TIDMABF
RNS Number : 7201R
Associated British Foods PLC
09 November 2021
For release 9 November 2021
Annual Results Announcement
Year ended 18 September 2021
Associated British Foods plc results for 53 weeks ended 18
September 2021
Strong delivery in food; retail trading and margin
recovering
Financial Headlines
Constant
Actual currency currency
change change
===================================== ========== =============== =========
Group revenue GBP13,884m In line +1%
Adjusted operating profit GBP1,011m * 1% +2%
Adjusted profit before tax GBP908m * 1%
Adjusted earnings per share 80.1p * 1%
Dividends per share
* Interim 6.2p
* Final 20.5p
* Special 13.8p
Gross investment GBP721m
Net cash before lease liabilities GBP1,901m
Net debt including lease liabilities GBP1,380m
Statutory operating profit GBP808m In line
Statutory profit before tax GBP725m +6%
Basic earnings per share 60.5p +5%
===================================== ========== =============== =========
Statutory operating profit of GBP808m for the year was broadly
in line with the statutory operating profit of GBP810m last year
and is stated after charging net exceptional items of GBP151m this
year compared to GBP156m in the last financial year.
Strong delivery in food
Combined revenue up 5%(1) and adjusted operating profit up 10% to
GBP760m(1)
Sugar: very strong performance, adjusted operating profit up 75%(1)
Grocery: brand investment and strong international growth
Progress in Agriculture and Ingredients
Retail trading and margin recovering
Primark adjusted operating profit up 15% to GBP415m(2)
Like-for-like(3) sales down 12% on pre-pandemic levels
Strong profit margin recovery, with second half margin of 10.6%(4)
Wide-reaching new sustainability strategy launched
Plans to accelerate selling space expansion in major growth markets
Dividend
Total dividend of 34.3p per share declared and proposed: special
dividend 13.8p and final dividend 20.5p
Total dividends for the year 40.5p per share
George Weston, Chief Executive of Associated British Foods,
said:
"Our financial performance this year more than ever demonstrates
the resilience of the group. This comes from the strength of our
brands, the diversity of our products and markets, our geographic
spread, conservative financing and an organisation design that
permits fast and flexible decision-taking.
We provided safe, nutritious food under the most extraordinary
conditions again this year, proving the value and resilience of our
supply chains. Our food businesses delivered an adjusted operating
profit increase of 10%, driven by high demand and improved
productivity.
Primark delivered a good performance in the face of continued
disruption to trading caused by the pandemic. It also unveiled its
wide-reaching sustainability strategy with the aim of making more
sustainable fashion affordable for all. Although the possibility of
further trading restrictions cannot be ruled out, we expect Primark
to deliver a much improved margin and profit next year. We are now
intent on expanding our new store pipeline and investing in
technology and digital capabilities to continue improving the
performance of the business.
Given the strength of our balance sheet and our confidence in
the future we are setting out today a new capital cash allocation
policy that provides the Group with the capital it needs both for
investment and financial stability while allowing for enhanced
returns to shareholders when appropriate. We are announcing a
special dividend for shareholders today as a result.
We have the people and the cash resources to seize the
opportunities ahead and we look to the future with confidence."
(1) At constant currency
(2) Excluding the repayment of job retention scheme monies
(3) Like-for-like sales metric expressed over two years enables
measurement of the performance of our retail stores compared to our
experience in 2019, which was
before any of the economic effects of COVID-19
(4) Excluding 53(rd) week and the repayment of job retention
scheme monies
The Group has defined, and outlined the purpose of, its
Alternative performance measures in note 13. These measures are
used within the Financial Headlines and in this Annual Results
Announcement. The 53rd week applies to Primark and George Weston
Foods .
For further information please contact:
Associated British Foods:
John Bason, Finance Director
Tel: 020 7399 6545
Citigate Dewe Rogerson:
Tel: 020 7638 9571
Chris Barrie
Tel: 07968 727289
Jos Bieneman
Tel: 07834 336650
There will be an analyst and investor presentation at 09.00am
GMT 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 sales of GBP13.9bn and 128,000
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.
Annual Results Announcement
For the 53 weeks ended 18 September 2021
Chairman's statement
The economic effects of the measures taken by governments to
restrict the COVID-19 pandemic were evident in the financial
results for our last financial year and in the results for this
financial year. The Board recognises that a Group of our scale and
significance has responsibilities to many stakeholders. I want to
say thank you once again to every employee for their hard work and
determination in these difficult times.
Sales and profit for the Group this financial year were again
below pre-COVID levels and this was driven by the results for
Primark, where a third of its available trading days were lost as a
result of store closures due to the public health measures taken in
our major markets. The Primark management and operational teams
demonstrated agility in responding to both the fast changing and
wide range of trading restrictions applied to our stores over the
year. The strength of Primark's sales after the reopening of all
our stores in the spring demonstrated the relevance and appeal of
our value-for-money offering. Growth in our food businesses
continued this year with a combined increase in revenue of 5% and
increase in adjusted operating profit of 10% this financial year,
at constant currency.
Importantly, during this difficult trading year, we maintained
our focus on building for the future.
In Grocery, we continued to build our brands with a number of
new product introductions and wider international distribution. We
made significant progress with the expansion of Twinings in
Wellness teas, Ovaltine growth in China, Brazil and Switzerland,
the overseas development of Patak's and Mazzetti and the continuing
development of Yumi's in Australia. In Ingredients, we made major
steps to build our development capability and opened new technology
development centres for our bakery ingredients and enzyme
businesses. Our yeast joint venture with Wilmar International in
China became operational this year, progress was made on building a
major new yeast facility and we expect strong growth from this
business in the future.
We invested GBP721m in our businesses this year. We made good
progress with a number of major capital projects: work to
recommission the Vivergo bioethanol plant in the UK; a major new
animal feed mill in Western Australia; and a number of capacity
increases including bakery production in Australia and yeast
production in Brazil. In Primark, we continued to increase retail
selling space with the opening of 15 new stores and developed our
presence in the important US and Central European markets. We made
progress in the development and implementation of new inventory
management and point of sale systems across the store estate. The
expansion of our state-of-the art warehouse in Roosendaal in the
Netherlands was completed.
Our Responsibility and ESG
Our Company was founded with a conviction that acting
responsibly and with integrity is the only way to build and manage
a business over the long term. The belief that companies do well
when they act well is deeply ingrained in all of us, from the Board
and the leadership team, across all our businesses and at all
levels of our workforce. We have a clear sense of our social
purpose. We exist to provide safe, nutritious and affordable food
and to provide quality, affordable clothing to hundreds of millions
of customers worldwide.
We have a strong belief in our duty to respect the dignity of
everyone who works for us, both within our workforce and in our
supply chains. We have a firm commitment to operating under the
highest standards of corporate citizenship, acting as a good and
supportive neighbour to the communities around us while recognising
our wider obligations to society as a whole. Our 2021
Responsibility Update details the actions we continue to take to
invest in our people, support society, strengthen supply chains and
respect our environment. To see how we make a difference, please
download this update, at www.abf.co.uk/responsibility .
This year we have extensively engaged with our investors on the
key ESG factors for the Group and our strategy and governance in
relation to these. We provided an in-depth review of Primark's
processes to provide assurance of its supplier practices and of
Primark's sustainability strategy, Primark Cares, designed to
reduce its impact on the environment and to improve the lives of
people in its supply chain. A new customer campaign was launched in
September to highlight Primark's commitment to make more
sustainable fashion affordable for all. The March and September
presentations are available on our website. A further briefing is
due to be held in early 2022 and will focus on the environmental
factors that are most material for the Group.
Results
Revenue for the Group of GBP13.9bn was in line with last year at
actual exchange rates and was 1% ahead at constant currency. All
our food businesses delivered growth and in aggregate sales were 5%
ahead of last year at constant currency. Primark sales in both
years were impacted by trading restrictions and store closures as a
result of government measures taken to contain the spread of
COVID-19. The periods of closure were longer this year compared to
the last financial year and sales declined by 5% at constant
currency as a result.
Adjusted operating profit this year of GBP1,011m was broadly in
line with last financial year. For the full year the strengthening
of sterling against our major currencies has led to a translation
loss of some GBP36m. The adjusted operating profit for Grocery,
Sugar, Agriculture and Ingredients combined increased by a strong
10% at constant currency. Primark operating profit margin improved
this year with an adjusted operating profit of GBP415m, before
repayment of job retention scheme monies of GBP94m, which compared
to GBP362m last financial year.
The charge for net finance expense and other financial income
declined to GBP103m following the repayment of GBP25m of the
private placement debt and there were no RCF interest charges since
the facility was not drawn down this year. This was another year
where a lower proportion of the Group's profit was generated in the
UK and Ireland because of the lower Primark profitability and the
Group's adjusted effective tax rate was therefore again elevated,
at 28.1%, a small decrease from 28.8% last year.
The Group's net cash before lease liabilities of GBP1.9bn this
year compared to GBP1.6bn at the same time last year even after
another year in which the pandemic adversely impacted Primark's
trading. This outturn reflects the strong cash generating
capability of the Group and good working capital management.
The statutory operating profit for the year at GBP808m was
broadly in line with last year. It is stated after a net
exceptional non-cash charge of GBP151m this year which mainly
comprises impairments of GBP141m in property, plant and equipment
at our Spanish Sugar business, Azucarera, and other Sugar
businesses, and was marginally lower than the GBP156m net
exceptional charge last year. Basic earnings per share were 60.5p,
an increase from the reported 57.6p last year.
Board
We welcomed Dame Heather Rabbatts as a non-executive director of
the Company with effect from 1 March 2021. Heather brings a wealth
of experience having held a number of executive and non-executive
roles across local government, infrastructure, media and sports.
She was the first woman to join the board of the Football
Association. She continues to work in film and sports and is a
non-executive director of Kier Group plc.
Dividends
The Board decided not to pay any dividends relating to the 2020
financial year. This was due to the uncertainty of cash flow for
the Group as a result of the economic impact of COVID-19 on our
businesses, especially driven by the unknown duration and extent of
Primark store closures. The scale of this uncertainty was
demonstrated by the cash outflow of some GBP800m experienced in the
period March to May 2020. Uncertainty was particularly acute in
April and November 2020 when the Board considered the payment of an
interim and then a final dividend for the 2020 financial year.
Although uncertainty remained at the 2021 half year, it was
substantially lower as a result of the extensive roll-out of
vaccinations, and so the Board decided to declare an interim
dividend. The dividend of 6.2p per share was based on the proforma
adjusted earnings per share in the first half of 18.5p which was
net of a GBP79.4m charge for the job retention scheme repayments in
respect of that period.
All our stores are now open, and are mostly free of trading
restrictions, and the food businesses are trading well. The
uncertainty around future cash flows is considerably lower than a
year ago although the possibility of further trading restrictions
cannot be ruled out. Our net cash before lease liabilities was
GBP1.9bn at the year end. The Board is proposing a final dividend
of 20.5p per share which together with the interim dividend of 6.2p
per share makes a total of 26.7p per share for the year, which is
three times covered by the adjusted earnings per share of 80.1p for
the year, in line with previous practice. The Board intends to
continue to have regard to a cover of three times for regular
dividends in the ordinary course.
The Board is pleased by the recovery in trading across the
Group's activities and the highly effective management of cash and
reduction in financial leverage. As a sign of our confidence, the
Board is also declaring a special dividend of 13.8p per share, to
be paid as a second interim dividend at the same time as the
payment of the final dividend. We determined the amount of this
special dividend such that, taken with the final dividend proposed
for the 2021 financial year, the aggregate equates to the final
dividend of 34.3p per share paid in respect of the 2019 financial
year which was our highest ever final dividend and was based on the
Group's pre-COVID profitability. Total dividends for the year are
40.5p per share.
The payment date for the 2021 final dividend and second interim
dividend will be 14 January 2022 to shareholders on the register on
17 December 2021.
A strong capital base
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 financial leverage policy is that, in the ordinary course of
business, the Board prefers to see the Group's ratio of net debt
including lease liabilities: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. At the end of this financial
year, the financial leverage ratio was 0.7 times. The Group also
holds substantial net cash balances which ensure that it has
sufficient liquidity to meet unforeseen requirements and at this
financial year end net cash balances, before lease liabilities,
amounted to GBP1.9bn.
The events of the last two years have clearly demonstrated the
importance of having sufficient financial resources and the credit
strength to meet the operational challenges faced by our
businesses, and in particular Primark. We are pleased that S&P
Global announced that they had assigned to the Group an 'A' grade
long-term issuer credit rating, with a stable outlook, which
reflects the strength of each of the Group's businesses, their
diversity and ABF's strong credit metrics underpinned by a
conservative financial policy.
Capital allocation policy
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. We see considerable
opportunities to do this, both over the short and the medium-term,
and across all our businesses. Nevertheless, the ability to invest
our capital is inevitably subject to the timing of opportunities
and practical limits as to the amount that can be invested within a
given timeframe. As a result, 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.
Surplus capital may be returned to shareholders by special
dividend or share buy-backs.
It is not possible to anticipate every possible set of
circumstances and this policy must be subject to the Board's
discretion. Currently, uncertainty remains over the possible
reintroduction of trading restrictions related to COVID-19 and the
decision to declare a special dividend at the indicated level is
made with this in mind.
Thank you to our employees
At the end of another challenging year I am proud of how our
people have continued to respond to the many challenges presented
by COVID-19, whilst at the same time taking action and seizing
opportunities for our future. The strength of our culture shone
through and our operating model of devolved decision making to each
business and market enabled us to respond very quickly and
appropriately to local challenges. The responses this year were
again a testament to the dedication, skills and ingenuity of our
people. I will never be able to thank all of them enough for their
extraordinary efforts during this time.
Outlook
The lower Group profit in the last two financial years compared
to the 2019 financial year was driven by the extensive closure of
Primark stores. All of our stores are now open and are mostly free
of trading restrictions. There has been an extensive roll-out of
vaccinations against COVID-19 in all of the markets where Primark
operates and customers have returned to our stores in large
numbers. Absent the reimposition of significant restrictions, we
expect Primark trading to continue to improve and for sales to
increase by at least the estimated GBP2bn of sales lost due to
store closures last financial year. Primark will continue to expand
its selling space next year, with the most stores being added in
two of our key markets, Italy and Spain. The expected significant
increase in sales should lead to a sharp improvement in Primark's
adjusted operating margin, recovering to above 10%. Primark is not
immune to the challenges of supply chain, raw material cost and
labour rate inflation. However, we currently expect the impact of
these to be broadly mitigated by the transaction currency gain
arising from the weaker US dollar, improved store labour efficiency
and lower operating costs.
We are seeing significant cost increases in energy, logistics
and commodities in addition to the impact of widely reported port
congestion and road freight limitations. Our businesses are working
to offset the impact of these through cost savings. Where
necessary, our food businesses will also implement price
increases.
With the recovery in Primark's profitability, we expect the
Group's effective tax rate to fall next year to a level closer to
pre-COVID rates.
We will continue to invest in building the capacity and
capabilities of all our businesses. We expect the improvement in
Group profitability to deliver another year of strong cash
generation.
Taking these factors into account, we expect significant
progress, at both the half and full year, in adjusted operating
profit and adjusted earnings per share for the Group.
Michael McLintock
Chairman
Chief Executive's statement
I am proud of how we responded to the many challenges presented
by COVID-19 this year. All of our people demonstrated care, good
judgement and immense hard work.
Our financial performance this year more than ever demonstrates
the resilience of the group. This comes from the strength of our
brands, the diversity of our products and markets, our geographic
spread, conservative financing and an organisation design that
permits fast and flexible decision-taking.
Group revenue was in line with last year at GBP13.9bn at
constant currency, with the reduction compared to pre-pandemic
levels driven by the loss of sales for the periods in which
Primark's stores were closed. Adjusted operating profit of
GBP1,011m was broadly in line with last year, which was also
impacted by lost sales during the closures of Primark stores.
Our food businesses delivered another strong performance this
year and throughout the pandemic we have provided safe, nutritious
food under the most extraordinary conditions, proving the value and
resilience of our supply chains. The adjusted operating profit of
Grocery, Sugar, Agriculture and Ingredients combined increased by
10%, building on an increase of 26% last year, at constant
currency.
Sugar delivered another year of very strong improvement with
profit margin reaching 9.2% and a 75% increase in adjusted
operating profit at constant currency. Our focus in this business
has been to deliver an acceptable shareholder return on capital
over the cycle and return on average capital employed reached 10.2%
this year. The profit improvement was underpinned by significant
savings from our ongoing cost improvement and efficiency
programmes. Notably, after a disappointing performance last year,
Illovo recovered strongly, benefiting from higher sales as a
consequence of our long-term drive to develop African domestic and
regional volumes.
Grocery revenues were 3% ahead of last year at constant
currency. This was achieved despite a small decline in some retail
volumes this year compared to the elevated levels seen last year.
Twinings Ovaltine delivered strong sales growth, supported by
increased marketing investment and driven by Ovaltine growth in
emerging markets and a programme of new product development in
existing markets. The international development of a number of our
brands, notably Patak's and Mazzetti, continued. The adjusted
operating profit for Grocery declined marginally, mainly due to
weaker corn oil margins at ACH. The development of our brands over
the medium-term is demonstrated by an increase in adjusted
operating profit of 12% over the pre-COVID levels of 2019,
following a very strong profit increase of 15% last year, at
constant currency.
AB Agri performed well with progress in both revenue and
adjusted operating profit. Growth was notable in China, our UK feed
business AB Connect and in AB Neo, which specialises in feed for
animals in the early stages of life, driven by higher volumes and
commodity prices. Ingredients' sales were 4% ahead, and adjusted
operating profit was 8% ahead of last year at constant currency
driven by strong trading at AB Mauri.
Primark
As we look back on two years of disruption to Primark trading
caused by the COVID-19 pandemic, our confidence in the Primark
business model is unaltered.
There is no doubt that Primark, with its reliance on a highly
efficient store retail model, has been seen to be vulnerable to the
pandemic. The closure of its stores for long periods and
restrictions on trading inevitably led to significant loss of sales
and profit.
We believe that Primark's proposition of providing customers
with a wide selection of products at great value prices is highly
sustainable. The low-cost retailing model is driven by structural
advantages: purchasing quantities on a large scale leads to
efficient production, a broad supplier base with long-term
relationships, very low distribution costs throughout the supply
chain from supplier to store, and high store sales densities. These
characteristics provide Primark with a differentiated business
model with real competitive advantage.
Primark is a compelling brand proposition. It offers customers a
wide selection of products, from everyday essentials to the latest
trends, for all age groups and at prices everyone can afford,
ranged across attractive up-to-date stores. There is strong
supporting evidence that, for a substantial share of customers, the
in-store shopping experience will have enduring appeal. Primark is
uniquely placed on the High Street to take advantage of this as it
continually evolves its store design and in-store services and
expands into new product ranges attracting existing and new
customers to the business.
At the time of writing, all our stores have reopened and are
trading with only limited restrictions in some countries. There has
been an extensive roll-out of vaccinations against COVID-19 in all
the markets where Primark operates, and customers have returned to
our stores in large numbers. A post-pandemic equilibrium has not
yet been reached. However, like-for-like sales, compared to
pre-COVID levels, are steadily improving as customers' appetite to
return to shopping and city centres increases and, over the
medium-term, as foreign and domestic tourism recovers.
Next year, we expect Primark to increase sales significantly
along with a sharp improvement in adjusted operating margin,
recovering to above 10%, absent the reimposition of further
restrictions on store trading. We see opportunities to reduce costs
further, with lower operating costs from reduced lease costs and
the harnessing of technology in our warehouses and stores.
Additionally, Primark is investing to upgrade its digital presence
and online visibility and is on track to launch a redesigned
customer facing website in the UK in the first quarter of 2022. In
September, Primark launched a wide-reaching new sustainability
strategy aiming to position the business as a pioneer for making
more sustainable fashion affordable for all, engaging a new
generation of customers. We believe this strategy can be
implemented without any significant movements in the Primark profit
margin over the longer term.
Primark sees further growth potential in all of its existing
markets, and in some new markets besides. In particular, it will
accelerate the expansion of its selling space in the major markets
of the US, France, Italy and Iberia, building on its established
brand recognition, proven track record of successful store openings
and strengthening relationships with key landlords.
Operating review
Grocery
Actual Constant
2021 2020 currency currency
=================================== ===== ===== ========= =========
Revenue GBPm 3,593 3,528 +2% +3%
=================================== ===== ===== ========= =========
Adjusted operating profit GBPm 413 437 * 5% * 2%
=================================== ===== ===== ========= =========
Adjusted operating profit margin 11.5% 12.4%
=================================== ===== ===== ========= =========
Return on average capital employed 31.4% 31.3%
=================================== ===== ===== ========= =========
Grocery revenues were 3% ahead of last year at constant currency
with particularly strong growth in Twinings Ovaltine more than
offsetting expected decline in sales at Allied Bakeries. Adjusted
operating profit however declined, primarily driven by weaker corn
oil margins at ACH, lower margins at George Weston Foods and a
one-off charge of GBP5m for further restructuring in Allied
Bakeries. The improvement in return on average capital employed was
mainly driven by lower working capital in our Don meat business in
Australia and lower assets employed in Allied Bakeries.
Twinings and Ovaltine continued to make strong progress.
Ovaltine sales growth was primarily in Thailand, China and
Switzerland, and was supported by the continuing success of new
product launches in a number of countries. Twinings revenue growth
was driven by strong new product launches and good performances in
France and North America. Twinings has become the leading tea brand
in France.
At Allied Bakeries, sales reduced following our decision to exit
the supply of bread to the Co-op in April this year. We continued
to drive significant cost reductions with savings from a further
consolidation of our operations, the most material being delivered
in the distribution network. At the end of the year we successfully
commenced a partnership to supply premium bakery products to a
leading UK multiple retailer.
AB World Foods delivered a record sales year and international
progress continued to be particularly strong supported by new
distribution gains this year in North America. We increased
marketing investment in Patak's and Blue Dragon to levels
significantly ahead of pre-COVID. Al'Fez continued to perform
strongly with further distribution gains in both UK and
international markets. Silver Spoon and Westmill sales were also
significantly ahead and maintained the sales uplifts achieved last
year.
At Acetum, our leading Balsamic Vinegar producer, revenues
continued to increase with the Mazzetti brand performing very
strongly. We increased the marketing support for this brand, and
good commercial performance, with new listings, delivered
international growth in the US, the UK, the Netherlands and
Germany.
As expected adjusted operating profit for ACH declined this
year, with margins impacted by the later phasing of price increases
following a sharp increase in the cost of corn oil. Substantial
price increases were implemented over the year to offset cost
pressures while keeping our brand equity relevant for consumers. A
further price increase has been announced.
Revenue at George Weston Foods in Australia, excluding the
benefit of the 53rd week this year, was ahead of last year.
Adjusted operating profit was lower, mainly driven by a margin
decline in the Don meat business. Despite operating restrictions
imposed by regional government arising from COVID-19, the Don
factory performed well delivering excellent labour utilisation and
meat yields, as well as controlling fixed overhead costs. Although
we have seen some recovery in foodservice, we are still
experiencing volumes lower than last year. In Tip Top Australia,
The One and Abbotts bread brands continued to perform strongly and
benefited from a consumer trend to buy trusted brands. Yumi's
delivered strong growth with share gains in its existing products
and successful new product launches.
Sugar
Actual Constant
2021 2020 currency currency
=================================== ===== ===== ========= =========
Revenue GBPm 1,650 1,594 +4% +8%
=================================== ===== ===== ========= =========
Adjusted operating profit GBPm 152 100 +52% +75%
=================================== ===== ===== ========= =========
Adjusted operating profit margin 9.2% 6.3%
=================================== ===== ===== ========= =========
Return on average capital employed 10.2% 6.3%
=================================== ===== ===== ========= =========
AB Sugar delivered another year of strong trading performance
with big improvements in adjusted operating profit, profit margin
and return on average capital employed. Revenue was 8% ahead of
last year at constant currency with higher domestic and regional
volumes for Illovo as well as higher prices in Europe and Africa.
The commercial performance in Illovo, together with continued
savings from our cost improvement and efficiency programmes,
resulted in a 75% increase in adjusted operating profit to
GBP152m.
The world sugar price continued to rise through the year.
European sugar prices also increased with a reduction in stocks
following lower EU sugar production in the last two campaigns.
Looking ahead, estimates for EU sugar production in next year's
campaign are marginally higher, with a recovery in yields combined
with a slight reduction in the planted area, but are still
estimated to be broadly in line with EU consumption in the next
marketing year.
UK sugar production of 0.9 million tonnes this year was well
down on the 1.19 million tonnes produced last year, due to adverse
weather conditions at the time of planting and the severe impact of
virus yellows, a disease transmitted by aphids on sugar beet.
Difficult processing conditions and limited beet availability
increased costs further during the campaign and were an offset to
the higher sales prices achieved. Looking ahead, our production
forecast for next year is marginally over 1.0 million tonnes with a
reversion to normal yields more than offsetting a reduced planting
area. We expect our UK sales to continue to be strong next year
although significant cost increases in gas, carbon and logistics
are likely to limit an improvement in year-on-year profitability.
Work to restart the Vivergo bioethanol plant next calendar year is
on track and the recent transition to E10 in blended petrol
underpins the strong demand for bioethanol from fuel blenders.
In Spain, strong demand and higher prices resulted in a
significant increase in revenues. The operating profit margin,
however, was impacted by lower volumes from the northern beet crop.
Our current view for yield and sugar content from beet sugar and
lower margins due to the expected increase in future raw refining
volumes, has resulted in a non-cash exceptional charge of EUR136m
in these accounts to write-down the net asset value of this
business.
Illovo revenues were ahead of last year driven by both strong
domestic sales, particularly in Zambia and Malawi, and regional
sales. Sugar production was ahead of last year with better
production in Tanzania and Mozambique compared to last year but was
held back by disruption to the operations in South Africa and
Eswatini as a result of civil unrest. The recovery in profit this
year is very strong, with adjusted operating profit exceeding that
delivered in recent years. This was driven by improved sales, the
benefits from restructuring activities last year and further
efficiency activities this year.
The campaign in China completed with sugar production ahead of
last year although poor agronomic conditions held back the yield
from a larger planted area.
Given the on-going trading challenges in some of our smaller
sugar businesses we have reviewed our outlook for these
cash-generating units, including the forecast evolution of beet
area and yields. As a result, we have made a one-time non-cash
adjustment of GBP21m to the relevant net asset values as an
exceptional charge this year.
Agriculture
Actual Constant
2021 2020 currency currency
=================================== ===== ===== ========= =========
Revenue GBPm 1,537 1,395 +10% +11%
=================================== ===== ===== ========= =========
Adjusted operating profit GBPm 44 43 +2% +7%
=================================== ===== ===== ========= =========
Adjusted operating profit margin 2.9% 3.1%
=================================== ===== ===== ========= =========
Return on average capital employed 10.6% 10.5%
=================================== ===== ===== ========= =========
Trading at AB Agri was strongly ahead of last year with revenue
and adjusted operating profit increases of 11% and 7% respectively
at constant currency.
The revenue growth was delivered by higher commodity prices and
an increase in feed volumes. Growth was notable in China, our UK
feed business AB Connect and in AB Neo, which specialises in feed
for animals in the early stages of life.
China delivered a much-improved trading performance and
benefited from a recovery from the effects of African Swine Fever.
We developed feed sales for other species and supported our margins
with good procurement. The regionalisation of the nutrition
technical team and increased technical talent has supported the
launch of new products. Adjusted operating profit at Frontier was
ahead with a much-improved result from grain trading as a result of
increased commodity price volatility driven by reduced UK wheat
availability, Brexit uncertainty and tightening global supply and
demand. AB Neo was also ahead driven by the performance in Spain
due to increased demand for starter feed and additives, as well as
favourable buying gains.
Sales and adjusted operating profit at AB Vista, our
international feed enzymes business, were broadly in line with last
year. Sales in Asia Pacific and the Americas were ahead and offset
a decline in EMEA as lockdowns affected meat consumption and
consequently feed production.
Our UK pig and poultry animal feed business has announced its
intention to build a state-of-the-art animal feed mill in the east
of England. This substantial investment will provide much needed
capacity and will also ensure consistent quality.
Ingredients
Actual Constant
2021 2020 currency currency
=================================== ===== ===== ========= =========
Revenue GBPm 1,508 1,503 In line +4%
=================================== ===== ===== ========= =========
Adjusted operating profit GBPm 151 147 +3% +8%
=================================== ===== ===== ========= =========
Adjusted operating profit margin 10.0% 9.8%
=================================== ===== ===== ========= =========
Return on average capital employed 16.9% 16.7%
=================================== ===== ===== ========= =========
Ingredients sales were 4% ahead of last year and strong trading
by AB Mauri delivered an increase in adjusted operating profit of
8%, all at constant currency. The results of AB Mauri in Argentina
continue to be reported under IAS 29 Financial Reporting in
Hyperinflationary Economies, which reduced operating profit by
GBP7m (2020 - GBP5m).
The sales growth in AB Mauri was led by our operations in Latin
America, with Brazil benefiting from a recovery in the craft
channel and new non-dairy creamer product launches. Argentina
delivered good growth despite difficult ongoing economic
conditions. Strong growth was also achieved in the South and South
East Asia region, supported by the implementation of a strong
technical service and route-to-market model. The easing of COVID-19
restrictions in the EMEA region allowed product development
activities to resume and sales increased as a result. The Italian
business has now completed a new, centralised bakery ingredients
centre that will consolidate and enhance our competitiveness and
innovation in production and product development. Last year, the
demand for retail yeast and bakery ingredients generally remained
elevated compared to pre-COVID levels. However, some declines to
pre-COVID volumes were noted in countries as pandemic restrictions
have been lifted.
During the year, we opened our new Global Technology Centre in
the Netherlands. This provides an upgraded international hub for
the research and development of bakery solutions, as well as
accommodating a pilot plant, laboratories and training
facilities.
Significant inflationary pressures emerged across many areas of
our cost base during the final months of the year, and these are
anticipated to continue in the new financial year. Price increases
will be implemented to preserve margins.
ABF Ingredients businesses delivered revenue and profit growth
despite the challenges of COVID-19 and the supply chain. A recovery
of customer demand for our products was particularly noticeable in
the last quarter.
Our enzymes business delivered a record year in its bakery, food
and textiles platforms driven by strong growth outside Europe,
where we continued to enhance our local application and commercial
capabilities. Innovative new products and operational efficiencies
will be facilitated by the new state-of-the art pilot plant which
was commissioned during the year. We maintained share in the animal
feed enzyme market despite competitive pricing pressures.
ABITEC grew its sales in the pharmaceutical and nutritional
lipids markets. Our yeast extracts business delivered a record year
in sales and profit driven by increased sales to the fast-growing
market for meat analogues, new product introductions in human and
animal nutrition and demand recovery in the US foodservice
industry. Our antacids and pharmaceutical excipients business, SPI
Pharma, also delivered good growth fuelled by price and volumes,
global momentum in antacids and the promising initial success of a
new excipient product line for oral dosage forms.
Retail
Actual Constant
2021 2020 currency currency
=================================================== ===== ===== ========== ==========
* 5%
Revenue GBPm 5,593 5,895 * 5%
=================================================== ===== ===== ========== ==========
Adjusted operating profit (after repayment
of job retention scheme monies) GBPm 321 362 * 11% * 11%
=================================================== ===== ===== ========== ==========
Adjusted operating profit (before repayment
of job retention scheme monies) GBPm 415 362 +15% +15%
=================================================== ===== ===== ========== ==========
Adjusted operating profit margin (before repayment
of job retention scheme monies) 7.4% 6.1%
=================================================== ===== ===== ========== ==========
Return on average capital employed (before
repayment of job retention scheme monies) 6.6% 5.6%
=================================================== ===== ===== ========== ==========
Sales at Primark, including a 53rd week this financial year,
were 5% below last year at both actual and constant currency
exchange rates. This year a third of the available trading days
were lost as a result of store closures due to the public health
measures in our major markets to control the spread of COVID-19.
This compared with the loss of one quarter of the available trading
days in the previous financial year. Despite this decreased level
of trading days, adjusted operating profit, before repayment of job
retention scheme monies, increased 15% to GBP415m representing an
adjusted operating profit margin of 7.4% for the full year.
Operating profit margin improved during the year from 1.9% in the
first half to 10.6% in the second half, excluding the 53rd week.
The repayment of monies received from the job retention schemes in
the UK, Republic of Ireland, Portugal, Czechia and Slovenia this
year has been charged in the second half at GBP94m.
This year has been characterised by greater than expected
restrictions on the ability of Primark to trade. For this financial
year we estimate the loss of sales, while stores were closed, to be
some GBP2bn. When stores were open, full year like-for-like sales
were 12% below two years ago and were 7% lower excluding
destination city centre stores. In the first half, the
like-for-like performance reflected lower category spend and lower
footfall due to trading restrictions. When the stores reopened in
the third quarter, customers came back to our stores in large
numbers and sales were 3% ahead on a like-for-like basis compared
to the same period two years ago. Like-for-like sales declined by
17% in the fourth quarter and were affected by the impact on
footfall of the changes in public health measures. Trading varied
considerably across the estate. In the UK, sales were affected by
the number of people required to self-isolate following contact
tracing alerts - the "pingdemic". The self-isolation rules were
then eased in early August with like-for-like sales showing a
corresponding improvement through the period from a decline of 24%
in the first four weeks of the quarter to a decline of 11% in the
last four weeks of the quarter. In Continental Europe,
like-for-like sales were impacted by the performance of our stores
in Spain and Portugal with the decline in foreign tourism at that
time.
Our US business performed well this financial year and delivered
a good profit margin. Like-for-like sales consistently improved
during the year and for the full year were 6% up on the same period
two years ago excluding the city centre Boston store. Six years
after our first store openings, Primark is clearly resonating with
the US customer and brand awareness continues to build. This was
especially evident in the strong trading at all the new stores
opened during the year: Sawgrass Mills Florida, American Dream New
Jersey, State Street Chicago and Fashion District Philadelphia. The
performance of both our existing and newly opened stores, combined
with the profitability, gives us confidence to increase the pace of
expansion in this important market.
We continue to extend our product offering to meet changing
customer needs. In September we launched an expanded Primark Home
department at Merry Hill in the West Midlands, with increased
in-store selling space to offer an all-new range of quality,
affordable home and lifestyle products. The new space enabled us to
offer a much wider range including new categories such as cookware,
ceramics, rugs and furniture. Following a very positive customer
response, we are rolling this extended range out to a total of 40
stores over the coming months.
Sales of our autumn/winter ranges have started well and sales
densities continue to improve. Primark has capitalised on the
continued trend for 'comfort living' with the launch of its range
of 'snuddies', attracting a strong response from customers across
all markets. Bestsellers include the avocado print for men and,
under our licence collection, Minnie Mouse for kids. The Primark
Edit of quality investment pieces for women has proven very popular
since launch in September, with strong sales of its seasonal
staples such as cotton cashmere jumpers and a classic trench coat
driven by promotion on Primark's social channels. Another trend
which came through strongly in the second half was the desire by
more customers to get outside and get active. We launched the Great
Outdoors range with a collection of waterproof jackets, boots and
breathable trousers spanning womenswear, menswear and kids. It has
also extended the range of product under the Primark Cares label
with 65% of the Outdoors collection made from recycled or more
sustainably sourced materials. Overall, sales of the Primark Cares
range, made from recycled and more sustainably sourced materials,
continue to perform strongly since the customer launch of our
sustainability strategy in September.
Following the strong trading after the reopening of our stores
in the spring, inventory, which had built up during the lockdown,
reduced. All spring/summer inventory brought forward from last year
has been sold and the autumn/winter inventory held over from last
season will be sold in the coming months. In recent weeks, we have
experienced further supply chain disruption including temporary
closures at dispatch ports, limited sea container availability and
congestion at destination ports. These disruptions have delayed
both the handover of inventory from suppliers and the shipping and
delivery of inventory to store. We are closely managing this with
the support of our logistics providers, taking advantage of our
scale and efficient warehouses, and we are prioritising the product
most in demand. Although, at this point, the disruption is causing
limited availability on a small number of lines, our warehouse
inventories give us stock cover on the majority of lines for the
important Christmas trading period.
Margin in the second half benefited from a significant reduction
in store operating costs, driven by lower employee headcount,
improved labour scheduling, and savings in other operating costs.
Looking ahead to our next financial year, operating profit margin
will continue to benefit from these store labour efficiencies and
lower operating costs. Our forecast is for the effect on margin of
the increased costs relating to supply chain and raw material
inflationary pressures to be broadly mitigated by these lower store
operating costs and the transaction currency gain from the weaker
US dollar exchange rate. We expect the adjusted operating profit
margin to be above 10%.
In September, Primark unveiled a wide-reaching new
sustainability strategy, pledging to make more sustainable fashion
choices affordable for all. It is designed to reduce fashion waste,
halve carbon emissions across its value chain and improve the lives
of people who make Primark products. The new strategy was launched
with a new customer campaign, 'How Change Looks', setting out the
key commitments in prominent locations across all stores and
digital channels in all our 14 markets. The nine-year programme
includes commitments to ensure all Primark clothing is made from
recycled or more sustainably sourced materials by 2030, increasing
from 25% of all clothes sold at the time of launch; the elimination
of all single-use plastics in Primark's own operations by 2027; and
the commitment to pursue a living wage for workers in the supply
chain by 2030. Primark will report annually on its progress against
the nine high-level targets in the new strategy.
This sustainability transition is expected to lead to only a
modest increase in costs in some areas of the business, net of
mitigating actions, over the period to 2030. We are confident of
our ability to mitigate these increased costs without any material
impact on Primark's operating profit margin in the short term and
without any significant movements in the margin over the longer
term. Additionally, we believe that this is an opportunity to drive
further sales growth from both existing and new customers.
Digital is becoming increasingly important in Primark. We expect
the roll-out of the enabling stock management system, Oracle,
across all our stores in the current financial year and for all
stores to be equipped with state-of-the-art point of sale terminals
by the end of calendar year 2022. Following the announcement in
July of our plans to launch a new customer-facing website, the
design and development of the new digital platform is progressing
well. We are on track to launch the new website in the UK in the
first quarter of 2022. The new site will showcase those products
which customers expect to be able to browse online, before they
come into our stores, with much richer product information and
imagery for every product shown. We expect this to be around 70% of
our total range, substantially up from some 20% on the current
site. The new site will then enable customers to research product
availability in their local store and this responds to what we know
is a clear customer demand. The initial response from consumer
testing has been positive. In addition, we are building digital
marketing capability to enable us to start to capture and manage
customer data and to begin to communicate directly with customers
with relevant marketing messages.
At year end we were trading from 398 stores and 16.8 million sq
ft of retail selling space, after our latest new store in the
Fashion District of Philadelphia in the US was opened on 16
September. This represents an increase of 0.6 million sq ft over
the year. Fifteen stores were added this year: four stores in the
US; four in Spain; two in Italy, and one each in France, the UK,
the Netherlands and Poland, as well as our first store in Czechia.
We relocated to new premises in Southend. One of our first stores
to open in the Netherlands, a small store in Alkmaar, was closed.
Downsizing of the Downtown Crossing store in Boston was
successfully completed in September. Encouragingly sales in the
three German stores which were downsized last year have remained in
line with pre-downsizing levels.
In the next financial year, we are planning to add a net 0.5
million sq ft of additional selling space. Eleven store openings
have been confirmed: four new stores in Italy, four new stores in
Spain and one store in each of US, Czechia and Ireland.
We see growth in all our existing markets. Over the next five
years we expect our store estate to grow to 530 stores from 398 at
financial year end. In particular, we will accelerate the expansion
of our selling space in the major markets of the US, France, Italy
and Iberia, building on our established brand recognition, proven
track record of successful store openings and strengthening
relationships with key landlords. Reflecting this, we are expanding
our team of in-market specialist acquisition surveyors. We are
increasing the use of technology and demographic data to inform our
decisions about new store locations. Additionally, we expect to
benefit from more store opportunities with the revival of property
sector development as we emerge from the pandemic.
In the US, the potential for new stores is considerable. We
successfully opened four stores in the last financial year,
including new stores well beyond our existing north-east footprint,
in Florida and Chicago. This financial year we are committed to
opening a store on Jamaica Avenue, Queens and have already signed
four further leases to expand our reach in the greater New York
area and a lease for a store in Tyson's Corner, Washington.
In Western Europe, our major opportunities for growth are in
Iberia, Italy and France. In Spain, our second biggest market, we
opened four new stores during this financial year, including
flagships in the city centres of Barcelona and Bilbao, bringing our
total number to 52 at the year end. We have confirmed plans to open
many more locations in this important country in the coming years,
including four in the new financial year. We plan to add four new
stores in Italy, the largest being Milan Via Torino.
We are also expanding into Central and Eastern Europe (CEE). A
milestone was the opening of our 46,000 sq ft store in Prague's
historic Wenceslas Square in June, building on our recently opened
stores in Ljubljana Slovenia and in Poland. Our reception from CEE
shoppers has been very positive. We are opening our second store in
Czechia next summer and we have signed leases for our first store
in Bratislava, Slovakia and four further stores in Poland.
In addition, we will continue to explore opportunities in new
markets.
New store openings in the year ended 18 September 2021:
Czechia France Italy Netherlands
Prague Wenceslas Coquelles Roma Maximo Rotterdam Forum
Square Roma - Est
Poland Spain UK US
Poznan Barcelona Sant Cugat Tamworth Sawgrass Mills Florida
Espacio León American Dream New
Bilbao Gran Via Jersey
Marbella Chicago State Street
Philadelphia Fashion
District
Year ended Year ended
18 September 12 September
2021 2020
====================== ======================
sq ft sq ft
# of stores 000 # of stores 000
================================================== =========== ========= ============= =======
UK 191 7,597 190 7,534
Spain 52 2,143 48 1,988
Germany 32 1,841 32 1,841
Republic of Ireland 36 1,076 36 1,076
France 20 1,044 19 996
Netherlands 20 1,016 20 971
US 13 563 9 470
Belgium 8 403 8 403
Portugal 10 383 10 383
Italy 7 361 5 257
Austria 5 242 5 242
Poland 2 77 1 40
Czechia 1 50 n/a n/a
Slovenia 1 46 1 46
================================================== =========== ========= ============= =======
Total 398 16,842 384 16,247
================================================== =========== ========= ============= =======
Financial review
Group performance
Group revenue was in line with last year on a reported basis at
GBP13.9bn. On a reported basis adjusted operating profit of
GBP1,011m was 1% lower than last financial year. In calculating
adjusted operating profit, the amortisation charge on non-operating
intangibles, profits less losses on disposal of non-current assets,
transaction costs, amortisation of acquired inventory fair value
adjustments and exceptional items are excluded from statutory
operating profit.
The income statement this year included a net charge for
exceptional items of GBP151m. This mainly comprised the impairment
of certain plant and equipment in our sugar business. In Spain, our
current view for yield and sugar content from beet sugar and lower
margins due to the expected increase in future raw refining
volumes, resulted in a non-cash exceptional charge of EUR136m to
write-down the net asset value of this business. Given the ongoing
trading challenges in some of our smaller sugar businesses,
following a review of our projections for the forecast evolution of
beet area and yields, we have made a non-cash adjustment of GBP21m
to the relevant net asset values as an exceptional charge this
year. An inventory charge of GBP21m in Primark was taken at the
half year which related to the clearance from our stores before
reopening after lockdown of certain seasonal items on display and
which could not be sold before the end of the season. This
provision was used during the second half of the year. Prior year
exceptional items included a mark-down provision of GBP22m for
potential damage to Primark inventory stored on our behalf by
suppliers for longer than usual as a result of the pandemic.
Minimal damage was found and the majority of the provision was
released this year.
On an unadjusted basis, statutory operating profit was in line
with last year at GBP808m.
The strengthening of sterling this year against some of our
trading currencies resulted in a loss on translation of GBP36m.
Net finance expense decreased this year due to the repayment of
GBP25m of private placement debt and no RCF interest charges
following the repayment of the facility at the end of the last
financial year. Profits on the sale and closure of businesses
amounted to GBP20m and profits less losses on sale of non-current
assets were GBP4m.
Statutory profit before tax on a reported basis was up 6% to
GBP725m. On our adjusted basis profit before tax was down by 1% to
GBP908m.
Acquisitions and disposals
In May 2021, the Group's Ingredients business acquired DR
Healthcare España, a Spanish enzymes producer for a total
consideration of GBP14m.
During the period the Group contributed GBP43m to the bakery
ingredients joint venture in China with Wilmar International. These
businesses were classified as a disposal group and held for sale at
the previous year end. In August 2021, the Group agreed the sale,
subject to regulatory approval, of a further factory in China to
this joint venture and a non-cash reversal of GBP10m for the
impairment of these assets has been included in profit on sale and
closure of business.
Closure provisions of GBP3m relating to disposals made in
previous years which are no longer required were released to sale
and closure of business in Ingredients and Grocery, both in Asia
Pacific.
Taxation
We recognise the importance of complying fully with all
applicable tax laws as well as paying and collecting the right
amount of tax in every country in which the Group operates. Our
Board-adopted tax strategy is based on seven tax principles that
are embedded in the financial and non-financial processes and
controls of the Group. This tax strategy is available on the
Group's website at:
www.abf.co.uk/documents/pdfs/policies/abf_tax_strategy.pdf .
This year's tax charge on the adjusted profit before tax was
GBP255m at an effective rate of 28.1% (2020 - 28.8%). Based on
current tax rates at the time of writing and with the recovery in
Primark's profitability, we expect the Group's effective tax rate
to fall next year to a level closer to pre-COVID rates.
Looking ahead beyond next year, we anticipate upward pressure on
the effective tax rate due to the impact of corporation tax
increases, notably the increase enacted in the UK, and the proposed
increase recently announced in Ireland. We continue to monitor
developments in other jurisdictions and also in respect of the
OECD's BEPS 2.0 proposals.
The total tax charge for the year of GBP227m benefited from a
credit of GBP27m (2020 - GBP42m) for tax relief on the amortisation
of non-operating intangible assets, amortisation of acquired
inventory fair value adjustments, profits on disposal of
non-current assets, losses on disposal of businesses and
exceptional items.
Earnings and dividends
Earnings attributable to equity shareholders in the current year
were GBP478m and the weighted average number of shares in issue
during the year, which is used to calculate earnings per share, was
790 million (2020 - 790 million). Given the marginal decline in
operating profits and the reduction in the adjusted effective tax
rate from 28.8% to 28.1%, earnings per ordinary share were 5%
higher than last year at 60.5p. Adjusted earnings per share, which
provides a more consistent measure of trading performance, declined
by 1% from 81.1p to 80.1p.
We decided not to declare an interim dividend nor propose a
final dividend relating to the last financial year. This was due to
the impact of COVID-19 on the Group's cash flow driven by the
duration and number of Primark store closures. This year the Board
declared an interim dividend of 6.2 pence per share (2020 - nil)
which was paid on 9 July 2021 to shareholders registered at the
close of business on 4 June 2021.
For the full year, the Board has proposed a final dividend of
20.5p per share giving a full year dividend of 26.7p per share.
Further, the Board has declared the payment of a special dividend,
to be paid as a second interim dividend, of 13.8p per share. The
payment date for the 2021 final dividend and second interim
dividend will be 14 January 2022 to shareholders on the register on
17 December 2021.
Total dividends for the 2021 financial year would therefore be
40.5p per share at a total cost of GBP320m.
Balance sheet
Non-current assets of GBP10.8bn were GBP0.1bn lower than last
year. This was driven by a decrease in the investment in property,
plant and equipment and right-of-use assets with depreciation,
amortisation and impairments higher than capital expenditure and
acquisitions made in the year. This was mostly offset by an
increase in employee benefits assets as the surplus in the UK
defined benefit pension scheme improved significantly.
Working capital at the year end was marginally higher than last
year.
Net cash at the year end excluding lease liabilities was
GBP1.9bn compared with net cash at the end of last year of GBP1.6bn
reflecting the strong operating cash flow in the year. Net debt
including lease liabilities was GBP1.4bn compared with GBP2.1bn
last year.
The Group's net assets of GBP10bn were GBP0.6bn higher than last
year. Return on capital employed for the Group which is calculated
by expressing adjusted operating profit as a percentage of the
average capital employed for the year, was higher this year at 9.8%
compared with 9.5% last year.
Cash flow
Net cash inflow from operating activities decreased from
GBP1,753m last year to GBP1,413m this year mainly as a result of
the increase in the change in working capital compared to the prior
year. Capital expenditure increased by GBP5m compared to the prior
year and GBP21m was realised from the sale of property, plant and
equipment. The net cash outlay on acquisitions and disposals was
GBP23m.
Tax paid in the year amounted to GBP298m (2020 - GBP254m). The
increase in tax paid was primarily due to the state aid payment of
GBP23m and tax top up payments made due to strong final quarter
results at the end of 2020.
Financing and liquidity
The financing of the Group is managed by a central treasury
department.
The Board's treasury policies are in place to maintain a strong
capital base and manage the Group's balance sheet to ensure
long-term financial stability. They are the basis for investor,
creditor and market confidence and enable the successful future
development of the business.
The Board has approved a financial leverage policy for the
Group. In the ordinary course, the Board prefers to see the Group's
ratio of Net Debt including lease liabilities:Adjusted EBITDA to be
well under 1.5 times at each half-year and year-end reporting date.
In exceptional circumstances, it will be prepared to see leverage
above that level for a short period of time.
We are pleased that S&P Global announced that they had
assigned to the Group an 'A' grade long-term issuer credit rating,
with a stable outlook, which reflected the strength of each of the
Group's businesses, their diversity, and ABF's strong credit
metrics underpinned by a conservative financial policy.
At the year end, the Group had total committed borrowing
facilities amounting to GBP1.5bn, comprising GBP1.1bn provided
under the RCF, GBP0.3bn of US private placement notes, maturing
between 2021 and 2024, and GBP0.1bn of local committed facilities
in Africa. At the year end, GBP0.3bn was drawn down under the
private placement notes and local committed facilities. The Group
also had access to GBP0.5bn of uncommitted credit lines under which
GBP0.1bn was drawn at the year end.
Cash and cash equivalents totalled GBP2.3bn at the year end, of
which centrally available cash on hand was GBP1.9bn.
The Group holds substantial net cash bank balances, which reduce
its net debt, which include lease liabilities, and most importantly
ensure that it has sufficient liquidity to meet unforeseen
requirements.
Pensions
The Group's defined benefit pension schemes were in surplus by
GBP493m at the year end compared with a deficit last year of
GBP66m. The UK scheme, which accounts for 91% of the Group's gross
pension assets, was in surplus by GBP633m (2020 - GBP94m). The
increase in the UK pension surplus was driven by large asset gains
on the pension assets, whereas the defined benefit obligations
increased marginally driven by adverse changes in inflation
assumptions. The pension surplus for the Group will result in an
increased interest income compared to last year, and this will be
reported in other financial income.
The last triennial valuation of the UK scheme was undertaken at
5 April 2020 which determined a deficit of GBP302m. This valuation
was performed just after the first COVID-19 measures were
introduced. Although we were required to agree a recovery plan with
the trustees, in the light of the subsequent asset performance, we
do not currently expect to make any payments.
The charge for the year for the Group's defined contribution
schemes, which was equal to the contributions made, amounted to
GBP81m (2020 - GBP79m). This compared with the cash contribution to
the defined benefit schemes of GBP42m (2020 - GBP37m).
New accounting policies
The following accounting standards and amendments were adopted
during the year and had no significant impact on the Group:
- Amendments to IFRS 3 Definition of a Business;
- Amendments to IAS 1 and IAS 8 Definition of Material;
- Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
Interest Rate Benchmark Reform - Phase 1; and
- Amendments to References to the Conceptual Framework in IFRS
Standards.
John Bason
Finance Director
The annual report and accounts is available at www.abf.co.uk and will
be despatched to shareholders on 11 November 2021. The annual general
meeting will be held at 11am on Friday, 10 December 2021. Further
details are provided in the Notice of Annual General Meeting, although
please also monitor the AGM 2021 page of the Company's website (www.abf.co.uk/agm
) for any updates.
Principal risks and uncertainties
Managing our risks
Our approach to risk management
The delivery of our strategic objectives and the sustainable
growth (or long-term shareholder value) of our business, is
dependent on effective risk management. We regularly face business
uncertainties and it is through a structured approach to risk
management that we are able to mitigate and manage these risks and
embrace opportunities when they arise. These disciplines remain
effective as we continue to navigate our way through the ongoing
challenges resulting from COVID-19 and the changing risk landscape
as the world starts to emerge from the pandemic.
The diversified nature of our operations, geographical reach,
assets and currencies are important factors in mitigating the risk
of a material threat to the Group's sustainable growth and
long-term shareholder value. However, as with any business, risks
and uncertainties are inherent in our business activities. These
risks may have a financial, operational or reputational impact.
The Board is accountable for effective risk management, for
agreeing the principal, including emerging, risks facing the Group
and ensuring they are successfully managed. The Board undertakes a
robust annual assessment of the principal risks, including emerging
risks, that would threaten the business model, future performance,
solvency or liquidity. The Board also monitors the Group's exposure
to risks as part of the performance reviews conducted at each Board
meeting. Financial risks are specifically reviewed by the Audit
Committee.
Our decentralised business model empowers the management of our
businesses to identify, evaluate and manage the risks they face, on
a timely basis, to ensure compliance with relevant legislation, our
business principles and Group policies.
Our businesses perform risk assessments which consider
materiality, risk controls and specific local risks relevant to the
markets in which they operate. The collated risks from each
business are shared with the respective divisional chief executives
who present their divisional risks to the Group Executive.
Emerging risks are identified and considered at both a Group and
individual business level, with key management being close to their
geographies. These risks are identified, as part of the overall
risk management process, through a variety of horizon-scanning
methods including geopolitical insights; ongoing assessment of
competitor activity and market factors; workshops and management
meetings focused on risk identification; analysis of existing risks
using industry knowledge and experience to understand how these
risks may affect us in the future; and representation and
participation in key industry associations.
The Group's Director of Financial Control receives the risk
assessments on an annual basis and, with the Finance Director,
reviews and challenges them with the divisional chief executives,
on an individual basis.
These discussions are wide-ranging and consider operational,
environmental and other external risks. These risks and their
impact on business performance are reported during the year and are
considered as part of the monthly management review process.
Group functional heads including Legal, Treasury, Tax, IT,
Pensions, HR, Procurement and Insurance also provide input to this
process, sharing with the Director of Financial Control their view
of key risks and what activities are in place or planned to
mitigate them. A combination of these perspectives with the
business risk assessments creates a consolidated view of the
Group's risk profile. A summary of these risk assessments is then
shared and discussed with the Finance Director and Chief Executive
at least annually.
The Director of Financial Control holds meetings with each of
the non-executive directors seeking their feedback on the reviews
performed and discussing the key risks, which include emerging
risks, and mitigating activities identified through the risk
assessment exercise. Once all non-executive directors have been
consulted, a Board report is prepared summarising the full process
and providing an assessment of the status of risk management across
the Group. The key risks, mitigating controls and relevant policies
are summarised and the Board confirms the Group's principal risks.
These are the risks which could prevent Associated British Foods
from delivering its strategic objectives. This report also details
when formal updates relating to the key risks will be provided to
the Board throughout the year.
Key areas of focus this year
Effective risk management processes and internal controls
We continued to seek improvements in our risk management
processes to ensure the quality and integrity of information and
the ability to respond swiftly to direct risks. During the year,
the Audit Committee on behalf of the Board conducted reviews on the
effectiveness of the Group's risk management processes and internal
controls in accordance with the 2018 UK Corporate Governance Code.
Our approach to risk management and systems of internal control is
in line with the recommendations in the Financial Reporting
Council's (FRC) revised guidance 'Risk management, internal control
and related financial and business reporting' (the Risk
Guidance).
The Board is satisfied that internal controls were properly
maintained and that key and emerging risks are being appropriately
identified and managed.
COVID-19
Effective communication both within our businesses and across
the Group has ensured that our food businesses continued to
operate, providing safe, nutritious and affordable food to
customers. Primark's leadership demonstrated agility in responding
to store activities being restricted at short notice. In addition,
its effective planning ensured that the UK stores were well
prepared for a safe reopening from 12 April.
COVID-19 has resulted in increased volatility and uncertainty in
almost all of our markets, particularly the UK, Europe and the US,
where there is a high risk of inflation impacting on energy,
commodities and wages. During the year, changes in public health
measures in our major markets to control the spread of COVID-19,
and the Delta variant in particular, have impacted both our
customers and employees. Whilst the UK now has an advanced
vaccination programme and the majority of COVID-19 restrictions
have been lifted, the outlook is currently more mixed in a number
of countries in which we operate. For example, there continue to be
ongoing lockdowns in place across Australia and New Zealand. In
addition, our retail business continues to adapt to localised
restrictions and special arrangements for shoppers in some of our
markets, for example in Portugal and Slovenia.
As the world starts to emerge from the COVID-19 pandemic, there
are continuing impacts our consumers, customers, retailers,
suppliers and our employees. Across a number of our businesses,
there is the risk of increased pressure on the supply chains
resulting from labour shortages as economies reopen which are
exacerbated by employee health and safety concerns. The closure of
the Suez Canal in March compounded some supply chain challenges
that resulted from the pandemic and increased buying as economies
have reopened. We have contracts in place for major parts of our
business to ensure that we have the cost, stability and interim
security of volumes in the volatile inbound market. Our businesses
are reliant on the availability of skilled HGV drivers. Whilst
there is currently a shortage of drivers in other parts of Europe,
the USA and Australia, the situation has been exacerbated in the UK
as a result of the EU exit. We continue to work closely with our
major carriers and logistics partners to minimise supply chain
disruption. The situation remains fluid and is being closely
managed and monitored.
Throughout the pandemic, the Audit Committee, on behalf of the
Board has provided ongoing support and challenge to management's
processes and internal controls. Numerous lessons have been learnt
and we have developed a flexible set of possible responses that are
ready to be deployed in the event of further restrictions being
imposed, whether that be locally, regionally or globally.
EU exit
Our businesses were well prepared for the end of the Brexit
transition period and we have seen no material disruption to our
supply chains. We have experienced a small increase in the
administrative costs of trading and in limited cases duties related
to our trading with the EU.
Regulatory changes
Our businesses are facing a large number of regulatory changes
over the coming years with new requirements being developed in a
number of areas including the Task Force on Climate-related
Financial Disclosures (TCFD), Environmental, Social and Governance
(ESG), extended producer responsibility regarding packaging and
plastics and the potential requirements resulting from the BEIS
White Paper: Restoring Trust in Audit and Corporate Governance. For
each of these areas, groupwide initiatives are well advanced to
meet the specific requirements. The extent of change will have an
impact on the capacity of management at the time when they are
dealing with the ongoing challenges resulting from COVID-19,
alongside the day-to-day growth of our businesses.
Environment
ABF has a clear sense of social purpose: it exists to provide
safe, nutritious and affordable food, and clothing that is great
value for money, to hundreds of millions of customers worldwide.
ABF is set on a mission: to continue to make food and clothes
available and affordable and also carbon neutral as quickly as we
can. The people in our businesses are motivated by the excitement
that comes from driving social and environmental improvement. ESG
isn't simply a matter of risk mitigation. ESG factors, including
the potential implications of climate change, are considered as
part of our well-established risk management framework and they
also frame opportunities for our businesses to become better. Our
leaders are empowered to include the prioritisation of mitigation
of environmental impacts as a central aspect of their business
plans, sharing learnings from other ABF businesses and applying
industry best practice. The Board reviews each business segment in
depth every year, and ESG factors are central to the analysis and
discussion.
Our culture and values, and particularly our devolved
decision-making model, empowers the people closest to risks to make
the right judgements to mitigate risks. In respect of ESG, each of
our businesses has prioritised and is devoting most resources to
those ESG factors which are of greatest relevance and will make the
greatest long-term difference. They are also challenged by the
centre through detailed reviews of the Group's environmental
performance, health and safety performance, and its diversity,
equity and inclusion and workforce engagement programmes.
Our principal risks and uncertainties
The directors have carried out an assessment of the principal
risks facing Associated British Foods, including emerging risks,
that would threaten its business model, future performance,
solvency or liquidity. Outlined below are the Group's principal
risks and uncertainties and the key mitigating activities in place
to address them. These are the principal risks of the Group as a
whole and are not in any order of priority.
Associated British Foods is exposed to a variety of other risks
related to a range of issues such as human resources and talent,
community relations, the regulatory environment and competition.
These are managed as part of the risk process and a number of these
are referred to in our 2021 Responsibility Update. Here, we report
the principal risks which we believe are likely to have the
greatest current or near-term impact on our strategic and
operational plans and reputation.
They are grouped into external risks, which may occur in the
markets or environment in which we operate, and operational risks,
which are related to internal activity linked to our own operations
and internal controls.
The 'Changes since 2020' describe our experience and activity
over the last year.
External risks
----------------------------------------------------------------------------------------------------------------------------------------------------
Movement in exchange
rates ->
--------------------------------------------------------------- ------------------------------------------------------ -----------------------
Context and potential Board-approved policies Primark covers its
impact require businesses to currency
Associated British Foods hedge all transactional exposure on purchases
is a multinational Group currency exposures and of
with operations and transactions long-term supply or purchase merchandise denominated
in many currencies. contracts which are denominated in foreign currencies
Changes in exchange rates in a foreign currency, at
give rise to transactional using foreign exchange the time of placing
exposures within the forward contracts. orders,
businesses and to translation Cash balances and borrowings with an average tenor
exposures when the assets, are largely maintained of
liabilities and results in the functional currency Primark's hedging
of overseas entities of the local operations. activity
are translated into sterling Cross-currency swaps of between three and
upon consolidation. are used to align borrowings four
Mitigation with the underlying currencies months. There was a
Our businesses constantly of the Group's net assets positive
review their currency (refer to note 26 to transactional effect
exposures and their hedging the financial statements from
instruments and, where for more information). changes in the US
necessary, ensure appropriate Changes since 2020 dollar
actions are taken to Sterling strengthened exchange rate on
manage the impact of against most of our trading Primark's
currency movements. currencies this year, largely
resulting in a loss on dollar-denominated
translation of GBP36m. purchases for the year
in aggregate.
The strengthening of
sterling
against our major
trading
currencies during the
financial
year has largely been a
result of better
certainty
with the EU exit
completion
at the end of 2020 and
improved confidence as
the UK's roadmap out of
the COVID-19 lockdown
was
developed and
restrictions
subsequently eased.
--------------------------------------------------------------- ------------------------------------------------------ -----------------------
Fluctuations in commodity and energy prices
------------------------------------------------------------------------------------------------------------------------- -----------------------
Context and potential The commercial implications new financial year. The
impact of commodity price movements price of corn oil, in
Changes in commodity are continuously assessed particular,
and energy prices can and, where appropriate, has increased,
have a material impact are reflected in the impacting
on the Group's operating pricing of our products. profit margins in ACH.
results, asset values Changes since 2020 Energy prices,
and cash flows. Commodity price inflation particularly
Mitigation has been a global factor in the UK and Europe,
The Group purchases a throughout the year. have
wide range of commodities A number of our food recently increased
in the ordinary course and agriculture businesses materially
of business. have seen increases in as a result of
We constantly monitor energy and agricultural significant
the markets in which commodity prices in the market uncertainty.
we operate and manage latter part of the financial Businesses continue to
certain of these exposures year, with expectations manage price risk under
with exchange traded of further increases their existing risk
contracts and hedging in the management
instruments. frameworks and, where
appropriate,
reflect this in pricing
of products.
Sugar prices in Europe
and Africa have
increased
during the year, with a
positive impact on
profitability.
--------------------------------------------------------------- ------------------------------------------------------ -----------------------
Operating in global markets
--------------------------------------------------------------- ------------------------------------------------------ -----------------------
Context and potential Provision is made for Changes since 2020
impact known issues based on COVID-19 has resulted
Associated British Foods management's interpretation in
operates in 53 countries of country-specific tax increased volatility
with sales and supply law, EU cases and investigations and
chains in many more, on tax rulings and their uncertainty in a number
so we are exposed to likely outcomes. of our markets,
global market forces; By their nature socio-political particularly
fluctuations in national events are largely unpredictable. the UK, Europe and the
economies; societal unrest Nonetheless our businesses US, where there is a
and geopolitical uncertainty; have detailed contingency high
a range of consumer trends; plans which include site-level risk of inflation
evolving legislation emergency responses and impacting
and changes made by our improved security for on energy, commodities
competitors. employees. and wages.
Failure to recognise We engage with governments, There is continued
and respond to any of local regulators and uncertainty
these factors could directly community organisations as a result of the
impact the profitability to contribute to, and COVID-19
of our operations. anticipate, important pandemic. Authorities
Entering new markets changes in public policy. continue
is a risk to any business. We conduct rigorous due to impose restrictions
Mitigation diligence when entering, on both a regional and
Our approach to risk or commencing business local basis.
management incorporates activities in, new markets. High inflation
potential short-term continues
market volatility and to be a challenge for
evaluates longer-term our
socio-economic and political yeast and bakery
scenarios. The Group's ingredients
financial control framework business based in
and Board-adopted tax Argentina.
and treasury policies Fifteen new Primark
require all businesses stores
to comply fully with were opened in the year
relevant local laws. including our first
store
in Czechia.
--------------------------------------------------------------- ------------------------------------------------------ -----------------------
Health and nutrition
--------------------------------------------------------------- ------------------------------------------------------ -----------------------
Context and potential Our brands develop partnerships Changes since 2020
impact with other organisations Our Sugar and Grocery
Failure to adapt to changing to promote healthy options, businesses
consumer health choices for example, Ryvita has have invested in
or to address nutrition partnered with Cancer communication
concerns in the formulation Research UK on a campaign linked to nutrition and
of our products, related to promote fibre consumption health during the year
to consumer preferences in the UK. to help consumers make
or government public Before COVID-19, our informed choices about
health policies, could specialist sports-nutrition their diet.
result in a loss of consumer brand HIGH5 typically Notable examples
base and impact business supported over 600 events include
performance. which promote exercise the Ryvita 'Fibre Fit'
Mitigation across the UK each year, campaign in the UK,
Consumer preferences helping over 500,000 through
and market trends are people improve their which the business has
monitored continually. fitness levels. These continued to engage
Recipes are regularly events are predominantly over
reviewed and reformulated promoted online, and 50,000 consumers in
to improve the nutritional HIGH5 assists in this relation
value of our products. promotion by highlighting to the benefit of a
All of our grocery products events on its website high-fibre
are labelled with nutritional and via social media diet.
information. in conjunction with nutritional In addition, our Sugar
We actively consider advice. business's campaign
consumer health in the We invest in research 'Making
context of brand development with experts to improve Sense of Sugar' has
and merger and acquisition our understanding of continued
activity. For example, the science and societal to develop into a
the launch of the Twinings trends. global
wellness range. Branded platform. The aim is to
grocery acquisitions provide factual
over the past decade information
include Acetum, producers based on robust science
of Balsamic Vinegar of to help inform and
Modena, that is typically educate
consumed as an accompaniment people about sugar and
to salads; and Dorset the role it can play as
Cereals, producers of part of a healthy
high-fibre breakfast balanced
cereals made from whole diet.
grains and dried fruits, Our businesses continue
nuts and seeds. to assess the
nutritional
content of their
products
on an ongoing basis;
and
engage with
stakeholders,
directly and through
trade
associations, in
relation
to nutrition science
and
changes to the
regulatory
and consumer operating
environment.
--------------------------------------------------------------- ------------------------------------------------------ -----------------------
increased
-> unchanged
decreased
Operational risks
--------------------------------------------------------------- ------------------------------------------------------ -----------------------
Workplace health and
safety ->
--------------------------------------------------------------- ------------------------------------------------------ -----------------------
Context and potential Our Health and Safety We are saddened to
impact Policy and Practices report
Many of our operations, are firmly embedded in that in the year there
by their nature, have each business, supporting were two work-related
the potential for loss a strong ethos of workplace fatalities
of life or workplace safety. in our southern Africa
injuries to employees, We have a continuous sugar operations. Our
contractors and visitors. safety audit programme businesses
We are saddened that to verify implementation have conducted thorough
since the start of the of safety management root cause analyses and
pandemic in March 2020, and support a culture have implemented safety
we have lost 43 colleagues of continuous improvement. changes.
to COVID-19. We deeply Best practice safety This year over GBP39m
mourn their passing and and occupational health was
our hearts go out to guidance is shared across invested in reducing
their families and colleagues. the businesses, co-ordinated the
Mitigation from the corporate centre, safety and health risks
Safety continues to be to supplement the delivery across a wide range of
one of our main priorities. of their own programmes. operational hazards. As
The chief executives Changes since 2020 part of this we
of each business, who The safety performance invested
lead by example, are of the Group is reported GBP9.3m dedicated to
accountable for the safety in the 2021 Responsibility COVID-19
performance of their Update at www.abf.co.uk/responsibility. safety measures for
business. employees,
customers and other
visitors
to our stores and
manufacturing
sites. A Group-level
steering
committee has shared
best
practice for minimising
the risk of infection
across
all of our businesses.
In Illovo, we launched
a Group Vaccination
Roll-out
Campaign which has seen
almost 20,000
employees,
dependants, growers and
community members
vaccinated
against COVID-19 to
date.
We plan to continue the
campaign in the coming
months to reach many
more.
--------------------------------------------------------------- ------------------------------------------------------ -----------------------
Product safety and quality ->
--------------------------------------------------------------- ------------------------------------------------------ -----------------------
Context and potential Food quality and safety All Primark's products
impact audits are conducted are tested to, and must
As a leading food manufacturer across all our manufacturing meet, stringent product
and retailer, it is vital sites, by independent safety specifications
that we manage the safety third parties and customers, in
and quality of our products and a due diligence programme line with and in some
throughout the supply is in place to ensure instances
chain. the safety of our retail above legal
Mitigation products. requirements.
Product safety is put Our sites comply with Primark continues to
before economic considerations. international food safety drive
We operate strict food and quality management and improve product
safety and traceability standards and our businesses performance
policies within an organisational conduct regular mock for quality and
culture of hygiene and product incident exercises. compliance
product safety to ensure All businesses set clear purposes through its
consistently high standards expectations of suppliers, product
in our operations and with relevant third-party approval processes, in
in the sourcing and handling certification or other country inspections
of raw materials and assessment a condition centres
garments. of doing business. Product and management of its
testing and trials are supply
undertaken as required base.
and where bespoke raw Changes since 2020
materials are purchased, We did not have any
the businesses will work major
closely with the supplier product recalls.
to ensure quality parameters Businesses have
are suitably specified continued
and understood. to define and refine
KPIs
in this area.
--------------------------------------------------------------- ------------------------------------------------------ -----------------------
Breaches of IT and information security ->
------------------------------------------------------------------------------------------------------------------------- -----------------------
Context and potential Robust disaster recovery The extent of remote
impact plans are in place for working
To meet customer, consumer business-critical applications has increased the risk
and supplier needs, our and are adequately tested. of users falling victim
IT infrastructure needs Technical security controls to phishing attacks
to be flexible, reliable are in place over key because
and secure to allow us IT platforms with the users rely primarily on
to interact through technology. Chief Information Security email communication. We
Our delivery of efficient Officer (CISO) tasked have an ongoing
and effective operations with identifying and phishing
is enhanced by the use responding to potential testing regime and
of relevant technologies security risks. there
and the sharing of information. Changes since 2020 is regular
We are therefore subject As the number of employees communication
to potential cyber-threats working at home as a with all users to
such as computer viruses result of COVID-19 restrictions remind
and the loss or theft remains high, the impact them of the risks. We
of data. on the delivery of IT have
There is the potential services and the need raised the level of
for disruption to operations for increased information monitoring
from data centre failures, security has been enveloped for phishing attempts
IT malfunctions or external into our daily practices. and
cyber-attacks. There is an ongoing programme other security threats.
Mitigation of investment in both In addition, we have
In parallel to building technology and people issued
IT roadmaps and developing to enhance the longevity security awareness
our technology systems, of our IT environments advice
we invest in developing for both on-site and on secure homeworking
the IT skills and capabilities remote working. best
of our people across To maintain the support practices.
our businesses. for seamless homeworking As cybersecurity risks
We continue to actively we continue to modify evolve, we continue to
monitor and mitigate our IT infrastructure, invest in our security
any cyber-threats and manage bandwidth with capabilities at a Group
suspicious IT activity. our telecommunications level and across the
We have established Group partners and improve businesses
IT security policies, our collaboration tools. allowing us to more
technologies and processes, effectively
all of which are subject detect, respond and
to regular internal audit. recover
Access to sensitive data from disruptive
is restricted and closely cyber-threats.
monitored. We have improved and
developed
the existing
disciplines
to ensure that user
devices
are regularly patched
and
upgraded to reflect
changing
IT security threats.
Revised
guidance for laptop and
desktop patching has
been
issued to all
businesses
to ensure that systems
are up to date and
secure.
During the year we have
reviewed and tested IT
disaster recovery plans
across the businesses.
--------------------------------------------------------------- ------------------------------------------------------ -----------------------
Our use of natural resources and managing our
environmental impact
------------------------------------------------------------------------------------------------------------------------- -----------------------
Context and potential TCFD compliance. We have This year, we also
impact engaged external experts performed
Our businesses and their to support our TCFD implementation a high-level exercise
supply chains rely on and established a steering to
a secure supply of finite committee to oversee establish an overview
natural resources, some its governance, which of
of which are vulnerable reports to the Audit our Scope 3 emissions.
to external factors such Committee. The steering These same three
as natural disasters committee comprises senior businesses
and climate change and functional leaders from comprised a significant
others are vulnerable Corporate Social Responsibility, proportion of those
based on the operational Environment, Finance, emissions.
choices we take. Our Risk Management, Corporate We continued to focus
material environmental Affairs and HR, together on
impacts come from fuel with senior representation improving our energy
use, energy use and agricultural from AB Sugar and Primark. efficiency
operations giving rise Our packaging and product and optimising the use
to greenhouse gas emissions, design teams are working of renewable energy
use of land related to together to address the sources
agricultural operations, use of single-use plastics with 54% of energy used
the abstraction and management and scale up innovative this year coming from
of water in water-stressed solutions to the environmental renewables,
areas and waste which impacts of single-use mainly from a
is not yet eliminated plastic. biomass-based
at source, reused or Our businesses aim to fuel.
recycled including single-use be a good neighbour within This year 79% of the
plastics. their local communities. waste
Our businesses and supply Aspects of this include materials generated by
chains operate in many the monitoring and management our businesses'
areas subject to climate of noise, particle and operations
change risks and opportunities odour pollution and community was sent for recycling,
as we transition to a engagement. Where possible, recovery or other
lower-carbon world. Our our businesses implement beneficial
ongoing success depends circular economy principles uses.
on mitigating these risks to use more from less Twinings in the UK is a
and making the most of and continuously seek carbon neutral business
the opportunities. In ways to recycle or reuse thanks to energy
our assessment of climate-related all waste materials. efficiency
business risks, we recognise AB Sugar and AB Agri projects and the
that the cumulative impacts have set commitments greater
of changes in weather for their own operations use of renewable
and water availability and supply chain to improve energy.
could affect our operations sustainability performance. GWF achieved its GHG
at a Group level. The Primark is committed and
diversified and decentralised to the Textiles 2030 water reduction targets
nature of Associated Initiative, to accelerate of 20% reduction by
British Foods means that the whole fashion and 2020,
mitigation or adaptation textiles industry's move against a 2010 baseline
strategies are considered towards circularity and as set by the
and implemented by individual system change in the Australian
businesses and divisions. UK. Food & Grocery Council.
Our operations generate Through Primark's Sustainable As a Group we continue
a range of emissions Cotton Programme we have to develop our
such as dust, wastewater committed to train 160,000 single-use
and waste which, if not farmers in more sustainable plastic packaging
controlled, could pose farming methods by 2022. solutions
a risk to the environment This is a significant to align with future
and local communities, commitment towards helping environmental
potentially creating Primark fulfil our long-term packaging legislation
risk to our licence to ambition of ensuring in
operate and resulting all the cotton used in local geographies
in additional costs. our supply chain is sustainably whilst
Mitigation sourced. balancing the needs to
We continuously seek Changes since 2020 minimise food waste and
ways to improve the efficiency The environmental performance carbon emissions with
of our operations, using of the Group is reported food
technologies and techniques in the 2021 Responsibility safety and integrity at
to reduce our use of Update at www.abf.co.uk/responsibility. the core. Our UK
natural resources and This year, we began engaging grocery
subsequent impact on formally with each business business is a signatory
the environment. in respect of TCFD, building to the Courtauld
Climate change, with on existing awareness Commitment
its associated risks of climate change issues. 2025 as well as the UK
and opportunities, is This will continue in Plastics PACT, a
not a new issue. It has the coming year until collaborative
long been important to full reporting under initiative delivered by
us and our stakeholders. TCFD begins for ABF in WRAP, that will create
We have considered some 2022 and thereafter on a circular economy for
of these issues for many an ongoing basis. We plastics.
years as part of normal are currently reviewing GWF is a member of the
commercial decision-making, the governance of climate-related Australian Packaging
for example Primark's risks and opportunities Covenant
longstanding Sustainable to ensure the Board is Organisation (APCO) and
Cotton Programme, and enabled to fully consider has committed that by
the assessment of drought these while setting our 2025
risk to the wheat supply strategy and overseeing its packaging will be
in our Australian bakery major decisions. designed
business, long standing To better understand to be 100% recyclable,
progress in reducing how the potential long-term reusable or compostable
energy use in sugar refining. impacts of climate change to help
It is not a separate might affect our businesses, "close-the-loop".
and parallel discipline; our performance and our Primark launched the
it is already part of balance sheet, this year Primark
the ordinary course of we began scenario analysis. Cares sustainability
business and we are working Our overall focus is strategy
to understand and improve on the specific businesses focused on People,
this further. and raw materials with Planet
The Board receives a the greatest identified and Product with
formal update from the climate risk exposure, targets
Group Corporate Responsibility and those that offer of halving its carbon
Director, the Chief People the greatest transition footprint
and Performance Officer opportunities. We identified across our entire
and the Group Safety Primark, AB Sugar and Primark
and Environment Manager Twinings as the businesses value chain by 2030 and
on environmental issues with the most material changing the way we
annually including on climate-related risks make
GHG emissions and carbon and opportunities. In clothes to ensure they
management. In addition, 2020, these three businesses are recyclable by
environmental issues comprise in aggregate design
are addressed as part 73% of adjusted operating by 2027 and, by 2030,
of both specific and profit, 69% of Scope made
routine Board agenda 1 and 2 emissions and from recycled fibres or
items. As an example, 97% of water usage. more sustainably
Primark reported to the sourced
Board in June 2021 on materials.
its carbon reduction Additionally,
footprint. we will eliminate
The Audit Committee and single-use
the Board have received plastics and all
specific briefings on non-clothing
climate change matters waste by 2027 and
and on our approach to already
achieving work with cotton
farmers
to deliver better soil
health, biodiversity
and
water quality in the
regions
where our cotton is
grown.
We report our approach
to climate change,
water
and deforestation risk
on an annual basis via
CDP at www.cdp.net.
--------------------------------------------------------------- ------------------------------------------------------ -----------------------
Our supply chain and ethical business practices ->
------------------------------------------------------------------------------------------------------------------------- -----------------------
Context and potential Primark has strengthened Changes since 2020
impact our policies around modern Our Modern Slavery and
As an international business slavery and published Human Trafficking
we understand that we a revised Supplier Code Statement
have both a role to play of Conduct. This is a 2021, together with the
in delivering on the combination of the ABF steps we take to try to
UN sustainable agenda Group Code of Conduct ensure that any forms
and also that we are and the Base Code of of
expected to abide by the Ethical Trading Initiative, modern slavery are not
internationally agreed of which Primark is a present within our own
rules of business conduct. member. Our new Code operations or supply
Doing so means we are is tailored specifically chain,
managing risks to our to some of the risks are reported in detail
business and to all those Primark perceives in in the 2021
involved in our supply our supply chains. We Responsibility
chains, and so we expect are internationally recognised Update at
that our supply chain for our ethical trade www.abf.co.uk/responsib
partners will work within programme. More information ility.
the same framework as is available at https://corporate.primark.com/en. In June 2021, the UK
us. We work with our Twinings uses a comprehensive Government's
supply chain partners Community Needs Assessment Business Against
to help them meet our Framework, which has Slavery
standards of acceptable been developed in consultation Forum coalition hosted
working conditions, financial with expert organisations a Ministerial Forum at
stability, ethics and to help understand what which the chief
technical competence. supply chain communities executives
Potential supply chain really need. In addition of member companies
and ethical business to human and labour rights, discussed
practice risks include: it covers housing, water relevant issues with
* the vulnerability of workers in our supply chains and and sanitation, health ministers.
the amplification of this as a result of the ongoing and nutrition, gender Our Chief Executive,
impacts of COVID-19; and children's rights, George
land rights, farming Weston, attended this
practices and more. event
* inconsistent adoption of a rigorous human rights due Primark, Twinings and and contributed to
diligence approach across the Group; and low AB Sugar have all produced discussions
transparency of Group human rights impact. interactive sourcing on several themes,
maps to better understand including
and address the challenges the UK Government's
Mitigation in their supply chain forthcoming
Our businesses ask their operations. Modern Slavery Strategy
suppliers to work in Primark's map shows suppliers' Review, the challenges
line with recognised production sites covering involved in modern
standards, including 95% of Primark products slavery
the UN Guiding Principles for sale in stores: due diligence and how
on Business and Human https://corporate.primark.com/en/our-approach/our-stan to
Rights, International dards/global-sourcing-map. harness the power of
Labour Organization's Twinings' map outlines transparency
Declaration on Fundamental where we source tea and and other levers for
Principles and Rights ingredients: positive
at work and our Supplier https://www.sourcedwithcare.com/en/our-approach/sourci change.
Code of Conduct. This ng-map. AB Agri's Human Rights
code, which incorporates AB Sugar's map outlines Policy addresses modern
the Ethical Trading Initiative where we grow, source slavery and other
Base Code, underpins and export sugar: www.absugar.com/sourcing-map. issues
any relevant policies in line with the
or standards the businesses Universal
set themselves. We have Declaration of Human
developed a groupwide Rights.
online training module AB Sugar have further
about modern slavery developed
to help accelerate awareness-raising their modern slavery
and give businesses the policy
tools to train people. and created their 'We
Listen,
We Act, We Remedy'
toolkit.
Primark has reviewed
and
updated its Code of
Conduct,
strengthening the
requirements
that guard against
forced
labour and adding a new
clause that requires
all
its suppliers to have
effective
grievance procedures
for
workers in place.
Twinings published its
Human Rights Policy in
2021.
Twinings set a target
in
2016 to positively
impact
500,000 people through
Sourced with Care. The
programme has now
reached
almost 544,000 people
and
delivered lasting
change.
--------------------------------------------------------------- ------------------------------------------------------ -----------------------
increased
-> unchanged
decreased
Viability statement
The directors have determined that the most appropriate period
over which to assess the Company's viability, in accordance with
the UK Corporate Governance Code, is three years. This is
consistent with the Group's business model which devolves
operational decision making to the businesses. Each business sets a
strategic planning time horizon appropriate to its activities and
which are typically of three years duration. The directors also
considered the diverse nature of the Group's activities and the
degree to which the businesses change and evolve in the relatively
short term.
The directors considered the Group's profitability, cash flows
and key financial ratios over this period and the potential impact
that the Principal Risks and Uncertainties set out on pages 16 to
22 could have on future performance, solvency or liquidity of the
Group and its resilience to threats to its viability posed by
severe but plausible scenarios. Sensitivity analysis was applied to
these metrics and the projected cash flows were stress tested
against a range of scenarios.
The directors considered the level of performance that would
cause the Group to exhaust its available liquidity; to breach its
debt covenants; the financial implications of making any strategic
acquisitions and a variety of factors that have the potential to
reduce profit substantially. We considered actions which could
damage the Group's reputation for the long term, macro-economic
influences such as fluctuations in commodity markets, and
climate-related business risks. Specific consideration has been
given to the potential ongoing risks associated with COVID-19.
These risks include its impact on Primark's trading performance and
to a lesser extent our ability to run our factories efficiently
with the potential for disruption through shortage of labour or
logistical issues caused by port constraints.
At the year end the Group had gross cash of GBP2,307m and
GBP1,088m of undrawn committed Revolving Credit Facilities (RCF)
which together provide some GBP3,395m of liquidity. In August 2020,
a two-year extension to the Group's RCF was agreed with its
relationship banks extending the maturity of the facility to July
2023. During the course of this assessment all of the GBP297m of
outstanding private placement notes will mature and the RCF will
require refinancing. It is the opinion of the board based on the
credit rating and the strength of the balance sheet that this
facility can be renewed, and that substantial further funding could
be secured should the need arise. Events of COVID-19 and the last
year show that there was a value in having sufficient financial
resources and credit strength to manage the operational challenges
faced across our businesses. ABF has sought an external validation
of our credit strength and the A grade credit rating from S&P
Global reflects this.
The diversity of the Group is such that we have some 60
different businesses operating in different markets, sectors,
customers, geographies and products. The importance of food
production has been highlighted by recent events and the resilience
of the Group has been demonstrated by our ability to ensure the
continuity of the food supply chain. While the principal risks
considered all have the potential to affect future performance,
none of them are considered individually or collectively likely to
give rise to a deterioration in trading to a level that might
threaten the viability of the Company for the period of the
assessment.
The Group has a track record of delivering strong cash flows,
with in excess of GBP1bn of operating cash being generated in each
of the last ten years. This has been more than sufficient to meet
not only our ongoing financing obligations but also to fund the
Group's expansionary capital investment.
Even in a worst-case scenario, with risks modelled to
materialise simultaneously and for a sustained period, the
possibility of the Group having insufficient resources to meet its
financial obligations is considered extremely remote. Based on this
assessment, the directors confirm that they have a reasonable
expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the three-year
period to 14 September 2024.
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
consolidated financial statements.
The forecast for the going concern assessment period to 28
February 2023 has been updated for the business's latest trading in
October and is our best estimate of cashflow in the period. Having
reviewed this forecast and having applied a downside sensitivity
and performed a reverse stress test, we consider it a remote
possibility that the financial headroom could be exhausted.
At the full year, the Group had net cash, before lease
liabilities, of GBP1,901m and had an undrawn, committed RCF of
GBP1,088m for the coming year. The directors have satisfied
themselves that the RCF is available for at least the going concern
assessment period, having assessed the Group's projected compliance
with the remaining terms and covenants of these facilities. Events
of COVID-19 and the last year show that there was a value in having
sufficient financial resources and credit strength to manage the
operational challenges faced across our businesses. ABF has sought
an external validation of our credit strength and the A grade
credit rating from S&P Global reflects this.
In August 2020, a two-year extension to the Group's RCF was
agreed with its relationship banks, extending the maturity of the
facility to July 2023. Whilst this maturity date is beyond the
going concern assessment period, it is the opinion of the Board,
based on the credit rating and the strength of the balance sheet,
that this facility can be renewed, and that substantial further
funding could be secured should the need arise.
In reviewing the cash flow forecast for the period, the
directors reviewed the trading for both Primark and the non-Primark
businesses in light of the experience gained from the last eighteen
months 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.
The diversity of the Group is such that we have some 60
different businesses operating in different markets, sectors,
customer groups, geographies and products. The importance of food
production has been highlighted by recent events and the resilience
of the Group has been demonstrated by our ability to ensure the
continuity of the food supply chain. While the principal risks
considered all have the potential to affect future performance,
none of them are considered individually or collectively likely to
give rise to a deterioration in trading to a level that might
threaten the viability of the Company for the period of the
assessment.
As a downside scenario, the directors considered the extreme
adverse scenario in which half of the Primark estate was closed for
six months including the forthcoming Christmas trading period,
without taking any of the available cost mitigation actions within
their control and assuming no available job retention scheme
support. Under this downside scenario the Group has a forecast net
cash position throughout the period and forecast compliance with
the covenants in the debt facilities.
In addition, we also considered the circumstances which would be
needed to exhaust the Group's cash resources over the assessment
period - a reverse stress test. This would indicate that all
Primark stores would need to remain completely closed for more than
12 months, including the peak Christmas sales period. 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 cost cutting measures and
reducing capital investment. Secondly, we have seen governments
develop a number of measures to contain the virus, including
widespread vaccination programmes, which make it likely that any
future lockdowns would be regional.
Cautionary statements
This report contains forward-looking statements. These have been
made by the directors in good faith based on the information
available to them up to the time of their approval of this report.
The directors can give no assurance that these expectations will
prove to have been correct. Due to the inherent uncertainties,
including both economic and business risk factors, underlying such
forward-looking information, actual results may differ materially
from those expressed or implied by these forward-looking
statements. The directors undertake no obligation to update any
forward-looking statements whether as a result of new information,
future events or otherwise.
Directors' responsibilities in respect of the financial
statements
We confirm that to the best of our knowledge:
- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole; and
- the Strategic report includes a fair review of the development
and performance of the business and the position of the Company and
the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face.
We consider the annual report and financial statements, taken as
a whole, are fair, balanced and understandable and provide the
information necessary for shareholders to assess the Company's
position and performance, business model and strategy.
The contents of this announcement, including the responsibility
statement above, have been extracted from the annual report and
accounts for the 53 weeks ended 18 September 2021 which may be
found at www.abf.co.uk and will be despatched to shareholders on 11
November 2021. Accordingly this responsibility statement makes
reference to the financial statements of the Company and the group
and to the relevant narrative appearing in that annual report and
accounts rather than the contents of this announcement.
On behalf of the Board
Michael McLintock George Weston John Bason
Chairman Chief Executive Finance Director
9 November 2021
Consolidated income statement
for the 53 weeks ended 18 September 2021
2021 2020
Continuing operations note GBPm GBPm
======================================================= ==== ======== ========
Revenue 1 13,884 13,937
Operating costs before exceptional items (13,008) (13,046)
Exceptional items 2 (151) (156)
======================================================= ==== ======== ========
725 735
Share of profit after tax from joint ventures and
associates 79 57
Profits less losses on disposal of non-current assets 4 18
======================================================= ==== ======== ========
Operating profit 808 810
Adjusted operating profit 1 1,011 1,024
Profits less losses on disposal of non-current assets 4 18
Amortisation of non-operating intangibles (50) (59)
Acquired inventory fair value adjustments (3) (15)
Transaction costs (3) (2)
Exceptional items 2 (151) (156)
======================================================= ==== ======== ========
Profits less losses on sale and closure of businesses 7 20 (14)
======================================================= ==== ======== ========
Profit before interest 828 796
Finance income 9 11
Finance expense 3 (111) (124)
Other financial (expense)/income (1) 3
======================================================= ==== ======== ========
Profit before taxation 725 686
Adjusted profit before taxation 908 914
Profits less losses on disposal of non-current assets 4 18
Amortisation of non-operating intangibles (50) (59)
Acquired inventory fair value adjustments (3) (15)
Transaction costs (3) (2)
Exceptional items 2 (151) (156)
Profits less losses on sale and closure of businesses 7 20 (14)
======================================================= ==== ======== ========
Taxation - UK (excluding tax on exceptional items) (68) (69)
* UK (on exceptional items) 3 1
* Overseas (excluding tax on exceptional items) (196) (189)
* Overseas (on exceptional items) 34 36
====================================================== ==== ======== ========
4 (227) (221)
======================================================= ==== ======== ========
Profit for the period 498 465
======================================================= ==== ======== ========
Attributable to
Equity shareholders 478 455
Non-controlling interests 20 10
======================================================= ==== ======== ========
Profit for the period 498 465
======================================================= ==== ======== ========
Basic and diluted earnings per ordinary share (pence) 6 60.5 57.6
Dividends per share paid and proposed for the period
(pence) 5 26.7 nil
Special dividend per share proposed for the period
(pence) 5 13.8 nil
======================================================= ==== ======== ========
Consolidated statement of comprehensive income
for the 53 weeks ended 18 September 2021
2021 2020
GBPm GBPm
============================================================ ===== =====
Profit for the period recognised in the income statement 498 465
Other comprehensive income
Remeasurements of defined benefit schemes 559 (89)
Deferred tax associated with defined benefit schemes (144) 15
============================================================
Items that will not be reclassified to profit or loss 415 (74)
Effect of movements in foreign exchange (355) (97)
Net loss on hedge of net investment in foreign subsidiaries 14 (3)
Deferred tax associated with movements in foreign exchange - 1
Reclassification adjustement for movements in foreign
exchange on subsidiaries disposed (6) -
Movement in cash flow hedging position 39 (15)
Deferred tax associated with movement in cash flow hedging
position (14) -
Share of other comprehensive income of joint ventures
and associates (10) (1)
Effect of hyperinflationary economies 18 17
============================================================ ===== =====
Items that are or may be subsequently reclassified to
profit or loss (314) (98)
Other comprehensive income/(loss) for the period 101 (172)
============================================================ ===== =====
Total comprehensive income for the period 599 293
============================================================ ===== =====
Attributable to
Equity shareholders 579 296
Non-controlling interests 20 (3)
============================================================ ===== =====
Total comprehensive income for the period 599 293
============================================================ ===== =====
Consolidated balance sheet
at 18 September 2021
2021 2020
GBPm GBPm
================================================= ======= =======
Non-current assets
Intangible assets 1,581 1,629
Property, plant and equipment 5,286 5,651
Right-of-use assets 2,649 2,990
Investments in joint ventures 278 233
Investments in associates 60 56
Employee benefits assets 640 100
Income tax 23 -
Deferred tax assets 218 212
Other receivables 55 45
================================================== ======= =======
Total non-current assets 10,790 10,916
================================================== ======= =======
Current assets
Assets classified as held for sale 13 43
Inventories 2,151 2,150
Biological assets 85 72
Trade and other receivables 1,367 1,328
Derivative assets 124 102
Current asset investments 32 32
Income tax 58 30
Cash and cash equivalents 2,275 1,996
================================================== ======= =======
Total current assets 6,105 5,753
================================================== ======= =======
Total assets 16,895 16,669
================================================== ======= =======
Current liabilities
Liabilities classified as held for sale - (5)
Lease liabilities (289) (297)
Loans and overdrafts (330) (154)
Trade and other payables (2,386) (2,316)
Derivative liabilities (34) (87)
Income tax (172) (171)
Provisions (71) (123)
================================================== ======= =======
Total current liabilities (3,282) (3,153)
================================================== ======= =======
Non-current liabilities
Lease liabilities (2,992) (3,342)
Loans (76) (318)
Provisions (31) (41)
Deferred tax liabilities (363) (210)
Employee benefits liabilities (147) (166)
================================================== ======= =======
Total non-current liabilities (3,609) (4,077)
================================================== ======= =======
Total liabilities (6,891) (7,230)
================================================== ======= =======
Net assets 10,004 9,439
================================================== ======= =======
Equity
Issued capital 45 45
Other reserves 175 175
Translation reserve (34) 323
Hedging reserve 43 (7)
Retained earnings 9,692 8,819
================================================== ======= =======
Total equity attributable to equity shareholders 9,921 9,355
================================================== ======= =======
Non-controlling interests 83 84
================================================== ======= =======
Total equity 10,004 9,439
================================================== ======= =======
Consolidated cash flow statement
for the 53 weeks ended 18 September 2021
2021 2020
GBPm GBPm
================================================================== ===== =====
Cash flow from operating activities
Profit before taxation 725 686
Profits less losses on disposal of non-current assets (4) (18)
Profits less losses on sale and closure of businesses (20) 14
Transaction costs 3 2
Finance income (9) (11)
Finance expense 111 124
Other financial expense/(income) 1 (3)
Share of profit after tax from joint ventures and associates (79) (57)
Amortisation 74 89
Depreciation (including depreciation of right-of-use
assets and non-cash lease adjustments) 823 827
Impairment of property, plant & equipment and right-of-use
assets - 15
Exceptional items 151 156
Acquired inventory fair value adjustments 3 15
Effect of hyperinflationary economies 7 5
Net change in the fair value of current biological assets (12) (1)
Share-based payment expense 17 8
Pension costs less contributions 4 10
(Increase)/decrease in inventories (120) 199
(Increase)/decrease in receivables (98) 81
Increase/(decrease) in payables 175 (174)
Purchases less sales of current biological assets (1) (1)
(Decrease)/increase in provisions (40) 41
================================================================== ===== =====
Cash generated from operations 1,711 2,007
Income taxes paid (298) (254)
================================================================== ===== =====
Net cash generated from operating activities 1,413 1,753
================================================================== ===== =====
Cash flow from investing activities
Dividends received from joint ventures and associates 63 43
Purchase of property, plant and equipment (551) (561)
Purchase of intangibles (76) (61)
Lease incentives received 10 35
Sale of property, plant and equipment 21 30
Purchase of subsidiaries, joint ventures and associates (57) (16)
Sale of subsidiaries, joint ventures and associates 34 2
Purchase of other investments (14) (1)
Interest received 9 11
================================================================== ===== =====
Net cash used in investing activities (561) (518)
================================================================== ===== =====
Cash flow from financing activities
Dividends paid to non-controlling interests (4) (7)
Dividends paid to equity shareholders (49) (271)
Interest paid (116) (104)
Repayment of lease liabilities (290) (247)
Decrease in short-term loans (10) (43)
Decrease in long-term loans (18) (2)
Increase in current asset investments (2) (2)
Purchase of shares in subsidiary undertaking from non-controlling
interests (23) (2)
================================================================== ===== =====
Net cash used in financing activities (512) (678)
================================================================== ===== =====
Net increase in cash and cash equivalents 340 557
Cash and cash equivalents at the beginning of the period 1,909 1,358
Effect of movements in foreign exchange (60) (6)
================================================================== ===== =====
Cash and cash equivalents at the end of the period 2,189 1,909
================================================================== ===== =====
Consolidated statement of changes in equity
for the 53 weeks ended 18 September 2021
Attributable to equity shareholders
============================================================= ============ =======
Non-
Issued Other Translation Hedging Retained controlling Total
capital reserves reserve reserve earnings Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
================================ ======== ========= =========== ======== ========= ====== ============ =======
Balance as at 14 September 2019 45 175 409 (9) 8,832 9,452 98 9,550
================================ ======== ========= =========== ======== ========= ====== ============ =======
IFRS 16 opening balance
adjustment - - - - (149) (149) (1) (150)
================================ ======== ========= =========== ======== ========= ====== ============ =======
Balance as at 15 September 2019 45 175 409 (9) 8,683 9,.303 97 9,400
================================ ======== ========= =========== ======== ========= ====== ============ =======
Total comprehensive income
Profit for the period recognised
in the income statement - - - - 455 455 10 465
Remeasurements of defined
benefit
schemes - - - - (89) (89) - (89)
Deferred tax associated with
defined
benefit schemes - - - - 15 15 - 15
================================ ======== ========= =========== ======== ========= ====== ============ =======
Items that will not be
reclassified
to profit or loss - - - - (74) (74) - (74)
Effect of movements in foreign
exchange - - (83) (1) - (84) (13) (97)
Net loss on hedge of net
investment
in foreign subsidiaries - - (3) - - (3) - (3)
Deferred tax associated with
movements
in foreign exchange - - 1 - - 1 - 1
Movement in cash flow hedging
position - - - (15) - (15) - (15)
Share of other comprehensive
income
of joint ventures and
associates - - (1) - - (1) - (1)
Effect of hyperinflationary
economies - - - - 17 17 - 17
================================ ======== ========= =========== ======== ========= ====== ============ =======
Items that are or may be
subsequently
reclassified to profit or loss - - (86) (16) 17 (85) (13) (98)
================================ ======== ========= =========== ======== ========= ====== ============ =======
Other comprehensive income - - (86) (16) (57) (159) (13) (172)
================================ ======== ========= =========== ======== ========= ====== ============ =======
Total comprehensive income - - (86) (16) 398 296 (3) 293
================================ ======== ========= =========== ======== ========= ====== ============ =======
Inventory cash flow hedge
movements
Gains transferred to cost of
inventory - - - 18 - 18 - 18
================================ ======== ========= =========== ======== ========= ====== ============ =======
Total inventory cash flow hedge
movements - - - 18 - 18 - 18
================================ ======== ========= =========== ======== ========= ====== ============ =======
Transactions with owners
Dividends paid to equity
shareholders - - - - (271) (271) - (271)
Net movement in own shares held - - - - 8 8 - 8
Deferred tax associated with
share-based
payments - - - - 1 1 - 1
Dividends paid to
non-controlling
interests - - - - - - (8) (8)
Acquisition and disposal of
non-controlling
interests - - - - - - (2) (2)
================================ ======== ========= =========== ======== ========= ====== ============ =======
Total transactions with owners - - - - (262) (262) (10) (272)
Balance as at 12 September 2020 45 175 323 (7) 8,819 9,355 84 9,439
================================ ======== ========= =========== ======== ========= ====== ============ =======
Total comprehensive income
Profit for the period recognised
in the income statement - - - - 478 478 20 498
Remeasurements of defined
benefit
schemes - - - - 559 559 - 559
Deferred tax associated with
defined
benefit schemes - - - - (144) (144) - (144)
================================ ======== ========= =========== ======== ========= ====== ============ =======
Items that will not be
reclassified
to profit or loss - - - - 415 415 - 415
Effect of movements in foreign
exchange - - (355) - - (355) - (355)
Net gain on hedge of net
investment
in foreign subsidiaries - - 14 - - 14 - 14
Reclassification adjustment for
movements
in foreign exchange on
subsidiaries
disposed - - (6) - - (6) - (6)
Movement in cash flow hedging
position - - - 39 - 39 - 39
Deferred tax associated with
movements
in cash flow hedging position - - - (14) - (14) - (14)
Share of other comprehensive
income
of joint ventures and
associates - - (10) - - (10) - (10)
Effect of hyperinflationary
economies - - - - 18 18 - 18
================================ ======== ========= =========== ======== ========= ====== ============ =======
Items that are or may be
subsequently
reclassified to profit or loss - - (357) 25 18 (314) - (314)
================================ ======== ========= =========== ======== ========= ====== ============ =======
Other comprehensive income - - (357) 25 433 101 - 101
================================ ======== ========= =========== ======== ========= ====== ============ =======
Total comprehensive income - - (357) 25 911 579 20 599
================================ ======== ========= =========== ======== ========= ====== ============ =======
Inventory cash flow hedge
movements
Gains transferred to cost of
inventory - - - 25 - 25 - 25
================================ ======== ========= =========== ======== ========= ====== ============ =======
Total inventory cash flow hedge
movements - - - 25 - 25 - 25
================================ ======== ========= =========== ======== ========= ====== ============ =======
Transactions with owners
Dividends paid to equity
shareholders - - - - (49) (49) - (49)
Net movement in own shares held - - - - 17 17 - 17
Dividends paid to
non-controlling
interests - - - - - - (4) (4)
Acquisition and disposal of
non-controlling
interests - - - - (6) (6) (17) (23)
================================ ======== ========= =========== ======== ========= ====== ============ =======
Total transactions with owners - - - - (38) (38) (21) (59)
================================ ======== ========= =========== ======== ========= ====== ============ =======
Balance as at 18 September 2021 45 175 (34) 43 9,692 9,921 83 10,004
================================ ======== ========= =========== ======== ========= ====== ============ =======
1. Operating segments
The Group has five operating segments, as described below. These
are the Group's operating divisions, based on the management and
internal reporting structure, which combine businesses with common
characteristics, primarily in respect of the type of products
offered by each business, but also the production processes
involved and the manner of the distribution and sale of goods. The
Board is the chief operating decision-maker.
Inter-segment pricing is determined on an arm's length basis.
Segment result is adjusted operating profit, as shown on the face
of the consolidated income statement. Segment assets comprise all
non-current assets except employee benefits assets and deferred tax
assets, and all current assets except cash and cash equivalents,
current asset investments and income tax assets. Segment
liabilities comprise trade and other payables, derivative
liabilities, provisions and lease liabilities.
Segment results, assets and liabilities include items directly
attributable to a segment as well as those that can be allocated on
a reasonable basis. Unallocated items comprise mainly corporate
assets and expenses, cash, borrowings, employee benefits balances
and current and deferred tax balances.
Segment non-current asset additions are the total cost incurred
during the period to acquire segment assets that are expected to be
used for more than one year, comprising property, plant and
equipment, right-of-use assets, operating intangibles and
biological assets.
Businesses disposed are shown separately and comparatives have
been re-presented for businesses sold or closed during the
year.
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 and services for the agriculture sector.
Ingredients
The manufacture of bakers' yeast, bakery ingredients, enzymes,
lipids, yeast extracts and cereal specialities.
Retail
Buying and merchandising value clothing and accessories through
the Primark and Penneys retail chains.
Geographical information
In addition to the required disclosure for operating segments,
disclosure is also given of certain geographical information about
the Group's operations, based on the geographical groupings: 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.
Adjusted operating
Revenue profit
============== ====================
2021 2020 2021 2020
GBPm GBPm GBPm GBPm
========================= ====== ====== ========= =========
Operating segments
Grocery 3,593 3,528 413 437
Sugar 1,650 1,594 152 100
Agriculture 1,537 1,395 44 43
Ingredients 1,508 1,503 151 147
Retail 5,593 5,895 321 362
Central - - (70) (63)
========================= ====== ====== ========= =========
13,881 13,915 1,011 1,026
Businesses disposed:
Grocery 2 13 - (1)
Ingredients 1 9 - (1)
========================= ====== ====== ========= =========
13,884 13,937 1,011 1,024
========================= ====== ====== ========= =========
Geographical information
United Kingdom 4,982 5,054 293 312
Europe & Africa 4,944 5,048 302 298
The Americas 1,678 1,619 259 254
Asia Pacific 2,277 2,194 157 162
========================= ====== ====== ========= =========
13,881 13,915 1,011 1,026
Businesses disposed:
Asia Pacific 3 22 - (2)
========================= ====== ====== ========= =========
13,884 13,937 1,011 1,024
========================= ====== ====== ========= =========
2021
Grocery Sugar Agriculture Ingredients Retail Central Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Revenue from continuing businesses 3,594 1,714 1,539 1,687 5,593 (246) 13,881
Internal revenue (1) (64) (2) (179) - 246 -
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
External revenue from continuing
businesses 3,593 1,650 1,537 1,508 5,593 - 13,881
Businesses disposed 2 - - 1 - - 3
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Revenue from external customers 3,595 1,650 1,537 1,509 5,593 - 13,884
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Adjusted operating profit before
joint ventures and associates 364 149 31 134 321 (70) 929
Share of profit after tax from
joint ventures and associates 49 3 13 17 - - 82
------------------------------------------
Adjusted operating profit 413 152 44 151 321 (70) 1,011
Profits less losses on disposal
of non-current assets 2 1 - 1 - - 4
Amortisation of non-operating intangibles (41) - (2) (7) - - (50)
Acquired inventory fair value adjustments (3) - - - - - (3)
Transaction costs - - - (2) - (1) (3)
Exceptional items - (141) - - (6) (4) (151)
Profits less losses on sale and
closure of businesses - - - 19 - 1 20
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Profit before interest 371 12 42 162 315 (74) 828
Finance income 9 9
Finance expense (1) (2) - (1) (80) (27) (111)
Other financial income (1) (1)
Taxation (227) (227)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Profit for the period 370 10 42 161 235 (320) 498
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Segment assets (excluding joint
ventures and associates) 2,541 1,776 441 1,480 6,919 154 13,311
Investments in joint ventures and
associates 53 28 139 118 - - 338
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Segment assets 2,594 1,804 580 1,598 6,919 154 13,649
Cash and cash equivalents 2,275 2,275
Current asset investments 32 32
Income tax 81 81
Deferred tax assets 218 218
Employee benefits assets 640 640
Segment liabilities (601) (361) (151) (340) (4,142) (208) (5,803)
Loans and overdrafts (406) (406)
Income tax (172) (172)
Deferred tax liabilities (363) (363)
Employee benefits liabilities (147) (147)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Net assets 1,993 1,443 429 1,258 2,777 2,104 10,004
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Non-current asset additions 113 134 21 118 343 16 745
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Depreciation (including depreciation
of right-of-use assets) (110) (82) (16) (56) (549) (10) (823)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Amortisation (48) (4) (3) (9) (8) (2) (74)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Reversal of impairment of property,
plant & equipment and
right-of-use assets - - - 10 - - 10
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
2020
Grocery Sugar Agriculture Ingredients Retail Central Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Revenue from continuing businesses 3,530 1,658 1,398 1,685 5,895 (251) 13,915
Internal revenue (2) (64) (3) (182) - 251 -
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
External revenue from continuing
businesses 3,528 1,594 1,395 1,503 5,895 - 13,915
Businesses disposed 13 - - 9 - - 22
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Revenue from external customers 3,541 1,594 1,395 1,512 5,895 - 13,937
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Adjusted operating profit before
joint ventures and associates 404 98 33 132 362 (63) 966
Share of profit after tax from
joint ventures and associates 33 2 10 15 - - 60
Businesses disposed (1) - - (1) - - (2)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Adjusted operating profit 436 100 43 146 362 (63) 1,024
Profits less losses on disposal
of non-current assets 9 7 1 (1) 3 (1) 18
Amortisation of non-operating intangibles (52) - (1) (6) - - (59)
Acquired inventory fair value adjustments (15) - - - - - (15)
Transaction costs - - - (2) - - (2)
Exceptional items 5 (23) - - (138) - (156)
Profits less losses on sale and
closure of businesses (4) - - (4) - (6) (14)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Profit before interest 379 84 43 133 227 (70) 796
Finance income 11 11
Finance expense (1) (3) - - (79) (41) (124)
Other financial income 3 3
Taxation (221) (221)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Profit for the period 378 81 43 133 148 (318) 465
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Segment assets (excluding joint
ventures and associates) 2,689 1,893 429 1,470 7,372 155 14,008
Investments in joint ventures and
associates 51 27 136 75 - - 289
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Segment assets 2,740 1,920 565 1,545 7,372 155 14,297
Cash and cash equivalents 1,998 1,998
Current asset investments 32 32
Income tax 30 30
Deferred tax assets 212 212
Employee benefits assets 100 100
Segment liabilities (637) (351) (147) (334) (4,523) (219) (6,211)
Loans and overdrafts (472) (472)
Income tax (171) (171)
Deferred tax liabilities (210) (210)
Employee benefits liabilities (166) (166)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Net assets 2,103 1,569 418 1,211 2,849 1,289 9,439
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Non-current asset additions 104 88 21 97 476 13 799
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Depreciation (including depreciation
of right-of-use assets) (109) (85) (16) (57) (546) (14) (827)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Amortisation (62) (2) (2) (7) (14) (2) (89)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Impairment of property, plant &
equipment and
right-of-use assets (15) - - - - - (15)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Impairment of property, plant and
equipment on sale
and closure of businesses (1) - - (1) - - (2)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
Impairment of right-of-use assets
on sale and closure
of businesses - - - (2) - - (2)
------------------------------------------ ------- ----- ----------- ----------- ------- ------- -------
1. Operating segments - geographical information
2021
United Europe
Kingdom & Africa The Americas Asia Pacific Total
GBPm GBPm GBPm GBPm GBPm
------------------------------------------ -------- --------- ------------ ------------ ------
Revenue from external customers 4,982 4,944 1,678 2,280 13,884
------------------------------------------ -------- --------- ------------ ------------ ------
Segment assets 5,178 5,754 1,324 1,393 13,649
------------------------------------------ -------- --------- ------------ ------------ ------
Non-current asset additions 200 382 74 89 745
------------------------------------------ -------- --------- ------------ ------------ ------
Depreciation (including depreciation
of right-of-use assets and non-cash
lease adjustments) (288) (406) (62) (67) (823)
------------------------------------------ -------- --------- ------------ ------------ ------
Amortisation (35) (26) (7) (6) (74)
------------------------------------------ -------- --------- ------------ ------------ ------
Acquired inventory fair value adjustments - (3) - - (3)
------------------------------------------ -------- --------- ------------ ------------ ------
Reversal of impairment of property,
plant and equipment on sale and
closure of businesses - - - 10 10
------------------------------------------ -------- --------- ------------ ------------ ------
Transaction costs (2) - - (1) (3)
------------------------------------------ -------- --------- ------------ ------------ ------
Exceptional items (13) (117) - (21) (151)
------------------------------------------ -------- --------- ------------ ------------ ------
2020
United Europe
Kingdom & Africa The Americas Asia Pacific Total
GBPm GBPm GBPm GBPm GBPm
------------------------------------------ -------- --------- ------------ ------------ ------
Revenue from external customers 5,054 5,048 1,619 2,216 13,937
------------------------------------------ -------- --------- ------------ ------------ ------
Segment assets 5,249 6,263 1,314 1,471 14,297
------------------------------------------ -------- --------- ------------ ------------ ------
Non-current asset additions 197 406 128 68 799
------------------------------------------ -------- --------- ------------ ------------ ------
Depreciation (including depreciation
of right-of-use assets and non-cash
lease adjustments) (292) (397) (70) (68) (827)
------------------------------------------ -------- --------- ------------ ------------ ------
Amortisation (48) (27) (6) (8) (89)
------------------------------------------ -------- --------- ------------ ------------ ------
Acquired inventory fair value adjustments - (15) - - (15)
------------------------------------------ -------- --------- ------------ ------------ ------
Impairment of property, plant &
equipment and
right-of-use assets (15) - - - (15)
------------------------------------------ -------- --------- ------------ ------------ ------
Impairment of property, plant and
equipment on sale
and closure of businesses - - - (2) (2)
------------------------------------------ -------- --------- ------------ ------------ ------
Impairment of right-of-use assets
on sale and
closure of businesses - - - (2) (2)
------------------------------------------ -------- --------- ------------ ------------ ------
Transaction costs - (1) - (1) (2)
------------------------------------------ -------- --------- ------------ ------------ ------
Exceptional items (4) (108) (44) - (156)
------------------------------------------ -------- --------- ------------ ------------ ------
The group's operations in the following countries met the
criteria for separate disclosure:
Revenue Non-current assets
------------ --------------------
2021 2020 2021 2020
GBPm GBPm GBPm GBPm
-------------- ----- ----- --------- ---------
Australia 1,209 1,161 533 558
Spain 1,190 1,097 670 849
United States 1,098 1,055 672 727
-------------- ----- ----- --------- ---------
All segment disclosures are stated before reclassification of
assets and liabilities classified as held for sale.
2. Exceptional items
2021
Exceptional items of GBP151m comprise impairments of GBP141m in
property, plant and equipment at Azucarera and other sugar
businesses, a GBP21m inventory charge in Primark, the reversal of
GBP20m of the GBP22m Primark inventory provision raised last year,
a GBP5m provision for excessive stock of COVID-19 related items in
Primark and a GBP4m pension past service cost following a further
High Court ruling on 20 November 2020 regarding the equalisation of
Guaranteed Minimum Pensions.
In our sugar business in Spain we have seen a significant
increase in revenues reflecting strong demand and higher prices,
although the operating profit margin was impacted by lower volumes
from the northern beet crop, as well as a one-off charge from a
court arbitration. Our current view for yield and sugar content
from beet sugar and our lower estimated margins due to the expected
increases in raw refining volumes in the future has resulted in a
non-cash exceptional charge of EUR136m to write down the net asset
value of this business. Given the ongoing trading challenges in
some of our smaller sugar businesses we have reviewed our forward
projections for these units, including the forecast evolution of
beet area and yields. As a result, we have made a non-cash
adjustment of GBP21m to the relevant net asset values as an
exceptional charge this year.
Our half year results included an inventory charge of GBP21m in
Primark, which related to certain seasonal items already on display
in closed stores and which could not be sold before the end of the
season. This inventory had been cleared from our stores to allow
spring/summer stock to be displayed as stores prepared to reopen,
and an exceptional provision of GBP21m was charged to reflect the
write-down of this inventory to net realisable value, which has
subsequently been utilised.
The prior year end exceptional items included a GBP22m markdown
provision which was created for potential damage of inventory
stored on our behalf by suppliers for longer than usual as a result
of the pandemic. In large part, this damage did not arise and
GBP20m of the provision has been released. GBP5m has been provided
for excessive stock of COVID-19 related items.
2020
The prior year included exceptional items of GBP156m.
Impairments of GBP116m in property, plant and equipment and
right-of-use assets at Primark were recognised related to
downsizing of a number of stores in the US and Germany. Beet
volumes contracted by Azucarera in the second crop year after
reducing the beet price paid to farmers, resulted in revised
business forecasts and a GBP23m non-cash write-down of goodwill. A
charge of GBP22m related to a markdown provision in Primark for
inventory stored on our behalf by suppliers for longer than usual
as a result of the pandemic. A GBP5m gain was recorded related to
the closure of our Speedibake Wakefield factory where the net
proceeds received from the insurance claim raised for the factory
being destroyed by a fire in February 2020 exceeded the losses
recorded earlier in the year.
3. Finance expense
2021 2020
GBPm GBPm
========================== ===== ======
Bank loans and overdrafts (16) (29)
All other borrowings (10) (10)
Lease liabilities (84) (84)
Other payables (1) (1)
=========================== ===== ======
(111) (124)
========================== ===== ======
4. Income tax expense
2021 2020
GBPm GBPm
------------------------------------------------------------- ----- -----
Current tax expense
UK - corporation tax at 19% (2020 - 19%) 46 57
Overseas - corporation tax 208 203
UK - under provided in prior periods 9 3
Overseas - over provided in prior periods (9) (4)
------------------------------------------------------------- ----- -----
254 259
Deferred tax expense
UK deferred tax 13 5
Overseas deferred tax (37) (53)
UK - (over)/under provided in prior periods (3) 3
Overseas - under provided in prior periods - 7
------------------------------------------------------------- ----- -----
(27) (38)
------------------------------------------------------------- ----- -----
Total income tax expense in income statement 227 221
------------------------------------------------------------- ----- -----
Reconciliation of effective tax rate
Profit before taxation 725 686
Less share of profit after tax from joint ventures and
associates (79) (57)
------------------------------------------------------------- ----- -----
Profit before taxation excluding share of profit after
tax from joint ventures and associates 646 629
------------------------------------------------------------- ----- -----
Nominal tax charge at UK corporation tax rate of 19%
(2020 - 19%) 123 120
Effect of higher and lower tax rates on overseas earnings 33 18
Effect of changes in tax rates on income statement 17 13
Expenses not deductible for tax purposes 51 54
Disposal of assets covered by tax exemptions or unrecognised
capital losses (3) 1
Deferred tax not recognised 9 6
Adjustments in respect of prior periods (3) 9
------------------------------------------------------------- ----- -----
227 221
------------------------------------------------------------- ----- -----
Income tax recognised directly in equity
Deferred tax associated with defined benefit schemes 144 (15)
Deferred tax associated with share-based payments - (1)
Deferred tax associated with movement in cash flow hedging
position 14 -
Deferred tax associated with movements in foreign exchange - (1)
------------------------------------------------------------- ----- -----
158 (17)
------------------------------------------------------------- ----- -----
The UK corporation tax rate of 19% is set to increase 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. The effect of this change was a GBP15m
charge to the income statement principally on the amortisation on
non-operating intangibles and exceptional items and a GBP39m charge
to other comprehensive income relating to the deferred tax
liability on the pension surplus.
In April 2019 the European Commission published its decision on
the Group Financing Exemption in the UK's controlled foreign
company legislation. The Commission found that the UK law did not
comply with EU State Aid rules in certain circumstances. The Group
has arrangements that may be impacted by this decision as might
other UK-based multinational groups that had financing arrangements
in line with the UK's legislation in force at the time. The Group
has appealed against the European Commission's decision, as have
the UK Government and a number of other UK companies. We have
calculated our maximum potential liability to be GBP26m (2020 -
GBP27m), however we do not consider that any provision is required
in respect of this amount based on our current assessment of the
issue. Following receipt of charging notices from HM Revenue &
Customs ('HMRC') during the year, we made payments to HMRC. Receipt
of the charging notices marginally changed our assessment of the
maximum potential liability but did not change our assessment that
no provision is required in respect of this amount. We will
continue to consider the impact of the Commission's decision on the
group and the potential requirement to record a provision.
5. Dividends
2021 2020
pence per pence per 2021 2020
share share GBPm GBPm
------------- ---------- ---------- ----- -----
2019 final - 34.30 - 271
2020 interim - - - -
2020 final - - - -
2021 interim 6.20 - 49 -
------------- ---------- ---------- ----- -----
6.20 34.30 49 271
------------- ---------- ---------- ----- -----
The 2021 interim dividend was declared on 20 April 2021 and was
paid on 9 July 2021. As a sign of our confidence in our improved
trading we have declared the payment of a special dividend, to be
paid as a second interim dividend of 13.8p per share at a cost of
GBP109m.
The Board has proposed a final dividend of 20.5p per share at a
cost of GBP162m which together with the interim dividend of 6.2p
per share makes a total of 26.7p per share for the year.
The combined 2021 final and special dividend of 34.3p, with a
total value of GBP271m, will be paid on 14 January 2022 to
shareholders on the register on 17 December 2021.
No interim or final dividend was proposed or paid for 2020.
6. Earnings per share
The calculation of basic earnings per share at 18 September 2021
was based on the net profit attributable to equity shareholders of
GBP478m (2020 - GBP455m), and a weighted average number of shares
outstanding during the year of 790 million (2020 - 790 million).
The calculation of the weighted average number of shares excludes
the shares held by the Employee Share Ownership Plan Trust on which
the dividends are being waived.
Adjusted earnings per ordinary share, which exclude the impact
of profits less losses on disposal of non-current assets and the
sale and closure of businesses, amortisation of acquired inventory
fair value adjustments, transaction costs, amortisation of
non-operating intangibles, exceptional items and any associated tax
credits, is shown to provide clarity on the underlying performance
of the group.
The diluted earnings per share calculation takes into account
the dilutive effect of share incentives. The diluted, weighted
average number of shares is 790 million (2020 - 790 million). There
is no difference between basic and diluted earnings.
2021 2020
pence pence
----------------------------------------------------- ------ ------
Adjusted earnings per share 80.1 81.1
Disposal of non-current assets 0.5 2.3
Sale and closure of businesses 2.5 (1.8)
Acquired inventory fair value adjustments (0.4) (1.9)
Transaction costs (0.4) (0.3)
Exceptional items (19.1) (19.7)
Tax effect on above adjustments 3.0 4.6
Amortisation of non-operating intangibles (6.3) (7.5)
Tax credit on non-operating intangibles amortisation
and goodwill 0.6 0.8
------------------------------------------------------ ------ ------
Earnings per ordinary share 60.5 57.6
------------------------------------------------------ ------ ------
7. Acquisitions and disposals
Acquisitions
2021
In May 2021, the Group's Ingredients business acquired DR
Healthcare España, a Spanish enzymes producer. Total consideration
for this transaction was GBP14m, comprising GBP12m cash
consideration and GBP2m deferred consideration. Net assets acquired
included non-operating intangible assets of GBP19m, which were
recognised with their related deferred tax of GBP5m.
During the period, the Group contributed GBP43m to the bakery
ingredients joint venture in China with Wilmar International and
also paid GBP2m of deferred consideration on acquisitions made in
prior years.
2020
In December 2019, the Group's Grocery business in the UK
acquired Al'Fez, a Middle Eastern food brand with customers in the
UK and Europe. In the second half of the year the Group acquired
two small Agriculture businesses in Europe and the Group's
Ingredients business acquired Larodan, a Swedish manufacturer and
international marketer of state-of-the-art, high-purity
research-grade lipids that will expand our research and product
development capabilities to better serve the pharmaceutical,
nutritional and industrial market sectors.
Total consideration for these acquisitions was GBP19m,
comprising GBP16m cash consideration and GBP3m deferred
consideration. Net assets acquired comprised non-operating
intangible assets of GBP15m, which were recognised with their
related deferred tax of GBP3m, and GBP1m of other operating assets.
Goodwill of GBP6m resulted from these acquisitions.
Disposals
2021
In the first half of 2021, the Group sold a number of our
Chinese yeast and bakery ingredients businesses into a new Chinese
joint venture with Wilmar International. These businesses were
classified as a disposal group and held for sale at the previous
year end. Gross cash consideration was GBP39m with GBP5m of cash
disposed with the businesses. The joint venture also assumed GBP11m
of debt, resulting in net proceeds of GBP45m. Net assets disposed
were GBP33m with provisions of GBP6m for associated restructuring
costs and a GBP6m gain on the recycling of foreign exchange
differences. The gain on disposal was GBP6m.
In August, the Group agreed the sale of a further factory in
China to the same joint venture, subject to regulatory approval.
These factory assets were fully written down in 2019 when the
proposed joint venture with Wilmar was first announced. A non-cash
reversal of impairment of GBP10m has been included in profit on
sale and closure of business.
Closure provisions of GBP3m relating to disposals made in
previous years were no longer required and were released to sale
and closure of business in Ingredients and Grocery, both in Asia
Pacific. Property provisions of GBP1m held in previous years were
also no longer required and were released in the Central and UK
segments.
2020
In 2020, the Group announced the closure of the Cake business in
the Grocery segment in Australia and the Jasol New Zealand business
in the Ingredients segment, with GBP10m included in loss on closure
of business, comprising GBP2m non-cash impairment of property,
plant and equipment, GBP2m non-cash impairment of right-of-use
assets and GBP6m of restructuring provisions. The Group also sold a
small business in China, reported within the Asia Pacific and
Grocery segments. Cash proceeds amounted to GBP2m on GBP1m of net
assets disposed, resulting in a pre-tax profit on disposal of
GBP1m.
Warranty provisions of GBP1m relating to disposals made in
previous years were no longer required and were released to sale
and closure of business in the Americas and Ingredients segments.
The Group also charged a GBP6m onerous lease provision to sale and
closure of business (in the Central and UK segments) in respect of
guarantees given on property leases assigned to third parties that
the Group expects to be required to honour.
8. Analysis of net debt
At New leases At
12 September and non-cash Exchange 18 September
2020 Cash flow Disposals items adjustments 2021
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- ------------- --------- --------- ------------- ------------ -------------
Short-term loans (65) 10 10 (202) 3 (244)
Long-term loans (318) 18 - 202 22 (76)
Lease liabilities (3,639) 290 - (100) 168 (3,281)
--------------------------------- ------------- --------- --------- ------------- ------------ -------------
Total liabilities from financing
activities (4,022) 318 10 (100) 193 (3,601)
--------------------------------- ------------- --------- --------- ------------- ------------ -------------
Cash at bank and in hand,
cash equivalents and overdrafts 1.909 340 - - (60) 2,189
Current asset investments 32 2 - - (2) 32
--------------------------------- ------------- --------- --------- ------------- ------------ -------------
(2,081) 660 10 (100) 131 (1,380)
--------------------------------- ------------- --------- --------- ------------- ------------ -------------
At
14 September
2019
(after New leases At
IFRS 16 and non-cash Exchange 12 September
transition) Cash flow Disposals items adjustments 2020
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- ------------- --------- --------- ------------- ------------ -------------
Short-term loans (89) 43 - (23) 4 (65)
Long-term loans (348) 2 - 23 5 (318)
Lease liabilities (3,678) 247 1 (143) (66) (3,639)
--------------------------------- ------------- --------- --------- ------------- ------------ -------------
Total liabilities from financing
activities (4,115) 292 1 (143) (57) (4,022)
--------------------------------- ------------- --------- --------- ------------- ------------ -------------
Cash at bank and in hand,
cash equivalents and overdrafts 1,358 557 - - (6) 1,909
Current asset investments 29 2 - - 1 32
--------------------------------- ------------- --------- --------- ------------- ------------ -------------
(2,728) 851 1 (143) (62) (2,081)
--------------------------------- ------------- --------- --------- ------------- ------------ -------------
Cash and cash equivalents comprise bank and cash balances, call
deposits and short-term investments with original maturities of
three months or less. GBP86m (2020 - GBP89m) of bank overdrafts
that are repayable on demand form an integral part of the Group's
cash management and are included as a component of cash and cash
equivalents for the purpose of the cash flow statement.
Net cash excluding lease liabilities Is GBP1,901m (2020 -
GBP1,558m).
GBP86m (2020 - GBP89m) of bank overdrafts plus the GBP244m (2020
- GBP65m) of short-term loans shown above comprise the GBP330m
(2020 - GBP154m) 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 GBP289m and GBP2,992m respectively (2020 -
GBP297m and GBP3,342m respectively) comprise the GBP3,281m (2020 -
GBP3,639m) of lease liabilities shown above.
Current asset investments comprise term deposits and short-term
investments with original maturities of greater than three months
but less than one year.
9. Related parties
The Group has a controlling shareholder relationship with its
parent company, Wittington Investments Limited, with the trustees
of the Garfield Weston Foundation and with certain other
individuals who hold shares in the Company. The Group has a related
party relationship with its associates and joint ventures and with
its directors. In the course of normal operations, related party
transactions entered into by the Group have been contracted on an
arm's length basis.
Material transactions and year end balances with related parties
were as follows:
Sub 2021 2020
note GBP000 GBP000
-------------------------------------------------------- ----- ------- -------
Charges to Wittington Investments Limited in respect
of services provided by the Company and its subsidiary
undertakings 895 1,095
Dividends paid by Associated British Foods and
received in a beneficial capacity by:
(i) trustees of the Garfield Weston Foundation
and their close family 1 1,570 9,151
(ii) directors of Wittington Investments Limited
who are not trustees of the Foundation and their
close family 300 3,632
(iii) directors of the Company who are not trustees
of the Foundation and are not directors of Wittington
Investments Limited 14 73
Sales to fellow subsidiary undertakings on normal
trading terms 2 55 96
Sales to companies with common key management
personnel on normal trading terms 3 14,980 18,404
Commissions paid to companies with common key
management personnel on normal trading terms 3 - 557
Amounts due from companies with common key management
personnel 3 1,705 2,237
Sales to joint ventures on normal trading terms 44,405 14,154
Sales to associates on normal trading terms 46,407 28,249
Purchases from joint ventures on normal trading
terms 361,287 323,860
Purchases from associates on normal trading terms 16,524 12,863
Amounts due from joint ventures 35,941 41,722
Amounts due from associates 4,033 3,497
Amounts due to joint ventures 22,960 26,745
Amounts due to associates 1,615 1,272
-------------------------------------------------------- ----- ------- -------
1. The Garfield Weston Foundation ('the Foundation') is an
English charitable trust, established in 1958 by the late W.
Garfield Weston. The Foundation has no direct interest in the
Company, but as at 18 September 2021 was the beneficial owner of
683,073 shares (2020 - 683,073 shares) in Wittington Investments
Limited representing 79.2% (2020 - 79.2%) of that company's issued
share capital and is, therefore, the Company's ultimate controlling
party. At 18 September 2021 trustees of the Foundation comprised
four grandchildren of the late W. Garfield Weston and five children
of the late Garry H. Weston.
2. The fellow subsidiary undertakings are Fortnum and Mason plc and Heal & Son Limited.
3. The companies with common key management personnel are the
George Weston Limited group, in Canada, and Selfridges & Co.
Limited.
Amounts due from joint ventures include GBP32m (2020 - GBP40m)
of finance lease receivables. The remainder of the balance is
trading balances. All but GBP4m (2020 - GBP5m) of the finance lease
receivables are non-current.
10. Other Information
The financial information set out above does not constitute the
Company's statutory accounts for the 53 weeks ended 18 September
2021, or the 52 weeks ended 12 September 2020. Statutory accounts
for 2020 have been delivered to the Registrar of Companies and
those for 2021 will be delivered following the Company's annual
general meeting. The auditors have reported on those accounts.
Their reports were (i) unqualified, (ii) did not include references
to any matters to which the auditors drew attention by way of
emphasis without qualifying their reports and (iii) did not contain
a statement under section 498(2) or (3) of the Companies Act 2006
in respect of the accounts.
11. Basis of preparation
The Company presents its consolidated financial statements in
sterling, rounded to the nearest million, prepared on the
historical cost basis except that current biological assets and
certain financial instruments are stated at fair value, and assets
classified as held for sale are stated at the lower of carrying
amount and fair value less costs to sell.
The preparation of financial statements under Adopted IFRS
requires management to make judgements, estimates and assumptions
about the reported amounts of assets and liabilities, income and
expenses and the disclosure of contingent assets and liabilities.
The estimates and associated assumptions are based on experience.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed regularly.
Revisions to accounting estimates are recognised prospectively from
when the estimates are revised.
Details of accounting standards which came into force in the
year are set out at the end of this note.
The Group's consolidated financial statements are prepared to
the Saturday nearest to 15 September. Accordingly, they have been
prepared for the 53 weeks ended 18 September 2021 (2020 - 52 weeks
ended 12 September 2020).
To avoid delay in the preparation of the consolidated financial
statements, the results of certain subsidiaries, joint ventures and
associates are included to 31 August each year.
Adjustments have been made where appropriate for significant
transactions or events occurring between 31 August and 18
September.
12. New accounting policies
The following accounting standards and amendments were adopted
during the year and had no significant impact on the Group:
- Amendments to IFRS 3 Definition of a Business;
- Amendments to IAS 1 and IAS 8 Definition of Material;
- Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
Interest Rate Benchmark Reform - Phase 1; and
- Amendments to References to the Conceptual Framework in IFRS
Standards.
The Group is assessing the impact of the following standards,
interpretations and amendments that are not yet effective. Where
already endorsed by the UKEB, these changes will be adopted on the
effective dates noted. Where not yet endorsed by the UKEB, the
adoption date is less certain:
- IFRS 17 Insurance Contracts effective 2023 financial year (not
yet endorsed by the UKEB);
- Amendments to IAS 1 Presentation of Financial Statements:
Classification of Liabilities as Current or Non-current effective
2023 financial year (not yet endorsed by the UKEB);
- Disclosure of Accounting Policies (Amendments to IAS 1 and
IFRS Practice Statement 2) effective 2024 financial year (not yet
endorsed by the UKEB);
- Amendments to IAS 8 Definition of Accounting Estimates
effective 2024 financial year (not yet endorsed by the UKEB);
- Amendments to IAS 12 Deferred Tax related to Assets and
Liabilities arising from a Single Transaction effective 2024
financial year (not yet endorsed by the UKEB);
- Amendments to IAS 16 Property, Plant and Equipment - Proceeds
before Intended Use effective 2023 financial year (not yet endorsed
by the UKEB);
- Amendments to IAS 37 Onerous Contracts - Cost of Fulfilling a
Contract effective 2023 financial year (not yet endorsed by the
UKEB);
- Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
Interest Rate Benchmark Reform - Phase 2 effective 2022 financial
year (endorsed by the UKEB). Financial authorities have announced
the timing of key interest rate benchmark replacements such as
LIBOR in the UK, the US and the EU and other territories expected
at the end of 2021, with remaining USD tenors expected to cease in
2023. We are primarily exposed to USD LIBORs that will be available
until June 2023; and
- Annual Improvements to IFRS 2018-2020 effective 2023 financial
year (not yet endorsed by the UKEB).
13. Alternative performance measures
In reporting financial information, the Board uses various 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,
for cannibalisation by new stores,
or for the timing of national or bank
holidays.
It is measured against comparable
trading days in each year.
------------------ ------------- ---------------------------------------------- --------------------------
Two year No direct The like-for-like sales metric expressed Consistent with
like-for-like equivalent over two years enables measurement the definition
sales of the performance of our retail stores given
compared to our experience in 2019,
which was before any of the economic
effects of COVID-19.
It is calculated as described above
for like-for-like sales, but with
2019 data as the comparator.
------------------ ------------- ---------------------------------------------- --------------------------
Adjusted No direct Adjusted operating (profit) margin 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 consolidated
on disposal of non-current assets income statement
and exceptional items. and by operating
Items defined above which arise in segment in note
the Group's joint ventures and associates 1 of the financial
are also treated as adjusting items statements
for the purposes of adjusted operating
profit.
================== ============= ============================================== ==========================
Adjusted See adjusted Adjusted operating profit before repayment See note A
operating operating of job retention scheme monies is
profit profit adjusted operating profit adjusted
before (non-IFRS) for repayment of job retention scheme
repayment measure monies.
of job
retention
scheme
monies
------------------ ------------- ---------------------------------------------- --------------------------
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 consolidated
on disposal of non-current assets, income statement
exceptional items and profits less and by operating
losses on sale and closure of businesses. segment in note
Items defined above which arise in 1 of the financial
the group's joint ventures and associates statements
are also treated as adjusting items
for the purposes of adjusted profit
before tax.
------------------ ------------- ---------------------------------------------- --------------------------
Adjusted Earnings Adjusted earnings and adjusted earnings Reconciliations
earnings and earnings per share are stated before amortisation of these measures
and adjusted per share of non-operating intangibles, transaction are provided
earnings costs, amortisation of fair value in note 7 of
per share adjustments made to acquired inventory, the financial
profits less losses on disposal of statements
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
and adjusted earnings per share.
------------------ ------------- ---------------------------------------------- --------------------------
Exceptional No direct Exceptional items are items of income Exceptional
items equivalent and expenditure which are material items are included
Exceptional and unusual in nature and are considered on the face
items (continued) of such significance that they require of the consolidated
separate disclosure on the face of income statement
the income statement. with further
detail provided
in note 2 of
the financial
statements
================== ============= ============================================== ==========================
Constant Revenue Constant currency measures are derived See note B
currency and see by translating the relevant prior
adjusted year figure 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
two countries where the Group has
operations in this position - Argentina
and Venezuela.
------------------ ------------- ---------------------------------------------- --------------------------
Effective Income The effective tax rate is the tax Whilst the effective
tax rate tax expense charge for the year expressed as a tax rate is
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 5 of
the financial
statements
------------------ ------------- ---------------------------------------------- --------------------------
Adjusted No direct The adjusted effective tax rate is The tax impact
effective equivalent the tax charge for the year 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 7 of
the financial
statements
------------------ ------------- ---------------------------------------------- --------------------------
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 year.
------------------ ------------- ---------------------------------------------- --------------------------
Capital No direct Capital expenditure is a measure of See note D
expenditure equivalent investment each year 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 year 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 25 of the
financial statements
================== ============= ============================================== ==========================
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 25 of the
financial statements
------------------ ------------- ---------------------------------------------- --------------------------
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
------------------ ------------- ---------------------------------------------- --------------------------
(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 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 adjusted operating the definition
capital profit by average capital employed. given
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
(Average) balance sheet. All elements of working
working capital are calculated in accordance
capital with Adopted IFRS.
(continued) 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 definition
capital 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
----------------------------------- ------- ----- ----------- ----------- ------ ------------- ------
2021
External revenue from continuing
businesses 3,593 1,650 1,537 1,508 5,593 3 13,884
Adjusted operating profit 413 152 44 151 321 (70) 1,011
Repayment of job retention scheme
monies - - - - 94 - 94
Adjusted operating profit before
repayment of job retention scheme
monies 413 152 44 151 415 (70) 1,105
Adjusted operating margin % 11.5% 9.2% 2.9% 10.0% 5.7% 7.3%
2020
External revenue from continuing
businesses 3,528 1,594 1,395 1,503 5,895 22 13,937
Adjusted operating profit 437 100 43 147 362 (65) 1,024
Adjusted operating margin % 12.4% 6.3% 3.1% 9.8% 6.1% 7.3%
----------------------------------- ======= ===== =========== =========== ====== ============= ======
Note B
Disposed
Grocery Sugar Agriculture Ingredients Retail businesses Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- ------- ----- ----------- ----------- --------- ----------- ------
2021
External revenue from continuing
businesses
at actual rates 3,593 1,650 1,537 1,508 5,593 3 13,884
2020
External revenue from continuing
businesses
at actual rates 3,528 1,594 1,395 1,503 5,895 22 13,937
Impact of foreign exchange (29) (70) (8) (49) (14) 1 (169)
--------------------------------- ------- ----- ----------- ----------- --------- ----------- ------
External revenue from continuing
businesses
at constant currency 3,499 1,524 1,387 1,454 5,881 23 13,768
% change at constant currency +3% +8% +11% +4% * 5% +1%
--------------------------------- ------- ----- ----------- ----------- --------- ----------- ------
Central
and disposed
Grocery Sugar Agriculture Ingredients Retail businesses Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------------- --------- ----- ----------- ----------- ---------------- ------------- -----
2021
Adjusted operating profit at
actual
rates 413 152 44 151 321 (70) 1,011
2020
Adjusted operating profit at
actual
rates 437 100 43 147 362 (65) 1,024
Impact of foreign exchange (16) (13) (2) (7) - 2 (36)
---------------------------------- --------- ----- ----------- ----------- ---------------- ------------- -----
Adjusted operating profit at
constant
currency 421 87 41 140 362 (63) 988
% change at constant currency * 2% +75% +7% +8% * 11% +2%
---------------------------------- --------- ----- ----------- ----------- ---------------- ------------- -----
Note C
2021 2020
GBPm GBPm
----------------------------------------------------------- ----- -----
Adjusted earnings per share (pence) 80.1 81.10
Dividends relating to the year (pence) - excluding special
dividend proposed 26.7 -
----------------------------------------------------------- ----- -----
Dividend cover 3.00 n/a
----------------------------------------------------------- ----- -----
Note D
2021 2020
From the cash flow statement GBPm GBPm
------------------------------------------ ----- -----
Purchase of property, plant and equipment 551 561
Purchase of intangibles 76 61
------------------------------------------ ----- -----
627 622
------------------------------------------ ----- -----
Note E
2021 2020
From the cash flow statement GBPm GBPm
------------------------------------------------------------------ ----- -----
Purchase of property, plant and equipment 551 561
Purchase of intangibles 76 61
Purchase of subsidiaries, joint ventures and associates 57 16
Purchase of shares in subsidiary undertaking from non-controlling
interests 23 2
Purchase of other investments 14 1
------------------------------------------------------------------ ----- -----
721 641
------------------------------------------------------------------ ----- -----
Note F
2019
(IFRS
16 pro
forma
2021 2020 basis)
GBPm GBPm GBPm
==================================================================== ======= ======= ========
Adjusted operating profit 1,011 1,024 1,482
Charged to adjusted operating profit:
Depreciation of property, plant and equipment 535 538 544
Amortisation of operating intangibles 26 33 23
Depreciation of right-of-use assets and non-cash lease adjustments 288 289 281
Impairment of property, plant and equipment and right-of-use assets - 15 -
==================================================================== ======= ======= ========
Adjusted EBITDA 1,860 1,899 2,330
Net debt including lease liabilities (1,380) (2,081) (2,728)
Financial leverage ratio 0.7 1.1 1.2
==================================================================== ======= ======= ========
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END
FR FSUFAAEFSEDF
(END) Dow Jones Newswires
November 09, 2021 02:00 ET (07:00 GMT)
Grafico Azioni Associated British Foods (LSE:ABF)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni Associated British Foods (LSE:ABF)
Storico
Da Apr 2023 a Apr 2024
