REG - Assoc.British Foods - Annual Results
07/11/2023 07:00
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RNS Number : 5614S Associated British Foods PLC 07 November 2023
For release 7 November 2023
Annual Results Announcement
Year ended 16 September 2023
Associated British Foods plc results for the 52 weeks ended 16 September 2023
Financial Headlines
2023 2022 Actual Constant currency
currency
Group revenue £19,750m £16,997m +16% +15%
Adjusted operating profit £1,513m £1,435m +5% +4%
Adjusted profit before tax £1,473m £1,356m +9%
Adjusted earnings per share 141.8p 131.1p +8%
Operating profit £1,383m £1,178m +17%
Profit before tax £1,340m £1,076m +25%
Basic earnings per share 134.2p 88.6p +51%
Gross investment £1,171m £930m +26%
Free cash flow £269m £(84)m
Net cash before lease liabilities £895m £1,488m
Total net debt £2,265m £1,764m
Return on Average Capital Employed (ROACE) 13.6% 14.0%
Total dividends per share 60.0p 43.7p +37%
Performance
- Strong performance in demanding environment
- Significant growth in Group sales driven in large part by pricing actions
- Resilient growth in Group adjusted operating profit
- Continued momentum across Retail
- Revenues well ahead at £9.0bn, supported by selective pricing and well
received ranges
- Adjusted operating profit 3% lower at £735m with margin of 8.2% reflecting
our decisions on pricing
- Space expansion on track with 27 new stores in the year
- Continued investment in digital capability with completion of enhanced website
rollout and Click + Collect expansion
- Significant profit growth at Ingredients
- Good growth in Grocery led by international brands, US focused brands and
recovery in Allied Bakeries
- Sugar sales well ahead, profitability ahead but impacted by more challenging
British Sugar crop conditions and Vivergo
- Lower profitability at Agriculture due to tough market conditions
- Investment of £1.2bn with a number of strategic initiatives driving increased
capacity and capability
- Good progress on ESG priorities
- Free cash flow of £269m with higher profit, offset by higher capital
investment and reduced working capital outflow
Shareholder returns
● Initial £500m buyback programme concluded end of October. Additional £500m
buyback programme announced
● Total dividends of 60.0p per share up 37% comprising interim of 14.2p per
share, final proposed of 33.1p per share and special dividend of 12.7p per
share
George Weston, Chief Executive of Associated British Foods, said:
"At the outset of this financial year the Group was facing very significant
economic challenges caused in part by major geo-political events. Looking back
on the year, it is clear to me that the Group performed extremely well and is
as a result now well positioned for the year ahead.
Trading at Primark was excellent under the circumstances. At the beginning of
the year we implemented selective price increases partially to protect
profitability, on the grounds that the significant input cost inflation was
temporary. That careful pricing delivered as intended, with customers
continuing to shop with us enthusiastically. Profitability in our food
businesses moved ahead as a result of the appeal of our products and the
strength of our brands, both of which supported us in the recovery of high
levels of input cost inflation without disrupting our customer relationships.
Although consumer demand remains uncertain, Primark is as well placed as it
has ever been. We continue to believe that Primark's offer is very attractive
not just to existing customers but also to new customers engaged by our
digital platform, new store openings, and word of mouth which remains as
powerful as ever. With Primark margin now moving back to its historic levels,
we view the future for this business with confidence. Our food businesses are
also in very good shape, and our Sugar business especially should see much
better profitability in the year ahead."
The Group has defined, and outlined the purpose of, its Alternative
performance measures (APMs) in note 13. These measures are used within the
Financial Headlines and in this Annual Results Announcement.
References to growth in the following commentary are based on constant
currency unless stated otherwise.
For further information please contact:
Associated British Foods:
Tel: 020 7399 6545
Eoin Tonge, Finance Director
Chris Barrie, Corporate Affairs Director
Citigate Dewe Rogerson:
Tel: 020 7638 9571
Holly Gillis Tel: 07940 797 560
Jos Bieneman Tel: 07834 336 650
Angharad Couch Tel: 07507 643 004
There will be an analyst and investor presentation at 09.00am GMT today which
will be streamed online and accessed via our website here
(https://www.abf.co.uk/investorrelations/results_and_presentations) .
Notes to Editors
Associated British Foods is a diversified international food, ingredients and
retail group with sales of £20bn and 133,000 employees in 55 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.
Summary
The Group performed very well in the financial year despite significant
inflationary and other macro-economic pressures. Group revenue increased to
£19.8bn, 16% higher than the previous year at actual exchange rates and 15%
higher at constant currency. This increase in revenue was largely due to price
increases across our businesses to mitigate high levels of inflation. As the
financial year progressed, we saw the rate of inflation ease. Adjusted
operating profit rose to £1,513m, 5% higher at actual exchange rates and 4%
at constant currency. Operating profit for the Group of £1,383m was 17% ahead
at actual rates and is stated after exceptional charges of £109m (2022 -
£206m). Adjusted profit before tax rose by 9% at actual rates to £1,473m and
adjusted earnings per share increased by 8% to 141.8p.
Grocery revenues were well ahead of last year largely as a result of price
increases to mitigate inflation. Our international brands - Twinings,
Ovaltine, Blue Dragon, Patak's, Jordans and Mazzetti - generally traded well,
with particularly strong sales in the US. Our US regional brands and
businesses also traded well. In the UK the performance of Allied Bakeries
improved considerably due to higher volumes and stronger pricing and the
financial losses in this business reduced as a result.
Our Ingredients businesses had a very good year with revenues and profit
significantly ahead. AB Mauri delivered a very strong performance,
particularly in the US. We continued to invest in our ABF Ingredients'
speciality ingredients businesses. Agriculture had a more challenging year
with declines in the compound feed markets in the UK and China. AB Vista and
our dairy businesses improved and we continue to invest in building expertise
in these areas.
Sugar had a good year considering the impacts of challenging weather in both
Europe and Africa. British Sugar production was significantly down after poor
weather conditions reduced beet yields and the business had to obtain
expensive alternative sources of supply to make good the resulting production
shortfall. Illovo, our African sugar business, had a much improved year and
made further progress in developing local routes to market. Vivergo made a
substantial loss for the year as a whole but profitability improved markedly
in the course of the year.
Full year revenues at Retail rose significantly, increasing by 17% to £9.0bn
at actual rates and 15% on a constant currency basis. Trading was much better
than we expected at the start of the year when volatile inflation had
threatened to disrupt consumer spending. However, the strength of the Primark
offer, and our decision to pass on only part of our input cost increases,
stood us in good stead with our customers. Although unseasonal weather was a
feature of our performance, particularly in the second half, trading remained
generally robust. Adjusted operating profit proved resilient as a consequence
despite the high levels of input cost inflation in the year. Our space
expansion continued, both in Europe and the US, and benefits of the
restructuring of our German estate are starting to become visible. We continue
to create a more coherent and powerful digital platform for Primark with
investment in numerous capabilities including completion of the roll-out of
the enhanced website in all markets, and the extension by range and geography
of our UK Click + Collect trial.
We made further progress in our ESG initiatives with significant investments
in decarbonisation at Sugar, and in water and effluent projects in
Ingredients. In Primark we progressed a number of Primark Cares initiatives
including increasing the proportion of recycled or more sustainably sourced
materials used in our clothing.
Gross investment stepped up to £1.2bn in the financial year reflecting the
many strategic investments made in our Grocery, Ingredients and Sugar
divisions as well as a step-up in the store and technology roll-out in
Primark. We made a number of small acquisitions for a total cash payment of
£94m, in particular in our Agriculture division to expand the strength and
breadth of our offer to the dairy sector.
The Group generated a free cash inflow of £269m with higher profit offset by
the increased capital expenditure. There was a working capital outflow in the
year predominantly reflecting the impact of inflation. After payment of
dividends of £345m and the share buyback cash outflow of £448m, the Group
cash outflow was £534m, leaving net cash before lease liabilities of £895m
and net debt after lease liabilities of £2,265m.
Capital structure and shareholder returns
Our capital allocation policy is for the Group's financial leverage, expressed
as the ratio of total net debt including lease liabilities to adjusted EBITDA,
to be well under 1.5 times whilst financial leverage consistently below 1.0
times may indicate a surplus capital position. Surplus capital may be returned
to shareholders by special dividends or share buybacks, subject to the Board's
discretion.
During the financial year we executed £446m of a £500m share buyback
programme with the remaining amount being completed recently. At the end of
the financial year the financial leverage ratio was just under 1.0 times. The
Group continues to prioritise investment in its businesses, and we expect to
increase spend in each of the next few years to slightly above last year's
level. Nevertheless, given the outlook for the Group, the strength of the
balance sheet and the underlying cash generation of the business, the Board
has decided to continue to return additional capital to shareholders.
Therefore, the Group will continue with a buyback programme, targeting an
additional amount of £500m over the next 12 months. In addition, the Group is
declaring a special dividend of 12.7p per share.
The Board is proposing a final dividend of 33.1p per share which together with
the special dividend will be paid on 12 January 2024 to shareholders on the
register on 15 December 2023. Taken with the interim dividend of 14.2p per
share, the aggregate total dividend equates to 60.0p per share, 37% higher
than the total dividend of 43.7p in 2022.
Outlook
Whilst the environment is still challenging for the consumer, inflationary
pressures have eased and there is less volatility than there was 12 months
ago. The Group is well positioned as a result.
At Primark, we believe our trading performance demonstrates the enduring
strength of our appeal to customers across all markets. We continue to invest
in both our existing store estate and in new stores and in our digital
infrastructure. We expect further growth in sales next year driven by new
selling space expansion of some 1 million sq ft and modest levels of
like-for-like sales growth. This like-for-like growth will be underpinned by
our value proposition, our product relevance and stretch, our increasingly
effective digital platform and some limited pricing. Lower material costs and
lower freight costs should result in a substantial recovery in gross margin
and overall we expect Primark adjusted operating profit margin to recover
strongly. At this early stage we believe that the adjusted operating profit
margin will be above 10% with further improvement dependent on levels of
consumer demand.
In our food businesses, we expect stability across our Grocery division as
inflation recedes and as we step up our investment in marketing in our
international brands. In Ingredients we anticipate a modest decline in sales
and profit as we consolidate following a year of very strong growth and we
invest to enhance capabilities. We expect Agriculture to move forward as
markets improve and it integrates and leverages the acquisitions of the last
two years. We continue to expect the broader Sugar portfolio to deliver a
substantial improvement in profitability in this new financial year, driven by
a marked improvement in the performance of British Sugar with an anticipated
better UK sugar beet crop, and a significant reduction in losses at Vivergo.
Strong cash generation will be driven by higher profitability, lower working
capital, lower levels of cash tax payable and pension contributions, partially
offset by higher capital investment. We look forward to a year of meaningful
progress.
Operating review
Grocery
2023 2022 Actual Constant currency
currency
Revenue £m 4,198 3,735 +12% +11%
Adjusted operating profit £m 448 399 +12% +8%
Adjusted operating profit margin 10.7% 10.7%
Operating profit £m 402 369 +9%
Return on average capital employed 30.0% 29.3%
Our Grocery businesses performed with great resilience in what were
challenging inflationary conditions. Revenues were strongly ahead of last year
driven primarily by price increases through the course of the year to mitigate
cost inflation. Despite the challenges of dealing with inflation volatility,
adjusted operating profit margin held at 10.7%, helped in part by a recovery
in our Allied Bakeries business. Adjusted operating profit for the year was
8% higher at £448m. In the first half of the year revenues were 10% higher
than the same period a year ago. In the second half, revenues were 12% higher.
The difference in the growth rates predominantly reflects the lag between the
input cost inflation of the prior year and the first half of this financial
year and the time taken to implement pricing. As this year progressed,
inflation abated somewhat. Adjusted operating profit in the first half was
£173m, down 10% on the same period a year ago. However, in the second half
adjusted operating profit increased by 23% to £275m as the effect of pricing
came through.
Our group of international brands - Twinings, Ovaltine, Blue Dragon, Patak's,
Jordans and Mazzetti - largely performed well. Sales at Twinings moved higher
on pricing to recover input cost inflation, with volumes broadly flat. Within
this, there were good performances in the US, UK, Australia and France. The
brand conducted a number of marketing trials in the year as a prelude to
deploying marketing spend to drive further growth. Sales of fruit and herbal
infusion teas have increased significantly and are now close to those of black
teas. Ovaltine sales also moved higher, with good performances in Brazil,
Switzerland and Nigeria partially offset by lower foodservice sales in China
and by difficult trading conditions in Myanmar. We saw an increase in sales of
Ready-to-drink products in Thailand but lower sales of higher margin powder
products. Patak's and Blue Dragon both traded well. Half the sales of Patak's
are now located outside the UK where we delivered good growth, and the brand
also delivered strong growth in the US and good growth in Australia. Blue
Dragon delivered strong value growth, increasing further its proportion of
international sales with growth in the US and Canada. Jordans had a resilient
year, broadly maintaining its international sales. The Mazzetti brand of
balsamic vinegars continued its international growth and nearly half of sales
are now outside Europe.
As noted above, in the US our international brands performed well. Our US
focused brands and businesses also traded well. Mazola, the leading brand in
the US edible oils category, delivered strong volumes and profitability
supported by new production capabilities. Sales of our Fleischmann's yeast and
baking ingredients products have also been strong. Stratas, our joint venture
in the US that supplies oils and other products to the foodservice,
ingredients and retail markets, traded strongly due to improved sales mix and
good procurement of oils.
In our UK focused brands and businesses, the sales trajectory of Allied
Bakeries improved considerably through the course of the year due to higher
volumes, stronger pricing and operational improvement. We continue to work on
improvements to the financial performance of this business. Ryvita continues
to underperform but is investing in a brand relaunch and early results are
positive. Shortly after the period end we acquired the Capsicana range of
Latin American products such as tortillas, pastes, kits and seasoning mixes,
broadening further our range of world foods.
In our Australian focused brands and businesses, sales at our Tip Top brand
increased due to pricing taken to mitigate cost inflation. Performance at Don
was held back by high meat costs, labour shortages and the insolvency of a
major distribution business. As a result, we have conducted a value in use
assessment which has led to a non-cash exceptional impairment charge of £41m.
Investment continued, with major projects including the re-construction of the
Canning Vale bakery in Western Australia which will secure Tip Top's position
as the leading supplier in that state and the first part of Ovaltine's
investment in a production facility in Nigeria to serve markets across West
Africa. We have also invested in increased edible oil production capacity in
the US. The division has also stepped up its investment programme in core
technology platforms.
Ingredients
2023 2022 Actual Constant currency
currency
Revenue £m 2,157 1,827 +18% +15%
Adjusted operating profit £m 214 159 +35% +28%
Adjusted operating profit margin 9.9% 8.7%
Operating profit £m 201 141 +43%
Return on average capital employed 16.1% 14.8%
Ingredients had a very strong year with substantial increases in both revenues
and profits and, significantly for the future development of these businesses,
higher investment in both production capacity and capability.
Revenues were well ahead of last year primarily due to pricing action to
recover large increases in raw material and other input costs which were
apparent both this year and in the prior financial year. Revenues in the first
half of the financial year were ahead of the same period last year by 27% at
£1,088m. In the second half of this financial year, revenues were 6% ahead at
£1,069m.
Profitability this year was well ahead of the last financial year as the
benefits of pricing were felt, with volumes proving generally resilient and a
particularly strong performance by AB Mauri, our yeast and bakery ingredients
business. In the first half of the financial year, Ingredients' adjusted
operating profit was 48% higher than the same period a year ago at £102m; in
the second half of the period, adjusted operating profit was 14% higher at
£112m.
AB Mauri had a very strong year with significant increases in both revenues
and profit. Price increases lagged prior year input cost inflation as customer
contracts came up for renewal. As these contracts were repriced, the benefits
came through strongly with little impact on volumes. Demand for yeast
remained good, both from industrial bakers and from consumers who returned to
home baking during the pandemic. Sales and profitability were particularly
strong in the US. Elsewhere, hyperinflation continued in Argentina, Venezuela
and Turkey with a consequent need for frequent repricing. Transition of our
China business to our joint venture was completed.
We continue to invest in effluent treatment plants at many sites to deliver on
our commitment to maintain appropriate standards of water quality, this
investment being significant in recent years. More broadly, the company's
water strategy focuses on reducing its water-intensity ratio defined as the
quantity of water consumed per tonne of product produced, excluding
by-products. AB Mauri has reduced its overall water-intensity ratio by 25%
since 2017/18.
ABF Ingredients, our portfolio of specialty ingredients businesses, delivered
a solid increase in revenues derived from pricing taken to offset input cost
inflation, partially offset by a small decline in volumes, particularly in the
second half of the period as customers destocked following the stabilisation
of supply chains. Profits were slightly lower year-on-year as we continue to
invest in these growth businesses to enhance capability in both research and
development and in commercial activities.
Specifically, AB Enzymes, specialising in food and feed enzymes, had flat
sales with pricing offsetting lower volumes caused by destocking. Ohly,
specialising in yeast extracts, delivered good revenue growth driven by robust
demand from food and bionutrients customers. SPI Pharma, specialising in
pharmaceutical excipients, continued to progress with pricing and volume
growth and an improvement in manufacturing efficiency. ABITEC, specialising in
lipids, delivered a modest increase in sales driven by a solid performance in
the Pharma and Nutritional Science sectors. Fytexia, our life sciences
businesses acquired last year, continued to perform well. PGPI, which
specialises in extruded proteins, saw volumes fall due to lower consumer
demand for nutrition bars in the US.
Investment continued, with major projects including a powder packing line for
AB Enzymes at Rajamaki, Finland, and increased capacity at Ohly's fermentation
and spray dryer operations in Hamburg. In Mauri ANZ, investment in our animal
feed mill in Hope Valley in Western Australia was completed and commissioned.
Our specialty yeast plant in Hull has now been commissioned.
Agriculture
2023 2022 Actual Constant currency
currency
Revenue £m 1,840 1,722 +7% +7%
Adjusted operating profit £m 41 47 -13% -15%
Adjusted operating profit margin 2.2% 2.7%
Operating profit £m 32 41 -22%
Return on average capital employed 8.4% 10.3%
AB Agri revenues were up 7% against the same period last year driven by
pricing taken to mitigate input cost inflation, partially offset by lower
volumes in the UK and China compound feed businesses. By period, revenue in
the first half grew 15% compared to the same period a year ago but fell by 1%
year-on-year in the second half, largely reflecting movements in input
commodity prices. As a result of these challenging market conditions, adjusted
operating profit reduced to £41m despite a modest recovery in the second half
of the financial year.
There was a decline in the size of the European pig and poultry sectors as a
result of disease and high cost of inputs, reducing sales volumes and margins
in our compound feed and starter feed businesses. The dairy sector was more
resilient, and we saw higher revenues and profits in our businesses serving
that sector. In China, lockdowns caused by the pandemic depressed demand for
pork products and reduced pig herd sizes, resulting in a decline in that
market. AB Vista, our international feed additives business, traded robustly
with sales and profits both slightly higher. The performance at Frontier, our
joint venture specialising in farm crop inputs and grain marketing, was only
slightly lower than the record results achieved last year as grain and
fertiliser trading normalised.
We believe there is an opportunity to develop a unique full service offer to
the dairy sector. In August 2023 we completed the acquisition of National Milk
Records for £48m which provides services to the dairy supply industry
including testing services and management information which are complementary
to AB Agri's existing services. This follows our acquisition in November 2022
of Kite Consulting and Advance Sourcing which also serve customers in this
sector.
Sugar
2023 2022 Actual Constant currency
currency
Revenue £m 2,547 2,016 +26% +29%
Adjusted operating profit £m 169 162 +4% +8%
Adjusted operating profit margin 6.6% 8.0%
Operating profit £m 119 164 -27%
Return on average capital employed 9.7% 10.3%
Sales were well ahead of last year with a strong performance by Illovo, our
African sugar business, which delivered both higher sugar production and
strong pricing actions. Illovo also made good progress in developing new and
higher margin routes to market through pre-pack branded sugar facilities. In
Europe, production was lower due to adverse weather conditions, but the
resulting impact on profitability was partially offset by good co-product
sales.
Revenues were strongly ahead of the prior year driven by higher sugar pricing,
a recovery in production and sales in Eswatini in Africa following strike
action last year, and much higher sales from Vivergo, our bioethanol plant in
Hull. European sugar prices moved higher this year, building on the price
levels seen in the previous year and driven by lower European sugar production
and higher world market prices. Prices in Africa also increased. Sales volumes
increased modestly, with higher volumes at Illovo more than offsetting
declines at British Sugar and Azucarera. Total production, at 2.8 million
tonnes, is 8% down on last year reflecting lower volumes as a result of
adverse weather affecting European crops, partly mitigated by strong
co-product performance and partially offset by higher production in Africa
driven by the recovery in Eswatini and good factory performances in Malawi and
South Africa. By period, revenue in the first half increased 27% to £1.2bn
against the same period a year ago; in the second half, revenue rose 31% to
£1.4bn.
Adjusted operating profit was modestly ahead of last year at £169m. Overall,
the contribution from higher sales prices was partially offset by higher costs
for beet, cane and energy. Specifically, profit was impacted by the need for
British Sugar to buy and import sugar to make good a shortfall in beet sugar
production. Overall profits were held back by the substantial trading losses
incurred by Vivergo in the first half of the year. First half Sugar adjusted
operating profit was 5% ahead of the same period last year at £86m while
second half adjusted operating profit was 11% higher at £83m.
British Sugar production levels were exceptionally low at 0.74 million tonnes,
27% lower than the prior year's campaign, the result of a sequence of
unusually poor weather conditions which reduced the crop size and lowered beet
yields and sugar content. The business secured alternative sources of supply
in order to fulfil customer contracts but profitability was significantly
reduced as a consequence in the second half of the year. In the course of the
year energy costs remained at elevated levels, but were partially offset by
strong pricing for electricity produced and other co-products. Profitability
for the year at British Sugar was lower as a result of the combination of
these factors.
Azucarera, our Spanish sugar business, benefitted in the course of the year
from the higher prices, partially offset by elevated costs for beet, raw
sugars and energy. Beet sugar production was lower than the prior year due to
hot and dry weather, and additional purchasing of raw sugars for refining was
required in order to support sales. Overall production was down 20% at some
0.45 million tonnes.
Our Illovo Sugar Africa business performed very well. The business continues
to develop sales and higher margin routes to market for pre-packed branded
sugar in Malawi, Tanzania and Zambia. Overall, Illovo sugar production was
1.53 million tonnes compared to 1.45 million tonnes in the previous financial
year reflecting the recovery in production in Eswatini and good production in
Malawi and South Africa partially offset by the impact of flooding in
Mozambique. The combination of higher volumes and strong pricing resulted in
both sales and profit being well ahead of last year. Construction of our new
sugar mill in Tanzania continues and will increase our production capacity
considerably in that country.
At the end of February, severe flooding in Mozambique affected our cane estate
at Maragra and most of our partner-grower operations. The Maragra mill will
not open for sugar production this season and as such we have taken a non-cash
exceptional impairment charge of £35m in these accounts to write down the net
asset value of this business.
The trading performance of AB Sugar China was below last year as a result of
lower demand caused by lockdowns earlier in the year. More recently the
relaxation of restrictions has caused sugar prices to recover strongly.
However, trading remains difficult and we have reviewed our outlook for this
business, including the forecast for the evolution of beet crop area and
yields. As a result, we have taken a one-off non-cash adjustment of £15m as
an exceptional impairment charge this year.
Vivergo incurred substantial losses in the first half due to high wheat and
energy costs and low bioethanol prices. The second half of the year saw much
reduced losses and a significant improvement in margin and operating
performance, particularly in the fourth quarter.
Sugar made good progress in its decarbonisation programme in the financial
year. It completed 17 decarbonisation projects across various sugar processes,
which contributed to a 4% reduction in greenhouse gas emissions compared with
2022. Among the projects completed are modifications in the UK to replace coal
with natural gas in the dryers at our Bury St Edmunds processing plant,
improvements to gas turbine performance at our Wissington plant, the
elimination of heavy fuel oil at Cantley, and the installation of more
efficient slicer machines at Bury St Edmunds. In addition, Sugar has also
published its transition plan to a low carbon economy by 2030.
Retail
2023 2022 Actual Constant currency
currency
Revenue £m 9,008 7,697 +17% +15%
Adjusted operating profit £m 735 756 -3% -3%
Adjusted operating profit margin 8.2% 9.8%
Operating profit £m 717 550 +30%
Return on average capital employed 12.0% 12.9%
Primark revenues rose strongly in this financial year, up 15% and exceeding
our expectations a year ago. This reflects a sales increase in all our markets
driven by a number of factors, including carefully selected price increases
taken to partially offset high and volatile input cost inflation,
well-received product ranges and the resulting appeal of our offer to new and
existing customers. Good footfall, strongly performing new stores and the
rollout of our enhanced customer website also contributed to the strong sales
performance. Sales increased in both halves of the year: in the first half, by
17% to £4.2bn against the same period in the prior year; and in the second
half, by 14% to £4.8bn.
We believe that our product offer was a source of differentiation and
competitive advantage throughout the year. Cold weather essentials and other
seasonal product lines, including our well-received velvet plush leggings,
drove strong sales leading into a record Christmas season which included a
resurgence in women's partywear, tailoring separates and beauty products as a
return to festive socialising gathered pace. In the new year sales of
beachwear and luggage were exceptionally strong as customers looked early to
holidays. Our summer trading was good, led by our boho-inspired design trend.
Throughout the year we further broadened our ranges and collaborations to
appeal to customers trying Primark for the first time alongside existing
customers. We expanded our Edit collection, our more premium essentials range
for women, across more stores which sold well. We also continued our
successful UK and European collaborations with Stacey Solomon, Kem Cetinay and
Paula Echevarria launched our first truly international partnership with Rita
Ora whose first collection sales have surpassed expectations. Sales of
licensed products grew significantly year-on-year, in particular over
Christmas across our growing portfolio of brand partners including Disney,
Netflix, The Grinch, and US sports partners NFL and NBA. Our summer Barbie
collection with Mattel also proved very successful.
Trading was influenced in the second half of the year by weather. We saw good
sales through the early summer with the exception of Iberia which suffered
unusually poor weather in May. In July, there was very poor weather in the UK
and Ireland and heatwaves in Southern Europe, followed by warm conditions in
August and September which coincided with the launch of our Autumn / Winter
ranges. Despite these unseasonal conditions, we generally traded well with our
core product ranges remaining in robust demand and partially offsetting
inevitable volatility in sales more dependent on fashion and season.
Like-for-like sales growth was 8.5% for the year. In the first half,
like-for-like sales rose by 10% driven by higher average selling prices and
higher unit volumes partially offset by smaller basket sizes. Footfall
increased in both the UK and Europe, against a comparative period which
featured some disruption from the pandemic. In the second half of the year
like-for-like growth was lower than in the first half at 7%. This growth was
driven by a slightly greater benefit from selective pricing taken to
part-mitigate inflation, the benefits of which were partially offset in turn
by lower unit volumes, smaller basket sizes and slightly lower footfall. Space
growth contributed sales growth of 6%, driven by the increase in selling space
across a number of our markets, in particular Italy, France and the US, and
higher sales densities in most new stores.
Adjusted operating profit margin for the full year was 8.2%, down on the
previous financial year's 9.8%. Adjusted operating profit margin in the first
half was 8.3%, down on the same period a year ago due to our decision not to
fully recover all the inflation in input costs. In the first half the higher
costs of bought-in goods, higher freight rates, higher labour costs and higher
energy costs outweighed the benefits of our selective price increases and an
improvement in store sales densities due to higher footfall. In the second
half, compared with the same period a year ago, the cost of bought-in goods
was higher again including a more significant impact of the strength of the US
dollar against sterling and the euro when we placed orders for our Spring /
Summer ranges several months earlier. This higher cost of goods was offset
somewhat by the benefit of like-for-like sales growth and sales from new store
openings and by the benefit of additional pricing being implemented in the
spring and summer ranges. Freight costs fell in the fourth quarter, but labour
costs were higher than the same period a year ago. Second half operating
profit margin was 8.0%, slightly below the first half of the year, and also
held back by higher than expected stock loss and a modest amount of German
restructuring costs, albeit helped by lower markdowns.
In the UK, sales increased by 11% against the previous financial year, driven
by like-for-like growth of 10% helped in particular by our new customer
website that has now been running for more than a year. This sales performance
was achieved despite unhelpful weather impacts in the third and fourth
quarters which resulted in slightly lower footfall in contrast to the first
half of the year when footfall was significantly higher. Primark's market
share((1)) grew in the financial year, increasing from 6.4% last year to 6.7%
this year.
In Europe excluding the UK, sales increased by 18% on the previous financial
year, with like-for-like growth of 8% despite weaker trading at times due to
unseasonable weather. Our store estates in all the countries in which we
operate delivered like-for-like sales growth, with good performances in
Iberia, France, Germany, Belgium, the Netherlands and Eastern Europe. Italy
delivered strong total sales growth and continues to operate on high sales
densities. We opened 17 stores in the European region in the period to strong
customer demand and good resulting footfall. Sales densities in most of these
new stores continue to be higher than average. Primark's share of the total
clothing, footwear and accessories market by value increased in both Spain and
France. In Germany we closed two stores in the period and, after period end,
we closed one more store and agreed two further closures. In addition we have
started our rightsizing programme with two stores in the period and the signs
are encouraging. Two further stores were resized in September after the
period end. We continue to consider further resizing. We are also developing
plans to open new stores smaller than average in new locations with
merchandise selected to appeal to local customer demand.
In the US, total net sales were 24% higher than last year driven by space
expansion. We opened eight new stores in the period, largely in the Northeast,
taking the estate to 21 stores trading from 0.9 million sq ft and are on track
to meet our US store expansion target of around 60 stores by the end of 2026.
We are pleased with trading in our new stores which are benefitting from our
growing knowledge of the US consumer and the wider retail market. We have
refined the design, size and layout of our stores and continue to tailor our
ranges to suit the US consumer. We continued to expand our footprint beyond
the Northeast with further progress in the new store pipeline and two leases
signed recently in Texas. Investment in infrastructure to support this
expansion continues with work ongoing at our new Jacksonville logistics centre
where we expect to be operational in the spring.
Further progress has been made implementing our wide-ranging sustainability
strategy unveiled two years ago, itself an evolution of an earlier and
long-standing ethical trade and sustainability programme. During the year we
further embedded the processes and capabilities needed to drive and accelerate
change both internally and across our value chain. Some 55% of all the
clothing units we sold in the financial year contained recycled or more
sustainably sourced materials, up from 45% last year and up from 25% at launch
two years ago. This represents good progress in the delivery of our commitment
that all our clothes will be made from recycled or sustainably sourced
materials by 2030. Within this, 46% of our cotton clothing now contains
cotton that is organic, recycled or sourced from our Primark Sustainable
Cotton Programme (PSCP), up from 40% last year. Our commitment to reduce our
carbon emissions across our value chain by 50% by 2030 was validated by the
Science Based Targets initiative (SBTi). While carbon emissions increased this
year by 11% compared to our baseline 2018/19 financial year, this is as
expected: Scope 1 and 2 emissions reduced but there was an increase in our
Scope 3 emissions due to an increase in the volume of materials used to
produce the higher number of products sold in the period year-on-year. In the
short term, this trend is likely to continue, but emissions will decline in
time as we increase the use of more sustainably sourced materials across our
product ranges. In our own store estate, some 70% of our stores are now
powered by renewable or low-carbon electricity and 141 stores have switched to
energy-efficient lighting.
Primark continues to build and invest in transforming its digital capability.
This year we successfully rolled out our new and improved website to all 16
markets. Since launching the new website, we have seen a positive customer
reaction and strong traffic uplift in all trading markets, led by the UK and
the Republic of Ireland which were the first two countries to move on to the
new platform. Usage of the stock checker facility ranged broadly between
15%-20% of website sessions across our markets. We are also putting more focus
on increasing traffic growth to www.primark.com through organic search, CRM
and selected performance marketing trials and, overall, working in closer
alignment with our already strong social media engagement. We believe our
digital platform is already beginning to support good uplifts in footfall and
that it is contributing to store like-for-like sales across our markets.
In April we announced the expansion of our Click + Collect trial to an
additional 32 stores in London, taking the total number offering this service
to 57 stores, one third of our UK estate. On 13 September 2023 we extended the
service to include womenswear, alongside the existing offer on kidswear.
Although this remains a trial, we are encouraged by the early results. In
addition, we implemented self-checkouts in 22 stores in the period. This
service has seen high utilisation and customer engagement and the roll-out
continues.
Retail selling space overall increased by just under 1 million sq ft since the
last financial year end and on 16 September 2023 we were trading from 432
stores and 18.2 million sq ft of selling space. We added 27 stores in the
period: eight in the US; six in Central and Eastern Europe with three in
Poland, two in Romania and our first store in Slovakia marking our 15(th) and
16(th) market; four in Italy and France respectively; three in Spain; and two
in the UK. We fully reopened our Bank Buildings store in the heart of Belfast,
and closed our temporary store in Donegal Place. As referred to above, two
stores in Germany were closed during the year. We also re-started our store
refurbishment programme.
We remain on track to grow to 530 stores by the end of 2026 and have
visibility for continued footprint expansion beyond.
Year ended Year ended
16 September 2023
17 September 2022
# of stores sq ft 000 # of stores sq ft 000
UK 192 7,725 191 7,620
Spain 59 2,390 56 2,305
Germany 30 1,605 32 1,841
France 24 1,203 20 1,044
Republic of Ireland 37 1,165 37 1,121
Netherlands 20 1,016 20 1,016
US 21 873 13 563
Italy 15 747 11 552
Belgium 8 403 8 403
Portugal 10 383 10 383
Austria 5 242 5 242
Poland 5 197 2 77
Czechia 2 89 2 89
Romania 2 75 - -
Slovenia 1 46 1 46
Slovakia 1 39 - -
Total 432 18,198 408 17,302
1. Kantar, Primark market share of the total UK clothing, footwear and
accessories market including online by value, 52-week data to 16 September
2023
Financial review
Group performance
Group revenue was £19.8bn, 15% ahead of last year at constant currency, with
sales growth in each of our businesses, benefitting from the build of price
increases taken to offset inflation. However, as expected, adjusted operating
profit margin declined, from 8.4% last year to 7.7% this year as a result of
the overall inflation. The Group generated an adjusted operating profit of
£1,513m, an increase of 5% at actual rates ahead of last year, a strong
result given the scale of input cost increases. Statutory operating profit for
the Group of £1,383m was 17% ahead, after charging exceptional items of
£109m (2022 - £206m).
For the full year the average rates used to translate the income statement
resulted in a translation gain of £17m, primarily driven by the strengthening
of the US dollar, particularly in the first half compared to the first half of
2022. The weakness of sterling against some of our trading currencies also
drove a benefit on translation of our non-sterling earnings.
Segmental summary Revenue Adjusted operating profit
At actual rates 2023 2022 Change 2023 2022 Change
£m
£m
£m
£m
% %
Grocery 4,198 3,735 +12.4 448 399 +12.3
Ingredients 2,157 1,827 +18.1 214 159 +34.6
Agriculture 1,840 1,722 +6.9 41 47 -12.8
Sugar 2,547 2,016 +26.3 169 162 +4.3
Retail 9,008 7,697 +17.0 735 756 -2.8
Central - - - (94) (88) -6.8
19,750 16,997 +16.2 1,513 1,435 +5.4
The segmental analysis by division is set out in the operating reviews. The
segmental analysis by geography is set out in note 1 on page 22. Of note is
the increase in adjusted operating profit in North America which is driven by
the success of our Grocery and Ingredients' businesses there.
Adjusted earnings per share
2023 2022 Change
£m
£m
%
Adjusted operating profit 1,513 1,435 +5.4
Net finance income/(expense) excluding lease interest 11 (11) +200.0
Other financial income 40 13 +207.7
Lease interest (91) (81) -12.3
Adjusted profit before tax 1,473 1,356 +8.6
Taxation on adjusted profit (346) (302) -14.6
Adjusted profit after tax 1,127 1,054 +6.9
Adjusted earnings attributable to equity shareholders 1,103 1,034 +6.7
Adjusted earnings per share (in pence) 141.8p 131.1p +8.2
Net finance income and other financial income
Finance income increased as a result of higher interest rates earned on our
cash deposits. Other financial income increased this year as a consequence of
the higher surplus in the Group's UK defined benefit pension scheme at the
beginning of the financial year. Lease interest increased during the year
because of more leases being entered into from our continued store expansion
programme, particularly in the US, Italy and France.
As a result, on an adjusted basis, profit before tax was up 8.6%, to £1,473m.
Taxation
This year's tax charge on the adjusted operating profit before tax was £346m,
with an increase in adjusted effective tax rate to 23.5% from 22.2% last year.
This rate includes the impact on the blended tax rate for the full year of the
increase in UK corporation tax rate from 19% to 25% in April 2023. The Group
is exposed to a range of uncertain tax positions. The provision at the
financial year end for these tax positions was £55m (2022 - £102m). The
reduction in the provision is due to the conclusion of UK tax audits covering
several businesses and years. This reduction in the provision between last
financial and this financial year was due to partial utilisation and also
translated into a one-off benefit to the effective tax rate for the year.
We expect the Group's effective tax rate in 2024 to be broadly in line with
2023. This includes the full year impact of the increase in the UK corporation
tax rate in April 2023 and changes to the mix in profits by jurisdiction.
Adjusted earnings per share increased by 8.2% to a record 141.8p per share.
This increase follows from the higher adjusted profit and the higher financial
income, more than offsetting the slightly higher adjusted effective tax rate.
The adjusted earnings per share also benefit from the reduction in weighted
average number of shares, from 789 million for 2022 to 778 million for 2023,
as a result of the buyback programme.
Basic earnings per share
2023 2022 Change
£m
£m
%
Adjusted profit before tax 1,473 1,356 +8.6
Acquired inventory fair value adjustments (3) (5)
Amortisation of non-intangibles (41) (47)
Exceptional items (109) (206)
Profits less losses on sale and closure of businesses (3) (23)
Profits less losses on disposal of non-current assets 28 7
Transaction costs (5) (6)
Profit before tax 1,340 1,076 +24.5
Taxation (272) (356) +23.6
Profit after tax 1,068 720 +48.3
Earnings attributable to equity shareholders 1,044 700 +49.1
Basic earnings per share (in pence) 134.2p 88.6p +51.5
Profit before tax of £1,340m was 24.5% ahead of last year, benefitting from
the lower level of exceptional items in 2023.
Exceptional items
2023 2022
£m
£m
Grocery - Impairment 41 -
Sugar - Impairments 50 -
Retail - Impairments, rightsizing and fair value write downs 18 206
109 206
The income statement this year included a non-cash exceptional impairment
charge of £109m. In Grocery, the Don business has been impacted by
inflationary pressures, a surplus supply of fresh pork in the market, labour
constraints, equipment reliability causing production shortfalls and
additional transportation costs following the unforeseen liquidation of its
distribution partner. As a result we recognised impairment write-downs of
£39m against property, plant and equipment, £1m against right-of-use assets
and £1m against intangible assets.
In Sugar, the China Sugar North business recognised a £15m impairment
write-down against property, plant and equipment. This business was held for
sale in the previous year but that process was halted in the second half of
the year. Due to severe flooding in Mozambique, the related damage to the
sugar crop fields and the inability to plant for the foreseeable future Illovo
Mozambique recognised £25m impairment write-downs against property, plant and
equipment, £7m against current biological assets, £2m of personnel costs and
£1m write-down against inventory.
In Retail, the German Primark portfolio recognised exceptional impairment
charges relating to stores that were impaired in the previous year: £13m as a
result of additional right-of-use assets being recognised due to rent
indexation adjustments on right-of-use assets that were impaired, a further
£5m non-cash exceptional charge for the rightsizing of four stores and the
fair value write-down of a store.
The prior year exceptional impairment charge of £206m comprised non-cash
write-downs of assets in Primark Germany, £72m against property plant and
equipment and £134m against right-of-use assets.
Total tax charge for the year was £272m. This includes the positive benefit
of deferred tax on exceptional items from the prior year, when a £63m
exceptional charge was included in the Group's total tax charge reflecting the
de-recognition of the deferred tax assets relating to Primark Germany. A
significant proportion of that asset had been deemed to be irrecoverable and
was written off as an exceptional tax charge last year. As a result of further
work undertaken this year it has been determined that more of this deferred
tax asset is recoverable and so, an exceptional non-cash tax credit of £58m
was recognised in the first half.
Earnings attributable to equity shareholders were £1,044m and basic earnings
per share were 134.2p, 52% ahead of last year.
Cash flow
2023 2022
£m
£m
Adjusted EBITDA 2,361 2,261
Repayment of lease liabilities net of incentives received (246) (275)
Working capital (216) (729)
Capital expenditure (1,073) (769)
Purchase of subsidiaries, joint ventures and associates (94) (154)
Sale of subsidiaries, joint ventures and associates 4 -
Net interest paid (74) (97)
Taxation (341) (304)
Share of adjusted profit after tax from joint ventures and associates (127) (112)
Dividends received from joint ventures and associates 107 93
Other (32) 2
Free cash flow 269 (84)
Share buyback (448) -
Dividends (345) (380)
Movement in loans and current asset investments (10) 196
Cash flow (534) (268)
There was free cash inflow in the year totalling £269m as a result of the
operating profit generated by the Group, despite cash outflows driven by
higher capital expenditure than the prior year and a working capital outflow.
The capital expenditure increase was driven by the number of large capital
projects and a step up following low levels of the last few years. The
increase of the investment in our food businesses primarily relates to
projects to build capacity. In Primark the increase reflects the acceleration
of our new store programme and expenditure to expand our capabilities in
warehouse automation and technology. We expect this higher level of investment
to continue over the medium term.
The main factors driving the increase in working capital were twofold: the
impact of inflation across all our food businesses and higher inventories,
particularly in our Sugar and Primark businesses. As a reminder Primark
inventories a year ago were too low and reflected the logistics and supply
chain difficulties experienced in the prior year. We do expect a working
capital inflow in 2024 as Primark inventory levels normalise.
Cash tax increased in the year driven by the increase in profit before tax. We
expect a reduced level of cash tax in 2024 due to the reallocation of historic
overpayments and favourable settlements of historical enquires and returns.
There was cash outflow of £448m for our share buyback programme, with the
remainder of the £500m programme completed after the year end. We also paid
£345m for total dividends in this financial year, which reflects the final
2022 dividend and interim 2023 dividend. The £380m paid in the prior year
included a special dividend that was declared in respect of the 2021 financial
year.
Acquisitions and disposals
The spend on acquisitions this financial year was £94m. The most significant
of these were the acquisitions of National Milk Records, Kite Consulting and
Advance Sourcing in Agriculture.
For disposals, a non-cash provision of £6m was included in profit less losses
on sale and closure of business in respect of Illovo's investment in Gledhow.
Financing and liquidity
2023 2022
£m
£m
Short-term loans (99) (31)
Long-term loans (394) (480)
Lease liabilities (3,160) (3,252)
Total debt (3,653) (3,763)
Cash at bank and in hand, cash equivalents and overdrafts 1,388 1,995
Current asset investments - 4
Total net debt (2,265) (1,764)
Leverage ratio 0.96 0.78
At 16 September 2023, the Group held cash balances of £1,388m. In addition,
the Group has an undrawn Revolving Credit Facility (RCF) for £1.5bn. This
facility is free from performance covenants and was extended in June 2023 for
a further year, bringing the maturity to 2028. Our £400m bond, launched last
year, at 2.5% is due in 2034, and our final $100m Private Placement notes are
due in March 2024.
Total liquidity at year end was £2.7bn, comprising the £1.5bn of cash, less
£0.2bn of short-term loans and overdrafts and £0.1bn of inaccessible cash,
plus the £1.5bn RCF. This compares to £3.4bn at the end of 2022.
Pensions
The Group's defined benefit pension schemes aggregate surplus increased by 5%
to £1,377m at year end compared to last year's £1,314m. The UK scheme, which
accounts for around 90% of the Group's gross pension assets was in surplus by
£1,397m (2022 - £1,366m). A significant increase in the pension surplus in
the prior year was driven by an increase in bond yields reducing liabilities.
Details of the assumptions made in the current and previous year are disclosed
in note 12 of the financial statements together with the bases on which those
assumptions have been made.
The charge for the year for the Group's defined contribution schemes, which
was equal to the contributions made, amounted to £95m (2022 - £87m). This
compared with the cash contribution to the defined benefit schemes of £36m
(2022 - £36m).
The most recent triennial actuarial valuation of the UK scheme was carried out
as of 5 April 2023. This last valuation showed a funding surplus of £1,013m.
This is a clear improvement on the previous valuation undertaken at 5 April
2020, which showed a deficit of £302m. As agreed with the trustees in
September, as a result of this significant increase in the surplus, the Group
will receive a cash flow benefit of approximately £70m per year from the
abatement of UK employer pension contributions on both the defined benefit and
defined contribution schemes. This will take effect from the start of the new
financial year.
Dividend and shareholder returns
We announced a share buyback programme of £500m in November 2022. In the
financial year we purchased 23.7 million shares for £446m and the shares
bought back were cancelled. At the end of the financial year we had 765
million ordinary shares in issue. The weighted average number of shares for
the year was 778 million which compared to 789 million for the last financial
year. This share buyback has resulted in a positive impact on our reported
adjusted earnings per share of 1.8p. Since the financial year end, a further
2.8 million shares were purchased, completing the total £500m buyback
programme. The Group has announced the continuation of a buyback programme,
targeting an additional amount of £500m over the next 12 months.
This year the Board declared an interim dividend of 14.2p per share (2022 -
13.8p), an increase of 3% compared to prior year. The Board is proposing a
final dividend of 33.1p per share. It is also declaring a special dividend of
12.7p per share to be paid as a second interim dividend. Taken with the first
interim dividend of 14.2p per share, the aggregate total dividend for the year
is 60.0p per share, 37% higher than the total dividend of 43.7p in 2022, which
comprised an interim dividend of 13.8p, and a final dividend of 29.9p.
Principal risks and uncertainties
Our principal risks and uncertainties
The directors have carried out an assessment of the principal risks facing
ABF, including emerging risks, that would threaten our business model, future
performance, solvency or liquidity. Outlined below are the Group's principal
risks and uncertainties. These have been detailed in the 2023 Annual Report
and Accounts together with the key mitigating activities in place to address
them.
Operating in global markets
Fluctuations in commodity and energy prices
Movement in exchange rates
Health and nutrition
Workplace health and safety
Product safety and quality
Breaches of IT and information security
Our supply chain and ethical business practices
Our use of natural resources and managing our environmental impact
The impact of climate change and natural disasters on our operations
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 1 March 2025 has been
updated for the business's latest trading in October and is the best estimate
of cashflow in the period. Having reviewed this forecast and having applied a
downside sensitivity analysis and performed a reverse stress test, the
directors consider it a remote possibility that the financial headroom could
be exhausted.
The Board's treasury policies are in place to maintain a strong capital base
and manage the Group's balance sheet and liquidity to ensure long-term
financial stability. These policies are the basis for investor, creditor and
market confidence and enable the successful development of the business. The
financial leverage policy requires that, in the ordinary course of business,
the Board prefers to see the Group's ratio of net debt including lease
liabilities to adjusted EBITDA to be well under 1.5x. At the end of this
financial year, the financial leverage ratio was 1.0x and the Group had total
cash of £1.5bn and an undrawn committed Revolving Credit Facility of £1.5bn.
In March 2023, S&P Global Ratings reaffirmed their assignment to the Group
of an 'A' grade long-term issuer credit rating. The Group's funding basis is
supported by the existing £400m public bond due in 2034. Furthermore the
Group's committed Revolving Credit Facility is free of performance covenants
and matures in 2028, with one 1-year extension option remaining (after the
first was utilised during the year). The $100m of outstanding private
placement notes are due in March 2024 after which point Group funding will not
be subject to financial performance covenants.
In reviewing the cash flow forecast for the period, the directors reviewed the
trading for both Primark and the food businesses in light of the experience
gained from events of the last three years of trading and emerging trading
patterns. The directors have a thorough understanding of the risks,
sensitivities and judgements included in these elements of the cash flow
forecast and have a high degree of confidence in these cash flows.
As a downside scenario the directors considered the adverse scenario in which
inflationary costs are not fully recovered, there are adverse foreign exchange
impacts and there is a global recession, reducing demand for goods further
than the base levels forecast. This downside scenario was modelled without
taking any mitigating actions within their control. Under this downside
scenario the Group forecasts liquidity throughout the period.
In addition, the directors also considered the circumstances which would be
needed to exhaust the Group's total liquidity over the assessment period - a
reverse stress test. This indicates that, on top of the downside scenario
outlined above, cost inflation would need to exceed £1.9bn without any price
increases or other mitigating actions being taken before total liquidity is
exhausted. The likelihood of these circumstances is considered remote for two
reasons. Firstly, over such a period, management could take substantial
mitigating actions, such as reviewing pricing, taking cost cutting measures
and reducing capital investment. Secondly, the Group has significant business
and asset diversification and would be able to, if it were necessary, dispose
of assets and/or businesses to raise considerable levels of funds.
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 52
weeks ended 16 September 2023 which may be found at www.abf.co.uk
(http://www.abf.co.uk) and will be despatched to shareholders shortly.
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 Eoin Tonge
Chairman Chief Executive Finance Director
7 November 2023
Consolidated income statement
for the 52 weeks ended 16 September 2023
Continuing operations note 2023 2022
£m
£m
Revenue 1 19,750 16,997
Operating costs before exceptional items (18,410) (15,729)
Exceptional items 2 (109) (206)
1,231 1,062
Share of profit after tax from joint ventures and associates 124 109
Profits less losses on disposal of non-current assets 28 7
Operating profit 1,383 1,178
Adjusted operating profit 1 1,513 1,435
Profits less losses on disposal of non-current assets 28 7
Amortisation of non-operating intangibles (41) (47)
Acquired inventory fair value adjustments (3) (5)
Transaction costs (5) (6)
Exceptional items 2 (109) (206)
Profits less losses on sale and closure of businesses 7 (3) (23)
Profit before interest 1,380 1,155
Finance income 48 19
Finance expense 3 (128) (111)
Other financial income 40 13
Profit before taxation 1,340 1,076
Adjusted profit before taxation 1,473 1,356
Profits less losses on disposal of non-current assets 28 7
Amortisation of non-operating intangibles (41) (47)
Acquired inventory fair value adjustments (3) (5)
Transaction costs (5) (6)
Exceptional items 2 (109) (206)
Profits less losses on sale and closure of businesses 7 (3) (23)
Taxation - UK (excluding tax on exceptional items) (40) (50)
- UK (on exceptional items) - 3
- Overseas (excluding tax on exceptional items) (300) (243)
- Overseas (on exceptional items) 68 (66)
4 (272) (356)
Profit for the period 1,068 720
Attributable to
Equity shareholders 1,044 700
Non-controlling interests 24 20
Profit for the period 1,068 720
Basic and diluted earnings per ordinary share (pence) 6 134.2 88.6
Dividends per share paid and proposed for the period (pence) 5 47.3 43.7
Special dividend per share proposed for the period (pence) 5 12.7 -
Consolidated statement of comprehensive income
for the 52 weeks ended 16 September 2023
2023 2022
£m
£m
Profit for the period recognised in the income statement 1,068 720
Other comprehensive income
Remeasurements of defined benefit schemes (7) 821
Deferred tax associated with defined benefit schemes 4 (198)
Items that will not be reclassified to profit or loss (3) 623
Effect of movements in foreign exchange (470) 440
Net gain/(loss) on hedge of net investment in foreign subsidiaries 1 (1)
Net gain on other investments held at fair value through other comprehensive - 4
income
Deferred tax associated with movements in foreign exchange (5) -
Current tax associated with movements in foreign exchange 6 -
Movement in cash flow hedging position (260) 419
Deferred tax associated with movement in cash flow hedging position 40 (28)
Deferred tax associated with movement in other investments - (1)
Share of other comprehensive (loss)/income of joint ventures and associates (18) 28
Effect of hyperinflationary economies 40 46
Items that are or may be subsequently reclassified to profit or loss (666) 907
Other comprehensive income for the period (669) 1,530
Total comprehensive income for the period 399 2,250
Attributable to
Equity shareholders 397 2,219
Non-controlling interests 2 31
Total comprehensive income for the period 399 2,250
Consolidated balance sheet
at 16 September 2023
2023 2022
£m
£m
Non-current assets
Intangible assets 1,870 1,868
Property, plant and equipment 5,766 5,599
Right-of-use assets 2,350 2,456
Investments in joint ventures 303 301
Investments in associates 91 85
Employee benefits assets 1,446 1,393
Income tax 23 23
Deferred tax assets 193 158
Other receivables 63 58
Total non-current assets 12,105 11,941
Current assets
Assets classified as held for sale - 45
Inventories 3,207 3,259
Biological assets 99 105
Trade and other receivables 1,778 1,758
Derivative assets 96 475
Current asset investments - 4
Income tax 102 67
Cash and cash equivalents 1,457 2,121
Total current assets 6,739 7,834
Total assets 18,844 19,775
Current liabilities
Liabilities classified as held for sale - (14)
Lease liabilities (335) (316)
Loans and overdrafts (168) (157)
Trade and other payables (2,953) (3,114)
Derivative liabilities (69) (205)
Income tax (109) (160)
Provisions (55) (87)
Total current liabilities (3,689) (4,053)
Non-current liabilities
Lease liabilities (2,825) (2,936)
Loans (394) (480)
Provisions (48) (26)
Deferred tax liabilities (626) (647)
Employee benefits liabilities (69) (79)
Total non-current liabilities (3,962) (4,168)
Total liabilities (7,651) (8,221)
Net assets 11,193 11,554
Equity
Issued capital 44 45
Other reserves 179 178
Translation reserve (42) 422
Hedging reserve 2 154
Retained earnings 10,910 10,649
Total equity attributable to equity shareholders 11,093 11,448
Non-controlling interests 100 106
Total equity 11,193 11,554
Consolidated cash flow statement
for the 52 weeks ended 16 September 2023
2023 2022
£m
£m
Cash flow from operating activities
Profit before taxation 1,340 1,076
Profits less losses on disposal of non-current assets (28) (7)
Profits less losses on sale and closure of businesses 3 23
Transaction costs 5 6
Finance income (48) (19)
Finance expense 128 111
Other financial income (40) (13)
Share of profit after tax from joint ventures and associates (124) (109)
Amortisation 82 68
Depreciation (including of right-of-use assets) 804 802
Exceptional items 109 206
Acquired inventory fair value adjustments 3 5
Effect of hyperinflationary economies 14 16
Net change in the fair value of current biological assets (11) (8)
Share-based payment expense 18 19
Pension costs less contributions (8) 7
Increase in inventories (94) (953)
Increase in receivables (107) (288)
(Decrease)/increase in payables (15) 512
Purchases less sales of current biological assets (9) (4)
(Decrease)/increase in provisions (27) 7
Cash generated from operations 1,995 1,457
Income taxes paid (341) (304)
Net cash generated from operating activities 1,654 1,153
Cash flow from investing activities
Dividends received from joint ventures and associates 107 93
Purchase of property, plant and equipment (997) (680)
Purchase of intangibles (76) (89)
Lease incentives received 62 46
Sale of property, plant and equipment 48 30
Purchase of subsidiaries, joint ventures and associates (94) (154)
Sale of subsidiaries, joint ventures and associates 4 -
Purchase of other investments (4) (7)
Interest received 44 17
Net cash used in investing activities (906) (744)
Cash flow from financing activities
Dividends paid to non-controlling interests (7) (8)
Dividends paid to equity shareholders (345) (380)
Interest paid (118) (114)
Repayment of lease liabilities (308) (321)
Decrease in short-term loans (13) (12)
Increase in long-term loans - 178
Decrease in current asset investments 3 30
Share buyback (448) -
Movement from changes in own shares held (46) (50)
Net cash used in financing activities (1,282) (677)
Net decrease in cash and cash equivalents (534) (268)
Cash and cash equivalents at the beginning of the period 1,995 2,189
Effect of movements in foreign exchange (73) 74
Cash and cash equivalents at the end of the period 1,388 1,995
Consolidated statement of changes in equity
for the 52 weeks ended 16 September 2023
Attributable to equity shareholders Non- Total
controlling
equity
interests
£m
£m
Issued Other Translation Hedging Retained Total
capital
reserves
reserve
reserve
earnings
£m
£m
£m
£m
£m
£m
Balance as at 18 September 2021 45 175 (34) 43 9,692 9,921 83 10,004
Total comprehensive income
Profit for the period recognised in the income statement - - - - 700 700 20 720
Remeasurements of defined benefit schemes - - - - 821 821 - 821
Deferred tax associated with defined benefit schemes - - - - (198) (198) - (198)
Items that will not be reclassified to profit or loss - - - - 623 623 - 623
Effect of movements in foreign exchange - - 429 - - 429 11 440
Net loss on hedge of net investment in foreign subsidiaries - - (1) - - (1) - (1)
Net gain on other investments held at fair value through other comprehensive - 4 - - - 4 - 4
income
Movement in cash flow hedging position - - - 419 - 419 - 419
Deferred tax associated with movements in cash flow hedging position - - - (28) - (28) - (28)
Deferred tax associated with movement in other investments - (1) - - - (1) - (1)
Share of other comprehensive income of joint ventures and associates - - 28 - - 28 - 28
Effect of hyperinflationary economies - - - - 46 46 - 46
Items that are or may be subsequently reclassified to profit or loss - 3 456 391 46 896 11 907
Other comprehensive income - 3 456 391 669 1,519 11 1,530
Total comprehensive income - 3 456 391 1,369 2,219 31 2,250
Inventory cash flow hedge movements
Amounts transferred to cost of inventory - - - (280) - (280) - (280)
Total inventory cash flow hedge movements - - - (280) - (280) - (280)
Transactions with owners
Dividends paid to equity shareholders - - - - (380) (380) - (380)
Net movement in own shares held - - - - (31) (31) - (31)
Deferred tax associated with share-based payments - - - - (1) (1) - (1)
Dividends paid to non-controlling interests - - - - - - (8) (8)
Total transactions with owners - - - - (412) (412) (8) (420)
Balance as at 17 September 2022 45 178 422 154 10,649 11,448 106 11,554
Total comprehensive income
Profit for the period recognised in the income statement - - - - 1,044 1,044 24 1,068
Remeasurements of defined benefit schemes - - - - (7) (7) - (7)
Deferred tax associated with defined benefit schemes - - - - 4 4 - 4
Items that will not be reclassified to profit or loss - - - - (3) (3) - (3)
Effect of movements in foreign exchange - - (448) - - (448) (22) (470)
Net gain on hedge of net investment in foreign subsidiaries - - 1 - - 1 - 1
Deferred tax associated with movements in foreign exchange - - (5) - - (5) - (5)
Current tax associated with movements in foreign exchange - - 6 - - 6 - 6
Movement in cash flow hedging position - - - (260) - (260) - (260)
4 422
Deferred tax associated with movement in cash flow hedging position - - - 40 - 40 - 40
Share of other comprehensive income of joint ventures and associates - - (18) - - (18) - (18)
Effect of hyperinflationary economies - - - - 40 40 - 40
Items that are or may be subsequently reclassified to profit or loss - - (464) (220) 40 (644) (22) (666)
Other comprehensive income - - (464) (220) 37 (647) (22) (669)
Total comprehensive income - - (464) (220) 1,081 397 2 399
Inventory cash flow hedge movements
Amounts transferred to cost of inventory - - - 68 - 68 - 68
Total inventory cash flow hedge movements - - - 68 - 68 - 68
Transactions with owners
Dividends paid to equity shareholders - - - - (345) (345) - (345)
Net movement in own shares held - - - - (28) (28) - (28)
Share buyback (1) 1 - - (448) (448) - (448)
Deferred tax associated with share-based payments - - - - 1 1 - 1
Dividends paid to non-controlling interests - - - - - - (8) (8)
Total transactions with owners (1) 1 - - (820) (820) (8) (828)
Balance as at 16 September 2023 44 179 (42) 2 10,910 11,093 100 11,193
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, income tax assets, deferred tax assets, and all current
assets except cash and cash equivalents, current asset investments and income
tax assets. Segment liabilities comprise trade and other payables, derivative
liabilities, provisions and lease liabilities.
Segment results, assets and liabilities include items directly attributable to
a segment as well as those that can be allocated on a reasonable basis.
Unallocated items comprise mainly corporate assets and expenses, cash,
borrowings, employee benefits balances and current and deferred tax balances.
Segment non-current asset additions are the total cost incurred during the
period to acquire segment assets that are expected to be used for more than
one year, comprising property, plant and equipment, right-of-use assets,
operating intangibles and biological assets.
Businesses disposed are shown separately and comparatives are re-presented for
businesses sold or closed during the year.
The Group comprises 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.
Ingredients
The manufacture of bakers' yeast, bakery ingredients, enzymes, lipids, yeast
extracts and cereal specialities.
Agriculture
The manufacture of animal feeds and the provision of other products and
services for the agriculture sector.
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.
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 of
certain geographical information about the Group's operations is also given
based on the geographical groupings: United Kingdom; Europe & Africa; The
Americas; and Asia Pacific.
Revenues are shown by reference to the geographical location of customers.
Profits are shown by reference to the geographical location of the businesses.
Segment assets are based on the geographical location of the assets.
Revenue Adjusted operating profit
2023 2022 2023 2022
£m
£m
£m
£m
Operating segments
Grocery 4,198 3,735 448 399
Ingredients 2,157 1,827 214 159
Agriculture 1,840 1,722 41 47
Sugar 2,547 2,016 169 162
Retail 9,008 7,697 735 756
Central - - (94) (88)
19,750 16,997 1,513 1,435
Geographical information
United Kingdom 7,271 6,378 488 533
Europe & Africa 7,552 6,291 559 482
The Americas 2,420 2,028 353 279
Asia Pacific 2,507 2,300 113 141
19,750 16,997 1,513 1,435
2023
Grocery Ingredients Agriculture Sugar Retail Central Total
£m £m £m £m £m £m £m
Revenue from continuing businesses 4,222 2,366 1,849 2,680 9,008 (375) 19,750
Internal revenue (24) (209) (9) (133) - 375 -
Revenue from external customers 4,198 2,157 1,840 2,547 9,008 - 19,750
Operating profit 402 201 32 119 717 (88) 1,383
Adjusted operating profit before joint ventures and associates 368 190 25 162 735 (94) 1,386
Share of adjusted profit after tax from joint ventures and associates 80 24 16 7 - - 127
Adjusted operating profit 448 214 41 169 735 (94) 1,513
Finance income 48 48
Finance expense (1) (1) - (3) (86) (37) (128)
Other financial income 40 40
Adjusted profit before taxation 447 213 41 166 649 (43) 1,473
Profits less losses on disposal of non-current assets 19 - - - - 9 28
Amortisation of non-operating intangibles (23) (13) (5) - - - (41)
Acquired inventory fair value adjustments (1) - (2) - - - (3)
Transaction costs - - (2) - - (3) (5)
Exceptional items (41) - - (50) (18) - (109)
Profits less losses on sale and closure of businesses - 3 - (6) - - (3)
Profit before taxation 401 203 32 110 631 (37) 1,340
Taxation (272) (272)
Profit for the period 401 203 32 110 631 (309) 1,068
Segment assets (excluding joint ventures and associates) 2,759 2,011 640 2,179 7,530 110 15,229
Investments in joint ventures and associates 58 133 155 48 - - 394
Segment assets 2,817 2,144 795 2,227 7,530 110 15,623
Cash and cash equivalents 1,457 1,457
Income tax 125 125
Deferred tax assets 193 193
Employee benefits assets 1,446 1,446
Segment liabilities (689) (407) (196) (501) (4,326) (166) (6,285)
Loans and overdrafts (562) (562)
Income tax (109) (109)
Deferred tax liabilities (626) (626)
Employee benefits liabilities (69) (69)
Net assets 2,128 1,737 599 1,726 3,204 1,799 11,193
Non-current asset additions 154 174 20 289 711 4 1,352
Depreciation (including of right-of-use assets) (114) (62) (19) (75) (526) (8) (804)
Amortisation (26) (15) (7) (3) (31) - (82)
2022
Grocery Ingredients Agriculture Sugar Retail Central Total
£m £m £m £m £m £m £m
Revenue from continuing businesses 3,736 1,996 1,728 2,097 7,697 (257) 16,997
Internal revenue (1) (169) (6) (81) - 257 -
Revenue from external customers 3,735 1,827 1,722 2,016 7,697 - 16,997
Operating profit 369 141 41 164 550 (87) 1,178
Adjusted operating profit before joint ventures and associates 328 142 31 154 756 (88) 1,323
Share of adjusted profit after tax from joint ventures and associates 71 17 16 8 - - 112
Adjusted operating profit 399 159 47 162 756 (88) 1,435
Finance income 19 19
Finance expense (1) (1) - (2) (76) (31) (111)
Other financial expense 13 13
Adjusted profit before taxation 398 158 47 160 680 (87) 1,356
Profits less losses on disposal of non-current assets 4 - - 2 - 1 7
Amortisation of non-operating intangibles (32) (13) (2) - - - (47)
Acquired inventory fair value adjustments (1) (2) (2) - - - (5)
Transaction costs (1) (3) (2) - - - (6)
Exceptional items - - - - (206) - (206)
Profits less losses on sale and closure of businesses - (7) - (16) - - (23)
Profit before taxation 368 133 41 146 474 (86) 1,076
Taxation (356) (356)
Profit for the period 368 133 41 146 474 (442) 720
Segment assets (excluding joint ventures and associates) 2,876 2,017 597 2,422 7,570 136 15,618
Investments in joint ventures and associates 62 136 143 45 - - 386
Segment assets 2,938 2,153 740 2,467 7,570 136 16,004
Cash and cash equivalents 2,121 2,121
Current asset investments 4 4
Income tax 90 90
Deferred tax assets 163 163
Employee benefits assets 1,393 1,393
Segment liabilities (703) (450) (196) (616) (4,545) (188) (6,698)
Loans and overdrafts (637) (637)
Income tax (160) (160)
Deferred tax liabilities (647) (647)
Employee benefits liabilities (79) (79)
Net assets 2,235 1,703 544 1,851 3,025 2,196 11,554
Non-current asset additions 128 183 26 223 489 3 1,052
Depreciation (including of right-of-use assets) (109) (57) (17) (75) (532) (12) (802)
Amortisation (37) (14) (3) (3) (11) - (68)
Reversal of impairment of property, plant & equipment and right-of-use - (11) - (19) - - (30)
assets
1. Operating segments - geographical information
2023
United Kingdom Europe & Africa The Americas Asia Pacific Total
£m £m £m £m £m
Revenue from external customers 7,271 7,552 2,420 2,507 19,750
Segment assets 5,690 6,651 1,792 1,490 15,623
Non-current asset additions 305 732 217 98 1,352
Depreciation (including of right-of-use assets) (279) (374) (84) (67) (804)
Amortisation (17) (56) (4) (5) (82)
Acquired inventory fair value adjustments (2) (1) - - (3)
Transaction costs (4) (1) - - (5)
Exceptional items - (53) - (56) (109)
2022
United Kingdom Europe & Africa The Americas Asia Pacific Total
£m £m £m £m £m
Revenue from external customers 6,378 6,291 2,028 2,300 16,997
Segment assets 5,972 6,519 1,840 1,673 16,004
Non-current asset additions 285 487 177 103 1,052
Depreciation (including of right-of-use assets) (277) (392) (69) (64) (802)
Amortisation (25) (32) (5) (6) (68)
Impairment of property, plant and equipment on sale and closure of businesses - - - (30) (30)
Acquired inventory fair value adjustments (2) (3) - - (5)
Transaction costs (2) (3) - (1) (6)
Exceptional items - (206) - - (206)
The Group's operations in the following countries met the criteria for
separate disclosure:
Revenue Non-current assets
2023 2022 2023 2022
£m
£m
£m £m
Australia 1,407 1,232 541 623
Spain 1,836 1,545 651 650
United States 1,580 1,315 887 866
All segment disclosures are stated before reclassification of assets and
liabilities classified as held for sale.
2. Exceptional items
2023
The income statement this year included a non-cash exceptional impairment
charge of £109m. In Grocery, the Don business has been adversely affected by
inflationary pressures, a surplus supply of fresh pork in the market, labour
constraints and equipment reliability causing production shortfalls and
additional transportation costs following the unforeseen liquidation of its
distribution partner. As a result, the Group has recognised impairment
write-downs of £39m against property, plant and equipment, £1m against
right-of-use assets and £1m against intangible assets.
In the Sugar segment, north China recognised a £15m impairment write-down
against property, plant and equipment. This business was classified as held
for sale in the previous year, but the potential buyer withdrew their offer in
the second half of the year. Due to the severe flooding in Mozambique, the
related damage to the sugar crop fields and the inability to plant for the
foreseeable future, Illovo Mozambique recognised a £25m impairment write-down
against property, plant and equipment, £7m against current biological assets,
provided £2m for personnel costs and wrote down inventory by £1m.
In the Retail segment, the Group recognised £13m of exceptional impairment
charge relating to the German store portfolio. This primarily related to
stores impaired in the previous year after additional right-of-use assets were
recognised due to rent indexation adjustments. The Group also recognised a
£4m charge including a £3m exceptional impairment charge for the write-down
of property, plant and equipment for the right-sizing of four further German
stores and £1m to write down a freehold store
The income statement included an exceptional impairment charge of £206m
comprising non-cash write-downs of £72m against property, plant and equipment
and a write-down of £134m of right-of-use assets relating to the
capitalisation of store leases for Primark. Also £49m of the £63m
exceptional charge included in the Group's total tax charge for this financial
year was the de-recognition of the deferred tax assets relating to Germany.
3. Finance expense
2023 2022
£m £m
Bank loans and overdrafts (23) (20)
All other borrowings (11) (8)
Lease liabilities (91) (81)
Other payables (3) (2)
(128) (111)
4. Income tax expense
2023 2022
£m £m
Current tax expense
UK - corporation tax at 21.8% (2022 - 19%) 26 44
Overseas - corporation tax 249 244
UK - over provided in prior periods (14) (12)
Overseas - under provided in prior periods 18 1
279 277
Deferred tax expense
UK deferred tax 54 18
Overseas deferred tax 28 72
UK - over provided in prior periods (26) (3)
Overseas - over provided in prior periods (63) (8)
(7) 79
Total income tax expense in the income statement 272 356
Reconciliation of effective tax rate
Profit before taxation 1,340 1,076
Less share of profit after tax from joint ventures and associates (124) (109)
Profit before taxation excluding share of profit after tax from joint ventures 1,216 967
and associates
Nominal tax charge at UK corporation tax rate of 21.8% (2022 - 19%) 265 184
Effect of higher and lower tax rates on overseas earnings (16) 4
Effect of changes in tax rates on income statement 5 2
Expenses not deductible for tax purposes 66 63
Disposal of assets covered by tax exemptions or unrecognised capital losses (2) 6
Deferred tax not recognised 39 120
Adjustments in respect of prior periods (85) (23)
272 356
Income tax recognised in equity
Deferred tax associated with defined benefit schemes (4) 198
Deferred tax associated with share-based payments (1) 1
Deferred tax associated with movement in cash flow hedging position (40) 28
Deferred tax associated with movements in foreign exchange 5 -
Current tax associated with movements in foreign exchange (6) -
Deferred tax associated with movement in other investments - 1
(46) 228
The UK corporation tax rate of 19% increased to 25% from 1 April 2023. The
legislation to effect these changes was enacted before the balance sheet date
and UK deferred tax has been calculated accordingly.
In April 2019 the European Commission published its decision on the Group
Financing Exemption in the UK's controlled foreign company legislation. The
Commission found that the UK law did not comply with EU State Aid rules in
certain circumstances. The Group has arrangements that may be impacted by this
decision as might other UK-based multinational groups that had financing
arrangements in line with the UK's legislation in force at the time. The UK
Government, the Group and a number of other UK companies appealed against this
decision to the General Court of the European Union ('GCEU'). On 8 June 2022,
the GCEU found in favour of the Commission's original decision. As a result of
this, in August 2022 the UK Government, the Group and various other UK
companies appealed GCEU's decision to the Court of Justice of the European
Union. We have calculated our maximum potential liability to be £26m (2022 -
£26m), however we do not consider that any provision is required in respect
of this amount based on our current assessment of the issue. Following receipt
of charging notices from HM Revenue & Customs ('HMRC'), we made payments
to HMRC in 2021. Our assessment remains that no provision is required in
respect of this amount. We will continue to consider the impact of the
Commission's decision on the Group and the potential requirement to record a
provision.
In the second half of last year a deferred tax asset arose mainly in relation
to the charge taken for the impairment of property, plant and equipment and
store leases in Primark Germany. A significant proportion of this asset was
deemed not to be recoverable and was written off as an exceptional tax charge.
Since then, further work has been undertaken to assess the amount of the
deferred tax asset that is expected to be recoverable. This work determined
that the deferred tax asset at last year end was understated in error.
The Directors believe that this understatement of the deferred tax asset was
not material to the prior period financial statements. Accordingly, an
exceptional tax credit of £58m has been recognised in this year.
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 tax strategy, approved by the Board, 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 in the
Policies section of the Group's website.
5. Dividends
2023 pence per share 2022 pence per share 2023 2022
£m £m
2021 final and special - 34.3 - 271
2022 interim - 13.8 - 109
2022 final 29.9 - 235 -
2023 interim 14.2 - 110 -
44.1 48.1 345 380
The 2023 interim dividend was declared on 25 April 2023 and was paid on 7 July
2023. Given the outlook for the Group, the strength of the balance sheet and
the underlying cash generation of the business, we have declared the payment
of a special dividend, to be paid as a second interim dividend of 12.7p per
share at an estimated cost of £97m.
The Board has proposed a final dividend of 33.1p per share at an estimated
cost of £252m. The combined 2023 final and special dividend of 45.8p, with an
estimated total value of £349m, will be paid on 12 January 2024 to
shareholders on the register on 15 December 2023.
Dividends relating to the period including the special dividend were 60.0p per
share totalling £459m (2022 - 43.7p per share totalling £345m).
6. Earnings per share
The calculation of basic earnings per share at 16 September 2023 was based on
the net profit attributable to equity shareholders of £1,044m (2022 -
£700m), and a weighted average number of shares outstanding during the year
of 778 million (2022 - 789 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. The weighted average number of
shares has reduced as a result of our first share buyback programme. In the
year, we repurchased 23.7 million shares which were cancelled.
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
778 million (2022 - 789 million). There is no difference between basic and
diluted earnings.
2023 2022
pence pence
Adjusted earnings per share 141.8 131.1
Disposal of non-current assets 3.6 0.9
Sale and closure of businesses (0.4) (2.9)
Acquired inventory fair value adjustments (0.4) (0.6)
Transaction costs (0.6) (0.8)
Exceptional items (14.0) (26.1)
Tax effect on above adjustments 8.2 (8.0)
Amortisation of non-operating intangibles (5.3) (6.0)
Tax credit on non-operating intangibles amortisation and goodwill 1.3 1.0
Earnings per ordinary share 134.2 88.6
7. Acquisitions and disposals
Acquisitions
2023
In the first half, the Agriculture division acquired Kite Consulting, Advance Sourcing and Progres. Kite Consulting is a specialist dairy consultant and Advance Sourcing provides specialist products to create value by improving herd performance and supports dairy farmers to improve herd efficiency and build resilience across the agri-food supply chain. Progres in Finland uses a patented additive to support good health, reduce inflammation and stimulate recovery, which improves gut integrity and the performance of animals.
In April, the Ingredients division acquired Vital Solutions, a German company specialising in natural science-based ingredients for application in dietary supplements and functional foods.
The Agriculture division acquired IFCN AG, a dairy research and consulting company in June and in August acquired National Milk Records plc (NMR) for £48m. NMR is the leading agri-tech supplier of management information and testing services to the UK dairy supply chain, developing technology used to inform farming efficiency and animal welfare, and quantify food provenance.
Pre-acquisition carrying Recognised values on acquisition
values
£m
National Milk Records Other Total
£m
£m £m
Net assets
Intangible assets 3 23 12 35
Property, plant and equipment and right-of-use assets 5 4 1 5
Investment in joint ventures 3 9 - 9
Cash and overdrafts 1 - 1 1
Working capital (1) - (1) (1)
Loans (2) (2) - (2)
Taxation 1 (4) (2) (6)
Net identifiable assets and liabilities 10 30 11 41
Goodwill 18 21 39
Total consideration 48 32 80
Recognised values on acquisition
£m
Satisfied by
Cash consideration 78
Deferred consideration 2
80
Net cash
Cash consideration 78
Cash and cash equivalents acquired (1)
77
Pre-acquisition carrying amounts were the same as recognised values on
acquisition apart from £32m of non-operating intangibles in respect of
brands, technology and customer relationships, a £7m deferred related tax
liability, a £6m uplift to the investment in joint ventures and goodwill of
£39m. Cash flow on acquisition of subsidiaries, joint ventures and associates
of £94m comprised £78m cash consideration less £1m cash and overdrafts
acquired, £16m of deferred consideration relating to previous acquisitions
and a £1m contribution to an existing joint venture in China.
2022
In January, the Group acquired 100% of Fytexia, a B2B specialty ingredients business in France and Italy producing and formulating polyphenols-based active ingredients for the dietary supplements industry. In July, the Group acquired Greencoat, a UK-based animal supplement and care business. During the year, the Group also acquired a small grocery company in New Zealand, a small agriculture business in Finland and a small ingredients business in Australia.
Pre-acquisition carrying amounts were the same as recognised values on acquisition apart from £88m of non-operating intangibles in respect of brands, technology and customer relationships, an £8m uplift to inventory, a £16m related deferred tax liability and goodwill of £85m. Cash flow on acquisition of subsidiaries, joint ventures and associates of £154m comprised £153m cash consideration less £10m cash and overdrafts acquired, £7m of deferred consideration relating to previous acquisitions and a £4m contribution to an existing joint venture in China.
Disposals
2023
The Group agreed to sell property, plant and equipment to its Chinese joint
venture partner. Profit on sale was £3m. In March Gledhow, the Group's 30%
equity-accounted associate in Illovo South Africa, formally went into business
rescue. A non-cash provision of £6m was booked on the financial guarantee
held on this business' liabilities.
2022
The proposed sale of a yeast company to the joint venture with Wilmar International in China (classified as held for sale at the 2021 year end) is not going ahead. The £10m non-cash impairment reversed in 2021 through profit/(loss) on sale and closure of business has been reinstated at a cost of £11m.
The Group's investment in north China Sugar is classified as held for sale at year end and an associated £19m non-cash write-down has been charged to loss on sale and closure of business.
The Group also released £3m of closure provisions in Vivergo in the UK and £4m of warranty provisions no longer required for a disposed Ingredients business in the United States.
8. Analysis of net debt
At Cash flow Acquisitions and Disposals New leases and non-cash Exchange At
16 September
17 September £m £m items adjustments
2023
£m
2022 £m £m
£m
Short-term loans (31) 13 (1) (87) 7 (99)
Long-term loans (480) - (1) 87 - (394)
Lease liabilities (3,252) 308 - (279) 63 (3,160)
Total liabilities from financing activities (3,763) 321 (2) (279) 70 (3,653)
Cash at bank and in hand, cash equivalents and overdrafts 1,995 (534) - - (73) 1,388
Current asset investments 4 (3) - - (1) -
Net debt including lease liabilities (1,764) (216) (2) (279) (4) (2,265)
At Cash flow Acquisitions and Disposals New leases and non-cash Exchange At
17 September
18 September £m £m items adjustments
2022
£m
2021 £m £m
£m
Short-term loans (244) 12 (23) 224 - (31)
Long-term loans (76) (178) - (224) (2) (480)
Lease liabilities (3,281) 321 (8) (186) (98) (3,252)
Total liabilities from financing activities (3,601) 155 (31) (186) (100) (3,763)
Cash at bank and in hand, cash equivalents and overdrafts 2,189 (268) - - 74 1,995
Current asset investments 32 (30) - - 2 4
Net debt including lease liabilities (1,380) (143) (31) (186) (24) (1,764)
Cash and cash equivalents comprise bank and cash balances, deposits and
short-term investments with original maturities of three months or less. £69m
(2022 - £126m) of bank overdrafts that are repayable on demand form part of
the Group's cash management and are included as a component of cash and cash
equivalents for the purpose of the cash flow statement.
Net cash before lease liabilities is £895m, comprising cash at bank and in
hand, cash equivalents and overdrafts of £1,388m, short-term loans of £99m,
long-term loans of £394m and current asset investments of £nil (2022 -
£1,488m, £1,995m, £31m, £480m and £4m, respectively).
£69m (2022 - £126m) of bank overdrafts plus the £99m (2022 - £31m) of
short-term loans shown above comprise the £168m (2022 - £157m) 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 £335m and £2,825m respectively (2022 - £316m and £2,936m
respectively) comprise the £3,160m (2022 - £3,252m) of lease liabilities
shown above.
Current asset investments comprise term deposits and short-term investments
with original maturities of greater than three months.
Interest paid is included within financing activities. The roll-forward of the
liabilities associated with interest paid is an opening balance of £(18)m,
expense of £(128)m, payments of £118m, effect of hyperinflationary economies
of £3m and a closing balance of £(25)m (2022 - opening balance of £(20)m,
expense of £(111)m, payments of £114m, fx of £(1)m and a closing balance of
£(18)m).
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 2023 2022
note £000 £000
Charges to Wittington Investments Limited in respect of services provided by 985 930
the Company and its subsidiary undertakings
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 11,219 12,361
ii. directors of Wittington Investments Limited who are not trustees of 2,159 2,322
the Foundation and their close family
iii. directors of the Company who are not trustees of the Foundation and are 89 128
not directors of Wittington Investments Limited
Sales to fellow subsidiary undertakings on normal trading terms 2 18 48
Sales to companies with common key management personnel on normal trading 3 9,912 16,891
terms
Amounts due from companies with common key management personnel 3 1,028 2,898
Sales to joint ventures on normal trading terms 40,645 54,111
Sales to associates on normal trading terms 88,753 73,360
Purchases from joint ventures on normal trading terms 482,267 436,467
Purchases from associates on normal trading terms 97,844 13,879
Amounts due from joint ventures 36,986 37,865
Amounts due from associates 8,745 9,151
Amounts due to joint ventures 17,609 30,214
Amounts due to associates 7,161 594
1. The Garfield Weston Foundation ('the Foundation') is an English charitable
trust, established in 1958 by the late W. Garfield Weston. TheFoundation has
no direct interest in the Company, but as at 16 September 2023 was the
beneficial owner of 683,073 shares (2022 - 683,073 shares) in Wittington
Investments Limited representing 79.2% (2022 - 79.2%) of that company's issued
share capital and is, therefore, the Company's ultimate controlling party. At
16 September 2023 trustees of the Foundation comprised nine grandchildren of
the late W. Garfield Weston of whom five are children of the late Garry H.
Weston
2. The fellow subsidiary undertaking is Fortnum and Mason plc.
3. The company with common key management personnel is the George Weston Limited
group, in Canada.
Amounts due from joint ventures include £32m (2022 - £29m) of finance lease
receivables. The remainder of the balance is trading balances. All but £4m
(2022 - £4m) 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 52 weeks ended 16 September 2023, or the 52 weeks
ended 17 September 2022. Statutory accounts for 2022 have been delivered to
the Registrar of Companies and those for 2023 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
in note 12 below.
The Group's consolidated financial statements are prepared to the Saturday
nearest to 15 September. Accordingly, they have been prepared for the 52 weeks
ended 16 September 2023 (2022 - 52 weeks ended 17 September 2022).
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 16 September.
12. New accounting standards
The following accounting standards and amendments were adopted during the
year and had no significant impact on the Group:
- Reference to the Conceptual Framework (Amendments to IFRS 3)
- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS
16)
- Onerous Contracts-Cost of Fulfilling a Contract (Amendments to IAS 37)
- Annual Improvements to IFRS 2018-2020:
The Group is assessing the impact of the following standards, interpretations
and amendments that are not yet effective. Where already endorsed by the UK
Endorsement Board (UKEB), these changes will be adopted on the effective dates
noted. Where not yet endorsed by the UKEB, the adoption date is less certain:
- IFRS 17 Insurance Contracts, Amendments to IFRS 17, Initial Application of
IFRS 17 and IFRS 9 - Comparative Information, effective 2024 financial year
- Disclosure of Accounting policies (Amendments to IAS 1 and IFRS Practice
Statement 2), effective 2024 financial year
- Definition of Accounting Estimates (Amendments to IAS 8) effective 2024
financial year
- Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12), effective 2024 financial year
- Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) effective 2024
financial year
- International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12),
effective 2024 financial year
- Amendments to IAS 1 Presentation of Financial Statements,effective 2024
financial year
- Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7), effective 2025
financial year (not yet endorsed by the UKEB)
- Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of
Exchangeability, effective 2026 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.
APM Closest equivalent IFRS measure Definition/purpose Reconciliation/calculation
Like-for-like sales No direct equivalent The like-for-like sales metric enables measurement of the performance of our Consistent with the definition given
retail stores on a comparable year-on-year basis.
This measure represents the change in sales at constant currency in our retail
stores adjusted for new stores, closures and relocations. Refits, extensions
and downsizes are also adjusted for if a store's retail square footage changes
by 10% or more. For each change described above, a store's sales are excluded
from like-for-like sales for one year.
No adjustments are made for disruption during refits, extensions or downsizes
if a store's retail square footage changes by less than 10%, for
cannibalisation by new stores, or for the timing of national or bank holidays.
It is measured against comparable trading days in each year.
Adjusted operating profit Operating profit Adjusted operating profit is stated before amortisation of non-operating A reconciliation of this measure is provided on the face of the consolidated
intangibles, transaction costs, amortisation of fair value adjustments made to income statement and by operating segment in note 1 of the financial
acquired inventory, profits less losses on disposal of non-current assets and statements
exceptional items.
Items defined above which arise in the Group's joint ventures and associates
are also treated as adjusting items for the purposes of Adjusted operating
profit.
Adjusted operating (profit) margin No direct equivalent Adjusted operating (profit) margin is Adjusted operating profit as a See note A
percentage of revenue.
Adjusted profit before tax Profit before tax Adjusted profit before tax is stated before amortisation of non-operating A reconciliation of this measure is provided on the face of the consolidated
intangibles, transaction costs, amortisation of fair value adjustments made to income statement and by operating segment in note 1 of the financial
acquired inventory, profits less losses on disposal of non-current assets, statements
exceptional items and profits less losses on sale and closure of businesses.
Items defined above which arise in the Group's joint ventures and associates
are also treated as adjusting items for the purposes of Adjusted profit before
tax.
Adjusted earnings and Adjusted earnings per share Earnings and earnings per share Adjusted earnings and adjusted earnings per share are stated before Reconciliations of these measures are provided in note 7 of the financial
amortisation of non-operating intangibles, transaction costs, amortisation of statements
fair value adjustments made to acquired inventory, profits less losses on
disposal of non-current assets, exceptional items and profits less losses on
sale and closure of businesses, together with the related tax effect.
Items defined above which arise in the Group's joint ventures and associates
are also treated as adjusting items for the purposes of Adjusted earnings and
Adjusted earnings per share.
Exceptional items No direct equivalent Exceptional items are items of income and expenditure which are material and Exceptional items are included on the face of the consolidated income
unusual in nature and are considered of such significance that they require statement with further detail provided in note 2 of the financial statements
separate disclosure on the face of the income statement.
Constant currency Revenue and Adjusted operating profit (non-IFRS) measure Constant currency measures are derived by translating the relevant prior year See note B
figures at current year average exchange rates, except for countries where CPI
has escalated to extreme levels, in which case actual exchange rates are used.
There are currently three countries where the Group has operations in this
position - Argentina, Venezuela and Turkey.
Effective tax rate Income tax expense This measure is the tax charge for the year expressed as a percentage of Whilst the Effective tax rate is not disclosed, a reconciliation of the tax
profit before 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 effective tax rate No direct equivalent This measure is the tax charge for the year excluding tax on adjusting items The tax impact of reconciling items between profit before tax and Adjusted
expressed as a percentage of adjusted profit before tax. profit before tax is shown in note 7 of the financial statements
Dividend cover No direct equivalent Dividend cover is the ratio of Adjusted earnings per share to dividends per See note C
share relating to the year.
Capital expenditure No direct equivalent Capital expenditure is a measure of the investment each year in non-current See note D
assets in existing businesses. It comprises cash outflows from the purchase of
property, plant and equipment and intangibles.
Gross investment No direct equivalent Gross investment is a measure of investment in non-current assets in existing See note E
businesses and acquisition of new businesses. It comprises capital
expenditure, cash outflows from the purchase of subsidiaries, joint ventures
and associates, additional shares in subsidiary undertakings purchased from
non-controlling interests and other investments, and net debt assumed in
acquisitions.
Net cash/debt before lease liabilities No direct equivalent This measure comprises cash, cash equivalents and overdrafts, current asset A reconciliation of this measure is shown in note 8
investments and loans.
Net cash/debt including lease liabilities No direct equivalent This measure comprises cash, cash equivalents and overdrafts, current asset A reconciliation of this measure is shown in note 8
investments, loans and lease liabilities.
Adjusted EBITDA Adjusted operating profit (non-IFRS) measure Adjusted EBITDA is stated before depreciation, amortisation and impairments See note F
charged to Adjusted operating profit.
Financial leverage ratio No direct equivalent Financial leverage is the ratio of net cash/debt including lease liabilities See note F
to Adjusted EBITDA.
Free cash flow No direct equivalent This measure represents the cash that the Group generates from its operations See note G
after maintaining and investing in its capital assets.
All the items below Adjusted EBITDA can be found on the face of the cash flow
statement or derived directly from it.
Working capital comprises the movements in inventories, receivables and
payables within net cash generated from operating activities.
Net interest paid is the sum of interest received within net cash used in
investing activities and interest paid within net cash used in financing
activities.
Share of adjusted profit after tax from joint ventures and associates is the
amount on the face of the cash flow statement, plus the £3m (2022 - £3m)
non-operating intangible amortisation which is not included in Adjusted
EBITDA.
Other includes all other items from net cash generated from operating
activities and net cash used in investing activities except for the purchase
and sale of subsidiaries, joint ventures and associates, plus dividends paid
to non-controlling interests and the movement from changes in own shares held.
Total liquidity No direct equivalent Total liquidity comprises cash at bank and in hand and cash equivalents less See note H
current loans and overdrafts, and an estimate of inaccessible cash, plus the
undrawn RCF.
In our Annual Report and Accounts, Cash at bank and in hand and cash
equivalents are set out in note 18 and current loans and overdrafts are set
out in note 19.
Inaccessible cash is generally located in jurisdictions where there is limited
access to foreign currency or where there are exchange controls. It is
estimated at 5% of cash at bank and in hand and cash equivalents.
The RCF is long-term, legally committed and contains no performance covenants.
(Average) capital employed No direct equivalent Capital employed is derived from the management balance sheet and does not Consistent with the definition given
reconcile directly to the statutory 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 on (average) capital employed No direct equivalent This measure expresses Adjusted operating profit as a percentage of Average Consistent with the definition given
capital employed.
(Average) working capital No direct equivalent Working capital is derived from the management balance sheet and does not Consistent with the definition given
reconcile directly to the statutory balance sheet. All elements of working
capital are calculated in accordance with Adopted IFRS.
Average working capital for each segment and for 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) working capital as a percentage of revenue No direct equivalent This measure expresses (Average) working capital as a percentage of revenue. Consistent with the definition given
Note A
Grocery Ingredients Agriculture Sugar Retail Central and disposed businesses Total
£m £m £m £m £m £m £m
2023
External revenue from continuing businesses 4,198 2,157 1,840 2,547 9,008 - 19,750
Adjusted operating profit 448 214 41 169 735 (94) 1,513
Adjusted operating margin % 10.7% 9.9% 2.2% 6.6% 8.2% 7.7%
2022
External revenue from continuing businesses 3,735 1,827 1,722 2,016 7,697 - 16,997
Adjusted operating profit 399 159 47 162 756 (88) 1,435
Adjusted operating margin % 10.7% 8.7% 2.7% 8.0% 9.8% 8.4%
Note B
Grocery Ingredients Agriculture Sugar Retail Central and disposed businesses Total
£m
£m
£m
£m
£m
£m
£m
2023
External revenue from continuing businesses at actual rates 4,198 2,157 1,840 2,547 9,008 - 19,750
2022
External revenue from continuing businesses at actual rates 3,735 1,827 1,722 2,016 7,697 - 16,997
Impact of foreign exchange 51 46 3 (40) 137 - 197
External revenue from continuing businesses at constant currency 3,786 1,873 1,725 1,976 7,834 - 17,194
% change at constant currency +11% +15% +7% +29% +15% +15%
Grocery Ingredients Agriculture Sugar Retail Central and disposed businesses Total
£m
£m
£m
£m
£m
£m
£m
2023
Adjusted operating profit at actual rates 448 214 41 169 735 (94) 1,513
2022
Adjusted operating profit at actual rates 399 159 47 162 756 (88) 1,435
Impact of foreign exchange 16 8 1 (5) 4 - 24
Adjusted operating profit at constant currency 415 167 48 157 760 (88) 1,459
% change at constant currency +8% +28% -15% +8% -3% +4%
Note C
2023 2022
Adjusted earnings per share (pence) 141.8 131.1
Dividends relating to the year (pence) - excluding special dividend proposed 47.3 43.7
Dividend cover 3 3
Note D
From the cash flow statement 2023 2022
£m
£m
Purchase of property, plant and equipment 997 680
Purchase of intangibles 76 89
Capital expenditure 1,073 769
Note E
From the cash flow statement 2023 2022
£m
£m
Purchase of property, plant and equipment 997 680
Purchase of intangibles 76 89
Purchase of subsidiaries, joint ventures and associates 94 154
Purchase of other investments 4 7
Gross investment 1,171 930
Note F
2023 2022
£m
£m
Adjusted operating profit 1,513 1,435
Charged to adjusted operating profit:
Depreciation of property, plant and equipment 531 521
Amortisation of operating intangibles 44 24
Depreciation of right-of-use assets and non-cash lease adjustments 273 281
Adjusted EBITDA 2,361 2,261
Net debt including lease liabilities (2,265) (1,764)
Financial leverage ratio 1.0 0.8
Note G
2023 2022
£m
£m
Adjusted EBITDA (see note F) 2,361 2,261
Repayment of lease liabilities net of incentives received (246) (275)
Working capital (216) (729)
Capital expenditure (see note D) (1,073) (769)
Purchase of subsidiaries, joint ventures and associates (94) (154)
Sale of subsidiaries, joint ventures and associates 4 -
Net interest paid (74) (97)
Income taxes paid (341) (304)
Share of adjusted profit after tax from joint ventures and associates (127) (112)
Dividends received from joint ventures and associates 107 93
Other (32) 2
Free cash flow 269 (84)
Note H
2023 2022
£m
£m
Cash at bank and in hand and cash equivalents 1,457 2,121
Current loans and overdrafts (168) (157)
Estimated inaccessible cash (73) (106)
RCF 1,500 1,500
Total liquidity 2,716 3,358
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