Tate & Lyle plc

food has the power to bring out the best in people bringing us together discovering more and creating new things to share at tate and lyle we want to bring out the best in food we believe that when food is at its best it's delicious and nutritious It's accessible to everyone. It's better for the planet. And the challenge of feeding the world of tomorrow can be solved today. That's why we're leading in food science. Harnessing nature's ingredients and developing innovative solutions with our customers. to make tasty food healthier and healthy food tastier. Putting the best in food so we can all make better choices. Because when we transform the future of food, we transform lives. It's all there in every bite, sip, and crunch is our commitment to collaboration, innovation, and progress. All to make the best in food even better. Science. Solutions. Society. Tate & Lyle.

Good morning and thank you for joining us. I am pleased to present Tate and Lyle's results for the six months to the 30th of September, 2023. The agenda for today's presentation is on the screen. I will begin with an overview of the first half, Dawn will run through the financial results, and then I will talk about our strategic progress and the outlook. Finally, Dawn and I will be happy to take your questions. Starting then with the key headlines. We delivered another robust performance in the first half. with good revenue and profit growth and strong cash generation. The strategic repositioning of Tate & Lyle as a growth-focused speciality food and beverage solutions business continues to progress well. We are seeing positive progress from our focus on providing solutions to customers and we continue to invest in the business to drive long-term growth. We remain focused on managing challenging short-term market dynamics and investing in the business to build strong foundations for the future. In the short term, we are operating in a volatile cost environment with inflation and the cost of living crisis driving softer consumer demand and customer destocking. It is a sign of the quality and resilience of the business and a great credit to my management team that despite these challenging market dynamics, we still met our key financial measures in the first half. At the same time, we continue to invest in the business to ensure we are well positioned to capture future growth opportunities. We are expanding our portfolio, increasing our investment in innovation and solution selling, investing in growth capacity and significantly advancing our sustainability programme. These investments support our position at the centre of the future of food, helping our customers create healthier, tastier and more convenient food and drink that is both more sustainable and affordable. Turning to the financial highlights. Group revenue was up 4% and EBITDA was up 7%. Cash management was strong, with free cash flow £15 million higher and we delivered $17 million of productivity savings. We also made good progress delivering on our commitment to science, solutions and society. Science and solution selling are at the heart of how we deliver our strategy. Our customers increasingly rely on our innovation expertise to solve the challenges of food reformulation and to deliver nutritional improvement and taste. That is why building stronger solutions based partnerships with customers is critical. In the first half, we increased investment in innovation and solution selling by 11%. And the mix of new business wins coming from solutions increased by 4 percentage points to 22%. For society, we continue to make good progress against our purpose targets. including our sustainability agenda, which I will talk more about later, and on our ambition to improve the diets of people across the world. For example, in the last three and a half years, our no and low calorie sweeteners and fibres have helped to remove seven million tonnes of sugar from the world's diets. That's 28 trillion calories. As we build the new Tate & Lyle, it's also key that we really understand what our customers think of us, where we are seen as strong and where we can continue to improve. This year, we undertook our second annual brand equity survey in which around 500 customers and prospective customers asked what they think about Tate & Lyle. The results are very encouraging. 81% saw us as a leader in ingredient innovation, with 80% also seeing us as a leader in sustainability. These scores were up by 7 and 10 percentage points respectively from the survey in 2022. Importantly, our Net Promoter Score, which is a measure used to gauge customers' loyalty, satisfaction and enthusiasm about Tate & Lyle, is also high at a very positive score of 61, an increase of 9 points. These results give me great confidence that the new Tate & Lyle is increasingly being seen as a valued innovation and growth partner for our customers. as well as an attractive partner for prospective customers. And the way we have reshaped and focused the business is resonating strongly. I will come back to talk about our strategic progress and the outlook later. But for now, I will hand over to Dawn to talk through the financial results. Dawn, over to you.

Thank you, Nick, and good morning, everyone. In line with previous presentations, I will focus on adjusted measures. Items with percentage growth are in constant currency, unless I indicate otherwise. As Nick said, the group performed well in the first half, delivering against our key financial measures. Revenue and profit growth was robust, navigating a tough external environment. We continued to invest for the long term across all three pillars of science, solutions and society. Cash performance was strong by significantly improved cash conversion. All of this resulted in a strong balance sheet providing the flexibility for further investment. In terms of financial highlights, group revenue was 4% higher. We delivered EBITDA growth of 7% with EBITDA margin 70 basis points higher at 20.8%. Profit before tax was 16% higher, reflecting strong performance from Tate and Lyle and improved performance in our minority holding in premium and lower finance charges in the half. Earnings per share were 19% higher and free cash flow was £15 million higher at £77 million. So overall, a pleasing set of results. Moving on to the performance of our three operating segments. Starting with food and beverage solutions, this business is our growth engine and represents more than 80% of our revenue. Its role is to drive margin accretive growth. Revenue in the half was 5% higher with 2 percentage points decrease from volume and price mix which was more than offset by 7 percentage points increase from the recovery of inflation. The volume and price mix decrease of two percentage points is driven by two factors. Firstly, a six percentage points benefit from our focus on strategic mix management and solution selling. And secondly, eight percentage points volume reduction from the impact of consumer demand softness and customer destocking. Looking at the performance of our three regions, in North America, revenue grew 2%. Despite some soft demand, we saw good gains in the beverage, confectionery, and bakery categories, particularly with our largest customers. In Asia, Middle East, Africa, and Latin America, revenue was up 1%. reflecting a mixed picture with pockets of growth and some regional challenges. In Asia, revenue was broadly in line with the comparative period, with robust growth in China, supported by the acquisition of quantum. In Latin America, revenue declined, driven by lower priced imports from outside the region, especially in Mexico. And in the Middle East and Africa, we saw good demand. In Europe, revenue growth at 19% was strong, reflecting the pricing through of significant input cost inflation. We also continued to exit some low margin business. EBITDA grew ahead of revenue at 10%, benefiting from increased solution selling, customer and product mix, as well as from contributions from productivity savings. As a result, the business delivered 90 basis points of EBITDA margin expansion. As I said at our capital markets event earlier this year, our five-year revenue growth ambition is on an underlying basis, excluding the impact of abnormal inflation and deflation. Consecutive periods of high input cost inflation have significantly accelerated revenue growth with food and beverage solutions, revenue 19% higher in each of the last two years, well ahead of our five-year overall ambition of 4% to 6% growth each year. Following this period of rapid inflation, we are now seeing cost deflation across a range of inputs. While the renewal of customer contracts for the 2024 calendar year is still in its early stages, revenue in the second half is expected to reflect the pass-through of these lower costs. let's move to sucralose this is a strongly cash generative business and its role is to provide attractive returns the underlying performance of this business was steady after taking into account the phasing of customer orders into the first half of last year Revenue was down 5%, reflecting the more normal phasing of orders and inflation recovery. EBITDA at £28 million was 14% lower, as multi-year contracts limited our near-term recovery of inflation. Stepping back, industry demand for sucralose remains robust, driven by growing consumer demand for both reduced sugar and calorie food and drink. In addition, we continue to see good demand from our larger customers. Primary Products Europe is the smallest segment, comprising 7% of our revenue. We continue to optimise the financial performance of this segment as we transition capacity to higher margin food and beverage solutions ingredients. Revenue declined by 2% with lower volume partially mitigated by improved pricing from more favourable market conditions and the recovery of input cost inflation. EBITDA losses improved significantly to 3 million pounds. So pulling this all together, food and beverage solutions increased EBITDA by 10% or 40 million pounds. Sucralose saw a decline in EBITDA of 5 million pounds. And in primary products Europe, EBITDA losses were 3 million pounds lower. Overall, this led to an increase in absolute EBITDA in constant currency of £12 million or 7%. The impact of foreign exchange was to decrease EBITDA by £6 million to £178 million. Turning now to productivity, we delivered $17 million of productivity savings in the half, demonstrating the strong productivity culture across the business. Savings came from a number of areas, including capital investments to increase efficiency and reduce energy costs, more efficiencies in our supply chain and cost savings in SG&A. We expect to deliver productivity savings in the 2024 financial year of more than $25 million. And we are on track to deliver a target of $100 million productivity savings in the five years ending the 31st of March, 2028. Let's move on to talk through tax and exceptional items. The adjusted effective tax rate for the year was 21.9%. in line with the comparative period. We anticipate the adjusted effective tax rate for the 2024 financial year will be one to two percentage points higher than last year's full year rate, which was 19.9%. The key drivers of this are the increase in the headline UK corporation tax rate from 19% to 25%. and more profit being taxed in higher rate jurisdictions. In terms of exceptional items, net pre-tax exceptional charges were £8 million, most of which related to restructuring costs to drive organisational improvements and productivity benefits. From a cash flow perspective, this translated into a total exceptional cash outflow of £11 million. Premium's performance improved in the first half. Our share of profit was 32% higher at £70 million. as premium benefited from strong commercial performance and sweetener demand alongside an improving operational performance. This more than offset higher interest charges and a reduction in the share of profits from premium owned joint ventures. We received $17 million in cash dividends from Premium in the half, with a further dividend of $37 million received in early November, bringing the total year-to-date dividend to $54 million. Moving now to free cash flow. Adjusted free cash flow was £15 million higher at 77 million pounds. A strong focus on cash generation delivered a 47 million pound improvement in net working capital compared to the comparative period. We continue to invest in long-term growth with capital expenditure 20 million pounds higher at 46 million pounds. For the 2024 financial year, we continue to expect capital expenditure to be in the 90 to 100 million pounds range. Cash conversion was strong at 69%, a 14 percentage points increase from the comparative period, and we are well on track to deliver our ambition to increase cash conversion to 75% over the next five years. Moving on to net debt and dividends. Net debt was £11 million higher at £249 million. This was driven by two main factors. Firstly, strong cash generation and secondly, the payment of the final dividend to shareholders of £52 million. Our net debt to EBITDA ratio is 0.8 times. We continue to have strong liquidity headroom to invest for growth with access to more than £1 billion through cash on hand and our undrawn revolving credit facility. We have repaid $120 million of debt since the 31st of March 2023 from cash, of which $95 million was floating rate debt. The Board has declared an interim dividend of 6.2 pence per share, an increase of 0.8 pence per share. As previously stated, this reflects the adoption of our approach to pay interim dividends equal to one third of the prior year's full year dividend. The Board continues to operate a progressive dividend policy. I want to leave you with three key messages. The first is that we are delivering on our growth strategy and successfully navigating a challenging external environment to deliver robust financial performance. Secondly, we continue to generate strong cash flow and maintain a culture of productivity and cost discipline. And thirdly, we are investing for the future across our pillars of science, solutions and society, more of which Nick will talk about shortly. These results are a sign of the strength and resilience of the business and the financial discipline we have instilled. This gives us flexibility to continue to invest for long-term growth, both organically and through M&A. With that, let me hand you back to Nick.