Final Results - Part 2

Associated British Foods PLC 6 November 2001 PART 2 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended For the year ended 15 September 2001 16 September 2000 Continuing Continuing operations operations before before excep Excep excep Excep -tional -tional -tional -tional items items Total items items Total Note £m £m £m £m £m £m Turnover of the group 4,434 - 4,434 4,414 - 4,414 including its share of joint ventures Less share of turnover (16) - (16) (8) - (8) of joint ventures ------- ------ ----- ------ ------ ------ Group turnover 1 4,418 - 4,418 4,406 - 4,406 Operating costs (4,085) (62) (4,147) (4,079) (130) (4,209) ------- ------ ----- ------ ------ ------ Group operating profit 333 (62) 271 327 (130) 197 Share of operating results of: - joint 3 - 3 3 - 3 ventures - associates 4 - 4 4 - 4 ------- ------ ----- ------ ------ ------ Total operating profit 1 340 (62) 278 334 (130) 204 ------- ------ ----- ------ ------ ------ Operating profit 351 - 351 340 - 340 before exceptional items and amortisation of goodwill Exceptional - - - - (130) (130) items Amortisation of (11) (62) (73) (6) - (6) goodwill ------- ------ ----- ------ ------ ------ Profits less losses on 20 - 20 8 - 8 sale of properties Profits less losses on - 17 17 - - - sale of businesses Investment income 66 - 66 61 - 61 ------- ------ ----- ------ ------ ------ Profit on ordinary 426 (45) 381 403 (130) 273 activities before interest Interest payable (24) - (24) (26) - (26) ------- ------ ----- ------ ------ ------ Profit on ordinary 402 (45) 357 377 (130) 247 activities before taxation ------- ------ ----- ------ ------ ------ Adjusted profit 393 - 393 375 - 375 before taxation Profits less 20 - 20 8 - 8 losses on sale of properties Exceptional - 17 17 - (130) (130) items Amortisation of (11) (62) (73) (6) - (6) goodwill ------- ------ ----- ------ ------ ------ Tax on profit on 2 (106) - (106) (111) - (111) ordinary activities ------- ------ ----- ------ ------ ------ Profit on ordinary 296 (45) 251 266 (130) 136 activities after taxation Minority interests - (8) - (8) (3) 5 2 equity ------- ------ ----- ------ ------ ------ Profit for the 288 (45) 243 263 (125) 138 financial year Dividends - interim 3 (93) - (93) (89) - (89) ------- ------ ----- ------ ------ ------ Transfer to/(from) 195 (45) 150 174 (125) 49 reserves ====== ===== ==== ===== ==== ===== Basic and diluted 4 30.8p 17.5p earnings per ordinary share Adjusted earnings per 4 35.4p 33.1p ordinary share The group has made no material acquisitions nor discontinued any operations within the meaning of the Financial Reporting Standards during either 2001 or 2000. CONSOLIDATED BALANCE SHEET As at As at 15 September 16 September 2001 2000 £m £m Fixed assets Intangible assets - goodwill 179 151 Tangible assets 1,397 1,459 --------- ---------- 1,576 1,610 --------- ---------- Interest in net assets of - joint ventures 10 12 - associates 9 11 Other investments 12 14 --------- ---------- Total fixed asset investments 31 37 --------- ---------- 1,607 1,647 --------- ---------- Current assets Stocks 469 496 Debtors 549 526 Investments 1,195 1,133 Cash at bank and in hand 95 65 --------- ---------- 2,308 2,220 --------- ---------- Creditors amounts falling due within one year Short term borrowings (82) (57) Other creditors (671) (735) --------- ---------- (753) (792) --------- ---------- Net current assets 1,555 1,428 --------- ---------- Total assets less current liabilities 3,162 3,075 --------- ---------- Creditors amounts falling due after one year Loans (157) (160) Other creditors (10) (11) --------- ---------- (167) (171) --------- ---------- Provisions for liabilities and charges (39) (63) --------- ---------- 2,956 2,841 ===== ===== Capital and reserves Called up share capital 47 47 Revaluation reserve 3 3 Other reserves 173 173 Profit and loss account 2,658 2,540 --------- ---------- Equity shareholders' funds 2,881 2,763 Minority interests in subsidiary undertakings - 75 78 equity --------- ---------- 2,956 2,841 ===== ===== CONSOLIDATED CASH FLOW STATEMENT For the For the year ended year ended 15 September 16 September 2001 2000 Note £m £m Cash flow from operating activities 5 427 445 ---------- ---------- Dividends from joint ventures 3 2 ---------- ---------- Dividends from associates 1 1 ---------- ---------- Return on investments and servicing of finance Investment income 66 51 Interest paid (24) (26) Dividends paid to minorities (10) (2) ---------- ---------- 32 23 ---------- ---------- Taxation (127) (106) ---------- ---------- Capital expenditure and financial investment Purchase of tangible fixed assets (212) (182) Sale of tangible fixed assets 39 32 Purchase of equity investments (1) (7) Sale of equity investments 7 17 ---------- ---------- (167) (140) ---------- ---------- Acquisitions and disposals Purchase of new subsidiary undertakings (121) (73) Purchase of joint ventures and associates - (5) Sale of subsidiary undertakings 142 54 ---------- ---------- 21 (24) ---------- ---------- Equity dividends paid (88) (85) ---------- ---------- Net cash inflow before use of liquid funds and 102 116 financing Management of liquid resources (76) (104) Financing Borrowings due within one year - (28) (54) repayment of loans - increase in loans 42 50 Borrowings due after one year - (13) - repayment of loans - increase in loans 5 1 Increase in bank borrowings - 4 ---------- ---------- Increase in cash 32 13 ===== ======= CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES For the For the year ended year ended 15 September 16 September 2001 2000 £m £m Profit for the financial year 243 138 Currency translation differences on foreign (44) 50 currency net assets Tax on currency translation differences 7 (12) ----------- ----------- Total recognised gains and losses 206 176 ======= ===== CONSOLIDATED STATEMENT OF HISTORICAL COST PROFITS There is no material difference between the group results as reported and on an unmodified historical cost basis. Accordingly no note of historical cost profits and losses has been prepared. RECONCILIATION OF MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDS For the For the year ended year ended 15 September 16 September 2001 2000 £m £m Profit for the financial year 243 138 Dividends - interim (93) (89) ---------- ----------- Transfer to reserves 150 49 Other recognised gains and losses relating to the (37) 38 year Goodwill written back 5 2 ---------- ----------- Net increase in shareholders' funds 118 89 Opening shareholders' funds 2,763 2,674 ---------- ----------- Closing shareholders' funds 2,881 2,763 ====== ===== NOTES TO THE PRELIMINARY ANNOUNCEMENT 1. Segmental analysis Group Turnover Operating Profit Capital Employed 2001 2000 2001 2000 2001 2000 £m £m £m £m £m £m Analysis by business Primary Food & 1,867 1,802 172 157 769 746 Agriculture Ingredients & 711 640 42 32 266 260 Oils Grocery 858 847 37 29 319 295 Retail & 574 484 63 53 339 249 Packaging Australia and New 583 608 19 31 230 246 Zealand Inter company (255) (279) - - - - sales Central costs / - - (10) (4) (33) (10) capital employed Pension credit - - 27 27 - - ------- ------- -------- -------- -------- -------- 4,338 4,102 350 325 1,890 1,786 Businesses disposed: Grocery 33 251 2 13 - 83 Ingredients 47 53 (1) 2 - 29 & Oils Exceptional items - - - (130) - - Amortisation of - - (73) (6) - - goodwill ------- ------- -------- -------- -------- -------- 4,418 4,406 278 204 1, 890 1,898 ------- ------- -------- -------- -------- -------- Analysis by geography (by origin and destination) European Union 2,913 2,782 246 235 1,321 1,229 (mainly UK & Ireland) Australia & New 583 608 19 31 230 246 Zealand North America 651 578 33 26 234 225 Elsewhere 191 134 25 6 105 86 Pension credit - - 27 27 - - ------- ------- -------- -------- -------- -------- 4,338 4,102 350 325 1, 890 1,786 Businesses disposed: European 50 255 3 14 - 90 Union North 30 49 (2) 1 - 22 America Exceptional items: European - - - (72) - - Union North - - - (45) - - America Elsewhere - - - (13) - - Amortisation of - - (73) (6) - - goodwill ------- ------- -------- -------- -------- -------- 4,418 4,406 278 204 1, 890 1,898 ------- ------- -------- -------- -------- -------- Business segment operating profits include a pension charge that reflects the regular cost. The difference between this charge and that required under SSAP 24 is shown as a credit held centrally. Virtually all of the credit arises in the European Union. The amortisation of goodwill arises in Primary Food & Agriculture £1 million (2000 - £1 million), Ingredients & Oils £71 million, including an exceptional charge of £62 million, (2000 - £5 million) and Grocery £1 million (2000 - nil). By geography, the charge arises in the European Union £1 million (2000 - £1 million), North America £71 million (2000 - £4 million) and elsewhere £1 million (2000 - £1 million). The exceptional write-down of goodwill relates to an FRS11 impairment charge based on the projected cash flow of SPI's food business, discounted at 12.5%. The exceptional charge of £130 million in 2000 related to Primary Food & Agriculture - £72 million, Ingredients & Oils - £48 million and Grocery - £10 million. Capital employed comprises tangible fixed assets, interests in joint ventures and associates, current assets (excluding cash and investments), creditors (excluding borrowings, tax and dividends) and provisions for liabilities and charges. For the For the year ended year ended 15 September 16 September 2001 2000 £m £m 2. Tax on profit on ordinary activities The charge for the year comprises: United - corporation tax at 30% (2000 - 76 80 Kingdom 30%) Overseas - income and corporation tax 28 29 Joint ventures and associates 2 2 -------- -------- 106 111 ===== ==== 3. Dividends First interim dividend of 4.25p per share 34 34 (2000 - 4.25p) Second interim dividend of 7.55p per share (2000 59 55 - 7.00p) -------- -------- 93 89 ===== ==== The first interim dividend was paid on 31 August 2001. The second interim dividend will be paid on 18 February 2002. 4. Earnings per ordinary share Adjusted profit for the financial year 279 261 Profits less losses on sale of properties 20 8 Exceptional items (45) (125) Amortisation of goodwill (11) (6) -------- -------- Profit for the financial year attributable to 243 138 shareholders ===== ==== Adjusted earnings per ordinary share 35.4p 33.1p Earnings per ordinary share on: - sale of properties 2.5p 1.0p - exceptional items (5.7)p (15.8)p - amortisation of goodwill (1.4)p (0.8)p -------- -------- Earnings per ordinary share 30.8p 17.5p ===== ==== The weighted average number of ordinary shares in issue during the year was 789 million (2000 - 789 million). The calculation of the weighted average number of shares excludes the shares held by the Employee Share Option Scheme on which the dividends are being waived. Adjusted earnings per ordinary share, which exclude the impact of profits less losses on the disposal of properties, exceptional items and goodwill amortisation, 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 options. The diluted, weighted average number of share is 789 million (2000 - 789 million). 5. Cash flow from operating activities Operating profit 271 197 Amortisation of goodwill 73 6 Impairment of fixed assets - 32 Depreciation 149 206 (Increase)/decrease in working capital - Stocks 8 (28) - Debtors (31) (25) - Creditors (16) 44 European Commission fine (27) - Other provisions - 13 --------- ---------- Net cash from operating activities 427 445 ==== ==== The depreciation of £206 million in 2000 included £53 million relating to the exceptional charge following the review of the group's manufacturing operations. A cash outflow of £12 million arose during the year in respect of the exceptional charge in 2000. 2001 2000 6. Reconciliation of net cash flow movement in £m £m net funds Increase in cash 32 13 Management of liquid resources 76 104 Net increase in borrowings (6) (1) --------- ---------- Change in net funds resulting from cash flow 102 116 Effect of currency changes (5) (2) On acquisition of subsidiary undertakings (17) - Other (10) (4) --------- ---------- Movements in net funds 70 110 Opening net funds 981 871 --------- ---------- Closing net funds 1,051 981 ========= ========== At Acquisition Other At 15 16 September Cash of subsidiary Exchange non-cash September 2000 flow undertakings adjustments changes 2001 £m £m £m £m £m £m 7. Analysis of net funds Cash at 65 32 - (2) - 95 bank and in hand Short (57) (14) (12) 1 - (82) term borrowings Investments 1,133 76 - (4) (10) 1,195 Loans (160) 8 (5) - - (157) over one year -------- --------- ---------- --------- --------- ------- 981 102 (17) (5) (10) 1,051 ======== ========= ========== ========= ========= ======= 8. Other information The financial information set out above does not constitute the group's statutory financial statements for the years ended 15 September 2001 and 16 September 2000, but is derived from them. The 2000 financial statements have been filed with the Registrar of Companies whereas those for 2001 will be delivered following the company's annual general meeting. The auditor's opinions on these financial statements were unqualified and did not include a statement under section 237 (2) or (3) of the Companies Act 1985. ACCOUNTING POLICIES Basis of preparation These financial statements have been prepared under the historical cost convention as modified by the revaluation of certain assets, and in accordance with applicable accounting standards and the Companies Act 1985. Basis of consolidation The group accounts comprise a consolidation of the accounts of the company and its subsidiary undertakings, together with the group's share of the results and net assets of its joint ventures and associates. The financial statements of the company and its subsidiary undertakings are made up for the 52 weeks ended 15 September 2001, except that, to avoid delay in the preparation of the consolidated financial statements, those of the Australian and New Zealand group and China and Poland are made up to 31 July 2001, and those of the North American subsidiary undertakings are made up to 31 August 2001. Acquisitions The consolidated profit and loss account includes the results of new subsidiary undertakings, joint ventures and associates attributable to the period since change of control. Disposals The results of subsidiary undertakings, joint ventures and associates sold are included up to the dates of change of control. The profit or loss on the disposal of an acquired business takes into account the amount of any related goodwill previously written off directly to reserves, or the net amount of goodwill remaining unamortised, as appropriate. Intangible fixed assets Intangible fixed assets consist of goodwill arising on acquisitions since 13 September 1998, being the excess of the fair value of the purchase consideration of new subsidiary undertakings, joint ventures and associates over the fair value of net assets acquired. Goodwill is capitalised in accordance with FRS 10 and amortised over its useful economic life, not exceeding 20 years. Goodwill previously written off against reserves has not been reinstated. Tangible fixed assets Tangible fixed assets are carried at their original cost less accumulated depreciation. Foreign currencies Monetary assets and liabilities denominated in foreign currencies are translated into sterling at rates of exchange ruling at the balance sheet date or at the contracted rate as appropriate. The assets and liabilities of overseas operations are translated into sterling at the rates of exchange ruling at the balance sheet date. The results of overseas operations have been translated at the average rate prevailing during the year. Exchange differences arising on consolidation are taken directly to reserves. Other exchange differences are dealt with as part of operating profits. Pensions The group has established separately funded pension schemes for the benefit of permanent staff, which vary with employment conditions in the countries concerned. Net pension costs are charged to income over the expected average remaining service lives of employees. Any differences between the charge for pensions and total contributions are included within pension provisions or debtors as appropriate. Research and development Expenditure in respect of research and development is written off against profits in the period in which it is incurred. Fixed asset investments Joint ventures and associates are accounted for in the financial statements of the group under the equity method of accounting. Other fixed asset investments in the group's accounts, and all fixed asset investments in the accounts of the company, are stated at cost less amounts written off in respect of any impairment. Depreciation Depreciation is provided on the original cost of assets and is calculated on a straight line basis at rates sufficient to reduce them to their estimated residual value. No depreciation is provided on freehold land or payments on account. Leaseholds are written off over the period of the lease. The anticipated life of other assets is generally deemed to be not longer than: Freehold buildings 66 years Plant, machinery, fixtures and fittings - sugar factories 20 years - other operations 12 years Vehicles 8 years Leases All material leases entered into by the group are operating leases, whereby substantially all of the risks and rewards of ownership of an asset remain with the lessor. Rental payments are charged against profits on a straight line basis over the life of the lease. Stocks Stocks are valued at the lower of cost or net realisable value, after making due provision against obsolete and slow-moving items. In the case of manufactured goods the term 'cost' includes ingredients, production wages and production overheads. Current asset investments Current asset investments are stated at the lower of cost or market value. Financial instruments Forward foreign exchange contracts and currency options are used to hedge forecast transactional cash flows and accordingly, any gains or losses on these contracts are recognised in the profit and loss account when the underlying transaction is settled. Derivative commodity contracts are used to hedge committed purchases or sales of commodities and accordingly, any gains or losses on these contracts are recognised in the profit and loss account in the same accounting period as the underlying purchase or sale. Gains or losses arising on hedging instruments which are cancelled due to the termination of the underlying exposure are taken to the profit and loss account immediately. Deferred tax Deferred tax represents corporation tax in respect of accelerated taxation allowances on capital expenditure and other timing differences, to the extent that a liability is anticipated in the foreseeable future.

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