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WORLD LEADER IN CARBOHYDRATE INGREDIENTS WORLD LEADER IN CARBOHYDRATE INGREDIENTS Sterling Bond Investor Presentation June 2002 Agenda Business Overview Group Strategy Financial Review Credit Strength Bond Offering Details A World Leader in Carbohydrate Ingredients History

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agenda
Agenda
  • Business Overview
  • Group Strategy
  • Financial Review
  • Credit Strength
  • Bond Offering Details
history
History

The First Hundred Years

Initial Starch Investments

A FocusedBusiness

  • 1859Henry Tate forms sugar refining partnership
  • 1976First investment in Cereal Sweeteners & Starches
  • 1938Listed on the London Stock Exchange
  • 1999-2002Sale of 30 businesses to focus on core activities
  • 2000Creation of a Global Cereal Sweeteners & Starches business
  • 1921Henry Tate & Sons merge with Abram Lyle & Sons
  • 1988First investment in US Corn Wet Milling
  • 1959First investment in North America
group structure in june 2002 following disposal of 30 businesses
Group Structure in June 2002Following disposal of 30 businesses

CEREAL SWEETENERS & STARCHES

SUGAR

  • Staley
    • Almex (JV)
    • Citric Acid
  • Amylum
    • Eaststarch (JV)
  • Sucralose
  • TLS/Alcantara
    • Sugar Trading
  • Eastern Sugar (JV)
  • Redpath Sugar
  • Occidente
  • Vietnam & China

Note: excludes UM Group - planned disposal

starch i ndustry overview
The Starch Tree – Inputs and Outputs of the Industry

Lysine

Enzymes

Citric Acid

Tryptophan

Lactic Acid

MonoSodiumGlutamate

Fuel/Industrial/ Potable Ethanol

Xanthan Gum

42 & 55 HFCS

Riboflavin

Crystalline Fructose

Crystalline Dextrose

Cyclodextrins

Corn Syrup

Separation Fermentation

Sorbitol/Hydrogenated Syrups

Glucose Syrup

PrimaryStarches

Value AddedStarches

Conversion

Maltodextrin

Starch

Wet Milling

Corn(Dent/Waxy/

High Amylose)

Potato

Tapioca

Wheat

Starch Industry Overview
cereal sweeteners
Cereal Sweeteners

Raw Material

Product

Markets

Corn

HFCS

Corn Syrup

Maltodextrins

Polydextrose

Dextrose

Crystalline Dextrose

& Fructose

Soft drinks

Confectionery

Brewing

Wheat

Baking

Fermentation

Tate & Lyle Product Volume : 5m tonnes

Tate & Lyle Position

World: No.1 Crystalline Fructose

North America: No. 2/3 HFCS, No.2 Dextrose

EU: No.1 HFCS (Isoglucose), No.2 Glucose

starches
Starches

Raw Material

Product

Markets

Corn

Food

Beverages

Pharmaceutical

Food Starches

Wheat

Paper & Board

Corrugating

Building Materials

Textiles

Industrial

Starches

Tate & Lyle Product Volume : over 1.5m tonnes

Tate & Lyle Position

Global: No.1 Industrial Starches

North America: No. 2 in Commodity & Specialty Food Starches

fermentation hydrogenation

Raw Material

Product

Market

Fermentation

Soft Drinks

Foods

Detergents

Alcoholic Drinks

Fuel

Industrial Uses

Cereal

Sweeteners

Citric Acid

Ethanol

MSG

Sugar

Molasses

Hydrogenation

Toothpaste

Chewing Gum

Polyurethane

Sorbitol

Dextrose

Fermentation & Hydrogenation

World: No.1 Citric Acid EU: No.1 MSG & Grain Alcohols

sugar
Sugar
  • TLS (UK) – 42% share of UK industrial, 30% share of UK retail sugar markets
  • Alcantara – c. 50% of Portuguese market
  • Regulatory protection under EU sugar regime
  • Strong consumer brands
  • Eastern Sugar poised to benefit from EU enlargement
  • Other Markets: Redpath (Canada), Occidente (Mexico), Nghe An (Vietnam)
agenda11
Business Overview

Group Strategy

Financial Review

Credit Strength

Bond Offering Details

Agenda
strategy overview

LOW COST

VALUE ADDED

FOCUS

Focusing on our core business

Developing a low cost culture throughout the Group

Growing the contribution from value added products

Strategy Overview
slide13

The Group in March 1999Significant operating units

Starch

A E Staley

Almex

Citric

Imasa (Argentina)

Sugar

Domino

Western

Redpath

Occidente

Sugar

TLS/Alcantara

TLI

Eastern (JV)

Garbow (Poland)

Starch

Amylum

Eaststarch (JV)

North America

Europe

Animal Feed

PM Ag

United Molasses

UMT

Rumenco

ABS (JV)

FSL Bells

International

Other

Bundaberg

ZSR

Zambia Sugar

UFIC/EAP

NATL (Vietnam)

China

Booker Tate (JV)

Fletcher Smith

TLPT

Sucralose

group structure in june 2002 following disposal of 30 businesses14
Group Structure in June 2002Following disposal of 30 businesses

CEREAL SWEETENERS & STARCHES

SUGAR

  • Staley
    • Almex (JV)
    • Citric Acid
  • Amylum
    • Eaststarch (JV)
  • Sucralose
  • TLS/Alcantara
    • Sugar Trading
  • Eastern Sugar (JV)
  • Redpath Sugar
  • Occidente
  • Vietnam & China

Note: excludes UM Group - planned disposal

delivering on strategy low cost culture throughout the group
Delivering on Strategy Low cost culture throughout the Group

Good progress on Amylum integration

Confident of achieving £50m pa benefit

Millwall production site closed

Exceeded 3% energy efficiency target

New Global Teams

Export Sales Speciality Sales R&D

a world leader in carbohydrate ingredients16
A World Leader in Carbohydrate Ingredients

Speciality products - specific functionality

Focused R&D working with customers

45% contribution from Value Added

agenda17
Business Overview

Group Strategy

Financial Review

Credit Strength

Bond Offering Details

Agenda
s ummary profit and loss account
Turnover

EBIT 1

Margins

Net interest

Profit before tax 1

Summary Profit and Loss Account

£m

Year ending March

2002

2001

Change (%)

  • 3,944
  • 216
  • 5.5
  • (57)
  • 159
  • 4,146
  • 185
  • 4.5
  • (72)
  • 113
  • -5
  • +17
  • +21
  • +41
  • 4.3x
  • 2.3x
  • +28
  • +43
  • 5.5x
  • 3.3x
  • EBITDA / Interest 2
  • EBIT / Interest 2
  • 1 Before exceptional items and goodwill amortisation
  • 2 Excludes joint ventures and associates
profit and loss account analysis year ended march 2002
Profit and Loss AccountAnalysis - year ended March 2002

£mPlanned#

Ongoing# Disposals Discont’d Total

Sales 3,053 371 520 3,944

Profit before interest* 216 15 (15) 216

Goodwill amortisation (8) - - (8)

Profit before interest‡208 15 (15) 208

PBI/Sales margin* 7.1% 4.0% n/a 5.5%

# Ongoing and Planned Disposals together constitute continuing activities

* before exceptional items and goodwill amortisation

‡ before exceptional items

segmented profit and loss
Segmented Profit and Loss

2002 Sales

2002 EBIT

EBIT (1): £216m

Sales: £3,053m

  • * Before exceptional items and goodwill amortisation
  • (1) Includes net cost from Other Businesses and Activities of £22m
sum mary balance sheet
Fixed Assets

Working Capital

Net Debt

Provisions

Net Assets

Summary Balance Sheet

2002

2001

£m

Year ending March

  • 1,860
  • 551
  • (963)
  • (386)
  • 1,062
  • 1,699
  • 365
  • (639)
  • (344)
  • 1,081
  • Gearing
  • Net Debt / EBITDA #
  • RONOA ‡
  • 59%
  • 2.1x
  • 10.5%
  • 91%
  • 3.3x
  • 8.5%

# EBITDA excludes share of income from joint ventures and associates

‡ before exceptional items

capital expenditure
Capital Expenditure

£m

Years ended March

free cash flow generated 273m year to march 2002 in m
Free Cash Flow Generated £273mYear to March 2002, in £m

1

Interest

143

Tax

Other

Capex

301

61

273

35

Reduction in

working capital

76

Free cash flow

Operating profit

before depreciation

reduction in net debt 324m year to march 2002 in m
Reduction in Net Debt £324mYear to March 2002, in £m

963

Free cash flow

15

Disposals

79

639

Investments

Other

Dividends

273

137

8

2002

2001

financial targets
Financial Targets
  • EBITA / Interest Cover > 4x
  • 15% RONOA
  • > 50% of EBITA from value added
debt maturity profile
Debt Maturity Profile

Maturity of Borrowings

Undrawn Committed Facilities

Existing borrowings

£200m bond

Dotted line represents syndicated facility to be repaid with proceeds from £200m bond issue

items not on balance sheet
Receivables securitisation 52 42

Indebtedness of JVs & associates

100% 145 220

Group share 71 86

Commitments under

operating leases 166 210

Items not on Balance Sheet

2002

2001

£m

Year ending March

agenda29
Agenda
  • Business Overview
  • Group Strategy
  • Financial Review
  • Credit Strength
  • Bond Offering Details
rating agency perspective
Rating Agency Perspective

Moody’s – Baa2 (Stable)

Standard & Poor’s – BBB (Stable)

  • “The ratings reflect the strengths of T&L’s competitive positions in the sugar, cereal sweeteners and starch industries, and the broad diversification of the company’s earnings base....It also takes into account that the operating performance should improve after a difficult 2000 / 2001 financial year....The ratings outlook is stable, reflecting Moody’s expectation that T&L will continue to be exposed to the cyclicality of its markets, resulting in fluctuating profitability and debt protection measures; it also reflects that T&L financial profile should be positively impacted by asset sales which should help reduce debt.”
  • 7 Mar 2002
  • “The ratings reflect the group's leading positions in cereal sweeteners and starches in the U.S. and the EU, as well as in the very stable EU sugar industry; its successful divestment of noncore businesses, especially that of the loss-making U.S. sugar operations; and improving financial profile… Further improvements in earnings and debt measures are likely in financial year 2003, on the back of stable market conditions; additional synergy benefits from the integration of Staley and Amylum; the group's enhanced business mix following the divestment of the U.S. sugar operations; and limited investments. To sustain the current ratings, Tate & Lyle needs to maintain EBITA net interest coverage of at least 3x to 3.5x.”
  • 7 June 2002
investment highlights
Strength of operating cash flow

Investment grade ratings

Conservative financial policies

Improving financial ratios

Consistent and effective strategy

Investment Highlights
agenda32
Business Overview

Group Strategy

Financial Review

Credit Strength

Bond Offering Details

Agenda
offering summary
Issuer: Tate & Lyle International Finance PLC

Guarantor: Tate & Lyle PLC

Issue Size: GBP 200m

Maturity: 7 or 10 years

Offering Format: Eurobond issued off existing EMTN programme

Ratings: Baa2 (stable outlook) / BBB (stable outlook)

Use of proceeds: Refinancing existing debt

Joint-Bookrunners: HSBC, Schroder Salomon Smith Barney

Offering Summary