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Nestle India Limited

Financial Analysts’ Meet


November 29, 2006

Financial Analysts Meet, Nov 29, 2006


Agenda

Introduction & CSR Martial Rolland

Financials Shobinder Duggal

Questions & Answers All

Financial Analysts Meet, Nov 29, 2006


Disclaimer

This presentation may contain statements which reflect


Management’s current views and estimates and could be
construed as forward looking statements. The future
involves certain risks and uncertainties that could cause
actual results to differ materially from the current views
being expressed. Potential risks and uncertainties
include factors such as general economic conditions,
availability and prices of commodities, competitive
products and pricing pressures and regulatory
developments etc.

Responses can only be given to questions, which are not


price sensitive.
Financial Analysts Meet, Nov 29, 2006
Introduction & CSR

Financial Analysts Meet, Nov 29, 2006


An example of CSR

Nestlé Milk District Model


45 years of a progressive partnership with
farmers

FINANCIAL ANALYSTS MEET


29.11.06

Financial Analysts Meet, Nov 29, 2006


AN EXAMPLE OF CSR :
NESTLE milk district model

1 Nestlé – An Overview

2 Evolution of the Nestlé Milk Districts

3 Nestlé in India

4 Nestlé Milk Districts & Rural Growth

Concerns for the Environment


5 and the Community

6 Summary and Conclusions

Financial Analysts Meet, Nov 29, 2006


1 Nestlé – An Overview

Nestlé – The World Food Company


Henri Nestlé. Born in 1814. Trained to be a pharmacist.
Created the first milk and cereal based infant food Farine
Lactée Henri Nestlé
Founded the Company in 1867

Nestlé grew from a small company producing powdered


milk and cereal products for infants into a global food
company feeding much of the world’s population
Nutrition and Wellness are at the core of Nestlé’s products
and manufacturing.

Financial Analysts Meet, Nov 29, 2006


1 Nestlé – The World Food Company

Our Business Vision

“Respected, Trustworthy Food,


Nutrition, Health and Wellness
Company”

Financial Analysts Meet, Nov 29, 2006


1 Nestlé – The World Food Company

The India Business Vision

To rapidly build Nestlé India as the Respected


and Trustworthy leading Food, Nutrition, Health
and Wellness Company ensuring long term
sustainable and profitable growth

Financial Analysts Meet, Nov 29, 2006


2 Evolution of Nestlé Milk Districts

Nestlé Corporate Business Principles: Agricultural raw materials,


principally milk, coffee, cocoa, cereals, vegetables, fruit, herbs, sugar
and spices, are vital factors affecting the quality and costs of Nestlé
manufactured food products and, as a consequence, the Company’s
business performance. In this context Nestlé:

1) … provides agricultural assistance to farmers


2) Procures Agricultural raw materials either through trade channels
or directly from farmers
3) Supports farming practices and agricultural production systems
that are sustainable; that is those practices and systems that
satisfy long-term economic, ecological and social requirements;
4) Supports mechanisms that contribute to a more regular income
for farmers;
5) Is not engaged itself in its own commercial farming activities;
Financial Analysts Meet, Nov 29, 2006
2 Evolution of Nestlé Milk Districts

1866: Nestlé and the Anglo-Swiss Condensed Milk Company started


the milk district development around the towns of Vevey and Cham in
Switzerland

1872: With demand outstripping production, the Anglo-Swiss


Condensed Milk Company set up two milk districts in the Swiss
cantons of Fribourg and St. Gallen

1872-1881: Upon expanding its operations, more milk districts were


started in England

1905: Nestlé and the Anglo-Swiss Condensed Milk Company had


merged and by then milk districts were set-up in six countries –
Switzerland, United Kingdom, Germany, Norway, Spain and
United States

1906: Started manufacturing operations in Australia, its second


largest export market for Nestlé products
Financial Analysts Meet, Nov 29, 2006
2 Evolution of Nestlé Milk Districts

1912: Acquired the Dutch company – Galak Condensed Milk


Company of Rotterdam, Holland and also established a skimmed milk
powder company entirely for export market

1920: Entered South America by establishing a milk districts in


Brazil, in Argentina in 1922, and in Peru in 1940

1961: Started to replicate its successful milk district models in Asian


countries with Moga in India, followed by Sri Lanka in 1982,
Indonesia 1986, Pakistan 1988, China 1990, Thailand 1991,
Morocco 1993 and Uzbekistan 2001

China, India and Pakistan each collect over 10,00,000 Kg/day

On an average Nestlé milk districts are growing 2% - 5% annually,


and in some cases as high as 10%

Financial Analysts Meet, Nov 29, 2006


2 Evolution of Nestlé Milk Districts

Given the ever-increasing consumer demand, it is


an ongoing priority and challenge to:

¾ Secure a plentiful supply of fresh milk


¾ Find areas to produce high quality milk
¾ Find cost-effective ways to meet projected demand

Financial Analysts Meet, Nov 29, 2006


3 Nestlé’s processing units in India

Moga (Punjab) 1961 Choladi (Tamilnadu) 1967 Nanjangud (Karnataka) 1989

Nestlé India
Samalkha (Haryana) 1993 Ponda (Goa) 1995
Head Office, Gurgaon

Bicholim (Goa) 1997 Pantnagar (Uttaranchal) 2006


Financial Analysts Meet, Nov 29, 2006
4 Nestlé Milk Districts & Rural Growth

Dairy
Dairy
Farmers
Farmers

Fresh
Freshmilk
milk
procurement
procurement

…a glimpse at
Nestlé Milk Collection Areas
Financial Analysts Meet, Nov 29, 2006
4 Nestlé’s presence in Rural India

Over Four decades of sustained growth

¾ Starting in 1961, Nestlé set up its


first milk processing facility at Moga
in the State of Punjab

¾ Built in 1991, today Samalkha


factory in Haryana along with
Moga produces over 100,000 tons
of milk products annually

Financial Analysts Meet, Nov 29, 2006


4 Nestlé Milk Districts & Rural Growth

Starting in Moga with 511 kg of milk on the


first day of collection (15th Nov 1961), today
TOTAL AREA :
Nestlé procures over 12,00,000 kg of milk per
50,362 SQ. KMS day during the peak season in the states of
Punjab and Haryana.

MOGA

FACTORY 14,000 square kilometers area


TOTAL AREA :
50,362 SQ. KMS

over 110,000 dairy farmers

FACTORY
2085 milk agencies
SAMALKHA

TOTAL AREA :
44,212 SQ. KMS
695 milk cooling tanks
DELHI
Financial Analysts Meet, Nov 29, 2006
4 Nestlé Milk Districts & Rural Growth

Nestlé adds value at each step of the milk supply chain…

The
The Milk
Milk District
District is
is an
an integral
integral part
part of
of
delivering
delivering high
high quality
quality nutritional
nutritional milk
milk
products
products toto our
our consumers
consumers

Dairy
Dairy Fresh
Freshmilk
milk Milk
Milk Marketing
Marketing&&
Farmers
Farmers procurement
procurement Processing
Processing distribution
distribution Consumers
Consumers

••Technical
Technical assistance
assistance to
to
farmers
farmers ••Milk
MilkQuality
QualityPolicy
Policy
••Farmer
Farmereducation
education--Good
Good ••Expertise,
Expertise,Know
Knowhow
how
dairying
dairyingpractices,
practices,etc
etc
Financial Analysts Meet, Nov 29, 2006
4 Nestlé Milk Districts & Rural Growth

Bringing worldwide
competence of Nestlé at the
doorstep of the farmers…

…to help them improve milk


productivity and quality

Financial Analysts Meet, Nov 29, 2006


4 Nestlé Milk Districts & Rural Growth

Setting up an efficient Milk


Collection system
¾ On-going technical assistance to farmers for
improved milk productivity and quality

¾ Maintenance of sustainable farming practices

¾ Establishing milk collection points and


arranging milk collection

¾ Installing chilling centers

¾ Installing farm cooling tanks

¾ Arranging transportation to the factory


Financial Analysts Meet, Nov 29, 2006
4 Nestlé Milk Districts & Rural Growth

Technical Assistance to
Farmers
…to help them improve milk productivity and
quality
¾ Training and development on good farm
practices
¾ Regular audits of farmers to ensure that good
farm practices are implemented & maintained
¾ Testing of milk at collection and cooling
centers
¾ The financial well-being of producers

Financial Analysts Meet, Nov 29, 2006


4 Nestlé Milk Districts & Rural Growth

Technical Assistance to
Farmers
¾ Veterinary & field staff offering round the clock
technical services
¾ Veterinary medicines are provided to farmers

¾ Artificial insemination centers


¾ highly pedigreed bulls are provided
Financial Analysts Meet, Nov 29, 2006
4 Nestlé Milk Districts & Rural Growth

Technical Assistance to
Farmers
¾ Good quality fodder seed is provided to
farmers
¾ High quality balanced cattle feed distributed
annually
¾ Subsidized milking machines have been
provided
¾ Technical support is extended for:
- Silage making techniques,
- Bio-Gas generation & vermiculture
compost from animal waste

Financial Analysts Meet, Nov 29, 2006


4 Technical Assistance to Farmers

Silage making

Bio-Gas
Generators and
Vermicompost
production

Financial Analysts Meet, Nov 29, 2006


4 Nestlé Milk Districts & Rural Growth

Farmers Education Programs


¾ Establishes herd demonstration farms
¾ Conducts field camps to impart education
on good dairy practices
¾ Organizes factory visits and special
educational tours for dairy farmers
¾ Offers prizes to farmers in the Nestlé milk
competition
¾ Sensitize farmers to water issues like water
conservation, depleting water tables and
water management at farms

Financial Analysts Meet, Nov 29, 2006


4 Nestlé Milk Districts & Rural Growth

Farmers Education Programs

Helping village women learn

¾ Nestlé recognizes the role played by women in


the dairy farm and has specially developed an
education program.
¾ Through posters, demos and talks, village
women are taught good dairying practices
Over 12,000 women have been covered by this
program in 155 villages

Financial Analysts Meet, Nov 29, 2006


4 Nestlé Milk Districts & Rural Growth

Financial Analysts Meet, Nov 29, 2006


4 Nestlé Milk Districts & Rural Growth

Helping Farmer improve Milk Productivity

…to help farmers


achieve higher milk
yields over longer
lactation periods, in
1982 Nestlé
introduced the milk
cows to the benefit of
its farmers
…from a mere 0.5 %
cow milk in 1982,
today 50% of the milk
procured is cow milk

Financial Analysts Meet, Nov 29, 2006


4 Nestlé Milk Districts & Rural Growth

Nestlé – The Milk


Maximizer
Milk density
TOTAL AREA :
50,362 SQ. KMS In Moga Milk
Collection area,
milk available for
processing to
MOGA FACTORY
TOTAL AREA :
Milk Plants, has
50,362 SQ. KMS risen to twice that
of rest of Punjab

Financial Analysts Meet, Nov 29, 2006


Sustainable Agriculture
– Key to long-term sustainable growth
NESTLE
What is the SAI Platform?
DANONE
Overall objective UNILEVER
CAMPINA
Promote
CIO
Sustainable Agriculture to meet the needs of DANISCO
today and future generations COCACOLA
DOLE
Our definition EFICO
“Sustainable agriculture (SA) is a productive, FINDUS
FONTERRA
competitive and efficient way to produce
FRIESLANDFOODS
agricultural products, while at the same time KRAFT
protective and improving the natural LAMEWESTON
MCCANN
environment as well as the socio-economic
MCDONALDS
conditions of local communities” SARA LEE
TECHIBO
VOLCAFE
Financial Analysts Meet, Nov 29, 2006
5 Environment and the Community

Solar heaters at
Nestlé milk collection
Centres save energy
Rain Water
And help create Silencers on Harvesting help in
awareness amongst generator exhausts better water
communities at Nestlé milk management at Dairy
collection Centres farms
Financial Analysts Meet, Nov 29, 2006
5 Environment and the Community

Many of our
factories are
ZERO WASTE
DISCHARGE – In Moga factory part
treated waste of the Waste Water
water is is treated and
recovered for in- supplied to farmers
house irrigation for crop irrigation.
Financial Analysts Meet, Nov 29, 2006
5 Community Projects

Providing access to Clean Drinking Water


in Village schools

• Creating awareness in the communities around its factories


• Children in local village schools are the key beneficiaries
Financial Analysts Meet, Nov 29, 2006
5 Community Projects
Water Education Program

Posters, Demonstrations are used as a


medium to teach students water basics
like the water cycle, ground water table,
uses of water, water resources, ground
water depletion etc.
Financial Analysts Meet, Nov 29, 2006
6 Summary and Conclusions

A Win-Win situation for all…


…benefits the Farmer

¾ Results in steady incremental income for the


farmers
¾ Generates Employment for rural residents
¾ Significant improvements in the standards of
living of rural communities
¾ Affords a profitable alternative to traditional farming
practices

Financial Analysts Meet, Nov 29, 2006


6 Summary and Conclusions

A Win-Win situation for all…


…benefits the milk processor
¾ Nestlé does not own any agricultural land or farms,
but is committed to develop long-term credible
relationships with dairy farmers based on mutual
trust
¾ This makes mutual economic sense and ensures
long-term sustainability
¾ Stimulating production of good quality fresh milk
¾ Collecting fresh milk in the best possible conditions
¾ Processing to ensure high quality products for its
consumers
Financial Analysts Meet, Nov 29, 2006
Over to SHD

Financial Analysts Meet, Nov 29, 2006


FINANCIALS
Financials
Total Shareholder’s Return

ƒ 140% over the last 19 quarters. (Bloomberg)


ƒ Market Capitalization has doubled over this
period from INR 49 Bio. to INR 101 Bio.

Some Rankings:
ƒ Return on Capital Employed: No 1 (Source: Latest
Business India)
ƒ Return on Equity: No 2 in BSE FMCG Index &
BSE SENSEX companies (Source: Reuters)
Outperformed the BSE FMCG Index
350

300

250

200

150

100

50

Oc t- Apr- Oc t- Apr- Oc t- Apr- Oc t- Apr- Oc t- Apr- Oc t- Apr- Oc t-


00 01 01 02 02 03 03 04 04 05 05 06 06
Nestle BSE FMCG Index BSE-SENSEX
Returning cash to Shareholders
Dividend
1.7 1.9 1.9 2.4 0.5 0.6
(INR Bio)
35 300

250
30 250

Dividend as a % of Share Capital


25 200 200
180 200
20
INR / Share

150
15
100
10 60
50
5 50

18 21 20 27 20 26 25 32 5 24 6 26
0 0
2002 2003 2004 2005 Jan-Sep 05 Jan-Sep 06
DPS EPS %
First interim dividend

2004 - Excludes special dividend of INR 4.5 / Share


Creation of Economic Value
12.2 2003

12.0
2.3
11.8 60% Jan-Sep
2002 2005 2006
Return on Sales (%)

11.6

11.4 1.8 2.7 2.2


49% 61%
62%
11.2

11.0
2004
10.8

10.6 2.2
54%
10.4

10.2
5.5 5.7 5.9 6.1 6.3 6.5
Asset Turns
Bubble size represents Economic Profit (INR Bio)

Basis International Accounting Standards


Driving Total Shareholders Return
The Value Drivers

1. Sales Growth

2. Profit Margin

3. Working Capital Intensity

4. Fixed Capital Intensity

5. Income Tax Rate

6. Cost Of Capital

7. Value Growth Duration


SALES GROWTH (1)
Sales Evolution

Gross Third Party Sales INR Bio Real Internal Growth (%) Organic Growth (%)

30.0 13
12.1
11.5 11.6 11.7 12
11.4

11.3 10.4 11

9.5 10
25.0
8.5 9
7.9
8

7
20.0
6.3 6

4.4 4
20.6 22.9 23.9 26.7 19.9 22.0
15.0 3
2002 2003 2004 2005 Jan-Sep 05 Jan-Sep 06

Aff. Exports 1.7 1.8 1.5 1.7 1.3 1.2


INR Bio

Basis International Accounting Standards


Analysis of 9 months Sales Growth

+11.7%

Selling prices = 2.2%

RIG = 9.5 %

Jan-Sep 2006 Third Party Sales

Basis International Accounting Standards


Channel-wise Sales

Volume (000’ Tons) – Jan-Sep Value@ (INR Bio) – Jan-Sep


2006 2005 Var% 2006 2005 Var%
Domestic 162.3 149.1 8.8 19.7 17.7 11.3 #
Exports 12.3 13.8 (10.1) 2.0 2.0 (0.0)
Total 174.6 162.9 7.2 21.8 19.8 10.1

@ Gross Sales including excise duty

Mix of Domestic to Exports remains stable at around 90:10

# Net Domestic Sales up 13.7%

All calculations are based on non-rounded figures


Balancing Export Portfolio

INR Bio 2.4 2.6 2.4 2.6 2.0 2.0

28
33
52 56 54
Contr. 69

(%)

72
67
48 46
44
31

2002 2003 2004 2005 Jan-Sep 05 Jan-Sep 06

Exports to Russia Others


A Balanced Portfolio

Contr. (%) Contr. (%)

Milk Products
44.8 45.4
and Nutrition

Prep. Dishes &


20.0 18.7
Cooking Aids

Beverages 19.7 21.3

Chocolate and
Confectionary 15.5 14.6

Jan-Sep 06 Jan-Sep 05
Gross Sales including excise duty
Product Categories: Jan - Sep 2006
Organic Growth (%)
Prepared Dishes &
20 Cooking Aids

4.4

3.4
15 Chocolate &
Confectionery

10 21.8
9.7

Milk Products & Total


Nutrition
5
Beverages

4.3

0
-14 -9 -4 1 6 11 16
Volume Growth (%) Bubble size represents Gross Sales (INR Bio)
Milk Products & Nutrition
• Market Leader in Baby Foods,
Infant Formula, Sweetened
Condensed Milk
• Strong No 2 in Dairy Whitener
• Growing presence in Fresh Dairy

Sales Volume (000’ tons) Sales (INR Bio) Contribution to Total Sales
80
10.0
78 U 2.8% 15.5
U 8.7%
76

78.2 9.0 44.8


74 9.7 20.0
76.0
72 9.0
19.7
70 8.0
Jan-Sep 05 Jan-Sep 06 Jan-Sep 05 Jan-Sep 06
Jan-Sep 2006
Beverages
• Market Leader in Instant Coffee

Sales Volume (000’ tons) Sales (INR Bio) Contribution to Total Sales
19 4.6

U (12.1)%
18 15.5
4.4
44.8
17 18.7 U 1.8%
20.0
4.2
16 4.3
16.5 4.2 19.7
15 4.0
Jan-Sep 05 Jan-Sep 06 Jan-Sep 05 Jan-Sep 06
Jan-Sep 2006
Prepared Dishes & Cooking Aids
• Market Leader in instant Noodles
& Ketchups
• Strong No 2 in Healthy Soups

Sales Volume (000’ tons) Sales (INR Bio) Contribution to Total Sales
60 4.5
U 18.2%
55 4.0
15.5
U 18.0%
4.4 44.8
57.0 20.0
50 3.5
3.7
48.3
19.7
45 3.0
Jan-Sep 05 Jan-Sep 06 Jan-Sep 05 Jan-Sep 06
Jan-Sep 2006
Chocolate & Confectionery
• Market Leader in Wafers and
white chocolates
• Strong No 2 in Chocolates
• Market Leader in Eclairs

Sales Volumes (000’ tons) Sales (INR Bio) Contribution to Total Sales
23 3.6

3.4 15.5
21 U 15.7% 22.9 3.2
U 16.3% 44.8
3.4 20.0
3.0
19.8
19
19.7
2.9
Jan-Sep 05 Jan-Sep 06 2.8
Jan-Sep 05 Jan-Sep 06
Jan-Sep 2006
PROFIT MARGINS (2)
Evolution of Operating Margins

INR Bio.
20.5
6.0 19.5 19.5 19.7 21
19.0 19.2
18.3
17.5 17.6
17.1 16.9 17.0 18
5.0
15

4.0 12

9
3.0
6

4.0 3.5 4.4 3.9 4.5 4.0 5.2 4.6 4.0 3.6 4.2 3.7
2.0 3
2002 2003 2004 2005 Jan-Sep 05 Jan-Sep 06
EBITD-INR.Bio EBIT-INR.Bio EBITD % of Gross Sales EBIT % of Gross Sales
Total Expenditure
INR Mio.
Description Jan-Sep 06 % Net Jan-Sep 05 % Net Var.
Sales Sales %

Tot. Expenses
-of which 16,615 79.9 14,496 78.0 14.6
Materials
9,782 47.0 8,435 46.0 16.0

Staff Cost
1,592 7.7 1,392 7.5 14.4

Advt + sales
Promotion 1,002 4.6 911 4.9 10.0
Distribution
961 4.6 863 4.7 11.3
Power & Fuel
853 4.1 750 4.0 13.8
Evolution – Milk Solid Prices

120
Current
111
110
Indexed price Per Kg

106
103 2006
100
100 97 97 97
95 2005
94
91
88 95
90 2004

80
Q1 Q2 Q3 Q4
Period

Indexed with base Q1-04


Evolution - Milk Fat Prices
Indexed Price per kg
110
106

103
100
100 97 97
97
95 95
94
91
90 88

80
2004 2005 2006

Q1 Q2 Q3 Q4

Indexed with base Q1-04


Evolution – Green Coffee Prices

230
229 Current
210
Indexed price per KG

190
174 170
158
2006
170
152 153
150 2005

130 114 121

110 100 100 101 101


2004
90
Q1 Q2 Q3 Q4
Period

Indexed with base Q1-04


Evolution – HVF Prices
(329 mio, 12% of RM costs, 5% of Net Sales)

110 Current
106 106

100 102
2006
Indexed price per KG

100 98
101
96 2004
94

90
90 93 88
87
2005

80
Q1 Q2 Period Q3 Q4

Indexed with base Q1-04


Evolution – Sugar Prices
(329 mio, 12% of RM costs, 5% of Net Sales)

Current
150 146 145
141 140 2006
140
134
Indexed price per KG

132
130 128 2005
130

120 116
113 2004
111
110
100

100
Q1 Q2 Q3 Q4
Period

Indexed with base Q1-04


Evolution – Wheat Flour Prices
(329 mio, 12% of RM costs, 5% of Net Sales)

140 138 Current

130
Indexed price per KG

120 118
115 116 2006

110
104 2005
100 2004
100 96 97
99
96
95
90
Q1 Q2 Q3 Q4
Period

Indexed with base Q1-04


Evolution of Net Profit Margins

INR Bio.

3.5 14
11.7 11.9 11.6
11.4
10.6 12
3 9.7
10
2.5 8

2 6

4
1.5
2
2.0 2.6 2.5 3.1 2.4 2.5
1 0
2002 2003 2004 2005 Jan-Sep 05 Jan-Sep 06

Amount % of Gross Sales


WORKING CAPITAL INTENSITY (3)
Trade Net Working Capital

INR Mio
30-Sep 2006 30-Sep 2005

Trade receivables 514 419

Inventories 2,288 2,142

Less: Trade Payables 1,711 1,575 #

Net capital tied up 1,091 986

As % of Gross Sales 4.9% 4.9%

# Excludes exceptional items and impact of reclassification

Basis International Accounting Standards


Rotation of Average Operating Working Capital
Times

36 34.8

31.4
32 30.8

27.7
29.0
28 28.0
25.2
Adjusted
24
21.8

20
2002 2003 2004 2005 Jan-Sep 05 Jan-Sep 06

Basis International Accounting Standards


Evolution of Operating Cash Flow
INR Bio.
%
4.0 18.0 18
16.4
15.7 15.4 15.2
16.3 15.7 15
14.7
15.1 14.9
3.5 14.7 14.7
12

3.0 9

2.5

3.4 3.6 3.7 4.0 3.6 3.2


2.0 0
2002 2003 2004 2005 Jan-Sep 05 Jan-Sep 06
Operating Cash Flow OCF as % of Sales Adj OCF as % of Sales
FIXED CAPITAL INTENSITY (4)
Investment in Fixed Assets
INR mio. % of Net sales
1200 7.0
1,054
1000
5.1
781
800 742 5.0
681
596
600
3.3 458
2.9 3.0 3.0
400 3.0
2.3

200

0 1.0
2002 2003 2004 2005 Jan-Sep 05 Jan-Sep 06

Amount % of NPS

Dep. 494 463 491 498 385 404


Rotation of Average Tangible Fixed Assets
Times
6.8 6.7
6.8
6.5
6.3
6.4 6.2

6.0

5.6 5.4

5.2

4.8

4.4

4.0
2002 2003 2004 2005 Jan-Sep 05 Jan-Sep 06

Basis International Accounting Standards


INCOME TAX RATE (5)
Evolution of Tax
%
38
36.8
36.6
35.9
36
35.0 34.9
34.7
34.4 34.5
34.2
34 33.3 34.7
33.7

32

30
2002 2003 2004 2005 Jan-Sep 05 Jan-Sep 06

Marginal Rate % Effective Rate %

( rates are a % of pre-tax profit excluding FBT)


COST OF CAPITAL (6)
Evolution – Cost of Capital

WACC Risk Free Bond Rate


15.0 14.2

12.0 10.5 10.8


9.4 9.7 9.7
9.0
9.0
7.2 7.2
6.6 6.6
5.3
6.0

3.0

0.0
2002 2003 2004 2005 Jan-Sep 05 Jan-Sep 06

Basis International Accounting Standards


VALUE GROWTH DURATION (7)
Value Growth Duration

Nutrition, Health & Wellness Innovation and Renovation

Availability
for all ages

Effective & Efficient Operations

Consumer Communications

People Structure GLOBE


QUESTIONS

Thank You
LIFFE
ROBUSTA COFFEE

2001 2002 2003 2004 2005 2006


NYBOT - New York
ARABICA COFFEE

2001 2002 2003 2004 2005 2006


PALM OIL Malaysia

2001 2002 2003 2004 2005 2006


NYBOT - New York
SUGAR

2001 2002 2003 2004 2005 2006