TIDMTATE
RNS Number : 2817R
Tate & Lyle PLC
04 November 2021
Half year results for six months to 30 September 2021
Thursday 4 November 2021
Strategic transformation progressing well; strong growth in Food
& Beverage Solutions
Headlines
-- Group delivered strong H1 performance
-- Double-digit revenue growth in Food & Beverage Solutions
-- New Products revenue growth acceleration
-- Effective management of cost inflation through productivity, cost discipline and pricing
-- Delivered environmental commitment to eliminate use of coal
in all operations four years ahead of target
-- Transaction to create two focused businesses on track for
completion in Q1 of 2022 calendar year
-- Strong platform for growth as a focused Food & Beverage Solutions business
Financial highlights(1)
Continuing operations (new Tate & Lyle)
-- Revenue +19%; profit before tax +20%
- Food & Beverage Solutions revenue +19%
- New Products revenue +48%
- Sucralose revenue +17%
-- Adjusted diluted EPS + 25%
Discontinued operations (2) (NewCo)
-- Adjusted profit after tax ( 12)% lower
Total operations (Tate & Lyle Group)
-- Statutory profit after tax (23)% low er at GBP 102m with
exceptional costs of GBP67m partially offset by benefit of GBP25m
held for sale accounting adjustments
-- Adjusted diluted EPS +3% higher at 29.8p
-- Free cash flow GBP67m lower at GBP127m, net debt GBP8m lower at GBP409m
-- Interim dividend increased by 2.3% to 9.0p
Nick Hampton, Chief Executive said
"In a year of significant change as we re-position Tate &
Lyle as a growth-focused speciality food and beverage solutions
business, the Group delivered strong first half performance despite
inflationary headwinds. Food & Beverage Solutions had an
excellent half and we made good progress on the priorities we set
out at the start of the year.
Consumer demand for healthier food and drink continues to
strengthen across our markets and this was reflected in the
performance of Food & Beverage Solutions which delivered strong
volume and double-digit revenue growth across all regions. Our
investment in innovation and focus on working more closely with
customers continues to generate excellent results with revenue from
New Products 48% higher.
The strategic transformation we announced in July is progressing
well and we remain on course to complete the sale of a controlling
stake in our Primary Products business in the Americas in the first
quarter of 2022.
The strong performance of Food & Beverage Solutions
underpins Tate & Lyle's future potential as a growth-focused
speciality food and beverage solutions business. The new Tate &
Lyle is very well-positioned to deliver on its five-year ambition
for mid single-digit organic revenue growth and annual operating
margin expansion of at least 50 to 100 basis points per year,
supported by increased investment in innovation and a strong
balance sheet to fund both organic growth and M&A.
We are entering a new, ambitious and exciting chapter for Tate
& Lyle and I look forward to the future with great
optimism."
---------------------------------------------------------------------------------------------------------------------------
1 Adjusted metrics percentage changes are in constant
currency
2 Defined as the "Disposed Primary Products business" in this
statement. Adjusted to exclude impact of exceptional items and IFRS
5 held for sale accounting.
Financial Summary
Proposed sale of a controlling stake in Primary Products and
associated reporting changes
On 12 July 2021, we announced we had entered into an agreement
to sell a controlling stake in a new company and its subsidiaries
which will hold the Primary Products business in North America and
Latin America and its interests in the Almidones Mexicanos S.A de
C.V and DuPont Tate & Lyle Bio-Products Company, LLC joint
ventures (together, 'NewCo') to KPS Capital Partners, LP (the
'Transaction'). From July, NewCo has been classified as held for
sale and met the definition of a discontinued operation in
accordance with IFRS 5. As a result, NewCo is required to be
treated as a discontinued operation for all of the year ending 31
March 2022. This classification has been adopted in this half-year
results statement. The continuing operations comprise: Food &
Beverage Solutions (into which the European Primary Products
business, which is not part of the Transaction, and some stranded
costs have been combined); Sucralose; and Central costs. The
results for comparative periods have been restated on a consistent
basis.
Summary of results for six months ended 30 September 2021
Adjusted results(1) Statutory results
2021 2020 vs 2020 2021 2020 vs 2020
Continuing operations
Revenue GBP656m GBP592m +19% +11%
Profit before tax GBP85m GBP78m +20% GBP21m GBP58m (64%)
Diluted earnings per
share 14.4p 12.9p +25% 2.5p 9.6p (74%)
Discontinued operations
Profit after tax GBP72m GBP90m (12%) GBP90m GBP88m +3%
Total operations
Diluted earnings per
share 29.8p 32.1p +3% 21.7p 28.4p (24%)
Free cash flow GBP127m GBP194m GBP(67)m
Net debt (vs. at 31 GBP409m GBP417m
March 2021)
Dividend per share 9.0p 8.8p +2.3%
-------- -------- --------- ------- ------- --------
1 The adjusted results for the six months to 30 September 2021
exclude exceptional items, amortisation of acquired intangible
assets, the tax on those adjustments and tax items that are
themselves exceptional. The adjusted results of discontinued
operations have also been adjusted to exclude the impact of IFRS 5
held for sale accounting. A reconciliation of statutory and
adjusted information is included in Note 2 and Note 6 to the
Financial Information. Growth percentages are calculated on
unrounded numbers. Changes in adjusted performance metrics are in
constant currency throughout this statement.
2 Adjusted operating profit
Continuing operations (new Tate & Lyle)
-- Food & Beverage Solutions:
- Volume +9% with a particularly strong performance from Asia,
Middle East, Africa and Latin America
- Revenue +19% with double-digit organic growth across all regions; 3ppts from acquisitions
- New Products revenue +48% reflecting strong customer demand for sugar reduction solutions
- Profit(2) +9% higher with benefit of positive mix and some reinvestment in future growth
o Profit(2) +2% higher at GBP83m when including lower
performance from Primary Products Europe
-- Sucralose:
- Volume +23% led by strong demand in beverages and phasing of
customer orders into the first half
- Revenue +17% with higher volume partially offset by customer mix and modest pricing pressure
- Profit(2) +34% at GBP31m
-- Adjusted profit before tax +20%; Adjusted diluted EPS +25%
Discontinued operations (NewCo)
-- Volume up +3% as out-of-home consumption continued to recover; strong industrial starch growth
-- Profit(2) (10)% lower at GBP74m
- Sweeteners & Starches profit(2) down (13)% due to cost
inflation and operational and supply chain disruption
- Commodities profit(2) 4% higher reflecting good market conditions at the start of the period
Total operations (Tate & Lyle Group)
-- Adjusted diluted EPS +3%
-- GBP26m cost inflation mitigated to GBP2m net of GBP10m of
pricing and GBP14m of productivity benefits
-- Adjusted free cash flow GBP(67)m lower due to GBP54m higher
working capital from higher revenue and corn price
-- Net debt GBP 8m lower at GBP409m; Net Debt to EBITDA ratio 0.8x
-- Interim dividend increased by 2.3% to 9.0p
Outlook for Year Ending 31 March 2022
We continue to work on completing the sale of a controlling
interest in the Primary Products business in the Americas and
certain joint venture interests to KPS Capital Partners, LP in the
first quarter of the 2022 calendar year. For the purposes of
providing an outlook, we are assuming completion of the transaction
on 31 March 2022.
On that basis , for the year ending 31 March 2022 we expect:
Continuing operations (new Tate & Lyle)
-- Food & Beverage Solutions to deliver another year of progress
-- Sucralose profit to be ahead of the prior year
-- Growth in adjusted profit before tax in constant currency to
be in the high single-digit percent range
Discontinued operations (NewCo)
-- Sweeteners and Starches adjusted operating profit to be below
the prior year and Commodities profit to be significantly lower
Total operations (Tate & Lyle Group)
-- Change in adjusted diluted earnings per share in constant
currency to be mid-single digits percent lower due to the
performance of discontinued operations and expected cost
inflation.
Overview of the Half-Year
Business environment and trading
The Group benefitted from an improved trading environment while
having to navigate changing demand patterns, disruption to
international supply chains, evolving Covid-19 restrictions and
cost inflation. Performance was in line with our expectations at
the start of the 2022 financial year although the divisional mix
was different than anticipated with stronger profit growth in Food
& Beverage Solutions and Sucralose offsetting lower profits
from Primary Products.
Food & Beverage Solutions saw strong demand as in-home
consumption remained robust and out-of-home consumption continued
to recover. Each region delivered strong volume and double-digit
revenue growth. The business continues to benefit from increasing
consumer awareness of the importance of a healthier diet. With its
broad portfolio and technical capabilities in sweetening, mouthfeel
and fortification, Food & Beverage Solutions provides customers
with solutions to reduce sugar, calories and fat, and add fibre to
their products. These capabilities, together with good commercial
execution, supported strong top-line delivery in the half.
In Sucralose, recovering out-of-home consumption led to strong
volume growth in beverages. The business benefitted from phasing of
customer orders into the half which we expect will mostly unwind in
the second half.
In discontinued operations, lower sweetener volume caused by
short-term operational disruption from the installation of new gas
turbines at our facility in Lafayette, Indiana to increase
long-term efficiency and environmental performance, together with
cost inflation, resulted in lower profits in Primary Products.
Industrial starches performed very well with higher volume from
continued growth in the sustainable plant-based packaging
market.
Across the business we saw cost inflation totaling GBP26 million
in the first half in areas such as energy, labour, consumables and
transportation. This was mitigated by productivity benefits of
GBP14 million, pricing of GBP10 million and cost discipline. We
expect cost inflation to increase in the second half and to be
partially mitigated through a combination of the same actions, with
pricing playing a greater role, particularly in the fourth quarter
reflecting the annual contracting cycle.
Delivering strategic progress in Food & Beverage
Solutions
Food & Beverage Solutions made good progress delivering its
strategy and working closely with customers on reformulating
existing products and launching new products. During the half:
-- Food & Beverage Solutions delivered double-digit revenue growth in each region
-- New Product revenue increased by 48% in constant currency
-- New Products represented 14% of Food & Beverage Solutions revenue
-- The value of the new business pipeline increased by 4%
-- The risk adjusted value of the innovation pipeline grew by 2%
-- Integration of the acquisitions of stevia and tapioca
businesses in H2 of fiscal 2021 progressed well.
Growth within Food & Beverage Solutions is being driven by
delivery of its strategic growth framework which is centered on
four pillars - market focus; portfolio expansion; accelerating
innovation; and integrated solutions for customers. Progress in
each pillar in the half is summarised below.
Market focus
Our aim is to maximise opportunities in developed markets and
accelerate growth in the faster growing markets of Asia, Middle
East, Africa and Latin America. We focus on three global categories
- dairy, beverage, and soups, sauces and dressings - as well as two
or three regional categories where we have local expertise such as
bakery and snacks. This category focus, combined with expertise in
sweetening, mouthfeel and fortification, provides a unique and
attractive offering for customers. In North America, revenue from
bakery and snacks grew by 32% and from beverages by 17% supported
by strong demand for fibre and stevia solutions, respectively. In
Asia, revenue from soups, sauces and dressings grew by 16%, while
in Latin America we saw double-digit revenue growth in all three
global categories.
We continue to invest in both infrastructure and capabilities to
support our customers particularly in higher growth markets. In
October, we opened a new Application Technical Centre in Dubai to
serve customers in the Middle East, Turkey and Africa region, where
consumer demand for healthier food and drink is increasing. The
Centre's state-of-the-art technology will speed up the innovation
process for customers and increase their speed to market. It will
also support a new initiative we have launched - The Middle East
Sugar and Calorie Reduction Knowledge Building Programme - together
with the UAE Food & Beverage Manufacturers Group.
Portfolio expansion
The integration of the two acquisitions we made at the end of
the 2021 financial year (Sweet Green Fields, a leading global
stevia solutions business, and Chaodee Modified Starch Co., Ltd. a
speciality tapioca food starch business in Thailand) is progressing
well. Our expanded stevia business is performing very well with
revenue more than doubling. To meet growing customer demand for
stevia solutions, we are investing in our stevia facility in Anji,
China to increase extraction capacity and to install new
environmental equipment. We are also increasing the capacity of our
stevia production line in the US. The capital investment programme
to significantly increase capacity over the next three years for
higher functionality tapioca starches at our facility in Thailand
is progressing as planned.
We strengthened our sweetener platform with two New Product
launches including PUREFRUIT(TM) Monkfruit Juice Concentrate. We
also strengthened our health and wellness platform through a new
distribution agreement for chickpea protein and flour with
Nutriati, a US-based company.
Accelerate Innovation
We continue to increase our investment in R&D, both by
building on our strong in-house scientific expertise and with
external partners through open innovation. New Product revenue grew
by 48% with the sweetener platform delivering exceptionally strong
performance with revenue nearly three times higher driven mainly by
demand for stevia solutions. Revenue in the health & wellness
platform grew by 23% with good demand in the sports nutrition
category while revenue from texturants grew by 9%.
Our increased focus on open innovation is unlocking exciting new
ideas and opportunities. We are seeing good progress in our
partnership with Zymtronix (US), an early-stage company developing
enzyme immobilization technologies used to enhance the efficiency
of production processes. We formed a new partnership with TNO in
the Netherlands to explore the use of 3D food digital technology to
deliver personalised food and nutrition choices for consumers. We
also extended our existing work with APC Microbiome Ireland to
undertake scientific research on the potential metabolic health
benefits of combining dietary fibre with certain bacterial
strains.
Integrated Solutions
We continue to focus on creating integrated solutions for
customers to strengthen our position as their partner for growth.
Our deep understanding of how ingredients interact across the food
matrix in our core categories, together with our leading product
portfolio and technical expertise, mean we can provide customers
with a unique solutions' offering. To further strengthen our
offering, we are increasing our investment in category and consumer
insights, for example through the establishment of a new position
of Global Head of Marketing and Insights, as well as strengthening
our customer-facing applications teams across our regions.
In April, to support our solutions offering, we launched the
Stabiliser University(TM), an online modular course designed to
help formulators and food scientists solve even the toughest
stabiliser formulation challenges. This follows the success of
three other curriculums - Texture University(TM), Sweetener
University(TM) and Fibre University(TM) - which have attracted
thousands of attendees worldwide.
Delivering on our near-term priorities
We are successfully delivering on the four near-term priorities
we set out as we entered the year.
Looking after our colleagues and communities
-- Established new Employee Resource Group focused on providing
support and information on mental health.
-- Partnered with the China Foundation for Poverty Alleviation
to provide children in nine schools with a nutritious daily meal,
nutrition education and to install modern kitchen equipment in the
school canteens.
-- Created a new role of Chief Equity, Diversity & Inclusion Officer.
-- Covid-19 safety protocols in place at all our sites to ensure
the workplace is as safe as possible for our people.
Strengthen our relationships with customers
-- Continued to stay very close to our customers by using
technology and increasingly by meeting in person.
-- All our manufacturing facilities remained operational and our
customers served during the pandemic.
-- Partnered with Nutrição em Pauta, a leading nutrition
education platform in Brazil, the Brazilian Society for Food and
Nutrition and Coca-Cola, to offer health and food industry
professionals a free-to-access digital course to explain the
origins, safety and efficacy of low and no calorie sweeteners.
-- Partnered with the Kellogg's Nutrition and Health Institute
to launch an online course to share the latest science on dietary
fibres with health clinicians, nutritionists, and industry
professionals in Latin America.
Continue to progress our strategy
-- Announced transaction to re-position Tate & Lyle as a
growth-focused global food and beverage solutions business through
the sale of a controlling stake in Primary Products in the Americas
and certain joint ventures. This transaction is explained in more
detail later in this statement.
-- Further information on how we are progressing our strategy is
set out in the "Delivering strategic progress in Food &
Beverage Solutions" section in this statement.
Maintaining our financial strength
-- Robust financial position and strong balance sheet. No
employees furloughed or government aid sought.
-- Continued to execute against productivity programme to
deliver US$150 million benefits over a six-year period ending 31
March 2024 with US$20 million of benefits delivered in the half. Of
this US$14 million was realised from projects in our operations and
US$6 million from SG&A savings.
-- Total benefits since start of programme are US$144 million,
coming from areas including capital investments to reduce costs,
supply chain efficiencies and SG&A savings.
Caring for our Planet - eliminating the use of coal from our
operations
In May 2020 we announced a set of ambitious environmental
targets for 2030 to significantly reduce our absolute 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.
During the half, we completed projects to replace coal boilers
with natural gas fired heat and power systems at our plants in
Lafayette, Indiana and Decatur, Illinois. Both projects were part
of a multi-year US$150 million capital investment programme to
reduce greenhouse gas emissions and increase operational efficiency
in our plants. With the completion of these projects, we delivered
on our commitment, four years ahead of schedule, to eliminate the
use of coal in all our operations.
We also launched a new sustainability programme for stevia
farmers in Eastern China, developed with the environmental charity
Earthwatch and Nanjing Agricultural University, to help growers
lower their environmental impact and improve their economic
returns.
Changes to Executive Management
William 'Bill' Magee was appointed as President, North America,
Food & Beverage Solutions, and as a member of Tate & Lyle's
Executive Committee, with effect from 1 October 2021. Bill joined
Tate & Lyle in 2018 and had previously served as Senior Vice
President and General Manager, North America, Food & Beverage
Solutions.
Re-positioning Tate & Lyle as a growth-focused business
On 12 July 2021, we announced we had entered into an agreement
to sell a controlling stake in the Primary Products business in
North America and Latin America and certain joint ventures
interests ("NewCo" or the "NewCo Business") to KPS Capital
Partners, LP (the "Transaction"). Full details of the Transaction
are set out in the circular to shareholders posted on 13 September
2021 (the "Circular"), a copy of which is available on the
company's website.
Growth-focused speciality food and beverage solutions
business
The Transaction re-positions Tate & Lyle as a leading global
food and beverage solutions business focused on faster growing
speciality markets with the opportunity to, firstly, benefit from
growing global consumer demand for healthier food and drink a trend
which the global pandemic is accelerating; secondly, to accelerate
growth through a step-up in R&D investment and innovation; and
thirdly to increase the focus on solutions development to support
and strengthen customer relationships. Tate & Lyle's ambition
over the five years following completion of the Transaction is to
increase R&D spend to more than 4% of Food & Beverage
Solutions revenue per annum, and to grow revenue from New Products
to around 20% of Food & Beverage Solutions revenue by the 2026
financial year.
With increased focus, positive top-line momentum, and our plans
to increase investment in innovation, we are confident we have a
strong platform in place from which to sustainably accelerate
organic growth. Our ambition for the five years following
completion is to deliver:
-- Organic revenue growth of mid single-digit percent per annum
-- Operating margin expansion of at least 50 to 100 basis points per annum
-- Organic return on capital employed improvement of 50 basis points per annum on average.
The performance of Food & Beverage Solutions over the three
years ended 31 March 2021 (compound annual revenue growth of 4%)
and in the first half of the 2022 financial year (19% revenue
growth), supports this ambition and demonstrates the potential of
Food & Beverage Solutions as a growth-focused business.
Progress towards completion
Completion of the Transaction is subject to various conditions.
Progress on key areas include:
i) Approval of shareholders was received at a General Meeting
held on 30 September 2021. The ordinary resolution was passed with
99.9% of the votes cast in favour.
ii) Anti-trust clearance from five out of the six the relevant
jurisdictions has been received to-date.
iii) The legal restructuring required to separate the NewCo
Business from Tate & Lyle is proceeding as planned.
iv) The information technology separation to enable both Tate
& Lyle and NewCo to report financially on a standalone basis
from completion is also on track.
We remain on track to complete the Transaction in the first
quarter of the 2022 calendar year.
Dividend
The Board has approved an increase in the interim dividend for
the six months to 30 September 2021 of 0.2p to 9.0p. This will be
paid on 5 January 2022 to all shareholders on the Register of
Members on 26 November 2021. As well as the cash dividend option,
shareholders will be offered a Dividend Reinvestment Plan
alternative.
As set out in the Circular, consistent with the sale of a
controlling stake in NewCo, it is intended to reduce the dividend
to reflect the earnings base of the re-focused Tate & Lyle. The
pay-out ratio (excluding any NewCo earnings) is expected to be
maintained and the dividend per share reduced by around 50%, before
the impact of the share consolidation. Following payment of the
intended special dividend of around GBP500 million and the
associated share consolidation, it is intended that a progressive
dividend policy will be maintained.
With completion of the Transaction expected on or before 31
March 2022, it is expected that the final dividend for the 2022
financial year will be re-based.
Operating Performance - Continuing Operations (New Tate &
Lyle)
Six months to 30 September Volume Revenue Revenue Adjusted Adjusted
2021 change growth operating operating
profit profit
change
-------- -------- -------- ----------- -----------
North America +4% GBP260m +19% - -
Asia, Middle East, Africa
and
Latin America +19% GBP151m +20% - -
Europe(1) +9% GBP167m +18% - -
-------- -------- -------- ----------- -----------
Food & Beverage Solutions +9% GBP578m +19% GBP83m +2%
-------- ----------- -----------
Memo: Food & Beverage
Solutions (before reporting
changes) +10% GBP528m +19% GBP98m +9%
-------- ----------- -----------
Sucralose +23% GBP78m +17% GBP31m +34%
Central costs GBP(17)m +25%
-------- -------- ----------- -----------
Total - Continuing operations GBP656m +19% GBP97m +18%
------------------------------- -------- -------- -------- ----------- -----------
The adjusted results for the six months to 30 September 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 2 to the
Financial Information. Growth percentages are calculated on
unrounded numbers. Changes in revenue and adjusted operating profit
are in constant currency.
1 Includes loss from the retained Primary Products Europe
business for the six months to 30 September 2021 GBP(11) million
loss (2020 - loss of GBP(4) million) and cost re-allocations
(stranded costs) of GBP(4) million (2020 - GBP(4) million).
FOOD & BEVERAGE SOLUTIONS
Excellent top-line growth
Volume increased by 9% with revenue 19% higher in constant
currency at GBP578 million. Customer demand for ingredients used
for in-home consumption, such as packaged and shelf-stable foods,
remained strong, supplemented by increasing demand for ingredients
used in food and drink consumed out-of-home. Consumer demand for
healthier food and beverages that are lower in sugar and calories,
with cleaner labels and added fibre, also continued to grow. Strong
mix management, together with the pass through of higher corn costs
contributed 7ppts of price/mix leverage. Acquisitions contributed
3ppts to revenue growth.
Looking through the impact of the Covid-19 pandemic and before
the impact of reporting changes, compared to the six months to 30
September 2019, volume was 11% higher and revenue 21% higher.
Adjusted operating profit was 2% higher in constant currency at
GBP83 million with the benefit of strong mix management, strong
cost discipline and productivity benefits mitigated by selected
investments in future growth. As a result of the transaction to
sell a controlling stake in the Primary Products business in the
Americas, Primary Products Europe is now included in the Food &
Beverage Solutions division. Operating losses in the European
Primary Products business increased by GBP7 million to GBP11
million reflecting the impact of higher corn costs and low sugar
pricing. Excluding this, adjusted operating profit for the division
was 9% higher in constant currency. The effect of currency
translation decreased revenue by GBP39 million and adjusted
operating profit by GBP8 million.
North America
Top-line momentum continued with volume 4% higher as strong
demand for in-home consumption continued supported by improving
out-of-home demand, especially for customers in the food service
channel. Demand for solutions which make food and beverage
healthier remained strong in our focus categories in the North
American market, driving volume growth well ahead of the overall
food and beverage market which remained in line with the
comparative period. Growth was driven by strong performance across
categories such as beverage, confectionery and nutrition and
bakery, especially for solutions using our fibre portfolio.
Revenue was 19% higher in constant currency at GBP260 million.
Significant volume growth to revenue growth leverage reflects good
mix with particularly strong growth from the fibre portfolio and
New Products, the impact of acquisitions and the pass through of
higher corn costs. Revenue for New Products increased by more than
50% in North America in the half, with high customer demand for
stevia and allulose sweeteners.
Asia, Middle East, Africa and Latin America
Volume was 19% higher reflecting double-digit growth in each
sub-region, the impact of acquisitions and a comparative period
impacted by the pandemic. Revenue increased by 20% in constant
currency to GBP151 million. Revenue growth was strong in each
sub-region with especially strong growth in Latin America.
In Asia, revenue growth was strong in South East and North Asia.
In China, we saw strong revenue growth in stevia while overall
revenue was lower reflecting a strong comparative. In Latin
America, sugar reduction solutions for customers addressing new
front-of-pack labelling rules accelerated growth in the Mexico and
Central American region, while growth was also strong in Southern
Latin America driven by strong stevia performance. In Brazil,
revenue was slightly lower. In Middle East and Africa, revenue grew
strongly reflecting good performance in Turkey and North West
Africa and strong demand for texturants.
Europe
Volume was 9% higher. Revenue for the region was GBP167 million
including GBP50 million from the retained European Primary Products
business. Revenue was 18% higher in constant currency both before
and after the inclusion of the European Primary Products business.
Revenue growth benefited from strong performance in the beverage,
bakery and confectionary categories and a comparative period
impacted by pandemic lockdowns.
New Products
Revenue from New Products (products launched in the last seven
years) increased by 48% in constant currency to GBP80 million,
representing 14% of Food & Beverage Solutions revenue (after
inclusion of Primary Products Europe), with revenue growth across
the three platforms of sweeteners, texturants and health &
wellness. Acquisitions, particularly the Sweet Green Fields stevia
business, helped to accelerate New Product revenue growth.
The sweeteners platform delivered exceptionally strong
performance with revenue nearly three times higher in the half
driven mainly by demand for stevia solutions. Stevia is an
important natural sweetening ingredient for customers and consumers
and our stevia solutions are used to reduce sugar and calories in
products across a range of categories such as beverage, dairy,
confectionery and bakery. Excluding acquisitions, revenue from the
sweetener platform doubled. Revenue in the health & wellness
platform also grew strongly reflecting strong demand in the sports
nutrition category.
SUCRALOSE
Robust demand
Sucralose volume increased by 23% with strong customer demand in
the beverage category as out-of-home consumption recovered and
customers phased orders into the first half.
Revenue increased by 17% in constant currency to GBP78 million
reflecting strong volume growth partially offset by the impact of
customer mix and modest pricing pressure. In the second half of the
2022 financial year, we expect the impact of customer order phasing
to mostly unwind and further modest pricing pressure to
continue.
Looking through the impact of the Covid-19 pandemic, compared to
a comparative period for the six months to 30 September 2019,
volume was 21% higher and revenue 14% higher.
Adjusted operating profit at GBP31 million was 34% higher in
constant currency reflecting both operational leverage of higher
revenue and one-off production costs incurred in the comparative
period. Currency translation decreased revenue by GBP7 million and
adjusted operating profit by GBP3 million.
Operating Performance - Discontinued Operations (NewCo)
Six months to 30 September Volume Revenue Revenue Adjusted Adjusted
2021 change growth operating operating
profit(1) profit
change
-------- -------- -------- ----------- -----------
Sweeteners and Starches(2) - - - GBP60m (13% )
Commodities - - - GBP14m +4%
-------- -------- -------- ----------- -----------
Primary Products +3% GBP891m +22% GBP74m (10%)
Memo: Primary Products
(before reporting changes) +3% GBP941m +22% GBP59m (19%)
----------------------------- -------- -------- -------- ----------- -----------
The adjusted results for the six months to 30 September 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 6 to the
Financial Information. Growth percentages are calculated on
unrounded numbers. Changes in revenue and adjusted operating profit
are in constant currency.
1 Adjusted results for discontinued operations have also been
adjusted to exclude the impact of IFRS 5 'held for sale'
accounting.
2 Excludes Primary Products Europe, which has been retained.
Reflects cost re-allocations (stranded costs) transferred to Food
& Beverage Solutions reflecting separation of the businesses
see Note 3.
Resilient performance
Volume was 3% higher with sweetener volume 1% lower and
industrial starch volume 22% higher. Sweetener volume benefited
from improved out-of-home demand for beverages but was impacted by
operational and supply chain disruption. Industrial starch volume
benefited from its strategy to focus on packaging markets as well
as a weak comparative period impacted by Covid-19. Revenue at
GBP891 million increased by 22% in constant currency reflecting
higher volume, the pass through of higher corn costs and
significantly higher revenue from Commodities due to higher
co-product prices.
Looking through the impact of the Covid-19 pandemic and before
reporting changes, compared to the six months to 30 September 2019,
volume was 5% lower and revenue 15% higher.
Adjusted operating profit was 10% lower in constant currency at
GBP74 million. Adjusted operating profit in Sweeteners and Starches
was 13% lower in constant currency reflecting costs associated with
productivity related operational disruption at our Lafayette,
Indiana facility of GBP6 million and input cost inflation. Benefits
from the productivity programme also supported financial
performance. Profit for the period was also lower as the
comparative period benefited from transactional foreign exchange in
Latin America of GBP3 million. Commodities adjusted operating
profit at GBP14 million was 4% higher in constant currency.
Currency translation decreased revenue by GBP84 million and
adjusted operating profit by GBP8 million.
Sweeteners
Volume was 1% lower with out-of-home consumption continuing to
recover after declining during Covid-19 lockdowns mitigated by the
impact of operational disruption. While out-of-home consumption
continues to recover, demand in that channel remains below
pre-pandemic levels.
Industrial Starches
Volume was 22% higher as demand for paper and packaging
recovered compared to weak demand in the comparative period. Our
strategy to partner with customers focused on more sustainable,
plant-based packaging delivered growth ahead of the market.
Commodities
Commodities delivered adjusted operating profit of GBP14
million, 4% higher in constant currency. As we entered the period,
market conditions remained good and co-product recoveries high,
with market conditions and co-product recoveries weakening as the
half progressed.
Additional Commentary in Financial Statements
Constant
Restated* currency
Six months to 30 September (1) 2021 2020 Change change
Continuing operations GBPm GBPm % %
------------------------------------------- ------ ---------- ------- ----------
Revenue 656 592 11% 19%
Adjusted operating profit(2)
- Food & Beverage Solutions 83 90 (7% ) 2%
- Sucralose 31 25 22% 34%
- Central (17) (24) 27% 25%
------- ----------
Adjusted operating profit 97 91 6% 18%
Net finance expense (12) (13) 5% (3% )
Adjusted profit before tax 85 78 8% 20%
Exceptional items (59) (15) (>99%) (>99%)
Amortisation of acquired intangible
assets (5) (5) (5% ) (11% )
Profit before tax 21 58 (64%) (41%)
Income tax expense(3) (9) (13) 26% 23%
------------------------------------------- ------ ----------
Profit for the period - continuing
operations 12 45 (74%) (46%)
Profit for the period - discontinued
operations 90 88 3% 12%
Profit for the period - total operations 102 133 (23%) (8%)
Earnings per share (pence) - continuing
operations
Adjusted diluted 14.4p 12.9p 11% 25%
Diluted 2.5p 9.6p (74% ) (46% )
------------------------------------------- ------ ---------- ------- ----------
Earnings per share (pence) - total
operations
Adjusted diluted 29.8p 32.1p (7%) 3%
Diluted 21.7p 28.4p (24%) (8%)
------------------------------------------- ------ ---------- ------- ----------
Cash flow and net debt - total operations
Adjusted free cash flow 127 194
Net debt - At 30 September (comparative
31 March 2021) 409 417
------------------------------------------- ------ ---------- ------- ----------
* Prior period restated to reflect discontinued operations (see
Notes 1 and 6)
1. Adjusted results and certain other terms and performance
measures used in this document are not directly defined within
IFRS. We have provided descriptions of such metrics and their
reconciliations to the most directly comparable measures reported
in accordance with IFRS and the calculation (where relevant) of any
ratios in Note 2.
2. For a reconciliation to the IFRS 8 segmental results refer to
Note 3.
3. Statutory income tax expense on continuing operations of GBP9
million comprises adjusted income tax charge of GBP17 million
(Difference of GBP8 million comprises
exceptional tax charge of GBP6 million and tax credit on
adjusting items of GBP14 million). Refer to Note 5.
Continuing operations - adjusted operating profit
Constant
currency
Six months to 30 September 2021 2021 2020 change
Adjusted operating profit GBPm GBPm %
-------------------------------------------------- ------ ------ ----------
Food & Beverage Solutions
As previously reported 98 98 9%
Cost re-allocations(1) (4) (4) (4%)
Retained European Primary Products business(2) (11) (4 ) (>99%)
-------------------------------------------------- ------ ------ ----------
Food & Beverage Solutions 83 90 2%
Sucralose 31 25 34%
Central costs (17) (24) 25%
-------------------------------------------------- ------ ------ ----------
Adjusted operating profit - continuing
operations 97 91 18%
-------------------------------------------------- ------ ------ ----------
1. Inclusion of certain operating costs which are reallocated
from Primary Products to Food & Beverage Solutions because they
will remain with the Group post disposal.
2. Adjustment to include the European Primary Products business
in Food & Beverage Solutions, which is not subject to the NewCo
disposal transaction.
Central costs
Central costs, which include head office costs and certain
treasury and legal activities, were 27% lower (25% lower in
constant currency) at GBP17 million benefitting from strong
discipline on overhead costs. Higher costs in the comparative
period also reflected higher self-insurance costs.
Net finance expense and liquidity
Net finance expense from continuing operations at GBP12 million
was 5% lower (3% higher in constant currency), mainly reflecting
lower finance costs in the comparative period due to the US$200
million Private Placement issued in August 2020.
Exceptional items
The Group recorded a net exceptional charge of GBP65 million in
continuing operations, comprising GBP59 million of exceptional
items included in profit before tax and a GBP6 million charge
included as an exceptional item within tax. Such items principally
included the following:
-- GBP41 million of cash costs associated with the transaction
to dispose of the Americas Primary Products business ("NewCo" or
the "NewCo Business");
-- GBP13 million non-cash impairment charge related to the
write-off of dedicated assets in the European Primary Products
business and certain other assets, which are obsolete as a result
of the NewCo Business disposal;
-- GBP2 million of cash costs relating to productivity and
simplification projects in our operations; and
-- GBP3 million net charge related to historical legal matters in the US.
The exceptional cash outflows for the period totalled GBP15
million (for total operations), comprising GBP8 million of cash
outflows related to charges recorded in the current period and GBP7
million of cash outflows resulting from exceptional costs recorded
in prior year.
The Group is in the fourth year of its programme to generate
productivity benefits of US$150 million by 31 March 2024 and has
delivered US$144 million of total benefits to date. During the six
months to 30 September 2021, exceptional cash costs in respect of
this programme of US$3 million (GBP2 million, total operations)
were recognised (either paid or provided), bringing the total to
date to US$51 million.
In the comparative period, the Group recorded a net exceptional
charge of GBP15 million in continuing operations.
Taxation
The adjusted effective tax rate on continuing operations was
20.2% (30 September 2020 (restated) - 22.5%). The rate reflects the
prevailing rates of corporation tax in the US and UK, the
jurisdictions most applicable to the Group's activities, as well as
the benefit from the recognition of additional deferred tax assets
following the announced future increase in the UK corporation tax
rate. We expect the adjusted effective tax rate for the year ending
31 March 2022 to be at a similar level to this rate .
The reported effective tax rate (on statutory earnings) for
continuing operations was 44.7% (30 September 2020 - 21.9%). The
higher effective tax rate on statutory earnings reflects the GBP6
million exceptional tax charge recorded in the period.
Earnings per share
For continuing operations, adjusted earnings per share increased
by 11% (25% in constant currency) to 14.5p and adjusted diluted
earnings per share at 14.4p were also 11% higher (25% in constant
currency). This increase reflects both stronger business
performance as well as a slightly lower tax rate. Statutory diluted
earnings per share decreased by 7.1p to 2.5p, principally
reflecting the higher exceptional costs in the period.
Discontinued operations
Discontinued operations comprises the NewCo Business which
represents a disposal group.
Constant
currency
2021 2020 Change change
Six months to 30 September 2021 GBPm GBPm % %
----------------------------------------- ------ ------ ------- ----------
Revenue 891 797 12% 22%
Primary Products as previously reported
- adjusted operating profit 59 83 (28%) (19%)
Costs re-allocations to continuing
operations(1) 4 4 5% 4%
Transfer of European Primary Products
to continuing operations(2) 11 4 >99% >99%
----------------------------------------- ------ ------ ------- ----------
Adjusted operating profit 74 91 (19%) (10%)
Net finance expense (2) (2) 21% 13%
Adjusted share of profit after tax
from joint ventures 15 13 13% 12%
Adjusted profit before tax 87 102 (14%) (7%)
Exceptional items (2) (3) 30% 24%
IFRS 5 held for sale adjustments 25 - - % - %
Profit before tax 110 99 11% 20%
Income tax expense (20) (11) (74% ) (88%)
----------------------------------------- ------ ------ ------- ----------
Profit for the period - discontinued
operations 90 88 3% 12%
----------------------------------------- ------ ------ ------- ----------
1. Inclusion of certain operating costs which are reallocated
from Primary Products to Food & Beverage Solutions because they
will remain with the Group post disposal.
2. Adjustment to include the European Primary Products business
in Food & Beverage Solutions, which is not subject to the NewCo
disposal transaction.
Adjusted profit after tax for discontinued operations (which
excludes the impact of exceptional items and IFRS 5 held for sale
adjustments) of GBP72 million was 12% lower than the comparative
period, mainly reflecting weaker operating performance.
IFRS 5 Held for Sale adjustments of GBP25 million
IFRS 5 requires certain adjustments to assets held for sale, for
which the relevant items to the Group from the Transaction were as
follows:
-- Cessation of depreciation of assets of the NewCo Business,
this reduced operating costs by GBP23 million; and
-- Cessation of equity accounting of the share of profits from
the Group's existing joint venture interests in Almex and Bio-PDO.
The impact of this resulted in a reduction in joint venture income
of GBP7 million, however dividends received in the period were
recorded as income within discontinued operations, an income of
GBP9 million.
Such adjustments applied prospectively from 1 July 2021 (being
the date at which the Transaction became highly probable) and
comparatives are not restated. The impact of these adjustments is
reflected in discontinued operations only.
Adjusted share of profit after tax of joint ventures
The Group's adjusted share of profit after tax of joint ventures
of GBP15 million was 13% higher (12% higher in constant currency)
principally due to higher profits in DuPont Tate & Lyle
Bio-Products (Bio-PDO), as demand recovered from the pandemic
period. Almex saw stronger sweetener demand in the half as
consumption recovered compared to a Covid-19 pandemic impacted
comparative period. Almex profit was in line with the comparative
period, as the impact of higher volume was offset by the benefit in
the comparative period of transactional foreign exchange of GBP4
million. The statutory share of profit after tax of joint ventures
of GBP8 million reflects the impact of stopping equity accounting
on 1 July 2021 (reduction in joint venture income of GBP7
million).
Net finance expense
Relates to the interest charge on certain leases, principally
railcars.
Exceptional items
Relates to the exceptional charge recognised within the NewCo
Business. This cash charge of GBP2 million relates principally to
productivity and simplification projects in our operations.
Cash flow, net debt and liquidity - total operations
Adjusted free cash flow for the total Group was GBP127 million
(2020 - GBP194 million). The decrease of GBP67 million reflects the
weaker performance in Primary Products, as well as an increase in
working capital of GBP54 million. The increase in working capital
was due to higher receivables as a result of increased revenue and
an increase in inventory as a result of higher corn prices.
We continue to expect capital expenditure for the 2022 financial
year to be between GBP160 million and GBP180 million Such forecast
capital expenditure assumes completion of the Transaction to sell
the NewCo Business on 31 March 2022.
Net debt at 30 September 2021 of GBP409 million was GBP8 million
lower than at 31 March 2021. Net cash flow generated from operating
activities was largely offset by dividend payments of GBP102
million and capital expenditure of GBP67 million leading to this
modest reduction in the period.
At 30 September 2021 the Group held cash and cash equivalents of
GBP396 million (including GBP11 million classified as held for
sale) and had access to a committed, undrawn revolving credit
facility of US$800 million until 2025. Net debt to EBITDA ratio was
0.8 times (31 March 2021 - 0.8 times). On a covenant-testing basis,
net debt to EBITDA ratio was 0.6 times, which was materially lower
than the required covenant ratio of not greater than 3.5 times,
demonstrating significant headroom above this covenant
requirement.
Retirement benefits
The Group maintains pension plans for certain of its current 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.
On disposal of the NewCo Business, the Group will retain all US
defined benefit pension schemes. However, certain funded
non-qualified deferred compensation arrangements as well as the
unfunded post-retirement medical plans relating to employees
transitioning as part of the Transaction (together representing a
net deficit of GBP28 million) will be disposed of and are therefore
classified as held for sale.
At 30 September 2021, the Group's retirement benefit obligations
were in a net deficit of GBP114 million (31 March 2021 - net
deficit of GBP140 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).
During the period to 30 September 2021, the asset performance
closely matched and offset the actuarial losses in the funded
plans. As a result, the net deficit position increased marginally
to GBP142 million before the impact of reclassification to held for
sale.
The main UK plan was subject to a 'buy-in' in the 2020 financial
year whereby any increases in pension obligations are offset by
equal and opposite movements in the 'buy-in' insurance policy. As a
result, the balance sheet for the UK plans has remained consistent
with the 31 March 2021 position.
In the six months to 30 September 2021, pension contributions of
GBP5 million were in line with the comparative period.
Basis of preparation
Notwithstanding the application of IFRS 5 'Non-current assets
Held for Sale and Discontinued Operations' to the NewCo Business,
the Group's principal accounting policies are unchanged compared
with the year ended 31 March 2021 with one exception. During the
six months to 30 September 2021, the Group has revised its
accounting policy in relation to upfront configuration and
customisation costs incurred in implementing Software-as-a-Service
arrangements in response to an IFRS Interpretations Committee
decision (Configuration or Customisation Costs in a Cloud Computing
Arrangement (IAS 38 Intangible Assets)-Agenda Paper 2).
Details of the basis of preparation, including information in
respect of the Group's alternative performance measures, can be
found in Note 1 to the attached financial information.
Going Concern
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
this condensed set of consolidated financial information to 31
March 2023. The Directors have also considered the impact of the
Transaction on this assessment. 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 30 September 2021, the Group has significant available
liquidity, including GBP396 million of cash and US$800 million of
committed and undrawn revolving credit facility, of which US$100
million matures in 2025 and US$700 million matures in 2026. In
addition, none of the Group's existing financing matures during the
going concern assessment period and the Transaction does not
require any of it to be repaid or refinanced. The earliest maturity
date is October 2023, when US$120 million of private placement debt
will mature. During the prior 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 30 September 2021
(Refer to Note 2). For a covenant breach to occur it would require
a profound reduction in Group profit. Such reduction is considered
to be extremely unlikely.
As set out in our 31 March 2021 Annual Report, during May 2021,
the Directors 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
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' did not result in any material
uncertainty to the Group's going concern assessment and did not
erode the significant headroom above the Group's debt covenant
requirement. The Directors also 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' showed that the forecast Group profit would have to be
reduced to almost zero in order to cause a breach.
Since the assessment in May, the Directors updated the model
such that it considered similar downside cases (being a major plant
shutdown, loss of our two largest Food & Beverage Solutions
customers and a slower recovery from the Covid-19 pandemic). This
assessment also considered a scenario where the Transaction did not
complete. Based on this assessment, the Directors concluded that in
both the Base Case and worst case scenario, the Group has
significant liquidity and covenant headroom throughout the period
to 31 March 2023. Accordingly, the Directors have concluded that
there are no material uncertainties with respect to going concern
and have adopted the going concern basis in preparing the condensed
consolidated financial information of the Group as at 30 September
2021.
Risks and uncertainties
The principal risks and uncertainties affecting the business
activities of the Group are detailed on pages 71 to 76 of the Tate
& Lyle Annual Report 2021, a copy of which is available on the
Company's website at www.tateandlyle.com . Given the work currently
being undertaken to complete the transaction announced on 12 July
2021 to sell a controlling stake in the Primary Products business
in the Americas ("NewCo") to KPS Capital Partners, LP, the Board
has decided to add a further principal risk to those outlined in
the Annual Report 2021 which is 'Failure to successfully manage the
transition to two standalone businesses following the sale of the
controlling stake in Primary Products'. The Board considers that
actions are also being taken to substantially mitigate the impact
of this risk. Except as described above, the Board considers that
the principal risks set out in the Annual Report 2021 remain
unchanged and that actions continue to be taken to substantially
mitigate the impact of such risks, should they materialise.
CAUTIONARY STATEMENT AND CONFERENCE CALL DETAILS
Cautionary statement
This statement of Half 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 Half Year Results for the six months
to 30 September 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 (GMT) on Thursday 4
November 2021. To access the presentation, visit
https://www.investis-live.com/tate-and-lyle/61718bc1835ae21200bc2f0b/dfgh
.
This presentation will be live streamed at 10.00 (GMT), and will
then be followed by a live Q&A session. To view and listen to
this audio webcast and Q&A, visit
https://www.investis-live.com/tate-and-lyle/61718e74b3a1780c00c8bf58/hunb
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/61718e74b3a1780c00c8bf58/hunb
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
CONDENSED (INTERIM) CONSOLIDATED INCOME STATEMENT
(UNAUDITED)
Restated* Restated*
Six months Six months Year to
to to 31 March
30 September 30 September 2021
2021 2020 GBPm
Continuing operations Notes GBPm GBPm
-------------------------------------- ---- ------- --------------- ------ -------------- -------- ------------
Revenue 2 656 592 1 211
-------------------------------------------- ------- --------------- ------ -------------- -------- ------------
Operating profit 2 33 71 116
Finance income - 1 1
Finance expense (12) (14) (27)
Profit before tax 21 58 90
Income tax expense 5 (9) (13) (1)
-------------------------------------------- ------- --------------- ------ -------------- -------- ------------
Profit for the period - continuing
operations 12 45 89
Profit for the period - discontinued
operations 6 90 88 164
-------------------------------------------- ------- --------------- ------ -------------- -------- ------------
Profit for the period - total
operations 102 133 253
-------------------------------------------- ------- --------------- ------ -------------- -------- ------------
Profit for the period attributable
to:
--------------------------------------- --- ------- --------------- ------------------ ----------------
- Owners of the Company 102 133 253
- Non-controlling interests - - -
--------------------------------------- --- ------- --------------- ------------------ ----------------
Profit for the period - total
operations 102 133 253
--------------------------------------- --- ------- --------------- ------------------ ----------------
Earnings per share Pence Pence Pence
--------------------------------------- --- ------- --------------- ------------------ ----------------
Continuing operations
- basic 7 2.5p 9.7p 19.3p
- diluted 7 2.5p 9.6p 19.1p
--------------------------------------- --- ------- --------------- ------------------ ----------------
Total operations
- basic 7 21.9p 28.6p 54.4p
- diluted 7 21.7p 28.4p 53.8p
--------------------------------------- --- ------- --------------- ------------------ ----------------
Analysis of adjusted profit GBPm GBPm GBPm
for the period - continuing
operations
--- ------- --------------- ------------------
Profit before tax - continuing
operations 21 58 90
Adjusted for:
Net charge for exceptional
items 4 59 15 34
Amortisation of acquired intangible
assets 5 5 10
Adjusted profit before tax
- continuing operations 2 85 78 134
Adjusted income tax expense
- continuing operations 2 (17) (17) (16)
--------------------------------------- --- ------- --------------- ------------------ ----------------
Adjusted profit for the period
- continuing operations 2 68 61 118
--------------------------------------- --- ------- --------------- ------------------ ----------------
* Prior periods restated to reflect discontinued operations (see
Notes 1 and 6)
CONDENSED (INTERIM) CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME (UNAUDITED)
Six months Six months
to to
30 30 Year to
September September 31 March
2021 2020 2021
Notes GBPm GBPm GBPm
------------------------------------------------------------ ------ ------------ ------------- -----------
Profit for the period - total
operations 102 133 253
Other comprehensive income/(expense):
Items that have been/may be reclassified
to profit or loss:
Gain/(loss) on currency translation
of foreign operations 41 (35) (141)
Fair value (loss)/gain on net
investment hedges (28) 13 39
Net gain on cash flow hedges 40 1 1
Net change in cost of hedging (2) - -
Share of other comprehensive income/(expense)
of joint ventures 5 (3) (6)
Tax effect of the above items (10) - -
------------------------------------------------------------ ------ ------------ ------------- -----------
46 (24) (107)
------------------------------------------------------------ ------ ------------ ------------- -----------
Items that will not be reclassified
to profit or loss:
Re-measurement of retirement benefit
plans:
* return on plan assets 11 35 186 129
* net actuarial loss on retirement benefit obligations 11 (35) (177) (80)
Change in the fair value of FVOCI
investments 10 (1) (1) 3
Tax effect of the above items - (3) (13)
------------------------------------------------------------ ------ ------------ ------------- -----------
(1) 5 39
Total other comprehensive income/(expense) 45 (19) (68)
------------------------------------------------------------ ------ ------------ ------------- -----------
Total comprehensive income 147 114 185
------------------------------------------------------------ ------ ------------ ------------- -----------
Analysed by:
- Continuing operations 2 58 129
- Discontinued operations 145 56 56
------------------------------------- ---- ---- ----
Total comprehensive income - total
operations 147 114 185
------------------------------------- ---- ---- ----
Attributable to:
- Owners of the Company 147 114 185
- Non-controlling interests - - -
------------------------------------ ---- ---- ----
Total comprehensive income - total
operations 147 114 185
------------------------------------- ---- ---- ----
CONDENSED (INTERIM) CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
At Restated(*) Restated(*)
30 September At 30 September At 31 March
2021 2020 2021
Notes GBPm GBPm GBPm
------------------------------------- -------- -------------- ----------------- -------------
ASSETS
Non-current assets
Goodwill and other intangible
assets 290 319 345
Property, plant and equipment
(including right-of-use assets
of GBP46 million (30 September
2020 -
GBP133 million, 31 March 2021
- GBP121 million)) 426 1 152 1 105
Investments in joint ventures - 98 104
Investments in equities 10 50 65 59
Retirement benefit surplus 11 22 9 18
Deferred tax assets 44 30 32
Trade and other receivables 1 1 1
Derivative financial instruments 10 - 3 1
833 1 677 1 665
------------------------------------- -------- -------------- ----------------- -------------
Current assets
Inventories 263 391 532
Trade and other receivables 251 314 333
Current tax assets 11 5 11
Derivative financial instruments 10 3 9 23
Other current financial assets 10 - 38 32
Cash and cash equivalents 9 385 484 371
-------------------------------------- -------- -------------- ----------------- -------------
913 1 241 1 302
------------------------------------- -------- -------------- ----------------- -------------
Assets classified as held for
sale 6 1 372 - -
-------------------------------------- -------- -------------- ----------------- -------------
2 285 1 241 1 302
------------------------------------- -------- --------------
TOTAL ASSETS 3 118 2 918 2 967
-------------------------------------- -------- -------------- ----------------- -------------
EQUITY
Capital and reserves
Share capital 117 117 117
Share premium 407 407 407
Capital redemption reserve 8 8 8
Other reserves 196 223 144
Retained earnings 779 668 777
-------------------------------------- -------- -------------- ----------------- -------------
Equity attributable to owners
of the Company 1 507 1 423 1 453
Non-controlling interests 1 - 1
-------------------------------------- -------- -------------- ----------------- -------------
TOTAL EQUITY 1 508 1 423 1 454
LIABILITIES
Non-current liabilities
Borrowing (including lease
liabilities of GBP52 million
(30 September 2020 - GBP116
million,
31 March 2021 - GBP116 million)) 9 699 800 746
Retirement benefit deficit 11 136 200 158
Deferred tax liabilities 8 26 41
Provisions 13 12 11
856 1 038 956
------------------------------------- -------- -------------- ----------------- -------------
Current liabilities
Borrowings (including lease
liabilities of GBP9 million
(30 September 2020 - GBP27
million,
31 March 2021 - GBP27 million)) 9 25 42 42
Trade and other payables 211 333 431
Provisions 16 20 24
Current tax liabilities 15 51 25
Derivative financial instruments 10 17 1 9
Other current financial liabilities 10 - 10 26
-------------------------------------- -------- -------------- ----------------- -------------
284 457 557
------------------------------------- -------- -------------- ----------------- -------------
Liabilities directly associated
with the assets held for sale 6 470 - -
754 457 557
------------------------------------- -------- -------------- ----------------- -------------
Total liabilities 1 610 1 495 1 513
-------------------------------------- -------- -------------- ----------------- -------------
TOTAL EQUITY AND LIABILITIES 3 118 2 918 2 967
-------------------------------------- -------- -------------- ----------------- -------------
* Prior periods restated for change in accounting policy
(Configuration or Customisation Costs in a Cloud
Computing Arrangement (IAS 38 Intangible Assets) - Agenda Paper 2, see Notes 1 and 15)
CONDENSED (INTERIM) CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Six months Six months Year to
to 30 September to 30 September 31 March
2021 2020 2021
Notes GBPm GBPm GBPm
Cash flows from operating activities
- total operations
Profit before tax from total operations 131 157 283
Adjustments for:
Depreciation of property, plant
and equipment (excluding exceptional
items) 47 72 142
Amortisation of intangible assets 14 16 33
Share-based payments 6 7 8
Net impact of exceptional income
statement items 4 46 1 10
Net finance expense 14 15 30
Share of profit after tax of joint
ventures (8) (13) (26)
Net retirement benefit obligations (2) (2) (8)
Changes in working capital and other
non-cash movements (28) 26 (24)
Cash generated from total operations 220 279 448
Net income tax paid (31) (24) (57)
Interest paid (10) (10) (22)
Net cash generated from operating
activities 179 245 369
------------------------------------------- -------- ----------------- ----------------- ----------
Cash flows from investing activities
Purchase of property, plant and
equipment (62) (62) (134)
Disposal of property, plant and
equipment - 5 5
Acquisition of businesses, net of
cash acquired 1 - (62)
Investments in intangible assets (5) (7) (18)
Purchase of equity investments 10 (2) (3) (4)
Disposal of equity investments 10 2 2 3
Interest received - 1 1
Dividends received from joint ventures 25 4 4
Net cash used in investing activities (41) (60) (205)
------------------------------------------- -------- ----------------- ----------------- ----------
Cash flows from financing activities
Purchase of own shares including
net settlement (4) (4) (5)
Cash inflow from additional borrowings 1 153 154
Cash outflow from repayment of borrowings - - (5)
Repayment of leases (16) (18) (36)
Dividends paid to the owners of
the Company 8 (102) (97) (137)
Net cash (used in)/ generated from
financing activities (121) 34 (29)
------------------------------------------- -------- ----------------- ----------------- ----------
Net increase in cash and cash equivalents 9 17 219 135
------------------------------------------- -------- ----------------- ----------------- ----------
Cash and cash equivalents
Balance at beginning of period 371 271 271
Net increase in cash and cash equivalents 17 219 135
Currency translation differences 8 (6) (35)
------------------------------------------- -------- ----------------- ----------
Balance at end of period 9 396 484 371
------------------------------------------- -------- ----------------- ----------------- ----------
A reconciliation of the movement in cash and cash equivalents to
the movement in net debt is presented in Note 9. Included in the
total cash and cash equivalents of GBP396 million held at 30
September 2021, is GBP11 million classified as held for sale.
CONDENSED (INTERIM) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(UNAUDITED)
Share
capital Attributable
and Capital to owners Non-controlling
share redemption Other Retained of the interests Total
premium reserve reserves earnings Company equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------- --------- ------------ ---------- ---------- -------------- ----------------- ---------
At 1 April 2021
(restated)* 524 8 144 777 1 453 1 1 454
----------------------- --------- ------------ ---------- ---------- -------------- ----------------- ---------
Profit for the period - - - 102 102 - 102
Other comprehensive
income - - 45 - 45 - 45
----------------------- --------- ------------ ---------- ---------- -------------- ----------------- ---------
Total comprehensive
income - - 45 102 147 - 147
Hedging losses
transferred
to inventory - - 9 - 9 - 9
Tax effect of the
above
item - - (2) - (2) - (2)
Transactions with
owners:
Share-based
payments,
net of tax - - - 6 6 - 6
Purchase of own
shares
including net
settlement - - - (4) (4) - (4)
Dividends paid (Note
8) - - - (102) (102) - (102)
----------------------- --------- ------------ ---------- ---------- -------------- ----------------- ---------
At 30 September 2021 524 8 196 779 1 507 1 1 508
----------------------- --------- ------------ ---------- ---------- -------------- ----------------- ---------
At 1 April 2020 523 8 239 629 1 399 - 1 399
Software-as-a-Service
restatement - - - (6) (6) - (6)
----------------------- --------- ------------ ---------- ---------- -------------- ----------------- ---------
At 1 April 2020 -
restated* 523 8 239 623 1 393 - 1 393
----------------------- --------- ------------ ---------- ---------- -------------- ----------------- ---------
Profit for the period - - - 133 133 - 133
Other comprehensive
(expense)/ income - - (25) 6 (19) - (19)
----------------------- --------- ------------ ---------- ---------- -------------- ----------------- ---------
Total comprehensive
(expense)/ income - - (25) 139 114 - 114
Hedging losses
transferred
to inventory - - 13 - 13 - 13
Tax effect of the
above
item - - (4) - (4) - (4)
Transactions with
owners:
Share-based
payments,
net of tax - - - 7 7 - 7
Issue of share
capital 1 - - - 1 - 1
Purchase of own
shares
including net
settlement - - - (4) (4) - (4)
Dividends paid - - - (97) (97) - (97)
----------------------- --------- ------------ ---------- ---------- -------------- ----------------- ---------
At 30 September 2020
(Restated)* 524 8 223 668 1 423 - 1 423
----------------------- --------- ------------ ---------- ---------- -------------- ----------------- ---------
* Prior period restated for change in accounting policy
(Configuration or Customisation Costs in a Cloud
Computing Arrangement (IAS 38 Intangible Assets) - Agenda Paper 2, see Notes 1 and 15)
CONDENSED (INTERIM) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(UNAUDITED)
Share
capital Attributable
and Capital to owners Non-controlling
share redemption Other Retained of the interests Total
premium reserve reserves earnings Company equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------- --------- ------------ ---------- ---------- -------------- ----------------- ---------
At 1 April 2020 523 8 239 629 1 399 - 1 399
Software-as-a-Service
restatement - - - (6) (6) - (6)
----------------------- --------- ------------ ---------- ---------- -------------- ----------------- ---------
At 1April 2020 -
restated* 523 8 239 623 1 393 - 1 393
----------------------- --------- ------------ ---------- ---------- -------------- ----------------- ---------
Profit for the year - - - 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)
Non-controlling
interests
in subsidiaries
acquired - - - - - 1 1
Dividends paid - - - (137) (137) - (137)
Other movement - - - (3) (3) - (3)
----------------------- --------- ------------ ---------- ---------- -------------- ----------------- ---------
At 31 March 2021
(Restated) 524 8 144 777 1 453 1 1 454
----------------------- --------- ------------ ---------- ---------- -------------- ----------------- ---------
* Prior period restated for change in accounting policy
(Configuration or Customisation Costs in a Cloud Computing
Arrangement (IAS 38 Intangible Assets) - Agenda Paper 2, see Notes
1 and 15)
TATE & LYLE PLC
NOTES TO THE FINANCIAL INFORMATION
For the six months to 30 September 2021
1. Presentation of half year financial information
The principal activity of Tate & Lyle PLC and its
subsidiaries, together with its joint ventures, is the global
provision of ingredients and solutions to the food, beverage and
other industries.
The Company is a public limited company incorporated and
domiciled in the United Kingdom and registered in England. The
address of its registered office is 1 Kingsway, London WC2B 6AT.
The Company has its primary listing on the London Stock
Exchange.
Basis of preparation
Notwithstanding the application of IFRS 5 - 'Non-current assets
Held for Sale and Discontinued Operations' to the NewCo Business,
the Group's principal accounting policies are unchanged compared
with the year ended 31 March 2021 with one exception. During the
period to 30 September 2021, the Group has revised its accounting
policy in relation to upfront configuration and customisation costs
incurred in implementing Software-as-a-Service arrangements in
response to an IFRS Interpretations Committee decision
(Configuration or Customisation Costs in a Cloud Computing
Arrangement (IAS 38 Intangible Assets) - Agenda Paper 2). Other
than for this change, this condensed set of consolidated financial
information for the six months to 30 September 2021 has been
prepared on the basis of the accounting policies set out in the
Group's 2021 Annual Report and in accordance with UK adopted IAS
34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority. In the year to 31 March 2022 and beyond, financial
statements will be prepared in accordance with UK adopted
international accounting standards. This change in the basis of
preparation is required by UK company law for the purposes of
financial reporting as a result of the UK's exit from the European
Union on 31 January 2020 and the cessation of the transition period
on 31 December 2020. This does not constitute a change in
accounting policy but rather a change in framework, which is
required to ground the use of IFRS in company law. There is no
impact on recognition, measurement or disclosure between the two
frameworks in the period reported.
The Directors have determined that there is a significant
accounting judgment with respect to the Group's future accounting
for its 49.9% interest in the NewCo Business following the
completion of the Transaction. The Group will equity account for
this interest as a joint venture.
Such accounting is appropriate because the Group will no longer
have unilateral control over NewCo. Instead, important operational
decisions will be decided by a majority vote by the NewCo Board
(KPS will have the right to appoint four directors and the Group
will have the right to appoint two) and more significant strategic
matters will require unanimous agreement of each of the two
shareholders. In addition, from completion, the Group and NewCo
will enter into certain long-term agreements, principally relating
to the supply of product between one another; such agreements will
not afford either party rights that are indicative of unilateral
control.
As a result, decisions about relevant activities are principally
reserved for the two shareholders and cannot be decided upon
unilaterally by either shareholder. Therefore, the Group's interest
in NewCo will meet the definition of a joint venture.
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
this condensed set of consolidated financial information to 31
March 2023. The Directors have also considered the impact of the
Transaction on this assessment. 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 30 September 2021, the Group has significant available
liquidity, including GBP396 million of cash and US$800 million of
committed and undrawn revolving credit facility, of which US$100
million matures in 2025 and US$700 million matures in 2026 . In
addition, none of the Group's existing financing matures during the
going concern assessment period and the Transaction does not
require any of it to be repaid or refinanced. The earliest maturity
date is October 2023, when US$120 million will mature. During the
prior 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 30 September 2021
(refer to Note 2). For a covenant breach to occur it would require
a profound reduction in Group profit. Such reduction is considered
to be extremely unlikely.
As set out in our 31 March 2021 Annual Report, during May 2021,
the Directors 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
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' did not result in any material
uncertainty to the Group's going concern assessment and did not
erode the significant headroom above the Group's debt covenant
requirement. The Directors also 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' showed that the forecast Group profit would have to be
reduced to almost zero in order to cause a breach.
Since the assessment in May, the Directors updated the model
such that it considered similar downside cases (being a major plant
shutdown, loss of our two largest Food & Beverage Solutions
customers and a slower recovery from the Covid-19 pandemic). This
assessment also considered a scenario where the Transaction did not
complete. Based on this assessment, the Directors concluded that in
both the Base Case and Worst Case scenario, the Group has
significant liquidity and covenant headroom throughout the period
to 31 March 2023. Accordingly, the Directors have concluded that
there are no material uncertainties with respect to going concern
and have adopted the going concern basis in preparing the condensed
consolidated financial information of the Group as at 30 September
2021.
The condensed set of consolidated financial information is
unaudited but has been reviewed by the external auditor and its
report to the Company is set out on page 47. The information shown
for the year ended 31 March 2021 does not constitute statutory
accounts as defined in Section 435 of the Companies Act 2006 and
has been extracted from the Group's 2021 Annual Report which has
been approved by the Board of Directors on 26 May 2021 and filed
with the Registrar of Companies.
The report of the auditor on the financial statements contained
within the Group's 2021 Annual Report was unqualified and did not
contain a statement under either Section 498(2) or Section 498(3)
of the Companies Act 2006. The interim financial statements should
be read in conjunction with the annual consolidated financial
statements for the year ended 31 March 2021, which were prepared in
accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006 and International
Financial Reporting Standards ("IFRS") adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European
Union.
The condensed set of consolidated financial information for the
six months to 30 September 2021 on pages 16 to 42 was approved by
the Board of Directors on 3 November 2021.
The presentation of the income statements for the six months to
30 September 2020 and the year to 31 March 2021 has been amended to
align with the presentation of the income statement for the six
months to 30 September 2021 including discontinued operations.
Restatement of comparative financial information - discontinued
operations and application of Held for Sale
On 12 July 2021 the Group announced that it has entered into an
agreement to sell a controlling stake in a new company and its
subsidiaries ("NewCo" or the "NewCo Business"), comprising its
Primary Products business in North America and Latin America and
its interests in the Almidones Mexicanos S.A de C.V ("Almex") and
DuPont Tate & Lyle Bio-Products Company, LLC ("Bio-PDO") joint
ventures, to KPS Capital Partners, LP ("KPS") (the "Transaction").
Tate & Lyle will own 49.9% of NewCo.
In accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations, from 1 July 2021 the Group has classified
the business that will become NewCo as a disposal group held for
sale and a discontinued operation. 1 July 2021 reflects the date
that negotiations on substantive matters with KPS were completed.
An operation is classified as discontinued if it is a component of
the Group that: (i) has been disposed of, or meets the criteria to
be classified as held for sale; and (ii) represents a separate
major line of business or geographic area of operations or will be
disposed of as part of a single coordinated plan to dispose of a
separate major line of business or geographic area of operations.
The results, assets and liabilities and cash flows of discontinued
operations are presented separately from those of continuing
operations. Accordingly, the results for the six month period to 30
September 2020 and year to 31 March 2021 have been restated
impacting the consolidated income statement. Refer to Note 6 for
further details on discontinued operations.
Changes in accounting policy and disclosures
The accounting policies adopted in the preparation of the
condensed set of consolidated financial information are consistent
with those of the Group's Annual Report and Accounts for the year
to 31 March 2021, but also reflect the adoption, with effect from 1
April 2021, of new or revised accounting standards, as set out
below.
In April 2021 the IFRS Interpretations Committee published an
agenda decision regarding the treatment of Configuration or
Customisation Costs in a Cloud Computing Arrangement under IAS 38 -
Intangible Assets. During the period to 30 September 2021, the
Group has revised its accounting policy in relation to upfront
configuration and customisation costs incurred in implementing
Software-as-a-Service (SaaS) arrangements in response to this IFRS
Interpretations Committee decision. In addition, the Group has
assessed the impact of this change in accounting policy on any
cloud computing arrangements entered into during the prior periods
and restated the comparative figures. This has impacted the balance
sheet and retained earnings only as the income statement impact on
earlier periods was not material. A balance sheet as at the
beginning of the preceding period (i.e. at 1 April 2020) has not
been presented on the grounds of materiality, however the impact of
the change is shown in Note 15. The revised accounting policy is
shown below.
SaaS arrangements are service contracts providing the Group with
the right to access the cloud provider's application software over
the contract period. Costs incurred to configure or customise, and
the ongoing fees to obtain access to the cloud provider's
application software, are recognised as operating expenses when the
services are received.
In a contract where the cloud provider provides both the SaaS
configuration and customisation as well as the SaaS access over the
contract term, then the configuration and customisation costs are
expensed over the contract term only if the services provided are
not distinct and are otherwise expensed upfront as the software is
configured or customised.
Some of the costs incurred relate to the development of software
code that enhances or modifies, or creates additional capability
to, existing on-premise systems and meets the definition of, and
the recognition criteria for, an intangible asset. These costs are
recognised as intangible software assets and amortised over the
useful life of the software on a straight line basis.
The useful lives of these assets are reviewed at least at the
end of each financial year, and any change accounted for
prospectively as a change in accounting estimate.
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.
Seasonality
The Group's principal exposure to seasonality is in relation to
working capital. The Group's inventories are subject to seasonal
fluctuations reflecting the timing of crop harvests in North
America and purchases. Inventory levels typically increase from
September to November and gradually reduce in the first six months
of the calendar year.
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.
Use of 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
periods 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);
- 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; and
- IFRS 5 held for sale adjustment consisting of 1) Cessation of
depreciation and amortisation of assets of the NewCo Business; and,
2) Cessation of equity accounting of the share of profits and
dividends received from the Group's existing joint venture
interests. These adjustments relate to the six-month period to 30
September 2021 only. Within adjusted discontinued operations these
adjustments are excluded in order to provide a better understanding
of the Group's underlying financial performance on a like-for-like
basis with the comparative periods.
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 2 and Note
6.
This document also contains pro-forma financial information for
Tate & Lyle for the six months ended 30 September 2021 together
with comparative information, which shows the impact of further
adjustments reflecting additional factors that will come into
effect at or following completion of the Transaction. Refer to
'Additional Information' on pages 44 and 45.
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.
2. Reconciliation of alternative performance measures
Income statement measures
For the reasons set out in Note 1, 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
alternative performance measures to the most directly comparable
measures reported in accordance with IFRS:
Restated*
Six months to 30 September Six months to 30 September
2021 2020
---------------------------------- -----------------------------------------
GBP million unless otherwise IFRS Adjusting Adjusted
stated reported items reported IFRS Adjusting Adjusted
Continuing operations reported items reported
------------------------------- ---------- ---------- ---------- -------------- ---------- -------------
Revenue 656 - 656 592 - 592
------------------------------- ---------- ---------- ---------- -------------- ---------- -------------
Operating profit 33 64 97 71 20 91
------------------------------- ---------- ---------- ---------- -------------- ---------- -------------
Profit before tax 21 64 85 58 20 78
Income tax expense (9) (8) (17) (13) (4) (17)
------------------------------- ---------- ---------- ---------- -------------- ---------- -------------
Profit for the period 12 56 68 45 16 61
------------------------------- ---------- ---------- ---------- -------------- ---------- -------------
Effective tax rate % 44.7% 20.2% 21.9% 22.5%
------------------------------- ---------- ---------- ---------- -------------- ---------- -------------
Earnings per share:
Number of ordinary shares(1)
- basic 465.2 465.2 464.0 464.0
Basic earnings per share
(pence) 2.5p 12.0p 14.5p 9.7p 3.4p 13.1p
Number of ordinary shares(1)
- diluted 469.6 469.6 468.8 468.8
Diluted earnings per
share (pence) 2.5p 11.9p 14.4p 9.6p 3.3p 12.9p
------------------------------- ---------- ---------- ---------- -------------- ---------- -------------
1. Weighted average
(millions)
* Restated (see Notes
1 and 6)
Restated*
Year to 31 March 2021
---------------------------------------------------
GBP million unless otherwise
stated IFRS Adjusting Adjusted
Continuing operations reported items reported
-------------------------------- --------------------------- ---------- ----------
Revenue 1 211 - 1 211
-------------------------------- --------------------------- ---------- ----------
Operating profit 116 44 160
-------------------------------- --------------------------- ---------- ----------
Profit before tax 90 44 134
Income tax expense (1) (15) (16)
-------------------------------- --------------------------- ---------- ----------
Profit for the year 89 29 118
-------------------------------- --------------------------- ---------- ----------
Effective tax rate % 1.2% 12.1%
Earnings per share:
Number of ordinary shares(1)
- basic 464.2 464.2
Basic earnings per share
(pence) 19.3p 6.1p 25.4p
Number of ordinary shares(1)
- diluted 469.4 469.4
Diluted earnings per
share (pence) 19.1p 6.1p 25.2p
-------------------------------- --------------------------- ---------- ----------
1. Weighted average
(millions)
* Restated (see Notes
1 and 6)
The following table shows the reconciliation of the adjusting
items in the current and comparative periods:
Restated*
Six months Restated*
Six months to Year to
to 30 September 30 September 31 March
2021 2020 2021
Continuing operations Note GBPm GBPm GBPm
------------------------------------- ------ ----------------- -------------- ----------
Exceptional costs in operating
profit 4 59 15 34
Amortisation of acquired intangible
assets 5 5 10
-------------------------------------- ------ ----------------- -------------- ----------
Total excluded from adjusted profit
before tax 64 20 44
Tax credit on adjusting items (14) (4) (8)
Exceptional tax charge/(credit) 4 6 - (7)
-------------------------------------- ------ ----------------- -------------- ----------
Total excluded from adjusted profit
for the period 56 16 29
-------------------------------------- ------ ----------------- -------------- ----------
* Prior periods restated to reflect discontinued operations (see
Notes 1 and 6)
Cash flow measure
The Group also presents an alternative cash flow measure,
'Adjusted free cash flow' which is defined as cash generated from
total operations after net interest and tax paid, and capital
expenditure, and excluding the impact of exceptional items.
The following table shows the reconciliation of adjusted free
cash flow:
Six months Six months Year to
to to 31 March
30 September 30 September 2021
2021 2020 GBPm
Total operations GBPm GBPm
Adjusted operating profit 171 182 339
Adjusted for:
Depreciation and adjusted amortisation(1) 56 83 165
Share-based payments charge 6 7 8
Changes in working capital and other non-cash
movements (28) 26 (24)
Net retirement benefit obligations (2) (2) (8)
Capital expenditure (67) (69) (152)
Net interest and tax paid (41) (33) (78)
Held for sale adjustment(2) 32 - -
Adjusted free cash flow 127 194 250
------------------------------------------------ -------------- --------------- ----------
1. Total depreciation of GBP47 million (30 September 2020 -
GBP75 million; 31 March 2021 - GBP148 million) and amortisation of
GBP14 million (30 September 2020 - GBP16 million; 31 March 2021 -
GBP33 million) less GBPnil (30 September 2020 - GBP3 million; 31
March 2021 - GBP6 million) of accelerated depreciation recognised
in exceptional items and GBP5 million (30 September 2020 - GBP5
million; 31 March 2021 - GBP10 million) of amortisation of acquired
intangibles.
2. The IFRS 5 adjustments relating to the cessation of
depreciation of assets and equity accounting are excluded from
adjusted operating profit for total operations.
Financial strength measure
At the interim period the Group uses the net debt to EBITDA
ratio to assess its financial strength. Performance is based on the
previous 12 months' results. The ratio is calculated based on
unrounded figures in GBP million.
Calculation of net debt to EBITDA ratio - t otal 30 September 31 March
operations 2021 2021
GBPm GBPm
-------------------------------------------------- ------------- ---------
Net debt (Note 9) 409 417
-------------------------------------------------- ------------- ---------
Adjusted operating profit 328 339
Add back depreciation and adjusted amortization 160 165
EBITDA (1) - t otal operations 488 504
-------------------------------------------------- ------------- ---------
Net debt to EBITDA ratio (times) 0.8 0.8
-------------------------------------------------- ------------- ---------
1. EBITDA is calculated as adjusted operating profit of GBP328
million for the last 12 months (31 March 2021 - GBP339 million)
adding back depreciation (excluding the impact of the IFRS 5 held
for sale adjustments) of GBP138 million for the past 12 months
(total depreciation of GBP142 million less GBP4 million of
accelerated depreciation recognised in exceptional items) (31 March
2021 - depreciation of GBP142 million (total depreciation of GBP148
million less GBP6 million of accelerated depreciation recognised in
exceptional items) and amortisation of GBP22 million for the past
12 months (total amortisation of GBP32 million less GBP10 million
of amortisation of acquired intangible assets) (31 March 2021 -
amortisation of GBP23 million (total amortisation of GBP33 million
less GBP10 million of amortisation of acquired intangible
assets).
The Group has a core committed revolving credit facility of
US$800 million which is unsecured and contains one financial
covenant, that the multiple of net debt to EBITDA, as defined in
the facility agreement, should not be greater than 3.5 times.
The net debt to EBITDA ratio for the purpose of the financial
covenant is 0.6 times with the difference being driven by specific
covenant definitions or requirements (e.g. exclusion of
leases).
3. Segment information
Despite the classification of NewCo as a disposal group held for
sale and discontinued operation, there is no change to the Group's
existing operating segments for the purposes of IFRS 8, because the
segment information presented to the Board (Chief Operating
Decision Maker) during the six months to 30 September 2021 for the
purpose of allocating resources and assessing business performance
remained unchanged. As a result, further information is provided to
reconcile the IFRS 8 segmental results to the presentation in the
additional commentary in Financial Statements. All revenue is from
external customers. Such reconciliation is set out below:
Segmental results for the six months to 30 September 2021
a) IFRS 8 Segment results Six months to 30 September 2021
-------------------------- ------------ ------------------------------------
Food & Beverage Solutions
GBPm Primary
Sucralose Products Central Total
Total operations GBPm GBPm GBPm GBPm
--------------------------- -------------------------- ------------ --------------- ---------- -------
Revenue* 528 78 941 - 1 547
Adjusted operating profit 98 31 59 (17) 171
--------------------------- -------------------------- ------------ --------------- ---------- -------
Adjusted operating margin 18.6% 39.3% 6.3% n/a 11.1%
--------------------------- -------------------------- ------------ --------------- ---------- -------
* Includes GBP891 million of revenue recognised in discontinued
operations
Reconciliation of IFRS 8 segmental disclosures to the income
statement and to Additional Commentary in financial statements:
(i) Revenue
Six months to 30 September 2021
-------------------------- ------------ ------------------------------------
Food & Beverage Solutions
GBPm Primary
Sucralose Products Central Total
Continuing operations GBPm GBPm GBPm GBPm
-------------------------------------- -------------------------- ------------ --------------- ---------- -------
Segmental revenue - as above 528 78 941 - 1 547
Reclassification to discontinued
operations - - (891) - (891)
Reclassification of European PP
business to F&BS 50 - (50) - -
As presented in Additional Commentary
in financial statements (page 10) 578 78 - - 656
-------------------------------------- -------------------------- ------------ --------------- ---------- -------
(ii) Adjusted operating profit
Six months to 30 September 2021
-------------------------- ------------ ------------------------------------
Food & Beverage Solutions
GBPm Primary
Sucralose Products Central Total
Continuing operations GBPm GBPm GBPm GBPm
-------------------------------------- -------------------------- ------------ --------------- ---------- -------
Segmental adjusted operating profits
- as above 98 31 59 (17) 171
Transfer of European PP business to
F&BS(1) (11) - 11 - -
Reclassification to discontinued
operations(1) (4) - (70) - (74)
As presented in Additional Commentary
in financial statements (page 10)(2) 83 31 - (17) 97
-------------------------------------- -------------------------- ------------ --------------- ---------- -------
Adjusted operating margin 14.5% 39.3% n/a n/a 14.8%
-------------------------------------- -------------------------- ------------ --------------- ---------- -------
1. Food & Beverage Solutions adjustment relates to the
inclusion of the European Primary Products business which is not
subject to the disposal of the NewCo Business and the inclusion of
certain operating costs which will remain with the Group post
disposal. Primary Products adjustment relates to its results
(excluding the European Primary Products business results) being
classified as a discontinued operation.
2. Total adjusted operating profit for continuing operations is
reconciled to the statutory profit for the period in Note 2.
Segmental results for the six months to 30 September 2020
a) IFRS 8 Segment results Six months to 30 September 2020
-------------------------- ------------ ------------------------------------
Food & Beverage Solutions
GBPm Primary
Sucralose Products Central Total
Total operations GBPm GBPm GBPm GBPm
--------------------------- -------------------------- ------------ --------------- ---------- -------
Revenue* 475 72 842 - 1 389
Adjusted operating profit 98 25 83 (24) 182
--------------------------- -------------------------- ------------ --------------- ---------- -------
Adjusted operating margin 20.5% 34.9% 9.9% n/a 13.1%
--------------------------- -------------------------- ------------ --------------- ---------- -------
* Includes GBP797 million of revenue recognised in discontinued
operations
Reconciliation of IFRS 8 segmental disclosures to the income
statement and to Additional Commentary in financial statements:
(i) Revenue
Restated*
Six months to 30 September 2020
-------------------------- ------------ -------------------------------------
Food & Beverage Solutions
GBPm Primary
Sucralose Products Central Total
Continuing operations GBPm GBPm GBPm GBPm
------------------------------------- -------------------------- ------------ --------------- ----------- -------
Segmental revenue - as above 475 72 842 - 1 389
Reclassification to discontinued
operations - - (797) - (797)
Reclassification of European PP
business to F&BS 45 - (45) - -
As presented in Additional
Commentary in financial statements
(page 10) 520 72 - - 592
------------------------------------- -------------------------- ------------ --------------- ----------- -------
* Prior periods restated to reflect discontinued operations (see
Notes 1 and 6)
(ii) Adjusted operating profit
Restated*
Six months to 30 September 2020
-------------------------- ------------ -------------------------------------
Food & Beverage Solutions
GBPm Primary
Sucralose Products Central Total
Continuing operations GBPm GBPm GBPm GBPm
------------------------------------- -------------------------- ------------ --------------- ----------- -------
Segmental adjusted operating profits
- as above 98 25 83 (24) 182
Transfer of European PP business to
F&BS(1) (4) - 4 - -
Reclassification to discontinued
operations(1) (4) - (87) - (91)
------------------------------------- -------------------------- ------------ --------------- ----------- -------
As presented in Additional
Commentary in financial statements
(page 10) 90 25 - (24) 91
------------------------------------- -------------------------- ------------ --------------- ----------- -------
Adjusted operating margin 17.2% 34.9% n/a n/a 15.4%
------------------------------------- -------------------------- ------------ --------------- ----------- -------
* Prior periods restated to reflect discontinued operations (see
Notes 1 and 6)
1. Food & Beverage Solutions adjustment relates to the
inclusion of the European Primary Products business which is not
subject to the disposal of the NewCo Group and the inclusion of
certain operating costs which will remain with the Group post
disposal. Primary Products adjustment relates to its results
(excluding the European Primary Products business results) being
classified as a discontinued operation.
Segmental results for the year to 31 March 2021
a) IFRS 8 Segment results Year to 31 March 2021
-------------------------- ------------ ----------- ------------------------
Food & Beverage Solutions
GBPm Primary
Sucralose Products Central Total
Total 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%
--------------------------- -------------------------- ------------ ----------- ------------- ---------
* Includes GBP1 596 million of revenue recognised in
discontinued operations
Reconciliation of IFRS 8 segmental disclosures to the income
statement:
(i) Revenue
Restated*
Year to 31 March 2021
-------------------------- ------------ -------------------------------
Food & Beverage Solutions
GBPm Primary
Sucralose Products Central Total
Continuing operations GBPm GBPm GBPm GBPm
------------------------------------------- -------------------------- ------------ ----------- -------- --------
Segmental revenue - as above 970 151 1 686 - 2 807
Reclassification to discontinued
operations - - (1 596) - (1 596)
Reclassification of European PP business
to F&BS 90 - (90) - -
Revenue restated 1 060 151 - - 1 211
------------------------------------------- -------------------------- ------------ ----------- -------- --------
* Prior periods restated to reflect discontinued operations (see
Notes 1 and 6)
(ii) Adjusted operating profit
Restated*
Year to 31 March 2021
-------------------------- ------------ -----------------------------
Food & Beverage Solutions
GBPm Primary
Sucralose Products Central Total
Continuing operations GBPm GBPm GBPm GBPm
--------------------------------------------- -------------------------- ------------ ----------- -------- ------
Adjusted operating profit - segments 177 55 158 (51) 339
Transfer of European PP business to F&BS(1) (14) - 14 - -
Reclassification to discontinued
operations(1) (7) - (172) - (179)
--------------------------------------------- -------------------------- ------------ ----------- -------- ------
Adjusted operating profit restated 156 55 - (51) 160
--------------------------------------------- -------------------------- ------------ ----------- -------- ------
Adjusted operating margin 14.7% 36.8% n/a n/a 13.3%
--------------------------------------------- -------------------------- ------------ ----------- -------- ------
* Prior periods restated to reflect discontinued operations (see
Notes 1 and 6)
1. Food & Beverage Solutions adjustment relates to the
inclusion of the European Primary Products business which is not
subject to the disposal of the NewCo Group and the inclusion of
certain operating costs which will remain with the Group post
disposal. Primary Products adjustment relates to its results
(excluding the European Primary Products business results) being
classified as a discontinued operation.
Six months to Six months to Year to
30 September 30 September 31 March
2021 2020 2021
b) Geographic disclosure: revenue - total operations GBPm GBPm GBPm
------------------------------------------------------ -------------- -------------- ----------
Food & Beverage Solutions
North America 260 240 485
Asia, Middle East, Africa and Latin America 151 131 269
Europe 117 104 216
-------------------------------------------------------- -------------- -------------- ----------
Food & Beverage Solutions - total 528 475 970
-------------------------------------------------------- -------------- -------------- ----------
Sucralose - total 78 72 151
-------------------------------------------------------- -------------- -------------- ----------
Primary Products
Americas 891 797 1 596
Rest of the world 50 45 90
-------------------------------------------------------- -------------- -------------- ----------
Primary Products - total 941 842 1 686
-------------------------------------------------------- -------------- -------------- ----------
Total 1 547 1 389 2 807
-------------------------------------------------------- -------------- -------------- ----------
Revenue - reconciliation to the income statement
Six months to 30 September 2021 Six months to Year to
GBPm 30 September 31 March
2020 2021
GBPm GBPm
-------------------------------------------------- -------------------------------- -------------- ----------
Revenue - geographic disclosure - total operations 1 547 1 389 2 807
Transfer of European PP business to F&BS 50 45 90
Reclassified to discontinued operations (941) (842) (1 686)
---------------------------------------------------- -------------------------------- -------------- ----------
Revenue - continuing operations 656 592 1 211
---------------------------------------------------- -------------------------------- -------------- ----------
4. Exceptional items
Exceptional items recognised in the income statement are as
follows:
Restated* Restated*
Six months Six months Year to
to to 31 March
30 September 30 September
2021 2020 2021
Income statement - continuing Footnotes GBPm GBPm GBPm
operations
-------------------------------------- ----------- --------------- -------------- ----------
Costs associated with the separation
and disposal of NewCo (a) (41) (5) (19)
Impairment related to the disposal (b)
of NewCo (13) - -
Restructuring costs (c) (2) (12) (12)
Historical legal matters (d) (3) 2 (3)
Exceptional items included in
profit before tax (59) (15) (34)
--------------------------------------------------- --------------- -------------- ----------
US tax credit - - 7
UK tax charge (e) (6) - -
-------------------------------------- ----------- --------------- -------------- ----------
Exceptional items included in
income tax (6) - 7
--------------------------------------------------- --------------- -------------- ----------
Exceptional items - continuing
operations (65) (15) (27)
--------------------------------------------------- --------------- -------------- ----------
Discontinued operations
Restructuring costs (2) (3) (8)
Exceptional items - discontinued
operations (2) (3) (8)
--------------------------------------------------- --------------- -------------- ----------
Exceptional items - total operations (67) (18) (35)
--------------------------------------------------- --------------- -------------- ----------
* Prior periods restated to reflect discontinued operations (see
Notes 1 and 6)
Continuing operations
a) In the six months to 30 September 2021 the Group announced it
had entered into an agreement to sell a controlling interest in
NewCo. The associated transaction and separation costs during this
period totalled GBP41 million which consisted principally of
external advisor fees, which were recognised within Central.
b) Following this agreement to sell a controlling interest in
NewCo, the Group has assessed all assets for impairment. This
resulted in no impairment of assets held for sale. However, for the
assets remaining with the Group, an impairment charge of GBP13
million was recognised. This charge consisted principally of the
write-off of certain items of plant and equipment in the Group's
loss-making European Primary Products business. In addition,
certain IT and other assets which are expected to have no future
benefit to the Group following completion of the Transaction have
been fully impaired.
c) The Group recorded GBP2 million of restructuring costs
relating to productivity and simplification projects, principally
in relation to Global Operations cost-saving initiatives. Of the
GBP2 million charge, GBP1 million was recorded in Food &
Beverage Solutions whilst GBP1 million was recognised within
Central.
d) The Group recorded a net GBP3 million charge related to
historical legal matters in the US, including a credit of GBP2
million in relation to a partial release of a provision following
the favourable settlement of a legal claim.
e) As a result of the agreement to sell a controlling interest
in NewCo, the amount of brought forward UK tax losses that the
Group expects to be able to utilise in the future has reduced
resulting in an exceptional tax charge of GBP6 million.
Of the net GBP59 million exceptional charge recorded in
operating profit in continuing operations during the period, GBP7
million was reflected in exceptional cash flow. In addition, GBP7
million of exceptional costs recorded in prior year resulted in
cash outflows in the six months to 30 September 2021, such that
cash outflow from exceptional items in continuing operations was
GBP14 million. There was a further net cash outflow of GBP1 million
recognised in discontinued operations.
The most significant exceptional costs in the comparative
periods were costs incurred in relation to the NewCo disposal as
well as restructuring costs related to the Group's
previously-announced programme to simplify the business and drive
productivity. Other exceptional costs and income in the comparative
periods related to historical legal matters offset by a one-off tax
credit due to release of an uncertain tax position in the US.
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 was a tax credit of GBP12 million.
Discontinued operations
The exceptional costs in the current period were restructuring
costs relating to productivity and simplification projects
totalling GBP2 million which were mainly related to Global
Operations cost saving initiatives.
Cash flows from total operations
Cash flows from exceptional items are set out below:
Restated*
Six months Restated* Year
to Six months to
30 September to 30 September 31 March
Net cash outflows on exceptional 2021 2020 2021
items Footnotes GBPm GBPm GBPm
-------------------------------------- ----------- -------------- ----------------- ----------
Costs associated with the separation
and disposal of NewCo (a) (10) - (15)
Restructuring costs (c) (4) (13) (9)
Historical legal matters (d) - - 1
Asset remediation - - (1)
Net cash outflows - continued
operations (14) (13 ) (24)
--------------------------------------------------- -------------- ----------------- ----------
Net cash outflows - discontinued
operations (1) (4) (8)
--------------------------------------------------- -------------- ----------------- ----------
Net cash outflows - total operations (15) (17 ) (32)
--------------------------------------------------- -------------- ----------------- ----------
* Prior periods restated to reflect discontinued operations (see
Notes 1 and 6)
Exceptional cash flows
The total cash adjustment relating to exceptional items
presented in the cash flow statement of GBP46 million (inflow)
reflects the exceptional costs in profit before tax of GBP61
million (total operations) which were GBP46 million higher than net
cash outflows of GBP15 million set out in the table above.
5. Income tax expense
Income tax for the six months is presented as follows:
-- Statutory current and deferred taxes from continuing
operations of GBP9 million, which when divided by statutory profit
before tax from continuing operations of GBP21 million gives a
statutory effective tax rate of 44.7%;
-- The impact on this income tax charge of the tax effect of
adjusting and exceptional items and a tax item that is itself an
exceptional item, such that adjusted income tax expense from
continuing operations is GBP17 million, which when divided by
adjusted profit before tax from continuing operations of GBP85
million gives an adjusted effective tax rate of 20.2%; and
-- Income tax on discontinued operations is shown in Note 6 - Discontinued Operations.
Restated* Restated*
Six months to Six months to Year to
30 September 30 September 31 March
2021 2020 2021
Continuing operations GBPm GBPm GBPm
------------------------------------------------- -------------- --------------- ----------
Current tax :
- United Kingdom 5 (1) 3
- Overseas (20) (31) (26)
- Tax credit on exceptional items 10 3 5
- US exceptional tax credit - - 7
- Credit in respect of previous financial years - 2 -
------------------------------------------------- -------------- --------------- ----------
(5) (27) (11)
Deferred tax:
(Expense)/credit for the period (3) 14 8
Credit in respect of previous financial years - - 2
Changes in tax rate 3 - -
Tax credit on exceptional items 2 - -
UK exceptional tax charge (6) - -
------------------------------------------------- --------------
Income tax expense - continuing operations (9) (13) (1)
--------------------------------------------------- -------------- --------------- ----------
Statutory effective tax rate % 44.7% 21.9% 1.2%
--------------------------------------------------- -------------- --------------- ----------
* Prior periods restated to reflect discontinued operations (see
Notes 1 and 6)
Reconciliation to adjusted income tax expense
Restated* Restated*
Six months to Year to
Six months to 30 September 30 September 31 March
2021 2020 2021
Continuing operations GBPm GBPm GBPm
------------------------------------------------------ --------------------------- --------------- ----------
Income tax expense: (9) (13) (1)
Add back the impact of:
Taxation credit on exceptional items (12) (3) (5)
Taxation credit on amortisation of acquired intangibles (2) (1) (3)
Exceptional UK tax charge 6 - -
Exceptional US tax credit - - (7)
-------------------------------------------------------- --------------------------- --------------- ----------
Adjusted income tax expense (17) (17) (16)
-------------------------------------------------------- --------------------------- --------------- ----------
Adjusted effective tax rate % 20.2% 22.5% 12.1%
-------------------------------------------------------- --------------------------- --------------- ----------
6. Discontinued operations
On 12 July 2021 the Group announced that it has entered into an
agreement to sell to KPS a controlling stake in NewCo.
The NewCo Business consists of the following operations:
-- Corn wet mills in the US in Decatur, Illinois; Lafayette, Indiana; and Loudon, Tennessee.
-- Acidulants plants in Dayton, Ohio; Duluth, Minnesota; and Santa Rosa, Brazil.
-- The Group's existing shareholdings in two joint ventures -
Almex in Guadalajara, Mexico and Bio-PDO, in Loudon, Tennessee.
-- Grain elevator network and bulk transfer stations in North America.
Primary Products' European operations are not included in this
transaction and are therefore not part of the discontinued
operations.
The statutory results of the discontinued operations which have
been included in the consolidated income statement for the six
months to 30 September 2021 and the comparative periods were as
follows:
Six months to Six months to 30 September Year to
30 September 2020 31 March
2021 GBPm 2021
Discontinued operations GBPm GBPm
--------------------------------------------------------- -------------- --------------------------- ----------
Revenue 891 797 1 596
Operating profit 104 88 171
Finance expense (2) (2) (4)
Share of profit after tax of joint ventures 8 13 26
---------------------------------------------------------- -------------- --------------------------- ----------
Profit before tax 110 99 193
Income tax charge (20) (11) (29)
---------------------------------------------------------- -------------- --------------------------- ----------
Profit for the period from discontinued operations 90 88 164
---------------------------------------------------------- -------------- --------------------------- ----------
Basic earnings per share from discontinued operations 19.4p 18.9p 35.1p
Diluted earnings per share from discontinued operations 19.2p 18.8p 34.7p
---------------------------------------------------------- -------------- --------------------------- ----------
Adjusted discontinued operation measures are set out on the next
page.
On classification as held for sale, the net assets of the NewCo
disposal group were measured at the lower of their carrying amount
and their fair value less costs to sell. This did not result in any
impairment.
The results of the discontinued operations which have been
included in the consolidated cash flow statement for the six months
to 30 September 2021 and the comparative periods were as
follows:
Six months to Six months to Year to
30 September 30 September 31 March
2021 2020 2021
Discontinued operations GBPm GBPm GBPm
------------------------- -------------- -------------- ----------
Operating 148 183 181
Investing (17) (41) (88)
Financing (10) (13) (24)
-------------------------- -------------- -------------- ----------
Net cash inflow 121 129 69
-------------------------- -------------- -------------- ----------
The following table shows for discontinued operations for the
reconciliation of the key alternative performance measures to the
most directly comparable measures reported in accordance with
IFRS:
Restated
Six months to 30 September 2021 Six months to 30 September 2020
------------------------------------ -----------------------------------------------
GBP million unless IFRS Adjusting Adjusted
otherwise stated reported items reported
Discontinued IFRS Adjusting Adjusted
operations reported items reported
----------------------- ----------- ----------- ---------- ----------------- ---------- ----------------
Revenue 891 - 891 797 - 797
----------------------- ----------- ----------- ---------- ----------------- ---------- ----------------
Operating profit 104 (30) 74 88 3 91
Finance expense (2) - (2) (2) - (2)
Profit after tax of
joint ventures 8 7 15 13 - 13
----------------------- ----------- ----------- ---------- ----------------- ---------- ----------------
Profit before tax 110 (23) 87 99 3 102
Income tax expense (20) 5 (15) (11) (1) (12)
----------------------- ----------- ----------- ---------- ----------------- ---------- ----------------
Profit for the period 90 (18) 72 88 2 90
----------------------- ----------- ----------- ---------- ----------------- ----------
Effective tax rate % 18.3% 17.3% 11.7% 12.1%
Earnings per share:
Number of ordinary
shares(1) - basic 465.2 465.2 464.0 464.0
Basic earnings per
share (pence) 19.4p (3.8p) 15.6p 18.9p 0.5p 19.4p
Number of ordinary
shares(1) - diluted 469.6 469.6 468.8 468.8
Diluted earnings per
share (pence) 19.2p (3.8p) 15.4p 18.8p 0.4p 19.2p
1. Weighted average
(millions)
Restated
Year to 31 March 2021
GBP million unless otherwise stated IFRS Adjusting Adjusted
Discontinued operations reported items reported
Revenue 1 596 - 1 596
Operating profit 171 8 179
Finance expense (4) - (4)
Profit after tax of joint ventures 26 - 26
Profit before tax 193 8 201
Income tax expense (29) (3) (32)
Profit for the year 164 5 169
Effective tax rate % 15.4% 15.8%
Earnings per share:
Number of ordinary shares(1) - basic 464.2 464.2
Basic earnings per share (pence) 35.1p 1.4p 36.5p
Number of ordinary shares(1) - diluted 469.4 469.4
Diluted earnings per share (pence) 34.7p 1.3p 36.0p
1. Weighted average (millions)
The following table shows the reconciliation of the adjusting
items in the current and comparative periods:
Restated
Six months Restated
Six months to Year to
to 30 September 30 September 31 March
2021 2020 2021
Discontinued operations Note GBPm GBPm GBPm
----------
Exceptional costs in operating
profit 4 2 3 8
Held for sale adjustment(1) (32) - -
Total excluded from adjusted operating
profit (30) 3 8
Held for sale adjustment(1) -
profit after tax of joint ventures 7 - -
Total excluded from adjusted profit
before tax (23) 3 8
Tax effect of adjusting items 5 (1) (3)
Total excluded from adjusted profit
for the period (18) 2 5
----------
1. Held for sale adjustments include: cessation of depreciation
and amortisation (reduction in operating costs of GBP23 million),
reclassification of dividends from joint ventures (income of GBP9
million) and cessation of equity accounting (reduction in joint
venture income of GBP7 million).
Held for sale
The major classes of assets and liabilities of NewCo classified
as held for sale as at 30 September 2021 are, as follows:
At 30 September
2021
GBPm
Assets
Goodwill and other intangible assets 49
Property, plant and equipment 714
Investments in joint ventures 101
Investments in equity 11
Inventories 252
Trade and other receivables 141
Derivative financial instruments 55
Other current financial assets 38
Cash and cash equivalents 11
Assets classified as held for sale 1 372
At 30 September
2021
GBPm
Liabilities
Retirement benefit deficit 28
Deferred tax liabilities 66
Trade and other payables 267
Lease liabilities 81
Derivative financial instruments 3
Other current financial liabilities 25
Liabilities directly associated with the assets
held for sale 470
Amounts included in accumulated OCI are shown below:
At 30 September 2021
Accumulated OCI GBPm
Currency translation reserve 38
Actuarial gain (net of deferred
tax) 7
Net gain on cash flow hedges (net
of deferred tax) 28
Reserve of disposal group classified
as held for sale 73
7. 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 six months to 30 September 2021 was 752p (six months to 30
September 2020 - 670p; year to 31 March 2021 - 679p). The dilutive
effect of share-based incentives was 4.4 million shares (six months
to 30 September 2020 - 4.8 million shares; year to 31 March 2021 -
5.2 million shares).
Restated*
Six months to 30 September 2021 Six months to 30 September 2020
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
Profit attributable
to owners of the
Company (GBP
million) 12 90 102 45 88 133
Weighted average
number of ordinary
shares (million) -
basic 465.2 465.2 465.2 464.0 464.0 464.0
Basic earnings per
share (pence) 2.5p 19.4p 21.9p 9.7p 18.9p 28.6p
Weighted average
number of ordinary
shares (million) -
diluted 469.6 469.6 469.6 468.8 468.8 468.8
Diluted earnings
per share (pence) 2.5p 19.2p 21.7p 9.6p 18.8p 28.4p
* Prior periods restated to reflect discontinued operations (see
Notes 1 and 6)
Restated*
Year to 31 March 2021
Continuing operations Discontinued operations Total
Profit attributable to owners of the Company (GBP million) 89 164 253
Weighted average number of ordinary shares (million) - basic 464.2 464.2 464.2
Basic earnings per share (pence) 19.3p 35.1p 54.4p
Weighted average number of ordinary shares (million) - diluted 469.4 469.4 469.4
Diluted earnings per share (pence) 19.1p 34.7p 53.8p
* Prior periods restated to reflect discontinued operations (see
Notes 1 and 6)
Adjusted earnings per share
A reconciliation between profit attributable to owners of the
Company from continuing operations, total operations and the
equivalent adjusted metrics, together with the resulting adjusted
earnings per share metrics is set out below:
Restated* Restated*
Six months Six months Year to
to to 31 March
30 September 30 September 2021
2021 2020 GBPm
Continuing operations Note GBPm GBPm
--------------
Profit attributable to owners
of the Company 12 45 89
Adjusting items:
- exceptional costs in operating
profit 4 59 15 34
- amortisation of acquired intangible
assets 5 5 10
- tax credit on adjusting items (14) (4) (8)
- exceptional tax charge/(credit) 6 - (7)
--------------
Adjusted profit attributable to
owners of the Company 68 61 118
--------------
Adjusted basic earnings per share
(pence) -
Continuing operations 14.5p 13.1p 25.4p
--------------
Adjusted diluted earnings per
share (pence) -
Continuing operations 14.4p 12.9p 25.2p
--------------
* Prior periods restated to reflect discontinued operations (see
Notes 1 and 6)
Restated* Restated*
Six months Six months Year to
to to 31 March
30 September 30 September 2021
2021 2020 GBPm
Total operations Notes GBPm GBPm
--------------- --------------
Adjusted profit attributable to
owners of the Company - Continuing
operations 2 68 61 118
Adjusted profit attributable to
owners of the Company - Discontinued
operations 6 72 90 169
Adjusted profit attributable to
owners of the Company - Total
operations 140 151 287
Adjusted basic earnings per share
(pence) -
Total operations 30.1p 32.5p 61.9p
--------------- --------------
Adjusted diluted earnings per
share (pence) -
Total operations 29.8p 32.1p 61.2p
--------------- --------------
* Prior periods restated to reflect discontinued operations (see
Notes 1 and 6)
8. Dividends on ordinary shares
The Directors have declared an interim dividend of 9.0p per
share for the six months to 30 September 2021 (six months to 30
September 2020 - 8.8p per share), payable on 5 January 2022.
The final dividend for the year to 31 March 2021 of GBP102
million, representing 22.0p per share, was paid during the six
months to 30 September 2021.
9. Net debt - total operations
The components of the Group's net debt are as follows:
At 30 September At 30 September At 31 March
2021 2020 2021
GBPm GBPm GBPm
Borrowings (662) (688) (645)
Lease liabilities(1) (143) (154) (143)
Cash and cash equivalents(2) 396 484 371
Net debt (409) (358) (417)
1. Includes GBP81 million of leases included in liabilities held
for sale as at 30 September 2021 (see Note 6)
2. Includes GBP11 million of cash and cash equivalents included
in assets held for sale as at 30 September 2021 (see Note 6)
A reconciliation of the movement in cash and cash equivalents to
the movement in net debt is as follows:
Six months Six months Year to
to to 31 March
30 September 30 September 2021
2021 2020 GBPm
GBPm GBPm
Net debt at beginning of the period (417) (451) (451)
Net increase in cash and cash equivalents 17 219 135
Net decrease/(increase) in borrowings
and leases 15 (135) (113)
Decrease in net debt resulting from
cash flows 32 84 22
Currency translation differences(1) (10) 15 39
Subsidiaries acquired - - (7)
Leases and non-cash movements (14) (6) (20)
Decrease in net debt in the period 8 93 34
Net debt at end of the period (409) (358) (417)
1. Includes the foreign currency element of 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 31 March 2021 371 (788) (417)
Movements from cash flows 17 15 32
Currency translation differences 8 (18) (10)
Leases and non-cash movements - (14) (14)
At 30 September 2021 396 (805) (409)
10. Investments in equities and financial instruments
Carrying amount versus fair value
The fair value of borrowings, excluding lease liabilities, is
estimated to be GBP691 million (30 September 2020 - GBP735 million;
31 March 2021 - GBP672 million) and has been determined by
discounted estimated cash flows with an applicable market quoted
yield, using quoted market prices, discounted estimated cash flows
based on broker dealer quotations or quoted market prices. The
carrying value of other assets and liabilities held at amortised
cost is not materially different from their fair value.
Fair value measurements recognised in the balance sheet
The table below shows the Group's financial assets and
liabilities measured at fair value at 30 September 2021. The fair
value hierarchy categorisation, valuation techniques and inputs,
are consistent with those used in the year to 31 March 2021.
At 30 September 2021 At 31 March 2021
Level Level Level Total Level Level Level Total
1 2 3 GBPm 1 2 3 GBPm
GBPm GBPm GBPm GBPm GBPm GBPm
Assets at fair value
Investments in equities(1) - - 61 61 - - 59 59
Derivative financial instruments:
- forward foreign exchange - - - - - - - -
contracts
* commodity derivatives(2) 58 - - 58 24 - - 24
Other financial assets (commodity
pricing contracts) (3) - 8 30 38 - 21 11 32
Assets at fair value 58 8 91 157 24 21 70 115
Liabilities at fair value
Derivative financial instruments:
* forward foreign exchange contracts - (17) - (17) - - - -
* commodity derivatives (3) - - (3) (9) - - (9)
Other financial liabilities
(commodity pricing contracts)
(2) - (4) (21) (25) - - (26) (26)
Liabilities at fair value (3) (21) (21) (45) (9) - (26) (35)
1. Includes FVPL assets of GBP32 million (31 March 2021 - GBP29
million) and FVOCI assets of GBP29 million (31 March 2021 - GBP30
million)
2. GBP47 million (31 March 2021 - GBP5 million) relates to
derivatives to hedge cash flow risk associated with forecast
purchases and sales of commodities or purchases of chemicals used
in the manufacturing process which are designated as cash flow
hedges
3. Fair value adjustments due to risks hedged
Investments in equities are presented in the statement of
financial position as follows:
At 30 September At 31 March 2021
2021
Assets Assets
GBPm GBPm
Investments in equities 50 59
Classified as assets held for sale 11 -
Derivative assets/(liabilities) and other financial
assets/(liabilities) are presented in the statement of financial
position as follows:
At 30 September At 31 March 2021
2021
Assets Liabilities Assets Liabilities
GBPm GBPm GBPm GBPm
Non-current derivative financial
instruments: - - 1 -
Current derivative financial instruments - (17) - -
Commodity derivatives 3 - 23 (9)
Total current derivative financial
instruments 3 (17) 23 (9)
Other current financial assets/(liabilities)
(commodity pricing contracts) - - 32 (26)
Classified as assets/(liabilities)
held for sale 93 (28) - -
Included in commodity derivatives set out above are cash flow
hedges that relate to discontinued operations, of which the most
significant relate to cash flow hedging using natural gas futures.
The Group did not cease cash flow hedging such items upon
classification of NewCo as held for sale but will do so upon
completion of the Transaction.
The Group manages its US net corn position, comprising the
purchase, sale and inventory of corn and corn-based goods,
including co-products, on a net basis. The Group has designated the
components of its US net corn position in effective fair value
hedge accounting relationships whereby the hedged item is a group
of items with offsetting risk positions. This results in each
element of the net corn position being marked to market. The Group
uses financial instruments (mainly corn futures contracts) as
hedging instruments to manage this net position. Recording all
components of the US net corn position at fair value also aligns
with the underlying economics and risk management of the business.
All changes in fair value of hedged items and hedging instruments
are recorded in operating costs.
The most significant unobservable inputs in the valuation of US
commodity contracts remain the future price of co-product positions
and basis and so are included as Level 3 financial instruments.
Basis represents the difference in price between the corn pricing
on the Chicago Mercantile Exchange and localised pricing that can
be achieved for physical delivery. It is typically driven by local
supply, demand and logistics factors. Both co-product positions and
basis are valued based on the Group's own assessment of the
particular commodity, its supply and demand and expected pricing. A
25% movement in the price of co-products and 50% movement in the
price of basis would result in a net fair value movement of GBP16
million and GBP13 million respectively.
The derivative and other financial instruments included within
the Group's Level 2 financial instruments are valued based on
observable inputs. The commodity pricing contracts are valued by
reference to the Chicago Mercantile Exchange.
Included in investments in equities are assets classified as
FVOCI. These relate principally to long-term strategic investments
that we do not control, nor have significant influence over. The
investments are non-listed and are mainly start-ups or in the
earlier stages of their lifecycle. Therefore, fair value has been
determined based on the most recent funding rounds adjusted for
indicators of impairment. The fair values assigned to each of the
investments have different significant unobservable inputs.
For assets and liabilities that are recognised in the financial
statements at fair value on a recurring basis, the Group determines
whether transfers have occurred between levels in the hierarchy by
re-assessing categorisation (based on the lowest level of input
that is significant to the fair value measurement as a whole) at
the end of the reporting period. There were no transfers between
Level 1 and Level 2 fair value measurements during the period, and
no transfers into or out of Level 3 fair value measurements during
the six months to 30 September 2021.
The following table reconciles the movement in the Group's net
financial instruments and fair value adjustments due to risks
hedged classified in 'Level 3' of the fair value hierarchy:
Commodity Commodity
pricing pricing
contracts contracts
- assets - liabilities Financial assets at FVPL Financial assets at FVOCI Total
GBPm GBPm GBPm GBPm GBPm
At 1 April 2021 11 (26) 29 30 44
Income statement:
- prior year amounts
settled (6) 22 - - 16
- current year unrealised
net gain/(loss) in
operating profit 25 (17) - - 8
Other comprehensive income - - - (1) (1)
Non-qualified deferred
compensation arrangements - - 1 - 1
Purchases - - 2 - 2
Disposals - - (2) - (2)
Currency translation
differences - - 2 - 2
Reclassification to assets
held for sale (30) 21 (11) - (20)
At 30 September 2021 - - 21 29 50
11. Retirement benefit obligations
At 30 September 2021, the Group's retirement benefit obligations
are in a net deficit of GBP114 million (31 March 2021 - deficit of
GBP140 million). On disposal of the NewCo Business, the Group will
retain all US defined benefit pension schemes but certain funded
non-qualified deferred compensation arrangements as well as the
unfunded post-retirement medical plan relating to employees
transitioning to the NewCo Business (together a net deficit of
GBP28 million) will be disposed of and are therefore classified as
held for sale.
The primary driver for the GBP26 million reduction was from the
re-classification to held for sale in the balance sheet. On a
like-for-like basis the retirement benefit obligation increased
marginally by GBP2 million. The closing total net deficit
substantially comprises the unfunded schemes in the US.
In the six months to 30 September 2021, the main movements in
retirement benefit obligations were as follows, each of which had
no impact on profit and loss (second adjustment recorded in other
comprehensive income):
-- Re-classification of GBP28 million of defined benefit
obligation to held for sale in the balance sheet.
-- Financial assumptions from a lower discount rate and higher
inflation resulted in a larger value being placed on the
liabilities. However this was mitigated by better than expected
returns on assets in the US plans and matched by the UK Group
Scheme 'buy-in' policy.
Other movements in retirement benefit obligations comprise a net
income statement charge of GBP4 million, employer contributions of
GBP5 million and an increase in the net deficit for currency
translation of GBP2 million.
These movements are set out in the following table:
Six months to 30 September
2021
US plans US plans
UK plans (funded) (unfunded) Total
GBPm GBPm GBPm GBPm
Net deficit at 31 March 2021 (18) (14) (108) (140)
Income statement:
- current service costs - - (1) (1)
- administration costs (1) (1) - (2)
- net interest expense - 1 (2) (1)
Other comprehensive income:
- actual return higher than interest
on plan assets 16 19 - 35
- actuarial (loss)/gain:
- changes in financial assumptions (11) (16) (3) (30)
- experience against assumptions (5) - - (5)
Other movements:
- employer's contributions 1 - 4 5
- non-qualified deferred compensation
arrangements - (1) - (1)
- currency translation differences - - (2) (2)
Re-classification to liability held
for sale - 11 17 28
Net deficit at 30 September 2021 (18) (1) (95) (114)
During the year ending 31 March 2022 the Group expects to
contribute approximately GBP8 million to its defined benefit
pension plans and to pay approximately GBP4 million in relation to
retirement medical benefits, principally in the US. The Group also
expects to make a one-off contribution to settle a post transaction
price adjustment in respect of the bulk annuity policy 'buy in' of
the main UK plan.
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 30 September 2021 will have a material
adverse effect on the Group's financial position.
13. 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. In the period to 30
September 2021, following the finalisation of the completion
accounts and working capital adjustment, the final consideration in
respect of the acquisition is GBP60 million (including the fair
value of the 15% that the Group already owned) (a decrease of GBP1
million from the GBP61 million provisional consideration disclosed
in the 31 March 2021 Annual Report) and the final fair value for
identifiable net assets is GBP26 million (an increase of GBP1
million compared to the provisional fair value for identifiable net
assets of GBP25 million disclosed in the 31 March 2021 Annual
Report) . This has resulted in a final goodwill balance at the date
of acquisition of GBP34 million (a decrease of GBP2 million
compared to the provisional goodwill of GBP36 million disclosed in
the 31 March 2021 Annual Report).
Chaodee Modified Starch Co., Ltd ("CMS")
On 10 February 2021, the Group acquired 85% of the shares of CMS
(increased to 90% by October 2021 following the funding of capacity
expansion in which the minority shareholder did not participate), a
well-established tapioca modified food starch manufacturer located
in Thailand. In the six months to 30 September 2021, there have
been no changes to the provisional consideration, provisional fair
value for identifiable net assets and resultant goodwill disclosed
in the 31 March 2021 Annual Report. All amounts remain provisional
until the finalisation of the completion accounts and working
capital adjustments which is expected in the second half of the
financial year.
14. Events after the reporting period
There are no material post balance sheet events requiring
disclosure in respect of the six months to 30 September 2021.
15. Change in accounting policy
As explained in Note 1, the Group has revised its accounting
policy in relation to upfront configuration and customisation costs
incurred in implementing SaaS arrangements. The impact of the
adoption of this revised accounting policy is set out below.
Comparatives have been restated accordingly.
Impact of change in accounting policy
At 1 April 2020 As reported Adjustment As restated
GBPm GBPm GBPm
Goodwill and other intangibles 340 (9) 331
Total assets 2 851 (9) 2 842
Deferred tax liabilities (42) 3 (39)
Total liabilities (1 452) 3 (1 449)
Retained Earnings 629 (6) 623
Total equity 1 399 (6) 1 393
Impact of change in accounting policy
At 30 September 2020 As reported Adjustment As restated
GBPm GBPm GBPm
Goodwill and other intangibles 328 (9) 319
Total assets 2 927 (9) 2 918
Deferred tax liabilities (29) 3 (26)
Total liabilities (1 498) 3 (1 495)
Retained Earnings 674 (6) 668
Total equity 1 429 (6) 1 423
Operating profit* 159 - 159
Profit for the six-month period to 30 September 2020* 133 - 133
Impact of change in accounting policy
At 31 March 2021 As reported Adjustment As restated
GBPm GBPm GBPm
Goodwill and other intangibles 354 (9) 345
Total assets 2 976 (9) 2 967
Deferred tax liabilities (44) 3 (41)
Total liabilities (1 516) 3 (1 513)
Retained Earnings 783 (6) 777
Total equity 1 460 (6) 1 454
Operating profit* 287 - 287
Profit for the year to 31 March 2021* 253 - 253
* Before restatement for discontinued operations.
There is no impact on the Group's basic or diluted earnings per
share and no impact on the total operating, investing or financing
cash flows for the period to 30 September 2020 or year to 31 March
2021.
TATE & LYLE PLC
ADDITIONAL INFORMATION
For the six months to 30 September 2021
Calculation of changes in constant currency
Where changes in constant currency are presented in this
statement, they are calculated by retranslating current period
results at prior period exchange rates. The following table
provides a reconciliation between the six months to September 2021
performance at actual exchange rates and at constant currency
exchange rates. Absolute numbers presented in the table are rounded
for presentational purposes, whereas the growth percentages are
calculated on unrounded numbers.
Change
Six months to 30 2021 in
September Adjusted at constant Underlying constant
performance 2021 FX currency growth 2020* Change currency
Continuing operations GBPm GBPm GBPm GBPm GBPm % %
Revenue 656 46 702 110 592 11% 19%
Food & Beverage
Solutions 83 8 91 1 90 (7%) 2%
Sucralose 31 3 34 9 25 22% 34%
Central (17) (1) (18) 6 (24) 27% 25%
Adjusted operating
profit 97 10 107 16 91 6% 18%
Net finance expense (12) (1) (13) - (13) 5% (3% )
Adjusted profit
before tax 85 9 94 16 78 8% 20%
Adjusted income
tax expense (17) (1) (18) (1) (17) 2% (2%)
Adjusted profit
after tax 68 8 76 15 61 11% 25%
Adjusted diluted
EPS (pence) 14.4p 1.8p 16.2p 3.3p 12.9p 11% 25%
* Prior period restated to reflect discontinued operations (see
Notes 1 and 6). For a reconciliation to segmental results refer to
Note 3.
Impact of changes in exchange rates
The Group's reported financial performance at average rates of
exchange for the six months to 30 September 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
Six months to 30 September 2021 2020 2021 2020
US dollar : sterling 1.39 1.27 1.35 1.29
Euro : sterling 1.16 1.12 1.16 1.10
For the six months to 30 September 2021, net foreign exchange
decreased Food & Beverage Solutions adjusted operating profit
by GBP8 million and decreased Sucralose adjusted operating profit
by GBP3 million, with adjusted profit before tax for the continuing
operations of the Group decreasing by GBP9 million.
Summary of pro-forma financial results for the six months to 30
September 2021
On 21 October 2021, the Group published a document to show the
impact of restatement of prior year financial information for the
shareholder-approved sale of a controlling interest in the Primary
Products Business (NewCo) - within Section II of that document was
included certain pro-forma financial information, which took the
restated continuing operations financial information and showed the
pro-forma effect of further adjustments reflecting additional
factors that will come into effect at or following completion of
the Transaction. These adjustments were for:
-- The financial impact of certain long-term agreements that
will exist between the Group and NewCo; and
-- The Group's equity-accounted share of profits of the NewCo
Business from completion of the Transaction.
Because the adjustments are also not included in the continuing
operations information contained within the half year results for
the six months ended 30 September 2021 disclosed herein, pro-forma
adjustment is given to them as set out below.
While IFRS 5 provides the basis on which to determine the
composition of continuing and discontinued operations, pro-forma
financial information is a non-IFRS measure. In addition, because
such pro-forma financial information contains estimates with
respect to each of the items set out above, it should not be used
to replace the restated statutory financial information but is an
illustration of how the Group will present its financial results
following completion of the Transaction.
This section contains pro-forma financial information for Tate
& Lyle for the six months ended 30 September 2021, which shows
the impact of further adjustments reflecting additional factors
that will come into effect at or following completion of the
Transaction. Pro-forma financial information is a non-IFRS measure.
Because such pro-forma financial information contains estimates
with respect to each of the items set out below, it should not be
used to replace the restated statutory financial information but is
an illustration of how the Group will present its financial results
following completion of the Transaction.
Change
Food in
& Beverage Joint 2021 2020 constant
Pro-forma - six months to Solutions Sucralose Ventures Central Total Total currency
30 September GBPm GBPm GBPm GBPm GBPm GBPm %
Adjusted operating profit
- Continuing operations 83 31 - (17) 97 91 18%
Impact of long-term agreements (3) - - - (3) (3) -
Pro-forma adjusted operating
profit 80 31 - (17) 94 88 18%
Pro-forma share of NewCo joint
venture profit - - 30 - 30 38 (9%)
Net finance expense - - - (12) (12) (13) (3%)
Pro-forma adjusted profit
before tax 80 31 30 (29) 112 113 11%
Pro-forma adjusted tax charge (24) (27) 2%
Pro-forma adjusted profit
for the period 88 86 15%
The table above starts with the adjusted operating profit set
out in Note 3 (six months to 30 September 2021, section (ii)
Adjusted operating profit) and then gives pro-forma effect to each
of the following:
The resultant pro-forma adjusted operating margins are as
follows:
Pro-forma Food & Beverage Solutions Sucralose Central Total
Pro-forma adjusted operating margin 13.9% 39.3% n/a 14.3%
Comparative for the six months to 30 September 2020 - Food &
Beverage Solutions: 16.6%, Sucralose: 34.9%, Total: 14.8%.
This pro-forma adjusted operating margin is stated before
actions the Group expects to take as part of its stated ambition of
adjusted operating margin expansion of at least 50 to 100 bps per
annum for the five years following completion.
Six months to 30 September 2021 As reported Pro-forma
Earnings Per Share
Diluted weighted average number of shares 469.6m 469.6m
Adjusted diluted EPS (pence) 29.8p 18.6p
EPS dilution of 38% (30 September 2020 - 43%) being from 29.8p
as reported to a pro-forma of 18.6p (30 September 2020 - reported
32.1p, pro-forma 18.4p), represents the de-consolidation of
discontinued operations offset by the inclusion of the Group's
share of NewCo joint venture profit.
Such dilution is higher than the expected forward-looking
post-completion EPS dilution of the transaction as t he reduction
in the diluted number of ordinary shares following the proposed
special dividend and share consolidation after completion is not
reflected.
The pro-forma effect on EPS of the impact on the number of
ordinary shares following the planned share consolidation has not
been disclosed as it is unknown at this time as it will be impacted
by the market capitalisation of the Tate & Lyle at time it is
completed. Illustratively, at the closing share price on 2 November
2021 of GBP6.46 a GBP500 million special dividend would result in a
reduction of approximately 77 million shares, representing
approximately 16% of the Group's share capital used for the purpose
of calculating EPS.
The Group's share of the NewCo joint venture profit is set out
in the table below:
Six months to Six months to
30 September 30 September
2021 2020
Share of NewCo joint venture profit: GBPm GBPm
Adjusted profit before tax from discontinued operations(1) 87 102
Pro-forma effect of NewCo's financing facilities (22) (22)
Income from long-term agreements 3 3
Additional standalone costs in NewCo(2) (7) (7)
Adjusted pro-forma profit before tax for NewCo 61 76
Share of NewCo joint venture profit at 49.9% pro-forma equity interest 30 38
1. NewCo joint venture's adjusted profit before tax is before
charging exceptional items of GBP2 million (30 September 2020 -
GBP3 million) and the impact of held for sale adjustments of GBP25
million.
2. Represents additional staff costs required in Newco in order
to replicate back-office activities currently shared across Tate
& Lyle PLC
Statement of Directors' responsibilities
The Directors confirm: that this condensed consolidated set of
financial information has been prepared on the basis of the
accounting policies set out in the Group's 2021 Annual Report, and
in accordance with UK adopted International Accounting Standard 34
"Interim Financial Reporting"; that the condensed consolidated set
of financial statements gives a true and fair view of the assets,
liabilities, financial position and profit or loss as required by
the Disclosure Guidance and Transparency Rules (DTRs) sourcebook of
the United Kingdom's Financial Conduct Authority, paragraph DTR
4.2.4; and that the interim management report herein includes a
fair review of the information required by paragraphs DTR 4.2.7 and
DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
consolidated financial information;
-- a description of the principal risks and uncertainties for
the remaining six months of the financial year; and
-- material related party transactions in the first six months
and any material changes in the related party transactions
described in the last Annual Report.
The Directors are responsible for the maintenance and integrity
of the Company's website. UK legislation governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
The Directors of Tate & Lyle PLC are listed in the Tate
& Lyle Annual Report for the year ended 31 March 2021; the
following changes have been made to the Board in the six months to
30 September 2021. On 1 May 2021, Patrícia Corsi joined the Board
as a non-executive director and as a member of the Remuneration and
Nominations Committees. In addition, non-executive director and
Chair of the Remuneration Committee, Anne Minto retired from the
Board at the AGM on 29 July 2021 and non-executive director,
Sybella Stanley, succeeded Anne as Chair of the Remuneration
Committee from the conclusion of the AGM.
For and on behalf of the Board of Directors:
Nick Hampton Vivid Sehgal
Chief Executive Chief Financial Officer
3 November 2021
INDEPENT REVIEW REPORT TO TATE & LYLE PLC
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2021 which comprises the condensed
(interim) consolidated income statement, condensed (interim)
consolidated statement of comprehensive income, condensed (interim)
consolidated statement of financial position, condensed (interim)
consolidated statement of cash flows, condensed (interim)
consolidated statement of changes in equity and the related
explanatory notes 1 - 15. We have read the other information
contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2021 is not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting" and the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK and Ireland) "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
Group will be prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting".
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Auditor's responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
conclusion is based on procedures that are less extensive than
audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
3 November 2021
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