Half-yearly Report

31st Oct 2007 07:00

\* TTate & Lyle PLC - 31 October 2007ANNOUNCEMENT OF INTERIM RESULTSFor the six months ended 30 September 2007\* T \* TINTERIM RESULTS TO30 SEPTEMBER (UNAUDITED)--------------------------------------------------------------------------------------------- 2007 2006--------------------------------------------------------------------------------------------- Continuing Operations(1) Sales £1 662m £1 645m Adjusted profit before taxation(2) £120m £149m Profit before taxation £84m £145m Adjusted diluted earnings per share(2) 15.8p 20.4p Diluted earnings per share 8.5p 19.6p Total Operations Diluted earnings per share 27.9p 23.5p Dividend per share 6.5p 6.2p---------------------------------------------------------------------------------------------\* T -- Adjusted profit before taxation(2) down 19% at £120 million (down 14% in constant currency) -- Profits from core value added food ingredients(3) increased by 18% in constant currency -- Improved US 2008 calendar year sweetener pricing round in line with expectations -- Share buy-back programme to be continued following the end of the close period -- Interim dividend increased by 5% (0.3p) to 6.5p per share -------------------------------------------------------------------------- 1 Excluding the results of Redpath, Eastern Sugar and the disposed of Europeanstarch plants. 2 Before exceptional costs of £30 million (2006 - £nil million) and amortisationof acquired intangible assets of £6 million (2006 - £4 million). 3 Core value added food ingredients comprise value added food ingredientsexcluding sucralose. "The 2008 financial year is proving to be more challenging than expected at thebeginning of the year with difficult conditions in international sugar tradingand the weak US dollar adversely impacting first half results. Nevertheless, inthe first six months we made important progress in the delivery of our strategy.Our core value added food ingredients business performed strongly and wecompleted further significant steps to reduce the impact of our exposure tovolatile raw material and commodity markets and regulated regimes, notablythrough the sale of five of our European starch plants. The 2008 calendar year sweetener pricing round in the US has completed earlierthan usual. We have been pleased by the outcome which was in line with ourexpectations. As a result, visibility has improved somewhat with regard to theremainder of the current financial year. Higher corn costs in Europe and the USdollar exchange rate remain important areas of uncertainty. We currently expectthe outturn, based on an average US dollar rate in the second half of US$2.04 tothe pound, for our continuing businesses in the second half to be broadlysimilar to that of the first six months. Looking further forward, we areconfident that our strategy to focus on our value added business leaves uswell-placed to create value for our shareholders in the years ahead." \* TSir David Lees Iain Ferguson CBEChairman Chief Executive\* T Cautionary Statement This Interim Statement contains certain forward-looking statements with respectto the financial condition, results, operations and businesses of Tate & LylePLC. These statements and forecasts involve risk and uncertainty because theyrelate to events and depend upon circumstances that will occur in the future.There are a number of factors that could cause actual results or developments todiffer materially from those expressed or implied by these forward-lookingstatements and forecasts. Nothing in this Interim Statement should be construedas a profit forecast. A copy of this interim statement for the six months ended 30 September 2007 canbe found on our website at www.tateandlyle.com. A hard copy of this statement isalso available from The Company Secretary, Tate & Lyle PLC, Sugar Quay, LowerThames Street, London EC3R 6DQ. SPLENDA(R) is a trademark of McNeil Nutritionals, LLC Webcast and Conference Call A presentation of the results by Chief Executive, Iain Ferguson and GroupFinance Director, John Nicholas will be audio webcast live at 10.00 (GMT) today.To view and/or listen to a live audio webcast of the presentation, visit: \* Thttp://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=81336&eventID=1674490\* T (link via www.tateandlyle.com or www.hemscott.com). Please note that remotelisteners will not be able to ask questions during the Q&A session. A webcastreplay of the presentation will be available for six months, at the links above. For those without video-streaming facilities, there will also be ateleconference facility for the presentation. Details are given below: \* TUK Toll-Free No.: +44 (0) 808-109-5741US Toll-Free No.: +1-866-432-7175 Replay Number (available for 1 week): +44-20-8196-1998Replay Access code: 691691#\* T STATEMENT OF INTERIM RESULTS for the six months to 30 September 2007 Results for the continuing businesses are adjusted to exclude exceptional itemsand amortisation of acquired intangible assets. Except where specifically statedto the contrary, this narrative relates only to continuing businesses.Discontinued businesses are Redpath, the five starch plants sold from the Food &Industrial Ingredients, Europe division and Eastern Sugar. An analysis of the income statement between the continuing and discontinuedbusinesses, which also bridges the statutory to the adjusted results, isincluded as additional information. Overview Tate & Lyle has experienced a challenging first half with difficult conditionsin international sugar trading and the weak US dollar adversely impactingresults. Operating profit in the six months to 30 September 2007 was 15% lowerat £142 million (£168 million) and profit before tax was £120 million (£149million). Exchange translation accounted for £10 million of the reduction inprofit before tax. Adjusted diluted earnings per share at 15.8p were lower thanthe prior period's 20.4p. Despite this, we made significant progress in the first half on the delivery ofour strategy. Firstly, our core value added food ingredients business performedstrongly achieving an 18% increase in profits over the comparative period inconstant currency. Secondly, we completed further significant steps to reducethe impact of our exposure to volatile raw material and commodity markets andregulated regimes. After the period-end we also implemented changes to ourmanagement structure to improve internal efficiency and enhance customer focus.These actions, together with our expansion projects to increase value addedproduction, are in line with our strategy to improve the quality of the Group'searnings. Dividend The Board has declared an interim dividend of 6.5p, an increase of 5% over theprior year. This will be paid on 8 January 2008 to shareholders on the registerat 7 December 2007. Reshaping our Business We expected the 2008 financial year to be challenging as we transitioned ourportfolio of businesses in line with our strategy. However, a dramatic increasein European cereal prices, a mark-to-market charge for increased freight costsand lower trading profits in our international sugar trading business, andfurther weakening in the US dollar have made this transition even morechallenging than we anticipated at the beginning of the financial year. Despitethese headwinds, we have continued to grow the contribution from core valueadded food ingredients and have made significant progress in transitioning ourportfolio of businesses. Since the beginning of the financial year we have completed the sale of ourCanadian cane sugar refining business and wound down our Eastern Sugar jointventure. At the end of September we completed the sale of five starch plantsfrom our Food & Industrial Ingredients, Europe division for EUR 310 million(£209 million) subject to closing adjustments. Initial proceeds of £197 millionwere received on 1 October 2007. The soaring price of European cereals during2007 underlines the rationale for selling these plants. In October, we agreed tosell Occidente, our Mexican cane sugar joint venture. These steps further reducethe impact of our exposure to volatile commodity markets and regulated regimes. We have retained our share in Eaststarch, our Eastern European corn jointventure. This is an efficient, low-cost business in developing markets and wehave a strong partner. However today it is primarily a commodity businessexposed both to European corn prices and to the regulated EU sugar market. Weintend to work with our joint venture partner on how we can generate optimalreturns for shareholders. The impact of the EU Sugar Regime reforms is likely toinfluence the timing of any strategic decisions. Our European sugar operation is a good business within an evolving industry andwe are increasingly positive for the future once the EU Sugar Regime reforms arefully implemented in 2010. Once greater stability has been achieved, which we donot expect before the end of the reform period, we anticipate consolidation inthe EU sugar industry and we expect that Tate & Lyle will be a part of this. Weare now taking the necessary steps to ensure that our Sugars business isoptimally structured to take advantage of the opportunities that lie ahead. The commissioning of the new Singapore SPLENDA(R) Sucralose facility has gonewell and we have been able to demonstrate production capacity both in Singaporeand from the expansion of the Alabama plant sooner than anticipated. Theadditional value added food ingredient capacity at our Sagamore plant inLafayette, Indiana is on stream. Construction of the first phase of our new cornwet mill in Fort Dodge, Iowa remains on track for completion by March 2009. TheLoudon, Tennessee expansion, which is adding capacity for value addedingredients, substrate to the Bio-PDO(TM) joint venture and ethanol, shouldcomplete before the end of the financial year. On 15 June 2007, we completed the acquisition of the German specialty foodingredients group G.C. Hahn & Co. This business has increased our value addedoffering and its integration is progressing well. During the first half we alsoopened a new sales office in Melbourne and research and development facilitiesin Lille and Shanghai to better serve our food and beverage customers in thoseregions. 2008 Calendar Year Pricing Round The 2008 calendar year sweetener pricing round in the US has completed earlierthan usual. We have been pleased by the outcome which was in line with ourexpectations. We have significant sales under toll and multi-year contracts thatwere not part of the 2008 calendar year pricing round activity. Despite this,and some cost and transport inflation, we expect to achieve modest marginimprovements. Group Financial Performance Sales increased by 1% to £1,662 million (£1,645 million). Excluding the effectof exchange translation, which was £108 million adverse, sales increased by 8%.This sales increase was driven largely by an improvement in Food & IndustrialIngredients, Americas which increased sales by 9% despite strong growth in thecomparative period, partially offset in Sugars by a reduction in internationalsugar trading activity. Operating profit was £142 million (£168 million). The net interest expenseincreased to £22 million (£19 million) due to the completion of major capitalprojects, where interest was previously capitalised, partially offset by afavourable currency variance of £1 million. The effective tax rate for total operations was 29.4% (30.1%). After adjustingfor disposals, the effective tax rate for continuing businesses on profit beforetax, exceptional items and amortisation was 34.4% (31.5%). This is based on ourexpectations for the year to 31 March 2008. The disposal of five of our starch plants from the Food & IndustrialIngredients, Europe division, together with their tax losses, leaves a greaterproportion of profits earned in higher tax jurisdictions. We informedshareholders at our Annual General Meeting (AGM) in July 2007 that, subject toexpected regulatory approval, we expected a substantial saving in our tax ratefrom our next financial year from the implementation of revised financingarrangements. While this is still our expectation, we did not identify at thattime the full consequences of the restructuring of the European businesses. As aresult, the tax rate reduction from the current financial year will be from ahigher base than previously assumed. While we are confident of clearance for therevised financing arrangements, there is a small chance of a one-off tax cost onimplementation. Subject to this, we anticipate that our tax rate for the nextfinancial year will be in the high 20% range. The Group's net assets at 30 September 2007 were £1,058 million, £63 millionhigher than at 31 March 2007. The increase is due mainly to the profit for theperiod and reduction in the Group's net retirement benefit liability, due to anincrease in corporate bond yields, partially offset by the 2007 year-enddividend payment and the impact of the share buy-back. Net debt was £840 millioncompared to £900 million at 31 March 2007. In the period we received in full £72million of Transitional Aid payments in the UK and Portugal. Following approval from shareholders at the AGM in July 2007, the Boardcommenced an on-market share buy-back programme under which, to-date, we havebought and cancelled 8.8 million shares (1.8% of the issued share capital) for atotal cost of £48.5 million. The share buy-back programme will continuefollowing the end of the close period. Segmental Analysis In the segmental analysis we discuss performance in constant currency terms. Toarrive at a constant currency result, we have retranslated the results for thesix months to 30 September 2006 using the average exchange rates for the sixmonths to 30 September 2007. Operating profits are stated before exceptionalitems and amortisation of acquired intangible assets. Food & Industrial Ingredients, Americas This division again performed well across most product categories with aparticularly strong performance from value added food ingredients which achievedboth higher volumes and improved prices. However, this was more than offset byethanol profits, lower by £6 million in constant currency, which returned tomore normal levels reflecting the impact of increased industry production,following the exceptional levels achieved in the comparative period. Profitsfrom other industrial ingredients and commodity sweeteners grew on the strengthof higher margins although volumes in the HFCS market were slightly weaker. As aresult, profits for the division at £84 million were slightly lower than thecomparative period (£86 million in constant currency). The effect of exchangetranslation was £7 million adverse. Commissioning of the expansion project at the Sagamore plant in Lafayette,Indiana, in order to increase production of value added food ingredients,commenced during the period. Now that the additional capacity is on stream, weexpect this part of our business to grow further in the second half. Other majorcapital projects at Fort Dodge, Iowa and Loudon, Tennessee are proceedingsatisfactorily. Corn costs rose more than 50% over the comparative period, principally driven byhigher ethanol demand. EU approval for certain GMO strains in US-sourced corngluten feed was delayed several times, and the subsequent surplus in the USresulted in the value of this by-product not rising to the same extent for someof the first half. Accordingly, net corn costs were substantially higher. Thesedelays also led to unanticipated variances between the actual prices realisedfor US-sourced corn gluten feed and the published benchmarks. This negativelyimpacted the pricing formula in toll contracts. Corn gluten feed prices haverisen in the last few weeks because of strong demand in North America. However,the 2007 harvest of US corn contains new GMO strains that will also require EUapproval before exports can be made. Our fermentation business in Selby, UK consisting of our citric acid andastaxanthin facilities ceased production, resulting in an operating loss duringthe period of £5 million. The astaxanthin joint venture is expected to bedissolved shortly. Profits from the remaining citric acid business were slightlylower due to higher substrate costs in the US. Almex, our Mexican joint venture, and Tate & Lyle Custom Ingredients continue toperform satisfactorily and broadly in line with expectations. The Bio-PDO(TM) joint venture facility in Loudon, Tennessee continues to operatewell. Market proving activities for this new product are continuing to beundertaken. This business will, as anticipated, incur a modest loss in its firstfull year of operation. Sucralose Sales at £70 million were £3 million higher in constant currency, although afterthe effect of exchange translation were £6 million adverse. Encouraging salesgrowth was achieved in Latin America, Europe and Asia-Pacific. Profits of £32 million were the same as the comparative period in constantcurrency. After the effect of exchange translation, profits were £2 millionadverse. We continue to deploy significant resources to work with customers onreformulation projects. Customer acceptance of the new granular SPLENDA(R)Sucralose product is increasing as key customers complete their audits of thenew Singapore facility. The start-up of the Singapore facility has proceeded smoothly and we have beenable to demonstrate production capacity, with product in specification, both inSingapore and from the expansion of the Alabama plant ahead of schedule. Inproving production at higher capacities than expected so soon aftercommissioning, we have increased inventories. We understand some customers stillmaintain security stocks and that these will be reduced further now there is thecomfort of supply from two plants. We can now flex production over both plantsto optimise efficiency while managing inventory at appropriate levels. Our patent infringement case in the United States International Trade Commission(ITC) in Washington continues. The trial is currently scheduled for lateFebruary 2008 with a final decision expected in October 2008. The proceedingsallege infringement of patented sucralose manufacturing technology in respect ofsucralose manufactured in China and imported to the US. So far, seven of the 27respondents in the ITC matter have been held in default by the Judge and are nowbarred from contesting the case. The US Federal District Court case has beenstayed pending the conclusion of the ITC case. Sugars Profits of £14 million were substantially lower than the comparative period (£32million in constant currency). The effect of exchange translation was £2 millionadverse. Our international sugar and molasses trading business broke even with a loss ininternational sugar trading being offset by a good performance from the molassestrading and storage activity. International sugar trading suffered from amark-to-market charge for increased freight costs, which we have now covered,and lower trading profits. The molasses trading business has benefited inparticular from the recent sharp increase in EU animal feed ingredient prices,with demand for molasses increasing as a result. The comparative period includedunusually high profits from international sugar trading and the year-on-yearreduction in profit from this activity was £18 million in constant currency. Profitability of our EU cane sugar refining operations in the UK and Portugalwas ahead of last year, despite the continued difficult EU sugar marketconditions. Oversupply of sugar, partly due to the slow pace of quota surrenderunder the EU restructuring scheme, continues to depress prices. We welcome the recent agreement to strengthen the EU restructuring scheme whichshould improve market conditions. The agreement makes surrender of beet quotamore attractive, whilst at the same time highlighting the consequences of notdoing so. These changes have little direct effect on cane refineries, which arenot part of the restructuring scheme, but we believe a balanced and stablemarket is good for the whole industry. The level of future earnings for our EUsugar businesses will depend on the success of the implementation of the EUSugar Regime reforms over the four-year transition period ending in 2010, andthe consequent beneficial impact on margins that can be established. Our plans to reduce costs and increase throughput at our two refineries and todevelop new EU markets continue apace. Ongoing projects include the successfulinstallation of two new sugar unloading cranes in London, investments to allowincreased throughput in Lisbon, our Eridania Tate & Lyle joint venture in Italy,and our investment in the People's Democratic Republic of Lao to secure supplyfor our refineries. A number of other projects, including cost savinginitiatives totalling £7 million by the end of this financial year on anannualised basis, are also underway. The contribution of all these actions isbeginning to impact positively on the performance of our sugar refiningbusinesses. We announced on 8 October 2007 that we had reached an agreement to sell our 49%share in Occidente, the Mexican joint venture, subject to competition clearance.Completion is expected by early December. We will receive cash consideration ofUS$93 million (£46 million). Occidente is reported as a continuing business inthese interim results, but will be reported as discontinued at the year-end. Nghe An Tate & Lyle in Vietnam increased cane sugar throughput but profits werelower due to a decrease in prices from the comparative period. The closure of our Eastern Sugar business continues on plan following surrenderof its beet quota to the EU sugar restructuring scheme. Tate & Lyle's share ofnet cash proceeds from the restructuring fund of approximately £51 million willbe payable in two instalments in the financial year to 31 March 2009. Food & Industrial Ingredients, Europe The sale of the four wheat plants in Belgium, France, Italy and the UK and thecorn plant in Spain to a subsidiary of French co-operative Tereos was completedon 30 September 2007 for EUR 310 million (£209 million) subject to closingadjustments. Initial proceeds of £197 million were received on 1 October 2007.This disposal reduces our exposure to both EU commodity markets and to theimpact of the reform of the EU Sugar Regime. The continuing businesses, consisting primarily of the five joint ventureEaststarch corn plants in Central and Eastern Europe and the wholly-ownedspecialty corn starch plant in Koog, the Netherlands, increased our share ofprofit to £26 million over the comparative period (£23 million in constant currency). The improvement was due to increased salesvolumes, improved product mix and higher prices. There was no effect fromexchange translation. Corn costs were well above the prior year and rose significantly during theperiod to record levels as EU prices followed world cereal prices, primarilydriven by disappointing harvests in various countries and increasing demand fromAsia. Some of this increase was offset by much stronger prices for nearly allour by-products. The full impact of the higher corn prices will be felt in thesecond half of the year. Prices touched record highs at the end of August and,despite some recent modest retrenchment, remain highly volatile. There appearsto be little prospect of any significant reduction in corn prices as it wouldrequire one or two exceptional world crops of non-GMO corn and wheat toreplenish stocks and reduce prices and volatility. We expect to recover increased raw material costs, where possible, in the 2008calendar year pricing round. However, the price of a number of sweetenerproducts in the EU is capped by the price of sugar, and overall it is expectedthat margins will be squeezed during the second half and that profits will bemodest. Approximately two-thirds of the continuing businesses' production is insweeteners. The cost of the corn that has still to be purchased as well as thepricing of new sales contracts will be key factors in the second half. G.C. Hahn & Co made a small profit following its acquisition in June 2007. The discontinued business contributed profit of £38 million (£19 million in thecomparative period in constant currency) on the back of significantly highersales prices, improved product mix and increased volumes. For the first fewmonths of the year, these higher prices generated an improved margin over thecomparative period. However, the strong cereal price increase in August reversedthis trend which is expected to continue for some time. Central Items Net costs at £14 million were lower than the comparative period (£16 million inconstant currency). Following the significant reshaping of the business, areview of central functions across the Group has commenced. Energy The Group's energy cost in the first half was slightly higher than thecomparative period in constant currency. Increased throughput was largely offsetby improved efficiency. We have in place contracts and hedges that cover morethan 80% of our estimated energy use for the current financial year. Exceptional Items The sale of Redpath generated a profit on disposal of £59 million. The sale ofthe five starch plants from the Food & Industrial Ingredients, Europe divisiongenerated a profit on disposal of £1 million after writing off goodwill of £15million. The social plan that was agreed with the Works Council was, at £30million, at a higher cost than we had previously anticipated and resulted in anet loss of £29 million. Risks and Uncertainties The principal risks and uncertainties affecting the business activities of theGroup remain those detailed on pages 30 and 31 in the Report and Accounts forthe year ended 31 March 2007, a copy of which is available on the Company'swebsite at www.tateandlyle.com. In the view of the Board there is no materialchange in these factors in respect of the remaining six months of the year. TheGroup has some exposure to raw material markets, especially to European corn,and in its ability to achieve satisfactory sales prices, particularly from somesizeable annual contracts which are effective for the calendar year 2008. TheGroup also retains an exposure to foreign currency movements for the translationof profits. Outlook The 2008 financial year is proving to be more challenging than expected at thebeginning of the year with difficult conditions in international sugar tradingand the weak US dollar adversely impacting first half results. Nevertheless, inthe first six months we made important progress in the delivery of our strategy.Our core value added food ingredients business performed strongly and wecompleted further significant steps to reduce the impact of our exposure tovolatile raw material and commodity markets and regulated regimes, notablythrough the sale of five of our European starch plants. The 2008 calendar year sweetener pricing round in the US has completed earlierthan usual. We have been pleased by the outcome which was in line with ourexpectations. As a result, visibility has improved somewhat with regard to theremainder of the current financial year. Higher corn costs in Europe and the USdollar exchange rate remain important areas of uncertainty. We currently expectthe outturn, based on an average US dollar rate in the second half of US$2.04 tothe pound, for our continuing businesses in the second half to be broadlysimilar to that of the first six months. Looking further forward, we areconfident that our strategy to focus on our value added business leaves uswell-placed to create value for our shareholders in the years ahead. \* TSir David Lees Iain Ferguson CBEChairman Chief Executive\* T Statement of Directors' responsibilities The Directors confirm that this condensed set of financial statements has beenprepared in accordance with IAS 34 Interim Financial Reporting as adopted by theEuropean Union, and that the interim management report herein includes a fairreview of the information required by the Disclosure Rules and TransparencyRules of the Financial Services Authority, paragraphs DTR 4.2.7 and DTR 4.2.8. The Directors of Tate & Lyle PLC are listed in the Tate & Lyle Annual Report forthe year ended 31 March 2007. \* TFor and on behalf of the Board of Directors:Sir David Lees Iain Ferguson John NicholasDirectors30 October 2007\* T Independent review report to Tate & Lyle PLC Introduction We have been engaged by the Company to review the condensed interim financialstatements in the interim report for the six months ended 30 September 2007,which comprises the consolidated interim income statement, the consolidatedinterim statement of recognised income and expense, the consolidated interimbalance sheet, the consolidated interim cash flow statement and related notes.We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the information in the condensed interim financialstatements. Directors' responsibilities The interim report is the responsibility of, and has been approved by, thedirectors. The directors are responsible for preparing the interim report inaccordance with the Disclosure and Transparency Rules of the United Kingdom'sFinancial Services Authority. As disclosed in note 1, the annual financial statements of the Group areprepared in accordance with IFRSs as adopted by the European Union. Thecondensed interim financial statements included in this interim report have beenprepared in accordance with International Accounting Standard 34, "InterimFinancial Reporting", as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensedinterim financial statements in the interim report based on our review. Thisreport, including the conclusion, has been prepared for and only for the Companyfor the purpose of the Disclosure and Transparency Rules of the FinancialServices Authority and for no other purpose. We do not, in producing thisreport, accept or assume responsibility for any other purpose or to any otherperson to whom this report is shown or into whose hands it may come save whereexpressly agreed by our prior consent in writing. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, 'Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity' issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed interim financial statements in the interim report for thesix months ended 30 September 2007 is not prepared, in all material respects, inaccordance with International Accounting Standard 34 as adopted by the EuropeanUnion and the Disclosure and Transparency Rules of the United Kingdom'sFinancial Services Authority. \* TPricewaterhouseCoopers LLPChartered AccountantsLondon30 October 2007\* T CONSOLIDATED INTERIM INCOME STATEMENT(UNAUDITED) \* T Six months to Six months to Year to 30 September 30 September 31 March Notes 2007 2006 2007 £m £m £m---------------------------------------------------------------------------------------------------Continuing operationsSales 2 1 662 1 645 3 294 ------------- ------------- ------------ Operating profit 2 106 164 295Finance income 4 24 29 51Finance expense 4 (46) (48) (87) ------------- ------------- ------------Profit before tax 84 145 259Income tax expense 5 (41) (47) (90) ------------- ------------- ------------Profit for the period from continuing operations 43 98 169Profit for the period from discontinued operations 8 96 19 48 ------------- ------------- ------------Profit for the period 139 117 217 ------------- ------------- ------------ Profit for the period attributable to:Equity holders of the Company 138 115 214Minority interest 1 2 3 ------------- ------------- ------------Profit for the period 139 117 217 ------------- ------------- ------------ Earnings per share attributable to the equity pence pence pence holders of theCompany from continuing and discontinued operations- Basic 6 28.5 23.9 44.3- Diluted 6 27.9 23.5 43.6 ------------- ------------- ------------ Earnings per share attributable to the equity pence pence pence holders ofthe Company from continuing operations- Basic 6 8.7 19.9 34.4- Diluted 6 8.5 19.6 33.8 ------------- ------------- ------------ Dividends per share pence pence pence- Proposed at the end of the period 7 6.5 6.2 15.3 ------------- ------------- ------------- Paid in the period 7 15.3 14.1 20.3--------------------------------------------------------------------------------------------------- Analysis of profit before tax from continuing £m £m £m operations ------------- ------------- ------------Profit before tax 84 145 259Add back:Exceptional items 3 30 - 13Amortisation of acquired intangible assets 6 4 9 ------------- ------------- ------------ Profit before tax, exceptional items and amortisation ofacquired intangible assets 120 149 281 ------------- ------------- ------------\* T CONSOLIDATED INTERIM STATEMENT OF RECOGNISED INCOME AND EXPENSE (UNAUDITED) \* T Six months to Six months to Year to 30 September 30 September 31 March 2007 2006 2007 £m £m £m---------------------------------------------------------------------------------------------------Net exchange differences 8 (52) (81)Employee post-employment benefits:- net actuarial gains/(losses) in post-employment benefit plans 71 (34) (1)- deferred taxation recognised directly in equity (23) 11 -Net valuation losses on available-for-sale financial assets - (1) -Net loss on cash flow hedges, net of tax - - (4) ------------- ------------- ------------Net profit/(loss) recognised directly in equity (Note 10) 56 (76) (86)Profit for the period 139 117 217 ------------- ------------- ------------Total recognised income and expense for the period 195 41 131 ------------- ------------- ------------ Attributable to:Equity holders of the Company 196 42 131Minority interests (1) (1) - ------------- ------------- ------------ 195 41 131 ------------- ------------- ------------\* T CONSOLIDATED INTERIM BALANCE SHEET (UNAUDITED) \* T 30 September 30 September 31 March Notes 2007 2006 2007 £m £m £m---------------------------------------------------------------------------------------------------ASSETSNon-current assetsIntangible assets 298 253 232Property, plant and equipment 1 123 1 221 1 217Investments in associates 6 4 7Available-for-sale financial assets 18 17 18Derivative financial instruments 9 36 39 36Deferred tax assets - 8 8Trade and other receivables 35 19 64 ------------- ------------- ------------ 1 516 1 561 1 582 ------------- ------------- ------------Current assetsInventories 437 411 503Trade and other receivables 670 527 558Current tax assets 27 18 39Derivative financial instruments 9 78 136 102Cash and cash equivalents 9 114 546 189Assets held for sale - - 89 ------------- ------------- ------------ 1 326 1,638 1,480 ------------- ------------- ------------TOTAL ASSETS 2 842 3 199 3 062 ------------- ------------- ------------ SHAREHOLDERS' EQUITYCapital and reserves attributable to the Company's equity holders:Share capital 120 122 122Share premium 404 402 403Capital redemption reserve 2 - -Other reserves 47 (4) 50Retained earnings 456 374 385 ------------- ------------- ------------ 1 029 894 960Minority interests 29 34 35 ------------- ------------- ------------TOTAL SHAREHOLDERS' EQUITY 10 1 058 928 995 ------------- ------------- ------------ LIABILITIESNon-current liabilitiesTrade and other payables 46 2 6Borrowings 9 814 762 842Derivative financial instruments 9 18 22 19Deferred tax liabilities 97 51 85Retirement benefit obligations 27 183 131Provisions for other liabilities and charges 34 64 51 ------------- ------------- ------------ 1 036 1 084 1 134 ------------- ------------- ------------ Current liabilitiesTrade and other payables 318 418 420Current tax liabilities 63 20 47Borrowings and bank overdrafts 9 156 577 271Derivative financial instruments 9 132 151 123Provisions for other liabilities and charges 79 21 44Liabilities held for sale - - 28 ------------- ------------- ------------ 748 1 187 933 ------------- ------------- ------------TOTAL LIABILITIES 1 784 2 271 2 067 ------------- ------------- ------------TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 2 842 3 199 3 062 ------------- ------------- ------------\* T CONSOLIDATED INTERIM CASH FLOW STATEMENT (UNAUDITED) \* T Six months Six months to to 30 Year to 30 September September 31 March Notes 2007 2006 2007 £m £m £m---------------------------------------------------------------------------------------------------Cash flows from operating activitiesProfit before tax 84 145 259Adjustments for: Depreciation and impairment of property, plant and equipment 48 39 79 Non - cash exceptional items 30 - 13 Amortisation of intangible assets 8 6 13 Share based payments 2 3 5 Finance income 4 (24) (29) (51) Finance expense 4 46 48 87Changes in working capital 71 70 (70) ------------- ------------ ------------Cash generated from operations 265 282 335 Interest paid (43) (28) (75) Income tax paid (32) (36) (81)Cash generated from discontinued operations 8 27 33 48 ------------- ------------ ------------Net cash generated from operating activities 217 251 227 ------------- ------------ ------------ Cash flows from investing activities Proceeds on disposal of property, plant and equipment - 1 8 Interest received 18 16 33 Purchase of available-for-sale financial assets - - (1) Acquisitions of subsidiaries, net of cash acquired 11 (81) - (3) Disposals of subsidiaries, net of cash disposed 12 101 - - Investments in associates - - (3) Purchase of property, plant and equipment (133) (128) (251) Purchase of intangible assets and other non- current assets (2) (7) (6) ------------- ------------ ------------Net cash flows used in investing activities (97) (118) (223) ------------- ------------ ------------ Cash flows from financing activities Proceeds from issue of ordinary shares 7 12 16 Repurchase of ordinary shares (49) - - Cash (outflow)/inflow from (repayment)/drawdown of borrowings (78) 319 112 Cash outflow from repayment of capital element of finance leases - - (1) Dividends paid to the Company's equity holders (74) (68) (98) ------------- ------------ ------------Net cash flows from financing activities (194) 263 29 ------------- ------------ ------------ ------------- ------------ ------------Net (decrease)/increase in cash and cash equivalents 9 (74) 396 33 ------------- ------------ ------------ Cash and cash equivalents: Balance at beginning of period 189 158 158 Effect of changes in foreign exchange rates (1) (8) (2) Net (decrease)/increase in cash and cash equivalents (74) 396 33 ------------- ------------ ------------ Balance at end of period 114 546 189 ------------- ------------ ------------\* T TATE & LYLE PLC NOTES TO INTERIM STATEMENT (UNAUDITED) For the six months to 30 September 2007 1. Presentation of interim financial statements General information The principal activities of Tate & Lyle PLC are the development, manufacture andmarketing of food and industrial ingredients that have been made from renewableresources. The Group has more than 50 production facilities mainly in Europe,the Americas and South East Asia. It operates through its subsidiary companiesand numerous partnerships and joint ventures. The Company is a public limited company incorporated and domiciled in the UnitedKingdom. The address of its registered office is Sugar Quay, Lower ThamesStreet, London EC3R 6DQ. The Company has its primary listing on the London StockExchange. Basis of preparation This condensed consolidated interim financial information for the period ended30 September 2007 has been prepared in accordance with the Disclosure andTransparency Rules of the Financial Services Authority and with IAS 34, 'Interimfinancial reporting' as adopted by the European Union. The interim condensedconsolidated financial report should be read in conjunction with the annualfinancial statements for the year ended 31 March 2007 which have been preparedin accordance with International Financial Reporting Standards ('IFRS') asadopted by the European Union. Use of adjusted measures Tate & Lyle presents adjusted operating profit, profit before tax and earningsper share information. These measures are used by Tate & Lyle for internalperformance analysis and incentive compensation arrangements for employees. Theterms 'adjusted' and 'exceptional items' are not defined terms under IFRS andmay therefore not be comparable with similarly titled measures reported by othercompanies. They are not intended to be a substitute for, or superior to, GAAPmeasurements of profit. The term 'adjusted' refers to the relevant measure beingreported excluding exceptional items and amortisation of intangible assetsarising on acquisition of businesses. Statutory financial statements The financial information presented here does not represent statutory accountsas defined in the Companies Act 1985. The Group's statutory financial statementsfor the year to 31 March 2007 were prepared under International FinancialReporting Standards as adopted by the European Union and filed with theRegistrar of Companies. The auditors, PricewaterhouseCoopers LLP, reported onthose accounts and their report was unqualified and did not contain a statementunder section 237(2) or (3) of the Companies Act 1985. Accounting policies The accounting policies adopted are consistent with those of the annualfinancial statements for the year ended 31 March 2007, as described in thoseannual financial statements. The following new standards, amendments to standards or interpretations aremandatory for the first time for the financial year ending 31 March 2008: - IFRIC 8, 'Scope of IFRS 2'. This interpretation has not had any impact on therecognition of share-based payments in the Group. - IFRIC 9, 'Reassessment of embedded derivatives'. This interpretation has nothad a significant impact on the reassessment of embedded derivatives as theGroup already assesses if embedded derivatives should be separated usingprinciples consistent with IFRIC 9. - IFRIC 10, 'Interims and impairment'. This interpretation has not had anyimpact on the timing or recognition of impairment losses as the Group alreadyaccounted for such amounts using principles consistent with IFRIC 10. - IFRIC 11, 'IFRS 2 - Group and treasury share transactions'. Thisinterpretation has not had any impact on the recognition of share-based paymentsin the Group. - IFRS 7, 'Financial instruments: Disclosures' and IFRS 4, 'Insurancecontracts', revised implementation guidance, effective when an entity adoptsIFRS 7. As this interim report contains only condensed financial statements,these disclosures will be given in the annual financial statements. - IAS 1, 'Amendments to capital disclosures'. As this interim report containsonly condensed financial statements these disclosures will be given in theannual financial statements. Seasonality The Group's principal exposure to seasonality is in relation to working capital.The Group's inventories are subject to seasonal fluctuations reflecting cropharvesting and purchases. Inventory levels typically increase progressively fromSeptember to November and gradually reduce in the first six months of thecalendar year. 2. Segment information Following the disposal of Tate & Lyle Canada (Redpath) and the cessation of theGroup's Eastern Sugar joint venture, the Sugars, Americas and Asia and Sugars,Europe segments have been combined into one segment, 'Sugars', and thecomparative segmental information has been represented. 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 represented. Discontinued operations comprise Tate & Lyle Canada, Eastern Sugar and thedisposed European starch plants (see note 8). The segment results for the six months to 30 September 2007 were as follows: \* T Continuing operations --------------------------------------------------------------------------- Food & Food & Industrial Industrial Discontinued Ingredients, Ingredients, Central operations Americas Europe Sucralose Sugars costs Total (note 8) Total £m £m £m £m £m £m £m £m------------------------------------------------------------------------------------------------------------------------SalesTotal sales 672 215 70 722 - 1 679 373 2 052Inter-segment sales (1) (7) - (9) - (17) (29) (46) -------------- -------------- ------------- ---------- ---------- --------- -------------- ---------External sales 671 208 70 713 - 1 662 344 2 006 -------------- -------------- ------------- ---------- ---------- --------- -------------- --------- Operating profitBefore exceptional items and amortisation of acquired intangible assets 84 26 32 14 (14) 142 43 185Exceptional items (Note 3) - (30) - - - (30) 60 30Amortisation of acquired intangible assets (2) (2) (2) - - (6) - (6) -------------- -------------- ------------- ---------- ---------- --------- -------------- ---------Operating profit 82 (6) 30 14 (14) 106 103 209 -------------- -------------- ------------- ---------- ----------Net finance expense (22) - (22) --------- -------------- ---------Profit before tax 84 103 187 --------- -------------- ---------\* T The segment results for the six months to 30 September 2006 were as follows: \* T Continuing operations ----------------------------------------------------------------------- Food & Food & Industrial Industrial Discontinued Ingredients, Ingredients, Central operations Americas Europe Sucralose Sugars costs Total (note 8) Total £m £m £m £m £m £m £m £m------------------------------------------------------------------------------------------------------------------------SalesTotal sales 617 161 73 872 - 1 723 411 2 134Inter-segment sales (2) (4) - (72) - (78) (17) (95) -------------- -------------- ------------- ------ ---------- --------- -------------- ---------External sales 615 157 73 800 - 1 645 394 2 039 -------------- -------------- ------------- ------ ---------- --------- -------------- --------- Operating profitBefore exceptional items and amortisation of acquired intangible assets 93 23 34 34 (16) 168 25 193Amortisation of acquired intangible assets (1) (1) (2) - - (4) - (4) -------------- -------------- ------------- ------ ---------- --------- -------------- ---------Operating profit 92 22 32 34 (16) 164 25 189 -------------- -------------- ------------- ------ ----------Net finance expense (19) (1) (20) --------- -------------- ---------Profit before tax 145 24 169 --------- -------------- ---------\* 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 8) Total £m £m £m £m £m £m £m £m------------------------------------------------------------------------------------------------------------------------SalesTotal sales 1 259 316 147 1 707 - 3 429 810 4 239Inter-segment sales (4) (11) - (120) - (135) (34) (169) -------------- -------------- ------------- ---------- ---------- --------- -------------- ---------External sales 1 255 305 147 1 587 - 3 294 776 4 070 -------------- -------------- ------------- ---------- ---------- --------- -------------- --------- Operating profitBefore exceptional items and amortisation of acquired intangible assets 175 40 71 66 (35) 317 56 373Exceptional items (Note 3) (33) - 20 - - (13) 23 10Amortisation of acquired intangible assets (3) (2) (4) - - (9) - (9) -------------- -------------- ------------- ---------- ---------- --------- -------------- ---------Operating profit 139 38 87 66 (35) 295 79 374 -------------- -------------- ------------- ---------- ----------Net finance expense (36) (1) (37) --------- -------------- ---------Profit before tax 259 78 337 --------- -------------- ---------\* T 3. Exceptional items \* T Six months to Six months to Year to 30 September 30 September 31 March 2007 2006 2007 £m £m £m-----------------------------------------------------------------------------------------------------ContinuingRestructuring costs (a) (30) - -Impairment and closure costs (b) - - (33)Deferred payment provision release (c) - - 20 ------------- ------------- ------------ (30) - (13)DiscontinuedEuropean starch plants (a) 1 - -Eastern Sugar (d) - - 23Redpath (e) 59 - - ------------- ------------- ------------ 30 - 10 ------------- ------------- ------------\* T (a) Overall the net loss on disposal of the European starch plants in France,Belgium, Italy, Spain and the UK is £29 million, comprising £30 million ofredundancy and other restructuring costs within continuing operations, and a netprofit of £1 million in discontinued operations (comprising £16 million profiton disposal offset by goodwill written off of £15 million). The restructuringcosts result from the significant reduction in central support functionsrequired by the retained Food & Industrial Ingredients, Europe business. (b) Impairment and closure costs in the prior year of £33 million wererecognised following a review of the manufacturing activities at the Selby, UKfactory for citric acid and Astaxanthin. These businesses are both reportedwithin the Food & Industrial Ingredients, Americas division. (c) The deferred payment provision release in the prior year of £20 millionrelated to the Sucralose business. As part of the realignment of Sucraloseactivities with McNeil Nutritionals, LLC ('McNeil') in April 2004 a provisionwas set up for deferred consideration payable to McNeil. It was anticipated thatthe provision would not be fully utilised and consequently £20 million wasreleased to the income statement in the prior year. (d) Exceptional items of £23 million in discontinued operations in the prioryear related to the Group's Eastern Sugar joint venture. These comprised a £14million net gain expected on termination of operations following surrender ofsugar quota to the EU Restructuring Fund under the terms of the EU Sugar Regimeand a £9 million gain following a favourable outcome to a long runninglitigation dispute with the government of the Czech Republic. (e) On 21 April 2007 the Group disposed of its shareholding of Tate & LyleCanada Limited (Redpath) resulting in a profit on disposal of £59 million (seenote 12). There was no tax impact on exceptional items for the periods to 30 September2007 and 2006. In the year to 31 March 2007 the tax impact on continuing netexceptional items was a £3 million charge and on total net exceptional items wasa £7 million charge. Tax credits on exceptional items are only recognised to theextent that losses created are expected to be recoverable in the future. Inaddition a further £18 million exceptional tax charge was recognised in the yearto 31 March 2007 of which £13 million related to an adjustment to the tax creditrecognised on the impairment in Food & Industrial Ingredients, Europe in theyear ended 31 March 2006. The balance of £5 million related to a one-off chargerelating to discontinued operations in the year ended 31 March 2007. 4. Finance income and finance expense \* T Six months to 30 Six months to 30 Year to September September 31 March 2007 2006 2007 £m £m £m---------------------------------------------------------------------------------------------------------------------Finance incomeInterest receivable 22 28 49Net finance income arising on defined benefit retirement schemes:- interest cost (34) (34) (66)- expected return on plan assets 36 35 68 ----------------- ------------------ -------------Finance income 24 29 51 ----------------- ------------------ ------------- Finance expenseInterest expense on bank and other borrowings (43) (47) (81)Unwinding of discounts in provisions (1) (1) (3)Fair value (loss)/gain on interest-related derivative instruments (1) 1 -Finance lease charges (1) (1) (3) ----------------- ------------------ -------------Finance expense (46) (48) (87) ----------------- ------------------ ------------- Net finance expense (continuing operations) (22) (19) (36) ----------------- ------------------ -------------\* T 5. Income tax expense \* T Six months to 30 Six months to 30 Year to September September 31 March 2007 2006 2007Continuing £m £m £m---------------------------------------------------------------------------------------------------------------------Current taxUK taxation - (6) (27)Overseas taxation 40 43 98 ------------------ ------------------- -------------Deferred tax 40 37 71 1 10 19 ------------------ ------------------- -------------Income tax expense 41 47 90 ------------------ ------------------- -------------\* T \* T Six months to 30 Six months to 30 Year to September September 31 March 2007 2006 2007Discontinued £m £m £m---------------------------------------------------------------------------------------------------------------------Current taxUK taxation - - 3Overseas taxation 7 6 16 ----------------- ------------------- ------------- 7 6 19Deferred tax - (1) 11 ----------------- ------------------- -------------Income tax expense 7 5 30 ----------------- ------------------- -------------\* T The calculations of the effective tax rates are set out in Note (ii) of theadditional information. 6. 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 period, excluding ordinary shares purchased by the Companyand held in the employee share ownership trust. \* T Six months to 30 September 2007 Six months to 30 September 2006 ------------------------------------ ----------------------------------- Continuing Discontinued Total Continuing Discontinued Total operations operations operations operations------------------------------------------------------------------------------------------------------Profit attributable to equity holders of the Company (£million) 42 96 138 96 19 115Weighted average number of ordinary shares in issue (millions) 483.9 483.9 483.9 481.3 481.3 481.3Basic earnings per share 8.7p 19.8p 28.5p 19.9p 3.9p 23.9p ----------- ------------ --------- ----------- ------------ --------\* T \* T Year to 31 March 2007 ------------------------------------ Continuing Discontinued Total operations operations-----------------------------------------------------------------Profit attributable to equity holders of the Company (£million) 166 48 214Weighted average number of ordinary shares in issue (millions) 482.8 482.8 482.8Basic earnings per share 34.4p 9.9p 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 Six months to 30 September 2007 Six months to 30 September 2006 ------------------------------------ ----------------------------------- Continuing Discontinued Total Continuing Discontinued Total operations operations operations operations------------------------------------------------------------------------------------------------------Profit attributable to equity holders of the Company (£million) 42 96 138 96 19 115Weighted average number of diluted shares in issue (millions) 493.9 493.9 493.9 489.1 489.1 489.1Diluted earnings per share 8.5p 19.4p 27.9p 19.6p 3.9p 23.5p ----------- ------------ --------- ----------- ------------ --------\* T \* T Year to 31 March 2007 ------------------------------------ Continuing Discontinued Total operations operations-----------------------------------------------------------------Profit attributable to equity holders of the Company (£million) 166 48 214Weighted average number of diluted shares in issue (millions) 491.0 491.0 491.0Diluted earnings per share 33.8p 9.8p 43.6p ----------- ------------ ---------\* T The adjustment for the dilutive effect of share options at 30 September 2007 was10.0 million (30 September 2006 - 7.8 million; 31 March 2007 - 8.2 million). Adjusted earnings per share Adjusted earnings per share is stated excluding exceptional items andamortisation of acquired intangible assets, as follows: \* TContinuing Operations Six months to 30 Six months to 30 Year to September September 31 March 2007 2006 2007------------------------------------------------------------------------------------------------------------------------Profit attributable to equity holders of the Company (£million) 42 96 166Adjustments for:- exceptional items (note 3) 30 - 13- amortisation of acquired intangible assets 6 4 9- tax effect on the above adjustments and exceptional tax items - - 13 ----------------- ----------------- ------------------Adjusted profit (£million) 78 100 201 ----------------- ----------------- ------------------ Adjusted basic earnings per share from continuing operations 16.1p 20.8p 41.6pAdjusted diluted earnings per share from continuing operations 15.8p 20.4p 40.9p ----------------- ----------------- ------------------\* T \* TTotal Operations Six months to 30 Six months to 30 Year to September September 31 March 2007 2006 2007-----------------------------------------------------------------------------------------------------------------------Profit attributable to equity holders of the Company (£million) 138 115 214Adjustments for:- exceptional items (note 3) (30) - (10)- amortisation of acquired intangible assets 6 4 9- tax effect on the above adjustments and exceptional tax items - - 22 ----------------- ----------------- -----------------Adjusted profit (£million) 114 119 235 ----------------- ----------------- ----------------- Adjusted basic earnings per share from total operations 23.6p 24.7p 48.7pAdjusted diluted earnings per share from total operations 23.1p 24.3p 47.9p ----------------- ----------------- -----------------\* T 7. Dividends The directors have declared an interim dividend of £31 million out of the profitfor the six months to 30 September 2007 (30 September 2006 - £30 million),representing 6.5p per share (30 September 2006 - 6.2p), payable on 8 January2008. The final dividend for the year to 31 March 2007 of £74 million,representing 15.3p per share, was paid during the six months to 30 September2007. 8. Discontinued operations On 14 February 2007 the Group reached an agreement for the sale of Tate & LyleCanada Limited to American Sugar Refining, Inc. Following regulatory approval,the sale transaction completed on 21 April 2007. Accordingly the results of Tate& Lyle Canada are presented as discontinued operations for the periods ended 30September 2007 and 30 September 2006 and for the year ended 31 March 2007, andthe related assets and liabilities as held for sale at 31 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 periods ended 30 September 2007 and 30 September2006 and the year ended 31 March 2007. On 18 July 2007, the Group reached an agreement with Syral SAS (a subsidiary ofTereos of France) for the sale of its starch facilities forming part of the Food& Industrial Ingredients, Europe segment in the UK, Belgium, France, Spain andItaly (together "the European starch plants"). As the completion conditions hadbeen satisfied by 30 September 2007 the disposal has been accounted for at thatdate. Accordingly the results of the European starch plants that have beendisposed of are presented as discontinued operations for the periods ended 30September 2007 and 30 September 2006 and for the year ended 31 March 2007. The results of Tate & Lyle Canada and Eastern Sugar were previously reported inthe former Sugars, Americas & Asia and Sugars, Europe segments respectively. Thedisposed European starch plants were previously reported as part of the Food &Industrial Ingredients, Europe segment. \* T Period to 30 September 2007 Period to 30 September 2006 --------------------------------------- ---------------------------------------- Tate & Lyle Eastern European Total Tate & Lyle Eastern European Canada Sugar starch Canada Sugar starch Total plants plants £m £m £m £m £m £m £m £m------------------------------------------------------------------------------------------------------------------------Sales 11 25 308 344 101 37 256 394 --------------------------------------- ---------------------------------------- Operating profit before exceptional items - 5 38 43 (1) 6 20 25Exceptional items (note 3) 59 - 1 60 - - - - --------------------------------------- ----------------------------------------Operating profit 59 5 39 103 (1) 6 20 25Finance income - 1 - 1 - - - -Finance expense - - (1) (1) - - (1) (1) --------------------------------------- ----------------------------------------Profit before tax from discontinued operations 59 6 38 103 (1) 6 19 24Income tax expense (note 5) - - (7) (7) - (1) (4) (5) --------------------------------------- ----------------------------------------Profit for the period from discontinued operations 59 6 31 96 (1) 5 15 19 --------------------------------------- ---------------------------------------- Net cash flows from discontinued operations are as follows: Net cash (outflows)/inflows from operating activities (8) 27 8 27 (11) 15 29 33Net cash (outflows)/inflows from investing activities - - (23) (23) (1) (1) (19) (21) --------------------------------------- ----------------------------------------\* T \* T Year to 31 March 2007 ------------------------------------------------------- Tate & Lyle European Canada Eastern Sugar starch plants Total £m £m £m £m------------------------------------------------------------------------------------------------------Sales 189 67 520 776 ------------------------------------------------------- Operating profit before exceptional items 8 10 38 56Exceptional items (note 3) - 23 - 23 -------------------------------------------------------Operating profit 8 33 38 79Finance income 1 - - 1Finance expense - - (2) (2) -------------------------------------------------------Profit before tax from discontinued operations 9 33 36 78Income tax expense (note 5) (9) (6) (15) (30) -------------------------------------------------------Profit for the year from discontinued operations - 27 21 48 ------------------------------------------------------- Net cash flows from discontinued operations are as follows: Net cash inflows from operating activities 4 - 44 48Net cash (outflows)/inflows from investing activities (1) 3 (39) (37) -------------------------------------------------------\* T 9. Net debt The components of the Group's net debt profile are as follows: \* T 30 September 30 September 31 March 2007 2006 2007 £m £m £mNon-current borrowings (814) (762) (842)Current borrowings and overdrafts (1) (156) (577) (271)Debt-related derivative instruments (2) 16 22 24Cash and cash equivalents 114 546 189 -------------- -------------- ------------Net debt (840) (771) (900) -------------- -------------- ------------\* T Movements in the Group's net debt profile are as follows: \* T Six months to Six months to Year to 30 September 30 September 31 March 2007 2006 2007 £m £m £m-----------------------------------------------------------------------------------------------------Balance at beginning of period (900) (866) (866)(Decrease)/increase in cash and cash equivalents in the period (74) 396 33(Proceeds from)/repayments of borrowings 78 (319) (111)Net debt transferred on disposal of subsidiaries 43 - -Inception of finance leases - (13) (14)Exchange differences 13 31 58 -------------- -------------- ------------Decrease in net debt in the period 60 95 (34) -------------- -------------- ------------Balance at end of period (840) (771) (900) -------------- -------------- ------------\* T (1) Current borrowings and overdrafts at 30 September 2007 include £49 million(30 September 2006 - £99 million, 31 March 2007 - £95 million) in respect ofsecuritised receivables. (2) Derivative financial instruments presented within assets and liabilities inthe balance sheet of £36 million net liability (30 September 2006 - £2 millionasset; 31 March 2007 - £4 million net liability) comprise net debt-relatedinstruments of £16 million asset (30 September 2006 - £22 million asset; 31March 2007 - £24 million asset) and non debt-related instruments of £52 millionliability (30 September 2006 - £20 million liability; 31 March 2007 - £28million liability). Additional non debt-related instruments of £1 million assetwere included in assets held for sale at 31 March 2007. 10. Consolidated statement of changes in shareholders' equity \* T Attributable Share Capital Other Retained to the Minority Total capital redemption reserves earnings equity interests equity and holders of premium the Company £m £m £m £m £m £m £m--------------------------------------------------------------------------------------------------------------Balance at 1 April 2007 525 - 50 385 960 35 995Net profit/(loss) recognised directlyin equity (Note a) - - 10 48 58 (2) 56Profit for the period - - - 138 138 1 139Share-based payments, including tax - - - 2 2 - 2Proceeds from shares issued 1 - - 6 7 - 7Exchange differences transferred to income on disposal - - (13) - (13) - (13)Share buybacks (2) 2 - (49) (49) - (49)Dividends paid - - - (74) (74) - (74)Minority interest acquired - - - - - (5) (5) -------------------------------------------------------------------------------Balance at 30 September 2007 524 2 47 456 1 029 29 1 058 -------------------------------------------------------------------------------\* T \* T Attributable to the Share Capital Other Retained equity Minority Total capital redemption reserves earnings holders of interests equity and the Company premium £m £m £m £m £m £m £m--------------------------------------------------------------------------------------------------------------Balance at 1 April 2006 522 - 56 327 905 35 940Net loss recognised directlyin equity (Note a) - - (60) (13) (73) (3) (76)Profit for the period - - - 115 115 2 117Share-based payments, including tax - - - 3 3 - 3Proceeds from shares issued 2 - - 10 12 - 12Dividends paid - - - (68) (68) - (68) -------------------------------------------------------------------------------Balance at 30 September 2006 524 - (4) 374 894 34 928 -------------------------------------------------------------------------------\* T (a) Net profit/(loss) recognised directly in equity includes a taxation creditof £18 million (30 September 2006 - £nil million) relating to net investmenthedging in the prior period. 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. Hahn's primaryoperations are located in L£beck, Germany. It also has production operations inthe 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 fair values currently established for the acquisition are provisional due tothe proximity of the date of acquisition to the Group's interim reporting date.The acquisition has contributed £21 million to sales and £nil million tooperating profit post amortisation in the period since acquisition. If theacquisition of Hahn had been completed on 1 April 2007, Group sales for theperiod would have been £1,677 million and Group profit attributable to equityholders of the Company would have been unchanged. \* T Book value Provisional fair Provisional on acquisition value fair value adjustments----------------------------------------------------------------------------------------------------- Intangible assets - 52 52Property, plant and equipment 11 1 12Inventories 8 2 10Trade and other receivables 18 (3) 15Cash and cash equivalents 5 - 5Trade and other payables (8) (2) (10)Borrowings (2) - (2)Deferred tax - (17) (17) ------------------------------------------------- 32 33 65 ----------------------------------Goodwill 35 ---------------Consideration payable 100 --------------- Satisfied by:-------------------------------------Cash consideration, including costs 80Deferred consideration 20 --------------- 100 ---------------Cash movement:-------------------------------------Cash consideration, including costs 80Net cash acquired (3) ---------------Net cash outflow in the period 77 ---------------\* T Goodwill on acquisition relates to anticipated synergies that do not meet thecriteria for recognition as an intangible asset at the date of acquisition. Other During the period, the Group invested a further £4 million in Tate & Lyle GadotManufacturing. 12. Disposals On 21 April 2007 the Group disposed of its shareholding in Tate & Lyle CanadaLimited (Redpath). Net consideration was £131 million subject to closingadjustments relating to working capital. Total consideration, net of disposalcosts and including working capital adjustments is £139 million. On 30 September 2007 the Group disposed of five of its starch plants within theFood & Industrial Ingredients, Europe segment in the UK, Belgium, France, Spainand Italy. Consideration was set at EUR 310 million (£209 million) subject tocapital expenditure and working capital movements to the date of completion.Total consideration, net of disposal costs and subject to conclusion ofcompletion accounts, is £214 million. \* T Tate & Lyle European Canada starch plants £m £m-------------------------------------------------------------------------------Total consideration, net of costs 139 214Net assets disposed (85) (217)Goodwill written off - (15)Other items, including exchange differences transferred from equity 5 19 ------------ ------------Profit on disposal 59 1 ------------ ------------ Cash flows:-------------------------------------------------Cash consideration net of costs 128 -Cash disposed (6) (20) ------------ ------------Cash inflow/(outflow) in the period 122 (20) ------------ ------------ Cash proceeds receivable 11 222 ------------ ------------\* T Trade and other receivables in the consolidated Group Balance Sheet includesconsideration remaining on disposal of the above businesses of £233 million.£197 million was received as an initial payment on 1 October 2007 relating tothe European starch plants. \* TNet assets disposed comprise: Tate & Lyle European Canada starch plants £m £m-------------------------------------------------------------------------------Property, plant and equipment 51 172Intangible assets - 2Inventory 22 42Provisions - (8)Retirement benefit liability (7) -Trade and other receivables 31 150Cash and cash equivalents 6 20Trade and other payables (18) (118)Borrowings - (43) ------------ ------------Net assets disposed of 85 217 ------------ ------------\* 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 re-insurance operations and including cashbalances of £8 million, for cash consideration of £3 million. The loss ondisposal was £1 million. 13. Capital expenditure In the period, there were additions to intangible assets of £2 million (2006 -£7 million). In the period, there were additions to property, plant andequipment of £133 million (2006 - £128 million). There were no materialdisposals of property, plant and equipment during the period (2006 - £1million). \* T 30 September 30 September 31 March 2007 2006 2007 £m £m £m-----------------------------------------------------------------------------------------------------Commitments for the acquisition of property, plant and equipment 87 82 77\* T 14. Contingent liabilities There have been no material changes to the Group's contingent liabilities since31 March 2007. 15. Related party disclosures The Group's significant related parties are its associates and joint ventures asdisclosed in the Tate & Lyle Annual Report for the year ended 31 March 2007.There were no material differences in related parties or related partytransactions in the period or prior period. 16. Post balance sheet events On 8 October 2007 the Group announced that it has signed an agreement for thesale of its 49% shareholding in Grupo Industrial Azucarero de Occidente, S.A. deC.V. ('Occidente') to ED&F Man Holdings Limited for cash consideration of US$93million (£46 million). 17. Foreign exchange rates The following exchange rates have been applied in the translation of thefinancial statements of the Group's principal overseas operations: \* T Six months to Six months to Year to 30 September 30 September 31 MarchAverage exchange rates 2007 2006 2007----------------------------------------------------------------------------------------------------US Dollar £1 = $ 2.00 1.85 1.89Euro £1 = EUR 1.47 1.46 1.48\* T \* T 30 September 30 September 31 MarchPeriod end exchange rates 2007 2006 2007----------------------------------------------------------------------------------------------------US Dollar £1 = $ 2.03 1.87 1.97Euro £1 = EUR 1.43 1.48 1.47\* T ADDITIONAL INFORMATION (UNAUDITED) For the six months to 30 September 2007 Additional Information (i) Reconciliation of adjusted financial information (ii) Taxation charge (iii) Product profitability (iv) Net margin analysis (v) Ratio analysis (i) Reconciliation of adjusted financial information This period's results are impacted by discontinued operations, exceptional itemsand amortisation of acquired intangibles. In order to provide an understandingof the underlying performance of the continuing Group, the table set out belowshows the impact of excluding these items from the statutory results. Thisadjusted information, which is referred to throughout this announcement, is alsoused by management internally for analysing the performance of the business. \* T Six months to 30 September 2007 Six months to 30 September 2006 --------------------------------- ------------------------------- ContinuingDiscontinued Total ContinuingDiscontinued Total £m £m £m £m £m £m------------------------------------------------------------------------------------------------ Statutory information-----------------------------Operating profit 106 103 209 164 25 189Net finance costs (22) - (22) (19) (1) (20) --------------------------------- -------------------------------Profit before taxation 84 103 187 145 24 169Taxation (41) (7) (48) (47) (5) (52) --------------------------------- -------------------------------Profit after taxation 43 96 139 98 19 117 --------------------------------- ------------------------------- Adjustments-----------------------------Exceptional items 30 (60) (30) - - -Amortisation 6 - 6 4 - 4 --------------------------------- -------------------------------Adjustments to operating profit and profit after taxation 36 (60) (24) 4 - 4 --------------------------------- ------------------------------- Adjusted information-----------------------------Operating profit 142 43 185 168 25 193Net finance costs (22) - (22) (19) (1) (20) --------------------------------- -------------------------------Profit before taxation 120 43 163 149 24 173Taxation (41) (7) (48) (47) (5) (52) --------------------------------- -------------------------------Profit after taxation 79 36 115 102 19 121 --------------------------------- -------------------------------\* T (ii) Taxation charge \* T Six months to 30 September 2007 Six months to 30 September 2006 --------------------------------- ------------------------------- ContinuingDiscontinued Total ContinuingDiscontinued Total £m £m £m £m £m £m------------------------------------------------------------------------------------------------ Profit before taxation 84 103 187 145 24 169Taxation (41) (7) (48) (47) (5) (52) --------------------------------- -------------------------------Reported tax rate 48.8% 6.8% 25.7% 32.4% 20.8% 30.8% --------------------------------- ------------------------------- Adjusted profit before taxation 120 43 163 149 24 173Adjusted taxation (41) (7) (48) (47) (5) (52) --------------------------------- -------------------------------Adjusted tax rate 34.4% 16.3% 29.4% 31.5% 20.8% 30.1% --------------------------------- -------------------------------\* T The above table is based on our expectations for the year to 31 March 2008. (iii) Product profitability (a) Operating profit of continuing operations at actual 2007 rates. \* T Six months to 30 September 2007 Six months to 30 September 2006 --------------------------------- ------------------------------- Primary Value added Total PrimaryValue added Total £m £m £m £m £m £m--------------------------------------------------------------------------------------------------Sugars - Products 11 3 14 13 3 16 - Trading - - - 16 - 16 Ingredients - Food 46 45 91 44 38 82 - Industrial 21 (2) 19 23 4 27 Global Sucralose - 32 32 - 32 32 --------------------------------- -------------------------------Total 78 78 156 96 77 173 ----------------------- ---------------------Exchange - 11Central costs (14) (16) ---------- ----------Total 142 168 ---------- ----------\* T (b) Sales of continuing operations at actual 2007 rates. \* T Six months to 30 September 2007 Six months to 30 September 2006 --------------------------------- ------------------------------- Primary Value added Total PrimaryValue added Total £m £m £m £m £m £m--------------------------------------------------------------------------------------------------Sugars - Products 306 36 342 255 36 291 - Trading 371 - 371 460 - 460 Ingredients - Food 404 210 614 318 157 475 - Industrial 199 66 265 188 56 244 Global Sucralose - 70 70 - 67 67 --------------------------------- -------------------------------Total 1 280 382 1 662 1 221 316 1 537 ----------------------- ---------------------Exchange - 108 ---------- ----------Total 1 662 1 645 ---------- ----------\* T (c) Continuing operations for six months to 30 September 2006 at reported 2006rates. \* T Sales Operating profit* --------------------------------- ------------------------------- Primary Value added Total PrimaryValue added Total £m £m £m £m £m £m--------------------------------------------------------------------------------------------------Sugars - Products 259 36 295 13 3 16 - Trading 505 - 505 18 - 18 Ingredients - Food 344 174 518 47 41 88 - Industrial 196 58 254 24 4 28 Global Sucralose - 73 73 - 34 34 --------------------------------- -------------------------------Total 1 304 341 1 645 102 82 184 ----------------------- ---------------------Central costs - (16) ---------- ----------Total 1 645 168 ---------- ----------\* T * Profit before interest, exceptional items and amortisation of acquiredintangible assets. (iv) Net margin analysis \* T Six months to Six months to Year to 30 September 2007 30 September 2006 31 March 2007 % % %------------------------------------------------------------------------------------------------- Before exceptional items and amortisation of acquired intangibles-------------------------------------------- Food & Industrial Ingredients, Americas 12.5% 15.1% 13.9% Food & Industrial Ingredients, Europe 12.5% 14.6% 13.1% Sucralose 45.7% 46.6% 48.3% Sugars 2.0% 4.3% 4.2% Group - continuing 8.5% 10.2% 9.6% - total 9.2% 9.5% 9.2% After exceptional items and amortisation of acquired intangibles-------------------------------------------- Food & Industrial Ingredients, Americas 12.2% 15.0% 11.1% Food & Industrial Ingredients, Europe (2.9)% 14.0% 12.5% Sucralose 42.9% 43.8% 59.2% Sugars 2.0% 4.3% 4.2% Group - continuing 6.4% 10.0% 9.0% - total 10.4% 9.3% 9.2%\* T (a) Unless otherwise stated, above margins are based on continuing operationsand calculated as profit before interest, tax, exceptional items andamortisation of acquired intangible assets divided by external sales. (v) Ratio analysis \* T Six months to Six months to Year to 30 September 30 September 31 March 2007 2006 2007----------------------------------------------- ------------------------------------------------ Net debt to EBITDA (b) = Net debt 840 771 900----------------------------------------------- --------------- --------------- ------------- Annualised pre-exceptional EBITDA (2 x 241) (2 x 245) 477 = 1.7 times = 1.6 times = 1.9 times Gearing = Net debt 840 771 900----------------------------------------------- --------------- --------------- ------------- Total net assets 1 058 928 995 = 79% = 83% = 90% Interest cover = Operating profit before amortisation of acquired intangibles and exceptional items----------------------------------------------- Net interest and finance expense 185 193 373 --------------- -------------- -------------- 22 20 37 = 8.4 times = 9.7 times = 10.1 times Return on Net Operating Assets = Annualised profit before interest, tax and exceptional items----------------------------------------------- Average net operating assets (2 x 179) (2 x 189) 364 --------------- -------------- -------------- 2 013 1 801 1 926 = 17.8% = 21.0% = 18.9% Net operating assets are calculated as:Total net assets 1 058 928 995Add back net borrowings (see note 9) 840 771 900Add back net tax liabilities 133 45 99 --------------- -------------- --------------Net operating assets 2 031 1 744 1 994 --------------- -------------- -------------- Average net operating assets 2 013 1 801 1 926 --------------- -------------- --------------\* T (a) Ratios are based on financial information from total operations. (b) Includes depreciation and amortisation related to discontinued operations of£6 million (30 September 2006 - £11 million, 31 March 2007 - £21million). Copyright Business Wire 2007

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