TIDMABF
RNS Number : 2697F
Associated British Foods PLC
23 April 2014
For release 23 April 2014
Associated British Foods plc announces its
interim results for the 24 weeks ended 1 March 2014
Associated British Foods delivers 10% growth in earnings per
share
Highlights
-- Group revenue down 2% to GBP6,206m
-- Adjusted operating profit up 1% at GBP497m *
-- Adjusted profit before tax up 4% at GBP468m *
-- Adjusted earnings per share up 10% at 45.8p *
-- Dividend per share up 4% to 9.70p
-- Net debt GBP827m after net capital investment of GBP328m
-- Operating profit up 2% to GBP463m, profit before tax up 6% at GBP434m
and basic earnings per share up 12% to 43.2p
George Weston, Chief Executive of Associated British Foods,
said:
"The group as a whole has delivered a very resilient operational
and financial result at a challenging time of transition for our
European sugar business."
* before amortisation of non-operating intangibles and profits less losses
on the disposal of non-current assets
All figures stated after amortisation of non-operating intangibles,
profits less losses on the disposal of non-current assets, and profits
less losses on the sale and closure of businesses are shown on the face
of the condensed consolidated income statement.
For further information please contact:
Associated British Foods:
Until 15.00 only
George Weston, Chief Executive
John Bason, Finance Director
Tel: 020 7638 9571
Chris Barrie/Eleni Menikou, Citigate Dewe Rogerson
Tel: 020 7638 9571
Jonathan Clare
Tel: 07770 321881
After 15.00
John Bason, Finance Director
Flic Howard-Allen, Head of External
Affairs
Tel: 020 7399 6500
Note to editors:
The results for the year ended 14 September 2013, and the
interim results for the 24 weeks ended 2 March 2013, have been
restated upon adoption of IAS19 Employee Benefits Revised. The
impact of this restatement on the income statement and segmental
analysis is summarised below:
24 weeks ended 2 March Year ended 14 September
2013 2013
restated previously restated previously
reported reported
Adjusted operating profit
(GBPm) 493 496 1,180 1,185
Adjusted profit before
tax (GBPm) 448 452 1,088 1,096
Adjusted earnings (GBPm) 328 331 775 781
Adjusted earnings per
share (p) 41.5 41.9 98.1 98.9
Segmental analysis
Adjusted operating profit:
Grocery (GBPm) 96 97 230 232
Sugar (GBPm) 162 163 434 435
Retail (GBPm) 237 238 513 514
Central (GBPm) (24) (24) (51) (50)
These adjustments only affect the United Kingdom geographic
segment.
ASSOCIATED BRITISH FOODS plc
INTERIM RESULTS ANNOUNCEMENT
FOR THE 24 WEEKS ENDED 1 MARCH 2014
CHAIRMAN'S STATEMENT
I am pleased to report interim results for the group that
deliver adjusted earnings growth of 10% in the face of a
strengthening of sterling and much lower sugar prices. This was
achieved with the benefit of strong performances from Primark and
Grocery, an encouraging improvement at Ingredients and a lower
interest charge which was, in large part, due to the group's strong
cash flow.
Revenue in the first half fell by 2% and adjusted operating
profit increased by 1%. Revenue in our food businesses was lower
than last year primarily because of food commodity deflation,
particularly sugar. At constant currency, revenues were 1% ahead of
last year and first half profits, when further adjusted for
businesses disposed, were 3% higher. Sterling was stronger than
most of our major currencies in the first half and strengthened
markedly towards the end of the period. If these rates persist, the
translation impact on full year profits would be in the order of
GBP50m.
Net financing costs in the period were GBP14m lower than last
year's first half, resulting from a reduced level of net borrowings
and the repayment, last July, of British Sugar's GBP150m 10 3/4 %
debenture. The underlying tax rate of 23.5% is below the 25.7%
applied to first half profits last year, reflecting the lower UK
corporation tax rate applicable in the current year and a higher
proportion of profit earned in territories with lower rates.
Adjusted earnings were 10% ahead at 45.8p per share.
AB Sugar has been severely affected this year by the decline in
sugar prices. The impact in the EU is exacerbated by an
intensification of competition ahead of quota abolition in 2017. In
this environment, AB Sugar's continued drive for efficiency
improvement from the sharing of best practice around the group is
all the more important. This programme is now well embedded and has
delivered benefits in the period. Our sugar operations are well
invested with highly efficient and cost-competitive plants, and in
Europe are well placed to succeed in the post-reform
environment.
Primark delivered an operating profit 26% ahead of the same
period last year, with an increased margin. Another 0.6 million sq
ft of retail selling space was added including our first two stores
in France, in Marseille and Dijon. Primark has an active schedule
of store openings planned for the second half, and the pipeline of
new stores for the future is as full as it has ever been. We have
also announced today that we will be taking Primark to the
north-east of the USA with the opening of a number of stores, the
first of which we expect to begin trading towards the end of
2015.
In the immediate aftermath of last year's collapse of Rana Plaza
in Bangladesh, Primark promised that it would meet its
responsibilities in full and that it would pay long-term
compensation to the workers employed by its supplier, New Wave
Bottoms, or their dependants. Primark has worked diligently with
local partners in Bangladesh to establish a rigorous, sustainable
approach to compensation and has begun making long-term payments
totalling US$9m. Primark also paid US$2m in short-term aid to the
families of all the workers employed at Rana Plaza, most of whom
were making clothes for its competitors. It has agreed a further
payment of US$1m to the Rana Plaza Donors Trust Fund (Trust Fund)
chaired by the International Labour Organization bringing the total
that Primark is paying to US$12m, of which US$7m was provided in
last year's results and US$5m has been charged in the year to date.
We support the International Labour Organization in urging other
retailers sourcing from Rana Plaza to donate to the Trust Fund so
that it can pay out in full to the remaining victims.
The safety of the staff we employ both directly, and indirectly
through our suppliers, is a high priority for the group, and the
Rana Plaza tragedy underlined the imperative for change in the
Bangladeshi garment industry. Primark signed the Accord on Fire and
Building Safety which was developed as a direct response to the
disaster and was designed to ensure improved and assured building
safety in Bangladesh. We have also completed a programme of
structural assessments of factories producing for us in the
country.
The recovery in Grocery profit seen in the second half of last
year has continued with a substantial improvement from George
Weston Foods in Australia and a higher profit from ACH. Twinings
Ovaltine has consistently delivered sales and profit growth over a
number of years, and has done so again this period.
Our cash flow improved for the third successive year. The cash
outflow before funding in the first half had the benefit of a
substantially lower working capital outflow. Capital expenditure
was in line with last year although the total amount spent on new
stores and extensions for Primark was more than a third higher,
with an equivalent reduction in expenditure by the food businesses.
This strong cash performance and a translation benefit on US dollar
borrowings reduced net debt by GBP510m from last half year to
GBP827m at the period end.
On 5 March we repaid US$196m of private placement financing,
with an average coupon of 6.75%, which will reduce our interest
charge further. There is no immediate need to replace this
financing as the headroom between the group's borrowing facilities
and projected levels of net debt is sufficient to meet the ongoing
needs of the business.
Dividends
The board has declared an interim dividend of 9.70p per share,
an increase of 4% on last year. The dividend will be paid on 4 July
2014 to shareholders registered at the close of business on 6 June
2014.
Outlook
Lower sugar prices will result, as previously indicated, in a
substantial reduction in profit from Sugar this year and the
current strength of sterling, if maintained, will have a greater
impact on translation of overseas results in the second half.
However, as Primark builds upon the success achieved in the first
half and with further store expansion planned for the remainder of
the year, Retail profits are expected to be well ahead. When
combined with improvements in Grocery and Ingredients and a lower
interest charge, we continue to expect adjusted earnings per share
for the financial year to be similar to 2013.
Charles Sinclair
Chairman
23 April 2014
OPERATING REVIEW
Adjusted operating profit increased by 1% to GBP497m in the
first half, on group revenues that were 2% lower than last year at
GBP6.2bn. At constant currency, first half profits were 2% ahead
and when further adjusted for businesses disposed of last year,
were 3% higher. Revenues from continuing operations at constant
currency were 1% ahead.
Strong performances from Primark and Grocery and an encouraging
improvement at Ingredients more than offset a substantially lower
profit from Sugar. Together with the benefit of lower interest and
tax charges, adjusted earnings per share increased by 10%. At a
challenging time of transition for our European sugar business, the
rest of the group has clearly delivered a very strong operational
and financial performance.
At AB Sugar, agricultural performance was much improved, many
factories achieved record results and cost savings were
successfully delivered by a continuous improvement and overhead
reduction programme. The profit reduction was driven by low world
sugar prices and a rapid change in the EU sugar market ahead of
regime reform in 2017. Our EU sugar operations are well placed to
succeed in the post-reform environment with highly efficient and
well-invested factories. Africa continues to offer low-cost
production and growth opportunities, and profitability in China
will improve as our investment in agricultural development yields
sustainable benefit.
Primark delivered on many fronts this period. Trading
performance was again excellent with like-for-like growth of 4%,
building on the 7% achieved in the first half last year, and with a
higher operating profit margin. We opened 16 new stores and each
was greeted with a high degree of excitement. The success of our
stores across continental Europe is now well established and has
extended to our first stores in France. From its first store
opening in Spain in 2006, Primark has demonstrated that its concept
can travel and we have now announced that we will be opening stores
in the north-east of the USA later next year.
Grocery benefited from much-improved profitability at George
Weston Foods in Australia and a stronger performance from the oils
business at ACH in North America. Twinings Ovaltine achieved
further growth but profit from the UK Grocery businesses was held
back by lower sugar prices and volumes at Silver Spoon. With the
benefit of no restructuring costs and an improved performance from
yeast and bakery ingredients, profit at Ingredients rallied and,
whilst there is still a long way to go to restore margins in this
business to acceptable levels, good progress is being made.
The results of the prior year have been restated to reflect the
adoption of the revised IAS 19 Employee Benefits. This had the
effect of reducing the 2013 half year adjusted operating profit and
adjusted earnings per share by GBP3m and 0.4p respectively.
SUGAR
2014 2013
Revenue GBPm 1,027 1,323
------ ------
Operating profit GBPm 64 162
------ ------
Sugar revenues in the first half were 22% below last year driven
by substantially lower sugar prices and by lower volumes in all
markets. As a consequence, operating profit in the first half was
significantly reduced, even with the benefit of the non-repeat of
last year's GBP22m charge for the mothballing of our two smallest
beet sugar factories in north China.
Favourable growing conditions through the mild winter in the UK
resulted in the crop continuing to grow into the new calendar year,
with good beet quality and high sugar content. All factories
operated very well and sugar production is estimated to be 1.32
million tonnes, a record for the period since regime reform in
2006, and compares with last year's 1.15 million tonnes. Production
volumes at the Vivergo bioethanol plant in Hull have increased
steadily but profitability was adversely affected by lower ethanol
prices.
In Spain, the northern campaign was delayed to maximise beet
development from the reduced area under cultivation in the 2013
crop year. Although the campaign commenced well, adverse weather
towards the end of the period resulted in challenging harvest
conditions and an interrupted campaign at our La Beñeza factory.
The crop in the south is well established and growing conditions
have been excellent. Production in the south is expected to be
almost double that of last year, which will help to mitigate the
lower volumes in the north, and we expect to produce 330,000 tonnes
of beet sugar, compared with 405,000 tonnes last year. The
Guadalete refinery is expected to produce 200,000 tonnes of refined
cane sugar and a further 64,000 tonnes of co-refined cane sugar
will be produced at the northern beet plants.
Sugar production for the Illovo season ended March 2014
increased from 1.75 million tonnes last year to 1.84 million tonnes
this year. However, revenues and profits in the first half were
below last year primarily due to lower prices. Domestic prices in
Tanzania and South Africa were affected in particular by low-cost
imports. Our business in Malawi has continued to be affected by
further devaluation of the kwacha and associated high inflation in
the country. In recent years Illovo has invested in the development
of value-added co-products, the most recent example being the new
Tanzanian distillery for potable alcohol which has consistently
achieved its designed throughput levels with excellent product
quality throughout the period.
All five factories in south China had good campaigns with sugar
content and extraction both ahead of last year, compensating for
the smaller area under cultivation. Sugar production in the south
is expected to be slightly ahead of last year at 526,000 tonnes.
Production in the north was seriously reduced by flooding in
Heilongjiang and, with fewer factories in operation following last
year's rationalisation, volumes are expected to be 116,000 tonnes.
The campaigns at Qianqi and Zhangbei were both excellent with good
factory throughput and higher sugar content in the beet. This year
has seen a further deterioration in sugar prices as a high level of
imports have left the market heavily in surplus. Significant
overhead and efficiency improvements have been achieved in both
regions resulting in a net improvement in the underlying operating
loss.
Lower EU sales volumes and prices are expected to persist
throughout the second half although, encouragingly, world sugar
prices have shown some improvement recently. Sugar profits in the
second half will be substantially lower than last year as a
result.
Agriculture
2014 2013
Revenue GBPm 625 641
----- -----
Operating profit GBPm 19 20
----- -----
Revenue and operating profit in the first half were similar to
last year at both constant currency and actual rates. Lower UK feed
revenues were partly offset by growth in China and a strong
performance at AB Vista.
Sales revenues in our UK feed business, AB Connect, were lower
than last year as commodity prices eased. Pig and poultry feed saw
some import price pressure and ruminant feed was in strong demand
despite a plentiful supply of forage. Lower raw material prices
also led to a reduction in revenue for Premier Nutrition despite
premix volumes being ahead of last year. Starter feed volumes were
also higher, driven by further growth in exports. Investment was
made in new capacity at our highly automated production facility at
Rugeley.
AB Vista delivered good sales and profit growth in the period
driven by further success for Quantum Blue in South America, Asia
Pacific and particularly in North America. Having recently received
EU approval, Quantum Blue is now licensed for sale in all of our
major markets. Successful commissioning of the feed enzyme
granulation line at the extrusion plant in Evansville, Indiana, was
completed in the period, providing a platform for future
growth.
Frontier benefited from strong demand for seed and crop inputs.
Winter wheat plantings were substantially ahead of last year and
fine conditions in the autumn of 2013 enabled cereals and winter
oilseed rape to become well established. However, the grain trading
market was challenging in 2013, following the smallest UK wheat
crop in many years, with demand being met by higher imports.
In China, although the traditional market for pigs saw some
improvement, consumer concerns over food safety resulted in a
softening of demand for poultry. Revenues and profit from feed
sales were ahead of last year but profit was held back by a smaller
sugar beet crop. Meat production in China is modernising from
traditionally small, family-run concerns to large-scale commercial
operations, and construction of new feed mills at Rudong and
Zhenlai to supply these large integrated meat processors has
progressed well.
GROCERY
2014 2013
Revenue GBPm 1,767 1,832
------ ------
Operating profit GBPm 126 96
------ ------
Grocery revenue in the first half was 2% ahead of last year at
constant currency, but 4% below last year at actual exchange rates.
Currency movements had little net effect on adjusted operating
profit which was much improved at GBP126m, 31% ahead of last year.
The primary drivers of this profit improvement were George Weston
Foods in Australia where good progress has been made, particularly
in milling and baking, and at ACH Foods in the US.
Twinings Ovaltine again performed well with strong sales growth
for tea, particularly in the US where teabags and K-Cups both
achieved double-digit growth. We are the leading tea brand in the
fast-growing K-Cup dispenser format. Further growth was driven in
the UK, by green teas and infusions, and in France where we
relaunched English Breakfast. Further investment was made in
high-speed tea packaging equipment at Andover and we have also
completed construction of a new packaging plant for Ovaltine in
Nigeria which will enhance our ability to service this important
developing market.
Allied Bakeries made progress in the highly competitive UK bread
market with volumes and margins both ahead of last year. The
Kingsmill 50/50 range continued to be the main stimulus of growth,
although the much smaller Allinson brand also achieved significant
gains, both brands being supported by television advertising in the
period. A new bread plant was commissioned at West Bromwich as we
approach the end of a major capital investment programme in our UK
bakeries. This programme delivers less waste, better control of our
processes, consistently high-quality bread and lower energy
usage.
Jordans and Ryvita both achieved further sales growth and gained
market share in their core markets. Ryvita Thins were the principal
driver of the increase in the UK, buoyed by the new varieties
launched last year, and production has been successfully
transferred from a third party to our newly commissioned line in
Poole. Jordans Country Crisp and Granola, which was relaunched in
resealable packaging, also performed well. Internationally, both
brands achieved strong growth with targeted marketing and good
distribution gains, particularly in France and Canada. Westmill
grew volumes in the ethnic wholesale market with further share
gains for Lucky Boat noodles and Elephant Atta chapatti flour,
while Patak's performed well for AB World Foods, both in the UK and
internationally. Revenue at Silver Spoon was well below last year
as a result of lost contracts and considerably lower UK sugar
pricing. The impact on profit was partially mitigated by overhead
cost reduction. New products resulted in further gains for Truvia,
the stevia-based zero-calorie sweetener, strengthening its position
as market leader in the category.
Sales at George Weston Foods in Australia were ahead of last
year in local currency, driven by higher bread prices and increased
meat volumes. Don KRC secured a number of incremental sales
contracts with major customers, recognising our improved service
levels and consistent product quality. Both businesses made
progress with cost reduction, and an improved product mix further
contributed to an increased baking profit. Don KRC achieved further
productivity improvements which contributed to better yields at its
factory in Castlemaine, and labour cost initiatives also delivered
favourable results.
Sales volumes at ACH were ahead of last year, largely the result
of higher corn oil demand but also with the launch of a number of
new baking products, and new seasonings and flavours within the
Spice Islands range. Capullo, our premium oil brand in Mexico,
continued to benefit from its successful relaunch and gained both
volume and market share. Profit in both the US and Mexico improved
with the benefit of lower input costs.
INGREDIENTS
Continuing operations 2014 2013
Revenue GBPm 509 527
----- -----
Operating profit GBPm 15 -
----- -----
Revenue in the first half from continuing operations was 4%
ahead of last year at constant currency but 3% lower at actual
exchange rates. Profit from continuing operations was well ahead of
last year's break-even result, and would have been GBP3m higher but
for exchange rate movements, notably in South America. The result
benefited from the absence of the one-time cost of closing dry
yeast production in Italy last year, and there were early signs of
improvement in yeast and bakery ingredients. Last year's results
have been adjusted to reflect the disposal in August 2013 of the US
whey protein business.
While many of AB Mauri's markets remain competitive,
particularly Asia, a number of new initiatives have started to
yield positive results. Good revenue growth was achieved across
South America and cost inflation was either recovered through
pricing or offset by improvements in efficiency. Revenue and profit
were also ahead in North America driven by higher volumes and a
focus on business development. The new yeast factory in Mexico is
supplying the markets of North and Central America. Our yeast
factory at Xinjiang in China is now one of the highest-quality dry
yeast plants in AB Mauri and, as a result of further efficiency
initiatives, amongst the lowest cost.
On 31 January 2014 AB Mauri completed the acquisition of a small
bakery ingredients business operating across Western Europe which
offers craft and industrial customers a range of high-quality
bakery ingredients. Its integration will broaden our product range
and strengthen our presence in a number of key markets.
At ABF Ingredients, growth was achieved in bakery enzymes and
the development of feed enzymes, in conjunction with AB Vista, was
very positive and saw strong customer demand. The new extrusion
factory at Evansville, Indiana, in the US, is fully operational and
products have been approved by key customers. Closure of the yeast
extracts plant in China was completed with a number of contracts
successfully transferred to our Hamburg facility where plant
reliability has also been improved.
RETAIL
2014 2013
Revenue GBPm 2,278 1,997
------ ------
Operating profit GBPm 298 237
------ ------
Primark's sales in the first half were 14% ahead of last year
and profits were 26% ahead; an excellent performance by any
standard.
At constant currency, sales were 13% higher, driven by 4%
like-for-like sales growth, an increase in retail selling space and
superior sales densities in the larger new stores. Like-for-like
sales in the first eight weeks of the financial year were held back
by strong comparatives in the previous year but the rest of the
period, including Christmas, saw excellent trading. Spain and
Portugal achieved double-digit like-for-like growth and trading in
our northern continental European stores in Germany, the
Netherlands, Belgium and Austria, was very strong. In December we
opened our first French store in Marseille which was closely
followed by Dijon in February, and early trading from both has been
very encouraging.
Operating profit margin of 13.1% was higher than in the same
period last year, benefiting from warehouse and distribution
efficiencies and lower freight rates.
This was an active period for new store openings. Retail selling
space increased by 0.6 million sq ft since the last financial year
end, and by 0.7 million sq ft, or 8%, since the 2013 half year. At
1 March 2014, we were trading from 269 stores and 9.6 million sq ft
of selling space. We opened 16 new stores in the period including
the two stores in France with 63,000 sq ft in Marseille and 44,000
sq ft in Dijon. In Spain we opened six new stores and closed the
smaller of our two stores in La Coruña and Zaragoza, bringing the
total there to 39. Three further stores were added in the UK,
including Crawley where we relocated to a larger site, and we also
closed our small store in Leytonstone. Two new stores were added in
the Netherlands and one each in Germany, Austria and Portugal.
We expect to add a further 0.5 million sq ft of selling space in
this financial year, bringing the net additions for the year to 1.1
million sq ft which is substantially more than the 0.8 million
achieved in 2013. The additional stores will include a further
three in France, located in shopping centres in the suburbs of
Paris, two of which opened in recent weeks; two additional German
stores, our second in Berlin and one in Cologne; three new UK
stores including a relocation in Cardiff; and we will also relocate
our Plenilunio store, our first in Spain, to a location twice its
size. As we opened no stores in the second half of last year, these
openings will accelerate the 8% selling space growth achieved in
the first half.
To support the rapid expansion of selling space in continental
Europe, work is under way to increase our warehouse capacity in
Germany and Spain which we expect to complete by the end of this
year. Capital expenditure on new stores and refits for the full
year is planned to be ahead of last year.
Looking beyond this current financial year we have a good
pipeline of new stores. We announced today that, after extensive
research, we have decided to take the Primark concept to consumers
in the north-east of the USA. Primark has signed a lease for some
70,000 sq ft of selling space in the historic Burnham Building,
which is currently being renovated, at Downtown Crossing in the
heart of Boston, Massachusetts. The site was previously home to
Boston's famous Filene's Department Store and is planned to open as
a new Primark store towards the end of 2015. Negotiations are under
way to open further stores in the north-east through to the middle
of 2016. The US stores will be supported by warehousing in the
region.
George Weston
Chief Executive
CONDENSED CONSOLIDATED INCOME STATEMENT
52 weeks
24 weeks
ended ended
24 weeks
ended 2 March 14 September
1 March 2013 2013
2014 (restated) (restated)
GBPm GBPm GBPm
Continuing operations Note
------------------------------------------ ---- -------- ----------- --------------
Revenue 1 6,206 6,333 13,315
Operating costs (5,743) (5,882) (12,240)
463 451 1,075
Share of (loss)/profit after tax from
joint ventures and associates (1) 5 13
Profits less losses on disposal of
non-current assets 1 - -
------------------------------------------ ---- -------- ----------- --------------
Operating profit 463 456 1,088
Adjusted operating profit 1 497 493 1,180
Profits less losses on disposal of
non-current assets 1 - -
Amortisation of non-operating intangibles (35) (37) (92)
------------------------------------------ ---- -------- ----------- --------------
Profits less losses on sale and closure
of businesses - - (128)
------------------------------------------ ----
Profit before interest 463 456 960
Finance income 9 6 13
Finance expense (38) (49) (100)
Other financial expense - (2) (5)
------------------------------------------ ---- -------- ----------- --------------
Profit before taxation 434 411 868
Adjusted profit before taxation 468 448 1,088
Profits less losses on disposal of
non-current assets 1 - -
Amortisation of non-operating intangibles (35) (37) (92)
Profits less losses on sale and closure
of businesses - - (128)
------------------------------------------ ---- -------- ----------- --------------
Taxation - UK (49) (55) (111)
- Overseas (51) (50) (129)
2 (100) (105) (240)
------------------------------------------ ---- -------- ----------- --------------
Profit for the period 334 306 628
========================================== ==== ======== =========== ==============
Attributable to:
Equity shareholders 341 304 585
Non-controlling interests (7) 2 43
------------------------------------------ ---- -------- ----------- --------------
Profit for the period 334 306 628
========================================== ==== ======== =========== ==============
Basic and diluted earnings per ordinary
share (pence) 3 43.2 38.5 74.0
Dividends per share paid and proposed
for the period (pence) 4 9.7 9.35 32.0
References throughout this Interim Results Announcement to the
restatement of data for the 24 weeks ended 2 March 2013 and the 52
weeks ended 14 September 2013 relate to the adoption of revised
IAS19 Employee Benefits - see note 9.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
24 weeks 24 weeks 52 weeks
ended ended ended
1 March 2 March 14 September
2014 2013 2013
(restated) (restated)
GBPm GBPm GBPm
Profit for the period recognised in the
income statement 334 306 628
Other comprehensive income
Actuarial (losses)/gains on defined benefit
schemes (56) (114) 33
Deferred tax associated with defined benefit
schemes 12 27 (7)
---------------------------------------------- ---------- ---------- ------------
Items that will not be reclassified to
profit or loss (44) (87) 26
Effect of movements in foreign exchange (292) 247 (114)
Net gain/(loss) on hedge of net investment
in foreign subsidiaries 38 (57) (20)
Deferred tax associated with movements
in foreign exchange - 1 2
Reclassification adjustment for movements
in foreign exchange on subsidiaries disposed - - 7
Movement in cash flow hedging position (7) 24 6
Deferred tax associated with movement
in cash flow hedging position 2 (5) (2)
Share of other comprehensive income of
joint ventures and associates (7) 2 -
---------------------------------------------- ---------- ---------- ------------
Items that are or may be subsequently
reclassified to profit or loss (266) 212 (121)
Other comprehensive income for the period (310) 125 (95)
---------------------------------------------- ---------- ---------- ------------
Total comprehensive income for the period 24 431 533
---------------------------------------------- ---------- ---------- ------------
Attributable to
Equity shareholders 80 439 527
Non-controlling interests (56) (8) 6
---------------------------------------------- ---------- ---------- ------------
Total comprehensive income for the period 24 431 533
---------------------------------------------- ---------- ---------- ------------
CONDENSED CONSOLIDATED BALANCE SHEET
1 March 2 March 14 September
2014 2013 2013
(restated) (restated)
GBPm GBPm GBPm
Non-current assets
Intangible assets 1,484 1,771 1,581
Property, plant and equipment 4,506 4,779 4,552
Biological assets 88 92 97
Investments in joint ventures 179 184 182
Investments in associates 34 39 36
Employee benefits assets 25 3 81
Deferred tax assets 218 203 273
Other receivables 163 154 148
-------- ----------- -------------
Total non-current assets 6,697 7,225 6,950
-------- ----------- -------------
Current assets
Inventories 1,650 1,795 1,581
Biological assets 98 115 112
Trade and other receivables 1,259 1,403 1,342
Derivative assets 31 40 27
Cash and cash equivalents 311 218 362
-------- ----------- -------------
Total current assets 3,349 3,571 3,424
-------- ----------- -------------
TOTAL ASSETS 10,046 10,796 10,374
-------- ----------- -------------
Current liabilities
Loans and overdrafts (539) (601) (394)
Trade and other payables (1,806) (1,923) (1,881)
Derivative liabilities (51) (31) (38)
Income tax (164) (132) (166)
Provisions (36) (63) (47)
-------- ----------- -------------
Total current liabilities (2,596) (2,750) (2,526)
-------- ----------- -------------
Non-current liabilities
Loans (599) (954) (772)
Provisions (29) (29) (30)
Deferred tax liabilities (363) (361) (431)
Employee benefits liabilities (97) (191) (96)
-------- ----------- -------------
Total non-current liabilities (1,088) (1,535) (1,329)
-------- ----------- -------------
TOTAL LIABILITIES (3,684) (4,285) (3,855)
-------- ----------- -------------
NET ASSETS 6,362 6,511 6,519
-------- ----------- -------------
Equity
Issued capital 45 45 45
Other reserves 175 175 175
Translation reserve 234 732 440
Hedging reserve (18) 2 (13)
Retained earnings 5,626 5,189 5,508
-------- ----------- -------------
TOTAL EQUITY ATTRIBUTABLE TO
EQUITY SHAREHOLDERS 6,062 6,143 6,155
Non-controlling interests 300 368 364
-------- ----------- -------------
TOTAL EQUITY 6,362 6,511 6,519
-------- ----------- -------------
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
24 weeks 24 weeks 52 weeks
ended ended ended
1 March 2 March 14 September
2014 2013 2013
(restated) (restated)
Note GBPm GBPm GBPm
Cash flow from operating activities
Profit before taxation 434 411 868
Profits less losses on disposal of non-current
assets (1) - -
Profits less losses on sale and closure
of businesses - - 128
Finance income (9) (6) (13)
Finance expense 38 49 100
Other financial expense - 2 5
Share of profit/(loss) after tax from
joint ventures and associates 1 (5) (13)
Amortisation 46 54 130
Depreciation 187 197 405
Impairment of property, plant and equipment - 8 27
Impairment of operating intangibles - 4 4
Impairment of goodwill - 10 10
Net change in the fair value of biological
assets (10) (21) (26)
Share-based payment expense 6 6 15
Pension costs less contributions 3 1 (24)
Increase in inventories (126) (239) (112)
Decrease/(increase) in receivables 36 (128) (158)
Increase in payables 9 116 173
Purchases less sales of current biological
assets - - (2)
(Decrease)/increase in provisions (9) - 11
----------------------------------------------- ---- ---------- ---------- ------------
Cash generated from operations 605 459 1,528
Income taxes paid (97) (109) (252)
----------------------------------------------- ---- ---------- ---------- ------------
Net cash from operating activities 508 350 1,276
----------------------------------------------- ---- ----------
Cash flows from investing activities
Dividends received from joint ventures
and associates 3 4 11
Purchase of property, plant and equipment (321) (323) (593)
Purchase of intangibles (18) (12) (22)
Purchase of non-current biological assets - (1) (1)
Sale of property, plant and equipment 11 1 15
Purchase of subsidiaries, joint ventures
and associates (7) (43) (75)
Sale of subsidiaries, joint ventures
and associates - 13 35
Loans to joint ventures (15) (4) (4)
Purchase of non-controlling interests - (1) (1)
Interest received 6 5 10
----------------------------------------------- ----
Net cash from investing activities (341) (361) (625)
----------------------------------------------- ---- ---------- ---------- ------------
Cash flows from financing activities
Dividends paid to non-controlling interests (8) (11) (29)
Dividends paid to equity shareholders 4 (179) (158) (232)
Interest paid (33) (39) (107)
Financing:
Increase/(decrease) in short-term loans 68 86 (258)
Decrease in long-term loans (11) (12) (23)
Sale of shares in subsidiary undertakings
to non-controlling interests - - 1
Movements from changes in own shares
held - - (10)
Net cash from financing activities (163) (134) (658)
----------------------------------------------- ---- ---------- ---------- ------------
Net increase/(decrease) in cash and cash
equivalents 4 (145) (7)
Cash and cash equivalents at the beginning
of the period 243 245 245
Effect of movements in foreign exchange (15) 10 5
----------------------------------------------- ---- ---------- ---------- ------------
Cash and cash equivalents at the end
of the period 6 232 110 243
=============================================== ==== ========== ========== ============
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity shareholders
Issued Other Translation Hedging Retained Non-controlling Total
Note capital reserves reserve reserve earnings Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance as at 14
September
2013 (restated) 45 175 440 (13) 5,508 6,155 364 6,519
Total
comprehensive
income
Profit for the
period
recognised
in the income
statement - - - - 341 341 (7) 334
Actuarial losses
on defined
benefit schemes - - - - (55) (55) (1) (56)
Deferred tax
associated with
defined benefit
schemes - - - - 12 12 - 12
------------------ ----- -------- --------- ------------ -------- --------- ------- ---------------- --------
Items that will
not be
reclassified
to profit or
loss - - - - (43) (43) (1) (44)
Effect of
movements in
foreign
exchange - - (244) - - (244) (48) (292)
Net gain on hedge
of net
investment in
foreign
subsidiaries - - 38 - - 38 - 38
Movement in cash
flow hedging
position - - - (7) - (7) - (7)
Deferred tax
associated with
movement in cash
flow hedging
position - - - 2 - 2 - 2
Share of other
comprehensive
income of joint
ventures
and associates - - - - (7) (7) - (7)
------------------ ----- -------- --------- ------------ -------- --------- ------- ---------------- --------
Items that are or
may be
subsequently
reclassified
to profit or
loss - - (206) (5) (7) (218) (48) (266)
Other
comprehensive
income - - (206) (5) (50) (261) (49) (310)
------------------ ----- -------- --------- ------------ -------- --------- ------- ---------------- --------
Total
comprehensive
income - - (206) (5) 291 80 (56) 24
Transactions with
owners
Dividends paid to
equity
shareholders 4 - - - - (179) (179) - (179)
Net movement in
own shares
held - - - - 6 6 - 6
Dividends paid to
non-controlling
interests - - - - - - (8) (8)
Total
transactions
with owners - - - - (173) (173) (8) (181)
------------------ ----- -------- --------- ------------ -------- --------- ------- ---------------- --------
Balance as at 1
March 2014 45 175 234 (18) 5,626 6,062 300 6,362
------------------ ----- -------- --------- ------------ -------- --------- ------- ---------------- --------
Balance as at 15
September
2012 (restated) 45 175 532 (17) 5,120 5,855 387 6,242
Total
comprehensive
income
Profit for the
period
recognised
in the income
statement
(restated) - - - - 304 304 2 306
Actuarial losses
on defined
benefit schemes
(restated) - - - - (114) (114) - (114)
Deferred tax
associated with
defined benefit
schemes
(restated) - - - - 27 27 - 27
Items that will
not be
reclassified
to profit or
loss - - - - (87) (87) - (87)
Effect of
movements in
foreign
exchange - - 250 - - 250 (3) 247
Net loss on hedge
of net
investment in
foreign
subsidiaries - - (50) - - (50) (7) (57)
Deferred tax
associated with
movements in
foreign exchange - - - - 1 1 - 1
Movement in cash
flow hedging
position - - - 24 - 24 - 24
Deferred tax
associated with
movement in cash
flow hedging
position - - - (5) - (5) - (5)
Share of other
comprehensive
income of joint
ventures
and associates - - - - 2 2 - 2
------------------ ----- -------- --------- ------------ -------- --------- ------- ---------------- --------
Items that are or
may be
subsequently
reclassified
to profit or
loss - - 200 19 3 222 (10) 212
Other
comprehensive
income - - 200 19 (84) 135 (10) 125
------------------ ----- -------- --------- ------------ -------- --------- ------- ---------------- --------
Total
comprehensive
income - - 200 19 220 439 (8) 431
Transactions with
owners
Dividends paid to
equity
shareholders 4 - - - - (158) (158) - (158)
Net movement in
own shares
held - - - - 7 7 - 7
Dividends paid to
non-controlling
interests - - - - - - (11) (11)
Total
transactions
with owners - - - - (151) (151) (11) (162)
------------------ ----- -------- --------- ------------ -------- --------- ------- ---------------- --------
Balance as at 2
March 2013 45 175 732 2 5,189 6,143 368 6,511
------------------ ----- -------- --------- ------------ -------- --------- ------- ---------------- --------
Balance as at 15
September
2012 (restated) 45 175 532 (17) 5,120 5,855 387 6,242
Total
comprehensive
income
Profit for the
period
recognised
in the income
statement
(restated) - - - - 585 585 43 628
Actuarial
gains/(losses)
on defined
benefit schemes
(restated) - - - - 35 35 (2) 33
Deferred tax
associated with
defined benefit
schemes
(restated) - - - - (7) (7) - (7)
Items that will
not be
reclassified
to profit or
loss - - - - 28 28 (2) 26
Effect of
movements in
foreign
exchange - - (86) - - (86) (28) (114)
Net loss on hedge
of net
investment in
foreign
subsidiaries - - (13) - - (13) (7) (20)
Deferred tax
associated with
movements in
foreign exchange - - - - 2 2 - 2
Reclassification
adjustment
for movements in
foreign
exchange on
subsidiaries
disposed - - 7 - - 7 - 7
Movement in cash
flow hedging
position - - - 6 - 6 - 6
Deferred tax
associated with
movement in cash
flow hedging
position - - - (2) - (2) - (2)
------------------ ----- -------- --------- ------------ -------- --------- ------- ---------------- --------
Items that are or
may be
subsequently
reclassified
to profit or
loss - - (92) 4 2 (86) (35) (121)
Other
comprehensive
income - - (92) 4 30 (58) (37) (95)
------------------ ----- -------- --------- ------------ -------- --------- ------- ---------------- --------
Total
comprehensive
income - - (92) 4 615 527 6 533
Transactions with
owners
Dividends paid to
equity
shareholders 4 - - - - (232) (232) - (232)
Net movement in
own shares
held - - - - 5 5 - 5
Dividends paid to
non-controlling
interests - - - - - - (29) (29)
Total
transactions
with owners - - - - (227) (227) (29) (256)
------------------ ----- -------- --------- ------------ -------- --------- ------- ---------------- --------
Balance as at 14
September
2013 45 175 440 (13) 5,508 6,155 364 6,519
------------------ ----- -------- --------- ------------ -------- --------- ------- ---------------- --------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1. Operating segments
The group discloses five operating segments, as described below. These
are the group's operating divisions, based on the group's management
and internal reporting structure, which combine businesses with common
characteristics. The board is the chief operating decision maker.
Inter-segment pricing is determined on an arm's length basis. Segment
result is adjusted operating profit, as shown on the face of the consolidated
income statement. Segment assets comprise all non-current assets except
employee benefits assets and deferred tax assets, and all current assets
except cash and cash equivalents. Segment liabilities comprise trade
and other payables, derivative liabilities and provisions. Segment results,
assets and liabilities include items directly attributable to a segment
as well as those that can be allocated on a reasonable basis. Unallocated
items comprise mainly corporate assets and expenses, cash, borrowings,
employee benefits balances and current and deferred tax balances. Segment
non-current asset additions are the total cost incurred during the period
to acquire segment assets that are expected to be used for more than
one year, comprising property, plant and equipment, operating intangibles
and biological assets.
The group is comprised of the following operating segments:
The manufacture of grocery products, including hot beverages,
sugar & sweeteners, vegetable oils, bread & baked goods, cereals,
ethnic foods, herbs & spices, and meat products which are
sold to retail, wholesale and foodservice businesses.
The growing and processing of sugar beet and sugar cane for
Grocery sale to industrial users and to Silver Spoon, which is included
in the grocery segment.
The manufacture of animal feeds and the provision of other
Sugar products for the agriculture sector.
The manufacture of bakers' yeast, bakery ingredients, enzymes,
Agriculture lipids, yeast extracts and cereal specialities.
Ingredients Buying and merchandising value clothing and accessories through
Retail the Primark and Penneys retail chains.
Geographical information
In addition to the required disclosure for operating segments, disclosure
is also given of certain geographical information about the group's operations,
based on the geographical groupings: United Kingdom; Europe & Africa;
The Americas; and Asia Pacific.
Revenues are shown by reference to the geographical location of customers.
Profits are shown by reference to the geographical location of the businesses.
Segment assets are based on the geographical location of the assets.
Revenue Adjusted operating profit
24 weeks 24 weeks 52 weeks 24 weeks 24 weeks 52 weeks
ended ended ended ended ended ended
1 March 2 March 14 September 1 March 2 March 14 September
2014 2013 2013 2014 2013 2013
(restated) (restated)
Operating segments GBPm GBPm GBPm GBPm GBPm GBPm
---------- ---------- -------------- -------- ----------- --------------
Grocery 1,767 1,832 3,840 126 96 230
Sugar 1,027 1,323 2,677 64 162 434
Agriculture 625 641 1,410 19 20 47
Ingredients 509 527 1,088 15 - 1
Retail 2,278 1,997 4.,273 298 237 513
Central - - - (25) (24) (51)
---------- ---------- -------------- -------- ----------- --------------
6,206 6,320 13,288 497 491 1,174
Businesses disposed:
Ingredients - 13 27 - 2 6
---------- ---------- -------------- -------- ----------- --------------
6,206 6,333 13,315 497 493 1,180
---------- ---------- -------------- -------- ----------- --------------
Geographical information
United Kingdom 2,603 2,676 5,728 267 341 710
Europe & Africa 1,964 1,849 3,790 149 138 386
The Americas 610 607 1,282 64 50 103
Asia Pacific 1,029 1,188 2,488 17 (38) (25)
---------- ---------- -------------- -------- ----------- --------------
6,206 6,320 13,288 497 491 1,174
Businesses disposed:
The Americas - 13 27 - 2 6
---------- ---------- -------------- -------- ----------- --------------
6,206 6,333 13,315 497 493 1,180
---------- ---------- -------------- -------- --------------
1 Operating segments for the 24 weeks ended
1 March 2014
Grocery Sugar Agriculture Ingredients Retail Central Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue from continuing
businesses 1,770 1,072 625 553 2,278 (92) 6,206
Internal revenue (3) (45) - (44) - 92 -
------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Revenue from external customers 1,767 1,027 625 509 2,278 - 6,206
Adjusted operating profit
before joint ventures and
associates 121 78 16 10 298 (25) 498
Share of profit after tax
from joint ventures and
associates 5 (14) 3 5 - - (1)
Adjusted operating profit 126 64 19 15 298 (25) 497
Amortisation of non-operating
intangibles (23) (9) (2) (1) - - (35)
Profit less losses on disposal
of non-current assets 2 - - - (1) - 1
------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Profit before interest 105 55 17 14 297 (25) 463
Finance income 9 9
Finance expense (38) (38)
Taxation (100) (100)
------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Profit for the period 105 55 17 14 297 (154) 334
===================================== ======== ====== ============ ============ ========= ======== ========
Segment assets (excluding
joint ventures and associates) 2,550 2,515 343 1,102 2,556 213 9,279
Investments in joint ventures
and associates 36 24 102 51 - - 213
------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Segment assets 2,586 2,539 445 1,153 2,556 213 9,492
Cash and cash equivalents 311 311
Deferred tax assets 218 218
Employee benefits assets 25 25
Segment liabilities (510) (490) (121) (185) (475) (141) (1,922)
Loans and overdrafts (1,138) (1,138)
Income tax (164) (164)
Deferred tax liabilities (363) (363)
Employee benefits liabilities (97) (97)
------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Net assets 2,076 2,049 324 968 2,081 (1,136) 6,362
===================================== ======== ====== ============ ============ ========= ======== ========
Non-current asset additions 61 48 9 26 168 1 313
------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Depreciation 49 42 3 20 71 2 187
------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Amortisation 31 10 3 2 - - 46
------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Geographical information United Europe The Asia
Kingdom & Africa Americas Pacific Total
GBPm GBPm GBPm GBPm GBPm
--------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Revenue from external customers 2,603 1,964 610 1,029 6,206
------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Segment assets 4,025 2,843 958 1,666 9,492
------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Non-current asset additions 116 149 18 30 313
------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Depreciation 88 49 13 37 187
------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Amortisation 10 10 20 6 46
------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
1 Operating segments for the 24 weeks ended
2 March 2013 (restated)
Grocery Sugar Agriculture Ingredients Retail Central Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue from continuing
businesses 1,836 1,390 641 583 1,997 (127) 6,320
Internal revenue (4) (67) - (56) - 127 -
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
External revenue from continuing
businesses 1,832 1,323 641 527 1,997 - 6,320
Businesses disposed - - - 13 - - 13
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Revenue from external customers 1,832 1,323 641 540 1,997 - 6,333
Adjusted operating profit
before joint ventures and
associates 92 168 16 (3) 237 (24) 486
Share of profit after tax
from joint ventures and
associates 4 (6) 4 3 - - 5
Businesses disposed - - - 2 - - 2
Adjusted operating profit 96 162 20 2 237 (24) 493
Amortisation of non-operating
intangibles (9) (11) - (17) - - (37)
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Profit before interest 87 151 20 (15) 237 (24) 456
Finance income 6 6
Finance expense (49) (49)
Other financial expense (2) (2)
Taxation (105) (105)
Profit for the period 87 151 20 (15) 237 (174) 306
====================================== ======== ====== ============ ============ ========= ======== ========
Segment assets (excluding
joint ventures and associates) 2,837 2,810 368 1,428 2,532 174 10,149
Investments in joint ventures
and associates 31 44 91 57 - - 223
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Segment assets 2,868 2,854 459 1,485 2,532 174 10,372
Cash and cash equivalents 218 218
Deferred tax assets 203 203
Employee benefits assets 3 3
Segment liabilities (566) (607) (136) (193) (418) (126) (2,046)
Loans and overdrafts (1,555) (1,555)
Income tax (132) (132)
Deferred tax liabilities (361) (361)
Employee benefits liabilities (191) (191)
Net assets 2,302 2,247 323 1,292 2,114 (1,767) 6,511
====================================== ======== ====== ============ ============ ========= ======== ========
Non-current asset additions 65 96 6 34 116 1 318
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Depreciation 50 44 3 31 67 2 197
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Amortisation 18 17 1 18 - - 54
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of property,
plant and equipment - 8 - - - - 8
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of operating
intangibles - 4 - - - - 4
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of goodwill - 10 - - - - 10
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Geographical information United Europe The Asia
Kingdom & Africa Americas Pacific Total
GBPm GBPm GBPm GBPm GBPm
---------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Revenue from external customers 2,676 1,849 620 1,188 6,333
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Segment assets 3,935 3,108 1,149 2,180 10,372
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Non-current asset additions 122 118 26 52 318
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Depreciation 88 52 12 45 197
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Amortisation 16 11 14 13 54
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of property,
plant and equipment - - - 8 8
Impairment of operating
intangibles - - - 4 4
Impairment of goodwill - - - 10 10
1 Operating segments for the 52 weeks ended 14
September 2013 (restated)
Grocery Sugar Agriculture Ingredients Retail Central Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue from continuing
businesses 3,851 2,808 1,410 1,193 4,273 (247) 13,288
Internal revenue (11) (131) - (105) - 247 -
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
External revenue from continuing
businesses 3,840 2,677 1,410 1,088 4,273 - 13,288
Businesses disposed - - - 27 - - 27
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Revenue from external customers 3,840 2,677 1,410 1,115 4,273 - 13,315
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Adjusted operating profit
before joint ventures and
associates 222 449 35 (7) 513 (51) 1,161
Share of profit after tax
from joint ventures and
associates 8 (15) 12 8 - - 13
Businesses disposed - - - 6 - - 6
Adjusted operating profit 230 434 47 7 513 (51) 1,180
Amortisation of non-operating
intangibles (19) (21) (1) (51) - - (92)
Profits less losses on
sale and closure of businesses - (15) - (113) - - (128)
Profit before interest 211 398 46 (157) 513 (51) 960
Finance income 13 13
Finance expense (100) (100)
Other financial expense (5) (5)
Taxation (240) (240)
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Profit for the period 211 398 46 (157) 513 (383) 628
====================================== ======== ====== ============ ============ ========= ======== ========
Segment assets (excluding
joint ventures and associates) 2,666 2,432 319 1,159 2,677 187 9,440
Investments in joint ventures
and associates 33 34 99 52 - - 218
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Segment assets 2,699 2,466 418 1,211 2,677 187 9,658
Cash and cash equivalents 362 362
Deferred tax assets 273 273
Employee benefits assets 81 81
Segment liabilities (539) (398) (121) (207) (619) (112) (1,996)
Loans and overdrafts (1,166) (1,166)
Income tax (166) (166)
Deferred tax liabilities (431) (431)
Employee benefits liabilities (96) (96)
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Net assets 2,160 2,068 297 1,004 2,058 (1,068) 6,519
====================================== ======== ====== ============ ============ ========= ======== ========
Non-current asset additions 165 158 10 70 220 6 629
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Depreciation 108 86 7 49 151 4 405
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Amortisation 37 37 3 53 - - 130
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of property,
plant and equipment - 8 - 19 - - 27
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of operating
intangibles - 4 - - - - 4
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of goodwill - 10 - - - - 10
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of property,
plant and equipment on
closure of business - 3 - 74 - - 77
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of goodwill
on sale of business - 14 - - - - 14
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Geographical information United Europe The Asia
Kingdom & Africa Americas Pacific Total
GBPm GBPm GBPm GBPm GBPm
---------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Revenue from external customers 5,728 3,790 1,309 2,488 13,315
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Segment assets 3,863 3,096 1,022 1,677 9,658
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Non-current asset additions 260 209 51 109 629
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Depreciation 177 102 28 98 405
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Amortisation 35 26 39 30 130
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of property,
plant and equipment - 19 - 8 27
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of operating
intangibles - - - 4 4
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of goodwill - - - 10 10
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of property,
plant and equipment on
closure of business - - - 77 77
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of goodwill
on sale of business - - - 14 14
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
2. Income tax expense
24 weeks 24 weeks 52 weeks
ended ended ended
1 March 2 March 14 September
2014 2013 2013
(restated) (restated)
GBPm GBPm GBPm
Current tax expense
UK - corporation tax at 22.1%/23.5%/23.5% 51 56 143
Overseas - corporation tax 49 51 145
UK - overprovided in prior periods - - (9)
Overseas - overprovided in prior periods - - (10)
100 107 269
Deferred tax expense
UK deferred tax (2) (1) (23)
Overseas deferred tax 2 (1) 2
Overseas - overprovided in prior periods - - (8)
-------- ---------- ------------
- (2) (29)
Total income tax expense in income
statement 100 105 240
======== ========== ============
Reconciliation of effective tax rate
Profit before taxation 434 411 868
Less share of loss/(profit) from joint
ventures and associates 1 (5) (13)
-------- ---------- ------------
Profit before taxation excluding share
of profit after tax from joint ventures
and associates 435 406 855
-------- ---------- ------------
Nominal tax charge at UK corporation
tax rate of 22.1%/23.5%/23.5% 96 95 201
Different tax rates on overseas earnings (7) (2) (34)
Expenses not deductible for tax purposes 5 9 24
Disposal of assets covered by tax exemptions
or unrecognised capital losses - - 39
Deferred tax not recognised 6 3 37
Adjustments in respect of prior periods - - (27)
-------- ---------- ------------
100 105 240
======== ========== ============
Income tax recognised directly in equity
Deferred tax associated with defined
benefit schemes (12) (27) 7
Deferred tax associated with movement
in cash flow hedging position (2) 5 2
Deferred tax associated with movements
in foreign exchange - (1) (2)
(14) (23) 7
======== ========== ============
Following the enactment of legislation by the UK government to reduce
the corporation tax rate from 23% to 21% with effect from 1 April 2014
and to reduce it further to 20% with effect from 1 April 2015, UK deferred
tax has been calculated using a rate of 20%. This legislation was enacted
before 14 September 2013 and accordingly the impact of these rate reductions
on deferred tax was reflected in the group's financial statements for
the financial year ended 14 September 2013.
3. Earnings per ordinary share 24 weeks 24 weeks 52 weeks
ended ended ended
1 March 2 March 14 September
2014 2013 2013
(restated) (restated)
pence pence pence
Adjusted earnings per share 45.8 41.5 98.1
Disposal of non-current assets 0.1 - -
Sale and closure of businesses - - (16.2)
Tax effect on above adjustments - - (0.8)
Amortisation of non-operating intangibles (4.4) (4.7) (11.7)
Tax credit on non-operating intangibles
amortisation and goodwill 1.3 1.3 3.7
Non-controlling interests' share of
amortisation of non-operating intangibles
net of tax 0.4 0.4 0.9
Earnings per ordinary share 43.2 38.5 74.0
================ ====================== ==============
4. Dividends
24 weeks 24 weeks 52 weeks
ended ended ended
1 March 2 March 14 September
2014 2013 2013
pence pence pence
Per share
2012 final - 20.00 20.00
2013 interim - - 9.35
2013 final 22.65 - -
---------------- ---------------------- --------------
22.65 20.00 29.35
================ ====================== ==============
Total GBPm GBPm GBPm
2012 final - 158 158
2013 interim - - 74
2013 final 179 - -
---------------- ---------------------- --------------
179 158 232
================ ====================== ==============
The 2013 final dividend of 22.65p per share was approved on 6 December
2013 and totalled GBP179m when paid on 10 January 2014. The 2014 interim
dividend of 9.70 pence per share, total value of GBP77m, will be paid
on 4 July 2014 to shareholders on the register on 6 June 2014.
5. Acquisitions and disposals
A small bakery ingredients business in Western Europe was acquired
during the period. The cash outflow on purchase of subsidiaries, joint
ventures and associates in the cash flow statement of GBP7m comprised
GBP1m of cash consideration net of cash and cash equivalents acquired
and a GBP6m investment in joint ventures. There were no disposals
in the period.
6. Analysis of net debt
At At
14 September Non-cash Exchange 1 March
2013 Cash flow Acquisitions items adjustments 2014
GBPm GBPm GBPm GBPm GBPm GBPm
Cash at bank and in
hand, cash
equivalents
and overdrafts 243 4 - - (15) 232
Short-term
borrowings (275) (68) (4) (123) 10 (460)
Loans over one year (772) 11 - 123 39 (599)
------------- --------- -------------- --------------- --------------- ----------
(804) (53) (4) - 34 (827)
============= ========= ============== =============== =============== ==========
Cash and cash equivalents comprise cash balances, call deposits
and investments with original maturities of three months or less.
Bank overdrafts of GBP79m that are repayable on demand and form an
integral part of the group's cash management are included as a
component of cash and cash equivalents for the purpose of the cash
flow statement. Non-cash items represent the changing maturity of
long-term borrowings as they become short-term.
7. Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed
in this note.
Full details of the group's other related party relationships, transactions
and balances are given in the group's financial statements for the
52 weeks ended 14 September 2013. There have been no material changes
in these relationships in the
24 weeks ended 1 March 2014 or up to the date of this report.
No related party transactions have taken place in the first 24 weeks
of the current financial year that have materially affected the financial
position or the performance of the group during that period.
8. Basis of preparation
Associated British Foods plc ('the Company') is a company domiciled
in the United Kingdom. The condensed consolidated interim financial
statements of the Company for the 24 weeks ended 1 March 2014 comprise
those of the Company and its subsidiaries (together referred to as
'the group') and the group's interests in associates and jointly controlled
entities.
The consolidated financial statements of the group for the 52 weeks
ended 14 September 2013 are available upon request from the Company's
registered office at 10 Grosvenor Street, London W1K 4QY or at www.abf.co.uk.
The condensed consolidated interim financial statements have been
prepared in accordance with IAS 34 Interim Financial Reporting. They
do not include all of the information required for full annual financial
statements and should be read in conjunction with the consolidated
financial statements of the group for the 52 weeks ended 14 September
2013.
The preparation of interim financial statements requires management
to make judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets and liabilities,
income and expense. Actual results may differ from these estimates.
In preparing the condensed consolidated interim financial statements,
the significant judgements made by management in applying the group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated financial
statements for the 52 weeks ended 14 September 2013.
After making enquiries, the directors have a reasonable expectation
that the group has adequate resources to continue in operational existence
for the foreseeable future. For this reason they continue to adopt
the going concern basis in preparing the condensed consolidated interim
financial statements. The group's business activities, together with
the factors likely to affect its future development, performance and
position are set out in the Operating review. Note 24 on pages 113
to 123 of the 2013 annual report provides details of the group's policy
on managing its financial and commodity risks.
The group has considerable financial resources, good access to debt
markets, a diverse range of businesses and a wide geographic spread.
It is therefore well placed to continue to manage business risks successfully
despite the current economic uncertainty.
The 24-week period for the condensed consolidated interim financial
statements of the Company means that the second half of the year is
usually a 28-week period, and the two halves of the reporting year
are therefore not of equal length. For the Retail segment, Christmas,
falling in the first half of the year, is a particularly important
trading period. For the Sugar segment, the balance sheet, and working
capital in particular, is strongly influenced by seasonal growth patterns
for both sugar beet and sugar cane, which vary significantly in the
markets in which the group operates.
The condensed consolidated interim financial statements are unaudited
but have been subject to an independent review by the auditor and
were approved by the board of directors on 23 April 2014. They do
not constitute statutory financial statements as defined in section
434 of the Companies Act 2006. The comparative figures for the 52
weeks ended 14 September 2013 have been abridged from the group's
2013 financial statements and are not the Company's statutory financial
statements for that period. Those financial statements have been reported
on by the Company's auditor and delivered to the Registrar of Companies.
The report of the auditors was unqualified, did not include a reference
to any matters to which the auditors drew attention by way of emphasis
without qualifying their report and did not contain a statement under
section 498(2) or (3) of the Companies Act 2006.
This interim results announcement has been prepared solely to provide
additional information to shareholders as a body, to assess the group's
strategies and the potential for those strategies to succeed. This
interim results announcement should not be relied upon by any other
party or for any other purpose.
9. Significant accounting policies
The accounting policies applied by the group in these condensed consolidated
interim financial statements are substantially the same as those applied
by the group in its consolidated financial statements for the 52 weeks
ended 14 September 2013. There have been a number of minor changes
to standards which become applicable for the year ending 13 September
2014, none of which have been assessed as having a significant impact
on the group.
The revised IAS 19 Employee Benefits is applicable to the group for
the first time in 2014 and makes changes to measurement and disclosure
requirements for defined benefit post-employment arrangements. The
expected return on plan assets and the interest charge on scheme liabilities
have been replaced by net interest income or expense calculated by
applying the liability discount rate to the net pension asset or liability.
Scheme administration costs are expensed as incurred and the reserve
for scheme costs, which was previously included in scheme liabilities,
has been removed. IAS 19 service cost is charged to operating profit
and pension financing costs are charged to other financial expense.
The impact of adoption of the revised standard, which has been applied
with retrospective effect from the 2012 balance sheet date, is set
out below. The impact of all charges is reflected in retained earnings
in equity and is wholly attributable to equity shareholders.
In the 2012 balance sheet, the GBP95m net pension liability decreased
by GBP28m to GBP67m and net deferred tax liabilities of GBP177m increased
by GBP7m to GBP184m.
24 weeks ended 52 weeks ended
2 March 2013 14 September 2013
(previously (previously
(restated) reported) (restated) reported)
------------ ------------ ----------- ------------
GBPm GBPm GBPm GBPm
Income statement
Adjusted operating profit 493 496 1,180 1,185
Operating profit 456 459 1,088 1,093
Other financial expense (2) (1) (5) (2)
Adjusted profit before taxation 448 452 1,088 1,096
Profit before taxation 411 415 868 876
Taxation (105) (106) (240) (242)
Profit for the period 306 309 628 634
pence pence pence pence
Basic earnings per share 38.5 38.9 74.0 74.8
Adjusted earnings per share 41.5 41.9 98.1 98.9
GBPm GBPm GBPm GBPm
Other comprehensive income
Actuarial (losses)/gains on defined
benefit schemes (114) (121) 33 24
Deferred tax associated with defined
benefit schemes 27 28 (7) (5)
Balance sheet
Net employee benefits balances (188) (219) (15) (44)
Net deferred tax balances (158) (151) (158) (151)
These adjustments had no effect on net cash from operating activities
but the cash flow statement does reflect the above adjustments to
profit before tax offset by an equal and opposite adjustment to pension
costs less contributions.
CAUTIONARY STATEMENTS
This Interim Results Announcement contains forward-looking
statements. These 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. The directors can give no assurance that
these expectations will prove to have been correct. 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 whether as a result of new
information, future events or otherwise.
RISKS AND UNCERTAINTIES
There are a number of potential risks and uncertainties which
could have a material impact on the group's performance over the
remainder of the financial year and could cause actual results to
differ materially from expected and historical results. These
include, but are not limited to, competitor activity and
competition risk, commercial relationships with customers and
suppliers, changes in foreign exchange rates and commodity prices.
Details of the principal risks facing the group's businesses at an
operational level are included on pages 56 to 61 of the group's
statutory financial statements for the 52 weeks ended 14 September
2013, as part of the corporate governance report. Details of
further potential risks and uncertainties arising since the issue
of the previous statutory financial statements are included within
the Chairman's Statement and the Operating Review as
appropriate.
RESPONSIBILITY STATEMENT
The Interim Results Announcement complies with the Disclosure
and Transparency Rules ('the DTR') of the UK's Financial Conduct
Authority in respect of the requirement to produce a half yearly
financial report.
The directors confirm that to the best of their knowledge:
-- this financial information has been prepared in accordance
with IAS 34 as adopted by the EU;
-- this Interim Results Announcement includes a fair review of
the important events during the first half and their impact on the
financial information, and a description of the principal risks and
uncertainties for the remaining half of the year as required by DTR
4.2.7R; and
-- this Interim Results Announcement includes a fair review of
the disclosure of related party transactions and changes therein as
required by DTR 4.2.8R.
On behalf of the board
George Weston John Bason Charles Sinclair
Chief Executive Finance Director Chairman
23 April 2014 23 April 2014 23 April 2014
Independent review report to Associated British Foods plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the Interim Results Announcement for the
24 weeks ended 1 March 2014 which comprises the condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated balance sheet,
the condensed consolidated cash flow statement, the condensed
consolidated statement of changes in equity and the related
explanatory notes. We have read the other information contained in
the interim results announcement and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the Disclosure and Transparency Rules ('the DTR')
of the UK's Financial Conduct Authority ('the UK FCA'). Our review
has been undertaken so that we might state to the Company those
matters we are required to state to it in this 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
for our review work, for this report, or for the conclusions we
have reached.
Directors' responsibilities
The Interim Results Announcement is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the Interim Results Announcement in accordance with
the DTR of the UK FCA.
The annual financial statements of the group are prepared in
accordance with International Financial Reporting Standards as
adopted by the EU. The condensed set of financial statements
included in this Interim Results Announcement has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the Interim Results
Announcement based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the Interim Results Announcement for the 24 weeks ended 1 March
2014 is not prepared, in all material respects, in accordance with
IAS 34 as adopted by the EU and the DTR of the UK FCA.
Richard Pinckard
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London, E14 5GL
23 April 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DMGZDNZVGDZM
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