22nd Jun 2005 14:30
Associated British Foods PLC22 June 2005 Associated British Foods plc Publication of the European Commission's proposals for the reform of the EU sugar regime 22 June 2005 Associated British Foods plc ("ABF"), the international food, ingredients andretail group, today notes the publication of proposals by the EuropeanCommission for the reform of the EU sugar regime. These proposals have yet tobe considered by the European Parliament and their final form to be agreed bythe Council of Ministers. The ABF businesses affected by these proposals arethe sugar operations of British Sugar in the UK and Poland. A number of key aspects of the Commission's policy orientation paper publishedin July 2004 have been significantly modified. The proposed new regime will runfrom 2006/7 until 2014/15 with no mid-term review as originally suggested.There is a restructuring scheme, funded by a levy on the beet industry, designedto compensate marginal producers who would relinquish their quota withincentives for early redemption. It is anticipated that this scheme willdeliver the reduction in EU production sought by the Commission. There are nomandatory quota cuts. These proposals are welcomed by British Sugar as one ofthe most efficient producers in the EU. In addition there is the option ofpurchasing 83,000 tonnes of quota for the UK beet sugar business andapproximately 10,000 tonnes for the Polish business. The proposals include the restructuring levy, payable over 3 years commencing in2006/7, and reductions in the reference price for sugar of 24% in 2007/8 risingto 29% and 39% in the subsequent years. The UK beet price will be reduced by31% in 2006/7 rising to 47% in 2007/8 and thereafter. The current exportproducer levy will be removed and a lower "production charge" will be introducedfrom 2007/8. Exports of non-quota C sugar may be phased out over the next fewyears. British Sugar has announced its intention to build the UK's firstbioethanol plant, using this sugar, which is expected to commence production inearly 2007. We believe that these proposals provide a framework for an orderlyadjustment to the EU sugar market. Our best estimate is that the operating profit impact on our sugar operationswhich results directly from the above will be some £10m in 2006/7 and some £40min 2007/8 and thereafter. However, we expect these effects to be in partmitigated by cost reductions in both the UK and Poland and the exploitation ofnew revenue opportunities including the processing of cane raws. For further information please contact: Associated British FoodsJohn Bason, Finance Director Tel: +44 (0) 20 7399 6502Geoff Lancaster Tel: +44 (0)1733 422901 Citigate Dewe Rogerson Tel: +44 (0)20 7638 9571Jonathan Clare / Chris Barrie / Sara Batchelor This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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