Tate & Lyle said today (31 March) that it has sold an ethanol facility to agribusiness giant Cargill for US$57m.
The sale of the site, in Fort Dodge, Iowa, will lead to an “accounting gain” of GBP16m (US$25.8m), once a GBP17m impairment charge – booked last year – and GBP3m of costs are considered.
However, Tate & Lyle said GBP20m of the GBP25m exceptional charge on the facility’s long-term contracts will be reversed.
“Thus we expect an exceptional credit of GBP36m in the second half of the current financial year and an exceptional credit for the full year of GBP11m,” the company said.
“The sale crystallises tax losses of around GBP65m, the bulk of which we expect to recover in cash over the coming two financial years; the reported tax rate will not change as a result of the sale as a deferred tax asset was booked at the time of the impairment charge.”
The disclosure of the disposal was made as Tate & Lyle gave a trading update to the London Stock Exchange for its financial year, which ended today.
Tate & Lyle said it had “continued its encouraging performance through the year” with its operating performance “similar to market expectations”.
However, it added that corn price rises drove a further increase in co-product income in the final quarter of the year.
“We have continued to deliver global volume growth in speciality food ingredients across all the major product categories through the year. Within bulk ingredients, sweetener volumes remained strong and margins improved in industrial starches, particularly in Europe where the market has tightened following a poor potato harvest. The higher co-product income primarily benefits the bulk ingredients division,” Tate & Lyle said.
Tate & Lyle will issue its financial results on 27 May.