Tate & Lyle PLC · LSE:TATE
Tate & Lyle — FY2005 Earnings Presentation
51 slides from Tate & Lyle's earnings presentation, Jun 2, 2005
Slide 1: Preliminary Results Presentation
Preliminary Results Presentation 2 June 2005 Preliminary results (12 months to 31 March 2005) Presentation : 2 June 2005 1
Slide 2: Iain Ferguson, Chief Executive: Introduction
Preliminary Results Presentation Iain Ferguson, Chief Executive 2 June 2005 Good morning and thank you for joining us today. I'd also like to welcome our Chairman Sir David Lees and other Non-Executive Directors • Richard Delbridge (our Senior NED) • Evert Henkes; and • Dr. Barry Zoumas, one of our
Slide 3: Key Results
Key Results • Profit before tax, exceptional items and amortisation of £255m up 18% at constant exchange rates • Strong first year performance from SPLENDA® Sucralose with PBIEA of £52m % t 60 • Value added contribution increased to 49% from rg e 39% of profit before interest, exceptional items d Ta
Slide 4: Simon Gifford, Group Finance Director
Preliminary Results Presentation Simon Gifford, Group Finance Director 2 June 2005 As usual, the slides and the text of this presentation have been posted on our website and we are webcasting our results. Preliminary results (12 months to 31 March 2005) Presentation : 2 June 2005 4
Slide 5: Financial Highlights
Financial Highlights – Increase in PBT* 12% – Adverse exchange translation – SPLENDA® Sucralose profitability higher – Declining cost for European raw materials – Value added products contribute more – Interest cover remains high 5 * before exceptional items and amortisation The increase of 12% in p
Slide 6: Profit and Loss Account
Profit and Loss Account Years to March AUDITED FIGURES £m 2005 2004 Sales 3,342 3,167 +6% Profit before interest* 276 251 +10% Interest (21) (24) -13% Profit before taxation* 255 227 +12% • Exchange translation reduced profit before interest by £13m 6 * before exceptional items and amortisation Turn
Slide 7: Profit and Loss Account
Profit and Loss Account Years to March AUDITED FIGURES £m 2005 2004 Sales 3,342 3,167 +6% Profit before interest* 276 251 +10% Interest (21) (24) -13% Profit before taxation* 255 227 +12% PBI*/Sales margin 8.3% 7.9% Interest cover* 11.3 x 9.3 x 7 * before exceptional items and amortisation The profi
Slide 8: Profit and Loss Account
Profit and Loss Account Years to March AUDITED FIGURES £m 2005 2004 Profit before taxation* 255 227 +12% Amortisation (13) (8) +63% Exceptional items (45) 5 - Taxation (53) (69) -23% Minority interests (4) (1) - Profit for the period 140 154 -9% 8 * before exceptional items and amortisation Amortisa
Slide 9: Exceptional Items
Exceptional Items Loss for the Year £45m AUDITED FIGURES Non- £m Operating Total operating Settlement of HFCS Civil Antitrust Case (55) - (55) Settlement of Western Loan notes - 16 16 Loss on sale of fixed assets and - (6) (6) termination of businesses and assets Total exceptional items (55) 10 (45)
Slide 10: Profit and Loss Account
Profit and Loss Account Years to March AUDITED FIGURES £m 2005 2004 Profit before taxation* 255 227 +12% Amortisation (13) (8) +63% Exceptional items (45) 5 - Taxation (53) (69) -23% Minority interests (4) (1) - Profit for the period 140 154 -9% 10 * before exceptional items and amortisation The eff
Slide 11: Earnings & Dividends per Share
Earnings & Dividends per Share In Pence AUDITED FIGURES 2005 2004 Diluted earnings per share* 38.0 33.9 Dividend per share 19.4 18.8 Dividend cover* 2.0 x 1.8 x 11 * before exceptional items and amortisation Diluted earnings per share before exceptional items and amortisation increased from 33.9 pen
Slide 12: Segmental Analysis
Segmental Analysis Turning to the segmental analysis. Profits in this part of the presentation, as last year, are before exceptional items and amortisation. Preliminary results (12 months to 31 March 2005) Presentation : 2 June 2005 12
Slide 13: Sweeteners and Starches - Americas
Sweeteners and Starches - Americas (2005 includes Sucralose) AUDITED FIGURES £m 2005 2004 61% Group PBI* Sales 1,273 1,219 +4% Profit before interest* 169 131 +29% Margin* 13.3% 10.7% +2.6 pts Exchange translation reduced profits by £10m 13 * before exceptional items and amortisation In the Americas
Slide 14: Sweeteners and Starches - Americas (Excludes Sucralose)
Sweeteners and Starches - Americas (Excludes Sucralose) AUDITED FIGURES £m 2005 2004 42% Group PBI* Sales 1,158 1,219 -5% Profit before interest* 117 131 -11% Margin* 10.1% 10.7% -0.6 pts Food and Industrial Ingredients – Good demand for food ingredients and industrial products; gross margins and vo
Slide 15: Sucralose
Sucralose Sweeteners & Starches - Americas AUDITED FIGURES 2005 £m 2005 $m 2004 Sales 115 212 - Profit before interest* 52 95 - – Rebuilt inventory during second half restricting profitability – Plant expansions and constructions are on schedule – 2006 Start-up costs estimated at £10m 15 * before ex
Slide 16: Sweeteners and Starches - Europe
Sweeteners and Starches - Europe AUDITED FIGURES £m 2005 2004 41% Group PBI* Sales 1,449 1,336 +8% Profit before interest* 113 115 -2% Margin* 7.8% 8.6% -0.8 pts Food and Industrial Ingredients – Higher raw materials in first half – 2005 pricing round disappointing – EU volume increases – Energy and
Slide 17: Sweeteners and Starches - Rest of the World
Sweeteners and Starches Rest of the World AUDITED FIGURES £m 2005 2004 5% Group PBI* Sales 435 412 +6% Profit before interest* 13 8 +63% Margin* 3.0% 1.9% +1.1 pts – Increase in prices and profit from Vietnam – Sugar trading profits higher 17 * before exceptional items and amortisation In the Rest o
Slide 18: Other Segments
Other Segments Animal Feed & Bulk Storage and Other AUDITED FIGURES £m 2005 2004 Animal Feed & Bulk Storage Sales 182 195 -7% Profit before interest* 7 6 +17% Margin* 3.8% 3.1% +0.7 pts Other Business and Activities Sales 3 5 -40% Loss before interest* (26) (9) - 18 * before exceptional items and am
Slide 19: Capital Expenditure and Investments
Capital Expenditure and Investments AUDITED FIGURES Capital Expenditure Investments Depreciation £m 240 200 160 120 80 40 0 2002 2003 2004 2005 Years to March 19 Capital expenditure at £121m was slightly above depreciation of £115m. Investment expenditure principally related to the purchase of the S
Slide 20: Free Cash Flow
Free Cash Flow 66% increase AUDITED FIGURES Year to March 2005, in £m 35 20 74 353 121 103 EBIT DA § Increase in Interest T ax Capex Free Cash working Flow capital 20 § subsidiaries only, before exceptional items As expected, net debt increased during the year. Operating profit before depreciation a
Slide 21: Net Debt Increased to £451m
Net Debt Increased to £451m Year to March 2005, in £m AUDITED FIGURES 10 7 86 451 388 67 103 55 25 Net Debt § Free Cash HFCS Disposals Dividends Investments Net Inflow - Foreign Net Debt § Mar 04 Flow Settlement Share Exchange Mar 05 Options and Other 21 § subsidiaries only, before exceptional items
Slide 22: Summary Balance Sheet
Summary Balance Sheet As at 31 March AUDITED FIGURES Total net assets Net debt Net debt / EBITDA § £m Times 1200 1.6 1.4 1000 1.2 800 1 600 0.8 0.6 400 0.4 200 0.2 0 0 2004 2005 22 § subsidiaries only, before exceptional items Net debt at March 2005 was £451m compared to £388m at the beginning of th
Slide 23: Continued Improvement in Financial Position
Continued Improvement in Financial Position Years Ended March AUDITED FIGURES £m Net debt Interest cover † Times 1100 12 1000 900 10 800 700 8 600 6 500 400 4 300 200 2 100 0 0 2001 2002 2003 2004 2005 23 † before exceptional items and amortisation. 2003 before unusual interest credits Net debt decl
Slide 24: Retirement Benefits
Retirement Benefits P&L Charge & Cash Contributions £m 2005 2004 SSAP24 P&L charge 25 30 Pension Cash Contributions Current service 24 25 To fund deficit 11 9 Total cash contributions 35 34 24 The two yearly actuarial review of our main UK pension fund seems to come round with increasing regularity.
Slide 25: Retirement Benefits: FRS17 Gross Deficit
Retirement Benefits FRS17 – Gross Deficit £m Pensions Healthcare Mar 03 Mar 04 Mar 05 0 50 150 128 100 196 150 81 105 200 250 104 231 233 300 300 350 25 Turning to FRS17, this slide shows the deficit for pensions and healthcare liabilities. The pension deficit has declined from £150m at March 2004 t
Slide 26: Retirement Benefits: Impact of FRS17
Retirement Benefits Impact of FRS17 – Year to March 2005 Current £m SSAP24 FRS17 Profit before interest* 276 281 Interest (21) (23) Profit before tax* 255 258 Total net assets 1,047 935 26 * before exceptional items and goodwill amortisation Incorporating FRS17 into the accounts at March 2005 would
Slide 27: Key Financial Ratios
Key Financial Ratios Years to March AUDITED FIGURES 2005 2004 Restated^ Interest cover* 11.3 x 9.3 x Dividend cover* 2.0 x 1.8 x Net debt / EBITDA § 1.3 x 1.2 x Gearing 43% 40% RONOA ‡ 16.7% 15.4% Profits from value added 49% 39% ^ UITF 38 * before exceptional items and goodwill amortisation 27 § su
Slide 28: Contribution to Profitability
Contribution to Profitability Year Ended March 2004 Category % Sales Margin % Contribution % Group EBITA/Sales to Margin EBITA % 2004 Base Value Added 15 22.6 3.4 42 Consumer Branded 5 19.5 1.0 12 Quota Constrained 16 10.4 1.6 22 Commodity 64 3.0 1.9 24 Group Total 100 7.9 7.9 100 2004 Restated Valu
Slide 29: Contribution to Profitability
Contribution to Profitability Years Ended March Category % Sales Margin % Contribution % Group EBITA/Sales to Margin EBITA % 2004 Restated Value Added 15 20.5 3.1 39 Consumer Branded 5 14.5 0.7 9 Quota Constrained 16 12.3 2.0 26 Commodity 64 3.3 2.1 26 Group Total 100 7.9 7.9 100 2005 Value Added 18
Slide 30: Effect of IFRS compared to UK GAAP
Effect of IFRS compared to UK GAAP – Financial instruments (IAS 32 & 39) – Pensions and other employee benefits (IAS 19) – Business combinations (IFRS 3) – Goodwill amortisation (IAS 38) – Share-based payments (IFRS 2) – Taxation (IAS 12) – Capitalisation and subsequent amortisation of development c
Slide 31: Effect of IFRS on PBT and Earnings
Effect of IFRS on PBT and Earnings Years Ended March UNAUDITED FIGURES PBTEA PBTE UK GAAP 255 242 Employee benefits 4 4 Share based payments (2) (2) Business combinations (4) 5 Joint ventures - - Intangible assets 1 - Other - 1 (1) 8 IFRS 254 250 EPS before exceptional items and amortisation (pence)
Slide 32: IFRS – Effect on Net Assets
IFRS – Effect on Net Assets UNAUDITED FIGURES £m 31 March 2005 1 April 2004 Restated ^ Net Operating Assets - UK GAAP 1,627 1,521 Net Operating Assets – IFRS 1,499 1,420 Net Assets - UK GAAP 1,047 978 Net Assets – IFRS 985 921 32 ^ UITF 38 I have shown on this slide the effect of IFRS on net operati
Slide 33: IFRS – Effect on Net Debt
IFRS – Effect on Net Debt UNAUDITED FIGURES £m 1 April 2005 31 March 2005 1 April 2004 Net Debt UK GAAP 451 451 388 Proportionate consolidation of joint ventures 20 20 32 Reclassification of securitised receivables 45 N/A N/A 65 20 32 Net Debt - IFRS 516 471 420 33 The final IFRS slide shows the eff
Slide 34: New Segment Classifications
New Segment Classifications Sugars, Americas & Asia Sugars, Europe Sucralose Food & Industrial Ingredients, Americas Food & Industrial Ingredients, Europe 34 I have mentioned previously that we would review our segmental analysis to reflect the changing shape of our business. With effect from 1 Apri
Slide 35: Summary
Summary – Improvement in: – interest cover – dividend cover – return on net operating assets – Increased contribution from value added products – Accelerated investment for growth – Increased start-up and European export licence costs in 2006 – Strong financial position 35 So to summarise: We have i
Slide 36: Iain Ferguson, Chief Executive
Preliminary Results Presentation Iain Ferguson, Chief Executive 2 June 2005 Preliminary results (12 months to 31 March 2005) Presentation : 2 June 2005 36
Slide 37: Agenda
Agenda EU Sugar Regime Customer-focused innovation Investment in Research & Development Investing for Growth SPLENDA® Sucralose update Outlook 37 Thank you, Simon. I now want to focus on how we are growing our business through customer-focused innovation, and continued investment in research and dev
Slide 38: EU Sugar Regime
EU Sugar Regime Due for renewal on 1 July 2006 • April 2005 - WTO panel upheld decision that EU sugar exports are trade distorting • When reform proposals are published (expected on 22 June 2005) we will quantify and publish the range of potential impacts upon our businesses • Potential impact on Ta
Slide 39: Customer Focused Innovation
Customer Focused Innovation Tate & Lyle Rebalance SystemTM 50 Cereal and granola bars solutions Cracker Ingredients Tate & Lyle Rebalance System TM 001 and 002 Meripro711 (emulsifying wheat protein) Egg replacement Exclusive brand partnership 39 Low calorie sugar sweetener Low GI sugar This slide sh
Slide 40: Investment in Research and Technology
Investment in Research and Technology Group R&D Expenditure in $m 35 35 29 28 30 24 25 • R&D expenditure increased by 20% 20 year on year and by 45% since 2002 15 10 5 • R&D headcount increased by 19 0 since 2004 and by 20% over 2002 FY02 FY03 FY04 FY05 Group R&D Headcount • New scientists and techn
Slide 41: Investing for Growth - Venture Fund
Investing for Growth - Venture Fund • Will invest in start-ups and expansion-stage companies that support Tate & Lyle’s strategic focus • Investing up to £25m over a five- year period • Important vehicle for Tate & Lyle to continue investment in innovative products and new technologies • Will comple
Slide 42: Investment in Value Added Growth
Investment in Value Added Growth Xanthan / Bio-gums AquastaTM Astaxanthin Bio-3G DuPont JV Industrial grade xanthan Essential nutrient for farm- Market interest in Bio-Sorona® production now produced and raised fish now sold in remains positive. Potential sold. Production of food grade Japan, the US
Slide 43: SPLENDA Sucralose Update
SPLENDA® Sucralose Update • The business has been successfully integrated and has performed strongly • Exciting demand from our customers which continues to exceed supply • Expansion of McIntosh, Alabama plant on track. Some benefits already seen in year ending 31 March 2005 • Construction of new Si
Slide 44: SPLENDA Sucralose Update: Patent Protection
SPLENDA® Sucralose Update Patent Protection 6 Pending Granted 5 4 No. of Patents 3 2 1 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 44 Date of Expiry We have a strong patent estate. Since the value added seminar, held in October last year, 3 p
Slide 45: SPLENDA Sucralose Update: Barriers to Entry
SPLENDA® Sucralose Update Barriers to Entry SPLENDA® Sucralose brand Regulatory & Specifications Economy of Scale Technology Know-how Patents 45 We have other important barriers to entry. We have shown you these before, but just to remind you, patents are the kernel of our protection with our other
Slide 46: SPLENDA Sucralose Now in Over 4000 Products Globally
SPLENDA® Sucralose update Now in Over 4000 Products Globally Baked goods Cereals Yoghurts Confectionery Preserves Beverages Ice creams 46 This slide shows you some of the new product launches using SPLENDA® Sucralose. You will have seen the announcements of new product launches by Coca Cola, PepsiCo
Slide 47: SPLENDA Sucralose Ingredient Use
SPLENDA® Sucralose Ingredient Use FY 2005 - % Split by sales revenue Pharma, 8% Beverages, 39% Food, 53% 47 Data: Company Estimates We are showing these statistics for our financial year (previously these were shown in calendar years). The biggest share of our sales continues to come from the food s
Slide 48: Major Sweeteners Global Demand
Major Sweeteners Global Demand FY 2005 - 154 Million Tonnes Sugar Equivalent Million Tonnes Sugar Equivalent 11 15 128 HFCS Intense Sugar 48 Data: Company Estimates We estimate the global demand for sweeteners at 154 million tonnes sugar equivalent, having increased from 150 million tonnes in calend
Slide 49: Intense Sweetener Market Relative Value
Intense Sweetener Market Relative Value FY 2005 - Split by Geography and by Product, Total Value US$1.1bn US$m Sales, Manufacturers’ Sales Split by Geography Split by Product 10 111 220 81 212 566 220 650 10 120 Am ericas Europe Aspartam e Acesulfam e K Stevia Sucralose Asia Rest of World Saccharin
Slide 50: Outlook Statement
Outlook Statement A Changing Organisation Focused on Changing Customer Needs • Successful delivery of strategy, with good performance from SPLENDA® Sucralose • Expect further progress in FY 2006, but increased start-up costs and higher cost of export licences • Increasing investment in product innov
Slide 51: Question and Answers
Question and Answers Please wait for the microphone and state your name and that of your organisation. 51 Preliminary results (12 months to 31 March 2005) Presentation : 2 June 2005 51