REG-Tate & Lyle PLC Final Results <Origin Href="QuoteRef">TATE.L</Origin> - Part 2
25/05/2017 07:05
- Part 2: For the preceding part double click ID:nBwbHCRQva
Sales
Operating profit 4 233 127
Finance income 6 2 1
Finance expense 6 (34) (30)
Share of profit after tax of joint ventures and associates 32 28
Profit before tax 233 126
Income tax credit/(expense) 7 22 (5)
Profit for the year - continuing operations 255 121
Profit for the year - discontinued operations 8 1 42
Profit for the year - total operations 256 163
Profit for the year attributable to:
– owners of the Company 256 163
– non-controlling interests – –
Profit for the year 256 163
Earnings per share Pence Pence
Continuing operations:
– basic 9 55.0p 26.1p
– diluted 9 54.2p 25.9p
Total operations:
– basic 9 55.2p 35.1p
– diluted 9 54.4p 34.8p
Analysis of adjusted profit for the year - continuing operations £m £m
Profit before tax - continuing operations 233 126
Adjusted for:
Net charge for exceptional items 5 19 50
Amortisation of acquired intangible assets 12 11
Net retirement benefit interest 6,13 7 6
Adjusted profit before tax - continuing operations 3 271 193
Adjusted income tax expense - continuing operations 3,7 (49) (32)
Adjusted profit for the year - continuing operations 3 222 161
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 March
Notes 2017 2016
£m £m
Profit for the year 256 163
Other comprehensive income/(expense)
Items that have been/may be reclassified to profit or loss:
Fair value gain on cash flow hedges 1 –
Fair value loss on cash flow hedges transferred to the income 4 2
statement
Reclassified and reported in the income statement in respect of (1) –
available-for-sale financial assets
Gain on currency translation of foreign operations 185 60
Fair value loss on net investment hedges (69) (18)
Share of other comprehensive income/(expense) of joint ventures and 12 7 (12)
associates
Amounts transferred to the income statement upon disposal of 16 (1) –
subsidiary
Amounts transferred to the income statement upon disposal of joint 16 – 34
ventures
Tax effect of the above items – –
126 66
Items that will not be reclassified to profit or loss:
Re-measurement of retirement benefit plans
– actual return higher/(lower) than interest on plan assets 13 179 (52)
– net actuarial (loss)/gain on net retirement benefit obligation 13 (106) 45
Tax effect of the above items (30) 2
43 (5)
Total other comprehensive income 169 61
Total comprehensive income 425 224
Analysed by:
– continuing operations 425 156
– discontinued operations – 68
Total comprehensive income 425 224
Attributable to:
– owners of the Company 425 224
– non-controlling interests – –
Total comprehensive income 425 224
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 March
Notes 2017 2016
£m £m
ASSETS
Non-current assets
Goodwill and other intangible assets 401 390
Property, plant and equipment 1 061 926
Investments in joint ventures 12 92 82
Investments in associates 4 3
Available-for-sale financial assets 30 19
Derivative financial instruments 15 21
Deferred tax assets 22 3
Trade and other receivables 1 1
Retirement benefit surplus 13 120 45
1 746 1 490
Current assets
Inventories 441 389
Trade and other receivables 291 301
Current tax assets 1 3
Available-for-sale financial assets – 4
Derivative financial instruments 31 43
Cash and cash equivalents 11 261 317
Assets classified as held for sale 8 – 7
1 025 1 064
TOTAL ASSETS 2 771 2 554
EQUITY
Capital and reserves
Share capital 117 117
Share premium 406 406
Capital redemption reserve 8 8
Other reserves 253 127
Retained earnings 548 370
Equity attributable to owners of the Company 1 332 1 028
Non-controlling interests – 1
TOTAL EQUITY 1 332 1 029
LIABILITIES
Non-current liabilities
Trade and other payables 10 13
Borrowings 11 604 556
Derivative financial instruments 37 19
Deferred tax liabilities 25 21
Retirement benefit deficit 13 259 253
Provisions for other liabilities and charges 17 13
952 875
Current liabilities
Trade and other payables 315 337
Current tax liabilities 57 66
Borrowings and bank overdrafts 11 88 200
Derivative financial instruments 17 22
Provisions for other liabilities and charges 10 23
Liabilities classified as held for sale 8 – 2
487 650
TOTAL LIABILITIES 1 439 1 525
TOTAL EQUITY AND LIABILITIES 2 771 2 554
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 31 March
Notes 2017 2016
£m £m
Cash flows from operating activities
Profit before tax from continuing operations 233 126
Adjustments for:
Depreciation of property, plant and equipment 109 80
Amortisation of intangible assets 40 35
Share-based payments 21 9
Exceptional items 5 (5) 17
Finance income 6 (2) (1)
Finance expense 6 34 30
Share of profit after tax of joint ventures and associates (32) (28)
Changes in working capital and other non-cash movements 4 24
Net retirement benefit obligations (36) (38)
Cash generated from continuing operations 366 254
Interest paid (30) (21)
Net income tax paid (35) (16)
Cash used in discontinued operations 8 (3) (29)
Net cash generated from operating activities 298 188
Cash flows from investing activities
Purchase of property, plant and equipment (127) (179)
Purchase of intangible assets (26) (19)
Disposal of property, plant and equipment 2 –
Cash adjustment in respect of previous acquisitions 3 –
Disposal of businesses, net of cash disposed 3 –
Acquisition of businesses, net of cash acquired 16 – (54)
Disposal of joint ventures 16 – 240
Purchase of available-for-sale financial assets (4) (4)
Disposal of available-for-sale financial assets 4 18
Interest received 2 1
Dividends received from joint ventures and associates 29 83
Net cash (used in)/from investing activities (114) 86
Cash flows from financing activities
Purchase of own shares to trust or treasury (18) (7)
Cash inflow from additional borrowings 66 261
Cash outflow from repayment of borrowings (189) (286)
Repayment of capital element of finance leases (1) (4)
Dividends paid to the owners of the Company 10 (130) (130)
Net cash used in financing activities (272) (166)
Net (decrease)/increase in cash and cash equivalents 11 (88) 108
Cash and cash equivalents:
Balance at beginning of year 317 195
Net (decrease)/increase in cash and cash equivalents (88) 108
Currency translation differences 32 14
Balance at end of year 11 261 317
A reconciliation of the movement in cash and cash equivalents to the movement
in net debt is presented in Note 11.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Capital Attributable Non-
capital and redemption Other Retained to the owners controlling Total
share reserve reserves earnings of the Company interests equity
premium (NCI)
£m £m £m £m £m £m £m
At 1 April 2015 523 8 61 343 935 1 936
Year ended 31 March 2016:
Profit for the year - total operations – – – 163 163 – 163
Other comprehensive income/(expense) – – 66 (5) 61 – 61
Total comprehensive income – – 66 158 224 – 224
Share-based payments, net of tax – – – 6 6 – 6
Purchase of own shares to trust or treasury – – – (7) (7) – (7)
Dividends paid (Note 10) – – – (130) (130) – (130)
At 31 March 2016 523 8 127 370 1 028 1 1 029
Year ended 31 March 2017:
Profit for the year - total operations – – – 256 256 – 256
Other comprehensive income – – 126 43 169 – 169
Total comprehensive income – – 126 299 425 – 425
Share-based payments, net of tax – – – 24 24 – 24
Purchase of own shares to trust or treasury – – – (18) (18) – (18)
Derecognition of put option on NCI – – – 3 3 – 3
Movement on NCI – – – – – (1) (1)
Dividends paid (Note 10) – – – (130) (130) – (130)
At 31 March 2017 523 8 253 548 1 332 – 1 332
TATE & LYLE PLC
NOTES TO THE FINANCIAL INFORMATION FOR THE YEAR ENDED 31 MARCH 2017
1. Background
The financial information on pages 16 to 44 is extracted from the Group’s
consolidated financial statements for the year ended 31 March 2017, which were
approved by the Board of Directors on 24 May 2017.
The financial information does not constitute statutory accounts within the
meaning of sections 434(3) and 435(3) of the Companies Act 2006 or contain
sufficient information to comply with the disclosure requirements of
International Financial Reporting Standards (IFRS) and related interpretations
as adopted for use in the European Union.
The Company’s auditors, PricewaterhouseCoopers LLP, have given an
unqualified report on the consolidated financial statements for the year ended
31 March 2017. The auditors’ report did not include reference to any matters
to which the auditors drew attention without qualifying their report and did
not contain any statement under section 498 of the Companies Act 2006. The
consolidated financial statements will be filed with the Registrar of
Companies, subject to their approval by the Company’s shareholders on 27
July 2017 at the Company’s Annual General Meeting.
2. Basis of preparation
Basis of accounting
The Group’s consolidated financial statements for the year ended 31 March
2017 have been prepared in accordance with International Financial Reporting
Standards (IFRS) and related interpretations as adopted for use in the
European Union and those parts of the Companies Act 2006 that are applicable
to companies reporting under IFRS.
The Directors are satisfied that the Group has adequate resources to continue
to operate for a period of not less than 12 months from the date of approval
of the financial statements and that there are no material uncertainties
around their assessment. Accordingly, the Directors continue to adopt the
going concern basis of accounting.
The Group’s principal accounting policies will be set out in Notes 2 and 3
of the Group’s 2017 Annual Report.
Changes in accounting policy and disclosures
In the current year, the Group has adopted, with effect from 1 April 2016, new
or revised accounting standards as set out below:
- IFRS 11 Joint arrangements (Amendments)
- IAS 16 Property, plant and equipment (Amendments)
- IAS 38 Intangible assets (Amendments)
- IAS 27 Separate financial statements (Amendments)
- IAS 1 Presentation of financial statements (Amendments)
- Annual Improvements to IFRS – 2012-14 cycles
The adoption of these amendments has had no material effect on the Group’s
financial statements.
The following new standards have been issued and are relevant to the Group,
but were not effective for the financial year beginning 1 April 2016, and have
not been adopted early:
- IFRS 15 – Revenue from Contracts with Customers (effective for the
year ending 31 March 2019) The Group has undertaken a review of its commercial
arrangements across all significant revenue streams and geographies including
assessing the timing of revenue recognition as well as focusing on the
accounting for principal and agency relationships, consignment stocks and
discounts provided. As a result of the review, the Group has concluded that
the adoption of IFRS 15 is not expected to have a material impact on reported
revenue or revenue growth rates, and will continue to review its contracts and
transactions with customers to ensure compliance with IFRS 15 on adoption.
- IFRS 9 – Financial Instruments (effective for the year ending 31
March 2019) The Group has undertaken a review of the key areas of IFRS 9
focused principally on classification and measurement of financial assets and
liabilities, impairment of financial assets and hedge accounting. The Group
has concluded that the adoption of IFRS 9 will not have a material impact on
its consolidated results or financial position, and will continue to review
its activities in these areas to ensure compliance with IFRS 9 upon adoption.
- IFRS 16 – Leases (effective for the year ending 31 March 2020) The
standard eliminates the classification of leases as either operating or
finance leases and introduces a single accounting model, and will require the
Group to recognise substantially all of its current operating lease
commitments on the statement of financial position. The financial impact of
this, together with any other implications of the standard, will be assessed
during the 2018 financial year.
There are no other new standards, new interpretations or amendments to
standards or interpretations that have been published that 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 crop harvesting and purchases. Inventory levels typically increase
progressively from September to November and gradually reduce in the first six
months of the calendar year.
Changes in constant currency
Where changes in constant currency are presented in this statement, they are
calculated by retranslating current year results at prior year exchange rates.
This represents a change to the methodology applied in previous years, which
involved retranslating prior year results at current year exchange rates. This
change, which has not had a material impact, has been made to align with how
the majority of external stakeholders view constant currency performance
comparisons. Reconciliations of the movement in constant currency have been
included in the 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,
adjusted operating cash flow and adjusted free cash flow, which are used for
internal performance analysis and incentive compensation arrangements for
employees.
These measures are presented because they provide investors with valuable
additional information about the performance of the business. For the years
presented, adjusted performance measures exclude, where relevant:
* Exceptional items (excluded as they relate to events which are unlikely to
recur, are outside the normal course of business 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);
* Net retirement benefit interest (accounting charges or credits which are not
linked to the underlying performance of the business. The amounts excluded
reflect the net interest cost of post-retirement benefit plans substantially
closed to future accrual); and
* Tax on the above items and tax items that themselves meet these definitions.
Alternative performance measures reported by the Group are not defined terms
under IFRS and may therefore not be comparable with similarly-titled measures
reported by other companies. Reconciliations of the alternative performance
measures to the most directly comparable IFRS measures are presented in Note
3.
Exceptional items
Exceptional items comprise items of income and expense, including tax items
that are material in amount, relate to events which are unlikely to recur, are
outside the normal course of business 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 and expense as exceptional items include, but are not limited
to: 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.
All material amounts relating to exceptional items in the Group’s financial
statements are classified on a consistent basis across accounting periods.
Discontinued operations
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 co-ordinated
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.
Discontinued operations comprised the following activities:
- Eaststarch / Morocco
On 31 October 2015, the Group completed the re-alignment of its Eaststarch
joint venture leading to the disposal of the majority of the Group’s
European Bulk Ingredients business. In a related agreement, the Group also
agreed to sell its corn wet mill in Casablanca, Morocco to Archer Daniels
Midland Inc. (ADM) and completed this disposal on 1 June 2016.
- Sugars and European Starch Pensions settlements
The Group announced on 29 September 2015, that the Commercial Court in London
had handed down a decision in a case brought by American Sugar Refining, Inc.
(ASR) in which it made a number of claims in relation to its acquisition of
the Group’s European Sugars business in 2010. The European Sugars business
formed part of the Group’s discontinued Sugars segment, and accordingly the
costs associated with those claims were recognised within discontinued
operations.
During the year ended 31 March 2016, the Group also made a settlement payment
of £2 million to transfer all remaining obligations under a legacy pension
scheme related to the Group’s discontinued European Wheat Starch business,
which was disposed of in the 2008 financial year.
3. Reconciliation of alternative performance measures
For the reasons set out in Note 2, the Group presents alternative performance
measures including adjusted operating profit, adjusted profit before tax and
adjusted earnings per share.
For the years presented, these alternative performance measures exclude, where
relevant: – exceptional items; – the amortisation of acquired intangible
assets; – net retirement benefit interest; and – tax on the above items
and tax items that themselves meet these definitions.
The following table shows the reconciliation of the key alternative
performance measures to the most directly comparable measures reported in
accordance with IFRS:
Year ended 31 March 2017 Year ended 31 March 2016
£m unless otherwise stated IFRS Adjusting Adjusted IFRS Adjusting Adjusted
Continuing operations Reported items Reported Reported items Reported
Sales 2 753 – 2 753 2 355 – 2 355
Operating profit 233 31 264 127 61 188
Net finance expense (32) 7 (25) (29) 6 (23)
Share of profit after tax of joint ventures and associates 32 – 32 28 – 28
Profit before tax 233 38 271 126 67 193
Income tax credit/(expense) 22 (71) (49) (5) (27) (32)
Non-controlling interests – – – – – –
Profit attributable to owners of the Company 255 (33) 222 121 40 161
Basic earnings per share 55.0p (7.2p) 47.8p 26.1p 8.6p 34.7p
Diluted earnings per share 54.2p (7.1p) 47.1p 25.9p 8.6p 34.5p
Effective tax rate (9.6%) 18.2% 4.0% 16.5%
The following table shows the reconciliation of the adjusting items in the
current and comparative year:
Year ended 31 March
Continuing operations Notes 2017 2016
£m £m
Exceptional items in operating profit 5 19 50
Amortisation of acquired intangible assets 12 11
Total excluded from adjusted operating profit 31 61
Net retirement benefit interest 6 7 6
Total excluded from adjusted profit before tax 38 67
Tax on adjusting items 7 (6) (27)
Exceptional deferred tax credits 5, 7 (65) –
Total excluded from adjusted profit attributable to owners of the (33) 40
Company
The Group also presents two alternative cash flow measures which are defined
as follows:
(a) Adjusted free cash flow represents cash generated from continuing
operations excluding the impact of exceptional items, less net interest paid,
less income tax paid, less capital expenditure.
(b) Adjusted operating cash flow is defined as adjusted free cash flow from
continuing operations, adding back net interest paid, tax paid and retirement
cash contributions, and excluding derivative and margin call movements within
working capital.
The following table shows the reconciliation of these alternative cash flow
performance measures:
Year ended 31 March
2017 2016*
£m £m
Adjusted operating profit from continuing operations 264 188
Adjusted for:
Depreciation and adjusted amortisation 137 104
Share-based payments charge 21 9
Changes in working capital and other non-cash movements 4 24
Net retirement benefit obligations (36) (38)
Capital expenditure (153) (198)
Net interest and tax paid (63) (36)
Adjusted free cash flow 174 53
Add back: net interest and tax paid 63 36
Add back: net retirement cash contributions 42 40
Less: derivatives and margin call movements within changes in (6) (5)
working capital
Adjusted operating cash flow 273 124
* Restated to reflect exclusion of operating post-retirement benefit costs.
The Group presents certain financial measures as defined in its external
financial covenants as well as return on capital employed (ROCE) metrics as
Key Performance Indicators. Net debt to EBITDA and interest cover are defined
under the Group’s financial covenants and reported on a proportionate
consolidation basis. For financial covenant purposes these ratios are
calculated based on the accounting standards that applied for the 2014
financial year, with new accounting standards adopted by the Group subsequent
to 1 April 2014 disregarded. Net debt is calculated using average currency
exchange rates. Average invested operating capital represents the average at
the beginning and end of the period of shareholders’ equity excluding net
debt, net tax assets/liabilities, investment in joint ventures and associates
and net retirement benefit obligations. All ratios are calculated based on
unrounded figures in £ million. The following table presents the calculation
of these alternative measures:
31 March
2017 2016
£m £m
Calculation of Net debt to EBITDA ratio – on a financial covenant
basis
Net debt (see Note 11) 452 434
Further adjustments set out in financial covenants:
to reflect use of average exchange rates in translating net debt (13) (11)
Net debt – on a financial covenant basis 439 423
Adjusted operating profit 264 188
Further adjustments set out in financial covenants:
to reflect proportionate consolidation 48 44
to exclude charges for share-based payments 21 9
to add back depreciation and adjusted amortisation 137 104
Pre-exceptional EBITDA 470 345
Net debt to EBITDA ratio (times) 0.9 1.2
Calculation of interest cover ratio – on a financial covenant
basis
Adjusted operating profit 264 188
Further adjustments set out in financial covenants:
to reflect proportionate consolidation 43 38
to exclude charges for share-based payments 21 9
Operating profit before exceptional items and amortisation of intangible 328 235
assets – on a financial
covenant basis
Adjusted net finance expense 25 23
Further adjustments set out in financial covenants:
to reflect proportionate consolidation – –
Other (1) (1)
Net finance expense – on a financial covenant basis 24 22
Interest cover ratio (times) 13.9 10.7
31 March
2017 2016 2015
£m £m £m
Calculation of return on capital employed
Adjusted operating profit 264 188
Add back amortisation on acquired intangible assets (12) (11)
Profit before interest, tax and exceptional items from continuing 252 177
operations for ROCE
Goodwill and other intangible assets 401 390 340
Property, plant and equipment 1 061 926 750
Working capital, provisions and non-debt derivatives 394 323 339
Other – 29 31
Invested operating capital of continuing operations 1 856 1 668 1 460
Average invested operating capital 1 762 1 564
Return on capital employed (ROCE) % 14.3 11.3
4. Segment information
Segment information is presented on a basis consistent with the information
presented to the Board (the designated Chief Operating Decision Maker) for the
purposes of allocating resources within the Group and assessing the
performance of the Group’s businesses. Continuing operations comprise two
operating segments: Speciality Food Ingredients and Bulk Ingredients. Central,
which comprises central costs including head office, treasury and re-insurance
activities, does not meet the definition of an operating segment under IFRS 8
‘Operating Segments’ but no sub-total is shown for the Group’s two
operating segments in the tables below so as to be consistent with the
presentation of segment information presented to the Board. Both segments are
served by a single manufacturing network, and receive services from a number
of global support functions. The segmental allocation of costs is performed
using standard product costs to allocate all direct costs (including
plant-based depreciation) and allocation keys for all indirect costs
(including share-based payments and amortisation) which reflect the value of
service provided to each operating unit, consistently applied over time.
The Board uses adjusted operating profit as the measure of the profitability
of the Group’s businesses. Adjusted operating profit is, therefore, the
measure of segment profit presented in the Group’s segment disclosures.
Adjusted operating profit represents operating profit before specific items
that are considered to hinder comparison of the trading performance of the
Group’s businesses year-on-year. During the years presented, the items
excluded from operating profit in arriving at adjusted operating profit were
the amortisation of acquired intangible assets and exceptional items. The
segmental classification of exceptional items is detailed in Note 5.
An analysis of total assets and total liabilities by operating segment is not
presented to the Board but it does receive segmental analysis of net working
capital (inventories, trade and other receivables, less trade and other
payables). Accordingly, the amounts presented for segment assets and segment
liabilities in the tables below represent those assets and liabilities that
comprise elements of net working capital. The segmental split of working
capital allocates raw material and co-product inventories, and associated
payables, based on the segmental split of primary capacity. Other payables,
work in progress and finished goods inventories and receivables are allocated
based on the products to which they relate. The segment results were as
follows:
(a) Segment sales and results
Year ended 31 March
Sales Notes 2017 2016
£m £m
Speciality Food Ingredients 996 897
Bulk Ingredients 1 757 1 458
Sales – continuing operations 2 753 2 355
Sales – discontinued operations 8 3 13
Sales – total operations 2 756 2 368
Adjusted operating profit – continuing operations
Speciality Food Ingredients 181 150
Bulk Ingredients 129 84
Central (46) (46)
Adjusted operating profit – continuing operations 264 188
Adjusting items:
– exceptional items 5 (19) (50)
– amortisation of acquired intangible assets (12) (11)
Operating profit – continuing operations 233 127
Finance income 6 2 1
Finance expense 6 (34) (30)
Share of profit after tax of joint ventures and associates 32 28
Profit before tax – continuing operations 233 126
Profit before tax – discontinued operations 8 1 47
Profit before tax – total operations 234 173
Year ended 31 March
2017 2016
% %
Adjusted operating margin
Speciality Food Ingredients 18.2% 16.7%
Bulk Ingredients 7.3% 5.8%
Central n/a n/a
Total – continuing operations 9.6% 8.0%
(b) Segment assets/(liabilities)
At 31 March 2017
Assets Liabilities Net
£m £m £m
Net working capital
Speciality Food Ingredients 371 (129) 242
Bulk Ingredients 349 (146) 203
Central 13 (50) (37)
Group working capital – continuing and total operations 733 (325) 408
Other assets/(liabilities) 2 038 (1 114) 924
Group assets/(liabilities) 2 771 (1 439) 1 332
At 31 March 2016
Assets Liabilities Net
£m £m £m
Net working capital
- More to follow, for following part double click ID:nBwbHCRQvcRecent news on Tate & Lyle
See all newsREG - Tate & Lyle PLC Aviva PLC - Holding(s) in Company
AnnouncementREG - Tate & Lyle PLC - Directorate change
AnnouncementREG - Tate & Lyle PLC - Holding(s) in Company
AnnouncementREG - Tate & Lyle PLC - Holding(s) in Company
AnnouncementREG - Tate & Lyle PLC - Director/PDMR Shareholding
Announcement