Glanbia plc Annual Report and Financial Statements 2021
GLANBIA PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
WE BELIEVE IN
HEALTHIER
LIFESTYLES
Glanbia is a global nutrition group
dedicated to delivering better nutrition
for every step of life’s journey. We believe
in working for the good of our business,
people and planet together, every day.
We believe in…
OUR CULTURE
AND PEOPLE
Read more on page 18
THE POWER OF
OUR BRANDS
Read more on page 28
SCIENCELED
INNOVATION
Read more on page 34
STRONG CAPITAL
MANAGEMENT
Read more on page 42
SUSTAINABLE
OPERATIONS
Read more on page 50
For definitions and more information on constant currency and other
performance measures see the glossary on pages to .
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
01
Inside this report
STRATEGIC REPORT
Highlights 01
Glanbia at a Glance 02
Group Chairman’s Statement 04
Group Managing Director’s Review 06
Market Trends 08
Our Business Model 10
Strategic Priorities 12
Our People 20
Diversity, Equity & Inclusion 22
Our Stakeholders 24
Key Performance Indicators 26
Operations Review 30
Group Finance Director’s Review 44
Pure Food + Pure Planet 52
Environment 54
Our Society 59
Non-Financial Reporting Statement 60
Task Force on Climate-Related
Financial Disclosures 61
Risk Management 67
Principal Risks and Uncertainties 72
DIRECTORS’ REPORT
Corporate Governance Report 76
Audit Committee Report 103
Environmental, Social and Governance
Committee Report 109
Nomination and Governance
Committee Report 112
Remuneration Committee Report 118
Statutory information and Forward-looking
statement 143
Directors’ Responsibility Statement 152
FINANCIAL STATEMENTS
Independent Auditor’s Report 154
Group Financial Statements 162
Notes to the Financial Statements 167
Company Financial Statements 233
Notes to the Company Financial Statements 235
OTHER INFORMATION
Glossary of KPIs and non-IFRS
Performance Measures 241
Shareholder Information 250
Contacts 254
FORWARD-LOOKING STATEMENTS
This document contains forward-looking
statements, which by their nature involve risk and
uncertainty. Please see Disclaimer/Forward-
Looking Statements on page 149 for more
information about these statements and certain
factors that may cause them to prove inaccurate.
Revenue
€4.2bn
2020: €3.8bn
+9.8%
1
/+13.1%
2
Profit after tax
€141.0m
2020: €120.8m
+€20.2m
Return on
Capital Employed
10.0%
2020: 8.8%
+120 bps
Health and safety
GPN’s Lost Time Case
Zero
Scope 1 & 2
GHG emissions
8% reduction
over 2018 baseline
Employee
engagement score
70%
Adjusted EPS
77.84c
2020: 65.21c
+19.4%
1
/+23.9%
2
Basic EPS
48.47c
2020: 40.93c
+18.4%
1
/+23.3%
2
Net debt
€602.7m
2020: €493.9m
EBITA
(pre-exceptional)
€270.6m
2020: €209.6m
+29.1%
1
/+34.0%
2
OCF
3
conversion
100.2%
2020: 122.4%
STRATEGIC REPORT
Highlights
Non-Financial Highlights
Based on continuing operations
1. Reported currency
2. Constant currency
3. Operating cash flow
“ Glanbia delivered very strong results in
2021, across all our metrics. We progressed
our strategic agenda aligning our portfolio
to our growth opportunities.”
Siobhán Talbot
Group Managing Director
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
02
STRATEGIC REPORT
Glanbia at a glance
Who we are
Glanbia is a global
nutrition group
dedicated to delivering
better nutrition for
every step of life’s
journey.
We employ a team of
8,071
1
people and sell
our award-winning and
market-leading brands
and ingredients in over
100 countries worldwide.
Cash conversion
100.2%
Adjusted EPS growth
- continuing operations
+23.9%*
+19.4% reported
ROCE - continuing
operations
10.0%
Revenue growth
+13.1%*
+9.8% reported
GLANBIA
PERFORMANCE
NUTRITION
SPORTS NUTRITION
AND LIFESTYLE BRANDS
GLANBIA
NUTRITIONALS
US CHEESE
AND JOINT
VENTURES
SPECIALITY
INGREDIENTS
INGREDIENTS
OUR UNIQUE
PORTFOLIO OF
BRANDS AND
INGREDIENTS
Our joint ventures have access to large
sustainable milk pools in the US and UK.
This gives us supply chain visibility, which
is a key global customer and consumer
differentiator. It also gives us access to
large captive whey volumes, making our
broad range of high-quality ingredients
a critical asset for Glanbia Nutritionals.
Glanbia Nutritionals has pioneered the
development of technologies and
processes for the application of whey, a
valuable source of protein.
Today Glanbia Nutritionals is a leading
provider of both bespoke premix solutions
and whey protein isolate.
The Glanbia Performance Nutrition family
has a portfolio of leading brands in sports
and lifestyle nutrition that satisfy a range
of consumer motivations from
performance nutrition to active lifestyle
and weight management. Our mission is
to inspire people everywhere to achieve
their performance and healthy lifestyle
goals.
* Constant currency
1. Includes wholly-owned Group and JV’s
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
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2021 GPN revenue
€1.3bn
2021 GPN revenue growth
+17.1%*
reported +14.5%
Our unique portfolio comprises world-
leading sports nutrition and lifestyle
brands and large-scale, expert capabilities
in proprietary technologies in dairy and
non-dairy ingredient solutions.
We add value to our portfolio by moving up the
value chain from base ingredients to consumer
sports nutrition and lifestyle brands.
Our culture and values
Glanbia’s purpose and values, once again came to
the fore in 2021. Thanks to the commitment of our
people; Glanbia’s brands and ingredients continued
to reach millions of our customers and consumers
across the world every day.
CUSTOMERS’ CHAMPION
We are the customers’ champion. Our customers and
consumers do not just choose us once, but rely on us
delivering for them again and again.
PERFORMANCE MATTERS
We are committed to the highest standards of performance,
in quality, consistency, safety and more. We are not just
delivering better nutrition, but delivering it better every day.
FIND A BETTER WAY
The drive to constantly improve is in our DNA. It has led
us to innovate and collaborate. It has fueled acquisitions,
partnerships, new products, and smarter ways of working.
WINNING TOGETHER
We expect a lot from our people and offer much in return. We
nurture individuals but encourage everyone to work together.
Winning is great, but winning together is far more rewarding.
SHOWING RESPECT
Respect underpins everything we do. Caring for people and
the planet is embedded in the fabric of our business. Respect
builds a better future for everyone and is vital for our success.
#1
Global sports nutrition brand
2021 GN revenue
€2.9bn
2021 GN revenue growth
+11.4%*
reported +7.8%
Scale operational excellence
Nutritional ingredient partner of choice to global brands
Driving global brand growth
Visibility and access to large captive whey volumes
#1
US producer of whey protein isolate
#2
Global nutritional and functional
premix solutions
#1
producer and marketer of
American-style cheddar cheese
* Constant currency
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
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STRATEGIC REPORT
Group Chairman’s statement
Dear Shareholder,
The past two years have reinforced my views on Glanbia’s strengths,
values and resilience. We asked a lot of our people again in 2021, and
I am delighted for you and them, that their efforts are reflected in our
strong performance. Our ability to grow, even in a pandemic, reflects
the strength and depth of our portfolio of sports nutrition and lifestyle
brands and nutritional ingredients. It also reflects our commitment to
innovation and to the millions of relationships we have established with
our consumers, customers and communities across the globe. I want
to thank each and every one of our people for their hard work and
commitment in 2021. The commitment of our people and our culture
has successfully led us through this challenging time.
The Board is very proud of the continued resilience of the business and
the ingenuity of our people in managing the challenges of the Covid-19
pandemic. Against this backdrop, the Group has delivered a very strong
performance in 2021 with adjusted Earnings Per Share growth of 22.1%,
against the originally guided range of 6% to 12%, on a constant currency
basis. Adjusted Earnings Per Share from continuing operations increased
by 23.9% on a constant currency basis. Group EBITA increased 34.0%,
constant currency, to €270.6 million (+29.1% reported). Return on Capital
Employed from continuing operations, a key metric for the Group, was
10.0%. The strong Operating Cash Flow conversion continued at 100.2%.
Net debt at year-end was €602.7 million (2020: €493.9 million).
Strategy
Our strategic objectives continue to focus on protecting and growing our
portfolio of leading brands and nutritional ingredient solutions, purposeful
growth through innovation and acquisitions, and driving efficiency by
embedding operational enablers. We achieve this by adhering to our
core values and acting consistently with our purpose. The financial and
non-financial value created for all of our stakeholders by this model makes
the Group highly resilient and sustainable. We share more detail on our
stakeholder engagement on pages 24 and 25, and throughout the
Strategic Report you will find case studies on our core beliefs, and how
we bring our strategy to life as we go about our day-to-day operations.
Shareholder returns
We have a proven cash generative business model and in line with
our capital allocation policy, we launched a €50 million share buyback
programme in 2020, which concluded in April 2021. We commenced
a further two separate €50 million share buybacks in 2021, the latter of
which continued into 2022. These programmes provide an opportunity
to allocate capital to the benefit of shareholders.
In a further testament to the strength of the business, the Board
concluded it is appropriate for Glanbia to deliver a strong dividend for
2021. The Board is recommending a final dividend of 17.53 cent per
share for the year ended 1 January 2022. This brings the total dividend
per share for the year ended 1 January 2022 to 29.28 cent per share,
up 10.0% on the previous year.
Board changes
My colleagues on the Board are experienced business leaders who
bring a wealth of knowledge and experience from diverse sectors.
This supports the Board’s discussions on the strategic, operational
and sustainability issues, which affect the Group today and do so
in the future.
There were a number of changes in the composition of the Board
and Committees during 2021. The most significant change was in
accordance with the amended and restated Relationship Agreement
effective 23 February 2021 (the ‘Relationship Agreement’) between
Glanbia plc (‘the Company’) and Glanbia Co-operative Society (the
‘Society’), which reduced in 2021 the number of Non-Executive Directors
nominated by the Society (‘Society Nominee Directors’) from seven to
six. Society Nominee Non-Executive Director Martin Keane retired from
the Board at the conclusion of the 2021 AGM. I would again like to take
this opportunity to thank Martin for his commitment and wise counsel
during his tenure.
A YEAR OF
STRONG
GROWTH AND
POSITIVE IMPACT
Donard Gaynor
Group Chairman
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
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The Society will reduce its representation on the Board (from seven
to three by 2023) in order to facilitate the appointment of additional
Independent of the Society Non-Executive Directors and further
strengthen the diversity of the Board. In line with this agreement with the
Society, the Board will reduce from 15 members to 13 by 2023.
We were delighted to welcome Paul Duffy, who joined the Board as
Independent Non-Executive Director on 1 March 2021, returning the
number of Independent Non-Executive Directors to six. Paul brings
significant brand experience to the Board, full biographical details for
Paul can be found on pages 82.
On 24 February 2022 Patrick Coveney informed the Board that he
would step down as Non-Executive Director effective 30 March
2022. A process to identify two new Independent Non-Executive
Directors is currently under way. Additionally, in line with the Relationship
Agreement Vincent Gorman, Society Nominee Director, will retire from
the Board at the conclusion of the AGM on 5 May 2022. I wish to thank
Patrick and Vincent for their commitment and valuable contributions to
the Board during their tenure.
We are also pleased that as at the date of this Report female Directors
comprise 33.3% of our Independent (of the Society) Non-Executive
Directors.
Glanbia Ireland
For many years the Group has enjoyed a valued partnership with
the Society in creating a strong business under our joint stewardship.
In 2021, the Society members voted to approve the purchase of the
40% stake in Glanbia Ireland owned by the Company. On 25 February
2022, the Group’s Independent shareholders approved the transaction.
Upon completion (which is expected to occur in the first half of 2022)
Glanbia Ireland will become 100% owned by the Society and operate as
an independent business.
The sale will allow us to focus on driving growth through our market
leading positions as a brand owner and ingredient solutions provider,
playing into strong underlying consumer health and wellness trends.
Our climate commitments
Our strategy is not only about financial performance, it is about doing
great business in an authentic socially responsible way to make a real
difference for all of our stakeholders. Now, more than ever, it is
incumbent on organisations like Glanbia to lead with purpose and act as
a force for good. Our strategy is fully aligned with the environment that
we depend on, and the consumers, customers and communities we
serve. Climate change is a significant issue and the transition to a
low-carbon economy will create both risks and opportunities for all
businesses.
2021 has seen a marked acceleration in our focus on our Environmental,
Social and Governance (ESG) commitment. During the year, we established
a new ESG Board committee, which I chair, sending a clear message about
our commitment from the top. The objective of the new committee is to
provide oversight of Glanbia’s environmental programme: Pure Food + Pure
Planet, and driving further progress in our social and governance agendas.
As outlined throughout this Report, we are committed to the United
Nations Sustainability Development Goals and are focusing on those
where our business operations can make the most impactful contribution.
In doing so, we also continue to extend our assessment of climate change
impacts and our existing disclosures, on our journey to adopting all
the recommendations of the Task Force on Climate-Related Financial
Disclosures (TCFD) and the UK Corporate Governance Code. (See pages
52 to 66 for our Sustainability Report and TCFD Report and page 80 for
our UK Corporate Governance Statement).
Our culture
One of the challenges of the Covid-19 pandemic has been and remains
the restrictions placed on the mobility around the business. This has
limited the ability of the Non-Executive Directors to visit various locations,
as would be the norm, and to meet our colleagues.
However, the strength of Glanbia’s culture and values are such that
despite the challenges, our colleagues remain engaged with our
ambitions as evidenced by the annual engagement pulse survey
that saw an employee engagement score of 70%.
Despite the restrictions on movement, I was delighted as Non-Executive
Director for Workforce Engagement, to join digital meetings with colleagues
to hear their views, answer questions and stay in touch. As a Board,
we were also delighted to resume in-person meetings in line with public
health guidance in August 2021.
As detailed on pages 22 and 23, the Board is committed to promoting a
corporate culture that is more diverse and inclusive with the development
and roll out of a new Group-wide Diversity, Equity and Inclusion (DE&I)
strategy, to ensure that everyone has equal opportunities, can contribute
fully and reach their full potential regardless of gender, religious belief,
ethnicity, nationality or sexual orientation.
Delivering better nutrition now and for the future
To conclude our people have delivered a strong performance in a
challenging and volatile environment, and we exceeded each of our
financial targets for the year, across revenue growth, adjusted Earnings
Per Share growth, operating cash flow conversion and cash returned
to shareholders. Our teams achieved this while always prioritising the
health and safety of our people.
While we are pleased with these results and the overall strength of our
business and our growth strategy is clear, the external environment
continues to be volatile and difficult to predict. Indeed, the biggest
uncertainty we face is the increased geopolitical tensions and the disruptive
effect of the pandemic across the cost and efficacy of supply chains.
However, the Board and I are confident that the strong foundations of
the Company will enable further growth. This confidence comes from
knowing that, through the most challenging of times, we continue to
work together towards our purpose of delivering better nutrition for
every step of life’s journey.
Glanbia’s diverse and resilient business model, the range and breadth
of the Group’s sports nutrition and lifestyle brands and nutritional
ingredients coupled with our extremely strong balance sheet, ensures
that Glanbia can capitalise on healthier lifestyle trends, and is well
placed to continue its growth and development into the future.
Donard Gaynor
Group Chairman
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
06
STRATEGIC REPORT
Group Managing Director’s review
DELIVERING
A STRONG
PERFORMANCE
Siobhán Talbot
Group Managing Director
• €76.1 million investment in the accretive acquisition of a 60% stake in
LevlUp, a European gaming nutrition brand within the GPN brand
portfolio and the acquisition of PacMoore, a US food ingredients
company as part of the Glanbia Nutritionals (GN) portfolio;
• progressive capital allocation through the completion of €91.3 million
share buyback programmes;
• progression of the planned disposal of the Group’s 40%
shareholding in Glanbia Ireland to Glanbia Co-operative Society; and
• advanced our Environmental, Social and Governance agenda across
many areas including adoption of science based environmental
targets, progression of the Group-wide Diversity, Equity and
Inclusion (DE&I) agenda and revised governance at Board level.
Our markets
Our long-term drivers of growth remain unchanged, and the ongoing
global response to Covid-19 has in fact amplified many of the market
trends that drive our growth. There is much talk of a ‘new normal’
in a post Covid-19 environment but in reality, we expect to see more
of an acceleration of changes that were already underway. The move
to health and wellness, fitness and active lifestyles, is only going to
increase further as a result of the experience we have been through.
We also expect the heightened awareness of nutrition including
supplementation, immunity boosting and a desire for more functional
foods to further accelerate. While consumption trends are changing,
so too are shopping behaviours and our broad portfolio, and geographic
and channel reach ensures that Glanbia is well placed to serve our
customers and consumers needs with a portfolio balanced across
sports nutrition and lifestyle brands, and functional ingredient solutions.
Protecting the world around us
Glanbia has a long, rich heritage that dates all the way back to the early
1900s when the purpose of the Company was to deliver a brighter future
for the communities in which it operated by adding value to their farm
produce. Our purpose today, to deliver better nutrition for every step of
life’s journey, is not too far removed from this. Now more than ever, we
understand that a desire for a brighter future is still a driving force for the
consumers, customers, suppliers and communities, we serve.
Our strong performance in 2021 once again demonstrated the strength
and resilience of Glanbia’s portfolio of global sports nutrition and lifestyle
brands and nutritional ingredients and validated our strategy for growth.
The Covid-19 pandemic continued to test our purpose, people, and
business model, but I am really proud of how we navigated the
pandemic-related challenges over the past two years. From the outset,
we continued to execute the strategic priorities outlined early in 2020
and this strategic focus, combined with strong tactical execution,
positioned the Group well for the growth delivered in 2021.
Our primary focus remained steadfast on the safety and wellbeing
of our people and their families. We continued to respond with speed
and agility to market volatility keeping our global facilities operating,
and sustaining a robust supply chain, while all the time, growing
our business.
Yet again, our people and our extended community of supplier and
customer partners stepped up to the challenge. The response and
commitment of all our people to serve our consumers and customers
has been outstanding. Everyone has shown remarkable fortitude in the
face of an unprecedented challenge over the past two years and I am
very grateful and very proud of all my Glanbia colleagues around the
world who delivered such strong performance in 2021.
Our strategy and performance
In 2021, we strengthened and executed our strategy while ‘delivering
better nutrition’ for our consumers and customers. It was a busy year for
the Group, one in which we moved quickly to deliver on our objectives
in line with changing market realities. Our approach yielded very strong
results with revenue and earnings recovery. Revenue for the year at
€4.2 billion was up 13.1% constant currency (reported 9.8%), adjusted
Earnings Per Share for continuing operations was up 23.9% constant
currency, and Operating Cash Flow conversion exceeded 100%.
We also made strong progress on a number of our key strategic
objectives including:
• significant progress on the Glanbia Performance Nutrition (GPN)
transformation programme driving revenue and margin growth;
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
07
They trust the essence of our portfolio of brands and ingredients and we
will work to assure them that they can trust us in our efforts to protect
the planet too. Climate change is the defining issue of our generation.
In 2021 under the stewardship of a dedicated Board Committee, we
strengthened our resourcing and governance across all areas of our
Environmental, Social and Governance agenda. Our Pure Food + Pure
Planet sustainability strategy which is detailed on pages 52 and 53 sets
out clear priorities based on the most material issues to our business.
From an environmental perspective we identified carbon, waste and
water as key focus areas where we will drive progress by engaging,
empowering and advancing sustainable practices across the entire
organisation in collaboration with our suppliers and business partners.
When it comes to social sustainability, our goal is to create a sustainable
and resilient organisation for the future. Our people truly embraced
this goal in 2021 and the organisation was never more ready to take
meaningful action on what will be a multi-year journey. Our global DE&I
policy which was rolled out in 2021 underscores this commitment to
build a diverse and inclusive culture where everyone feels they can
be themselves and all share in equal opportunity to thrive as ‘Together
We Are More’.
Glanbia Performance Nutrition
As I mentioned earlier, the global consumer response to Covid-19
has increased the relevance of sports and performance nutrition
to a broader audience, as health has come into sharp focus. GPN’s
branded portfolio sits at the heart of this positive trend.
In 2021, GPN’s transformation programme progressed extremely well
delivering revenue growth and margin improvements ahead of the
business case. The business saw revenue grow to €1.3 billion, an
increase of 17.1% constant currency (14.5% reported) when compared
to the prior year. This was largely driven by volume growth of 11.4%,
price increases of 4.5% and the acquisition of LevlUp, delivering 1.2%.
GPN has been agile in its response to changing market dynamics. The
transformation programme built a foundation of sustainable top line and
margin enhancement initiatives. 2021 demand has been very robust
and the business managed supply chain dynamics extremely effectively
to meet this demand. As we moved through 2021, inflationary pressures
became evident and again the business responded quickly with
mitigating actions across pricing and efficiency measures. Through all
this changing landscape, GPN has continued to prioritise brand building
investment to drive long-term sustainable growth. Globally our Optimum
Nutrition (ON) brand performed very strongly in 2021. The lifestyle brand
portfolio, also delivered revenue growth with think! and Amazing Grass
performing well, while SlimFast was somewhat impacted by ongoing
headwinds in the diet category but is continuing to invest in marketing
and innovation. Regionally, strong growth was delivered across both the
Americas and Internationally.
The business streamlining and organisational transformation that is now
largely completed across all regions provides a strong foundation for
GPN future growth momentum.
For more information on GPN, see pages 30 to 33
Glanbia Nutritionals
GN delivered 2021 revenue of €2.9 billion, an increase of 11.4% versus
prior year on a constant currency basis (7.8% reported). This was driven
by a volume increase of 18.1% offset by a price decrease of 7.7% with
acquisitions delivering 1.0% revenue growth. Nutritional Solutions (NS)
revenue increased by 20.8% constant currency (17.5% reported) and
US Cheese by 7.7% constant currency (4.0% reported) in the year.
GN NS revenue growth was driven by volume increase of 13.6%,
price increase of 3.7% and acquisitions 3.5%. The broad sectoral
reach of NS nutritional ingredients drove strong volume growth across
the portfolio, which was augmented by newly commissioned joint
venture (JV) dairy capacity. Accelerated by the consumer response
to the pandemic, strong global demand from customers orientated
to health and wellbeing drove strong demand for the NS portfolio
of micro-nutrient blends and healthy snacking solutions in a range of
product formats. In 2021, NS also continued its progression of organic
and acquired growth through the acquisition of the US food ingredients
company PacMoore, providing further solutions capability in the healthy
snacking category.
US Cheese revenue increased by 7.7%, constant currency, in the period.
This was driven by volume growth of 19.8% offset by a price decline
of 12.1%. Volume growth was driven by cheese sales from the newly
commissioned Michigan JV while pricing reflected market dynamics.
For more information on GN, see pages 36 to 39
Joint Ventures
Our JVs performed well in 2021, demonstrating the strength of our
models. GN’s US Cheese team continues to operate all of the wholly-
owned and US JV dairy processing plants. The new large-scale JV
plant in Michigan, US was fully commissioned during the second
quarter of 2021 with commissioning of the Glanbia Cheese EU JV
plant in Portlaoise, Ireland due for completion in 2022.
Following a long and successful partnership with Glanbia Co-operative
Society (the ‘Society’) in the Glanbia Ireland business, we have in 2021
progressed the sale of our 40% shareholding in Glanbia Ireland to
the Society for €307 million. In December 2021, members of the Society
approved the transaction and on 25 February 2022, the Group’s
Independent shareholders approved the transaction. We expect the
transaction to close by the first half of 2022.
For more information on the performance of our JVs, see pages 40
and 41.
Looking forward
While, Covid-19 and the intensifying geopolitical crisis has reminded
us all of the fragility of the world we live in, we remain positive about
the future. We believe that as a values led organisation, we can play
a positive role for all our stakeholders. We will continue to drive a
progressive agenda on issues like climate change and social inequality.
We are committed to serving our consumers and customers through
our purposeful brands and ingredients, which are now more relevant
than ever.
Our proven strategy has the clarity and agility to support the evolution
and growth of our business. Our growth journey will continue to be
a blend of organic, M&A and portfolio activity as our strong financial
position will allow us to capitalise on opportunities as they arise.
Siobhán Talbot
Group Managing Director
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
08
STRATEGIC REPORT
Market trends
LEADERS IN LARGE
AND GROWING
MARKETS
A growing focus on healthy and active lifestyles and a greater understanding
of the link between diet, exercise and health is driving strong demand for
our brands across the globe.
Markets trends
Our markets continue to evolve as today’s busy consumers want to stay
fit and healthy. Underlying this in many markets across the globe, is a
growing focus on active lifestyles as consumers become more educated
about the benefits of a health and fitness lifestyle and governments play
an increasingly active role in encouraging and sponsoring healthy living
initiatives among their populations, in particular in emerging markets.
To fuel the demands of their on-the-go lifestyle, consumers are looking
for functional food and beverage brands that are high in protein,
sustainable, good tasting and in an easy-to-use format. The shift from
traditional three-meals a day lifestyle continues apace, with snacking
and convenience playing a critical role in everyday routines. There is also
greater awareness of the benefits of good nutrition across ages and
genders. As people live longer they are looking to understand specific
nutritional and fitness plans to support their lifestyles whatever
their age. Finally, digital consumerism has heightened expectations
for individualised nutrition and fitness plans.
Meeting market demand
Whatever our consumers’ nutrition and wellness ambitions are, our
trusted performance and lifestyle nutrition brands will inspire them to
achieve their performance and healthy lifestyle goals. For more than
35 years, Optimum Nutrition
™
has supported athletes all over the world
in achieving their sports performance goals, with Optimum Nutrition
™
Gold Standard Whey the number one global protein powder sold in over
90 countries, BSN
™
and ISOPURE
™
rounds off the GPN Sports Nutrition
portfolio. For active-lifestyle consumers, Amazing Grass
™
is a plant-based
nutrition brand for people who want to live a healthier life while think!
™
offers a range of high quality, high protein, nutritional ready-to-eat
bars and snacks. SlimFast
™
is well established as a leading weight
management brand in the US and the UK, with a wide range of
product formats.
Read more on pages 30 to 33
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
09
Customers and consumers are searching
for better, healthier and smarter nutritional
ingredients and solutions that fit their
lifestyles.
A thriving functional ingredients market
Today’s busy consumers want to be in control of their health and are
increasingly seeking products with clean, healthy ingredients and added
functional benefits. A desire for improved energy, immunity and mental
health is driving the demand for functional foods and beverages that are
high in protein or fortified with specific health and wellness benefits.
Consumers are also looking for on-the-go snacks that are tailored
to individual needs and fit a busy but healthy lifestyle. Furthermore,
an ever-increasing lifespan coupled with globally low birth rates also
combine to form an ageing population with changing nutritional needs.
These global macro trends have resulted in significant changes in
how consumers meet their nutritional requirements and in turn has
led to a proliferation of new products and formats across the food and
beverage sector.
Our ingredients expertise and capabilities
As a large-scale global provider of ingredient and functional solutions
and one of the biggest cheese manufacturers in the world, Glanbia
Nutritionals (GN) is well positioned to capitalise on these market trends.
We have established our leadership positions in protein and micro-
nutrient premix solutions by building close relationships with key global
and regional customers in attractive, growing end-markets. GN
innovation and capabilities in the fast-growing ready-to-eat, ready-to-
mix and ready-to-drink categories is ideally positioned to benefit from
the consumer demand for consumption convenience. Our protein
solutions have transformed the bar and beverage categories over
several years. Our aim is to ensure that GN continues to leverage both
its dairy and plant-based protein capabilities to meet the ever-evolving
demands of customers and consumers across the globe.
Read more on pages 36 to 39
GROWING DEMAND
FOR INGREDIENT
EXPERTISE
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
10
STRATEGIC REPORT
Our Business model
Our Purpose Our markets
Understanding the views
of our stakeholders
Our assets and resources
Our culture
DELIVERING
BETTER NUTRITION
FOR EVERY STEP OF
LIFE’S JOURNEY.
Our Values
Customers’ champion
Performance matters
Find a better way
Winning together
Showing respect
HOW WE ADD VALUEDRIVEN BY
WHAT MAKES
OUR MODEL WORK
Glanbia’s brands and
ingredients are positioned
at the centre of a large and
growing market for nutrition
and weight management
products that support a
healthy lifestyle
Understanding key issues
through effective stakeholder
engagement
• Capital deployment
• Financial control
• Quality risk management
• Secure supply chain
• Sustainable operations
• Dedicated employees
• Hard-working and
adaptable
• Passion for delivering
better nutrition
• Curious and innovative
• Respectful and inclusive
• Collaborative and
supportive
We believe in
OUR CULTURE
AND PEOPLE
THE POWER OF
OUR BRANDS
SUSTAINABLE
OPERATIONS
SCIENCELED INNOVATION
STRONG PORTFOLIO AND CAPITAL
MANAGEMENT
Read more on page 3 Read more on page 18, 28, 34, 42 & 50
HOW WE ADD VALUE
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
11
THE VALUE WE CREATE
Driven through three
strategic priorities
HOW WE ADD VALUE
PROTECT AND GROW
OUR PORTFOLIO OF
BRANDS AND
INGREDIENTS
PURPOSEFUL GROWTH
THROUGH INNOVATION
AND ACQUISITIONS
FUEL GROWTH
BY INVESTING IN
ORGANISATIONAL
ENABLERS
Committed people
We invest in our people throughout their
careers. We provide competitive rewards
and benefits, clearly aligned with
performance, and offer opportunities
for further career progression.
Employee payments for wholly-owned
group
€451.9m
Total Group employee numbers including JV’s is
8,071
Investors
We have a progressive dividend policy
with a targeted dividend payout ratio of
between 25% and 35% of adjusted
Earnings Per Share. We met this target in
2021 with a payout ratio of 33.6%.
Dividends to shareholders
in FY 2021
€84.5m
Consumers and customers
Optimum Nutrition
™
(ON) enjoys strong
brand loyalty from its users and saw
consumption growth in top five tracked
markets (US, UK, India, China & Australia).
ON consumption growth
18.8%
*
* Consumption numbers are on US channels on the
52-week period up to 26th December 2021
Suppliers
The Carbon Disclosure Project (CDP)
Supplier Engagement score improved
significantly to A- against a sector
average of B-.
CDP Supplier Engagement Score
A-
Communities
The Great Pink Run with Glanbia raised
over €650k for breast cancer research.
We also contributed directly to causes in
our local communities.
Charitable donations
€1m+
Environment
We validated our decarbonisation targets
with the Science Based Targets initiative
(SBTi). Our focus on energy efficiency has
delivered a reduction in our Scope 1 and 2
GHG emissions by 8% from 2018 baseline.
Carbon emissions change since 2018
-8%
Read more on pages 12 to 17
Delivering shared value for our stakeholders
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
12
STRATEGIC REPORT
Strategic priority #1
Our core brands and nutritional ingredients hold market-leading positions in
categories that are driven by strong underlying health and wellness trends.
DELIVER GROWTH
THROUGH OUR PORTFOLIO
OF LEADING BRANDS
AND INGREDIENTS
2021 Progress
GPN
• Continued strong execution of transformation
programme driving top line and margin
momentum ahead of target;
• Like-for-like branded growth of 18.3% constant
currency with strong growth in all regions;
• Optimum Nutrition continued to perform well with
market share gains in the top five tracked
markets (US, UK, India, China and Australia); and
• Focused brand development in growth channels
with over 64.4% of sales in online and Food,
Drug, Mass and Club (FDMC) channels.
GN
• Strong Nutritional Solutions’ (NS) like-for-like
revenue growth at 17.3% constant currency with
strong volume growth at 13.6%;
• NS portfolio depth and reach facilitated strong
growth in trending categories as strong
capabilities in functional and nutritional ingredients
delivered to customer needs for improved
immunity and general health offerings; and
• Completed the integration of Foodarom, a
Canadian flavours business, with our NS
business.
Looking ahead to 2022
GPN
• Continue to leverage the transformation
programme to drive long-term sustainable top
line and margin growth and mitigate the impact
of inflation;
• Continue to position Optimum Nutrition
™
and
SlimFast
™
as our global brands via channel
development, innovation and consumer
advocacy;
• Capture further global growth in key growing
channels; and
• Innovate in broadening reach of key brands
across consumer motivations and usage
occasions.
GN
• Maintain NS’s strong growth rate with local and
global brand owners; and
• Continue to build out NS’s business through
enhanced capabilities, innovative technologies
and acquisitions.
Link to remuneration
Read more on page 118
Key Risks
Read more on page 72
KPIs
Adjusted EPS - continuing
operations
77.84c
+23.9% constant currency
+19.4% reported currency
GPN Revenue
€1.3bn
+17.1% constant currency
+14.5% reported currency
GN Revenue
€2.9bn
+11.4% constant currency
+7.8% reported currency
Revenue Volume Growth
16.1%
Basic EPS - continuing
operations
48.47c
+23.3% constant currency
+18.4% reported currency
OUR CULTURE
AND PEOPLE
THE POWER OF
OUR BRANDS
SCIENCE-LED
INNOVATION
STRONG
PORTFOLIO
AND CAPITAL
MANAGEMENT
SUSTAINABLE
OPERATIONS
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
13
STRATEGY-IN-ACTION
DELIVERING YOUR DAILY
ENERGY BOOST
With a rich 35+ year history of providing premium
quality products Optimum Nutrition™ is helping
consumers to manage their increasingly busy lives
through the expansion of its Optimum Nutrition™
AMIN.O. Energy product into a sparkling ready-to-
drink format.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
14
OUR CULTURE
AND PEOPLE
THE POWER OF
OUR BRANDS
SCIENCE-LED
INNOVATION
STRONG
PORTFOLIO
AND CAPITAL
MANAGEMENT
SUSTAINABLE
OPERATIONS
STRATEGIC REPORT
Strategic priority #2
The growing global interest in healthy, active lifestyles means our portfolio
of brands and ingredients have extensive appeal to a growing number
of global consumers and customers. Our innovative mindset drives our
investment in our brands and ingredient capabilities.
GROW THROUGH
INNOVATIVE SCIENCE
AND ACQUISITIONS
2021 progress
• In our GPN branded business we increased
brand investment and extended our channel
reach across all markets, delivering double-digit
like-for-like growth in the year;
• Acquired a 60% stake in LevlUp, a European
gaming nutrition brand company for €31.8 million;
• In our GN NS business we have broadened our
customer portfolio as a partner of choice to many
emerging as well as established brand owners;
• Acquired PacMoore Process Technologies, a US
food ingredient solutions business for €44.3
million;
• Fully commissioned new $470 million dairy JV
facility in Michigan, US (MWC); and
• Agreed the disposal of our 40% interest in
Glanbia Ireland to Glanbia Co-operative Society
for €307 million.
Looking ahead to 2022
• Maintain brand investment driving further channel
reach and penetration;
• Selectively invest and grow in key strategic
international markets in both GPN and GN;
• Consider strategically complementary
acquisitions as opportunities arise;
• Continue to build differentiated, compelling
capabilities and technologies that are attractive
to NS’ customers;
• Complete commissioning of the Glanbia Cheese
EU JV plant in Ireland; and
• Complete the disposal of our 40% interest in
Glanbia Ireland.
Link to remuneration
Read more on page 118
Key Risks
Read more on page 72
KPIs
Adjusted EPS - continuing
operations
77.84c
+23.9% constant currency
+19.4% reported currency
OCF conversion
100.2%
-222bps
ROCE - continuing operations
10.0%
+120bps
Total Shareholder Return
21%
2020: 5%
Basic EPS - continuing
operations
48.47c
+23.3% constant currency
+18.4% reported currency
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
15
STRATEGY-IN-ACTION
DEVELOPING
CUTTING EDGE
INGREDIENTS
Consumers are seeking food,
beverages and supplements that
help improve their sleep and reduce
stress and anxiety.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
16
STRATEGIC REPORT
Strategic priority #3
Delivering investor returns in a sustainable and responsible way requires
us to be innovative and accountable for our actions. The Group is
supported by vital growth enablers across talent retention and development,
sustainability and risk management, all combining to set a consistent
strategic direction.
FUEL GROWTH BY
CONTINUING TO INVEST IN
ORGANISATIONAL ENABLERS
ACROSS THE BUSINESS
2021 progress
• Continued the Group technology investment
programme to drive opportunity and enhance
efficiencies;
• Commenced the implementation of our
Group-wide 2030 sustainability strategy;
• Completed a Group-wide employee engagement
survey;
• Embedded a new Group-wide flexible working
model to create an agile working environment
which will remain post pandemic;
• Rolled out a Group-wide Diversity, Equity and
Inclusion strategy; and
• Revised GPN operating model in Americas to
accelerate its growth agenda.
Looking ahead to 2022
• Continue to drive diverse and inclusive strategic
talent acquisition, retention and development
agenda;
• Evolve organisational design to effectively deliver
to employee needs in a post pandemic
environment;
• Continue to engage employees through clear
action responses to the 2021 engagement
survey;
• Evolve our ESG roadmap to deliver our
sustainability goals; and
• Continue technology investment to digitize
operating activities including for example,
supporting the significant transformation of the
Group-wide HR activities.
KPIs
Employee Engagement Score
70%
Percentage of employees who
said they were happy working
at Glanbia.
Carbon Emission
-8%
Scope 1 & 2
GHG emissions reduction
since 2018 baseline.
OUR CULTURE
AND PEOPLE
THE POWER OF
OUR BRANDS
SCIENCE-LED
INNOVATION
STRONG
PORTFOLIO
AND CAPITAL
MANAGEMENT
SUSTAINABLE
OPERATIONS
Link to remuneration
Read more on page 118
Key Risks
Read more on page 72
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
17
STRATEGY-IN-ACTION
DELIVERING GPN
TRANSFORMATION
Ideation sessions
We ran ideation sessions to brainstorm ways to
improve profitability and/or revenue growth and
prioritise new initiatives.
Execution engine
We internalised routines and mindsets to
effectively plan, manage, and implement projects.
Capability building
Through the transformation programme we
invested to build individual and team capability
across a variety of areas such as revenue growth
management, and embed learnings and
competencies that will drive our future
growth agenda.
2021 year-on-year EBITA margin improvement
+320bps (Constant Currency)
Margin improvement underpinned by the realisation
of benefits from GPN transformation programme.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
18
STRATEGIC REPORT
OUR CULTURE
AND
PEOPLE
We believe in healthier lifestyles
Our people are at the heart of our business and we are committed to
nurturing a high performing, inclusive and respectful culture where each
individual feels engaged, valued and supported to develop and grow.
We want our people to feel passionate about our purpose, connected
to our shared values and empowered to be their best. We consistently
invest in their development and prioritise their health, safety and
wellbeing at all times.
WE BELIEVE IN
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
19
Keeping our people safe
In response to Covid-19, we launched the
Advanced Observation Programme (AOP)
for several of our larger US-based sites.
It was anticipated that the impact of staff
shortages would have a detrimental effect
on production continuity at sites, with an
adverse knock-on effect on suppliers and
consumers. In an effort to prevent this from
occurring, the AOP was implemented with
the singular goal of keeping people safe and
well at work. The programme used stringent
site safety protocols as well as US Centers
for Disease Control and Prevention (CDC)
guidance, and on-site occupational
health support. Since inception, over
900 personnel have gone through the
programme with an over 90% success rate
(ability to remain in the work place rather
than having required quarantine without the
AOP), while rigorously maintaining safety
standards for all employees. To achieve this,
over 2,500 tests were conducted by a
Glanbia provided third party occupational
health service, to ensure risk management
and compliance to all CDC requirements.
Together We Are More
Our vision for our diversity, equity and
inclusion strategy is that we celebrate
individuality, knowing that Together We
Are More. This year we accelerated our
diversity, equity and inclusion journey,
establishing our first global and regional
employee resource groups, updating our
talent acquisition practices to ensure
more diverse candidate pools and investing
in inclusive leadership capability for our
people. It is important that our people feel
they can bring their authentic self to work.
Being yourself is the best way to form
meaningful relationships, which are
integral to career success and growth.
Therefore, we were delighted to see in our
annual employee engagement survey that
77% of employees agreed that they feel
comfortable being themselves at work.
Our employee engagement survey also
revealed continued high levels of pride
among our people in Glanbia’s products
and services with 80% of those
surveyed saying they would be happy
to recommend Glanbia’s products to
a friend or family member.
27%
of direct reports to the Group executive team
are women.
82%
Feel physically safe in the workplace.
80%
Agree that they feel proud of Glanbia’s products
and services.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
20
STRATEGIC REPORT
SUPPORTING
OUR PEOPLE
TO PERFORM
AND FLOURISH
Sue Sweem
Chief Human Resources Officer
Our People
Continuing to keep our people safe
The health and safety of our people continues to be our top priority.
Throughout the Covid-19 pandemic we implemented progressive
policies and procedures to help keep them safe and to enable us
to successfully navigate the pandemic. In 2021, we focused our
efforts on health and safety procedures to minimise the risk of
contracting or spreading the virus at our sites, as well as encouraging
and facilitating employees to get vaccinated in line with local public
health programmes globally.
Investing in our people’s growth and development
Continuing to invest in our people is critical to our future success.
In 2021, we launched a bespoke global leadership capability model
‘Lead for Growth’. This model is rooted in our values and describes the
critical leadership capabilities to thrive and grow into the future, ensuring
sustained growth for our people and our business. We continued to
deliver our suite of customised high potential leadership programmes
virtually in 2021, including the Senior Leadership Programme (SLP)
for senior executives from across the Group. This included virtual
workshops with global faculty and industry speakers, learning labs,
coaching and psychometrics. The virtual nature of learning in 2021
resulted in greater participation in learning events, with 90% of the total
workforce participating in our learning and development programmes
this year, up 49% on 2020. In addition, we increased our investment in
developing our people’s skills in the areas of leadership and personal
effectiveness and built on our in-house mentoring offerings.
“We believe in fostering a people-first
inclusive culture where our employees
have the freedom to succeed and where
they feel valued for their contribution
to Glanbia.“
The Group also completed its talent and succession review, our
Organisation and People Review (OPR) during the year, which assesses
succession bench strength and emerging issues and opportunities in
our talent planning. Succession mapping for key roles was completed
with a number of key senior hires made throughout the year and
development plans accelerated to meet current and future succession
needs. Of the senior leadership team, 43% now have the potential to
move to the next level. Overall, our internal talent mobility continued to
be high with one in four salaried roles now filled internally (+2% on 2020).
Our Pure Ambition Graduate Programme continues to play an important
role in our talent strategy by supporting emerging leaders to achieve
their potential through dedicated development programmes.
Smart working
Building on feedback from employee engagement data, we continued
to roll out our Smart Working programme in 2021. Smart Working is an
outcome driven work model that enables flexible ways of working to
deliver superior business performance, greater productivity and support
employee wellbeing. Core principles of the model include flexible hours;
blended working where employees can balance working both remotely
and onsite on an ongoing basis; and flex Fridays where eligible.
Health and wellbeing for employees
Glanbia supports the physical, nutritional and mental health of our
people through health and wellbeing programmes. As well as putting
in place detailed health and safety measures to protect frontline workers
this year, we provided care packs to employees on the frontline and
recognised their efforts through appreciation awards in recognition
of their service during the pandemic. For remote workers, our focus
is on ensuring that employees are supported to cope well with new
ways of working. We expanded our employee assistance programmes
and offered online exercise and wellbeing classes while sharing
communications highlighting the importance of staying well both mentally
and physically. Our annual Workplace Wellbeing Day took place virtually
this year, with approximately 1,000 employees globally participating.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
21
2020 2021
4.5
3.5
3.0
4.0
2.5
2.0
1.5
1.0
NAIC Average Food Manufacturing
2020 2021
2.0
1.6
1.4
1.8
1.2
1.0
0.6
0.8
0.0
0.2
0.4
NAIC Average Food Manufacturing
Glanbia’s 2021 LTIR was 0.76, down from 0.99
in 2020. Glanbia’s score is significantly lower than
the NAIC Food Manufacturing Average of 1.2.
Glanbia’s 2021 TRIR score is 1.99, down from
2.0 in 2020 and substantially lower than the
NAIC Average of 4.0.
1. TRIR is the number of recordable, work related incidences per 200,000 hours worked.
2. LTIR is the number of loss time work related incidences per 200,000 hours worked.
Culture and engagement
Staying connected and supporting our people’s health, safety and
wellbeing through the Covid-19 pandemic was a key engagement
priority in 2021. Throughout the year we found innovative ways to
engage with our people, mostly online, through health and wellness
challenges and webinars, leadership updates, townhall meetings and
virtual social events. Further roll out and embedding of our Smart
Working policies also increased opportunities for people to work flexibly.
Glanbia’s Your Voice employee survey conducted in 2021 showed
employee engagement at 70% with high levels of pride in Glanbia’s
product and services and physical safety at work exceeding industry
benchmark. We also made progress on physical safety at work as well
as increasing our scores in equal opportunity and communication.
GPN
2,032
including
LevlUp acquisition
GN
2,685
including
PacMoore
acquisition
Joint Ventures
3,354
including
Glanbia Ireland
Total group employees in 2021
8,071
92 nationalities across 32 countries
Key areas identified for further improvement included wellbeing and
communication with action plans developed to support these areas.
A re-evaluation of our engagement tools is currently underway, as we
plan for the changed dynamics of our workplaces going forward.
Health and safety
In 2021 we realigned our health and safety reporting metrics to focus on
performance against industry benchmarks, based on the manufacturing
specific North American Industry Codes (NAIC). Driven by Total
Recordable Incident Rates (TRIR)
1
and Lost Time Incident Rates (LTIR)
2
for sites, this also allows Glanbia to compare results against industry
peers for sites as well as the Group as a whole. We believe that these
metrics are an effective way to drive improvement as well as overall
organisational 5-year TRIR and LTIR rates.
Zero critical injuries (i.e. fatality or life changing injury) were reported
across the Group in 2021. GPN achieved zero Lost Time Cases
(LTCs) which represents 18% of Group-wide reporting locations, an
achievement reflecting our ambition to aspire to ‘Zero Harm’. Outside
of GPN, a further 41% of all reporting locations also had zero LTCs,
resulting in a total of 59% of all reporting locations within the Group
having zero LTCs. Expanding the excellent practices and learnings
from GPN’s performance will be a top priority for the Health and Safety
Leadership Team (HSLT) and Operational leadership.
We have improved our health and safety performance year-on-year
and have scored well above food industry benchmarks for both TRIR
(2021: 1.99 vs. 2020: 2.00) and LTCs (0.76, a 23% improvement on
2020) on an aggregate basis. We have strong capability across the
Group with warehousing, laboratories, offices and milling facilities
overall out-performing their NAIC industry benchmark. In our major
manufacturing sites, 70% of our dairy facilities are at or better than
their peer benchmark. We will drive action plans in 2022 to ensure
the remaining sites reach benchmark performance and, like all sites,
maintain a zero critical injuries target.
Health and Safety Benchmarking – Food Manufacturing
Lost Time Incident Rate (LTIR)
2
Total Recordable Incident Rate (TRIR)
1
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
22
STRATEGIC REPORT
Diversity, Equity & Inclusion
In 2021, we continued to lay solid
foundations to bring our Diversity,
Equity and Inclusion (DE&I) strategy
to life in a meaningful way. Glanbia’s
DE&I vision is to advance a culture
where we celebrate individuality,
knowing that ‘Together We Are More’.
“From launching inclusion training to
offering employee resource groups,
we are committed to advancing our
strategy to promote a diverse and
inclusive Glanbia.”
Siobhán Talbot
Group Managing Director
BUILDING A DIVERSE
AND INCLUSIVE CULTURE
Leadership
and Education
• Launched ‘Fostering Inclusion’ education module
for all employees.
• Senior leaders participated in unconscious bias training.
• Integrated leadership capability incorporating inclusive
leadership.
Talent
Acquisition
• Developed inclusive hiring training for managers to launch
in Q1 2022.
• Increased focus on ensuring diverse candidate slates for
open roles to improve diverse hiring. Our overall gender
hiring ratio for 2021 was 48% female and 52% male.
• Focused on female leadership, 27% of direct reports to
the Group operating executive team are women.
Communications
and Engagement
• Developed DE&I brand identity and resource hub
for employees.
• Launched a DE&I communications plan which included
celebrating global DE&I events such as International
Women’s Day and Pride.
• Initiated a values refresh project to ensure our values are
reflective of our inclusive culture.
Employee
Resource Groups
• Defined a global Employee Resource Group (ERG)
framework.
• Established the first global Group-wide ERG: Glanbia
NOW (Network of Women).
• Established several regional ERGs in North America
(LGBTQ+ Network; Multicultural Network) with the
intention of scaling these globally in 2022.
Commercial
and Reputation
• Established a global marketing communications
workstream to share knowledge and best practices.
• Rolled out inclusive marketing training.
• Developed a Casting, Influencer and Ambassador policy
within Glanbia Performance Nutrition.
• Optimum Nutrition partnered with Athlete Ally to promote
participation in sport regardless of sexual orientation
gender identity or gender expression.
A governance structure for DE&I was established during the year,
as part of the Group’s wider ESG governance framework, including
the appointment of the Group’s first Vice President of DE&I.
Our ambitious DE&I strategy continued to roll out under the following
strategic pillars, with cross functional teams from each area of the
business assigned to drive progress.
DE&I Strategic Pillars
leadership and
education
employee resource
groups
talent acquisition
leadership and
education
commercial and
reputation
communications +
engagement
employee resource
groups
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
23
CASE STUDY
FOSTERING
INCLUSION
TRAINING
Our first Group-wide employee education
programme on inclusion was launched during the
year. Designed to equip employees with the tools
and knowledge to live our vision of celebrating
individuality knowing that ‘Together We Are More’,
the learning outcomes of the programme include
a deeper understanding of Glanbia’s DE&I vision;
how to value our differences; what is unconscious
bias and how to reduce it; and steps to becoming
more inclusive in the workplace. We expect that all
Glanbia employees will have taken the course by
Leadership and Inclusive Hiring will be forthcoming
Global HR Transformation programme
Grow@Glanbia is our global HR transformation programme which aims
to create a future-ready, people-centred organisation to drive business
outcomes through increased agility, flexibility and coordination.
Through the transformation programme, we plan to digitise and
streamline our talent acquisition, retention and development
programmes. Employees will have access to improved tools and better
people-related data. HR services will be streamlined through a ‘centres
of excellence’ approach and our HR focus will be to provide more
strategic, value-add support, thereby enhancing productivity and
relevance to the business. The programme scope includes designing
and rolling out a new global HR operating model, setting up a HR service
delivery organisation and implementing best-in-class HR technology.
This multi-year programme began in March 2021 with the establishment
of a global project team. A phased programme go-live in the second half
of 2022 will roll out the new global HR operating model, establish the
service delivery model and the launch of additional SAP SuccessFactors
technology underpinned by a robust engagement and adoption strategy.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
24
High Higher Highest
Importance to Glanbia
High Higher Highest
Importance to Stakeholders
STRATEGIC REPORT
Our stakeholders
Our material topics
We support the United Nations (UN) sustainability strategy and have
linked our material topics to the UN Sustainable Development Goals
(SDGs). Analysis of the goals and targets to identify the most substantial
ones in line with our materiality assessment was informed by the
‘Practical Guide on Integrating the SDGs into Corporate Reporting’
issued by the UN Global Compact (UNGC) and GRI. Detailed materiality
assessment results can be found at Glanbia.com.
Our corporate ESG reporting
Glanbia considers high-quality corporate reporting on environmental,
social and governance (ESG) topics essential for open and transparent
communication with stakeholders. We disclose information on our
ESG performance in the 2021 Annual Report in compliance with the
• EU Non-Financial Reporting Directive (NFRD), page 60
• EU Taxonomy Regulation, pages 60 and 150-151
• Recommendations and recommended disclosures of the Task Force
on Climate-Related Financial Disclosures (TCFD), pages 61-66
Glanbia also takes part in external evaluation and benchmarking
initiatives such as Carbon Disclosure Project (CDP), Morgan Stanley
Capital International (MSCI) ESG Ratings (see page 56).
We welcome the intention of the European Union (EU) to issue EU
sustainability standards under the Corporate Sustainability Reporting
Directive in partnership with GRI, as well as the establishment of the
International Sustainability Standards Board (ISSB), under the auspices
of the International Financial Reporting Standards (IFRS) Foundation,
with an ambition to create a global sustainability reporting standard.
Addressing stakeholders’ need for completeness, reliability and
comparability of ESG information, Glanbia is committed to further
enhancing the corporate reporting process by:
• Renewing the materiality matrix following a double materiality
approach in FY 2022;
• Adopting GRI reporting standard under ‘Core’ option, including
external assurance;
• Taking an integrated reporting approach to ensure coherent
disclosure of financial and non-financial information; and
• Launching Digital ESG Reporting Hub at Glanbia.com to provide
more accessible and timely disclosures on material topics in the first
half of FY 2022.
1 4
11
23
7
14 17 20
2 5
12
13
8
15 18
21
22
9
16 19
63
10
1
Water
2
Responsible nutrition
3
Farmer development
4
Climate change
5
Packaging
6
Food quality and safety
7
Employee health, safety
andwellbeing
8
Animal welfare
9
Operational excellence
10
UN SDGs
11
Sustainable value chains
12
Fair pricing
13
Sustainable products
14
Energy
15
Waste
16
Resource efficiency
17
Protecting and restoring
nature
18
Sustainable business
19
Stakeholder engagement
20
Employee engagement
anddevelopment
21
Diversity, equity and inclusion
22
Community engagement
23
Sustainability reporting
To ensure our business remains connected to stakeholder needs and addresses significant
issues that impact society and the environment, Glanbia implements regular materiality
assessments. Our approach to materiality is dynamic and informed by the Global Reporting
Initiative (GRI) guidelines. Key stakeholders’ input contributes to the materiality matrix, which
guides our ESG strategy development and implementation, and informs our disclosures.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
25
Glanbia ensures a transparent and inclusive
approach to stakeholders, founded upon
continuous dialogue, timely corporate
disclosures, direct communication with key
stakeholder groups, and collected feedback
incorporation into strategic business priorities.
Our stakeholders mapped below are those with an interest or concern in
our purpose, strategy, and operations and who may be affected by them.
On this page you will find information on how Glanbia engages with key
stakeholder groups, the main issues raised in 2021 and engagement
outcomes. The details on how the Board consults stakeholders on
economic, environmental, and social issues are included in the
Governance section on pages 94 and 95.
Issues How we engage and care
Support
of SDGs
Read
more
Our people and communities
• Safety and support amid Covid-19
• Healthy lifestyles and diets
• Diverse and inclusive workplaces
• Career development
• Continued focus on safety plans and procedures
• Interacting with representative bodies and collecting feedback
• Focused talent assessment and development programmes
• Running diversity, equity and inclusion, wellbeing and community
initiatives in partnerships with non-profits and foodbanks
Pages
18-23
59
Our consumers and customers
• Stable supply of high-quality
products and ingredients
• Secure operations amid Covid-19
• Sustainable food with a lower
environmental footprint, produced
in a responsible way
• Our key account managers, R&D and brand teams work closely
with customers to meet their needs and our consumers’ preferences
• We monitor pandemic-related health guidelines in the regions we operate
to ensure safe, compliant and adaptive manufacturing and logistics
• We are constantly working on carbon footprint reduction and social
responsibility practices implementation in our operations and value chain
Pages
8-17
19-20
50-59
Our shareholders
• Values-led sustainable growth
• Effective governance and strategy
• Portfolio evolution through
organic growth, acquisitions
and divestments
• Emphasis on ESG integration
• Open and transparent communication during investor calls
and meetings, timely press releases and announcements
• Disclosing our financial and non-financial metrics consistently,
improving year-on-year ESG disclosures
Pages
8-17
94-95
26-27
Our value chain partners
• Fair pricing and long-term
partnerships
• Reducing the environmental impact
of agriculture and dairy production
• Procurement teams are continuously working with our suppliers to
ensure mutually beneficial cooperation, achievement of environmental
ambitions and joint innovation
• We are working with our milk suppliers under US Dairy Net Zero Initiative
(NZI) and US National Milk Producers Federation (NMPF) Farmers
Assuring Responsible Management (FARM) programmes to build a
foundation for a carbon footprint reduction plan, accelerate workforce
development, and enhance animal care
• We are in continuous dialogue with plastic recyclers to work on GPN
sustainable packaging targets
• We partner with EcoVadis platform to advance our Responsible
Procurement programme
Pages
56-58
Governments and NGOs
• Regulation across all business
activities
• Reliable and complete corporate
reporting
• Climate change and environment
preservation
• Responsible sourcing
• Human rights, diversity and
inclusion
• Engaging at industry level and through business associations relevant
to food production and agriculture
• Working with standard-setting bodies to define and achieve Pure Food
+ Pure Planet strategic goals, ensure food safety and quality, support
informed health and nutrition choices, transparent labeling
• Regular reporting on material ESG topics, including carbon footprint
and human rights
• Seeking feedback through our corporate dialogue processes
Pages
52-58
60-66
22, 24
94-95
our people
our consumers and
customers
our value chain
partners
our value chain
partners
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
26
STRATEGIC REPORT
Key performance indicators
Revenue
€4.2bn (2020: €3.8bn)
+13.1% constant currency
+9.8% reported currency
Strategic relevance
Revenue growth is a key indicator of how the
Group is succeeding in developing through
investment in organic growth and the ongoing
acquisition programme.
In addition to overall revenue for the Group there
are a number of key components of Group
revenue (price, volume and acquisition) which
are actively monitored to provide greater insight
into performance.
Performance
In 2021, revenue was €4.2 billion (2020:
€3.8 billion), an increase of 9.8% on a
reported basis and up 13.1% constant
currency (cc) on 2020. Revenue growth
was driven by strong volume growth in
GPN and GN of 16.1%, and a further
contribution from acquisitions of 1.0%,
offset by net pricing declines of 4.0%
driven by US cheese market dynamics.
Revenue volume growth
1
+16.1% (2020: -2.0%)
GPN +13.6% (2020: -10.9%)
Like-for-Like branded revenue volume growth
NS +13.6% (2020: +2.4%)
Like-for-Like revenue volume growth
Strategic relevance
Revenue volume growth is an important metric for
the Group as it represents the underlying growth
in sales to customers excluding any impact of
price. Volume is further broken down by the
Business Units to understand the brand growth
within GPN and the components of volume
growth in Nutritional Solutions within GN.
Performance
Overall volumes increased 16.1% in the
year. The key volume growth metrics were
a LFL branded volume growth in GPN of
13.6% and volume growth within the NS
and US Cheese businesses of the GN
segment of 13.6% and 19.8% respectively.
Volume growth was strong across all
markets of the Group.
EBITA
2
€270.6m (2020: €209.6m)
+34.0% constant currency
+29.1% reported currency
Strategic relevance
Earnings Before Interest, Tax and Amortisation
(EBITA), pre-exceptional items, is the key
performance measure of the wholly-owned
segments within the Group. The exclusion of
amortisation aids comparability between our
segments.
EBITA margin is a key metric to ensure that
growth is being driven in a responsible manner
by maintaining margins within an acceptable
range. The strategy for the Group is to focus
on higher growth, higher margin products within
GPN and GN.
Performance
EBITA was €270.6 million in 2021, an
increase of 29.1% reported and up 34.0%
on a constant currency (cc) basis. GPN’s
EBITA increased by 65.5% versus 2020,
while EBITA margins were up 320bps (cc)
to 11.1%. GN experienced EBITA growth of
9.8% (cc) with EBITA margins down 10bps
(cc and reported) versus 2020 to 4.3%.
Profit after Tax
€167.4m (2020: €143.8m)
Continuing operations €141.0m
Discontinued operations €26.4m
Strategic relevance
Profit after tax is the measure of the profit
generated by the Group for the year, post tax
and post exceptional items.
Performance
Profit after tax for 2021 was €167.4 million
compared to €143.8 million in 2020, an
increase of €23.6 million on prior year.
This comprises the profit generated from
continuing operations of €141.0 million and
discontinued operations of €26.4 million,
with discontinued operations representing
the contribution of Glanbia Ireland which
was classified as a ‘held-for-sale’ asset
on 17 December 2021. The increase in
profit after tax was driven by increased
profitability in the wholly-owned business.
Basic Earnings Per Share –
continuing operations
48.47c (2020: 40.93c)
+23.3% constant currency
+18.4% reported currency
Strategic relevance
Basic Earnings Per Share (EPS) is an important
IFRS reporting metric and relates to EPS of the
Group post tax and post exceptional items.
Performance
Basic EPS – continuing operations was
48.47 cent, an increase of 18.4% on a
reported basis and an increase of 23.3%
constant currency, driven by the increased
profitability across the Group. Discontinued
operations have been excluded on the
basis that they are now less relevant as
a benchmark for the ongoing business
of the Group.
1. Performance condition of Glanbia’s Annual Incentive Scheme.
2. Both EBITA and OCF are presented on a pre-exceptional basis.
Key performance indicators
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
27
NFM Non-financial Metric
Adjusted Earnings Per Share –
continuing operations
1,3
77.84c (2020: 65.21c)
+23.9% constant currency
+19.4% reported currency
Strategic relevance
Adjusted Earnings Per Share (EPS) is an
important measure of the profitability of the
Group as it represents the underlying profit
per equity share in issue.
Performance
Adjusted EPS from continuing operations
was 77.84 cent, up 19.4% on a reported
basis and an increase of 23.9% on a
constant currency basis, primarily driven
by increased profitability of GPN. GPN
performance improvement was as a
result of strong revenue momentum which
improved operating leverage and the benefit
of ongoing transformation initiatives.
Return on Capital Employed –
continuing operations
3
10.0% (2020: 8.8%)
Strategic relevance
Return on Capital Employed (ROCE) measures
the efficiency of the Group’s organic and
acquisition investment programme as well
as the utilisation of its assets.
Performance
ROCE from continuing operations increased
by 120 basis points to 10.0% (2020: 8.8%).
This increase was primarily due to improved
profitability in GPN as a result of improved
operating leverage and benefits from the
successful delivery of the GPN
transformation programme.
OCF conversion
1,2
100.2% (2020: 122.4%)
Strategic relevance
Operating Cash Flow (OCF) measures the cash
generated from operations before interest and
tax payments and before strategic capital
expenditure. OCF conversion is OCF as a
percentage of EBITDA (earnings before interest,
tax, depreciation and amortisation) and is a
measure of the ability of the Group to convert
trading profits to cash, which is then available for
strategic investments and dividend payments.
Performance
OCF conversion was 100.2% in 2021
compared to a target conversion of 80%
and conversion in 2020 of 122.4%. The OCF
conversion rate remains very strong and
has reduced since prior year as a result
of increased investment in working capital
to support growth across the Group.
Carbon emissions
4
-8%
Objective
Decarbonise our operations
and dairy supply chain in line with
the global imperative to keep
temperature increases well below
2 degrees celsius and future proof
our organisation and our supply chain.
NFM
Strategic relevance
Climate change is impacting all of society. At
Glanbia we are committed to doing our part by
focusing on our most material areas. Our Pure
Food + Pure Planet strategy prioritises energy
efficiency and renewable electricity procurement
for our operations.
Performance
To date we reduced carbon emissions for
our operations by 8% from a 2018 baseline.
The reduction is consistent with the
trajectory of our Science Based Targets
initiative (SBTi) validated target of a 31%
reduction in operations emissions by 2030.
We have conducted energy audits and
mapped renewable electricity opportunities
at our major sites to inform the roadmap
to achieving our ambition.
Health and safety
Objective
Maintain the highest possible global
safety standards using sites with
no Lost Time Case (LTC) as a key
benchmark.
NFM
Strategic relevance
The health and safety of our employees is
inherent in our Glanbia values and is reflected
in our organisational goal of ‘Zero Harm’.
Proportion of sites meeting at least industry
standard safety performance, based on NAIC
benchmark (North American Industry Codes),
and reduced severity of injuries, by progression
of the Lost Time Incident Rate (LTIR) are
established global measures of safety
performance. Glanbia aspires to zero LTC
and all sites maintaining a minimum of industry
benchmark performance for Loss Time injuries.
Performance
In 2021, 59% of reporting locations had zero
LTC. The Group 2021 global LTIR showed
significant year on year improvement at
0.76, a 23% improvement over 2020.
In comparison to industry benchmarks,
all reporting non-manufacturing locations
are at or above their industry peers for
LTIR while 78% of the Group reporting
manufacturing locations met or exceed
industry benchmarks. Improvement action
plans are in place for all locations which do
not meet their relevant industry benchmark.
Employee engagement
score
70%
NFM
Strategic relevance
Employee engagement is a key enabler of
performance. At Glanbia we acknowledge that
people who are positively engaged, motivated
and supported perform to the best of their ability,
find a greater sense of meaning in what they do
and contribute positively to Glanbia’s success.
Performance
Participation levels in the survey were down
due to the impact of the pandemic on people’s
ability to complete the digital survey across
our operations. While scores increased in
four focus areas, the impact of the challenges
presented by Covid-19 was reflected in a
slight decline in the engagement score.
3. Performance condition of Glanbia’s Long-Term Incentive Plan.
4. Reduction versus 2018 baseline year. MWC is not included within this measure, as this site only become operational in 2021, and is not factored into the baseline value.
Refer to page 54 which outlines Glanbia’s operational control GHG emissions by scopes 1 and 2, and outlines MWC emissions impact in 2021.
NFM Non-financial Metric
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
28
STRATEGIC REPORT
We believe in healthier lifestyles
We are proud to be a global leader in sports and lifestyle nutrition.
Our commitment to quality allows our brands to play a unique role
delivering better nutrition for our consumers and customers,
and thereby enabling them to live happier, healthier lives.
THE POWER
OF OUR
BRANDS
WE BELIEVE IN
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
29
New think! Keto 10g protein bars
Innovation drives us forward to create new
products, tastes and experiences for our
consumers. In 2021, key innovation highlights
included the ongoing roll out of the Optimum
Nutrition
™
AMIN.O. Energy Sparkling
ready-to-drink range (see page 13 for more
detail) and the launch of two additional think!
Keto protein bars.
The two new flavours, Chocolate Mousse Pie
and Chocolate Peanut Butter Cookie Dough,
come on the heels of the successful launch
of the brand’s Keto bars in 2020 which quickly
became the #1 best-selling Keto protein bar
in the category. Both of the new flavours
provide the delicious taste and high-quality
ingredients people expect from think! while
offering 10 grams of protein, two grams or
less of sugar, and are 180 calories or less.
think! Keto protein bar is the
#1 selling Keto protein bar in
the Wellness Bar category with
a +180% consumption growth in
2021, driven by new distribution
and +64% increase in velocity.*
* Source: SPINS, Wellness Bar Sales
in Total US - MULO + Convenience
L52W, 12.26.2021.
World-leading brands
From athletes to remote workers, people
around the world want to eat well and live
healthier, more active lives. Our award-
winning performance and lifestyle brands
inspire our customers to achieve their
performance and healthy lifestyle goals.
Whether you want to build muscle mass,
maximise athletic performance, lead a more
active lifestyle, manage or lose weight, we
have a brand to help.
We are taking our brands to new
consumers, new markets and new channels
worldwide. We’re looking beyond our core
sports nutrition brands, to new products
and formats for active lifestyle consumers.
Everyday diets can benefit from targeted
supplements and healthier snacks too.
Many of our products are leaders in the
lifestyle nutrition category, helping people to
get essential nutrients in convenient formats
or lose weight.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
30
STRATEGIC REPORT
Operations review
Glanbia Performance Nutrition
DELIVERING ON
TRANSFORMATION
WITH STRONG
GROWTH AND
STRATEGIC
PROGRESS
Hugh McGuire
CEO, Glanbia Performance Nutrition
Financial Performance
GPN revenue increased by 17.1% in FY 2021
versus prior year. This was driven by volume
growth of 11.4% and price increase of 4.5%
with the LevlUp acquisition, completed in May
2021, delivering 1.2% growth. Volumes grew
in all markets as strong in-market execution
was aligned with strong demand. Demand
was driven both by a post Covid-19 market
inventory rebuild in the early part of the year
and strong underlying consumption trends
throughout the year. The price increase for
the full year was driven by price increases
implemented in the second half of 2020
and the third quarter of 2021. Like-for-like
branded revenues increased by 18.3% in the
financial year.
FY 2021 GPN EBITA increased by 65.5%
versus prior year to €145.1 million. This was
driven by strong revenue growth and
improved margin. The margin increase of 320
basis points was driven by increased price,
improved operating leverage and the
realisation of benefits from the GPN
transformation programme. Input costs were
a benefit to margin in the first half and as
expected were a headwind to second half
margins.
In 2022, GPN will continue to focus on the
long-term strength of its brands and will invest
behind these brands as appropriate. Current
consumer trends in key categories remain
positive and price elasticity will continue to be
closely monitored as the year progresses.
GPN transformation programme
The delivery of planned revenue and margin
enhancing initiatives under the GPN
transformation programme continued during
2021 and this programme provides a
structural underpin to GPN margins when
moving through the current high inflationary
cycle.
Key deliverables of the programme in 2021
were the delivery of revenue growth
opportunities including pricing actions across
all regions, the reshaping of the operating
model to drive brand growth in the Americas
and the execution of key efficiency projects
including the consolidation of the supply chain
footprint in North America.
Over the term of the programme GPN’s SKU’s
have been reduced by over 30%, private label
manufacturing has been largely exited,
route-to-market in key territories has been
improved and the GPN organisation has been
simplified and aligned behind growth
opportunities.
GPN Performance
Overview
€’m FY 2021 FY 2020 Change
Constant
Currency
Change
Revenue 1,303.1 1,138.0 +14.5% +17.1%
EBITA 145.1 91.2 +59.1% +65.5%
EBITA margin 11.1% 8.0% +310bps +320bps
Commentary on percentage movements is on a constant currency basis throughout.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
31
Revenue
€1,303.1m
2020: €1,138.0m
EBITA (pre-exceptional)
€145.1m
2020: €91.2m
EBITA margin
11.1%
2020: 8.0%
PERFORMANCE LIFESTYLE
Americas
GPN Americas like-for-like branded revenues
increased by 13.7% in FY 2021 compared to
prior year. This was driven by volume growth
in all channels, the impact of pricing actions
as well as ongoing strong revenue growth
management. The Optimum Nutrition (ON)
brand had a strong performance in the
period. ON consumption¹ growth in North
America in the 52 weeks to 26 December
2021 was 18.8%.
ON has benefitted from its leading position in
its category, ongoing marketing investment
and broad channel positioning. The SlimFast
brand performance in the year reflected
headwinds in the diet category. SlimFast
consumption
1
in North America, in the 52
weeks to 26 December 2021 declined by
4.3%. The think! and Amazing Grass brands
delivered strong growth in the period due to
consumer focus on healthy snacking and
natural immunity.
International
GPN International, which includes direct-to-
consumer (DTC), grew like-for-like branded
revenues by 29.6% in FY 2021 compared to
prior year. This was driven by volume growth
in all regional markets as strong demand was
driven both by a post Covid-19 market
inventory rebuild in the early part of the year
and strong underlying consumption trends
throughout the year. Pricing action was also
taken across all regions in response to
inflationary trends.
1. North America measured channels include Online,
FDMC (Food, Drug, Mass, Club) and Specialty
channels. Data compiled from published external
sources and Glanbia estimates.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
32
STRATEGIC REPORT
Operations review continued
Glanbia Performance Nutrition continued
CASE STUDY
PROVEN PLATFORM
marketing investment focused on core brands and product
lines, and continued effort on selective, strategic innovation.
platform, which featured the ‘More Than Your Body’ advertising
which was seen across paid, owned and earned media
roster, including many Olympic athletes competing in the
GPN growth strategy
GROWING OUR BRANDS
Invest in marketing and brand building.
These brands delivered 71% of GPN branded revenues in 2021.
SHARPER GEOGRAPHIC FOCUS
Leverage our scale in the US to drive growth.
Prioritise key Rest of World markets.
OMNICHANNEL CAPABILITY
Expand channel exposure.
Accelerate our investment in global eCommerce.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
33
Delivering on our strategy
Having refreshed our assessment of relevant consumer and category trends, our strategy remains
fundamentally unchanged, with three major areas of focus supported by enhanced execution
capabilities delivered by our transformation programme.
• Three areas of strategic focus:
– Brand prioritisation: Optimum Nutrition and SlimFast are our flagship brands in the
sports nutrition and lifestyle categories respectively. We aim to maximise the potential
of these brands globally, through increased focus and investment.
– Geographic prioritisation: While our products are available in over 90 countries
worldwide, we prioritise a number of key markets where we see the highest potential. We
also prioritise investment in people and brands to these higher growth markets and
implement effective low-cost tactics to maintain our presence in others.
– Omnichannel capability: The need to play effectively in all channels was of critical
importance pre-Covid-19 and has become even more pressing as Covid-19 disrupted
markets and channels. We continue to build out our omnichannel capabilities by
restructuring our commercial teams and establishing new ways of working. We have
established new centres of excellence to elevate our capabilities in insights and analytics,
digital marketing, category management, revenue growth management and eCommerce
expertise. Our ability to effectively address the eCommerce channel has been built over the
last number of years and includes a number of components:
– In 2021 we expanded our direct-to-consumer efforts across the EU and ASPAC with
increased market launches of the Body&Fit brand and the acquisition of LevlUp in
Germany.
– We relaunched a number of Optimum Nutrition content and eCommerce sites across
the US and in key international markets.
– We enhanced our ability to effectively support our marketplace and bodyandfit.com
customers to deliver best-in-class consumer journeys and maximise our brands’
penetration.
• Transformation:
– Our transformation programme, initiated in late 2019, has delivered substantial performance
benefits to our business through improvements in efficiency and the acceleration of various
growth initiatives.
– Efficiency: We have completed hundreds of initiatives, with many more underway,
to address inefficiencies across the business. We have:
– Refined and consolidated our physical footprint;
– Dramatically simplified operations through aggressive SKU rationalisation; and
– Adopted a more aggressive approach in delivering synergies from past acquisitions,
centralising functional teams, consolidating supply chain partners and bringing more
manufacturing in-house.
– Growth: We have accelerated several important growth initiatives and maximised
their potential value. For example:
– Established new routes-to-market in instances where current arrangements could
not effectively support future growth;
– Commenced local manufacturing for key SKUs to improve competitiveness;
– Accelerated our distribution in Food, Drug, Mass and eCommerce channels; and
– Increased our ability to measure return on investment through better analytics.
– We expect that our new ways of working, adopted across the business over the course
of the transformation programme, will deliver ongoing benefits long after its completion.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
34
STRATEGIC REPORT
Science and scientific insights are crucial to enhancing our knowledge
and understanding of how food and nutrition can benefit our health and
wellbeing. We are the architects of world-leading sports nutrition and
best-in-class functional and nutritional ingredients. With innovation and
collaboration centres in Ireland, the US, Canada, Germany, Italy,
Singapore and China, we innovate, develop and validate our brands and
ingredients so they can enrich and delight the lives of our customers
and consumers every day.
SCIENCELED
INNOVATION
WE BELIEVE IN
We believe in healthier lifestyles
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
35
Our customers’ partner of choice
In the rapidly moving sports nutrition
segment, our customers often look to our
research and development teams to help
them formulate complete solutions that they
will take into production for their consumers,
requiring us to be a close partner to their
product development teams. In 2021, a
major sports nutrition brand sought our
expertise and advice in formulating a new
ready-to-drink beverage with several
different flavour varieties. Working in
partnership with the customer, we
developed a number of formulations which
included Glanbia flavours and Glanbia
Premix for each of the flavour varieties. The
beverages required a great deal of expertise
to balance the desired flavour, nutrition and
functionality. Working to our customer’s
ambitious speed-to-market timelines, we
enabled our customer to successfully
launch its new and exciting ready-to-drink
beverage on the market within the tight
timeframe.
Best-in-class nutritional solutions
We partner with companies to improve the
functionality and quality of their nutritional
products, and help them develop the
innovations they need to keep growing their
business. We offer expertise in food science
and supply chains, deep knowledge of our
customers and their categories, and a
dedication to the art and science of nutrition.
It’s what creates our recipe for superior
partnerships and mutual performance – a
recipe that no one else offers. Our deep
understanding of consumers, category trends
and end-to-end product development helps
our customers to consistently bring winning
products to market. Our ingredients and
solutions are used in a wide range of market
segments, such as dairy products, bakery and
confectionary, beverages, infant nutrition and
sports nutrition.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
36
STRATEGIC REPORT
Operations review continued
Glanbia Nutritionals
Nutritional Solutions Revenue
€877.4m
2020: €746.8m
US Cheese Revenue
€2,016.4m
2020: €1,938.3m
Financial Performance
Glanbia Nutritionals (GN) recorded a strong
performance in FY 2021 with revenues up
11.4% (reported 7.8%) on prior year. This was
driven by volume increases of 18.1%, offset by
a pricing decline of 7.7% and acquisitions
adding 1.0% growth. Volume increase was
driven by strong demand for the innovative
ingredient solutions in the GN Nutritional
Solutions (GN NS) portfolio and by capacity
expansion in the Michigan, US joint venture,
which was commissioned in the first half of
the year. Price decline was driven by US
Cheese due to lower average market prices in
the period versus a strong prior year
comparator. GN EBITA increased in FY 2021
by 9.8% as a result of strong revenue growth
which offset a margin decline of 10 basis
points.
Nutritional Solutions
GN NS is a leading provider of dairy and plant
based protein solutions as well as
micronutrients and has added further
capability to these core platforms via
acquisitions. This strategy has further
extended GN NS’s capability in the areas of
flavours, healthy snacking and bioactive
ingredients.
GN NS revenues increased in FY 2021 by
20.8% versus prior year (reported 17.5%). This
was driven by a 13.6% increase in volume, a
3.7% increase in price and the Foodarom and
PacMoore acquisitions delivering 3.5%
growth. Volume growth was broadly based
across the portfolio with strong growth in
STRONG
PERFORMANCE
UNDERPINNED
BY A CLEAR
STRATEGY
Brian Phelan
CEO Glanbia Nutritionals
GN divisional performance
FY 2021 FY 2020
€’m Revenue EBITA Margin % Revenue EBITA Margin %
Nutritional Solutions 877.4 101.1 11.5% 746.8 90.5 12.1%
US Cheese 2,016.4 24.4 1.2% 1,938.3 27.9 1.4%
Total GN 2,893.8 125.5 4.3% 2,685.1 118.4 4.4%
Commentary on percentage movements is on a constant currency basis throughout.
Nutritional Solutions
€’m FY 2021 FY 2020 Change
Constant
Currency
Change
Revenue 877.4 746.8 +17. 5% +20.8%
EBITA 101.1 90.5 +11.7% +15.7%
EBITA margin 11.5% 12.1% -60bps -50bps
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
37
We established our leadership positions in protein and micro-nutrient premix solutions by building close relationships
with key global and regional customers. We participate in attractive, growing end-markets. Continuing to nurture
these relationships and build new customer relationships is fundamental to our continued growth.
Establishing these relationships relied on a core set of capabilities that we are
focusedon bringing to our customers on a global basis:
The future
To deliver against our ambitions, we will continue to pursue selective acquisitions aligned with our strategic priorities.
In addition to driving organic growth with our customers,
in the past few years we have acquired:
We will enable our growth
by investing in our talent
and innovation capabilities.
Meeting our customers’
supply chain needs
New capabilities in healthy snacking
We will accelerate growth in our
key growth platforms including
healthy snacking and flavours.
By proactively innovating new
solutions as well as formulating
specific solutions that our
customers are looking for across
a range of product formats
Flavours
We will continue to build our
leadership positions in protein and
premix solutions.
To understand where our
customers’ needs and their end
consumers’ needs are going
Premix
CONTINUE
TO BUILD
DELIVERING
INSIGHTS
ACCELERATE
OUR GROWTH
MEETING
THOSE NEEDS
GROWTH
ENABLERS
ENSURING
QUALITY INGREDIENTS
NS growth strategy
In our Nutritional Solutions business segment, we have an ambitious
growth strategy consisting of three primary pillars
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
38
STRATEGIC REPORT
Operations review continued
Glanbia Nutritionals continued
CASE STUDY
PREMIX
portfolio, delivering strong growth, and we continue to have ambitious
growth targets for this business area. Our growth in this business is
underpinned by close partnerships with several key global and regional
network, access to quality raw materials and reliable solution blending
capabilities.
business, which bolstered our go-to-market the capabilities with our
customers. The Watson acquisition also gave us new capabilities in the
this as a key growth platform and we have identified several key market
segments in which to focus our growth efforts. As we grow our business
here, we are committed to continue innovating and further investing in
Market
#1
Producer of US whey protein isolate
premix, micro-nutrients and protein-based
healthy snacking reflecting good end-market
demand across a broad sectoral reach. GN
NS continued to leverage its supply chain
expertise delivering a strong operating
performance. Price increase primarily related
to increased dairy ingredient market pricing
year-on-year.
Consumer trends related to immunity,
functional nutrition and healthy snacking have
been a powerful driver of the business and
GN NS has a unique set of solutions to
partner with its customers in these areas. GN
NS also maintained supply chain performance
throughout 2021 to deliver strong volume
growth while navigating significant volatility.
GN NS EBITA in FY 2021 was €101.1 million,
15.7% higher than prior year due to strong
revenue growth. Margins declined by 50 basis
points versus prior year to 11.5% driven by
increased input costs in the period.
Global Market Trends
At GN we are well positioned to capitalise on
future market trends across our key end
markets in the nutrition space so that we can
continue delivering against our growth
ambitions. While Covid-19 has changed many
aspects of consumer behaviour, one mega
trend that has been reinforced over the past
few years is the focus of consumers on their
health and wellness. Our broad portfolio of
nutritional solutions and our ability to partner
with and innovate for our customers allows us
to continue to help them meet their
consumers’ evolving needs. Specifically, we
see four major trends that will continue to
shape the nutrition, health and wellness
landscape over the coming years:
Convenience & Snacking
While the Covid-19 pandemic has changed
the nature of what consumers find convenient
due to changed commuting habits,
consumers continue to seek convenient and
accessible snacking formats even while many
of them work from home. As a leader in
healthy snacking solutions, we continue to
work with our customers to create more
convenient solutions, leveraging our strength
in the bar category into other snacking
formats.
Personalisation
Consumers seek food and beverages that
meet their individual needs and our customers
are evolving their offerings to tailor their
products toward various consumer groups.
The breadth of our solution portfolio and the
variety of formats we can develop for
ourcustomers (ranging from bars to
supplements to beverages and beyond),
means we are well positioned to benefit from
this growing personalisation trend.
Healthy body, Healthy mind
More and more, consumers are looking for
nutritious solutions that provide specific health
benefits ranging across both physical and
mental health. From energy and gut health to
cognition, mood and sleep and everything in
between – consumers want to meet those
needs through their food, beverage and
supplement consumption. Following the
pandemic, we have seen particularly high
growth in immunity support requirements as
well as interest in energy and focus needs. We
continue to stay ahead of these trends and offer
a full portfolio of ingredients (in particular across
our premix and bioactives portfolios) that help
provide solutions to target specific health
benefits.
Sustainability
Consumers are increasingly factoring
sustainability into their purchasing decisions,
from wanting more sustainable packaging
formats to better understanding the
environmental impact of what they are
consuming. Our customers are on their own
journeys to meet thoseconsumer needs and
we at GN will ensure that sustainability
remains acore part of our strategy.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
39
US CHEESE 2021 PERFORMANCE
US Cheese
€’m FY 2021 FY 2020 Change
Constant
Currency
Change
Revenue 2,016.4 1,938.3 +4.0% +7.7%
EBITA 24.4 27. 9 -12.5% -9.3%
EBITA margin 1.2% 1.4% -20bps -20bps
Financial Performance
Cheese innovation
CASE STUDY
HEALTHY SNACKING
leveraging our formulation and ingredient innovation capabilities and continuously developing new customer relationships
extend our healthy snacking business into several other formats as customers increasingly look for protein in new formats
and applications. As the healthy snacking space evolves further, we are investing to stay aligned with the growth areas in the
both innovate further in the healthy snacking category and expand into additional formats.
Market
#1
Producer of American-style
cheddar cheese
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
40
STRATEGIC REPORT
Glanbia Cheese UK and EU MWC-Southwest Holdings
JV large-scale manufacturers of
mozzarella cheese
US producers of
American-style cheddar cheese
and whey ingredients
United Kingdom and Ireland
New Mexico, US
(Southwest Cheese) and Michigan,
US (MWC)
Joint Ventures
€’m FY2021 FY 2020 Change
Share of profit after tax (pre-
exceptional) – continuing operations* 19.2 37.7 (49.1%)
Share of profit after tax (pre-
exceptional)* – discontinued
operations** 25.7 23.9 7.5%
Total 44.9 61.6 (27.1%)
* Includes Glanbia’s share of profits from the MWC-Southwest Holdings, and Glanbia
Cheese UK, Glanbia Cheese EU joint ventures.
** Glanbia Ireland
Glanbia’s principal joint ventures (continuing operations) include
MWC-Southwest Holdings, Glanbia Cheese UK and Glanbia Cheese
EU. Glanbia uses the equity method of accounting for its joint ventures
and includes its share of joint venture profit after tax in the adjusted
earnings per share calculation.
The Group’s share of joint ventures’ profit after tax after tax pre-
exceptionals (continuing operations) decreased by €18.5 million to €19.2
million in FY 2021. This reduction was driven by an exceptionally strong
market-driven, prior year comparative in the US joint venture as well as
commissioning costs of new joint venture projects.
Glanbia Cheese UK and EU
Glanbia Cheese UK and EU are both large-scale manufacturer and
marketers of mozzarella cheese supplying the food service industry.
Glanbia Cheese EU was established in 2018, as a 50:50 joint venture
between Glanbia plc and Leprino Foods Company. Construction of the
new Glanbia Cheese EU joint venture plant in Portlaoise, Ireland was
completed in 2021.
MWC-Southwest Holdings
The new large-scale MWC-Southwest Holdings JV plant in Michigan
completed commissioning in line with expectation in June 2021 and the
plant has operated well in the year. With this increased production it
consolidates the Group’s leading position in the US American-style
cheddar cheese and value-add whey markets. On a full year basis this
plant will increase Glanbia’s US Cheese production capacity by over
30%.
Glanbia Ireland
In November 2021, the Group announced its intention to sell its
remaining interest in Glanbia Ireland DAC (Glanbia Ireland) to Glanbia
Co-operative Society Limited (the ‘Society’). All shareholder approvals
have now been obtained with completion of this transaction anticipated
in H1 2022, subject to standard regulatory clearances. The proposed
transaction was approved by members of the Society on 17 December
2021, following which this joint venture investment is considered as an
investment ‘held-for-sale’, with equity accounting ceasing to apply from
that date. In addition, as Glanbia Ireland represents a significant
component and separately reported segment of the Group, the Group’s
share of Glanbia Ireland’s results have been presented separately in the
financial statements as discontinued operations, with a corresponding
restatement of comparative figures to show the discontinued operations
separately from continuing operations. The Group’s share of joint
venture profits from discontinued operations increased by €1.8 million to
€25.7 million (2020: €23.9 million) in the year. The joint venture delivered
a strong operational performance with year-on-year volume and price
growth as a result of favourable market dynamics.
Joint Venture models
Key Activities
Location:
Operations review continued
Joint Ventures
BUILDING ON OUR CORE
STRATEGIC PARTNERSHIPS
Joint Venture
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
41
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
42
STRATEGIC REPORT
STRONG
CAPITAL
MANAGEMENT
We believe in healthier lifestyles
We are focused on investing in the long-term growth and development
of our business, while creating shared value for all our stakeholders. We
take a disciplined approach to capital allocation, with prudent financial
policies designed to strike the right balance between growth, returns
and flexible access to financial markets.
WE BELIEVE IN
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
43
27.3
%
22.2%
26.2%
24.3
%
Returning value to shareholders
We have demonstrated our strong
commitment to maintaining a high level of
reinvestment into the business, while at the
same time continually increasing capital
returns to shareholders. We do this by
increasing our dividend year-after-year.
Based on our 2021 performance, the Board
of Directors has recommended a dividend
increase of 10% which will be reflected in
our final dividend to be paid in May 2022. As
a result of our strong free cash flow
generation and business disposals, we
continued to return excess cash to
shareholders through share buybacks.
Share buyback programmes over the past
two years have amounted to €150 million
We launched a €50 million programme in
November 2020 which concluded in 2021,
another programme of €50 million which
commenced and concluded in 2021, and a
third €50 million programme which
commenced in December 2021 and
continued into 2022.
Investing in growth drivers
Our growth and resilience is driven by the
agility of our business and the strength of
our diversified portfolio across geographies,
product and ingredient categories, and
channels.
Investing for the long-term takes the form of
research and development investment,
brand support and capital expenditure to
support organic profitable growth. We
allocate these resources discerningly,
focusing on projects with the highest
potential to create economic profit.
We continuously fuel our growth agenda
through disciplined cost management,
improving operational efficiency at all levels
of the business. We will pursue our strategic
objectives while delivering strong cash
conversion, enabling us to invest in future
growth opportunities as they arise.
Mergers and acquisitions €95.0m
Share buyback €91.3m
FY2021 dividend €84.5m
Ca p e x € 7 7. 5m
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
44
STRATEGIC REPORT
Group Finance Director’s review
Adjusted EPS – continuing operations
77.84 cent
(2020: 65.21 cent)
+23.9% constant currency
+19.4% reported currency
EBITA (pre-exceptional)
€270.6m
(2020: €209.6m)
+34.0% constant currency
+29.1% reported currency
OCF conversion
100.2%
(2020: 122.4%)
OCF as % of EBITDA
ROCE – continuing operations
10.0%
(2020: 8.8%)
+120bps
Dividend payout ratio
33.6%
(2020: 36.1%)
Dividend per share as a %
of adjusted EPS (continuing
and discontinued)
Basic EPS – continuing operations
48.47 cent
(2020: 40.93 cent)
+23.3% constant currency
+18.4% reported currency
Profit After Tax – continuing operations
€141.0m
(2020: €120.8m)
+21.6% constant currency
+16.7% reported currency
A STRONG
PERFORMANCE
DELIVERED THROUGH
AN EFFECTIVE
EXECUTION OF
OUR STRATEGY
Mark Garvey
Group Finance Director
2021 delivered strong growth across the Group,
achieving above the upper end of market guidance
and progressing a number of strategic initiatives.
The Group reported adjusted EPS of 87.15 cent
(continuing operations of 77.84 cent), an increase
of 22.1% constant currency (+23.9% continuing
operations) on prior year. Basic EPS from
continuing operations of 48.47 cent was achieved
(2020: 40.93 cent), an increase of 23.3% constant
currency (+18.4% reported). Strong performances
in Glanbia Performance Nutrition (GPN) and Glanbia
Nutritionals (GN) segments, combined with the
dedication of all Glanbia stakeholders, enabled
the Group to successfully navigate the ongoing
challenges of the global Covid-19 pandemic and
deliver on the growth agenda.
GPN’s revenues of €1.3 billion reflected an
increase of 17.1% constant currency (reported
14.5%), comprising organic volume growth of
11.4%, with positive pricing contributing 4.5% and
acquisitions adding 1.2% since prior year. Revenue
growth was experienced across all GPN businesses,
but was particularly strong in the US Sports Nutrition
market which experienced strong double-digit
like-for-like revenue growth in 2021. GPN delivered
EBITA of €145.1 million, representing growth of
65.5% constant currency in the year as a result
of good operating leverage, benefits from
transformation savings and favourable input costs
in the first half of 2021. Margin levels increased
by 310 basis points to 11.1% in 2021.
Revenues in GN comprising Nutritional Solutions
(NS) and US Cheese businesses remained strong in
the year, up 11.4% constant currency (reported 7.8%)
to €2.9 billion, with organic volumes up 18.1%, offset
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
45
by pricing headwinds of 7.7% (primarily cheese related) and acquisitions
contributing a further 1.0% growth. NS organic volumes were up
13.6% with good double-digit growth in both Premix and Dairy.
US Cheese volumes increased by 19.8%, benefiting from the successful
commissioning of the new joint venture plant in Michigan. GN EBITA
grew 9.8% constant currency, to €125.5 million while margins contracted
by 10 basis points to 4.3% (NS 11.5% and US Cheese 1.2% margin).
In November 2021, the proposed sale of the Group’s remaining
40% interest in Glanbia Ireland to Glanbia Co-operative Society was
announced. Following the subsequent approval by the Group’s
Shareholders in February 2022, the transaction is expected to conclude
in H1 2022, successfully completing a long-term strategic goal of the
Group and enabling a renewed focus on growth opportunities in the
health, wellbeing and nutrition space. The proceeds received on
completion of this transaction will be re-invested to drive further growth
across the Group, as well as a return of capital to shareholders.
The ongoing focus on efficient operations continued, with the
investment phase of GPN’s multi-year transformation programme
completed during 2021. Significant progress was also made on
the restructuring of legacy defined benefit pension schemes across
the UK and Ireland, further de-risking the Group’s balance sheet.
Acquisition activity saw the addition of LevlUp (60%), a European
gaming nutrition brand, and PacMoore (100%), a US based food
ingredients’ company, to the Group’s portfolio in May 2021 and
September 2021 respectively, further adding to the capacity and
capability of the Group. The new US Cheese joint venture plant in
Michigan, US was fully commissioned in H1 2021 contributing to
the strong performance of the Group over the remainder of 2021.
Operating cash flow (OCF) was strong at €334.2 million converting
over 100% of EBITDA into OCF, against a target of 80% conversion.
Free cash flow (FCF) for the year was €303.9 million.
Return on Capital Employed (ROCE) from continuing operations
increased by 120 basis points to 10.0% (2020: 8.8%), as a result of the
improved profitability in GPN with stronger operating leverage and the
benefit of transformation initiatives.
Return of capital to shareholders remains a key priority. Strong cash
flows in the business have facilitated the return of capital via share
buyback programmes. During 2021, the prior year share buyback
programme of €50 million concluded, another programme of €50 million
commenced and concluded, and a further programme of €50 million
commenced, resulting in total capital allocations to shareholders via
these programmes of €91.3 million in 2021 with ongoing programmes
due to conclude in early 2022. In addition and as previously announced,
further planned share buybacks of €31.0 million took place in January
2022, following share placements by Glanbia Co-operative Society in
advance of concluding the proposed Glanbia Ireland transaction
mentioned above.
In addition, the Board is recommending a final dividend of 17.53 cent
per share representing a dividend payout of 33.6% of adjusted Earnings
Per Share in respect of 2021.
Looking ahead
The Group remains vigilant to the continued volatile and disruptive
potential of rising geopolitical tensions and the ongoing Covid-19
pandemic, and their indirect impact of inflation and global supply chain
disruption. The strong performance and strategic actions executed in
2021 position the Group well to navigate this environment and enable
further growth across the business.
Our growth journey will continue to be a blend of organic, M&A and
portfolio activity as our strong financial position will allow us to capitalise
on opportunities as they arise.
2021 Income Statement review
Revenue and EBITA
Revenue and EBITA are key performance indicators (KPIs) for the Group.
In particular the Group focuses on revenue volumes and EBITA margins to
assess underlying performance. Details of these KPIs are set out below.
€’m 2021 2020 Change
Constant
currency
change
Revenue
GPN 1,30 3.1 1,138.0 14.5% 17.1%
GN 2,893.8 2,6 85.1 7.8% 11.4%
Total Revenue 4,196.9 3,823.1 9.8% 13.1%
EBITA (pre-exceptional)
GPN 14 5.1 91.2 59.1% 65.5%
GN 125.5 118.4 6.0% 9.8%
Total EBITA 270.6 209.6 29.1% 34.0%
EBITA margin (pre-exceptional)
GPN 11.1% 8.0% +310bps +320bps
GN 4.3% 4.4% -10 bps -10bps
Total EBITA margin 6.4% 5.5% +90bps +100bp s
Revenue
Revenue increased in 2021 by 13.1% versus prior year on a constant
currency basis to €4.2 billion, an increase of 9.8% on a reported basis.
Like-for-like wholly-owned revenue increased by 12.1%, driven by
volume growth of 16.1%, net of price declines of 4.0%. The full year
impact of the 2020 Foodarom acquisition, and the recent PacMoore and
LevlUp acquisitions added a further 1.0% to annual revenue. Detailed
analysis of revenue is set out below.
Glanbia Performance Nutrition
GPN recorded a total revenue increase of 17.1% constant currency
(reported 14.5%) in 2021 versus prior year. Like-for-like branded revenue
volumes increased by 13.6%, with strong performance across US
Sports Nutrition and International markets driven by strong underlying
consumption trends as well as the effects of channel reopening as
Covid-19 restrictions were eased across most markets. Price increase of
4.5% was driven by the full year impact of prior year price increases and
a continued focus on revenue growth management. The acquisition of
LevlUp was completed on 31 May 2021 and contributed 1.2% revenue
growth in the period.
GPN
FY20 FX FY20 CC Volume Price Acquisitions FY21
€800m
€1,000m
€1,20 0m
€1,400m
(€ 25m)
11.4%
4.5%
1.2%
€1,13 8m
€1,113 m
€1,303m
Further price increases introduced in Q4 2021 have been accepted and
will be reflected in revenue growth trends during FY 2022.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
46
STRATEGIC REPORT
Group Finance Director’s review continued
Glanbia Nutritionals
GN delivered revenue growth of 11.4% constant currency (reported
7.8%) in 2021, driven by increases in organic volumes of 18.1% offset by
net price declines of 7.7% (driven by US Cheese) and the incremental full
year impact of acquisitions contributing a further 1.0%. NS volumes
increased by 13.6%, reflecting strong year-on-year growth in premix and
dairy ingredients. NS pricing contributed 3.7%, primarily driven by
favourable dairy market dynamics. US Cheese volumes were 19.8%
higher than prior year, benefitting from the successful commissioning of
the new Michigan cheese plant in June 2021. Cheese pricing declined
12.1% in 2021 due to market dynamics.
Nutritional Solutions
FY20 FX FY20 CC Volume Price Acquisitions FY21
€0m
€250m
€750m
€1,000m
(€21m)
13.6%
3.7%
3.5%
€747m
€726m
€877m
US Cheese
FY20 FX FY20 CC Volume Price FY21
€1,20 0m
€1,50 0m
€1,800m
€2,10 0m
€2,400m
(€66m)
19.8%
(12.1%)
€1,938m
€1,872m
€2,016m
EBITA (pre-exceptional)
EBITA before exceptional items increased 34.0% constant currency
(+29.1% reported) to €270.6 million (2020: €209.6 million) primarily due
to higher EBITA in GPN. EBITA margin in FY 2021 was 6.4%, an increase
of 90 basis points reported versus prior year (2020: 5.5%).
GPN pre-exceptional EBITA increased by 65.5% constant currency to
€145.1 million (2020: €91.2 million), an increase of 59.1% on a reported
basis. GPN pre-exceptional EBITA margin at 11.1% was 310 basis points
higher than prior year reported, due to positive operating leverage and
margin benefit derived from ongoing transformation programme
initiatives.
GN pre-exceptional EBITA grew 9.8% constant currency to €125.5
million (2020: €118.4 million), an increase of 6.0% on a reported basis.
GN pre-exceptional EBITA margin was 4.3%, down 10 basis points from
2020, due to the prior year having higher market pricing dynamics which
did not repeat in 2021.
Net finance costs
€’m 2021 2020 Change
Finance income 2.0 4.1 (2.1)
Finance costs (19.5) (24.6) 5.1
Net finance costs (17.5) (20.5) 3.0
Net finance costs decreased by €3.0 million to €17.5 million (2020: €20.5
million). The decrease was driven by reduced debt levels and
significantly lower interest rates on US$325 million of fixed rate
indebtedness re-financed during H1 2021. The Group’s average interest
rate in 2021 was 3.0% (2020: 2.9%). Glanbia operates a policy of fixing a
significant amount of its interest exposure, with 95% of projected 2022
debt currently contracted at fixed rates.
Share of results of joint ventures (continuing operations)
€’m - pre-exceptionals 2021 2020 Change
Share of profits of joint ventures:
– continuing operations 19.2 37.7 (18.5)
– discontinued operations 25.7 23.9 +1.8
Total 44.9 61.6 (16.7)
The Group’s share of results of joint ventures (continuing operations) is
stated after tax and before exceptional items. The Group’s share of joint
venture profits from continuing operations decreased by €18.5 million to
€19.2 million (2020: €37.7 million) in the year. This reduction was driven
by an exceptionally strong, market driven, prior year comparative in the
US joint ventures as well as 2021 commissioning costs of new US and
EU joint venture projects. Operationally, the joint ventures, particularly in
the US, delivered a strong performance with year-on-year volume
growth, primarily driven by the successful commissioning of a new scale
cheese and whey facility in Michigan, US. Market pricing in the US
Cheese market was volatile through 2021 and while the joint venture
models effectively pass through these pricing movements, it did result in
a revenue decline in the year. Commissioning continues in the Glanbia
Cheese EU joint venture mozzarella facility in Ireland with further start-up
costs expected in 2022. The share of results from joint ventures from
discontinued operations is discussed below.
Income taxes
€’m 2021 2020 Change
Income taxes 17.0 10.3 +6.7
Exceptional tax credit (7.6) (4.2) +3.4
Income taxes (pre-exceptional) 24.6 14.5 +10.1
Effective tax rate 13.0% 11.3% +170 bps
The 2021 pre-exceptional tax charge increased by €10.1 million to €24.6
million (2020: €14.5 million). This represents an effective tax rate,
excluding joint ventures, of 13.0% (2020: 11.3%). The increase in the
pre-exceptional tax rate is driven primarily by the improved performance
and profitability across the Group and the geographic mix of those
profits. The tax credit related to exceptional items is €7.6 million (2020:
€4.2 million). The Group currently expects that its effective tax rate for
2022 will be in the range of 12% to 13%.
Share of results of joint ventures (discontinued operations)
The Group’s share of joint venture profits from discontinued operations
increased by €1.8 million to €25.7 million (2020: €23.9 million) in the year.
Discontinued operations relate to the Group’s disposal of its remaining
40% interest in Glanbia Ireland to the Society for which all shareholder
approvals have now been obtained with completion of the transaction
anticipated in H1 2022, subject to standard regulatory clearances. This
joint venture investment was considered as an investment ‘held-for-sale’,
with equity accounting ceasing to apply from 17 December 2021, the
date of approval of the transaction by members of the Society. On this
basis and as Glanbia Ireland represents a significant component
and separately reported segment of the Group, the Group’s share
of Glanbia Ireland’s results have been presented separately in the
financial statements as discontinued operations, with a corresponding
restatement of comparative figures to show the discontinued operations
separately from continuing operations.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
47
Exceptional items
€’m – continuing operations 2021 2020
Organisation redesign costs (note 1) 18.1 31.2
Pension related costs (note 2) 30.3 –
Acquisition integration costs (note 3) – 3.4
Legal settlement gain (note 4) – (3.4)
Asset impairments (note 5) – (0.4)
Covid-19 costs (note 6) – 3.7
Wholly-owned exceptional charge before
tax 48.4 34.5
Share of results of joint ventures (2021 charge:
note 2; 2020 charge: note 6) 2.0 0.3
Exceptional tax credit (7.6) (4.2)
Exceptional charge after tax – continuing
operations 42.8 30.6
€’m – discontinued operations 2021 2020
Share of results of joint ventures (2021 gain:
note 7; 2020 charge: note 6) (0.7) 0.9
Exceptional (gain)/charge after tax –
discontinued operations (0.7) 0.9
Details of the exceptional items are as follows:
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 to date includes people and property
related costs, and professional consulting fees. The investment
phase of this multi-year strategic programme is now complete and
no further costs are anticipated.
2. Pension related costs relate to the restructure of legacy defined
benefit pension schemes associated with the Group and joint
ventures, which included initiating a process for the ultimate buyout
and wind up of these schemes and a further simplification of
schemes that remain. 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, net of gains from the completion of an Enhanced
Transfer Value exercise that reduces risk in remaining schemes.
3. Prior year acquisition integration costs comprised material costs
relating to the acquisition, integration and restructuring of acquired
businesses. No material once off costs of this nature were incurred
in 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.
5. Prior year asset impairments credit relates to the release of a
provision not required on the disposal of certain inventory following
the completion of a rationalisation and simplification of certain
product lines and related assets in the GPN business. No similar
costs were incurred in 2021.
6. 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 2021.
7. Exceptional item from discontinued operations relates to the
Glanbia Ireland joint venture that was classified as a discontinued
operation on 17 December 2021. The net gain in 2021 includes
once off gains on the settlement of forward contracts and pension
reorganisation, net of charges relating to the costs of a company-
wide reorganisation programme that includes redundancy cost,
professional service costs and impairment charges.
During 2021 there were cash outflows of €50.9 million and €5.0 million
in respect of exceptional charges recognised in FY 2021 and FY 2020
respectively. During 2020 there were cash outflows of €29.5 million in
respect of exceptional charges incurred in FY 2020 and prior years.
Profit after tax
€’m 2021 2020 Change
Profit after tax – continuing
operations 141.0 120.8 +20.2
Profit after tax – discontinued
operations 26.4 23.0 +3.4
Profit after tax for the year 167.4 143.8 +23.6
Profit after tax for the year was €167.4 million compared to €143.8 million
in 2020, comprising continuing operations of €141.0 million (2020:
€120.8 million) and discontinued operations of €26.4 million (2020: €23.0
million). Profit after tax from continuing operations comprises pre-
exceptional profit of €183.8 million (2020: 151.4 million) and exceptional
charges of €42.8 million (2020: €30.6 million). The €32.4 million increase
in pre-exceptional profit after tax is driven by the increased profitability
of wholly-owned businesses net of reduced profitability of Joint Ventures
and Associates.
Profit after tax for the year includes profit from discontinued operations
being the performance of the Glanbia Ireland joint venture up to the
date it was classified as a ‘held-for-sale’ asset (17 December 2021),
following which equity accounting ceased to be applied. Profit after
tax (including exceptional items) from discontinued operations increased
by €3.4 million to €26.4 million in the year.
Earnings Per Share
2021 2020
Reported
Change
Constant
Currency
Change
Basic EPS 57.57c 48.72c +18. 2% +22.3%
– continuing 48.47c 40.93c +18 .4% +23.3%
– discontinued 9.10 c 7.79c +16.8% +16.8%
Adjusted EPS 87.15c 73.78c +18.1% +22.1%
– continuing 77. 84c 65.21c +19.4% +23.9%
– discontinued 9.31c 8.57c +8.6% +8.6%
Basic EPS increased by 18.2% reported versus prior year, driven by
a year-on-year increase in pre-exceptional profitability.
Adjusted EPS is a Key Performance Indicator (KPI) of the Group, a key
metric guided to the market and a key element of Executive Director and
senior management remuneration. Adjusted EPS increased by 22.1%
constant currency (18.1% reported) in the year, driven primarily by the
increased profitability in both GPN and GN, offset by a reduced share of
profits of joint ventures, due to an exceptionally strong, market driven,
prior year comparative in the US joint ventures. Adjusted EPS comprises
continuing operations of 77.84 cent (2020: 65.21 cent) and discontinued
operations following the classification of the Glanbia Ireland joint venture
as held-for-sale of 9.31 cent (2020: 8.57 cent).
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
48
STRATEGIC REPORT
Group Finance Director’s review continued
Cash flow
€’m 2021 2020
EBITDA pre-exceptional 333.6 273.5
Movement in working capital (pre-exceptional) 16.5 77.8
Business-sustaining capital expenditure (15.9) (16.5)
Operating cash flow 334.2 334.8
Net interest and tax paid (51.5) (43.0)
Dividends from joint ventures 33.9 36.6
Payment of lease liabilities (19.1) (19.2)
Other inflows/(outflows) 6.4 (2.7)
Free cash flow 303.9 306.5
Strategic capital expenditure (61.6) (47.7 )
Dividends paid to Company shareholders (80.5) (78.6)
Share buyback (purchase of own shares) (91.3) (16.6)
Payment for acquisition of subsidiaries (95.0) (21.9)
Exceptional costs paid (55.9) (29.5)
Proceeds from sale of property, plant and
equipment 1.5 –
Loans/investment in joint ventures (10.7) (9.6)
Net cash flow (89.6) 102.6
Exchange translation (23.6) 30.0
Cash/(debt) acquired on acquisition 4.4 (12.2)
Net debt movement (108.8) 120.4
Opening net debt (493.9) (614.3)
Closing net debt (602.7) (493.9)
For more information on operating cash flow and free cash flow see
glossary page 246 to 247.
The principal cash flow KPIs of the Group and Business Units 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 year
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 Units and identify available cash for strategic
investment. OCF conversion, which is OCF as a percentage of EBITDA
is a key element of Executive Director and senior management
remuneration.
OCF was €334.2 million in the year (2020: €334.8 million) and
represents a strong cash conversion on EBITDA of 100.2% (2020:
122.4%). The OCF conversion target for the year was 80%. The OCF
conversion rate remains very strong albeit that it has reduced since the
prior year as a result of an increased strategic investment in working
capital to support both supply chain efficacy and revenue growth across
the Group.
The Group continues to actively manage its working capital with strong
management of inventory and receivables ongoing throughout the year.
FCF was €303.9 million versus €306.5 million in 2020, with the reduction
primarily due to higher net tax payments in the year.
Acquisition spend relates to the cost of LevlUp and PacMoore
acquisitions, which completed in May 2021 and September 2021
respectively, and final earn-out payments of the 2020 Foodarom
acquisition. Loans to/equity in joint ventures during 2021 includes the
continuation of the investment in Glanbia Cheese EU, the mozzarella
cheese joint venture in Portlaoise, Ireland.
Share buyback cash flows relate to the conclusion of a share buyback
programme of €50 million launched in November 2020 which concluded
in 2021, another programme of €50 million which commenced and
concluded in 2021, and a third €50 million programme which
commenced in December 2021 and which was continued into 2022.
The Board continues to review buyback programmes as part of the
Groups capital allocation strategy as they provide an opportunity to
allocate capital to the benefit of shareholders.
Group net debt
Financing Key Performance Indicators 2021 2020
Net debt (€’m) 602.7 493.9
Net debt: adjusted EBITDA 1.71 times 1.70 times
Adjusted EBIT: net finance cost 15.1 t imes 10.0 times
The Group’s financial position continues to be strong. Net debt at the
end of 2021 was €602.7 million (2020: €493.9 million), an increase of
€108.8 million from prior year. At year-end 2021, Glanbia had committed
debt facilities of €1.16 billion (2020: €1.23 billion) with a weighted average
maturity of 3.9 years (2020: 4.4 years). Glanbia’s ability to generate cash
as outlined above and its available debt facilities ensures the Group has
considerable capacity to finance future investments. Net debt to
adjusted EBITDA was 1.71 times (2020: 1.70 times) and interest cover
was 15.1 times (2020: 10.0 times), both metrics remaining well within
financing covenants.
Use of capital
Capital expenditure
The cash outflow relating to capital expenditure for the year amounted
to €77.5 million (2020: €64.2 million) which includes €15.9 million of
business-sustaining capital expenditure and €61.6 million of strategic
capital expenditure. Key strategic projects completed in 2021 include
the consolidation of GPN manufacturing sites in Chicago as part of the
GPN transformation programme.
Investments in Joint Ventures
During 2021, the Group continued developing its joint venture
investment portfolio, which commenced in 2018. The new cheese
and whey manufacturing facility in Michigan, US which is part of the
MWC-Southwest Holdings JV was successfully commissioned in H1
2021 with no further investment required in the year.
During 2021 the Group also advanced a further €10.7 million to Glanbia
Cheese EU, the joint venture mozzarella cheese plant in Portlaoise, Ireland,
bringing the total invested to €38.7 million, with a further €10.0 million cash
contributions committed in addition to an undrawn loan facility of €1.3 million.
Commissioning is ongoing, and is expected to complete in 2022.
Return on Capital Employed
2021 2020 Change
Return on Capital Employed: 10.1% 9.0% +110 b ps
– continuing operations 10.0% 8.8% +120bp s
– discontinued operations 12.0% 11.6% +40bps
Return on Capital Employed (ROCE) increased in 2021 by 110 basis
points to 10.1%. This increase was primarily due to improved profitability
in GPN as a result of improved operating leverage and benefits from the
successful delivery of the GPN transformation programme. Acquisitions
remain a key part of the growth strategy of the Group with investments
assessed against a target benchmark of 12% return after tax by the end
of year three.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
49
Annual impairment testing
The Group monitors the performance of acquisitions on an ongoing
basis and completes annual impairment reviews in respect of goodwill
and intangible assets. No impairments were identified from the 2021
review, nor did sensitivity analysis identify any scenarios where a
reasonably possible change in assumptions would result in an
impairment charge. Full details of the annual impairment reviews are set
out in note 16 of the financial statements.
For the purposes of impairment testing, assets are grouped at the
lowest level for which there are separately identifiable cash flows, in
Cash Generating Units (CGUs), and these CGUs are kept under review
to ensure that they reflect any changes to the interdependencies of cash
flows within the Group. CGUs remained under review during 2021 and
we have now completed the ongoing organisation redesign within GPN
in 2021, which will result in a further consolidation of reported CGUs in
2022.
Dividends
The Board is recommending a final dividend of 17.53 cent per share
which brings the total dividend for the year to 29.28 cent per share, a
10% increase on the prior year. This total dividend represents a return of
€84.5 million to shareholders from 2021 earnings and a payout ratio of
33.6% of 2021 adjusted Earnings Per Share which is in line with the
Board’s target dividend payout ratio of 25% to 35%. The final dividend
will be paid on 6 May 2022 to shareholders on the share register on
25 March 2022.
Total Shareholder Returns
Total Shareholder Return (TSR) for 2021 was +21%. The STOXX Europe
600 Food & Beverage Index (F&B Index) a benchmark for the Group,
increased by 24.1% in 2021. The three-year period 2019 to 2021 Glanbia
TSR was negative 19.7% versus the F&B Index of +51.4%. The five-year
Glanbia TSR to 2021 was negative 14.5% versus the F&B Index of
+60.9%. Glanbia’s share price at the end of the financial year was
€12.30 compared to €10.38 at the 2020 year-end, an 18.5% increase.
Impact of new accounting standards
No new accounting standards were adopted in 2021. Amendments
to existing standards during the year did not have a material impact on
the Group.
Pension
The Group’s net pension liability under IAS 19 (revised) ‘Employee
Benefits’, before deferred tax, decreased by €15.1 million to €14.2 million
in 2021 (2020: €29.3 million). The defined benefit pension liability is
calculated by discounting the estimated future cash outflows using
appropriate corporate bond rates. During 2021, 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. A further restructuring of Irish pension schemes, resulted in
gains that offset some of the UK related losses, ultimately reducing the
net pension liabilities and future volatility on the Group’s balance sheet.
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 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, due to the strengthening of the US dollar compared
to prior year, there was a currency translation gain arising primarily on
the translation of US assets and liabilities into euro which is presented
within other comprehensive income and amounted to €126.7 million in
the year. The amount included a gain of €13.0 million on the retranslation
of non-euro denominated cash and cash equivalents as presented in
the cash flow statement. Average and year-end euro to US dollar rates
were as follows:
Average Year-end
2021 2020 2021 2020
1 euro converted to
US dollar 1.1826 1.1423 1.132 6 1.2271
Investor relations
Glanbia has a proactive approach to shareholder engagement.
The Annual General Meeting is the key event in the year. Due
to the Covid-19 pandemic, the 2021 AGM was held as a closed
meeting. Shareholders were provided with an opportunity to submit
questions in advance of the meeting and were invited to follow the
proceedings of the AGM by listening via a teleconference. All details
relating to the AGM were published on the Company’s website:
www.glanbia.com/agm.
The Group Chairman consulted directly with a significant number of
shareholders throughout the year. The Remuneration Chair led a
consultation on Remuneration Policy and this feedback was shared and
discussed by the Board. The Group Director of Strategic Planning and
Investor Relations undertook shareholder consultation on the Group’s
share buyback resolution and published a summary of the feedback,
where available.
In 2021, Glanbia virtually attended 16 international equities investor
conferences which were organised by a variety of independent
organisations.
In addition to full year and half year results, Glanbia publishes interim
management statements after the first and third quarters to provide
investors with a regular update on performance and expectations
throughout the year. All releases, reports and presentations are
made available immediately on publication on the Group’s investor
relations website.
Annual General Meeting (AGM)
Glanbia plc’s AGM will be held on Thursday, 5 May 2021, in the Hotel
Kilkenny, College Road, Kilkenny, Ireland.
Mark Garvey
Group Finance Director
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
50
STRATEGIC REPORT
We believe in healthier lifestyles continued
Sustainability is fundamental to everything we do. Our holistic approach
to sustainability responds to the challenges that endanger our planet
and people. Our Pure Food + Pure Planet sustainability strategy
tackles the topics that are most material to our business and our
stakeholders, and translates our overall sustainability efforts into
tangible results that enable us to improve the environmental,
societal and economic impact of our products.
SUSTAINABLE
OPERATIONS
WE BELIEVE IN
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
51
Wastewater Treatment
The new MWC-Southwest Holdings (MWC)
cheese and whey processing facility in
St. Johns, Michigan was engineered
and built to contribute significantly to our
commitments around carbon, water, and
waste reduction. Reverse osmosis and
polisher equipment generates ~800,000
gallons a day of clean water from the
milk processed in making cheese.
Instrumentation is used to recover clean
flush water for all equipment rinses,
minimising water down the drain and
re-using the water as many times as
possible. Over 90% of water is reused.
The on-site wastewater treatment plant
currently processes ~1.5 million gallons of
water a day, which is treated to high enough
standards to be discharged to the Great
Lakes. MWC is in effect a net generator
of water since it discharges more than
it pulls from the city. The state-of-the-art
wastewater treatment plant includes
anaerobic digestion to generate
biomethane, creating renewable energy
from waste to help fuel plant operations.
UK Reducing use
of Virgin Plastic
Tub Consolidation & Reduction Project
The GPN UK Team successfully
implemented a reduction in packaging
for the Optimum Nutrition Gold Standard
Pre-Workout, BCAA, and AMIN.O. Energy
product lines by reducing the excess
headspace and the length of the scoop.
Resulting in a reduction of over 5 tonnes
of plastic annually.
Reducing use of Virgin Plastic
with Recycled Plastic
Launched new Optimum Nutrition ready-
to-drink (RTD) Protein Shakes, using 51%
recycled PET (rPET) exceeding the new
UK tax regulations threshold of minimum
30% recycled plastic. With rPET requiring
less energy to recycle than it takes to
manufacture bottles using virgin PET, an
rPET content bottle has a lower carbon
footprint. In 2021 this change impacted
over 1.2 million bottles.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
52
STRATEGIC REPORT
Pure Food + Pure Planet
Glanbia has embraced a comprehensive
commitment to ESG, actively and
transparently managing our impacts
on our stakeholders inside and outside
the organisation. Environmental
sustainability is core to that commitment.
Integrating sustainable practices and governance
structures across our business
In 2021 we embarked on a progressive journey to net zero based on:
strategic analysis; good data analytics; science-led, detailed planning;
and a commitment to building partnerships, for we cannot achieve our
goals in isolation.
We established new governance structures for Environmental, Social
and Governance (ESG), with Board responsibility for ESG policy and
oversight. Our new governance structure, as outlined on page 111,
identifies the roles and responsibilities of those tasked with integrating
ESG practices into the business and aligns with how we manage risk
in the organisation. Building out sustainable operations in an integrated
manner and finding solutions across the business is something we are
well-placed to do.
Our approach is built on science and knowledge, coupled with practical
innovation and delivered through working in partnership with others.
We have progressively invested in building out our data capability,
scaling best practice and demonstrating our action on our most material
elements, leveraging our longstanding focus on operational excellence.
Our partnerships are informing our strategic actions, while our external
engagements allow Glanbia contribute to industry-wide solutions.
We also conducted an extensive project to identify potential climate
related risks and opportunities partnering with The Carbon Trust.
The project is informing our Task Force on Climate-Related Financial
Disclosures (TCFD) report but, more fundamentally, has added climate
DELIVERING
NUTRITION
FOR A
BETTER
WORLD
Michael Patten
Chief ESG & Corporate Affairs Officer
insights and extensive modelling capability specific to Glanbia’s
business model, strategy and risk management processes.
In aligning with TCFD disclosure requirements we are confident in the
bedrock of our governance, strategy and risk management. In January
2021, the Board approved a strategy focused on our most material
environmental sustainability areas. The most ambitious element is
decarbonisation and in July 2021 the Science Based Targets initiative
(SBTi) validated our targets. Our sustainability strategy is focused on our
operational control boundary (which includes Glanbia’s wholly-owned
operations as well as the MWC-Southwest Holdings joint venture
operations). We recognise that while dairy is one of the world’s most
complete and nutrient dense foods, it is a carbon intense sector.
For this reason we have been heavily engaged with external thought
leadership including the US Dairy Net Zero Initiative. Refer to page 58
for an illustration of the key components of this initiative.
Our work on prioritising sustainable business practices is not new, nor
is it a ‘bolt-on’ to Glanbia’s operational focus. It will inform and integrate
into every part of our business. Embedding these practices across our
operations and supply chain takes time but we are confident that the
robust analysis we have carried out on data, the insights derived from
extensive expert audits in 2021 on energy and water, and the continued
development of the US Dairy Net Zero Initiative are key tools for
delivering on our sustainability commitments. This in turn has deep
and positive implications for the way we deploy resources, for the way
we organise ourselves, and for our culture. Adapting ourselves to take
substantial action on our operations provides an opportunity to build
on our commitment to be a purposeful business, which thinks and acts
for the long term, and will continue to thrive for generations.
“Our focus is to deliver on our
commitments, fully, in a prudent and
planned manner. That is the essence
of our culture.”
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
53
Key focus areas
our people
A value-led culture Safeguarding the environment Supporting ou r peop le a n d commu nities
Progress 2021
• New strategies for environmental sustainability and DE&I
approved by the Board
• Enhanced ESG resources and governance
• ESG metrics included in executive remuneration (for both
short and long-term incentive plans)
• Completed a climate risk and opportunity assessment and
issued first TCFD report
• Greenhouse gas (GHG) emission targets set across Scopes 1,
2 and 3 and validated by the SBTi
• Independent energy and water audits carried out for all key
manufacturing sites
• On-boarding of EcoVadis to support our responsible
procurement ambition
• Continued 100% compliance record of maintaining a globally
recognised food safety certificate programme at all our
manufacturing sites
Priority areas 2022
• Focus on building sustainability awareness and enhance our
sustainability culture through communication, reporting and
engagement with our key stakeholders
• Build upon the climate risk and opportunity assessment
review and TCFD process
• Focus on renewable electricity procurement
• Develop detailed strategic programme for on-farm emissions
• Implement energy and water priority projects, a direct output
from the independent audit process carried out during 2021
• Develop water use reduction ambition and establish polished
water impact
• Food quality to focus on revising and updating Glanbia Quality
System (GQS) standards, practices, and auditing around our
extended supply chain, including contract manufacturers
Our sustainability framework draws together our environmental, social and governance ambitions. These ambitions will be delivered as part of our
business model, and will be fully embedded in the way we work. This framework helps us to articulate how we deliver our purpose.
Our purpose
Delivering better nutrition for every step of life’s journey.
Pure Food + Pure Planet
Food Safety
& Quality
Responsible
Sourcing
Carbon Water
Waste Packaging
Social
Our Culture & People
Read more on pages 18-21
Health, Safety &
Wellbeing
Read more on pages 20-21
Diversity, Equity
& Inclusion (DE&I)
Read more on pages 22-23
Our Society
Read more on page 59
Governance
Our Business Model
Read more on pages 10-17
Our Values
Read more on pages 10-11
Stakeholder
Engagement
Read more on pages 24-25
Corporate Governance
Read more on pages 77-102
Policies & Procedures
Read more on page 60
Protecting
the planet
Responsible
supply chains
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
54
63%
37%
2018
(baseline year)
2019
2020
2021
10,174
11,956
15,659
12,307
13,205
130,413
122,068
117,270
113,700
150,471
112,992
98,172
106,242
107,475
139,602
(initial
baseline
scope,
excl. MWC)
(total
incl. MWC)
STRATEGIC REPORT
Environment
RENEWABLE ELECTRICITY – 2021
(Glanbia - operational control incl. MWC)*
Renewable electricity
Electricity from non-renewable sources
* Percentage of renewable electricity is calculated based on Renewable Energy
Certificates (REC), power purchasing contracts or grid electricity data where
other sources are not available.
Greenhouse Gas (GHG) Emissions (MtCO
2
e) –
Scopes 1-2 and biogenic emissions, 2018-2021
Scope 1, MtCO
2
e
Scope 2, MtCO
2
e
Biogenic Emissions, MtCO
2
e
OUR FOCUS AREAS
Our focus areas for sustainability are based on our materiality assessment which is used
to identify our material issues as outlined on pages 24 and 25. These focus areas are
further underscored by the 2021 Carbon Trust ‘Climate Change Risk Assessment’ where
decarbonisation and water resource efficiency were identified as vital mitigation strategies.
In 2021 the Board approved Glanbia’s new sustainability strategy,
‘Pure Food + Pure Planet’ which is the culmination of analysis of metrics,
issues, options and science-based potential involving workstreams
across the organisation and supported by expert external advisors.
For carbon operations we committed to a 31% reduction in carbon
emissions at all our manufacturing sites under our operational control
by 2030 (Scope 1 and 2) and to reduce carbon emission intensity in our
dairy supply chain by 25% by 2030. Both commitments are from a 2018
base year. Our targets were developed with the expert guidance of The
Carbon Trust and align to the Paris Agreement to limit global temperature
increases. These targets were validated by the Science Based Target
initiative (SBTi) to a well below two degrees celsius pathway.
Since then the workstreams that undertook the strategy work have
moved into implementation mode. A significant upgrade was undertaken
in our data systems platform and enhanced data capture methodologies
were deployed to ensure we can measure and react in real time, and
can evaluate the impact of our projects.
In 2021 the Group commissioned energy audits of its seven biggest
sites to benchmark all utilisation data and set out opportunities for energy
optimisation and reduction. This review reported comprehensively
in December 2021 and has detailed priority opportunities which have
the potential to significantly reduce energy consumption in operations.
Detailed project feasibility plans and costings are being prepared in
2022 against priority projects.
Glanbia’s strategy also targets, as far as possible, 100% renewable
electricity across our network. Much of the Group’s purchased
electricity is already renewable sourced. A working group is advancing
plans to shift progressively to 100% renewable electricity sourcing,
taking account of availability, procurement management, and optimal
alignment with energy efficiency initiatives. It is expected that this
planning will also be substantially completed in 2022.
To date our operational control Scope 1 and 2 emissions reduced by
8% compared to our 2018 baseline. With the first full year of operations
in 2021 of the new large scale MWC facility in St. Johns, Michigan, it is
being added to the Group’s carbon footprint database. Given the scale
of the operation we will examine re-baselining in due course.
CARBON IN OUR OPERATIONS
Scope 1 and 2
31%
carbon emissions reduction
by 2030 (2018 baseline)
Scope 3
25%
reduction in carbon intensity
in our dairy supply chain
Glanbia has had its
emissions reduction targets
approved by the Science
Based Targets initiative as
consistent with levels
required to meet the goals
of the Paris Agreement.
“To date our operational control
Scope 1 and 2 emissions reduced by
8% compared to our 2018 baseline.”
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
55
95%
3%
2%
78.3%
0.4%
5.0%
0.2%
0.1%
0.4%
15.6%
94%
5%
1%
0 1 2 3 4 5
4.71
0.97
4.533
GN –
Dairy
GN –
Specialty
GPN
Sum/
Average
4.49
Fresh Water Consumption Intensity (L/Kg)
Our Commitments
100%
zero waste to
landfill by 2025
50%
reduction in food
waste by 2030
In 2021, consultants, Harbor Environmental conducted a Water Risk
Assessment using the World Resource Institute (WRI) Aqueduct 3.0
mapping tool. Aqueduct measures water risks across 13 risks in
3 categories: Physical Risk (Water Quantity), Physical Risk (Water
Quality), Regulatory and Reputational Risks. Informed by the Water
Risk Assessments, Harbor Environmental carried out water audits
at two material sites.
The results of those audits, together with site water conservation
plans are informing our 2022 action plans for water conservation and
management. In addition to active water recycling Glanbia’s dairy
processing operations recover significant volumes of water (polished
water) from raw milk supplies which are then used for in-process
utilisation. These volumes significantly offset demand for fresh water.
Glanbia re-baselined its fresh water data across all operational control
sites in 2021 and in 2022 will supplement this with improved accounting
for polished water utilisation. Taken together with the risk assessments,
audits and water reduction project plans, the Group is assembling
comprehensive benchmark data and will finalise its water use reduction
targets in 2022.
We are committed to achieving zero waste to landfill by 2025 and
to reducing food waste by 50% by 2030. In 2021 our waste project
team completed baselining work on the broad waste streams: landfill;
non-landfill; and recycled. Furthermore, Glanbia used the ‘Food Loss
& Waste Protocol’ by World Resources Institute to identify and classify
food waste generated across all our production sites.
The majority (78%) of our operational food waste is currently diverted
to animal nutrition. According to the ‘Food Recovery Hierarchy’, it is one
of the most wholesome ways to repurpose food ingredients that cannot
go to human consumption directly.
In 2022 our project team will continue examining and implementing
solutions to drive out waste generation sources, including reducing
surplus goods and ingredients produced, and ensuring we maximise
operational waste recovery and recycling.
FOOD WASTE GENERATED
(Kg) – 2021 (Glanbia –
operational control incl. MWC)
GN – Dairy – 46.0m Kg
GN – Specialty – 1.6m Kg
GPN – 0.9m Kg
Animal Feed 78.3%
Composting 5.0%
Reuse/Recovery 0.2%
Waste to Energy 0.4%
Incineration 0.1%
Landfill 0.4%
Other 15.6%
FOOD WASTE RECOVERY –
2021 (Glanbia – operational
control incl. MWC)
FRESH WATER CONSUMPTION – 2021, baseline year
(Glanbia - Operational Control incl. MWC)
GN – Dairy – 5,120.7m Litres
GN – Specialty – 281.6m Litres
GPN – 52.5m Litres
WATER
WASTE
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
56
4%
3%
6%
8%
9%
31%
39%
STRATEGIC REPORT
Environment continued
In 2021 we established a packaging steering committee and technical
teams led by Glanbia Performance Nutrition (GPN), charged with
baselining our packaging footprint and developing the strategy for
consumer facing packaging. The baselining exercise identified the
most material focus areas: high-density polyethylene (HDPE)
and flexible packaging. Based on the assessment undertaken,
Glanbia is committing to all consumer packaging materials being
100% recyclable, reusable, or compostable by 2030.
The recognition of black plastics can often be problematic in recycling
centres in some markets. A key project by GPN in 2021 was to validate
that its largest packaging stock keeping unit (SKU) in North America,
the iconic ON black HDPE tub, is being recycled in North America.
In 2018 we completed our first Carbon Disclosure Project (CDP)
submission. CDP gives us the opportunity to be transparent with key
stakeholders and meet specific customer demands on sustainability
data and progress. In 2021 we improved our CDP scores for climate
change and maintained a strong water security score. Our supplier
engagement score improved significantly reflecting our value chain
work and Scope 3 targets. The improvement was a direct result of the
strategic work behind ‘Pure Food + Pure Planet’. Establishing science
based targets and improving our carbon reporting data across Scopes
1, 2 and 3 all contributed to an improved rating.
Our water security score maintained, and we expect the water action
plans based on the water risk assessments and site audits, as well
as the development of strategic water conservation targets will see
our performance improve. Furthermore, governance and executive
remuneration are providing stakeholders confidence in our execution.
Outside of the CDP score improvements, our ESG rating from
Morgan Stanley Capital International (MSCI) also improved in 2021,
from an A level to an AA level rating. This is another endorsement
of the progress we have made to date.
CDP Climate Change Glanbia Sector Average
2021 C B-
2020 D B-
2019 D B-
CDP Water Security Glanbia Sector Average
2021 B- B
2020 B- B
2019 B- B
CDP Supplier
Engagement
Glanbia Sector Average
2021 A- B-
2020 C- B-
2019 B- C-
High-density polyethylene
(HDPE)* 39%
Corrugated cardboard 31%
Flexible thermoplastics* 9%
Polypropylene (PP)* 8%
Glass 6%
Polyethylene terephthalate
(PET)* 3%
Other 4%
Packaging footprint
Target agreed:
Glanbia commits to all consumer packaging materials
being 100% recyclable, reusable, or compostable by
2030
PACKAGING
ESG BENCHMARKS
The exercise found that technology is available for recycling centres to
detect and sort black HDPE and there is a strong secondary market as
a material used for the manufacture of long life span building materials.
In 2022 we will establish packaging data management via Intelex with
support from Harbor Environmental. Our teams will work with both
upstream suppliers and downstream recycling services to investigate
solutions and drive progress against our target.
* Commonly used types of plastic
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
57
Dairy supply
Dairy is one of nature’s complete foods and a critical part of our food
chain, however, we recognise that dairy production is inherently high
in greenhouse gas emissions. We are committed to working with
our farmers to demonstrate dairy’s potential as a climate solution.
In 2021 the SBTi validated our carbon commitment to reduce our scope
3 emissions (emissions associated with our dairy supply chain) intensity
by 25%. This commitment is a central component of our de-
carbonisation strategy and is developed based on extensive value chain
foot-printing carried out in conjunction with The Carbon Trust. This
assessment based on 2018 data estimated a baseline intensity of 5.47t
CO
2
e per tonne of production within our operational control boundary, in
which 70% of our total GHG emissions came from purchased milk
footprint. The baseline was calculated considering volumes of milk
processed, production tonnes and market-based emission factors.
Based on the modelling of available technologies and their likely uptake
completed as part of our strategy in 2020, our key project in 2022 is
to develop a clear roadmap of actions and initiatives which can be
pursued in partnership with our milk suppliers and joint venture partners
to achieve our Scope 3 ambition. We will also focus on data and
measurement, working with trusted partners and leveraging our
engagement in US Dairy’s Net Zero Initiative. This plan must also take
account of the recent Forest, Land and Agriculture (FLAG) guidance
issued by SBTi in respect of designated Scope 3 pathways in the food
sector, and which may alter some of our original planning assumptions.
Since 2012 we have worked with our Idaho milk suppliers on a journey
of continuous improvement. The approach has seen Glanbia Nutritionals
require suppliers to be in full standing with the National Milk Producers
Federation (NMPF) Farmers Assuring Responsible Management (FARM)
programme. FARM provides the evidence that US dairy farmers are
operating to the highest standards. In early iterations the focus was on
animal care and antibiotic stewardship, however, in meeting growing
consumer interest and in the true spirit of continuous improvement
the programme has evolved to include programmes on Environmental
Stewardship and, most recently, Workforce Development.
Food safety and quality
Now in its seventh full year, the Global Quality Leadership Team (QLT) remains
the centre of excellence and expert network where policies are developed to
ensure standardisation of best practices. The Glanbia Quality System (GQS),
our internal food safety code of practice, has been further expanded in 2021.
In 2021 we continued to ensure 100% compliance to the Group-wide
policy for maintaining a globally recognised certification programme
(e.g. The Global Food Safety Initiative (GFSI)) at all our manufacturing
sites. These externally benchmarked and conventionally required
certifications demand systematic, comprehensive management
programmes and procedures, integrated with our operational practices.
Looking forward to 2022, the QLT will focus on revising and updating GQS
standards, practices, and auditing around our extended supply chain,
including contract manufacturers, to verify that our key business partners
are applying the same level of rigour to Quality and Food Safety principles
as our wholly-owned sites. A newly established laboratory excellence team
was formed in 2021, which will work to harmonise laboratory best
practices, including the global application of laboratory information
management systems (LIMS), improved testing methodologies and
standards, and assessing laboratory certification as a possible strategy.
Our success is built on shared value and partnership, from our evolution
in dairy to a global nutrition company. In our ‘Pure Food + Pure Planet’
sustainability strategy, we recognise the importance of working in
partnership with our supply chain, to enhance our sustainability impact.
In 2021 we made significant progress in developing our Global
Procurement Policy, training our procurement teams on responsible
sourcing, and partnering with EcoVadis.
Glanbia procurement
In 2021, we launched our Group-wide Responsible Procurement
Programme which sets out our supplier selection criteria and integrates
sustainability into the procurement processes, procedures and systems
with key stakeholders.
We focused on ensuring and re-enforcing compliance with all applicable
laws on anti-slavery and human trafficking, requiring our suppliers to
confirm acceptance and conformance with the relevant Glanbia policies.
Our Global Procurement Policy was updated to include responsible
procurement requirements and ethical provisions which were included
in our standard terms and conditions.
In growing our procurement teams understanding, we partnered with
The Chartered Institute of Procurement and Supply (CIPS) to provide
an ethical procurement and supply course across ESG.
In November of 2021, we partnered with EcoVadis, the world’s most
trusted provider of business sustainability ratings, to help develop
and support our responsible procurement programme. Using their
technology platform they provide evidence-based ratings of companies
that are validated by a global team of experts. The overall score
awarded to companies (0-100) reflects the quality of the company’s
sustainability management system at the time of the assessment.
Following an initial assessment of our top 90 suppliers, 30 suppliers
already have an EcoVadis rating. A further 25 suppliers are now being
invited on to the EcoVadis platform for evaluation and by the end of
2022 all key suppliers will be assessed.
The Group has a zero tolerance approach to bribery or any form of
corrupt practices as outlined in the Group’s Anti-Bribery and Corruption
policy, published on our website, this policy is supported by the Group
Code of Conduct and Supplier Code of Conduct.
RESPONSIBLE SUPPLY CHAINS
Animal Care
100%
Workforce
Development
100%
Environmental
Stewardship
100%
% of Idaho supply implementing FARM modules:
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
58
STRATEGIC REPORT
CASE STUDY
US DAIRY
NET ZERO INITIATIVE
Environment continued
Mitigating dairy's environmental footprint
The US Dairy Industry has identified a series of initiatives to address
greenhouse gas (GHG) emissions at each step of a farm footprint.
Feed (26%) Enteric (35%) Manure (33%)
Energy (6%)
Feed 26%
• No/low-till farming
• Cover crops
• Nutrient management
• Precision agriculture
• Water use efficiency
Enteric methane 35%
• Diet management
• Genetic improvement
• Herd management
• Cow comfort and wellbeing
• Feed additives
Energy 6%
• Renewable energy
– Renewable electricity
– Renewable natural gas
– Renewable energy from
wind and solar sources
• Energy efficiency
– LED lighting
– Variable speed pumps
– Milk pre-cooling
technology
– Soft start motors
• Replacement of fossil-fuelled
engines with electric motors
Manure 33%
• Anaerobic digestion (includes manure
and co-digestion of food waste)
• Renewable fertilisers
• Nutrient and water recovery
• Drying technology (elimination of lagoons)
• Manure storage (cover and flare)
Visuals do not represent all possible practices, technologies or benefits. Each farm can voluntarily contribute to net zero efforts based on their individual operation.
*Adapted from Thoma 2013, Regional Analysis of greenhouse gas emissions from USA dairy farms. A cradle to farm-gate assessment of the American dairy industry circa 2008.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
59
GN contributed $50k to the Valley House Homeless Shelter in Idaho, supporting
homeless persons in the region.
Members of the GPN team in Illinois volunteered at the Northern Illinois Food Bank to
pack meals for those in need during the holiday season.
Our society
Education initiatives
Glanbia Performance Nutrition (GPN) Global Education elevated Sports
Nutrition School (SNS) to a virtual platform to extend its reach into 30
countries globally, targeting customers, retailers, distributors, consumers
and internal teams, with nearly 13,000 participants during 2021. The team
also launched SNS Level 400 – Peak Product Performance, a new course
designed to share a comprehensive learning on GPN’s top products.
GPN Global Education offers continuing education through SNS
Advanced Training, focusing on our main pillars including nutrition,
performance, ingredients, brands, products and quality.
Support for local communities
Glanbia continued to support communities around the world in 2021.
In North America, Glanbia Nutritionals (GN) continued its work with local
communities, supporting foodbanks across Idaho and New Mexico
throughout the year and partnering with local patrons to contribute to food
drives across our organisation. In Idaho, GN partnered with Valley House
Homeless Shelter on their new Beyond Shelter Project, contributing $50,000
towards a new shelter which will support homeless persons and families in
the Magic Valley region. GPN North America also supported worthy causes,
with members of the GPN team volunteering at the Northern Illinois Food
Bank in December to help pack over 5,300 meals for those in need.
Breast Cancer Ireland
Glanbia continued its partnership with Breast Cancer Ireland (BCI)
in 2021. Once more, the Great Pink Run with Glanbia went virtual
and global with 270 Glanbia employees from all over the world taking
part, joining over 8,000 participants. In 2021, Glanbia helped to raise
€650,000 for breast cancer research through its support of the Great
Pink Run and other BCI initiatives.
SUPPORTING HEALTH AND WELL
BEING IN OUR COMMUNITIES
CASE STUDY
OPTIMUM
NUTRITION
PARTNERS WITH
ATHLETE ALLY
based non-profit organisation, whose mission is
to educate athletic communities to understand
the obstacles to inclusion for LGBTQ+ people in
sports and how they can build more inclusive
communities. Through the partnership, Athlete Ally’s
founder participated in an education programme
with Glanbia employees to talk about inclusion and
allyship in sporting organisations.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
60
STRATEGIC REPORT
Glanbia complies with the European Union (Disclosure of Non-Financial and Diversity information by certain large undertakings and groups)
Regulations 2017. The table below is designed to help stakeholders navigate to the relevant sections in this Annual Report to understand the
Group’s approach to these non-financial risks. Many of our policies can be viewed on www.glanbia.com.
Consolidated disclosures pursuant to Article 8 Taxonomy Regulation
Following consideration of the ‘EU Taxonomy Compass’, and detailed review of the economic activities descriptions and NACE code definitions
as referenced within the “EU Taxonomy Climate Delegated Act (Delegated Act)”, the Group concludes that our core economic activities of food
processing and manufacturing are not included within the Delegated Act and consequently are Taxonomy non-eligible.
Refer to pages 150 and 151 for Glanbia’s consolidated disclosure in accordance with “Article 8 Taxonomy Regulation” and Art. 10 (2) of the Art. 8
Delegated Act (Disclosures Delegated Act).
Non-financial reporting statement
Reporting Requirement Policies and standards which govern our approach Risk management and additional information
Environmental
matters
• Environmental sustainability
• Supply chain and responsible sourcing and on-farm
sustainability
• Environment section – pages 52 to 56
• Responsible supply chains – pages 57 and 58
• ESG Committee Report – pages 109 to 111
• Task Force on Climate-related Financial Disclosures
(TCFD) Report – pages 61 to 66
• Risk management – pages 69, 72 and 73
Employee matters • Culture and engagement
• Group code of conduct
• Whistleblowing policy
• Diversity, equity and inclusion
• Employee engagement survey – pages 19 and 21
• Whistleblowing and fraud – page 108
• UK Corporate Governance Code – pages 77 to 80
• Diversity, equity and inclusion – pages 22 and 23
Social matters • Education initiatives
• Community support
• GPN Sports Nutrition School – page 59
• Community and charity support – page 59
Human rights • Anti-slavery and human trafficking statement
• Supplier code of conduct
• Human rights policy
• See page 57 and our policies can be viewed on
www.glanbia.com/investors/corporate-governance/
our-policies
Anti-bribery and
corruption
• Group code of conduct
• Anti-bribery and corruption policy
• See page 57 and our policies can be viewed on
www.glanbia.com/investors/corporate-governance/
our-policies
Description of principal risks and impact of business activity • Principal risks and uncertainties – pages 72 to 75
Description of the business model • Business model – pages 10 and 11
Non-financial Key Performance Indicators (KPIs) • Key Performance Indicators – page 27
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
61
Glanbia is pleased to present our first report under the Task Force on Climate-related
Financial Disclosures (TCFD) framework. As recommended by the TCFD, we have set out our
disclosures around the four key areas where climate-related impacts should be considered
and embedded within our organisation – Governance, Strategy, Risk Management, and
Metrics and Targets.
At Glanbia, consideration of the impact of climate change is part of
our core business and strategic agenda. We recognise the continued
importance of integrating climate-related impacts within our governance,
operational and strategic model, and are committed to building further
on our existing structures, strategy and resources in this respect.
This statement pertains to the parts of the business over which Glanbia
has operational control. This includes the Group’s wholly-owned
operations as well as the MWC-Southwest Holdings joint venture
operations where Glanbia plc has full authority to introduce and
implement Glanbia operating policies in accordance with our sustainability
strategy, as well as those operations related to our supply chain footprint.
Under the UK Financial Conduct Authority (FCA) listing rules (LR 9.8.6(R)
(8)) relating to TCFD recommendations and recommended disclosures
relating to climate-related disclosure requirements, as outlined within the
FCA Handbook, we have disclosed consistent with the TCFD framework
except for (1) embedding climate-related risks and opportunities (CROs)
into our financial planning and completing quantitative scenario analysis
under “Strategy” and (2) aligning metrics to the identified CROs and
setting relevant targets under “Metrics and Targets”. The detail within
this disclosure addresses our plans to complete further work on these
areas, also refer to page 66.
Governance
The Board: is responsible for the oversight of all Group activities that
ensure the long term sustainability of our business. Our purpose, ‘to
deliver better nutrition for every step of life’s journey’, our vision, ‘to be
one of the world’s top performing nutrition companies trusted to enrich
lives every day’, and our values speak to our desire to drive performance
and shareholder value in a way that is truly sustainable. In assessing that
organisational sustainability, the Board considers all risks and
opportunities including the impact of climate change. To assist in
addressing all organisational risks and opportunities, the following
Board Committees ensure that the Group adopts a holistic embedded
approach to risk management, including climate change.
Audit Committee: monitors and reviews the effectiveness of the
Groups risk management system (including climate risk).
Environmental, Social and Governance (ESG) Committee: assists
the Board in defining and reviewing the integration into the Group
strategy of all relevant ESG factors.
Remuneration Committee: designs incentive structures across both
short term and long term incentives to promote the achievement of
defined key performance indicators.
Management: The Group Managing Director and Executive team are
responsible, under Board direction, for the execution and delivery of the
Group’s strategic plans. Management report regularly to the Board on
all matters relating to the performance of the Group including climate-
related matters. Recognising the importance of the overall ESG agenda
and the management of CROs we have increased resourcing in this
area in 2021, including the appointment to the Executive committee of a
Chief ESG and Corporate Affairs Officer, to oversee delivery of the ESG
agenda, supported by the Group Operating Executive ESG Committee
and a Group-wide ESG Centre of Excellence team. Refer to page 111 for
details on the ESG governance structure and related activities.
Strategy
In 2021, we engaged The Carbon Trust, an independent sustainability
consultant, to assist the Group in analysing the possible CROs which may
be faced by the business, to better understand the potential impacts from
physical climate change risks and possible risks associated with the
transition to a decarbonised economy. The approach adopted to
determine the CROs is outlined within the ‘Risk management’ section,
page 65, including details on the identification and prioritisation phases
adopted. Overall, a list of 13 potential thematic CROs were identified, prior
to the consideration of any mitigating measures. From a materiality
assessment perspective, each item was assessed independently of each
other on an annualised basis, rather than through detailed scenario or
quantification analysis.
Impact of the CROs on our strategy
While our strategic planning process has in the past considered the risk of
climate change this process has refined our approach further and in 2022
we will assess how the potential identified CROs might affect our financial
planning and business strategy, specifically focusing on our operations,
supply chain, adaptation and mitigation activities, including future capital
investment opportunities. We have for example updated the Group Capital
Investment Policy to formally integrate climate-related metrics into our
investment decision criteria. In 2022, we will also plan to carry out a
quantitative scenario analysis on the potential CROs identified, with a
view to further integrating these findings within the assessment of our
strategic resilience. This will consider the interplay of the potential
material CROs identified with each other under a number of temperature
scenarios and the associated potential impact.
CROs under a two-degree scenario
Under two-degree scenario models, the inherent assumption is a world
taking action and, as a result, transition risks represent the greatest
potential impact on Glanbia’s business. Such models predict the rapid
introduction of policy and regulation to drive decarbonisation, as well as
technological advancements and shifting market dynamics (both
upstream and downstream). In addition to these transition risks however,
some physical risks are still likely to materialise due to unavoidable
warming. For example, water scarcity, its severity and materiality will
depend on the level of warming which is observed. Potential
opportunities identified under a 2 degree scenario include: investment in
operational and dairy decarbonisation, opportunities to access low
carbon markets and to be at the forefront of ‘climate-smart’ agriculture.
CROs under a four-degree scenario
The four-degree scenario models can largely be described as a failure to
act, characterised by insufficient or a distinct lack of policy and
regulation to drive decarbonisation. Consequently, the transition risks
associated with the shift to a low carbon economy would be unlikely to
occur and physical risks are of greatest potential impact. Physical risks
such as heatwaves and water scarcity have the potential to have a
significant impact on our value chain especially dairy and crop
production. However, there are some transition opportunities which are
still likely to materialise. The high likelihood of carbon credit prices
increasing would render propositions such as the creation and sale of
credits from the generation and use of biogas and from sequestration of
carbon in soil more attractive by leveraging Glanbia’s supply chain.
Task Force on Climate-related Financial Disclosures Report
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
62
STRATEGIC REPORT
Task Force on Climate-related Financial Disclosures Report continued
The 13 thematic potential CROs are summarised in the table below. The description reflects the relevant CRO prior to the consideration of any
mitigation measure and may or may not arise dependant on climate action taken and the resulting impact on global temperatures.
1 refer to page 64 for listing of individual CROs.
Transition risks – Climate regulation, related carbon taxes, consumer trends and energy
Description TCFD category Impact Management’s response
Introduction of regulations on the dairy
industry in terms of greenhouse gas emissions
may impact on supply chain costs.
Introduction of the requirement to pay direct
and indirect carbon tax, may increase
operational costs.
Change in demand potentially impacted
by sustainable trends and requirements.
Change in energy prices may increase
operational costs.
Deployment of assets which are potentially
misaligned to the Group’s long term
energy plan.
Policy and Legal, Technology,
Products and Services,
Markets, Energy Source
CRO
1
1 2 3 4 5 6
Value chain impact
Dairy Value Chain – Raw
Materials
Product – Distribution
Production
Sales
Regulations are likely to be necessary to restrict agricultural
practices or introduce new regenerative practices. Additionally,
potential regulation of ammonia and methane emissions from
farms, which may increase agriculture and dairy procurement
costs over time.
Carbon taxes imposed on high-carbon products and processes
may drive increases in Glanbia’s operational costs.
Potential change in customer or consumer demand, based
on specific sustainable criteria or values, which may impact
product demand.
Potential for energy prices to increase, leading to increased
operational costs.
Potential for the deployment of assets which are misaligned to
the Group’s long term energy plan, leading to stranded assets
or early write offs.
Maintain engagement with government regulators and industry group representatives. Outside Ireland, Glanbia advocates for US dairy policy
as members of the International Dairy Foods Association and the National Milk Producers Federation.
In 2022, we will execute an on-farm project to analyse on-farm data, identify opportunities for carbon reduction and partner with farmers to pilot
activation for direct procurement. For milk sourced by our joint ventures, we will work with our partners to understand their ambition and share best
practice.
Glanbia demonstrates its thought leadership in the US:
• as a member of the US Dairy Sustainability Alliance;
• through the Dairy Stewardship Commitment;
• through representation on the Innovation Center for US Dairy’s Environmental Stewardship Committee which drives the Net Zero Initiative; and
• locally in Idaho (key dairy supply base) through active membership in various regional groups and through our investment in on-farm resources.
We engage with trusted external consultants and advisors for counsel on proposed and developing regulations, in order to anticipate and
understand the regulatory requirements and impact.
Glanbia holds a strong brand portfolio with a loyal customer base. We closely monitor consumer preferences and consumption trends which directly
informs our strategy.
Energy related CROs are addressed within the ‘Opportunities’, ‘Management’s response’ row below.
Physical risks – Temperature increase impacts on supply chain and production
Description TCFD category Impact Management’s response
Assessment of prolonged temperature
increases/heatwaves on the key regions of
importance within the USA, from a supply
chain and production perspective, taking
into account:
• Glanbia US milk pools;
• regions of importance for crop production;
• production facility locations.
Chronic/Acute
CRO
1
7 8 9 10
Value chain impact
Dairy Value Chain – Raw
Materials
Raw Materials – Farm Inputs
Product Processing
Reduction in milk yield due to long term high temperature and
humidity rises.
Increased cost of purchased feed by farmers in Glanbia’s
supply chain due to drought or higher temperature conditions
negatively impacting crop yields.
It is uncertain at this point to what extent costs will be passed
onto Glanbia but any constraint on supply as a result of reduced
yield/or increased production costs may have an upward effect
on dairy procurement costs.
Due to prolonged increased temperature greater likelihood of
water stress for key production sites, potentially leading to
increased water prices in the short to medium term and
potential supply shortages which may lead to production
disruptions in the longer term.
Commitment to achieving and showing progress against our validated Science Based Targets initiative (SBTi) targets for our operations and dairy
supply chain carbon emissions. Continue to work closely with our supplier base and industry bodies.
Glanbia demonstrates its commitment to reducing on-farm impact by being a member of the US Dairy Stewardship Commitment, to the US dairy
initiative for net zero emissions by 2050, known as the Net Zero Initiative (NZI).
NZI focuses on feed production, cow care, energy efficiency and manure management – which together represent the total footprint of a farm.
Engagement with our suppliers: 100% of our Idaho supply base are enrolled in the FARM Environmental Stewardship (ES) programme, which
provides tools and resources for US dairy farmers to measure and improve their carbon footprint.
Conducted a Water Risk Assessment using the World Resource Institute Aqueduct 3.0 mapping tool. In 2022, we plan to use on-site water audits
to identify a list of priority actions with associated timelines assigned.
Opportunities – Decarbonisation – operations, supply chain
Description TCFD category Impact Management’s response
Adapt to new technologies and revenue
streams, such as the creation and sale of
carbon credits, to improve and or diversify
our production methods, product offering
and access to new markets.
Execute operational excellence in resource
efficiency and waste reduction.
Energy Source, Products and
Services, Markets, Resilience
CRO
1
11 12 13
Value chain impact
Raw Materials
Production
Sales
With our ongoing efforts towards lowering carbon emissions
within our value chain and partnering with our key suppliers,
the opportunity exists to proactively respond to market and
regulatory demands.
This can be achieved by building a low carbon footprint into
our strategic ambition, ensuring new technologies and product
offerings are considered as part of our strategic plan, including
future capital investment.
Continue to include and expand carbon reduction metrics, including stretch targets, within the senior leadership remuneration plan, across Scope 1,
2 and 3 emissions.
Develop action plans from the extensive energy audits conducted in 2021 to inform a register of energy efficiency and carbon reducing priorities.
This is also a key mitigating measure to reduce the impact of potential energy price increases.
Updated the Group Capital Investment Policy to formally integrate climate-related metrics into our investment decision criteria. This formal lens reduces
the risk of misaligned capital investment.
Further integration of climate-related data into long term strategic decision making, by reviewing progress against commitments and targeting
plans which maximise climate impact reduction measures, the status of which will continue to be presented to the ESG Committee and Board
on a regular basis.
Leverage our existing innovation pipeline structure to focus on innovations with a sustainability focus, such as increasing packaging recycling and
reusability of products produced and expanding our product offerings. This ensures we are correctly positioned to anticipate and meet customer
and consumer requirements.
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63
Transition risks – Climate regulation, related carbon taxes, consumer trends and energy
Description TCFD category Impact Management’s response
Introduction of regulations on the dairy
industry in terms of greenhouse gas emissions
may impact on supply chain costs.
Introduction of the requirement to pay direct
and indirect carbon tax, may increase
operational costs.
Change in demand potentially impacted
by sustainable trends and requirements.
Change in energy prices may increase
operational costs.
Deployment of assets which are potentially
misaligned to the Group’s long term
energy plan.
Policy and Legal, Technology,
Products and Services,
Markets, Energy Source
CRO
1
1 2 3 4 5 6
Value chain impact
Dairy Value Chain – Raw
Materials
Product – Distribution
Production
Sales
Regulations are likely to be necessary to restrict agricultural
practices or introduce new regenerative practices. Additionally,
potential regulation of ammonia and methane emissions from
farms, which may increase agriculture and dairy procurement
costs over time.
Carbon taxes imposed on high-carbon products and processes
may drive increases in Glanbia’s operational costs.
Potential change in customer or consumer demand, based
on specific sustainable criteria or values, which may impact
product demand.
Potential for energy prices to increase, leading to increased
operational costs.
Potential for the deployment of assets which are misaligned to
the Group’s long term energy plan, leading to stranded assets
or early write offs.
Maintain engagement with government regulators and industry group representatives. Outside Ireland, Glanbia advocates for US dairy policy
as members of the International Dairy Foods Association and the National Milk Producers Federation.
In 2022, we will execute an on-farm project to analyse on-farm data, identify opportunities for carbon reduction and partner with farmers to pilot
activation for direct procurement. For milk sourced by our joint ventures, we will work with our partners to understand their ambition and share best
practice.
Glanbia demonstrates its thought leadership in the US:
• as a member of the US Dairy Sustainability Alliance;
• through the Dairy Stewardship Commitment;
• through representation on the Innovation Center for US Dairy’s Environmental Stewardship Committee which drives the Net Zero Initiative; and
• locally in Idaho (key dairy supply base) through active membership in various regional groups and through our investment in on-farm resources.
We engage with trusted external consultants and advisors for counsel on proposed and developing regulations, in order to anticipate and
understand the regulatory requirements and impact.
Glanbia holds a strong brand portfolio with a loyal customer base. We closely monitor consumer preferences and consumption trends which directly
informs our strategy.
Energy related CROs are addressed within the ‘Opportunities’, ‘Management’s response’ row below.
Physical risks – Temperature increase impacts on supply chain and production
Description TCFD category Impact Management’s response
Assessment of prolonged temperature
increases/heatwaves on the key regions of
importance within the USA, from a supply
chain and production perspective, taking
into account:
• Glanbia US milk pools;
• regions of importance for crop production;
• production facility locations.
Chronic/Acute
CRO
1
7 8 9 10
Value chain impact
Dairy Value Chain – Raw
Materials
Raw Materials – Farm Inputs
Product Processing
Reduction in milk yield due to long term high temperature and
humidity rises.
Increased cost of purchased feed by farmers in Glanbia’s
supply chain due to drought or higher temperature conditions
negatively impacting crop yields.
It is uncertain at this point to what extent costs will be passed
onto Glanbia but any constraint on supply as a result of reduced
yield/or increased production costs may have an upward effect
on dairy procurement costs.
Due to prolonged increased temperature greater likelihood of
water stress for key production sites, potentially leading to
increased water prices in the short to medium term and
potential supply shortages which may lead to production
disruptions in the longer term.
Commitment to achieving and showing progress against our validated Science Based Targets initiative (SBTi) targets for our operations and dairy
supply chain carbon emissions. Continue to work closely with our supplier base and industry bodies.
Glanbia demonstrates its commitment to reducing on-farm impact by being a member of the US Dairy Stewardship Commitment, to the US dairy
initiative for net zero emissions by 2050, known as the Net Zero Initiative (NZI).
NZI focuses on feed production, cow care, energy efficiency and manure management – which together represent the total footprint of a farm.
Engagement with our suppliers: 100% of our Idaho supply base are enrolled in the FARM Environmental Stewardship (ES) programme, which
provides tools and resources for US dairy farmers to measure and improve their carbon footprint.
Conducted a Water Risk Assessment using the World Resource Institute Aqueduct 3.0 mapping tool. In 2022, we plan to use on-site water audits
to identify a list of priority actions with associated timelines assigned.
Opportunities – Decarbonisation – operations, supply chain
Description TCFD category Impact Management’s response
Adapt to new technologies and revenue
streams, such as the creation and sale of
carbon credits, to improve and or diversify
our production methods, product offering
and access to new markets.
Execute operational excellence in resource
efficiency and waste reduction.
Energy Source, Products and
Services, Markets, Resilience
CRO
1
11 12 13
Value chain impact
Raw Materials
Production
Sales
With our ongoing efforts towards lowering carbon emissions
within our value chain and partnering with our key suppliers,
the opportunity exists to proactively respond to market and
regulatory demands.
This can be achieved by building a low carbon footprint into
our strategic ambition, ensuring new technologies and product
offerings are considered as part of our strategic plan, including
future capital investment.
Continue to include and expand carbon reduction metrics, including stretch targets, within the senior leadership remuneration plan, across Scope 1,
2 and 3 emissions.
Develop action plans from the extensive energy audits conducted in 2021 to inform a register of energy efficiency and carbon reducing priorities.
This is also a key mitigating measure to reduce the impact of potential energy price increases.
Updated the Group Capital Investment Policy to formally integrate climate-related metrics into our investment decision criteria. This formal lens reduces
the risk of misaligned capital investment.
Further integration of climate-related data into long term strategic decision making, by reviewing progress against commitments and targeting
plans which maximise climate impact reduction measures, the status of which will continue to be presented to the ESG Committee and Board
on a regular basis.
Leverage our existing innovation pipeline structure to focus on innovations with a sustainability focus, such as increasing packaging recycling and
reusability of products produced and expanding our product offerings. This ensures we are correctly positioned to anticipate and meet customer
and consumer requirements.
In recognition of the potential importance of these themes to our future strategy, we have included the possible impact of each theme on our value
chain in addition to providing insights to the actions Glanbia’s management is currently undertaking and also planning to undertake.
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64
9
6
Likelihood
Velocity
High
Low
Short-term Long-term
7
1 5
2
4
13
11
12
8
10
3
STRATEGIC REPORT
Task Force on Climate-related Financial Disclosures Report continued
Velocity: relevant speed of CRO impact Likelihood: relative probability of CRO taking place
Time Horizon Period Level Requirements
Short-term Before 2025 H Highly consistent outcome under all scenarios
Medium-term Between 2025 - 2030 M Greater change in outcome under respective stress scenarios, but trends are
directionally the same
Long-term Beyond 2030 L Outcome only expected under stress scenarios
The below diagram illustrates the 13 CROs identified following the climate change risk assessment process facilitated by The Carbon Trust and
discussed in the ‘Risk management’ section on the next page. As already referenced, the CROs are listed prior to the consideration of mitigation
measures. This CRO identification process is regarded as the first step, with further detailed scenario and quantification analysis required which
includes incorporation of the mitigations in place or planned for implementation on the residual impact of the CROs identified. Following this
exercise it is likely that the CRO listing below will be further refined in 2022.
Transition risk
1
Direct and indirect carbon taxes
2
Sustainable trends in consumer demand
3
Energy prices
4
Change in dairy market consumption
5
Climate regulation on dairy
6
Misaligned capital expenditure allocation
Physical risk
7
Water scarcity related production disruption
8
Impact on dairy production from increased
temperatures
9
Impact on crop production from increased
temperatures
10
Heatwave impact on dairy productivity
Opportunity
11
Investment in operational decarbonisation
12
Investment in dairy decarbonisation
13
Access to new low carbon markets
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
65
Risk management
In order to determine our CROs the following approach was adopted:
1. Identification Phase: Identified and categorised a comprehensive
list of individual CROs, including consideration of emerging regulatory
requirements related to climate change (and assessed each by
assigning an initial set of criteria, including materiality, likelihood and
velocity). Other criteria considered for comparability were TCFD
category, root cause, relevant business unit, value driver impacted
(e.g. revenue, costs, etc.), and value chain stage impacted (e.g. raw
materials, processing, sales, etc.), to enable effective comparability.
2. Prioritisation Phase: Prioritised the CROs using an evidence-
based methodological approach to assess the CROs, based on
analysis of third party scenarios (as outlined within the next
paragraph) and Glanbia’s financial data to assess the likelihood,
velocity and materiality of each CRO.
In line with the Group’s risk management framework, the CROs were
assessed for likelihood, velocity and materiality (impact) drawing on
the most recent climate models, desk-based research, including the
International Energy Agency, the International Institute for Applied
Systems Analysis, Shared Socioeconomic Pathways, the World
Economic Forum, the World Resources Institute and KNMI climate
change Atlas (CMIP5 ensemble), and Glanbia’s financial forecasts,
strategic planning and risk management processes. Necessary
deviations from the standard risk management framework are
discussed on page 69.
The materiality assessment contributed towards identifying the most
relevant CROs to Glanbia prior to the consideration of mitigating
measures, where each CRO was assessed independently of each
other on an annualised basis, rather than through detailed scenario
or quantification analysis. Given these limitations, the materiality
assessment was used to assist in the identification of the CROs but
is not used to compare those CROs against each other.
The identification of climate change as a principal risk is underpinned
by our Group Risk Management Framework, used to identify, assess,
prioritise, manage, monitor and report risks. This process, which is
described on pages 67-73 within the ‘Risk management’ section of
the Strategic Report, integrates the output from the CRO identification
process through the Group risk register and also documents the
identified Group-wide controls and actions to mitigate against the
climate change principal risk. Within the Strategy section of this report,
page 63 outlines the key mitigations and or planned actions to address
the CROs identified.
Metrics and targets
As part of our ‘Pure Food + Pure Planet’ sustainability strategy we have
set specific targets across three key pillars, Carbon, Waste and Water.
Refer to pages 54-58 within our Environment section for details on these
targets and progress to date, including details of the carbon reduction
measures within our value chain, across our Scope 1, 2 and 3 emissions.
Focus for 2022
Glanbia commits to building on the progress achieved in 2021 in relation
to our climate change impact. Our strategy outlines our fundamental
commitments to reduce carbon emissions. The results of these
commitments are externally validated by the Science Based Targets
initiative (SBTi) and our performance is benchmarked by the Carbon
Disclosure Project (CDP). We have developed strong partnerships with
our dairy supply base within the US and we will build on the programmes
developed including the US Dairy NZI.
We are also very aware of the impact that climate change may have on
us as an organisation. The CRO identification process is an invaluable
tool for us to identify the inherent risks that Glanbia faces. Following
quantification and scenario analysis in 2022, Glanbia is committed to
identifying, prioritising and further embedding the appropriate mitigating
actions within our strategy to ensure we address the assessed material
climate-related risks, ensuring we build out our existing metrics to
monitor and assess those risks and focus on maximising the climate-
related opportunities within our business model.
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66
STRATEGIC REPORT
Location of TCFD aligned disclosures within the Annual Report
Governance: Disclose the Company’s governance around climate-related risks and opportunities See page(s)
a) Describe the Board’s oversight of climate-related risks and opportunities ESG Committee Report
Audit Committee Report
Corporate Governance Report
Group Chairman’s Statement
Within TCFD report
109-111
103-108
91
5
61
b) Describe management’s role in identifying, assessing and managing climate-related risks
and opportunities
Group Managing Director’s Review
Risk management
Within TCFD report
6-7
67- 68
61
Strategy: Disclose the actual and potential impacts of climate-related risks and opportunities on the Company’s business,
strategy and financial planning where material See page(s)
a) Describe the climate-related risks and opportunities that the organisation has identified
over the short, medium and long term
Our material topics
Principal risks and uncertainties
Within TCFD report
24
72-73
61-64
b) Describe the impact of climate-related risk and opportunities on the Company’s business,
strategy and financial planning
1
Within TCFD report 61-64
c) Describe the resilience of the organisation’s strategy considering different climate-related
scenarios, including a two-degree or lower scenario
1
Within TCFD report 61
Risk management: Disclose how the Company identifies, assesses and manages climate-related risks and opportunities See page(s)
a) Describe the Company’s process for identifying and assessing climate-related risks and
opportunities
Risk management
Within TCFD report
67-70
65
b) Describe the Company’s process for managing climate-related risks and opportunities Risk management
Principal risks and uncertainties
Within TCFD report
67-70
72-73
62-63, 65
c) Describe how these processes are integrated into the overall risk management programme Risk management
Principal risks and uncertainties
Within TCFD report
67-70
72-73
65
Metrics and targets: Disclose the metrics and targets used to assess and manage climate-related risks and opportunities See page(s)
a) Disclose the metrics used by the organisation to assess climate-related risks and
opportunities in line with its strategy and risk management process
2
Environment section
Within TCFD report
54-58
65
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG)
emissions, and the related risks
Environment section 54, 57-58
c) Describe the targets used by the organisation to manage climate-related risks and
opportunities and performance against targets
2
Environment section
54-57
1 In the context of this being Glanbia’s first TCFD report, in 2021 we identified the inherent CROs for the business, for 2022 we will build upon our analytical and modelling
capabilities by executing financial quantification and related scenario analysis to address part b (financial planning) and part c requirements of the ‘Strategy’ pillar.
2 While Glanbia has a number of key metrics and targets in place to manage the CROs identified, this will be built upon following completion of further CRO analysis in 2022 to further
address part a and c of the ‘Metrics and Targets’ pillar.
Task Force on Climate-related Financial Disclosures Report continued
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
67
OUR RISK MANAGEMENT FRAMEWORK
AND CULTURE, SUPPORT OUR RISK
RESILIENCE AND ADAPTABILITY
Managing our risks
The past year has continued to be challenging for organisations globally
as further waves of Covid-19 impacted multiple geographic regions at
varying levels of severity. While the Group remains vigilant to the
continued volatile and disruptive potential of the pandemic, plants
across the Group have operated well throughout 2021 responding
swiftly to Covid-19 related risk items and to the strong demand
dynamics across both GPN and GN.
Covid-19
The impact of Covid-19 variants on the business is explained in various
sections of the Strategic Report and consequently the narrative included
in the Group Managing Director, Group Finance Director and Operations
Review updates should be read in conjunction with the below
disclosures to provide an overall understanding of the risks, economic
uncertainties and challenges which will continue in 2022.
The Omicron variant, while more transmissible, is milder than previous
variants and this, in combination with the continuing global vaccination
and booster campaign rollouts, is gradually weakening the economic
impacts of Covid-19. The Group’s focus in 2022 includes, ensuring strict
compliance with safety policies for our frontline workers, the phased
implementation of the Group’s comprehensive return to office plans and
the continued monitoring of our risk environment for any significant
changes that may impact the delivery of the Group’s strategic objectives.
Our risk management framework
The Group encounters risk every day in the pursuit of its strategic
priorities. Our risk management framework is designed to ensure that
risk management is embedded into our culture, policies and practices.
There is input across all levels of the business to enable the Group to
remain responsive to the ever-changing operating environment, including
the ongoing impact of Covid-19 which is a factor in almost all risks to
some extent. An overview of the Group’s risk management and internal
control framework is outlined in the diagram below.
Risk management
Oversight
Identification
Assessment
Mitigation
At Business
Unit and Group
Functional level
Including the
identification and
mitigation of
emerging risks
Bottom Up
Risk
Top Down
Risk
Oversight
Identification
Assessment
Mitigation
Including the
identification
and mitigation of
emerging risks
Board
Underpinned by:
Our Strategic Priorities
Our Purpose Our Values Our Code
Protect and grow
our portfolio of
brands and
ingredients
Purposeful
growth through
innovation and
acquisitions
Fuel growth by
investing in
organisational
enablers
Governance
Supported through:
Audit
Committee
ESG
Committee
Group Operating
Executive
Group Internal
Audit
Senior Leadership Team
Driven by:
Risk
awareness
Risk
ownership
Risk
monitoring
Risk
reporting
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68
STRATEGIC REPORT
Risk oversight
Board of Directors
The Board has overall responsibility for determining the nature and
extent of the significant risks it is willing to take in achieving the Group’s
strategic objectives and for setting the Group’s risk appetite. In 2021, the
Board and the Audit Committee reviewed and approved the overarching
Group risk appetite statement and a number of the individual risk
appetite statements for the Group’s principal risks. These risk appetite
statements seek to implement a balanced approach to risk, embracing
risk in areas in which management has the appropriate skills, knowledge
and experience to take advantage of the opportunities presented, whilst
limiting risk in other areas.
As part of the annual Group strategy process, the Board conducted a
detailed assessment of the impact of the Group’s principal risks,
including emerging risks. This was designed to ensure that the Board
understands both the key risks existing within the business and newly
emerging risks, together with the methods employed to manage these
risks. The focus during such reviews is to ensure that the Group’s
residual risk position is within the Group’s risk appetite. The Board and
management use the same process to assess and manage risks within
our material joint ventures as it does for the wholly-owned areas of the
Group. In 2021, we held board positions in all such entities.
The Board conducted a formal half-year and full-year review of the risk
register summary reports prepared by Group Internal Audit to ensure
that the Group’s principal risks and uncertainties, as outlined on pages
72 to 75, effectively describe the nature and extent of the Group’s
principal risks. The Board is satisfied that its risk management systems
and internal control processes are effective. However, as with all
practices, a mindset of continuous improvement is required. The Board
also considered its obligations in relation to providing both the annual
Going Concern and Long-term Viability Statements. Its review and
conclusions in this regard are outlined on pages 70 and 71.
Audit Committee
The Audit Committee on behalf of the Board, has responsibility for
monitoring the Group’s systems of risk management and internal control
including the review of their effectiveness.
In 2021 and early 2022, to ensure that appropriate measures are in
place to validate the strength of internal controls and risk mitigation and
to continue to develop a deeper awareness and insight into the Group’s
principal risks, the Audit Committee received updates from senior
executives and detailed presentations from Group functional leads
including the Group Head of Health and Safety, Food Safety and Quality,
Glanbia Business Services and IT, Legal, and Taxation.
These presentations typically provide the Committee with the
opportunity to review the Group’s risk appetite statements in relation to
the principal and emerging risks being examined.
Group Operating Executive
The Group Operating Executive forum as outlined in the Corporate
Governance Report on page 96 also acts as the Group Risk Committee
and supports the Audit Committee in the risk management process
through the ongoing monitoring of the risk environment and the
effectiveness of the controls in place. The Group Operating Executive
aims to ensure that the risk management process supports the delivery
of the Group’s strategy by managing the risks impacting the Group’s
ability to achieve business objectives.
Environmental, Social and Governance (ESG) Committee
The ESG Committee, established in 2021, supports the Group’s
ongoing commitment to environmental, corporate social responsibility
and corporate governance matters. This Committee is responsible for
monitoring and reviewing current and emerging ESG trends, relevant
international standards and legislative requirements and identifying how
these are likely to impact the strategy, operations, and reputation of the
Group. The Committee, in conjunction with the Group Operating
Executive, is also responsible for assessing the effectiveness of the
Group’s policies, programmes, practices and systems for:
a) Identifying, managing and mitigating or eliminating ESG risks in
connection with the Group’s operations and corporate activity; and
b) Ensuring compliance with relevant legal and regulatory requirements
and industry standards and guidelines applicable to ESG matters.
Risk reporting
Group Internal Audit (GIA)
GIA assists in the process by preparing regular Group summary risk
management reports based on information submitted by management
throughout the year. These reports include:
• An analysis of key Group risks in terms of impact (assessed over the
following 12 months within defined monetary terms), likelihood of
occurrence (using defined probabilities of occurrence) and velocity
(speed at which the impact of the risk could materialise);
• A summary of the key movements in the identified risks, with a
particular focus on highlighting new or emerging risks;
• A summary of management action plans (MAPs) to manage
significant risk exposures; and
• An overview of broader organisational, business and emerging risks.
The Audit Committee and Board perform bi-annual reviews of these
reports, with interim updates received from management as required.
Group Senior Leadership Team (SLT)
The identification of risk is based on a Group-wide approach. The
management team of each business segment and the Group functional
leads are required to maintain and submit a risk register. The register
ensures consistency of approach in the reporting of risks in accordance
with Group defined guidelines. By focusing our risk management
system on the early identification of new or emerging risks, it enables us
to conduct a detailed assessment of the existing level of mitigation and
the management actions required to either reduce or remove the risk.
Where the removal or reduction of the risk is not possible, the Group
formulates management action plans to respond to the risk, should the
risk materialise.
The quality and consistency of SLT risk reporting is supported by a
number of other monitoring and reporting processes including the:
• Group strategy process and Board review of financial and
operational performance, including detailed finance, capex planning
and expenditure reviews;
• KPI tracking of health & safety and environmental reporting within the
Group’s environmental management system;
• Bi-annual control self-assessment and management representation
letter processes;
• Post-acquisition completion and significant Capex project reviews;
• Risk-focused GIA plan; and
• The externally assessed Glanbia Risk Management System (GRMS)
reviews which assess operational risks across the Group and the
internal Glanbia Quality System (GQS) reviews.
Risk management continued
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69
Climate Risk and Opportunities
In line with the recommendations of the Task Force on Climate-
Related Financial Disclosures (TCFD) reporting requirements, the
Group has considered climate related impacts within the organisation
under the pillars of Governance, Strategy, Risk Management and
Metrics and Targets as outlined on pages 61 to 66.
The Group engaged The Carbon Trust, an independent sustainability
consultant, to conduct a comprehensive climate change risk
assessment on the parts of the business over which Glanbia has
operational control, to better understand the potential impacts from
physical climate risks largely associated with a failure to act, and the
potential transition risks associated with the transition to a
decarbonised economy as detailed on pages 61 to 66. From this
exercise 13 thematic climate-related risks and opportunities (CROs)
wereshortlisted.
The CROs were then assessed for likelihood, velocity and materiality
(impact), in line with the Group’s risk management framework with
the following threshold deviations:
– The time horizon applied to velocity was short term before
2025, medium term between 2025-2030 and long term
beyond 2030 as opposed to the Group approved thresholds
which assess velocity as very rapid if the impact of the risk is
felt within 1 month, rapid if within 1 quarter and slow if it
extends beyond 1 quarter.
– Likelihood: Under the CRO assessment, this is based upon
the certainty of outcome across the different climate scenarios
analysed, to consider the degree to which directionally and the
rate of change is consistent or divergent. Where there is a
highly consistent outcome under all scenarios, the relevant
CRO is categorised with a higher likelihood and conversely,
where the outcome is only expected under stress scenarios
the CRO is categorised with a lower likelihood. The standard
Group approach to likelihood is measured as a percentage of
possible occurrence over a three year period in line with the
Group’s strategic plan.
– Risk type: The CROs identified within the TCFD report on
pages 61 to 66 represent inherent risk, prior to the
assessment of mitigating actions. The Group’s principal risks
and uncertainties are reported on a residual risk basis having
due consideration for mitigating actions.
The Directors consider these deviations from the standard risk
framework to be acceptable given the nature of the specific risk.
As outlined on page 70, the previously reported Climate Change
principal risk has moved from Emerging to Strategic/External in
nature. The controls for this principal risk are aligned with our
strategyand regulatory framework requirements. They include
controls relating to governance, leadership and climate adaptation.
Climate change risk controls are considered throughout other
relevant risks including: Economic, Industry and Political; Market
Disruption and Acquisition/Integration.
In 2022, we will complete scenario and quantification analysis which
will consider available mitigation measures and the interplay of the
material CROs identified with each other under a number of
temperature scenarios and the associated potential impact, including
taking into consideration a two-degree or lower scenario.
Glanbia has a continuing engagement with The Carbon Trust who
provide technical expertise on the Group’s carbon footprint mapping,
and identification of key carbon reduction projects. The Group plans
to continue to work with them to inform its strategic planning and
project prioritisation going forward.
Risk categories
Our approach recognises the external risks associated with our
operating environment, which are typically considered and managed
through our strategic processes, and the mainly internal risks associated
with our people, processes and systems which are managed through
our internal controls. Emerging risks with the potential to impact our
longer term success are also considered to ensure that we plan
appropriately to respond to them over time.
Identifying our principal risks and uncertainties
The Directors have carried out a robust assessment of the Group’s
principal risks, including those that may threaten our business model,
future performance, solvency or liquidity. Key risks are identified based
on the likelihood of occurrence, potential impact and velocity on the
Group using the process outlined on pages 67 to 69.
Risks are reported on a residual risk basis and represent a snapshot of
the Group’s principal risk profile. This is not an exhaustive list of all of the
risks faced by the Group, there may be other risks and uncertainties
thatare not yet considered material or not yet known to us and this list
will change if these risks assume greater importance in the future.
Likewise, some of the current risks will drop off the key risks schedule
as management actions are implemented or changes in the operating
environment occur.
The Board also fully recognises that many risks do not exist in isolation
and that one or more risks may crystallise at the same time which could
increase the impact to the Group. The interactions and relationship
between such risks are discussed and considered by the Board
throughout the year. In 2021, these discussions included an in-depth
consideration of the consequences of the ongoing evolution of Covid-19
variants on many of the underlying principal risks being faced by the
business, the impacts of which are varied and have changed as the
impact of Covid-19 has ebbed and flowed throughout the year. The
disclosures on pages 167 and 168 consider the financial statement
impacts of Covid-19.
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70
STRATEGIC REPORT
Changes to risks in the year
The Directors have considered the Group’s principal risks and
uncertainties and have determined that the risks and uncertainties
reported in Glanbia plc’s 2020 Annual Report still remain relevant, with
no new principal risks identified. Some fluctuation in risk trends did arise
in 2021 including:
• The risk trend for market disruption risk reduced from increasing to
stable during the year due to the pace of the Covid-19 vaccination
rollout and the resulting benefits to consumer mobility and the ability
of businesses to reopen.
• The supply chain risk trend has increased from stable to increasing
as global activity has increased supply chain pressures and inflation
has created headwinds across the business into 2022.
• Economic, industry andpolitical, climate change, talent
management, and cyber security and data protection risks continue
to trend upwards.
• The previously reported climate change risk has moved from the
Emerging to Strategic/External category. This is due to the increasing
importance of this risk on the Group’s strategy and the continuing
efforts being applied at a Group level in this area.
Principal risks and uncertainties
The key risk factors and uncertainties with the potential to impact on the
Group’s financial performance in 2022 include:
• Economic, Industry and Political risk – continues to increase primarily
due to the significant inflationary pressures across the global
economy and the geo-political risks associated with the escalating
conflict between Russia and the Ukraine.
• Market disruption risk – the risk of further waves of Covid-19 may
disrupt markets re-opening fully, and remaining open, in 2022 and
delay markets returning to pre-Covid-19 levels particularly in the GPN
International markets, distributor networks and/or the specialty
channel. Price increases driven by input cost inflation may also
disrupt demand.
• 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.
• Supply chain risk – Glanbia is actively monitoring a number of supply
chain and inflationary pressures including:
– The overall impact on margins of movements in dairy pricing,
particularly in whey markets, which experienced significant price
increases in 2021 and are expected to continue throughout the
majority of 2022. This has resulted in price increases to offset
some of the increased input costs and further increases may be
required in 2022. Any further price increases will be managed
against the Group’s ambition to continue to drive revenue growth;
– 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 for core raw materials,
however a prolonged impact to supply chains would have
negative consequences from both a supply and pricing
perspective; and
– 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 continue to require careful navigation in 2022.
• 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.
Awide range of additional measures and mitigations have 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.
Going concern
Glanbia’s business activities, together with the main factors likely to
affect its future development and performance, are described in the
Strategic Report on pages 1 to 75. After due consideration and review,
the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for a period of
at least 12months from the date of approval of the Financial
Statements.
The Group therefore continues to adopt the going concern basis of
accounting in preparing its Financial Statements. In reaching this
conclusion the Directors have given due regard to:
• Available cash resources, cash generation from operations, liquidity,
borrowing facilities and related covenant requirements which taken
together, provide confidence that Glanbia will be able to meet its
obligations as they fall due. Further information on its bank facilities is
provided in Note 25 to the Financial Statements and outlined in the
Group Finance Director’s review on pages 44 to 49;
• Glanbia’s financial risk management policies as described in Note 29
to the Financial Statements, the nature of its business activities and
the factors likely to impact our operating performance and future
growth; and
• The potential impact of the ongoing Covid-19 pandemic, the
recoverability of trade receivables, inventory and other assets as
outlined in Note 2 to the Financial Statements.
Risk management continued
Strategic/External
Mainly external risks associated
with our operating environment
Economic, Industry
andPolitical
Market Disruption
Customer Concentration
Climate Change
Technological
The systems we use to drive the
business and the data they hold
Digital Transformation
Cyber Security and
DataProtection
Operational/Regulatory
The people and processes we
use to power our business model
Talent Management
Health and Safety
Supply Chain
Product Safety and
Compliance
Acquisition/Integration
Financial
Our financial status and internal
controls
Taxation Changes
Risk trend
Increasing Stable Decreasing
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
71
Long-term viability statement
Assessment of prospects
In accordance with the Code and Listing Rule 6.1.82 (3) of Euronext
Dublin, the Directors have assessed the viability of the Group and its
ability to meet its liabilities as they fall due over a period extending to
2024. This period was chosen as it is aligned to the Group’s budget and
strategy plans as approved at the Board strategy review session in
December 2021. The Board considers this the most appropriate period
to assess the Group’s prospects taking into account its current financial
position, the Group’s strategy and business model and the potential
impact arising from the principal risks and uncertainties. Factors
considered in assessing long-term prospects include:
(a) The Group’s current position
• A team of talented and committed people, focused on the delivery of
Group targets in line with our Group purpose, vision and values.
• Strong market positions in the wholly-owned segments GPN and GN
and robust joint venture business models.
• Global market trends in human nutrition continue to strengthen and
will underpin the execution of the Group’s strategic ambition.
• Key long-term customer relationships, brands with strong equity and
leadership positions in ingredients.
• GPN transformation programme delivered margin improvements in
2021 which will be further enhanced in 2022.
• Recent acquisitions including PacMoore and the 60% stake in
LevlUp performing well.
• Completion of a share buyback programme of €50 million launched
in November 2020. Two further programmes, also of €50 million
each launched in 2021, one of which continued into 2022. These
programmes support the Board’s confidence in the strength of the
Group’s financial position.
• Net debt at year end increased by €108.8 million versus the prior
year, primarily due to the Group’s acquisition activity and the
execution of the Group’s share buyback programmes. The net debt
to adjusted EBITDA ratio remained low at 1.71 times with continuing
strong cash generation.
See the Finance Director’s review on pages 44 to 49 for more detail.
(b) The Group’s strategy and business model
• The Group’s strategic focus is on global nutrition via its platforms,
Glanbia Performance Nutrition (GPN) and Glanbia Nutritionals (GN),
and through strategic joint ventures.
• Clearly articulated business model with well-defined Group growth
targets focused on building GPN top line growth and driving earnings
to 2024 from GPN and Nutritional Solutions (NS).
• The Group have signed a legal binding agreement to dispose of its
40% interest in Glanbia Ireland for €307 million.
• Clear focus and prioritisation on the development of talent which
remains central to our strategy as outlined in the Our People section
on pages 20 and 21.
• The Group continues to invest for growth, with all key strategic
capital expenditure projects on track and the acquisitions of LevlUp
and PacMoore closing in the second and third quarters respectively.
• Customer demand has sustained in GPN following the quarter four
price increases.
• Volume growth and cost benefits from the GPN transformation
project are expected to mitigate the impact of inflation during 2022.
• Ambition to grow through both organic investment and acquisition
activity within a framework of clear capital allocation priorities.
See the Group’s business model on pages 10 and 11 and strategy on
pages 12 to 17 for more detail.
(c) Principal risks related to the Group’s business
See pages 72 to 75 for a detailed description of each of the Group’s
principal risks, including climate change risk, related mitigation
measures and 2022 focus areas.
Assessment of viability
The Directors’ assessment of the Group’s viability has been made with
reference to the 2021 performance, the principal risks and uncertainties
including emerging risks facing the Group and how these are managed
within the Board’s risk appetite as detailed on pages 67 to 75. The
Directors carried out a robust assessment of the consolidated financial
forecast for the current year and financial projections for future years to
2024 during its strategy and budget review session in December 2021
with due consideration to the impacts of Covid-19, particularly with
respect to the significant judgements and estimates made in the
application of its accounting policies and the continued pandemic-
related uncertainty on the Group’s performance.
The Board reviewed the assessment of the Group’s prospects made by
management, including:
• The development of a rigorous planning process, the outputs of
which are comprised of a strategic plan, a consolidated financial
forecast for the current year and financial projections for future years
covering the period of the plan;
• A comprehensive review of the strategic plan as part of its annual
strategy review, with regular monitoring of the achievement of
strategic objectives taking place at each Board meeting;
• Assumptions are built at both Group and Business Unit levels and
are subject to detailed examination, challenge and sensitivity analysis
by management and the Directors; and
• A consideration of how the impact of one or more of the principal
risks and uncertainties, outlined on pages 72 to 75, could materially
impact the Group’s performance, solvency or liquidity.
• The impact of climate change on the Financial Statements as
outlined in Note 2. The assessment concluded that climate change is
not expected to have a material impact on the viability of the Group
in the short term. Further detailed scenario and quantification
analysis on the CROs in the TCFD report will be examined in 2022.
These considerations include external factors such as the impacts of the
expected high levels of inflation, lower economic growth, particularly in
our key areas of operation; the potential impacts of Covid-19 on the
Group; unfavourable currency exchange rate movements, principally the
USD/euro rate; increased regulations; and internal factors such as the
strategic plan under-delivering; the loss of a key production site; or a
major food safety or health and safety related event. These
considerations also took into account additional mitigating measures
available to the Group, including the ability to reduce capital expenditure
and the potential availability of additional debt facilities. The Board is
satisfied that sufficient financial headroom exists to address the
potential negative impacts arising from the events considered.
Conclusions
Having considered these elements and the Covid-19 related challenges
and impacts experienced in 2021 and those anticipated for the years
ahead, the Board assessed the prospects and viability of the Group in
accordance with the UK Corporate Governance Code requirements.
The Board has a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due over the
period of the assessment. The Board does not expect any reasonably
anticipated Covid-19 outcome to impact the Group’s long-term viability
or ability to continue as a going concern. The Board, in considering its
dividend policy for the years to 2024, believes it will have sufficient
distributable reserves to pay dividends. The Board assesses the
Group’s key financial metrics, liquidity position and projected cash flows
before declaring interim and proposing final dividends. The Board is also
satisfied that due to the continued strong cash flows in the business and
the expected proceeds from the disposal of the Group’s 40% interest in
Glanbia Ireland, sufficient distributable reserves are available to maintain
the execution of the share buyback programme which commenced in
December 2021 and continued into 2022.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
72
STRATEGIC REPORT
Principal risks and uncertainties
Link to strategic priorities (see pages 12 to 17)
Protect and grow our portfolio
of brands and ingredients
Purposeful growth through
innovation and acquisitions
Fuel growth by investing in
organisational enablers
Risk Potential impact Mitigation Developments in 2021 2022 focus areas
Strategic/External
Economic, industry
and political
Our performance is inuenced by global
economic conditions, consumer condence
and the stability of the markets in which we
operate.
The inability to contain the spread of
the virus and in-country Covid-19
actions taken by governments may
create a risk of business interruption.
Continued inationary pressures
above expectations may disrupt
demand due to consumer price
elasticity.
Deterioration in economic growth or
consumer condence, signicant
currency movements, political
instability or civil disturbance may
impact performance and the
achievement of growth targets.
Covid-19 actions taken by governments in the countries in which we operate
continue to address the spread of new variants, including Omicron. While
these actions may lead to some further business interruption the position is
stabilising as has the general political landscape.
Our strategy is aimed at the continued expansion of our geographic reach,
focusing on key customer relationships and investment in new product
development which help to protect the Group from economic uctuations.
The Board regularly assesses key market trends and the implications for
Group performance and strategic objectives. Corrective actions, such as the
GPN transformation project, are implemented as required.
The macroeconomic environment faced headwinds particularly in relation to cost
ination, developments in global trade uncertainty and currency uctuations which the
Group will continue to navigate and mitigate where possible.
Signicant actions to mitigate cost ination were implemented across a range of
initiatives including pricing, revenue growth management and efciency programmes.
The evolution of the Covid-19 pandemic and the restrictions implemented by
governments in the countries in which the Group operates continued to disrupt
business activities, supply chains and employees at varying levels across 2021.
The Group maintained its focus on protecting employees, continuing food supply and
maintaining our strong nancial position, throughout the year.
The macroeconomic environment will remain under continued focus throughout
2022 to ensure mitigating actions to combat cost ination impacts are assessed and
implemented where appropriate.
The continued successful progression of the GPN transformation objectives and the
careful management of price increases where required to address inationary
challenges will be a core area of management focus.
Aside from the impact of the pandemic and inationary concerns on the global
economy, the geo-political climate has also deteriorated with signicant concerns
developing regarding the escalating conict between Russia and the Ukraine in
particular, and also with regard to the Chinese claims on Taiwan.
Market disruption
Further waves of Covid-19 may continue to
disrupt the ability of markets to re-open
fully and delay growth plans.
Increasing competition across certain
channels through high promotional activity,
competitor product innovation and channel
shifts provides an ongoing challenge.
Consumer channels have been
restricted and/or shut down entirely
at varying stages during the
pandemic. Consumer spending
habits have also altered as a result of
a changed way of working / living
through the pandemic.
Failing to recognise or obtain
accurate and relevant competitive
and environmental intelligence may
result in the adoption of incorrect
business strategies.
The GPN team has invested in developing in-house capabilities to assess
market trends and to improve the accuracy and relevance of data available to
the Board and management to support decision making.
We invest in research and development expenditure focused on value-added
and customer-specic solutions, and invest in promotional activities where
required.
GN focuses on differentiating its capabilities from competitors through
innovation to enable it to be the partner of choice for nutritional and functional
solutions across both the dairy and non-dairy segments.
The continued successful implementation of the GPN transformation project
objectives and strong performance by GN and our joint ventures demonstrated the
resilience of our business and our people.
Marketing spend has been focused on the areas/brands where recovery momentum
is strong.
Covid-19 restrictions continued to be disruptive in 2021 with the arrival of the Omicron
variant impacting the ability of markets to fully re-open.
The impact of increasing inationary pressures, supply chain volatility and labour
shortages which have been mitigated by price increases will continue to be closely
monitored in 2022.
The continued successful implementation of the GPN transformation project
objectives will be integral to our growth ambitions.
The Board will keep the frequency and impact of any future waves of Covid-19 under
review to assess the level of potential market disruption and the ability of markets to
remain open throughout 2022.
Customer concentration
The Group benets from close
commercial relationships with a number
of key customers.
The loss or material disruption with
one or more of these customers, or a
signicant deterioration in
commercial terms, could have a
material impact on Group protability.
Pricing risks associated with the
growth of the online channel.
The Group has developed strong relationships with major customers by
focusing on superior customer service, quality assurance and cost
competitiveness.
Continued strong execution of the Glanbia Nutritionals commercial team one
face to the customer approach.
The Board regularly reviews its exposure, including credit exposure, to
individual customers and considers the impact of acquisitions where relevant.
The impacts of channel shifts by consumers and the nancial strength of our customer
base is continually assessed. In 2021, the impact of the pandemic continued to cause
disruption in the market with a continuing increase in the level of online purchasing.
The Board carefully monitored credit exposures in 2021 as customers recovered from
the challenges imposed by Covid-19 restrictions on their operations.
The impact of potential pricing risks associated with the growth of the online channel
will be closely monitored.
The Group will continue to build key customer partnerships through strategic
capacity expansions and product supply opportunities, particularly with our core GN
customers.
Climate change
The risk of non-compliance with regulations
and/or the Group’s vision to protect the
environment through responsible
stewardship.
Changes in policy, regulation,
technologies and weather
conditions, may impact the Group or
inuence consumer preferences.
Failure to comply with environmental
incident reporting regulations may
cause reputational damage.
The Board recognises the scientic consensus that action is required to
address the impact of greenhouse gases on rising global temperatures and
has ensured that:
• A Board approved strategy is in place to accelerate our climate change
commitments, targeting decarbonisation in our operations and supply
chain and addressing our most material sustainability focus areas.
• The Group-wide sustainability programme focuses on building a strong
culture, systems and governance model to oversee progress.
• We have expanded our climate change reporting to include the use of the
Task Force on Climate-Related Financial Disclosures (TCFD) framework.
A new ESG Board subcommittee was formed and a member of the Group Operating
Executive was appointed to oversee the delivery of the Group’s agenda on
environmental, sustainability and governance topics going forward.
A 2030 Group sustainability strategy branded ‘Pure Food + Pure Planet’ was reviewed
and approved by the Group Operating Executive and Board in January 2021 to ensure
that the Board and Group Operating Executive play a key role in maintaining and
developing clear alignment between business goals, the requirements of key
stakeholders and the ability of the Group to demonstrate a robust ESG framework.
The Group is implementing the recommendations of the Taskforce on Climate-Related
Financial Disclosures (TCFD), as outlined on pages 61 to 66.
The Board will receive regular updates from the ESG Committee on environment
related risks and opportunities and will work to integrate climate related impacts
within our governance, operational and strategic model, particularly with regard to
investment in energy efciency advancements, carbon reduction and emission
management programmes.
The ESG Committee, will focus on monitoring the effectiveness of the environment
metrics and regulatory disclosure requirements in assessing performance indicators.
Technological
Digital transformation
The risk of the Group implementing an
ineffective digital strategy.
A failure to adopt new technologies
may impact our targeted growth.
Signicant investment by the Group to ensure a leading eCommerce platform
and market-leading technologies have been deployed to drive growth across
the eCommerce landscape.
Executive commitment to ensure the full benets of the Group’s digital
capabilities are maximised to increase our speed to market, reduce costs and
improve customer experience.
Completion of the remaining elements of the phased migration to our preferred
eCommerce platform.
Closure of legacy websites where appropriate and continued focus on ensuring
eCommerce projects support business growth in direct-to-consumer (D2C) and
increased online shopping trends.
Fraud and cyber security exercises completed with vulnerability scans implemented
across all eCommerce sites.
Evaluate additional opportunities to leverage the D2C platform across GPN and
execute where the opportunity matches the brand strategy.
Continue to execute fraud and cyber security reviews and vulnerability scans across
all eCommerce sites.
Cyber security and data
protection
The Group is dependent on robust IT
systems and infrastructure for most of our
principal business processes which may be
impacted by the signicant growth of cyber
threats.
An adverse event could result in
signicant reputational damage due
to the potential loss or unauthorised
access to sensitive nancial,
personal and commercial information
such as the Group’s intellectual
property (IP) and that of our
customers. It could also result in
signicant negative impacts to our
operational capabilities.
Dedicated Group IT Security team in place to manage IT risks.
Regular security scanning across all eCommerce sites with penetration
testing completed on all new sites.
Policies in place regarding the protection of both business and personal
information, as well as the use of IT systems and applications by our
employees with oversight by the Group Data Protection Committee.
Systems in place, including ongoing audit activities, to monitor compliance
with relevant privacy laws and regulations.
Signicant development of control processes to limit the risk of system intrusion and/
or data loss with a particular focus on regulatory compliance.
Continued progress on the effective integration of our IT systems and related Group
monitoring controls within our recent acquisitions.
Evolved security and data privacy programmes to address new threats, hybrid
working models and increasing regulatory requirements.
Continue to enhance existing incident response processes from the system recovery
simulation exercise learnings.
Continue to raise awareness of potential cyber-attack risks such as phishing and
social engineering.
The cross-functional teams involved will continue to ensure our IP is protected
through appropriate IT security measures, patent applications and related control
procedures.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
73
Risk Potential impact Mitigation Developments in 2021 2022 focus areas
Strategic/External
Economic, industry
and political
Our performance is inuenced by global
economic conditions, consumer condence
and the stability of the markets in which we
operate.
The inability to contain the spread of
the virus and in-country Covid-19
actions taken by governments may
create a risk of business interruption.
Continued inationary pressures
above expectations may disrupt
demand due to consumer price
elasticity.
Deterioration in economic growth or
consumer condence, signicant
currency movements, political
instability or civil disturbance may
impact performance and the
achievement of growth targets.
Covid-19 actions taken by governments in the countries in which we operate
continue to address the spread of new variants, including Omicron. While
these actions may lead to some further business interruption the position is
stabilising as has the general political landscape.
Our strategy is aimed at the continued expansion of our geographic reach,
focusing on key customer relationships and investment in new product
development which help to protect the Group from economic uctuations.
The Board regularly assesses key market trends and the implications for
Group performance and strategic objectives. Corrective actions, such as the
GPN transformation project, are implemented as required.
The macroeconomic environment faced headwinds particularly in relation to cost
ination, developments in global trade uncertainty and currency uctuations which the
Group will continue to navigate and mitigate where possible.
Signicant actions to mitigate cost ination were implemented across a range of
initiatives including pricing, revenue growth management and efciency programmes.
The evolution of the Covid-19 pandemic and the restrictions implemented by
governments in the countries in which the Group operates continued to disrupt
business activities, supply chains and employees at varying levels across 2021.
The Group maintained its focus on protecting employees, continuing food supply and
maintaining our strong nancial position, throughout the year.
The macroeconomic environment will remain under continued focus throughout
2022 to ensure mitigating actions to combat cost ination impacts are assessed and
implemented where appropriate.
The continued successful progression of the GPN transformation objectives and the
careful management of price increases where required to address inationary
challenges will be a core area of management focus.
Aside from the impact of the pandemic and inationary concerns on the global
economy, the geo-political climate has also deteriorated with signicant concerns
developing regarding the escalating conict between Russia and the Ukraine in
particular, and also with regard to the Chinese claims on Taiwan.
Market disruption
Further waves of Covid-19 may continue to
disrupt the ability of markets to re-open
fully and delay growth plans.
Increasing competition across certain
channels through high promotional activity,
competitor product innovation and channel
shifts provides an ongoing challenge.
Consumer channels have been
restricted and/or shut down entirely
at varying stages during the
pandemic. Consumer spending
habits have also altered as a result of
a changed way of working / living
through the pandemic.
Failing to recognise or obtain
accurate and relevant competitive
and environmental intelligence may
result in the adoption of incorrect
business strategies.
The GPN team has invested in developing in-house capabilities to assess
market trends and to improve the accuracy and relevance of data available to
the Board and management to support decision making.
We invest in research and development expenditure focused on value-added
and customer-specic solutions, and invest in promotional activities where
required.
GN focuses on differentiating its capabilities from competitors through
innovation to enable it to be the partner of choice for nutritional and functional
solutions across both the dairy and non-dairy segments.
The continued successful implementation of the GPN transformation project
objectives and strong performance by GN and our joint ventures demonstrated the
resilience of our business and our people.
Marketing spend has been focused on the areas/brands where recovery momentum
is strong.
Covid-19 restrictions continued to be disruptive in 2021 with the arrival of the Omicron
variant impacting the ability of markets to fully re-open.
The impact of increasing inationary pressures, supply chain volatility and labour
shortages which have been mitigated by price increases will continue to be closely
monitored in 2022.
The continued successful implementation of the GPN transformation project
objectives will be integral to our growth ambitions.
The Board will keep the frequency and impact of any future waves of Covid-19 under
review to assess the level of potential market disruption and the ability of markets to
remain open throughout 2022.
Customer concentration
The Group benets from close
commercial relationships with a number
of key customers.
The loss or material disruption with
one or more of these customers, or a
signicant deterioration in
commercial terms, could have a
material impact on Group protability.
Pricing risks associated with the
growth of the online channel.
The Group has developed strong relationships with major customers by
focusing on superior customer service, quality assurance and cost
competitiveness.
Continued strong execution of the Glanbia Nutritionals commercial team one
face to the customer approach.
The Board regularly reviews its exposure, including credit exposure, to
individual customers and considers the impact of acquisitions where relevant.
The impacts of channel shifts by consumers and the nancial strength of our customer
base is continually assessed. In 2021, the impact of the pandemic continued to cause
disruption in the market with a continuing increase in the level of online purchasing.
The Board carefully monitored credit exposures in 2021 as customers recovered from
the challenges imposed by Covid-19 restrictions on their operations.
The impact of potential pricing risks associated with the growth of the online channel
will be closely monitored.
The Group will continue to build key customer partnerships through strategic
capacity expansions and product supply opportunities, particularly with our core GN
customers.
Climate change
The risk of non-compliance with regulations
and/or the Group’s vision to protect the
environment through responsible
stewardship.
Changes in policy, regulation,
technologies and weather
conditions, may impact the Group or
inuence consumer preferences.
Failure to comply with environmental
incident reporting regulations may
cause reputational damage.
The Board recognises the scientic consensus that action is required to
address the impact of greenhouse gases on rising global temperatures and
has ensured that:
• A Board approved strategy is in place to accelerate our climate change
commitments, targeting decarbonisation in our operations and supply
chain and addressing our most material sustainability focus areas.
• The Group-wide sustainability programme focuses on building a strong
culture, systems and governance model to oversee progress.
• We have expanded our climate change reporting to include the use of the
Task Force on Climate-Related Financial Disclosures (TCFD) framework.
A new ESG Board subcommittee was formed and a member of the Group Operating
Executive was appointed to oversee the delivery of the Group’s agenda on
environmental, sustainability and governance topics going forward.
A 2030 Group sustainability strategy branded ‘Pure Food + Pure Planet’ was reviewed
and approved by the Group Operating Executive and Board in January 2021 to ensure
that the Board and Group Operating Executive play a key role in maintaining and
developing clear alignment between business goals, the requirements of key
stakeholders and the ability of the Group to demonstrate a robust ESG framework.
The Group is implementing the recommendations of the Taskforce on Climate-Related
Financial Disclosures (TCFD), as outlined on pages 61 to 66.
The Board will receive regular updates from the ESG Committee on environment
related risks and opportunities and will work to integrate climate related impacts
within our governance, operational and strategic model, particularly with regard to
investment in energy efciency advancements, carbon reduction and emission
management programmes.
The ESG Committee, will focus on monitoring the effectiveness of the environment
metrics and regulatory disclosure requirements in assessing performance indicators.
Technological
Digital transformation
The risk of the Group implementing an
ineffective digital strategy.
A failure to adopt new technologies
may impact our targeted growth.
Signicant investment by the Group to ensure a leading eCommerce platform
and market-leading technologies have been deployed to drive growth across
the eCommerce landscape.
Executive commitment to ensure the full benets of the Group’s digital
capabilities are maximised to increase our speed to market, reduce costs and
improve customer experience.
Completion of the remaining elements of the phased migration to our preferred
eCommerce platform.
Closure of legacy websites where appropriate and continued focus on ensuring
eCommerce projects support business growth in direct-to-consumer (D2C) and
increased online shopping trends.
Fraud and cyber security exercises completed with vulnerability scans implemented
across all eCommerce sites.
Evaluate additional opportunities to leverage the D2C platform across GPN and
execute where the opportunity matches the brand strategy.
Continue to execute fraud and cyber security reviews and vulnerability scans across
all eCommerce sites.
Cyber security and data
protection
The Group is dependent on robust IT
systems and infrastructure for most of our
principal business processes which may be
impacted by the signicant growth of cyber
threats.
An adverse event could result in
signicant reputational damage due
to the potential loss or unauthorised
access to sensitive nancial,
personal and commercial information
such as the Group’s intellectual
property (IP) and that of our
customers. It could also result in
signicant negative impacts to our
operational capabilities.
Dedicated Group IT Security team in place to manage IT risks.
Regular security scanning across all eCommerce sites with penetration
testing completed on all new sites.
Policies in place regarding the protection of both business and personal
information, as well as the use of IT systems and applications by our
employees with oversight by the Group Data Protection Committee.
Systems in place, including ongoing audit activities, to monitor compliance
with relevant privacy laws and regulations.
Signicant development of control processes to limit the risk of system intrusion and/
or data loss with a particular focus on regulatory compliance.
Continued progress on the effective integration of our IT systems and related Group
monitoring controls within our recent acquisitions.
Evolved security and data privacy programmes to address new threats, hybrid
working models and increasing regulatory requirements.
Continue to enhance existing incident response processes from the system recovery
simulation exercise learnings.
Continue to raise awareness of potential cyber-attack risks such as phishing and
social engineering.
The cross-functional teams involved will continue to ensure our IP is protected
through appropriate IT security measures, patent applications and related control
procedures.
Risk trend
Increasing Stable
Decreasing
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
74
STRATEGIC REPORT
Principal risks and uncertainties continued
Link to strategic priorities (see pages 12 to 17)
Risk Potential impact Mitigation Developments in 2021 2022 focus areas
Operational/Regulatory
Talent management
The ability to attract, develop, engage and
retain appropriately qualied talent is
critical if the Group is to continue to
compete effectively.
A failure to retain, attract and/or
develop key talent, particularly in
emerging areas of talent need, will
impact on our ability to deliver
sustainable value for all our
stakeholders.
The Group’s purpose, vision and values are embedded across all levels of the
Group through dened training programmes.
A remuneration policy is in place with clear links to our strategic objectives.
This policy includes a balanced approach to short and long-term incentives
and is aimed at mitigating weak performance in any one year and utilising
appropriate retention tools for key individuals.
Strong recruitment processes, effective human resources (HR) policies and
procedures, robust succession management planning and talent
management initiatives are in place.
Protecting our employees continued to be a core focus of our Covid-19 business
continuity plans which was recognised in our employee engagement survey results.
Remote working continued to be supported where possible, and new smart working
hybrid models were developed for when workplaces re-open to all employees.
The Board monitored the implementation of the Group’s diversity strategy and metrics
across the organisation, including our new acquisitions and new geographies.
ESG metrics continue to be incorporated in executive remuneration to accelerate the
implementation of the Group’s strategy.
Retaining focus on the protection of our employees by sustaining control procedures
and employee communications throughout the pandemic in line with local restrictions
and Group policies.
Continuing execution of our people strategy which aims to sustain a high-performing,
values driven and respectful culture with a diversity and inclusion focus.
Monitoring the evolving talent retention risks driven by inationary pressures and
remote working options which have become more widespread during the pandemic.
Driving the HR transformation programme implementation particularly through the
global talent centre of excellence and IT platform development work.
Health and safety
The risk of an escalation in the spread of
Covid-19 or the spread of new coronavirus
strains.
The risk of non-compliance with building
and re code regulations and/or zoning
restrictions resulting in a loss of capacity or
closure at a major site.
Health and safety risks to our people
and the wider public.
Reputational damage, regulatory
penalties and an inability to service
customer requirements due to
capacity restrictions or plant closure.
ESG Board subcommittee formed and a member of the Group Operating
Executive appointed to oversee Health & Safety related performance
previously covered in other forums.
The Group Operating Executive will also continue to monitor progress against
our key health and safety, food safety and quality and environmental
objectives. This review is focused on ensuring an effective framework, Group
policies and clear objectives are in place and that corrective actions are
implemented in a timely manner.
The Group monitors overall safety and loss prevention performance through
the independently assessed Glanbia Risk Management System (GRMS).
Management controls in place to monitor the Group’s business continuity plans in
response to the evolving organisational needs arising from the pandemic.
All production sites remained operational throughout the pandemic, with approximately
three quarters of employees working on site and the remainder working remotely.
Employee engagement programmes continued across the Group to provide an
additional level of support to both our frontline and remote workers.
Close monitoring of our accident rates continues with a clear focus on driving effective
root cause analysis across the Group.
A new health and safety KPI target setting model more closely aligned to industry
benchmarks with clear maturity level classications was approved by the Audit
Committee.
The Group HR and operational teams will remain focused on providing ongoing
surveillance and support across the Group to maintain business continuity and
employee welfare including:
1. Maintaining effective employee engagement and welfare programmes.
2. Sustaining operations in line with local geographical restrictions.
3. Ensuring clearly communicated site health and safety policies and procedures are
in place.
4. Managing the timely re-opening of ofces when it is safe to do so.
Evolving health and safety regulatory requirements will continue to be monitored.
Supply chain
Risks include the inability to contain the
spread of Covid-19 resulting in prolonged
supply chain disruptions and related
inationary impacts.
The Covid-19 crisis could result in
supply chain constraints, inationary
impacts and/or negative impacts on
our international sales channels.
Milk availability and pricing can vary
from quarter-to-quarter and
year-to-year with resulting impacts
on production levels and input costs.
Appropriate short-term safety stocks are in place for our core raw materials
and detailed monitoring of raw material delay risks are in place with alternative
sources of supply identied if required.
The majority of our dairy activities are in joint venture partnerships with
established, robust business models to manage this risk in our dairy operations.
Our milk and procurement strategy teams work proactively with the US patron
supplier base to ensure the business remains competitive in its supplier
offerings to underpin long-term sustainable supply including the provision of
non-pricing value-added initiatives.
Cost ination became a headwind for the Group as 2021 progressed, resulting in
pricing action in both GPN and GN Nutritional Solutions (NS).
Signicant management effort deployed to prevent unexpected supply chain
disruptions.
The continuing spread of the disease and subsequent government restrictions did
negatively impact some sales channels and corrective actions were taken where
possible.
Both GPN and NS expect to mitigate ination through further pricing actions, volume
growth and the realisation of benets from the GPN transformation programme.
Continuing to monitor the potential impacts of Covid-19, particularly on the import of
key raw materials and/or negative impacts on our international sales channels and
taking effective action where required.
Ongoing engagement with our supply base to ensure sustainability of supply at a
level of pricing that is both commercial and competitive.
Product safety and
compliance
A breakdown in control processes may
result in contamination of products
resulting in a breach of existing food safety
legislation and potential consumer or
employee illness.
Reputational damage, regulatory
penalties or restrictions, product
recall costs, compensation
payments, lost revenues and
reduced growth potential.
The sudden introduction of more
stringent regulations such as
additional labelling requirements may
also cause operational difculties.
The global reporting tool and core Glanbia Quality Standards (GQS)/KPIs are
embedded across the Group.
Considerable focus on ensuring suitably qualied and experienced staff are
employed within the Group.
Ensuring new regulatory requirements and emerging issues are captured with
appropriate team training.
Appropriate product liability insurance is maintained.
All sites achieved or maintained a globally recognised food safety certication in 2021.
Signicant downward trend of critical incidents continued in 2021 partly due to the
effective root cause analysis and implementation of appropriate corrective and
preventive actions from previous incidents.
The exibility and commitment of our people has ensured robust quality and auditing
standards have been maintained, despite the complexities observed due to Covid-19.
Maintaining standards as we integrate new acquisitions and optimise our supply
chain globally by encompassing a mix of owned and contract manufacturer facilities.
Ensuring effective oversight of third party manufacturing qualications and
compliance with Glanbia’s food safety performance standards.
Tailoring business continuity plans to the evolving pandemic situation while
maintaining a clear focus on protecting our employees.
Working to continuously improve our operations, particularly in the servicing of higher
risk product sectors, while reducing our environmental impacts in a cost effective and
sustainable manner.
Acquisition/integration
The anticipated benets of acquisitions may
not be achieved if the Group fails to conduct
effective due diligence, complete the
transaction or properly integrate the
acquired businesses.
Below expected performance of the
acquired business and the diversion
of management attention to
integration efforts could result in
signicant value destruction.
The Board approves the business case and funding requirements for all
signicant investments and has acquisition integration processes in place to
monitor the performance of acquired businesses.
Chief Corporate Development Ofcer appointed to the Group Operating
Executive to oversee acquisition and divestiture related activity.
Acquired entity management teams are typically strengthened by the transfer
of experienced Glanbia managers, which assists in increasing the efciency of
integration efforts.
Mandatory post-acquisition completion and signicant capital expenditure
project reviews are conducted, with regular Audit Committee updates.
Signed a memorandum of understanding for the sale of Glanbia plc’s shareholding in
Glanbia Ireland to Glanbia Co-operative Society for €307 million.
The Board considered and approved the acquisition of a 60% stake in LevlUp, a
European D2C gaming nutrition brand and PacMoore, a US based ingredients
solutions business.
The Foodarom acquisition was effectively integrated into the Group’s operations.
Continued progression with the Group’s strategic joint venture partners with the
commissioning of the MWC-Southwest Holdings plant in Michigan, US and the
on-going commissioning of the Glanbia Cheese EU plant.
The Audit Committee assessed the impairment review of goodwill and intangibles,
including an appropriate consideration of the impacts of Covid-19 on the assessment,
as outlined on page 107 and reviewed a number of post-completion reviews
presented by the Group Finance Director.
The Board will continue to review the Group’s overall portfolio as part of its strategic
review processes and will evaluate potential acquisition opportunities to broaden the
portfolio in this context.
Completion of the disposal of Glanbia plc’s shareholding in Glanbia Ireland to Glanbia
Co-operative Society.
Acquisition integration and post-acquisition review processes will continue to be
monitored through Board and/or Audit Committee reviews.
The Audit Committee will continue to review the impairment testing methodology,
inputs, assumptions, sensitivity analysis and results of any material business units
performing below expectations.
Financial
Taxation changes
The Group’s tax strategy may be impacted
by legislative changes to local or
international tax rules.
The Group may be exposed to
additional tax liabilities.
The Group employs a team of tax professionals to support the Group in
ensuring compliance with legislative requirements globally.
We constructively engage with tax authorities where appropriate and we
engage advisors to clarify tax legislation to ensure that we achieve compliance
with relevant tax law across the jurisdictions in which we operate.
The Audit Committee is routinely updated on the outcome of tax authority
reviews. No material issues arose in any such reviews in recent years.
The Audit Committee received a detailed management presentation on our tax
structures and controls, the ongoing management of our current operations and
evolving tax legislation including the Organisation for Economic Co-operation and
Development (OECD) work on agreeing global minimum taxes.
The Committee also received a presentation from our external advisors on the
operating effectiveness of our systems of operation.
Management will continue to monitor developments in international tax legislation,
with a focus on maintaining compliance with legislative requirements.
Pro-active engagement with tax authorities in all material jurisdictions will continue
where required.
Protect and grow our portfolio
of brands and ingredients
Purposeful growth through
innovation and acquisitions
Fuel growth by investing in
organisational enablers
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
75
Risk Potential impact Mitigation Developments in 2021 2022 focus areas
Operational/Regulatory
Talent management
The ability to attract, develop, engage and
retain appropriately qualied talent is
critical if the Group is to continue to
compete effectively.
A failure to retain, attract and/or
develop key talent, particularly in
emerging areas of talent need, will
impact on our ability to deliver
sustainable value for all our
stakeholders.
The Group’s purpose, vision and values are embedded across all levels of the
Group through dened training programmes.
A remuneration policy is in place with clear links to our strategic objectives.
This policy includes a balanced approach to short and long-term incentives
and is aimed at mitigating weak performance in any one year and utilising
appropriate retention tools for key individuals.
Strong recruitment processes, effective human resources (HR) policies and
procedures, robust succession management planning and talent
management initiatives are in place.
Protecting our employees continued to be a core focus of our Covid-19 business
continuity plans which was recognised in our employee engagement survey results.
Remote working continued to be supported where possible, and new smart working
hybrid models were developed for when workplaces re-open to all employees.
The Board monitored the implementation of the Group’s diversity strategy and metrics
across the organisation, including our new acquisitions and new geographies.
ESG metrics continue to be incorporated in executive remuneration to accelerate the
implementation of the Group’s strategy.
Retaining focus on the protection of our employees by sustaining control procedures
and employee communications throughout the pandemic in line with local restrictions
and Group policies.
Continuing execution of our people strategy which aims to sustain a high-performing,
values driven and respectful culture with a diversity and inclusion focus.
Monitoring the evolving talent retention risks driven by inationary pressures and
remote working options which have become more widespread during the pandemic.
Driving the HR transformation programme implementation particularly through the
global talent centre of excellence and IT platform development work.
Health and safety
The risk of an escalation in the spread of
Covid-19 or the spread of new coronavirus
strains.
The risk of non-compliance with building
and re code regulations and/or zoning
restrictions resulting in a loss of capacity or
closure at a major site.
Health and safety risks to our people
and the wider public.
Reputational damage, regulatory
penalties and an inability to service
customer requirements due to
capacity restrictions or plant closure.
ESG Board subcommittee formed and a member of the Group Operating
Executive appointed to oversee Health & Safety related performance
previously covered in other forums.
The Group Operating Executive will also continue to monitor progress against
our key health and safety, food safety and quality and environmental
objectives. This review is focused on ensuring an effective framework, Group
policies and clear objectives are in place and that corrective actions are
implemented in a timely manner.
The Group monitors overall safety and loss prevention performance through
the independently assessed Glanbia Risk Management System (GRMS).
Management controls in place to monitor the Group’s business continuity plans in
response to the evolving organisational needs arising from the pandemic.
All production sites remained operational throughout the pandemic, with approximately
three quarters of employees working on site and the remainder working remotely.
Employee engagement programmes continued across the Group to provide an
additional level of support to both our frontline and remote workers.
Close monitoring of our accident rates continues with a clear focus on driving effective
root cause analysis across the Group.
A new health and safety KPI target setting model more closely aligned to industry
benchmarks with clear maturity level classications was approved by the Audit
Committee.
The Group HR and operational teams will remain focused on providing ongoing
surveillance and support across the Group to maintain business continuity and
employee welfare including:
1. Maintaining effective employee engagement and welfare programmes.
2. Sustaining operations in line with local geographical restrictions.
3. Ensuring clearly communicated site health and safety policies and procedures are
in place.
4. Managing the timely re-opening of ofces when it is safe to do so.
Evolving health and safety regulatory requirements will continue to be monitored.
Supply chain
Risks include the inability to contain the
spread of Covid-19 resulting in prolonged
supply chain disruptions and related
inationary impacts.
The Covid-19 crisis could result in
supply chain constraints, inationary
impacts and/or negative impacts on
our international sales channels.
Milk availability and pricing can vary
from quarter-to-quarter and
year-to-year with resulting impacts
on production levels and input costs.
Appropriate short-term safety stocks are in place for our core raw materials
and detailed monitoring of raw material delay risks are in place with alternative
sources of supply identied if required.
The majority of our dairy activities are in joint venture partnerships with
established, robust business models to manage this risk in our dairy operations.
Our milk and procurement strategy teams work proactively with the US patron
supplier base to ensure the business remains competitive in its supplier
offerings to underpin long-term sustainable supply including the provision of
non-pricing value-added initiatives.
Cost ination became a headwind for the Group as 2021 progressed, resulting in
pricing action in both GPN and GN Nutritional Solutions (NS).
Signicant management effort deployed to prevent unexpected supply chain
disruptions.
The continuing spread of the disease and subsequent government restrictions did
negatively impact some sales channels and corrective actions were taken where
possible.
Both GPN and NS expect to mitigate ination through further pricing actions, volume
growth and the realisation of benets from the GPN transformation programme.
Continuing to monitor the potential impacts of Covid-19, particularly on the import of
key raw materials and/or negative impacts on our international sales channels and
taking effective action where required.
Ongoing engagement with our supply base to ensure sustainability of supply at a
level of pricing that is both commercial and competitive.
Product safety and
compliance
A breakdown in control processes may
result in contamination of products
resulting in a breach of existing food safety
legislation and potential consumer or
employee illness.
Reputational damage, regulatory
penalties or restrictions, product
recall costs, compensation
payments, lost revenues and
reduced growth potential.
The sudden introduction of more
stringent regulations such as
additional labelling requirements may
also cause operational difculties.
The global reporting tool and core Glanbia Quality Standards (GQS)/KPIs are
embedded across the Group.
Considerable focus on ensuring suitably qualied and experienced staff are
employed within the Group.
Ensuring new regulatory requirements and emerging issues are captured with
appropriate team training.
Appropriate product liability insurance is maintained.
All sites achieved or maintained a globally recognised food safety certication in 2021.
Signicant downward trend of critical incidents continued in 2021 partly due to the
effective root cause analysis and implementation of appropriate corrective and
preventive actions from previous incidents.
The exibility and commitment of our people has ensured robust quality and auditing
standards have been maintained, despite the complexities observed due to Covid-19.
Maintaining standards as we integrate new acquisitions and optimise our supply
chain globally by encompassing a mix of owned and contract manufacturer facilities.
Ensuring effective oversight of third party manufacturing qualications and
compliance with Glanbia’s food safety performance standards.
Tailoring business continuity plans to the evolving pandemic situation while
maintaining a clear focus on protecting our employees.
Working to continuously improve our operations, particularly in the servicing of higher
risk product sectors, while reducing our environmental impacts in a cost effective and
sustainable manner.
Acquisition/integration
The anticipated benets of acquisitions may
not be achieved if the Group fails to conduct
effective due diligence, complete the
transaction or properly integrate the
acquired businesses.
Below expected performance of the
acquired business and the diversion
of management attention to
integration efforts could result in
signicant value destruction.
The Board approves the business case and funding requirements for all
signicant investments and has acquisition integration processes in place to
monitor the performance of acquired businesses.
Chief Corporate Development Ofcer appointed to the Group Operating
Executive to oversee acquisition and divestiture related activity.
Acquired entity management teams are typically strengthened by the transfer
of experienced Glanbia managers, which assists in increasing the efciency of
integration efforts.
Mandatory post-acquisition completion and signicant capital expenditure
project reviews are conducted, with regular Audit Committee updates.
Signed a memorandum of understanding for the sale of Glanbia plc’s shareholding in
Glanbia Ireland to Glanbia Co-operative Society for €307 million.
The Board considered and approved the acquisition of a 60% stake in LevlUp, a
European D2C gaming nutrition brand and PacMoore, a US based ingredients
solutions business.
The Foodarom acquisition was effectively integrated into the Group’s operations.
Continued progression with the Group’s strategic joint venture partners with the
commissioning of the MWC-Southwest Holdings plant in Michigan, US and the
on-going commissioning of the Glanbia Cheese EU plant.
The Audit Committee assessed the impairment review of goodwill and intangibles,
including an appropriate consideration of the impacts of Covid-19 on the assessment,
as outlined on page 107 and reviewed a number of post-completion reviews
presented by the Group Finance Director.
The Board will continue to review the Group’s overall portfolio as part of its strategic
review processes and will evaluate potential acquisition opportunities to broaden the
portfolio in this context.
Completion of the disposal of Glanbia plc’s shareholding in Glanbia Ireland to Glanbia
Co-operative Society.
Acquisition integration and post-acquisition review processes will continue to be
monitored through Board and/or Audit Committee reviews.
The Audit Committee will continue to review the impairment testing methodology,
inputs, assumptions, sensitivity analysis and results of any material business units
performing below expectations.
Financial
Taxation changes
The Group’s tax strategy may be impacted
by legislative changes to local or
international tax rules.
The Group may be exposed to
additional tax liabilities.
The Group employs a team of tax professionals to support the Group in
ensuring compliance with legislative requirements globally.
We constructively engage with tax authorities where appropriate and we
engage advisors to clarify tax legislation to ensure that we achieve compliance
with relevant tax law across the jurisdictions in which we operate.
The Audit Committee is routinely updated on the outcome of tax authority
reviews. No material issues arose in any such reviews in recent years.
The Audit Committee received a detailed management presentation on our tax
structures and controls, the ongoing management of our current operations and
evolving tax legislation including the Organisation for Economic Co-operation and
Development (OECD) work on agreeing global minimum taxes.
The Committee also received a presentation from our external advisors on the
operating effectiveness of our systems of operation.
Management will continue to monitor developments in international tax legislation,
with a focus on maintaining compliance with legislative requirements.
Pro-active engagement with tax authorities in all material jurisdictions will continue
where required.
Risk trend
Increasing Stable
Decreasing
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
76
DIRECTORS’ REPORT
Corporate
Governance
Report
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
77
Corporate Governance Report
Introduction from the Group Chairman
Dear Shareholder,
On behalf of the Board, I am delighted to present the Corporate
Governance Report for the year ended 1 January 2022.
2021 has been another extraordinary year, I was appointed the first
independent Group Chairman on 8 October 2020 in the midst of
the Covid-19 pandemic and it has been an unprecedented time in
which to chair the Board and a period that has afforded me a deeper
understanding of the strength of the leadership and culture within
Glanbia. As the Covid-19 pandemic continued to impact society and
our daily lives, I observed the power of the collective Glanbia spirit and
our values being lived each day in the way we work together alongside
our customers and suppliers committed to our purpose to deliver better
nutrition for every step of life’s journey. The Group remains vigilant
to the continued unpredictable and disruptive potential of the
Covid-19 pandemic.
Disposal of Glanbia plc’s 40% interest in Glanbia
Ireland DAC
Following many years of successful collaboration with Glanbia
Co-operative Society Limited (the ‘Society’) as joint venture partners
in Glanbia Ireland DAC (‘Glanbia Ireland’ or ‘GI’), on 7 December 2021,
the Glanbia plc Board approved the sale of Glanbia plc’s 40% interest
in Glanbia Ireland to the Society for a sale price of €307 million, subject
to the receipt of all necessary approvals and any applicable regulatory
approvals. The requisite approvals were obtained by the members
of the Society and the Independent Shareholders of the Company
on 17 December 2021 and 25 February 2022, respectively.
The disposal of Gl represents the final stage of a transformation journey
that commenced in 2012 (with the creation of GI) and will enable Glanbia
plc and the Society to focus on our respective strategies positioning us
well for the future. The proceeds from the sale will be re-invested behind
our growth strategy to drive further growth and to return capital to
shareholders. The Society will continue to hold a strategic investment
in Glanbia plc.
Further details on the disposal transaction are set out on
page 40.
Sustainability
During the year, we enhanced the governance of sustainability activities
across the Group. We established an Environmental, Social and
Governance (‘ESG’) Committee which I chair, and moved to include
environmental targets in our remuneration metrics.
While sustainability activities are overseen by the Board, the ESG
Committee introduced various governance changes to support delivery
and oversight of our ambitious Group sustainability strategy which are
described on pages 109 to 111.
Our commitment to delivering long-term value for our stakeholders has
made Glanbia successful over many years. As the needs and priorities
of our stakeholders evolve, Glanbia will continue to innovate to enable
people and businesses to grow and progress. This is what makes our
business truly sustainable.
Further details on our sustainability strategy can be found on
pages 52 to 66 and pages 109 to 111.
Stakeholder engagement
Stakeholder engagement, and understanding the views of our
stakeholders, is a core part of my role as Group Chairman and is integral
to developing and delivering a successful and sustainable business
strategy in a manner that meets the needs of all our stakeholders.
As required by the UK Corporate Governance Code (the ‘Code’), the
Board ensures that Glanbia engages effectively with, and encourages
participation from, its key stakeholders.
Since my appointment as Group Chairman, I have had the pleasure of
proactively engaging regularly, albeit virtually (in most instances), with
a significant number of our largest shareholders and other stakeholders
to gain an understanding of their perspectives on Glanbia. I appreciate
the time taken by stakeholders to engage on these important subjects
and I remain available to discuss these matters during the course of the
coming year.
Further details on how we engage with our stakeholders are set
out on pages 94 and 95.
Donard Gaynor
Group Chairman
COMMITTED TO
THE HIGHEST
STANDARDS OF
GOVERNANCE
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
78
DIRECTORS’ REPORT
Culture
The Board is cognisant of our role in promoting the Group’s culture
through living the Group’s values and in particular ensuring that its
uniqueness is safeguarded in such times of change. We are a purpose
led company and the relevance of our purpose became very apparent
especially during the pandemic, as an essential service delivering better
nutrition for every step of life’s journey. We believe in healthier lifestyles.
The Board recognises that critical to our success is ensuring a culture
that complements the delivery of our strategy. The ‘Glanbia Way’ has
five global strategically important expectations within the business
which are our values and these values are at the heart of our business
and culture and they set us apart. Our values are set out on page 3.
They are the code by which we live and breathe, shaping how we behave
with each other, how we work with our partners and how we build
trusted relationships with our customers, consumers and communities,
and they are placed at the forefront of our decision-making and strategy
development in advancing and achieving our purpose.
Our cultural climate is measured through a number of mechanisms
including policy and compliance processes, internal audit and both
formal and informal channels for employees to raise concerns (including
our employee engagement survey and our whistleblowing programme,
Speak Up, which is also available to the contractors and suppliers
working with us). The Board is appraised of any material whistleblowing
incidents and in my continuing role as Workforce Director, I review them
on an ongoing basis throughout the year.
Diversity, Equity and Inclusion
During 2021 we accelerated our commitment to having a more diverse,
equitable and inclusive working culture and approved a new Group-wide
Diversity, Equity and Inclusion (‘DE&I’) policy and strategy aimed at
embedding a more equitable culture within the organisation. This
strategy and policy is aligned to Glanbia’s Purpose, Vision and Values
and is an extension of the work we have been doing over the past
number of years to embed values-based behaviours and commits to
fostering a truly inclusive culture that rejects any forms of racism and
other discrimination, where everyone feels that they belong, are valued
and respected for who they are as individuals and that they have equal
opportunities to thrive. Moreover to further emphasize the role of senior
leadership, in this regard, the Group Operating Executive have DE&I
metrics embedded in their annual incentive. We plan to cascade further
in 2022 through the various leadership cadres.
For more on our DE&I policies see pages 22 to 23.
Board composition, Board renewal
and Committee changes
There were a number of changes in the composition of the Board and
Committees during 2021 which are discussed in more detail in the
Nomination and Governance Committee Report on pages 114 and 115.
From a governance perspective the most significant changes to the
Board were:
1. the strategic decision on 23 February 2021 by the Society to
reduce its representation on the Board (from seven to three by 2023)
in order to facilitate the appointment of additional Independent
Non-Executive Directors and further strengthen the diversity of
the Board. The Society and the Company formally amended their
Relationship Agreement on 5 May 2021 to reflect the changes
agreed on 23 February 2021, details of which are contained in the
Nomination and Governance Committee Report on page 115;
2. in accordance with the amended and restated Relationship
Agreement dated 5 May 2021 (the ‘Relationship Agreement’)
between the Company and the Society, the reduction in 2021 of
the number of Non-Executive Directors nominated by the Society
(‘Society Nominee Directors’) from seven to six. Society Nominee
Director, Martin Keane retired from the Board at the conclusion
of the 2021 Annual General Meeting (‘AGM’). On behalf of the Board,
I thank Martin for his service and commitment to the Board during
his tenure and particularly as former Group Chairman over the last
number of years. and wish him success for the future; and
3. in line with the decision referred to in 1 above a reduction in the size
of the Board from 15 to 13 in 2023.
During 2021, the Board unanimously proposed and I agreed that I will
continue as Group Chairman until my 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 and other ongoing strategic initiatives.
On 23 February 2021, the Board approved the appointment of Paul
Duffy as Independent Non-Executive Director effective 1 March 2021
returning the number of Independent Non-Executive Directors to six.
Full biographical details for Paul can be found on page 82.
On 24 February 2022, Patrick Coveney informed the Board that he will
step down as Non-Executive Director of Glanbia plc effective 30 March
2022. A process to identify two new Independent Non-Executive
Directors is currently underway.
Additionally, in line with the Relationship Agreement referred to in 1
above Vincent Gorman, Society Nominee Director, will retire from the
Board at the conclusion of the AGM on 5 May 2022.
I thank Patrick and Vincent for their commitment and valuable
contributions to the Board during their tenure.
Michael Horan has been appointed to a new role of Chief Finance and
Secretariat Officer of the Society effective 4 April 2022 and will step
down from his role as Group Secretary and as a member of the Group
Operating Executive, with effect from that date. Michael has held the
position of Group Secretary since 2005 having first joined Glanbia in
1998. Michael has made an enormous contribution to the growth and
development of the Group during his tenure, particularly in relation to the
transformation of our Irish business where he has played a pivotal role.
I wish to thank Michael for his support to me personally in my transition
to the role of Group Chairman and on behalf of the Board I wish Michael
all the very best in his new role and every success in the future.
“ The Board is cognisant of their role
in promoting the Group’s culture
through living the Group’s values
and in particular ensuring that its
uniqueness is safeguarded in such
times of change.”
Corporate Governance Report continued
Introduction from the Group Chairman continued
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
79
As a result of Michael’s move, Liam Hennigan, Group Director of
Strategic Planning & Investor Relations, will take on an expanded role of
Company Secretary and Head of Investor Relations for Glanbia with
effect from 4 April 2022. Liam joined Glanbia in 2014 as Head of Investor
Relations and later took on added responsibility for Strategic Planning.
Prior to Glanbia he worked at PwC focusing on restructuring, mergers
and acquisitions within the consumer sector.
The composition of the three main Board Committees were reorganised
in 2021 and 2022 as set out on page 114. In addition to the new ESG
Committee a new Corporate Development Committee was established
on 24 February 2022 to assist the Board in assessing new corporate
development opportunities. The composition of the new ESG
Committee and Corporate Development Committee are set out on
pages 109 and 114 respectively.
We are pleased that as at the date of this Report female Directors
comprise 33.3% of our Independent of the Society Non-Executive
Directors and 21.4% of our total Directors.
Board evaluation
A comprehensive and externally facilitated Board evaluation was
undertaken between 2019 and 2020. This year, our Board evaluation
was an internal one, led by myself. The evaluation provided the Board
with the assurance that actions arising from the external evaluation,
including around Board succession, were progressing well, and the
Board concluded that it was operating effectively. The evaluation
process also allowed the Board to identify opportunities for it to further
improve its effectiveness. A full summary of the outcomes of the Board
evaluation and the areas of focus that we have agreed are set out in
more detail on page 100 of this Report.
Priorities for the Board and Board Committees
during 2021
Audit Committee
In 2021, the Committee maintained a strong focus on its responsibilities
for monitoring and reviewing the effectiveness of the Group’s systems of
risk management and internal controls. This included an assessment of
the ongoing challenges posed by the Covid-19 pandemic and the
processes in place to ensure effective oversight of environmental and
other non-financial disclosures. The Committee also reviewed reports
from specialist functions such as Health and Safety, Group Tax, Group
IT and Group Quality and Food Safety to identify issues that may have a
material impact to the Group. Following a detailed review, the Audit
Committee is satisfied that the Group’s risk management and internal
control processes are working effectively and have not been unduly
impacted by the remote working environment that remained largely in
place across the Group in 2021.
Nomination and Governance Committee
During the year, the key focus of the Nomination and Governance
Committee was, in accordance with the Relationship Agreement, the
recruitment and selection of new Independent Non-Executive Directors
which successfully resulted in the appointment of Paul Duffy to the
Board effective 1 March 2021. The extension of my term of office as
first Independent of the Society Group Chairman until 2025 was also
a major priority for the Committee. The activities of the Nomination and
Governance Committee are detailed on pages 112 to 117.
Remuneration Committee
In 2021 due to the Covid-19 pandemic, the Company deferred bringing
a new Remuneration Policy to the 2021 AGM until 2022, in accordance
with the European (Shareholder Rights) Regulations 2020 (‘SRD II’). The
Remuneration Policy review was undertaken in 2021 with a new policy
proposed for 2022-2024. The Remuneration Policy 2022-2024 (the
‘Policy’) has required exceptional consideration and judgement by the
Committee to ensure the new policy is aligned to the Group’s long term
strategy while simultaneously navigating a continuing period of volatility
requiring dynamic performance management agility and resilience. In
addition, to address new requirements under the Code and align with
investor expectations the Policy is being amended to include the
alignment of Executive Director pension arrangements with the wider
workforce from 2023 and post-employment shareholding requirements.
The Remuneration Committee completed a shareholder consultation
process and engaged with proxy advisors and their feedback is
reflected in the Policy which was approved by the Board on 7 December
2021 and will be put to shareholders for their consideration at the 2022
AGM of the Company.
Looking ahead
The governance priorities for the coming year include a continued focus
on maximising our growth strategy, supporting our diversity, equity and
inclusion journey and strategy and specifically monitoring progress
against our sustainability targets. We will also be planning our 2022
AGM and I encourage all shareholders to use their proxy vote in
respect of the resolutions to be considered at the Company’s 2022
AGM which will be held on 5 May 2022 at 11.00 a.m. (the location and
form of the meeting will be subject to the prevailing Covid-19 restrictions
but at the time of writing it is expected to be held both in person and
via a virtual meeting platform). This will enable us to obtain a better
understanding of your views. I also welcome questions from
shareholders either via our website www.glanbia.com, by e-mail at
Groupsecretary@glanbia.ie or in person at the AGM.
Good governance and a strong corporate culture are the foundations
of Glanbia’s purpose, vision and strategy. The Board gives careful
consideration to the views of all stakeholders in its decision-making
and understands the importance of clear disclosures of this and other
material issues in its reporting of how governance matters contribute
to the long-term success of the Company. The Corporate Governance
Report is prepared on that basis. The following pages set out further
detail on our Board’s composition, corporate governance arrangements,
processes and activities during 2021, together with our Board
Committee Reports.
I would like to express my sincere thanks to the Board and on behalf of
the Board to our employees, colleagues and partners worldwide, whose
remarkable agility and commitment during this difficult and uncertain
period has been exemplary and without whose talents we could not
achieve success.
I believe that the Board is well placed to provide the strategic oversight
and stewardship required to ensure that Glanbia continues to deliver
long-term sustainable success. We remain committed to the execution
of our long-term growth strategy and the delivery of further margin
expansion, cash generation and enhanced returns for shareholders.
Donard Gaynor
Group Chairman
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
80
Board gender diversity
Male
Female
Directors’ tenure on the Board
Less than 3 years
Between 3 and 6 years
Between 6 and 9 years
Over 9 years
Composition of the Board
Group Chairman
Non-Executive Directors nominated by
Glanbia Co-operative Society Limited
Other Non-Executive Directors
Executive Directors
DIRECTORS’ REPORT
CORPORATE
GOVERNANCE
AT A GLANCE
“Our approach to corporate governance
aims to preserve and strengthen
stakeholder confidence in our business.”
Major Board Activities
The major decisions taken by the Board and its Committees during
2021 included:
• disposal of Glanbia plc’s 40% interest in Glanbia Ireland DAC;
• a number of important strategic acquisitions in Europe and
North America;
• the adoption of the Group sustainability strategy;
• the establishment of an Environmental, Social and Governance
(‘ESG’)Committee and Corporate Development Committee;
• the adoption of a Diversity, Equity and Inclusion Policy;
• succession planning and talent management;
• further share buyback programme(s) and dividend payments; and
• agreement with the Society to make further changes by 2023 to its
Board representation enabling further recruitment of Independent
Non-Executive Directors and advancement of the Board’s diversity goals.
More details on our Board activities can be found on pages 89 to 93.
Corporate Governance Statement
During 2021 the Group was subject to the Irish Corporate
Governance Annex (2010) and the UK Corporate Governance
Code, collectively the ‘Codes’. The Group has applied all the
principles and complied with the detailed provisions of the Codes
throughout 2021 with the exception of those set out below.
TheCodes are not a rigid set of rules and they recognise that an
alternative to following a provision may be justified in particular
circumstances where good governance is still achieved. The
rationale for these departures is explained below:
Provision 11 (Composition of the Board of Directors)
The current composition of the Board reflects the relationship
of the Company with the Society which is documented in the
amended and restated Relationship Agreement dated 5 May
2021. On 23 February 2021, the Society and the Board agreed
a number of changes which will impact the composition and size
of the Board over the period between 2021 to 2023 and which will
reduce the number of Directors nominated by the Society on the
Board from the current level of six (February 2021: seven) to three
and the Board size from 15 to 13 (details of which are set out in the
Nomination and Governance Committee Report on page 115).
TheBoard is satisfied that the current composition and size of
theBoard is justified in our particular circumstances.
Provision 19 (Chairman tenure)
In accordance with the Relationship Agreement dated 2 July 2017,
Donard Gaynor, an Independent Non-Executive Director, was
appointed as the first Independent of the Society Group Chairman
of the Company on 8 October 2020.
During 2021, the Board unanimously agreed that the Group
Chairman will continue as Group Chairman until his successor is
appointed in 2025 to facilitate the appointment of three new
Independent Non-Executive Directors together with ongoing
effective Board renewal. The Board believes that the extension of
the Group Chairman’s tenure beyond nine years is warranted in
this particular instance to facilitate effective succession planning
and the development of a diverse board.
Provisions 24 and 32 (Composition of Board Committees)
The Group Chairman (appointed on 8 October 2020) continued
as a member of the Audit Committee until 20 January 2021
and remained as Chairman of the Remuneration Committee
until 28 February 2021 to facilitate the completion of the 2020
year-end processes and ensure an orderly transition to the new
Committee members.
Provision 36 (Post-employment shareholding policy)
Post cessation of employment shareholding guidelines are
proposed as part of the 2022-2024 Remuneration Policy review.
Provision 38 (Pension Contributions)
The pension contribution rates for our two Executive Directors will
be aligned with the wider Irish workforce by the end of 2022. The
pension contribution rates for any future new executive directors
will immediately be aligned with the wider Irish workforce.
A detailed description of how we have applied the principles and
detailed provisions oftheCodes is set out in the following pages
including the Audit,Environmental, Social and Governance,
Nomination and Governance and Remuneration
CommitteeReports.
Corporate Governance Report continued
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
81
Board of Directors and Senior Management
Group Chairman and Executive Directors
Donard Gaynor
Group Chairman and Non-Executive Director
Age: 65
Siobhán Talbot
Group Managing Director and Executive Director
Age: 58
Committee Membership
NGC RCESG
Date of appointment
12 March 2013
Board tenure
Eight full years
Skills and expertise
Extensive knowledge of the food and beverage industry with significant commercial
acumen and deep insight into international business.
Experience
Donard Gaynor was appointed Group Chairman on 8 October 2020. Donard
Gaynor retired in December 2012 as Senior Vice President of Strategy and
Corporate Development of Beam, Inc., the premium spirits company previously
listed on the New York Stock Exchange. A Fellow of Chartered Accountants Ireland
and the American Institute of Certified Public Accountants, he joined Beam, Inc. in
2003 as Senior Vice President and Managing Director – International. Prior to this,
he served in a variety of senior executive leadership roles with The Seagram Spirits
& Wine Group in New York and was also Audit Client Services Partner with the New
York office of PricewaterhouseCoopers. In November 2016, Donard was appointed
Chairman of Hazelwood Demense Limited, ‘The Lough Gill Distillery’ Company.
Key external appointments
Chairman of Hazelwood Demesne Limited.
Committee Membership
ESG
Date of appointment
1 July 2009
Board tenure
12 full years
Skills and expertise
Strong leadership qualities, and deep knowledge of management, finance and
strategic planning acquired from a successful career path within Glanbia.
Experience
Siobhán Talbot was appointed as Group Managing Director on 12 November 2013,
having been appointed Group Managing Director Designate on 1 June 2013. She
was previously Group Finance Director and her role encompassed responsibility for
Group strategic planning. She has been a member of the Group Operating
Executive since 2000 and the Board since 2009 and has held a number of senior
positions since she joined the Group in 1992. She is also a Director of the Irish
Business Employers’ Confederation (IBEC) and was appointed as a Non-Executive
Director of CRH plc effective 1 December 2018. Prior to joining Glanbia, she worked
with PricewaterhouseCoopers in Dublin and Sydney. A Fellow of Chartered
Accountants Ireland, Siobhán graduated from University College Dublin with
a Bachelor of Commerce degree and Diploma in Professional Accounting.
Key external appointments
Non-Executive Director of CRH plc and Director of the Irish Business Employers’
Confederation (IBEC).
Mark Garvey
Group Finance Director and Executive Director
Age: 57
Date of appointment
12 November 2013
Board tenure
Eight full years
Skills and expertise
Strong background in finance and global executive management and extensive
experience in the food and beverage industry.
Experience
Mark Garvey was appointed as Group Finance Director on 12 November 2013.
Prior to joining Glanbia he held the position of Executive Vice President and Chief
Financial Officer until 2012 with Sara Lee Corporation, a leading global food and
beverage company. Mark also held a number of senior finance roles in the Sara Lee
Corporation in the US and Europe and prior to that he worked with Arthur Andersen
in Ireland and the US. A Fellow of Chartered Accountants Ireland and the American
Institute of Certified Public Accountants, Mark graduated from University College
Dublin with a Bachelor of Commerce degree and Diploma in Professional
Accounting and has an Executive MBA from Northwestern University, Illinois.
Key external appointments
None.
Key
AC
Audit Committee
ESG
Environmental Social and Governance Committee
NGC
Nomination and Governance Committee
RC
Remuneration Committee
Chair
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
82
DIRECTORS’ REPORT
Dan O’Connor
Senior Independent Director and Non-Executive Director
Age: 62
Roisin Brennan
Non-Executive Director
Age: 57
Committee Membership
NGC RCAC
Date of appointment
1 December 2014
Board tenure
Seven full years
Skills and expertise
Strong, strategic leadership acquired from 30 years international and financial
services sector experience.
Experience
Dan O’Connor is currently Chairman of Activate Capital Limited and a Director of
Oriel Windfarm Limited. He is former Chairman of International Personal Finance plc
and a former Non-Executive Director of CRH plc. Dan is a former President and
Chief Executive Officer of GE Consumer Finance Europe and a former Senior
Vice-President of GE. He was Executive Chairman of Allied Irish Banks plc from 2009
until 2010. A Fellow of Chartered Accountants Ireland. Dan graduated from University
College Dublin with a Bachelor of Commerce degree and Diploma in Professional
Accounting.
Key external appointments
Chairman of Activate Capital Limited and Director of Oriel Windfarm Limited.
Committee Membership
NGC RC
Date of appointment
1 January 2021
Board tenure
One full year
Skills and expertise
Extensive strategic and financial advisory experience across many sectors including
food and FMCG.
Experience
Roisin Brennan is a former Chief Executive of IBI Corporate Finance Ltd and has over
20 years of investment banking experience, particularly advising public companies in
Ireland. She brings strong strategic and financial advisory experience across many
sectors including food and FMCG to the Board. Roisin is currently a Non-Executive
Director of Ryanair Holdings plc, Hibernia REIT plc, Musgrave Group plc and Dell
Bank International DAC. Formerly, she was a Non-Executive Director of DCC plc from
2005 until 2016 and is also a former Non-Executive Director of Wireless Group plc,
Coillte DAC and The Irish Takeover Panel. A Fellow of Chartered Accountants Ireland,
Roisin graduated from University College Dublin with a Bachelor of Civil Law degree.
Key external appointments
Non-Executive Director of Ryanair Holdings plc, Hibernia REIT plc,
Musgrave Group plc and Dell Bank International DAC.
Patrick Coveney
Non-Executive Director
Age: 51
Paul Duffy
Non-Executive Director
Age: 56
Committee Membership
ESGAC
Date of appointment
30 May 2014
Board tenure
Seven full years
Skills and expertise
Experienced chief executive officer who has gained extensive strategic, corporate
development and transactional experience.
Experience
Patrick Coveney is Chief Executive Officer (CEO) of Greencore Group plc, a leading
convenience foods manufacturer. Prior to becoming CEO of Greencore, Patrick served as
the Chief Financial Officer for Greencore for over two years. Before he joined Greencore,
Patrick was Managing Partner of McKinsey & Company in Ireland. Patrick is also
Non-Executive Chairman of Core Media Group. He holds an M.Phil and D.Phil from New
College Oxford University, where he was a Rhodes Scholar. He also holds a Bachelor of
Commerce degree (First Class) from University College Cork. Patrick will step down as
Non-Executive Director of Glanbia plc and Director and CEO of Greencore effective
30 March 2022. He will join SSP Group as Group CEO effective 31 March 2022.
Key external appointments
CEO of Greencore Group plc and Non-Executive Chairman of Core Media Group.
Committee Membership
RCAC
Date of appointment
1 March 2021
Board tenure
One full year
Skills and expertise
Experienced Chairman and Chief Executive Officer with extensive knowledge of the
consumer and beverage industry with significant strategic and brand experience.
Experience
Paul Duffy is a former Chairman and CEO of Pernod Ricard North America, a global
leader in the Wine and Spirits industry. During his 25 year career with Pernod Ricard,
Paul held a number of senior management positions including Chairman and CEO
roles at Pernod Ricard UK, The Absolut Company (Sweden) and Irish Distillers. He
served on the Pernod Ricard worldwide management executive committee. Paul is
currently a director of W.A. Baxter & Sons, a United Kingdom Food Group and is a
former director of Corby Spirit and Wine Limited, a leading Canadian marketer and
distributor of spirits and wines listed on the Toronto Stock Exchange. Paul is a Fellow
of Chartered Accountants Ireland and is a graduate of Trinity College Dublin.
Key external appointments
Non-Executive Director of W.A. Baxter & Sons.
Corporate Governance Report continued
Board of Directors and Senior Management continued
Senior Independent Director, Non-Executive Directors
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
83
Board of Directors and Senior Management continued
Senior Independent Director, Non-Executive Directors continued
Jane Lodge
Non-Executive Director
Age: 66
Committee Membership
RCAC
Date of appointment
1 November 2020
Board tenure
One full year
Skills and expertise
In-depth knowledge of international business, management, corporate transactions,
corporate governance and reporting gained from a successful career with Deloitte.
Experience
Jane Lodge is a former Senior Audit Partner of Deloitte with extensive knowledge and
experience of international businesses in a wide range of sectors. Jane served on the
Deloitte UK Board of Partners and was the UK Manufacturing Industry Lead Partner.
She is currently a Non-Executive Director of FirstGroup plc, DCC plc and Bakkavor
Group plc. She is a former Non-Executive Director of Devro plc, Sirius Minerals plc
and Costain Group plc. A Fellow of the Institute of Chartered Accountants in England
and Wales, Jane graduated from University of Birmingham with a BSc in Geology.
Key external appointments
Non-Executive Director of FirstGroup plc, DCC plc and Bakkavor Group plc.
Key
AC
Audit Committee
ESG
Environmental Social and Governance Committee
NGC
Nomination and Governance Committee
RC
Remuneration Committee
Chair
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
84
DIRECTORS’ REPORT
Patsy Ahern
Non-Executive Director nominated by the Society
Age: 64
Vincent Gorman
Non-Executive Director nominated by the Society
Age: 65
Date of appointment
21 June 2018
Board tenure
Six full years (over each of his terms)
Skills and expertise
Extensive knowledge of the global dairy and agribusiness industry and significant
experience in the governance and strategic management of a global business
gained from his tenure on the Boards of Glanbia Co-operative Society Limited
and Glanbia plc.
Experience
Patsy Ahern farms at Sheanmore, Ballyduff Upper, Co. Waterford and previously
served two full years on the Board. Patsy has completed the University College
Cork Diploma in Corporate Direction.
Key external appointments
Director of Irish Co-operative Organisation Society Limited.
Date of appointment
27 June 2013
Board tenure
Eight full years
Skills and expertise
Extensive knowledge of the global dairy and agribusiness industry and significant
experience in the governance and strategic management of a global business
gained from his tenure on the Boards of Glanbia Co-operative Society Limited
and Glanbia plc.
Experience
Vincent Gorman farms at Ballindrum, Athy, Co. Kildare. Vincent will retire from the
Board at the conclusion of the AGM on 5 May 2022.
Key external appointments
Chairman of Progressive Genetics Co-operative Society Limited.
Brendan Hayes
Non-Executive Director nominated by the Society
Age: 61
John G Murphy
Non-Executive Director nominated by the Society
Age: 59
Date of appointment
2 June 2017
Board tenure
Nine full years (over each of his terms)
Skills and expertise
Extensive knowledge of the global dairy and agribusiness industry and significant
experience in the governance and strategic management of a global business
gained from his tenure on the Boards of Glanbia Co-operative Society Limited
and Glanbia plc.
Experience
Brendan Hayes farms at Ballyquinn, Carrick-on-Suir, Co. Waterford and previously
served four full years on the Board. He was appointed Vice-Chairman of Glanbia
Co-operative Society Limited on 8 October 2020. Brendan has completed the
University College Cork Diploma in Corporate Direction.
Key external appointments
None.
Committee Membership
ESG
Date of appointment
29 June 2010
Board tenure
11 full years
Skills and expertise
Extensive knowledge of the global dairy and agribusiness industry and significant
experience in the governance and strategic management of a global business
gained from his tenure on the Boards of Glanbia Co-operative Society Limited
and Glanbia plc.
Experience
John G Murphy farms at Ballinacoola, Craanford, Gorey, Co. Wexford. John served
as Group Vice-Chairman between 2 June 2017 and 8 October 2020. John was
appointed Chairman of Glanbia Co-operative Society Limited on 8 October 2020.
John has completed the University College Cork Diploma in Corporate Direction.
Key external appointments
None.
Corporate Governance Report continued
Board of Directors and Senior Management continued
Non-Executive Directors nominated by Glanbia Co-operative Society Limited (the ‘Society’)
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
85
Board of Directors and Senior Management continued
Non-Executive Directors nominated by Glanbia Co-operative Society Limited (the ‘Society’) continued
John Murphy
Non-Executive Director nominated by the Society
Age: 62
Patrick Murphy
Non-Executive Director nominated by the Society
Age: 63
Date of appointment
8 October 2020
Board tenure
One full year
Skills and expertise
Extensive knowledge of the global dairy and agribusiness industry and significant
experience in the governance and strategic management of a global business
gained from his tenure on the Boards of Glanbia Co-operative Society Limited
and Glanbia plc.
Experience
John Murphy farms at High Down Hill, Newcastle, Co Dublin.
Key external appointments
None.
Date of appointment
26 May 2011
Board tenure
10 full years
Skills and expertise
Extensive knowledge of the global dairy and agribusiness industry and significant
experience in the governance and strategic management of a global business
gained from his tenure on the Boards of Glanbia Co-operative Society Limited
and Glanbia plc.
Experience
Patrick Murphy farms at Smithstown, Maddoxtown, Co. Kilkenny. Patrick
served as Group Vice-Chairman until 8 October 2020 having served as
Vice-Chairman for over five years over two separate terms. He is Vice-Chairman
of Glanbia Co-operative Society Limited. Patrick is a Director of Farmer Business
Developments plc.
Key external appointments
Director of Farmer Business Developments plc.
Key
AC
Audit Committee
ESG
Environmental Social and Governance Committee
NGC
Nomination and Governance Committee
RC
Remuneration Committee
Chair
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
86
DIRECTORS’ REPORT
Corporate Governance Report continued
Senior Management
Group Operating Executive
The Group Managing Director and Group Finance Director are also part of the Group Operating Executive and their biographical details are on page 81.
Ian Doyle
Chief Corporate Development Officer
Age: 44
Michael Horan
Group Secretary
Age: 57
Date of appointment
4 January 2022
Tenure
Less than one full year
Skills and expertise
A deep knowledge of international corporate finance with extensive experience
negotiating and structuring complex acquisitions, divestitures, investments
and partnerships.
Experience
Ian Doyle is Chief Corporate Development Officer and responsible for identifying
partnership, acquisition and new business opportunities globally. Prior to joining
Glanbia, he was Managing Director in the North American Consumer Retail Group
of Nomura Securities with responsibility for food and beverage companies.
Previously Ian was based in London and was part of Lehman Brothers’ European
investment banking business. He holds a degree in Business Studies and German
from Trinity College Dublin.
Key external appointments
None.
Date of appointment
9 June 2005
Tenure
16 full years
Skills and expertise
In-depth knowledge of financial and management reporting, regulatory compliance,
operational and risk matters in a global food and beverage manufacturing and
distribution landscape.
Experience
Michael Horan was appointed as Group Secretary on 9 June 2005, having
previously held the position of Group Financial Controller since June 2002. He
joined the Group in 1998 as Financial Controller of the Fresh Pork business in
Ireland. Michael previously worked with Almarai Company in Saudi Arabia and BDO
Simpson Xavier. A Fellow of Chartered Accountants Ireland, Michael graduated
from the National University of Ireland, Galway with a Bachelor of Commerce
degree.
Key external appointments
None.
Hugh McGuire
CEO Glanbia Performance Nutrition
Age: 51
Michael Patten
Chief ESG & Corporate Affairs Officer
Age: 59
Date of appointment
1 June 2013
Tenure
Eight full years
Skills and expertise
Experienced chief executive officer who has extensive strategic, corporate
development and acquisition experience. Strong leadership qualities acquired from
a successful career within Glanbia.
Experience
Hugh McGuire is CEO of Glanbia Performance Nutrition. Hugh was appointed to
the Board on 1 June 2013 and served as a Director of the Company between June
2013 and April 2019. Hugh joined the Group in 2003 and has been CEO of Glanbia
Performance Nutrition since 2008. Prior to that he held a number of senior
management roles in the Group. He previously worked for McKinsey & Company
as a consultant across a range of industry sectors. Prior to this he worked in the
consumer products industry with Nestle and Leaf. Hugh graduated from University
College Dublin with an M.Sc. in Food Science. He has a Diploma in Finance from
the Association of Chartered Certified Accountants Ireland.
Key external appointments
None.
Date of appointment
11 December 2014
Tenure
Seven full years
Skills and expertise
A deep understanding of the Group’s global reputation, public affairs, sustainability
agenda and how shareholders and other audiences are viewing the business.
Experience
Michael Patten is Chief Environmental Social Governance (“ESG”) & Corporate
Affairs Officer and has responsibility for the development and implementation of our
ESG strategy, strategic leadership of the Group’s global reputation, public affairs
and sustainability agenda. Prior to joining the Group, Michael was Global Public
Affairs Director with Diageo plc. He previously served with the Group as Director
of Communications. Michael is currently a Non-Executive Director of the Irish
Management Institute (IMI). Michael holds a BA in Communication Studies from
Dublin City University and is an Honorary Life Fellow of the Public Relations Institute
of Ireland.
Key external appointments
None.
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87
Senior Management continued
Group Operating Executive continued
Brian Phelan
CEO Glanbia Nutritionals
Age: 55
Sue Sweem
Chief Human Resources Officer
Age: 58
Date of appointment
1 January 2004
Tenure
18 full years
Skills and expertise
Experienced chief executive officer who has extensive strategic, commercial
and corporate development experience. Strong leadership qualities acquired from
a successful career within Glanbia.
Experience
Brian Phelan was appointed as CEO of Glanbia Nutritionals on 1 June 2013 and
served as a Director of the Company between January 2013 and April 2019. Brian
was previously Group Human Resources & Operations Development Director from
2004 to 2012. He is the Chairman of Glanbia Cheese Limited. Since joining the
Group in 1993, he has held a number of senior management positions. Prior to this,
he worked with KPMG. He graduated from University College Cork with a Bachelor
of Commerce degree and is a Fellow of Chartered Accountants Ireland.
Key external appointments
None.
Date of appointment
1 December 2021
Tenure
Less than one full year
Skills and expertise
A deep knowledge of global human resources management with expertise in
organisation development shaping the culture and capabilities of the business,
and supporting the integration of acquisitions.
Experience
Sue Sweem is Chief Human Resources Officer and has responsibility for the
strategic leadership of Group Human Resources. Previously, she was Chief People
Officer for Glanbia Performance Nutrition (GPN) from 2015 to 2021 and held other
HR positions in GPN since joining in 2012. Prior to joining Glanbia, Sue was a HR
Director at Walgreens and gained international experience while serving as Head of
HR in the US for AkzoNobel, a global company based in The Netherlands. Sue
holds a PhD in Organization Development from Benedictine University, a Master’s
degree in HR & Industrial Relations from Loyola University and a BS in Sociology
from Iowa State University.
Key external appointments
None.
Key
AC
Audit Committee
ESG
Environmental Social and Governance Committee
NGC
Nomination and Governance Committee
RC
Remuneration Committee
Chair
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88
DIRECTORS’ REPORT
Corporate Governance Report continued
Board leadership and company purpose
Board leadership during Covid-19
Early monitoring
and preparation
Covid-19 was identified in early
2020 and continued into 2021 as
an impending risk with the
potential to be a significant
disruptor to the Group. During
2021, the Board kept its Group
Covid-19 contingency plans
under regular review and
Covid-19 continued to be a key
agenda item at Board meetings
in order to provide the required
oversight and leadership.
Clear and proactive
communication with
stakeholders
During times of uncertainty, clear
and proactive communication is
essential to provide support and
relief. We detail on pages 94 and
95 how the Group proactively
engaged with stakeholders
during 2021.
Preparation for the future
Covid-19 continues to have an
impact on global economies and
society. The Board has
considered the long-term
implications on our business.
Feedback and reflection
The Board sought independent
feedback via the employee
survey (see pages 18 to 21),
which enabled management to
receive feedback and identify
areas for further action.
Purpose, values and culture
Our purpose, values and culture are referenced throughout the Strategic and Directors’ Report.
Purpose
Why we do
whatwe do
Values
The qualities
weembody
Culture
How we work
together
Our purpose communicates the Group’s strategic direction and
intentions to our employees and wider stakeholders. Our progress
towards achieving our purpose during 2021 can be reviewed on the
following pages:
• Through product innovation we have continued to deliver nutritional
solutions that have a positive impact on peoples’ lives, health and
well-being (pages 34 and 35);
• The long-term returns to our shareholders (page 49); and
• The social, environmental and economic benefits brought to all
our stakeholders (pages 10 to 11).
Our values: the Customers’ Champion, Performance Matters,
Showing Respect, Find a Better Way and Winning Together articulate
the qualities we embody and our underlying approach to doing
business. Our values are embedded in our operational practices
through the policies approved by the Board and direct oversight and
involvement of the Executive Directors.
Our culture has developed from our values and is a key strength of our
business. The benefits of a strong culture are seen in our employees’
engagement, retention and productivity. As the cultural tone of a
business comes from the boardroom, safeguarding our culture is a key
factor in the development of Board succession plans.
The Board reinforces our culture and values through its decisions,
strategy and conduct. Further information on how our Board factors
stakeholders into its decisions is on pages 94 and 95.
The Board monitors and assesses the culture of the Group via:
• Regular meetings with management;
• Reviewing the outcomes of employee surveys; and
• Assessing cultural indicators such as:
– management’s attitude to risk;
– compliance with the Group’s policies and procedures;
– key performance indicators including staff retention and
engagement;
– feedback from our wider stakeholders;
– messages received via the Group’s whistleblowing system;
– health and safety data;
– promptness of payments to suppliers; and
– employee training data and spend.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
89
Strategy and Corporate Development
Key Board Considerations Stakeholder Groups
Strategic Response to the Covid-19 Pandemic
The significance, scale and pace of the Board’s commitment to coordinating the Group’s response to the
prolonged Covid-19 pandemic continued throughout 2021 and included:
• Regular Covid-19 pandemic updates from the Group Managing Director at Board meetings;
• Enhanced focus on utilising the digital tools that have been adopted very effectively to enable people
to work from home;
• Broadening the reach of the transformation programme in Glanbia Performance Nutrition (‘GPN’) to drive
further opportunities across all aspects of the business and the scaling of our capabilities in Glanbia
Nutritionals (‘GN’) to match new consumer trends;
• Recognising the substantial shift to online and digital platforms and the importance of improving and
accelerating our shift to such platforms in all aspects of the business;
• Considering the radical shifts in how, where and what customers want as the Covid-19 pandemic
accelerated trends, such as health, wellness, immunity enhancing and eCommerce;
• Pricing action in both GPN and GN in the third quarter to mitigate cost inflation headwinds for the Group; and
• Considering how GPN had realigned its footprint internationally to focus on targeted key growth markets and
further utilising e-commerce to grow the business.
Further details are available on pages 30 to 41.
Stakeholders: Employees,
investors, governments and
regulators, consumers, suppliers
and communities.
Contributions: Long-term results,
employees, business relationships
and reputation.
Glanbia Performance Nutrition (GPN) Transformation
• The Board continued to oversee and monitor the significant transformation programme in the GPN
business to address the challenges encountered in 2019 while focusing on a return to revenue growth
and delivery of an overall margin improvement ambition by 2022.
Further details are available on pages 30 to 33.
Stakeholders: Employees,
investors, consumers and
suppliers.
Contributions: Long-term
results, business relationships
and reputation.
LevlUp Acquisition
• The Board approved and completed the acquisition of a 60% stake in LevlUp GmbH (“LevlUp”), a DTC
gaming nutrition brand company based in Germany.
Further details are available on pages 14 and 30 to 33.
Stakeholders: Employees and
investors.
Contributions: Long-term
results and business relationships.
Glanbia Nutritionals (GN)
• During 2021, the Board monitored the integration of Foodarom, a Canadian flavours business which
has strong flavour formulation capability, into the GN business; and
• In September 2021, Glanbia acquired PacMoore, a US food ingredients solutions company.
Further details are available on pages 14 and 36 to 39.
Stakeholders: Employees and
investors.
Contributions: Long-term
results, business relationships
and reputation.
The Board is responsible for promoting the long-term sustainable success of the Group to generate value for its stakeholders and contribute to the
wider society. The Board recognises that the alignment of the Company’s purpose, strategy and culture is a cornerstone of their leadership role and
critical to our success.
The following pages provide an overview of the broad range of matters that the Board considered at its meetings. These are non-exhaustive and detail
the breath of oversight provided by the Board in order to discharge responsible leadership. The Board considerations in relation to stakeholder
engagement can be found on pages 94 to 95.
2021 Board Highlights
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DIRECTORS’ REPORT
Corporate Governance Report continued
Board Leadership and Company Purpose continued
2021 Board Highlights continued
Strategy and Corporate Development continued
Key Board Considerations Stakeholder Groups
Disposal of Glanbia plc’s 40% interest in Glanbia Ireland DAC
• On 7 December 2021, the Board approved the sale of its 40% interest in Glanbia Ireland DAC to Glanbia
Co-operative Society Limited (the ‘Society’), subject to the receipt of all necessary shareholder approvals
and any applicable regulatory approvals. The disposal is expected to occur in the first half of 2022.
Further details are available on page 40.
Stakeholders: Employees,
investors, consumers and
suppliers.
Contributions: Long-term
results, employees and business
relationships.
Diversity, Equity and Inclusion (DE&I)
• During the year, the Board reflected on our commitment to Diversity, Equity and Inclusion (DE&I) and
approved a new Group-wide DE&I policy and strategy aimed at embedding a more diverse, equitable and
inclusive culture throughout the Group.
Further details are available on pages 22 to 23.
Stakeholders: Employees,
investors, consumers, suppliers
and communities.
Contributions: Long-term results,
employees, business relationships
and reputation.
HR Transformation Programme
• The Board approved the HR transformation programme, Grow@Glanbia, which is being implemented
to enhance the Group’s HR Operating model, service delivery and technology capability.
Further details are available on page 23.
Stakeholders: Employees.
Contributions: Long-term results,
employees, business relationships
and reputation.
Share Buyback Programme
• During 2021, the prior year share buyback programme of €50 million concluded and in August 2021 the
Board approved the launch of a second share buyback programme of up to €50 million in total value of
Glanbia plc ordinary shares which commenced on 12 August 2021 and completed on 21 October 2021;
• In December 2021 the Board approved a third share buyback programme of up to €50 million in total value
of Glanbia plc ordinary shares which commenced on 8 December 2021 and will run through to the date
three business days’ prior to the Company’s next Annual General Meeting (‘AGM’), expected to be held in
May 2022, unless otherwise terminated in accordance with the Company’s agreement with Davy;
• At the end of 2021, the Company had purchased and cancelled 7,272,432 ordinary shares at a total cost
of €91.3 million during 2021;
• A planned share buybacks of €31.0 million took place in January 2022, following share placements by
Glanbia Co-operative Society in advance of concluding the proposed Glanbia Ireland transaction; and
• The Board will seek to renew shareholder authorisation for a share buyback programme at the 2022 AGM.
Further details are available on pages 43, 45 and 145.
Stakeholders: Employees
investors, consumers and
suppliers.
Contributions: Long-term
results and business relationships.
Procurement Policy
• Throughout 2021, the Board continued to support Glanbia’s Procurement teams as the key stakeholders
in ensuring continuity of operations across all business units through the sourcing of personal, protective
equipment and other essential safety supplies in a highly competitive, global sourcing environment as
a result of the Covid-19 pandemic; and
• In 2021, the Responsible Procurement Programme was launched across the Group to co-ordinate and
report on the work undertaken to support Glanbia’s overall ESG strategy and commitments. Glanbia’s
Procurement Policy was updated to reflect our responsible procurement requirements.
Further details are available on pages 56 and 57.
Stakeholders: Employees,
investors, consumers, suppliers
and communities.
Contributions: Long-term results,
employees, business relationships
and reputation.
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Strategy and Corporate Development continued
Key Board Considerations Stakeholder Groups
Group Sustainability Strategy
• In January 2021 the Board approved the Group sustainability strategy. This aims to achieve net zero carbon
emissions no later than 2050 and accelerates our ambition to put sustainable growth at the heart of our
business model; and
• The Board considered the Group’s alignment with recommendations from the Task Force on Climate-Related
Financial Disclosures (TCFD) and our targets under this strategy have been validated by the Science Based
Targets initiative (SBTi).
Further details are available on pages 52 to 66 and pages 109 to 111.
Stakeholders: Employees,
investors, governments and
regulators, consumers, suppliers
and communities.
Contributions: Long-term results,
employees, business relationships
and reputation.
Operational and Financial Performance
Key board considerations Stakeholder Groups
Operational Response to the Covid-19 Pandemic
• As the Covid-19 pandemic continued to evolve throughout 2021, the Board examined the main priorities and
goals it had established for monitoring the impact of the Covid-19 pandemic. These covered maintenance
of operations while keeping our people, clients and suppliers safe and healthy, preserving the health of the
business including its financial health:
• The Board received regular updates and continues to monitor the implications of the Covid-19 pandemic for
the business, employees and stakeholders. The Group Business Continuity Planning (BCP) team remains
in place with the following priorities:
1. Protect our people;
2. Maintain operations and service our customers and consumers; and
3. Manage our financial resources.
• The Board continued to review and monitor the HR management of the Covid-19 pandemic in terms of the
HR policies, systems, processes, equipment, training, and other corrective actions implemented to protect
employees; and
• The Board continues to monitor the initiatives, to simplify business and focus on cost containment and
margin improvement across the Group. All these measures provided a solid platform to help mitigate the
Covid-19 pandemic challenges.
Further details are available on pages 30 to 41.
Stakeholders: Employees,
investors, governments and
regulators, consumers, suppliers
and communities
Contributions: Long-term results,
employees, business relationships
and reputation.
Budget and Financial Modelling
• For 2021 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, the Group raised
its expectations for the full year 2021 to adjusted EPS growth of 17% to 22% on a constant currency basis
versus the prior year. Actual full year 2021 adjusted EPS growth on a constant currency basis was 22.1%.
Further details are available on pages 44 to 49.
Stakeholders: Employees,
investors, consumers and
suppliers.
Contributions: Long-term results,
employees, business relationships
and reputation.
Financing
• The Group had €1.16 billion committed debt facilities at 2021 year-end, with a weighted average maturity of
3.9 years and an earliest maturity date of January 2024 (2020: €1.23 billion committed debt facilities, weighted
average maturity of 4.4 years).
Further details are available on page 48.
Stakeholders: Employees,
investors, consumers and
suppliers.
Contributions: Long-term results,
employees, business relationships
and reputation.
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DIRECTORS’ REPORT
Corporate Governance Report continued
Board Leadership and Company Purpose continued
2021 Board Highlights continued
Operational and Financial Performance continued
Key Board Considerations Stakeholder Groups
Brexit
• The Board monitored the end of the Brexit transition period on 31 December 2020 which had no material
financial impact on the Group;
• The Group has adopted its procedures to comply with various regulations associated with the EU-UK Trade
and Cooperation Agreement (“TCA”) which has been applied provisionally since 1 January 2021. To date there
have been no material impacts on the Group’s operations or trading performance as a result of the TCA;
• The Board continues to monitor the development of follow on agreements related to other aspects of EU-UK
trade as well as future UK trade agreements with other countries which may impact Glanbia. This falls within
the Group’s ongoing process of monitoring key geopolitical trading relationships as part of the Board’s overall
risk management process; and
• On the recommendation of the Board, on 11 February 2021, the shareholders of the Company approved the
migration of the Company’s securities from CREST to Euroclear Bank Belgium.
Stakeholders: Employees,
investors, governments and
regulators, consumers, suppliers
and communities.
Contributions: Long-term results,
employees, business relationships
and reputation.
Cash Flow
• From the onset of the Covid-19 pandemic in 2020, the Group’s financial priority has been its financial strength,
and again delivered strong operating cash flow performance in 2021;
• During the year, the Group acquired LevlUp and PacMoore and spent €61.6 million on strategic capital
investment. Key strategic investment included supply chain consolidation as part of the GPN transformation
programme. In addition the strong cash flow enabled a dividend payout ratio of 33.6% and the launch of two
further €50 million share buyback programmes;
• As a result of the strong performance in the first half of 2021, the Board recommended 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. The interim dividend was paid on 1 October 2021 to shareholders on the register of members as
at 20 August 2021; and
• The Board is recommending a final dividend of 17.53 cent per share (FY 2020: 15.94 cent per share) which
brings the total dividend for the year to 29.28 cent per share, representing an increase of 10% for the prior
year. The final dividend will be paid on 6 May 2022 to shareholders on the register of members as at
25 March 2022.
Further details are available on pages 44 to 49.
Stakeholders: Employees,
investors, consumers and
suppliers.
Contributions: Long-term results,
employees, business relationships
and reputation.
Glanbia Cheese EU Limited
• In 2018, the Board approved a €130 million investment in a new mozzarella cheese plant in Portlaoise by the
new joint venture, Glanbia Cheese EU a partnership with Leprino Foods Company;
• Glanbia Cheese EU continued commissioning during 2021 with systems and production equipment being
gradually run up to full operating speeds. It began commercial operations in March 2021 and to the end of
2021 has packed 9,600 tonnes of mozzarella as part of commissioning and customer approvals; and
• The Board received regular updates on the progress of this project throughout the year.
Further details are available on page 40.
Stakeholders: Employees,
investors, consumers, suppliers
and communities.
Contributions: Long-term results,
employees and business
relationships.
MWC Michigan
• The Board continued to monitor the progress of MWC (part of the MWC-Southwest Holdings joint venture) in
Michigan. This is a joint venture between Glanbia, Dairy Farmers of America, Inc. and Select Milk Producers
Inc; and
• The Board received regular updates on the progress of this project throughout the year and no further
investment was required in this venture during 2021.
Further details are available on page 40.
Stakeholders: Employees,
investors, consumers, suppliers
and communities.
Contributions: Long-term results,
employees and business
relationships
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93
Governance and Legal
Key Board Considerations Stakeholder Groups
Board Composition
• On 23 February 2021, the Society and the Board, in order to facilitate the appointment of additional
Independent Non-Executive Directors and further strengthen the diversity of the Board, agreed the changes
set out in the table on page 115, which will impact the composition and size of the Board between 2021
and 2023.
Further details are available on pages 78 and 113 to 115.
Board Biographical details are available on pages 81 to 85.
Stakeholders: Employees,
investors, consumers and
suppliers.
Contributions: Long-term
results, employees, business
relationships and reputation.
Group Chairman Succession
• In accordance with the Relationship Agreement dated 2 July 2017 Donard Gaynor an Independent
Non-Executive Director, was appointed as the first Independent of the Society Group Chairman on
8 October 2020; and
• During 2021, the Board unanimously agreed that Donard Gaynor will continue as Group 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.
Further details are available on pages 78 and 113.
Stakeholders: Employees,
investors, consumers and
suppliers.
Contributions: Long-term
results, employees, business
relationships and reputation.
Board Committees
• Following the appointment of a new Independent Group Chairman and the appointment of three new
Independent Non-Executive Directors between 2020 and 2021, a review of the Board Committees
membership was undertaken in early 2021 to maintain compliance with the UK Corporate Governance
Code, balance of Committee membership across the Independent Non-Executive Directors and to ensure
diversity in each of the three Board Committees;
• During the year the Board approved the establishment of a new Environmental, Social and Governance
(‘ESG’) Committee to ensure the Board has the highest level of accountability and oversight of its
commitment to the Group sustainability strategy and the diversity, equity and inclusion journey; and
• A new Corporate Development Committee was established on 24 February 2022 to assist the Board in
assessing new corporate development opportunities.
Further details are available on page 114.
Stakeholders: Employees,
investors, consumers, and
suppliers.
Contributions: Long-term
results, employees, business
relationships and reputation.
Board Evaluation
• A comprehensive and externally facilitated Board evaluation took place in both 2019 and 2020. Following the
significant changes to the Board in 2019, it was decided to carry out two successive external reviews to
ensure a consistent approach to development;
• In 2021, the Board evaluation was an internal one in line with our agreed triennial cycle; and
• The evaluation concentrated on progress on last year’s areas of focus and the resulting actions, as well as
agreeing new areas of focus for the coming year.
Further details are available on page 100.
Stakeholders: Employees,
investors, consumers and
suppliers.
Contributions: Long-term
results, employees, business
relationships and reputation.
Remuneration Policy 2022 - 2024
• A review of the 2018-2020 Remuneration Policy was conducted during 2021 and a new Remuneration
Policy for the period 2022-2024 was presented and approved by the Board on 7 December 2021 and will
be put to shareholders for consideration at the 2022 AGM.
Further details are available on pages 123 to 128.
Stakeholders: Employees and
investors.
Contributions: Long-term
results, employees, business
relationships and reputation.
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DIRECTORS’ REPORT
HOW DO WE ENGAGE WITH
OUR STAKEHOLDERS?
We recognise the importance of clear communication and proactive engagement with all of our stakeholders. Our stakeholder engagement
programmes are kept under routine review by the Board.
This was of particular importance during 2021 due to the uncertainty and economic difficulties caused by the Covid-19 pandemic. Some of our
engagement methods required adjustment in response to the restrictions imposed by governments to slow the spread of the virus, including the use of
a virtual platform to hold our 2021 AGM.
How do we engage with our employees?
We have an experienced, diverse and dedicated workforce which is recognised as a key asset of our business. The Board and its Committees
routinely invite members of the management team to join meetings to present on the matters being discussed, enabling their input into discussions.
In order to reach all employees (including individuals engaged under contracts of service, agency workers, and remote workers), the Board utilises
a combination of formal and informal engagement methods which are detailed below.
Non-Executive Director engagement with our employees
As the designated Director for bringing the voice of employees into our Boardroom, Donard Gaynor attended three town hall meetings. The town hall
meetings are usually a face-to-face event however due to the Covid-19 pandemic they were conducted virtually in 2021.
Dedicated Workforce Director
Donard Gaynor is the dedicated
Non-Executive Director for gathering
the views of the workforce. As Group
Chairman, Chairman of the ESG,
and Nomination and Governance
Committees, Donard oversaw and
received updates on our employee
engagement methods.
Town hall meetings
The Group Managing Director hosted
three virtual town hall meetings to ensure
all employees were kept informed of
business activity, reassured and engaged.
Employees were encouraged to ask
questions during the sessions. Our Group
Chairman also attended the launch of the
DE&I strategy and the Women’s Employee
Resource Groups.
Career development
We develop our people though a range of
leadership programmes for all levels. Our
Talent Centre of Excellence leads the way.
We run training days each year across the
Group including Leading the Glanbia Way
and Reverse Mentoring.
ESG Committee
The ESG Committee was established
during 2021 to strengthen the Board’s
oversight of environmental and social
issues and monitor the Group’s corporate
responsibility, sustainability, diversity,
equity & inclusion and stakeholder
engagement activities (see pages 109
to 111).
Employee surveys
We gather feedback regularly from our
employees to assess their levels of
engagement. We conduct a formal
employee survey, designed and
developed in conjunction with an
independent provider. In 2021, we also
conducted a full employment
engagement survey and a number of
Covid-19 pulse surveys to determine how
our employees felt they had been
supported during the pandemic.
Whistleblowing
Our whistleblowing system offers an
anonymous reporting line for employees
to raise any concerns directly with the
Board. The whistleblowing system allows
concerns to be raised with a member of
the management team in their business
unit, the Group Secretary or with the
Group’s externally managed and
confidential Safecall service provider.
Intranet
Our intranet is used as a popular platform
for employees to access our policies and
be kept fully informed of the latest Group
news. In addition during the lockdown
restrictions, the intranet was used to
share links to useful information on social
and wellbeing, culture and entertainment,
health and safety.
Committees &
working groups
We launched ‘Fostering Inclusion’
education models for all employees.
Established the first global Group-wide
Employee Resource Group (‘ERG’):
Glanbia NOW (Network of Women) and
several regional ERGs in North America
(LGBTQ+ Network; Multicultural Network)
with the intention of scaling these globally
in 2022.
Corporate Governance Report continued
Board Leadership and Company Purpose continued
Stakeholder engagement
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95
How do we engage with our shareholders?
Shareholders play a valuable role in safeguarding the Group’s governance through, for example, the annual re-election of Directors, the review and
consideration of appropriate remuneration policies and engagement and constructive dialogue with the Board.
The Group aims to be as transparent as possible with the information it provides to investors and welcomes face-to-face interaction. Formally, this can
be done at our annual general meeting (‘AGM’), and our Group Chairman aims to routinely meet with institutional investors and report their views to the
Board. We also write to our shareholders on major issues or decisions and offer to consult. However, Covid-19 pandemic restrictions have curtailed
much of this in person activity, replacing it with a significant increase in virtual meetings and conferences. We describe our main engagement methods
in the table below.
Shareholder consultation We will always seek to engage with shareholders when considering material changes to governance, key policies
(such as remuneration) and on specific shareholder resolutions at the AGM, where appropriate.
During 2021, the Chairman of the Remuneration Committee consulted with our major shareholders and engaged with
proxy advisors on the proposed Remuneration Policy 2022–2024 before presenting the final Remuneration Policy
2022–2024 to the Board for their approval.
Investor meetings During 2021, the Group held over 200 investor meetings and attended 16 investor conferences. These engagements
covered a significant amount of our largest shareholders. Due to the Covid-19 pandemic, the majority of these were
virtual meetings. The meetings focused on the Group’s portfolio, strategy and Covid-19 pandemic impact. Where
significant views were expressed, either during or following the meetings, these were noted and circulated to all
Directors.
Investor presentations During 2021, we hosted in-person year-end and virtual interim results presentations.
Annual General Meeting The AGM provides an opportunity for shareholders to question the Directors and the Chairman of the Board.
Due to the Irish Government restrictions arising from the Covid-19 pandemic, the 2021 AGM was held as a virtual
meeting. The 2021 AGM was broadcast and shareholders were invited to participate in the AGM via a live webcast
hosted on the Lumi Platform. All details relating to the AGM were published on the Company’s website: www.glanbia.
com/agm. Shareholders could listen to the business of the meeting and submit questions both in advance and during
the meeting. A full recording of the webcast is available on our website at: www.glanbia.com/agm.
Annual Report Our Annual Report is available to all shareholders. Through our electronic communication initiatives, we aim to make
our Annual Report as accessible as possible. Shareholders can opt to receive a hard copy in the post or PDF copies
via email or from our website. Additionally, if a shareholder holds their Glanbia plc shares via a nominee account and
encounters difficulty receiving our Annual Report via their nominee provider, they can contact the Group Secretary to
request a copy.
Corporate website Our website, www.glanbia.com, has a dedicated investor section which includes our Annual Reports, results
presentations (which were provided to analysts and investors at the time of the half year and full year results) and our
financial calendar for the upcoming year.
Share buybacks At the 2021 AGM of the Company approval was sought for the Board to have the authority to conduct share
buybacks within certain specified limits until the conclusion of the 2022 AGM. 99.83% of shareholders and 68.94% of
independent shareholders voted in favour respectively for Resolutions 10 (purchase of own shares) and 12 (rule 37
waiver). However, while the relevant waiver required under Rule 37 of the Irish Takeover Panel Act 1997, Takeover
Rules 2013 giving the Company the authority to implement a share buyback programme was approved by the
independent shareholders by 68.94%, this approval was less than 80%. Accordingly, in compliance with the UK
Corporate Governance Code, Glanbia consulted with shareholders to understand the reasons behind the result. This
consultation took place in June and July 2021 and found that the Group’s shareholders were supportive of Glanbia’s
capital allocation strategy and recognised the success of the previous programme. On 12 August 2021 Glanbia
published an update on the views received from shareholders. The Board will seek to renew shareholder
authorisation for a share buyback programme at the 2022 AGM.
Contacts Contact details for our Investor Relations team, Group Secretary and Registrar are available on page 254.
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DIRECTORS’ REPORT
Corporate Governance Report continued
Division of Responsibilities
The Board is responsible for establishing the Company’s purpose, values and strategy, promoting its culture, overseeing its conduct and affairs,
and for promoting the success of the Group for the benefit of its members and stakeholders. It discharges some of its responsibilities directly and
others through its Committee framework, the Group Operating Executive and Group Senior Leadership Team. A description of the Governance
Framework as at 4 January 2022 is set out below.
Audit Committee
Key activities: review of Annual
Report and Financial Statements
and statutory Auditor’s
independence and fees, internal
controls, risk management
systems, post-acquisition reviews
and the effectiveness of the Group
Internal Audit and Group Finance
functions.
ESG Committee
Key activities: oversight of the ESG
programme, the Group
sustainability strategy, Pure Food +
Pure Planet and the Diversity,
Equity and Inclusion Policy,
monitoring progress against key
performance indicators and
external ESG index results and
overseeing progress on ESG
commitments and targets.
Nomination and
Governance Committee
Key activities: making
recommendations on
appointments to the Board
(including the Group Chairman),
senior management succession
planning, review of the
independence and time
commitment of Non-Executive
Directors and keeping under
review corporate governance
developments to ensure Group
governance practices remain in
line with best practice.
Remuneration Committee
Key activities: review of Executive
Directors’ salaries and benefits,
approval of annual incentive
targets, long-term incentive share
awards, review of Non-Executive
Directors’ fees and compliance
with the relevant codes.
Group Operating Executive
This group is comprised of the two Executive Directors, the Group
Secretary, the CEO of Glanbia Performance Nutrition, the CEO of Glanbia
Nutritionals, the Chief Human Resources Officer, the Chief Corporate
Development Officer and Chief ESG & Corporate Affairs Officer. Key
activities: monitoring performance and making strategic
recommendations to the Board. This forum is also the Group Risk
Committee and the Group Investment Committee.
Group Senior Leadership Team
This team includes the Group Operating Executive and the Group’s
senior business and functional leaders. Key activities: to create alignment
and drive delivery of the Group’s business plans.
The Disclosure Committee is in place to oversee the timely and accurate disclosure of all information required to be so disclosed by the Company to
meet the legal and regulatory obligations required by its stock exchange listings. It also continues to assist in the design, implementation and periodic
evaluation of disclosure controls and procedures. The Committee comprises of the Group Managing Director, the Group Finance Director, the Group
Secretary and the Director of Strategic Planning and Investor Relations.
Board
Managing
Director
Board Committees
Group Management
The following are the key matters reserved for the Board:
• Approval of the Group’s strategic plan, oversight of the Group’s
operations and review of performance in light of the Group’s strategy,
objectives, business plans and budgets, ensuring that any necessary
corrective/transformative action is taken;
• Ultimate oversight of risk, including determining the Group’s risk profile
and risk appetite;
• Approval of acquisitions, disposals and other transactions outside
delegated limits;
• Financial reporting and controls, including approval of the Half-Year
Results, Interim Management Statements and Full-Year Results,
approval of the Annual Report and Financial Statements, approval of
any significant changes in accounting policies or practices and
ensuring maintenance of appropriate internal control and risk
management systems;
• Appointment and removal of Directors;
• Ensuring the Annual Report and Financial Statements present a fair,
balanced and understandable assessment of the Group’s position
and prospects and provides the information necessary for
shareholders to assess the Group’s position, performance, business
model and strategy;
• Assessment of the Group’s viability and ability to continue as a going
concern;
• Capital expenditure, including annual approval of capital expenditure
budgets and any material changes to them in line with the Group-wide
policy on capital expenditure;
• Dividend policy, including annual review of the dividend policy and
declaration of the interim dividend and recommendation of the final
dividend;
• Shareholder documentation, including approval of resolutions and
corresponding documentation to be put to the shareholders and
approval of all press releases concerning matters decided by the
Board; and
• Key business policies.
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Board responsibilities
To ensure that the Group operates efficiently and effectively, the Directors, the Group Secretary and the Group Operating Executive have clearly defined
responsibilities which are set out below. There is a clear division of responsibility between the Group Chairman and the Group Managing Director.
Donard Gaynor, Group Chairman
• Leads the Board, sets the agenda and promotes a culture of open
debate between Executive and Non-Executive Directors and sets the
highest standards of corporate governance;
• Regularly meets with the Group Managing Director and other senior
management to stay informed; and
• Ensures effective communication with our stakeholders.
Siobhán Talbot, Group Managing Director
• Develops and implements strategy and chairs the Group Operating
Executive;
• Leads the Group through the Group Operating Executive; and
• Promotes the purpose, vision and values of the organisation.
Dan O’Connor, Senior Independent Director
• Provides a sounding board to the Group Chairman and appraises his
performance;
• Acts as intermediary for other Directors, if needed; and
• Is available to respond to shareholder concerns when contact through
the normal channels is inappropriate.
Mark Garvey, Group Finance Director
• Manages the effectiveness and profitability of the Group including
financial and operational risk management; and
• Develops appropriate capital and corporate structures to ensure the
Group’s strategy is met.
Non-Executive Directors
• Provide independent insight and supports the Group Chairman in
instilling the appropriate culture, values and behaviours in the Group;
• Contribute to developing strategy;
• Scrutinise and constructively challenge the performance of the
business, management and individual Executive Directors;
• Monitor the integrity of financial information and ensures that there are
robust financial controls and systems of risk management;
• Determine and agree the framework and policy for executive
remuneration; and
• Oversee Director succession planning.
Michael Horan, Group Secretary
• Monitors the Group’s compliance with legal, regulatory, governance,
ethics, policy and procedural matters;
• In conjunction with the Group Chairman, ensures that the Directors
receive timely and clear information so that the Directors are equipped
for robust debate and informed decision making;
• Supports the Group Chairman by organising induction and training
programmes for Directors; and
• Provides support and guidance to the Board and the Chairman,
and acts as an intermediary for Non-Executive Directors.
Group Operating Executive
• With the Group Managing Director, develops and executes the Group’s
strategy in line with the policies and objectives agreed by the Board;
• Manages operational effectiveness and profitability of the Group; and
• Is the Group Risk Committee and Group Investment Committee.
Board and Committee meeting attendance
Director
Years on the
Board Scheduled Unscheduled Audit Committee
Environmental and Social
Governance Committee
Nomination and
Governance Committee Remuneration Committee
D Gaynor (Note 1) 8 10/10 8/8 1/1 2/2 7/7 8/8
S Talbot 12 10/10 8/8 – 2/2 – –
P Ahern (Note 2) 6 10/10 3/3 – – – –
R Brennan (Note 3) 1 9/10 7/8 – – 6/6 7/ 7
P Coveney (Note 4) 7 10/10 7/8 8/8 2/2 1/1
P Duffy (Note 5) 1 8/8 8/8 4/4 – – 3/3
M Garvey 8 10/10 8/8 – – – –
V Gorman (Note 2) 8 10/10 3/3 – – – –
B Hayes (Note 2) 9 10/10 3/3 – – – –
Mn Keane (Note 6) 15 3/3 2/2 – – – –
J Lodge 1 10/10 8/8 8/8 – – 8/8
J G Murphy (Note 2) 11 10/10 3/3 – 2/2 – –
J Murphy (Note 2) 1 10/10 3/3 – – – –
P Murphy (Note 2) 10 10/10 3/3 – – – –
D O’ Connor 7 10/10 7/8 8/8 – 7/7 8/8
1. D Gaynor retired from the Audit Committee on 20 January 2021.
2. The disposal of 40% of Glanbia Ireland to the Society was classified as a related party
transaction for the purpose of the Euronext and UK Listing Rules and the Society Nominee.
Directors recused themselves from the five unscheduled board meetings held to
consider the disposal.
3. R Brennan was unable to attend one scheduled Board meeting due to a family
bereavement.
4. P Coveney retired from the Nomination and Governance Committee on 20 January 2021.
5. P Duffy was appointed to the Board on 1 March 2021 and as member of the Audit
Committee and Remuneration Committee on 17 June 2021
6. Mn Keane retired from the Board on 6 May 2021.
The Board held 10 scheduled Board meetings and eight unscheduled Board meetings in
2021. Unscheduled meetings were held as and when required throughout the year.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
98
DIRECTORS’ REPORT
Composition, Succession and Evaluation
The Board has a clear governance framework with defined
responsibilities and accountabilities which ensures that policies and
procedures set at Board level are effectively communicated across the
whole Group. The Board has established certain principal Committees
to assist it in fulfilling its oversight responsibilities, providing detailed
focus on particular areas as set out in the respective Committee Reports
that follow. The Committees focus on their areas of expertise enabling
the Board meetings to focus on strategy, performance, leadership and
people, governance and risk, and stakeholder engagement, thereby
making the best use of the Board’s time together as a whole. The
Committee Chairs report to the full Board at each Board meeting
following their sessions, ensuring a good communication flow while
retaining the ability to escalate items to the full Board’s agenda
if appropriate.
Information for the Board
The Group Chairman, with the assistance of the Group Managing Director
and the Group Secretary, is responsible for ensuring that Directors are
supplied with information in a timely manner and of an appropriate quality
that enables them to discharge their duties. Board papers are published
typically seven days prior to each meeting to ensure the Board has
sufficient time to read the papers and presentations and be prepared
in advance of the meeting. In the normal course of business, such
information is provided by the Group Managing Director in a regular report
to the Board that includes information on operational matters, strategic
developments, financial performance relative to the business plan,
business development, corporate responsibility and investor relations.
The Board meets sufficiently frequently to discharge its duties, and holds
additional unscheduled meetings when required. This year, for example,
the Board held a number of additional unscheduled meetings to
specifically discuss the disposal of 40% of Glanbia Ireland to Glanbia
Co-operative Society Limited (the ‘Society’).
Each scheduled Board meeting follows a carefully tailored agenda agreed
in advance by the Group Chairman, the Group Managing Director and
the Group Secretary. At each scheduled Board meeting, the Group
Managing Director, the Group Finance Director and CEOs of the Group’s
two global growth platforms, Glanbia Performance Nutrition (GPN) and
Glanbia Nutritionals (GN), provide detailed operational and financial
updates. Depending on the nature of the agenda item to be considered,
other Senior Executives are invited to make presentations or participate
in Board discussions to ensure that Board decisions are supported by
a full analysis.
Throughout the year the Chairmen of the Audit, Environmental, Social
and Governance, Nomination and Governance and Remuneration
Committees updated the Board on the proceedings of their meetings,
including the key discussion points and any particular areas of concern.
All Directors have access to the advice and services of the Group
Secretary, who is responsible for advising the Board on all governance
matters. The Directors also have access to independent professional
advice, if required, at the expense of the Group. This is coordinated
through the Group Secretary.
For the majority of 2021, due to the ongoing Covid-19 pandemic, social
distancing restrictions and lockdown measures, the Board and
Committees met remotely. Although not ideal, there was no deterioration
in the engagement of the Board, nor in the quality of debate, challenge
and discussions as the Board worked to ensure strong corporate
governance, oversight and monitoring during the continuing Covid-19
pandemic. Equally, the Covid-19 pandemic has not impacted the
commitment that Directors have to the Board which is evidenced by
their attendance at Board and Committee meetings held during the year.
The Board welcomed a return to in-person meetings in August 2021.
Board structure
The Board currently comprises 14 Directors: two Executive Directors,
the Group Chairman and 11 Non-Executive Directors of whom six are
currently nominated by the Society. There are currently five other
Independent Non-Executive Directors and a vacancy for a further
Independent Non-Executive Director.
Avonmore Foods plc and Waterford Foods plc merged in 1997 to form
Glanbia plc, the Company. At the same time, their respective major
shareholders also merged to form the Society. The Society retains a
major shareholding in the Company and currently nominates from its
board of directors up to six Non-Executive Directors for appointment to
the Board of the Company. On 23 February 2021, the Society and the
Board agreed a number of changes which will impact the composition
and size of the Board over the period between 2021 to 2023 and which
will reduce the number of Directors nominated by the Society on the
Board from the current level of six to three and the Board size from 15 to
13 (details of which are set out in the Nomination and Governance
Committee Report on page 115.
Our Directors come from diverse backgrounds, ranging from corporate
finance, accountancy and banking to industry (dairy, fast moving
consumer goods and production).
Appointments to the Board: policy, diversity and
succession planning
During 2018, the Board approved a Board Diversity Policy which
recognises the benefits of diversity. Having regard to the right of the
Society to nominate Directors to the Board, the Nomination and
Governance Committee keeps the Board’s balance of skills, knowledge,
experience and the tenure of Directors under constant review. The Group
has agreed that as new Director appointments are made, the target is
that a minimum of 50% of the Independent of the Society Non-Executive
Directors will be female. The Group progressed this in 2020 and 2021
with two of its three most recent appointments being female. In respect
of succession planning and maintaining the skill-set of the Board, there is
an established procedure for the appointment of new Directors and
Senior Executives. The Nomination and Governance Committee identifies
the set of skills and experience required. Individuals are then selected on
the basis of required competencies, irrespective of ethnicity, colour,
sexual orientation, gender, age, nationality or other personal
characteristics. External search agencies are engaged to assist where
appropriate. The Company also has a formal policy with respect to the
appointment of new Independent Non-Executive Directors (other than
those nominated by the Society). The policy provides that any new
Independent Non-Executive Directors will be appointed for an initial
three-year term, subject to re-appointment by shareholders at each
AGM, and should expect to serve no more than three successive
three-year terms i.e. a maximum of nine years. All new Independent
Non-Executive Directors, and any re-appointments, will be subject to a
rigorous review by the Committee after each three-year term and annually
after six years.
Induction and Board development
A robust induction and site visits pre-pandemic are an integral part of
performing one’s duties as a Director. They are invaluable in enabling
Board members to develop a greater understanding of the opportunities
and challenges affecting the business, leading to more informed
discussions around the Board table.
The Company puts full, formal and tailored induction programmes
in place for all of its new Directors. While Directors’ backgrounds and
experience are taken into account, the induction programme is aimed
to be a broad introduction to the Group’s businesses and its areas of
significant risk. Key elements include meeting the Executive Directors
and senior management as well as visiting the Group’s main sites
Corporate Governance Report continued
Composition, Succession and Evaluation
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
99
to be briefed on Group strategy and on their individual businesses.
Induction programmes are usually completed within the first six months
of a Director’s appointment and the Group Secretary provides assistance
and support throughout the induction process. The programmes are
reviewed regularly to consider Directors’ feedback and are continually
updated and improved.
Paul Duffy joined the Board on 1 March 2021. Paul received an extensive
and thorough induction involving one-to-one virtual meetings with the
Group Chairman, Group Managing Director, the Group Finance Director
and other members of senior management from various Group functions
including Group Finance, Group Treasury, Group Tax and Group HR.
New Director induction usually requires new Directors to undertake site
visits but due to the foreign travel restrictions as a result of the Covid-19
pandemic, site visits were deferred until it was deemed safe to travel. In
September 2021 Paul Duffy visited the GPN North America offices in
Downers Grove and met with senior management. During the Covid-19
restrictions the new Directors were supported virtually and were offered
the same level of interaction where possible, albeit through digital means.
Directors are encouraged to visit facilities and management and future
engagements will be planned with the CEOs and members of the senior
leadership teams of both businesses, GPN and GN.
The Group Chairman regularly encourages the Non-Executive Directors
to update their skills, expertise and knowledge of the Group in order to
carry out their responsibilities competently. This is achieved by regular
presentations at Board meetings from senior management on matters of
significance. Examples during the year included regular presentations
from senior management of our two wholly-owned business segments
GPN and GN and from our strategic joint ventures. The Board and
Committees also received presentations from the Group Secretary, the
then Group Human Resources & Corporate Affairs Director, and now the
new Chief ESG and Corporate Affairs Officer, General Manager of Group
Business Services, the Group Head of IT and the Group Head of Quality
and Safety. The Board also participated in DE&I training in 2021 and
sustainability briefings are planned for 2022.
In addition to the induction programme that all Directors undertake on
joining the Board, an ongoing programme of Director development has
been established. For example, It has been the Board’s practice to hold a
number of Board meetings at subsidiary locations each year in order to
provide Directors with the opportunity to meet local teams, see
operations on the ground and have presentations on current operations,
projects, future plans and strategy. Opportunities to visit our operations
globally and learn more about the business continue to be very important
and valuable for the Board, and for new members in particular, as they
provide the opportunity for our Directors to understand operations,
performance and challenges in a regional context. Board members also
get a chance to engage with local employees in different roles at different
levels of seniority and from varying backgrounds. This aspect of Board
visits provides real insight into the culture of the business. These visits
also afford Directors the opportunity to interact with employees and
develop deeper insights into the quality of our current senior
management and the potential for succession. It also helps the Directors
to actively embed the values of Glanbia across key locations.
During 2021 due to the ongoing Covid-19 pandemic, the majority of site
visits had to be cancelled but as soon as it is deemed safe to travel there
will be an opportunity for all Directors to visit some of the international
sites and meet the teams.
The Group Secretary in conjunction with Glanbia’s advisers, monitor legal
and governance developments and Directors are regularly provided with
updates on corporate governance, legislative and regulatory issues.
During 2021, updates included a presentation from the Group Secretary
on the Market Abuse Regulations and the migration of the Company’s
securities from CREST to Euroclear Bank Belgium and the subsequent
impact thereof and an investor relations update presentation from the
Group Director of Strategic Planning and Investor Relations.
As part of their annual performance evaluation, Directors are given the
opportunity to discuss their own training and development needs and our
Directors can avail of external courses.
Independence
The Board and the Nomination and Governance Committee believe that
all Non-Executive Directors demonstrate the essential characteristics of
independence and bring independent challenge and deliberations to the
Board. An explanation of the basis for this belief is set out in the
Nomination and Governance Committee Report on page 117. While the
Company regards the Directors nominated by the Society (the ‘Society
Nominee Directors’) as being independent, the Society Nominee
Directors are not being designated as Independent Directors for the
purpose of either the UK Corporate Governance Code or Listing Rule
6.1.7 (2) of Euronext Dublin/Listing Rule 9.2.2 AD of the United Kingdom
Listing Authority (UKLA). This is to ensure consistency with the
Relationship Agreement between the Company and the Society with
regard to the composition and size of the Board and allowing for the
planned reduction of the Society’s representation on the Board.
In compliance with Listing Rule 6.1.7 (2) of Euronext Dublin/Listing Rule
9.2.2 AD of the UKLA, the Company has entered into a written legally
binding agreement with the Society, the Relationship Agreement, the only
controlling shareholder, which is intended to ensure that the Society
complies with the independence provisions/undertakings set out in Listing
Rule 2.2.15 of Euronext Dublin and 6.5.4 R of the UKLA (the ‘Independence
Provisions’). The Society and the Company amended the Relationship
Agreement to reflect (1) the planned reduction of the Society’s
representation on the Board and (2) the size of the Board as described on
page 115 of the Nomination and Governance Committee Report.
During 2021, the Company has complied with the Independence
Provisions in the Relationship Agreement and, in so far as the Company
is aware, the Society has also complied with the Independence
Provisions. The Company’s constitution allows the election and re-
election of Independent Directors for the purpose of Listing Rule 6.1.7 (2)
of Euronext Dublin/Listing Rule 9.2.2 AD of the UKLA, to be conducted in
accordance with the election provisions for such Directors in the Euronext
Dublin/UKLA Listing Rules.
Re-election of Directors
In accordance with the UK Corporate Governance Code, all of the
Directors are subject to annual re-election by shareholders. Accordingly,
each of the Directors, with the exception of Patrick Coveney who retires
effective 30 March 2022 and Vincent Gorman who is not putting himself
forward for re-election at the AGM, will seek re-election at the 2022 AGM.
Additionally the re-election of Roisin Brennan, Paul Duffy, Donard Gaynor,
Jane Lodge and Dan O’Connor will be subject to the approval by
independent shareholders (i.e. all of the shareholders save the Society
and its subsidiary companies and related parties). All Directors have
indicated that they will abstain from voting on these resolutions.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
100
DIRECTORS’ REPORT
Board Evaluation
The annual Board evaluation process is an important element in ensuring and enhancing the effective and efficient operation
oftheBoard.
A key element of good governance is an annual evaluation to ensure that
the Board, its Committees and Board members are continuing to operate
and perform effectively.
The Group has established a formal process for the annual evaluation of
the performance of the Board and its principal Committees, including a
triennial external evaluation. The external evaluation supplements our
existing internal Board performance evaluation processes. During 2019,
in accordance with our triennial cycle of Board performance evaluations
and taking into account the significant changes to the Board in 2019, it
was decided to carry out two successive external reviews in 2019 and
2020 to ensure a consistent approach to development. External
consultants, Independent Audit, were engaged to facilitate the external
evaluations of the effectiveness of the Board and its Committees, the
purpose of which was to provide the Board with greater insights into its
performance and to identify opportunities to further increase and improve
its overall effectiveness. Independent Audit had no other connection with
the Group or with the individual Directors.
2021 internal Board and Board Committee evaluation process
This year, our Board evaluation was an internal one in line with our agreed
three-year cycle.
Process
Questionnaires focussing on best practice, relevant guidance and
recommendations from 2019 and 2020 external evaluations, were issued
electronically to all Board members followed by one to one video call
interviews between each Director and the Group Chairman with feedback
being provided on strategy, the operation of the Board and its
Committees, the management of the Board in the context of the Covid-19
pandemic, talent management, succession planning for the Board and
senior management and the transition of the chairmanship of the Group.
The performance of the Group Chairman was separately evaluated by the
Board led by the Senior Independent Director. As part of the Group
Chairman’s evaluation, the Non-Executive Directors met separately under
the chairmanship of the Senior Independent Director.
Outcome
The questionnaire responses and interview results were collated and
analysed and a report, summarising the findings and including proposed
recommendations for discussion, was prepared by the Group Chairman.
The report was presented to the Board in December 2021 for
consideration. Overall, it was the collective view of the Directors that the
Board is engaged and effective in discharging its responsibilities with an
open and collegiate culture and relations with senior management allows
constructive challenge on key issues. The Board welcomed a return to
in-person meetings (in the wake of Covid-19 pandemic) especially noting
the importance of Board members meeting and engaging with new
senior talent in the Group. The Board recognises the importance of
remaining closely connected with the business and fellow Directors, in
order to lead by example and continue to promote and monitor the
desired culture throughout the Group.
The strategic decision by the Society to reduce its representation on the
Board (from seven to three in 2023) in order to facilitate the appointment
of additional Independent Non-Executive Directors and further strengthen
the diversity of the Board was considered very significant. The increase in
Board gender diversity was welcomed and the importance of ongoing
effective Board renewal, further increasing the Board skill-set and
expanding gender and ethnic diversity was noted.
Areas of focus for 2022
The following areas of focus were agreed for 2022:
• given the significance of the Environmental Governance and Social
(‘ESG’) agenda to stakeholders, the Board expressed the importance
of being kept informed of the Company’s efforts and progress in
meeting its ESG ambitions and targets;
• the continued support of the Board to the Group’s Diversity, Equity
and Inclusion (‘DE&I’) challenges including DE&I at Board level is
imperative to the success of the Groups DE&I journey; and
• continued senior management succession planning.
A review of the performance of each of the Board Committees was also
undertaken covering each of their terms of reference, composition,
procedures, contribution and effectiveness. As a result of that
assessment, the Board and each Committee is satisfied that each
Committee is functioning effectively and continues to meet its terms of
reference. In particular, all Committees were considered to be well
chaired, enjoy a broad representation across the Board, deal with
relevant topics and substantially ease the burden of specific matters or
areas on the Board as a whole.
Indepth external Board
evaluations by external
facilitator
Internal evaluation facilitated by the Group
Chairman focusing onprogress against the key
objectives highlighted by the external
evaluations
Internal evaluation facilitated
bythe Group Chairman
2021
Year 2
Internal
evaluation
2022
Year 3
Internal
evaluation
2019/2020
Year 1
External
evaluation
Corporate Governance Report continued
Composition, Succession and Evaluation continued
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
101
Risk management and internal control
Effective risk management underpins our operating, financial and
governance activities. The Board continues to place particular emphasis
on monitoring both principal and emerging risks and regularly monitors
the risk management framework to ensure risks are being appropriately
mitigated and new risks identified.
While the Board has ultimate responsibility for determining the Group’s
risk profile and risk appetite, the Board has delegated responsibility for
reviewing the design and implementation of the Group’s risk
management and internal control systems to the Audit Committee.
These systems are designed to manage, rather than eliminate, the risk of
failure to achieve business objectives and provide reasonable, but not
absolute, assurance against material misstatement or loss. During the
year, the Board considered the Group key risk reports and received
updates from the Audit Committee Chairman on the programme of risk
presentations from key risk managers across the Group. This work
provided a comprehensive insight into how key risk exposures are
managed and better informs the Board in its evaluation of progress
against strategic objectives of the business.
The Board and management are satisfied that appropriate risk
management and internal control systems are in place throughout the
Group. The Risk Management Report is contained on pages 67 to 75.
Going concern
Glanbia’s business activities, together with the main factors likely to affect
its future development and performance, are described in the Strategic
Report on pages 1 to 75.
After due consideration and review, the Directors 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 Financial Statements. The Group therefore continues to
adopt the going concern basis in preparing its Financial Statements. The
full Going Concern Statement is contained on page 70.
Long-term viability statement
In accordance with the UK Corporate Governance Code and Listing Rule
6.1.82(3) of Euronext Dublin Listing Rules, the Directors have assessed
the viability of the Group and its ability to meet its liabilities as they fall due
over a period extending to 2024, taking into account the Group’s current
financial position, the Group’s strategy and business model and the
potential impact arising from the principal risks and uncertainties. The
factors considered in assessing the long-term prospects are detailed on
page 71.
Having considered these factors, the Covid-19 pandemic-related
challenges and impacts experienced in 2021 and anticipated for the
years ahead, the Board assessed the prospects and viability of the Group
in accordance with the UK Corporate Governance Code requirements.
The Board has a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due over the
period of the assessment. The full viability statement is contained on
page 71.
Fair, balanced and understandable
The Directors have concluded that the Annual Report and Financial
Statements, taken as a whole is fair, balanced and understandable and
provides the information necessary for shareholders to assess the Group
and the Company position, performance, business model and strategy.
This evaluation was supported by the Audit Committee as outlined in its
Report on page 105.
Adequate accounting records
The Directors are responsible for keeping adequate accounting records
that are sufficient to correctly record and explain the transactions of the
Company or enable, at any time, the assets, liabilities, financial position
and profit or loss of the Company to be determined with reasonable
accuracy, enable the Directors to ensure that the Financial Statements
comply with the Companies Act 2014, and, as regards the Group
Financial Statements, Article 4 of the IAS Regulation, and enable those
Financial Statements to be audited. The Directors, through the use of
appropriate procedures and systems, have also ensured that measures
are in place to secure compliance with the Company’s and the Group’s
obligation to keep adequate accounting records. These accounting
records are kept at Glanbia House, Kilkenny, R95 E866, Ireland, the
registered office of the Company.
Accountability and audit
Directors’ responsibilities for preparing the Financial Statements for the
Company and the Group are detailed on page 152.
The Independent Auditor’s Report details the respective responsibilities
of Directors and the statutory Auditor.
Statutory Auditor
The statutory Auditor, Deloitte Ireland LLP, continues in office in
accordance with section 383(2) of the Companies Act 2014. Deloitte (who
was succeeded by Deloitte Ireland LLP) was originally appointed on
27 April 2016.
Disclosure of information to statutory Auditor
In accordance with the provisions of section 330 of the Companies Act
2014, each of the persons who are Directors of the Company at the date
of approval of this Report confirms that:
• so far as the Director is aware, there is no relevant audit information
(as defined in the Companies Act 2014) of which the statutory Auditor
is unaware; and
• the Director has taken all the steps that he/she ought to have taken as
a Director to make himself/herself aware of any relevant audit
information (as defined) and to ensure that the statutory Auditor is
aware of such information.
Remuneration
The Remuneration Committee’s agenda continued to apply focus to the
key matters of Group and individual Executive Director performance and
the consideration of appropriate targets for 2022 and beyond. Our aim is
to ensure that our remuneration policies and practices remain competitive
within our industry to attract, retain and motivate high quality and
committed people who are critical to the future development and growth
of the Group.
A review of the 2018-2020 Remuneration Policy was conducted in 2021
and a new policy will be put to shareholders for consideration, in respect
of the 2022-2024 period, at the 2022 AGM. Full details of 2022-2024
Remuneration Policy and the work of the Remuneration Committee can
be obtained on pages 118 to 142.
Audit, Risk, Internal Control and Remuneration
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
102
DIRECTORS’ REPORT
Compliance Statements
Directors’ Compliance Statement
It is the policy of the Company to comply with its relevant obligations
(as defined in the Companies Act 2014). The Directors have drawn up
a compliance policy statement as defined in section 225(3)(a) of the
Companies Act 2014. Arrangements and structures have been put in
place that are, in the Directors’ opinion, designed to secure a material
compliance with the Company’s relevant obligations. These
arrangements and structures were reviewed by the Company during the
financial year. As required by section 225(2) of the Companies Act 2014,
the Directors acknowledge that they are responsible for the Company’s
compliance with the relevant obligations. In discharging their
responsibilities under section 225, the Directors relied on the advice of
third parties whom the Directors believe have the requisite knowledge
and experience to advise the Company on compliance with its relevant
obligations.
Corporate Governance Statement
During 2021 the Group was subject to the Irish Corporate Governance
Annex (2010) and the UK Corporate Governance Code, the ‘Codes’. Our
Corporate Governance Statement can be found on page 80.
The Irish Corporate Governance Annex published in December 2010 by
Euronext Dublin, previously named as the Irish Stock Exchange, is
publicly available on the website: https://www.euronext.com/sites/default/
files/2019-06/Irish-Corporate-Governance-Annex.pdf. The UK Corporate
Governance Code is publicly available on the Financial Reporting Council
website: www.frc.org.uk/getattachment/88bd8c45-50ea-4841-95b0-
d2f4f48069a2/2018-UK-Corporate-Governance-Code-FINAL.PDF.
Our approach to corporate governance and how we apply the principles
of the Codes is set out in this Corporate Governance Report, the Board
of Directors and Senior Management section and the Risk Management
Report (all of which are deemed to be incorporated in this Corporate
Governance Report). The Reports from the Chairmen of the Audit,
Environmental, Social and Governance, Nomination and Governance and
Remuneration Committees highlight the key areas of focus for, and the
background to, the principal decisions taken by those Committees, which
form an integral part of our governance structure. A fair, balanced and
understandable assessment of the Group’s position and prospects is set
out in the Strategic Report on pages 1 to 75. The Strategic Report also
includes other important information relating to Governance including our
approach to People, Sustainability and Stakeholders. Other Statutory
Information contains certain other information required to be incorporated
into this Corporate Governance Statement. All of these statements are
deemed to be incorporated in the Corporate Governance Statement.
UK Corporate Governance Code
Board Leadership and Company Purpose Pages 10 to 11 and 77 to 95
Division of Responsibilities Pages 96 to 97
Composition Succession and Evaluation Pages 98 to 100 and 112 to 117
Audit Risk and Internal Controls Pages 101 to 108
Remuneration Pages 118 to 142
Irish Corporate Governance Annex
Board Composition Pages 81 to 100
Board Appointments Pages 78, 98 and 112 to 117
Board Evaluation Pages 79, 100 and 113
Board Re-election Pages 99 and 117
Audit Committee Pages 103 to 108
Remuneration Pages 118 to 142
Section 1373 Companies Act 2014
Applicable Codes Pages 80 and 102
Departures from the Codes Page 80
Risk Management and Internal Control Pages 67 to 75 and 101 to 108
Takeover Regulations Pages 143 to 148
Shareholder Information Pages 250 to 253
Board and Committees Pages 76 to 142
Corporate Governance Report continued
Audit, Risk, Internal Control and Remuneration continued
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
103
Committee members and Committee tenure
Appointed to the
Committee
Number of full
years on the
Committee
D O’Connor (Chair)
1 Dec 14 7
P Coveney
30 Sep 14 7
D Gaynor
1
24 Feb 15 5
J Lodge
20 Jan 21 1
P Duffy
17 Jun 21 <1
1. D Gaynor retired from the Audit Committee on 20 January 2021.
See pages 82 and 83 for more information on the current
Audit Committee members.
Key responsibilities
Protecting the interest of shareholders by monitoring the integrity of the
Group’s Financial Statements including reviewing significant financial
reporting issues, judgements and other supplementary financial
information contained in formal announcements and communications.
Reviewing and challenging where necessary the appropriateness and
consistency of the accounting policies applied to the Group’s Financial
Statements.
Providing advice on whether the Annual Report and Financial
Statements, taken as a whole, is fair, balanced and understandable and
provides the necessary information for shareholders to assess the
Group’s position and performance, business model and strategy.
Advising the Board of its responsibilities to monitor and review the
effectiveness of the Group’s systems of risk management and internal
controls including its assessment of the challenges posed by Covid-19.
Reviewing reports from specialist functions such as Health & Safety,
Quality and Food Safety, Group Legal, and Group Tax to identify issues
that may have a material impact to the Group.
Receiving updates on the work undertaken to improve the Group IT and cyber
security capabilities, and the Group’s climate and ESG disclosure requirements.
Advising the Board of any material uncertainties that may impact the
Group’s ability to continue as a going concern and the appropriateness
of the Group’s long-term viability statement.
Overseeing the relationship with the statutory Auditor, including
approving the terms of engagement and remuneration, and performing
an annual assessment of the independence and objectivity of the
statutory Auditor and effectiveness of the external audit.
Making recommendations to the Board in relation to the appointment,
re-appointment and removal of the Group’s statutory Auditor.
Ensuring that an audit tender is conducted at least every 10 years.
Monitoring the operation and reviewing the effectiveness of the Internal
Audit Function.
Assessing the Group’s procedures for fraud prevention and detection.
Supporting the Board in assessing the Group’s whistleblowing arrangements.
MAINTAINING
EFFECTIVE
INDEPENDENT
RISK AND
CONTROL
OVERSIGHT
Audit Committee Report
Dan O’Connor
Audit Committee Chairman
Terms of reference
The full terms of reference of the Audit Committee can be found on
the Group’s website: www.glanbia.com or can be obtained from the
Group Secretary.
Allocation of time
Financial and corporate governance activities
Statutory Auditor
Risk management and internal controls
Internal Audit
Other
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
104
DIRECTORS’ REPORT
Audit Committee Report continued
Dear shareholder,
As Chairman of the Audit Committee (the ‘Committee’), I am pleased to
present the Committee’s report for the year ended 1 January 2022. This
report provides an overview of the Committee’s principal activities
during the year, its role in ensuring the integrity of the Group’s published
financial information and an outline of the Committee’s priorities for the
year ahead.
Committee structure changes
As noted in the 2020 Annual Report, Donard Gaynor retired as a
Committee member in line with best practice on 20 January 2021 and
Jane Lodge was appointed as a member of the Committee on that date.
Paul Duffy was also appointed as a member of the Committee on
17 June 2021. As announced on 24 February 2022, Paul Duffy will
succeed me as Chairperson of the Audit Committee effective 7 March
2022 and Patrick Coveney will retire as an Independent Non-Executive
Director effective 30 March 2022.
Responsibilities
The Committee is responsible for monitoring the integrity of the Group’s
Financial Statements and for assisting the Board in determining that the
Annual Report and Financial Statements, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for shareholders to assess the Group’s position and performance,
business model and strategy. The work performed in this regard and
our engagement with the statutory Auditor is detailed on pages 105 and
106.
The Committee also supports the Board in reviewing the effectiveness
of the Group’s risk management and internal control systems and for
ensuring a robust assessment of the emerging and principal risks facing
the Company is performed. During 2021, the Committee evaluated key
areas of risk such as health and safety, legal, financial reporting and tax,
IT security and quality and food safety by receiving direct presentations
from the relevant Group functional leads.
The Group’s focus on climate risk management is also increasing due to
the evolving regulatory reporting requirements, changing stakeholder
focus and the related risks. This included a review of the 13 thematic
potential climate-related risks and opportunities (CROs) which may
impact the Group as identified through the review work conducted with
The Carbon Trust as outlined in the Task Force on Climate-related
Financial Disclosures (TCFD) on pages 61 to 66. During the year, Group
Finance and the statutory Auditors provided the Committee with regular
updates on the evolving legislative and external reporting requirements
including the climate related risk disclosures. Group Internal Audit
presented a Group risk management report focusing on the Group risk
appetite and KPIs which provided greater detail for the Committee to
assess the Group’s risks and further develop the Group’s risk
framework. The work performed in this regard is detailed on page 106.
Covid-19
The Committee has and will continue to engage with the Board to
ensure that effective internal control and risk management systems are
maintained and to monitor the additional pressures on management
and employees as a result of the pandemic. The Committee believes
that employee performance has remained strong and that negative
impacts to health and safety have been carefully managed.
We have also discussed with Group management the work performed
in respect of the Going Concern and Viability Statements, the goodwill
and intangible asset impairment reviews and the evaluation of
exceptional items. Impacts to the internal and external audit processes,
which are largely being conducted remotely, have also been considered.
The Committee is satisfied both parties were able to work safely and in
compliance with the relevant laws and guidance.
Engagement
In fulfilling its key oversight responsibilities the Committee engaged
regularly with management, Group Internal Audit and the statutory
Auditor to ensure timely and accurate information was consistently
provided to the Committee. Our engagement with the Group Internal
Audit function and the statutory Auditor is detailed on pages 106 and
108 together with an explanation of how the Committee has assessed
the independence and effectiveness of the external audit process.
During the year an external quality assessment of the Internal Audit
function was performed with no material issues arising. The Committee
is also satisfied, based on the evidence obtained throughout the
external audit process that a robust, effective and efficient process is
evident across the Group. The Committee is particularly pleased that a
high standard has been maintained following the transition of the lead
audit engagement partner for the 2021 Annual Report and Financial
Statements audit. In particular, the Committee reviewed the key audit
risk areas, and the work undertaken by the statutory Auditor to address
those risks, in detail.
Priorities for 2022
The Committee’s key priorities for 2022 include:
• Ensuring the Group’s Financial Statements are accurate and reflect
the balanced and consistent application of financial and non-financial
reporting requirements;
• Reviewing the detailed scenario and quantification analysis on the
CROs in the TCFD report which will be performed by management;
• Assessing the processes in place to ensure effective oversight of
environmental (including climate), social and governance activities
and other non-financial disclosures;
• Providing independent challenge and oversight on areas of key
judgement or estimation;
• Maintaining focus on our impairment testing methodology, inputs,
assumptions, sensitivity analysis and results;
• Detailed monitoring of the Group’s principal risks and uncertainties;
• Continue its programme of direct presentations from management to
ensure that effective risk management processes are implemented
to address key risk areas in a manner consistent with the Group’s
risk appetite;
• Continued focus on the impact of the Covid-19 pandemic on the
business, principal risks, cash flow, accounting disclosures and
financial controls; and
• Ensuring that robust due diligence is performed, acquisition
integration is closely monitored and post completion reviews are
conducted on all material investments.
Review of Audit Committee performance
The Committee assessed its performance covering its terms of
reference, composition, procedures, contribution, and effectiveness. As
a result of that assessment, the Board and Committee are satisfied that
the Committee is functioning effectively and continues to meet the
requirements of its terms of reference. A detailed Audit Committee
effectiveness review, conducted by Group Internal Audit, validated the
Committee’s conclusion. Any actions arising from this review will be
implemented in 2022.
On behalf of the Audit Committee
Dan O’Connor
Audit Committee Chairman
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
105
Governance
Committee membership
The Committee was in place throughout 2021. At present, the
Committee comprises of four Independent Non-Executive Directors,
Dan O’Connor (Senior Independent Director and Committee Chairman),
Patrick Coveney, Jane Lodge and Paul Duffy. Two members constitute a
quorum. The Group Secretary acts as secretary to the Committee.
Membership is reviewed annually by the Chairman of the Committee
and the Group Chairman who recommend new appointments to the
Nomination and Governance Committee for consideration and onward
recommendation to the Board.
The Board is satisfied that all four Committee members meet the
requirements for recent and relevant financial experience, as set out in
the UK Corporate Governance Code. The Board is also satisfied that the
Committee, as a whole, has competence relevant to the sector in which
the Group operates including a wide range of skills, expertise and
experience in financial and commercial matters arising from the senior
positions they hold or held in other organisations as set out in their
biographical details on pages 82 and 83.
Meetings
The Committee met eight times during the year ended 1 January 2022.
The Group Managing Director, Group Finance Director, Group
Secretary, Group Head of Internal Audit, Group Financial Controller and
representatives of the statutory Auditor are invited to attend all meetings
of the Committee. Where required other key executives or members of
the senior management team are invited to attend meetings and when
specialist technical knowledge is required to provide a deeper insight on
agenda items related to the Group’s principal risks.
The Committee meet with the statutory Auditor, without other executive
management being present, on an annual basis to discuss any issues
which may have arisen in the year under review. This meeting was held in
February 2022 to review the findings from the audit of the Financial
Statements. The Group Head of Internal Audit also has direct access to
the Chairman of the Committee.
After each Committee meeting, the Chairman of the Committee reports to
the Board on the key issues which have been discussed. The allocation of
time across each of the key Committee activities is set out on page 103.
Audit Committee key activities
Financial reporting and significant financial judgements
As part of the Committee’s role, the Committee reviewed the Interim
Management Statements, the Interim and Annual Consolidated Financial
Statements and all formal announcements relating to these statements
before submitting them to the Board of Directors with a recommendation
to approve. These reviews were focused on but not limited to:
• the appropriateness and consistency of application of accounting
policies and practices;
• compliance with financial reporting standards and corporate
governance requirements; and
• significant areas in which estimation or judgement had been applied
in the preparation of the Financial Statements.
The Group Internal Audit team contribute to the assurance process by
reviewing compliance with internal control processes. The statutory
Auditor presents its findings to the shareholders as the owners of the
business, and its report can be found on pages 154 to 161.
As outlined in our accounting policies on page 177, the Group has
adopted an income statement format that seeks to highlight significant
items within the Group results for the year (‘exceptional items’).
Judgement is applied by the Directors in assessing the particular items
which by virtue of their scale and nature should be disclosed in the
Income Statement and Financial Statement notes as exceptional items.
Several significant items have been highlighted as exceptional items in
both 2020 and 2021 and the Committee is satisfied that this is
appropriate and consistent with the Group’s policy in this area. The table
on page 107 sets out the 2021 significant Financial Statements reporting
judgements and disclosures and how the Committee addressed these
matters.
The Committee considered the Directors’ Responsibility Statement and
the Group’s principal risks and uncertainties within the 2021 Annual
Report and Financial Statements and the half-year results and were
satisfied with the adequacy of the disclosures.
Regulators and our financial reporting
During the year, the Group received correspondence from the Irish
Auditing and Accounting Supervisory Authority (IAASA) in respect of the
Group’s Annual Report and Financial Statements for the year ended
2 January 2020 outlining a number of areas on which they required
further information and clarity. The Company provided the necessary
information and clarifications requested and IAASA acknowledged the
cooperation received from the Directors and management in responding
to the queries raised. The Committee was satisfied that no material
findings arose from the review.
Covid-19
The pandemic has had a range of implications on risk management and
corporate reporting in the period. The impacts on the Group’s principal
risks and uncertainties and going concern have been reviewed in depth
together with the related mitigations in the Risk Management Report on
pages 67 to 75.
Fair, balanced and understandable
At the request of the Board, the Audit Committee reviewed the content
of the Annual Report and Financial Statements to ensure that when
taken as a whole, it is fair, balanced and understandable, and provides
the information necessary for shareholders to assess the company’s
position, performance, business model and strategy. In satisfying this
responsibility the Committee considered the following:
• the documented process and timelines for the co-ordination,
preparation and review of the Annual Report and Financial Statements;
• a dedicated project manager was in place to drive adherence to
deadlines, reporting standards and consistency and this is aligned
with the external audit process undertaken by Deloitte Ireland LLP;
• the senior finance management and executive team review and
approval procedures;
• the key process milestones, in particular to ensure the draft Annual
Report and Financial Statements were available to the Committee in
sufficient time in advance of the Committee meeting to facilitate
adequate review and effective challenge at the meeting;
• a detailed report was presented to the Committee outlining the
process by which they assessed the narrative and financial sections
and disclosures of the 2021 Annual Report to ensure that the criteria
of fair, balanced and understandable has been achieved;
• the report highlighted new disclosure areas such as the TCFD report
and climate disclosures which were discussed in detail; and
• the effectiveness of the key features of internal control.
Having considered the above, in conjunction with the regular updates the
Committee receives from management and the reports received from
the statutory Auditor, Deloitte Ireland LLP, the Committee confirmed to
the Board that the Annual Report and Financial Statements, taken as a
whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group and the Company
position, performance, business model and strategy.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
106
DIRECTORS’ REPORT
Audit Committee Report continued
Going Concern and Viability Statements
The Audit Committee reviewed the draft Going Concern and Viability
Statements prior to recommending them for approval by the Board.
These statements are included in the Risk Management Report on
pages 70 to 71.
This review included assessing the effectiveness of the process
undertaken by the Directors to evaluate going concern, including the
impact of the pandemic and the analysis supporting the Going Concern
Statement and disclosures in the Financial Statements. The Committee
and the Board consider it appropriate to adopt the going concern basis
of accounting with no material uncertainties as to the Group’s ability to
continue to do so.
The Committee also reviewed the Long-term Viability Statement which
is supported by the work conducted in the strategy and budget review
in December 2021 and the Board’s ongoing review of monthly and
year-to-date business performance versus budget and forecast. Further
detail is provided within the Viability Statement on page 71.
Directors’ Compliance Statement
The Committee considered the requirements of the Irish Companies Act
2014 in relation to the Directors’ Compliance Statement and received a
report from senior management on the review undertaken during the
financial year of the compliance structures and arrangements in place to
ensure the Company’s material compliance with its relevant obligations.
On the basis of this review, the Committee confirmed to the Board that it
is satisfied that appropriate steps have been undertaken to ensure that
Glanbia plc is in material compliance with its relevant obligations.
Risk management and internal control systems
The Committee receives regular Group key risk summary reports, prepared
by the Internal Audit team, tracking residual key risk exposures which allows
the Committee to assess the appropriateness of management’s action
plans to ensure the Board’s risk appetite is not exceeded and to remain
alert to emerging risks as they are identified through the review process.
The Risk Management Report on pages 67 to 75 sets out the detailed
steps in the process and the Group’s principal risks. The Committee’s risk
management focus during 2021 included:
• ensuring the Group’s risk appetite statements have an established
context within the risk management framework where they can be
operationalised through both quantitative and qualitative statements;
• reviewing and approving the assessment of the principal risks and
uncertainties that could impact the achievement of the Group’s
strategic objectives as outlined on pages 72 to 75;
• evaluating the continued impacts of Covid-19 on the business and
the health and safety of its employees;
• reviewing the 13 thematic potential CROs identified through the
review work conducted with The Carbon Trust as outlined in the
TCFD on pages 61 to 66;
• reviewing a paper prepared by Group Finance which considered the
impact of climate change on the financial statements which includes
details on the TCFD requirements, as outlined on pages 61 to 66 and
accounting policy Note 2 to the Financial Statements;
• receiving risk presentations from a number of Group functional leads;
• increased focus on developing a detailed understanding of the risks
within each of these core functions, our improvement opportunities
and areas of emerging risk;
• a consideration of the detailed business unit performance updates
on Group investments and the impairment review methodology and
outcomes outlined in Note 16;
• receiving updates from the Group Head of Internal Audit outlining
areas of non-compliance with Group policies and controls identified
during the year, fraud investigation reports and management actions
to address the weaknesses noted;
• assessing the Group’s risk management and internal control systems
in line with the Financial Reporting Council (FRC) guidance on risk
management and internal control; and
• reviewing reports from the statutory Auditor in respect of significant
financial accounting and reporting issues, together with
management’s plans in place to address any internal control
weaknesses noted.
The Committee, having assessed the above information, is satisfied that
the Group’s systems of internal control and risk management are
operating effectively and has reported that opinion to the Board who
has conducted its own review and is also satisfied that these systems
are operating effectively.
Internal audit
To fulfil its responsibilities for monitoring and reviewing the operation and
effectiveness of the Internal Audit function, the Committee:
• approved the Group Internal Audit charter and annual work plan
including any amendments during the year as a result of the
Covid-19 risk impacts and travel restrictions. Remote auditing carried
out by Internal Audit continued to work satisfactorily with no delay in
delivering the internal audit plan. As restrictions were eased in late
2021 certain audits were performed on-site;
• ensured that it is adequately resourced with a strong mix of skills and
expertise capable of conducting effective internal audits, IT audits
and special investigations;
• reviewed the team’s use of technology including the audit
management system and data analytics tools to ensure the
effectiveness of the Internal Audit processes;
• received regular reports from the Head of Internal Audit covering
team development, progress against the audit plan, amendments
required and best practice risk management procedures; and
• ensured an external quality assessment of the Internal Audit function
was conducted during the year by PricewaterhouseCoopers. The
review assessed our compliance with the Institute of Internal
Auditors’ (IIA) International Standards for the Professional Practice of
Internal Auditing. The external review noted that the Internal Audit
function is providing effective assurance to management and the
Committee and is in general compliance with the IIA Standards with
no material issues identified.
During the year, Internal Audit coverage focused on principal risks, which
included cyber threat and information security, legal and regulatory compliance
and technology failure. Audit results are reported to the Audit Committee to
allow the Committee to have an integrated view on the way risks are managed.
Assurance was also provided across a range of areas, including data loss
prevention, phishing and data privacy. Management is responsible for ensuring
issues raised by Internal Audit are addressed within the agreed timeframe,
and the Committee reviews the status of actions periodically throughout
the year to ensure they are completed on a timely basis.
The Group Head of Internal Audit routinely meets with the Chairman of
the Committee, in preparation for upcoming Committee meetings, to
review the meeting agenda and draft papers and to ensure that the
overall Committee work plan remains aligned to the current and
emerging areas of key Group risk. Where required, the relevant Board or
Committee agendas are amended to include items that require more
detailed consideration, typically by a direct presentation to the
Committee or Board by the relevant business unit or functional lead.
On the basis of the above, the Committee concluded that the Internal
Audit function was performing well and is satisfied that the quality,
experience and expertise of the function is appropriate for the Group.
The Committee also encourages effective coordination between the
external and internal audit teams to maximise the benefits from
coordinated activities and ensures that this is in place.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
107
2021 significant financial reporting judgements and disclosures
The areas considered and the actions taken by the Committee in relation to the 2021 Annual Report are outlined in the table below. For each area,
following their enquiries, the Committee was satisfied with the key assumptions made, the accounting treatment applied and the disclosures in the
Financial Statements.
Key financial judgement and disclosures How the Audit Committee addressed these matters
Impairment review of goodwill
and intangibles
Judgement decisions largely relate to the
assumptions used to assess the value-in-use of
the assets being tested. These assumptions
typically include short and long-term business
and macroeconomic projections, cash flow
forecasts and associated discount rates.
• Management provided the Committee with detailed reports to support the recoverable value of
the balances included in Note 16 to the Financial Statements including an analysis of the level of
headroom between the carrying value of the asset and the value-in-use;
• The Committee reviewed and discussed the reports with management and challenged the
consistent application of managements’ methodology, the appropriateness of the assumptions
made for future cash flows, discount rates, terminal values and growth rates, and the
achievability of the business plans with consideration of different scenarios;
• The Committee considered the updates made to assumptions and Financial Statement
disclosures as a result of managements’ assessment of the impact of Covid-19 on forecasted
business performance and cash flows, and the extent of sensitivity disclosures provided; and
• The Committee considered the output from the sensitivity analysis performed at 2021 year-end,
and in particular they noted that based on the conclusions of the impairment process completed,
no impairment was identified.
Exceptional items
Judgement decisions relate to the assessment of
the items identified as being exceptional in nature
and the appropriateness of the presentation in the
Financial Statements.
• The Committee reviewed the nature of the exceptional items identified and after a detailed review
and consideration of the disclosures is satisfied that the treatment is in line with the Group policy,
consistently applied across years and appropriately presented in the Financial Statements with
sufficient detail to allow users of the Financial Statements to understand the nature and extent of
the exceptional items and how they arose. Further details on the exceptional items identified in
2021 are included in Note 6 to the Financial Statements.
Revenue recognition
Revenue is a risk given the inherent complexity
of IFRS 15 accounting requirements, the nature
of some customer relationships and the
adjustments recorded to ensure the basis of
year-end rebate provisions are appropriate.
• Within the GPN segment, revenue is recognised net of rebate, discount, deduction and
allowance claims where the amounts payable can vary depending on the arrangements made
with individual customers and the volume of trade entered into; and
• Key areas of focus and challenge from the Committee were in relation to the period-end close
process and the basis of any significant year-end rebate provisions to ensure they were adequate
and appropriate.
Uncertain tax provisions
Significant judgement is applied in assessing
current and deferred tax exposures in relation to
the interpretation of local and international tax
laws, rates and treaties relating to the worldwide
uncertain tax provisions.
• The Committee received a presentation from the Group Finance Director and the Group Head of
Tax on various tax matters including our tax structures and controls, the ongoing management of
our system of operation, evolving tax legislation and the status or outcome of any tax authority
reviews conducted during the financial period;
• The Committee considered the impact of the Group financing arrangements and the Group’s
compliance with the legislative requirements in this area;
• The Committee also received a presentation from our external professional advisors on the
operating effectiveness of our system of operation;
• The Committee received an analysis of movements in the year-end uncertain tax provisions,
reviewed the key judgements in relation to the calculation of the uncertain tax provisions, the
external professional advice obtained to support the provisions and the Financial Statements
disclosure requirements; and
• The Committee challenged management on the key judgements and estimates underpinning
both the provisioning and disclosures adopted for the most significant components of the
taxation liabilities and the underlying assumptions for the recognition of deferred tax assets,
principally the availability of future taxable profits and the utilisation period.
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108
DIRECTORS’ REPORT
Whistleblowing and fraud
The Board has delegated responsibility to the Committee for ensuring
that the Group maintains suitable arrangements for its employees to
raise concerns, in confidence, about possible wrongdoing in financial
reporting and other matters. These arrangements are outlined in our
Code of Conduct which is available on the Company’s website www.
glanbia.com and on our Group intranet.
The Committee receives bi-annual presentations from the Group
Secretary providing an overview of how concerns raised are
categorised, investigated, monitored and reported, together with a
review of the main themes, issues and resolution actions arising.
Opportunities to improve the effectiveness of the Group’s whistleblowing
arrangements are also considered.
The Committee concluded, and confirmed to the Board, that it was
satisfied that the Group’s whistleblowing and other fraud prevention and
detection procedures, including the Internal Audit team activities, are
adequate and allow for the proportionate and independent investigation
of such matters and appropriate follow up action.
Review of statutory Auditor
The Committee oversees the relationship with the statutory Auditor,
including ensuring that the statutory audit contract is put out to tender at
least every 10 years. Deloitte (who were succeeded by Deloitte Ireland
LLP) were appointed as the Group’s statutory Auditor on 27 April 2016
following a formal tender process.
The Committee reviewed the approach and scope of the annual audit
work to be undertaken by the statutory Auditor, which included planned
levels of materiality, significant risks and key audit matters, the audit of
the Group’s core financial IT systems fraud responsibilities and
representations, the proposed audit fee and the approval of the terms of
engagement for the audit. Particular consideration was given to the
planning considerations associated with developing a hybrid audit plan
to ensure the delivery of a robust audit within the required timelines
through a combination of remote and in-person meetings, subject to
any changes in Covid-19 restrictions. The Committee is satisfied, based
on discussions with the Group lead audit engagement partner, that the
effectiveness of the audit procedures performed were not unduly
impacted as a result of being unable to perform some of the testing
on-site, with alternative procedures conducted.
The Committee discussed with Deloitte the evolving regulatory
requirements for environmental, social and governance reporting and
the recent corporate governance updates including:
• FRC and IFRS technical updates and commentary;
• UK Corporate Governance Code requirements;
• investor and regulator expectations in relation to the disclosure of the
financial and other impacts arising from the pandemic; and
• the increasing importance of climate related matters including
performance management.
The Committee also received updates from the statutory Auditor at its
meetings in December 2021, January 2022 and February 2022.
Independence and objectivity of the statutory Auditor
To ensure the independence and objectivity of the statutory Auditor,
the Committee:
• maintains and regularly reviews the Group’s Auditor Relationship and
Independence Policy;
• considers the performance of the statutory Auditor each year;
• monitors the nature and extent of services provided by the statutory
Auditor through an annual review of fees paid for audit and non-audit
work;
• reviews audit partner rotation requirements and assesses their
independence on an ongoing basis. In line with regulatory
requirements for listed companies, the statutory Auditor is required
to rotate the audit partner responsible for the Group audit every five
years. For the 2021 audit, Emer O’Shaughnessy replaced Kevin
Sheehan as the Group lead audit engagement partner. Emer
shadowed the 2020 audit process to help ensure a smooth audit
transition; and
• requests the statutory Auditor to formally confirm in writing that they
are in compliance with relevant ethical and professional guidance
and that, in their professional judgment, they are independent from
the Group. This confirmation process also provides examples of
safeguards that may, either individually or in combination, reduce any
independence threat to an acceptable level.
Non-audit services
The Glanbia Auditor Relationship and Independence Policy includes a
clearly defined pre-approval process, subject to defined monetary
thresholds, for audit and other services, including a requirement for the
business to submit a formal template setting out the details of the
services requested, the likely fee level, the rationale for requiring the
work to be carried out by Deloitte Ireland LLP rather than another
service provider and confirmation that the service requested is not a
prohibited service. The provision of all non-audit services which are not
prohibited and approved in line with our policy must be ratified by the
Committee at the following meeting of the Committee, who also ensures
that the total fees for non-audit services will not exceed the defined
thresholds and that the defined authorisation process is followed.
Fees paid to Deloitte Ireland LLP for audit-related and non-audit related
services are analysed in Note 5 to the Financial Statements. The
Committee is pleased that this policy continues to be effectively
implemented.
Effectiveness
The Group Finance Director confirmed that the feedback from the
Group and subsidiary finance executives, who had the most interaction
with Deloitte Ireland LLP in 2021, remained consistently positive.
Overall, the Committee remains satisfied with the effectiveness of the
statutory Auditor based on:
• its own interactions with Deloitte Ireland LLP during Committee
meetings;
• the smooth transition of lead audit partners, the quality of planning,
delivery and execution of the audit;
• effectiveness of communications between management and the
audit team;
• the quality of the reports and presentations received;
• the robustness of the challenge provided, particularly in relation to
judgmental and complex areas as well as demonstrating professional
scepticism and independence;
• their technical insight; and
• their demonstration of a clear understanding of the Group’s business
and its key risks.
The Committee’s conclusion that the external audit process was
effective was conveyed to the Board.
Audit Committee Report continued
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
109
Committee members and Committee tenure
Appointed to the
Committee
Number of full
years on the
Committee
D Gaynor (Chair)
17 Jun 21 <1
P Coveney
17 Jun 21 <1
J Murphy
17 Jun 21 <1
S Talbot
17 Jun 21 <1
Terms of reference
The full terms of reference of the Environmental, Social and Governance
Committee can be found on the Group’s website: www.glanbia.com or
can be obtained from the Group Secretary.
See page 81, 82 and 84 for more information on current
Environment, Social and Governance Committee members.
Key Responsibilities
Assisting the Board in defining and regularly reviewing the strategy of
the Company and its subsidiaries (the “Group”) relating to
Environmental, Social and Governance (“ESG”) matters and in setting
relevant key performance indicators;
Developing and reviewing regularly the policies, programmes, codes of
practices, targets and initiatives of the Group relating to ESG matters
ensuring they remain effective and up to date and consistent with good
industry practice;
Providing oversight of the Group’s management of ESG matters and
compliance with relevant legal and regulatory requirements, including
applicable rules and principles of corporate governance, and recognised
international standards;
Reviewing the quality and integrity of internal and external reporting of
ESG matters and performance to ensure that the Group provides
appropriate information, complies with reporting obligations and meets
international reporting standards and is transparent regarding its ESG
related policies with the investment community;
Reporting on these matters to the Board and, where appropriate, make
recommendations to the Board; and
Reporting as required to the shareholders of the Company on the
activities and remit of the Committee.
Donard Gaynor
Environmental, Social and
Governance Committee Chairman
As the world faces extraordinary challenges
– from climate change to food insecurity –
delivering on our purpose is more critical
than ever before.
Environmental, Social and Governance Committee Report
DELIVERING
ON OUR
PURPOSE
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
110
DIRECTORS’ REPORT
Environmental, Social and Governance Committee Report continued
Dear shareholder,
As chairman of the ESG Committee, I am pleased to present to you the
work of the Committee for the year ended 1 January 2022. I would
suggest that this report is read in conjunction with Our Sustainability
section on pages 52-60 and Our People section on pages 18-25 which
provides further information on Glanbia’s ESG activities.
Our global sustainability strategy (as outlined on pages 52-53) sets out
our clear priorities based on the most material topics to our business
(refer to the materiality matrix within the Strategic Report on page 24).
We identified climate change, energy, water, waste and packaging as
our most material environmental issues. Under our social pillar we are
focused on inclusion for all with particular emphasis on diversity equity
and inclusion. The below table highlights the key activities of the
Committee during 2021 and outlines the main focus areas for the year
ahead.
Climate change
Despite the ongoing impact of COVID-19 experienced during 2021, we
remained committed to the global fight against climate change. Climate
change is the defining issue of our time, as highlighted during last
Novembers United Nations Climate Change Conference ‘COP26’ in
Glasgow. It has continued to move up the agenda for our stakeholders
(refer to ‘Our stakeholders’ page 25), as well as for the wider population
as a whole.
A responsible climate change strategy focuses on adaptation as well as
mitigation. As outlined within our Task Force on Climate-related Financial
Disclosures (TCFD) Report pages 61-66, Glanbia recognises the
importance of identifying the climate-related risks and opportunities that
face the Group from a physical and transition risk standpoint. A number of
mitigation and adaption measures have been identified by management
and there is a firm commitment to carry out further analysis during 2022,
which will be used to inform our business strategy.
Diversity, Equity and Inclusion (DE&I)
Glanbia is deeply committed to our DE&I vision to advance a culture
where we celebrate individuality knowing that ‘Together We Are More’,
which sums up our perspective on the importance of an inclusive
organisational culture. 2021 was the first year of a multi-year strategy to
meet our set ambitions. In 2022 we will continue implementation of this
strategy and also measure our success against defined targets.
Membership
The Committee comprises of myself as Chair, the Group Managing
Director, and two non-executive directors. Two members constitute a
quorum. The Group Secretary acts as secretary to the Committee. In
addition the Group Chief ESG Officer holds a standing invitation to
attend Committee meetings. At the request of the Committee, members
of the Executive Committee, senior management team and external
advisers may be invited to attend all or part of any meeting, as and when
appropriate. As Chair I report to the Board after each meeting on the
nature and content of our discussion, recommendations and any
actions to be taken.
I would also refer you to the chart on the next page which provides an
overview of the ESG governance structure and related roles and
responsibilities, including those of this Committee.
Review of Committee performance
The Committee assessed its performance covering its terms of
reference, composition, procedures, contribution and effectiveness. As
a result of that assessment, the Board and Committees are satisfied
that the Committee is functioning effectively and is meeting its terms of
reference.
On behalf of the ESG Committee
Donard Gaynor
ESG Committee Chairman
Key activities of the Committee during 2021
The main focus areas for the Committee during 2021 was monitoring
the roll out of our ‘Pure Food + Pure Planet’ Group Sustainability
Strategy which was approved by the Board at the start of 2021.
The following areas were prioritised in year one of the strategy
• Appointment of Chief ESG Officer, core central team and
Business Unit (BU) sustainability leads;
• Emission related targets across Scopes 1,2 and 3 validated
by the Science Based Target initiative (SBTi);
• Third-party audits of energy and water management at
manufacturing sites;
• DE&I year one strategy actions rolled out;
• Executive ESG Working Group, DE&I Committee, Functional
Leadership Teams in place;
• Group-wide Women’s Employee Resource Group (ERG)
launched;
• ESG targets introduced into Executive Directors and Group
Executive STIP and LTIP incentives;
• Reviewed the climate-related risks and opportunities, a key output
of the TCFD disclosure preparation, facilitated by The Carbon
Trust; and
• Monitored performance against agreed targets and commitments.
Focus areas for 2022
In 2022 we intend to accelerate our ESG initiatives to commence a
meaningful shift in the roadmap to strategic targets.
Environmental
• Focus on renewable energy procurement;
• Develop comprehensive business plan based on energy audits;
• Build upon TCFD process, including quantification analysis;
• Establish US farm emission programme with key partners;
• Establish water & waste efficiency programme; and
• Roll out GPN sustainable packaging programme.
Social
• Roll out DE&I training programmes for leaders and Group-wide
management;
• Introduce new ERGs (LGBTQ+, Multi-cultural);
• Revise diversity target setting; and
• Enhance data capture to support insights/decisions.
Governance
• Ensure greater focus on sustainability and DE&I culture within
organisation;
• Implement Board and Senior Executive ESG training;
• Refresh ESG related policies and Code of Conduct to underpin
organisational commitments;
• Complete disclosure requirements roadmap; and
• Extend ESG targets to all LTIP participants (E metrics) and DE&I
targets introduced into all ELT level STIP incentives.
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111
ESG Committee – is responsible for providing overall strategic
guidance to the Group’s ESG programme. This includes the Group’s
actions to address climate-related matters by assessing the Group’s
environmental strategy and results, as well as how the Group adapts its
business strategy taking into account potential climate risks and
opportunities. Approving recommendations from the Group Operating
Executive ESG Committee in respect of the key ESG issues and related
objectives that are material to the Group as a whole.
Group Operating Executive (GOE) ESG Committee – comprising of
the BU Chief Operating Officers (COOs), Human Resource Directors
(HRDs), the Senior Vice President (SVP) of Sustainability, Vice President
(VP) of DE&I and the VP of Quality Health Safety (QHS), is responsible for
delivery of the ESG Strategy including providing the appropriate
resources and support to ensure integration and achievement of our
climate related targets.
ESG Centre of Excellence (COE) Group – is responsible for
providing expert advice and direction in respect of ESG strategy,
supporting the BUs in achieving their net zero pathways and in
delivering the overall Group ESG strategy, monitoring performance and
keeping the Board and GOE ESG Committees informed on areas of
required focus and progress made.
ESG Leadership Team – is a cross functional working group which
includes ESG subject matter experts at a Group and BU level, with input
from wider Group functions including Group Finance, Corporate Affairs,
Investor Relations, IT and Procurement. This Group is responsible for
designing and coordinating ESG activation plans, including collaborating
to ensure we are monitoring delivery of our ESG commitments, including
climate related targets, and to identify and manage the related risks.
DE&I Committee – are Group and BU representatives responsible for
advancing our DE&I strategic pillars and delivering the Group-wide
strategy and BU specific activity.
QHS Leadership Team – are subject matter expert teams comprised
of senior representatives in Quality, Food Safety and Health and Safety
respectively, from the BUs and Group. These teams are responsible for
developing programmes, action plans, and reporting standards to
achieve Group wide ESG strategic deliverables.
Sustainability Leadership Team – includes Group and BU
representatives, in conjunction with the respective BU workstream
teams for Carbon, Water, Waste, Packaging, Responsible Sourcing and
Responsible Nutrition are responsible for delivering BU objectives
aligned to the Group-wide strategic intent and principles.
ESG governance structure
Board and its committees
Group MD
DE&I Committee
Sustainability LT
QHS LT
Culture &
Leadership
Talent
Acquisition
Commercial
& Reputation
Employee
ERGs
Measurement
by Governance
Carbon Water Waste Packaging
Responsible
Sourcing
Reporting
Responsible
Nutrition
Quality
Health
& Safety
GOE ESG Committee
Group Exec plus:
• BU COOs
& HRDs
• SVP
Sustainability
• VP DE&I
• SVP QHS
ESG Leadership Team (LT)
Centre Of Excellence
Chief ESG Officer
VP DE&I SVP QHS SVP
Sustainability
Group Financial
Controller /
Non-Financial
Reporting Lead
Strategy & Sponsorship ESG Centre of Excellence Plan Delivery Coordinate BU Activity Workstream Delivery
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
112
DIRECTORS’ REPORT
Committee members and Committee tenure
Appointed to the
Committee
Number of full
years on the
Committee
D Gaynor (Chair)
12 Dec 14 7
R Brennan
20 Jan 21 1
P Coveney*
23 Feb 16 5
D O’Connor
12 Dec 14 7
* P Coveney retired from the Nomination and Governance Committee
on 20 January 2021.
Terms of reference
The full terms of reference of the Nomination and Governance
Committee can be found on the Group’s website: www.glanbia.com
or can be obtained from the Group Secretary.
See pages 81 and 82 for more information on current
Nomination and Governance Committee members.
Key responsibilities
Assessing the composition, structure and size (including skills,
knowledge, experience and diversity) of the Board and its Committees
and making recommendations on appointments and reappointments to
the Board;
Recommending to the Board the membership and chairmanship
of the Audit, Remuneration and ESG Committees respectively;
Planning for the orderly succession of new Directors to the Board and
of senior management;
Keeping under review the leadership needs of the Group, both executive
and non-executive, with a view to ensuring the continued ability of the
Group to compete effectively in the market place;
Keeping the extent of Directors’ other interests under review to ensure
that the effectiveness of the Board is not compromised;
Overseeing the performance evaluation of the Board, its Committees
and individual Directors;
Keeping under review corporate governance developments with the aim
of ensuring that the Group’s governance policies and practices continue
to be in line with best practice;
Ensuring that the principles and provisions set out in the Irish Corporate
Governance Annex and the UK Corporate Governance Code (and any
other governance code that applies to the Company) are observed; and
Reviewing the disclosures and statements made in the Directors’ Report
to the shareholders.
Focusing on Board succession and the
development of governance structures
and an inclusive and diverse high
performing leadership team to meet the
Group’s strategic objectives now and for
the future.
Donard Gaynor
Nomination and Governance Committee
Chairman
WORKING
TOGETHER
Nomination and Governance Committee Report
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113
Dear Shareholder,
On behalf of the Board and the Nomination and Governance Committee
(the ‘Committee’) it’s my pleasure to present the Nomination and
Governance Committee Report for the year ended 1 January 2022.
At the heart of every organisation are its people and its culture. The
Committee has the very important role of setting the framework for
the development of a diverse, inclusive, high-performing Board,
leadership team and workforce who have an affinity to the Group’s
culture now and for the future. In this regard, the Committee keeps
Board composition under constant review, continuously evaluating
the composition, balance and performance of the Board and of its
Committees, identifying and recommending to the Board the
appointment of new Directors and Committee members to ensure
that the Board and its Committees are comprised of an appropriate
balance of independence, skills, knowledge, experience and diversity
so that they are effective in discharging their responsibilities and in
having oversight of all matters relating to corporate governance.
The Committee also identifies the leadership needs of the Group,
overseeing talent and succession plans for senior roles and monitors
the Group’s compliance with, and approach to, all applicable legal,
regulatory and guidance related to corporate governance matters.
As Glanbia moves forward with its growth strategy, I will work with
my fellow Directors on the Nomination and Governance Committee
to ensure our Board continues to comprise a mix of people who have
diverse backgrounds, experiences, cultures, perspectives and deep
knowledge of our business segments to adequately support the
Group’s activities and strategic direction.
Focus for the year
The Committee’s areas of focus in 2021 were the review of the
composition of the Board to facilitate the appointment of additional
Independent Non-Executive Directors, the extension of my tenure
as Group Chairman, the selection and appointment of Paul Duffy as
a new Independent Non-Executive Director, the search for a seventh
Independent of the Society Non-executive Director, an internal Board
evaluation, ongoing succession planning and oversight of the Board’s
Diversity, Equity and Inclusion (‘DE&I’) ambitions, each of which are
dealt in more detail in the following pages.
Glanbia Co-operative Society Limited
representation changes
The composition and size of the Board was reviewed in early 2021
and on 23 February 2021 Glanbia Co-operative Society Limited
(the ‘Society’) took a strategic decision to reduce the Society’s
representation on the Board (from seven to three in 2023) to facilitate
the appointment of additional Independent Non-Executive Directors
and further strengthen the diversity of the Board. In line with this the
size of the Board will also be reduced from 15 to 13 by 2023, further
details of how this will be implemented are contained on page 115.
Group Chairman succession
On 8 October 2020, in accordance with the Relationship Agreement
between the Company and the Society described on page 99,
I accepted the apppintment as first independent of the Society
Non-Executive Group Chairman until no later than the 2022 AGM.
On 11 August 2021, the Board extended my tenure as Group Chairman
until 2025. I recused myself from the Group Chairman succession
approval process which was led by the Senior Independent Director.
The Board and Committee were satisfied that, under provision 19
of the UK Corporate Governance Code, my extension was appropriate,
the reasons for which are set out on page 80.
2021/2022 Non-Executive Director changes
On 23 February 2021 the Board approved the appointment of Paul
Duffy as Independent Non-Executive Director effective 1 March 2021.
Full biographical details for Paul are set out on page 82. For information
on the process followed in respect of Paul’s recruitment see page 116.
At the conclusion of the 2021 Annual General Meeting (‘AGM’), Martin
Keane retired from the Board. In line with the Relationship Agreement,
as revised, Martin Keane will be replaced by an Independent Non-
Executive Director.
On 24 February 2022 Patrick Coveney informed the Board that he will
step down as Non-Executive Director of Glanbia plc effective 30 March
2022. Additionally, in line with the Relationship Agreement, Vincent
Gorman, Society Nominee Director, will retire from the Board at the
conclusion of the AGM on 5 May 2022.
Our search for new Independent Non-Executive Directors continues.
We remain cognisant of our ambitions and will look to strengthen our
diversity of skills, knowledge and personal experiences. Gender
diversity is being prioritised to enable the Company to achieve its target
that 50% of the Independent of the Society Non-Executive Director
appointments be female.
Board evaluation
During 2021 in line with our agreed triennial cycle, the Committee
oversaw an internal evaluation of the effectiveness of the Board and
its Committees. The results of this process were positive and provided
the Board with the assurance that actions from last year’s external
evaluation were progressing well and the Board concluded that it was
operating effectively. The evaluation process also allowed the Board to
identify opportunities for it to further improve its effectiveness. A number
of actions were agreed which will be implemented during the current
year. These are designed to drive Board effectiveness as the Group
continues to grow and develop.
Information on the evaluation process and a summary of the outcomes
of the Board evaluation and the areas of focus for 2022 arising therefrom
are set out in more detail at page 100 of this report.
Committee changes
There were a number of changes to the membership of the Board
Committees in 2021 which were driven directly by the changes in
the composition of the Board between 2020 and 2021.
On 20 January 2021, the Board approved the appointment of
Jane Lodge as successor to Donard Gaynor as Chairman of the
Remuneration Committee effective 1 March 2021. Jane is a former
Remuneration Committee member of Costain Group plc, Devro plc
and Sirius Minerals plc.
On 20 January 2021, the Board also approved the following Committee
changes effective immediately:
• Jane Lodge replaced Donard Gaynor as a member of the
Audit Committee;
• Group Chairman Donard Gaynor succeeded Dan O’Connor as
Chairman of the Nomination and Governance Committee and
Roisin Brennan replaced Patrick Coveney as a member of the
Nomination and Governance Committee; and
• Roisin Brennan was appointed as a member of the
Remuneration Committee.
On 17 June 2021, the Board approved the appointment of Paul Duffy
as a member of the Remuneration Committee and the Audit Committee
with immediate effect. Paul Duffy will succeed Dan O’ Connor as
Chairperson of the Audit Committee effective 7 March 2022.
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114
DIRECTORS’ REPORT
At the meeting of the Board held on 20 January 2021, the Sustainability
Strategy 2030 for the Group was presented and approved. In addition,
the Group has committed to a diversity, equity and inclusion journey to
ensure all employees can contribute fully and reach their full potential.
These commitments collectively represent the Group’s Environmental,
Social and Governance (‘ESG’) goals and ambitions. A new Board
Environmental, Social & Governance Sub-Committee was established
on 17 June 2021 to ensure the Board has the highest level of
accountability and oversight of its commitment to its Sustainability
Strategy 2030 and its diversity, equity and inclusion journey. The
Committee is also responsible for oversight of the Group’s management
of ESG matters and compliance with relevant legal and regulatory
requirements, including applicable rules and principles of corporate
governance, and applicable industry standards. The Committee
comprises of the Group Chairman, Donard Gaynor as Chairman of the
Committee, Patrick Coveney, John G. Murphy and Siobhán Talbot.
The Group Secretary was appointed Secretary to the Committee.
On 24 February 2022, a new Corporate and Development Committee
was established to assist the Board to assess new corporate
development opportunities. The membership of the Committee
comprises the Group Chairman, the Group Managing Director, the
Group Finance Director, Dan O’Connor, Paul Duffy and Roisín Brennan.
The Group Secretary was appointed Secretary to the Committee.
In compliance with the UK Corporate Governance Code (the ‘Code’),
the membership of the Nomination and Governance
and Remuneration Committees continues to comprise only the
Group Chairman and Independent Non-Executive Directors.
The Audit Committee continues to comprise only Independent
Non-Executive Directors.
Committee aims for 2022
In 2022, Board composition, balance and diversity, senior management
succession planning and governance oversight will continue to be
priorities for the Committee.
We will continue to support the Board’s broader oversight of culture,
diversity, equity and inclusion, talent and succession, ensuring that the
frameworks through which the Board analyses and evaluates these
matters are thorough and robust. Additionally, the Committee will
oversee the Board evaluation process and monitor progress against
the findings from the most recent internal evaluation and will continue
to lead Non-Executive Director search activity, as required, in
accordance with the amended Relationship Agreement and Glanbia’s
well-established succession plans.
The following pages provide further details on the roles and
responsibilities of the Committee and its governance duties.
I am available at any time to discuss any matters that any shareholder
may wish to raise.
On behalf of the Nomination and Governance Committee
Donard Gaynor
Nomination and Governance Committee Chairman
Diversity, Equity and Inclusion
At Glanbia we believe our organisation has strong values where
everyone who shares our purpose has a place and equal opportunity
regardless of ethnicity, religion, colour, gender, sexual orientation,
nationality or any other personal characteristics.
We are committed to fostering a truly inclusive culture that rejects any
forms of racism and other discrimination, where talent and individuality
is nurtured, where everyone feels that they belong, are valued,
respected and appreciated for who they are as individuals and the
diverse perspectives they bring to Glanbia and that they have equal
opportunities to thrive.
Critical to our success is ensuring a culture that complements the delivery
of our strategy. The Board continues to focus on engendering a corporate
culture that is more diverse, equitable and inclusive and on ensuring that
this aligns with the Company’s purpose, values and strategy.
On 15 December 2020 a new Group Diversity, Equity and Inclusion
strategy was approved by the Board.
Details of our diversity objectives, policy on equity and inclusion and
linkage to Company strategy and progress on achieving the objectives
are contained in Diversity, Equity and Inclusion on pages 22 to 23.
Board diversity
The commercial benefits of having a diverse Board are well established.
Our Board Diversity Policy is contained on page 22. We strongly believe
that diversity throughout the Group and at Board level is a driver of
business success. We respect, value and welcome all forms of diversity.
We recruit talented Board members who have the appropriate mix of
skills, capabilities and market knowledge to ensure the Board is
effective. When recruiting, we look across all sectors and non-traditional
talent pools, and we require diversity on our candidate shortlists. We
believe that diversity, equity and inclusion are essential to our purpose
of delivering better nutrition for every step of life’s journey.
During 2020, the Group agreed that as new appointments are made,
the target is that a minimum of 50% of the Independent of the Society
Non-Executive Directors will be female. The Group progressed this in
2020 and 2021 with two of its most recent appointments being female.
Nomination and Governance Committee Report continued
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
115
Glanbia Co-operative Society Limited – Right to nominate Non-Executive Directors
The Society as at 28 February 2022 owned 31.08% (32.48% as at 1 January 2022) of the issued share capital of the Company. The current
composition and size of the Board reflects the relationship of the Company with the Society and is documented in the Relationship Agreement. On
23 February 2021, the Society and the Board, in order to facilitate the appointment of additional Independent Non-Executive Directors and further
strengthen the diversity of the Board, agreed the changes set out in the table below, which will impact the composition and size of the Board between
2022 and 2023. It has been agreed, as part of the Nomination and Governance Committee process to select and appoint the three new diverse
Independent Non-Executive Directors, that the Chairman and Vice-Chairmen of the Society (who will be the continuing Society Nominee Directors
on the Board) will be invited to participate in the selection process. In May 2021, the Society and the Company formally amended the Relationship
Agreement to reflect the changes agreed on 23 February 2021. The Society and the Company have further agreed that these changes will remain
applicable for a period of five years and will be reviewed thereafter by the Society and the Company.
Year
Changes to the number of
Non-Executive Directors nominated
by the Society (the ‘Society
Nominee Directors’)
Changes to the number of
Other Non-Executive Directors
Changes to the number of
Executive Directors Changes to Board Size
Progress against
agreed action
2021 The number of Society
Nominee Directors will
reduce from seven to six.
The number of Independent
of the Society Non-Executive
Directors will increase from
six to seven.
The number of
Executive Directors
remains at two.
The size of the Board
remains unchanged
at 15.
Martin Keane Society
Nominee Director
retired from the
Board on 6 May 2021.
A process to identify
a new Independent
Non-Executive
Director to replace
Martin is on-going.
2022 The number of Society
Nominee Directors will
reduce from six to five.
The number of Independent
of the Society Non-Executive
Directors remains at seven.
The number of
Executive Directors
remains at two.
The size of the Board
reduces to 14.
Vincent Gorman
Society Nominee
Director will retire from
the Board on 5 May
2022.
2023 The number of Society
Nominee Directors will
reduce from five to three.
The number of Independent
of the Society Non-Executive
Directors will increase from
seven to eight as it is intended:
• Two of the Society Nominee
Directors will retire;
• One of the current
Independent of the Society
Non-Executive Directors will
retire; and
• Two new Independent of
the Society Non-Executive
Directors will be appointed.
The number of
Executive Directors
remains at two.
The size of the Board
reduces to 13.
Patrick Coveney is
stepping down as
Independent
Non-Executive
Director on 30 March
2022 and a process
to identify a new
Independent
Non-Executive
Director to replace
Patrick has
commenced.
Governance
The Committee was in place throughout 2021 and Donard Gaynor (Group Chairman) succeeded Dan O’Connor as Committee Chairman on
20 January 2021. The Committee comprises the Group Chairman and two Independent Non-Executive Directors, of whom two members constitute
a quorum. The Group Secretary acts as secretary to the Committee. The Group Managing Director attends by invitation only.
The Committee advises the Board on significant developments in the law and practice of corporate governance and monitors the Company’s
compliance with corporate governance best practice (making recommendations to the Board in relation to changes and enhancements to current
procedures), with particular reference to the UK Corporate Governance Code.
There was extensive engagement with shareholders during 2021 on governance matters which are detailed throughout the Board Highlights on pages
89 to 93 and Stakeholder Engagement on pages 94 and 95.
Board size, composition and renewal
Board renewal and composition is an ongoing and dynamic process. The Committee reviews Board composition and structure and the leadership
and succession needs of the Group to ensure we have the right balance of skills, knowledge and experience on the Board, taking account of our
business model and the specific sectors in which the Group operates and developments in terms of scale, geographic expansion and external factors.
Succession planning
The Board considers oversight of succession planning as one of its prime responsibilities, assisted by the Nomination and Governance Committee.
The Nomination and Governance Committee leads the process for Board appointments and is responsible for ensuring that plans are in place for
orderly Board and senior management succession. In addition, the Committee ensures that the Group’s governance framework facilitates the
appointment and development of effective Directors and management that can deliver shareholder value over the longer term.
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116
DIRECTORS’ REPORT
The Committee gives full consideration to succession planning for
Directors, in particular the Group Chairman, the Group Managing Director
and Group Finance Director taking into account both Group strategy and
the Group’s Diversity, Equity and Inclusion Strategy (which is now at the
core of the Group’s succession planning), as well as the challenges and
opportunities facing the Group to ensure orderly refreshment of
membership. This is achieved through effective succession planning.
The Committee regularly reviews the structure, size and composition of the
Board and its Committees, to ensure critical skills and experience are
appropriately refreshed, that continuity is maintained, and that Directors
with the appropriate skills and experience and from a diverse range of
backgrounds join the Board to bring fresh perspective and challenge to the
Group’s strategy in the markets in which it operates and the Group’s
delivery of that strategy. The Committee ensures that appropriate
procedures are in place for nominating, inducting and evaluating directors.
The Committee is also heavily focused on the leadership needs of the
Group at senior management level and regularly receives and reviews
updates from the Chief Human Resources Officer. Areas of focus covered
during 2021 included talent, succession, diversity, equity and inclusion,
people review processes, emerging talent pipelines and learning and
development initiatives. During 2021, the Committee continued to
maintain its focus on the succession pipeline in the context of the Group’s
longer term talent strategy to understand the changing competencies
required to ensure the development of a skilled workforce which will
support the Group’s strategy, purpose, culture and values while
promoting diversity of gender and social and ethnic background to
enhance diversity across its employees and executive pipeline.
Internal talent development and the attraction and retention of skilled
individuals is facilitated through engagement with HR to ensure that the
broader people strategy supports the development of the internal talent
pipeline and ensures access to a diverse and inclusive external talent pool.
We look to identify, harness and accelerate the development of talent at all
levels, based on an assessment of successor readiness in respect of
senior positions. Generally, at least one Board meeting is held annually at
one of the wholly-owned business sites which provide an opportunity for
interaction with employees and a chance for Non-Executive Directors to
develop deeper insights into the quality of our senior management in their
current roles and their potential for succession. This did not occur in 2020
or 2021 due to the Covid-19 restrictions, however, senior managers
continued to present to the Board virtually throughout the year.
Crucial to the successful delivery of our strategy is attracting and
retaining strong, diverse talent who have an affinity to our culture. Our
culture is a major contributing factor to the delivery of long-term success
for our stakeholders and this makes the effective internal management of
that talent absolutely critical to ensuring that Glanbia’s unique culture is
preserved as far as possible.
The Committee plays a key role in embedding a positive culture by
ensuring that our succession planning and appointment process
identifies candidates who are exemplars of our values. Our induction and
training programmes and the annual performance evaluation process
promotes these values in all our Directors and employees.
The Committee is satisfied that effective succession plans for Directors
and senior management are in place to ensure the continued ability of the
Group to implement strategy and compete effectively in the markets in
which it operates in a manner that fosters the Company’s culture and values.
Independent Non-Executive Director recruitment
and selection process
A key element of the Committee’s remit is to lead the process for Board
appointments in line with the terms of the Relationship Agreement and
succession plans as appropriate.
Egon Zehnder, a global management consulting and executive search
firm (who does not have any other connection with the Company or the
Directors) was engaged in 2020 to assist in the identification of suitable
candidates for appointment as Non-Executive Directors to the Board. A
Non-Executive Director role specification was drawn up to determine
the key skills, experience, characteristics and requirements for the role
having regard to the challenges and demands of the future operating
environment, growth opportunities for the Company and Board diversity
with a strong emphasis placed on gender diversity. Egon Zehnder
established a strong list of potential candidates for consideration, which
was reduced to a shortlist for more detailed consideration and interview.
Shortlisted candidates went through a two-stage video conferencing
interview process meeting with the Senior Independent Director and the
Group Secretary initially. Second round video conferencing interviews
involving the then Group Chairman and Vice-Chairmen of the Company,
the members of the Nomination and Governance Committee and the
Executive Directors were undertaken. All were unanimous in their final
selection of Paul Duffy and he joined the Board effective 1 March 2021.
In accordance with the amended and restated Relationship Agreement
between the Company and the Society dated 23 February 2021 (the
‘Relationship Agreement’), an Independent Non-Executive Director
recruitment and selection process was undertaken during 2021 and
continued into 2022 to identify new diverse Independent Non-Executive
Directors.
It was agreed as part of the Relationship Agreement that, while the
Nomination and Governance Committee will run the process to select
and appoint three new diverse Independent Non-Executive Directors
between 2021 and 2023 in place of the Society Nominee Directors, the
Chairman and Vice-Chairmen of the Society (who will be the continuing
Society Nominee Directors on the Board) would be invited to participate
in the selection process for these independent positions.
The Committee defined a set of specific criteria for the three new
Non-Executive Directors to be appointed between 2021 and 2023
which are set out in a role specification to determine the key skills,
experience, knowledge, characteristics and requirements for the role,
having regard to the challenges and demands of the future operating
environment, growth opportunities for Glanbia and Board diversity with
a strong emphasis placed on gender diversity. Glanbia expects all
Non-Executive Directors to demonstrate the highest level of integrity and
credibility, independence of judgement, maturity, collegiality and the
commitment to devote the necessary time.
It was agreed by the Committee that the first appointment to be made
should prioritise gender diversity to enable the Company progress its
objective to achieve its target that 50% of the Independent Non-
Executive Director appointments be female and such candidate would
bring the following mix of skills and experience:
• Marketing background with CEO, President, General Manager, or
other commercial leader experience;
• US market experience;
• Food or wider consumer products experience; and
• Previous board experience.
Nomination and Governance Committee Report continued
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117
A sub-Committee comprised of the members of the Nomination and
Governance Committee and the Chairman and Vice-Chairmen of the
Society was established to progress the Independent Non-Executive
Director selection process. The Committee appointed Egon Zehnder to
assist them in the identification of suitable females for appointment as
Independent Non-Executive Director to the Board. Egon Zehnder had
no other connection with the Group or with the individual Directors.
The Sub-Committee continues to progress the independent Non-
Executive Director selection process.
Workforce Director
During 2019, the role of Donard Gaynor, an Independent Non-Executive
Director, was expanded to include oversight of workforce engagement
to further improve Board involvement in this area. Details of Donard’s
engagements with employees during 2021 are set out in Stakeholder
Engagement on page 94.
Regular matters
A number of regular matters were considered by the Committee in
accordance with its terms of reference, details of which are:
Review of Non-Executive Directors’ independence
in accordance with the guidance in the Irish
Corporate Governance Annex and the UK
Corporate Governance Code (the ‘Codes’)
The Board evaluation and review process considered the independence
of each of the Non-Executive Directors, taking into account their
integrity, objectivity and contribution to the Board and its Committees.
A rigorous internal review was carried out in respect of those Non-
Executive Directors who served longer than six years.
The Board is of the view that the following behaviours are essential for
a Non-Executive Director to be considered independent:
• Provides an objective, robust and consistent challenge to the
assumptions, beliefs and views of senior management and the other
Directors;
• Questions intelligently, debates constructively and challenges
rigorously and dispassionately;
• Acts at all times in the best interests of the Company and its
shareholders; and
• Has a detailed and extensive knowledge of the Company and the
Group’s business and of the market as a whole which provides a
solid background with which they can consider the strategy of the
Company and the Group objectively and help the Executive Directors
develop proposals on strategy.
The Board also gives due regard to applicable legislation. The Board
and Committee believe that all Non-Executive Directors demonstrated
the essential characteristics of independence and brought independent
challenge and deliberations to the Board.
The reviews took into consideration the fact that Brendan Hayes, John
G Murphy and Patrick Murphy have each served on the Board for more
than nine years (John G Murphy serving 11 years coterminously with the
Group Managing Director, the longest coterminous period with a current
Executive Director) and that six of the current Non-Executive Directors
are Society Nominee Directors, both of which factors the Codes state
could be relevant to the determination of a Non-Executive Director’s
independence. The Codes also make it clear, however, that a director
may be considered independent notwithstanding the presence of one
or more of these factors. This reflects the Board’s view that
independence is determined by the Director’s character as set out
above. The Committee concluded that the Society Nominee Directors
continue to demonstrate the essential characteristics of independence
and brought independent challenge and deliberations to the Board
through their character and objectivity. Notwithstanding this, however,
the Society Nominee Directors are not being designated as Independent
Directors for the purpose of either the Code or Listing Rule 6.1.7 (2) of
Euronext Dublin/Listing Rule 9.2.2 AD of the UKLA. This conclusion was
presented to, and agreed by, the Board. This is to ensure consistency
with the Relationship Agreement between the Company and the Society
with regard to the composition and size of the Board and allowing for
the planned reduction of the Society’s representation on the Board.
Re-election of Directors
The Committee continues to be of the view that all Directors should be
re-elected to the Board at the Company’s AGM. All Directors who
sought re-election at the 2021 AGM were re-elected. All Directors with
the exception of Patrick Coveney who retires effective 30 March 2022
and Vincent Gorman (who is not putting himself forward for re-election
at the AGM) are seeking re-election at the 2022 AGM.
The Committee is satisfied that the backgrounds, skills, knowledge of the
Group and experience of the continuing Directors collectively enables the
Board and its Committees to discharge their respective duties and
responsibilities effectively. Each Director is committed to their role,
provides constructive challenge and devotes sufficient time to contribute
to the performance of the Board. The Nomination and Governance
Committee assesses the Non-Executive Directors’ time commitment
considering both the time required for Glanbia Board and committee
appointments and the number and nature of the directors’ external
commitments. All Non-Executive Directors continue to demonstrate that
they have sufficient time to devote to their present role within Glanbia.
Jane Lodge stepped down as non-executive director of Costain Group
plc on 6 May 2021. On 30 June 2021, with the approval of the Board,
Jane became a non-executive director of FirstGroup plc. The Group
Chairman continues as chairman of Hazelwood Demense Limited, ‘The
Lough Gill Distillery’ Company, but the Committee and the Board
consider that this does not interfere with the discharge of his duties to
the Group. The Directors’ individual biographies on pages 81 to 85
provide a summary of the key skills and competencies, important to the
long-term success of the Group that each Director brings to the Board.
Additionally in 2022, as in 2021, the re-election of each of the
Independent of the Society Non-Executive Directors, Roisin Brennan,
Paul Duffy, Donard Gaynor, Jane Lodge and Dan O’Connor will be
subject to approval by the independent shareholders (i.e. all of the
shareholders save the Society and its subsidiary companies and related
parties). We believe that sufficient biographical and other information on
those Directors seeking re-election is provided in this Annual Report,
and the Circular accompanying the Notice of the 2022 AGM to be
published, to enable shareholders to make an informed decision.
Committee performance
The Committee assessed its performance covering its terms of reference,
composition, procedures, contribution and effectiveness. As a result of that
assessment, the Board and Committee are satisfied that the Committee is
functioning effectively and continues to meet its terms of reference.
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118
DIRECTORS’ REPORT
Key responsibilities
Determine and agree with the Board the framework and policy for
remuneration of the Executive Directors and other Senior Executives
as required.
Oversee remuneration design and target setting of annual and long-term
incentive arrangements to ensure comprehensive linkages between
performance and reward and to incentivise delivery of Group strategy.
Determine, within the agreed policy, individual total compensation
packages for the Executive Directors and other Senior Executives
as required.
Determine any employee share-based incentive award and any
performance conditions to be used for such awards.
Consider and approve Executive Directors’ and other Senior Executives’
total compensation arrangements annually.
Determine the achievement of performance conditions for vesting of
Annual and Long-Term Incentive Plans (LTIP).
Review and understanding of reward policies and practices throughout
the Glanbia Group.
Terms of reference
The full terms of reference of the Remuneration Committee can be
found on the Group’s website: www.glanbia.com or obtained from the
Group Secretary.
Jane Lodge
Remuneration Committee Chairman
Remuneration Committee Report
Dear Shareholder,
On behalf of the Board and Remuneration Committee, I am pleased to
present the Directors’ Remuneration Committee Report for the year
ended 1 January 2022.
This is my first Directors’ Remuneration Report having taken over
as the Chairman of the Committee on 1 March 2021 following the
appointment of Donard Gaynor as Group Chairman. I have had the
pleasure of meeting with a number of shareholders to discuss our new
remuneration policy, which I refer further to below, and to receive your
helpful feedback.
We welcomed two new Non-Executive Directors, Roisin Brennan
and Paul Duffy to the Committee, joining on 20 January 2021 and
17 June 2021 respectively. The Committee had a full agenda for 2021
as we reviewed the Directors’ Remuneration Policy to be brought to
shareholders at our 2022 Annual General Meeting (AGM), the policy
for senior management below the Executive Directors, considered
remuneration outcomes for 2021 and operation of policy for 2022.
The Annual Report on Remuneration that sets out the operation of the
Directors’ Remuneration Policy in 2021 and proposed operation in 2022
with this my Annual Statement will be subject to an advisory vote at our
AGM and our new Policy will be subject to a separate advisory vote.
In line with our previous remuneration policies, the 2022 Directors’
Remuneration Policy has been developed to support the strategy and
continued success of the business, with a primary focus on ensuring
that Executive Directors and other senior executives are aligned to the
experience of shareholders and wider stakeholders.
We are confident that the proposed Remuneration Policy will achieve
this alignment with long-term shareholder value growth while driving
performance during a sustained period of volatility.
FOCUSING ON
DELIVERING
OUR STRATEGIC
OBJECTIVES
AND SUSTAINING
PERFORMANCE
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
119
Business performance 2021
As noted in the Group Chairman’s statement, the Group turned in a
strong and resilient performance in 2021, delivering growth in all aspects
of the business while managing the on-going impacts of the pandemic
during the year, with a continued focus on staff safety. There is no doubt
that as the headwinds of the Covid-19 pandemic continued into 2021
with supply chain disruption, labour shortages and inflation in particular
altering the operating landscape, Glanbia’s portfolio depth and
organisational focus and resilience delivered strong results.
Financial performance was excellent with Group revenues up 13.1%
constant currency to €4,196.9 million and adjusted earnings per share
up 22.1% constant currency to 87.15 cent. The Group’s operating cash
conversion was 100.2% for the year. Both business units performed
exceptionally well.
Just as importantly Glanbia continued to make solid progress against its
strategic objectives. The reorganisation of Glanbia Performance
Nutrition(GPN) was delivered ahead of plan, Glanbia Nutritional’s large
scale joint venture (JV) processing facility in Michigan was
commissioned on time and on budget, two acquisitions which build into
adjacent strategic space were completed and, of course, the
transaction to sell the Group’s 40% interest in Glanbia Ireland was
agreed.
Glanbia also progressed its new Environmental, Social and Governance
(ESG) strategy approved by the Board in December 2020. Importantly,
ESG metrics were introduced into executive remuneration in 2021 for
the Group Operating Executive and will penetrate progressively deeper
into the organisation in 2022 and beyond.
What was noteworthy in 2021 is the Group’s resilience and capacity to
stay on course despite significant volatility which is persisting. Two of
Glanbia’s key strengths – an ability to focus on performance delivery
and prudent financial management – were crucial throughout 2020 and
2021 and no doubt will be to the fore again in 2022 and beyond.
Remuneration in respect of 2021
Executive Director base salary and benefits
Base salaries for the Executive Directors were increased by 2.5% which
aligns to the increases provided to our wider employee population in
Ireland. The resulting base salary for the Group Managing Director from
1 January 2021 was €1,076,250 and for the Group Finance Director
€595,525.
2021 pension
The Group Managing Director and Group Finance Director pension
continued at 2020 levels and will align to the rate applicable to the
majority of the workforce in Ireland by the end of 2022. A review of
workforce pension is ongoing.
2021 Annual Incentive
The Group Managing Director and Group Finance Director continued to
participate in the annual incentive plan in 2021 based on a combination
of business (70% weighting), strategic (20% weighting) and ESG (10%
weighting) objectives, with target and maximum payments remaining at
75% and 150% of base salary.
Overall the Group exceeded its maximum target for Adjusted Earnings
Per Share (EPS) (22.1% growth vs annual incentive maximum of 15.9%).
It also exceeded its maximum target for cash conversion (100.2% vs
90%) and performed strongly against all of its key first year objectives for
ESG. The strategic objectives set for the Executive Directors have also
been achieved. Accordingly the Remuneration Committee awarded the
Executive Directors each an annual incentive award of 97.7% of
maximum calculated on a formulaic basis in accordance with the rules
of the short term incentive scheme. Given the strong financial,
operational and strategic performance of the Group in a challenging
year the Committee determined that discretion did not need to be
applied in respect of this formulaic outcome. Full details can be found
on page 130 of this report.
2019 Share Awards Vesting
The 2019 share awards over the three year performance period 2019 to
2021 focused on long-term delivery of Group EPS (40%), Group ROCE
(40%) and Total Shareholder Return (20%). As discussed last year in
relation to the 2018 LTIP award, there were performance challenges in
2019 as well as the very significant and unforeseen Covid-19 impact
having a material unexpected impact in 2020. Notwithstanding the very
significant recovery in 2021, the vesting outcome for both the Group
Managing Director and Group Finance Director is 21.6% for the 2019
share awards. These share awards will vest no earlier than 21 March
2022, the third anniversary of their grant. Full details on the 2019 share
awards can be found on page 132.
The pandemic heavily impacted the inflight awards for 2019 and
particularly 2020, the performance conditions for which were set only
weeks before the onset of the pandemic. The incentives for Executive
Directors in these schemes have thus been largely eroded and therefore
there is reasonable concern that these incentives lack the intended
impact for both motivation and retention. As part of our consultation with
shareholders on our new Remuneration Policy proposals (see below),
the Committee sought feedback on proposals to include additional
stretch EPS targets for 2021 and 2022 for each of the 2019 and 2020
awards respectively which if achieved would result in enhanced vesting
aligned to actual vesting for other management participants.
The Committee listened carefully to feedback and, as a result, the
2019 award has vested as normal and there are no changes proposed
to the 2020 award at this time. The Committee does however reserve
the discretion to revisit the matter again in early 2023 in relation to the
2020 award, taking into account the timing of the setting of targets
for the 2020 award which was only weeks before the pandemic,
the shareholder experience and the wider holistic performance and
strategic progress of the business and its operating environment
over the period 2020–2022. The Committee will consider whether it is
appropriate to exercise any discretion at that time such that Executive
Directors are treated equitably compared to other management
participants in the 2020 LTIP award. In such circumstances the
Committee will consult with major shareholders in advance of
exercising such discretion.
2021 Share Awards
Awards were made under the LTIP scheme to the Group Managing
Director and Group Finance Director during 2021. These awards were
made in line with the existing Remuneration Policy (i.e., grants of 250%
and 200% of salary for the Group Managing Director and Group Finance
Director respectively). Performance and vesting will be determined by
the key Group performance metrics of adjusted EPS, ROCE, relative
TSR against the STOXX Europe 600 Food and Beverage Index, and
ESG metrics. The 2021 LTIP grant marked the first time the Group has
incorporated an ESG measure into the LTIP, and for the 2021 grant the
environmental metric is focused on initiating new programmes to reduce
carbon emissions as well as baselining and target setting for water,
waste and packaging.
Given the continuing challenging and uncertain environment due to the
Covid-19 pandemic the Committee carefully monitored the situation
and fully considered the appropriate target range for EPS and ROCE
to ensure they were appropriately challenging and supported long-term
growth. The targets were announced in March 2021 by way of a
regulatory announcement.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
120
DIRECTORS’ REPORT
2021 other benefits
In addition to the benefits that were paid in 2020, the Committee agreed
additional benefits, which the Group discussed with shareholders during
the consultation process for the 2022–2024 Directors’ Remuneration
Policy. These include an annual accommodation allowance for the
Group Managing Director and a tax equalisation benefit for the Group
Finance Director. Further details are set out on page 129 of this report.
Our new Directors’ Remuneration Policy and
Executive Director remuneration for 2022
Background and Context
We explained in last year’s Remuneration Report that we had extended
the Directors’ Remuneration Policy by one year and the Committee
committed to undertake a comprehensive review during 2021. The
in-depth review took place and I engaged with our largest shareholders
to seek their feedback on the policy proposals.
Glanbia’s focus is on delivering growth and full execution of our strategy.
With a robust financial base and strong operational delivery, the Group
is well positioned to pursue market opportunities while navigating the
current headwinds of general inflationary pressures, supply chain
disruption, labour shortages and continuing turbulence from the
pandemic. The ethos of financial discipline has resulted in strong cash
conversion metrics and, leveraging the strength of the Group’s balance
sheet, the Board and management’s approach now is to deliver
sustained strong year-on-year growth organically and through mergers
and acquisitions.
The Committee is mindful that our incentive schemes play an important
role in driving and rewarding performance. It is within this context that
the Committee has reviewed the current policy so as to continue strong
alignment between executive and shareholder interests and incentivise
the delivery of strategy.
Our new policy provides a simpler incentive mechanism with more
weighting to annual bonus and focus on annual target setting with
longer-term shareholdings, while maintaining a focus on shareholder
alignment through delivery in shares. Total incentive quantum remains
the same.
Shareholders who provided feedback were overall supportive of our
proposals, subject to reviewing the details of the final proposals and the
Committee clearly setting out the context and rationale for the changes
being made and how the new policy ensures continuing focus on longer
-term performance and alignment to shareholders. The feedback
received from shareholders was considered fully in the finalisation of the
policy proposals.
Rationale for our policy proposals
The Committee’s policy development sought to satisfy a number of
objectives:
• Ensure that the remuneration policy is simple and clear and
appropriately incentivises management to deliver the objectives set
by the Board on behalf of shareholders.
• Recognise that the current operating environment is unprecedented
and evolving and requires management to be agile and responsive
to the volatility created by inflation, supply chain disruption and other
effects of the pandemic. For example, it is noteworthy that as we
were consulting with shareholders on the policy options, neither
the Omicron variant nor the emergence of persistent inflation were
visible, such is the dynamic nature of the current environment.
• Align to our business strategy over the coming three-year period as
we continue to leverage the benefits of our significant transformation
programme in GPN and execute our growth strategy in our GN
business. The Committee believes it is a business imperative to
incentivise management to drive strong year-on-year growth over
the next policy period, as well as embed and sustain new ways of
working after significant organisational changes in recent years,
leading to longer term sustainable performance.
• Address the difficulty in setting longer-term targets in the current period
of global economic uncertainty, whereby short-term volatility factors in
a given year can disproportionately impact multiple long-term awards
and thus fail to adequately reflect management’s success in
strategically leading and managing the business over the longer term.
• Ensure continuing alignment between Executive remuneration, wider
shareholder experience and longer term sustainable performance
through an increased deferral into shares.
• Enable the Committee to be more agile in calibrating performance
targets for the majority of the variable remuneration. This will assist
the Committee to refocus objectives over shorter timeframes as well
as resulting in a stronger link between management performance
and reward and sustaining the alignment with shareholders.
In considering how our new policy operates we have ensured that:
• The structure of the targets and metrics for our short term and long
term incentives align with the business strategy, comprising mainly
financial measures with robust, objective and measurable strategic
targets, including ESG, aligned to the key priorities of the business.
• Remuneration is aligned with the Group’s strategy to address climate
change in particular and foster an inclusive culture and a balanced
and equitable workplace.
We will ensure that there is appropriate disclosure of the annual bonus
targets that were set, of the performance against targets and the overall
bonus payable, in each Directors’ Remuneration Report.
The Committee retains its discretion to adjust formulaic incentive
outcomes, if for example it considers bonus outturn is not reflective
of overall longer-term performance and the shareholder experience.
There is further information about our choice of performance metrics
and our approach to target setting below and in the relevant sections
of our Annual Report on Remuneration.
Summary of policy proposals
Our new policy is an evolution of our existing policy with specific
changes as follows:
• Increased emphasis on share based remuneration, longer term
sustainable performance and alignment to shareholders for
Senior Executives with no increase in overall incentive quantum;
• Significant increase in annual bonus deferral requirements, whereby
50% of all annual bonus earned will be deferred into shares;
• Rebalancing of incentives to put more emphasis on achieving
year-on-year performance delivery and achievement of
strategic objectives;
• Annual incentive maximum opportunity increased from 150%
of salary, to 250% and 200% of salary for the Group Managing
Director and Group Finance Director respectively. Annual target
payout continues at 50% of maximum opportunity;
• Corresponding reduction in LTIP award levels to 150% from 250%
and 200% of salary for the Group Managing Director and Group
Finance Director;
• No change to base salary positioning;
• Increased weighting of ESG metric in LTIP to correspond with
removal of TSR metric to support delivery of key emissions and
environmental targets that are key to our strategy;
• Increase in the Group Finance Director’s shareholding requirement.
• Introduction of a post-employment shareholding policy for both
Executive Directors;
• Alignment of incumbent Director pension to the workforce effective
by the end of 2022; and
• Updating of clawback and malus provisions.
Remuneration Committee Report continued
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121
Operation of our new policy for Executive Directors for 2022
Further details about our 2022 incentives are set out below. The new
policy will be provisionally applied pending the outcome of the
shareholder advisory vote at the forthcoming AGM.
Executive Director base salary
The base salary of the Group Managing Director and the Group Finance
Director will increase by 2.8% to €1,106,385 and €612,200 respectively,
effective 1 January 2022, in line with the standard increase for other
employees based in Ireland.
Executive Director pension
The pension of the incumbent Executive Directors will be aligned
to the rate applicable to the majority of the workforce in the country
of appointment, Ireland, by the end of 2022.
Executive Director benefits
There will be no changes to benefits from 2021.
2022 Annual Incentive
The performance metrics and weightings for the Group Managing
Director and Group Finance Director remain the same as for the
2021 Annual Incentive, being 50% EPS, 20% Cash Conversion, 20%
strategic metrics and 10% ESG. As mentioned above under the new
Remuneration Policy, which is subject to a shareholder advisory vote, if
approved by shareholders, there is an increased weighting to the Annual
Incentive and equivalent reduction in the LTIP award level. The target
Annual Incentive opportunity is 125% and 100% of salary for the Group
Managing Director and Group Finance Director with maximum payment
of 250% and 200% for the Group Managing Director and Group Finance
Director respectively. The targets for the Annual Incentive will be
disclosed retrospectively in next year’s Remuneration Report. The
Committee is comfortable that the targets set for 2022 reflect our
business planning and are appropriately stretching relative to prior years
and taking into account the reweighting to Annual Incentive given the
current commercial circumstances. As already stated, 50% of the
Annual Incentive will be deferred into shares over three years.
2022 Share Awards
Subject to a shareholder advisory vote, the share award levels for the
Group Managing Director and Group Finance Director will be 150% of
salary. Performance and vesting will be determined by the key Group
performance metrics of adjusted EPS 40%, ROCE 40% and ESG
metrics 20%. Full details on weightings and performance conditions as
well as targets are set out on page 137.
Non-Executive Director Remuneration
As part of the Directors’ Remuneration Policy review, consideration has
been given to the structure and fee levels for the Non-Executive Directors.
We are making an amendment to our Non-Executive Directors’
Remuneration Policy to ensure the Board has sufficient flexibility to
appoint individuals with appropriate skills and experience in the markets
within which we operate including North America. The amendment
enables the Company to provide a travel allowance to compensate Non-
Executive Directors for additional time required to travel on Company
business as a result of their location. For the time being this travel
allowance will be structured as an annual allowance payable to US
based Non-Executive Directors.
Non-Executive Director fees (excluding the Group Chairman) have been
reviewed as part of the Directors’ Remuneration Policy review, noting
that the last review was in 2018. Modest increases have been made to
the Non-Executive Director base fee and the fee for the Senior
Independent Director (SID) and Committee Chair.
Where an individual holds both the role of SID and Committee Chair,
two fees will be paid reflecting the time commitment of holding both of
these roles.
The Group Chairman fee was not included in the wider Non-Executive
Director fee review. It has instead been increased to align to the increase
in salaries for the Executive Directors and workforce in Ireland. This
approach of annual workforce aligned increases will be applied to all
Non-Executive Director fees with effect from 2023. Further details are
set out on page 138.
Disposal of Glanbia plc’s interest in Glanbia Ireland
The Board was very pleased to announce the proposed disposal of
Glanbia plc’s interest in Glanbia Ireland DAC to Glanbia Cooperative
Society Limited. The announcement marks the culmination of our
management team’s hard work in achieving the disposal but also their
focus on driving our ongoing strategy of alignment of Glanbia’s portfolio
and increasing focus on global nutrition.
The Committee has considered the implications of the disposal on
inflight incentives and intends, given the exceptional nature of the
disposal, to adjust the inflight LTIP awards made in 2020 and 2021 such
that the performance conditions measure continuing businesses only
and take no account of either the gain or subsequent earnings impact
of the disposal event. It is not expected that such an adjustment will
have any material impact on vesting of these inflight awards compared
to a scenario where the disposal had not taken place at all.
Conclusion
The Committee is satisfied that the remuneration decisions in respect
of 2021 reflect the operational and financial performance of the Group
in the year.
Having consulted with shareholders and listened to their feedback, the
Committee strongly believes that the new Remuneration Policy, as now
proposed, will incentivise the delivery of superior strategic, operating
and financial performance and is the appropriate approach in periods
of volatility.
The Committee is confident that the significantly increased annual
bonus deferral into shares combined with LTIP awards, increase
in the Group Finance Director’s shareholding requirement and the
implementation of a post-employment shareholding for both Senior
Executives ensures continued focus on the longer-term and alignment
with shareholder interests.
I look forward to receiving your support for both our new Remuneration
Policy and the Annual Report on Remuneration and my Annual
Statement at our 2022 AGM.
I am available through our Group Secretary if you wish to engage with
me prior to our 2022 AGM.
Jane Lodge
Remuneration Committee Chairman
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DIRECTORS’ REPORT
Remuneration Committee Governance
The Remuneration Committee comprises the Group Chairman who was independent on appointment and four Independent Non-Executive Directors,
of whom two members constitute a quorum. The Committee is chaired by Jane Lodge, a former Non-Executive Director and Remuneration
Committee member of Devro plc and Sirius Minerals plc and former Senior Independent Director, Audit Committee Chair and Remuneration
Committee member of Costain Group plc.
The Group Managing Director, Group Finance Director and the Chief Human Resources Officer attend Committee meetings by invitation only and as
necessary. No Director or member of Group Operating Executive is involved in considering his/her own remuneration, they absent themselves when
their remuneration is discussed. The Group Secretary acts as secretary to the Remuneration Committee.
Committee members and Committee tenure
Appointed to the
Committee
Number of full years
on the Committee
J Lodge (Chair)* 14 Dec 20 1
R Brennan 20 Jan 21 1
P Duffy 17 June 21 <1
D Gaynor* 13 May 14 7
D O’Connor 1 Dec 14 7
* J Lodge succeeded D Gaynor as Chairman of the Committee effective 1 March 2021.
See page 81 to 83 for more information on current Remuneration Committee members
Allocation of time
Framework and Policy 40%
Annual Incentive Plan 25%
Long-Term Incentive Plan 25%
Total Compensation Package 10%
Remuneration best practices
The Remuneration Committee complies with all relevant reporting and legislative requirements applicable to an Irish incorporated company with a
primary listing on Euronext Dublin. With a secondary premium listing on the London Stock Exchange, the Committee has also resolved on a voluntary
basis to align, to the extent it considers possible and appropriate having had regard to Irish law, the Directors’ Remuneration Policy and Remuneration
Reporting with UK remuneration best practices including the regulations applicable to UK incorporated and listed companies. Additionally, the
Committee is giving increasing regard to remuneration practices in the major overseas countries in which the Group operates which are relevant
in attracting, retaining and motivating senior talent in relevant markets.
The Committee receives independent external advice on executive remuneration from Korn Ferry who was appointed as Remuneration Advisers in
2019. Korn Ferry, which does not have any connection with any Directors of the Company, provide advice to the Committee which supports robust
and sound decision making. Korn Ferry is a member of the Remuneration Consultants Group and signatory to its Code of Conduct. While Korn Ferry
provides other people-related services to the Group, the Remuneration Committee is satisfied that its remuneration advisers act independently.
Korn Ferry fees for advising the Remuneration Committee during 2021 were €133,930.
The Committee is committed to strong and effective engagement with our shareholders and to provide remuneration reporting disclosures that
effectively explain our remuneration decisions. The Committee continues to actively listen and incorporate, as far as possible, the views of the
shareholders when determining the Directors’ Remuneration Policy and making remuneration decisions in terms of operation of that policy.
Furthermore, through the advice of its independent external Remuneration Advisers, Korn Ferry, the Committee monitors and incorporates,
as appropriate, best practice developments in respect of executive remuneration. During 2021, the Committee operated within the Directors’
Remuneration Policy 2018 to 2021 which received 99.83% approval of shareholders at the AGM on 25 April 2018.
Directors’ Remuneration Report results at 2021 AGM
Resolution to receive and consider the Directors’ Remuneration Report for the year ended 2 January 2021
For % Against % Total excluding withheld % Withheld % Total including withheld %
171,016,506 99.75% 420,026 0.25% 171,436,532 100.00% 11,628 0.01% 171,448,160 100.00%
Directors’ Remuneration Policy results at 2018 AGM
Resolution to receive and consider the Directors’ Remuneration Policy 2018–28–2020 (extended to 2021)
For % Against % Total excluding withheld % Withheld % Total including withheld %
185,508,946 99.83% 309,270 0.17% 185,818,216 100.00% 2,403 0.00% 185,820,619 100.00%
Remuneration Committee Report continued
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Section A: Directors’ Remuneration Policy 2022 – 2024
The 2022 Remuneration Policy will apply to the Group’s Directors. Under Section 1110M of the Irish Companies Act 2014, the Company is required to
obtain shareholder approval of its Directors’ Remuneration Policy every four years, or sooner if changes are required. UK regulations require a new
policy to be brought to shareholders every three years or sooner if material changes are required.
The decision-making process which has been followed to develop the Remuneration Policy and operation of Policy is set out in the Chairman’s
Annual Statement on Remuneration and the section above on Remuneration Committee Governance and is incorporated into the Remuneration Policy
by reference.
The proposed Remuneration Policy will be subject to a shareholder advisory vote at the 2022 AGM and is expected to apply for a three year period.
The Committee may under Irish regulation extend the Policy by one-year and seek shareholder approval to a new Policy after a four year period if this
is deemed appropriate.
Remuneration strategy, policy, and purpose
The Directors’ Remuneration Policy has been developed to attract, retain and motivate executives to ensure that they perform in the best interests
of the Group and its shareholders by growing and developing the business over the long term. Performance-related elements of remuneration are
designed to form an appropriate portion of the overall remuneration package of Executive Directors and link remuneration to business performance
and individual performance, while aligning their interests with those of shareholders.
The Directors’ Remuneration Policy focuses on incentivising the successful implementation of our corporate strategy, consistent with our risk
management framework. This strategy aims to deliver sustainable, superior earnings growth, solid financial stewardship and total shareholder return
for our shareholders over the long-term through the strong performance of high-quality and committed leadership, critical to the future development
of the Group.
The Group Key Performance Indicators (KPIs), which are detailed on pages 26 and 27, underpin the selection of performance criteria used within the
incentive arrangements. In the operation of policy section we have provided specifics in summary form on the individual elements of the remuneration
packages for Executive Directors, including personal objectives.
Factors considered when developing the Remuneration Policy
The Committee considered the following factors when reviewing the existing remuneration policy and subsequently developing the proposed
Directors’ Remuneration Policy outlined below:
• Clarity – All elements of the Remuneration Policy and its implementation is set out clearly in the Directors’ Remuneration Report.
• Simplicity – The Policy is simple and straightforward with the structures used being common across listed companies.
• Risk – The Policy has been developed so that incentive structures discourage inappropriate risk taking through use of long-term incentives, the balance
of measures used to determine variable remuneration outcomes, and through features such as shareholding requirements and malus and clawback.
• Predictability – The Policy has been constructed to have clear limits on the variable remuneration payable, with the scenario chart later in this
report providing illustrative examples of how the Policy may operate in practice.
• Proportionality – There is a sensible balance between fixed and variable pay, and variable remuneration is appropriately structured to sustainable
long-term performance.
• Alignment to culture – Through the assessment of financial and non-financial performance, executives are incentivised to achieve performance
in a way that aligns to Glanbia’s values and culture.
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DIRECTORS’ REPORT
Summary of changes being made to current 2018 – 2021 Directors’ Remuneration Policy
The table below summarises the substantive changes to the Directors’ Remuneration Policy which are being brought to shareholders for approval
at the 2022 AGM. The entire Remuneration Policy can be found on pages 123 to 128.
Policy element Change to current policy Rationale
Benefits
• Addition of wording to make it clear that benefits are not
limited to those specified as examples in the policy.
• To provide clarity of current policy and ensure the Committee has sufficient
flexibility to provide appropriate benefits based on market practice and specific
circumstances.
Short-Term
Incentive Plan
(STIP)
• Maximum opportunity increased from 150% of salary to
250% and 200% of salary for the Group Managing Director
and Group Finance Director respectively (with equivalent
reduction in LTIP award levels).
• Increased deferral of bonus paid in shares with a holding
requirement. 50% of all bonus earned will be deferred into
shares, with 30% released after 2 years and 20% after
3 years.
The rationale for the rebalancing of incentives to place greater weighting on the
Annual Incentive is:
• Alignment to business strategy over new Policy period, to drive strong year on
year performance and growth over the next 3 years, as well as embed and
sustain new ways of working post significant organisational changes in recent
years.
• To reduce reliance on the LTIP because of the difficulty in setting longer-term
targets, whereby short-term external volatility factors in a given year can
disproportionately impact multiple long-term awards and thus fail to adequately
reflect management’s success in strategically leading and managing the business
over the longer-term.
• To take account of the current environment where the pandemic and its effects
continue to disrupt supply chains, markets and consumer behaviours, introducing
additional volatility outside management control and potentially impeding visibility
of performance over a longer timeframe.
• To enable the Committee to be more agile in recalibrating performance targets for
the majority of the variable remuneration, enabling the Committee to refocus
motivation on an annual basis as well as resulting in a stronger link between
management performance and reward, with a natural reduction in the impact of
external factors.
• The increase in weighting towards the short-term performance is coupled with
significantly increased deferral under the Annual Bonus ensuring ongoing
alignment to longer-term sustainable performance and shareholder interests.
Long-Term
Incentive Plan
(LTIP)
• Maximum opportunity decreased from 250% and 200% of
salary for the Group Managing Director and Group Finance
Director respectively to 150% for both the Group Managing
Director and Group Finance Director.
Pension
• Incumbent Executive Directors from 1 January 2023 and
new appointments with immediate effect, to receive a
pension contribution as a percentage of salary aligned to the
majority of the workforce in the country of appointment.
Workforce pension is currently under review.
• To align to best practice, the UK Corporate Governance Code and to align the
policy to the approach set out in the 2020 Directors’ Remuneration Report.
Malus &
Clawback
• Malus and clawback trigger to be updated to include
corporate failure and failure of risk management.
• To align to best practice.
Remuneration
Committee
discretion
• The Committee may exercise discretion to adjust the
formulaic outcome of incentives where it is considered
appropriate.
• The Remuneration Committee already exercises discretion in respect of
remuneration outcomes. This change is to formally incorporate this discretion into
the policy.
In service
shareholding
requirement
• Group Finance Director shareholding requirement to be
increased from 150% to 200% of salary.
• 5-year period in which to meet the requirement to be
replaced with a requirement to hold 50% of vested incentive
awards after sales to meet taxes until shareholding
requirement is achieved.
• To align to market practice and support alignment with long-term performance,
sustainable growth and shareholder interests.
• The change to retaining 50% of vested incentive awards is to encourage a
gradual building of a shareholding.
Post-
employment
shareholding
policy
• Introduction of a post-employment shareholding policy to
hold the lower of shares actually held on cessation and
100% of salary for the first year following cessation of
employment and 50% of salary for the second year with the
discretion for the Committee to amend the requirement in
exceptional circumstances.
• The policy applies to shares acquired from incentive awards
granted under the new policy from 2022 and does not apply
to own purchased shares.
• Policy to be met by retaining 50% of vested LTIPs and bonus
shares granted under this policy (after sales to meet taxes).
• To align to best practice and support alignment with long-term performance,
sustainable growth and shareholder interests.
Other wording
changes
• Some changes have been made to clarify the policy
wording.
• Some changes have been made to clarify the policy wording.
Non-Executive
Directors fees
• To enable payment of a travel allowance and to note that
normally increases will be aligned to the annual salary
increases of the workforce.
• To ensure the Company has the flexibility to appoint Non-Executive Directors with
appropriate skills and is able to compensate them for any additional time required
as a result of their location to travel on Company business.
Remuneration Committee Report continued
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125
Executive Directors’ Remuneration Policy
The following table sets out the Directors’ Remuneration Policy for the Group’s Executive Directors. The Remuneration Policy is subject to approval
with a non-binding shareholder resolution at the 5 May 2022 AGM.
Element Objective Description, Performance Measures and Maximum Value
Base salary (fixed)
Annual fixed pay
Provide competitive base pay
which reflects market value of
role, job size, responsibility and
individual skills and experience.
Set by reference to the relevant market median of Europe and US based on an external independent
evaluation of the role against appropriate peer companies.
Reviewed annually by the Remuneration Committee. Any reviews, unless reflecting a change in role
or increased complexity, usually take effect from the commencement of the relevant financial year.
There is no maximum increase or maximum salary amount, however increases as a percentage of
salary will normally be aligned to those of the wider workforce although the Committee may
determine it is appropriate to make higher increase than this, for example, but not limited to, where
there is an increase in role including responsibilities and complexities.
Pension (fixed)
Retirement benefit
Provide market-aligned,
affordable and sustainable
retirement benefits.
Determined as a percentage of base salary.
Until 31 December 2022, the Group Managing Director receives cash in lieu of pension of 26.5% of
salary and the Group Finance Director participates in the Glanbia defined contribution plan with
contributions of 25% of salary.
Incumbent Executive Directors from 1 January 2023 and new appointments with immediate effect,
to receive a pension contribution aligned to the majority of the workforce in the country of
appointment.
Other Benefits (fixed) Provide competitive benefits
which recognise market value of
role, job size and responsibility.
Determined in consideration of the level of responsibilities and local market practice.
Benefits to include, but not be limited to, company car or equivalent, medical/life assurance, tax
equalisation payments and accommodation / relocation or other business-related allowances where
appropriate.
Short-Term Incentive Plan
(variable)
Incentivise Executive Directors
to achieve specific performance
goals and personal
performance objectives which
are linked to the Group’s
business plans during a
one-year period.
Ensure greater linkage of
remuneration to performance.
Ensure greater linkage to
long-term sustainability and
alignment to Group Risk
Management Policy.
Alignment with shareholders
and/or share value growth.
The annual incentive scheme rewards achievement of specific short-term annual performance
metrics.
The Group Managing Director and the Group Executive Directors can earn 125% and 100% of base
salary at target performance respectively and up to 250% and 200% of base salary respectively for
maximum performance. Annual bonus starts to accrue at 0% for threshold performance.
In relation to strategic targets the structure of the target will vary based on the nature of the target set
and it will not always be practicable to set targets using a graduated scale. Vesting may therefore
take place in full if specific criteria are met in full.
The majority of the STIP will be based on financial metrics. The Remuneration Committee reviews
and determines the metrics, weightings and calibration of targets annually taking into account the
business planning process and the strategic priorities of the business. The Remuneration Committee
has the discretion to adjust the formulaic vesting outcome if it deems it appropriate.
50% of any annual incentive earned is deferred into shares and once the appropriate taxation and
social security deductions have been made, invested in shares in the Company. The shares are
subject to a holding period, 20% is released after 2 years, and 30% after 3 years.
Deferred incentives are subject to malus and clawback (for a period of two years following this
investment) to the extent determined by the Remuneration Committee as outlined in Note 1 on
page 126.
Long-Term Incentive Plan
(variable)
Long-term Incentive Plan under
which shares are granted in the
form of a provisional allocation
of shares for which no exercise
price is payable
To align the interests of
Executive Directors and
shareholders through a
long-term share-based
incentive linked to share
ownership and holding
requirements.
To focus on greater alignment
with shareholders, long-term
retention and reward for
sustainable performance.
Long-term incentive individual annual share award level cannot exceed 150% of base salary.
The majority of the LTIP will be based on financial metrics. The Remuneration Committee reviews
and determines the performance metrics and weightings annually ensuring that they support the
strategic priorities of the business.
For all performance metrics, 25% vests at threshold performance and 100% vests at maximum with
straight line vesting in between these points.
In relation to strategic targets the structure of the target will vary based on the nature of the target set
and it will not always be practicable to set targets using a graduated scale. Vesting may therefore
take place in full if specific criteria are met in full.
The extent of vesting shall be dependent on the level of achievement, measured over a three-year
period, of the relevant performance conditions. The Remuneration Committee has the discretion to
select different performance criteria (including the measures, their weighting and calibration) where
deemed appropriate for new long-term incentive awards to ensure they continue to reflect the
strategic priorities of the business. The performance conditions for each award will be disclosed in
the Directors’ Remuneration Report which will be subject to a general shareholder non-binding
advisory vote.
The Remuneration Committee has the discretion to adjust the formulaic vesting outcome if it deems
it appropriate and a share award shall not vest unless the Remuneration Committee is satisfied that
the Group’s underlying financial performance has shown a sustained improvement in the period
since the date of grant.
Executive Directors will be required to hold shares received pursuant to the vesting of share awards
for a minimum period of two years post vesting subject to sales to meet taxes. Share awards are
subject to malus and clawback (during the two-year holding period following vesting), to the extent
determined by the Remuneration Committee as outlined in Note 1 on page 126.
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DIRECTORS’ REPORT
Element Objective Description, Performance Measures and Maximum Value
Shareholding Requirement
Minimum share ownership
requirements to be built up over
time through the retention of
vested incentive awards
Ensure a greater alignment with
shareholders’ interests.
Executive Directors are required to build a shareholding through retaining 50% of shares vesting
under the annual bonus and LTIP (subject to sales to meet taxes) until the relevant shareholding
requirement has been achieved.
The Group Managing Director is required to build and maintain a shareholding of 250% of base
salary and the other Executive Directors are required to build up and maintain a shareholding of
200% of base salary.
Post-Employment
Shareholding Requirement
Minimum share ownership
requirements to be built up over
time through the retention of
vested incentive awards
Ensure a greater alignment with
shareholders’ interests
The lower of shares actually held and 100% of salary for the first year following cessation of
employment and 50% of salary for the second year with Committee discretion to amend the
requirement in exceptional circumstances.
Applies to incentive awards granted from 2022, and not to shares purchased from the Executive
Director’s own funds.
Requirement is to retain 50% of vested LTIPs and bonus shares (after sales to meet taxes) until
sufficient shares held to meet post-employment requirement.
Note 1: Malus and clawback – the Committee may, at any time within two years of a share award or annual deferred incentive vesting, determine that malus and clawback shall apply if
the Committee determines that there was a material misstatement of the financial statements of the Company upon which the performance targets were assessed or an erroneous
calculation was made in assessing the extent to which performance targets were met. Additionally, the Committee can determine at any time within two years of a share award or
annual deferred incentive vesting that malus and clawback will apply if an award holder is found guilty, or pleads guilty, to a crime which causes reputational damage; or an award
holder is guilty of serious misconduct or gross negligence which causes loss or reputational damage, or where corporate failure or failure in risk management has occurred.
Executive Director employment conditions
The Remuneration Committee adopts a transparent framework when making Board appointments of either external or internal candidates.
Recruitment Policy
When recruiting Executive Directors, the Group’s policy is to provide an appropriate remuneration package to attract the right calibre of individuals
taking into account the skills and experience appropriate to the role being filled, and taking into account cost and remuneration across the Group,
including other senior executives, and that offered by other international food and nutritional companies and other companies of similar size and
complexity. New Executive Directors will generally be appointed on remuneration packages with the same structure and pay elements as described in
the table below. Each element of remuneration to be included in the package offered to a new Executive Director would be considered.
Element Description
Base salary (fixed) Base salary levels will be set in consideration of the skills, experience and expected contribution to the new role, the current salaries
of other Executive Directors in the Group and current market levels for the role.
Pension (fixed) Pension contribution will be aligned to the majority of the workforce in the country of appointment unless there is specific market
practice in the country of appointment and where for the recruitment of the right candidate it is considered necessary by the
Committee for the executive to participate in retirement benefits applicable to their local market and in line with relevant scheme rules
and Company practice.
Other benefits (fixed) Will be considered in light of relevant market practice for the role, the benefit received by the candidate in current role and the
provisions in place for other Executive Directors.
Short-Term Performance
Related Incentive (variable)
The maximum level of short-term variable remuneration which may be granted to a new recruit is 250% (total maximum variable
remuneration is 400%, annual and long-term variable). This excludes any buyout share awards that might arise.
The Remuneration Committee will consider whether it is appropriate for the new recruit to participate in the same annual incentive
plan applicable to the current Executive Directors. If this is considered appropriate, the same financial measures, weighting, payout
scale and target and maximum incentive opportunity (as a percentage of base salary) which apply to the existing Executive Directors
will generally apply to the new recruit.
Long-Term Performance
Related Incentive (variable)
The maximum level of long-term variable remuneration which may be granted to a new recruit is 150% (total maximum variable
remuneration is 400%, annual and long-term variable). This excludes any buyout share awards that might arise.
The award of long-term incentives will depend on the timing of the appointment and where this fits into the typical annual grant
cycles.
In addition to the above, when appointing an Executive Director, all other aspects of the Remuneration Policy such as malus and clawback and
shareholding requirements will apply.
In exceptional circumstances or where the Committee determines that it is necessary for the recruitment of key executives, the Committee reserves
the right to offer additional cash and/or share-based payments, to take into account remuneration relinquished including incentive awards forfeited
when leaving the former employer which would reflect as far as possible the nature (delivery vehicle), time horizons and performance requirements
attached to that remuneration.
The Committee’s approach to this matter is to carry out a detailed review of the awards or other remuneration element which the individual will lose
and calculate the estimated value of them. In doing so, the Committee will consider the vesting period; the award exercise period if applicable; whether
the awards are cash or share-based; performance-related or not; the former employer’s recent performance and payout levels and any other factors
the Committee considers appropriate. If a buyout share award is to be made, the structure and level will be carefully designed and will generally reflect
and replicate the previous awards as accurately as possible. The award will be made subject to appropriate clawback provisions in the event that the
individual resigns or their employment is terminated within a certain time frame.
Remuneration Committee Report continued
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127
For an internal appointment, any variable pay element awarded in respect of the prior role may be allowed to payout according to its terms, adjusted
as relevant to take into account the appointment. In addition, any ongoing remuneration obligations existing prior to appointment (which are
inconsistent with the policy as disclosed herein) may continue, provided they are disclosed to the Committee and in the Annual Report on
Remuneration. The Committee may also, if it considers it appropriate and in the best interests of the Group and its shareholders, realign existing
incentive awards to the Director’s Remuneration Policy applicable at the time of appointment.
Executive Director Service Agreements
The Group’s Policy is to provide rolling service contracts with a 12 month notice period. The Group Managing Director, Siobhán Talbot, and the Group
Finance Director, Mark Garvey service agreements have been renewed with a rolling 12 month notice period. The Group retains the sole right to
terminate with payment in lieu of 12 months’ notice, or part thereof, at any time.
Employment contracts for Executive Directors do not provide for any compensation for loss of office beyond payments in lieu of notice and therefore,
except as may otherwise be required by Irish law, the amount payable under the contract upon termination is limited to a maximum of 12 months’
remuneration. If so required, the Group reserves the right to make necessary payments in settlement of a Director’s statutory employment rights.
Both the Group Managing Director and Group Finance Director have additional 12 month restrictive covenant agreements which were introduced in
2019 and are in addition to the contract of service and notice period. These restrictive covenant agreements were put in place under the 2018–2021
Remuneration Policy and are grandfathered into the 2022–2024 policy. These agreements are necessary as a matter of law and aligned to market
practice in Ireland to ensure enforceability of non-compete obligations. The Committee will ensure that careful consideration is given to the
remuneration payable on any termination of employment including whether an Executive Director is required to work his or her notice period to
minimise the total cost of severance.
All new appointments will have restrictive covenant agreements incorporated into their service contracts with no additional payment in respect of
these.
Exit Pay Policy
The Group’s exit pay policy for the variable pay of Executive Directors is as follows:
• STIP awards – STIP awards will vest pro-rata to reflect the performance period which was worked and the performance outcomes achieved, in
accordance with plan rules with the Remuneration Committee applying its discretion to allow all or part of STIP award to vest. STIP payments will
normally be made at the usual time.
• LTIP awards – In the event an Executive Director leaves before an award vests for reasons of death, redundancy, injury, ill health or disability,
retirement with the agreement of the Remuneration Committee or any other reason approved by the Committee, LTIP awards lapse unless the
Committee exercises its discretion to allow all or some of the Executive Director’s awards to vest taking into account pro-rating for service and the
extent to which the performance conditions of the award are met (save in the case of death or if the circumstances are sufficiently exceptional as
determined by the Committee where the Committee may reduce the pro-rating and vest awards earlier than the normal time). The Committee may
at any time prior to vesting, in its absolute discretion, revoke any determination to permit awards to vest where an Executive Director breaches a
protective covenant. For all other leavers awards will lapse.
• In the event of a takeover, merger, scheme of arrangement or other similar event involving a change of control of the Company or a demerger of a
substantial part of the Group, or a special dividend, or which has the effect of materially changing the Group’s business, or an Executive Director’s
employment with the Group terminates by reason of a transfer of his/her employment to an entity outside the Group or other similar event that
affects the Group’s shares to a material extent, share awards under the 2018 LTIP will vest early, subject to performance and normal restrictions on
sale and the pro-rating of the share awards to reflect the reduced period of time between the commencement of the performance period and the
early vesting. The Committee can decide not to apply restrictions on sale or pro-rate a share award if it regards it as inappropriate to do so in the
particular circumstances.
• Other payments, such as legal or other professional fees, relocation or outplacement costs, payments to settle legal claims may be paid if it is
considered appropriate and is at the absolute discretion of the Committee.
Policy on external Board appointments
The long-standing policy of allowing Executive Directors to hold external Non-Executive Directorships with the prior approval of the Committee will
continue. The Committee considers that external directorships provide the Group’s Executive Directors with valuable experience that is of benefit to
Glanbia. The Committee believes that it is reasonable for the individual Executive Director to retain any fees received from such appointments given the
additional personal responsibility that this entails. Siobhán Talbot is a Non-Executive Director of CRH plc effective from 1 December 2018, for which
Siobhán received an annual fee in 2021 of €135,000. Siobhán Talbot also holds a position on the board of IBEC (Irish Business and Employers
Confederation) for which she does not receive any fee. The Group Finance Director has no external directorships and no other fees earned.
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DIRECTORS’ REPORT
Remuneration below Executive Directors
The Group’s remuneration principles and policy underpin remuneration practice across the Group. Below the level of the Executive Directors, similar principles
and policy framework, as outlined in the preceding pages, cascade as far as possible, taking account of seniority and relevant local market practice.
The table below outlines the reward elements which apply to employees across the Group depending on their level of seniority and market location.
During 2021 the Remuneration Committee also reviewed and considered with management the remuneration policy applying to the senior
management team below Executive Directors. Some changes have been made to the policy currently in place to ensure that remuneration
arrangements remain competitive in the markets in which Glanbia operates, particulary for North America, and provide clear and motivating incentives
for the senior management team. The changes that have been made include some refinements to the current restricted stock award structure to
provide annual vesting which is market practice in North America and also to align the metrics for the LTIP awards to Group KPIs only providing an
effective Group based incentive with clear line of sight to performance and reward for all participants.
Element Description
Base salary (fixed) Set by reference to role responsibilities relative to the relevant local market based on external independent market data against
appropriate peer companies. Reviewed annually in consideration of personal performance with any change of pay approved by a
member of the Group Operating Executive (and by the Remuneration Committee for senior executives falling under its remit).
Pension (fixed) Employees participate in retirement benefits applicable to their local market and in line with relevant scheme rules and Company
practice.
Other benefits (fixed) Employees participate in other benefits applicable to their local market and in line with relevant rules and Company practice. Other
benefits may include but are not limited to car benefit, illness benefit, medical insurance, relocation expenses/payments.
Short-Term Performance
Related Incentive (variable)
The annual incentive potential is based on appropriate and specific Group or Business Unit measures, as determined by the
Remuneration Committee. For designated senior executives, deferral of the proportion of the annual incentive earned once the
appropriate taxation and social security deductions have been made, will be invested in shares in the Company and delivered over
three years following investment.
Long-Term Performance
Related Incentive (variable)
The Long-Term Incentive Plan is focused on key Group financial metrics aligned to the awards made to the Executive Directors. The
Remuneration Committee may also assign a portion of the share award as restricted stock over the performance period.
Consideration of employment conditions elsewhere in the Group
The Committee considers all employees across the Group when establishing and implementing policy for Executive Directors. Senior and high-
performing individuals within the organisation are invited to participate in both annual and long-term incentive arrangements. Similar to the Executive
Directors, incentives are calibrated to provide appropriate rewards only on the achievement of superior performance. In addition, senior executives
below Board level may be eligible to participate in restricted stock awards as part of the annual LTIP grant.
The Committee has not previously consulted directly with employees when formulating Executive Director pay policy. However, it does solicit and take
into account information provided by the Group Human Resources function and the independent external advice from its Remuneration Advisers. The
resumption of in-person townhall meetings and other employee engagement activities post-pandemic, will provide an opportunity for engagement on
pay related matters including executive compensation in 2022.
Elements of remuneration for Non-Executive Directors
The Remuneration Policy for the Group Chairman and Non-Executive Directors is set out below:
Element Objective Description
Annual Fees Recognise market value of role, job size,
responsibility and reflects individual skills
and experience.
Set by reference to market rates based on an external independent evaluation of
comparator companies of a similar scale and complexity. Includes a base fee for the role
of Non-Executive Director and additional fees reflecting responsibilities for chairmanship of
a Committee of the Board and Senior Independent Director, additional fees as appropriate
for other roles and increased time commitments. The Chairman of the Board receives a
single all encompassing fee. Reviewed from time to time by the Remuneration Committee
and the Board with no minimum or maximum increase but where made usually aligned to
annual increases in general workforce salary.
Travel allowance To recognise the additional time
commitment associated with travel on
Company business.
Set by reference to market practice and market rates where comparable allowances are
paid and the associated time commitment.
A travel allowance may be structured as appropriate from time to time, taking into account
market practice, the location of the Non-Executive Director and travel commitments,
including but not limited to an annual allowance, an allowance per meeting and different
allowances payable for Non-Executives based in different countries or continents.
Benefits and expenses Reimburse role-based expenses incurred
during performance of the duties of the
role.
No additional benefits are provided other than direct expenses relating to the role. Such
expenses may include travel in the course of the role for the Group and any tax payable in
respect of the reimbursement, grossed up if appropriate.
The Non-Executive Directors do not have service contracts but have letters of appointment detailing the basis of their appointment. The terms and
conditions of appointment of Non-Executive Directors are available for inspection at the Company’s registered office and at the AGM of the Company.
The Non-Executive Directors do not have periods of notice and the Group has no obligation to pay compensation when their appointment terminates
in accordance with their letters of appointment. They are subject to annual re-election at the AGM of the Company.
Remuneration Committee Report continued
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Section B: Directors’ Remuneration Implementation Report
Executive Directors’ Remuneration Elements 2021
The operation of the Directors’ Remuneration Policy for 2021 is summarised in the table below.
Fixed pay 2021
Base salary, Pension, Other benefits
Base salary increase in 2021
2.5%
Long-term incentive 2021
2021 share award granted
Group MD, 250%
Group FD, 200% (% of base salary)
Measured by 50% Adjusted EPS,
30% Group ROCE, 10% TSR and
10% ESG
2019 share award vesting
21.6%
Measured by 40% Adjusted EPS,
40% Group ROCE, 20% TSR
Annual incentive 2021
Up to 150% of base salary for
maximum performance
Measured by 50% Adjusted EPS,
20% Group OCF, 20% Strategic Objectives,
10% ESG Objectives
2021 incentive payments
Group MD 97.7% and Group FD 97.7%
of maximum
Executive Director remuneration payments 2021
Further details of actual 2021 payments are set out in the subsequent table and later in this report.
Fixed Pay Annual Incentives Long-term
Incentives
Total
Fixed Pay
Total
Variable Pay
Total
Executive Directors Full Year
Base salary
€’000
Pension
contribution
1
€’000
Other
benefits
2
€’000
Annual
incentive
(payable in
cash)
3
€’000
Annual
incentive
(deferred
shares)
4
€’000
Long-term
incentive
5
€’000
S Talbot 2021 1,076 – 457 807 770 387 1,533 1,964 3,497
2020 1,050 – 349 572 – 466 1,399 1,038 2,437
M Garvey 2021 596 149 33 447 426 171 778 1,044 1,822
2020 581 145 33 320 – 219 759 539 1,298
Further explanatory notes relating to each remuneration element follow.
1. M Garvey participates in the Glanbia defined contribution plan with a contribution of 25%.
2. Other benefits include company car or equivalent, medical/life assurance, for 2021 tax equalisation for M Garvey, taxable cash in lieu of pension payments of 26.5% of salary and
for 2021 accommodation allowance to S Talbot.
3. This reflects the proportion of the annual incentive payable in cash to Executive Directors in respect of performance for full year 2020 and 2021 performance.
4. This reflects the proportion of the gross annual incentive (over 75% of base salary) which will be invested in shares and retained for two years, following appropriate taxation and
social security deductions.
5. For 2020, this reflects the value of the 2018 share awards to the value on the date of vest, 18 May 2021 (€14.30). Under the 2018 Long-term Incentive Plan vested awards are held
for a 2 year period to April 2023. For 2021, this reflects the value of the 2019 share award which will vest on 21 March 2022, earliest, where the performance period ended on
1 January 2022. The gross value is calculated using the official closing share price on 31 December 2021 (last day of trading for the 2021 financial year) of €12.30. 2019 vested
awards are held for a 2 year period from the date of vest.
Fixed pay 2021
Base salary 2021
Base salary of the Group Managing Director and the Group Finance Director increased by 2.5% to €1,076,250 and €595,525, respectively, effective
1 January 2021, in line with the increase for the broader employee population in Ireland.
Pension 2021
The Group Finance Director participates in a defined contribution retirement plan, to which contributions are made at an agreed rate of 25%.
Other benefits 2021
Other benefits include employment-related benefits such as the use of a company car or equivalent, benefit in lieu of personal future service pension
benefit, medical/life assurance, tax equalisation and relocation. All benefits are subject to normal deductions per the relevant regulations.
The Group Managing Director is a member of the Glanbia defined benefit scheme but, effective 1 January 2012, is no longer accruing personal
pension benefits under this scheme. As a result of the cap on pension benefits introduced in the Irish Finance Act 2006, and subsequently amended in
December 2010 and in December 2013, the Committee reviewed the pension arrangements for Executive Directors and agreed to offer Siobhán
Talbot the option to receive a taxable payment (26.5% of base salary) in lieu of the personal future service pension benefit.
The role of the Group Managing Director is now substantially based in Dublin on a day to day basis during the working week whereas her home is in
Kilkenny where the Group is headquartered. The Committee agreed to provide an annual accommodation allowance with effect from 2021 for
dedicated accommodation in Dublin city for the Group Managing Director rather than the ongoing use of hotel accommodation and services; or
commuting. While such a benefit is capable of being provided under the current policy (as a housing allowance and has previously been paid to
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DIRECTORS’ REPORT
Executive Directors overseas), this allowance is new for the Group Managing Director and reflects both changed work requirements and the necessity
for appropriate safe accommodation. The allowance is calculated on the basis of the annual cost of a serviced apartment in Dublin city plus the related
tax / BIK costs of this benefit and amounts to €100,000 gross annually.
The Committee also agreed from 2021 to provide the Group Finance Director with a tax equalisation benefit. This has arisen because the Group
Finance Director is a US citizen and as such is subject to US taxation on employer Defined Contribution (DC) pension contributions in Ireland. As there
is no double taxation relief for DC employer pension contributions in the current US Ireland tax treaty, the Committee resolved that it is appropriate to
tax equalise the Group Finance Director in respect of his pension payments until double tax relief is provided in an updated treaty. This is consistent
with the Group’s overall approach managing multi-jurisdictional tax costs for employees. The Committee has not considered this matter before now as
it had been hoped that double tax relief would have become available.
Annual incentive 2021
The Group’s Executive Directors participate in a performance related annual incentive scheme, which aims to reward achievement of specific
short-term performance metrics determined by the Committee annually. Other senior executives including the members of the Group’s Operating
Executive also participate in this scheme, albeit at different participation levels. The performance metrics consider collective business performance
and individual performance against strategic objectives as well as ESG objectives. The Committee believes that this method of performance
measurement and assessment is objective, transparent, rigorous and balanced, and provides an appropriate means to evaluate annual performance.
It also ensures that all senior management in the Group are aligned to the same annual goals in the best interests of the Group and the shareholders.
For the financial year to 1 January 2022, each Executive Director could earn up to 150% of base salary for maximum performance measured against
growth in adjusted EPS on a constant currency basis, Operating Cash Flow (OCF) on an Operating Cash Conversion basis, ESG and strategic
performance objectives. The mix of weightings for all objectives at target reflected 15% of base salary for strategic objectives, 7.5% for ESG and 52.5%
of base salary for business objectives (EPS and OCF), doubling at maximum performance to 30% of base salary for strategic objectives, 15% for ESG
and 105% of base salary for business objectives. All objectives are specific and measurable, determined and communicated at the start of the financial
year.
For 2021 our STIP ESG metric is focused on the execution of Phase 1 of the Group’s Diversity, Equity and Inclusion (DE&I) strategy, which is to build
capacity, processes and leadership skills to underpin overall strategy delivery.
Strategic objectives are aligned with the Group strategy reflecting personal contribution to the achievement of both medium and long-term strategic
objectives all relating to: organisational leadership, organisational effectiveness (including growth and innovation), the execution of the strategic growth
plan and driving innovation capability.
The Committee considered bonuses payable based on a formulaic basis. Given the strong financial, operational and strategic performance in a
challenging year, the Committee did not deem it necessary to apply discretion in respect of the formulaic determination of the bonus outcomes.
The table below outlines the 2021 annual incentive design and respective weightings for each Executive Director. It also details the 2021 performance
assessment %, actual bonus to be paid and incentive payable as a percentage of maximum opportunity.
Annual incentive weighting
Executive Directors Adjusted EPS Group OCF
1
Strategic
objectives ESG Total
Annual Incentive
opportunity as
% of salary
2021 Incentive
payable as a %
of maximum
opportunity
S Talbot 50% 20% 20% 10% 100% 0%-150% 97.7%
M Garvey 50% 20% 20% 10% 100% 0%-150% 97.7%
1. Group OCF is measured using Operating Cash Conversion defined as OCF divided by pre-exceptional earnings before interest, tax, depreciation and amortisation (EBITDA). This
cash measure aligns with the Group’s working capital management programme as introduced at the Group’s Capital Markets Day in May 2018.
Key Business Objectives 2021
The table below sets out actual performance relative to target for the Group financial measures.
Performance Assessment
in 2021 Performance range Actual
% of maximum
vesting
Below Threshold
(zero vesting)
Threshold
to Target
(pro-rata vesting)
Target
(100%
vesting)
Target to
Maximum
(pro-rata vesting)
Maximum
(200% vesting)
Adjusted EPS Growth
1
75.7 to 82.8 cent 87. 2 cent 100%
Group OCF (%)
2
75% to 90% 100.2% 100%
1. Adjusted EPS growth is measured on a constant currency basis to reflect the underlying performance of the Group. For 2021 the Executive Directors’ targeted constant currency
adjusted EPS of 80.4 cent with a maximum incentive achievable at 82.8 cent. The 2021 outcome was 87.2 cent adjusted to 87.3 cent when the impact of acquisitions during the
year is excluded.
2. OCF was measured as Operating Cash Conversion and is defined as OCF divided by pre-exceptional earnings before interest, tax, depreciation and amortisation (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. For 2021 the
Executive Directors’ target Group Operating Cash Conversion was 80% with a maximum incentive achievable at 90%. The 2021 outcome was 100.2% adjusted to 100.3% when
the impact of acquisitions during the year is excluded.
Remuneration Committee Report continued
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131
ESG metric 2021
Measure/Objective
Weighting
%
Maximum
vesting % Performance Assessment
% of
Maximum
vesting
The 2021 ESG STIP metric focused on embedding the
governance, capability and core programmes to enable the
evolution of a more inclusive and balanced organisation culture
and increase diversity in participation at all levels of the Group,
from entry level to Board.
10% 20%
The Executive Directors oversaw the launch of a comprehensive
DE&I strategy approved by the Board. Both Executive Directors
sponsored resources and initiatives across gender, LGBTQ+
and Multi-cultural strands which included education and
awareness building initiatives, unconscious bias training for
senior leadership, commercial DE&I review and establishment of
a global Womens Employee Resource Group and a regional
pilot LGBTQ+ and Multi-cultural ERGs. Other initiatives included
a review of Talent Acquisition protocols to enhance diversity
hiring for the Group.
90%
Key strategic objectives 2021
Strategic objectives are aligned with the Group strategy reflecting the Executive Director’s personal contribution to organisational effectiveness, the
execution of the strategic growth plan and driving innovation capability. The Group Managing Director set the strategic performance objectives for the
Group Finance Director, with the Group Managing Director’s strategic objectives set by the Group Chairman in conjunction with the Committee. All
strategic objectives were then agreed with the Committee who monitored their progress throughout the year.
Group Managing Director,
Siobhán Talbot
Strategic objectives at maximum: 30%
Overall performance assessment: 93%
Strategic objectives bonus payout: 28%
Measure/objective Weighting % Performance assessment
Achievement
%
Objective 1 Succession Planning and evolution of senior team.
Progression of development of succession planning for the Group Operating
Executive and their senior teams including individual development planning for
each executive member. Progress identified capability enhancements to Group
Operating Executive.
8%
Externally facilitated, assessment and development
planning programme completed by key executives and
development initiatives in train.
Significant evolution executed at Group Operating
Executive with new roles of Chief ESG Officer and Chief
Corporate Development Officer appointed as well as new
Chief Human Resources Officer.
Robust succession planning process with Group
Operating Executive members completed this year,
deeper career planning development now in train for
potential successors and this will be a continued focus
item for 2022.
7%
Objective 2: Oversee delivery of Key Strategic initiatives for 2021.
Deliver key tactical initiatives to underpin 2021 and evolve strategic priorities
1. Optimise team response and performance through Covid-19
2. Ensure top line growth in GPN and GN NS achieve targeted levels
3. Ensure targeted transformation programme savings in GPN are delivered
4. Support completion of operating model changes in GPN Americas in 2021
5. Support evolution of segment strategy in GN and GPN
6. Ensure commissioning of Michigan facility is delivered on target
10%
2021 Group performance strong across all the noted key
initiatives. Group performed strongly despite the supply
chain challenges that emerged in 2021 and consequent
inflation headwinds. All financial metrics overachieved for
FY 2021. New GPN Operating Model fully stood up and
operational. GN successfully achieved all key objectives
across portfolio evolution and execution of Michigan
facility commissioning.
10%
Objective 3: Ensure achievement of targeted M&A for 2021.
5%
Acquisitions of LevlUp and PacMoore completed in 2021.
4%
Objective 4: Strategic portfolio evolution.
With the Board, review the alignment of the strategic portfolio to the Group
strategy and purpose.
7%
As part of a continuing portfolio review, the successful
sale of the Group interest in Glanbia Ireland is a significant
evolution in the Group portfolio facilitating a renewed focus
on the strategic growth platforms of GPN and GN NS.
7%
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DIRECTORS’ REPORT
Group Finance Director,
Mark Garvey
Strategic objectives at maximum: 30%
Overall performance assessment: 93%
Strategic objectives bonus payout: 28%
Measure/objective Weighting % Performance assessment
Achievement
%
Objective 1: Group IT.
Complete strategic review of Group IT capability and operating model to ensure
its continued alignment to the Group’s current and future needs.
6%
Major project well advanced to benchmark current IT
capability and operating model, setting options for future
evolution and investment.
5%
Objective 2: Engage Business Units in margin improvement initiatives to drive
incremental margin delivery in 2021.
4%
Strong progression in GPN margin in 2021. Effective
margin management in GN offset by market dynamics in
the year with a consequent slight reduction.
4%
Objective 3: Finance Team development.
Progress a clear development and succession plan for all key finance roles.
4%
With a focused functional Organisational People Review
(OPR) and talent process initiated for the Finance function,
succession plans for the finance area are progressing well
at business unit and Group levels.
3%
Objective 4: Deliver accretive M&A in line with strategy.
6%
Working with Group MD and BU CEOs, successful
completion of LevlUp and PacMoore acquisitions which
provide clear adjacency opportunities for GPN and GN.
6%
Objective 5: Strategic Portfolio Review.
Working with the Board and Group Managing Director review strategic portfolio
evolution aligned to Group strategy and purpose.
10%
As part of a continuing portfolio review, the successful
sale of the Group interest in Glanbia Ireland is a significant
evolution in the Group portfolio facilitating a renewed focus
on the strategic growth platforms of GPN and GN NS.
10%
Long-Term Incentive Share Awards 2019
The 2019 share awards granted on 21 March 2019 had a three-year performance period (2019 to 2021) which ended on 1 January 2022. Under the
2019 LTIP, the 2019 share awards incorporated Group performance conditions which are measured in respect of performance in the three-year period
and independently verified by external advisers on behalf of the Committee.
For the Group Managing Director and Group Finance Director the 2019 performance conditions were; growth in annual adjusted EPS, Group ROCE
and the Group’s relative TSR measured against a peer group of the STOXX Europe 600 Food & Beverage Index.
2019 Long-Term Incentive Share Award vesting
The following table sets out the performance measures, weightings, targets and actual vesting outcome for the 2019 share awards, for the three-year
performance period 2019–2021.
Performance Condition
Weighting (% of
maximum) Threshold (25% vesting) Maximum (100% vesting) Actual
Group EPS 40% Three-year adjusted EPS growth
equal to 4% CAGR
Three-year adjusted EPS growth equal
to or greater than 9% CAGR
Less than threshold
CAGR of – 1.5
Vesting 0%
Group ROCE 40% Three-year simple ROCE average
equal to 8.82%*
Three-year simple ROCE average equal
to 11.82%*
Above threshold
ROCE average 9.98%
Vesting 54%
Group TSR 20% Ranked at the median of the
STOXX Europe 600 Food & Beverage Index
Ranked in the top quartile of the STOXX
Europe 600 Food & Beverage Index
Ranked below median
Vesting 0%
* Group ROCE adjustment from 9.00% to 8.82% and 12.00% to 11.82% for impact of IFRS accounting for leases which was implemented in 2020 after the targets had been set.
The share awards granted to Executive Directors in 2019, under the 2019 LTIP, for the three-year performance period 2019–2021, vest no earlier than
21 March 2022 (3 years from the date of grant) as follows:
Executive Directors
Total number of
shares awarded
Number of shares
awarded
expected to vest
in 2022
Percentage
outcome %
Value at grant of
the shares vesting
(A)
Change in value
over vesting
period of share
vesting (B)
Total vesting value
(A+B)1
S Talbot 145,752 31,482 21.6% €566,991 -€179,762 €387,229
M Garvey 64,520 13,936 21.6% €250,987 -€79,575 €171,413
1. This reflects the value of share awards expected to vest in 2022 with a three year performance period ended on 1 January 2022. The total vesting values have been estimated
using the official closing share price on 31 December 2021 (last day of trading for FY 2021) of €12.30. The value at grant of the shares vesting was €18.01 being the median
between the high and low of a Glanbia plc share on 20 March 2019 the day of grant, which was the value used to determine the number of shares of the 2019 award.
Remuneration Committee Report continued
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133
Share awards to past Executive Directors
The 2019 share awards granted to Hugh McGuire and Brian Phelan, who retired from the Board on 24 April 2019, have a 3-year performance period
which ended on 1 January 2022. These awards will vest no earlier than 21 March 2022 as set out below. The awards were based on 30% Group EPS,
25% Group ROCE, 15% relative TSR along with 10% ROCE and 20% EBITA for GPN and GN as appropriate. Performance against Group targets is set
out above. The Divisional targets and actual performance are not disclosed due to commercial sensitivity.
Past Directors
Total number of
shares awarded
Number of shares
expected to vest
Percentage
outcome %
Total vesting
value
1
H McGuire, CEO of Glanbia Performance Nutrition 58,336 20,943 35.9% €257,599
B Phelan, CEO of Glanbia Nutritionals 50,880 30,528 60.0% €375,494
1. This reflects the value of share awards expected to vest in 2022 with a three year performance period ended in January 2022. The total vesting values have been estimated using
the official closing share price on 31 December 2021 (last day of trading for FY 2021) of €12.30.
There are no other elements of remuneration to disclose in respect of FY 2021 for past Directors.
Methodology
The Committee has agreed that the target ranges of awards under LTIP 2019 are set in consideration of acquisitions and disposals over the three-year
performance period and therefore no adjustment is made for acquisitions and disposals to determine vesting.
Group EPS
The Group’s Compound Annual Growth Rate (CAGR) of adjusted EPS over the three-year performance period was a key metric for the Executive
Directors’ 2019 share award, representing a 40% weighting. Adjusted EPS is calculated as the profit attributable to the equity holders of the Company
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 year excluding ordinary shares purchased by the Group and held as own shares. The EPS
performance condition is measured using constant currency to reflect more accurately underlying earnings performance and remove any distortionary
effect of currency volatility.
Investors consider adjusted EPS to be a key indicator of long-term financial performance and value creation of a public limited company. Therefore
adjusted EPS is a key metric to incentivise long-term sustainable business performance.
The table below shows the Group’s adjusted EPS on a constant currency basis over the performance period.
Adjusted
EPS
2018 91.2c
2021 87. 2c
Group ROCE
Group ROCE is defined as the Group’s earnings before interest and amortisation (net of related tax) plus the Group’s share of the results of joint
ventures after interest and tax divided by capital employed. Capital employed comprises the sum of the Group’s total assets plus cumulative intangible
asset amortisation and impairment less current liabilities and deferred tax liabilities excluding all borrowings and lease liabilities, retirement benefit
assets, cash and acquisition related contingent consideration and contract options. It is calculated by taking the average of the relevant opening and
closing balance sheet amounts.
Where an acquisition or disposal takes place within a timeframe of an award, the acquisition or disposal are equally time apportioned to the numerator
and the denominator. No adjustments were required in respect of 2019.
Group TSR
The Group’s TSR ranking relative to an agreed peer group of STOXX Europe 600 Food & Beverage Index represents the change in the capital value of
a listed/quoted company over a period, plus dividends reinvested, expressed as a plus or minus percentage of the opening value. Investors regard
TSR as an important indication of both earnings and capital growth relative to other major companies in the same sector as well as ensuring that share
awards only vest if there has been a clear improvement in the Group’s relative performance over the relevant period. This metric attracted a 20%
weighting for 2020 and a 10% weighting for 2021.
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DIRECTORS’ REPORT
Long-Term Incentive Share Awards 2020 and 2021
At the beginning of 2021 the Committee took time to consider the appropriate target range for the EPS and ROCE measures for the 2021 LTIP
awards given the ongoing challenging environment due to the Covid-19 pandemic, ensuring targets continue to be challenging and consistent with
the Committee’s focus on incentivising a long-term profitable growth. The targets were disclosed at the time they were set by way of a regulatory
announcement and within six months of the award being granted. The targets are also set out in full below.
2020 share awards and 2021 share awards were made to the Executive Directors on 23 March 2020 and 16 March 2021 respectively. Both awards
are subject to the achievement of Group TSR, Group EPS, Group ROCE performance conditions and the 2021 award additionally an element based
on ESG, as set out below, measured over the relevant three-year performance period. 2020 share awards will vest no earlier than 23 March 2023 with
2021 share awards vesting no earlier than 16 March 2024. Any vested shares are subject to a two-year holding period from date of vesting.
The performance conditions and weightings for all outstanding share awards under LTIP 2018 are set out in the following table.
2020 Performance Metrics Financial Period 2020 – 2022 2021 Performance Metrics Financial Period 2021 – 2023
Performance Condition
Weighting %
of max Vesting 0%
Vesting 25%
(Threshold)*
Vesting 100%
(Maximum)*
Weighting %
of max Vesting 0%
Vesting 25%
(Threshold)*
Vesting 100%
(Maximum)*
Group EPS
Three-year adjusted EPS 40% < 4% CAGR = 4% CAGR ≥ 9% CAGR 50% < 6% CAGR = 6% CAGR ≥ 11% CAGR
Group ROCE 40% < 9% = 9% ≥ 12% 30% < 8% = 8% ≥ 11%
Group TSR
Ranking in STOXX Europe
600 Food and Beverage
Index 20%
Below the
median At median
In the top
quartile 10%
Below the
median At median
In the top
quartile
ESG
1
N/A 10% Qualitative assessment see table below
* Straight line vesting between threshold performance and maximum performance.
Achievement against financial performance conditions is determined on a constant currency basis to reflect more accurately underlying earnings
performance and remove any distortionary effect of currency volatility. LTIP performance targets are set with future acquisitions in mind and are
therefore reflective of the expected impact acquisitions may have on key performance conditions. This approach acknowledges the strategic
importance of acquisitions to the Group’s long-term performance and strategy.
1 The 2021 LTIP grant is the first time Glanbia has included environmental targets in remuneration metrics and represents an important milestone towards the execution of Glanbia’s
ESG strategy.
ESG metrics
LTIP 2021
Total ESG – 10% weighting Threshold Maximum
Renewable Energy – 5% Equal to a 30% conversion of existing non-renewable
energy utilisation by December 2023
Equal to or greater than 40% conversion of
existing non-renewable energy utilisation by
December 2023
Energy Efficiency – 2.5% Audits completed at all key sites, and energy efficiency
plans approved within the performance period
Completion of planned actions within the
performance period
Waste & Water Utilisation – 2.5% Base lining completed and plans approved within the
performance period
Completion of planned actions within the
performance period
Disposal of Glanbia plc’s interest in Glanbia Ireland and Long-Term Incentive Awards 2020 and 2021
As referenced in the Committee Chairman’s letter, the Committee has considered the implications of the disposal on inflight incentives and intends,
given the exceptional nature of the disposal, to adjust the inflight LTIP awards made in 2020 and 2021 such that the performance conditions measure
continuing businesses only and take no account of either the gain or subsequent earnings impact of the disposal event. It is not expected that such
an adjustment will have any material impact on vesting of these inflight awards compared to a scenario where the disposal had not taken place at all.
Remuneration Committee Report continued
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135
TSR performance
The graph illustrates the TSR performance of the Group over the past six years showing the change in value of €100 invested in Group’s shares from
3 January 2016 to 1 January 2022 (dates aligning with opening and closing financial periods) compared with the STOXX Europe 600 Food & Beverage
Index of which the Group is a constituent. This chart was first incorporated into our reporting for 2020 covering five years and will build over the next
5 years to provide a full 10 year overview.
The STOXX Europe 600 Food and Beverage Index has been selected as an appropriate index as it comprises other companies within the same broad
sector to Glanbia and of which Glanbia is a constituent.
€140
€120
€80
€60
€40
€20
€0
Jan 2016 Jan 2017 Jan 2018 Jan 2019 Jan 2020 Jan 2021 Jan 2022
STOXX Europe 600 Food and Beverage Index
Glanbia
€100
Group Managing Director total remuneration
The table below sets out the remuneration received by the Group Managing Director. This table will be extended each year to cover a 10 year period.
Siobhán Talbot – Group Managing Director
2015 2016 2017 2018 2019 2020 2021
Total Remuneration €’000 2,631 3,13 3 3,229 3,466 1,577
1
2,437 3,497
Annual Incentive
achieved as a % of maximum 81.2% 90.5% 71.6% 92.8% 0.0%
1
36.3% 97.7%
Long-term Incentives
achieved as a % of maximum 74.98% 81.07% 76.79% 58.13% 17.6 4% 21.0% 21.6%
1. S Talbot voluntarily waived the entire 2019 annual incentive which would have otherwise resulted in a Total Remuneration earned in 2019 of €2.104 million. Annual Incentive earned
in 2019 was 33.4% of maximum.
Directors’ shareholdings
As at 1 January 2022 the Executive Directors’ share ownership against the guidelines was as follows:
Executive Directors
Shares held as at
1 January 2022
% of base salary
based on market
value as at
1 January 2022
1
Shareholding
guidance
S Talbot 335,235 383% 250%
M Garvey 119,4 90 247% 150%
1. The market values have been estimated using the official closing price of a Glanbia plc share on 31 December 2021 (being the last day of trading on the Euronext Dublin before
year end 1 January 2022) of €12.30.
Dilution
Share awards granted under the 2018 LTIP are satisfied through the funding of employee benefit trusts which acquire shares in the market.
The Company’s employee benefit trusts held 412,493 shares at 1 January 2022. No shares remaining to be allotted under 2002 LTIP.
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DIRECTORS’ REPORT
Change in remuneration of Directors compared to employees
The table below shows the percentage change in total remuneration using the single figure methodology for the years ended 4 January 2020,
2 January 2021 and 1 January 2022 for the Directors of the Company and the average of all permanent employees of the Group on a full time
equivalent basis. For the purpose of this disclosure the Group is defined as all employees of wholly-owned entities in US and Ireland who are deemed
to be most representative of the global workforce.
2019–2021
Total
remuneration
2021,
€’000
Total
remuneration
2020,
€’000
Total
remuneration
2019,
€’000
Change in total
remuneration %
2020 to 2021
Change in total
remuneration %
2019 to 2020
Executive Directors
S Talbot
1
Earned 3,497 2,437 2,104 43.5% 9.8%
Paid 3,497 2,437 1,577 43.5% 46.5%
M Garvey
1
Earned 1,822 1,298 1,165 40.4% 6.3%
Paid 1,822 1,298 1,10 3 40.4% 12.2%
Non-Executive Directors
D Gaynor
2
325 150 95 116.7% 57.9 %
P Ahern 43 43 43 0% 0%
R Brennan
3
85 – – – –
P Coveney 85 85 85 0% 0%
P Duffy
3
71 – – – –
V Gorman 43 43 43 0% 0%
B Hayes 43 43 43 0% 0%
J Lodge
4
93 14 – 564.3% –
J G Murphy
5
43 56 60 -23.2% -6.7%
J Murphy
6
43 10 – 330.0% –
P Murphy
5
43 56 60 -23.2% -6.7%
D O’Connor 95 95 95 0% 0%
Average remuneration on full-time equivalent basis
Employees of the Group
7
84 81 75 4% 8%
1. For supporting notes regarding 2020 remuneration reference should be made to the 2020 Remuneration Report.
2. D Gaynor was appointed Group Chairman effective 8 October 2020 which is reflected in the % change in total remuneration from 2020 to 2021.
3. R Brennan and P Duffy were appointed 1 January 2021 and 1 March 2021 respectively.
4. J Lodge was appointed 1 November 2020 and then appointed Remuneration Committee Chairman effective 1 March 2021 which is reflected in the % change in total remuneration
from 2020 to 2021.
5. J G Murphy and P Murphy retired as Vice-Chairman on 8 October 2020 which is reflected in the % change in total remuneration from 2020 to 2021.
6. J Murphy was appointed 8 October 2020 which is reflected in the % change in total remuneration from 2020 to 2021.
7. Average remuneration has been determined based on the workforce of wholly-owned entities in US and Ireland which is most representative of the global workforce.
Group Managing Director to all-employee pay ratio
Whilst not a reporting-requirement, a voluntary disclosure on Group Managing Director pay ratio is set out below. The disclosure is based on the
workforce of wholly-owned entities in US and Ireland which is most representative of the global workforce. Total remuneration has been determined
using the ‘single total figure’ methodology as it provides a like-for-like comparison between the Group Managing Director and other employees.
All elements of remuneration were calculated on a full-time and full-year equivalent basis and no adjustments or assumptions were made by
the Committee.
The Committee notes that the median pay ratio has increased since last year, which is largely driven by the nature of the Group Managing Director’s
remuneration structure rather than changes in the wider workforce. As expected by shareholders a greater proportion of the remuneration awarded to
the Group Managing Director is performance based and therefore at risk. As a result, where performance is strong the total remuneration of the Group
Managing Director increases at a proportionately greater rate compared to the wider workforce, with the reverse being true when performance is not
as strong.
The Committee is satisfied that the pay ratio is appropriate relative to the performance achieved and is consistent with Glanbia’s reward and
progression policies. The Committee is committed to ensuring that remuneration structures below Board is appropriate and enables the business
to attract, retain, incentivise and reward our people – see page 128 for further details on our below Board remuneration arrangements.
Financial Year
P25
(Lower Quartile)
P50
(Median)
P75
(Upper Quartile)
Group Managing
Director
2019 Total Remuneration Ratio 41 28 18 –
2020 Total Remuneration Ratio 57 41 26 –
2021
Total Remuneration (€’000) 41 56 89 3,497
Total Remuneration Ratio 86 62 39 –
Base Salary (€’000) 33 44 66 1,076
Remuneration Committee Report continued
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
137
Implementation of policy in 2022
Salary, pension and benefits
The base salaries of the Group Managing Director and Group Finance Director are increased by 2.8% to €1,106,385 and €612,200 respectively,
effective 1 January 2022 aligned to the salary increase for broader employee population in Ireland.
All pension and benefits will remain unchanged for 2022 with the Executive Directors’ pension provision being aligned to the workforce in Ireland by
31 December 2022.
2022 Annual Incentive
Subject to shareholder approval of the new Remuneration Policy at our 2022 AGM, the Annual Incentive opportunity for the Group Managing Director
and Group Finance Director in 2022 is 250% and 200% of salary respectively (increased from 2021 with an equivalent reduction in LTIP award levels).
Under the new Policy and effective from 2022 the bonus deferral for the Executive Directors is significantly increased. For 2021 and prior years, the
executives defer only bonus that is in excess of target for two years. The new policy provides for 50% of all bonuses earned to be deferred over
a three-year period. In addition, with the new Policy including a post employment shareholding policy and the Group Finance Director’s increased
in-service shareholding requirement, the Committee is satisfied that management is strongly aligned to and focused on long term sustainable
performance and outcomes.
Annual Incentive will continue to be based on 50% EPS, 20% Group Operating Cash flow, 20% strategic objectives and 10% ESG objectives. As part
of the Directors’ Remuneration Policy review the Committee reviewed the mix of annual bonus measures and weightings and concluded that they
remained appropriate being clearly aligned to the business strategy, reflecting the KPIs that we focus on as a business and that are important to
our shareholders. In 2022 Glanbia will continue to build its franchise with its customers and consumers but will operate in a context of significant
inflationary pressure and supply chain disruption in particular. The business plan has been prepared in this context and therefore maintaining sharp
focus on plan delivery (earnings, cash conversion) and on achieving agreed strategic objectives remains appropriate.
The ESG metric in the 2022 annual incentive will focus on measuring the effectiveness and impact of the Group’s Diversity, Equity and Inclusion (DE&I)
programme. To be clear and simple it is focusing on key areas for improvement during 2022. The metric may vary from year to year depending on the
priority objective. In 2022 there are two DE&I metrics being measured – increasing the percentage of female managers and improved inclusion scores
in the 2022 employee engagement survey which is measured via a cumulative index. These DE&I metrics are being measured on a Group-wide basis
and also by business unit as the metrics apply to the Executive Directors, Group Operating Executive and the business unit leadership teams.
The Committee believes that the targets being set for 2022 reflect internal planning and are appropriately stretching relative to prior years given the
current commercial circumstances and also taking into account the increased weighting of total incentives to the annual incentive and its need to
ensure there continues to be a strong link between pay and performance at all times and incentivise exceptional performance from management.
Targets and performance against them will be disclosed in our 2022 Remuneration Report.
2022 LTIP share awards
Subject to shareholder approval at our 2022 AGM, the 2022 share awards will be made under our new Policy at 150% of salary for both the Group
Managing Director and Group Finance Director.
The vesting criteria for 2022 share awards for the Group Managing Director and Group Finance Director will continue to focus on EPS, ROCE and
ESG. With the increased focus on earnings recovery last year the weighting to EPS was increased. For 2022 both EPS and ROCE return to being
equally weighted reflecting the importance of both earnings and capital management to sustainable growth. Relative TSR accounted for only 10% of
the 2021 LTIP award and for 2022 TSR has been removed as a performance measure, reflecting the Committee’s decision to ensure as far as possible
that the new Policy focuses management on operational and financial measures which they are able to influence while reducing the impact of factors
outside of their control. The Committee is confident that the underlying link to share price growth stemming from the granting of equity awards under
the LTIP and through the significant bonus deferral and shareholding requirements including post employment provides clearer alignment with
shareholder interests. The ESG component has increased to reflect the criticality of these targets to our strategy.
Executive Directors Weighting Vesting 0%
Vesting 25%
(Threshold)
Vesting 100%
(Maximum)
Group EPS
Three-year adjusted EPS 40% <4% 4% 9%
Group ROCE 40% <8% 8% 11%
ESG 20% See below
ESG
The objective of incorporating ESG metrics in our LTIP is to align management to both our strategy and our external commitments (Science Based
Target initiative ‘SBTi’) to reduce carbon emissions in our value chain and to address our other environmental impacts across waste, water and
packaging. For our 2022-2024 LTIP we are targeting Scope 1 & 2 emissions reduction.
Since we validated our planned emissions reductions under the SBTi to a WB2DS standard (keeping global temperature increases to well below 2 degrees
Celsius), SBTi moved to a new base commitment in advance of COP26 to a 1.5 degree standard for Scope 1 & 2 emissions and it is Glanbia’s intention to re-align
to this standard. As a result we are in the process of completing detailed energy efficiency and procurement planning re-aligned to SBTi 1.5 degree pathway
from which the Remuneration Committee supported by the Board ESG Committee will set specific emissions reductions targets for the period 2022-2024.
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138
DIRECTORS’ REPORT
Extensive work required to realign to SBTi 1.5 degree pathway has already been completed however further work is underway in H1 2022. As a result
the Remuneration Committee is unable to finalise the emissions reduction targets for 2022-2024 in time for the 2021 Remuneration Report. Instead
these targets will be disclosed by RNS no later than six months after the granting of the 2022 LTIP award and the Committee will ensure the targets are
fully aligned to our strategy and are appropriately stretching. The Chairman of the Remuneration Committee and the ESG Committee will be pleased to
engage with shareholders to discuss our ESG strategy, our approach to setting these emissions reduction targets and to answer any questions that
may arise once the targets have been set.
Waste and water initiatives were incorporated into our 2021-2023 LTIP with progress being measured over the performance period to 2023. The Committee
will consider appropriate targets for the 2023-2025 LTIP to ensure there is continuity on these elements.
Our Scope 3 emissions include mainly farm based Green House Gas emissions in the supply chain but also dairy inputs such as purchased whey
proteins. To reduce Scope 3 emissions is inherently more complex because milk production is outside the group’s control. During 2022 we will be
developing a comprehensive Scope 3 reduction programme aligned to new SBTi FLAG guidance so that the Committee can consider how best to
incorporate Scope 3 targets in our LTIP awards aimed at achieving emissions intensity reductions by 2030.
Application of Remuneration Policy for 2022
The chart below shows how the composition of each of the Executive Directors’ packages varies at different levels of performance under the operation
of the Remuneration Policy for 2022. The assumptions noted for ‘target’ performance are provided for illustration purposes only.
0
€1k
€2k
€3k
€4k
€5k
€6k
€7k
€6,645
26%
46%
28%
€5,838
€2,862
€778
100%
€1,820
43%
33%
25%
€3,309
27%
42%
31%
€3,686
37%
22%
42%
€1,533
100%
€’000
Below
threshold
Target M aximum Below
threshold
Target
GMD GFD
Maxim um
Below
Threshold Target
Maximum
1. Assuming constant share price; and
2. Assuming 50% increase in share price
Fixed pay Fixed pay, being base salary, pension allowances for the 2022 financial year and other benefits taken from the single for the prior year
Annual Incentives Nil
125% of salary for the Group Managing Director
100% of salary for the Group Finance Director
250% of salary for the Group Managing Director
200% of salary for the Group Finance Director
Long-term
Incentives Nil
50% vesting of share awards
75% of salary for Group Managing Director
and Group Finance Director
100% vesting of share awards
150% of salary for Group Managing Director and Group
Finance Director
Remuneration Committee Report continued
Fixed Pay
Annual Bonus
LTIP
LTIP with 50% Share Price Growth
Non-Executive Director fees
Non-Executive Director fees (excluding the Group Chairman) have been reviewed as part of the Directors’ Remuneration Policy review, noting that
the last review was in 2018. The increases set out below comprise an increase to the Non-Executive Director base fee and the fee for the Senior
Independent Director (SID) and Committee Chair. Where an individual holds both the role of SID and chairs a Committee, two fees will be paid
reflecting the time commitment of holding both of these roles.
The Group Chairman fee was set on his appointment in October 2020 and was not included in the wider Non-Executive Director fee review. It has
instead been increased by 2.8% aligned to the increase in salaries for the Executive Directors and workforce in Ireland. This approach of annual
workforce aligned increases will be applied to all Non-Executive Director fees with effect from 2023.
The new Remuneration Policy enables the Board to set a travel allowance to reflect the time commitment of Non-Executive Directors travelling on
Company business. Within this policy the travel allowance is currently structured as an annual payment for US based Non-Executive Directors.
A summary of the fee levels is provided below:
Role 2022 € 2021 €
Group Chairman 335,000 325,000
Non-Executive Director Base Fee 90,000 85,000
Fee for Senior Independent Director and Committee Chairs 12,500 10,000
Society-nominated Non-Executive Director 42,500 42,500
Travel allowance for US based Non-Executive Directors 30,000 –
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
139
Directors’ remuneration and interests in shares in Glanbia plc
Tables A to G on the following pages give details of the Directors’ remuneration and interests in shares in Glanbia plc held by Directors and the Group
Secretary and their connected persons as at 1 January 2022. There have been no changes in the interests listed in Tables B to G between 1 January
2022 and 28 February 2022. The official closing share price on 31 December 2021 (last day of trading for the 2021 financial year) was €12.30 and the
range during the year was €9.88 to € 15.11. The average price for the year was €12.95.
Table A: 2021 Directors’ remuneration
The salary, fees and other benefits pursuant to the remuneration package of each Director during the year were:
Date of Directorship
appointment/retirement
Salary
€’000
Fees
€’000
Pension
contribution
1
€’000
Other
benefits
2
€’000
Annual
Incentive
paid in cash
3
€’000
Annual
Iincentive
deferred into
shares
4
€’000
Long-Term
Incentive
5
€’000
2021 Total
€’000
2020 Total
6
€’000
Executive Directors
S Talbot 1,076 – – 457 807 770 387 3,497 2,437
M Garvey 596 – 149 33 447 426 171 1,822 1,298
2021 1,672 – 149 490 1,254 1,196 558 5,319
2020 1,631 – 145 382 892 – 685 3,735
Former Executive Directors
H McGuire
7
Stepped down 24 April 2019
– – – – – – 258 258 139
B Phelan
7
Stepped down 24 April 2019
– – – – – – 375 375 180
2021 – – – – – – 633 633
2020 – – – – – – 319 – 319
2021 1,672 – 149 490 1,254 1,196 1,191 5,952
2020 1,631 – 145 382 892 – 1,004 4,054
Non-Executive Directors
D Gaynor
8
– 325 – – – – – 325 150
P Ahern – 43 – – – – – 43 43
R Brennan
App. 1 January 2021 – 85 – – – – – 85 –
P Coveney – 85 – – – – – 85 85
J Daly
Ret. 1 November 2020 – – – – – – – – 71
J Doheny
Ret. 22 April 2020 – – – – – – – – 13
P Duffy
App. 1 March 2021 – 71 – – – – – 71 –
V Gorman – 43 – – – – – 43 43
B Hayes – 43 – – – – – 43 43
Mn Keane
Ret. as Chairman 8 October 2020 and
Board 6 May 2021
– 15 – – – – – 15 97
R Laube
Ret. 28 February 2020 – – – – – – – – 14
J Lodge
App. 1 November 2020 – 93 – – – – – 93 14
M Minnick
Ret. 31 December 2020 – – – – – – – – 85
J Murphy
Ret. as Vice-Chairman 8 October 2020
– 43 – – – – – 43 56
J Murphy
App. 8 October 2020 – 43 – – – – – 43 10
P Murphy
Ret. as Vice-Chairman 8 October 2020
– 43 – – – – – 43 56
D O'Connor – 95 – – – – – 95 95
E Power
Ret. 22 April 2020 – – – – – – – – 13
2021 – 1,027 – – – – – 1,027
2020 – 888 – – – – – 888
Total 2021 1,672 1,027 149 490 1,254 1,196 1,191 6,979
Total 2020 1,631 888 145 382 892 – 1004 4,942
1. M Garvey participates in the Glanbia defined contribution plan with a contribution of 25%.
2. Other benefits include company car or equivalent, medical/life assurance, for 2021 tax equalisation for M Garvey, taxable cash in lieu of pension payments of 26.5% of salary and
for 2021 accommodation allowance to S Talbot.
3. This reflects the proportion of the Annual Incentive payable in cash to Executive Directors in respect of performance for full year 2021.
4. This reflects the proportion of the gross Annual Incentive (over 75% of base salary) (2020: nil) which will be invested in shares and retained for two years, following appropriate
taxation and social security deductions.
5. This reflects the value of the 2019 share awards which will vest on 21 March 2022, earliest, the performance period for which ended on 1 January 2022. The gross value is
calculated using the official closing price of a Glanbia plc share on 31 December 2021 (being the last day of trading on the Euronext Dublin for the 2021 financial year) of €12.30.
2019 vested share awards will be held for a 2 year period from the date of vest.
6. 2020 Total Remuneration has been restated to update the value of the 2018 share awards to the value on the date of vest, 18 May 2021. The restated gross value is calculated
using the official opening share price on the date of vest of €14.30. 2018 vested share awards will be held for a 2 year period to May 2023.
7. H McGuire and B Phelan stepped down as Executive Directors on 24 April 2019. The vest value of share awards granted while Executive Directors in 2018 and 2019, in respect of
performance periods ending in 2020 and 2021 respectively, are included in the table above.
8. Donard Gaynor was appointed Group Chairman effective 8 October 2020, the % change in total remuneration from 2020 to 2021 reflects his appointment and the increase in
Group Chairman fees as set out on page 138.
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140
DIRECTORS’ REPORT
Details of Directors’ long-term awards expected to vest in respect of performance to 1 January 2022 are set out on page 132.
The defined pension benefit of the Executive Directors during the year was as follows:
Transfer value of
increase in
accrued pension
€’ 000
Annual pension
accrued in 2021 in
excess of inflation
€’ 000
Total annual
accrued pension
at 1 January 2022
€’ 000
S Talbot – – 159
2021 – – 159
2020 – – 159
Table B: Directors’ and Secretary’s interests in ordinary shares in Glanbia plc
Notes
As at 1 January
2022
Ordinary Shares
As at 3 January
2021
Ordinary Shares*
Directors
D Gaynor 10,000 10,000
S Talbot
1 335,235 317,79 8
P Ahern 14,091 14,091
R Brennan – –
P Coveney 3,900 3,900
P Duffy
2 6,930 6,930
M Garvey
1 119,4 90 111,285
V Gorman 6,033 6,033
B Hayes 3 9,151 34,846
J Lodge 5,000 –
J G Murphy 7, 28 3 7,283
J Murphy 1,292 1,292
P Murphy 11,50 6 11,5 06
D O’Connor 7,6 8 0 7, 6 8 0
567, 591 532,644
Secretary
M Horan 50,442 41,990
* or at date of original appointment to the Board if appointed during financial year
1. Executive Director.
2. Appointed 1 March 2021.
Note: The ordinary shares held in trust for the Directors and Secretary disclosed in Table C below are included in the total number of ordinary shares
held by the Directors and Secretary above.
None of the Directors have used their shares as security.
Table C: Directors’ and Secretary’s interests in ordinary shares in Glanbia plc subject to restriction
2008 LTIP
2
2018 LTIP
3
2019 Annual
Deferred
Incentive
4
Total
1
Executive Directors
S Talbot 10,606 17,437 – 28,043
M Garvey 4,990 8,205 14,040 27,235
Secretary
M Horan 2,235 8,452 – 10,687
1. The above ordinary shares are held on trust for the Directors and Secretary by the Glanbia plc Section 128D Employee Benefit Trust and are included in the total number of
ordinary shares held by the Directors and Secretary disclosed in Table B.
2. Subject to restriction on sale until 24 April 2022.
3. Subject to restriction on sale until 18 May 2023.
4. Subject to restriction on sale until 27 March 2022.
Remuneration Committee Report continued
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
141
Table D: Summary of Directors’ and Secretary’s interests in Glanbia plc 2018 LTIP
As at 1 January
2022
2018 LTIP
Share awards
As at 3 January
2021
2018 LTIP
Share awards
Executive Directors
S Talbot 618,492 539,733
M Garvey 273,787 243,242
Secretary
M Horan 118,338 108,952
Table E: Directors’ and Secretary’s interests in 2018 LTIP
Date of Grant
As at
3 January
2021
Granted
during the
year
Vested
during the
year
Lapsed
during the
year
As at
1 January
2022
Market price
at date of
award €
Earliest date
for vesting Expiry date Notes
Executive Directors
S Talbot
26-A pr-18 155,005 – 32,613 122,392 – 13.86 26-Apr-21 26-Apr-22 1
21-Mar-19 145,752 – – – 145,752 17.73 21-Mar-22 21-Mar-23 2
23-Mar-20 238,976 – – – 238,976 8.24 23-Mar-23 23-Mar-24 3
16-Mar-21 – 233,764 – – 233,764 11.57 16-Mar-24 16-Mar-25 4
Total: 539,733 233,764 32,613 122,392 618,492
M Garvey
26-A pr-18 72,935 – 15,346 5 7,589 – 13.86 26-Apr-21 26-Apr-22 1
21-Mar-19 64,520 – – – 64,520 17.73 21-Mar-22 21-Mar-23 2
23-Mar-20 105,787 – – – 105,787 8.24 23-Mar-23 23-Mar-24 3
16-Mar-21 – 103,480 – – 103,480 11.57 16-Mar-24 16-Mar-25 4
Total: 243,242 103,480 15,346 57,5 89 273,787
Secretary
M Horan
26-A pr-18 35,341 – 15,808 19,533 – 13.86 26-Apr-21 26-Apr-22 1
21-Mar-19 27,887 – – – 27,887 17.73 21-Mar-22 21-Mar-23 2
23-Mar-20 45,724 – – – 45,724 8.24 23-Mar-23 23-Mar-24 3
16-Mar-21 – 44,727 – – 44,727 11.57 16-Mar-24 16-Mar-25 4
Total: 108,952 44,727 15,808 19,533 118,338
1. Share awards granted on 26 April 2018 were subject to performance conditions measured over the three financial years ended 2 January 2021. The awards vested on 18 May
2021 and the percentage of the awards vested are shown on page 142. Directors were permitted to sell sufficient shares to satisfy any tax or social security deductions arising on
the acquisition of the shares. The balance of the shares are restricted from sale for two years and are held on trust for them by the trustee of the Glanbia plc Section 128D
Employment Benefit Trust. The total number of shares subject to restriction are included in the total number of ordinary shares disclosed in Table B on page 140.
2. Share awards granted on 21 March 2019 were subject to performance conditions measured over the three financial years ended 1 January 2022. The outcome of these
performance conditions and the number of share awards expected to vest to Executive Directors during 2022 are set out on page 132. The vested share award, net of relevant
taxation and social security deductions, will be restricted from sale for two years and be held on trust for them by the trustee of the Glanbia plc section 128D Employee Benefit
Trust.
3. The performance period in respect of the 2018 LTIP awards made in 2020 is the three financial years ending 2022.
4. The performance period in respect of the 2018 LTIP awards made in 2021 is the three financial years ending 2023.
The performance conditions attached to the awards granted in 2020 and 2021 are detailed in the section entitled ‘Long-Term Incentive Awards 2020
and 2021’ on page 134.
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142
DIRECTORS’ REPORT
Table F: Directors’ and Secretary’s annual deferred incentive paid
Value of Annual
Incentive
converted into
shares €
1
Date of
conversion/
acquisition of
shares
Acquisition price
per share at date
of conversion
Number of shares
acquired
Executive Director
M Garvey
2019 Annual Deferred Incentive €256,000 27-Mar-20 €9.750 26,208
1. Numbers are rounded to the nearest thousand.
2. Directors were permitted to sell sufficient shares to satisfy any tax or social security deductions arising on the acquisition of the shares. The balance of the shares are restricted
from sale for two years and are held on trust for the Directors by the trustee of the Glanbia plc Section 128D Employee Benefit Trust.
3. The total number of shares subject to restriction are included in the total number of ordinary shares disclosed in Table B on Page 140.
Table G: Value of awards expected to vest in 2022 and awards vested in 2021
Number of
shares awarded
expected to vest
in 2022
Percentage
Outcome %
Estimated Market
Value €
1
Number of shares
vested in 2021
Percentage
Outcomes %
Estimated Market
Value €
2
Executive Directors
S Talbot 31,482 21.6% 387,229 32,613 21.0% 466,366
M Garvey 13,936 21.6% 171,413 15,346 21.0% 219,448
1. This reflects the value of long-term incentive share awards expected to vest in 2022 with a three year performance period ended in 2021. The market values have been estimated
using the official closing price of a Glanbia plc share on 31 December 2021 (being the last day of trading on Euronext Dublin before year end 1 January 2022) of €12.30.
2. This reflects the value of long-term incentive share awards vested in 2021 with a three year performance period ended in 2020. These have been valued at the market value of the
shares on the date of vesting €14.30 per share (official opening price).
Remuneration Committee Report continued
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143
Principal activities, strategy and business model
Glanbia plc is a global nutrition group, headquartered in Ireland, with a direct presence in 32 countries worldwide.
The Group’s business model and strategy are summarised in the Strategic Report on pages 1 to 75.
The Group Chairman’s statement on pages 4 and 5, the Group Managing Director’s review on pages 6 to 7, the Operations review on pages 30
to 41 and the Group Finance Director’s review on pages 44 to 49 contain a review of the development and performance of the Group’s business
during the year, of the state of affairs of the business at 1 January 2022, of recent events and of likely future developments. Information in respect of
events since the year end is included in these sections and in Note 36 to the Financial Statements.
As set out in the Group Income Statement on page 162, the Group reported a profit for the period of €167.4 million after exceptionals. Comprehensive
reviews of the financial and operating performance of the Group during 2021 are set out in the Group Finance Director’s review on pages 44 to 49
and in the Operations review on pages 30 to 41. Key Performance Indicators are set out on pages 26 to 27 . The treasury policy and the financial risk
management objectives of the Group are set out in detail in Note 29 to the Financial Statements. Our approach to our people, Diversity Equity and
Inclusion and our stakeholders are discussed on pages 20 to 25 and sustainability is discussed on pages 52 to 66 and 109 to 111.
Non-Financial Reporting Statement
The Group complies with the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups)
Regulations 2017, SI No. 360 of 2017 (as amended). The table on page 60 is designed to help stakeholders navigate to the relevant sections in this
Annual Report to understand the Group’s approach to these non-financial risks. Many of our policies can be viewed on www.glanbia.com.
Process for appointment/retirement of Directors
In addition to the Companies Act 2014, the constitution of the Company contains provisions regarding the appointment and retirement of Directors.
At each Annual General Meeting (AGM) the constitution of the Company provides that each Director who has been in office at the conclusion of each
of the three preceding AGMs, and who has not been appointed or reappointed at either of the two most recently held of those three meetings, shall
retire from office; however in accordance with the UK Corporate Governance Code, all of the Directors are subject to annual re-election. Each
of the Directors, with the exception of Patrick Coveney who retires effective 30 March 2022 and Vincent Gorman (who is not putting himself forward for
re-election at the AGM), will retire at the 2022 AGM and, being eligible, offer themselves for re-appointment. The constitution of the Company also
allows the election and re-election of Independent Directors to be conducted in accordance with the election provisions for Independent Non-
Executive Directors in the Euronext Dublin Listing Rules and the United Kingdom Listing Authority (UKLA) Listing Rules.
No person, other than a Director retiring by rotation, shall be appointed a Director at any general meeting unless he/she is recommended by the
Directors or, not less than seven nor more than 42 days before the date appointed for the meeting, notice executed by a member qualified to vote
at the meeting has been given to the Company of the intention to propose that person for appointment. If a Director is also a director of Glanbia
Co-operative Society Limited (the ‘Society’), the constitution of the Company provides that his or her appointment as a Director shall terminate
automatically in the event of his or her ceasing to be a director of the Society.
The constitution of the Company also contains provisions regarding the automatic retirement of a Director in certain other limited circumstances.
Annual General Meeting
The Company’s 2022 AGM will be held on 5 May 2022. Full details of the 2022 AGM, together with explanations of the resolutions to be proposed, will
be contained in the Notice of the 2022 AGM. The record date for the 2022 AGM will be determined in accordance with section 1087G and 1105 of the
Companies Act 2014.
Powers of the Directors
The Directors are responsible for the management of the business of the Company and the Group and may exercise all powers of the Company
subject to applicable legislation and regulation and the constitution of the Company. At the 2021 AGM, the Directors were given the power to issue
new shares up to a nominal amount of €3,522,289.08. This power will expire on the earlier of the close of business on the date of the 2022 AGM or
5 August 2022. Accordingly, a resolution will be proposed at the 2022 AGM to renew the Company’s authority to issue new shares.
At the 2021 AGM, the Directors were also given the power to:
i. dis-apply the strict statutory pre-emption provisions in the event of a rights issue or other pre-emptive issue or in any other issue up to an aggregate
amount equal to 5% of the nominal value of the Company’s issued share capital. This 5% limit includes any treasury shares re-issued by the
Company while this authority remains operable; and
ii. dis-apply the strict statutory pre-emption provisions for an additional 5% for specific transactions. The resolution gave the Directors an additional
power to allot shares on a non-pre-emptive basis and for cash up to a further 5% of the issued share capital in connection with an acquisition
or a specified capital investment which is announced contemporaneously with the issue, or which has taken place in the preceding six month
period and is disclosed in the announcement of the issue. The 5% limit includes any treasury shares reissued by the Company while this authority
remains operable.
These powers will expire on the date of the 2022 AGM or 5 August 2022, whichever is earlier. Accordingly, resolutions will be proposed at the 2022
AGM to renew these authorities.
It is the Directors’ intention to follow the provisions of the Pre-emption Group Statement of Principles regarding cumulative usage of authorities within
a rolling three-year period. These principles provide that companies should consult shareholders prior to issuing, other than to existing shareholders,
shares for cash representing in excess of 7.5% of a company’s issued share capital in any rolling three-year period. At the 2021 AGM, the Directors
Statutory information and Forward-looking statement
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
144
DIRECTORS’ REPORT
Statutory information and Forward-looking statement continued
were also given the power to buy back a maximum number of 29,129,518 ordinary shares at a minimum price of €0.06 each. The maximum price
was an amount equal to 105% of the average of the middle market quotations of the Company’s ordinary shares as derived from the Euronext Dublin
Daily Official List for the five business days immediately preceding the day on which such ordinary shares are contracted to be purchased. This power
will expire at the earlier of the conclusion of the 2022 AGM or 5 August 2022 and a resolution will be proposed at the 2022 AGM to renew this power.
A special resolution will be proposed at the 2022 AGM to renew the Company’s authority to acquire its own shares. At the 2021 AGM, shareholders
also authorised the maximum and minimum prices at which the Company may reissue off-market such shares as it may purchase. This authority will
expire at the earlier of the conclusion of the 2022 AGM or 5 August 2022 and a resolution will be proposed at the 2022 AGM to renew this authority.
Research and development
The Group is fully committed to ongoing technological innovation in all sectors of its business, providing integrated customer-focused product
development by leveraging our global technology capabilities and expertise. Expenditure on research and development amounted to €18.5 million
in 2021 (2020: €17.3 million) as disclosed in Note 5 to the Financial Statements.
Dividends
An interim dividend of 11.75 cent per share was paid on 1 October 2021 (an aggregate of €34.1 million) to shareholders on the share register at
the close of business on 20 August 2021. The Directors propose a final dividend of 17.53 cent per share which based on the issued share capital at
28 February 2022 would equate to (an aggregate of €49.3 million) bringing the total dividend in respect of 2021 to 29.28 cent per share (an aggregate
of €83.4 million). Subject to shareholder approval, the final dividend will be paid on 6 May 2022 to shareholders on the share register on 25 March
2022. The foregoing amounts paid are net of dividends waived by the Group’s Employee Trusts.
Total dividends paid during 2021 amounted to an aggregate of €80.5 million (being a final dividend of 15.94 cent per share paid on 7 May 2021 (an
aggregate of €46.4 million) and an interim dividend of 11.75 cent per share paid on 1 October 2021 (an aggregate of €34.1 million). The foregoing
amounts paid are net of dividends waived by the Group’s Employee Trusts.
Following approval by shareholders at the AGM in 2010, all dividend payments will be made by direct credit transfer into a nominated bank or financial
institution. If a shareholder has not provided his/her account details prior to the payment of the dividend, a shareholder will be sent the normal tax
voucher advising a shareholder of the amount of his/her dividend and that the amount is being held because his/her direct credit transfer instructions
had not been received in time. A shareholder’s dividends will not accrue interest while they are held. Payment will be transferred to a shareholder’s
account as soon as possible on receipt of his/her direct credit transfer instructions.
For the past number of years, dividends have been paid in sterling to shareholders whose address, according to the Glanbia share register, is in
the UK (unless they have elected otherwise). On 15 March 2021 this structure changed and a default currency of euro will be applied to all new
shareholders who come on to the Glanbia plc share register, regardless of their registered address. Where an existing shareholder holds shares in
certificated (i.e. paper) form and has previously received sterling because his/her registered address is in the UK or because he/she has previously
elected to receive sterling, he/she will continue to receive sterling after 15 March 2021 unless he/she elects otherwise. All other shareholders will from
15 March 2021 automatically be paid in euro unless a sterling currency election is made (including those shareholders who hold their shares in
uncertificated (i.e. dematerialised) form).
Shareholders holding their shares via the central securities depository operated by Euroclear Bank or CREST will receive dividends electronically via
such systems. To avail of these facilities, shareholders should follow the applicable procedures in the EB Services Description, the EB Rights of
Participants Document and the CREST International Manual.
Irish Dividend Withholding Tax (DWT) must be deducted from dividends paid by an Irish resident company, unless a shareholder is entitled to an
exemption and has submitted a properly completed exemption form to the Company’s Registrar. DWT is deducted at the standard rate of Income Tax
(25%). Non-resident shareholders located in countries with a double tax treaty with Ireland and certain Irish companies, trusts, pension schemes,
investment undertakings and charities may be entitled to claim exemption from DWT. Copies of the exemption form may be obtained from the
Company’s Registrar. Shareholders should note that DWT will be deducted from dividends in cases where a properly completed form has not been
received by the market deadline for the dividend. Individuals who are resident in Ireland for tax purposes are not entitled to an exemption. If shares are
held via Euroclear Bank or CREST, the owners of the shares will need to contact the intermediary through whom the shares are held to ascertain
arrangements for tax relief to be applied at source.
Political donations
The Electoral Act, 1997 as amended requires companies to disclose all political donations over €200 in aggregate made during the financial year.
The Directors, on enquiry, have satisfied themselves that no payment or other donations in excess of this amount have been made by the Group.
Issued share capital
At 1 January 2022 the authorised share capital of the Company was 350,000,000 ordinary shares of €0.06 each and the issued share capital was
287,169,345 (2020: 294,401,777) ordinary shares of €0.06 each, of which 32.48% was held by the Society. All the Company’s shares are fully paid up
and quoted on Euronext Dublin and the London Stock Exchange. On 21 January 2021, 40,000 ordinary shares of €0.06 each were alloted, upon the
exercise of outstanding options under the 2002 LTIP. The Company purchased 7,272,432 shares during the year as part of the share buyback
programme.
Details of the Company’s share capital and shares under share award at 1 January 2022 are given in Notes 22 and 10, respectively, to the Financial
Statements.
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145
Share Buyback
During 2021, the Company completed the share buyback programme of up to €50 million announced in October 2020 and commenced two
further share buyback programmes of up to €50 million each (the ‘2021 Buyback Programmes’) which were announced on 12 August 2021 and
8 December2021.
The 2021 Buyback Programme announced on 8 December 2021 continues into 2022.
During 2021, the Company purchased a total of 7,272,432 ordinary shares under the 2021 Buyback Programmes, returning a total of over €91million
in cash to shareholders.
The table below sets out the ordinary shares purchased under the Buyback Programme during 2021. See Note 23 to the Consolidated Financial
Statements for further details.
Month
Total number of
share buyback
purchases
Average price
paid per share
January 1,021,181 10.354
February 1,491,795 10.171
March 395,000 11.825
April 238,619 13.022
August 848,833 14.719
September 1,097,041 14.748
October 1,563,133 13.708
November – –
December 616,830 12.307
Total 2021 7,272 ,432 12.543
Additionally on 20 January 2022, Glanbia Co-operative Society Limited(“the Co-op”) completed the sale of approximately 5.75 million ordinary shares
in the Company (the “Shares”), representing around 2 percent of the Company’s issued share capital, for a total consideration of approximately €70
million (the “Equity Placement”). Concurrently with the Equity Placement, the Co-op placed EUR 250 million senior secured bonds and certain
subscribers to these bonds placed existing Shares (the “Delta Shares”) together with the Equity Placement (the “Placement”). The price per Share in
the Placement was €12.25. Pursuant to the Company’s existing authority to purchase its own shares, the Company participated in the Placement via
Glanbia’s broker Davy and purchased 2,527,152 Shares (representing around 0.9 percent of the Company’s existing issued share capital), at a price of
€12.25 per Share (the “Buyback”) (an aggregate of circa €31 million). The Shares purchased in the Buyback were cancelled. The purchase of shares
from the Co-op as part of the Buyback constituted a related party transaction for the Company under the Euronext Listing Rules (“Euronext LR”) and
the FCA Listing Rules (“FCA LR”). Pursuant to paragraph 11.1.15 (2)(a) of the Euronext LR and paragraph 11.1.10 (2)(b) of the FCA LR, Davy Corporate
Finance confirmed that the terms of the Buyback with the related party, were fair and reasonable as far as the shareholders of the Company were
concerned. The Company’s participation in the Placement was incremental to the ongoing €50 million 2021 Buyback Programme announced on
8 December 2021.
Rights and obligations of ordinary shares
On a show of hands at a general meeting, every holder of ordinary shares present in person or by proxy and entitled to vote shall have one vote. On a
poll, every shareholder present in person or by proxy, shall have one vote for every ordinary share held. In accordance with the provisions of the
constitution of the Company, holders of ordinary shares are entitled to a dividend where declared or paid out of profits available for such purposes. On
a return of capital on a winding up, holders of ordinary shares are entitled to participate.
Restrictions on transfer of shares/votes
With the exception of restrictions on transfer of shares under the Group’s share schemes, (while the shares are subject to such schemes), there are no
restrictions on the voting rights attaching to the Company’s ordinary shares (except as outlined below) or the transfer of securities in the Company.
Certain restrictions on transfers of shares may from time to time be imposed by the Group’s share dealing rules and/or the Market Abuse Regulation
(EU) No 596/2014. Directors and certain employees are required to seek the Company’s approval to deal in its shares. Additionally, members of the
Group Operating Executive are required to hold a proportion of the value of their base salary in shares. These shares may not normally be transferred
during the individuals’ period in office. Where participants in a Group share scheme operated by the Group are the beneficial owners of shares but not
the registered owner, the voting rights are normally exercised by the registered owner at the direction of the participants.
Article 2 of the constitution of the Company provides that any ordinary shares acquired by any person who is/was an employee of the Group or any
associate or joint venture (provided he is neither a Director of the Company nor a director of the Society) shall be non-voting shares if such acquisition
would, if not for this restriction on voting rights, cause such person to be deemed to have acquired indirect control of the Company or to have to make
an offer under Rule 9 of the Irish Takeover Panel Act 1997, Takeover Rules 2013.
Under the constitution of the Company, the Directors have the power to impose restrictions on the exercise of rights attaching to share(s) where the
holder of the share(s) fails to disclose the identity of any person who may have an interest in those shares. No person holds securities in the Company
carrying special rights with regard to control of the Company. The Company is not aware of any agreements between holders of securities that may
result in restrictions in the transfer of securities or voting rights.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
146
DIRECTORS’ REPORT
Statutory information and Forward-looking statement continued
Exercise of rights of shares in employee share schemes
As detailed in Note 23 to the Financial Statements at 1 January 2022, 412,493 ordinary shares were held in employee benefit trusts for the purpose of
the Company’s employee share schemes.
The Group’s employee benefit trusts have waived dividends due to them in respect of unallocated shares save a nominal amount.
The Trustees of the Group’s employee trusts do not seek to exercise voting rights on shares held in the employee trusts other than on the direction of
the underlying beneficiaries. No voting rights are exercised in relation to shares unallocated to individual beneficiaries.
Rights under the Shareholders’ Rights (Directive 2007/36/EC) Regulations 2009
Shareholder(s) have the right to ask questions related to items on the agenda of a general meeting and to receive answers, subject to certain qualifications.
Shareholder(s) holding 3% of the issued share capital of the Company, representing at least 3% of its total voting rights, have the right to put items on the
agenda and to table draft resolutions at AGMs. The request must be received by the Company at least 42 days before the relevant meeting. Further details
of shareholders’ rights under the Shareholders’ Rights (Directive 2007/36/EC) Regulations 2009 will be contained in the Notice of the 2022 AGM.
Restrictions on voting deadlines
The notice of any general meeting shall specify the deadline for exercising voting rights and appointing a proxy or proxies to vote in relation to
resolutions to be proposed at the general meeting. The number of proxy votes for, against or withheld in respect of each resolution is published on the
Group’s website after the meeting.
Constitution of the Company
The Company’s constitution details the rights attaching to the shares; the method by which the Company may purchase or reissue its shares, the
provisions which apply to the holding of shares and voting at general meetings and the rules relating to the Directors, including their appointment,
retirement, re-election, duties and powers. A copy of the Company’s constitution can be obtained from the Group’s website: www.glanbia.com.
Unless expressly specified to the contrary in the constitution of the Company, the Company’s constitution may be amended by special resolution of
the Company’s shareholders.
Change of control provisions
The Group has certain debt facilities which may require repayment in the event that a change in control occurs with respect to the Group.
There are also a number of agreements that take effect, alter or terminate upon a change of control of the Group, which include the Group’s Glanbia
Cheese joint ventures with Leprino Foods Company and the shareholders agreement with the Society in respect of Glanbia Ireland DAC (GI). If a third
party were to acquire control of the Group, Leprino Foods Company could elect to terminate its joint ventures with the Group and, if this were to occur,
the Group could then be required to sell its shareholding in the joint ventures to Leprino Foods Company at a price equal to its fair value. In the same
circumstances, the Society could within one year exercise the call option described on page 148. The shareholders agreement with the Society in
respect of GI will terminate on completion of the disposal of the Company’s interest in GI to the Society resulting in the Society call option falling away,
see opposite paragraph on Contracts of Significance for further detail.
In addition, the Company’s employee share plans contain change of control provisions which can allow for the acceleration of the exercisability of
share options and the vesting of share awards in the event of a change of control.
The Board is satisfied that no change of control has occurred in respect of these agreements.
Substantial interests
The Company has been advised of the following notifiable interests in its ordinary share capital:
Shareholder
No. of ordinary
shares as at
1Jan 2022
% of issued share
capital as at
1 Jan 2022
No. of ordinary
shares as at
28 Feb 2022
% of issued share
capital as at
28 Feb 2022
Glanbia Co-operative Society Limited 93,276,241 32.48% 87, 526 , 241 31.08%
Black Creek Investment Management Inc.* 11,874,803 4.14% 11,874,803 4.22%
Southeastern Asset Management, Inc. - N/A 10,731,019 3.81%
* Black Creek Investment Management Inc. (‘Black Creek’) is an investment management company. The shares are beneficially owned by 21 separate funds and clients which Black
Creek advises regarding their investment portfolios. Shares held directly are by funds for which Black Creek also acts as investment fund manager. None of the funds or clients by
itself reaches or exceeds the 3% threshold. The funds and clients give a proxy to Black Creek who can exercise the voting rights for the shares in its own discretion.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
147
Contracts of Significance
On 5 May 2021, the Company (Glanbia plc) and the Society entered into an amended and restated relationship agreement, as required for compliance
with the Listing Rules, effective as of 23 February 2021 (the “Relationship Agreement”). Under the Relationship Agreement, the number of Society
Nominee Directors reduced from seven to six in 2021 in a board comprising of 15 members, with seven Independent Non-Executive Directors and two
Executive Directors. There is currently a vacancy for one Independent Non-Executive Director on the Board. In 2022, the size of the Board will reduce
to 14 through the retirement of a Society Nominee Director. In 2023, the size of the Board will reduce to 13, with the number of Independent Non-
Executive Directors increasing from seven to eight, with two further Society Nominee Directors to retire (reducing the number of Society Nominee
Directors on the Board to three), one of the current Independent Non-Executive Directors to retire and two new Independent Non-Executive Directors
to be appointed.
In connection with disposal by the Company of its interest in Glanbia Ireland DAC (GI), certain agreements were entered into by the Company and the
Society, the principal terms and conditions of which were included in the circular sent to shareholders on 1 February 2022 in respect of the
Extraordinary General Meeting held on 25 February 2022 and is available to view on www.glanbia.com/egm. These agreements include:
1
• Share Subscription and Redemption Agreement between the Company, the Society, GI and Glanbia Financial Services Unlimited Company dated
7 December 2021; and
• Pensions Agreement between Glanbia, the Society, Glanbia Foods Ireland Limited and GI dated 7 December 2021 in respect of pension matters
arising in the context of the Proposed Transaction.
On 2 July 2017, the Company entered into a shareholders agreement with the Society in respect of GI. This agreement will terminate on completion of
the disposal of the Company’s interest in GI to the Society. The key terms of the shareholders agreement are set out below.
The board of directors of GI
The board of directors of GI will comprise of 14 directors appointed by the Society, six directors appointed by Glanbia plc (the ‘PLC Appointees’) and
up to three executive directors. The PLC Appointees are appointed from the Executive Directors of Glanbia plc, the Independent of the Society
Non-Executive Directors of the Company and such other persons as may be approved by the Nomination and Governance Committee of the Board of
the Company. Each of the PLC Appointees has 1.5 votes at any meeting of the board of directors of GI. All of the other directors of GI have one vote
each. The chairman of the board of GI shall not be entitled to a casting vote. The chairman of GI shall be appointed by the Society so long as it holds
more than 50% of the entire issued share capital of GI.
Consent of Glanbia plc and the Society
The prior written consent of the Company and the Society will be required for certain matters relating to GI, including:
• Changes to the business being carried on by GI;
• Agreeing the annual budget and the three-year rolling business plan;
• ValueAdded Projects (as defined below);
• Approval and changes to the related dividend policy;
• Altering the distribution policy or any material decision which is likely to result in GI failing to meet its minimum profitability level specified in the
business plan;
• Incurring any capital expenditure in excess of that provided for in the budget;
• Acquisitions and disposals with a consideration in excess of €4 million;
• Entering into any contract or transaction except in the ordinary course of the business of GI and on an arm’s length basis with a value in excess of
€2 million; and
• Incurring any new debt facilities in excess of €4 million which are not included in the business plan or which does not arise in the ordinary course of
trading.
Future capital contributions to GI
Future capital contributions will be considered by the shareholders of GI on a case by case basis (without any binding commitment).
Profit and distribution policies of GI
Profit retention
A minimum profit policy that sets an expectation for the profitability of GI by reference to a minimum profit after tax equivalent to not less than 3.2% of
net revenue of the business of GI (the ‘Minimum Net Profit’). Net revenue for this purpose will be adjusted for revenue arising from Value-Added
Projects (as defined below) in respect of which there is to be a separate profit retention policy (see below).
In any year where the Minimum Net Profit will be exceeded, the first €5 million of incremental net profit in excess of the Minimum Net Profit will be set
aside as a Volatility Fund in the business to support milk suppliers, grain suppliers, suppliers of other farm outputs and customers purchasing
agricultural inputs, to be paid out at the discretion of the GI board (the terms of distribution of each Volatility Fund and the time limit on payout will be
determined by the board of GI before the close of the audit of the financial statements for GI for the year in which the Volatility Fund was created).
Value Added Projects – target profit policy
A separate target profit policy will apply to Value Added Projects. Projects undertaken as Value Added Projects shall be subject to a target profit after
tax which shall be agreed by the board of GI on a project-by-project basis for each financial year based upon the investment business case of each
such Value Added Project. For such projects, 30% of the profit after tax for each Value Added Project shall be retained by GI and 70% shall be
distributed to GI’s shareholders pro rata.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
148
DIRECTORS’ REPORT
Statutory information and Forward-looking statement continued
Dividend policy of GI
Subject to compliance with its applicable banking covenants and the availability of sufficient distributable reserves, GI will operate an annual dividend
payout comprised of the aggregate of 70% of the profit after tax attributable to Value Added Projects as described above, and 50% of profit after tax
attributable to the remaining business activities.
Call option
Under the shareholders agreement dated 2 July 2017, the Society will continue to have a call option (the ‘Call Option’) to acquire Glanbia plc’s 40%
interest in GI. The Call Option will be exercisable for a one year period commencing on completion of a change of control event in relation to Glanbia
plc. A reduction of the Society’s representation on the Glanbia plc Board or its shareholding in Glanbia plc below 30% shall not constitute a change of
control for the purposes of the Call Option (unless there is an associated acquisition by an unaffiliated third party of a controlling interest in Glanbia plc).
The price payable by the Society on completion of the Call Option shall be an amount equal to 40% of the fair value of GI as between a willing buyer
and willing seller (and no discount in respect of Glanbia plc being a minority shareholder in GI will apply). The fair value of GI shall be agreed by Glanbia
plc and the Society or, in the absence of agreement, the fair value shall be the midpoint between the valuations as determined for the fair value by two
suitably qualified independent valuers.
If following the exercise of the Call Option by the Society, GI and/or its subsidiary Glanbia Foods Ireland Limited continues to be a participating
employer in the Glanbia defined benefit pension schemes and Glanbia plc continues to be the principal employer, the Society will guarantee to Glanbia
plc the due performance of the obligations of these companies under the schemes for so long as each individual company remains as a participating
employer.
Effect of Glanbia plc ceasing to hold shares in GI
If Glanbia plc ceases to have any shareholding in GI:
• GI and, if applicable, each of its subsidiaries will change its name to a new name which does not include the name ‘Glanbia’ and Glanbia will pay to
GI 50% of the vouched reasonable costs of such rebranding up to a maximum liability for Glanbia plc of €1,500,000 (i.e. 50% of €3 million); and
• the Society will propose (and recommend to its members for approval) a resolution at the next AGM of the Society following the date on which
Glanbia plc ceases to have any shareholding in GI to change its corporate name to a name which does not include the name ‘Glanbia’. The Society
will not be required to convene a general meeting of members solely to consider a proposed change of name. The Society will not use the ‘Glanbia’
name for any trading or business purpose.
As outlined in the circular sent to shareholders on 1 February 2022 in respect of the Extraordinary General Meeting held on 25 February 2022 and is
available to view on www.glanbia.com/egm, the Company and the Society have agreed certain provisions (in addition to the provisions outlined above)
which will apply when the Company ceases to have any shareholding in GI.
Information required to be disclosed by LR 6.1.77, Euronext Dublin Listing Rules/LR 9.8.4 R,
UKLA Listing Rules
For the purposes of LR 6.1.77/LR 9.8.4 R, the information required to be disclosed by LR 6.1.77/LR 9.8.4 R can be found in the following locations:
Section Topic Location
(1) Interest capitalised and related tax relief Financial Statements, Note 11
(2) Publication of unaudited financial information Not applicable
(3) Small related party transactions Page 145
(4) Details of long-term incentive schemes Remuneration Committee Report
(5) Waiver of emoluments by a director Not applicable
(6) Waiver of future emoluments by a director Not applicable
(7) Non pre-emptive issues of equity for cash Not applicable
(8) Item (7) in relation to major subsidiary undertakings Not applicable
(9) Parent participation in a placing by a listed subsidiary Not applicable
(10) Contracts of significance Page 147 to 148
(11) Provision of services by a controlling shareholder Not applicable
(12) Shareholder waivers of dividends Page 146
(13) Shareholder waivers of future dividends Page 146
(14) Agreement with controlling shareholders and independence provisions/undertakings Pages 99 and 115
All the information cross-referenced above is hereby incorporated by reference into this Directors’ Report.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
149
Forward-looking statements
Glanbia plc (the ‘Group’) has made forward-looking statements in this Annual Report 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,’ ‘ensure’, ‘expect’, ‘arrive,’ ‘achieve,’ ‘anticipate,’ ‘maintain,’ ‘grow,’ ‘aim,’ ‘deliver,’ ‘sustain,’ ‘should’, ‘should be’, ‘will be’ 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 at pages 72 to 75 of this Annual Report 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 Annual Report. The Group expressly
disclaims any obligation to update these forward-looking statements other than as required by law. The forward-looking statements in this Annual
Report do not constitute reports or statements published in compliance with any of Regulations 4 to 9 and 26 of the Transparency (Directive
2004/109/EC) Regulations 2007 or any equivalent provisions of the Disclosure and Transparency Rules of the UK Financial Conduct Authority. As an
Irish incorporated company, the Strategic report does not constitute a strategic report for the purposes of the UK Companies Act 2006 (Strategic
Report and Directors’ Report) Regulations 2013 and the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013, and the Remuneration Committee report does not constitute a remuneration report for the purposes of the UK Large and Medium-
sized Companies and Groups (Accounts and Reports) (Amendment) Regulations.
Subsidiary and associated undertakings/branches outside the State
A list of the principal subsidiary and associated undertakings and their activities including details of any branches of the Group outside the State is
included in Note 37 to the Financial Statements.
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150
DIRECTORS’ REPORT
Statutory information and Forward-looking statement continued
Consolidated disclosures pursuant to Article 8
Taxonomy Regulation
Article 8 Taxonomy Regulation
The Taxonomy Regulation is a key component of the European
Commission’s action plan to redirect capital flows towards a more
sustainable economy. It represents an important step towards achieving
carbon neutrality by 2050 in line with EU goals as the Taxonomy is a
classification system for environmentally sustainable economic activities.
In the following section, in line with regulatory guidance only the wholly
owned business is considered, therefore excluding joint venture and
associates activities from our evaluation of turnover, capital expenditure
(Capex) and operating expenditure (Opex) for the reporting period 2021,
which are associated with Taxonomy-eligible economic activities related
to the first two environmental objectives (climate change mitigation and
climate change adaptation) in accordance with Article 9 of the
Taxonomy Regulation and Art. 10 (2) of the Art. 8 Delegated Act,
(Disclosures Delegated Act).
Glanbia Activities
Core Business Activities – Taxonomy Non Eligible
Following consideration of the EU Taxonomy Compass, and after a
thorough review involving all relevant divisions and functions, including
carrying out detailed workshops with the business unit (BU) operational
and finance senior leadership teams, reviewing the economic activities
description and NACE code definitions as referenced within the EU
Taxonomy Climate Delegated Act, the Group concluded that our core
economic activities of food processing and manufacturing are not
covered by the Climate Delegated Act and consequently are Taxonomy-
non-eligible.
Our assessment of Taxonomy eligibility is focused on economic
activities defined as the provision of goods or services on a market, thus
(potentially) generating revenues. In this context we define the
manufacture and processing of food products as the core of our
business activities. We define activities such as the acquisition/
construction of new buildings (for our production sites) or the
transportation of our products as underlying activities necessary to
conduct our core business activities. They are not reported as
Taxonomy-eligible activities and not included in our turnover KPI as they
are not generating external turnover on a standalone basis.
Outlook on our potential for Taxonomy-eligibility
In the Taxonomy pack for feedback that was published in August 2021,
the Platform on Sustainable Finance reported on activities that are
considered for the upcoming delegated act on the other four
environmental objectives (sustainable use and protection of water and
marine resource; transition to a circular economy; pollution prevention
and control; protection and restoration of biodiversity and ecosystem). In
this call for feedback, manufacturer of food and beverage products was
mentioned as an indicator to establish priority activities regarding the
objective of protection and restoration of biodiversity and ecosystems.
Therefore, we expect to be able to report at least some of our core
business activities as Taxonomy-eligible in the future. We disclose this
information on a voluntary basis as we believe that this information is
helpful for users of our consolidated non-financial statement to gain a
better understanding of our business activities.
KPIs
The KPIs include turnover, Capex and Opex calculations. For the
reporting period 2021, the KPIs have been disclosed in relation to
Taxonomy-eligible economic activities and Taxonomy-non-eligible
economic activities (Art. 10 (2) of the Disclosures Delegated Act).
As our economic activities as a food processing and manufacturing
group are not covered by the Climate Delegated Act, the share of
Taxonomy-eligible economic activities in our total turnover is 0% and
consequently the related capital and operating expenditure are also 0%.
In addition, the capital and operating expenditure reported considered
the purchase of output from Taxonomy-eligible criteria, based on our
assessment and information available to us in terms of taxonomy-
alignment of this expenditure, we have concluded we cannot report any
Capex/Opex for this category – refer to the ‘Accounting Policy’ section,
within this disclosure, for further details.
Total €’m
Proportion of
Taxonomy eligible
economic activities
(in %)
Proportion of
Taxonomy-non-
eligible economic
activities (in %)
Turnover 4,196.9 0 100
Capex 194.7 0 100
Opex 41.0 0 100
Accounting Policy
The specification of the KPIs is determined in accordance with Annex I
of the Disclosures Delegated Act. We determine the Taxonomy-eligible
KPIs in accordance with the legal requirements and describe our
accounting policy in this regard as follows:
Turnover
Definition: The proportion of Taxonomy-eligible economic activities in
our total turnover has been calculated as the part of net turnover derived
from products and services associated with Taxonomy-eligible economic
activities (numerator) divided by the net turnover (denominator). Refer to
note 2 ‘Summary of significant accounting policies’ on page 176 which
outlines the Group’s revenue recognition policy.
With regard to the numerator, we have not identified any Taxonomy-
eligible activities as already outlined, as a result the numerator value
equals zero. Refer to note 5 ‘Operating profit’ and the ‘Revenue’ line for
the denominator value, the denominator includes total revenue
recognised pursuant to International Accounting Standard (IAS) 1,
paragraph 82(a).
Capital Expenditure
Definition: The Capex KPI is defined as Taxonomy-eligible Capex
(numerator) divided by our total Capex (denominator). With regard to the
numerator, we refer to our explanations below.
Total Capex consists of additions to tangible and intangible fixed assets
during the financial year, before depreciation, amortisation and any
re-measurements, including those resulting from revaluations and
impairments, as well as excluding changes in fair value. It includes
additions to fixed assets (IAS 16), intangible assets (IAS 38) and
right-of-use assets (IFRS 16). Additions resulting from business
combinations are also included. Goodwill is not included in Capex as it
is not defined as an intangible asset in accordance with IAS 38. Refer to
note 2 ‘Summary of significant accounting policies on pages 170, 171
and 174 which outlines our property plant and equipment, intangible
assets and leasing accounting policies.
Refer to Note 15 ‘Property, plant and equipment’, Note 16 ‘Intangible
assets’ and Note 31 ‘Leasing’ (acquisitions and additions line within the
respective notes) for the denominator value, the Capex denominator
consists of all IAS 16, IAS 38 and IFRS 16 additions and acquisitions.
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Operating Expenditure
Definition: The Opex KPI is defined as Taxonomy-eligible Opex
(numerator) divided by our total Opex (denominator). With regard to the
numerator, we refer to our explanations below.
Total Opex consists of direct non-capitalised costs that relate to
research and development, building renovation measures, short-term
lease, maintenance and repair, and any other direct expenditures
relating to the day-to-day servicing of assets of property, plant and
equipment. This includes:
• Research and development expenditure recognised as an expense
during the reporting period in our income statement, refer to note 5
‘Operating profit’, ‘Research and development costs’ amount. In line
with our consolidated financial statements (IAS 38.126), this includes
all non-capitalised expenditure that is directly attributable to research
or development activities.
• The volume of non-capitalised leases was determined in accordance
with IFRS 16 and includes expenses for short-term leases and
low-value leases, refer to note 31 ‘Leasing’. Even though low-value
leases are not explicitly mentioned in the Disclosures Delegated Act,
we have interpreted the legislation as to include these leases.
• Maintenance and repair and other direct expenditures relating to the
day-to-day servicing of assets of property, plant and equipment were
determined based on the income statement general ledger accounts
categorised as repairs and maintenance.
The denominator does not include expenditures relating to the
day-to-day operation of property, plant and equipment such as: raw
materials, cost of employees operating the machine, electricity or
fluids that are necessary to operate the property, plant and
equipment.
Direct costs for training and other human resources adaptation
needs are excluded from the denominator and the numerator. This is
because Annex I to the Disclosures Delegated Act lists these costs
only for the numerator which does not allow a mathematically
meaningful calculation of the Opex KPI.
Explanation on the numerator of the Capex KPI and
the Opex KPI
As Glanbia has not identified Taxonomy-eligible economic activities, we
do not record Capex/Opex related to assets or processes that are
associated with Taxonomy-eligible economic activities in the numerator
of the Capex KPI and the Opex KPI. Furthermore, there are no Capex
plans to upgrade a Taxonomy-eligible economic activity to become
Taxonomy-aligned or to expand a Taxonomy-aligned economic activity.
Only “category c” Capex and Opex as defined within the Disclosures
Delegated Act can therefore qualify as Taxonomy-eligible, i.e. Capex/
Opex related to the purchase of output from Taxonomy-eligible
economic activities and individual measures enabling certain target
activities (our non-eligible activities) to become low-carbon or to lead to
greenhouse gas reductions (Sect. 1.1.2.2. (c) of Annex I to the
Disclosures Delegated Act). As the disclosure requirements for the 2021
financial year relate exclusively to Taxonomy-eligible Capex/Opex, we
have assessed this category in terms of Taxonomy-eligibility as follows:
As reliable statements on the Taxonomy-alignment of our suppliers’
output are currently not available and as we are not obliged to assess
the Taxonomy-alignment of our individual measures for the reporting
year 2021, we cannot report any Capex/Opex for this category either.
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DIRECTORS’ REPORT
Directors’ Responsibility Statement
The Directors are responsible for preparing the Annual Report and the Group and Company Financial Statements in accordance with applicable law
and regulations. Irish company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors are
required to prepare the Group Financial Statements in accordance with International Financial Reporting Standards (IFRS) as adopted by
the European Union and Article 4 of the IAS Regulation and elected to prepare the Company Financial Statements in accordance with IFRS as
adopted by the European Union, as applied in accordance with the provisions of the Companies Act 2014. Under Irish law the Directors shall not
approve the Group and Company Financial Statements unless they are satisfied that they give a true and fair view of the assets, liabilities and financial
position, of the Group and Company respectively, as at the end of the financial year and of the profit or loss of the Group for the financial year and
otherwise comply with the Companies Act 2014.
In preparing these Group and Company Financial Statements the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state that the Financial Statements comply with IFRS as adopted by the European Union and ensure the Financial Statements contain the
information required by the Companies Act 2014 and as regards the Company Financial Statements as applied in accordance with the provision of
the Companies Act 2014; and
• prepare the Financial Statements on a going concern basis, unless it is inappropriate to presume that the Group and the Company will continue in
business.
The Directors are also required by the Transparency Directive (Directive 2004/109/EC) Regulations 2007, the Central Bank (Investment Market
Conduct) Rules 2019, the Companies Act 2014, the Listing Rules issued by Euronext Dublin and the Disclosure and Transparency Rules of the UK
Financial Conduct Authority to prepare a Directors’ Report and reports relating to Directors’ remuneration and corporate governance and the Directors
are required to include a management report containing, amongst other things, a fair review of the development and performance of the Group’s
business and of its position and a description of the principal risks and uncertainties facing the Group.
The Directors are responsible for keeping adequate accounting records that are sufficient to:
• correctly record and explain the transactions of the Company;
• enable, at any time, the assets, liabilities, financial position and profit or loss of the Company to be determined with reasonable accuracy;
• enable the Directors to ensure that the Group and Company Financial Statements and the Directors’ Report comply with the Companies Act 2014,
and as regards the Group Financial Statements Article 4 of the IAS Regulation; and
• enable the Group and Company Financial Statements to be audited.
The Directors are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of certain corporate
and financial information included on the Group’s website (www.glanbia.com). Legislation in Ireland concerning the preparation and dissemination of
Financial Statements may differ from legislation in other jurisdictions.
Each of the Directors, whose names and functions are listed on pages 81 to 85 (‘Current Directors’) confirms that he/she considers that
the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary
for shareholders to assess the position, performance, business model and strategy of the Company and the undertakings included in the
consolidation taken as whole. Each of the Current Directors also confirms that to the best of each person’s knowledge and belief:
• The Group Financial Statements prepared in accordance with IFRS as adopted by the European Union and the Company Financial Statements
prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and as applied in accordance with the
provision of the Companies Act 2014 give a true and fair view of the assets, liabilities and financial position and profit or loss of the Company and
the undertakings included in the consolidation taken as a whole; and
• The Directors’ Report contained in the Annual Report includes a fair review of the development and performance of the business and the position
of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and
uncertainties that they face.
Directors’ Report
The Directors’ Report for the purpose of the Transparency Directive (Directive 2004/109/EC) Regulations 2007, the Central Bank (Investment Market
Conduct) Rules 2019, the Companies Act 2014, the Listing Rules issued by Euronext Dublin and the Disclosure and Transparency Rules of the UK
Financial Conduct Authority consists of pages 1 to 152.
On behalf of the Board
Donard Gaynor Siobhán Talbot Mark Garvey
Directors
2 March, 2022
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Financial
Statements
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FINANCIAL STATEMENTS
Independent auditor’s report to the members of Glanbia plc
Report on the audit of the European Single Electronic Format financial statements (‘the financial statements’)
Opinion on the financial statements of Glanbia plc (the ‘Company’)
In our opinion the Group and Company financial statements:
• give a true and fair view of the assets, liabilities and financial position of the Group and Company as at 1 January 2022 and of the profit of the
Group for the financial period then ended; and
• have been properly prepared in accordance with the relevant financial reporting frameworks and, in particular, with the requirements of the
Companies Act 2014 and, as regards the Group financial statements, Article 4 of the IAS Regulation.
The financial statements we have audited comprise:
The Group financial statements:
• the Group income statement;
• the Group statement of comprehensive income;
• the Group balance sheet;
• the Group statement of changes in equity;
• the Group statement of cash flows; and
• the related notes 1 to 37, including a summary of significant accounting policies as set out in note 2.
The Company financial statements:
• the Company balance sheet;
• the Company statement of changes in equity; and
• the related notes 1 to 11, including a summary of significant accounting policies as set out in note 1.
The relevant financial reporting framework that has been applied in the preparation of the Group financial statements is the Companies Act 2014,
International Financial Reporting Standards (IFRS) and IFRIC interpretations as adopted by the European Union and interpretations as approved by the
International Accounting Standards Board (IASB) (“the relevant financial reporting framework”).
The relevant financial reporting framework that has been applied in the preparation of the Company financial statements is the Companies Act 2014
and FRS 101 “Reduced Disclosure Framework” issued by the Financial Reporting Council (“the relevant financial reporting framework”).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law. Our responsibilities under
those standards are described below in the “Auditor’s responsibilities for the audit of the financial statements” section of our report.
We are independent of the Group and Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in
Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA), as applied to public interest entities,
and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Summary of our audit approach
Key audit matters The key audit matters that we identified in the current year, and consistent with those reported on in the prior year, were:
• Exceptional items;
• Provisions for uncertain tax positions;
• Impairment of goodwill and other intangible assets; and
• Revenue recognition
Materiality The materiality that we used for the Group in the current year was €11.5m which was determined on the basis of profit before
tax and exceptional items. The materiality that we used for the Company was €4.6m which was determined based on net
assets.
Scoping We determined the scope of our Group audit by obtaining an understanding of the Group and its environment, including
Group-wide internal financial controls, and assessing the risks of material misstatement at the Group level.
Based on that assessment, we focused our Group audit scope primarily on the audit work in 45 components, 10 of these
were subject to a full audit, whilst the remaining 35 were subject to audits of specified balances where the extent of our
testing was based on our assessment of the associated risks of material misstatement, and the materiality of the
component’s operations to the Group. Analytical review procedures were performed by the Group audit team on all other
components within the Group.
Significant changes
in our approach
There have been no significant changes in our audit approach in the current financial year.
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Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
Our evaluation of the directors’ assessment of the Group and Company’s ability to continue to adopt the going concern basis of accounting is set out
below:
• We evaluated the design and determined the implementation of the relevant controls in place for the directors’ review of the budgets and forecasts
for at least a period of 12 months from the date of signing of the Annual Report, including reviewing their challenge of these;
• We evaluated the Group’s and Company’s financing arrangements, including the agreements in respect of the undrawn committed bank facilities
in place within the Group;
• We challenged the directors’ assumptions and the basis for their evaluation and the inclusion of sensitivities incorporated in the budget and also the
impact of Covid-19 on future trading;
• We performed a look back analysis of the historical accuracy of forecasts prepared by management; and
• We evaluated the completeness and accuracy of the disclosures made in the Basis of Preparation note on page 167 by reference to the
understanding we have obtained of the Group’s and Company’s financial performance during 2021, our assessment of the directors’ projections
and our reading of the Group’s and Company’s financing agreements. We also evaluated the directors’ assessment of the impact of Covid-19 and
the adequacy of disclosures in relation to the specific risks posed by the pandemic. We considered throughout the audit any contradictory
information to the directors’ confirmation that the Group and Company is a going concern, including evaluating whether the assumptions are
realistic, achievable and consistent with the external and internal environment.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively,
may cast significant doubt on the Group and Company’s ability to continue as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code and the Irish Corporate Governance Annex, we have
nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered
it appropriate to continue to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current
financial period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
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FINANCIAL STATEMENTS
Independent auditor’s report to the members of Glanbia plc continued
Exceptional items
Key audit matter
description
As described in note 2 (summary of significant accounting polices) and note 6 (exceptional items) the Group, in accordance
with its stated accounting policy, classified a number of significant items of income and expense totalling €48.4m as
exceptional items. These exceptional items relate to organisation redesign costs and pension related costs.
Earnings before interest, tax and amortisation (EBITA) is disclosed throughout the Annual Report on a pre-exceptional basis
and is one of the Group’s key performance indicators. The classification of items as exceptional affects adjusted earnings per
share and is inherently judgemental. As a result, there is a risk that items are not consistently classified as exceptional items
in line with the Group’s accounting policy, or are not adequately disclosed.
Refer also to page 107 (Audit Committee Report), and page 177 (Exceptional Items accounting policy).
How the scope
of our audit
responded to the
key audit matter
We documented our understanding of the process the directors undertook to identify and present exceptional items within
the Annual Report.
We challenged the nature and classification of transactions as exceptional items in accordance with the Group’s accounting
policy, whilst also challenging whether the accounting policy for exceptional items is appropriate and has been applied
consistently with previous periods.
We evaluated the completeness and accuracy of the presentation and disclosures of exceptional items in the Group’s
financial statements against requirements under the relevant financial reporting framework.
Key observations We have no observations that impact on our audit in respect of the amounts and disclosures related to exceptional items.
Provisions for uncertain tax positions
Key audit matter
description
The Group operates across numerous multinational jurisdictions, the most significant of which are Ireland and the US, and
are subject to periodic challenge by local tax authorities on a range of tax matters during the normal course of business
including transfer pricing, Group financing arrangements and transaction-related tax matters.
The directors apply significant judgement in assessing current and deferred tax risks and exposures in relation to the
interpretation of local and international tax laws, rates and treaties relating to worldwide provisions for uncertain tax positions.
As a result there is a significant risk that tax authorities could have different interpretations to those of the directors resulting
in potential misstatement of tax provisions.
Refer also to page 107 (Audit Committee Report), Page 176 (Income taxes accounting policy), note 3 (Critical accounting
estimates and judgements) and notes 12 and 26 to the financial statements.
How the scope
of our audit
responded to the
key audit matter
To obtain evidence over the appropriateness of the directors’ assumptions in determining provisions for uncertain tax
positions, we obtained an understanding of the Group’s tax strategy, tax operating models, the impact of new jurisdictions
arising from recent acquisitions and amendments to the Group’s tax structures during the financial period arising from global
changes in tax legislation.
We evaluated the design and determined the implementation of the relevant controls in respect of the tax computation
process and tax risk management process.
We also reviewed the directors’ assessment of related tax risks and exposures across the Group.
We engaged our Irish and International tax specialists as part of our audit team, including US tax specialists, to analyse and
challenge the appropriateness of the assumptions made by the directors in determining adjustments to current and deferred
tax provisions.
We challenged and evaluated directors’ assumptions and estimates, including external advice obtained, in respect of tax
risks and related provisions. We focused particularly on the directors’ judgements made in relation to transfer pricing models,
interpretations of relevant tax laws, new and amended Group financing arrangements and the directors’ assessment of likely
outcomes for uncertain tax positions in key jurisdictions where the Group has significant trading operations.
We inspected relevant correspondence between the Group and relevant tax authorities.
We evaluated the completeness and accuracy of current and deferred tax disclosures for compliance with the relevant
financial reporting framework.
Key observations As the international corporation tax environment has undergone unprecedented change over recent years, and is likely to
continue to evolve over the coming years, judgements around tax structures and related uncertain tax positions continue
to be a focus area for the Group. We have discussed the evolving tax environment with management, and the impact on
uncertain tax positions, and following the completion of our procedures outlined above, have no observations that impact
on our audit.
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Impairment of goodwill and other intangible assets
Key audit matter
description
The Group’s goodwill and other intangible assets of €1,375m, which are held across 10 (2020: 8) individual Cash Generating
Units (CGUs), represent approximately 38% of the Group’s total assets at year end.
In carrying out their impairment review, judgement is required by the directors in identifying indicators of impairment, and
estimation is required in determining the recoverable amount of the Group’s CGUs. There is a significant risk, pinpointed
to eight CGUs, that the net present value of future cashflows within the CGUs will not be sufficient to recover the Group’s
carrying value of each CGU including goodwill and intangible assets, leading to an impairment charge that has not been
recognised in the financial statements.
The recoverable amount used in the impairment assessment is determined based on value in use calculations which rely
on directors’ assumptions and estimates of future trading performance.
The key assumptions utilised by the directors in the impairment reviews are discount rates, cash flow projections and long
term growth rates.
Refer also to page 107 (Audit Committee Report), page 170 (Intangible assets accounting policy), note 3 (Critical accounting
estimates and judgements) and note 16 to the financial statements.
How the scope
of our audit
responded to the
key audit matter
We, in conjunction with our valuation specialists, evaluated the Group’s impairment review methodology applied by the
directors in preparing the value in use calculations. In addition, we evaluated the design and determined the implementation
of relevant controls in respect of the impairment review process and the budgeting process upon which the Group’s
discounted cash flow model is based.
We performed a retrospective review of assumptions used in prior year value in use calculations and compared these to
actual outturn.
We understood and challenged the underlying key assumptions within the Group’s impairment model by developing an
independent view of the Group discount rate and long term growth rates where, in conjunction with our valuation specialists,
we benchmarked the rates used by the directors against market data and comparable organisations.
We obtained and challenged cash flow projections by comparing them to historic growth rates and the Group’s strategic
plans, including those effected by the Covid-19 pandemic. We challenged the Group’s forecasts with reference to recent
performance, economic and industry forecasts and trend analysis including comparing recent historic performance to
budgets for CGUs where revenue growth has significantly fallen behind plans or where sensitivity analysis in respect of key
assumptions in the Group’s impairment model indicates a potential impairment.
Where we noted any significant reduction in headroom for a CGU since the prior year, we gained an understanding of the
reasons giving rise to the reduction and performed additional procedures to substantiate these reasons. We held discussions
with the business unit controllers to understand the changes being implemented at the site level to achieve the targets set in
the strategic plans.
We evaluated the directors’ sensitivity analysis and performed our own sensitivity analysis on the key assumptions used.
We evaluated the completeness and accuracy of the disclosures in relation to goodwill and other intangible assets for
compliance with the relevant financial reporting framework.
Key observations While we note that actions are required by the Group to achieve the forecasts outlined in the Group’s strategic plans,
particularly in light of increasing inflationary pressures, over the short and medium term, we concluded that the assumptions
in the impairment models, specifically in the value in use calculations, are within an acceptable range.
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FINANCIAL STATEMENTS
Independent auditor’s report to the members of Glanbia plc continued
Revenue recognition
Key audit matter
description
The Group sells products to customers under a variety of contractual terms. The group’s revenue arrangements are
predominantly straightforward and require little judgement to be exercised. In the Performance Nutrition (GPN) segment,
discounts, rebates and other promotional arrangements are a feature and revenue must be recognised net of these selling
arrangements.
Management estimates the level of discounts, rebates and other promotional arrangements to be applied to its sales
contracts. Judgement is required to determine the level of accruals required to settle these arrangements with customers
post year-end, which impacts the amount of revenue recognised in the period. We have therefore pinpointed the significant
risk to year-end accruals relating to selling arrangements, and the corresponding debit adjustment to revenue as a risk exists
that revenue could be misstated either intentionally to achieve performance targets, or as a result of error.
Refer also to page 107 (Audit Committee Report), and page 176 (Revenue recognition accounting policy).
How the scope
of our audit
responded to the
key audit matter
We obtained an understanding of the various revenue contracts and selling arrangements in place with customers across all
segments of the Group, and of the relevant internal controls and IT systems in place over the revenue processes to determine
if revenue was appropriately recognised to reflect the terms of contracts with customers. We focused specifically on the
GPN segment as these selling arrangements are a significant feature of the GPN business.
We evaluated the design and determined the implementation of relevant controls in respect of discounts, rebates and
promotional arrangements applied to revenue contracts. Where possible, operating effectiveness testing was performed
and controls were relied upon.
We discussed key contractual arrangements with management and obtained relevant documentation, including
documentation in respect of discounts, rebates and other promotional arrangements.
On a sample basis, we recalculated year-end accruals based on underlying contracts with customers and assessed whether
there was any evidence of management bias in key judgements made by management. We also performed retrospective
look-back analysis over changes to prior period estimates to challenge the assumptions made, including assessing the
amounts recorded for evidence of management bias.
Key observations We have no observations that impact on our audit in respect of the amounts and disclosures related to revenue recognition.
Our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole, and not to express an
opinion on individual accounts or disclosures. Our opinion on the financial statements is not modified with respect to any of the risks described above,
and we do not express an opinion on these individual matters.
Our application of materiality
We define materiality as the magnitude of misstatement that makes it probable that the economic decisions of a reasonably knowledgeable person,
relying on the financial statements, would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating
the results of our work.
We determined materiality for the Group audit to be €11.5m which is approximately 5.5% of profit before tax (‘PBT’) excluding exceptional items.
We have considered PBT excluding exceptional items to be the critical component for determining materiality because it is the most important
measure for the users of the Group’s financial statements and the impact of exceptionals is excluded to avoid distortion of the critical component
on an annual basis.
We determined materiality for the Company audit to be €4.6m which is between 0.5% and 1% of net assets. As a non-trading company, it does not
generate significant revenues but instead incurs costs, thus net assets are of most relevance to the users of the Company financial statements.
We have considered quantitative and qualitative factors such as our understanding of the Group and its environment, history of misstatements,
complexity of the Group and the reliability of the control environment.
PBT excluding
exceptional items
Materiality
PBT excluding
exceptional items
€208.4m
Materiality €11.5m
Audit Committee reporting threshold
€0.575m
We agreed with the Audit Committee that we would report to them any audit differences in excess of €0.575m, as well as differences below that
threshold which, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we
identified when assessing the overall presentation of the financial statements.
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An overview of the scope of our audit
We determined the scope of our Group audit by obtaining an understanding of the Group and its environment, including Group-wide internal financial
controls, and assessing the risks of material misstatement at the Group level. Based on that assessment, we focused our Group audit scope primarily
on the audit work in 45 components. 10 of these were subject to a full audit, whilst the remaining 35 were subject to specified audit procedures where
the extent of our testing was based on our assessment of the associated risks of material misstatement and of the materiality of the component’s
operations to the Group’s. Analytical review procedures were performed by the Group audit team on all other components within the Group.
These components were selected based on the level of coverage achieved on revenue and net assets, the qualitative and risk considerations of these
components and to provide an appropriate basis for undertaking audit work to address the risks of material misstatement identified. Our audit work for
all components was executed at levels of materiality applicable to each individual component which were lower than Group materiality and ranged
from €2.3m to €7.4m.
We have considered the ongoing impact of COVID-19 on the Group’s business as part of our audit risk assessment and planning. This assessment
noted that the Group increased its revenue and profit before tax in the financial period, however we have continued to focus on the control environment
as a result of remote working by Glanbia personnel and on the Group’s key judgements and estimates in relation to future strategic plans and profitability
forecasts which are key inputs into the Group’s asset impairment model and going concern assessment.
At the Group level, we also tested the consolidation process and carried out analytical procedures to confirm our conclusion that there were no
significant risks of material misstatement of the aggregated financial information of the remaining components not subject to a full audit or specified
audit procedures.
External Revenue % Tested Net Assets % Tested
Full Audit
Specified Audit Balances
Analytic Procedures
52%
49%
39%
41%
9%
10%
The Group audit team held planning discussions in person and/or virtually with all significant components during the year and visited a number of
locations in the US as part of our audit planning.
In addition to our planning meetings, we sent detailed instructions to our component audit teams, included them in our team briefings, discussed their
risk assessment, attended client planning and closing meetings, and, for certain significant risks and judgemental areas, reviewed their audit working
papers.
Other information
The other information comprises the information included in the Annual Report, other than the financial statements and our auditor’s report thereon.
The directors are responsible for the other information contained within the Annual Report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of directors
As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view and otherwise comply with the Companies Act 2014, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to
liquidate the Group or Company or to cease operations, or have no realistic alternative but to do so.
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FINANCIAL STATEMENTS
Independent auditor’s report to the members of Glanbia plc continued
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (Ireland), we exercise professional judgement and maintain professional scepticism throughout the audit.
We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Group and Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by
the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group and Company’s ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of the auditor’s report. However, future events or conditions may cause the entity (or where relevant, the Group)
to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the business activities within the Group to express an opinion
on the consolidated financial statements. The Group auditor is responsible for the direction, supervision and performance of the Group audit.
The Group auditor remains solely responsible for the audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that the auditor identifies during the audit.
For listed entities and public interest entities, the auditor also provides those charged with governance with a statement that the auditor has complied
with relevant ethical requirements regarding independence, including the Ethical Standard for Auditors (Ireland), and communicates with them all
relationships and other matters that may reasonably be thought to bear on the auditor’s independence, and where applicable, related safeguards.
Where the auditor is required to report on key audit matters, from the matters communicated with those charged with governance, the auditor
determines those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit
matters. The auditor describes these matters in the auditor’s report unless law or regulation precludes public disclosure about the matter or when,
in extremely rare circumstances, the auditor determines that a matter should not be communicated in the auditor’s report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
Opinion on other matters prescribed by the Companies Act 2014
Based solely on the work undertaken in the course of the audit, we report that:
• We have obtained all the information and explanations which we consider necessary for the purposes of our audit.
• In our opinion the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited.
• The Company balance sheet is in agreement with the accounting records.
• In our opinion the information given in those parts of the directors’ report as specified for our review is consistent with the financial statements
and the directors’ report has been prepared in accordance with the Companies Act 2014.
Corporate Governance Statement required by Companies Act 2014
We report, in relation to information given in the Corporate Governance Statement on pages 77 to 102 that:
• In our opinion, based on the work undertaken during the course of the audit, the information given in the Corporate Governance Statement
pursuant to subsections 2(c) and (d) of section 1373 of the Companies Act 2014 is consistent with the Company’s statutory financial statements
in respect of the financial year concerned and such information has been prepared in accordance with the Companies Act 2014. Based on our
knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified any material
misstatements in this information.
• In our opinion, based on the work undertaken during the course of the audit, the Corporate Governance Statement contains the information
required by Regulation 6(2) of the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups)
Regulations 2017 (as amended); and
• In our opinion, based on the work undertaken during the course of the audit, the information required pursuant to section 1373(2)(a),(b),(e) and (f)
of the Companies Act 2014 is contained in the Corporate Governance Statement.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
161
Corporate Governance Statement
The Listing Rules and ISAs (Ireland) require us to review the directors’ statement in relation to going concern, longer-term viability and the part of the
Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code and Irish Corporate
Governance Annex specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement
is materially consistent with the financial statements and our knowledge obtained during the audit:
• the directors’ statement with regards the appropriateness of adopting the going concern basis of accounting and any material uncertainties
identified set out on page 70 and page 235;
• the directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period is appropriate set
out on page 71;
• the directors’ statement on fair, balanced and understandable set out on page 101;
• the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks and the disclosures in the annual report
that describe the principal risks and the procedures in place to identify emerging risks and an explanation of how they are being managed or
mitigated set out on pages 69 to 71;
• the section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on pages 69
to 71; and
• the section describing the work of the Audit Committee set out on pages 103 to 108.
Matters on which we are required to report by exception
Based on the knowledge and understanding of the Group and Company and its environment obtained in the course of the audit, we have not
identified material misstatements in those parts of the directors’ report as specified for our review.
The Companies Act 2014 requires us to report to you if, in our opinion, the Company has not provided the information required by Regulation 5(2) to
5(7) of the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 (as
amended) for the financial period ended 1 January 2022. We have nothing to report in this regard.
The Companies Act 2014 also requires us to report to you if, in our opinion, the Company has not provided the information required by Section 1110N
in relation to its remuneration report. We have nothing to report in this regard.
We have nothing to report in respect of the provisions in the Companies Act 2014 which require us to report to you if, in our opinion, the disclosures
of directors’ remuneration and transactions specified by law are not made.
The Listing Rules of the Euronext Dublin require us to review six specified elements of disclosures in the report to shareholders by the Board of
Directors’ remuneration committee. We have nothing to report in this regard.
Other matters which we are required to address
We were appointed by Glanbia plc on 27 April 2016 to audit the financial statements for the financial period ended 31 December 2016 and subsequent
financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is six years, covering the
financial periods ending 31 December 2016, 30 December 2017, 29 December 2018, 4 January 2020, 2 January 2021 and 1 January 2022.
The non-audit services prohibited by IAASA’s Ethical Standard were not provided and we remained independent of the Company in conducting the audit.
Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance with ISA (Ireland) 260.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies Act 2014. Our audit work has
been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the
Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Emer O’Shaughnessy
For and on behalf of Deloitte Ireland LLP
Chartered Accountants and Statutory Audit Firm
Deloitte & Touche House, Earlsfort Terrace, Dublin 2
2 March 2022
Notes: An audit does not provide assurance on the maintenance and integrity of the website, including controls used to achieve this, and in particular on whether any changes may
have occurred to the financial statements since first published. These matters are the responsibility of the Directors but no control procedures can provide absolute assurance in this
area. Legislation in Ireland governing the preparation and dissemination of financial statements differs from legislation in other jurisdictions.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
162
FINANCIAL STATEMENTS
Group income statement
for the financial year ended 1 January 2022
2021 2020
Notes
Pre-
exceptional
€’m
Exceptional
€’m
(note 6)
Tot al
€’m
Pre-
exceptional
€’m
Exceptional
€’m
(note 6)
Total
€’m
Continuing operations
Revenue
5 4, 196.9 – 4, 196.9 3 , 8 2 3 .1 – 3 , 8 2 3 .1
Operating profit before intangible asset amortisation
(earnings before interest, tax and amortisation (EBITA))
5 270.6 (4 8 .4 ) 222.2 20 9.6 (34.5 ) 17 5 .1
Intangible asset amortisation
16 (63.9 ) – (63 .9 ) (60.9 ) – (6 0.9 )
Operating profit
5 2 0 6.7 (48 . 4 ) 15 8 . 3 14 8 .7 (34.5 ) 114 . 2
Finance income
11 2 .0 – 2.0 4 .1 – 4 .1
Finance costs
11 (19 . 5 ) – (19 . 5 ) (24 . 6 ) – (24 . 6 )
Share of results of joint ventures accounted for using the equity
method
17 19. 2 (2 .0 ) 17. 2 3 7. 7 (0.3 ) 3 7. 4
Profit before taxation 208.4 (50.4 ) 15 8 . 0 16 5 . 9 (34. 8 ) 1 3 1 .1
Income taxes
12 (2 4.6 ) 7. 6 (1 7. 0 ) (1 4.5 ) 4. 2 (10 . 3 )
Profit from continuing operations 18 3 . 8 (4 2 . 8 ) 141. 0 151. 4 (30.6 ) 12 0 . 8
Discontinued operations
Profit after tax from discontinued operations
7/17 2 5 .7 0 .7 26.4 23.9 (0.9 ) 23 .0
Profit for the year 20 9.5 (4 2 .1 ) 1 6 7. 4 17 5 . 3 (3 1 .5 ) 14 3 . 8
Attributable to:
Equity holders of the Company
24 1 6 7. 0 14 3 . 8
Non-controlling interests 0.4 –
Earnings Per Share from continuing operations attributable to the equity holders of the Company
Basic Earnings Per Share (cent)
13 4 8 . 47 40.9 3
Diluted Earnings Per Share (cent)
13 48.3 0 40.82
Earnings Per Share attributable to the equity holders of the Company
Basic Earnings Per Share (cent)
13 57.57 4 8 .72
Diluted Earnings Per Share (cent)
13 5 7. 3 7 4 8.59
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
163
Notes
2021
€’m
2020
€’m
Profit for the year 16 7. 4 14 3 . 8
Other comprehensive income
Items that will not be reclassified subsequently to the Group income statement:
Remeasurements on defined benefit plans, net of deferred tax (0.5 ) 8.3
Share of other comprehensive income of joint ventures accounted for using the equity method, net of
deferred tax
17 1.7 (0 .7 )
Revaluation of equity investments at FVOCI, net of deferred tax
23 (0.2 ) –
Share of other comprehensive income of discontinued operations, net of deferred tax
17 4. 3 7. 7
Items that may be reclassified subsequently to the Group income statement:
Currency translation differences
23 1 26.7 (14 6 . 9 )
Currency translation difference arising on net investment hedge
23 (6.7 ) 8 .1
Gain/(loss) on cash flow hedges, net of deferred tax
23(c) 2 .7 (0.9 )
Share of other comprehensive income of joint ventures accounted for using the equity method, net of
deferred tax
17 6.2 (6.4 )
Share of other comprehensive income of discontinued operations, net of deferred tax
17 1.1 (0.3 )
Other comprehensive income for the year, net of tax 1 35.3 (1 3 1.1 )
Total comprehensive income for the year 3 02 .7 12.7
Attributable to:
Equity holders of the Company 302 .3 12 . 7
Non-controlling interests 0.4 –
Total comprehensive income for the year 3 02 .7 12.7
Group statement of comprehensive income
for the financial year ended 1 January 2022
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
164
FINANCIAL STATEMENTS
Group balance sheet
as at 1 January 2022
Notes
1 January 2022
€’m
2 January 2021
€’m
ASSETS
Non-current assets
Property, plant and equipment
15 485. 2 43 3.3
Right-of-use assets
31 99. 9 9 0.5
Intangible assets
16 1, 3 7 5 . 4 1, 24 3 . 3
Interests in joint ventures
17 18 4 . 8 3 95.9
Other financial assets
18 1. 9 3.2
Loans to joint ventures
35 42. 5 3 1. 8
Deferred tax assets
26 4.7 2. 4
Other receivables 0.8 –
Derivative financial instruments
29 0.5 –
Retirement benefit assets
9 2.9 2. 6
Current assets
Inventories
20 59 3.6 3 7 7. 6
Trade and other receivables
19 35 9.4 3 19 . 2
Current tax receivable 8.8 –
Derivative financial instruments
29 2.2 1. 3
Cash and cash equivalents (excluding bank overdrafts)
21 2 3 1. 0 16 4 . 3
Joint venture held for sale
7 23 4.0 –
Total assets 3,627.6 3, 0 65 .4
EQUITY
Issued capital and reserves attributable to equity holders of the Company
Share capital and share premium
22 10 5 . 0 10 5 . 3
Other reserves
23 245 .5 12 6 . 0
Retained earnings
24 1, 3 8 1. 7 1 ,380.5
Non-controlling interests 8 .1 –
Total equity 1, 74 0. 3 1 , 6 11 . 8
LIABILITIES
Non-current liabilities
Borrowings
25 6 97. 2 4 5 8.4
Lease liabilities
31 10 5 . 0 9 4.4
Other payables
28 32.6 –
Retirement benefit obligations
9 1 7. 1 31. 9
Deferred tax liabilities
26 14 4. 4 1 46.5
Provisions
27 3.6 3.3
Current liabilities
Trade and other payables
28 6 69. 3 4 41. 6
Borrowings
25 13 6 . 5 19 9 . 8
Lease liabilities
31 14 . 5 15. 8
Current tax liabilities 53.0 50.3
Derivative financial instruments
29 1. 2 3 .7
Provisions
27 12 . 9 7. 9
Total liabilities 1 ,887 .3 1, 4 5 3 . 6
Total equity and liabilities 3,627 .6 3,0 6 5.4
On behalf of the Board
Donard Gaynor
Directors
Siobhán Talbot Mark Garvey
2 March 2022
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
165
Attributable to equity holders of the Company
Share capital
and share
premium
€’m
(note 22)
Other
reserves
€’m
(note 23)
Retained
earnings
€’m
(note 24)
Tot al
€’m
Non-
controlling
interests
€’m
Tot al
€’m
Balance at 3 January 2021 10 5 . 3 1 26.0 1, 3 8 0 . 5 1, 6 11. 8 – 1, 6 11. 8
Profit for the year – – 1 67 .0 167 .0 0.4 16 7. 4
Other comprehensive income – 12 9 . 8 5.5 1 35.3 – 1 35.3
Total comprehensive income for the year – 12 9 . 8 17 2 . 5 3 02. 3 0.4 3 02 .7
Dividends – – (80.5 ) (80.5 ) – (8 0.5 )
Purchase of own shares – (94.0 ) – (94.0 ) – (94.0 )
Cancellation of own shares (0.5 ) 9 1. 8 (9 1. 3 ) – – –
Issuance of shares 0.2 – – 0.2 – 0. 2
Cost of share-based payments – 15 . 9 – 15 . 9 – 15 . 9
Transfer on exercise, vesting or expiry of share-based
payments – 0. 8 (0.8 ) – – –
Deferred tax on share-based payments – – 1. 3 1. 3 – 1. 3
Non-controlling interests on acquisition of subsidiary
(note 34) – – – – 7. 7 7. 7
Recognition and remeasurement of put option liability
(note 34) – (24.8 ) – (24.8 ) – (24. 8 )
Balance at 1 January 2022 10 5 . 0 245 .5 1, 3 8 1. 7 1, 7 3 2 . 2 8 .1 1, 74 0. 3
Balance at 5 January 2020 10 5 . 4 2 6 9 .1 1, 3 15 . 0 1, 6 8 9 . 5 – 1, 6 8 9 . 5
Profit for the year – – 14 3 . 8 14 3 . 8 – 14 3 . 8
Other comprehensive income – (14 6 . 4 ) 15 . 3 (1 3 1 .1 ) – (1 3 1 .1 )
Total comprehensive income for the year – (14 6 . 4 ) 15 9 .1 12. 7 – 12 . 7
Dividends – – (78. 6 ) (78 .6 ) – (78 .6 )
Purchase of own shares – (17. 6 ) – (17. 6 ) – (17. 6 )
Cancellation of own shares (0 .1 ) 16 .7 (16 . 6 ) – – –
Cost of share-based payments – 5.2 – 5.2 – 5.2
Transfer on exercise, vesting or expiry of share-based
payments – (1. 0 ) 1. 0 – – –
Deferred tax on share-based payments – – 0.6 0.6 – 0.6
Balance at 2 January 2021 10 5 . 3 12 6 . 0 1 ,380.5 1 , 6 11 . 8 – 1 , 6 11 . 8
Group statement of changes in equity
for the financial year ended 1 January 2022
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
166
FINANCIAL STATEMENTS
Notes
2021
€’m
2020
€’m
Cash flows from operating activities
Cash generated from operating activities before exceptional items
32 3 58 .0 34 9.4
Cash outflow related to exceptional items (55.9 ) (29.5 )
Interest received 2 .1 4. 6
Interest paid (including interest expense on lease liabilities) (18 . 8 ) (25.0 )
Tax paid (34.3 ) (2 2.1 )
Net cash inflow from operating activities 2 5 1.1 2 7 7. 4
Cash flows from investing activities
Payment for acquisition of subsidiaries (95.0 ) (2 1. 9 )
Purchase of property, plant and equipment (49 .0 ) (38 .0 )
Purchase of intangible assets
16 (28 .5 ) (26 .2 )
Interest paid in relation to property, plant and equipment
11 (0.5 ) (0.5 )
Proceeds from sale of property, plant and equipment 1. 5 –
Dividends received from joint ventures*
17/35 33.9 36.6
Loans advanced to joint ventures
35 (10 .7 ) (3.0 )
Investment in joint ventures
17 – (6.6 )
Proceeds from disposal/redemption of FVOCI financial assets
18 1.1 0. 3
Payments for FVOCI financial assets
18 (0 .1 ) (0 .1 )
Net cash outflow from investing activities (1 4 7. 3 ) (59. 4 )
Cash flows from financing activities
Purchase of own shares
23 (9 4.0 ) (17. 6 )
Drawdown of borrowings
25/33 458.5 1 , 0 5 7. 2
Repayment of borrowings
25/33 (38 3 .4 ) (1 ,222 .0 )
Payment of lease liabilities
33 (1 9 .1 ) (19 . 2 )
Dividends paid to Company shareholders
14/24 (80.5 ) (78 .6 )
Proceeds from issue of shares
22 0.2 –
Net cash outflow from financing activities (118 . 3 ) (28 0. 2 )
Net decrease in cash and cash equivalents (14 . 5 ) (6 2. 2 )
Cash and cash equivalents at the beginning of the year 9 1. 6 16 4 .7
Cash and cash equivalents acquired on acquisition
25/34 4.4 –
Effects of exchange rate changes on cash and cash equivalents 13 . 0 (10. 9 )
Cash and cash equivalents at the end of the year
21 94.5 9 1. 6
* €1 2.2 million relates to discontinued operations (2020: €1 2.6 million) and represents the net cash inflow from investing activities from discontinued operations.
Group statement of cash flows
for the financial year ended 1 January 2022
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167
1. General information
it is registered is 129933. The address of its registered office is Glanbia House, Kilkenny, Ireland, R95 E866 . The Company is the ultimate parent of the
Group from 1 July 2020 and its shares are quoted on the Euronext Dublin and London Stock Exchange.
The consolidated financial statements were approved and authorised for issue by the Board of Directors on 2 March 2022.
2. Summary of significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently
applied to all years presented by the Group and joint ventures unless otherwise stated.
Basis of preparation
The consolidated financial statements have been prepared in accordance with EU adopted International Financial Reporting Standards (“IFRS”),
IFRIC interpretations and those parts of the Companies Act 2014, applicable to companies reporting under IFRS. IFRS as adopted by the European
Union (“EU”) comprise standards and interpretations approved by the International Accounting Standards Board (“IASB”). The consolidated financial
statements comply with Article 4 of the EU IAS Regulation. IFRS adopted by the EU differs in certain respects from IFRS issued by the IASB.
References to IFRS hereafter refer to IFRS adopted by the EU.
The consolidated 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.
The preparation of the consolidated financial statements in conformity with IFRS requires the use of estimates, judgements and assumptions that
affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amount, event or actions,
actual results ultimately may differ from these estimates. See note 3.
Amounts are stated in euro millions (€’m) unless otherwise stated. These financial statements are prepared for the 52-week period ended 1 January 2022.
Comparatives are for the 52-week period ended 2 January 2021. The balance sheets for 2021 and 2020 have been drawn up as at 1 January 2022
and 2 January 2021 respectively.
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 year. The re-presentation is to present the cash flows on exceptional items separately. There was no impact on
previously reported profit or net assets. In addition, the comparative Group income statement and Group statement of comprehensive income were
re-presented to reflect a discontinued operation (note 7).
Going concern
After making appropriate enquiries and given due regard to the Covid-19 considerations below, the Directors 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 consolidated
financial statements. The Group therefore considers it appropriate to adopt the going concern basis in preparing its consolidated financial statements.
Covid-19 considerations
While the Group remains vigilant to the continued volatile and disruptive potential of the Covid-19 pandemic, the Group has been highly cash generative
from its operating activities 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 the strong trading performance and operating cash flow for 2021, not having to avail of any
government support and assistance related to Covid-19, and events during the year such as the completion of the LevlUp and PacMoore acquisitions
(note 34), the launch of a new share repurchase programme in December 2021 (note 29(c)), payment of an interim dividend, and a final dividend
recommended by the Directors (note 14). Furthermore, the Group has no committed facilities due prior to January 2024 (note 25).
Nevertheless, the Group considered the impact of Covid-19 in the preparation of the 2021 financial statements with the most relevant considerations
described below.
Significant judgements and sources of estimation uncertainty
The key impact of Covid-19 is on the cash flow projections used in calculating value in use of cash generating units in the impairment testing of
goodwill and indefinite life intangibles. Given the economic uncertainty resulting from Covid-19, it is difficult to ascertain the impact on the Group’s
prospective financial performance. As an additional analysis, the Group has increased the sensitivities over EBITDA growth in 2022 and 2023. If the
Group experienced 20% decrease in EBITDA growth in those years, there would have been no change to the conclusion of the sensitivity analysis
in note 16.
Impairment of non-financial assets
The Group continues to actively manage its working capital including inventory. Appropriate inventory levels are held to minimise the likelihood of future
potential stock obsolescence. Other non-financial assets (such as property, plant and equipment, right-of-use assets and definite life intangible assets)
were reviewed for indicators of impairment at the end of the reporting period. Where indicators of impairment are present, they are tested for impairment.
Notes to the financial statements
for the financial year ended 1 January 2022
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
168
FINANCIAL STATEMENTS
Notes to the financial statements continued
2. Summary of significant accounting policies continued
Impairment of trade receivables and loans to joint ventures
The Group continues to actively manage its working capital including trade receivables. Outstanding customer balances are actively monitored and
reviews for indicators of impairment are done on an ongoing basis. Regarding the loans to joint ventures, the Group continues to monitor the joint
ventures’ ability to repay them. The Group has adjusted the historical loss rates that are used in the calculation of expected credit losses (“ECL”)
on trade receivables and loans to joint ventures to reflect future economic conditions (including the effects of Covid-19) where appropriate.
Impact of climate related matters
The Group has considered the impact of climate change on the financial statements including the impairment of financial and non-financial assets,
the useful lives of those assets, and provisions, particularly in the context of the disclosure included in the Strategic Report which includes detail on
the Taskforce for Climate-related Financial Disclosure (TCFD) requirements, refer to pages 61 to 66. The assessment concludes that climate change
is not expected to have a material impact on the viability of the Group in the short term, and includes the following specific considerations:
• The Group has carried out a climate risk and opportunity (CRO) assessment during 2021, which resulted in the identification of 13 thematic CROs,
prior to consideration of mitigating measures.
• The CRO assessment did not indicate obsolete production methods, site locations or products, hence management do not determine any short
term impact on the business. A detailed modelling and scenario exercise will be undertaken in 2022 to assess the longer term impact of these risks
and opportunities for the Group, including the strategic response to leverage these opportunities and mitigate risks.
• We have specifically considered the impact of the transition and physical risks identified on the carrying value of fixed assets and in our goodwill
impairment assessment, in the context of the estimated likelihood and velocity, taking into account the reliable external and internal sources of
information available to us and concluded it is not possible to quantify the financial impact of the potential CROs at this stage.
• The Group carried out sensitivity analysis in respect of the CGU’s, using the following sensitivity assumptions 1% increase in the discount rate,
10% decrease in EBITDA growth and a nil terminal value growth (note 16).
Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries. Subsidiaries are entities over which
the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over the entity.
Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control
ceases. Profit or loss and each component of other comprehensive income (“OCI”) are attributed to the equity holders of the Company and to the
non-controlling interests. Inter-company assets and liabilities, equity, income, expenses and cash flows relating to transactions between members
of the Group are eliminated on consolidation.
Interests in joint ventures
Interests in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each
investor. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures.
Interests in joint ventures are accounted for using the equity method of accounting. Under the equity method of accounting, interests in joint ventures
are initially recognised at cost. The Group’s share of joint ventures post acquisition profits or losses after tax are recognised in the ‘Share of results of
joint ventures accounted for using the equity method’ in the Group income statement. The Group’s share of joint ventures post acquisition movement
in reserves is recognised in the Group statement of comprehensive income.
The cumulative post acquisition movements are adjusted against the carrying amount of the investment less any impairment in value. Where indicators
of impairment arise, the carrying amount of the joint venture is tested for impairment by comparing its recoverable amount against its carrying value.
Unrealised gains arising from transactions with joint ventures are eliminated to the extent of the Group’s interest in the entity. Unrealised losses are
similarly eliminated to the extent that they do not provide evidence of impairment of a transferred asset.
When the Group’s share of losses in a joint venture equals or exceeds its interest in the joint venture, the Group does not recognise further losses
unless the Group has incurred obligations or made payments on behalf of the joint venture.
When the Group ceases to have joint control, any retained interest in the entity is re-measured to its fair value at the date when joint control is lost with
the change in carrying amount recognised in the income statement. This may mean that amounts previously recognised in other comprehensive
income are classified to the Group income statement.
Business combinations
The Group uses the acquisition method of accounting to account for business combinations. The acquisition date is defined as the date the Group
gained control of the entity. The cost of the acquisition is measured at the aggregate of the fair value of the consideration given.
Upon acquisition, the Group assesses the assets acquired and liabilities assumed for appropriate classification and designation in accordance with the
contractual terms, economic circumstances and pertinent conditions as at the acquisition date. Identifiable assets acquired, liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at the acquisition date except for deferred tax assets or liabilities
and assets or liabilities related to employee benefit arrangements which are recognised and measured in accordance with IAS 12 ‘Income Taxes’ and
IAS 19 ‘Employee Benefits’ respectively. The fair value of the assets and liabilities are based on valuations using assumptions deemed by management
to be appropriate. Professional valuers are engaged when it is deemed appropriate to do so.
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Goodwill represents the excess of the aggregate of the consideration transferred and the amount of any non-controlling interest in the acquired entity
over the net identifiable assets acquired. If this is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase,
the difference is recognised directly in the income statement.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports
provisional amounts for the items for which the valuation of the fair value of assets acquired and liabilities assumed is still in progress. Those provisional
amounts are adjusted during the measurement period of one year from the date control is achieved when additional information is obtained about
facts and circumstances which would have affected the amounts recognised as of that date.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration is
classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value, with changes in fair
value recognised in the income statement.
Acquisition related costs are expensed as incurred in the income statement.
On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling
interest’s proportionate share of the acquiree’s net assets.
Non-current assets held for sale and discontinued operations
Non-current assets and disposal groups classified as held for sale are measured at the lower of the carrying value and the fair value less costs to sell.
Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered through a sale transaction rather
than continued use. This condition is regarded as satisfied only when the sale is highly probable and the asset or disposal group is available for
immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a
completed sale within one year of the date of classification.
When the Group is committed to a sale plan involving disposal of a joint venture, the interest in the joint venture that will be disposed of is classified
as held for sale when the criteria described above are met. The Group then ceases to apply the equity method of accounting in relation to the portion
that is classified as held for sale.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate
major line of business or geographical area of operation, is part of a single coordinated plan to dispose of a separate major line of business or
geographical area of operation, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented
separately in the Group income statement. In addition, the comparative Group income statement and Group statement of comprehensive income
are re-presented as if the operation had been discontinued from the start of the comparative year.
Additional disclosures are provided in Note 7. All other notes to the financial statements include amounts for continuing operations, unless
indicated otherwise.
Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s subsidiaries and joint ventures are measured using the currency of the primary
economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in euro.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions are recognised in the income statement, except when deferred in equity
as qualifying cash flow hedges or net investment hedges.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. Currency
translation differences on monetary assets and liabilities are taken to the income statement, except when deferred in equity in the currency translation
reserve as (i) qualifying cash flow hedges or (ii) exchange gains or losses on long-term intra-group loans and on net investment hedges.
Subsidiaries and joint ventures
The income statement and balance sheet of subsidiaries and joint ventures that have a functional currency different from the presentation currency
are translated into the presentation currency as follows:
• assets and liabilities at each reporting date are translated at the closing rate at the reporting date of the balance sheet;
• income and expenses in the income statement and statement of comprehensive income are translated at average exchange rates for the year
when they are a reasonable approximation of the cumulative effect of the rates on transaction dates; and
• all resulting exchange differences are recognised in other comprehensive income.
Resulting exchange differences are taken to a separate currency reserve within equity. When a foreign entity is disposed of outside the Group,
such exchange differences are recognised in the income statement as part of the gain or loss on disposal.
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FINANCIAL STATEMENTS
Notes to the financial statements continued
2. Summary of significant accounting policies continued
The principal exchange rates used for the translation of results and balance sheets into euro are as follows:
Average Year end
1 euro = 2021 2020 2021 2020
US dollar 1.1826 1.1423 1.1326 1.2271
Pound sterling 0.8596 0.8898 0.8403 0.8990
Business combinations
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are denominated in the functional currency of the foreign entity,
recorded at the exchange rate at the date of the transaction and subsequently retranslated at the applicable closing rates.
Property, plant and equipment
Cost
Property, plant and equipment (“PP&E”) is stated at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is
directly attributable to the acquisition of the assets. Subsequent costs, for example the costs of major renovation, are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow
to the Group and the cost of the item can be measured reliably.
The carrying amount of any component accounted for as a separate asset is de-recognised when replaced. All other repairs and maintenance are
charged to the income statement during the reporting period in which they are incurred.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are included in the income statement. Borrowing
costs directly attributable to the construction of property, plant and equipment which take a substantial period of time to get ready for its intended use
are capitalised as part of the cost of the assets.
Depreciation
Depreciation is calculated on the straight-line method to write off the cost less residual value of each asset over its estimated useful life at the following
rates:
%
Land Nil
Buildings 2.5–5
Plant and equipment 4–33
Motor vehicles 20–25
Land and assets under construction are not depreciated. Residual values and useful lives are reviewed and adjusted if appropriate at each reporting date.
Impairment
Carrying amounts of items of property, plant and equipment are reviewed at each balance sheet date to determine whether there is any indication of
impairment. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount.
Impairment losses are recognised in the income statement. Following the recognition of an impairment loss, the depreciation charge applicable to the
asset is adjusted prospectively in order to systematically allocate the revised carrying amount, net of any residual value over the remaining useful life.
Intangible assets
Goodwill
Goodwill is initially recognised at cost being the excess of the aggregate of the consideration transferred and the amount of any non-controlling
interest in the acquired entity over the net identifiable assets of the acquired subsidiary or joint venture at the date of acquisition. Goodwill on
acquisition of subsidiaries is included within intangible assets. Goodwill associated with the acquisition of joint ventures is not recognised separately
and included within the interest in joint ventures under the equity method of accounting.
Following initial recognition goodwill is carried at cost less accumulated impairment losses, if applicable. Goodwill impairments are not reversed.
Goodwill is not amortised but is subject to impairment testing on an annual basis and at any time during the year if an indicator of impairment is
considered to exist. The annual goodwill impairment tests are undertaken at a consistent time in each annual period.
Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Research and development costs
Research expenditure is recognised as an expense in the income statement as incurred.
Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when it is
probable that the project will be a success, considering its commercial and technological feasibility and costs can be measured reliably. Development
costs are amortised using the straight-line method over their estimated useful lives. The useful life is typically three years.
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Brands, customer relationships, recipes, know-how and other intangibles
Brands, customer relationships, recipes, know-how and other intangibles acquired as part of a business combination are stated at their fair value at
the date control is achieved.
Indefinite life brands are carried at cost less accumulated impairment losses, if applicable. Indefinite life brands are not amortised on an annual basis
but are tested annually for impairment. Indefinite life intangible assets are those for which there is no foreseeable limit to their expected useful life.
The classification of intangible assets as indefinite is assessed annually.
Definite life brands, customer relationships, recipes, know-how and other intangibles are amortised using the straight-line method over their useful life
as follows:
Years
Brands 3–40
Customer relationships 5–15
Recipes, know-how and other intangibles 2–15
The useful life used to amortise definite life brands, customer relationships, recipes, know-how and other intangibles relates to the future performance
of the assets acquired and management’s judgement of the period over which the economic benefit will be derived from the assets.
The carrying values of definite life brands, customer relationships, recipes, know-how and other intangibles are reviewed for indicators of impairment
at each reporting date and are subject to impairment testing when events or circumstances indicate that the carrying values may not be recoverable.
Computer software
Computer software is stated at cost less accumulated amortisation and impairment losses. Costs incurred on the acquisition of computer software
are capitalised, as are costs directly associated with developing computer software programmes for internal use, if they meet the recognition criteria
of IAS 38 ‘Intangible Assets’. Computer software costs recognised as assets are amortised using the straight-line method over their estimated useful
lives, which is normally between five and 10 years.
Impairment of intangible assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more
frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable.
For the purposes of impairment testing, assets are grouped at the lowest level for which there are separately identifiable cash flows (cash generating
units (“CGUs”)). An impairment is recognised in the income statement for the amount by which the carrying value of the CGU exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. Value in use is determined as the
discounted future cash flows of the CGU.
Investments in equity instruments
The Group classifies and measures its investments in equity instruments at fair value. Changes in their fair value are recognised in the income
statement unless management has elected to present fair value gains and losses in OCI on an investment by investment basis. When an election is
made for an investment, there is no subsequent reclassification of fair value gains and losses related to the investment to profit or loss following the
derecognition of the investment. Dividends from such investments are recognised in profit or loss when the Group’s right to receive payments is
established.
Trade and other receivables, loans to joint ventures and financial assets at amortised cost
Trade and other receivables, loans to joint ventures and financial assets at amortised cost are classified and measured at amortised cost as they are
held to collect contractual cash flows which comprise solely payments of principal and interest, where applicable. They are recognised initially at fair
value plus transaction costs, except trade receivables that do not contain significant financing components which are recognised at transaction price.
They are subsequently measured at amortised cost using the effective interest method less expected credit loss allowance.
The Group recognises an allowance for expected credit losses (“ECL”) for financial assets not held at fair value through profit or loss. For credit
exposures for which there has not been a significant increase in credit risk since initial recognition, ECL are provided for credit losses that result from
default events that are possible within the next 12 months. For those credit exposures for which there has been a significant increase in credit risk
since initial recognition or where there has been a credit impaired event, a lifetime expected loss allowance is recognised, irrespective of the timing
of the default.
The Group applies the IFRS 9 simplified approach to measure ECL which uses a lifetime expected loss allowance for all trade receivables. A loss
allowance for the amount of receivables that is subject to credit risk is estimated based on expected credit losses. To measure ECL, historical loss
rates are calculated based on historical credit loss experience. The loss allowance based on historical loss rates is adjusted where appropriate to
reflect current information and forward-looking information on macroeconomic factors, including the trading environment of countries in which the
Group sells its goods, which affect the ability of the debtors to settle the receivables.
The above financial assets are written off when there is no reasonable expectation of recovery such as a debtor failing to engage in a repayment plan
with the Group.
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FINANCIAL STATEMENTS
Notes to the financial statements continued
2. Summary of significant accounting policies continued
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, and deposits held on call with banks. For the purposes of the Group statement of
cash flows, cash and cash equivalents consists of cash and cash equivalents net of bank overdrafts as bank overdrafts are repayable on demand and
they form an integral part of cash management.
Derecognition of financial assets
Financial assets are derecognised when the rights to receive cash flows from financial assets have expired or have been transferred and the Group
has transferred substantially all the risks and rewards of ownership. If the Group neither transfers nor retains substantially all the risks and rewards of
ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts
it may have to pay.
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the consideration
received and receivable is recognised in profit or loss.
Trade and other payables
Trade and other payables, other than put options over non-controlling interests, are recognised initially at their fair value and subsequently measured
at amortised cost which approximates to fair value given the short-term nature of these liabilities. These amounts represent liabilities for goods and
services provided to the Group prior to, or at the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within
30–90 days of recognition depending on the terms negotiated with suppliers.
Put option liability over non-controlling interests
A put option that is held by non-controlling interests in a subsidiary is one where the holder of the put option can require the Group to acquire the
non-controlling interests’ shareholding in the subsidiary at a future date. The Group assesses whether the non-controlling interests continue to have a
present ownership interest in the shares subject to the put option. Present ownership interest can be evidenced by non-controlling interests 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 non-controlling interests in the
subsidiary, including subsequent updates to reflect its share of profit and losses, dividends and other changes. A put option liability is initially recognised
based on an estimate of the fair value of the consideration to acquire the non-controlling interests shares that are subject to the put option with a
corresponding debit to equity. Changes in the estimated fair value of the liability, which is re-evaluated at each year end, are recognised within equity.
If the non-controlling interests do not have present ownership rights from the put option, the transaction is accounted for as if the Group had acquired
the non-controlling interests at the date of entering into the put option.
Borrowings
Borrowings are recognised initially at fair value and subsequently stated at amortised cost.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability
is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as derecognition of the original liability and recognition of a new liability.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash
assets transferred or liabilities assumed) is recognised in the income statement.
Offsetting
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the
recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable
right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or
bankruptcy of the Group or the counterparty.
Derivative financial instruments
Derivatives are initially recorded at fair value and subsequently remeasured at their fair value at the reporting date. Derivative contracts are recognised
on the trade date, other than ‘regular way’ contracts for which settlement date accounting is applied.
The fair value of any foreign currency contracts or any commodities contract is estimated by discounting the difference between the contractual
forward price and the current forward price, using the market interest rate at the measurement date, for a time period equal to the residual maturity
of the contract. The fair value of any interest rate swap is estimated by discounting future cash flows under the swap, using the market interest rates,
at the measurement date, for time periods equal to the residual maturity of the contracted cash flows.
The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of
the item being hedged. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised in the income
statement. The Group adopts the hedge accounting model in IFRS 9.
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The Group designates certain derivatives as either: (i) hedges of the fair value of recognised assets or liabilities or an unrecognised firm commitment
(fair value hedge); or (ii) hedges of a cash flow risk associated with the cash flows of recognised asset or liability or a highly probable forecast
transaction (cash flow hedge).
The Group documents at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management
objective and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and half yearly, of
whether the derivatives that are used in hedging transactions are effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of various derivative instruments used for hedging purposes are disclosed in note 29. The full fair value of a hedging derivative is
classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months, and as a current asset or liability if the
remaining maturity of the hedged item is less than 12 months.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any
changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in OCI. The gain or
loss relating to the ineffective portion is recognised immediately in the income statement. Where option contracts are used to hedge forecast
transactions, the Group designates only the intrinsic value of the options as the hedging instrument. Gains or losses relating to the effective portion of
the change in intrinsic value of the options are recognised in the hedging reserve within equity. The changes in the time value of the options that relate
to the hedged item are recognised within OCI in the cost of hedging reserve within equity.
Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item affects profit or loss (for instance when the
forecast sale that is hedged takes place). Where the hedged item subsequently results in the recognition of a non-financial asset (such as inventory),
the amounts accumulated in equity are included within the initial cost of the asset. The recycled gain or loss relating to the effective portion of interest
rate swaps hedging variable interest rates on borrowings is recognised in the income statement within ‘finance costs’. The recycled gain or loss
relating to the effective portion of foreign exchange contracts is recognised in the income statement. The recycled gain or loss relating to the time
value and the effective portion of the intrinsic value of commodity option contracts are included within the initial cost of an asset.
The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria (after
rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. The discontinuation is
accounted for prospectively. Any gain or loss recognised in OCI and accumulated in cash flow hedge reserve at that time remains in equity and is
reclassified to the income statement when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or
loss accumulated in the cash flow hedge reserve is reclassified immediately to the income statement.
Net investment hedge
Net investment hedges, including a hedge of a monetary item that is accounted for as part of the net investment, are accounted for in a way similar to
cash flow hedges. Gains or losses on the hedging instrument (for instance foreign currency borrowings) relating to the effective portion of the hedge
are recognised as OCI while any gains or losses relating to the ineffective portion are recognised in the income statement. On disposal of the foreign
operation, the cumulative value of any such gains or losses recorded in equity is transferred to the income statement.
Call options over non-controlling interests
If the Group has a call option over the shares held by non-controlling interests in a subsidiary where the Group can require the non-controlling interests
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.
Financial guarantee contracts
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured at fair value
and subsequently at the higher of: the amount determined in accordance with the expected credit loss model under IFRS 9 Financial Instruments; and
the amount initially recognised less, where appropriate, the cumulative amount of income recognised in accordance with the principles of IFRS 15
‘Revenue from Contracts with Customers’.
The fair value of financial guarantees is determined based on the present value of the difference in cash flows between the contractual payments
required under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable
to a third party for assuming the obligations.
Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost includes all expenditure incurred in the normal course of business in bringing the products to their present location and condition. Cost is
determined by the first-in, first-out (FIFO) method or by weighted average cost. The cost of finished goods and work in progress comprises raw
materials, direct labour, other direct costs and related production overheads (based on normal capacity). Costs of inventories include the transfer
from equity of any gains/losses on qualifying cash flow hedges which relate to purchases of raw materials.
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FINANCIAL STATEMENTS
Notes to the financial statements continued
2. Summary of significant accounting policies continued
Net realisable value is the estimated selling price in the ordinary course of business, less all estimated costs of completion and selling expenses.
Allowance is made, where necessary, for aged, slow moving, obsolete and defective inventories.
Provisions, contingent liabilities and contingent assets
Provisions are recognised on the balance sheet when the Group has a constructive or legal obligation as a result of past events, it is probable that
an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future
operating losses. Provisions are measured using management’s best estimate of the present value of the expenditure required to settle the present
obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. The increase in provision due to passage of time is recognised as an
interest expense.
Provisions arising on business combinations are only recognised to the extent that they have qualified for recognition in the financial statements of the
acquiree prior to acquisition.
A contingent liability is not recognised but is disclosed where the existence of the obligation will only be confirmed by future events or where it is
not probable that an outflow of resources will be required to settle the obligation or where the amount of the obligation cannot be measured with
reasonable reliability. Contingent assets are not recognised but are disclosed where an inflow of economic benefits is probable.
Leases
Right-of-use assets
The Group recognises right-of-use assets (“ROU assets”) at the commencement date of the lease (i.e. the date the underlying asset is available for
use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of
lease liabilities. The cost of right-of-use assets includes the initial amount of lease liabilities recognised, initial direct costs incurred, and lease payments
made at or before the commencement date less any lease incentives received. The recognised right-of-use assets are generally depreciated on
a straight-line basis over the shorter of its estimated useful life and the lease term. If the Group is reasonably certain to exercise a purchase option,
the right-of-use asset is depreciated over the underlying asset’s useful life.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the
lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the
exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term
reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as an
expense in the period on which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate (“IBR”) at the lease commencement date if the
interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect
the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is
a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the
underlying asset.
For leases of plant and equipment, and motor vehicles for which the Group is a lessee, it has elected not to separate lease and non-lease
components, and instead account for these as a single lease component.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases i.e. those leases that have a lease term of 12 months or less
from the commencement date and do not contain a purchase option. It also applies the lease of low-value assets recognition exemption to leases
of assets that are considered of low value. Lease payments on short-term leases and leases of low-value assets are recognised as an expense on
a straight-line basis over the lease term.
Employee benefits
Pension obligations
The Group operates various pension plans. The plans are funded through payments to trustee-administered funds. The Group has both defined
contribution and defined benefit plans.
Defined contribution pension
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or
constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee
service in the current and prior periods. The contributions are recognised as an employee benefit expense in the income statement when they are due.
Defined benefit pension obligation
Defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such
as age, years of service and compensation.
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The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the
reporting date less the fair value of the plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected
unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest
rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity
approximating to the terms of the related pension obligation. The fair value of plan assets is based on market price information and in the case of
quoted securities in active markets it is the published bid price.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which
they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance
sheet. Remeasurements are not reclassified to the income statement in subsequent periods.
A curtailment arises when the Group significantly reduces the number of employees or employee entitlements covered by a plan. A past service
cost may be either a loss (when benefits are introduced or changed so that the present value of the defined benefit obligation increases) or a gain
(when benefits are withdrawn or changed so that the present value of the defined benefit obligation decreases).
A settlement occurs when an entity enters into a transaction that eliminates all further legal or constructive obligation for part or all of the benefits
provided under a defined benefit plan (other than a payment of benefits to, or on behalf of, employees in accordance with the terms of the plan
and included in the actuarial assumptions). The gain or loss on a settlement is the difference between:
(a) the present value of the defined benefit obligation being settled, as determined on the date of settlement; and
(b) the settlement price, including any plan assets transferred and any payments made directly by the entity in connection with the settlement.
The deferred tax impact of pension plan obligations is disclosed separately within deferred tax assets.
Share-based payments
The Group operates a number of equity settled share-based compensation plans which include share option and share award schemes which are
open to Executive Directors and certain senior managers.
The charge to the income statement in respect of share-based payments is based on the fair value of the equity instruments granted and is spread
over the performance period.
Awards under the 2008 and 2018 Long-term incentive plan (2008 LTIP and 2018 LTIP)
The fair value of the awards is calculated using a Monte Carlo simulation technique. The awards contain both market and non-market vesting
conditions. The market vesting condition is total shareholder return (“TSR”) and, accordingly, the fair value assigned to the related equity instruments
is adjusted so as to reflect the anticipated likelihood at the grant date of achieving the market-based vesting condition. There are no revisions to the fair
value at subsequent reporting dates for changes in TSR estimates.
Awards under the 2019 Restricted share plan (2019 RSP)
The fair value of the awards is calculated using the discounted cash flow method. The awards typically contain only non-market vesting and
service conditions.
Awards under the Annual incentive deferred into shares scheme (AIDIS)
The fair value of shares awarded is determined in line with the Group’s Annual Incentive Scheme rules and equates with the cash value of the portion
of the annual incentive that will be settled by way of shares. The expense is recognised immediately in the income statement with a corresponding
entry to equity.
Options under the 2002 Long-term incentive plan (2002 LTIP)
The fair value of the instruments awarded were calculated using the binomial model. The proceeds received are credited to share capital (nominal
value) and share premium when the options are exercised. The market vesting condition is TSR and the awards contain both market and non-market
vesting conditions.
In respect of 2008 LTIP, 2018 LTIP and 2019 RSP, non-market vesting and service conditions are included in assumptions about the number of
awards that are expected to vest. At each reporting date, the Group revises its estimates of the number of awards that are expected to vest based
on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in the income statement with
a corresponding adjustment to equity. The non-market based charge to the income statement is reversed where awards do not vest because
non-market performance conditions have not been met or where, subject to the rules of the scheme, an employee in receipt of share awards leaves
service before the end of the vesting period.
When the awards are exercised, the Company reissues shares from own shares and the fair value of the awards exercised is reclassified from the
share-based payment reserve to retained earnings.
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176
FINANCIAL STATEMENTS
Notes to the financial statements continued
2. Summary of significant accounting policies continued
Income taxes
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates
to items recognised in other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income
or directly in equity, respectively.
A provision is recognised for those matters for which the tax determination is uncertain but it is considered probable that there will be a future outflow
of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable. The assessment is based
on the judgement of in-house tax experts, professional firms and previous experience of the Group. Further detail on estimates and judgements are
set out in note 3.
Current tax
Current tax is calculated on the basis of tax laws enacted or substantively enacted at the Group balance sheet date in countries where the Group
operates and generates taxable income, taking into account adjustments relating to prior years.
Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis,
or to realise the asset and settle the liability simultaneously.
Deferred tax
Deferred tax is determined using tax rates and laws enacted or substantively enacted by the reporting date. Deferred tax is provided on a non-
discounted basis, using the balance sheet liability method, providing for temporary differences on the reporting date between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. However, deferred tax is not accounted for if it arises from initial recognition of an
asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or
loss. Deferred tax liabilities are not recognised to the extent they arise from the initial recognition of goodwill not having full tax basis.
The carrying amount of a deferred tax asset or liability may change for reasons other than a change in the temporary difference itself. Such changes
might arise as a result of a change in tax rates or laws, a reassessment of the recoverability of a deferred tax asset or a change in the expected
manner of recovery of an asset or the expected manner of a settlement of a liability. The impact of these changes is recognised in the income
statement or in other comprehensive income depending on where the original deferred tax balance was recognised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries and joint ventures except where the timing of the reversal
of the temporary difference can be controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences
can be utilised.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and
when they relate to income taxes levied by the same tax authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Share capital
Equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction from the proceeds. Repurchase of the Company’s own equity instruments is recognised and deducted from equity with a transfer between
the own shares reserve and retained earnings when they are cancelled. No gain or loss is recognised in profit or loss on the purchase, sale, issue or
cancellation of the Company’s own equity instruments.
Own shares
Where the Employee Share Trust and/or the Employee Share Scheme Trust (on behalf of the Company) purchases the Company’s equity share capital,
under the 2008 and 2018 Long-term incentive plan, the 2019 Restricted share plan and the Annual incentive deferred into shares scheme, the
consideration paid is deducted from distributable reserves and classified as own shares until they are re-issued. Where such shares are re-issued,
they are re-issued on a first-in, first-out basis and the proceeds on re-issue of own shares are transferred from own shares to retained earnings.
Revenue recognition
The Group manufactures and sells performance nutrition and lifestyle nutrition products, cheese and dairy, and non-dairy nutritional and functional
ingredients. In general, there is one performance obligation relating to the sale of products in a contract with a customer. Performance obligations
are met at the point in time when control of the products has transferred to the customer, which is dependent on the contractual terms with each
customer. In most cases, control transfers to the customer when the products are dispatched or delivered to the customer. Delivery occurs when the
products have been delivered to the specific location. The Group is deemed to be a principal in an arrangement when it controls the promised goods
before transferring them to a customer, and accordingly recognises revenue on a gross basis.
Rebates and discounts are provided for based on agreements or contracts with customers, agreed promotional arrangements and accumulated
experience using the most likely method. Judgement is exercised by management in the determination of quantum and likelihood of rebates and
discounts based on experience and historical trading patterns. Rebates and discounts are recorded in the same period as the original revenue.
Generally, payment of the transaction price is due within credit terms that are consistent with industry practices, with no element of financing. Thus,
the Group does not adjust any of the transaction prices for the time value of money as a practical expedient as the Group does not expect to have any
contracts where the period between the transfer of the promised products to the customer and payment by the customer exceeds one year.
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177
Segment reporting
The segments reported in note 4 reflect the Group’s organisation structure and the nature of the information reported to the Chief Operating Decision
Maker (“CODM”) who is identified as the Group Operating Executive.
In identifying the Group’s operating segments, management considered the following principal factors:
• the Group’s organisational structure, namely Glanbia Performance Nutrition, Glanbia Nutritionals and joint ventures
• how financial information is reported to the CODM
• existence of managers responsible for the components
• the nature of the component business activities; refer to note 4 for details
• the degree of similarity of products and services, and production processes
Finance income, finance costs and income taxes are not allocated to segments, as this type of activity is driven by central treasury and taxation
functions which manage the cash and tax position of the Group. Unallocated assets and liabilities primarily include tax, cash and cash equivalents,
other financial assets, financial liabilities and derivatives. Inter-segment revenue is determined on an arm’s-length basis. Where a material dependency
or concentration on an individual customer would warrant disclosure, this is disclosed in note 4.
Dividends
Dividends on ordinary shares to the Company’s shareholders are recognised as a liability of the Company when approved by the Company’s
shareholders. Interim dividends are recognised when paid.
Proposed dividends that are approved after the balance sheet date are not recognised as a liability but are disclosed in the dividends note.
Finance costs
Finance costs comprise interest payable on borrowings calculated using the effective interest rate method, net losses on hedging instruments that are
recognised in the income statement, facility fees, the unwinding of discounts on provisions and the interest expense component of lease liabilities.
General and specific finance costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during
the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a
substantial period of time to get ready for their intended use or sale. Other finance costs are expensed in the income statement in the period in which
they are incurred.
Finance income
Finance income is recognised in the income statement as it accrues using the effective interest rate method and includes net gains on hedging
instruments that are recognised in the income statement.
Earnings Per Share
Earnings Per Share (“EPS”) represents the profit attributable to owners of the Company divided by the weighted average number of ordinary shares
in issue during the period excluding own shares.
Adjusted EPS is calculated on the net profit attributable to the owners of the Company 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 own shares. Full details on the calculation and reconciliation to IFRS reported numbers are included in the Glossary section.
Diluted EPS is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential
ordinary shares.
Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement date or whenever an employee accepts
voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier of the following dates: (i)when the
Group can no longer withdraw the offer of those benefits; and (ii) when the entity recognises costs for a restructuring that is within the scope of IAS 37
‘Provisions, Contingent Liabilities and Contingent Assets’ and involves the payment of termination benefits.
Income statement format
Exceptional items
The Group has adopted an income statement format that seeks to highlight significant items within the Group results for the year. Such items may
include impairment of assets, including significant adjustments arising from the re-assessment of asset lives, adjustments to contingent consideration,
significant acquisition integration costs, restructuring costs including termination benefits, profit or loss on disposal or termination of operations,
significant reorganisation programmes that may span over a reporting period(s), significant acquisition costs, litigation settlements, legislative changes,
gains or losses on defined benefit pension plan restructuring, external events including disasters relating to weather, pandemics, wars and other acts
of God and natural disasters, and profit or loss on disposal of investments. Judgement is used by the Group in assessing the particular items which
by virtue of their scale and/or nature should be disclosed in the income statement and notes as exceptional items.
Earnings before interest, tax and amortisation
The Group believes that Earnings before interest, tax and amortisation (“EBITA”) is a relevant performance measure and has therefore disclosed this
amount in the Group income statement. EBITA is stated before considering the share of results of joint ventures accounted for using the equity method.
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178
FINANCIAL STATEMENTS
Notes to the financial statements continued
2. Summary of significant accounting policies continued
Adoption of amended standards
The following changes to IFRS became effective for the Group during the financial year but did not result in material changes to the Group’s
financial statements:
• Amendment to IFRS 16 ‘Covid-19-Related Rent Concessions’
• Amendments to IFRS 4 ‘Extension of the Temporary Exemption from Applying IFRS 9’
• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 ‘Interest Rate Benchmark Reform – Phase 2’ (see below for further details)
Interest rate benchmark reform - Phase 2
The Group continues to monitor developments relating to the interest rate benchmark reform (“IBOR Reform”) initiatives with particular attention to
announcements by relevant regulatory authorities regarding LIBOR cessation. The Group Treasury function is charged with responsibility for managing
all aspects of the transition process. During the year, Group Treasury reviewed all relevant external funding agreements and derivative transactions
and determined that the potential impacts of IBOR reform will be with respect to replacement USD LIBOR benchmarks under the Group’s various
Revolving Credit Facilities. In accordance with Financial Conduct Authority (“FCA”) announcements on USD LIBOR cessation, the Group currently
does not expect to adopt replacement benchmarks until closer to 30 June 2023. Consequential loan amendments will be made in line with regulatory
timeframes. Group Treasury also reviewed the impact of IBOR reform on the Group’s treasury system design and related processes and continues to
liaise with system vendors to manage the transition. Overall, the Group does not anticipate that any changes required as part of the IBOR reform will
have a material financial impact.
New and amended standards that are not yet effective
The Group has not applied certain new standards and amendments to existing standards that have been issued but are not yet effective. The most
significant of which are as follows:
Property, Plant and Equipment: Proceeds before intended use – Amendments to IAS 16 (EU effective date: on or after 1 January 2022)
The amendments prohibit entities from deducting from the cost of an item of property, plant and equipment, any proceeds of the sale of items
produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Instead, an entity recognises the proceeds from selling such items, and the costs of producing those items, in profit or loss.
Disclosure of Accounting Policies – Amendments to IAS 1 (IASB effective date: on or after 1 January 2023)
The IASB amended IAS 1 to require entities to disclose their material rather than their significant accounting policies. The amendments define what is
‘material accounting policy information’ and explain how to identify when accounting policy information is material. They further clarify that immaterial
accounting policy information does not need to be disclosed. If it is disclosed, it should not obscure material accounting information.
Classification of Liabilities as Current or Non-current – Amendments to IAS 1 (IASB effective date: on or after 1 January 2023)
The amendments clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting
period. Classification is unaffected by the expectations of the entity or events after the reporting date (e.g. the receipt of a waiver or a breach of
covenant). The amendments also clarify what IAS 1 means when it refers to the ‘settlement’ of a liability.
The Group is currently evaluating the impact of the above amendments on future periods. Other changes to IFRS have been issued but are not yet
effective for the Group. However, they are either not expected to have a material impact on the Group or they are not currently relevant for the Group.
3. Critical accounting judgements and estimates
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting
accounting estimates may not equal the related actual results. Revisions to estimates are recognised prospectively.
The most significant judgements and key sources of estimation uncertainty identified in the preparation of these financial statements are set out below.
With the exception of retirement benefit obligations which are subject to market conditions, it is not expected that there will be a material adjustment
to the carrying value of assets and liabilities of the other areas outlined below.
Judgements
Joint venture classified as held for sale and presented as discontinued operations
The Company announced its intention to sell its 40% holding in Glanbia Ireland DAC (“Glanbia Ireland”) to Glanbia Co-operative Society Ltd (the “Society”)
for €307 million in November 2021 (the “Proposed Transaction”). The interest in joint venture, Glanbia Ireland is held for sale in its present condition
subject only to usual and customary terms. The Directors are of the opinion that the sale of Glanbia Ireland to the buyer is highly probable based on the
considerations below and accordingly, the interest in Glanbia Ireland is classified as held for sale.
• The Company and the buyer signed binding legal agreements relating to the Proposed Transaction on 8 December 2021;
• Members of the Society approved the Proposed Transaction on 17 December 2021;
• Based on the historical experience of the Company, it is expected that the Company’s independent shareholders will approve the Proposed
Transaction at an extraordinary general meeting subsequent to year end (note 36); and
• The buyer does not anticipate any barriers or challenges to regulatory approval.
The Group invests in dairy and agribusiness in Ireland through its significant investment in Glanbia Ireland as evidenced by the carrying amount of the
investment in the joint venture, which is classified as held for sale, and its share of profit after tax (note 7 and 17). Furthermore, Glanbia Ireland is an
operating segment and a separately reported segment of the Group (note 4). Hence, the Directors are of the opinion that it is appropriate to present
Glanbia Ireland as discontinued operations.
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179
Exceptional items
The Group considers that items of income or expense which are significant by virtue of their scale and/or 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. 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.
Interests in joint ventures
The Group holds 51% of the share capital of Glanbia Cheese Limited but this entity is considered to be a joint venture as the Group does not have control
of the company as along with its joint venture partner Leprino Foods Company, it has equal representation on the Board of Directors who directs the
relevant activities of the business. Decisions about the relevant activities require unanimous consent of the Group and the joint venture partner. The Group
controls 50% of the voting rights and is entitled to appoint 50% of the total number of Directors to the Board.
The Group holds 40% of the ordinary share capital of Glanbia Ireland DAC. However this entity is considered to be a joint venture of the Group as the
business plan, which directs the relevant activities of the business, requires the unanimous approval of both the Group and Glanbia Co-operative
Society Limited which holds the remaining 60% shareholding. The interest in the joint venture is classified as held for sale as at 1 January 2022 (note 7).
Estimates
Retirement benefit obligations
The Group operates a number of defined benefit pension plans both in Ireland and the UK. The rates of contributions payable, the pension cost and
the Group’s total obligation in respect of defined benefit plans is calculated and determined by independent qualified actuaries and updated at least
annually. Refer to note 9 for the amounts associated with the Irish and UK plans.
The size of the obligation and cost of the benefits are sensitive to actuarial assumptions. These include demographic assumptions covering mortality
and longevity, and economic assumptions including price inflation, benefit and salary increases together with the discount rate used. The Group
disclose the UK defined benefit pension plan details separately from the Irish plans to identify the impact of a change in UK assumptions on the
Group’s defined benefit pension plans. The estimates pertaining to retirement benefit obligations incorporated the effects of Covid-19 based on
actuarial advice where applicable.
The discount rate is a highly sensitive input to the calculation of scheme liabilities. Sensitivity analysis has been completed to assess the impact
of a change in the discount rate used and other principal actuarial assumptions. Refer to note 9 for the sensitivity analysis.
Impairment reviews of goodwill and indefinite life intangibles
The Group tests annually whether goodwill and indefinite life intangibles have suffered any impairment, in accordance with the accounting policy
stated in note 2. The recoverable amounts of CGUs have been determined based on value in use calculations. These calculations require the use
of estimates.
Goodwill and intangible assets in respect of CGUs within the Glanbia Performance Nutrition and Glanbia Nutritionals operating segments are tested for
impairment using projected cash flows over a three year period. In cases where management have strategic plans beyond three years these numbers are
also used in the projections. Discount rates are based on the Group weighted average cost of capital adjusted for company risk factors and specific
country risk. A terminal value assuming 2% growth into perpetuity is also applied. Refer to note 16 for the sensitivity analysis on the key assumptions used
for calculating value in use of the CGUs.
Additional information in relation to impairment reviews is disclosed in note 16.
Income taxes
The Group is subject to income tax in numerous jurisdictions. Significant estimation is required in determining the worldwide provision for income
taxes. There are many transactions during the ordinary course of business for which the ultimate tax determination is uncertain and the applicable
tax legislation is open to differing interpretations. The Group takes external professional advice to help minimise this risk. It recognises liabilities for
anticipated tax authority reviews based on estimates of whether additional taxes will be due, having regard to all information available on the tax
matter. The Group engages with local tax experts to support the judgements made where there is significant uncertainty about the position taken.
In determining any liability for amounts expected to be paid to tax authorities, the Group has regard to the tax status of the entities involved, the
external professional advice received, the status of negotiations and correspondence with the relevant tax authorities, the best estimate of the amount
expected to become payable, past practices of the tax authorities and any precedents in the relevant jurisdiction. Where the final outcome of these tax
matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period
in which such determination is made.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the unused tax losses and
unused tax credits may be utilised. The Group estimates the most probable amount of future taxable profits using assumptions consistent with those
employed in impairment calculations and taking into consideration applicable tax legislation in the relevant jurisdiction.
Income taxes and deferred taxes are disclosed in notes 12 and 26 respectively.
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180
FINANCIAL STATEMENTS
4. Segment information
In accordance with IFRS 8 ‘Operating Segments’, the Group, including its joint ventures, has identified three reportable segments as follows:
Glanbia Performance Nutrition
Glanbia Performance Nutrition manufactures and sells sports nutrition and lifestyle nutrition products through a variety of channels including specialty
retail, online, Food, Drug, Mass, Club (FDMC), and gyms in a variety of formats, including powders, Ready-to-Eat (bars and snacking foods) and
Ready-to-Drink beverages.
Glanbia Nutritionals
Glanbia Nutritionals manufactures and sells cheese, dairy and non-dairy nutritional and functional ingredients, and vitamin and mineral premixes
targeting the increased market focus on health and nutrition.
Glanbia Ireland
Glanbia Ireland is the largest milk processor in Ireland producing a range of value added dairy ingredients and consumer products. Glanbia Ireland is
also a large scale seller of animal nutrition and fertiliser as well as having a chain of agricultural retail outlets in Ireland. Glanbia Ireland is a joint venture
that is classified as held for sale as at 1 January 2022 and the amounts stated represent the Group’s share presented as discontinued operations
(note 7). Glanbia Ireland is reported as a segment as the Chief Operating Decision Maker (“CODM”) continues to review its results until the proposed
disposal is concluded.
Other segments and unallocated
All other segments and unallocated include both the results of other joint ventures who manufacture and sell cheese and dairy ingredients and
unallocated corporate costs. These investees did not meet the quantitative thresholds for reportable segments in 2021 or 2020.
These segments align with the Group’s internal financial reporting system and the way in which the CODM assesses performance and allocates
the Group’s resources. Each segment is reviewed in its totality by the CODM. The CODM assesses the trading performance of operating segments
based on a measure of earnings before interest, tax, amortisation and exceptional items. Given that net finance costs and income tax are managed
on a centralised basis, these items are not allocated between operating segments for the purposes of the information presented to the CODM and
are accordingly omitted from the detailed segmental analysis below.
Amounts stated for joint ventures represents the Group’s share.
Pre-exceptional segment results are as follows:
2021
Glanbia
Performance
Nutrition
€’m
Glanbia
Nutritionals
€’m
Glanbia
Ireland
€’m
Tot al
reportable
segments
€’m
All other
segments and
unallocated
€’m
Tot al
Group
€’m
Total gross segment revenue 1,303.3 2,955.5 – 4,258.8 – 4,258.8
Inter-segment revenue (0.2) (61.7) – (61.9) – (61.9)
Revenue 1,303.1 2,893.8 – 4,196.9 – 4,196.9
Operating profit before intangible asset
amortisation (EBITA) 145.1 125.5 – 270.6 – 270.6
Share of results of joint ventures accounted for
using the equity method – – – – 19.2 19.2
Profit after tax from discontinued operations – – 25.7 25.7 – 25.7
2020
Total gross segment revenue 1,13 8.1 2,706.5 – 3,844.6 – 3,844.6
Inter-segment revenue (0.1) (21.4) – (21.5) – (21.5)
Revenue 1,138.0 2,6 85.1 – 3,823.1 – 3,823.1
Operating profit before intangible asset
amortisation (EBITA) 91.2 118.4 – 209.6 – 209.6
Share of results of joint ventures accounted for
using the equity method – – – – 37.7 37.7
Profit after tax from discontinued operations – – 23.9 23.9 – 23.9
Notes to the financial statements continued
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181
Included in external revenue are related party sales between Glanbia Nutritionals and Glanbia Ireland of €0.7 million (2020: €0.6 million). Inter-segment
transfers or transactions are entered into under the normal commercial terms and conditions that would also be available to unrelated third parties.
Revenue of approximately €736.3 million (2020: €681.2 million) and €543.3 million (2020: €513.7 million) is derived from two external customers
respectively within the Glanbia Nutritionals segment.
Pre-exceptional segment operating profit before intangible asset amortisation (EBITA) is reconciled to reported profit before tax and profit after tax
in the Group income statement.
Other pre-exceptional segment information is as follows:
2021 Notes
Glanbia
Performance
Nutrition
€’m
Glanbia
Nutritionals
€’m
Glanbia
Ireland
€’m
Tot al
reportable
segments
€’m
All other
segments and
unallocated
€’m
Tot al
Group
€’m
Depreciation and impairment of PP&E and ROU
assets 23.4 39.6 – 63.0 (1.4) 61.6
Amortisation and impairment of intangible assets
16 45.7 18.2 – 63.9 – 63.9
Capital expenditure – additions 54.9 36.5 – 91.4 9.4 100.8
Capital expenditure – business combinations 49.7 44.3 – 94.0 – 94.0
2020
Depreciation and impairment of PP&E and ROU
assets 25.4 38.5 – 63.9 – 63.9
Amortisation and impairment of intangible assets
16 44.2 16.7 – 60.9 – 60.9
Capital expenditure – additions 37.4 40.5 – 7 7.9 3.9 81.8
Capital expenditure – business combinations – 52.6 – 52.6 – 52.6
The segment assets and liabilities are as follows:
2021
Glanbia
Performance
Nutrition
€’m
Glanbia
Nutritionals
€’m
Glanbia
Ireland
€’m
Tot al
reportable
segments
€’m
All other
segments and
unallocated
€’m
Tot al
Group
€’m
Segment assets 1,741.3 1,138.9 262.8 3,143.0 484.6 3,627.6
Segment liabilities 441.4 446.7 – 888.1 999.2 1,887.3
2020
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 from external customers in the table below and in the disaggregation of revenue by primary geographical markets table on the following page
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.
Revenue Non-current assets
2021
€’m
2020
€’m
2021
€’m
2020
€’m
Ireland (country of domicile) 7.7 4.7 713.1 880.4
US 3,390.2 3,177.5 1,201.9 1,101.3
Other
– North America (excluding US) 79.9 68.1 5.2 5.0
– Europe (excluding Ireland) 372.6 307.6 214.7 166.6
– Asia Pacific 265.6 221.7 11.2 9.7
– L ATAM 43.9 26.7 – –
– Rest of World 37.0 16.8 – –
4,196.9 3,823.1 2,146.1 2,163.0
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182
FINANCIAL STATEMENTS
4. Segment information continued
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.
2021 2020
Glanbia
Performance
Nutrition
€’m
Glanbia
Nutritionals
€’m
Tot al
€’m
Glanbia
Performance
Nutrition
€’m
Glanbia
Nutritionals
€’m
Total
€’m
Internal reporting structures
Nutritional Solutions – 877.4 877. 4 – 746.8 746.8
US Cheese – 2,016.4 2,016.4 – 1,938.3 1,938.3
GPN Americas 872.3 – 872.3 811.1 – 811.1
GPN International (including Direct-to-Consumer) 430.8 – 430.8 326.9 – 326.9
1,303.1 2,893.8 4,196.9 1,13 8.0 2,685.1 3,823.1
Primary geographical markets
North America 881.7 2,588.4 3,470.1 817.5 2,428.1 3,245.6
Europe 265.4 114.9 380.3 216.8 95.5 312.3
Asia Pacific 119. 5 146.1 265.6 87.1 134.6 221.7
LATAM 9.7 34.2 43.9 6.6 20.1 26.7
Rest of World 26.8 10.2 37.0 10.0 6.8 16.8
1,303.1 2,893.8 4,196.9 1,13 8.0 2,685.1 3,823.1
Timing of revenue recognition
Products transferred at point in time 1,303.1 2,893.8 4,196.9 1,138.0 2,685.1 3,823.1
Products transferred over time – – – – – –
1,303.1 2,893.8 4,196.9 1,13 8.0 2,685.1 3,823.1
Channel mix for Glanbia Performance Nutrition
2021
€’m
2020
€’m
Distributor 287.7 180.3
Food, Drug, Mass, Club (FDMC) 440.0 428.0
Online 398.6 372.8
Specialty 176.8 156.9
1,303.1 1,13 8.0
The disaggregation of revenue by channel mix is most relevant for Glanbia Performance Nutrition.
* The disaggregation of revenue relating to GPN reflects how it is managed as a result of the GPN transformation programme.
** 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.
Notes to the financial statements continued
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183
5. Operating profit
2021 2020
Notes
Pre-
exceptional
€’m
Exceptional
€’m
Tot al
€’m
Pre-
exceptional
€’m
Exceptional
€’m
Total
€’m
Revenue 4,196.9 – 4,196.9 3,823.1 – 3,823.1
Cost of goods sold (3,359.9) (6.4) (3,366.3) (3,134.1) (12.6) (3,146.7)
Gross profit 83 7.0 (6.4) 830.6 689.0 (12.6) 676.4
Selling and distribution expenses (379.7) (0.3) (380.0) (310.8) (3.1) (313.9)
Administration expenses (185.9) (41.7) (227.6) (164.0) (18.8) (182.8)
Net impairment losses on financial assets (0.8) – (0.8) (4.6) – (4.6)
Operating profit before intangible asset
amortisation (EBITA) 270.6 (48.4) 222.2 209.6 (34.5) 175.1
Intangible asset amortisation
16 (63.9) – (63.9) (60.9) – (60.9)
Operating profit 206.7 (48.4) 158.3 148.7 (34.5) 114.2
Operating profit is stated after (charging)/crediting:
2021 2020
Notes
Pre-
exceptional
€’m
Exceptional
€’m
Tot al
€’m
Pre-
exceptional
€’m
Exceptional
€’m
Total
€’m
Cost of inventories recognised as an expense in
cost of goods sold 20 (2,979.3) – (2,979.3) (2,794.8) – (2,794.8)
Employee benefit expense
8 (405.7) (31.5) (4 37.2) (350.6) (10.8) (361.4)
Depreciation of property, plant and equipment
15 (44.9) – (44.9) (45.9) – (45.9)
Depreciation of right-of-use assets
31 (18.1) – (18.1) (18.0) – (18.0)
Amortisation of intangible assets
16 (63.9) – (63.9) (60.9) – (60.9)
Research and development costs (18.5) – (18.5) (17. 3) – (17. 3)
Lease rentals (2.3) – (2.3) (2.9) – (2.9)
Reversal of impairment/(impairment) of property,
plant and equipment
15 1.4 (4.9) (3.5) – (1.3) (1.3)
Impairment of right-of-use assets
31 – (0.7) (0.7) – (1.0) (1.0)
Profit/(loss) on disposal of property, plant and
equipment
32 0.1 – 0.1 (0.8) (1.1) (1.9)
Auditor’s remuneration (1.6) – (1.6) (1.5) – (1.5)
Net foreign exchange loss (1.5) – (1.5) (1.3) – (1.3)
The following table discloses the fees paid or payable to Deloitte Ireland LLP, the Group auditor, and to other statutory audit firms in the Deloitte network:
Statutory auditor Other statutory auditor network firms
2021
€’m
2020
€’m
2021
€’m
2020
€’m
The audit of the Group financial statements 0.8 0.7 0.8 0.8
Other assurance services – – – –
Tax advisory services – – – –
Other non-audit services – – – –
0.8 0.7 0.8 0.8
In addition to the above, Deloitte Ireland LLP and Deloitte network member firms received fees of €0.3 million (2020: €0.3 million) in respect of the audit
of the Group’s joint ventures.
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184
FINANCIAL STATEMENTS
6. Exceptional items
The nature of the total exceptional items is as follows:
Notes
2021
€’m
2020
€’m
Organisation redesign costs (a) 18.1 31.2
Pension related costs
(b) 30.3 –
Acquisition integration costs
(d) – 3.4
Covid-19 costs
(e) – 3.7
Legal settlement gain
(f) – (3.4)
Asset impairments
(g) – (0.4)
Total 48.4 34.5
Share of results of joint ventures accounted for using the equity method 2.0
(b)
0.3
(e)
Exceptional tax credit 12 (7.6) (4.2)
Total exceptional charge from continuing operations 42.8 30.6
Exceptional (gain)/charge after tax from discontinued operations (0.7)
(c)
0.9
(e)
Total exceptional charge after tax for the year 32 42.1 31.5
Details of the exceptional items are as follows:
(a) Organisation redesign costs primarily relates 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 both
years includes people and property related costs, and professional consulting fees. The investment phase of this multi-year strategic programme
is now complete and no further costs are anticipated.
(b) Pension related costs relate to the restructure of legacy defined benefit pension schemes associated with the Group and joint ventures, which
included initiating a process for the ultimate buy out and wind up of these schemes (note 9) and a further simplification of schemes that remain.
Costs incurred relate to the estimated cost of the settlement loss as a result of acquiring a bulk purchase annuity policy to mirror and offset
movements in known liabilities of the schemes (“buy-in” transaction), as well as related advisory and execution costs, net of gains from the
completion of an Enhanced Transfer Value exercise that reduces risk in remaining schemes.
(c) The exceptional gain from discontinued operations relates to the Glanbia Ireland joint venture that was classified as a discontinued operation
on 17 December 2021 (note 7). The net gain in 2021 includes once off gains on the settlement of forward contracts and pension reorganisation,
net of charges relating to the costs of a company-wide reorganisation programme that includes redundancy cost, professional service costs and
impairment charges.
(d) Prior year acquisition integration costs comprised material costs relating to the acquisition, integration and restructuring of acquired businesses.
(e) Prior year Covid-19 costs related 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.
(f) Prior year legal settlement gain related to net compensation received following the successful conclusion of a legacy case.
(g) Prior year asset impairments credit related to the release of a provision not required on the disposal of certain inventory following the completion
of a rationalisation and simplification of certain product lines and related assets in the GPN business.
Notes to the financial statements continued
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185
7. Joint venture held for sale and discontinued operations
The Company announced its intention to sell its 40% holding in Glanbia Ireland DAC to Glanbia Co-operative Society Ltd for €307 million in November 2021
(the “Proposed Transaction”). The sale is consistent with the Group’s ambition to focus on its global nutrition strategy as a brand owner and provider
of value added nutrition solutions, serving high growth markets.
On 8 December 2021 the Company and the Society signed binding legal agreements relating to the Proposed Transaction. Members of the Society
approved the Proposed Transaction on 17 December 2021. The Proposed Transaction is expected to be completed in the first half of 2022 following
the approval of the shareholders of the Company, other than the Society or persons connected with the Society at an extraordinary general meeting
and receipt of any necessary regulatory approvals (note 36). Thus, the Group has treated the joint venture arrangement in Glanbia Ireland as an asset
held for sale and ceased to apply the equity method of accounting to its interest in Glanbia Ireland from 17 December 2021.
As Glanbia Ireland represented a significant component and separately reported segment of the Group (note 4), the Group’s share of Glanbia Ireland’s
results have been separately presented in the financial statements as discontinued operations. The Group income statement and Group statement of
comprehensive income for the comparative year have been re-presented to show the discontinued operation separately from continuing operations.
The profit after tax from discontinued operations included in the Group income statement relate to the Group’s share of profit after tax of Glanbia
Ireland and are analysed as follows:
Notes
2021
€’m
2020
€’m
Glanbia Ireland’s results (100%)
Revenue 2,169.9 1,906.2
Expenses (2,088.3) (1, 8 37. 3 )
Profit before tax 81.6 68.9
Tax (10.3) (8.9)
Profit after tax 71.3 60.0
Profit after tax attributable to equity holders of the joint venture 69.5 59.1
Reconciliation to the Group’s share of Glanbia Ireland’s profit after tax
Group’s 40% share of profit after tax 27. 8 23.6
Adjustments* (1.4) (0.6)
Share of profit after tax of joint venture (Glanbia Ireland) presented as discontinued operations
17 26.4 23.0
* Relates to adjustment in respect of unrealised profit on sales to the Group and amortisation of intangible assets recognised on fair value adjustments.
There was no impairment charge on the joint venture held for sale as the proposed sale price exceeded the carrying amount of the investment in
Glanbia Ireland when it was classified as an asset held for sale.
The asset classified as held for sale in the Group balance sheet is:
Notes
2021
€’m
2020
€’m
Interest in joint venture – Glanbia Ireland 17 234.0 –
Associated cumulative amounts recognised in other comprehensive income associated with Glanbia Ireland as at 1 January 2022 were
remeasurements on defined benefit plan, net of deferred tax of €5.5 million and fair value movement on cash flow hedges, net of deferred tax
of€1.4million.
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186
FINANCIAL STATEMENTS
8. Employment
The aggregate payroll costs of employees (including Executive Directors) in the Group were:
Notes
2021
€’m
2020
€’m
Wages and salaries 341.1 306.8
Social security costs 28.6 25.2
Pension costs – defined contribution plans
9 11.6 10.8
Pension costs – defined benefit plans
9 30.8 2.8
Other compensation costs
– Private health insurance 21.8 22.3
– Cost of share-based payments
10 15.9 5.2
– Company car allowance 2.1 1.7
451.9 374.8
Included within the aggregate payroll costs are exceptional items of €31.5 million (2020: €10.8 million) which include redundancy costs of €1.9 million
(2020: €7.3 million). Capitalised labour costs of €14.7 million (2020: €13.4 million) are included within the aggregate payroll costs while the remaining
post-exceptional cost of €437.2 million (2020: €361.4 million) are recognised as an expense (note 5).
The Directors’ remuneration information is shown on tables A to G on pages 139 to 142 in the Remuneration Committee Report.
The average number of employees, excluding the Group’s joint ventures, is analysed into the following reportable segments:
2021 2020
Glanbia Performance Nutrition 2,032 2,031
Glanbia Nutritionals 2,685 2,500
4,717 4,531
Notes to the financial statements continued
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187
9. Retirement benefit obligations
Defined contribution plans
The Group has a number of defined contribution pension plans in operation. €11.6 million (2020: €10.8 million) were recognised in the Group income
statement during the year (note 8).
Defined benefit pension plans
The Group operates two defined benefit pension plans in the Republic of Ireland (“Ireland”) and two defined benefit pension plans in 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. These Boards are responsible for the management and governance of the pension plans including compliance with all relevant laws and
regulations. Each of the Group’s defined benefit pension plans operate under their respective regulatory frameworks and minimum funding requirements
in Ireland and the statutory funding objective in the UK. The UK pension plans comprise solely of pensioners and deferred pensioners.
The defined benefit pension plans provide retirement and death benefits for the Group’s employees. The majority of the defined benefit pension plans
are career average pension plans, which provide benefits to members in the form of a guaranteed level of pension payable for life. The level of benefits
provided depends on members’ length of service and their average salary over their period of employment.
The contributions paid to the defined benefit pension plans are in accordance with the schedule of contributions agreed between the Group and
the Trustees of the relevant plans as recommended in the actuarial valuation reports or in subsequent actuarial advice. The contributions are partly
funded by the employees, where they are required to contribute a fixed percentage of pensionable salary, and partly by the Group. The latest
actuarial valuation reports for these plans, which are not available for public inspection, are dated between 30 June 2018 and 1 January 2021.
During 2021, the Trustee Boards of the UK pension plans completed a buy-in transaction whereby the assets of the plans were invested in a bulk
purchase annuity policy with a UK pension insurance specialist. The insurance policy was 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 Group balance sheet. As
the bulk purchase annuity policy is 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 income statement as an exceptional item.
The majority of the net UK pension liabilities at 1 January 2022 relates primarily to Guaranteed Minimum Pension equalisation (“GMPe”). These GMPe
liabilities will require an additional contribution from the Group prior to the completion of the aforementioned buy-out which is expected to occur in
2022 and result in the recognition of a charge/gain in the income statement in 2022.
In 2021, the Trustee Boards of the Irish pension plans undertook and concluded an enhanced transfer value exercise with an associated €10.7 million
of scheme payment and €1.5 million of contribution to fund the enhanced transfer values.
Recognition in the Group balance sheet:
2021
€’m
2020
€’m
Non-current assets
Surplus on defined benefit pension plan 2.9 2.6
Non-current liabilities
Deficit on defined benefit pension plan (17.1) (31.9)
Net defined benefit pension plan liability (14.2) (29.3)
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188
FINANCIAL STATEMENTS
9. Retirement benefit obligations continued
The amounts recognised in the Group balance sheet and the movements in the net defined benefit obligations over the year are as follows:
Present value of obligation Fair value of plan assets Total net
defined
liability
€’m2021
ROI
€’m
UK
€’m
Tot al
€’m
ROI
€’m
UK
€’m
Tot al
€’m
At the beginning of the year (146.3) (112.4) (258.7) 125.1 104.3 229.4 (29.3)
Current service cost (1.9) – (1.9) – – – (1.9)
Interest (expense)/income (1.0) (2.1) (3.1) 0.9 2.1 3.0 (0.1)
Settlement gain/(loss)* 2.9 – 2.9 – (31.7) (31.7) (28.8)
Total amount recognised in profit or loss – (2.1) (2.1) 0.9 (29.6) (28.7) (30.8)
Remeasurements
– Return of plan assets in excess of interest income – – – 2.9 (1.0) 1.9 1.9
– Actuarial loss arising from experience adjustments (1.5) (0.2) (1.7) – – – (1.7)
– Actuarial loss arising from changes in demographic
assumptions (0.7) – (0.7) – – – (0.7)
– Actuarial loss arising from changes in financial assumptions 3.7 (3.2) 0.5 – – – 0.5
Total amount recognised in other comprehensive income 1.5 (3.4) (1.9) 2.9 (1.0) 1.9 –
Exchange differences – (8.4) (8.4) – 8.0 8.0 (0.4)
Contributions paid by the employer – – – 6.4 39.8 46.2 46.2
Contributions paid by the employee (0.3) – (0.3) 0.3 – 0.3 –
Benefits paid 16.9 5.1 22.0 (16.9) (5.1) (22.0) –
Net assets attributed to the Group** – (12.1) (12.1) – 12.2 12.2 0.1
At the end of the year (128.2) (133.3) (261.5) 118.7 128.6 247. 3 (14.2)
* Included in pension related costs (note 6).
** 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.
Present value of obligation Fair value of plan assets
Total net
defined
liability
€’m2020
ROI
€’m
UK
€’m
Total
€’m
ROI
€’m
UK
€’m
Total
€’m
At the beginning of the year (142.5) (111.0) (253.5) 116. 3 90.9 2 07. 2 (46.3)
Current service cost (1.9) – (1.9) – – – (1.9)
Past service cost – (0.3) (0.3) – – – (0.3)
Interest (expense)/income (1.4) (1.9) (3.3) 1.1 1.6 2.7 (0.6)
Total amount recognised in profit or loss (3.3) (2.2) (5.5) 1.1 1.6 2.7 (2.8)
Remeasurements
– Return of plan assets in excess of interest income – – – 11.8 12.9 24.7 24.7
– Actuarial loss arising from experience adjustments (0.2) (0.5) (0.7) – – – (0.7)
– Actuarial loss arising from changes in demographic
assumptions – (0.6) (0.6) – – – (0.6)
– Actuarial loss arising from changes in financial assumptions (6.7) ( 7. 9 ) (14.6) – – – (14.6)
Total amount recognised in other comprehensive income (6.9) (9.0) (15.9) 11.8 12.9 24.7 8.8
Exchange differences – 5.9 5.9 – (4.9) (4.9) 1.0
Contributions paid by the employer – – – 2.3 7.7 10.0 10.0
Contributions paid by the employee (0.3) – (0.3) 0.3 – 0.3 –
Benefits paid 6.7 3.9 10.6 (6.7) (3.9) (10.6) –
At the end of the year (146.3) (112.4) (258.7) 125.1 104.3 229.4 (29.3)
The net liability disclosed above relates to funded plans.
Notes to the financial statements continued
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
189
The fair value of plan assets at the end of the reporting period are as follows:
2021 2020
Quoted
€’m
Unquoted
€’m
Tot al
€’m %
Quoted
€’m
Unquoted
€’m
Total
€’m %
Equities
– Consumer 6.0 − 6.0 3 4.2 − 4.2 2
– Financials 5.1 − 5.1 2 4.2 − 4.2 2
– Information technology 5.0 − 5.0 2 4.7 − 4.7 2
– Other 13.5 − 13.5 5 12.2 − 12.2 5
Corporate bonds
– Investment grade 9.4 − 9.4 4 9.5 − 9.5 4
– Non-investment grade − − − − 1.6 − 1.6 1
Government bonds and gilts 44.5 − 44.5 18 51.3 − 51.3 22
Property − 2.2 2.2 1 − 2.3 2.3 1
Cash 3.2 1.0 4.2 2 2.3 6.7 9.0 4
Investment funds 14.4 − 14.4 6 11.0 108.9 119.9 52
Insured assets − 12 7.3 12 7.3 51 − − − −
Other 2.5 13.2 15.7 6 − 10.5 10.5 5
103.6 143.7 247. 3 100 101.0 128.4 229.4 100
The plan assets at the end of the reporting period do not include any equities held in the Group, nor does the Group use or occupy any of the plan
assets.
Principal risks in the defined benefit pension plans
The principal risks associated with the bulk of the UK pension plans are mitigated by the bulk annuity policy. Accordingly the Group is exposed
to a number of risks on the Irish pension plans and the residual GMPe component of the UK pension plans. The most significant of those risks are
detailed below:
(a) Investment risk
The pension liabilities are discounted using market yields on high-quality corporate bonds. If the return on plan assets is below this rate, it will create
a plan deficit. Currently, the pension plans hold investments in primarily investment funds and government bonds and gilts. The Trustees conduct
investment reviews to take advice on asset allocation, taking into account asset valuations, liability durations, funding measurements and an
achievement of an appropriate return on assets.
(b) Interest rate risk
A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond
holdings. A change in the net defined benefit obligation as a result of changes in the discount rate leads to volatility in the Group balance sheet, Group
income statement and Group statement of comprehensive income. It also impacts the funding requirements for the plans.
(c) Inflation risk
A significant proportion of the benefits under the plans are linked to inflation, be it consumer price inflation or retail price inflation, which in most cases
are subject to a cap on annual increases. Although there are caps in force on inflation increases and the plans’ assets are expected to provide a good
hedge against inflation over the long term, higher inflation will lead to higher liabilities.
(d) Longevity risk
The present value of the defined benefit obligation is calculated by reference to the best estimate of the life expectancy of plan participants both during
and after their employment. An increase in the life expectancy of the plan participants will increase the defined benefit obligation.
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190
FINANCIAL STATEMENTS
9. Retirement benefit obligations continued
Principal assumptions used in the defined benefit pension plans
The principal assumptions used for the purposes of the actuarial valuations were as follows:
2021
ROI
2021
UK
2020
ROI
2020
UK
Discount rate 1.10% 1.90% 0.70% 1.45%
Inflation rate 2.10% 2.80%–3.40% 1.10% 2.25%–2.90%
Future salary increases* 3.10% 0.00% 2.10% 0.00%
Future pension increases 0.00% 2.75%–3.25% 0.00% 2.25%–2.80%
Mortality rates (years)
– Male – reaching 65 years of age in 20 years’ time 24.1 22.1 24.0 22.1
– Female – reaching 65 years of age in 20 years’ time 26.2 24.5 26.1 24.4
– Male – currently aged 65 years old 21.8 21.1 21.7 21.1
– Female – currently aged 65 years old 24.2 23.2 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.
Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience in each
territory.
Sensitivity analysis for principal assumptions used to measure plan liabilities
There are inherent uncertainties surrounding the financial assumptions adopted in calculating the actuarial valuation of the Group’s defined benefit
pension plans. The following table analyses, for the Group’s pension plans, the estimated impact on the plan liabilities resulting from changes to key
actuarial assumptions, with all other assumptions remaining constant.
The sensitivity analysis may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in the
assumptions would occur in isolation of one another as some of the assumptions may be correlated. The impact on the plan liabilities has been
calculated using the projected unit credit method, which is the same as that applied in calculating the defined benefit obligation recognised in the
Group balance sheet.
There have been no changes from the previous year in the methods and assumptions used in preparing the sensitivity analysis.
ROI plans UK plans
Assumption Change in assumption
Increase
€’m
Decrease
€’m
Increase
€’m
Decrease
€’m
2021
Discount rate 0.25% movement (5.3) 5.5 (4.8) 5.1
Inflation rate 0.25% movement 1.5 (1.5) 3.8 (3.7)
Mortality rate 1 year movement 4.2 (4.2) 6.3 (6.4)
Future salary increases*
Future pension increases**
2020
Discount rate 0.25% movement (6.2) 6.6 (4.2) 4.5
Inflation rate 0.25% movement 1.8 (1.8) 3.7 (3.5)
Mortality rate 1 year movement 5.0 (4.9) 5.5 (5.4)
Future salary increases*
Future pension increases**
* The majority of the defined benefit plans are career average plans. As a result, future salary increases will not have a material impact on the plan liabilities.
** There are no future pension increases agreed in the material defined benefit pension plans.
2021
ROI plans
2021
UK plans
2020
ROI plans
2020
UK plans
Expected contributions to the defined benefit plans for the coming year (€’m) 2.1 – 3.9 3.6
Weighted average duration of the defined benefit plans 17 years 15 years 17 years 16 years
Notes to the financial statements continued
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191
10. Share-based payment expense
The Group operates various equity settled share-based payment arrangements which are described in this note. Further details of the plans are
available in the Remuneration Committee Report on pages 118 to 142.
The total cost recognised in the Group income statement is analysed as follows:
Notes
2021
€’m
2020
€’m
The 2018 Long-term incentive plan (2018 LTIP) 10.5 4.2
The 2019 Restricted Share Plan (2019 RSP) 2.8 1.0
The annual incentive deferred into shares scheme (AIDIS) 2.6 –
8/32 15.9 5.2
Refer to note 23 for the movement in the share-based payment reserve recognised in the Group balance sheet.
2008 LTIP and 2018 LTIP
The 2008 LTIP was introduced in 2008 following approval by the shareholders, under which share awards are granted to Executive Directors and
certain senior managers in the form of a provisional allocation of shares for which no exercise price is payable. The 2008 LTIP expired on 4 March 2018
and was replaced by the 2018 LTIP. No further awards were made under the 2008 LTIP after 4 March 2018.
Awards granted under the 2008 LTIP and 2018 LTIP are scheduled to vest to the extent that there is sustained improvement in the underlying financial
performance over a three-year period and that the service condition is fulfilled as determined by the Remuneration Committee. Awards lapse/expire by
the fourth anniversary of the date of a grant. The maximum annual award level is 250% of base salary. Vesting is determined on a straight line basis
between threshold and maximum. There is a requirement to hold shares received pursuant to the vesting of LTIP awards for a minimum period of one
year post-vesting (two years for members of the Group Operating Executive).
The extent of vesting for awards outstanding is determined based on a combination of performance metrics comprised of Group adjusted Earnings
Per Share, relative Total Shareholder Return performance (“TSR”) against the STOXX Europe 600 Food & Beverage index, Group Return on Capital
Employed (“ROCE”), business segment EBITA and ROCE where applicable, a service condition, in certain circumstances a personal objective, and
Environmental, Social and Governance for the 2021 share awards where applicable.
2019 RSP
This scheme was introduced in 2019 to provide share awards to certain employees. The maximum award level is 250% of base salary. The extent
of vesting for awards outstanding is generally determined based on a service condition and personal objectives.
AIDIS
This scheme is an annual performance related incentive scheme for Executive Directors and other senior management. The fair value of the annual
incentive deferred into shares scheme was calculated as €2.6 million in 2021 (2020: nil) and equates to the cash value of the portion of the annual
incentive that will be settled by way of shares. The number of shares received is determined by the share price on the date of allocation. The incentive
will be invested in shares in the Company and delivered to the Executive Directors and senior management two years following this investment.
20 02 LTIP
This plan closed to further grants in 2012, the last share options were granted in 2011. Under the 2002 LTIP, options could not be exercised before
the expiration of three years from the date of grant and could only be exercised if a pre-determined performance criterion for the Group had been
achieved. The performance criterion required an increase in the adjusted Earnings per Share of the Group of at least the Consumer Price Index plus
5% over a three-year period. When the options are exercised, the Company issues new shares and the fair value of the awards exercised is reclassified
from the share-based payment reserve to retained earnings. The fair value of the share options was calculated using the Binomial Model.
During the year ended 1 January 2022 40,000 2002 LTIP share options were exercised at an average price of €4.38 per share (2020: nil). The number
of share options outstanding and exercisable as at 1 January 2022 is nil (2020: 40,000 share options with a weighted average exercise price of €4.38
per share).
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192
FINANCIAL STATEMENTS
10. Share-based payment expense continued
Movement in the number of awards of the 2018 LTIP, 2008 LTIP and 2019 RSP, and the weighted average fair value of grants during the years ended
1 January 2022 and 2 January 2021 are as follows:
2018 LTIP 20 0 8 LTIP 2019 RSP
2021
Number
2020
Number
2021
Number
2020
Number
2021
Number
2020
Number
At the beginning of the year 3,522,382 1,832,628 – 692,603 503,072 159,659
Granted 1,649,825 1,859,687 – – 104,818 360,478
Vested (296,153) – – (196,452) (187,025) (5,033)
Lapsed (842,287) (169,933) – (49 6,151) (49,031) (12,032)
At the end of the year 4,033,767 3,522,382 – – 371,834 503,072
Weighted average fair value of awards granted €10.94 € 7.43 – – €13.29 €10.35
The assumptions used in the valuation of the awards granted under 2018 LTIP and 2019 RSP during the years ended 1 January 2022 and 2 January
2021 included:
2018 LTIP –
2021 awards
2018 LTIP –
2020 awards
2019 RSP –
2021 awards
2019 RSP –
2020 awards
Model used Monte Carlo Monte Carlo Discounted
cash flow
Discounted
cash flow
Year of earliest vesting date 2024 2023 2022-2023 2021-2023
Share price at date of award €11.57 €8.24 €11.57- €14.90 €9.19-€10.42
Risk-free interest rate (0.73%) (0.68%) – –
Expected volatility* 37.5% 32.5% – –
Expected dividend yield 1.1% 2.15% 2.12%-2.30% 2.57%-2.60%
Fair value – TSR component €7.68 €4.62 – –
Fair value – non-market performance component €11.19 € 7.72 – –
* Expected volatility was determined by calculating the historical volatility of the Company’s share price over a period equivalent to the expected life of the award.
11. Finance income and costs
Notes
2021
€’m
2020
€’m
Finance income
Interest income on loans to related parties
35 1.4 1.3
Interest income on deposits 0.1 2.2
Interest income on swaps – 0.6
Changes in fair value of call option
29(b) 0.5 –
Total finance income
32 2.0 4.1
Finance costs
Bank borrowing costs (3.8) (12.8)
Facility fees (2.0) (1.7)
Finance cost of private placement debt (10.8) (7.3 )
Interest expense on swaps (0.2) –
Interest expense on lease liabilities
31 (2.5) (2.8)
Changes in fair value of contingent consideration (0.2) –
Total finance costs
32 (19.5) (24.6)
Net finance costs (17. 5) (20.5)
Net finance costs do not include capitalised borrowing costs of €0.5 million (2020: €0.5 million) on qualifying assets (note 15). Interest is capitalised at
the Group’s average interest rate for the period of 3.0% (2020: 2.9%). Where relevant, tax deduction for capitalised interest was taken in accordance
with Sec 81(3), TCA 1997. Tax relief in relation to capitalised interest is €0.1 million (2020: nil).
Notes to the financial statements continued
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12. Income taxes
Notes
2021
€’m
2020
€’m
Current tax
Irish current tax charge 9.4 5.7
Adjustments in respect of prior years – 0.1
Irish current tax for the year 9.4 5.8
Foreign current tax charge 28.4 14.8
Adjustments in respect of prior years (0.4) (1.4)
Foreign current tax for the year 28.0 13.4
Total current tax 37.4 19.2
Deferred tax
Deferred tax – current year (20.2) (11.6)
Adjustments in respect of prior years (0.2) 2.7
Total deferred tax
26 (20.4) (8.9)
Tax charge 17.0 10.3
The tax credit on exceptional items included in the above amounts is as follows:
Notes
2021
€’m
2020
€’m
Current tax credit on exceptional items (3.1) (4.2)
Deferred tax credit on exceptional items (4.5) –
Total tax credit on exceptional items for the year
6 (7.6) (4.2)
The tax credit on exceptional items has been disclosed separately above as it relates to costs and income which have been presented as exceptional.
The tax on the Group’s profit before tax differs from the theoretical amount that would arise applying the corporation tax rate in Ireland, as follows:
2021
€’m
2020
€’m
Profit before tax 158.0 131.1
Income tax calculated at Irish rate of 12.5% (2020: 12.5%) 19.8 16.4
Earnings at higher Irish rates 0.2 2.0
Difference due to overseas tax rates (capital and trading) 2.2 8.1
Adjustment to tax charge in respect of previous periods (0.6) 1.4
Tax on share of results of joint ventures accounted for using the equity method included in profit before tax (2.1) (4.7)
Other reconciling items (2.5) (12.9)
Total tax charge 17.0 10.3
Details of deferred tax charged or credited directly to other comprehensive income during the year are outlined in note 26.
Factors that may affect future tax charges and other disclosure requirements
The total tax charge in future periods will be affected by any changes to the applicable tax rates in force in jurisdictions in which the Group operates
and other relevant changes in tax legislation, including amendments impacting on the excess of tax depreciation over accounting depreciation. The
total tax charge of the Group may also be influenced by the effects of corporate development activity and the resolution of uncertain tax positions
where the final outcome of those matters is different than the amounts recorded (note 3).
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FINANCIAL STATEMENTS
13. 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 year, excluding ordinary shares purchased by the Group and held as own shares (note 23). The weighted average
number of ordinary shares in issue used in the calculation of Basic Earnings Per Share is 290,059,376 (2020: 295,173,279).
2021 2020
Continuing
operations
Discontinued
operations Total
Continuing
operations
Discontinued
operations Total
Profit after tax attributable to equity holders of the
Company (€’m) 140.6 26.4 167.0 120.8 23.0 143.8
Basic Earnings Per Share (cent) 48.47 9.10 57.57 40.93 7.79 48.72
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 awards and share options 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. The number of share options represents the number expected to be exercised.
2021 2020
Weighted average number of ordinary shares in issue 290,059,376 295,173,279
Shares deemed to be issued for no consideration in respect of:
– Share awards 1,048,035 762,861
– Share options – 22,031
Weighted average number of shares used in the calculation of Diluted Earnings Per Share 291,107,411 295,958,171
Diluted Earnings Per Share (cent) 57.37 48.59
2021 2020
Continuing
operations
Discontinued
operations Total
Continuing
operations
Discontinued
operations Total
Diluted Earnings Per Share (cent) 48.30 9.07 57. 37 40.82 7.7 7 48.59
14. Dividends
The dividends paid and recommended on ordinary share capital are as follows:
Notes
2021
€’m
2020
€’m
Equity dividends to shareholders
Final – paid 15.94c per ordinary share (2020: 15.94c) 46.5 47. 2
Interim – paid 11.75c per ordinary share (2020: 10.68c) 34.2 31.6
Total 80.7 78.8
Reconciliation to Group statement of cash flows and Group statement of changes in equity
Dividends to shareholders 80.7 78.8
Waived dividends in relation to own shares (0.2) (0.2)
Total dividends paid to equity holders of the Company
24 80.5 78.6
Equity dividends recommended
Final 2021 – proposed 17.53c per ordinary share (2020: 15.94c)
36 50.3 46.9
The amount of dividends recommended is based on the number of issued shares at year end (note 22). The actual amount will be based on the
number of issued shares on the record date (note 36).
Notes to the financial statements continued
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15. Property, plant and equipment
Notes
Land and
buildings
€’m
Plant and
equipment
€’m
Motor
vehicles
€’m
Tot al
€’m
Year ended 1 January 2022
Opening carrying amount 188.5 244.5 0.3 433.3
Exchange differences 14.0 19.4 – 33.4
Acquisitions
34 13.5 5.6 – 19.1
Additions 17.7 31.5 0.1 49.3
Depreciation charge
5/32 (10.6) (34.1) (0.2) (44.9)
Impairment
5 (1.1) (2.4) – (3.5)
Disposal of assets (0.1) (1.4) – (1.5)
Closing carrying amount 221.9 263.1 0.2 485.2
At 1 January 2022
Cost 329.1 634.3 2.9 966.3
Accumulated depreciation and impairment (107. 2) (371.2) (2.7) (481.1)
Carrying amount 221.9 263.1 0.2 485.2
Year ended 2 January 2021
Opening carrying amount 201.2 272.2 0.7 474.1
Exchange differences (14.9) (22.9) (0.1) ( 37.9 )
Acquisitions 3.9 3.1 – 7.0
Additions 10.0 29.2 – 39.2
Depreciation charge
5/32 (10.9) (34.7) (0.3) (45.9)
Impairment
5 (0.5) (0.8) – (1.3)
Disposal of assets (0.3) (1.6) – (1.9)
Closing carrying amount 188.5 244.5 0.3 433.3
At 2 January 2021
Cost 280.1 560.0 2.7 842.8
Accumulated depreciation and impairment (91.6) (315.5) (2.4) (409.5)
Carrying amount 188.5 244.5 0.3 433.3
Included in the closing cost at 1 January 2022 is an amount of €60.8 million (2020: €25.2 million) incurred in respect of assets under construction.
Included in the cost of additions for 2021 is €1.0 million (2020: €0.5 million) incurred in respect of staff costs capitalised into assets. Included
in the cost of additions for 2021 is €0.5 million (2020: €0.5 million) incurred in respect of borrowing cost capitalised into assets.
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196
FINANCIAL STATEMENTS
Notes to the financial statements continued
16. Intangible assets
Notes
Goodwill
€’m
Brands
and other
intangibles
€’m
Software
costs
€’m
Development
costs
€’m
Tot al
€’m
Year ended 1 January 2022
Opening carrying amount 548.4 609.7 64.6 20.6 1,243.3
Exchange differences 42.6 47. 8 1.6 1.7 93.7
Acquisitions 38.1 35.7 – – 73.8
Additions – – 18.4 10.1 28.5
Amortisation
4/5/32 – (39.2) (14.5) (10.2) (63.9)
Closing carrying amount 629.1 654.0 70.1 22.2 1,375.4
At 1 January 2022
Cost 629.1 954.1 139.1 45.6 1,767. 9
Accumulated amortisation and impairment – (300.1) (69.0) (23.4) (392.5)
Carrying amount 629.1 654.0 70.1 22.2 1,375.4
Year ended 2 January 2021
Opening carrying amount 574.3 684.1 64.4 21.8 1,344.6
Exchange differences (48.9) (58.7) (2.1) (1.9) (111.6)
Acquisitions 23.0 21.8 0.2 – 45.0
Additions – 0.7 15.0 10.5 26.2
Amortisation
4/5/32 – (38.2) (12.9) (9.8) (60.9)
Closing carrying amount 548.4 609.7 64.6 20.6 1,243.3
At 2 January 2021
Cost 548.4 853.0 123.0 82.1 1,606.5
Accumulated amortisation and impairment – (243.3) (58.4) (61.5) (363.2)
Carrying amount 548.4 609.7 64.6 20.6 1,243.3
The average remaining amortisation period for software costs is 4.8 years (2020: 5.2 years) and development costs is 2.1 years (2020: 2.2 years).
Approximately €11.2 million (2020: €13.5 million) of software additions during the year were internally generated which included €7.3 million
(2020: €6.2 million) of staff costs capitalised. Approximately €10.1 million of development cost additions during the year (2020: €10.5 million)
were internally generated which included €6.4 million (2020: €6.7 million) of staff costs capitalised.
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Brands and other intangibles
Notes
Brands
€’m
Customer
relationships
€’m
Recipes,
Know-how and
other
€’m
Tot al
€’m
Year ended 1 January 2022
Opening carrying amount 417.6 170.8 21.3 609.7
Exchange differences 32.7 13.1 2.0 47.8
Acquisitions
34 14.0 11.5 10.2 35.7
Amortisation (12.0) (24.9) (2.3) (39.2)
Closing carrying amount 452.3 170.5 31.2 654.0
At 1 January 2022
Cost 529.7 388.4 36.0 954.1
Accumulated amortisation and impairment (77.4) (217.9 ) (4.8) (300.1)
Carrying amount 452.3 170.5 31.2 654.0
Year ended 2 January 2021
Opening carrying amount 464.6 209.9 9.6 684.1
Exchange differences (40.2) (17.2) (1.3) (58.7)
Acquisitions 4.6 3.3 13.9 21.8
Additions – – 0.7 0.7
Amortisation (11.4) (25.2) (1.6) (38.2)
Closing carrying amount 417. 6 170.8 21.3 609.7
At 2 January 2021
Cost 478.5 351.0 23.5 853.0
Accumulated amortisation and impairment (60.9) (180.2) (2.2) (243.3)
Carrying amount 417. 6 170.8 21.3 609.7
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FINANCIAL STATEMENTS
Notes to the financial statements continued
16. Intangible assets continued
Individually material intangible assets with definite useful lives
Carrying
amount
2021
€’m
Average
remaining
amortisation
period
2021
Years
Carrying
amount
2020
€’m
Average
remaining
amortisation
period
2020
Years
Brands
Glanbia Performance Nutrition – BSN 40.9 29 39.0 30
Glanbia Performance Nutrition – Isopure 52.3 33 49.8 34
Glanbia Performance Nutrition – think! 64.4 34 61.2 35
Glanbia Performance Nutrition – Amazing Grass 31.7 35 30.1 36
Glanbia Performance Nutrition – Body & Fit 10.7 35 11.0 36
Glanbia Performance Nutrition – SlimFast North America 92.5 37 87.9 38
Glanbia Performance Nutrition - SlimFast International 19.0 37 18.0 38
Glanbia Performance Nutrition – LevlUp 13.6 20 – –
Customer relationships
Glanbia Performance Nutrition – Optimum Nutrition 8.6 1 12.7 2
Glanbia Performance Nutrition – BSN 10.3 4 11.8 5
Glanbia Performance Nutrition – Isopure 13.1 6 14.2 7
Glanbia Performance Nutrition – think! 35.9 7 3 8.1 8
Glanbia Performance Nutrition – Amazing Grass 24.2 10 24.6 11
Glanbia Performance Nutrition – SlimFast North America 36.8 12 37.2 13
Glanbia Performance Nutrition – SlimFast International 14.2 12 14.2 13
Management reviewed the amortisation period and amortisation method for the intangible assets with definite useful lives at the reporting date.
Management noted no difference in the expected useful life of the brands and customer relationship assets from the original estimates and noted no
change in the expected pattern of consumption of the future economic benefits of the assets.
Individually material indefinite life intangible assets
Carrying
amount
2021
€’m
Useful life
2021
Years
Carrying
amount
2020
€’m
Useful life
2020
Years
Brands
Glanbia Performance Nutrition – Optimum Nutrition 108.3 Indefinite 100.0 Indefinite
The movement in the carrying amount of the asset is in relation to exchange differences arising on translation at year end.
As at the reporting date management reviewed the events and circumstances supporting the indefinite useful life assessment. The brand is long
established, continues to have a strong market presence with high customer recognition and there are no material legal, contractual or other factors
that limit its useful life. In addition, the likelihood that market based factors could truncate the brand’s life is relatively remote because of the size,
diversification and market share of the brand. It was determined that this asset will continue to contribute indefinitely to the cash flows of the Group.
Impairment tests for goodwill and indefinite life intangibles
Goodwill and indefinite life intangibles acquired in business combinations are allocated to the Group’s cash generating units (“CGUs”) that are
expected to benefit from the business acquisition, rather than where the assets are owned. The CGUs represent the lowest level within the Group
at which the associated goodwill and indefinite life intangibles are monitored for internal management purposes and are not larger than the operating
segments determined in accordance with IFRS 8 ‘Operating Segments’. CGUs are kept under review to ensure that they reflect changing
interdependencies of cash inflows within the Group and how management monitors operations.
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The CGUs to which significant amounts of goodwill and indefinite life intangibles have been allocated and the associated discount rates used for
impairment testing as at 1 January 2022 and 2 January 2021 are set out below:
2021 2020
Goodwill
€’m
Indefinite life
intangibles
€’m
Discount
rate Goodwill
€’m
Indefinite life
intangibles
€’m
Discount
rate
North America Performance Nutrition 136.0 99.8 8 .61% 125.7 92.1 7. 3 9%
North America Lifestyle
– SlimFast North America 108.7 – 8 .61% 100.2 – 7. 3 9%
– think! 82.2 – 8 .61% 75.9 – 7. 3 9%
– Amazing Grass 37.5 – 8 .61% 34.6 – 7.39%
International 53.1 8.5 12.54% 49.2 7. 9 8.82%
Direct-to-Consumer (Body & Fit) 28.5 – 10.12% 27.1 – 8.13%
Direct-to-Consumer (LevlUp) 27.4 – 9.11% – – –
Nutritional Solutions 139.6 – 9.06% 130.2 – 7. 3 9%
Other CGUs without individually significant goodwill 16.1 – 8. 61%- 12 .7 7% 5.5 – 8.13%
Carrying amount 629.1 108.3 548.4 100.0
Key assumptions
The recoverable amount of goodwill and indefinite life intangibles allocated to a CGU is determined based on a value in use computation. The key
assumptions for calculating value in use of the CGUs are discount rates, growth rates and cash flows as described below.
We have considered the impact of the identified transition and physical risks related to climate related matters (note 2) in the context of the estimated
likelihood and velocity, taking into account the reliable external and internal sources of information available to us and concluded it is not possible to
quantify the financial impact of the potential CROs at this stage.
Discount rates
Refer to the table within this section for the pre-tax discount rates that are applied to the cash flow projections in the value in use computations.
The pre-tax discount rates are based on the Group’s weighted average cost of capital, calculated using the Capital Asset Pricing Model adjusted for
the Group’s specific beta coefficient together with a country risk premium to take account of the countries from where the CGU derives its cash flows.
Growth rates
A terminal value of 2% growth into perpetuity was used to extrapolate cash flows beyond the budget and strategic plan period. This growth rate does
not exceed the long-term average growth rate for the industries in which each CGU operates. The application of the terminal value has taken account
of the Group’s position, playing in large and growing markets which centre around nutrition and healthy lifestyles.
Cash flows
The cash flow projections are based on three years of cash flows being, the 2022 budget formally approved by, and the strategic plan for 2023
and 2024 as presented to, the Board of Directors. In cases where management have strategic plans beyond 2024 these numbers are also used
in the projections. Due to management’s plan as part of the Direct-to-Consumer business model to reinvest the profits of the business for a number
of years to drive revenue growth and build the brand for potential expansion into other markets, the cash flows of the CGU relating to Direct-to-
Consumer (Body & Fit) are over a five year period from 2022 to 2026. In respect of think! lifestyle business the strategy presented to the Board
covered a four year period from 2022 to 2025. These cash flows have been used in the impairment calculations.
In preparing the 2022 budget and strategic plan, management considered the Group’s history of earnings, past experience, cash flow generation,
and the impact of Covid-19 (note 2). Management also considered external sources of information pertaining to estimated growth of the relevant
market, customer and consumer behaviours, competitor activity and developing trends in the industry in which the CGU operates in. Business
sustaining capital expenditure and working capital requirements are estimated by assigning values to the investment required to support the estimated
future profitability taking into account historic investment patterns and past experience. The cash flow projections exclude the impact of future
development and acquisition activity.
No impairments relating to goodwill, brands and other intangibles, and software costs arose in either 2021 or 2020.
Sensitivity analysis
The key assumptions underlying the impairment reviews are set out above. Sensitivity analysis has been conducted in respect of each of the CGUs
using the following sensitivity assumptions: 1% increase in the discount rate; 10% decrease in EBITDA growth; and nil terminal value growth.
There were no CGU impairments as a result of the applied sensitivity analysis in 2021. In view of Covid-19, as an additional analysis, the Group has
increased the sensitivities over EBITDA growth in 2022 and 2023 (note 2). There is no change to the conclusion of the original sensitivity analysis.
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200
FINANCIAL STATEMENTS
Notes to the financial statements continued
17. Interests in joint ventures
The Group’s interests in joint ventures at the end of the reporting period is as follows:
Notes
2021
€’m
2020
€’m
MWC-Southwest Holdings LLC (a) 134.6 122.7
Glanbia Cheese Limited
(b) 36.2 36.3
Glanbia Cheese EU Limited
(c) 14.0 22.5
Glanbia Ireland DAC
(d) – 214.4
Interests in joint ventures 184.8 395.9
The joint ventures have share capital, consisting solely of ordinary shares, membership interests or membership units and preference shares.
Decisions about the relevant activities of the joint ventures require unanimous consent of the Group and the respective joint venture partners.
(a) MWC-Southwest Holdings LLC was established in 2018 to hold 100% of the ownership interest in Southwest Cheese Company, LLC (“Southwest
Cheese”) and MWC (Michigan) LLC (“MWC”). Consequently, the Group owns 50% of MWC-Southwest Holdings LLC and its two subsidiaries.
The Group controls 50% of the voting rights and is entitled to appoint 50% of the total number of Directors to the Board. Southwest Cheese and
MWC are large scale manufacturers of premium quality block cheese and whey protein ingredients for consumer foods markets internationally.
The MWC plant was fully commissioned in 2021.
(b) Glanbia Cheese Limited is a leading European mozzarella producer. Its customers include most of the leading pizza and pasta chains, food service
operators, industrial food manufacturers, wholesalers and retailers across Europe and internationally. The two plants (Magheralin and Llangefni) are
strategically located in productive agricultural heartland which helps to ensure a secure and consistent supply of high-quality milk. The Group holds
51% of the share capital of Glanbia Cheese Limited but this entity is considered to be a joint venture as the Group does not have control of the
company as along with its joint partner Leprino Foods Company it has equal representation on the Board of Directors, who direct the relevant
activities of the business. The Group controls 50% of the voting rights and is entitled to appoint 50% of the total number of Directors to the Board.
(c) Glanbia Cheese EU Limited was established in 2018 and is a joint venture with Leprino Foods Company with each party owning 50% of the share
capital of the company. The Group controls 50% of the voting rights and is entitled to appoint 50% of the total number of Directors to the Board.
When operating, the company will be a producer of mozzarella cheese with a plant situated in Portlaoise, Ireland. It is expected to be fully
commissioned in 2022.
(d) Glanbia Ireland DAC is the largest dairy and agribusiness in Ireland. It owns leading consumer and agri brands such as Avonmore, GAIN Animal
Nutrition, Kilmeaden Cheese, Premier Milk, mymilkman.ie and Wexford Cheese. The Group holds 40% of the ordinary share capital of Glanbia
Ireland DAC. However this entity is considered to be a joint venture of the Group as the business plan, which directs the relevant activities of the
business, requires the unanimous approval of both the Group and Glanbia Co-operative Society Limited which holds the remaining 60%
shareholding. The interest in Glanbia Ireland was classified as held for sale as at 1 January 2022 (note 7).
Refer to note 37 for further details of the joint ventures.
The movement in the investments in joint ventures recognised in the Group balance sheet is as follows:
Notes
2021
€’m
2020
€’m
At the beginning of the year 395.9 373.2
Investment in joint ventures – 6.6
Share of profit after tax (post-exceptional)
– continuing operations 17. 2 37.4
– discontinued operations
7 26.4 23.0
Share of OCI – remeasurements on defined benefit plan, net of deferred tax
– continuing operations
24 1.7 (0.7)
– discontinued operations
24 4.3 7.7
Share of OCI – fair value movement on cash flow hedges, net of deferred tax
– continuing operations 6.2 (6.4)
– discontinued operations 1.1 (0.3)
Dividends received
35 (33.9) (36.6)
Income tax movement (13.8) 8.8
IFRS 16 transition equity adjustment – (1.7)
Transferred to assets held for sale
7 (234.0) –
Exchange differences 13.7 (15.1)
At the end of the year 184.8 395.9
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201
Summarised financial information for joint ventures accounted for using the equity method
Set out below is the summarised financial information for the Group’s joint ventures which are accounted for using the equity method. The information
below reflects the amounts presented in the financial statements of the joint ventures reconciled to the carrying value of the Group’s investments in
joint ventures.
2021 Notes
Glanbia
Cheese
Limited
€’m
Glanbia
Cheese
EU Limited
€’m
MWC-
Southwest
Holdings
LLC
€’m Total
Summarised balance sheet (100%):
Non-current assets 42.9 150.5 705.6 899.0
Current assets
Cash and cash equivalents 31.2 10.0 52.5 93.7
Other current assets 55.2 17. 5 243.7 316.4
86.4 27.5 296.2 410.1
Non-current liabilities
Borrowings – – (492.6) (492.6)
Other non-current liabilities (3.6) (69.1) (22.3) (95.0)
(3.6) (69.1) (514.9) (5 87.6 )
Current liabilities
Bank overdrafts and loans – (62.1) – (62.1)
Other current liabilities (58.4) (18.8) (217.2) (294.4)
(58.4) (80.9) (217. 2) (356.5)
Net assets (100%) 67. 3 28.0 269.7 365.0
Net assets attributable to equity holders of the Company 67. 3 28.0 269.7 365.0
Reconciliation to carrying amount:
Group’s share of net assets 33.6 14.0 134.9 182.5
Adjustment in respect of unrealised profit on sales to the Group – – (0.3) (0.3)
Dividend income receivable 2.6 – – 2.6
Carrying amount 36.2 14.0 134.6 184.8
Summarised income statement (100%):
Revenue 369.7 27.4 1,421.6 1,818.7
Depreciation (5.2) – (28.1) (33.3)
Amortisation (0.2) – (1.2) (1.4)
Interest expense – (1.3) (10.4) (11.7)
Tax (5.3) (0.7) (14.4) (20.4)
Exceptional items net of tax (3.9) – – (3.9)
Profit/(loss) after tax 8.4 (16.9) 38.3 29.8
Other comprehensive income 3.5 – 14.1 17.6
Total comprehensive income 11.9 (16.9) 52.4 47.4
Profit/(loss) after tax attributable to equity holders of the Company 8.4 (16.9) 38.3 29.8
Total comprehensive income attributable to equity holders of the Company 11.9 (16.9) 52.4 47.4
Reconciliation to the Group’s share of total comprehensive income:
Group’s share of total comprehensive income 6.0 (8.5) 26.2 23.7
Adjustment in respect of unrealised profit on sales to the Group – – (0.3) (0.3)
Dividends receivable by the Group 2.6 – – 2.6
Group’s share of total comprehensive income 8.6 (8.5) 25.9 26.0
Dividends received by Group
35 11.1 – 10.6 21.7
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FINANCIAL STATEMENTS
Notes to the financial statements continued
17. Investments in joint ventures continued
2020 Notes
Glanbia
Ireland
DAC*
€’m
Glanbia
Cheese
Limited
€’m
Glanbia
Cheese
EU Limited
€’m
MWC-
Southwest
Holdings
LLC
€’m Total
Summarised balance sheet (100%):
Non-current assets 730.7 35.4 139.4 6 46.1 1,551.6
Current assets
Cash and cash equivalents 66.6 35.0 14.6 65.6 181.8
Other current assets 425.5 49.7 3.6 154.1 632.9
492.1 84.7 18.2 219.7 814.7
Non-current liabilities
Borrowings (227.8) – (49.8) (441.2) (718.8)
Other non-current liabilities (17 7.9) (5.0) (46.7) (33.7) (263.3)
(405.7) (5.0) (96.5) (474.9) (9 82.1)
Current liabilities
Bank overdrafts and loans (69.7) – – – (69.7)
Other current liabilities (282.8) (47.1) (16.1) (145.5) (491.5)
(352.5) (47.1) (16.1) (145.5) (561.2)
Net assets (100%) 464.6 68.0 45.0 245.4 823.0
Net assets attributable to equity holders of the Company 451.9 68.0 45.0 245.4 810.3
Reconciliation to carrying amount:
Group’s share of net assets 180.8 34.0 22.5 122.7 360.0
Adjustment in respect of unrealised profit on sales to the Group (2.0) – – – (2.0)
Fair value adjustments on investment in Glanbia Ireland DAC 35.6 – – – 35.6
Dividend income receivable – 2.3 – – 2.3
Carrying amount 214.4 36.3 22.5 122.7 395.9
Summarised income statement (100%):
Revenue 1,906.2 320.7 – 1,147. 2 3,374.1
Depreciation (39.9) ( 0.1) – (18.8) (58.8)
Amortisation (2.1) – – (0.1) (2.2)
Interest (expense)/income (11.7) – 0.6 (9.5) (20.6)
Tax (8.9) (5.1) 0.5 (20.3) (33.8)
Profit after tax 60.0 19.7 (3.4) 53.8 130.1
Other comprehensive income 18.6 (1.5) – 28.9 46.0
Total comprehensive income 78.6 18.2 (3.4) 82.7 176.1
Profit after tax attributable to equity holders of the Company 59.1 19.7 (3.4) 53.8 129.2
Total comprehensive income attributable to equity holders of the
Company 7 7.6 18.2 (3.4) 82.7 175.1
Reconciliation to the Group’s share of total comprehensive income:
Group’s share of total comprehensive income 31.0 9.1 (1.7) 41.4 79.8
Adjustment in respect of unrealised profit on sales to the Group 0.5 – – – 0.5
Amortisation of intangible assets recognised on the fair value adjustments (1.1) – – – (1.1)
Dividends receivable by the Group – 2.3 – – 2.3
Group’s share of total comprehensive income 30.4 11.4 (1.7) 41.4 81.5
Dividends received by Group
35 12.6 13.1 – 10.9 36.6
* The difference between the net assets and the net assets attributable to equity holders of the Company is the portion of net assets attributable to non-controlling interests. In 2021,
the joint venture is classified as held for sale (note 7).
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203
18. Other financial assets
Other financial assets comprise the following:
Notes
2021
€’m
2020
€’m
Financial assets at amortised cost
Ornua Co-operative Limited*
29(b)/29(e) 0.2 0.4
Equity instruments designated at FVOCI
The BDO Development Capital Fund 1.1 2.2
Others 0.6 0.6
Other financial assets 1.9 3.2
* This is a loan note receivable from Ornua Co-operative Limited.
Other financial assets are classified as non-current assets, unless they are expected to be realised within 12 months of the reporting date or unless
they will need to be sold to raise operating capital.
The movement in other financial assets is as follows:
2021
€’m
2020
€’m
At the beginning of the year 3.2 3.4
Disposals/redemption (1.1) (0.3)
Fair value adjustment (0.3) –
Additions 0.1 0.1
At the end of the year 1.9 3.2
19. Trade and other receivables
Current assets Notes
2021
€’m
2020
€’m
Trade receivables 327.2 283.5
Less: loss allowance
29(d) (12.0) (11.2)
Trade receivables – net 315.2 272.3
Receivables from joint ventures
35(c) 5.4 7. 2
Receivables from other related parties
35(c) 0.4 0.3
Interest receivable on loans to joint ventures
35 0.1 0.1
Value added tax 4.4 11.2
Prepayments 15.8 14.4
Other receivables 18.1 13.7
359.4 319.2
See note 32(a) for analysis of the movement in trade and other receivables. Information in relation to the Group’s credit risk and fair value estimation
process is included in note 29.
The currency profile of trade and other receivables is as follows:
euro
€’m
US dollar
€’m
Pound sterling
€’m
Australian dollar
€’m
Other
€’m
Tot al
€’m
At 1 January 2022 34.4 288.9 20.4 2.5 13.2 359.4
At 2 January 2021 38.8 249.6 16.3 2.0 12.5 319.2
Principal currencies in “other” include Indian Rupee and Chinese renminbi.
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FINANCIAL STATEMENTS
20. Inventories
2021
€’m
2020
€’m
Raw materials 200.3 120.1
Work in progress 15.4 9.1
Finished goods 338.2 218.5
Consumables 39.7 29.9
593.6 377.6
Recognition in the Group income statement:
Notes
2021
€’m
2020
€’m
Cost of inventories recognised as an expense in Cost of Goods Sold 5 2,979.3 2,794.8
Write down of inventory to net realisable value during the year 12.2 28 .1
Previous write downs of inventories reversed during the year* (6.1) (5.1)
32 6.1 23.0
* Previous write downs have been reversed as a result of increased sales prices in certain markets.
21. Cash and cash equivalents
Notes
2021
€’m
2020
€’m
Cash at bank and in hand 224.2 164.2
Short term bank deposits 6.8 0.1
Cash and cash equivalents in the Group balance sheet 231.0 164.3
Bank overdrafts used for cash management purposes
25 (136.5) (72.7)
Cash and cash equivalents in the Group statement of cash flows
25 94.5 91.6
22. Share capital and share premium
Number
of shares
(thousands)
Ordinary
shares
€’m
Share
premium
€’m
Tot al
€’m
At 3 January 2021 294,402 17.7 87.6 105.3
Issuance of shares 40 – 0.2 0.2
Cancellation of own shares (7,273 ) (0.5) – (0.5)
At 1 January 2022 287,16 9 17.2 87.8 105.0
At 5 January 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
The total authorised number of ordinary shares is 350 million shares (2020: 350 million shares) with a par value of €0.06 per share (2020: €0.06 per
share). All issued shares are fully paid, carry one vote per share and a right to dividends. The rights and obligations of the ordinary shares and the
restrictions on the transfer of shares and voting rights are provided in Other Statutory Information.
During the year ended 1 January 2022 40,000 (2020: nil) 2002 LTIP share options exercised. Details of share options and awards granted under the
Long-term and Annual Incentive Schemes are provided in note 10 and in the Remuneration Committee Report on pages 118 to 142.
During 2021, 7.3 million (2020: 1.6 million) ordinary shares were cancelled on the share buyback programme (note 23(e)). The amount paid to
repurchase these shares was initially recognised in the own shares reserve and was transferred to retained earnings on cancellation.
Notes to the financial statements continued
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205
23. Other reserves
Capital and
merger
reserve
€’m
note (a)
Currency
reserve
€’m
note (b)
Hedging
reserve
€’m
note (c)
Put option
liability
reserve
€’m
note (d)
Own
shares
€’m
note (e)
Share-based
payment
reserve
€’m
note (f)
Other
€’m
note (g)
Tot al
€’m
Balance at 3 January 2021 116.0 31.9 (20.6) – (11.4) 10.3 (0.2) 126.0
Currency translation differences – 126.7 – – – – – 126.7
Net investment hedge – (6.7) – – – – – (6.7)
Revaluation – gross – – 11.1 – – – (0.3) 10.8
Reclassification to profit or loss – gross – – 1.6 – – – – 1.6
Deferred tax – – (2.7) – – – 0.1 (2.6)
Net change in OCI – 120.0 10.0 – – – (0.2) 129.8
Purchase of own shares – – – – (94.0) – – (94.0)
Cancellation of own shares 0.5 – – – 91.3 – – 91.8
Cost of share-based payments – – – – – 15.9 – 15.9
Transfer on exercise, vesting or expiry
of share-based payments – – – – 7.7 (6.9) – 0.8
Initial recognition of put option liability – – – (23.2) – – – (23.2)
Changes in fair value of put option liability – – – (1.6) – – – (1.6)
Balance at 1 January 2022 116.5 151.9 (10.6) (24.8) (6.4) 19.3 (0.4) 245.5
Balance at 5 January 2020 115.9 170.7 (13.0) – (14.0) 9.7 (0.2) 269.1
Currency translation differences – (146.9) – – – – – (146.9)
Net investment hedge – 8.1 – – – – – 8.1
Revaluation – gross – – (9.8) – – – 0.5 (9.3)
Reclassification to profit or loss – gross – – (0.2) – – – – (0.2)
Reclassification to inventory – gross – – – – – – (0.5) (0.5)
Deferred tax – – 2.4 – – – – 2.4
Net change in OCI – (138.8) ( 7.6) – – – – (146.4)
Purchase of own shares – – – – (17. 6) – – (17. 6)
Cancellation of own shares 0.1 – – – 16.6 – – 16.7
Cost of share-based payments – – – – – 5.2 – 5.2
Transfer on exercise, vesting or expiry
of share-based payments – – – – 3.6 (4.6) – (1.0)
Balance at 2 January 2021 116.0 31.9 (20.6) – (11.4) 10.3 (0.2) 126.0
(a) Capital and merger reserve
The reserve includes capital reserve of €3.4 million (2020: €2.9 million) and merger reserve of €113.1 million (2020: €113.1 million) at the reporting date.
The capital reserve comprises of a capital redemption reserve and a capital reserve which arose on the re-nominalisation of the Company’s share
capital on conversion to the euro. The reserve also includes €0.5 million (2020: €0.1 million) undenominated share capital that arose on the cancellation
of own shares.
The merger reserve arose on the merger of Waterford Foods plc now named Waterford Foods DAC and Avonmore Foods plc now named Glanbia plc
in 1997. The merger reserve adjustment represents the difference between the nominal value of the issued share capital of Waterford Foods DAC and
the fair value of the shares issued by Glanbia plc.
€’m
Share premium representing excess of fair value over nominal value of ordinary shares issued in connection with the merger of
Avonmore Foods plc and Waterford Foods plc 355.3
Merger reserve adjustment (327.2)
Share premium and other reserves relating to nominal value of shares in Waterford Foods plc 85.0
At the beginning and end of the current and prior year 113.1
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206
FINANCIAL STATEMENTS
Notes to the financial statements continued
23. Other reserves continued
(b) Currency reserve
The currency reserve reflects the foreign exchange gains and losses arising from the translation of the net investment in foreign operations and on
borrowings designated as hedges of the net investment which are taken to equity. The movement in US dollar foreign exchange rates from 1.2271
as at 2 January 2021 to 1.1326 as at 1 January 2022 is the primary driver of the movement in the currency reserve in the year. When an entity is
disposed of the accumulated foreign currency gains and losses are recycled to the income statement.
(c) Hedging reserve
The hedging reserve reflects the effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges.
Amounts accumulated in the hedging reserve are recycled to the income statement in the periods when the hedged item affects income or expense,
or are included in the initial cost of a hedged non-financial item, depending on the hedged item. The hedging reserve also reflects the Group’s share
of the effective portion of changes in the fair value of derivatives that are entered into by the Group’s joint ventures (note 29(a)).
The movements on the hedging reserve for the years ended 1 January 2022 and 2 January 2021 are as follows:
Joint ventures
€’m
Group
€’m
Tot al
€’m
Balance at 3 January 2021 (17. 6) (3.0) (20.6)
Revaluation – gross
– Foreign exchange contracts – (loss)/gain in year (currency risk) (1.1) 1.2 0.1
– Commodity contracts – gain in year (commodity price risk) 0.1 – 0.1
– Interest rate swaps – gain in year (interest rate risk) 9.6 1.3 10.9
Recognised in OCI 8.6 2.5 11.1
Reclassification to profit or loss – gross
– Foreign exchange contracts – loss in year (currency risk) 0.7 0.6 1.3
– Commodity contracts – loss in year (commodity price risk) 0.3 – 0.3
Reclassified from OCI to profit or loss 1.0 0.6 1.6
Deferred tax (2.3) (0.4) (2.7)
Net change in OCI 7.3 2.7 10.0
Balance at 1 January 2022 (10.3) (0.3) (10.6)
Balance at 5 January 2020 (10.9) (2.1) (13.0)
Revaluation – gross
– Foreign exchange contracts – gain/(loss) in year (currency risk) 0.5 (1.1) (0.6)
– Commodity contracts – (loss)/gain in year (commodity price risk) (0.1) 0.1 –
– Interest rate swaps – loss in year (interest rate risk) (8.8) (0.4) (9.2)
Recognised in OCI (8.4) (1.4) (9.8)
Reclassification to profit or loss – gross
– Foreign exchange contracts – (gain)/loss in year (currency risk) (0.6) 0.5 (0.1)
– Commodity contracts – gain in year (commodity price risk) – (0.1) (0.1)
Reclassified from OCI to profit or loss (0.6) 0.4 (0.2)
Deferred tax 2.3 0.1 2.4
Net change in OCI (6.7) (0.9) ( 7.6)
Balance at 2 January 2021 (17.6) (3.0) (20.6)
(d) Put option liability reserve
This reserve records the initial estimate of the fair value of the consideration to acquire the NCI shares that are subject to the put option (note 34) and
subsequent changes in fair value of the estimated liability (note 29(b)).
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207
(e) Own shares
The own shares reserve reflects the ordinary shares of Glanbia plc which are held in trust.
An Employee Share Trust was established in May 2002 to operate initially in connection with the Company’s Saving Related Share Option Scheme
and subsequently for the vesting of shares under the 2008 LTIP, 2018 LTIP and 2019 RSP (note 10). The Trustee of the Employee Share Trust is
Computershare Trustees (Jersey) Limited, a Jersey based trustee services company. The dividend rights in respect of these shares have been waived,
save 0.001 cent per share. An Employee Share Scheme Trust was established in April 2013 to operate in connection with the Company’s AIDIS. The
Trustee of the Employee Share Scheme Trust is Glanbia Management Services Limited. The dividend rights in respect of shares which have not vested
have been waived.
The Group launched a third share buyback programme of up to €50 million in total value in the Company’s ordinary shares in December 2021
following the respective completion of two prior share buyback programmes on 9 April 2021 and 20 October 2021. During 2021, the Group
repurchased 7.3 million (2020: 1.6 million) ordinary shares under the programmes which were subsequently cancelled (note 22).
The movements in own shares for the years ended 1 January 2022 and 2 January 2021 are as follows:
2021 2020
Value
€’m
Nominal value
€’m
Number
of Shares
Value
€’m
Nominal value
€’m
Number
of Shares
At the beginning of the year 11.4 0.1 692,698 14.0 0.1 820,302
Purchased by Employee Share (Scheme) Trust 2.7 – 2 07,8 86 1.0 – 103,709
Purchased under share buyback 91.3 0.5 7,272,432 16.6 0.1 1,643,907
Allocated under Employee Share (Scheme) Trust ( 7.7 ) – (488,091) (3.6) – (231,313)
Cancelled under share buyback (91.3) (0.5) (7,272,432) (16.6) (0.1) (1,643,907)
At the end of the year 6.4 0.1 412,493 11.4 0.1 692,698
The shares purchased during the year and those held in trust are allocated to employees under the various share-based schemes. Shares purchased
under the share buyback programme were cancelled. The shares acquired during the year represented an insignificant amount of the total share capital
at the beginning and end of the year. Shares purchased are deemed to be own shares in accordance with IAS 32 ‘Financial Instruments’. The own
shares at 1 January 2022 restrict distributable profits by €6.4 million (2020: €11.4 million) and had a market value of €5.1 million (2020: €7.2 million).
(f) Share-based payment reserve
The share-based payment reserve reflects the equity settled share-based payment plans in operation by the Group (note 10).
(g) Other
The reserve includes FVOCI reserve of €(0.4) million (2020: €(0.2) million) and cost of hedging reserve of nil (2020: nil) at the reporting date.
Unrealised gains and losses arising from changes in the fair value of equity instruments measured at FVOCI are recognised in the FVOCI reserve.
On derecognition of such an equity instrument, the accumulated balances of an instrument associated with it is reclassified to retained earnings.
The cost of hedging reserve includes the effects of the changes in fair value of the time value of commodity options when only the intrinsic value of the
options is designated as the hedging instrument. The recycled gain or loss relating to the time value of the option contracts is included within the initial
cost of an asset where the hedged item subsequently results in the recognition of a non-financial asset (such as inventory).
There were no movements on the cost of hedging reserve for the year ended 1 January 2022. Disclosure for the comparative year is as follows:
Joint ventures
€’m
Group
€’m
Tot al
€’m
Balance at 5 January 2020 – – –
Revaluation – gross (commodity price risk) – 0.5 0.5
Reclassification to inventory – gross (commodity price risk) – (0.5) (0.5)
Balance at 2 January 2021 – – –
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208
FINANCIAL STATEMENTS
Notes to the financial statements continued
24. Retained earnings
Notes
2021
€’m
2020
€’m
At the beginning of the year 1,380.5 1,315.0
Profit for the year attributable to equity holders of the Company 167.0 143.8
Other comprehensive income
– Remeasurement on defined benefit plans
9 – 8.8
– Deferred tax on remeasurements on defined benefit plans
26 (0.5) (0.5)
– Share of remeasurements on defined benefit plans from joint ventures, net of deferred tax
17 1.7 (0.7)
– Share of remeasurements on defined benefit plans from discontinued operations, net of deferred tax
17 4.3 7.7
5.5 15.3
Dividends
14 (80.5) (78.6)
Cancellation of own shares
23(e) (91.3) (16.6)
Transfer on exercise, vesting or expiry of share-based payments (0.8) 1.0
Deferred tax on share-based payments
26 1.3 0.6
At the end of the year 1,381.7 1,380.5
25. Borrowings
Notes
2021
€’m
2020
€’m
Non-current
Bank borrowings 366.1 315.8
Private placement debt 331.1 142.6
29(b) 697. 2 458.4
Current
Private placement debt – 127.1
Bank overdrafts
21 136.5 72.7
136.5 199.8
Total borrowings
29(e) 833.7 658.2
At the year-end, the Group had multi-currency committed term facilities of €1,160.4 million (2020: €1,233.3 million) of which €463.2 million (2020:
€647.8 million) were undrawn.
The maturity profile of borrowings, and undrawn committed and uncommitted facilities is as follows:
2021 2020
Borrowings
€’m
Undrawn
committed
facilities
€’m
Undrawn
uncommitted
facilities
€’m
Borrowings
€’m
Undrawn
committed
facilities
€’m
Undrawn
uncommitted
facilities
€’m
12 months or less 136.5 – 15.9 199.8 – 20.0
Between 1 and 2 years – – – – – –
Between 2 and 5 years 366.1 463.2 – 315.8 484.8 –
More than 5 years 331.1 – – 142.6 163.0 –
833.7 463.2 15.9 658.2 6 47. 8 20.0
The weighted average maturity of committed facilities is 3.9 years (2020: 4.4 years).
The currency profile of borrowings is as follows:
euro
€’m
US dollar
€’m
Pound sterling
€’m
Canadian dollar
€’m
Other
€’m
Tot al
€’m
At 1 January 2022 251.3 566.0 9.2 6.9 0.3 833.7
At 2 January 2021 169.2 471.5 11.3 5.0 1.2 658.2
Principal currencies in “other” include Danish krone and Swedish krona (2020: New Zealand dollar and Australian dollar).
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209
Bank borrowings
The Group has committed unsecured bank facilities maturing in 2024. They are borrowed at fixed and floating interest rates. At 1 January 2022,
€149.2 million of bank borrowings denominated in USD are at fixed nominal interest rate of 1.24% (2020: €137.7 million at 3.30%). The remaining
bank borrowings are subject to interest rate changes, taking account of contractual repricing dates. Nominal interest rates of these borrowings
range primarily from 0.25% – 1.91% (2020: 0.28% – 1.34%). The floating interest rates are set at commercial rates based on a margin over EURIBOR,
US dollar LIBOR (refer to note 2 for discussion of the IBOR reform) and Canadian dollar interest rates for periods of up to six months.
Private placement debt
At 1 January 2022, €154.5 million of private placement debt matures in December 2031, bears interest at a fixed 2.75% nominal interest rate and is
denominated in USD. There was also €176.6 million of an additional private placement debt facility which commenced in March 2021. €88.3 million
matures in March 2028, bears interest at a fixed 2.49% nominal interest rate and is denominated in USD and a further €88.3 million matures in
March 2031, bears interest at a fixed 2.82% nominal interest rate and is denominated in USD.
Bank overdrafts
Bank overdraft interest rates are variable and range from 0.23% – 1.25% (2020: 0.35% – 1.25%). At 1 January 2022, the Group had undrawn
uncommitted bank overdraft facilities of €11.0 million (2020: €10.6 million).
Guarantees
Financial liabilities are secured by cross-guarantees from Glanbia plc. The Group has complied with the financial covenants of its borrowing facilities
during 2021 and 2020 (note 29(c)).
Net debt is a non-IFRS measure which we provide to investors as we believe they find it useful. It is also used to calculate leverage under the Group’s
financing arrangements, as defined within covenants. Refer to the Financing Key Performance Indicators section in the Glossary for more details.
Net debt comprises the following:
Notes
2021
€’m
2020
€’m
Private placement debt 331.1 269.7
Bank borrowings 149.2 137.7
Not subject to interest rate changes* 480.3 4 07.4
Bank borrowings 216.9 178 .1
Cash and cash equivalents net of bank overdrafts
21 (94.5) (91.6)
Subject to interest rate changes* 122.4 86.5
Net debt
29(c) 602.7 493.9
* Taking into account of contractual repricing dates at the reporting date.
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210
FINANCIAL STATEMENTS
Notes to the financial statements continued
25. Borrowings continued
The movement in net debt is as follows:
Notes
Cash and
short-term
bank deposits
€’m
(note 21)
Overdrafts
€’m
(note 21)
Borrowings
€’m
Private
placement debt
€’m
Tot al
€’m
At 3 January 2021 (164.3) 72.7 315.8 269.7 493.9
Drawdown of borrowings
33 – – 290.9 16 7.6 458.5
Repayment of borrowings
33 – – (252.7) (130.7) (383.4)
Net change in cash and cash equivalents (46.6) 61.1 – – 14.5
Acquisitions
34 (4.4) – – – (4.4)
Exchange differences (15.7) 2.7 12.1 24.5 23.6
At 1 January 2022 (231.0) 136.5 366.1 331.1 602.7
At 5 January 2020 (269.0) 104.3 639.1 139.9 614.3
Drawdown of borrowings
33 – – 913.3 143.9 1,0 5 7.2
Repayment of borrowings
33 – – (1,222.0) – (1,222.0)
Net change in cash and cash equivalents 93.6 (31.4) – – 62.2
Acquisitions – – 12.2 – 12.2
Exchange differences 11.1 (0.2) (26.8) (14.1) (30.0)
At 2 January 2021 (164.3) 72.7 315.8 269.7 493.9
26. Deferred taxes
Recognition in the Group balance sheet:
2021 2020
Deferred tax
assets
€’m
Deferred tax
liabilities
€’m
Net
€’m
Deferred tax
assets
€’m
Deferred tax
liabilities
€’m
Net
€’m
Deferred tax assets/(liabilities) before set off 38.2 (177.9) (139.7) 29.7 (173.8) (14 4.1)
Set off of deferred tax (33.5) 33.5 – (27. 3 ) 27.3 –
Deferred tax assets/(liabilities) after set off 4.7 (144.4) (139.7) 2.4 (146.5) (144.1)
The movement in the net deferred tax liability recognised in the Group balance sheet is as follows:
Notes
2021
€’m
2020
€’m
At the beginning of the year (144.1) (166.7)
Income statement credit
12 20.4 8.9
Deferred tax (charge)/credit to other comprehensive income
– on remeasurement of defined benefit plans
24 (0.5) (0.5)
– on disposal/redemption of FVOCI financial assets
23 (0.1) –
– on fair value movements
23(c) (0.4) 0.1
Deferred tax credit/(charge) to equity
– on share-based payments
24 1.3 0.6
– on acquisition of subsidiaries
34 (6.9) (0.8)
– on adoption of IFRS 16 – 1.5
Exchange differences (9.4) 12.8
At the end of the year (139.7) (14 4.1)
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
211
The movement in deferred tax assets during the year is as follows:
Retirement
benefit
obligations
€’m
Other
employee
obligations
€’m
Tax
losses
€’m
Other
€’m
Tot al
€’m
At 3 January 2021 5.5 8.8 3.0 12.4 29.7
(Charge)/credit to income statement (0.7) 5.1 1.4 (0.4) 5.4
Charge to other comprehensive income (0.5) – – (0.1) (0.6)
Credit to equity – 1.3 – – 1.3
Exchange differences 0.5 0.9 0.1 0.9 2.4
At 1 January 2022 4.8 16.1 4.5 12.8 38.2
At 5 January 2020 6.0 8.1 2.5 11.0 27. 6
Credit to income statement 0.7 0.8 0.6 2.4 4.5
Charge to other comprehensive income (0.5) – – – (0.5)
Credit to equity – 0.6 – – 0.6
Exchange differences (0.7) (0.7) (0.1) (1.0) (2.5)
At 2 January 2021 5.5 8.8 3.0 12.4 29.7
The movement in deferred tax liabilities during the year is as follows:
Accelerated tax
depreciation
€’m
Fair value
gain
€’m
Development
costs and other
intangibles
€’m
Other
€’m
Tot al
€’m
At 3 January 2021 (60.7) 0.4 (79.8) (33.7) (173.8)
Credit/(charge) to income statement 2.8 – 13.8 (1.6) 15.0
Charge to other comprehensive income – (0.4) – – (0.4)
Acquisition of subsidiaries and intellectual properties – – (6.9) – (6.9)
Exchange differences (4.9) – (6.1) (0.8) (11.8)
At 1 January 2022 (62.8) – (79.0) (36.1) (177.9)
At 5 January 2020 (66.0) 0.4 (92.3) (36.4) (194.3)
(Charge)/credit to income statement (1.9) – 5.7 0.6 4.4
Credit to other comprehensive income – 0.1 – – 0.1
Credit to equity 1.5 – – – 1.5
Acquisition of subsidiaries and intellectual properties (0.3) – (0.5) – (0.8)
Exchange differences 6.0 (0.1) 7. 3 2.1 15.3
At 2 January 2021 (60.7) 0.4 (79.8) (33.7) (173.8)
A deferred tax asset has been recognised on the basis that the realisation of the related tax benefit through future taxable profits is probable.
This includes deferred tax assets which are recognised for tax losses carried forward to the extent that realisation of the related tax benefit through
future taxable profits is probable.
At the balance sheet date, the Group has unused tax losses of €129.3 million (2020: €75.4 million) available for offset against future profits. A deferred
tax asset has been recognised in respect of €4.5 million (2020: €3.0 million) of such losses. No deferred tax asset has been recognised in respect
of the remaining €124.8 million (2020: €72.4 million) as it is not considered probable that there will be future taxable profits available. All tax losses
may be carried forward indefinitely. Also included in unrecognised tax losses are €48.9 million (2020: €44.1 million) of capital losses.
No deferred tax liability has been recognised on temporary differences of €47.5 million (2020: €42.3 million) relating to the unremitted earnings of
overseas subsidiaries as the Group is able to control the timing of the reversal of these temporary differences and it is probable that they will not
reverse in the foreseeable future. Temporary differences arising in connection with interests in joint ventures are insignificant.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
212
FINANCIAL STATEMENTS
Notes to the financial statements continued
27. Provisions
Restructuring
€’m
note (a)
Property and
lease
commitments
€’m
note (b)
Legal and
operational
€’m
note (c)
Tot al
€’m
Balance at 3 January 2021 – non-current – 3.3 – 3.3
Balance at 3 January 2021 – current 2.5 3.5 1.9 7.9
Amount provided for in the year 2.7 1.3 7.2 11.2
Utilised in the year (2.9) (2.1) – (5.0)
Unused amounts reversed in the year (0.1) (0.2) (1.3) (1.6)
Exchange differences 0.1 0.3 0.3 0.7
Balance at 1 January 2022 2.3 6.1 8.1 16.5
Non-current – 3.6 – 3.6
Current 2.3 2.5 8.1 12.9
2.3 6.1 8.1 16.5
(a) The restructuring provision relates mainly to a redundancy provision arising from the ongoing strategic review within the Glanbia Performance
Nutrition segment. The provision at 1 January 2022 is expected to be settled within the next 12 months.
(b) The property and lease commitments provision relates to property remediation works and is based on the estimated cost of reinstating a property
to its original condition. Due to the nature of the remediation works there is some uncertainty around the amount and timing of payments.
(c) The legal and operational provision relates to certain legal claims, insurance claims and other items. Due to the nature of these items, there is some
uncertainty around the amount and timing of payments.
See note 32(a) for analysis of the movement in provisions.
28. Trade and other payables
Notes
2021
€’m
2020
€’m
Current
Trade payables 309.0 181.8
Amounts due to joint ventures
35(c) 133.5 78.5
Social security costs 6.9 4.8
Accrued expenses 219.9 159.1
Contingent consideration
29(b)/29(e) – 17. 4
669.3 441.6
Non-current
Put option liability
29(b)/29(e) 24.8 –
Contingent consideration
29(b)/29(e) 7.3 –
Other payables 0.5 –
32.6 –
Total 701.9 441.6
See note 32(a) for analysis of the movement in current trade and other payables. See note 29(b) for information on the Group’s fair value estimation process.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
213
29. Derivative financial instruments and financial risk management
(a) Derivative financial instruments
Notes
2021
Assets
€’m
2021
Liabilities
€’m
2020
Assets
€’m
2020
Liabilities
€’m
Cross currency swaps – fair value through income statement 1.4 – 1.1 –
Foreign exchange contracts – cash flow hedges (currency risk) 0.8 – 0.2 (1.2)
Interest rate swaps – cash flow hedges (interest rate risk) – (1.2) – (2.5)
Call option over non-controlling interests
34 0.5 – – –
Total 2.7 (1.2) 1.3 (3.7)
Non-current 0.5 (1.2) – (2.5)
Current 2.2 – 1.3 (1.2)
29(f) 2.7 (1.2) 1.3 (3.7)
Derivatives recognised at fair value through income statement
Included in cross currency swaps is a pound sterling euro cross currency swap with a notional amount of £60.0 million and €70.2 million and a US dollar
euro cross currency swap with notional amounts of US$20.0 million and €17.7 million accounted for at fair value. The translation gain included in the
income statement in respect of these swaps is €1.4 million.
At 2 January 2021, there was a pound sterling euro cross currency swap with a notional amount of £80.0 and €87.9 million. The translation gain
included in the 2020 income statement in respect of this swap was €1.1 million.
Hedge accounting
The Group enters into hedge relationships when there is an economic relationship between the hedged item and the hedging instrument. When the
critical terms of the hedged item and hedging instrument are closely aligned for the prospective assessment of effectiveness, a qualitative assessment
is performed. In instances where changes occur to the hedged item which result in the critical terms being no longer closely aligned, the Group uses
the hypothetical derivative method to assess the ineffectiveness. A hedge ratio of one to one is established as the quantities of the hedged item and
the hedging instrument used to hedge that hedged item are the same. Potential sources of ineffectiveness may include the timing and amounts of
cash flows, and changes in credit risk of the hedging instruments or hedged items.
Derivative assets and liabilities designated as cash flow hedges
Foreign exchange contracts
The Group may use foreign exchange contracts to hedge its future cash flow risk from movements in foreign exchange rates on foreign denominated
sales or purchases. Such contracts are generally designated as cash flow hedges. Weighted average hedged rate of foreign exchange contracts
(including forward points) as at 1 January 2022 is 1 euro = 1.1900 US dollar (2020: 1 euro = 1.2160 US dollar).
The notional principal amounts of the outstanding foreign exchange contracts as at 1 January 2022 were €14.9 million (2020: €18.9 million).
All outstanding foreign exchange contracts will mature and be released to the income statement within 12 months of the reporting date (2020: within
12 months of the reporting date).
Interest rate swaps
The Group may use floating to fixed interest rate swaps to hedge against its future cash flow risk from its exposure to variable rates on its long-term
borrowings with floating rates. The notional principal amounts of the outstanding EURIBOR linked interest rate swaps designated as cash flow hedges
as at 1 January 2022 were €120.0 million (2020: €120.0 million). Weighted average hedged rate of interest rate swaps as at 1 January 2022 is 0.20%
(2020: 0.20%). All outstanding interest rate swaps mature in 2023.
Commodity contracts
The Group may use commodity contracts to hedge its future cash flow risk from movement in milk prices. There were no outstanding commodity options
contracts as at 1 January 2022 (2020: nil). All commodity options that were entered into during the period had expired as at the end of the reporting period.
Gain/(loss) recognised in other comprehensive income Notes
2021
€’m
2020
€’m
Foreign exchange contracts 23(c) 1.2 (1.1)
Commodity contracts
23(c) – 0.1
Interest rate swaps
23(c) 1.3 (0.4)
2.5 (1.4)
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214
FINANCIAL STATEMENTS
Notes to the financial statements continued
29. Derivative financial instruments and financial risk management continued
Loss/(gain) transferred from cash flow hedge reserve to the Group income statement Notes
2021
€’m
2020
€’m
Foreign exchange contracts 23(c) 0.6 0.5
Commodity contracts
23(c) – (0.1)
0.6 0.4
The transferred amounts relating to foreign exchange and commodity contracts are recorded in the line item “Administration expenses” in the income
statement and “Inventories” in the balance sheet respectively.
Gain transferred from cost of hedging reserve to the Group balance sheet Notes
2021
€’m
2020
€’m
Commodity options 23(g) – (0.5)
The transferred amounts relating to commodity options are recorded in the line item “Inventories” in the balance sheet.
No material ineffectiveness has been recognised in respect of the cash flow hedges in 2021 (2020: nil). If ineffectiveness had been recognised, it would
have been recorded in “Administration expenses” in the income statement.
Refer to note 23(c) and 23(g) for the balances in the cash flow hedge reserve and cost of hedging reserve. The maturity profile of the cash flows of the
derivative financial instruments is included in note 29(d).
Derivative financial instruments entered into by joint ventures
The Group’s joint ventures enter into interest rate swaps, commodity contracts (gas, oil, butter, whey and skim milk powder) and foreign exchange
contracts. The Group’s share of the movement in the derivative financial instruments designated as cash flow hedges is recognised in other
comprehensive income and against the carrying value of the interest in joint ventures.
The movement recognised in other comprehensive income on interest rate swaps (note 23(c)) represents the Group’s share of the movement in the
interest rate swaps entered into by joint ventures. All movements are recognised against the carrying value of the interest in joint ventures until
repayment of the related bank borrowings.
Net investment hedge
A portion of the Group’s US dollar denominated borrowings (refer to note 25) with a nominal amount of US$98.5 million (2020: US$98.5 million) is
designated as a hedge of a portion of the net investment in the Group’s US dollar net assets amounting to US$98.5 million (2020: US$98.5 million).
Therefore, hedge ratio is 1:1.
Notes
2021
€’m
2020
€’m
Carrying value of net investment hedge 87.0 80.3
(Loss)/gain recognised in other comprehensive income
23 (6.7) 8.1
The borrowings of US$98.5 million is translated at year end exchange rate of 1 euro = 1.1326 US dollar (2020: 1 euro = 1.2271 US dollar) to arrive
at carrying amount of €87.0 million (2020: €80.3 million). €10.6 million (2020: €3.9 million) of the currency reserve (refer to note 23) relates to the
net investment hedge. There was no ineffectiveness recognised in the income statement during the year (2020: nil). If ineffectiveness had been
recognised, it would have been recorded in “Administration expenses” in the income statement.
(b) Fair value and fair value estimation
Fair value of financial instruments measured at amortised cost
Except as detailed in the following table the Group deemed that the carrying amounts of financial instruments measured at amortised cost in the
Group financial statements approximate their fair value due to their short term nature:
Notes
Carrying
amount
2021
€’m
Fair value
2021
€’m
Carrying
amount
2020
€’m
Fair value
2020
€’m
Financial assets
– Non-current financial asset at amortised cost – Ornua Co-Operative Limited
18 0.2 0.2 0.4 0.4
– Non-current loans to joint ventures
35 42.5 42.6 31.8 32.1
Financial liabilities
– Non-current borrowings
25 697.2 673.2 458.4 463.8
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).
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
215
Group’s fair valuation process
The Group’s finance department includes a team that performs the valuations of financial assets and liabilities required for financial reporting purposes,
including Level 3 fair values. The valuation team reports directly to the Group Finance Director who in turn reports to the Audit Committee. Discussions
of valuation processes and results are held between the Group Finance Director and the Audit Committee. Changes in Level 2 and Level 3 fair values
are analysed at each reporting date. As part of this discussion, the valuation team presents a report that explains the reasons for fair value movements.
In accordance with IFRS 13 ‘Fair Value Measurements’, the Group has disclosed the fair value of instruments by the following fair value measurement
hierarchy:
• quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
• inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly (that is, as prices) or indirectly
(that is, derived from prices) (Level 2); and
• inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).
Fair value of financial instruments carried at fair value
The following table shows the fair values of financial instruments measured at fair value:
Notes
Fair value
hierarchy
2021
€’m
2020
€’m
Assets
Equity instrument designated at FVOCI – BDO Development Capital Fund
(a) Level 2 1.1 2.2
Cross currency swaps – fair value through income statement
(b) Level 2 1.4 1.1
Foreign exchange contracts - cash flow hedges
(c) Level 2 0.8 0.2
Call option over non-controlling interests
(d) Level 3 0.5 –
Liabilities
Foreign exchange contracts – cash flow hedges
(c) Level 2 – (1.2)
Interest rate swaps – cash flow hedges
(e) Level 2 (1.2) (2.5)
Put option liability
(d) Level 3 (24.8) –
Contingent consideration Level 3 ( 7.3 )
(d)
(17.4)
(f)
(a) The investment in BDO Development Capital Fund (note 18) is fair valued by reference to the latest quarterly report available to the limited partners.
(b) Fair value is determined by reference to the current foreign exchange rates at the end of the reporting period.
(c) Fair value is estimated by discounting the difference between the contractual forward exchange rates and the current forward exchange rates (from
observable forward exchange rates at the end of the reporting period). The effect of discounting was insignificant in 2021 and 2020.
(d) Refer to note 34 for a description of how the fair values of the call option over non-controlling interests, put option liability and contingent
consideration relating to the LevlUp acquisition are estimated.
(e) Fair value is estimated by discounting the difference between the contractual interest rate swap rates and the current interest rate swap rates (from
observable interest rate swap rates at the end of the reporting period). The effect of discounting was insignificant in 2021 and 2020.
(f) The contingent consideration of €17.4 million at 2 January 2021 relates to the Foodarom acquisition. The contingent consideration arrangement
required the Group to pay the former owners of Foodarom an earnout if a pre-defined earnings threshold was exceeded within a defined period
post acquisition. Under the acquisition agreement, the undiscounted amount of future payments for which the Group might be liable ranged from
nil to €18.0 million. The fair value of the contingent consideration was estimated by calculating the present value of the future expected payments.
As the contingent consideration was due to be paid within 12 months, the effect of discounting is not material. The main significant unobservable
input in the calculation was the forecast EBITDA of Foodarom over the relevant period. As it was deemed highly probable that the higher end of the
EBITDA range would be met, the Group assumed that the upper limit of the earnout would be payable. A 5% increase in the forecast EBITDA
would not change the fair value of the contingent consideration. A 5% decrease in forecast EBITDA would result in a decrease in fair value of the
contingent consideration by €2.8 million.
There were no transfers in either direction between Level 1 and Level 2 in 2021 and 2020. The movement in carrying amounts associated with Level 3
financial instruments are as follows:
Call option
over non-
controlling
interests
€’m
Put option
liability
€’m
(note 23)
Contingent
consideration
€’m
At 3 January 2021 – – (17. 4)
Additions through business combination (note 34) 0.4 (23.2) ( 7.1)
Remeasurements 0.1 (1.6) (0.6)
Settlements – – 19.3
Exchange translation adjustments – – (1.5)
At 1 January 2022 0.5 (24.8) ( 7.3)
At 5 January 2020 – – –
Additions through business combination – – (17. 4)
At 2 January 2021 – – (17.4)
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
216
FINANCIAL STATEMENTS
Notes to the financial statements continued
29. Derivative financial instruments and financial risk management continued
(c) Capital risk management
The Group’s objective when managing capital is to safeguard the Group’s ability to continue as a going concern while maximising the returns
to shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the overall cost of capital. Total capital is
calculated based on equity as shown in the balance sheet and net debt as follows:
Notes
2021
€’m
2020
€’m
Equity 1,740.3 1,611.8
Net debt
25 602.7 493.9
Total capital 2,343.0 2,10 5.7
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares, sell assets to increase or reduce debt or buy back shares. Any material adjustments to the capital structure are approved by the Board
of Directors. From time to time, the Group purchases its own shares on the market. These shares are primarily intended to be used for issuing shares
under the Group’s long-term and short-term incentive plans. Buy decisions are made on a specific transaction basis by the Employee Benefit Trusts.
The Group launched a third share buyback programme of up to €50 million in total value in the Company’s ordinary shares in December 2021
following the respective completion of two prior share buyback programmes on 9 April 2021 and 20 October 2021. The purpose of the share
buyback programmes is to reduce the share capital of the Company. Any shares repurchased for this purpose will be cancelled. Each programme
runs from the date of announcement of the programme and concluding no later than the Company’s next Annual General Meeting.
The Group’s key financing arrangements are: adjusted EBIT: net finance cost and net debt: adjusted EBITDA ratios, as defined within covenants.
At 1 January 2022, the Group’s net debt: adjusted EBITDA ratio was 1.71 times (2020: 1.70 times), which is deemed by management to be prudent
and within the Group’s financing covenants. Net debt: adjusted EBITDA is calculated as net debt at the end of the period divided by adjusted EBITDA.
Net debt is calculated as current and non-current borrowings less cash and cash equivalents. Adjusted EBITDA is calculated in accordance with
lenders’ facility agreements definitions which adjust pre-exceptional EBITDA for items such as dividends received from joint ventures, acquisitions
or disposals and to reverse the net impact on EBITDA as a result of adopting IFRS 16 ‘Leases’.
At 1 January 2022 the Group’s adjusted EBIT: adjusted net finance cost was 15.1 times (2020: 10.0 times) which is within the Group’s financing
covenants. 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 joint ventures divided by adjusted net finance cost. Adjusted net finance cost comprises finance costs
less finance income per the Group income statement plus borrowing costs capitalised into assets and excludes finance income/costs on changes
in fair value of call options and contingent consideration and interest expense on lease liabilities.
The Group’s capital position and information on the capital monitoring ratios are included in the monthly report issued to the Board of Directors. The
Group has no externally imposed capital requirements. No changes were made in the objectives, policies or processes for capital management during
2021 and 2020.
(d) Financial risk management
The conduct of its ordinary business operations necessitates the Group holding financial instruments. The Group has exposure to the following risks
arising from financial instruments: market risk comprising of currency risk, interest rate risk and price risk, liquidity risk and cash flow risk, and credit risk.
The Group does not enter into any financial instruments that give rise to a speculative position. The Group finances its operations by a mixture
of retained profits, medium-term committed borrowings and undrawn uncommitted borrowings. The Group borrows in the major global debt markets
in a range of currencies at both fixed and floating rates of interest, using derivatives where appropriate to generate the desired effective currency profile
and interest rate basis. Risk management, other than credit risk management, is carried out by a central treasury department (“Group Treasury”) under
policies approved by the Board of Directors. Group Treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s
business units. The Board of Directors provides written principles for overall risk management, as well as, written policies covering specific areas such
as foreign exchange risk, interest rate risk, price risk, liquidity and cash flow risk, and credit risk, use of derivative financial instruments and non-
derivative financial instruments and investment of excess liquidity.
There has been no significant change during the financial year or since the end of the year to the types of financial risks faced by the Group
or the Group’s approach to the management of those risks.
Currency risk
Although the Group is based in Ireland with the euro as the functional currency of Glanbia plc, it has significant geographic investment and operating
exposures outside the eurozone, primarily in the US. As a result, currency movements, particularly movements in the euro/US dollar exchange rate,
can significantly affect the Group’s euro balance sheet and income statement. Group Treasury monitors and manages these currency exposures on
a continuous basis, using approved hedging strategies and appropriate currency derivative instruments.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
217
Sensitivity analysis
The following table demonstrates the sensitivity of profit before tax and total equity to movements in the euro/US dollar exchange rate with all other
variables held constant.
+/-5% change in euro/US dollar exchange rate
2021
€’m
2020
€’m
Impact on profit before tax* -/+10.5 –/+7.4
Impact on total equity** -/+60.9 –/+54.2
* The impact on profit before tax is based on changing the euro/US dollar exchange rate used in calculating profit before tax for the period.
** The impact on total equity is calculated by changing the euro/US dollar exchange rate used in measuring the closing balance sheet.
The Group is exposed to transactional foreign currency risk that arises from sales or purchases by an operating unit in currencies other than the
operating unit’s functional currency. Group companies are required to manage their foreign exchange risk against their functional currency and spot
and forward exchange contracts are primarily used to hedge foreign exchange risk exposure on foreign currency denominated sales and purchases.
The notional principal amounts of the outstanding foreign exchange contracts as at 1 January 2022 were €14.9 million (2020: €18.9 million),
which substantially covers the operating units currency exposure. Refer to note 29(a) for further details of the foreign exchange contracts.
Interest rate risk
The Group’s objective is to minimise the impact of interest rate volatility on interest costs. This is achieved by determining a long-term strategy against
a number of policy guidelines, which focus on (i) the amount of floating rate indebtedness anticipated over such a period and (ii) the consequent
sensitivity of interest costs to interest rate movements on this indebtedness and the resultant impact on reported profitability. The Group borrows at
both fixed and floating rates of interest and can use interest rate swaps to manage the Group’s resulting exposure to interest rate fluctuations.
The Group’s main interest rate risk arises from long-term borrowings with floating rates, due to the borrowings being periodically contractually repriced
within 12 months from the reporting date. These borrowings expose the Group to cash flow interest rate risk.
Group policy is to maintain no more than one third of its projected debt exposure on a floating rate basis over any succeeding 12 month period with
further minimum guidelines over the succeeding 24 and 36 month periods. The Group, on a continuous basis, monitors the level of fixed rate cover
dependent on prevailing fixed market rates, projected debt and market informed interest rate outlook. Occasionally, the Group manages its cash flow
interest rate risk by using floating to fixed interest rate swaps. Such interest rate swaps have the effect of converting borrowings from floating rates
to fixed rates. Under these interest rate swaps, the Group agrees with other parties to exchange at specified intervals, the difference between fixed
interest rate amounts and floating interest rate amounts calculated by reference to the agreed notional amounts.
The exposure of the Group’s borrowings subject to interest rate changes taking into account contractual repricing dates at the end of the reporting
period is €216.9 million (2020: €178.1 million) (note 25). The Group does not hedge 100% of its floating rate loans, therefore the amount hedged is
a proportion of the outstanding loans up to the notional amount of the swaps. See note 29(a) for the floating to fixed interest rate swaps entered into
by the Group to hedge against this exposure.
The Group enters into interest rate swaps that have similar critical terms as the hedged item. As all critical terms matched during the year, there
is an economic relationship between the interest rate swaps (hedging instruments) and floating rate borrowings (hedged items).
Sensitivity analysis
The Group does not account for any fixed rate financial liabilities at fair value through profit or loss. Therefore a change in interest rates at the reporting
date would not affect profit or loss.
The following table demonstrates the sensitivity of profit before tax and total equity if market interest rates had been 1% higher or lower with all other
variables held constant:
+/-1% change in market interest rates
2021
€’m
2020
€’m
Impact on profit before tax -/+0.2 –/+0.9
Impact on total equity -/+0.2 –/+0.8
Price risk
Equity price risk
The Group’s objective is to minimise the price risk the Group is exposed to because of equity instruments held by the Group (note 18). These equity
instruments are classified in the Group balance sheet as FVOCI. To manage its price risk arising from these equity securities, the Group does not
maintain a significant balance with any one equity. Diversification of the equity instruments held by the Group must be done in accordance with the
limits set by the Group. The impact of a 5% increase or decrease in equity indices across the eurozone countries would not have any material impact
on Group profit before tax or total equity.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
218
FINANCIAL STATEMENTS
Notes to the financial statements continued
29. Derivative financial instruments and financial risk management continued
Commodity price risk
Commodity price risk in the Group arises primarily from price fluctuations of commodities. The Group’s objective is to minimise commodity price
risk through entering into commodity options and future contracts for instance and the use of appropriate hedging strategies. The Group enters into
forward purchase and forward sale agreements in the normal course of business. Certain of these contracts are deemed to be ‘own use’ as they were
entered into in accordance with the Group’s expected purchase, sale or usage requirements. The impact of a 5% increase or decrease in commodity
prices (milk, cheese and gas) would not have any material impact on Group profit before tax or total equity.
Liquidity and cash flow risk
The Group’s objective is to ensure that the Group does not encounter difficulties in meeting obligations associated with financial liabilities that
are settled by delivering cash or another financial asset.
In order to preserve the continuity of funding, the Group’s policy is that, at a minimum, committed facilities should be available at all times to
meet the full extent of its anticipated finance requirements, arising in the ordinary course of business, during the succeeding 12 month period.
Refer to note 25 for details of the Group’s committed facilities.
When appropriate, surplus funds in the Group are transferred to Group Treasury through different methods including the repayment of borrowings,
deposits and dividends. These are then lent to Group companies, contributed as equity to fund Group operations, used to repay external debt
or invested externally. The Group does not use off-balance sheet special purpose entities as a source of liquidity or for other financing purposes.
The Group uses cash flow forecasts to constantly monitor the funding requirements of the Group. Compliance with the Group’s financial covenants
is monitored continually based on statutory and management accounts and financial projections. All covenants have been complied with in 2021
and 2020.
There is no significant concentration of liquidity risk.
Further analysis of the Group’s debt covenants is included in the Group Finance Director’s Review. For further details regarding the Group’s borrowing
facilities see note 25.
The table below analyses the Group’s non-derivative financial liabilities and derivative financial liabilities for which the contractual maturities are
essential for an understanding of the timing of the cash flows, into relevant maturity groupings based on the remaining period from the reporting
date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Less than
1 year
€’m
Between
1 and 2
years
€’m
Between
2 and 5
years
€’m
More than
5 years
€’m
Tot al
€’m
At 1 January 2022
Non-derivative financial liabilities
Borrowings 151.9 15.4 392.9 365.3 925.5
Trade payables and amounts due to joint ventures 442.5 – – – 442.5
Put option liability – – 36.3 – 36.3
Contingent consideration – 8.3 – – 8.3
Lease liabilities 16.8 17.6 41.8 57.2 133.4
611. 2 41.3 471.0 422.5 1,546.0
Less future finance costs (21.2) (20.7) (37.2) (39.1) (118.2)
590.0 20.6 433.8 383.4 1, 427. 8
Derivative financial liabilities – 1.2 – – 1.2
At 2 January 2021
Non-derivative financial liabilities
Borrowings 221.3 18.4 350.6 182.4 772.7
Trade payables and amounts due to joint ventures 260.3 – – – 260.3
Contingent consideration 17.4 – – – 17.4
Lease liabilities 18.0 14.7 38.6 51.1 122.4
517. 0 33.1 389.2 233.5 1,172.8
Less future finance costs (23.7) (20.4) (39.3) (43.3) (126.7)
493.3 12.7 349.9 190.2 1,046.1
Derivative financial liabilities 1.2 – 2.5 – 3.7
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
219
Credit risk
The Group’s objective is to minimise credit risk which is managed on a Group basis. Credit risk is the risk of financial loss to the Group if a customer
or counterparty to a financial transaction fails to meet its contractual obligations. Credit risk arises from cash and cash equivalents, credit exposures to
customers, including outstanding receivables and committed transactions, and loans to joint ventures. Other financial assets (note 18) are not material
and accordingly, loss allowance of ECL is not material.
Financial assets subject to credit risk are written off when there is no reasonable expectation of recovery such as debtor failing to engage in a repayment
plan with a company. Subsequent recoveries of amounts written off are recognised in the Group income statement. The Group does not expect any
significant counterparty to fail to meet its obligations. The maximum exposure to credit risk is represented by the carrying amount of each asset.
Refer to note 2 for Covid-19 considerations.
Cash and cash equivalents
In the international movement and placement of funds and execution of financial transactions, the risk of counterparty default is managed by the
Group’s policies requiring exposure to independently rated parties with long-term credit ratings of at least A3 (Moody’s) or A– (Standard & Poor’s).
In the movement and placement of funds and execution of financial transactions in Ireland, the Group’s policies accept exposure to independently
rated parties with long-term credit ratings of at least Baa3 (Moody’s) or BBB– (Standard & Poor’s). The Group’s cash and cash equivalents (note 21)
at 1 January 2022 and 2 January 2021 were held within financial institutions which complied with Group policy. Accordingly, the Group considers its
cash and cash equivalents to be of low credit risk and does not expect any expected credit loss in relation to them.
Trade receivables
The Group’s credit risk management policy requires that, where possible, all debt is insured with an external credit insurance underwriter. Covid-19
had an effect on the availability of credit insurance which has resulted in higher credit risk. This heightened risk has been managed closely by the
Group, with a strong focus on tighter cash collection and credit terms. The Group’s authorisation review includes external credit agency reports,
the trading and financial history and position of the customer, the business case, the country in which the customer operates and any other available
information. The utilisation of credit limits is actively managed and reviewed formally on an annual basis. Where the extension of credit is not
appropriate, payment in advance is required. No goods are dispatched on credit until the credit controller has authorised the application confirming
all necessary procedures have been complied with. Outstanding customer balances are regularly monitored and a review for indicators of impairment
(evidence of financial difficulty of the customer, payment default, breach of contract etc.) is carried out at each reporting date.
Goods are sold primarily subject to retention of title clauses, so that in the event of non-payment the Group may have a secured claim. Where required,
the Group holds appropriate security or liens in respect of trade and other receivables. The Group does not hold any significant security or liens at the
end of the year.
See note 19 for the carrying amount of the Group’s trade and other receivables.
At the end of the reporting period, the Group derecognised €31.3 million of certain trade receivables related to one customer through the use of a
limited receivables sale programme (2020: €33.7 million). This programme was entered into to partially mitigate but not fully offset an increase in credit
terms relating to these trade receivables during the period. Under this programme, the Group has the option to sell certain trade receivable invoices
to a third party financial institution. This third party may accept this offer for sale by way of a non-recourse payment to the Group (for face value
of the receivables net of transaction fees), upon which the Group no longer retains any risks and rewards in the receivables sold, resulting in the
derecognition of these receivables from the Group balance sheet. The proceeds from these sales of receivables are included in cash from operating
activities in the Group statement of cash flows. The fair value of the receivables equals to its amortised cost as they are transferred at the face value
of the trade receivable invoices.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade
receivables. To measure the expected credit losses, historical loss rates of operating units are calculated based on their recent historical credit loss
experience and applied to the operating units trade receivables at the reporting date. The loss allowance is estimated based on historical loss rates
and adjusted where appropriate to reflect current information and forward-looking information on macroeconomic factors which affect the ability of the
debtors to settle the receivables. The increase in loss allowance recognised during the year reflect current and forward-looking information including
the effects of Covid-19 on the trading environment in which the Group sells its goods.
The movement in the expected credit loss allowance for trade receivables is as follows:
Notes
2021
€’m
2020
€’m
At the beginning of the year 11. 2 6.6
Exchange differences 0.8 (0.6)
Increase in loss allowance recognised during the year 2.6 9.1
Receivables written off during the year as uncollectible (1.7) (2.0)
Unused amounts reversed (0.9) (1.9)
At the end of the year
19 12.0 11.2
The net movement in the loss allowance has been included within the income statement.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
220
FINANCIAL STATEMENTS
Notes to the financial statements continued
29. Derivative financial instruments and financial risk management continued
Trade receivables amounted to €327.2 million at 1 January 2022 (2020: €283.5 million) (note 19). Receivable balances that are neither past due nor
impaired amounted to €299.7 million (2020: €259.8 million). Past due information is reported to key management personnel for credit risk management
purposes. At 1 January 2022, trade receivables of €27.5 million (2020: €23.7 million) were past due and analysed as follows:
2021
€’m
2020
€’m
Past due
Less than 30 days 19.6 16.4
1 to 3 months 4.5 2.5
4 to 6 months 1.3 0.8
Over 6 months 2.1 4.0
27. 5 23.7
Less expected credit loss allowance (12.0) (11.2)
Total 15.5 12.5
Loans to joint ventures
The Group advanced interest bearing loans to its joint ventures for the purposes of funding capital expenditure. See note 35 for details of the loans.
The loans receivable are considered to have low credit risk as there is a low risk of default and the joint ventures are expected to meet their contractual
cash flow obligations in the near term. The Group considers information such as cash flow forecasts of the joint ventures to determine whether they
have the ability to repay the intercompany loans. Management does not expect significant adverse changes in economic and business conditions
which would reduce the ability of the joint ventures to repay the intercompany loans. Consequently, the Group has determined that the loans are of low
credit risk.
Where a loan is considered not to have low credit risk at the reporting date and to assess whether there is a significant increase in credit risk
of the loan since initial recognition, the Group considers information such as actual or expected significant adverse changes in economic or business
conditions that are expected to cause a significant change in a joint venture’s ability to meet its obligations, and significant increases in credit risk on
other financial instruments of the joint venture. A loan would be considered to be in default if a joint venture did not make contractual repayments within
90 days after they fell due unless evidenced otherwise. Evidence that an intercompany loan is credit-impaired would include information such as
significant financial difficulty of the joint venture, or the probability that the joint venture will enter bankruptcy.
In calculating the expected credit loss rates, the Group considers historical loss rate on its loans advanced to the joint ventures, internal credit rating of
the joint ventures based on the experience of Group Treasury and recent pricing provided by external credit providers and adjusts for forward-looking
macroeconomic data. There were no historical losses for loans advanced to the joint ventures and internal credit rating of the joint ventures is
considered to be about investment grade. Expected credit loss allowance is accordingly not material.
(e) Carrying amounts of financial instruments
Notes
2021
€’m
2020
€’m
Financial assets measured at amortised cost
Trade receivables and receivables from related parties 321.1 279.9
Loans to joint ventures
35 42.5 31.8
Ornua Co-operative Limited
18 0.2 0.4
363.8 312.1
Financial liabilities measured at amortised cost
Borrowings
25 (833.7) (658.2)
Trade payables and amounts due to related parties (442.5) (260.3)
Lease liabilities
31 (119.5) (110.2)
(1,395.7) (1,028.7)
Financial liabilities measured at FVTPL – contingent consideration 28 ( 7.3 ) (17.4)
Investments in equity instruments designated at FVOCI 1.7 2.8
Put option liability measured at FV through equity
28 (24.8) –
Net derivative asset/(liability) 1.5 (2.4)
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
221
(f) Offsetting financial assets and financial liabilities
Financial assets and liabilities are offset and the net amount is reported in the Group balance sheet where the Group has a legally enforceable right to
offset recognised amounts which is not conditional on the occurrence of a future event, and there is an intention to settle on a net basis or realise the
asset and settle the liability simultaneously.
The Group enters into derivative transactions under International Swaps and Derivatives Association (ISDA) master netting arrangements. The following
table sets out the carrying amounts of recognised financial instruments that are subject to these agreements:
Notes
Gross amounts
€’m
Gross amounts
set off in the the
balance sheet
€’m
Net amounts
presented in the
balance sheet
€’m
At 1 January 2022
Derivative financial assets
29(a) 2.7 – 2.7
Derivative financial liabilities
29(a) (1.2) – (1.2)
At 2 January 2021
Derivative financial assets
29(a) 1.3 – 1.3
Derivative financial liabilities
29(a) (3.7) – (3.7)
30. Contingent liabilities and commitments
Contingent liabilities
The Company has contingent liabilities arising from the binding legal agreements signed on 8 December 2021 relating to the Proposed Transaction
(note 7). As part of the terms of the Proposed Transaction, the Company has committed to pay Glanbia Ireland a contribution of €8 million related to
pension obligations, separation and rebranding costs as well as a maximum additional €1.5 million re-imbursement of rebranding costs in connection
with the Proposed Transaction. The liabilities are contingent on the completion of the Proposed Transaction which is subject to approval of the
shareholders of the Company, other than the Society or persons connected with the Co-op at an extraordinary general meeting and receipt of any
necessary regulatory approvals (note 36).
Guarantees provided by financial institutions amounting to €6.9 million (2020: €4.4 million) are outstanding at 1 January 2022. 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 other than those provided for.
Any Irish registered wholly-owned subsidiary of the Company may avail of the exemption from filing its statutory financial statements for the year ended
1 January 2022 as permitted by section 357 of the Companies Act 2014 and if an Irish registered wholly-owned subsidiary of the Company elects to
avail of this exemption, there will be in force an irrevocable guarantee from the Company in respect of all commitments entered into by such wholly-
owned subsidiary, including amounts shown as liabilities (within the meaning of section 357 (1) (b) of the Companies Act 2014) in such wholly-owned
subsidiary’s statutory financial statements for the year ended 1 January 2022.
Within the scope of benefitting from the exemption related to the filing of the statutory financial statements for the financial year ended 31 December
2021 of Glanbia Foods B.V., the Company has guaranteed the liabilities ensuing from legal acts performed by this subsidiary from 1 January 2021 in
accordance with and to the extent as set out in section 2:403.1(b and f) of the Dutch Civil Code. Therefore Glanbia Foods B.V. is exempt from the
obligation to publish its statutory financial statements and its obligations to file statutory financial statements has been fulfilled by means of the
publication of the declaration of consent and the declaration of liability.
Within the scope of benefitting from the exemption related to the filing of the statutory financial statements for the financial year ended 31 December
2021 of the three Luxembourg subsidiaries, Glanbia Luxembourg SA, Glanbia Luxfin SA and Glanbia Luxinvest SA, the Company has guaranteed the
liabilities of these subsidiaries in respect of any losses or liabilities (as provided by Article 70 (c) of the Luxembourg Law of 19 December 2002 on the
register of commerce and companies and the accounting and annual accounts of undertakings) for the financial year ended 31 December 2021.
These subsidiaries avail of the exemption from filing of their statutory financial statements, as permitted by Article 70 of the Luxembourg Law of
19 December 2002 on the register of commerce and companies and the accounting and annual accounts of undertakings.
Commitments
Capital expenditure contracted for at the reporting date but not recognised in the Group financial statements is as follows:
2021
€’m
2020
€’m
Property, plant and equipment 8.3 7.9
Intangible assets 1.5 –
As at 1 January 2022, the Group has committed to invest €10.0 million cash contributions in Glanbia Cheese EU Limited (2020: €10.0 million) which is
contingent on the successful commissioning of the plant. Additionally, there was an undrawn loan facility of €1.3 million as at 1 January 2022 (2020:
€2.0 million) which was provided by the Group to the joint venture.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
222
FINANCIAL STATEMENTS
Notes to the financial statements continued
31. Leasing
The movement in right-of-use assets during the year is as follows:
Notes
Land and
buildings
€’m
Plant and
equipment
€’m
Motor
vehicles
€’m
Tot al
€’m
Year ended 1 January 2022
Opening carrying amount 84.0 3.4 3.1 90.5
Exchange differences 6.2 0.2 0.2 6.6
Acquisitions
34 0.7 0.4 – 1.1
Additions 19.7 1.2 2.1 23.0
Disposals (2.5) – – (2.5)
Impairment
5 (0.7) – – (0.7)
Depreciation charge
5/32 (13.6) (2.7) (1.8) (18.1)
Closing carrying amount 93.8 2.5 3.6 99.9
At 1 January 2022
Cost 119.2 5.4 6.4 131.0
Accumulated depreciation (25.4) (2.9) (2.8) (31.1)
Carrying amount 93.8 2.5 3.6 99.9
Year ended 2 January 2021
Opening carrying amount – – – –
Effect of adopting IFRS 16 97. 9 5.2 3.3 106.4
Exchange differences ( 7.3) (0.4) (0.3) (8.0)
Acquisitions 0.6 – – 0.6
Additions 11.9 2.6 1.9 16.4
Disposals (4.4) (1.3) (0.2) (5.9)
Impairment
5 (1.0) – – (1.0)
Depreciation charge
5/32 (13.7) (2.7) (1.6) (18.0)
Closing carrying amount 84.0 3.4 3.1 90.5
At 2 January 2021
Cost 97.5 5.6 4.6 107.7
Accumulated depreciation (13.5) (2.2) (1.5) (17. 2)
Carrying amount 84.0 3.4 3.1 90.5
Lease liabilities shown in the Group balance sheet are as follows:
Notes
2021
€’m
2020
€’m
Current 14.5 15.8
Non-current 105.0 94.4
Total
29(e)/33 119.5 110.2
Refer to note 29(d) for a maturity analysis of the lease liabilities arising from the Group’s leasing activities.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
223
Amounts recognised in the Group income statement included the following:
Notes
2021
€’m
2020
€’m
Depreciation charge of right-of-use assets 5 18.1 18.0
Impairment of right-of-use assets
5 0.7 1.0
Interest expense on lease liabilities
11 2.5 2.8
Expense relating to short-term leases 1.9 2.4
Expense relating to variable lease payments not included in lease liabilities 0.4 0.5
There was no income from subleasing and gains/losses on sale and leaseback transactions. The total cash outflow for lease payments during the
year was €22.9 million (2020: €21.9 million). At 1 January 2022, the Group was committed to €0.9 million (2020: €1.0 million) for short-term leases.
Certain building leases contain extension options exercisable by the Group. As at 1 January 2022, undiscounted potential future lease payments of
€70.8 million (2020: €90.0 million) have not been included in lease liabilities because it is not reasonably certain that the extension options, €66.2 million
(2020: €77.1 million) of which relate to periods more than five years from the reporting date, will be availed of. The undiscounted future lease payments
relating to leases that have not yet commenced which the Group is committed as at 1 January 2022 and 2 January 2021 were not material. The effect
of excluding future cash outflows arising from variable lease payments, termination options, and residual value guarantees from lease liabilities is not
material for the Group.
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224
FINANCIAL STATEMENTS
32. Cash generated from operating activities
Notes
2021
€’m
2020
€’m
Profit for the year 167. 4 143.8
Exceptional items
6 42.1 31.5
Profit after tax from discontinued operations (25.7) (23.9)
Income taxes 24.6 14.5
Profit before taxation 208.4 165.9
Share of results of joint ventures accounted for using the equity method (19.2) ( 37.7 )
Finance costs
11 19.5 24.6
Finance income
11 (2.0) (4.1)
Amortisation of intangible assets
16 63.9 60.9
Depreciation of property, plant and equipment
15 44.9 45.9
Depreciation of right-of-use assets
31 18.1 18.0
Cost of share-based payments
10/23 15.9 5.2
Difference between pension charge and cash contributions (6.4) ( 7. 2)
Net write down of inventories
20 6.1 23.0
Non-cash movement in/on:
– provisions 8.7 3.3
– allowance for impairment of receivables – 5.2
– cross currency swaps (0.8) (0.7)
– disposal of leases (0.1) (0.7)
Reversal of impairment of property, plant and equipment
5 (1.4) –
(Profit)/loss on disposal of property, plant and equipment
5 (0.1) 0.8
Operating cash flows before movement in working capital 355.5 302.4
(Increase)/decrease in inventories
(a) (186.1) 18.7
(Increase)/decrease in short-term receivables
(a) (13.4) 80.7
Increase/(decrease) in short-term liabilities
(a) 207.1 (54.4)
(Decrease)/increase in provisions
(a) (5.1) 2.0
Cash generated from operating activities before exceptional items 358.0 349.4
(a) The movement in working capital is as follows:
2021
Inventories
€’m
(note 20)
Trade and other
receivables
€’m
(note 19)
Trade and other
payables
€’m
(note 28)
Provisions
€’m
(note 27)
Tot al
€’m
At 3 January 2021 37 7.6 319.2 (441.6) (11.2) 244.0
Exchange differences 33.1 23.5 (38.4) (0.7) 17. 5
Arising on acquisition (note 34) 2.9 3.4 (4.4) – 1.9
Loans/amounts payable to joint ventures, interest accruals, capital
creditors and other non-operating items (6.1) (0.1) 22.2 (9.7) 6.3
Increase/(decrease) in working capital 186.1 13.4 (207.1) 5.1 (2.5)
At 1 January 2022 593.6 359.4 (669.3) (16.5) 26 7.2
2020
At 5 January 2020 4 47.5 432.3 (525.0) (3.6) 351.2
Exchange differences (31.3) (29.8) 35.8 0.2 (25.1)
Arising on acquisition 3.2 3.2 (5.5) – 0.9
Loans/amounts payable to joint ventures, interest accruals, capital
creditors and other non-operating items (23.1) (5.8) (1.3) (5.8) (36.0)
(Decrease)/increase in working capital (18.7) (80.7) 54.4 (2.0) (47.0)
At 2 January 2021 37 7.6 319.2 (441.6) (11.2) 244.0
Notes to the financial statements continued
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
225
33. Changes in liabilities arising from financing activities
Notes
Borrowings
€’m
Private
Placement Debt
€’m
Lease
liabilities
€’m
Tot al
€’m
At 3 January 2021 315.8 269.7 110. 2 695.7
Drawdown of borrowings
25 290.9 167.6 – 458.5
Repayment of borrowings
25 (252.7) (130.7) – (383.4)
Leases – – 2 7.3 27.3
Payment of lease liabilities – – (19.1) (19.1)
Acquisitions
34 – – 1.1 1.1
Exchange differences 12.1 24.5 – 36.6
1 January 2022 366.1 331.1 119.5 816.7
At 5 January 2020 6 39.1 139.9 – 779.0
Drawdown of borrowings
25 913.3 143.9 – 1, 0 57. 2
Repayment of borrowings
25 (1,222.0) – – (1,222.0)
Leases – – 128.8 128.8
Payment of lease liabilities – – (19.2) (19.2)
Acquisitions 12.2 – 0.6 12.8
Exchange differences (26.8) (14.1) – (40.9)
At 2 January 2021 315.8 269.7 110.2 695.7
34. Business combinations
In 2020, the Group acquired Foodarom Group Inc., Foodarom USA, Inc. and Foodarom Germany GmbH (collectively known as “Foodarom”). Refer to
2020 Annual Report for details of the Foodarom acquisition. During the year, the Group paid the former owners of Foodarom an earnout of €19.3m,
as the pre-defined earnings threshold was exceeded during the year.
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 Glanbia Performance Nutrition’s DTC platform and the investment provides Glanbia Performance
Nutrition 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 €27.4 million is not deductible for tax purposes.
On 20 September 2021, Glanbia acquired 100% of the voting shares of PacMoore Process Technologies, LLC (“PacMoore”), a US based food
ingredients solution business for $51.9 million. PacMoore has production and innovation facilities in the US states of Indiana and Illinois and will form
part of the Glanbia Nutritionals segment. PacMoore provides a number of ingredient solutions, predominantly to the healthy snacking category.
The goodwill relates to the expectation that the business will continue to generate new customers, the acquired workforce and further development
of the recipes and know-how within the Glanbia Nutritionals segment. Goodwill of €10.7 million is not deductible for tax purposes.
Details of the net assets acquired and goodwill arising from the acquisitions are as follows:
Notes
PacMoore
€’m
LevlUp
€’m
Tot al
€’m
Cash paid 44.3 31.4 75.7
Payment due to sellers – 0.4 0.4
Contingent consideration – 7.1 7.1
Total consideration 44.3 38.9 83.2
Less: fair value of net assets acquired (33.6) (19.2) (52.8)
Non-controlling interest arising on acquisition – 7.7 7.7
Goodwill
16 10.7 27.4 38.1
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226
FINANCIAL STATEMENTS
34. Business combinations continued
The fair value of assets and liabilities arising from the acquisition are as follows:
Notes
PacMoore
€’m
LevlUp
€’m
Tot al
€’m
Property, plant and equipment 15 18.9 0.2 19.1
Right-of-use assets
31 0.8 0.3 1.1
Intangible assets – brands
16 – 14.0 14.0
Intangible assets – customer relationships
16 3.7 7.8 11. 5
Intangible assets – recipes and know-how
16 10.2 – 10.2
Inventories
32(a) 0.9 2.0 2.9
Trade and other receivables
32(a) 2.9 0.5 3.4
Cash and cash equivalents
25 – 4.4 4.4
Trade and other payables
32(a) (3.0) (1.4) (4.4)
Current tax liabilities – (1.4) (1.4)
Lease liabilities
33 (0.8) (0.3) (1.1)
Deferred tax liabilities
26 – (6.9) (6.9)
Fair value of net assets acquired 33.6 19.2 52.8
LevlUp
The contingent consideration arrangement requires the Group to pay the non-controlling interests 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 non-controlling interests shareholder has a contractual put option in relation to the
non-controlling interests shares in LevlUp where the non-controlling interests shareholder can require the Group to acquire those shares in 2025.
The fair values of the put option liability and contingent consideration at 1 January 2022 was €24.8 million and €7.3 million respectively and are
estimated by calculating the present value of the future expected payments discounted using a risk-adjusted discount rate.
Along with the put option, there is a contractual call option in relation to the non-controlling interests shares in LevlUp where the Group can require
the non-controlling interests shareholder to sell those shares to the Group in 2025. The fair value of the call option was €0.5 million at 1 January 2022
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.
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,
contingent consideration and call option.
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)
Call option
10% increase in forecast earnings –
10% decrease in forecast earnings –
The fair value of LevlUp’s trade receivables at the acquisition date amounted to €0.5 million. The gross contractual amount for trade receivables due
is €0.5 million which is expected to be received in full. Acquisition-related costs of €1.1 million incurred primarily on professional fees are included
in administrative expenses.
PacMoore
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 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 2022 interim financial statements.
The fair value of PacMoore’s trade receivables at the acquisition date amounted to €2.8 million. The gross contractual amount for trade receivables
due is €2.9 million, of which €0.1 million is expected to be uncollectible. Acquisition-related costs of €0.8 million incurred primarily on professional fees
are included in administrative expenses.
Notes to the financial statements continued
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
227
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
year ended 1 January 2022, were as follows:
2021
Acquisitions
€’m
Group excluding
acquisitions
€’m
Group including
acquisitions
€’m
Revenue 20.4 4,176.5 4,196.9
Profit before taxation and exceptional items 0.2 208.2 208.4
The revenue and profit before taxation and exceptional items of the Group for the year ended 1 January 2022 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 year would be as follows:
Pro-forma
2021
acquisitions
€’m
Group excluding
acquisitions
€’m
Pro-forma
group including
acquisitions
€’m
Revenue 51.2 4,176.5 4,227.7
Profit before taxation and exceptional items 5.3 208.2 213.5
35. Related party transactions
Related parties of the Group include Glanbia Co-operative Society Limited (the Group’s ultimate parent up to 30 June 2020), subsidiary
undertakings, joint ventures and key management personnel. A listing of the principal subsidiaries and joint ventures is provided in note 37.
Transactions with Glanbia Co-operative Society Limited
Glanbia Co-operative Society Limited (the “Society”), together with its subsidiaries, holds 32.5% (2020: 31.7%) of the issued share capital of the Company.
Refer to note 7 for details of the Proposed Transaction between the Company and the Society.
During 2021, dividends of €25.8 million (2020: €24.8* million) were paid to the Society and its wholly owned subsidiaries based on their shareholding
in Glanbia plc. Dividends of €0.1 million (2020: €0.1** million) were received during the period from the Society by a subsidiary society of the Group.
The Group provides a range of management and administrative services to the Society and is headquartered in a premises owned by the Society.
* €14.9 million of this amount pertained to the period ended 30 June 2020 when the Society was the ultimate parent of the Group.
** Nil pertained to period ended 30 June 2020 when the Society was the ultimate parent of the Group.
Transactions with joint ventures
The Group trades in the normal course of business with its joint ventures. Refer to (a) to (c) herein for the transactions carried out with them and the
balances relating to them at year end. The Group provides management and administrative services to its joint ventures, which are settled in cash.
Dividends received by the Group from its joint ventures are as follows:
Entity Notes
2021
€’m
2020
€’m
Glanbia Ireland DAC 12.2 12.6
Glanbia Cheese Limited
17 11.1 13.1
Southwest Cheese Company, LLC
17 10.6 10.9
17 33.9 36.6
Dividends receivable from Glanbia Cheese Limited of €2.6 million (2020: €2.3 million) were recognised by the Group.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
228
FINANCIAL STATEMENTS
35. Related party transactions continued
Loans to joint ventures
Notes
2021
€’m
2020
€’m
Loans to joint ventures
At the beginning of the year 31.8 28.8
Loans advanced during the year 10.7 3.0
At the end of the year
29(b)/29(e) 42.5 31.8
Interest receivable on loans to joint ventures
At the beginning of the year 0.1 0.1
Interest charged
11 1.4 1.3
Interest received (1.4) (1.3)
At the end of the year
19 0.1 0.1
Total loans and interest at the end of the year 42.6 31.9
During 2021, the Group advanced amounts of €10.7 million (2020: €3.0 million) at arm’s length to Glanbia Cheese EU Limited, a joint venture of the
Group, which are repayable on 29 December 2025. During 2018, the Group advanced a loan of €16.0 million at arm’s length to Glanbia Ireland DAC,
a joint venture of the Group, which is repayable on 6 August 2024. On 21 January 2016 a subordinated loan of €12.8 million was advanced to Glanbia
Ireland DAC, a joint venture of the Group, which is repayable on 6 August 2024. As part of the Proposed Transaction (note 7) the Group and Glanbia
Ireland DAC have agreed that the loans will be repaid within one year of completion of the transaction.
The following transactions were carried out with related parties:
(a) Sales of goods and services
2021
€’m
2020
€’m
Sales of goods:
– joint ventures 0.7 0.6
Sales of services:
– Glanbia Co-operative Society Limited* 2.4 2.2
– joint ventures 49.2 37. 8
* There were €1.1 million of sales of goods and services during the period ended 30 June 2020 when the Society was the ultimate parent of the Group.
Sales to related parties were carried out under normal commercial terms and conditions.
(b) Purchases of goods and services
2021
€’m
2020
€’m
Purchases of goods:
– joint ventures 1,430.0 1,191.0
Purchases of services:
– Glanbia Co-operative Society Limited* 0.3 0.3
– joint ventures – 0.2
* There were €0.1 million of purchases of goods and services during the period ended 30 June 2020 when the Society was the ultimate parent of the Group.
Purchases from related parties were carried out under normal commercial terms and conditions.
(c) Year end balances (excluding loans)
Notes
2021
€’m
2020
€’m
Receivables from related parties:
– Glanbia Co-operative Society Limited
19 0.4 0.3
– joint ventures
19 5.4 7. 2
Payables to related parties:
– joint ventures
28 133.5 78.5
Notes to the financial statements continued
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
229
The outstanding balances included in receivables and payables at the balance sheet date in respect of transactions with related parties are unsecured,
interest free and settlement arises in cash. No guarantees have been given or received. All outstanding balances are deemed to be fully recoverable by
the Group.
(d) Contributions to retirement benefit plans
Information in relation to the Group’s contributions to retirement benefit plans is disclosed in note 9.
(e) Key management compensation
The Board of Directors and Glanbia Operating Executive are deemed to be key management personnel as they are responsible for planning, directing
and controlling the activities of the Group.
Key management compensation includes the compensation of the Board of Directors (Executive and Non-Executive) and members of the Glanbia
Operating Executive, including the Group Secretary. Dividends totalling €0.3 million (2020: €0.3 million) were received by key management personnel
during the year, based on their personal shareholdings in Glanbia plc.
In addition to their salaries and short-term benefits, the Group contributes to post retirement benefit plans (note 9) on behalf of key management
personnel and these personnel also participate in the Group’s various share-based payment arrangements (note 10). No loans were made to key
management during the year (2020: nil).
2021
€’m
2020
€’m
Salaries and other short-term employee benefits 8.1 7. 8
Post-employment benefits 0.9 1.3
Share-based payments 7. 3 1.4
Non-Executive Directors fees 1.0 0.9
17. 3 11.4
Retirement benefits of €0.4 million (2020: €0.4 million) were accrued in the year to three members of key management (2020: four) under a post
retirement defined benefit plan. Total retirement benefits accrued to key management under the post retirement defined benefit plan are
€7.8 million (2020: €8.6 million).
The Group through Employee Benefit Trusts reacquired Company shares from key management personnel; the total number reacquired was 52,506
ordinary shares at an average price of €14.09 per share (2020: 28,631 ordinary shares at an average price of €9.40 per share).
Details of the Directors’ compensation including salary, fees, various share-based payment arrangements and other benefits, together with their
interest in Glanbia plc is disclosed in the Remuneration Committee Report on pages 118 to 142.
36. Events after the reporting period
See note 14 for the final dividend, recommended by the Directors. Subject to shareholder approval, this dividend will be paid on 6 May 2022
to shareholders on the register of members on 25 March 2022, the record date.
On 20 January 2022, Glanbia Co-operative Society completed the sale of approximately 5.75 million ordinary shares in the Company (the “Shares”),
representing around 2 percent of the Company’s issued share capital, for a total consideration of approximately €70 million (the “Placement”). The
price per Share in the Placement was €12.25. Pursuant to the Company’s existing authority to repurchase shares, the Company participated in the
Placement via Glanbia’s broker and purchased 2,527,152 Shares (representing around 0.9 percent of the Company’s existing issued share capital),
at a price of €12.25 per Share (the “Buyback”) (an aggregate of €31 million). The Shares purchased in the Buyback were cancelled. The Company’s
participation in the Placement was incremental to the ongoing €50 million share repurchase programme announced on 8 December 2021. In addition,
the Board announced on 2 March 2022 that it has launched a further €50 million share buyback programme.
On 25 February 2022 Glanbia’s independent shareholders approved the disposal of the Group’s 40% interest in Glanbia Ireland to Glanbia
Co-operative Society for €307 million to be paid in cash on closing. All shareholder approvals have now been obtained with completion of the
transaction anticipated in Q2 2022, subject to standard regulatory clearances. Glanbia will continue to provide certain corporate, business and IT
services to Glanbia Ireland for a number of years following the close of the transaction. Glanbia will also continue to be a customer of Glanbia Ireland
for certain ingredients. All contractual arrangements between Glanbia and Glanbia Ireland are arm’s length and on market based commercial terms.
Product supply agreements with Glanbia Ireland are not material to the Group’s operating performance or financial results. Within 18 months of
completion, Glanbia Ireland is required to change its name to a new name that does not include the name or word ‘Glanbia’. Glanbia Ireland’s results
have been presented separately in the financial statements as discontinued operations with a corresponding restatement of comparative figures to
show the discontinued operations separately from continuing operations.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
230
FINANCIAL STATEMENTS
The information outlined in section (a) below relates only to the principal undertakings in the Group as at 1 January 2022 and as at 2 January 2021.
The Group has availed of the exemption under section 316 of the Companies Act 2014. The information required under section 314 of the Companies
Act 2014 including a full listing of subsidiaries and joint venture undertakings will be annexed to the Company’s Annual Return to be filed in the
Companies Registration Office in Ireland. All beneficial interests are in ordinary shares, membership interests or membership units.
(a) Subsidiaries
Incorporated and operating in
Registered
office Principal activity
Beneficial
% interest
Ireland Alanfield Society Limited 1 Holding society 100
Avonmore Proteins Designated Activity Company
3
1 Financing 100
Avonmore Skim Milk Products Limited
3
1 Holding company 100
Glanbia Cheesip Limited
4
1 Research and development 100
Glanbia Estates Limited 1 Property and land dealing 100
Glanbia Finance Designated Activity Company
3
1 Financing 100
Glanbia Finance International Designated Activity Company 1 Financing 100
Glanbia Financial Services Unlimited Company 1 Financing 100
Glanbia GNPN Holding Limited 1 Holding company 100
Glanbia Holdfin Limited 1 Holding company 100
Glanbia Investchip Limited 1 Holding and managing receivables 100
Glanbia Investment Holding Limited 1 Holding company 100
Glanbia Management Services Limited 1 Management and general business services 100
Glanbia Nutritionals Limited 1 Nutritional ingredients 100
Glanbia Performance Nutrition Limited 1 Performance nutrition 100
Glanbia Property Holding Designated Activity Company 1 Holding company 100
Glanbia Property Rentals Designated Activity Company
3
1 Property lessor 100
Glanbia Support Services Limited 1 Holding company 100
Glassonby Unlimited Company 1 Financing 100
Waterford Foods Designated Activity Company 1 Holding company 100
United States
of America
Aseptic Solutions USA Ventures, LLC 2 Nutritional ingredients 100
Foodarom USA, Inc. 3 Flavours solutions 100
Glanbia Business Services, Inc. 2 Business services 100
Glanbia (Delaware), Inc. 2 Holding company 100
Glanbia Foods, Inc. 4 Cheese and nutritional ingredients 100
Glanbia, Inc. 2 Holding company 100
Glanbia Nutritionals (NA), Inc. 2 Nutritional ingredients 100
Glanbia Nutritionals, Inc. 2 Nutritional ingredients 100
Glanbia Nutritionals Services, LLC 2 Management services (nutritional ingredients) 100
Glanbia Performance Nutrition (Manufacturing), Inc. 2 Performance nutrition 100
Glanbia Performance Nutrition (NA), Inc. 5 Performance nutrition 100
GPN Commercial, LLC 2 Performance nutrition 100
GPN Slimfast Commercial, LLC 2 Weight management solutions 100
Grass Advantage, LLC 6 Performance nutrition 100
KSF Acquisition Corporation 2 Weight management solutions 100
Lifeagen Biosciences of Florida, Inc. 5 Mineral and vitamin supplements 100
PacMoore Process Technologies, LLC
6
7 Nutritional ingredients 100
Britain and
Northern Ireland
Glanbia Holdings Limited 8 Financing 100
Glanbia Investments (UK) Limited 8 Holding company 100
Glanbia Milk Limited 8 Management services 100
Glanbia Performance Nutrition (UK) Limited 8 Performance nutrition 100
Notes to the financial statements continued
37. Principal subsidiaries and joint ventures
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
231
Incorporated and operating in
Registered
office Principal activity
Beneficial
% interest
Glanbia Performance Nutrition (UK Sales Division) Limited 8 Performance nutrition 100
Glanbia (UK) Limited 8 Holding company 100
Waterford Foods International Limited 8 Holding company 100
Australia Glanbia Performance Nutrition Pty Ltd 9 Performance nutrition 100
Brazil Glanbia Marketing de Produtos de
Nutriçâo e Performance do Brasil Ltda
1
10 Performance nutrition 100
Canada Foodarom Group Inc.
1
11 Flavours solutions 100
Glanbia Nutritionals (Canada) Inc.
1
11 Nutritional ingredients 100
Glanbia Performance Nutrition Canada Inc.
1
11 Performance nutrition 100
China Glanbia Nutritionals (Suzhou) Co., Ltd.
1
12 Nutritional ingredients 100
Glanbia Performance Nutrition Trading (Shanghai) Co., Ltd.
1
13 Performance nutrition 100
Glanbia (Shanghai) International Trading Co., Ltd.
1
14 Nutritional ingredients 100
Denmark Nutramino Holding ApS
1
15 Holding company 100
Nutramino Int. ApS
1
15 Performance nutrition 100
France Glanbia Performance Nutrition France SAS
1
16 Performance nutrition 100
Germany Body & Fit Nutrition GmbH
1
17 Performance nutrition 100
Foodarom Germany GmbH
1,5
18 Flavours solutions 100
Glanbia Nutritionals Deutschland GmbH
1
18 Nutritional ingredients 100
Glanbia Performance Nutrition GmbH
1
19 Performance nutrition 100
LevlUp GmbH
1,6
20 Performance nutrition 60
India Glanbia India Private Limited
2
21 Nutritional ingredients 100
Glanbia Performance Nutrition (India) Private Limited
2
22 Performance nutrition 100
Japan Glanbia Japan K.K.
1
23 Nutritional ingredients 100
Korea (Republic
of)
Glanbia Performance Nutrition Korea, LLC
1
24 Performance nutrition 100
Malta Glanbia Maltinvest Limited
1
25 Financing 100
Glanbia Maltfin Limited
1
25 Financing 100
Mexico Glanbia, S.A. de C.V.
1
26 Nutritional ingredients 100
Netherlands Body & Fit Sportsnutrition B.V.
1
27 Performance nutrition 100
Glanbia Foods B.V.
1
28 Holding company 100
New Zealand Glanbia Performance Nutrition (New Zealand) Limited
1
29 Performance nutrition 100
Norway Nutramino NO AS
1
30 Performance nutrition 100
Philippines Glanbia Performance Nutrition Philippines, Inc.
1
31 Performance nutrition 100
Portugal Glanbia Nutritionals (Portugal), Sociedade Unipessoal Lda.
1
32 Performance nutrition 100
Russian
Federation
LLC Glanbia
1
33 Nutritional ingredients 100
Singapore Glanbia Nutritionals Singapore Pte Limited 34 Nutritional ingredients 100
Glanbia Performance Nutrition Singapore Pte. Ltd 34 Performance nutrition 100
South Africa Glanbia (Pty) Limited 35 Nutritional ingredients 100
Sweden Nutramino AB
1
36 Performance nutrition 100
United Arab
Emirates
Glanbia Performance Nutrition DMCC
1
37 Performance nutrition 100
Uruguay Glanbia (Uruguay Exports) SA
1
38 Nutritional ingredients 100
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
232
FINANCIAL STATEMENTS
37. Principal subsidiaries and joint ventures continued
1. The statutory year end of these subsidiaries is fixed at 31 December each year to comply with statutory requirements.
2. The statutory year end of this subsidiary is 31 March, which coincides with the tax year in India.
3. The statutory year end of these subsidiaries is 23 December.
4. Glanbia Cheesip Limited has a branch at 1 rue Hildegard von Bingen L–1282 Luxembourg. The company and its branch have a statutory year end fixed at 31 December each year
to comply with statutory requirements.
5. Foodarom Germany GmbH has a branch at Via Santa Valeria 52, Seregno (MB) 20831 Italy.
6. Acquired in 2021.
The Group has no significant restrictions in relation to its ability to access or use the assets and settle the liabilities of its subsidiaries.
(b) Joint ventures
Incorporated and operating in
Registered
office Principal activity
1
Beneficial
% interest
Ireland Glanbia Cheese EU Limited 1 Cheese products 50
Glanbia Ireland Designated Activity Company
2
1 Milk products, consumer goods and agri trading 40
United States
of America
MWC-Southwest Holdings LLC 2 Holding company of two cheese and nutritional
ingredients companies
50
Britain and
Northern Ireland
Glanbia Cheese Limited 39 Cheese products 51
1. Refer to note 17 for further details.
2. The interest in Glanbia Ireland DAC is classified as held for sale as at 1 January 2022 (note 7).
The Group’s interests in joint ventures are subject to certain restrictions, however these are not material.
Registered office
1 Glanbia House, Kilkenny, Ireland, R95 E866
2 3411 Silverside Road Tatnall Building 104, Wilmington, New Castle County, DE 19810, United States
3 1925 Lovering Ave, Wilmington, DE 19806, United States
4 950 W Bannock Street 1100, Boise, ID83702, Ada County, United States
5 11380 Prosperity Farms Rd 221E, Palm Beach Gardens FL 33410, United States
6 251 Little Falls Drive, Wilmington, New Castle County, DE 19808, United States
7 501 Silverside Road, Suite 87, Wilmington, DE 19809, United States
8 One Victoria Square, Birmingham, B1 1BD, United Kingdom
9 Level 10, 68 Pitt Street, Sydney NSW 2000, Australia
10 Rua Funchal, no, 411, 4th floor, suite 43, room 36, Villa Olimpia, São Paula, SP 04551-060, Brazil
11 1700-242 Hargrave Street, Winnipeg MB, R3C 0V1, Canada
12 No. 128 Fangzong Street SIP, Suzhou, Jiangsu Province, PRC 215025, China
13 Room 101, Building D, the Bund SOHO, Zhongshan East 2nd Road 88, Shanghai, 200001, China
14 Room 228, 2/F, Building 1, No. 239, Gang’ao Road, Shanghai New Free Trade Zone, China
15 Landgreven 3, 1. tv., 1301, København K, Denmark
16 8, Avenue Hoche, 75008, Paris, France
17 Hohenstaufenring 62, 50674, Köln, Germany
18 Gewerbestrasse 3, 78359 Orsingen – Nenzingen, Germany
19 Mainzer Landstraße 41, 60329, Frankfurt am Main, Germany
20 Zeppelinstr. 15, 37983, Gottingen, Germany
21 Ground Floor, No. 12/47, 7th Cross, Swimming Pool Extension, Malleshwaram, Bangalore KA, 560003, India
22 Allied House, Nelson Mandela Marg Pocket 10, Sector B, Vasant Kunj, New Delhi, DL110070, India
23 Level 18 Yebisu Garden Place, Tower 4–20–3, Ebisu Shibuya-ku, Tokyo, Japan
24 1319, 13th floor, 311 Gangnam-daero, Seocho-gu, Seoul, Republic of Korea
25 Vision Exchange Building, Level 2, Triq it-Territorjals, Zone 1, Central Business District, Birkirkara, CBD 1070, Malta
26 Av. Prolongación Paseo de la Reforma No. 115–1006, Col. Paseo de las Lomas, C.P. 01330, Mexico
27 Mars 10, 8448CP, Heerenveen, Netherlands
28 Herikerbergweg 88, 1101 CM Amsterdam, Netherlands
29 C/–Martelli Mckegg, Level 20, HSBC Tower, 188 Quay Street, Auckland, 1010, New Zealand
30 Fjordalléen 16, Oslo, 0250, Norway
31 146 Yakal Street, San Antonio Village, Makati City 1203, Philippines
32 Miraflores, Torre de Monsanto, Rua Afonso Praça, 30–7o e 8o piso, 1495–061 Miraflores, Portugal
33 6 Vernadskogo prospect, Office 614, 119311, Moscow, Russian Federation
34 10 Changi Business Park Central 2, #01- 02, Hansapoint, 486030, Singapore
35 Stand 893, 7 Forbes Street, Midstream Estate – Windsor Gate, Brakfontein Road, Guateng, South Africa, 2192, South Africa
36 Ostermalinstorg.1, 4 tr, 114 42, Stockholm, Sweden
37 Unit No: 1633, DMCC Business Centre, Level No 1, Jewellery & Gemplex 3, Dubai, United Arab Emirates
38 Copacabana Street, Block 26 – S 12, Médanos de Solymar City, Canelones, Uruguay
39 4 Royal Mews, Gadbrook Park, Rudheath, Northwich, Cheshire, CW9 7UD, United Kingdom
Notes to the financial statements continued
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
233
Company Balance Sheet
as at 1 January 2022
Notes
1 January
2022
€’m
2 January
2021
€’m
ASSETS
Non-current assets
Investment in joint venture
2 – 95.4
Investment in subsidiaries
3 581.9 585.6
Other financial assets
4 1.3 2.6
Deferred tax assets 0.6 0.5
583.8 684.1
Current assets
Trade and other receivables
5 13.9 7.1
Cash at bank and in hand 10.2 10.7
24.1 17. 8
Joint venture held for sale
2 95.4 –
119. 5 17. 8
Total assets 703.3 701.9
EQUITY
Issued capital and reserves attributable to equity holders of the Company
Share capital and share premium
6 460.3 460.6
Other reserves 17. 3 3.0
Retained earnings 94.8 121.5
Total equity 572.4 5 85.1
LIABILITIES
Non-current liabilities
Bank borrowings 53.0 35.0
Current liabilities
Bank overdraft 7.5 9.2
Provisions 0.6 0.6
Trade and other payables
7 69.8 72.0
77.9 81.8
Total liabilities 130.9 116.8
Total equity and liabilities 703.3 701.9
As permitted by section 304 of the Companies Act 2014, the Company is availing of the exemption from presenting its separate profit and loss account
in these financial statements and from filing it with the Registrar of Companies. The profit for the year dealt with in the financial statements of the
Company amounts to €145.9 million (2020: €112.9 million).
On behalf of the Board
Donard Gaynor
Directors
Siobhán Talbot Mark Garvey
2 March 2022
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
234
FINANCIAL STATEMENTS
Company Statement of Changes in Equity
for the financial year ended 1 January 2022
Other reserves
Share
capital and
share
premium
€’m
(note 6)
Capital
reserve
€’m
Own
shares
€’m
Share-
based
payment
reserve
€’m
FVOCI
reserve
€’m
Retained
earnings
€’m
Tot al
Equity
€’m
Balance at 3 January 2021 460.6 4.3 (11.4) 10.3 (0.2) 121.5 585.1
Profit for the year – – – – – 145.9 145.9
Other comprehensive income
- Revaluation – gross – – – – (0.3) – (0.3)
- Deferred tax – – – – 0.1 – 0.1
Total comprehensive income for the year – – – – (0.2) 145.9 145.7
Dividends – – – – – (80.5) (80.5)
Cost of share–based payments – – – 15.9 – – 15.9
Transfer on exercise, vesting or expiry
of share–based payments – – 7.7 (6.9) – (0.8) –
Purchase of own shares – – (94.0) – – – (94.0)
Cancellation of own shares (0.5) 0.5 91.3 – – (91.3) –
Issue of shares 0.2 – – – – – 0.2
Total contributions by and distributions to
owners (0.3) 0.5 5.0 9.0 – (172.6) (158.4)
Balance at 1 January 2022 460.3 4.8 (6.4) 19.3 (0.4) 94.8 572.4
At 5 January 2020 460.7 4.2 (14.0) 9.7 (0.2) 102.8 563.2
Profit for the year – – – – – 112.9 112.9
Other comprehensive income – – – – – – –
Total comprehensive income for the year – – – – – 112.9 112.9
Dividends – – – – – (78.6) (78.6)
Cost of share–based payments – – – 5.2 – – 5.2
Transfer on exercise, vesting or expiry of share–
based payments – – 3.6 (4.6) – 1.0 –
Purchase of own shares – – (17. 6) – – – (17.6)
Cancellation of own shares (0.1) 0.1 16.6 – – (16.6) –
Total contributions by and distributions to
owners (0.1) 0.1 2.6 0.6 – (94.2) (91.0)
At 2 January 2021 460.6 4.3 (11.4) 10.3 (0.2) 121.5 585.1
Refer to note 23 of the Group financial statements for a description of the individual components in other reserves.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
235
Notes to the Company Financial Statements
for the financial year ended 1 January 2022
1. Accounting policies
Basis of preparation
Glanbia plc (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.
These financial statements are prepared for the 52-week period ended 1 January 2022. Comparatives are for the 52-week period ended 2 January
2021. The balance sheets for 2021 and 2020 have been drawn up as at 1 January 2022 and 2 January 2021 respectively. The financial statements
were approved and authorised for issue by the Board of Directors on 2 March 2022.
The financial statements have been prepared under the historical cost convention, as modified by use of fair values for certain other financial assets,
and comply with the Companies Act 2014 and Financial Reporting Standard 101 Reduced Disclosure Framework (“FRS 101”). The Company has
taken advantage of the following disclosure exemptions under FRS 101:
• a Cash Flow Statement and related notes;
• disclosures in respect of transactions with wholly owned subsidiaries;
• disclosures in respect of capital management;
• the effects of new but not yet effective IFRS; and
• disclosures in respect of the compensation of key management personnel.
As the consolidated financial statements of the Company and its subsidiaries include the equivalent disclosures, the Company has also availed
of the following disclosure exemptions under FRS 101:
• IFRS 2 Share Based Payments in respect of group settled share based payments; and
• certain disclosures required by IFRS 13 Fair Value Measurement and IFRS 7 Financial Instrument Disclosures.
The financial statements have been prepared in euro and presented in millions. The accounting policies set out below have, unless otherwise stated,
been applied consistently to all periods presented in these financial statements.
Going concern
After making appropriate enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational
existence for a period of at least 12 months from the date of approval of the financial statements. The Company therefore considers it appropriate to
adopt the going concern basis in preparing its financial statements.
Investments in joint venture and subsidiaries
Investments in joint venture and subsidiaries are held at cost less, if any, accumulated impairment. The Company assesses investments for impairment
whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable. If any such indication of
impairment exists, the Company makes an estimate of its recoverable amount. When the carrying amount of an investment exceeds its recoverable
amount, the investment is considered impaired and is written down to its recoverable amount. In the opinion of the Directors the shares in the joint
venture and subsidiaries are worth at least the amounts at which they are stated in the balance sheet.
Other financial assets
The Company classifies and initially measures its investments in equity instruments at fair value and are subsequently adjusted to fair value at each
reporting date. If the market for a financial asset is not active or unquoted, the Company establishes fair value using valuation techniques. The investment
in BDO Development Capital Fund is fair valued by reference to the latest quarterly report available to the limited partners. Changes in their fair value are
recognised in the profit and loss account unless management has elected to present changes in fair value through other comprehensive income (“FVOCI”)
on an investment by investment basis. When an election is made for an investment, there is no subsequent reclassification of fair value gains and losses
related to the investment to profit or loss following the derecognition of the investment. Dividends from such investments are recognised in profit or loss
when the Company’s right to receive payments is established.
Financial assets are derecognised when the rights to receive cash flows from financial assets have expired or have been transferred and the Company
has transferred substantially all the risks and rewards of ownership.
Trade and other receivables and payables
Receivables and payables are recognised initially at fair value except trade receivables that do not contain significant financing components which are
recognised at transaction price. They are subsequently measured at amortised cost using the effective interest method less any allowance
for expected credit loss for receivables.
Impairment
The Company applies the simplified approach under IFRS 9 to measure ECL which uses a lifetime expected loss allowance for all trade receivables.
A loss allowance for receivables is estimated based on expected credit losses. To measure ECL, historical loss rates are calculated based on
historical credit loss experience. The loss allowance based on historical loss rates is adjusted to reflect current information and forward-looking
information on macroeconomic factors if there is evidence to suggest these factors will affect the ability of the counterparty to settle the receivables.
Trade and other receivables are written off when there is no reasonable expectation of recovery such as a debtor failing to engage in a repayment
plan with the Company.
The Company’s intercompany receivables at 1 January 2022 amounted to €13.7 million (2020: €6.9 million). There is no material ECL in respect
of intercompany receivables as at 1 January 2022.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
236
FINANCIAL STATEMENTS
Notes to the Company Financial Statements continued
1. Accounting policies continued
Cash at bank and in hand
Cash includes cash, in any currency, in hand or deposited with financial institutions repayable without penalty on notice of not more than 24 hours.
Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered through a sale transaction rather than
continued use. This condition is regarded as satisfied only when the sale is highly probable and the asset or disposal group is available for immediate
sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale
within one year of the date of classification.
When the Company is committed to a sale plan involving disposal of an investment in a joint venture, the investment in joint venture that will be
disposed of is classified as held for sale when the criteria described above are met. The investment in joint venture in Glanbia Ireland DAC is classified
as held for sale as at 1 January 2022.
Non-current assets and disposal groups classified as held for sale are measured at the lower of the carrying value and the fair value less costs to sell.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as
a deduction from the proceeds. Repurchase of the Company’s own equity instruments is recognised and deducted from equity with a transfer
between the own shares reserve and retained earnings when they are cancelled. No gain or loss is recognised in profit or loss on the purchase,
sale, issue or cancellation of the Company’s own equity instruments.
Own shares
Where the Employee Share Trust and/or the Employee Share Scheme Trust (on behalf of the Company) purchases the Company’s equity share
capital, under the 2008 and 2018 Long-term incentive plan, the 2019 Restricted share plan, and the Annual incentive deferred into shares scheme,
the consideration paid is deducted from distributable reserves and classified as own shares until they are re-issued. Where such shares are re-issued,
they are re-issued on a first-in, first-out basis and the proceeds from re-issue of own shares are transferred from own shares to retained earnings.
Dividends
Dividends on ordinary shares to the Company’s shareholders are recognised as a liability of the Company when approved by the Company’s
shareholders. Interim dividends are recognised when paid. Proposed dividends that are approved after the balance sheet date are not recognised
as a liability but are disclosed in note 14 of the Group financial statements.
Bank borrowings
Bank borrowings are recognised initially at fair value and are subsequently stated at amortised cost.
Foreign currency translation
The functional and presentation currency of the Company is euro. Transactions in foreign currencies are translated at the rates of exchange ruling
at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated into euro at the rates of exchange ruling
at the balance sheet date, with a corresponding charge or credit to the profit and loss account.
Dividend income
Dividend income is recognised in the profit and loss account on the date the entity’s right to receive payment is established.
Share-based payments
The Company operates equity settled share-based payment arrangements. The arrangements include both share option and share award schemes
open to both Executive Directors and certain senior management. The Company also operates an annual incentive scheme whereby a portion of the
annual incentive will be settled by way of shares, and a long-term incentive plan and a restricted share plan whereby share awards in the Company
are granted to Executive Directors and senior management. The Company recharges the costs of these plans to its subsidiaries and the balances
are settled in cash.
Taxation
The tax expense for the year comprises current and deferred tax. Tax is recognised in the profit and loss account except to the extent that it relates
to items recognised in other comprehensive income or directly in equity, in which case the tax is also recognised in other comprehensive income or
directly in equity, respectively.
A provision is recognised for those matters for which the tax determination is uncertain but it is considered probable that there will be a future outflow
of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable.
Current tax is calculated on the basis of tax laws enacted or substantively enacted at the balance sheet date in countries where the Company
operates and generates taxable income, taking into account adjustments relating to prior years.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
237
Deferred tax is determined using tax rates and laws enacted or substantively enacted by the reporting date. Deferred tax is provided on a non-
discounted basis, using the balance sheet liability method, providing for temporary differences on the reporting date between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. However, deferred tax is not accounted for if it arises from initial recognition of
an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit
or loss. Deferred tax liabilities are not recognised to the extent they arise from the initial recognition of goodwill not having full tax basis. Deferred tax
assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Critical accounting judgements and estimates
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances. The most significant judgement used in the preparation of these financial statements is
set out below.
Joint venture classified as held for sale
The Company announced its intention to sell its 40% holding in Glanbia Ireland DAC (“Glanbia Ireland”) to Glanbia Co-operative Society Ltd (the
“Society”) for €307 million in November 2021 (the “Proposed Transaction”). The interest in joint venture, Glanbia Ireland is held for sale in its present
condition subject only to usual and customary terms. The Directors are of the opinion that the sale of Glanbia Ireland to the buyer is highly probable
based on the considerations below and accordingly, the interest in Glanbia Ireland is classified as held for sale (note 2).
• The Company and the buyer signed binding legal agreements relating to the Proposed Transaction on 8 December 2021;
• Members of the Society approved the Proposed Transaction on 17 December 2021;
• Based on the historical experience of the Company, it is expected that the Company’s independent shareholders will approve the Proposed
Transaction at an extraordinary general meeting subsequent to year end (note 36 of the Group financial statements); and
• The buyer does not anticipate any barriers or challenges to regulatory approval.
2. Investment in joint venture (held for sale)
2021
€’m
2020
€’m
At the beginning and end of the year 95.4 95.4
The investment in a joint venture relates to Glanbia Ireland.
The Company announced its intention to sell its 40% holding in Glanbia Ireland to Glanbia Co-operative Society Ltd for €307 million in November 2021
(the “Proposed Transaction”). The sale is consistent with the Glanbia group’s ambition to focus on its global nutrition strategy as a brand owner and
provider of value added nutrition solutions, serving high growth markets.
On 8 December 2021 the Company and the Society signed binding legal agreements relating to the Proposed Transaction. Members of the Society
approved the Proposed Transaction on 17 December 2021. The Proposed Transaction is expected to be completed in the first half of 2022 following
the approval of the shareholders of the Company, other than the Society or persons connected with the Society at an extraordinary general meeting
and receipt of any necessary regulatory approvals (note 36 of the Group financial statements). Thus, the Group has treated the joint venture
arrangement in Glanbia Ireland as an asset held for sale as at 1 January 2022.
There was no impairment charge on the joint venture held for sale as the proposed sale price exceeded the carrying amount of the investment
in Glanbia Ireland when it was classified as a joint venture held for sale.
3. Investment in subsidiaries
2021
€’m
2020
€’m
At the beginning of the year 585.6 660.5
Additions 0.2 –
Impairment (3.9) (74.5)
Disposals – (0.4)
At the end of the year 581.9 585.6
Details of the Company’s principal subsidiaries are set out in note 37 of the Group financial statements. At the reporting date, the carrying amount
of the investment in subsidiaries is assessed for impairment when indications of impairment exist. During the current year, €3.9 million (2020: €74.5 million)
of impairment was recognised where the recoverable amount was determined based on the estimated cash flows generated by the underlying assets
of the subsidiaries.
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238
FINANCIAL STATEMENTS
4. Other financial assets
2021
€’m
2020
€’m
At the beginning of the year 2.6 2.8
Additions 0.1 0.1
Disposals/redemption (1.1) (0.3)
Fair value adjustment (0.3) –
At the end of the year 1.3 2.6
Other financial assets comprised an equity instrument at FVOCI (BDO Development Capital Fund) of €1.1 million (2020: €2.2 million) and a financial
asset at amortised cost (a loan note receivable from Ornua Co-operative Limited) of €0.2 million (2020: €0.4 million).
5. Trade and other receivables
2021
€’m
2020
€’m
Amounts owed by subsidiaries 13.7 6.9
Amounts owed by Glanbia Co-operative Society Limited 0.2 0.1
Prepayments – 0.1
13.9 7.1
6. Share capital and share premium
At 1 January 2022, share capital and share premium were €17.2 million (2020: €17.7 million) and €443.1 million (2020: €442.9 million) respectively.
The movement in the share capital was due to cancellation of ordinary shares on the share buyback programme (note 22 of the Group financial
statements). The difference between the Company and Group share premium is due to €0.2 million (2020: nil) of issuance of shares during the
year and the merger of Waterford Foods plc now named Waterford Foods DAC and Avonmore Foods plc now named Glanbia plc in 1997. Refer to
notes 22 and 23(a) of the Group financial statements respectively.
7. Trade and other payables
2021
€’m
2020
€’m
Amounts owed to subsidiaries 55.3 54.7
Accruals 14.5 17.3
69.8 72.0
8. Contingent liabilities
Refer to note 30 of the Group financial statements for contingent liabilities relating to the Proposed Transaction (note 2).
Any Irish registered wholly-owned subsidiary of the Company may avail of the exemption from filing its statutory financial statements for the year ended
1 January 2022 as permitted by section 357 of the Companies Act 2014 and if an Irish registered wholly-owned subsidiary of the Company elects to
avail of this exemption, there will be in force an irrevocable guarantee from the Company in respect of all commitments entered into by such wholly-
owned subsidiary, including amounts shown as liabilities (within the meaning of section 357 (1) (b) of the Companies Act 2014) in such wholly-owned
subsidiary’s statutory financial statements for the year ended 1 January 2022.
Within the scope of benefitting from the exemption related to the filing of the statutory financial statements for the financial year ended 31 December
2021 of Glanbia Foods B.V., the Company has guaranteed the liabilities ensuing from legal acts performed by this subsidiary from 1 January 2021 in
accordance with and to the extent as set out in section 2:403.1(b and f) of the Dutch Civil Code. Therefore Glanbia Foods B.V. is exempt from the
obligation to publish its statutory financial statements and its obligations to file statutory financial statements has been fulfilled by means of the
publication of the declaration of consent and the declaration of liability.
Within the scope of benefitting from the exemption related to the filing of the statutory financial statements for the financial year ended 31 December
2021 of the three Luxembourg subsidiaries, Glanbia Luxembourg SA, Glanbia Luxfin SA and Glanbia Luxinvest SA, the Company has guaranteed the
liabilities of these subsidiaries in respect of any losses or liabilities (as provided by Article 70 (c) of the Luxembourg Law of 19 December 2002 on the
register of commerce and companies and the accounting and annual accounts of undertakings) for the financial year ended on 31 December 2021.
These subsidiaries avail of the exemption from filing of their statutory financial statements, as permitted by Article 70 of the Luxembourg Law of
19 December 2002 on the register of commerce and companies and the accounting and annual accounts of undertakings.
The Group’s financial liabilities are secured by cross-guarantees by the Company and certain principal subsidiary(ies). Expected credit loss allowance
in relation to these guarantees is not material.
Notes to the Company Financial Statements continued
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239
9. Related party transactions
Refer to note 2 for details of the Proposed Transaction.
During 2021, dividends of €25.8 million (2020: €24.8* million) were paid to the Society and its wholly owned subsidiaries based on their shareholding in
the Company. The Company received €12.2 million (2020: €12.6 million) of dividends from its joint venture, Glanbia Ireland during 2021. Non-Executive
Directors fees of €0.5 million (2020: €0.5 million) were recharged from the Company to the Society during 2021.
* €14.9 million of this amount pertained to the period ended 30 June 2020 when the Society was the ultimate parent of the Company.
10. Statutory information
The following table discloses the fees paid or payable to Deloitte Ireland LLP:
2021
€’m
2020
€’m
Statutory audit* – –
Other assurance services 0.8 0.7
Tax advisory services – –
Other non-audit services – –
0.8 0.7
* The audit fee for the Company is €38,000 (2020: €38,000) and is payable to Deloitte Ireland LLP, the statutory auditor.
Directors’ remuneration is disclosed in the Remuneration Committee Report on pages 118 to 142 and in note 35(e) of the Group financial statements.
11. Events after the reporting period
Refer to note 36 of the Group financial statements.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
240
OTHER INFORMATION
Other
Information
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
241
Glossary
Key Performance Indicators and non-IFRS performance measures
NOT COVERED BY INDEPENDENT AUDITOR’S REPORT
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.
These non-IFRS performance measures may not be uniformly defined by all companies and accordingly they may not be directly comparable with
similarly titled measures and disclosures by other companies. 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:
G 1. Constant currency
G 2. Revenue
G 3. EBITA (pre-exceptional)
G 4. EBITA margin % (pre-exceptional)
G 5. EBITDA
G 6. Constant Currency Basic and Adjusted Earnings Per Share (“EPS”)
G 7. Net debt
G 8. Financing Key Performance Indicators
G 9. Volume and pricing increase/(decrease)
G 10. Like-for-like revenue increase/(decrease)
G 11. Effective tax rate
G 12. Average interest rate
G 13. Operating cash conversion
G 14. Operating cash flow and free cash flow
G 15. Return on capital employed (“ROCE”)
G 16. Total shareholder return (“TSR”)
G 17. Dividend payout ratio
G 18. Compound annual growth rate (“CAGR”)
G 19. Exceptional items
These principal non-IFRS performance measures are defined below with a reconciliation of these measures to IFRS measures where applicable.
A number of the non-IFRS performance measures below have been re-presented to reflect continuing and discontinued operations in line with the
presentation adopted in the Group income statement (see note 2).
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 year-on-year change, the results for the prior year are retranslated using the average exchange rates for the current year and
compared to the current year reported numbers.
The principal average exchange rates used to translate results for 2021 and 2020 are set out below:
1 euro = 2021 2020
US dollar 1.1826 1.1423
Pound sterling 0.8596 0.8898
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
242
OTHER INFORMATION
Glossary continued
Key Performance Indicators and non-IFRS performance measures
continued
G 2. Revenue
Revenue comprises sales of goods and services 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 Revenue:
Reference to the
Financial Statements/
Glossary
2021
Reported
€’m
2020
Reported
€’m
2020
Retranslated
€’m
Constant
currency
growth
%
Like-for-like
Growth
(G 10)
%
Nutritional Solutions Note 4 87 7.4 746.8 726.4 20.8% 17. 3%
US Cheese Note 4 2,016.4 1,938.3 1,872.2 7.7% 7.7%
Glanbia Nutritionals Note 4 2,893.8 2,6 85.1 2,598.6 11.4% 10.4%
Americas Note 4 872.3 811.1 783.9 11.3% 11.3%
International (including Direct-to-Consumer) Note 4 430.8 326.9 328.6 31.1% 27.1%
Glanbia Performance Nutrition Note 4 1,303.1 1,138.0 1,112.5 17.1% 15.9%
Revenue Note 5 4,196.9 3,823.1 3,711.1 13.1% 12.1%
G 3. EBITA (pre-exceptional)
EBITA (pre-exceptional) is defined as earnings before interest, tax and amortisation. EBITA references throughout the annual report are on a pre-
exceptional basis unless otherwise indicated. EBITA (pre-exceptional) is one of the Group’s Key Performance Indicators. Business Segment EBITA
(pre-exceptional) 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 5 of the financial statements for the reconciliation of EBITA (pre-exceptional).
G 3.1 EBITA (pre-exceptional):
Reference to the Financial
Statements/Glossary
2021
Reported
€’m
2020
Reported
€’m
2020
Retranslated
€’m
Constant
currency
growth
%
Nutritional Solutions 101.1 90.5 87.4 15.7%
US Cheese 24.4 27.9 26.9 (9.3%)
Glanbia Nutritionals Note 4 125.5 118.4 114.3 9.8%
Glanbia Performance Nutrition Note 4 145.1 91.2 87.7 65.5%
EBITA (pre-exceptional) Note 5 270.6 209.6 202.0 34.0%
G 4. EBITA margin % (pre-exceptional)
EBITA margin % (pre-exceptional) is defined as EBITA (pre-exceptional) as a percentage of revenue. Refer to G2.1 and G3.1 for reconciliations of
revenue and EBITA (pre-exceptional) respectively. EBITA references throughout the annual report 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 annual
report are on a pre-exceptional basis unless otherwise indicated.
Reference to the Financial
Statements/Glossary
2021
€’m
2020
€’m
Earnings before interest, tax and amortisation (pre-exceptional EBITA) G 3.1 270.6 209.6
Depreciation* Note 5 63.0 63.9
Earnings before interest, tax, depreciation and amortisation
(pre-exceptional EBITDA) G 8.1, G 14 333.6 273.5
* Depreciation – includes depreciation of tangible assets of €44.9 million (2020: €45.9 million) and depreciation of right-of-use assets of €18.1 million (2020: €18.0 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 profit after tax attributable to the equity holders of the Company by the weighted average
number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Group and held as own shares (note 23). Basic
Earnings Per Share has also been calculated on a continuing basis (excluding Glanbia Ireland) in line with the presentation of continuing and
discontinued operations in the Group income statement (see note 2).
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
243
Reference to the Financial
Statements/Glossary
2021
Reported
€’m
2020
Reported
€’m
2020
Retranslated
€’m
Profit after tax attributable to equity holders of the Company Group income statement 167.0 143.8 139.0
Less: profit after tax attributable to equity holders of the Company -
discontinued operations Group income statement (26.4) (23.0) (23.0)
Profit after tax attributable to equity holders of the Company - continuing
operations 140.6 120.8 116.0
Weighted average number of ordinary shares in issue (thousands) Note 13 290,059 295,173 29 5,173
Basic Earnings Per Share (cent) - continuing operations Note 13 48.47 40.93 39.30
Basic Earnings Per Share (cent) Note 13 57.57 48.72 47.09
Constant currency change - continuing operations 23.3%
Constant currency change 22.3%
G 6.2 Constant Currency Adjusted Earnings Per Share (“EPS”)
Adjusted EPS is defined as the profit after tax attributable to the equity holders of the Company, 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 year,
excluding ordinary shares purchased by the Group and held as own shares (note 23). The Group concluded 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 Earnings
Per Share has also been calculated on a continuing basis (excluding Glanbia Ireland) in line with the presentation of continuing and discontinued
operations in the Group income statement (see note 2).
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 Financial
Statements/Glossary
2021
Reported
€’m
2020
Reported
€’m
2020
Retranslated
€’m
Profit after tax from continuing operations Group income statement 141.0 120.8 116.0
Less: exceptional charge - continuing operations Group income statement 42.8 30.6 29.8
Profit after tax from continuing operations (pre-exceptional) Group income statement 183.8 151.4 145.8
Non-controlling interests Group income statement (0.4) – –
Amortisation and impairment of intangible assets (excluding software
amortisation) net of related tax of €7.0 million (2020: €7.0 million,
2020 retranslated: €6.7 million) – continuing operations 42.4 41.1 39.7
Adjusted net income - continuing operations 225.8 192.5 185.5
Profit after tax from discontinued operations Group income statement 26.4 23.0 23.0
Exceptional (credit)/charge - discontinued operations Group income statement (0.7) 0.9 0.9
Profit from discontinued operations (pre-exceptional) Group income statement 25.7 23.9 23.9
Amortisation and impairment of intangible assets (excluding software
amortisation) net of related tax of €0.2 million (2020: €0.2 million) -
discontinued operations 1.3 1.4 1.4
Adjusted net income 252.8 217. 8 210.8
Weighted average number of ordinary shares in issue (thousands) Note 13 290,059 2 95,173 29 5,173
Adjusted Earnings Per Share (cent) - continuing operations 77.84 65.21 62.83
Adjusted Earnings Per Share (cent) G 17 87.15 73.78 71.40
Constant currency growth - continuing operations 23.9%
Constant currency growth 22 .1%
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
244
OTHER INFORMATION
Glossary continued
Key Performance Indicators and non-IFRS performance measures
continued
G 7. Net debt
Net debt is calculated as current and non-current borrowings less cash and cash equivalents.
Reference to the Financial
Statements/Glossary
2021
€’m
2020
€’m
Cash and cash equivalents Group balance sheet (231.0) (164.3)
Current borrowings Group balance sheet 136.5 199.8
Non-current borrowings Group balance sheet 6 97.2 458.4
Net debt Note 25, G 14 602.7 493.9
G 8. Financing Key Performance Indicators
G 8.1 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 current and
non-current borrowings less cash and cash equivalents. Adjusted EBITDA is calculated in accordance with lenders’ facility agreements definitions
which adjust EBITDA for items such as exceptional items, dividends received from joint ventures, 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 (a period of 12 consecutive months
determined on a rolling basis with a new 12 month period beginning on the first day of each month).
Reference to the Financial
Statements/Glossary
2021
€’m
2020
€’m
Net debt G 7 602.7 493.9
EBITDA G 5 333.6 273.5
IFRS 16 adjustment (21.6) (22.0)
Adjustments in accordance with lenders’ facility agreements 40.8 38.8
Adjusted EBITDA 352.8 290.3
Net debt: adjusted EBITDA Note 29(c) 1.71 1.70
G 8.2 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 joint ventures divided by adjusted net finance cost. Adjusted net finance cost comprises finance costs less finance income
per the Group income statement plus borrowing costs capitalised into assets and excludes finance income/costs on changes in fair value of call options
and contingent consideration and interest expense on lease liabilities. Adjusted EBIT and adjusted net finance cost are rolling 12 month measures
(a period of 12 consecutive months determined on a rolling basis with a new 12 month period beginning on the first day of each month).
Reference to the Financial
Statements/Glossary
2021
€’m
2020
€’m
Operating profit Group income statement 158.3 114. 2
Exceptional charge Group income statement 48.4 34.5
Operating profit (pre-exceptional) Group income statement 206.7 148.7
Dividends received from joint ventures Group statement of cash flows 33.9 36.6
IFRS 16 adjustment - interest Note 11 (2.5) (2.8)
Adjusted EBIT 238.1 182.5
Adjusted net finance costs Note 11, Note 15 15.8 18.2
Adjusted EBIT: adjusted net finance cost Note 29(c) 15.1 10.0
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245
G 9. Volume and pricing increase/(decrease)
Volume increase/(decrease) represents the impact of sales volumes within the revenue movement year-on-year, excluding volume from acquisitions,
on a constant currency basis.
Pricing increase/(decrease) represents the impact of sales pricing (including trade spend) within revenue movement year-on-year, excluding
acquisitions, on a constant currency basis.
G 9.1 Reconciliation of volume and pricing increase/(decrease) to constant currency revenue growth:
Reference to the
Financial Statements/
Glossary
Volume
increase/
(decrease)
Price
increase/
(decrease)
Acquisitions/
(disposals)
Revenue
increase/
(decrease)
Nutritional Solutions G 2.1 13.6% 3.7% 3.5% 20.8%
US Cheese G 2.1 19.8% (12.1%) – 7.7 %
Glanbia Nutritionals G 2.1 18.1% ( 7.7%) 1.0% 11.4%
Glanbia Performance Nutrition G 2.1 11.4% 4.5% 1.2% 17.1%
2021 increase/(decrease) % - continuing operations revenue G 2.1 16.1% (4.0%) 1.0% 13 .1%
G 10. Like-for-like revenue increase/(decrease)
G 10.1 Glanbia Performance Nutrition (“GPN”) like-for-like revenue
GPN like-for-like revenue represents the sales increase/(decrease) year-on-year, excluding the incremental revenue contributions from current year and
prior year acquisitions and the impact of a 53rd week (when applicable), on a constant currency basis.
GPN like-for-like branded revenue represents the sales increase/(decrease) year-on-year on branded sales, excluding the incremental revenue
contributions from current year and prior year acquisitions and the impact of a 53rd week (when applicable), 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 10.2 Glanbia Nutritionals like-for-like revenue
This represents the sales increase/(decrease) year-on-year, excluding the incremental revenue contributions from current year and prior year
acquisitions and the impact of a 53rd week (when applicable), on a constant currency basis.
G 11. 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 joint ventures.
Reference to the Financial
Statements/Glossary
2021
€’m
2020
€’m
Profit before tax - continuing operations Group income statement 158.0 131.1
Exceptional charge Group income statement 50.4 34.8
Profit before tax (pre-exceptional) - continuing operations Group income statement 208.4 165.9
Less share of results of joint ventures (pre-exceptional) Group income statement (19.2) (37.7 )
189.2 128.2
Income tax Group income statement 17.0 10.3
Exceptional tax credit Group income statement 7.6 4.2
Income tax (pre-exceptional) Group income statement 24.6 14.5
Effective tax rate 13.0% 11.3%
G 12. Average interest rate
The average interest rate is defined as the annualised net finance costs (excluding capitalised borrowing costs, finance income/costs on changes in fair
value of call option and contingent consideration and interest expense on lease liabilities) divided by the average net debt during the reporting period.
G 13. 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 adjusted trading profits into cash and is an important metric in the Group’s working capital management programme.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
246
OTHER INFORMATION
Glossary continued
Key Performance Indicators and non-IFRS performance measures
continued
G 14. Operating cash flow and free cash flow
Operating cash flow is defined as pre-exceptional 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 year before the following items: strategic capital expenditure, dividends paid to Company
shareholders, loans/investments in joint ventures, exceptional costs paid, payment for acquisition of subsidiaries, proceeds received on disposals,
purchase of own shares under share buyback and currency translation movements.
Reference to the Financial
Statements/Glossary
2021
€’m
2020
€’m
Earnings before interest, tax, depreciation and amortisation
(pre-exceptional EBITDA) G 5 333.6 273.5
Movement in working capital (pre-exceptional) G 14.2 16.5 77. 8
Business sustaining capital expenditure G 14.4 (15.9) (16.5)
Operating cash flow G 14.1 334.2 334.8
Net interest and tax paid G 14.3 (51.5) (43.0)
Dividends received from joint ventures Group statement of cash flows 33.9 36.6
Payments of lease liabilities Group statement of cash flows (19.1) (19.2)
Other inflows/(outflows) G 14.5 6.4 (2.7)
Free cash flow 303.9 306.5
Strategic capital expenditure G 14.4 (61.6) (47.7 )
Dividends paid to Company shareholders Group statement of cash flows (80.5) (78.6)
Purchase of own shares under share buyback Note 23(e) (91.3) (16.6)
Loans/investment in joint ventures Group statement of cash flows (10.7) (9.6)
Exceptional costs paid Group statement of cash flows (55.9) (29.5)
Proceeds from sale of property, plant and equipment Group statement of cash flows 1.5 –
Payment for acquisition of subsidiaries Group statement of cash flows (95.0) (21.9)
Net cash flow (89.6) 102.6
Exchange translation Note 25 (23.6) 30.0
Cash/(debt) acquired on acquisition Note 25 4.4 (12.2)
Net debt movement (108.8) 120.4
Opening net debt Note 25 (493.9) (614.3)
Closing net debt Note 25, G 7 (602.7) (493.9)
Certain comparative amounts below have been re-presented in line with note 32 to present the cash flows on exceptional items separately (note 2).
G 14.1 Reconciliation of operating cash flow to the Group statement of cash flows in the Financial Statements:
Reference to the Financial
Statements/Glossary
2021
€’m
2020
€’m
Cash generated from operating activities before exceptional items Note 32 358.0 349.4
Less business sustaining capital expenditure G 14.4 (15.9) (16.5)
Non-cash items not adjusted in computing operating cash flow:
Cost of share-based payments Note 32 (15.9) (5.2)
Difference between pension charge and cash contributions Note 32 6.4 7. 2
Reversal of impairment of property, plant and equipment Note 32 1.4 –
Other items 0.2 (0.1)
Operating cash flow G 14 334.2 334.8
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247
G 14.2 Movement in working capital:
Reference to the Financial
Statements/Glossary
2021
€’m
2020
€’m
Movement in working capital G 14 16.5 77.8
Net write down of inventories Note 32 (6.1) (23.0)
Non-cash movement in allowance for impairment of receivables Note 32 – (5.2)
Non-cash movement in provisions Note 32 (8.7) (3.3)
Non-cash movement on cross currency swaps Note 32 0.8 0.7
Movement in working capital Note 32(a) 2.5 47.0
G 14.3 Net interest and tax paid:
Reference to the Financial
Statements/Glossary
2021
€’m
2020
€’m
Interest received Group statement of cash flows 2.1 4.6
Interest paid (including interest expense of lease liabilities) Group statement of cash flows (18.8) (25.0)
Tax paid Group statement of cash flows (34.3) (22.1)
Interest paid in relation to property, plant and equipment Group statement of cash flows (0.5) (0.5)
Net interest and tax paid G 14 (51.5) (43.0)
G 14.4 Capital expenditure:
Reference to the Financial
Statements/Glossary
2021
€’m
2020
€’m
Business sustaining capital expenditure G 14 15.9 16.5
Strategic capital expenditure G 14 61.6 47.7
Total capital expenditure 7 7.5 64.2
Purchase of property, plant and equipment Group statement of cash flows 49.0 38.0
Purchase of intangible assets Group statement of cash flows 28.5 26.2
Total capital expenditure per the Group statement of cash flows 77.5 64.2
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 14.5 Other inflows/(outflows):
Reference to the Financial
Statements/Glossary
2021
€’m
2020
€’m
Cost of share-based payments Note 32 15.9 5.2
Difference between pension charge and cash contributions Note 32 (6.4) (7.2)
(Profit)/loss on disposal of property, plant and equipment Note 32 (0.1) 0.8
Proceeds from disposals/redemption of FVOCI financial assets Group statement of cash flows 1.1 0.3
Payments for FVOCI financial assets Group statement of cash flows (0.1) (0.1)
Proceeds from issue of shares Group statement of cash flows 0.2 –
Purchase of own shares by Employee Share (Scheme) Trust Note 23 (e) (2.7) (1.0)
Non cash movement on disposal of leases Note 32 (0.1) (0.7)
Reversal of impairment of property, plant and equipment Note 32 (1.4) –
Total other inflows/(outflows) G 14 6.4 (2.7)
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248
OTHER INFORMATION
G 15. Return on capital employed (“ROCE”)
ROCE is defined as the Group’s earnings before interest, and amortisation (net of related tax) plus the Group’s share of the results of joint ventures
after interest and tax divided by capital employed. Capital employed comprises the sum of the Group’s total assets plus cumulative intangible asset
amortisation and impairment less current liabilities and deferred tax liabilities excluding all borrowings and lease liabilities, retirement benefit assets,
cash and acquisition related contingent consideration and contract options. It is calculated by taking the average of the relevant opening and closing
balance sheet amounts. ROCE has also been calculated on a continuing basis (excluding Glanbia Ireland) in line with the presentation of continuing
and discontinued operations in the Group income statement (see note 2).
In years where the Group makes significant acquisitions or disposals, the ROCE calculation is adjusted appropriately, to ensure the acquisition or
disposal are equally time apportioned in the numerator and the denominator.
ROCE is one of the Group’s Key Performance Indicators (see pages 26 to 27). ROCE is one of the performance conditions in Glanbia’s Long-Term
Incentive Plan. See Remuneration Committee Report on pages 118 to 142 for more information.
Reference to the Financial
Statements/Glossary
2021
€’m
2020
€’m
Operating profit Group income statement 158.3 114.2
Exceptional charge Group income statement 48.4 34.5
Operating profit (pre-exceptional) Group income statement 206.7 148.7
Tax on operating profit (26.9) (16.8)
Amortisation and impairment of intangible assets net of related tax of €10.0m
(2020: €9.5m) 53.9 51.4
Share of results of joint ventures accounted for using the equity method Group income statement 19.2 37.7
Return – continuing operations 252.9 221.0
Profit after tax from discontinued operations Group income statement 26.4 23.0
Exceptional (credit)/charge - discontinued operations Group income statement (0.7) 0.9
Profit after tax from discontinued operations – pre-exceptional Group income statement 25.7 23.9
Return 278.6 244.9
Total assets Group balance sheet 3,627.6 3,065.4
Current liabilities Group balance sheet (8 87.4) (719.1)
Deferred tax liabilities Group balance sheet (144.4) (146.5)
Less: cash and cash equivalents Group balance sheet (231.0) (164.3)
Less: current financial liabilities (borrowings) Group balance sheet 136.5 199.8
Less: call option over non-controlling interests Note 29 (0.5) –
Less: acquisition related liabilities Note 28 – 17.4
Less: short term lease liabilities Note 31 14.5 15.8
Less: retirement benefit assets Group balance sheet (2.9) (2.6)
Plus: accumulated amortisation Note 16 392.5 363.2
Capital employed before adjustments 2,904.9 2,6 29.1
Adjustment for effect of adopting IFRS 16 Note 31 – 106.4
Adjustment for acquisitions G 15.1 (12.0) (12.0)
Adjustment for joint venture held for sale G 15.2 (18.5) –
Capital employed after adjustments 2,874.4 2,723.5
Average capital employed 2,751.7 2,729.3
Adjustment for discontinued operations G 15.2 (215.0) (206.3)
Average capital employed – continuing operations 2,536.7 2,523.0
Return on capital employed – continuing operations 10.0% 8.8%
Return on capital employed 10.1% 9.0%
Glossary continued
Key Performance Indicators and non-IFRS performance measures
continued
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
249
G 15.1. Adjustment for acquisitions
This adjustment is required to ensure the capital employed of the acquisitions LevlUp and PacMoore (2021) and Foodarom (2020) are appropriately
time apportioned in the denominator.
G 15.2. Adjustment for discontinued operations
This adjustment is required to ensure the capital employed of the joint venture held for sale (Glanbia Ireland) is appropriately time apportioned in the
denominator.
The adjustment for discontinued operations removes the average capital employed of Glanbia Ireland to calculate the return on capital employed for
continuing operations.
G 16. Total shareholder return (“TSR”)
TSR represents the change in the capital value of a listed quoted company over a period, plus dividends reinvested, expressed as a plus or minus
percentage of the opening value.
TSR is one of the Group’s Key Performance Indicators (see pages 26 to 27). TSR is one of the performance conditions in Glanbia’s Long-Term
Incentive Plan. See Remuneration Committee Report on pages 118 to 142 for more information.
G 17. Dividend payout ratio
Dividend payout ratio is defined as the annual dividend per ordinary share divided by the adjusted Earnings Per Share. The dividend payout ratio
provides an indication of the value returned to shareholders relative to the Group’s total earnings.
Reference to the Financial
Statements/Glossary
2021
€ cent
2020
€ cent
Adjusted Earnings Per Share G 6.2 87.15 73.78
Dividend recommended/paid per ordinary share Note 14 29.28 26.62
Dividend payout % 33.6% 3 6.1%
G 18. 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 19. 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. 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 6 for an analysis of exceptional items recognised in 2021.
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250
OTHER INFORMATION
Shareholder Information
Stock exchange listings
The Company’s shares are listed on the main market of the Euronext Dublin Stock Exchange as well as having a premium listing on the main market
of the London Stock Exchange.
Managing your shareholding
Computershare Investor Services (Ireland) Limited (“Computershare”) maintains the Company’s register of members. Should a shareholder have any
queries in respect of their shareholding, they should contact Computershare directly using the contact details provided below:
Contact details:
Computershare Investor Services (Ireland) Limited, 3100 Lake Drive, Citywest Business Campus, Dublin 24, Ireland. Telephone number 01 247 5349
(within Ireland), +353 1 247 5349 (outside Ireland), or by logging on to: www.investorcentre.com/ie/contactus.
2021 2020
Share price data € €
Share price as at financial year end 12.30 10.38
Market capitalisation as at financial year end 3,532.2m 3,056m
Share price movements during the year:
– high 15.11 11.4 9
– low 9.88 7.70
The current share price of Glanbia plc ordinary shares can be accessed at: https://www.glanbia.com/investors/share-price-information/detailed-
share-price.
Shareholder analysis
Geographic Location*
Number of
shares held
% of
total
Institutional
North America 53,961,524 18.8
UK 25,257,879 8.8
Rest of world 41,715,114 14.5
Retail 72,958,751 25.4
Glanbia Co-operative Society Ltd 93,276,077 32.5
* This represents a best estimate of the number of shares held by geographic locations at 01 January 2022.
North America – 18.8%
UK – 8.8%
Rest of the World – 14.5%
Retail – 25.4%
Glanbia Co-operative Society Ltd – 32.5%
Share capital
The authorised share capital of the Company at 01 January 2022 was 350,000,000 ordinary shares at €0.06 each. The issued share capital at
01 January 2022 was 287,169,345 ordinary shares of €0.06 each.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
251
Substantial shareholdings
The table below details the major shareholdings (3% or more) in the Company’s ordinary share capital that has been disclosed to the Company at
01 January 2022 and 28 February 2022 in accordance with the requirements of Regulation 14 of the Transparency (Directive 2004/109/EC)
Regulations 2007 and Rule 13 of the Central Bank (Investment Market Conduct) Rules 2019.
Shareholder
No. of ordinary
shares as at
1 January 2022
% of issued share
capital as at
1 January 2022
Glanbia Co-operative Society Limited 93,276,241 32.48%
Black Creek Investment Management Inc.* 11,874,803 4.14%
Southeastern Asset Management, Inc. – –
Shareholder
No. of ordinary
shares as at
28 February 2022
% of issued share
capital as at
28 February 2022
Glanbia Co-operative Society Limited 8 7,52 6,241 31.08%
Black Creek Investment Management Inc.* 11,874,803 4.22%
Southeastern Asset Management, Inc. 10,731,019 3.81%
* Black Creek Investment Management Inc. (‘Black Creek’) is an investment management company. The shares are beneficially owned by 21 separate funds and clients which Black
Creek advises regarding their investment portfolios. Shares held directly are by funds for which Black Creek also acts as investment fund manager. None of the funds or clients by
itself reaches or exceeds the 3% threshold. The funds and clients give a proxy to Black Creek who can exercise the voting rights for the shares in its own discretion.
Employee share schemes
The Company operates a number of employee share schemes. At 01 January 2022, 412,493 ordinary shares were held in employee benefit trusts
for the purpose of the Group’s employee share schemes. While any shares in the Company are held by the Trustees, the Trustees shall refrain from
exercising any voting rights which may attach to the shares save that if the beneficial interest in any share has been vested in any beneficiary the
Trustees shall seek and comply with any direction from such beneficiary as to the exercise of voting rights attaching to such shares.
Dividend payments direct to your bank account
An interim dividend of 10.68 cent per share was paid in respect of ordinary shares on 02 October 2020.
Subject to shareholders’ approval, a final dividend of 17.53 cent per share will be paid in respect of ordinary shares on 06 May 2022 to shareholders
on the register of members on 25 March 2022. Following approval by shareholders at the AGM in 2010, all dividend payments will be made by direct
credit transfer into a nominated bank or financial institution. If a shareholder has not provided his/her account details prior to the payment of the
dividend, a shareholder will be sent the normal tax voucher advising a shareholder of the amount of his/her dividend and that the amount is being held
because his/her direct credit transfer instructions had not been received in time. A shareholder’s dividends will not accrue interest while they are held.
Payment will be transferred to a shareholder’s account as soon as possible on receipt of his/her direct credit transfer instructions. For the past number
of years, dividends have been paid in sterling to shareholders whose address, according to the Glanbia share register, is in the UK (unless they have
elected otherwise). From Monday, 15 March 2021 this structure changed and a default currency of euro will be applied to all new shareholders who
come on to the Glanbia plc share register, regardless of their registered address. Where an existing shareholder holds shares in certificated (i.e. paper)
form and has previously received sterling because his/her registered address is in the UK or because he/she has previously elected to receive sterling,
he/she will continue to receive sterling after 15 March 2021 unless he/she elects otherwise. All other shareholders will from 15 March 2021 automatically
be paid in euro unless a sterling currency election is made (including those shareholders who hold their shares in uncertificated (i.e. dematerialised) form).
Shareholders holding their shares via the central securities depository operated by Euroclear Bank or CREST will receive dividends electronically
via such systems. To avail of these facilities, shareholders should follow the applicable procedures in the EB Services Description, the EB Rights of
Participants Document and the CREST International Manual.
Irish Dividend Withholding Tax (DWT) must be deducted from dividends paid by an Irish resident company, unless a shareholder is entitled to an
exemption and has submitted a properly completed exemption form to the Company’s Registrar. DWT is deducted at the standard rate of Income
Tax (25%). Non-resident shareholders located in countries with a double tax treaty with Ireland and certain Irish companies, trusts, pension schemes,
investment undertakings and charities may be entitled to claim exemption from DWT. Copies of the exemption form may be obtained from the
Company’s Registrar. Shareholders should note that DWT will be deducted from dividends in cases where a properly completed form has not been
received by the market deadline for the dividend. Individuals who are resident in Ireland for tax purposes are not entitled to an exemption. If shares
are held via Euroclear Bank or CREST, the owners of the shares will need to contact the intermediary through whom the shares are held in order to
ascertain arrangements for tax relief to be applied at source.
Electronic copies of current and past annual and half-yearly reports can be downloaded from the Glanbia website. Current and historic share prices,
news, updates and presentations may also be obtained. Shareholders may also register to receive future shareholder communications electronically.
Shareholders may visit: https://www.glanbia.com/investors/shareholder-information for up-to-date investor information.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
252
OTHER INFORMATION
Electronic communications
The Transparency (Directive 2004/109/EC) Regulations 2007 recognises the growing importance of electronic communications. The Group,
therefore, provides documentation and communications to all shareholders via our website unless a shareholder has specifically elected to receive
a hard copy.
Using electronic communications enables fast receipt of documents, helps the environment by significantly reducing the amount of paper used to
communicate with shareholders and reduces associated printing, mailing and distribution costs.
Shareholders who hold their shares in certificated form can also vote online for the next Annual General Meeting (‘AGM’) via:
www.eproxyappointment.com. Holders of CREST Depository Interests (‘CDIs’) and/or participants of Euroclear Bank SA/NV (‘Euroclear Bank’)
system should refer to the new arrangements post migration to Euroclear Bank on page 253.
Financial calendar
Announcement of 2021 Full Year Results 03 March 2022
Ex-dividend date 24 March 2022
Record date for dividend 25 March 2022
Expected latest time for return of voting instructions by CDI holders 28 April 2022
Record date for AGM 01 May 2022
Latest time for return of voting instructions by Euroclear Bank participants 03 May 2022
Latest time for return of voting instructions by holders of certificated shares 03 May 2022
AGM 05 May 2022
Dividend payment date 06 May 2022
AGM
The AGM will be held on 05 May 2022. The notice of meeting, together with details of the business to be conducted at the meeting will be available
20 business days before the meeting on: www.glanbia.com/agm
The well-being of shareholders and our people is a primary concern for the Directors and we will continue to closely monitor the COVID-19 situation
and any advice by the Government of Ireland in relation to the pandemic. We will take all recommendations and applicable law in to account in the
conduct of the AGM.
The voting results for the 2022 AGM, including proxy votes and votes withheld will be available on our website shortly after the meeting at the
following address: www.glanbia.com/agm.
Conditions for participating in a meeting
Every shareholder, irrespective of how many Glanbia plc shares they hold, has the right to attend, speak, ask questions and vote at the AGM.
Completion of a proxy form will not affect a shareholder’s right to attend, speak, ask questions and vote at the meeting in person.
The quorum for a general meeting of the Company is constituted by two persons entitled to vote upon the business of the meeting, each being
a shareholder or a proxy or corporate representative for a shareholder.
The right to participate in the AGM is subject to the registration of the shares prior to the date of the meeting (the record date). For the 2022 AGM
the record date is to be determined in accordance with sections 1087G and 1105 of the Companies Act 2014.
Appointment of proxy
Where a shareholder is unable to attend the AGM in person, a proxy (or proxies) may be appointed to attend, speak, ask questions and vote
on their behalf. For this purpose a form of proxy is posted to all shareholders. Copies of these documents may be requested by telephoning the
Company’s Registrar on 01 247 5349 (within Ireland), 00353 1 247 5349 (outside Ireland), or by logging on to www.investorcentre.com/ie/contactus
or by writing to the Group Secretary at Glanbia plc, Glanbia House, Kilkenny, Ireland.
Alternatively, a shareholder may appoint a proxy electronically, by visiting: www.eproxyappointment.com and submitting their proxy details. They will
be asked to enter the Control Number, the Shareholder Reference Number (“SRN”) and PIN and agree to certain terms and conditions. The Control
Number, the SRN and the PIN can be found on the top of the form of proxy.
How to exercise shareholders’ rights
Shareholders have several ways to exercise their right to vote at the AGM:
• by attending the AGM in person; subject to COVID-19 applicable restrictions; or
• by submitting a validly completed proxy form appointing the chair of the meeting or another person as a proxy to vote on their behalf; or
• by visiting www.eproxyappointment.com and submitting their proxy details; or
• via the Broadridge global proxy voting service if you hold CDIs via CREST; or
• EB Participants may send electronic voting instructions to Euroclear Bank via SWIFT or to EasyWay Corporate Actions; or
• EB Participants may send a proxy voting instruction to Euroclear Bank to appoint a third party (i.e. other than Euroclear Nominees Limited or the
chairman of the meeting) to attend and vote at the AGM; or
• attending via the Virtual Meeting Platform and voting electronically.
Shareholder Information continued
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
253
In the case of joint holders, the vote of the senior holder who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes
of the other registered holder(s) and, for this purpose, seniority will be determined by the order in which the names stand in the register of members.
The passing of resolutions at a meeting of the Company, other than special resolutions, requires a simple majority. To be passed, a special resolution
requires at least 75% of the votes cast to be in favour of the resolution.
New arrangements post Migration to Euroclear Bank
New arrangements regarding voting and the exercise of shareholder rights became applicable to all dematerialised shares following the migration
to Euroclear Bank which became effective in March 2021.
If you hold your interests in the Company’s ordinary shares through a participant account in the Euroclear Bank System you can either send:
• electronic voting instructions to Euroclear Bank via SWIFT or to EasyWay Corporate Actions; or
• a proxy voting instruction to Euroclear Bank to appoint a third party (other than Euroclear Nominees or the chair of the AGM), subject to any
COVID-19 restrictions, to attend and vote at the AGM;
If you hold your interests in the Company’s ordinary shares as CDIs through CREST you can either send:
• electronic voting instructions to Euroclear Bank via Broadridge Financial Solutions Limited (“Broadridge”); or
• appoint a proxy via the Broadridge Global Proxy Voting service.
Persons who hold their interests in the Company’s ordinary shares as Belgian law rights through the Euroclear Bank System or as CDIs should
consult with their stockbroker or other intermediary at the earliest opportunity for further information on the processes and timelines for submitting
proxies and voting instructions for the AGM through the respective systems. For voting services offered by custodians holding Irish corporate
securities directly with Euroclear Bank, please contact your custodian.
Tabling agenda items
A shareholder, or a group of shareholders acting together, who hold at least 3% of the issued share capital of the Company, has the right to put an
item on the agenda of the AGM. In order to exercise this right, written details of the item to be included on the 2022 AGM agenda together with a
written explanation why the item is to be included on the agenda and evidence of the shareholding must be received by the Group Secretary at
Glanbia plc, Glanbia House, Kilkenny, Ireland or by email to groupsecretary@glanbia.ie no later than 25 March 2022 (i.e. 42 days before the AGM).
An item cannot be included on the AGM agenda unless it is accompanied by the written explanation and received at either of these addresses by
this deadline.
Tabling draft resolutions
A shareholder, or a group of shareholders acting together, who hold at least 3% of the issued share capital of the Company, has the right to table
a draft resolution for inclusion on the agenda of the 2022 AGM subject to any contrary provision in company law.
In order to exercise this right, the text of the draft resolution and evidence of shareholding must be received no later than 25 March 2022 (i.e. 42 days
before the AGM) by post to the Group Secretary at Glanbia plc, Glanbia House, Kilkenny, Ireland or by email to groupsecretary@glanbia.ie. A resolution
cannot be included on the 2022 AGM agenda unless it is received at either of these addresses by this deadline. Furthermore, shareholders are
reminded that there are provisions in company law which impose other conditions on the right of shareholders to propose resolutions at the general
meeting of a company.
How to ask a question before or at the meeting
The AGM is an opportunity for shareholders to put a question to the Group Chairman during the question and answer session. Before the 2022
AGM, a shareholder may also submit a question in writing by sending a letter and evidence of shareholding at least four business days before the
2022 AGM (i.e. 29 April 2022) to the Group Secretary, Glanbia plc, Glanbia House, Kilkenny, Ireland or by email to groupsecretary@glanbia.ie.
Dividend rights
The Company may, by ordinary resolution, declare dividends in accordance with the respective rights of shareholders, but no dividend shall exceed
the amount recommended by the Directors. The Directors may also declare and pay interim dividends if it appears to them that the interim dividends
are justified by the profits of the Company available for distribution.
Distribution on winding up
If the Company shall be wound up and the assets available for distribution among shareholders shall be insufficient to repay the whole of the paid
up or credited as paid up share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by shareholders in
proportion to the capital paid up or credited as paid up at the commencement of the winding up on the shares held by them respectively. Further if,
in a winding up, the assets available for distribution among shareholders shall be more than sufficient to repay the whole of the share capital paid up
or credited as paid up at the commencement of the winding up, the excess shall be distributed among shareholders in proportion to the capital at
the commencement of the winding up paid up or credited as paid up on the said shares held by them respectively.
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
254
OTHER INFORMATION
Group Secretary and Registered Office
Group Secretary
Glanbia plc,
Glanbia House,
Kilkenny,
Ireland,
R95 E866.
Stockbrokers
Davy Stockbrokers,
49 Dawson Street,
Dublin 2,
Ireland.
(Joint Broker)
Jefferies,
100 Bishopsgate,
London EC2N 4JL,
United Kingdom.
(Joint Broker)
Auditor
Deloitte Ireland LLP
Deloitte & Touche House,
Earlsfort Terrace,
Dublin 2,
Ireland.
Solicitors
Arthur Cox,
10 Earlsfort Terrace,
Dublin 2,
Ireland.
Principal Bankers
Allied Irish Banks, P.L.C.
The Governor and Company of the Bank of Ireland
Barclays Bank Ireland PLC
Danske Bank A/S
Coöperatieve Rabobank UA, trading as Rabobank Dublin
Ulster Bank Ireland DAC
Citibank N.A., London Branch
BNP Paribas, Dublin Branch
HSBC Bank PLC
Registrar
Computershare Investor Services (Ireland) Limited,
3100 Lake Drive,
Citywest Business Campus,
Dublin 24,
Ireland.
Contacts
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
255
Notes
GLANBIA PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
256
OTHER INFORMATION
Notes
Glanbia plc Annual Report and Financial Statements 2021
GLANBIA PLC
Glanbia House
Kilkenny
Ireland
R95 E866
Tel: +353 56 777 2200
Email: ir@glanbia.ie
WWW.GLANBIA.COM