TIDMTATE
RNS Number : 9575Z
Tate & Lyle PLC
27 May 2021
TATE & LYLE PLC
FULL YEAR RESULTS
For the year ended 31 March 2021
Adjusted results(1) Statutory results
2021 2020 vs 2020 2021 2020 vs 2020
---------- ---------- -------- -------- --------
Revenue GBP2 807m GBP2 882m +1% (3%)
Profit before tax (PBT) GBP335m GBP331m +6% GBP283m GBP296m (4%)
Diluted earnings per
share (EPS) 61.2p 57.8p +12% 53.8p 52.1p +3%
Free cash flow GBP250m GBP247m +GBP3m
Net debt GBP417m GBP451m
Dividend per share 30.8p 29.6p +4.1%
---------- ---------- -------- -------- -------- --------
Movements in adjusted results are shown in constant currency
throughout this statement.
Robust performance with strong growth in Food & Beverage
Solutions
Strategic highlights
-- Food & Beverage Solutions delivers strong top-line growth and double-digit profit(2) growth
-- Primary Products profit(2) higher, benefiting from record year of Commodities profits(2)
-- Strong demand for New Products with revenue up 21% at GBP133m
-- Acquisition of stevia and tapioca businesses expands customer offering and presence in Asia
-- Productivity programme continues to support operational efficiency and investment in growth
-- 2030 sustainability targets on track with Scope 1 and 2 greenhouse gas emissions reduced by 7%
-- Three years of consistent strategic and financial delivery,
creating strong platform for future growth
-- Exploring separation of two businesses by selling controlling stake in Primary Products
Financial highlights
-- Food & Beverage Solutions profit(2) +12% to GBP177m; +3% volume and +6% revenue
-- Sucralose profit(2) -9% to GBP55m reflecting pricing pressure and higher production costs
-- Primary Products profit(2) +5% to GBP158m with Sweeteners and Starches -13%, Commodities +98%
-- Group adjusted profit before tax +6%
-- Adjusted diluted EPS +12%, benefitting from lower effective tax rate of 14.3% (2020: 17.9%)
-- Group statutory diluted EPS +3% after exceptional costs to
explore separating businesses and for productivity
-- Adjusted free cash flow +GBP3m higher at GBP250m
-- Net debt GBP34m lower at GBP417m; Net Debt to EBITDA ratio 0.8x
-- Strong return on capital employed of 17.2%, a 30bps decrease
due to the short-term impact of acquisitions
-- Final dividend increased by 5.8% to 22.0p, making a full year dividend of 30.8p, up 4.1%
Emerging stronger from the pandemic
-- Purpose-led response to pandemic ensuring colleagues and
communities supported and customers served
-- Broadening product portfolio, investing in innovation and strengthening technical capabilities
-- Pandemic accelerating trends for healthier food and drink;
supporting growth in new business and innovation
1 The adjusted results for the year ended 31 March 2021 have
been adjusted to exclude exceptional items, amortisation of
acquired intangible assets, the tax on those adjustments and tax
items that are themselves exceptional. A reconciliation of
statutory and adjusted information is included in Note 3 to the
Financial Information. Growth percentages are calculated on
unrounded numbers. Changes in adjusted performance metrics are in
constant currency.
2 Adjusted operating profit.
NICK HAMPTON, CHIEF EXECUTIVE, SAID:
"Despite all the challenges thrown at us by the pandemic, we
progressed our strategy, grew our profits, strengthened our
financial position and increased our dividend.
In response to the pandemic, we focused on making the right
decisions for our colleagues, communities, customers and the
environment. Inspired by our purpose of Improving Lives for
Generations, this included protecting and supporting colleagues at
our sites and at home, providing over one and a half million meals
to food banks in our local communities, operating with agility to
meet customers' rapidly changing needs, and delivering significant
progress on our sustainability targets. I would like to express my
personal thanks to all our colleagues for their dedication during
an extremely demanding year.
Both businesses performed well, with the impact of the pandemic
starting to ease through the second half. Food & Beverage
Solutions delivered another year of strong top-line growth and
double-digit profit growth. The pandemic is accelerating consumer
demand for healthier food and drink and with its leading
capabilities in sweetening, mouthfeel and fortification, Food &
Beverage Solutions is well-placed to capitalise on this trend.
Primary Products delivered resilient performance with profit higher
despite a significant reduction in out-of-home consumption in North
America. This reflects a record year of profits from Commodities as
well as a focus on customer service, operational performance and
rigorous cost discipline.
We continue to make good progress on our strategy. We acquired
two businesses in Asia to strengthen our sweetener and texturant
portfolios in Food & Beverage Solutions. New Products delivered
double-digit revenue growth, our new business and innovation
pipelines both grew and our productivity programme continued to
generate significant benefits.
Since we announced our strategic priorities in 2018, we have
delivered three years of consistent progress and built a strong
platform for future growth. We are exploring the potential to
separate our Food & Beverage Solutions and Primary Products
businesses through the sale of a controlling stake in Primary
Products to a long-term financial partner. This transaction would
create two businesses, each able to focus on its own strategic and
capital allocation priorities - Tate & Lyle focused on Food
& Beverage Solutions, and Primary Products in partnership with
a new investor with a long-term commitment to growing the
business.
The past year has tested us like no other, and our performance
has demonstrated the resilience, quality and agility of Tate &
Lyle. We are emerging stronger from the pandemic and I am more
confident than ever in the long-term growth potential of our
business."
OUTLOOK FOR YEARING 31 MARCH 2022
For the year ending 31 March 2022, despite the continuing impact
of the Covid-19 pandemic, we expect:
-- Food & Beverage Solutions to deliver another year of progress
-- Sucralose to see further modest pricing pressure
-- In Primary Products, Sweeteners and Starches to return to
growth as out-of-home consumption recovers and Commodities profits
to be significantly lower
-- Further productivity benefits.
With overall positive momentum, we expect growth in Group
adjusted operating profit before Commodities to be in the
mid-single digit range in constant currency.
Reflecting significantly lower Commodities profits and an
increase in the adjusted effective tax rate, Group adjusted diluted
earnings per share are expected to be lower than the prior year in
constant currency.
OVERVIEW OF THE YEAR
Business environment and trading
Demand was closely correlated to the imposition and easing of
lockdowns in our largest markets of North America and Europe. At
the start of the year, in April and May, with lockdowns in place in
both regions, we saw a significant reduction in demand for products
used in out-of-home consumption, partially offset by stronger
in-home consumption. From June onwards, demand improved as
lockdowns eased, although as we finished the year out-of-home
demand remained below pre-pandemic levels. In Asia and Latin
America, demand improved in China from the second quarter as it
emerged from lockdown, while in Latin America demand slowed as
lockdowns were imposed.
All our manufacturing facilities remained operational during the
year. Our operations and customer-facing teams adapted quickly to
the new working environment, adjusting to our customers' changing
needs. Excellent operational execution, productivity and cost
reduction were reflected in the Group's financial performance.
The pandemic has heightened consumer awareness of the importance
of a healthier diet and lifestyle. Our high-quality portfolio and
technical capabilities in sweetening, mouthfeel and fortification
which help reduce sugar, calories and fat, and add fibre to food
and drink, mean we are well-positioned to provide the solutions
needed to meet this growing trend.
Delivering our priorities for the year
In May 2020, as the global pandemic took hold, we set out four
priorities for the year - to look after our colleagues and
communities, strengthen our relationships with customers, continue
to progress our strategy and maintain our financial strength. We
made good progress on each of these priorities during the year and,
with the pandemic continuing, they remain our near-term focus. Our
three longer-term priorities established in May 2018 - Sharpen our
Focus on the Customer, Accelerate Portfolio Development and
Simplify the Business - continue to underpin business performance
and drive a culture of agility and accountability across the
organisation.
Look after our colleagues and communities
Our purpose of Improving Lives for Generations has been central
to our response to Covid-19 with our two purpose pillars of
Supporting Healthy Living and Building Thriving Communities
particularly relevant. During the year, we intensified our
programmes to support the mental wellbeing of colleagues and to
promote health education more widely. Working with Nestlé in Latin
America we launched a free online education programme on the health
benefits of dietary fibre and, in the UK, we became a founder
member of FastFutures, a programme to help young people from
disadvantaged backgrounds learn new skills and increase their
employability. We also took steps to build a more inclusive and
diverse culture within Tate & Lyle, including the creation in
April 2021 of the new role of Chief Equity, Diversity &
Inclusion Officer.
Strengthen our relationships with customers
The pandemic is making us a more agile organisation and we
continue to stay very close to our customers. Through technology we
are connecting and collaborating with them in new ways and building
stronger relationships. This includes bespoke customer webinars on
topics such as sugar reduction and plant-based ingredients, virtual
prototype tastings and video links in our applications labs. These
initiatives led to a 44% increase in our technical team's
interactions with customers during the year.
We accelerated the launch of customer-focused online programmes.
For example, in July, a year earlier than originally planned, we
launched Sweetener Vantage(TM) Expert Systems, a set of innovative
sweetener solution design tools to provide technical support to our
customers to create sugar-reduced food and drinks using low-calorie
sweeteners. Then, in February, we launched our Fibre University, an
online modular course designed to help formulators and food
scientists at our customers solve difficult fibre formulation
challenges. Also in February, we launched the Tate & Lyle
Nutrition Centre, a new digital hub providing customers, scientists
and health professionals with easy access to expert insights,
research and educational tools to increase the awareness of
evidence-based science for ingredients including low- and
no-calorie sweeteners and dietary fibres, and their role in a
healthy, balanced diet.
These actions helped increase the value of our new business
pipeline for Food & Beverage Solutions by 12%. Our work with
customers on reformulation and new product launches increased the
risk adjusted revenue value of our innovation pipeline by 18%.
Continue to progress our strategy
In November, we acquired the outstanding majority shareholding
in Sweet Green Fields, a leading global stevia solutions business.
This acquisition brings us a broad portfolio of stevia products and
a fully integrated stevia supply chain including leaf sourcing,
leaf varietal development and established agricultural programmes.
Sweet Greet Fields has dedicated stevia production and research and
development facilities located in Anji, China. This acquisition
strengthens our sweetener platform and our position as a leading
provider of innovative sweetener solutions with the capabilities to
create foods and beverages that are lower in sugar and calories and
with cleaner labels for customers across the world.
In February, we completed the acquisition of an 85% shareholding
in Chaodee Modified Starch Co., Ltd. a speciality tapioca food
starch business in Thailand. This investment strengthens our
texturant platform and brings new tapioca capabilities and raw
material sourcing expertise. It also establishes a dedicated
tapioca facility in Asia and expands our customer offering in
categories including dairy, bakery, snacks, noodles, and soups,
sauces and dressings.
New Products revenue was once again strong, up 21% in constant
currency, with double-digit growth in both our texturants and
sweeteners platforms benefitting from strong performance from our
CLARIA(R) clean-label starches and stevia sweetener solutions,
respectively. New Products represent 14% of Food & Beverage
Solutions revenue, up from 12% in the prior year.
In Primary Products we continue to execute our strategy to
diversify our product mix by moving into new and growing
end-markets. In sweeteners, we continue to see good demand for
craft beers and other alcohols, while in industrial starches, we
continue to work with formulators on our TEXTURLUX(R) Personal Care
Additives, a range of bio-based specialty polymers for skin, hair
and sun care applications available in North America. Our long-term
strategy to move from the printing and writing paper market into
packaging proved beneficial as online shopping accelerated
significantly during the pandemic. The volume of industrial
starches used in packaging increased by 19%.
Maintain our financial strength
We finished the year in a more robust financial position than we
started with positive cash delivery and a stronger balance sheet.
No employees were furloughed and we did not seek any government
aid.
In May 2020, we extended the maturity of our committed but
undrawn US$800 million revolving credit facility by one year to
2025 . Then, in March 2021, we extended US$700 million of this
facility by a further year to 2026. The pricing of this facility is
linked to the delivery of our 2030 environmental targets for Scope
1 and 2 greenhouse gas emissions, water use and beneficial use of
waste. I n August, w e also issued US$200 million in US private
placement debt at an average coupon of 2.96%. As a result, we have
strong liquidity headroom with access to US$1.3 billion through
cash on hand and a committed and undrawn revolving credit facility.
Leverage remains low with a Net Debt to EBITDA ratio at 31 March
2021 of 0.8x (0.6x on a covenant basis). Following the issuance of
US private placement debt in August, the Group has US$800 million
of private placement debt.
During the year we took steps to reduce costs and preserve cash
to mitigate the financial impact of lower demand. Actions taken
included freezing salary increases and non-essential recruitment,
significantly reducing discretionary costs and re-prioritising
capital commitments. We continued to execute against our
productivity programme to deliver US$150 million benefits over a
six-year period ending 31 March 2024. This programme is ahead of
schedule. In the 2021 fiscal year, the programme delivered US$37
million of benefits taking the total benefits from the first three
years of the programme to US$124 million. These benefits come from
many areas including capital investments to reduce energy costs,
supply chain efficiency improvements and SG&A savings.
Exploring opportunities to separate two businesses
On 25 April 2021, following speculation in the media, we issued
a statement confirming that we are in the process of exploring the
potential to separate our Food & Beverage Solutions and Primary
Products businesses through the sale of a controlling stake in
Primary Products to a long-term financial partner. This
transaction, if concluded, would create two businesses - Tate &
Lyle, focused on Food & Beverage Solutions and a global leader
in sweetening, mouthfeel and fortification, and Primary Products, a
leader in plant-based products for the food and industrial markets,
alongside a new investor with a strong appetite to develop and grow
the business.
We continue to successfully execute our strategy and remain
confident in the future growth prospects of the company. However,
the Board believes that if a transaction of this nature were to be
completed, it would enable Tate & Lyle and the new business to
focus their respective strategies and capital allocation priorities
and create the opportunity for enhanced shareholder value.
Discussions with potential new partners for Primary Products are
ongoing. During the year, we incurred GBP19 million of exceptional
costs, principally for external advisors, for work performed in
relation to this potential transaction. There can be no certainty
that a transaction will be concluded, and we will make further
announcements when appropriate. Any transaction, if concluded,
would be subject to shareholder approval.
Good progress on 2030 environmental targets
Caring for our Planet and helping to protect its natural
resources for the benefit of future generations is one of the three
pillars of our purpose. In May 2020 we announced a set of new,
ambitious environmental targets for 2030 to reduce our greenhouse
gas emissions, beneficially use all the waste we generate, reduce
water consumption and to continue to support sustainable
agriculture. We also committed to eliminate the use of coal in our
operations by 2025, and to make our Scope 1 and 2 and Scope 3
greenhouse gas emissions reduction targets science-based to ensure
we play our part in limiting global warming in line with the goals
of the Paris Agreement. Our emissions targets were validated as
science-based by the Science Based Targets initiative in
September.
We made good progress on our targets during the year:
-- Scope 1 and 2 absolute greenhouse gas emissions reduced by 7% (2030 target: 30%)
-- Water usage reduced by 1% (2030 target: 15%)
-- 69% of our waste was beneficially used (2030 target: 100%) to
generate energy or as nutrients for farms
-- We continued to support 1.5 million acres of sustainably
farmed corn through our partnership with Truterra.
Three major projects are underway at our plants in Lafayette and
Decatur (both US) and Santa Rosa (Brazil) to further reduce our
Scope 1 and 2 greenhouse gas emissions and increase operational
efficiency at each site. When completed, these projects will reduce
our Scope 1 and 2 greenhouse gas emissions by up to 20% (from our
2019 baseline) and deliver on our commitment to eliminate coal from
our operations by 2025.
We also exceeded the two environmental targets set with a 2008
baseline to be delivered by 2020. The first was to reduce
greenhouse gas emissions by 19% per tonne of production, and we
delivered 25% reduction. The second was to reduce waste to landfill
by 30%, and we delivered 37% reduction.
Dividend
The Board recognises the importance of dividends to shareholders
and operates a progressive dividend policy. Due to the uncertainty
caused by the Covid-19 pandemic, the Board decided not to increase
either the final dividend for the 2020 financial year or the
interim dividend for the 2021 financial year. Given this year's
robust performance, the Board is recommending a 1.2p or 5.8%
increase in the final dividend to 22.0p (2020 - 20.8p) per share,
bringing the full year dividend to 30.8p per share (2020 - 29.6p),
an increase of 4.1%. This increase brings dividends back to a level
consistent with the Board's progressive dividend policy,
notwithstanding the pandemic.
The final dividend is subject to approval by shareholders at the
AGM on 29 July 2021. Subject to shareholder approval, the final
dividend will be due and payable on 6 August 2021 to all
shareholders on the Register of Members on 25 June 2021. In
addition to the cash dividend option, shareholders will continue to
be offered a Dividend Reinvestment Plan alternative.
Changes to the Board of Directors
-- John Cheung joined the Board as a non-executive director on 1 January 2021.
-- Imran Nawaz, Chief Financial Officer stepped down from the Board on 31 March 2021.
-- Vivid Sehgal joined the Board on 1 March 2021 as Chief
Financial Officer Designate and became Chief Financial Officer on 1
April 2021.
-- Dr Ajai Puri, a non-executive director, retired from the Board on 31 March 2021.
-- Patrícia Corsi joined the Board as a non-executive director on 1 May 2021.
-- Anne Minto, a non-executive director, will retire from the
Board at the Company's AGM on 29 July 2021.
Changes to Executive Management
-- Andrew Taylor, previously President, Innovation and
Commercial Development, was appointed as President, Asia, Middle
East, Africa and Latin America from 1 October 2020.
-- Victoria Spadaro Grant joined the Company in November 2020 as
President, Innovation and Commercial Development. She also became a
member of the Executive Committee. She joined from Barilla, the
Italian multinational food company, where she had been Chief Global
Research Development and Quality Officer since 2014.
-- Harry Boot, President, Asia Pacific, Food & Beverage
Solutions left the Company on 31 March 2021.
-- As stated above, Vivid Sehgal joined as Chief Financial
Officer Designate on 1 March 2021, when he also joined the
Executive Committee.
SEGMENTAL OPERATING PERFORMANCE
Year ended 31 March 2021 Volume Revenue Revenue Adjusted Adjusted
change growth operating operating
profit profit
change
--------------------------- -------- ---------- -------- ----------- -----------
North America +4% GBP485m +6% - -
Asia, Middle East, Africa
and Latin America +2% GBP269m +7% - -
Europe +4% GBP216m +2% - -
-------- ---------- -------- ----------- -----------
Food & Beverage Solutions +3% GBP970m +6% GBP177m +12%
-------- ----------- -----------
Sucralose - % GBP151m (2%) GBP55m (9% )
Sweeteners and Starches - - - GBP109m (13% )
Commodities - - - GBP49m +98%
-------- ---------- -------- ----------- -----------
Primary Products (5%) GBP1 686m (2%) GBP158m +5%
-------- ----------- -----------
Central costs GBP(51)m - %
---------- -------- ----------- -----------
Total Group GBP2 807m +1% GBP339m +7%
--------------------------- -------- ---------- -------- ----------- -----------
The adjusted results for the year ended 31 March 2021 have been
adjusted to exclude exceptional items, amortisation of acquired
intangible assets, the tax on those adjustments and tax items that
are themselves exceptional. A reconciliation of statutory and
adjusted information is included in Note 3 to the Financial
Information. Growth percentages are calculated on unrounded
numbers. Changes in revenue and adjusted operating profit are in
constant currency.
FOOD & BEVERAGE SOLUTIONS
Strong top-line growth
Volume increased by 3% with revenue 6% higher in constant
currency at GBP970 million. Stronger customer demand for
ingredients used in packaged and shelf-stable foods for consumption
in-home more than offset reduced demand for ingredients used in
food and drink consumed out-of-home. Momentum built as the year
progressed, benefitting from growing demand for healthier food and
beverages that are lower in sugar and calories, with cleaner labels
and added fibre and a gradual recovery in out-of-home consumption.
Good mix management further contributed to revenue growth.
Adjusted operating profit was 12% higher in constant currency at
GBP177 million with good operational performance and strong cost
discipline. The effect of currency translation decreased revenue by
GBP26 million and adjusted operating profit by GBP4 million.
As explained earlier in the statement, we completed two
acquisitions during the year. In November 2020, we acquired the
outstanding 85% interest in the global stevia sweetener solutions
business of Sweet Green Fields. In February 2021, we acquired an
85% holding in Chaodee Modified Starch Co., Ltd, a tapioca business
based in Thailand. These acquisitions broaden our customer
offering, strengthen our sweetener and texturant platforms and
expand our presence in the higher growth Asian markets.
During the year, to increase our focus on building our business
and presence in higher growth markets, we created a new single
Asia, Middle East, Africa and Latin America region. This comprises
the regions previously reported as Asia Pacific, Latin America and
Middle East and Africa (formerly part of Europe, Middle East and
Africa). Additional information on page 33 of this statement
provides the divisional results for the year ended 31 March 2021 in
the format used in the previous financial years.
North America
Top-line momentum continued with volume 4% higher. The Covid-19
pandemic caused significant changes in demand patterns earlier in
the year with strong demand for in-home consumption offset by
weaker out-of-home demand. The North American market for food and
beverages saw low single-digit growth in the year benefiting from
stronger in-home consumption. A focus on customer service and good
performance across categories such as beverage and confectionery,
and nutrition and bakery helped us grow ahead of the market.
Revenue in constant currency was 6% higher at GBP485 million,
benefiting from good mix management with strong growth from clean
label starches, stevia sweeteners and our fibre portfolio.
Strengthening out-of-home consumption and good commercial
performance saw revenue growth accelerate as the year
progressed.
Asia, Middle East, Africa and Latin America
Volume was 2% higher with a weaker first half due to the
pandemic and strong growth in the second half. Revenue increased by
7% in constant currency to GBP269 million helped by good price and
mix management. Asia saw high single-digit revenue growth, while in
Latin America constant currency revenue growth benefitted from US
dollar-based pricing with the region delivering double-digit
revenue growth.
In Asia, revenue growth was strong in China, where the pandemic
recovery started earlier, and in Australia and New Zealand, while
revenue was slightly lower in South East Asia. In Latin America,
revenue grew strongly in Brazil where pandemic restrictions were
less stringent, with Mexico slightly lower due to lockdowns. Across
Latin America, new front-of-pack labelling rules are leading to
increased reformulation opportunities with customers, particularly
to reduce sugar. In Middle East and Africa revenue was in line with
the prior year, reflecting the impact of the pandemic mainly in the
first half, and increased focus on credit risk management.
Europe
Volume was 4% higher with revenue 2% higher in constant currency
at GBP216 million. Volume growth reflected solid demand for in-home
consumption offset by weaker out-of-home demand. Revenue grew more
slowly than volume as strong texturant demand impacted mix with
customers looking for bulking and cost reduction in foods. This was
mitigated by higher stevia and clean label texturants revenue as
well as the benefit of increased revenue from higher-grade
maltodextrin, used in categories such as baby food, following the
opening of additional capacity at our facility in Slovakia.
New Products
Revenue from New Products (products launched in the last seven
years) increased by 21% in constant currency to GBP133 million,
representing 14% of Food & Beverage Solutions revenue, up from
12% in the prior year. Acquisitions, particularly the Sweet Green
Fields stevia business, helped to accelerate New Product revenue
growth.
Our texturants platform delivered strong double-digit revenue
growth driven by high demand for our Non-GMO and CLARIA(R) line of
functional clean label starches. Revenue from the sweeteners
platform also delivered strong double-digit growth, particularly in
stevia and allulose, as sugar and calorie reduction across
categories such as beverage, dairy, confectionery and bakery
remained an important focus for customers and consumers. Revenue
was lower in the health and wellness platform reflecting reduced
consumption in the sports nutrition category due to Covid-19
lockdowns.
SUCRALOSE
Robust demand
Sucralose volume was in line with the prior year with customer
orders slightly higher in the second half despite continued
softness in beverages consumed out-of-home. Revenue in constant
currency decreased by 2% to GBP151 million reflecting customer mix
and pricing pressure. We expect further modest pricing pressure to
continue in the 2022 financial year.
Adjusted operating profit at GBP55 million was 9% lower in
constant currency reflecting de-leverage from lower revenue and
one-off production costs. Currency translation decreased revenue by
GBP6 million and adjusted operating profit by GBP2 million.
PRIMARY PRODUCTS
Resilient performance
Volume was 5% lower with sweetener volume 7% lower and
industrial starch volume 6% lower, both reflecting the impact of
the Covid-19 pandemic. Revenue at GBP1,686 million decreased by 2%
in constant currency, reflecting lower volume mitigated by improved
mix and higher Commodities revenue where co-product prices were
higher. Adjusted operating profit was 5% higher in constant
currency at GBP158 million. Currency translation decreased revenue
by GBP59 million and adjusted operating profit by GBP9 million.
Adjusted operating profit in Sweeteners and Starches was 13%
lower in constant currency. Actions to reduce costs across the
business, especially in operations, and further productivity
benefits were successful in mitigating some of the impact of lower
volume. Adverse US winter weather increased costs by GBP6 million
in the last months of the year. Profit for the year also benefited
from transactional foreign exchange in Latin America of GBP3
million. In the prior year, adjusted operating profit included
profit of GBP7 million from a non-core, savoury ingredients
business closed during that year.
Commodities adjusted operating profit at GBP49 million was GBP26
million higher in constant currency.
Sweeteners
Volume was 7% lower reflecting reduced out-of-home consumption
(representing around 30% of sweetener consumption) as lockdowns in
North America impacted consumer consumption patterns in the early
part of the year. The pandemic also impacted consumption in Mexico,
with export volume lower. As the year progressed, out-of-home
consumption began to recover but demand remains below pre-pandemic
levels.
The 2021 calendar year bulk sweetener pricing round was more
competitive than in previous years delivering slight unit margin
compression which we expect to mitigate with our continuing
productivity programme.
Industrial Starches
Volume was 6% lower reflecting lower demand for paper, partially
mitigated by stronger demand for packaging.
The pandemic resulted in lower demand from the printing and
writing paper industry following the closure of many schools and
offices. Demand for printing and writing paper improved later in
the year but remains below pre-pandemic levels. In packaging,
demand was higher, benefitting from increased online shopping. Our
strategy over recent years to diversify away from the printing and
writing paper market towards other markets such as packaging helped
to mitigate the impact of these changes.
Commodities
Commodities delivered a record year with adjusted operating
profit of GBP49 million, GBP26 million higher in constant currency.
Co-product recoveries were significantly higher, benefiting from
good market conditions including increased market demand and strong
prices across our co-products, and in particular for corn oil
prices.
ADDITIONAL COMMENTARY ON FINANCIAL STATEMENTS
Constant
currency
Year ended 31 March (1) 2021 2020 Change change
Continuing and total operations GBPm GBPm % %
--------------------------------------------- ------ ------ ------- ----------
Revenue 2 807 2 882 (3% ) 1%
Adjusted operating profit
- Food & Beverage Solutions 177 162 10% 12%
- Sucralose 55 63 (12% ) (9%)
- Primary Products 158 158 (1% ) 5%
- Central (51) (52) 1% -%
Adjusted operating profit 339 331 2% 7%
Net finance expense (30) (28) (7%) (9%)
Share of profit after tax of joint ventures 26 28 (6%) 7%
--------------------------------------------- ------ ------ ------- ----------
Adjusted profit before tax 335 331 1% 6%
Exceptional items (42) (24) (69%) (73%)
Amortisation of acquired intangible assets (10) (11) 5% 4%
Profit before tax 283 296 (4%) 1%
Income tax expense (30) (51) 39% 40%
--------------------------------------------- ------ ------ ------- ----------
Profit for the year 253 245 3% 10%
Earnings per share (pence)
Adjusted diluted 61.2p 57.8p 6% 12%
Diluted 53.8p 52.1p 3% 10%
--------------------------------------------- ------ ------ ------- ----------
Cash flow and net debt
Adjusted free cash flow 250 247
Net debt 417 451
--------------------------------------------- ------ ------ ------- ----------
1 Adjusted results and a number of other terms and performance
measures used in this document are not directly defined within
IFRS. We have provided descriptions of the various metrics and
their reconciliation to the most directly comparable measures
reported in accordance with IFRS and the calculation (where
relevant) of any ratios in Note 3.
Central costs
Central costs, which include head office costs and certain
treasury and legal activities, were 1% lower (in line with the
prior year in constant currency). This reflected continued strong
discipline on overhead costs but was largely offset by higher
self-insurance costs and additional costs incurred as we adapted to
new ways of working during the pandemic and positioned the Group to
exit the pandemic a stronger business.
Net finance expense and liquidity
Net finance expense at GBP30 million was 7% higher. This
reflected lower interest income on cash balances, the loss of
non-cash finance income following the 'buy-in' of the main UK
defined benefit pension scheme during the prior year and the issue
of US$200 million of US private placement debt in August 2020,
which was issued to increase the Group's access to liquidity.
In May 2020, we extended the maturity of our committed but
undrawn US$800 million revolving credit facility by one year to
2025. Then, in March 2021, we extended US$700 million of this
facility by a further year to 2026. The pricing of this facility is
linked to the delivery of our 2030 environmental targets for Scope
1 and 2 greenhouse gas emissions, water use and beneficial use of
waste. As set out above, in August 2020, we issued US$200 million
in US private placement debt comprising US$100 million 2.91% notes
maturing in 2030 and US$100 million 3.01% notes maturing in
2032.
As a result, we have strong liquidity headroom with access to
US$1.3 billion through cash on hand and a committed and undrawn
revolving credit facility. Leverage remains low with a net debt to
EBITDA ratio at 31 March 2021 of 0.8x (0.6x on a covenant
basis).
Share of profit after tax of joint ventures
The Group's share of profit after tax of joint ventures of GBP26
million was 6% lower (7% higher in constant currency), reflecting a
weakening of the Mexican Peso. In Almex, the Group's joint venture
in Mexico, weaker sweetener demand was offset by transactional
foreign exchange benefit of GBP4 million. In DuPont Tate & Lyle
Bio Products (Bio-PDO(TM) ) weaker demand for high-performance
textiles and cosmetics, both impacted by the pandemic, saw volume
and profits lower than the prior year.
Exceptional items
The Group recorded a net exceptional charge of GBP35 million,
comprising GBP42 million of exceptional items included in profit
before tax and a GBP7 million credit included as an exceptional
item within tax. Such items principally included the following:
-- GBP20 million of restructuring charges (GBP12 million cash
costs and GBP8 million non-cash costs) for the previously-announced
simplification and productivity programme.
-- GBP19 million of costs (all cash costs), principally for
external advisors, for work performed in exploring the potential to
separate the Food & Beverage Solutions and Primary Products
businesses.
-- A GBP3 million net charge related to historical legal matters
in the US, including income recorded for the favourable settlement
of an insurance claim.
-- The exceptional credit of GBP7 million within tax related to
the release of an uncertain tax provision in the US, which had been
recorded at the time of the Group's exit of Sucralose manufacturing
in Singapore. At that time, the costs arising from the closure of
Singapore and the associated tax were recorded as exceptional
items.
The exceptional cash outflows for the period were GBP32 million,
comprising GBP19 million of cash outflows related to charges
recorded in the current period and GBP13 million of cash outflows
resulting from exceptional costs recorded in the prior years.
In the prior year, the Group recorded a net exceptional charge
of GBP24 million which comprised GBP19 million of restructuring
costs related to the productivity programme and a GBP5 million
charge related to the decision to exit a small non-core savoury
business.
The Group is in the third year of a six-year programme to
generate productivity benefits of US$150 million by 31 March 2024.
For the first half of the year the Group reported spend of US$22
million. US$12 million of this has now been classified as spend
relating to the potential separation of the two businesses and as
such the total spend for the year on productivity projects other
than this was US$15 million (GBP12 million). This brings the total
to date to US$48 million. We now expect to spend less than the
previously announced estimate of around US$75 million in delivering
the targeted benefits of US$150 million.
Taxation
The adjusted effective tax rate was 14.3% (2020 - 17.9%). The
rate was lower than the prior year reflecting the release of
certain tax provisions following expiry of statute of limitations
as well as recognition of certain tax credits in the US.
Given the release of certain tax provisions noted above we now
expect the adjusted effective tax rate for the year ending 31 March
2022 to be higher than the year ended 31 March 2021.
The reported effective tax rate (on statutory earnings) was
10.9% (2020 - 17.1%), this was lower than the adjusted effective
tax rate due to the impact of the factors highlighted above and the
impact of the GBP7 million tax credit recorded as an exceptional
item.
Earnings per share
Adjusted basic earnings per share increased by 6% (12% in
constant currency) to 61.9p and adjusted diluted earnings per share
at 61.2p were 6% higher (12% in constant currency). Statutory
diluted earnings per share increased by 1.7p to 53.8p reflecting
the items above and higher exceptional charges in the year.
Cash flow, net debt and liquidity
Adjusted free cash flow was GBP250 million (2020 - GBP247
million). The increase of GBP3 million reflects higher adjusted
earnings, lower capital expenditure and lower retirement benefit
contributions following the buy-in of the main UK pension scheme in
the prior year , partially offset by the impact of higher corn
prices on working capital. Capital expenditure of GBP152 million
(2020 - GBP166 million) included investment in our Lafayette and
Decatur plants in the US to further reduce our greenhouse gas
emissions and increase operational efficiency at each site.
We expect capital expenditure for the 2022 financial year to be
between GBP180 million and GBP200 million reflecting both a step up
in Food & Beverage Solutions growth capacity and investment
related to acquisitions.
Net debt at 31 March 2021 of GBP417 million was GBP34 million
lower than at 31 March 2020. This movement mainly reflects the
strong net cash flow generated from operating activities and the
favourable translation impact of the weaker US dollar on US
dollar-denominated debt, partially offset by exceptional cash flows
of GBP32 million, investments to acquire businesses totalling GBP62
million and dividend payments of GBP137 million.
At 31 March 2021, the Group held cash and cash equivalents of
GBP371 million and had a committed, undrawn revolving credit
facility of US$800 million until 2025 (of which US$700 million has
been extended to 2026). Net Debt to EBITDA ratio was 0.8 times (31
March 2020 - 0.9 times). On a covenant-testing basis, Net Debt to
EBITDA ratio was 0.6 times, which was significantly lower than the
covenant ratio of not greater than 3.5 times, demonstrating
continued significant headroom above this covenant requirement.
Retirement benefits
The Group maintains pension plans for its current employees and
former employees in a number of countries. Certain of these
arrangements are defined benefit pension schemes. All funded
schemes in the UK and US are closed for further accrual. In the US,
the Group also continues to provide an unfunded post-retirement
medical benefit scheme.
At 31 March 2021, the Group's retirement benefit obligations are
in a net deficit of GBP140 million (31 March 2020 - net deficit of
GBP203 million). The largest component of the net deficit relates
to schemes in the US that are by their nature unfunded schemes
(e.g. US post-retirement medical benefit scheme).
The net deficit decreased by GBP63 million, due to higher
returns of GBP30 million on plan assets in the US funded plans and
reductions in retirement benefit obligations in the US of GBP21
million, due to changes in actuarial assumptions. Additionally, US
dollar denominated plans showed a foreign exchange translation
benefit of GBP20 million.
The main UK plan was subject to a 'buy-in' in the prior year and
therefore the significant increase in obligations due to a lower
discount rate and the impact of higher inflation was largely
off-set by an increase in the value of the 'buy-in' insurance
policy. As a result, the balance sheet for the UK plans remained
broadly consistent with the prior year.
In the year ended 31 March 2021, pension contributions were
GBP14 million lower than the prior year as a result of cessation of
contributions to the main UK scheme following the 'buy-in'.
CAUTIONARY STATEMENT AND CONFERENCE CALL DETAILS
This statement of Full Year Results contains certain
forward-looking statements with respect to the financial condition,
results, operations and businesses of Tate & Lyle PLC. These
statements and forecasts involve risk and uncertainty because they
relate to events and depend upon circumstances that will occur in
the future. There are a number of factors that could cause actual
results or developments to differ materially from those expressed
or implied by these forward-looking statements and forecasts.
A copy of this statement of Full Year Results for the year ended
31 March 2021 can be found on our website at www.tateandlyle.com. A
hard copy of this statement is also available from the Company
Secretary, Tate & Lyle PLC, 1 Kingsway, London WC2B 6AT.
Webcast and Q&A Details
An audio presentation of the results by Chief Executive, Nick
Hampton, and Chief Financial Officer, Vivid Sehgal, will be
available to view on our website from 07.00 (BST) on Thursday 27
May 2021. To access the presentation, visit
https://www.investis-live.com/tate-and-lyle/609d4b818b32171000610eec/njkl
.
This presentation will be live streamed at 10.00 (BST), and will
then be followed by a live Q&A session. To view and listen to
this video webcast and Q&A, visit
https://www.investis-live.com/tate-and-lyle/609ce9ab8afe380a00646c9d/bsdf
. Please note that only sell-side analysts and any pre-registered
buy-side investors will be able to ask questions during the Q&A
session. Sell-side analysts will be automatically pre-registered.
To pre-register, please contact Lucy Huang at
lucy.huang@tateandlyle.com .
The archive version of the audio webcast with Q&A will be
available on the same link at
https://www.investis-live.com/tate-and-lyle/609ce9ab8afe380a00646c9d/bsdf
within two hours of the end of the live broadcast.
For more information contact Tate & Lyle PLC:
Christopher Marsh, VP Investor Relations
Tel: Mobile: +44 (0) 7796 192 688
Nick Hasell, FTI Consulting (Media)
Tel: Mobile: +44 (0) 7825 523 383
CONSOLIDATED INCOME STATEMENT
Year ended 31 March
----------------------
2021 2020
Notes GBPm GBPm
---------------------------------------- -------- ---------- ----------
Continuing operations
Revenue 4 2 807 2 882
----------------------------------------- -------- ---------- ----------
Operating profit 287 296
Finance income 6 1 5
Finance expense 6 (31) (33)
Share of profit after tax of joint
ventures 26 28
----------------------------------------- -------- ---------- ----------
Profit before tax 283 296
Income tax expense 7 (30) (51)
----------------------------------------- -------- ---------- ----------
Profit for the year - continuing
operations 253 245
Profit for the year - total operations 253 245
----------------------------------------- -------- ---------- ----------
Attributable to:
---------------------------------------- -------- ---------- ----------
- owners of the Company 253 245
- non-controlling interests - -
---------------------------------------- -------- ---------- ----------
Profit for the year 253 245
----------------------------------------- -------- ---------- ----------
Earnings per share Pence Pence
---------------------------------------- -------- ---------- ----------
Continuing operations:
- basic 8 54.4p 52.8p
- diluted 8 53.8p 52.1p
----------------------------------------- -------- ---------- ----------
Total operations:
- basic 8 54.4p 52.8p
- diluted 8 53.8p 52.1p
----------------------------------------- -------- ---------- ----------
Analysis of adjusted profit for the year -
continuing operations GBPm GBPm
-------
Profit before tax 283 296
Adjusted for:
Net charge for exceptional items 5 42 24
Amortisation of acquired intangible
assets 10 11
Adjusted profit before tax 3 335 331
Adjusted income tax expense 3, 7 (48) (59)
---------------------------------------- ----- ------- -------
Adjusted profit for the year 3 287 272
---------------------------------------- ----- ------- -------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 March
----------------------
2021 2020
Note GBPm GBPm
------------------------------------------------- ------- ---------- ----------
Profit for the year 253 245
------------------------------------------------- ------- ---------- ----------
Other comprehensive (expense)/income
Items that have been/may be reclassified
to profit or loss:
(Loss)/gain on currency translation of foreign
operations (141) 46
Fair value gain/(loss) on net investment
hedges 39 (18)
Net gain/(loss) on cash flow hedges 1 (1)
Share of other comprehensive expense of joint
ventures (6) (3)
(107) 24
Items that will not be reclassified to profit
or loss:
Re-measurement of retirement benefit plans
- actual return higher/(lower) on plan assets 11 129 (58)
- impact of 'buy-in' on main UK pension scheme 11 - (195)
- net actuarial (loss)/gain on retirement
benefit obligations 11 (80) 12
Changes in the fair value of equity investments
at fair value through OCI 3 2
Tax effect of the above items (13) 41
------------------------------------------------- ------- ----------
39 (198)
Total other comprehensive expense (68) (174)
------------------------------------------------- ------- ---------- ----------
Total comprehensive income 185 71
------------------------------------------------- ------- ---------- ----------
Attributable to:
----------------------------- ---- ---
- owners of the Company 185 71
- non-controlling interests - -
----------------------------- ---- ---
Total comprehensive income 185 71
------------------------------- ---- ---
Total comprehensive income relates entirely to continuing
operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 March
------------------------
2021 2020
Notes GBPm GBPm
---------------------------------------------- -------- ------ ------
ASSETS
Non-current assets
Goodwill and other intangible assets 354 340
Property, plant and equipment (including
right-of-use assets of GBP121 million
(2020 - GBP150 million)) 1 105 1 190
Investments in joint ventures 104 91
Investments in equities 59 63
Retirement benefit surplus 11 18 4
Deferred tax assets 32 30
Trade and other receivables 1 -
Derivative financial instruments 1 1
---------------------------------------------- -------- ------ ------
1 674 1 719
---------------------------------------------- -------- ------ ------
Current assets
Inventories 532 456
Trade and other receivables 333 323
Current tax assets 11 10
Derivative financial instruments 23 5
Other current financial assets 32 67
Cash and cash equivalents 10 371 271
1 302 1 132
---------------------------------------------- -------- ------ ------
TOTAL ASSETS 2 976 2 851
---------------------------------------------- -------- ------ ------
EQUITY
Capital and reserves
Share capital 117 117
Share premium 407 406
Capital redemption reserve 8 8
Other reserves 144 239
Retained earnings 783 629
---------------------------------------------- -------- ------ ------
Equity attributable to owners of the Company 1 459 1 399
Non-controlling interests 1 -
---------------------------------------------- -------- ------ ------
TOTAL EQUITY 1 460 1 399
---------------------------------------------- -------- ------ ------
LIABILITIES
Non-current liabilities
Borrowings (including lease liabilities
of GBP116 million (2020 - GBP141 million)) 10 746 682
Retirement benefit deficit 11 158 207
Deferred tax liabilities 44 42
Provisions 11 11
Derivative financial instruments - 2
959 944
---------------------------------------------- -------- ------ ------
Current liabilities
Borrowings (including lease liabilities
of GBP27 million (2020 - GBP30 million)) 10 42 40
Trade and other payables 431 370
Provisions 24 21
Current tax liabilities 25 38
Derivative financial instruments 9 20
Other current financial liabilities 26 19
557 508
---------------------------------------------- -------- ------ ------
Total liabilities 1 516 1 452
---------------------------------------------- -------- ------ ------
TOTAL EQUITY AND LIABILITIES 2 976 2 851
---------------------------------------------- -------- ------ ------
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 31 March
----------------------
2021 2020
Notes GBPm GBPm
Cash flows from operating activities
Profit before tax from continuing
operations 283 296
Adjustments for:
Depreciation of property, plant
and equipment (excluding exceptional
items) 142 137
Amortisation of intangible assets 33 35
Share-based payments 8 14
Net impact of exceptional income
statement items 5 10 1
Net finance expense 6 30 28
Share of profit after tax of joint
ventures (26 ) (28)
Net retirement benefit obligations (8) (21)
Changes in working capital and other
non-cash movements (24) 2
-------------------------------------------- -------- ----------- ---------
Cash generated from continuing operations 448 464
Net income tax paid (57) (49)
Interest paid (22) (30)
Net cash generated from operating
activities 369 385
-------------------------------------------- -------- ----------- ---------
Cash flows from investing activities
Purchase of property, plant and
equipment (134) (141)
Disposal of property, plant and
equipment (exceptional) 5 - (1)
Disposal of property, plant and 5 -
equipment
Acquisition of businesses, net of (62) -
cash acquired
Investments in intangible assets (18) (25)
Purchase of equity investments (4) (6)
Disposal of equity investments 3 4
Interest received 1 5
Dividends received from joint ventures 4 35
Net cash used in investing activities (205) (129)
-------------------------------------------- -------- ----------- ---------
Cash flows from financing activities
Purchase of own shares including
net settlement (5) (22)
Cash inflow from additional borrowings 154 157
Cash outflow from repayment of borrowings (5) (234)
Repayment of leases (36) (37)
Dividends paid to the owners of
the Company 9 (137) (137)
Net cash used in financing activities (29) (273)
-------------------------------------------- -------- ----------- ---------
Net increase/(decrease) in cash
and cash equivalents 10 135 (17)
-------------------------------------------- -------- ----------- ---------
Cash and cash equivalents:
Balance at beginning of year 271 285
Net increase/(decrease) in cash
and cash equivalents 135 (17)
Currency translation differences (35) 3
-------------------------------------------- -------- ----------- ---------
Balance at end of year 10 371 271
-------------------------------------------- -------- ----------- ---------
A reconciliation of the movement in cash and cash equivalents to
the movement in net debt is presented in Note 10.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Attributable
capital to the Non-
and Capital owners controlling
share redemption Other Retained of the interests Total
premium reserve reserves earnings Company (NCI) equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- --------- ------------- ----------- ----------- ------------- ------------- ---------
At 1 April 2019 523 8 217 733 1 481 - 1 481
Profit for the year -
total operations - - - 245 245 - 245
Other comprehensive
income/(expense) - - 26 (200) (174) - (174)
------------------------- --------- ------------- ----------- ----------- ------------- ------------- ---------
Total comprehensive
income - - 26 45 71 - 71
Hedging gains
transferred
to inventory - - (6) - (6) - (6)
Tax effect of the above
item - - 2 - 2 - 2
Transactions with
owners:
Share-based payments,
net of tax - - - 14 14 - 14
Purchase of own
shares
including net
settlement - - - (22) (22) - (22)
Dividends paid (Note
9) - - - (137) (137) - (137)
Other movements - - - (4) (4) - (4)
------------------------- ----------- ------------- ------------- ---------
At 31 March 2020 523 8 239 629 1 399 - 1 399
------------------------- --------- ------------- ----------- ----------- ------------- ------------- ---------
Profit for the year -
total operations - - - 253 253 - 253
Other comprehensive
(expense)/income - - (104) 36 (68) - (68)
------------------------- --------- ------------- ----------- ----------- ------------- ------------- ---------
Total comprehensive
(expense)/income - - (104) 289 185 - 185
Hedging losses
transferred
to inventory - - 12 - 12 - 12
Tax effect of the above
item - - (3) - (3) - (3)
Transactions with
owners:
Share-based payments,
net of tax - - - 10 10 - 10
Issue of share
capital 1 - - - 1 - 1
Purchase of own
shares
including net
settlement - - - (5) (5) - (5)
Dividends paid (Note
9) - - - (137) (137) - (137)
NCI in subsidiaries
acquired - - - - - 1 1
Other movements - - - (3) (3) - (3)
------------------------- --------- ------------- ----------- ----------- ------------- ------------- ---------
At 31 March 2021 524 8 144 783 1 459 1 1 460
------------------------- --------- ------------- ----------- ----------- ------------- ------------- ---------
TATE & LYLE PLC
NOTES TO THE FINANCIAL INFORMATION
FOR THE YEARED 31 MARCH 2021
1. Background
The financial information on pages 14 to 31 is extracted from
the Group's consolidated financial statements for the year ended 31
March 2021, which were approved by the Board of Directors on 26 May
2021.
The financial information does not constitute statutory accounts
within the meaning of sections 434(3) and 435(3) of the Companies
Act 2006 or contain sufficient information to comply with the
disclosure requirements of International Financial Reporting
Standards (IFRS) adopted pursuant to Regulation (EC) No 1606/2002
as it applies in the European Union.
The Company's auditor, Ernst & Young LLP, has given an
unqualified report on the consolidated financial statements for the
year ended 31 March 2021. The auditor's report did not include
reference to any matters to which the auditor drew attention
without qualifying its report and did not contain any statement
under section 498 of the Companies Act 2006. The consolidated
financial statements will be filed with the Registrar of Companies,
subject to their approval by the Company's shareholders on 29 July
2021 at the Company's Annual General Meeting.
2. Basis of preparation
Basis of accounting
The Group's consolidated financial statements for the year ended
31 March 2021 have been prepared in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006 and international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in
the European Union.
The Directors are satisfied that the Group has adequate
resources to continue to operate as a going concern for the
foreseeable future and that no material uncertainties exist with
respect to this assessment. In making the assessment, the Directors
have considered the Group's balance sheet position and forecast
earnings and cash flows for the period from the date of approval of
these financial statements to 31 March 2023. The business plan used
to support the going concern assessment (the "Base case") is
derived from Board-approved forecasts together with certain
downside sensitivities.
Further details of the Directors' assessment are set out
below:
At 31 March 2021, the Group has significant available liquidity,
including GBP371 million of cash and US$800 million (GBP579
million) of committed and undrawn revolving credit facility, none
of which matures before March 2025. In addition, none of the
Group's existing financing matures during the going concern
assessment period, with the earliest maturity being in the year
ending 31 March 2024. During the year, the Group demonstrated its
ability to raise new finance despite the uncertainties of the
Covid-19 pandemic, raising US$200 million of new private placement
debt in August 2020, with ten-year and twelve-year tenors at 2.91%
and 3.01%, respectively.
The Group has only one debt covenant requirement which is to
maintain a net debt to EBITDA ratio of not more than 3.5 times. On
the covenant-testing basis this was 0.6 times at 31 March 2021. As
set out below, for a covenant breach to occur it would require a
profound reduction in Group profit. Such reduction is considered to
be extremely unlikely.
As described elsewhere in the annual report and accounts, the
Group's performance has demonstrated resilience to the challenges
of Covid-19, with revenue, profit and cash-flow growth being
delivered during the year ended 31 March 2021. None of the
scenarios modelled in the Directors' 'worst case scenario' in the
Group's two most recent going concern assessments (30 September
2020 and 31 March 2020) have come to fruition to any degree.
In concluding that the going concern basis is appropriate, the
Directors have modelled the impact of a 'worst case scenario' to
the Base case by including the same three plausible but severe
downside risks also used for the Group's viability statement,
being: a major operational failure causing an extended shutdown of
our largest manufacturing facility; the loss of two of our largest
Food & Beverage Solutions customers; and a slower recovery from
the impact of the Covid-19 pandemic. In aggregate, such 'worst case
scenario' does not result in any material uncertainty to the
Group's going concern assessment and the resultant position still
has significant headroom above the Group's debt covenant
requirement.
In addition, the Directors have calculated a 'reverse stress
test', which represents the changes that would be required to the
Base case in order to breach the Group's debt covenant. Such
'reverse stress test' shows that the forecast Group profit would
have to be reduced to almost zero in order to cause a breach.
Finally, the Group has and continues to demonstrate its ability to
operate all of its manufacturing facilities safely in the current
environment.
Having reviewed the 'worst case scenario' and 'reverse stress
test', the Directors consider that there is no reasonable scenario
in which available liquidity could be exhausted or the Group's debt
covenant could be breached. Accordingly, there is no reasonable
basis under which the Group would not be a going concern.
The Group's principal accounting policies have been consistently
applied throughout the year and will be set out in the notes to the
Group's 2021 Annual Report.
Accounting standards adopted during the year
In the current year, the Group has adopted, with effect from 1
April 2020, the following new accounting standards:
- Amendments to IFRS 3 Definition of a Business
- Amendments to IAS 1 Presentation of Financial Statements and IAS 8 Definition of Material
The adoption of these amendments from 1 April 2020 has had no
material effect on the Group's financial statements.
Accounting standards issued but not yet adopted
No other new standards, new interpretations or amendments to
standards or interpretations have been published which are expected
to have a significant impact on the Group's financial
statements.
Changes in constant currency
Where year-on-year changes in constant currency are presented in
this statement, they are calculated by retranslating current year
results at prior year exchange rates. Reconciliations of the
movement in constant currency have been included in 'Additional
information' within this document.
Alternative performance measures
The Group also presents alternative performance measures,
including adjusted operating profit, adjusted profit before tax,
adjusted earnings per share and adjusted free cash flow, which are
used for internal performance analysis and incentive compensation
arrangements for employees. They are presented because they provide
investors with additional information about the performance of the
business which the Directors consider to be valuable. For the years
presented, alternative performance measures exclude, where
relevant:
- Exceptional items (excluded as they are material in amount;
and are outside the normal course of business or relate to events
which do not frequently recur, and therefore merit separate
disclosure in order to provide a better understanding of the
Group's underlying financial performance);
- Amortisation of acquired intangible assets (costs associated
with amounts recognised through acquisition accounting that impact
earnings compared to organic investments); and
- Tax on the above items and tax items that themselves meet
these definitions. For tax items to be treated as exceptional,
amounts must be material and their treatment as exceptional enable
a better understanding of the Group's underlying financial
performance.
Alternative performance measures reported by the Group are not
defined terms under IFRS and may therefore not be comparable with
similarly-titled measures reported by other companies.
Reconciliations of the alternative performance measures to the most
directly comparable IFRS measures are presented in Note 3.
Exceptional items
Exceptional items comprise items of income, expense and cash
flow, including tax items that: are material in amount; and are
outside the normal course of business or relate to events which do
not frequently recur, and therefore merit separate disclosure in
order to provide a better understanding of the Group's underlying
financial performance. Examples of events that give rise to the
disclosure of material items of income, expense and cash flow as
exceptional items include, but are not limited to:
-- significant impairment events;
-- significant business transformation activities;
-- disposals of operations or significant individual assets;
-- litigation claims by or against the Group; and
-- restructuring of components of the Group's operations.
For tax items to be treated as exceptional, amounts must be
material and their treatment as exceptional enable a better
understanding of the Group's underlying financial performance.
Exceptional items in the Group's financial statements are
classified on a consistent basis across accounting periods.
3. Reconciliation of alternative performance measures
Income statement measures
For the reasons set out in Note 2, the Group presents
alternative performance measures including adjusted operating
profit, adjusted profit before tax and adjusted earnings per
share.
The following table shows the reconciliation of the key income
statement alternative performance measures to the most directly
comparable measures reported in accordance with IFRS:
Year ended 31 March Year ended 31 March 2020
2021
---------------------------------- ----------------------------------
GBPm unless otherwise
stated IFRS Adjusting Adjusted IFRS Adjusting Adjusted
Continuing operations reported items reported reported items reported
-------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Revenue 2 807 - 2 807 2 882 - 2 882
-------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Operating profit 287 52 339 296 35 331
-------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Profit before tax 283 52 335 296 35 331
Income tax expense (30) (18) (48) (51) (8) (59)
-------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Profit for the year 253 34 287 245 27 272
-------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Basic earnings per share
(pence) 54.4p 7.5p 61.9p 52.8p 5.8p 58.6p
Diluted earnings per
share (pence) 53.8p 7.4p 61.2p 52.1p 5.7p 57.8p
Effective tax rate % 10.9% 3.4% 14.3% 17.1% 0.8% 17.9%
-------------------------- ---------- ---------- ---------- ---------- ---------- ----------
The following table shows the reconciliation of the adjusting
items impacting adjusted profit for the year:
Year ended 31 March
----------------------
2021 2020
Continuing operations Notes GBPm GBPm
--------------------------------------------- -------- ---------- ----------
Exceptional costs in operating profit 5 42 24
Amortisation of acquired intangible assets 10 11
--------------------------------------------- -------- ---------- ----------
Total excluded from adjusted profit before
tax 52 35
Tax effect of adjusting items 7 (11) (8)
Exceptional US tax credit 5, 7 (7) -
Total excluded from adjusted profit for the
year 34 27
--------------------------------------------- -------- ---------- ----------
Cash flow measure
The Group also presents an alternative cash flow measure, 'A
djusted free cash flow' which is defined as cash generated from
continuing operations after net interest and tax paid, after
capital expenditure, and excluding the impact of exceptional
items.
The following table shows the reconciliation of adjusted free
cash flow:
Year ended 31
March
----------------
2021 2020
GBPm GBPm
---------------------------------------------------------- ------- -------
Adjusted operating profit from continuing operations 339 331
Adjusted for:
Adjusted depreciation and adjusted amortisation (1) 165 161
Share-based payments 8 14
Changes in working capital and other non-cash movements (24) 2
Net retirement benefit obligations (8) (21)
Capital expenditure (152) (166)
Net interest and tax paid (78) (74)
---------------------------------------------------------- ------- -------
Adjusted free cash flow 250 247
---------------------------------------------------------- ------- -------
1 Total depreciation of GBP148 million (2020 - GBP145 million)
and amortisation of GBP33 million (2020 - GBP35 million) less GBP6
million (2020 - GBP8 million) of accelerated depreciation
recognised in exceptional items and GBP10 million (2020 - GBP11
million) of amortisation of acquired intangible assets.
Financial strength measures
The Group uses two financial metrics as key performance measures
to assess its financial strength. These are the net debt to EBITDA
ratio and the return on capital employed ratio. For the purposes of
KPI reporting, the Group uses a simplified calculation of these
KPIs to make them more directly related to information in the
Group's financial statements.
All ratios are calculated based on unrounded figures in GBP
million.
The net debt to EBITDA ratio is as follows:
31 March
------------
2021 2020
GBPm GBPm
Calculation of net debt to EBITDA ratio
Net debt (Note 10) 417 451
---------------------------------------------------------- ----- -----
Adjusted operating profit 339 331
Add back adjusted depreciation and adjusted amortisation 165 161
EBITDA(1) 504 492
---------------------------------------------------------- ----- -----
Net debt to EBITDA ratio (times) 0.8 0.9
---------------------------------------------------------- ----- -----
1 EBITDA is calculated as adjusted operating profit GBP339
million (2020 - GBP331 million) adding back adjusted depreciation
of GBP142 million (2020 - GBP137 million) (total depreciation of
GBP148 million (2020 - GBP145 million) less GBP6 million (2020 -
GBP8 million) of accelerated depreciation recognised in exceptional
items) and adding back adjusted amortisation of GBP23 million (2020
- GBP24 million) (total amortisation of GBP33 million (2020 - GBP35
million) less GBP10 million (2020 - GBP11 million) of amortisation
of acquired intangible assets).
The return on capital employed calculation is as follows:
31 March
---------
2021 2020 2019
GBPm GBPm GBPm
----------------------------------------------------- ------ ------ ---------
Calculation of return on capital employed (ROCE)
Adjusted operating profit 339 331
Deduct: amortisation of acquired intangible assets (10) (11)
----------------------------------------------------- ------ ------
Profit before interest, tax and exceptional items
from continuing operations for ROCE 329 320
----------------------------------------------------- ------ ------
Goodwill and other intangible assets 354 340 342
Property, plant and equipment 1 105 1 190 982
Working capital, provisions and non-debt-related
derivatives(1) 421 409 401
Invested operating capital of continuing operations 1 880 1 939 1 725
----------------------------------------------------- ------ ------ ---------
Average invested operating capital(2) 1 910 1 832
----------------------------------------------------- ------ ------
Return on capital employed (ROCE) % 17.2% 17.5%
----------------------------------------------------- ------ ------
1 All derivatives held at 31 March 2021 and 2020 were
non-debt-related derivatives. For the purpose of this calculation
other current financial assets and liabilities are also
included.
2 Average invested operating capital represents the average at
the beginning and end of the year of goodwill and other intangible
assets, property, plant and equipment, working capital, provisions
and non-debt-related derivatives.
4. Segment information
Segment information is presented on a basis consistent with the
information presented to the Board (the designated Chief Operating
Decision Maker). All revenue is from external customers.
(a) Segment results
Year ended 31 March 2021
-------------------------- ------------ -----------------------------
Food & Beverage Solutions
GBPm Primary
Sucralose Products Central Total
Continuing operations GBPm GBPm GBPm GBPm
---------------------------- -------------------------- ------------ ----------- -------- ------
Revenue 970 151 1 686 - 2 807
Adjusted operating profit* 177 55 158 (51) 339
------------------------------- -------------------------- ------------ ----------- -------- ------
Adjusted operating margin 18.3% 36.8% 9.4% n/a 12.1%
------------------------------- -------------------------- ------------ ----------- -------- ------
* Reconciled to statutory profit for the year in Note 3
Year ended 31 March 2020
-------------------------- ------------ -----------------------------
Food & Beverage Solutions
GBPm Primary
Sucralose Products Central Total
Continuing operations GBPm GBPm GBPm GBPm
---------------------------- -------------------------- ------------ ----------- -------- ------
Revenue 942 161 1 779 - 2 882
Adjusted operating profit* 162 63 158 (52) 331
------------------------------- -------------------------- ------------ ----------- -------- ------
Adjusted operating margin 17.2% 39.3% 8.9% n/a 11.5%
------------------------------- -------------------------- ------------ ----------- -------- ------
* Reconciled to statutory profit for the year in Note 3
(b) Geographic disclosures: revenue
Year ended 31
March
-----------------
Restated
2021 2020(1)
GBPm GBPm
---------------------------------------------- ------ ---------
Food & Beverage Solutions
North America 485 470
Asia, Middle East, Africa and Latin America 269 263
Europe 216 209
Food & Beverage Solutions - total 970 942
---------------------------------------------- ------ ---------
Sucralose - total 151 161
---------------------------------------------- ------ ---------
Primary Products
Americas 1 596 1 683
Rest of the World 90 96
Primary Products - total 1 686 1 779
---------------------------------------------- ------ ---------
Total 2 807 2 882
---------------------------------------------- ------ ---------
1 Comparatives have been restated following a change during the
year to the geographic Food & Beverage Solutions disclosure. To
increase our focus on building our business and presence in higher
growth markets, a new single Asia, Middle East, Africa and Latin
America region has been created comprising the regions previously
reported as Asia Pacific, Latin America and Middle East and Africa
(formerly part of Europe, Middle East and Africa).
5. Exceptional items
Exceptional (costs)/income recognised in the income statement
are as follows:
Year ended 31 March
---------------------------
2021 2020
Income statement - continuing operations Footnotes GBPm GBPm
------------------------------------------------------ ------------ ----- -----
Restructuring costs (a) (20) (19)
Exploration of potential separation of the business (b) (19) -
Historical legal matters (c) (3) -
Primary Products' savoury business exit - (5)
------------------------------------------------------ ------------ ----- -----
Exceptional items included in profit before
tax (42) (24)
------------------------------------------------------ ------------ ----- -----
US tax credit (d) 7 -
------------------------------------------------------ ------------ ----- -----
Exceptional items included in income tax 7 -
Total exceptional items (35) (24)
------------------------------------------------------ ------------ ----- -----
Set out below are the principal components of the Group's
exceptional items:
(a) The Group recorded GBP20 million of restructuring charges,
principally comprising GBP16 million of productivity costs
including accelerated depreciation of assets being replaced with
more efficient alternatives, Global Operations cost saving
initiatives and other associated project costs and GBP4 million of
severance costs for roles removed from the organisation. Of these
costs, GBP7 million was recorded in Food & Beverage Solutions,
GBP8 million was recorded in Primary Products and GBP5 million was
recorded in Central.
(b) As previously announced, the Group has undertaken work to
explore the potential to separate its Food & Beverage Solutions
and Primary Products businesses through a sale of a controlling
stake in its Primary Products business to a new long-term financial
partner. During the year ended 31 March 2021, the Group incurred
costs of GBP19 million relating to this activity, principally for
external advisors.
(c) During the year, the Group recorded a net charge of GBP3
million relating to certain historical legal matters in the US.
Included within this net cost was GBP2 million of income recorded
for the favourable settlement of an insurance claim and provision
made to settle other historical matters.
(d) The Group recorded an exceptional tax credit of GBP7 million
within tax related to the release of an uncertain tax provision in
the US, which had been recorded at the time of the Group's exit of
Sucralose manufacturing in Singapore. At that time, the costs
arising from the closure of Singapore and the associated tax were
recorded as exceptional items.
Of the net GBP35 million exceptional charge recorded during the
year ended 31 March 2021, GBP19 million was reflected in
exceptional cash flow in the current year. In addition, GBP13
million of exceptional costs recorded in the prior year resulted in
cash outflows in the current year, such that net cash outflow from
exceptional items for the year ended 31 March 2021 was GBP32
million.
The most significant exceptional cost in the prior year was
restructuring charges related to the Group's previously announced
programme to simplify the business and drive productivity. Other
exceptional costs in the prior year related to exit costs for the
Primary Products' small, non-core savoury ingredients business,
mainly comprising the cost of writing off the associated assets of
the business.
Tax credits/charges on exceptional items are only recognised to
the extent that gains/losses incurred are expected to result in tax
recoverable/payable in the future. The total tax impact of these
exceptional items included in profit before tax was a tax credit of
GBP8 million.
Cash flows from exceptional items are set out below.
Year ended 31 March
----------------------
2021 2020
Net cash (outflows)/inflows on exceptional Footnotes GBPm GBPm
items
-------------------------------------------- ----------- ---------- ----------
Restructuring charges (a) (11) (13)
Exploration of potential separation of (b) -
the business (15)
Historical legal matters (c) 1 -
Primary Products' savoury business exit - (1)
Oats ingredients business disposal - (1)
Asset remediation(1) (7) (9)
Net cash outflows (32) (24)
--------------------------------------------------------- ---------- ----------
1 Cash outflow of GBP7 million relates to utilisation of
existing provision.
Cash outflows in relation to asset remediation related to costs
to remediate environmental health and safety risks associated
primarily with idle assets at manufacturing sites in North
America.
Exceptional cash flows
The total cash outflows from exceptional items presented in the
cash flow statement of GBP10 million reflect that the exceptional
costs in profit before tax of GBP42 million were GBP10 million
higher than net cash outflows of GBP32 million set out in the table
above. In the prior year, cash flows from exceptional items were
GBP1 million in cash generated from operating activities and GBP1
million in net cash used in investing activities, as the
exceptional costs in profit before tax in total were the same as
net cash outflows.
6. Finance income and finance expense
Year ended 31 March
-------------------- ------
2021 2020
Continuing operations Note GBPm GBPm
------------------------------------------------ ------ -------------------- ------
Interest payable on bank and other borrowings (20) (26)
Fair value hedges:
- fair value loss on interest rate
derivatives - (3)
- fair value adjustment of hedged borrowings - 3
Lease interest (6) (7)
Net retirement benefit interest 11 (5) -
Finance expense (31) (33)
------------------------------------------------- ------ -------------------- ------
Finance income - income on cash balances 1 5
------------------------------------------------- ------ -------------------- ------
Net finance expense (30) (28)
------------------------------------------------- ------ -------------------- ------
7. Income tax expense
Analysis of charge for the year Year ended 31 March
----------------------
2021 2020
Continuing operations GBPm GBPm
--------------------------------------------- ---------- ----------
Current tax:
- United Kingdom (5) (8)
- Overseas (51) (42)
- Exceptional tax credit 13 3
- (Expense)/credit in respect of previous
financial years (5) 6
----------------------------------------------- ---------- ----------
(48) (41)
Deferred tax:
Credit/(expense) for the year 4 (10)
Credit/(expense) in respect of previous
financial years 12 (2)
Exceptional tax credit 2 2
Income tax expense (30) (51)
----------------------------------------------- ---------- ----------
Statutory effective tax rate % 10.9% 17.1%
----------------------------------------------- ---------- ----------
Year ended 31 March
----------------------
2021 2020
Reconciliation to adjusted income tax expense Notes GBPm GBPm
--------------------------------------------------------- -------- ---------- ----------
Income tax expense (30) (51)
Adjusted for:
Taxation credit on exceptional items (8) (5)
Taxation credit on amortisation of acquired intangibles (3) (3)
Exceptional US tax credit 5 (7) -
Adjusted income tax expense 3 (48) (59)
---------------------------------------------------------- -------- ---------- ----------
Adjusted effective tax rate % 14.3% 17.9%
---------------------------------------------------------- -------- ---------- ----------
8. Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to owners of the Company by the weighted average
number of ordinary shares in issue during the year (excluding
shares held by the Company and the Employee Benefit Trust to
satisfy awards made under the Group's share-based incentive
plans).
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares in issue assuming
conversion of potentially dilutive ordinary shares, reflecting
vesting assumptions on employee share plans, as well as the deemed
profit attributable to owners of the Company for any proceeds on
such conversions.
The average market price of the Company's ordinary shares during
the year was 679p (2020 - 733p). The dilutive effect of share-based
incentives was 5.2 million shares (2020 - 6.4 million shares).
Year ended 31 March 2021 Year ended 31 March 2020
----------------------------------- -----------------------------------
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
----------------------- ------------ ------------- ------ ------------
Profit attributable
to owners of the
Company (GBP million) 253 - 253 245 - 245
Weighted average
number of ordinary
shares (million)
- basic 464.2 - 464.2 464.2 - 464.2
Basic earnings per
share 54.4p - 54.4p 52.8p - 52.8p
Weighted average
number of ordinary
shares (million)
- diluted 469.4 - 469.4 470.6 - 470.6
Diluted earnings
per share 53.8p - 53.8p 52.1p - 52.1p
Adjusted earnings per share
A reconciliation between profit attributable to owners of the
Company from continuing operations and the equivalent adjusted
measure, together with the resulting adjusted earnings per share
measures are set out below:
Year ended 31 March
2021 2020
Continuing operations Notes GBPm GBPm
Profit attributable to owners of the Company 253 245
Adjusting items:
- exceptional items 5 42 24
- amortisation of acquired intangible
assets 10 11
- tax impact of adjusting items 7 (11) (8)
- exceptional US tax credit 5, 7 (7) -
Adjusted profit attributable to owners
of the Company 3 287 272
Adjusted basic earnings per share (pence) 61.9p 58.6p
Adjusted diluted earnings per share (pence) 61.2p 57.8p
9. Dividends on ordinary shares
Dividends on ordinary shares in respect of the financial
year:
Year ended 31 March
2021 2020
Pence Pence
Per ordinary share:
Interim dividend paid 8.8 8.8
Final dividend proposed 22.0 20.8
Total dividend 30.8 29.6
The Directors propose a final dividend for the financial year of
22.0p per ordinary share that, subject to approval by shareholders,
will be paid on 6 August 2021 to shareholders who are on the
Register of Members on 25 June 2021.
Dividends on ordinary shares paid in the financial year:
Year ended 31 March
2021 2020
GBPm GBPm
Final dividend paid relating to the prior financial
year 97 97
Interim dividend paid relating to the financial
year 40 40
Total dividend paid 137 137
Based on the number of ordinary shares outstanding at 31 March
2021 and the proposed amount, the final dividend for the financial
year is expected to amount to GBP102 million.
10. Net debt
The components of the Group's net debt are as follows:
At 31 March
2021 2020
GBPm GBPm
Borrowings (645 ) (551)
Lease liabilities (143) (171)
Cash and cash equivalents 371 271
Net debt (417) (451)
On 6 August 2020, the Group issued a US$200 million (GBP152
million) debt private placement comprising US$100 million 2.91%
notes maturing in 2030 and US$100 million 3.01% notes maturing in
2032.
In the prior year, the Group refinanced its maturing GBP200
million 6.75% bond with the proceeds from drawing down US$100
million (GBP77 million) 3.31% notes due 2029 and US$100 million
(GBP77 million) 3.41% notes due 2031, with the remaining amount
made up from cash balances.
Reconciliation of the movement in cash and cash equivalents to
the movement in net debt is as follows:
Year ended 31 March
2021 2020
GBPm GBPm
Net debt at beginning of the year (451) (504)
Net increase/(decrease) in cash and cash equivalents 135 (17)
Net (increase)/decrease in borrowings and leases (113) 114
Decrease in net debt resulting from cash flows 22 97
Currency translation differences(1) 39 (22)
Fair value and other movements - 2
Subsidiaries acquired (7) -
Leases non-cash movements (20) (24)
Decrease in net debt in the year 34 53
Net debt at end of the year (417) (451)
1 Includes the foreign currency element of the fair value
movement on cross currency swaps (2020 only) and the translation of
foreign denominated borrowings.
Movements in the Group's net debt were as follows:
Cash and cash equivalents Borrowings and lease liabilities Total
GBPm GBPm GBPm
At 1 April 2020 271 (722) (451)
Movements from cash flows 135 (113) 22
Currency translation differences (35) 74 39
Subsidiaries acquired - (7) (7)
Fair value and other movements - - -
Lease and non-cash movements - (20) (20)
At 31 March 2021 371 (788) (417)
11. Retirement benefit obligations
The Group operates a number of defined benefit pension plans,
principally in the UK and the US.
The UK plans primarily comprise funded retirement benefit plans
where plan assets were previously held separately from those of the
Group in funds that were under the control of trustees.
At 31 March 2021, the Group's retirement benefit obligations are
in a net deficit of GBP140 million (31 March 2020 - deficit of
GBP203 million). The closing total net deficit substantially
comprises the unfunded schemes in the US. In the prior year, the
main UK pension scheme was subject to a bulk annuity insurance
policy 'buy-in' and the schemes' assets were replaced with an
insurance asset matching UK scheme liabilities. The net deficit of
GBP18 million (31 March 2020 - GBP19 million) is predominantly
relating to a smaller UK plan not subject to the 'buy-in'.
The significant movements in retirement benefit obligations in
the year are as follows, each of which is recorded in other
comprehensive income and has no impact on profit and loss.
-- GBP51 million reduction in benefit obligation in the US principally from asset performance.
-- GBP101 million increase in the UK benefit obligation
principally from the impact of a lower discount rate (from 2.3% to
1.9%) and inflation increases are set-off by.
-- GBP99 million increase in market value of assets where the
'buy-in' insurance policy is valued to match the obligation
movement.
-- GBP20 million translation benefit primarily from the weaker US dollar.
Total movements are set out in the table below.
Year ended 31 March 2021
US plans US plans
UK plans (funded) (unfunded) Total
GBPm GBPm GBPm GBPm
Net deficit at 1 April 2020 (19) (43) (141) (203)
Income statement:
- current service costs - - (1) (1)
- administration costs (1) (1) - (2)
- net interest expense US plans - (1) (4) (5)
Other comprehensive income:
- actual return higher than interest
on plan assets 99 30 - 129
- actuarial (loss)/gain:
- changes in financial assumptions (107) - 7 (100)
- changes in demographic assumptions (3) 4 1 2
- experience against assumptions 9 - 9 18
Other movements:
- employer's contribution 2 2 7 11
- non-qualified deferred compensation
arrangements - (9) - (9)
- currency translation differences 2 4 14 20
Net deficit at 31 March 2021 (18) (14) (108) (140)
Following the prior year main UK plan 'buy-in', actuarial
movements recorded in other comprehensive income in relation to the
main UK plan's liabilities are matched by an equal and opposite
movement recorded in other comprehensive income on its assets. The
net GBP2 million loss recorded in other comprehensive income is in
relation to UK obligations not yet subject to the 'buy-in'.
For the main UK plan, the Group does not expect to make any
contributions during the financial year ending 31 March 2022 other
than a one-off contribution to settle a post transaction price
adjustment in respect of the bulk annuity insurance policy and
meeting ongoing administration costs. Payments to the main UK
scheme in the year ended 31 March 2021 include GBP1 million in fees
and expenses met on behalf of the scheme.
During the year ending 31 March 2022 the Group expects to
contribute approximately GBP8 million to its defined benefit
pension plans, the one-off post transaction price adjustment in
respect of the bulk annuity insurance policy and to pay
approximately GBP4 million in relation to retirement medical
benefits, principally in the US.
12. Contingent liabilities
The Group is subject to claims and litigation generally arising
in the ordinary course of its business. Provision is made when
liabilities are considered likely to arise and the expected quantum
of the exposure can be estimated reliably. The risk in relation to
claims and litigation is monitored on an ongoing basis and
provisions amended accordingly. It is not expected that claims and
litigation existing at 31 March 2021 will have a material adverse
effect on the Group's financial position.
13. Capital expenditure and commitments
In the year ended 31 March 2021, there were additions to
intangible assets (excluding goodwill and acquired intangibles) of
GBP19 million (2020 - GBP25 million) and additions to property,
plant and equipment of GBP155 million (2020 - GBP165 million).
Total commitments for the purchase of tangible and intangible
non-current assets are GBP33 million (2020 - GBP51 million).
In addition, the Group has various lease contracts that have not
yet commenced as at 31 March 2021. The future lease payments for
these non-cancellable lease contracts are GBPnil within one year,
GBP6 million within five years and GBP3 million thereafter.
Commitments in respect of retirement benefit obligations are
detailed in Note 11.
14. Acquisitions
Sweet Green Fields ("SGF")
On 30 November 2020, the Group acquired the remaining 85% of the
equity of SGF which it did not already own. Total provisional
consideration in respect of the acquisition was GBP61 million
(including the fair value of the 15% that the Group already owned).
The provisionally determined fair value of identifiable net assets
acquired was GBP25 million, resulting in provisional goodwill at
the date of acquisition of GBP36 million (which was not deductible
for tax purposes). The goodwill of GBP36 million remains
provisional subject to finalisation of the completion accounts and
working capital adjustments. The acquisition of SGF brings a broad
portfolio of stevia products and a fully integrated stevia supply
chain to the Group. It strengthens the Group's position as a
leading provider of innovative sweetener solutions. The provisional
goodwill primarily represented the premium paid to acquire an
established business with a fully integrated supply chain and
growth potential in the speciality food ingredients market.
The acquired business contributed revenue of GBP7 million and an
operating loss of GBP2 million for the period from acquisition on
30 November 2020 until the end of the 2021 financial year
(including the amortisation of acquired intangibles recognised from
the acquisition). Had the business been acquired at the beginning
of the 2021 financial year, it would have contributed revenue of
GBP41 million and an operating profit of GBPnil in the 2021
financial year.
Chaodee Modified Starch Co., Ltd ("CMS")
On 10 February 2021, the Group acquired 85% of the shares of CMS
a well-established tapioca modified food starch manufacturer
located in Thailand. Total provisional consideration in respect of
the CMS acquisition was GBP13 million. The provisionally determined
fair value of identifiable net assets acquired was GBP9 million,
resulting in provisional goodwill at the date of acquisition of
GBP4 million (which was not deductible for tax purposes). The
goodwill of GBP4 million remains provisional subject to
finalisation of the completion accounts and working capital
adjustments. This investment extends the Group's presence in
speciality tapioca-based texturants and establishes a dedicated
production facility in the main tapioca region of eastern Thailand.
The acquisition will enable the Group to offer a broader range of
tapioca-based solutions. The provisional goodwill primarily
represented the premium paid to acquire an established business
with a manufacturing plant which has the potential for
modernisation and expansion.
The acquired business contributed revenue and operating profit
that was immaterial to the Group.
The Group has elected to measure the non-controlling interests
in the acquiree at fair value.
The following table provides a summary of the acquisition
accounting for Sweet Green Fields:
Sweet Green
Fields
GBPm
Cash consideration 50
Non-cash consideration (fair value of existing interest in
SGF) 11
Purchase price adjustments -
Total consideration 61
Less: fair value of net assets acquired 25
Provisional goodwill 36
Cash flows:
Total cash consideration (including purchase price adjustments) (50)
Less: net cash and working capital adjustments 1
Acquisition of business, net of cash acquired (49)
The fair value of net assets recognised on acquisition is
comprised as follows:
Sweet Green
Fields
GBPm
Intangible assets (customer relationships GBP2
million, intellectual property GBP16 million) 18
Property, plant and equipment 13
Inventories 20
Trade and other receivables 10
Cash and cash equivalents 1
Trade and other payables (26)
Borrowings (7)
Tax liabilities (4)
Net assets at fair value on acquisition 25
15. Events after the balance sheet date
There are no post balance sheet events requiring disclosure in
respect of the year ended 31 March 2021.
ADDITIONAL INFORMATION
FOR THE YEAR ENDED 31 MARCH 2021
Calculation of changes in constant currency
Where changes in constant currency are presented in this
statement, they are calculated by retranslating current year
results at prior year exchange rates. The following table provides
a reconciliation between the 2021 performance at actual exchange
rates and at constant currency exchange rates. Absolute numbers
presented in the tables are rounded for presentational purposes,
whereas the growth percentages are calculated on unrounded
numbers.
2021 Change
at constant Underlying in
2021 FX currency growth 2020 Change constant
Adjusted performance GBPm GBPm GBPm GBPm GBPm % currency
Continuing operations %
Revenue 2 807 91 2 898 16 2 882 (3%) 1%
Food & Beverage Solutions 177 4 181 19 162 10% 12%
Sucralose 55 2 57 (6) 63 (12%) (9%)
Primary Products 158 9 167 9 158 (1%) 5%
Central (51) (1) (52) - (52) 1% -%
Adjusted operating
profit 339 14 353 22 331 2% 7%
Net finance expense (30) - (30) (2) (28) (7%) (9%)
Share of profit after
tax of joint ventures 26 3 29 1 28 (6%) 7%
Adjusted profit before
tax 335 17 352 21 331 1% 6%
Adjusted income tax
expense (48) - (48) 11 (59) 19% 19%
Adjusted profit after
tax 287 17 304 32 272 6% 12%
Adjusted diluted
EPS (pence) 61.2p 3.6p 64.8p 7.0p 57.8p 6% 12%
Impact of changes in exchange rates
The Group's reported financial performance at average rates of
exchange for the year ended 31 March 2021 was unfavourably impacted
by currency translation. The average and closing US dollar and euro
exchange rates used to translate reported results were as
follows:
Average rates Closing rates
Year ended 31 March 2021 2020 2021 2020
US dollar : sterling 1.31 1.27 1.38 1.25
Euro : sterling 1.12 1.14 1.17 1.13
For the year ended 31 March 2021, net foreign exchange
translation decreased Food & Beverage Solutions adjusted
operating profit by GBP4 million, decreased Sucralose adjusted
operating profit by GBP2 million and decreased Primary Products
adjusted operating profit by GBP9 million, with adjusted profit
before tax for the Group decreasing in total by GBP14 million.
The sensitivity of the Group's results to changes in US dollar
currency translation rates for the year ending 31 March 2022 is
expected to be around GBP2.6 million for the annual impact of a one
cent change on adjusted profit before tax.
Change to Food & Beverage Solutions regional disclosure
following creation of new single Asia, Middle East, Africa and
Latin America region
During the year and as previously announced, to increase our
focus on building our business and presence in higher growth
markets, a new single Asia, Middle East, Africa and Latin America
region has been created comprising the regions previously reported
as Asia Pacific, Latin America and Middle East and Africa (formerly
part of Europe, Middle East and Africa). The Segmental Operating
Performance on pages 7 and 8 has adopted this revised disclosure
model. The divisional results for the year ended 31 March 2021 have
been provided under the previous disclosure model below.
Year ended 31 March 2021 Volume Revenue Revenue
change GBPm growth
North America +4% 485 +6%
Asia Pacific and Latin
America +3% 221 +9%
Europe, Middle East and
Africa +3% 264 +1%
------- ------- -------
Food & Beverage Solutions +3% 970 +6%
------- -------
Revenue growth percentages are calculated on unrounded numbers
and in constant currency.
RATIO ANALYSIS
31 March 31 March
2021 2020
Net debt to EBITDA
= Net debt 417 451
EBITDA 504 492
= 0.8 times = 0.9 times
Earnings dividend cover
= Adjusted basic earnings per share from continuing
operations 61.9 58.6
Dividend per share 29.6 29.6
= 2.1 times = 2.0 times
Cash dividend cover
= Adjusted free cash flow from continuing operations 250 247
Cash dividends 137 137
= 1.8 times = 1.8 times
Return on capital employed
= Profit before interest, tax and exceptional items
from continuing operations 329 320
Average invested operating capital from continuing
operations 1 910 1 832
= 17.2% = 17.5%
Gearing
= Net debt 417 451
Total equity 1 460 1 399
= 29% = 32%
All ratios are calculated based on unrounded figures in GBP
million. Net debt to EBITDA, Adjusted free cash flow, Average
invested operating capital and Return on capital employed are
defined and reconciled in Note 3 of the attached financial
information.
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END
FR PPUMCAUPGGRQ
(END) Dow Jones Newswires
May 27, 2021 02:00 ET (06:00 GMT)
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