Assoc British Foods ABF Final Results

  Assoc British Foods (ABF) - Final Results

RNS Number : 3191Q
Associated British Foods PLC
06 November 2012

For release 6 November 2012

  Associated British Foods plc results for 52 weeks ended 15 September 2012


                     ABF delivers a strong set of results



Financial Highlights

· Group revenue up 11% to £12.3bn
· Adjusted operating profit up 17% to £1,077m*
· Adjusted profit before tax up 17% to £974m**
· Adjusted earnings per share up 18% to 87.2p**
· Dividends per share up 15% to 28.5p
· Net capital investment of £707m
· Net debt of £1,061m
· Operating profit up 4% to £873m, profit before tax level at £761m
            and basic earnings per share up 2% to 70.3p

George Weston, Chief Executive of Associated British Foods, said:

"These are very good results for the group and include exceptional
performances from AB Sugar and Primark. Global economic uncertainty remains
but we have opportunities for further investment and the strength of the group
balance sheet and a strong cash flow will enable us to pursue them with

*  before amortisation of non-operating intangibles, profits less losses on
   disposal of non-current assets and exceptional items.
** before amortisation of non-operating intangibles, profits less losses on
   disposal of non-current assets, profits less losses on the sale and closure
   of businesses and exceptional items.
   All adjustments to profit measures are shown on the face of the
   consolidated income statement.

For further information please contact:
Associated British Foods:
Until 15.00 only
John Bason, Finance Director
Tel: 020 7638 9571
Chris Barrie/Nicola Swift, Citigate Dewe Rogerson
Tel: 020 7638 9571

Jonathan Clare
Tel:  07770 321881

After 15.00
John Bason, Finance Director
Tel: 020 7399 6500

Notes to Editors

Associated British Foods is a diversified international food, ingredients and
retail group with sales of £12.3bn and 106,000 employees in 47 countries. It
has significant businesses in Europe, southern Africa, the Americas, China and

Our aim is to achieve strong, sustainable leadership positions in markets that
offer potential for profitable growth. We look to achieve this through a
combination of growth of existing businesses, acquisition of complementary new
businesses and achievement of high levels of operating efficiency.

                         ASSOCIATED BRITISH FOODS plc


                         ANNUAL RESULTS ANNOUNCEMENT


                  FOR THE 52 WEEKS ENDED 15 SEPTEMBER 2012

For release 6 November 2012


                             CHAIRMAN'S STATEMENT

I concluded my statement last year with the expectation that we would achieve
growth in sales and adjusted operating profit this year with the latter
weighted towards the second half. I am therefore pleased that we have been
able to report results throughout the course of the year that have met those
expectations, despite the enduring challenges of subdued economic growth and
continued pressure on consumer disposable incomes in the world's developed
economies. By any standards, an increase of 11% in revenue and 17% in
adjusted operating profit in the current climate is a fine performance. This
resulted in an 18% increase in adjusted earnings per share to 87.2p.

AB Sugar delivered a first-class result, exceeding last year's record profit
following the investment made in recent years. The business benefited from an
excellent UK campaign, a strong European commercial market and better sugar
yields across southern Africa. Primark's rate of growth increased this year
with sales of £3.5bn, more than double those of five years ago. It was
particularly exciting to see new store openings in Germany greeted with the
same degree of customer enthusiasm as that experienced in the UK, with Berlin
setting a new Primark record for sales made on the first day of trading. AB
Agri also had a very good year. In recent years this business has evolved
successfully from selling traditional animal feeds in the UK to producing
high-value premixes, enzymes and technical ingredients and providing
value-adding advisory and marketing services to the global agricultural

This year was not without its challenges, however, as evidenced by the results
of our Grocery and Ingredients business segments. Although Twinings Ovaltine
delivered another good result with continued growth, particularly in its
developing markets, a mix of strong competition, a continued strain on
consumer spending and high costs for a number of commodities led to lower
profitability in both of these segments. A combination of management action
to reduce the cost base together with increased investment in marketing and
new product development, enabled most of the businesses in these segments to
enter the new financial year on a sound footing. It was, nevertheless,
disappointing that earlier this year we announced that these actions were not
sufficient to avoid a non-cash impairment of the Don KRC assets in Australia.
However, this business has already made substantial operational improvements
and a recovery plan is in place. It is noteworthy that even if adjusted
earnings are reduced by this exceptional charge they still show a 6% increase
over last year.

Recent years have seen substantial capital investment in the food businesses
with a number of projects spanning several years. These have now largely come
to an end and our capital expenditure was lower as a result. Investment
during the year included construction of the relocated sugar factory at
Zhangbei in China and a new yeast plant in Mexico. As we continued to pursue
the big retail expansion opportunity in continental Europe, capital
expenditure on Primark reached £326m last year, and we expect a high level of
expenditure on Primark to continue.

Following last year's cash outflow, the lower level of capital investment
together with the higher profit and lower working capital resulted in a strong
cash flow this year. Even taking into account the acquisition of Elephant
Atta for £34m, net debt at the year end was £224m lower at £1,061m.


As announced last November, we welcomed Emma Adamo to the board at the
conclusion of last year's annual general meeting. Emma was educated at
Stanford University and INSEAD and is a director of Wittington Investments


The trading environment for many of our businesses has been difficult this
year and, while credit is clearly due to those who have made progress, those
working in the businesses most affected by adverse market conditions are,
perhaps, all the more deserving of our thanks and appreciation for their
strenuous efforts. On behalf of shareholders, I thank all our employees for
the contribution they have made to the group's success in the past year.

Primark has created 10,000 new jobs across the UK and continental Europe this
year at a time of high unemployment, particularly for young people. The
average number of people employed by the group worldwide increased during the
year to 106,000.


I am pleased to report that a final dividend of 20.0p is proposed, to be paid
on 11 January 2013 to shareholders on the register on 7 December 2012.
Together with the interim dividend of 8.5p paid on 6 July 2012, this will make
a total of 28.5p for the year, an increase of 15%.


Global economic uncertainty looks set to remain a feature of the new financial
year and in recent months we have seen an increase in some of our commodity
costs, notably cereals. We expect a reduction in profit from AB Sugar, as a
result of lower EU production, to be more than offset by further growth at
Primark and some recovery in Grocery. We therefore expect the group to make
some further progress in this new financial year but, in contrast to last
year, this will be weighted towards the first half.

Charles Sinclair



In 2012 the group's revenue increased by 11% to £12.3bn and adjusted operating
profit was 17% ahead of the previous year exceeding the one billion pound mark
for the first time at £1,077m.

This was an extremely good year but it shouldn't be considered in isolation.
The compound annual growth of revenue and profit achieved over the last 10
years is 10% and 11% respectively. This long-term performance is a direct
result of our business model. Our businesses are organised so that they are
close to the markets and customers they serve and the corporate centre is
consequently small. Operational decisions are made by the businesses and
strategy is agreed between the businesses and the centre. Business
performance is closely monitored by the centre and capital is allocated to
businesses where returns meet or exceed clearly defined criteria.

AB Sugar delivered a further significant improvement in profit this year
driven by its European businesses and Illovo. AB Agri matched last year's
record performance. Primark delivered excellent growth with a substantial
increase in retail selling space and like-for-like growth at the top of its
peer group. In Grocery, Twinings Ovaltine, Jordans Ryvita and Silver Spoon
achieved good growth but overall profit was held back by restructuring charges
taken to lower the cost base, and a difficult trading environment for George
Weston Foods. The further decline in Ingredients' profit was disappointing.

The major investment in our sugar businesses in recent years has been an
important driver of the substantial growth in Sugar profits. The acquisition
of Azucarera in Iberia has proved to be a very sound investment and has been a
key contributor to the increased profitability over the last two years. The
investment in capacity expansion across southern Africa is now delivering
better returns for Illovo and the development of our presence in China, in
both cane and beet sugar, has built a platform for future growth. Our
European businesses have benefited from firmer pricing and higher sugar
production this year. Although we expect prices in the EU to remain firm,
profit in the coming year will be affected by reduced European production, as
a consequence of lower yields, and higher beet costs for British Sugar.

Primark's result reflects continued growth in the UK, including the opening of
a flagship store in Edinburgh, and a major step forward in continental
Europe. Retail selling space in Iberia was increased by almost half, our
presence in Germany was strengthened by the opening of four large stores, and
we continue to develop our regional distribution network with the opening of
the Mönchengladbach distribution centre. The excitement that continues to be
generated by each new store opening and the sales densities that we are
achieving in continental Europe afford us the confidence to believe that
Primark is capable of much further growth.

Once again, Twinings Ovaltine demonstrated its ability to generate strong
revenue growth for both the Twinings and Ovaltine brands which resulted in
higher profit. However, the continued pressure on consumer disposable incomes
in the world's developed economies created a challenging environment for the
businesses in Grocery. To succeed in this environment it is important to be a
low-cost supplier and the management teams in George Weston Foods and Allied
Bakeries made good progress in reducing their cost base. The financial
results reflect the cost of this management action. It was a difficult year
for the meat business in Australia but the new factory is now operating more
efficiently and the focus for the coming year will be on increasing volumes.

The effects of a combination of high input costs and increased competition for
yeast this year contributed to a further decline in margin for Ingredients.
We are committed to this business and have focused our attention on the need
to develop a more differentiated bakery ingredients proposition. We made a
number of management changes during the year, including the appointment of a
new chief executive, and the strengthened team will drive the implementation
of the new business proposition across the group.

Net capital investment in the group was £707m this year which included a
higher level of expenditure for Primark on new stores, and on the refit and
extension of existing stores, as we increased the retail selling space by
13%. Continental Europe accounted for the vast majority of this investment
but selling space in the UK still increased by 5%. We completed construction
of the Vivergo bioethanol plant in Hull and continued the investment in
efficient production at Allied Bakeries. We made good progress with
construction of the new yeast factory in Mexico and the relocation of the
Zhangbei sugar factory in China will be completed in time for processing the
new season's beet later this year. In the coming financial year we expect to
maintain the level of investment in new stores for Primark but will see some
reduction in the level of expenditure in the rest of the group.


                                   2012  2011  change
Revenue £m                         2,666 2,134  +25%
Adjusted operating profit £m        510   315   +62%
Adjusted operating profit margin   19.1% 14.8%
Return on average capital employed 26.5% 17.3%

AB Sugar is a leading multinational in the growing market for sugar and sugar
derived products and co-products. In the EU, Azucarera is the major producer
in Iberia and British Sugar is the sole processor of the UK sugar beet crop
and Europe's most efficient producer. Illovo is the largest sugar processor
in Africa and is one of the world's foremost low-cost producers. The group
also has substantial businesses in China producing cane sugar in the south and
beet sugar in the north east. The group currently operates 34 plants in ten
countries and is capable of producing some 5.5 million tonnes of sugar and 600
million litres of ethanol each year. It also has the capacity to generate
power sufficient to meet most of its internal needs. AB Sugar aims to achieve
growth through excellence in agriculture and operations, the application of
new technologies for the sustainable processing of beet and cane, and the
further development of co-products.

AB Sugar made significant advances during the year with revenue ahead by 25%
and profit up 62% reflecting higher sugar production and strong commercial
markets in the EU and Africa, and a continued focus on performance improvement
in agriculture and processing. Profit in China was lower as a result of a
weakening of sugar prices during the year.

In the UK, profit from British Sugar was well ahead of last year reflecting
the excellent campaign, higher sugar production and firmer prices. The
absence of the weather-related challenges of last year resulted in the
production of 1.3 million tonnes of sugar compared with just under 1.0 million
tonnes in 2011.2012 marked the centenary of the UK beet sugar industry and
also saw British growers delivering record beet yields.While growers
benefited from excellent conditions, the achievement of record yields for the
fifth year out of the last seven confirms the progress the industry has made
in harnessing applied science and innovation.Investment in processing and a
continuing programme of business improvement enabled a strong factory
performance in the year.This included the successful commissioning of the CO2
liquefaction facility at the Wissington sugar factory which utilises the CO2
produced during fermentation by the existing bioethanol plant.

Improvements made by Azucarera's growers contributed to record Spanish beet
yields. Combined with a continued focus on raising factory performance and
extraction rates, this resulted in the northern factories producing a total of
388,000 tonnes of sugar from beet in the 2011/12 campaign. The southern beet
campaign, which commenced in early June and finished in August, produced
80,000 tonnes of sugar. The Guadalete refinery again increased its output,
processing 303,000 tonnes of cane sugar against last year's 248,000 tonnes. A
further 70,000 tonnes of co-refined cane sugar was produced at the three
northern factories.

The advances made in recent years by both Azucarera and British Sugar in
manufacturing productivity and agricultural development have made a major
contribution to their financial performance and underscore the importance of
continued investment in efficiency improvement. However, further improvements
are required if these businesses are to become globally competitive and we
believe the ending of sugar quotas in 2015, as proposed by the European
Commission, is premature and is likely to jeopardise further investment in the
European industry. AB Sugar is engaged with policymakers in the EU to explore
alternative options for sugar reform. The tariffs for sugar imports into the
EU are not affected by these proposals.

Construction of Vivergo's bioethanol plant in Hull is now complete with
production coming on stream by the end of this calendar year. The plant uses
feed wheat and has the capacity to produce up to 420 million litres of
bioethanol and up to 500,000 tonnes of high-protein, high-fibre animal feed.

Illovo made good progress, recovering from the impact of low sucrose levels in
the cane across the region and the severe drought in South Africa last year.
Sugar production increased to 1.8 million tonnes compared to 1.6 million
tonnes last year. The increased volumes in South Africa enabled the Umzimkulu
mill to be reopened in March 2012 following last season's closure because of a
shortfall in cane supplies. In Zambia and Swaziland, which have both seen
recent investment in production and agricultural expansion, operations ran
close to design capacity. Positive market conditions, combined with a more
favourable rand/dollar exchange rate, led to higher domestic sugar revenues.
However, the economic environment in Malawi remains challenging and the kwacha
was devalued on 7 May 2012. Local sugar prices were increased as a result of
the devaluation which, together with higher export earnings, more than offset
increased operating costs in local currency terms. The devaluation had no
material effect on profit when translated into sterling.

As announced in July, the Mali government was unable to fulfil its undertaking
to fund the agricultural component of a project to develop Illovo's sugar
business in the country. When combined with the deteriorating security
situation, the project risk was considered to have increased to an
unsupportable level and the decision was taken to terminate further
involvement in the project. Illovo's investment in pre-project expenditure of
£15m has been written off and charged as a loss on closure of businesses in
the income statement. This charge was largely offset by the realisation of
deferred profit on the disposal, in November 2009, of the group's former
Polish sugar operations.

Illovo also markets a number of co-products which have become an increasingly
important contributor to its results. These range from food-grade, industrial
and agricultural products manufactured at the Sezela plant and at its ethanol
distilleries in South Africa, to the export of electricity to the Swaziland
national grid by the Ubombo sugar mill. A potable alcohol distillery at
Kilombero in Tanzania is currently under construction and is due to be
commissioned in 2013.

In China, further progress was made in the north, both in factory efficiency
and in beet plantings and yield, with sugar production increasing from 210,000
tonnes to 287,000 tonnes. Factories concentrated on improving manufacturing
performance through higher energy efficiency and extraction rates, and
previous investment in beet handling drove record throughput at the Yi'an
factory. Heavy rains in January 2012 constrained output in south China with
volumes almost level with last year at 405,000 tonnes. China's national
2011/12 sugar production was 1.0 million tonnes higher than last year which,
combined with lower prices for sugar imports, led to weaker domestic selling
prices and consequently lower operating profit for our Chinese operations.
Relocation of the Zhangbei beet sugar factory is almost complete and will be
operational in time for the new season campaign.


                                   2012  2011  change
Revenue £m                         1,265 1,127  +12%
Adjusted operating profit £m        40    40     -
Adjusted operating profit margin   3.2%  3.5%
Return on average capital employed 16.5% 19.0%

AB Agri is an established major force in UK agriculture and is increasingly
operating on a global scale. It supplies technology-based products and
services to farmers, feed and food manufacturers, processors and retailers.
It also buys grain from UK farmers and supplies them with crop inputs through
its joint venture, Frontier. Operating across the agricultural supply chain,
AB Agri manufactures high-performance compound feeds, provides world-leading
analytical services, nutritional advice and poultry marketing services for
customers. It provides an added-value service to food, drink and bioethanol
companies internationally, by marketing their co-products as animal feed,
which in turn helps to reduce the costs of production for its farming customer
base. It also supplies the livestock and pet industries with premixes,
enzymes and other technical ingredients which are increasingly important
growth drivers for the business.

AB Agri delivered another good performance with revenues 12% ahead and profit
in line with last year's strong result. The UK feed business benefited from
higher volumes of sugar beet feed but saw some margin erosion in the pig and
poultry feed markets reflecting another difficult year for the UK livestock

Frontier continued to trade well. Earnings from grain trading were at more
normal levels which reflected less movement in wheat prices during the year.
High crop prices underpinned good farm profitability and Frontier benefited
from continued high demand for fertiliser, seed and crop protection products.

Premier Nutrition increased its UK market share in broiler and ruminant
premixes but suffered margin erosion in Eastern Europe. The weakening of the
euro affected the competitiveness of exported piglet starter feed and pet
premixes into the Eurozone. The major building and engineering operations for
UK expansion are now complete and plant commissioning is well under way.

AB Vista continued to expand its geographic presence and share of the feed
enzyme market, with a particularly good performance in the Asia Pacific
region. The main growth driver was the Quantum phytase range including the
recently launched product, Quantum Blue. AB Vista also recently finalised an
arrangement that will see it become a major global supplier of betaine to the
animal nutrition sector.

During the year, AB Sustain acquired a small UK-based business, specialising
in the development, implementation and auditing of systems which promote
continuous improvement in agricultural supply chains across the world. AB
Sustain also won the Sainsbury's Supplier 'Making it Happen' award in
recognition of its outstanding customer support and service.

Progress was made in China with increased compound and sugar beet feed sales
volumes together with new products for the feed ingredients market. Agreement
was reached recently with a major US multinational to build a new feed mill in
China to service its local poultry feed requirements.


                                   2012  2011  % change
Revenue £m                         3,503 3,043   +15%
Adjusted operating profit £m        356   309    +15%
Adjusted operating profit margin   10.2% 10.2%
Return on average capital employed 19.2% 18.2%

Primark is a major clothing retailer with stores in the UK, Ireland, Spain,
Portugal, Germany, the Netherlands, Belgium and Austria. It offers customers
quality, up-to-the-minute fashion at value-for-money prices. Further
expansion saw the creation of 10,000 new jobs during the year with the
business employing more than 43,000 people by the year end.

Revenue was 17% ahead of last year at constant exchange rates. As a result of
the weakening of the euro in the second half of the year, the increase was 15%
when translated at actual exchange rates. This excellent result was driven by
an increase in retail selling space and like-for-like sales growth of 3% for
the full year. UK trading was particularly strong during the summer and sales
in continental Europe remained buoyant. Trading in newly opened stores
exceeded expectations and the opening of the new store in Berlin in July saw
our most successful first day's sales ever. Sales of the autumn/winter range
in the new financial year are encouraging.

The operating profit margin at 10.2% was level with that achieved last year.
In the first half margins were lower than last year reflecting the absorption
of high cotton costs and the increase in VAT in the UK, which we chose not to
pass on to customers. As expected, margins in the second half increased
reflecting the fall in cotton prices. Operating margins are expected to
improve further in the first half of the new financial year with the benefit
of lower cotton prices but will be partly constrained by the three percentage
point increase in VAT rates in Spain from 1 September 2012. Operating profit
at constant currency was 17% higher than last year reflecting the strong
revenue growth. At actual exchange rates profit was 15% ahead.

Primark continued to make significant progress with its ethical trade
programme during the year. A member of the Ethical Trading Initiative (ETI)
since 2006, it is now ranked at 'Leader' level which is the highest status
achievable. The ETI classifies a Leader as "tackling the root causes of
labour rights problems beyond individual workplaces with collaborative
initiatives aimed at the sectorial level and in raw material or component
supply". Achievement of this ranking demonstrates the hard work and
commitment made by Primark to ensuring that workers making our products are
paid fairly, treated well, and work in decent conditions. The impact of our
in-country teams of ethical trading specialists has been significant in
supporting sustainable improvements within supplier factories, providing
greater visibility across the supply chain as well as improving the management
of our audit programme. We conducted 1,795 audits in the last calendar year
and ethical trade training continues to be provided to every new Primark

Our new store design aims to provide an inspirational, exciting, fashionable
and fun shopping environment for all customers. Strategically placed
mannequins combine with video screens to inspire customers to choose outfits
that are readily available on adjacent fixtures. Prominent directional
signage allows easy navigation through the store and the confident expression
of our Primark brand on building facades and at various focal points
encourages customers to feel engaged with the brand. Customer service has
been enhanced by providing a higher ratio of fitting rooms and cash registers
to ensure a smoother experience when trying outfits on and paying for them.

The pace of store and retail selling space expansion increased this year. By
the financial year end we had opened 19 new stores and added 0.9 million sq ft
of selling space bringing the total to 242 stores and 8.2 million sq ft.
Three new stores were opened in the UK, 11 in Iberia and five in northern
continental Europe. Highlights of the year included a major expansion in
Iberia, particularly Spain, the opening of a flagship store on Princes Street
in Edinburgh and four large stores in Germany.

                                       Republic of     Northern
                UK          Iberia       Ireland     Continental     Total
           sq ft stores  sq ft stores  sq ft stores  sq ft stores sq ft stores
            '000          '000          '000          '000
September  5,190    154    760     24  1,010     38    320      7 7,280    223
Change       235      3    340     11      -      -    345      5   920     19
in year
September 5,425    157  1,100     35  1,010     38    665     12 8,200    242
             +5%          +45%             -         +108%         +13%

The momentum of our store opening programme has continued into the new
financial year with our second store on London's Oxford Street and our first
store in Austria, in Innsbruck, during September. The new Oxford Street store
has 82,000 sq ft of selling space over four floors and showcases Primark's
latest design concept incorporating enhanced visual merchandising, branding,
fixtures, lighting and state-of-the-art video screens showing the latest
campaigns. A further 12 stores will have opened before Christmas, including a
second store in Austria. By the spring of next year we will also have
completed the expansion of our city centre stores in Manchester, Newcastle and
Mary Street in Dublin, featuring the new store design.

We have invested further to improve the efficiency, and increase the capacity,
of our logistics network. In August we opened a new, purpose-built depot in
Mönchengladbach in the west of Germany with 425,000 sq ft of warehouse space.
This increases our total warehouse capability to 2.7 million sq ft, adding to
the footprint of our existing depots in Ireland, the UK and Spain and enabling
a more flexible response to the needs of our customers in northern Europe.

New store openings:
Alicante (Spain)       Parque-sur, Madrid      Schloss Strasse, Berlin
                       (Spain)                 (Germany)
Badajoz (Spain)        Valencia (Spain)        Zaandam (the Netherlands)
Barcelona (Spain)      Braga Parque (Portugal) Chelmsford (UK)
Cordoba (Spain)        Coimbra (Portugal)      Edinburgh (UK)
Majadahonda (Spain)    Essen (Germany)         Livingston (UK)
Malaga (Spain)         Hannover (Germany)
Pamplona (Spain)       Saarbrucken (Germany)
UK concessions:                                Relocations:
Selfridges, Birmingham Selfridges, Manchester  Metro Centre, Gateshead (UK)


                                   2012  2011* % change
Revenue £m                         3,726 3,671   +1%
Adjusted operating profit £m        187   244    -23%
Adjusted operating profit margin   5.0%  6.6%
Return on average capital employed 12.2% 17.6%

*Restated - see note 1

Grocery comprises our consumer-facing businesses that manufacture and market a
variety of grocery brands both nationally and internationally. Twinings
Ovaltine has the broadest geographic reach selling its premium teas and malted
beverages in more than 100 countries. The UK grocery businesses produce
well-known household brands including Kingsmill, Silver Spoon, Jordans,
Ryvita, Patak's and Blue Dragon. ACH is a speciality food business operating
across North America and Mexico. Among its market-leading products are Mazola
corn oil, Karo corn syrup and the leading corn starch brand, Argo. George
Weston Foods in Australia produces a range of meats, breads and baked goods
including Tip Top, the country's leading food brand.

Grocery revenue increased by 1% but adjusted operating profit declined by 23%
reflecting primarily the cost of restructuring at George Weston Foods in
Australia and Allied Bakeries in the UK, together with the difficult retail
and competitor environment in Australia.

Twinings Ovaltine, our most profitable grocery business, maintained the
momentum of last year achieving sales growth and share gains in its four
largest tea markets. Marketing investment was substantially increased
throughout the business. In the UK, we launched the very successful 'Gets you
back to you' television campaign which contributed to our market share
increase. In the US, growth was driven by the K-cup single-serve format which
has expanded beyond foodservice into the grocery channel where we are now the
leading tea brand in this format. Twinings had a particularly successful year
in Australia, increasing its market share with an effective marketing campaign
including consumer trial. Following last year's factory expansion in China
and completion of the new factory in Poland, the final stages of investment in
the Andover factory, which supplies the UK market, is due to complete before
the end of the calendar year. New production lines enabled further
improvements to be made in tea packaging. Ovaltine achieved strong growth in
Thailand and other developing markets with particular success in Brazil, where
we have now also introduced a 'ready to drink' format, and Indochina.

UK consumers have continued to seek value from product choice, promotions and
price in response to sustained pressure on household incomes.The market
remained competitive for Allied Bakeries with promotional activity reducing
margins and the recent increase in wheat costs will give rise to further
margin pressure in the coming year.However, good progress was made during the
year in reducing the cost base with the closure of two small bakeries and a
re-engineering of business processes to reduce overheads.Whilst delivering a
significant change agenda the business has continued to focus on both
understanding and meeting customer and consumer needs.This was recognised by
The Grocer magazine which named Allied Bakeries as its branded bakery supplier
of the year for the fourth year in succession.Kingsmill’s largest sub-brand,
50/50, continues to be a key driver of Allied Bakeries’ performance having
become, last year, the number one brand in its segment, healthier white bread.
Its range has also been successfully extended into wraps, pitta pockets and
muffins. The capital expenditure programme to upgrade and modernise the
equipment in the bakeries was accelerated during the year to realise, more
quickly, the benefits of greater reliability, improved consistency and lower
costs.The upgraded bread plant and new silos at Stockport came on stream in
September creating one of the most advanced bakeries in the UK.

Jordans and Ryvita performed strongly in the UK with both brands responding
well to effective advertising. Ryvita Thins won the healthy product of the
year award and Jordans saw continued success in granola where it is the
leading brand in the segment. The business also had a good year
internationally with particularly strong sales growth for both brands in
Canada, driven by increased distribution following the move from two
distributors to one, and the building of a dedicated sales and marketing team
in Toronto. The transfer of crackerbread manufacture from Stockport to Poole
was completed during the year and the new plant is now fully functioning. The
business was recognised during the year for its commitment to sustainability,
winning the 'Waitrose Way' award for its work on water conservation at the
Poole factory.

Silver Spoon had a good year but volumes and margins came under pressure
towards the end of the year from increased competition in the consumer sugar
market. Growth in caster and icing sugar for homebaking was offset by a
decline in granulated and brown sugars as consumers sought cheaper
alternatives. The Allinson flour brand continued to grow strongly,
particularly as a result of increased distribution of its Nature Friendly
plain and self-raising flours. In January, in partnership with Cargill, we
launched the Truvia sweetener brand in the UK, the first stevia-based, zero
calorie sweetener. The launch was supported with television and radio
advertising as well as in-store promotional activity and has built a leading
position in the sweetener category.

AB World Foods operated in a competitive trading environment throughout the
year with an increased level of promotional activity which, although
supporting volumes, had an adverse effect on margins. Blue Dragon became the
UK's largest oriental ambient brand with strong sales growth following its
successful relaunch last year and Patak's also achieved good growth albeit
driven by promotional activity. The UK and Polish factories both performed
well with Poland in particular benefiting from record volumes. Although the
ethnic food industry remained weak, especially in the hard-pressed Chinese
takeaway sector, Westmill's revenues held up well. The noodles business,
spearheaded by our leading brand in the sector, Lucky Boat, continued to gain
share with sales to industrial customers, as well as Chinese restaurants,
ahead of last year. Investment in a third noodle line at the Trafford factory
during the year consolidated our position as the largest and most efficient
noodle manufacturer in the UK. On 5 July we acquired the leading ethnic flour
brand in the UK, Elephant Atta, together with a number of smaller related
ethnic flour brands which are used to make chapatti and other unleavened flat
breads. This business will complement Westmill's other leading ethnic brands
including Tolly Boy rice and Rajah spices.

At ACH in the US, vegetable oil volumes increased benefiting from a recent
price reduction, while homebaking and spices volumes were level with last
year. Oil costs remained high for most of the year but sales and margins
recovered from last year's levels. Continued increases in raw material costs,
with an inability to recover them fully, impacted margins in the flavours
business. Significant investment was made during the year in new product
launches in baking and in the sauces / marinades category, capitalising on the
strength of the ACH brands. In Mexico, a weaker peso and continued competitive
pressure resulted in lower volumes and operating profit. Stratas achieved
further margin improvement with better oil procurement and by reducing

In Australia, the difficult retail and competitor environment experienced by
George Weston Foods led to lower revenues and an operating loss for the year.
Retailer promotion of in-store bakery products, combined with continuing
support for $1 bread and range rationalisation, affected sales and margins in
the bread business. Operationally, good progress was made with improved
reliability and efficiencies delivered through supply chain optimisation. The
successful launch during the year of 'The One', a nutritional loaf,
strengthened the business in the key mainstream white bread segment of the
market. The meat business performed well below expectations, driven by
commissioning issues at the new Castlemaine factory, retailer pressure on
prices, particularly in the first half of the year, and competitors increased
volumes. Following the closure of the plant in Altona, the transfer of
production and commissioning of the new facilities at Castlemaine constrained
volume throughput which affected service levels, revenues and operating
costs.The throughput issues have now been addressed and we are engaging with
our key customers to recover lost volumes and drive growth. Costs are also
reducing and a significant programme of work is under way to simplify the
structure of the group and improve efficiency. Restructuring charges were
made during the year for the cost of reorganising sales distribution and
warehousing and a general reduction in administration overheads. As a result
of the difficult trading conditions and low volumes, the carrying value of the
assets in the meat business was no longer supported by our forecasts of its
discounted future cash flows and an exceptional impairment charge of A$150m
(£98m) has been taken.


                                   2012  2011* % change
Revenue £m                         1,092 1,090    -
Adjusted operating profit £m        32    61     -48%
Adjusted operating profit margin   2.9%  5.6%
Return on average capital employed 4.3%  8.3%

*Restated - see note 1

The Ingredients segment comprises AB Mauri and ABF Ingredients. AB Mauri has
a major global presence in bakers' yeast, with significant market positions in
the Americas, Europe and Asia, and is a technology leader in, and supplier of,
bakery ingredients. It operates from 49 plants in 26 countries. ABF
Ingredients markets enzymes, yeast extracts, speciality proteins and lipids
worldwide with manufacturing facilities in Europe, the US and China.

Revenues were level with last year but operating profit was sharply lower
reflecting restructuring charges and continuing operational challenges faced
by AB Mauri. The European yeast market continued to be extremely competitive
and our margins remained constrained by an inability to recover fully raw
material cost increases. In Asia, sales volumes in China were disappointing
and key raw material costs, primarily molasses, remained at a high level.
Progress was made in improving productivity at the recently commissioned yeast
factory in Harbin, making this one of our most efficient plants, and our
factory in Vietnam was reopened in the second half of the year following
completion of operational improvements. Latin America once again maintained
strong revenue and profit growth across most markets although margins in
Brazil came under pressure early in the year from higher molasses prices and
increased competitor activity. As the Brazilian real has progressively
weakened during the year our locally produced dry yeast has been able to
compete more effectively against higher priced imports.

We achieved further growth in bakery ingredients benefiting from continued
investment in resources and technology. This was particularly notable in the
creativity and flexibility brought to bear by our Innovation Centre which has
enabled the bakery ingredients business to tailor solutions to meet changing
customer requirements at appropriate price points. The Innovation Centre is
now supporting the yeast business by developing total yeast and ingredient

In the past year, AB Mauri made substantial progress in identifying the
capabilities needed to deliver a more differentiated bakery ingredients
proposition. It is now applying this understanding to each of its businesses,
ensuring that it is adapted to meet their distinctive market requirements.

Capital investment by AB Mauri during the year included the construction of
new yeast plants in Mexico and Shandong province in China together with the
expansion of dry yeast capacity at Xinjiang in China. The plants in China
have been commissioned and the Mexican plant will be operational during the
first half of next year.

ABF Ingredients delivered good growth in sales and operating profit. Growth
in feed, bakery and speciality enzymes was driven by new product launches and,
in response to this sustained growth, the enzymes factory in Finland, which is
now approaching capacity following its expansion in 2009, is to be expanded
further. Management processes in the Enzymes business were enhanced during
the year with the installation of new information systems, and improved sales
forecasting accuracy has enabled better inventory management.

In the US, extruded grain products enjoyed strong growth driven by an enhanced
range and customer service and an expanded customer base. Production at the
existing facility in California is nearing capacity and with increasing
demand, a new facility is to be built in Evansville, Indiana. The results of
the US dairy business improved driven by high lactose and whey protein prices.

Yeast extracts are now supplied to Europe from the new, fully commissioned,
factory in Harbin, China and new business is being developed in the Chinese
and Asian markets. The yeast extracts facility in Hamburg was upgraded during
the year enabling it to expand into new market sectors and, after a period of
operational challenge, the US business made a number of efficiency
improvements and is back in growth.


The last financial year presented us with a number of challenges, and
continued weakness in the economies of our developed markets suggests that
2013 will also be challenging. However, the diversity of the group's
operations, our commitment to new product development, an exciting new store
opening programme for Primark, the strength of the group balance sheet and a
strong cash flow give us every reason to believe that we can meet the
challenges ahead with confidence.

George Weston

Chief Executive



Group revenue increased by 11% to £12.3bn and adjusted operating profit was up
17% at £1,077m. Movements in foreign currency exchange rates had no material
net effect on revenues but at constant exchange rates, adjusted operating
profit was 19% ahead of last year. In calculating adjusted operating profit,
the amortisation charge on non-operating intangibles, any profits or losses on
disposal of non-current assets and any exceptional items are excluded. On an
unadjusted basis, operating profit was 4% ahead of last year at £873m after
charging intangible amortisation of £100m and an exceptional impairment charge
of £98m.

The exceptional charge was taken to impair property, plant and equipment at
the meat business in Australia which has performed well below expectations.
Although a recovery plan is in place and a number of operational improvements
have been made during the year, the discounted cash flow forecasts for the
business were not sufficient to support the carrying value of its assets and
an impairment charge of A$150m (£98m) was taken. Accounting standards do not
permit the inclusion, in the impairment calculation, of cash flows that are
expected to be generated from the future sale of the former meat processing
sites in Western Australia and Victoria. These are being redeveloped and the
net cash inflows in future years are expected to be substantial.

A net loss of £9m arose on the sale or closure of businesses this year
relating primarily to the write off of Illovo's investment in pre-project
expenditure in Mali following the decision not to pursue the development of
this business, net of deferred profit realised on the disposal, in November
2009, of the group's former Polish sugar operations. The net loss is excluded
from the calculation of adjusted earnings.

Finance expense less finance income of £105m compared with a net charge of
£92m last year. This reflected the higher average net debt during the year
and the incremental interest rate on the private placement financing completed
in March.

Profit before tax increased from £757m to £761m. Adjusted to exclude the
intangible amortisation and exceptional impairment charges, the losses on the
sale of fixed assets and on the sale or closure of businesses, profit before
tax increased by 17% to £974m.


The tax charge of £178m included an underlying charge of £242m, at an
effective rate of 24.8% (2011 - 24.6%) on the adjusted profit before tax. The
small increase in the effective rate is a result of the mix of profits earned
in different tax jurisdictions and would have been higher had it not been for
the further reduction in the UK corporation tax rate. The UK tax charge
included a credit of £12m from the calculation of deferred tax liabilities
reflecting the enacted rate reduction from 25% to 23%. The group is a
substantial UK tax payer and even at the lower tax rate, out of a total of
£191m tax paid in the year, £107m was paid in the UK as a result of the higher
profits earned by our UK businesses. The proposed future reduction in the UK
tax rate to 22% will be reflected in the year that the relevant legislation is
substantively enacted. However, with increasing profitability in
jurisdictions with a higher corporate tax rate than the UK, we expect the
group's effective tax rate to be higher in future years.

The overall tax charge for the year benefited from a £33m (2011 - £25m) credit
for tax relief on the amortisation of non-operating intangible assets and
goodwill arising from previous acquisitions. A tax credit of £2m arose on the
property and business disposals and a deferred tax asset of £29m has been
recorded in respect of the exceptional impairment charge.


Earnings attributable to equity shareholders were £555m, £14m higher than last
year, and the weighted average number of shares in issue during the year used
to calculate earnings per share was 789 million (2011 - 788 million).
Earnings per ordinary share were 2% higher than last year at 70.3p. Adjusted
earnings per share which provides a more consistent measure of performance
increased by 18% from 74.0p to 87.2p.

The interim dividend was increased by 8% to 8.5p and a final dividend has been
proposed at 20.0pwhich represents an overall increase of 15% for the year.
The proposed dividend is expected to cost £158m and will be charged next
year. Dividend cover, on an adjusted basis, remains at three times.


Non-current assets of £6,971m were broadly unchanged from last year.
Intangible assets were £124m lower, mainly reflecting the amortisation charge
of £122m for the year. Property, plant and equipment increased by £76m driven
by the capital expenditure in the year, net of depreciation and the
exceptional impairment charge.

Working capital at the year end was £73m lower than last year and average
working capital across the year expressed as a percentage of sales showed an
improvement. The inflation seen in commodity costs last year was not repeated
and Primark delivered a substantial improvement with tight inventory
management across the year. Net borrowings at the year end were £224m lower
than last year at £1,061m as a consequence of the very strong cash flow.

A currency loss of £230m arose on the translation into sterling of the group's
foreign currency denominated net assets. This resulted from a strengthening
of sterling at the end of the year, particularly against the euro, US dollar
and the rand. The group's net assets increased by £46m to £6,221m.

Return on capital employed (ROCE) for the group increased from 15.8% to 17.0%
this year. Sugar and Primark both delivered an improvement through much
higher profits but the lower profit at George Weston Foods and AB Mauri
resulted in a reduction in the returns for Grocery and Ingredients. ROCE is
calculated by expressing adjusted operating profit as a percentage of the
average capital employed for the year.


Net cash flow from operating activities was very strong this year with a
substantial increase from £736m to £1,240m. This mainly reflected a working
capital inflow of £43m this year compared to an outflow of £199m last year,
and higher operating profit adjusted for amortisation, depreciation and the
exceptional item. The amortisation and depreciation charges were respectively
£26m and £77m higher than last year, largely the consequence of capital
investment in recent years on assets which are now operational, and also due
to a foreshortening of the useful economic lives of certain assets in British
Sugar, AB Mauri and Primark.

We continued to invest in the future growth of the group but the net £707m
spent on property, plant and equipment and intangibles net of disposals during
the year was a reduction on last year's investment of £825m. Primark spent
£326m on the acquisition of new stores and the fit-out of new and existing
stores. Elsewhere we continued the capital investment programme at Allied
Bakeries and good progress was made with construction of the new yeast factory
in Mexico and the relocation of the Zhangbei sugar factory in China.

We invested £45m on acquisitions, principally £34m on the acquisition of
Elephant Atta, with the balance being deferred consideration payable on
acquisitions made in previous years.


Cash and cash equivalents totalled £391m at the year end. These were managed
during the year by a central treasury department, operating under strictly
controlled guidelines, which also arranges term bank finance for acquisitions
and to meet short-term working capital requirements, particularly for the
sugar beet and wheat harvests.

The group has total committed borrowing facilities amounting to £2.6bn, of
which £1.15bn is provided under a syndicated, revolving credit facility which
does not mature until July 2015. £1.2bn was drawn down on these facilities at
the year end. The strength and breadth of the 12 banks in the syndicate
provide support for our financial needs and reflect the scale and
international presence of the business. The group also had access, at the
year end, to £874m of uncommitted credit lines under which £265m was drawn.

On 13 December 2011 we raised $100m in a bi-lateral private placement with a
10 year maturity and on 29 March 2012 we completed a private placement of
senior notes to a number of UK and US institutional lenders raising $526m with
a range of maturities from 2019 to 2024. These issues provided funds, in
addition to our existing committed bank facilities, some of which will be used
to refinance debt maturing next year. The average fixed interest coupon on
these notes of 4.5% and 3.66% respectively, while historically attractive, are
higher than prevailing variable interest rates on shorter term bank
borrowings. This increased the group's interest expense in the second half of
the year. However, by further diversifying our sources of funding and
lengthening our debt maturity profile the financial strength and flexibility
of the group has been enhanced.


Pensions are accounted for in accordance with IAS 19 Employee benefits and on
this basis, liabilities in the group's defined benefit pension schemes
exceeded employee benefit assets by £95m compared with last year's deficit of
£44m. The UK scheme accounts for 90% of the group's total pension assets and
the increase in the market value of these assets during the year was slightly
less than the increase in the present value of scheme liabilities which
resulted from a further reduction in long-term bond yields during the year.
By agreement with the Trustees, the Company agreed to eliminate the deficit
identified at the time of the triennial actuarial valuation of the UK pension
scheme in 2008 with five annual payments of £30m each. The last triennial
valuation was undertaken in 2011 and revealed a funding surplus of £17m.
However, following the fall in bond yields after the date of that valuation,
the Company agreed to continue to make the remaining two payments, the last of
which will be in March 2013. Total contributions to defined benefit plans in
the year amounted to £71m (2011 - £70m).

For defined contribution schemes the charge for the year is equal to the
contributions made which amounted to £53m (2011 - £51m).

John Bason

Finance Director

The annual report and accounts is available at and will be
despatched to shareholders on 8 November 2012. The annual general meeting
will be held at Congress Centre, 28 Great Russell Street, London. WC1B 3LS at
11am on Friday, 7 December 2012.


Each business is responsible for its own risk management assessment which is
reported to the group's Director of Financial Control annually. Our
decentralised business model empowers the boards and management of our
businesses to identify, evaluate and manage the risks they face on a timely
basis. Key risks and internal control procedures are reviewed at group level
by the board.

We require all businesses to implement appropriate levels of risk management
to ensure compliance with all relevant legislation, our group health, safety
and environment policies, our overriding business principles and group
policies relating to them, taking into account business needs and local

Each business is responsible for regularly assessing its health, safety and
environmental risks with managers, operators, contracting companies and
specialist staff working together to identify hazards. Appropriate
operational procedures and controls are put in place to mitigate risks and all
employees are provided with appropriate information, training and
supervision. Further details of our risk mitigation activities can be found
in our Corporate Responsibility report at

The board reviews annually the material financial and non-financial risks
facing our businesses and, on a rolling cycle basis, reviews the effectiveness
of the risk management process and the resources that our individual
businesses devote to them. The principal risks currently identified by our
businesses and reviewed by the board are:

Issue               Risk                         Mitigation
Product safety      Reputational damage caused   Food safety put before
                    by food hygiene or safety    economic considerations.
                                                 Our businesses employ quality
                    Non-compliance with          control specialists and
                    regulatory requirements.     operate strict policies to
                                                 ensure consistently high
                                                standards are maintained in
                                                 relation to the sourcing and
                                                 handling of raw materials.


                                                 Food safety systems regularly
                                                 reviewed to ensure efficacy
                                                 and legal compliance.


                                                 Quality and food safety
                                                 audits are undertaken at our
                                                 manufacturing sites.


                                                 Documented and tested product
                                                 recall procedures are
                                                 embedded in all our
                                                 businesses and regularly


                                                 We proactively monitor the
                                                 regulatory and legislative
                                                 environment as well as
                                                 emerging scientific research.
Health and          Health concerns over certain Our recipes are regularly
nutrition           ingredients in food.         reviewed and reformulation is
                                                 conducted as necessary to
                                               optimise the nutritional
                                                 profile of products.
                                                 Our UK Grocery group has
                                                signed the UK government's
                                                 'Responsibility Deal on
                                                Public Health' and associated
                                                 pledges to reduce salt,
                                                remove trans fats and promote
                                                 healthy eating and lifestyle
                                                options to our employees.


                    Inappropriate advertising to % Guideline Daily Amount
                    children.                    labelling or equivalent
                                                 nutritional information
                                                 provided to consumers in the
                                                 UK and Australia.


                                                 Our UK Grocery portfolio
                                                 contains only a small number
                                                 of products specifically
                                                 intended for children. These
                                                 products are marketed
                                                 responsibly, following
                                                 accepted codes of practice
                                                 and within the parameters of
                                                 a clear, operational business
Workplace health    Potential for fatal          Group health and safety
and safety          accidents and serious        policy in place.
                    injuries to employees and

                                                Increased financial
                                                 investment in health and
                                                 safety management.

                                                 Information and guidance
                                                 provided to our businesses.


                                                 Internal and external audits
                                                 of health, safety and
                                                 management reporting
Employee rights     Non-compliance with          International Labour
                    internationally recognised   Organization conventions are
                   standards.                   taken into account and we
                                                 strive to observe the UN
                                               Universal Declaration of
                                                 Human Rights in the
                   Inability to recruit and     management of all businesses.
                    retain high-calibre people
                   at all levels necessary to   
                    achieve business performance
                   targets and maintain         Staff throughout the group
                    profitable growth.           are recruited, trained and
                                                 rewarded according to
                                                 performance alone.


                                                 Groupwide whistleblowing
                                                 policy in place and kept
                                                 under review.

Management          Failure to plan for          Each business has a
succession          succession to key roles      succession plan which is
                    could lead to a lack of      reviewed with group
                    management continuity and    management twice a year, and
                    sub-optimal operational or   with the board, annually.
                    financial performance.

                                                 Development of our senior
                                                 managers is co-ordinated by
                                                 the Group HR Director and the
                                                 Head of Executive


                                                 A small number of executive
                                                 search companies have been
                                                 briefed to introduce us to
                                                 talented executives from
                                                 other companies who could add
                                                 value to the group.
Input costs,        Damage to brands caused by   Extensive audit programme for
suppliers and       supply chain weakness e.g.   labour standards of
supply chain        poor conditions for workers. suppliers.

                    Disruption to raw material   Continued work, in
                    supplies and production      partnership with suppliers
                    caused by problems with      and NGOs, to improve working
                    suppliers, natural disasters conditions e.g. via training.
                    and other incidents.

                                                 Business continuity and
                                                 disaster recovery planning
                                                 regularly reviewed.

Ethical business    Penalties imposed or         All group businesses required
practices           reputational damage suffered to sign up to the group's
                    through bribery, corruption  Business Principles and
                   or unfair competition.       Anti-Bribery and Corruption
                                                 policy with training provided
                                                to all staff.

                    Reputational damage.         



                                                 Businesses work
                                                 co-operatively to ensure
                                                 visibility of reputational
                                                 risk within supply chains and
                                                 draw upon best practice
                                                 management expertise from
                                                 across the group, including
                                                 Primark and Twinings.
Climate change      Long-term increase in energy Compliance with the group's
                    prices.                      environment policy.


                    Physical threats to          Best available techniques
                    operations from climate      employed to reduce energy
                    change e.g. flooding.        consumption - statutory
                                                 requirement for all sites
                                                subject to the EU's Pollution
                                                 Prevention and Control
                    Altered weather patterns     regime.
                    affecting crop productivity.
                                                 Own electricity generated
                                                where possible, e.g. through
                                                 combined heat and power
                                                 plants and use of bagasse
                                                 (waste sugar cane fibre).


                                                 Agricultural raw materials
                                                 sourced from a wide range of
                                                 geographical locations and


                                                 Substantial investment to
                                                 improve environmental risk
                                                 management and energy
Air pollution       Unacceptable impact on       Plant and process changes
                    environment and offence      assessed in advance before
                    caused to local communities  authorisation sought. As a
                    by emissions to air.         minimum, comply with emission
                                                 standards in country of
Disposal of waste   Legal sanction and           Responsibility assigned to
and waste water     reputational damage because  senior executives in all
                    of non-compliance with       businesses and specialists
                   regulations and licences.    employed. As a minimum,
                                                 comply with standards in
                                                 country of operation.


                                                 Our UK Grocery group supports
                                                 the Courtauld 2 Commitment to
                                                 reduce packaging waste, the
                                                 Food and Drink Federation
                                                 'Fivefold Environmental
                                                 Ambition' and the Institute
                                                 of Grocery Distribution
                                                 'Water Savings Initiative'.


                                                 Waste reduced, re-used or
                                                 recycled wherever
Water availability  Water shortages and          Water-intensive sites in
                    increased cost of water      areas of water stress
                                                 identified, and efforts
                                                 focused on water reduction in
                                                 these areas.


                                                 Investing heavily in the
                                                 quality of our water usage
                                                 data to enable improved
                                                 monitoring and management of
                                                 our water use.
Resource efficiency Unnecessary costs from       Use of raw materials
                    inefficient use of natural   optimised.

                                                 Packaging waste minimised
                                                 consistent with food safety
                                                 and product protection.


                                                 Fuel consumption in transport
Palm oil            Reputational damage from     Group policy introduced to
                    unsustainable sourcing of    buy all palm oil from
                   palm oil.                    sustainable sources by 2015.

Genetically         Consumer concern over use of Recognised as a sensitive
modified (GM) crops GM food ingredients.         issue for some consumers and
                                                 trends monitored by market.

Financial and
Competition rules   Penalties for failing to     Clear policy direction and
                    comply with the 1998         close support from specialist
                   Competition Act, the 2003    in-house legal department.
                    Enterprise Act, relevant EU
                   law and all relevant         
                    competition legislation.
                                                Compulsory awareness
Global economic     Demand for our products      Mitigated by diversity of
slowdown and        declines due to uncertainty  business portfolio and
changing consumer   over economic outlook and    geographic reach.
demand              impact on disposable

                                                 Substantial investment in
                                                 research and development,
                                                 product quality, advertising
                                                 and promotion, and focus on
                                                 cost management.
Financial, currency Loss sustained as a result   Adherence to the group's
and commodity risks of failure of internal       financial control framework
                    controls or fraud, and       and anti-fraud policy.
                   exposure to foreign
                    currencies, interest rates,  
                   counterparty credit risk,
                    liquidity risk, and changes  Treasury operations are
                   in market prices especially  conducted within a framework
                    for energy and commodities. of board-approved policies
                                                and guidelines.


                                                Sufficient funding is
                                                 maintained by way of external
                                                 loans and committed bank
                                                 facilities which are renewed
                                                 or extended on a timely basis
                                                 having regard to the group's
                                                 projected funding needs.


                                                 Financial transactions are
                                                 dealt through financial
                                                 institutions with a credit
                                                 rating of A or better.
Tax compliance      Failure to comply with local The group has a financial
                    tax law resulting in         control framework and a
                   underpayment of tax and      board-adopted tax policy
                    exposure to related interest requiring all businesses to
                   and penalties.               comply fully with all
                                                 relevant local tax law.


                                                 Provision is made for known
                                                issues based on management's
                                                 interpretation of
                                                 country-specific tax law and
                                                 the likely outcome. Any
                                                 interest and penalties on tax
                                                 issues are provided for in
                                                 the tax charge.
Loss of a major     The loss of one of our key   Our businesses have business
site                sites could present          continuity plans in place to
                    significant operational      manage the impact of such an
                   difficulties.                event and group insurance
                                                 programmes to mitigate the
                                                financial consequences.
Regulatory and      Failure to recognise         We remain vigilant to future
political           political or cultural        changes and the increased
                    differences in the many      risk presented by emerging
                   countries in which we        markets.
                    operate could directly
                    impact the success of our    
                                                 We engage with governments
                                                and NGOs to ensure the views
                                                 of our stakeholders are
                                                represented and we try to
                                                 anticipate, and contribute
                                                to, important changes in
                                                 public policy.
                    Proposals to end sugar
                    quotas in 2015.              

                                                 Our financial control
                                                 requirements are consistently
                                                 applied wherever we operate.


                                                 We are exploring alternative
                                                 options with EU policymakers.
Major capital       Risk of overspending initial All major projects are
projects and        cost estimates, overrunning  managed by dedicated teams
acquisitions        construction timelines and   who work in close liaison
                    failure to meet design       with business management.

                                                 Project plans are reviewed
                                                 and approved by group
                                                 management and, for larger
                                                 projects, by the board.
                                                 Updates on progress are
                                                 provided throughout the


This report contains forward-looking statements. These have been made by the
directors in good faith based on the information available to them up to the
time of their approval of this report. The directors can give no assurance
that these expectations will prove to have been correct. Due to the inherent
uncertainties, including both economic and business risk factors underlying
such forward-looking information, actual results may differ materially from
those expressed or implied by these forward-looking statements. The directors
undertake no obligation to update any forward-looking statements whether as a
result of new information, future events or otherwise.


The financial statements, prepared in accordance with International Financial
Reporting Standards as adopted by the EU, give a true and fair view of the
assets, liabilities, financial position and profit of the Company and the
undertakings included in the consolidation taken as a whole.

Pursuant to Disclosure and Transparency Rules, Chapter 4, the following
sections of the Company's annual report contain a fair review of the
development and performance of the business and the position of the Company,
and the undertakings included in the consolidation taken as a whole, together
with a description of the principal risks and uncertainties that they face:

1. The Chairman's statement on pages 14 and 15;
2. Operating review on pages 16 to 29 which includes a review of the external
   environment, key strategic aims, future development and performance
3. Financial review on pages 30 and 31;
4. Other disclosures: 'Research and development';
5. Other disclosures: 'Financial instruments';
6. Other disclosures: 'Property, plant and equipment';
7. Other disclosures: 'Power of the directors'; and
8. Other disclosures: 'Principal risks and uncertainties'

The contents of this announcement, including the responsibility statement
above, have been extracted from the annual report and accounts for the 52
weeks ended 15 September 2012 which can be found at and will be
despatched to shareholders on 8 November 2012. Accordingly this
responsibility statement makes reference to the financial statements of the
Company and the group and to the relevant narrative appearing in that annual
report and accounts rather than the contents of this announcement.

On behalf of the board

Charles Sinclair George Weston   John Bason
Chairman         Chief Executive Finance Director

6 November 2012

For the 52 weeks ended 15 September 2012

                                          Before Exceptional
                                           Items      Items*    Total
                                          2012        2012     2012     2011
                                            £m          £m       £m       £m
Continuing operations           Note                                      
Revenue                          1        12,252           -   12,252   11,065
Operating costs before
exceptional items                      (11,302)           - (11,302) (10,265)
Exceptional items                             -        (98)     (98)        -
                                           950        (98)      852      800
Share of profit after tax from
joint ventures and associates                27           -       27       37
Profits less losses on disposal
of non-current assets                       (6)           -      (6)        5
Operating profit                            971        (98)      873      842
Adjusted operating profit        1         1,077           -    1,077      920
Profits less losses on disposal
of non-current assets                       (6)           -      (6)        5
Amortisation of non-operating
intangibles                               (100)           -    (100)     (83)
Exceptional items                             -        (98)     (98)        -
Profits less losses on sale and
closure of businesses            2           (9)           -      (9)        -
Profit before interest                      962        (98)      864      842
Finance income                                9           -        9        9
Finance expense                           (114)           -    (114)    (101)
Other financial income                        2           -        2        7
Profit before taxation                      859        (98)      761      757
Adjusted profit before taxation             974           -      974      835
Profits less losses on disposal
of non-current assets                       (6)           -      (6)        5
Amortisation of non-operating
intangibles                               (100)           -    (100)     (83)
Exceptional items                             -        (98)     (98)        -
Profits less losses on sale and
closure of businesses                       (9)           -      (9)        -
Taxation – UK                            (91)           -     (91)     (92)
Taxation – Overseas
(excluding tax on exceptional
items)                                    (116)           -    (116)     (88)
 – Overseas (on
exceptional items)                            -          29       29        -
                                3         (207)          29    (178)    (180)
Profit for the period                       652        (69)      583      577
Attributable to                                                          
Equity shareholders                         624        (69)      555      541
Non-controlling interests                    28           -       28       36
Profit for the period                       652        (69)      583      577
Basic and diluted earnings per
ordinary share (pence)           4                             70.3     68.7
Dividends per share paid and
proposed for the period (pence)  5                            28.50    24.75
*Refer to Note 6                                                         


For the 52 weeks ended 15 September 2012

                                                                     2012 2011
                                                                      £m   £m
Profit for the period recognised in the income statement              583  577
Other comprehensive income
Actuarial (losses)/gains on defined benefit schemes                  (99)   12
Deferred tax associated with defined benefit schemes                   23  (4)
Effect of movements in foreign exchange                             (241)   89
Net gain on hedge of net investment in foreign subsidiaries            11    2
Deferred tax associated with movements in foreign exchange              3  (1)
Current tax associated with movements in foreign exchange             (4)  (1)
Movement in cash flow hedging position                               (21)    6
Deferred tax associated with movement in cash flow hedging
position                                                                4  (1)
Other comprehensive income for the period                           (324)  102
Total comprehensive income for the period                             259  679
Attributable to
Equity shareholders                                                   281  657
Non-controlling interests                                            (22)   22
Total comprehensive income for the period                             259  679


At 15 September 2012

                                                    15 September  17 September

                                                           2012          2011
                                                              £m            £m
Non-current assets
Intangible assets                                          1,769         1,893
Property, plant and equipment                              4,541         4,465
Biological assets                                             89            99
Investments in joint ventures                                174           150
Investments in associates                                     40            44
Employee benefits assets                                      18            35
Deferred tax assets                                          189           150
Other receivables                                            151           203
Total non-current assets                                   6,971         7,039
Current assets
Inventories                                                1,500         1,425
Biological assets                                            109           112
Trade and other receivables                                1,236         1,259
Derivative assets                                             33            26
Cash and cash equivalents                                    391           341
Total current assets                                       3,269         3,163
TOTAL ASSETS                                              10,240        10,202
Current liabilities
Loans and overdrafts                                       (538)         (729)
Trade and other payables                                 (1,752)       (1,627)
Derivative liabilities                                      (50)          (22)
Income tax                                                 (150)         (133)
Provisions                                                  (98)          (31)
Total current liabilities                                (2,588)       (2,542)
Non-current liabilities
Loans                                                      (914)         (897)
Provisions                                                  (38)         (105)
Deferred tax liabilities                                   (366)         (404)
Employee benefits liabilities                              (113)          (79)
Total non-current liabilities                            (1,431)       (1,485)
TOTAL LIABILITIES                                        (4,019)       (4,027)
NET ASSETS                                                 6,221         6,175
Issued capital                                                45            45
Other reserves                                               175           175
Translation reserve                                          532           712
Hedging reserve                                             (17)             -
Retained earnings                                          5,099         4,816
Non-controlling interests                                    387           427
TOTAL EQUITY                                               6,221         6,175


For the 52 weeks ended 15 September 2012

                                                                    2012  2011
                                                                      £m    £m
Cash flow from operating activities
Profit before taxation                                               761   757
Profits less losses on disposal of non-current assets                  6   (5)
Profits less losses on sale and closure of businesses                  9     -
Finance income                                                       (9)   (9)
Finance expense                                                      114   101
Other financial income                                               (2)   (7)
Share of profit after tax from joint ventures and associates        (27)  (37)
Amortisation                                                         122    96
Depreciation                                                         394   317
Exceptional impairment of property, plant and equipment               92     -
Exceptional impairment of operating intangibles                        6     -
Net change in the fair value of biological assets                   (28)  (21)
Share-based payment expense                                            8     8
Pension costs less contributions                                    (38)  (38)
Increase in inventories                                            (125) (176)
Decrease/(increase) in receivables                                     3 (138)
Increase in payables                                                 165   115
Purchases less sales of current biological assets                    (3)   (2)
Decrease in provisions                                              (17)  (69)
Cash generated from operations                                     1,431   892
Income taxes paid                                                  (191) (156)
Net cash from operating activities                                 1,240   736
Cash flows from investing activities
Dividends received from joint ventures and associates                 11     9
Purchase of property, plant and equipment                          (700) (794)
Purchase of intangibles                                             (13)  (49)
Purchase of non-current biological assets                            (1)   (1)
Sale of property, plant and equipment                                  6    18
Purchase of subsidiaries, joint ventures and associates             (45)  (24)
Sale of subsidiaries, joint ventures and associates                    2     3
Loans to joint ventures                                               24  (25)
Purchase of non-controlling interests                                  -  (29)
Interest received                                                     10    11
Net cash from investing activities                                 (706) (881)
Cash flows from financing activities
Dividends paid to non-controlling interests                         (23)  (22)
Dividends paid to equity shareholders                              (200) (190)
Interest paid                                                      (108)  (99)
(Decrease)/increase in short-term loans                            (279)   342
Increase in long-term loans                                           44   105
Sale of shares in subsidiary undertakings to non-controlling
interests                                                              4     -
Movements from changes in own shares held                              -  (16)
Net cash from financing activities                                 (562)   120
Net decrease in cash and cash equivalents                           (28)  (25)
Cash and cash equivalents at the beginning of the period             291   309
Effect of movements in foreign exchange                             (18)     7
Cash and cash equivalents at the end of the period                   245   291


For the 52 weeks ended 15 September 2012

                     Attributable to equity shareholders
             Other                     The story has been truncated,
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