Simon Gifford, described by the Financial Times as Tate & Lyle's 'notoriously cautious' finance director, is a happy man. After years of disappointing numbers, the latest interim figures saw pre-tax profits rise a better-than-expected 9.2% to £130m, and the group triumphantly returned to the FTSE 100 after an absence of seven years. So Gifford and his fellow directors finally have something to smile about.
I've come to meet Gifford in his office at Sugar Quay overlooking the River Thames, and to find out what has brought about such a change in the company's fortunes.
Although its roots lie in the refining of sugar-cane, Tate & Lyle first began taking an interest in starches and cereal sweeteners, which are produced by milling corn and wheat, in the mid-1970s when it acquired a one-third stake in Amylum. A decade later the company increased investment in this side of the business through a 90% acquisition of the north American AE Staley Manufacturing Company.
Gifford takes up the story: 'About 12 years ago we started building up the value-added side of the business through modified starches, which predominantly go into food ingredients.' It's all very technical stuff and if you've ever wondered why the fruit doesn't sink to the bottom of your yoghurt pot or why your cake doesn't crumble, Gifford is the man to ask.Enter Splenda
But the real buzz is all about the most successful value-added product in Tate & Lyle's larder, sucralose, marketed as Splenda, a no-calorie sweetener based on sugar, which has come on stream after more than a quarter of a century in the laboratory. Produced in the US in conjunction with Johnson & Johnson, it is said to have no after-taste, and can withstand the high heat of cooking without breaking down or losing flavour. It already goes into thousands of food and drink products as well as being sold for table-top use, and sales have exceeded all expectations.
Leading manufacturers like Coca-Cola and Pepsi are clamouring to put it into their products. In fact, demand has been so strong that there are concerns over the company's ability to keep pace until extended production facilities in Alabama and a brand new £97m plant in Singapore come on line over the next two years.
Gifford is unfazed by suggestions that sucralose's patents might not be strong enough: 'Some patents might expire because it has taken a long time to bring the product to market, but there are applications in there that will take it beyond 2020. And in some cases we've got proprietary knowledge as well, because sometimes filing the patent can give away more information than not filing it, so you want to keep that information to yourself.'
Certainly with an increasingly diet-obsessed society, any product that promises to reduce calorific values with minimum impact on taste must have a rosy future.
The other factor contributing to the improved performance was the completion of a five-year disposal programme that saw the company divest itself of 30 loss-making businesses. Says Gifford: 'The three biggest of those represented 25% of our assets and we needed to refocus the group. We were very pleased with the prices we got for those businesses.'
By today's standards, Gifford, 58, has been with Tate & Lyle for a quite extraordinarily long time - 35 years. He did his articles with Thornton Baker in Liverpool in the swinging sixties. 'It was a great place to be: all that music and also Liverpool football club doing extremely well. A bit like being at the centre of the universe,' he recalls.
At the end of the decade, industry was hungry for qualified accountants and the young Gifford was spoilt for choice when, straight after qualifying, he made the leap from professional practice into industry.
'I had the opportunity to choose the job I wanted,' he says. He joined Tate & Lyle as an accountant with a diversification subsidiary that was exploring the acquisition of a wide variety of businesses. Although the project was doomed to failure, it proved a valuable first rung on Gifford's relentless climb up Tate's corporate ladder and he soon moved on to the sugar refinery. 'I guess you need some good luck in life,' he says, 'and after a few years the finance director decided to leave to enter his family business, so I was chosen to step into his shoes.' So still under the age of 30, Gifford found himself FD of a major subsidiary.Young contender
The first time the group finance director's role became vacant, Gifford was a strong contender but ultimately considered too young, so he moved instead into general management. In the 1980s, his job took on a strong international focus when he was given a trouble-shooting role working for the main board directors, and by the time he became managing director of the foreign investment division in 1989, he was spending three out of every four weeks travelling to Africa and Europe.
In spite of the company's sweeping international operations, these days he travels far less, as indeed do most of the company's managers. 'Although we are building up the value-added side, we don't want to lose the low-cost focus of our commodity base, so we use video conferencing wherever we can. We are continually looking at our travel budget.'
Just the sort of thing you would expect from someone whose eight years in the finance director's chair have earned him a reputation for caution.
So does he think that reputation is justified?
'Yes, I think it's a true statement and I was not unhappy with it. I think it's good that finance directors are … prudent.' True to character, the man who describes himself as a 'hands-on manager' chooses the word with care. 'Tate & Lyle went through some very difficult times when I first became FD, and we issued several trading statements indicating that earnings were going to be lower than expected, so you might have thought that I wouldn't have had that reputation. But I think the stockbrokers and analysts understand that I tell the story as it is and that's what I always try to do. I believe that, when it's appropriate for the market to know about bad news, I should be describing what's happening in each part of the business, so maybe part of it has come from that, and also I'm quite happy if we just beat those external forecasts by a bit.'More than mere commodities
Traditionally thought of as a sugar company, Gifford is at pains to point out that Tate & Lyle produces a lot more than mere commodities. 'We are a food and industrial ingredients company and we make a very wide range of ingredients,' he says.
One of the most promising products currently in the pipeline is Sorona, a fabric being developed in partnership with DuPont. Until now, it has been produced using a petrochemical base but DuPont wanted to change to a renewable resource and chose Tate & Lyle's corn-based polymer as the fabric's new foundation. 'We've just announced with DuPont the building of the first commercialised plant and if it is successful then we don't believe this will be a niche product. It can be used in a huge range of textile products from swimwear to carpets.'
Why then, with the proportion of profits from value-added products now standing at 54% and growing, and commodities at the mercy of market forces beyond the company's control, does Tate & Lyle not spin off the commodity business altogether? It is because, says Gifford, by virtue of the enormous volume of corn it takes in, it benefits the value-added products by providing a low-cost base ingredient.EU scrutinises sugar
The commodity business does face further uncertainty as the European Union looks at ways to reform its sugar regime. Under the current arrangements, Tate & Lyle pays artificially high prices for raw cane - around three times the world market rate - but is able to charge enormously inflated prices for the finished product. Gifford explains that there are strong lobby groups on each side, with the African, Caribbean and Pacific countries that receive the higher prices clearly against any price cuts, and poorer producing countries pressing for change. Until the new EU agricultural commissioner clarifies the position, probably in the spring, it will remain unclear what effect this will have on Tate & Lyle.
The market, though, remains unconcerned and the company's shares closed the year 55% higher than their year low of 269p. As a result, Tate & Lyle, one of the few surviving companies from the FTSE 30 established in 1932, made its triumphant return to the FTSE 100 after a seven-year absence.
No wonder Simon Gifford is smiling.
Who: Simon Gifford
When: 1 October 1946
Where: Poole, Dorset
Work: Various senior financial and general management roles within Tate & Lyle, including managing director, foreign investment division and company secretary. Group finance director since January 1996.
Life: Tennis, gardening, antiques, opera.TATE & LYLE FACTS
• Henry Tate and Abraham Lyle probably never met, despite operating refineries less than two miles apart in East London. The two companies merged to form Tate & Lyle in 1921.
• As the largest cane sugar refiner in Europe today, Tate & Lyle provides jobs for more than 300,000 people in African, Caribbean and Pacific countries.
• Tate & Lyle services over 5,000 customers at 14,000 locations across the globe.
• In June 2000, Tate & Lyle acquired the remaining minorities of Amylum and Staley.
• If you stacked up every tin of Lyle's Golden Syrup sold just in the EU each year, the column would be more than 1,500 times the height of the Petronas Towers in Kuala Lumpa - the world's tallest building.
• In 2004, the Lyle's Golden Syrup brand celebrated its 100th anniversary.
• The company's total annual sweetener volume would fill enough railcars to stretch across the Golden Gate Bridge 485 times.
• Henry Tate was created a baronet in 1898 and died in 1899, having endowed his collection of contemporary paintings to the nation. He made bequeaths to many causes, including support for the building of the famous Tate Gallery, now known as Tate Britain.