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