Final Results

22nd May 2008 07:00

TATE & LYLE PLC PRELIMINARY ANNOUNCEMENT OF RESULTS For the year ended 31 March 2008 \* TYear ended 31 March 2008 2007----------------------------------------------------------- --------- Continuing operations(1) Sales £3 424m £3 225m Adjusted profit before taxation(2) £244m £275m Adjusted diluted earnings per share(2) 32.7p 37.5p Dividends per share 22.6p 21.5p\* T Strong progress in delivering our strategy: -- Strategic reshaping of the Group largely complete -- New management structure in place; Group organisation simplified and de-layered into four divisions each reporting to the Chief Executive; key hires made to lead the Sucralose and Food & Industrial Ingredients, Americas divisions -- Four-year major capital investment programme nearing completion; new value added capacity in the US and Singapore now on-stream -- Sold Redpath, Occidente and five European starch plants; businesses where we could not hedge to an acceptable level our exposure to raw material and commodity pricing volatility and regulation -- Group well-positioned to deliver its longer term target of a return on net operating assets of 20% Financial and operational summary: -- Adjusted profit before taxation(2) down 11% at £244 million (down 7% in constant currency) -- Reduction in profit before tax more than accounted for by: \* T - International sugar trading operating loss of £9 million from £22 million profit in prior year - £11 million adverse impact from exchange translation\* T -- Profits from core value added food ingredients(3) at £89 million increased 13% in constant currency -- Food & Industrial Ingredients, Americas achieved a fourth year of record profits increasing 13% over the prior year in constant currency; now represents almost 60% of the Group's adjusted operating profit(1,2) before central costs -- Food & Industrial Ingredients, Europe's sales prices increased ahead of our expectations but profits lower in constant currency due to higher corn costs -- Sugar refining profits reduced due to challenging market conditions -- Sucralose sales increased by 6% in constant currency; 30% increase in new product launches -- Returned £159 million to shareholders through repurchase of 6.9% of issued share capital -- Proposed increase in total dividend of 5% to 22.6p per share Statutory information \* TYear ended 31 March 2008 2007--------------------------------------------------------------------- Continuing operations - profit before tax £173m £253m Total operations - profit for the year £187m £217m Diluted earnings per share 40.4p 43.6p\* T ------------------------------------------------------------------------------ (1) Excluding the results of Redpath, Occidente, Eastern Sugar and the disposedof European starch plants. (2) Before exceptional costs of £59 million (2007 - £13 million) andamortisation of acquired intangible assets of £12 million (2007 - £9 million). (3) Core value added food ingredients comprise value added starch-based foodingredients and exclude sucralose. Sir David Lees, Chairman, said: "2008 was a year of significant change and progress for Tate & Lyle. Wesuccessfully achieved a number of steps to reshape our business in line with ourstrategy to build a stronger value added business on a low-cost commodity base.This reshaping process is largely complete and, taken together with someimportant changes in the management structure, the Group is now well-positionedto benefit from the growth opportunities in our chosen markets. "The Board is recommending an increase in the full year dividend of 5% to 22.6pper share, reflecting its confidence in the outlook for the Group." Iain Ferguson, Chief Executive, said: "The Group's profit from continuing operations was adversely affected by a verydisappointing performance in international sugar trading and by the weak USdollar. In international sugar trading, we have taken the necessary actions torestructure its activities and re-focus management priorities to ensure thatthis year's result is not repeated. The profitability of the rest of the Group'soperations was encouraging, demonstrating considerable resilience in the face ofboth the unprecedented increase in global commodity prices and the impact of theEU sugar regime reform. Food & Industrial Ingredients, Americas once againperformed strongly achieving a fourth consecutive year of record profits. The13% increase in profits from core value added food ingredients and the 6%increase in SPLENDA(R) Sucralose sales, both in constant currency, were alsopleasing and demonstrate the good progress we are making to grow our business inthose areas of strategic focus and investment. "We expected 2008 to be a year of transition and that proved to be the case.With our strategic reshaping largely complete, our priority is clear - todeliver our longer term target of a return on net operating assets of 20%. Withall that we have achieved this year, and with the new management structure inplace, we now have the platform from which that longer term target can bedelivered and we are committed to that goal." Outlook Looking forward to the year to 31 March 2009: -- We anticipate the Food & Industrial Ingredients businesses in the Americas and Europe, which together accounted for 72% of the Group's continuing operating profit before central costs in the 2008 financial year, will make further progress benefiting in the Americas both from improved HFCS pricing achieved for the 2008 calendar year and from additional value added capacity now on-stream. In Europe the results will be significantly influenced by European cereal prices following the 2008 harvest. -- The EU sugar regime reforms have proved successful in eliminating all but 6% of the quota production capacity targeted for reduction. Surplus refined sugar stocks will need to be absorbed over at least the first half of the year, during which time the market is likely to remain very difficult and challenging. However, we look forward to market equilibrium being re-established during the second half of our financial year which, together with the actions we have taken on international sugar trading, should enable a progressive restoration of margins in the Sugars business. -- The SPLENDA(R) Sucralose business is now fully invested. Whilst the incremental impact of a first full year of costs associated with the Singapore facility will restrict profit growth in the first half-year, we expect continued sales growth to offset these costs and to lead to improved profits in the full year. For the Group, the 2009 financial year has started in line with plan and wecontinue to expect to make good progress in the year as a whole. Cautionary statement This Preliminary Statement contains certain forward-looking statements withrespect to the financial condition, results, operations and businesses of Tate &Lyle PLC. These statements and forecasts involve risk and uncertainty becausethey relate to events and depend upon circumstances that will occur in thefuture. There are a number of factors that could cause actual results ordevelopments to differ materially from those expressed or implied by theseforward-looking statements and forecasts. Nothing in this Preliminary Statementshould be construed as a profit forecast. A copy of this Preliminary Statement for the year ended 31 March 2008 can befound on our website at www.tateandlyle.com. Copies of the Annual Report for theyear ended 31 March 2008 will be available to shareholders shortly, and will beobtainable from The Company Secretary, Tate & Lyle PLC, Sugar Quay, Lower ThamesStreet, London EC3R 6DQ. SPLENDA(R) is a trademark of McNeil Nutritionals, LLC The DuPont Oval Logo, DuPont(TM) and Sorona(R) are trademarks or registeredtrademarks of E.I. du Pont Nemours and Company. Webcast and Conference Call Presentation A presentation of the results by Chief Executive, Iain Ferguson and GroupFinance Director, John Nicholas will be audio webcast live at 10.00 (BST) today.To view and/or listen to a live audiocast of the presentation, visithttp://www.tateandlyle.com/TateAndLyle/investor_relations/results/default.htm orhttp://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=81336&eventID=1852227. (Due to its length, this URL may need to be copied/pasted intoyour Internet browser's address field. Remove the extra space if one exists.)Please note that remote listeners will not be able to ask questions during theQ&A session. A webcast replay of the presentation will be available within twohours of the end of the live broadcast for six months, on the link above. For those unable to view the webcast, there will also be a teleconferencefacility for the presentation. Details are given below: \* TUK dial in number: +44 (0) 203 003 2666US dial in number: +1 866 966 5335 7 day conference call replayUK replay number: +44 (0) 208 196 1998US replay number: +1 866 583 1039Replay Access code: 691691\* T CHIEF EXECUTIVE'S REVIEW All comments refer to the continuing operations adjusted to exclude exceptionalitems and amortisation of acquired intangible assets, unless stated to thecontrary. A reconciliation of reported and adjusted information is included inNote 15. Delivering on our strategy 2008 was a year of considerable activity and progress for Tate & Lyle. Wesuccessfully achieved a number of important steps to reshape our business inline with our strategy to build a stronger value added business on a low-costcommodity base. -- We simplified and de-layered the Group's organisational structure into four divisions each reporting to the Chief Executive. A new management structure was put in place and key hires made to lead the Sucralose and Food & Industrial Ingredients, Americas divisions. -- We removed substantial risks from the Group by exiting markets (European wheat and Canadian and Mexican sugar) where we could not hedge to an acceptable level our exposure to raw material and commodity pricing volatility and regulation. -- We continued to implement our four-year major capital investment programme to support long-term growth which we expect will be completed by March 2009. -- We took actions to restructure our international sugar trading activities to reduce future earnings volatility and re-focus management priorities to ensure that this year's result is not repeated. We continued to grow those areas of our business of key strategic focus andinvestment. Our core value added food ingredients business achieved a profit of£89 million, a 13% increase over the prior year, whilst sales of SPLENDA(R)Sucralose increased by 6% (both in constant currency) and new product launchesfeaturing SPLENDA(R) Sucralose increased by 30% over the prior year. The process of reshaping the Group's business is now largely complete. Theactions we have taken this year, together with our expansion projects toincrease value added production, gives us a solid platform from which to growour business and to improve further the quality of the Group's earnings. New management structure Following the Group's reshaping process we have simplified and de-layered theGroup's organisational structure. The Group now consists of four distinctbusiness divisions each reporting to the Chief Executive: Food & IndustrialIngredients, Americas; Food & Industrial Ingredients, Europe; Sucralose andSugars. These divisions are supported by our Research & Development team, whichalso reports to the Chief Executive, and other Central functions. To drive our business forward, we have appointed new heads for three of the fourdivisions. Matt Wineinger joined Tate & Lyle in March 2008 and will take overfrom Lynn Grider as President, Food & Industrial Ingredients, Americas after heretires at the end of June 2008. Matt has worked for a number of major companiesin the food sector, most recently as President of Swift & Co's Australian Meatdivision, and before that at Cargill where he held a number of senior roles insales and marketing. Olivier Rigaud, who has worked for Tate & Lyle for 19 years in our European foodingredients business, has been promoted to President, Food & IndustrialIngredients, Europe. Ian Bacon continues as Chief Executive, Sugars. Karl Kramer joined Tate & Lyle in April and will become President, Sucralosefrom 1 June 2008. He joins us from Givaudan, the flavour company, prior to whichhe worked for the NutraSweet Kelco division of Monsanto. The four heads of the divisions, together with John Nicholas, Group FinanceDirector; Robert Gibber, Company Secretary and General Counsel; and Dr BobFisher, President, Research and Development will sit on a new Group ExecutiveCommittee, which I will chair. This Committee will replace the existing GroupManagement Committee. This is a strong new management team with the appropriate skills, knowledge andexperience to drive forward each division and the Group as a whole in the yearsahead. Acquisitions and divestments We sold three businesses during the year to exit markets where we could nothedge to an acceptable level our exposure to raw material and commodity pricingvolatility and regulation. We completed the sale of our sugar operations in Canada and Mexico on 22 April2007 and 28 December 2007 respectively, and the sale of five of our Europeanstarch plants, including all four which processed wheat, on 1 October 2007. Theunprecedented increase in European cereal prices since last summer, up by morethan 80% since May 2007 when we announced we were in advanced discussions overthe sale of our European starch plants, and the recent decline in the Mexicansugar price following changes introduced by the North American Free TradeAgreement, underline our rationale for selling these businesses. We strengthened our value added offering during the year through the acquisitionof an 80% holding in the German speciality food ingredients group, G. C. HAHN &Co (Hahn) on 15 June 2007. Hahn has a leadership position in dairy andconvenience food stabiliser systems and when combined with Tate & Lyle'sexisting products, systems and applications skills, provides our customers witha comprehensive texturant offering. Return of capital We returned £159 million to shareholders through the repurchase of 33.6 millionshares representing 69% of the approval given by shareholders at the AnnualGeneral Meeting (AGM) in July 2007. Given current worldwide economic conditionswe have decided to suspend the remainder of the repurchase programme. We will beasking shareholders to renew the Company's authority to buy back shares at theAGM on 23 July 2008. Major capital investment programme nearing completion The expansion of our Sagamore corn wet mill in Lafayette, Indiana wascommissioned during the year. This increases capacity for a variety of valueadded starches used by customers in dairy, beverages, baking, snacks anddressings. The expansion of our Loudon, Tennessee plant, which is addingcapacity for value added ingredients, ethanol and substrate for the Bio-PDO(TM)joint venture with DuPont, was effectively completed at the end of the financialyear. Our unique bio-refining joint venture plant continues to operate well andis currently undertaking market proving activities with sales across severalcategories including polymerisation for clothing and carpets, and directapplications in cosmetics, deodorants and as de-icing fluid. The construction of the new corn wet mill in Fort Dodge, Iowa and the biomassboiler at the cane sugar refinery in London are progressing satisfactorily andwe continue to anticipate that both will be mechanically complete by the end ofMarch 2009. The Fort Dodge plant will produce industrial starches and ethanol.Its completion will enable a reconfiguration of finishing capacities in the USto optimise production, particularly at the Sagamore plant, which will now focuspredominantly on value added food ingredients. The new Singapore SPLENDA(R) Sucralose facility was commissioned during the yearand we were able to prove the capacity of the plant more smoothly and muchearlier than expected. By March 2009, Tate & Lyle will have completed a four-year programme of majorcapital investment to support long-term growth. Over the first three years ofthis programme, capital expenditure totalled more than £500 million aboveongoing levels of depreciation. The total investment programme has raisedcapital expenditure to levels above £250 million in each of these three years.In the year ended 31 March 2008, capital expenditure was £264 million, which was2.6 times depreciation. To complete the investment programme, the Group's totalcapital expenditure forecast for the year ending 31 March 2009 is £200 million.Beyond this, we believe that we can adequately invest going forward with capitalexpenditure running at around 1.25 times depreciation. International sugar trading The performance in our international sugar trading operations was verydisappointing, more so after the excellent performance in the prior year. Thisbusiness suffered from a mark-to-market charge for increased freight costs whichwere hedged in the first half of the year, and lower trading profits. We havereviewed its activities in light of the changes to our Sugars' asset base andthe reforms of the EU sugar regime. We have restructured the business andre-focused management priorities to ensure that this year's result is notrepeated. Overview of business performance The Group's profit before tax, adjusted to exclude exceptional items andamortisation of acquired intangible assets, at £244 million was 11% lower (7% inconstant currency) than the prior year. The reduction in profit before tax wasmore than accounted for by a £9 million operating loss in international sugartrading from a £22 million profit in the prior year, and an £11 million adverseimpact from exchange translation. Food & Industrial Ingredients, Americas, our largest division representingalmost 60% of the Group's adjusted operating profit before central costs,performed strongly, achieving a fourth consecutive year of record profits.Operating profit of £186 million increased by 6% (13% in constant currency).Both value added and primary product lines performed well, the latter assistedby firmer by-product prices. We were pleased by the outcome of the 2008 calendaryear pricing round which has resulted in modest margin improvements. Asexpected, ethanol profits returned to more normal levels reflecting the impactof increased industry production and higher corn costs, following the verystrong profits achieved in the prior year. Food & Industrial Ingredients, Europe saw profits increase by 3% to £41 million(a reduction of 1% in constant currency). This was a pleasing result given thevery significant disruption faced by the business during the year as thenon-manufacturing operations were completely re-engineered following the sale offive of its starch plants. A strong performance in the first half-year wasoffset in the second half-year by significantly higher corn costs. In Europe,the ability to pass increased costs through to customers is limited for thoseproducts that have a clear link to the price of sugar, although we were able topass on more of the increase than we had expected. The initial £8 million profitcontribution from Hahn following its acquisition in June 2007 was ahead of ourexpectations. We continue to work with our partners in the Eaststarch jointventure in Central and Eastern Europe on how we can generate optimal returns forshareholders. Sugars profits were £24 million, down from £60 million in the prior year. TheEuropean sugar refining business was profitable in a market made difficult bythe implementation of the EU sugar regime reform. We were delighted with thereaction to our announcement that our UK retail sugars range will move toFairtrade by the end of 2009, and we are investing in reducing our carbonfootprint through a new biomass boiler at our London refinery to help driveefficiency and differentiation of cane sugar. A number of other projects,including cost saving initiatives by the operations based at our London refinerytotalling £7 million on an annualised basis, were delivered during the year.Despite the challenges it faces, our European sugar refining operations remain agood business within an evolving industry and we are increasingly positive forthe future once the EU sugar regime reforms are fully implemented in 2010. Themolasses business performed strongly benefiting from a sharp increase in EUanimal feed ingredient prices. However, this was insufficient to compensate forthe loss of £9 million incurred by international sugar trading, which wasespecially disappointing when compared with a profit of £22 million in theprevious year. Sales of SPLENDA(R) Sucralose of £148 million were 1% ahead of the prior year(6% in constant currency). New product launches were some 30% ahead of the prioryear. Following the doubling of capacity at the McIntosh, Alabama facility lastyear, and the successful commissioning of the Singapore facility this year, wehave completed the major expansion projects for sucralose and will need onlylimited further capital investment in the coming years. Operating profit for theyear at £66 million was 7% lower (3% lower in constant currency), affected byfixed costs from the second plant and also by legal costs of £6 million (2007 -£3 million) incurred in defending against alleged infringement of our patents inthe US International Trade Commission (ITC). This case went to trial in February2008. The proceedings allege infringement of patented sucralose manufacturingtechnology in respect of sucralose manufactured in China and imported into theUS. So far, seven of the twenty seven respondents in the ITC matter have beenheld in default by the judge and are now barred from contesting the case. Thejudge's initial and non-binding determination is expected in June 2008, leadingto a final ruling by the ITC in October 2008. European sugar regime Our European sugar business has been operating in a highly competitive marketwhile the EU sugar regime undergoes reform. The target of the reforms is toeliminate 6.0 million tonnes of quota production through a process of voluntarysurrender from which full-time cane sugar refiners are excluded. Followingamendments to the EU sugar restructuring fund agreed in September 2007, on 8 May2008 the EU announced that 5.65 million tonnes out of the 6.0 million tonnetarget had been surrendered. While there is still surplus sugar to be absorbedby the market, the reforms' aim of reducing supply is substantially complete.There will be two reductions in the EU reference price of refined sugar and inraw material costs which will be implemented in October 2008 and October 2009.However, we expect that market equilibrium will be restored during the secondhalf of our 2009 financial year, which should lead to progressively firmerrefining margins. We believe cane sugar refineries have a superior economicmodel in the post-reform EU market. Energy Energy costs for the continuing operations were £150 million, an increase of 2%over the prior year (6% in constant currency). We have covered over half thecosts for the 2009 financial year but still anticipate costs will increase by£35 million from higher prices and also higher consumption because of capacityexpansion. Rising fossil fuel prices increase the benefits of our investments inbiomass boilers under construction in London and Fort Dodge, Iowa. Central costs A review of central functions across the Group was completed during the year inlight of the significant reshaping of the business. Central costs decreased from£35 million to £31 million. This decrease reflects a £1 million reduction inunderlying costs. There was a one-off benefit totalling £7 million frominsurance and reallocation of costs to the divisions offset by costs relating tothe re-alignment of the Group's management and organisational structure. Ourreview of central costs realised savings of about £3 million in 2008, benefitswhich should double by 2010. Conclusion 2008 was a year of considerable activity and progress for Tate & Lyle as wereshaped our business in line with our strategy to build a stronger value addedbusiness on a low-cost commodity base. Implementing so much change whilst alsomanaging the impact of significant movements in global commodity prices and theconsequences of the EU sugar regime reforms has only been possible thanks to thededication, diligence and commitment of our people, for which I would like toexpress my sincere gratitude. We expected 2008 to be a year of transition and that proved to be the case. Withour strategic reshaping largely complete, our priority is clear - to deliver ourlonger term target of a return on net operating assets of 20%. With all that wehave achieved this year, and with the new management structure in place, we nowhave the platform from which that longer term target can be delivered and we arecommitted to that goal. Iain Ferguson CBEChief Executive OPERATING AND FINANCIAL REVIEW Basis of preparation Adjusted performance Adjusted profit is presented as it provides both management and investors withvaluable additional information on the performance of the business. Thefollowing items are excluded from adjusted profit: -- Results of discontinued operations, including gains and losses on disposal (note 9); -- Exceptional items from continuing operations (note 4); and -- Amortisation of acquired intangibles. This adjusted information is used by management internally for analysing theperformance of the business. A reconciliation of reported and adjustedinformation is included in Note 15. Impact of changes in exchange rates Our results have been negatively impacted this year by exchange ratetranslation, in particular due to the weakening of the US dollar againststerling. This was partially offset by the strengthening of the Euro againststerling. Exchange rates used to translate reported results were as follows: \* T Average rates Closing rates ------------------- ----------------- 2008 2007 2008 2007------------------------ -------- ---------- ----- -------- --------US dollar : sterling 2.01 1.89 1.99 1.97Euro : sterling 1.42 1.48 1.26 1.47\* T Constant currency comparisons in this review have been calculated by translatingunderlying currencies for the prior year at the average rates for the currentyear. Constant currency comparisons provide an insight into the movements insales and cost levels driven by the real local changes, demonstrating underlyingprofitability progression of the business. Central costs Previously the Group's central costs were allocated to the segments. Centralcosts are no longer allocated and are presented separately and the comparativesegmental information has been reclassified. Primary and value added products Value added products are those that utilise technology or intellectual propertyenabling our customers to produce distinctive products and us to obtain a pricepremium and/or sustainable higher margins. Other products from our commodity corn milling and sugars businesses areclassified as primary. Summary of financial results \* T Year to Year to Actual Constant 31 March 31 March currency 2008 2007 change change £m £m % %------------------------------------------------- --------- -- --------- -- ------- -- ---------Continuing operationsSales 3,424 3,225 6% 10% --------- --------- Adjusted operating profit 286 311 (8)% (4)%Net finance expense (42) (36) --------- ---------Profit before tax, exceptional items and amortisation 244 275 (11)% (7)%Exceptional items (59) (13)Amortisation of acquired intangibles (12) (9) --------- ---------Profit before tax 173 253 (32)% (26)% Income tax expense (76) (88) --------- --------- Profit for the year from continuing operations 97 165 (41)% (35)%Profit for the year from discontinued operations 90 52 --------- ---------Profit for the year 187 217 (14)% (8)% --------- --------- Earnings per shareBasic 40.9p 44.3p (8)% (3)%Diluted 40.4p 43.6p (7)% (3)% --------- --------- Adjusted earnings per share from continuing operationsBasic 33.1p 38.1p (13)% (9)%Diluted 32.7p 37.5p (13)% (8)% --------- --------- Dividends per shareInterim paid 6.5p 6.2pFinal proposed 16.1p 15.3p --------- --------- 22.6p 21.5p 5% n/a --------- --------- Net debtAt 31 March 1,041 900 16% 13% --------- ---------\* T Sales of £3,424 million from continuing operations were 6% higher (10% inconstant currency). Growth was reported in all divisions other than Sugars whichsaw reduced sales in its international sugar trading business. The acquisitionof Hahn contributed sales of £60 million. Despite the reduction in our international sugar trading business, primary salesincreased by 3% (7% in constant currency) to £2,622 million, with strongperformances in our Americas and retained European ingredients businesses andour sugar refining operations. Value added sales increased by 16% (20% inconstant currency) to £802 million again driven by our Food & IndustrialIngredients businesses which benefited from the acquisition of Hahn. Overall adjusted operating profit decreased by 8% to £286 million (4% inconstant currency) as we incurred losses of £9 million in our internationalsugar trading operations. Value added operating profit increased by 1% to £160million (3% in constant currency), and primary operating profit decreased by 16%(12% in constant currency) to £157 million. Central costs decreased from £35million to £31 million in the year. Exceptional items from continuing operations amounted to a net loss before taxof £59 million (2007 - loss of £13 million). Following the disposal of five ofthe European starch plants and the closure of the Aalst head office, thesignificant reduction in central support functions required by the retained Food& Industrial Ingredients, Europe business resulted in an exceptionalrestructuring charge of £30 million comprising redundancy and otherrestructuring costs. We have also recognised an impairment of £12 million to ourcitric acid business as a result of industry oversupply and Chinese competition,and an impairment of £17 million to our Orsan monosodium glutamate business inChina as we do not expect profit recovery in the near term due to uncertainmarket conditions. After minority interests of £10 million, the charge againstprofit for the year attributable to equity holders of the Company in respect ofthe Orsan impairment is £7 million. Amortisation of acquired intangibles increased to £12 million from £9 million in2007 reflecting the acquisition of Hahn in the first half of the financial year. The net finance expense from continuing operations increased from £36 million to£42 million as a result of the increase in average net debt. Net debt increasedto accommodate our capital expenditure, acquisition and share buy-backprogrammes and working capital requirements, the latter of which were drivenprimarily by increasing raw material costs. Profit before tax from continuing operations on a statutory basis decreased by32% (26% in constant currency) from £253 million to £173 million. The effective rate of tax on adjusted profit was 34.4% (2007 - 32.0%). Theincrease was due mainly to the increased levels of profits in the US and thefull consequences of the disposal of five of our European starch plants, and theassociated single billing entity, with their tax losses. Discontinued operations comprising our former activities in sugar processing inCanada and Mexico, and in our Eastern Sugar business and the five disposedstarch plants in Europe, reported profit after tax of £90 million includingexceptional items. Basic adjusted earnings per share, which are based on continuing operationsexcluding the effects of amortisation of acquired intangibles and exceptionalitems, declined from 38.1 pence to 33.1 pence, down 13% (9% in constantcurrency); the equivalent diluted figure also declined by 13% (8% in constantcurrency) from 37.5 pence to 32.7 pence. Food & Industrial Ingredients, Americas \* T Year to 31 March 2008 Year to 31 March 2007 ---------------------------------- ------------------------------------ Value Value added Total Primary added Total Primary £m £m £m £m £m £m----------------------------------------------------------------------------------------Sales - Food 651 293 944 543 277 820 - Industrial 309 133 442 315 120 435 ------- -------- --------- -------- -------- ----------- 960 426 1 386 858 397 1 255 ------- -------- --------- -------- -------- -----------Operating profit - Food 76 68 144 61 70 131 - Industrial 42 - 42 43 1 44 ------- -------- --------- -------- -------- ----------- 118 68 186 104 71 175 ------- -------- --------- -------- -------- -----------Margin - Food 11.7% 23.2% 15.3% 11.2% 25.3% 16.0% - Industrial 13.6% - 9.5% 13.7% 0.8% 10.1% - Total 12.3% 16.0% 13.4% 12.1% 17.9% 13.9%----------------------------------------------------------------------------------------\* T Food & Industrial Ingredients, Americas enjoyed another exceptional year. Salesof £1,386 million were 10% higher than the prior year (17% in constantcurrency). Operating profit, which accounts for almost 60% of the Group'sadjusted operating profit before central costs, increased by 6% to £186 million(13% in constant currency). In primary products, sales were 12% higher (19% in constant currency) andprofits were 13% higher (24% in constant currency). US sweetener and industrialstarch volumes were largely in line with the prior year, and sales andby-product price increases more than covered higher input costs. As expected,ethanol profits were lower primarily due to higher corn costs. Citric acid profits were in line with the prior year despite industryoversupply, continued Chinese competition, and further devaluation of the USdollar in key regional markets. Our current assessment of this business hasresulted in an exceptional impairment charge of £12 million. Anti-dumpingactions have been initiated against Chinese producers by European and USproducers. The closure of the Selby, UK facility, announced last year, wassuccessfully completed, and the site was sold. Value added food ingredients achieved robust volume growth following thecompletion of the capital project at the Sagamore plant in Indiana during theyear with sales up by 6% (12% in constant currency). Start-up costs and fixedcosts were incurred following commissioning in October. Performance at CustomIngredients was ahead of the prior year, despite a difficult year for the USdairy industry as dairy prices were pushed to record levels by higher fuel andcorn prices. Value added food profits were down 3% (nil in constant currency).However, following a review of central costs, various tasks and the associatedcosts were delegated to the appropriate divisions. During the year, £5 millionof costs were incurred to Food & Industrial Ingredients, Americas and the vastmajority was within value added food. Accordingly, underlying profit growth fromvalue added food was 4% (8% in constant currency) reflecting improved pricingand better product mix. Value added industrial starch volumes were similar to the prior year but priceincreases more than covered input cost increases. The Bio-PDO(TM) joint venture plant in Loudon, Tennessee continued to operatewell during the year. Market proving activities continue to be undertaken withBio-PDO(TM) sales across several categories including for polymerisation forclothing and carpets, and for direct applications in cosmetics, deodorants andas de-icing fluid. Whilst the global customer base for Bio-PDO(TM) continues tobroaden, as expected, the business incurred a modest loss, similar in size tothe prior year, in its first full year of operation. On 31 October 2007 we completed the separation from our Astaxanthin jointventure with Igene Biotechnology, Inc. The manufacturing facility was closed andincluded in the sale of the Selby site. Corn prices increased significantly in the second half of the year driven bystrong demand from China and as a raw material for ethanol and this affected allproduct categories. Corn costs are hedged either by physical purchases or onfutures markets at the point of contracting with the customer, or are for thecustomer's account in the case of toll contracts. It is only possible to hedgesome by-product prices, which mostly increase when corn and soy meal pricesincrease. As both corn and soy meal prices rose following the annual contractinground, which this year was largely completed in October 2007, we received abenefit from this subsequent increase in soft commodity prices. Manufacturing costs rose due to increased energy and process ingredient costs,and higher depreciation costs from the large capital projects which came onstream. Selling, general and administrative costs were impacted by additionalresearch project expenses and increased allocation of support costs followingthe disposal of our sugar assets in North America. The sale of an investment in the Chicago Mercantile Exchange contributed aone-off profit of £4 million. Looking forward The capacity expansion of the Sagamore plant to produce value added foodingredients was completed in September 2007 and the expansion in Loudon,Tennessee to produce ethanol, value added ingredients and substrate for theBio-PDO(TM )plant, is essentially complete. Construction of the greenfield cornwet mill in Fort Dodge, Iowa is progressing well and is on track for mechanicalcompletion by March 2009. Its completion will enable a reconfiguration offinishing capacities in the US to optimise production, particularly at theSagamore plant, which will now focus predominantly on value added foodingredients. These major capital projects will increase production and will playa significant role in maximising operational efficiencies. Moreover, innovativeCORNBELT((R)) technology associated with the Fort Dodge and Loudon projects willgreatly lower overall costs and reduce Tate & Lyle's carbon footprint. Growth prospects are encouraging as we remain focused on, and have invested innew capacity for the production of, value added food ingredients which satisfyconsumer trends for food products with nutritional benefits. Net corn prices have recently reached record highs on the back of strong globaldemand and the fundamentals seem likely to support continuing high prices forcorn and its by-products. The differential between corn-based HFCS and itssubstitute, sugar will be an important factor at the time of the negotiations atthe end of the calendar year. At current corn and sugar prices we would expectto be able to maintain satisfactory headroom for HFCS below the price of sugarwithout compromising margins. We have some multi-year agreements which mean thatnot every contract is negotiated annually. Food & Industrial Ingredients, Europe \* T Year to 31 March 2008 Year to 31 March 2007 ---------------------------------- ------------------------------------ Value Value added Total Primary added Total Primary £m £m £m £m £m £m----------------------------------------------------------------------------------------Sales - Food 168 155 323 139 74 213 - Industrial 138 - 138 92 - 92 ------- -------- --------- -------- -------- ----------- 306 155 461 231 74 305 ------- -------- --------- -------- -------- -----------Operating profit - Food 14 21 35 27 10 37 - Industrial 6 - 6 3 - 3 ------- -------- --------- -------- -------- ----------- 20 21 41 30 10 40 ------- -------- --------- -------- -------- -----------Margin - Food 8.3% 13.5% 10.8% 19.4% 13.5% 17.4% - Industrial 4.3% - 4.3% 3.3% - 3.3% - Total 6.5% 13.5% 8.9% 13.0% 13.5% 13.1%----------------------------------------------------------------------------------------\* T On 1 October 2007, five plants, including the four that process wheat, were soldand these are treated as discontinued and excluded from the results for thecontinuing businesses as shown in the table above. The former divisional headoffice and single billing entity in Aalst, Belgium was closed and a new centreestablished in Slovakia, with associated changes to systems, staffing andmanagement. This relocation was achieved without major disruption to thebusiness. This division now comprises: the wholly owned speciality starch plantin Koog, the Netherlands; small facilities in Greece (scheduled for closure inSeptember 2008) and Morocco; five joint venture plants in Central and EasternEurope; our speciality food ingredient operations Cesalpinia, Hahn and Tate &Lyle South Africa; and Orsan, the monosodium glutamate operation in China. On 15 June 2007, we acquired an 80% holding in Hahn strengthening our valueadded offering through its leadership position in dairy and convenience foodstabiliser systems, and complementing our activities in Cesalpinia, South Africaand the US. Hahn is based in Germany and also has manufacturing operations inthe UK and Australia and sales offices in 22 countries. Sales from the continuing operations at £461 million increased by 51% (44% inconstant currency) over the prior year, reflecting expansions in the Hungarianand Bulgarian joint ventures and a £60 million initial contribution from Hahn.Raw material price increases following the 2006 harvest were largely passedthrough to customers, but only partially following the unprecedented increasesafter the 2007 harvest. The continuing operations contributed £41 million of operating profit, 13% ofthe Group's adjusted operating profit before central costs, an increase of 3%(reduction of 1% in constant currency). Primary product sales increased by 32% (28% in constant currency). Increases infood, mostly isoglucose, although significant at 21% (19% in constant currency),were capped by sweetener products performance where prices are linked to theregulated sugar price in Europe. However, prices achieved were better than weexpected, and in some cases the discounts to sugar prices were reduced. Volumesfor isoglucose were higher as production quotas were increased as part of the EUsugar regime reforms, granted as compensation for the reference pricereductions. For isoglucose, these price reductions affect selling prices but,unlike sugar, raw material costs are unaffected by the regulatory changes.Because of the sugar price cap on sweetener products, we were not able to raiseprices sufficiently to cover higher net raw material costs. Industrial starchsales increased by 50% (41% in constant currency) and more than recovered higherinput costs. In value added, sales increased following the addition of Hahn. Higher rawmaterial costs were passed through to customers and there was growth in our drysweetener ingredient range. Operating profits increased from the initial £8million contribution from Hahn and from growth in the value added starchportfolio. We have invested in a Health and Wellness Research centre in Lille,France to support the development of new functional starches and fibres. Theapplications laboratory will provide technical expertise for beverage customersin the region and will support the European speciality sweetener portfolio aswell as SPLENDA(R) Sucralose. Raw material costs rose in an unprecedented fashion, driven both by drought inthe key corn-growing areas of Central and Eastern Europe and by the globalfundamentals of supply and demand. In Europe the futures markets do not havesufficient liquidity for us to hedge annual contracts with customers as we canin the US. In addition, higher energy prices increased manufacturing costsduring the year. In China, Orsan, the monosodium glutamate producer suffered from anover-supplied market with increased industry capacity coming on-stream and achange in tax incentives discouraging exports. Given uncertainty as to whethermarket conditions will recover in the near term, we recorded an impairment of£17 million as an exceptional charge. After minority interests of £10 million,the charge against profit for the year attributable to equity holders of theCompany is £7 million. Looking forward The outlook for the second half year is expected to be influenced significantlyby European cereal prices following the harvest. Whilst it is still too soon topredict with certainty the outcome of the 2008 harvest, growing conditions havebeen good to-date, although it is likely that corn prices will remain high untilstocks are rebuilt. The year ending 31 March 2009 will see the last full year of payments of ourshare of the levy on the isoglucose quota to the EU Restructuring Fundanticipated at EUR 11 million with final payments anticipated at EUR 4 millionin the first half of the following financial year. As previously announced, the facility in Greece will be closed at the end ofSeptember 2008 and the isoglucose quota surrendered. The isoglucose quota inNetherlands will also be surrendered; while continuing to manufacture starchesand glucose, the plant is being developed further as a location for specialityproducts. Sales volumes are expected to grow following the increases in capacity in theEaststarch joint venture facilities. Recent upgrading of the facility in Turkeywill enable the developing European market for crystalline fructose to besupplied with a high quality product to replace chicory-based fructose. Sugars \* T Year to 31 March 2008 Year to 31 March 2007 ---------------------------------- ------------------------------------ Value Value added Total Primary added Total Primary £m £m £m £m £m £m----------------------------------------------------------------------------------------Sales - Products 572 73 645 461 72 533 - Trading 784 - 784 985 - 985 ------- -------- --------- -------- -------- ----------- 1 356 73 1 429 1 446 72 1 518 ------- -------- --------- -------- -------- -----------Operating profit - Products 15 5 20 25 7 32 - Trading 4 - 4 28 - 28 ------- -------- --------- -------- -------- ----------- 19 5 24 53 7 60 ------- -------- --------- -------- -------- -----------Margin - Products 2.6% 6.8% 3.1% 5.4% 9.7% 6.0% - Trading 0.5% - 0.5% 2.8% - 2.8% - Total 1.4% 6.8% 1.7% 3.7% 9.7% 4.0%----------------------------------------------------------------------------------------\* T During the year, the continuing sugar operations were merged into one Sugarsdivision. This follows the completion of the sale of Redpath in Canada on 22April 2007, the sale of our 49% interest in Occidente in Mexico on 28 December2007, and the closure of our Eastern Sugar joint venture factories. Sugars'continuing operations comprise our sugar refining activities in the UK andPortugal, sugar processing in Vietnam and international sugar and molassestrading. Sales of £1,429 million were lower by 6% from £1,518 million in the prior year(2% in constant currency), mostly driven by lower turnover in internationalsugar trading. Operating profit decreased from £60 million to £24 million, down 60% (59% inconstant currency). International sugar trading produced a very disappointingperformance in the year with a £9 million loss compared with a profit of £22million in the prior year. Excluding this, adjusted operating profit decreasedfrom £38 million to £33 million. Our Trading businesses had a mixed performance with overall profits lower thanthe prior year. The molasses business performed strongly, benefiting from asharp increase in EU animal feed ingredient prices, with demand for molassesincreasing as a result. However, this was insufficient to compensate for theloss incurred by international sugar trading, which suffered from increasedfreight costs which were hedged in the first half of the year. Brazilian rawsugar prices were under pressure throughout the year, reflecting theavailability of Indian export sugar in the markets. India had an unusually largesurplus to export from its harvest, a situation not expected to recur in thecoming year. We have taken the necessary action to restructure our internationalsugar trading activities and re-focus management priorities to ensure thisyear's results are not repeated. In products (predominantly EU refining), the EU market remained disrupted by thesignificant changes brought about by the reform of the EU sugar regime. Themarket suffered excess supply and prices have fallen to a discount to theregulated reference price. Our UK and Portuguese refineries performedsatisfactorily given these challenging conditions, with profits falling despiteincreased sales. Our EU operations benefited from transitional aid amounting to£17 million (2007 - £13 million), and made only a small operating profit aftertaking this into account. As discussed in the Chief Executive's Review, thereforms of the EU sugar market have made significant progress. There is stillsurplus sugar to be absorbed by the market and that will make the market verydifficult in the near term. However, we expect that market equilibrium betweensupply and demand will be restored during the second half of our financial yearending 31 March 2009, which should lead to progressively firmer refiningmargins. We were delighted with the reaction to our announcement that our entire range ofUK retail sugars would move to Fairtrade by the end of the 2009 calendar year. The operations based at our London refinery achieved its target of £7 millioncost reductions on an annualised basis ahead of plan and we also implementedoperational efficiency improvements. Two new sugar unloading cranes weresuccessfully installed at the London refinery. Ongoing projects includeinvestments to allow increased throughput at the Lisbon refinery. We havedeveloped new markets through our association with Eridania Tate & Lyle inItaly. We are making good progress in securing long-term raw sugar supplies,both with new suppliers (for example, through our investment in the DemocraticPeople's Republic of Lao) and through new agreements with traditional suppliers(for example, the announcement after the year-end that we have entered into along term agreement for the supply of up to 300,000 tonnes of raw sugar per yearfrom Fiji). In Vietnam, despite a hesitant start to the crop caused by the weather, thecurrent season has gone well with 100,000 tonnes of sugar sold. Looking forward We expect improved performance from our trading businesses, particularly afterthe actions we have taken to avoid a repetition of the losses in internationalsugar trading. The EU market is expected to remain very challenging in the first half of theyear ending 31 March 2009 but we anticipate an improvement in relative pricingonce equilibrium is restored during the second half of the year. The mostcost-effective model for serving sophisticated refined sugar markets is throughrefining raw cane sugar at full-time, large-scale port-based refineries, such asour refineries in London and Lisbon. One of the consequences of the EU sugarregime reforms is the near-doubling of cane sugar imports, which should provideopportunities for increasing our share once the market has settled. Sucralose \* T Year to 31 March 2008 Year to 31 March 2007 ---------------------------------- ------------------------------------ Value Value added Total Primary added Total Primary £m £m £m £m £m £m----------------------------------------------------------------------------------------Sales - 148 148 - 147 147Operating profit - 66 66 - 71 71Margin - 44.6% 44.6% - 48.3% 48.3%----------------------------------------------------------------------------------------\* T Sales of SPLENDA(R) Sucralose of £148 million were 1% ahead of the prior year(6% in constant currency). Operating profit for the year at £66 million was 7%lower (3% in constant currency). This reflects £6 million (2007 - £3 million) incosts in pursuit of our patent infringement action in the US International TradeCommission (ITC). During the year we have continued to focus on expanding the business and haveseen a 30% increase in new product launches by our customers as we havecontinued to work with them, both in the US and internationally, to broadentheir pipeline of food and beverage products using SPLENDA(R) Sucralose. Strongsales growth was seen in Latin America, Europe and Asia whilst sales in NorthAmerica decreased slightly compared with the prior year during which customersbuilt inventory. In addition, McNeil Nutritionals, LLC (McNeil) maintained itsleadership position in the tabletop segment of the intense sweetener market inthe US with SPLENDA(R) No Calorie Sweetener, and gained significant market sharefor the franchise in Latin America as well. It also launched SPLENDA(R) NoCalorie Sweetener into the food service channel in China, in advance of the 2008Olympic Games in Beijing. With security of supply from the two production facilities in McIntosh, Alabamaand Singapore, we believe that surplus stocks, which had been built up bycustomers when there was only the Alabama facility in production, have now beenreleased. The new Singapore facility was commissioned in June 2007 and we now have a fullyinvested asset base. A new pilot plant facility was completed and commissionedat our McIntosh, Alabama plant which will facilitate the implementation ofprocess improvements that have been demonstrated in the laboratory. This formspart of our strategy to maintain leadership in sucralose manufacturingtechnology. With the commissioning of the Singapore facility and the pilot plant atMcIntosh, fixed costs were higher, particularly due to an additionaldepreciation charge of £13 million. Unit costs increased as the fixed costs fromthe two facilities were spread over a production volume which increased by onlya relatively small amount in the year when compared with the additional capacityavailable. We continued to defend our patents and incurred US$11 million (£6 million) incosts in pursuit of our patent infringement action in the ITC. The ITC case nowinvolves four manufacturers and eighteen importers and distributors. The ITCproceeding alleges infringement of patented sucralose manufacturing technologyin respect of sucralose manufactured in China and imported to the US by thedefendants named in the case. The ITC has the right to exclude products fromimportation into the US that are shown to infringe a US patent. The ITC hearingwas concluded in February 2008, with a preliminary non-binding decision by thejudge currently anticipated no earlier than June 2008 and the subsequent reviewand formal decision by the full ITC Board another four months after the judge'sdecision. Our suite of patents is one of the elements of our considerable competitiveadvantage in the global sucralose market. Our sucralose manufacturing facilitiesoperate at a level of cost, efficiency and environmental stewardship surpassedby none. We can achieve significant economies of scale as we ramp up ourproduction beyond our current 45% capacity utilisation in the two plants. It isthe combination of our unique technology and intellectual property, built upover many years, in solving the immense technical challenges involved inproducing sucralose reliably and with cost-competitive economies of scale thatunderpin our position as the world's leading supplier of sucralose. This strongcompetitive position is further enhanced by our comprehensive applicationsknow-how and service offering. These factors give us great confidence in thecontinued ability of the Sucralose business to make a significant contributionto the Group's results. Looking forward Sales of SPLENDA(R) Sucralose are expected to increase year-on-year, driven byfour primary sources of growth. Firstly, through the replacement of existinghigh intensity sweeteners (particularly aspartame), not only in value added foodbut also in high volume beverages. Secondly, there remains a significantopportunity to capitalise on the unique properties of SPLENDA(R) Sucralose forpartial replacement of nutritive sweeteners (i.e. sugar and HFCS) withoutcompromising on taste. Thirdly, food and beverage manufacturers will continue toinnovate in order to meet both known and perceived consumer needs. Finally,there also remain significant opportunities for growth outside the US,particularly in Latin America and Europe. Average selling prices should be expected to fall over time as we widen ourcustomer offering. However, as sales increase, unit costs of production shouldalso decline as fixed costs are spread over a wider base. The SPLENDA(R) Sucralose business is now fully invested. Whilst the incrementalimpact of a first full year of costs associated with the Singapore facility willrestrict profit growth in the first half-year, we expect continued sales growthto offset these costs and to lead to improved profits in the full year. Central Central costs, which include head office, treasury and reinsurance activities,have decreased by £4 million to £31 million. This decrease reflects a £1 millionreduction in underlying costs. There was a one-off benefit totalling £7 millionfrom insurance and reallocation of costs to the divisions offset by costsrelating to the re-alignment of the Group's management and organisationalstructure. Our review of central costs realised savings of about £3 million in2008, benefits which should double by 2010. Exceptional items Exceptional items from continuing operations comprised restructuring andrelocation charges in respect of our remaining Food & Industrial Ingredients,Europe operations amounting to £30 million, and impairment charges in respect ofcitric acid and our monosodium glutamate business in China (Orsan) of £12million and £17 million, respectively. Our effective ownership of Orsan is 41%and, as a result, the impact on profit attributable to shareholders in respectof that impairment is a charge of £7 million. Net finance expense The net finance expense from continuing operations was £42 million compared with£36 million in the year to 31 March 2007, was principally due to higher net debtlevels. Completion of other capital expenditure projects are expected to add afurther £8 million to interest in 2009 and an additional £4 million in 2010. The effective interest rate in the year, calculated as net finance expense ontotal operations divided by average net debt, was 4.9% (2007 - 4.6%). Interestcover based on total operations was 8.1 times (2007 - 10.1 times) and forcontinuing operations was 6.8 times (2007 - 8.6 times). Taxation The taxation charge from continuing operations was £76 million (2007 - £88million). The effective rate of tax on adjusted profit was 34.4% (2007 - 32.0%).The increase was due mainly to the increased levels of profits in the US, whichare typically taxed at between 37% - 39% and higher unrelieved losses in the UK. An internal financing plan has been implemented which is expected to deliversubstantial savings. While we are confident of regulatory clearance, aspreviously advised there is a small chance of a one-off tax cost inimplementation. Subject to this, and the expected geographical mix of profits,we are targeting a tax rate for the next financial year at the top end of thetwenty per cent range. Discontinued operations Discontinued operations comprise our former activities in sugar processing inCanada and Mexico, and in our Eastern Sugar business and the five disposedstarch plants in Europe. Sales for the year amounted to £394 million (2007 -£845 million), with operating profits of £45 million (2007 - £62 million). Afterfinance costs, income tax expense and gains and losses on disposals, thecontribution to profit for the year was £90 million. Earnings per share Total diluted earnings per share were 40.4 pence, down 7% (3% in constantcurrency) from 43.6 pence in the prior year. Total basic earnings per share were40.9p down 8% (3% in constant currency). Diluted earnings per share fromcontinuing operations adjusted to exclude exceptional items and amortisationwere 32.7p, a reduction of 13% (8% in constant currency). On the same basis,basic earnings per share of 33.1p also reduced by 13% (9% in constant currency). Dividend The Board is recommending a final dividend of 16.1p as an ordinary dividend tobe paid on 31 July 2008 to shareholders on the Register of Members on 4 July2008. This represents an increase in the total dividend for the year of 1.1pence per share. An interim dividend of 6.5p (2007 - 6.2p) was paid on 8 January2008. Dividend cover based on total operations was 1.8 times (2007 - 2.1 times)and for continuing operations was 1.0 times (2007 - 1.6 times). Net debt The Group's net debt increased from £900 million to £1,041 million. Workingcapital increases drove down operating cash generation, whilst the proceeds frombusiness disposals were reinvested in the capital expenditure programme,business acquisitions and returns to shareholders. Debt is expected to remainclose to this level in the forthcoming financial year. Exchange translationincreased net debt by £32 million. The ratio of net debt to total earnings before exceptional items, interest, tax,depreciation and total amortisation (EBITDA) was 2.4 times (2007 - 1.9 times).During the year net debt peaked at £1,041 million in March 2008 (in the prioryear it peaked at £900 million in March 2007). The average net debt was £845million, an increase of £41 million from £804 million in the prior year. We continue to seek to optimise our financing costs in respect of all financingtransactions. Where it is economically beneficial, operating leases areundertaken in preference to purchasing assets. Commitments under operatingleases amounted to £228 million at the year end (2007 - £201 million); rentalcharges for the year were £21 million (2007 - £27 million). Cash flow Cash inflow from continuing operations was £126 million, down from £325 millionin 2007. The effects on cash of lower profit before tax of £244 million(compared to £275 million) were largely offset by higher depreciation charges.However, outflows from working capital effects (principally inventory increasesin Sucralose and Food & Industrial Ingredients, Americas and Europe, higherreceivables in Sugars and Food & Industrial Ingredients, Americas, offset bycreditor levels in all divisions except Sucralose), together with cash spendconnected with restructuring and closure activities, resulted in lower cashgeneration. Cash inflows in 2008 were improved by the full receipt of sugartransitional aid of £74 million which is being credited to income up to 2011. Net interest paid totalled £34 million (2007 - £42 million). Net taxation paidfrom continuing operations was £75 million (2007 - £78 million). Capital expenditure remained at similar levels to 2007 as capacity expansionprojects and the construction of the new plant at Fort Dodge, Iowa continued. Free cash outflow (representing cash generated from operations after interest,taxation and capital expenditure) totalled £247 million (2007 - £46 millionoutflow). Proceeds from disposals of businesses amounted to £383 million and £75 millionwas spent on the Hahn acquisition. Equity dividends were £105 million (2007 - £98 million). In total, a net £139million (2007 - £140 million) was paid to providers of finance as dividends andinterest. A net inflow of £8 million was received relating to employeesexercising share options during the year (2007 - £16 million). Net assets and return on net operating assets Net assets were £950 million at the year end (2007 - £995 million). Currentassets less current liabilities were marginally lower at £491 million. Return onnet operating assets was 15.5%, down from 18.9% in 2007 as the improvement inFood & industrial Ingredients, Americas was offset by significant declines inSugars. Shareholders' equity During the year, 33.6 million shares were repurchased for a total cost of £159million. Of these shares, 30.3 million were cancelled and the remainder held intreasury. At the year-end, there were 459.9 million shares in issue. CONSOLIDATED INCOME STATEMENT \* T Year to Year to 31 March 31 March 2008 2007 Notes £m £m-----------------------------------------------------------------------------------------------------Continuing operationsSales 3 3 424 3 225 -------------- ------------ Operating profit 3 215 289Finance income 5 38 50Finance expense 5 (80) (86) -------------- ------------Profit before tax 173 253Income tax expense 6 (76) (88) -------------- ------------Profit for the year from continuing operations 97 165Profit for the year from discontinued operations 9 90 52 -------------- ------------Profit for the year 187 217 -------------- ------------ Profit/(loss) for the year attributable to:Equity holders of the Company 194 214Minority interest (7) 3 -------------- ------------Profit for the year 187 217 -------------- ------------ Earnings per share attributable to the equity holders ofthe Company from continuing and discontinued operations 7 Pence Pence- Basic 40.9 44.3- Diluted 40.4 43.6 -------------- ------------ Earnings per share attributable to the equity holders ofthe Company from continuing operations 7- Basic 21.9 33.6- Diluted 21.7 33.0 -------------- ------------ Dividends per share 8- Interim paid 6.5 6.2- Final proposed 16.1 15.3 -------------- ------------ 22.6 21.5 ------------------- ------------ -----------------------------------------------------------------------------------------------------Analysis of profit before tax from continuing operations £m £m -------------- ------------Profit before tax 173 253Add back:Exceptional items 4 59 13Amortisation of acquired intangible assets 12 9 -------------- ------------Profit before tax, exceptional items and amortisation of acquired intangible assets 244 275 -------------- ------------ -----------------------------------------------------------------------------------------------------\* T CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE \* T Year to Year to 31 March 31 March 2008 2007 Note £m £m--------------------------------------------------------------------------------------------------Net exchange differences 57 (81)Net actuarial losses in post-employment benefit plans (7) (1)Net gains/(losses) on cash flow hedges 1 (4)Losses on revaluation of available-for-sale financial assets (3) - ------------ ------------Net gain/(loss) recognised directly in equity 13 48 (86)Profit for the year 187 217 ------------ ------------Total recognised income and expense for the year 235 131 ------------ ------------ Attributable to:Equity holders of the Company 242 131Minority interests (7) - ------------ ------------ 235 131 ------------ ------------\* T CONSOLIDATED BALANCE SHEET \* T Year to Year to 31 March 31 March 2008 2007 Notes £m £m--------------------------------------------------------------------------------------------------ASSETSNon-current assetsGoodwill and intangible assets 320 232Property, plant and equipment 1 196 1 217Investments in associates 7 7Available-for-sale financial assets 15 18Derivative financial instruments 36 36Deferred tax assets 1 8Trade and other receivables 11 64Retirement benefit surplus 53 - ------------ ------------ 1 639 1 582 ------------ ------------Current assetsInventories 562 503Trade and other receivables 675 558Current tax assets 18 39Derivative financial instruments 275 102Cash and cash equivalents 10 165 189Assets held for sale - 89 ------------ ------------ 1 695 1 480 ------------ ------------TOTAL ASSETS 3 334 3 062 ------------ ------------ SHAREHOLDERS' EQUITYCapital and reserves attributable to the Company's equity holdersShare capital 114 122Share premium 404 403Capital redemption reserve 8 -Other reserves 91 50Retained earnings 317 385 ------------ ------------ 934 960Minority interests 16 35 ------------ ------------TOTAL SHAREHOLDERS' EQUITY 13 950 995 ------------ ------------ LIABILITIESNon-current liabilitiesTrade and other payables 27 6Borrowings 10 858 842Derivative financial instruments 30 19Deferred tax liabilities 107 85Retirement benefit obligations 144 131Provisions for other liabilities and charges 14 51 ------------ ------------ 1 180 1 134 ------------ ------------Current liabilitiesTrade and other payables 488 420Current tax liabilities 35 47Borrowings and bank overdrafts 10 360 271Derivative financial instruments 267 123Provisions for other liabilities and charges 54 44Liabilities held for sale - 28 ------------ ------------ 1 204 933 ------------ ------------TOTAL LIABILITIES 2 384 2 067 ------------ ------------TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 3 334 3 062 ------------ ------------\* T CONSOLIDATED CASHFLOW STATEMENT \* T Year to Year to 31 March 31 March 2008 2007 Notes £m £m------------------------------------------------------------------------------------------------Cash flows from operating activitiesProfit before tax from continuing operations 173 253Adjustments for: Depreciation of property, plant and equipment 100 80 Exceptional items 4 59 13 Amortisation of intangible assets 15 13 Share-based payments 7 5 Finance income 5 (38) (50) Finance expense 5 80 86Working capital, non-cash movements and other operating cash (270) (75) ------------ ------------Cash generated from continuing operations 126 325 Interest paid (87) (75) Income tax paid (75) (78)Cash generated from discontinued operations 9 36 55 ------------ ------------Net cash flows generated from operating activities - 227 ------------ ------------ Cash flows from investing activitiesProceeds on disposal of property, plant and equipment 7 8Interest received 53 33Purchase of available-for-sale financial assets (4) (1)Proceeds on disposal of available-for-sale financial assets 4 -Acquisitions of subsidiaries, net of cash and cash equivalents acquired (75) (3)Disposals of subsidiaries, net of cash and cash equivalents disposed 341 -Disposals of joint ventures, net of cash and cash equivalents disposed 42 -Investment in associates - (3)Purchase of property, plant and equipment (264) (251)Purchase of intangible assets and other non-current assets (7) (6) ------------ ------------Net cash flows generated from/(used in) investing activities 97 (223) ------------ ------------ Cash flows from financing activitiesProceeds from issuance of ordinary shares 8 16Repurchase of ordinary shares (159) -Cash inflow from additional borrowings 152 416Cash outflow from repayment of borrowings (23) (304)Cash outflow from repayment of capital element of finance leases (1) (1)Dividends paid to the Company's equity holders (105) (98)Dividends paid to minority interests (1) - ------------ ------------Net cash flows (used in)/generated from financing activities (129) 29 ------------ ------------ ------------ ------------Net (decrease)/increase in cash and cash equivalents 10 (32) 33 ------------ ------------ Cash and cash equivalentsBalance at beginning of year 189 158Effect of changes in foreign exchange rates 8 (2)Net (decrease)/increase in cash and cash equivalents (32) 33 ------------ ------------Balance at end of year 10 165 189 ------------ ------------\* T NOTES TO FINANCIAL INFORMATION For the Year to 31 March 2008 1. Basis of preparation The preliminary results for the year ended 31 March 2008 have been extractedfrom audited consolidated financial statements which have not yet been deliveredto the Registrar of Companies. The financial information in this announcementdoes not constitute the Group's Annual Report and Accounts. The auditors havereported on the Group's statutory accounts for the year ended 31 March 2008. Thereport was unqualified and did not contain a statement under Section 237 of theCompanies Act 1985. Following the disposal of Tate & Lyle Canada (Redpath), Grupo IndustrialAzucarero de Occidente S.A. de C.V. (Occidente) and the cessation of the Group'sEastern Sugar joint venture, the Sugars, Americas and Asia and Sugars, Europesegments have been combined into one segment, 'Sugars', and the comparativesegmental information has been represented. In a further change to our segmentalinformation we have separated central costs, which were previously allocated tothe segments, as this is the way the business is managed and financialinformation is presented to key decision makers on this basis. The financial information for the year ended 31 March 2007 is derived from thestatutory accounts for that year, except that the comparative information hasbeen reclassified as a result of the realignment of the segments discussed aboveand the results of the discontinued operations of Occidente and the disposedEuropean starch plants. 2. International Financial Reporting Standards (IFRS) The consolidated financial statements have been prepared in accordance with IFRSas adopted by the European Union, and with those parts of the Companies Act 1985applicable to companies reporting under IFRS. In accordance with IAS1 'Presentation of Financial Statements', certain itemswhich are material to the result for the year and are of a non-recurring natureare presented separately. These are classified as exceptional items whichcomprise items of income and expense that are material in amount and unlikely torecur, and which merit separate disclosure in order to provide an understandingof the Group's underlying financial performance. 3. Segment information Discontinued operations comprise Tate & Lyle Canada Limited (Redpath),Occidente, Eastern Sugar and the disposed European starch plants (see note 9). The segment results for the year to 31 March 2008 were as follows: \* T Continuing operations --------------------------------------------------------------------------- Food & Food & Industrial Industrial Discontinued Ingredients, Ingredients, Central operations Americas Europe Sucralose Sugars costs Total (note 9) Total £m £m £m £m £m £m £m £m------------------------------------------------------------------------------------------------------------------------SalesTotal sales 1 390 470 148 1 438 - 3 446 423 3 869Inter-segment sales (4) (9) - (9) - (22) (29) (51) -------------- -------------- ------------- ---------- ---------- --------- -------------- ---------External sales 1 386 461 148 1 429 - 3 424 394 3 818 -------------- -------------- ------------- ---------- ---------- --------- -------------- ---------Operating profitBefore exceptional items and amortisation of acquired intangible assets 186 41 66 24 (31) 286 45 331Exceptional items (Note 4) (12) (47) - - - (59) 60 1Amortisation of acquired intangible assets (3) (5) (4) - - (12) - (12) -------------- -------------- ------------- ---------- ---------- --------- -------------- ---------Operating profit 171 (11) 62 24 (31) 215 105 320 -------------- -------------- ------------- ---------- ----------Net finance expense (42) 1 (41) --------- -------------- ---------Profit before tax 173 106 279 --------- -------------- ---------\* T The segment results for the year to 31 March 2007 were as follows: \* T Continuing operations --------------------------------------------------------------------------- Food & Food & Industrial Industrial Discontinued Ingredients, Ingredients, Central operations Americas Europe Sucralose Sugars costs Total (note 9) Total £m £m £m £m £m £m £m £m------------------------------------------------------------------------------------------------------------------------SalesTotal sales 1 259 316 147 1 638 - 3 360 879 4 239Inter-segment sales (4) (11) - (120) - (135) (34) (169) -------------- -------------- ------------- ---------- ---------- --------- -------------- ---------External sales 1 255 305 147 1 518 - 3 225 845 4 070 -------------- -------------- ------------- ---------- ---------- --------- -------------- --------- Operating profitBefore exceptional items and amortisation of acquired intangible assets 175 40 71 60 (35) 311 62 373Exceptional items (Note 4) (33) - 20 - - (13) 23 10Amortisation of acquired intangible assets (3) (2) (4) - - (9) - (9) -------------- -------------- ------------- ---------- ---------- --------- -------------- ---------Operating profit 139 38 87 60 (35) 289 85 374 -------------- -------------- ------------- ---------- ----------Net finance expense (36) (1) (37) --------- -------------- ---------Profit before tax 253 84 337 --------- -------------- ---------\* T 4. Exceptional items Exceptional items are as follows: \* T Year to Year to 31 March 31 March 2008 2007 £m £m----------------------------------------------------------------------------------------------ContinuingRestructuring costs (a) (30) -Impairment and closure costs (b) (29) (33)Deferred payment provision release (c) - 20 -------------- ------------- (59) (13) -------------- -------------DiscontinuedEuropean starch plants (a) (8) -Redpath (d) 60 -Occidente (e) 8 -Eastern Sugar (f) - 23 -------------- ------------- 60 23 -------------- -------------\* T (a) Overall the net loss on disposal of the European starch plants in France,Belgium, Italy, Spain and the UK is £38 million, comprising £30 million ofredundancy and other restructuring costs within continuing operations, and a netloss of £8 million in discontinued operations (comprising £7 million profit ondisposal offset by goodwill written off of £15 million). The restructuring costsresult from the significant reduction in central support functions required bythe retained Food & Industrial Ingredients, Europe business. (b) Following a review of the global citric acid business, an impairment chargeof £12 million relating to property, plant and equipment has been recognised.The citric acid business is reported in the Food & Industrial Ingredients,Americas division. The Group is also taking an impairment charge of £17 million in the Group'smonosodium glutamate business in China; inventory (£7 million), property, plantand equipment (£9 million) and intangible assets (£1 million). £10 million ofthis impairment relates to minority interests. This business is currentlyreported in the Food & Industrial Ingredients, Europe division. Impairment and closure costs in the prior year of £33 million were recognisedfollowing a review of the manufacturing activities at the Selby, UK factory forcitric acid and astaxanthin. These businesses are both reported within the Food& Industrial Ingredients, Americas division. (c) The deferred payment provision release in the year ended 31 March 2007 of£20 million related to the Sucralose business. As part of the realignment ofSucralose activities with McNeil Nutritionals, LLC ('McNeil') in April 2004 aprovision was set up for deferred consideration payable to McNeil. It wasanticipated that the provision would not be fully utilised and consequently £20million was released to the income statement. (d) The Group disposed of its shareholding of Redpath resulting in a profit ondisposal of £60 million (see note 12). (e) The Group disposed of its interest in its Mexican cane sugar business,Occidente, resulting in a profit on disposal of £8 million (see note 12). (f) The exceptional gain of £23 million in discontinued operations in 2007related to the Group's Eastern Sugar joint venture. This comprised a £14 millionnet gain expected on termination of operations following surrender of sugarquota to the EU Restructuring Fund under the terms of the EU Sugar Regime and a£9 million gain following a favourable outcome to a long running litigationdispute with the government of the Czech Republic. The tax impact on continuing net exceptional items is a £5 million credit (2007- £3 million charge) and on total net exceptional items is a £3 million charge(2007 - £7 million charge). Tax credits on exceptional items are only recognisedto the extent that losses created are expected to be recoverable in the future.In the year to 31 March 2007, a further £18 million exceptional tax charge wasrecognised in relation to discontinued operations. Exceptional items include a £10 million loss (2007 - nil) attributable tominority interests. 5. Finance income and finance expense \* T Year to Year to 31 March 31 March 2008 2007Continuing £m £m----------------------------------------------------------------------------------------------------Finance incomeInterest receivable 34 48Net finance income/(cost) arising on defined benefit retirement schemes:- interest cost (67) (66)- expected return on plan assets 71 68 ------------- ------------Total finance income 38 50 ------------- ------------Finance expenseInterest payable on bank borrowingsInterest payable on other borrowings (6) (3)Unwinding of discounts in provisions (69) (77)Finance lease charges (1) (3)Fair value gain/(loss) on interest-related derivative financial (3) (3) instruments:- interest rate swaps - fair value hedges 16 (4)- derivatives not designated as hedges 1 (1)Fair value adjustment of borrowings attributable to interest rate risk (18) 5 ------------- ------------Total finance expense (80) (86) ------------- ------------Net finance expense (42) (36) ------------- ------------\* T 6. Income tax expense \* T Year to Year to 31 March 31 March 2008 2007Continuing £m £m----------------------------------------------------------------------------------------------------Current tax:In respect of the current year- UK - (33)- Overseas 87 96Adjustments in respect of previous years (4) 6 ------------- ------------ 83 69Deferred tax (7) 19 ------------- ------------Income tax expense 76 88 ------------- ------------\* T The taxation charge on continuing operations in the year to 31 March 2008 of £76million (2007 - £88 million) includes a credit of £5 million in respect ofexceptional items (2007 - £3 million charge). \* T Year to Year to 31 March 31 March 2008 2007Discontinued £m £m----------------------------------------------------------------------------------------------------Current tax:- UK - 3- Overseas 13 18 ------------- ------------ 13 21Deferred tax 3 11 ------------- ------------Income tax expense 16 32 ------------- ------------\* T 7. Earnings per share Basic Basic earnings per share is calculated by dividing the profit attributable toequity holders of the Company by the weighted average number of ordinary sharesin issue during the year, excluding ordinary shares purchased by the Company andheld in the Employee Share Ownership Trust or in Treasury. \* T Year to 31 March 2008 Year to 31 March 2007 ----------------------------------- ----------------------------------- Continuing Discontinued Total Continuing Discontinued Total operations operations operations operations-----------------------------------------------------------------------------------------------------Profit attributable to equity shareholders of the Company (£million) 104 90 194 162 52 214Weighted average number of ordinary shares in issue (millions) 474.7 474.7 474.7 482.8 482.8 482.8Basic earnings per share 21.9p 19.0p 40.9p 33.6p 10.7p 44.3p ----------- ------------ -------- ----------- ------------ --------\* T Diluted Diluted earnings per share is calculated by adjusting the weighted averagenumber of ordinary shares outstanding to assume conversion of all potentialdilutive ordinary shares. Potential dilutive ordinary shares arise from shareoptions. For these, a calculation is performed to determine the number of sharesthat could have been acquired at fair value (determined as the average annualmarket share price of the Company's shares) based on the monetary value of thesubscription rights attached to outstanding share options. \* T Year to 31 March 2008 Year to 31 March 2007 ----------------------------------- ----------------------------------- Continuing Discontinued Total Continuing Discontinued Total operations operations operations operations-----------------------------------------------------------------------------------------------------Profit attributable to equity shareholders of the Company (£million) 104 90 194 162 52 214Weighted average number of diluted shares in issue (millions) 480.4 480.4 480.4 491.0 491.0 491.0Diluted earnings per share 21.7p 18.7p 40.4p 33.0p 10.6p 43.6p ----------- ------------ -------- ----------- ------------ --------\* T The adjustment for the dilutive effect of share options at 31 March 2008 was 5.7million (2007 - 8.2 million). Adjusted earnings per share Adjusted earnings per share is stated excluding exceptional items andamortisation of acquired intangible assets as follows: \* T Year to Year to 31 March 31 MarchContinuing operations 2008 2007----------------------------------------------------------------------------------------------------Profit attributable to equity shareholders of the Company (£million) 104 162Adjustments for:- exceptional items (note 4) 59 13- minority interest share of exceptional items (note 4) (10) -- amortisation of acquired intangible assets 12 9- tax effect of the above adjustments (8) - ------------- ------------Adjusted profit (£million) 157 184 ------------- ------------ Adjusted basic earnings per share from continuing operations 33.1p 38.1pAdjusted diluted earnings per share from continuing operations 32.7p 37.5p----------------------------------------------------------------------------------------------------\* T 8. Dividends \* T Year to Year to 31 March 31 March 2008 2007---------------------------------------------------------------------------------------------------Dividends paid on ordinary equity shares- final paid relating to prior year (£million) 74 68- interim paid relating to current year (£million) 31 30 ------------ -----------Total dividend paid (£million) 105 98 ------------ -----------The total ordinary dividend is 22.6p (2007 - 21.5p) made up as follows:- interim dividend paid 6.5p 6.2p- final dividend proposed 16.1p 15.3p ------------ ----------- 22.6p 21.5p ------------ -----------\* T The final dividend proposed for the year, which has not been recognised as aliability, will be paid subject to approval by shareholders at the Company'sAnnual General Meeting on 23 July 2008 to shareholders who are on the Registerof Members on 4 July 2008. 9. Discontinued operations On 22 April 2007 the Group completed the sale of Redpath to American SugarRefining, Inc. Accordingly the results of Redpath are presented as discontinuedoperations for the years ended 31 March 2008 and 31 March 2007. The relatedassets and liabilities were held for sale at 31 March 2007. On 1 October 2007, the Group completed the sale to Syral SAS (a subsidiary ofTereos of France) of its starch facilities forming part of the Food & IndustrialIngredients, Europe segment in the UK, Belgium, France, Spain and Italy(together "the European starch plants"). Accordingly the results of the Europeanstarch plants that have been disposed of are presented as discontinuedoperations for the years ended 31 March 2008 and 31 March 2007. On 28 December 2007 the Group disposed of its 49% indirect shareholding inOccidente to E D & F Man Holdings Limited. Accordingly the results of Occidenteare presented as discontinued operations for the years ended 31 March 2008 and31 March 2007. Following an extensive review of the impact of the new EU sugar regime, theGroup's Eastern Sugar joint venture ceased processing beets by March 2007 andrenounced its sugar quotas in Hungary, Czech Republic and Slovakia in return forRestructuring Aid. Accordingly the results of Eastern Sugar are presented asdiscontinued operations for the years ended 31 March 2008 and 31 March 2007. The results of Redpath, Occidente and Eastern Sugar were previously reported inthe Sugars segment. The disposed European starch plants were previously reportedas part of the Food & Industrial Ingredients, Europe segment. \* T Year to 31 March 2008 ----------------------------------------------------------- Eastern European Redpath Sugar starch Occidente Total plants £m £m £m £m £m--------------------------------------------------------------------------------------------------Sales 11 31 308 44 394 ----------------------------------------------------------- Operating profit before exceptional items - 5 38 2 45Exceptional items (note 4) 60 - (8) 8 60 -----------------------------------------------------------Operating profit 60 5 30 10 105Finance income - 2 - 1 3Finance expense - - (1) (1) (2) -----------------------------------------------------------Profit before tax from discontinued operations 60 7 29 10 106Income tax expense (note 6) - (1) (7) (8) (16) -----------------------------------------------------------Profit for the year from discontinued operations 60 6 22 2 90 -----------------------------------------------------------\* T \* T Year to 31 March 2007 ----------------------------------------------------------- Eastern European Redpath Sugar starch Occidente Total plants £m £m £m £m £m--------------------------------------------------------------------------------------------------Sales 189 67 520 69 845 ----------------------------------------------------------- Operating profit before exceptional items 8 10 38 6 62Exceptional items (note 4) - 23 - - 23 -----------------------------------------------------------Operating profit 8 33 38 6 85Finance income 1 - - 1 2Finance expense - - (2) (1) (3) -----------------------------------------------------------Profit before tax from discontinued operations 9 33 36 6 84Income tax expense (note 6) (9) (6) (15) (2) (32) -----------------------------------------------------------Profit for the year from discontinued operations - 27 21 4 52 -----------------------------------------------------------\* T Income tax expense in Occidente in the year to 31 March 2008 includes an £8million charge in respect of exceptional items. Income tax expense in Redpath inthe year to 31 March 2007 included a £5 million exceptional charge. Income taxexpense in Eastern Sugar in the year to 31 March 2007 included a £4 millioncharge in respect of exceptional items. Net cash flows from discontinued operations are as follows: \* T Year to 31 March 2008 ----------------------------------------------------------- Eastern European Redpath Sugar starch Occidente Total plants £m £m £m £m £m--------------------------------------------------------------------------------------------------Net cash (outflows)/inflows fromoperating activities (8) 22 22 - 36Net cash inflows/(outflows) frominvesting activities - 1 (23) (2) (24)==================================================================================================\* T \* T Year to 31 March 2007 ----------------------------------------------------------- Eastern European Redpath Sugar starch Occidente Total plants £m £m £m £m £m--------------------------------------------------------------------------------------------------Net cash inflows fromoperating activities 4 - 44 7 55Net cash (outflows)/inflows frominvesting activities (1) 3 (39) (6) (43)==================================================================================================\* T There were no cash flows to or from financing activities in relation todiscontinued operations in the years ended 31 March 2008 and 2007. 10. Net debt The components of the Group's net debt profile are as follows: \* T Year to Year to 31 March 31 March 2008 2007 £m £m---------------------------------------------------------------------------------------------------Non-current borrowings (858) (842)Current borrowings and overdrafts (a) (360) (271)Debt-related derivative instruments (b) 12 24Cash and cash equivalents 165 189 ------------ -----------Net debt (1 041) (900) ------------ -----------\* T (a) Borrowings and overdrafts at 31 March 2008 include £50 million (31 March2007 - £95 million) in respect of securitised receivables. (b) Derivative financial instruments presented within assets and liabilities inthe balance sheet of £14 million net asset comprise net debt-related instrumentsof £12 million asset and net non debt-related instruments of £2 million asset(2007 - £4 million net liability compromising net debt-related instruments of£24 million asset and net non debt-related instruments of £28 millionliability). There were no derivative financial instruments held for sale at 31March 2008 (2007 - £1 million net non debt-related asset). Movements in the Group's net debt profile are as follows: \* T Year to Year to 31 March 31 March 2008 2007 £m £m---------------------------------------------------------------------------------------------------Balance at 1 April (900) (866) ------------ -----------(Decrease)/increase in cash and cash equivalents in the year (32) 33Cash inflow from increase in borrowings (128) (111)Debt transferred on disposal of subsidiaries 55 -Inception of finance leases (2) (14)Borrowings arising on acquisition (2) -Exchange differences (32) 58 ------------ -----------Increase in net debt in the year (141) (34) ------------ -----------Balance at 31 March (1 041) (900) ------------ -----------\* T 11. Acquisitions G.C.Hahn & Co On 15 June 2007, the Group acquired 80% of the issued share capital of G.C. Hahn& Co (Hahn). Hahn provides customised ingredient solutions to global customers.Hahn's primary operations are located in L£beck, Germany. It also has productionoperations in the UK, USA and Australia, and sales offices in 22 countries. The acquisition agreement allows for the Group to acquire the remaining 20% ofthe issued share capital prior to 1 January 2020 through put and call options.The owner of the remaining 20% of the issued share capital is entitled to fixeddividends until the options are exercised. The Group effectively bears all therisks and rewards for 100% of the business and therefore no minority interest isrecognised in the Group's financial statements. The acquisition has contributed £60 million to sales and £5 million to operatingprofit post amortisation of acquired intangibles in the period sinceacquisition. If the acquisition of Hahn had been completed on 1 April 2007,Group sales from continuing operations for the year would have been £3,439million and Group profit attributable to equity holders of the Company wouldhave been unchanged. \* T Book value Provisional fair Provisional fair on acquisition value value adjustments £m £m £m------------------------------------------------------------------------------------------------Intangible assets - 52 52Property, plant and equipment 11 1 12Inventories 8 2 10Trade and other receivables 18 (2) 16Cash and cash equivalents 5 - 5Trade and other payables (9) (1) (10)Provisions - (2) (2)Borrowings (2) - (2)Deferred tax liabilities - (17) (17) ----------------- ----------------- ---------------- 31 33 64 ----------------- -----------------Goodwill 36 ----------------Consideration payable 100 ---------------- Satisfied by:-------------------------------------Cash consideration, including costs 80Deferred consideration 20 ---------------- 100 ----------------Cash movement:-------------------------------------Cash consideration, including costs 80Less: Cash acquired (5) ----------------Net cash outflow in the year 75 ----------------\* T Goodwill on acquisition relates to anticipated synergies that do not meet thecriteria for recognition as an intangible asset at the date of acquisition. The fair value adjustments above are provisional, based on management's bestestimates. The fair value adjustments will be finalised in the 2009 financialyear. 12. Disposals On 22 April 2007 the Group disposed of its shareholding in Redpath. Totalconsideration, net of disposal costs was £140 million. On 1 October 2007 the Group completed the disposal of five of its starch plantswithin the Food & Industrial Ingredients, Europe segment in the UK, Belgium,France, Spain and Italy. Total consideration, net of disposal costs was £212million. On 28 December 2007 the Group disposed of its 49% shareholding in Occidente.Total consideration, net of disposals costs was £46 million. \* T European Redpath starch plants Occidente £m £m £m-----------------------------------------------------------------------------------------------Total consideration, net of costs 140 212 46Net assets disposed (85) (217) (36)Goodwill written off - (15) -Other items, including exchange differencestransferred from equity 5 12 (2) ------------- -------------- -------------Profit/(loss) on disposal 60 (8) 8 ------------- -------------- ------------- Cash flows:-------------------------------------------------Cash consideration, net of costs 139 223 46Cash disposed (6) (20) (4) ------------- -------------- -------------Cash inflow in the year 133 203 42 ------------- -------------- -------------\* T \* TNet assets disposed comprised: European Redpath starch Occidente plants £m £m £m-----------------------------------------------------------------------------------------------Intangible assets - 2 -Property, plant and equipment 51 172 26Available-for-sale financial assets - - 1Inventories 22 42 19Retirement benefit surplus/(obligation) 2 (4) -Trade and other receivables 22 150 5Cash and cash equivalents 6 20 4Trade and other payables (18) (118) (6)Borrowings - (43) (12)Provisions - (4) (1) -------------- -------------- -------------Net assets disposed 85 217 36 -------------- -------------- -------------\* T Other disposals On 26 April 2007 the Group disposed of its shareholding in Pure Cane Molassesfor cash consideration of £4 million resulting in a loss on disposal of £1million. On 15 June 2007 the Group disposed of its shareholding in Tate & LyleReinsurance, comprising part of its reinsurance operations and including cashbalances of £2 million, for cash consideration of £3 million. The loss ondisposal was £1 million. 13. Consolidated statement of changes in shareholders' equity \* T Attributable Share Capital to the capital redemption Other Retained equity Minority Total and reserve reserves earnings holders of interest equity premium the Company £m £m £m £m £m £m £m---------------------------------------------------------------------------------------------------------------Balance at 1 April 2006 522 - 56 327 905 35 940Net loss recognised directlyin equity - - (82) (1) (83) (3) (86)Profit for the year - - - 214 214 3 217Share-based paymentsincluding tax - - - 5 5 - 5Proceeds from shares issued 3 - - 14 17 - 17Transfers - - 76 (76) - - -Dividends paid - - - (98) (98) - (98)---------------------------------------------------------------------------------------------------------------Balance at 31 March 2007 525 - 50 385 960 35 995---------------------------------------------------------------------------------------------------------------Net profit/(loss) recogniseddirectly in equity - - 55 (7) 48 - 48Profit for the year - - - 194 194 (7) 187Share-based paymentsincluding tax - - - 2 2 - 2Proceeds from sharesissued 1 - - 7 8 - 8Items transferred to incomeon disposal - - (14) - (14) (1) (15)Share buy-backs (8) 8 - (159) (159) - (159)Dividends paid - - - (105) (105) (1) (106)Minority interest disposed - - - - - (10) (10)---------------------------------------------------------------------------------------------------------------Balance at 31 March 2008 518 8 91 317 934 16 950===============================================================================================================\* T 14. Foreign exchange rates \* T Year to Year to 31 March 31 MarchAverage exchange rates 2008 2007-------------------------------------------------------------------------------------------------US Dollar £1 = $ 2.01 1.89Euro £1 = EUR 1.42 1.48\* T \* T Year to Year to 31 March 31 MarchYear end exchange rates 2008 2007-------------------------------------------------------------------------------------------------US Dollar £1 = $ 1.99 1.97Euro £1 = EUR 1.26 1.47\* T 15. Reconciliation to adjusted information Adjusted information is presented as it provides both management and investorswith valuable additional information on the performance of the business. Thefollowing items are excluded from adjusted information: -- Discontinued operations; -- Exceptional items including profits/losses on disposals of businesses and impairments; and -- Amortisation of acquired intangibles. The following table shows the reconciliation of the statutory informationpresented in the income statement to the adjusted information: \* T Year to 31 March 2008 Year to 31 March 2007 -------------------------------- ------------------------------ ReportedExceptional/ Adjusted ReportedExceptional/ Adjusted £mAmortisation £m £mAmortisation £m £m £m--------------------------------------------------------------------------------------------------Continuing operationsSales 3 424 - 3 424 3 225 - 3 225 -------------------------------- ------------------------------Operating profit 215 71 286 289 22 311Net finance costs (42) - (42) (36) - (36) -------------------------------- ------------------------------Profit before tax 173 71 244 253 22 275Income tax expense (76) (8) (84) (88) - (88)Minority interest 7 (10) (3) (3) - (3) -------------------------------- ------------------------------Profit attributable to equity shareholders of the Company 104 53 157 162 22 184 -------------------------------- ------------------------------ Basic earnings per share (pence) 21.9 11.2 33.1 33.6 4.5 38.1Diluted earnings per share (pence) 21.7 11.0 32.7 33.0 4.5 37.5 Tax rate 43.9% 34.4% 34.8% 32.0% Discontinued operationsSales 394 - 394 845 - 845 ----------------------------------------------------------------Operating profit 105 (60) 45 85 (23) 62Net finance costs 1 - 1 (1) - (1) ----------------------------------------------------------------Profit before tax 106 (60) 46 84 (23) 61Income tax expense (16) 8 (8) (32) 22 (10)Minority interest - - - - - - ----------------------------------------------------------------Profit attributable to equity shareholders of the Company 90 (52) 38 52 (1) 51 ---------------------------------------------------------------- Basic earnings per share (pence) 19.0 (11.0) 8.0 10.7 (0.1) 10.6Diluted earnings per share (pence) 18.7 (10.8) 7.9 10.6 (0.2) 10.4 Tax rate 15.1% 17.4% 38.1% 16.4% Total operationsSales 3 818 - 3 818 4 070 - 4 070 ----------------------------------------------------------------Operating profit 320 11 331 374 (1) 373Net finance costs (41) - (41) (37) - (37) ----------------------------------------------------------------Profit before tax 279 11 290 337 (1) 336Income tax expense (92) - (92) (120) 22 (98)Minority interest 7 (10) (3) (3) - (3) ----------------------------------------------------------------Profit attributable to equity shareholders of the Company 194 1 195 214 21 235 ---------------------------------------------------------------- Basic earnings per share (pence) 40.9 0.2 41.1 44.3 4.4 48.7Diluted earnings per share (pence) 40.4 0.2 40.6 43.6 4.3 47.9 Tax rate 33.0% 31.7% 35.6% 29.2%\* T ADDITIONAL INFORMATION For the Year to 31 March 2008 Adjusted operating profit margin analysis \* T Year to 31 March 2008 Year to 31 March 2007 Primary Value added Total PrimaryValue added Total £m £m £m £m £m £m--------------------------------------------------------------------------------------------------SalesSugars - Products 572 73 645 461 72 533 - Trading 784 - 784 985 - 985 ------------------------------ ------------------------------ 1 356 73 1 429 1 446 72 1 518 ------------------------------ ------------------------------Food & Industrial Ingredients, Americas - Food 651 293 944 543 277 820 - Industrial 309 133 442 315 120 435 ------------------------------ ------------------------------ 960 426 1 386 858 397 1 255 ------------------------------ ------------------------------Food & Industrial Ingredients, Europe - Food 168 155 323 139 74 213 - Industrial 138 - 138 92 - 92 ------------------------------ ------------------------------ 306 155 461 231 74 305 ------------------------------ ------------------------------Sucralose - 148 148 - 147 147 ------------------------------ ------------------------------Total 2 622 802 3 424 2 535 690 3 225 ------------------------------ ------------------------------ Operating profitSugars - Products 15 5 20 25 7 32 - Trading 4 - 4 28 - 28 ------------------------------ ------------------------------ 19 5 24 53 7 60 ------------------------------ ------------------------------Food & Industrial Ingredients, Americas - Food 76 68 144 61 70 131 - Industrial 42 - 42 43 1 44 ------------------------------ ------------------------------ 118 68 186 104 71 175 ------------------------------ ------------------------------Food & Industrial Ingredients, Europe - Food 14 21 35 27 10 37 - Industrial 6 - 6 3 - 3 ------------------------------ ------------------------------ 20 21 41 30 10 40 ------------------------------ ------------------------------Sucralose - 66 66 - 71 71 ------------------------------ ------------------------------Total 157 160 317 187 159 346 --------------------- --------------------Central costs (31) (35) --------- ----------Adjusted operating profit 286 311 --------- ---------- Operating marginSugars - Products 2.6% 6.8% 3.1% 5.4% 9.7% 6.0% - Trading 0.5% - 0.5% 2.8% - 2.8% 1.4% 6.8% 1.7% 3.7% 9.7% 4.0% ------------------------------ ------------------------------Food & Industrial Ingredients, Americas - Food 11.7% 23.2% 15.3% 11.2% 25.3% 16.0% - Industrial 13.6% 0.0% 9.5% 13.7% 0.8% 10.1% 12.3% 16.0% 13.4% 12.1% 17.9% 13.9% ------------------------------ ------------------------------Food & Industrial Ingredients, Europe - Food 8.3% 13.5% 10.8% 19.4% 13.5% 17.4% - Industrial 4.3% - 4.3% 3.3% - 3.3% 6.5% 13.5% 8.9% 13.0% 13.5% 13.1% ------------------------------ ------------------------------Sucralose - 44.6% 44.6% - 48.3% 48.3% ------------------------------ ------------------------------Margin before central costs 6.0% 20.0% 9.3% 7.4% 23.0% 10.7% --------------------- --------------------Margin after central costs 8.4% 9.6% --------- ----------\* T ADDITIONAL INFORMATION For the Year to 31 March 2008 Ratio analysis (note a) \* T Year to Year to 31 March 31 March 2008 2007------------------------------------------------------------- -------------------------------- Net debt to EBITDA = Net debt 1 041 900------------------------------------------------------------- --------------- ------------- Pre-exceptional EBITDA 442 477 = 2.4 times = 1.9 times Gearing = Net debt 1 041 900------------------------------------------------------------- --------------- ------------- Total shareholders' equity 950 995 = 110% = 90% Interest cover = Operating profit before amortisation of acquired intangibles and exceptional items----------------------------------------------------------------------------------------------Net finance expense (total operations) 331 373 --------------- ------------- 41 37 = 8.1 times = 10.1 times Dividend Cover = Adjusted basic earnings per share 41.1 48.7------------------------------------------------------------- --------------- ------------- Dividend per share 22.6 21.5 = 1.8 times = 2.3 times Return on Net Operating Assets = Profit before interest, tax and exceptional items------------------------------------------------------------- Average net operating assets 319 364 --------------- ------------- 2 054 1 926 = 15.5% = 18.9% £mNet operating assets are calculated as:Total shareholders' equity 950 995Add back net debt (see note 10) 1 041 900Add back net tax liabilities 123 99 --------------- -------------Net operating assets 2 114 1 994 --------------- ------------- Average net operating assets 2 054 1 926 --------------- -------------\* T (a) Ratios are based on financial information from total operations. Copyright Business Wire 2008

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