Interim Results

Associated British Foods PLC 17 April 2002 17 April 2002 Associated British Foods reports strong growth for interim period 2002 Interim results for 24 weeks ended 2 March 2002 Highlights • Operating profit up 13% to £179 million* • Group sales up 2%, and by ongoing businesses up 5%, to £2,092 million • Investment income down from £33 million to £23 million • Profit before tax up 6% to £192 million** • Adjusted earnings per share up 10% to 17.0p** • Dividend per share maintained at 4.25p • Net cash funds up £102 million year on year, to £902 million * before amortisation of goodwill ** before exceptional items, property profits and amortisation of goodwill Peter Jackson, Chief Executive of Associated British Foods, said: 'These results demonstrate strong growth across four of our five business categories. This has been achieved through focus on effective planning and good implementation of the strategies laid down which are producing tangible benefits to shareholders. We remain committed to the generation of strong cash flow and sustainable growth and will continue to develop our group businesses to achieve these goals.' For further information please contact: Associated British Foods: Until 1500 only Peter Jackson, Chief Executive John Bason, Finance Director Tel: 020 7638 9571 After 1500 John Bason, Finance Director Tel: 020 7589 6363 Geoff Lancaster, Head of External Affairs Mobile: 07860 562 659 Jonathan Clare/Chris Barrie/Sara Batchelor, Citigate Dewe Rogerson Tel: 020 7638 9571 ASSOCIATED BRITISH FOODS plc INTERIM REPORT FOR THE 24 WEEKS ENDED 2 MARCH 2002 CHAIRMAN'S STATEMENT Shareholders will have read of the death of Garry Weston on 15 February. For more than three decades he inspired and oversaw the growth and development of Associated British Foods, creating the successful enterprise of which we are the current stewards. His legacy is a company renowned for its focus on long-term organic growth and a culture of business integrity. He will be greatly missed by all who knew him and worked with him. I am pleased to report further solid progress in the group's performance. Operating profit before amortisation of goodwill increased by £20 million to £179 million, an improvement of 13 per cent. This progress has been achieved during the six months of intense economic pressure and consumer uncertainty following the catastrophic events in the US last September. The programme of concentrating on our operational strengths continues to pay dividends and all sectors of the group, with the exception of our Australian company, recorded double digit gains in profit. Despite adverse weather and poor crop volumes our agricultural businesses improved performance, assisted by the restructuring programmes of the past two years in our flour milling, sugar refining and animal feeds activities. Ingredients and oils produced further growth after a strong performance in the previous year. Particularly pleasing has been the significant recovery in our ACH food operations. The current year has seen the acquisition in the UK of the Kerry bakery ingredients business. The costs of integrating this acquisition into our existing baking ingredient activities have been borne in the half year under review. Our grocery businesses again achieved strong profit progress. Twinings, the world's leading speciality tea company, recorded significant gains in sales and profits, reinforcing its leading market share position at home and overseas. Allied Bakeries continued its recovery with growth in its branded volumes and improved cost control programmes. Primark, our retail textile business in the UK and Ireland, again enjoyed strong growth in sales and profit despite an increasingly competitive market environment. The major expansion programme of the last two years has driven a significant further advance in operating profit in the half year. In my statement in the last annual report I described the performance of George Weston Foods in Australia as unacceptable. Despite a further decline in profitability in the latest half year, positive steps are being taken to turn round this poor-performing group. Completion of the disposal of the loss making starch business took place at the end of March and this will have a positive impact on the results for the second half. The other under-performing businesses, meat & dairy and biscuit & cake, are being intensively managed to achieve recovery in sales and profit. We expect to see progress in these areas in the second half. Our milling and baking activities continued to outperform, led by strong new product innovation and improved cost controls. The sharp reduction in interest rates in the UK and overseas during this half year inevitably resulted in a significant fall in investment income, which declined by some 30 per cent to £23 million. Despite this, profit before tax, adjusted for the surplus on property disposals, exceptional profits on disposals of businesses and amortisation of goodwill, rose by £11 million or 6 per cent. After the charge for tax and minority interests, adjusted earnings were up by £12 million or 10 per cent to £134 million. At the time of the last annual review I referred to our commitment to improved profit and management performance. These results amply demonstrate the strength of that commitment and the effectiveness of management's programme to focus on our traditional strengths. Although we have made no significant acquisitions during the period, we continue to pursue actively a range of opportunities to acquire businesses which complement our core operational activities. Since September last year, the rapid reduction in interest rates, particularly in the US, has stabilised what threatened to be a period of severe economic turbulence. Although this has resulted in early signs of a modest recovery in the US and elsewhere, it would be neither wise nor realistic to expect a return to the strong growth environment of the late 1990s. There is still a strong element of financial instability present in many sectors of the global economy, which will require a prolonged period of stable markets to work through. Against this background we remain confident of achieving our budget for further growth in sales and profit during the second half of the year. Board changes In January this year, the appointment of an additional non-executive director, Mike Alexander, was announced. Mr Alexander is executive director and chief operating officer of Centrica plc having previously held a number of management positions with BP and latterly with British Gas. He brings a wealth of operational management experience and will make a strong contribution to our activities. Dividends The directors have declared a first interim dividend of 4.25p per share (2001 - 4.25p) which will be paid on 30 August 2002 to shareholders registered at the close of business on 2 August 2002. Harry Bailey Chairman OPERATING REVIEW Adjusted operating profit increased by 13% to £179 million. We have again achieved double digit profit growth across four of our five business categories. Sales by ongoing businesses increased by 5% to £2,092 million. Primary Food and Agriculture 2002 2001 Sales £m 819 848 Operating profit £m 84 76 British Sugar benefited from the action it had taken in the previous year to improve significantly its efficiency by the closure of two of its factories. This improvement more than offset the impact of a sugar beet crop of only 1.22 million tonnes as opposed to the previous year's 1.325 million tonnes. To improve its efficiency further, the plan to close Kidderminster has been implemented and all production in the West of England will now be concentrated at the newly expanded Allscott factory. There was further investment at Wissington where the new £25 million resin separation unit has been successfully commissioned making a significant contribution towards better sugar extraction and the production of other beet-derived high value products. The Wissington factory did not have a good campaign with processing problems resulting in increased operating costs and difficulties for farmers. Actions are in place to alleviate the filtration problems which caused these difficulties, prior to the next processing season. Excellent performance at our newly acquired Wuxuan cane sugar mill in China was the highlight in our overseas sugar operations, which were held back by a poor crop and weak market prices in Poland and weak prices in China. Allied Mills also benefited from the impact of efficiency programmes implemented last year, which saw the closure of two mills and the centralisation of its administrative function. The first increase in flour prices for five years, triggered by the smallest UK wheat harvest since 1988, was implemented in the autumn. ABNA, which represents all our interests in animal feeds, grain trading and speciality crop contracting, saw strong growth in its profits for the half year despite the much publicised difficulties in the UK agricultural sector. This reflects both market share growth in seeds and animal feeds and the benefit of cost reductions in the animal feeds business instigated last year. Benefits are also accruing from supply chain partnerships in the arable and livestock sectors which include an exclusive marketing agreement for moist concentrate feeds and a new joint venture agreement to market Guinness Ireland's brewing by-products. Ingredients & Oils 2002 2001 Sales £m 355 317 Operating profit £m 22 15 The strong profit growth last year has continued. A major part of this growth is contributed by ACH Food Companies following the acquisition last year of the branded foodservice shortenings and oils business from Procter & Gamble. ACH also benefited from lower manufacturing costs as a result of the closure of the Columbus, Ohio plant, the exit from commodity oil processing at Champaign, Illinois and the sale of the low margin rice operation at Greenville, Mississippi last year. Abitec has focused its activities on three business areas: bakery ingredients, lipid technologies and enzymes. Management attention has been dedicated to refocusing the businesses around core areas of expertise which will provide a springboard for growth. The bakery ingredients business now operates under the Cereform name which, in the UK, includes the newly acquired operations from Kerry. Rationalisation of the Kerry operations has been announced and benefits will flow from this in the second half. Opportunities for rationalisation have also been taken by Cereform in the US which will result in the focus of our activity in Denver with the closure of the St Louis facility. A charge for these Cereform rationalisations has been included in these results. Despite the effect of a slow US economy, lipid technologies experienced a strong performance in the personal care and pharmaceuticals sectors. Progress in our enzymes business has slowed as a result of strong competitive pricing in the bakery sector. Close management attention to restructuring and cost reduction at SPI has been successful in addressing the manufacturing cost issues previously reported and profit is ahead of the same period last year. The launch of Pharmagum, a chewable drug delivery system, is meeting expectations and has growing customer acceptance. It has been joined this year by Pharmaburst, a quick-dissolve drug delivery system. Grocery 2002 2001 Sales £m 418 398 Operating profit £m 21 17 Growth in profits from our grocery businesses, reported last year end, has continued. Allied Bakeries made good progress in a highly competitive environment. Bread prices were increased last autumn to recover increased flour prices. Kingsmill, the leading UK premium bread brand, continued to grow supported by the launch of Whole White last year followed by Whole White Rolls earlier this year. Further cost reductions were achieved in distribution, the Sheffield bakery was closed and production efficiencies were improved. Profitability at Speedibake was affected by competitive pricing. However, its new stone bake oven at Wakefield was fully commissioned during the period. Production is now focused at Wakefield and Bradford following the closure of Northampton which was completed at the end of November. Our market leading sugar and sweetener brand Silver Spoon continued to add to its portfolio of products, and we acquired Crusha, a syrup-based milk shake mix in December. The brand, which has a long heritage stretching back to the 1950s, fits well with our existing sweetener and ice cream topping products. It leads the foodservice sector of its market and is number two in the retail sector. ' Nothing Comes Closer To Sugar', the artificial sweetener, now holds number two spot in the market after television and merchandising support over the period. At Ryvita, excellent factory efficiencies and strong export sales resulted in good growth in profit despite some decline in the UK market for crispbread and extruded products. Rice cakes were launched in the UK and early signs are very encouraging. Westmill Foods recorded a much-improved performance with sales ahead across the business. Rice volumes increased with growth in the multiple retailers and flour benefited from a price increase and further growth in Allinsons. A recovery in sales of noodles into the ready meal sector was offset by a slowing of business in the Chinese catering trade. Sales and profits continue to grow at Twinings, the world's leading speciality tea producer. Performance has been particularly good in the UK, US, France and Norway. The benefits of integrating the newly acquired Swedish and Danish distributors have begun to be realised. In the UK the relaunch with new packaging and products has been successful and a further increase in market share has reinforced our brand leadership. In France, herbal teas, particularly the 'wellness' and organic ranges, are growing. Ready-to-drink iced teas continue to progress and additional flavours and increased marketing support are planned for the UK and other European markets. Retail & Packaging 2002 2001 Sales £m 337 265 Operating profit £m 39 32 Very strong growth continued at Primark, our retail textile business, with sales up 30% to £311 million and profit up 23% to £37 million. This was driven by the new stores that have been opened, particularly in the second half of last year. Like-for-like sales growth for the interim period was 4% despite weaker trading during the autumn. Operating profit margins reduced slightly mainly as a result of the overheads relating to the substantial increase in warehousing capacity following the opening of Magna Park last year. The store opening programme continued with new stores in Manchester, which is now our largest store, Blanchardstown and Lewisham. We are now trading from 111 stores and 1.9 million square feet of retail selling space. New stores will be opened in Glasgow and Torquay. Sales and profits were maintained by Allied Glass Containers and capital investment at Leeds will increase productivity. A range of lighter liquor bottles is showing promise and our design and technological excellence was recognised in the period when we took two prestigious industry awards. Australia & New Zealand 2002 2001 Sales £m 271 273 Operating profit £m 8 10 George Weston Foods continued to face a series of challenges during the period with competitive pressures being the most significant. Although sales increased 3% to $764 million, profits declined 15% to $23 million. The under-performing starch business was sold on 22 March 2002, having received clearance from the regulatory authorities on 22 February 2002. Baking continued to perform well and strengthened its market position and increased sales. This business includes Tip Top bread, Australia's largest food brand, and Noble Rise which has now been extended to a range of seven products after the successful launch in November of Crunchy Toast White. Holsom's was launched in March and is aimed at the growth segment of health conscious families. Early indications are that this range will perform well. The performance of biscuit & cake declined as a result of lower volumes and higher input costs. Meat & dairy was adversely affected, not only by higher raw material costs and declining sales volumes, but also by some loss of productivity arising from the reconfiguration following the acquisition of Don's. The Chapman's factory in Nairne has now been closed. Milling was impacted by substantial increases in wheat prices but this was mitigated by selling price increases, growth in external business and reduced conversion costs. Product innovation continued to contribute to the business including the introduction of a new fortified flour enriched with vitamins and minerals. The performance in the second half of this year is expected to be ahead of the same period last year. Summary These results demonstrate strong growth across four of our five business categories. This has been achieved through focus on effective planning and good implementation of the strategies laid down which are producing tangible benefits to shareholders. We remain committed to the generation of strong cash flow and sustainable growth and will continue to develop our group businesses to achieve these goals. Peter Jackson Chief Executive CONSOLIDATED PROFIT AND LOSS ACCOUNT 52 weeks ended 15 September 2001 Continuing 24 weeks 24 weeks operations ended ended before 2 March 3 March exceptional Exceptional 2002 2001 items Items Total (restated) (restated) (restated) (restated) Note £m £m £m £m £m Turnover of the group including its share 2,100 2,063 4,434 - 4,434 of joint ventures Less share of turnover of joint ventures (8) (6) (16) - (16) ----------- ----------- ----------- ---------- ---------- Group turnover 1 2,092 2,057 4,418 - 4,418 Operating costs (1,922) (1,906) (4,085) (62) (4,147) ----------- ----------- ----------- ---------- ---------- Group operating profit 170 151 333 (62) 271 Share of operating results of - joint ventures 1 1 3 - 3 - associates 2 2 4 - 4 ----------- ----------- ----------- ---------- ---------- Total operating profit 1 173 154 340 (62) 278 Operating profit before amortisation 179 159 351 - 351 of goodwill Amortisation of goodwill (6) (5) (11) (62) (73) Profits less losses on sale of properties 3 10 20 - 20 Profit on disposal of businesses - 51 - 29 29 Investment income 23 33 66 - 66 ----------- ----------- ----------- ---------- ---------- Profit on ordinary activities before 199 248 426 (33) 393 interest Interest payable (10) (11) (24) - (24) ----------- ----------- ----------- ---------- ---------- Profit on ordinary activities before 189 237 402 (33) 369 taxation Adjusted profit before taxation 192 181 393 - 393 Profits less losses on sale of 3 10 20 - 20 properties Exceptional items - 51 - 29 29 Amortisation of goodwill (6) (5) (11) (62) (73) Tax on profit on ordinary activities 2 (56) (56) (118) - (118) ----------- ----------- ----------- ---------- ---------- Profit on ordinary activities after 133 181 284 (33) 251 taxation Minority interests - equity (2) (3) (8) - (8) ----------- ----------- ----------- ---------- ---------- Profit for the financial period 131 178 276 (33) 243 Dividends - first interim (34) (34) (34) - (34) - second interim - - (59) - (59) ----------- ----------- ----------- ---------- ---------- Transfer to/(from) reserves 97 144 183 (33) 150 ----------- ----------- ----------- ---------- ---------- Basic and diluted earnings per ordinary 3 16.6p 22.6p 30.8p share Adjusted earnings per ordinary share 3 17.0p 15.5p 33.8p The group has made no material acquisitions nor discontinued any operations within the meaning of the Financial Reporting Standards during either 2002 or 2001. The results for the 24 weeks ended 3 March 2001 and the year ended 15 September 2001 have been restated to reflect the adoption of FRS 19 'Deferred Tax'. Details of the impact of this change in accounting policy are provided in note 8. CONSOLIDATED BALANCE SHEET At At At 2 March 3 March 15 September 2002 2001 2001 (restated) (restated) £m £m £m Fixed assets Intangible assets - goodwill 198 239 179 Tangible assets 1,428 1,360 1,397 ------------ ---------- ----------- 1,626 1,599 1,576 ------------ ---------- ----------- Interest in net assets of - joint ventures 9 10 9 - associates 12 12 9 Other investments 12 14 12 ------------ ---------- ----------- Total fixed asset investments 33 36 30 ------------ ---------- ----------- 1,659 1,635 1,606 ------------ ---------- ----------- Current assets Stocks 726 684 469 Debtors 531 544 551 Investments 1,139 1,021 1,195 Cash at bank and in hand 21 37 95 ------------ ---------- ----------- 2,417 2,286 2,310 ------------ ---------- ----------- Creditors amounts falling due within one year Short term borrowings (91) (90) (82) Other creditors (697) (673) (672) ------------ ---------- ----------- (788) (763) (754) ------------ ---------- ----------- Net current assets 1,629 1,523 1,556 ------------ ---------- ----------- Total assets less current liabilities 3,288 3,158 3,162 Creditors amounts falling due after one year Loans (167) (168) (157) Other creditors (10) (11) (10) ------------ ---------- ----------- (177) (179) (167) Provisions for liabilities and charges (126) (118) (130) ------------ ---------- ----------- 2,985 2,861 2,865 ------------ ---------- ----------- Capital and reserves Called up share capital 47 47 47 Revaluation reserve 3 3 3 Other reserves 173 173 173 Profit and loss account 2,684 2,561 2,567 ------------ ---------- ----------- Equity shareholders' funds 2,907 2,784 2,790 Minority interests in subsidiary undertakings - 78 77 75 equity ------------ ---------- ----------- 2,985 2,861 2,865 ------------ ---------- ----------- CONSOLIDATED CASH FLOW STATEMENT 24 weeks 24 weeks 52 weeks ended ended ended 2 March 3 March 15 September 2002 2001 2001 Note £m £m £m Cash flow from operating activities 4 21 (53) 427 ----------- ---------- ---------- Dividends from joint ventures 2 2 3 ----------- ---------- ---------- Dividends from associates - - 1 ----------- ---------- ---------- Return on investments and servicing of finance Investment income 23 37 66 Interest paid (11) (11) (24) Dividends paid to minorities (3) (1) (10) ----------- ---------- ---------- 9 25 32 ----------- ---------- ---------- Taxation (35) (50) (127) ----------- ---------- ---------- Capital expenditure and financial investment Purchase of tangible fixed assets (89) (70) (212) Sale of tangible fixed assets 12 15 39 Purchase of equity investments - - (1) Sale of equity investments 2 7 7 ----------- ---------- ---------- (75) (48) (167) ----------- ---------- ---------- Acquisitions and disposals Purchase of new subsidiary undertakings (28) (116) (121) Purchase of joint ventures and associates (2) - - Sale of subsidiary undertakings 18 141 142 ----------- ---------- ---------- (12) 25 21 ----------- ---------- ---------- Equity dividends paid (59) (55) (88) ----------- ---------- ---------- Net cash (outflow)/ inflow before use of (149) (154) 102 liquid funds and financing ----------- ---------- ---------- Management of liquid funds 62 104 (76) Financing 5 12 23 6 ----------- ---------- ---------- (Decrease)/increase in cash (75) (27) 32 ----------- ---------- ---------- CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 24 weeks 24 weeks 52 weeks ended ended ended 2 March 3 March 15 September 2002 2001 2001 (restated) (restated) Note £m £m £m Profit for the financial period 131 178 243 Currency translation differences on foreign 23 (37) (44) currency net assets Tax on currency translation differences (3) 2 7 ---------- ---------- --------- Total recognised gains and losses relating to the 151 143 206 period Prior year adjustment 8 (91) ---------- --------- ---------- Total recognised gains and losses since previous 60 year end ---------- RECONCILIATION OF MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDS 24 weeks 24 weeks 52 weeks ended ended ended 2 March 3 March 15 September 2002 2001 2001 (restated) (restated) Note £m £m £m Profit for the financial period 131 178 243 Dividends - first interim (34) (34) (34) - second interim - - (59) ----------- ---------- ---------- Retained profit for the financial period 97 144 150 Goodwill written back - 3 5 Other recognised gains and losses relating 20 (35) (37) to the period ----------- ---------- ---------- Net increase in shareholders' funds 117 112 118 ----------- ---------- ---------- Opening shareholders' funds as previously 2,881 2,763 2,763 reported Prior year adjustment 8 (91) (91) (91) ----------- ---------- ---------- Opening shareholders' funds restated 2,790 2,672 2,672 ----------- ---------- ---------- Closing shareholders' funds 2,907 2,784 2,790 ----------- ---------- ---------- NOTES TO THE INTERIM REPORT Group turnover Operating profit ---------------------------------------------- ------------------------------------------ 24 weeks 24 weeks 52 weeks 24 weeks 24 weeks 52 weeks ended ended ended ended ended ended 2 March 3 March 15 September 2 March 3 March 15 September 2002 2001 2001 2002 2001 2001 £m £m £m £m £m £m 1. Segmental Analysis Analysis by business Primary food and 819 848 1,867 84 76 172 agriculture Ingredients and oils 355 317 711 22 15 42 Grocery 418 398 858 21 17 37 Retail and packaging 337 265 574 39 32 63 Australia and New 271 273 583 8 10 19 Zealand Inter company sales (108) (103) (255) - - - Central costs - - - (6) (4) (10) Pension credit - - - 11 12 27 ----------- ---------- ------------ ----------- ----------- ---------- 2,092 1,998 4,338 179 158 350 Businesses disposed Grocery - 33 33 - 2 2 Ingredients and oils - 26 47 - (1) (1) Amortisation of - - - (6) (5) (73) goodwill ----------- ---------- ------------ ----------- ----------- ----------- 2,092 2,057 4,418 173 154 278 ----------- ---------- ------------ ----------- ----------- ----------- Analysis by geography (by origin and destination) European Union (mainly 1,408 1,352 2,913 133 119 246 UK and Ireland) Australia and New 271 273 583 8 10 19 Zealand North America 325 294 651 21 10 33 Elsewhere 88 79 191 6 7 25 Pension credit - - - 11 12 27 ----------- ---------- ------------ ----------- ----------- ----------- 2,092 1,998 4,338 179 158 350 Businesses disposed European Union - 41 50 - 2 3 North America - 18 30 - (1) (2) Amortisation of - - - (6) (5) (73) goodwill ----------- ---------- ------------ ----------- ----------- ----------- 2,092 2,057 4,418 173 154 278 ----------- ---------- ------------ ----------- ----------- ----------- 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 goodwill amortisation in the year ended 15 September 2001 included an exceptional charge of £62 million related to an FRS 11 impairment charge based on the projected cash flows of the food business of SPI in the US, discounted at 12.5%. Capital employed ---------------------------------------------------------------------------------- 24 weeks 24 weeks 52 weeks ended ended ended 2 March 3 March 15 September 2002 2001 2001 (restated) (restated) £m £m £m 1. Segmental analysis continued Analysis by business Primary food and agriculture 979 981 769 Ingredients and oils 259 246 266 Grocery 336 319 319 Retail and packaging 335 260 339 Australia and New Zealand 263 251 230 Central capital employed (33) (19) (33) ------------ ------------- ------------- 2,139 2,038 1,890 Businesses disposed Ingredients and oils - 32 - ------------ ------------- ------------- 2,139 2,070 1,890 ------------ ------------- ------------- Analysis by geography (by origin and destination) European Union (mainly UK and Ireland) 1,498 1,437 1,321 Australia and New Zealand 263 251 230 North America 235 216 234 Elsewhere 143 134 105 ------------ ------------- ------------- 2,139 2,038 1,890 Businesses disposed European Union - 10 - North America - 22 - ------------ ------------- ------------- 2,139 2,070 1,890 ------------ ------------- ------------- 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 (excluding deferred tax). 24 weeks 24 weeks 52 weeks ended ended ended 2 March 3 March 15 September 2002 2001 2001 (restated) (restated) £m £m £m 2. Tax on profit on ordinary activities United Kingdom 38 35 76 Overseas 11 17 28 Joint ventures and associates 1 1 2 Deferred taxation 6 3 12 ---------- ---------- ----------- 56 56 118 ---------- ---------- ----------- Pence Pence Pence 3. Earnings per ordinary share (restated) (restated) Adjusted earnings per ordinary share 17.0 15.5 33.8 Earnings per ordinary share on: Sale of properties 0.4 1.3 2.5 Exceptional items - 6.4 (4.1) Amortisation of goodwill (0.8) (0.6) (1.4) ---------- ---------- ----------- Earnings per ordinary share 16.6 22.6 30.8 ---------- ---------- ----------- £m £m £m 4. Cash flow from operating activities Operating profit 170 151 271 Amortisation of goodwill 6 5 73 Depreciation 70 76 149 (Increase)/decrease in working capital - stocks (252) (191) 8 - debtors 4 (58) (31) - creditors 33 (8) (16) European Commission fine - (27) (27) Other provisions (10) (1) - ---------- ---------- ----------- 21 (53) 427 ---------- ---------- ----------- 5. Analysis of changes in financing Repayment of short-term loans (57) (15) (28) Issue of short-term loans 64 34 42 Repayment of loans over one year (1) (3) (13) Issue of loans over one year 6 7 5 ---------- ---------- ----------- 12 23 6 ---------- ---------- ----------- 24 weeks 24 weeks 52 weeks ended ended ended 2 March 3 March 15 September 2002 2001 2001 £m £m £m 6. Reconciliation of net cash flow to movement in net funds (Decrease)/increase in cash (75) (27) 32 Management of liquid funds (62) (104) 76 Net increase in borrowings (12) (23) (6) --------- --------- --------- Change in net funds resulting from cash flows (149) (154) 102 Effect of currency changes 1 (4) (5) On acquisition of subsidiary undertakings - (14) (17) Other (1) (9) (10) --------- --------- --------- Movement in net funds (149) (181) 70 Opening net funds 1,051 981 981 --------- --------- --------- Closing net funds 902 800 1,051 --------- --------- --------- At Acquisition Other At 15 September Cash of subsidiary Exchange non-cash 2 March 2001 flow undertakings adjustments changes 2002 £m £m £m £m £m £m 7. Analysis of net funds Cash at bank and in hand 95 (75) - 1 - 21 Short-term borrowings (82) (7) - (2) - (91) Investments 1,195 (62) 5 2 (1) 1,139 Loans over one year (157) (5) (5) - - (167) ------------ ------------ ------------ ------------- ------------- ------------ 1,051 (149) - 1 (1) 902 ------------ ------------ ------------ ------------- ------------- ------------ 8. Basis of preparation The figures shown for the financial year ended 15 September 2001, which have been abridged from the group's 2001 financial statements, are not the group's statutory accounts. Those accounts have been reported on by the auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under Section 237 (2) or (4) of the Companies Act 1985. The figures for the 24 weeks ended 2 March 2002 and 3 March 2001 are unaudited. The interim financial information has been prepared on the basis of the accounting policies set out in the group's 2001 statutory accounts except that FRS 19 'Deferred Tax' has been adopted in these accounts for the first time. Adoption of FRS 19 has the effect of increasing the tax charge on profits by £6 million for the 24 weeks to 2 March 2002 (£3 million for the 24 weeks to 3 March 2001 and £12 million for the year ended 15 September 2001). It also increases the profit on disposal of businesses in the year ended 15 September 2001 by £12 million (£11 million at 3 March 2001). Shareholders' funds at 15 September 2001 have been reduced by £91 million (£83 million at 3 March 2001). A prior year adjustment has been made and comparative figures have been restated. This information is provided by RNS The company news service from the London Stock Exchange

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