AssociatedBrit.Foods - Final Results
03 November 1997 - 10:00PM
UK Regulatory
RNS No 9284r
ASSOCIATED BRITISH FOODS PLC
3rd November 1997
ASSOCIATED BRITISH FOODS plc
PRELIMINARY ANNOUNCEMENT
FOR THE YEAR ENDED 13 SEPTEMBER 1997
KEY POINTS
- Profit before tax from continuing businesses up by 10% at #401 million
- Profit on disposal of businesses #424 million
- Worldwide sales from continuing operations level at #4,437 million
- Special interim ordinary dividend of 5p per share
- Sterling appreciation reduced sales by #305 million and profits before
tax by #39 million
- In the past twelve months:
- Expenditure on new assets #254 million
- Shareholders' funds up 19% to #2,917 million
The profit before tax for the year of #850 million includes #424 million
arising from the sales of our Irish food retailing interests to Tesco in May
of this year and the adhesives operations in Australia.
The profit on ordinary activities before tax on the continuing businesses at
#401 million was up by #35 million compared with the previous year.
Further, the operating profits earned by the Irish food retailing companies
to the date of the sale plus the investment income on the sale proceeds for
the balance of the year, were #8 million less than their operating profits
reported last year.
The increase in the strength of the pound sterling had a major adverse
effect on our results reducing profits by #39 million and sales values by
some #305 million. The realignment of the green pound particularly affected
British Sugar, whilst our major exporting companies, Twinings tea and
Burtons biscuits, suffered from their inability to increase selling prices
in local currencies against strong local competition overseas.
Group turnover at #5,203 million is #504 million lower than the year ago
figure. However, after allowing for the operations sold during the year and
for the currency effect, sales show an underlying increase of some 5 per
cent.
The United Kingdom based food manufacturing companies reported sales and
profits of #3,051 million and #270 million respectively compared with #3,059
million and #276 million a year ago.
British Sugar contributed profits of #179 million, only #4 million down on a
year ago, despite the green pound effect referred to above. This excellent
result was achieved following a record harvest, and the benefits arising
from the restructuring of the company within a capital investment programme
in excess of #230 million undertaken since acquisition by the group in 1991.
Allied Bakeries experienced difficult trading following some loss of volume
in own label products early in the year and although the expansion of our
range of products throughout the year compensated to some extent, there was
a net loss of revenue over the period.
Allied Mills had a satisfactory year producing profits 7 per cent ahead of
budgets. A decision to close the loss making European commodity trading
operation within the Allied Grain division was taken towards the end of the
financial year.
Our other United Kingdom manufacturing companies contributed excellent
results and, despite the effect of the strength of sterling on their
overseas trading, Burtons produced record profits and Twinings narrowly
failed to match their last years excellent result.
Primark, our retail textile operation contributed record profits up 46 per
cent at #19 million on sales increased by 6 per cent to #256 million.
The operating profits of George Weston Foods in Australia and New Zealand
were reduced to #33 million from #38 million a year ago, although half of
this reduction is attributable to currency translation. Sales of #620
million show a growth rate of 4 per cent on the continuing businesses.
AC Humko and Abitec in the United States continue their development into
added value products and this has been complemented by two further
acquisitions during the year. Profits increased by #6 million to #9 million
which is after charging further rationalisation and integration costs of #1
million.
The group continues to seek further investment opportunities in the Far East
and by the end of the current financial year in September 1998 it is
budgeted that our investment in that area will amount to #38 million.
Investment income for the year was #72 million. Overall, the return
obtained was disappointing but there was an on budget performance in the
second half of the year following the poor result reported in our interim
statement. The increase of #18 million on a year ago is largely
attributable to the income on additional funds arising on the sale of the
Irish retail food companies.
This sale also contributed #639 million to the increase in net investment
funds which at the year end amounted to #1,460 million.
The group remains strongly cash generative funding expenditure this year on
new assets and subsidiaries exceeding #300 million, 25 per cent greater than
last year.
The average tax rate as disclosed by the profit and loss account is 19 per
cent. The corporation tax payable on the profit arising on the disposal of
the Irish food retailing companies under the capital gains tax provisions is
calculated after the rebasing of values at March 1982, together with
indexation relief thereon, and the offset of capital losses. Allowing for
these factors, the average tax rate is 31 per cent compared with 33 per cent
a year ago. This reduction follows the lowering of the UK corporation tax
rate to 31 per cent and the lower proportion of profits arising overseas.
At a Board Meeting today, the directors declared a second interim ordinary
dividend of 5.75p per share (1996 - 5.25p), payable on 23 February 1998.
The first and second interim dividends paid in respect of this financial
year will be the equivalent of a 5.3 per cent increase on the dividends paid
in respect of 1996.
At the same Board Meeting the directors declared a special interim ordinary
dividend of 5.0p per share which will be paid on 23 February 1998 with the
second interim dividend of 5.75p per share to be paid on that day. The
additional payment is in recognition of the value created for shareholders
arising from the sale of our Irish food retail operations and will not be
payable on an annual basis.
Both dividends will be paid to shareholders on the register on 30 January
1998.
The Annual Report and Accounts will be available on 12 November 1997 and the
annual general meeting will be held at the New Connaught Rooms on Friday 5
December 1997.
Press enquiries to: Garry H Weston - Chairman
Telephone: 0171-589 6363
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended For the year ended
13 September 1997 14 September 1996
Con- Discon- Con- Discon-
tinuing tinued tinuing tinued
oper- oper- oper- oper-
ations ations Total ations ations Total
Note #m #m #m #m #m #m
Turnover 1 4,437 766 5,203 4,443 1,264 5,707
Operating costs (4,095) (738) (4,833) (4,104) (1,208) (5,312)
Operating profit 1 342 28 370 339 56 395
Profit less losses on sale of
properties 4 2 6 (1) 7 6
Profit on sale of businesses 4 420 424 - - -
Investment income 72 - 72 53 1 54
Profit on ordinary activities
before interest 422 450 872 391 64 455
Interest payable (21) (1) (22) (25) - (25)
Profit on ordinary activities
before taxation 401 449 850 366 64 430
Tax on profit on
ordinary activities 2 (119) (42) (161) (120) (24) (144)
Profit on ordinary activities
after taxation 282 407 689 246 40 286
Minority interests - equity (8) - (8) (8) - (8)
Profit for the financial year 274 407 681 238 40 278
Dividend - interim 3 (90) - (90) (85) - (85)
- special interim 3 (45) - (45) - - -
Retained profit for the
financial year 139 407 546 153 40 193
Earnings per ordinary share 30.3p 45.3p 75.6p 26.7p 4.3p 31.0p
The group has made no material acquisitions within the meaning of the
Financial Reporting Standards during either 1997 or 1996.
CONSOLIDATED BALANCE SHEET
As at As at
13 Sept 14 Sept
1997 1996
#m #m
Fixed assets
Tangible fixed assets 1,396 1,650
Investments 12 8
1,408 1,658
Current assets
Stocks 416 482
Debtors 495 514
Investments 1,618 900
Cash at bank and in hand 50 93
2,579 1,989
Creditors - amounts falling due within one year
Short term borrowings (51) (33)
Other creditors (722) (875)
(773) (908)
Net current assets 1,806 1,081
Total assets less current liabilities 3,214 2,739
Creditors - amounts falling due after one year
Loans (157) (163)
Other creditors (15) (12)
(172) (175)
Provisions for liabilities and charges (54) (38)
2,988 2,526
Capital and reserves
Called up share capital 47 47
Revaluation reserve 4 5
Other reserves 173 173
Profit and loss account 2,693 2,228
Equity shareholders' funds 2,917 2,453
Minority interests in subsidiary
undertakings - equity 71 73
2,988 2,526
CONSOLIDATED CASH FLOW STATEMENT
For the For the
year ended year ended
13 Sept 14 Sept
1997 1996
Note #m #m
Cash flow from operating
activities 4 489 577
Returns on investments and servicing
of finance
Dividends and other investment income 76 62
Interest paid (22) (24)
Dividends paid to minorities (12) (3)
42 35
Taxation (148) (107)
Capital expenditure and
financial investment
Purchase of tangible fixed assets (254) (225)
Sale of tangible fixed assets 23 24
Sale of equity investments 1 3
(230) (198)
Acquisitions and disposals
Purchase of new subsidiary undertakings (48) (17)
Purchase of associated undertakings (5) (2)
Sale of subsidiary undertakings 647 -
594 (19)
Equity dividends paid (85) (79)
Net cash inflow before use
of liquid resources and financing 662 209
Management of liquid funds 5 658 114
Financing 5 (12) 34
Increase in cash 5 16 61
662 209
CONSOLIDATED STATEMENT OF TOTAL
RECOGNISED GAINS AND LOSSES
For the For the
year ended year ended
13 Sept 14 Sept
1997 1996
#m #m
Profit for the financial year 681 278
Currency translation differences on foreign
currency net assets (53) 10
Total recognised gains and losses 628 288
CONSOLIDATED STATEMENT OF HISTORICAL COST PROFITS
There is no material difference between the group results as reported and on
an unmodified historical cost basis. Accordingly no note of historical cost
profits and losses has been prepared.
RECONCILIATION OF MOVEMENTS IN
CONSOLIDATED SHAREHOLDERS' FUNDS
For the For the
year ended year ended
13 Sept 14 Sept
1997 1996
#m #m
Profit for the financial year 681 278
Dividend- interim (90) (85)
- special interim (45) -
Retained profit for the financial year 546 193
Other recognised gains and losses relating
to the year (53) 10
Goodwill acquired and written off during the
year (31) (8)
Goodwill written back during the year 2 -
Net increase in shareholders' funds 464 195
Opening shareholders' funds 2,453 2,258
Closing shareholders' funds 2,917 2,453
NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the For the
year ended year ended
13 Sept 14 Sept
1997 1996
#m #m
1.Analysis of turnover
Geographical analysis (by origin and
destination):
European Union, mainly United Kingdom
and Ireland 3,307 3,301
Australia and New Zealand 620 637
North America 453 451
Other 57 54
Continuing operations 4,437 4,443
Discontinued operations - United Kingdom
& Ireland 766 1,264
5,203 5,707
Business sector:
Manufacturing 4,181 4,201
Retail 256 242
Continuing operations 4,437 4,443
Discontinued operations - retail 766 1,264
5,203 5,707
Analysis of profits
Geographical analysis (by origin and
destination):
European Union, mainly United Kingdom
and Ireland 289 289
Australia and New Zealand 33 38
North America 13 6
Other 7 6
Continuing operations 342 339
Discontinued operations - United Kingdom
& Ireland 28 56
Operating profit 370 395
Business sector:
Manufacturing 323 326
Retail 19 13
Continuing operations 342 339
Discontinued operations - retail 28 56
Operating profit 370 395
Other net income 480 35
Profit on ordinary activities before
taxation 850 430
2.Tax on profit on ordinary activities
United Kingdom 122 97
Overseas 39 47
161 144
The tax charge for the year has been reduced by the use of capital losses
and the rebasing of the tax values of assets sold, together with
indexation relief thereon.
3.Ordinary dividends
First interim dividend of 4.25p per share
(1996 - 4.25p) 38 38
Second interim dividend of 5.75p per share
(1996 - 5.25p) 52 47
90 85
Special interim dividend of 5.00p per share 45 -
4.Cash flow from operating activities
Operating profit 370 395
Depreciation 156 172
(Increase)/decrease in working capital:
Stocks (6) 5
Debtors (17) (26)
Creditors (30) 30
Provisions 16 1
489 577
5.Analysis of changes in net funds
Opening balance 797 601
Increase in cash 16 61
Financing (12) 34
Management of liquid funds 658 114
Sale of equity investments (1) (2)
Changes in market value - (8)
Acquisition of subsidiary undertakings (6) (5)
Shares issued to minority shareholders 8 -
Effect of currency changes - 2
Closing balance 1,460 797
As at As at
13 Sept 14 Sept
1997 1996
#m #m
6.Analysis of net funds
Current asset investments 1,618 900
Cash at bank and in hand 50 93
Short term borrowings (51) (33)
Loans falling due after one year (157) (163)
1,460 797
7.Basis of preparation
The financial information set out above does not constitute the group's
statutory financial statements for the years ended 13 September 1997 and
14 September 1996, but is derived from them. The 1996 financial
statements have been filed with the Registrar of Companies whereas those
for 1997 will be delivered following the company's annual general meeting.
The auditor's opinions on these financial statements were unqualified and
did not include a statement under section 237 (2) or (3) of the Companies
Act 1985.
END
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