AGM Statement

Associated British Foods PLC
09 December 2005





CHAIRMAN'S ADDRESS TO AGM - 9th December 2005



Good Morning Ladies and Gentlemen.  It is good to see so many of you here.
Could I please ask you to switch off your mobile phones.



It is now just past eleven o'clock and I would like to welcome you to the
seventieth Annual General Meeting of our company, Associated British Foods.   I
am Martin Adamson, the Chairman of the company, and I am joined on the platform
by other Directors and the Company Secretary, Paul Lister.  Galen Weston has
asked me to apologise for his absence on this occasion.



There is a quorum present and we can formally open this meeting.  You may wish
to follow the proceedings by referring to the Notice of Meeting which you will
find this year on page 80 of the Annual Report and Accounts.



In view of the length of the Notice of Meeting I will, with your permission,
take it as read.



Before we proceed to the formal business of the meeting there are a few issues I
would like to cover.  The individual resolutions will be put to you after this
when there will be the opportunity to ask questions.



You received the annual report and accounts some weeks ago.  They contain a
great deal of information and to avoid testing your patience I will confine my
comments now to a few important matters.



First of all, the trading results were good.  Adjusted operating profit rose by
18% and adjusted earnings per share by 14%.  Dividends for the year will show an
increase of 10%, the fourth successive year of double digit increase in
dividends.  All of this has been against a background of very competitive
markets for most of our businesses.



The annual report includes extensive comments on the trading results of
individual businesses and there is no need for me to repeat that.  However, I
won't let this opportunity pass of remarking on the really excellent trading by
Primark.  Sales growth has been strong where that of many competitors has been
weak or negative.  Profits grew by 30%.  This was achieved in a trading
environment which was tough, even by the standards of UK clothing retailing.



I am sure you all know about the shocking fire at Primark's main UK warehouse on
the evening of 1st November.  The premises, which were owned by a third party,
and our stock were a complete 'write off'.  Our insurance covers the stock and
also the effect of business interruption.  More importantly, Primark's
management took immediate action to deal with this crisis; another warehouse was
made available and incoming stock flowed to all stores with little interruption.
Sourcing of alternative goods for those destroyed has proceeded as quickly as
practicable, helped by the use for a period of a large cargo plane to speed
goods from Asia.  Primark has continued to trade well.



The good growth in the group's trading results was accompanied by a major level
of investment.  £1.5bn was spent on renewing plant and machinery, expanding
capacity and buying new businesses.  Normal renewal investment in productive
assets absorbed £182m.  We invested £628m in acquiring new space for Primark and
fitting it out.  £733m was spent on acquiring new businesses, of which the major
part was on the yeast and bakery ingredients business now trading as AB Mauri.
There were also several other smaller businesses which add to the range and
capacity of our food manufacturing operations.



This heavy investment reflects our long-term strategy, discussed when we met a
year ago, of devoting much of our resources to expanding our non-sugar interests
by developing current businesses and adding new ones which complement our
existing operations and skills.  The investment I have referred to has been both
in the UK, some £700m, much of it to expand Primark, and abroad another £850m
with AB Mauri accounting for the major part.



You will recognise from what I have been saying that your Board retains its
long-term commitment to grow our businesses.  At the risk of repetition, I will
emphasise that when we invest in existing operations and add new ones it is in
the expectation that we will be there, in a leading position, in the long term.



A very good example of this long-term commitment is Twinings which most of you
will know celebrates its 300th anniversary next year.  ABF acquired the business
in 1964.  The founder, Thomas Twining, would not recognise the commercial world
of today nor the far flung operations which make up Twinings nine generations
later.  However, he would I guess recognise much of the product, the range to
suit different tastes and above all the commitment to quality.



Twinings, together with Ovaltine, forms the core of ABF's hot beverages business
which now is sold in more than 90 countries.  Ovaltine, or as it is known in
many of its markets, 'Ovomaltine', by coincidence has just celebrated its
centenary.  It was originally developed in Switzerland as a tonic for
malnourished children but has spawned many other products in its various
markets.



There are other brands in our hot beverages business with strong regional
presence.  Less than 25% of this business is now in the UK.  Very much the
largest part is spread across the world with Asia a particular area of growth.



I am glad to say that our hot beverages business has been trading very well and
growing both the main brands and the various sub brands and extensions that have
been developed.  Just one example which you may recognise, if only from the
advertising involving Stephen Fry, is the recently launched 'Twinings Everyday
Tea'.  It is pleasing that it has been performing well up to expectations.



There is one other thing which Thomas Twining would recognise in a much changed
world.  That is the famous shop at 216 Strand in London, not far from here.  It
is the site of his original tea shop and is the oldest commercial premises in
continuous trading in the city.  Those of you who head south from here should
take a very slight detour to visit it.



ABF is now widely spread around the world, operating in a variety of businesses.
There will always be challenges for our people to face.  As I speak to you
today, the first is the proposed reform of the EU sugar regime.  On 24th
November agreement was reached in Brussels by The Council of Ministers for the
reform of the regime.  This agreement follows revisions to the proposals
published by the European Commission in June 2005.  The agreement has yet to be
ratified by the European Parliament.  The ABF businesses affected by these
proposals are the sugar operations of British Sugar in the UK and Poland.



The thrust of the proposals will be to reduce productive capacity in the EU,
eliminate subsidised exports and reduce support prices.  The nature of these
proposals is welcomed by British Sugar as one of the most efficient producers in
the EU.  We envisage a continuing successful role for British Sugar which will
be supported with investment, where appropriate, as it adapts to the new
environment.



Our best estimate of the longer term operating impact on our sugar operations,
which results from the agreement, is based on the assumptions made by the
European Commission.  The outcome is expected to be slightly better at the end
of the period of transition than the £40m reduction in profit which we estimated
in June 2005 in response to the Commission's first proposals.



The recent rise in gas prices is an important issue for ABF as it is for much of
British industry.  The market for gas has simply failed to operate in the way
intended.  For example, last week, despite sharply higher prices, the main gas
pipeline from Europe operated at substantially below capacity and stocks
consequently reduced further.  If supplies to industry failed this would have
serious consequences for industry and customers alike.



Another major development will be the roll out of new stores by Primark over the
next 15 months.  Recent new store openings have been successful and 46 further
stores will be opened mainly those acquired when we bought Littlewoods.
Together with store extensions 1.5 million square feet of trading space will be
added to give 4 million square feet against 2.3 million just over a year ago.
The plans for this programme are well developed.  I have every confidence that
they will be successfully implemented and that Primark will be trading strongly
from a much expanded base.



Plans for these two major businesses will not affect our commitment to building
our other businesses further.  Following the major investment of the past year,
ABF is still cash positive and has the financial strength to support further
growth in our operations.



Let me comment now on the immediate outlook.



I said earlier that Primark has continued to trade well even after the fire.
There was swift and effective action by Primark's management which helped
mitigate the disruptive effect of an event of this magnitude.



Trading in the current year for British Sugar UK and Poland has been difficult
and we expect volatility to continue during the transition to the new EU regime.
We continue to work on cost reductions in both the UK and Poland and the
exploitation of new revenue opportunities including the manufacture of
bioethanol in the UK.



I would remind shareholders of my comments in the annual report about the impact
on profits of the roll out of new Primark stores converted from Littlewoods.
This will occur progressively from Spring 2006 until early 2007 and returns will
build gradually.  The reduction in net investment income will result in
relatively modest growth in earnings for the current year and the benefit of the
investment will begin to be realised from the second half of the year and
beyond.



Overall, trading in the early part of the current year has been a little ahead
of the previous year which saw a good opening.  Competition in all our markets
is strong and the current trend in energy prices is a particular concern.  We
expect to deliver further progress as the year develops.



                                      END



For further information, please contact;



Associated British Foods

John Bason, Finance Director                    Tel: [phone]

Geoff Lancaster, Head of External Affairs       Tel: [phone]



Citigate Dewe Rogerson

Jonathan Clare/Chris Barrie/Sara Batchelor     Tel: [phone]




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