TIDMABF
RNS Number : 9563V
Associated British Foods PLC
20 April 2021
Associated British Foods plc
Interim Results Announcement
24 weeks ended 27 February 2021
For release 20 April 2021
ASSOCIATED BRITISH FOODS PLC RESULTS FOR THE 24 WEEKSED 27
FEBRUARY 2021
Exceptional delivery in food; retail strong when stores open
Financial headlines
Actual Constant currency
* Group revenue GBP6,313m -17% -18%
* Adjusted operating profit GBP369m -46% -46%
* Adjusted profit before tax GBP319m -50%
* Adjusted earnings per share 25.1p -59%
* Dividend per share 6.2p
GBP382m
* Gross investment
GBP705m
* Net cash (before lease liabilities)
GBP2,715m
* Net debt (including lease liabilities)
* Statutory operating profit GBP320m -8%
* Statutory profit before tax GBP275m -8%
* Basic earnings per share 20.5p -25%
Statutory operating profit is stated after exceptional charges
and other items shown on the face of the condensed consolidated
income statement. Exceptional charges of GBP25m this year compare
to GBP309m in the last financial half year.
George Weston, Chief Executive of Associated British Foods,
said:
"I am proud of how our people have responded to the many
challenges presented by COVID-19. Our food businesses delivered an
exceptional increase in adjusted operating profit of 30% and we
have provided safe and nutritious food under the most demanding of
conditions.
With most of the Primark stores closed for more than half the
period, the management team demonstrated operational agility in
response to the measures employed by governments to tackle the
pandemic. Primark sales after store reopenings demonstrate the
relevance and appeal of our value-for-money offering. We are
excited about welcoming customers back into our stores as the
lockdowns ease and are delighted with record sales in England and
Wales in the week after reopening on 12 April. With our success in
a number of new markets, as wide-ranging as Poland and Florida, we
are as convinced as we have ever been in the long-term growth
prospects for Primark.
Looking ahead, with stores reopening and Primark once again
becoming cash generative, our confidence is reflected in our
decisions to repay the job retention scheme monies in respect of
this financial year and to declare an interim dividend."
The group has defined, and outlined the purpose of, its
Alternative Performance Measures in note 12. These measures are
used within the Financial headlines and in this Interim Results
Announcement.
For further information please contact:
Associated British Foods:
John Bason, Finance Director
Catherine Hicks, Corporate
Affairs Director
Tel: 020 7399 6545
Citigate Dewe
Rogerson:
Tel: 020 7638
9571
Chris Barrie Tel: 07968
727289
Jos Bieneman Tel: 07834
336650
INTERIM RESULTS ANNOUNCEMENT
For the 24 weeks ended 27 February 2021
CHAIRMAN'S STATEMENT
A year ago the human tragedy of COVID-19 was unfolding on a
scale that both shocked and saddened us. None of us could have
anticipated the profound global impact on people's lives and
livelihoods over this past year.
The economic effects of the measures taken by governments to
restrict the pandemic were evident in the financial results for our
last financial year and in the results for this financial half
year. The Board recognises that a group of our scale and
significance has responsibilities to many stakeholders. I want to
say thank you once again to every employee for their hard work and
determination in these difficult times. So many have continued to
go beyond the ordinary call of duty and I am proud of the many
examples of this that I have seen.
Our food businesses worldwide have adapted to working safely in
this environment and continued to provide safe, nutritious and
affordable food to customers. During this first half, with most
stores closed for more than half of the time, the Primark team have
demonstrated operational agility in responding to the fast changing
and wide range of measures employed by governments to tackle the
pandemic.
Revenue in Grocery, Sugar, Agriculture and Ingredients was ahead
of the first half last year at constant currency. Adjusted
operating profit in each of these food businesses was well ahead of
both expectations and last year, and in aggregate were an
exceptional 30% up on last year. Primark's performance in the first
half was materially lower than expected impacted, as outlined
above, by extensive store closures and restrictions on trading. We
have been very encouraged by Primark's trading when the stores were
open.
Revenue for the group of GBP6.3bn was 17% behind last year at
actual exchange rates driven by the loss of Retail sales as a
consequence of the trading restrictions placed on Primark. Adjusted
operating profit of GBP369m was 46% lower than last year at actual
exchange rates as a result of the contribution lost at Primark. Net
finance expense was in line with last year, but the adjusted
effective tax rate increased substantially to 35% as a result of
lower profitability for Primark expected for the full year which
will now include the repayment of job retention scheme monies
relating to the current financial year. Adjusted earnings per share
decreased by 59% to 25.1p per share.
The statutory operating profit for the period reduced by 8% to
GBP320m, a much lower reduction than the decline in adjusted
operating profit. Statutory operating profit is stated after
exceptional items which decreased from a charge GBP309m last year
to GBP25m this year. To ensure that Primark greets its customers
with fresh spring/summer collections in its stores when they reopen
this month, exceptional items this year include an inventory charge
of GBP21m which relates to the clearing of some autumn/winter
seasonal items in those stores which have been closed since
December.
The cash outflow for the group in the first half was GBP860m. We
normally have a seasonal outflow in this period for our Sugar
businesses in the northern hemisphere and payment was made for
Primark orders delayed from last financial year. The major part of
the cash outflow, some GBP650m, is a result of the Primark store
closures and relates to both the loss of revenue and the consequent
increase in stocks.
The group's net cash before lease liabilities of GBP705m at this
half year compared to GBP801m at the same time last year. The cash
outflow as a result of the periods for which Primark's stores were
closed over the last year has been substantially offset by higher
cash generation by our food businesses, targeted cost control
initiatives and the non-payment of dividends for our last financial
year. Our balance sheet has been strengthened this half year by a
substantial increase since the start of the financial year in the
aggregate net assets of the group's defined benefit pension
schemes. The aggregate net assets reached GBP382m at the half year
end and the improvement was driven by the main UK pension
scheme.
We are delighted that our stores in England and Wales delivered
record sales in the first week after reopening on 12 April. We
welcomed our customers back with our value-for-money offering,
exciting new season ranges and a safe store environment.
Government job retention schemes
To contain the spread of COVID-19 over the past year governments
have taken unprecedented measures which have had drastic economic
effects on many businesses and their employees. In turn governments
have provided economic support for those most affected.
Primark has been required to close its stores several times over
the past year, with a consequent loss of over GBP3bn of sales and
over GBP1bn of profit over the past 12 months. We have also seen
huge cash outflows with a GBP650m outflow in the first half of this
year alone. During this time we have accessed the job retention
schemes offered by the UK and European governments to pay those
employees not working while the stores were closed. These schemes
have enabled us to preserve all the jobs in Primark's 65,000
workforce.
Last financial year we took measures to protect the business and
its liquidity which included stopping discretionary spend. All
Primark employees saw a reduction in their income either through
being placed on a job retention scheme or through voluntary salary
reduction. As reported last year, senior management at Primark and
at group level elected to take material reductions in their pay,
and no bonuses were paid. No dividends were paid to shareholders.
We received GBP98m from job retention schemes in that year.
This financial year, we were eligible for a further GBP79m from
job retention schemes in respect of the first half and at the date
of this announcement this has reached GBP121m. Although uncertainty
remains, a large proportion of the UK adult population has now been
vaccinated and last week we saw the successful reopening of
Primark's English and Welsh stores which represent some 40% of our
total retail selling space. On the assumption that our English and
Welsh stores remain open, Primark will return to cash generation.
Accordingly, we do not plan to make any further claims from
government job retention schemes for which we would be eligible
from this date, and we intend to repay the GBP121m referred to
above. This includes the repayment of GBP72m to the UK
government.
Board
I am delighted to welcome Dame Heather Rabbatts as a
non-executive director of the Company with effect from 1 March
2021. Heather brings a wealth of experience having held a number of
executive and non-executive roles across local government,
infrastructure, media and sports. She was the first woman to join
the board of the Football Association. She continues to work in
film and sports and is a non-executive director of Kier Group plc.
We very much look forward to working with her.
Dividends
We decided not to declare an interim dividend nor propose a
final dividend relating to the last financial year. This was due to
the impact of COVID-19 on the group's cash flow driven by the
duration and number of Primark store closures. The scale of this
was demonstrated by the cash outflow of some GBP800m experienced in
the period from March to May 2020. Uncertainty was particularly
acute in April and again in November 2020 when the Board considered
the payment of dividends.
The degree of uncertainty is now substantially lower than last
year due to a large proportion of the UK adult population having
been vaccinated and the successful reopening of Primark's English
and Welsh stores. In the light of the net cash position before
lease liabilities for the group of GBP705m reported at the half
year and our cash flow projections, which demonstrate the
substantial headroom available to the group, the Board has decided
to declare an interim dividend for this financial year.
The dividend per share has been based on the adjusted earnings
per share for the first half. The decision to repay the monies
received from the job retention schemes has been taken after the
half year and so the first half income statement does not include
the repayment of the GBP79m in respect of that period. Therefore,
for the purpose of this dividend calculation, a deduction of the
repayment amount has been taken into account which on a pro-forma
basis would reduce the adjusted earnings per share for the first
half from 25.1p to 18.5p.
The Board has declared an interim dividend of 6.2 pence per
share (2020: nil, 2019: 12.05 pence per share) totalling GBP49m.
This will be paid on 9 July 2021 to shareholders registered at the
close of business on 4 June 2021.
In due course, the Board will consider whether to pay a final
dividend determined by the trading of the group in the second half
and the outlook at that time.
ESG
It is our belief that businesses that have a sound culture and
balance the interests of their many stakeholders will be both more
sustainable and successful than businesses which do not. In
addressing Environmental, Social and Governance (ESG) factors,
every company has to prioritise and apply most resources to those
ESG factors which are of greatest relevance to its businesses. Last
month the group held the first in a series of investor events
designed to set out our approach to this important topic. This
first presentation is available on our website www.abf.co.uk and
our second event will be held in the summer with the date to be
confirmed in due course.
Outlook
Following the exceptional performance of our Grocery, Sugar,
Agriculture and Ingredients businesses in the first half, we expect
a softer performance in the second half. Full year profit at AB
Sugar will be ahead of last year and in line with expectation. The
profit recovery in Illovo primarily benefited the first half but
further recovery in the second half will offset the one-time costs
associated with the recommissioning of Vivergo, our bioethanol
plant in Hull, UK. Full year profits at Ingredients and Agriculture
are expected to be in line with last year with the impact of higher
commodity costs affecting the second half. Grocery volumes are
expected to be softer in the second half compared to the very
strong retail channel sales experienced last year at this time and
margins will be impacted by significantly higher US commodity
vegetable oil costs.
In the first half further peaks of COVID-19 infections led to
additional restrictions and store closures for Primark. At the half
year, 22% of its selling space was open. With the reopening of
stores in England and Wales last week, and expected reopenings in
some markets over the coming weeks, we will be trading at the end
of April from 68% of our retail selling space, which increases to
79% if stores with restricted trading are included. The reopening
dates for France, the Republic of Ireland and the remaining stores
in Germany are yet to be confirmed. We will increase our retail
selling space with an additional nine stores opening in the second
half. We continue to expect the profit for Primark to be somewhat
lower than last year. The repayment of the job retention scheme
monies will be treated as an expense in adjusted operating profit
in the full year.
For the full year the recent strengthening of sterling against
our major currencies would lead to a translation loss of some
GBP30m and the group's effective tax rate is expected to be
35%.
Michael McLintock
Chairman
CHIEF EXECUTIVE'S STATEMENT
COVID-19
In the past twelve months we have lost 30 employees to COVID-19
and we mourn them all. I am proud of how our people have responded
to the many challenges presented by the pandemic. We have provided
safe and nutritious food under the most demanding of conditions and
when permitted to be open, we have safely served millions of
customers in our Primark stores.
Over the past year Primark stores have been closed for extended
periods of time in most markets and our retail operations teams
have had to react to changes at short notice. As a business we have
faced huge uncertainty and our financial results starkly
demonstrate the economic consequences. Primark has accessed the job
retention schemes made available by governments in those markets
where we operate. These funds provided income for employees while
work was not available. Operationally these schemes have been
critical in enabling us to preserve the skills and capability
within the business and to preserve all the jobs in Primark.
Vaccinations are now underway, and progress has been made in
many countries in controlling the spread of the virus. However the
pandemic is still very much present in many parts of the world and
will continue to affect our businesses for some time. We have seen
a number of Primark stores reopen since the half year and we now
expect to be trading from 68% of our retail selling space at the
end of April, which rises to 79% if stores with restricted trading
are also included. We are looking forward to the time when all
restrictions have been lifted in our markets and all of our Primark
stores are open once again.
Review of the first half
Group revenue of GBP6.3bn was 18% behind the same period last
year at constant currency reflecting the material impact on Retail
of the measures taken to control the spread of COVID-19. The
majority of Primark stores were closed for more than half of this
period. The decline in adjusted operating profit was a consequence
of this and at GBP369m was 46% lower than last year.
Each of our food businesses: Sugar, Grocery, Agriculture and
Ingredients delivered exceptional performances in this first half.
In aggregate they delivered an increase in adjusted operating
profit of 30%.
Sugar continued to deliver a much-improved performance driven in
this first half by Illovo. Grocery delivered a strong increase in
adjusted operating profit through a combination of successful new
product launches and increased volumes through retail sales
channels. Twinings Ovaltine is the biggest profit contributor to
Grocery and delivered strong growth in this period. Our recent
acquisitions have all performed well. Acetum, our Italian premium
balsamic vinegar business, Yumi's in Australia and Anthony's Goods
in the US are all thriving. Profits at both AB Agri and Ingredients
were well ahead of last year. Agriculture delivered growth in its
high value markets. AB Mauri experienced increased demand for yeast
and bakery ingredients and our joint venture in China with Wilmar
International is now operational. ABF Ingredients saw further
growth in demand for its nutritional and pharmaceutical
products.
Our businesses have worked hard to overcome the many challenges
presented by COVID-19 over the past year. Throughout this period
however, we have maintained a focus on developing plans for the
future. Substantial new capital investment projects are underway in
many of our businesses and in a difficult environment for opening
stores Primark added 0.7m sq ft of retail selling space. Our
ambition is now to accelerate the pace of new store openings,
particularly in France, Spain, Italy, the US and eastern Europe.
With our success over the last year in entering a number of new
markets, as wide ranging as Poland and Florida, we are as convinced
as we have ever been in the long-term growth prospects for
Primark.
OPERATING REVIEW
Grocery
Ongoing businesses 2021 2020 Actual Constant
fx fx
Revenue GBPm 1,834 1,689 +9% +8%
------------------------------- ----- ----- ------ --------
Adjusted operating profit GBPm 199 189 +5% +6%
------------------------------- ----- ----- ------ --------
Grocery performance in the first half was strong. Revenue was
significantly ahead of last year, 8% at constant currency, with
increased retail sales more than offsetting weaker foodservice as a
result of COVID-19. Adjusted operating profit was up by 6% at
constant currency, driven by Twinings Ovaltine and our UK Grocery
businesses.
Twinings and Ovaltine both had a strong first half despite
weaker demand in out-of-home channels. Twinings revenue was ahead
of last year, driven by growth in herbal and fruit infusions with
an outstanding performance in France, which delivered a significant
improvement in market share. Volume benefited from an increase in
home consumption as a result of COVID-19, as well as successful new
product launches. Ovaltine delivered growth in its major markets
with a much-improved performance in Thailand and Brazil, further
expansion in Switzerland and excellent progress in e-commerce and
foodservice in China.
Jordans, Dorset Cereals, Ryvita, Patak's and Blue Dragon all
delivered growth as they benefited from international development
and significant increases in consumer demand through the retail
channel. Consumer demand for home baking products in the UK
continued and Silver Spoon was well ahead as a result. Revenue in
Allied Bakeries was in line with last year and following our
decision last year to exit the Co-op contract, cost reductions have
been delivered to mitigate the loss in contribution. Sales at
Acetum, our premium balsamic vinegar business in Modena, continued
to progress as distribution gains and successful marketing
increased the reach of the Mazzetti brand in many markets.
At ACH, our baking businesses, ACH Mexico, and Anthony's Goods
all continued to deliver profit growth. However, the profit
contribution from Mazola declined due to significantly higher
commodity costs and reduced availability of corn oil in the US.
At George Weston Foods in Australia, our bakery business Tip Top
continued to make strong progress with both market share gains and
tight cost control. Successful new product launches and higher
consumer demand in both the dips and vegetarian categories
delivered substantially increased volumes at Yumi's. However, total
operating profit at George Weston Foods was lower with reduced
volumes in the Don meat business as a result of COVID-19. Weston
Animal Nutrition has announced plans to build a large
state-of-the-art feed mill in Western Australia that will provide
additional capacity, reduce costs and will ensure that the latest
strict feed safety and quality standards are met.
Sugar
2021 2020 Actual Constant
fx fx
Revenue GBPm 763 803 -5% +1%
------------------------------- ---- ---- ------ --------
Adjusted operating profit GBPm 66 12 +450% +633%
------------------------------- ---- ---- ------ --------
AB Sugar revenue was marginally ahead of last year in the first
half at constant currency. Adjusted operating profit was
significantly ahead, driven by Illovo, which benefited from
increased domestic demand and higher prices. All businesses
continued to deliver savings from the ongoing performance
improvement programme.
UK sugar production for the 2020/21 campaign was 0.9m tonnes,
well down on last year's 1.19m tonnes, due to wet weather
conditions at the time of planting and the severe impact of virus
yellows, which is transmitted by aphids, on the sugar beet. As a
result of prolonged cold temperatures this February which
substantially reduced the likelihood of virus yellows this summer,
the conditional permit for the use of neonicotinoids was not
needed. We continue to work to secure a neonicotinoid-free
long-term solution in partnership with sugar beet growers and seed
producers. Looking ahead to the 2021/22 campaign good progress was
made in drilling the crop in March due to favourable planting
conditions. Sugar production is expected to be just over 1.0m
tonnes with a reduced planting area compensated by more normal
yields.
The UK Department for Transport has announced an increase in the
mandated inclusion levels of renewable ethanol in petrol moving
from E5 to E10. We now plan to reopen the Vivergo facility in Hull,
which uses domestic feed-grade wheat to produce bioethanol and
supply to UK fuel blenders is expected from early 2022.
Sugar production in Spain this financial year is expected to be
in line with last year. The beet campaigns have progressed
successfully in the north and the area planted in the south was
ahead again this year. The volume of raw sugar refined at the
Guadalete facility is likely to be ahead of last year.
Illovo margins and adjusted operating profit were well ahead of
last year. Major contributors to this improvement were a non-repeat
of the restructuring costs taken last year, significant cost
reductions this year from the performance improvement programme and
a recovery from the operational difficulties experienced in
Mozambique last year. We saw some recovery of sugar prices in many
markets and exports benefited from the higher world sugar price.
The sales mix improved with higher domestic volumes, including
those in South Africa, and regional market volumes.
The campaign in China has now been completed with sugar
production ahead of last year. Although revenue was lower in the
first half, with reduced sales ahead of Chinese New Year, the
profit impact has been partially offset by strong factory
performances. Domestic sugar prices have risen, supported by higher
world prices.
For the full year, our expectation remains for operating profit
to be well ahead of last year with the major driver being the
strong recovery in Illovo. We expect nonetheless a softer
performance in the second half compared to last year with the
earlier profit phasing by Illovo this year and the recommissioning
costs for Vivergo now included in the second half.
Agriculture
2021 2020 Actual Constant
fx fx
Revenue GBPm 746 692 +8% +8%
------------------------------- ---- ---- ------ --------
Adjusted operating profit GBPm 19 16 +19% +27%
------------------------------- ---- ---- ------ --------
Revenue and adjusted operating profit were well ahead at AB Agri
in the first half. The revenue growth was delivered by higher
commodity prices and increase in feed volumes with notable growth
in China. AB Neo, which specialises in feed for animals in the
early stages of life, increased sales, particularly in Spain.
Adjusted operating profit was significantly ahead of last year.
China delivered a much-improved performance with the benefit of a
recovery from the effects of African Swine Fever, strong feed sales
for other species, good procurement, the earlier phasing of sugar
beet sales and the non-recurrence of restructuring costs taken last
year. Frontier was ahead with a much-improved result from grain
trading with increased commodity price volatility driven by reduced
UK wheat availability, Brexit uncertainty and tightening global
supply and demand.
Profit at AB Vista was ahead of last year, with improved feed
enzyme volumes.
Our UK pig and poultry animal feed business has announced its
intention to build a state-of-the-art animal feed mill in the East
of England. This substantial investment will provide much needed
capacity and will also ensure consistent quality at a lower
cost.
Ingredients
Ongoing businesses 2021 2020 Actual Constant
fx fx
Revenue GBPm 735 737 in line +2%
------------------------------- ---- ---- ------- --------
Adjusted operating profit GBPm 78 62 +26% +28%
------------------------------- ---- ---- ------- --------
Adjusted operating profit was significantly ahead of last year
driven by increased margins in both AB Mauri and ABF
Ingredients.
AB Mauri benefited from increased sales and margins in yeast.
Demand for retail yeast and retail bakery ingredients have been
particularly high driven by the popularity of home baking. Our
joint venture with Wilmar in China became fully operational in
October and the business integration of our production and
technology assets with Wilmar's wider distribution is progressing
well. Despite the difficult conditions in South America, our
businesses continue to make good progress with continued growth in
Non-Dairy Toppings.
We have just opened our new Global Technology Centre in the
Netherlands. This provides an upgraded international hub for the
research and development of bakery solutions, as well as
accommodating a pilot plant, laboratories and training
facilities.
Profit growth at ABF Ingredients was driven by our nutritional
and pharmaceutical lipids business and further good progress in
yeast extracts.
Retail
2021 2020 Actual Constant
fx fx
Revenue GBPm 2,232 3,710 -40% -41%
------------------------------- ----- ----- ------ --------
Adjusted operating profit GBPm 43 441 -90% -90%
------------------------------- ----- ----- ------ --------
This period has been characterised by greater than expected
restrictions on the ability of Primark to trade as a consequence of
the measures taken by UK and European governments to limit the
spread of COVID-19. The extent and timing of these restrictions
have varied by market, with different approaches taken by each
government. Nonetheless, at no time were all of our stores closed
during this first half, unlike the first lockdown. The majority of
our stores were closed during November and from December to the end
of the period. We estimate the loss of sales while stores were
closed to be some GBP1.1bn and when stores were open, the
restrictions resulted in like-for-like sales of -15% compared to
last year.
We consider this like-for-like performance to be strong and it
should be seen in the context of lower category spend, lower
footfall reflecting government advice to limit journeys from home
and, in many eurozone markets, more severe trading restrictions
while open. Like-for-like performance in the UK was -6% in the
first half and -1% excluding four major city centre stores.
Although stores remained open in a number of eurozone countries, in
many cases they were subject to restrictions on trading hours and
allowed travelling distances from home. In some cases, the range of
merchandise we were permitted to sell was limited. Consequently,
the like-for-like performance in the first half in the eurozone was
-20%.
Performance has varied by store reflecting the prevailing
circumstances of our customers including home working, less
commuting and very little tourism. Like-for-like sales at our
stores in retail parks were higher than a year ago, shopping centre
and regional high street stores were lower than last year, and
large destination city centre stores, which are heavily reliant on
tourism and commuters, continued to see a significant decline in
footfall. Excluding our 16 major city centre stores like-for-like
sales were -11%.
Our US business performed well and is now profitable. No stores
were required to close during the period and like-for-like sales
performance was -11%, and -3% excluding the city centre Boston
store, which we consider to be strong given that customers were
limiting their journeys from home. We are particularly pleased with
the strong trading at the recently opened stores of Sawgrass Mills
Florida, American Dream New Jersey and, during March, State Street
Chicago. Primark is clearly resonating with the US customer and
brand awareness continues to build.
Sales in those stores open during the festive season reflected
the excitement and broad appeal of the Primark offering. All
Christmas and gifting lines were sold out and the performance for
"stay at home" product categories was strong, especially in
nightwear and loungewear. The level of markdown was substantially
lower than the same period last year. Some GBP260m of autumn/winter
regular seasonal stock, which was not delivered to the stores, will
be held over and sold later this calendar year. All orders placed
with our suppliers have been honoured.
For the period while stores were closed, measures to reduce
operating costs included savings in logistics, store variable
costs, central overheads and access to government job retention
schemes. Combined these have been delivering savings of some
25%.
Retail selling space has increased by 0.3m sq ft since the last
financial year end and at the half year, we had 390 stores with
16.5m sq ft of retail selling space which compared to 15.8m sq ft a
year ago. Six new stores were opened in the period, Coquelles near
Calais in France, Barcelona Sant Cugat and Espacio León in Spain,
Sawgrass Mills Florida and American Dream New Jersey in the US and
Roma Maximo in Italy. In addition, we relocated to larger premises
in Southend UK. We had a very positive customer reaction to all
these store openings and Roma Maximo in particular has traded well
beyond expectation.
At the time of our last trading update on 25 February we were
trading from 77 stores representing 22% of our retail selling
space. Our stores in England and Wales reopened on 12 April, which
we expect to be followed by our 20 stores in Scotland on 26 April,
following the roadmap laid out by the UK authorities at the end of
February. However, progress in the eurozone has been mixed. Some
store reopening dates have been delayed and some stores have
reopened albeit with restricted trading as the authorities have
endeavoured to find ways to keep stores trading. A pre-booking
system which controls the number of customers in the store at any
one time, "click and meet", has been introduced in our reopened
stores in the Netherlands, Germany and Belgium. This format allows
trading to continue albeit at a much-reduced level, where otherwise
stores might have been closed. As of the end of April, we expect
275 stores representing 68% of our retail selling space to be open,
which increases to 79% of our retail selling space if stores with
restricted trading are included.
On the basis of published expected reopening dates, our estimate
for the sales which will be lost during the second half of our
financial year in respect of the remaining periods of store
closures is now some GBP700m.
Our stores in England and Wales delivered record sales in the
first week after reopening. Over half of the stores broke their own
sales records. After such a challenging year, this performance
demonstrates that the relevance and appeal of our value-for-money
offering continues to resonate strongly with customers. A notable
feature of our performance after reopening in June and December was
an increase in basket size compared to pre-COVID-19 levels. The
performance last week was driven not only by increased basket sizes
but more importantly by an improvement in footfall across all our
high street, shopping centre and retail park locations to bring
footfall for the whole estate back to pre- COVID-19 levels. Demand
for nightwear, lingerie and leisurewear continued to be strong.
However, compared to previous reopenings, this time we have seen
excellent demand for our fashion ranges, particularly in
womenswear. Customer response to the new trends for spring/summer,
which have featured on our digital social media channels, has been
very strong. Safety remains our priority so that colleagues and
customers can return to our stores with confidence as we have
maintained the high safety standards implemented over the past
year. Extended opening hours were offered across most stores to
help reduce queues, spread demand and give customers more time to
shop safely.
We expect the period after the reopening of stores to be very
cash generative as we sell the higher than normal inventory on
hand. In line with our normal practice, we have placed substantial
orders for merchandise for the coming autumn/winter season.
Status Country Reopening Stores Space
Date
------------------ ------------ ----------
m sq
ft
------------------ ------------ ---------- ------- ----- ----
Open by end of April 2021
Austria 3 0.1
Italy 5 0.3
Spain 44 1.8
US 12 0.6
Germany 1 0.1
Slovenia 12-Apr 1 0.0
England 12-Apr 153 6.3
Wales 12-Apr 8 0.3
Portugal 19-Apr 10 0.4
Poland 19-Apr 1 0.1
Belgium 26-Apr 8 0.4
Scotland 26-Apr 20 0.7
Northern
Ireland 30-Apr 9 0.2
------------------ ------------------------------- ---------- ------- ----- ----
Subtotal 275 70% 11.3 68%
-------------------------------- ----------------- ---------- ------- ----- ----
Open restricted
trading
Italy 1 0.0
Spain 6 0.2
Netherlands 20 1.0
Germany 11 0.6
-------------------------------- ----------------- ---------- ------- ----- ----
Subtotal 38 10% 1.8 11%
-------------------------------- ----------------- ---------- ------- ----- ----
Cumulative Total 313 80% 13.1 79%
-------------------------------- ---------- ------- ----- ----
Opening dates to be confirmed
Austria 2 0.1
France 20 1.0
Republic of Ireland 36 1.1
Germany 20 1.2
-------------------------------- ----------------- ---------- ------- ----- ----
Total 391 100% 16.5 100%
-------------------------------- ----------------- ---------- ------- ----- ----
We expect to add a net 0.7m sq ft of selling space in this
financial year. Following the opening of our store in Chicago in
March we plan to open a further eight stores in the remainder of
this financial year: Prague Wenceslas Square in Czechia, Poznań in
Poland, Roma Est in Italy, three further stores in Spain, Tamworth
in the UK and Rotterdam Forum, the Netherlands.
We continue to feel very optimistic about the opportunities for
growth in the Primark business. We have a strong pipeline of store
openings across a number of growth markets for the brand, with a
particular focus on southern Europe and eastern Europe. We see
further opportunity to expand our selling space in France, Spain,
Portugal and Italy, where the Primark brand resonates strongly with
consumers. We are opening three further stores in Spain this
financial year, and a second store in Rome, the first of eight new
store openings in Italy by 2022. We are in the early stages of our
expansion into eastern Europe, with a second store to open in
Poland and our first store in Czechia, as we build our pipeline of
new stores across the region. In addition, we have plans to
accelerate our growth in the US over the next five years. This
builds on strong trading in our first twelve stores including a
great response to our latest opening in Chicago last month. Further
to the leases already announced for stores in Queens, New York and
Green Acres Mall in Long Island, New York, we have also now signed
a lease for a new store in Tysons Corner, just outside Washington
DC. With more than 22 million highly engaged followers across the
Primark social channels, digital plays an important role in our
business, showcasing our latest ranges, building engagement and
driving customers into store. As we look ahead, we are actively
exploring ways to leverage our digital channels to support our
plans for growing our store estate. This will involve investing in
our website and digital marketing to help us target content and
communications to customers.
George Weston
Chief Executive
PRINCIPAL RISKS AND UNCERTAINTIES
The delivery of our strategic objectives is dependent on
effective risk management. There are a number of potential risks
and uncertainties which could have a material impact on the group's
performance and could cause actual results to differ materially
from expected and historical results. Details of the principal
risks facing the group's businesses at an operational level were
included on pages 84 to 91 of the group's Annual Report and
Accounts for the 52 weeks ended 12 September 2020, as part of the
Strategic Report.
We have reassessed our principal risks and uncertainties as the
COVID-19 pandemic continues to be a worldwide crisis and
uncertainty remains in a number of our markets. Whilst the UK now
has an advanced vaccination programme and a roadmap for exiting the
COVID-19 lockdown, the outlook is currently more mixed in a number
of countries in which we operate.
Effective communication both within our businesses and across
the group has ensured that our food businesses continued to
operate, providing safe, nutritious and affordable food to
customers. Primark's leadership demonstrated agility in responding
to store activities being restricted at short notice. In addition,
their effective planning ensured that the UK stores were well
prepared for a safe reopening from 12 April.
Throughout the pandemic, the Audit Committee, on behalf of the
Board has provided ongoing support and challenge to management's
processes and internal controls. Numerous lessons have been learnt
and we have developed a flexible set of possible responses that are
ready to be deployed in the event of further restrictions being
imposed, whether that be locally, regionally or globally.
The purchase of merchandise denominated in foreign currencies by
Primark is the most material currency transaction risk for the
group but Primark is now fully bought for this financial year.
Sterling has strengthened in recent months against a number of our
major trading currencies, which will likely lead to a translation
loss in the second half of the financial year.
The group purchases a wide range of commodities in the ordinary
course of business. We constantly monitor the markets in which we
operate and manage certain of these exposures with exchange traded
contracts and hedging instruments. The commercial implications of
commodity price movements are continuously assessed and, where
appropriate, are reflected in the pricing of our products. Margins
in our ACH oils business are likely to be adversely affected in the
second half following a significant increase in US vegetable oil
costs.
The number of employees working from home continues to be very
high and are supported by effective collaboration tools with
appropriate IT infrastructure and bandwidth. Remote working has
increased the exposure to phishing attacks, which together with
socially engineered fraud, have become more sophisticated. In
response to this we have worked on increasing user awareness and
have implemented higher levels of monitoring.
Our businesses were well prepared for the end of the Brexit
transition period and we have seen no material disruption to our
supply chains. We have experienced a small increase in the
administrative costs of trading and in limited cases duties related
to our trading with the EU.
Going concern
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. See note 9 to
the Condensed Consolidated Interim Financial Statements.
CONDENSED CONSOLIDATED INCOME STATEMENT
For the 24 weeks ended 27 February 2021
24 weeks 24 weeks 52 weeks
ended ended ended
27 February 29 February 12 September
2021 2020 2020
Continuing operations Note GBPm GBPm GBPm
Revenue 1 6,313 7,646 13,937
Operating costs before exceptional items (5,996) (7,024) (13,046)
Exceptional items 2 (25) (309) (156)
-------------------------------------------------- ------ ------------------ ----------------- -------------------
292 313 735
Share of profit after tax from joint
ventures and associates 26 27 57
Profits less losses on disposal of non-current
assets 2 9 18
-------------------------------------------------- ------ ------------------ ----------------- -------------------
Operating profit 320 349 810
-------------------------------------------------- ------ ------------------ ----------------- -------------------
Adjusted operating profit 1 369 682 1,024
Profits less losses on disposal of non-current
assets 2 9 18
Amortisation of non-operating intangibles (24) (24) (59)
Acquired inventory fair value adjustments (1) (8) (15)
Transaction costs (1) (1) (2)
Exceptional items (25) (309) (156)
-------------------------------------------------- ------ ------------------ ----------------- -------------------
Profits less losses on sale and closure
of businesses 6 5 (5) (14)
-------------------------------------------------- ------ ------------------ ----------------- -------------------
Profit before interest 325 344 796
Finance income 5 7 11
Finance expense (52) (54) (124)
Other financial (expense)/income (3) 1 3
-------------------------------------------------- ------ ------------------ ----------------- -------------------
Profit before taxation 275 298 686
-------------------------------------------------- ------ ------------------ ----------------- -------------------
Adjusted profit before taxation 319 636 914
Profits less losses on disposal of non-current
assets 2 9 18
Amortisation of non-operating intangibles (24) (24) (59)
Acquired inventory fair value adjustments (1) (8) (15)
Transaction costs (1) (1) (2)
Exceptional items (25) (309) (156)
Profits less losses on sale and closure
of businesses 5 (5) (14)
-------------------------------------------------- ------ ------------------ ----------------- -------------------
Taxation - UK (excluding tax on exceptional
items) (18) (34) (69)
- UK (on exceptional items) 3 25 1
- Overseas (excluding tax on
exceptional
items) (90) (103) (189)
- Overseas (on exceptional items) 2 35 36
-------------------------------------------------- ------ ------------------ ----------------- -------------------
3 (103) (77) (221)
-------------------------------------------------- ------ ------------------ ----------------- -------------------
Profit for the period 172 221 465
-------------------------------------------------- ------ ------------------ ----------------- -------------------
Attributable to
Equity shareholders 162 217 455
Non-controlling interests 10 4 10
-------------------------------------------------- ------ ------------------ ----------------- -------------------
Profit for the period 172 221 465
-------------------------------------------------- ------ ------------------ ----------------- -------------------
Basic and diluted earnings per ordinary
share (pence) 4 20.5 27.5 57.6
Dividends per share paid and proposed
for the period (pence) 5 6.2 nil nil
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 24 weeks ended 27 February 2021
52 weeks
24 weeks 24 weeks ended
ended ended 12 September
27 February 29 February 2020
2021 2020 GBPm
GBPm GBPm
Profit for the period recognised in the income
statement 172 221 465
Other comprehensive income
Remeasurements of defined benefit schemes 448 17 (89)
Deferred tax associated with defined benefit
schemes (84) (3) 15
-------------------------------------------------- ------------------------- ------------------ -------------------
Items that will not be reclassified to profit
or loss 364 14 (74)
Effect of movements in foreign exchange (335) (283) (97)
Net gain/(loss) on hedge of net investment in
foreign subsidiaries 11 10 (3)
Deferred tax associated with movements in foreign
exchange - - 1
Reclassification adjustment for movements in
foreign exchange on subsidiaries disposed (6) - -
Movement in cash flow hedging position (26) 18 (15)
Deferred tax associated with movement in cash
flow hedging position (1) (3) -
Share of other comprehensive income of joint
ventures and associates (10) (6) (1)
Effect of hyperinflationary economies 12 12 17
-------------------------------------------------- ------------------------- ------------------ -------------------
Items that are or may be subsequently reclassified
to profit or loss (355) (252) (98)
-------------------------------------------------- ------------------------- ------------------ -------------------
Other comprehensive income/(loss) for the period 9 (238) (172)
-------------------------------------------------- ------------------------- ------------------ -------------------
Total comprehensive income/(loss) for the period 181 (17) 293
-------------------------------------------------- ------------------------- ------------------ -------------------
Attributable to
Equity shareholders 177 (15) 296
Non-controlling interests 4 (2) (3)
-------------------------------------------------- ------------------------- ------------------ -------------------
Total comprehensive income/(loss) for the period 181 (17) 293
-------------------------------------------------- ------------------------- ------------------ -------------------
CONDENSED CONSOLIDATED BALANCE SHEET
At 27 February 2021
27 February 29 February 12 September
2021 2020 2020
GBPm GBPm GBPm
Non-current assets
Intangible assets 1,570 1,631 1,629
Property, plant and equipment 5,417 5,620 5,651
Right-of-use assets 2,772 3,057 2,990
Investments in joint ventures 256 216 233
Investments in associates 59 54 56
Employee benefits assets 531 247 100
Deferred tax assets 217 183 212
Other receivables 58 50 45
------------------------------------ ----------- ----------- ------------
Total non-current assets 10,880 11,058 10,916
------------------------------------ ----------- ----------- ------------
Current assets
Assets classified as held for sale - 42 43
Inventories 2,596 2,025 2,150
Biological assets 96 96 72
Trade and other receivables 1,381 1,379 1,328
Derivative assets 64 96 102
Current asset investments 33 29 32
Income tax 13 - 30
Cash and cash equivalents 1,112 1,320 1,996
------------------------------------ ----------- ----------- ------------
Total current assets 5,295 4,987 5,753
------------------------------------ ----------- ----------- ------------
Total assets 16,175 16,045 16,669
------------------------------------ ----------- ----------- ------------
Current liabilities
Liabilities classified as held for
sale - (6) (5)
Lease liabilities (290) (273) (297)
Loans and overdrafts (213) (204) (154)
Trade and other payables (1,931) (2,134) (2,316)
Derivative liabilities (48) (40) (87)
Income tax (101) (69) (171)
Provisions (102) (108) (123)
------------------------------------ ----------- ----------- ------------
Total current liabilities (2,685) (2,834) (3,153)
------------------------------------ ----------- ----------- ------------
Non-current liabilities
Lease liabilities (3,130) (3,279) (3,342)
Loans (227) (344) (318)
Provisions (47) (33) (41)
Deferred tax liabilities (300) (248) (210)
Employee benefits liabilities (149) (194) (166)
------------------------------------ ----------- ----------- ------------
Total non-current liabilities (3,853) (4,098) (4,077)
------------------------------------ ----------- ----------- ------------
Total liabilities (6,538) (6,932) (7,230)
------------------------------------ ----------- ----------- ------------
Net assets 9,637 9,113 9,439
------------------------------------ ----------- ----------- ------------
Equity
Issued capital 45 45 45
Other reserves 175 175 175
Translation reserve (11) 136 323
Hedging reserve - 6 (7)
Retained earnings 9,359 8,662 8,819
------------------------------------ ----------- ----------- ------------
Total equity attributable to equity
shareholders 9,568 9,024 9,355
Non-controlling interests 69 89 84
------------------------------------ ----------- ----------- ------------
Total equity 9,637 9,113 9,439
------------------------------------ ----------- ----------- ------------
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the 24 weeks ended 27 February 2021
24 weeks 24 weeks 52 weeks
ended ended ended
27 February 29 February 12 September
2021 2020 2020
GBPm GBPm GBPm
Cash flow from operating activities
Profit before taxation 275 298 686
Profits less losses on disposal of non-current
assets (2) (9) (18)
Profits less losses on sale and closure of businesses (5) 5 14
Transaction costs 1 1 2
Finance income (5) (7) (11)
Finance expense 52 54 124
Other financial expense/(income) 3 (1) (3)
Share of profit after tax from joint ventures
and associates (26) (27) (57)
Amortisation 34 33 89
Depreciation (including depreciation of right-of-use
assets and non-cash lease adjustments) 409 386 827
Impairment of property, plant & equipment and
right-of-use assets - - 15
Exceptional items 25 309 156
Acquired inventory fair value adjustments 1 8 15
Effect of hyperinflationary economies 2 4 5
Net change in the fair value of current biological
assets (32) (20) (1)
Share-based payment expense 8 7 8
Pension costs less contributions 4 3 10
(Increase)/decrease in inventories (565) 29 199
(Increase)/decrease in receivables (113) 3 81
Decrease in payables (269) (318) (174)
Purchases less sales of current biological assets - - (1)
(Decrease)/increase in provisions (16) (14) 41
----------------------------------------------------- ----------------------- ----------------- -------------------
Cash generated from operations (219) 744 2,007
Income taxes paid (160) (151) (254)
----------------------------------------------------- ----------------------- ----------------- -------------------
Net cash from operating activities (379) 593 1,753
----------------------------------------------------- ----------------------- ----------------- -------------------
Cash flows from investing activities
Dividends received from joint ventures and associates 27 29 43
Purchase of property, plant and equipment (263) (315) (561)
Purchase of intangibles (44) (43) (61)
Lease incentives received 12 12 35
Sale of property, plant and equipment 9 18 30
Purchase of subsidiaries, joint ventures and
associates (39) (3) (16)
Sale of subsidiaries, joint ventures and associates 34 2 2
Purchase of other investments (13) (2) (1)
Interest received 6 6 11
----------------------------------------------------- ----------------------- ----------------- -------------------
Net cash from investing activities (271) (296) (518)
----------------------------------------------------- ----------------------- ----------------- -------------------
Cash flows from financing activities
Dividends paid to non-controlling interests (2) (4) (7)
Dividends paid to equity shareholders - (271) (271)
Interest paid (56) (42) (104)
Repayment of lease liabilities (131) (115) (247)
Increase/(decrease) in short-term loans 4 (18) (43)
Decrease in long-term loans - - (2)
Increase in current asset investments (2) (3) (2)
Purchase of shares in subsidiary undertaking
from non-controlling interests (23) (2) (2)
----------------------------------------------------- ----------------------- ----------------- -------------------
Net cash from financing activities (210) (455) (678)
----------------------------------------------------- ----------------------- ----------------- -------------------
Net (decrease)/increase in cash and cash equivalents (860) (158) 557
Cash and cash equivalents at the beginning of
the period 1,909 1,358 1,358
Effect of movements in foreign exchange (23) (17) (6)
----------------------------------------------------- ----------------------- ----------------- -------------------
Cash and cash equivalents at the end of the period 1,026 1,183 1,909
----------------------------------------------------- ----------------------- ----------------- -------------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 24 weeks ended 27 February 2021
Attributable to equity shareholders Non-
controlling
interests
GBPm
-------- ----------
Issued Other Translation Hedging Retained Total
capital reserves reserve reserve earnings Total equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance as at 12
September
2020 45 175 323 (7) 8,819 9,355 84 9,439
Total
comprehensive
income
Profit for the
period recognised
in the income
statement - - - - 162 162 10 172
Remeasurements of
defined
benefit schemes - - - - 448 448 - 448
Deferred tax
associated with
defined benefit
schemes - - - - (84) (84) - (84)
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Items that will
not be
reclassified
to profit or loss - - - - 364 364 - 364
Effect of
movements in
foreign
exchange - - (329) - - (329) (6) (335)
Net gain on hedge
of net investment
in foreign
subsidiaries - - 11 - - 11 - 11
Movements in
foreign exchange
on businesses
disposed - - (6) - - (6) - (6)
Movement in cash
flow hedging
position - - - (26) - (26) - (26)
Deferred tax
associated with
movements in cash
flow hedging
position - - - (1) - (1) - (1)
Share of other
comprehensive
income of joint
ventures and
associates - - (10) - - (10) - (10)
Effect of
hyperinflationary
economies - - - - 12 12 - 12
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Items that are or
may be
subsequently
reclassified to
profit or
loss - - (334) (27) 12 (349) (6) (355)
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Other
comprehensive
income - - (334) (27) 376 15 (6) 9
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Total
comprehensive
income - - (334) (27) 538 177 4 181
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Inventory cash
flow hedge
movements
Gains transferred
to cost
of inventory - - - 34 - 34 - 34
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Total inventory
cash flow
hedge movements - - - 34 - 34 - 34
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Transactions with
owners
Net movement in
own shares
held - - - - 8 8 - 8
Dividends paid to
non-controlling
interests - - - - - - (2) (2)
Acquisition and
disposal of
non-controlling
interests - - - - (6) (6) (17) (23)
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Total transactions
with owners - - - - 2 2 (19) (17)
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Balance as at 27
February
2021 45 175 (11) - 9,359 9,568 69 9,637
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Balance as at 14
September
2019 45 175 409 (9) 8,832 9,452 98 9,550
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
IFRS 16 opening
balance
adjustment - - - - (149) (149) (1) (150)
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Balance as at 15
September
2019 45 175 409 (9) 8,683 9,303 97 9,400
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Total
comprehensive
income
Profit for the
period recognised
in the income
statement - - - - 217 217 4 221
Remeasurements of
defined
benefit schemes - - - - 17 17 - 17
Deferred tax
associated with
defined benefit
schemes - - - - (3) (3) - (3)
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Items that will
not be
reclassified
to profit or loss - - - - 14 14 - 14
Effect of
movements in
foreign
exchange - - (277) - - (277) (6) (283)
Net gain on hedge
of net investment
in foreign
subsidiaries - - 10 - - 10 - 10
Movement in cash
flow hedging
position - - - 18 - 18 - 18
Deferred tax
associated with
movements in cash
flow hedging
position - - - (3) - (3) - (3)
Share of other
comprehensive
income of joint
ventures and
associates - - (6) - - (6) - (6)
Effect of
hyperinflationary
economies - - - - 12 12 - 12
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Items that are or
may be
subsequently
reclassified to
profit or
loss - - (273) 15 12 (246) (6) (252)
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Other
comprehensive
income - - (273) 15 26 (232) (6) (238)
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Total
comprehensive
income - - (273) 15 243 (15) (2) (17)
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Transactions with
owners
Dividends paid to
equity
shareholders 5 - - - - (271) (271) - (271)
Net movement in
own shares
held - - - - 7 7 - 7
Dividends paid to
non-controlling
interests - - - - - - (4) (4)
Acquisition and
disposal of
non-controlling
interests - - - - - - (2) (2)
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Total transactions
with owners - - - - (264) (264) (6) (270)
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Balance as at 29
February
2020 45 175 136 6 8,662 9,024 89 9,113
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONTINUED
For the 24 weeks ended 27 February 2021
Attributable to equity shareholders Non-
controlling
interests
GBPm
-------- ----------
Issued Other Translation Hedging Retained Total
capital reserves reserve reserve earnings Total equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance as at 14
September
2019 45 175 409 (9) 8,832 9,452 98 9,550
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
IFRS 16 opening
balance
adjustment - - - - (149) (149) (1) (150)
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Balance as at 15
September
2019 45 175 409 (9) 8,683 9,303 97 9,400
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Total
comprehensive
income
Profit for the
period recognised
in the income
statement - - - - 455 455 10 465
Remeasurements of
defined
benefit schemes - - - - (89) (89) - (89)
Deferred tax
associated with
defined benefit
schemes - - - - 15 15 - 15
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Items that will
not be
reclassified
to profit or loss - - - - (74) (74) - (74)
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Effect of
movements in
foreign
exchange - - (83) (1) - (84) (13) (97)
Net loss on hedge
of net investment
in foreign
subsidiaries - - (3) - - (3) - (3)
Deferred tax
associated with
movement in
foreign exchange - - 1 - - 1 - 1
Movement in cash
flow hedging
position - - - (15) - (15) - (15)
Share of other
comprehensive
income of joint
ventures and
associates - - (1) - - (1) - (1)
Effect of
hyperinflationary
economies - - - - 17 17 - 17
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Items that are or
may be
subsequently
reclassified to
profit or
loss - - (86) (16) 17 (85) (13) (98)
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Other
comprehensive
income - - (86) (16) (57) (159) (13) (172)
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Total
comprehensive
income - - (86) (16) 398 296 (3) 293
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Inventory cash
flow hedge
movements
Gains transferred
to cost
of inventory - - - 18 - 18 - 18
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Total inventory
cash flow
hedge movements - - - 18 - 18 - 18
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Transactions with
owners
Dividends paid to
equity
shareholders 5 - - - - (271) (271) - (271)
Net movement in
own shares
held - - - - 8 8 - 8
Deferred tax
associated with
share-based
payments - - - - 1 1 - 1
Dividends paid to
non-controlling
interests - - - - - - (8) (8)
Acquisition and
disposal of
non-controlling
interests - - - - - - (2) (2)
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Total transactions
with owners - - - - (262) (262) (10) (272)
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
Balance as at 12
September
2020 45 175 323 (7) 8,819 9,355 84 9,439
------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
For the 24 weeks ended 27 February 2021
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 by each business, 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,
current asset investments and income tax assets. Segment
liabilities comprise trade and other payables, derivative
liabilities, provisions and lease liabilities.
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, right-of-use assets,
operating intangibles and biological assets. Businesses disposed
are shown separately and comparatives have been re-presented for
businesses sold or closed during the period.
The group is comprised of the following operating segments:
Grocery The manufacture of grocery products, including hot beverages,
sugar & sweeteners, vegetable oils, balsamic vinegars, bread
& baked goods, chilled foods, cereals, ethnic foods 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, cereal specialities and pharmaceutical
excipients.
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 24 weeks 52 weeks 24 weeks 24 weeks 52 weeks
ended ended ended ended ended ended
27 29 12 27 29 12 September
February February September February February 2020
2021 2020 2020 2021 2020 GBPm
GBPm GBPm GBPm GBPm GBPm
Operating
segments
Grocery 1,834 1,689 3,528 199 189 437
Sugar 763 803 1,594 66 12 100
Agriculture 746 692 1,395 19 16 43
Ingredients 735 737 1,503 78 62 147
Retail 2,232 3,710 5,895 43 441 362
Central - - - (37) (37) (63)
------------- ---------------- -------------- ---------------- ---------------- ------------- -------------------
6,310 7,631 13,915 368 683 1,026
Businesses
disposed:
Grocery 2 10 13 1 (1) (1)
Ingredients 1 5 9 - - (1)
------------- ---------------- -------------- ---------------- ---------------- ------------- -------------------
6,313 7,646 13,937 369 682 1,024
------------- ---------------- -------------- ---------------- ---------------- ------------- -------------------
Geographical
information
United
Kingdom 2,186 2,881 5,054 99 254 312
Europe &
Africa 2,180 2,882 5,048 69 241 298
The Americas 801 804 1,619 130 122 254
Asia Pacific 1,143 1,064 2,194 70 66 162
------------- ---------------- -------------- ---------------- ---------------- ------------- -------------------
6,310 7,631 13,915 368 683 1,026
Businesses
disposed:
Asia Pacific 3 15 22 1 (1) (2)
------------- ---------------- -------------- ---------------- ---------------- ------------- -------------------
6,313 7,646 13,937 369 682 1,024
------------- ---------------- -------------- ---------------- ---------------- ------------- -------------------
1. Operating segments for the 24 weeks ended 27 February
2021
Grocery Sugar Agriculture Ingredients Retail Central Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue from continuing businesses 1,835 798 747 825 2,232 (127) 6,310
Internal revenue (1) (35) (1) (90) - 127 -
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
External revenue from continuing
businesses 1,834 763 746 735 2,232 - 6,310
Businesses disposed 2 - - 1 - - 3
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Revenue from external customers 1,836 763 746 736 2,232 - 6,313
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Adjusted operating profit before
joint ventures and associates 186 64 16 69 43 (37) 341
Share of profit after tax from
joint ventures and associates 13 2 3 9 - - 27
Businesses disposed 1 - - - - - 1
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Adjusted operating profit 200 66 19 78 43 (37) 369
Finance income 5 5
Finance expense - (1) - - (37) (14) (52)
Other financial expense (3) (3)
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Adjusted profit before taxation 200 65 19 78 6 (49) 319
Profits less losses on disposal
of non-current assets 1 - - 1 - - 2
Amortisation of non-operating
intangibles (20) - (1) (3) - - (24)
Acquired inventory fair value
adjustments (1) - - - - - (1)
Transaction costs - - - (1) - - (1)
Exceptional items - - - - (21) (4) (25)
Profits less losses on sale and
closure of businesses - - - 5 - - 5
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Profit before taxation 180 65 18 80 (15) (53) 275
Taxation (103) (103)
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Profit for the period 180 65 18 80 (15) (156) 172
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Segment assets (excluding joint
ventures and associates) 2,585 1,925 466 1,394 7,417 167 13,954
Investments in joint ventures
and associates 36 27 139 113 - - 315
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Segment assets 2,621 1,952 605 1,507 7,417 167 14,269
Cash and cash equivalents 1,112 1,112
Current asset investments 33 33
Income tax 13 13
Deferred tax assets 217 217
Employee benefits assets 531 531
Segment liabilities (609) (334) (153) (302) (3,924) (226) (5,548)
Loans and overdrafts (440) (440)
Income tax (101) (101)
Deferred tax liabilities (300) (300)
Employee benefits liabilities (149) (149)
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Net assets 2,012 1,618 452 1,205 3,493 857 9,637
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Non-current asset additions 44 50 10 59 162 8 333
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Depreciation (including depreciation
of right-of-use assets and non-
cash lease adjustments) (56) (47) (8) (27) (266) (5) (409)
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Amortisation (24) (1) (2) (4) (2) (1) (34)
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
1. Operating segments for the 24 weeks ended 29 February 2020
Grocery Sugar Agriculture Ingredients Retail Central Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue from continuing businesses 1,690 833 694 824 3,710 (120) 7,631
Internal revenue (1) (30) (2) (87) - 120 -
------------------------------------- ------- ------ ----------- ----------- ------- ------- -------
External revenue from continuing
businesses 1,689 803 692 737 3,710 - 7,631
Businesses disposed 10 - - 5 - - 15
------------------------------------- ------- ------ ----------- ----------- ------- ------- -------
Revenue from external customers 1,699 803 692 742 3,710 - 7,646
------------------------------------- ------- ------ ----------- ----------- ------- ------- -------
Adjusted operating profit before
joint ventures and associates 173 10 14 54 441 (37) 655
Share of profit after tax from
joint ventures and associates 16 2 2 8 - - 28
Businesses disposed (1) - - - - - (1)
------------------------------------- ------- ------ ----------- ----------- ------- ------- -------
Adjusted operating profit 188 12 16 62 441 (37) 682
Finance income 7 7
Finance expense - (1) - - (37) (16) (54)
Other financial income 1 1
------------------------------------- ------- ------ ----------- ----------- ------- ------- -------
Adjusted profit before taxation 188 11 16 62 404 (45) 636
Profits less losses on disposal
of non-current assets 9 - - - - - 9
Amortisation of non-operating
intangibles (22) - - (2) - - (24)
Acquired inventory fair value
adjustments (8) - - - - - (8)
Transaction costs (1) - - - - - (1)
Exceptional items (25) - - - (284) - (309)
Profits less losses on sale and
closure of businesses (6) - - 1 - - (5)
------------------------------------- ------- ------ ----------- ----------- ------- ------- -------
Profit before taxation 135 11 16 61 120 (45) 298
Taxation (77) (77)
------------------------------------- ------- ------ ----------- ----------- ------- ------- -------
Profit for the period 135 11 16 61 120 (122) 221
------------------------------------- ------- ------ ----------- ----------- ------- ------- -------
Segment assets (excluding joint
ventures and associates) 2,674 2,120 444 1,444 7,158 156 13,996
Investments in joint ventures
and associates 36 27 137 70 - - 270
------------------------------------- ------- ------ ----------- ----------- ------- ------- -------
Segment assets 2,710 2,147 581 1,514 7,158 156 14,266
Cash and cash equivalents 1,320 1,320
Current asset investments 29 29
Deferred tax assets 183 183
Employee benefits assets 247 247
Segment liabilities (561) (394) (140) (296) (4,263) (219) (5,873)
Loans and overdrafts (548) (548)
Income tax (69) (69)
Deferred tax liabilities (248) (248)
Employee benefits liabilities (194) (194)
------------------------------------- ------- ------ ----------- ----------- ------- ------- -------
Net assets 2,149 1,753 441 1,218 2,895 657 9,113
------------------------------------- ------- ------ ----------- ----------- ------- ------- -------
Non-current asset additions 55 35 11 54 251 8 414
Depreciation (including depreciation
of right-of-use assets and non-
cash lease adjustments) (52) (49) (8) (27) (246) (4) (386)
------------------------------------- ------- ------ ----------- ----------- ------- ------- -------
Amortisation (26) (1) (1) (3) (1) (1) (33)
Impairment of property, plant
and equipment on sale and closure
of businesses (2) - - - - - (2)
1. Operating segments for the 52 weeks ended 12 September
2020
Grocery Sugar Agriculture Ingredients Retail Central Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue from continuing businesses 3,530 1,658 1,398 1,685 5,895 (251) 13,915
Internal revenue (2) (64) (3) (182) - 251 -
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
External revenue from continuing
businesses 3,528 1,594 1,395 1,503 5,895 - 13,915
Businesses disposed 13 - - 9 - - 22
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Revenue from external customers 3,541 1,594 1,395 1,512 5,895 - 13,937
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Adjusted operating profit before
joint ventures and associates 404 98 33 132 362 (63) 966
Share of profit after tax from
joint ventures and associates 33 2 10 15 - - 60
Businesses disposed (1) - - (1) - - (2)
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Adjusted operating profit 436 100 43 146 362 (63) 1,024
Finance income 11 11
Finance expense (1) (3) - - (79) (41) (124)
Other financial income 3 3
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Adjusted profit before taxation 435 97 43 146 283 (90) 914
Profits less losses on disposal
of non-current assets 9 7 1 (1) 3 (1) 18
Amortisation of non-operating
intangibles (52) - (1) (6) - - (59)
Acquired inventory fair value
adjustments (15) - - - - - (15)
Transaction costs - - - (2) - - (2)
Exceptional items 5 (23) - - (138) - (156)
Profits less losses on sale and
closure of businesses (4) - - (4) - (6) (14)
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Profit before taxation 378 81 43 133 148 (97) 686
Taxation (221) (221)
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Profit for the period 378 81 43 133 148 (318) 465
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Segment assets (excluding joint
ventures and associates) 2,689 1,893 429 1,470 7,372 155 14,008
Investments in joint ventures
and associates 51 27 136 75 - - 289
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Segment assets 2,740 1,920 565 1,545 7,372 155 14,297
Cash and cash equivalents 1,998 1,998
Current asset investments 32 32
Income tax 30 30
Deferred tax assets 212 212
Employee benefits assets 100 100
Segment liabilities (637) (351) (147) (334) (4,523) (219) (6,211)
Loans and overdrafts (472) (472)
Income tax (171) (171)
Deferred tax liabilities (210) (210)
Employee benefits liabilities (166) (166)
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Net assets 2,103 1,569 418 1,211 2,849 1,289 9,439
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Non-current asset additions 104 88 21 97 476 13 799
Depreciation (including depreciation
of right-of-use assets and non-
cash lease adjustments) (109) (85) (16) (57) (546) (14) (827)
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
Amortisation (62) (2) (2) (7) (14) (2) (89)
Impairment of property, plant
& equipment and right-of-use assets (15) - - - - - (15)
Impairment of property, plant
and equipment on sale and closure
of businesses (1) - - (1) - - (2)
Impairment of right-of-use assets
on sale and closure of businesses - - - (2) - - (2)
------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
2021 half year
During the period, Primark received GBP79m from government job
retention schemes in the UK and Europe. This was recorded as a
reduction to staff costs.
2020 full year
In the prior year, Primark received GBP98m from government job
retention schemes in the UK and Europe, all of which arose in the
second half of the year. This was recorded as a reduction to staff
costs.
1. Operating segments - geographical information
For the 24 weeks ended 27 February 2021
United Europe The Americas Asia
Kingdom & Africa GBPm Pacific Total
GBPm GBPm GBPm GBPm
Revenue from external customers 2,186 2,180 801 1,146 6,313
Segment assets 5,577 6,020 1,214 1,458 14,269
Non-current asset additions 98 164 32 39 333
Depreciation (including depreciation of right-of-use
assets and non-cash lease adjustments) (144) (203) (30) (32) (409)
Amortisation (17) (10) (4) (3) (34)
Acquired inventory fair value adjustments - (1) - - (1)
Exceptional items (18) (7) - - (25)
Transaction costs - - - (1) (1)
For the 24 weeks ended 29 February 2020
United Europe The Americas Asia
Kingdom & Africa GBPm Pacific Total
GBPm GBPm GBPm GBPm
Revenue from external customers 2,881 2,882 804 1,079 7,646
Segment assets 5,458 6,050 1,328 1,430 14,266
Non-current asset additions 106 208 64 36 414
Depreciation (including depreciation of right-of-use
assets and non-cash lease adjustments) (138) (183) (33) (32) (386)
Amortisation (20) (7) (3) (3) (33)
Acquired inventory fair value adjustments - (7) (1) - (8)
Exceptional items (151) (150) (8) - (309)
Transaction costs (1) - - - (1)
Impairment of property, plant and equipment
on sale and closure of businesses - - - (2) (2)
For the 52 weeks ended 12 September 2020
United Europe The Americas Asia
Kingdom & Africa GBPm Pacific Total
GBPm GBPm GBPm GBPm
Revenue from external customers 5,054 5,048 1,619 2,216 13,937
Segment assets 5,249 6,263 1,314 1,471 14,297
Non-current asset additions 197 406 128 68 799
Depreciation (including depreciation of right-of-use
assets and non-cash lease adjustments) (292) (397) (70) (68) (827)
Amortisation (48) (27) (6) (8) (89)
Acquired inventory fair value adjustments - (15) - - (15)
Exceptional items (4) (108) (44) - (156)
Transaction costs - (1) - (1) (2)
Impairment of property, plant & equipment
and right-of-use assets (15) - - - (15)
Impairment of property, plant and equipment
on sale and closure of businesses - - - (2) (2)
Impairment of right-of-use assets on sale
and closure of businesses - - - (2) (2)
The group's operations in the following countries met the
criteria for separate disclosure:
Revenue Non-current
assets
52 weeks
24 weeks 24 weeks 52 weeks 24 weeks 24 weeks ended
ended ended ended ended ended 12
27 February 29 February 12 September 27 February 29 February September
2021 2020 2020 2021 2020 2020
GBPm GBPm GBPm GBPm GBPm GBPm
Australia 601 564 1,161 545 503 558
Spain 541 673 1,097 776 834 849
United States 530 526 1,055 651 740 727
-------------
All prior year segment disclosures are stated before
reclassification of assets and liabilities classified as held for
sale
2. Exceptional items
2021
Exceptional items of GBP25m for the 24 weeks ended 27 February
2021 comprise an inventory charge of GBP21m in Primark, which
relates to certain autumn/winter seasonal items already on display
in closed stores and which could not be sold before the end of the
season. This has been cleared from stores to allow spring/summer
stock to be displayed as our stores prepare to reopen, and an
exceptional provision of GBP21m has been charged to reflect the
write-down of this inventory to net realisable value. The
exceptional items also include a GBP4m pension service cost taken
for members of the Company's UK defined benefit pension scheme
following a further High Court ruling on 20 November 2020 regarding
the equalisation of Guaranteed Minimum Pensions.
2020
Exceptional items of GBP156m for the 52 weeks ended 12 September
2020 included impairments of GBP116m in property, plant and
equipment and right-of-use assets at Primark, an impairment of
GBP23m in goodwill relating to Azucarera, charges of GBP22m
relating to inventory in Primark and a GBP5m gain on closure of our
Speedibake Wakefield factory.
Following the successful downsizing of three stores in the US
and three stores in Germany, plans for several more stores in those
markets resulted in non-cash write-downs of GBP34m against
property, plant and equipment and GBP82m against right-of-use
assets.
In the light of the beet volumes contracted by Azucarera in the
second crop year after reducing the beet price paid to farmers, we
revised our forecasts for this business. This resulted in a GBP23m
non-cash write-down of goodwill recorded in the Sugar and Europe
& Africa operating segments.
Our prior year half year results were announced on 21 April 2020
and included an exceptional inventory impairment charge of GBP248m
and an onerous contract provision of GBP36m. At the time of the
interim announcement, the dates for the reopening of Primark stores
were not known and more than half of the impairment charge related
to stock already on display in the closed stores. The earlier
reopening of the stores and subsequent successful trading of the
spring/summer inventory avoided the need for this provision. At the
year-end a markdown provision of GBP22m was created for inventory
stored on our behalf by suppliers for longer than usual as a result
of the pandemic.
Our Speedibake Wakefield factory was destroyed by fire in
February 2020 and an exceptional charge of GBP25m was recognised in
the prior year half year results. This comprised an GBP18m non-cash
write-down of property, plant and equipment, a GBP1m provision
against inventory and GBP6m of closure costs. Net insurance
proceeds of GBP30m were received in the second half of last year,
more than offsetting the exceptional charge recorded in the first
half. The prior year full year position was an exceptional gain of
GBP5m recorded in the Grocery and United Kingdom operating
segments.
3. Income tax expense
24 weeks 24 weeks 52 weeks
ended ended ended
27 February 29 February 12 September
2021 2020 2020
GBPm GBPm GBPm
Current tax expense
UK - corporation tax at 19.00% (2020 - 18.08%) 12 9 57
Overseas - corporation tax 98 72 203
UK - under provided in prior periods - - 3
Overseas - over provided in prior periods (2) - (4)
-----------------
108 81 259
Deferred tax expense
UK deferred tax 3 - 5
Overseas deferred tax (8) (4) (53)
UK - under provided in prior periods - - 3
Overseas - under provided in prior periods - - 7
(5) (4) (38)
-----------------
Total income tax expense in income statement 103 77 221
-----------------
Reconciliation of effective tax rate
Profit before taxation 275 298 686
Less share of profit after tax from joint ventures
and associates (26) (27) (57)
-----------------
Profit before taxation excluding share of profit
after tax from joint ventures and associates 249 271 629
-----------------
Nominal tax charge at UK corporation tax rate
of 19.00% (2020 - 18.08%) 47 49 120
Effect of higher and lower tax rates on overseas
earnings 26 9 18
Effect of changes in tax rates on income statement - - 13
Expenses not deductible for tax purposes 26 18 54
Disposal of assets covered by tax exemptions
or unrecognised capital losses - - 1
Deferred tax not recognised 6 1 6
Adjustments in respect of prior periods (2) - 9
-----------------
103 77 221
-----------------
Income tax recognised directly in equity
Deferred tax associated with defined benefit
schemes 84 3 (15)
Deferred tax associated with share-based payments - - (1)
Deferred tax associated with movement in cash
flow hedging position 1 3 -
Deferred tax associated with movements in foreign
exchange - - (1)
85 6 (17)
-----------------
A UK corporation tax rate of 19% (effective 1 April 2020) was
substantively enacted on 17 March 2020 and UK income tax and
deferred tax has accordingly been calculated at 19%. On 3 March
2021, the UK Government announced that the UK corporation tax rate
applicable from 1 April 2023 will increase to 25% from 19%. The
change was not substantively enacted at the balance sheet date and
hence the impact has not been reflected in the measurement of
deferred tax balances at the period end, but it is anticipated that
substantive enactment will occur later in the year. The group has
calculated that the impact of applying the rate change to the
opening deferred tax balance sheet would increase the net deferred
tax liability by approximately GBP23m. Whilst this will increase
the group's total effective tax rate, it is expected to have a
minimal impact on the group's adjusted effective tax rate for
2021.
In April 2019 the European Commission published its decision on
the Group Financing Exemption in the UK's controlled foreign
company legislation. The Commission found that the UK law did not
comply with EU State Aid rules in certain circumstances. The group
has arrangements that may be impacted by this decision as might
other UK-based multinational groups that had financing arrangements
in line with the UK's legislation in force at the time. The group
has appealed against the European Commission's decision, as have
the UK Government and a number of other UK companies. We have
calculated our maximum potential liability to be GBP27m, however we
do not consider that any provision is required in respect of this
amount based on our current assessment of the issue. Following
receipt of charging notices from HM Revenue & Customs ('HMRC')
at the end of February, we made payment to HMRC in March. However,
receipt of the charging notices does not change our assessment of
the maximum potential liability nor our assessment that no
provision is required in respect of this amount. We will continue
to consider the impact of the Commission's decision on the group
and the potential requirement to record a provision.
4. Earnings per share
24 weeks ended 24 weeks 52 weeks
27 February ended ended
2021 29 February 12 September
pence 2020 2020
pence pence
Adjusted earnings per share 25.1 61.8 81.1
Disposal of non-current assets 0.3 1.1 2.3
Sale and closure of businesses 0.6 (0.6) (1.8)
Acquired inventory fair value adjustments (0.1) (1.0) (1.9)
Transaction costs (0.1) (0.1) (0.3)
Exceptional items (3.2) (39.1) (19.7)
Tax effect on above adjustments 0.3 7.8 4.6
Amortisation of non-operating intangibles (3.0) (3.0) (7.5)
Tax credit on non-operating intangibles
amortisation and goodwill 0.6 0.6 0.8
------------
Earnings per ordinary share 20.5 27.5 57.6
------------
5. Dividends
24 weeks ended 24 weeks 52 weeks
27 February ended ended
2021 29 February 12 September
pence 2020 2020
pence pence
2019 final - 34.30 34.30
- 34.30 34.30
------------
24 weeks ended 24 weeks 52 weeks
27 February ended ended
2021 29 February 12 September
GBPm 2020 2020
GBPm GBPm
2019 final - 271 271
- 271 271
------------
No 2020 interim dividend was paid in the prior year and no 2020
final dividend was paid this year.
The 2021 interim dividend of 6.2p per share, total value of
GBP49m, will be paid on 9 July 2021 to shareholders registered at
the close of business on 4 June 2021.
6. Acquisitions and disposals
Acquisitions
2021
During the period the group contributed GBP39m to the bakery
ingredients joint venture in China with Wilmar International. There
were no other acquisitions in the first half.
2020
In December 2019, the group's Grocery business in the UK
acquired Al'Fez, a Middle Eastern food brand with customers in the
UK and Europe. In the second half of the year the group acquired
two small Agriculture businesses in Europe and the group's
Ingredients business acquired Larodan, a Swedish manufacturer and
international marketer of state-of-the-art, high-purity
research-grade lipids that will expand our research and product
development capabilities to better serve the pharmaceutical,
nutritional and industrial market sectors.
Total consideration for these acquisitions was GBP19m,
comprising GBP16m cash consideration and GBP3m deferred
consideration. Net assets acquired comprised non-operating
intangible assets of GBP15m, which were recognised with their
related deferred tax of GBP3m, and GBP1m of other operating assets.
Goodwill of GBP6m resulted from these acquisitions.
Disposals
2021
In the first half of 2021 the group sold the businesses
classified as a disposal group and held for sale at the previous
year end, into the yeast and bakery ingredients joint venture in
China with Wilmar International. Cash proceeds amounted to GBP34m
with the purchaser also assuming GBP11m of debt, resulting in total
proceeds of GBP45m. Net assets disposed were GBP43m. Provisions for
associated restructuring costs were GBP6m, with a GBP8m gain on the
recycling of foreign exchange differences and foreign exchange on
the cash proceeds. The gain on disposal was GBP4m.
Closure provisions of GBP1m relating to disposals made in
previous years were also no longer required and were released to
sale and closure of business in the Asia Pacific and Ingredients
segments.
2020
In 2020 the group announced the closure of the Cake business in
the Grocery segment in Australia and the Jasol New Zealand business
in the Ingredients segment, with GBP10m included in loss on closure
of business, comprising GBP2m non-cash impairment of property,
plant and equipment, GBP2m non-cash impairment of right-of-use
assets and GBP6m of restructuring provisions.
The group also sold a small business in China, reported within
the Asia Pacific and Grocery segments. Cash proceeds amounted to
GBP2m on GBP1m of net assets disposed, resulting in a pre-tax
profit on disposal of GBP1m.
Warranty provisions of GBP1m relating to disposals made in
previous years were no longer required and were released to sale
and closure of business in the Americas and Ingredients segments.
The group also charged a GBP6m onerous lease provision to sale and
closure of business (in the Central and UK segments) in respect of
guarantees given on property leases assigned to third parties that
the group expects to be required to honour.
7. Analysis of net debt
At 12 September At 27
2020 New leases Exchange February
GBPm Cash flow Disposals and non-cash adjustments 2021
GBPm GBPm items GBPm GBPm
GBPm
Cash at bank and in hand,
cash equivalents and overdrafts 1,909 (860) - - (23) 1,026
Current asset investments 32 2 - - (1) 33
Short-term loans (65) (4) 11 (72) 3 (127)
Long-term loans (318) - - 72 19 (227)
-----------
Net cash before lease liabilities 1,558 (862) 11 - (2) 705
-----------
Lease liabilities (3,639) 131 - (54) 142 (3,420)
(2,081) (731) 11 (54) 140 (2,715)
-----------
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
2020. There have been no material changes in these relationships in
the 24 weeks ended 27 February 2021 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 2021 comprise those of the Company and its subsidiaries
(together referred to as 'the group') and the group's interests in
joint ventures and associates.
The consolidated financial statements of the group for the 52
weeks ended 12 September 2020 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 for the 52 weeks ended
12 September 2020.
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 directors have taken into consideration that restrictions on
trading activity and the movement of people applied by most
governments to contain the spread of COVID-19 since March last year
have had a severe effect on economic activity. The directors have
reviewed a detailed cash flow forecast to the end of the 2022
financial year which takes into account conservative judgements
where there is continued uncertainty.
At the half year, the group had net cash before lease
liabilities of GBP705m and had an undrawn, committed revolving
credit facility (RCF) of GBP1,088m for the coming year. The
directors have satisfied themselves that the RCF is available
throughout the going concern period having assessed the group's
projected compliance with the terms and covenants of this facility.
Last year the group's headroom was increased following confirmation
by the Bank of England of our eligibility to access funding under
its COVID Corporate Financing Facility (CCFF). This facility was
not utilised at any time, and we have now confirmed with the Bank
of England that this eligibility has now lapsed. As at the date of
approval of these interim results, the group has available central
cash on hand of GBP622m.
In reviewing the cash flow forecast for the coming year, the
directors reviewed the trading of the non-Primark businesses and
the cash outflows for Primark under the base scenario of the likely
reopening dates of those stores still closed. The directors have a
thorough understanding of the risks, sensitivities and judgements
included in these elements of the cash flow forecasts and have a
high degree of confidence in these cash flows. The main
uncertainties in the year ahead were considered to be the length of
time for which the Primark stores might be closed and the measures
and trading restrictions imposed by different governments, as well
as the strength of the trading in our stores as they reopen. In
this regard, the base forecast assumes that all Primark stores will
be open from May this year until the end of this financial year and
it also assumes the possibility of a number of regional lockdowns
impacting the estate during the first half of 2022. This cash flow
has been stress tested assuming that half of the Primark estate is
closed for all of the first half of next year which is in line with
the store closures experienced during the first half of this
financial year.
Under both of these scenarios the group has a forecast net cash
position throughout the 18 months and forecast compliance with the
covenants in the debt facilities. In addition, we also considered
the circumstances which would be needed to exhaust the group's cash
resources over the assessment period - a reverse stress test. This
would indicate that all Primark stores would need to remain
completely closed for more than five months, including the peak
Christmas sales period, without management taking any mitigating
actions. The likelihood of these circumstances is remote for two
reasons. Firstly, over such a long period, management could take
substantial mitigating actions, such as cost cutting measures,
accessing government job retention schemes, and reducing capital
investment. Secondly, we have seen governments develop a number of
measures to contain the virus, including widespread vaccination
programmes, which make it likely that any future lockdowns would be
regional.
Headroom throughout the period is substantial, the directors did
not consider the need for any mitigating actions and so the
likelihood of the headroom being exhausted was considered
remote.
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 26 on pages 176 to 187 of
the 2020 Annual Report provides details of the group's policy on
managing its financial and commodity risks.
The 24 week period for the condensed consolidated interim
financial statements of the Company means that the second half of
the year is usually a 28 week period, and the two halves of the
reporting year are therefore not of equal length. For the Retail
segment, Christmas, falling in the first half of the year, is a
particularly important trading period. For the Sugar segment, the
balance sheet, and working capital in particular, is strongly
influenced by seasonal growth patterns for both sugar beet and
sugar cane, which vary significantly in the markets in which the
group operates.
The condensed consolidated interim financial statements are
unaudited but have been subject to an independent review by the
auditor and were approved by the board of directors on 20 April
2021. 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 12 September 2020 have been abridged
from the group's 2020 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.
10. Significant accounting policies
Except where detailed otherwise, 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 2020 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 12 September 2020.
New accounting standards
The following accounting standards and amendments were adopted
during the period and had no significant impact on the group:
-- Amendments to IFRS 3 Definition of a Business
-- Amendments to IAS 1 and IAS 8 Definition of Material
-- Amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate Benchmark Reform
Accounting standards not yet applicable
The group is assessing the impact of the following standards,
interpretations and amendments that are not yet effective. Where
already endorsed by the EU (before 31 December 2020) or by the UK
Endorsement Board (UKEB) (from 1 January 2021), these changes will
be adopted on the effective dates noted. Where not yet endorsed,
the adoption date is less certain:
-- IFRS 17 Insurance Contracts effective 2022 financial year (not yet endorsed by the UKEB)
-- Amendments to IAS 1 Presentation of Financial Statements:
Classification of Liabilities as Current or Non-current effective
2023 financial year.
11. Accounting estimates and judgements
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 applied to the consolidated financial statements for
the 52 weeks ended 12 September 2020.
12. Alternative performance measures
In the reporting of financial information, the Board uses
various Alternative Performance Measures (APMs) which they believe
provide useful additional information for understanding the
financial performance and financial health of the group. These APMs
should be considered in addition to IFRS measures and are not
intended to be a substitute for them. As they are not defined by
IFRS, they may not be directly comparable with other companies who
use similar measures.
APMs are also used to improve the comparability of information
between reporting periods and geographical units (such as
like-for-like sales) by adjusting for non-recurring or
uncontrollable factors which affect IFRS measures, to aid users in
understanding the group's performance.
Consequently, APMs are used by the Board and management for
performance analysis, planning, reporting and incentive-setting
purposes.
Closest
APM equivalent Definition/purpose Reconciliation/calculation
IFRS measure
Like-for-like No direct The like-for-like sales metric enables Consistent with
sales equivalent measurement of the performance of the definition given
our retail stores on a comparable
year-on-year basis.
This measure represents the change
in sales at constant currency in our
retail stores adjusted for new stores,
closures and relocations. Refits,
extensions and downsizes are also
adjusted for if a store's retail square
footage changes by 10% or more. For
each change described above, a store's
sales are excluded from like- for-like
sales for one year.
No adjustments are made for disruption
during refits, extension or downsizes,
for cannibalisation by new stores,
or for the timing of national or bank
holidays.
It is measured against comparable
trading days in each year.
Two year No direct The like-for-like sales metric expressed Consistent with
like- equivalent over two years enables measurement the definition given
for-like of the performance of our retail stores
sales compared to our experience in 2019,
which was before any of the economic
effects of COVID-19.
It is calculated as described above
for like-for-like sales, but with
2019 data as the comparator.
Adjusted No direct Adjusted operating (profit) margin Reconciliation/calculation
operating equivalent is adjusted operating profit as a see Note A below
(profit) percentage of revenue.
margin
Adjusted Operating Adjusted operating profit is stated A reconciliation
operating profit before amortisation of non-operating of this measure
profit intangibles, transaction costs, amortisation is provided on the
of fair value adjustments made to face of the condensed
acquired inventory, profits less losses consolidated income
on disposal of non-current assets statement and by
and exceptional items. operating segment
Items defined above which arise in in note 1
the group's joint ventures and associates
are
also treated as adjusting items for
the purposes of adjusted operating
profit.
Adjusted Profit Adjusted profit before tax is stated A reconciliation
profit before before amortisation of non-operating of this measure
before tax intangibles, transaction costs, amortisation is provided on the
tax of fair value adjustments made to face of the condensed
acquired inventory, profits less losses consolidated income
on disposal of non-current assets, statement and by
exceptional items and profits less operating segment
losses on sale and closure of businesses. in note 1
Items defined above which arise in
the group's joint ventures and associates
are
also treated as adjusting items for
the purposes of adjusted profit before
tax.
Adjusted Earnings Adjusted earnings per share are stated A reconciliation
earnings per share before amortisation of non-operating of adjusted earnings
per share intangibles, transaction costs, amortisation per share is provided
of fair value adjustments made to in note 4
acquired inventory, profits less losses
on disposal of non-current assets,
exceptional items and profits less
losses on sale and closure of businesses
together with the related tax effect.
Items defined above which arise in
the group's joint ventures and associates
are
also treated as adjusting items for
the purposes of adjusted earnings
per share.
Exceptional No direct Exceptional items are items of income Exceptional items
items equivalent and expenditure which are material are included on
and unusual in nature and are considered the face of the
of such significance that they require consolidated income
separate disclosure on the face of statement with further
the income statement. detail provided
in note 2
Closest
APM equivalent Definition/purpose Reconciliation/calculation
IFRS measure
Constant Revenue Constant currency measures are derived Reconciliation/calculation
currency and adjusted by translating the relevant prior see Note B below
operating year figure at current year average
profit exchange rates, except for countries
(non-IFRS) where CPI has escalated to extreme
measure levels, in which case actual exchange
rates are used. There are currently
two countries where the group has
operations in this position - Argentina
and Venezuela.
Effective Income The effective tax rate is the tax Whilst the effective
tax rate tax expense charge for the year expressed as a tax rate is not disclosed,
percentage of profit before tax. a reconciliation
of the tax charge
on profit before
tax at the UK corporation
tax rate to the actual
tax charge is provided
in note 3
Adjusted No direct The adjusted effective tax rate is The tax impact of
effective equivalent the tax charge for the year excluding reconciling items
tax rate tax on adjusting items expressed as between profit before
a percentage of adjusted profit before tax and adjusted
tax. profit before tax
is shown in note
4
Dividend No direct Dividend cover is the ratio of adjusted Reconciliation/calculation
cover equivalent earnings per share to dividends per see Note C below
share relating to the year.
Capital No direct Capital expenditure is a measure of Reconciliation/calculation
expenditure equivalent investment each year in non-current see Note D below
assets in existing businesses. It
comprises cash outflows from the purchase
of property, plant and equipment and
intangibles.
Gross No direct Gross investment is a measure of investment Reconciliation/calculation
investment equivalent each year in non-current assets of see Note E below
existing businesses and acquisitions
of new businesses. It includes capital
expenditure (see above) as well as
cash outflows from the purchase of
subsidiaries, joint ventures and associates,
additional shares in subsidiary undertakings
from non-controlling interests and
other investments, as well as net
debt assumed in acquisitions.
Net cash/debt No direct This measure comprises cash, cash A reconciliation
before equivalent equivalents and overdrafts, current of this measure is
lease asset investments and loans. in note 7
liabilities
Net cash/debt No direct This measure comprises cash, cash A reconciliation
including equivalent equivalents and overdrafts, current of this measure is
lease asset investments, loans and lease in note 7
liabilities liabilities.
(Average) No direct Capital employed is derived from the Consistent with the
capital equivalent management balance sheet and does definition given
employed not reconcile directly to the statutory
balance sheet. All elements of capital
employed are calculated in accordance
with adopted IFRS.
Average capital employed for each
segment and the group is calculated
by averaging the capital employed
for each period of the financial year
based on the
reporting calendar of each business.
Return No direct The return on (average) capital employed Consistent with the
on (average) equivalent measure divides adjusted operating definition given
capital profit by average capital employed.
employed Also referred to as ROCE and ROACE.
(Average) No direct Working capital is derived from the Consistent with the
working equivalent management balance sheet and does definition given
capital not reconcile directly to the statutory
balance sheet. All elements of working
capital are calculated in accordance
with adopted IFRS.
Average working capital for each segment
and the group is calculated by averaging
the working capital for each period
of the financial year based on the
reporting calendar of each business.
(Average) No direct This measure expresses average working Consistent with the
working equivalent capital as a percentage of revenue. definition given
capital
as a percentage
of revenue
Note A
Central
and disposed
Grocery Sugar Agriculture Ingredients Retail businesses Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
24 weeks ended 27 February
2021
External revenue from continuing
businesses 1,834 763 746 735 2,232 3 6,313
Adjusted operating profit 199 66 19 78 43 (36) 369
Adjusted operating margin
% 10.9% 8.7% 2.5% 10.6% 1.9% 5.8%
24 weeks ended 29 February
2020
External revenue from continuing
businesses 1,689 803 692 737 3,710 15 7,646
Adjusted operating profit 189 12 16 62 441 (38) 682
Adjusted operating margin
% 11.2% 1.5% 2.3% 8.4% 11.9% 8.9%
Note B
Disposed
Grocery Sugar Agriculture Ingredients Retail businesses Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
24 weeks ended 27 February 2021
External revenue from continuing
businesses at actual rates 1,834 763 746 735 2,232 3 6,313
24 weeks ended 29 February 2020
External revenue from continuing
businesses at actual rates 1,689 803 692 737 3,710 15 7,646
Impact of foreign exchange 12 (47) 1 (14) 88 1 41
External revenue from continuing
businesses at constant currency 1,701 756 693 723 3,798 16 7,687
% change at constant currency +8% +1% +8% +2% -41% -18%
Central
and disposed
Grocery Sugar Agriculture Ingredients Retail businesses Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
24 weeks ended 27 February
2021
Adjusted operating profit
at actual rates 199 66 19 78 43 (36) 369
24 weeks ended 29 February
2020
Adjusted operating profit
at actual rates 189 12 16 62 441 (38) 682
Impact of foreign exchange (2) (3) (1) (1) 8 1 2
Adjusted operating profit
at constant currency 187 9 15 61 449 (37) 684
% change at constant currency +6% +633% +27% +28% -90% -46%
Note C
24 weeks ended 24 weeks 52 weeks
27 February ended ended
2021 29 February 12 September
2020 2020
Adjusted earnings per share (pence) 25.1 61.8 81.1
Adjustment to reflect the impact of the future
repayment of GBP79m job retention monies received (6.6) - -
in the first half taxed at the adjusted effective
tax rate (pence)
18.5 61.8 81.1
Dividends relating to the period (pence) 6.2 - -
Dividend cover 3 n/a n/a
Note D
24 weeks ended 24 weeks 52 weeks
27 February ended ended
2021 29 February 12 September
GBPm 2020 2020
From the cash flow statement GBPm GBPm
Purchase of property, plant and equipment 263 315 561
Purchase of intangibles 44 43 61
307 358 622
------------
Note E
24 weeks ended 24 weeks 52 weeks
27 February ended ended
2021 29 February 12 September
GBPm 2020 2020
From the cash flow statement GBPm GBPm
Purchase of property, plant and equipment 263 315 561
Purchase of intangibles 44 43 61
Purchase of subsidiaries, joint ventures
and associates 39 3 16
Purchase of shares in subsidiary undertaking
from non-controlling interests 23 2 2
Purchase of other investments 13 2 1
382 365 641
13. Subsequent events
During the first half, we were eligible for GBP79m from
government job retention schemes which, at the date of this
announcement, has increased to GBP121m. We are announcing in these
interim results that we do not plan to make any further claims from
government job retention schemes for which we would be eligible
from this date, and that we intend to repay the GBP121m, including
GBP72m to the UK government, for which we were eligible in this
financial year up to this date.
This decision was made after the half year end and so the
condensed consolidated income statement for the first half does not
reflect the repayment of the amount relating to the first half. The
expense of the repayment for the full financial year will be
charged to adjusted operating profit in the second half and will be
reflected in the full year income statement.
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.
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
Michael McLintock George Weston John Bason
Chairman Chief Executive Finance Director
20 April 2021
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 2021 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 set
of financial statements.
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "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 Guidance 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 IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this Interim Results Announcement has 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 set of financial statements in the Interim Results
Announcement based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the 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 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 2021 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 Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Ernst & Young LLP London
20 April 2021
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IR ZZGMDRLGGMZM
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