TIDMABF
RNS Number : 2990X
Associated British Foods PLC
25 April 2023
Interim Results Announcement
24 weeks ended 4 March 2023
For release 25 APRIL 2023
Associated British Foods plc results for the 24 weeks ended 4
March 2023
Strong growth in Group sales
Very good footfall and margin better than expected at
Primark
Financial Headlines
Actual currency Constant
currency
change change
------------------------------------- --------- --------------- ---------
Group revenue GBP9,560m +21% +17%
Adjusted operating profit GBP684m * 3% * 7%
Adjusted profit before tax GBP667m In line
Adjusted earnings per share 62.0p * 3%
Dividend per share 14.2p +3%
Gross investment GBP527m +17%
Net cash before lease liabilities GBP586m
Net debt including lease liabilities GBP2,601m
Statutory operating profit GBP663m * 3%
Statutory profit before tax GBP644m +1%
Basic earnings per share 67.0p +11%
Statutory operating profit is derived from the adjusted
operating profit after taking certain charges and credits as shown
on the face of the condensed consolidated income statement.
Summary of Group performance
Food
-- Sales increased across all businesses, up 23% in aggregate to GBP5,332m
-- Adjusted operating profit up 13% to GBP373m
-- Exceptionally strong adjusted operating profit performance in Ingredients,
up 62%
-- Sugar crop and inflationary challenges offset by strong Illovo performance
-- Grocery adjusted operating profit broadly in line with pricing lagging
input cost inflation as expected
-- Agriculture adjusted operating profit down with difficult animal
feed markets in UK and China
Primark
-- Sales up 19% to GBP4,228m reflecting good growth in all countries
-- Strong like-for-like sales growth driven by price and volume
-- New stores performing strongly
-- Adjusted operating profit of GBP351m, margin of 8.3%
-- US: expansion into southern states to be anchored by new warehouse
-- Announcement of restructuring and growth plan for Germany
-- Digital development continues with rollout of improved website, UK trial of Click and Collect
launched with geographic extension later this year
Shareholder returns
-- GBP140m of the GBP500m share buyback completed in the period
George Weston, Chief Executive of Associated British Foods,
said:
"This period was marked by extreme and volatile inflation in all
our businesses. We have taken considerable action to mitigate these
costs through operational cost savings and, where appropriate,
pricing.
The performance of our Food businesses was resilient in
aggregate, underpinned by an exceptional performance at
Ingredients. We were very pleased with the improvement in Primark
sales, which recovered strongly from the second half of the last
financial year and drove operating profit margin up to 8.3%, higher
than we had expected.
Primark has been very successful in this period in attracting
new customers with its proposition of good quality merchandise
combined with price leadership and well invested stores. We have
had a very strong contribution from new stores opened in the
period, and today we are announcing plans for the development of
our Primark business in southern states of the US."
The Group has defined and outlined the purpose of its
Alternative performance measures in note 14. These measures are
used within the Financial Headlines and in this Interim Results
Announcement.
For further information please contact:
Associated British Foods:
+44 20 7399 6545
John Bason, Finance Director
Eoin Tonge, Finance Director designate
Chris Barrie, Corporate Affairs Director
Citigate Dewe Rogerson:
+44 20 7638 9571
Holly Gillis +44 7940 797560
Angharad
Couch +44 7507 643004
There will be an analyst and investor presentation at 09.00am
BST today which will be streamed online and accessed via our
website here.
Notes to editors
Associated British Foods is a diversified international food,
ingredients and retail group with annual sales of GBP17bn and
132,000 employees in 53 countries. It has significant businesses in
Europe, Africa, the Americas, Asia and Australia.
Our aim is to achieve strong, sustainable leadership positions
in markets that offer potential for long-term 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.
For release 25 APRIL 2023
Interim Results Announcement
For the 24 weeks ended 4 March 2023
Chairman's statement
Our performance this half year should be seen in the context of
an operating environment that has seen intense and volatile
inflationary pressures. First half revenues were up 21% at actual
exchange rates and 17% at constant currency, against the same
period last year, to GBP9.6bn. Careful pricing decisions at Primark
and the usual delay in recovering inflation in many of our Food
businesses resulted in lower Group margins. Given this economic
environment, it is creditable that adjusted operating profit for
the Group was broadly in line with that delivered last year.
Adjusted operating profit was 3% lower at GBP684m at actual
exchange rates and declined 7% at constant currency. There were no
exceptional items in either half year, and so the statutory
operating profit also declined by 3% to GBP663m this period.
Over the period, sterling saw pronounced weakness and this was
the major reason for the decline in the Primark margin. However,
given the international breadth of our operations there was a
GBP29m benefit on the translation of our non-sterling earnings.
Within Food, our Ingredients businesses performed well with AB
Mauri recording good growth in volumes and cost recovery. Our
Grocery and Sugar businesses were resilient in the face of cost
inflation and, in the case of Sugar, a particularly poor UK crop
and other challenges.
Given the wider economic conditions and their effect on the cost
of living for our customers, Primark traded very strongly in the
half year, ahead of both our expectations and the wider clothing
retail market. The business attracted new customers and it is
notable that the higher sales resulted from both pricing and an
increase in unit volumes.
The net of finance and other financial income and expense
improved by GBP23m, reflecting a further substantial increase in
the surplus in the Group's defined benefit pension schemes and the
increase in interest rates. Adjusted profit before tax was in line
with last year. As previously indicated, the effective tax rate
increased to 24.7% from 23.2% last year. Adjusted earnings per
share declined by 3% to 62.0p.
We have a number of large capital projects under way, and with a
recovery from the pandemic-affected years gross investment is
building and increased by 17% to GBP527m. This was driven by
projects to build capacity in our businesses, add stores in Primark
and increasingly expand our capabilities in automation and
technology. We expect this higher level of investment to continue
over the medium term.
The cash outflow for the Group in the first half was GBP895m,
some GBP600m higher than that expected in a typical first half.
This increase was driven by GBP140m spent in the first half
following the initiation of the GBP500m share buyback programme and
by a working capital increase some GBP400m higher than a typical
first half. This higher than usual increase in working capital was
driven by three factors: the effect of inflation, higher than usual
inventory at Primark and higher sugar production in Illovo. Working
capital will be lower at the end of the financial year, with the
seasonal increase in Sugar inventory set to reverse and we expect a
reduction in Primark's inventory.
This cash outflow in the first half resulted in net cash before
lease liabilities of GBP586m at the half year. Net debt including
lease liabilities of GBP3.2bn was GBP2.6bn, giving a financial
leverage ratio of 1.2 times. Total liquidity was GBP2.5bn.
Board
Last November we announced that John Bason would be retiring
this month, having been Finance Director since 1999. He leaves with
our immense gratitude. On 6 February this year we welcomed Eoin
Tonge to the Group as Finance Director Designate. John will stand
down as Finance Director, and from the Board, on 28 April with Eoin
succeeding him as Finance Director the following day. John will
become Chairman of Primark's Strategic Advisory Board in May.
Having completed nine years on the Board on 1 May 2023, Ruth
Cairnie will relinquish her roles of Senior Independent Director
and as Chair of the Remuneration Committee with effect from that
date. Dame Heather Rabbatts will become Senior Independent Director
and Graham Allan will become Chair of the Remuneration Committee.
Ruth will not stand for re-election at the next Annual General
Meeting of the Company.
Dividend
The Board has declared an interim dividend of 14.2p a share, an
increase of 3% on last year reflecting our confidence in our
forecast for the outturn for the year.
The dividend will be paid on 7 July 2023 to shareholders
registered at the close of business on 2 June 2023.
Capital allocation
In the ordinary course of business, the Board prefers to see the
Group's financial leverage, expressed as the ratio of net debt
including lease liabilities to adjusted EBITDA, to be well under
1.5 times at each half year and year end reporting date. In
exceptional circumstances the Board will be prepared to see
leverage above that level for a short period of time. Our priority
is always to invest in our businesses, both organically and by
acquisition, at an appropriate pace and wherever attractive returns
on capital can be generated. The Board may from time to time
conclude that it has surplus cash and capital. In making this
assessment, the Board will be mindful that financial leverage
consistently below 1.0 times and substantial net cash balances at
both half and full year ends may indicate such a surplus
position.
Accordingly, we announced a share buyback programme of GBP500m
in November 2022. The Board views the share buyback as an
investment, rather than simply a return of capital, with both the
size and timing of the programme appropriate for the delivery of
value to shareholders. Although financial leverage was 1.2 times at
this half year end, with the seasonal reduction of working capital,
leverage is expected to be below 1.0 times at the financial year
end.
In the period we purchased 8.1m shares for GBP140m. Shares
bought back were cancelled and at the end of the half year we had
784m ordinary shares in issue. The weighted average number of
shares for the half year was 786m which compared to 789m for the
last financial year.
Outlook
In the second half the continued recovery of significant
inflation in our input costs remains a management priority across
the Group, albeit that inflation has become less volatile, with
some input costs reduced. Some macro-economic headwinds for the
consumer remain.
For the full year, adjusted operating profit in our Food
businesses is expected to be modestly ahead of last year. After the
very strong performance in the first half, we expect Ingredients
profit for the full year to be well ahead of last year. We now
expect a decline in adjusted operating profit for the full year at
AB Sugar mainly as a consequence of much lower UK sugar production.
We now expect the Grocery adjusted operating profit to be ahead of
the prior year with the full year benefit of the pricing actions
and cost savings already taken.
At Primark, we remain cautious about the resilience of consumer
spending in the face of ongoing inflation in the cost of living and
higher interest rates. We expect like-for-like sales growth in the
second half although we expect that growth to moderate from that in
the first half. The cost of bought-in goods will be higher than the
same period a year ago due to the particular strength of the US
dollar against sterling and the euro at the time of purchasing.
However, we will start to see the benefits of lower sea freight
costs, which have returned to normal levels, and of much reduced
energy costs. Our forecast for overhead costs includes increases in
in-store retail wages and incremental investment in technology.
Taking these factors into account, we now expect the second half
margin to be similar to that achieved in the first half and as a
consequence the full year adjusted operating profit margin to be
similar to 8.3%.
For the full year, our expectation for the Group remains for
adjusted operating profit and adjusted earnings per share to be
broadly in line with the previous financial year.
Michael McLintock
Chairman
Chief Executive's statement
Inflation dominated the economic and commercial environment for
all our businesses. The growth in sales, an increase of 17% at
constant currency to GBP9.6bn, demonstrated the work to recover the
very significant input cost inflation that we were not able to
mitigate through operational efficiencies. We chose not to recover
all the input cost inflation in Primark and actions on price in our
Food businesses lagged input cost inflation as usual, and margin
declined in the first half as a result. Given the extent of
inflation this was to be expected and we regard this level of
profitability as satisfactory in the circumstances while
acknowledging that there is more work to do on margin recovery.
At the start of this financial year all our businesses were
experiencing inflation across raw materials and commodities, in the
supply chain, and in energy. All of this was made more difficult by
high volatility and short-term currency movements which were
especially pronounced in the sterling US dollar exchange rate which
is a major determinant of Primark's transaction costs. As the
period progressed, this volatility lessened and some input costs
such as freight and cotton fell back to normal levels. Labour costs
have increased substantially and some costs, while reduced, remain
above past norms. Our businesses took steps to offset these higher
input costs through operational cost savings and where necessary
the implementation of price increases. Looking into the second
half, our focus remains on margin recovery in both Food and
Retail.
In Food, revenues grew by 17% to GBP5.3bn and adjusted operating
profit grew by 4% to GBP373m at constant currency. Ingredients
performed particularly strongly, and adjusted operating profit rose
by 48% at constant currency to GBP102m. This was mainly driven by
good cost recovery and resilient volumes at AB Mauri, our yeast and
bakery ingredients business; ABF Ingredients, our portfolio of
speciality ingredients businesses, also had a strong period. In
Sugar, the adjusting operating profit in the first half was ahead
driven by the Illovo businesses in Zambia and Malawi. However, we
now expect full year profits to decline: adverse weather conditions
damaged the UK beet crop and as a result sugar production was the
lowest seen in decades at British Sugar, severe flooding in
Mozambique caused the significant loss of sugar cane, and adverse
price movements combined with short-term spikes in operating costs
drove losses at Vivergo. Pricing actions became more evident as the
period progressed in Grocery but margins declined. Agriculture
sales rose significantly but margins declined given that market
conditions for animal feed in our major markets of the UK and China
remained tough.
A key feature of Primark trading in the first half was the
increase in footfall and unit volumes which compared to volume
declines seen elsewhere in retailing in this environment. We were
pleased with the recovery in Primark sales from those of the second
half of the last financial year and a 10% increase in like-for-like
sales over last year.
Late last summer the US dollar strengthened significantly
against sterling and the euro, and energy costs were both high and
highly volatile. Against this backdrop, and the likelihood of much
reduced disposable incomes for our customers, we decided to
implement only moderate price increases on a selection of our
ranges for this financial year. Given the evolution of the
inflation environment, we believe that this decision was not only
in the best interests of Primark customers but also supported our
core proposition of everyday affordability and price leadership.
This pricing did not recover the input cost inflation in the first
half, and margins declined in the period as a result. Margins in
the second half of this financial year are now expected to be
similar to that achieved in the first half of this year, and this
increases our confidence in returning the Primark margin to above
10%.
Today we are announcing our plans to establish a significant
presence for Primark in southern states of the US. In the coming
months we expect to sign leases for stores in states across the
region, including locations in Texas. We are locating our second US
distribution centre in Jacksonville Florida and construction is
progressing well.
We are committed to our Primark business in Germany and have
been developing plans with some restructuring to return the
existing estate to long-term profitability and we will also open
new stores.
We increased our focus on investment and innovation in the Group
and the increase in capital expenditure is one reflection of this.
This was achieved despite the intensity of work required to
successfully manage high inflation. We are well placed to grow both
sales and profits sustainably in the medium term.
George Weston
Chief Executive
Operating review
The table below shows the results by segment on a reported
basis.
Adjusted operating
Revenue 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
2023 2022 2022 2023 2022 2022
GBPm GBPm GBPm GBPm GBPm GBPm
------------------- -------- -------- ------------- --------- --------- -------------
Operating segments
Grocery 2,105 1,821 3,735 173 175 399
Sugar 1,189 914 2,016 86 77 162
Agriculture 950 809 1,722 12 15 47
Ingredients 1,088 798 1,827 102 63 159
------------------- -------- -------- ------------- --------- --------- -------------
Food 5,332 4,342 9,300 373 330 767
Retail 4,228 3,540 7,697 351 414 756
Central - - - (40) (38) (88)
------------------- -------- -------- ------------- --------- --------- -------------
9,560 7,882 16,997 684 706 1,435
------------------- -------- -------- ------------- --------- --------- -------------
References to changes in revenue and adjusted operating profit
in the following segmental commentary are based on constant
currency.
Grocery
Actual Constant
2023 2022 currency currency
=============================== ===== ===== ========= ==========
Revenue GBPm 2,105 1,821 +16% +10%
=============================== ===== ===== ========= ==========
Adjusted operating profit GBPm 173 175 * 1% * 10%
=============================== ===== ===== ========= ==========
Revenue in the first half was 10% higher than the same period
last year with price increases building during the period to
recover cost inflation. Adjusted operating profit was slightly
lower reflecting the decline in margin from 9.6% in the same period
last year to 8.2% this year, which reflected the lag between input
cost inflation and the time taken for the agreement and
implementation of pricing. In the second half, we will benefit from
the full effect of the pricing taken in the first half, and from
further pricing implemented in the period. As a consequence we
expect the decline in the adjusted operating profit margin,
compared to the second half margin of the prior year, to be
substantially less than the 1.4 ppt decline in the first half. For
the full year, we now expect adjusted operating profit to be
broadly in line with the previous year.
Half year sales at Twinings Ovaltine were broadly in line with
the same period last year. Marketing investment was increased in
the period and we expect an increase for the full year. Twinings
revenues were ahead driven by good performances in the US and
Australia and continued growth of Wellness teas. Although Ovaltine
performed well in Brazil and Switzerland, revenues were held back
by the disruption to imports into Myanmar, lower sales of powder
products in Thailand, and lower foodservice sales in China.
Allied Bakeries secured significant pricing in the period and
the results improved. The trajectory of this performance is
encouraging with the financial performance improving through the
period and, as a consequence, a bigger improvement is expected in
the second half. We continue to work on improvements to the
financial performance of this business. Early indications are that
the significant brand investment made in the period by Jordans
Dorset Ryvita is having a positive impact. Pricing at AB World
Foods and Westmill led to higher sales.
Revenue growth was strong at ACH, our edible oils and bakery
ingredients business in the US, driven by both Mazola and
Fleischmann's improving on their strong market share positions, and
pricing taken to recover inflationary costs. Stratas, our joint
venture in the US that supplies oils to the foodservice,
ingredients and retail markets, continued to trade very
strongly.
George Weston Foods in Australia delivered strong sales growth
led by pricing. Our Tip Top baking business traded well but faced a
number of inflationary pressures, specifically very high prices for
wheat used in bread due to a wet Australian harvest. Don KRC, our
meat business, delivered some recovery in its adjusted operating
profit due to good sales growth and production increased as labour
availability improved.
Sugar
Actual Constant
2023 2022 currency currency
=============================== ===== ==== ========= =========
Revenue GBPm 1,189 914 +30% +27%
=============================== ===== ==== ========= =========
Adjusted operating profit GBPm 86 77 +12% +5%
=============================== ===== ==== ========= =========
AB Sugar revenues were 27% ahead of the same period last year
driven by higher sugar and co-product prices, higher Illovo
volumes, and the resumption of Vivergo bioethanol sales. The
contribution from the higher sales was partly offset by higher
costs for beet, cane and energy, increased processing costs in
British Sugar, and a substantial trading loss at Vivergo. We also
recognised a GBP10m charge for extensive flood damage to the cane
estate in Mozambique following cyclone Freddy. Taking all this into
account, adjusted operating profit was 5% ahead of the same period
last year.
European and world sugar prices improved further, and remain
high, with estimates for EU sugar production in the 2022/23
campaign showing a reduction of some 10% compared to last year as a
result of a smaller growing area and lower beet yields caused by
adverse weather. Our UK and Spanish businesses have largely
contracted sales for this financial year at much improved
prices.
UK sugar production for the 2022/23 campaign was 0.74 million
tonnes, down from 1.03 million tonnes in the previous year. This
was an exceptionally low level of production and was caused by both
low beet yields and sugar content following an unusually adverse
sequence of weather events over the summer and winter. Energy costs
and beet costs were higher in the period compared to last year.
Looking to the second half, as a consequence of the production
shortfall, British Sugar has secured alternative sources of supply
and continues to work with its customers to ensure continuity of
supply, and profitability will be significantly impacted as a
result.
Vivergo incurred substantial losses in the first half as a
result of higher energy and wheat costs, and lower bioethanol
prices than expected combined with short-term spikes in operating
costs. Losses are expected to reduce in the second half with more
consistency in operating costs and as bioethanol prices
improve.
Sugar production at Azucarera is expected to be some 11% lower
than last year with higher margin beet sugar production running at
similar levels to last year while volumes of lower margin cane raws
declined. In this first half, the benefit of higher sugar prices
was more than offset by higher energy costs, but we expect an
improvement in profitability in the second half of the financial
year.
Financial results at Illovo for the period were much higher than
in the same period a year ago. Sales were much improved with higher
sugar prices and volumes, higher sugar production in Malawi and
Zambia in particular, strong sales of co-products, and an improved
performance in Eswatini compared to volumes affected by strike
action last year. Profit was also ahead despite the charge taken
for flood damage to our cane estates in Mozambique and a levy
required by the South African Sugar Association reflecting the
early-stage insolvency of some of the other market participants in
the period. Construction of the new production and packaging plant
at Kilombero, in Tanzania, is progressing and, when operational,
will enable us to supply more domestic demand from domestic
production, so displacing imports.
AB Sugar China trading performance was below the same period
last year mainly as a result of lower sugar prices which resulted
from a reduction in demand due to the temporary closure of
hospitality venues caused by pandemic-related restrictions.
Agriculture
Actual Constant
2023 2022 currency currency
=============================== ==== ==== ========== ==========
Revenue GBPm 950 809 +17% +15%
=============================== ==== ==== ========== ==========
Adjusted operating profit GBPm 12 15 * 20% * 25%
=============================== ==== ==== ========== ==========
Revenue in the period was up significantly and reflected pricing
taken to recover higher input costs partially offset by lower
volumes of compound feed in the UK and China where market
conditions continue to remain challenging. Lower demand for UK
compound feed volumes was the result of avian influenza and a
reduction in the UK pig herd. Compound feed volumes in China were
also lower as a result of low livestock prices and localised
disruption from the pandemic. Sales at AB Vista, our enzymes
business, were broadly in line with last year but increased raw
material and freight costs led to lower margins. Frontier
benefitted from good grain trading and higher demand for
fertiliser. The decline in adjusted operating profit in the first
half was driven mainly by lower profit in our UK and Chinese
compound feed businesses.
Ingredients
Actual Constant
2023 2022 currency currency
=============================== ===== ==== ========= =========
Revenue GBPm 1,088 798 +36% +27%
=============================== ===== ==== ========= =========
Adjusted operating profit GBPm 102 63 +62% +48%
=============================== ===== ==== ========= =========
Sales and adjusted operating profit rose significantly in the
period with a very strong performance by AB Mauri and ABF
Ingredients performing well.
AB Mauri, our yeast and bakery ingredients business, saw sales
rise strongly with successful actions on pricing and resilient
volumes. All major regions, and North America in particular, showed
good sales increases with the exception of China where demand was
lower due to pandemic-related disruption. Adjusted operating profit
grew significantly as a result. Looking ahead, construction of a
new yeast plant in northern India has begun and plans to expand
capacity in Brazil are on schedule for completion this year. AB
Biotek, which develops high value yeast strains for non-baking
applications, is now benefitting from additional capability and
innovation with the start-up earlier this month of our new
specialty yeast plant in Hull in the UK.
ABF Ingredients, our portfolio of specialty ingredients
businesses, delivered good organic revenue and profit growth and
also benefitted from the acquisition last year of Fytexia Group.
Ohly, Abitec and SPI Pharma, our specialists in yeast extracts,
lipids and pharmaceutical ingredients respectively, all delivered
significant revenue growth, while we had good revenue growth at AB
Enzymes and PGPI, our food and feed enzymes business and our
extruded proteins business respectively. Fytexia continues to
perform well.
Retail
Actual Constant
2023 2022 currency currency
=============================== ===== ===== ========== ==========
Revenue GBPm 4,228 3,540 +19% +17%
=============================== ===== ===== ========== ==========
Adjusted operating profit GBPm 351 414 * 15% * 16%
=============================== ===== ===== ========== ==========
Total Primark sales for the first half were 17% ahead of last
year at constant currency with increases in all our markets.
Trading was significantly better than expected driven by good
footfall and the appeal of our proposition to new and existing
customers. This represented a material improvement in both the UK
and Europe on the second half of the last financial year. This
financial year began with good sales in September, followed by
softer trading in a warm October, succeeded by better trading in
November and December which culminated in two record sales weeks in
the run-up to Christmas. Trading in the New Year started very
strongly with a slight softening in February against harder
year-on-year comparators. More recently we have seen a positive
reaction to our spring and summer ranges.
Like-for-like sales were 10% ahead of last year driven by higher
average selling prices and higher unit volumes. Footfall increased
in both the UK and in Europe. This was against a comparative period
which had some disruption from COVID-19. Like-for-like sales for
the half year returned to levels broadly in line with pre-COVID.
The increase in our weighted average retail selling space was more
meaningful in the period, at 3.4%, and follows the acceleration of
our store opening programme. All the new stores opened in the
period are performing well with some exceptionally high sales
densities.
The benefit of stronger sales than expected drove operating
profit margin up to 8.3%, which was higher than we expected at the
start of our financial year. However, the first half margin last
year was 11.7%. The margin reduction from last year was a result of
our decision not to fully recover all the inflation in input costs.
The cost of bought-in goods increased due to the significant
strengthening of the US dollar against sterling and the euro, and
higher freight rates. We also experienced inflation in labour and
energy costs.
In the UK, total sales were 15% ahead of the same period a year
ago driven by like-for-like sales growth of 15%. Footfall
strengthened on high streets and in retail parks and was
significantly better in our destination city stores which are now
busy as tourists and office workers have returned. The strength of
these sales is evidenced by the outperformance of Primark's share
of the total UK clothing, footwear and accessories market by value,
including online sales. The latest 12-week data to 5 March 2023,
showed Primark's market share increased from 6.2% last year to 6.5%
this year.
Total sales in Europe, excluding the UK, were 18% higher, with
an increase in like-for-like sales of 8% with higher average
selling prices and footfall. The like-for-like performance was
driven by much improved performances in our large markets of Spain,
France and Germany. In Spain, Primark increased its market share in
the period from November to the end of January with sales 14%
higher against overall market growth of 5%. We opened 10 stores in
Europe in the first half, all of which have shown very strong and
sustained customer demand, in particular Bucharest in Romania, and
Bari and Caserta Naples in southern Italy. We also added more than
100,000 sq ft of retail selling space in France, with Saint Etienne
performing particularly well. This extensive store opening
programme delivered a 6% year-on-year increase in weighted average
retail selling space.
In Germany, like-for-like sales recovered strongly in this first
half, increasing 13% year-on-year, but sales densities across the
estate remain too low as a result of the size of some existing
stores and their proximity to one another. We have been developing
our plans to return our business to long-term profitability and
have announced today a restructuring and growth plan. We intend to
optimise the retail selling space of some stores and to reduce the
number of stores which stood at 31 at the end of the period. We
closed our store in Weiterstadt in the half year and our store in
Steglitz Berlin after the period end. We are consulting on our
intention to close a further four stores: Gelsenkirchen, Frankfurt
Nord-West-Zentrum, Kaiserslautern and Krefeld. We recently reduced
the size of our Hannover store and we are consulting on plans to
reduce in size more stores in due course.
Primark is committed to the German market where it has a
substantial and loyal customer base. A large proportion of German
shoppers do not live within a convenient distance of a Primark
store and so we will invest in new stores in locations where there
is little risk of cannibalisation. The new stores will be smaller
than the average in Primark's estate in Germany and the merchandise
will be selected to appeal to local customer demand. Our
proposition remains attractive to customers and we believe the
enhanced functionality of our new website will benefit sales.
In the US total sales were 11% higher with good trading across
the 16 stores. Prior year comparatives were particularly strong
with consumer spending supported by COVID-related government
stimulus. We opened three new stores in the period with another
five stores opening in the second half: Buffalo, and Albany New
York, Baltimore Maryland, and two further stores in the wider New
York metro area - Green Acres Long Island and Jersey Gardens
Newark. We also signed in the period two leases for new stores due
to open beyond this financial year: Florida Mall Orlando, and
Jersey City New Jersey. In the coming months we expect to sign
leases for stores across southern states of the US, including
locations in Texas. We are locating our second US distribution
centre in Jacksonville Florida and construction is progressing
well.
Trading across the estate benefitted from higher levels of stock
and this better availability of stock compared to last year drove
incremental sales through investment in high demand seasonal
product. Our cold weather and Christmas collections, including the
"Snuddie" and velvet plush leggings, drove good sales growth in the
first quarter. Since the Christmas period, holiday and summer
categories have had exceptional growth in sales of beachwear and
luggage in particular. Early reaction to our spring and summer
ranges has been positive. Our collaborations with UK and Spanish
brand ambassadors continue to perform well across all markets.
Health and beauty continued its strong sales performance with
expanded product ranges driving strong growth. More recent
standalone collections such as the Edit, our more premium
essentials range for women, continue to grow and attract new
customers.
The Primark Cares sustainability strategy was launched in
September 2021. We published in November 2022 the first of our
annual Sustainability and Ethics Progress Reports. Some 50% of
clothing unit sales in this first half contained recycled or more
sustainably sourced materials, an increase from 39% over the same
period last year. We have now trained over 250,000 farmers in more
sustainable farming practices under the Primark Sustainable Cotton
Programme. We are well placed to reach our target to train some
275,000 farmers by the end of this calendar year and we now plan to
expand the Programme beyond Bangladesh, India, Pakistan and China
to farmers in Turkey. Some 38% of the cotton in our clothes sold in
the first half is now organic, recycled or sourced from this
Programme, up from 33% in the same period last year. After the
period end we launched our first circular product collection
comprising 35 pieces in menswear, womenswear and kidswear.
Primark's digital development continues. Our much-improved
website was launched in the UK a year ago followed by the Republic
of Ireland before Christmas, Germany and Spain after the half year
end, with Italy, US and France the next to follow. All remaining
markets will follow over the summer. We have seen a significant
increase in customer traffic where the new website has been
introduced, and importantly the stock checker facility is being
used by a significant number of customers. We believe that the
website has contributed to like-for-like growth in the relevant
markets. Our Click and Collect trial of children's products in 25
stores in the north of England and Wales was launched in late
November and continues with encouraging results. We have decided to
extend this trial to 32 stores which are broadly within the M25
region by late summer.
Retail selling space increased by 0.5 million sq ft since the
last financial year end and on 4 March 2023 we were trading from
419 stores and 17.8 million sq ft of selling space. Thirteen new
stores were opened in the period: our first store in Romania,
Primark's 15th market, three in the US, three in Italy, three in
France, two in Poland, and one in Northern Ireland. We fully
reopened our Bank Buildings store in the heart of Belfast, which
was damaged by fire in 2018, and closed our temporary store in
Donegal Place. We extended our stores at Sawgrass Mills, Florida,
and Galway Eyre Square, Republic of Ireland, and closed our store
in Weiterstadt, Germany. After the period end we closed one of our
stores in Berlin. We are on track to deliver a net increase in
retail selling space of some 1 million sq ft in the financial
year.
Principal risks and uncertainties
Managing our risks
Our approach to risk management
The delivery of our strategic objectives is dependent on
effective risk management. There are a number of potential risks
and uncertainties which could have a material impact on the Group's
performance and could cause actual results to differ materially
from expected and historical results. Details of the principal
risks facing the Group's businesses at an operational level were
included on pages 94 to 101 of the Group's Annual Report and
Accounts for the 52 weeks ended 17 September 2022, as part of the
Strategic Report.
We have reassessed our principal risks for the remaining six
months of the financial year as the world continues to face
uncertainties as a result of the war between Russia and Ukraine.
Whilst supply chain volatility has reduced and energy prices and
sea freight costs have stabilised, uncertainty and instability
continue to be significant risks and there are inflationary
pressures on raw materials and some key commodities. We remain
cognisant of the significant impacts that would result from an
escalation in the conflict in Ukraine. Our procurement teams
continue to work closely with suppliers.
Rising interest rates and a slowdown in global growth,
potentially leading to recession in some economies, could
exacerbate debt problems, raise risks of emerging market crises,
and could trigger market instability.
Whilst consumer spending has proven to be more resilient in this
trading period than anticipated at the start of the financial year,
household budgets continue to face real pressures as a result of
high inflation, increased interest rates and general economic
uncertainty. This means that some consumers are having to make
challenging and difficult choices in respect of what they spend and
where they spend it. Whilst we continue to offer safe, nutritious
and affordable food and affordable, quality clothes to our
customers, the full consequences of the current cost of living
crisis remains uncertain. The impact on our businesses will depend
on the extent of government intervention and the duration of any
economic downturns.
Extreme weather conditions have a significant impact on sugar
production. In the UK, adverse weather conditions have resulted in
significantly lower beet yields from the 2022/23 crop. British
Sugar has moved swiftly to secure alternative sources of supply.
Mozambique continues to be impacted by ongoing severe flooding
resulting in significant areas of crops being under water.
Some of our businesses are experiencing challenges in recruiting
and retaining talent with the appropriate skills in pockets of
their operations. Recruitment and talent management and development
continue to be key priorities.
Our businesses remain on high alert to the heightened risk of IT
security breaches and cyber-based attacks. We continue to invest in
monitoring and detection capabilities.
The purchase of merchandise denominated in foreign currencies by
Primark is the most material currency transaction risk for the
Group, although Primark is now bought for this financial year.
Financial markets have generally been less volatile than the same
period last year, which was impacted by the onset of the war in
Ukraine. Market disruption events still remain though and ABF's key
transactional and earnings denominated currencies are subject to
these economic and geo-political events. Sterling is on average
weaker against our portfolio of earnings currencies and the net
impact of this will lead to a small translation gain in the second
half of the year.
The Group purchases a wide range of commodities, including the
consumption of energy, in the ordinary course of business. We
constantly monitor the markets in which we operate and manage
certain of these exposures with fixed price supply contracts,
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.
The Group continues to focus on tightly managing cash flow,
maintaining a very strong level of liquidity and prudently managing
the interest rate and credit risk associated with our significant
gross cash balances.
Going concern
After making enquiries, the directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the
Condensed Consolidated Interim Financial Statements. See note 11 to
the Condensed Consolidated Interim Financial Statements.
Condensed consolidated income statement
for the 24 weeks ended 4 March 2023
52 weeks
ended
========= ==== ======== ========
17 September
24 weeks 24 weeks
ended ended
4 March 5 March
2023 2022 2022
Continuing operations Note GBPm GBPm GBPm
========================================================= ==== ======== ======== ------------
Revenue 1 9,560 7,882 16,997
Operating costs before exceptional items (8,949) (7,237) (15,729)
Exceptional items 2 - - (206)
========================================================= ==== ======== ======== ============
611 645 1,062
Share of profit after tax from joint ventures
and associates 50 37 109
Profits less losses on disposal of non-current
assets 2 4 7
========================================================= ==== ======== ======== ============
Operating profit 663 686 1,178
--------------------------------------------------------- ---- -------- -------- ------------
Adjusted operating profit 684 706 1,435
Profits less losses on disposal of non-current
assets 2 4 7
Amortisation of non-operating intangibles (20) (20) (47)
Acquired inventory fair value adjustments (2) - (5)
Transaction costs (1) (4) (6)
Exceptional items 2 - - (206)
--------------------------------------------------------- ---- ======== ======== ============
Profits less losses on sale and closure of businesses 7 (2) (11) (23)
========================================================= ==== ======== ======== ============
Profit before interest 661 675 1,155
Finance income 22 6 19
Finance expense (59) (50) (111)
Other financial income 20 4 13
========================================================= ==== ======== ======== ============
Profit before taxation 644 635 1,076
Adjusted profit before taxation 667 666 1,356
Profits less losses on disposal of non-current
assets 2 4 7
Amortisation of non-operating intangibles (20) (20) (47)
Acquired inventory fair value adjustments (2) - (5)
Transaction costs (1) (4) (6)
Exceptional items 2 - - (206)
Profits less losses on sale and closure of businesses 7 (2) (11) (23)
========================================================= ==== ======== ======== ============
Taxation UK (excluding tax on exceptional items) (28) (29) (50)
UK ( exceptional items) - - 3
Overseas (excluding tax on exceptional items) (132) (122) (243)
Overseas ( exceptional items) 58 - (66)
======================================================== ==== ======== ======== ============
3 (102) (151) (356)
========================================================= ==== ======== ======== ============
Profit for the period 542 484 720
========================================================= ==== ======== ======== ============
Attributable to
Equity shareholders 527 476 700
Non-controlling interests 15 8 20
========================================================= ==== ======== ======== ============
Profit for the period 542 484 720
========================================================= ==== ======== ======== ============
Basic and diluted earnings per ordinary share
(pence) 4 67.0 60.3 88.6
Dividends per share paid and proposed for the
period (pence) 5 14.2 13.8 43.7
Condensed consolidated statement of comprehensive income
for the 24 weeks ended 4 March 2023
52 weeks
=========================================================== ======== ========
ended
===========================================================
17 September
24 weeks 24 weeks
ended ended
4 March 5 March
2023 2022 2022
GBPm GBPm GBPm
=========================================================== ======== ======== ------------
Profit for the period recognised in the income statement 542 484 720
Other comprehensive income
Remeasurements of defined benefit schemes 18 300 821
Deferred tax associated with defined benefit schemes (2) (74) (198)
===========================================================
Items that will not be reclassified to profit or loss 16 226 623
Effect of movements in foreign exchange (179) 5 440
Net gain/(loss) on hedge of net investment in foreign
subsidiaries 1 5 (1)
Net gain on other investments held at fair value through
other comprehensive income - - 4
Movement in cash flow hedging position (271) 72 419
Deferred tax associated with movement in cash flow
hedging position 62 (3) (28)
Deferred tax associated with movement in other investments - - (1)
Share of other comprehensive (loss)/income of joint
ventures and associates (6) 7 28
Effect of hyperinflationary economies 26 10 46
=========================================================== ======== ======== ============
Items that are or may be subsequently reclassified
to profit or loss (367) 96 907
Other comprehensive (loss)/income for the period (351) 322 1,530
Total comprehensive income for the period 191 806 2,250
=========================================================== ======== ======== ============
Attributable to
Equity shareholders 191 799 2,219
Non-controlling interests - 7 31
=========================================================== ======== ======== ============
Total comprehensive income for the period 191 806 2,250
=========================================================== ======== ======== ============
Condensed consolidated balance sheet
at 4 March 2023
4 March 17 September
================================================= ==== =======
5 March
2023 2022 2022
Note GBPm GBPm GBPm
================================================= ==== ------- ======= ============
Non-current assets
Intangible assets 1,901 1,756 1,868
Property, plant and equipment 5,702 5,308 5,599
Right-of-use assets 2,386 2,511 2,456
Investments in joint ventures 297 271 301
Investments in associates 91 69 85
Employee benefits assets 10 1,440 942 1,393
Income tax 23 23 23
Deferred tax assets 204 191 158
Other receivables 58 53 58
================================================= ==== ======= ======= ============
Total non-current assets 12,102 11,124 11,941
================================================= ==== ======= ======= ============
Current assets
Assets classified as held for sale 6 92 - 45
Inventories 3,601 2,525 3,259
Biological assets 129 115 105
Trade and other receivables 1,824 1,507 1,758
Derivative assets 92 146 475
Current asset investments 8 3 34 4
Income tax 68 62 67
Cash and cash equivalents 8 1,213 2,190 2,121
================================================= ==== ======= ======= ============
Total current assets 7,022 6,579 7,834
================================================= ==== ======= ======= ============
Total assets 19,124 17,703 19,775
================================================= ==== ======= ======= ============
Current liabilities
Liabilities classified as held for sale 6 (26) - (14)
Lease liabilities 8 (322) (292) (316)
Loans and overdrafts 8 (150) (275) (157)
Trade and other payables (2,892) (2,466) (3,114)
Derivative liabilities (134) (40) (205)
Income tax (140) (152) (160)
Provisions (60) (80) (87)
================================================= ==== ======= ======= ============
Total current liabilities (3,724) (3,305) (4,053)
================================================= ==== ======= ======= ============
Non-current liabilities
Lease liabilities 8 (2,865) (2,849) (2,936)
Loans 8 (480) (473) (480)
Provisions (28) (35) (26)
Deferred tax liabilities (593) (456) (647)
Employee benefits liabilities (77) (145) (79)
================================================= ==== ======= ======= ============
Total non-current liabilities (4,043) (3,958) (4,168)
================================================= ==== ======= ======= ============
Total liabilities (7,767) (7,263) (8,221)
================================================= ==== ======= ======= ============
Net assets 11,357 10,440 11,554
================================================= ==== ======= ======= ============
Equity
Issued capital 45 45 45
Other reserves 38 175 178
Translation reserve 253 (16) 422
Hedging reserve (49) 61 154
Retained earnings 10,970 10,091 10,649
================================================= ==== ======= ======= ============
Total equity attributable to equity shareholders 11,257 10,356 11,448
Non-controlling interests 100 84 106
================================================= ==== ======= ======= ============
Total equity 11,357 10,440 11,554
================================================= ==== ======= ======= ============
Condensed consolidated cash flow statement
for the 24 weeks ended 4 March 2023
52 weeks
ended
================================================== ======== ========
17 September
2022
24 weeks 24 weeks
ended ended
4 March 5 March
2023 2022
Note GBPm GBPm GBPm
======================================================== ======== ======== ------------
Cash flow from operating activities
Profit before taxation 644 635 1,076
Profits less losses on disposal of non-current
assets (2) (4) (7)
Profits less losses on sale and closure of businesses 2 11 23
Transaction costs 1 4 6
Finance income (22) (6) (19)
Finance expense 59 50 111
Other financial income (20) (4) (13)
Share of profit after tax from joint ventures
and associates (50) (37) (109)
Amortisation 39 33 68
Depreciation (including depreciation of right-of-use
assets and non-cash lease adjustments) 386 373 802
Exceptional items - - 206
Acquired inventory fair value adjustments 2 - 5
Effect of hyperinflationary economies 8 2 16
Net change in the fair value of current biological
assets (39) (29) (8)
Share-based payment expense 8 8 19
Pension costs less contributions (2) 3 7
Increase in inventories (437) (376) (953)
Increase in receivables (115) (122) (288)
(Decrease)/increase in payables (151) 46 512
Purchases less sales of current biological assets - - (4)
(Decrease)/increase in provisions (20) 13 7
======================================================== ======== ======== ============
Cash generated from operations 291 600 1,457
Income taxes paid (148) (150) (304)
======================================================== ======== ======== ============
Net cash generated from operating activities 143 450 1,153
======================================================== ======== ======== ============
Cash flow from investing activities
Dividends received from joint ventures and associates 43 45 93
Purchase of property, plant and equipment (444) (272) (680)
Purchase of intangibles (54) (64) (89)
Lease incentives received 12 8 46
Sale of property, plant and equipment 11 10 30
Purchase of subsidiaries, joint ventures and
associates 7 (29) (114) (154)
Sale of subsidiaries, joint ventures and associates 4 - -
Purchase of other investments - - (7)
Interest received 22 4 17
======================================================== ======== ======== ============
Net cash used in investing activities (435) (383) (744)
======================================================== ======== ======== ============
Cash flow from financing activities
Dividends paid to non-controlling interests (5) (6) (8)
Dividends paid to equity shareholders 5 (235) (271) (380)
Interest paid (57) (48) (114)
Payment of lease liabilities 8 (135) (131) (321)
Decrease in short-term loans 8 (11) (80) (12)
Increase in long-term loans 8 - 402 178
Increase/(decrease) in current asset investments 8 1 (1) 30
Share buyback (140) - -
Movement from changes in own shares held (21) (50) (50)
Net cash used in financing activities (603) (185) (677)
======================================================== ======== ======== ============
Net decrease in cash and cash equivalents (895) (118) (268)
Cash and cash equivalents at the beginning of
the period 1,995 2,189 2,189
Effect of movements in foreign exchange (20) 20 74
======================================================== ======== ======== ============
Cash and cash equivalents at the end of the
period 8 1,080 2,091 1,995
================================================== ==== ======== ======== ============
Condensed consolidated statement of changes in equity
for the 24 weeks ended 4 March 2023
Attributable to equity shareholders
============================================================== =============== =======
Issued Other Translation Hedging Retained Non-controlling Total
capital reserves reserve reserve earnings Total interests equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
========================== ======== ========= =========== ======== ========= ======= =============== =======
Balance as at 17 September
2022 45 178 422 154 10,649 11,448 106 11,554
Total comprehensive income
Profit for the period
recognised
in the income statement - - - - 527 527 15 542
Remeasurements of defined
benefit
schemes - - - - 18 18 - 18
Deferred tax associated
with defined
benefit schemes - - - - (2) (2) - (2)
========================== ======== ========= =========== ======== ========= ======= =============== =======
Items that will not be
reclassified
to profit or loss - - - - 16 16 - 16
Effect of movements in
foreign exchange - - (164) - - (164) (15) (179)
Net gain on hedge of net
investment
in foreign subsidiaries - - 1 - - 1 - 1
Movement in cash flow
hedging position - - - (271) - (271) - (271)
Deferred tax associated
with movement
in cash flow hedging
position - - - 62 - 62 - 62
Share of other
comprehensive income
of joint ventures and
associates - - (6) - - (6) - (6)
Effect of
hyperinflationary
economies - - - - 26 26 - 26
-------------------------- -------- --------- ----------- -------- --------- ------- --------------- -------
Items that are or may be
reclassified
to profit or loss - - (169) (209) 26 (352) (15) (367)
Other comprehensive income - - (169) (209) 42 (336) (15) (351)
Total comprehensive income - - (169) (209) 569 191 - 191
-------------------------- -------- --------- ----------- -------- --------- ------- --------------- -------
Inventory cash flow hedge
movements
Losses transferred to cost
of inventory - - - 6 - 6 - 6
-------------------------- -------- --------- ----------- -------- --------- ------- --------------- -------
Total inventory cash flow
hedge
movements - - - 6 - 6 - 6
-------------------------- -------- --------- ----------- -------- --------- ------- --------------- -------
Transactions with owners
Dividends paid to equity
shareholders 5 - - - - (235) (235) - (235)
Net movement in own shares
held - - - - (13) (13) - (13)
Share buyback - (140) - - - (140) - (140)
Dividends paid to
non-controlling
interests - - - - - - (6) (6)
Total transactions with
owners - (140) - - (248) (388) (6) (394)
========================== ======== ========= =========== ======== ========= ======= =============== =======
Balance as at 4 March 2023 45 38 253 (49) 10,970 11,2576 100 11,357
-------------------------- -------- --------- ----------- -------- --------- ------- --------------- -------
Balance as at 18 September
2021 45 175 (34) 43 9,692 9,921 83 10,004
Total comprehensive income
Profit for the period
recognised
in the income statement - - - - 476 476 8 484
Remeasurements of defined
benefit
schemes - - - - 300 300 - 300
Deferred tax associated
with defined
benefit schemes - - - - (74) (74) - (74)
========================== ======== ========= =========== ======== ========= ======= =============== =======
Items that will not be
reclassified
to profit or loss - - - - 226 226 - 226
Effect of movements in
foreign exchange - - 6 - - 6 (1) 5
Net gain on hedge of net
investment
in foreign subsidiaries - - 5 - - 5 - 5
Movement in cash flow
hedging position - - - 72 - 72 - 72
Deferred tax associated
with movement
in cash flow hedging
position - - - (3) - (3) - (3)
Share of other
comprehensive income
of joint ventures and
associates - - 7 - - 7 - 7
Effect of
hyperinflationary
economies - - - - 10 10 - 10
========================== ======== ========= =========== ======== ========= ======= =============== =======
Items that are or may be
subsequently
reclassified to profit or
loss - - 18 69 10 97 (1) 96
Other comprehensive income - - 18 69 236 323 (1) 322
Total comprehensive income - - 18 69 712 799 7 806
========================== ======== ========= =========== ======== ========= ======= =============== =======
Inventory cash flow hedge
movements
Gains transferred to cost
of inventory - - - (51) - (51) - (51)
========================== ======== ========= =========== ======== ========= ======= =============== =======
Total inventory cash flow
hedge
movements - - - (51) - (51) - (51)
========================== ======== ========= =========== ======== ========= ======= =============== =======
Transactions with owners
Dividends paid to equity
shareholders 5 - - - - (271) (271) - (271)
Net movement in own shares
held - - - - (42) (42) - (42)
Dividends paid to
non-controlling
interests - - - - - - (6) (6)
========================== ======== ========= =========== ======== ========= ======= =============== =======
Total transactions with
owners - - - - (313) (313) (6) (319)
========================== ======== ========= =========== ======== ========= ======= =============== =======
Balance as at 5 March 2022 45 175 (16) 61 10,091 10,356 84 10,440
========================== ======== ========= =========== ======== ========= ======= =============== =======
Condensed consolidated statement of changes in equity
(continued)
for the 24 weeks ended 4 March 2023
Attributable to equity shareholders
============================================================= =============== =======
Issued Other Translation Hedging Retained Non-controlling Total
capital reserves reserve reserve earnings Total interests equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
=========================== ======== ========= =========== ======== ========= ====== =============== =======
Balance as at 18 September
2021 45 175 (34) 43 9,692 9,921 83 10,004
Total comprehensive income
Profit for the period
recognised in
the income statement - - - - 700 700 20 720
Remeasurements of defined
benefit
schemes - - - - 821 821 - 821
Deferred tax associated
with defined
benefit schemes - - - - (198) (198) - (198)
=========================== ======== ========= =========== ======== ========= ====== =============== =======
Items that will not be
reclassified
to profit or loss - - - - 623 623 - 623
Effect of movements in
foreign exchange - - 429 - - 429 11 440
Net loss on hedge of net
investment
in foreign subsidiaries - - (1) - - (1) - (1)
Net gain on other
investments held
at fair value through
other comprehensive
i - 4 - - - 4 - 4
income
Movement in cash flow
hedging position - - - 419 - 419 - 419
Deferred tax associated
with movement
in cash flow hedging
position - - - (28) - (28) - (28)
Deferred tax associated
with movement
in other investment - (1) - - - (1) - (1)
Share of other
comprehensive income
of joint ventures and
associates - - 28 - - 28 - 28
Effect of hyperinflationary
economies - - - - 46 46 - 46
=========================== ======== ========= =========== ======== ========= ====== =============== =======
Items that are or may be
subsequently
reclassified to profit or
loss - 3 456 391 46 896 11 907
Other comprehensive income - 3 456 391 669 1,519 11 1,530
Total comprehensive income - 3 456 391 1,369 2,219 31 2,250
=========================== ======== ========= =========== ======== ========= ====== =============== =======
Inventory cash flow hedge
movements
Gains transferred to cost
of inventory - - - (280) - (280) - (280)
=========================== ======== ========= =========== ======== ========= ====== =============== =======
Total inventory cash flow
hedge movements - - - (280) - (280) - (280)
=========================== ======== ========= =========== ======== ========= ====== =============== =======
Transactions with owners
Dividends paid to equity
shareholders 5 - - - - (380) (380) - (380)
Net movement in own shares
held - - - - (31) (31) - (31)
Deferred tax associated
with share-based
payments - - - - (1) (1) - (1)
Dividends paid to
non-controlling
interests - - - - - - (8) (8)
=========================== ======== ========= =========== ======== ========= ====== =============== =======
Total transactions with
owners - - - - (412) (412) (8) (420)
=========================== ======== ========= =========== ======== ========= ====== =============== =======
Balance as at 17 September
2022 45 178 422 154 10,649 11,448 106 11,554
=========================== ======== ========= =========== ======== ========= ====== =============== =======
1. Operating segments
The Group has five operating segments. 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, income tax
assets, deferred tax assets, and all current assets except cash and
cash equivalents, current asset investments and income tax assets.
Segment liabilities comprise trade and other payables, derivative
liabilities, provisions and lease liabilities.
Segment results, assets and liabilities include items directly
attributable to a segment as well as those that can be allocated on
a reasonable basis. Unallocated items comprise mainly corporate
assets and expenses, cash, borrowings, employee benefits balances
and current and deferred tax balances.
Segment non-current asset additions are the total cost incurred
during the period to acquire segment assets that are expected to be
used for more than one year, comprising property, plant and
equipment, right-of-use assets, operating intangibles and
biological assets.
Businesses disposed are shown separately and comparatives have
been re-presented for businesses sold or closed during the
period.
The Group is comprised of the following operating segments:
Grocery
The manufacture of grocery products, including hot beverages,
sugar and sweeteners, vegetable oils, balsamic vinegars, bread and
baked goods, cereals, ethnic foods, and meat products, which are
sold to retail, wholesale and foodservice businesses.
Sugar
The growing and processing of sugar beet and sugar cane for sale
to industrial users and to Silver Spoon, which is included in the
Grocery segment.
Agriculture
The manufacture of animal feeds and the provision of other
products for the agriculture sector.
Ingredients
The manufacture of bakers' yeast, bakery ingredients, enzymes,
lipids, yeast extracts and cereal specialities.
Retail
Buying and merchandising value clothing and accessories through
the Primark and Penneys retail chains.
Geographical information
In addition to the required disclosure for operating segments,
disclosure is also given of certain geographical information about
the Group's operations, based on the geographical groupings: United
Kingdom; Europe & Africa; The Americas; and Asia Pacific.
Revenues are shown by reference to the geographical location of
customers. Profits are shown by reference to the geographical
location of the businesses. Segment assets are based on the
geographical location of the assets.
Revenue Adjusted operating profit
========================= ================================ ================================
52 weeks 52 weeks
========================= ======== ======== ======== ========
ended ended
17 September 17 September
2022 2022
24 weeks 24 weeks 24 weeks 24 weeks
ended ended ended ended
4 March 5 March 4 March 5 March
2023 2022 2023 2022
GBPm GBPm GBPm GBPm GBPm GBPm
========================= ======== ======== ------------ ======== ======== ============
Operating segments
Grocery 2,105 1,821 3,735 173 175 399
Sugar 1,189 914 2,016 86 77 162
Agriculture 950 809 1,722 12 15 47
Ingredients 1,088 798 1,827 102 63 159
Retail 4,228 3,540 7,697 351 414 756
Central - - - (40) (38) (88)
========================= ======== ======== ============ ======== ======== ============
9,560 7,882 16,997 684 706 1,435
Geographical information
United Kingdom 3,590 2,951 6,378 261 288 533
Europe & Africa 3,508 2,902 6,291 235 255 482
The Americas 1,219 919 2,028 160 107 279
Asia Pacific 1,243 1,110 2,300 28 56 141
========================= ======== ======== ============ ======== ======== ============
9,560 7,882 16,997 684 706 1,435
========================= ======== ======== ============ ======== ======== ============
Operating segments for the 24 weeks ended 4 March 2023
Grocery Sugar Agriculture Ingredients Retail Central Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------ ------- ----- ----------- ----------- ------- ------------ -------
Revenue from continuing businesses 2,117 1,260 953 1,194 4,228 (192) 9,560
Internal revenue (12) (71) (3) (106) - 192 -
------------------------------------------ ------- ----- ----------- ----------- ------- ------------ -------
Revenue from external customers 2,105 1,189 950 1,088 4,228 - 9,560
------------------------------------------ ------- ----- ----------- ----------- ------- ------------ -------
Adjusted operating profit before
joint ventures and associates 141 82 8 91 351 (40) 633
Share of profit after tax from
joint ventures and associates 32 4 4 11 - - 51
------------------------------------------
Adjusted operating profit 173 86 12 102 351 (40) 684
Finance income 22 22
Finance expense (1) (1) - - (39) (18) (59)
Other financial income 20 20
Adjusted profit before taxation 172 85 12 102 312 (16) 667
Profits less losses on disposal
of non-current assets 1 - - - - 1 2
Amortisation of non-operating intangibles (11) - (2) (7) - - (20)
Acquired inventory fair value adjustments - - (2) - - - (2)
Transaction costs - - (1) - - - (1)
Profits less losses on sale and
closure of businesses - (6) - 4 - - (2)
------------------------------------------ ------- ----- ----------- ----------- ------- ------------ -------
Profit before taxation 162 79 7 99 312 (15) 644
Taxation (102) (102)
------------------------------------------ ------- ----- ----------- ----------- ------- ------------ -------
Profit for the period 162 79 7 99 312 (117) 542
------------------------------------------ ------- ----- ----------- ----------- ------- ------------ -------
Segment assets (excluding joint
ventures and associates) 2,866 2,509 643 2,113 7,501 147 15,779
Investments in joint ventures and
associates 52 48 147 141 - - 388
------------------------------------------ ------- ----- ----------- ----------- ------- ------------ -------
Segment assets 2,918 2,557 790 2,254 7,501 147 16,167
Cash and cash equivalents 1,213 1,213
Current asset investments 3 3
Income tax 91 91
Deferred tax assets 210 210
Employee benefits assets 1,440 1,440
Segment liabilities (696) (670) (190) (391) (4,193) (187) (6,327)
Loans and overdrafts (630) (630)
Income tax (140) (140)
Deferred tax liabilities (593) (593)
Employee benefits liabilities (77) (77)
------------------------------------------ ------- ----- ----------- ----------- ------- ------------ -------
Net assets 2,222 1,887 600 1,863 3,308 1,477 11,357
------------------------------------------ ------- ----- ----------- ----------- ------- ------------ -------
Non-current asset additions 67 131 11 86 282 2 579
------------------------------------------ ------- ----- ----------- ----------- ------- ------------ -------
Depreciation and non-cash lease
adjustments (57) (47) (9) (30) (239) (4) (386)
------------------------------------------ ------- ----- ----------- ----------- ------- ------------ -------
Amortisation (13) (1) (3) (7) (15) - (39)
------------------------------------------ ------- ----- ----------- ----------- ------- ------------ -------
Operating segments for the 24 weeks ended 5 March 2022
Grocery Sugar Agriculture Ingredients Retail Central Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Revenue from continuing businesses 1,822 950 810 878 3,540 (118) 7,882
Internal revenue (1) (36) (1) (80) - 118 -
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Revenue from external customers 1,821 914 809 798 3,540 - 7,882
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Adjusted operating profit before
joint ventures and associates 150 75 13 54 414 (38) 668
Share of profit after tax from
joint ventures and associates 25 2 2 9 - - 38
Adjusted operating profit 175 77 15 63 414 (38) 706
Finance income 6 6
Finance expense (1) (1) - - (35) (13) (50)
Other financial income 4 4
Adjusted profit before taxation 174 76 15 63 379 (41) 666
Profits less losses on disposal
of non-current assets 3 - - - - 1 4
Amortisation of non-operating intangibles (15) - - (5) - - (20)
Transaction costs (1) - - (3) - - (4)
Profits less losses on sale and
closure of businesses - - - (11) - - (11)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Profit before taxation 161 76 15 44 379 (40) 635
Taxation (151) (151)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Profit for the period 161 76 15 44 379 (191) 484
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Segment assets (excluding joint
ventures and associates) 2,611 2,099 519 1,722 6,805 165 13,921
Investments in joint ventures and
associates 37 32 141 130 - - 340
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Segment assets 2,648 2,131 660 1,852 6,805 165 14,261
Cash and cash equivalents 2,190 2,190
Current asset investments 34 34
Income tax 85 85
Deferred tax assets 191 191
Employee benefits assets 942 942
Segment liabilities (649) (461) (177) (349) (3,906) (220) (5,762)
Loans and overdrafts (748) (748)
Income tax (152) (152)
Deferred tax liabilities (456) (456)
Employee benefits liabilities (145) (145)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Net assets 1,999 1,670 483 1,503 2,899 1,886 10,440
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Non-current asset additions 55 120 14 73 142 1 405
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Depreciation and non-cash lease
adjustments (52) (42) (8) (26) (240) (5) (373)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Amortisation (20) (1) (1) (6) (5) - (33)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Impairment of property, plant,
equipment and right-of-use assets
on sale - - - (11) - - (11)
------- ----- ----------- ----------- ------- ------- -------
and closure of businesses
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Operating segments for the 52 weeks ended 17 September 2022
Grocery Sugar Agriculture Ingredients Retail Central Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Revenue from continuing businesses 3,736 2,097 1,728 1,996 7,697 (257) 16,997
Internal revenue (1) (81) (6) (169) - 257 -
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Revenue from external customers 3,735 2,016 1,722 1,827 7,697 - 16,997
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Adjusted operating profit before
joint ventures and associates 328 154 31 142 756 (88) 1,323
Share of profit after tax from
joint ventures and associates 71 8 16 17 - - 112
========================================== ======= ===== =========== =========== ======= ======= =======
Adjusted operating profit 399 162 47 159 756 (88) 1,435
Finance income 19 19
Finance expense (1) (2) - (1) (76) (31) (111)
Other financial income 13 13
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Adjusted profit before taxation 398 160 47 158 680 (87) 1,356
Profits less losses on disposal
of non-current assets 4 2 - - - 1 7
Amortisation of non-operating intangibles (32) - (2) (13) - - (47)
Acquired inventory fair value adjustments (1) - (2) (2) - - (5)
Transaction costs (1) - (2) (3) - - (6)
Exceptional items - - - - (206) - (206)
Profits less losses on sale and
closure of businesses - (16) - (7) - - (23)
========================================== ======= ===== =========== =========== ======= ======= =======
Profit before taxation 368 146 41 133 474 (86) 1,076
Taxation (356) (356)
========================================== ======= ===== =========== =========== ======= ======= =======
Profit for the period 368 146 41 133 474 (442) 720
========================================== ======= ===== =========== =========== ======= ======= =======
Segment assets (excluding joint
ventures and associates) 2,876 2,422 597 2,017 7,570 136 15,618
Investments in joint ventures and
associates 62 45 143 136 - - 386
========================================== ======= ===== =========== =========== ======= ======= =======
Segment assets 2,938 2,467 740 2,153 7,570 136 16,004
Cash and cash equivalents 2,121 2,121
Current asset investments 4 4
Income tax 90 90
Deferred tax assets 163 163
Employee benefits assets 1,393 1,393
Segment liabilities (703) (616) (196) (450) (4,545) (188) (6,698)
Loans and overdrafts (637) (637)
Income tax (160) (160)
Deferred tax liabilities (647) (647)
Employee benefits liabilities (79) (79)
========================================== ======= ===== =========== =========== ======= ======= =======
Net assets 2,235 1,851 544 1,703 3,025 2,196 11,554
========================================== ======= ===== =========== =========== ======= ======= =======
Non-current asset additions 128 223 26 183 489 3 1,052
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Depreciation and non-cash lease
adjustments (109) (75) (17) (57) (532) (12) (802)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Amortisation (37) (3) (3) (14) (11) - (68)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Reversal of impairment of property,
plant & equipment and
right-of-use assets - (19) - (11) - - (30)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Geographical information for the 24 weeks ended 4 March 2023
Europe &
United Kingdom Africa The Americas Asia Pacific Total
GBPm GBPm GBPm GBPm GBPm
-------------------------------- -------------- -------- ------------ ------------ ------
Revenue from external customers 3,590 3,508 1,219 1,243 9,560
-------------------------------- -------------- -------- ------------ ------------ ------
Segment assets 5,916 6,744 1,803 1,704 16,167
-------------------------------- -------------- -------- ------------ ------------ ------
Non-current asset additions 143 292 105 39 579
-------------------------------- -------------- -------- ------------ ------------ ------
Depreciation and non-cash
lease adjustments (136) (175) (41) (34) (386)
-------------------------------- -------------- -------- ------------ ------------ ------
Amortisation (8) (26) (2) (3) (39)
-------------------------------- -------------- -------- ------------ ------------ ------
Acquired inventory fair value
adjustments (2) - - - (2)
-------------------------------- -------------- -------- ------------ ------------ ------
Transaction costs (1) - - - (1)
-------------------------------- -------------- -------- ------------ ------------ ------
Geographical information for the 24 weeks ended 5 March 2022
Europe &
United Kingdom Africa The Americas Asia Pacific Total
GBPm GBPm GBPm GBPm GBPm
-------------------------------- -------------- -------- ------------ ------------ ------
Revenue from external customers 2,951 2,902 919 1,110 7,882
-------------------------------- -------------- -------- ------------ ------------ ------
Segment assets 5,449 5,856 1,415 1,541 14,261
-------------------------------- -------------- -------- ------------ ------------ ------
Non-current asset additions 139 170 54 42 405
-------------------------------- -------------- -------- ------------ ------------ ------
Depreciation and non-cash
lease adjustments (138) (176) (29) (30) (373)
-------------------------------- -------------- -------- ------------ ------------ ------
Amortisation (14) (13) (3) (3) (33)
-------------------------------- -------------- -------- ------------ ------------ ------
Transaction costs (3) - - (1) (4)
-------------------------------- -------------- -------- ------------ ------------ ------
Impairment of property, plant,
equipment and right-of-use - - - (11) (11)
-------------- -------- ------------ ------------ ------
assets on sale and closure
of businesses
-------------------------------- -------------- -------- ------------ ------------ ------
Geographical information for the 52 weeks ended 17 September
2022
Europe &
United Kingdom Africa The Americas Asia Pacific Total
GBPm GBPm GBPm GBPm GBPm
-------------------------------- -------------- -------- ------------ ------------ ------
Revenue from external customers 6,378 6,291 2,028 2,300 16,997
-------------------------------- -------------- -------- ------------ ------------ ------
Segment assets 5,972 6,519 1,840 1,673 16,004
-------------------------------- -------------- -------- ------------ ------------ ------
Non-current asset additions 285 487 177 103 1,052
-------------------------------- -------------- -------- ------------ ------------ ------
Depreciation and non-cash
lease adjustments (277) (392) (69) (64) (802)
-------------------------------- -------------- -------- ------------ ------------ ------
Amortisation (25) (32) (5) (6) (68)
-------------------------------- -------------- -------- ------------ ------------ ------
Impairment of property,
plant and equipment on sale
and - - - (30) (30)
-------------- -------- ------------ ------------ ------
closure of businesses
-------------------------------- -------------- -------- ------------ ------------ ------
Acquired inventory fair
value adjustments (2) (3) - - (5)
-------------------------------- -------------- -------- ------------ ------------ ------
Transaction costs (2) (3) - (1) (6)
-------------------------------- -------------- -------- ------------ ------------ ------
Exceptional items - (206) - - (206)
-------------------------------- -------------- -------- ------------ ------------ ------
The Group's operations in the following countries met the
criteria for separate disclosure:
Revenue Non-current assets
24 weeks ended 24 weeks ended 52 weeks ended 24 weeks ended 24 weeks ended 52 weeks ended
4 March 5 March 17 September 4 March 5 March 17 September
2023 2022 2022 2023 2022 2022
GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ============== =============== ============== ============== =============== ==============
Australia 705 571 1,232 606 568 623
Spain 880 748 1,545 647 635 650
United States 806 614 1,315 854 683 866
-------------- -------------- --------------- -------------- -------------- --------------- --------------
All segment disclosures are stated before reclassification of
assets and liabilities classified as held for sale.
2. Exceptional items
2023
At half year, there were no exceptional items.
2022
At half year, there were no exceptional items. At year end, the
income statement included an exceptional charge for Primark of
GBP206m comprising non-cash writedowns of GBP72m against property,
plant and equipment and a writedown of GBP134m of right-of-use
assets relating to the capitalisation of store leases.
3. Income tax expense
24 weeks 24 weeks 52 weeks
ended ended ended
4 March 5 March 17 September
2023 2022 2022
GBPm GBPm GBPm
----------------------------------------------------------- ======== ======== =============
Current tax expense
UK - corporation tax at 21.76% (2022 - 19%) 23 18 44
Overseas - corporation tax 112 112 244
UK - (over)/under provided in prior periods (7) 1 (12)
Overseas - (over)/under provided in prior periods - (3) 1
----------------------------------------------------------- -------- -------- -------------
128 128 277
Deferred tax expense
UK deferred tax 12 10 18
Overseas deferred tax 20 12 72
UK - over provided in prior periods - - (3)
Overseas - (over)/under provided in prior periods (58) 1 (8)
----------------------------------------------------------- -------- -------- -------------
(26) 23 79
----------------------------------------------------------- -------- -------- -------------
Total income tax expense in income statement 102 151 356
----------------------------------------------------------- -------- -------- -------------
Reconciliation of effective tax rate
Profit before taxation 644 635 1,076
Less share of profit after tax from joint ventures
and associates (50) (37) (109)
----------------------------------------------------------- -------- -------- -------------
Profit before taxation excluding share of profit
after tax from joint ventures and associates 594 598 967
Nominal tax charge at UK corporation tax rate of
21.76% (2022 - 19%) 129 114 184
Effect of higher and lower tax rates on overseas
earnings - 7 4
Effect of changes in tax rates on income statement 2 3 2
Expenses not deductible for tax purposes 28 24 63
Disposal of assets covered by tax exemptions or
unrecognised capital losses 1 1 6
Deferred tax not recognised 7 3 120
Adjustments in respect of prior periods (65) (1) (23)
----------------------------------------------------------- -------- -------- -------------
102 151 356
----------------------------------------------------------- -------- -------- -------------
Income tax recognised directly in equity
Deferred tax associated with defined benefit schemes 2 74 198
Deferred tax associated with share-based payments - - 1
Deferred tax associated with movement in cash flow
hedging position (62) 3 28
Deferred tax associated with movement in other investments - - 1
(60) 77 228
----------------------------------------------------------- -------- -------- -------------
The adjusted tax rate of 24.7% (2022 half year: 23.2%) is the
estimated weighted average annual tax rate based on full year
projections and has been applied to profit before adjusting items
for the 24 weeks ended 4 March 2023. The tax impact of adjusting
items has been calculated on an item-by-item basis. The UK
corporation tax rate of 19% increased to 25% from 1 April 2023. The
legislation to effect these changes was enacted before the balance
sheet date and UK deferred tax has been calculated accordingly.
In April 2019 the European Commission published its decision on
the Group Financing Exemption in the UK's controlled foreign
company legislation. The Commission found that the UK law did not
comply with EU State Aid rules in certain circumstances. The Group
has arrangements that may be impacted by this decision as might
other UK-based multinational groups that had financing arrangements
in line with the UK's legislation in force at the time. The UK
Government, the Group and a number of other UK companies appealed
against this decision to the General Court of the European Union
('GCEU'). On 8 June 2022, the GCEU found in favour of the
Commission's original decision. As a result of this, in August
2022, the UK Government, the Group and various other UK companies
appealed GCEU's decision to the Court of Justice of the European
Union. We have calculated our maximum potential liability to be
GBP26m (HY22: GBP26m), however we do not consider that any
provision is required in respect of this amount based on our
current assessment of the issue. Following receipt of charging
notices from HM Revenue & Customs ('HMRC'), we made payments to
HMRC in FY2021. Our assessment remains that no provision is
required in respect of this amount. We will continue to consider
the impact of the Commission's decision on the group and the
potential requirement to record a provision.
In the second half of last year a deferred tax asset arose
mainly in relation to the charge taken for the impairment of
property, plant and equipment and store leases in Primark Germany.
A significant proportion of this asset was deemed not to be
recoverable and was written off as an exceptional tax charge. Since
then, further work has been undertaken to assess the amount of the
deferred tax asset that is expected to be recoverable. This work
determined that the deferred tax asset at last year end was
understated in error. The Directors believe that this
understatement of the deferred tax asset was not material to the
prior period financial statements. Accordingly, an exceptional tax
credit of GBP58m has been recognised in this half year.
4. Earnings per share
24 weeks 24 weeks 52 weeks
ended ended ended
4 March 5 March 17 September
2023 2022 2022
pence pence pence
----------------------------------------------------- ======== ======== =============
Adjusted earnings per share 62.0 63.8 131.1
Disposal of non-current assets 0.3 0.5 0.9
Sale and closure of businesses (0.3) (1.4) (2.9)
Acquired inventory fair value adjustments (0.3) - (0.6)
Transaction costs (0.1) (0.5) (0.8)
Exceptional items - - (26.1)
Tax effect on above adjustments and exceptional
tax 7.4 - (8.0)
Amortisation of non-operating intangibles (2.5) (2.5) (6.0)
Tax credit on non-operating intangibles amortisation
and goodwill 0.5 0.4 1.0
------------------------------------------------------ -------- -------- -------------
Earnings per ordinary share 67.0 60.3 88.6
------------------------------------------------------ -------- -------- -------------
5. Dividends
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
2023 2022 2022 2023 2022 2022
pence pence pence GBPm GBPm GBPm
----------------------- ======== ======== ============= ======== ======== =============
2021 final and special - 34.3 34.3 - 271 271
2022 interim - - 13.8 - - 109
2022 final 29.9 - - 235 - -
----------------------- -------- -------- ------------- -------- -------- -------------
29.9 34.3 48.1 235 271 380
----------------------- -------- -------- ------------- -------- -------- -------------
The 2022 final dividend of 29.9p was approved on 9 December 2022
and totalled GBP235m when paid on 13 January 2023. The 2023 interim
dividend of 14.2p per share, totalling GBP110m will be paid on 7
July 2023 to shareholders on the register on 2 June 2023.
6. Assets and liabilities classified as held for sale
The Group currently continues to expect to dispose of its north
China sugar business, subject to competition and administrative
requirements. GBP92m of assets classified as held for sale comprise
of GBP49m of inventories, GBP17m of property, plant and equipment,
GBP12m of operating intangibles, GBP8m of trade and other
receivables and a deferred tax asset of GBP6m. GBP26m of
liabilities classified as held for sale comprise trade and other
payables.
7. Acquisitions and disposals
Acquisitions
2023
In November, the Agriculture division acquired Advance Sourcing,
which provides specialist products to create value by improving
herd performance and supports dairy farmers to improve herd
efficiency and build resilience across the agri-food supply
chain.
In February, the Agriculture division acquired Progres in
Finland, originally created by Finnish biosciences company Hankkija
and owner of a patented additive used to support good health,
reduce inflammation and stimulate recovery, which improves gut
integrity and the performance of animals.
Cash consideration was GBP24m. Net assets acquired included
non-operating intangible assets of GBP5m, GBP2m of other operating
assets and GBP17m of goodwill. The cash outflow of GBP29m on the
purchase of subsidiaries, joint ventures and associates in the cash
flow statement comprised cash consideration of GBP24m less cash
acquired of GBP1m and GBP6m of deferred consideration in respect of
previous acquisitions.
2022
In January 2022, the Group acquired Fytexia, a B2B specialty
ingredients business in France and Italy producing and formulating
polyphenols-based active ingredients for the dietary supplements
industry. The Group also acquired a small grocery company in New
Zealand and a small agriculture business in Finland during the
first half.
In the second half, the Group acquired Greencoat, a UK-based
animal supplement and care business.
Total consideration for these acquisitions was GBP160m,
comprising GBP153m cash consideration and GBP7m deferred
consideration. Pre-acquisition carrying amounts were the same as
recognised values on acquisition apart from GBP88m of non-operating
intangibles in respect of brands, technology and customer
relationships, an GBP8m uplift to inventory, a GBP16m related
deferred tax liability and goodwill of GBP85m.
Disposals
2023
The Group agreed to sell property, plant and equipment to its
Chinese joint venture partner. Profit on sale was GBP4m.
In March, Gledhow, the Group's 30% equity-accounted associate in
Illovo South Africa formally went into business rescue. A non-cash
provision of GBP6m was booked on the financial guarantee held on
this business' liabilities.
2022
There were no disposals in the first half. The proposed sale of
a yeast company to the joint venture with Wilmar International in
China (classified as held for sale at the 2021 year end) did not go
ahead. The GBP10m non-cash impairment reversed in 2021 through
profit/(loss) on sale and closure of business was reinstated at a
cost of GBP11m.
The Group's investment in north China Sugar was classified as
held-for-sale at the 2022 financial year end and an associated
GBP19m non-cash write-down was charged to loss on sale and closure
of business.
The Group also released GBP3m of closure provisions in Vivergo
in the UK and GBP4m of warranty provisions that were no longer
required for a disposed Ingredients business in the United
States.
8. Analysis of net debt
At New leases At
17 September and non-cash Exchange 4 March
2022 Cash flow Acquisitions items adjustments 2023
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- ------------- --------- ------------ ------------- ------------ --------
Short-term loans (31) 11 - - 3 (17)
Long-term loans (480) - - - - (480)
Lease liabilities (3,252) 135 (1) (71) 2 (3,187)
-------------------------- ------------- --------- ------------ ------------- ------------ --------
Total liabilities from
financing activities (3,763) 146 (1) (71) 5 (3,684)
-------------------------- ------------- --------- ------------ ------------- ------------ --------
Cash at bank and in hand,
cash equivalents and 1,995
overdrafts (895) - - (20) 1,080
Current asset investments 4 (1) - - - 3
-------------------------- ------------- --------- ------------ ------------- ------------ --------
Net debt including lease
liabilities (1,764) (750) (1) (71) (15) (2,601)
-------------------------- ------------- --------- ------------ ------------- ------------ --------
Cash and cash equivalents comprise bank and cash balances,
deposits and short-term investments with original maturities of
three months or less. GBP133m (2022 half year - GBP99m; 2022 full
year - GBP126m) of bank overdrafts that are repayable on demand
form 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.
Net cash excluding lease liabilities is GBP586m (2022 half year
- GBP1,476m; 2022 year end - GBP1,488m).
GBP133m (2022 half year - GBP99m; 2022 full year - GBP126m) of
bank overdrafts plus the GBP17m (2022 half year - GBP176m; 2022
full year - GBP31m) of short-term loans shown above comprise the
GBP150m (2022 half year - GBP275m; 2022 full year - GBP157m) of
current loans and overdrafts shown on the face of the balance
sheet.
Current and non-current lease liabilities shown on the face of
the balance sheet of GBP322m and GBP2,865m respectively (2022 half
year - GBP292m and GBP2,849m respectively; 2022 full year - GBP316m
and GBP2,936m respectively) comprise the GBP3,187m (2022 half year
- GBP3,141m; 2022 full year - GBP3,252m) of lease liabilities shown
above. Current asset investments comprise term deposits and
short-term investments with original maturities of greater than
three months.
Interest paid is included within financing activities. The
roll-forward of the liabilities associated with interest paid is an
opening balance of GBP(18)m, expense of GBP(59)m, payments of
GBP57m, interest on the interest rate swap GBP(5)m and a closing
balance of GBP(25)m (2022 half year: opening balance of GBP(20)m,
expense of GBP(50)m, payments of GBP48m, fx of GBP(1)m and a
closing balance of GBP(23)m; 2022 full year: opening balance of
GBP(20)m, expense of GBP(111)m, payments of GBP114m, fx of GBP(1)m
and a closing balance of GBP(18)m).
9. Related parties
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note. Full details of the Group's other related
party relationships, transactions and balances are given in the
Group's financial statements for the 52 weeks ended 17 September
2022. There have been no material changes in these relationships in
the 24 weeks ended 4 March 2023 or up to the date of this report.
No related party transactions have taken place in the first 24
weeks of the current financial year that have materially affected
the financial position or the performance of the group during that
period.
10. Defined benefit pension schemes
Employee benefits assets primarily comprise the accounting
surplus of the Group's UK defined benefit scheme. At the end of the
period these UK asset schemes were GBP1,397m (2022 half year:
GBP935m). The increase from GBP1,366m at the end of the last
financial year is due to an increase in corporate bond yields since
year end.
11. Basis of preparation
Associated British Foods plc ('the Company') is a company
domiciled in the United Kingdom. The condensed consolidated interim
financial statements of the Company for the 24 weeks ended 4 March
2023 comprise those of the Company and its subsidiaries (together
referred to as 'the Group') and the Group's interests in joint
ventures and associates.
The consolidated financial statements of the Group for the 52
weeks ended 17 September 2022 are available upon request from the
Company's registered office at 10 Grosvenor Street, London, W1K 4QY
or at www.abf.co.uk.
The condensed consolidated interim financial statements have
been prepared in accordance with UK-adopted IAS 34 Interim
Financial Reporting. They do not include all of the information
required for full annual financial statements and should be read in
conjunction with the consolidated financial statements for the 52
weeks ended 17 September 2022.
After making enquiries, the directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the
consolidated interim financial statements.
The directors have reviewed a detailed cash flow forecast to the
end of the 2024 financial year. Having reviewed this forecast and
having applied a downside sensitivity analysis and performed a
reverse stress test, the directors consider it a remote possibility
that the financial headroom could be exhausted.
The Board's treasury policies are in place to maintain a strong
capital base and manage the Group's balance sheet and liquidity to
ensure long-term financial stability. These policies are the basis
for investor, creditor and market confidence and enable the
successful development of the business. The events of the last two
years demonstrated the importance of sufficient financial resources
and credit strength to meet any operational challenges or business
disruption events. The financial leverage policy states that, in
the ordinary course of business, the Board prefers to see the
Group's ratio of net debt including lease liabilities to adjusted
EBITDA to be well under 1.5x. At the end of this financial period,
the financial leverage ratio was 1.2x and the Group had net cash
before lease liabilities of GBP586m.
In March 2023, S&P Global Ratings reaffirmed their
assignment to the Group of an 'A' grade long-term issuer credit
rating. The Group's funding basis is supported by the existing
GBP400m public bond due in 2034 furthermore the Groups committed
Revolving Credit Facility is free of performance covenants maturing
in 2027, with two 1-year extension options.
In reviewing the cash flow forecast for the period, the
directors reviewed the trading for both Primark and the Food
businesses in light of the experience gained from events of the
last two years of trading and emerging trading patterns. The
directors have a thorough understanding of the risks, sensitivities
and judgements included in these elements of the cash flow forecast
and have a high degree of confidence in these cash flows.
As a downside scenario the directors considered the adverse
scenario in which inflationary costs are not fully recovered and in
which energy costs are twice the forecasted increase and other
inflationary cost pressures are 25% higher. It also includes
further adverse foreign exchange impacts combined with a global
recession, reducing demand for goods further than the base levels
forecast. This downside scenario was modelled without taking any
mitigating actions within their control. Under this downside
scenario the Group forecasts liquidity throughout the period and
compliance with financial covenants in the remaining $100m of
outstanding private placement notes (due March 2024).
In addition, the directors also considered the circumstances
which would be needed to exhaust the Group's total liquidity over
the assessment period - a reverse stress test. This indicates that
increasing inflation (rising energy costs and other inflationary
cost pressures; and adverse foreign exchange impacts) combined with
a global recession, reducing demand for goods, and more frequent
and extreme weather events would need to exceed GBP3.9 billion more
than the level forecasted by the Group, without any mitigating
actions being taken before total liquidity is exhausted. The
likelihood of these circumstances is considered remote for two
reasons. Firstly, over such a long period, management could take
substantial mitigating actions, such as reviewing pricing, cost
cutting measures and reducing capital investment. Secondly, the
Group has significant business and asset diversification and would
be able to, if it were necessary, dispose of assets and/or
businesses to raise considerable levels of funds.
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Operating Review. Note 26 on pages 204 to 215 of
the 2022 Annual Report provides details of the Group's policy on
managing its financial and commodity risks.
The 24 week period for the condensed consolidated interim
financial statements of the Company means that the second half of
the year is usually a 28 week period, and the two halves of the
reporting year are therefore not of equal length. For the Retail
segment, Christmas, falling in the first half of the year, is a
particularly important trading period. For the Sugar segment, the
balance sheet, and working capital in particular, is strongly
influenced by seasonal growth patterns for both sugar beet and
sugar cane, which vary significantly in the markets in which the
Group operates.
The condensed consolidated interim financial statements are
unaudited but have been subject to an independent review by the
auditor and were approved by the board of directors on 25 April
2023. They do not constitute statutory financial statements as
defined in section 434 of the Companies Act 2006. The comparative
figures for the 52 weeks ended 17 September 2022 have been abridged
from the Group's 2022 financial statements and are not the
Company's statutory financial statements for that period. Those
financial statements have been reported on by the Company's auditor
for that period and delivered to the Registrar of Companies. The
report of the auditor was unqualified, did not include a reference
to any matters to which the auditor drew attention by way of
emphasis without qualifying their report and did not contain a
statement under section 498(2) or (3) of the Companies Act
2006.
This Interim Results Announcement has been prepared solely to
provide additional information to shareholders as a body, to assess
the Group's strategies and the potential for those strategies to
succeed. This Interim Results Announcement should not be relied
upon by any other party or for any other purpose.
12. Significant accounting policies
Except where detailed otherwise, the accounting policies applied
by the Group in these condensed consolidated interim financial
statements are substantially the same as those applied by the Group
in its consolidated financial statements for the 52 weeks ended 17
September 2022 including for derivatives and current biological
assets, which are recognised in the balance sheet at fair value and
fair value less costs to sell, respectively. The methodology for
selecting assumptions underpinning the fair value calculations has
not changed since 17 September 2022. The significant movement in
derivatives and in the cash flow hedging position recorded in other
comprehensive income are due to changes in underlying market
conditions.
New accounting standards
The following accounting standards, amendments and
clarifications were adopted during the period and had no
significant impact on the Group:
-- Annual Improvements to IFRS 2018-2020:
Amendment to IFRS 1 First-time Adoption of International Financial Reporting Standards-Subsidiary
-- as a First-time Adopter.
Amendment to IFRS 9 Financial Instruments-Fees in the '10 per cent' Test for Derecognition
-- of Financial Liabilities.
-- Amendment to IAS 41 Agriculture-Taxation in Fair Value Measurements.
-- Onerous Contracts-Cost of Fulfilling a Contract (Amendments
to IAS 37)
-- Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16)
-- Reference to the Conceptual Framework (Amendments to IFRS 3)
Accounting standards not yet applicable
The Group is assessing the impact of the following standards,
interpretations and amendments that are not yet effective. Where
already endorsed by the UK Endorsement Board (UKEB), these changes
will be adopted on the effective dates noted. Where not yet
endorsed by the UKEB, the adoption date is less certain:
-- Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12) effective 2024 financial year
-- Definition of Accounting Estimates (Amendments to IAS 8) effective
2024 financial year
-- Disclosure of Accounting policies (Classification of Liabilities
as Current or Non-current - Amendments to IAS 1 and IFRS Practice
Statement 2). IAS 1 effective 2024 financial year. IFRS 2 Practice
Statement 2 has no transition requirements or effective date
-- IFRS 17 Insurance Contracts effective 2024 financial year
-- Amendments to Classification of Liabilities as Current or Non-current
- IAS 1 Presentation of Financial Statements effective 2024 financial
year (not yet endorsed by the UKEB)
-- Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
effective 2024 financial year
13. Accounting estimates and judgements
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates. In preparing the condensed
consolidated interim financial statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those applied to the consolidated financial statements for
the 52 weeks ended 17 September 2022.
14. Alternative performance measures
In reporting financial information, the Board uses various
alternative performance measures (APMs) which it believes provide
useful additional information for understanding the financial
performance and financial health of the Group. These APMs should be
considered in addition to IFRS measures and are not intended to be
a substitute for them. Since IFRS does not define APMs, they may
not be directly comparable to similar measures used by other
companies.
The Board also uses APMs to improve the comparability of
information between reporting periods and geographical units (such
as like-for-like sales) by adjusting for non-recurring or
uncontrollable factors which affect IFRS measures, to aid users in
understanding the Group's performance.
Consequently, the Board and management use APMs for performance
analysis, planning, reporting and incentive-setting.
Closest
equivalent
APM IFRS measure Definition/purpose Reconciliation/calculation
------------------ ------------- ---------------------------------------------- --------------------------
Like-for-like No direct The like-for-like sales metric enables Consistent with
sales equivalent measurement of the performance of the definition
our retail stores on a comparable given
year-on-year basis.
This measure represents the change
in sales at constant currency in our
retail stores adjusted for new stores,
closures and relocations. Refits,
extensions and downsizes are also
adjusted for if a store's retail square
footage changes by 10% or more. For
each change described above, a store's
sales are excluded from like-for-like
sales for one year.
No adjustments are made for disruption
during refits, extensions or downsizes
if a store's retail square footage
changes by less than 10%, for cannibalisation
by new stores, or for the timing of
national or bank holidays.
It is measured against comparable
trading days in each period.
------------------ ------------- ---------------------------------------------- --------------------------
Adjusted No direct Adjusted operating (profit) margin See note A
operating equivalent is adjusted operating profit as a
(profit) percentage of revenue.
margin
------------------ ------------- ---------------------------------------------- --------------------------
Adjusted Operating Adjusted operating profit is stated A reconciliation
operating profit before amortisation of non-operating of this measure
profit intangibles, transaction costs, amortisation is provided
of fair value adjustments made to on the face
acquired inventory, profits less losses of the condensed
on disposal of non-current assets consolidated
and exceptional items. income statement
Items defined above which arise in and by operating
the Group's joint ventures and associates segment in note
are also treated as adjusting items 1
for the purposes of adjusted operating
profit.
================== ============= ============================================== ==========================
Adjusted Profit Adjusted profit before tax is stated A reconciliation
profit before before amortisation of non-operating of this measure
before tax intangibles, transaction costs, amortisation is provided
tax of fair value adjustments made to on the face
acquired inventory, profits less losses of the condensed
on disposal of non-current assets, consolidated
exceptional items and profits less income statement
losses on sale and closure of businesses. and by operating
Items defined above which arise in segment in note
the Group's joint ventures and associates 1
are also treated as adjusting items
for the purposes of adjusted profit
before tax.
------------------ ------------- ---------------------------------------------- --------------------------
Adjusted Earnings Adjusted earnings per share is stated Reconciliation
earnings per share before amortisation of non-operating of this measure
per share intangibles, transaction costs, amortisation is provided
of fair value adjustments made to in note 4
acquired inventory, profits less losses
on disposal of non-current assets,
exceptional items and profits less
losses on sale and closure of businesses
together with the related tax effect.
Items defined above which arise in
the Group's joint ventures and associates
are also treated as adjusting items
for the purposes of adjusted earnings
per share.
------------------ ------------- ---------------------------------------------- --------------------------
Exceptional No direct Exceptional items are items of income Exceptional
items equivalent and expenditure which are material items are included
and unusual in nature and are considered on the face
of such significance that they require of the condensed
separate disclosure on the face of consolidated
the income statement. income statement
with further
detail provided
in note 2
================== ============= ============================================== ==========================
Constant Revenue Constant currency measures are derived See note B
currency and see by translating the relevant prior
adjusted year figures at current year average
operating exchange rates, except for countries
profit where CPI has escalated to extreme
(non-IFRS) levels, in which case actual exchange
measure rates are used. There are currently
three countries where the Group has
operations in this position - Argentina,
Venezuela and Turkey.
------------------ ------------- ---------------------------------------------- --------------------------
Effective Income The effective tax rate is the tax Whilst the effective
tax rate tax expense charge for the period expressed as tax rate is
a percentage of profit before tax. not disclosed,
a reconciliation
of the tax charge
on profit before
tax at the UK
corporation
tax rate to
the actual tax
charge is provided
in note 3
------------------ ------------- ---------------------------------------------- --------------------------
Adjusted No direct The adjusted effective tax rate is The tax impact
effective equivalent the tax charge for the period excluding of reconciling
tax rate tax on adjusting items expressed as items between
a percentage of adjusted profit before profit before
tax. tax and adjusted
profit before
tax is shown
in note 3
------------------ ------------- ---------------------------------------------- --------------------------
Dividend No direct Dividend cover is the ratio of adjusted See note C
cover equivalent earnings per share to dividends per
share relating to the period.
------------------ ------------- ---------------------------------------------- --------------------------
Capital No direct Capital expenditure is a measure of See note D
expenditure equivalent investment each period in non-current
assets in existing businesses. It
comprises cash outflows from the purchase
of property, plant and equipment and
intangibles.
------------------ ------------- ---------------------------------------------- --------------------------
Gross investment No direct Gross investment is a measure of investment See note E
equivalent each period in non-current assets
of existing businesses and acquisitions
of new businesses. It includes capital
expenditure as well as cash outflows
from the purchase of subsidiaries,
joint ventures and associates, additional
shares in subsidiary undertakings
purchased from non-controlling interests
and other investments, as well as
net debt assumed in acquisitions.
------------------ ------------- ---------------------------------------------- --------------------------
Net cash/debt No direct This measure comprises cash, cash A reconciliation
before equivalent equivalents and overdrafts, current of this measure
lease liabilities asset investments and loans. is shown in
note 8
================== ============= ============================================== ==========================
Net cash/debt No direct This measure comprises cash, cash A reconciliation
including equivalent equivalents and overdrafts, current of this measure
lease liabilities asset investments, loans and lease is shown in
liabilities. note 8
------------------ ------------- ---------------------------------------------- --------------------------
Adjusted See Adjusted Adjusted EBITDA is stated before depreciation, See note F
EBITDA operating amortisation and impairment charged
profit to adjusted operating profit.
(non-IFRS)
measure
------------------ ------------- ---------------------------------------------- --------------------------
Financial No direct Financial leverage is the ratio of See note F
leverage equivalent net cash/debt including lease liabilities
ratio to adjusted EBITDA based on the last
12 months rolling adjusted EBITDA.
------------------ ------------- ---------------------------------------------- --------------------------
Total liquidity No direct Total liquidity comprises net cash/debt See note G
equivalent before lease liabilities plus qualifying
debts and credit facilities. Qualifying
debt and credit facilities are those
which are medium-to-long-term, are
committed and either contain no performance
covenants, or where they do, they
are assessed as highly unlikely to
be breached in even a severe downside
scenario.
================== ============= ============================================== ==========================
(Average) No direct Capital employed is derived from the Consistent with
capital equivalent management balance sheet and does the definition
employed not reconcile directly to the statutory given
balance sheet. All elements of capital
employed are calculated in accordance
with UK adopted IFRS.
Average capital employed for each
segment and the Group is calculated
by averaging the capital employed
for each period of the financial year
based on the reporting calendar of
each business.
------------------ ------------- ---------------------------------------------- --------------------------
Return No direct The return on (average) capital employed Consistent with
on (average) equivalent measure divides annualised adjusted the definition
capital operating profit by average capital given
employed employed.
(Average) No direct Working capital is derived from the Consistent with
working equivalent management balance sheet and does the definition
capital not reconcile directly to the statutory given
balance sheet. All elements of working
capital are calculated in accordance
with UK-adopted IFRS.
Average working capital for each segment
and the Group is calculated by averaging
the working capital for each period
of the financial year based on the
reporting calendar of each business.
------------------ ------------- ---------------------------------------------- --------------------------
(Average) No direct This measure expresses (average) working Consistent with
working equivalent capital as a percentage of revenue. the
capital definition given
as a percentage
of revenue
------------------ ------------- ---------------------------------------------- --------------------------
Note A
Central
and disposed
Grocery Sugar Agriculture Ingredients Retail businesses Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- ------- ----- ----------- ----------- ------ ------------- -----
24 weeks ended 4 March 2023
External revenue from continuing
businesses 2,105 1,189 950 1,088 4,228 - 9,560
Adjusted operating profit 173 86 12 102 351 (40) 684
Adjusted operating margin
% 8.2% 7.2% 1.3% 9.4% 8.3% 7.2%
24 weeks ended 5 March 2022
External revenue from continuing
businesses 1,821 914 809 798 3,540 - 7,882
Adjusted operating profit 175 77 15 63 414 (38) 706
Adjusted operating margin
% 9.6% 8.4% 1.9% 7.9% 11.7% 9.0%
--------------------------------- ======= ===== =========== =========== ====== ============= =====
Note B
Disposed
Grocery Sugar Agriculture Ingredients Retail businesses Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- ------- ----- ----------- ----------- ------ ----------- -----
24 weeks ended 4 March 2023
External revenue from continuing
businesses
at actual rates 2,105 1,189 950 1,088 4,228 - 9,560
24 weeks ended 5 March 2022
External revenue from continuing
businesses
at actual rates 1,821 914 809 798 3,540 - 7,882
Impact of foreign exchange 99 22 15 62 89 - 287
--------------------------------- ------- ----- ----------- ----------- ------ ----------- -----
External revenue from continuing
businesses
at constant currency 1,920 936 824 860 3,629 - 8,169
% change at constant currency +10% +27% +15% +27% +17% +17%
--------------------------------- ------- ----- ----------- ----------- ------ ----------- -----
Central
and disposed
Grocery Sugar Agriculture Ingredients Retail businesses Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------ ---------- ----- ----------- ----------- ---------- ------------- ---------
24 weeks ended 4 March 2023
Adjusted operating profit
at actual rates 173 86 12 102 351 (40) 684
24 weeks ended 5 March 2022
Adjusted operating profit
at actual rates 175 77 15 63 414 (38) 706
Impact of foreign exchange 17 5 1 6 3 - 32
------------------------------ ---------- ----- ----------- ----------- ---------- ------------- ---------
Adjusted operating profit
at constant currency 192 82 16 69 417 (38) 738
% change at constant currency * 10% +5% * 25% +48% * 16% * 7%
------------------------------ ---------- ----- ----------- ----------- ---------- ------------- ---------
Note C
24 weeks 24 weeks 52 weeks
ended ended ended
4 March 5 March 17 September
2023 2022 2021
pence pence pence
Adjusted earnings per share (pence) 62.0 63.8 131.1
Dividends relating to the period (pence) 14.2 13.8 43.7
Dividend cover 4 5 3
Note D
24 weeks 24 weeks 52 weeks
ended ended ended
4 March 5 March 17 September
2023 2022 2022
From the cash flow statement GBPm GBPm GBPm
Purchase of property, plant and equipment 444 272 680
Purchase of intangibles 54 64 89
498 336 769
Note E
24 weeks 24 weeks 52 weeks
ended ended ended
4 March 5 March 17 September
2023 2022 2022
From the cash flow statement GBPm GBPm GBPm
Purchase of property, plant and equipment 444 272 680
Purchase of intangibles 54 64 89
Purchase of subsidiaries, joint ventures and associates 29 114 154
Purchase of other investments - - 7
527 450 930
Note F
24 weeks 24 weeks 52 weeks
ended ended ended
4 March 5 March 17 September
2023 2022 2022
GBPm GBPm GBPm
Adjusted operating profit 684 706 1,435
Charged to adjusted operating profit:
Depreciation of property, plant and equipment 258 245 521
Amortisation of operating intangibles 20 14 24
Depreciation of right-of-use assets and non-cash
lease adjustments 128 128 281
Adjusted EBITDA 1,090 1,093 2,261
Net debt including lease liabilities (2,601) (1,665) (1,764)
Financial leverage ratio (based on the last 12 months
rolling adjusted EBITDA) 1.2 0.8 0.8
Note G
At 4 March At 5 March At 17 September
2023 2022 2022
GBPm GBPm GBPm
Net cash before lease liabilities 586 1,476 1,488
Qualifying debt 400 400 400
Qualifying credit facilities 1,500 1,088 1,500
Total liquidity 2,486 2,964 3,388
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.
Responsibility statement
The Interim Results Announcement complies with the Disclosure
and Transparency Rules ('the DTR') of the UK's Financial Conduct
Authority in respect of the requirement to produce a half-yearly
financial report.
The directors confirm that to the best of their knowledge:
this financial information has been prepared in accordance with
UK-adopted International Accounting Standard 34 Interim Financial
Reporting;
this Interim Results Announcement includes a fair review of the
important events during the first half and their impact on the
financial information, and a description of the principal risks and
uncertainties for the remaining half of the year as required by DTR
4.2.7R; and this Interim Results Announcement includes a fair
review of the disclosure of related party transactions and changes
therein as required by DTR 4.2.8R.
On behalf of the board
Michael McLintock George Weston John Bason
Chairman Chief Executive Finance Director
25 April 2023
Independent review report to Associated British Foods plc
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the Interim Results Announcement for the
24 week period ended 4 March 2023 which comprises the condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated balance sheet,
the condensed consolidated cash flow statement, the condensed
consolidated statement of changes in equity and the related
explanatory notes. We have read the other information contained in
the Interim Results Announcement and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed consolidated interim
financial statements in the Interim Results Announcement for the 24
week period ended 4 March 2023 are not prepared, in all material
respects, in accordance with UK-adopted International Accounting
Standard 34 Interim Financial Reporting and the Disclosure Guidance
and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK and Ireland) Review of
Interim Financial information performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 11, the annual financial statements of the
Group will be prepared in accordance with UK-adopted international
accounting standards. The condensed set of financial statements
included in this Interim Results Announcement has been prepared in
accordance with UK-adopted International Accounting Standard 34
Interim Financial Reporting.
Conclusions relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis of Conclusion
section of this report, nothing has come to our attention to
suggest that management have inappropriately adopted the going
concern basis of accounting or that management have identified
material uncertainties relating to going concern that are not
appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with this ISRE, however future events or conditions may
cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the Interim Results
Announcement in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the Interim Results Announcement, the directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial
information
In reviewing the Interim Results Announcement, we are
responsible for expressing to the Company a conclusion on the
condensed set of financial statements in the Interim Results
Announcement. Our conclusion, including our Conclusions Relating to
Going Concern, is based on procedures that are less extensive than
audit procedures, as described in the Basis for conclusion
paragraph of this report.
Use of our report
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) Review of Interim Financial information
performed by the Independent Auditor of the Entity issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
Birmingham
25 April 2023
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IR PPUACCUPWPWC
(END) Dow Jones Newswires
April 25, 2023 02:00 ET (06:00 GMT)
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