Key Financial Highlights September 2001

Announcement of interim results for the six months ended 30 September 2001

  • For September 2001 Interim Results in full click here
  • For March 2001 Preliminary Results in full click here
  • For September 2000 Interim Results in full click here
  • For March 2000 Preliminary Results in full click here
  • For Key Financial Highlights for 52 weeks ended 25th September 1999 click here
  • For Key Financial Highlights for 26 weeks ended 27th March 1999 click here
  • For 1998 Interim Results in full click here
  • For 1998 Preliminary Results in full click here

INTERIM RESULTS TO SEPTEMBER
2001
2000

Sales £2,133m £2,122m
Profit before interest, goodwill amortisation and exceptional items £97m £107m
Profit before tax, goodwill amortisation and exceptional items £64m £68m
Profit before taxation £64m 1£2m
Diluted earnings per share before goodwill amortisation and exceptional items 9.4p 19.3p
Interim dividend declared 5.5p 5.5p

  • Overall trading in line with expectation
  • Net debt reduced by £115 million
  • Amylum/Staley integration well advanced
  • Domino disposal completed after period end
"Substantial progress has been made in our strategy to reshape Tate & Lyle. The important completion of the disposal of Domino was announced on 6 November 2001. The integration of Amylum and Staley continues according to plan.

Overall, trading in this half year has been in line with our expectations. The outlook for the second half year is positive notwithstanding increasingly difficult global economic conditions. We remain committed to improving overall shareholder returns and rebuilding interest and dividend cover. "

Sir David Lees
Chairman
Larry Pillard
Chief Executive

 

 

An interim statement incorporating the Group profit and loss account for the six months ended 30 September 2001 will be posted to shareholders.

Copies of this Announcement are available from:

Robert Gibber, Company Secretary, Tate & Lyle PLC,
Sugar Quay, Lower Thames Street, London EC3R 6DQ

1 Comparative figures have been restated following the adoption of a new accounting standard FRS 19 on deferred taxation.


INTERIM REPORT

Comparisons are with the 27 week period to 30 September 2000 unless stated otherwise. The comparatives have been restated to reflect the adoption of FRS 19 on deferred taxation.

Overview

Profit before tax, goodwill amortisation and exceptional items for the six months to 30 September 2001 was £64 million. As expected, this was below the £68 million achieved in the corresponding period to 30 September 2000, mainly because of a £10 million increase, to £19 million, in losses before interest in the US sugar businesses. Progress on the disposal of these businesses is referred to below.

Trading in our three main businesses has been equal to or ahead of the comparative period. Energy costs increased by £11 million in the half year before mitigation by internal action on energy conservation. In the second half year we hope to contain the increase to single figures.

We announced on 26 September 2001 the signing of an agreement to realign our sucralose activities into a new global alliance with McNeil Nutritionals ("McNeil"), a Johnson & Johnson Company. Under this agreement, Tate & Lyle has received the first of three annual advance license fees from McNeil of US $10 million each. These annual fees are effective from 1 October and had no impact on the first half year results. In the second half year, profit before interest will include £3 million (US $5million) from the first instalment.

We continue to refocus the Group towards higher-margin and higher-growth businesses, disposing of underperforming or non-core assets and eliminating costs. The sale of Zambia Sugar together with the disposal of other smaller businesses and surplus assets generated proceeds of £20 million. This, together with the containment of capital expenditure below the level of depreciation and a reduction in working capital, enabled net debt to be reduced by £115 million.

We announced on 6 November 2001 that we have completed the disposal of Tate & Lyle North American Sugars ("Domino") for a cash consideration of £86 million (US$ 125 million). Total proceeds are the same as detailed in the announcement of the sale dated 26 July 2001, except for an adjustment for the level of working capital. This disposal again demonstrates that we are delivering on our strategy to retain only those assets that produce acceptable returns. Proceeds will be used to further reduce Group debt.

We announced on 26 September 2001 that the sale of the Western Sugar Company is progressing more slowly than anticipated and the date for closing has been extended to 31 January 2002 to coincide with the completion of the current beet processing campaign.

The Board has declared an unchanged interim dividend of 5.5p per share, to be paid on 15 January 2002 to shareholders registered on 7 December 2001.

Results for the six months to 30 September 2001

Sales were £2,133 million (£2,122 million). Profit before interest and exceptional items was £93 million (£106 million) after a £4 million (£1 million) charge for amortisation of goodwill relating to the purchase of minorities in Amylum and Staley in August 2000.

Exceptional items totalled a profit of £4 million (loss £65 million), mainly comprising profit on the sale of assets.

Profit before tax, goodwill amortisation and exceptional items was £64 million (£68 million). Currency movements reduced profits by £2 million, mainly due to the impact of the Zimbabwe Dollar on ZSR Corporation. Profit before tax and after goodwill amortisation and exceptional items was £64 million (£2 million).

The underlying rate of tax on profit before goodwill amortisation and exceptional items of 30% increased by 3 percentage points due to the adoption of Financial Reporting Standard 19 on deferred taxation. The prior period tax charge has been restated (and increased by 2 percentage points to 29%) to reflect this change.

Diluted earnings per share before goodwill amortisation and exceptional items were 9.4p (9.3p), and after exceptional items and goodwill amortisation were 9.4p (loss of 5.8p).

The Group generated strong net cash inflow from operating activities of £215 million (£195 million). Capital expenditure at £39 million (£57 million), remained below depreciation. Interest cover improves from 2.3 times in the 53 weeks to 31 March 2001 to3.0 times in the half year to 30 September 2001. On a proforma basis had the sale of Domino taken place at the beginning of the half year interest cover would have been 3.8 times.

Amylum Integration

Good progress has been made on the integration of Amylum and Staley as part of our global ingredients business. As anticipated, little net benefit has accrued in the six month period to 30 September 2001 because of one-off integration costs. We are in consultation with works councils throughout our European operations to discuss the cost improvement programme. We remain confident that we will achieve our original target for annual benefits of £50 million by the financial year ending March 2004.

Segmental Analysis before Exceptional Items

Americas

Profits in the segment were £45 million (£57 million). This was after £10 million increase in losses in the US Sugar businesses to £19 million. Domino accounted for £18 million of this loss, Western £1 million.

Profits at Staley were higher, despite energy costs and a reduced performance from the citric acid product line. Sweetener volumes and margins improved, reflecting price rises announced at the beginning of the calendar year. Starch volumes increased but industrial starch margins continue to suffer from lower pricing, in particular from the paper industry. The contribution from ethanol improved. Energy conservation measures partially offset increased energy costs. By-product pricing, especially corn oil, has improved from the low level of last year. The citric acid industry faces competition from Asian imports and new capacity. We have undertaken a number of cost reduction initiatives to respond to this challenge. These included the eight-week closure of the Mexican factory, which we re-opened in September with a reduced workforce, the sourcing of lower-cost raw materials in the USA, and delivering energy efficiency improvements in Brazil.

In our North American sugar business Redpath, our Canadian refiner, performed well despite overall profits being lower due to the recent fall in world raw sugar prices. In the US sugar businesses, the sugar market remained substantially oversupplied and losses increased by £10 million as margins and volumes were squeezed in the early part of the financial year. As the six months progressed the situation eased. There are signs of an improvement in sugar prices as a result of a smaller beet crop in the US and the impact of the renewal of the government 'Payment In Kind' programme.

Europe

Profits in the segment improved to £53 million (£48 million).

Amylum, our European cereal sweetener and starch business, showed improved results due to a combination of better pricing, volumes (related to good summer weather), and higher by-product revenues. Results were enhanced by efficiency improvements and energy conservation efforts, which partially offset the effect of higher energy prices and increased raw material and ingredient costs.

In European Sugar, our refineries in London and Lisbon performed well. The European Union beet sugar regime was renewed from July 2001. A reduction in export revenues as a consequence of the removal of the storage levy had a minor impact on profits. Our beet operations in Central Europe continued to make satisfactory returns, with better margins compensating for lower volumes.

Rest of the World

The sale of Zambia Sugar, which was the largest unit in this segment, was completed on 2 April 2001. In Zimbabwe, ZSR Corporation remained profitable in local currency but its contribution fell in Sterling terms. Profits from sugar production in Vietnam increased with both higher volumes and margins.

Animal Feed and Bulk Storage

Profit in this sector, now mainly molasses and storage, was £1 million (£2 million), due to a competitive market in the UK. The molasses business is expected to improve in the second half year following the normal seasonal trend.

Other Businesses and Activities

Our reinsurance business had modest exposure to the terrorist attacks in the USA on 11 September and this, combined with the mark to market of investments associated with its business, reduced profits by £6 million.

The Board

Lord Walker retired from the Board at the end of the Annual General Meeting in August having served the Board with great distinction since 1990. We thank him again for his outstanding service and contribution.

Outlook

"Substantial progress has been made in our strategy to reshape Tate & Lyle. The important completion of the disposal of Domino was announced on 6 November 2001. The integration of Amylum and Staley continues according to plan.

Overall, trading in this half year has been in line with our expectations. The outlook for the second half year is positive notwithstanding increasingly difficult global economic conditions. We remain committed to improving overall shareholder returns and rebuilding interest and dividend cover".

 

Sir David Lees
Chairman
7 November 2001
Larry Pillard
Chief Executive
7 November 2001