02:00 Tue 03 Nov 2015
Assoc British Foods - Annual Results Announcement 2015
For release 3 November 2015
A strong performance despite currency and commodity challenges
Financial Headlines
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Actual |
Constant currency1 |
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· Group revenue |
£12.8bn |
-1% |
+2% |
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· Adjusted operating profit |
£1,092m* |
-6% |
-4% |
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· Adjusted profit before tax down 6% to £1,034m** |
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· Adjusted earnings per share down 2% to 102.0p** |
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· Dividends per share up 3% to 35.0p |
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· Gross capital investment of £613m |
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· Net debt reduced to £194m |
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· After profits less losses on sale and closure of businesses and exceptional items, operating profit down 12% to £947m, profit before tax down 30% to £717m and basic earnings per share down 30% to 67.3p. |
"We delivered a strong operational performance despite the challenges of food commodity deflation and big movements in exchange rates. The group continues to generate strong cash flows and to reduce net debt. While marginally down, our earnings per share result underlines the group's strength."
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before amortisation of non-operating intangibles, profits less losses on disposal of non-current assets and exceptional items. |
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before amortisation of non-operating intangibles, profits less losses on disposal of non-current assets, profits less losses on sale and closure of businesses and exceptional items. |
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All adjustments to profit measures are shown on the face of the consolidated income statement. |
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Constant currency is derived by translating the 2014 results at 2015 average exchange rates. |
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For further information please contact: |
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Until 15.00 only |
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Tel: 020 7638 9571 |
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Tel: 020 7638 9571
Tel: 07770 321881 |
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After 15.00 |
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Tel: 020 7399 6500 |
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Notes to Editors
Our aim is to achieve strong, sustainable leadership positions in markets that offer potential for profitable growth. We look to achieve this through a combination of growth of existing businesses, acquisition of complementary new businesses and achievement of high levels of operating efficiency.
ASSOCIATED BRITISH FOODS plc
ANNUAL RESULTS ANNOUNCEMENT
FOR THE 52 WEEKS ENDED 12 SEPTEMBER 2015
CHAIRMAN'S STATEMENT
This financial year has been characterised by continuing investment in businesses with growth opportunities and a relentless drive for improved efficiencies and cost reduction. The two major challenges facing the group have been well flagged - food commodity deflation and substantial movements in currency markets.
A key influence on our food businesses has been deflation in many of our major commodities, making growth in revenues difficult to achieve. The most notable examples are the substantial declines in both the EU and world sugar prices. We have also experienced significant movements in exchange rates with a strengthening of sterling and the US dollar, and a weakening of the euro and emerging market currencies. These movements had a negative effect on the translation of overseas results but also, and increasingly as the year progressed, on transactional exposures.
Against this background a 2% decline in adjusted earnings per share is all the more creditable and the group continued to generate strong cash flows and reduce net debt significantly as a result.
This year has seen growth for a number of our businesses. Primark expanded its retail selling space by 9% this year with a major increase in its presence in
Cost reduction was not confined to our Sugar businesses. The substantial profit and margin recovery in Ingredients and margin improvement in Grocery were also driven by wide ranging initiatives in these businesses.
We continued to invest for the long term with gross capital expenditure on property, plant, equipment and intangible assets of £613m. Over half of this was spent on
Cash flow was again strong this year despite a working capital outflow driven by higher sugar stocks. Net debt at the year end was £252m lower than last year at £194m. With the group's cash generating ability, the lower net debt and the committed borrowing facilities available, we have the capacity to meet our growth ambitions.
Corporate responsibility
At the heart of our group is the very simple philosophy that helping to feed and clothe people is a virtuous and valuable endeavour. Our approach to ensuring that we provide our customers with high quality, ethically sourced products in a responsible manner is described in our latest Corporate Responsibility update which is published today and available on the group's website at www.abf.co.uk/responsibility.
The board
The Senior Independent Director,
In January we welcomed
Employees
This year's success is testament to the resilience and resourcefulness of our employees who, in many of our businesses, and particularly in Sugar, have been operating in difficult market conditions. I would like to thank them all for their valuable contribution, particularly to the various continuous improvement initiatives that have led to substantial cost reduction across the group this year. These required a robust challenge to historic practices, innovation and creativity, and an absolute determination to succeed, all of which underpinned delivery of this year's result.
Auditors
Dividends
I am pleased to report that a final dividend of 25.0p is proposed, to be paid on 8 January 2016 to shareholders on the register on 11 December 2015. Together with the interim dividend of 10.0p paid on 3 July 2015, this will make a total of 35.0p for the year, an increase of 3%.
Outlook
The good underlying trading achieved by our businesses in 2015 is expected to continue.
We intend to maintain investment in expansion opportunities, most notably for Primark. After three years of large profit declines for AB Sugar, we expect greater stability in profit next year ahead of EU quota removal in 2017. However, the substantial moves in exchange rates last year, notably the weakening of the euro and emerging market currencies, will have a significant influence on the results for the coming year. At current rates the translation impact would be at a similar level to last year but the transactional impact would be greater and will be seen primarily in Primark and British Sugar.
At this early stage we expect the currency pressures to lead to a modest decline in adjusted operating profit and adjusted earnings for the group for the coming year.
Chairman
CHIEF EXECUTIVE'S STATEMENT
I am pleased with the trading performance and the progress made by each of our businesses this year. Grocery, Agriculture, Ingredients and Retail all increased their profits. Sugar profit was, as expected, substantially lower than last year as a result of much weaker euro-denominated EU sugar prices, but the business made great strides in reducing operating costs.
Group revenue declined by 1% to £12.8bn but was 2% higher at constant currency. Adjusted operating profit was 6% lower at £1,092m, and 4% lower at constant currency.
The international diversity of the group means that our businesses operate and transact in many currencies and are therefore subject to both translational and transactional currency exposures. During the financial year, against a basket of currencies, the euro and emerging market currencies weakened significantly and the US dollar and sterling both strengthened. The full year impact of these movements in exchange rates on the translation of overseas results into sterling was £31m. In order to understand the underlying operating performance of each of our businesses, in the operating review we have referred to year-on-year changes at constant currency.
Food commodity price deflation was the primary reason for the decline in revenues in each of our food businesses this year and was also the major driver of the big decline in profit at AB Sugar.
This is the third year of significant profit decline for AB Sugar as a consequence of falling EU and world sugar prices. It is encouraging that EU prices have now stabilised and the steps we have taken, and continue to take, to reduce our cost base, are aimed at creating a profitable business at these price levels and in a post-quota environment in the EU.
We took the opportunity to increase our ownership of
The development of our Grocery businesses this year was reflected in the improvement in the overall operating margin to 9%. The acquisition of
Profit in Ingredients recovered even more strongly this year as the new management team at
The exciting expansion of Primark is very much on track with the addition of nearly one million square feet of selling space, the opening of our first store in the US at the end of the year, and the announcement that we will be opening in
OPERATING REVIEW
GROCERY
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2015 |
2014 |
Actual fx |
Constant fx |
Revenue £m |
3,177 |
3,337 |
-5% |
-3% |
Adjusted operating profit £m |
285 |
269 |
6% |
5% |
Adjusted operating profit margin |
9.0% |
8.1% |
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Return on average capital employed |
22.5% |
20.8% |
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Grocery operating profit increased by 5% at constant currency with Twinings Ovaltine and our US vegetable oils business well ahead of last year. Revenues were 3% lower, held back by commodity price deflation, leading to an increase in margin.
Twinings Ovaltine grew market share in a number of regions and generated a strong profit increase. In the
Sales volumes at
Silver Spoon substantially improved operational efficiency this year and achieved commercial success with increased volumes to the major
At AB World Foods,
Revenue and operating profit at
At ACH in
SUGAR
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2015 |
2014 |
Actual fx |
Constant fx |
Revenue £m |
1,818 |
2,083 |
-13% |
-9% |
Adjusted operating profit £m |
43 |
189 |
-77% |
-76% |
Adjusted operating profit margin |
2.4% |
9.1% |
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Return on average capital employed |
2.4% |
10.5% |
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Revenue and adjusted operating profit for AB Sugar were substantially lower than the previous year primarily driven by the further decline in EU sugar prices, and the underlying decline in profit was even greater given the non-repeat of last year's restructuring charge. In light of the structural changes in the world's sugar industry, we remained focused on delivering significant cost reduction across all of our businesses through our ongoing performance improvement programme. This will reduce our cost base but the reductions in the year could not compensate for the impact of lower prices.
Sugar prices in the EU stabilised towards the end of the financial year and with quota stock levels expected to reduce back towards historic norms during 2015/16, we have seen some price recovery for the 2015/16 marketing year. Prices in
In
Illovo produced 1.64 million tonnes in the year to September, marginally less than last year. The effect of drought on cane growth in
In January, we announced our decision to cease sugar operations in
This business was formed in 2007 as a joint venture between
AGRICULTURE
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2015 |
2014 |
Actual fx |
Constant fx |
Revenue £m |
1,211 |
1,312 |
-8% |
-8% |
Adjusted operating profit £m |
60 |
50 |
20% |
18% |
Adjusted operating profit margin |
5.0% |
3.8% |
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Return on average capital employed |
19.2% |
17.3% |
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In response to the
Frontier Agriculture, our joint venture arable operation, celebrated its 10th anniversary this year. Formed in April 2005, the business has since doubled in size and now serves 10,000 customers. Over this decade the income from the supply of crop inputs such as fertilisers, seeds and agronomy services has grown significantly and now exceeds that from its original grain marketing business. This year, the business traded at similar levels to last year with added complexity in its grain trading operations, and lower than normal protein levels in domestic wheat which increased the demand for quality wheat imports.
AB Agri China delivered a strong result driven by good procurement and a favourable product mix. The new feed mills are performing well with Zhenlai delivering substantial cost savings to its major customer and Rudong, which was built to supply feed exclusively to a major international processor, already performing to plan.
AB Vista, our international feed ingredients business, continued to deliver strong growth in both sales and profit, driven by further success for Quantum Blue which achieved significant market share gains in the phytase market. Encouragingly, we see further growth opportunities in new applications and geographies where AB Vista currently has a lower presence, and planned expansion of AB Enzyme's fermentation plant in
INGREDIENTS
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2015 |
2014 |
Actual fx |
Constant fx |
Revenue £m |
1,247 |
1,261 |
-1% |
3% |
Adjusted operating profit £m |
76 |
41 |
85% |
100% |
Adjusted operating profit margin |
6.1% |
3.3% |
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Return on average capital employed |
11.1% |
5.8% |
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Ingredients' revenues were 3% ahead of last year at constant currency and for the second successive year the increase in operating profit was substantial, driven by stronger trading across all businesses and a focus on overhead reduction. As a consequence, margin was much improved.
The successful integration of our recently acquired European bakery ingredients business has broadened our product offering, strengthened our market position and delivered significant cost synergies. The
Yeast extracts and speciality powders advanced with a focus on higher value products and improved plant utilisation. Further development of our extrusion and granulation operations in
RETAIL
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2015 |
2014 |
Actual fx |
Constant fx |
Revenue £m |
5,347 |
4,950 |
8% |
13% |
Adjusted operating profit £m |
673 |
662 |
2% |
5% |
Adjusted operating profit margin |
12.6% |
13.4% |
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Return on average capital employed |
31.1% |
33.2% |
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Sales at Primark were 13% ahead of last year at constant currency mainly driven by an increase in retail selling space of 9%. Like-for-like sales were 1% ahead of last year reflecting a strong performance across a number of countries. Very high sales densities were achieved by stores opened in the last 18 months and especially by our stores in
Like-for-like sales in the early part of the financial year were impacted by the unseasonably warm autumn followed by strong trading across the important Christmas period. Spring trading was held back by cool weather followed by strong trading in the fourth quarter of our financial year.
Our very successful trading in 2013/14 led to an unusually low level of markdown in that year. As anticipated, markdowns returned to more normal levels this year with a consequent reduction in operating margin. To a lesser extent, margin was also reduced by the effect of the stronger US dollar, at the end of the financial year, on purchases for the new autumn/winter range. Primark sources much of its merchandise in US dollars and its strength, particularly against the euro, will have a further adverse effect on margins in the new financial year, especially in the first half. However, more than half of the potential impact has been successfully mitigated by our buying teams as they have placed orders for next year.
During this financial year we opened almost one million sq ft of selling space bringing the total estate to 293 stores and 11.2 million sq ft at the financial year end. 20 new stores were opened including relocations to larger premises in
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Year ended 12 September 2015 |
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Year ended 13 September 2014 |
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# of stores |
sq ft 000 |
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# of stores |
sq ft 000 |
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164 |
6,083 |
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164 |
6,039 |
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40 |
1,369 |
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40 |
1,338 |
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19 |
1,194 |
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13 |
829 |
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36 |
1,028 |
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37 |
1,035 |
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12 |
547 |
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8 |
346 |
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8 |
267 |
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7 |
232 |
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5 |
231 |
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5 |
231 |
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4 |
193 |
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3 |
142 |
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4 |
166 |
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1 |
34 |
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1 |
77 |
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- |
- |
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293 |
11,155 |
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278 |
10,226 |
We have an extensive pipeline of new stores to be opened over the next few years with some 1.5 million sq ft scheduled for the new financial year, the major elements of which will be in the north-east US, the
We have made a significant investment in our warehouse infrastructure and further expenditure is planned for next year. In total we will have doubled our warehouse capacity since 2013. Our existing warehouse in Torija in northern
New store openings: |
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Relocations or closures:
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Arnhem |
Omagh |
Braunschweig |
Naas (closed) |
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Dresden |
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Kaiserslautern |
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Venlo |
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Krefeld |
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Weiterstadt |
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Hasselt |
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Margate (closed) |
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George Weston
Chief Executive
FINANCIAL REVIEW
GROUP PERFORMANCE
Group revenue increased by 2% at constant exchange rates, but the strengthening of sterling against our major trading currencies, particularly in the second half of the year, resulted in a decline in revenues of 1% at actual rates, to £12.8bn. Adjusted operating profit of £1,092m was 4% below last year at constant rates but 6% lower at actual rates. In calculating adjusted operating profit, the amortisation charge on non-operating intangibles, profits or losses on disposal of non-current assets and any exceptional items are excluded. On an unadjusted basis, operating profit was 12% below last year at £947m.
An exceptional non-cash operating charge of £98m was taken in February to impair the group's shareholder loans to
The income statement includes a charge of £172m for the net loss on the sale and closure of businesses primarily in respect of two items. In May, we assumed BP's 47% interest in
Finance expense less finance income of £53m was lower than last year's net charge of £58m reflecting a lower average level of debt during the year.
Profit before tax fell from £1,020m to £717m. On an adjusted basis, where the amortisation of non-operating intangible assets, any profits or losses on the sale of non-current assets or on the sale and closure of businesses, and exceptional items are excluded, profit before tax fell by 6% to £1,034m.
TAXATION
We recognise the importance of complying fully with all applicable tax laws as well as paying and collecting the right amount of tax in every country in which the group operates. We have had a board-adopted tax policy for many years which is based on seven tax principles that are embedded in the financial and non-financial processes and controls of the group. Our tax principles are included in the appendix to our Corporate Responsibility Report (www.abf.co.uk).
As a substantial
This year's tax charge of £193m included an underlying charge of £220m at an effective rate of 21.3% (2014 - 23.3%) on the adjusted profit before tax. The reduction in the effective rate is a result of the mix of profits earned in different tax jurisdictions, the reduction in the
The overall tax charge for the year benefited from a credit of £8m (2014 - £21m) for tax relief on the amortisation of non-operating intangible assets and goodwill arising from previous acquisitions. A tax credit of £22m arose on the exceptional item and the net profit on the sale of fixed assets gave rise to a tax charge of £3m. No tax credit is recognised on the loss on disposal of businesses as no relief is available.
EARNINGS AND DIVIDENDS
Earnings attributable to equity shareholders were £532m and the weighted average number of shares in issue during the year, which is used to calculate earnings per share, was 790 million (2014 - 790 million). Earnings per ordinary share were 30% lower than last year at 67.3p as a result of the exceptional charge and the losses on sale of businesses. Adjusted earnings per share, which provides a more consistent measure of trading performance, fell by 2% from 104.1p to 102.0p.
The interim dividend was increased by 3% to 10.0p and a final dividend has been proposed at 25.0p which represents an overall increase of 3% for the year. The proposed dividend is expected to cost £198m and will be charged next year. Dividend cover, on an adjusted basis, is 2.9 times.
BALANCE SHEET
Non-current assets of £6.4bn were £0.4bn lower than last year. Although capital expenditure was again higher than depreciation and amortisation charges this year, this was more than offset by foreign exchange translation losses and assets disposed, with the result that the carrying value of intangible assets and property, plant and equipment fell by £100m and £177m respectively.
Working capital at the year end was £101m lower than last year reflecting lower food commodity prices and although inventories were higher driven by year end European sugar stock levels and higher new-season inventory at Primark, this was more than offset by lower trade receivables and higher trade payables. Average working capital as a percentage of sales was broadly level with last year at 9.4%. Net borrowings at the year end were £252m lower than last year at £194m as a consequence of another strong cash flow performance.
A currency loss of £432m arose on the translation into sterling of the group's foreign currency denominated net assets. The group's net assets fell by £202m to £6,551m.
Return on capital employed for the group, which is calculated by expressing adjusted operating profit as a percentage of the average capital employed for the year, was 17.6% compared with 18.9% last year. The primary reason for the decline was the reduction in sugar profits although there was also a small dilution of
CASH FLOW
The group generated a net cash flow from operating activities of £1,166m this year with a working capital outflow of £66m, driven by the higher level of sugar stocks and Primark inventory, compared to last year's inflow of £100m.
Gross expenditure on property, plant and equipment and intangibles amounted to £613m compared with £708m last year. Primark spent £306m on the acquisition of new stores, the fit-out of new and existing stores and on the expansion of warehouse capacity including new facilities in the
The purchase of
FINANCING
The financing of the group is managed by a central treasury department. The group has total committed borrowing facilities amounting to £2.1bn, which comprise: £0.6bn of US private placement notes maturing between 2016 and 2024, with an average fixed rate coupon of 5.1%, £78m of which is payable in March 2016; £1.2bn provided under a syndicated, revolving credit facility which matures in July 2020 with an option to extend by a further year; and £0.3bn of local committed facilities in
The financial strength and flexibility of the group is enhanced by diversifying our sources of funding and having certainty of finance over a long period. The strength and breadth of the 12 banks in the syndicate reflect the scale and international presence of the group and particularly our increasing activities in continental
PENSIONS
Pension liabilities in the group's defined benefit pension schemes exceeded employee benefit assets at the year end by £16m compared with last year's deficit of £43m. The
The charge for the year for the group's defined contribution schemes, which was equal to the contributions made, amounted to £76m (2014 - £76m) which was substantially greater than the cash contribution made to the defined benefit schemes reflecting the changing shape of pension provision in the group.
Finance Director
The annual report and accounts is available at www.abf.co.uk and will be despatched to shareholders on 5 November 2015. The annual general meeting will be held at Congress Centre, 28 Great Russell Street,
RISK MANAGEMENT
The board views effective risk management as part of its role in providing strategic oversight and stewardship of the group. In order to deliver our strategic plans, we believe we must understand and respond appropriately to risks and also consider whether additional business opportunities can be realised through effective risk management.
We require all of our businesses to implement appropriate levels of risk management to ensure compliance with relevant legislation, our overriding business principles and group policies relating to them.
We have embedded a process for identifying risks and put in place activities to mitigate them. Our decentralised business model empowers the management of our businesses to identify, evaluate and manage the risks they face on a timely basis. The collated risks from each business are shared with the respective divisional chief executives who present their divisional risks to the group executive.
The group's Director of Financial Control receives the risk assessments on an annual basis and, with the Group Finance Director, reviews them with the divisional chief executives. These reviews include questioning the approach taken to risk management in the businesses, reviewing the detailed risk logs and supporting materials, checking how well processes are embedded, and questioning how effectively risk management has driven business decisions. These risks and their impact on business performance are reported during the year and are considered as part of the monthly management review process.
Group functional heads including Legal,
A summary of these risk assessments is then shared and discussed with the Group Finance Director and Chief Executive.
The board undertakes an annual review of the material risks facing our businesses together with the internal control procedures and resources devoted to them. It also monitors the group's exposure to these risks as part of the performance reviews undertaken at each board meeting. Financial risks are reviewed by the Audit Committee and all other risks are reviewed by the board.
The Director of Financial Control holds meetings with each of the non-executive directors seeking their feedback on the reviews performed and discussing the key risks and mitigating activities. Once all non-executive directors have been consulted, a board report is prepared summarising the full process and providing an assessment of the status of risk management across the group. The key risks, mitigating controls and relevant policies are summarised. This report also details when formal updates, relating to the key risks, will be provided to the board throughout the year.
Reporting our principal risks and uncertainties
The group's principal risks and uncertainties identified by the above process during 2015 are detailed in the following tables. They are grouped into external risks, which may occur in the markets or environment in which we operate, and operational risks, which are related to internal activity linked to our own operations and internal controls.
The 'Changes since 2014' highlight the significant variations in the profile of our principal risks or describe our experience and activity over the last year.
These are the principal risks of the group as a whole and are not in any order of priority. The operational and product diversity of the group reduces the impact that any one business risk can have on the group's results. Risks such as the loss of a major site or water use and availability have been reported in previous years and, although we remain exposed to them and continue to take action to mitigate them, we no longer consider them likely to have a material impact.
Principal risks and uncertaintiesExternal risks |
Risk trend |
Context and potential impact |
Mitigation |
Changes since 2014 |
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Movement in exchange rates and inflation |
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Changes in exchange rates give rise to transactional exposures within the businesses and to translation exposures when the assets, liabilities and results of overseas entities are translated into sterling upon consolidation.
Exchange rates between some of our major trading currencies have changed markedly this year.
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Businesses impacted by exchange rate volatility, specifically those manufacturing or purchasing in one currency and selling in another, constantly review their currency related exposures.
Board approved policies require businesses to hedge, using foreign exchange forward contracts, all transactional currency exposures, and long-term supply or purchase contracts which give rise to currency exposures.
Borrowings are largely maintained in the functional currency of the local operations.
Cross currency swaps are used to align borrowings with the underlying currencies of the group's net assets; (Refer to note 24 to the financial statements in the annual report for more information) |
The US dollar appreciated and the euro weakened over the last 12 months with the effect that the average US dollar/euro exchange rate moved by 15% over that period.
The impact on adjusted operating profit for 2014/15 from the translation of overseas results into sterling was a loss of £31m compared with the prior year.
Towards the end of the financial year, emerging market currencies weakened significantly against sterling.
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Fluctuations in commodity and energy prices |
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Changes in commodity and energy prices can have a material impact on the group's operating results, asset values and cash flows.
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We constantly monitor the markets in which we operate and manage certain of these exposures through the use of 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. |
Our businesses have been affected by the global trends in commodity prices, the most significant of which have been low EU and world sugar prices that had a substantial effect on the profitability of our sugar businesses, and a fall in cereal prices which contributed to lower revenues for |
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Operating in global markets |
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Operating in 48 countries with a supply chain covering even more, we are exposed to global market forces, fluctuations in national economies, societal and political changes, a range of consumer concerns and evolving legislation.
Failure to recognise and respond to any of these factors could directly impact the profitability and even the viability of our operations.
Entering new markets is a risk to any business.
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Our approach to risk management incorporates potential short-term market volatility and evaluates longer-term socio-economic and political scenarios.
The group's financial control framework and board adopted tax and treasury policies require all businesses to comply fully with relevant local laws. Provision is made for known issues based on management's interpretation of country-specific tax law and the likely outcome.
We engage with governments, local regulators and community organisations to contribute to, and anticipate important changes in, public policy.
Extensive research is conducted into each new market that Primark enters, and, in the case of its entry into the US where there is no existing local infrastructure, care has been taken to limit capital investment to a minimum. Expansion into new markets in |
AB Sugar is addressing the consequences of the abolition of EU sugar quotas in 2017 and the performance improvement programme is substantially reducing the cost base and enhancing production efficiency.
No significant regulatory developments have impacted our group during 2015 although our businesses are subject to increased enforcement activities in relation to existing regulations in, for example,
Activity continued over the last 12 months in preparation for the opening, in September 2015, of
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vw |
Health and nutrition |
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Failure to respond appropriately to health and nutrition concerns in the formulation of our products could result in adverse consumer reaction.
We must also act responsibly across the spectrum of food poverty and malnutrition to obesity. |
Recipes are regularly reviewed and reformulated to improve the nutritional value of our grocery products, all of which are labelled with nutritional information.
We develop partnerships with other organisations to help educate consumers about making healthy choices. |
Our businesses continued to review their products and to partner with others to enable a swift and innovative response to changing consumer needs. As examples: across the Jordans range of granola and cluster cereals we have reduced the sugar content by 12% and, using scientific research,
British Sugar and Azucarera both launched or supported websites aimed at helping people make informed decisions about their food. |
Operational risks |
Risk trend |
Context and potential impact |
Mitigation |
Changes since 2014 |
vw |
Workplace health and safety |
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Many of our operations, by their nature, have the potential for injuries and fatal accidents to employees, contractors and visitors.
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Safety continues to be the number one priority for our businesses with active endorsement and accountability from the chief executives of each business.
Our Health and Safety policy and practices are firmly embedded in each business, supporting a strong ethos of workplace safety.
Independent audits are conducted to verify implementation and support continuous improvement.
Best practice safety and occupational health training and guidance are shared across the businesses, co-ordinated from the corporate centre, to supplement the delivery of their own training programmes. |
Sadly we had one fatality this year which occurred in our operations in
We have introduced contractor safety guidelines across the group.
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Product safety and quality |
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As a leading food manufacturer and retailer it is fundamental that we manage the safety and integrity of our products throughout the supply chain.
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Across the group, product safety is put before economic considerations.
Our businesses employ quality control specialists and operate strict policies within an organisational culture of hygiene and product safety to ensure that consistently high standards are maintained in our operations and in the sourcing and handling of raw materials and garments.
We monitor the regulatory environment and emerging scientific research while reviewing our food safety systems for efficacy and legal compliance. A programme of independent food quality and safety audits is undertaken across all of our manufacturing sites and a due diligence programme is in place to ensure the safety of our retail products. |
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Our use of natural resources and managing our environmental impact |
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Our businesses rely on a stable supply of natural resources some of which are vulnerable to external factors such as natural disasters and climate change.
Our operations give rise to a range of emissions including dust, waste water and waste which, if not controlled, could lead to a risk to the environment and our local communities.
|
We aim to go beyond environmental compliance.
Our businesses employ environmental specialists who use the best available technologies and techniques to reduce our use of consumables, adapt operations to climate change and reduce our environmental footprint.
We report group environmental performance every year in our Corporate Responsibility and Annual Reports as well as the voluntary CDP disclosure (formerly Carbon Disclosure Project).
|
The environmental performance of the group, with updates by division, is reported in the 2015 Corporate Responsibility Update at www.abf.co.uk/responsibility.
|
vw |
Our supply chain and ethical business practices |
||
|
Our suppliers are essential to the successful operation of the group. We therefore work with them to ensure reliability and to help them meet acceptable standards of product quality and safety, financial stability, ethics, technical competence and people safety.
Potential supply chain and ethical business practice risks include: - reputational damage through supply chain weaknesses e.g. poor conditions for workers; - unacceptable and unethical behaviour, including bribery and corruption; - impact on reliability of supply and business continuity due to unforeseen incidents e.g. natural disasters; and - long-term sustainability of key suppliers.
|
Our Supplier Code of Conduct is designed to ensure suppliers, representatives and all with whom we deal, adhere to our values and standards. The full Code is available at the Company's website www.abf.co.uk/supplier_code_of_conduct.
Adherence to the Code is verified through
All businesses are required to comply with the group's Business Principles including its Anti-Bribery and Corruption Policy. |
Over the year, our businesses have continued to engage with key suppliers on a range of shared issues such as maximising environmental and cost efficiencies, maintaining safe workplaces, supporting steady employment and increasing transparency across the wider supply chain.
We have increased our ethical trade resources, both on-the-ground and centrally, to monitor suppliers.
Primark signed up to Greenpeace's Detox campaign and has committed to phase out the use of certain chemicals within the supply chain by 2020. |
r |
Breaches of IT and information security |
||
|
Our delivery of efficient and effective operations is enhanced by the use of relevant technologies and the sharing of information. We are therefore subject to potential internal and external cyber threats such as computer viruses and the loss or theft of data.
There is also the potential for disruption to operations from unforeseen IT and system malfunctions or external attack. |
We seek to understand the changing cyber risks faced by our businesses and take appropriate action.
We have established processes, group IT security policies and technologies in place all of which are subject to regular internal audit.
Access to sensitive data is restricted and closely monitored.
Robust disaster recovery plans are in place for business critical applications.
Technical security controls are in place over key IT platforms with the Head of IT Security tasked with identifying and responding to potential security risks.
|
During the year there has been an ongoing focus on raising the awareness of all employees of the risks associated with the use of IT.
|
CAUTIONARY STATEMENTS
This report 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.
DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS
We confirm that to the best of our knowledge:
• |
the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and |
• |
the Strategic report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. |
We consider the annual report and financial statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.
The contents of this announcement, including the responsibility statement above, have been extracted from the annual report and accounts for the 52 weeks ended 12 September 2015 which will be despatched to shareholders on 5 November 2015 and may then be found at www.abf.co.uk. Accordingly this responsibility statement makes reference to the financial statements of the Company and the group and to the relevant narrative appearing in that annual report and accounts rather than the contents of this announcement.
On behalf of the board
|
George Weston |
|
Chairman |
Chief Executive |
Finance Director |
3 November 2015
CONSOLIDATED INCOME STATEMENT
For the 52 weeks ended 12 September 2015
|
|
|
2015 |
2014 |
Continuing operations |
Note |
|
£m |
£m |
|
|
|
|
|
Revenue |
1 |
|
12,800 |
12,943 |
Operating costs before exceptional item |
|
|
(11,811) |
(11,865) |
Exceptional item |
2 |
|
(98) |
- |
|
|
|
891 |
1,078 |
Share of profit after tax from joint ventures and associates |
|
|
48 |
13 |
Profits less losses on disposal of non-current assets |
|
|
8 |
(11) |
Operating profit |
|
|
947 |
1,080 |
|
|
|
|
|
Adjusted operating profit |
1 |
|
1,092 |
1,163 |
Profits less losses on disposal of non-current assets |
|
|
8 |
(11) |
Amortisation of non-operating intangibles |
|
|
(55) |
(72) |
Exceptional item |
|
|
(98) |
- |
|
|
|
|
|
Profits less losses on sale and closure of businesses |
6 |
|
(172) |
(2) |
Profit before interest |
|
|
775 |
1,078 |
Finance income |
|
|
8 |
15 |
Finance expense |
|
|
(61) |
(73) |
Other financial expense |
|
|
(5) |
- |
Profit before taxation |
|
|
717 |
1,020 |
|
|
|
|
|
Adjusted profit before taxation |
|
|
1,034 |
1,105 |
Profits less losses on disposal of non-current assets |
|
|
8 |
(11) |
Amortisation of non-operating intangibles |
|
|
(55) |
(72) |
Exceptional item |
|
|
(98) |
- |
Profits less losses on sale and closure of businesses |
|
|
(172) |
(2) |
|
|
|
|
|
Taxation - |
|
|
(88) |
(117) |
- |
|
|
22 |
- |
- Overseas |
|
|
(127) |
(120) |
|
3 |
|
(193) |
(237) |
Profit for the period |
|
|
524 |
783 |
|
|
|
|
|
Attributable to |
|
|
|
|
Equity shareholders |
|
|
532 |
762 |
Non-controlling interests |
|
|
(8) |
21 |
Profit for the period |
|
|
524 |
783 |
|
|
|
|
|
Basic and diluted earnings per ordinary share (pence) |
4 |
|
67.3 |
96.5 |
Dividends per share paid and proposed for the period (pence) |
5 |
|
35.0 |
34.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 52 weeks ended 12 September 2015
|
|
2015 |
2014 |
|
|
£m |
£m |
|
|
|
|
Profit for the period recognised in the income statement |
|
524 |
783 |
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
|
Remeasurements of defined benefit schemes |
|
27 |
(25) |
Deferred tax associated with defined benefit schemes |
|
(5) |
3 |
Items that will not be reclassified to profit or loss |
|
22 |
(22) |
|
|
|
|
Effect of movements in foreign exchange |
|
(457) |
(275) |
Net gain on hedge of net investment in foreign subsidiaries |
|
22 |
25 |
Deferred tax associated with movements in foreign exchange |
|
2 |
- |
Current tax associated with movements in foreign exchange |
|
1 |
2 |
Reclassification adjustment for movements in foreign exchange on subsidiaries disposed |
|
(8) |
- |
Movement in cash flow hedging position |
|
(56) |
55 |
Deferred tax associated with movement in cash flow hedging position |
|
11 |
(11) |
Share of other comprehensive income of joint ventures and associates |
|
(2) |
(5) |
Items that are or may be subsequently reclassified to profit or loss |
|
(487) |
(209) |
|
|
|
|
Other comprehensive income for the period |
|
(465) |
(231) |
|
|
|
|
Total comprehensive income for the period |
|
59 |
552 |
|
|
|
|
Attributable to |
|
|
|
Equity shareholders |
|
150 |
580 |
Non-controlling interests |
|
(91) |
(28) |
Total comprehensive income for the period |
|
59 |
552 |
CONSOLIDATED BALANCE SHEET
At 12 September 2015
|
|
|
2015 |
|
2014 |
|
|
|
£m |
|
£m |
Non-current assets |
|
|
|
|
|
Intangible assets |
|
|
1,367 |
|
1,467 |
Property, plant and equipment |
|
|
4,488 |
|
4,665 |
Biological assets |
|
|
83 |
|
96 |
Investments in joint ventures |
|
|
180 |
|
180 |
Investments in associates |
|
|
32 |
|
32 |
Employee benefits assets |
|
|
125 |
|
90 |
Deferred tax assets |
|
|
125 |
|
152 |
Other receivables |
|
|
23 |
|
164 |
Total non-current assets |
|
|
6,423 |
|
6,846 |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Inventories |
|
|
1,827 |
|
1,631 |
Biological assets |
|
|
70 |
|
109 |
Trade and other receivables |
|
|
1,176 |
|
1,293 |
Derivative assets |
|
|
74 |
|
74 |
Cash and cash equivalents |
|
|
702 |
|
519 |
Total current assets |
|
|
3,849 |
|
3,626 |
TOTAL ASSETS |
|
|
10,272 |
|
10,472 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Loans and overdrafts |
|
|
(319) |
|
(358) |
Trade and other payables |
|
|
(2,226) |
|
(2,046) |
Derivative liabilities |
|
|
(33) |
|
(15) |
Income tax |
|
|
(126) |
|
(193) |
Provisions |
|
|
(38) |
|
(72) |
Total current liabilities |
|
|
(2,742) |
|
(2,684) |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Loans |
|
|
(577) |
|
(607) |
Provisions |
|
|
(28) |
|
(29) |
Deferred tax liabilities |
|
|
(233) |
|
(266) |
Employee benefits liabilities |
|
|
(141) |
|
(133) |
Total non-current liabilities |
|
|
(979) |
|
(1,035) |
TOTAL LIABILITIES |
|
|
(3,721) |
|
(3,719) |
NET ASSETS |
|
|
6,551 |
|
6,753 |
|
|
|
|
|
|
Equity |
|
|
|
|
|
Issued capital |
|
|
45 |
|
45 |
Other reserves |
|
|
175 |
|
175 |
Translation reserve |
|
|
(125) |
|
238 |
Hedging reserve |
|
|
(11) |
|
29 |
Retained earnings |
|
|
6,252 |
|
5,950 |
TOTAL EQUITY ATTRIBUTABLE TO EQUITY SHAREHOLDERS |
|
|
6,336 |
|
6,437 |
Non-controlling interests |
|
|
215 |
|
316 |
TOTAL EQUITY |
|
|
6,551 |
|
6,753 |
CONSOLIDATED CASH FLOW STATEMENT
For the 52 weeks ended 12 September 2015
|
|
2015 |
2014 |
|
|
£m |
£m |
Cash flow from operating activities |
|
|
|
Profit before taxation |
|
717 (5) |
1,020 |
Profits less losses on disposal of non-current assets |
|
(8) |
11 |
Profits less losses on sale and closure of businesses |
|
172 |
2 |
Finance income |
|
(8) |
(15) |
Finance expense |
|
61 |
73 |
Other financial expense |
|
5 |
- |
Share of profit after tax from joint ventures and associates |
|
(48) |
(13)
|
Amortisation |
|
81 |
94 |
Depreciation |
|
401 |
402 |
Exceptional item |
|
98 |
- |
Net change in the fair value of biological assets |
|
4 |
(21) |
Share-based payment expense |
|
11 |
15 |
Pension costs less contributions |
|
6 |
7 |
Increase in inventories |
|
(310) |
(119) |
Decrease in receivables |
|
10 |
19 |
Increase in payables |
|
234 |
200 |
Purchases less sales of current biological assets |
|
(2) |
(3) |
(Decrease)/increase in provisions |
|
(28) |
13 |
Cash generated from operations |
|
1,396 |
1,685 |
Income taxes paid |
|
(230) |
(246) |
Net cash from operating activities |
|
1,166 |
1,439 |
|
|
|
|
Cash flows from investing activities |
|
|
|
Dividends received from joint ventures and associates |
|
50 |
17 |
Purchase of property, plant and equipment |
|
(582) |
(676) |
Purchase of intangibles |
|
(31) |
(32) |
Purchase of non-current biological assets |
|
(1) |
- |
Sale of property, plant and equipment |
|
72 |
17 |
Purchase of subsidiaries, joint ventures and associates |
|
(52) |
(8) |
Sale of subsidiaries, joint ventures and associates |
|
5 |
15 |
Loans to joint ventures |
|
(7) |
(15) |
Interest received |
|
7 |
10 |
Net cash from investing activities |
|
(539) |
(672) |
|
|
|
|
Cash flows from financing activities |
|
|
|
Dividends paid to non-controlling interests |
|
(16) |
(21) |
Dividends paid to equity shareholders |
|
(271) |
(256) |
Interest paid |
|
(64) |
(77) |
Financing: |
|
|
|
Decrease in short-term loans |
|
(115) |
(158) |
Increase/(decrease) in long-term loans |
|
15 |
(10) |
Sale of shares in subsidiary undertakings to non-controlling interests |
|
11 |
1 |
Movements from changes in own shares held |
|
- |
(59) |
Net cash from financing activities |
|
(440) |
(580) |
|
|
|
|
Net increase in cash and cash equivalents |
|
187 |
187 |
Cash and cash equivalents at the beginning of the period |
|
399 |
243 |
Effect of movements in foreign exchange |
|
(1) |
(31) |
Cash and cash equivalents at the end of the period |
|
585 |
399 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 52 weeks ended 12 September 2015
|
Attributable to equity shareholders |
|
|
|||||
|
Issued capital |
Other reserves |
Translation reserve |
Hedging reserve |
Retained earnings |
Total |
Non-controlling interests |
Total equity |
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
£m |
Balance as at 14 September 2013 |
45 |
175 |
440 |
(13) |
5,508 |
6,155 |
364 |
6,519 |
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
Profit for the period recognised in the income statement |
- |
- |
- |
- |
762 |
762 |
21 |
783 |
|
|
|
|
|
|
|
|
|
Remeasurements of defined benefit schemes |
- |
- |
- |
- |
(25) |
(25) |
- |
(25) |
Deferred tax associated with defined benefit schemes |
- |
- |
- |
- |
3 |
3 |
- |
3 |
Items that will not be reclassified to profit or loss |
- |
- |
- |
- |
(22) |
(22) |
- |
(22) |
|
|
|
|
|
|
|
|
|
Effect of movements in foreign exchange |
- |
- |
(224) |
- |
- |
(224) |
(51) |
(275) |
Net gain on hedge of net investment in foreign subsidiaries |
- |
- |
25 |
- |
- |
25 |
- |
25 |
Current tax associated with movements in foreign exchange |
- |
- |
2 |
- |
- |
2 |
- |
2 |
Movement in cash flow hedging position |
- |
- |
- |
53 |
- |
53 |
2 |
55 |
Deferred tax associated with movement in cash flow hedging position |
- |
- |
- |
(11) |
- |
(11) |
- |
(11) |
Share of other comprehensive income of joint ventures and associates |
- |
- |
(5) |
- |
- |
(5) |
- |
(5) |
Items that are or may be subsequently reclassified to profit or loss |
- |
- |
(202) |
42 |
- |
(160) |
(49) |
(209) |
|
|
|
|
|
|
|
|
|
Other comprehensive income |
- |
- |
(202) |
42 |
(22) |
(182) |
(49) |
(231) |
|
|
|
|
|
|
|
|
|
Total comprehensive income |
- |
- |
(202) |
42 |
740 |
580 |
(28) |
552 |
|
|
|
|
|
|
|
|
|
Transactions with owners |
|
|
|
|
|
|
|
|
Dividends paid to equity shareholders |
- |
- |
- |
- |
(256) |
(256) |
- |
(256) |
Net movement in own shares held |
- |
- |
- |
- |
(44) |
(44) |
- |
(44) |
Current tax associated with share-based payments |
- |
- |
- |
- |
2 |
2 |
- |
2 |
Dividends paid to non-controlling interests |
- |
- |
- |
- |
- |
- |
(21) |
(21) |
Acquisition of non-controlling interests |
- |
- |
- |
- |
- |
- |
1 |
1 |
Total transactions with owners |
- |
- |
- |
- |
(298) |
(298) |
(20) |
(318) |
Balance as at 13 September 2014 |
45 |
175 |
238 |
29 |
5,950 |
6,437 |
316 |
6,753 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
Profit for the period recognised in the income statement |
- |
- |
- |
- |
532 |
532 |
(8) |
524 |
|
|
|
|
|
|
|
|
|
Remeasurements of defined benefit schemes |
- |
- |
- |
- |
26 |
26 |
1 |
27 |
Deferred tax associated with defined benefit schemes |
- |
- |
- |
- |
(5) |
(5) |
- |
(5) |
Items that will not be reclassified to profit or loss |
- |
- |
- |
- |
21 |
21 |
1 |
22 |
|
|
|
|
|
|
|
|
|
Effect of movements in foreign exchange |
- |
- |
(376) |
(1) |
- |
(377) |
(80) |
(457) |
Net gain on hedge of net investment in foreign subsidiaries |
- |
- |
22 |
- |
- |
22 |
- |
22 |
Deferred tax associated with movements in foreign exchange |
- |
- |
- |
- |
- |
- |
2 |
2 |
Current tax associated with movements in foreign exchange |
- |
- |
1 |
- |
- |
1 |
- |
1 |
Reclassification adjustment for movements in foreign exchange on subsidiaries disposed |
- |
- |
(8) |
- |
- |
(8) |
- |
(8) |
Movement in cash flow hedging position |
- |
- |
- |
(49) |
- |
(49) |
(7) |
(56) |
Deferred tax associated with movement in cash flow hedging position |
- |
- |
- |
10 |
- |
10 |
1 |
11 |
Share of other comprehensive income of joint ventures and associates |
- |
- |
(2) |
- |
- |
(2) |
- |
(2) |
Items that are or may be subsequently reclassified to profit or loss |
- |
- |
(363) |
(40) |
- |
(403) |
(84) |
(487) |
|
|
|
|
|
|
|
|
|
Other comprehensive income |
- |
- |
(363) |
(40) |
21 |
(382) |
(83) |
(465) |
|
|
|
|
|
|
|
|
|
Total comprehensive income |
- |
- |
(363) |
(40) |
553 |
150 |
(91) |
59 |
|
|
|
|
|
|
|
|
|
Transactions with owners |
|
|
|
|
|
|
|
|
Dividends paid to equity shareholders |
- |
- |
- |
- |
(271) |
(271) |
- |
(271) |
Net movement in own shares held |
- |
- |
- |
- |
11 |
11 |
- |
11 |
Current tax associated with share-based payments |
- |
- |
- |
- |
4 |
4 |
- |
4 |
Dividends paid to non-controlling interests |
- |
- |
- |
- |
- |
- |
(16) |
(16) |
Acquisition and disposal of non-controlling interests |
- |
- |
- |
- |
5 |
5 |
6 |
11 |
Total transactions with owners |
- |
- |
- |
- |
(251) |
(251) |
(10) |
(261) |
Balance as at 12 September 2015 |
45 |
175 |
(125) |
(11) |
6,252 |
6,336 |
215 |
6,551 |
|
|
|
|
|
|
|
|
|
NOTES TO THE ANNUAL RESULTS ANNOUNCEMENT
For the 52 weeks ended 12 September 2015
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. Segment liabilities comprise trade and other payables, derivative liabilities and provisions. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets and expenses, cash, borrowings, employee benefits balances and current and deferred tax balances. Segment non-current asset additions are the total cost incurred during the period to acquire segment assets that are expected to be used for more than one year, comprising property, plant and equipment, operating intangibles and biological assets.
The group is comprised of the following operating segments:
Grocery The manufacture of grocery products, including hot beverages, sugar & sweeteners, vegetable oils, bread & baked goods, cereals, ethnic foods, herbs & spices, and meat products, which are sold to retail, wholesale and foodservice businesses. Sugar The growing and processing of sugar beet and sugar cane for sale to industrial users and to Silver Spoon, which is included in the grocery segment. Agriculture The manufacture of animal feeds and the provision of other products and services for the agriculture sector. Ingredients The manufacture of bakers' yeast, bakery ingredients, enzymes, lipids, yeast extracts and cereal specialities. Retail Buying and merchandising value clothing and accessories through the Primark and Penneys retail chains.
Geographical information In addition to the required disclosure for operating segments, disclosure is also given of certain geographical information about the group's operations, based on the geographical groupings:
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 |
|||||
|
52 weeks ended 12 September 2015 |
|
52 weeks ended 13 September 2014 |
|
52 weeks ended 12 September 2015 |
|
52 weeks ended 2014 |
|
|
Operating segments |
£m |
£m |
|
£m |
£m |
||
|
|
|
|
|
|
|
||
|
Grocery |
3,177 |
3,337 |
|
285 |
269 |
||
|
Sugar |
1,818 |
2,083 |
|
43 |
189 |
||
|
Agriculture |
1,211 |
1,312 |
|
60 |
50 |
||
|
Ingredients |
1,247 |
1,261 |
|
76 |
41 |
||
|
Retail |
5,347 |
4,950 |
|
673 |
662 |
||
|
Central |
- |
- |
|
(45) |
(49) |
||
|
|
12,800 |
12,943 |
|
1,092 |
1,162 |
||
|
Businesses disposed: |
|
|
|
|
|
||
|
Grocery |
- |
- |
|
- |
1 |
||
|
|
12,800 |
12,943 |
|
1,092 |
1,163 |
||
|
|
|
|
|
|
|
||
|
Geographical information |
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
|
5,444 |
5,631 |
|
535 |
602 |
||
|
|
4,080 |
3,924 |
|
335 |
393 |
||
|
The |
1,269 |
1,211 |
|
148 |
127 |
||
|
|
2,007 |
2,177 |
|
74 |
40 |
||
|
|
12,800 |
12,943 |
|
1,092 |
1,162 |
||
|
Businesses disposed: |
|
|
|
|
|
||
|
|
- |
- |
|
- |
1 |
||
|
|
12,800 |
12,943 |
|
1,092 |
1,163 |
Disposed businesses in 2014 comprised the disposal of the group's interest in a US associate in the Ingredients segment and an associated Australian royalty stream in the Grocery segment.
1. |
Operating segments for the 52 weeks ended 12 September 2015 |
|
|
|
|
|
|
|
|
Grocery |
Sugar |
Agriculture |
Ingredients |
Retail |
Central |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
|
Revenue from continuing businesses |
3,179 |
1,887 |
1,213 |
1,402 |
5,347 |
(228) |
12,800 |
|
Internal revenue |
(2) |
(69) |
(2) |
(155) |
- |
228 |
- |
|
Revenue from external customers |
3,177 |
1,818 |
1,211 |
1,247 |
5,347 |
- |
12,800 |
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit before joint ventures and associates |
259 |
43 |
48 |
66 |
673 |
(45) |
1,044 |
|
Share of profit after tax from joint ventures and associates |
26 |
- |
12 |
10 |
- |
- |
48 |
|
Adjusted operating profit |
285 |
43 |
60 |
76 |
673 |
(45) |
1,092 |
|
Profits less losses on disposal of non-current assets |
19 |
3 |
1 |
- |
(8) |
(7) |
8 |
|
Amortisation of non-operating intangibles |
(19) |
(35) |
- |
(1) |
- |
- |
(55) |
|
Exceptional item |
- |
(98) |
- |
- |
- |
- |
(98) |
|
Profits less losses on sale and closure of businesses |
6 |
(181) |
3 |
- |
- |
- |
(172) |
|
Profit before interest |
291 |
(268) |
64 |
75 |
665 |
(52) |
775 |
|
Finance income |
|
|
|
|
|
8 |
8 |
|
Finance expense |
|
|
|
|
|
(61) |
(61) |
|
Other financial expense |
|
|
|
|
|
(5) |
(5) |
|
Taxation |
|
|
|
|
|
(193) |
(193) |
|
Profit for the period |
291 |
(268) |
64 |
75 |
665 |
(303) |
524 |
|
|
|
|
|
|
|
|
|
|
Segment assets (excluding joint ventures and associates) |
2,369 |
2,069 |
318 |
1,142 |
3,126 |
84 |
9,108 |
|
Investments in joint ventures and associates |
22 |
17 |
125 |
48 |
- |
- |
212 |
|
Segment assets |
2,391 |
2,086 |
443 |
1,190 |
3,126 |
84 |
9,320 |
|
Cash and cash equivalents |
|
|
|
|
|
702 |
702 |
|
Deferred tax assets |
|
|
|
|
|
125 |
125 |
|
Employee benefits assets |
|
|
|
|
|
125 |
125 |
|
Segment liabilities |
(451) |
(391) |
(115) |
(230) |
(1,034) |
(104) |
(2,325) |
|
Loans and overdrafts |
|
|
|
|
|
(896) |
(896) |
|
Income tax |
|
|
|
|
|
(126) |
(126) |
|
Deferred tax liabilities |
|
|
|
|
|
(233) |
(233) |
|
Employee benefits liabilities |
|
|
|
|
|
(141) |
(141) |
|
Net assets |
1,940 |
1,695 |
328 |
960 |
2,092 |
(464) |
6,551 |
|
|
|
|
|
|
|
|
|
|
Non-current asset additions |
104 |
121 |
17 |
58 |
351 |
6 |
657 |
|
Depreciation |
94 |
76 |
9 |
45 |
173 |
4 |
401 |
|
Amortisation |
37 |
39 |
2 |
3 |
- |
- |
81 |
|
Exceptional item |
- |
(98) |
- |
- |
- |
- |
(98) |
|
Impairment of goodwill on disposal of business |
- |
46 |
- |
- |
- |
- |
46 |
|
Impairment of intangible on closure of business |
- |
11 |
- |
- |
- |
- |
11 |
|
Geographical information |
|
|
|
|
|
|
|
|
|
|
|
United |
|
The |
|
|
|
|
|
|
Kingdom |
& |
|
Pacific |
Total |
|
|
|
|
£m |
£m |
£m |
£m |
£m |
|
Revenue from external customers |
|
|
5,444 |
4,080 |
1,269 |
2,007 |
12,800 |
|
Segment assets |
|
|
3,977 |
3,059 |
1,009 |
1,275 |
9,320 |
|
Non-current asset additions |
|
|
216 |
289 |
91 |
61 |
657 |
|
Depreciation |
|
|
185 |
118 |
27 |
71 |
401 |
|
Amortisation |
|
|
29 |
38 |
4 |
10 |
81 |
|
Exceptional item |
|
|
(98) |
- |
- |
- |
(98) |
|
Impairment of goodwill on disposal of business |
|
|
- |
- |
- |
46 |
46 |
|
Impairment of intangible on closure of business |
|
|
- |
- |
11 |
- |
11 |
|
|
|
|
|
|
|
|
|
1. |
Operating segments for the 52 weeks ended 13 September 2014 |
|
|
|
|
|
|
|
|
|
|
|
Grocery |
Sugar |
Agriculture |
Ingredients |
Retail |
Central |
Total |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
£ |
|
|
|
|
|
|
|
|
|
|
Revenue from continuing businesses |
3,344 |
2,164 |
1,312 |
1,423 |
4,950 |
(250) |
12,943 |
|
Internal revenue |
(7) |
(81) |
- |
(162) |
- |
250 |
- |
|
Revenue from external customers |
3,337 |
2,083 |
1,312 |
1,261 |
4,950 |
- |
12,943 |
|
|
|
|
|
|
|
|
|
|
Adjusted operating profit before joint ventures and associates |
254 |
215 |
36 |
31 |
662 |
(49) |
1,149 |
|
Share of profit after tax from joint ventures and associates |
15 |
(26) |
14 |
10 |
- |
- |
13 |
|
Businesses disposed |
1 |
- |
- |
- |
- |
- |
1 |
|
Adjusted operating profit |
270 |
189 |
50 |
41 |
662 |
(49) |
1,163 |
|
Profits less losses on disposal of non-current assets |
6 |
- |
1 |
- |
(14) |
(4) |
(11) |
|
Amortisation of non-operating intangibles |
(50) |
(17) |
(3) |
(2) |
- |
- |
(72) |
|
Profits less losses on sale and closure of businesses |
- |
- |
- |
(2) |
- |
- |
(2) |
|
Profit before interest |
226 |
172 |
48 |
37 |
648 |
(53) |
1,078 |
|
Finance income |
|
|
|
|
|
15 |
15 |
|
Finance expense |
|
|
|
|
|
(73) |
(73) |
|
Taxation |
|
|
|
|
|
(237) |
(237) |
|
Profit for the period |
226 |
172 |
48 |
37 |
648 |
(348) |
783 |
|
|
|
|
|
|
|
|
|
|
Segment assets (excluding joint ventures and associates) |
2,431 |
2,327 |
312 |
1,266 |
2,948 |
215 |
9,499 |
|
Investments in joint ventures and associates |
38 |
13 |
113 |
48 |
- |
- |
212 |
|
Segment assets |
2,469 |
2,340 |
425 |
1,314 |
2,948 |
215 |
9,711 |
|
Cash and cash equivalents |
|
|
|
|
|
519 |
519 |
|
Deferred tax assets |
|
|
|
|
|
152 |
152 |
|
Employee benefits assets |
|
|
|
|
|
90 |
90 |
|
Segment liabilities |
(495) |
(385) |
(125) |
(251) |
(784) |
(122) |
(2,162) |
|
Loans and overdrafts |
|
|
|
|
|
(965) |
(965) |
|
Income tax |
|
|
|
|
|
(193) |
(193) |
|
Deferred tax liabilities |
|
|
|
|
|
(266) |
(266) |
|
Employee benefits liabilities |
|
|
|
|
|
(133) |
(133) |
|
Net assets |
1,974 |
1,955 |
300 |
1,063 |
2,164 |
(703) |
6,753 |
|
|
|
|
|
|
|
|
|
|
Non-current asset additions |
153 |
103 |
28 |
65 |
394 |
1 |
744 |
|
Depreciation |
96 |
80 |
7 |
44 |
171 |
4 |
402 |
|
Amortisation |
64 |
20 |
6 |
4 |
- |
- |
94 |
|
Impairment of goodwill on closure of business |
- |
- |
- |
4 |
- |
- |
4 |
|
Geographical information |
|
|
|
|
|
|
|
|
|
|
|
United |
|
The |
|
|
|
|
|
|
Kingdom |
& |
|
Pacific |
Total |
|
|
|
|
£m |
£m |
£m |
£m |
£m |
|
Revenue from external customers |
|
|
5,631 |
3,924 |
1,211 |
2,177 |
12,943 |
|
Segment assets |
|
|
3,951 |
3,220 |
968 |
1,572 |
9,711 |
|
Non-current asset additions |
|
|
279 |
351 |
34 |
80 |
744 |
|
Depreciation |
|
|
184 |
122 |
27 |
69 |
402 |
|
Amortisation |
|
|
22 |
19 |
43 |
10 |
94 |
|
Impairment of goodwill on closure of business |
|
|
- |
- |
- |
4 |
4 |
|
|
|
|
|
|
|
|
|
2. |
Exceptional item |
|
The exceptional item is a £98m non-cash charge to impair the group's shareholder loans to |
|
|
|
|
|
|
3. |
Income tax expense |
|
|
|
|
|
|
|
52 weeks |
|
52 weeks |
|
|
|
ended |
|
ended |
|
|
|
12 September |
|
13 September |
|
|
|
2015 |
|
2014 |
|
|
|
£m |
|
£m |
|
Current tax expense |
|
|
|
|
|
|
|
74 |
|
137 |
|
Overseas - corporation tax |
|
109 |
|
148 |
|
|
|
(10) |
|
3 |
|
Overseas - overprovided in prior periods |
|
(15) |
|
(2) |
|
|
|
158 |
|
286 |
|
Deferred tax expense |
|
|
|
|
|
|
|
(6) |
|
(17) |
|
Overseas deferred tax |
|
25 |
|
(19) |
|
|
|
8 |
|
(6) |
|
Overseas - under/(over) provided in prior periods |
|
8 |
|
(7) |
|
|
|
35 |
|
(49) |
|
Total income tax expense in income statement |
|
193 |
|
237 |
|
|
|
|
|
|
|
Reconciliation of effective tax rate |
|
|
|
|
|
Profit before taxation |
|
717 |
|
1,020 |
|
Less share of profit after tax from joint ventures and associates |
|
(48) |
|
(13) |
|
Profit before taxation excluding share of profit after tax from joint ventures and associates |
|
669 |
|
1,007 |
|
Nominal tax charge at |
|
137 |
|
222 |
|
Effect of higher and lower tax rates on overseas earnings |
|
(29) |
|
(11) |
|
Effect of changes in tax rates on income statement |
|
3 |
|
4 |
|
Expenses not deductible for tax purposes |
|
58 |
|
25 |
|
Disposal of assets covered by tax exemptions or unrecognised capital losses |
|
23 |
|
2 |
|
Deferred tax not recognised |
|
10 |
|
7 |
|
Adjustments in respect of prior periods |
|
(9) |
|
(12) |
|
|
|
193 |
|
237 |
|
|
|
|
|
|
|
Income tax recognised directly in equity |
|
|
|
|
|
Deferred tax associated with defined benefit schemes |
|
5 |
|
(3) |
|
Current tax associated with share-based payments |
|
(4) |
|
(2) |
|
Deferred tax associated with movement in cash flow hedging position |
|
(11) |
|
11 |
|
Deferred tax associated with movements in foreign exchange |
|
(2) |
|
- |
|
Current tax associated with movements in foreign exchange |
|
(1) |
|
(2) |
|
|
|
(13) |
|
4 |
|
|
|
|
|
|
|
The tax credit of £22m arising on the exceptional impairment charge in the year is included in
The |
4. |
Earnings per share |
|
|
|
|
|
The calculation of basic earnings per share at 12 September 2015 was based on the net profit attributable to equity shareholders of £532m (2014 - £762m), and a weighted average number of shares outstanding during the year of 790 million (2014 - 790 million). The calculation of the weighted average number of shares excludes the shares held by the Employee Share Ownership Plan Trust on which the dividends are being waived.
Adjusted earnings per ordinary share, which exclude the impact of exceptional items, profits less losses on disposal of non-current assets and the sale and closure of businesses, amortisation of non-operating intangibles and any associated tax credits, is shown to provide clarity on the underlying performance of the group.
The diluted earnings per share calculation takes into account the dilutive effect of share incentives. The diluted, weighted average number of shares is 790 million (2014 - 790 million). There is no difference between basic and diluted earnings. |
|
|
|
|
|
|
|
|
|
52 weeks |
|
52 weeks |
|
|
|
ended |
|
ended |
|
|
|
12 September |
|
13 September |
|
|
|
2015 |
|
2014 |
|
|
|
pence |
|
pence |
|
|
|
|
|
|
|
Adjusted earnings per share |
|
102.0 |
|
104.1 |
|
Disposal of non-current assets |
|
1.0 |
|
(1.4) |
|
Sale and closure of businesses |
|
(21.7) |
|
(0.3) |
|
Exceptional item |
|
(12.4) |
|
- |
|
Tax effect on above adjustments |
|
2.4 |
|
(0.1) |
|
Amortisation of non-operating intangibles |
|
(7.0) |
|
(9.1) |
|
Tax credit on non-operating intangibles amortisation and goodwill |
|
1.0 |
|
2.7 |
|
Non-controlling interests' share of the above adjustments |
|
2.0 |
|
0.6 |
|
Earnings per ordinary share |
|
67.3 |
|
96.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5. |
Dividends |
|
|
|
|
|
|
2015 |
2014 |
2015 |
2014 |
|
|
pence |
pence |
£m |
£m |
|
|
per share |
per share |
|
|
|
2013 final |
- |
22.65 |
- |
179 |
|
2014 interim |
- |
9.70 |
- |
77 |
|
2014 final |
24.30 |
- |
192 |
- |
|
2015 interim |
10.00 |
- |
79 |
- |
|
|
34.30 |
32.35 |
271 |
256 |
|
|
|
|
|
|
|
The 2015 interim dividend was declared on 21 April 2015 and paid on 3 July 2015. The 2015 final dividend of 25.0 pence, total value of £198m, will be paid on 8 January 2016 to shareholders on the register on 11 December 2015.
Dividends relating to the period were 35.0 pence per share totalling £277m (2014 - 34.0 pence per share totalling £269m). |
6. |
Acquisitions and disposals |
|||
|
Acquisitions |
|||
|
2015 |
|||
|
Acquisitions had the following effect on the group's assets and liabilities: |
|||
|
|
Pre-acquisition carrying values |
|
Recognised values on acquisition |
|
Net assets |
£m |
|
£m |
|
Intangible assets |
32 |
|
53 |
|
Property, plant and equipment |
4 |
|
4 |
|
Inventories |
10 |
|
10 |
|
Trade and other receivables |
18 |
|
18 |
|
Cash and cash equivalents |
8 |
|
8 |
|
Trade and other payables |
(38) |
|
(40) |
|
Loan interest |
(48) |
|
(3) |
|
Overdrafts |
(3) |
|
(3) |
|
Loans |
(323) |
|
(18) |
|
Taxation |
82 |
|
20 |
|
Net identifiable assets and liabilities |
(258) |
|
49 |
|
|
|
|
5 |
|
Non-controlling interests |
|
|
1 |
|
Total consideration |
|
|
55 |
|
|
|
|
|
|
Satisfied by |
|
|
|
|
Cash consideration |
|
|
57 |
|
Deferred consideration |
|
|
6 |
|
Interest in joint venture |
|
|
(8) |
|
|
|
|
55 |
|
Net cash |
|
|
|
|
Cash consideration |
|
|
57 |
|
Cash and cash equivalents acquired |
|
|
(8) |
|
Overdrafts acquired |
|
|
3 |
|
|
|
|
52 |
|
|
|
In October 2014, the group acquired
In May 2015, the group acquired BP's 47% interest in
A non-cash charge of £75m was recorded in line with accounting requirements to remeasure the group's interest at fair value prior to the acquisition. This was charged to loss on sale and closure of business.
The acquisitions contributed aggregate revenues of £81m and an adjusted loss before tax of £1m for the period between the dates of acquisition and 12 September 2015. Aggregate contributions to revenue and adjusted profit before tax had the acquisitions occurred at the beginning of the period have not been disclosed, as appropriate financial information prepared under Adopted IFRS is not available.
|
|
Acquisitions and disposals (continued) 2014 During 2014, the group acquired a bakery ingredients business in western
Pre-acquisition carrying amounts were the same as recognised values on acquisition apart from a £4m non-operating intangible asset recognised in respect of customer relationships. The acquisitions contributed aggregate revenues of £27m and adjusted profit before tax of £1m for the period between the dates of acquisition and 13 September 2014. Aggregate contributions to revenue and adjusted profit before tax had the acquisitions occurred at the beginning of the period were not disclosed, as appropriate financial information prepared under Adopted IFRS was not available.
|
|
The cash consideration net of cash acquired with the businesses was £2m which compares with a cash outflow of £8m on the purchase of subsidiaries, joint ventures and associates shown in the cash flow statement. The difference related to a £5m investment in an existing joint venture and £1m of deferred consideration paid in respect of prior year acquisitions. |
|
|
|||||
|
Disposals |
|||||
|
2015 |
|||||
|
The group sold and closed businesses which had the following impact on adjusted operating profit by segment:
|
|||||
|
|
|
|
The |
|
Total |
|
|
£m |
£m |
£m |
£m |
£m |
|
Sugar |
|
|
|
|
|
|
|
- |
- |
- |
(100) |
(100) |
|
|
(75) |
- |
- |
- |
(75) |
|
Other (including warranties) |
- |
4 |
(11) |
1 |
(6) |
|
|
(75) |
4 |
(11) |
(99) |
(181) |
|
|
|
|
|
|
|
|
Grocery (warranties) |
6 |
- |
- |
- |
6 |
|
Agriculture (warranties) |
3 |
- |
- |
- |
3 |
|
|
(66) |
4 |
(11) |
(99) |
(172) |
|
|
|
|
|
|
|
|
|
|
The group sold the Yi'an and BoCheng beet sugar factories in
|
|||
|
Net assets |
|
|
£m |
|
Intangible assets |
|
|
9 |
|
Property, plant and equipment |
|
|
47 |
|
Inventories |
|
|
3 |
|
Trade and other payables |
|
|
(1) |
|
Loans |
|
|
(1) |
|
Taxation |
|
|
5 |
|
Net identifiable assets and liabilities |
|
|
62 |
|
|
|
|
46 |
|
Non-controlling interests |
|
|
(2) |
|
Recycle of effect of movements in foreign exchange |
|
|
(8) |
|
Profits less losses on sale and closure of businesses |
|
|
(100) |
|
Total consideration |
|
|
(2) |
|
|
|
|
|
|
Satisfied by |
|
|
|
|
Cash consideration |
|
|
3 |
|
Provisions made |
|
|
(5) |
|
|
|
|
(2) |
|
Net cash |
|
|
|
|
Cash consideration |
|
|
3 |
|
Acquisitions and disposals (continued)
The group incurred a net £75m non-cash charge arising on the acquisition of BP's 47% interest in
Also in the Sugar segment, an intangible asset with a carrying value of £11m was written off on closure of a small business in
£14m of warranty provisions relating to disposals made in previous years are no longer required and were released during the year. These comprised £6m in Grocery (all in the
The cash consideration received for the disposal was £3m which compares with a cash inflow of £5m on the sale of subsidiaries, joint ventures and associates shown in the cash flow statement. The difference relates to deferred consideration received in respect of prior year disposals. |
|
|
|
2014 |
|
During 2014, the group disposed of its interest in a US associate in the Ingredients segment for a profit of £7m. Cash consideration was £12m, deferred consideration was £1m, share of net assets disposed was £2m and provisions made were £4m. In addition, a charge of £9m was made in the Ingredients segment in
The net cash of £13m differs from the cash inflow of £15m on the sale of subsidiaries, joint ventures and associates shown in the cash flow statement. The £2m difference relates to deferred consideration received in respect of disposals made in previous years. |
7. |
Analysis of net debt |
|
At 13 September 2014 |
|
Cash flow |
|
Acquisitions and disposals |
|
Non-cash items |
|
Exchange adjustments |
|
At |
|
£m |
|
£m |
|
£m |
|
£m |
|
£m |
|
£m |
Cash at bank and in hand, cash |
399 |
|
187 |
|
- |
|
- |
|
(1) |
|
585 |
Short-term loans |
(238) |
|
115 |
|
1 |
|
(81) |
|
1 |
|
(202) |
Long-term loans |
(607) |
|
(15) |
|
(18) |
|
81 |
|
(18) |
|
(577) |
|
(446) |
|
287 |
|
(17) |
|
- |
|
(18) |
|
(194) |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents comprise bank and cash balances, call deposits and short-term investments with original maturities of three months or less. Bank overdrafts that are repayable on demand of £117m form an integral part of the group's cash management and are included as a component of cash and cash equivalents for the purpose of the cash flow statement. |
8. |
Related party transactions |
|
The group has a controlling shareholder relationship with its parent company,
Material transactions and year end balances with related parties were as follows: |
|
|
|
|
2015 |
2014 |
|
Sub note |
£'000 |
£'000 |
Charges to |
|
661 |
403 |
Dividends paid by |
|
|
|
(i) trustees of the Garfield Weston Foundation and their close family |
1 |
9,838 |
9,125 |
(ii) directors of |
|
1,529 |
1,442 |
(iii) directors of the Company who are not trustees of the Foundation and are not directors of |
|
50 |
43 |
(iv) members of the Weston family employed within the |
2 |
1,011 |
952 |
Sales to fellow subsidiary undertakings on normal trading terms |
3 |
108 |
93 |
Sales to companies with common key management personnel on normal trading terms |
4 |
13,343 |
12,459 |
Commissions paid to companies with common key management personnel on normal trading terms |
4 |
1,602 |
1,418 |
Amounts due from companies with common key management personnel |
4 |
1,541 |
1,456 |
Sales to joint ventures on normal trading terms |
|
18,288 |
21,337 |
Sales to associates on normal trading terms |
|
29,992 |
30,248 |
Purchases from joint ventures on normal trading terms |
|
314,818 |
372,496 |
Purchases from associates on normal trading terms |
|
16,132 |
16,266 |
Amounts due from joint ventures |
|
18,959 |
182,254 |
Amounts due from associates |
|
2,978 |
3,274 |
Amounts due to joint ventures |
|
28,533 |
33,095 |
Amounts due to associates |
|
2,278 |
6,640 |
|
|
|
|
|
1. The Garfield Weston Foundation ('the Foundation') is an English charitable trust, established in 1958 by the late W Garfield Weston. The Foundation has no direct interest in the Company, but as at 12 September 2015 was the beneficial owner of 683,073 shares (2014 - 683,073 shares) in 2. Members of the Weston family who are employed by the group and are not directors of the Company or 3. The fellow subsidiary undertakings are 4. The companies with common key management personnel are the George Weston Limited group, in
|
|
Amounts due from joint ventures comprise £19m (2014 - £14m) of finance lease receivables and £nil (2014 - £145m) of loan receivables. The remainder of the balance is trading balances. The loan receivables in 2014 were all non-current and all but £3m (2014 - £3m) of the finance lease receivables are non-current. |
|
|
9. |
Other information |
|
The financial information set out above does not constitute the Company's statutory accounts for the 52 weeks ended 12 September 2015, or the 52 weeks ended 13 September 2014. Statutory accounts for 2014 have been delivered to the Registrar of Companies and those for 2015 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts. Their reports were (i) unqualified, (ii) did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and (iii) did not contain a statement under section under section 498(2) or (3) of the Companies Act 2006 in respect of the accounts. |
10. |
Basis of preparation |
|
The consolidated financial statements were authorised for issue by the directors on 3 November 2015.
The consolidated financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards ('IFRS') as adopted by the EU. Under IFRS, management is required to make judgements, estimates and assumptions about the reported amounts of assets and liabilities, income and expense and the disclosure of contingent assets and liabilities. The estimates and associated assumptions are based on experience. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on a regular basis. Revisions to accounting estimates are recognised from the period in which the estimates are revised.
The consolidated financial statements are presented in sterling, rounded to the nearest million. They are prepared on the historical cost basis except that biological assets and certain financial instruments are stated at fair value. Assets classified as held for sale are stated at the lower of carrying amount and fair value less costs to sell.
The consolidated financial statements of the group are prepared to the Saturday nearest to 15 September. Accordingly, these financial statements have been prepared for the 52 weeks ended 12 September 2015. To avoid delay in the preparation of the consolidated financial statements, the results of certain subsidiaries, joint ventures and associates are included up to 31 August 2015. The results of Illovo are included for the period to 30 September 2015 in line with Illovo's local reporting date. Adjustments are made as appropriate for significant transactions or events occurring between 31 August and 30 September. |
11. |
Significant accounting policies |
||||||||
|
The accounting policies applied by the group in this annual results announcement are substantially the same as those applied by the group in its consolidated financial statements for the 52 weeks ended 13 September 2014. IFRS12 Disclosure of Interest in Other Entities is applied for the first time this year which requires disclosure in the annual report of information on the group's economic interests. Adoption this year, of the following IFRSs and IFRIC interpretations, all of which have been applied with effect from 14 September 2014, had no material impact on the group's financial statements:
.
|
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