Key performance indicators

Tate & Lyle’s Board and executive management monitor a range of financial and non-financial performance indicators, reported on a periodic basis, to measure the Group’s performance over time. Annual targets are set for base key performance indicators (KPIs) in line with the Company’s strategic objectives.

In light of the changes to our business explained in the Review of the business section, we will be reporting on different KPIs in the Annual Report 2011.

Interest cover1

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1

Measured by financial year on total operations.

Target

min 5.0 times

2010

5.8 times

2009

6.1 times

2008

7.8 times

2007

8.4 times

Description: This is the Group’s total operating profit before exceptional items and amortisation divided by net finance expense, as defined in our bank covenants. Or, the number of times the profit of the Group exceeds interest payments made to service its debt.
Comment: Our interest cover remains above our target.

Net debt to EBITDA multiple1

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1

Measured by financial year on continuing operations and translating net debt at the same average exchange rates as EBITDA.

Target

max 2.0 times

2010

1.8 times

2009

2.4 times

2008

2.5 times

2007

1.9 times

Description: This is 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.
Comment: Consistent with the Group’s financial strategy to at least maintain our investment-grade credit ratings, during the year we tightened our maximum target to 2.0 times from 2.5 times. We are within our new target and comfortably within that of our bank covenants.

Return on net operating assets1

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1

Measured by financial year on total operations.

Target

20.0%

2010

14.1%

2009

12.7%

2008

15.5%

2007

18.9%

Description: This is the Group’s total profit before interest, tax and exceptional items divided by the average net operating assets.
Comment: We are below both our initial target of a Group return on net operating assets (RONOA) of 15%, and our longer-term target of a RONOA of 20%.

Safety index1

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1

Measured by calendar year.

Target

zero

2009

1.12

2008

1.16

2007

2.08

2006

2.41

Description: Our safety index compares safety performance across the Group and is a weighted average of injuries sustained in the workplace, with severe accidents having greater impact. The lower the index, the better the performance.
Comment: Employee safety showed modest progress in 2009 with a 3% improvement on 2008. Further information can be found in the Safety section.

Energy use1

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1

Measured by calendar year.

Target (longer-term)

3% reduction

2009

zero

2008

zero

2007

1.3% reduction

2006

1.2% reduction

Description: Energy use is our most significant environmental impact. Our businesses have a target to reduce energy consumption on a per unit basis by 3% each year.
Comment: Our 3% target continues to be more challenging as value added products typically use more energy than our traditional products.
Further information on the Group’s energy use can be found in the Environment section.