Tate & Lyle PLC
Chairman's Annual General Meeting and Interim Management Statement
At the Annual General Meeting of Tate & Lyle PLC, to be held in London today,
Sir David Lees, Chairman, will make the following statement:
INTERIM MANAGEMENT STATEMENT
The Group has made a satisfactory start to the financial year with profit before
tax for the continuing operations (note 1) in the first quarter broadly in line
with the equivalent period in the prior year.
At our Food & Industrial Ingredients, Americas division, we benefited from
improved by-product returns driven by volatile and exceptionally high corn
prices, which have reduced since the end of June. These were partially offset by
some additional costs as we commission new technology at the Loudon, Tennessee
corn wet mill.
Food & Industrial Ingredients, Europe's improved co-product prices compensated
for higher energy prices. The Food Systems businesses (Hahn and Cesalpinia)
continued to perform well.
Sucralose sales volume growth was strong and consistent with our capacity
utilisation targets. As anticipated, sales values increased at a lower rate.
Higher energy costs were offset by efficiency gains. The Singapore facility was
commissioned in June 2007, and so the first quarter of the current financial
year includes the impact of a full quarter of costs associated with this new
plant.
The EU sugar businesses, as has been widely reported, are operating in a very
difficult market while surplus stock is absorbed in anticipation of the first
reduction in the EU reference prices which will take place on 1 October 2008
(when the raw sugar reference price will also reduce). Gas prices at the UK
refinery have been higher than expected, further validating the investment in
the biomass boiler which will be commissioned at the end of the current
financial year ending 31 March 2009. We are increasingly confident that, during
the second half of the financial year, market equilibrium between supply and
demand for EU sugar will be restored, which should lead to progressively firmer
refining margins.
On 2 July we announced the sale of the international sugar trading business to
Bunge Limited. The approvals required have now been obtained and the sale is
unconditional. As already announced, the working capital in the business will
remain with, and be collected and paid by, Tate & Lyle through to 31 March 2009
at which point it will be assumed by Bunge upon final completion of the
transaction. At 31 March 2008, the net operating assets attributable to the
business being sold had a value of £106 million and related primarily to working
capital.
The business sold reported an operating profit of £4 million for the three
months, which compares with a loss of £6 million for the six month period ended
30 September 2007 and with a £9 million loss for the year to 31 March 2008. The
results of international sugar trading have now been reclassified into
discontinued operations. As a consequence the sale will have an impact on the
comparison of the continuing operations' profits with the equivalent period in
the prior year in both the first and second half years.
As previously advised, the Group's tax rate is sensitive to the geographical mix
of profits, with profits from the UK covered by tax losses while US profits are
typically taxed at between 37% and 39%. The disposal of international sugar
trading increases the tax rate of the continuing operations as this business
contributed to earnings in the UK. Given these factors and the performance of UK
sugar refining, we would now anticipate a tax rate for the full year in the
region of 31% for the continuing operations.
Group net debt at 30 June 2008 was £967 million compared with £1,041 million at
31 March 2008.
OUTLOOK FOR THE CONTINUING OPERATIONS
The general deterioration in global economic conditions, particularly in the USA
and specifically in raw materials and energy, makes any statement about the
outlook more difficult than usual. Nevertheless, with three months of the
financial year behind us and with three of the four divisions having started the
year in line with our expectations, we are on track to make progress for the
year as a whole.
Note 1: Continuing operations do not include international sugar trading as,
following the announcement of its sale on 2 July 2008, it has been classified as
a discontinued operation.
pants are
requested to dial in at least 5 minutes before the commencement of the call.
Dial in details are as follows:
Participant dial in number: +44 (0) 1452 586 513 (UK freephone 0800 694 1503)
Conference ID: 57096658
Replay dial in number: +44 (0) 1452 550 000 (UK freephone 0800 953 1533)
Replay passcode: 57096658#
A replay of this call will be available from two hours after the end of the live
call for 7 days until 29 July 2008.
For more information contact Tate & Lyle PLC:
Tim Lodge, Director of Investor Relations
Tel: 020 7626 6525 or Mobile: 07798 837317
Rowan Adams, Director of Corporate Communications (Media)
Tel: 020 7626 6525 or Mobile 07713 067 542
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