Glanbia : 2017 Full Year Results

21 February 2018 - Glanbia plc ('Glanbia', the 'Group', the 'plc'), the global nutrition group, announces its results for the financial year ended 30 December 2017.

Results highlights for the full year 2017

· On a pro-forma¹ basis adjusted Earnings Per Share¹ from continuing operations was 87.11 cent, up 10.2% on prior year, constant currency (up 8.3% reported);

· Reported profit after tax of €329.4 million up €117.3 million on prior year driven by underlying performance and the profit arising on the disposal of 60% of the Dairy Ireland segment;

· Wholly owned revenue from continuing operations of €2,387.1 million (2016: €2,231.7 million) up 9.2% on prior year, constant currency (up 7.0% reported)

· Wholly owned EBITA from continuing operations of €283.2 million (2016: €273.3 million) up 5.8% on prior year, constant currency (up 3.6% reported)

· Glanbia Performance Nutrition delivered revenue growth of 13.7% constant currency (up 11.3% reported) with like-for-like branded sales growth of 6.3% and EBITA of €169.7 million, a 7.0% increase on prior year, constant currency (up 4.8% reported);

· Glanbia Nutritionals delivered revenue growth of 5.4% constant currency (3.4% reported) and EBITA of €113.5 million, a 4.1% increase on prior year, constant currency (up 2.0% reported) driven by a good performance from Nutritional Solutions;

· Strong result for the year from Joint Ventures with share of profits pre-exceptionals of €42.8 million up €16.8 million (up 64.6% reported) primarily driven by higher dairy markets and volume growth;

· Completion of the disposal of 60% of the Dairy Ireland segment and creation of a new joint venture, Glanbia Ireland;

· Net debt reduced by €69.8 million to €367.7 million at year end 2017, net debt to EBITDA ratio of 1.07 times; and

· Recommended final dividend of 16.09 cent per share. 2017 full year dividend of 22.00 cent per share an increase of 65% on prior year with revised dividend policy in place targeting an on-going dividend pay-out ratio of 25% to 35% of adjusted earnings per share.

Commenting today Siobhán Talbot, Group Managing Director, said:

'I am delighted to announce Glanbia's eighth year of double-digit earnings growth in 2017. On a pro-forma basis from continuing operations adjusted Earnings Per Share¹ was up 10.2%, constant currency, and wholly owned revenue was up 9.2%, constant currency. Growth was broad based across Glanbia Performance Nutrition ('GPN'), Glanbia Nutritionals ('GN') and Joint Ventures ('JVs') with good volume growth across all segments.

The strategic evolution of the Group portfolio continued in 2017 with the acquisition of two highly complementary businesses to the GPN portfolio, Amazing Grass and Body & Fit as well as the disposal of 60% of Dairy Ireland and the subsequent creation of the Glanbia Ireland JV. These initiatives demonstrate the ambition of the Group to build on its existing strengths, drive future sustainable growth and deliver on our vision to be one of the world's top performing nutrition companies. Our focus in 2018 will be on volume driven revenue growth across our wholly owned growth platforms of GPN and GN. The outlook for 2018 is positive and I expect Glanbia will deliver between 5% to 8% growth in pro-forma¹ adjusted Earnings Per Share on a constant currency basis. We expect growth to be delivered in the second half of 2018 as comparative dairy dynamics and planned investments will adversely affect performance in the first half of 2018.

Finally, recognising the strength of the Group's balance sheet and growth prospects, Glanbia has materially increased its 2017 dividend and revised its ongoing target dividend pay-out ratio to between 25% and 35% of annual adjusted Earnings Per Share.'

2017 full year income statement highlights

1. Pro-forma Adjusted Earnings Per Share for the continuing Group calculation assumes the Dairy Ireland segment and related assets were disposed of at the beginning of the 2016 financial year. A reconciliation is set out on pages 39 and 40.

2. To arrive at the Constant Currency Change, the average FX rate for the current period is applied to the relevant reported result from the same period in the prior year. The average Euro US Dollar FX rate for 2017 was €1 = $1.1295 (FY 2016: €1 = $1.1068).

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

4. Adjusted Earnings Per Share (reported) has been amended to exclude the cost of software amortisation within the earnings calculation and also includes the contribution from the Dairy Ireland segment and related assets.

This release contains certain alternative performance measures. A detailed glossary of the key performance indicators and non-IFRS performance measures can be found on pages 35 to 46.

2017 full-year overview

Following the disposal of 60% of the Dairy Ireland segment and related assets ('Dairy Ireland') the results of Dairy Ireland have been classified as discontinued operations for 2017 and 2016 comparatives. Wholly owned continuing operations includes the GPN and GN segments.

Glanbia delivered a good performance in 2017. Wholly owned revenue from continuing operations was €2,387.1 million, an increase of 7.0% reported (up 9.2% constant currency). The drivers of this revenue growth were a 5.3% improvement in volume, a 0.2% increase in price and a 3.7% contribution from acquisitions. Wholly owned EBITA from continuing operations was €283.2 million, up 3.6% reported (up 5.8% constant currency). Wholly owned EBITA margin from continuing operations was 11.9%, down 30 basis points reported and constant currency.

Glanbia's share of profit after tax from JVs increased by €16.8 million to €42.8 million in 2017. Glanbia's profit, including exceptional items, from discontinued operations was €92.2 million an increase of 277.9% on prior year. This includes the profit on the disposal of 60% of Dairy Ireland.

Total Group profit (after discontinued activities and exceptional items) in 2017 was €329.4 million up €117.3 million versus prior year driven by a good underlying performance from GPN and GN, the profit arising on the disposal of 60% of Dairy Ireland and a strong performance from JVs.

On a pro-forma basis, assuming the disposal of 60% of Dairy Ireland had occurred at the beginning of FY 2016, adjusted Earnings Per Share from continuing operations was 87.11 cent. On this basis this was an increase on prior year of 8.3% on a reported basis (up 10.2% constant currency). Group EBITA, on the same pro-forma basis, including Glanbia's share of EBITA from JVs was €351.0 million up €21.4 million versus prior year.

Including the contribution from discontinued operations which were owned by Glanbia up to 2 July 2017, adjusted Earnings Per Share for the year was 89.17 cent representing a reported increase of 3.7% (up 5.3% constant currency).

Dividend and total shareholder return

The Board has reviewed the Group's dividend policy and has put in place a target annual dividend pay-out of between 25% and 35% of adjusted Earnings Per Share. This is a material increase from recent years and reflective of the strength of the Group's balance sheet and cash flow. The Board will continue to assess the dividend policy on an on-going basis with the aim of balancing investment in growth opportunities for the Group with a return of cash to shareholders. As a result of this, the Board is recommending a final dividend of 16.09 cent per share which brings the total dividend for the year to 22.00 cent per share, a 65% increase on prior year. This total dividend represents a return of €65 million to shareholders from 2017 earnings and a pay-out of 25% of 2017 pro-forma adjusted Earnings Per Share. The final dividend will be paid on 27 April 2018 to shareholders on the share register on 16 March 2018. Glanbia's total shareholder return ('TSR') in 2017 was a negative 4.8%; TSR for the 3 years to the end of 2017 was 18.9%.

Board changes

The following nominees to the Glanbia plc Board from Glanbia Co-operative Society Limited (the 'Society Nominees') retired in 2017; Jim Gilsenan and Matthew Merrick retired on 26 April 2017. Jer Doheny retired on 2 June 2017. They were replaced by Tom Grant, Eamon Power and Brendan Hayes on 2 June 2017. On the same day, John Murphy was appointed Vice Chairman replacing Patrick Murphy. On 20 February 2018 Michael Keane, a Society Nominee, announced his intention to retire from the Board at the 2018 Glanbia plc AGM on 25 April 2018. It is expected that he will be replaced by a Society Nominee by 30 June 2018.

Capital investment

In 2017 total capital expenditure amounted to €72.5 million consisting of €48.7 million strategic capital expenditure which was focused on both GPN and GN. Key strategic projects completed in 2017 were a new innovation centre in GPN in the US and various plant and IT system upgrades in GPN and GN.

Strategic initiatives

In 2017 Glanbia made progress on a number of key strategic initiatives. Delivery of these initiatives is consistent with the ambition of the Group to build on its existing strengths and drive future sustainable growth.

Acquisitions of Amazing Grass and Body & Fit

On 6 January 2017, Glanbia acquired Grass Advantage LLC ('Amazing Grass') in the US. Amazing Grass has a portfolio of organic and non-GMO plant-based nutrition brands. On 31 March 2017 Glanbia acquired B&F Vastgoed B.V. ('Body & Fit') in the Netherlands, a leading direct-to-consumer online branded business focused on performance nutrition. The combined consideration for both acquisitions was €168.2 million. The acquisitions delivered €79.6 million of revenue in 2017. Both acquisitions have a strong strategic fit and are enabling GPN to extend its reach to new consumers.

Disposal of 60% of Dairy Ireland and creation of Glanbia Ireland

On 2 July 2017, Glanbia completed the disposal of 60% of the Dairy Ireland segment and related assets ('Dairy Ireland') to Glanbia Co-operative Society Limited (the 'Society'). The disposal generated net cash proceeds of €208.8 million of which €112.0 million represents the disposal of the 60% equity stake in Dairy Ireland and the balance equal to 100% of the working capital in Dairy Ireland based on the final completion accounts. Following completion, the businesses of Glanbia Ingredients Ireland DAC and Dairy Ireland were combined to create a new joint venture called Glanbia Ireland DAC. This JV is owned 60% by the Society and 40% by Glanbia plc. In creating Glanbia Ireland the shareholders have created a strong organisation with the ambition to leverage the benefits of the significant growth plans of the Irish dairy supply base and an ownership structure more aligned to the needs of that supply base. Glanbia Ireland has plans in place for strategic investment of €250 million to €300 million between 2018 and 2020 to increase processing capacity and capability to produce value-added products. This investment is largely being funded by debt facilities sourced directly by Glanbia Ireland.

Southwest Cheese ('SwC')

The $140 million investment to expand production capacity at SwC by 25% is on track with commissioning expected to be completed by the third quarter of 2018. This project has been funded directly by SwC.

Michigan Joint Venture

Glanbia's project to create a new JV to build a large scale cheese and whey plant in the State of Michigan, USA remains on track with commissioning expected in 2020. Glanbia will own 50% of this new JV with US based partners owning the other 50% share.

2018 Outlook

In 2017 Glanbia refreshed its strategy; reaffirming better nutrition at its core and restating the ambition to drive long term sustainable growth. In 2018 the focus will be on volume-driven revenue growth. To achieve this Glanbia will invest further in building the consumer brand franchise in GPN, the solutions capability in GN and across the Group will continue to support innovation, talent development and systems infrastructure recognising the need for new skills and capabilities in an increasingly digital age.

For 2018 Glanbia is targeting mid-to-high single digit like-for-like volume growth in both the branded portfolio in GPN and the Nutritional Solutions component of GN. Overall margins in both GPN and GN are expected to be broadly in line with 2017 levels. JVs are expected to deliver a reduced profit in 2018 versus prior year as a result of more challenging dairy markets. On a pro-forma¹ basis Glanbia expects adjusted Earnings Per Share of the continuing Group to grow between 5% to 8%, constant currency in 2018. Growth is expected to be delivered in the second half of 2018 as comparative dairy dynamics and planned investments will adversely affect performance in the first half of 2018.

Glanbia generates over 80% of its earnings in US Dollar and reports in Euro. If the Euro US Dollar foreign exchange rate remains at current levels Glanbia expects an approximate 8% translational headwind to constant currency results when reporting in Euro.

1. Pro-forma Adjusted Earnings Per Share for the continuing Group calculation assumes the Dairy Ireland segment and related assets were disposed of at the beginning of the 2016 financial year. A reconciliation is set out on pages 39 and 40. On this basis FY 2016 and FY 2017 pro-forma adjusted Earnings Per Share from continuing operations was 80.40 cent and 87.11 cent respectively.

Operations review

* 2016 EBITA numbers for the segments have been adjusted down by €0.5 million each due to a reallocation of certain central overheads following the reclassification of Dairy Ireland and related investments in Associated Companies as discontinued operations to ensure a like-for-like comparison with current year. Overall EBITA for the Group is unchanged.

Glanbia Performance Nutrition

* EBITA for GPN and GN for 2016 have been adjusted down by €0.5m reflecting on going corporate costs previously allocated to the Dairy Ireland segment but which will be allocated to GPN and GN going forward. This is to ensure a like-for-like comparison and reflective of the allocations received in 2017 and going forward.

Commentary is on a constant currency basis throughout

GPN delivered a good performance in 2017 with an overall increase in revenue of 13.7%. Volume increased by 7.1% as a result of branded revenue growth. The acquisitions of Amazing Grass and Body & Fit drove revenue growth of 8.1% with net price declining 1.5% due to investment in brand development and innovation launches. Like-for-like branded revenue growth versus prior year was 6.3% and like-for-like branded volume growth was 8.0%. Branded revenue growth was driven by the continued expansion of the online, food, drug, mass and club channels in North America and strong in-market execution and share gains in EMEA and LAPAC. GPN EBITA in 2017 was €169.7 million which was a 7.0% increase on the prior year with EBITA margin of 15.1%, down 100 basis points largely due to the net impact of higher year-on-year input costs and increased brand investment.

All geographic regions increased volume during the year with a strong performance in EMEA and LAPAC. As expected momentum improved in the North American market in quarter four 2017 driven by improved seasonal uplift relative to prior year. Innovation was also a key element of branded growth with the recent launches of ON Cake Bites and thinkThin plant-based bars both performing well. As a result of recent investments in geographic development, innovation and acquisitions, GPN has navigated the channel shift that has occurred in the category and has in place a portfolio of brands and product formats to serve performance and lifestyle consumer occasions across all channels on a global basis.

Glanbia acquired Amazing Grass and Body & Fit in the first quarter of 2017. Amazing Grass participates in the fast growing plant-based nutrition, 'Greens' and 'Super food' categories in North America. Body & Fit, an online Direct-to-Consumer ('DTC') brand, is a market leader in the Benelux region in Europe. Both plant based nutrition and overall DTC are in line with consumer trends and Glanbia will be investing further in 2018 in order to build on the existing brand strengths and broaden the current capabilities to develop platforms for future growth. Glanbia will be leveraging its broad channel presence and innovation capability to drive Amazing Grass in the North American market and has plans to grow the Body & Fit brand with investment focused on systems and organisational infrastructure to support this expansion.

Glanbia Nutritionals

* EBITA for GPN and GN for 2016 have been adjusted down by €0.5m reflecting on going corporate costs previously allocated to the Dairy Ireland segment but which will be allocated to GPN and GN going forward. This is to ensure a like-for-like comparison and reflective of the allocations received in 2017 and going forward.

Commentary is on a constant currency basis throughout

GN delivered a good performance in 2017. Total GN revenues increased versus the prior year by 5.4% to €1,266.0 million, driven by volume growth of 3.9% and pricing growth of 1.5%. Both volume and pricing growth was largely driven by Nutritional Solutions. GN's EBITA in 2017 was €113.5 million, a 4.1% improvement versus prior year as strong Nutritional Solutions performance was offset by challenging US cheese dynamics. GN EBITA margin in 2017 was 9.0%, broadly in line with prior year.

Nutritional Solutions

Nutritional Solutions ('NS'), at 42% of total GN revenues, is a provider of customised nutrient premixes, advanced-technology protein solutions, functional beverages and flavours. NS has a diverse product portfolio and supports its customers on both a global and regional basis, supplying solutions that improve product functionality and nutritional profile.

NS delivered a strong performance in 2017 with revenue of €531.9 million, an increase of 10.9% on the prior year. Volume growth of 7.2% was broadly based across customers, geographies and categories, driven by the ever-increasing trend of consumers seeking nutritional products with added protein, convenience and functionality. Pricing was also positive with growth of 3.7% mainly reflecting relatively stronger dairy markets in 2017 versus the prior year.

In 2017, 61% of the revenue in NS was from non-dairy products such as vitamin & mineral blends, functional beverages, plant-based solutions and flavours. The remaining 39% of NS revenue was from dairy solutions including advanced-technology whey and specialist dairy ingredients. Typical examples of the end products which NS supports are protein bars & snacks, value added beverages, performance nutrition, infant & clinical nutrition and supplements.

US Cheese

US Cheese is a leading producer of American-style cheddar cheese in the US supplying leading brand owners and other food processors. US Cheese delivered a satisfactory performance in 2017 with revenue of €734.1 million, an increase of 1.8% versus 2016. This was driven by volume growth of 1.7% and price increase of 0.1%. Volume growth was achieved through an increase in milk processed and improved yields year-on-year. Pricing was broadly flat as a result of reduced prices in the cheese barrel format offsetting improved prices for the cheese block format.

Joint Ventures (Glanbia Share)

* Share of JVs revenue is calculated as the share of revenue attributed to Glanbia based on Glanbia's percentage ownership in the JV.

Commentary is on a constant currency basis throughout

JVs delivered a strong performance in 2017. Glanbia's share of profit after tax ('PAT') from JVs, pre-exceptional, increased by €16.8 million to €42.8 million in 2017. Glanbia's share of JVs' revenues increased by 35.7% versus the prior year. This was driven by a price increase of 17.1%, as a result of the positive dairy market environment during 2017, and volume growth of 4.3% versus prior year driven by the Glanbia Ireland and Glanbia Cheese UK JVs. The Dairy Ireland transaction grew JVs' revenue by 14.3% in 2017. Glanbia's share of JVs' EBITA in 2017 was €63.4 million, an increase of 50.2% year-on-year. This was primarily as a result of volume growth and relatively strong year on year dairy markets.

Glanbia Ireland

The Glanbia Ireland JV ('GI') was created on 2 July 2017 following the acquisition of 60% of Dairy Ireland from Glanbia plc by the Society whereby the businesses of Glanbia Ingredients Ireland and Dairy Ireland were combined to create GI. GI is owned 60% by the Society and 40% by the plc. GI is the largest milk processor in Ireland producing a range of value added dairy ingredients and consumer products. In addition GI is a large scale seller of animal feed and fertiliser as well as having a chain of agricultural retail outlets in Ireland.

GI delivered a good performance in 2017 driven by volume and price improvements as a result of relatively higher global dairy markets. Milk volumes processed increased by 9% to a total GI milk pool of 2.6 billion litres. GI has a strategy in place to leverage the benefits of the significant growth plans of the Irish dairy supply base with plans for strategic investment of €250 million to €300 million between 2018 and 2020 to increase processing capacity and capability to produce value added products. This investment is largely being funded by debt facilities sourced directly by GI.

Southwest Cheese (SwC)

SwC is a large scale producer of American-style cheddar cheese and whey ingredients in the US with a production facilitylocated in the State of New Mexico. SwC is 50% owned by Glanbia plc with US based dairy Co-operatives owning the other 50% share. SwC works closely with Glanbia Nutritionals as a route to market for all of its cheese and whey ingredients production. SwC delivered a reduced performance in 2017 versus prior year as a result of adverse dairy product pricing dynamics.

Glanbia Cheese UK

Glanbia Cheese UK is a large scale mozzarella cheese producer with two production facilities in the United Kingdom. Glanbia Cheese UK primarily supplies customers in the pizza industry across Europe. It is owned 51% by Glanbia plc and 49% by a global mozzarella producer. Glanbia Cheese UK delivered an excellent performance in 2017 with strong revenue and earnings growth. This was mainly driven by higher volumes and relatively higher dairy product pricing versus prior year.

Discontinued operations

* EBITA for Discontinued operations for 2016 have been adjusted up by €1.0m reflecting on going corporate costs previously allocated to the Dairy Ireland segment but which will be allocated to GPN and GN going forward. This is to ensure a like-for-like comparison and reflective of the allocations received in 2017 and going forward.

The disposal of 60% of Dairy Ireland was completed on 2 July 2017 and the segment has been classified as discontinued operations. Note in the table above, discontinued operations for FY 2016 reflect the ownership of Dairy Ireland for the full 2016 financial year whereas FY 2017 reported numbers reflect Dairy Ireland ownership for half of the 2017 financial year.

Capital markets day 2018

Glanbia will hold a capital markets day on Wednesday, 23 May 2018 in Chicago, USA. The day will focus on the overall Group and provide an opportunity to tour Glanbia facilities. For those interested in attending please email: investorday@glanbia.com. Further details will be available on the Investor Relations section of the Glanbia.com website.

2017 Finance review

2017 Group income statement

Dairy Ireland transaction and presentation of income statement

The disposal of 60% of Dairy Ireland and the creation of the Glanbia Ireland JV was completed on 2 July 2017. As a consequence, the results of Dairy Ireland have been classified as a discontinued operation up to the date of the transaction with prior year comparatives also adjusted accordingly. Total net cash proceeds from the transaction amounted to €208.8 million which represents €112 million cash payment relating to the disposal of the 60% equity stake in Dairy Ireland and the balance equal to 100% of the working capital in Dairy Ireland based on the final completion accounts. The operations of Dairy Ireland were combined with Glanbia Ingredients Ireland DAC, creating a new joint venture called Glanbia Ireland DAC. Glanbia Ireland is classified as a joint venture with 60% owned by the Society Limited and 40% owned by Glanbia plc. The profit arising on the disposal of 60% of Dairy Ireland, and the related costs incurred in respect of the transaction, have been presented as exceptional items in the period as discussed further below.

Commentary below, unless otherwise stated, refers to the continuing business. Any references to pro-forma assumes the Dairy Ireland transaction was completed at the beginning of the 2016 financial year.

Income statement

Revenue

Wholly owned revenue from continuing operations increased by 9.2% constant currency (7.0% reported) in 2017 to €2,387.1 million. Sales volumes accounted for 5.3% of the increase primarily driven by like-for-like branded growth within GPN and Nutritional Solutions within GN. Pricing benefit accounted for 0.2% of the growth in the year driven primarily by higher dairy markets offset partially by brand investment and innovation support within GPN. Acquisitions, which include the results of Amazing Grass and Body & Fit, accounted for a 3.7% increase in revenue.

Profit

Profit for the year from continuing activities amounted to €237.2 million which represents an increase of €49.5 million on prior year. This increase is driven by profit growth in GPN and GN, an increase in the share of joint venture profits and once-off net exceptional gains versus prior year. Wholly owned EBITA from continuing activities before exceptional items grew by 5.8% constant currency (up 3.6% reported) to €283.2 million (2016: €273.3 million). Increased EBITA was reported from each wholly owned segment as a result of like-for-like branded sales growth in GPN and a good performance from Nutritional Solutions within GN. Overall wholly owned EBITA margins have increased from 10.7% reported in prior year to 11.9% as a result of the Dairy Ireland transaction. On a like-for-like comparison, wholly owned EBITA margins from continuing activities decreased by 30 basis points to 11.9% driven primarily by higher input costs and increased brand investment.

Net finance costs

Net financing costs pre-exceptional items increased by €0.2 million to €23.0 million (2016: €22.8 million) primarily driven by the higher costs in the first half of the year as a result of the acquisitions of Amazing Grass and Body & Fit, which was completed in the first quarter of 2017. On 15 December 2017 the Group repaid $169 million out of a total of $325 million outstanding private placement debt due in June 2021, and consequently was required to pay additional interest of €14.0 million reflecting make-whole interest due to holders of this private placement debt. Total net finance costs in 2017 include this additional interest cost as an exceptional item. The early repayment of the private placement debt appropriately restructured the Group's debt facilities following the disposal of 60% of Dairy Ireland and accordingly will beneficially impact finance costs over financial periods to June 2021. The Group's average interest rate in 2017 was 6.3% (3.9% excluding the additional exceptional interest on private placement debt) (2016: 3.8%). Glanbia operates a policy of fixing a significant amount of its interest exposure, with 85% of projected 2018 debt currently contracted at fixed rates.

Equity accounted investees

The Group's share of Equity accounted investees (joint ventures) pre-exceptional profits increased by €16.8 million to €42.8 million (2016: €26.0 million) in the year driven by good volume growth and relatively strong dairy markets. The share of results of joint venture includes 40% of the result of Dairy Ireland from 2 July following the disposal of 60% of Dairy Ireland to the Society. The results of Dairy Ireland up to the date of the transaction have been included within discontinued operations. The share of results of Equity accounted investees is after tax and interest.

Income taxes

The 2017 pre-exceptional tax charge decreased by €1.0 million to €38.3 million (2016: €39.3 million). This represents an effective tax rate, excluding JVs, of 17.6% (2016: 18.4%). The overall tax charge for the year includes an exceptional deferred tax credit of €38.7 million arising from a reduction in the US federal corporate tax rate from 35% to 21% under the Tax Cuts and Jobs Act signed into US law on 22 December 2017. This reduction in the US federal corporate tax rate is expected to drive a reduction in the Group's effective tax rate, however there are certain provisions within the US legislation to be evaluated further during 2018 to confirm this. As a result, Glanbia currently expects the Group effective tax rate in 2018 to be between 16.0% and 17.5%.

Earnings per share ('EPS')

Basic EPS from continuing activities grew by 28.8% constant currancy (26.4% reported) versus prior year driven by strong results in the year.

Pro-forma adjusted EPS grew 10.2% constant currency (8.3% reported). Pro-forma adjusted EPS has been presented as it is more reflective of the revised structure of the Group following the disposal of 60% of Dairy Ireland. Pro-forma adjusted EPS assumes the Dairy Ireland disposal was completed at the beginning of the 2016 financial year and is calculated based on the net profit attributable to equity holders of the parent from continuing activities plus 40% of the share of profits after tax for Dairy Ireland, before exceptional items and amortisation of intangible assets (excluding software amortisation), net of related tax.

Exceptional items

Details of the exceptional items are as follows:

1. Intangible asset amortisation - Following a review of the useful life of capitalised development costs in respect of newly developed products across the Group, it was decided to reduce the estimate of the useful life from 6 to 3 years to reflect the dynamic environment for new product launches in their early development stage. The once-off additional amortisation from this change in estimate amounted to €19.4 million.

2. Rationalisation costs in the current year relate to employee redundancies arising from the elimination of certain positions following a Group-wide organisational review. This review is on-going to ensure that the Group structure is appropriate to support the future growth of Glanbia post the disposal of 60% of Dairy Ireland. Discontinued costs in 2016 primarily relate to the redundancy and rationalisation programme in the Dairy Ireland segment.

3. Debt restructuring costs - Following the disposal of 60% of Dairy Ireland a review of existing debt facilities was undertaken to ensure they were appropriate to meet the needs of the new Group structure. As a result the Group repaid $169 million out of $325 million private placement debt resulting in €14.1 million of once-off interest costs and fees reflecting make-whole interest due to holders of this private placement debt arising on early settlement.

4. Organisation redesign costs relate to GN's programme announced in 2015 to fundamentally reorganise the business and leverage future market opportunities. This was largely complete in 2016. There were no material organisation redesign related costs in 2017.

5. Acquisition integration costs comprise of costs relating to the integration, restructuring and redesign of route to market capabilities within acquired businesses in the GPN segment. This was completed in 2016. There were no material acquisition related costs in 2017.

6. On 2 July 2017 the Group completed the disposal of 60% of Dairy Ireland to Glanbia Co-operative Society Limited. The profit arising on disposal amounted to €83.3 million which was net of transaction related costs of €13.0 million. These costs include impairment of tangible fixed assets, professional fees, EGM meeting costs, employee benefit expenses and other related costs.

7. On 22 December 2017 the Tax Cuts and Jobs Act was signed into law in the United States which reduced the federal corporate tax rate from 35% to 21%. Included in the exceptional tax credit is a deferred tax credit of €38.7 million arising from the reduction in the US federal corporation tax rate. The impact from this reduced tax rate on Glanbia's share of PAT from the Southwest Cheese JV amounted to €8.7 million.

Cash flow

The commentary below relates to the Group Statement of Cash flows as set out on page 21 of the financial statements.

Operating activities:

Net cash inflow from operating activities in the year amounted to €91.1 million which was a decrease of €231.7 million compared to prior year. The key drivers of the decrease in operational cash inflow on prior year are negative working capital movements of €180.7 million and the additional interest on private placement debt of €14.0 million, as previously discussed within net finance costs. Negative working capital movements are driven primarily by €76.5 million of negative receivable movements from the continuing business, due to increased business activity, and negative working capital movements from Dairy Ireland in the first half of 2017, amounting to €47.5 million,.

Investing activities

Net cash outflow from investing activities in the year amounted to €14.0 million which was a decrease of €90.0 million compared to prior year. The key drivers of the outflow in the year were the acquisitions of Amazing Grass and Body & Fit for a combined cost of €168.2 million and capital expenditure of €72.5 million being partially offset by net proceeds from the disposal of Dairy Ireland. Total capital expenditure in the year relates to tangible and intangible asset investments across GN and GPN. This is discussed further in the investing for growth section below. Total net proceeds from the Dairy Ireland transaction amounted to €208.8 million which represents cash proceeds of €112.0 million with the balance relating to settlement of working capital balances at the completion date.

Financing activities

Net cash outflow from financing activities amounted to €120.1 million which represents a decrease of €83.2 million. The outflow in the current year is driven by repayment of part of the US private placement debt and dividends to shareholders.

Cash flow KPIs

Key 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 net cash flow in the year before the following items: strategic capital expenditure, acquisition spend, proceeds received on disposal, loans to joint ventures, equity dividends, exceptional costs paid and foreign exchange movements. These metrics are used to monitor cash conversion performance of the Group. OCF is a key element of executive and senior management remuneration. OCF and FCF results for the Group are outlined below:

* Pro-forma excludes Dairy Ireland cash flows

On a pro-forma basis (excluding Dairy Ireland cash flows) OCF was €185.0 million which includes an adverse working capital movement of €123.3 million. The adverse working capital movement was largely driven by negative receivables movement of €76.5 million due to increased sales activity in the latter part of the year. The pro-forma OCF of €185.0 million represents a cash conversion on EBITDA of 56.4% compared to a prior year pro-forma cash conversion of 101.5%. The OCF conversion target for 2018 is 80%. Despite the reduced OCF in the year, overall net debt was reduced in the year by €69.8 million driven by an overall net positive cash flow of €19.9 million and a positive foreign exchange movement of €49.9 million. This is discussed further below.

Group Net debt

The Group's financial position continues to be strong. Net debt at the end of 2017 was €367.7 million. This is a decrease of €69.8 million from the prior year net debt of €437.5 million and can be primarily attributed to the proceeds received from the disposal of 60% of Dairy Ireland and positive foreign exchange gains offset partially by the cost from the investment in working capital and the Amazing Grass and Body & Fit acquisitions. Net debt to adjusted EBITDA was 1.07 times and interest cover was 7.0 times, both metrics remaining well within financing covenants. The reduction in the interest cover was driven by the exceptional €14.0 million interest cost in the year following the early repayment of part of the private placement debt. Excluding this once-off cost the cover would be 11.2 times. At year end 2017 Glanbia had available facilities of €844 million. Glanbia's capital structure has considerable capacity to finance future investments.

Investing for growth

In 2017 capital expenditure amounted to €72.5 million which includes €23.8 million of sustaining capital expenditure and €48.7 million of strategic capital expenditure, which was focused on GPN and GN. Key strategic capital investment projects completed in 2017 were a new innovation centre in GPN in the US, various plant and IT system upgrades in GPN and GN.

In the first quarter of 2017 Glanbia acquired Amazing Grass and Body & Fit for a combined cost of €168.2 million. Amazing Grass and Body & Fit are two key platforms for GPN in the strategically important plant-nutrition category and the DTC online channel respectively. The combined revenues of these two businesses in 2017 was approximately €79.6 million. Increasing capability in the DTC channel, initially through Body & Fit, is a key strategic objective for Glanbia and in addition to the investment made in 2017 Glanbia expects this investment will continue in 2018 to drive future top line growth. Acquisitions will continue to be an important part of the growth strategy of Glanbia, and as outlined below, the Group has the capacity to make acquisitions should opportunities arise that are in line with its strategic and financial objectives.

Return on capital employed ('ROCE')

* Restated for the impact of deferred tax (prior year reported was 12.9%).

Following a review and peer benchmark of the ROCE metric, the methodology used to calculate ROCE was amended in 2017 to include the impact of net deferred taxes within capital employed. On a like-for-like comparison using the restated ROCE of 13.9%, ROCE decreased marginally in 2017 by 50 basis points to 13.4%. This was driven primarily by the growth in reported EBITA, being more than offset by the near-term dilutive effect of recent acquisitions.

Foreign exchange

Glanbia generates over 80% of its earnings in US Dollars and has significant assets and liabilities denominated in US Dollar. As a result, as Glanbia has a Euro reporting currency 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. Within the income statement commentary has been provided 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.

However, at the balance sheet date at year end, due to the weakening of the US Dollar compared to prior year, there was a significant translation loss arising on the translation of US assets and liabilities into Euro. The gain or loss on translation of non-monetary assets and liabilities from US Dollar to Euro is presented within other comprehensive income and amounted to a charge of €149.8 million in the year. The retranslation of US Dollar denominated debt resulted in a gain of €49.9 million within the cash flow statement.

Euro US dollar foreign exchange rates

Dividend per share

Recognising the strength of the Group's balance sheet and growth prospects, the Board has reviewed the Group's dividend policy and has now set a target annual dividend pay-out ratio of between 25% and 35% of annual adjusted Earnings Per Share. This is a material increase from recent years .The Board will continue to assess the dividend policy on an on-going basis with the aim of balancing investment in growth opportunities for the Group with a return of cash to shareholders. As a result of this change the recommended final dividend will be 16.09 cent per share (2016: final dividend 7.94 cent per share) and brings the total dividend for the year to 22.00 cent per share (2016: 13.31 cent per share). This represents a 65% increase in the total dividend payment for 2017 versus prior year and represents a return of €65.1 million to shareholders from 2017 earnings.

Pension

The Group's net pension liability under IAS 19 (revised) 'Employee Benefits', before deferred tax, decreased in 2017 by €68.5 million to €41.9 million (2016: €110.4 million). The decrease was driven by the transfer to Glanbia Ireland of €44.2 million relating to the liability attributed to Dairy Ireland pension members following the completion of the disposal of 60% of Dairy Ireland.

Total shareholders returns

TSR for the year was a negative 4.8%. However, TSR over the three-year period to 2017 was 18.9% and five-year TSR to 2017 was 88.2%. Glanbia's share price at the end of the financial year was €14.90 compared to €15.78 at the 2016 year end. The STOXX Europe 600 Food & Beverage Index, which is a key benchmark for the Group, increased by 10.4% in 2017.

Principal risks and uncertainties

The Board of Glanbia plc has the ultimate responsibility for the Group's systems of risk management and internal control. The Directors of Glanbia have carried out a robust assessment of the principal risks facing the Group, including those that may threaten the business model, future performance, solvency or liquidity. In 2018 the principal risks and uncertainties affecting the Group's performance are:

· Economic, industry and political risk - macroeconomic and global trade uncertainty continues to increase, partly as a result of the geo-political climate and the continued uncertainty in relation to Brexit (the United Kingdom (UK) electorate voteg to leave the European Union). From a Group perspective this has increased raw material pricing and currency volatility which together with other economic measures will require continued focus to limit the impact to Glanbia's strategic growth objectives;

· Market risk - The overall impact on margins of movements in dairy pricing;

· Tax risk - while the impacts of the US tax reform legislation enacted on 22 December 2017 will continue to be considered in detail by the Group, it is possible that further legislative change in other jurisdictions may follow which will require careful monitoring by the Group's in-house tax team and external advisors to assess any potential impacts to Glanbia's tax strategy and investment decisions; and

· Customer concentration - while from a strategic perspective the Group aims to build strong customer relationships with major customers, it can expose Glanbia to credit exposure and other balance sheet risks. The Board and management will be focused on utilising available mitigation to limit such exposures in 2018 while recognising that they cannot be fully eliminated.

The Group's approach to financial risks, including currency risk, interest rate risk, liquidity and cash flow risk, price risk and credit risk is to centrally manage these risks against comprehensive policy guidelines, details of which are outlined further in the 2017 Annual Report.

Financial strategy

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

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

· Focusing the organisation on cash conversion through improved working capital management and disciplined business sustaining capital expenditure;

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

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

Investor relations

Glanbia continued its active investor relations initiatives in 2017. During the year, representatives from Glanbia presented at 18 investor conferences globally and held over 300 meetings with institutional investors. Glanbia is focused on ensuring that a broad geographic base of institutional investors is reached via its investor relations programme. To this end Glanbia senior management increased the level of investor meetings in the US and for the first time completed two investor road-shows in Asia covering five financial centres in the region. Finally, during 2017 Glanbia met with its largest institutional shareholders as well as key independent proxy advisors to get perspectives on the Group's Remuneration Policy. This was led by the Chairman of the Remuneration Committee with all stakeholders viewing this as a proactive approach by the Company in gathering external feedback on the Remuneration Policy.

Annual General Meeting (AGM)

Glanbia plc's AGM will be held on Wednesday, 25 April 2018, in the Lyrath Estate Hotel, Old Dublin Road, Kilkenny, Ireland.

Cautionary statement

This announcement contains forward-looking statements. These statements have been made by the Directors in good faith based on the information available to them up to the time of their approval of this report. Due to the inherent uncertainties, including both economic and business risk factors underlying such forward looking information, actual results may differ materially from those expressed or implied by these forward-looking statements. The Directors undertake no obligation to update any forward-looking statements contained in this announcement, whether as a result of new information, future events, or otherwise.

On behalf of the Board

Siobhán Talbot Mark Garvey

Group Managing Director Group Finance Director

21 February 2018

Results webcast and dial-in details

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

Ireland: 01 246 5621

UK / International: +44 330 336 9411

USA: +323 794 2093

The access code for all participants is: 3159858

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

For further information contact

Glanbia plc +353 56 777 2200

Investor contact:

Liam Hennigan, Head of Investor Relations: +353 86 046 8375

Media Contact:

Mark Garrett, Director of Communications & Public Affairs: +353 86 601 9655

Group Income Statement

for the financial year ended 30 December 2017

*As re-presented to reflect the impact of discontinued operations. See note 4 for further information.

Group Statement of Comprehensive Income

for the financial year ended 30 December 2017

*As re-presented to reflect the impact of discontinued operations. See note 4 for further information.

Group Balance Sheet

as at 30 December 2017

On behalf of the Board

H Corbally S Talbot M Garvey

Directors

Group Statement of Changes in Equity

for the financial year ended 30 December 2017

Group Statement of Changes in Equity continued

for the financial year ended 30 December 2017

Group Statement of Cash Flows

for the financial year ended 30 December 2017

Notes to the Financial Statements

for the financial year ended 30 December 2017

1. Basis of preparation

The financial information set out in this document does not constitute full statutory Financial Statements but has been derived from the Group Financial Statements for the year ended 30 December 2017 (referred to as the 2017 Financial Statements). The Group Financial Statements are prepared under EU adopted International Financial Reporting Standards (IFRS). The 2017 Financial Statements have been audited and have received an unqualified audit report. Amounts are stated in euro millions (€'m) unless otherwise stated. The financial information is prepared for a 52 week period ended on 30 December 2017. Comparatives are for the 52 week period ending on 31 December 2016. The balance sheets for 2017 and 2016 have been drawn up as at 30 December 2017 and 31 December 2016 respectively. After making enquiries, the Directors have reasonable expectation that the Group has adequate resources to continue operating for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Group Financial Statements.

The financial information has been prepared under the historical cost convention as modified by use of fair values for available for sale financial assets, share based payments, derivative financial instruments and retirement benefit obligations. The Group's accounting policies which will be included in the 2017 Financial Statements are broadly consistent with those as set out in the 2016 Financial Statements. The adaptation of new standards and interpretations (as set out in the 2016 Annual Report) that become effective for the Group's Financial Statements for the year ended 30 December 2017 did not have any significant impact on the Group Preliminary Full Year Results Statement.

Re-presentation

Certain comparative amounts in the balance sheet have been reclassified or re-presented, to achieve a more appropriate presentation. This includes the reclassification of lease incentives, the presentation of Interests in Associates and Interests in Joint Ventures as Equity accounted investees. Following the disposal of 60% of Dairy Ireland and related assets, and in accordance with the requirements of IFRS 5 'Non-current assets held for sale and discontinued operations', the results of Dairy Ireland to the date of disposal have been presented within profit from discontinued operations in the Group income statement with the prior year comparatives re-presented accordingly.

The Financial Statements were approved by the Board of Directors on 20 February 2018 and signed on its behalf by H Corbally, S Talbot, and M Garvey.

2. Segment information

On 2 July 2017 the Group completed the disposal of Dairy Ireland and related assets. The Group has treated these operations as discontinued operations in accordance with IFRS 5 'Non-current assets held for sale and discontinued operations' and details of the disposal are included in note 4. Following this change the structure of the internal reporting to the Chief Operating Decision Maker was reviewed as required by IFRS 8 'Operating segments'. As a result, the Group has revised its operating segments, and, comparative segment amounts for 2016 have been restated.

The Group, including its Joint Venture Glanbia Ireland, now reports across the following segments: Glanbia Performance Nutrition, Glanbia Nutritionals and Glanbia Ireland. These segments align with the Group's internal financial reporting system and the way in which the Chief Operating Decision Maker assesses performance and allocates the Group's resources. Each segment is reviewed in its totality by the Chief Operating Decision Maker. The Glanbia Operating Executive assesses the trading performance of operating segments based on a measure of earnings before interest, tax, amortisation and exceptional items (EBITA).

Each segment derives its revenue as follows; Glanbia Performance Nutrition earns its revenue from the manufacture and sale of performance nutrition products, Glanbia Nutritionals earns its revenue from the manufacture and sale of cheese, dairy and non-dairy nutritional ingredients, and Glanbia Ireland earns its revenue from the manufacture and sale of cheese and dairy ingredients, and the manufacture and sale of a range of consumer products and farm inputs. Glanbia Ireland is an Equity accounted investee and the amounts stated represent the Group's share. All other segments and unallocated include both the results of other Equity accounted investees who manufacture and sell cheese and dairy ingredients and unallocated corporate costs. These investees did not meet the quantitative thresholds for reportable segments in 2017 or 2016.

Amounts stated for Equity accounted investees represents the Group's share.

The segment results for continuing operations are as follows:

**Re-presented to reflect the realignment of operating segments

Included in external revenue are related party sales between Glanbia Nutritionals and Joint Ventures of €14.1 million (2016: €13.5 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.

Segment earnings before interest, tax, amortisation and exceptional items are reconciled to reported profit before tax and profit after tax for continuing operations as follows:

Other segment information (pre-exceptional) for continuing operations are as follows:

The segment assets and liabilities are as follows:

**Re-presented to reflect the realignment of operating segments.

Unallocated assets and liabilities comprise primarily taxation, cash and cash equivalents, borrowings, available for sale financial assets, derivatives, retirement benefit obligations and the carrying value of remaining Equity accounted investees.

Geographical information

The following represents a geographical analysis of the segment information in accordance with IFRS 8, which requires disclosure of information about the country of domicile (Republic of Ireland) and countries with material revenue and non-current assets. The analysis of revenue represents revenue from continuing operations.

*As re-presented to reflect the impact of discontinued operations. See note 4 for further information.

Revenue of approximately €312.5 million (2016: €332.5 million) is derived from a single external customer within the Glanbia Nutritionals segment.

The total of non-current assets, other than financial instruments and deferred tax assets, located in Ireland is €821.3 million (2016: €857.4 million) and located in other countries, mainly the US, is €849.3 million (2016: €920.6 million).

3. Exceptional items

The nature of the total exceptional operating (loss)/profit is as follows:

*As re-presented to reflect the impact of discontinued operations. See note 4 for further information.

The net cash inflow during the year in respect of exceptional charges was €177.5 million (2016: net cash outflow €19.4 million) of which a cash outflow of €9.9 million (2016: cash outflow of €9.1 million) was in respect of prior year exceptional charges.

(a) Intangible asset amortisation: Following a review of the useful life of capitalised development costs in respect of newly developed products across the Group, it was decided to reduce the estimate of the useful life from 6 to 3 years to reflect the dynamic environment for new product launches in their early development stage. The once-off additional amortisation from this change in estimate amounted to €19.4 million.

(b) Rationalisation costs in the current year relate mainly to redundancies arising from the elimination of certain positions following a Group-wide organisational review. This review is on-going to ensure that the structure is appropriate to support the future growth of the Group following the disposal of 60% of the Dairy Ireland segment and related assets ('Dairy Ireland'). Costs of €5.4 million include employee benefit expense of €3.9 million, professional fees of €1.1 million and other costs of €0.4 million. Rationalisation costs in 2016 primarily relate to the redundancy and rationalisation programme in the Dairy Ireland segment, now presented as discontinued operations (note 4). In 2016 costs of €3.0 million related to redundancy.

(c) Debt restructuring costs: Following the disposal of 60% of Dairy Ireland a review of existing debt facilities was undertaken to ensure they were appropriate for the revised Group structure. As a result the Group repaid $169.0 million of the $325.0 million private debt placement resulting in €14.0 million of once-off interest costs reflecting make-whole interest due to note holders arising on early settlement and €0.1 million of professional fees.

(d) On 22 December 2017 the Tax Cuts and Jobs Act was signed into law in the United States which reduced the federal corporate tax rate from 35% to 21%. As a result of the reduced federal corporate tax rate the Group recognised a deferred tax credit of €38.7 million within wholly owned subsidiaries and a deferred tax credit of €8.7 million within Equity accounted investees.

(e) On 2 July 2017 the Group completed the disposal of 60% of Dairy Ireland to Glanbia Co-operative Society Limited. The profit arising on disposal amounted to €83.3 million which was net of related costs of €13.0 million. These costs include impairment of tangible fixed assets of €8.1 million, professional fees of €3.6 million, Extraordinary General Meeting costs of €0.6 million, employee benefit expense of €0.5 million and other related costs of €0.2 million.

(f) Organisation redesign costs relate to the Glanbia Nutritionals programme, announced in 2015, to fundamentally reorganise the business and leverage future market opportunities. This was largely completed in 2016. In 2016 costs of €11.3 million include consultancy of €2.9 million, employee benefit expense of €5.0 million, of which redundancy was €1.4 million, travel and expenses of €1.7 million, impairment of development costs and product lines of €1.6 million and other costs of €0.1 million. There were no material organisation redesign related costs in 2017.

(g) Acquisition integration costs comprise costs relating to the integration, restructuring and redesign of route to market capabilities within acquired businesses in the Glanbia Performance Nutrition segment. This was completed in 2016. 2016 costs of €3.1 million include consultancy of €0.7 million, employee benefit expense comprising redundancy of €2.1 million and other costs of €0.3 million. There were no material acquisition related costs in 2017.

Please refer to the Glossary on page 34 for further information on exceptional items (non-IFRS information).

4. Discontinued operations

On 2 July 2017, the Group disposed of 60% of its shareholding in Dairy Ireland and related assets to Glanbia Co-operative Society Limited (the Society), its ultimate parent, creating a new joint venture, together with Glanbia Ingredients Ireland DAC, called Glanbia Ireland. Dairy Ireland is comprised of two business units, Glanbia Consumer Foods Ireland and Glanbia Agribusiness.

The disposal was approved by Society members at a Special General Meeting (SGM) on 18 May 2017 and by Group shareholders at an Extraordinary General Meeting (EGM) on 22 May 2017.

In consideration for the Society acquiring the 60% interest, Glanbia plc received €112.0 million and an amount of €96.8 million which equalled 100% of the net working capital in Dairy Ireland at completion.

The transaction is accounted for as a 100% disposal of Dairy Ireland in consideration for the cash payments outlined above and a 40% investment in Glanbia Ireland. Since 2 July 2017 the 40% investment in Glanbia Ireland is treated as a Joint Venture of the Group.

Results of discontinued operations

The following table details the results of discontinued operations included within the Group income statement:

The operating profit for discontinued operations pre-exceptional is stated after (charging)/crediting:

The aggregate payroll cost of employees in discontinued operations was:

The average number of employees in discontinued operations in 2017 was 1,070 (2016: 1,142).

The net cash flows of the Group's discontinued operations are as follows:

The following table details the effect of the disposal on the financial position of the Group:

The following table details the profit on disposal of discontinued operations before tax: