Interim Results

Associated British Foods PLC 24 April 2007 24 April 2007 Associated British Foods plc announces its interim results for the 24 weeks ended 3 March 2007 Investment in Primark and sugar drives growth Highlights • Adjusted operating profit up 7% to £272m* • Group revenue up 12% to £3,220m • Adjusted profit before tax up 5% to £268m ** • Adjusted earnings per share level at 23.3p ** • Interim dividend per share up 4% to 6.5p • Net investment in capital and acquisitions over the last year of £720m • Net debt of £350m • Basic earnings per share down 9% to 19.2p and profit before tax down 15% to £198m, reflecting increases in the charges for the amortisation of intangibles and the net loss on the sale of businesses and fixed assets George Weston, Chief Executive of Associated British Foods, said: 'This is a good set of results. The satisfactory growth in revenue and operating profit in the first half reflects the substantial investment made by the group in capital and acquisitions last year. The advances made by Primark and sugar are the beginning of the benefits we expect from this investment and represent a significant development for these businesses.' * before amortisation of intangibles and profits less losses on the sale of property, plant & equipment ** before amortisation of intangibles, profits less losses on the sale of property, plant & equipment and losses on the sale of businesses All figures stated after amortisation of intangibles, profits or losses on the sale of businesses and property, plant & equipment are shown on the face of the consolidated income statement. For further information please contact: Associated British Foods: Until 1500 only George Weston, Chief Executive Geoff Lancaster, Head of External Affairs John Bason, Finance Director Mobile: 07860 562 659 Tel: 020 7638 9571 Jonathan Clare/Chris Barrie/Fiona Bradshaw, Citigate Dewe Rogerson Tel: 020 7638 9571 After 1500 John Bason, Finance Director Tel: 020 7399 6500 ASSOCIATED BRITISH FOODS plc INTERIM REPORT FOR THE 24 WEEKS ENDED 3 MARCH 2007 CHAIRMAN'S STATEMENT This half year shows the early benefits of the investment made last year and has been a period of considerable activity which has seen the group perform well against a backdrop of challenging market conditions. In particular the results include, for the first time, those of Illovo Sugar Limited, in which we acquired a 51% interest in September 2006. The rapid roll-out of new Primark stores contributed some £200m of additional sales. The Kingsmill brand was relaunched in February. Energy costs eased during the period but the currency translation impact of the strengthening of sterling, particularly against the US dollar, reduced operating profit year-on-year by £8m. Adjusted operating profit increased by 7% to £272m. Net interest paid rose in the period reflecting the major investment of the past year. Adjusted profit before tax increased by 5% to £268m. Minorities' share of adjusted profits rose sharply due to the sizeable minority interests in Illovo. Adjusted earnings per share, reflecting this, were level with the previous year. With the acquisition of Illovo, our sugar activities now extend to 24 plants operating in nine countries in three continents. This important strategic step for the business not only provides a substantial growth opportunity within sub-Saharan Africa but also supports our intention to develop our EU sales capacity by harnessing the tariff free trading arrangements afforded from 2009/ 10 to the Least Developed Countries (LDCs). Illovo grows and processes cane sugar in four LDC countries. In addition to the contribution from Illovo, our other sugar businesses all showed progress in the first half. It is now accepted by the sugar industry in Europe that the restructuring process in its current form will fall short of the 6m tonnes target for voluntary renunciation of quota by an estimated 2m tonnes. We are pleased that the industry is actively engaging with the European Commission to determine how the restructuring programme can be modified to speed up the process of restoring the balance between consumption and production in the EU market. Furthermore, the Commission has demonstrated its desire to manage the supply of sugar in the EU in 2007/8 with its announcement of an advanced quota withdrawal of 2m tonnes for the beet industry. British Sugar will commission the UK's first bioethanol plant at Wissington in June 2007 with commercial sales of ethanol starting later in the Summer. This plant will have the capacity to deliver 55,000 tonnes or 70m litres per year of ethanol to the UK market for blending with petrol. British Sugar is also continuing to develop plans for a cereal based biofuel facility in the UK. In grocery the major issue was the disappointing results from the UK bakeries. Following the relaunch of the Kingsmill brand in February better trading is expected in the second half. The North American and Australian grocery businesses made good progress. Primark opened 23 new stores in the period adding 0.9 million sq ft of selling space, net of the closure of five adjacent smaller stores. By the half year, all but four of the former Littlewoods stores had been converted and were trading as Primark stores. Primark's sales and profit in the first half were 36% and 28% respectively ahead of the previous year mainly due to the additional retail selling space. The identification of further new sites, in all countries where Primark operates, continues. This is expected to result in significant further expansion in the next two years, although not on the scale of the past year. The new, much larger, distribution depot in the UK is now fully operational and working well. During the period we disposed of our Scandinavian food distributor and our commodity food polyols business in the US for total proceeds of £60m. There will be a phased closure of the polyols manufacturing plant in Delaware but provision for the expected loss associated with the disposal and closure has been made in these accounts and is included in the net loss of £39m on the sale of businesses. Cash flow in the period was strong. Net borrowings at the end of the period amounted to £350m as against £162m a year ago. The cash consideration for Illovo in September 2006 plus its debt totalled £382m, and so the other cash flows over the past year have been positive. The group's financial capacity remains very substantial. Board Changes In my last annual statement I reported in full on the appointment as directors on 2 November 2006 of Lord Jay of Ewelme and Mr Javier Ferran. On 28 February it was announced that Jeff Harris will retire from the board at the conclusion of the board meeting on 18 April. Jeff's contribution both as a director and as chairman of the Audit committee has been outstanding for which we thank him. Peter Smith was appointed to the board on 28 February and will succeed Jeff Harris as chairman of the Audit committee. Mr Smith is also currently chairman of Savills plc and a non-executive director of Templeton Emerging Markets Investment Trust plc and NM Rothschild & Sons Limited. I am confident he will make a valuable contribution to ABF. Dividends The board has decided that the interim dividend will be 6.5p, an increase of 4% on last year. This dividend will be paid on 2 July 2007 to shareholders registered at the close of business on 1 June 2007. Outlook The successful outcome of the European Commission's refinement of the terms of the sugar regime restructuring, due over the coming months, will be of great importance. Following the extensive Primark store opening programme we will now take the opportunity to optimise the performance of these new stores. Our businesses are well placed to face the competitive conditions in the markets in which they operate. Despite continuing adverse currency translation impacts, we expect progress in adjusted operating profit and in adjusted earnings in the remainder of the year. Martin Adamson Chairman 24 April 2007 OPERATING REVIEW Group revenue increased by 12% to £3,220m and adjusted operating profit by 7% to £272m. These advances are the result of the substantial investments made by the group in capital and acquisitions last year. Profit from our sugar businesses increased by 64% following the acquisition of a 51% interest in Illovo Sugar Limited in September 2006, and the benefit of capacity increases and efficiency improvements in existing sugar factories. Primark's profit increased by 28% reflecting the current extensive store opening programme. The increase in adjusted operating profit has been achieved despite an estimated total impact of £28m on the profits of Primary Food and Grocery arising from changes to the EU sugar regime. Although a disappointing performance by Allied Bakeries led to a reduction in grocery profit, a major relaunch of Kingsmill has now been implemented. Ingredients made very good progress but the profit increase was held back by the impact of currency translation. PRIMARY FOOD & AGRICULTURE Primary Food 2007 2006 Revenue £m 579 282 Operating profit £m 87 53 Agriculture 2007 2006 Revenue £m 322 296 Operating profit £m 7 8 In Primary Food, the acquisition of Illovo led to a doubling of revenue and a 64% increase in profit. Profit in the UK was in line with the same period last year. The business benefited from a very efficient campaign, additional quota acquired, lower energy costs and earlier exports of sugar. These factors were offset by the further impact on profit of sugar regime reform amounting to £24m arising from the temporary quota cut and the cost of the restructuring levy which exceeded reduced beet costs, although sugar prices were more stable. In Poland profit was ahead of last year benefiting from an excellent campaign, factory rationalisation and improved retail prices. Operations in the UK and Poland once again achieved improvements in production performance and the Glinojeck factory performed ahead of expectations following completion of its major expansion programme. The sugar crop was 1.16m tonnes in the UK and 0.21m tonnes in Poland. China performed very well with a record crop of over 0.5m tonnes. This crop, combined with production efficiencies, exceptionally high sugar yields and consistent prices, drove an increase in profit. Such is the competition from alternative, higher value crops in China that farmers, in conjunction with local and provincial governments, required higher prices for cane in order to justify their continued farming of this crop. These higher prices partly offset the profit improvement in this business. Illovo's contribution to this result was ahead of our expectations at the time of acquisition. Illovo's earnings for the full year to 31 March 2007 were over 40% ahead of those achieved in its prior year. This is despite production in South Africa and Tanzania being significantly lower than planned due to the combination of extended drought and then unusually high rainfall at the end of the growing season. Malawi and Zambia both delivered strong manufacturing performances. The recent announcement of the planned £100m investment to double sugar production in Zambia over the next two years is an example of the exciting growth opportunities available to this business. Stronger volumes and margins benefited our UK agricultural business and Frontier, the arable joint venture with Cargill, delivered a strong profit increase from revenue growth and cost synergies. In China, the inability to pass on the impact of high raw material costs led to a reduction in the profit for animal feeds. GROCERY 2007 2006 Revenue £m 1,226 1,257 Operating profit £m 64 84 Grocery revenue and profit were lower than last year. The reduction in profit was primarily a result of a poor performance by Allied Bakeries, the currency translation impact of the weaker dollar on the results of our US businesses and lower sugar prices in Silver Spoon. ACH continued to perform well in both the US and Mexico. Sales of Mazola increased in a US consumer oil category which has stabilised following the decline last year. In January we announced the rationalisation of our commodity oils business. Oil processing at Jacksonville will cease and we will exit the supply of certain low margin products. A charge of £2m relating to this rationalisation was made in the first half with a further £3m to be taken in the second half. Capullo in Mexico showed further strong sales growth. In spices, the development of the premium brand, Spice Islands, continued and was complemented by the introduction of two new product ranges. The competitive bread market in the UK delayed the recovery of increased wheat prices last Autumn, volumes were lower than expected and profitability suffered as a result. We have now implemented a major relaunch of the Kingsmill brand with improved products and new packaging. Recipes have been improved to exclude artificial preservatives and loaves are now larger and have a softer texture. Bread prices have been increased and strong marketing support, including television advertising, will continue into the second half. International hot beverages continued to deliver good sales growth with market share gains in its main strategic markets. Progress in the Twinings brand was driven by a strong performance in the UK with further growth in sales of Everyday, green tea, speciality black teas and infusions. Twinings sales were also strong in Australia, the US and other international export markets, particularly Italy and Russia. Thailand continued to be the major driver of Ovaltine brand growth which benefited from new products and strong marketing support. In October we sold our Scandinavian food distributor and the profit on this disposal is included in these results. Silver Spoon's profit was impacted by the reduction in selling prices sustained last year. Billington's grew strongly and significant new business for Fairtrade sugar, which is packed in the UK and supplied by our African business, Illovo, was secured. The integration of Westmill's various ethnic food businesses was completed successfully and good progress is being made with the consolidation of its logistics and warehousing at a site adjacent to the main office in North London. At Ryvita further investment was made in marketing and in its supply chain. Growth in Ryvita Minis, Goodness bars and the premium crispbread range partially offset a decline in standard crispbread. In Australia, bread prices were increased to recover significantly higher wheat costs following the drought in Australia and higher world prices. Bakery volumes grew and major improvements were made in the operation of the Sydney bakery. Our new bakery in Wuhan, China, started trading in January supplying rolls to the rapidly expanding foodservice market. This bakery will provide a platform for the development of local retail sales and market opportunities elsewhere in China. INGREDIENTS 2007 2006 Revenue £m 345 322 Operating profit £m 33 32 Revenue was ahead by 7% to £345m and profit by 3% to £33m. Both revenue and profit were adversely affected by currency translation and the underlying performance was very good with a profit increase of 9%. The yeast business demonstrated good progress with price increases in many markets to recover higher molasses and energy costs. This drove a particularly strong recovery in North America. In China, production capacity was expanded to keep pace with the very strong growth in domestic demand. Resources in our bakery ingredients business were strengthened as it continued to develop well, albeit from a low base. Good organic growth was achieved in yeast and particularly in bakery ingredients in developing countries where it was driven by the use of our bread ingredient technology and the launch of a range of new products to the craft bakery sectors. Enzymes and proteins have seen good sales growth in the period, particularly in the US and Asia. Enzyme sales were strong, especially to the textile and animal feed markets, but profit was affected by higher raw material costs. Investment in capacity expansion is being made at the Finnish enzyme factory to meet increasing demand. Profit increased in proteins with higher volumes and improved pricing. Capacity expansion is underway at both of the yeast extract plants and for milk protein isolates. A new protein specialities group, comprising specialist sales and product development expertise, has been created to build our capability in this high value-added sector. We completed the sale of our commodity food polyols business in the US in February and there will be a phased closure of the old manufacturing plant in Delaware. The loss on disposal of this business, including the write-off of goodwill and the costs of the plant closure, is provided for in these accounts. The business supplying antacids, excipients including polyols, and drug delivery systems to pharmaceutical companies has been retained. RETAIL 2007 2006 Primark Revenue £m 721 530 Operating profit £m 91 71 Littlewoods Revenue £m - 141 Operating profit £m - 16 Primark's results were substantially ahead of last year with a revenue increase of 36% to £721m and profit ahead 28% to £91m. The increases resulted primarily from the additional retail selling space from an extensive store opening programme. As expected, the operating profit margin fell from 13.4% to 12.6% primarily as a result of the higher depreciation charge associated with the recent capital investment. Like-for-like sales were level with last year in the first half despite the previously highlighted impact on existing stores of adding 1.5 million sq ft of new space. Our estimate for like-for-like sales growth in stores unaffected by new openings is 6%. Trading in the new stores has been encouraging. Delivering the store opening programme for the first half, on time and to budget, was a major achievement for the management team. 23 new stores were opened and five smaller stores were closed to give 161 stores with 4.4 million sq ft of retail selling space at the half year. All but four of the 41 former Littlewoods stores were trading by the half year. New store openings: Aberdeen Dublin - Swords Lincoln Blackpool Dundee Murcia - Spain Burton-on-Trent Dunfermline Oldham Camberley Eastbourne Plymouth Cheltenham Glasgow - Parkhead Poole Chesterfield Greenock Swindon Coventry Hanley Wolverhampton Doncaster Inverness Stores closed: Aberdeen (resite) Doncaster (resite) Swindon (resite) Burton-on-Trent (resite) Dundee (resite) Our new store openings included our second store in Spain and we are very encouraged by early trading in both Spanish stores. We will open a further eight stores in the second half taking the total retail selling space to 4.7 million sq ft by the financial year end. Six of these stores were acquired outside the Littlewoods transaction which demonstrates that Primark's heightened profile makes attractive high street locations easier to secure, as evidenced by the highly successful opening of the 70,000 sq ft store on London's Oxford Street on 5 April. George Weston Chief Executive CONSOLIDATED INCOME STATEMENT 24 weeks 24 weeks 52 weeks ended ended ended 3 March 4 March 16 September 2007 2006 2006 £m £m £m Note Revenue 1 3,220 2,887 5,996 Operating costs before exceptional items (2,994) (2,651) (5,486) Exceptional items - - (97) 226 236 413 Share of profit after tax from joint ventures 3 3 10 and associates Profits less losses on sale of property, plant 12 - 10 & equipment Operating profit 241 239 433 Adjusted operating profit 1 272 255 561 Profits less losses on sale of property, plant 12 - 10 & equipment Amortisation of intangibles (43) (16) (41) Exceptional items - - (97) Profits less losses on sale of businesses (39) (5) (4) Provision for loss on termination of an - - (8) operation Profit before interest 202 234 421 Financial income 71 73 149 Financial expenses (75) (73) (151) Profit before taxation 198 234 419 Adjusted profit before taxation 268 255 559 Profits less losses on sale of property, plant 12 - 10 & equipment Amortisation of intangibles (43) (16) (41) Exceptional items - - (97) Profits less losses on sale of businesses (39) (5) (4) Provision for loss on termination of an - - (8) operation Taxation - UK (25) (35) (60) - Overseas (18) (31) (51) 2 (43) (66) (111) Profit for the period 155 168 308 Attributable to: Equity shareholders 152 166 301 Minority interests 3 2 7 Profit for the period 155 168 308 Basic and diluted earnings per ordinary share 3 19.2 21.0 38.1 (pence) CONSOLIDATED BALANCE SHEET At At At 3 March 4 March 16 September 2007 2006 2006 Note £m £m £m Non-current assets Intangible assets 1,454 1,239 1,542 Property, plant & equipment 2,548 2,203 2,479 Biological assets 46 - 46 Investments in joint ventures 39 39 54 Investments in associates 18 18 15 Employee benefits assets 193 96 169 Deferred tax assets 87 78 82 Other receivables 5 - 5 Total non-current assets 4,390 3,673 4,392 Current assets Assets classified as 3 77 53 held for sale Inventories 895 854 681 Biological assets 52 - 51 Trade and other receivables 797 758 913 Other investments 20 201 53 Cash and cash equivalents 364 354 349 Total current assets 2,131 2,244 2,100 TOTAL ASSETS 6,521 5,917 6,492 Current liabilities Liabilities classified as held for - - (11) sale Interest-bearing loans and (80) (166) (531) overdrafts Trade and other payables (1,016) (797) (997) Income tax (71) (99) (85) Provisions (42) (11) (49) Total current liabilities (1,209) (1,073) (1,673) Non-current liabilities Interest-bearing loans (654) (551) (176) Provisions (26) (38) (21) Deferred tax liabilities (407) (251) (398) Employee benefits (41) (21) (42) liabilities Total non-current liabilities (1,128) (861) (637) TOTAL LIABILITIES (2,337) (1,934) (2,310) NET ASSETS 4,184 3,983 4,182 Equity Issued capital 47 47 47 Other reserves 173 173 173 Translation reserve (58) 78 (29) Hedging reserve (5) 1 (6) Retained earnings 3,819 3,656 3,773 3,976 3,955 3,958 Minority interests 208 28 224 TOTAL EQUITY 6 4,184 3,983 4,182 CONSOLIDATED CASH FLOW STATEMENT 24 weeks 24 weeks 52 weeks ended ended ended 3 March 4 March 16 September 2007 2006 2006 £m £m £m Cash flow from operating activities Profit before taxation 198 234 419 Add back non-operating items Profits less losses on sale of (12) - (10) property, plant & equipment Profits less losses on sale of 39 5 4 businesses Provision for loss on termination of - - 8 an operation Exceptional items - - 97 Financial income (71) (73) (149) Financial expenses 75 73 151 Adjustments for Share of profit from joint ventures (3) (3) (10) and associates Amortisation 43 16 41 Depreciation 109 95 177 Pension cost less contributions (14) 3 (1) Increase in inventories (224) (279) (29) Decrease/(increase) in receivables 108 (58) (178) Increase in payables 54 14 78 Decrease in provisions (18) (45) (62) Cash generated from operations 284 (18) 536 Income taxes paid (48) (69) (117) Net cash from operating activities 236 (87) 419 Cash flows from investing activities Dividends received from joint - - 1 ventures Dividends received from associates - - 3 Purchase of property, plant & (227) (156) (432) equipment Purchase of intangibles (7) - (13) Sale of property, plant & equipment 22 83 181 Purchase of subsidiary undertakings (1) (100) (496) Sale of subsidiary undertakings 60 - - Interest received 7 22 36 Net cash from investing activities (146) (151) (720) Cash flows from financing activities Dividends paid to minorities (9) (4) (6) Dividends paid to equity shareholders (99) (95) (144) Interest paid (24) (25) (47) Decrease in other current asset investments 32 70 216 Financing Decrease in short-term loans (360) (372) (46) Increase/(decrease) in long-term loans 479 - (365) (Increase)/decrease in own shares held (9) (1) 1 Net cash from financing activities 10 (427) (391) Net increase/(decrease) in cash and 100 (665) (692) cash equivalents Cash and cash equivalents at the 198 894 894 beginning of the period Effect of movements in foreign exchange (1) 3 (4) Cash and cash equivalents at the end 297 232 198 of the period CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE 24 weeks 24 weeks 52 weeks ended ended ended 3 March 4 March 16 September 2007 2006 2006 £m £m £m Actuarial gains on defined benefit schemes - - 43 Deferred tax associated with defined - - (12) benefit schemes Effect of movements in foreign exchange (40) 49 (88) Tax on effect of movements in foreign exchange - (2) - Net gain/(loss) on hedge of net 1 (10) 14 investment in foreign subsidiaries Movement in cash flow hedging position 1 (8) (13) Net (loss)/gain recognised directly in equity (38) 29 (56) Profit for the period 155 168 308 Total recognised income and expense 117 197 252 for the period Adjustments relating to the adoption - 9 7 of IAS 32 and IAS 39 on 18 September 2005 (Equity shareholders) 117 206 259 Attributable to: Equity shareholders 124 194 246 Minority interests (7) 3 6 117 197 252 NOTES TO THE INTERIM REPORT 1. Segmental analysis Revenue Adjusted operating profit 24 weeks 24 weeks 52 weeks 24 weeks 24 weeks 52 weeks ended ended ended ended ended ended 3 March 4 March 16 September 3 March 4 March 16 September 2007 2006 2006 2007 2006 2006 Business segments £m £m £m £m £m £m Grocery 1,226 1,257 2,578 64 84 182 Primary Food 579 282 671 87 53 115 Agriculture 322 296 623 7 8 15 Ingredients 345 322 683 33 32 79 Retail 721 671 1,309 91 87 185 Central - - - (13) (11) (22) 3,193 2,828 5,864 269 253 554 Businesses disposed: Grocery 7 35 78 - 1 3 Agriculture - 3 8 - - 1 Ingredients 20 21 46 3 1 3 3,220 2,887 5,996 272 255 561 Geographical segments United Kingdom 1,503 1,484 2,995 114 133 280 Europe, Middle East & 614 277 668 62 35 70 Africa The Americas 544 576 1,164 58 58 121 Asia Pacific 532 491 1,037 35 27 83 3,193 2,828 5,864 269 253 554 Businesses disposed: United Kingdom - 3 8 - - 1 Europe, Middle East & 7 35 78 - 1 3 Africa The Americas 20 21 46 3 1 3 3,220 2,887 5,996 272 255 561 1. Segmental analysis - 24 weeks ended 3 March 2007 Business segments Primary Elimina- Grocery Food Agriculture Ingredients Retail Central tions Total £m £m £m £m £m £m £m £m Revenue from continuing 1,231 624 323 368 721 - (74) 3,193 operations Businesses disposed 7 - - 20 - - - 27 Internal revenue (5) (45) (1) (23) - - 74 - Revenue from external 1,233 579 322 365 721 - - 3,220 customers Adjusted operating profit 64 87 7 33 91 (13) - 269 from continuing operations Businesses disposed - - - 3 - - - 3 Adjusted operating profit 64 87 7 36 91 (13) - 272 Amortisation of (6) (24) - (13) - - - (43) intangibles Profits less losses on 4 - - - 8 - - 12 sale of property, plant & equipment Profits less losses on 6 - - (39) (6) - - (39) sale of businesses Profit before financial 68 63 7 (16) 93 (13) - 202 income, financial expenses and taxation Financial income 71 - 71 Financial expenses (75) - (75) Taxation (43) - (43) Profit for the period 68 63 7 (16) 93 (60) - 155 Segment assets (excl. 1,804 1,497 184 949 1,352 14 - 5,800 investments in associates and joint ventures) Investments in associates 9 7 28 13 - - - 57 and joint ventures Segment assets 1,813 1,504 212 962 1,352 14 - 5,857 Cash and cash equivalents 364 - 364 Employee benefits assets 193 - 193 Deferred tax assets 87 - 87 Other investments 20 - 20 Segment liabilities (339) (339) (54) (130) (190) (38) - (1,090) Interest-bearing loans and (734) - (734) overdrafts Income tax (71) - (71) Deferred tax liabilities (407) - (407) Employee benefits (35) - (35) liabilities Net assets 1,474 1,165 158 832 1,162 (607) - 4,184 Capital expenditure 38 48 3 18 94 - - 201 Depreciation 36 30 3 13 27 - - 109 Amortisation of 6 24 - 13 - - - 43 intangibles Geographical segments Europe United Middle East The Asia Elimina- Kingdom & Africa Americas Pacific tions Total £m £m £m £m £m £m Revenue from external customers 1,503 621 564 532 - 3,220 Segment assets 2,705 1,398 936 818 - 5,857 Capital expenditure 125 39 19 18 - 201 Depreciation 66 15 12 16 - 109 Amortisation of intangibles 2 27 12 2 - 43 1. Segmental analysis - 24 weeks ended 4 March 2006 Business segments Primary Elimina- Grocery Food Agriculture Ingredients Retail Central tions Total £m £m £m £m £m £m £m £m Revenue from continuing 1,263 330 296 341 671 - (73) 2,828 operations Businesses disposed 35 - 3 21 - - - 59 Internal revenue (6) (48) - (19) - - 73 - Revenue from external 1,292 282 299 343 671 - - 2,887 customers Adjusted operating profit 84 53 8 32 87 (11) - 253 from continuing operations Businesses disposed 1 - - 1 - - - 2 Adjusted operating profit 85 53 8 33 87 (11) - 255 Amortisation of (5) - - (11) - - - (16) intangibles Profits less losses on - - - (5) - - - (5) sale of businesses Profit before financial 80 53 8 17 87 (11) - 234 income, financial expenses and taxation Financial income 73 - 73 Financial expenses (73) - (73) Taxation (66) - (66) Profit for the period 80 53 8 17 87 (77) - 168 Segment assets (excl. 1,917 926 183 1,009 809 287 - 5,131 investments in associates and joint ventures) Investments in associates 6 6 25 20 - - - 57 and joint ventures Segment assets 1,923 932 208 1,029 809 287 - 5,188 Cash and cash equivalents 354 - 354 Employee benefits assets 96 - 96 Deferred tax assets 78 - 78 Other investments 201 - 201 Segment liabilities (337) (159) (56) (113) (168) (13) - (846) Interest-bearing loans and (717) - (717) overdrafts Income tax (99) - (99) Deferred tax liabilities (251) - (251) Employee benefits (21) - (21) liabilities Net assets 1,586 773 152 916 641 (85) - 3,983 Capital expenditure 38 22 4 18 80 - - 162 Depreciation 37 26 3 13 16 - - 95 Amortisation of 4 - - 12 - - - 16 intangibles Geographical segments Europe United Middle East The Asia Elimina- Kingdom & Africa Americas Pacific tions Total £m £m £m £m £m £m Revenue from external customers 1,487 312 597 491 - 2,887 Segment assets 2,560 767 1,107 754 - 5,188 Capital expenditure 100 18 11 33 - 162 Depreciation 58 7 14 16 - 95 Amortisation of intangibles 2 3 9 2 - 16 1. Segmental analysis - 52 weeks ended 16 September 2006 Business segments Primary Elimina- Grocery Food Agriculture Ingredients Retail Central tions Total £m £m £m £m £m £m £m £m Revenue from 2,597 766 623 729 1,309 - (160) 5,864 continuing operations Businesses disposed 78 - 8 46 - - - 132 Internal revenue (19) (95) - (46) - - 160 - Revenue from external 2,656 671 631 729 1,309 - - 5,996 customers Adjusted operating 182 115 15 79 185 (22) - 554 profit from continuing operations Businesses disposed 3 - 1 3 - - - 7 Adjusted operating 185 115 16 82 185 (22) - 561 profit Exceptional items - (97) - - - - - (97) Amortisation of (12) - - (29) - - - (41) intangibles Profits less losses on 4 4 (1) - 2 1 - 10 sale of property, plant & equipment Profits less losses on 3 (2) - (6) - 1 - (4) sale of businesses Provision for loss on - - - - (8) - - (8) termination of an operation Profit before 180 20 15 47 179 (20) - 421 financial income, financial expenses and taxation Financial income 149 - 149 Financial expenses (151) - (151) Taxation (111) - (111) Profit for the period 180 20 15 47 179 (133) - 308 Segment assets (excl 1,782 1,497 158 1,010 1,302 14 - 5,763 investments in associates and joint ventures) Investments in 7 6 27 29 - - - 69 associates and joint ventures Segment assets 1,789 1,503 185 1,039 1,302 14 - 5,832 Cash and cash 356 - 356 equivalents Employee benefits 169 - 169 assets Deferred tax assets 82 - 82 Other investments 53 - 53 Segment liabilities (303) (338) (48) (113) (214) (60) - (1,076) Interest-bearing loans (707) - (707) and overdrafts Income tax (86) - (86) Deferred tax (398) - (398) liabilities Employee benefits (43) - (43) liabilities Net assets 1,486 1,165 137 926 1,088 (620) - 4,182 Capital expenditure 84 55 6 48 303 - - 496 Depreciation 71 36 7 30 33 - - 177 Amortisation of 12 - - 29 - - - 41 intangibles Geographical segments Europe United Middle East The Asia Elimina- Kingdom &Africa Americas Pacific tions Total £m £m £m £m £m £m Revenue from external customers 3,003 746 1,210 1,037 - 5,996 Segment assets 2,519 1,533 1,023 757 - 5,832 Capital expenditure 357 52 30 57 - 496 Depreciation 101 18 26 32 - 177 Amortisation of intangibles 4 7 18 12 - 41 24 weeks 24 weeks 52 weeks ended ended ended 3 March 4 March 16 September 2007 2006 2006 £m £m £m 2. Income tax expense Current tax expense UK - corporation tax at 30% 15 28 37 Overseas - corporation tax 20 26 46 35 54 83 Deferred tax expense UK deferred tax 10 7 21 Overseas deferred tax (2) 5 8 Over-provided in prior years - - (1) Total income tax expense in income 43 66 111 statement Reconciliation of effective tax rate Profit before taxation 198 234 419 Less share of profit from joint ventures (3) (3) (10) and associates Profit before taxation excluding share of 195 231 409 profit from joint ventures and associates Nominal tax charge at UK corporation tax 59 69 123 rate (30%) Lower tax rates on overseas earnings (17) (10) (23) Expenses not deductible for tax purposes 5 7 12 Utilisation of losses (4) - - Adjustments in respect of prior periods - - (1) 43 66 111 3. Earnings per ordinary share Pence Pence Pence Adjusted earnings per share 23.3 23.3 50.9 Earnings per share on: Sale of property, plant & equipment 1.5 - 1.3 Sale of businesses (4.9) (0.7) (0.5) Provision for loss on termination of - - (1.0) operation Exceptional items - - (12.3) Tax effect on above 2.0 - 3.3 Amortisation of intangibles (5.4) (2.0) (5.2) Tax credit on intangibles amortisation 1.6 0.4 1.6 Minority share of net amortisation charge 1.1 - - Earnings per ordinary share 19.2 21.0 38.1 4. Dividends Pence Pence Pence Per share 2005 final - 12.00 12.00 2006 interim - - 6.25 2006 final 12.50 - - 12.50 12.00 18.25 £m £m £m Total 2005 final - 95 95 2006 interim - - 49 2006 final 99 - - 99 95 144 The 2006 final dividend of 12.5p per share was approved on 9 December 2006 and totalled £99m when paid on 12 January 2007. The 2007 interim dividend of 6.5p per share will be paid on 2 July 2007 to shareholders on the register on 1 June 2007. At Cash flow Exchange At adjustments 3 March 16 September 2007 2006 £m £m £m £m 5. Analysis of net debt Cash at bank and in hand, 198 100 (1) 297 cash equivalents and overdrafts Short-term borrowings (373) 360 - (13) Investments 53 (32) (1) 20 Loans over one year (176) (479) 1 (654) (298) (51) (1) (350) Cash and cash equivalents comprise cash balances, call deposits and investments with original maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the group's cash management are included as a component of cash and cash equivalents for the purpose of the cash flow statement. 24 weeks 24 weeks 52 weeks ended ended ended 3 March 4 March 16 September 2007 2006 2006 £m £m £m 6. Summary of movements in equity Opening equity (excluding IAS 32 and IAS 39) 4,182 3,877 3,877 Adjustments relating to adoption of IAS 32 and IAS 39 on - 9 7 18 September 2005 Opening equity (restated) 4,182 3,886 3,884 Profit for the period 155 168 308 Other recognised income and expense for the period (38) 29 (56) Total recognised income and expense for the period 117 197 252 Dividends paid to shareholders (99) (95) (144) Net (increase)/decrease in own shares held (7) (1) 1 Minority interests acquired - - 195 Dividends paid to minorities (9) (4) (6) Closing equity 4,184 3,983 4,182 Attributable to: Equity shareholders 3,976 3,955 3,958 Minority interests 208 28 224 4,184 3,983 4,182 7. Basis of preparation These interim financial statements have been prepared in accordance with accounting policies set out in the group's statutory accounts for the year ending 16 September 2006. The interim results are unaudited and were approved by the board of directors on 24 April 2007 but do not constitute statutory accounts as defined in Section 290 of the Companies Act 1985. The comparative figures for the financial year ended 16 September 2006 have been abridged from the group's 2006 financial statements and are not the company's statutory accounts for that financial period. Those accounts have been reported on by the company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain statements under Section 237(2) or (3) of the Companies Act 1985. END This information is provided by RNS The company news service from the London Stock Exchange

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