TIDMABF
RNS Number : 6541C
Associated British Foods PLC
19 April 2017
For release 19 April 2017
Associated British Foods plc announces its
interim results for the 24 weeks ended 4 March 2017
Excellent progress on all fronts
Financial highlights
Actual Constant
currency
* Group revenue GBP7,296m +19% +7%
* Adjusted operating profit GBP652m +36% +23%
* Adjusted profit before tax GBP624m +35%
* Adjusted earnings per share 59.7p +30%
* Dividend per share 11.35p +10%
GBP416m
* Gross capital investment
GBP190m
* Net cash
* Statutory operating profit up 36% to GBP640m and,
with the benefit of a profit on the sale of
businesses, profit before tax up 92% to GBP867m and
basic earnings per share up 79% to 80.5p
George Weston, Chief Executive of Associated British Foods,
said:
"The underlying growth of the group at constant currency was
strong in the first half. Primark delivered a substantial increase
in selling space which, together with its strong consumer offering,
contributed to a further increase in our share of the total
clothing market. Furthermore, we achieved a more acceptable rate of
return in Sugar and further good progress was made by our
Ingredients and Grocery businesses."
Adjusted operating profit is stated before the amortisation of
non-operating intangibles, profits less losses on disposal of
non-current assets and transaction costs. These items, together
with profits less losses on the sale and closure of businesses, are
excluded from adjusted profit before tax and adjusted earnings per
share. Constant currency is derived by translating the 2016 results
at 2017 average exchange rates.
References to operating profit in the Operating Review are based
on the adjusted measure defined above.
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
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 WEEKSED 4 MARCH 2017
CHAIRMAN'S STATEMENT
I am very pleased to report excellent progress across the whole
group in the period. Revenue of GBP7.3bn in the first half was 19%
ahead of last year and adjusted operating profit of GBP652m was 36%
ahead. This growth includes the benefit of the devaluation of
sterling on the translation of our overseas results. The total
increase of GBP171m in adjusted operating profit included GBP51m of
currency benefit. The underlying growth of the group was therefore
strong with revenue up 7% and adjusted operating profit up 23% at
constant currency.
Net financing costs remained at a similar level to last year
primarily due to the effect of translation of interest on our
foreign currency denominated debt. As previously indicated, last
year's tax rate benefited from the revaluation of deferred tax to
reflect announced reductions in the UK corporation tax rate and, as
a result, this year's underlying rate has increased from 21.3% to
22.7%. Adjusted earnings per share were 30% ahead at 59.7
pence.
We completed the disposal of two businesses during the period:
US herbs and spices and our south China cane sugar operations.
These disposals generated a profit of GBP255m, with an associated
tax charge of GBP82m, both of which are included in the group's
statutory performance measures. As a result, profit before tax was
92% higher than last year and earnings per share were 79%
ahead.
I said in my statement in last year's annual report that 2016
would be seen as a turning point for AB Sugar. Our sugar businesses
were the largest single driver of the group's underlying profit
improvement in the first half. Higher sugar prices and further
significant savings generated by performance improvement both
contributed to this and to a more acceptable return on investment.
Illovo is the leading producer of sugar in Africa and our move to
full ownership last year has enabled us to focus on accelerating
its performance improvement and commercial development in markets
with high growth in both population and income per capita.
Primark's growth continued apace with a revenue increase of 12%
on a comparable basis with last year at constant currency. The
opening of 16 new stores with 0.8 million sq. ft. of selling space,
across eight countries in 24 weeks was a major achievement and
early trading from these stores has been ahead of expectations.
Primark performed well in the highly competitive UK market with
like-for-like growth and a strong increase in its market share. The
impact of the US dollar's strength on Primark's input costs have
been well flagged and our commitment to price leadership in
clothing retail has seen, as forecast, a decline in its operating
margin.
I would also highlight the major contribution made to the
group's profit growth by the substantial increases from Grocery and
Ingredients.
Cash flow before acquisitions and disposals was further improved
this year driven by the higher profit and a lower working capital
outflow. Gross capital expenditure of GBP416m was higher than last
year driven by Primark's expansion. Proceeds from the sale of
businesses net of tax paid amounted to GBP503m, including debt
assumed by the purchaser in China. Net consideration paid on a
number of small acquisitions amounted to GBP81m. When combined with
the strong operational cash flow, the group had a net cash balance
at the half year of GBP190m which compared with net debt of GBP315m
at the beginning of the financial year.
The consequences for the group of the decision by the UK to
leave the EU should be seen in the context of the diversity of our
operations and geographical footprint, combined with a business
model that wherever possible aligns food production with the end
markets for our products and a discrete UK supply chain for
Primark. Nevertheless, we have had a dedicated team working for
many months to determine the consequences of Brexit for us, and our
businesses are now working to seize the opportunities and mitigate
any risks. We are actively engaging with a number of Government
departments to ensure that these opportunities and risks are
recognised.
Dividend
The board has declared an interim dividend of 11.35 pence per
share, an increase of 10% on last year. The dividend will be paid
on 7 July 2017 to shareholders registered at the close of business
on 9 June 2017.
Outlook
The growth in earnings achieved in the first half has been
excellent. We expect the underlying revenue momentum in all of our
businesses to continue in the second half. However, profit growth
in the second half will, at current exchange rates, be tempered
primarily by a smaller translation benefit and the full effect of
the devaluation of sterling against the US dollar on Primark's
margin.
Our outlook for the group's full year results has improved and
we now expect to report good growth in adjusted operating profit
and adjusted earnings per share.
Charles Sinclair
Chairman
19 April 2017
OPERATING REVIEW
The underlying growth of the group at constant currency was
strong in the first half with revenue up 7% and adjusted operating
profit up 23% at constant currency. With some two thirds of the
group's revenues and operating profit generated outside the UK, the
weakness of sterling has been very favourable on the translation of
these overseas results. The translation benefit in operating profit
in the first half was GBP51m.
These results demonstrate the excellent progress made across the
group. Primark's revenue growth of 12% at constant currency and on
a comparable week basis with last year reflected its ability to
deliver a very strong, geographically broad-based, expansion of its
selling space and to trade well and gain share in competitive
European markets. It was pleasing to see the jump in Sugar profits
which was the result of higher prices and hard work to deliver
performance improvement. Further margin progress and profit growth
was achieved by Grocery with growth from Twinings Ovaltine and
margin recovery at George Weston Foods in Australia. The recovery
in Ingredients, sustained over the last few years through a
combination of performance improvement, cost reduction and
commercial development, is also very encouraging.
Further growth in operating profit is expected in the second
half but not at the rate achieved in the first half, for the
following reasons: the translation benefit in operating profit, if
exchange rates remain at current levels, will be less in the second
half; the full effect of sterling weakness against the US dollar on
Primark's purchases will result in a greater margin decline in the
second half because our currency hedges were at more advantageous
exchange rates in the first half; last year's change in Illovo's
financial year end has benefited the first half; and the second
half last year benefited from an extra week's trading as 2016 was a
53 week year for the group.
GROCERY
Continuing operations 2017 2016 Actual fx Constant
fx
----------------------- ------ ------ ---------- ---------
Revenue GBPm 1,658 1,441 +15% +2%
----------------------- ------ ------ ---------- ---------
Operating profit
GBPm 151 126 +20% +4%
----------------------- ------ ------ ---------- ---------
Revenue and operating profit from continuing operations in the
first half were ahead of last year at constant currency and
substantially ahead at actual exchange rates. Margin made further
progress and increased from 8.7% to 9.1%.
Twinings Ovaltine revenues were well ahead of last year at
constant currency and, with almost 80% of sales generated overseas,
revenues at actual exchange rates were even further ahead. Twinings
achieved market share gains in the UK, the US, Australia and
France. Ovaltine sales showed good growth in the developing markets
of Vietnam and Brazil and a number of new product successes drove
an increase in Thailand.
Allied Bakeries achieved higher sales volumes in the first half,
and the distinctive new pack design for Kingsmill was well received
by customers and consumers. The market remains competitive, and
with inflationary cost pressures, margins have declined as a
consequence. Work commenced last September on the upgrade of the
Speedibake bakery in Wakefield in preparation for the installation
of a new doughnut line to increase production capacity. The retail
sugar market was also competitive and resulted in a decline in
margins at Silver Spoon.
In the UK, Jordans achieved good growth driven by Muesli and
Country Crisp, and Dorset Cereals made further progress following
its relaunch with a number of award-winning new products. Exports
of both brands performed particularly well, notably in Australia,
Belgium, the Netherlands and France. The rate of decline in Ryvita
crispbread volumes slowed, benefiting from the launch of portion
packs and new variants including Apple & Cinnamon and Cracked
Black Pepper, both of which won Great Taste awards. At AB World
Foods, Patak's and Blue Dragon have made a good start to the year
with strong sales growth in international markets.
During the first half we acquired two small sports nutrition
businesses in the UK which have well-known brands in targeted niche
markets. High5 is a hydration and energy brand popular with
endurance athletes and Reflex provides a range of premium
protein-based recovery products. This is a new high-growth market
segment and we plan to develop these brands and broaden their
distribution.
Trading from continuing operations at ACH in North America was
stronger than last year with higher consumer oil volumes and better
margins. Home baking product volumes also increased resulting in
share gains. As previously announced, we completed the sale of the
herbs and spices business on 21 November 2016 for a gross cash
consideration of GBP294m and the assumption by the purchaser of net
pension liabilities which, last year end, amounted to GBP14m. Tax
of some GBP70m will be payable on the transaction in the current
year. Oil volumes in Mexico have improved but weakness in the peso
kept margin under pressure. Stratas Foods, our commodity oils joint
venture, completed the purchase of Supreme Oil, based in New
Jersey, thereby expanding its manufacturing presence in the
northeast of the US. Supreme supplies a variety of oils,
shortenings, mayonnaise and dressings to foodservice and
retail.
Operating margins improved at George Weston Foods in Australia
with market share gains achieved by its bakery and meat businesses.
Tip Top achieved volume growth for its mainstream bread brand, 'The
One', and the launch last September of Abbott's gluten free loaf
was well received. Continued cost reduction at the Castlemaine
factory contributed to margin improvement for Don KRC.
SUGAR
Continuing operations 2017 2016 Actual fx Constant
restated fx
----------------------- ------ ---------- ---------- ---------
Revenue GBPm 1,081 811 +33% +16%
----------------------- ------ ---------- ---------- ---------
Operating profit
GBPm 123 3
----------------------- ------ ---------- ---------- ---------
AB Sugar revenue from continuing operations was well ahead of
last year on a comparable basis taking into account last year's
alignment of Illovo's year end with that of the rest of the group.
The change in Illovo's financial year end had the effect of
including the month of September, a period of high sales and
profit, in this year's first half. Higher sugar prices, increased
production in Africa, and further benefit from the performance
improvement programme drove the substantial increase in profit. The
operating profit for 2016 has been restated for the change of
accounting policy for cane roots adopted in the second half of last
year.
With 2016/17 forecast to be the second year of global sugar
deficit, world prices are higher than last year. A tightening of EU
stock levels has strengthened domestic prices across the region and
in Africa, domestic and regional prices increased as a result of
higher US dollar denominated world prices.
In the UK, the operating result in the first half was much
improved compared to last year with higher prices, lower beet costs
and a weaker sterling/euro exchange rate. With sales fully
contracted for the year we expect an improvement in British Sugar's
result for the full year. The contracted growing area for 2016/17
was below that of the prior year and, with lower beet yields
resulting from unfavourable planting conditions last year, sugar
production at 900,000 tonnes was much lower than normal. The
campaign started later in order to maximise the growth of the crop
and was completed at all sites by late February. As a consequence
the high level of sugar stocks at the beginning of the year has
reduced to meet sales demand. The contracted growing area for
2017/18 has been increased and planting by growers is well
advanced.
The new anaerobic digestion plant at Bury St Edmunds, which
produces biogas from sugar beet pulp, became operational in the
summer of 2016. The biogas is fed into a gas engine capable of
generating five megawatts of low-carbon, renewable, electricity for
export to the national grid. This plant will also make a major
contribution to cost reduction by lowering the volume of pulp
needing to be dried and transported off site.
Vivergo's performance fell short of last year, primarily as a
result of lower ethanol prices and higher wheat prices. The ongoing
focus on optimising the plant's operating performance led to an
extension of the annual maintenance shutdown, which was completed
in mid-February, and delivered a number of process
improvements.
In Spain, the operating profit was much improved with the
benefit of higher sugar prices, increased co-product revenues and
the continued roll-out of profit improvement activities. Azucarera
is expected to produce close to 385,000 tonnes of sugar from beet
and the campaign has finished in Toro and Miranda with both sites
performing well. In response to strengthening customer demand and
partly to compensate for a lower volume of beet sugar, the
Guadalete refinery, which processes cane raws, is operating this
year and is now expected to produce 295,000 tonnes. Additional
imported raw sugar has been refined at the northern beet
factories.
Illovo made good progress following last year's weather-related
crop shortfalls and, with further recovery expected in the new
season, sugar production in this financial year is expected to
improve to 1.7 million tonnes compared with 1.4 million tonnes
produced in the comparable months last year. Revenue increased
substantially in the first half driven by higher volumes and
prices, and benefited from the introduction of new pack sizes for
the consumer which improve product positioning and availability.
Cost reduction from performance improvement initiatives in Zambia,
Malawi and Mozambique substantially mitigated local inflation. The
new refining and sugar conditioning facility at the Nakambala plant
in Zambia has been fully operational this year and has the capacity
to meet the growing regional demand for more refined sugars.
In China, we completed the sale of our five cane sugar factories
to a consortium led by Nanning Sugar on 22 December 2016 for total
proceeds, including debt assumed, of GBP297m. Tax arising on the
transaction is not expected to be material. Our continuing
operations now comprise two beet factories in north China at
Zhangbei and Qianqi. These plants processed a record beet crop and
although sugar levels in the beet were affected by adverse weather,
the higher volumes and better prices enabled them to deliver an
improved profit. In collaboration with growers, beet yields have
improved significantly in recent years with the mechanisation of
agricultural operations and the application of improved beet
storage methods to overcome the harsh winter weather.
Agriculture
2017 2016 Actual fx Constant
fx
------------------ ----- ----- ---------- ---------
Revenue GBPm 552 491 +12% +8%
------------------ ----- ----- ---------- ---------
Operating profit
GBPm 23 22 +5% -8%
------------------ ----- ----- ---------- ---------
Revenue growth in the first half was driven by increased prices
of UK compound feed, volume growth in our China compound feed and
UK premix businesses, and last year's acquisition of a producer of
alternative proteins and other speciality feed ingredients.
Operating profit was marginally ahead in the first half with the
benefit of currency translation. However, on an underlying basis,
margin pressure in UK and China feeds was only partially offset by
the continued strong performance from AB Vista.
UK ruminant feed volumes were lower than last year as a result
of the smaller sugar beet crop and lower demand, but UK pig feed
volumes benefited from increased herd sizes as imports of fresh
meat from continental Europe declined. Exports of UK starter feeds
were strong, particularly into the Polish market, and production
from the new starter feed factory in Spain is due to commence in
the spring.
AB Vista continued its recent strong performance in Asia
following last year's focus to strengthen sales support and
customer service and improve supply chain efficiency.
In China, further consolidation in the agricultural sector,
leading to an increase in larger scale farms, drove higher demand
for assured sources of high-quality feed. Further investment has
been made by AB Agri in developing a value-added product range and
operation of its new premix mill will commence shortly.
AB Agri also made progress in the development of new businesses
supplying alternative proteins and feed for baby animals.
INGREDIENTS
2017 2016 Actual fx Constant
fx
------------------ ----- ----- ---------- ---------
Revenue GBPm 730 596 +22% +3%
------------------ ----- ----- ---------- ---------
Operating profit
GBPm 61 40 +53% +27%
------------------ ----- ----- ---------- ---------
At constant currency, revenue in the first half was 3% ahead of
last year and operating profit growth was strong at 27% with
further recovery in yeast and bakery ingredients and another
excellent performance from ABF Ingredients. Most of our Ingredients
activities are outside the UK and our results therefore benefit
considerably from their translation into sterling.
Trading at AB Mauri in North America has been good and in
January we completed the acquisition of Specialty Blending, a
bakery ingredients business located in Cedar Rapids, Iowa. The
combination of this high-quality and well-positioned ingredients
blending operation with AB Mauri's global technology capability
will further strengthen our North American business. Asia delivered
a stronger performance following last year's manufacturing
rationalisation, and margin improvement in Australia was achieved
through overhead reduction.
The trading performance in Europe was in line with last year
with notable success for the recently opened UK Technical Centre
which enables the development of new bakery ingredient solutions
and provides technical support and training to customers. Despite
challenging economic conditions in South and Central America our
important markets of Argentina and Brazil performed well.
ABF Ingredients had an excellent performance in the first half.
A major contributor was AB Enzymes where sales of feed enzymes were
particularly strong and growth was also achieved in the bakery,
food and technical markets. The production site in Finland ran at
full capacity in the first half delivering efficiency benefits, and
new capacity is scheduled to be added later this year. Abitec in
the US continued to strengthen its range of bioavailability
enhancement solutions, capitalising on its world leading speciality
lipids. We also achieved sustained growth in functional excipients
and drug delivery systems and the US protein extrusion business
continues to develop fuelled by the consumer trend for healthy
snacking.
RETAIL
2017 2016 Actual fx Constant
fx
------------------ ------ ------ ---------- ---------
Revenue GBPm 3,222 2,667 +21% +11%
------------------ ------ ------ ---------- ---------
Operating profit
GBPm 323 313 +3% -2%
------------------ ------ ------ ---------- ---------
Sales at Primark were 11% ahead of last year at constant
currency, driven by increased retail selling space, and 21% ahead
at actual exchange rates. Last year was a 53-week year for Primark
and, as a result, this financial year started one week later than
last year. On a comparable week basis, total retail sales at
constant currency were 12% ahead, and 22% ahead at actual exchange
rates. The increase in average retail selling space in the first
half, compared with the same period last year, was 12%.
Primark performed well in the UK and delivered sales 7% ahead of
last year with a strong increase in our share of the total clothing
market. This was driven by 2% growth in like-for-like sales, the
increase in selling space and the strength of our consumer
offering. In continental Europe, sales and market shares increased
strongly. In the Netherlands, where sales densities are high and
some stores are over-trading, we have added 32% more retail selling
space over the last year, including a flagship store in Amsterdam.
Consequently, total sales in the Netherlands increased by 18% but
like-for-like sales declined. Like-for-like sales for the group
were level with last year but were 1% ahead excluding the
Netherlands. We continue to develop and evolve our US store
offering and we are encouraged by our most recent store, Staten
Island, which opened in March and is performing very well.
The operating profit margin in the first half declined, as
forecast, reflecting the strength of the US dollar on input costs.
The full effect of sterling weakness against the US dollar on
Primark's purchases will result in a greater margin decline in the
second half because our currency hedges were at more advantageous
exchange rates in the first half. The buying and merchandising
teams have worked hard to reduce the currency impact on margin as
Primark remains committed to price leadership in clothing retail.
Foreign exchange contracts are now in place for virtually all of
the remaining purchases for this financial year and our expectation
for margin decline for the full year is unchanged. Stock has been
well managed and markdowns were in line with the first half last
year.
The new store opening programme in the first half was very
strong. We increased retail selling space by 0.8 million sq. ft.
since the last financial year end and, at 4 March 2017, 329 stores
were trading from 13.1 million sq. ft. 16 new stores were opened in
the period including five stores in the UK; our second store in
Italy in Brescia; an 89,000 sq. ft. store in the centre of
Amsterdam; and a sixth store in the US in Burlington,
Massachusetts.
New store openings: Relocations:
UK Ireland Spain UK
Carlisle Liffey Valley Mallorca Reading
Colchester Sheffield
Stafford France Germany
Truro Lille Mannheim
York Paris, Evry Hamburg
The Netherlands Italy US
Amsterdam Brescia Burlington,
Mass
Our store at the Tottenham Court Road end of Oxford Street in
London was extended by almost 40%, increasing square footage to
114,000 sq. ft., making it our largest store after Manchester and
Newcastle in the UK and the Gran Via store in Madrid, Spain. We
relocated in Reading and Sheffield to larger stores in more central
locations.
We have added a further 0.3 million sq. ft. of selling space
since the half year. This comprised new stores in Charleroi,
Belgium; Granada, Spain; Staten Island in the US; Uxbridge in the
UK and Zwolle in the Netherlands; and an extension of the Downtown
Crossing store in Boston, US taking it to 93,000 sq. ft.
Having added 1.1 million sq. ft. of space already this year and
with earlier than expected openings now planned for September we
expect to have added close to 1.5 million sq. ft. of new selling
space in this financial year.
George Weston
Chief Executive
CONDENSED CONSOLIDATED INCOME STATEMENT
24 weeks 24 weeks 53 weeks
ended ended ended
4 March 27 February 17 September
2017 2016 2016
(restated(1)
)
Continuing operations Note GBPm GBPm GBPm
------------------------------------ ---- -------- ------------ --------------
Revenue 1 7,296 6,117 13,399
Operating costs (6,684) (5,668) (12,364)
612 449 1,035
Share of profit after tax
from joint ventures and associates 26 23 57
Profits less losses on disposal
of non-current assets 2 - 11
------------------------------------ ---- -------- ------------ --------------
Operating profit 640 472 1,103
Adjusted operating profit 1 652 481 1,118
Profits less losses on disposal
of non-current assets 2 - 11
Amortisation of non-operating
intangibles (11) (9) (21)
Transaction costs (3) - (5)
------------------------------------ ---- -------- ------------ --------------
Profits less losses on sale
and closure of businesses 5 255 - (14)
------------------------------------ ----
Profit before interest 895 472 1,089
Finance income 4 2 6
Finance expense (29) (26) (56)
Other financial (expense)/income (3) 4 3
------------------------------------ ---- -------- ------------ --------------
Profit before taxation 867 452 1,042
Adjusted profit before taxation 624 461 1,071
Profits less losses on disposal
of non-current assets 2 - 11
Amortisation of non-operating
intangibles (11) (9) (21)
Transaction costs (3) - (5)
Profits less losses on sale
and closure of businesses 5 255 - (14)
------------------------------------ ---- -------- ------------ --------------
Taxation - UK (36) (32) (73)
Taxation - Overseas (185) (64) (148)
2 (221) (96) (221)
------------------------------------ ---- -------- ------------ --------------
Profit for the period 646 356 821
==================================== ==== ======== ============ ==============
Attributable to
Equity shareholders 636 355 818
Non-controlling interests 10 1 3
------------------------------------ ---- -------- ------------ --------------
Profit for the period 646 356 821
==================================== ==== ======== ============ ==============
Basic and diluted earnings
per ordinary share (pence) 3 80.5 44.9 103.4
Dividends per share paid and
proposed for the period (pence) 4 11.35 10.3 36.75
(1) The results of the prior half year have been restated to
reflect a change of accounting policy for sugar cane roots (see
note 9)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
24 weeks 24 weeks 53 weeks
ended ended ended
4 March 27 February 17 September
2017 2016 2016
(restated(1)
)
GBPm GBPm GBPm
---------------------------------------- ---------- ------------ ------------
Profit for the period recognised
in the income statement 646 356 821
Other comprehensive income
Remeasurements of defined benefit
schemes 103 45 (258)
Deferred tax associated with
defined benefit schemes (22) (10) 50
Current tax associated with
defined benefit schemes - - 1
----------------------------------------- ---------- ------------ ------------
Items that will not be reclassified
to profit or loss 81 35 (207)
Effect of movements in foreign
exchange 256 281 610
Net gain/(loss) on hedge of
net investment in foreign subsidiaries (13) (42) (75)
Deferred tax associated with
movements in foreign exchange - 6 8
Current tax associated with
movements in foreign exchange - 1 1
Reclassification adjustment
for movements in foreign exchange
on subsidiaries disposed (28) - -
Movement in cash flow hedging
position 20 (2) (13)
Deferred tax associated with
movement in cash flow hedging
position (4) - 4
Share of other comprehensive
income of joint ventures and
associates 7 9 16
----------------------------------------- ---------- ------------ ------------
Items that are or may be subsequently
reclassified to profit or loss 238 253 551
Other comprehensive income for
the period 319 288 344
----------------------------------------- ---------- ------------ ------------
Total comprehensive income for
the period 965 644 1,165
----------------------------------------- ---------- ------------ ------------
Attributable to
Equity shareholders 949 660 1,153
Non-controlling interests 16 (16) 12
----------------------------------------- ---------- ------------ ------------
Total comprehensive income for
the period 965 644 1,165
----------------------------------------- ---------- ------------ ------------
(1) The results of the prior half year have been restated to
reflect a change of accounting policy for sugar cane roots (see
note 9)
CONDENSED CONSOLIDATED BALANCE SHEET
4 March 27 February 17 September
2017 2016 2016
(restated(1)
)
GBPm GBPm GBPm
------------------------------- -------- ------------- -------------
Non-current assets
Intangible assets 1,467 1,425 1,348
Property, plant and equipment 5,400 4,764 5,145
Investments in joint ventures 210 196 221
Investments in associates 46 36 39
Employee benefits assets 7 177 6
Deferred tax assets 136 120 139
Other receivables 47 29 41
-------- ------------- -------------
Total non-current assets 7,313 6,747 6,939
-------- ------------- -------------
Current assets
Assets classified as held
for sale - - 312
Inventories 1,988 1,951 2,033
Biological assets 121 90 86
Trade and other receivables 1,382 1,281 1,337
Derivative assets 127 105 105
Income tax - - 9
Cash and cash equivalents 1,103 583 555
-------- ------------- -------------
Total current assets 4,721 4,010 4,437
-------- ------------- -------------
TOTAL ASSETS 12,034 10,757 11,376
-------- ------------- -------------
Current liabilities
Liabilities classified
as held for sale - - (75)
Loans and overdrafts (249) (379) (245)
Trade and other payables (2,444) (2,200) (2,551)
Derivative liabilities (52) (49) (73)
Income tax (169) (112) (147)
Provisions (84) (35) (54)
-------- ------------- -------------
Total current liabilities (2,998) (2,775) (3,145)
-------- ------------- -------------
Non-current liabilities
Loans (664) (625) (640)
Provisions (50) (25) (34)
Deferred tax liabilities (226) (221) (139)
Employee benefits liabilities (210) (161) (296)
-------- ------------- -------------
Total non-current liabilities (1,150) (1,032) (1,109)
-------- ------------- -------------
TOTAL LIABILITIES (4,148) (3,807) (4,254)
-------- ------------- -------------
NET ASSETS 7,886 6,950 7,122
-------- ------------- -------------
Equity
Issued capital 45 45 45
Other reserves 175 175 175
Translation reserve 650 153 433
Hedging reserve (7) (14) (22)
Retained earnings 6,940 6,424 6,423
-------- ------------- -------------
TOTAL EQUITY ATTRIBUTABLE
TO
EQUITY SHAREHOLDERS 7,803 6,783 7,054
Non-controlling interests 83 167 68
-------- ------------- -------------
TOTAL EQUITY 7,886 6,950 7,122
-------- ------------- -------------
(1) The results of the prior half year have been restated to
reflect a change of accounting policy for sugar cane roots (see
note 9)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
24 weeks 24 weeks 53 weeks
ended ended ended
4 March 27 February 17 September
2017 2016 2016
(restated(1)
)
Note GBPm GBPm GBPm
-------------------------------------- ---- ---------- ------------ ------------
Cash flow from operating activities
Profit before taxation 867 452 1,042
Profits less losses on disposal
of non-current assets (2) - (11)
Profits less losses on sale
and closure of businesses (255) - 14
Transaction costs 3 - 5
Finance income (4) (2) (6)
Finance expense 29 26 56
Other financial expense/(income) 3 (4) (3)
Share of profit after tax from
joint ventures and associates (26) (23) (57)
Amortisation 24 22 47
Depreciation 232 202 439
Net change in the fair value
of current biological assets (25) (25) (12)
Share-based payment expense 9 - 7
Pension costs less contributions 8 5 7
Decrease/(increase) in inventories 104 (56) (62)
Decrease/(increase) in receivables 7 (57) (55)
(Decrease)/increase in payables (155) (79) 107
Purchases less sales of current
biological assets (1) - (2)
(Decrease)/increase in provisions (9) (7) 5
-------------------------------------- ---- ---------- ------------ ------------
Cash generated from operations 809 454 1,521
Income taxes paid (164) (87) (211)
-------------------------------------- ---- ---------- ------------ ------------
Net cash from operating activities 645 367 1,310
-------------------------------------- ---- ----------
Cash flows from investing activities
Dividends received from joint
ventures and associates 38 10 25
Purchase of property, plant
and equipment (394) (332) (766)
Purchase of intangibles (22) (16) (30)
Purchase of non-current biological
assets (5) (3) (8)
Sale of property, plant and
equipment 17 7 27
Purchase of subsidiaries, joint
ventures and associates (81) (9) (10)
Sale of subsidiaries, joint
ventures and associates 455 - -
Interest received 4 2 6
-------------------------------------- ----
Net cash from investing activities 12 (341) (756)
-------------------------------------- ---- ---------- ------------ ------------
Cash flows from financing activities
Dividends paid to non-controlling
interests - (7) (10)
Dividends paid to equity shareholders 4 (209) (198) (279)
Interest paid (24) (21) (62)
Increase/(decrease) in short-term
loans 114 21 (109)
(Decrease)/increase in long-term
loans (2) 4 12
Purchase of shares in subsidiary
undertaking from
non-controlling interests - - (252)
Movements from changes in own
shares held - - (19)
Net cash from financing activities (121) (201) (719)
-------------------------------------- ---- ---------- ------------ ------------
Net increase/(decrease) in cash
and cash equivalents 536 (175) (165)
Cash and cash equivalents at
the beginning of the period 462 585 585
Effect of movements in foreign
exchange 16 34 42
-------------------------------------- ---- ---------- ------------ ------------
Cash and cash equivalents at
the end of the period 6 1,014 444 462
====================================== ==== ========== ============ ============
(1) The results of the prior half year have been restated to
reflect a change of accounting policy for sugar cane roots (see
note 9)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity
shareholders
Issued Other Translation Hedging Retained Non-controlling Total
capital reserves reserve reserve earnings Total interests equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Balance as at 17
September
2016 45 175 433 (22) 6,423 7,054 68 7,122
Total
comprehensive
income
Profit for the
period
recognised in
the income
statement - - - - 636 636 10 646
Remeasurements of
defined
benefit schemes - - - - 103 103 - 103
Deferred tax
associated
with defined
benefit
schemes - - - - (22) (22) - (22)
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Items that will
not
be reclassified
to
profit or loss - - - - 81 81 - 81
Effect of
movements
in foreign
exchange - - 251 (1) - 250 6 256
Net loss on hedge
of
net investment
in foreign
subsidiaries - - (13) - - (13) - (13)
Reclassification
adjustment
for movements in
foreign
exchange on
subsidiaries
disposed - - (28) - - (28) - (28)
Movement in cash
flow
hedging position - - - 20 - 20 - 20
Deferred tax
associated
with movement in
cash
flow hedging
position - - - (4) - (4) - (4)
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 - - 217 15 - 232 6 238
Other
comprehensive
income - - 217 15 81 313 6 319
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Total
comprehensive
income - - 217 15 717 949 16 965
Transactions with
owners
Dividends paid to
equity
shareholders 4 - - - - (209) (209) - (209)
Net movement in
own
shares held - - - - 9 9 - 9
Disposal of
non-controlling
interests - - - - - - (1) (1)
Total
transactions
with owners - - - - (200) (200) (1) (201)
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Balance as at 4
March
2017 45 175 650 (7) 6,940 7,803 83 7,886
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Balance as at 12
September
2015 (restated) 45 175 (120) (11) 6,232 6,321 190 6,511
Total
comprehensive
income
Profit for the
period
recognised in
the income
statement - - - - 355 355 1 356
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 - - 299 - - 299 (18) 281
Net gain 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 - - 273 (3) - 270 (17) 253
Other
comprehensive
income - - 273 (3) 35 305 (17) 288
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Total
comprehensive
income - - 273 (3) 390 660 (16) 644
Transactions with
owners
Dividends paid to
equity
shareholders 4 - - - - (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 45 175 153 (14) 6,424 6,783 167 6,950
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Balance as at 12
September
2015 (restated) 45 175 (120) (11) 6,232 6,321 190 6,511
Total
comprehensive
income
Profit for the
period
recognised in
the income
statement - - - - 818 818 3 821
Remeasurements of
defined
benefit schemes - - - - (258) (258) - (258)
Deferred tax
associated
with defined
benefit
schemes - - - - 50 50 - 50
Current tax
associated
with defined
benefit
schemes - - - - 1 1 - 1
Items that will
not
be reclassified
to
profit or loss - - - - (207) (207) - (207)
Effect of
movements
in foreign
exchange - - 603 2 - 605 5 610
Net loss on hedge
of
net investment
in foreign
subsidiaries - - (75) - - (75) - (75)
Deferred tax
associated
with movements
in foreign
exchange - - 8 - - 8 - 8
Current tax
associated
with movements
in foreign
exchange - - 1 - - 1 - 1
Movement in cash
flow
hedging position - - - (17) - (17) 4 (13)
Deferred tax
associated
with movement in
cash
flow hedging
position - - - 4 - 4 - 4
Share of other
comprehensive
income of joint
ventures
and associates - - 16 - - 16 - 16
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Items that are or
may
be subsequently
reclassified
to profit or
loss - - 553 (11) - 542 9 551
Other
comprehensive
income - - 553 (11) (207) 335 9 344
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Total
comprehensive
income - - 553 (11) 611 1,153 12 1,165
Transactions with
owners
Dividends paid to
equity
shareholders 4 - - - - (279) (279) - (279)
Net movement in
own
shares held - - - - (12) (12) - (12)
Deferred tax
associated
with share based
payments - - - - (2) (2) - (2)
Current tax
associated
with share-based
payments - - - - 1 1 - 1
Dividends paid to
non-controlling
interests - - - - - - (10) (10)
Acquisition of
non-controlling
interests - - - - (128) (128) (124) (252)
Total
transactions
with owners - - - - (420) (420) (134) (554)
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
Balance as at 17
September
2016 45 175 433 (22) 6,423 7,054 68 7,122
------------------ ----- -------- --------- ------------ --------- --------- ------ ---------------- --------
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:
Grocery 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.
Sugar 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.
Agriculture The manufacture of animal feeds and the provision of other products and services for the
agriculture
sector.
Ingredients The manufacture of bakers' yeast, bakery ingredients, enzymes, lipids, yeast extracts and
cereal specialities.
Retail Buying and merchandising value clothing and accessories through 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 53 weeks
24 weeks ended ended 24 weeks 24 weeks 53 weeks
ended 27 17 ended ended ended
4 March February September 4 March 27 February 17 September
2017 2016 2016 2017 2016 2016
(restated(1) )
Operating
segments GBPm GBPm GBPm GBPm GBPm GBPm
--------- -------- --------- ------------------ ------------------ ----------------
Grocery 1,658 1,441 3,097 151 126 294
Sugar 1,081 811 1,636 123 3 35
Agriculture 552 491 1,084 23 22 58
Ingredients 730 596 1,294 61 40 93
Retail 3,222 2,667 5,949 323 313 689
Central - - - (31) (25) (60)
--------- -------- --------- ------------------ ------------------ ----------------
7,243 6,006 13,060 650 479 1,109
Businesses
disposed:
Grocery 53 79 177 5 4 10
Sugar - 32 162 (3) (2) (1)
--------- -------- --------- ------------------ ------------------ ----------------
7,296 6,117 13,399 652 481 1,118
Geographical
information
United Kingdom 2,589 2,488 5,375 204 210 484
Europe & Africa 2,800 2,080 4,564 278 158 364
The Americas 752 575 1,226 107 73 158
Asia Pacific 1,102 863 1,895 61 38 103
--------- -------- --------- ------------------ ------------------ ----------------
7,243 6,006 13,060 650 479 1,109
Businesses
disposed:
The Americas 53 79 177 5 4 10
Asia Pacific - 32 162 (3) (2) (1)
--------- -------- --------- ------------------ ------------------ ----------------
7,296 6,117 13,399 652 481 1,118
(1) The results of the prior half year have been restated to reflect a change of accounting
policy for sugar cane roots (see note 9)
1 Operating segments for the 24 weeks ended 4 March
2017
Grocery Sugar Agriculture Ingredients Retail Central Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------ -------- ------ ------------ ------------ --------- -------- --------
Revenue from continuing businesses 1,660 1,135 553 826 3,222 (153) 7,243
Internal revenue (2) (54) (1) (96) - 153 -
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
External revenue from continuing
businesses 1,658 1,081 552 730 3,222 - 7,243
Businesses disposed 53 - - - - - 53
Revenue from external customers 1,711 1,081 552 730 3,222 - 7,296
Adjusted operating profit before joint
ventures and associates 138 120 20 54 323 (31) 624
Share of profit after tax from joint
ventures and associates 13 3 3 7 - - 26
Businesses disposed 5 (3) - - - - 2
Adjusted operating profit 156 120 23 61 323 (31) 652
Profits less losses on disposal of
non-current assets 2 - - - - - 2
Amortisation of non-operating
intangibles (10) - - (1) - - (11)
Transaction costs (3) - - - - - (3)
Profits less losses on sale and closure
of businesses 72 183 - - - - 255
Profit before interest 217 303 23 60 323 (31) 895
Finance income 4 4
Finance expense (29) (29)
Other financial expense (3) (3)
Taxation (221) (221)
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Profit for the period 217 303 23 60 323 (280) 646
======================================== ======== ====== ============ ============ ========= ======== ========
Segment assets (excluding joint
ventures and associates) 2,404 2,312 388 1,489 3,800 139 10,532
Investments in joint ventures and
associates 33 25 132 66 - - 256
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Segment assets 2,437 2,337 520 1,555 3,800 139 10,788
Cash and cash equivalents 1,103 1,103
Deferred tax assets 136 136
Employee benefits assets 7 7
Segment liabilities (531) (492) (115) (267) (1,042) (183) (2,630)
Loans and overdrafts (913) (913)
Income tax (169) (169)
Deferred tax liabilities (226) (226)
Employee benefits liabilities (210) (210)
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Net assets 1,906 1,845 405 1,288 2,758 (316) 7,886
======================================== ======== ====== ============ ============ ========= ======== ========
Non-current asset additions 55 38 15 41 224 2 375
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Depreciation 49 47 5 25 104 2 232
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Amortisation 19 2 1 2 - - 24
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of property, plant &
equipment on disposal of business 2 - - - - - 2
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Geographical information United Europe The Asia
Kingdom & Africa Americas Pacific Total
GBPm GBPm GBPm GBPm GBPm
------------------------------------ -------- ------ ------------ ------------ --------- -------- --------
Revenue from external customers 2,589 2,800 805 1,102 7,296
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Segment assets 4,245 3,870 1,153 1,520 10,788
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Non-current asset additions 119 175 46 35 375
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Depreciation 93 84 20 35 232
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Amortisation 14 2 2 6 24
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Impairment of property, plant &
equipment on disposal of business - - 2 - 2
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
1 Operating segments for the 24 weeks ended 27 February
2016 (restated)
Grocery Sugar Agriculture Ingredients Retail Central Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------ -------- ------ ------------ ------------ --------- -------- --------
Revenue from continuing businesses 1,442 872 493 669 2,667 (137) 6,006
Internal revenue (1) (61) (2) (73) - 137 -
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
External revenue from continuing
businesses 1,441 811 491 596 2,667 - 6,006
Businesses disposed 79 32 - - - - 111
Revenue from external customers 1,520 843 491 596 2,667 - 6,117
Adjusted operating profit before joint
ventures and associates 113 2 18 35 313 (25) 456
Share of profit after tax from joint
ventures and associates 13 1 4 5 - - 23
Businesses disposed 4 (2) - - - - 2
Adjusted operating profit 130 1 22 40 313 (25) 481
Amortisation of non-operating
intangibles (9) - - - - - (9)
Profit before interest 121 1 22 40 313 (25) 472
Finance income 2 2
Finance expense (26) (26)
Other financial income 4 4
Taxation (96) (96)
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Profit for the period 121 1 22 40 313 (141) 356
======================================== ======== ====== ============ ============ ========= ======== ========
Segment assets (excluding joint
ventures and associates) 2,470 2,230 363 1,253 3,225 104 9,645
Investments in joint ventures and
associates 29 19 129 55 - - 232
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Segment assets 2,499 2,249 492 1,308 3,225 104 9,877
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 (221) (221)
Employee benefits liabilities (161) (161)
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Net assets 2,022 1,793 384 1,087 2,297 (633) 6,950
======================================== ======== ====== ============ ============ ========= ======== ========
Non-current asset additions 46 73 14 25 140 - 298
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Depreciation 44 42 4 21 89 2 202
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
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 3,136 1,095 1,576 9,877
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Non-current asset additions 118 127 28 25 298
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Depreciation 95 62 15 30 202
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Amortisation 10 5 2 5 22
---------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
1 Operating segments for the 53 weeks ended 17 September 2016
Grocery Sugar Agriculture Ingredients Retail Central Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Revenue from continuing businesses 3,100 1,736 1,090 1,444 5,949 (259) 13,060
Internal revenue (3) (100) (6) (150) - 259 -
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
External revenue from continuing
businesses 3,097 1,636 1,084 1,294 5,949 - 13,060
Businesses disposed 177 162 - - - - 339
Revenue from external customers 3,274 1,798 1,084 1,294 5,949 - 13,399
Adjusted operating profit before
joint ventures and associates 262 33 44 84 689 (60) 1,052
Share of profit after tax from joint
ventures and associates 32 2 14 9 - - 57
Businesses disposed 10 (1) - - - - 9
Adjusted operating profit 304 34 58 93 689 (60) 1,118
Profits less losses on disposal of
non-current assets 3 8 - - - - 11
Amortisation of non-operating
intangibles (19) (1) - (1) - - (21)
Transaction costs - (5) - - - - (5)
Profits less losses on sale and
closure of businesses - - - (5) - (9) (14)
Profit before interest 288 36 58 87 689 (69) 1,089
Finance income 6 6
Finance expense (56) (56)
Other financial income 3 3
Taxation (221) (221)
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Profit for the period 288 36 58 87 689 (337) 821
====================================== ======== ====== ============ ============ ========= ======== ========
Segment assets (excluding joint
ventures and associates) 2,503 2,139 333 1,359 3,942 95 10,371
Investments in joint ventures and
associates 52 21 129 58 - - 260
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Segment assets 2,555 2,160 462 1,417 3,942 95 10,631
Cash and cash equivalents 581 581
Income tax 13 13
Deferred tax assets 145 145
Employee benefits assets 6 6
Segment liabilities (522) (498) (106) (274) (1,166) (156) (2,722)
Loans and overdrafts (896) (896)
Income tax (147) (147)
Deferred tax liabilities (180) (180)
Employee benefits liabilities (309) (309)
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Net assets 2,033 1,662 356 1,143 2,776 (848) 7,122
====================================== ======== ====== ============ ============ ========= ======== ========
Non-current asset additions 116 141 27 69 466 9 828
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Depreciation (98) (78) (10) (47) (202) (4) (439)
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Amortisation (38) (4) (1) (3) - (1) (47)
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Transaction costs - (5) - - - - (5)
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Geographical information United Europe The Asia
Kingdom & Africa Americas Pacific Total
GBPm GBPm GBPm GBPm GBPm
---------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Revenue from external customers 5,375 4,564 1,403 2,057 13,399
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Segment assets 4,108 3,804 1,239 1,480 10,631
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Non-current asset additions 315 349 99 65 828
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Depreciation (195) (144) (35) (65) (439)
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Amortisation (30) (4) (3) (10) (47)
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
Transaction costs - (5) - - (5)
-------------------------------------- -------- ------ ------------ ------------ --------- -------- --------
The above segment disclosures are stated before reclassification
of assets and liabilities classified as held for sale.
2. Income tax expense
24 weeks 24 weeks 53 weeks
ended ended ended
4 March 27 February 17 September
2017 2016 2016
(restated)
GBPm GBPm GBPm
--------------------------------------------- ------------- -------------- ---------------------------------
Current tax expense
UK - corporation tax (19.5%, 20%, 20%) 33 38 85
Overseas - corporation tax 165 57 142
UK - under provided in prior periods - - 6
Overseas - over provided in prior periods - - (17)
198 95 216
Deferred tax expense
UK deferred tax 3 (6) (14)
Overseas deferred tax 20 7 28
UK - over provided in prior periods - - (4)
Overseas - over provided in prior periods - - (5)
------------- -------------- ---------------------------------
23 1 5
Total income tax expense in income statement 221 96 221
============= ============== =================================
Reconciliation of effective tax rate
Profit before taxation 867 452 1,042
Less share of profit after tax from joint
ventures and associates (26) (23) (57)
------------- -------------- ---------------------------------
Profit before taxation excluding share of profit
after tax from joint ventures and associates 841 429 985
------------- -------------- ---------------------------------
Nominal tax charge at UK corporation tax rate
(19.5%, 20%, 20%) 164 86 197
Effect of higher and lower tax rates on overseas
earnings 40 5 5
Effect of changes in tax rates on income
statement 1 (5) (6)
Expenses not deductible for tax purposes 4 7 38
Disposal of assets covered by tax exemptions or
unrecognised capital losses 13 - (1)
Deferred tax not recognised - 3 8
Adjustments in respect of prior periods (1) - (20)
------------- -------------- ---------------------------------
221 96 221
============= ============== =================================
Income tax recognised directly in equity
Deferred tax associated with defined benefit
schemes 22 10 (50)
Current tax associated with defined benefit
schemes - - (1)
Deferred tax associated with share-based payments - - 2
Current tax associated with share-based payments - - (1)
Deferred tax associated with movement in cash
flow hedging position 4 - (4)
Deferred tax associated with movements in foreign
exchange - (6) (8)
Current tax associated with movements in foreign
exchange - (1) (1)
26 3 (63)
============= ============== =================================
Legislation has been substantively enacted to reduce the UK corporation tax rate from 20%
to 19% with effect from 1 April 2017 with a further reduction to 17% from 1 April 2020. Accordingly,
UK deferred tax has been measured taking these rates into account.
3. Earnings per ordinary share
24 weeks 24 weeks 53 weeks
ended ended ended
4 March 27 February 17 September
2017 2016 2016
restated
pence pence pence
Adjusted earnings per share 59.7 45.8 106.2
Disposal of non-current assets 0.3 - 1.4
Sale and closure of businesses 32.3 - (1.8)
Transaction costs (0.4) - (0.6)
Tax effect on above adjustments (10.3) - 0.1
Amortisation of non-operating intangibles (1.4) (1.2) (2.6)
Tax credit on non-operating intangibles
amortisation and goodwill 0.3 0.3 0.6
Non-controlling interests' share of the above
adjustments - - 0.1
Earnings per ordinary share 80.5 44.9 103.4
============= ============== =================================
4. Dividends
24 weeks 24 weeks 53 weeks
ended ended ended
4 March 27 February 17 September
2017 2016 2016
pence pence pence
Per share
2015 final - 25.0 25.0
2016 interim - - 10.3
2016 final 26.45 - -
------------- -------------- ---------------------------------
26.45 25.0 35.3
============= ============== =================================
Total GBPm GBPm GBPm
2015 final - 198 198
2016 interim - - 81
2016 final 209 - -
------------- -------------- ---------------------------------
209 198 279
============= ============== =================================
The 2016 final dividend of 26.45p per share was approved on 9 December 2016 and totalled GBP209m
when paid on 13 January 2017. The 2017 interim dividend of 11.35p per share, total value of
GBP90m, will be paid on 7 July 2017 to shareholders on the register on 9 June 2017.
5. Acquisitions and disposals
2017
During the period the group acquired two small Grocery businesses in the UK and one small
Ingredients business in the US. Total consideration was GBP88m, comprising cash of GBP86m
and deferred consideration of GBP2m. Net assets acquired comprised intangible assets of GBP66m,
cash of GBP5m and other operating assets and liabilities of GBP17m. The cash outflow of GBP81m
on the purchase of subsidiaries, joint ventures and associates in the cash flow statement
comprises cash consideration of GBP86m less cash acquired with the businesses of GBP5m.
The group disposed of its US herbs and spices business, reported within the Grocery segment.
Cash proceeds amounted to GBP294m, net assets disposed were GBP63m and the associated goodwill
was GBP124m. Provisions for transaction and associated restructuring costs were GBP34m, with
a loss of GBP1m on recycling foreign exchange differences. The gain on disposal was GBP72m.
The group also disposed of its south China sugar cane operations for cash proceeds of GBP194m.
The purchaser also assumed GBP103m of debt resulting in total proceeds of GBP297m. Net assets
disposed were GBP120m. Provisions for transaction and associated restructuring costs were
GBP24m, offset by a gain of GBP29m on recycling of foreign exchange differences and GBP1m
of non-controlling interests. The gain on disposal was GBP183m.
2016
During the first half of 2016 the group acquired two small Agriculture businesses in Europe.
Total consideration paid was GBP8m, acquiring net assets of GBP5m, resulting in goodwill of
GBP3m. The GBP8m of cash consideration differs from the cash outflow on the purchase of subsidiaries,
joint ventures and associates in the cash flow statement by GBP1m in the first half of 2016
and by GBP2m in the full year. The difference comprises payment of deferred consideration
in respect of prior year acquisitions.
In June 2016 the group paid GBP252m, including costs, to acquire the minority shareholding
in Illovo Sugar Limited. As Illovo and its subsidiaries had been consolidated in the group
financial statements since the acquisition of the original controlling interest in 2006, this
was treated as a transaction with owners and recorded in equity rather than as an acquisition.
The cash flow was shown within financing activities.
6. Analysis of net cash/(debt)
At At
17 September Non-cash Exchange 4 March
2016 Cash flow Disposals items adjustments 2017
GBPm GBPm GBPm GBPm GBPm GBPm
----------------- -------------- ---------- ------------- -------------- ---------------- ---------------
Cash at bank and in
hand, cash
equivalents and
overdrafts 462 536 - - 16 1,014
Short-term loans (137) (114) 103 (9) (3) (160)
Long-term loans (640) 2 - 9 (35) (664)
-------------- ---------- ------------- -------------- ---------------- ---------------
(315) 424 103 - (22) 190
============== ========== ============= ============== ================ ===============
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 GBP89m 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 GBP81m and derivative liabilities include GBP16m 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.
At 17 September 2016, GBP26m of cash at bank and in hand and GBP11m of short-term loans included
in the above analysis were included within assets and liabilities classified as held for sale.
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 53 weeks ended 17 September 2016. There have been no material changes in
these relationships in the 24 weeks ended 4 March 2017 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
4 March 2017 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 for the 53 weeks ended 17 September 2016
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 53 weeks ended 17 September 2016.
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 53 weeks ended 17 September 2016.
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 25 on pages 131 to 140 of the 2016 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 previous reporting year ended on
17 September 2016 and was 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 2017. They do not constitute statutory financial statements as defined in section 434
of the Companies Act 2006. The comparative figures for the 53 weeks ended 17 September 2016
have been abridged from the group's 2016 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 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.
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 53 weeks ended 17 September 2016, including for derivatives and current
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 17 September 2016.
In the second half of the 2016 financial year, the group adopted early the amendments to IAS
16 Property, Plant and Equipment and IAS 41 Agriculture which were not otherwise applicable
until the 2017 financial year. This followed the acquisition of the remaining minority stake
in Illovo Sugar Limited and the change of Illovo's year end to 31 August to align it more
closely with the rest of the group. Details of the impact of the adoption of these amendments
are set out on pages 106 and 107 of the 2016 annual report.
As the 2016 interim report was published before these amendments were adopted, the condensed
consolidated financial statements for the 24 weeks ended 27 February 2016 have been restated
with the following effects:
-- Cost of sales increased by GBP5m and, of the net reduction of GBP4m in profit
after tax, GBP2m
was attributable to equity shareholders and GBP2m to non-controlling interests.
Basic earnings
per share decreased by 0.3p, from 45.2p to 44.9p and adjusted earnings per share
decreased
from 46.1p to 45.8p.
-- Non-current biological assets reduced from GBP83m to GBP28m and deferred tax
liabilities decreased
from GBP234m to GBP221m. The reduction in consolidated net assets of GBP42m
comprised GBP16m
attributable to equity shareholders (of which a credit of GBP6m was reflected in
the translation
reserve and a charge of GBP22m was included in retained earnings), and GBP26m was
attributable
to non-controlling interests.
-- In the consolidated cash flow statement, in addition to the GBP5m reduction in
profit before
taxation, the previously reported GBP5m outflow on the net change in fair value of
sugar cane
roots has been replaced with GBP3m of historic cost depreciation and GBP3m of
capital expenditure.
There was therefore no net effect on the group's cash flow. These adjustments
affect only
the Sugar operating segment and the Europe & Africa geographic segment.
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 48 to 52 of the group's
statutory financial statements for the 53 weeks ended 17 September
2016, 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 2017 19 April 2017 19 April 2017
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 4 March 2017 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 8, 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
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 4 March 2017 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 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BIGDSDDBBGRI
(END) Dow Jones Newswires
April 19, 2017 02:00 ET (06:00 GMT)
Associated British Foods (LSE:ABF)
Historical Stock Chart
From Mar 2024 to Apr 2024
Associated British Foods (LSE:ABF)
Historical Stock Chart
From Apr 2023 to Apr 2024
