Review of annual results
for the 52 weeks ended
12 September 2009
3 November 2009
Business Highlights
!! Good results in difficult economic times
!! Considerable progress in development of group
!! Strong cash performance and balance sheet
Financial Highlights
•! Group revenue up 12% to £9.3bn
•! Adjusted operating profit up 8% to £720m*
•! Adjusted profit before tax up 4% to £655m **
•! Adjusted earnings per share up 5% to 57.7p**
•! Dividends per share up 4% to 21.0p
•! Net investment in capital expenditure and acquisitions less disposals of £832m
•! EBITDA more than £1bn
•! Net debt of £999m
•! Operating profit up 13% at £625m, profit before tax down 6% to £495m and basic
earnings per share up 1% at 45.5p
* and ** - see notes at end
Income Statement
£m
2009
2008
Change
Revenue
Operating costs
Exceptional costs
Share of jv’s and associates
Profits less losses on sale of PP&E
Operating profit
Adjusted operating profit*
Profits less losses on sale of PP&E
Amortisation of non-operating intangibles
Inventory fair value adjustment
Exceptional items
9,255
8,235
+12%
(8,639)
(7,660)
-
10
(1)
625
720
(1)
(82)
(12)
-
(46)
15
10
554
664
10
(74)
-
(46)
+8%
Income Statement
£m
Operating profit
Profits less losses on sale of businesses
Finance income
Finance expense
Other financial income
Profit before tax
Tax
Profit after tax
Minority interests
Attributable to equity shareholders
Adjusted profit before tax**
2009
2008
Change
625
(65)
17
(95)
13
495
(112)
383
(24)
359
655
554
+13%
5
21
(74)
21
527
-6%
(136)
391
(34)
357
632
+4%
Tax
2009
£m
2008
£m
Underlying charge
166
25.3%
154
24.4%
(Credit)/charge on disposal of businesses and PP&E
Credit on goodwill & intangible amortisation
Credit on inventory fair value adjustment
Credit on exceptional items
(25)
(25)
(4)
-
9
(21)
-
(6)
Reported charge
112
22.6%
136
25.8%
Earnings and Dividends Per Share
Adjusted earnings per share *
Earnings per share
Dividends per share
p
p
p
2009
57.7
2008
Change
54.9
+5%
45.5
45.2
+1%
21.0
20.25
+4%
Balance Sheet
£m
Intangible assets (including goodwill)
PP&E and other non-current assets
Net assets classified as held for sale (excl cash)
Working capital
Biological assets - current
Current tax
Net debt
Other financial (liabilities)/assets
Deferred tax
Provisions
Net pension (liability)/asset
Equity shareholders’ funds
Minority interests
2009
1,913
3,905
102
970
101
(113)
(999)
(64)
(212)
(421)
(106)
5,076
4,748
328
5,076
2008
1,815
3,349
19
905
80
(89)
(791)
29
(348)
(186)
61
4,844
4,554
290
4,844
Cash Flow
£m
Adjusted operating profit (before joint ventures and associates)
Depreciation and amortisation of operating intangibles
Working capital
Provisions
Capital expenditure - Primark
- Food
Purchase of intangibles
Tax
Net interest and other income
Pension cost less contributions
Other
Free cash flow
Dividends paid (incl minorities)
Quota renunciation compensation
(Acquisitions)/disposals
Net cash flow before financing
2009
710
293
117
(20)
(159)
(386)
(24)
(135)
(77)
(40)
(79)
200
(184)
101
(179)
(62)
2008
649
236
(110)
(6)
(152)
(350)
(70)
(110)
(55)
(18)
(59)
(45)
(177)
-
(165)
(387)
Segmental Analysis
By business
Revenue
*
Profit
Margin
ROCE
2009
2008
2009
2008
2009
2008
2009
2008
Grocery
3,188
2,820
Sugar & agriculture
2,579
2,134
989
824
Ingredients
Retail
£m
£m
£m
£m
191
223
88
194
186
78
%
6.0
8.6
8.9
%
6.9
8.7
9.5
2,314
1,933
252
233
10.9
12.1
Inter company/central costs
-
-
Continuing businesses
9,070
7,711
(34)
720
(28)
663
Businesses disposed
185
524
-
1
9,255
8,235
720
664
n/a
7.9
n/a
7.8
n/a
8.6
n/a
8.1
%
17.9
13.3
16.0
17.8
n/a
15.4
n/a
%
18.6
14.4
18.0
18.6
n/a
16.6
n/a
15.4
16.6
Segmental Analysis
By geography
Revenue
Profit*
Margin
2009
2008
2009
2008
2009
2008
United Kingdom
4,140
3,766
£m
£m
£m
354
Europe & Africa
2,027
1,489
219
The Americas
Asia Pacific
1,068
860
1,835
1,596
85
62
Continuing businesses
9,070
7,711
720
Businesses disposed
185
524
-
£m
309
159
105
90
663
1
9,255
8,235
720
664
%
8.6
10.8
8.0
3.4
7.9
n/a
7.8
%
8.2
10.7
12.2
5.6
8.6
n/a
8.1
Sugar
Revenue £m
Operating Profit £m
2009
1,575
189
2008 Change
1,267
+24%
153
+24%
Overview
•! changes to EU sugar regime behind us
•! EU position strengthened
–! Azucarera Ebro acquisition
–! sale of Polish sugar
–! access to LDC sugars
•! ambitious expansion continuing in Africa
•! difficult year in China
Sugar
EU sugar
Revenue £m
Operating Profit £m
2009
1,575
189
2008 Change
1,267
+24%
153
+24%
•! supply and demand broadly balanced, prices more stable
•! profit increase, recent trend of decline reversed
•! no further regime changes until October 2015
UK
•!
favourable growing conditions, high yield and extraction rates
•! 1.19 million tonnes sugar
•! strong euro, favourable energy cost benefit
Spain
•! good early progress
Sugar
Revenue £m
Operating Profit £m
2009
1,575
189
2008 Change
1,267
+24%
153
+24%
UK biofuels
•! Wissington
–! strong profit contribution
•! Vivergo
–! construction progressing well at Hull
–! commissioning due autumn 2010
–! AB Agri contracted to supply wheat from Frontier and sell
distillers grain co-products
Sugar
Revenue £m
Operating Profit £m
2009
1,575
189
2008 Change
1,267
+24%
153
+24%
Illovo
•! excellent operating result, profit ahead
–! higher local market prices
–! world sugar price increase
–! currency gain outside South Africa
•!
recent rand strength
•! Zambia capacity doubled
•! South Africa streamlined
–! Umfolozi and Pongola mills sold
–! new joint venture at Gledhow
•!
rand 3bn rights issue to fund expansion plans
Nakambala
Sugar
Revenue £m
Operating Profit £m
2009
1,575
189
2008 Change
1,267
+24%
153
+24%
China
•! a difficult year
low first half sugar prices
•!
•! prices rallied in second half
South – cane sugar
•! profitable business
•! new mill commissioned – now five mills
North East – beet sugar
•! Yi’an completed
•!
•! management capability built
•! agricultural yield improvement
focus production on seven factories
Agriculture
Revenue £m
Operating Profit £m
2009
1,004
34
2008 Change
867
+16%
33
+3%
AB Agri
•! another exceptional year
•! UK animal feeds - increased presence in UK blends market
- Carbon Trust accredited greenhouse gas reduction
model for dairy farms
•! Frontier
- excellent grain trading performance
- increased demand for agricultural inputs
•! AB Vista
- enzymes development and sales growth
•! China
- good profit growth
- new mill in Henan opened
Retail
Primark
Revenue £m
Operating Profit £m
2009
2,314
252
2008
Change
1,933
+20%
233
+8%
•!
•!
•!
•!
excellent trading throughout year
7% like-for-like sales growth
12 new stores including five in Spain, one each in Netherlands,
Germany and Portugal
operating profit margin decline
–!
fixed overhead of new UK distribution centre
–! gross margin decline in second half – weakness of sterling but
some mitigation from better buying, lower freight cost and sales
mix
Bristol store
Primark - selling space expansion
UK
stores
sq ft
‘000
Republic of
Ireland
Spain
Other
Total
sq ft
‘000
stores
sq ft
‘000
stores
sq ft
‘000
stores
sq ft
‘000
stores
Sep 2008
4,140
134
970
38
270
9
-
Sep 2009
4,380
136
970
38
410
14
120
-
3
5,380
181
5,880
191
+6%
-
+52%
n/a
+9%
Retail
Revenue £m
Operating Profit £m
2009
2,314
252
2008
Change
1,933
+20%
233
+8%
Currently planned to open in 2009/10
•! UK
- four new stores
•! Spain
- four new stores
•! Germany
- Frankfurt
•! Portugal
•! Belgium
- Porto
- Liege
Grocery
2009
2008 Change
Revenue £m
3,188
2,820
+13%
Operating Profit £m
191
194
-2%
Overview
•! major developments
–! packaged oil joint venture in US
–!
integration of meat business in Australia
–! Jordans and Ryvita merged
–! Patak’s and Blue Dragon
•!
•!
very good progress by Allied Bakeries and Twinings Ovaltine
profit held back
–!
first half problem at ACH in the US
–! margin reduction in UK retail sugar
Grocery
2009
2008 Change
Revenue £m
3,188
2,820
+13%
Operating Profit £m
191
194
-2%
Ovaltine
•!
growth in developing markets: Thailand, Brazil, Nigeria
Twinings
•! UK premium teas slowed but Everyday performed well
•!
consultation on major manufacturing reorganisation announced
–! new factory in Poland
–! doubling capacity in China, focusing on US, Asia Pacific markets
–! expansion and automation of Andover
Grocery
2009
2008 Change
Revenue £m
3,188
2,820
+13%
Operating Profit £m
191
194
-2%
Allied Bakeries
•!
•!
•!
strong sales and good profit improvement
Little Big Loaf launched – full sized slices, just fewer of them!
first UK bread brand to win accreditation from the Carbon Trust
Grocery
2009
2008 Change
Revenue £m
3,188
2,820
+13%
Operating Profit £m
191
194
-2%
Silver Spoon
•! margin reduction in UK retail sugar
•!
•!
increased demand for home baking products
closure of Newark packaging plant and transfer to Bury
Jordans Ryvita
•!
•!
businesses integrated
Jordans improving after slow start
•! Ryvita crispbread growth
Grocery
2009
2008 Change
Revenue £m
3,188
2,820
+13%
Operating Profit £m
191
194
-2%
Westmill
•!
•!
recessionary impact on ethnic foodservice spending
development of main brands
World Foods
•!
benefits from Blue Dragon and Patak’s combination
•! major relaunch of Patak’s brand
Patak’s paste relaunch
!! Demystifying pastes
–! making them easier to understand
–! and easier to use
!! Making pastes better for you (50% less salt and fat)
!! Explaining the value for money
Grocery
2009
2008 Change
Revenue £m
3,188
2,820
+13%
Operating Profit £m
191
194
-2%
ACH
•!
first half
long positions in vegetable oil futures
–!
–! Mazola, Capullo volumes down
•!
second half improvement
–! oil futures fully utilised
–! Mazola volumes recovering, consumer prices down
–! competitive market for Capullo
good year for home baking and spices
•!
Stratas
•!
•!
•! ACH facilities to close spring 2010
progress on integration
production transferring on phased basis
Grocery
2009
2008 Change
Revenue £m
3,188
2,820
+13%
Operating Profit £m
191
194
-2%
Australia
•!
profit progress
–!
recovery of higher input prices
–! strong milling performance
•!
consolidation of baking in New South Wales completed
•! meat rationalisation
–! closure of Perth factory
–! expansion of Castlemaine plant under way
Ingredients
2009
2008 Change
Revenue £m
Operating Profit £m
989
88
824
+20%
78
+13%
Overview
•! capacity expansion, a major feature
–! enzymes in Finland complete
–! yeast, yeast extracts in China to complete 2010
•! benefit of currency translation
Ingredients
2009
2008 Change
Revenue £m
Operating Profit £m
989
88
824
+20%
78
+13%
AB Mauri
•! good sales growth in all regions
•! South American yeast, technical ingredients in the Americas strong
•! effluent treatment investment
ABF Ingredients
•! enzyme growth
•!
lower sales volumes, pressure on margins
Major capital projects completed
A number of major projects were completed during the year:
Sugar
Sugar
Sugar
Sugar
Retail
Spanish cane refinery
Zambia capacity
China North, Yi’an capacity
China South, Jinchengjiang new mill
12 Primark stores including Bristol
Grocery
UK sugar packaging
Ingredients
Enzyme capacity
Continuation of long-term capital investment
Significant investment is expected in 2009/10:
Expected completion*
Sugar
Vivergo biofuels
end 2010
Sugar
Africa development: Swaziland, Mali
2011/12
Retail
Store expansion across Europe
continuing
Grocery
Castlemaine factory
end 2010
Grocery
Twinings manufacturing
2011/12
Ingredients
China yeast, yeast extracts
early 2010
* calendar year
Financial strength
!! Landmark in cash generating ability - EBITDA over £1bn
!! Net debt at £999m
!! Substantial capability for investment
Summary
!! Good results in difficult economic times
!! Considerable progress in development of group
!! Strong cash performance and balance sheet
Review of annual results
for the 52 weeks ended
12 September 2009
3 November 2009
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 non-operating intangibles, profits less losses on the sale of PP&E, inventory fair value
adjustment and exceptional items
before amortisation of non-operating intangibles, profits less losses on the sale of PP&E, inventory fair value
adjustment, profits less losses on the sale and closure of businesses and exceptional items
All figures stated after amortisation of intangibles, profits or losses on the sale of PP&E, inventory fair value adjustment,
profits less losses on the sale and closure of businesses and exceptional items are shown on the face of the
consolidated income statement.