Associated British Foods plc...Associated British Foods plc Financial Highlights Adjusted operating...

Associated British Foods plc


Review of preliminary results for year ended 16 September 2006

7 November 2006


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


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


(25) (41) (41) Amortisation of intangibles

20 10 10 Profits less losses on sale of PP&E

20 10 10 Profits less losses on sale of PP&E

Restated Total Exceptional Items

Before Exceptional

items

561

530

10

(5,486)

5,996

2006

(97)

(97)

(97)

(97) Exceptional Items

+1% 555 561 Adjusted operating profit

550 433 Operating profit

7 10 Share of jv’s and associates

(5,099) (5,583) Operating costs

+7% 5,622 5,996 Revenue

Change 2005 £m

Income Statement

* 2005 restated to reflect adoption of IFRS.

*


Income Statement

(47) (8) Provision for loss on termination of an operation

4% 580 559 Adjusted profit before tax*

379 301 Attributable to equity shareholders

(7) (7) Minority interests

386 308 Profit after tax

(141) (111) Tax

20% 527 419 Profit before tax

(137) (151) Financial expenses

162 149 Financial income

(1) (4) Profits less losses on sale of businesses

21% 550 433 Operating profit

Change 2005 2006 £m

* before amortisation of intangibles, profits less losses on the sale of PPE and profits less losses on sale of businesses.


Tax

141

(7)

(11)

159

£m

2005

(26) Credit on exceptional items

£m

111

(13)

150

2006

26.8% 26.5% Reported charge

Credit on intangible amortisation

27.4% 26.8% Underlying charge


Earnings and Dividends Per Share

+4% 18.00p 18.75p Dividends per share

21% 48.0p 38.1p Earnings per share

3% 52.5p 50.9p Adjusted earnings per share *

Change 2005 2006

* before amortisation of intangibles, profits less losses on the sale of PP&E, profits less losses on sale of businesses and exceptional items.


Balance Sheet

9 35 Net assets classified as held for sale

(155) (316) Deferred tax

51 Biological assets current

76 127 Net pension asset

3,877

29

3,848

3,877

(90)

212

(117)

484

2,306

1,152

2005

4,182

224 Minority interests

3,958 Equity shareholders’ funds

4,182

(70) Provisions

(298) Net (debt)/cash funds

(85) Current tax

597 Working capital

2,599 PP&E and other noncurrent assets

1,542 Intangible assets (including goodwill)

2006 £m


Cash Flow

(62) Provisions

144 Sale of Littlewoods stores

51 Loan repayment from Frontier

(8) (1) Pension cost less contributions

(182) (211) Food

(1,048) (498) Net cash flow before financing

(1,140) (496) (Acquisitions)/disposals

(139) (150) Dividends paid (incl minorities)

231 4 Free cash flow

43 28 Other

25 (11) Net interest and other income

(132) (117) Tax

(221) (221) Capital expenditure Primark

(54) (129) Working capital

161 177 Depreciation

548 551 Adjusted operating profit (before joint ventures and associates)

2005 2006 £m


23.6

n/a

23.6

n/a

33.4

21.1

23.5

21.9

%

2005

ROCE

18.9

n/a

18.9

n/a

23.1

21.6

17.2

20.2

%

2006

9.4

n/a

9.4

n/a

14.1

11.2

10.1

7.0

%

2006

9.9

n/a

9.9

n/a

13.9

11.1

13.0

7.1

%

2005

Margin

140 185 1,006 1,309 Retail

186 131 1,435 1,302 Primary food & agriculture

185 185 2,590 2,656 Grocery

65 82 583 729 Ingredients

555 561 5,622 5,996

8 Businesses disposed

555 561 5,614 5,996 Continuing businesses

(21) (22) Inter company/central costs

£m £m £m £m

2005 2006 2005 2006

Profit Revenue

By business

Segmental Analysis

* *

* excludes former Littlewoods stores not being converted into Primark

**

** adjusted operating profit


9.4

9.4

8.0

10.2

9.8

9.4

%

2006

Margin

9.9

9.9

6.9

9.3

10.0

11.2

%

2005

555 561 5,622 5,996

8 Businesses disposed

555 561 5,614 5,996 Continuing businesses

67 83 976 1,037 Asia Pacific

102 124 1,102 1,210 The Americas

72 73 720 746 Europe, Middle East & Africa

314 281 2,816 3,003 United Kingdom

£m £m £m £m

2005 2006 2005 2006

Profit Revenue

By geography

Segmental Analysis


31% 4%

Change

166 115 Operating Profit £m

700 671 Revenue £m 2006 2005 Primary food

Sugar

• a transformational year

• confirmation of details of regime change

• a strong response


31% 4%

Change



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


31% 4%

Change



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


Illovo plant locations


Cane irrigation


31% 4%

Change



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


Swaziland Dam


31% 4%

Change



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


20% 14%

Change


735 631 Revenue £m

2006 2005 restated

Agriculture

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


Primark

Cashmere Coat £35.00

Cashmere Sweater £25.00

Leather gloves in assorted colours £8.00

Large bag £6.00

Shoes £15.00 Sweater Dress £10.00


n/a (1) 19 Littlewoods +18% 141 166 Primark

n/a 17 141 Littlewoods +18% 989 1,168 Primark

Retail Change

Operating Profit £m

Revenue £m

2006 2005 restated

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


Primark • growth in 2007 driven by big increases in floor space • Littlewoods openings on schedule and virtually complete

+18% +18%

Change


989 1,168 Revenue £m

2006 2005 restated

Retail

Primark


Littlewoods stores conversions

Newcastle Metro Sutton Leeds White Rose Harlow Preston Luton Maidstone Exeter Portsmouth Mansfield Croydon Nottingham Swansea Southport Southend Darlington Bradford Glasgow Argyle Street

18 opened at financial year end

Camberley Glasgow Parkhead Inverness Burton on Trent Oldham Doncaster Dundee Blackpool Cheltenham Eastbourne

28 open now

Chesterfield Wolverhampton Poole Greenock Swindon Lincoln Hanley Dunfermline

36 by Christmas

Aberdeen Bedford Irvine Liverpool Brighton

41 by end 2007


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

+18% +18%

Change


989 1,168 Revenue £m

2006 2005 restated

Retail

Primark


level +3%

Change


2,590 2,656 Revenue £m

2006 2005 restated

Grocery

• 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

Twinings


level +3%

Change


2,590 2,656 Revenue £m

2006 2005 restated

Grocery

• 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

Twinings

• investment in new products and marketing • continued Asian growth • successful Thai launch of Hi9

Ovaltine


level +3%

Change


2,590 2,656 Revenue £m

2006 2005 restated

Grocery

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


Silver Spoon • £8m profit impact from EU sugar regime

change • growth in Billington’s and ‘Light’

level +3%

Change


2,590 2,656 Revenue £m

2006 2005 restated

Grocery

Ryvita • continued Ryvita crispbread growth • Minis now well established in healthy snack sector • launch of Goodness bars


level +3%

Change


2,590 2,656 Revenue £m

2006 2005 restated

Grocery

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


Allied Bakeries

• tough year

• new management team

• new products launched

• comprehensive recovery plan developed

level +3%

Change


2,590 2,656 Revenue £m

2006 2005 restated

Grocery

Australia

• major operational improvements at Sydney bakery in second half

• first low GI white loaf launched

• improvements in Meat & Dairy


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

+26% +25%

Change


583 729 Revenue £m

2006 2005 restated

Ingredients


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

+26% +25%

Change


583 729 Revenue £m

2006 2005 restated

Ingredients


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


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



Review of preliminary results for year ended 16 September 2006

7 November 2006


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.

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