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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 8.50 | 0.45% | 1,908.00 | 1,908.00 | 1,909.50 | 1,928.00 | 1,901.50 | 1,918.00 | 140,200 | 11:13:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Textile Goods, Nec | 20.07B | 1.46B | 1.9867 | 9.61 | 13.91B |
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RNS No 1028x
ASSOCIATED BRITISH FOODS PLC
2nd November 1998
ASSOCIATED BRITISH FOODS plc
PRELIMINARY ANNOUNCEMENT
FOR THE YEAR ENDED 12 SEPTEMBER 1998
KEY POINTS
- Profit before tax at #391 million - down #35 million
- Sterling appreciation reduced profit before tax by #37 million
- Exceptional provisions reduced profits by #19 million
- Worldwide sales from continuing operations #4,195 million
- Sterling appreciation reduced sales by #277 million
- In the past twelve months
- Expenditure on new assets and businesses #283 million
- Shareholders' funds up at #2,997 million
In a year of global economic turbulence the ABF group has demonstrated its
financial strength and resilience to adverse operating conditions. Group
profit before tax was #391 million. This was achieved despite the #37 million
impact of the continuing high levels of sterling and the provision for
exceptional costs of #19 million. After excluding the profit arising from the
1997 sale of our Irish food retailing interests and our adhesives business in
Australia totalling #424 million, the comparable profit before tax was #426
million.
Group turnover of our continuing operations at #4,195 million is #242 million
below last year. After allowing for the adverse currency affect of #277
million and the closure of a high volume but low margin European commodity
trading operation last year, sales show an underlying increase of 6 per cent.
British Sugar contributed profits of #151 million, #28 million below last
year. The benefits of another excellent harvest and past capital investment
programmes were more than offset by the appreciation in the Green Pound and
the full provision for the recently announced European Commission fine.
Shareholders will have read in the newspapers that the European Commission
has imposed a fine of Ecu 39.6 million, equivalent at current exchange rates
to #28 million, on British Sugar plc pursuant to Article 85 of the European
Treaty. This was in respect of matters which occurred between 1986 and 1990,
prior to Associated British Foods plc acquiring ownership of British Sugar.
British Sugar is to appeal against this decision which we believe to be out
of all proportion to the alleged offence. Including an additional charge of
#13 million taken as an exceptional charge in the current year, full
provision has been made for the fine.
Results from our milling and baking divisions were adversely affected by the
poor 1997 harvest and continuing surplus capacity in the plant baking market.
Rationalisation and restructuring of our bakeries continues and during the
year provision was made for the closure of our Nottingham bakery.
Our animal feed division, ABN, has continued to suffer from the after affects
of the BSE crisis and the financial pressures on farmers who are struggling
with low prices due to oversupply.
Other manufacturing divisions within the UK largely produced results in
excess of last year. Twinings had a record year in spite of the strength of
sterling in the markets in which they operate and achieved best ever sales
volumes in Europe. However, Burtons Biscuits came under pressure from
greater competition from local manufacturers in export markets and the
dramatic decline in the Russian economy and as a result profits were lower
than the record achieved last year.
Primark, our clothing retail operation, has gone from strength to strength
returning another year of record profits, up by 26 per cent to #23 million on
a turnover of #295 million up 16 per cent on the comparable period last year.
George Weston Foods operating in Australia and New Zealand had a particularly
difficult year in an aggressive competitive environment particularly in the
baking industry. Profits were reduced from #33 million to #25 million
although #6 million of this reduction is attributable to currency translation
following the weakness of the Australian dollar.
In the United States, AC Humko and Abitec have had a remarkable year,
generating profits of #19 million, a #10 million advance on last year due to
our rationalisation and integration programme coming to fruition. Further
small acquisitions complementing the existing business have been made during
the year, which together with an ongoing capital expenditure programme, has
increased our investment in the United States to over #200 million.
Investment opportunities in the Far East and Asia have been limited due to
political and economic uncertainties. British Sugar has, however, secured a
further investment in China, taking a majority shareholding in a sugar
refinery. In view of the instability within Indonesia, we have agreed with
our joint venture partner to mothball the newly built glucose factory in this
country until a more favourable business climate returns. The investment has
been written down in our books by #6 million which has been treated as an
exceptional item.
Investment income for the year has increased from #72 million to #119
million, the main factors being a combination of a strong performance from
our fund managers, who exceeded the targets set on the funds held under
management, and the full year effect of the income arising on the funds
realised upon the disposal of our Irish retail companies.
"Year 2000 and the millennium computer bug" headlines have been attracting
attention for some time. The ABF group initiated a Year 2000 compliance
programme in 1996/97 to address the group's exposure to these issues, with
each division forming a committee to monitor compliance progress and to
ensure that adequate resources are available either to replace or upgrade
existing systems by early 1999.
A large proportion of the compliance effort has been in the normal upgrades
and replacement of existing networks and production facilities. This
expenditure has amounted to some #8 million during the current year, of which
#5 million has been charged to operating profits. The balance has been
capitalised in accordance with group accounting policies. It is forecast
that future expenditure on Year 2000 remedial work will be some #15 million,
of which #9 million will be charged against operating profits.
Whilst there can be no absolute guarantees that the group will not be subject
to a Year 2000 failure, we are in the process of taking the necessary steps
to ensure that contingency plans minimise disruption to our supply chain and
to our customers.
On 1 January 1999 the Euro will become the official single currency of the
eleven countries forming the European Monetary Union. Although the United
Kingdom has, at present, opted out of the single currency, the group's
subsidiaries based in those countries will be directly affected by the
introduction of the Euro and have therefore made the necessary administrative
and accounting arrangements to handle non-cash transactions in the new single
currency where required. Euro notes and coins will not be in use until 1
January 2002 but arrangements for handling cash and for dealing with the
changeover are well advanced.
At a board meeting today, the directors declared a second interim dividend of
6.25p per share (1997 - 5.75p) which will be paid on 6 April 1999 to
shareholders registered at the close of business on 5 March 1999. This makes
a total dividend for the year of 10.5p, an increase of 5 per cent on the
previous year excluding the special dividend payment.
The Annual Report and Accounts will be available on 11 November 1998 and the
annual general meeting will be held at the New Connaught Rooms on Friday 4
December 1998.
Press enquiries to: Garry H Weston - Chairman
Telephone: 0171-589 6363
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended
13 September 1997
For the Con- Discon-
year ended tinuing tinued
12 Sept oper- oper-
1998 ations ations Total
Note #m #m #m #m
Turnover of the group including
its share of joint ventures 4,202 4,437 766 5,203
Less share of turnover of joint
ventures (7) - - -
Group turnover 1 4,195 4,437 766 5,203
Operating costs (3,897) (4,095) (738) (4,833)
Group operating profit 298 342 28 370
Share of operating results of
- joint ventures (3) - - -
associates 2 - - -
Total operating profit 1 297 342 28 370
Operating profit before
exceptional items 1 316 342 28 370
Exceptional items 1 (19) - - -
Profits less losses on sale of
properties (3) 4 2 6
Profit on sale of businesses - 4 420 424
Investment income 119 72 - 72
Profit on ordinary activities before
interest 413 422 450 872
Interest payable (22) (21) (1) (22)
Profit on ordinary activities before
taxation 391 401 449 850
Tax on profit on ordinary activities 2 (124) (119) (42) (161)
Profit on ordinary activities after
taxation 267 282 407 689
Minority interests - equity (2) (8) - (8)
Profit for the financial year 265 274 407 681
Dividends - interim 3 (94) (90) - (90)
special interim 3 - (45) - (45)
Retained profit for the financial year 171 139 407 546
Earnings per ordinary share 29.6p 30.3p 45.3p 75.6p
The group has made no material acquisitions within the meaning of the
Financial Reporting Standards during either 1998 or 1997.
CONSOLIDATED BALANCE SHEET
As at As at
12 September 13 September
1998 1997
#m #m
Fixed assets
Tangible fixed assets 1,439 1,396
Interest in net assets of
- joint ventures 3 -
associates 6 -
Other investments 17 12
Total investments 26 12
1,465 1,408
Current assets
Stocks 428 416
Debtors 481 495
Investments 1,570 1,618
Cash at bank and in hand 70 50
2,549 2,579
Creditors amounts falling due
within one year
Short term borrowings (44) (51)
Other creditors (682) (722)
(726) (773)
Net current assets 1,823 1,806
Total assets less current
liabilities 3,288 3,214
Creditors amounts falling due
after one year
Loans (157) (157)
Other creditors (13) (15)
(170) (172)
Provisions for liabilities and
charges (55) (54)
3,063 2,988
Capital and reserves
Called up share capital 47 47
Revaluation reserve 3 4
Other reserves 173 173
Profit and loss account 2,774 2,693
Equity shareholders' funds 2,997 2,917
Minority interests in subsidiary
undertakings - equity 66 71
3,063 2,988
CONSOLIDATED CASH FLOW STATEMENT
For the For the
year ended year ended
12 September 13 September
1998 1997
Note #m #m
Cash flow from operating
activities 4 448 489
Dividends from joint ventures 1 -
Dividends from associates 1 -
Return on investments and servicing
of finance
Dividends and other investment
income 113 76
Interest paid (22) (22)
Dividends paid to minorities (2) (12)
89 42
Taxation (127) (148)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (226) (254)
Sale of tangible fixed assets 10 23
Purchase of equity investments (3) -
Sale of equity investments 3 1
Purchase of own shares (8) -
(224) (230)
Acquisitions and disposals
Purchase of new subsidiary
undertakings (57) (48)
Advances to joint ventures (1) -
Purchase of associated undertakings - (5)
Sale of subsidiary undertakings - 647
(58) 594
Equity dividends paid (135) (85)
Net cash (outflow)/inflow before
use of liquid funds and financing (5) 662
Management of liquid funds 5 (107) 658
Financing 5 (11) (12)
Increase in cash 5 113 16
(5) 662
CONSOLIDATED STATEMENT OF TOTAL
RECOGNISED GAINS AND LOSSES
For the For the
year ended year ended
12 September 13 September
1998 1997
#m #m
Profit for the financial year 265 681
Currency translation differences on
foreign currency net assets (59) (53)
Total recognised gains and losses 206 628
CONSOLIDATED STATEMENT OF HISTORICAL COST PROFITS
There is no material difference between the group results as reported and on
an unmodified historical cost basis. Accordingly no note of historical cost
profits and losses has been prepared.
RECONCILIATION OF MOVEMENTS IN
CONSOLIDATED SHAREHOLDERS' FUNDS
For the For the
year ended year ended
12 September 13 September
1998 1997
#m #m
Profit for the financial year 265 681
Dividends - interim (94) (90)
special interim - (45)
Retained profit for the financial
year 171 546
Other recognised gains and losses
relating to the year (59) (53)
Goodwill acquired and written off
during the year (32) (31)
Goodwill written back during the
year - 2
Net increase in shareholders' funds 80 464
Opening shareholders' funds 2,917 2,453
Closing shareholders' funds 2,997 2,917
NOTES TO THE PRELIMINARY ANNOUNCEMENT
For the year ended
13 September 1997
For the Con- Discon-
year ended tinuing tinued
12 Sept oper- oper-
1998 ations ations Total
#m #m #m #m
1.Analysis of turnover and profits
Turnover
Geographical analysis (by origin and destination):
European Union, mainly United
Kingdom and Ireland 3,023 3,307 766 4,073
Australia and New Zealand 534 620 - 620
North America 557 453 - 453
Elsewhere, mainly Asia 81 57 - 57
Group turnover 4,195 4,437 766 5,203
Business sector:
Manufacturing 3,900 4,181 - 4,181
Retail 295 256 766 1,022
Group turnover 4,195 4,437 766 5,203
Profits
Geographical analysis (by origin):
European Union, mainly United
Kingdom and Ireland 268 289 28 317
Australia and New Zealand 25 33 - 33
North America 22 13 - 13
Elsewhere, mainly Asia 1 7 - 7
Total operating profit before
exceptional items 316 342 28 370
Exceptional items
- European Union (13) - - -
Elsewhere, mainly Asia (6) - - -
Total operating profit 297 342 28 370
Business sector:
Manufacturing 293 323 - 323
Retail 23 19 28 47
Total operating profit before
exceptional items 316 342 28 370
Exceptional items - Manufacturing (19) - - -
Total operating profit 297 342 28 370
Other net income 94 59 421 480
Profit on ordinary activities before
taxation 391 401 449 850
Exceptional items arising in the year relate to an increase in provisions
of #13 million for the British Sugar European Commission fine and a charge
of #6 million for a write down within our joint ventures.
For the For the
year ended year ended
12 September 13 September
1998 1997
2.Tax on profit on ordinary activities #m #m
United Kingdom 93 122
Overseas 29 39
Associates and joint ventures 2 -
124 161
3.Ordinary dividends
First interim dividend of 4.25p
per share (1997 - 4.25p) 38 38
Second interim dividend of 6.25p
per share (1997 - 5.75p) 56 52
94 90
Special interim dividend of 5.00p
per share - 45
94 135
4.Cash flow from operating activities
Operating profit 297 370
Depreciation 151 156
(Increase)/decrease in working capital:
Stocks (16) (6)
Debtors 7 (17)
Creditors 7 (30)
Provisions 2 16
448 489
5.Analysis of changes in net funds
Opening balance 1,460 797
Management of liquid resources (107) 658
Financing (11) (12)
Increase/(decrease) in:
Cash 113 16
Equity investments - (1)
Changes in market value 3 -
Arising on acquisition of
subsidiary undertakings (8) (6)
Shares issued to minorities 5 8
Effect of currency changes (16) -
Closing balance 1,439 1,460
As at As at
12 September 13 September
1998 1997
#m #m
6.Analysis of net funds
Current asset investments 1,570 1,618
Cash at bank and in hand 70 50
Short term borrowings (44) (51)
Loans falling due after one year (157) (157)
1,439 1,460
7.Basis of preparation
The financial information set out above does not constitute the group's
statutory financial statements for the years ended 12 September 1998 and 13
September 1997, but is derived from them. The 1997 financial statements
have been filed with the Registrar of Companies whereas those for 1998 will
be delivered following the company's annual general meeting. The auditor's
opinions on these financial statements were unqualified and did not include
a statement under section 237 (2) or (3) of the Companies Act 1985.
END
FR FSUFSEUAUFLF
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