Tate & Lyle

Annual Report 2014 Corporate site

Key Performance Indicators

Measuring our success against our strategy

We focus on a number of financial performance measures to ensure that our strategy successfully delivers increased value for our shareholders.

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Sales of speciality food ingredients

Sales of speciality food ingredients
Why we measure it How we have performed Change Comment
  • To ensure we are successful in growing the division which is the key area of strategic focus for the business.
  • Performance metric for the Group Bonus Plan.
How we performed on sales of speciality food ingredients chart +4%

(constant currency)6
Volume growth of 4% in SFI with value sales growth held back by lower prices for SPLENDA® Sucralose and lower corn prices.

Adjusted operating profit2

Adjusted operating profit
Why we measure it How we have performed Change Comment
  • To track the underlying performance of the business and to ensure sales growth translates into increased profits.
  • Performance metric for the Group Bonus Plan.
How we performed on adjusted operating profit chart -1%

(constant currency)6
Growth of 1% in Speciality Food Ingredients with a good performance in Europe, Asia Pacific and Latin America offset by a lower contribution from the US and SPLENDA® Sucralose. A reduction in Bulk Ingredients of 4% as a result of weakened demand for bulk sweeteners and lower co-product returns.

Return on capital employed2:

Adjusted profit before interest, tax and exceptional items divided by adjusted average invested operating capital3 for continuing operations.

Return on capital employed
Why we measure it How we have performed Change Comment
  • To ensure that we continue to generate a strong rate of return on the assets that we employ and have a disciplined approach to capital investment.
  • Performance metric for the Performance Share Plan.
How we performed on return on capital employed chart -50bps7 Reduction in adjusted operating profit combined with slight increase in operating assets.

Cash conversion cycle4:

Controllable working capital divided by quarterly sales, multiplied by the number of days in the quarter.

Cash conversion cycle
Why we measure it How we have performed Change Comment
  • To track how efficient we are in turning increased sales into cash and to ensure that working capital is managed effectively.
  • Performance metric for the Group Bonus Plan.
How we performed on cash conversion cycle chart Improved by 3 days Lower finished goods inventories in the US, and significantly lower corn prices in the US.

We look at measures of financial strength to ensure that we maintain the financial flexibility to grow the business whilst maintaining investment-grade credit ratings.

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Net debt to EBITDA multiple5:

The number of times the Group’s net borrowing exceeds its trading cash flow. EBITDA is earnings before exceptional items, interest, tax, depreciation and amortisation.

Net debt to EBITDA multiple
Why we measure it How we have performed Change Comment
  • To ensure that we have the appropriate level of financial gearing and that we generate sufficient profits to service our debt. These measures are a key focus for banks and providers of both debt and equity capital.
How we performed on Net debt to EBITDA multiple chart Improved 0.2x Ratio remains well inside our internal maximum threshold of 2.0x. The improvement reflects the reduction in net debt during the year.

Interest cover5:

The number of times the profit of the Group exceeds interest payments made to service its debt.

Interest cover
Why we measure it How we have performed Change Comment
  • To ensure that we have the appropriate level of financial gearing and that we generate sufficient profits to service our debt. These measures are a key focus for banks and providers of both debt and equity capital.
How we performed on Interest cover chart Improved 0.5x Ratio remains well above our internal minimum threshold of 5.0x.

It is important that we act responsibly and consider carefully the impact our activities have on all stakeholders including employees, customers and the communities in which we operate.

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Recordable incident rate:

The number of injuries per 200,000 hours that require more than first aid, for employees and contractors.

Recordable incident rate
Why we measure it How we have performed Comment
  • The safety of our employees and contractors is of paramount importance. Ensuring safe and healthy conditions at all our locations is essential to our operation as a successful business.
  • Safety performance is a specific consideration that the Remuneration Committee may factor into decisions on pay.
How we performed on Recordable incident rate chart While our safety KPIs were the lowest levels recorded, we are saddened to report that our Group safety performance this year was completely overshadowed by three fatal accidents: two during and one after the end of the reporting year. Further details are provided in the Chairman’s Statement, the Chief Executive’s Review and the Corporate Responsibility section.

Lost-work case rate:

The number of injuries that resulted in lost-work days per 200,000 hours, for employees and contractors.

Lost-work case rate
Why we measure it How we have performed Comment
  • The safety of our employees and contractors is of paramount importance. Ensuring safe and healthy conditions at all our locations is essential to our operation as a successful business.
  • Safety performance is a specific consideration that the Remuneration Committee may factor into decisions on pay.
How we performed on Lost-work case rate chart While our safety KPIs were the lowest levels recorded, we are saddened to report that our Group safety performance this year was completely overshadowed by three fatal accidents: two during and one after the end of the reporting year. Further details are provided in the Chairman’s Statement, the Chief Executive’s Review and the Corporate Responsibility section.
1
Measured on a calendar year basis.
2
Prior year numbers restated for IAS 19 (Revised 2011) ‘Employee Benefits’.
3
Defined as shareholders’ equity excluding net debt, net tax assets/liabilities and net retirement benefit obligations.
4
Defined as controllable working capital divided by quarterly sales, multiplied by the number of days in the quarter on a four-quarter rolling basis (a reduction in the number of days represents an improvement).
5
Net debt, EBITDA, profit and interest are defined under the Group’s bank covenant conditions and are based on unrounded numbers. Net debt is calculated using average rates of exchange.
6
Changes in constant currency are calculated by retranslating comparative period results at current period exchange rates.
7
Basis points (one hundred basis points equates to one percentage point).
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Financial Results
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