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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Associated British Foods Plc | LSE:ABF | London | Ordinary Share | GB0006731235 | ORD 5 15/22P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
16.00 | 0.60% | 2,702.00 | 2,708.00 | 2,710.00 | 2,713.00 | 2,694.00 | 2,694.00 | 771,636 | 16:35:17 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Textile Goods, Nec | 19.75B | 1.04B | 1.3790 | 19.64 | 20.51B |
TIDMABF
RNS Number : 9563V
Associated British Foods PLC
20 April 2021
Associated British Foods plc
Interim Results Announcement
24 weeks ended 27 February 2021
For release 20 April 2021
ASSOCIATED BRITISH FOODS PLC RESULTS FOR THE 24 WEEKSED 27 FEBRUARY 2021
Exceptional delivery in food; retail strong when stores open
Financial headlines
Actual Constant currency * Group revenue GBP6,313m -17% -18% * Adjusted operating profit GBP369m -46% -46% * Adjusted profit before tax GBP319m -50% * Adjusted earnings per share 25.1p -59% * Dividend per share 6.2p GBP382m * Gross investment GBP705m * Net cash (before lease liabilities) GBP2,715m * Net debt (including lease liabilities) * Statutory operating profit GBP320m -8% * Statutory profit before tax GBP275m -8% * Basic earnings per share 20.5p -25%
Statutory operating profit is stated after exceptional charges and other items shown on the face of the condensed consolidated income statement. Exceptional charges of GBP25m this year compare to GBP309m in the last financial half year.
George Weston, Chief Executive of Associated British Foods, said:
"I am proud of how our people have responded to the many challenges presented by COVID-19. Our food businesses delivered an exceptional increase in adjusted operating profit of 30% and we have provided safe and nutritious food under the most demanding of conditions.
With most of the Primark stores closed for more than half the period, the management team demonstrated operational agility in response to the measures employed by governments to tackle the pandemic. Primark sales after store reopenings demonstrate the relevance and appeal of our value-for-money offering. We are excited about welcoming customers back into our stores as the lockdowns ease and are delighted with record sales in England and Wales in the week after reopening on 12 April. With our success in a number of new markets, as wide-ranging as Poland and Florida, we are as convinced as we have ever been in the long-term growth prospects for Primark.
Looking ahead, with stores reopening and Primark once again becoming cash generative, our confidence is reflected in our decisions to repay the job retention scheme monies in respect of this financial year and to declare an interim dividend."
The group has defined, and outlined the purpose of, its Alternative Performance Measures in note 12. These measures are used within the Financial headlines and in this Interim Results Announcement.
For further information please contact:
Associated British Foods: John Bason, Finance Director Catherine Hicks, Corporate Affairs Director Tel: 020 7399 6545 Citigate Dewe Rogerson: Tel: 020 7638 9571 Chris Barrie Tel: 07968 727289 Jos Bieneman Tel: 07834 336650
INTERIM RESULTS ANNOUNCEMENT
For the 24 weeks ended 27 February 2021
CHAIRMAN'S STATEMENT
A year ago the human tragedy of COVID-19 was unfolding on a scale that both shocked and saddened us. None of us could have anticipated the profound global impact on people's lives and livelihoods over this past year.
The economic effects of the measures taken by governments to restrict the pandemic were evident in the financial results for our last financial year and in the results for this financial half year. The Board recognises that a group of our scale and significance has responsibilities to many stakeholders. I want to say thank you once again to every employee for their hard work and determination in these difficult times. So many have continued to go beyond the ordinary call of duty and I am proud of the many examples of this that I have seen.
Our food businesses worldwide have adapted to working safely in this environment and continued to provide safe, nutritious and affordable food to customers. During this first half, with most stores closed for more than half of the time, the Primark team have demonstrated operational agility in responding to the fast changing and wide range of measures employed by governments to tackle the pandemic.
Revenue in Grocery, Sugar, Agriculture and Ingredients was ahead of the first half last year at constant currency. Adjusted operating profit in each of these food businesses was well ahead of both expectations and last year, and in aggregate were an exceptional 30% up on last year. Primark's performance in the first half was materially lower than expected impacted, as outlined above, by extensive store closures and restrictions on trading. We have been very encouraged by Primark's trading when the stores were open.
Revenue for the group of GBP6.3bn was 17% behind last year at actual exchange rates driven by the loss of Retail sales as a consequence of the trading restrictions placed on Primark. Adjusted operating profit of GBP369m was 46% lower than last year at actual exchange rates as a result of the contribution lost at Primark. Net finance expense was in line with last year, but the adjusted effective tax rate increased substantially to 35% as a result of lower profitability for Primark expected for the full year which will now include the repayment of job retention scheme monies relating to the current financial year. Adjusted earnings per share decreased by 59% to 25.1p per share.
The statutory operating profit for the period reduced by 8% to GBP320m, a much lower reduction than the decline in adjusted operating profit. Statutory operating profit is stated after exceptional items which decreased from a charge GBP309m last year to GBP25m this year. To ensure that Primark greets its customers with fresh spring/summer collections in its stores when they reopen this month, exceptional items this year include an inventory charge of GBP21m which relates to the clearing of some autumn/winter seasonal items in those stores which have been closed since December.
The cash outflow for the group in the first half was GBP860m. We normally have a seasonal outflow in this period for our Sugar businesses in the northern hemisphere and payment was made for Primark orders delayed from last financial year. The major part of the cash outflow, some GBP650m, is a result of the Primark store closures and relates to both the loss of revenue and the consequent increase in stocks.
The group's net cash before lease liabilities of GBP705m at this half year compared to GBP801m at the same time last year. The cash outflow as a result of the periods for which Primark's stores were closed over the last year has been substantially offset by higher cash generation by our food businesses, targeted cost control initiatives and the non-payment of dividends for our last financial year. Our balance sheet has been strengthened this half year by a substantial increase since the start of the financial year in the aggregate net assets of the group's defined benefit pension schemes. The aggregate net assets reached GBP382m at the half year end and the improvement was driven by the main UK pension scheme.
We are delighted that our stores in England and Wales delivered record sales in the first week after reopening on 12 April. We welcomed our customers back with our value-for-money offering, exciting new season ranges and a safe store environment.
Government job retention schemes
To contain the spread of COVID-19 over the past year governments have taken unprecedented measures which have had drastic economic effects on many businesses and their employees. In turn governments have provided economic support for those most affected.
Primark has been required to close its stores several times over the past year, with a consequent loss of over GBP3bn of sales and over GBP1bn of profit over the past 12 months. We have also seen huge cash outflows with a GBP650m outflow in the first half of this year alone. During this time we have accessed the job retention schemes offered by the UK and European governments to pay those employees not working while the stores were closed. These schemes have enabled us to preserve all the jobs in Primark's 65,000 workforce.
Last financial year we took measures to protect the business and its liquidity which included stopping discretionary spend. All Primark employees saw a reduction in their income either through being placed on a job retention scheme or through voluntary salary reduction. As reported last year, senior management at Primark and at group level elected to take material reductions in their pay, and no bonuses were paid. No dividends were paid to shareholders. We received GBP98m from job retention schemes in that year.
This financial year, we were eligible for a further GBP79m from job retention schemes in respect of the first half and at the date of this announcement this has reached GBP121m. Although uncertainty remains, a large proportion of the UK adult population has now been vaccinated and last week we saw the successful reopening of Primark's English and Welsh stores which represent some 40% of our total retail selling space. On the assumption that our English and Welsh stores remain open, Primark will return to cash generation. Accordingly, we do not plan to make any further claims from government job retention schemes for which we would be eligible from this date, and we intend to repay the GBP121m referred to above. This includes the repayment of GBP72m to the UK government.
Board
I am delighted to welcome Dame Heather Rabbatts as a non-executive director of the Company with effect from 1 March 2021. Heather brings a wealth of experience having held a number of executive and non-executive roles across local government, infrastructure, media and sports. She was the first woman to join the board of the Football Association. She continues to work in film and sports and is a non-executive director of Kier Group plc. We very much look forward to working with her.
Dividends
We decided not to declare an interim dividend nor propose a final dividend relating to the last financial year. This was due to the impact of COVID-19 on the group's cash flow driven by the duration and number of Primark store closures. The scale of this was demonstrated by the cash outflow of some GBP800m experienced in the period from March to May 2020. Uncertainty was particularly acute in April and again in November 2020 when the Board considered the payment of dividends.
The degree of uncertainty is now substantially lower than last year due to a large proportion of the UK adult population having been vaccinated and the successful reopening of Primark's English and Welsh stores. In the light of the net cash position before lease liabilities for the group of GBP705m reported at the half year and our cash flow projections, which demonstrate the substantial headroom available to the group, the Board has decided to declare an interim dividend for this financial year.
The dividend per share has been based on the adjusted earnings per share for the first half. The decision to repay the monies received from the job retention schemes has been taken after the half year and so the first half income statement does not include the repayment of the GBP79m in respect of that period. Therefore, for the purpose of this dividend calculation, a deduction of the repayment amount has been taken into account which on a pro-forma basis would reduce the adjusted earnings per share for the first half from 25.1p to 18.5p.
The Board has declared an interim dividend of 6.2 pence per share (2020: nil, 2019: 12.05 pence per share) totalling GBP49m. This will be paid on 9 July 2021 to shareholders registered at the close of business on 4 June 2021.
In due course, the Board will consider whether to pay a final dividend determined by the trading of the group in the second half and the outlook at that time.
ESG
It is our belief that businesses that have a sound culture and balance the interests of their many stakeholders will be both more sustainable and successful than businesses which do not. In addressing Environmental, Social and Governance (ESG) factors, every company has to prioritise and apply most resources to those ESG factors which are of greatest relevance to its businesses. Last month the group held the first in a series of investor events designed to set out our approach to this important topic. This first presentation is available on our website www.abf.co.uk and our second event will be held in the summer with the date to be confirmed in due course.
Outlook
Following the exceptional performance of our Grocery, Sugar, Agriculture and Ingredients businesses in the first half, we expect a softer performance in the second half. Full year profit at AB Sugar will be ahead of last year and in line with expectation. The profit recovery in Illovo primarily benefited the first half but further recovery in the second half will offset the one-time costs associated with the recommissioning of Vivergo, our bioethanol plant in Hull, UK. Full year profits at Ingredients and Agriculture are expected to be in line with last year with the impact of higher commodity costs affecting the second half. Grocery volumes are expected to be softer in the second half compared to the very strong retail channel sales experienced last year at this time and margins will be impacted by significantly higher US commodity vegetable oil costs.
In the first half further peaks of COVID-19 infections led to additional restrictions and store closures for Primark. At the half year, 22% of its selling space was open. With the reopening of stores in England and Wales last week, and expected reopenings in some markets over the coming weeks, we will be trading at the end of April from 68% of our retail selling space, which increases to 79% if stores with restricted trading are included. The reopening dates for France, the Republic of Ireland and the remaining stores in Germany are yet to be confirmed. We will increase our retail selling space with an additional nine stores opening in the second half. We continue to expect the profit for Primark to be somewhat lower than last year. The repayment of the job retention scheme monies will be treated as an expense in adjusted operating profit in the full year.
For the full year the recent strengthening of sterling against our major currencies would lead to a translation loss of some GBP30m and the group's effective tax rate is expected to be 35%.
Michael McLintock
Chairman
CHIEF EXECUTIVE'S STATEMENT
COVID-19
In the past twelve months we have lost 30 employees to COVID-19 and we mourn them all. I am proud of how our people have responded to the many challenges presented by the pandemic. We have provided safe and nutritious food under the most demanding of conditions and when permitted to be open, we have safely served millions of customers in our Primark stores.
Over the past year Primark stores have been closed for extended periods of time in most markets and our retail operations teams have had to react to changes at short notice. As a business we have faced huge uncertainty and our financial results starkly demonstrate the economic consequences. Primark has accessed the job retention schemes made available by governments in those markets where we operate. These funds provided income for employees while work was not available. Operationally these schemes have been critical in enabling us to preserve the skills and capability within the business and to preserve all the jobs in Primark.
Vaccinations are now underway, and progress has been made in many countries in controlling the spread of the virus. However the pandemic is still very much present in many parts of the world and will continue to affect our businesses for some time. We have seen a number of Primark stores reopen since the half year and we now expect to be trading from 68% of our retail selling space at the end of April, which rises to 79% if stores with restricted trading are also included. We are looking forward to the time when all restrictions have been lifted in our markets and all of our Primark stores are open once again.
Review of the first half
Group revenue of GBP6.3bn was 18% behind the same period last year at constant currency reflecting the material impact on Retail of the measures taken to control the spread of COVID-19. The majority of Primark stores were closed for more than half of this period. The decline in adjusted operating profit was a consequence of this and at GBP369m was 46% lower than last year.
Each of our food businesses: Sugar, Grocery, Agriculture and Ingredients delivered exceptional performances in this first half. In aggregate they delivered an increase in adjusted operating profit of 30%.
Sugar continued to deliver a much-improved performance driven in this first half by Illovo. Grocery delivered a strong increase in adjusted operating profit through a combination of successful new product launches and increased volumes through retail sales channels. Twinings Ovaltine is the biggest profit contributor to Grocery and delivered strong growth in this period. Our recent acquisitions have all performed well. Acetum, our Italian premium balsamic vinegar business, Yumi's in Australia and Anthony's Goods in the US are all thriving. Profits at both AB Agri and Ingredients were well ahead of last year. Agriculture delivered growth in its high value markets. AB Mauri experienced increased demand for yeast and bakery ingredients and our joint venture in China with Wilmar International is now operational. ABF Ingredients saw further growth in demand for its nutritional and pharmaceutical products.
Our businesses have worked hard to overcome the many challenges presented by COVID-19 over the past year. Throughout this period however, we have maintained a focus on developing plans for the future. Substantial new capital investment projects are underway in many of our businesses and in a difficult environment for opening stores Primark added 0.7m sq ft of retail selling space. Our ambition is now to accelerate the pace of new store openings, particularly in France, Spain, Italy, the US and eastern Europe. With our success over the last year in entering a number of new markets, as wide ranging as Poland and Florida, we are as convinced as we have ever been in the long-term growth prospects for Primark.
OPERATING REVIEW
Grocery
Ongoing businesses 2021 2020 Actual Constant fx fx Revenue GBPm 1,834 1,689 +9% +8% ------------------------------- ----- ----- ------ -------- Adjusted operating profit GBPm 199 189 +5% +6% ------------------------------- ----- ----- ------ --------
Grocery performance in the first half was strong. Revenue was significantly ahead of last year, 8% at constant currency, with increased retail sales more than offsetting weaker foodservice as a result of COVID-19. Adjusted operating profit was up by 6% at constant currency, driven by Twinings Ovaltine and our UK Grocery businesses.
Twinings and Ovaltine both had a strong first half despite weaker demand in out-of-home channels. Twinings revenue was ahead of last year, driven by growth in herbal and fruit infusions with an outstanding performance in France, which delivered a significant improvement in market share. Volume benefited from an increase in home consumption as a result of COVID-19, as well as successful new product launches. Ovaltine delivered growth in its major markets with a much-improved performance in Thailand and Brazil, further expansion in Switzerland and excellent progress in e-commerce and foodservice in China.
Jordans, Dorset Cereals, Ryvita, Patak's and Blue Dragon all delivered growth as they benefited from international development and significant increases in consumer demand through the retail channel. Consumer demand for home baking products in the UK continued and Silver Spoon was well ahead as a result. Revenue in Allied Bakeries was in line with last year and following our decision last year to exit the Co-op contract, cost reductions have been delivered to mitigate the loss in contribution. Sales at Acetum, our premium balsamic vinegar business in Modena, continued to progress as distribution gains and successful marketing increased the reach of the Mazzetti brand in many markets.
At ACH, our baking businesses, ACH Mexico, and Anthony's Goods all continued to deliver profit growth. However, the profit contribution from Mazola declined due to significantly higher commodity costs and reduced availability of corn oil in the US.
At George Weston Foods in Australia, our bakery business Tip Top continued to make strong progress with both market share gains and tight cost control. Successful new product launches and higher consumer demand in both the dips and vegetarian categories delivered substantially increased volumes at Yumi's. However, total operating profit at George Weston Foods was lower with reduced volumes in the Don meat business as a result of COVID-19. Weston Animal Nutrition has announced plans to build a large state-of-the-art feed mill in Western Australia that will provide additional capacity, reduce costs and will ensure that the latest strict feed safety and quality standards are met.
Sugar
2021 2020 Actual Constant fx fx Revenue GBPm 763 803 -5% +1% ------------------------------- ---- ---- ------ -------- Adjusted operating profit GBPm 66 12 +450% +633% ------------------------------- ---- ---- ------ --------
AB Sugar revenue was marginally ahead of last year in the first half at constant currency. Adjusted operating profit was significantly ahead, driven by Illovo, which benefited from increased domestic demand and higher prices. All businesses continued to deliver savings from the ongoing performance improvement programme.
UK sugar production for the 2020/21 campaign was 0.9m tonnes, well down on last year's 1.19m tonnes, due to wet weather conditions at the time of planting and the severe impact of virus yellows, which is transmitted by aphids, on the sugar beet. As a result of prolonged cold temperatures this February which substantially reduced the likelihood of virus yellows this summer, the conditional permit for the use of neonicotinoids was not needed. We continue to work to secure a neonicotinoid-free long-term solution in partnership with sugar beet growers and seed producers. Looking ahead to the 2021/22 campaign good progress was made in drilling the crop in March due to favourable planting conditions. Sugar production is expected to be just over 1.0m tonnes with a reduced planting area compensated by more normal yields.
The UK Department for Transport has announced an increase in the mandated inclusion levels of renewable ethanol in petrol moving from E5 to E10. We now plan to reopen the Vivergo facility in Hull, which uses domestic feed-grade wheat to produce bioethanol and supply to UK fuel blenders is expected from early 2022.
Sugar production in Spain this financial year is expected to be in line with last year. The beet campaigns have progressed successfully in the north and the area planted in the south was ahead again this year. The volume of raw sugar refined at the Guadalete facility is likely to be ahead of last year.
Illovo margins and adjusted operating profit were well ahead of last year. Major contributors to this improvement were a non-repeat of the restructuring costs taken last year, significant cost reductions this year from the performance improvement programme and a recovery from the operational difficulties experienced in Mozambique last year. We saw some recovery of sugar prices in many markets and exports benefited from the higher world sugar price. The sales mix improved with higher domestic volumes, including those in South Africa, and regional market volumes.
The campaign in China has now been completed with sugar production ahead of last year. Although revenue was lower in the first half, with reduced sales ahead of Chinese New Year, the profit impact has been partially offset by strong factory performances. Domestic sugar prices have risen, supported by higher world prices.
For the full year, our expectation remains for operating profit to be well ahead of last year with the major driver being the strong recovery in Illovo. We expect nonetheless a softer performance in the second half compared to last year with the earlier profit phasing by Illovo this year and the recommissioning costs for Vivergo now included in the second half.
Agriculture
2021 2020 Actual Constant fx fx Revenue GBPm 746 692 +8% +8% ------------------------------- ---- ---- ------ -------- Adjusted operating profit GBPm 19 16 +19% +27% ------------------------------- ---- ---- ------ --------
Revenue and adjusted operating profit were well ahead at AB Agri in the first half. The revenue growth was delivered by higher commodity prices and increase in feed volumes with notable growth in China. AB Neo, which specialises in feed for animals in the early stages of life, increased sales, particularly in Spain.
Adjusted operating profit was significantly ahead of last year. China delivered a much-improved performance with the benefit of a recovery from the effects of African Swine Fever, strong feed sales for other species, good procurement, the earlier phasing of sugar beet sales and the non-recurrence of restructuring costs taken last year. Frontier was ahead with a much-improved result from grain trading with increased commodity price volatility driven by reduced UK wheat availability, Brexit uncertainty and tightening global supply and demand.
Profit at AB Vista was ahead of last year, with improved feed enzyme volumes.
Our UK pig and poultry animal feed business has announced its intention to build a state-of-the-art animal feed mill in the East of England. This substantial investment will provide much needed capacity and will also ensure consistent quality at a lower cost.
Ingredients
Ongoing businesses 2021 2020 Actual Constant fx fx Revenue GBPm 735 737 in line +2% ------------------------------- ---- ---- ------- -------- Adjusted operating profit GBPm 78 62 +26% +28% ------------------------------- ---- ---- ------- --------
Adjusted operating profit was significantly ahead of last year driven by increased margins in both AB Mauri and ABF Ingredients.
AB Mauri benefited from increased sales and margins in yeast. Demand for retail yeast and retail bakery ingredients have been particularly high driven by the popularity of home baking. Our joint venture with Wilmar in China became fully operational in October and the business integration of our production and technology assets with Wilmar's wider distribution is progressing well. Despite the difficult conditions in South America, our businesses continue to make good progress with continued growth in Non-Dairy Toppings.
We have just opened our new Global Technology Centre in the Netherlands. This provides an upgraded international hub for the research and development of bakery solutions, as well as accommodating a pilot plant, laboratories and training facilities.
Profit growth at ABF Ingredients was driven by our nutritional and pharmaceutical lipids business and further good progress in yeast extracts.
Retail
2021 2020 Actual Constant fx fx Revenue GBPm 2,232 3,710 -40% -41% ------------------------------- ----- ----- ------ -------- Adjusted operating profit GBPm 43 441 -90% -90% ------------------------------- ----- ----- ------ --------
This period has been characterised by greater than expected restrictions on the ability of Primark to trade as a consequence of the measures taken by UK and European governments to limit the spread of COVID-19. The extent and timing of these restrictions have varied by market, with different approaches taken by each government. Nonetheless, at no time were all of our stores closed during this first half, unlike the first lockdown. The majority of our stores were closed during November and from December to the end of the period. We estimate the loss of sales while stores were closed to be some GBP1.1bn and when stores were open, the restrictions resulted in like-for-like sales of -15% compared to last year.
We consider this like-for-like performance to be strong and it should be seen in the context of lower category spend, lower footfall reflecting government advice to limit journeys from home and, in many eurozone markets, more severe trading restrictions while open. Like-for-like performance in the UK was -6% in the first half and -1% excluding four major city centre stores. Although stores remained open in a number of eurozone countries, in many cases they were subject to restrictions on trading hours and allowed travelling distances from home. In some cases, the range of merchandise we were permitted to sell was limited. Consequently, the like-for-like performance in the first half in the eurozone was -20%.
Performance has varied by store reflecting the prevailing circumstances of our customers including home working, less commuting and very little tourism. Like-for-like sales at our stores in retail parks were higher than a year ago, shopping centre and regional high street stores were lower than last year, and large destination city centre stores, which are heavily reliant on tourism and commuters, continued to see a significant decline in footfall. Excluding our 16 major city centre stores like-for-like sales were -11%.
Our US business performed well and is now profitable. No stores were required to close during the period and like-for-like sales performance was -11%, and -3% excluding the city centre Boston store, which we consider to be strong given that customers were limiting their journeys from home. We are particularly pleased with the strong trading at the recently opened stores of Sawgrass Mills Florida, American Dream New Jersey and, during March, State Street Chicago. Primark is clearly resonating with the US customer and brand awareness continues to build.
Sales in those stores open during the festive season reflected the excitement and broad appeal of the Primark offering. All Christmas and gifting lines were sold out and the performance for "stay at home" product categories was strong, especially in nightwear and loungewear. The level of markdown was substantially lower than the same period last year. Some GBP260m of autumn/winter regular seasonal stock, which was not delivered to the stores, will be held over and sold later this calendar year. All orders placed with our suppliers have been honoured.
For the period while stores were closed, measures to reduce operating costs included savings in logistics, store variable costs, central overheads and access to government job retention schemes. Combined these have been delivering savings of some 25%.
Retail selling space has increased by 0.3m sq ft since the last financial year end and at the half year, we had 390 stores with 16.5m sq ft of retail selling space which compared to 15.8m sq ft a year ago. Six new stores were opened in the period, Coquelles near Calais in France, Barcelona Sant Cugat and Espacio León in Spain, Sawgrass Mills Florida and American Dream New Jersey in the US and Roma Maximo in Italy. In addition, we relocated to larger premises in Southend UK. We had a very positive customer reaction to all these store openings and Roma Maximo in particular has traded well beyond expectation.
At the time of our last trading update on 25 February we were trading from 77 stores representing 22% of our retail selling space. Our stores in England and Wales reopened on 12 April, which we expect to be followed by our 20 stores in Scotland on 26 April, following the roadmap laid out by the UK authorities at the end of February. However, progress in the eurozone has been mixed. Some store reopening dates have been delayed and some stores have reopened albeit with restricted trading as the authorities have endeavoured to find ways to keep stores trading. A pre-booking system which controls the number of customers in the store at any one time, "click and meet", has been introduced in our reopened stores in the Netherlands, Germany and Belgium. This format allows trading to continue albeit at a much-reduced level, where otherwise stores might have been closed. As of the end of April, we expect 275 stores representing 68% of our retail selling space to be open, which increases to 79% of our retail selling space if stores with restricted trading are included.
On the basis of published expected reopening dates, our estimate for the sales which will be lost during the second half of our financial year in respect of the remaining periods of store closures is now some GBP700m.
Our stores in England and Wales delivered record sales in the first week after reopening. Over half of the stores broke their own sales records. After such a challenging year, this performance demonstrates that the relevance and appeal of our value-for-money offering continues to resonate strongly with customers. A notable feature of our performance after reopening in June and December was an increase in basket size compared to pre-COVID-19 levels. The performance last week was driven not only by increased basket sizes but more importantly by an improvement in footfall across all our high street, shopping centre and retail park locations to bring footfall for the whole estate back to pre- COVID-19 levels. Demand for nightwear, lingerie and leisurewear continued to be strong. However, compared to previous reopenings, this time we have seen excellent demand for our fashion ranges, particularly in womenswear. Customer response to the new trends for spring/summer, which have featured on our digital social media channels, has been very strong. Safety remains our priority so that colleagues and customers can return to our stores with confidence as we have maintained the high safety standards implemented over the past year. Extended opening hours were offered across most stores to help reduce queues, spread demand and give customers more time to shop safely.
We expect the period after the reopening of stores to be very cash generative as we sell the higher than normal inventory on hand. In line with our normal practice, we have placed substantial orders for merchandise for the coming autumn/winter season.
Status Country Reopening Stores Space Date ------------------ ------------ ---------- m sq ft ------------------ ------------ ---------- ------- ----- ---- Open by end of April 2021 Austria 3 0.1 Italy 5 0.3 Spain 44 1.8 US 12 0.6 Germany 1 0.1 Slovenia 12-Apr 1 0.0 England 12-Apr 153 6.3 Wales 12-Apr 8 0.3 Portugal 19-Apr 10 0.4 Poland 19-Apr 1 0.1 Belgium 26-Apr 8 0.4 Scotland 26-Apr 20 0.7 Northern Ireland 30-Apr 9 0.2 ------------------ ------------------------------- ---------- ------- ----- ---- Subtotal 275 70% 11.3 68% -------------------------------- ----------------- ---------- ------- ----- ---- Open restricted trading Italy 1 0.0 Spain 6 0.2 Netherlands 20 1.0 Germany 11 0.6 -------------------------------- ----------------- ---------- ------- ----- ---- Subtotal 38 10% 1.8 11% -------------------------------- ----------------- ---------- ------- ----- ---- Cumulative Total 313 80% 13.1 79% -------------------------------- ---------- ------- ----- ---- Opening dates to be confirmed Austria 2 0.1 France 20 1.0 Republic of Ireland 36 1.1 Germany 20 1.2 -------------------------------- ----------------- ---------- ------- ----- ---- Total 391 100% 16.5 100% -------------------------------- ----------------- ---------- ------- ----- ----
We expect to add a net 0.7m sq ft of selling space in this financial year. Following the opening of our store in Chicago in March we plan to open a further eight stores in the remainder of this financial year: Prague Wenceslas Square in Czechia, Poznań in Poland, Roma Est in Italy, three further stores in Spain, Tamworth in the UK and Rotterdam Forum, the Netherlands.
We continue to feel very optimistic about the opportunities for growth in the Primark business. We have a strong pipeline of store openings across a number of growth markets for the brand, with a particular focus on southern Europe and eastern Europe. We see further opportunity to expand our selling space in France, Spain, Portugal and Italy, where the Primark brand resonates strongly with consumers. We are opening three further stores in Spain this financial year, and a second store in Rome, the first of eight new store openings in Italy by 2022. We are in the early stages of our expansion into eastern Europe, with a second store to open in Poland and our first store in Czechia, as we build our pipeline of new stores across the region. In addition, we have plans to accelerate our growth in the US over the next five years. This builds on strong trading in our first twelve stores including a great response to our latest opening in Chicago last month. Further to the leases already announced for stores in Queens, New York and Green Acres Mall in Long Island, New York, we have also now signed a lease for a new store in Tysons Corner, just outside Washington DC. With more than 22 million highly engaged followers across the Primark social channels, digital plays an important role in our business, showcasing our latest ranges, building engagement and driving customers into store. As we look ahead, we are actively exploring ways to leverage our digital channels to support our plans for growing our store estate. This will involve investing in our website and digital marketing to help us target content and communications to customers.
George Weston
Chief Executive
PRINCIPAL RISKS AND UNCERTAINTIES
The delivery of our strategic objectives is dependent on effective risk management. There are a number of potential risks and uncertainties which could have a material impact on the group's performance and could cause actual results to differ materially from expected and historical results. Details of the principal risks facing the group's businesses at an operational level were included on pages 84 to 91 of the group's Annual Report and Accounts for the 52 weeks ended 12 September 2020, as part of the Strategic Report.
We have reassessed our principal risks and uncertainties as the COVID-19 pandemic continues to be a worldwide crisis and uncertainty remains in a number of our markets. Whilst the UK now has an advanced vaccination programme and a roadmap for exiting the COVID-19 lockdown, the outlook is currently more mixed in a number of countries in which we operate.
Effective communication both within our businesses and across the group has ensured that our food businesses continued to operate, providing safe, nutritious and affordable food to customers. Primark's leadership demonstrated agility in responding to store activities being restricted at short notice. In addition, their effective planning ensured that the UK stores were well prepared for a safe reopening from 12 April.
Throughout the pandemic, the Audit Committee, on behalf of the Board has provided ongoing support and challenge to management's processes and internal controls. Numerous lessons have been learnt and we have developed a flexible set of possible responses that are ready to be deployed in the event of further restrictions being imposed, whether that be locally, regionally or globally.
The purchase of merchandise denominated in foreign currencies by Primark is the most material currency transaction risk for the group but Primark is now fully bought for this financial year. Sterling has strengthened in recent months against a number of our major trading currencies, which will likely lead to a translation loss in the second half of the financial year.
The group purchases a wide range of commodities in the ordinary course of business. We constantly monitor the markets in which we operate and manage certain of these exposures with exchange traded contracts and hedging instruments. The commercial implications of commodity price movements are continuously assessed and, where appropriate, are reflected in the pricing of our products. Margins in our ACH oils business are likely to be adversely affected in the second half following a significant increase in US vegetable oil costs.
The number of employees working from home continues to be very high and are supported by effective collaboration tools with appropriate IT infrastructure and bandwidth. Remote working has increased the exposure to phishing attacks, which together with socially engineered fraud, have become more sophisticated. In response to this we have worked on increasing user awareness and have implemented higher levels of monitoring.
Our businesses were well prepared for the end of the Brexit transition period and we have seen no material disruption to our supply chains. We have experienced a small increase in the administrative costs of trading and in limited cases duties related to our trading with the EU.
Going concern
After making enquiries, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the Condensed Consolidated Interim Financial Statements. See note 9 to the Condensed Consolidated Interim Financial Statements.
CONDENSED CONSOLIDATED INCOME STATEMENT
For the 24 weeks ended 27 February 2021
24 weeks 24 weeks 52 weeks ended ended ended 27 February 29 February 12 September 2021 2020 2020 Continuing operations Note GBPm GBPm GBPm Revenue 1 6,313 7,646 13,937 Operating costs before exceptional items (5,996) (7,024) (13,046) Exceptional items 2 (25) (309) (156) -------------------------------------------------- ------ ------------------ ----------------- ------------------- 292 313 735 Share of profit after tax from joint ventures and associates 26 27 57 Profits less losses on disposal of non-current assets 2 9 18 -------------------------------------------------- ------ ------------------ ----------------- ------------------- Operating profit 320 349 810 -------------------------------------------------- ------ ------------------ ----------------- ------------------- Adjusted operating profit 1 369 682 1,024 Profits less losses on disposal of non-current assets 2 9 18 Amortisation of non-operating intangibles (24) (24) (59) Acquired inventory fair value adjustments (1) (8) (15) Transaction costs (1) (1) (2) Exceptional items (25) (309) (156) -------------------------------------------------- ------ ------------------ ----------------- ------------------- Profits less losses on sale and closure of businesses 6 5 (5) (14) -------------------------------------------------- ------ ------------------ ----------------- ------------------- Profit before interest 325 344 796 Finance income 5 7 11 Finance expense (52) (54) (124) Other financial (expense)/income (3) 1 3 -------------------------------------------------- ------ ------------------ ----------------- ------------------- Profit before taxation 275 298 686 -------------------------------------------------- ------ ------------------ ----------------- ------------------- Adjusted profit before taxation 319 636 914 Profits less losses on disposal of non-current assets 2 9 18 Amortisation of non-operating intangibles (24) (24) (59) Acquired inventory fair value adjustments (1) (8) (15) Transaction costs (1) (1) (2)
Exceptional items (25) (309) (156) Profits less losses on sale and closure of businesses 5 (5) (14) -------------------------------------------------- ------ ------------------ ----------------- ------------------- Taxation - UK (excluding tax on exceptional items) (18) (34) (69) - UK (on exceptional items) 3 25 1 - Overseas (excluding tax on exceptional items) (90) (103) (189) - Overseas (on exceptional items) 2 35 36 -------------------------------------------------- ------ ------------------ ----------------- ------------------- 3 (103) (77) (221) -------------------------------------------------- ------ ------------------ ----------------- ------------------- Profit for the period 172 221 465 -------------------------------------------------- ------ ------------------ ----------------- ------------------- Attributable to Equity shareholders 162 217 455 Non-controlling interests 10 4 10 -------------------------------------------------- ------ ------------------ ----------------- ------------------- Profit for the period 172 221 465 -------------------------------------------------- ------ ------------------ ----------------- ------------------- Basic and diluted earnings per ordinary share (pence) 4 20.5 27.5 57.6 Dividends per share paid and proposed for the period (pence) 5 6.2 nil nil
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 24 weeks ended 27 February 2021
52 weeks 24 weeks 24 weeks ended ended ended 12 September 27 February 29 February 2020 2021 2020 GBPm GBPm GBPm Profit for the period recognised in the income statement 172 221 465 Other comprehensive income Remeasurements of defined benefit schemes 448 17 (89) Deferred tax associated with defined benefit schemes (84) (3) 15 -------------------------------------------------- ------------------------- ------------------ ------------------- Items that will not be reclassified to profit or loss 364 14 (74) Effect of movements in foreign exchange (335) (283) (97) Net gain/(loss) on hedge of net investment in foreign subsidiaries 11 10 (3) Deferred tax associated with movements in foreign exchange - - 1 Reclassification adjustment for movements in foreign exchange on subsidiaries disposed (6) - - Movement in cash flow hedging position (26) 18 (15) Deferred tax associated with movement in cash flow hedging position (1) (3) - Share of other comprehensive income of joint ventures and associates (10) (6) (1) Effect of hyperinflationary economies 12 12 17 -------------------------------------------------- ------------------------- ------------------ ------------------- Items that are or may be subsequently reclassified to profit or loss (355) (252) (98) -------------------------------------------------- ------------------------- ------------------ ------------------- Other comprehensive income/(loss) for the period 9 (238) (172) -------------------------------------------------- ------------------------- ------------------ ------------------- Total comprehensive income/(loss) for the period 181 (17) 293 -------------------------------------------------- ------------------------- ------------------ ------------------- Attributable to Equity shareholders 177 (15) 296 Non-controlling interests 4 (2) (3) -------------------------------------------------- ------------------------- ------------------ ------------------- Total comprehensive income/(loss) for the period 181 (17) 293 -------------------------------------------------- ------------------------- ------------------ -------------------
CONDENSED CONSOLIDATED BALANCE SHEET
At 27 February 2021
27 February 29 February 12 September 2021 2020 2020 GBPm GBPm GBPm Non-current assets Intangible assets 1,570 1,631 1,629 Property, plant and equipment 5,417 5,620 5,651 Right-of-use assets 2,772 3,057 2,990 Investments in joint ventures 256 216 233 Investments in associates 59 54 56 Employee benefits assets 531 247 100 Deferred tax assets 217 183 212 Other receivables 58 50 45 ------------------------------------ ----------- ----------- ------------ Total non-current assets 10,880 11,058 10,916 ------------------------------------ ----------- ----------- ------------ Current assets Assets classified as held for sale - 42 43 Inventories 2,596 2,025 2,150 Biological assets 96 96 72 Trade and other receivables 1,381 1,379 1,328 Derivative assets 64 96 102 Current asset investments 33 29 32 Income tax 13 - 30 Cash and cash equivalents 1,112 1,320 1,996 ------------------------------------ ----------- ----------- ------------ Total current assets 5,295 4,987 5,753 ------------------------------------ ----------- ----------- ------------ Total assets 16,175 16,045 16,669 ------------------------------------ ----------- ----------- ------------ Current liabilities Liabilities classified as held for sale - (6) (5) Lease liabilities (290) (273) (297) Loans and overdrafts (213) (204) (154) Trade and other payables (1,931) (2,134) (2,316) Derivative liabilities (48) (40) (87) Income tax (101) (69) (171) Provisions (102) (108) (123) ------------------------------------ ----------- ----------- ------------ Total current liabilities (2,685) (2,834) (3,153) ------------------------------------ ----------- ----------- ------------ Non-current liabilities Lease liabilities (3,130) (3,279) (3,342) Loans (227) (344) (318) Provisions (47) (33) (41)
Deferred tax liabilities (300) (248) (210) Employee benefits liabilities (149) (194) (166) ------------------------------------ ----------- ----------- ------------ Total non-current liabilities (3,853) (4,098) (4,077) ------------------------------------ ----------- ----------- ------------ Total liabilities (6,538) (6,932) (7,230) ------------------------------------ ----------- ----------- ------------ Net assets 9,637 9,113 9,439 ------------------------------------ ----------- ----------- ------------ Equity Issued capital 45 45 45 Other reserves 175 175 175 Translation reserve (11) 136 323 Hedging reserve - 6 (7) Retained earnings 9,359 8,662 8,819 ------------------------------------ ----------- ----------- ------------ Total equity attributable to equity shareholders 9,568 9,024 9,355 Non-controlling interests 69 89 84 ------------------------------------ ----------- ----------- ------------ Total equity 9,637 9,113 9,439 ------------------------------------ ----------- ----------- ------------
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the 24 weeks ended 27 February 2021
24 weeks 24 weeks 52 weeks ended ended ended 27 February 29 February 12 September 2021 2020 2020 GBPm GBPm GBPm Cash flow from operating activities Profit before taxation 275 298 686 Profits less losses on disposal of non-current assets (2) (9) (18) Profits less losses on sale and closure of businesses (5) 5 14 Transaction costs 1 1 2 Finance income (5) (7) (11) Finance expense 52 54 124 Other financial expense/(income) 3 (1) (3) Share of profit after tax from joint ventures and associates (26) (27) (57) Amortisation 34 33 89 Depreciation (including depreciation of right-of-use assets and non-cash lease adjustments) 409 386 827 Impairment of property, plant & equipment and right-of-use assets - - 15 Exceptional items 25 309 156 Acquired inventory fair value adjustments 1 8 15 Effect of hyperinflationary economies 2 4 5 Net change in the fair value of current biological assets (32) (20) (1) Share-based payment expense 8 7 8 Pension costs less contributions 4 3 10 (Increase)/decrease in inventories (565) 29 199 (Increase)/decrease in receivables (113) 3 81 Decrease in payables (269) (318) (174) Purchases less sales of current biological assets - - (1) (Decrease)/increase in provisions (16) (14) 41 ----------------------------------------------------- ----------------------- ----------------- ------------------- Cash generated from operations (219) 744 2,007 Income taxes paid (160) (151) (254) ----------------------------------------------------- ----------------------- ----------------- ------------------- Net cash from operating activities (379) 593 1,753 ----------------------------------------------------- ----------------------- ----------------- ------------------- Cash flows from investing activities Dividends received from joint ventures and associates 27 29 43 Purchase of property, plant and equipment (263) (315) (561) Purchase of intangibles (44) (43) (61) Lease incentives received 12 12 35 Sale of property, plant and equipment 9 18 30 Purchase of subsidiaries, joint ventures and associates (39) (3) (16) Sale of subsidiaries, joint ventures and associates 34 2 2 Purchase of other investments (13) (2) (1) Interest received 6 6 11 ----------------------------------------------------- ----------------------- ----------------- ------------------- Net cash from investing activities (271) (296) (518) ----------------------------------------------------- ----------------------- ----------------- ------------------- Cash flows from financing activities Dividends paid to non-controlling interests (2) (4) (7) Dividends paid to equity shareholders - (271) (271) Interest paid (56) (42) (104) Repayment of lease liabilities (131) (115) (247) Increase/(decrease) in short-term loans 4 (18) (43) Decrease in long-term loans - - (2) Increase in current asset investments (2) (3) (2) Purchase of shares in subsidiary undertaking from non-controlling interests (23) (2) (2) ----------------------------------------------------- ----------------------- ----------------- ------------------- Net cash from financing activities (210) (455) (678) ----------------------------------------------------- ----------------------- ----------------- ------------------- Net (decrease)/increase in cash and cash equivalents (860) (158) 557 Cash and cash equivalents at the beginning of the period 1,909 1,358 1,358 Effect of movements in foreign exchange (23) (17) (6) ----------------------------------------------------- ----------------------- ----------------- ------------------- Cash and cash equivalents at the end of the period 1,026 1,183 1,909 ----------------------------------------------------- ----------------------- ----------------- -------------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 24 weeks ended 27 February 2021
Attributable to equity shareholders Non- controlling interests GBPm -------- ---------- Issued Other Translation Hedging Retained Total capital reserves reserve reserve earnings Total equity Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm Balance as at 12 September 2020 45 175 323 (7) 8,819 9,355 84 9,439 Total comprehensive income Profit for the period recognised in the income statement - - - - 162 162 10 172 Remeasurements of defined benefit schemes - - - - 448 448 - 448 Deferred tax associated with defined benefit schemes - - - - (84) (84) - (84) ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Items that will not be reclassified to profit or loss - - - - 364 364 - 364 Effect of movements in foreign exchange - - (329) - - (329) (6) (335) Net gain on hedge of net investment in foreign subsidiaries - - 11 - - 11 - 11 Movements in foreign exchange on businesses disposed - - (6) - - (6) - (6) Movement in cash flow hedging position - - - (26) - (26) - (26) Deferred tax associated with movements in cash flow hedging position - - - (1) - (1) - (1) Share of other comprehensive income of joint ventures and associates - - (10) - - (10) - (10) Effect of hyperinflationary economies - - - - 12 12 - 12 ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Items that are or may be subsequently reclassified to profit or loss - - (334) (27) 12 (349) (6) (355) ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Other comprehensive income - - (334) (27) 376 15 (6) 9 ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Total comprehensive income - - (334) (27) 538 177 4 181 ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Inventory cash flow hedge movements Gains transferred to cost of inventory - - - 34 - 34 - 34 ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Total inventory cash flow hedge movements - - - 34 - 34 - 34 ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Transactions with owners Net movement in own shares held - - - - 8 8 - 8 Dividends paid to non-controlling interests - - - - - - (2) (2) Acquisition and disposal of non-controlling interests - - - - (6) (6) (17) (23) ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Total transactions with owners - - - - 2 2 (19) (17) ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Balance as at 27 February 2021 45 175 (11) - 9,359 9,568 69 9,637 ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Balance as at 14 September 2019 45 175 409 (9) 8,832 9,452 98 9,550 ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- IFRS 16 opening balance adjustment - - - - (149) (149) (1) (150) ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Balance as at 15 September 2019 45 175 409 (9) 8,683 9,303 97 9,400 ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Total comprehensive income Profit for the period recognised in the income statement - - - - 217 217 4 221 Remeasurements of defined benefit schemes - - - - 17 17 - 17 Deferred tax associated with defined benefit schemes - - - - (3) (3) - (3) ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Items that will not be reclassified to profit or loss - - - - 14 14 - 14 Effect of movements in foreign exchange - - (277) - - (277) (6) (283) Net gain on hedge of net investment in foreign subsidiaries - - 10 - - 10 - 10 Movement in cash flow hedging position - - - 18 - 18 - 18 Deferred tax associated with movements in cash flow hedging position - - - (3) - (3) - (3) Share of other comprehensive income of joint ventures and associates - - (6) - - (6) - (6) Effect of hyperinflationary economies - - - - 12 12 - 12 ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Items that are or may be subsequently reclassified to profit or loss - - (273) 15 12 (246) (6) (252) ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Other comprehensive income - - (273) 15 26 (232) (6) (238) ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Total comprehensive income - - (273) 15 243 (15) (2) (17) ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Transactions with owners Dividends paid to equity
shareholders 5 - - - - (271) (271) - (271) Net movement in own shares held - - - - 7 7 - 7 Dividends paid to non-controlling interests - - - - - - (4) (4) Acquisition and disposal of non-controlling interests - - - - - - (2) (2) ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Total transactions with owners - - - - (264) (264) (6) (270) ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Balance as at 29 February 2020 45 175 136 6 8,662 9,024 89 9,113 ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONTINUED
For the 24 weeks ended 27 February 2021
Attributable to equity shareholders Non- controlling interests GBPm -------- ---------- Issued Other Translation Hedging Retained Total capital reserves reserve reserve earnings Total equity Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm Balance as at 14 September 2019 45 175 409 (9) 8,832 9,452 98 9,550 ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- IFRS 16 opening balance adjustment - - - - (149) (149) (1) (150) ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Balance as at 15 September 2019 45 175 409 (9) 8,683 9,303 97 9,400 ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Total comprehensive income Profit for the period recognised in the income statement - - - - 455 455 10 465 Remeasurements of defined benefit schemes - - - - (89) (89) - (89) Deferred tax associated with defined benefit schemes - - - - 15 15 - 15 ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Items that will not be reclassified to profit or loss - - - - (74) (74) - (74) ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Effect of movements in foreign exchange - - (83) (1) - (84) (13) (97) Net loss on hedge of net investment in foreign subsidiaries - - (3) - - (3) - (3) Deferred tax associated with movement in foreign exchange - - 1 - - 1 - 1 Movement in cash flow hedging position - - - (15) - (15) - (15) Share of other comprehensive income of joint ventures and associates - - (1) - - (1) - (1) Effect of hyperinflationary economies - - - - 17 17 - 17 ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Items that are or may be subsequently reclassified to profit or loss - - (86) (16) 17 (85) (13) (98) ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Other comprehensive income - - (86) (16) (57) (159) (13) (172) ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Total comprehensive income - - (86) (16) 398 296 (3) 293 ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Inventory cash flow hedge movements Gains transferred to cost of inventory - - - 18 - 18 - 18 ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Total inventory cash flow hedge movements - - - 18 - 18 - 18 ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Transactions with owners Dividends paid to equity shareholders 5 - - - - (271) (271) - (271) Net movement in own shares held - - - - 8 8 - 8 Deferred tax associated with share-based payments - - - - 1 1 - 1 Dividends paid to non-controlling interests - - - - - - (8) (8) Acquisition and disposal of non-controlling interests - - - - - - (2) (2) ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Total transactions with owners - - - - (262) (262) (10) (272) ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- ----------- Balance as at 12 September 2020 45 175 323 (7) 8,819 9,355 84 9,439 ------------------ ----- ----------- ----------- ----------- ---------- -------- ---------- ----------------- -----------
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
For the 24 weeks ended 27 February 2021
1. Operating segments
The group has five operating segments, as described below. These are the group's operating divisions, based on the management and internal reporting structure, which combine businesses with common characteristics, primarily in respect of the type of products offered by each business, but also the production processes involved and the manner of the distribution and sale of goods. The board is the chief operating decision-maker.
Inter-segment pricing is determined on an arm's length basis. Segment result is adjusted operating profit, as shown on the face of the consolidated income statement. Segment assets comprise all non-current assets except employee benefits assets and deferred tax assets, and all current assets except cash and cash equivalents, current asset investments and income tax assets. Segment liabilities comprise trade and other payables, derivative liabilities, provisions and lease liabilities.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets and expenses, cash, borrowings, employee benefits balances and current and deferred tax balances. Segment non-current asset additions are the total cost incurred during the period to acquire segment assets that are expected to be used for more than one year, comprising property, plant and equipment, right-of-use assets, operating intangibles and biological assets. Businesses disposed are shown separately and comparatives have been re-presented for businesses sold or closed during the period.
The group is comprised of the following operating segments:
Grocery The manufacture of grocery products, including hot beverages, sugar & sweeteners, vegetable oils, balsamic vinegars, bread & baked goods, chilled foods, cereals, ethnic foods and meat products, which are sold to retail, wholesale and foodservice businesses. Sugar The growing and processing of sugar beet and sugar cane for sale to industrial users and to Silver Spoon, which is included in the Grocery segment. Agriculture The manufacture of animal feeds and the provision of other products and services for the agriculture sector. Ingredients The manufacture of bakers' yeast, bakery ingredients, enzymes, lipids, yeast extracts, cereal specialities and pharmaceutical excipients. Retail Buying and merchandising value clothing and accessories through the Primark and Penneys retail chains.
Geographical information
In addition to the required disclosure for operating segments, disclosure is also given of certain geographical information about the group's operations, based on the geographical groupings: United Kingdom; Europe & Africa; The Americas; and Asia Pacific.
Revenues are shown by reference to the geographical location of customers. Profits are shown by reference to the geographical location of the businesses. Segment assets are based on the geographical location of the assets.
Revenue Adjusted operating profit ---------------- -------------- ---------------- ---------------------------------------------------- 24 weeks 24 weeks 52 weeks 24 weeks 24 weeks 52 weeks ended ended ended ended ended ended 27 29 12 27 29 12 September February February September February February 2020 2021 2020 2020 2021 2020 GBPm GBPm GBPm GBPm GBPm GBPm Operating segments Grocery 1,834 1,689 3,528 199 189 437 Sugar 763 803 1,594 66 12 100 Agriculture 746 692 1,395 19 16 43 Ingredients 735 737 1,503 78 62 147 Retail 2,232 3,710 5,895 43 441 362 Central - - - (37) (37) (63) ------------- ---------------- -------------- ---------------- ---------------- ------------- ------------------- 6,310 7,631 13,915 368 683 1,026 Businesses disposed: Grocery 2 10 13 1 (1) (1) Ingredients 1 5 9 - - (1) ------------- ---------------- -------------- ---------------- ---------------- ------------- ------------------- 6,313 7,646 13,937 369 682 1,024 ------------- ---------------- -------------- ---------------- ---------------- ------------- ------------------- Geographical information United Kingdom 2,186 2,881 5,054 99 254 312 Europe & Africa 2,180 2,882 5,048 69 241 298 The Americas 801 804 1,619 130 122 254 Asia Pacific 1,143 1,064 2,194 70 66 162 ------------- ---------------- -------------- ---------------- ---------------- ------------- ------------------- 6,310 7,631 13,915 368 683 1,026 Businesses disposed: Asia Pacific 3 15 22 1 (1) (2) ------------- ---------------- -------------- ---------------- ---------------- ------------- ------------------- 6,313 7,646 13,937 369 682 1,024 ------------- ---------------- -------------- ---------------- ---------------- ------------- -------------------
1. Operating segments for the 24 weeks ended 27 February 2021
Grocery Sugar Agriculture Ingredients Retail Central Total GBPm GBPm GBPm GBPm GBPm GBPm GBPm Revenue from continuing businesses 1,835 798 747 825 2,232 (127) 6,310 Internal revenue (1) (35) (1) (90) - 127 - ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- External revenue from continuing businesses 1,834 763 746 735 2,232 - 6,310 Businesses disposed 2 - - 1 - - 3 ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Revenue from external customers 1,836 763 746 736 2,232 - 6,313 ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Adjusted operating profit before joint ventures and associates 186 64 16 69 43 (37) 341 Share of profit after tax from joint ventures and associates 13 2 3 9 - - 27 Businesses disposed 1 - - - - - 1 ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Adjusted operating profit 200 66 19 78 43 (37) 369 Finance income 5 5 Finance expense - (1) - - (37) (14) (52) Other financial expense (3) (3) ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Adjusted profit before taxation 200 65 19 78 6 (49) 319 Profits less losses on disposal of non-current assets 1 - - 1 - - 2 Amortisation of non-operating intangibles (20) - (1) (3) - - (24) Acquired inventory fair value adjustments (1) - - - - - (1) Transaction costs - - - (1) - - (1) Exceptional items - - - - (21) (4) (25) Profits less losses on sale and closure of businesses - - - 5 - - 5 ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Profit before taxation 180 65 18 80 (15) (53) 275 Taxation (103) (103) ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Profit for the period 180 65 18 80 (15) (156) 172 ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Segment assets (excluding joint ventures and associates) 2,585 1,925 466 1,394 7,417 167 13,954 Investments in joint ventures and associates 36 27 139 113 - - 315
------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Segment assets 2,621 1,952 605 1,507 7,417 167 14,269 Cash and cash equivalents 1,112 1,112 Current asset investments 33 33 Income tax 13 13 Deferred tax assets 217 217 Employee benefits assets 531 531 Segment liabilities (609) (334) (153) (302) (3,924) (226) (5,548) Loans and overdrafts (440) (440) Income tax (101) (101) Deferred tax liabilities (300) (300) Employee benefits liabilities (149) (149) ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Net assets 2,012 1,618 452 1,205 3,493 857 9,637 ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Non-current asset additions 44 50 10 59 162 8 333 ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Depreciation (including depreciation of right-of-use assets and non- cash lease adjustments) (56) (47) (8) (27) (266) (5) (409) ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Amortisation (24) (1) (2) (4) (2) (1) (34) ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- 1. Operating segments for the 24 weeks ended 29 February 2020 Grocery Sugar Agriculture Ingredients Retail Central Total GBPm GBPm GBPm GBPm GBPm GBPm GBPm Revenue from continuing businesses 1,690 833 694 824 3,710 (120) 7,631 Internal revenue (1) (30) (2) (87) - 120 - ------------------------------------- ------- ------ ----------- ----------- ------- ------- ------- External revenue from continuing businesses 1,689 803 692 737 3,710 - 7,631 Businesses disposed 10 - - 5 - - 15 ------------------------------------- ------- ------ ----------- ----------- ------- ------- ------- Revenue from external customers 1,699 803 692 742 3,710 - 7,646 ------------------------------------- ------- ------ ----------- ----------- ------- ------- ------- Adjusted operating profit before joint ventures and associates 173 10 14 54 441 (37) 655 Share of profit after tax from joint ventures and associates 16 2 2 8 - - 28 Businesses disposed (1) - - - - - (1) ------------------------------------- ------- ------ ----------- ----------- ------- ------- ------- Adjusted operating profit 188 12 16 62 441 (37) 682 Finance income 7 7 Finance expense - (1) - - (37) (16) (54) Other financial income 1 1 ------------------------------------- ------- ------ ----------- ----------- ------- ------- ------- Adjusted profit before taxation 188 11 16 62 404 (45) 636 Profits less losses on disposal of non-current assets 9 - - - - - 9 Amortisation of non-operating intangibles (22) - - (2) - - (24) Acquired inventory fair value adjustments (8) - - - - - (8) Transaction costs (1) - - - - - (1) Exceptional items (25) - - - (284) - (309) Profits less losses on sale and closure of businesses (6) - - 1 - - (5) ------------------------------------- ------- ------ ----------- ----------- ------- ------- ------- Profit before taxation 135 11 16 61 120 (45) 298 Taxation (77) (77) ------------------------------------- ------- ------ ----------- ----------- ------- ------- ------- Profit for the period 135 11 16 61 120 (122) 221 ------------------------------------- ------- ------ ----------- ----------- ------- ------- ------- Segment assets (excluding joint ventures and associates) 2,674 2,120 444 1,444 7,158 156 13,996 Investments in joint ventures and associates 36 27 137 70 - - 270 ------------------------------------- ------- ------ ----------- ----------- ------- ------- ------- Segment assets 2,710 2,147 581 1,514 7,158 156 14,266 Cash and cash equivalents 1,320 1,320 Current asset investments 29 29 Deferred tax assets 183 183 Employee benefits assets 247 247 Segment liabilities (561) (394) (140) (296) (4,263) (219) (5,873) Loans and overdrafts (548) (548) Income tax (69) (69) Deferred tax liabilities (248) (248) Employee benefits liabilities (194) (194) ------------------------------------- ------- ------ ----------- ----------- ------- ------- ------- Net assets 2,149 1,753 441 1,218 2,895 657 9,113 ------------------------------------- ------- ------ ----------- ----------- ------- ------- ------- Non-current asset additions 55 35 11 54 251 8 414 Depreciation (including depreciation of right-of-use assets and non- cash lease adjustments) (52) (49) (8) (27) (246) (4) (386) ------------------------------------- ------- ------ ----------- ----------- ------- ------- ------- Amortisation (26) (1) (1) (3) (1) (1) (33) Impairment of property, plant and equipment on sale and closure of businesses (2) - - - - - (2)
1. Operating segments for the 52 weeks ended 12 September 2020
Grocery Sugar Agriculture Ingredients Retail Central Total GBPm GBPm GBPm GBPm GBPm GBPm GBPm Revenue from continuing businesses 3,530 1,658 1,398 1,685 5,895 (251) 13,915 Internal revenue (2) (64) (3) (182) - 251 - ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- External revenue from continuing businesses 3,528 1,594 1,395 1,503 5,895 - 13,915 Businesses disposed 13 - - 9 - - 22 ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Revenue from external customers 3,541 1,594 1,395 1,512 5,895 - 13,937 ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Adjusted operating profit before joint ventures and associates 404 98 33 132 362 (63) 966 Share of profit after tax from joint ventures and associates 33 2 10 15 - - 60 Businesses disposed (1) - - (1) - - (2)
------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Adjusted operating profit 436 100 43 146 362 (63) 1,024 Finance income 11 11 Finance expense (1) (3) - - (79) (41) (124) Other financial income 3 3 ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Adjusted profit before taxation 435 97 43 146 283 (90) 914 Profits less losses on disposal of non-current assets 9 7 1 (1) 3 (1) 18 Amortisation of non-operating intangibles (52) - (1) (6) - - (59) Acquired inventory fair value adjustments (15) - - - - - (15) Transaction costs - - - (2) - - (2) Exceptional items 5 (23) - - (138) - (156) Profits less losses on sale and closure of businesses (4) - - (4) - (6) (14) ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Profit before taxation 378 81 43 133 148 (97) 686 Taxation (221) (221) ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Profit for the period 378 81 43 133 148 (318) 465 ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Segment assets (excluding joint ventures and associates) 2,689 1,893 429 1,470 7,372 155 14,008 Investments in joint ventures and associates 51 27 136 75 - - 289 ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Segment assets 2,740 1,920 565 1,545 7,372 155 14,297 Cash and cash equivalents 1,998 1,998 Current asset investments 32 32 Income tax 30 30 Deferred tax assets 212 212 Employee benefits assets 100 100 Segment liabilities (637) (351) (147) (334) (4,523) (219) (6,211) Loans and overdrafts (472) (472) Income tax (171) (171) Deferred tax liabilities (210) (210) Employee benefits liabilities (166) (166) ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Net assets 2,103 1,569 418 1,211 2,849 1,289 9,439 ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Non-current asset additions 104 88 21 97 476 13 799 Depreciation (including depreciation of right-of-use assets and non- cash lease adjustments) (109) (85) (16) (57) (546) (14) (827) ------------------------------------- ------- ------- ----------- ----------- ------- ------- -------- Amortisation (62) (2) (2) (7) (14) (2) (89) Impairment of property, plant & equipment and right-of-use assets (15) - - - - - (15) Impairment of property, plant and equipment on sale and closure of businesses (1) - - (1) - - (2) Impairment of right-of-use assets on sale and closure of businesses - - - (2) - - (2) ------------------------------------- ------- ------- ----------- ----------- ------- ------- --------
2021 half year
During the period, Primark received GBP79m from government job retention schemes in the UK and Europe. This was recorded as a reduction to staff costs.
2020 full year
In the prior year, Primark received GBP98m from government job retention schemes in the UK and Europe, all of which arose in the second half of the year. This was recorded as a reduction to staff costs.
1. Operating segments - geographical information
For the 24 weeks ended 27 February 2021
United Europe The Americas Asia Kingdom & Africa GBPm Pacific Total GBPm GBPm GBPm GBPm Revenue from external customers 2,186 2,180 801 1,146 6,313 Segment assets 5,577 6,020 1,214 1,458 14,269 Non-current asset additions 98 164 32 39 333 Depreciation (including depreciation of right-of-use assets and non-cash lease adjustments) (144) (203) (30) (32) (409) Amortisation (17) (10) (4) (3) (34) Acquired inventory fair value adjustments - (1) - - (1) Exceptional items (18) (7) - - (25) Transaction costs - - - (1) (1)
For the 24 weeks ended 29 February 2020
United Europe The Americas Asia Kingdom & Africa GBPm Pacific Total GBPm GBPm GBPm GBPm Revenue from external customers 2,881 2,882 804 1,079 7,646 Segment assets 5,458 6,050 1,328 1,430 14,266 Non-current asset additions 106 208 64 36 414 Depreciation (including depreciation of right-of-use assets and non-cash lease adjustments) (138) (183) (33) (32) (386) Amortisation (20) (7) (3) (3) (33) Acquired inventory fair value adjustments - (7) (1) - (8) Exceptional items (151) (150) (8) - (309) Transaction costs (1) - - - (1) Impairment of property, plant and equipment on sale and closure of businesses - - - (2) (2)
For the 52 weeks ended 12 September 2020
United Europe The Americas Asia Kingdom & Africa GBPm Pacific Total GBPm GBPm GBPm GBPm Revenue from external customers 5,054 5,048 1,619 2,216 13,937 Segment assets 5,249 6,263 1,314 1,471 14,297 Non-current asset additions 197 406 128 68 799 Depreciation (including depreciation of right-of-use assets and non-cash lease adjustments) (292) (397) (70) (68) (827) Amortisation (48) (27) (6) (8) (89) Acquired inventory fair value adjustments - (15) - - (15) Exceptional items (4) (108) (44) - (156) Transaction costs - (1) - (1) (2) Impairment of property, plant & equipment and right-of-use assets (15) - - - (15) Impairment of property, plant and equipment on sale and closure of businesses - - - (2) (2) Impairment of right-of-use assets on sale and closure of businesses - - - (2) (2)
The group's operations in the following countries met the criteria for separate disclosure:
Revenue Non-current assets 52 weeks 24 weeks 24 weeks 52 weeks 24 weeks 24 weeks ended ended ended ended ended ended 12 27 February 29 February 12 September 27 February 29 February September 2021 2020 2020 2021 2020 2020 GBPm GBPm GBPm GBPm GBPm GBPm Australia 601 564 1,161 545 503 558 Spain 541 673 1,097 776 834 849 United States 530 526 1,055 651 740 727 -------------
All prior year segment disclosures are stated before reclassification of assets and liabilities classified as held for sale
2. Exceptional items
2021
Exceptional items of GBP25m for the 24 weeks ended 27 February 2021 comprise an inventory charge of GBP21m in Primark, which relates to certain autumn/winter seasonal items already on display in closed stores and which could not be sold before the end of the season. This has been cleared from stores to allow spring/summer stock to be displayed as our stores prepare to reopen, and an exceptional provision of GBP21m has been charged to reflect the write-down of this inventory to net realisable value. The exceptional items also include a GBP4m pension service cost taken for members of the Company's UK defined benefit pension scheme following a further High Court ruling on 20 November 2020 regarding the equalisation of Guaranteed Minimum Pensions.
2020
Exceptional items of GBP156m for the 52 weeks ended 12 September 2020 included impairments of GBP116m in property, plant and equipment and right-of-use assets at Primark, an impairment of GBP23m in goodwill relating to Azucarera, charges of GBP22m relating to inventory in Primark and a GBP5m gain on closure of our Speedibake Wakefield factory.
Following the successful downsizing of three stores in the US and three stores in Germany, plans for several more stores in those markets resulted in non-cash write-downs of GBP34m against property, plant and equipment and GBP82m against right-of-use assets.
In the light of the beet volumes contracted by Azucarera in the second crop year after reducing the beet price paid to farmers, we revised our forecasts for this business. This resulted in a GBP23m non-cash write-down of goodwill recorded in the Sugar and Europe & Africa operating segments.
Our prior year half year results were announced on 21 April 2020 and included an exceptional inventory impairment charge of GBP248m and an onerous contract provision of GBP36m. At the time of the interim announcement, the dates for the reopening of Primark stores were not known and more than half of the impairment charge related to stock already on display in the closed stores. The earlier reopening of the stores and subsequent successful trading of the spring/summer inventory avoided the need for this provision. At the year-end a markdown provision of GBP22m was created for inventory stored on our behalf by suppliers for longer than usual as a result of the pandemic.
Our Speedibake Wakefield factory was destroyed by fire in February 2020 and an exceptional charge of GBP25m was recognised in the prior year half year results. This comprised an GBP18m non-cash write-down of property, plant and equipment, a GBP1m provision against inventory and GBP6m of closure costs. Net insurance proceeds of GBP30m were received in the second half of last year, more than offsetting the exceptional charge recorded in the first half. The prior year full year position was an exceptional gain of GBP5m recorded in the Grocery and United Kingdom operating segments.
3. Income tax expense
24 weeks 24 weeks 52 weeks ended ended ended 27 February 29 February 12 September 2021 2020 2020 GBPm GBPm GBPm Current tax expense UK - corporation tax at 19.00% (2020 - 18.08%) 12 9 57 Overseas - corporation tax 98 72 203 UK - under provided in prior periods - - 3 Overseas - over provided in prior periods (2) - (4) ----------------- 108 81 259 Deferred tax expense UK deferred tax 3 - 5 Overseas deferred tax (8) (4) (53) UK - under provided in prior periods - - 3 Overseas - under provided in prior periods - - 7 (5) (4) (38) ----------------- Total income tax expense in income statement 103 77 221 ----------------- Reconciliation of effective tax rate Profit before taxation 275 298 686 Less share of profit after tax from joint ventures and associates (26) (27) (57) ----------------- Profit before taxation excluding share of profit after tax from joint ventures and associates 249 271 629 ----------------- Nominal tax charge at UK corporation tax rate of 19.00% (2020 - 18.08%) 47 49 120 Effect of higher and lower tax rates on overseas earnings 26 9 18 Effect of changes in tax rates on income statement - - 13 Expenses not deductible for tax purposes 26 18 54 Disposal of assets covered by tax exemptions or unrecognised capital losses - - 1 Deferred tax not recognised 6 1 6 Adjustments in respect of prior periods (2) - 9 ----------------- 103 77 221 ----------------- Income tax recognised directly in equity Deferred tax associated with defined benefit schemes 84 3 (15) Deferred tax associated with share-based payments - - (1) Deferred tax associated with movement in cash flow hedging position 1 3 - Deferred tax associated with movements in foreign exchange - - (1) 85 6 (17) -----------------
A UK corporation tax rate of 19% (effective 1 April 2020) was substantively enacted on 17 March 2020 and UK income tax and deferred tax has accordingly been calculated at 19%. On 3 March 2021, the UK Government announced that the UK corporation tax rate applicable from 1 April 2023 will increase to 25% from 19%. The change was not substantively enacted at the balance sheet date and hence the impact has not been reflected in the measurement of deferred tax balances at the period end, but it is anticipated that substantive enactment will occur later in the year. The group has calculated that the impact of applying the rate change to the opening deferred tax balance sheet would increase the net deferred tax liability by approximately GBP23m. Whilst this will increase the group's total effective tax rate, it is expected to have a minimal impact on the group's adjusted effective tax rate for 2021.
In April 2019 the European Commission published its decision on the Group Financing Exemption in the UK's controlled foreign company legislation. The Commission found that the UK law did not comply with EU State Aid rules in certain circumstances. The group has arrangements that may be impacted by this decision as might other UK-based multinational groups that had financing arrangements in line with the UK's legislation in force at the time. The group has appealed against the European Commission's decision, as have the UK Government and a number of other UK companies. We have calculated our maximum potential liability to be GBP27m, however we do not consider that any provision is required in respect of this amount based on our current assessment of the issue. Following receipt of charging notices from HM Revenue & Customs ('HMRC') at the end of February, we made payment to HMRC in March. However, receipt of the charging notices does not change our assessment of the maximum potential liability nor our assessment that no provision is required in respect of this amount. We will continue to consider the impact of the Commission's decision on the group and the potential requirement to record a provision.
4. Earnings per share
24 weeks ended 24 weeks 52 weeks 27 February ended ended 2021 29 February 12 September pence 2020 2020 pence pence Adjusted earnings per share 25.1 61.8 81.1 Disposal of non-current assets 0.3 1.1 2.3 Sale and closure of businesses 0.6 (0.6) (1.8) Acquired inventory fair value adjustments (0.1) (1.0) (1.9) Transaction costs (0.1) (0.1) (0.3) Exceptional items (3.2) (39.1) (19.7) Tax effect on above adjustments 0.3 7.8 4.6 Amortisation of non-operating intangibles (3.0) (3.0) (7.5) Tax credit on non-operating intangibles amortisation and goodwill 0.6 0.6 0.8 ------------ Earnings per ordinary share 20.5 27.5 57.6 ------------
5. Dividends
24 weeks ended 24 weeks 52 weeks 27 February ended ended 2021 29 February 12 September pence 2020 2020 pence pence 2019 final - 34.30 34.30 - 34.30 34.30 ------------ 24 weeks ended 24 weeks 52 weeks 27 February ended ended 2021 29 February 12 September GBPm 2020 2020 GBPm GBPm 2019 final - 271 271 - 271 271 ------------
No 2020 interim dividend was paid in the prior year and no 2020 final dividend was paid this year.
The 2021 interim dividend of 6.2p per share, total value of GBP49m, will be paid on 9 July 2021 to shareholders registered at the close of business on 4 June 2021.
6. Acquisitions and disposals
Acquisitions
2021
During the period the group contributed GBP39m to the bakery ingredients joint venture in China with Wilmar International. There were no other acquisitions in the first half.
2020
In December 2019, the group's Grocery business in the UK acquired Al'Fez, a Middle Eastern food brand with customers in the UK and Europe. In the second half of the year the group acquired two small Agriculture businesses in Europe and the group's Ingredients business acquired Larodan, a Swedish manufacturer and international marketer of state-of-the-art, high-purity research-grade lipids that will expand our research and product development capabilities to better serve the pharmaceutical, nutritional and industrial market sectors.
Total consideration for these acquisitions was GBP19m, comprising GBP16m cash consideration and GBP3m deferred consideration. Net assets acquired comprised non-operating intangible assets of GBP15m, which were recognised with their related deferred tax of GBP3m, and GBP1m of other operating assets. Goodwill of GBP6m resulted from these acquisitions.
Disposals
2021
In the first half of 2021 the group sold the businesses classified as a disposal group and held for sale at the previous year end, into the yeast and bakery ingredients joint venture in China with Wilmar International. Cash proceeds amounted to GBP34m with the purchaser also assuming GBP11m of debt, resulting in total proceeds of GBP45m. Net assets disposed were GBP43m. Provisions for associated restructuring costs were GBP6m, with a GBP8m gain on the recycling of foreign exchange differences and foreign exchange on the cash proceeds. The gain on disposal was GBP4m.
Closure provisions of GBP1m relating to disposals made in previous years were also no longer required and were released to sale and closure of business in the Asia Pacific and Ingredients segments.
2020
In 2020 the group announced the closure of the Cake business in the Grocery segment in Australia and the Jasol New Zealand business in the Ingredients segment, with GBP10m included in loss on closure of business, comprising GBP2m non-cash impairment of property, plant and equipment, GBP2m non-cash impairment of right-of-use assets and GBP6m of restructuring provisions.
The group also sold a small business in China, reported within the Asia Pacific and Grocery segments. Cash proceeds amounted to GBP2m on GBP1m of net assets disposed, resulting in a pre-tax profit on disposal of GBP1m.
Warranty provisions of GBP1m relating to disposals made in previous years were no longer required and were released to sale and closure of business in the Americas and Ingredients segments. The group also charged a GBP6m onerous lease provision to sale and closure of business (in the Central and UK segments) in respect of guarantees given on property leases assigned to third parties that the group expects to be required to honour.
7. Analysis of net debt
At 12 September At 27 2020 New leases Exchange February GBPm Cash flow Disposals and non-cash adjustments 2021 GBPm GBPm items GBPm GBPm GBPm Cash at bank and in hand, cash equivalents and overdrafts 1,909 (860) - - (23) 1,026 Current asset investments 32 2 - - (1) 33 Short-term loans (65) (4) 11 (72) 3 (127) Long-term loans (318) - - 72 19 (227) ----------- Net cash before lease liabilities 1,558 (862) 11 - (2) 705 ----------- Lease liabilities (3,639) 131 - (54) 142 (3,420) (2,081) (731) 11 (54) 140 (2,715) -----------
8. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Full details of the group's other related party relationships, transactions and balances are given in the group's financial statements for the 52 weeks ended 12 September 2020. There have been no material changes in these relationships in the 24 weeks ended 27 February 2021 or up to the date of this report. No related party transactions have taken place in the first 24 weeks of the current financial year that have materially affected the financial position or the performance of the group during that period.
9. Basis of preparation
Associated British Foods plc ('the Company') is a company domiciled in the United Kingdom. The condensed consolidated interim financial statements of the Company for the 24 weeks ended 27 February 2021 comprise those of the Company and its subsidiaries (together referred to as 'the group') and the group's interests in joint ventures and associates.
The consolidated financial statements of the group for the 52 weeks ended 12 September 2020 are available upon request from the Company's registered office at 10 Grosvenor Street, London, W1K 4QY or at www.abf.co.uk.
The condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements for the 52 weeks ended 12 September 2020.
After making enquiries, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the condensed consolidated interim financial statements.
The directors have taken into consideration that restrictions on trading activity and the movement of people applied by most governments to contain the spread of COVID-19 since March last year have had a severe effect on economic activity. The directors have reviewed a detailed cash flow forecast to the end of the 2022 financial year which takes into account conservative judgements where there is continued uncertainty.
At the half year, the group had net cash before lease liabilities of GBP705m and had an undrawn, committed revolving credit facility (RCF) of GBP1,088m for the coming year. The directors have satisfied themselves that the RCF is available throughout the going concern period having assessed the group's projected compliance with the terms and covenants of this facility. Last year the group's headroom was increased following confirmation by the Bank of England of our eligibility to access funding under its COVID Corporate Financing Facility (CCFF). This facility was not utilised at any time, and we have now confirmed with the Bank of England that this eligibility has now lapsed. As at the date of approval of these interim results, the group has available central cash on hand of GBP622m.
In reviewing the cash flow forecast for the coming year, the directors reviewed the trading of the non-Primark businesses and the cash outflows for Primark under the base scenario of the likely reopening dates of those stores still closed. The directors have a thorough understanding of the risks, sensitivities and judgements included in these elements of the cash flow forecasts and have a high degree of confidence in these cash flows. The main uncertainties in the year ahead were considered to be the length of time for which the Primark stores might be closed and the measures and trading restrictions imposed by different governments, as well as the strength of the trading in our stores as they reopen. In this regard, the base forecast assumes that all Primark stores will be open from May this year until the end of this financial year and it also assumes the possibility of a number of regional lockdowns impacting the estate during the first half of 2022. This cash flow has been stress tested assuming that half of the Primark estate is closed for all of the first half of next year which is in line with the store closures experienced during the first half of this financial year.
Under both of these scenarios the group has a forecast net cash position throughout the 18 months and forecast compliance with the covenants in the debt facilities. In addition, we also considered the circumstances which would be needed to exhaust the group's cash resources over the assessment period - a reverse stress test. This would indicate that all Primark stores would need to remain completely closed for more than five months, including the peak Christmas sales period, without management taking any mitigating actions. The likelihood of these circumstances is remote for two reasons. Firstly, over such a long period, management could take substantial mitigating actions, such as cost cutting measures, accessing government job retention schemes, and reducing capital investment. Secondly, we have seen governments develop a number of measures to contain the virus, including widespread vaccination programmes, which make it likely that any future lockdowns would be regional.
Headroom throughout the period is substantial, the directors did not consider the need for any mitigating actions and so the likelihood of the headroom being exhausted was considered remote.
The group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Operating Review. Note 26 on pages 176 to 187 of the 2020 Annual Report provides details of the group's policy on managing its financial and commodity risks.
The 24 week period for the condensed consolidated interim financial statements of the Company means that the second half of the year is usually a 28 week period, and the two halves of the reporting year are therefore not of equal length. For the Retail segment, Christmas, falling in the first half of the year, is a particularly important trading period. For the Sugar segment, the balance sheet, and working capital in particular, is strongly influenced by seasonal growth patterns for both sugar beet and sugar cane, which vary significantly in the markets in which the group operates.
The condensed consolidated interim financial statements are unaudited but have been subject to an independent review by the auditor and were approved by the board of directors on 20 April 2021. They do not constitute statutory financial statements as defined in section 434 of the Companies Act 2006. The comparative figures for the 52 weeks ended 12 September 2020 have been abridged from the group's 2020 financial statements and are not the Company's statutory financial statements for that period. Those financial statements have been reported on by the Company's auditor for that period and delivered to the Registrar of Companies. The report of the auditor was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
This Interim Results Announcement has been prepared solely to provide additional information to shareholders as a body, to assess the group's strategies and the potential for those strategies to succeed. This Interim Results Announcement should not be relied upon by any other party or for any other purpose.
10. Significant accounting policies
Except where detailed otherwise, the accounting policies applied by the group in these condensed consolidated interim financial statements are substantially the same as those applied by the group in its consolidated financial statements for the 52 weeks ended 12 September 2020 including for derivatives and current biological assets, which are recognised in the balance sheet at fair value and fair value less costs to sell, respectively. The methodology for selecting assumptions underpinning the fair value calculations has not changed since 12 September 2020.
New accounting standards
The following accounting standards and amendments were adopted during the period and had no significant impact on the group:
-- Amendments to IFRS 3 Definition of a Business -- Amendments to IAS 1 and IAS 8 Definition of Material -- Amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate Benchmark Reform
Accounting standards not yet applicable
The group is assessing the impact of the following standards, interpretations and amendments that are not yet effective. Where already endorsed by the EU (before 31 December 2020) or by the UK Endorsement Board (UKEB) (from 1 January 2021), these changes will be adopted on the effective dates noted. Where not yet endorsed, the adoption date is less certain:
-- IFRS 17 Insurance Contracts effective 2022 financial year (not yet endorsed by the UKEB)
-- Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current effective 2023 financial year.
11. Accounting estimates and judgements
The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing the condensed consolidated interim financial statements, the significant judgements made by management in applying the group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the 52 weeks ended 12 September 2020.
12. Alternative performance measures
In the reporting of financial information, the Board uses various Alternative Performance Measures (APMs) which they believe 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. As they are not defined by IFRS, they may not be directly comparable with other companies who use similar measures.
APMs are also used 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, APMs are used by the Board and management for performance analysis, planning, reporting and incentive-setting purposes.
Closest APM equivalent Definition/purpose Reconciliation/calculation IFRS measure Like-for-like No direct The like-for-like sales metric enables Consistent with sales equivalent measurement of the performance of the definition given our 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, extension or downsizes, for cannibalisation by new stores, or for the timing of national or bank holidays. It is measured against comparable trading days in each year. Two year No direct The like-for-like sales metric expressed Consistent with like- equivalent over two years enables measurement the definition given for-like of the performance of our retail stores sales compared to our experience in 2019, which was before any of the economic effects of COVID-19. It is calculated as described above for like-for-like sales, but with 2019 data as the comparator. Adjusted No direct Adjusted operating (profit) margin Reconciliation/calculation operating equivalent is adjusted operating profit as a see Note A below (profit) percentage of revenue. margin Adjusted Operating Adjusted operating profit is stated A reconciliation operating profit before amortisation of non-operating of this measure profit intangibles, transaction costs, amortisation is provided on the of fair value adjustments made to face of the condensed acquired inventory, profits less losses consolidated income on disposal of non-current assets statement and by and exceptional items. operating segment Items defined above which arise in in note 1 the group's joint ventures and associates are also treated as adjusting items for the purposes of adjusted operating profit. Adjusted Profit Adjusted profit before tax is stated A reconciliation profit before before amortisation of non-operating of this measure before tax intangibles, transaction costs, amortisation is provided on the tax of fair value adjustments made to face of the condensed acquired inventory, profits less losses consolidated income on disposal of non-current assets, statement and by exceptional items and profits less operating segment losses on sale and closure of businesses. in note 1 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 Adjusted earnings per share are stated A reconciliation earnings per share before amortisation of non-operating of adjusted earnings per share intangibles, transaction costs, amortisation per share is provided of fair value adjustments made to in note 4 acquired inventory, profits less losses on disposal of non-current assets, exceptional items and profits less losses on sale and closure of businesses together with the related tax effect. Items defined above which arise in the group's joint ventures and associates are also treated as adjusting items for the purposes of adjusted earnings per share. Exceptional No direct Exceptional items are items of income Exceptional items items equivalent and expenditure which are material are included on and unusual in nature and are considered the face of the of such significance that they require consolidated income separate disclosure on the face of statement with further the income statement. detail provided in note 2 Closest APM equivalent Definition/purpose Reconciliation/calculation IFRS measure Constant Revenue Constant currency measures are derived Reconciliation/calculation currency and adjusted by translating the relevant prior see Note B below operating year figure at current year average profit exchange rates, except for countries (non-IFRS) where CPI has escalated to extreme measure levels, in which case actual exchange rates are used. There are currently two countries where the group has operations in this position - Argentina and Venezuela. Effective Income The effective tax rate is the tax Whilst the effective tax rate tax expense charge for the year expressed as a tax rate is not disclosed, percentage of profit before tax. a reconciliation of the tax charge on profit before tax at the UK corporation tax rate to the actual tax charge is provided in note 3 Adjusted No direct The adjusted effective tax rate is The tax impact of effective equivalent the tax charge for the year excluding reconciling items tax rate tax on adjusting items expressed as between profit before a percentage of adjusted profit before tax and adjusted tax. profit before tax is shown in note 4 Dividend No direct Dividend cover is the ratio of adjusted Reconciliation/calculation cover equivalent earnings per share to dividends per see Note C below share relating to the year. Capital No direct Capital expenditure is a measure of Reconciliation/calculation expenditure equivalent investment each year in non-current see Note D below assets in existing businesses. It comprises cash outflows from the purchase of property, plant and equipment and intangibles. Gross No direct Gross investment is a measure of investment Reconciliation/calculation investment equivalent each year in non-current assets of see Note E below existing businesses and acquisitions of new businesses. It includes capital expenditure (see above) as well as cash outflows from the purchase of subsidiaries, joint ventures and associates, additional shares in subsidiary undertakings from non-controlling interests and other investments, as well as net debt assumed in acquisitions. Net cash/debt No direct This measure comprises cash, cash A reconciliation before equivalent equivalents and overdrafts, current of this measure is lease asset investments and loans. in note 7 liabilities Net cash/debt No direct This measure comprises cash, cash A reconciliation including equivalent equivalents and overdrafts, current of this measure is
lease asset investments, loans and lease in note 7 liabilities liabilities. (Average) No direct Capital employed is derived from the Consistent with the capital equivalent management balance sheet and does definition given employed not 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 No direct The return on (average) capital employed Consistent with the on (average) equivalent measure divides adjusted operating definition given capital profit by average capital employed. employed Also referred to as ROCE and ROACE. (Average) No direct Working capital is derived from the Consistent with the working equivalent management balance sheet and does definition given capital not 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 the group is calculated by averaging the working capital for each period of the financial year based on the reporting calendar of each business. (Average) No direct This measure expresses average working Consistent with the working equivalent capital as a percentage of revenue. definition given capital as a percentage of revenue
Note A
Central and disposed Grocery Sugar Agriculture Ingredients Retail businesses Total GBPm GBPm GBPm GBPm GBPm GBPm GBPm 24 weeks ended 27 February 2021 External revenue from continuing businesses 1,834 763 746 735 2,232 3 6,313 Adjusted operating profit 199 66 19 78 43 (36) 369 Adjusted operating margin % 10.9% 8.7% 2.5% 10.6% 1.9% 5.8% 24 weeks ended 29 February 2020 External revenue from continuing businesses 1,689 803 692 737 3,710 15 7,646 Adjusted operating profit 189 12 16 62 441 (38) 682 Adjusted operating margin % 11.2% 1.5% 2.3% 8.4% 11.9% 8.9%
Note B
Disposed Grocery Sugar Agriculture Ingredients Retail businesses Total GBPm GBPm GBPm GBPm GBPm GBPm GBPm 24 weeks ended 27 February 2021 External revenue from continuing businesses at actual rates 1,834 763 746 735 2,232 3 6,313 24 weeks ended 29 February 2020 External revenue from continuing businesses at actual rates 1,689 803 692 737 3,710 15 7,646 Impact of foreign exchange 12 (47) 1 (14) 88 1 41 External revenue from continuing businesses at constant currency 1,701 756 693 723 3,798 16 7,687 % change at constant currency +8% +1% +8% +2% -41% -18% Central and disposed Grocery Sugar Agriculture Ingredients Retail businesses Total GBPm GBPm GBPm GBPm GBPm GBPm GBPm 24 weeks ended 27 February 2021 Adjusted operating profit at actual rates 199 66 19 78 43 (36) 369 24 weeks ended 29 February 2020 Adjusted operating profit at actual rates 189 12 16 62 441 (38) 682 Impact of foreign exchange (2) (3) (1) (1) 8 1 2 Adjusted operating profit at constant currency 187 9 15 61 449 (37) 684 % change at constant currency +6% +633% +27% +28% -90% -46%
Note C
24 weeks ended 24 weeks 52 weeks 27 February ended ended 2021 29 February 12 September 2020 2020 Adjusted earnings per share (pence) 25.1 61.8 81.1 Adjustment to reflect the impact of the future repayment of GBP79m job retention monies received (6.6) - - in the first half taxed at the adjusted effective tax rate (pence) 18.5 61.8 81.1 Dividends relating to the period (pence) 6.2 - - Dividend cover 3 n/a n/a
Note D
24 weeks ended 24 weeks 52 weeks 27 February ended ended 2021 29 February 12 September GBPm 2020 2020 From the cash flow statement GBPm GBPm Purchase of property, plant and equipment 263 315 561 Purchase of intangibles 44 43 61 307 358 622 ------------
Note E
24 weeks ended 24 weeks 52 weeks 27 February ended ended 2021 29 February 12 September GBPm 2020 2020 From the cash flow statement GBPm GBPm Purchase of property, plant and equipment 263 315 561 Purchase of intangibles 44 43 61 Purchase of subsidiaries, joint ventures and associates 39 3 16 Purchase of shares in subsidiary undertaking from non-controlling interests 23 2 2 Purchase of other investments 13 2 1 382 365 641 13. Subsequent events
During the first half, we were eligible for GBP79m from government job retention schemes which, at the date of this announcement, has increased to GBP121m. We are announcing in these interim results that we do not plan to make any further claims from government job retention schemes for which we would be eligible from this date, and that we intend to repay the GBP121m, including GBP72m to the UK government, for which we were eligible in this financial year up to this date.
This decision was made after the half year end and so the condensed consolidated income statement for the first half does not reflect the repayment of the amount relating to the first half. The expense of the repayment for the full financial year will be charged to adjusted operating profit in the second half and will be reflected in the full year income statement.
CAUTIONARY STATEMENTS
This Interim Results Announcement contains forward-looking statements. These have been made by the directors in good faith based on the information available to them up to the time of their approval of this report. The directors can give no assurance that these expectations will prove to have been correct. Due to the inherent uncertainties, including both economic and business risk factors underlying such forward- looking information, actual results may differ materially from those expressed or implied by these forward-looking statements. The directors undertake no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
RESPONSIBILITY STATEMENT
The Interim Results Announcement complies with the Disclosure and Transparency Rules ('the DTR') of the UK's Financial Conduct Authority in respect of the requirement to produce a half-yearly financial report.
The directors confirm that to the best of their knowledge:
-- this financial information has been prepared in accordance with IAS 34 as adopted by the EU;
-- this Interim Results Announcement includes a fair review of the important events during the first half and their impact on the financial information, and a description of the principal risks and uncertainties for the remaining half of the year as required by DTR 4.2.7R; and
-- this Interim Results Announcement includes a fair review of the disclosure of related party transactions and changes therein as required by DTR 4.2.8R.
On behalf of the board
Michael McLintock George Weston John Bason Chairman Chief Executive Finance Director
20 April 2021
INDEPENDENT REVIEW REPORT TO ASSOCIATED BRITISH FOODS PLC
Introduction
We have been engaged by the Company to review the condensed consolidated interim financial statements in the Interim Results Announcement for the 24 weeks ended 27 February 2021 which comprise the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated cash flow statement, the condensed consolidated statement of changes in equity and the related explanatory notes. We have read the other information contained in the Interim Results Announcement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The Interim Results Announcement is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Results Announcement in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 9, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this Interim Results Announcement has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the Interim Results Announcement based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements in the Interim Results Announcement for the 24 weeks ended 27 February 2021 are not prepared, in all material respects, in accordance with International Accounting Standard 34 Interim Financial Reporting as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP London
20 April 2021
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IR ZZGMDRLGGMZM
(END) Dow Jones Newswires
April 20, 2021 02:00 ET (06:00 GMT)
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