Associated British Foods plc
Review of preliminary results for year ended 16 September 2006
7 November 2006
Associated British Foods plc Business Highlights
§ A resilient performance with operating profit ahead
§ £34m impact of sugar regime reform
§ £64m increase in energy costs – most not recovered in pricing
§ Excellent performances from Primark, AB Mauri, Twinings/Ovaltine, ACH
§ Significant Primark store expansion close to completion
§ Sugar repositioned
Associated British Foods plc Financial Highlights
§ Adjusted operating profit up 1% to £561m*
§ Group revenue up 7% to £6.0bn
§ Adjusted profit before tax down 4% to £559m **
§ Adjusted earnings per share down 3% to 50.9p **
§ Dividends per share up 4% to 18.75p
§ Net investment in acquisitions and capital expenditure of £760m
§ Net debt of £298m
§ Basic earnings per share down 21% to 38.1p and profit before tax down 20% to £419m after exceptional charge for reorganisation of British Sugar of £97m
* & ** see notes at end Associated British Foods plc Income Statement
£m 2006 2005 Change Before Exceptional Total Restated * Exceptional Items items Revenue 5,996 5,996 5,622 +7%
Operating costs (5,486) (97) (5,583) (5,099)
Share of jv’s and associates 10 10 7
Profits less losses on sale of PP&E 10 10 20
Operating profit 530 (97) 433 550
Adjusted operating profit 561 561 555 +1%
Profits less losses on sale of PP&E 10 10 20
Amortisation of intangibles (41) (41) (25)
Exceptional Items (97) (97)
* 2005 restated to reflect adoption of IFRS.
Associated British Foods plc Income Statement
£m 2006 2005 Change
Operating profit 433 550 21%
Profits less losses on sale of businesses (4) (1)
Provision for loss on termination of an operation (8) (47)
Financial income 149 162 Financial expenses (151) (137) Profit before tax 419 527 20%
Tax (111) (141)
Profit after tax 308 386
Minority interests (7) (7)
Attributable to equity shareholders 301 379 Adjusted profit before tax* 559 580 4%
* before amortisation of intangibles, profits less losses on the sale of PPE and profits less losses on sale of businesses. Associated British Foods plc Tax
2006 2005 £m £m
Underlying charge 150 26.8% 159 27.4%
Credit on exceptional items (26) (11)
Credit on intangible amortisation (13) (7)
Reported charge 111 26.5% 141 26.8%
Associated British Foods plc Earnings and Dividends Per Share
2006 2005 Change
Adjusted earnings per share * 50.9p 52.5p 3%
Earnings per share 38.1p 48.0p 21%
Dividends per share 18.75p 18.00p +4%
* before amortisation of intangibles, profits less losses on the sale of PP&E, profits less losses on sale of businesses and exceptional items.
Associated British Foods plc Balance Sheet
£m 2006 2005
Intangible assets (including goodwill) 1,542 1,152 PP&E and other noncurrent assets 2,599 2,306 Net assets classified as held for sale 35 9 Working capital 597 484 Biological assets current 51 Current tax (85) (117) Net (debt)/cash funds (298) 212 Deferred tax (316) (155) Provisions (70) (90) Net pension asset 127 76 4,182 3,877
Equity shareholders’ funds 3,958 3,848 Minority interests 224 29 4,182 3,877
Associated British Foods plc Cash Flow
£m 2006 2005
Adjusted operating profit (before joint ventures and associates) 551 548 Depreciation 177 161 Working capital (129) (54) Provisions (62) Capital expenditure Primark (221) (221) Food (211) (182) Tax (117) (132) Net interest and other income (11) 25 Pension cost less contributions (1) (8) Loan repayment from Frontier 51 Other 28 43 Free cash flow 4 231 Dividends paid (incl minorities) (150) (139) Sale of Littlewoods stores 144 (Acquisitions)/disposals (496) (1,140) Net cash flow before financing (498) (1,048)
Associated British Foods plc Segmental Analysis
By business
Revenue Profit ** Margin ROCE
2006 2005 2006 2005 2006 2005 2006 2005
£m £m £m £m % % % %
Grocery 2,656 2,590 185 185 7.0 7.1 20.2 21.9
Primary food & agriculture 1,302 1,435 131 186 10.1 13.0 17.2 23.5
Ingredients 729 583 82 65 11.2 11.1 21.6 21.1
Retail 1,309 1,006 185 140 14.1 13.9 23.1* 33.4*
Inter company/central costs (22) (21) n/a n/a n/a n/a Continuing businesses 5,996 5,614 561 555 9.4 9.9 18.9 23.6
Businesses disposed 8 n/a n/a n/a n/a
5,996 5,622 561 555 9.4 9.9 18.9 23.6
* excludes former Littlewoods stores not being converted into Primark ** adjusted operating profit Associated British Foods plc Segmental Analysis
By geography
Revenue Profit Margin
2006 2005 2006 2005 2006 2005
£m £m £m £m % %
United Kingdom 3,003 2,816 281 314 9.4 11.2
Europe, Middle East & Africa 746 720 73 72 9.8 10.0
The Americas 1,210 1,102 124 102 10.2 9.3
Asia Pacific 1,037 976 83 67 8.0 6.9
Continuing businesses 5,996 5,614 561 555 9.4 9.9
Businesses disposed 8
5,996 5,622 561 555 9.4 9.9
Associated British Foods plc Primary food 2006 2005 Change Revenue £m 671 700 4% Operating Profit £m 115 166 31%
Sugar
• a transformational year
• confirmation of details of regime change
• a strong response
Associated British Foods plc Primary food 2006 2005 Change Revenue £m 671 700 4% Operating Profit £m 115 166 31%
Sugar – UK and Poland • £26m impact of changes to regime • £21m impact from unrecovered energy costs • best ever processing campaigns
Sugar – China
• excellent cane operations
• 0.5 million tonnes of capacity after expansion at Shibie and WuXuan
• drought reduced crop but strong pricing
Associated British Foods plc Primary food 2006 2005 Change Revenue £m 671 700 4% Operating Profit £m 115 166 31%
Sugar – Developments
• York and Allscott factory closures announced • completion of Polish consolidation • intention to purchase additional quota in UK and Poland • collaboration with BP and DuPont on development of UK biofuels • purchase of 51% of Illovo
Associated British Foods plc Illovo plant locations
Associated British Foods plc Cane irrigation
Associated British Foods plc Primary food 2006 2005 Change Revenue £m 671 700 4% Operating Profit £m 115 166 31%
Sugar – Illovo • strong management and sound ethics • a leader in its African markets • one of lowest cost producers in world • well placed for LDC exports to EU • opportunity for growth – capacity expansion, operational efficiencies and business development • ambition to develop in Africa and EU giving earnings stability • British Sugar and Illovo: a powerful combination in Africa and Europe
Associated British Foods plc Swaziland Dam
Associated British Foods plc Primary food 2006 2005 Change Revenue £m 671 700 4% Operating Profit £m 115 166 31%
Sugar – Looking forward
• major producer
• limited exposure to world sugar price
• one third of production in most efficient plants in EU
• two thirds of production with growth potential
• new business opportunity in biofuels
Associated British Foods plc Agriculture 2006 2005 Change restated Revenue £m 631 735 14% Operating Profit £m 16 20 20%
ABNA
• Frontier trading well • UK feeds business restructured for customer focus • sixth Chinese feed mill opened in South Henan • seventh mill under construction in North East China • impact of avian flu and energy costs
Associated British Foods plc Associated British Foods plc Associated British Foods plc Associated British Foods plc Associated British Foods plc Cashmere Coat £35.00
Large bag £6.00
Cashmere Sweater Primark £25.00
Shoes £15.00 Leather gloves in assorted colours £8.00 Sweater Dress Associated British Foods plc £10.00 Retail 2006 2005 Change restated Revenue £m Primark 1,168 989 +18% Littlewoods 141 17 n/a
Operating Profit £m Primark 166 141 +18% Littlewoods 19 (1) n/a
Primark • revenue up 18%, profit up 18%, strong performance • 27 new stores this year, trading 143 stores at year end • 40% increase in selling space to 3.5 million sq ft • likeforlike growth of 3% for year – exceptionally strong 12% increase in second half 2005 • continued growth in value clothing market share • first store in Spain • commissioning new larger distribution centre at Magna Park
Associated British Foods plc Retail 2006 2005 Change restated Primark Revenue £m 1,168 989 +18% Operating Profit £m 166 141 +18%
Primark • growth in 2007 driven by big increases in floor space • Littlewoods openings on schedule and virtually complete
Associated British Foods plc Littlewoods stores conversions
18 opened at financial year end 28 open now 36 by Christmas 41 by end 2007
Newcastle Metro Camberley Chesterfield Aberdeen Sutton Glasgow Parkhead Wolverhampton Bedford Leeds White Rose Inverness Poole Irvine Harlow Burton on Trent Greenock Liverpool Preston Oldham Swindon Brighton Luton Doncaster Lincoln Maidstone Dundee Hanley Exeter Blackpool Dunfermline Portsmouth Cheltenham Mansfield Eastbourne Croydon Nottingham Swansea Southport Southend Darlington Bradford Glasgow Argyle Street
Associated British Foods plc Retail 2006 2005 Change restated Primark Revenue £m 1,168 989 +18% Operating Profit £m 166 141 +18%
Primark • growth in 2007 driven by big increases in floor space • Littlewoods openings virtually complete • openings on time, to budget, and trading in line with expectations • Oxford Street to open Spring 2007 • total of 4.5 million sq ft expected year end 2007 • in 2007 60% of selling space will be outside likeforlike measure
Associated British Foods plc Grocery 2006 2005 Change restated Revenue £m 2,656 2,590 +3% Operating Profit £m 185 185 level
Twinings • excellent sales and profit growth • strong UK growth Everyday, Green Tea • TV support for Green Tea and infusions • US relaunch • tea packing supply chain rationalised – France and US closed – Shanghai operating well
Associated British Foods plc Associated British Foods plc Grocery 2006 2005 Change restated Revenue £m 2,656 2,590 +3% Operating Profit £m 185 185 level
Twinings • excellent sales and profit growth • strong UK growth Everyday, Green Tea • TV support for Green Tea and infusions • US relaunch • tea packing supply chain rationalised – France and US closed – Shanghai operating well
Ovaltine • investment in new products and marketing • continued Asian growth • successful Thai launch of Hi9
Associated British Foods plc Grocery 2006 2005 Change restated Revenue £m 2,656 2,590 +3% Operating Profit £m 185 185 level
ACH
• good revenue and profit growth
• Capullo in Mexico well ahead
• Mazola volumes affected by oil category decline
• consumer yeast performed well
• development of premium brand Spice Islands
Associated British Foods plc Grocery 2006 2005 Change restated Revenue £m 2,656 2,590 +3% Operating Profit £m 185 185 level
Silver Spoon • £8m profit impact from EU sugar regime change • growth in Billington’s and ‘Light’
Ryvita • continued Ryvita crispbread growth • Minis now well established in healthy snack sector • launch of Goodness bars
Associated British Foods plc Grocery 2006 2005 Change restated Revenue £m 2,656 2,590 +3% Operating Profit £m 185 185 level
Westmill
• strengthened supplier leadership to the UK ethnic food sector
• new brands Rajah, Green Dragon, Lotus and distribution rights for Amoy
• full product range – spices, sauces, rice, edible oils, flour, noodles
Associated British Foods plc Grocery 2006 2005 Change restated Revenue £m 2,656 2,590 +3% Operating Profit £m 185 185 level
Allied Bakeries • tough year • new management team • new products launched • comprehensive recovery plan developed
Australia • major operational improvements at Sydney bakery in second half • first low GI white loaf launched • improvements in Meat & Dairy
Associated British Foods plc Ingredients 2006 2005 Change restated Revenue £m 729 583 +25% Operating Profit £m 82 65 +26%
AB Mauri
• very strong revenue and profit growth
• energy and raw material costs recovered in key markets
• Asian expansion in China, India and Vietnam to meet strong demand
• new plant in New Zealand
• strong bakery ingredients growth in China, South America, South & West Asia
Associated British Foods plc Ingredients 2006 2005 Change restated Revenue £m 729 583 +25% Operating Profit £m 82 65 +26%
ABF Ingredients
• speciality proteins – strong growth in yeast extracts – purchase of producer of dairy protein concentrates and isolates
• enzymes – new management team – continued focus on new products
Associated British Foods plc Development of ABF
§ Strength in depth and wider geographical spread enabled group to absorb the impact of EU regime reform and energy costs this year
§ Major developments this year – scale of Primark with new store openings – complete repositioning of British Sugar with UK rationalisation, Illovo acquisition and biofuel opportunities
Associated British Foods plc Summary
§ A resilient performance with operating profit ahead
§ £34m impact of sugar regime reform
§ £64m increase in energy costs – most not recovered in pricing
§ Excellent performances from Primark, AB Mauri, Twinings/Ovaltine, ACH
§ Significant Primark store expansion close to completion
§ Sugar repositioned
Associated British Foods plc Associated British Foods plc
Review of preliminary results for year ended 16 September 2006
7 November 2006
Associated British Foods plc This presentation pack is directed only at investment professionals falling within article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 and to other persons to whom the presentation pack may lawfully be promoted.
Notes * before amortisation of intangibles, profits less losses on the sale of PP&E and exceptional items. ** before amortisation of intangibles, profits less losses on sale of PP&E, profits less losses on the sale of businesses and exceptional items.
All figures stated after amortisation of intangibles, profits less losses on the sale of PP&E and losses on the sale of businesses are shown on the face of the consolidated income statement. Associated British Foods plc