TIDMABF
RNS Number : 5669V
Associated British Foods PLC
19 April 2016
19 April 2016
Associated British Foods plc announces its
interim results for the 24 weeks ended 27 February 2016
Progress in all our businesses despite currency
Financial highlights
Actual Constant currency(1)
* Group revenue GBP6,117m -2% +2%
* Adjusted operating profit* GBP486m +3% +5%
* Adjusted profit before tax up 4% to GBP466m**
* Adjusted earnings per share level at 46.1p**
* Dividend per share up 3% to 10.3p
* Gross capital investment of GBP348m
* Net debt reduced to GBP421m
* Operating profit up 35% to GBP477m, profit before tax
up 115% to GBP457m and basic earnings per share up
150% to 45.2p
George Weston, Chief Executive of Associated British Foods,
said:
"These results demonstrate underlying progress for all of our
businesses in the period despite currency. Good buying and selling
space expansion continued at Primark, cost reduction and
performance improvements contributed to a better result at Sugar,
profits were well ahead at Ingredients, and profit margins improved
at Grocery and Agriculture."
* before amortisation of non-operating intangibles, profits less
losses on disposal of non-current assets and exceptional items.
** before amortisation of non-operating intangibles, profits
less losses on disposal of non-current assets, profits less losses
on sale and closure of businesses and exceptional items.
All figures stated after amortisation of non-operating
intangibles, profits less losses on disposal of non-current assets,
profits less losses on sale and closure of businesses, and
exceptional items are shown on the face of the condensed
consolidated income statement.
References to operating profit in the Operating Review are based
on the adjusted measure defined above.
(1) Constant currency is derived by translating the 2015 results
at 2016 average exchange rates.
For further information please
contact:
Associated British Foods:
Until 15.00 only
John Bason, Finance Director
Flic Howard-Allen, Head of
External Affairs
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
ASSOCIATED BRITISH FOODS plc
INTERIM RESULTS ANNOUNCEMENT
FOR THE 24 WEEKS ENDED 27 FEBRUARY 2016
CHAIRMAN'S STATEMENT
These results demonstrate underlying progress for all of our
businesses in the period. Primark's selling space expansion
continued, profit margins improved in Grocery and Agriculture,
profits were well ahead in Ingredients, and Sugar delivered a
better result, albeit still at a low level. As expected, the
movement in exchange rates held our group profits back, both in the
translation of overseas revenues and profits and, significantly, in
the transaction effect on the margin at Primark and British Sugar.
I am therefore pleased to report interim results for the group of
adjusted earnings per share level with last year.
Revenue in the first half increased by 2% at constant currency
but was 2% lower than last year at actual exchange rates. Adjusted
operating profit increased by 5% at constant currency and by 3% at
actual rates. Net financing costs in the period were lower than
last year's first half, resulting from a lower average level of net
borrowings, and the underlying tax rate was in line with last year.
Although adjusted profit before tax was 4% ahead of last year, the
results attributable to the minority shareholders in our African
and Chinese sugar businesses were greater this year. As a result,
adjusted earnings per share in the first half were level with last
year. On an unadjusted basis, results were well ahead of last year
which included the impact of restructuring in AB Sugar.
After several years of decline, the small improvement in AB
Sugar is encouraging. Management has worked hard to embed a culture
of performance improvement which is delivering significant cost
reduction across all of its businesses. We have established a good
track record here and have identified a number of further
opportunities. Low world prices and the remaining uncertainty
expected from the withdrawal of EU sugar quotas in October 2017
underline the imperative to focus on low-cost production.
I am pleased that after ten successful years of investment in
Illovo, we have now reached agreement with its board for the
purchase of the minority shareholdings that we do not already own
for some GBP260m. Illovo shareholder approval will be sought at an
extraordinary meeting in May. Illovo already benefits from being
one of the world's lowest-cost producers and its domestic markets
are growing strongly. We believe that full ownership will
accelerate Illovo's commercial development and its performance
improvement initiatives which are already under way.
Cash flow was much improved this period with a cash inflow from
operating activities GBP174m higher than the same period last year.
This improvement was driven mainly by a reduction in EU sugar
stocks, but also lower inventory at Primark. Capital expenditure
was higher driven by Primark's expansion, and investment in
increased capacity and cost reduction in the food businesses. Net
debt at the period end was GBP421m, a reduction of GBP380m from the
position last half year, reflecting strong cash flows both in the
second half of last year and the first half of this.
The referendum, on 23 June, on the UK's continued membership of
the EU has created uncertainty in the business community and
financial markets. ABF is an international business with diverse
interests across 48 countries and a business model that, wherever
possible, aligns production with the end markets for its products.
Primark operates discrete supply chains for its stores in each of
the UK, US and eurozone. We undertake relatively little
cross-border trading between the UK and the rest of the EU.
The UK Chancellor's 2016 budget included proposals for the
introduction of a soft drinks levy in the UK aimed at addressing
rising levels of obesity. There is uncertainty as to how these
proposals may be implemented. Obesity has been, and continues to
be, a complex issue driven by many different factors. We remain
committed to informing and educating consumers about the role that
sugar can play in the diet and lifestyle.
The board
On 13 April 2016 Peter Smith retired after nine years' service
as chairman of the Audit committee and as a valued member of the
board. I would like to thank Peter for his steadfast commitment and
the enthusiasm with which he has steered the Audit committee
through a period of substantial change in corporate governance and
financial reporting.
We welcome Richard Reid to the board. Richard was appointed as a
director on 14 April 2016 and succeeds Peter as chairman of the
Audit committee. Richard was a partner in KPMG LLP having joined
the firm in 1980 and was latterly, until his retirement last year,
chairman of the London office. He brings to the board a wealth of
experience across a range of consumer products and retail
businesses.
Dividend
The board has declared an interim dividend of 10.3 pence per
share, an increase of 3% on last year. The dividend will be paid on
1 July 2016 to shareholders registered at the close of business on
3 June 2016.
Outlook
The underlying trading outlook for the group for the full year
is unchanged.
Sterling has weakened recently against our major trading
currencies. If current rates were to prevail, this would give rise
to a currency translation benefit in the second half and we would
no longer expect currency translation to have a material impact on
our results for the full year. With the exchange rates applicable
to most of Primark's purchase orders for the second half already
having been fixed, we would expect any further impact on Primark's
margin for the balance of the financial year to be limited. British
Sugar margins are, however, expected to benefit from sterling
weakness on its euro-denominated sales.
We now expect only a marginal decline in adjusted earnings per
share for the group for the full year.
Charles Sinclair
Chairman
19 April 2016
OPERATING REVIEW
Adjusted operating profit in the first half of GBP486m was 5%
higher than last year on group revenues that were 2% ahead at
GBP6,117m, at constant currency. As explained in the Chairman's
statement, the currency effects of both translation and transaction
have held back the financial performance in the first half.
Underlying progress was made by all of our businesses this
year.
The clothing retail market over the half year has been
challenging, especially in the UK. The rate of Primark's selling
space additions will increase and the pipeline of new store
openings is strong, both for the second half of this year and next
year. We are encouraged by the early trading in the US and are
excited by the prospect of Primark's recent entry into Italy. These
achievements are noteworthy as is the work undertaken to mitigate
the transactional currency impact on margin.
Both AB Mauri and the speciality ingredients businesses have
continued the recovery of the last two years with a further
substantial improvement in profits. This recovery is broadly based,
driven by a combination of performance improvement, cost reduction
and commercial development.
GROCERY
2016 2015 Actual Constant
fx fx
-------------- ------ ------ ------- ---------
Revenue GBPm 1,520 1,580 -4% -1%
-------------- ------ ------ ------- ---------
Operating
profit GBPm 130 128 +2% +2%
-------------- ------ ------ ------- ---------
(MORE TO FOLLOW) Dow Jones Newswires
April 19, 2016 02:00 ET (06:00 GMT)
Adjusted operating profit in the first half was 2% ahead of last
year on revenues that were 1% lower at constant currency and 4%
lower at actual exchange rates. Margin improved from 8.1% to 8.6%
continuing the progress of recent years.
Twinings Ovaltine achieved market share gains for tea in the UK,
Italy, the US and Australia where a combination of television,
digital and print advertising campaigns have been used to good
effect. Sales of Ovaltine were better in Thailand where margin also
improved and, in its developing markets, good progress was made in
Vietnam. Difficult economic conditions led to disappointing sales
in Nigeria.
The UK bakery market remains intensely competitive with
retailers choosing bread as a means of highlighting their value for
money to shoppers. Although average prices have been stable for the
last six months, they remain at their lowest level for eight years.
Kingsmill's market share grew, with a substantial increase in sales
volumes and strong consumer demand for alternative bakery products,
especially Sandwich Thins. Bakery margins as a whole remain under
pressure. Capital investment in the period included the moving and
upgrading of the bun plant from Orpington to Cardiff which,
together with the Stoke bakery, supplied 50 million hot cross buns
this season. A new warehouse management system has been installed
at Stockport, West Bromwich and Glasgow which has significantly
increased picking speeds and ensured that we maintain our leading
customer service levels. Roll-out of this new system to all
remaining bakeries will take place over the next 12 months.
Dorset Cereals continued to perform very well and the brand has
now been launched in Australia with good distribution in the two
major national retailers. Jordans and Ryvita both made further
progress internationally, growing particularly well in Australia,
Canada and France.
At AB World Foods, Patak's and Blue Dragon maintained their
positions as the leading Indian and Oriental ambient brands in the
UK with support for both on television, radio and in-store.
Significant cost inflation on spices and dhal flour, the principal
ingredient in pappadums, has put pressure on margins. Westmill
Foods' core ethnic catering business traded well, with Lucky Boat
noodles volumes well ahead. In the ethnic consumer market, Elephant
Atta volumes recovered strongly after a weaker performance last
year, and Green Dragon Thai rice achieved strong growth.
Operating profit in North America was maintained, despite a very
competitive market for vegetable oils, with further advertising
behind the Mazola brand promoting the health benefits of plant
sterols. In the US, ACH's foodservice volumes showed good growth
reflecting strong partnerships with key distributors and the impact
of lower Mazola retail volumes was offset by a reduction in
overheads. In Mexico, oil volumes were lower and margins came under
pressure from the devaluation of the peso. Stratas Foods achieved
strong volume growth in both foodservice and retail oils.
Trading at George Weston Foods in Australia was much improved.
Revenues were ahead of last year across all businesses with
particularly strong progress made by the Don KRC meat business.
Here further factory improvements and lower procurement costs drove
the improved result. Tip Top continued to drive a more efficient
cost base and the brand has undergone a complete redesign with new
packaging across the bakery range.
SUGAR
2016 2015 Actual fx Constant
fx
-------------- ----- ----- ---------- ---------
Revenue GBPm 843 928 -9% +3%
-------------- ----- ----- ---------- ---------
Operating
profit GBPm 6 (3) n/a n/a
-------------- ----- ----- ---------- ---------
Revenue for AB Sugar in the first half was 3% higher than last
year at constant currency and the operating result improved. A
tightening of EU and Chinese stock levels resulted in a
strengthening of domestic prices in those markets, but world prices
remain low. With most of British Sugar's contracts for the current
year already agreed, there will be no material impact on its profit
from the improvement in pricing until next year.
After last year's record UK sugar production of 1.45 million
tonnes, a smaller area was contracted for cultivation this year.
This reduction, combined with beet yields returning to more typical
levels, resulted in production just short of 1.0 million tonnes.
Operating performance remained very strong at all sites with a
successful campaign completed in February. However, the benefit of
the reduction in beet costs for this campaign was more than offset
by a higher overhead cost in stock, as a result of the lower
volumes, and weakness of the euro in the period. This reduced the
half year operating result and we also expect the result for the
full year to be lower than last year.
A state-of the-art anaerobic digestion plant for the production
of biogas is being built at Bury St Edmunds and will be
commissioned later this year. This facility will have the capacity
to use 100,000 tonnes of pressed sugar beet pulp as a feedstock and
will generate five megawatts of electricity for export to the grid.
Importantly, this will reduce the energy consumed on site, by
eliminating both the need to dry pulp and the transportation cost
of removing it, and will be a major contributor to further cost
reduction.
The Vivergo bioethanol plant has operated well which, combined
with better bioethanol prices, led to some improvement in its
result in the first half. At current wheat prices and with
increasing production rates, this progress is expected to continue
in the second half.
In Spain the operating result improved significantly with the
benefit of lower beet costs, better pricing and higher production.
In the north, the campaigns at Miranda and Toro were completed by
mid January and at La Bañeza, where the start of the campaign was
deferred to allow further maturity of the beet, it was completed in
early April. Total beet sugar production is estimated to be 440,000
tonnes compared with last year's 414,000 tonnes. Additionally,
25,000 tonnes will be produced from the refining of imported raw
cane sugars at the northern beet factories.
Illovo's production is expected to be 10% below last year at
1.47 million tonnes as a result of the widespread effects of
drought on growing conditions and power supply. Investment in a new
refinery at Nakambala in Zambia is progressing well and will come
on stream later this year. This will enable us to meet the growing
demand for more refined sugars in the African market and will
strengthen our leadership in the region.
On 8 April we announced that we had reached an agreement with
the board of Illovo to acquire the 48.65% interest in the company
that we do not already own for a price of 25 rand per share,
representing a total consideration of 5.6bn rand (GBP262m) in cash.
Illovo is listed on the Johannesburg stock exchange and completion
of the transaction is subject to Illovo shareholder approval which
will be sought at an extraordinary shareholder meeting in May.
Illovo directors intend to vote in favour of the proposed
transaction in respect of their own shares. This transaction is
expected to be immediately earnings accretive for ABF.
China also saw an improvement following the closure last year of
the two uneconomic factories in Heilongjiang and an increase in
prices. Operational performance at the two remaining beet sugar
factories at Zhangbei and Qianqi was strong with a record beet
supply to both plants, and the highly successful campaign finished
in December with 159,000 tonnes of sugar produced. In the south,
production was 31% lower than last year at 287,000 tonnes, due to a
combination of a smaller area assigned to the cane crop, excessive
rain affecting cane maturity and, as a consequence, poor sugar
content.
All of our sugar businesses remain focused on the delivery of
substantial cost reduction through a combination of continuous
improvement, business transformation, capital expenditure and
procurement activities. There are many instances of best practice
transfer across the group. For example, Illovo undertook a
comprehensive study of crop harvesting and inbound logistics in
Africa involving the use of GPS technology to map vehicle
movements. This is now being adopted by British Sugar and Azucarera
to reduce waste both for growers and ourselves. Investment at AB
Sugar has not only delivered substantial cost reduction but has
also delivered co-product extensions and improvements in product
quality and format.
Agriculture
2016 2015 Actual fx Constant
fx
-------------- ----- ----- ---------- ---------
Revenue GBPm 491 577 -15% -15%
-------------- ----- ----- ---------- ---------
Operating
profit GBPm 22 23 -4% -8%
-------------- ----- ----- ---------- ---------
Revenue in the first half was 15% lower than last year, driven
by soft commodity prices and lower volumes in our UK feed business,
AB Connect. However, excellent trading at AB Vista drove further
margin improvement for AB Agri as a whole.
Lower revenues for AB Connect were largely the result of lower
demand for ruminant feed during the mild winter. Speciality feed
volumes were ahead of last year as the business increased its share
of the domestic market, more than offsetting lower export volumes
to the EU. We are developing our anaerobic digestion products and
services business with the aim of improving the efficiency of this
industry. We are also developing an anaerobic digestion plant in
Yorkshire which uses low-grade food waste, sustainably, as a
feedstock.
(MORE TO FOLLOW) Dow Jones Newswires
April 19, 2016 02:00 ET (06:00 GMT)
AB Vista continued to build on its success in feed enzymes with
good progress made in Asia, Europe and the Middle East. As well as
continued growth of its phytase enzyme, Quantum Blue, there was
also increased demand for Econase XT in the Americas and in south
east Asia. North America continued to be very competitive but sales
from new markets in eastern Europe were strong.
In China, market conditions remain weak but the impact has been
mitigated by improved purchasing and pricing. Furthermore, the
industry in China is moving from traditional backyard farms to
larger, more professionally managed enterprises that demand
higher-quality service, differentiated products and food safety
credentials. We have targeted these larger businesses and have had
success in winning a number of new feed supply contracts. A new
premix plant, which is currently under construction and due to
complete at the end of this calendar year, will broaden our product
range.
In Frontier Agriculture, good grain trading income was partly
offset by lower demand for fertiliser and crop protection products,
as a result of excellent sowing conditions in the autumn and a mild
winter which allowed crops to establish well.
INGREDIENTS
2016 2015 Actual fx Constant
fx
-------------- ----- ----- ---------- ---------
Revenue GBPm 596 616 -3% +4%
-------------- ----- ----- ---------- ---------
Operating
profit GBPm 40 28 +43% +54%
-------------- ----- ----- ---------- ---------
Revenue in the first half was 4% ahead of last year at constant
currency. Building on the improvement of the last two years,
operating profit for the half year was substantially ahead, with
further recovery in yeast and bakery ingredients and another strong
performance from ABF Ingredients.
At AB Mauri, the businesses in the Americas performed well. We
lead the North American industry in the application of ingredient
technology in industrial bread production and we launched USDA
'certified organic' bread improvers in the period. Despite a
difficult economic environment in Hispano America and Brazil, our
continued focus on craft bakeries enabled further progress.
Globally we continue to develop our baking technology to enable
our customers to meet growing consumer demand for healthier diets,
while at the same time improving their productivity. In particular,
this has enabled them to reduce sugar and salt in, and remove
additives from, their recipes.
Growth was more limited in western Europe. The continued
integration of the bakery ingredients business acquired in 2014 saw
the rationalisation of warehousing and distribution in Iberia. A
new technical centre was opened in the UK to enable the development
of new bakery ingredient solutions and the provision of technical
support and training to customers.
Capital investment in our Montreal and Memphis yeast plants has
facilitated significant improvement in the consistency of product
quality and plant efficiency. This included new equipment to
improve raw materials handling and deliver automated sanitation
systems. We are also investing in a new bakery ingredients plant in
Argentina, which is due to commence operations early next year.
ABF Ingredients achieved good revenue growth in the first half
and all businesses made further profit progress. Strong factory
performances and effective cost control resulted in increased
margins, particularly at AB Enzymes which made further advances in
the baking and detergent sectors. In the US, functional excipients
achieved significant growth and speciality cereals advanced with a
good performance from protein extrusions. Key capacity expansion
projects, to enable further growth in enzymes and speciality
lipids, are on track.
RETAIL
2016 2015 Actual Constant
fx fx
-------------- ------ ------ ------- ---------
Revenue GBPm 2,667 2,547 +5% +7%
-------------- ------ ------ ------- ---------
Operating
profit GBPm 313 322 -3% -1%
-------------- ------ ------ ------- ---------
Primark's sales in the first half were 7% ahead of last year at
constant currency, driven by increased retail selling space, and 5%
ahead at actual exchange rates.
Following a strong performance at the start of the financial
year, trading was weaker in the weeks leading up to and over
Christmas, as a result of unseasonably warm weather across northern
Europe, resulting in like-for-like sales for the first half that
were less than 1% below last year. Our stores in France delivered a
strong like-for-like performance despite the very high sales
densities achieved in their first year of trading last year. As
expected, the impact of new store openings on the like-for-like
sales in existing stores in Germany and the Netherlands has eased.
Early trading at our two stores in the US has been encouraging,
with very positive customer feedback. Primark has been well
received, particularly its exceptional value for money and the
breadth of its product range. Footfall and sales density have
increased steadily as awareness of the Primark brand, which started
at a low level, continues to grow.
Adjusted operating profit was 1% lower than last year at
constant currency and 3% lower at actual exchange rates. As
previously explained, Primark buys a substantial proportion of its
garments in US dollars, and sells them in euros and sterling,
giving rise to transactional currency exposures. Forward currency
contracts are taken out to cover these exposures when orders are
placed. Last year's results were therefore protected from the
effect of the devaluation, in early calendar 2015, of the euro
against the US dollar. The impact of this devaluation was felt in
the first half of this year when the operating profit margin of
11.7% was 0.9 percentage points lower than last year. This margin
decline was smaller than had been expected, as much of the impact
of the stronger dollar was mitigated by a good buying performance
and a lower level of mark-downs arising from a well-managed stock
position. This margin decline also included the net cost, in the
US, of the head office and warehouse which only supported two
stores in the first half.
Retail selling space has increased by 0.3 million sq ft since
the last financial year end and by 0.8 million sq ft since the 2015
half year. At 27 February 2016, 299 stores were trading from 11.5
million sq ft of retail selling space. We opened a net six new
stores in the period including a flagship, 133,000 sq ft store on
Gran Via in central Madrid in October, and our second store in the
US, at the King of Prussia mall in Pennsylvania, at the end of
November.
The number of openings will be greater in the second half, with
a further 0.3 million sq ft in seven new stores already opened
since the half year including Cagnes-sur-Mer, near Nice, and Toulon
in France. The remaining openings will be weighted towards the end
of the second half and, for the full year, we expect to have opened
a total of 1.4 million sq ft of new selling space.
Our store opening plans for our two most recent markets are well
advanced. In the US, six stores are scheduled to open later this
calendar year and we expect to open a 70,000 sq ft store in the
American Dream shopping mall in New Jersey in calendar 2017. This
will bring the total number of stores in the US to nine. We have
also announced the locations of our first three stores in Italy. On
14 April we had an enthusiastic response to the opening of our
57,000 sq ft store in Arese, a city 12 kilometres north west of
Milan. This will be followed by Brescia in the early autumn and
Florence later in 2017.
We are making a significant investment in our warehouse
infrastructure. Last year, capacity was added in Spain and Germany
and we opened a new warehouse in Bor, on the western border of the
Czech Republic. This summer we will migrate our Magna Park
distribution centre in the UK to a larger, purpose-built warehouse
at Islip, Northamptonshire, and open a new facility in Roosendaal
in the Netherlands. By the end of this year we will have doubled
our capacity since 2013.
George Weston
Chief Executive
CONDENSED CONSOLIDATED INCOME STATEMENT
24 weeks 24 weeks 52 weeks
ended ended ended
27 February 28 February 12 September
2016 2015 2015
GBPm GBPm GBPm
Continuing operations Note
------------------------------------------ ---- ------------ ------------ --------------
Revenue 1 6,117 6,248 12,800
Operating costs before exceptional
items (5,663) (5,820) (11,811)
Exceptional items - (98) (98)
454 330 891
Share of profit after tax
from joint ventures and associates 23 18 48
Profits less losses on disposal
of non-current assets - 5 8
------------------------------------------ ---- ------------ ------------ --------------
Operating profit 477 353 947
Adjusted operating profit 1 486 474 1,092
Profits less losses on disposal
of non-current assets - 5 8
(MORE TO FOLLOW) Dow Jones Newswires
April 19, 2016 02:00 ET (06:00 GMT)
Amortisation of non-operating
intangibles (9) (28) (55)
Exceptional item 2 - (98) (98)
Profits less losses on sale
and closure of businesses 6 - (116) (172)
------------------------------------------ ----
Profit before interest 477 237 775
Finance income 2 6 8
Finance expense (26) (32) (61)
Other financial income/(expense) 4 2 (5)
------------------------------------------ ---- ------------ ------------ --------------
Profit before taxation 457 213 717
Adjusted profit before taxation 466 450 1,034
Profits less losses on disposal
of non-current assets - 5 8
Amortisation of non-operating
intangibles (9) (28) (55)
Exceptional item 2 - (98) (98)
Profits less losses on sale
and closure of businesses 6 - (116) (172)
Taxation - UK (excluding tax
on exceptional item) (32) (36) (88)
- UK (on exceptional item) - 3 22
Taxation - Overseas (65) (56) (127)
3 (97) (89) (193)
------------------------------------------ ---- ------------ ------------ --------------
Profit for the period 360 124 524
========================================== ==== ============ ============ ==============
Attributable to:
Equity shareholders 357 143 532
Non-controlling interests 3 (19) (8)
------------------------------------------ ---- ------------ ------------ --------------
Profit for the period 360 124 524
========================================== ==== ============ ============ ==============
Basic and diluted earnings
per ordinary share (pence) 4 45.2 18.1 67.3
Dividends per share paid and
proposed for the period (pence) 5 10.3 10.0 35.0
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
24 weeks 24 weeks 52 weeks
ended ended ended
27 February 28 February 12 September
2016 2015 2015
GBPm GBPm GBPm
Profit for the period recognised
in the income statement 360 124 524
Other comprehensive income
Remeasurements of defined benefit
schemes 45 (58) 27
Deferred tax associated with
defined benefit schemes (10) 12 (5)
----------------------------------------- ----------- ----------- ------------
Items that will not be reclassified
to profit or loss 35 (46) 22
Effect of movements in foreign
exchange 279 (208) (457)
Net (loss)/gain on hedge of
net investment in foreign subsidiaries (42) 22 22
Deferred tax associated with
movements in foreign exchange 6 - 2
Current tax associated with
movements in foreign exchange 1 - 1
Reclassification adjustment
for movements in foreign exchange
on subsidiaries disposed - - (8)
Movement in cash flow hedging
position (2) 33 (56)
Deferred tax associated with
movement in cash flow hedging
position - (1) 11
Share of other comprehensive
income of joint ventures and
associates 9 - (2)
----------------------------------------- ----------- ----------- ------------
Items that are or may be subsequently
reclassified to profit or loss 251 (154) (487)
Other comprehensive income for
the period 286 (200) (465)
----------------------------------------- ----------- ----------- ------------
Total comprehensive income for
the period 646 (76) 59
----------------------------------------- ----------- ----------- ------------
Attributable to
Equity shareholders 661 (42) 150
Non-controlling interests (15) (34) (91)
----------------------------------------- ----------- ----------- ------------
Total comprehensive income for
the period 646 (76) 59
----------------------------------------- ----------- ----------- ------------
CONDENSED CONSOLIDATED BALANCE SHEET
27 February 28 February 12 September
2016 2015 2015
GBPm GBPm GBPm
Non-current assets
Intangible assets 1,425 1,431 1,367
Property, plant and equipment 4,736 4,515 4,488
Biological assets 83 99 83
Investments in joint ventures 196 167 180
Investments in associates 36 33 32
Employee benefits assets 177 30 125
Deferred tax assets 120 132 125
Other receivables 29 86 23
------------ ------------ -------------
Total non-current assets 6,802 6,493 6,423
------------ ------------ -------------
Current assets
Inventories 1,951 1,872 1,827
Biological assets 90 102 70
Trade and other receivables 1,281 1,258 1,176
Derivative assets 105 149 74
Cash and cash equivalents 583 283 702
------------ ------------ -------------
Total current assets 4,010 3,664 3,849
------------ ------------ -------------
TOTAL ASSETS 10,812 10,157 10,272
------------ ------------ -------------
Current liabilities
Loans and overdrafts (379) (459) (319)
Trade and other payables (2,200) (1,920) (2,226)
Derivative liabilities (49) (18) (33)
Income tax (112) (175) (126)
Provisions (35) (63) (38)
------------ ------------ -------------
Total current liabilities (2,775) (2,635) (2,742)
------------ ------------ -------------
Non-current liabilities
Loans (625) (625) (577)
Provisions (25) (29) (28)
Deferred tax liabilities (234) (245) (233)
Employee benefits liabilities (161) (131) (141)
------------ ------------ -------------
Total non-current liabilities (1,045) (1,030) (979)
------------ ------------ -------------
TOTAL LIABILITIES (3,820) (3,665) (3,721)
------------ ------------ -------------
NET ASSETS 6,992 6,492 6,551
------------ ------------ -------------
Equity
Issued capital 45 45 45
Other reserves 175 175 175
Translation reserve 147 70 (125)
Hedging reserve (14) 58 (11)
Retained earnings 6,446 5,862 6,252
------------ ------------ -------------
TOTAL EQUITY ATTRIBUTABLE
TO
EQUITY SHAREHOLDERS 6,799 6,210 6,336
(MORE TO FOLLOW) Dow Jones Newswires
April 19, 2016 02:00 ET (06:00 GMT)
Non-controlling interests 193 282 215
------------ ------------ -------------
TOTAL EQUITY 6,992 6,492 6,551
------------ ------------ -------------
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
24 weeks 24 weeks 52 weeks
ended ended ended
27 February 28 February 12 September
2016 2015 2015
Note GBPm GBPm GBPm
Cash flow from operating activities
Profit before taxation 457 213 717
Profits less losses on disposal
of non-current assets - (5) (8)
Profits less losses on sale
and closure of businesses - 116 172
Finance income (2) (6) (8)
Finance expense 26 32 61
Other financial (income)/expense (4) (2) 5
Share of profit after tax from
joint ventures and associates (23) (18) (48)
Amortisation 22 41 81
Depreciation 199 199 401
Exceptional item - 98 98
Net change in the fair value
of biological assets (30) (3) 4
Share-based payment expense - 4 11
Pension costs less contributions 5 6 6
Increase in inventories (56) (297) (310)
(Increase)/decrease in receivables (57) (20) 10
(Decrease)/increase in payables (79) (48) 234
Purchases less sales of current
biological assets - (1) (2)
Decrease in provisions (7) (17) (28)
-------------------------------------- ---- ----------- ----------- ------------
Cash generated from operations 451 292 1,396
Income taxes paid (87) (102) (230)
-------------------------------------- ---- ----------- ----------- ------------
Net cash from operating activities 364 190 1,166
-------------------------------------- ---- -----------
Cash flows from investing activities
Dividends received from joint
ventures and associates 10 30 50
Purchase of property, plant
and equipment (332) (289) (582)
Purchase of intangibles (16) (17) (31)
Purchase of non-current biological
assets - - (1)
Sale of property, plant and
equipment 7 29 72
Purchase of subsidiaries, joint
ventures and associates (9) (60) (52)
Sale of subsidiaries, joint
ventures and associates - 3 5
Loans to joint ventures - - (7)
Interest received 2 5 7
-------------------------------------- ----
Net cash from investing activities (338) (299) (539)
-------------------------------------- ---- ----------- ----------- ------------
Cash flows from financing activities
Dividends paid to non-controlling
interests (7) (8) (16)
Dividends paid to equity shareholders 5 (198) (192) (271)
Interest paid (21) (28) (64)
Financing:
Increase/(decrease) in short-term
loans 21 106 (115)
Increase/(decrease) in long-term
loans 4 (1) 15
Sale of shares in subsidiary
undertakings to non-controlling
interests - 11 11
Net cash from financing activities (201) (112) (440)
-------------------------------------- ---- ----------- ----------- ------------
Net (decrease)/increase in cash
and cash equivalents (175) (221) 187
Cash and cash equivalents at
the beginning of the period 585 399 399
Effect of movements in foreign
exchange 34 (11) (1)
-------------------------------------- ---- ----------- ----------- ------------
Cash and cash equivalents at
the end of the period 7 444 167 585
====================================== ==== =========== =========== ============
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 12
September
2015 45 175 (125) (11) 6,252 6,336 215 6,551
Total
comprehensive
income
Profit for the
period
recognised in
the income
statement - - - - 357 357 3 360
Remeasurements of
defined
benefit schemes - - - - 45 45 - 45
Deferred tax
associated
with defined
benefit
schemes - - - - (10) (10) - (10)
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Items that will
not
be reclassified
to
profit or loss - - - - 35 35 - 35
Effect of
movements
in foreign
exchange - - 298 - - 298 (19) 279
Net loss on hedge
of
net investment
in foreign
subsidiaries - - (42) - - (42) - (42)
Deferred tax
associated
with movements
in foreign
exchange - - 6 - - 6 - 6
Current tax
associated
with movements
in foreign
exchange - - 1 - - 1 - 1
Movement in cash
flow
hedging position - - - (3) - (3) 1 (2)
Share of other
comprehensive
income of joint
ventures
and associates - - 9 - - 9 - 9
Items that are or
may
be subsequently
reclassified
to profit or
loss - - 272 (3) - 269 (18) 251
Other
comprehensive
income - - 272 (3) 35 304 (18) 286
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Total
comprehensive
income - - 272 (3) 392 661 (15) 646
Transactions with
owners
Dividends paid to
equity
shareholders 5 - - - - (198) (198) - (198)
Dividends paid to
non-controlling
interests - - - - - - (7) (7)
Total
transactions
with owners - - - - (198) (198) (7) (205)
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Balance as at 27
February
2016 45 175 147 (14) 6,446 6,799 193 6,992
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Balance as at 13
September
2014 45 175 238 29 5,950 6,437 316 6,753
Total
comprehensive
income
Profit for the
period
recognised in
the income
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April 19, 2016 02:00 ET (06:00 GMT)
statement - - - - 143 143 (19) 124
Remeasurements of
defined
benefit schemes - - - - (58) (58) - (58)
Deferred tax
associated
with defined
benefit
schemes - - - - 12 12 - 12
Items that will
not
be reclassified
to
profit or loss - - - - (46) (46) - (46)
Effect of
movements
in foreign
exchange - - (190) (3) - (193) (15) (208)
Net gain on hedge
of
net investment
in foreign
subsidiaries - - 22 - - 22 - 22
Movement in cash
flow
hedging position - - - 33 - 33 - 33
Deferred tax
associated
with movement in
cash
flow hedging
position - - - (1) - (1) - (1)
Items that are or
may
be subsequently
reclassified
to profit or
loss - - (168) 29 - (139) (15) (154)
Other
comprehensive
income - - (168) 29 (46) (185) (15) (200)
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Total
comprehensive
income - - (168) 29 97 (42) (34) (76)
Transactions with
owners
Dividends paid to
equity
shareholders 5 - - - - (192) (192) - (192)
Net movement in
own
shares held - - - - 4 4 - 4
Dividends paid to
non-controlling
interests - - - - - - (8) (8)
Acquisition of
non-controlling
interests - - - - 3 3 8 11
Total
transactions
with owners - - - - (185) (185) - (185)
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Balance as at 28
February
2015 45 175 70 58 5,862 6,210 282 6,492
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Balance as at 13
September
2014 45 175 238 29 5,950 6,437 316 6,753
Total
comprehensive
income
Profit for the
period
recognised in
the income
statement - - - - 532 532 (8) 524
Remeasurements of
defined
benefit schemes - - - - 26 26 1 27
Deferred tax
associated
with defined
benefit
schemes - - - - (5) (5) - (5)
Items that will
not
be reclassified
to
profit or loss - - - - 21 21 1 22
Effect of
movements
in foreign
exchange - - (376) (1) - (377) (80) (457)
Net gain on hedge
of
net investment
in foreign
subsidiaries - - 22 - - 22 - 22
Deferred tax
associated
with movements
in foreign
exchange - - - - - - 2 2
Current tax
associated
with movements
in foreign
exchange - - 1 - - 1 - 1
Reclassification
adjustment
for movement in
foreign
exchange on
subsidiaries
disposed - - (8) - - (8) - (8)
Movement in cash
flow
hedging position - - - (49) - (49) (7) (56)
Deferred tax
associated
with movement in
cash
flow hedging
position - - - 10 - 10 1 11
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 - - (363) (40) - (403) (84) (487)
Other
comprehensive
income - - (363) (40) 21 (382) (83) (465)
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Total
comprehensive
income - - (363) (40) 553 150 (91) 59
Transactions with
owners
Dividends paid to
equity
shareholders 5 - - - - (271) (271) - (271)
Net movement in
own
shares held - - - - 11 11 - 11
Current tax
associated
with share-based
payments - - - - 4 4 - 4
Dividends paid to
non-controlling
interests - - - - - - (16) (16)
Acquisition of
non-controlling
interests - - - - 5 5 6 11
Total
transactions
with owners - - - - (251) (251) (10) (261)
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Balance as at 12
September
2015 45 175 (125) (11) 6,252 6,336 215 6,551
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1. Operating
segments
The group has five operating segments, as described
below. These are the group's operating divisions, based
on the management and internal reporting structure,
which combine businesses with common characteristics,
primarily in respect of the type of products offered
but also the production processes involved and the manner
of the distribution and sale of goods. 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 sale to industrial users and
to Silver Spoon, which is included in the grocery
segment.
Grocery The manufacture of animal feeds and the provision
of other products and services for the agriculture
sector.
Sugar The manufacture of bakers' yeast, bakery ingredients,
enzymes, lipids, yeast extracts and cereal specialities.
Agriculture Buying and merchandising value clothing and
Ingredients accessories through the Primark and Penneys
Retail retail chains.
Geographical information
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April 19, 2016 02:00 ET (06:00 GMT)
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
27 February 28 February 12 September 27 February 28 February 12 September
2016 2015 2015 2016 2015 2015
Operating
segments GBPm GBPm GBPm GBPm GBPm GBPm
------------ ------------ ------------- ------------ ------------ -------------
Grocery 1,520 1,580 3,177 130 128 285
Sugar 843 928 1,818 6 (3) 43
Agriculture 491 577 1,211 22 23 60
Ingredients 596 616 1,247 40 28 76
Retail 2,667 2,547 5,347 313 322 673
Central - - - (25) (24) (45)
------------ ------------ ------------- ------------ ------------ -------------
6,117 6,248 12,800 486 474 1,092
------------ ------------ ------------- ------------ ------------ -------------
Geographical
information
United Kingdom 2,488 2,574 5,444 210 248 535
Europe & Africa 2,080 2,077 4,080 163 142 335
The Americas 654 622 1,269 77 73 148
Asia Pacific 895 975 2,007 36 11 74
------------ ------------ ------------- ------------ ------------ -------------
6,117 6,248 12,800 486 474 1,092
------------ ------------ ------------- ------------ ------------ -------------
1 Operating segments for the 24
weeks ended 27 February 2016
Grocery Sugar Agriculture Ingredients Retail Central Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue from continuing
businesses 1,521 904 493 669 2,667 (137) 6,117
Internal revenue (1) (61) (2) (73) - 137 -
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Revenue from external
customers 1,520 843 491 596 2,667 - 6,117
Adjusted operating
profit before joint
ventures and associates 117 5 18 35 313 (25) 463
Share of profit after
tax from joint ventures
and associates 13 1 4 5 - - 23
Adjusted operating
profit 130 6 22 40 313 (25) 486
Amortisation of non-operating
intangibles (9) - - - - - (9)
Profit before interest 121 6 22 40 313 (25) 477
Finance income 2 2
Finance expense (26) (26)
Other financial income 4 4
Taxation (97) (97)
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Profit for the period 121 6 22 40 313 (142) 360
================================ ======== ====== ============ ============ ========= ======== ========
Segment assets (excluding
joint ventures and
associates) 2,470 2,285 363 1,253 3,225 104 9,700
Investments in joint
ventures and associates 29 19 129 55 - - 232
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Segment assets 2,499 2,304 492 1,308 3,225 104 9,932
Cash and cash equivalents 583 583
Deferred tax assets 120 120
Employee benefits
assets 177 177
Segment liabilities (477) (456) (108) (221) (928) (119) (2,309)
Loans and overdrafts (1,004) (1,004)
Income tax (112) (112)
Deferred tax liabilities (234) (234)
Employee benefits
liabilities (161) (161)
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Net assets 2,022 1,848 384 1,087 2,297 (646) 6,992
================================ ======== ====== ============ ============ ========= ======== ========
Non-current asset
additions 46 70 14 25 140 - 295
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Depreciation 44 39 4 21 89 2 199
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Amortisation 17 2 1 2 - - 22
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Geographical information United Europe The Asia
Kingdom & Africa Americas Pacific Total
GBPm GBPm GBPm GBPm GBPm
------------------------------- --------- ------ ------------ ------------ --------- -------- --------
Revenue from external
customers 2,488 2,080 654 895 6,117
-------------------------------- ------------ ------ ------------ ------------ --------- -------- --------
Segment assets 4,070 3,191 1,095 1,576 9,932
-------------------------------- ------------ ------ ------------ ------------ --------- -------- --------
Non-current asset
additions 118 124 28 25 295
-------------------------------- ------------ ------ ------------ ------------ --------- -------- --------
Depreciation 95 59 15 30 199
-------------------------------- ------------ ------ ------------ ------------ --------- -------- --------
Amortisation 10 5 2 5 22
-------------------------------- ------------ ------ ------------ ------------ --------- -------- --------
1 Operating segments for the 24
weeks ended 28 February 2015
Grocery Sugar Agriculture Ingredients Retail Central Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue from continuing
businesses 1,581 960 577 693 2,547 (110) 6,248
Internal revenue (1) (32) - (77) - 110 -
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April 19, 2016 02:00 ET (06:00 GMT)
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Revenue from external
customers 1,580 928 577 616 2,547 - 6,248
Adjusted operating
profit before joint
ventures and associates 118 (3) 20 23 322 (24) 456
Share of profit after
tax from joint ventures
and associates 10 - 3 5 - - 18
Adjusted operating
profit 128 (3) 23 28 322 (24) 474
Profit less losses
on disposal of non-current
assets 7 1 - - 1 (4) 5
Amortisation of non-operating
intangibles (10) (18) - - - - (28)
Exceptional item - (98) - - - - (98)
Profits less losses
on sale and closure
of businesses - (116) - - - - (116)
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Profit before interest 125 (234) 23 28 323 (28) 237
Finance income 6 6
Finance expense (32) (32)
Other financial income 2 2
Taxation (89) (89)
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Profit for the period 125 (234) 23 28 323 (141) 124
================================ ======== ====== ============ ============ ========= ======== ========
Segment assets (excluding
joint ventures and
associates) 2,466 2,454 356 1,218 2,861 157 9,512
Investments in joint
ventures and associates 22 14 116 48 - - 200
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Segment assets 2,488 2,468 472 1,266 2,861 157 9,712
Cash and cash equivalents 283 283
Deferred tax assets 132 132
Employee benefits
assets 30 30
Segment liabilities (463) (515) (121) (213) (575) (143) (2,030)
Loans and overdrafts (1,084) (1,084)
Income tax (175) (175)
Deferred tax liabilities (245) (245)
Employee benefits
liabilities (131) (131)
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Net assets 2,025 1,953 351 1,053 2,286 (1,176) 6,492
================================ ======== ====== ============ ============ ========= ======== ========
Non-current asset
additions 53 55 8 24 131 2 273
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Depreciation 45 48 4 22 78 2 199
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Amortisation 18 20 1 2 - - 41
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Exceptional item - 98 - - - - 98
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of property,
plant and equipment
on closure of business - 14 - - - - 14
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of intangibles
on closure of business - 5 - - - - 5
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of goodwill
on closure of business - 46 - - - - 46
-------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Geographical information United Europe The Asia
Kingdom & Africa Americas Pacific Total
GBPm GBPm GBPm GBPm GBPm
------------------------------- --------- ------ ------------ ------------ --------- -------- --------
Revenue from external
customers 2,574 2,077 622 975 6,248
-------------------------------- ------------ ------ ------------ ------------ --------- -------- --------
Segment assets 4,232 3,007 971 1,502 9,712
-------------------------------- ------------ ------ ------------ ------------ --------- -------- --------
Non-current asset
additions 106 122 17 28 273
-------------------------------- ------------ ------ ------------ ------------ --------- -------- --------
Depreciation 90 58 12 39 199
-------------------------------- ------------ ------ ------------ ------------ --------- -------- --------
Amortisation 10 24 2 5 41
-------------------------------- ------------ ------ ------------ ------------ --------- -------- --------
Exceptional item 98 - - - 98
-------------------------------- ------------ ------ ------------ ------------ --------- -------- --------
Impairment of property,
plant and equipment
on closure of business - - - 14 14
-------------------------------- ------------ ------ ------------ ------------ --------- -------- --------
Impairment of intangibles
on closure of business - - - 5 5
-------------------------------- ------------ ------ ------------ ------------ --------- -------- --------
Impairment of goodwill
on closure of business - - - 46 46
-------------------------------- ------------ ------ ------------ ------------ --------- -------- --------
1 Operating segments for the 52 weeks
ended 12 September 2015
Grocery Sugar Agriculture Ingredients Retail Central Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue from continuing
businesses 3,179 1,887 1,213 1,402 5,347 (228) 12,800
Internal revenue (2) (69) (2) (155) - 228 -
----------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Revenue from external
customers 3,177 1,818 1,211 1,247 5,347 - 12,800
Adjusted operating
profit before joint
ventures and associates 259 43 48 66 673 (45) 1,044
Share of profit after
tax from joint ventures
and associates 26 - 12 10 - - 48
Adjusted operating
profit 285 43 60 76 673 (45) 1,092
Profits less losses
on disposal of non-current
assets 19 3 1 - (8) (7) 8
Amortisation of non-operating
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April 19, 2016 02:00 ET (06:00 GMT)
intangibles (19) (35) - (1) - - (55)
Exceptional item - (98) - - - - (98)
Profits less losses
on sale and closure
of businesses 6 (181) 3 - - - (172)
Profit before interest 291 (268) 64 75 665 (52) 775
Finance income 8 8
Finance expense (61) (61)
Other financial expense (5) (5)
Taxation (193) (193)
----------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Profit for the period 291 (268) 64 75 665 (303) 524
=================================== ======== ====== ============ ============ ========= ======== ========
Segment assets (excluding
joint ventures and
associates) 2,369 2,069 318 1,142 3,126 84 9,108
Investments in joint
ventures and associates 22 17 125 48 - - 212
----------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Segment assets 2,391 2,086 443 1,190 3,126 84 9,320
Cash and cash equivalents 702 702
Deferred tax assets 125 125
Employee benefits
assets 125 125
Segment liabilities (451) (391) (115) (230) (1,034) (104) (2,325)
Loans and overdrafts (896) (896)
Income tax (126) (126)
Deferred tax liabilities (233) (233)
Employee benefits
liabilities (141) (141)
----------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Net assets 1,940 1,695 328 960 2,092 (464) 6,551
=================================== ======== ====== ============ ============ ========= ======== ========
Non-current asset
additions 104 121 17 58 351 6 657
----------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Depreciation 94 76 9 45 173 4 401
----------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Amortisation 37 39 2 3 - - 81
----------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Exceptional item - 98 - - - - 98
----------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of goodwill
on disposal of business - 46 - - - - 46
----------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of intangibles
on closure of business - 11 - - - - 11
----------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Geographical information United Europe The Asia
Kingdom & Africa Americas Pacific Total
GBPm GBPm GBPm GBPm GBPm
------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Revenue from external
customers 5,444 4,080 1,269 2,007 12,800
----------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Segment assets 3,977 3,059 1,009 1,275 9,320
----------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Non-current asset
additions 216 289 91 61 657
----------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Depreciation 185 118 27 71 401
----------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Amortisation 29 38 4 10 81
----------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Exceptional item 98 - - - 98
----------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of goodwill
on disposal of business - - - 46 46
----------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of intangibles
on closure of business - - 11 - 11
----------------------------------- -------- ------ ------------ ------------ --------- -------- --------
2. Exceptional item
The exceptional item in 2015 was a GBP98m non-cash
charge to impair the group's shareholder loans to
Vivergo Fuels which, at the time of the impairment,
was a joint venture in which the group's equity interest
was 47%. An exceptional tax credit of GBP22m arose
on this item.
3. Income tax expense
24 weeks 24 weeks 52 weeks
ended ended ended
27 February 28 February 12 September
2016 2015 2015
GBPm GBPm GBPm
Current tax expense
UK - corporation tax at 20.0%/20.5%/20.5% 38 35 74
Overseas - corporation tax 57 47 109
UK - over provided in prior
periods - - (10)
Overseas - over provided in
prior periods - - (15)
95 82 158
Deferred tax expense
UK deferred tax (6) (2) (6)
Overseas deferred tax 8 9 25
UK - under provided in prior
periods - - 8
Overseas - under provided
in prior periods - - 8
----------- ----------- ------------
2 7 35
Total income tax expense in
income statement 97 89 193
=========== =========== ============
Reconciliation of effective
tax rate
Profit before taxation 457 213 717
Less share of profit after
tax from joint ventures and
associates (23) (18) (48)
----------- ----------- ------------
Profit before taxation excluding
share of profit after tax
from joint ventures and associates 434 195 669
----------- ----------- ------------
Nominal tax charge at UK corporation
tax rate of 20.0%/20.5%/20.5% 87 40 137
Effect of higher and lower
tax rates on overseas earnings 5 (2) (29)
Effect of changes in tax rates
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on income statement (5) 1 3
Expenses not deductible for
tax purposes 7 25 58
Disposal of assets covered
by tax exemptions or unrecognised
capital losses - 23 23
Deferred tax not recognised 3 2 10
Adjustments in respect of
prior periods - - (9)
----------- ----------- ------------
97 89 193
=========== =========== ============
Income tax recognised directly
in equity
Deferred tax associated with
defined benefit schemes 10 (12) 5
Current tax associated with
share-based payments - - (4)
Deferred tax associated with
movement in cash flow hedging
position - 1 (11)
Deferred tax associated with
movements in foreign exchange (6) - (2)
Current tax associated with
movements in foreign exchange (1) - (1)
3 (11) (13)
=========== =========== ============
The UK corporation tax was reduced from 21% to 20%
with effect from 1 April 2015. The legislation to effect
this rate change had been enacted before the prior
year balance sheet date. In October 2015 legislation
was substantively enacted to reduce the rate further
to 19% from 1 April 2017 and to 18% from 1 April 2020.
Accordingly, UK deferred tax has been measured taking
these rates into account.
It has recently been announced that the UK corporation
tax rate will be further reduced to 17% from 1 April
2020. However, this has not yet been substantively
enacted and is not reflected in these interim results.
4. Earnings per ordinary share 24 weeks 24 weeks 52 weeks
ended ended ended
27 February 28 February 12 September
2016 2015 2015
pence pence pence
Adjusted earnings per share 46.1 46.1 102.0
Disposal of non-current assets - 0.6 1.0
Sale and closure of businesses - (14.2) (21.7)
Exceptional item - (12.4) (12.4)
Tax effect on above adjustments - 0.3 2.4
Amortisation of non-operating
intangibles (1.2) (3.5) (7.0)
Tax credit on non-operating
intangibles amortisation and
goodwill 0.3 0.6 1.0
Non-controlling interests'
share of the above adjustments - 0.6 2.0
Earnings per ordinary share 45.2 18.1 67.3
=========== =================== ============
5. Dividends 24 weeks 24 weeks 52 weeks
ended ended ended
27 February 28 February 12 September
2016 2015 2015
pence pence pence
Per share
2014 final - 24.3 24.3
2015 interim - - 10.0
2015 final 25.0 - -
----------- ------------------- ------------
25.0 24.3 34.3
=========== =================== ============
Total GBPm GBPm GBPm
2014 final - 192 192
2015 interim - - 79
2015 final 198 - -
----------- ------------------- ------------
198 192 271
=========== =================== ============
The 2015 final dividend of 25.0p per share was approved
on 4 December 2015 and totalled GBP198m when paid
on 8 January 2016. The 2016 interim dividend of 10.3p
per share, total value of GBP81m, will be paid on
1 July 2016 to shareholders on the register on 3
June 2016.
6. Acquisitions and disposals
During the period the group acquired two small Agriculture
businesses in Europe. Total consideration paid was
GBP8m, acquiring net assets of GBP5m, resulting in
goodwill of GBP3m. GBP1m was paid in respect of deferred
consideration on prior year acquisitions.
At the 2015 half year, the GBP116m charge related
entirely to the closure of the Yi'an and BoCheng
beet sugar factories in Heilongjiang province in
north China, which were subsequently sold.
In the year ended 12 September 2015, the group sold
the Yi'an and BoCheng beet sugar factories and restructured
the associated head office in Beijing, incurring
a mainly non-cash charge of GBP100m. Also in the
Sugar segment, the group incurred a net GBP75m non-cash
charge arising on the acquisition of BP's 47% interest
in Vivergo Fuels in the UK, and an GBP11m charge
for the write-off of an intangible on closure of
a small business in North America. The group also
released GBP14m of warranty provisions arising on
prior year disposals that were no longer required,
comprising GBP6m in Grocery in the UK, GBP4m in European
Sugar, GBP1m in China Sugar and GBP3m in Agriculture
in the UK.
7. Analysis of net debt
At At
12 September Non-cash Exchange 27 February
2015 Cash flow items adjustments 2016
GBPm GBPm GBPm GBPm GBPm
Cash at bank and
in hand, cash equivalents
and overdrafts 585 (175) - 34 444
Short-term loans (202) (21) (7) (10) (240)
Long-term loans (577) (4) 7 (51) (625)
------------- --------- -------- ------------ ------------
(194) (200) - (27) (421)
============= ========= ======== ============ ============
Cash and cash equivalents comprise bank and cash balances,
call deposits and short-term investments with original
maturities of three months or less. Bank overdrafts
that are repayable on demand of GBP139m form an integral
part of the group's cash management and are included
as a component of cash and cash equivalents for the
purpose of the cash flow statement.
Derivative assets include GBP56m in respect of a number
of cross-currency swaps which have the economic effect
of matching the currency mix of the group's US private
placement debt more closely to the currency mix of
its operating asset base. These derivative assets
are not included in the group's net debt.
8. 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 12 September
2015. There have been no material changes in these
relationships in the 24 weeks ended 27 February 2016
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.
9. 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 27 February 2016 comprise
those of the Company and its subsidiaries (together
referred to as 'the group') and the group's interests
in associates and joint ventures.
The consolidated financial statements of the group
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for the 52 weeks ended 12 September 2015 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 12 September 2015.
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 12 September
2015.
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
129 to 138 of the 2015 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. The current reporting
year ends on 17 September 2016 and will be 53 weeks
long with a 29 week second half. 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 19 April 2016. 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 statutory financial statements
for that period. Those financial statements have
been reported on by the Company's auditor for that
period and delivered to the Registrar of Companies.
The report of the auditor was unqualified, did not
include a reference to any matters to which the auditor
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.
10. 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 12 September 2015, including for
derivatives and biological assets, which are recognised
in the balance sheet at fair value and fair value
less costs to sell, respectively. The methodology
for selecting assumptions underpinning the fair value
calculations has not changed since 12 September 2015.
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 59 of the group's
statutory financial statements for the 52 weeks ended 12 September
2015, as part of the strategic 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
19 April 2016 19 April 2016 19 April 2016
Independent review report to Associated British Foods plc
Introduction
We have been engaged by the Company to review the condensed
consolidated interim financial statements in the interim results
announcement for the 24 weeks ended 27 February 2016 which comprise
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
consolidated interim financial statements.
This report is made solely to the Company in accordance with
guidance contained in 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. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
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 Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 9, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards as adopted by the European Union. The condensed
consolidated interim financial statements included in this interim
results announcement have been prepared in accordance with
International Accounting Standard 34 Interim Financial Reporting as
adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed consolidated interim financial statements in the
interim results announcement based on our review.
Scope of review
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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 United Kingdom. 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 consolidated interim
financial statements in the interim results announcement for the 24
weeks ended 27 February 2016 are not prepared, in all material
respects, in accordance with International Accounting Standard 34
Interim Financial Reporting as adopted by the European Union and
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Ernst & Young LLP
London
19 April 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFVDSIITLIR
(END) Dow Jones Newswires
April 19, 2016 02:00 ET (06:00 GMT)
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