19th Apr 2005 07:00
Associated British Foods PLC19 April 2005 Associated British Foods plc announces 16% increase in adjusted profit before tax and 14% increase in interim dividend Interim results for the 24 weeks ended 5 March 2005 Highlights • Adjusted operating profit up 18% to £252m* • Group sales up 10% to £2,618m • Adjusted profit before tax up 16% to £268m ** • Adjusted earnings per share up 16% to 24.2p ** • Interim dividend per share up 14% to 6.0p • Net cash funds of £464m • Basic earnings per share up 16% to 22.9p and profit before tax up 15% to £252m George Weston, Chief Executive of Associated British Foods, said: "These results reflect the strong contribution from recent acquisitions and goodprogress from our existing businesses. The integration of the acquisitions isvirtually complete and these businesses are performing in line with ourexpectation." * before amortisation of goodwill. ** before profits less losses on the sale of businesses and fixed assets and amortisation of goodwill. All figures stated after profits on the sale of businesses and fixed assets and amortisation of goodwill are shown on the face of the consolidated profit and loss account. 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 ASSOCIATED BRITISH FOODS plcINTERIM REPORTFOR THE 24 WEEKS ENDED 5 MARCH 2005 CHAIRMAN'S STATEMENT The period has seen sizeable changes in the group due, in particular, to themajor investments made at the end of the last financial year. Growth in salesand operating profit has been boosted by these acquisitions and by organicgrowth in the existing businesses. The profit contribution is now more evenlybalanced across the four main business areas and the group's operations have agreater geographic spread. Operating profit, before amortisation of goodwill, rose by 18% to £252m and theincrease in grocery and ingredients reflected the contribution from the newbusinesses. Trading conditions continued to be testing in highly competitive markets. Anumber of key input costs such as energy and packaging increased and, althoughsome commodity costs fell, others rose significantly. Currency fluctuations hadvarying effects but, including profit translation, the impact was adverseoverall. The acquisitions of the US herbs and spices and consumer yeast businesses andthe Capullo oils business in Mexico accounted for a substantial part of theadvance in grocery. Further progress by the UK bakery business and improvementsat ACH, our US oils business, also contributed to this profit growth. The contribution from primary food and agriculture showed little change from thesame period last year. Despite a good campaign, the profit at British Sugar UKwas adversely impacted by an oversupply of sugar in the EU this year, currencyand higher energy costs. However, this was more than offset by the benefit ofthe introduction of the EU sugar regime in Poland, higher volumes in China andan improvement in animal feeds. In ingredients, the acquisition of the bakers' yeast and yeast extractbusinesses greatly increased its scale and geographical coverage. Althoughyeast pricing weakened in North America and Turkey, this was partially offset bya strong performance from the operations in South America and Eastern Asia. The acquired businesses have operated in line with our expectations and we areconfident that they will make a significant contribution to the group's futureperformance. Clothing retailing is as competitive a market as any at the present time. Theperformance of Primark is therefore particularly satisfying. Sales advanced by12% and by 6% on a like-for-like basis. Margins showed further improvement andoperating profit grew by 18%. Shareholders will probably be aware that Primarkhas acquired a number of sites formerly traded by the Allders department storechain. These, together with other sites secured as part of Primark's continuingstore development programme, will provide substantial additional selling spaceby the autumn of this year. This continuing increase in floor space willprovide the basis for further profitable development in the future. The group's strategic intent includes broadening the spread of our businessesand their global coverage thereby reducing the proportion of the group's profitsearned from sugar production, particularly in the UK. The geographical andsegmental analysis together with the comments in the operating review show theextent to which the group has moved in the desired direction. Specifically,given the forthcoming changes to the EU sugar regime, it is significant that theprofit contribution from British Sugar in the UK was a little over a quarter oftotal operating profits compared to around a third a year earlier. Investment income less interest payable reduced from £14m to £11m. Thisreduction was less than might have been expected given the major acquisitionsmade at the end of the previous year and was due to higher interest rates andstrong cash generation in the last twelve months. Profit before taxation, adjusted for profits less losses on the sale of fixedassets and businesses and before amortisation of goodwill, rose by 16% from£232m to £268m. The group's underlying effective rate of taxation was 28.0% asagainst 28.8% in the last full year. Adjusted earnings per share increased by16% to 24.2p. The substantial cash outflow in the period included £630m of acquisition cost,virtually all of which related to the yeast business. Capital expenditure onfixed assets was also higher than in recent years, influenced by increasedexpenditure on new Primark stores. Net cash funds amounted to £464m whichcompared with £1,025m a year earlier. The underlying cash flow remained strongand the group retains the flexibility to invest appropriately in the developmentof the businesses. Dividends The interim dividend will be 6.0p per share, an increase of 14%, broadly in linewith the growth in adjusted earnings per share in the period. The dividend willbe paid on 4 July 2005 to shareholders registered at the close of business on 3June 2005. Board Changes It was announced last autumn that Peter Jackson had decided to retire on 31March, having been chief executive since 1999. He was managing director ofBritish Sugar when it was acquired in 1991 and joined the ABF board in 1992. Inhis time as Chief Executive great progress was made in operating performance andin the strategic development of the group. Peter's contribution over thisperiod has been critical to our success and has been greatly valued by hiscolleagues. We wish him the very best for the future. George Weston has been appointed Chief Executive as successor to Peter Jackson.On taking up this role he ceased to be Deputy Chairman. International Financial Reporting Standards We are required to report our results for the financial year ending in September2006 in accordance with International Financial Reporting Standards rather thanUK GAAP. The results for the year ending 18 September 2005 will be publishedunder UK GAAP in November this year and a restatement of these results underIFRS will be published in December. Outlook Although the operating environment will be no less demanding in the secondperiod of the year, we nevertheless expect to report good progress in operatingprofit for the full year. However, net investment income will be significantlylower than in the corresponding period of the previous year. Even after the major acquisitions referred to in this statement, our financialresources remain strong and will enable the group to support new investmentinitiatives. Your group is well placed for further development. Martin AdamsonChairman19 April 2005 OPERATING REVIEW Group sales increased by 10% to £2,618m and adjusted operating profit increasedby 18% to £252m. All business areas again made progress. In existing businesses, Primarkcontributed another strong performance and ACH has recovered from the impact ofthe sharp increase in soy and corn oil costs last year. However, British SugarUK has been affected by an oversupply of sugar in the EU and increased inputcosts, and the Australian bread business has been affected by continuedcompetitive pressure. Acquisitions have significantly contributed to the development of the group inthe first half and, less disposals, added £33m to operating profit. Grocery hasbenefited from the acquisitions of the herbs and spices and consumer yeastbusinesses in the US, Capullo in Mexico and Billington's in the UK. Ingredientsnow includes the international yeast and bakery ingredients business, AB Mauri.Each of these has performed to expectation and integration is virtuallycomplete. GROCERY Our businesses around the world produce and sell famous brands as well as ownlabel grocery products. 2005 2004Sales £m 1,244 1,168Operating profit £m 86 70 There was strong growth in our international grocery businesses with sales up 7%to £1,244m and profit up 23% to £86m. Margins at ACH have benefited from a recovery in the oils business with lowersoy and corn oil costs. Further progress was made by Mazola in the US withvolumes ahead of last year by 3%. The acquisitions of Capullo in Mexico and theUS herbs and spices and consumer yeast businesses are meeting our expectation.The integration of the US businesses with the existing sales, marketing andsupply chain infrastructure is well under way and has already provided some costsavings. This combination with our existing retail brands, led by Mazola, hasenabled ACH to consolidate its selling and brokerage relationships which willenhance sales coverage and scale with key retailers. In Mexico, ourorganisation will be fully staffed by May. The bread market in Australia continues to experience pressure on volume andprice due to strong competition, and margins have suffered as a result. The newChullora bakery starts production in May with completion scheduled for thesummer. In the UK, Allied Bakeries benefited from growth in the Kingsmill brandwhich has received national television advertising support. Our frozen bakerybusiness, Speedibake, has continued to improve its operational efficiency. Our international hot beverage brands, Twinings and Ovaltine, have maintainedthe momentum of strong sales growth reported last year. Twinings sales havegrown well in the key UK and US markets with a similar performance from Ovaltinein Asia. Ovaltine has grown market share in Switzerland, China and in itssingle largest market, Thailand, driven by new product introductions andincreased advertising and promotion spend. We have recently announced theintention to close factories in the US and France with additional investment inthe UK and China. A rationalisation charge has been taken to operating profitin these results. Silver Spoon, our UK retail sugar brand, completed the national roll-out of itsreduced calorie 'Light' variety, and the integration of Billington's, theleading supplier of unrefined cane sugars to the UK, is proceeding to plan. A strong profit performance from Ryvita was fuelled by sales growth in its corecrispbread range and the successful launch of the snack version Minis. The Blue Dragon brand of ethnic foods traded particularly well in the importantChinese New Year period and benefited from national television advertising. Thenew Manchester factory which produces noodles and a range of microwaveableproducts is now fully operational. PRIMARY FOOD & AGRICULTURE We add value to primary products through our sophisticated and efficientprocessing facilities to produce high quality staple ingredients such as sugar. 2005 2004Sales £m 736 747Operating profit £m 86 83 British Sugar had a good campaign with a crop of 1.39 million tonnes. Excellentagricultural yields from good quality beet offset the effect of a smaller croparea. The UK is now ranked highly in the EU for agricultural productivity aswell as being the most efficient processor. Factory performance was excellentwith record production from Wissington. However, the UK profit has beenaffected by an oversupply of sugar in the EU this year as a result of theEuropean Commission's incorrect forecasts of consumption and stocks particularlyin the new member states. This is expected to continue to impact the businessthroughout the second half. In addition, higher energy costs and a weaker euro,compared to last year, have further reduced profit. Poland has benefited from higher sugar prices following its accession to the EUlast year. These prices are now subject to the same market and currency forcesthat affect the EU market in general. Our sugar business in China has performedwell with a combination of a good campaign, strong sales and firmer pricing. Reform of the European sugar regime is the most significant strategic issuefacing British Sugar. The European Commission made indicative proposals forquota and price reductions in July last year. The Council of Ministers isexpected to have considered these proposals by the end of this year. Theirfinal form is expected to take effect from July 2006. Notwithstanding theuncertainties surrounding the outcome, we should expect that the newarrangements will still provide for efficient companies to be able to make anadequate return on the investment they have made in the industry. The UK animal feeds business continues to present a challenging environment withovercapacity making cost recovery difficult at a time of high energy costs. InApril we formed a joint venture with Banks Cargill Agriculture, trading asFrontier, which combined the UK arable businesses of both partners to create abusiness of national scale, offering a broader product range to its farming andcereal processing customers. In China, market demand for quality assured feedsis high and has resulted in a strong performance. We purchased the interests ofour Chinese joint venture partners in the feed mills in the period. INGREDIENTS We develop and produce functional ingredients from natural products for use in adiverse range of applications. 2005 2004Sales £m 267 133Operating profit £m 32 15 Sales and profit have more than doubled and reflect the recent acquisition ofthe international yeast and bakery ingredients businesses. At AB Mauri, the new organisation is well established. Although yeast pricinghas weakened in North America and Turkey and higher molasses and energy costshave affected profits in a number of countries, the operations in South Americaand Eastern Asia performed strongly. Growth in China has been excellent and anew factory is on target to open in Xinjiang, Western China, later this year.We have announced plans for the construction of a new plant in New Zealand andthe rationalisation of plants in India. The integration of our existing bakeryingredients businesses in the UK, US and Australia with those of AB Mauri hasmade good progress and provides the opportunity for important market andcustomer synergies. In the US, our food polyol business has slowed as the trend for low carbohydrateproducts in the US has weakened but antacid sales and profit have improved.Speciality lipids and emulsifiers benefited from improved operationalefficiencies and the introduction of new plant sterol products. RETAIL Primark has a winning formula for providing quality merchandise at affordableprices. 2005 2004Sales £m 448 399Operating profit £m 59 50 Primark's excellent performance saw sales increase by 12% to £448m and profit by18% to £59m. The sales increase was driven by 6% growth in like-for-like sales,maintaining the momentum of the last financial year, and an increase in retailselling space. The like-for-like value growth was achieved against a backgroundof 5% price deflation. The margin improvement reflected better purchasing andthe benefit of the weaker US dollar. Three new stores opened in the period in Lincoln, Sunderland and Dundrum.Smaller stores in Glengormley and Dundrum were closed. Extensions to Watford,Drogheda and Cork were completed. At the end of the period we were trading from121 stores and 2.4 million sq ft of selling space. We continue to place great priority on the expansion of Primark. Through acombination of store refurbishments, extensions to selling space andacquisitions of new sites and re-sitings we have spent a total of £70m incapital expenditure over the period. We now have an extensive programme of new store openings which include therecently announced acquisition of stores which had previously traded as Allders.We expect that Kingston and a larger store in Mullingar will commence tradingby the end of this financial year with a further six stores, in Leicester,Bromley, Hull, Leeds, Cardiff and Dundalk, opening in time for Christmas.Oxford is scheduled to open next year and we are evaluating the redevelopment ofthe Coventry store. SUMMARY These results reflect the strong contribution from recent acquisitions and goodprogress from our existing businesses. The integration of the acquisitions isvirtually complete and these businesses are performing in line with ourexpectation. George WestonChief Executive CONSOLIDATED PROFIT AND LOSS ACCOUNT Continuing Ongoing Acquisitions Total 24 weeks 24 weeks 24 weeks 24 weeks 53 weeks ended ended ended ended ended 5 March 5 March 5 March 28 February 18 September 2005 2005 2005 2004 2004 (restated) Note £m £m £m £m £m Turnover of the group including its share of joint ventures 2,433 195 2,628 2,380 5,181Less share of turnover of joint ventures (4) (6) (10) (8) (16)Group turnover 1 2,429 189 2,618 2,372 5,165Operating costs (2,227) (177) (2,404) (2,187) (4,744)Group operating profit 202 12 214 185 421Share of operating results of: joint ventures - 1 1 6 8 associates 2 - 2 2 3Total operating profit 1 204 13 217 193 432 Operating profit before amortisation of goodwill 226 26 252 213 478Amortisation of goodwill (22) (13) (35) (20) (46) Profits less losses on sale of fixed 19 (1) 8assetsProfits less losses on sale of businesses - 8 7Investment income 25 24 59Profit on ordinary activities before 261 224 506interestInterest payable (14) (10) (23)Other financial income 5 5 11Profit on ordinary activities before 252 219 494taxation Adjusted profit before taxation 268 232 525Profits less losses on sale of fixed 19 (1) 8assetsProfits less losses on sale of businesses - 8 7Amortisation of goodwill (35) (20) (46) Tax on profit on ordinary 2 (69) (63) (146)activitiesProfit on ordinary activities after 183 156 348taxationMinority interests - equity (2) - (6)Profit for the financial period 181 156 342Dividends (47) (41) (129)Transfer to reserves 134 115 213 Basic and diluted earnings per ordinary share 3 22.9p 19.8p 43.3pAdjusted earnings per ordinary share 3 24.2p 20.9p 46.6p The results of acquisitions shown separately above are those of the US herbs andspices business and the international yeast and bakery ingredients businessrecently acquired from Burns Philp. The group has discontinued no operations within the meaning of the FinancialReporting Standards during either 2005 or 2004. The results for the 24 weeks ended 28 February 2004 have been restated toreflect the adoption of FRS 17 - Retirement Benefits in the group's 2004financial statements. The impact of this change is detailed in note 8. CONSOLIDATED BALANCE SHEET At At At 5 March 28 February 18 September 2005 2004 2004 (restated) £m £m £mFixed assetsIntangible assets - goodwill 1,036 475 593Tangible assets 1,644 1,371 1,459 2,680 1,846 2,052Interest in net assets of - joint ventures 15 13 12 - associates 13 11 11Other investments 1 1 1Total fixed asset 29 25 24investments 2,709 1,871 2,076Current assetsStocks 841 755 496Debtors 672 567 600Investments 905 1,305 1,547Cash at bank and in hand 164 158 136 2,582 2,785 2,779 Creditors amounts falling due within one yearShort- term borrowings (102) (89) (68)Other creditors (918) (744) (829) (1,020) (833) (897)Net current assets 1,562 1,952 1,882Total assets less current liabilities 4,271 3,823 3,958 Creditors amounts falling due after one yearLoans (503) (349) (357)Other creditors (2) (7) (8) (505) (356) (365)Provisions for liabilities and charges (171) (144) (155)Net assets excluding pension asset 3,595 3,323 3,438Pension asset 44 33 58Net assets 3,639 3,356 3,496 Capital and reservesCalled up share capital 47 47 47Revaluation reserve 3 3 3Other reserves 173 173 173Profit and loss reserve including pension reserve 3,392 3,111 3,246Equity shareholders' funds 3,615 3,334 3,469Minority interests in subsidiary undertakings - equity 24 22 27 3,639 3,356 3,496 The balance sheet at 28 February 2004 has been restated to reflect the adoptionof FRS 17 - Retirement Benefits in the group's 2004 financial statements. Theimpact of this change is detailed in note 8. CONSOLIDATED CASH FLOW STATEMENT 24 weeks 24 weeks 53 weeks ended ended ended 5 March 28 February 18 September 2005 2004 2004 Note £m £m £m Cash flow from operating activities 4 71 16 631Dividends from joint ventures - 1 4Dividends from associates - 1 2Return on investments and servicing of financeInvestment income 27 25 55Interest paid (13) (13) (23)Dividends paid to minorities (2) - (1) 12 12 31 Taxation (72) (65) (128) Capital expenditure and financial investmentPurchase of tangible fixed assets (142) (96) (223)Sale of tangible fixed assets 31 5 29 (111) (91) (194)Acquisitions and disposalsPurchase of subsidiary undertakings (630) (33) (229)Sale of joint ventures and associates 1 1 1Sale of subsidiary undertakings 1 19 24 (628) (13) (204) Equity dividends paid (88) (78) (119)Net cash (outflow)/inflow before use of liquid (816) (217) 23 funds and financing Management of liquid funds 6 641 223 (18)Financing 5 200 (5) (28)Increase/(decrease) in cash 6 25 1 (23) CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 24 weeks 24 weeks 53 weeks ended ended ended 5 March 28 February 18 September 2005 2004 2004 (restated) £m £m £m Profit for the financial period 181 156 342Actuarial gains on net pension assets - - 43Deferred tax associated with net pension assets - - (13)Currency translation differences on foreign 10 (77) (75)currency net assetsTax on currency translation differences - (1) 1Total recognised gains and losses relating to the 191 78 298period RECONCILIATION OF MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDS 24 weeks 24 weeks 53 weeks ended ended ended 5 March 28 February 18 September 2005 2004 2004 (restated) £m £m £m Opening shareholders' funds 3,469 3,304 3,304Profit for the financial period 181 156 342Dividends (47) (41) (129)Goodwill written back - (3) (3)Net decrease/(increase) in own shares held 2 (4) (1)Other recognised gains and losses relating to 10 (78) (44)the periodClosing shareholders' funds 3,615 3,334 3,469 These statements have been restated to reflect the adoption of FRS 17 -Retirement Benefits in the group's 2004 financial statements.NOTES TO THE INTERIM REPORT Group turnover Operating profit 24 weeks 24 weeks 53 weeks 24 weeks 24 weeks 53 weeks ended ended ended ended ended ended 5 March 28 February 18 September 5 March 28 February 18 September 2005 2004 2004 2005 2004 2004 (restated) (restated)1. Segmental Analysis £m £m £m £m £m £mAnalysis by businessGrocery 1,244 1,168 2,446 86 70 160Primary food & agriculture 736 747 1,682 86 83 189Ingredients 267 133 294 32 15 36Retail 448 399 858 59 50 108Inter company sales (77) (116) (160) - - -Central costs - - - (11) (9) (19) 2,618 2,331 5,120 252 209 474Businesses disposed: Grocery - 19 22 - - 1 Primary food & agriculture - 22 23 - 4 3 2,618 2,372 5,165 252 213 478Amortisation of goodwill - - - (35) (20) (46) 2,618 2,372 5,165 217 193 432Analysis by geography (by origin anddestination)United Kingdom 1,390 1,343 2,952 140 140 298Rest of Europe 303 250 526 36 21 59The Americas 519 386 865 51 33 66Australia, Asia & Rest of World 439 387 834 25 15 51Inter company sales (33) (35) (57) - - - 2,618 2,331 5,120 252 209 474Businesses disposed:United Kingdom - 23 26 - - -Rest of Europe - 4 5 - - -Australia, Asia & Rest of World - 14 14 - 4 4 2,618 2,372 5,165 252 213 478Amortisation of goodwill - - - (35) (20) (46) 2,618 2,372 5,165 217 193 432 The composition of our geographic segments was revised in the financialstatements for the year ended 18 September 2004 to reflect the increasinglyinternational breadth of our businesses. The segmental analysis for the 24weeks ended 28 February 2004 has been restated to reflect these changes and theadoption of FRS 17 - Retirement Benefits, the impact of which is detailed innote 8. Segmental analysis of acquisitions for the24 weeks ended 5 March 2005 (£m): Sales Operating profitBy business before goodwillGrocery 58 9Ingredients 131 17 189 26By geographyUnited Kingdom 6 1Rest of Europe 29 5The Americas 122 16Australia, Asia & Rest of World 32 4 189 26 Goodwill amortisation of £13m, relating to these acquisitions, was charged inthe period. Capital employed At At At 5 March 28 February 18 September 2005 2004 2004 (restated) £m £m £m 1. Segmental analysis continued Analysis by businessGrocery 832 738 767Primary food & agriculture 885 901 690Ingredients 319 127 125Retail 392 317 338Central capital employed (55) (29) (24) 2,373 2,054 1,896Businesses disposed Grocery - 2 - Primary food & agriculture - 5 - 2,373 2,061 1,896Analysis by geographyUnited Kingdom 1,373 1,359 1,169Rest of Europe 310 196 193The Americas 313 184 255Australia, Asia & Rest of World 377 315 279 2,373 2,054 1,896Businesses disposed United Kingdom - 7 - 2,373 2,061 1,896 Capital employed comprises tangible fixed assets, interests in joint venturesand associates, current assets (excluding deferred taxation, cash andinvestments), creditors (excluding borrowings, tax and dividends) and provisionsfor liabilities and charges excluding deferred taxation. Capital employed is reconciled to net assets as follows: At At At 5 March 28 February 18 September 2005 2004 2004 (restated) £m £m £mCapital employed 2,373 2,061 1,896Goodwill 1,036 475 593Other fixed asset investments 1 1 1Net funds 464 1,025 1,258Tax and dividends (279) (239) (310)Pension asset 44 33 58Net assets 3,639 3,356 3,496 24 weeks 24 weeks 53 weeks ended ended ended 5 March 28 February 18 September 2005 2004 2004 (restated) £m £m £m2. Tax on profit on ordinary activities Tax charge comprises:UK corporation tax at 30% 39 37 94Overseas income and corporation tax 26 18 30Joint ventures and associates 1 1 2Current tax charge 66 56 126UK deferred taxation 2 3 7Overseas deferred taxation 1 4 13Total tax charge 69 63 146Add back: Tax credit on goodwill amortisation 6 4 9 Tax credit on sale of fixed assets and businesses - - (4)Underlying tax charge 75 67 151 3. Earnings per ordinary share Pence Pence PenceAdjusted earnings per ordinary share 24.2 20.9 46.6Earnings per ordinary share on: Sale of fixed assets 2.4 (0.1) 1.0 Sale of businesses - 0.9 0.9 Tax effect on above - 0.1 (0.5) Amortisation of goodwill (4.4) (2.5) (5.8) Tax credit on goodwill amortisation 0.7 0.5 1.1Earnings per ordinary share 22.9 19.8 43.3 4. Cash flow from operating activities £m £m £mOperating profit 214 185 421Amortisation of goodwill 35 20 46Depreciation 79 72 139(Increase)/decrease in working capital - stocks (314) (259) 30 - debtors (15) (28) (39) - creditors 52 15 16Other provisions 13 3 4Pension cost less contributions 7 8 13Other movement in own shares held reserve - - 1Net cash from operating activities 71 16 631 24 weeks 24 weeks 53 weeks ended ended ended 5 March 28 February 18 September 2005 2004 2004 £m £m £m5. Analysis of changes in financingRepayment of short-term loans (9) (61) (97)Issue of short-term loans 40 65 81Repayment of loans over one year (199) (6) (6)Issue of loans over one year 366 1 2Decrease in bank borrowings - - (6)Net decrease/(increase) in cost of own shares held 2 (4) (2) 200 (5) (28) 6. Reconciliation of net cash flow to movement in net fundsIncrease /(decrease) in cash 25 1 (23)Management of liquid resources (641) (223) 18Net (increase)/decrease in borrowings (198) 1 26Change in net funds resulting from cash flows (814) (221) 21Effect of currency changes 24 17 8On acquisition of subsidiary undertakings (4) (9) (9)Movement in net funds (794) (213) 20 Opening net funds 1,258 1,238 1,238Closing net funds 464 1,025 1,258 At Acquisition At 18 September Cash of subsidiary Exchange 5 March 2004 flow undertakings adjustments 2005 £m £m £m £m £m7. Analysis of net fundsCash at bank and in hand 136 25 - 3 164Short-term borrowings (68) (31) (5) 2 (102)Investments 1,547 (641) 1 (2) 905Loans over one year (357) (167) - 21 (503) 1,258 (814) (4) 24 464 8. Basis of preparation The figures shown for the financial year ended 18 September 2004, whichhave been abridged from the group's 2004 financial statements, are not thegroup's statutory accounts. Those accounts have been reported on by theauditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement underSection 237 (2) or (3) of the Companies Act 1985. The figures for the 24 weeks ended 5 March 2005 and 28 February 2004 areunaudited. The interim financial information has been prepared on the basis of theaccounting policies set out in the group's 2004 statutory accounts. The adoption of FRS 17 in the 2004 statutory accounts required a change to theaccounting treatment of defined benefit pension arrangements such that the groupnow includes the assets and liabilities of these arrangements in theconsolidated balance sheet. Current service costs, curtailments and settlementgains and losses and net financial returns are included in the profit and lossaccount in the period to which they relate. Actuarial gains and losses arerecognised in the statement of total recognised gains and losses. The following table sets out the impact of adopting FRS 17 on the affected lineitems in the group profit and loss account and balance sheet at 28 February2004. Tax on Profit Profit on Other profit on for the Operating sale of financial ordinary financial profit businesses income activities period £m £m £m £m £mProfit and loss accountAs previously reported 204 6 - (64) 159Adoption of FRS 17 (11) 2 5 1 (3)As restated 193 8 5 (63) 156 Other Provision for Net Profit creditors liabilities pension & loss due within and charges assets reserve 1 year £m £m £m £mBalance sheetAs previously reported (746) (147) - 3,073Adoption of FRS 17 2 3 33 38As restated (744) (144) 33 3,111 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
AB Foods