PowerPoint Presentation - Tate _ Lyle by wuyunyi

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									Preliminary Results Presentation




2 June 2005
Preliminary Results Presentation
Iain Ferguson, Chief Executive




2 June 2005
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

•   Value added contribution increased to 49% from
    39% of profit before interest, exceptional items
    and amortisation

•   Diluted EPS before exceptional items and
    amortisation increased 12% to 38.0p

•   Return on net operating assets 16.7%, beating
    initial 15% target for the second year running

•   Proposed total dividend increased by 3% to
    19.4p per share
                                                       SPLENDA® and the SPLENDA® logo are trademarks of
3                                                      McNeil Nutritionals, LLC
Preliminary Results Presentation
Simon Gifford, Group Finance Director




2 June 2005
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
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
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
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
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)




9
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
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
Segmental Analysis
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
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
        volumes higher
      – HFCS demand weaker
      – Maintenance of sweetener margins through the pricing round
      – Citric Acid increased profits
      Astaxanthin
      – Astaxanthin plant commissioned, start-up loss
      Sugar
      – Canadian sugar business results similar to comparative period

14
                                                          * before exceptional items and amortisation
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 exceptional items and amortisation
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 transport costs higher
      – EU Accession of several Eaststarch countries beneficial to profits
      Sugar
      – UK and Portugal sugar profits in line – despite higher export licence costs
      – Eastern Sugar returned to profit


16
                                                             * before exceptional items and amortisation
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
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 amortisation
Capital Expenditure and Investments

                                      AUDITED FIGURES




19
Free Cash Flow
66% increase
                                                            AUDITED FIGURES
     Year to March 2005, in £m




20                               § subsidiaries only, before exceptional items
Net Debt Increased to £451m
Year to March 2005, in £m
                                                         AUDITED FIGURES




21                            § subsidiaries only, before exceptional items
Summary Balance Sheet
As at 31 March
                                                   AUDITED FIGURES




        £m                                       Times




22                      § subsidiaries only, before exceptional items
Continued Improvement in Financial Position
Years Ended March
                                                                                   AUDITED FIGURES



     £m                                                                                      Times




23                  † before exceptional items and amortisation. 2003 before unusual interest credits
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
Retirement Benefits
FRS17 – Gross Deficit



     £m




                              231   233
                        300




25
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
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                      § subsidiaries only, before exceptional items ‡ before exceptional items
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
     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
28
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              22.3           4.0           49
     Consumer Branded       4              14.2           0.6            7
     Quota Constrained     16              12.2           2.0           24
     Commodity             62                 2.7         1.7           20
     Group Total          100                 8.3         8.3          100
29
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 costs (IAS 38)
 – Proportionate consolidation of joint ventures (IAS 31)
 – Non-recognition of proposed dividends (IAS 10)




30
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) - UK GAAP                            38.0
EPS before exceptional items and amortisation (pence) - IFRS                               38.2

EPS after exceptional items (pence) - UK GAAP                                              29.4
EPS after exceptional items (pence) - IFRS                                                 31.4
31
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
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
New Segment Classifications



     Sugars, Americas & Asia



     Sugars, Europe



     Sucralose



     Food & Industrial Ingredients, Americas



     Food & Industrial Ingredients, Europe



34
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
Preliminary Results Presentation
Iain Ferguson, Chief Executive




2 June 2005
Agenda




 EU Sugar Regime

 Customer-focused innovation

 Investment in Research & Development

 Investing for Growth

 SPLENDA® Sucralose update

 Outlook



37
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 Tate & Lyle European operations
  from FY 2007
    – cane sugar refineries, and joint venture beet
      processors in Central and Eastern Europe
    – isoglucose operations and other products that
      compete with sugar
    – citric acid operations

• Underscores the importance of value added growth
38
   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
Investment in Research and Technology


     Group R&D Expenditure in $m


                                   • R&D expenditure increased by 20%
                                     year on year and by 45% since 2002

                                   • R&D headcount increased by 19
                                     since 2004 and by 20% over 2002

     Group R&D Headcount           • New scientists and technologists in
                                     both US and Europe joined us from
                                     major customers and top universities

                                   • Further increases in our R&D
                                     headcount in 2006

40
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 complement our internal
  research capability



41
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, Canada and        addressable market US$2bn
    xanthan will start shortly                 Chile




42
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 Singapore plant
  on track

• Patent estate and other barriers to
  entry continue to be strong

43
SPLENDA® Sucralose Update
Patent Protection




44
                     Date of Expiry
SPLENDA® Sucralose Update
Barriers to Entry




                    SPLENDA® Sucralose brand
                    Regulatory & Specifications
                        Economy of Scale
                           Technology
                            Know-how


                             Patents




45
SPLENDA® Sucralose update
Now in Over 4000 Products Globally


 Baked goods          Cereals                              Yoghurts

                                     Confectionery


                                                           Preserves




           Beverages
                                              Ice creams




46
SPLENDA® Sucralose Ingredient Use
FY 2005 - % Split by sales revenue




                           Pharma, 8%


                                        Beverages, 39%




                  Food, 53%




47
                                              Data: Company Estimates
Major Sweeteners Global Demand
FY 2005 - 154 Million Tonnes Sugar Equivalent


 Million Tonnes Sugar Equivalent




48
                                                Data: Company Estimates
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




49
                                                                    Data: Company Estimates
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 innovation,
                                 marketing, and R&D

                             •   Investment in important growth generators
                                 SPLENDA® Sucralose and Bio-3G

                             •   EU sugar regime reform will adversely impact in
                                 FY 2007

                             •   We view the future with confidence

50
Question and Answers




     Please wait for the
     microphone and state
     your name and that of
     your organisation.




51

								
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