It is easy to forget that Tate & Lyle’s ingredients don’t end up only in food. The British sugar and sweeteners group also makes industrial starch from corn that it sells to US paper makers.

Shareholders might wish that it did not. With demand for cardboard packaging for domestic appliances and furniture predictably weak, Tate’s sales to the US paper industry are down 20 per cent on the year. The strength of the dollar has also hurt, making packaged US goods sharply less competitive on world export markets.

Those travails explain why Tate gave a warning on profits yesterday for the second time in ten weeks: at the pretax level, profits will be about 4 per cent lower than consensus forecasts. But if its shares rose 7 per cent, that has more to do with the disclosures further down Tate’s update _– specifically, that tighter management of working capital has pulled net debt down faster than expected over the past three months, by £300 million to £1.25 billion.

That is reassuring given nervousness over Tate’s borrowings, which hover at about three times operating profits, but the greater significance is the leeway it gives on dividends. Tate’s prospective yield of 9 per cent, one of the highest in the FTSE 350, signals the stock market’s belief that the payout cannot be sustained, an assumption that on yesterday’s evidence would appear too harsh. The completion of the company’s four-year £1 billion programme of capital expenditure should also assist future cash generation. Tate now intends to spend less on fixed assets than it writes off on depreciation – about £130 million a year at present.

The near-term outlook is poor. Oversupply of ethanol in the US has prompted the company to postpone the opening of its new factory in Fort Dodge that was to start production next month, probably by about a year. The US soft drinks market, to which Tate supplies high fructose corn syrup, also remains weak, albeit highly seasonal. Then there is the outcome of the patent infringement case that Tate has bought against Chinese sucralose manufacturers through the US Independent Trade Commission (ITC), the ruling on which is due today.

Finally, the support once provided by Harbinger Capital, the US hedge fund, has gone away. It has cut its stake from 19 per cent to 13 per cent, a move that would seem to presage further sales.

At 276½p, up 17¾p, the shares look cheap at seven times current-year earnings. However, given the prospect of short-term volatility – not least from the ITC – hold for the yield alone.

BTG

About one third of biotechnology companies are forecast to run out of cash over the next six months, but BTG will not be one of them.

The year-end trading update revealed yesterday that the sector’s sole FTSE 250 constituent sits on a £70 million war chest. Just as reassuring was the disclosure that the integration of Protherics, bought late last year in an all-share deal, is proceeding to plan. That tie-up will take £20 million out of the combined entity’s overheads. The broader logic is that BTG gains the $100 million (£68 million) of annual revenues from CroFab and DigiFab, Protherics’s flagship products for rattlesnake bites and digoxin poisoning, while using its own cash pile to develop existing products and license in new ones from rivals.

There was progress on that front, too. Genzyme, of the United States, has bought the full rights to Campath as a treatment for multiple sclerosis, a deal that should bring BTG substantial royalties if the drug is launched as expected in 2012. Elsewhere, the US Food & Drug Administration has not sought additional safety tests on Varisolve, BTG’s varicose vein treatment, which allows it to press ahead with finding a partner for Phase III trials.

The longer-term draw is that BTG has scope to build a US sales team through which it can sell CroFab and DigiFab directly once it regains their rights next year, as well as additional treatments it may pick up from distressed peers or as a result of US drugs industry consolidation. At 138¾p, up 2¾p, buy.

Shed Media

Growing Up Fat, Embarrassing Pets, My Child Won’t Sleep. This is not a random excursion into autobiography but a peek into the commissions roster of Shed Media, the AIM-listed TV production house better known for making Supernanny, Waterloo Road, and Who Do You Think You Are?

Some of that programming will disappear without trace. But some will get recommissioned, remade by Shed for US networks, or sold overseas as a royalty-generating format in which Shed has no hand.

That is the company’s formula, and one which, on the evidence of yesterday’s full-year numbers, appears to be serving it well. Annual comparisons were clouded by a change to its financial year-end and the late 2007 acquisition of Twenty Twenty and Wall to Wall. But, on an underlying basis, sales were up 30 per cent, adjusted operating profits ahead 32 per cent and the dividend raised 14 per cent. Equally, gross profits from the US have exceeded those from the UK for the first time in Shed’s 11-year history.

There must be a suspicion that TV production is a late-cyclical niche, such that Shed is still getting paid out of last year’s budgets. However, 60 per cent of this year’s production revenues, and 90 per cent of distribution revenues, are assured, and, in the UK at least, it has the right customers (35 per cent of sales to BBC, against 1 per cent to ITV).

Shareholders awaiting a reprise of last year’s abortive buyout talks may be disappointed – Shed, having consolidated its latest purchases, casts itself as predator rather than prey. But at 62½p, up, 1½p, or five times earnings, it is clearly worth holding on.

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