Associated British Foods' underlying operating performance has been ahead of its expectation in the second half, according to an update issued ahead of it entering the close period for its full year results for the 53 weeks to 17 September. It says the further weakening of sterling during the period since the EU referendum has resulted in a translation benefit. With no material transactional effect in the period, as a result of forward currency purchases and fixed contracts, its expectation for the full year results is now for earnings per share to be marginally ahead of last year. Operating profit for the group will now be ahead of last year. The net interest expense will be similar to last year with the benefit of a lower average level of borrowings up to the point of acquiring the Illovo minorities being offset by an adverse translation impact on non-sterling interest. The underlying tax rate is expected to be close to last year. These results expectations take into account a change in our accounting policy for the valuation of Illovo's sugar cane roots in line with an amendment to IAS 41 which now permits the valuation of such assets at cost less accumulated depreciation. This has the effect of reducing the year's operating profit by £8m in the current year, with a restatement of the adjusted operating profit for 2015 to reduce it by £10m to £1,082m. Sales at Primark for the full year are expected to be 9% ahead of last year at constant currency. A higher proportion of this year's new store openings were in the second half giving a weighted average increase in selling space of 9%. There was a two percentage point benefit from the 53rd week this year. Like-for-like sales are expected to be minus 2%, affected by unseasonable weather - warm weather in the pre-Christmas period and a very cold March and April. Ireland delivered a strong performance throughout the year, Spain, France and Austria traded well and the Netherlands and Germany improved. The UK performance was in line with the group with good trading in periods of more typically seasonal weather. As a result of the weakening of sterling, we expect sales at actual exchange rates to be 11% ahead. Underlying revenue and adjusted operating profit for AB Sugar for the full year, at both actual and constant currency, will be ahead of last year. A reduction in EU stock levels and an increase in world sugar prices resulted in a strengthening of European sugar prices which benefited our Spanish business. However, with most of British Sugar's contracts agreed on an annual basis, there will be no material impact on its results from the improvement in pricing until our next financial year. All of our sugar businesses have delivered substantial cost reductions again this year through a combination of continuous improvement, business transformation, capital expenditure and procurement activities.
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