19th Apr 2006 07:01
Associated British Foods PLC19 April 2006 For release 19 April 2006 Associated British Foods plc announces its interim results for the 24 weeks ended 4 March 2006 Highlights • Adjusted operating profit up 5% to £255m* • Group revenue up 10% to £2,887m • Adjusted profit before tax down 2% to £255m ** • Adjusted earnings per share down 1% to 23.3p ** • Interim dividend per share up 4% to 6.25p • Net debt of £162m • Basic earnings per share down 16% to 21.0p and profit before tax down 13% to £234m George Weston, Chief Executive of Associated British Foods, said: "The resilience of the group's operations has produced good results despitetough trading conditions in some markets and sharply higher energy costs.Primark continues to perform strongly and will benefit from the heavy investmentnow being made in its expansion, while our hot beverages and international yeastbusinesses are also doing well. As expected, British Sugar has experiencedprice pressure but it is well positioned for the medium term and we remainconfident about its prospects." * before amortisation of intangibles and profits less losses on the sale of property, plant & equipment** before amortisation of intangibles, profits less losses on the sale of property, plant & equipment and losses on the sale of businesses All figures stated after profits on the sale of businesses and property, plant & equipment and amortisation of intangibles are shown on the face of the consolidated income statement. For further information please contact: Associated British Foods:Until 1500 onlyGeorge Weston, Chief Executive Geoff Lancaster, Head of External AffairsJohn Bason, Finance Director Mobile: 07860 562 659Tel: 020 7638 9571 Jonathan Clare/Chris Barrie/Sara Batchelor, Citigate Dewe RogersonTel: 020 7638 9571After 1500John Bason, Finance DirectorTel: 020 7399 6500 High resolution photographs of the recently opened Primark Bromley store areavailable at www.prshots.com. For release 19 April 2006 ASSOCIATED BRITISH FOODS plcINTERIM REPORTFOR THE 24 WEEKS ENDED 4 MARCH 2006 CHAIRMAN'S STATEMENT This period has been an eventful one for the group. Imbalances in supply anddemand within the EU sugar market and changes in producer behaviour inanticipation of the new regime resulted in price pressure and much lower profitfor British Sugar. Energy costs have risen sharply and have affected all of ourbusinesses. Primark has again produced excellent results despite a devastatingfire at its main UK warehouse and there was good progress at AB Mauri, therecently acquired bakery ingredients business. In the face of significant profit pressures, it is a demonstration of theresilience of the group that operating profit, before amortisation ofintangibles and profits less losses on the sale of property, plant & equipmentand businesses, rose by 5% to £255m. As expected net investment income hasfallen and consequently net earnings attributable to shareholders have shown amarginal decline. The EU Commission published final proposals for sugar regime reform in Novemberwhich define the shape of the sugar market from 2009. The changes are aimed atreducing processing capacity within the EU, eliminating subsidised exports andreducing sugar prices. Producers in Least Developed Countries ("LDCs") will beable to sell sugar without quota or tariff into the EU. British Sugar hasalways recognised the need for reform and expects, as a highly efficientproducer, to have a strong and profitable position within the EU sugar market.However, the changes and continued imbalances in supply and demand can beexpected to affect the profit of British Sugar during the transition period. In our grocery businesses, there was good organic growth in hot beverages,Ryvita and our Mexican oils business. However, profit growth was held back bylower UK bakery volumes and the final commissioning costs of the new Sydneybakery. In Ingredients, the major feature was the good progress of AB Mauri, whichreflected the benefit of volume increases and improved pricing for yeast and avery satisfactory growth in bakery ingredients. We continue to invest forfuture growth with the opening of a new factory in Western China and othercapacity increases at many locations. Primark's strong revenue and profit growth reflected a 6% like-for-like salesincrease and the addition of seven new stores. This like-for-like growth wasachieved against a background of weak sales in the UK high street generally butwas inevitably affected by the warehouse fire, which occurred only eight weeksbefore Christmas. Stock levels have now recovered and the stores were ready forthe Spring season. These results are a great credit to all Primark's people whoreacted superbly to a crisis. Following the acquisition of the Littlewoods retail business last July it isvery satisfying that the profit from trading these stores prior to the closurein January was ahead of our expectations. Primark is now refurbishing andrefitting 41 stores which will add a further 1.4 million sq ft to its retailselling space by early 2007. Good progress has been made in disposing of theremainder of the Littlewoods stores. The investment in stores for Primark is the major contributor to the £16mreduction in net investment income. As a result, profit before taxation,adjusted for profits less losses on the sale of property, plant & equipment andbusinesses and before amortisation of intangibles, fell by £4m to £255m. Thegroup's underlying effective rate of tax was 27.1% as against 27.4% in the firsthalf of the previous year. Adjusted earnings per share fell by 1% to 23.3p. Negative cash flow from operations reflects the normal seasonal investment inworking capital. This, together with continuing capital expenditure on renewingand extending capacity, particularly at Primark, and on new businesses, resultedin net borrowings at the period end of £162m, compared with net cash funds inSeptember of £212m. The group's financial resources remain strong. On 15 March ABF confirmed that it was in discussions that could involve itacquiring a 51% interest in Illovo Sugar Limited. At the time of writing thesediscussions continue. Illovo, which is quoted on the Johannesburg SecuritiesExchange with a market capitalisation of around £510m, is the largest sugarproducer in Africa and one of the world's leading low cost sugar producers. Itgrows and processes sugar cane in South Africa and Swaziland, as well as Malawi,Mozambique, Tanzania and Zambia which are classified as LDCs. Total productionin 2004/5 was 1.9 million tonnes. With the recently announced changes to the EUsugar regime, LDCs will receive unrestricted access for sugar exports to the EUfrom 2009. British Sugar has a long experience of operations outside the UK, first inPoland and then in China. Its worldwide sugar production in 2004/5 was 2.0million tonnes. A partnership between British Sugar and Illovo would enable thetransfer of its expertise to support the development of Illovo's low costproduction in Southern Africa and British Sugar would become Illovo's route tomarket when exports have unrestricted access to the EU from 2009. In anticipation of reform, the proportion of the group accounted for by sugarhas reduced substantially in recent years as major investments have been made inour other food businesses and in Primark. We are committed to our investment inBritish Sugar, a profitable and highly efficient producer, and the addition ofIllovo would strengthen this position. Dividends The interim dividend will be 6.25p per share, an increase of 4% over last year.The interim dividend will be paid on 3 July 2006 to shareholders registered atthe close of business on 2 June 2006. International Financial Reporting Standards These interim financial statements have been prepared under InternationalFinancial Reporting Standards ("IFRS") and apply the accounting policiespublished in our IFRS Transition Document on 15 December 2005. The comparativeresults have been restated accordingly. Outlook Operating profit in the remainder of the year will continue to be adverselyaffected by conditions in the UK sugar business, our bakery operations and byenergy costs. The benefit of trading profits from the Littlewoods stores priorto their closure has ended, and there will be net interest payable in the secondhalf of the year reflecting the investment in fitting out the former Littlewoodsstores. As a consequence, some reduction in earnings after tax can be expectedin the second half compared with the previous year. Looking beyond the current year, the transition to the new EU sugar regime maywell continue to impact on profits through 2006/7. We are confident that whenthe transition to the new regime is completed British Sugar will besatisfactorily profitable. We expect that the major investment in Primark willgenerate good returns which will build progressively as the new stores open andtrading develops, and that there will be a substantial profit contribution in2006/7 and beyond. Our financial resources remain strong. Even allowing for a successful outcomeof the discussions with Illovo Sugar, the group will be well placed to continueto fund further investment in its businesses. The outlook for further progressin the long term remains good. Martin AdamsonChairman19 April 2006 OPERATING REVIEW Group revenue increased by 10% to £2,887m and adjusted operating profit by 5% to£255m. This growth in operating profit has been achieved in the period despite anincreased cost of some £20m across the group from higher energy prices and asignificant reduction in profit from our EU sugar operations. Although somebusinesses recovered the higher energy costs through pricing, an estimated halfof the £20m cost was not recovered and consequently affected profit. Excludingenergy, profit at British Sugar reduced by £22m which resulted from the weaknessof the euro and lower sugar pricing, caused in turn by changes in producerbehaviour in anticipation of the new regime and by oversupply within the market.This lower sugar pricing was more severe and earlier than we expected. Many businesses delivered excellent growth in the period, notably Primark, fromstrong like-for-like sales growth and new store openings, AB Mauri andInternational Hot Beverages. GROCERY 2006 2005Revenue £m 1,292 1,235Operating profit £m 85 84 Revenue increased by 5% to £1,292m and profit by 1% to £85m. Strong progresswas made by Ryvita, International Hot Beverages and ACH. However, the overallprofit increase was held back by lower volumes at Allied Bakeries, commissioningcosts at the new Sydney bakery and lower sugar pricing in Silver Spoon. ACH performed well. In Mexico, Capullo grew strongly and, supported by newadvertising, has increased its market share. The Karo syrup brand, a recentacquisition, has been successfully integrated. In the US, the consumer brandsin spices and yeast performed to expectation. In consumer oils Mazola volumeswere down in a category which declined sharply. Significant investment hasbeen made to support the launch of Mazola Pure oil spray. This is an innovativepan release and flavour enhancing oil spray without the alcohol or siliconefound in many competitive products. It has been well received by both thetrade and consumers. The UK cracker and crispbread market has continued to grow strongly and Ryvitaachieved growth in its traditional products. Ryvita Minis, launched last yearin the rapidly expanding healthy bagged snack market, continued to perform well.The brand was extended further with the launch of Ryvita Goodness nutritionalbars in January. Our international hot beverage brands, Twinings and Ovaltine, continued to growwell with investment in new products and marketing. Twinings showed stronggrowth in the UK following the launch of premium Everyday and with higher GreenTea sales. The television advertising, featuring Stephen Fry, was extended toGreen Teas and infusions promoting their health and wellness benefits. Therationalisation of the tea packing cost base was successfully completed. Plantsin France and the US have been closed and a new facility opened in Shanghai,China. Ovaltine benefited from growth in powder sales in Thailand and from newproduct launches in Thailand, China and Switzerland. In Australia, profit at the bakery business was affected by commissioning costsof the new Sydney bakery. This new bakery replaces bakeries at Fairfield, whichwas destroyed by fire, and at Chatswood, which is now closed, and thedistribution centre at Chipping Norton. Profitability of the New South Walesbusiness will benefit once this facility is fully commissioned and a significantimprovement is planned for the second half of the year. Good progress was madein all of the other Australian states and in New Zealand. Performance at Allied Bakeries was unsatisfactory. Kingsmill and own labelrevenues both declined and profit fell as a result. Steps are in place torecover lost volumes and to reduce our cost base further but a recovery inprofitability is not likely in the second half. In Silver Spoon both Light, a low calorie offering, and Billington's continuedto perform well but pricing pressure on granulated sugar reduced profit. Westmill's established position as a leading supplier to the UK ethnic foodsector was strengthened with the acquisition in February of the Rajah, GreenDragon and Lotus brands from Heinz which it had just acquired from Danone. Wealso reached an agreement for the distribution of the Amoy brand in thischannel. PRIMARY FOOD & AGRICULTURE Primary Food 2006 2005Revenue £m 282 288Operating profit £m 53 78 Agriculture 2006 2005Revenue £m 299 393Operating profit £m 8 8 In Primary Food, revenue reduced to £282m and the sharp decline in profit from£78m to £53m was caused by the EU operations of British Sugar. Imbalances insupply and demand within the EU sugar market and changes in producer behaviourin anticipation of the new regime resulted in more severe price pressure thanhad been expected. In addition, profit was reduced by a weaker euro andsignificantly higher energy costs, particularly gas prices in the UK. This year's processing campaigns were excellent with sugar production of 1.34million tonnes in the UK and 206,000 tonnes in Poland. A number of productionrecords were set covering productivity, sugar yields and energy usage. The EU Commission published its final proposals for sugar regime reform lastNovember which have now been accepted by the Council of Ministers.Implementation will commence in July 2006. The key components are cuts in sugarand beet prices of 36% and 39% respectively over a four year transition periodand a reduction in total EU quota of 5 million tonnes from 17.4 million tonnesto 12.4 million tonnes. A restructuring mechanism for quota reduction has beenadopted within the regulations. Quota volume can be surrendered to theCommission with compensation paid out of a levy, funded by the industry, overthe first three years. Announcements by some European processors regardingtheir quota have already been made. We view these changes as positive and weexpect that efficient sugar beet producers, like British Sugar, will have astrong and profitable position in the EU sugar market from 2009 onwards. During the transition period the impact of these changes and imbalances insupply and demand can be expected to continue to affect the profit at BritishSugar. In anticipation of oversupply in 2006/7, the Commission has announced a2.5 million tonne transitional quota cut. This is higher than the current yearand for British Sugar this equates to 133,000 tonnes in the UK and 20,000 tonnesin Poland. The Commission has confirmed that the restructuring levy will bebased on the full permanent quota. In a continued drive for efficiency, the Dobre and Unislaw factories in Polandhave now been closed and investment in expansion at Glinojeck has created aworld class beet processing factory. In the UK, work has continued on costreduction. Construction has started on the UK's first bioethanol production facility atWissington. The 55,000 tonne, 70 million litres, unit will commence operationsin February 2007 and has already attracted significant interest from the majoroil companies. The Chinese cane sugar operations performed well in the first campaign followingthe expansion of the Shibie and WuXuan factories. Capacity is now more thanhalf a million tonnes although the factories will produce substantially belowthis level this year because of a much reduced cane crop caused by insufficientrainfall. Despite the lower crop, profit was maintained through sharply highersugar prices. In Agriculture revenue fell to £299m reflecting the sale of the grain tradingbusiness, Allied Grain, into Frontier, a joint venture with Cargill. Profit wasmaintained at £8m despite the effects of higher energy costs and avianinfluenza. Revenue from animal feeds in China was affected by a substantialcull of chickens in the North East following the outbreak of avian influenzathere. Despite this our business in China continues to develop well and we havebuilt a new feed mill in South Henan which will begin production in April. INGREDIENTS 2006 2005Revenue £m 343 254Operating profit £m 33 25 AB Mauri, our international yeast and bakery ingredients business, contributedstrongly to the increase in revenue of 35% to £343m and profit of 32% to £33m.This reflected a full half-year of profit following its acquisition during thefirst half of last year, the benefits of price and volume increases in yeast,and growth in bakery ingredients. Good progress has been made with price increases for yeast in a number of keymarkets including North America, China, India and Western Europe. These haverecovered higher raw material costs, particularly molasses and energy. The newly opened factory in Western China is operating well. The existingHarbin and Hebei plants in China are in the process of expansion and will becompleted in the second half of the year as will the expansion in Vietnam and atChiplun in India. We have worked hard to transfer our technology in bakery ingredients to allparts of AB Mauri. Resources are now in place in most markets with furtheropportunities to be developed particularly in China. Agreement has been reachedto sell the small bakery mix and icings business of Cereform US which is basedin Denver, Colorado. The operation was not well located and was loss-making. Aloss of £5m on the sale of the business has been included in the incomestatement. Our yeast extracts businesses achieved good growth and have benefited fromimprovements in manufacturing efficiency and yield. Plans are in place toexpand capacity, increase the product range and enhance our position in the foodand fermentation markets. Our enzymes business continues to focus on theintroduction of new products, particularly in the textile and bakery sectors. Despite higher energy costs our polyols business traded in line with last year,with food polyols benefiting from improved manufacturing efficiencies andantacids maintaining the improvement in performance seen last year. RETAIL 2006 2005PrimarkRevenue £m 530 448Operating profit £m 71 59 LittlewoodsRevenue £m 141 -Operating profit £m 16 - Primark performed well once again with a revenue increase of 18% to £530m and aprofit increase of 20% to £71m. The revenue increase resulted from 6% growth inlike-for-like sales and a substantial increase in retail selling space. This is a remarkable result given the upheaval caused by the fire whichdestroyed the main UK warehouse last November. The potentially disastrouseffect on the supply of stock to the stores was mitigated by the swift action ofthe management team. Operations were immediately transferred to an adjacentwarehouse and back-up systems were rapidly commissioned. Deliveries to storeswere restored after 48 hours and air-lifts and road transport were used toreplace the lost warehouse stock. Like-for-like growth was inevitably affectedby the fire but stock levels recovered well and we were ready for the Springseason. The stock loss, additional costs of working and business interruption wereinsured and a substantial proportion of the cash for the stock loss andadditional costs of working was received during the period. However, the profitincludes a charge for the self-insurance element of the claim. The overallprofit margin improved, despite this charge, benefiting from lower levels ofdiscounts. There was an extensive programme of new store openings in the period and initialtrading has been very strong. Stores were opened in Dundalk, Lakeside Thurrock,Cardiff, Leicester, Bromley, Hull and Oxford. Three small stores were closed.At the end of the period we were trading from 126 stores and 2.9 million sq ftof retail selling space. The Littlewoods retail business was acquired last July and comprised 120 stores.This business was very successfully traded out and finally closed in earlyJanuary. The profit from trading of £16m was well ahead of our expectation atthe time of the acquisition. Of the 79 stores not required by Primark 61 havenow been sold and negotiations for the sale of the remainder are continuing.The remaining 41 stores are now being extensively refurbished and refitted andwill open as Primark over a period from May to early 2007. In total we will add1.4 million sq ft of retail selling space. By the end of the financial year inSeptember 2006 we expect that 16 of these stores and 0.4 million sq ft of retailselling space will have commenced trading. The first store in Spain, atPlenilunio outside Madrid, is expected to open in early Summer. This significant investment will have doubled the selling space in the UK from1.8 million sq ft in September 2005 to 3.6 million sq ft when all these storeshave opened. Primark will be firmly established as a major high streetretailer. George WestonChief Executive CONSOLIDATED INCOME STATEMENT 24 weeks 24 weeks 52 weeks ended ended ended 4 March 5 March 17 September 2006 2005 2005 Note £m £m £m Revenue 2,887 2,618 5,622Operating costs (2,651) (2,387) (5,099) 236 231 523Share of profit from joint ventures and associates 3 2 7Profits less losses on sale of property, plant & - 19 20equipmentOperating profit 239 252 550Adjusted operating profit 1 255 243 555Profits less losses on the sale of property, plant - 19 20& equipmentAmortisation of intangibles (16) (10) (25)Losses on sale of businesses (5) - (1)Provision for loss on termination of an operation - - (47)Profit before interest 234 252 502Investment income 20 25 49Interest payable (25) (14) (34)Other net financial income 5 5 10Profit before taxation 234 268 527Adjusted profit before taxation 255 259 580Profits less losses on the sale of property, plant - 19 20& equipmentLosses on sale of businesses (5) - (1)Provision for loss on termination of an operation - - (47)Amortisation of intangibles (16) (10) (25)Taxation: UK (34) (42) (82) Overseas (32) (26) (59) 2 (66) (68) (141)Profit for the period 168 200 386 Attributable to:Equity shareholders 166 198 379Minority interests 2 2 7Profit for the period 6 168 200 386 Basic and diluted earnings per ordinary share 3 21.0 25.1 48.0(pence) CONSOLIDATED BALANCE SHEET At At At 4 March 5 March 17 September 2006 2005 2005 Note £m £m £mNon-current assetsIntangible assets 1,239 1,078 1,152Property, plant & 2,203 1,632 2,255equipmentInvestments in joint ventures 39 15 36Investments in associates 18 13 15Employee benefits asset 96 73 95Deferred tax assets 78 41 78Other investments - 1 -Total non-current assets 3,673 2,853 3,631 Current assetsNon-current assets held 77 12 9for saleInventories 854 839 556Trade and other 758 665 678receivablesOther investments 201 429 269Cash and cash 354 640 929equivalentsTotal current assets 2,244 2,585 2,441TOTAL ASSETS 5,917 5,438 6,072 Current liabilitiesInterest bearing loans and overdrafts (166) (102) (447)Trade and other payables (791) (753) (747)Income tax (99) (116) (113)Amounts owed to joint ventures (6) (2) (3)Provisions (11) (13) (61)Total current (1,073) (986) (1,371)liabilities Non-current liabilitiesInterest bearing loans and overdrafts (551) (503) (539)Income tax - (2) (4)Provisions (38) (39) (29)Deferred tax liabilities (251) (186) (233)Employee benefits (21) (10) (19)liabilityTotal non-current (861) (740) (824)liabilitiesTOTAL LIABILITIES (1,934) (1,726) (2,195)NET ASSETS 3,983 3,712 3,877 EquityIssued capital 47 47 47 Other reserves 173 173 173Translation reserve 78 15 42Retained earnings 3,657 3,453 3,586 3,955 3,688 3,848Minority interest 28 24 29TOTAL EQUITY 6 3,983 3,712 3,877 CONSOLIDATED CASH FLOW STATEMENT 24 weeks 24 weeks 52 weeks ended ended ended 4 March 5 March 17 September 2006 2005 2005 £m £m £m Cash flow from operating activitiesProfit before taxation 234 268 527 Add back non-operating itemsProfits less losses on sale of property, plant & - (19) (20)equipmentLosses on sale of businesses 5 - 1Provision for loss on termination of an operation - - 47Investment income (20) (25) (49)Interest payable 25 14 34Other net financial income (5) (5) (10) Adjustments forShare of (profit) from joint ventures and (3) (2) (7)associatesAmortisation 16 10 25Depreciation 95 79 161Pension cost less contributions 3 7 (8)Increase in inventories (279) (306) (25)Increase in receivables (58) (15) (20)Increase/(decrease) in payables 14 52 (9)(Decrease)/increase in other provisions (45) 13 -Cash generated from operations (18) 71 647 Income taxes paid (69) (72) (132)Net cash from operating activities (87) (1) 515 Cash flows from investing activitiesDividends received from joint ventures - - 2Dividends received from associates - - 2Purchase of property, plant & equipment (156) (142) (403)Sale of property, plant & equipment 83 31 39Purchase of subsidiary undertakings (100) (630) (1,130)Sale of subsidiary undertakings - 1 8Sale of joint ventures and associates - 1 (18)Interest received 22 27 54Loan repayment from joint venture - - 51Net cash from investing activities (151) (712) (1,395) Cash flows from financing activitiesDividends paid to minorities (4) (2) (4)Dividends paid to shareholders (95) (88) (135)Interest paid (25) (13) (29)Management of liquid resources 70 109 273Financing (287) 200 551Net cash from financing activities (341) 206 656 Net decrease in cash and cash equivalents (579) (507) (224)Cash and cash equivalents at the beginning of the 929 1,144 1,144periodEffect of exchange rate fluctuations on cash held 4 3 9Cash and cash equivalents at the end of the period 354 640 929 CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE 24 weeks 24 weeks 52 weeks ended ended ended 4 March 5 March 17 September 2006 2005 2005 £m £m £m Actuarial losses on defined benefit schemes - - (7)Foreign exchange translation differences 39 16 44Unrealised gain on sale of businesses - - 2Movement of cash flow hedging position (8) - -Tax on currency translation differences (2) - (1)Net income recognised directly in equity 29 16 38Profit for the period 168 200 386Total recognised income and expense for the period 197 216 424Adjustments relating to the adoption of IAS 32 and 9 - -IAS 39 on 18 September 2005 (Equity shareholders) 206 216 424Attributable to:Equity shareholders 203 214 416Minority interests 3 2 8 206 216 424NOTES TO THE INTERIM REPORT 1. Segmental analysis Revenue Adjusted operating profit 24 weeks 24 weeks 52 weeks 24 weeks 24 weeks 52 weeks ended ended ended ended ended ended 4 March 5 March 17 September 4 March 5 March 17 September 2006 2005 2005 2006 2005 2005Business segments £m £m £m £m £m £m Grocery 1,292 1,235 2,590 85 84 185Primary Food 282 288 700 53 78 166Agriculture 299 389 735 8 8 20Ingredients 343 254 583 33 25 65Retail 671 448 1,006 87 59 140Central - - - (11) (11) (21) 2,887 2,614 5,614 255 243 555Businesses disposed:Agriculture - 4 8 - - - 2,887 2,618 5,622 255 243 555 Geographical segments United Kingdom 1,487 1,364 2,923 133 140 314Rest of Europe 312 296 638 36 35 72The Americas 597 517 1,100 59 46 102Australia, Asia & Rest of World 491 437 953 27 22 67 2,887 2,614 5,614 255 243 555Businesses disposed:United Kingdom - 4 8 - - - 2,887 2,618 5,622 255 243 555 1. Segmental analysis - 24 weeks ended 4 March 2006 Business segments Primary Elimina- Grocery Food Agriculture Ingredients Retail Central tions Total £m £m £m £m £m £m £m £m Total revenue 1,298 330 299 362 671 - (73) 2,887Internal revenue (6) (48) - (19) - - 73 -Revenue from external customers 1,292 282 299 343 671 - - 2,887 Adjusted operating profit 85 53 8 33 87 (11) - 255Amortisation of intangibles (4) - - (12) - - - (16)Profits less losses on sale of property, - - - - - - - -plant & equipmentLosses on sale of businesses - - - (5) - - - (5)Provision for loss on termination of an - - - - - - - -operationProfit before interest and taxation 81 53 8 16 87 (11) - 234Net financing costs (5) - (5)Other net financial income 5 - 5Income tax expense (66) - (66)Profit for the period 81 53 8 16 87 (77) - 168 Segment assets (excl. investments in 1,970 946 198 1,100 816 455 - 5,485associates and jointventures)Investment in associates and joint 6 6 25 20 - - - 57venturesSegment assets 1,976 952 223 1,120 816 455 - 5,542Employee benefits asset 96 - 96Deferred tax assets 78 - 78Other investments 201 - 201Segment liabilities (337) (159) (56) (113) (168) (13) - (846)Interest bearing loans and overdrafts (717) - (717)Income tax (99) - (99)Deferred tax liabilities (251) - (251)Employee benefits liability (21) - (21)Net assets 1,639 793 167 1,007 648 (271) - 3,983 Capital expenditure 38 22 4 18 69 11 - 162Depreciation 37 26 3 13 13 3 - 95Amortisation 4 - - 12 - - - 16Other significant non-cash expenses - - - - - - - - Geographical segments Australia, United Rest of The Asia & Elimina- Kingdom Europe Americas Rest of tions Total World £m £m £m £m £m £mRevenue from external customers 1,487 312 597 491 - 2,887 Segment assets 2,622 949 1,164 807 - 5,542 Capital expenditure 100 18 11 33 - 162Depreciation 58 7 14 16 - 95Amortisation 2 3 9 2 - 16Other significant non-cash expenses - - - - - - 1. Segmental analysis - 24 weeks ended 5 March 2005 Business segments Primary Elimina- Grocery Food Agriculture Ingredients Retail Central tions Total £m £m £m £m £m £m £m £m Total revenue 1,248 342 398 269 448 - (91) 2,614Businesses disposed - - 4 - - - - 4Internal revenue (13) (54) (9) (15) - - 91 -Revenue from external customers 1,235 288 393 254 448 - - 2,618 Adjusted operating profit 84 78 8 25 59 (11) - 243Amortisation of intangibles (1) - - (9) - - - (10)Profits less losses on sale of property, - 19 - - - - - 19plant & equipmentLosses on sale of businesses - - - - - - - -Provision for loss on termination of an - - - - - - - -operationProfit before interest and taxation 83 97 8 16 59 (11) - 252Net financing income 11 - 11Other net financial income 5 - 5Income tax expense (68) - (68)Profit for the period 83 97 8 16 59 (63) - 200 Segment assets (excl. investments in 1,787 897 282 929 497 474 - 4,866associates and joint ventures)Investment in associates and joint 1 4 - 23 - - - 28venturesSegment assets 1,788 901 282 952 497 474 - 4,894Employee benefits asset 73 - 73Deferred tax assets 41 - 41Other investments 430 - 430Segment liabilities (333) (182) (74) (78) (95) (45) - (807)Interest bearing loans and overdrafts (605) - (605)Income tax (118) - (118)Deferred tax liabilities (186) - (186)Employee benefits liability (10) - (10)Net assets 1,455 719 208 874 402 54 - 3,712 Capital expenditure 40 11 2 10 67 - - 130Depreciation 32 25 4 10 8 - - 79Amortisation 1 - - 9 - - - 10Other significant non-cash expenses 13 - - 1 - - - 14 Geographical segments Australia, United Rest of The Asia & Elimina- Kingdom Europe Americas Rest of tions Total World £m £m £m £m £m £mRevenue from external customers 1,368 296 517 437 - 2,618 Segment assets 2,432 783 945 734 - 4,894 Capital expenditure 77 20 7 26 - 130Depreciation 49 7 10 13 - 79Amortisation 1 2 5 2 - 10Other significant non-cash expenses - 5 9 - - 14 1. Segmental analysis - 52 weeks ended 17 September 2005 Business segments Primary Elimina- Grocery Food Agriculture Ingredients Retail Central tions Total £m £m £m £m £m £m £m £m Total revenue 2,604 802 747 620 1,006 - (165) 5,614Businesses disposed - - 11 - - - (3) 8Internal revenue (14) (102) (15) (37) - - 168 -Revenue from external customers 2,590 700 743 583 1,006 - - 5,622 Adjusted operating profit 185 166 20 65 140 (21) - 555Amortisation of intangibles (5) - - (20) - - - (25)Profits less losses on sale of (1) 24 (3) - - - - 20property, plant & equipmentLosses on sale of businesses 1 - 3 - - (5) - (1)Provision for loss on termination of an - - - - (47) - - (47)operationProfit before interest and taxation 180 190 20 45 93 (26) - 502Net financing income 15 - 15Other net financial income 10 - 10Income tax expense (141) - (141)Profit for the period 180 190 20 45 93 (142) - 386 Segment assets (excl. investments in 1,937 727 173 992 877 873 - 5,579associates and joint ventures)Investment in associates and joint 5 5 25 16 - - - 51venturesSegment assets 1,942 732 198 1,008 877 873 - 5,630Employee benefits asset 95 - 95Deferred tax assets 78 - 78Other investments 269 - 269Segment liabilities (348) (96) (55) (99) (230) (12) - (840)Interest bearing loans and overdrafts (986) - (986)Income tax (117) - (117)Deferred tax liabilities (233) - (233)Employee benefits liability (19) - (19)Net assets 1,594 636 143 909 647 (52) - 3,877 Capital expenditure 109 38 7 25 228 - - 407Depreciation 68 35 6 24 28 - - 161Amortisation 5 - - 20 - - - 25Other significant non-cash expenses 14 - - 5 47 - - 66 Geographical segments Australia, United Rest of The Asia & Elimina- Kingdom Europe Americas Rest of tions Total World £m £m £m £m £m £mRevenue from external customers 2,931 638 1,100 953 - 5,622 Segment assets 2,555 1,181 1,075 819 - 5,630 Capital expenditure 263 54 21 69 - 407Depreciation 94 15 24 28 - 161Amortisation 2 10 10 3 - 25Other significant non-cash expenses 51 5 8 2 - 66 Other significant non-cash expenses includes a provision of £47m for costs associated with the termination ofLittlewoods. 24 weeks 24 weeks 52 weeks ended ended ended 4 March 5 March 17 September 2006 2005 2005 £m £m £m2. Income tax expense Current tax expenseUK - corporation tax at 30% 28 39 84Overseas - corporation tax 26 26 49Over provided in prior years - - (1) 54 65 132Deferred tax expenseUK deferred tax 5 3 (2)Overseas deferred tax 7 - 12Over provided in prior years - - (1)Total income tax expense in income statement 66 68 141 Reconciliation of effective tax rateProfit before taxation 234 268 527Less share of profit from joint ventures and (3) (2) (7)associatesProfit before taxation excluding share of profit 231 266 520from joint ventures and associatesNominal tax charge at UK corporation tax rate (30%) 69 80 156Lower tax rates on overseas earnings (10) (11) (25)Expenses not deductible for tax purposes 7 3 9Utilisation of losses - (5) (1)Deferred tax not recognised - 1 3Adjustments in respect of prior periods - - (1) 66 68 141 3. Earnings per ordinary share Pence Pence Pence Adjusted earnings per share 23.3 23.6 52.5Earnings per share on: Sale of property, plant & equipment - 2.4 2.5 Sale of businesses (0.7) - (0.1) Provision for loss on termination of operation - - (6.0) Tax effect on above - - 1.4 Amortisation of intangibles (2.0) (1.3) (3.2) Tax credit on intangibles amortisation 0.4 0.4 0.9Earnings per ordinary share 21.0 25.1 48.0 4. Dividends Pence Pence Pence Per share 2004 final - 11.15 11.15 2005 interim - - 6.0 2005 final 12.0 - - 12.0 11.15 17.15 £m £m £m Total 2004 final - 88 88 2005 interim - - 47 2005 final 95 - - 95 88 135 The 2005 final dividend of 12p was declared on 2 December 2005 and totalled £95mwhen paid on 13 January 2006. The 2006 interim dividend of 6.25p will be paidon 3 July 2006 to shareholders on the register on 2 June 2006. At Cash Flow Acquisition Exchange At 17 September of subsidiary adjustments 4 March 2006 2005 undertakings £m £m £m £m £m 5. Analysis of net funds/(debt)Cash and cash equivalents at bank 929 (579) - 4 354and in handShort-term borrowings (447) 285 (2) (2) (166)Investments 269 (70) - 2 201Loans over one year (539) - (1) (11) (551) 212 (364) (3) (7) (162) Cash and cash equivalents comprise cash balances, call deposits and investments with maturities of three months orless. 24 weeks 24 weeks 52 weeks ended ended ended 4 March 5 March 17 September 2006 2005 2005 £m £m £m6. Summary of movements in equityOpening shareholders' funds (as previously reported under UK - 3,496 3,496GAAP)Opening shareholders' funds (restated excluding IAS 32 and IAS 3,877 - -39)Adjustments on adoption of IFRS from 18 September 2004 - 91 91Adjustments relating to adoption of IAS 32 and IAS 39 on 18 9 - -September 2005Opening shareholders' funds (restated) 3,886 3,587 3,587Profit for the period 168 200 386Other recognised income and expense for the period 29 16 38Total recognised income and expense for the period 197 216 424Dividends (95) (88) (135) Net decrease/(increase) in own shares held (1) 2 7 Minority interests (4) (5) (6) Closing shareholders' funds 3,983 3,712 3,877 Attributable to: Equity shareholders 3,955 3,688 3,848 Minority interests 28 24 29 Closing shareholders' funds 3,983 3,712 3,877 7. Basis of preparation The attached interim financial statements are the first interim financialstatements following the adoption of International Financial Reporting Standards(IFRS). These interim financial statements have been prepared under IFRSapplying the accounting policies published in the group's IFRS TransitionDocument on 15 December 2005. Detailed income statement, balance sheet and cashflow reconciliations to assist the reader in understanding the nature andquantum of differences between the application of UK Generally AcceptedAccounting Practices ('UK GAAP') and IFRS for the restated comparative resultsfor the year ended 17 September 2005 and for the 24 weeks ended 5 March 2005 areavailable on the company's website at www.abf.co.uk/media. These interim financial statements have been prepared in accordance withaccounting policies the group expects to follow in its first full IFRS financialstatements which will be for the year ending 16 September 2006. EU law (IASRegulation EC 1606/2002) requires that the next annual consolidated financialstatements of the company, for the year ending 16 September 2006, be prepared inaccordance with IFRS adopted for use in the EU ('adopted IFRS'). These interim financial statements have been prepared on the basis of therecognition and measurement requirements of IFRS in issue that either areendorsed by the EU and effective (or available for early adoption) at 16September 2006 or are expected to be endorsed and effective (or available forearly adoption) at 16 September 2006, the group's first annual reporting date atwhich it is required to use adopted IFRS. Based on these IFRS, the directorshave made assumptions about the accounting policies expected to be applied whenthe first annual IFRS financial statements are prepared for the year ending 16September 2006. In particular, the directors have assumed that the draftamendment to IAS 21, the Effects of Changes in Foreign Exchange Rates, issued bythe IASB on 30 September 2005 will be adopted and endorsed by the EU. The draftamendment clarifies the identification and accounting for exchange differenceson monetary items forming part of a net investment in a foreign operation andrequires that exchange differences on such items be recognised in equity. The adopted IFRS that will be effective (or available for early adoption) in theannual financial statements for the year ending16 September 2006 are still subject to change and to additional interpretationsand therefore cannot be determined with certainty. Accordingly, the accountingpolicies for that annual period will be determined finally only when the annualfinancial statements are prepared for the year ending 16 September 2006. As allowed by IFRS 1, First-time adoption of IFRS, the group adopted IAS 32,Financial Instruments: disclosure and presentation, and IAS 39, FinancialInstruments: recognition and measurement, prospectively from 18 September 2005.Therefore, until 17 September 2005, the group continued to hedge account forforecast foreign exchange transactions and commodity exposures in accordancewith UK GAAP, and hence the comparative financial statements exclude the impactof these standards. The half year results are unaudited and were approved by the board of directorson 19 April 2006. The comparative figures for the financial year ended 17September 2005 and half year ended 5 March 2005 are not the company's statutoryaccounts for those financial periods. Those accounts, which were prepared underUK GAAP, have been reported on by the company's auditors and delivered to theRegistrar of Companies. The report of the auditors was unqualified and did notcontain statements under Section 237(2) or (3) of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
AB Foods