AB Foods Regulatory News (ABF)

24 Aug 2007 09:00

Associated British Foods PLC24 August 2007 Associated British Foods plc Investment in China's beet sugar industry For immediate release Associated British Foods plc ("ABF"), the international food, ingredients andretail group, has today announced that it has reached agreement with the HebeiTian Lu Sugar Group ("Tian Lu"), based in the north east of China, to form ajoint venture. The formation of the joint venture, to be called Bo Tian, issubject to government approval with clearance anticipated by the end ofSeptember. Tian Lu will contribute its existing beet sugar business to the joint ventureand ABF will contribute some £70m to fund our plans for future development andexpansion. ABF will hold 51% and Tian Lu will hold the remaining 49% of thejoint venture. The Chinese beet sugar industry is centred in the north east where the provinceshave abundant high quality arable land with ideal weather conditions to producehigh sugar content in the beet. Tian Lu operates four beet sugar factories:Wangkui and Yi'an in Heilongjiang province, Zhangbei in Hebei province andQianqi in Inner Mongolia. Sugar production was 145,000 tonnes last year withsales of £34m. A significant increase in sugar production is planned. There is a majoropportunity to improve beet yields by the application of British Sugar'sEuropean beet sugar expertise through better agricultural practices andtechnology transfer. In addition, refinery capacity will be increased throughinvestment and efficiency improvements. The much larger cane sugar industry is centred in southern China. British Sugarhas four cane sugar refineries in Guangxi province. Following years ofinvestment in refinery capacity and efficiency and agricultural development,sugar production will exceed 500,000 tonnes this financial year. George Weston, Chief Executive of Associated British Foods, said "This acquisition represents another exciting development for us in China. Ourexperience in operating cane sugar factories in southern China, combined withour skills as the lowest cost beet sugar producer in Europe will enable us tointroduce improvements quickly and efficiently to China's beet sugar industry." For further information please contact: Associated British FoodsJohn Bason, Finance DirectorTel: 020 7399 6500 Citigate Dewe Rogerson: Jonathan Clare/Chris BarrieTel: 020 7638 9571 Notes to Editors 1. Associated British Foods is a diversified international food,ingredients and retail group with global sales of £6 billion and 75,000employees. It is listed on the London Stock Exchange with a marketcapitalisation of £6.7 billion. It operates in 46 countries with significantbusinesses outside Europe in Southern Africa, the US, China and Australia. Itsaim is to achieve strong, sustainable leadership positions in markets that offerpotential for profitable growth. It strives to achieve this through acombination of organic growth, the acquisition of complementary businesses andachievement of high levels of operating efficiency. The group has established atrack record of successful value adding acquisitions including a 51% stake inIllovo Sugar, Africa's biggest cane sugar producer with extensive agriculturaland manufacturing operations in six African countries, AB Mauri (its leadinginternational yeast and bakery ingredients business), Littlewoods stores forPrimark and the grocery brands Mazola and Ovaltine. 2. British Sugar is a substantial business within ABF. It hasoperations in the UK, Poland, China and Southern Africa which process some 4million tonnes of sugar annually. It is the most efficient sugar producer inEurope and has a proven ability to create value through improvement inagricultural yields, operational efficiencies, co-product development, marketingand product innovation. A number of its operations are already successful jointventures. It has world class production facilities and technical expertise. Thelargest and most efficient beet sugar factory in the world is at Wissington inNorfolk and this is also the site for the UK's first bioethanol plant. ABF hasalso announced the formation of a joint venture with BP and DuPont to build aworld-scale cereal-based bioethanol plant in the UK. British Sugar is the sole processor of the UK sugar beet crop and over 1million tonnes of sugar is processed each year at its factories. It suppliesfood and drink manufacturers in the UK and Europe and Silver Spoon for theretail market. Two beet sugar factories operate in Poland including Glinojeck,which is the country's largest, with an annual capacity of over 100,000 tonnes. British Sugar made its first investment in China's sugar industry in1995 with a joint venture in a cane sugar refinery in Guangxi province insouthern China. It now has four cane sugar refineries in Guangxi and, followingdevelopment and expansion of these, sugar production will exceed 500,000 tonnesin this financial year. This information is provided by RNS The company news service from the London Stock Exchange