BARRY CALLEBAUT ANNUAL REPORT 2005/06 Agenda. ANNUAL GENERAL MEETING 2005/06, ZURICH December 7, 2006 3-MONTH RESULTS 2006/07* January 18, 2007 HALF-YEAR RESULTS 2006/07 April 3, 2007 9-MONTH RESULTS 2006/07* June 28, 2007 NEWS RELEASE, MEDIA CONFERENCE AND ANALYSTS’ CONFERENCE ON 2006/07 ANNUAL RESULTS, ZURICH November 6, 2007 ANNUAL GENERAL MEETING 2006/07, ZURICH November 29, 2007 * The company will discontinue the quarterly reporting related to the first and third quarter if and when the company has called the outstanding 9¼% Senior Subordinated Notes due 2010 in the amount of EUR 165 million issued by Barry Callebaut Services N.V. ANNUAL REPORT 2005/06 Contents. KEY FIGURES 4 COMPANY PROFILE 8 LETTER TO SHAREHOLDERS 10 BOARD OF DIRECTORS AND MANAGEMENT 16 OVERVIEW OF BUSINESS PERFORMANCE 18 INDUSTRIAL BUSINESS 22 FOOD SERVICE/RETAIL BUSINESS 30 WINNING TOGETHER 37 CORPORATE GOVERNANCE 60 FINANCIAL STATEMENTS OF BARRY CALLEBAUT GROUP 72 Consolidated Financial Statements 74 Summary of Accounting Policies 79 Notes to the Consolidated Financial Statements 87 Report of the Group Auditors 113 FINANCIAL STATEMENTS OF BARRY CALLEBAUT AG 114 Report of the Statutory Auditors 119 FINANCIAL INFORMATION 120 8-year overview SUBSIDIARIES 122 CONTACTS 128 3 Key Figures. KEY FIGURES BARRY CALLEBAUT 4 Development of sales revenue IN CHF MILLION 1999/00 1,832.2 578.2 TOTAL 2,410.4 2000/01 1,912.1 636.5 TOTAL 2,548.6 2001/02 2,012.8 609.0 TOTAL 2,621.8 2002/03 2,193.9 1,377.4 TOTAL 3,571.3 2003/04 2,203.3 1,845.6 TOTAL 4,048.9 2004/05 2,251.0 1,810.1 TOTAL 4,061.1 2005/06 2,423.8 1,838.1 TOTAL 4,261.9 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 Industrial business Food Service/Retail Business EBIT development IN CHF MILLION 1999/00 TOTAL 148.7 2000/01 TOTAL 168.0 2001/02 TOTAL 173.2* 2002/03 TOTAL 208.7 2003/04 TOTAL 228.3 2004/05 TOTAL 258.3** 2005/06 TOTAL 293.1 0 50 100 150 200 250 300 * EBIT for 2001/02 is based on a normalized result excl. restructuring provisions amounting to CHF 80 million ** EBIT for 2004/05 is based on a normalized result excl. restructuring expenses and impairment charges amounting to CHF 94 million, restated for expenses for share-based payments in the amount of CHF 6.9 million following first-time application of IFRS 2 ROIC development IN % 1999/00 8.7 2000/01 8.9 2001/02 9.9* 2002/03 9.6 2003/04 10.4 2004/05 9.5** 2005/06 12.2 0 2 4 6 8 10 12 * Ratio is calculated on a pro forma basis excl. the impact of the Stollwerck acquisition ** Ratio is calculated on a pro forma basis excl. the impact of restructuring expenses and impairment charges, restated for expenses, for share- based payments in the amount of CHF 6.9 million following first-time application of IFRS 2 Sales volumes by region, 2005/06 IN TONNES 7% 29% EUROPE 671,172 64% AMERICAS 304,779 REST OF THE WORLD 73,837 TOTAL 1,049,788 KEY FIGURES BARRY CALLEBAUT 5 Cocoa price development IN GBP/TONNE (LONDON TERMINAL MARKET, 6-MONTH FORWARD PRICE) 1,700 1998 1999 2000 2001 2002 2003 2004 2005 2006 1,600 1,500 1,400 1,300 1,200 1,100 1,000 900 800 700 600 500 JAN JUL JAN JUL JAN JUL JAN JUL JAN JUL JAN JUL JAN JUL JAN JUL JAN JUL SEP Share price development Barry Callebaut vs. indices 01.09.03 = 100% 200% 150% 100% 50% 0% –50% SEP JAN APR JUL OCT JAN APR JUL OCT JAN APR JUL 2003/04 2004/05 2005/06 70% 60% 50% 40% 30% 20% 10% 0% BARRY CALLEBAUT AG SPI SWISS PERFORMANCE INDEX SPI SMALL & MID-CAP INDEX The bar chart shows the performance of the Barry Callebaut share in percent against the performance of the SPI Swiss Performance Index and the SPI Small & Mid-Cap Index in the respective one-year period. KEY FIGURES BARRY CALLEBAUT 6 Key Figures Barry Callebaut Change 2005/06 2004/055,6 Income Statement Sales revenue CHF m 4.9% 4,261.9 4,061.1 Sales volumes Tonnes –0.3% 1,049,788 1,052,467 EBITDA1 CHF m 9.0% 405.8 372.2 Operating profit (EBIT) CHF m 13.5% 293.1 258.3 Net profit (PAT) CHF m 17.4% 183.0 155.9 Cash flow2 CHF m 11.3% 347.9 312.6 Balance Sheet Total assets CHF m 3.0% 2,815.5 2,734.1 Net working capital CHF m 10.8% 920.9 830.8 Non-current assets CHF m 1.7% 1,188.6 1,168.2 Net debt CHF m –4.9% 906.9 953.5 Shareholders’ equity 8 CHF m 20.2% 1,001.9 833.4 Ratios Return on capital employed (ROCE)3 % 9.2% 17.9% 16.4% Return on equity (ROE) % –2.3% 18.3% 18.7% EBIT per tonne CHF 13.7% 279.2 245.5 Debt-to-equity ratio % –20.9% 90.5% 114.4% Shares Share price at year end CHF 48.1% 548 370 EBIT per share (issued) CHF 13.5% 56.7 50.0 Basic earnings per share CHF 17.1% 35.5 30.3 Cash earnings per share4 CHF 10.1% 66.9 60.8 Capital reduction and repayment per share CHF 31.3% 10.57 8.0 Other Employees Number –3.6% 8,236 8,542 1 EBIT + depreciation of property, plant and equipment + amortization of intangible assets 2 Operating cash flow before working capital changes 3 EBITA/average (capital employed – goodwill) 4 Operating cash flow before working capital changes/diluted shares outstanding 5 Key figures for 2004/05 have been calculated based on a pro forma basis excluding the impact of restructuring charges amounting to CHF 94 million 6 Certain comparatives have been restated or reclassified to conform with the current period’s presentation 7 Proposal of the Board of Directors to the shareholders (instead of a dividend) 8 Total equity attributable to the shareholders of the parent company KEY FIGURES BARRY CALLEBAUT 7 Company Profile. COMPANY PROFILE 8 OUR PORTRAIT OUR VISION Barry Callebaut is the world’s leading manufacturer of Our goal is to be Number One in all attractive cus tomer high-quality cocoa, chocolate, and confectionery products segments and in all major world markets. and the preferred solutions provider for the food industry. Our heritage, our knowledge of the chocolate business Our customers include: – from the cocoa bean to the finest product on the shelf – • Multinational branded consumer goods manufacturers and our innovative power in confections overall make us who incorporate our ingredients in their consumer the business partner of choice for the entire food industry. products and who increasingly also entrust us with the We seek to apply our constantly evolving expertise to molding and packaging of their finished products helping our customers grow their businesses, and we are • Artisanal and professional users of chocolate including passionate about creating and bringing to market new, chocolatiers, pastry chefs, bakeries, restaurants, hotels healthy products that taste great, delight all senses, and are and caterers fun to enjoy. • Food retailers for whom we make branded as well as Our strength comes from the passion and expertise of customer label products our people, for whom we strive to create an environment We also provide a comprehensive range of services in where learning is ongoing, entrepreneurship is encouraged, product development, processing, training and marketing. and creativity can flourish. Barry Callebaut is present in 24 countries, operates more We are working towards our vision with confidence than 30 production facilities, employs approximately 8,000 thanks to the strong commitment of all our colleagues people and generated sales of more than CHF 4 billion in around the world to our core values: customer focus – pas- fiscal year 2005/06. sion – entrepreneurship – team spirit – integrity. COCOA CHOCOLATE CUSTOMERS SEMI-FINISHED PRODUCTS CHOCOLATE PRODUCTS Consumer Products Food Manufacturers Butter Chocolate Artisanal Users Retailers Cocoa Liquor Vending mixes beans Cake Powder Compounds/ Fillings BARRY CALLEBAUT COMPANY PROFILE 9 Letter to Shareholders. LETTER TO SHAREHOLDERS 10 Dear Shareholders We aim to be the heart and engine of the chocolate industry. Our goal is to become Number One in all attractive customer segments and in all major world markets. We are pleased to report that the past fiscal year – the tenth since Belgian Callebaut merged with French Cacao Barry in 1996 – has seen us take a number of major steps along the path to reach that goal. Sales revenue rose by 4.9% to CHF 4,261.9 million. Sales volume development was flat, due to the deliberate discontinuation of volumes in the consumer business; sales volumes were 1,049,788 tonnes. Operating profit (EBIT) was up by 13.5% to CHF 293.1 million compared to fiscal year 2004/051. Net profit (PAT) grew by 17.4% to CHF 183.0 million. For detailed information about our business please see the sections “Overview of Business Performance” and “Consolidated Financial Statements”. The major events of fiscal year 2005/06 were the following: • Subsequent to the restructuring measures taken, our European consumer products business has achieved a positive result and is now operating on a solid basis. • The earnings power of our core business with industrial and artisanal customers was again con firmed.