associated british foods plc annual report and accounts 2014
value together
annual report and accounts 2014 associated british foods is a diversified international food ingredients and 
retail group with sales of £129bn 118000 employees and operations in 47 
countries across europe southern africa the americas asia and australia 
at the heart of the way we operate is a principle of ‘value together’ – the 
benefit that the group gains from each of the businesses being part of the 
larger organisation this is manifest in how the corporate centre provides 
support to its operations and in the advantages that individual businesses 
gain from collaboration with each other
our businesses benefit from working alongside other group operations in 
related markets – allowing them to share knowledge skills and best practice 
the model also allows them for example to make joint investments which 
would otherwise deliver insufficient returns the businesses also work with 
each other to provide practical support such as making introductions in new 
countries and markets hiring and developing people providing backoffice 
services and sharing office space to name but a few
   before amortisation of nonoperating intangibles and profits less losses on disposal of noncurrent assets
  before amortisation of nonoperating intangibles profits less losses on disposal of noncurrent assets and profits less losses on the sale  
and closure of businesses
  all adjustments to profit measures are shown on the face of the consolidated income statement
 constant currency is derived by translating the 2013 results at 2014 average exchange rates
value together
financial highlights
group revenue 
£129bn 
actual 3 
constant currency 1
adjusted operating profit

£1163m 
actual 1 
constant currency 2
adjusted profit before tax

 
£1105m 
up 2 
adjusted earnings per share

1041p 
up 6
dividends per share
340p 
up 6 
net capital investment 
£691m
net debt reduced to
£446m
operating profit 
£1080m 
down 1
profit before tax
£1020m  
up 18
basic earnings per share
965p  
up 30 
introduction
financial highlights what were the highlights 
of the year
u chief executive’s statement page 6 
what was the impact  
of falling sugar prices
u sugar page 18 
what drove margin 
improvement in grocery
u grocery page 12 
how did ab agri  
achieve record profits
u agriculture page 23 
how is ingredients 
achieving its turnaround
u ingredients page 26 
where is primark  
headed next
u retail page 30 
how well are we 
performing against our 
business principles
u corporate responsibility page 40 
contents 
introduction
 ifc financial highlights
 2 our businesses at a glance
strategic report
 4 chairman’s statement
 6 chief executive’s statement
 8 group business model and strategy
 10 business strategies
 12 operating review
 36  financial review
 40  corporate responsibility
 46 principal risks and uncertainties
governance
 50  board of directors
 52  corporate governance
 64  remuneration report
 80  directors’ report
 83   statement of directors’ responsibilities 
 84   independent auditors’ report 
financial statements
 86   consolidated income statement 
 87   consolidated statement of 
comprehensive income
 88  consolidated balance sheet
 89   consolidated cash flow statement 
 90   consolidated statement of changes 
in equity 
 91   significant accounting policies 
 96  accounting estimates and judgements
 96   notes forming part of the financial 
statements 
 131 company financial statements 
 1 3 6 p r o g re s s re p o r t
 136  company directory
our plc website is available on multiple 
platforms from mobile devices to laptops  
for a more interactive report go online at 
abfcoukar2014 
for an indepth look at our sustainable 
approach to business refer to the associated 
british foods corporate responsibility 
report 2013 with updates for 2014  
which are available at 
abfcoukresponsibility
associated british foods annual report and accounts 2014
1
introduction
contents our 
businesses  
at a glance
sugar
revenue
£2083m 2013 £2677m
 
adjusted operating profit
£189m 2013 £434m
 
adjusted operating  
profit margin
91 2013 162
 
return on average  
capital employed
105 2013 233
sugar europe
our uk beet sugar factories produce  
over one million tonnes of sugar annually 
azucarera in spain typically produces over 
400000 tonnes of beet sugar each year 
and has a cane refining capacity of a 
further 400000 tonnes
sugar china
we operate five cane sugar mills in 
guangxi province and four beet sugar 
factories in the north east of the country 
continuous investment has raised annual 
sugar capacity to over 900000 tonnes
sugar southern africa
illovo is africa’s largest sugar producer 
with agricultural and production facilities 
in six countries annual sugar production 
is 17 million tonnes
u sugar page 18
grocery
revenue
£3337m 2013 £3568m
 
adjusted operating profit
£269m 2013 £224m
 
adjusted operating  
profit margin
81 2013 63
 
return on average  
capital employed
208 2013 169
international
twinings and ovaltine are our global  
hot beverage brands
europe
silver spoon and billington’s sugars 
jordans cereals ryvita kingsmill  
patak’s and blue dragon
the americas
mazola is the leader in corn oil in the  
us capullo is a premium canola oil in 
mexico tone’s spice islands and  
durkee are us herbs and spices brands
australia
ham bacon and smallgoods under  
don and krc brands tip top bakeries 
produce a range of wellknown breads 
and baked goods
u grocery page 12
the group operates through five strategic 
business segments sugar agriculture 
retail grocery and ingredients
associated british foods annual report and accounts 2014
2
introduction
our businesses at a glance retail
revenue
£4950m 2013 £4273m
 
adjusted operating profit
£662m 2013 £513m
 
adjusted operating  
profit margin
134 2013 120
 
return on average  
capital employed
332 2013 260
primark 
primark is a major retail group employing  
54000 people it operates stores in the  
uk republic of ireland spain portugal 
germany the netherlands belgium 
austria and france 
it offers customers quality uptothe 
minute fashion at valueformoney prices 
buying and merchandising teams in 
dublin republic of ireland and reading 
uk travel internationally to source and 
buy fashion items that best reflect each 
season’s key fashion trends primark’s 
range includes womenswear lingerie 
childrenswear menswear footwear 
accessories hosiery and homeware
u retail page 30
agriculture
revenue
£1312m 2013 £1410m
 
adjusted operating profit
£50m 2013 £47m
 
adjusted operating  
profit margin
38 2013 33
 
return on average  
capital employed
173 2013 164
ab agri operates at the heart of the 
agricultural industry with activities that 
stretch from field to fork its unique 
breadth and experience enable it to  
add value all along the food drink and 
biofuel industry supply chains 
ab agri supplies products and services  
to farmers feed and food manufacturers 
processors and retailers it also buys grain 
from farmers and supplies crop inputs 
through its joint venture arable operation 
frontier agriculture
we employ over 2000 people in the  
uk and china and market products in 
more than 65 countries worldwide
u agriculture page 23
ingredients
revenue
£1261m 2013 £1360m
 
adjusted operating profit
£41m 2013 £5m
 
adjusted operating  
profit margin
33 2013 04
 
return on average  
capital employed
58 2013 06
yeast and bakery ingredients
ab mauri operates globally in yeast and 
bakery ingredient production with 54 
plants in 26 countries supplying plant  
and artisanal bakers and the foodservice 
and wholesale channels it is a technology 
leader in bread improvers dough 
conditioners and bakery mixes
speciality ingredients
abf ingredients focuses on highvalue 
ingredients for food and nonfood 
applications it manufactures and  
markets enzymes lipids yeast extracts 
and cereal specialities worldwide with 
manufacturing facilities in europe  
and the us
u ingredients page 26
associated british foods annual report and accounts 2014
3
introduction
our businesses at a glance i am pleased to report growth of  
6 in adjusted earnings per share  
for the financial year
chairman’s  
statement
has confirmed the abolition of sugar 
quotas from october 2017 and world 
sugar prices have declined dramatically 
we have seen increased competition as 
european producers position themselves 
for a postquota market this has driven a 
fall in prices which we expect to continue 
in 2015 we anticipate restructuring in  
the european sugar industry and as the 
high stock levels are liquidated we expect 
to see volatility in market prices this 
structural change is painful but ab sugar 
has risen to challenges of this nature 
before and does so this time with a 
programme of continuous performance 
improvement we are one of the most 
efficient producers in the eu and will 
continue to take the neccessary action to 
ensure that we are well placed to operate 
in the postquota environment
we have a good track record of investing 
for the long term and this year was no 
exception with net capital investment of 
£691m up from £600m last year the 
higher level of capital expenditure was 
driven by a larger number of new primark 
stores opened or still to open but in the 
process of fitout during the year the 
fiveyear investment programme at allied 
bakeries to create a stateoftheart 
baking capability across the uk is now 
substantially complete and ensures the 
reliable supply of high quality bread to our 
customers this programme also sets a 
new benchmark for standards of food 
safety in the bakery sector and has 
enhanced safety in our workplace 
cash flow was again stronger than the 
previous year driven by a working capital 
inflow more than offsetting the increase 
in net capital investment net debt at the 
year end was £358m lower than last  
year at £446m with the group’s cash 
generating ability the lower net debt  
and the committed borrowing facilities 
available we have the capacity to  
meet our growth ambitions for the 
foreseeable future
i am pleased to report growth of  
6 in adjusted earnings per share  
for the financial year significant 
progress was achieved in operating 
profit by grocery agriculture 
ingredients and primark all of  
which substantially outperformed 
last year much lower sugar prices  
in the eu held back the group’s  
profit growth although operationally  
sugar performed well earnings  
also benefited from the strength  
of the group’s balance sheet and 
effective cash management which 
resulted in a much lower interest 
charge than last year
the financial year was characterised by 
price deflation in many food commodities 
and a strengthening of sterling against our 
major trading currencies the impact of 
this is evident in the lower revenues of our 
food businesses and in this context the 
profit growth in grocery agriculture and 
ingredients is all the more impressive 
grocery margin advanced with strong 
performances from twinings ovaltine  
and ach foods in the us and mexico 
and a further recovery in the bakery and 
meat businesses of george weston 
foods in australia our yeast and bakery 
ingredients business ab mauri is 
achieving a strong turnaround from 
the challenges of recent years with the 
promise of further improvement to come 
ab agri achieved another record result
primark had another magnificent year 
increasing profit by 30 at constant 
currency and adding a net 12 million sq ft 
of selling space taking our total estate to 
over 10 million sq ft at the financial year 
end our highly successful entry into 
france this year brings the number of 
countries in which primark operates  
to nine primark has now developed 
experience in establishing the brand  
in new markets and has achieved 
considerable trading success in each  
of them we recently announced that  
the next new market would be in the 
northeast of the us with the first stores 
expected to open late in 2015 and with  
up to ten stores by the end of 2016
the results of our sugar operations reflect 
a major fall in eu sugar prices and a very 
low world sugar price looking back to 
201112 a shortage of sugar available for 
sale in the eu and relatively high world 
prices at the time drove eu prices to  
very high levels which clearly benefited 
our sugar profit in that year this was 
exceptional since then more sugar has 
become available sugar stocks in the eu 
have risen the european commission  
associated british foods annual report and accounts 2014
4
introduction
chairman’s statement corporate responsibility
last year we published a comprehensive 
corporate responsibility report which 
outlined the close alignment between  
our values and good business practice 
and highlighted our commitment to 
improving productivity and reducing 
waste this report was well received by 
all of our stakeholders and updates are 
now available to reflect the achievements 
of the last 12 months the report is 
available online at wwwabfcouk
responsibility of particular note is the 
further progress primark has made in its 
ethical trade programme with an enlarged 
team of specialists now located in seven 
countries which is critical to supporting 
sustainable improvements within supplier 
factories as a responsible business  
ab sugar is actively contributing to the 
debate about the role that sugar can play 
as part of a healthy balanced diet with  
its making sense of sugar campaign  
the board remains committed to the 
highest ethical standards across  
the group
the board
the senior independent director 
tim clarke was appointed to the board 
in 2004 and in accordance with the  
uk corporate governance code  
having completed nine years’ service  
his independence must be confirmed 
annually by the rest of the board  
this having been done we are delighted 
that tim has agreed to continue as a 
member of the board and as the senior 
independent director 
three other independent directors will 
complete nine years on the board in 2015 
and 2016 to avoid the possibility of a 
significant loss of experience in a short 
period we have temporarily expanded  
the board ruth cairnie was appointed  
as an independent nonexecutive director 
with effect from 1 may 2014 ruth was 
recently executive vice president strategy 
 planning at royal dutch shell plc where 
she had also held a number of senior 
commercial roles gaining experience  
in european and emerging markets  
we very much look forward to ruth’s 
participation in the board’s deliberations
employees
i would like to thank all our employees  
for their contribution to the group’s 
success in the past year operational 
improvements have underpinned the 
increased profitability in grocery and 
ingredients and have become part  
of everyday business at ab sugar 
together with the excellent performances 
from agriculture and primark these 
results are a tribute to the dedication  
and commitment of our employees
dividends
i am pleased to report that a final dividend 
of 243p is proposed to be paid on 
9 january 2015 to shareholders on the 
register on 12 december 2014 together 
with the interim dividend of 97p paid on 
4 july 2014 this will make a total of 340p 
for the year an increase of 6
outlook
in the coming year we expect primark’s 
expansion to continue and grocery 
ingredients and agriculture to make 
further progress with the continuing  
fall in eu sugar prices and volatility in the 
world sugar price we expect a further 
large reduction in profit from ab sugar  
but this will put much of the effect of the 
structural changes in eu prices behind us 
at this early stage we expect a marginal  
decline in adjusted operating profit for the 
group but the impact on earnings will be 
mitigated by much lower tax and interest 
charges we therefore see limited 
opportunity to grow adjusted earnings per 
share in the new financial year with the 
strength of the group’s balance sheet and 
strong cash generation we have every 
reason to be confident of further progress 
for the group thereafter
charles sinclair 
chairman
5
introduction
chairman’s statement the delivery of an adjusted operating 
profit for the group in line with last 
year reflects the considerable 
achievement of all of our businesses 
in a year when eu sugar prices 
declined substantially
this financial year saw sterling strengthen 
against all of our major trading currencies 
and particularly those in emerging 
markets group revenue declined by  
3 to £129bn but at constant currency 
actually increased by 1 adjusted 
operating profit was 1 lower at £1163m 
but increased by 2 at constant currency 
currency movements have had a 
significant impact on our business 
segments this year and in order to 
understand the underlying operating 
performance of each of them we have 
referred to the yearonyear changes at 
constant currency 
a key influence on this year’s 
performance has been the impact on  
our food businesses of price deflation  
in some of our major commodities  
the prices of wheat barley corn oil and 
rice all fell during the year world sugar 
prices have also fallen and as discussed 
elsewhere in this report we are in the 
midst of a structural change in eu sugar 
prices as a consequence the growth  
in revenues achieved by our food 
businesses in recent years has not been 
sustained this year it is against this 
background that i am pleased with the 
profit and margin improvements delivered 
by agriculture grocery and ingredients
operationally ab sugar had an excellent 
year with good factory performances  
and further substantial cost reductions 
from the performance improvement 
programmes which are well embedded  
in each of the businesses we expect  
eu prices to fall further during the  
coming year but remain confident that 
our well invested sugar assets position  
us amongst the world’s lowestcost  
sugar producers 
at primark a strong store opening 
programme excellent buying and higher 
sales densities in our new stores all  
came together to drive revenues to  
within a fraction of £5bn with a further 
improvement in margin as well as 
expanding in our more established uk 
market we also opened large stores in a 
number of major cities across europe 
including lisbon madrid berlin cologne 
dusseldorf and vienna this year saw the 
opening of our first stores in france firstly 
in marseille quickly followed by dijon and 
then three stores in the suburbs of paris 
chief executive’s 
statement
the delivery of an adjusted operating profit  
for the group in line with last year reflects  
the considerable achievement of all of our 
businesses in a year when eu sugar prices 
declined substantially
associated british foods annual report and accounts 2014
6
introduction
chief executive’s statement we were delighted by the success of 
these french stores both for the size of 
the crowds on opening days which were 
overwhelming but more importantly for 
the tremendous customer enthusiasm for 
primark in very different cities which was 
sustained throughout the rest of the year
primark’s response to the rana plaza 
disaster in bangladesh in 2013 has been 
extensive in addition to the payment of 
compensation to the victims and their 
families primark was a founding signatory 
to the accord on fire and building safety 
in bangladesh this accord is a contract 
between over 150 apparel brands and 
retailers international and local trade 
unions and ngos which are committed  
to carrying out factory inspections  
and improving working conditions in  
the bangladesh garment industry  
primark carried out building surveys  
in bangladesh to assess the structural 
integrity of all of the 80 factories from 
which we source garments these 
structural assessments will be extended 
to other countries shortly 
grocery made very good progress with 
profit and margin well ahead of last year 
twinings ovaltine had another excellent 
year both in the uk and overseas and 
trading was much improved at ach foods 
in the us and mexico the recovery in 
profitability at george weston foods in 
australia was well established this year 
ab agri deserves credit for the further 
development of the business particularly 
for the strides made by ab vista as it 
extends its global customer reach  
profit in ingredients recovered strongly 
this year as the new management team  
at ab mauri our yeast and bakery 
ingredients business made significant 
progress in reducing the cost base 
restructuring operations and integrating 
the newly acquired european bakery 
ingredients business 
our businesses are encouraged to  
take advantage of the technical skills 
geographical presence capabilities and 
experience that are available elsewhere  
in the group in the development of their 
own operations the operating review 
showcases some examples of our 
success in leveraging the benefits of 
being part of a larger group an illustration 
of which was the collaboration between 
our enzymes cereal extrusion and  
agri businesses to deliver the new  
cereal extrusions factory at evansville  
in the us which would not have been 
achieved by any of the individual 
businesses on their own
summary
looking ahead to the next few years  
we see excellent prospects for primark 
and further development of grocery 
ingredients and agriculture we expect  
a further large reduction in profit for ab 
sugar during 201415 and some volatility 
in the medium term with the reduction of 
excess stocks and as the sugar industry 
restructures by the end of our 2015 
financial year much of the structural 
change in eu prices will be behind us and 
we have every reason to be confident of 
further progress for the group thereafter
george weston 
chief executive
associated british foods annual report and accounts 2014 group business 
model and 
strategy
our range of activities is broad in product 
technology and market scope our portfolio  
of businesses comprises sizeable operations  
that achieve good revenue and profit growth 
mature cashgenerative operations and smaller 
enterprises that afford exciting growth potential 
in our markets we aim to achieve strong and 
sustainable positions through a combination of 
organic growth acquisition of complementary 
new businesses and achievement of high levels 
of operating efficiency we provide highquality 
valueformoney food and clothing that are  
central to people’s lives 
associated british foods is a diversified group of 
food ingredients and retail businesses selling into 
more than 100 countries worldwide and with 
operations in 47 countries across europe southern 
africa the americas asia and australia
10 year adjusted earnings per share growth pence
8 compound annual growth
04 05 06 07 08 09 10 11 12 13 14
0
110
100
90
80
70
60
50
40
30
20
10
associated british foods annual report and accounts 2014
8
strategic report
group business model and strategy strategy
the corporate centre agrees strategy 
and budgets with the businesses and 
monitors their performance closely 
the group balance sheet is managed 
to ensure longterm financial stability 
regardless of the state of capital markets 
and capital funding is made available to all 
of our businesses where returns meet or 
exceed clearly defined criteria the centre 
provides selected services where the 
scale of its operations enables a more 
costeffective or efficient delivery where 
expertise that might not be available at 
a business level can be retained by the 
group or where the provision of such 
services would otherwise distract 
business executives such services 
include investor relations pensions 
insurance tax and treasury management 
where specialist expertise is brought 
together in one place for the benefit of 
the group as a whole the centre also 
coordinates selected valueadded 
capabilities to support the businesses 
in their local markets such as talent 
management and development 
procurement and the sharing of best 
practice in for example health and  
safety or engineering risk management 
we operate to high ethical standards as 
an organisation and expect the same of 
our employees we encourage an open 
and honest culture in all our dealings and 
ensure that our core values are fully 
implemented throughout the group 
u business strategies page 10
organic growth
organic growth is achieved  
through investment in marketing  
in the development of existing 
and new products and technologies 
and in targeted capital expenditure  
to improve efficiency and  
expand capacity 
we are committed to innovation 
the continuous pursuit of improvement 
and the maintenance of our efficient 
manufacturing capability 
we aim to operate in a sustainable 
ethical efficient and safe manner 
we have a strong culture of continuing 
operational improvement and focus 
on delivering exceptional quality and 
customer service the group takes a 
longterm approach to investment and 
is committed to increasing shareholder 
value through sound commercial 
responsible and sustainable business 
decisions that deliver steady growth 
in earnings and dividends 
acquisitions are made to complement 
existing business activities and to  
exploit opportunities in adjacent  
markets or geographies
the  
corporate 
centre
business structure
our businesses are organised so that 
they are close to the markets and 
customers that they serve 
they are managed as five business 
segments that bring together common 
industry expertise operational capability 
and market intelligence operational 
decisions are made locally because in 
our experience they are most successful 
when made by the people who have 
the best understanding of their markets 
and who have to implement them 
the corporate centre aims to provide a 
framework in which our business leaders 
have the freedom and decisionmaking 
authority to pursue opportunities with 
entrepreneurial flair the centre is small 
and uses short lines of communication to 
ensure prompt incisive and unambiguous 
decisionmaking it seeks to ensure that 
business activities are appropriately 
monitored and supported 
u operating review page 12
associated british foods annual report and accounts 2014
strategic report
group business model and strategy business strategies 
sugar
a worldleading sugar business 
focused on excellence 
ab sugar is an advanced manufacturer 
and has a simple vision to be a 
worldleading sugar business we must 
remain cost competitive whilst exceeding 
the demanding and diverse needs of our 
customers and we must grow sustainably
ab sugar aims to achieve growth  
through excellence in agriculture and 
operations including the application of 
new technologies and the further 
expansion of coproduct opportunities 
we seek to ensure cost leadership in our 
various regional supply chains through 
engagement with growers to ensure 
optimum beetcane growing whilst 
providing fair returns to growers continual 
improvement in operating performance 
by maintaining a wellinvested asset base 
and by seeking out best practice to 
optimise product quality and the 
efficiency of the conversion process
grocery
an enviable portfolio of leading  
food brands
each of our grocery businesses pursues 
an independent strategy appropriate to 
its particular market position and stage 
of development as examples jordans 
ryvita is focused on developing its brands  
in its core markets whilst ab world 
foods has had considerable success 
extending its reach into new and 
emerging markets 
all of these businesses are committed 
to the consistent development of their 
brands and consumer research is 
conducted locally and internationally  
to establish consumer needs and ensure 
appropriately targeted investment  
our production facilities are well 
maintained and we take a longterm 
approach to capital investment 
recognising the merits of building for  
the future acquisitions are undertaken 
when opportunities are presented to 
either strengthen or complement 
existing businesses 
providing our business leaders with the freedom 
and decisionmaking authority to pursue 
opportunities with entrepreneurial flair 
associated british foods annual report and accounts 2014
10
strategic report
business strategies agriculture
driving value for businesses along  
the food supply chain
as a unique community of leading 
agricultural businesses ab agri 
consistently strives to improve the 
sustainability of food production  
we work in partnership with customers  
to deliver precision food production by 
optimising resources thereby enabling 
the production of more food with a lower 
environmental impact ab agri operates 
through individual entrepreneurial 
businesses empowered to grow their 
interests independently and through  
a strong network of contacts across  
the entire food supply chain 
organic growth is achieved through 
innovative product development and 
through extending the business’s 
already broad geographic reach into 
new territories using the diverse  
breadth of products services and  
people within the ab agri community  
the business develops bespoke solutions 
specifically tailored to its customers’ 
needs extending this into new 
geographies and into new areas that are 
adjacent to its core capabilities affords 
further growth opportunities ab agri  
will continue its successful strategy  
of seeking to make complementary 
acquisitions to strengthen its portfolio  
of businesses and its technical capability 
it will also continue to collaborate with 
other businesses in the abf group to 
harness new contacts and technologies
retail
uptotheminute fashion at  
amazing prices
primark offers great value for money 
which it achieves by incurring no 
advertising costs instead relying on its 
customers ‘doing the talking’ about its 
products buying in vast quantities and 
passing on the cost savings to customers 
keeping overheads to a minimum but 
investing in stateoftheart logistics to 
enable its stores to replenish stocks 
quickly and by not compromising its 
high quality standards rigorously testing 
products at the various stages 
of production 
in the world of fashion it is critical that 
once a style is seen on the fashion show 
catwalk it reaches the stores as quickly  
as possible it can take as little as six 
weeks from initial design concept to  
being available on shelf and merchandise 
is sourced from all corners of the globe 
although primark does not own the 
companies or factories that produce 
its merchandise it recognises its 
responsibility to the workers in those 
factories and to its customers to  
ensure that its products are made in  
good working conditions
ingredients
technology and innovation to meet 
customer needs 
our ingredients businesses are dedicated 
to understanding the key requirements 
of their customers and their enduse 
markets in order to ensure a relevant 
supply of ingredients systems  
products and technology that create 
value they develop partnership 
relationships with customers to achieve  
a genuine understanding of their 
products formulations equipment and 
processes and the market environment in 
which the products are sold they aim to 
grow by providing outstanding customer 
service backed by a high level of 
investment in technology innovation 
research and development
each business has its own business 
model that determines an appropriate 
balance of emphasis across the full range 
of potential sources of competitive 
advantage innovative and distinctive 
products an efficient and proprietary set 
of production processes and compelling 
customer propositions comprising a blend 
of product performance and customer 
specific services
associated british foods annual report and accounts 2014
11
strategic report
business strategies revenue
£3337m 
2013

 £3568m 
actual fx 6 
constant fx 1
adjusted operating profit
£269m  
2013

 £224m 
actual fx 20 
constant fx 24
adjusted operating  
profit margin
81  
2013

 63
return on average  
capital employed
208 
2013

 169
 restated
grocery
grocery comprises consumerfacing businesses that manufacture 
and market a variety of wellknown brands both nationally and 
internationally
twinings ovaltine has the broadest geographical reach selling 
premium teas and malted beverages in more than 100 countries 
ab world foods focuses on the creation and development of 
world flavours and its patak’s and blue dragon branded products 
are sold internationally westmill foods specialises in supplying  
uk restaurants and wholesalers with highquality ethnic foods 
including rice spices sauces oils flour and noodles under  
brands such as rajah lucky boat and elephant
jordans and ryvita operates in the betterforyou cereal and 
savoury biscuits categories in the uk but with increasing 
international presence jordans has a heritage of using traditional 
methods in the production of its wholegrain cereals and cereal 
bars ryvita has built a strong reputation in healthy snacking and  
is the uk category leader in crispbreads allied bakeries produces 
a range of bakery products under the kingsmill sunblest  
allinson and burgen brands with flour and semolina produced  
by sister company allied mills speedibake specialises in 
ownlabel baked goods for retail and foodservice customers  
silver spoon and billington’s are our two retail sugar brands  
in the uk complemented by a range of dessert toppings and  
syrups under the askeys and crusha brands 
in australia tip top is one of the country’s most recognised 
brands with an extensive range of bread and baked goods and 
george weston foods also manufactures a variety of bacon ham 
and meat products including the don and kr castlemaine brands 
in north america ach foods includes within its range of branded 
products mazola the leading corn oil in the us capullo a 
premium canola oil in mexico and a collection of herbs spices  
and cornderived products
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grocery we have developed an enviable portfolio  
of leading grocery brands that reflect the 
wonderful tastes of food from a diversity  
of cultures together they play a central  
role in helping to feed millions of people 
around the world
  abfcouk
iconic brands as our global reach 
expands it is important 
that our distribution 
capability keeps pace 
without compromising 
customer satisfaction  
in some countries that 
means collaboration with 
other group companies 
for example ryvita is 
distributed by george 
weston foods in  
australia and twinings  
is distributed by  
ach foods in mexico
  abfcouk
collaborative  
distribution grocery operating profit increased by 
24 at constant currency with george 
weston foods in australia ach foods 
in the us and twinings ovaltine all 
well ahead of last year revenues 
were level with last year at constant 
currency and were held back by lower 
food commodity prices
twinings ovaltine delivered strong 
revenue growth in tea with record market 
shares achieved in each of its four largest 
markets growth was achieved in all 
categories in the uk led by excellent 
progress in green teas and infusions and 
we remain the fastest growing tea brand 
in the us ovaltine again performed well 
in its developing markets particularly 
brazil where the brand was supported  
by a new advertising campaign in south 
east asia and in nigeria where our  
new ovaltine packing plant is now  
fully operational tea manufacturing 
conversion costs were lower than last 
year with the benefit of higher volumes 
further improvements in operating 
efficiency at the factory in poland and 
more highspeed packing equipment  
at andover 
at allied bakeries revenues and profit 
were ahead of last year with higher 
branded sales and an increase in market 
share successful new products this year 
included kingsmill great white a white 
bread with as much fibre as a wholemeal 
loaf which was launched in february 
supported by an instore marketing 
campaign and television advertising  
new resealable packaging with a 
refreshed design drove further growth  
of kingsmill wraps and towards the end 
of the year we launched sandwich thins 
which are proving very popular following 
its relaunch last year the allinson brand 
received further national advertising 
support this year and achieved further 
growth the fiveyear capital investment 
programme to upgrade our uk bakeries  
is almost at an end with completion of  
the modernisation of the glasgow  
bakery during the year and the installation 
of a new bread plant in stevenage  
which is due to be commissioned in 
november the proposed closure of  
the orpington bakery was announced  
in august with employee consultation 
nearing conclusion 
silver spoon’s revenue and profitability 
was well below last year reflecting an 
especially competitive year for the uk 
packed sugar market which saw the  
loss of a number of granulated sugar 
contracts this was mitigated in part  
by a reduction in overheads at the bury 
packaging plant new product launches 
resulted in truvia growing its share of the 
stevia sweeteners market and in the 
home baking sector allinson maintained 
its position as the leading bread flour 
brand following last year’s relaunch 
revenue and profit at jordans and ryvita 
were ahead of last year with good growth 
in our international business particularly 
in france canada and australia the new 
ryvita thins line at the poole factory 
yielded improvements in production 
efficiency and product quality enabling 
supply to keep pace with substantially 
increased demand on 20 october after 
clearance from the competition and 
markets authority we completed the 
acquisition of dorset cereals this 
premium brand with particular strength  
in the growing muesli sector will 
complement our existing jordans cereals 
and ryvita crispbread brands we intend 
to maintain dorset cereals’ existing 
production facility in poundbury dorset
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grocery ab world foods achieved revenue 
growth in the uk for patak’s and blue 
dragon which are respectively the 
largest indian and oriental ambient food 
brands both brands also performed well 
internationally particularly in canada 
where social media campaigns to 
coincide with ethnic festivals proved to be 
an effective way of promoting awareness 
of the product range the core brands of 
westmill foods lucky boat noodles and 
elephant atta flour both achieved further 
growth and towards the end of the year 
we relaunched the rajah spice brand with 
new packaging advertising support and 
instore trial 
george weston foods in australia 
achieved a major improvement in 
performance with higher bread prices 
increased meat volumes the delivery  
of a number of cost reduction initiatives 
and improved commodity procurement 
in a challenging retail and competitor 
environment tip top successfully 
implemented bread price rises in the first 
half of the year which together with an 
increase in the proportion of higher 
margin products sold and further 
productivity improvements led to a 
higher operating profit for the bakery 
business factory productivity was also 
better at don krc which contributed to 
better meat yields and a reduction in 
labour costs enhanced product quality 
and improved customer service levels 
resulted in a number of new contracts 
being secured and an increase in  
market share the opening of the new 
meat factory in castlemaine enabled  
the closure of our factory near perth in 
western australia and the redevelopment 
of the substantial site good progress  
has been made with the preparation of 
this site for housing development and  
a number of lots were sold this year
sales at ach were ahead of last year 
largely the result of increased demand for 
mazola with positive consumer reaction 
to a plant sterols advertising campaign 
highlighting the cholesterollowering 
benefits of corn oil in our flavours 
business volume increases were  
secured in barbecue and grilling spices 
with a very successful marketing 
campaign ‘grilling with the greats’ in 
association with major league baseball 
capullo our premium oil brand in mexico 
increased its market share which 
together with the benefit of lower input 
costs drove profit ahead of last year
ryvita thins
when we launched ryvita thins in  
april 2008 they were a new concept  
in savoury flatbread biscuits they were 
designed for dipping 
they have helped to create an entirely 
new product category in uk 
supermarkets which is now worth  
almost £20m a year and is growing at  
6 yearonyear ryvita thins continue  
to lead the way with yearonyear volume 
growth at four times the rate of the 
flatbreads category
ryvita thins are already available in  
four flavours with more to come and 
account for over half of the category’s 
sales well over two million households 
are now buying ryvita thins each year
the fiveyear investment programme  
at allied bakeries to create a stateof 
theart baking capability across the  
uk is now substantially complete  
and ensures the reliable supply of  
highquality bread to our customers 
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grocery twinings
we weren’t the first tea brand into the  
us kcup market but we are now the 
market leader
having tested the water in the awayfrom
home channel starting in 2005 we 
targeted the grocery channel aggressively 
in 2011 offering 21 different varieties 
from rooibos to pumpkin spice in the 
kcup format american tea drinkers 
like having multiple tea products in  
their pantry we supported this with  
a multimillion dollar investment in 
advertising and product sampling 
together with a programme to educate 
the us retail trade in how to optimise 
kcup sales
it worked
great white
a soft tasty quality white loaf with as 
much fibre as wholemeal
fibre is good for you – and most of us 
don’t get enough of it 
the european dietary reference value for 
adults is 25g a day yet 7 out of 10 men 
and 9 out of 10 women in the uk don’t 
manage that
so allied bakeries has developed 
kingsmill great white – a quality white 
loaf as soft and tasty as our top  
selling kingsmill soft white but  
with the added benefit of having the 
same amount of fibre as wholemeal  
a bread with no compromise
simply changing from two slices of white 
bread to kingsmill great white could 
increase your fibre intake by 3g a day 
and consumers like it backed by a strong 
tv campaign and instore support 
kingsmill great white gained an 8 
share of all standard white bread sales  
in the uk in its first three months
mazola
corn oil good or bad
research carried out for mazola in  
the us sought to challenge consumers’ 
perceptions that olive oil – a premium 
priced product – is the ‘healthiest oil’ 
it isn’t 
natural plant sterols can and do lower 
cholesterol corn oil has more of these 
sterols than other cooking oils and four 
times more than olive oil 
the core market for the mazola brand 
in the us is the hispanic community 
a marketing plan based on this science 
and executed in the second half of 2014 
in spanish and english has driven growth 
in the overall corn oil segment along 
with mazola’s market share and its 
consumption in nonhispanic regions
associated british foods annual report and accounts 2014
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grocery revenue
£2083m 
2013 £2677m 
actual fx 22 
constant fx 17
adjusted operating profit
£189m  
2013 £434m 
actual fx 56 
constant fx 54
adjusted operating  
profit margin
91  
2013 162
return on average  
capital employed
105  
2013 233
sugar
ab sugar is a leading multinational in the expanding international 
markets for sugar and sugarderived coproducts in the eu 
azucarera is the major producer in iberia and british sugar is the 
sole processor of the uk sugar beet crop and is europe’s most 
efficient processor illovo sugar in which the group has a 51 
stake is the largest sugar processor in africa and is one of the 
world’s foremost lowcost producers we also have substantial 
businesses in china producing cane sugar in the south and beet 
sugar in the northeast the group currently operates 31 plants  
in ten countries and has the capacity to produce over 5 million 
tonnes of sugar and 600 million litres of ethanol annually we also 
have the capacity to generate power sufficient to meet most of 
our internal needs and in a number of locations we export  
power into the local grid 
as a consumer of a large quantity of agricultural inputs we have  
a number of programmes to maximise crop yields whilst also 
minimising the usage of herbicides pesticides and water  
this applies equally to our outgrower estates funded jointly  
with our growers as well as our own farms we seek to ensure 
the early transfer of technology and best practice across ab sugar 
we are a significant employer in each of our countries of 
operation some of which are among the most impoverished in 
the world ab sugar seeks to ensure the wellbeing of all its 
employees their families and the wider community and in the 
developing countries we provide more wideranging social support 
including the provision of hospitals schooling housing and healthy 
living programmes
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sugar from the development  
of ever more efficient 
sugar production across 
the group to helping 
customers in the 
formulation of their 
products we work hard  
to apply the learnings  
and innovations from each 
of our sugar businesses 
for their mutual benefit 
and development 
  abfcouk
technical expertise the beet price payable to growers for  
the 201415 crop was agreed in summer 
2013 at a substantial increase over the 
price for the year under review and at an 
increased cost to british sugar of some 
£30m negotiations for delivered beet 
costs for the 201516 campaign have now 
been concluded with a reduction of some 
20 on the previous year this will make 
a major contribution to ensuring a more 
sustainable uk beet sugar industry 
reflective of the new commercial 
environment for eu sugar 
in spain sugar beet volumes were lower 
than last year with a larger crop area in the 
south not compensating for a reduction  
in the area planted in the north due to 
waterlogged fields during the spring as a 
consequence total beet sugar production 
was 338000 tonnes down from 405000 
tonnes in the previous year 200000 
tonnes of imported raw sugar was refined 
at guadalete and a further 59000 tonnes 
was corefined at the northern beet plants 
supplementing the beet sugar production 
and minimising logistics costs to market
contract negotiations with our eu 
customers for the 201415 marketing year 
are proving to be as challenging as last 
year there are high stocks of sugar in the 
eu competition continues to be intense 
and both of these factors have continued 
to drive eu prices downward in response 
to this difficult commercial environment 
we have undertaken a review of our cost 
base and a provision of £22m for the cost 
of overhead reduction has been charged 
to adjusted operating profit this year
after a complex commissioning process 
production volumes at the vivergo 
biofuels plant increased significantly this 
year although inclusion levels of ethanol 
in gasoline continued to rise in the eu 
yearonyear gasoline consumption has 
fallen which has led to lower prices 
vivergo sustained a loss this year but 
further enhancements to the plant in the 
new financial year will improve reliability 
these are aimed at extending our cost 
leadership in all regions to ensure that  
ab sugar is well positioned as a globally 
competitive producer 
british sugar produced 132 million 
tonnes of sugar compared with  
115 million tonnes last year good 
growing conditions extended into the  
mild winter resulting in higher beet yields 
and sugar content than last year all uk 
factories performed well with further 
progress achieved in performance 
improvement initiatives and in health 
safety and environmental metrics 
the crop for the 201415 campaign  
has benefited from excellent growing 
conditions with every indication that it 
will be much larger than that processed  
in the previous year the new campaign 
has started well with production ahead  
of schedule and with our newark and 
wissington factories already exceeding 
daily beet throughput records this larger 
crop will provide the opportunity to 
confirm our ability to process the higher 
volumes that we expect to become  
the norm in a postquota environment
revenue and adjusted operating 
profit for ab sugar were substantially 
lower than last year driven by 
declining sugar prices lower volumes 
and adverse currency translation  
the price and volume effects were 
predominantly seen in europe where 
prices were driven down by increased 
market competition as our 
competitors seek to establish new 
market positions ahead of the 
removal of quotas in 2017 and by a 
desire to reduce quota stock levels 
across the eu which have been higher 
than normal the world sugar price 
which has more of an impact on eu 
exports and our chinese business 
was low and fell further throughout 
the year but we consider this to be 
unsustainable given that it is 
markedly below the global average 
cost of production 
our sugar businesses have been  
actively engaged in performance 
improvement programmes for a number 
of years all businesses have undertaken 
a review of overheads substantial 
reductions have already been delivered 
and the programmes are continuing 
 operationally ab sugar had an excellent 
year with good factory performance  
and further substantial cost reductions 
from the performance improvement 
programmes which are well embedded  
in each of our businesses
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operating review 
sugar and throughputs are expected to meet or 
exceed rated capacity combined with 
lower wheat prices the profitability of 
vivergo is therefore expected to improve
profit at illovo saw some reduction this 
year sugar production of 170 million 
tonnes this financial year compared with 
187 million tonnes last year primarily as  
a result of lower production in zambia  
and swaziland where the phasing of the 
campaign is slightly later than last year 
domestic pricing increased in line with 
local inflation with the exception of 
tanzania and south africa which were 
affected by lowcost imports however 
import tariffs have now been introduced 
in south africa which has resulted in 
some improvement in local pricing  
the profitability of exports of raw sugar to 
the eu market under preferential import 
arrangements was adversely affected  
by the lower pricing in that market 
coproduct contribution which is of 
growing importance to illovo increased 
this year with the successful operation  
of the new potable alcohol distillery  
in tanzania
in china profitability has improved  
with the implementation of a number  
of overhead reduction and efficiency 
initiatives in the south excellent growing 
conditions and a higher sugar content in 
the cane resulted in an increase in sugar 
production from 500000 tonnes last year 
to 560000 tonnes this year however 
flooding in heilongjiang province led to  
a reduction in beet supplied to our 
factories which resulted in much lower 
sugar production in the north at 116000 
tonnes the campaigns at qianqi and 
zhangbei were excellent with good 
factory throughput and a high sugar 
content in the beet following our success 
in working with the growers over a 
number of years a significant level  
of imports and increased domestic 
production resulted in very low domestic 
prices throughout the year 
kilombero distillery
building a distillery in a remote part of 
tanzania has its challenges the nearest 
source of building materials was an eight 
hour drive away plant and machinery had 
to be imported from india and complex 
cultural considerations had to be taken 
into account but the distillery was 
delivered on time on budget and with  
an exceptional safety record
the distillery is a significant downstream 
addition to our operations employing a 
highly integrated approach to 
manufacturing which transforms all of  
our raw materials into sustainable 
products and extends our sugar and 
nonsugar product range – in this  
instance by meeting the increasing 
regional demand from local breweries  
for potable alcohol
ab sugar china transformation
a project was initiated in july 2013 to 
support the transformation of our existing 
sugar business in china into a more agile 
and costeffective operation able to 
compete effectively in the local economy 
whilst holding firm to our principles of 
improving standards of environmental  
and safety governance
across china we have four beet and  
five cane sugar factories receiving raw 
material from over 100000 farmers 
integral to the project has been the 
structured focus on developing farming 
practices to improve the agricultural 
effectiveness of our grower base as  
well as a rigorous drive to reduce overall 
costs and enhance processing efficiency 
this has been delivered through a careful 
scrutiny of activities and the 
reengineering of processes
we have benchmarked our factory 
performances and transferred best 
practice across our other operations in the 
uk spain and africa as well as reducing 
our overall costs in china by over 20
the threeyear project is due to complete 
within the next year by which time we 
will have improved annual profitability  
in china by some £40m 
irish tanker deliveries
since april all of british sugar’s deliveries 
in ireland have been made by their brand 
new road tanker fleet using scheduled 
ferries rather than by container shipment
not only is this more suitable for our 
customers but it also increases flexibility 
and reduces delivery times from three 
weeks to four days and with larger  
load sizes the number of journeys 
required has shrunk by more than  
15 thus reducing both environmental 
considerations and cost whilst improving 
customer service
associated british foods annual report and accounts 2014
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operating review 
sugar we work from field to fork continuing to 
develop innovative ways to help farmers 
maintain their crop and livestock yields and 
to provide an assured source of consistently 
high quality animal feeds
  abfcouk
ensuring quality revenue
£1312m 
2013 £1410m 
actual fx 7 
constant fx 6
adjusted operating profit
£50m  
2013 £47m 
actual fx 6 
constant fx 11
adjusted operating  
profit margin
38  
2013 33
return on average  
capital employed
173  
2013 164
ab agri is a major business in uk agriculture and is increasingly 
operating on a global scale it supplies feed and technologybased 
products and services to farmers feed and food manufacturers 
processors and retailers it also buys grain from uk farmers and 
supplies them with agronomy advice and crop inputs through its 
joint venture frontier agriculture 
operating across the agricultural supply chain ab agri 
manufactures highperformance compound feeds provides 
worldleading analytical services nutritional advice and poultry 
marketing services for customers it provides a valueadded 
service to food drink and bioethanol companies internationally  
by marketing their coproducts as animal feed which in turn helps 
to reduce the costs of production for its farming customer base 
working globally it supplies the livestock and pet industries with 
premixes enzymes and other technical ingredients and plays a key 
role in delivering supply chain integrity for retailers and processors 
ab agri’s operations comprise
•   ab connect – a feed supply business serving the uk’s food 
and farming community 
•  ab vista – an international supplier of worldleading feed 
ingredients and technical services 
•  speciality nutrition – a supplier of highquality bespoke 
vitaminmineral premixes starter feed and microingredients 
with worldclass nutrition and formulation expertise
•  ab sustain – a specialist in designing developing and 
delivering bespoke sustainable agricultural supply chain 
solutions for clients
•  ab agri china – a highperformance feed manufacturer for the 
ruminant pig and poultry sectors a coproduct marketing and 
feed additives business and an industrial services business 
working with largescale processors to optimise the food 
supply chain and
•  frontier agriculture – a joint venture which is the uk’s leading 
crop inputs and grain marketing organisation
agriculture
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agriculture ab agri deserves credit for the further 
development of the business particularly  
for the strides made by ab vista as it  
extends its global reach
granulation facility at evansville indiana  
is operating successfully providing 
additional capacity to meet the increasing 
demand for these enzymes
good commercial and procurement 
management drove a strong performance 
at speciality nutrition our uk premix and 
starter feeds business expansion and 
modernisation of its plant at rugeley 
enabled the business to meet increasingly 
stringent customer demands for high 
quality premixes ab sustain’s 
responsible sourcing programme 
achieved growth during the year and  
this programme has now been extended 
into overseas markets
ab agri china maintained margins 
through good procurement and a 
favourable product mix consumer 
demand for meat in china continues to 
grow with a particular need to ensure 
reliable and highquality sources as meat 
production in china therefore transitions 
from small familyrun concerns towards 
largescale commercial operations there 
is increasing demand for highquality feed 
supplied by modern efficient feed mills 
construction and commissioning of our 
new feed mill at zhenlai was completed  
to plan in august and good progress is 
being made with construction of a mill  
at rudong both of which will supply 
these large integrated meat processors 
profit at frontier was ahead of last year 
fine weather during the planting seasons 
saw strong demand for cereal and rape 
seed and the growing conditions of a mild 
winter and warm spring drove demand  
for crop inputs such as fungicides 
encouragingly the warm dry summer 
resulted in an early wheat harvest of 
excellent yield and quality
ab agri had another excellent year 
with adjusted operating profit 11 
ahead of last year at constant 
currency the decline in revenue 
reflected lower wheat and other 
commodity costs however cash 
margins in uk feed were maintained 
and the profit growth was delivered 
by the higher margin businesses 
the wet winter in the uk particularly in 
the west country adversely impacted 
livestock farming but excellent forage 
growing conditions during a dry spring 
and summer as well as a softening 
commodity market led to a period of 
more stable prices and increased 
confidence amongst farmers uk feed 
volumes remained resilient oversupply  
in the uk poultry market depressed prices 
during the summer but the market is now 
beginning to stabilise 
strong growth was achieved by ab vista 
driven by the success of quantum blue 
its phytase feed enzyme notably in latin 
america and the middle east but also in 
the eu where it was launched recently 
following its approval by the european 
food safety authority the new 
associated british foods annual report and accounts 2014
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agriculture ab agri china
in 2014 ab agri china invested £10m  
in building two new highly automated 
feed mills with bulk feed capability one  
in zhenlai in the north of the country and 
the other near shanghai
the northern mill has fully segregated 
monogastric and ruminant feed lines with 
a capacity of 180000 tonnes while the 
southern mill is designed to produce up  
to 240000 tonnes of poultry feed for a 
leading global meat processor
these investments not only show our 
confidence in the future of ab agri china 
but also our ability to work with major 
customers to help them develop their 
businesses and at the same time increase 
our revenues
effective procurement
performance improvement initiatives 
being undertaken across the group 
include improving procurement 
effectiveness through rigorous category 
management and the use of structured 
supplier engagement tools many of 
which are now eenabled 
where goods and services are sourced 
from competitive markets modern 
technologies such as electronic tendering 
and auction tools are increasingly being 
employed to ensure we achieve the best 
value for money further benefits have 
been achieved in the procurement of 
chemicals packaging it telecoms 
maintenance and logistics by the 
businesses working with one another  
to improve their negotiating position 
develop supplier relationships or take 
advantage of synergies that would 
otherwise not be available 
frontier
drones are the latest tool being used by 
soyl the precision farming division of 
frontier to help farmers get the best 
possible output from every hectare
the soylsight service uses an 
unmanned aerial vehicle or drone to  
map fields enabling growers to look at 
crops under different wavelengths of 
light revealing aspects of crop growth 
that could not previously be measured 
controlled by gps systems it flies 
remotely over areas of fields or trials  
and can monitor crop health identify 
weeds count plants and estimate yields
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agriculture ingredients comprises a number of businesses that supply a range 
of ingredients to food and nonfood manufacturers together they 
employ 8000 people in more than 70 plants in 26 countries 
ab mauri has a global presence in bakers’ yeast with significant 
market positions in the americas europe and asia and is a 
technology leader in and supplier of bread improvers dough 
conditioners and bakery mixes the business employs experts 
who have an unrivalled knowledge and understanding of the yeast 
and bakery ingredients business the equipment the processes 
and the raw materials 
abf ingredients comprises a range of businesses focusing on 
highvalue ingredients for both food and nonfood applications 
it has established strong market positions in enzymes lipids 
yeast extracts and cereal specialties it has manufacturing  
facilities in europe and the us
spi pharma is a leader in custom formulation solutions for 
pharmaceutical and nutraceutical manufacturers in more than 
50 countries it manufactures and markets antacids excipients 
and drug delivery systems for tablets and specialises in drug 
development services it collaborates with customers to deliver 
valueadded and costeffective solutions to their problems
revenue
£1261m 
2013

 £1360m 
actual fx 7 
constant fx 4
adjusted operating profit
£41m  
2013

 £5m
adjusted operating  
profit margin
33  
2013

 04
return on average  
capital employed
58 
2013

 06
 restated
ingredients
associated british foods annual report and accounts 2014
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operating review 
ingredients much of our business is large scale 
and highly mechanised but we are 
also committed to supporting 
small businesses and artisan 
bakeries that provide an invaluable 
service in their communities 
  abfcouk
supporting businesses made in baking enzymes with several 
new products launched during the year 
and following a series of successful trials 
in the pulp and paper industry a number 
of mills have converted to the use of 
enzymes to reduce costs and lessen  
their environmental impact the next 
phase of expansion at the enzymes 
manufacturing facility in finland is under 
way the closure of the yeast extracts 
plant in china for which provision was 
made last year end was well managed 
and profit benefited from the transfer of 
production to lower cost facilities 
elsewhere in the group the new cereal 
extrusions factory in the us at evansville 
indiana is now in production providing 
increased capacity to meet the growing 
demand both for extruded cereal products 
and ab vista’s granulated feed products 
in view of the complementary product 
portfolios and common customer base 
the australian and new zealand yeast  
and bakery ingredients businesses of  
ab mauri have been integrated with the 
flour milling business of george weston 
foods in australia this will reduce 
overheads and allow the combined 
business to bring its technologies to 
market more effectively reflecting this 
change the results of the australian 
milling business which were previously 
included within the grocery segment  
are now included within the ingredients 
segment the comparative results for 
2013 have been restated resulting in 
£272m of sales and £4m of operating 
profit being transferred from grocery  
to ingredients
the site of our meishan yeast factory  
in guangzhou city is to be redeveloped  
by the local government the factory  
has been closed and provision for the 
small associated cost has been made 
customer requirements will be met  
from our other factories in china
in january ab mauri completed the 
acquisition of a small bakery ingredients 
business operating across western 
europe which offers craft and industrial 
customers a range of highquality  
bakery ingredients its integration with 
our existing operations will broaden  
our product offering and our ability to  
respond to customer needs in a number 
of key markets
at abf ingredients good growth was 
achieved in extruded cereals in the us 
and in speciality ingredients which 
provide enhanced functionality when 
incorporated into pharmaceutical 
formulations further progress was  
ingredients’ revenues were 4 ahead 
of last year at constant currency but 
with most of these businesses being 
located overseas the strengthening 
of sterling resulted in a decline of 7 
at actual rates profit recovery was 
substantial driven by much stronger 
trading from ab mauri and the benefit 
from the nonrecurrence of last year’s 
restructuring and accelerated 
depreciation charges 
ab mauri made progress in all of its 
regions and in both yeast and bakery 
ingredients good revenue growth was 
achieved in south america where in a 
very competitive market cost inflation 
was either recovered through pricing or 
offset by improvements in efficiency 
higher volumes and a focus on business 
development drove growth in north 
america and the new yeast factory in 
mexico is now supplying the markets  
of north and central america in china 
 ab mauri achieved a strong turnaround 
from the challenges of recent years  
with the promise of further  
improvement to come
associated british foods annual report and accounts 2014
28
strategic report
operating review 
ingredients abitec
abitec manufactures a wide range  
of functional excipients for the 
pharmaceutical industry these  
excipients are critical components in  
drug formulations and are used in  
various dosage forms including softgel 
capsules and transdermal products  
as drug technology advances so must 
the delivery systems that enable the  
body to absorb the active ingredients  
the manufacturing processes to produce 
these excipients must meet the exacting 
standards of the international 
pharmaceutical industry 
abitec has worldclass technical 
scientific regulatory and manufacturing 
expertise to position the business to be 
able to assist pharmaceutical customers 
in their delivery of the next generation  
of drug formulations we have embarked 
on a threeyear project to expand and 
upgrade our manufacturing facility at 
janesville wisconsin foundations have 
been laid for the factory extension and  
the new facility will enhance our 
capabilities and keep the business  
at the forefront of technology
pgp international 
the development of a new specialty 
ingredients production unit in the us  
at evansville indiana shows the value  
of collaboration
cereals ingredients specialist pgp 
international was running out of capacity 
at its two existing locations and identified 
a need for an additional site in the 
midwest us animal feed supplement 
producer ab vista needed another 
copacker as it too was running out of 
granulation capacity for its flagship 
product quantum blue neither business 
could justify the capital investment for  
a standalone facility but by coming 
together they were able to prepare a 
business case for sharing one facility 
between them that made economic  
and good business sense 
by working closely together the new site 
was up and running – and selling product 
– within 14 months
ab enzymes
our enzymes are used in a variety of 
ways by a range of different industries  
in baking they are used to improve 
texture extend shelflife and replace 
emulsifiers and in beverages and food 
specialities they are used to improve 
yields in the processing of fruits grains 
and proteins in the pulp and paper 
industry more and more mills have 
recognised the economic and 
environmental benefits of using enzymes 
in their manufacturing process by 
reducing the use of chemicals in the 
production process in the field of 
detergents enzymes have been 
developed to reduce colour fading when 
washing garments most recently we  
have developed enzymes for the farming 
industry that enhance the absorption by 
livestock of the nutrients in animal feed 
and quantum blue has become our most 
successful new product for many years
associated british foods annual report and accounts 2014
29
strategic report
operating review 
ingredients revenue
£4950m 
2013 £4273m 
actual fx 16 
constant fx 17
adjusted operating profit
£662m  
2013

 £513m 
actual fx 29 
constant fx 30
adjusted operating  
profit margin
134  
2013

 120
return on average  
capital employed
332  
2013

 260
 restated
primark is one of the largest clothing retailers in europe it has  
278 stores and employs 54000 people in the uk republic of 
ireland spain portugal germany the netherlands belgium 
austria and france it was founded in june 1969 in the republic  
of ireland where it continues to trade as penneys
primark’s organic growth has been achieved through a 
combination of likeforlike growth and increasing selling  
space the likeforlike growth reflects investment in buying 
merchandising and our success in constantly refreshing the stores 
to ensure they remain exciting places to shop the increase in 
selling space has been driven by capital investment in freehold  
and leasehold properties as they have become available first on 
the high streets of the uk and ireland and more recently on the 
high streets and in the shopping centres of continental europe 
2006 saw primark’s first foray into continental europe with the 
opening of a store in madrid and it now operates from more than 
10 million sq ft of selling space across nine countries
with a unique combination of the latest fashion and lean 
operations primark offers customers quality uptotheminute 
designs at valueformoney prices buying and merchandising 
teams travel internationally to source and buy garments that best 
reflect each season’s key fashion trends primark’s range includes 
womenswear lingerie childrenswear menswear footwear 
accessories hosiery and homeware
retail
associated british foods annual report and accounts 2014
30
strategic report
operating review 
retail abf has supported the development of  
an international fashion brand – now as 
popular in continental europe as it is in  
the uk and ireland we have leveraged  
our local market insights and relationships  
to help primark continue its international 
development 
  abfcouk
style travels we aim to spot future trends and bring 
them to market quickly and affordably  
this doesn’t just apply to high fashion  
but increasingly to menswear 
childrenswear accessories sportswear  
and even homeware
  abfcouk
setting trends sales at primark were 17 ahead  
of last year at constant currency  
this excellent result was driven by  
an increase in retail selling space 
likeforlike sales growth of 4 and 
superior sales densities in the new 
stores the year was characterised  
by success for our autumnwinter and 
springsummer ranges sales over the 
christmas period were excellent and 
were boosted in the third quarter by 
warm weather especially in the 
spring and early summer we began 
trading in france in december last 
year and sales across all five stores 
have been exceptional eight years  
on from our initial entry into iberia 
this year’s likeforlike growth 
achieved by our spanish stores  
was particularly strong 
the adjusted operating profit margin in 
the first half was higher than last year 
reflecting the benefit of warehouse and 
distribution efficiencies and lower freight 
rates these benefits continued in the 
second half and with strong trading over 
the summer resulting in a lower level of 
markdowns the margin for the full year 
reached 134 this lower level of 
markdowns was a consequence of  
a strengthening of our buying and 
merchandising teams and the success  
of our seasonal range
in the immediate aftermath of last year’s 
collapse of rana plaza in bangladesh 
primark committed to meeting its 
responsibilities in full and to paying 
longterm compensation to the workers 
employed by its supplier or their 
dependants we began making these 
longterm payments in march 2014 and 
throughout the process we have 
provided broadlybased support primark 
also paid shortterm aid to the families of 
all the workers employed at rana plaza 
most of whom were making clothes  
for its competitors primark’s total 
commitment amounts to us12m of 
which us7m was provided in last year’s 
results and us5m has been charged  
this year
the safety of the staff employed by our 
suppliers is a high priority we have now 
undertaken structural assessments of all 
of our supplier factories in bangladesh 
we further strengthened our incountry 
teams of ethical trading specialists who 
are critical in supporting sustainable 
improvements within supplier factories 
and providing greater visibility across the 
supply chain we conducted 2058 audits 
in the last calendar year and ethical trade 
training continues to be provided to every 
new primark employee we intend to 
extend our programme of structural 
assessments to include factories 
producing for us outside bangladesh
the pace of selling space expansion 
quickened further this year with the gross 
addition of 14 million sq ft we relocated 
three stores extended three stores and 
opened in 25 new locations it is perhaps 
worth putting this growth into context –  
in the year 2000 when we opened our 
100th store after 31 years of trading the 
entire estate was just 14 million sq ft and 
now 14 years later the estate is seven 
times larger this year saw the entry of 
primark into france where we now have 
five stores marseille dijon and three in 
the suburbs of paris we closed seven 
smaller stores primarily where larger 
better located premises became 
available in the same city resulting in a 
net increase in selling space of 12 million 
sq ft this brings our total estate to  
278 stores and 102 million sq ft at the 
financial year end 
associated british foods annual report and accounts 2014
33
strategic report
operating review 
retail responding to the increasing scale of  
our business in continental europe we 
doubled the size of our warehouse in 
torija spain this summer and the 
mönchengladbach warehouse in 
germany which services the stores in 
northern europe is being extended by 
60 and will become fully operational 
early in 2015
we have a very strong pipeline of new 
stores in europe extending over a number 
of years we have already opened five 
new stores since the year end one in 
portugal two in the netherlands and two 
in germany with a further five scheduled 
to open before christmas including a 
relocation in northampton to a store more 
than three times the size we expect the 
increase in selling space for the financial 
year to be a little less than 10 million sq ft 
to be followed in the autumn of 2015 by a 
strong programme of european openings
we have announced that after extensive 
research we have decided to take 
primark to consumers in the northeast  
of the us we have chosen stores which 
are located close to areas of high urban 
density and which benefit from high levels 
of existing customer footfall our strategy 
is to generate interest in and awareness 
of the primark brand a lease for some 
70000 sq ft of selling space at 
downtown crossing in the heart of 
boston massachusetts was signed in 
april and we expect this store to open in 
late 2015 we have subsequently signed 
the lease of a further seven stores in this 
region including an 80000 sq ft store in 
the king of prussia shopping mall in 
pennsylvania one of the busiest in the 
us we intend that all eight stores will be 
trading from 05 million sq ft by late 2016 
these stores will be supported by leased 
warehousing
we have a very strong pipeline of new stores  
in europe… and after extensive research  
we have decided to take the primark concept  
to consumers in the northeast of the us
sports and leisure
sportswear is one of the biggest growth 
areas of the business 
the introduction of more technical fabrics 
and products means that we now offer a 
credible sports range that stands up well 
against the competition at the same time 
we are maintaining our credentials for 
fashionable streetwear alternatives and 
core workout ranges at low entry price 
points – extending the offering across all 
departments with coordinated ranges 
consisting of matching clothing footwear 
accessories underwear and hosiery
following the success of the ladies’  
and men’s ranges we have turned our 
attention to childrenswear for autumn
winter 2015 
associated british foods annual report and accounts 2014
34
strategic report
operating review 
retail store expansion by region
uk iberia
northern continental
europe
republic of
ireland total
sq ft 
000 stores
sq ft 
000 stores
sq ft 
000 stores
sq ft 
000 stores
sq ft 
000 stores
september 2013 5760 161 1330 41 880 17 1030 38 9000 257
change in year 280 3 240 6 680 13 – 1 1200 21
september 2014 6040 164 1570 47 1560 30 1030 37 10200 278
5 18 77 – 13
back of house
over the past three years we have 
transformed our customerfacing store 
design but our own ‘back of house’ 
working environment had stood still
it’s typical in retail to think ‘why invest  
in back of house it won’t make any 
money’ but we don’t believe that’s  
true in fact we know it isn’t
following a pilot in our leeds trinity  
store in december 2013 we are  
now investing in creating a motivating  
work environment
and the effect has been dramatic scores 
in staff feedback surveys are up to 24 
higher on areas like ‘communication’ and 
‘teamwork’ compared with the primark 
average the impact has also improved 
productivity for example
•   wifi throughout has made it easier for 
key tasks to be carried out ‘onthego’
•   paid absence levels are markedly lower 
and
•   the new openplan back of house 
environment means more efficiency 
and collaboration with staff briefings 
and inductions taking a third less time 
– meaning more time on the shop floor
primarkcom
primarkcom was launched in october 
2013 and has since been rolled out in local 
languages to each of our countries of 
operation the site now reaches almost 
one million people and is a showcase for 
the brand its price message and its 
fashion credentials the innovative 
primania section which makes heroes  
of our customers receives 300000  
visits every week
along with the fashion messages we 
have introduced a new ‘our ethics’ area 
to primarkcom which tackles some of 
the more common questions asked of  
the brand its sourcing and supply chain  
in clear bitesized info graphics 
we have also embraced social media – the 
environment that many of our customers 
live and breathe – sharing campaign 
imagery and videos with a fan base of  
over four million followers generating 
huge engagement and awareness 
relocations or closures 
spain
la coruna 
madrid – plenilunio 
zaragoza
uk
cardiff 
crawley 
leytonstone 
republic of ireland
dundalk
new store openings 
spain
albacete 
cartagena 
fuengirola 
huelva 
logrono 
madrid – plenilunio 
roquetas de mar 
tenerife
germany
berlin 
– alexanderplatz 
cologne 
dusseldorf
portugal
lisbon
austria
vienna
france
dijon 
marseille 
paris – creteil sc 
paris – o’parinor 
paris – vlg quartz
uk
bath 
canterbury 
cardiff 
crawley 
leeds – trinity 
warrington
the netherlands
eindhoven 
enschede 
nijmegen 
zoetermeer 
associated british foods annual report and accounts 2014
35
strategic report
operating review 
retail working capital at the year end was £164m 
lower than last year reflecting lower food 
commodity prices and the benefit of  
management action to reduce the average  
level of working capital throughout the year
financial review
group performance 
group revenue increased by 1 at 
constant exchange rates but the 
strengthening of sterling against our 
major trading currencies particularly 
in the second half of the year resulted 
in a decline in revenues of 3 at actual 
rates to £129bn adjusted operating 
profit of £1163m was 2 ahead of last 
year at constant rates but 1 lower at 
actual rates in calculating adjusted 
operating profit the amortisation 
charge on nonoperating intangibles 
and any profits or losses on disposal 
of noncurrent assets are excluded 
on an unadjusted basis operating 
profit was 1 below last year at 
£1080m comparative results for 2013 
have been restated for the effects of 
adopting the revised accounting 
standard for employee benefits 
details of which are provided under 
‘pensions’ on page 39
during the year we merged the activities 
of ab mauri’s australian and new zealand 
yeast and bakery ingredients businesses 
with the flour milling business of george 
weston foods in australia the results of 
the australian milling business which 
were previously included within the 
grocery segment are now included 
within the ingredients segment  
the comparative results for 2013 have 
been restated resulting in £272m of  
sales and £4m of operating profit being 
transferred from grocery to ingredients
the income statement benefited from  
the nonrecurrence of last year’s loss  
of £128m on the sale or closure of 
businesses in our ingredients and  
sugar segments 
finance expense less finance income  
of £58m compared with a net charge of 
£87m last year this reduction reflected 
the retirement of expensive longterm 
debt including the redemption of british 
sugar’s £150m 10¾ debenture on 
4 july 2013 and the repayment of £194m 
of private placement notes 120m of 
which was repaid mid way through last 
year and 194m was repaid this year the 
average level of debt also benefited from 
another strong cash flow performance 
profit before tax increased from £868m  
to £1020m on an adjusted basis where 
the amortisation of nonoperating 
intangible assets and any profits or losses 
on the sale of noncurrent assets and  
on the sale and closure of businesses  
are excluded profit before tax increased 
by 2 to £1105m
taxation
we recognise the importance of 
complying fully with all applicable tax  
laws as well as paying and collecting the 
right amount of tax in every country in 
which the group operates we have had  
a boardadopted tax policy for many years 
which is based on seven tax principles 
that are embedded in the financial and 
nonfinancial processes and controls of 
the group our tax principles are included 
in the appendix to our corporate 
responsibility report
the tax charge for the year of £237m 
included an underlying charge of £257m 
at an effective rate of 233 
associated british foods annual report and accounts 2014
36
strategic report
financial review 2013 – 242 on the adjusted profit 
before tax the reduction in the effective 
rate is a result of the mix of profits earned 
in different tax jurisdictions and the 
reduction in the uk corporation tax rate 
from 23 to 21 with effect from 
1 april 2014 a further reduction in the uk 
rate to 20 is due to take effect on 1 april 
2015 the legislation to effect these rate 
changes was enacted before the prior 
year balance sheet date and as deferred 
tax is measured at the rates that are 
expected to apply in the periods when  
the underlying timing differences reverse 
opening and closing uk deferred tax 
balances have both been calculated  
using a rate of 20 
the overall tax charge for the year 
benefited from a £21m 2013 – £29m 
credit for tax relief on the amortisation  
of nonoperating intangible assets  
and goodwill arising from previous 
acquisitions 
earnings and dividends
earnings attributable to equity 
shareholders were £762m £177m higher 
than last year and the weighted average 
number of shares in issue during the year 
used to calculate earnings per share was 
790 million 2013 – 790 million earnings 
per ordinary share were 30 higher  
than last year at 965p with the absence 
of losses on sales and closure of 
businesses adjusted earnings per share 
which provides a more consistent 
measure of trading performance 
increased by 6 from 981p to 1041p
the interim dividend was increased  
by 4 to 97p and a final dividend  
has been proposed at 243p which  
represents an overall increase of 6  
for the year the proposed dividend is 
expected to cost £192m and will be 
charged next year dividend cover on an 
adjusted basis is just over three times
return on capital employed for  
the group increased further this  
year to 189
37
strategic report
financial review in twinings’ three factories two animal 
feed mills in china and the redevelopment 
of a former bakery site in western 
australia including ground works and 
utilities in preparation for its sale for 
housing development 
financing
the financing of the group is managed by 
a central treasury department the group 
has total committed borrowing facilities 
amounting to £22bn which comprise 
£579m of us private placement notes 
maturing between 2016 and 2024 £12bn 
provided under a newly negotiated 
syndicated revolving credit facility which 
matures in july 2019 with an option to 
extend by two years a £120m loan from 
the european investment bank maturing 
in january 2015 and £328m of local 
committed facilities in africa and spain 
during the financial year we repaid from 
existing cash resources us194m of 
private placement notes at the year end 
£821m was drawn down under these 
committed facilities the group also had 
access to £644m of uncommitted credit 
lines under which £132m was drawn at 
the year end cash and cash equivalents 
totalled £519m at the year end 
the financial strength and flexibility of  
the group is enhanced by diversifying  
our sources of funding and having 
certainty of finance over a long period 
the strength and breadth of the 12 banks 
in the syndicate reflect the scale and 
international presence of the group and 
during the renegotiation this year we 
included another european bank in the 
syndicate to reflect the increasing 
activities of the group in continental 
europe through primark’s expansion  
the average fixed interest coupon on  
the private placement notes is 51 
return of 184 all businesses with  
the exception of sugar delivered an 
improvement through higher profits  
with the average level of capital employed 
in the business little changed from last 
year roce is calculated by expressing 
adjusted operating profit as a percentage 
of the average capital employed for  
the year
cash flow
net cash flow from operating activities 
was very strong again this year increasing 
from £1276m to £1439m with a working 
capital inflow of £100m compared to last 
year’s outflow of £97m
we continued to invest in the future 
growth of the group and the £691m  
spent on property plant and equipment 
and intangibles net of disposals during  
the year was an increase on last year’s 
investment of £600m primark spent 
£378m on the acquisition of new stores 
the fitout of new and existing stores and 
warehousing expenditure in the food 
businesses was lower than last year but 
major projects included further 
investment in the modernisation of our 
uk bakeries new tea packing machines  
balance sheet
noncurrent assets of £68bn were 
similar to last year intangible assets  
were £114m lower mainly reflecting  
the amortisation charge for the year  
and foreign exchange translation losses 
property plant and equipment increased 
by £113m with capital expenditure in the 
year running ahead of depreciation
working capital at the year end was 
£164m lower than last year reflecting 
lower food commodity prices and the 
benefit of management action to reduce 
the average level of working capital 
throughout the year when expressed as 
a percentage of sales this also showed 
further improvement net borrowings at 
the year end were £358m lower than last 
year at £446m as a consequence of the 
very strong cash flow
a currency loss of £250m arose on the 
translation into sterling of the group’s 
foreign currency denominated net assets 
the group’s net assets increased by 
£234m to £6753m
return on capital employed roce for 
the group increased further this year  
to 189 up from last year’s restated 
 we continued to invest in the future 
growth of the group with net capital 
investment of £691m during the year
associated british foods annual report and accounts 2014
38
strategic report
financial review pensions
pension liabilities in the group’s defined 
benefit pension schemes exceeded 
employee benefit assets at the year  
end by £43m compared with last year’s 
restated deficit of £15m the uk scheme 
accounts for 91 of the group’s total 
pension assets and the increase in the 
market value of these assets during the 
year was slightly more than the increase 
in the present value of scheme liabilities 
total contributions to defined benefit 
plans in the year amounted to £41m  
2013 – £69m the lower amount 
reflecting the end of the £30m pa deficit 
contributions that were paid in each of the 
last five years a triennial valuation of the 
uk scheme was undertaken as at 5 april 
2014 which was agreed by the trustees 
after the group’s year end and revealed  
a surplus of £78m as a result there is  
no requirement to agree a recovery plan 
with the trustees
on 1 october 2012 new legislation  
came into effect which required all  
eligible uk employees to be automatically 
enrolled into a qualifying pension scheme 
we embraced this new legislation by 
providing an attractive scheme with 
employer contribution rates in excess  
of the statutory minimum and we saw  
a high takeup 
the charge for the year for the group’s 
defined contribution schemes which  
is equal to the contributions made 
amounted to £76m 2013 – £66m  
and this is the first year that defined 
contribution costs have exceeded the 
cash contributions made to the defined 
benefit schemes reflecting the changing 
shape of pension provision in the group
the accounting standard under which the 
group’s pension schemes are accounted 
ias 19 employee benefits has been 
revised and the new provisions were 
adopted by the group with effect from  
15 september 2013 the comparative 
results for the financial year 2013 have 
been restated as a prior year adjustment 
the effect of which was to reduce the 
reported operating profit by £5m to  
reflect a change in the treatment of 
administration costs and to increase 
other financial expenses by £3m due to 
the replacement of the expected rate of 
return on assets with the discount rate 
there was little difference between the 
expected rates of return on assets and the 
discount rates in the group’s schemes in 
2013 hence the small adjustment 
john bason
finance director
total committed 
borrowing facilities £m
diversified sources of  
term funding
£m
1 banking syndicate 1200 54
2 private placement 579 26
3 eib 120 5
4 africa  spain 328 15
2227
data to be 
supplied
1
3
4
2
associated british foods annual report and accounts 2014
39
strategic report
financial review corporate  
responsibility
all our businesses share a common set of 
principles these principles ensure that people 
the environment and our communities are at  
the heart of how we operate
all our businesses share a common 
set of principles we strive to ensure 
that our environmental impact and 
use of resources are minimised we 
seek to provide a safe place of work 
for all of our people we want to be 
welcomed as good neighbours by the 
communities in which we operate 
and we take seriously the need to 
consider the health of our customers 
our staff and the communities of 
which we are part these principles 
are underpinned by the company’s 
overriding tenet of encouraging 
ethical business 
these principles ensure that people the 
environment and our communities are at 
the heart of how we operate we express 
this commitment to corporate 
responsibility cr in four areas
•  responsible stewardship of  
our environment
• being responsible for our people
• being a responsible neighbour and
•  being responsible for promoting  
good health
further information can be found in the 
associated british foods cr update 2014 
and 2013 cr report at wwwabfcouk
responsibility
our greenhouse gas emissions 
this year for the first time we report  
on the total greenhouse gas emissions 
from those activities for which we are 
directly responsible which includes the 
operational and agricultural impacts of  
our businesses for the 12month reporting 
period this also includes greenhouse  
gas emissions for entities where we do 
not have full ownership but have financial 
control joint ventures and associates 
where we do not have a majority 
shareholding but do have either joint 
control or significant influence
our total greenhouse gas emissions 
amounted to 9656000 tonnes of carbon 
dioxide equivalent co2e of which 73  
is contributed by our sugar businesses 
this is due to the extensive use of energy 
in our processing of sugar and transport 
use as well as the generation of 
emissions from its agricultural activities 
of the 7025000 tonnes of emissions 
that ab sugar produces twothirds 
comes from the combustion of renewable 
sugar cane biomass which is generally 
regarded as carbon neutral
we developed detailed reporting guidance 
including estimation methodologies 
assumptions and calculation 
methodologies which are aligned with 
iso 140641 the greenhouse gas 
protocol and the world business council 
for sustainable development
we engaged kpmg llp to provide 
limited assurance on our greenhouse  
gas performance data as described in  
the table opposite
kpmg llp used the international 
standard on assurance engagements 
‘isae’ 3410 ‘assurance engagements 
on greenhouse gas statements’ to assure 
the selected greenhouse gas performance 
data and issued an unqualified opinion 
their full assurance opinion is available at 
wwwabfcoukresponsibilityassurance
ourapproach2014updates
in order to form their opinion kpmg llp 
performed a range of procedures which 
included interviews with management 
examination of reporting processes and 
documentation and testing of selected 
data from various sites businesses and  
at group level a summary of the work 
they performed is included within their 
assurance opinion
nonfinancial performance information 
and greenhouse gas quantification in 
particular is inherently more subjective 
than financial information it is important 
to read the selected environmental 
performance data contained within this 
report in the context of kpmg llp’s  
full limited assurance opinion and  
our reporting definitions available  
at wwwabfcoukresponsibility 
ourpoliciesandappendices
fatal injuries
our first priority is to keep our people safe 
at work making sure that they return 
home as fit and well as they were when 
they came to work we regret very deeply 
the six workrelated fatalities of 
employees and contractors during the 
reporting year in africa four employees 
were killed one was crushed when the 
cane seed vehicle he was driving came 
off the road another died while preparing 
for cane harvest a third died in a shallow 
associated british foods annual report and accounts 2014
40
strategic report
corporate responsibility excavation and a fourth was killed when 
entangled in moving machinery above 
head height a security contractor died in 
africa having been the victim of violent 
criminal assault by an unconnected third 
party in china a contractor driver died 
after falling off the vehicle he was loading
we recognise that many of our 
businesses operate in high hazard 
environments such as with heavy 
machinery large transport and freight 
vehicles confined spaces and working  
at height whenever there is a death or 
near miss on our sites or linked to our 
operations we alert all our businesses 
and reemphasise the importance of  
safe working conditions 
these accidents were fully investigated 
by our internal safety specialists  
our directors and senior managers  
and external regulatory authorities  
all workrelated deaths are reported to 
the associated british foods board and 
local management are held to account for 
the cause and remedial action at their site
our approach to risk management is 
designed to ensure that the risks are 
assessed the relevant precautions and 
work procedures are implemented and 
that there is strong supervision it is a key 
principle that all managers are responsible 
for the safety of their workforce and for 
ensuring a safe working environment 
each factory and business has safety 
managers to advise and facilitate  
these principles and resources are 
embedded throughout our businesses
gender and diversity
in our 2013 cr report we shared our 
determination to welcome promote  
and develop women across all of our 
businesses we have two women and 
seven men on the company’s board and 
overall 30 of all managers are women 
we are committed to increasing this 
number in the coming years to this  
end we have put in place a number of 
programmes and groups to support 
associated british foods’ total greenhouse gas emissions in 2014
for the year ended 31 july 2014 we emitted in tonnes of carbon dioxide equivalent 
co2e the following greenhouse gases
combustion of fuel and operation of facilities 8642000 tonnes
purchased electricity and steam 1014000 tonnes
total emissions 9656000 tonnes
emission intensity 746 tonnes per £1m of revenue
our greenhouse gas emissions can be further analysed by source of emission which 
helps us to make our operations ever more energy efficient
tonnes  of total
source of emissions
use of energy within our factories and stores 7918000 82
operation of our owned and contracted vehicles 935000 10
our manufacturing processes 622000 6
from directly controlled agricultural activities 181000 2
sugar and other divisions
sugar 7025000 73
other 2631000 27
associated british foods annual report and accounts 2014
41
strategic report
corporate responsibility female employees and help them 
overcome any barriers they may face  
in the workforce
we have now held nine meetings of the 
women’s business education forum  
a network and learning group for 
highpotential and senior women more 
than 150 women have attended these 
events giving them the opportunity to 
network with one another build their 
business understanding and grow their 
confidence in aspiring to leadership roles
one of the biggest challenges that our 
female employees face is returning to 
work after having children ab sugar 
twinings ovaltine and our uk grocery 
businesses have introduced maternity 
coaching and support to help women 
manage this important transition in the 
context of their professional lives 
another aspect of promoting diversity  
in the workplace is attracting young 
women into our businesses in the uk 
british sugar and ab agri are corporate 
members of women in science  
engineering which builds relationships 
with schools universities and educational 
groups we are developing a schools 
liaison programme to help build a 
pipeline of female leaders for the future
our commitment to human rights
we believe that being responsible 
towards all our stakeholders is 
fundamental to our responsibility as a 
business our commitment to respect 
human rights is founded in a strong ethos 
of workplace safety and employee 
wellbeing and is supported by our 
commitment to ensure compliance with 
the un declaration on human rights  
our commitment spans our duty to be 
responsible for our people to be a 
responsible neighbour and also to be 
responsible stewards of our environment 
protecting the lives we touch is important 
to us this means doing everything we 
can to respect the human rights of all our 
employees and workers involved in the 
supply of products and services in our 
global supply chain as a matter of good 
practice we riskassess the impact that 
our operations may have on the protection 
and respect of human rights we ensure  
a greater focus on operations under the 
jurisdiction of governments that have a 
lesser commitment to the protection of 
human rights
as part of our commitment in this area 
primark will by the end of 2014 have 
agreed and adopted a publically available 
human rights policy associated british 
foods is working towards having a full 
policy in place by the end of 2015
a fuller explanation of our approach to 
respecting human rights and providing 
remedy where necessary can be found  
at wwwabfcoukresponsibility 
responsible stewardship  
of our environment
the aspects of our operations that have 
the greatest direct environmental impact 
are those related to our use of energy  
and the resultant emission of greenhouse 
gases the abstraction of water and the 
generation and disposal of liquid and  
solid wastes our global policy and 
approach to managing our environmental 
impacts is to improve the efficient use  
of natural resources and to minimise any 
negative impact on the environment  
in 2014 our sites received 627 visits  
from the environmental regulator which  
is similar to the number of visits last year 
and most of which were routine 
energy use 
in 2014 our absolute use of energy was 
25416 gwh compared to 23316 gwh 
in 2013 
the yearonyear increase of 9 can 
largely be explained by the reporting  
for the first time of the additional energy 
use included in the scope of greenhouse 
gas reporting for example we are now 
reporting energy used in our agricultural 
operations whereas previously we 
reported only energy used in our 
factories offices and stores
we are pleased to report that 54 of  
our energy is derived from renewable 
sources this is a 3 increase since  
last year and demonstrates how our 
businesses continue to explore reducing 
dependency on fossil fuels and cut 
resultant emissions the majority of  
our renewable energy comes from the 
burning of sugar cane fibre once the sugar 
has been extracted this makes our onsite 
energy production and use of byproducts 
gender metrics
total
employees men women
percentage
of women in
workforce
number 
of senior
management
roles
number of
women in
senior
management
roles
percentage
of senior 
management 
who are 
women
sugar 37487 31645 5842 16 227 33 15
grocery 17133 11859 5274 31 868 307 35
ingredients 7092 5430 1662 23 490 132 27
agriculture 2100 1598 502 24 241 57 24
retail 54136 14567 39569 73 123 46 37
central 261 156 105 40 57 18 32
total 118209 65255 52954 45 2006 593 30
 fulltime parttime and seasonalcontractors 
 includes directorships of subsidiary undertakings
associated british foods annual report and accounts 2014
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strategic report
corporate responsibility a very efficient closed system across 
illovo 93 of all energy consumed is 
sourced from renewable sources
water usage and disposal of  
waste water 
since 2010 we have made extensive 
investments in developing our operational 
management and reporting of water the 
majority of our businesses have robust 
measurement and reporting systems in 
place a number have implemented  
water efficiency programmes with the 
management of water quantity and 
quality as priorities illovo in africa has 
prepared a fiveyear strategic water 
management plan this year a new 
methodology has been implemented  
for calculating the water footprint of each 
site to quantify consumption of surface 
water groundwater and rain
we believe more work is required  
to accurately measure our global  
water footprint and to be confident  
that data provides a fair representation  
of our activities
this year over £6m was invested in 
improving the management of effluent 
and other waste water this includes £5m 
invested by our yeast business ab mauri 
in new expanded or improved effluent 
treatment plants in south america  
and china 
waste
in 2014 we generated 175000 tonnes  
of hazardous and nonhazardous waste 
which more than halves our previous 
year’s generation of such waste this 
significant reduction is due to the closure 
last year of three beet sugar factories in 
china whose soil and various filter 
residues were deemed to be waste  
under chinese legislation in addition our 
businesses have continued to work hard 
to find uses for what would otherwise  
be deemed as waste and sent to landfill  
we have increased our recycled or reused 
waste this year by 10 to 942000 
tonnes thereby diverting more material 
from increasingly scarce landfill sites
our high recycling rate is the positive 
outcome of focused attention by our 
businesses on improving their waste 
segregation and disposal management 
this includes a range of site specific 
activities such as engaging with new 
waste management contractors and 
improving waste segregation to allow  
for targeted reuse our waste recycling 
results in a wide range of applications 
including environmental restoration  
and landscaping soil ph treatment and 
fertiliser the production of paper and 
energy generation we also recycle a 
number of byproducts including plastic 
paper and cardboard metal glass mud 
and ash
packaging
the quantity of packaging used in our 
products since 2013 has been reduced  
by 3 from 238000 tonnes to 230000 
tonnes this continues a longterm 
downward trend in packaging use  
since 2008
responsible sourcing of palm oil
over recent years we have increased  
our focus on ethical procurement 
adapting to emerging customer 
expectations and our own improved 
understanding of the environmental 
impacts potentially associated with our 
products ultimately we strive for a  
global farming system and environment 
that is sustainable 
in 2013 we reported that all our grocery 
businesses were committed to the 
responsible sourcing of palm oil and  
by 2015 will use only rspo certified 
palm products 
we have strengthened this commitment 
and are now working towards all of our 
businesses being 100 compliant in 
sourcing only rspo certified sustainable 
palm oil products 
type of energy used in 2014 
1 renewable fuels 54
2 natural gas 27
3 solid fuels 8
4 electricity 7
5 imported steam 2
6 liquid fuels 2
 we are pleased to report that 54 of our  
energy is derived from renewable sources  
this is a 3 increase since last year
1
3
4
5
6
2
associated british foods annual report and accounts 2014
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strategic report
corporate responsibility being responsible for our people
a business priority is to safeguard the 
wellbeing development and safety of  
our people and those who work with us 
we put significant effort into ensuring that 
our businesses are safe places to work 
and aim to offer our people the support 
most suitable for their role during 2014 
we invested £32m in ensuring the safety 
of our equipment and improving working 
conditions for our people 
health and safety 
providing safe and healthy working 
conditions are of paramount importance 
we try very hard to reduce injuries in 
every location and have a clear 
requirement for continuous improvement 
during 2014 we received 425 visits from 
safety regulatory authorities fewer than 
the 509 visits we received last year  
the regulator visits were mainly routine 
but also included accident investigations 
we ensure that any findings from 
regulators are acted upon immediately 
injuries to our employees
this is the fifth consecutive year that we 
have reported a reduction in reportable 
injuries in 2014 reportable injuries have 
fallen by a further 16
the percentage of employees having  
a reportable injury has reduced from 
049 of our total workforce in 2013  
to 040 in 2014
since 2008 we have been able to report 
a downward trend in the total lost time 
injuries to our employees each year in 
2014 these totalled 537 which was 6 
lower than last year and 45 lower than 
2008 this equates to a reduction of 3 
in the number of employee days lost due 
to lost time injuries compared with last 
year in total 386 of our sites did not have 
a lost time injury for our reporting 
purposes a lost time injury arises out of 
or in connection with abf work activities 
and results in the employee being absent 
from work for at least one day or shift 
within 12 months of the accident
these facts demonstrate the continued 
importance of investing in the strong 
safety culture of our business 
safety fines 
during 2014 four sites received fines 
totalling £31000 for breaches of safety 
regulations which is a reduction of 29 
from 2013 all businesses are required  
to report to the group when and how 
remedial actions are implemented 
being a responsible neighbour
a good business takes seriously its 
responsibility to treat the people who live 
close to its operations with respect and in 
a neighbourly manner we seek to be 
welcomed around the world as a positive 
contributor to the life of the community
illovo socioeconomic and human 
capital impact
in 2013 illovo having identified 
community collaboration as a key 
strategic priority invited sustainability 
experts corporate citizenship to conduct 
two research projects on its operations  
in southern africa one area of research 
focused on human capital and the role  
the business has in supporting the skills 
health and education levels of local 
communities the other research project 
focused on the socioeconomic impact  
of the business
this research revealed that illovo 
contributed an estimated £1bn to  
african economies last year which is 
equivalent to about 50 of the gdp of 
malawi as well as directly employing 
29000 people it supports the livelihoods 
of more than 400000 people it also 
contributed £108m in social benefits  
to employees and neighbouring 
communities including healthcare 
education housing and other projects
reportable injuries 
reportable according to the differing laws 
of each country
372
551
514
445 443
2010 2011 2012 2013 2014
reportable injury rate
040
070
051
061
049
2010 2011 2012 2013 2014
 since 2008 we have been able to report a 
downward trend in the total lost time injuries  
to our employees each year
associated british foods annual report and accounts 2014
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strategic report
corporate responsibility balance of its portfolio over time  
they have reformulated the original 
crunchy bar which now contains  
23 less fat 24 less sugar and  
62 less saturated fat
we can also improve the nutritional value 
of a product by adding to it in march 
2014 allied milling and baking launched 
kingsmill great white in the uk which has 
the same amount of fibre as wholemeal 
bread see page 17 for more information
helping our people to be healthy
in addition to considering the health 
benefits of our products many of our 
businesses have programmes in place  
to help staff stay fit and well these 
initiatives help to improve health boost 
morale and lower staff absence making 
them good for business as well as for  
our teams
ab sugar signed the uk government’s 
public health responsibility deal pledge 
on physical activity and introduced a  
new ‘future fit’ programme for staff 
speedibake devoted a week in august 
2014 to events and presentations  
and george weston foods has 
introduced a new training module  
on health and wellbeing
in september 2013 azucarera signed  
the luxembourg declaration on 
workplace health promotion signalling 
the company’s commitment to  
improving the health of their employees 
and promoting wellbeing at work since 
then azucarera has implemented a 
number of health campaigns including 
offering vaccines and monitoring the risk 
factors of cardiovascular disease such as 
weight gain and elevated blood pressure 
in its workers
promoting good health in 
communities
for our businesses in developing 
countries health challenges are 
sometimes best addressed at the 
community level when attempting to  
limit the spread of a disease this benefits 
our workforce but also their families  
and neighbours
in southern africa malaria is a persistent 
threat and ilovo sugar has invested in  
an integrated malaria control strategy  
in mozambique ilovo sugar is working 
with the government to expand its 
programme of home spraying into the 
local community in one community in 
mozambique this resulted in a 62 drop 
in recorded cases of malaria in a year
twinings ovaltine works with three 
international ngos unicef save  
the children and mercy corps on 
programmes designed to improve the 
health of workers and wider communities 
all three partnerships continue to deliver 
positive results
in india twinings ovaltine’s collaboration 
with unicef and local tea producers in 
assam is aimed at improving the lives of 
7000 women living with family members 
who work on tea gardens the project 
was launched in 2011 and by march 
2014 anaemia levels in adolescent girls 
living on tea estates had been reduced by 
13 and the proportion of girls who are 
chronically malnourished had been 
reduced by a third twinings ovaltine is 
continuing to work with unicef in this 
region evolving this project to protect 
34000 girls in 63 tea gardens by 2017
helping mexican craft bakers thrive
ab mauri wanted to both understand  
its customers and help them succeed  
so it set about analysing the craft bakery 
sector in mexico it found that there was a 
wide range of barriers to success from a 
lack of knowledge to a lack of willingness 
to adapt to new market conditions it also 
found that small bakers were uncertain 
about how to secure new funding and 
invest wisely a multiyear initiative 
project lighthouse aims to redevelop 100 
craft bakeries around mexico ab mauri 
has committed to being a supportive 
partner with credible experience and 
knowledge to help these bakers thrive 
the first store to benefit from the project 
has seen revenues increase by 40 with 
queues forming at busy times
being responsible for promoting  
good health
promoting good health is a principle  
our businesses put into action every  
day at the most direct level this means 
striving for the highest standards on  
food safety and improving the nutritional 
content of our food and ingredients 
where we have less control we aim to 
use our influence to improve the health  
of the people around us by implementing 
employee wellbeing programmes and 
supporting the health of workers in 
developing countries
making our products even better
we continue to explore ways in which  
to improve the nutritional content of our 
products particularly by adding nutrients 
or reducing the proportion of fat and 
sugar maintaining great tasting products 
is a crucial part of this reformulation 
activity we want to help people eat better 
while still enjoying the products they love
jordans ryvita has sought guidance  
from leading academics to create a 
sciencebased nutrition strategy 
supported by targets to improve the 
composition of its products and the 
associated british foods annual report and accounts 2014
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strategic report
corporate responsibility procedures and controls are put in place 
to mitigate risks and all employees are 
provided with appropriate information 
training and supervision further details  
of our risk mitigation activities can be 
found in our corporate responsibility 
report at wwwabfcoukresponsibility
the board reviews annually the material 
financial and nonfinancial risks facing  
our businesses and on a rolling cycle 
basis reviews the effectiveness of  
the risk management process and the 
resources that our individual businesses 
devote to them the principal risks 
currently identified by our businesses  
and reviewed by the board are detailed  
on the following pages
each business is responsible for its own 
risk management assessment which is 
reported to the group’s director of 
financial control annually our 
decentralised business model empowers 
the boards and management of our 
businesses to identify evaluate and 
manage the risks they face on a timely 
basis key risks and internal control 
procedures are reviewed at group level  
by the board
we require all businesses to implement 
appropriate levels of risk management  
to ensure compliance with all relevant 
legislation our group health safety and 
environment policies our overriding 
business principles and group policies 
relating to them taking into account 
business needs and local circumstances
each business is responsible for regularly 
assessing its health safety and 
environmental risks with managers 
operators contracting companies and 
specialist staff working together to 
identify hazards appropriate operational 
principal risks  
and uncertainties
our decentralised business model empowers  
the boards and management of our businesses  
to identify evaluate and manage the risks they 
face on a timely basis 
associated british foods annual report and accounts 2014
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strategic report
principal risks and uncertainties people
issue risk mitigation
product safety reputational damage 
caused by food hygiene or 
product safety incidents 
noncompliance with 
regulatory requirements 
public concerns over 
materials used in packaging 
and ingredients in products
food safety is put before economic considerations 
our businesses employ quality control specialists and operate strict policies to ensure 
consistently high standards are maintained in our operations and in the sourcing and 
handling of raw materials 
food safety systems are regularly reviewed for efficacy and legal compliance
we participate in independent food health and safety audits quality and food safety 
audits are undertaken at our manufacturing sites 
documented and tested product recall procedures are embedded in all our businesses 
and are regularly reviewed
we proactively monitor the regulatory and legislative environment as well as emerging 
scientific research 
health and 
nutrition
health concerns over fat 
salt and calorie content  
of foods 
responding correctly  
to the spectrum of food 
poverty and malnutrition 
versus obesity
inappropriate advertising  
to children
recipes are regularly reviewed and reformulation is conducted to improve the 
nutritional value of products with a focus on reducing fat salt and calorie content 
where possible
our uk grocery group has signed the uk government’s ‘public health responsibility 
deal’ and associated pledges to reduce salt remove trans fats and promote healthy 
eating and lifestyle options 
all of our grocery products are labelled with nutritional information 
our uk grocery portfolio contains only a small number of products specifically intended 
for children these products are marketed responsibly following accepted codes of 
practice and within the parameters of a clear operational business policy 
we are looking further to continue programmes related to health and nutrition and to 
develop partnerships to help educate people about health and nutrition
workplace  
health and  
safety 
potential for fatal accidents 
and serious injuries to 
employees contractors  
and visitors
loss of healthy workforce 
and supply chain due to 
diseases such as hivaids 
tb and malaria in highrisk 
countries
group health and safety policy and practices are embedded with a strong ethos of 
workplace safety across the group we maintain a programme of audits to verify 
implementation and support continuous improvement 
accountable senior executives and specialists are appointed
we provide health and safety training and continue to share guidance and best practice 
with our businesses
we have extended the internal and external auditing of health safety and management 
reporting
we continue to invest in health and safety management 
management 
succession
failure to plan for succession 
to key roles could lead to a 
lack of management 
continuity and suboptimal 
operational or financial 
performance
each business has a succession plan which is reviewed with group management twice 
a year and with the board annually
development of our senior managers is coordinated by the group hr director and the 
head of executive development
a small number of executive search companies have been briefed to introduce us to 
talented executives from other companies who could add value to the group
associated british foods annual report and accounts 2014
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strategic report
principal risks and uncertainties people
issue risk mitigation
suppliers and 
supply chain 
reliability
damage to brands  
caused by supply chain 
weakness eg poor 
conditions for workers 
problems with supply 
reliability caused by  
natural disasters and  
other incidents
understanding the 
sustainability and 
responsible business 
practices of our suppliers 
maintain programme of supplier audits where appropriate extensive audit programme 
for labour standards of suppliers 
we have introduced a supplier code of conduct which is being implemented across  
all our businesses tailored to their requirements 
we continue to work in partnership with suppliers and ngos to improve working 
conditions eg via training
continued focus on worker safety and safe working conditions we have built up an 
intensive programme of ethical audits in primark’s supply chain
primark has maintained its classification as a leader by the ethical trade initiative  
and we are mapping second tier suppliers subcontractors
the grocery division conducts independent reviews of the environmental and ethical 
risks in their supply chain to increase understanding
external communication and transparency on the management of our supply chain  
in primark and grocery has been enhanced
business continuity and disaster recovery plans are regularly reviewed
ethical business 
practices
unacceptable business 
practices which contravene 
our business principles
reputational damage 
through the irresponsible 
business practices of 
individuals
penalties imposed through 
bribery corruption or unfair 
competition
all businesses are signed up to the group’s business principles and antibribery and 
corruption policy
a programme of training and compliance has been implemented for all employees
appointment of antibribery and corruption specialists
businesses work cooperatively to ensure visibility of reputational risk within supply 
chains and draw upon best practice management expertise across the group including 
primark and twinings
environment
issue risk mitigation
environment 
management 
including climate 
change
longterm increase in  
energy prices
physical threats to  
operations from climate 
change eg flooding 
climate change impact 
altering growth rates of raw 
materials we use 
increasing cost to operations 
to adapt to climate change 
and mitigate impact
negative impact on the 
environment and the 
communities which  
depend on land used by  
our operations
compliance with the group’s environment policy and annual reporting of 
environmental impact
best available techniques are employed to reduce energy consumption – statutory 
requirement for all sites subject to the eu’s pollution prevention and control regime
agricultural raw materials are sourced from a wide range of geographical locations 
and suppliers
we have a continued focus on reducing our environmental impact and implementing 
changes to our operations to maximise opportunities such as recycling more waste 
and using more renewable sources of fuel
we have implemented infrastructural protections against weatherrelated risks  
such as floods
greenhouse gas emissions are measured and reported annually and are subject  
to assurance by kpmg llp
substantial investment is made to improve environmental risk management with  
a focus on energy efficiency when investing in new capital projects 
water use and 
availability
securing access to sources 
of water and maintaining 
water availability for all
ensuring good practices  
in sharing and managing 
water supplies with local 
communities 
operating in water  
stress areas
waterintensive sites in areas of water stress identified and efforts focused on water 
efficiencies in these areas
investing heavily in the quality of our water usage data to enable improved 
measurement and management of water use and water quality
investment in irrigation systems
look to build longterm partnerships to address water issues at a local level
finalise the standardised approach to water measurement across the group so that 
we can target investment and build an effective water stewardship
associated british foods annual report and accounts 2014
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strategic report
principal risks and uncertainties financial and regulatory 
issue risk mitigation
competition rules penalties for failing to comply with the 1998 
competition act the 2003 enterprise act 
relevant eu law and all relevant competition 
legislation
clear policy direction and close support from specialist inhouse 
legal department 
compulsory awareness training
financial currency 
and commodity risks
loss sustained as a result of failure of internal 
controls or fraud and exposure to foreign 
currencies interest rates counterparty credit 
risk liquidity risk and changes in market prices 
especially for energy and commodities 
adherence to the group’s financial control framework and 
antifraud policy
treasury operations are conducted within a framework of 
boardapproved policies and guidelines
sufficient funding is maintained by way of external loans and 
committed bank facilities which are renewed or extended  
on a timely basis having regard to the group’s projected  
funding needs
financial transactions are dealt through financial institutions with 
a credit rating of a or better details of the group’s accounting 
and risk management policies with respect to financial 
instruments and associated quantitative and qualitative 
disclosures are set out in note 24 on pages 118 to 127
tax compliance failure to comply with local tax law resulting in 
underpayment of tax and exposure to related 
interest and penalties
the group has a financial control framework and a board adopted 
tax policy requiring all businesses to comply fully with all relevant 
local tax law
provision is made for known issues based on management’s 
interpretation of countryspecific tax law and the likely outcome 
any interest and penalties on tax issues are provided for in the 
tax charge
it security breach data loss or theft
business disruption
group it security policies and procedures are rolled out across 
the businesses
employee awareness campaigns are undertaken to highlight key 
activities to minimise it security risks
technical security controls are in place over key it platforms
head of it security is tasked with identifying security risks and 
working with the businesses to implement mitigating controls
internal audit reviews of compliance with policies and procedures 
are undertaken
loss of a major site the loss of one of our key sites could present 
significant operational difficulties
our businesses have in place business continuity plans to 
manage the impact of such an event and group insurance 
programmes to mitigate the financial consequences
regulatory and 
political
failure to recognise political or cultural 
differences in the many countries in which we 
operate could directly impact the success of 
our operations 
proposals to end sugar quotas in 2017
we remain vigilant to future changes and the risk presented by 
operating in emerging markets
we engage with governments and ngos to ensure the views  
of our stakeholders are represented and we try to anticipate  
and contribute to important changes in public policy
our financial control requirements are consistently applied 
wherever we operate
major capital  
projects and 
acquisitions
risk of overspending initial cost estimates 
overrunning construction timelines and failure 
to meet design specifications
all major projects are managed by dedicated teams who work  
in close liaison with business management 
project plans are reviewed and approved by group management 
and for larger projects by the board updates on progress are 
provided throughout the project
on behalf of the board
charles sinclair
chairman
george weston
chief executive
john bason
finance director
associated british foods annual report and accounts 2014
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strategic report
principal risks and uncertainties board of directors
george g weston
chief executive age 50
george was appointed to the board in 1999 
and took up his current appointment as chief 
executive in april 2005 in his former roles at 
associated british foods he was managing 
director of westmill foods allied bakeries  
and george weston foods limited australia 
other appointments he is a nonexecutive 
director of wittington investments limited and 
a trustee of the garfield weston foundation
charles sinclair 
chairman age 66 
charles was appointed a nonexecutive 
director in october 2008 and as chairman  
in april 2009 with wide business experience  
of both the uk and overseas his executive 
career was latterly with daily mail and  
general trust plc where he was chief 
executive from 1989 until he retired from  
that role and the board in september 2008
committee membership chairman of the 
nomination and remuneration committees
john bason 
finance director age 57
john was appointed as finance director in 
may 1999 he was previously the finance 
director of bunzl plc and is a member of  
the institute of chartered accountants  
in england and wales
other appointments he is a nonexecutive 
director of compass group plc a trustee  
of voluntary service overseas and deputy 
chairman of the charity fareshare
emma adamo 
nonexecutive director age 51
emma was appointed as a director in 
december 2011 she was educated at 
stanford university and insead in france 
other appointments she is a director of 
wittington investments limited and of the  
w garfield weston foundation in canada
associated british foods annual report and accounts 2014
50
governance
board of directors peter smith
independent nonexecutive director 
age 68
peter was appointed a director in  
february 2007 and brings broad experience  
of international financial matters  
formerly he was senior partner at 
pricewaterhousecoopers pwc in the uk  
he served for two years as chairman of 
coopers  lybrand international and as a 
member of the global leadership team of  
pwc he was also chairman of rac plc and  
a nonexecutive director of safeway plc 
other appointments he is chairman of  
savills plc and templeton emerging markets 
investment trust plc and a member of the 
supervisory board of paris orléans sca he is 
also chairman of the land restoration trust
committee membership chairman of the audit 
committee and a member of the nomination and 
remuneration committees
timothy clarke
independent nonexecutive director 
age 57
tim was appointed a director in november 
2004 and has been senior independent 
director since december 2007 tim has 
extensive experience of retailing until 2009 
he was chief executive of mitchells   
butlers plc following its demerger from  
six continents plc where he also held the 
position of chief executive previously he  
had been a partner of panmure gordon  co 
before joining bass plc in 1990 
other appointments he is a nonexecutive 
director of two pub and brewing companies 
hall  woodhouse limited and timothy taylor 
 company limited and also triple point vct 
2011 plc
committee membership member of the 
nomination and remuneration committees
javier ferrán 
independent nonexecutive director 
age 58
javier was appointed a director in november 
2006 he spent the earlier part of his career 
with bacardi group where latterly he served 
as president and chief executive officer  
he has indepth knowledge of consumer 
brands on an international basis and of 
international financing 
other appointments he is currently a partner 
at lion capital llp  a londonbased private 
equity firm
committee membership member of the audit 
nomination and remuneration committees
ruth cairnie
independent nonexecutive director 
age 60
ruth was appointed a director in may 2014 
she has extensive overseas experience 
including international marketing and supply 
chain ruth was formerly executive vice 
president strategy  planning at royal dutch 
shell plc this role followed a number of  
senior international roles within shell including 
vice president of their global commercial 
fuels business she is a physicist by 
qualification 
other appointments she is a nonexecutive 
director of keller group plc and of rollsroyce 
holdings plc
committee membership member of the audit and 
remuneration committees
lord jay of ewelme gcmg
independent nonexecutive director 
age 68
lord jay was appointed a director in november 
2006 and has broad experience of government 
and international business during his career in 
public service he was british ambassador to 
france from 1996 to 2001 and permanent 
under secretary at the foreign  
commonwealth office from 2002 to 2006 
other appointments he is a nonexecutive 
director of candover investments plc valeo 
the frenchbased automobile parts company 
and of electricité de france he has been an 
independent member of the house of lords 
since 2006 he is also chairman of the british 
library advisory council
committee membership member of the audit 
nomination and remuneration committees
associated british foods annual report and accounts 2014
governance
board of directors corporate governance
dear shareholder 
maintaining and promoting a high standard of corporate governance remains fundamental to the board’s ability to discharge its duties 
to shareholders and it is central to my role as chairman of associated british foods 
as i have already highlighted in my chairman’s statement on page 5 in may we were delighted to welcome ruth cairnie to the  
board as an independent nonexecutive director ruth brings a wealth of strategic and international experience and her appointment 
broadens the range of perspectives on the board the formal rigorous process by which ruth was appointed is described in the 
nomination committee report on page 59 
i believe that associated british foods already benefits from a strong cohesive board however we will continue to assess and refresh 
the composition of the board to maintain an appropriate balance and diversity of skills and experience and to ensure that it evolves in 
line with the group’s needs 
after a successful externally facilitated board evaluation carried out in 2012 we undertook evaluations internally both last year and in 
the year under review in last year’s report we set out a number of key points identified for action and i have monitored the progress in 
implementing these actions during the year on page 55 we report on the progress made and provide a description of the process we 
used in this year’s evaluation exercise along with a summary of the key findings 
at this year’s annual general meeting all the directors will stand for election or reelection during the year under review the financial 
conduct authority introduced changes to the listing regime which focused on companies such as associated british foods with a 
controlling shareholder one of the new requirements arising out of these enhanced regulations is that our independent nonexecutive 
directors will be subject to a dual vote by shareholders at the annual general meeting to be held in december as set out in the 
explanatory notes accompanying the notice of agm this means that each resolution to elect or reelect an independent nonexecutive 
director must be approved by both a majority vote of all shareholders and a majority vote of the company’s independent shareholders 
in the following pages we outline our approach to governance and i hope that we are able to demonstrate clearly how our corporate 
governance practices support our strategy to create sustainable longterm growth for shareholders we will continue to keep our 
corporate governance practices under review particularly in light of the updated version of the uk corporate governance code 
published in september this year which first applies to companies with financial years beginning on or after 1 october 2014 we 
welcome questions or comments from shareholders either via our website wwwabfcouk or in person at the annual general meeting
charles sinclair
chairman
compliance with the uk corporate 
governance code
as a premium listed company on the 
london stock exchange the company  
is reporting in accordance with the uk 
corporate governance code published in 
september 2012 the ‘code’ which sets 
out standards of good practice in relation 
to board leadership and effectiveness 
remuneration accountability and relations 
with shareholders the code is published 
by the uk financial reporting council 
‘frc’ and a copy of the code is available 
from the frc website wwwfrcorguk 
the board considers that the company 
has throughout the year ended 13 
september 2014 applied the main 
principles and complied with the 
provisions set out in the code with  
the following exception
leadership
the board
the board is collectively responsible to 
the company’s shareholders for the 
direction and oversight of the company to 
ensure its longterm success the board 
met regularly throughout the year to 
approve the group’s strategic objectives 
to lead the group within a framework of 
effective controls which enable risk to be 
assessed and managed and to ensure 
that sufficient resources are available to 
meet the objectives set
the board has agreed the specific 
business and governance matters which 
are reserved for its decision to help it 
discharge these responsibilities and 
oversee control of the company’s affairs 
this schedule of matters reserved for  
the board’s approval includes
• annual business strategy and 
objectives budget and forecasts 
• monitoring delivery of the group’s 
business strategy and objectives
code provision status explanation
d21 – the 
chairman should 
not chair the 
remuneration 
committee
charles sinclair is 
both chairman of  
the company and 
chairman of the 
remuneration 
committee
the board of associated british foods plc 
considers that charles sinclair due to  
his experience is best suited to chair 
this committee no director has any 
involvement in the determination of his 
own remuneration the board believes 
that the company has maintained  
robust governance while at the same 
time benefiting from having charles 
sinclair as the chairman of the 
remuneration committee
associated british foods annual report and accounts 2014
governance
corporate governance
52 board
audit 
committee
nomination
committee
remuneration
committee
charles sinclair 88 – 11 66
george weston 88 – – –
john bason 88 – – –
emma adamo 88 – – –
ruth cairnie
1
33 22 – 33
tim clarke 88 – 11 66
javier ferrán
2
78 55 01 66
lord jay 88 55 11 66
peter smith 88 55 11 66
1  
ruth cairnie was appointed as a director and as a member of the audit and remuneration committees 
with effect from 1 may 2014
2
  javier ferrán was unable to attend a board meeting and nomination committee meeting because of 
other business and personal commitments however he reviewed the relevant papers and provided 
comments as appropriate to the chairman
• changes to the company’s capital 
management or control structures
• dividend policy and dividend 
recommendation
• tax and treasury policies
• trading statements interim results 
interim management statements final 
results annual report and accounts
• the overall system of internal control 
and risk management
• major capital projects corporate actions 
or related actions and investment
• communications policy including 
procedures for the release of price 
sensitive information
• changes to the structure size and 
composition of the board 
• appointment of directors and the 
company secretary and
• material changes to pension plans or 
the introduction of new schemes
certain specific responsibilities are 
delegated to the board committees 
notably the audit remuneration and 
nomination committees which operate 
within clearly defined terms of reference 
and report regularly to the board for 
further details please see ‘board 
committees’ section below
chairman and chief executive
the roles of the chairman and the  
chief executive are separately held and 
the division of their responsibilities is 
clearly established set out in writing  
and agreed by the board to ensure that 
noone has unfettered powers of 
decision the chairman charles sinclair 
is responsible for the operation and 
leadership of the board ensuring its 
effectiveness and setting its agenda  
the chief executive george weston  
is responsible for leading and managing 
the group’s business within the 
authorities delegated by the board and  
the implementation of board strategy  
and policy
senior independent director
tim clarke is the company’s recognised 
senior independent director the role of 
the senior independent director is to act 
as a sounding board for the chairman and 
to serve as an intermediary for other 
directors where necessary he is also 
available to shareholders should a need 
arise to convey concerns to the board 
which they have been unable to convey 
through the chairman or through the 
executive directors during the year led 
by the senior independent director the 
nonexecutive directors met once without 
the presence of the chairman to appraise 
his performance
the nonexecutive directors
in addition to their responsibilities for 
strategy and business results the 
nonexecutive directors play a key role  
in providing a solid foundation for good 
corporate governance and ensure that  
no individual or group dominates the 
board’s decisionmaking they each 
occupy or have occupied senior 
positions in industry or public life bringing 
a valuable external view to the board’s 
deliberations through their experience  
and insight from other sectors enabling 
them to contribute significantly to board 
decisionmaking the formal letters of 
appointment of nonexecutive directors 
are available for inspection at the 
company’s registered office
election and reelection of directors
in accordance with the code’s 
recommendations all directors will be 
proposed for election or reelection at  
the 2014 annual general meeting to be 
held in december
board meetings
the board held eight meetings during the 
year periodically board meetings take 
place overseas and during the year  
under review one of the meetings was 
held in marseille the board visited the 
primark store in marseille providing the 
nonexecutive directors in particular  
with the opportunity to meet local 
management and other employees 
senior executives below board level are 
invited when appropriate to attend board 
meetings and to make presentations  
on the results and strategies of their 
business units papers for board and 
committee meetings are generally 
provided to directors a week in advance 
the attendance of the directors at board 
and committee meetings during the year 
to 13 september 2014 is shown in the 
table below
board committees 
the board has established three principal 
board committees to which it has 
delegated certain of its responsibilities 
these are the audit committee the 
nomination committee and the 
remuneration committee the 
membership responsibilities  
and activities of these committees  
are described later in this corporate 
governance report and in the case of  
the remuneration committee in the 
remuneration report on page 78 
membership of these committees is 
reviewed annually minutes of committee 
meetings are made available to all 
directors on a timely basis
the chairman of each of the audit 
nomination and remuneration 
committees intend to be present at  
the annual general meeting to answer 
questions on the work of their  
respective committees
the full written terms of reference for  
the nomination audit and remuneration 
committees are available on the 
company’s website wwwabfcouk  
and hard copies are available on request
directors’ insurance 
the company has in place appropriate 
directors’ and officers’ liability insurance 
cover in respect of legal action against its 
executive and nonexecutive directors 
amongst others
associated british foods annual report and accounts 2014
governance
corporate governance
53 the work of the board during the year 
during the financial year key activities of 
the board included
strategy 
• annual discussion focusing on strategy
• expansion of primark into the us 
including visits to the boston area by  
a number of directors
governance and risk
• approving the company’s full year and 
interim results
• recommending the 2013 final dividend 
and approving the 2014 interim 
dividend
• annual review of the material financial 
and nonfinancial risks facing the 
group’s businesses
• receiving both regular divisional food 
safety updates and an annual 
groupwide update 
• participating in the annual board 
performance evaluation and receiving  
a report on the evaluation
• receiving regular updates on 
regulatory matters
• confirming directors’ independence
performance monitoring
• receiving regular reports to the board 
from the chief executive
• receiving on a rolling 18month basis 
senior management presentations 
from each of the group’s business 
areas 
• approving the group budget for the 
201415 financial year
• undertaking an annual impairment 
review of goodwill and property  
plant and equipment
• receiving regular feedback on 
directors’ meetings held with 
institutional investors
• receiving reports from the audit 
committee chairman
corporate responsibility
• approving the corporate responsibility 
report 2013 and 2014 updates
• receiving regular management reports 
on health safety and environment 
issues
• receiving an update on primark  
ethical sourcing
people
• appointment of ruth cairnie as an 
independent nonexecutive director
• receiving and considering updates  
on senior management succession 
planning and people activities
various
• approving updated terms of reference 
for the audit committee and the 
remuneration committee
• undertaking appropriate preparations 
for the holding of the annual general 
meeting and subsequently discussing 
issues arising from that meeting
effectiveness
board composition
at the date of this report the board 
comprises nine directors
chairman
charles sinclair
executive directors 
george weston chief executive
john bason finance director
 no n  e x e c ut i v e d ire c t o r s
emma adamo
ruth cairnie 
tim clarke
javier ferrán
lord jay
peter smith
ruth cairnie was appointed as a 
nonexecutive director with effect from  
1 may 2014
emma adamo is not considered as 
independent by the board in view of her 
relationship with wittington investments 
limited the company’s majority 
shareholder she was appointed in 
december 2011 to represent this 
shareholding on the board of the 
company the board considers that the 
other five nonexecutive directors are 
independent in character and judgement 
and that they are each free from any 
business or other relationships which 
would materially interfere with the 
exercise of their independent judgement 
the board continues to keep tim clarke’s 
independence under review being 
mindful that the code requires that if a 
director has served on the board for more 
than nine years the board should state its 
reasons why it considers the director 
notwithstanding his or her length of 
service to be independent having given 
the matter careful consideration the 
board is satisfied that tim clarke 
continues to demonstrate the qualities  
of independence in carrying out his role  
as a nonexecutive director and senior 
independent director supporting the 
team in an objective and independent 
manner tim will retain his role as senior 
independent director and will offer 
himself for reelection at this year’s annual 
general meeting the board will continue 
to keep his independence under review
biographical and related information 
about the directors is set out on pages  
50 and 51
appointments to the board
there is a formal rigorous and  
transparent procedure for the 
appointment of new directors to the 
board details are available in the 
nomination committee report set out  
on page 58 which also provides details  
of the committee’s role and activities
commitment
the letters of appointment for the 
chairman and the nonexecutive directors 
set out the expected time commitment 
required of them and are available for 
inspection by any person during normal 
business hours at the company’s 
registered office and at the annual general 
meeting other significant commitments 
of the chairman and nonexecutive 
directors are disclosed on appointment 
and require approval thereafter 
board development
the chairman with the support of the 
company secretary is responsible for  
the induction of new directors and the 
continuing development of directors 
associated british foods annual report and accounts 2014
governance
corporate governance
54 board induction – ruth cairnie
ruth cairnie joined the board as a 
nonexecutive director on 1 may 2014 and 
undertook a formal tailored programme 
of induction facilitated by the chairman 
and the company secretary
the purpose of the induction programme 
was to familiarise ruth with the way  
the group operates through its five 
strategic business segments and  
with its governance arrangements  
the programme took into account  
ruth’s experience and business 
perspectives and the committees on 
which she is to serve new directors are 
encouraged to accelerate their knowledge 
of the group by visiting a number of its 
businesses and operations 
key elements of the induction 
programme and site visits undertaken by 
ruth following her appointment to date 
are set out below
board and governance
• legal and regulatory duties of a uk 
listed company director
• the board and committee structure 
schedule of matters reserved to the 
board for its decision and committee 
terms of reference
• restrictions and process for dealing 
in the company’s shares
• procedure for dealing with board 
conflicts
• the group’s approach to corporate 
responsibility and diversity 
management meetings  
and site visits
• visit to twinings’ site at andover and 
attending budget review meeting
• attending budget review meetings 
for ab mauri ab ingredients  
ab sugar and george weston foods
• ab vista site visit including meetings 
with senior management
• visit to ab agri including meetings 
with members of the senior 
management team
• ab sugar site visit and meetings with 
senior management
• audit committee briefing with the 
group financial controller
• remuneration committee briefing 
with the group hr director and head  
of reward 
• visit to george weston foods in 
australia including meetings with 
senior management and site visits  
to castlemaine and chullora
training and development
the board is kept uptodate on legal 
regulatory and governance matters 
through regular papers from the company 
secretary and by presentations from 
internal and external advisers during  
the year the board received updates on 
developments in narrative reporting and 
executive remuneration reporting the 
impact of the uk and eu reviews of the 
audit market and other corporate 
governance developments 
information flow
the company secretary manages the 
provision of information to the board at 
appropriate times in consultation with the 
chairman and chief executive in addition 
to formal meetings the chairman and 
chief executive maintain regular contact 
with all directors the chairman also holds 
informal meetings with nonexecutive 
directors without any of the executives 
being present to discuss any issues 
affecting the group if this is thought 
necessary regular management  
updates are sent to directors to keep  
the nonexecutive directors informed  
of events throughout the group between 
board meetings and to ensure that they 
are kept fully advised of the latest issues 
affecting the group
board performance evaluation
an evaluation to assess the performance 
of the board as a whole its committees 
and that of the individual directors is 
conducted annually with the aim of 
improving the effectiveness of the board 
and its members and the performance of 
the group 
this year’s review which took place in the 
final quarter of the financial year was led 
by one of the independent nonexecutive 
directors lord jay together with 
nonexecutive director emma adamo 
process
a discussion guide was prepared and 
circulated to each director and the 
company secretary this included the 
following topics which formed the 
agenda around which each discussion 
was framed 
• risk management and governance – 
including the expanded role of the 
board in reviewing certain risk and 
governance issues such as food  
safety project management 
environmental responsibility health  
and safety ethics and supply chain  
and management succession 
• board structure organisation and 
dynamics – covering the combination  
of skills experience knowledge and 
diversity including gender diversity 
the clarity of leadership given to the 
organisation’s purpose direction and 
values how well the board works as  
a unitary body the individual and 
collective contribution of all members 
to the working of the board
• board efficiency and effectiveness – 
considering whether agendas are 
appropriately focused on strategy 
performance value creation and 
accountability the quality of divisional 
presentations the adequacy of time 
devoted to exchange of views and 
discussion before key decisions are 
taken the content of board papers  
on investment decisions including  
the rigour with which assumptions 
have been tested leadership by the 
chairman and the quality of strategic 
review and debate
• business performance – including the 
level and quality of reporting measures 
on business performance the trading 
updates provided to the board by the 
chief executive and whether these 
provide an appropriate degree of insight 
into the key opportunities and 
challenges facing the group
• people issues – covering management 
development and succession planning 
the board’s exposure to senior 
divisional management the group’s 
ability to attract sufficient talent to  
meet the group’s needs and 
remuneration strategy
• board committees – considering 
whether each key committee is 
working effectively addressing the  
key issues and being effectively 
chaired assessing whether the quality 
and clarity of information provided and 
depth of debate is in each case 
satisfactory and whether committee 
activities are reported back to the board 
in appropriate detail and 
• key issues for 2014 – both strategic  
and operational
lord jay and emma adamo undertook a 
confidential unattributable interview with 
each director the company secretary and 
each other based on the discussion guide 
following the meetings lord jay and 
emma adamo produced a written report 
which was discussed with the chairman 
associated british foods annual report and accounts 2014
governance
corporate governance
55 and the chief executive before being sent 
to board members and discussed at the 
following board meeting
a list of recommended action points 
arising from the 2013 evaluation was 
implemented under the direction of the 
chairman and included the actions set  
out in the table below
objective
board impact
the agenda was shaped to give 
sufficient prominence to certain key 
business issues identified during the 
2013 evaluation namely the expansion 
of primark the development of the 
food portfolio the implications of eu 
sugar regime reform and enhancing 
the performance of ingredients  
and george weston foods
corporate responsibility
regular additional time was made 
available on the board agenda to 
address the further development of 
the groupwide cr agenda the 
implications for each business division 
and the associated communication 
challenges
risk management
the board increased its focus  
on certain key risks arising from 
competitive regulatory health or  
cr issues in each business division
major investments
information was provided to the board  
in the area of key market demand  
and competitive dynamics when a  
major investment or proposal is  
under consideration
based on the responses and results from 
the 2014 evaluation it was the directors’ 
overall view that the board was cohesive 
and was continuing to work effectively  
as a unitary body with a good balance of 
support challenge and mutual trust it 
was also their view overall that the board 
committees continued to function 
efficiently and effectively each of the 
directors was considered to be making  
a valuable contribution and with proper 
commitment including of time to their 
respective roles 
a list of recommended action points 
arising from this year’s evaluation is being 
implemented under the direction of the 
chairman and examples of actions 
identified are set out in the table below
objective
board impact
an increased focus by the board at 
each board meeting on primark 
including fuller details of primark’s 
performance metrics and the  
progress of its expansion into the us
particular board focus to be given to 
the sugar division as further eu sugar 
regime reforms approach
more structured discussion at the 
board after each divisional presentation 
to consider the performance of the 
division and to allow comparison with 
the performance of other operations 
within the group
divisional presentations to the board  
to provide increased level of 
information on key competitors  
and market demand
regular discussions to take place 
between board members individually 
and separately with the chairman and 
the chief executive
the board to consider whether the 
board evaluation exercise when  
not carried out by an external 
consultant should regularly be  
carried out in rotation by two 
nonexecutive directors
risk management
the handling of risk to continue to be  
a priority for the audit committee and 
the board with each business division 
encouraged to cover risk routinely in 
their presentations to the board 
corporate responsibility
the annual report to the board on the 
environment to be separated from the 
report on health and safety given the 
growing importance of environmental 
issues to the group
remuneration committee
the chairmanship of the remuneration 
committee to be kept under review
2015 evaluation
in accordance with the code requirement 
that the annual performance evaluation 
should be conducted by an external 
facilitator at least every three years the 
board intends to appoint an external 
facilitator to lead the 2015 evaluation
conflicts of interest procedure
the company has procedures in place to 
deal with the situation where a director 
has a conflict of interest as part of this 
process the board
• considers each conflict situation 
separately on its particular facts
• considers the conflict situation in 
conjunction with the rest of the 
conflicted director’s duties under  
the 2006 act
• keeps records and board minutes as to 
authorisations granted by directors and 
the scope of any approvals given and
• regularly reviews conflict authorisation
the board has complied with these 
procedures during the year
associated british foods annual report and accounts 2014
governance
corporate governance
56 accountability
financial and business reporting
the board is required by the code to 
present a fair balanced and 
understandable assessment of the 
company’s position and prospects  
in relation to this requirement reference 
is made to the statement of directors’ 
responsibilities for preparing the financial 
statements set out on page 83 of this 
annual report and accounts the board 
recognises that its responsibility to 
present a fair balanced and 
understandable assessment extends  
to interim and other pricesensitive  
public reports reports to regulators and 
information required to be presented  
by statutory requests
business model
a description of the company’s business 
model for sustainable growth is set out in 
the group business model and strategy 
section on pages 8 and 9 and in the 
business strategies section on pages  
10 and 11 these sections provide an 
explanation of the basis on which the 
group generates value and preserves it 
over the long term and its strategy for 
delivering its objectives
going concern
after making enquiries the directors  
have a reasonable expectation that the 
company and the group have adequate 
resources to continue in operational 
existence for the foreseeable future 
accordingly and consistent with the 
guidance contained in the document  
titled ‘going concern and liquidity  
risk guidance for directors of uk  
companies 2009’ published by the  
frc they continue to adopt the going  
concern basis in preparing the annual  
financial statements
internal control and risk management
the board acknowledges its 
responsibilities for the group’s system  
of internal control to facilitate the 
identification assessment and 
management of risk the protection  
of shareholders’ investments and the 
group’s assets the directors recognise 
that they are responsible for providing  
a return to shareholders which is 
consistent with the responsible 
assessment and mitigation of risks
effective controls ensure that the group’s 
exposure to avoidable risk is minimised 
that proper accounting records are 
maintained that the financial information 
used within the business is reliable and 
that the consolidated accounts 
preparation and financial reporting 
processes comply with all relevant 
regulatory reporting requirements  
the dynamics of the group and the 
environment within which it operates  
are continually evolving together with its 
exposure to risk the system is designed 
to manage rather than eliminate the risk 
of assets being unprotected and to guard 
against their unauthorised use and the 
failure to achieve business objectives 
internal controls can only provide 
reasonable and not absolute assurance 
against material misstatement or loss
the directors confirm that there is a 
process for identifying evaluating and 
managing the risks faced by the group 
and the operational effectiveness of the 
related controls which has been in place 
for the year under review and up to the 
date of approval of the annual report and 
accounts they also confirm that they 
have regularly reviewed the system of 
internal controls utilising the review 
process set out below
standards
there are guidelines on the minimum 
groupwide requirements for health and 
safety and environmental standards 
there are also guidelines on the minimum 
level of internal control that each of the 
divisions should exercise over specified 
processes each business has developed 
and documented policies and procedures 
to comply with the minimum control 
standards established including 
procedures for monitoring compliance 
and taking corrective action the board  
of each business is required to confirm 
twice yearly that it has complied with 
these policies and procedures
high level controls
all operations prepare annual operating 
plans and budgets which are updated 
regularly performance against budget  
is monitored at operational level and 
centrally with variances being reported 
promptly the cash position at group and 
operational level is monitored constantly 
and variances from expected levels are 
investigated thoroughly 
clearly defined guidelines have been 
established for capital expenditure and 
investment decisions these include  
the preparation of budgets appraisal  
and review procedures and delegated 
authority levels
financial reporting
detailed management accounts are 
prepared every four weeks consolidated 
in a single system and reviewed by senior 
management and the board they include 
a comprehensive set of financial reports 
and key performance indicators covering 
commercial operational environmental 
and people issues performance against 
budgets and forecasts is discussed 
regularly at board meetings and at 
meetings between operational and  
group management the adequacy and 
suitability of key performance indicators  
is reviewed regularly all chief executives 
and finance directors of the group’s 
operations are asked to sign an annual 
confirmation that their business has 
complied with the group accounting 
manual in the preparation of consolidated 
financial statements and specifically to 
confirm the adequacy and accuracy of 
accounting provisions 
internal audit
the group’s businesses employ internal 
auditors both employees and resources 
provided by ernst  young where 
appropriate with skills and experience 
relevant to the operation of each 
business all of the internal audit activities 
are coordinated centrally by the group’s 
director of financial control who is 
accountable to the audit committee
all group businesses are required to 
comply with the group’s financial control 
framework that sets out minimum control 
standards a key function of the group’s 
internal audit resources is to undertake 
audits to ensure compliance with the 
financial control framework and make 
recommendations for improvement in 
controls where appropriate internal audit 
associated british foods annual report and accounts 2014
governance
corporate governance
57 also conducts regular reviews to ensure 
that risk management procedures and 
controls are observed the audit 
committee receives regular reports on 
the results of internal audit’s work and 
monitors the status of recommendations 
arising the committee reviews annually 
the adequacy qualifications and 
experience of the group’s internal audit 
resources and the nature and scope of 
internal audit activity in the overall context 
of the group’s risk management system 
the director of financial control meets 
with the chairman of the audit committee 
as appropriate but at least annually 
without the presence of executive 
management and has direct access  
to the chairman of the board 
remuneration
a separate remuneration report is set out 
on pages 64 to 79 and provides details of 
our remuneration policy and how it has 
been implemented together with the 
activities of the remuneration committee
articles of association and  
share capital
information in relation to share capital  
the appointment and powers of directors 
the issue and buy back of shares and 
significant interests in share capital is  
set out in the directors’ report  
on pages 80 and 81
relations with shareholders
engaging with shareholders
the board works to engage effectively 
with the company’s shareholders so  
that both its objectives and those of 
shareholders are understood 
the company announces its 
achievements and prospects to 
shareholders by way of interim 
management statements the interim 
results and annual report and accounts 
significant matters relating to the trading 
or development of the business are 
disseminated to the market by way of 
stock exchange announcements and  
by press release and postings on the 
company’s website 
the board continues to promote effective 
engagement with its shareholders and 
on behalf of the board the chairman 
chief executive and finance director have 
met institutional shareholders and 
financial analysts on a regular basis 
throughout the year to discuss the 
company’s business strategy and current 
performance at each board meeting  
the directors are briefed on shareholder 
meetings that have taken place and on 
the feedback received
the senior independent director is 
available to shareholders in the event that 
communication with the chairman chief 
executive or finance director has failed  
to resolve concerns or where such 
contact is inappropriate
the company secretary acts as a focal 
point for communications on matters  
of corporate governance and corporate 
responsibility
annual general meeting agm
the agm will be held on friday  
5 december 2014 at 1100 am at the 
congress centre in london the board 
views the agm as a valuable opportunity 
to communicate with private shareholders 
in particular for whom it provides the 
opportunity to hear about the general 
development of the business and to ask 
questions of the chairman and through 
him the chairmen of the key committees 
and other directors the practice has been 
for a short film to be shown at the meeting 
explaining a particular area of the group’s 
business at this year’s agm the film 
focuses on associated british foods as 
a company that nurtures and develops 
businesses of all sizes the film looks  
at three abf businesses ab vista 
twinings us and ab world foods which 
were small ten years ago and which  
have transformed over that time into 
significant operations operating across 
many markets
the notice of agm which sets out in  
full the resolutions for consideration by 
shareholders together with explanatory 
notes has been sent to shareholders and 
is also available on the investors section of 
the company’s website wwwabfcouk
nomination committee report
members
during the year and at the date  
of this report 
charles sinclair chairman 
tim clarke 
javier ferrán 
lord jay  
peter smith
key duties
in accordance with its terms of 
reference the nomination committee’s 
key duties include
• leading the process for board 
appointments and making 
recommendations to the board
• regularly reviewing the board structure 
size and composition including the 
skills knowledge independence 
experience and diversity 
recommending any changes 
• considering plans for orderly 
succession for appointments to the 
board and to senior management  
to maintain an appropriate balance  
of skills and experience within the 
company and to ensure progressive 
refreshment of the board 
• keeping under review the leadership 
needs of the group both executive and 
nonexecutive to ensure the continued 
ability of the group organisation to 
compete efficiently in the marketplace 
and
• before any appointment is made by the 
board evaluating the skills knowledge 
experience independence and 
diversity on the board and in light of 
this evaluation preparing a description 
of the role and capabilities required 
for a particular appointment 
governance
the nomination committee comprises a 
minimum of three members at any time  
a majority of whom are independent 
nonexecutive directors a quorum 
consists of two members being either 
two independent nonexecutive directors 
or one independent nonexecutive 
director and the chairman
executive directors members of senior 
management and other parties may be 
invited to attend meetings as appropriate 
the chairman does not chair the 
nomination committee when it is dealing 
with the appointment of his successor 
associated british foods annual report and accounts 2014
governance
corporate governance
58 in these circumstances the committee  
is chaired by an independent 
nonexecutive director elected by  
the remaining members 
the committee may take independent 
professional advice on any matters 
covered by its terms of reference at  
the company’s expense 
the committee chairman reports the 
outcome of meetings to the board
the full terms of reference of the 
nomination committee can be viewed  
on the investors section of the 
company’s website wwwabfcouk
board appointments process
the process for making new 
appointments is led by the chairman 
where appropriate external consultants 
are engaged to conduct a search for 
potential candidates who are considered 
on the basis of their skills experience  
and fit with the range of skills of the  
other members of the board the 
nomination committee has procedures 
for appointing a nonexecutive or an 
executive director and these are set  
out in its terms of reference 
meetings
the committee met once during the year 
under review
committee activities during the year
appointment of new independent 
nonexecutive director
both the nomination committee and the 
board are committed to the principle that 
appointments to the board should be 
made on the basis of merit 
during the year and with the progressive 
refreshing of the board in mind the 
chairman led the process for the 
appointment of a new independent 
nonexecutive director 
the services of external executive search 
consulting firm spencer stuart were 
retained to help identify potential 
candidates spencer stuart is 
independent with no other connection 
with the company and is a signatory to 
the ‘voluntary code of conduct for 
executive search firms’ on gender 
diversity and best practice
potential candidates were considered  
on the basis of their skills and  
experience in the context of the range  
of skills and experience of the existing 
board as a whole 
following a rigorous process of interviews 
and assessments and on the 
recommendation of the nomination 
committee the board approved the 
appointment of ruth cairnie with effect 
from 1 may 2014 
diversity policy at board level
as a board we recognise that diversity is 
key for introducing different perspectives 
into board debate and decisionmaking  
a genuinely diverse board comprises 
individuals with a range of personal 
attributes perspectives skills experience 
and backgrounds as well as representing 
differences in nationality race and gender 
while gender remains an important 
aspect of creating an optimal board in 
terms of balance and composition it 
remains the board’s policy to make new 
appointments based on merit candidates 
for future board appointments will be 
considered from the widest possible pool 
although we will continue to ask any 
executive search agencies engaged to 
ensure that half of the candidates they  
put forward for consideration are women 
reelection of nonexecutive 
directors
the committee reviewed the results  
of the annual board performance 
evaluation that related to the  
composition of the board and the time 
needed to fulfil the roles of chairman 
senior independent director and 
nonexecutive director it was satisfied 
that all members of the board are 
devoting sufficient time to their duties 
the committee considered the 
reelection of directors prior to their 
recommended approval by shareholders 
at the annual general meeting the 
nonexecutive directors who have been 
on the board for more than six years were 
subject to particularly rigorous review 
performance review 
the performance of the committee was 
evaluated as part of the annual board 
performance evaluation and it was found 
to be operating effectively
audit committee report
members
during the year and at the date  
of this report
peter smith chairman 
lord jay  
javier ferrán 
ruth cairnie from 1 may 2014
key duties
in accordance with its terms of 
reference the audit committee’s key 
duties include
• monitoring the integrity of the  
group’s financial statements and any 
formal announcements relating to  
the company’s performance  
reviewing significant financial  
reporting judgements contained  
in them before their submission  
to the board for approval
• at the request of the board reviewing 
the content of the annual report and 
accounts and advising whether taken 
as a whole it is fair balanced and 
understandable and provides the 
information necessary for shareholders 
to assess the company’s performance 
business model and strategy
• reviewing the group’s internal financial 
controls including the policies and 
overall process for assessing 
established systems of internal 
financial control and timeliness and 
effectiveness of corrective action  
taken by management 
• overseeing the group’s arrangements 
for the prevention and detection of 
fraud and whistleblowing 
• monitoring and reviewing the role and 
effectiveness of the group’s internal 
audit function in the context of the 
group’s overall financial risk 
management system and 
• overseeing the relationship with the 
group’s external auditors including 
reviewing and monitoring their 
objectivity and independence agreeing 
the scope of their work and fees paid 
to them for audit and agreeing the 
policy in relation to the provision of 
nonaudit services
associated british foods annual report and accounts 2014
governance
corporate governance
59 governance
the audit committee comprises a 
minimum of three members all of whom 
are independent nonexecutive directors 
of the company two members 
constitute a quorum appointments are 
for a period of three years after which 
they are subject to annual review 
extendable by two further threeyear 
periods so long as members continue  
to be independent 
the committee structure requires the 
inclusion of one financially qualified 
member as recognised by the 
consultative committee of accountancy 
bodies with recent and relevant financial 
experience currently the committee 
chairman fulfils this requirement all 
committee members are expected to  
be financially literate and to have an 
understanding of the following areas
• the principles of and developments  
in financial reporting including the 
applicable accounting standards and 
statements of recommended practice
• key aspects of the company’s 
operations including corporate  
policies and the group’s internal  
control environment
• matters which may influence the 
presentation of accounts and key 
figures
• the principles of and developments in 
company law sectorspecific laws and 
other relevant corporate legislation
• the role of internal and external auditing 
and risk management and
• the regulatory framework for the 
group’s businesses
the committee invites the group finance 
director group financial controller 
director of financial control and senior 
representatives of the external auditors  
to attend its meetings in full although it 
reserves the right to request any of these 
individuals to withdraw other senior 
managers are invited to present such 
reports as are required for the committee 
to discharge its duties
during the year the committee held four 
meetings with the external auditors 
without any executive members of the 
board being present
the committee has unrestricted access 
to company documents and information 
as well as to employees of the company 
and the external auditors 
the committee may take independent 
professional advice on any matters 
covered by its terms of reference at the 
company’s expense 
the committee chairman reports the 
outcome of meetings to the board
the committee’s effectiveness is 
reviewed on an annual basis as part of the 
board’s performance evaluation process
the terms of reference of the audit 
committee were reviewed and updated 
during the year and can be viewed on the 
investors section of the company’s 
website wwwabfcouk
meetings
the audit committee met five times 
during the year including an additional 
meeting to consider tendering of the 
external audit the committee agenda  
are linked to events in the group’s  
financial calendar 
activities during the year 
in order to fulfil its terms of reference the 
audit committee receives and reviews 
presentations and reports from the 
group’s senior management consulting 
as necessary with the external auditors
monitoring the integrity of reported 
financial information
ensuring the integrity of the financial 
statements and associated 
announcements is a fundamental 
responsibility of the audit committee 
during the year it formally reviewed the 
group’s interim and annual reports and the 
interim management statements issued 
for the first and third quarters these 
reviews considered
• the accounting principles policies  
and practices adopted in the group’s 
financial statements any proposed 
changes to them and the adequacy  
of their disclosure in the annual report
• important accounting issues areas of 
complexity and the actions estimates 
and judgements of management in 
relation to financial reporting
• any significant adjustments to financial 
reporting arising from the audit
• litigation and contingent liabilities 
affecting the group and
• potential tax contingencies compliance 
with statutory tax obligations and the 
group’s tax policy
associated british foods annual report and accounts 2014
governance
corporate governance
60 significant accounting issues considered by the audit committee in relation to the group’s financial statements
in the preparation of these financial statements a number of areas required the exercise of management judgement or a degree of 
estimation set out below are the areas considered by the audit committee to be the most significant accounting issues of which 
impairment and tax provisions were the most material together with details of how the committee concluded that such judgements 
and estimates were appropriate
significant accounting issue audit committee assurance
impairment of goodwill tangible  
and intangible assets
assessment for impairment involves 
comparing the book value of an asset  
with its recoverable amount being the 
higher of value in use and fair value less 
costs to sell value in use is determined 
with reference to projected future cash 
flows discounted at an appropriate rate 
both the cash flows and the discount  
rate involve a significant degree of 
estimation uncertainty
the committee considered the reasonableness of cash flow projections which were based 
on the most recent budget approved by the board and reflected management’s expectations 
of sales growth operating costs and margins based on past experience and external sources 
of information longterm growth rates for periods not covered by the annual budget were 
challenged to ensure they were appropriate for the products industries and countries in 
which the relevant cash generating units operate the committee also reviewed the key 
assumptions made in deriving these projections discount rates growth rates and expected 
changes in production and sales volumes selling prices and direct costs refer to note 8 to 
the financial statements for more details of these assumptions 
the committee was satisfied that the discount rate assumptions appropriately reflected 
current market assessments of the time value of money and the risks associated with the 
particular assets the other assumptions were all considered to be reasonable
the external auditor explained the results of their own review of the estimate of value in use 
including their challenge of management’s underlying cash flow projections as well as the 
longterm growth assumptions and discount rates on the basis of their audit work and  
their challenge of the key assumptions the external auditor concurred that no impairments 
were required
biological assets
the valuation of growing sugar cane 
requires management to estimate 
• the sucrose content in the cane and the 
expected cane and sucrose yields for the 
following season taking into account 
weather conditions harvesting 
programmes and an assessment of the 
maturity of the cane at the balance sheet 
date and
• the sucrose price which depends on the 
markets to which the forthcoming crop is 
likely to be sold the probable domestic 
and export prices and related foreign 
currency exchange rates
the sugar business has a good track record of calculating reliable estimates and any 
significant over or underestimation becomes apparent in subsequent profit realisation
actual results were reviewed for consistency of measurement in the light of profit budgets 
and forecasts and the actual results of prior periods the committee was satisfied that 
appropriate assumptions had been made and consistently applied as biological assets 
represent just 2 of total assets and 3 of net assets material misstatement of the financial 
statements was considered highly unlikely
postretirement benefits
valuation of the group’s pension schemes 
and postretirement medical benefit 
schemes require various subjective 
judgements to be made including mortality 
assumptions discount rates and general 
inflation salary inflation and the rate of 
increase for pensions in payment and those 
in deferment
actuarial valuations of the group’s pension schemes are undertaken every three years by 
independent qualified actuaries who also provide advice to management on the assumptions 
to be used in intervening years to update those valuations details of the assumptions made 
in the current and previous two years are disclosed in note 12 to the financial statements 
together with the bases on which those assumptions have been made 
the committee reviewed the assumptions by comparison with externally derived data and also 
considered the adequacy of disclosures in respect of the sensitivity of the surplusdeficit to 
changes in these key assumptions
the principal accounting policy change in 2014 was the adoption of international accounting 
standard 19 relating to employee benefits in particular the committee reviewed the impact 
that this change had on pension liability disclosures and the resultant requirement to restate 
earnings per share for 2013 to ensure that a meaningful comparison could be made with 
2014 earnings further details of the accounting policy change can be found on page 95 
tax provisions
the level of current and deferred tax 
recognised in the financial statements  
is dependent on subjective judgements  
as to the outcome of decisions by tax 
authorities in various jurisdictions around 
the world and the ability of the group to use 
tax losses within the time limits imposed 
by the various tax authorities see also tax 
compliance on page 49
the committee annually reviews the company’s principles for managing tax risks
the committee reviewed and challenged the provisions recorded at the balance sheet date and 
management confirmed that they represent their best estimate of the likely financial exposure 
faced by the group
the external auditor explained to the committee the work they had conducted during the year 
including how their audit procedures were focused on those provisions requiring the highest 
degree of judgement the committee discussed with both management and the external 
auditor the key judgements which had been made it was satisfied that the judgements were 
reasonable and that accordingly the provision amounts recorded were appropriate
associated british foods annual report and accounts 2014
governance
corporate governance
61 misstatements
management reported to the committee 
that they were not aware of any material 
or immaterial misstatements made 
intentionally to achieve a particular 
presentation the auditors reported to the 
committee the misstatements that they 
had found in the course of their work 
after due consideration the committee 
concurred with management that no 
adjustments were required 
internal financial control and risk 
management 
the committee is required to assist the 
board to fulfil its responsibilities relating  
to the adequacy and effectiveness of  
the control environment controls over 
financial reporting and the group’s 
compliance with the uk corporate 
governance code to fulfil these duties 
the committee reviewed
• the external auditors’ management 
letters and their audit committee 
memoranda
• internal audit reports on key audit areas 
and significant deficiencies in the 
financial control environment
• reports on the systems of internal 
financial controls and risk management
• reports on fraud perpetrated against  
the group and
• the group’s approach to it cyber 
security and whistleblowing
internal audit
the audit committee is required to assist 
the board to fulfil its responsibilities 
relating to the adequacy of the resourcing 
and plans of internal audit to fulfil these 
duties the committee reviewed
• internal audit’s reporting lines and 
access to the committee and all 
members of the board
• internal audit’s plans and its 
achievement of the planned activity
• the results of key audits and other 
significant findings the adequacy  
of management’s response and  
the timeliness of resolution
• statistics on staff numbers 
qualifications and experience and 
timeliness of reporting
• the level and nature of nonaudit activity 
performed by internal audit and
• changes since the last annual 
assessment in the nature and extent  
of significant financial risks and the 
group’s ability to respond to changes  
in its business and the external 
environment
whistleblowing and fraud
the group’s ‘whistleblowing’ policy 
contains arrangements for an 
independent external service provider  
to receive in confidence complaints on 
accounting risk issues internal controls 
auditing issues and related matters for 
reporting to the audit committee as 
appropriate the audit committee 
reviewed reports from internal audit  
and the external service provider and  
the actions arising therefrom
the group’s antifraud policy has been 
communicated to all employees and 
states that all employees have a 
responsibility for fraud prevention and 
detection any suspicion of fraud should 
be reported immediately and will be 
investigated vigorously the audit 
committee reviewed all instances of fraud 
perpetrated against the company and the 
action taken by management both to 
pursue the perpetrators and to prevent 
recurrences
external audit
auditor independence
the audit committee is responsible for 
the development implementation and 
monitoring of policies and procedures  
on the use of the external auditors for 
nonaudit services in accordance with 
professional and regulatory requirements 
these policies are kept under review to 
meet the objective of ensuring that the 
group benefits in a costeffective manner 
from the cumulative knowledge and 
experience of its auditors whilst also 
ensuring that the auditors maintain the 
necessary degree of independence and 
objectivity consequently any nonaudit 
work to be undertaken by the auditor in 
excess of £300000 requires 
authorisation by the chairman of the audit 
committee and the group finance 
director prior to its commencement 
individual assignments less than 
£300000 are approved by the group 
finance director the aggregate 
expenditure with the group auditors  
is reviewed by the audit committee
typically the committee is required to 
approve the use of the external auditors  
to provide accounting advice and training 
employee benefit plan audits corporate 
responsibility it and other assurance 
services due diligence in respect of 
acquisitions and disposals certain 
specified tax services including tax 
compliance tax planning and related 
implementation advice and certain other 
services when it is in the best interests  
of the company to do so and they can be 
undertaken without jeopardising auditor 
independence no individually significant 
nonaudit assignments that would require 
disclosure were undertaken in the 
financial year
the company has a policy that any 
recruits hired directly from the external 
auditors must be preapproved by the 
group hr director and the group finance 
director or group financial controller 
with the chairman of the audit committee 
being consulted as appropriate
the audit committee has formally 
reviewed the independence of its 
auditors kpmg llp has provided  
a letter confirming that it believes  
it remains independent within the  
meaning of the regulations on this  
matter and in accordance with their 
professional standards 
to fulfil its responsibility to ensure the 
independence of the external auditors 
the audit committee reviewed
• changes in external audit executives  
in the audit plan for the current year
• a report from the external auditors 
describing their arrangements to 
identify report and manage any 
conflicts of interest and
• the extent of nonaudit services 
provided by the external auditors
consideration is also given by the audit 
committee to the need to include the  
risk of the withdrawal of the external 
auditors from the market in its risk 
evaluation and planning
associated british foods annual report and accounts 2014
governance
corporate governance
62 auditor effectiveness
to assess the effectiveness of the 
external auditors the committee 
reviewed
• the external auditors’ fulfilment of the 
agreed audit plan and variations from it 
• reports highlighting the major issues 
that arose during the course of the audit 
• feedback from the businesses 
evaluating the performance of each 
assigned audit team and
• a report from the audit quality review 
team of the financial reporting  
council frc
the audit committee holds private 
meetings with the external auditors  
after each committee meeting to review 
key issues within their sphere of interest 
and responsibility
to fulfil its responsibility for oversight of 
the external audit process the audit 
committee reviewed
• the terms areas of responsibility 
associated duties and scope of the 
audit as set out in the external  
auditors’ engagement letter for  
the forthcoming year
• the external auditors’ overall work plan 
for the forthcoming year
• the external auditors’ fee proposal
• the major issues that arose during the 
course of the audit and their resolution
• key accounting and audit judgements
• the level of errors identified during the 
audit and
• recommendations made by the 
external auditors in their management 
letters and the adequacy of 
management’s response
auditor appointment
although kpmg llp or its predecessor 
firms have been the company’s auditor 
for many years the firm periodically 
changes its audit partners at a group 
divisional and country level in accordance 
with professional and regulatory 
standards in order to protect 
independence and objectivity and provide 
fresh challenge to the business such 
changes are carefully planned to ensure 
that the company benefits from 
continuity of staffing without incurring 
undue risk or inefficiency
richard pinckard was appointed as kpmg 
lead audit partner for the financial year 
ended september 2012 and would 
ordinarily be expected to continue as  
lead audit partner until the conclusion  
of the 2016 audit upon his appointment 
mr pinckard undertook a detailed review 
of the external audit arrangements across 
the group including a review of senior 
audit executives and he presented his 
findings and recommendations to the 
audit committee as part of the normal 
partner rotation arrangements no 
changes were necessary in the current 
year but one divisional audit executive 
was changed
the audit committee is satisfied with the 
auditors’ effectiveness and independence 
and has recommended to the board that 
kpmg llp be reappointed as the 
company’s external auditor for 201415 
kpmg llp  or one of its predecessor 
firms have been reappointed annually by 
shareholders as auditor to the company 
since its incorporation in 1935 whilst the 
company has kept the effectiveness of 
the relationship under review no formal 
tender of the audit process has been 
carried out since the original appointment 
mindful of the requirements of the uk 
corporate governance code that the 
audit should be put out to tender every 
ten years and the uk competition  
market authority’s order requiring 
mandatory audit tendering at tenyear 
intervals which comes into force in 2015 
the company has notified kpmg llp of 
its intention to put the audit out to tender 
during 2015 with a view to a new firm 
being appointed to audit the financial 
statements for the year ending  
17 september 2016 
the total fees paid to kpmg llp for the 
year ended 13 september 2014 were 
£91m of which £32m related to 
nonaudit work further details are 
provided in note 2 to the financial 
statements
associated british foods annual report and accounts 2014
governance
corporate governance
63 remuneration report
annual statement by the remuneration committee chairman
201314 performance and incentive outcomes
associated british foods is a group of businesses that trade all over the world these businesses are expected to grow profitably in 
the long term but are subject to shortterm pressures which prevent this from time to time
the group has achieved strong growth in earnings for a number of years and the growth in shareholder return over the last five years  
in particular has been well above that achieved by the constituents of the ftse 100 index as shown on page 76 vesting under  
our longterm incentive plan ltip for the period from 2011–14 reflects the growth of the business since september 2011  
the committee is satisfied that this level of vesting represents a fair level of reward for executives for their contribution to the  
growth in value of the company 
the committee must ensure that targets are stretching but they must also be realistic and where necessary reflect the challenges 
faced by the business in order to encourage executives to strive for great performance in my statement last year as chairman of the 
remuneration committee i noted that one of our larger businesses european sugar would come under pressure in the years leading 
up to reform of the eu sugar regime in 2017 2014 proved to be a challenging year for this business and the effects of the fall in eu 
sugar prices are expected to be a further influence on the group’s overall performance in the short term 
when setting shortterm incentive targets for 201314 the committee was mindful of the expected pressure on sugar prices and the 
consequences for the group’s results during the course of the year the committee adjusted the target range for the shortterm 
incentive down by £10m to reflect unbudgeted costs for restructuring the sugar business to ensure that we are better positioned for 
the future this cost would otherwise have been included in the budget for 201415 and been included in the incentive target range for 
that year it was in the best longterm interests of the business for this restructuring to be commenced in and reflected in 
performance targets for the 201314 financial year
we are satisfied that pay outcomes for the financial year 201314 reflect overall business performance with the exception of sugar 
adjusted operating profit increased in all divisions ab agri achieved another record result grocery made very good progress with 
profit and margin well ahead of last year ingredients is achieving a strong turnaround from the challenges of recent years and primark 
had another excellent year and is well positioned to maintain its growth momentum this performance resulted in a shortterm 
incentive payment slightly above ontarget for the financial element of the plan
for our longterm incentive plan for 2014–17 the committee has determined that the current earnings per share target range remains 
appropriate particularly given the significant challenges facing the sugar business over that timeframe 
directors’ remuneration at associated british foods
the committee’s approach to remuneration is that it should be kept as simple as possible we believe that our current policy is well 
aligned to the business strategy and to growing longterm shareholder value we seek to ensure that remuneration directly reflects 
individual accountability for business results and that pay is managed fairly prioritising longterm profit development over shortterm 
results our framework for executive remuneration is based on our guiding principles including a belief in ‘line of sight’ and ‘doing the 
right thing’ 
as previously disclosed in december 2012 the committee reduced vesting on the ltip from 100 to 975 to reflect an asset 
impairment charge relating to don krc property development deals relating to a don krc site which are not included in the annual 
operating profit calculation mean that the committee now feels it is appropriate to return to the executive directors some but not all 
of the previously reduced value the committee has therefore determined to exercise its discretion to increase the personal element 
of the incentive payment by 24 of salary for george weston and 245 of salary for john bason
during the year the committee determined that a mandatory twoyear holding period would apply for shares vesting under the  
ltip to executive directors for allocations made after the 2014 agm if and when the remuneration policy set out in this report is 
formally approved
having introduced clawback and malus to the longterm incentive plan approved by shareholders in december 2013 the committee 
determined that the same approach should be applied to the shortterm incentive plan the committee also agreed that executives 
should now formally acknowledge the committee’s powers of discretion clawback and malus as a condition of participation in the 
group’s incentive schemes
your feedback and what we have planned for 201415
as chairman of the board i invite the larger institutional shareholders each year to discuss their views on the group’s strategy 
governance and remuneration those who have taken up the invitation this year have expressed confidence with the way the group 
has managed remuneration and discussion has again been characterised by informed enquiry and open debate 
remuneration is one of those subjects on which every shareholder has a point of view i hope that our principles of clarity relative 
simplicity accountability and fairness help to explain what the committee does 
we are not planning any changes to remuneration policy or its implementation in the new financial year i am happy to discuss  
any remuneration matters that help us shape our policy and practice at any time
charles sinclair
remuneration committee chairman
associated british foods annual report and accounts 2014
governance
remuneration report
64 remuneration policy
the policy for executive directors set out below will apply from the date of the 2014 agm subject to approval the provisions of the 
last remuneration policy as presented in last year’s remuneration report will continue to apply for unvested share awards until such 
time as all longterm incentive awards granted under that policy have vested
the committee will consider the approved remuneration policy annually to ensure that it remains aligned with the company’s  
strategic objectives if the committee determines that amendments to the policy are needed it will first discuss the proposals with 
shareholders before seeking their approval at a general meeting however it is intended that the policy set out below will apply for 
three years from the 2014 agm and the company therefore next expects to seek shareholder approval for its remuneration policy  
at the 2017 agm
executive directors’ reward potential – illustration of remuneration policy 201415
george weston £000 john bason £000
6000
5000
3000
1000
4000
2000
0
fixed elements annual variable element
stip
longterm variable element
ltip
minimum threshold ontarget maximum
 
6000
5000
3000
1000
4000
2000
0
fixed elements annual variable element
stip
longterm variable element
ltip
minimum threshold ontarget maximum
notes
1
  fixed elements for george weston comprise salary of £998000 benefits of £15000 and pension of £569000 and applies to minimum threshold  
ontarget and maximum performance
2
  fixed elements for john bason comprise salary of £649000 benefits of £18000 and pension of £464000 and applies to minimum threshold  
ontarget and maximum performance
3
 annual variable element – bonus is calculated on base salary at the end of the financial year
4
 longterm variable element – value is calculated on base salary at the date of allocation and excludes share price movement
5
 minimum – no stip or ltip payment for failure to achieve threshold performance
6
  threshold – stip of 12 of base salary 12 of base salary for threshold financial performance and 0 for failure to achieve threshold personal performance  
ltip vesting at 10 of maximum ie an allocation of 20 of grant date base salary following achievement of threshold performance targets
7
  on target – stip of 783 of base salary 65 for target financial performance and 133 for target personal performance  
ltip vesting at 50 of maximum ie an allocation of 100 of grant date base salary for target performance
8
  maximum – stip of 150 of base salary 130 for maximum financial performance and 20 for achieving maximum personal performance  
ltip vesting at 100 of maximum ie an allocation of 200 of grant date base salary
associated british foods annual report and accounts 2014
governance
remuneration report
65 future remuneration policy for executive directors
element and purpose operation and link to business strategy maximum opportunity
base salary 100 cash
to provide core reward for  
the role recognising 
responsibility for setting  
and delivering the strategy
base salaries are normally reviewed on an annual basis or following  
a significant change in responsibilities factors taken into account 
include market pay movements the level of increases awarded to  
uk employees across the group and the impact of any increase on 
the total remuneration package 
increases will usually be 
limited to those available for 
other uk employees in line 
with other employees if 
there is a significant change 
in role responsibility 
increases will reflect this 
benefits excluding relocation
to provide a competitive and 
costeffective benefits package 
appropriate to role
benefits are restricted to typical uk market levels for executive 
directors and include but are not limited to death in service payment 
permanent health insurance company car plus private fuel family 
healthcare and where relevant fees to maintain professional 
memberships executives are provided with the technology they 
require to carry out their roles efficiently and effectively 
the cost of these benefits is 
not expected to exceed 10 
of salary but is dependent on 
factors such as insurance 
premium rates that can vary 
shortterm incentive plan stip 100 cash 
to encourage and reward the 
attainment of challenging 
financial targets and the 
achievement of personal 
performance objectives  
over a oneyear period
performance measures
group financial performance is assessed against prime financial 
measures such as adjusted operating profit and working capital  
used across the group on a daytoday basis to drive and  
monitor performance
the personal element of the stip is calculated as a percentage of 
base salary on achieving certain personal targets set by the company 
chairman for the chief executive or by the chief executive for the 
finance director
target setting
budget performance is set as the ‘ontarget’ performance level at the 
start of each financial year the committee sets a range around target 
to incentivise delivery of truly stretching performance 
individual personal objectives are also set each year these may be 
specific shortterm goals or milestones towards medium or longterm 
objectives but are closely aligned to the overall strategy of the group 
following the end of the financial year the chairman reviews the 
performance of the chief executive against these objectives and 
makes a recommendation to the remuneration committee about the 
appropriate level of payout for the personal element similarly the  
chief executive makes a recommendation to the remuneration 
committee regarding the finance director following an assessment  
of his performance
discretion clawback and malus 
in specific circumstances the remuneration committee retains 
discretion including in relation to malus and from 201415 onwards 
clawback as set out in the notes that follow this table
150 of base salary
• 130 based on financial 
results and
• 20 on personal 
performance
associated british foods annual report and accounts 2014
governance
remuneration report
66 future remuneration policy for executive directors
element and purpose operation and link to business strategy maximum opportunity
longterm incentive plan ltip
to reward longterm business 
growth promote executive 
retention and align the interests 
of executives and shareholders
executive directors are eligible to participate in the associated british 
foods longterm incentive plan the ltip annual allocations of 
conditional shares vest over a threeyear period subject to agreed 
performance targets being satisfied ltips are granted over shares  
to the value of 200 of salary for maximum performance 100  
of the shares vest for target performance 50 vest for threshold 
performance 10 vest and below threshold level awards lapse
a mandatory twoyear holding period will apply for any shares 
allocated under the ltip from the 2014 agm onwards if this policy  
is approved by shareholders 
performance measures
group performance is measured against an absolute range of 
compound annual growth in adjusted earnings per share eps 
this measure was chosen because it
• reflects the group’s objective of sustained longterm  
earnings growth
• is a measure which is well understood both by participants  
and shareholders
• is a published figure with limited adjustments and
• encompasses the diverse nature of the group
an absolute rather than a relative measure is used  
as the group is a global business for which uk  
inflation factors are of limited impact
other financial measures have been considered but found  
to be unhelpful or inappropriate
target setting
targets are set by the committee at the beginning of each threeyear 
performance period taking into account the state of the markets in 
which the group operates as well as the scale of investments made  
in the pursuit of longterm growth in determining a fair but stretching 
target the committee also considers
• the results of the longterm incentive plan to date
• market expectations and internal forecasts for the next few years 
and
• advice from its appointed remuneration advisors
discretion clawback and malus
when the company introduced the new ltip approved by 
shareholders in 2013 malus and clawback were introduced into the 
plan rules in specific circumstances the remuneration committee 
retains discretion in relation to the plan further information can be 
found in the notes to this table 
200 of base salary at 
allocation on achievement  
of maximum vesting
associated british foods annual report and accounts 2014
governance
remuneration report
67 future remuneration policy for executive directors
element and purpose operation and link to business strategy maximum opportunity
longterm incentive plan continued
previous plan
conditional shares already allocated for 2011–14 2012–15 and 
2013–16 will vest or not under the terms of the executive share 
incentive plan 2003 these allocations were subject to earnings  
per share performance targets and in contrast to the new plan  
do not have clawback in place
shareholding requirement
to demonstrate commitment  
to and align personal interests 
with the success of the 
company and its shareholders
executive directors are required to build and maintain a shareholding 
in the company to a value at least equal to their pretax base salary
in order to achieve this target executives are required to retain at 
least 50 of the posttax value of any shares vesting each year and 
then to manage their shareholding in such a way as to continue to 
meet the requirement 
shareholding of 100  
of salary
pension
to provide a competitive 
retirement benefit in line  
with best practice standards 
adopted by major companies  
in the united kingdom and 
continental europe
defined benefit pension arrangements –  
closed to new members
the current executive directors are members of the company’s 
hmrc approved defined benefit pension scheme which closed to 
new entrants in october 2002 both executive directors opted out  
of the scheme on 5 april 2006 but retain their accrued benefits up  
to that date the scheme is designed to provide retirement benefits 
of around twothirds of final pensionable salary at age 65 62 for  
john bason 
the current executive directors have since 5 april 2006 earned 
benefits in an employerfinanced retirement benefit scheme 
efrbs the efrbs is unregistered but is designed to broadly 
mirror the provisions of the defined benefit pension scheme by 
providing retirement benefits of around twothirds of final  
pensionable salary at normal retirement age
defined contribution pension arrangements
future executive directors who are not already entitled to defined 
benefit pension arrangements at the time of appointment would 
benefit from an hmrc approved defined contribution arrangement 
with a company contribution of 25 of base salary 
cash alternative
where a ukbased pension arrangement is not possible or is not  
tax efficient a cash supplement equivalent to the normal pension 
contribution may be paid in lieu of pension contributions
for directors entitled to 
benefits under the 
company’s defined benefit 
pension scheme andor 
efrbs a retirement benefit 
target of around twothirds  
of final pensionable salary  
is payable at normal 
retirement age
for directors entitled to 
defined contribution pension 
arrangements executives 
may receive company 
contributions or cash 
equivalent up to a maximum 
of 25 of base salary
associated british foods annual report and accounts 2014
governance
remuneration report
68 notes to the remuneration policy table 
targetsetting and commercial sensitivity
the committee selected the performance conditions shown in the preceding table because these are the key measures used by  
the executive directors to manage the business the performance targets are set by the committee annually taking into account  
the views of their advisors and management
the committee is of the opinion that performance targets for the annual bonus are commercially sensitive and that it would be 
detrimental to the interests of the company to disclose them before the start of the financial year achievement against financial 
targets will be disclosed after the end of the relevant financial year in that year’s remuneration report
discretion malus and clawback
the committee may at any time within two years of the vesting date of an ltip award under the new plan or payment of an stip 
award determine that clawback shall apply if the committee determines that performance outcomes were misstated an erroneous 
calculation was made in assessing the extent to which performance targets were met or the participant is found to have committed 
at any time prior to vestingpayment including prior to grant an act or omission which justifies or in the opinion of the remuneration 
committee would have justified summary dismissal
as a condition of participating in the stip and ltip from the 201415 financial year onwards all participants will be required to agree  
that the committee may cause any stip or ltip award in which they participate to lapse in whole or in part and may operate 
clawback under any share scheme or bonus scheme in which they participate operated by a group company and may operate 
clawback by reducing any amounts payable to the participant andor by requiring the participant to immediately transfer shares  
or cash back to the company
the committee will apply discretion where necessary and by exception to ensure that there are no unintended consequences  
from the operation of the remuneration policy the committee has a robust set of principles that it applies to ensure that the  
outcome is consistent with business performance and aligned with shareholder interests any material exercises of discretion by  
the committee in relation to the stip and ltip will be in line with scheme rules or other applicable contractual documentation and  
will be fully disclosed and explained in the relevant year’s report on the implementation of remuneration policy and will not exceed 
scheme maxima 
remuneration for other employees compared with that of executive directors
first line reports to the chief executive and other senior executives are rewarded broadly within the same overall remuneration policy 
as executive directors in order to ensure fairness and common purpose across the group in general other executives therefore 
participate in incentive arrangements similar to those of the executive directors but with lower levels of potential payout the 
proportion of variable pay to base salary for first line executives is around 12 to 1 for ‘ontarget’ performance and 225 to 1 for 
maximum performance the remuneration committee regularly reviews the reward package for other groups of senior executives 
below board level to ensure that they remain at a level sufficient to attract and retain highcalibre individuals 
associated british foods is geographically dispersed and therefore subject to very different pay markets so it is difficult to make 
sensible comparisons with all employees across the group the salaries of executive directors are reviewed in line with uk employees 
of associated british foods in december 2013 when the target salary increase for employees in the uk was between c20 and 
c30 the chief executive received a salary increase of 256
in order to drive and reward performance and to align better the interests of executives and shareholders the executive directors  
have a greater proportion of their total reward package at risk than other employees this means that in years of very good 
performance the chief executive’s package increases proportionately more than that of most other employees and conversely in 
years of lower performance it may decrease however the structure and principles of incentives are consistent further down the 
organisation including
• the belief that employees should be encouraged to do the right thing for the longterm benefit and success of the organisation 
• the belief that individuals should have line of sight to their performance targets and 
• the belief in combining profit and return measures with personal measures in the stip 
the committee operates sharebased longterm incentives for approximately 150 senior individuals across the company 
executive directors serving as nonexecutive directors
to encourage selfdevelopment and allow external insight and practice the committee has determined that with the consent of the 
chairman and ceo executive directors may serve as nonexecutive directors of other companies in an individual capacity and will 
retain any fees earned 
associated british foods annual report and accounts 2014
governance
remuneration report
69 remuneration policy – consideration of employment conditions elsewhere in the company
how pay and conditions of employees were taken into account when setting directors’ remuneration policy
the committee considered the salary increases proposed for the employee population generally and other changes to the 
remuneration policy within the company when reviewing executive salaries at its september and october meetings as outlined  
in the policy table the committee typically limits the range of increases for executive directors to the range of increases available  
to employees unless there has been a change of role
the design of incentives is broadly consistent across the group the committee is provided with data on the remuneration structure 
for senior management in the two tiers below executive director and uses this information to work with the company to ensure 
consistency of approach in addition the committee approves all sharebased ltip awards across the group 
consideration of employees’ views
in setting the remuneration policy the committee seeks to act in the best interests of the company whilst the views of employees 
are not explicitly sought employees are able to feed back their opinions through employee opinion surveys or directly to the 
company’s management 
remuneration policy – executive director contracts recruitment retention and loss of office
recruitment arrangements – all executive directors
as we may need to recruit future executive directors from outside the uk or from companies with more aggressive incentive policies 
than our own and as our longterm incentive plans do not give us significant headroom to make awards to new joiners above the 
levels set out in the policy table the arrangements below are intended to give us the flexibility to recruit the right individuals should  
we need to
core package – in line with remuneration policy table on pages 66 to 68
salary – based on a combination of market information internal relativities and individual experience
benefits – in line with remuneration policy
pension – defined contribution pension or cash alternative to pension in line with policy
stip – pro rata in year of recruitment part of stip may be guaranteed to reduce the need for additional cash payments  
to hire new joiners
ltip – prorated grant for the year of recruitment a mandatory twoyear holding period will apply for any shares vesting  
under the ltip for any newly appointed executive directors from 1 september 2014 onwards 
buyout arrangements – in addition to remuneration policy table on pages 66 to 68
the committee may when it considers this to be in the best interest of the company make a oneoff award of additional cash andor 
shares to replace incentives foregone from a previous company the committee would seek validation of the value of incentives 
foregone including the nature time horizon and performance requirements attaching to that remuneration additional awards will  
not exceed the committee’s advisors’ calculation of the value of the original awards if possible additional incentive awards will be  
tied to group performance targets 
other elements – in addition to remuneration policy table on pages 66 to 68
the committee may when it considers this to be in the best interest of the company make a oneoff additional award of cash andor 
shares as an incentive to join this may for example be necessary if recruiting an individual from overseas if possible additional 
incentive awards will be tied to group performance targets 
total maximum additional incentive value will not exceed 200 of salary
internal appointments
for internal appointments awards in respect of the prior role may be allowed to vest according to the terms of the scheme  
adjusted as relevant to take account of the new appointment in addition ongoing prior remuneration obligations may continue
relocation
if a new executive director needs to relocate the company may pay
• actual relocation costs and other reasonable expenses relating to moving house 
• disturbance allowance of up to 5 of salary some of which may be taxfree for qualifying expenditure  
• school fees for dependent children where there are cultural or language considerations
• medical costs for the overseas family where relevant 
• one business class return fare per annum each for the executive hisher partner and dependent children in order  
to maintain family or other links where an executive is recruited from outside the uk 
• reasonable fees and taxes for buying andor selling a family home andor appropriate rental costs and
• any tax due grossed up on any relocation related payments listed above
associated british foods annual report and accounts 2014
governance
remuneration report
70 service contracts and payments for loss of office
it is the company’s policy that executive directors have rolling contracts with 12month notice periods this is in accordance  
with the uk corporate governance code and contracts are available for inspection at the company’s offices contracts and service 
agreements are not reissued when base salaries or fees are changed pension arrangements for both the current executive directors 
have been amended as described in the policy table without reissuing their contracts
the executive directors’ service contracts allow for the company to terminate the employment by paying the director in lieu of some 
or all of his notice period the company may determine that a payment in lieu of notice is made in monthly instalments or as a lump 
sum a payment in lieu of notice will comprise the salary benefits and pension provision that the director would otherwise have 
received during the relevant period the company is committed to the principle of mitigation if the committee determines that a 
payment in lieu of notice will be paid in monthly payments it would reduce the instalments to take account of amounts received from 
alternative employment
in addition the executive director may be entitled to a payment in respect of his statutory rights the committee may also determine 
that a contribution will be made to the director’s legal fees in connection with his termination and may agree to make reasonable 
payments to him in respect of outplacement in limited circumstances in addition to making a full payment in lieu of notice the 
company may permit an executive director to stay employed after the announcement of his departure for a limited period to ensure  
an effective handover andor to allow time for a successor to be appointed it would be open to the company to consider terminating 
an executive director’s service agreement in breach ie not to make a payment to him in lieu of notice and instead to make a payment 
of damages to him which compensates him for the loss he will suffer as a result of the termination of his contract taking into account 
his duty to mitigate his loss
there is no automatic entitlement to accrued stipltip awards on termination the approach to determining whether or not a payment 
might be made is set out in the table below prorated stip and ltip awards will not usually take account of notice periods but the 
committee retains the discretion to determine that they will the committee would not expect to do so in the case of poor performance
reason for 
termination
salary and 
contractual 
benefits stip ltip repatriation
good leaver including
• ill healthinjury 
disability
• redundancy
• retirement
• employing company 
or undertaking being 
transferred outside 
the group
• other reason 
determined by the 
committee
• death 
paid up to date of 
termination or death 
the committee has 
discretion to pay in 
lieu of notice as set 
out above 
the committee will 
consider making a pro rata 
payment for the financial 
year in which the 
terminationdeath took 
place 
any agreed payment will 
be made in the december 
following the year end
in the case of death 
payment may be 
accelerated
the committee will consider 
allowing awards due to vest in 
relation to the financial year of 
termination to vest other awards 
lapse unless the committee uses its 
discretion to allow them to vest 
the committee has never 
previously done this
vesting will take place on the  
usual vesting date subject to 
performance conditions unless the 
committee determines that the 
award should vest earlier pro rata  
in which case the committee may 
determine whether the executive’s 
notice period will be taken into 
account in any pro rating
if an executive was 
recruited from 
overseas and 
relocated to the uk 
at the start of his
her employment 
hisher repatriation 
may be paid
resignation paid up to 
termination date
if an executive director 
ceases to be employed 
beforeis under notice 
when full year results are 
published no award will 
be made unless the 
committee determines 
otherwise the 
committee has never 
previously determined 
otherwise
all conditional share awards will be 
cancelled unless the committee 
determines otherwise the 
committee has never previously 
determined otherwise
 
not paid
gross misconduct paid up to 
termination date
no award will be made all conditional share awards will  
be cancelled
not paid
associated british foods annual report and accounts 2014
governance
remuneration report
71 remuneration policy for nonexecutive directors
summary of remuneration policy for nonexecutive directors
nonexecutive directors’ fees are reviewed periodically in the light of fees payable in comparable companies and the importance 
attached to the retention and attraction of highcalibre individuals as nonexecutive directors fees are paid on a per annum basis and 
are not varied for the number of days worked nonexecutive directors receive no other benefits and take no part in any discussion or 
decision concerning their own fees
the remuneration committee under the chairmanship of the senior independent director reviews the chairman’s fees  
in addition to his fee the chairman also receives private medical insurance for himself and his spouse 
element purpose operation
chairman
fees to attract and retain a highcalibre 
chairman by providing a competitive 
core reward for the role
the chairman is paid a single fee for all his responsibilities 
the level of this fee is reviewed every other year by the committee in the absence 
of the chairman and the executive directors in the light of fees payable in 
comparable companies
fees are paid in cash on a monthly basis
benefits to provide market competitive benefits private medical insurance for chairman and spouse
other nonexecutive directors
fees to attract and retain highcalibre 
nonexecutive directors by offering 
market competitive fees
fees are paid on a per annum basis and are not varied for the number of days worked 
the chairman and executive directors review nonexecutive directors’ fees every 
other year in the light of fees payable in comparable companies
the senior independent director and chairman of the audit committee are paid an 
additional fee to reflect their extra responsibilities
fees paid in cash on a quarterly basis were last reviewed on 3 september 2014
nonexecutive directors’ terms of appointment 
it is the company’s policy that all nonexecutive directors are subject to specified terms of appointment appointment is for an initial 
term of three years unless terminated by either party on six months’ notice continuation of the contract of appointment is contingent 
on satisfactory performance and reelection at forthcoming annual general meetings nonexecutive directors are typically expected 
to serve two threeyear terms although the board may invite a nonexecutive director to serve for an additional period
the company’s articles of association require that all directors retire from office if they have not retired at either of the preceding two 
annual general meetings in any event at this year’s annual general meeting all directors are standing for reelection in compliance 
with the uk corporate governance code 
where an individual retires at the annual general meeting and does not stand for reelection they are not paid in lieu of notice
approach to recruitment for nonexecutive directors
the approach to fees outlined above would apply to new nonexecutive directors 
we would not pay to relocate a nonexecutive director to the head office location but would reimburse reasonable expenses incurred 
in travelling on behalf of the business in the first year such expenses may be higher than usual as part of the individual’s induction  
into the business
remuneration policy – statement of consideration of shareholders views
each year the chairman of the committee invites our larger institutional shareholders to discuss with him their views on the group’s 
remuneration strategy and governance 
ahead of the 2013 agm we received feedback from some investors who did not feel that our earnings per share targets were 
sufficiently stretching the committee robustly reviews targets each year with detailed input from our advisors and from the 
company we have satisfied ourselves in the context of the challenges facing the sugar business that the targets that we set for  
the ltip in 2013 for the period from 2013–2016 and those proposed for the period from 2014–2017 are indeed challenging and that 
delivering this level of performance will represent a good performance by the executive directors on behalf of shareholders
we are not planning any changes of remuneration policy in the current year and expect to implement the policy set out in the following 
report in the same manner as we have in the past the committee chairman remains happy to discuss any remuneration matters at 
any time to help shape our policy and practice 
associated british foods annual report and accounts 2014
governance
remuneration report
72 annual report on directors’ remuneration 
the annual report on directors’ remuneration sets out the elements of remuneration paid to directors in the financial year 201314  
the notes to the single figure table provide further detail including measures and outcomes for 201314 where relevant for each  
of the elements that make up the total single figure of remuneration in respect of each of the executive directors
this report is subject to an advisory vote at the 2014 agm
single total figure of remuneration – executive directors audited information
salary or fees taxable benefits pensions annual bonus
6
longterm
incentive
78
single total
figure
9
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000
2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013
executive directors
george weston 973 948 15 14 457 518
5
894 1219 4816 3133 7155 5832
john bason 633 617 18 16 373 383
5
582 808 3169 2103 4775 3927
nonexecutive directors
charles sinclair 349 346
1
1
4
1 350 347
tim clarke 82 81
1
– – 82 81
lord jay 65 64
1
– – 65 64
javier ferrán 65 64
1
– – 65 64
peter smith 82 81
1
– – 82 81
emma adamo 65 64
1
– – 65 64
ruth cairnie 24 – – – 24 –
10
1
  the value shown reflects the split across the year from the previous fee rate to the revised rates of £65000 for nonexecutive directors and £350000  
for the chairman
2
 the value of george weston’s benefits comprised £12964 taken in cash and £1540 taxed as benefitsinkind
3
 the value of john bason’s benefits comprised £12964 taken in cash and £4991 taxed as benefitsinkind
4
 the value of charles sinclair’s benefits reflects the provision of health care benefits which are taxed as a benefitinkind
5
  2013 pensions values for george weston and john bason have been adjusted from £520000 and £377000 respectively to reflect current reporting 
requirements to report based on cpi indexation over the year to september in the tax year prior to the date of the company’s year end these calculations 
previously used the cpi inflation over the company year in question 
6
 the annual bonus is paid in december in respect of the preceding financial year none of the incentive is subject to deferral
7
  as required by the regulations vesting under the longterm incentive plan for 2010–2013 has been recalculated to update last year’s estimates using the  
actual share price of 22714962p that applied on vesting information relating to performance targets weightings and outcomes can be found on page 73  
of the 2013 annual report 
8
  vesting under the longterm incentive plan for 2011–2014 has been estimated using the average midmarket closing price over the last quarter of the 201314 
financial year 13 june to 13 september 2014 of 289094p vesting will be on 24 november 2014 and a figure recalculated for the actual share price on that date 
will be presented in the 2015 remuneration report information relating to performance targets weightings and outcomes can be found on page 74
9
 the single total figure for 2013 has been updated to reflect the ltip adjustment noted in 8 above
10
 ruth cairnie joined the board on 1 may 2014
additional notes to the single total figure of remuneration – executive directors audited information
this section sets out supporting information for the single total figure columns in particular it provides information on the extent to 
which performance conditions have been satisfied for the stip and ltip 
single total figure – base salary
executive directors’ salaries were reviewed on 1 december 2013 in accordance with normal policy and were increased in line with 
average increases for the company’s ukbased employees
dec 2012 increase in dec 2013 dec 2013
george weston 977000 256 1002000
john bason 643000 264 660000
single total figure – benefits 
the taxable values of a fully expensed company car private medical insurance life assurance and an annual medical checkup are 
included in the table of directors’ remuneration
associated british foods annual report and accounts 2014
governance
remuneration report
73 pensions 
both directors opted out of the associated british foods pension scheme a defined benefit scheme on 5 april 2006 and since then 
have earned benefits in an employerfinanced retirement benefit scheme efrbs 
george g weston
the director has an overall benefit promise of a minimum of 23rds of final pay or 145th of final pensionable earnings for each year of 
pensionable service the director opted out of the associated british foods pension scheme on 5 april 2006 and has a deferred benefit  
in the scheme the balance of the promise is provided under an efrbs the directors’ benefits are payable from age 65 there is no 
additional benefit entitlement for the members if they take early retirement the pension accrued by the director at 13 september 2014  
was £477363
john g bason
the director has an overall benefit promise of a minimum of 2∕3rds of final pay or 145th of final pensionable earnings for each year of 
pensionable service less an allowance for the directors’ retained benefits from previous employment the director opted out of the 
associated british foods pension scheme on 5 april 2006 and has a deferred benefit in the scheme the balance of the promise is  
provided under an efrbs the directors’ benefits are payable from age 62 there is no additional benefit entitlement for the members  
if they take early retirement the pension accrued by the director at 13 september 2014 was £284064
shortterm incentive plan – 201314
in december 2014 there will be a payout of 7074 of salary to executive directors in respect of the financial element of the annual 
bonus for the 201314 financial year 7286 of salary based on adjusted operating profit performance multiplied by 09709 in respect 
of average working capital performance this reflects the performance of the group with adjusted operating profit slightly ahead of 
target and working capital as a percentage of sales just below target
actual
below bonus 
threshold below target target above target maximum
adjusted operating profit £1163m
average working capital as a percentage of sales 1456
the committee applied its discretion to reduce the incentive range downwards by £10m at cutin target and maximum this year  
as outlined in the section on discretion the committee has a robust process that it applies when considering whether or not any 
adjustment to incentive targets is appropriate in light of the challenge in the sugar business the company made the decision to 
significantly restructure this business in the current year which had a £22m impact on reported operating profit as this cost was  
not included in the budget and therefore incentive targets for the year the committee agreed to an adjustment to incentive targets  
of £10m in recognition of the fact that accelerating this action to restructure the business was in the best interests of company 
performance and of shareholders in the long term
following a review of personal performance against specific objectives for the 201314 financial year the committee determined  
that george weston will receive 161 of salary in relation to strong performance against set objectives cost base reductions and 
continuous improvement in the sugar business continuing the international rollout of primark and increasing internationalisation of  
the grocery businesses in addition there has been good progress on succession planning both for the board and divisional  
leadership teams john bason will receive 15 of base salary for the individual element of the annual bonus reflecting overall 
performance that is ahead of expectations with all objectives having been attained and good performance delivered on acquisitions  
it projects refinancing and pension funding personal objectives set for each of the executive directors were closely aligned to the 
overall strategy of the group and will not be disclosed because of commercial sensitivity 
in addition to the above percentages the committee has determined to increase the personal element of the incentive payment by  
a further 24 for george weston and 245 for john bason for the reasons detailed in the remuneration committee chairman’s 
statement on page 64
longterm incentive plan – 2011– 2014
the performance measures for each threeyear ltip cycle are set by the committee awards are made annually at the discretion  
of the committee and eligible executives receive shares at the end of the performance period subject to achievement of the 
performance measures for the 2011–2014 cycle the threshold level of compound earnings per share growth was 5 per annum  
with on target at 8 and maximum at 11 the actual earnings per share growth over the period was more than 12 compound  
per annum in november 2014 executive directors will therefore receive 100 of the conditional shares allocated in 2011 –  
george weston will receive 166606 shares and john bason 109614 shares no further deferral will be applied to these shares  
as outlined in the remuneration policy
associated british foods annual report and accounts 2014
governance
remuneration report
74 grant policy for share plans
conditional share awards are granted each year in the last 10 days of november following announcement of the company’s results 
in addition further awards are made following approval by the committee between the end of november and 1 june each year to 
new starters or newly promoted individuals who are eligible to participate the share price used to determine the number of shares  
in an allocation is the average of the closing share prices on the five trading days immediately preceding the award date
until the agm on 6 december 2013 awards were made under the associated british foods executive share incentive plan 2003 
since then awards have been made under the associated british foods longterm incentive plan all awards are settled using  
shares bought in the market
scheme interests awarded in 201314 audited information
the table below details the conditional share interests awarded to the executive directors the awards made were in line with our 
normal policy and are subject to performance conditions over the vesting period
executive director award date vesting date
maximum award
market price 
at grant
shares vesting
 salary face value maximum
target
50 of 
maximum
threshold
10 of 
maximum
below 
threshold
0 of 
maximum
george weston 251113 251116 200 £1954000 23212p 84181 42090 8418 0
john bason 251113 251116 200 £1286000 23212p 55402 27701 5540 0
the committee determined that performance for this award should be measured against an absolute range of 5 to 11 compound 
annual growth in adjusted earnings per share the committee believes that the range remains achievable but stretching over the next 
threeyear period in setting this target the committee has taken into account
• the volatility present in many of the markets in which the group operates
• the scale of investments made in the pursuit of longterm growth
• the results of the longterm incentive to date 
• market expectations
• internal forecasts for the next few years and
• advice from their appointed remuneration advisors
as outlined in the remuneration policy following vesting there will be no further holding period in place for these shares other than  
as detailed in the share ownership requirements section
executive directors’ shareholding requirements and share interests audited information
the executive directors are required to build up a beneficially owned shareholding of 100 of salary no share option awards from 
earlier years are outstanding
executive directors
holding 
requirement 
beneficial  
13 september 
2014
beneficial 
as 
 of salary
1
conditional  
13 september 
2014
2
total
13 september 
2014
total as at
14 september
2013
george weston
3
wittington investments limited  
ordinary shares of 50p na 2446 na na 2446 2446
associated british foods plc  
ordinary shares of 5
15
22p
100 of 
salary 3460882
4
9053 383339 3844221 3845908 
john bason
associated british foods plc  
ordinary shares of 5
15
22p
100 of 
salary 112724 448 252221 364945 387459
1
 calculated using share price as at 12 september 2014 of £2621
2
 these awards detailed in the preceding and following tables are conditional allocations under the longterm incentive plans described in the policy section
3
  george weston is a director of wittington investments limited which together with its subsidiary howard investments limited held 431515108 ordinary 
shares in associated british foods plc as at 13 september 2014 
4
  the increase in george weston’s holding of associated british foods plc shares as at 13 september 2014 arises in part from a release of shares under the  
ltip on 25 november 2013 and in part from an indepth exercise that has been carried out to comply with the new controlling shareholder requirements
5
 the interests above remained the same at 4 november 2014
in addition to the interests awarded in the year the executive directors have the following conditional interests in abf shares
scheme name
dates of award 
and vesting
market price  
at award maximum shares
face value  
£000
end of performance 
period
george weston share incentive plan 231111 – 241114 10984p 166606 1830 130914
231112 – 231115 14334p 132552 1900 120915
john bason share incentive plan 231111 – 241114 10984p 109614 1204 130914
231112 – 231115 14334p 87205 1250 120915
1
 for each of the above tranches performance is against an absolute range of 5 to 11 compound annual growth in adjusted earnings per share 
associated british foods annual report and accounts 2014
governance
remuneration report
75 nonexecutive directors’ shareholding requirements and share interests audited information
there is no shareholding requirement for nonexecutive directors the following shareholdings are ordinary shares of  
associated british foods plc unless stated otherwise
beneficial
13 september 2014
beneficial 
14 september 2013
total 
13 september 2014
total
14 september 2013
charles sinclair 12760 12760 12760 12760
tim clarke 4000 4000 4000 4000
lord jay 1000 1000 1000 1000
javier ferrán 2400 2400 2400 2400
peter smith 2000 2000 2000 2000
emma adamo
1
wittington investments limited 
ordinary shares of 50p 1322 1322 1322 1322
associated british foods plc  
ordinary shares of 5
15
22p 504465 504465 504465 504465
ruth cairnie
2
– – – –
1
  emma adamo is a director of wittington investments limited which together with its subsidiary howard investments limited held 431515108 ordinary shares 
in associated british foods plc as at 13 september 2014 emma adamo’s interest in associated british foods plc shares as at 14 september 2013 has been 
restated to include 38231 shares held by her husband
2
 ruth cairnie was appointed a director on 1 may 2014
payments to past directors audited information
no payments were made to past directors in 201314
payments for loss of office audited information
no payments were made for loss of office in 201314 
tsr performance and chief executive’s pay
the performance graph below illustrates the performance of the company over the past five years from september 2009 to 
september 2014 in terms of total shareholder return compared with that of the companies comprising the ftse 100 index  
this index has been selected because it represents a crosssection of leading uk companies 
in addition the table below the graph provides a fiveyear summary of the total remuneration of the chief executive over the same 
period showing a breakdown of each of the elements of variable pay within the total remuneration figure for the purpose of 
calculating the value of the remuneration of the chief executive data has been collated on a basis consistent with the ‘single figure’ 
methodology as defined by the department for business innovation and skills 
0
100
150
200
300
350
400
450
50
250
abf
ftse 100
2009 2010 2011 2012 2013 2014
total remuneration  
single figure £000 3886 3182 3859 5832 7155
annual variable pay £000 1266 438 864 1219 894
potential maximum annual 
variable pay £000 1310 1373 1425 1466 1503
annual variable pay 
 of maximum 97 32 61 83 59
longterm variable pay – shares 
vesting as  of maximum 9912 8380 9742 8500 10000
at close of business on 12 september 2014 the last trading day before the end of the financial year the market value of the 
company’s ordinary shares was 2621p during the previous 12 months the market value ranged from 1822p to 3125p
associated british foods annual report and accounts 2014
governance
remuneration report
76 percentage change in remuneration of the chief executive
between 2013 and 2014 the increase in the chief executive’s salary was 264 and the average increase in salaries for our uk 
employees was 2–3 the total increase in reward for the chief executive was 2265 reflecting full vesting on the ltip and the 
increase in the share price over the last year the overall increase in spend on reward for all of our employees was 3 these numbers 
are based on aggregate data presented on page 101 as it is very difficult in a decentralised group of the company’s size to separate  
the increase in spend on incentives and benefits
executive directors serving as nonexecutive director
during the year george weston served as a nonexecutive director of wittington investments limited for which he received no 
compensation 
john bason is a nonexecutive director and chairman of the audit committee of compass group plc for which he received a total fee 
of £103000 in the 201314 financial year he also served as a trustee of voluntary service overseas and as deputy chairman of the 
charity fareshare but received no compensation in respect of either of these roles
relative importance of spend on pay
a yearonyear comparison of the relative importance of pay and significant income distributions to shareholders and others is 
shown below 
expenditure
2014
£m
2013
£m  change
pay spend for the group 2006 1948
1
3
dividends relating to the period 269 253 6
income taxes paid 246 252 –2
1
  pay spend for the group for 2013 has been adjusted to reflect the new accounting standard on pensions
implementation of policy 201415
we do not intend to implement our policy differently in 201415 than in 201314 
base salary
executive directors’ salaries are subject to review on 1 december 2014 and will be increased as shown in the table below
dec 2013
increase in  
dec 2014 dec 2014
george weston 1002000 26000 1028000
john bason 660000 17000 677000
benefits and pension
no change to current operation
shortterm incentive plan – 201415
the stip will be operated in 201415 in line with the remuneration policy and with previous company practice on implementation
payout based 
on operating 
profit only
modification to 
payout based 
on average 
working capital
overall  
financial  
payout
personal 
element total bonus
maximum 1083 x12 130 200 1500
ontarget budget 650 x10 65 133 783
threshold 150 x08 12 00 120
below threshold 00 x08 00 00 00
as detailed in our remuneration policy we believe that the detailed targets used for our shortterm incentive plan are commercially 
sensitive we believe that our targets are set at a stretching level and will disclose achievement against them retrospectively in our 
2015 remuneration report as we have done for 201314 as the committee has the right to claw back awards under the stip  we will 
ask participants to confirm their acceptance of the terms of the award to ensure that they have understood this
 
associated british foods annual report and accounts 2014
governance
remuneration report
77 longterm incentive plan – 2014–17
the ltip will be operated in line with the remuneration policy and with the continuing company grant policy see page 67 as the 
committee has the right to claw back awards under the ltip  we will ask participants to confirm their acceptance of the terms of  
the award to ensure that they have understood this
service contracts
date of appointment
date of current contract
letter of appointment notice from company notice from individual
unexpired period of 
service contract
executive directors
george weston 190499 010605 12 months 12 months rolling contract
john bason 040599 160399 12 months 12 months rolling contract
nonexecutive directors
charles sinclair 011008 210409 6 months 6 months rolling contract
tim clarke 031104 031104 6 months 6 months rolling contract
lord jay 011106 011106 6 months 6 months rolling contract
javier ferrán 011106 011106 6 months 6 months rolling contract
peter smith 280207 280207 6 months 6 months rolling contract
emma adamo 091211 091211 6 months 6 months rolling contract
ruth cairnie 010514 010514 6 months 6 months rolling contract
nonexecutive directors’ fees for 201415
dec 2013
increase in  
dec 2014 dec 2014
chairman £350000 £40000 £390000
senior independent director £82500 £10000 £92500
chairman of audit committee £82500 £10000 £92500
director £65000 £7500 £72500
the nonexecutive directors’ fees were last revised in december 2012 since then the group has grown in scale and complexity and 
corporate governance responsibilities have increased the fee levels proposed for december 2014 are consistent with market rates
annual report on remuneration – governance
remuneration committee
the committee comprises the following members all of whom are independent nonexecutive directors
name role on committee independence year of appointment
meetings attended 
total of 6
charles sinclair chairman chairman 2008 6
tim clarke member senior independent director 2004 6
lord jay member independent director 2006 6
peter smith member independent director 2007 6
javier ferrán member independent director 2006 6
ruth cairnie member independent director 2014 3
1
1
 ruth cairnie attended all meetings from her date of joining
all committee members george weston chief executive and des pullen group hr director attended all six of the meetings of the 
committee and julie withnall group head of reward attended all except the june meeting no individual was present when their 
own remuneration was being considered
remuneration committee advisors and fees 
following a competitive tender in 2003 towers watson then towers perrin was selected to provide independent market information 
and remuneration advice to the remuneration committee the committee has retained towers watson in this role because it values 
the robust data provided and continuity of advice over the long term the committee remains satisfied that the advice from towers 
watson is independent thoughtful and challenging
towers watson is a member of the remuneration consultants group and adheres to its code in relation to executive remuneration 
consulting the only other advice that towers watson provides to the company is in survey provision and remuneration 
benchmarking the fees paid to towers watson for committee assistance over the past financial year totalled £80151
associated british foods annual report and accounts 2014
governance
remuneration report
78 role of the committee
the remuneration committee is responsible to the board for determining
• the remuneration policy for the executive directors and chairman taking into account remuneration trends across the company
• the specific terms and conditions of employment of each individual director
• the overall policy for remuneration for the chief executive’s first and second line reports 
• the design and monitoring of the operation of any company share plans
• stretching incentive targets to encourage enhanced performance
• an approach that rewards fairly and responsibly contribution to the company’s longterm success and 
• other provisions of the executive directors’ service agreements and ensuring that contractual terms on termination  
and payments made are fair to the individual and the company and that failure is not rewarded and loss is mitigated 
the committee’s remit is set out in detail in its terms of reference which are reviewed regularly and were updated in july 2014  
they are available on the website at wwwabfcoukinvestorrelations under corporate governanceboard committees or from  
the company secretary’s office on request 
remuneration principles
the overall remuneration policy of the company aims to
• provide alignment between remuneration and the company’s business objectives
• align executive rewards with shareholder value
• attract and retain highcalibre executive directors
• motivate executive directors to achieve challenging performance levels and reward them for so doing
• recognise both individual and group achievement and
• reflect the diversity of the group’s interests
statement on shareholder voting
at the last agm in december 2013 the voting results on the remuneration resolution ‘to receive and approve the remuneration  
report for the year ended 14 september 2013’ were as follows
 i the total number of votes cast in relation to the resolution was 656638825 643199668 ‘for’ and 13439157 ‘against’
 ii the percentage ‘for’ was 9795 and the percentage ‘against’ was 205
 iii the number of abstentions was 1405427
compliance statement
the remuneration committee has made major changes to the structure and content of the 2014 remuneration report in recognition 
of the government’s new reporting requirements set out in the large and mediumsized companies and groups accounts and 
reports amendment regulations 2013 
the policy section of this report will be subject to a binding vote at the forthcoming annual general meeting of the company 
it is our intention that this policy will be reviewed annually however we expect this policy to apply for three years and will seek 
shareholder approval before making any changes to the policy
the annual implementation section of this report will be subject to an advisory vote at the forthcoming annual general meeting  
of the company the vote will have advisory status in respect of the remuneration policy and overall remuneration packages  
and will not be specific to individual levels of remuneration 
kpmg llp has audited the report to the extent required by the large and mediumsized companies and groups accounts and 
reports regulations 2008
by order of the board
paul lister
company secretary
4 november 2014
associated british foods annual report and accounts 2014
governance
remuneration report
79 directors’ report
introduction 
the directors of associated british foods 
plc the ‘company’ present their report 
for the year ended 13 september 2014  
in accordance with section 415 of the 
companies act 2006 the ukla’s 
disclosure and transparency rules and 
listing rules also require the company  
to make certain disclosures some of 
which have been included in other 
appropriate sections of the annual  
report and accounts 
the information set out on pages 1 to 3  
and 83 and in particular the following 
crossreferenced material is incorporated 
into this directors’ report 
• likely future developments in the 
group’s business pages 4 to 49
• greenhouse gas emissions  
pages 40 and 41 and
• the board of directors and the 
corporate governance report  
pages 50 to 63
results and dividends
the consolidated income statement is  
on page 86 profit for the financial year 
attributable to equity shareholders 
amounted to £762m
the directors recommend a final dividend 
of 243p per ordinary share to be paid 
subject to shareholder approval on  
9 january 2015 together with the interim 
dividend of 97p per share paid on 4 july 
2014 this amounts to 340p for the year 
dividends are detailed on page 102
directors
the names of the persons who were 
directors of the company during the 
financial year and as at 4 november  
2014 appear on pages 50 and 51  
all the directors are standing for  
election or reelection at this year’s  
agm in december
appointment of directors 
the company’s articles of association 
the ‘articles’ give the directors power  
to appoint and replace directors under 
the terms of reference of the nomination 
committee any appointment must be 
recommended by the nomination 
committee for approval by the board  
of directors a person who is not 
recommended by the directors may  
only be appointed as a director where 
details of that director have been provided 
at least seven and not more than 35 days 
prior to the relevant meeting by at least 
two members of the company the 
articles require directors to retire and 
submit themselves for election at the  
first agm following appointment and all 
directors who held office at the time of 
the two preceding agms and in any 
event not less than one third of the 
relevant directors excluding those 
directors who retire other than by 
rotation to submit themselves for 
reelection the articles notwithstanding 
all directors will stand for election or 
reelection at the agm this year in 
compliance with the uk corporate 
governance code details of unexpired 
terms of directors’ service contracts is  
set out in the remuneration report on 
page 78 
power of directors 
the directors are responsible for 
managing the business of the company 
and may exercise all the powers of the 
company subject to the provisions of 
relevant statutes to any directions  
given by special resolution and to the 
company’s articles the articles for 
example contain specific provisions and 
restrictions concerning the company’s 
power to borrow money as indicated 
above powers relating to the issuing of 
shares are also included in the articles 
and such authorities are renewed by 
shareholders at the agm each year 
directors’ indemnities
three directors of operating subsidiaries 
benefited from qualifying thirdparty 
indemnity provisions provided by the 
company’s wholly owned subsidiary 
abf investments plc during the financial 
year and at the date of this report 
one director benefited from a qualifying 
pension scheme indemnity provision 
during the financial year and at the  
date of this report
directors’ share interests
details regarding the share interests of 
the directors and their connected persons 
in the share capital of the company 
including any interests under the 
longterm incentive plan are set out in the 
remuneration report on pages 75 and 76
employees
during the year under review the group 
employed an average of 118209 people 
worldwide 2013 112652 of whom 
41942 2013 40071 were employed in 
the uk the group abides by the following 
principles recognising that people are its 
most crucial resource
• equal opportunities – the group is 
committed to offering equal 
opportunities in recruitment training 
career development and promotion  
to all people including those with 
disabilities having regard for their 
particular aptitudes and abilities  
as a matter of policy full and fair 
consideration is given to applicants  
with disabilities and every effort is 
made to give employees who become 
disabled whilst employed by the group 
an opportunity for retraining and for 
continuation in employment it is group 
policy that the training career 
development and promotion of disabled 
persons should as far as possible be 
the same as those of other employees
• health and safety – health and safety 
are considered as equal in importance 
to that of any other function of the 
group and its business objectives  
the health and safety policy is  
available on the company’s website  
at wwwabfcouk
• harrassment – sexual mental or 
physical harassment in the workplace 
will not be tolerated it is expected  
that incidents of harassment to be 
reported to the appropriate human 
resources director
•  human rights – managers must take 
account of the core international labour 
organization labour conventions and 
strive to observe the un universal 
declaration of human rights by 
respecting the dignity and human rights 
of group employees and in particular as 
stated below
associated british foods annual report and accounts 2014
governance
directors’ report
80 “universal respect for an observance of 
human rights and fundamental freedoms 
for all without discrimination as to race 
sex language or religion”
the group remunerates fairly with  
respect to skills performance its peers 
and local conditions
• communication – employees and  
their representatives are briefed and 
consulted on all relevant matters on  
a regular basis in order to take their  
views into account with regard to 
decisionmaking and to achieve a 
common awareness of all the financial 
and economic factors affecting the 
performance of the group information 
relevant to the employees will be 
provided systematically to employees 
and
•  security – the security of our staff and 
customers is paramount and the group 
will at all times take the necessary 
steps to minimise risks to their safety 
employees are provided with information 
on the performance of their local business 
and their involvement is encouraged in a 
variety of ways such as through 
engagement surveys
the group encourages an open culture  
in all its dealings between employees  
and people with whom it comes into 
contact effective and honest 
communication is essential if malpractice 
and wrongdoing are to be dealt with 
effectively the group’s whistleblowing 
procedure sets out guidelines for 
individuals who feel they need to raise 
certain issues in confidence with the 
company or their own business  
every effort is made to protect the 
confidentiality of those who raise 
concerns and employees may come 
forward without fear for their position
controlling interest
details of a controlling interest in the 
shares of the company are given in  
note 28 on page 129
disclosures required under  
listing rule 984r
the following table is included to meet 
the requirements of listing rule section 
984r the information required to be 
disclosed by that section where 
applicable to the company can be located 
in the annual report and accounts at the 
references set out below
information required location in annual report
amount of interest 
capitalised note 9 on page 106
dividend waiver note 22 on page 117 
major interests in shares 
as at 31 october 2014 the company had 
received formal notification under the 
disclosure and transparency rules of the 
following material interest in its shares 
shareholder
number  
of ordinary  
shares
 of  
issued  
share 
capital
date of  
notification  
of interest
the capital 
group 
companies 
inc 55452249 70044
21 
january 
2014
share capital 
details of the company’s share capital 
and the rights attached to the company’s 
shares are set out in note 20 on page 115 
the company has one class of share 
capital ordinary shares of 5
15
22p the 
rights and obligations attaching to these 
shares are governed by uk law and the 
company’s articles of association
no shareholder holds securities carrying 
special rights with regard to the control of 
the company there are no restrictions on 
voting rights 
there are no restrictions on the transfer  
of ordinary shares other than the  
standard restrictions for a ukquoted 
company set out in article 32 of the 
company’s articles 
authority to issue shares 
at the last annual general meeting 
‘agm’ held on 6 december 2013 
authority was given to the directors to 
allot unissued relevant securities in the 
company up to a maximum of an amount 
equivalent to twothirds of the shares in 
issue of which onethird must be offered 
by way of rights issue this authority 
expires on the date of this year’s agm to 
be held on 5 december 2014 no such 
shares have been issued the directors 
propose to renew this authority at the 
2014 agm for the following year
a further special resolution passed at that 
meeting granted authority to the directors 
to allot equity securities in the company 
for cash without regard to the 
preemption provisions of the companies 
act 2006 this authority also expires on 
the date of the 2014 agm and the 
directors will seek to renew this authority 
for the following year
authority to purchase own shares
the companies act 2006 empowers  
the company to purchase its own shares 
subject to the necessary shareholder 
approval the company has no existing 
authority to purchase its own shares
amendment to company’s articles  
of association 
any amendments to the articles may be 
made in accordance with the provisions  
of the companies act 2006 by way of 
special resolution of the shareholders 
associated british foods annual report and accounts 2014
governance
directors’ report
81 significant agreements –  
change of control
the group has contractual arrangements 
with many parties including directors 
employees customers suppliers and 
banking groups the following 
arrangements are considered to be 
significant in terms of their potential 
impact on the business of the group as  
a whole and could alter or terminate on  
a change of control of the company
• the group has a number of borrowing 
facilities provided by various banking 
groups these facility agreements 
generally include change of control 
provisions which in the event of a 
change in ownership of the company 
could result in their renegotiation or 
withdrawal the most significant of 
these are the £12bn syndicated loan 
facility signed on 15 july 2014 and  
a £120m loan from the european 
investment bank signed on  
5 december 2007 which was  
fully drawn down at the year end  
there were no drawdowns at the  
year end under the £12bn facility  
the syndicated loan facility for  
£115bn signed on 13 july 2010  
was cancelled upon executing the 
£12bn syndicated facility 
• in addition to these bank facilities  
in march 2009 the company issued 
us610m of private placement notes 
to institutional investors and in 
december 2011 and march 2012 the 
company issued a further us626m of 
private placement notes in accordance 
with the scheduled maturities 
us194m of these notes were repaid  
in march 2014 in the event of a change 
in ownership of the company the 
company is obliged to make an offer of 
immediate repayment to the remaining 
note holders 
there are no agreements between the 
company and its directors or employees 
providing for compensation for loss of 
office or employment that occurs as a 
result of a takeover bid
political donations
the company did not make any political 
donations during the year 
financial risk management 
details of the group’s use of financial 
instruments together with information  
on our risk objectives and policies and our 
exposure to price credit liquidity cash 
flow and interest rate risks can be found 
in note 24 on pages 118 to 127
research and development
innovative use of existing and emerging 
technologies will continue to be crucial  
to the successful development of new 
products and processes for the group
the company has a major technical 
centre in the uk at the allied technical 
centre facilities also exist at ach food 
companies in the us weston 
technologies and ab mauri in australia 
and the netherlands and ab enzymes  
in germany these centres support the 
technical resources of the trading 
divisions in the search for new technology 
and in monitoring and maintaining high 
standards of quality and food safety
branches
the company through various 
subsidiaries has established branches in 
a number of different countries in which 
the group operates
postbalance sheet events
significant events affecting the group that 
have arisen between 13 september 2014 
and the date of this report and that require 
disclosure are described in note 29 on 
page 130
disclosure of information to auditors
each of the directors who held office at 
the date of approval of this directors’ 
report confirm that
• so far as heshe is aware there is no 
relevant audit information of which the 
company’s auditors are unaware and 
• each director has taken all the 
reasonable steps that heshe ought  
to have taken as a director to make 
himselfherself aware of any relevant 
audit information and to establish that 
the company’s auditors are aware of 
that information
for these purposes relevant audit 
information means information needed  
by the company’s auditors in connection 
with the preparation of their report on 
pages 84 and 85 
auditors
in accordance with section 489 of the 
companies act 2006 a resolution for the 
reappointment of kpmg llp as auditors 
of the company is to be proposed at the 
forthcoming agm
annual general meeting
the agm will be held on 5 december 
2014 at 1100 am at congress centre  
28 great russell street london  
wc1b 3ls details of the resolutions  
to be proposed are set out in a separate 
notice of meeting which accompanies 
this report for shareholders receiving hard 
copy documents and which is available at 
wwwabfcouk for those who elected to 
receive documents electronically at the 
2014 agm all voting will be by polls using 
electronic handsets
on behalf of the board
paul lister 
company secretary 
4 november 2014
associated british foods plc 
registered office 
weston centre 
10 grosvenor street 
london w1k 4qy 
 
company no 293262
associated british foods annual report and accounts 2014
governance
directors’ report
82 statement of directors’ 
responsibilities in respect  
of the annual report and the  
financial statements
the directors are responsible for 
preparing the annual report and the  
group and parent company financial 
statements in accordance with applicable 
law and regulations
company law requires the directors to 
prepare group and parent company 
financial statements for each financial 
year under that law they are required to 
prepare the group financial statements in 
accordance with ifrss as adopted by the 
eu and applicable law and have elected to 
prepare the parent company financial 
statements in accordance with uk 
accounting standards
under company law the directors must 
not approve the financial statements 
unless they are satisfied that they give  
a true and fair view of the state of affairs 
of the group and parent company and  
of their profit and loss for that period  
in preparing each of the group and  
parent company financial statements  
the directors are required to
• select suitable accounting policies and 
then apply them consistently
• make judgements and estimates that 
are reasonable and prudent
• for the group financial statements state 
whether they have been prepared in 
accordance with ifrss as adopted by 
the eu
• for the parent company financial 
statements state whether applicable 
uk accounting standards have been 
followed subject to any material 
departures disclosed and explained  
in the parent company financial 
statements and 
statement of directors’ responsibilities
• prepare the financial statements on  
the going concern basis unless it is 
inappropriate to presume that the  
group and the parent company will 
continue in business
the directors are responsible for keeping 
adequate accounting records that are 
sufficient to show and explain the parent 
company’s transactions and disclose  
with reasonable accuracy at any time the 
financial position of the parent company 
and enable them to ensure that its 
financial statements comply with the 
companies act 2006 they have general 
responsibility for taking such steps as are 
reasonably open to them to safeguard the 
assets of the group and to prevent and 
detect fraud and other irregularities
under applicable law and regulations  
the directors are also responsible for 
preparing a strategic report directors’ 
report remuneration report and 
corporate governance statement  
that complies with that law and  
those regulations
the directors are responsible for the 
maintenance and integrity of the 
corporate and financial information 
included on the company’s website 
legislation in the uk governing the 
preparation and dissemination of financial 
statements may differ from legislation in 
other jurisdictions
fair balanced and understandable 
the board considers that the company’s 
annual report and accounts 2014  
taken as a whole is fair balanced and 
understandable and provides information 
necessary for shareholders to assess the 
company’s performance business model 
and strategy 
directors’ responsibility statement 
we the directors of the company 
confirm that to the best of our knowledge
• the financial statements prepared  
in accordance with the applicable 
accounting standards give a true  
and fair view of the assets liabilities 
financial position and profit of the 
company and the undertakings 
included in the consolidation taken  
as a whole and
• the strategic report includes a fair 
review of the development and 
performance of the business and the 
position of the group together with  
a description of the principal risks  
and uncertainties that it faces
on behalf of the board
charles sinclair
chairman
george weston
chief executive
john bason
finance director
4 november 2014
associated british foods annual report and accounts 2014
governance
statement of directors’ responsibilities
83 independent auditors’ report
opinions and conclusions arising 
from our audit
1 our opinion on the financial 
statements is unmodified 
we have audited the financial statements 
of associated british foods plc for the 
52 week period ended 13 september 
2014 set out on pages 86 to 135  
in our opinion 
• the financial statements give a true and 
fair view of the state of the group’s and 
of the parent company’s affairs as at 
13 september 2014 and of the group’s 
profit for the 52 weeks then ended 
• the group financial statements have 
been properly prepared in accordance 
with international financial reporting 
standards as adopted by the  
european union 
• the parent company financial 
statements have been properly 
prepared in accordance with  
uk accounting standards and
• the financial statements have been 
prepared in accordance with the 
requirements of the companies act 
2006 and as regards the group 
financial statements article 4 of  
the ias regulation 
2 our assessment of risks of  
material misstatement
in arriving at our audit opinion above on 
the financial statements the risks that 
had the greatest effect on our audit and 
the key procedures we applied to  
address them are set out below those 
procedures were designed in the context 
of the financial statements as a whole 
and consequently we do not express  
any opinion on these individual risks
carrying value of ab mauri 1078m 
north china sugar £185m and the 
australian meat business a286m
refer to pages 61 audit committee 
report 96 accounting policy and  
104 to 106 financial disclosures
the risk
ab mauri north china sugar and the 
australian meat business have all 
experienced difficult trading 
environments in recent years
ab mauri has seen increased 
competitive pressure through pricing  
in some of its businesses around the 
world the profitability of north china 
sugar has suffered from low world 
sugar prices the australian meat 
business has seen continuing retailer 
price competition competitor activity 
and operational challenges 
in light of these trading challenges 
there is a risk that the group’s significant 
capitalised goodwill other intangibles 
and property plant and equipment 
balances may not be recoverable
due to the inherent uncertainty involved 
in forecasting and discounting future 
cash flows which are the basis of the 
assessment of recoverability this is one 
of the key judgemental areas upon 
which our audit is focused
our response
our audit procedures included among 
others testing the principles and 
mathematical integrity of the group’s 
discounted cash flow models for each 
cash generating unit cgu 
we compared the group’s assumptions 
to externally derived data as well as our 
own assessments in relation to key 
assumptions such as projected economic 
growth operational improvements in 
agriculture cost inflation margin 
improvement initiatives selling prices 
volumes and discount rates as well as 
performing breakeven analysis on the 
assumptions we compared the sum of 
the discounted cash flows to the group’s 
market capitalisation to assess the 
reasonableness of those cash flows
we tested the sensitivity of the 
impairment calculations to changes in the 
key assumptions used by the directors
we also assessed whether the group’s 
disclosures relating to the sensitivity  
of the outcome of the impairment 
assessment to changes in key 
assumptions properly reflected the  
risks inherent in the valuation of 
goodwill other intangibles and property 
plant and equipment
tax provisioning included within 
income tax creditor of £193m
refer to pages 61 audit committee 
report 96 accounting policy and 102 
financial disclosures
the risk
tax provisioning requires the directors  
to make judgements and estimates in 
relation to tax issues and exposures 
this is one of the key judgemental  
areas upon which our audit is focused 
due to the group operating in a number 
of tax jurisdictions the complexities of 
transfer pricing and other international 
tax legislation and the time taken for  
tax matters to be agreed with tax 
authorities
our response
our audit procedures included among 
others using our own tax specialists to 
assist us in assessing and challenging 
the assumptions and judgements made 
by the directors checking the accuracy 
of the computation of local income tax 
amounts and assessment of specific 
local tax issues in assessing the 
directors’ assumptions we have  
used both our own tax specialists’ 
knowledge of recent tax cases and 
where available information on recent 
tax settlements
we also considered the adequacy of 
the group’s disclosures in respect of  
tax and uncertain tax positions
3 our application of materiality and an 
overview of the scope of our audit
the materiality for the group financial 
statements as a whole was set at £50m 
this has been determined with reference 
to a benchmark of group profit before 
taxation which we consider to be one of 
the principal considerations for members  
of the company in assessing the financial 
performance of the group materiality 
represents 49 of group profit before tax 
and 45 after adjusting for nontrading 
items as disclosed on the face of the 
income statement 
we agreed with the audit committee to 
report to it all uncorrected misstatements 
we identified through our audit with a value 
in excess of £1m for income statement 
items in addition to other audit 
misstatements we believed warranted 
reporting on qualitative grounds
audits for group reporting purposes were 
performed by component auditors in 60 
locations with key reporting components 
associated british foods annual report and accounts 2014
governance
independent auditors’ report
84 being in the following countries united 
kingdom ireland us spain malawi 
thailand south africa germany 
australia zambia argentina and china 
these group procedures covered 88  
of total group revenue 89 of total group 
profits and losses that made up the 
group’s profit before taxation and 94  
of total group assets the remaining 12 
of revenue 11 of group profit before  
tax and 6 of total group assets  
is represented by 262 reporting 
components around the world whilst 
none of these individual 262 reporting 
components represented more than  
16 of revenue profit before tax or  
total group assets we considered the 
aggregate risk from these components 
when performing our audit planning and  
during our final analytical procedures over 
the group financial statements local 
statutory audits are performed over  
some of these components but generally 
these are completed at different times 
during the year
the audits undertaken for group  
reporting purposes at all key reporting 
components of the group were 
performed to local materiality levels 
these local materiality levels were set 
individually at each component and 
agreed with the group audit team and 
ranged from £2000 to £34m
detailed instructions were sent to all  
the auditors in these locations these 
instructions covered the significant  
areas that should be addressed by the 
component auditors which included the 
relevant risks of material misstatement 
detailed above and set out the 
information required to be reported back 
to the group audit team in addition to 
those components audited directly by  
the group audit team members of the 
group audit team visited china germany 
ireland mexico spain south africa and 
the us telephone meetings were also 
held with the auditors at those locations 
and the majority of the other locations 
that were not physically visited
4 our opinion on other matters 
prescribed by the companies act 
2006 is unmodified
in our opinion 
• the part of the remuneration report  
to be audited has been properly 
prepared in accordance with the 
companies act 2006 and
• the information given in the strategic 
report and the directors’ report for the 
financial year for which the financial 
statements are prepared is consistent 
with the financial statements 
5  we have nothing to report in 
respect of the matters on which we 
are required to report by exception 
under international standards on auditing 
uk and ireland we are required to report 
to you if based on the knowledge we 
acquired during our audit we have 
identified other information in the annual 
report that contains a material 
inconsistency with either that knowledge 
or the financial statements a material 
misstatement of fact or that is otherwise 
misleading 
in particular we are required to report to 
you if 
• we have identified material 
inconsistencies between the 
knowledge we acquired during our 
audit and the directors’ statement that 
they consider that the annual report and 
financial statements taken as a whole is 
fair balanced and understandable and 
provides the information necessary for 
shareholders to assess the group’s 
performance business model and 
strategy or
• the governance section of the annual 
report describing the work of the audit 
committee does not appropriately 
address matters communicated by  
us to the audit committee
under the companies act 2006 we are 
required to report to you if in our opinion 
• adequate accounting records have not 
been kept by the parent company or 
returns adequate for our audit have not 
been received from branches not 
visited by us or 
• the parent company financial 
statements and the part of the 
remuneration report to be audited  
are not in agreement with the 
accounting records and returns or 
• certain disclosures of directors’ 
remuneration specified by law are  
not made or 
• we have not received all the information 
and explanations we require for  
our audit 
under the listing rules we are required  
to review 
• the directors’ statement set out on 
page 57 in relation to going concern 
and 
• the part of the corporate governance 
statement on page 52 relating to  
the company’s compliance with  
the nine provisions of the 2010 uk 
corporate governance code  
specified for our review
we have nothing to report in respect of 
the above responsibilities 
scope of report and responsibilities
as explained more fully in the statement 
of directors’ responsibilities set out on 
page 83 the directors are responsible for 
the preparation of the financial statements 
and for being satisfied that they give a 
true and fair view a description of the 
scope of an audit of financial statements 
is provided on the financial reporting 
council’s website at wwwfrcorguk
auditscopeukprivate this report is made 
solely to the company’s members as a 
body and is subject to important 
explanations and disclaimers regarding 
our responsibilities published on our 
website at wwwkpmgcomuk
auditscopeukco2013a which are 
incorporated into this report as if set out  
in full and should be read to provide an 
understanding of the purpose of this 
report the work we have undertaken  
and the basis of our opinions
richard pinckard 
senior statutory auditor 
for and on behalf of kpmg llp   
statutory auditor 
chartered accountants 
15 canada square
london
e14 5gl
4 november 2014
associated british foods annual report and accounts 2014
governance
independent auditors’ report
85 consolidated income statement
for the 52 weeks ended 13 september 2014
continuing operations note
2014
£m
2013 
 restated
£m
revenue 1 12943 13315
operating costs 2 11865 12240
1078 1075
share of profit after tax from joint ventures and associates 11 13 13
profits less losses on disposal of noncurrent assets 11 –
operating profit 1080 1088
adjusted operating profit 1 1163 1180
profits less losses on disposal of noncurrent assets 11 –
amortisation of nonoperating intangibles 8 72 92
profits less losses on sale and closure of businesses 21 2 128
profit before interest 1078 960
finance income 4 15 13
finance expense 4 73 100
other financial incomeexpense 4 – 5
profit before taxation 1020 868
adjusted profit before taxation 1105 1088
profits less losses on disposal of noncurrent assets 11 –
amortisation of nonoperating intangibles 8 72 92
profits less losses on sale and closure of businesses 21 2 128
taxation – uk 117 111
    – overseas 120 129
5 237 240
profit for the period 783 628
attributable to
equity shareholders 762 585
noncontrolling interests 21 43
profit for the period 783 628
basic and diluted earnings per ordinary share pence 7 965 740
dividends per share paid and proposed for the period pence 6 340 320
 
 financial statements
consolidated income statement
associated british foods annual report and accounts 2014
86 consolidated statement of comprehensive income 
 for the 52 weeks ended 13 september 2014
2014 
£m
2013 
 restated
£m
profit for the period recognised in the income statement 783 628
other comprehensive income
remeasurements of defined benefit schemes 25 33
deferred tax associated with defined benefit schemes 3 7
items that will not be reclassified to profit or loss 22 26
effect of movements in foreign exchange 275 114
net gainloss on hedge of net investment in foreign subsidiaries 25 20
deferred tax associated with movements in foreign exchange – 2
current tax associated with movements in foreign exchange 2 –
reclassification adjustment for movements in foreign exchange on subsidiaries disposed – 7
movement in cash flow hedging position 55 6
deferred tax associated with movement in cash flow hedging position 11 2
share of other comprehensive income of joint ventures and associates 5 –
items that are or may be subsequently reclassified to profit or loss 209 121
other comprehensive income for the period 231 95
total comprehensive income for the period 552 533
attributable to
equity shareholders 580 527
noncontrolling interests 28 6
total comprehensive income for the period 552 533
 financial statements
consolidated statement of comprehensive income
associated british foods annual report and accounts 2014
87 consolidated balance sheet 
 at 13 september 2014
note
2014 
£m
2013 
 restated
£m
2012 
 restated
£m
noncurrent assets
intangible assets 8 1467 1581 1769
property plant and equipment 9 4665 4552 4541
biological assets 10 96 97 89
investments in joint ventures 11 180 182 174
investments in associates 11 32 36 40
employee benefits assets 12 90 81 45
deferred tax assets 13 152 273 189
other receivables 14 164 148 151
total noncurrent assets 6846 6950 6998
current assets
inventories 15 1631 1581 1500
biological assets 10 109 112 109
trade and other receivables 14 1293 1342 1236
derivative assets 24 74 27 33
cash and cash equivalents 16 519 362 391
total current assets 3626 3424 3269
total assets 10472 10374 10267
current liabilities
loans and overdrafts 17 358 394 538
trade and other payables 18 2046 1881 1752
derivative liabilities 24 15 38 50
income tax 193 166 150
provisions 19 72 47 98
total current liabilities 2684 2526 2588
noncurrent liabilities
loans 17 607 772 914
provisions 19 29 30 38
deferred tax liabilities 13 266 431 373
employee benefits liabilities 12 133 96 112
total noncurrent liabilities 1035 1329 1437
total liabilities 3719 3855 4025
net assets 6753 6519 6242
equity
issued capital 20 45 45 45
other reserves 20 175 175 175
translation reserve 20 238 440 532
hedging reserve 20 29 13 17
retained earnings 5950 5508 5120
total equity attributable to equity shareholders 6437 6155 5855
noncontrolling interests 316 364 387
total equity 6753 6519 6242
the financial statements on pages 86 to 130 were approved by the board of directors on 4 november 2014 and were signed on its  
behalf by 
charles sinclair
chairman
john bason
director
 financial statements
consolidated balance sheet
associated british foods annual report and accounts 2014
88 consolidated cash flow statement 
 for the 52 weeks ended 13 september 2014
2014
 
£m
2013 
 restated
£m
cash flow from operating activities
profit before taxation 1020 868
profits less losses on disposal of noncurrent assets 11 –
profits less losses on sale and closure of businesses 2 128
finance income 15 13
finance expense 73 100
other financial expense – 5
share of profit after tax from joint ventures and associates 13 13
amortisation 94 130
depreciation 402 405
impairment of property plant and equipment – 27
impairment of operating intangibles – 4
impairment of goodwill – 10
net change in the fair value of biological assets 21 26
sharebased payment expense 15 15
pension costs less contributions 7 24
increase in inventories 119 112
decreaseincrease in receivables 19 158
increase in payables 200 173
purchases less sales of current biological assets 3 2
increase in provisions 13 11
cash generated from operations 1685 1528
income taxes paid 246 252
net cash from operating activities 1439 1276
cash flows from investing activities
dividends received from joint ventures and associates 17 11
purchase of property plant and equipment 676 593
purchase of intangibles 32 22
purchase of noncurrent biological assets – 1
sale of property plant and equipment 17 15
purchase of subsidiaries joint ventures and associates 8 75
sale of subsidiaries joint ventures and associates 15 35
loans to joint ventures 15 4
purchase of noncontrolling interests – 1
interest received 10 10
net cash from investing activities 672 625
cash flows from financing activities
dividends paid to noncontrolling interests 21 29
dividends paid to equity shareholders 256 232
interest paid 77 107
financing
 decrease in shortterm loans 158 258
 decrease in longterm loans 10 23
 sale of shares in subsidiary undertakings to noncontrolling interests 1 1
 movements from changes in own shares held 59 10
net cash from financing activities 580 658
net increasedecrease in cash and cash equivalents 187 7
cash and cash equivalents at the beginning of the period 243 245
effect of movements in foreign exchange 31 5
cash and cash equivalents at the end of the period 399 243
 financial statements
consolidated cash flow statement
associated british foods annual report and accounts 2014
89 consolidated statement of changes in equity
 for the 52 weeks ended 13 september 2014
attributable to equity shareholders
note
issued 
 capital 
 £m
other 
 reserves 
 £m
translation 
 reserve 
 £m
hedging 
 reserve 
 £m
retained 
 earnings 
 £m
total 
 £m
non
controlling 
 interests 
 £m
total
 equity
 £m
balance as at 15 september 2012 restated see page 95 45 175 532 17 5120 5855 387 6242
total comprehensive income
profit for the period recognised in the income  
statement restated – – – – 585 585 43 628
remeasurements of defined benefit schemes restated – – – – 35 35 2 33
deferred tax associated with defined benefit schemes 
restated – – – – 7 7 – 7
items that will not be reclassified to profit or loss – – – – 28 28 2 26
effect of movements in foreign exchange – – 86 – – 86 28 114
net loss on hedge of net investment in foreign 
subsidiaries – – 13 – – 13 7 20
deferred tax associated with movements in foreign 
exchange – – – – 2 2 – 2
reclassification adjustment for movements in foreign 
exchange on subsidiaries disposed – – 7 – – 7 – 7
movement in cash flow hedging position – – – 6 – 6 – 6
deferred tax associated with movement in cash flow 
hedging position – – – 2 – 2 – 2
items that are or may be subsequently reclassified to 
profit or loss – – 92 4 2 86 35 121
other comprehensive income – – 92 4 30 58 37 95
total comprehensive income – – 92 4 615 527 6 533
transactions with owners
dividends paid to equity shareholders 6 – – – – 232 232 – 232
net movement in own shares held – – – – 5 5 – 5
dividends paid to noncontrolling interests – – – – – – 29 29
total transactions with owners – – – – 227 227 29 256
balance as at 14 september 2013 45 175 440 13 5508 6155 364 6519
total comprehensive income
profit for the period recognised in the income statement – – – – 762 762 21 783
remeasurements of defined benefit schemes – – – – 25 25 – 25
deferred tax associated with defined benefit schemes – – – – 3 3 – 3
items that will not be reclassified to profit or loss – – – – 22 22 – 22
effect of movements in foreign exchange – – 224 – – 224 51 275
net gain on hedge of net investment in foreign subsidiaries – – 25 – – 25 – 25
current tax associated with movements in foreign 
exchange – – 2 – – 2 – 2
movement in cash flow hedging position – – – 53 – 53 2 55
deferred tax associated with movement in cash flow 
hedging position – – – 11 – 11 – 11
share of other comprehensive income of joint ventures 
and associates – – 5 – – 5 – 5
items that are or may be subsequently reclassified to 
profit or loss – – 202 42 – 160 49 209
other comprehensive income – – 202 42 22 182 49 231
total comprehensive income – – 202 42 740 580 28 552
transactions with owners
dividends paid to equity shareholders 6 – – – – 256 256 – 256
net movement in own shares held – – – – 44 44 – 44
current tax associated with sharebased payments – – – – 2 2 – 2
dividends paid to noncontrolling interests – – – – – – 21 21
acquisition of noncontrolling interests – – – – – – 1 1
total transactions with owners – – – – 298 298 20 318
balance as at 13 september 2014 45 175 238 29 5950 6437 316 6753
 financial statements
consolidated statement of changes in equity
associated british foods annual report and accounts 2014
90 significant accounting policies
for the 52 weeks ended 13 september 2014
associated british foods plc ‘the 
company’ is a company domiciled in  
the united kingdom the consolidated 
financial statements of the company for 
the 52 weeks ended 13 september 2014 
comprise those of the company and its 
subsidiaries together referred to as ‘the 
group’ and the group’s interest in 
associates and joint ventures 
the financial statements were  
authorised for issue by the directors on  
4 november 2014
the consolidated financial statements 
have been prepared and approved by the 
directors in accordance with international 
financial reporting standards as adopted 
by the eu ‘adopted ifrs’
the company has elected to prepare its 
parent company financial statements 
under uk generally accepted accounting 
practice these are presented on pages 
131 to 135
basis of preparation
the going concern basis has been 
applied in these accounts the 
consolidated financial statements are 
presented in sterling rounded to the 
nearest million they are prepared on the 
historical cost basis except that biological 
assets and certain financial instruments 
are stated at fair value assets classified 
as held for sale are stated at the lower of 
carrying amount and fair value less costs 
to sell
the preparation of financial statements 
under adopted ifrs requires 
management to make judgements 
estimates and assumptions about the 
reported amounts of assets and liabilities 
income and expenses and the disclosure 
of contingent assets and liabilities the 
estimates and associated assumptions 
are based on experience actual results 
may differ from these estimates 
judgements made by management in 
the application of adopted ifrs that  
have a significant effect on the financial 
statements and estimates with a 
significant risk of material adjustment 
next year are discussed in accounting 
estimates and judgements detailed on 
page 96
the estimates and underlying 
assumptions are reviewed on a regular 
basis revisions to accounting estimates 
are recognised from the period in which 
the estimates are revised
the accounting policies set out below 
have been applied to all periods presented 
except where detailed otherwise
details of new accounting standards 
which came into force in the year are  
set out at the end of this note 
the consolidated financial statements of 
the group are prepared to the saturday 
nearest to 15 september accordingly 
these financial statements have been 
prepared for the 52 weeks ended 
13 september 2014 to avoid delay in  
the preparation of the consolidated 
financial statements the results of 
certain subsidiaries joint ventures and 
associates are included up to 31 august 
2014 the results of illovo are included  
for the period to 30 september 2014 in 
line with illovo’s local reporting date 
adjustments are made as appropriate  
for significant transactions or events 
occurring between 13 september and 
30 september
the group’s business activities together 
with the factors likely to affect its future 
development performance and position 
are set out in the strategic report on 
pages 6 to 35 the financial position  
of the group its cash flows liquidity 
position and borrowing facilities are 
described in the financial review on 
pages 36 to 39 in addition the principal 
risks and uncertainties on pages 46 to 49 
and note 24 on pages 118 to 127 provide 
details of the group’s policy on managing 
its financial and commodity risks
the group has considerable financial 
resources good access to debt markets 
a diverse range of businesses and a wide 
geographic spread it is therefore well 
placed to manage business risks 
successfully
basis of consolidation
the consolidated financial statements 
include the results of the company and 
all of its subsidiaries from the date that 
control commences to the date that 
control ceases the consolidated  
financial statements also include the 
group’s share of the aftertax results 
other comprehensive income and net 
assets of its joint ventures and associates 
on an equityaccounted basis from the 
point at which joint control or significant 
influence respectively commences to 
the date that it ceases
subsidiaries are entities controlled by  
the company control exists when the 
company has the power directly or 
indirectly to govern the financial and 
operating policies of an entity so as  
to obtain benefits from its activities
changes in the group’s ownership 
interest in a subsidiary that do not result 
in a loss of control are accounted for 
within equity
joint ventures are those entities over 
whose activities the group has joint control 
typically established by contractual 
agreement and requiring the venturers’ 
unanimous consent for strategic financial 
and operating decisions
associates are those entities in which  
the group has significant influence but 
not control over the financial and 
operating policies
where the group’s share of losses 
exceeds its interest in a joint venture or 
associate the carrying amount is reduced 
to zero and recognition of further losses 
is discontinued except to the extent that 
the group has incurred legal or constructive 
obligations or made payments on behalf 
of an investee
business combinations
on the acquisition of a business fair 
values are attributed to the identifiable 
assets liabilities and contingent liabilities 
acquired reflecting conditions at the date 
of acquisition adjustments to fair values 
include those made to bring accounting 
policies into line with those of the group 
provisional fair values are finalised within 
12 months of the business combination 
date and where significant are adjusted  
by restatement of the comparative period 
in which the acquisition occurred 
noncontrolling interests are measured  
at the proportionate share of the net 
identifiable assets acquired
for business combinations executed 
before 3 september 2004 goodwill  
is included on the basis of its deemed  
cost represented by the net book value 
recorded under previous gaap
for business combinations executed in 
periods ending on or before 12 september 
2009 goodwill arising on a business 
combination was the excess of the 
carrying amount of any existing equity 
interest plus the fair value of consideration 
payable for the additional stake over the 
fair value of the share of net identifiable 
 financial statements
significant accounting policies
associated british foods annual report and accounts 2014
91 significant accounting policies
for the 52 weeks ended 13 september 2014
assets and liabilities acquired including 
separately identified intangible assets 
net of noncontrolling interests total 
consideration included acquisition costs 
contingent consideration was measured 
at fair value at the date of the business 
combination subsequent changes to 
contingent consideration other than 
settlements are accounted for as 
adjustments to goodwill
for business combinations executed  
on or after 13 september 2009 existing 
equity interests in the acquiree are 
remeasured to fair value as at the date  
of the business combination with any 
resulting gain or loss taken to the 
income statement
goodwill arising on a business 
combination is the excess of the 
remeasured carrying amount of any 
existing equity interest plus the fair value 
of consideration payable for the additional 
stake over the fair value of the share of 
net identifiable assets and liabilities 
acquired including separately identified 
intangible assets net of noncontrolling 
interests total consideration does not 
include acquisition costs which are 
expensed as incurred
contingent consideration is measured  
at fair value at the date of the business 
combination classified as a liability or 
equity usually as a liability and 
subsequently accounted for in line with 
that classification changes in contingent 
consideration classified as a liability 
resulting other than from the finalisation 
of provisional fair values are accounted 
for in the income statement
revenue
revenue represents the invoiced value of 
sales made to customers after deduction 
of discounts and sales taxes discounts 
include sales rebates price discounts 
customer incentives certain promotional 
activities and similar items revenue 
does not include sales between group 
companies revenue is recognised when 
the risks and rewards of the underlying 
products have been substantially 
transferred to the customer and when  
it can be measured reliably
revenue from the sale of goods is 
generally recognised on dispatch or 
delivery to customers dependent  
on shipping terms discounts are  
provided for as a reduction to revenue  
at the time a sale is recorded based  
on management’s best estimate of  
the amount required to meet claims  
by customers
borrowing costs
borrowing costs are accounted for using 
the effective interest method for qualifying 
items of property plant and equipment 
where the commencement date for 
capitalisation was on or after 13 september 
2009 the group capitalises borrowing 
costs directly attributable to the acquisition 
construction or production of those 
qualifying assets as part of their cost  
the group previously expensed all 
borrowing costs as incurred interest 
capitalised is taxed under current or 
deferred tax as appropriate
exceptional items
exceptional items are defined as items  
of income and expenditure which are 
material and unusual in nature and which 
are considered to be of such significance 
that they require separate disclosure on 
the face of the income statement in 
accordance with ias 1 
adjusted profit and  
earnings measures
adjusted operating profit is stated  
before amortisation of nonoperating 
intangibles profits less losses on disposal 
of noncurrent assets and exceptional 
items adjusted profit before tax is stated 
before amortisation of nonoperating 
intangibles profits less losses on 
disposal of noncurrent assets profits 
less losses on sale and closure of 
businesses and exceptional items  
both measures are shown on the face  
of the income statement
adjusted earnings per share is shown in 
the notes and is stated before amortisation 
of nonoperating intangibles profits less 
losses on disposal of noncurrent assets 
profits less losses on sale and closure  
of businesses and exceptional items 
together with the related tax effect
foreign currencies
in individual companies transactions  
in foreign currencies are recorded at  
the rate of exchange at the date of the 
transaction monetary assets and liabilities 
in foreign currencies are translated at the 
rate prevailing at the balance sheet date 
any resulting differences are taken to the 
income statement
on consolidation assets and liabilities of 
foreign operations that are denominated 
in foreign currencies are translated into 
sterling at the rate of exchange at the 
balance sheet date income and expense 
items are translated into sterling at 
weighted average rates of exchange
differences arising from the retranslation 
of opening net assets of group companies 
together with differences arising from the 
restatement of the net results of group 
companies from average rates to rates  
at the balance sheet date are taken to 
the translation reserve in equity
pensions and other post
employment benefits
the impact of applying the revised  
ias 19 employee benefits is set out  
on page 95
the group’s principal pension schemes 
are defined benefit plans in addition the 
group has defined contribution plans  
and other unfunded postemployment 
liabilities for defined benefit plans the 
amount charged in the income statement 
is the cost of benefits accruing to 
employees over the year plus any benefit 
improvements granted to members by 
the group during the year it also includes  
net interest expense or income calculated 
by applying the liability discount rate to 
the net pension asset or liability for each 
plan the difference between market 
value of assets and present value of 
liabilities is disclosed as an asset or 
liability in the balance sheet 
any related deferred tax to the extent 
recoverable is disclosed separately in  
the balance sheet remeasurements  
are recognised immediately in other 
comprehensive income surpluses  
are recognised only to the extent that 
they are recoverable movements in 
irrecoverable surpluses are recognised 
immediately as remeasurement in other 
comprehensive income
contributions payable by the group in 
respect of defined contribution plans are 
charged to operating profit as incurred 
other unfunded postemployment 
liabilities are accounted for in the same 
way as defined benefit pension plans
sharebased payments
the fair value of share awards at grant date 
is recognised as an employee expense 
with a corresponding increase in equity 
spread over the period during which  
 financial statements
significant accounting policies
associated british foods annual report and accounts 2014
92 the employees become unconditionally 
entitled to the shares the amount 
recognised is adjusted to reflect expected 
and actual levels of vesting except where 
the failure to vest is as a result of not 
meeting a market condition 
income tax
income tax on profit or loss for the period 
comprises current and deferred tax 
income tax is recognised in the income 
statement except to the extent that it 
relates to items taken directly to other 
comprehensive income
current tax is the tax expected to be 
payable on taxable income for the year 
using tax rates enacted or substantively 
enacted during the period together with 
any adjustment to tax payable in respect  
of previous years
deferred tax is provided using the 
balance sheet liability method providing 
for temporary differences between the 
carrying amounts of assets and liabilities 
for financial reporting purposes and the 
amounts used for taxation purposes  
the following temporary differences are 
not provided for initial recognition of 
goodwill initial recognition of assets or 
liabilities affecting neither accounting nor 
taxable profit other than those acquired in 
a business combination and differences 
relating to investments in subsidiaries  
to the extent that they will probably not 
reverse in the foreseeable future the 
amount of deferred tax provided is based 
on the expected manner of realisation  
or settlement of the carrying amount  
of assets and liabilities using tax rates 
enacted or substantively enacted at the 
balance sheet date
a deferred tax asset is recognised only  
to the extent that it is probable that future 
taxable profits will be available against 
which the asset can be utilised 
additional income taxes that arise from 
the distribution of dividends are 
recognised at the same time as the 
liability to pay the related dividend
financial assets and liabilities
financial assets and financial liabilities 
except for other noncurrent investments 
and derivatives are measured initially 
at fair value plus directly attributable 
transaction costs and thereafter at 
amortised cost other noncurrent 
investments classified under other 
noncurrent receivables comprise 
availableforsale investments measured 
at market prices where available where 
quoted market prices in an active market 
are not available and where fair value 
cannot be reliably measured unquoted 
equity instruments are measured at cost 
less impairment 
cash and cash equivalents
cash and cash equivalents comprise 
bank and cash balances call deposits  
and shortterm investments with  
original maturities of three months or  
less bank overdrafts that are repayable  
on demand and form an integral part of  
the group’s cash management are  
included as a component of cash and 
cash equivalents for the purpose of  
the cash flow statement
derivatives
derivatives are used to manage the 
group’s economic exposure to financial 
and commodity risks the principal 
instruments used are foreign exchange 
and commodity contracts futures swaps  
or options the ‘hedging instrument’  
the group does not use derivatives for 
speculative purposes 
derivatives are recognised in the  
balance sheet at fair value based on 
market prices or rates or calculated  
using either discounted cash flow or 
option pricing models 
changes in the value of derivatives are 
recognised in the income statement 
unless they qualify for hedge accounting 
when recognition of any change in fair 
value depends on the nature of the item 
being hedged
the purpose of hedge accounting is  
to mitigate the impact on the group’s 
income statement of changes in foreign 
exchange or interest rates and commodity 
prices by matching the impact of the 
hedged risk and the hedging instrument 
in the income statement
changes in the value of derivatives  
used as hedges of future cash flows are 
recognised through other comprehensive 
income in the hedging reserve with  
any ineffective portion recognised 
immediately within operating profit in  
the income statement
when the future cash flow results in the 
recognition of a nonfinancial asset or 
liability the gains and losses previously 
recognised in the hedging reserve are 
included in the initial measurement of 
that asset or liability otherwise gains 
and losses previously recognised in the 
hedging reserve are recognised in the 
income statement at the same time as 
the hedged transaction 
hedge accounting is discontinued when 
the hedging instrument expires or is sold 
terminated exercised or no longer 
qualifies for hedge accounting at that 
time any cumulative gain or loss on  
the hedging instrument recognised in  
the hedging reserve is retained in the 
hedging reserve until the forecast 
transaction occurs gains or losses  
on hedging instruments relating to  
an underlying exposure that no longer 
exists are taken to the income statement
hedges of the group’s net investment in 
foreign operations principally comprise 
borrowings in the currency of the 
investment’s net assets
the group economically hedges foreign 
currency exposure on recognised 
monetary assets and liabilities but does 
not normally seek hedge accounting 
under ias 39 any derivatives that the 
group holds to hedge this exposure are 
classified as ‘held for trading’ within 
derivative assets and liabilities changes 
in the fair value of such derivatives and 
the foreign exchange gains and losses 
arising on the related monetary items  
are recognised within operating profit
intangible assets other  
than goodwill
nonoperating intangible assets are 
intangible assets that arise on business 
combinations and typically include 
technology brands customer 
relationships and grower agreements 
operating intangible assets are acquired 
in the ordinary course of business and 
typically include computer software land 
use rights and emissions trading licences
intangible assets other than goodwill  
are stated at cost less accumulated 
amortisation and impairment charges
amortisation is charged to the income 
statement on a straightline basis over 
the estimated useful lives of intangible 
assets from the date they are available 
for use the estimated useful lives are 
generally deemed to be no longer than
technology and brands – up to 15 years
customer relationships – up to 5 years
grower agreements – up to 10 years
 financial statements
significant accounting policies
associated british foods annual report and accounts 2014
93 significant accounting policies
for the 52 weeks ended 13 september 2014
leases payments made under operating 
leases are recognised in the income 
statement on a straightline basis over 
the term of the lease as is the benefit  
of lease incentives
where the group is a lessor under an 
operating lease the asset is capitalised 
within property plant and equipment and 
depreciated over its useful economic life 
payments received under operating 
leases are recognised in the income 
statement on a straightline basis over 
the term of the lease
biological assets
biological assets are measured at fair 
value less costs to sell cane roots and 
growing cane are stated at fair value on 
the following bases
 cane roots – escalated average cost 
using appropriate inflationrelated indices 
of each year of planting adjusted for  
remaining expected life currently ten 
years in south africa nine years in 
swaziland seven years in zambia and 
eight years elsewhere
 growing cane – estimated sucrose 
content valued at estimated sucrose price 
for the following season less estimated 
costs for harvesting and transport
when harvested growing cane is 
transferred to inventory at fair value  
less costs to sell
the fair value of cane roots and growing 
cane is determined using inputs that are 
unobservable using the best information 
available in the circumstances for using 
the cane roots and the growing cane  
and therefore fall into the level 3 fair  
value category
inventories
inventories are stated at the lower of  
cost and net realisable value cost 
includes raw materials direct labour and 
expenses and an appropriate proportion 
of production and other overheads 
calculated on a firstin firstout basis
inventories for primark are valued at  
the lower of cost and net realisable value 
using the retail method calculated on  
the basis of selling price less appropriate 
trading margin all primark inventories  
are finished goods
goodwill
goodwill is defined under ‘business 
combinations’ on pages 91 and 92 
certain commercial assets associated 
with the acquisition of a business are  
not capable of being recognised in the 
acquisition balance sheet in such 
circumstances goodwill is recognised  
which may include but is not necessarily 
limited to workforce assets and the 
benefits of expected future synergies
goodwill is not amortised but is subject  
to an annual impairment review
research and development
research expenditure is expensed as 
incurred development expenditure is 
capitalised if the product or process is 
technically and commercially feasible  
but is otherwise expensed as incurred 
capitalised development expenditure  
is stated at cost less accumulated 
amortisation and impairment charges
impairment
the carrying amounts of the group’s 
intangible assets and property plant and 
equipment are reviewed at each balance 
sheet date to determine whether there is 
any indication of impairment if any such 
indication exists the asset’s recoverable 
amount is estimated for goodwill and 
intangibles without a finite life the 
recoverable amount is estimated at  
each balance sheet date
an impairment charge is recognised  
in the income statement whenever  
the carrying amount of an asset or its 
cashgenerating unit cgu exceeds  
its recoverable amount
impairment charges recognised in respect 
of cgus are allocated first to reduce the 
carrying amount of any goodwill allocated 
to that cgu and then to reduce the 
carrying amount of the other assets  
in the unit on a pro rata basis
calculation of recoverable amount
the recoverable amount of assets is the 
greater of their fair value less costs to sell 
and their value in use in assessing value 
in use the estimated future cash flows 
are discounted to their present value 
using a pretax discount rate that reflects 
current market assessments of the time 
value of money and the risks specific to 
the asset for an asset that does not 
generate largely independent cash 
inflows the recoverable amount is 
determined for the cgu to which the 
asset belongs
reversals of impairment
an impairment charge in respect of 
goodwill is not subsequently reversed 
for other assets an impairment charge  
is reversed if there has been a change  
in the estimates used to determine the 
recoverable amount but only to the 
extent that the new carrying amount 
does not exceed the carrying amount 
that would have been determined net  
of depreciation or amortisation if no 
impairment charge had been recognised
property plant and equipment
items of property plant and equipment 
are stated at cost less accumulated 
depreciation and impairment charges
depreciation is charged to the income 
statement on a straightline basis over 
the estimated useful lives of items of 
property plant and equipment sufficient 
to reduce them to estimated residual 
value land is not depreciated estimated 
useful lives are generally deemed to be 
no longer than
freehold buildings 66 years
plant and equipment fixtures  
and fittings
–  sugar factories yeast plants 
mills and bakeries 20 years
– other operations 12 years
vehicles 10 years
leases
a lease is an agreement whereby the 
lessor conveys to the lessee in return for 
a payment or a series of payments the 
right to use a specific asset for an agreed 
period of time
where the group is a lessee and has 
substantially all the risks and rewards of 
ownership of an asset the arrangement 
is considered a finance lease finance 
leases are recognised as assets of the 
group within property plant and 
equipment at the inception of the lease  
at the lower of fair value and the present 
value of the minimum lease payments 
depreciation on leased assets is charged 
to the income statement on the same 
basis as owned assets payments made 
under finance leases are apportioned 
between capital repayments and interest 
expense charged to the income 
statement other leases where the group 
is a lessee are treated as operating 
 financial statements
significant accounting policies
associated british foods annual report and accounts 2014
94 new accounting policies
the revised ias 19 employee benefits  
is applied for the first time in 2014 and 
makes changes to measurement and 
disclosure requirements for defined 
benefit postemployment arrangements 
the expected return on plan assets and 
the interest charge on scheme liabilities 
have been replaced by net interest 
expense or income calculated by  
applying the liability discount rate to the 
net pension asset or liability scheme 
administration costs are expensed as 
incurred and the reserve for scheme 
expenses which was previously  
included in scheme liabilities has  
been removed ias 19 service cost is 
charged to operating profit and pension  
financing costs are charged to other 
financial expense 
the new standard is applied for the first 
time in the 2014 financial year but with 
retrospective effect from the 2012 
balance sheet date the impact of all 
changes is reflected in retained earnings 
in equity and is wholly attributable to 
equity shareholders 
the £95m net pension liability in the 
2012 balance sheet has been replaced by 
a net liability of £67m and net deferred 
tax liabilities of £177m increased by £7m 
to £184m 
in 2013 the impact was an increase of 
£5m in service cost and an increase of 
£3m in net pension finance costs the 
taxation charge decreased by £2m 
remeasurements in 2013 of £24m have 
been replaced with remeasurements of 
£33m and the deferred tax associated 
with remeasurements of defined benefit 
schemes increased by £2m from £5m  
to £7m the £44m net pension liability  
in the 2013 balance sheet has been 
replaced by a net liability of £15m and 
net deferred tax liabilities of £151m 
increased by £7m to £158m
2013 basic earnings per share decreased 
08p from 748p to 740p and adjusted 
earnings per share decreased 08p from 
989p to 981p 
the group has adopted the following  
new and amended ifrss and ifric 
interpretations with no material impact 
all effective from 15 september 2013
• certain elements of annual 
improvements to ifrss 2009–2011
• amendments to ifrs 7 financial 
instruments disclosures and
• ifrs 13 fair value measurement 
effective prospectively from the 
2014 financial year
the group is also assessing the impact  
of the following revised standards and 
interpretations or amendments that  
are not yet effective where already 
endorsed by the eu these changes will 
be adopted on the effective dates noted 
where not yet endorsed by the eu the 
adoption date is less certain the impact 
of these standards is currently under 
review all effective from 14 september 
2014 unless otherwise stated
• certain elements of annual 
improvements to ifrss 2010–2012 
2011–2013 and 2012–2014 effective 
2017 financial year
• ifrs 9 financial instruments 
classification and measurement 
effective 2019 financial year not yet 
endorsed by the eu
• ifrs 10 consolidated financial 
statements effective 2015 financial 
year
• ifrs 11 joint arrangements effective 
2015 financial year
• ifrs 12 disclosure of interests in 
other entities effective 2015 financial 
year
• ifrs 15 revenue from contracts with 
customers effective 2018 financial 
year not yet endorsed by the eu
• amendments to ias 16 property 
plant and equipment and ias 41 
agriculture effective 2017 financial 
year which changes the accounting 
requirements for bearer plants cane 
roots in the case of the group not 
yet endorsed by the eu and 
• ias 28 investments in associates 
and joint ventures effective 2015 
financial year
 financial statements
significant accounting policies
associated british foods annual report and accounts 2014
95 notes forming part of the financial statements
for the 52 weeks ended 13 september 2014
accounting estimates and judgements
for the 52 weeks ended 13 september 2014
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 the board 
is the chief operating decisionmaker
intersegment 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 
noncurrent assets except employee 
benefits assets and deferred tax assets 
and all current assets except cash and 
cash equivalents segment liabilities 
comprise trade and other payables 
derivative liabilities and provisions 
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 noncurrent 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 operating intangibles and 
biological assets
the group is comprised of the following 
operating segments
grocery 
the manufacture of grocery products 
including hot beverages sugar  
sweeteners vegetable oils bread  
baked goods cereals ethnic foods  
herbs  spices 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 and cereal specialities
retail 
buying and merchandising value clothing 
and accessories through the primark and 
penneys retail chains
in applying the accounting policies 
detailed on pages 91 to 95 management 
has made estimates in a number of areas 
and the actual outcome may differ from 
those calculated key sources of 
estimation uncertainty at the balance 
sheet date with the potential for material 
adjustment to the carrying value of 
assets and liabilities within the next 
financial year are set out below
forecasts and discount rates
the carrying values of a number of items 
on the balance sheet are dependent on 
estimates of future cash flows arising 
from the group’s operations which in 
some circumstances are discounted  
to arrive at a net present value
assessment for impairment involves 
comparing the book value of an asset 
with its recoverable amount being the 
higher of value in use and fair value less 
costs to sell value in use is determined 
with reference to projected future cash 
flows discounted at an appropriate rate 
both the cash flows and the discount  
rate involve a significant degree of 
estimation uncertainty
the realisation of deferred tax assets is 
dependent on the generation of sufficient 
future taxable profits the group 
recognises deferred tax assets to the 
extent that it is considered probable that 
sufficient taxable profits will be available 
in the future deferred tax assets are 
reduced to the extent that it is no longer 
considered probable that the related tax 
benefit will be realised
postretirement benefits
the group’s defined benefit pension 
schemes and similar arrangements are 
assessed annually in accordance with 
ias 19 the accounting valuation which 
has been assessed using assumptions 
determined with independent actuarial 
advice resulted in a net liability of £43m 
being recognised as at 13 september 
2014 the size of this net liability is 
sensitive to the market value of the 
assets held by the schemes to the 
discount rate used in assessing liabilities 
to the actuarial assumptions which 
include price inflation rates of pension 
and salary increases mortality and other 
demographic assumptions and to the 
level of contributions further details  
are included in note 12
biological assets
cane roots valuation requires an 
estimation by management of the 
average number of ratoons expected 
from the crop the carrying value of  
cane roots is disclosed in note 10
for the growing cane valuation estimated 
sucrose content requires management to 
assess expected cane and sucrose yields 
for the following season considering 
weather conditions and harvesting 
programmes estimated sucrose price 
requires management to assess into 
which markets the forthcoming crop will 
be sold and assess domestic and export 
prices as well as related foreign currency 
exchange rates the carrying value of 
growing cane is disclosed in note 10
taxation
the level of current and deferred tax 
recognised is dependent on subjective 
judgements as to the outcome of 
decisions by tax authorities in various 
jurisdictions around the world
 financial statements
accounting estimates and judgementsnotes forming part of the financial statements
associated british foods annual report and accounts 2014
96 1 operating segments continued
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
2014
£m
2013
£m
2014
£m
2013 
 restated
£m
operating segments
grocery 3337 3568 269 224
sugar 2083 2677 189 434
agriculture 1312 1410 50 47
ingredients 1261 1360 41 5
retail 4950 4273 662 513
central – – 49 51
12943 13288 1162 1172
businesses disposed
grocery – – 1 2
ingredients – 27 – 6
12943 13315 1163 1180
geographical information
united kingdom 5631 5728 602 710
europe  africa 3924 3790 393 386
the americas 1211 1282 127 103
asia pacific 2177 2488 40 27
12943 13288 1162 1172
businesses disposed
the americas – 27 – 6
asia pacific – – 1 2
12943 13315 1163 1180
the comparative results for 2013 have been restated for the adoption of ias 19 revised employee benefits see new accounting 
policies on page 95 for further details 
during the year the activities of ab mauri’s yeast and bakery ingredients businesses in australia and new zealand were merged 
with the flour milling business of george weston foods the results of the flour milling business which were previously included 
within the grocery segment are now included in the ingredients segment the comparative results for 2013 have been reclassified 
resulting in £272m of revenue and £4m of adjusted operating profit being transferred from grocery to ingredients segment assets 
and liabilities have also been restated in this respect
disposed businesses comprise the disposal during the year of the group’s interest in a us associate in the ingredients segment and 
an associated australian royalty stream in the grocery segment together with the prior year disposal of the group’s us whey protein 
business in the ingredients segment
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
97 notes forming part of the financial statements
for the 52 weeks ended 13 september 2014
1 operating segments continued
for the 52 weeks ended 13 september 2014
grocery
£m
sugar
£m
agriculture
£m
ingredients
£m
retail
£m 
central
£m
total
£m
revenue from continuing businesses 3344 2164 1312 1423 4950 250 12943
internal revenue 7 81 – 162 – 250 –
external revenue from continuing businesses 3337 2083 1312 1261 4950 – 12943
businesses disposed – – – – – – –
revenue from external customers 3337 2083 1312 1261 4950 – 12943
adjusted operating profit before joint ventures and associates 254 215 36 31 662 49 1149
share of profit after tax from joint ventures and associates 15 26 14 10 – – 13
businesses disposed 1 – – – – – 1
adjusted operating profit 270 189 50 41 662 49 1163
profits less losses on disposal of noncurrent assets 6 – 1 – 14 4 11
amortisation of nonoperating intangibles 50 17 3 2 – – 72
profits less losses on sale and closure of businesses – – – 2 – – 2
profit before interest 226 172 48 37 648 53 1078
finance income 15 15
finance expense 73 73
taxation 237 237
profit for the period 226 172 48 37 648 348 783
segment assets excluding joint ventures and associates 2431 2327 312 1266 2948 215 9499
investments in joint ventures and associates 38 13 113 48 – – 212
segment assets 2469 2340 425 1314 2948 215 9711
cash and cash equivalents 519 519
deferred tax assets 152 152
employee benefits assets 90 90
segment liabilities 495 385 125 251 784 122 2162
loans and overdrafts 965 965
income tax 193 193
deferred tax liabilities 266 266
employee benefits liabilities 133 133
net assets 1974 1955 300 1063 2164 703 6753
noncurrent asset additions 153 103 28 65 394 1 744
depreciation 96 80 7 44 171 4 402
amortisation 64 20 6 4 – – 94
impairment of goodwill on closure of business – – – 4 – – 4
geographical information
united
 kingdom
£m
europe 
  africa
£m
the
americas
£m
asia 
pacific
£m
total
£m
revenue from external customers 5631 3924 1211 2177 12943
segment assets 3951 3220 968 1572 9711
noncurrent asset additions 279 351 34 80 744
depreciation 184 122 27 69 402
amortisation 22 19 43 10 94
impairment of goodwill on closure of business – – – 4 4
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
98 1 operating segments continued
for the 52 weeks ended 14 september 2013 restated
grocery
£m
sugar
£m
agriculture
£m
ingredients
£m
retail
£m 
central
£m
total
£m
revenue from continuing businesses 3576 2808 1410 1544 4273 323 13288
internal revenue 8 131 – 184 – 323 –
external revenue from continuing businesses 3568 2677 1410 1360 4273 – 13288
businesses disposed – – – 27 – – 27
revenue from external customers 3568 2677 1410 1387 4273 – 13315
adjusted operating profit before joint ventures and associates 216 449 35 3 513 51 1159
share of profit after tax from joint ventures and associates 8 15 12 8 – – 13
businesses disposed 2 – – 6 – – 8
adjusted operating profit 226 434 47 11 513 51 1180
amortisation of nonoperating intangibles 19 21 1 51 – – 92
profits less losses on sale and closure of businesses – 15 – 113 – – 128
profit before interest 207 398 46 153 513 51 960
finance income 13 13
finance expense 100 100
other financial expense 5 5
taxation 240 240
profit for the period 207 398 46 153 513 383 628
segment assets excluding joint ventures and associates 2510 2432 319 1315 2677 187 9440
investments in joint ventures and associates 33 34 99 52 – – 218
segment assets 2543 2466 418 1367 2677 187 9658
cash and cash equivalents 362 362
deferred tax assets 273 273
employee benefits assets 81 81
segment liabilities 496 398 121 250 619 112 1996
loans and overdrafts 1166 1166
income tax 166 166
deferred tax liabilities 431 431
employee benefits liabilities 96 96
net assets 2047 2068 297 1117 2058 1068 6519
noncurrent asset additions 158 158 10 77 220 6 629
depreciation 102 86 7 55 151 4 405
amortisation 36 37 3 54 – – 130
impairment of property plant and equipment – 8 – 19 – – 27
impairment of operating intangibles – 4 – – – – 4
impairment of goodwill – 10 – – – – 10
impairment of property plant and equipment on closure 
of business – 3 – 74 – – 77
impairment of goodwill on sale of business – 14 – – – – 14
geographical information
united
 kingdom
£m
europe 
  africa
£m
the
americas
£m
asia 
pacific
£m
total
£m
revenue from external customers 5728 3790 1309 2488 13315
segment assets 3863 3096 1022 1677 9658
noncurrent asset additions 260 209 51 109 629
depreciation 177 102 28 98 405
amortisation 35 26 39 30 130
impairment of property plant and equipment – 19 – 8 27
impairment of operating intangibles – – – 4 4
impairment of goodwill – – – 10 10
impairment of property plant and equipment on closure 
of business – – – 77 77
impairment of goodwill on sale of business – – – 14 14
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
99 notes forming part of the financial statements
for the 52 weeks ended 13 september 2014
2 operating costs
note
2014 
£m
2013
restated
£m
operating costs
cost of sales including amortisation of intangibles 9793 10095
distribution costs 1271 1314
administration expenses 801 831
11865 12240
operating costs are stated after chargingcrediting
employee benefits expense 3 2006 1948
amortisation of nonoperating intangibles 8 72 92
amortisation of operating intangibles 8 22 38
profits less losses on disposal of noncurrent assets 11 –
depreciation of owned property plant and equipment 9 402 405
impairment of property plant and equipment 9 – 27
impairment of operating intangibles 8 – 4
impairment of goodwill 8 – 10
operating lease payments under property leases 175 155
operating lease payments for hire of plant and equipment 14 14
other operating income 19 22
research and development expenditure 38 25
fair value gains on financial assets and liabilities held for trading 12 14
fair value losses on financial assets and liabilities held for trading 5 15
foreign exchange gains on operating activities 33 30
foreign exchange losses on operating activities 43 31
auditors’ remuneration
2014 
£m
2013 
£m
fees payable to the company’s auditor and its associates  
in respect of the audit
group audit of these financial statements 06 06
audit of the company’s subsidiaries’ financial statements 52 53
total audit remuneration 58 59
fees payable to the company’s auditor and its associates in respect  
of nonaudit related services
auditrelated assurance services 03 03
tax compliance services 07 06
tax advisory services 13 12
information technology services 01 01
all other services 08 06
total nonaudit related remuneration 32 28
fees payable to the company’s auditor and its associates in respect  
of the group’s pension schemes
audit of the pension schemes 01 02
01 02
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
100 3 employees
2014 2013
average number of employees
united kingdom 41942 40071
europe  africa 54852 49247
the americas 4210 4036
asia pacific 17205 19298
118209 112652
note
£m £m
restated
employee benefits expense
wages and salaries 1672 1640
social security contributions 194 180
contributions to defined contribution schemes 12 76 66
charge for defined benefit schemes 12 49 47
equitysettled sharebased payment schemes 22 15 15
2006 1948
details of directors’ remuneration share options and pension entitlements are shown in the remuneration report on pages 64 to 79
4 interest and other financial income and expense
note
2014
 
£m
2013 
 restated
£m
finance income
cash and cash equivalents 15 13
15 13
finance expense
bank loans and overdrafts 39 42
all other borrowings 32 54
finance leases 1 1
other payables 1 2
unwinding of discount on provisions – 1
73 100
other financial incomeexpense
expected return on employee benefit scheme assets 12 148 135
interest charge on employee benefit scheme liabilities 12 148 137
net financial income from employee benefit schemes – 2
net foreign exchange losses on financing activities – 3
total other financial expense – 5
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
101 notes forming part of the financial statements
for the 52 weeks ended 13 september 2014
5 income tax expense
2014
 
£m
2013 
 restated
£m
current tax expense
uk – corporation tax at 221 2013 – 235 137 143
overseas – corporation tax 148 145
uk – underover provided in prior periods 3 9
overseas – overprovided in prior periods 2 10
286 269
deferred tax expense
uk deferred tax 17 23
overseas deferred tax 19 2
uk – overprovided in prior periods 6 –
overseas – overprovided in prior periods 7 8
49 29
total income tax expense in income statement 237 240
reconciliation of effective tax rate
profit before taxation 1020 868
less share of profit after tax from joint ventures and associates 13 13
profit before taxation excluding share of profit after tax  
from joint ventures and associates 1007 855
nominal tax charge at uk corporation tax rate of 221 2013 – 235 222 201
different tax rates on overseas earnings 11 15
effect of changes in tax rates on income statement 4 19
expenses not deductible for tax purposes 25 24
disposal of assets covered by tax exemptions or unrecognised capital losses 2 39
deferred tax not recognised 7 37
adjustments in respect of prior periods 12 27
237 240
income tax recognised directly in equity 
deferred tax associated with defined benefit schemes 3 7
current tax associated with sharebased payments 2 –
deferred tax associated with movement in cash flow hedging position 11 2
deferred tax associated with movements in foreign exchange – 2
current tax associated with movements in foreign exchange 2 –
4 7
following the enactment of legislation by the uk government prior to 14 september 2013 to reduce the corporation tax rate to 20 
with effect from 1 april 2015 uk deferred tax has been calculated using a rate of 20 the impact of this change was a reduction 
of £18m in the deferred tax charge for the year ended 14 september 2013
deferred taxation balances are analysed in note 13
6 dividends
2014
pence 
per share
2013
pence 
per share
2014
£m
2013
£m
2012 final – 2000 – 158
2013 interim – 935 – 74
2013 final 2265 – 179 –
2014 interim 970 – 77 –
3235 2935 256 232
the 2014 interim dividend was declared on 23 april 2014 and paid on 4 july 2014 the 2014 final dividend of 243 pence  
total value of £192m will be paid on 9 january 2015 to shareholders on the register on 12 december 2014
dividends relating to the period were 340 pence per share totalling £269m 2013 – 320 pence per share totalling £253m
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
102 7 earnings per share
the calculation of basic earnings per share at 13 september 2014 was based on the net profit attributable to equity shareholders  
of £762m 2013 – £585m and a weighted average number of shares outstanding during the year of 790 million 2013 – 790 million 
the calculation of the weighted average number of shares excludes the shares held by the employee share ownership plan trust 
on which the dividends are being waived
adjusted earnings per ordinary share which exclude the impact of profits less losses on disposal of noncurrent assets and the sale  
and closure of businesses amortisation of nonoperating intangibles and any associated tax credits is shown to provide clarity on 
the underlying performance of the group
the diluted earnings per share calculation takes into account the dilutive effect of share incentives the diluted weighted average 
number of shares is 790 million 2013 – 790 million there is no difference between basic and diluted earnings
2014
 
£m
2013 
 restated
£m
adjusted profit for the period 822 775
disposal of noncurrent assets 11 –
sale and closure of businesses 2 128
tax effect on above adjustments 1 6
amortisation of nonoperating intangibles 72 92
tax credit on nonoperating intangibles amortisation and goodwill 21 29
noncontrolling interests’ share of amortisation of nonoperating intangibles net of tax 5 7
profit for the period attributable to equity shareholders 762 585
2014 
pence
2013 
 restated
pence
adjusted earnings per share 1041 981
disposal of noncurrent assets 14 –
sale and closure of businesses 03 162
tax effect on above adjustments 01 08
amortisation of nonoperating intangibles 91 117
tax credit on nonoperating intangibles amortisation and goodwill 27 37
noncontrolling interests’ share of amortisation of nonoperating intangibles net of tax
06
09
earnings per ordinary share 965 740
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
103 notes forming part of the financial statements
for the 52 weeks ended 13 september 2014
8 intangible assets
nonoperating operating
goodwill
£m
technology
£m
brands
£m
customer
relationships
£m
grower
 agreements
£m
other
£m
other
£m
total
£m
cost
at 15 september 2012 1320 235 373 104 166 8 210 2416
acquisitions – externally purchased – – – – – – 40 40
acquired through previous business 
combinations 2 – – – – – – 2
reversal of deferred consideration 7 – – – – – – 7
businesses disposed 27 – – – – – – 27
other disposals – – – – – – 21 21
effect of movements in foreign exchange 22 8 3 2 26 1 4 66
at 14 september 2013 1266 227 370 102 140 7 225 2337
acquisitions – externally purchased – – – – – – 42 42
acquired through business combinations – – – 4 – – – 4
other disposals – – – – – – 12 12
effect of movements in foreign exchange 43 32 8 9 17 1 7 117
at 13 september 2014 1223 195 362 97 123 6 248 2254
amortisation and impairment
at 15 september 2012 5 187 189 94 100 8 64 647
amortisation for the year – 50 23 4 15 – 38 130
impairment 10 – – – – – 4 14
impairment on sale of business 14 – – – – – – 14
disposals – – – – – – 13 13
effect of movements in foreign exchange – 10 4 2 17 1 2 36
at 14 september 2013 29 227 208 96 98 7 91 756
amortisation for the year – – 52 7 13 – 22 94
impairment on closure of business 4 – – – – – – 4
other disposals – – – – – – 3 3
effect of movements in foreign exchange – 32 5 10 12 1 4 64
at 13 september 2014 33 195 255 93 99 6 106 787
net book value
at 15 september 2012 1315 48 184 10 66 – 146 1769
at 14 september 2013 1237 – 162 6 42 – 134 1581
at 13 september 2014 1190 – 107 4 24 – 142 1467
impairment
as at 13 september 2014 the consolidated balance sheet included goodwill of £1190m 2013 – £1237m goodwill is allocated to 
the group’s cashgenerating units cgus or groups of cgus that are expected to benefit from the synergies of the business 
combination that gave rise to the goodwill as follows
cgu or group of cgus primary reporting segment discount rate
2014
£m
2013
£m
ach grocery 139 236 241
ab mauri ingredients 127 291 341
twinings ovaltine grocery 100 119 119
capullo grocery 157 58 58
illovo sugar 140 121 137
ab world foods grocery 114 78 78
north china sugar sugar 120 45 46
other not individually significant various various 242 217
1190 1237
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
104 8 intangible assets continued
a cgu or group of cgus to which goodwill has been allocated must be assessed for impairment annually or more frequently if 
events or circumstances indicate that the carrying amount may not be recoverable
the carrying value of goodwill is assessed by reference to its value in use to perpetuity reflecting the projected cash flows of each  
of the cgus or group of cgus these projections are based on the most recent budget which has been approved by the board and 
reflects management’s expectations of sales growth operating costs and margin based on past experience and external sources  
of information longterm growth rates for periods not covered by the annual budget reflect the products industries and countries  
in which the relevant cgu or group of cgus operate
for some recently acquired intangible assets management expects to achieve growth over the next three to five years in excess  
of the longterm growth rates for the applicable country or region in these circumstances budgeted cash flows are extended 
generally to between three and five years using specific growth assumptions and taking into account the specific business risks
the key assumptions on which the cash flow projections for the most recent annual budget are based relate to discount rates 
growth rates and expected changes in volumes selling prices and direct costs
the cash flow projections have been discounted using the group’s pretax weighted average cost of capital adjusted for country 
industry and market risk the rates used were between 100 and 157 2013 – between 91 and 138
the growth rates to perpetuity beyond the initial budgeted cash flows applied in the value in use calculations for goodwill allocated 
to each of the cgus or groups of cgus that are significant to the total carrying amount of goodwill were in a range between 0 
and 5 consistent with the inflation factors included in the discount rates applied 2013 – between 0 and 35
changes in volumes selling prices and direct costs are based on past results and expectations of future changes in the market
sensitivity to changes in key assumptions
impairment testing is dependent on management’s estimates and judgements particularly as they relate to the forecasting of future 
cash flows the discount rates selected and expected longterm growth rates each of the group’s cgus had significant headroom 
under the annual impairment review with the exception of ab mauri and the north china sugar business
notwithstanding a substantial improvement in profit in the current year ab mauri has continued to experience competitive pressure 
in a number of markets around the world management has reviewed detailed forecasts for this business for a period of ten years  
to reflect the time required for completion of the dry yeast production strategy and has concluded that the assets are not impaired  
key drivers of the forecast improvement in performance include improved reach and competitiveness in the global dry yeast market 
from the new yeast factory in mexico implementation of a number of margin improvement initiatives particularly in cost reduction 
and continuing growth in the global bakery ingredients business headroom was 306m on a cgu carrying value of 1078m  
2013 – headroom of 103m on a cgu carrying value of 1195m the discount rate used was 127 2013 – 115 and would 
have to increase to more than 150 2013 – 121 before value in use fell below the cgu carrying value estimates of longterm 
growth rates beyond the forecast periods were 25–3 2013 – 25–3 per annum dependent on location
in north china sugar profitability has suffered as a result of low sugar prices and lower volume due to flooding current forecasts  
for the north china sugar business continue to support the carrying value of the assets but the achievement of these forecasts 
depends on the continuation of significant improvements already underway in a variety of operational parameters including 
agricultural yields factory volumes and sugar prices management has reviewed detailed forecasts for this business taking those 
issues into account for a period of ten years due to the nature and complexity of agricultural improvements and has concluded that 
no impairment is required headroom was £43m on a cgu carrying value of £185m 2013 – £2m headroom on a cgu carrying 
value of £221m the discount rate used was 120 2013 – 130 the estimate of longterm growth beyond the forecast period 
was 2 per annum 2013 – 2 per annum
for all goodwill other than ab mauri and north china sugar management has concluded that no reasonably possible change in key 
assumptions on which it has determined value in use would cause carrying values to materially exceed value in use
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
105 notes forming part of the financial statements
for the 52 weeks ended 13 september 2014
9 property plant and equipment
land and
buildings
£m
plant and
machinery
£m
fixtures and 
fittings
£m
assets under
construction
£m
total
£m
cost
at 15 september 2012 2176 3173 1453 250 7052
acquisitions – externally purchased 102 125 176 181 584
interest capitalised – – – 4 4
businesses disposed 1 12 – – 13
other disposals 8 132 20 – 160
transfers from assets under construction 49 229 7 285 –
effect of movements in foreign exchange 20 97 14 – 103
at 14 september 2013 2298 3286 1630 150 7364
acquisitions – externally purchased 103 127 324 148 702
acquired through business combinations 1 1 – – 2
other disposals 7 91 61 – 159
transfers from assets under construction 28 111 3 142 –
effect of movements in foreign exchange 79 159 40 7 285
at 13 september 2014 2344 3275 1856 149 7624
depreciation and impairment 
at 15 september 2012 425 1591 495 – 2511
depreciation for the year 53 209 143 – 405
impairment 8 19 – – 27
impairment on closure of business 30 47 – – 77
businesses disposed 1 5 – – 6
other disposals 5 116 19 – 140
effect of movements in foreign exchange 8 57 3 – 62
at 14 september 2013 502 1688 622 – 2812
depreciation for the year 49 189 164 – 402
other disposals 2 56 61 – 119
effect of movements in foreign exchange 29 94 13 – 136
at 13 september 2014 520 1727 712 – 2959
net book value
at 15 september 2012 1751 1582 958 250 4541
at 14 september 2013 1796 1598 1008 150 4552
at 13 september 2014 1824 1548 1144 149 4665
2014 
£m
2013
£m
net book value of finance lease assets 10 11
land and buildings at net book value comprise
– freehold 1399 1388
– long leasehold 322 313
– short leasehold
103 95
1824 1796
capital expenditure commitments – contracted but not provided for 324 215
impairment
the impairment assessments undertaken for goodwill in respect of ab mauri and north china sugar were consistent with those 
undertaken to assess property plant and equipment for impairment see note 8 for further details
an impairment of a150m £98m was recorded in 2012 in the australian meat business although good progress was made in the 
current year to reduce the factory cost base and improve efficiency continuing retailer price competition and slower than forecast 
recovery in production volumes held back the rate of improvement following a detailed assessment management has concluded 
that the carrying value of the assets in the meat business is not further impaired headroom was a26m on a cgu carrying value of 
a286m the discount rate used was 105 2013 – 105 estimates of longterm growth rates beyond the forecast periods were 
20 2013 – 20 per annum
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
106 10 biological assets
current noncurrent
growing 
cane
£m
other
£m
total
£m
cane
roots
£m
at 15 september 2012 101 8 109 89
transferred to inventory 112 23 135 –
purchases – 2 2 1
changes in fair value 124 22 146 15
effect of movements in foreign exchange 10 – 10 8
at 14 september 2013 103 9 112 97
transferred to inventory 72 25 97 –
purchases – 3 3 –
changes in fair value 80 26 106 12
effect of movements in foreign exchange 15 – 15 13
at 13 september 2014 96 13 109 96
cane roots 2014 2013
area under cane as at the end of the period hectares
south africa 8176 8729
malawi 19908 20031
zambia 16994 16848
swaziland 8646 8646
tanzania 9643 9565
mozambique
6176
5900
69543 69719
growing cane
the following assumptions have been used in the determination of the estimated sucrose tonnage at 13 september 2014
south africa malawi zambia swaziland tanzania mozambique
expected area to harvest hectares 4499 19401 16686 8383 9676 5966
estimated yield tonnes canehectare 695 1061 1188 972 842 875
average maturity of cane 570 667 673 667 500 667
the following assumptions were used in the determination of the estimated sucrose tonnage at 14 september 2013
south africa malawi zambia swaziland tanzania mozambique
expected area to harvest hectares 5210 19504 16370 8144 9565 5752
estimated yield tonnes canehectare 724 1053 1183 1023 810 932
average maturity of cane 560 667 667 667 500 667
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
107 notes forming part of the financial statements
for the 52 weeks ended 13 september 2014
11 investments in joint ventures and associates
 joint ventures associates
shares
£m
goodwill
£m
total
£m
shares
£m
goodwill
£m
total
£m
at 15 september 2012 156 18 174 39 1 40
acquisitions 2 – 2 – – –
profit for the period 10 – 10 3 – 3
dividends received 6 – 6 5 – 5
effect of movements in foreign exchange 2 – 2 2 – 2
at 14 september 2013 164 18 182 35 1 36
acquisitions 5 – 5 – – –
disposals – – – 2 – 2
profit for the period 8 – 8 5 – 5
dividends received 13 – 13 4 – 4
effect of movements in foreign exchange 1 1 2 3 – 3
at 13 september 2014 163 17 180 31 1 32
details of principal joint ventures and associates are listed in note 28
included in the consolidated financial statements are the following items that represent the group’s share of the assets liabilities and 
profit of joint ventures and associates
joint ventures associates
2014
£m
2013
£m
2014
£m
2013
£m
noncurrent assets 230 241 16 18
current assets 301 275 128 135
current liabilities 198 179 111 116
noncurrent liabilities 170 173 2 2
goodwill 17 18 1 1
net assets 180 182 32 36
revenue 1260 1322 81 88
expenses 1252 1311 74 82
taxation – 1 2 3
profit for the period 8 10 5 3
12 employee entitlements
the group operates a number of defined benefit and defined contribution retirement benefit schemes in the uk and overseas  
the defined benefit schemes expose the group to a variety of actuarial risks including demographic assumptions such as mortality 
and financial assumptions such as discount rate inflation risk and market investment risk the group is not exposed to any unusual 
entityspecific or scheme specific risks all schemes comply with local legislative requirements
the impact of applying the revised version of ias 19 employee benefits for the first time is set out in new accounting policies  
on page 95
uk defined benefit scheme
the group’s principal uk defined benefit scheme is the associated british foods pension scheme which is a funded final salary 
scheme that is closed to new members defined contribution arrangements are in place for other employees the uk defined 
benefit schemes represent 91 2013 – 91 of the group’s defined benefit plan assets and 89 2013 – 89 of the defined 
benefit scheme liabilities the scheme is governed by a trustee board which is independent of the group and which agrees a 
schedule of contributions with the company each time a formal funding valuation is performed
the previous triennial funding valuation of the scheme was carried out as at 5 april 2011 using the current unit method the market  
value of plan assets was £2559m representing 101 of members’ accrued benefits after allowing for expected future salary 
increases by agreement with the trustees the company agreed to eliminate the deficit identified at the time of the 2008 triennial 
funding valuation with five annual payments of £30m totalling £150m although the scheme was in surplus at the time of the 2011 
valuation the company made the final two payments in march 2012 and march 2013 the most recent triennial funding valuation  
of the scheme was carried out as at 5 april 2014 was agreed by the trustees after the group’s year end and revealed a surplus of 
£78m there will be no material increase in funding requirements
the scheme’s assets are managed using a risk controlled investment strategy which includes a liabilitydriven investment policy which 
seeks to match where appropriate the profile of the liabilities this includes the use of derivative instruments to hedge inflation interest 
and foreign exchange risks the scheme utilises both market and solvency triggers to develop the level of hedges in place to date the 
scheme is fully hedged for 30 of inflation sensitivity and 24 of interest rate risk it is intended to hedge 80 of total exposure
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
108 12 employee entitlements continued
the scheme is forbidden by the trust deed from holding direct investments in the equity of the company although it is possible that 
the scheme may hold indirect interests through investments in some equity funds the scheme owns the freehold of an office 
building in london which is leased to the group at an open market rent the fair value of this building is £6m 2013 – £5m
overseas defined benefit schemes
the group also operates defined benefit retirement schemes in a number of overseas businesses which are primarily funded final 
salary schemes as well as a small number of unfunded postretirement medical benefit schemes which are accounted for in the 
same way as defined benefit retirement schemes
defined contribution schemes
the group operates a number of defined contribution schemes for which the charge was £38m in the uk and £38m overseas 
totalling £76m 2013 – uk £27m overseas £39m total £66m
actuarial assumptions
the principal actuarial assumptions for the group’s defined benefit schemes at the year end were
2014
uk

2014
overseas

2013
uk

2013
overseas

discount rate 41 15 – 157 47 23 – 140
inflation 34 08 – 92 35 00 – 100
rate of increase in salaries 39 05 – 107 45 05 – 1 18
rate of increase for pensions in payment 32 12 – 63 33 16 – 88
rate of increase for pensions in deferment where provided 29 12 – 63 30 05 – 88
the mortality assumptions used to value the uk defined benefit schemes are derived from the s2 2013 – s1na generational 
mortality tables with improvements in line with the 2013 2013 – 2009 projection model prepared by the continuous mortality 
investigation of the uk actuarial profession with no rating for males 2013 – no rating and a 07 year rating down for females  
2013 – 02 year rating up both with a longterm trend of 15 2013 – 15 these mortality assumptions take account of 
experience to date and assumptions for further improvements in life expectancy of scheme members examples of the resulting  
life expectancies in the uk defined benefit schemes are as follows
2014 2013
life expectancy from age 65 in years male female male female
member aged 65 in 2014 2013 227 252 227 248
member aged 65 in 2034 2033 248 276 250 272
other demographic assumptions for the uk defined benefit schemes are set having regard to the latest trends in scheme 
experience and other relevant data the assumptions are reviewed and updated as necessary as part of the periodic funding 
valuation of the schemes
for the overseas schemes regionally appropriate assumptions for mortality financial and demographic factors have been used
a sensitivity analysis on the principal assumptions used to measure uk defined benefit scheme liabilities at 13 september 2014 is
change in assumption impact on scheme liabilities
discount rate decreaseincrease by 05 increasedecrease by 95
inflation increasedecrease by 05 increasedecrease by 87
rate of increase in salaries increasedecrease by 05 increasedecrease by 15
rate of mortality reduce by one year increase by 28
a sensitivity to the rate of increase in pensions in payment and pensions in deferment is represented by the inflation sensitivity as all 
pensions increases and deferred revaluations are linked to inflation
the sensitivity analysis above has been determined based on reasonably possible changes in the respective assumptions occurring 
at the end of the period and may not be representative of the actual change it is based on a change in the specific assumption while 
holding all other assumptions constant when calculating the sensitivities the same method used to calculate scheme liabilities 
recognised in the balance sheet has been applied the method and assumptions used in preparing the sensitivity analysis have not 
changed since the prior year
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
109 notes forming part of the financial statements
for the 52 weeks ended 13 september 2014
12 employee entitlements continued
balance sheet
2014 2013 restated
uk
£m
overseas
£m
total
£m
uk
£m
overseas
£m
total
£m
equities 1243 146 1389 1133 137 1270
government bonds 543 41 584 849 36 885
corporate and other bonds 628 55 683 527 66 593
property 229 6 235 163 4 167
cash and other assets 535 59 594 260 58 318
plan assets 3178 307 3485 2932 301 3233
scheme liabilities 3120 396 3516 2878 358 3236
aggregate net deficit 58 89 31 54 57 3
irrecoverable surplus a – 12 12 – 12 12
net pension assetliability 58 101 43 54 69 15
analysed as
schemes in surplus 87 3 90 77 4 81
schemes in deficit 29 104 133 23 73 96
58 101 43 54 69 15
unfunded liability included in the present value of scheme liabilities above 29 48 77 23 44 67
a  the surpluses in the plans are only recoverable to the extent that the group can benefit from either refunds formally agreed or 
from future contribution reductions
corporate and other bonds relating to uk schemes of £628m includes £46m 2013 – £4m of assets whose valuation is not derived 
from quoted market prices the valuation for all other equity assets government bonds corporate and other bonds is derived from 
quoted market prices the carrying value of uk property assets is based on a 31 march market valuation adjusted for purchases 
disposals and price indexation between the valuation and the balance sheet dates
for financial reporting in the group’s accounts liabilities are assessed by actuaries using the projected unit method the accounting 
value is different from the result obtained using the funding basis mainly due to different assumptions used to project scheme 
liabilities
the defined benefit scheme liabilities comprise 33 2013 – 31 in respect of active participants 20 2013 – 19 for deferred 
participants and 47 2013 – 50 for pensioners
the weighted average duration of the defined benefit scheme liabilities at the end of the year is 18 years uk schemes – 18 years 
and overseas schemes – 19 years
income statement
the charge to the income statement for employee benefit schemes comprises
2014
 
£m
2013
restated 
£m
charged to operating profit
defined benefit schemes 
current service cost 
past service cost
48
1
47
–
defined contribution schemes 76 66
total operating cost 125 113
reported in other financial incomeexpense
net interest incomeexpense on the net pension assetliability – 2
net impact on profit before tax 125 115
associated british foods annual report and accounts 2014
110
 financial statements
notes forming part of the financial statements 12 employee entitlements continued
cash flow
group cash flow in respect of employee benefits schemes comprises contributions paid to funded schemes of £41m  
2013 – £69m and benefits paid in respect of unfunded plans of £nil 2013 – £nil contributions to funded defined benefit  
plans are subject to periodic review contributions to defined contribution plans amounted to £76m 2013 – £66m
total contributions to funded plans and benefit payments by the group in respect of unfunded plans in 2015 are currently expected  
to be approximately £29m in the uk and £8m overseas totalling £37m 2014 – uk £31m overseas £11m totalling £42m
other comprehensive income
remeasurements of the net assetliability recognised in other comprehensive income are as follows
2014
 
£m
2013
restated 
£m
return on plan assets excluding amounts included in net interest in the income statement 211 156
actuarial gainslosses arising from changes in financial assumptions 262 113
actuarial gainslosses arising from changes in demographic assumptions 5 –
experience gainslosses on scheme liabilities 21 4
change in unrecognised surplus – 6
remeasurements of the net pension assetliability 25 33
reconciliation of change in assets and liabilities
2014
assets
£m
2013
assets
restated
£m
2014
liabilities
£m
2013
liabilities
restated
£m
2014
net
£m
2013
net
restated
£m
at beginning of year 3233 3003 3236 3062 3 59
current service cost – – 48 47 48 47
employee contributions 10 9 10 9 – –
employer contributions 41 69 – – 41 69
benefit payments 138 132 138 132 – –
settlements 2 – 2 – – –
past service cost – – 1 – 1 –
interest incomeexpense 148 135 148 137 – 2
return on plan assets less interest income 211 156 – – 211 156
actuarial gainslosses arising from changes in financial assumptions – – 262 113 262 113
actuarial gainslosses arising from changes in demographic 
assumptions – – 5 – 5 –
actuarial gainslosses arising from experience on scheme liabilities – – 21 4 21 4
acquisitions – – 1 – 1 –
effect of movements in foreign exchange 18 7 24 4 6 3
at end of year 3485 3233 3516 3236 31 3
reconciliation of change in irrecoverable surplus
2014
£m
2013
£m
at beginning of year 12 8
change recognised in other comprehensive income – 6
effect of movements in foreign exchange – 2
at end of year 12 12
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
111 notes forming part of the financial statements
for the 52 weeks ended 13 september 2014
13 deferred tax assets and liabilities
property
plant and
equipment
£m
intangible
assets
£m
employee
benefits
£m
financial
assets and
liabilities
£m
other
temporary
differences
£m
tax value of
carryforward
losses
£m
total
£m
at 15 september 2012 restated 179 95 19 4 33 100 184
amount chargedcredited to the income statement 21 2 4 – 12 17 10
amount chargedcredited to other comprehensive income – – 7 2 2 – 7
effect of changes in tax rates on income statement 12 2 – – 3 2 19
effect of movements in foreign exchange 2 3 – – 3 4 4
at 14 september 2013 144 92 8 2 13 81 158
amount chargedcredited to the income statement 6 6 5 – 42 6 53
amount chargedcredited to other comprehensive income – – 3 11 – – 8
acquired through business combinations – 1 – – – – 1
effect of changes in tax rates on income statement 5 – – – 1 2 4
effect of movements in foreign exchange 5 1 – – 2 4 4
at 13 september 2014 138 86 16 9 30 73 114
certain deferred tax assets and liabilities have been offset the following is the analysis of the deferred tax balances after offset  
for financial reporting purposes
2014 
 £m 
 2013
 £m 
deferred tax assets 152 273
deferred tax liabilities 266 431
 114 158
the recoverability of deferred tax assets is supported by the expected level of future profits in the countries concerned  
other deferred tax assets totalling £88m 2013 – £82m have not been recognised on the basis that their future economic  
benefit is uncertain
in addition there are temporary differences of £2122m 2013 – £2514m relating to investments in subsidiaries no deferred  
tax has been provided in respect of these differences since the timing of the reversals can be controlled and it is probable  
that the temporary differences will not reverse in the future
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
112 14 trade and other receivables
2014 
 £m 
 2013
 £m
noncurrent – other receivables 
loans and receivables 160 144
other noncurrent investments 4 4
 164 148
current – trade and other receivables
trade receivables 973 1033
other receivables 122 126
accrued income 31 24
 1126 1183
prepayments and other nonfinancial receivables 167 159
 1293 1342
the directors consider that the carrying amount of receivables approximates fair value
for details of credit risk exposure on trade and other receivables see note 24
trade and other receivables include £14m 2013 – £15m in respect of finance lease receivables with £11m in noncurrent loans  
and receivables and £3m in current other receivables 2013 – £12m in noncurrent loans and receivables and £3m in current other 
receivables minimum lease payments receivable are £3m within one year and £11m between one and five years 2013 – £4m 
within one year £12m between one and five years
the finance lease receivables relate to property plant and equipment leased to a joint venture of the group see note 27
15 inventories
2014 
 £m 
 2013
 £m 
raw materials and consumables 334 348
work in progress 23 29
finished goods and goods held for resale 1274 1204
 1631 1581
write down of inventories 78 78
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
113 notes forming part of the financial statements
for the 52 weeks ended 13 september 2014
16 cash and cash equivalents
note
2014 
 £m 
 2013
 £m 
cash
cash at bank and in hand 231 231
cash equivalents 288 131
cash and cash equivalents 24 519 362
reconciliation to the cash flow statement
bank overdrafts 17 120 119
cash and cash equivalents in the cash flow statement 399 243
cash at bank and in hand generally earns interest at rates based on the daily bank deposit rate 
cash equivalents generally comprise
i  deposits placed on money markets for periods up to three months which earn interest at a shortterm deposit rate and
ii  funds invested with fund managers that have a maturity of less than or equal to three months and are at fixed rates
the carrying amount of cash and cash equivalents approximates fair value
17 loans and overdrafts
 
 note
2014 
 £m 
 2013
 £m
current loans and overdrafts
secured loans 2 51
unsecured loans and overdrafts 356 343
 358 394
noncurrent loans
secured loans 14 44
unsecured loans 581 716
finance leases 25 12 12
 607 772
 24 965 1166
 note
2014 
 £m 
 2013
 £m
secured loans
– usd floating rate – 9
– usd fixed rate – 1
– eur floating rate – 21
– other floating rate 16 64
unsecured loans and overdrafts
– bank overdrafts 16 120 119
– gbp floating rate 113 123
– gbp fixed rate 159 160
– usd floating rate 29 4
– usd fixed rate 421 531
– eur floating rate 29 34
– eur fixed rate – 17
– rmb floating rate 58 57
– rmb fixed rate – 7
– other floating rate 7 5
– other fixed rate 1 2
finance leases fixed rate 12 12
965 1166
secured loans comprise amounts borrowed from commercial banks and are secured by floating charges over the assets of 
subsidiaries bank overdrafts generally bear interest at floating rates
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
114 18 trade and other payables
 
2014 
£m 
 2013
 £m
trade payables 910 903
accruals 883 753
1793 1656
deferred income and other nonfinancial payables 253 225
2046 1881
for payables with a remaining life of less than one year carrying amount is deemed to reflect fair value
19 provisions
restructuring 
£m
deferred
consideration
£m
 other 
 £m 
 total
 £m
at 14 september 2013 35 3 39 77
acquisitions – business combinations 4 – – 4
created 35 1 9 45
utilised 11 1 5 17
released 1 – 4 5
effect of movements in foreign exchange 1
1
1 3
at 13 september 2014 61 2 38 101
current 47 1 24 72
noncurrent 14 1 14 29
61 2 38 101
provisions were all financial liabilities in both years see note 24
restructuring
restructuring provisions relate to the cash costs including redundancy associated with the group’s announced reorganisation plans  
of which a majority will be utilised in 201415
deferred consideration
deferred consideration comprises estimates of amounts due to the previous owners of businesses acquired by the group which are  
often linked to performance or other conditions 
other
other provisions mainly comprise litigation claims and warranty claims arising from the sale and closure of businesses the extent  
and timing of the utilisation of these provisions is more uncertain given the nature of the claims and the period of the warranties
20 share capital and reserves
share capital
ordinary
 shares of
 5
15
⁄ 22p 
 each 
 000 
 nominal
 value
 £m
issued and fully paid
at 14 september 2013 and 13 september 2014 791674 45
at 13 september 2014 the company’s issued share capital comprised 791674183 ordinary shares of 5
15
⁄22p each carrying one  
vote per share
other reserves
£173m of other reserves arose from the cancellation of share premium account by the company in 1993 the remaining £2m  
arose in 2010 as a transfer to capital redemption reserve following redemption of two million £1 deferred shares at par both are  
nondistributable
translation reserve
the translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of  
foreign operations as well as from the translation of liabilities that hedge the group’s net investment in foreign subsidiaries
hedging reserve
the hedging reserve comprises all changes in the value of derivatives to the extent that they are effective cash flow hedges net  
of amounts recycled from the hedging reserve on occurrence of the hedged transaction or when the hedged transaction is no  
longer expected to occur
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
115 notes forming part of the financial statements
for the 52 weeks ended 13 september 2014
21 acquisitions and disposals
2014
during 2014 the group acquired a bakery ingredients business in western europe and a small animal feed specialist in the uk  
which had the following effect on the group’s assets and liabilities
note
 recognised  
 values on 
 acquisition
£m
net assets
nonoperating intangibles 8 4
property plant and equipment 9 2
inventories 4
trade and other receivables 11
cash and cash equivalents 5
trade and other payables 8
loans 23 4
provisions 19 4
employee benefits liabilities 12 1
taxation 1
net assets and liabilities and total consideration 8
satisfied by
cash consideration 7
deferred consideration 1
net cash
cash consideration 7
cash and cash equivalents acquired 5
2
preacquisition carrying amounts were the same as recognised values on acquisition apart from a £4m nonoperating intangible 
recognised in respect of customer relationships the acquisitions in aggregate contributed revenue of £27m and adjusted profit 
before tax of £1m for the period between the dates of acquisition and 13 september 2014 aggregate contributions to revenue  
and adjusted profit before tax had the acquisitions occurred at the beginning of the period have not been disclosed as appropriate 
financial information prepared under adopted ifrs is not available
the net cash of £2m in the acquisition table above differs by £6m from the cash outflow of £8m on the purchase of subsidiaries 
joint ventures and associates shown in the cash flow statement this difference relates to a £5m investment in an existing joint 
venture and £1m of deferred consideration paid in respect of prior year acquisitions
during the year the group disposed of its interest in a us associate in the ingredients segment for a profit of £7m cash 
consideration was £12m deferred consideration was £1m share of net assets disposed was £2m and provisions made were  
£4m in addition a charge of £9m was made in the ingredients segment in china and india for restructuring costs associated  
with business closures including a £4m impairment of goodwill
2013
during 2013 the group completed no new business combinations cash flow on purchase of subsidiaries joint ventures and 
associates of £75m comprised £71m of deferred consideration in respect of previous business combinations a £2m investment  
in a joint venture and a £2m adjustment to goodwill for a previous acquisition goodwill and deferred consideration were both 
reduced by £7m in respect of deferred consideration for previous acquisitions no longer payable
loss on sale and closure of businesses of £128m comprised £113m for disposals and closures in the ingredients segment and 
£15m for the loss on disposal of the sugar business in chifeng north china included within the amount charged in the ingredients 
segment was a loss of £26m in respect of the disposal of our us whey protein operation cash consideration for the us disposal 
was £20m tangible assets disposed amounted to £8m and goodwill disposed was £27m provisions made were £4m  
and foreign exchange differences recycled from equity were £7m a charge of £72m was made to write down the carrying value  
of certain ingredients assets in china and to provide for restructuring costs and a charge of £13m to write down the value of yeast 
plants in india cash flow on sale of subsidiaries joint ventures and associates of £35m comprised £20m in respect of the us whey 
protein business and £15m of deferred consideration received for previous disposals
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
116 22 sharebased payments
the group had the following principal equitysettled sharebased payment plans in operation during the period
associated british foods executive share incentive plan 2003 ‘the share incentive plan’
the share incentive plan was approved and adopted by the company at the annual general meeting held on 5 december 2003  
it takes the form of conditional allocations of shares which are released if and to the extent that performance targets are satisfied 
typically over a threeyear performance period the share incentive plan expired in december 2013 the last grant of allocations 
under the share incentive plan was made in november 2013 conditional shares allocated under the share incentive plan will vest 
under the terms of the share incentive plan
associated british foods longterm incentive plan ‘the ltip’
the ltip was approved and adopted by the company at the annual general meeting held on 6 december 2013 it takes the form  
of conditional allocations of shares which will be released if and to the extent that performance targets are satisfied typically over  
a threeyear performance period
further information regarding the operation of the above plans can be found in the remuneration report on pages 64 to 79
total conditional allocations under the group’s equitysettled sharebased payment plans are as follows
balance
outstanding at
the beginning
of the year
granted
awarded vested
expired
lapsed
balance 
outstanding 
at the end
of the year
2014 5013465 1177056 932626 892554 4365341
2013 5175939 2067195 1273950 955719 5013465
employee share ownership plan trust
ordinary shares subject to allocation under the group’s equitysettled sharebased payment plans are held in a separate employee 
share ownership plan trust the trust is funded by the company voting rights attached to shares held by the trust are exercisable 
by the trustee who is entitled to consider any recommendation made by a committee of the company at 13 september 2014 the 
trust held 3062447 2013 – 1995073 ordinary shares of the company the market value of these shares at the year end was 
£80m 2013 – £36m the trust has waived its right to dividends movements in the year were releases of 932626 and purchases 
of 2000000 2013 – releases of 1273950 and purchases of 500000
fair values
the weighted average fair value of conditional grants made was determined by taking the market price of the shares at the time  
of grant and discounting for the fact that dividends are not paid during the vesting period the weighted average fair value of the 
conditional shares allocated during the year was 2226 pence 2013 – 1345 pence and the weighted average share price was  
2393 pence 2013 – 1446 pence the dividend yield used was 25
23 analysis of net debt
at
14 september
2013
£m
cash flow
£m
acquisitions
£m
noncash 
items
£m
exchange
adjustments
£m
at
13 september
2014
£m
cash at bank and in hand cash equivalents  
and overdrafts 243 187 – – 31 399
shortterm loans 275 158 4 124 7 238
longterm loans 772 10 – 124 31 607
804 355 4 – 7 446
cash and cash equivalents comprise bank and cash balances call deposits and shortterm investments with original maturities  
of three months or less bank overdrafts that are repayable on demand of £120m form an integral part of the group’s cash 
management and are included as a component of cash and cash equivalents for the purpose of the cash flow statement 
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
117 notes forming part of the financial statements
for the 52 weeks ended 13 september 2014
24 financial instruments
a carrying amount and fair values of financial assets and liabilities
2014
£m
2013
£m
financial assets
cash and cash equivalents 519 362
loans and receivables
trade and other receivables 1126 1183
other noncurrent receivables fair value 2014 – £137m 2013 – £143m 164 148
at fair value through profit or loss
derivative assets not designated in a cash flow hedging relationship
– currency derivatives 8 1
designated net investment hedging relationships
derivative assets designated as net investment hedging instruments 
– currency derivatives 2 6
designated cash flow hedging relationships
derivative assets designated and effective as cash flow hedging instruments
– currency derivatives 50 11
– commodity derivatives 14 9
total financial assets 1883 1720
financial liabilities
financial liabilities at amortised cost
trade and other payables 1793 1656
secured loans 16 95
unsecured loans and overdrafts fair value 2014 – £999m 2013 – £1153m 937 1059
finance leases fair value 2014 – £17m 2013 – £16m 12 12
provisions 101 77
at fair value through profit or loss
derivative liabilities not designated in a cash flow hedging relationship
– currency derivatives 3 4
– commodity derivatives 1 –
designated cash flow hedging relationships
derivative liabilities designated and effective as cash flow hedging instruments
– currency derivatives 3 33
– commodity derivatives 8 1
total financial liabilities 2874 2937
net financial liabilities 991 1217
except where stated carrying amount is equal to fair value
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
118 24 financial instruments continued
the methods and assumptions used to estimate fair values of financial assets and liabilities are as follows
financial assetliability fair value determination
cash and cash equivalents
trade receivables other receivables and accrued income
trade payables other payables and accruals
fair values have been stated at book values due to short maturities or 
otherwise immediate or shortterm access and realisability
other noncurrent investments recorded within other  
noncurrent receivables
these comprise minority shareholdings held primarily in privately owned 
unquoted companies where there is no active market available to value 
them where the fair value of the equity instruments cannot be reliably 
measured they are recorded at cost
where shareholdings are held in publicly quoted companies bid price  
is used to estimate fair value
other noncurrent receivables
loans and overdrafts 
finance leases
fair values for these level 2 financial instruments have been estimated  
by discounting expected future cash flows see below
derivatives fair values are typically determined either by reference to thirdparty 
valuations usually from a bank or by reference to readily observable 
market prices
the group’s derivatives primarily cover a period of no more than 12 months 
from the balance sheet date and information derived from an active market  
is almost always available to assist with the valuation of derivatives
provisions these are measured at the directors’ best estimate of the expenditure 
required to settle the obligation at the balance sheet date and are 
discounted to present value where the effect is material consequently  
fair value is equivalent to book value
valuation of financial instruments carried at fair value
financial instruments carried at fair value in the balance sheet comprise other noncurrent investments and derivatives the group  
classifies these financial instruments using a fair value hierarchy that reflects the relative significance of both objective evidence and 
subjective judgements on the inputs used in making the fair value measurements
• level 1 financial instruments are valued using observable inputs that reflect unadjusted quoted market prices in an active 
market for identical instruments an example of an item in this category is a widely traded equity instrument with a normal 
quoted market price
• level 2 financial instruments are valued using techniques based on observable inputs either directly ie market prices and 
rates or indirectly ie derived from market prices and rates an example of an item in this category is a currency derivative 
where forward exchange rates and yield curve data which are observable in the market are used to derive fair value
• level 3 financial instruments are valued using techniques involving significant unobservable inputs 
b derivatives
all derivatives are classified as current on the face of the balance sheet the table below analyses the carrying amount of derivatives 
and their contractualnotional amounts together with an analysis of derivatives by the level in the fair value hierarchy into which their 
fair value measurement method is categorised
2014 2013
contractual
notional
amounts
£m
level 1
£m
level 2
£m
total
£m
contractual
notional
amounts
£m
level 1
£m
level 2
£m
total
£m
financial assets
currency derivatives 1805 – 60 60 783 – 18 18
commodity derivatives
178
9 5 14 264 6 3 9
1983 9 65 74 1047 6 21 27
financial liabilities
currency derivatives 402 – 6 6 1450 – 37 37
commodity derivatives 113 2 7 9 22 – 1 1
515 2 13 15 1472 – 38 38
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
119 notes forming part of the financial statements
for the 52 weeks ended 13 september 2014
24 financial instruments continued
c cash flow hedging reserve
the following table identifies the movements in the cash flow hedging reserve during the year and the periods in which the cash 
flows are expected to occur the periods in which the cash flows are expected to impact profit or loss are materially the same
2014 2013
currency
derivatives
£m
commodity
derivatives
£m
total
£m
currency
derivatives
£m
commodity
derivatives
£m
total
£m
opening balance 16 6 10 14 – 14
lossesgains recognised in the hedging reserve 46 1 45 26 5 21
amount removed from the hedging reserve and 
included in the income statement 
 – revenue 8 – 8 1 – 1
 – cost of sales – 8 8 2 1 3
 – other financial income 11 – 11 – – –
amount removed from the hedging reserve and 
included in a nonfinancial asset 
 – inventory 124 13 111 22 3 25
deferred tax 13 2 11 1 3 2
closing balance 30 4 34 16 6 10
cash flows are expected to occur 
 – within six months 27 4 31 15 6 9
 – between six months and one year 7 – 7 3 – 3
 – between one and two years – – – 2 – 2
 – between two and five years 1 – 1 – – –
 – after five years 3 – 3 – – –
30 4 34 16 6 10
of the closing balance of £34m £29m is attributable to equity shareholders and £5m to noncontrolling interests 2013 – £13m 
attributable to equity shareholders and £3m to noncontrolling interests of the net movements in the year of £44m £42m is 
attributable to equity shareholders and £2m to noncontrolling interests 2013 – £4m wholly attributable to equity shareholders 
d financial risk identification and management
the group is exposed to the following financial risks from its use of financial instruments
• market risk
• credit risk and
• liquidity risk
the group’s financial risk management process seeks to enable the early identification evaluation and effective management of key 
risks facing the business risk management policies and systems have been established and are reviewed regularly to reflect changes 
in market conditions and the group’s activities the group through its standards and procedures aims to develop a disciplined and 
constructive control environment in which all employees understand their roles and obligations
the group sources and sells products and manufactures goods in many locations around the world these operations expose the 
group to potentially significant price volatility in the financial and commodity markets trading and risk management teams have 
been established in the group’s major businesses to manage this exposure by entering into a range of products including physical 
and financial forward contracts futures and where appropriate options these teams work closely with group treasury and report 
regularly to executive management
treasury operations and commodity procurement are conducted within a clearly defined framework of boardapproved policies  
and guidelines to manage the group’s financial and commodity risks treasury works closely with the group’s procurement teams to 
manage commodity risks treasury policy seeks to ensure that adequate financial resources are available to the group at all times for 
the management and development of the group’s businesses whilst effectively managing its market risk and credit risk the group’s 
risk management policy explicitly forbids the use of financial or commodity derivatives outside its risk management framework of 
mitigating financial and commodity risks for speculative purposes
e foreign currency translation
the group presents its financial statements in sterling as a result of its worldwide operations the group is exposed to foreign 
currency translation risk where overseas operations have a functional currency other than sterling changes in foreign currency 
exchange rates impact the translation into sterling of both the income statement and net assets of these foreign operations
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
120 24 financial instruments continued
where appropriate the group finances its operations by borrowing locally in the functional currency of its operations this reduces 
net asset values reported in functional currencies other than sterling thereby reducing the economic exposure to fluctuations in 
foreign currency exchange rates on translation
the group also finances its operations by obtaining funding at group level through external borrowings and where they are not in 
sterling these borrowings may be designated as net investment hedges this enables gains and losses arising on retranslation of 
these foreign currency borrowings to be charged to other comprehensive income providing a partial offset in equity against the 
gains and losses arising on translation of the net assets of foreign operations
the group does not actively hedge the translation impact of foreign exchange rate movements on the income statement other than  
via the partial economic hedge arising from the servicing costs on nonsterling borrowings
the group designates certain of its intercompany loan arrangements as quasiequity for the purposes of ias 21 the effect of the 
designation is that any foreign exchange volatility arising within the borrowing entity andor the lending entity is accounted for 
directly within other comprehensive income
the group has foreign currency borrowings that have been designated as hedges of its net investment in foreign operations in euros  
and us dollars the value of these financial liabilities used as hedging instruments at the balance sheet date was
2014
£m
2013
£m
euro – 17
us dollar 174 532
174 549
a net foreign exchange gain of £29m 2013 – loss of £26m on retranslation of these loans has been taken to the translation reserve 
on consolidation all of which was attributable to equity shareholders 2013 – £19m loss attributable to equity shareholders and £7m 
loss to noncontrolling interests the group also held currency forwards and cross currency swaps that have been designated as 
hedges of its net investments in australian dollars and euros whose change in fair value of £4m has been debited to the translation 
reserve 2013 – £6m credited to the translation reserve
f market risk
market risk is the risk of movements in the fair value of future cash flows of a financial instrument or forecast transaction as 
underlying market prices change the group is exposed to changes in the market price of commodities interest rates and foreign 
exchange rates these risks are known as ‘transaction’ or recognised exposures and ‘economic’ or forecast exposures
i commodity price risk
commodity price risk arises from the procurement of raw materials and the consequent exposure to changes in market prices
the group purchases a wide range of commodities in the ordinary course of business exposure to changes in the market price of 
certain of these commodities including wheat edible oils soya beans meat sugar raws cocoa rice tea and energy is managed 
through the use of forward physical contracts and hedging instruments including futures and options contracts primarily to convert 
floating or indexed prices to fixed prices the use of such contracts to hedge commodity exposures is governed by the group’s risk 
management policies and is continually monitored by group treasury commodity derivatives also provide a way to meet customers’ 
pricing requirements whilst achieving a price structure consistent with the group’s overall pricing strategy
some of the group’s commodity derivatives are treated as ‘own use’ contracts since they are both entered into and continue to  
be held for the purposes of the group’s ordinary operations and the group takes physical delivery of the commodity concerned 
‘own use’ contracts do not require accounting entries until the commodity purchase actually crystallises certain other commodity 
derivatives are accounted for as cash flow hedges but some are not eligible for treatment as ‘own use’ contracts and are not 
contracts for which the strict requirements of hedge accounting can be satisfied this occurs typically where the group does not 
take physical delivery of the commodity concerned such commodity derivatives are used only where the business believes they 
provide an economic hedge of an underlying exposure these instruments are classified as held for trading and are marked to market 
through the income statement
the majority of the group’s forward physical contracts and commodity derivatives have original maturities of less than one year
the group does not have significant sensitivities in respect of the accounting for its onbalance sheet commodity contracts
ii interest rate risk
interest rate risk comprises two primary elements
• interest price risk results from financial instruments bearing fixed interest rates changes in floating interest rates therefore 
affect the fair value of these fixed rate financial instruments and
• interest cash flow risk results from financial instruments bearing floating rates changes in floating interest rates affect cash 
flows on interest receivable or payable
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
121 notes forming part of the financial statements
for the 52 weeks ended 13 september 2014
24 financial instruments continued
the group’s policy is to maintain floating rate debt for a significant proportion of its bank finance although it periodically assesses  
its position with respect to interest price and cash flow risk
at 13 september 2014 £593m 61 2013 – £730m and 63 of total debt was subject to fixed rates of interest following the 
redemption in july 2013 of the £150m secured redeemable debenture stock the majority of the group’s fixed rate debt is the  
us private placement loans of £579m 2013 – £710m
floating rate debt comprises bank borrowings bearing interest rates fixed in advance for various time periods up to 12 months  
by reference to official market rates eg libor
the group does not have significant sensitivities to the impact of interest rates on derivative valuations nor to the impact of interest 
rates on floating rate borrowings
iii foreign currency risk
the group conducts business worldwide and consequently in many foreign currencies as a result it is exposed to movements  
in foreign currency exchange rates which affect the group’s transaction costs the group also publishes its financial statements in 
sterling and is therefore exposed to movements in foreign exchange rates on the translation of the results and underlying net assets 
of its foreign operations into sterling
translation risk is discussed in section e on page 120
transaction risk
currency transaction exposure occurs where a business makes sales and purchases in a currency other than its functional currency 
it also arises where monetary assets and liabilities of a business are not denominated in its functional currency and where dividends 
or surplus funds are remitted from overseas the group’s policy is to match transaction exposures wherever possible and to hedge 
actual exposures and firm commitments as soon as they occur by using forward foreign currency contracts all foreign currency 
instruments contracted with nongroup entities to manage transaction exposures are undertaken by group treasury or where 
foreign currency controls restrict group treasury acting on behalf of subsidiaries under its guidance identification of transaction 
exposures is the responsibility of each business
the group uses derivatives principally forward foreign currency contracts and time options to hedge its exposure to movements in 
exchange rates on its foreign currency trade receivables and payables the group does not seek formal fair value hedge accounting 
for such transaction hedges instead such derivatives are classified as held for trading and marked to market through the income 
statement this offsets the income statement impact of the retranslation of the foreign currency trade receivables and payables
economic forecast risk
the group also uses forward foreign currency contracts to hedge its exposure to movements in exchange rates on its highly 
probable forecast foreign currency sales and purchases on a rolling 12month basis the group does not formally define the 
proportion of highly probable forecast sales and purchases to hedge but agrees an appropriate percentage on an individual basis  
with each business by reference to the group’s risk management policies and prevailing market conditions the group documents 
currency derivatives used to hedge its forecast transactions as cash flow hedges to the extent that cash flow hedges are effective 
gains and losses are deferred in equity until the forecast transaction occurs at which point the gains and losses are recycled either 
to the income statement or to the nonfinancial asset acquired
the majority of the group’s currency derivatives have original maturities of less than one year
the group’s most significant currency transaction exposures are
• sugar prices in british sugar to movements in the sterlingeuro exchange rate
• sugar prices in illovo to movements in the south african randus dollareuro exchange rates and
• sourcing for primark – costs are denominated in a number of currencies predominantly sterling euros and us dollars
elsewhere a number of businesses make sales and purchase a variety of raw materials in foreign currencies primarily us dollars 
and euros giving rise to transaction exposures in all other material respects businesses tend to operate in their functional 
currencies and as a result further transaction exposure to foreign currency exchange rate movements is modest
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
122 24 financial instruments continued
the analysis of the group’s foreign currency exposure to financial assets and liabilities by currency of denomination is as follows
2014
sterling
£m
us dollar
£m
euro
£m
other
£m
total
£m
financial assets
cash and cash equivalents 8 12 1 14 35
trade and other receivables – 23 52 9 84
8 35 53 23 119
financial liabilities
trade and other payables 25 186 31 12 254
unsecured loans and overdrafts 9 420 1 1 431
34 606 32 13 685
currency derivatives
gross amounts receivable 63 1377 35 168 1643
gross amounts payable 1 126 660 110 897
62 1251 625 58 746
36 680 604 68 180
2013
sterling
£m
us dollar
£m
euro
£m
other
£m
total
£m
financial assets
cash and cash equivalents 7 13 4 6 30
trade and other receivables – 25 46 12 83
7 38 50 18 113
financial liabilities
trade and other payables 5 209 27 10 251
unsecured loans and overdrafts 11 533 17 2 563
16 742 44 12 814
currency derivatives
gross amounts receivable 41 1122 134 131 1428
gross amounts payable 47 127 537 103 814
6 995 403 28 614
15 291 397 34 87
the following significant exchange rates applied during the year
average rate closing rate
2014 2013 2014 2013
us dollar 166 156 162 159
euro 122 119 125 119
rand 1743 1437 1786 1576
renminbi 1018 968 996 971
australian dollar 180 156 180 172
sensitivity analysis
the following sensitivity analysis illustrates the impact that a 10 strengthening of the group’s operating currencies against local 
functional currencies would have had on profit and equity the analysis covers currency translation exposures at year end on 
businesses’ financial assets and liabilities that are not denominated in the functional currencies of those businesses a similar but 
opposite impact would be felt on both profit and equity if the group’s main operating currencies weakened against local functional 
currencies by a similar amount
the exposure to foreign exchange gains and losses on translating the financial statements of subsidiaries into sterling is not  
included in this sensitivity analysis as there is no impact on the income statement and the gains and losses are recorded directly  
in the translation reserve in equity see below for a separate sensitivity this sensitivity is presented before taxation and 
noncontrolling interests
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
123 notes forming part of the financial statements
for the 52 weeks ended 13 september 2014
24 financial instruments continued
10 strengthening against other currencies of
2014
impact on 
profit for 
the year
£m
2014
impact on
total equity
£m
2013
impact on
profit for
the year 
£m
2013
impact on
total equity
£m
sterling 1 3 1 1
us dollar 3 74 5 44
euro 1 61 1 54
other 1 3 1 3
a second sensitivity analysis calculates the impact on the group’s profit before tax if the average rates used to translate the results  
of the group’s foreign operations into sterling were adjusted to show a 10 strengthening of sterling a similar but opposite impact 
would be felt on profit before tax if sterling weakened against the other currencies by a similar amount
10 strengthening of sterling against
2014
impact on
profit for
the year 
 £m
2013
impact on
profit for
the year
£m
us dollar 6 6
euro 22 18
rand 1 2
renminbi 3 16
australian dollar 2 1
g credit risk
credit risk is the risk that counterparties to financial instruments do not perform according to the terms of the contract or instrument 
the group’s businesses are exposed to counterparty credit risk when dealing with customers and from certain financing activities
the immediate credit exposure of financial instruments is represented by those financial instruments that have a net positive fair 
value by counterparty at 13 september 2014 the group considers its maximum exposure to credit risk to be
2014
£m
2013
£m
cash and cash equivalents 519 362
loans and receivables see note 24a 1290 1331
derivative assets at fair value through profit and loss 8 1
derivative assets in designated net investment hedging relationships 2 6
derivative assets in designated cash flow hedging relationships 64 20
1883 1720
the majority of cash balances and shortterm deposits are held with strong investmentgrade banks or financial institutions
the group uses market knowledge changes in credit ratings and other techniques to identify significant changes to the financial 
profile of its counterparties
trade and other receivables
concentrations of credit risk are limited as a result of the group’s large and diverse customer base the group has an established 
credit policy applied by each business under which the credit status of each new customer is reviewed before credit is advanced 
this includes external credit evaluations where possible and in some cases bank references credit limits are established for all 
significant or highrisk customers which represent the maximum amount permitted to be outstanding without requiring additional 
approval from the appropriate level of management outstanding debts are continually monitored by each business credit limits  
are reviewed on a regular basis and at least annually customers that fail to meet the group’s benchmark creditworthiness may  
only transact with the group on a prepayment basis aggregate exposures are monitored at group level
many of the group’s customers have been transacting with the group for many years and the incidence of bad debts has been low 
where appropriate goods are sold subject to retention of title so that in the event of nonpayment the group may have a secured 
claim the group does not typically require collateral in respect of trade and other receivables
the group provides for impairment of financial assets including trade and other receivables based on known events and makes a 
collective provision for losses yet to be identified based on historical data the majority of the provision comprises specific amounts
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
124 24 financial instruments continued
the maximum exposure to credit risk for trade and other receivables at the reporting date by geographic region of origin was
2014
£m
2013
£m
uk 415 460
europe  africa 239 234
the americas 154 149
asia pacific 318 340
1126 1183
trade receivables can be analysed as follows
2014
£m
2013
£m
not overdue 826 894
up to 1 month past due 125 126
between 1 and 2 months past due 21 15
between 2 and 3 months past due 8 6
more than 3 months past due 29 27
provision for doubtful debts 36 35
 973 1033
based on past experience the group believes that no impairment allowance is necessary in respect of trade receivables that are not 
past due
trade and other receivables are stated net of the following provision for irrecoverable amounts
2014
£m
2013
£m
opening balance 35 37
amounts provided for during the year 5 7
amounts released during the year 4 5
amounts utilised during the year 3 3
acquisitions 4 –
effect of movements in foreign exchange 1 1
closing balance 36 35
no trade and other receivables 2013 – none were written off directly to the income statement in the year
the directors consider that the carrying amount of trade and other receivables approximates fair value
cash and cash equivalents
banking relationships are generally limited to those banks that are members of the core relationship group these banks are selected 
for their credit status global reach and their ability to meet the businesses’ daytoday banking requirements the credit ratings of 
these institutions are monitored on a continuing basis in locations where the core relationship banking group cannot be used 
operating procedures including choice of bank opening of bank accounts and repatriation of funds must be agreed with group 
treasury the group has not recorded impairments against cash or cash equivalents nor have any recoverability issues been 
identified with such balances such items are typically recoverable on demand or in line with normal banking arrangements
other financial assets
other noncurrent investments are typically equity investments with no fixed maturity or recoverability date no impairment issues 
have been identified with respect to other noncurrent investments
since derivative assets are recorded at fair value either through profit and loss for those not in a designated cash flow hedging 
relationship or otherwise through the hedging or net investment hedging reserve no impairment issues have been identified
h liquidity risk
liquidity risk is the risk that the group will encounter difficulty in meeting its obligations associated with its financial liabilities as they 
fall due group treasury is responsible for monitoring and managing liquidity and ensures that the group has sufficient headroom in 
its committed facilities to meet unforeseen or abnormal requirements the group also has access to uncommitted facilities to assist 
with shortterm funding requirements
available headroom is monitored via the use of detailed cash flow forecasts prepared by each business which are reviewed at least 
quarterly or more often as required actual results are compared to budget and forecast each period and variances investigated  
and explained particular focus is given to management of working capital
details of the group’s borrowing facilities are given in section i on page 126
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
125 notes forming part of the financial statements
for the 52 weeks ended 13 september 2014
24 financial instruments continued
the following table analyses the contractual undiscounted cash flows relating to financial liabilities at the balance sheet date and 
compares them to carrying amounts
2014
note
due within 
6 months
£m
due 
between
6 months
 and 1 year
£m
due 
between
1 and 2
years
£m
due 
between
2 and 5 
years
£m
due after
5 years
£m
contracted
amount
£m
carrying
amount
£m
nonderivative financial liabilities 
trade and other payables 18 1784 9 – – – 1793 1793
secured loans 17 2 – 2 12 – 16 16
unsecured loans and overdrafts 17 360 29 103 280 333 1105 937
finance leases 25 1 – 1 2 38 42 12
provisions 19 51 20 15 1 14 101 101
derivative financial liabilities 
– currency derivatives net payments 5 1 – – – 6 6
– commodity derivatives net payments 32 8 1 – – 41 9
total financial liabilities 2235 67 122 295 385 3104 2874
2013
note
due within 
6 months
£m
due 
between
6 months
 and 1 year
£m
due 
between
1 and 2 
years
£m
due 
between
2 and 5 
years
£m
due after
5 years
£m
contracted
amount
£m
carrying
amount
£m
nonderivative financial liabilities 
trade and other payables 18 1649 7 – – – 1656 1656
secured loans 17 39 12 37 7 – 95 95
unsecured loans and overdrafts 17 345 28 157 165 557 1252 1059
finance leases 25 1 – 1 2 38 42 12
provisions 19 42 5 6 24 – 77 77
derivative financial liabilities 
– currency derivatives net payments 20 18 – – – 38 37
– commodity derivatives net payments 10 4 3 – – 17 1
total financial liabilities 2106 74 204 198 595 3177 2937
the above tables do not include forecast data for liabilities which may be incurred in the future but which were not contracted at 
13 september 2014
the principal reasons for differences between carrying values and contractual undiscounted cash flows are coupon payments on  
the fixed rate debt to which the group is already committed future interest payments on the group’s finance leases and cash flows 
on derivative financial instruments which are not aligned with their fair value
i borrowing facilities
the group has substantial borrowing facilities available to it the undrawn committed facilities available at 13 september 2014  
in respect of which all conditions precedent have been met amounted to £1406m 2013 – £1364m
2014 2013
facility
£m
drawn
£m
undrawn
£m
facility
£m
drawn
£m
undrawn
£m
£12bn syndicated facility 1200 – 1200 – – –
£115bn syndicated facility – – – 1150 – 1150
us private placement 579 579 – 710 710 –
european investment bank 120 120 – 120 120 –
illovo 198 93 105 228 130 98
azucarera 130 29 101 149 34 115
other – – – 1 – 1
2227 821 1406 2358 994 1364
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
126 24 financial instruments continued
uncommitted facilities available at 13 september 2014 were
2014 2013
facility
£m
drawn
£m
undrawn
£m
facility
£m
drawn
£m
undrawn
£m
money market lines 100 – 100 100 – 100
illovo 65 41 24 90 50 40
china banking 362 57 305 452 59 393
other 117 34 83 131 51 80
644 132 512 773 160 613
in addition to the above facilities there are also £225m 2013 – £406m of undrawn and available credit lines for the purposes  
of issuing letters of credit and guarantees in the normal course of business
the group also has £12m 2013 – £12m of finance lease liabilities which are not included in the tables above but which are included 
in the group’s loans and overdrafts in note 17
during the year the £115bn syndicated facility which was due to mature in july 2015 was replaced by a comparable £12bn 
syndicated facility which matures in july 2019 with an option to extend for two years in addition to the bank debt the company  
has £579m of private placement notes in issue to institutional investors in the us and europe at 13 september 2014 these had  
an average remaining duration of 57 years and an average fixed coupon of 51 the other significant core committed debt facilities 
comprise a £120m eib loan maturing 2015 as well as local committed facilities in illovo and azucarera
uncommitted bank borrowing facilities are normally reaffirmed by the banks annually although they can theoretically be withdrawn 
at any time
refer to note 9 for details of the group’s capital commitments and to note 26 for a summary of the group’s guarantees  
an assessment of the group’s current liquidity position is given in the financial review on page 38
j capital management
the capital structure of the group is presented in the balance sheet the statement of changes in equity provides details on equity 
and note 17 provides details of loans and overdrafts short and mediumterm funding requirements are provided by a variety of loan 
and overdraft facilities both committed and uncommitted with a range of counterparties and maturities longer term funding is 
sourced from a combination of these facilities the private placement notes and committed syndicated loan facilities
the board’s policy is to maintain a strong capital base so as to maintain investor creditor and market confidence and to enable 
successful future development of the business the board monitors return on capital by division and determines the overall level  
of dividends payable to shareholders
from time to time the trustee of the employee share ownership plan trust purchases the company’s shares in the market to 
satisfy awards under the group’s longterm incentive plan once purchased shares are not sold back into the market the group 
does not have a defined share buyback plan
there were no changes to the group’s approach to capital management during the year neither the company nor any of its 
subsidiaries are subject to externally imposed capital requirements
 
25 lease commitments
operating leases
the group acts as a lessee lessor and sublessor for land and buildings and plant and machinery under operating leases
rental receipts of £8m 2013 – £7m were recognised in the income statement in the period relating to operating leases  
the total of future minimum rental receipts expected to be received is £61m 2013 – £66m
under the terms of the lease agreements no contingent rents are payable
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
127 notes forming part of the financial statements
for the 52 weeks ended 13 september 2014
25 lease commitments continued
the future minimum lease payments under operating leases are as follows
2014
land and
buildings
£m
2014
plant and
equipment
£m
2014
total
£m
2013
land and
buildings
£m
2013 
plant and
equipment 
 £m 
2013
 total
 £m
within one year 189 11 200 163 11 174
between one and five years 780 26 806 646 24 670
after five years 2342 2 2344 2037 3 2040
3311 39 3350 2846 38 2884
finance leases
finance lease liabilities are payable as follows
2014
minimum
lease
payments
£m
2014
interest
£m
2014
principal
£m
2013
minimum
lease
payments
£m
2013 
interest 
 £m 
2013
 principal
 £m
within one year 1 1 – 1 1 –
between one and five years 3 2 1 3 2 1
after five years 38 27 11 38 27 11
42 30 12 42 30 12
26 contingencies 
litigation and other proceedings against companies in the group are not considered material in the context of these financial statements
the group has adopted the amendments to ias 39 in relation to financial guarantee contracts which apply for periods commencing 
on or after 1 january 2006 where group companies enter into financial guarantee contracts to guarantee the indebtedness of other 
group companies the group considers these to be insurance arrangements and has elected to account for them as such in 
accordance with ifrs 4 in this respect the guarantee contract is treated as a contingent liability until such time as it becomes 
probable that the relevant group company issuing the guarantee will be required to make a payment under the guarantee
as at 13 september 2014 group companies have provided guarantees in the ordinary course of business amounting to £916m  
2013 – £777m
27 related parties
the group has a controlling related party relationship with its parent company wittington investments limited which is also its 
ultimate parent company see note 28 the group also has a related party relationship with its associates and joint ventures see 
note 28 and with its directors in the course of normal operations related party transactions entered into by the group have been 
contracted on an arm’s length basis
material transactions and year end balances with related parties were as follows
sub note
2014
 £000 
 2013
 £000
charges to wittington investments limited in respect of services provided by the company  
and its subsidiary undertakings 403 338
dividends paid by associated british foods and received in a beneficial capacity by
i  trustees of the garfield weston foundation 1 9125 8277
ii  directors of wittington investments limited who are not trustees of the foundation 1442 1297
iii  directors of the company who are not trustees of the foundation and are not directors  
of wittington investments limited 2 43 30
iv a member of the weston family employed within the associated british foods group 3 952 864
sales to a fellow subsidiary undertaking on normal trading terms 4 93 2
sales to companies with common key management personnel on normal trading terms 5 12459 16538
commissions paid to companies with common key management personnel on normal trading terms 5 1418 787
amounts due from companies with common key management personnel 5 1456 2227
sales to joint ventures on normal trading terms 6 21337 18488
sales to associates on normal trading terms 6 30248 19460
purchases from joint ventures on normal trading terms 6 372496 397449
purchases from associates on normal trading terms 6 16266 20805
amounts due from joint ventures 6 182254 163170
amounts due from associates 6 3274 1790
amounts due to joint ventures 6 33095 30806
amounts due to associates 6 6640 1059
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
128 27 related parties continued
1  the garfield weston foundation ‘the foundation’ is an english charitable trust established in 1958 by the late w garfield weston 
the foundation has no direct interest in the company but as at 13 september 2014 was the beneficial owner of 683073 shares 
2013 – 683073 shares in wittington investments limited representing 792 2013 – 792 of that company’s issued share 
capital and is therefore the company’s ultimate controlling party at 13 september 2014 trustees of the foundation comprised 
two children and two grandchildren of the late w garfield weston and five children of the late garry h weston
2  details of the directors are given on pages 50 and 51 their interests including family interests in the company and its subsidiary 
undertakings are given on pages 75 and 76 key management personnel are considered to be the directors and their 
remuneration is disclosed within the remuneration report on page 73
3  a member of the weston family who is employed by the group and is not a director of the company or wittington investments 
limited and is not a trustee of the foundation
4  the fellow subsidiary undertaking is fortnum and mason plc
5  the companies with common key management personnel are the george weston limited group in canada and selfridges  
 co limited
6  details of the group’s principal joint ventures and associates are set out in note 28
amounts due from joint ventures comprise £14m 2013 – £15m of finance lease receivables see note 14 and £145m 2013 – £130m 
of loan receivables the remainder of the balance is trading balances the loan receivables are all noncurrent 2013 – all noncurrent 
and all but £3m 2013 – £3m of the finance lease receivables are noncurrent
28 group entities 
control of the group
the largest group in which the results of the company are consolidated is that headed by wittington investments limited the 
accounts of which are available at companies house crown way cardiff cf14 3uz it is the ultimate holding company is 
incorporated in great britain and is registered in england
at 13 september 2014 wittington investments limited together with its subsidiary howard investments limited held 431515108 
ordinary shares 2013 – 431515108 representing in aggregate 545 2013 – 545 of the total issued ordinary share capital of 
associated british foods plc
significant subsidiaries
a list of the group’s significant subsidiaries is given below the entire share capital of the companies listed is held within the group 
except where percentages are shown these percentages give the group’s ultimate interest and therefore allow for the situation 
where subsidiaries are owned by partly owned intermediate subsidiaries
 country of 
incorporation
manufacturing activities
ab agri limited uk
ab azucarera iberia sl sociedad unipersonal spain
ab brasil indústria e comércio de alimentos ltda brazil
ab calsa sa de cv mexico
ab enzymes gmbh germany
ab enzymes oy finland
abf grain products limited uk
ab food  beverages australia pty ltd australia
ab food  beverages philippines inc philippines
ab food  beverages thailand limited thailand
ab harbin food ingredients company limited china
ab mauri canada limited canada
ab mauri food inc us
ab mauri food sa spain
ab mauri india private limited india
ab mauri italy spa italy
ab mauri malaysia sdn bhd 52 malaysia
ab mauri portugal sa 96 portugal
ab mauri vietnam ltd 66 vietnam
ab world foods limited uk
 country of 
incorporation
manufacturing activities
abitec corporation us
abna feed liaoning co ltd china
abna shanghai feed co ltd china
ach food companies inc us
ach foods mexico sde rlde cv mexico
anzchem pty limited australia
bo tian sugar industry company limited china
british sugar plc uk
cereform limited uk
compañia argentina de levaduras saic argentina
food investments limited uk
foods international sas france
g costa and company limited uk
george weston foods limited australia
george weston foods nz limited new zealand
germain’s uk limited uk
guangxi bo hua food co ltd 71 china
guangxi boqing food co ltd 60 china
guangxi boxuan food co ltd 70 china
harbin mauri yeast co ltd 85 china
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
129 notes forming part of the financial statements
for the 52 weeks ended 13 september 2014
28 group entities continued
 country of 
incorporation
manufacturing activities
hebei mauri food co ltd china
illovo sugar limited 51 south africa
illovo sugar malawi limited 39 malawi
jacksons of piccadilly limited uk
kilombero sugar company limited 28 tanzania
maragra aćucar sarl 46 mozambique
mauri maya sanayi as turkey
mauri products limited uk
pgp international inc us
premier nutrition products limited uk
r twining and company limited uk
shanghai ab food  beverages co ltd china
spi pharma inc us
the billington food group limited uk
the jordans  ryvita company limited uk
twinings north america inc us
ubombo sugar limited 31 swaziland
wander ag switzerland
zambia sugar plc 42 zambia
 country of 
incorporation
retailing activities
lojas primark portugalexploracao gestao e 
administracao de espacos comerciais sa portugal
primark republic of ireland
primark austria ltd  cokg austria
primark deutschland gmbh germany
primark france sas france
primark mode ltd  cokg germany
primark netherlands bv netherlands
primark nv belgium
primark stores limited uk
primark tiendas slu spain
investment and other activities
ab exploration limited uk
abf holdings limited uk
abf investments plc uk
abf overseas limited uk
abf uk limited uk
talisman guernsey limited guernsey channel islands
the group’s interest in subsidiaries are all equity investments
interest in joint ventures and associates
a list of the group’s significant interests in joint ventures and associates is given below 
country of
incorporation group 
joint ventures
levaduras collico sa chile 50
roal oy finland 50
qingdao xinghua cereal oil  foodstuff co ltd china 25
frontier agriculture limited uk 50
vivergo fuels limited uk 47
stratas foods llc us 50
uniferm gmbh  co kg germany 50
associates
c czarnikow limited uk 43
new food coatings pty ltd australia 50
murray bridge bacon pty ltd australia 20
gledhow sugar company pty limited south africa 30
each joint venture and associate carries out manufacturing and food processing activities and operates mainly in its country  
of incorporation
the companies listed herein are those subsidiaries joint ventures and associates whose results or financial position in the  
opinion of the directors principally affected the figures shown in these annual accounts as a list of all group companies would  
result in information of excessive length being given a full list of subsidiaries will be annexed to the next annual return of  
associated british foods plc delivered to the registrar of companies
29 subsequent events
at the end of may the group exchanged contracts to acquire 100 of dorset cereals subject to clearance by the competition  
and markets authority in the uk which was received on 6 october 2014 the acquisition was completed on 20 october 2014  
for net consideration of £60m the premium brand with particular strength in the growing muesli sector will complement the 
group’s existing jordans cereals and ryvita crispbread brands since the acquisition was only completed shortly before the  
approval of these financial statements the initial accounting for the acquisition has not yet been finalised but will be included  
in the group’s 2015 interim results
since year end primark has signed the lease of seven stores in the northeast united states
 financial statements
notes forming part of the financial statements
associated british foods annual report and accounts 2014
130 company balance sheet
 at 13 september 2014
note
2014
£m
2013
£m
fixed assets
intangible assets 1 14 19
investments in subsidiaries 2 658 647
672 666
current assets
debtors
– due within one year 3 4863 3656
– due after one year 3 376 923
derivative assets 3 –
cash at bank and in hand 299 160
5541 4739
creditors amounts falling due within one year
bank loans and overdrafts – unsecured 134 154
other creditors 4 2981 2940
3115 3094
net current assets 2426 1645
total assets less current liabilities 3098 2311
creditors amounts falling due after one year
bank loans – unsecured 574 706
amounts owed to subsidiaries 4 318 1188
892 1894
net assets excluding pension liability 2206 417
net pension liability 22 17
net assets 2184 400
capital and reserves
issued share capital 5 45 45
capital redemption reserve 5 2 2
hedging reserve 4 –
profit and loss reserve 5 2141 353
equity shareholders’ funds 2184 400
the financial statements on pages 131 to 135 were approved by the board of directors on 4 november 2014 and were signed on  
its behalf by 
 
charles sinclair
chairman
john bason
director
reconciliation of movements in equity shareholders’ funds
for the 52 weeks ended 13 september 2014
2014
£m
2013
£m
profit for the financial year 2092 263
net movement in own shares held 44 5
remeasurement of defined benefit pension scheme 5 –
deferred tax associated with defined benefit pension scheme 1 –
movement in cash flow hedging position 4 –
dividends 256 232
net increase in equity shareholders’ funds 1784 36
opening equity shareholders’ funds 400 364
closing equity shareholders’ funds 2184 400
associated british foods annual report and accounts 2014
131
 financial statements
company balance sheet
reconciliation of movements in equity shareholders’ funds accounting policies    
 for the 52 weeks ended 13 september 2014
 basis of preparation
the financial statements are presented in sterling rounded to the nearest million they are prepared under the historical  
cost convention except that derivative financial instruments are stated at their fair value and in accordance with applicable  
united kingdom accounting standards uk gaap and the companies act 2006
as permitted by section 4084 of the companies act 2006 a separate profit and loss account for the company has not been 
included in these financial statements as permitted by frs 1 no cash flow statement for the company has been included on  
the grounds that the group includes the company in its own published consolidated financial statements as permitted by frs 8 
no related party disclosures in respect of transactions with wholly owned subsidiaries have been included
the company has taken advantage of the exemption in frs 25 financial instruments disclosure and presentation not to prepare 
a note to the financial statements relating to financial instruments as the information is available in the published financial 
statements of the group
intangible assets – goodwill
intangible assets comprise goodwill arising on acquisitions since 17 september 1998 being the excess of the fair value of  
the purchase consideration of businesses over the fair value of net assets acquired goodwill is capitalised in accordance with 
frs 10 and amortised over its useful life not exceeding 20 years goodwill previously written off against reserves has not  
been reinstated
investments in subsidiaries
investments in subsidiaries are reported at cost less any provision for impairment
financial instruments
all financial assets and financial liabilities are measured initially at fair value plus directly attributable transaction costs and 
thereafter at amortised cost 
pensions and other postemployment benefits
the company operates defined contribution and defined benefit pension schemes contributions to the defined contribution 
scheme are charged to the profit and loss account as they become payable the principal defined benefit scheme is a 
multiemployer scheme and the company is unable to identify its share of underlying assets and liabilities on a consistent and 
reasonable basis contributions to this scheme are accounted for as if they were contributions to a defined contribution scheme  
the company has one small unfunded defined benefit scheme which it accounts for in accordance with frs 17 using the advice 
of professional actuaries the amount charged to the profit and loss account is the cost of benefits accruing to employees over 
the year plus any benefit improvements granted to members during the year it also includes a charge equal to the expected 
interest on plan liabilities over the year the present value of plan liabilities is disclosed as a liability on the balance sheet net of  
any related deferred tax
sharebased payments
the company’s equitysettled sharebased payment plans take the form of conditional allocations of shares to employees  
which are released if and to the extent that performance targets are satisfied typically after a threeyear performance period 
the fair value of the conditional allocations is recognised as an employee expense with a corresponding increase in reserves  
the fair value is measured at grant date and spread over the period during which the executives become unconditionally entitled 
to the shares the fair value of the conditional allocations is measured taking into account the terms and conditions under which 
the shares were allocated the amount recognised as an expense is adjusted to reflect the actual number of shares that vest
where the company grants allocations of shares to employees of its subsidiaries these are accounted for on the same basis as 
allocations to employees of the company except that the fair value is recognised as an increase to investment in subsidiaries with 
a corresponding increase in reserves
shares in the company are held in a separate trust and are deducted in arriving at equity shareholders’ funds
derivatives
derivatives are used to manage the company’s economic exposure to financial risks the principal instruments used are foreign 
exchange contracts and swaps the hedging instrument 
derivatives are recognised in the balance sheet at fair value based on market prices or rates or calculated using either 
discounted cash flow or option pricing models
changes in the value of derivatives are recognised in the income statement unless they qualify for hedge accounting when 
recognition of any change in fair value depends on the nature of the item being hedged
associated british foods annual report and accounts 2014
132
 financial statements
accounting policies notes to the company financial statements
 for the 52 weeks ended 13 september 2014
1 intangible assets – goodwill
£m
cost
at 14 september 2013 and 13 september 2014 71
amortisation 
at 14 september 2013 52
provided during the year 5
at 13 september 2014 57
net book value
net book value at 14 september 2013 19
net book value at 13 september 2014 14
2 investments in subsidiaries
£m
at 14 september 2013 647
additions 11
at 13 september 2014 658
the additions relate to the allocation of shares under equitysettled sharebased payment plans to employees of the company’s 
subsidiaries
there were no provisions for impairment in either year
3 debtors
2014
£m
2013
£m
amounts falling due within one year
amounts owed by subsidiaries 4820 3635
other debtors 5 5
corporation tax recoverable 38 16
4863 3656
amounts falling due after one year
amounts owed by subsidiaries 376 923
the directors consider that the carrying amount of debtors approximates their fair value 
4 other creditors
2014
£m
2013
£m
amounts falling due within one year
other taxation and social security 1 1
accruals and deferred income 53 49
amounts owed to subsidiaries 2927 2890
2981 2940
amounts falling due after one year
amounts owed to subsidiaries 318 1188
the directors consider that the carrying amount of creditors approximates their fair value
 financial statements
notes to the company financial statements
associated british foods annual report and accounts 2014
133 notes to the company financial statements
 for the 52 weeks ended 13 september 2014
5 capital and reserves
 ordinary
shares of
5
15
⁄ 22 p 
 each 
 000 
 nominal 
 value
 £m 
issued and fully paid
at 14 september 2013 and 13 september 2014 791674 45
at 13 september 2014 the company’s issued share capital comprised 791674183 ordinary shares of 5
15
22p each carrying one vote 
per share 
share capital
£m
capital
redemption
reserve
£m
hedging
reserve
£m
profit and
loss reserve
£m
total
£m
at 14 september 2013 45 2 – 353 400
profit for the year – – – 2092 2092
net movement in own shares held – – – 44 44
remeasurement of defined benefit pension scheme net of tax – – – 4 4
movement in cash flow hedging position – – 4 – 4
dividends – – – 256 256
at 13 september 2014 45 2 4 2141 2184
capital redemption reserve
the nondistributable capital redemption reserve arose following redemption of two million £1 deferred shares at par in 2010
dividends
details of dividends paid and proposed are provided in note 6 to the consolidated financial statements
own shares held reserve and sharebased payments
ordinary shares subject to allocation under the company’s equitysettled sharebased payment plans are held in a separate 
employee share ownership plan trust the trust is funded by the company voting rights attached to shares held by the trust  
are exercisable by the trustee who is entitled to consider any recommendation made by a committee of the company  
at 13 september 2014 the trust held 3062447 2013 – 1995073 ordinary shares of the company the market value of these 
shares at the year end was £80m 2013 – £36m the trust has waived its right to dividends refer to note 22 of the consolidated 
financial statements for further information on the group and company’s equitysettled sharebased payment plans
hedging reserve
the hedging reserve comprises all changes in the value of derivatives to the extent that they are effective cash flow hedges net of 
amounts recycled from the hedging reserve on occurrence of the hedged transaction or when the hedged transaction is no longer 
expected to occur
6 contingent liabilities
where the company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its  
group the company considers these to be insurance arrangements and accounts for them as such the guarantee contract is 
treated as a contingent liability until such time as it becomes probable that the company will be required to make a payment  
under the guarantee
the company has provided £109m of guarantees in the ordinary course of business as at 13 september 2014 2013 – £117m
 financial statements
notes to the company financial statements
associated british foods annual report and accounts 2014
134 7 related parties
the company has a controlling related party relationship with its parent company wittington investments limited which is also its 
ultimate parent company the company also has a related party relationship with its subsidiaries associates and joint ventures and 
directors in the course of normal operations related party transactions entered into by the company have been contracted on an 
arm’s length basis
material transactions and year end balances with related parties excluding wholly owned subsidiaries were as follows
sub note
2014
£000
2013
£000
charges to wittington investments limited in respect of services provided by the company 403 338
charges to a fellow subsidiary 1 40 –
dividends paid by the company and received in a beneficial capacity by
i  trustees of the garfield weston foundation 1 9125 8277
ii  directors of wittington investments limited who are not trustees of the foundation 1 1442 1297
iii  directors of the company who are not trustees of the foundation and are not directors  
of wittington investments limited 1 43 30
iv a member of the weston family employed within the associated british foods group 1 952 864
charges to nonwholly owned subsidiaries 2 92 1212
interest income earned from nonwholly owned subsidiaries 2 361 1417
interest paid to nonwholly owned subsidiaries 2 – 202
amounts due from nonwholly owned subsidiaries 2 3454 17009
amounts due to nonwholly owned subsidiaries 2 9 –
1 details of the nature of the relationships with these bodies are set out in note 27 of the consolidated financial statements
2  details of the company’s subsidiaries joint ventures and associates are set out in note 28 of the consolidated 
financial statements
8 other information
emoluments of directors
the remuneration of the directors of the company is shown in the remuneration report for the group on page 73
employees
the company had an average of 135 employees in 2014 2013 – 122
the company is a member of the associated british foods pension scheme which is a funded final salary scheme that is closed  
to new members defined contribution arrangements are in place for other employees for the defined contribution scheme the 
pension costs are the contributions payable because the company is unable to identify its share of the scheme’s assets and 
liabilities on a consistent basis as permitted by frs 17 the scheme is accounted for by the company as if it were a defined 
contribution scheme
the last triennial funding valuation of the scheme was carried out as at 5 april 2011 the market value of plan assets was £2559m 
representing 101 of members’ accrued benefits after allowing for expected future salary increases the most recent triennial 
funding valuation of the scheme was carried out as at 5 april 2014 was agreed by the trustees after the year end and revealed  
a surplus of £78m 
further details are contained in note 12 in the consolidated financial statements there is no material difference in the valuation 
methodologies under ias 19 and frs 17
auditors’ fees
note 2 to the consolidated financial statements of the group provides details of the remuneration of the company’s auditors on  
a group basis
 financial statements
notes to the company financial statements
associated british foods annual report and accounts 2014
135 progress report
 saturday nearest to 15 september
2010
£m
2011
£m
2012
£m
2013
£m
2014
£m
revenue 10167 11065 12252 13315 12943
adjusted operating profit 909 920 1077 1180 1163
exceptional items – – 98 – –
amortisation of nonoperating intangibles 81 83 100 92 72
profits less losses on disposal of noncurrent assets 9 5 6 – 11
profits less losses on sale and closure of businesses 28 – 9 128 2
finance income 12 9 9 13 15
finance expense 88 101 114 100 73
other financial incomeexpense 8 7 2 5 –
profit before taxation 763 757 761 868 1020
taxation 194 180 178 240 237
profit for the period 569 577 583 628 783
basic and diluted earnings per ordinary share pence 693 687 703 740 965
adjusted earnings per share pence 722 740 872 965 1041
dividends per share pence 238 2475 285 320 340
associated british foods plc
registered office  
weston centre  
10 grosvenor street  
london w1k 4qy 
company registered in england number 293262
company secretary
paul lister 
registrars and transfer office
equiniti 
aspect house  
spencer road  
lancing bn99 6da 
auditors
kpmg llp chartered accountants
bankers
barclays bank plc 
lloyds banking group plc  
the royal bank of scotland plc
brokers
credit suisse securities europe limited 
one cabot square  
london e14 4qj 
barclays bank plc  
5 north colonnade 
canary wharf 
london e14 4bb
timetable
interim dividend paid  
4 july 2014
final dividend to be paid  
9 january 2015
annual general meeting  
5 december 2014
interim results to be announced  
21 april 2015
website
wwwabfcouk 
company directory 
associated british foods annual report and accounts 2014
136
 financial statements
progress reportcompany directory design and production 
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carbon offsetting project
this report contains forwardlooking 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 forwardlooking 
information actual results may differ materially from those expressed or implied  
by these forwardlooking statements the directors undertake no obligation to 
update any forwardlooking statements whether as a result of new information 
future events or otherwise associated british foods plc
weston centre 
10 grosvenor street 
london 
w1k 4qy
tel  44 0 20 7399 6500 
fax  44 0 20 7399 6580
for an accessible version  
of the annual report  
and accounts please visit 
wwwabfcouk
associated british foods plc annual report and accounts 2014


Summary:
 i am pleased to report growth of  
6 in adjusted earnings per share  
for the financial year
chairman’s  
statement
has confirmed the abolition of sugar 
quotas from october 2017 and world 
sugar prices have declined dramatically 
we have seen increased competition as 
european producers position themselves 
for a postquota market this has driven a 
fall in prices which we expect to continue 
in 2015 we anticipate restructuring in  
the european sugar industry and as the 
high stock levels are liquidated we expect 
to see volatility in market prices this 
structural change is painful but ab sugar 
has risen to challenges of this nature 
before and does so this time with a 
programme of continuous performance 
improvement we are one of the most 
efficient producers in the eu and will 
continue to take the neccessary action to 
ensure that we are well placed to operate 
in the postquota environment
we have a good track record of investing 
for the long term and this year was no 
exception with net capital investment of 
£691m up from £600m last year the 
higher level of capital expenditure was 
driven by a larger number of new primark 
stores opened or still to open but in the 
process of fitout during the year the 
fiveyear investment programme at allied 
bakeries to create a stateoftheart 
baking capability across the uk is now 
substantially complete and ensures the 
reliable supply of high quality bread to our 
customers this programme also sets a 
new benchmark for standards of food 
safety in the bakery sector and has 
enhanced safety in our workplace 
cash flow was again stronger than the 
previous year driven by a working capital 
inflow more than offsetting the increase 
in net capital investment net debt at the 
year end was £358m lower than last  
year at £446m with the group’s cash 
generating ability the lower net debt  
and the committed borrowing facilities 
available we have the capacity to  
meet our growth ambitions for the 
foreseeable future
i am pleased to report growth of  
6 in adjusted earnings per share  
for the financial year significant 
progress was achieved in operating 
profit by grocery agriculture 
ingredients and primark all of  
which substantially outperformed 
last year much lower sugar prices  
in the eu held back the group’s  
profit growth although operationally  
sugar performed well earnings  
also benefited from the strength  
of the group’s balance sheet and 
effective cash management which 
resulted in a much lower interest 
charge than last year
the financial year was characterised by 
price deflation in many food commodities 
and a strengthening of sterling against our 
major trading currencies the impact of 
this is evident in the lower revenues of our 
food businesses and in this context the 
profit growth in grocery agriculture and 
ingredients is all the more impressive 
grocery margin advanced with strong 
performances from twinings ovaltine  
and ach foods in the us and mexico 
and a further recovery in the bakery and 
meat businesses of george weston 
foods in australia our yeast and bakery 
ingredients business ab mauri is 
achieving a strong turnaround from 
the challenges of recent years with the 
promise of further improvement to come 
ab agri achieved another record result
primark had another magnificent year 
increasing profit by 30 at constant 
currency and adding a net 12 million sq ft 
of selling space taking our total estate to 
over 10 million sq ft at the financial year 
end our highly successful entry into 
france this year brings the number of 
countries in which primark operates  
to nine primark has now developed 
experience in establishing the brand  
in new markets and has achieved 
considerable trading success in each  
of them we recently announced that  
the next new market would be in the 
northeast of the us with the first stores 
expected to open late in 2015 and with  
up to ten stores by the end of 2016
the results of our sugar operations reflect 
a major fall in eu sugar prices and a very 
low world sugar price looking back to 
201112 a shortage of sugar available for 
sale in the eu and relatively high world 
prices at the time drove eu prices to  
very high levels which clearly benefited 
our sugar profit in that year this was 
exceptional since then more sugar has 
become available sugar stocks in the eu 
have risen the european commission  
associated british foods annual report and accounts 2014
4
introduction
chairman’s statement corporate responsibility
last year we published a comprehensive 
corporate responsibility report which 
outlined the close alignment between  
our values and good business practice 
and highlighted our commitment to 
improving productivity and reducing 
waste this report was well received by 
all of our stakeholders and updates are 
now available to reflect the achievements 
of the last 12 months the report is 
available online at wwwabfcouk
responsibility of particular note is the 
further progress primark has made in its 
ethical trade programme with an enlarged 
team of specialists now located in seven 
countries which is critical to supporting 
sustainable improvements within supplier 
factories as a responsible business  
ab sugar is actively contributing to the 
debate about the role that sugar can play 
as part of a healthy balanced diet with  
its making sense of sugar campaign  
the board remains committed to the 
highest ethical standards across  
the group
the board
the senior independent director 
tim clarke was appointed to the board 
in 2004 and in accordance with the  
uk corporate governance code  
having completed nine years’ service  
his independence must be confirmed 
annually by the rest of the board  
this having been done we are delighted 
that tim has agreed to continue as a 
member of the board and as the senior 
independent director 
three other independent directors will 
complete nine years on the board in 2015 
and 2016 to avoid the possibility of a 
significant loss of experience in a short 
period we have temporarily expanded  
the board ruth cairnie was appointed  
as an independent nonexecutive director 
with effect from 1 may 2014 ruth was 
recently executive vice president strategy 
 planning at royal dutch shell plc where 
she had also held a number of senior 
commercial roles gaining experience  
in european and emerging markets  
we very much look forward to ruth’s 
participation in the board’s deliberations
employees
i would like to thank all our employees  
for their contribution to the group’s 
success in the past year operational 
improvements have underpinned the 
increased profitability in grocery and 
ingredients and have become part  
of everyday business at ab sugar 
together with the excellent performances 
from agriculture and primark these 
results are a tribute to the dedication  
and commitment of our employees
dividends
i am pleased to report that a final dividend 
of 243p is proposed to be paid on 
9 january 2015 to shareholders on the 
register on 12 december 2014 together 
with the interim dividend of 97p paid on 
4 july 2014 this will make a total of 340p 
for the year an increase of 6
outlook
in the coming year we expect primark’s 
expansion to continue and grocery 
ingredients and agriculture to make 
further progress with the continuing  
fall in eu sugar prices and volatility in the 
world sugar price we expect a further 
large reduction in profit from ab sugar  
but this will put much of the effect of the 
structural changes in eu prices behind us 
at this early stage we expect a marginal  
decline in adjusted operating profit for the 
group but the impact on earnings will be 
mitigated by much lower tax and interest 
charges we therefore see limited 
opportunity to grow adjusted earnings per 
share in the new financial year with the 
strength of the group’s balance sheet and 
strong cash generation we have every 
reason to be confident of further progress 
for the group thereafter
charles sinclair 
chairman
5
introduction
chairman’s statement