Chief Executive’s statement

The group delivered satisfactory results at a time when economic uncertainty and declining consumer spending presented our businesses with considerable challenges. Group revenue increased by 12% to £9.3bn and adjusted operating profit increased by 8% to £720m. Sugar, Primark and Ingredients delivered major improvements in profit, and Agriculture traded well and matched the exceptional performance of last year. Grocery was more affected and its profit decline was mainly attributable to long positions in vegetable oil futures taken out in the first half by ACH at values well above market. Sterling’s weakness had a beneficial effect on the translation of profits from our overseas businesses.

Over the years we have developed the group through a combination of capital investment, process improvement, building new revenue streams and the acquisition of complementary businesses. Despite the economic environment, this year proved to be no exception and, if anything, the pace of activity increased with capital investment at a high level. All of our businesses have been strengthened as a result and are better equipped to deliver growth in the future.

In Sugar, the changes to the EU regime are now behind us and the market has been more stable. There has been much change and consolidation of producers in recent years. Our leading positions in the UK and Iberia, together with access to sugars from least developed countries, position us well for the EU market over the next few years. We expect volume growth from our African and Chinese operations over the coming years. Illovo has ambitious expansion plans and the doubling of capacity in Zambia was completed this year. Although profitability was held back by low prices in China, the addition of another mill in southern China expands this consistently profitable operation. Some progress was made in the beet sugar business in the north east of China but much remains to be achieved in improving agricultural yields and factory efficiency.

Primark had a remarkable year. Like-for-like growth of 7% demonstrated the strong development of its consumer franchise, particularly in the UK. The potential of continental Europe for the Primark model was even more evident this year and we are committed to expansion in Spain and the Netherlands. Early signs in Germany and Portugal are encouraging.

Development of our Grocery businesses was held back by the problems at ACH in the first half. However, it is noteworthy that considerable work was undertaken this year with integration work in our meat business in Australia, Patak’s and Blue Dragon, Jordans and Ryvita and Stratas in the US. Each of these businesses will emerge much stronger.

Capacity expansion was the major feature in Ingredients with investment in enzymes, yeast and yeast extracts all of which have demonstrated their growth potential in recent years.

A number of long-term capital projects are in progress across the group, many of which are expected to complete during 2010. They will contribute to the continued growth of our businesses.

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