0920_T&L_ Covers.qxd 15/6/09 13:53 Page 1 Tate & Lyle & Lyle Tate Annual Report 2009 Transforming raw materials into quality ingredients used by millions of people every day. www.tateandlyle.com Annual Report 2009 0920_T&L_ Covers.qxd 15/6/09 12:13 Page 2 Tate & Lyle is a world-leading manufacturer of renewable food and industrial ingredients. We use innovative technology to transform corn and sugar into quality ingredients used by millions of people every day. Cautionary statement Tate & Lyle PLC Please read the full cautionary and non-reliance Tate & Lyle PLC is a public limited company statements which can be found on page 168. listed on the London Stock Exchange and registered in England. This is the report and accounts for the Designed and produced by www.berghindjoseph.com Environmental statement year ended 31 March 2009. More information about This report is printed on ‘Look!’ paper and Tate & Lyle can be found on our website at Typeset by Orb Solutions has been independently certified on behalf www.tateandlyle.com. of the Forest Stewardship Council (FSC). Definitions Printed by St Ives Westerham Press Ltd Printed at St Ives Westerham Press Ltd, In this report, ‘Company’ means Tate & Lyle PLC, Photography by ISO14001, FSC certified and CarbonNeutral® ‘Tate & Lyle’ or ‘Group’ means Tate & Lyle PLC and its subsidiary and joint-venture companies. David Rees, Peter Thompson, Chris Brown, Detlev Klockow Trademarks SPLENDA® and the SPLENDA® logo are trademarks of McNeil Nutritionals, LLC. The DuPont Oval Logo, DuPontTM and Sorona® are trademarks or registered trademarks of E.I. du Pont de Nemours and Company. 0920_T&L_ Front_01-59.qxd 12/6/09 16:23 Page 01 Overview of the year Sir David Lees and Iain Ferguson summarise Tate & Lyle’s results for the past year and how Sales Adjusted operating profit Year to 31 March Year to 31 March we measure our performance. £m £m 3 553 2 867 295 298 2 584 2 065 184 166 160 2 Performance highlights 132 969 802 08 09 08 09 08 09 08 09 08 09 08 09 4 Group at a glance Primary Value added Total Primary Value added Total1 6 Chairman’s statement 1 Total includes central costs of £18 million in 2009 and £31 million in 2008. 8 Chief Executive’s review (including the Group’s vision, strategy and key performance indicators) OF THE YEAR OVERVIEW What we do Find out how we make our ingredients, which markets we operate in and how we serve our customers. 14 Overview 22 Going to market 16 Sustainable sourcing 26 People 18 Creating volume 27 External environment WE DO WHAT 19 Preserving value and risk management 20 Adding value How we performed Find out the results for the Group and each business division for the financial year. 32 Group financial results 36 Divisional performance 36 Food & Industrial Ingredients, Americas 40 Food & Industrial Ingredients, Europe 44 Sugars 48 Sucralose HOW WE PERFORMED 52 Other financial information How we run the business Find out who Tate & Lyle’s directors are and how we apply our values to the way we run our business. 60 Board of directors 62 Executive management 63 Corporate governance 70 Corporate social responsibility HOW WE RUN THE BUSINESS Statutory information Our detailed financial statements and other statutory information such as directors’ pay. 81 Directors’ report 84 Directors’ remuneration report 98 Group financial statements 156 Parent company financial statements 164 Ten-year review (non-statutory) 166 Information for investors (non-statutory) STATUTORY INFORMATION STATUTORY Tate & Lyle Annual Report 2009 01 0920_T&L_ Front_01-59.qxd 12/6/09 16:23 Page 02 Overview of the year Performance highlights Tate & Lyle performed soundly despite an increasingly challenging economic environment as the year progressed. The Board is recommending a maintained final dividend of 16.1p per share, making a full year dividend of 22.9p per share, an increaseof 1.3% over the prior year. Statutory results Year ended Year ended 31 March 2009 31 March 2008 Profit before tax (continuing operations) £113m £182m Profit for the year (total operations) £70m £187m Diluted earnings per share (continuing operations) 19.4p 23.6p Sales Adjusted operating profit Year to 31 March Year to 31 March £m £m 3 553 2 867 295 298 2 584 2 065 184 166 160 132 969 802 08 09 08 09 08 09 08 09 08 09 08 09 Primary Value added Total Primary Value added Total1 1 Total includes central costs of £18 million in 2009 and £31 million in 2008. Primary and value added products Value added products are those that utilise technology or intellectual property enabling our customers to produce distinctive products and Tate & Lyle to obtain a price premium and/or sustainable higher margins. Other products from our commodity corn milling and sugar businesses are classified as primary. 02 Tate & Lyle Annual Report 2009 0920_T&L_ Front_01-59.qxd 15/6/09 14:41 Page 03 OVERVIEW OF THE YEAR OVERVIEW Adjusted diluted earnings per share Dividends per share Year to 31 March Year to 31 March pence pence WHAT WE DO WHAT 22.9 21.5 22.6 38.0 19.4 20.0 34.6 08 09 05 06 07 08 09 Net debt Free cash flow3 As at 31 March Year to 31 March £m £m HOW WE PERFORMED 154 1 2312 1 041 (127) (167) 08 09 07 08 09 2 Exchange rate movements increased net debt by £378 million in the year ended 3 Free cash flow is defined as cash flow from continuing operations after interest, 31 March 2009. Excluding movements in exchange rates, net debt reduced by taxation and capital expenditure. £188 million. HOW WE RUN THE BUSINESS Basis of preparation Amortisation Unless stated otherwise, the Group’s financial statements are Unless stated otherwise, the use of the word ‘amortisation’ prepared in accordance with International Financial Reporting on pages 1 to 96 in this annual report relates to the amortisation Standards (IFRSs) as adopted by the EU. Information prior to of acquired intangible assets. 2005 is shown under Generally Accepted Accounting Practice in the UK (UK GAAP). Continuing operations Unless stated otherwise, all comments in this annual report and Adjusted operating profit and adjusted earnings per share accounts refer to the continuing operations adjusted to exclude Unless stated otherwise, adjusted operating profit and exceptional items and amortisation of acquired intangible assets. adjusted earnings per share in this annual report and accounts exclude discontinued operations and are before exceptional items and amortisation of acquired intangible assets. STATUTORY INFORMATION STATUTORY Tate & Lyle Annual Report 2009 03 0920_T&L_ Front_01-59.qxd 15/6/09 13:56 Page 04 Overview of the year Group at a glance Through our four divisions based largely in the Americas, Europe and South East Asia, Tate & Lyle makes quality ingredients for customers all over the world in the food and beverage, industrial, pharmaceutical and animal feed markets. Food & Industrial Ingredients, Americas Food & Industrial Ingredients, Europe – Large-scale corn processor with plants centred – Single Ingredients and Food Systems businesses in the US corn belt or near key markets – Single Ingredients (corn processing) produces a – Produces a range of ingredients including range of ingredients including starches (food and starches (food and industrial), sweeteners, industrial), sweeteners and ethanol proteins, acidulants, biogums and ethanol, – Food Systems provides stabiliser systems, and provides speciality blending services hydrocolloids and speciality blending services – Employees at 31 March 2009: 2,513 – Employees at 31 March 2009: 1,325 Contribution Contribution to Contribution Contribution to to sales adjusted operating profit1 to sales adjusted operating profit1 51% 57% 15% 16% Plants Blending facilities Plants Blending facilities 10 USA2, 1 Mexico, 2 USA, 1 Mexico 6 EU, 1 Morocco, 4 EU, 1 South Africa 2 South America 1 Turkey 1 Australia 1 For the year ended 31 March 2009 and excluding central costs. 2 Including Fort Dodge, Iowa under construction. 04 Tate & Lyle Annual Report 2009 0920_T&L_ Front_01-59.qxd 15/6/09 13:56 Page 05 OVERVIEW OF THE YEAR OVERVIEW Sugars Sucralose WHAT WE DO WHAT – Largest cane sugar refiner in EU – Producer of SPLENDA® Sucralose, – Produces a range of sugars, syrups and molasses a no-calorie high-intensity sweetener – Sugar brands: Tate & Lyle Sugars (UK); Melli – Manufactured by a patented process (Vietnam); and Sidul/Sores (Portugal) starting with cane sugar – Syrup brand: Lyle’s Golden Syrup (UK) – Used to sweeten over 4,000 products worldwide – Molasses distribution, blending and liquid storage in the food, beverage and pharmaceutical markets – Employees at 31 March 2009: 1,339 – Employees at 31 March 2009: 260 Contribution Contribution to Contribution Contribution to HOW WE PERFORMED to sales adjusted operating profit1 to sales adjusted operating profit1 29% 4% 5% 23% Plants Blending facilities Plants 3 EU, 1 Israel, 1 Vietnam, 10 global molasses 1 Singapore, 1 USA3 HOW WE RUN THE BUSINESS 1 For year ended 31 March 2009 and excluding central costs. 3 McIntosh, Alabama being mothballed. INFORMATION STATUTORY Tate & Lyle Annual Report 2009 05 0920_T&L_ Front_01-59.qxd 12/6/09 16:24 Page 06 Overview of the year Chairman’s statement Balance sheet management has been and continues to be a top priority. Sir David Lees Results Exchange translation increased ratings. The full year dividend is Tate & Lyle performed soundly profit before tax by £49 million covered 1.7 times by earnings despite an economic environment compared to the prior year. The from continuing operations before that grew increasingly challenging stronger US dollar contributed exceptional items and amortisation as the year progressed. Balance 83% of this increase, although it of acquired intangible assets.