annual report and accounts 2002
associated 
british foods plc
associated british foods plc annual report and accounts 2002 garﬁeld howard weston
born 28 april 1927 died 15 february 2002
‘… the quality both in skill and integrity of a
nation’s business community is of paramount
importance to the aspirations wellbeing and
standard of living of its people’ garry weston 1991 annual report and accounts 2002 1
associated british foods is an international
food ingredients and retail group with annual
sales of £45 billion and 35000 employees 
the group is one of europe’s largest food
companies and has significant businesses 
in australia new zealand asia and the us
group at a glance 2
chairman’s statement 4
chief executive’s review 8
grocery 10
ingredients  oils 14
primary food  agriculture 18
retail  packaging 22
australia  new zealand 26
finance director’s report 30
board of directors 34
directors’ report 36
corporate citizenship 38
corporate governance 40
remuneration report 42
directors’ responsibilities 46
independent auditor’s report 47
financial statements 48
accounting policies 53
notes to the ﬁnancial statements 55
principal subsidiary undertakings 74
investments 74
progress report 75
notice of meeting 76
company directory 80
operating proﬁt up 13 to £395 million

•
group sales up 3 to £4545 million•
investment income down from £66 million to £57 million•
proﬁt before tax up 9 to £430 million•

adjusted earnings per share up 14 to 387p•

dividends per share up 12 to 1325p•
cash ﬂow from operating activities up £96 million to £523 million
net cash funds £1050 million•
 before exceptional items and amortisation of goodwill
 before exceptional items proﬁt on the sale of ﬁxed assets and amortisation of goodwill 2 associated british foods plc
grocery
associated british foods is a major
manufacturer of both branded and private
label grocery products many of which are
household names
bread  crispbreads
flour rice  noodles
speciality teas
sugar  sweeteners
group at a glance
associated british foods is grouped into five segments these
are grocery ingredients  oils primary food  agriculture retail 
 packaging and the australian  new zealand operations george
weston foods the group has sales worldwide and manufacturing
operations across europe australia new zealand asia and the us
2002 2001
sales £m 902 858
operating proﬁt £m 50 37
proﬁt margin  55 43
return on capital employed  158 116
2002 2001
sales £m 800 711
operating proﬁt £m 53 42
proﬁt margin  66 59
return on capital employed  198 158
ingredients  oils
the group has an increasing focus 
on high added value ingredients and
vegetable oils it produces functional
ingredients from natural products for use 
in the food foodservice pharmaceutical
and personal care sectors
baking  confectionery ingredients
enzymes  yeasts
polyols  antacid ingredients
vegetable oils emulsiﬁers 
sterols  esters annual report and accounts 2002 3
2002 2001
sales £m 1761 1867
operating proﬁt £m 195 172
proﬁt margin  111 92
return on capital employed  247 224
2002 2001
sales £m 712 574
operating proﬁt £m 77 63
proﬁt margin  108 110
return on capital employed  224 186
2002 2001
sales £m 580 548
operating proﬁt £m 12 21
proﬁt margin  21 38
return on capital employed  58 97
primary food  agriculture
associated british foods is uk agriculture’s
biggest customer the group buys more
primary products from british farmers 
than any other adding value within the
food chain through its sophisticated and
efﬁcient processing facilities to produce
high quality staple food ingredients such
as ﬂour and sugar
animal feeds
flour milling
seed processing
sugar
retail  packaging
primark has a winning formula of
providing quality merchandise at
affordable prices allied glass containers 
is one of europe’s leading producers 
of premium glass packaging
fashion retail
glass packaging
australia  new zealand
george weston foods is a major
processor and producer of primary and
branded food products in australia and
new zealand
biscuits  cakes
bread 
flour milling 
meat  dairy 4 associated british foods plc
chairman’s statement
‘these results achieved against a background of increasing global
uncertainty and decreasing investor conﬁdence demonstrate not
only the strength and resilience inherent in our core businesses
but their capacity for producing further growth’ annual report and accounts 2002 5
in my interim statement i referred to the solid progress which
had been achieved in the first six months of the year and i 
am delighted to report that our operational performance in the
second half has maintained that rate of growth operating proﬁt
before exceptional items and amortisation of goodwill increased
by £44 million or 13 to £395 million it is particularly noteworthy
that this performance has been achieved against the background
of a global market characterised by excess capacity and declining
consumer conﬁdence
all divisions with the exception of australia achieved 
doubledigit proﬁt increases maintaining the trend established 
in the first half primary food  agriculture again produced 
strong profit growth despite a smaller uk beet crop british
sugar achieved a satisfactory increase in profit this could 
not have been achieved without the ongoing rationalisation 
and cost reduction programme which has been a constant focus 
in recent years despite an improved operational performance
our overseas sugar business in poland was hit by adverse 
market prices resulting in a fall in proﬁt although faced with 
a poor wheat harvest allied mills and our arable business
achieved strong gains in proﬁtability here again restructuring 
and cost reduction has been a constant theme in agriculture
traditionally the most volatile sector of our operations we were
able to overcome the trailing impact of disease and adverse
weather conditions to record strong gains in our animal feeds
business given the continuing problems of pricing ﬁnancial
instability and over capacity in the farming industry the
achievement of doubledigit growth in a shrinking sector of 
the uk economy is a remarkable result
with one exception the ingredients  oils businesses put in 
an outstanding performance ach signiﬁcantly increased its 
proﬁt and this is particularly pleasing because it was achieved
before including any contribution from the mazola oils
acquisition which was only purchased towards the end of 
the ﬁnancial year the integration of mazola is going according 
to plan and it is expected to make a substantial contribution 
to the proﬁt growth of ach in the coming year spi our polyols
business has made a recovery from the operational problems
experienced last year and achieved a signiﬁcantly improved
proﬁt it is disappointing to report that our abitec ingredients
business faced problems in reorganising and integrating its
existing and newly acquired bakery ingredients businesses 
in the uk and the us the result was a decline in proﬁt but
despite this setback we are confident that growth will be
resumed in the current year
our grocery businesses again produced an excellent result
allied bakeries continued to grow branded volume in the
multiple retail sector with contributions from a bread price
increase cost reductions and operational efﬁciency improvements
allied bakeries achieved a signiﬁcant improvement in its results
twinings maintained its strong performance in worldwide sales
market share and proﬁt growth a strong feature in this growth
story in recent years has been the successful development of its
product range into the herbal and fruit infusion markets both 
in the uk and overseas  
primark has again achieved outstanding growth in both 
sales and proﬁt we continue to acquire and develop stores 
in new city centre locations and we are confident that the
growth of this business can be maintained in an increasingly
competitive sector
the poor performance of george weston foods in australia
continued into the second half of the ﬁnancial year despite a highly
successful performance by the milling and baking businesses 
our meat and biscuit operations continued to underperform during 
the year we sold at a proﬁt our lossmaking starch manufacturing
operation since the ﬁnancial year end we have completed the
buyout of the minority shareholders in the company we are now 
in a position to take positive action to best position this business 
for growth this will be a major focus in the coming year
the disposal of redundant properties continued resulting in 
a proﬁt of £8 million in the year 
despite an increased level of expenditure on ﬁxed assets and
acquisitions at over £450 million the strong cash ﬂow from our
operating activities ensured that at the year end our net liquid
funds were in excess of £1 billion a level virtually unchanged 
from the previous year improved returns on these invested funds
in the second half of the year enabled us to restrict the decline 
in the level of investment income as a result of lower interest rates
at £57 million this was £9 million or 14 below last year 6 associated british foods plc
chairman’s statement continued
adjusting for exceptional items proﬁts on the sale of ﬁxed assets
and amortisation of goodwill group proﬁt before tax increased 
by 9 to £430 million adjusted earnings per share were 14
ahead of last year at 387p
your company is renowned for its defensive strengths and its cash
generating capability these results achieved against a background
of increasing global uncertainty and decreasing investor conﬁdence
demonstrate not only the strength and resilience inherent in our
core businesses but their capacity for producing further growth 
management effort continues to be focused on improving 
the efﬁciency of our businesses this is not only a process of
reducing our cost base but of improving the level of performance
by our operating management both by developing the best 
of our existing executives and targeted recruitment of stronger
managers where required
spending on acquisitions in the year totalled £268 million
including £235 million for the purchase of mazola in the us
this bottled corn oil business is an ideal ﬁt with ach oils and
enables us to broaden our product offering into the branded
retail segment of the market as well as to rationalise production
and distribution costs this acquisition will have a positive impact 
on earnings in our 2003 ﬁnancial year 
since the end of the ﬁnancial year we completed the purchase of
the minority shareholdings in george weston foods in australia at
a cost of £58 million in early october we announced the purchase
of ovaltine the branded malted drinks business from novartis of
switzerland for a consideration of £171 million the acquisition
includes ovaltine and associated brands throughout the world
except the us the addition of this internationally known brand to
our product portfolio will enhance our presence in the international
consumer market for hot beverages this acquisition is forecast to
be earnings enhancing in its ﬁrst year under our ownership
in my last annual report i stated that the outlook for the year
ahead was one of escalating uncertainty and of reduction in
consumer conﬁdence financial markets throughout the world
over the past year have reﬂected that in moving consistently
lower i believe that the coming months will bring little in the 
way of relief from these pressures as the global economy faces
up to the possibility of war in the middle east a seemingly
unending ﬁnancial crisis in japan and low to zero growth in the 
us and europe no company as large and widespread in its
activities as ours can be totally immune from these inﬂuences
despite this gloomy outlook i believe that this company can face
the coming year with the conﬁdence that it will maintain its positive
growth in sales and operating proﬁt in the past year we have
invested over £450 million on acquisitions and capital expenditure
in our existing businesses such is the strength of our cash ﬂow
that we have ﬁnanced all this without any signiﬁcant reduction in
the level of our net liquid funds these investments and the further
acquisitions since our year end will have a positive effect on our
operating performance in the coming year
the growth of your company has been ﬁnanced from its own
resources the value of this longheld and important discipline 
is clearly demonstrated in today’s hostile ﬁnancial environment
where the very existence of many companies is threatened by
their inability to service debt taken on in more expansionary times
our objective is to grow at a steady and sustainable pace funding
our development from cash ﬂow and a strong balance sheet 
the base of our business has been signiﬁcantly reshaped in the
past three years we have sought to eliminate areas of weakness
or irrelevance to our planned growth but at the same time we
have sought to strengthen and expand those sectors which can
act as the framework for our future development i am conﬁdent
that your company can maintain its current momentum 
board changes
the appointment of mike alexander as an additional nonexecutive
director was announced in january this year mr alexander is
executive director and chief operating officer of centrica plc
having previously held a number of management positions with
bp and latterly with british gas he brings a wealth of operational
management experience and will make a strong contribution to
our activities
dividends 
the directors have declared a second interim dividend of 900p
2001 – 755p which will be paid on 18 february 2003 to
shareholders registered at the close of business on 17 january 2003 annual report and accounts 2002 7
this makes a total dividend for the year of 1325p an increase 
of 12 on the previous year
employees 
the pace of change in our organisation owes much to our 
employees around the world who have not only risen to the
challenges this poses but have made major contributions in taking 
us forward the successes we are recording in this report are a
testament to their efforts and i take this opportunity to thank them all
chairman 
your company is well placed to achieve further growth it has an
excellent management team and a solid ﬁnancial base
having served as a director for the last 23 years i feel that it is the
appropriate time to step down and i have notiﬁed the board that 
i intend to retire immediately following the annual general meeting
my successor as chairman will be martin adamson a fellow board
member who will bring to the role a wealth of business experience
and a breadth of knowledge of your company’s activities i wish
him and my colleagues every success in the years ahead
harry bailey  
chairman
‘the growth of your company has been ﬁnanced from its own
resources our objective is to grow at a steady and sustainable
pace funding our development from cash ﬂow and a strong
balance sheet’ 8 associated british foods plc
chief executive’s review
businesses across the group again delivered excellent results
increasing operating proﬁt before exceptional items and
amortisation of goodwill by 13 to £395 million and increasing
group sales by 3 to £4545 million adjusted earnings per
share rose by 14 to 387p 
a particularly pleasing aspect of these results is that for the
second year running four out of ﬁve of the business categories
outlined in our segmental analysis delivered operating proﬁt
increases in excess of 10 a clear indication of the breadth 
of progress being made across the group
delivering sustained growth is however only one of our goals 
the other major goal is the generation of strong cash ﬂow the
means by which we will ensure our ongoing ability to invest heavily
in the capital projects and acquisitions necessary to underpin
future earnings growth the cash ﬂow generated by the group over
the last year after capital expenditure but before acquisitions and
disposals was £229 million this result demonstrates the strong
cash generating ability of the group
although our shareholders and our employees should take 
some satisfaction from these ﬁnancial results there have also
been other signs of progress good market positions have 
been strengthened strong management teams have been
reinforced and a more international company is emerging 
with the ﬁrst rate new businesses acquired in north america
europe and asia
there is however much still to do in order to bring the company
closer to achieving its full potential we need to do even more 
to develop our management teams and we must further increase
the focus we place on the marketing of our products we must
also continue to review the performance and plans of all our
businesses to determine those where we can achieve the best
returns on our investment
a key element of our future is the further development either
organically or by acquisition of very strong market positions 
that have the scale cost base and breadth and depth of product
offering necessary to make a major impact on their markets 
we still have a place for efﬁcient smaller businesses with the
potential to grow but the development of larger scale positions
will strengthen the base of our business and provide the platform
for signiﬁcant subsequent growth 
one example of our ability to develop businesses is at ach
here the business has moved in a two year period from 
being a medium size refiner bottler and marketer of private
label cooking oils to becoming a leading player in the bottling
and marketing of oil based food products in north america in
making this transition we outsourced the inefficient elements 
of our manufacturing operations and with the acquisition of
strong brands in both foodservice and retailing created strong
market positions with the scale necessary to optimise our
distribution and buying efficiencies in time this strength will
inevitably provide further opportunities for significant growth 
‘good market positions have
been strengthened strong
management teams have 
been reinforced and a more
international abf is emerging
with the first rate new
businesses acquired in north
america europe and asia’ annual report and accounts 2002 9
in a similar way we are looking to the recent acquisition of the
ovaltine brands from novartis to work alongside our already
successful twinings business to give the scale expertise and
international market presence necessary to have a much stronger
impact on the speciality beverages market this will again provide
a base for further growth
many of our businesses can however achieve the necessary strength
and scale in their markets without major acquisition but by organic
growth supported by capital investment during the past year 
£186 million was invested in capital projects including £51 million
on new stores and reﬁts in support of the remarkable growth of our
primark retailing operation the skill of primark’s staff their clarity of
focus and their understanding of the customer have all contributed
to a further strengthening of primark’s position in its chosen market 
this last year has seen good performances from a range 
of businesses across the group many of these will be referred 
to later in the report examples of marketing successes include
brand extensions at ryvita and twinings and innovative product
launches at our spi pharma business amongst the many
examples of effective cost reduction was a very strong performance
in improving supply chain and distribution efﬁciencies at our uk
bakery business however this business continues to trade in a
tough market and much work is still needed before we achieve 
a satisfactory level of return from this investment
references to tough market conditions become repetitive and
should now be seen as the norm for most industries many of 
our businesses have shown that success can be achieved in 
the toughest of markets 
since the end of the ﬁnancial year we have acquired the minority
shareholdings in george weston foods our australian 
business much has been said about the disappointing levels of
performance from this business in recent times the problems
have centred on our meat and biscuit operations and should 
not detract from the qualities of the rest of the company which
include a ﬁrst rate milling and baking operation some very good
brands and some very good people the change in ownership
structure will allow us to simplify the business and should lead 
to an early improvement in results
any overview of our performance would not be complete
without a reference to sugar british sugar’s results were
impacted by a low crop poor performance at the wissington
factory and to a lesser extent by low world sugar prices
despite this we delivered a strong result which although still 
a major part of our earnings is becoming a smaller proportion 
of the whole as other parts of the business continue to grow
this reduces the group’s exposure to the eu sugar regime 
which is a trend we expect to continue
i mentioned above the fluctuations in world sugar prices
although they do not have a major direct effect on british sugar
they have a major indirect effect on the profitability of our
businesses in poland and china lower sugar prices have
impacted profits from these two businesses during the last 
year and i do not expect to see any improvement in the 
coming year
across the board our businesses can face the future with
conﬁdence aware that there is still much to do but knowing
from their achievements this year that they have both the ability
and resources to continue on a very ﬁrm growth path
peter jackson  
chief executive
1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002
4195
4299
4406
4418
316
326
340
351
320
331
338
387
sales £m adjusted operating proﬁt £m
before exceptional items 
and amortisation of goodwill
adjusted earnings per share p
before exceptional items proﬁt on the sale 
of ﬁxed assets and amortisation of goodwill
313
4545 395 10 associated british foods plc
everyone’s cup of tea
our teas include
jacksons of piccadilly
nambarrie and the
world’s leading speciality
brand twinings


Summary:
 annual report and accounts 2002 9
in a similar way we are looking to the recent acquisition of the
ovaltine brands from novartis to work alongside our already
successful twinings business to give the scale expertise and
international market presence necessary to have a much stronger
impact on the speciality beverages market this will again provide
a base for further growth
many of our businesses can however achieve the necessary strength
and scale in their markets without major acquisition but by organic
growth supported by capital investment during the past year 
£186 million was invested in capital projects including £51 million
on new stores and reﬁts in support of the remarkable growth of our
primark retailing operation the skill of primark’s staff their clarity of
focus and their understanding of the customer have all contributed
to a further strengthening of primark’s position in its chosen market 
this last year has seen good performances from a range 
of businesses across the group many of these will be referred 
to later in the report examples of marketing successes include
brand extensions at ryvita and twinings and innovative product
launches at our spi pharma business amongst the many
examples of effective cost reduction was a very strong performance
in improving supply chain and distribution efﬁciencies at our uk
bakery business however this business continues to trade in a
tough market and much work is still needed before we achieve 
a satisfactory level of return from this investment
references to tough market conditions become repetitive and
should now be seen as the norm for most industries many of 
our businesses have shown that success can be achieved in 
the toughest of markets 
since the end of the ﬁnancial year we have acquired the minority
shareholdings in george weston foods our australian 
business much has been said about the disappointing levels of
performance from this business in recent times the problems
have centred on our meat and biscuit operations and should 
not detract from the qualities of the rest of the company which
include a ﬁrst rate milling and baking operation some very good
brands and some very good people the change in ownership
structure will allow us to simplify the business and should lead 
to an early improvement in results
any overview of our performance would not be complete
without a reference to sugar british sugar’s results were
impacted by a low crop poor performance at the wissington
factory and to a lesser extent by low world sugar prices
despite this we delivered a strong result which although still 
a major part of our earnings is becoming a smaller proportion 
of the whole as other parts of the business continue to grow
this reduces the group’s exposure to the eu sugar regime 
which is a trend we expect to continue
i mentioned above the fluctuations in world sugar prices
although they do not have a major direct effect on british sugar
they have a major indirect effect on the profitability of our
businesses in poland and china lower sugar prices have
impacted profits from these two businesses during the last 
year and i do not expect to see any improvement in the 
coming year
across the board our businesses can face the future with
conﬁdence aware that there is still much to do but knowing
from their achievements this year that they have both the ability
and resources to continue on a very ﬁrm growth path
peter jackson  
chief executive
1998 1999 2000 2001 2002 1998 1999 2000 2001 2002 1998 1999 2000 2001 2002
4195
4299
4406
4418
316
326
340
351
320
331
338
387
sales £m adjusted operating proﬁt £m
before exceptional items 
and amortisation of goodwill
adjusted earnings per share p
before exceptional items proﬁt on the sale 
of ﬁxed assets and amortisation of goodwill
313
4545 395 10 associated british foods plc
everyone’s cup of tea
our teas include
jacksons of piccadilly
nambarrie and the
world’s leading speciality
brand twinings