REG - Tate & Lyle PLC - Final Results
09/06/2022 07:00
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RNS Number : 2398O Tate & Lyle PLC 09 June 2022
Full year results for the year ended 31 March 2022
Issued: Thursday 9 June 2022
Strong top-line growth, accelerated innovation and major strategic milestone
passed
HEADLINES
· Continuing operations (new Tate & Lyle) delivered +18% revenue and
+14% profit(1) growth
· Significant acceleration in innovation with +35% New Product revenue
growth
· Effective management of cost inflation through pricing, productivity and
cost discipline
· Major strategic divestment re-positions Tate & Lyle as
growth-focused food & beverage solutions business
· Acquisition of leading dietary fibre business in China significantly
strengthens fortification platform
· Double-digit reduction in GHG emissions in last two years(2) and new
carbon net zero commitment by 2050
· Strong balance sheet enables investment for growth and payment of £500m
special dividend in May 2022
FINANCIAL SUMMARY(3)
Adjusted results(4) Statutory results
2022 2021 vs 2021 2022 2021 vs 2021
Continuing operations
Revenue £1,375m £1,211m +18% £1,375m £1,211m +14%
Profit before tax £145m £134m +14% £42m £90m (54%)
Diluted earnings per share 24.9p 25.2p +4% 5.5p 19.1p (71%)
Free cash flow £72m £153m (£81)m
Discontinued operations
Profit after tax £146m £169m (9%) £210m £164m 29%
Total operations
Diluted earnings per share 56.0p 61.2p (4%) 50.2p 53.8p (7%)
Net cash from operating activities £103m £369m (£266)m
Net debt £626m £417m
Dividend per share 21.8p 30.8p (29%)
NICK HAMPTON, CHIEF EXECUTIVE SAID:
"This has been a landmark year for the company. New Tate & Lyle delivered
double-digit organic revenue growth across all regions and double-digit
profit(1) growth despite significant inflation across the supply chain. We
also passed a major strategic milestone by refocusing the Group on our faster
growing speciality food and beverage solutions business. To do this during a
global pandemic, while serving our customers, accelerating innovation and
living our purpose is a testament to the resilience, ambition and agility of
all my colleagues.
Tate & Lyle is now a focused global leader in sweetening, mouthfeel and
fortification, and very well-placed to benefit from growing consumer demand
for healthier food and drink. Our strong balance sheet allows us to invest in
organic and inorganic growth and the acquisition of Quantum Hi-Tech, a leading
dietary fibre business in China, demonstrates our ability to further
strengthen our portfolio and deliver on our growth agenda.
We entered the 2023 financial year with strong top-line momentum, innovation
gathering pace and our productivity programme continuing to deliver benefits.
Customer demand remains high and while the conflict in Ukraine has caused
significant inflation in raw material, energy and logistics costs globally, we
are taking actions to mitigate these pressures including supplementary
pricing.
For the year ending 31 March 2023, we expect further progress with adjusted
profit before tax in line with market expectations and revenue growth
reflecting top-line momentum and the pricing through of higher input costs.
In the near term, our focus remains on continuity of supply, serving our
customers and maintaining our financial strength and strategic progress. We
have emerged from the pandemic a stronger, more ambitious business, and are
excited about our future growth potential."
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1 Adjusted profit before tax for continuing operations
2 Scope 1 and 2 absolute greenhouse gas (GHG) emissions in total operations in
two years from the baseline of year ended 31 December 2019
3 Continuing operations is Food & Beverage Solutions (including European
Primary Products business and certain stranded costs); Sucralose; and Central
costs. Discontinued operations is the disposed Primary Products business
(now called Primient). Total operations are continuing and discontinued
operations combined.
4 The adjusted results for the year ended 31 March 2022 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 3 and Note 8 to the Financial
Information. Growth percentages are calculated on unrounded numbers. Changes
in adjusted performance metrics are in constant currency throughout this
statement.
HIGHLIGHTS(1)
Continuing operations (new Tate & Lyle) delivers strong revenue and profit
growth
· Revenue +18% and adjusted profit before tax +14%
· Food & Beverage Solutions maintains positive top-line momentum:
− Volume +5% with particularly strong performance from Asia, Middle East,
Africa and Latin America
− Revenue +19% with double-digit organic growth across all regions; 2ppts
growth from acquisitions
− Profit(2) +12% benefitting from positive mix; profit(2) +7% including
Primary Products Europe at £160m
· Robust performance from Sucralose:
− Volume +15% led by strong demand in beverages and the benefit of
production optimisation
− Revenue +13% with higher volume partially offset by customer mix
− Profit(2) +15% at £61m
· Adjusted diluted EPS +4% reflecting a significantly lower adjusted
effective tax rate in the prior year
· Pro-forma adjusted diluted EPS(3) at 40.0p assumes full-year effect of
share consolidation
· Free cash flow of £72m (2021 - £153m) despite higher working capital
requirements of £41m due to business separation planning
Significant acceleration in innovation and New Product revenue growth
· New Product revenue +35% reflecting strong demand for sugar reduction
and clean label solutions
· New Products represent 14% of Food & Beverage Solutions revenue (16%
ex-Primary Products Europe)
· Integration of tapioca and stevia businesses acquired in the 2021
financial year progressing well
Major strategic milestone passed to re-position Tate & Lyle as a
growth-focused business
· Completed sale of controlling stake in Primary Products in the Americas
creating Primient joint venture
· Tate & Lyle re-positioned as a focused global leader in sweetening,
mouthfeel and fortification
Acquisition of Quantum Hi-Tech, a leading dietary fibre business in China
· Significantly strengthens fortification platform and solutions offering
for customers
· Further expands business and presence in higher growth markets of China
and Asia
Effective management of cost inflation in year through pricing, productivity
and cost discipline
· Continuing operations: £100m inflation mitigated by pricing,
productivity, cost discipline and volume/mix
· Six-year productivity programme to deliver US$150m benefits achieved two
years ahead of schedule
Profit(4) from total operations (Group) in-line with last year due to weaker
discontinued operations
· Discontinued operations (Primient) volume in-line; adjusted profit after
tax (9)% lower at £146m
− Sweeteners & Starches profit(2) down (42)% as operational
disruption outweighed firm demand
− Commodities profit(2) 52% higher benefiting from exceptionally strong
market conditions
· Statutory profit after tax (7)% lower at £236m
− Exceptional costs of £96m partially offset by £83m benefit from
held for sale accounting adjustments
· Adjusted diluted EPS (4)% lower at 56.0p; profit before tax in line with
prior year and tax rate higher
· Net cash from operating activities of £103m, £(266)m lower mainly
reflecting £(217)m higher working capital and £(60)m of exceptional cash
costs (mainly Primient disposal related)
· Return on capital employed of 14.9%, down 240bps impacted by
discontinued operations lower profits
· Net debt £209m higher at £626m at 31 March 2022; net debt to EBITDA
ratio 1.3x pre-Primient closing
Strong balance sheet enables investment for growth and c.£500m special
dividend paid in May
· Gross cash proceeds from sale of Primient business of approximately
£1.1bn (including favourable working capital adjustment to recover working
capital investment) subject to post-completion adjustments
· Returned c.£500m to shareholders in May 2022 by a special dividend and
associated share consolidation
· Recommended final dividend of 12.8p reflects new earnings base and
associated share consolidation
Good progress on sustainability programme and building a more agile and
inclusive culture
· Scope 1 and 2 absolute GHG emissions 12% lower(5); new commitment to be
carbon net zero by 2050
· Building agile, ambitious and diverse culture; 42% of top 500 managers
in new Tate & Lyle are women
· New targets established to progress equity, diversity and inclusion over
next 2, 5 and 10 years
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1 Adjusted metrics percentage changes are in constant currency
2 Adjusted operating profit
3 Pro-forma EPS calculation shown in Additional Information at the end of this
statement
4 Adjusted profit before tax
5 Reduction against baseline of year ended 31 December 2019; total operations
MAJOR MILESTONE PASSED IN STRATEGIC TRANSFORMATION
Tate & Lyle re-positioned as a growth-focused speciality food and beverage
solutions business
Following the sale of a controlling stake in Primary Products in the Americas,
now called 'Primient' (this transaction is explained in more detail later in
this statement), Tate & Lyle has been re-positioned as a leading global
speciality food and beverage solutions business focused on faster growing
markets. With our leading expertise in sweetening, mouthfeel and
fortification, this provides the opportunity to further:
· Benefit from growing global consumer demand for healthier food and drink
· Accelerate growth through a step-up in R&D investment and innovation
· Increase the focus on solutions development to support and strengthen
customer relationships.
During the year, we made good progress accelerating growth in Food &
Beverage Solutions and positioning the business for future growth:
· Double-digit revenue growth in each region with New Product revenue up
35% in constant currency
· New Product revenue is 14% of Food & Beverage Solutions revenue (16%
ex-Primary Products Europe)
· Value of wins from new business pipeline increased by 23%
· 10 New Products and more than 30 stevia-based sweetener solutions
launched from innovation pipeline
· Agreement to acquire Quantum Hi-Tech (Guangdong) Biological Co., Ltd, a
leading dietary fibre business in China
· Projects to build growth capacity in progress with total capital
expenditure in 2023 financial year expected to be in the £90 million to £100
million range.
We plan to increase investment in R&D and innovation to more than 4% of
Food & Beverage Solutions revenue each year (year ended 31 March 2022 -
3.4%), and expect to grow revenue from New Products to around 20% of Food
& Beverage Solutions revenue by the financial year ending 31 March 2027.
With our new strategic focus, positive top-line momentum, and plans to
increase investment in R&D and innovation, we are confident we have a
strong platform to drive organic growth, supplemented by acquisitions. Our
ambition for the five years ending 31 March 2027 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
on average
· Organic return on capital employed improvement of 50 basis points per
annum on average.
The performance of Food & Beverage Solutions over the four years ended 31
March 2022 with a compound annual revenue growth of 8%(1) validates this
ambition and demonstrates the potential of the new Tate & Lyle as a
growth-focused business.
Primient well-positioned for the future
Primient is a leading producer of food and industrial ingredients made from
plant-based, renewable sources. It has a strong future as a privately owned
business, supported by Tate & Lyle as owners of a 49.9% interest, and
controlled by our partner KPS Capital Partners, LP (KPS).
KPS has a proven track record of successfully creating value in manufacturing
and industrial businesses. As partners, we have worked closely together since
the transaction was announced to set up Primient for the future and the
business is now well-positioned to pursue its strategic growth opportunities,
with a strong and established management team.
The twenty-year supply agreements we have in place will ensure both parties
continue to work together for the benefit of the two businesses. Tate &
Lyle will also benefit from an ongoing cash dividend stream from Primient and
potential future value creation from the retained equity stake.
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1 Excludes Sucralose and retained European Primary Products business
OVERVIEW OF THE YEAR
Business environment and trading
The year saw improved customer demand in many of our key markets although the
trading environment remained challenging as we managed significant supply
chain disruption, evolving Covid-19 restrictions, rapidly increasing cost
inflation and, latterly, uncertainty related to the conflict in Ukraine.
In continuing operations (new Tate & Lyle), Food & Beverage Solutions
saw strong demand as in-home consumption remained robust and out-of-home
consumption continued to recover. The business continues to benefit from
increasing global 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 including a
positive 2022 calendar year pricing round, and the impact of acquisitions,
supported strong top-line delivery in the year. Operating profit benefited
from strong mix management, cost discipline in the face of inflationary
headwinds and productivity benefits mitigated by selective investments in
future growth.
Sucralose benefited from a combination of recovering out-of-home consumption
leading to strong volume growth in beverages, increased volume from the
optimisation of production at our plant in McIntosh, Alabama, and being the
only sucralose plant based outside China.
In the continuing business (new Tate & Lyle), we saw cost inflation
totaling £100 million during the year in areas such as energy, labour,
consumables and transportation. This was mitigated by a combination of
pricing, productivity benefits, cost discipline, and volume growth and mix
improvement.
In discontinued operations (Primient), sweetener volume was in line with the
prior year with stronger demand offset by operational disruption including
from the installation of new gas turbines at the facility in Lafayette,
Indiana, to increase long-term efficiency and environmental performance. This,
together with cost inflation particularly in the third quarter of the
financial year (before calendar year contracts were renewed in the fourth
quarter), resulted in lower profits. Commodities saw higher profits due to
exceptionally strong market conditions.
We entered the 2022 calendar year with renewed customer contracts that offset
expected inflation. Since then, the conflict in Ukraine has caused
significant further inflation in raw material (including corn), energy and
logistics costs globally, especially in Europe. A programme of supplementary
price increases has been implemented across our main markets to recover
incremental input costs together with a continued focus on productivity and
cost control. To ensure supply continuity we have committed agreements in
place for key production inputs such as corn and energy covering the majority
of the first half of the 2023 financial year.
Delivering strategic progress
Growth within new Tate & Lyle is being driven by the delivery of our
strategic growth framework. This framework is centered on four pillars -
market focus; portfolio expansion; accelerate innovation; and creating
integrated solutions for customers. Progress in each pillar during the year
is summarised below.
Market focus
· We aim to maximise opportunities in all our markets, to grow above the
market in developed markets and accelerate growth in the faster growing
markets of Asia, Middle East, Africa and Latin America.
· We focus on four global categories - dairy, beverage, bakery and soups,
sauces and dressings - as well as two or three regional categories where we
have local expertise such as confectionery and snacks. This category focus,
combined with our expertise in sweetening, mouthfeel and fortification,
provides a bespoke and attractive offering for customers.
· During the year, in North America revenue from bakery and snacks grew by
19% and from beverages by 12% supported by demand for our fibre and stevia
solutions. In Europe, dairy grew by 14% helped by demand for our clean label
solutions. In Asia, Middle East, Africa and Latin America, revenue grew by
25% with good progress across our focus categories as customers continued to
demand solutions that reduce sugar, calories and fat in their products.
Portfolio expansion
· The integration of the two businesses acquired 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.
− The expanded stevia business delivered revenue 92% higher. To meet
growing customer demand, we are investing in our stevia facility in Anji,
China and our production line in the US to increase capacity, and diversifying
leaf sourcing beyond China.
− The three-year capital investment programme at our facility in Thailand
to significantly increase capacity of higher functionality tapioca starches is
underway.
· In March 2022, we announced the acquisition of Quantum Hi-Tech
(Guangdong) Biological Co., Ltd (Quantum), a leading prebiotic dietary fibre
business in China for a total consideration of US$237 million. Quantum has a
high-quality portfolio of fructo-oligosaccharides (FOS) and
galacto-oligosaccharides (GOS), and this acquisition strengthens our position
as a leading global player in the fast-growing global dietary fibres market.
It also strengthens our fortification platform, enhances our integrated
solutions capabilities, and significantly extends our presence and customer
offering in China and Asia.
Accelerate Innovation
· We continued to invest in R&D by building our strong in-house
scientific expertise and with external partners through open innovation to
create a leading portfolio of New Products and drive top-line growth.
· Investment in R&D increased to 3.4% of Food & Beverage Solutions
revenue.
· New Product revenue grew by 35% with the sweetener platform up 97%
driven by high demand for stevia solutions. Revenue from our mouthfeel
platform was 19% higher reflecting consumer demand for cleaner labels.
· In April 2022, we acquired Nutriati, an ingredient technology business
developing and producing chickpea protein and flour, expanding our capability
to offer customers sustainable, plant-based solutions.
Integrated Solutions
· We continued to focus on creating integrated science-based solutions for
our customers to strengthen our position as their growth partner. Our deep
understanding of how ingredients interact across the food matrix in our core
categories, together with our leading product portfolio and technical
expertise, allows us to provide customers with a bespoke solutions offering.
· We continue to invest in accelerating our solutions offering by
strengthening our customer-facing capabilities in areas such as sensory,
prototyping and category and consumer insights. Pilot programmes are underway
to further develop our ways of working with customers and build stronger
solutions-based partnerships.
· In October 2021, we opened a new Customer Innovation and Collaboration
Centre in Dubai to serve customers in the Middle East and Africa region, where
consumer demand for healthier food and drink is increasing. The Centre's
state-of-the-art technology is accelerating the innovation process for
customers. In May 2022, we opened another Customer Innovation and
Collaboration Centre in Santiago, Chile.
· In April 2021, to support our solutions offering, we launched the
Stabiliser University™, 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™, Sweetener University™ and Fibre University™ - which have
attracted thousands of attendees worldwide.
Delivering on our near-term priorities as we entered the 2022 financial year
Looking after our colleagues and communities
· Appropriate Covid-19 safety protocols remain in place to ensure our
workplaces are safe for our people.
· Established an Employee Resource Group to provide support and
information on mental health.
· Created a new team dedicated to progressing equity, diversity and
inclusion.
· Guided by our purpose, we are actively supporting humanitarian relief
efforts for the Ukrainian people, in particular by supporting charities that
are providing food, clothes and shelter to refugees arriving in the regions of
Poland and Slovakia where we have operations.
Strengthen our relationships with customers
· Partnered with Coca-Cola, Nutrição em Pauta, a leading nutrition
education platform in Brazil, and the Brazilian Society for Food and
Nutrition, 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
· On 12 July 2021, we entered into an agreement to sell a controlling
stake in a new company and its subsidiaries (Primient), comprising our Primary
Products business in North America and Latin America and our interests in the
Almidones Mexicanos S.A de C.V and DuPont Tate & Lyle Bio-Products
Company, LLC joint ventures, to KPS Capital Partners, LP (KPS) (the
Transaction). The Transaction was approved by Ordinary Shareholders at a
general meeting on 30 September 2021 and completed on 1 April 2022. As a
result, KPS holds a 50.1% interest in Primient and has Board and operational
control. Tate & Lyle holds a 49.9% interest in Primient.
· Further details of how we are progressing our strategy is in the
'Delivering strategic progress' section.
Maintain our financial strength
· We continued to execute against our productivity programme to deliver
US$150 million of benefits over a six-year period ending 31 March 2024. In
total operations, US$34 million of benefits were delivered during the year of
which US$26 million was realised from projects in our operations and US$8
million from SG&A savings. Total benefits since the programme started
are now US$158 million, delivering the targeted benefits two years ahead of
schedule.
· Productivity remains an important part of the culture of the new Tate
& Lyle, helping to drive further efficiencies in our business. In
continuing operations, we are targeting a further US$10 million of benefits in
the 2023 financial year.
· Free cash flow from continuing operations was lower at £72 million, due
in part to rising inflation later in the financial year and decisions we took
to preserve service to customers ahead of closing the Primient transaction.
Nonetheless, the Primient transaction has left Tate & Lyle with a strong
balance sheet ready to support investment for growth with pro-forma(1) net
leverage of less than 1.0x net debt to EBITDA.
DIVIDENDS
Proceeds from sale of controlling stake in Primient
On completion of the Transaction, Tate & Lyle received gross cash proceeds
of approximately £1.1 billion (US$1.4 billion), taking into account estimates
of cash, debt, debt-like items and working capital balances at completion.
After one-off transaction and separation costs, as well as estimated tax
liabilities associated with the Transaction, net proceeds were approximately
£0.9 billion (US$1.2 billion) subject to customary post-completion
adjustments in accordance with the Transaction documentation.
£500 million special dividend and associated share consolidation
Having taken into account all relevant considerations, the Board decided to
return approximately £500 million to ordinary shareholders by way of a
special dividend of £1.07 per existing ordinary share. To maintain
comparability, so far as possible, of the Company's share price before and
after the special dividend, it was accompanied by a consolidation and division
of the Company's ordinary share capital resulting in ordinary shareholders
receiving six new ordinary shares for every seven existing ordinary shares
they held. Information about the special dividend and share consolidation
was set out in the shareholder circular dated 7 April 2022. The special
dividend and share consolidation were approved by shareholders at a General
Meeting on 26 April 2022. The share consolidation applied to ordinary
shareholders on the Register on 29 April 2022, while the special dividend was
paid on 16 May 2022.
Final dividend for year ended 31 March 2022
As previously communicated, the sale of the controlling stake in Primient
reduces the Group's earnings base by around 50%. As a result, the Board has
decided to reduce the dividend to reflect this new base. The pay-out ratio
(dividend cost compared to the Group's earnings base) has been maintained at
the same level, and the Board intends to operate a progressive dividend policy
from the new base. The share consolidation reduced the number of ordinary
shares in issue, allowing dividends to be paid over a smaller number of
shares, with the result that dividends per share reduce by less than the 50%.
The Board is recommending a final dividend for the year ended 31 March 2022 of
12.8p (2021 - 22.0p) per share, bringing the full year dividend to 21.8p per
share (2021 - 30.8p). This will be paid on 5 August 2022 to all shareholders
on the Register on 1 July 2022. As well as the cash dividend option,
shareholders will be offered a Dividend Reinvestment Plan alternative. The
interim dividend for the year ending 31 March 2023 is expected to be similarly
adjusted to reflect the new earnings base.
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1 Pro-forma leverage on 1 April 2022 calculated after: completion of Primient
disposal; the £500 million (approx.) special dividend paid to shareholders
and the acquisition of Quantum Hi-Tech (US$237 million).
PURPOSE
New purpose statement
With the challenges of Covid-19, the past year has made us even more
determined to deliver on our purpose. As the new Tate & Lyle, we will be
more ambitious with our purpose and positively impact the world through the
science of food. So that is why, while our three purpose pillars remain
unchanged, we have evolved our purpose statement from 'Improving Lives for
Generations' to 'Transforming Lives through the Science of Food'.
We remain committed to delivering our existing 2025 purpose targets for our
Supporting Healthy Living and Building Thriving Communities purpose pillars -
information on progress against our targets for these two purpose pillars will
be published in our Annual Report 2022. Progress on our targets for our Caring
for our Planet purpose pillar are set out below.
Good progress against our 2030 sustainability targets and commitments
In May 2020, we announced a set of ambitious environmental targets for 2030 to
reduce our greenhouse gas emissions (GHG), beneficially use all the waste we
generate, reduce water use and continue to support sustainable agriculture. We
also committed to eliminate the use of coal in all our operations by 2025. In
September 2020, our Scope 1 and 2 and Scope 3 absolute GHG emissions reduction
targets were validated as science-based by the Science Based Targets
initiative, meaning they are in line with the goals of the Paris Agreement.
In light of the separation of the Tate & Lyle and Primient businesses, we
have recalculated the 2019 baseline for our environmental targets (details
will be in our Annual Report 2022). Despite the material change in Tate
& Lyle's operational footprint, we remain committed to delivering our
existing targets for GHG emissions, waste and water use by 2030.
In both total operations (Tate & Lyle Group) and continuing operations
(new Tate & Lyle), we made good progress against our 2030 targets in the
second year of measurement against our 2019 baseline, as shown in the table
below.
Environmental area 2030 Target Total Continuing operations(1)
operations(1)
Scope 1 and 2 GHG emissions 30% absolute reduction -12% -4%
Scope 3 GHG emissions 15% absolute reduction -1% -5%
Use less water 15% intensity reduction +3% -3%
Beneficial use of waste 100% beneficial use 83% 91%
1 In the two calendar years from the baseline of the year ended 31
December 2019
The 12% reduction in Scope 1 and 2 absolute GHG emissions in total operations
was driven by the completion of projects to replace coal-fired boilers with
natural gas-fired heat and power systems at the plants in Lafayette, Indiana
and Decatur, Illinois (both now part of Primient). Both projects were the
final stage of a multi-year US$150 million capital investment programme to
reduce GHG emissions and increase operational efficiency in our plants. With
the completion of these projects, we delivered on our commitment to eliminate
the use of coal in all our operations four years ahead of schedule.
During the year, we continued to operate our sustainable corn programme in the
US Midwest with Truterra LLC, the only one of its kind in our industry. In
line with our commitment to maintain sustainable acreage equivalent to the
volume of corn we buy annually, we supported 1.4 million acres of sustainable
corn in the year. We also expanded our sustainability programme for stevia
farmers in China, developed in partnership with Earthwatch Europe and the
Nanjing Agricultural University, which helps growers lower their environmental
impact and improve their economic returns. With the decreased concentration of
corn-based products in the new Tate & Lyle, we are working on expanding
our sustainable agriculture commitment to cover more crops than corn, such as
stevia.
In addition to our existing targets, we are setting a new target that, by
2030, we will purchase renewable energy to supply 100% of the electricity we
use, therefore eliminating our Scope 2 GHG emissions. We will report our
progress on this new target next year.
Tate & Lyle commits to being carbon net zero by 2050
During the year, we carried out an analysis of what a net zero carbon
emissions pathway would look like for Tate & Lyle, including comprehensive
Scope 1 and 2 decarbonisation reviews at our four largest plants (after
business separation) and an in-depth review of our Scope 3 emissions. On the
basis of this work, Tate & Lyle is committing to being carbon net zero by
2050. More details will be provided in our Annual Report 2022.
New targets and commitments for equity, diversity and inclusion
We believe people are at their best when they feel they can be themselves, and
businesses are at their best when everyone can be seen, heard and valued.
This is why equity, diversity and inclusion is a key part of our purpose and
a business-wide priority. During the year we launched a set of actionable
targets and commitments for the next two, five and ten years to progress
equity, diversity and inclusion inside our business and also working with our
customers, suppliers and local communities. These targets, which are set out
in full in our Purpose Report 2021 (on our website), include:
· By 2025, we will achieve gender parity in leadership and management
roles
· By 2030, teams at all levels will be representative of their local
communities
· By 2030, we will expand our spend with diverse suppliers globally, with
interim goals for North America supplier diversity by 2027.
We are already making positive progress. On gender equality, for example, in
April 2021 our UK gender pay gap was -1.7% in favour of women. Currently, 56%
of our Executive Committee and 45% of our Board are women. In addition, of the
top 500 managers in new Tate & Lyle, 42% are women.
BOARD AND MANAGEMENT
Changes to the Board of Directors
· Patrícia Corsi joined the Board as a non-executive director on 1
May 2021.
· Dawn Allen joined the Board on 16 May 2022 as Chief Financial
Officer. She replaced Vivid Sehgal, who stepped down from the Board on 3
November 2021.
· Dr Isabelle Esser joined the Board as a non-executive director on 1
June 2022.
Changes to the Executive Committee
· William 'Bill' Magee was appointed as President, North America and as
a member of Tate & Lyle's Executive Committee, with effect from 1 October
2021.
· Jim Stutelberg, President, Primary Products stepped down from the
Executive Committee to take up his new role as Chief Executive, Primient on 1
April 2022.
· Vivid Sehgal stepped down from the Executive Committee on 31
December 2021.
OPERATING PERFORMANCE - CONTINUING OPERATIONS (NEW TATE & LYLE)
Reporting changes
Following the Transaction to sell the controlling stake in Primient which was
announced in July 2021, Primient was classified as held for sale and met the
definition of a discontinued operation under IFRS 5. As a result, Primient is
treated as a discontinued operation for all of the year ended 31 March 2022
and this classification has been adopted in this results statement. The
continuing operations comprise: Food & Beverage Solutions (into which the
European Primary Products business, which is not part of the Transaction, and
certain stranded costs have been combined); Sucralose; and Central costs. The
results for the comparative period have been restated on a consistent basis.
From 1 April 2022 our interest in Primient will be reported as a joint
venture.
Year ended 31 March 2022 Volume change Revenue Revenue growth Adjusted operating profit Adjusted operating profit change
North America +2% £542m +16% - -
Asia, Middle East, Africa and +15% £325m +25% - -
Latin America
Europe(1) +4% £345m +19% - -
Food & Beverage Solutions +5% £1,212m +19% £160m +7%
Memo: Food & Beverage Solutions (before reporting changes) +6% £1,111m +19% £190m +12%
Sucralose +15% £163m +13% £61m +15%
Central costs (£51m) in line
Total - continuing operations £1,375m +18% £170m +12%
The adjusted results for the year ended 31 March 2022 have been adjusted to
exclude exceptional items, amortisation of acquired intangible assets, the tax
on those adjustments and tax items that are themselves exceptional. A
reconciliation of statutory and adjusted information is included in Note 3 to
the Financial Information. Growth percentages are calculated on unrounded
numbers. Changes in revenue and adjusted operating profit are in constant
currency.
1 Includes loss from the retained European Primary Products business for the
year ended 31 March 2022 £(21) million loss (2021 - £(14) million loss) and
cost reallocations (stranded costs) of £(9) million (2021 - £(7) million).
FOOD & BEVERAGE SOLUTIONS
Excellent top-line growth
Volume increased by 5% with revenue 19% higher in constant currency at £1,212
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 pricing through of input cost inflation and higher
corn costs contributed 12ppts of price/mix leverage. Acquisitions contributed
2ppts to revenue growth. European Primary Products is now included in the Food
& Beverage Solutions division.
Looking through the impact of the Covid-19 pandemic and before the impact of
reporting changes, compared to the year ended 31 March 2020, volume was 10%
higher and revenue 28% higher.
Adjusted operating profit was 7% higher in constant currency at £160 million
with the benefit of strong mix management, cost discipline in the face of
inflationary headwinds and productivity benefits mitigated by selected
investments in future growth. Input cost inflation impacted profit,
especially in the final quarter of the 2021 calendar year, before customer
contracts for the 2022 calendar year were renewed that offset expected
inflation while seeking to at least maintain absolute unit margins. Operating
losses in the European Primary Products business increased by £7 million to
£21 million reflecting the impact of higher corn and other input costs.
Excluding this, adjusted operating profit for the division was 12% higher in
constant currency. The effect of currency translation decreased revenue by
£50 million and adjusted operating profit by £7 million.
North America
Top-line momentum continued with volume 2% 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 North
America, driving volume growth ahead of the overall food and beverage market
(which remained in line with the prior year). Growth was driven by good
performance across categories such as beverage, confectionery, dairy, bakery
and nutrition especially for solutions using our fibre, no- or low-calorie
sweetener and clean label texturant portfolios.
Revenue was 16% higher in constant currency at £542 million. Significant
volume to revenue growth leverage reflects good mix with particularly strong
growth from the fibre portfolio and New Products, the impact of acquisitions
and the pricing through of input cost inflation. Revenue for New Products
increased by 43% in North America, with high customer demand for stevia and
allulose sweeteners and fibre solutions.
Asia, Middle East, Africa and Latin America
Volume was 15% higher reflecting double-digit growth in each region, the
impact of acquisitions and a comparative period impacted by the pandemic.
Revenue increased by 25% in constant currency to £325 million. Revenue
growth was strong in each region benefiting from good mix and pricing, higher
volume and the impact of acquisitions.
In Asia, revenue growth was strong in the South East and North Asia, with both
benefiting from customers rebuilding inventory after the pandemic, together
with good revenue growth in both tapioca and stevia. In China, revenue was
slightly higher as good demand in some dairy sub-categories and stevia demand
was partially offset by the exit from some lower margin business.
In March 2022, we agreed to acquire Quantum Hi-Tech (Guangdong) Biological
Co., Ltd (Quantum), a leading prebiotic dietary fibre business in China.
Quantum will strengthen our fortification platform, enhance our integrated
solutions capabilities, and extend our presence and customer offering in China
and Asia.
In Latin America, sugar reduction solutions for customers addressing new
front-of-pack labelling regulations accelerated growth in the Mexico and
Central American region, while growth was also robust in southern Latin
America driven by stevia performance. In Brazil, revenue was lower
reflecting a sustained impact from the pandemic. In Middle East and Africa,
revenue grew strongly reflecting good performance in the United Arab Emirates,
following the opening of our new Customer Innovation and Collaboration Centre
in Dubai in the year, and also in Turkey and South Africa.
Europe
Volume was 4% higher. Revenue for the region was £345 million including
£101 million from the retained European Primary Products business. Revenue
was 19% 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 confectionery categories, good mix
management, the pricing through of input cost inflation and the impact of the
pandemic in the prior year. European Primary Products revenue growth
reflected higher pricing.
New Products
Revenue from New Products (products launched in the last seven years)
increased by 35% in constant currency to £173 million, representing 14% of
Food & Beverage Solutions revenue (16% excluding European Primary
Products), with revenue growth across the three platforms of sweeteners,
mouthfeel and fortification. 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 doubling in the year 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. Revenue in the mouthfeel platform also grew
strongly reflecting good demand for clean label and higher functionality
tapioca starches.
SUCRALOSE
Robust demand
Sucralose volume increased by 15% driven by strong customer demand in the
beverage category as out-of-home consumption recovered and the benefit of
optimisation of production at our facility in Alabama. Industry demand for
sucralose continues to grow in support of sugar reduction initiatives, while
the strong demand for our sucralose also reflected high customer service
levels in a challenged global supply chain environment.
Revenue increased by 13% in constant currency to £163 million reflecting
strong volume growth partially offset by the modest impact of customer mix.
Looking through the impact of the Covid-19 pandemic, compared to the year
ended 31 March 2020, volume was 16% higher and revenue 12% higher.
Adjusted operating profit at £61 million was 15% higher in constant currency
reflecting both operational leverage of higher volume and input cost
inflation. Currency translation decreased revenue by £8 million and
adjusted operating profit by £3 million.
The optimisation of production is expected to continue in the 2023 financial
year generating small volume growth opportunities and creating mitigation for
modest pricing headwinds and ongoing input cost inflation.
OPERATING PERFORMANCE - DISCONTINUED OPERATIONS (PRIMIENT)
Year ended 31 March 2022 Volume change Revenue Revenue growth Adjusted operating profit Adjusted operating profit change
Sweeteners and Starches(1) - - - £68m (42%)
Commodities - - - £74m +52%
Primary Products in the Americas in line £1,757m +15% £142m (16%)
Memo: Primary Products(2) (before reporting changes) in line £1,858m +15% £112m (25%)
The adjusted results for the year ended 31 March 2022 have been adjusted to
exclude exceptional items, amortisation of acquired intangible assets, the tax
on those adjustments and tax items that are themselves exceptional. Adjusted
results for 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 8 to the Financial Information.
Growth percentages are calculated on unrounded numbers. Changes in revenue
and adjusted operating profit are in constant currency.
1 Excludes European Primary Products, which has been retained. Reflects cost
reallocations (stranded costs) transferred to Food & Beverage Solutions
reflecting separation of the businesses (see Note 3).
2 Adjusted results for the former Primary Products operating segment which
included European Primary Products, consistent with how the Group disclosed
the results of the Primary Products operating segment in prior years.
A challenging year
Volume was in line with the prior year with sweetener volume also in line and
industrial starch volume 8% higher. Sweetener volume benefited from improved
out-of-home demand for beverages but was impacted by operational and wider
supply chain disruption. Industrial starch volume benefited from its
strategy to focus on packaging markets as well as a weak prior year impacted
by Covid-19. Revenue at £1,757 million increased by 15% in constant currency
reflecting 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 year ended 31 March 2020, volume was 5% lower and
revenue was 16% higher.
Adjusted operating profit was 16% lower in constant currency at £142 million.
Adjusted operating profit in Sweeteners and Starches at £68 million was 42%
lower in constant currency reflecting increased costs in our operations
including productivity-related operational disruption at the Lafayette,
Indiana facility of £6 million, and other costs from global supply chain
pressures, partially mitigated by benefits from the productivity programme.
Input cost inflation impacted adjusted operating profit, especially in the
final quarter of the 2021 calendar year, before customer contracts for the
2022 calendar year were renewed that offset expected inflation. Commodities
adjusted operating profit at £74 million was 52% higher in constant currency
reflecting exceptionally strong pricing in North American commodities markets.
Currency translation decreased revenue by £81 million and adjusted operating
profit by £8 million.
Sweeteners
Volume was in line with the prior year as out-of-home consumption continued to
recover after declining during Covid-19 lockdowns. The benefit of recovering
demand was offset by the impact of operational disruption. Volume for
customers in the domestic US market increased slightly, while exports to
Mexico declined.
Industrial Starches
Volume was 8% higher as demand for paper and packaging recovered compared to
weaker demand in the prior year. We continued to pursue our strategy to
partner with customers focused on higher growth segments of the packaging
market and more sustainable, plant-based packaging.
Commodities
Commodities delivered adjusted operating profit of £74 million, 52% higher in
constant currency. Supply chain capacity concerns positively impacted North
American commodities pricing driving co-product recoveries higher, especially
in corn oil and corn gluten feed. Dynamics in the US ethanol market also
improved, with pricing stronger on increased industry demand.
ADDITIONAL COMMENTARY IN FINANCIAL STATEMENTS
Year ended 31 March(1) 2022 Restated* Change Constant currency change %
Continuing operations
£m
%
2021
£m
Revenue 1 375 1 211 14% 18%
Adjusted operating profit(2)
- Food & Beverage Solutions 160 156 3% 7%
- Sucralose 61 55 9% 15%
- Central (51) (51) 1% -
Adjusted operating profit 170 160 6% 12%
Net finance expense (25) (26) 4% -
Adjusted profit before tax 145 134 8% 14%
Exceptional items (93) (34) (>99%) (>99%)
Amortisation of acquired intangible assets (10) (10) (4%) (9%)
Profit before tax 42 90 (54%) (37%)
Income tax expense(3) (16) (1) (>99%) (>99%)
Profit for the year - continuing operations 26 89 (71%) (46%)
Profit for the year - discontinued operations 210 164 29% 34%
Profit for the year - total operations 236 253 (7%) 6%
Earnings per share (pence) - continuing operations
Adjusted diluted 24.9p 25.2p (1%) 4%
Diluted 5.5p 19.1p (71%) (46%)
Earnings per share (pence) - total operations
Adjusted diluted 56.0p 61.2p (8%) (4%)
Diluted 50.2p 53.8p (7%) 6%
Cash flow and net debt - total operations
Adjusted free cash flow 16 250
Net debt 626 417
* Restated to reflect discontinued operations (see Notes 2 and 8)
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 3.
2.For a reconciliation to the IFRS 8 segmental results refer to Note 4.
3.Statutory income tax expense on continuing operations of £16 million (2021
- £1 million) includes an adjusted income tax charge of £28 million (2021 -
£16 million), exceptional tax charge of £12 million (2021 - exceptional tax
credit of £7 million) and a tax credit on adjusting items of £24 million
(2021 - £8 million). Refer to Note 7.
Continuing operations - adjusted operating profit
Year ended 31 March 2022 2021 Constant
Adjusted operating profit
£m
£m
currency
change
%
Food & Beverage Solutions
As previously reported 190 177 12%
Costs reallocation(1) (9) (7) (21%)
Retained European Primary Products business(2) (21) (14) (63%)
Food & Beverage Solutions 160 156 7%
Sucralose 61 55 15%
Central costs (51) (51) -
Adjusted operating profit - continuing operations 170 160 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 Primient
disposal transaction.
Continuing operations
Continuing operations comprise: Food & Beverage Solutions (into which the
European Primary Products business, which is not part of the Transaction, and
certain stranded costs have been combined); Sucralose; and Central costs.
Central costs
Central costs, which include head office costs and certain treasury and legal
activities, were in line with the prior year in constant currency at £51
million benefiting from strong discipline on overhead costs which offset
higher costs from continued investment in the business.
Net finance expense and liquidity
Net finance expense from continuing operations at £25 million was 4% lower
(in line with the prior year in constant currency), mainly reflecting lower
net interest on the Group's net retirement benefit liabilities being offset by
a full year of interest on the US$200 million US Private Placement Notes
issued in the first half of the prior year.
Exceptional items
The Group recorded a net exceptional charge of £105 million in continuing
operations, comprising £93 million of exceptional items included in profit
before tax and a £12 million charge included as exceptional items within tax.
Such items principally included the following:
· £79 million of cash costs associated with the transaction to dispose of
the Primary Products business in the Americas ("Primient" or the "Primient
business");
· £13 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 Primient business disposal;
· £9 million net exceptional gain resulting from a variation of certain
benefits within one of the US pension plans. This consists of a non-cash
past service credit of £13 million which has been partially offset by a cash
charge of £4 million;
· £9 million charge related to stabiliser product contamination, an issue
affecting not only the Group but the wider industry, consisting of a £6
million write-off of impacted inventories and receivables and a further £3
million impairment of certain fixed assets;
· £1 million of cash costs relating to productivity and simplification
projects in our operations; and
· £12 million tax charge due to a reduction in the amount of brought
forward UK tax losses and the amount of US State tax credits that the Group
expects to be able to utilise as a result of the agreement to sell a
controlling interest in Primient.
Exceptional cash outflows for the year totalled £60 million (for total
operations), comprising £48 million of cash outflows related to charges
recorded in the current year and £12 million of cash outflows resulting from
exceptional costs recorded in the 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 already exceeded this
target, delivering US$158 million of total benefits to date. During the year
ended 31 March 2022, exceptional cash costs in respect of this programme of
US$4 million (£3 million, total operations) were recognised (either paid or
provided), bringing the total to date to US$52 million.
In the prior year, the Group recorded a net exceptional charge of £34 million
in continuing operations included in profit before tax and a £7 million
credit included as an exceptional item within tax.
Taxation
The adjusted effective tax rate on continuing operations was 19.3% (31 March
2021 - 12.1%). The rate reflects the prevailing rates of corporation tax in
the US and UK, the jurisdictions most applicable to the Group's activities.
The prior year rate benefited from the release of certain tax provisions
following expiry of statute of limitations as well as recognition of certain
tax credits in the US. We expect the adjusted effective tax rate for the year
ending 31 March 2023 to be slightly higher than the current year.
The reported effective tax rate (on statutory earnings) for continuing
operations was 38.4% (31 March 2021 - 1.2%). The higher effective tax rate is
due to the factors highlighted above and the impact of the £12 million
exceptional tax charge on the de-recognition of deferred tax assets in the US
and UK as a result of the agreement to sell a controlling interest in
Primient. The prior year also benefited from an £7 million exceptional tax
credit.
Earnings per share
For continuing operations, adjusted basic earnings per share decreased by 1%
(increase of 4% in constant currency) to 25.2p and adjusted diluted earnings
per share at 24.9p were also 1% lower (4% higher in constant currency). The
increase in constant currency reflects strong business performance mitigated
by a higher adjusted effective tax rate. Statutory diluted earnings per
share decreased by 13.6p to 5.5p, reflecting lower statutory profit for the
year mainly due to higher exceptional charges in the year.
Discontinued operations
Discontinued operations comprises the Primient business which represents a
disposal group.
Year ended 31 March 2022 2021 Change Constant
£m
£m %
currency
change
%
Revenue 1 757 1 596 10% 15%
Primary Products as previously reported - adjusted operating profit 112 158 (29%) (25%)
Costs reallocation to continuing operations(1) 9 7 20% 21%
Transfer of European Primary Products business to continuing operations(2) 21 14 56% 63%
Adjusted operating profit 142 179 (21%) (16%)
Net finance expense (3) (4) 30% 25%
Adjusted share of profit after tax of joint ventures 35 26 38% 37%
Adjusted profit before tax 174 201 (13%) (9%)
Exceptional items (3) (8) 66% 64%
IFRS 5 held for sale adjustments 83 - - -
Profit before tax 254 193 32% 37%
Income tax expense (44) (29) (50%) (51%)
Profit for the year - discontinued operations 210 164 29% 34%
1. Exclusion 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 Primient
disposal transaction.
Adjusted profit after tax for discontinued operations (which excludes the
impact of exceptional items and IFRS 5 held for sale adjustments) of £146
million was 13% lower (9% lower in constant currency) than the prior year,
mainly reflecting weaker operating performance.
IFRS 5 Held for Sale adjustments of £83 million
IFRS 5 requires certain adjustments to assets held for sale, for which the
relevant items to the Group from the Primient disposal transaction were as
follows:
· Cessation of depreciation of assets of the Primient business, this
reduced operating costs by £68 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 share of profit after tax of joint ventures of £27
million, however dividends recognised in the period were recorded as income
within discontinued operations of £42 million.
Such adjustments applied prospectively from 1 July 2021 (being the date at
which the Primient disposal 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 £35
million was 38% higher (37% higher in constant currency) principally due to
higher profits in both joint ventures reflecting good demand for textiles and
cosmetics at Bio-PDO and good demand for sweeteners at Almex. The statutory
share of profit after tax of joint ventures of £8 million reflects the impact
of stopping equity accounting on 1 July 2021 (reduction of £27 million).
Net finance expense
Relates to the interest charge on certain leases, principally railcars.
Exceptional items
Relates to the exceptional charge recognised within the Primient business.
This cash charge of £3 million relates principally to productivity and
simplification projects in its operations.
Total Operations
Total operations of the Group, comprise both the continuing operations and the
discontinued operations.
Cash flow, net debt and liquidity
Year ended 31 March 2022 2021 Change
Adjusted free cash flow(1)
£m
£m
£m
Continuing operations
Adjusted operating profit 170 160 10
Adjusted depreciation and adjusted amortisation 70 87 (17)
Share-based payments charge 10 5 5
Changes in working capital (68) (8) (60)
Capital expenditure (75) (60) (15)
Pensions, tax and interest (39) (31) (8)
Other non-cash movements 4 - 4
Adjusted free cash flow - continuing operations 72 153 (81)
Adjusted free cash flow - discontinued operations (56) 97 (153)
Adjusted free cash flow - total operations 16 250 (234)
1. Adjusted results and a number of other terms and performance measures
used in this document are not directly defined within IFRS. We have provided
descriptions of the various metrics and their reconciliation to the most
directly comparable measures reported in accordance with IFRS and the
calculation (where relevant) of any ratios in Note 3.
Adjusted free cash flow for total operations was £16 million (2021 - £250
million) reflecting investments in working capital following actions to
separate the Primient business and the adverse impact of input cost inflation.
Adjusted free cash flow for total operations excludes cash outflows from
exceptional items in the year of £60 million (2021 - £32 million).
In continuing operations free cash flow was £72 million, £81 million lower
than the prior year. Of this year-on-year reduction, £41 million related to
increased working capital driven by the completion of the sale of Primient
where, to help mitigate the risks of separating our IT systems, we took
decisions to build inventory to ensure good service was maintained to
customers. Higher capital expenditure and the broader impact of inflation
also contributed to the overall reduction.
In discontinued operations, free cash flow was a £(56) million outflow, £153
million lower than the prior year mainly due to the Primient disposal. As
part of the closing of the transaction, US$120 million (£92 million) of
higher working capital was recovered through increased disposal proceeds.
Lower profits and the impact of inflation were further drivers of the
year-on-year decline.
We expect capital expenditure for the 2023 financial year to be in the £90
million to £100 million range, an increase compared to investment in the 2022
financial year of £75 million. The increase reflects increased investment in
growth capacity and investment related to acquired businesses.
Net debt at 31 March 2022 of £626 million was £209 million higher than in
the prior year. The increase primarily reflects dividend payments of £144
million, cash exceptional costs of £60 million and an increase in value of
debt denominated in foreign currencies of £24 million, which more than offset
the free cash flow generated in the period.
Leverage at 31 March 2022 was 1.3x net debt to EBITDA on a total operations
reported basis (2021 - 0.8x) and 1.1x on a covenant basis (2021 - 0.6x).
Following receipt of cash proceeds from the sale of a controlling stake in
the Primient business on 1 April 2022, the £497 million special dividend paid
to shareholders and the acquisition of Quantum, the continuing Group has
pro-forma net leverage of less than 1.0x net debt to EBITDA.
Retirement benefits
The Group maintains pension plans for its current employees and former
employees in a number of countries. Certain of these arrangements are defined
benefit pension schemes. All funded schemes in the UK and US are closed for
further accrual. In the US, the Group also continues to provide an unfunded
post-retirement medical benefit scheme. Consistent with the prior year, 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).
On disposal of the Primient business, the Group retains all US defined benefit
pension schemes but certain funded non-qualified deferred compensation
arrangements as well as the unfunded post-retirement medical plans relating to
employees who transitioned to the Primient business (together representing a
net deficit of £28 million) were disposed of and were therefore classified as
held for sale.
At 31 March 2022, the Group's retirement benefit obligations are in a net
deficit of £107 million (31 March 2021 - net deficit of £140 million).
This decrease of £33 million is principally due to classification of
certain plans as held for sale as mentioned above. Excluding the impact of
the held for sale classification, the net deficit decreased by £5 million
mainly driven by a £13 million decrease as a result of a plan amendment to
vary benefits to the US pension plans for which the past service credit was
recognised within exceptional items. The net deficit decreased further as a
result of employer contributions of £10 million. These decreases were
partially offset by a currency translation charge of £8 million and other
movements of £10 million.
During the year ended 31 March 2022, the asset performance closely matched and
offset the actuarial gain in the funded plans. The actuarial gain was
principally due to higher corporate bond yields in both the US and UK leading
to higher discount rates.
The main UK plan was subject to a 'buy-in' in the 2020 financial year and
therefore the significant decrease in obligations due to a higher discount
rate was largely off-set by a decrease in the value of the 'buy-in' insurance
policy. As a result, the balance sheet for the UK plans remained consistent
with the prior year.
In the year ended 31 March 2022, pension contributions of £10 million were
marginally lower than the prior year. In the first half of the next financial
year, the Group expects to make a one-off contribution of approximately £11
million to settle a post-transaction price adjustment in respect of the bulk
annuity policy 'buy in' of the main UK plan.
CAUTIONARY STATEMENT AND CONFERENCE CALL DETAILS
This statement of Full Year Results contains certain forward-looking
statements with respect to the financial condition, results, operations and
businesses of Tate & Lyle PLC. These statements and forecasts involve risk
and uncertainty because they relate to events and depend upon circumstances
that will occur in the future. There are a number of factors that could cause
actual results or developments to differ materially from those expressed or
implied by these forward-looking statements and forecasts.
A copy of this statement of Full Year Results for the year ended 31 March 2022
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, 5 Marble Arch, London W1H 7EJ.
Webcast and Q&A Details
Presentation Only
A presentation of the results by Chief Executive, Nick Hampton, and Chief
Financial Officer, Dawn Allen, will be available to view on our website from
07.00 (BST) on Thursday 9 June 2022. To access the presentation,
visit http://tateandlyle-events.com/ (http://tateandlyle-events.com/) .
Please note that the Q&A will not be accessible via this link.
Presentation with Q&A
This presentation will be live streamed at 10.00 (BST), and will then be
followed by a live Q&A session. Please register to view this webcast with
Q&A by visiting
https://event.on24.com/wcc/r/3794942/654DD352955B166EBE71F4955BA3C172
(https://event.on24.com/wcc/r/3794942/654DD352955B166EBE71F4955BA3C172)
. 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
(mailto:lucy.huang@tateandlyle.com) .
The archive version of the webcast with Q&A will be available on the link
http://tateandlyle-events.com/ (http://tateandlyle-events.com/) within two
hours of the end of the live broadcast.
For more information contact Tate & Lyle PLC:
Christopher Marsh, VP Investor Relations
Tel: Mobile: +44 (0) 7796 192 688
Nick Hasell, FTI Consulting (Media)
Tel: Mobile: +44 (0) 7825 523 383
CONSOLIDATED INCOME STATEMENT
Year ended 31 March
Restated*
Notes 2022 2021
£m £m
Continuing operations
Revenue 4 1 375 1 211
Operating profit 67 116
Finance income 6 1 1
Finance expense 6 (26) (27)
Profit before tax 42 90
Income tax expense 7 (16) (1)
Profit for the year - continuing operations 26 89
Profit for the year - discontinued operations 210 164
Profit for the year - total operations 236 253
Attributable to:
Owners of the Company 236 253
Non-controlling interests - -
Profit for the year - total operations 236 253
Earnings per share Pence Pence
Continuing operations:
- basic 9 5.5p 19.3p
- diluted 9 5.5p 19.1p
Total operations:
- basic 9 50.7p 54.4p
- diluted 9 50.2p 53.8p
Analysis of adjusted profit for the year -
continuing operations £m £m
Profit before tax - continuing operations 42 90
Adjusted for:
Net charge for exceptional items 5 93 34
Amortisation of acquired intangible assets 3 10 10
Adjusted profit before tax - continuing operations 3 145 134
Adjusted income tax expense - continuing operations 3, 7 (28) (16)
Adjusted profit for the year - continuing operations 3 117 118
* Restated to reflect discontinued operations (see Notes 2 and 8)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 March
2022 2021
£m
Note £m
Profit for the year - total operations 236 253
Other comprehensive income /(expense)
Items that have been/may be reclassified to profit or loss:
Gain/(loss) on currency translation of foreign operations 86 (141)
Fair value (loss)/gain on net investment hedges (52) 39
Net gain on cash flow hedges 82 1
Net change in cost of hedging (5) -
Share of other comprehensive income/(expense) of joint ventures 10 (6)
Tax effect of the above items (20) -
101 (107)
Items that will not be reclassified to profit or loss:
Re-measurement of retirement benefit plans
- actual return (lower)/higher on plan assets 12 (70) 129
- net actuarial gain/(loss) on retirement benefit obligations 12 67 (80)
Changes in the fair value of equity investments at fair value through OCI (4) 3
Tax effect of the above items - (13)
(7) 39
Total other comprehensive income/(expense) 94 (68)
Total comprehensive income 330 185
Analysed by:
- Continuing operations 9 129
- Discontinued operations 321 56
Total comprehensive income - total operations 330 185
Attributable to:
- Owners of the Company 330 185
- Non-controlling interests - -
Total comprehensive income - total operations 330 185
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 March
Restated*
2022 2021
Notes £m £m
ASSETS
Non-current assets
Goodwill and other intangible assets 283 345
Property, plant and equipment (including right-of-use assets of £40 million 497 1 105
(2021 - £121 million))
Investments in joint ventures - 104
Investments in equities 46 59
Retirement benefit surplus 12 23 18
Deferred tax assets 9 32
Trade and other receivables 1 1
Derivative financial instruments 3 1
862 1 665
Current assets
Inventories 317 532
Trade and other receivables 270 333
Current tax assets 11 11
Derivative financial instruments 13 23
Other current financial assets 2 32
Cash and cash equivalents 11 110 371
723 1 302
Assets classified as held for sale 8 1 666 -
2 389 1 302
TOTAL ASSETS 3 251 2 967
EQUITY
Capital and reserves
Share capital 117 117
Share premium 407 407
Capital redemption reserve 8 8
Other reserves 222 144
Retained earnings 865 777
Equity attributable to owners of the Company 1 619 1 453
Non-controlling interests 1 1
TOTAL EQUITY 1 620 1 454
LIABILITIES
Non-current liabilities
Borrowings (including lease liabilities of £49 million (2021 - £116 11 658 746
million))
Retirement benefit deficit 12 130 158
Deferred tax liabilities 51 41
Provisions 12 11
851 956
Current liabilities
Borrowings (including lease liabilities of £10 million (2021 - £27 million)) 11 21 42
Trade and other payables 294 431
Provisions 11 24
Current tax liabilities 23 25
Derivative financial instruments 31 9
Other current financial liabilities - 26
380 557
Liabilities directly associated with the assets held for sale 8 400 -
780 557
Total liabilities 1 631 1 513
TOTAL EQUITY AND LIABILITIES 3 251 2 967
* Prior year restated for change in accounting policy (to adopt the
requirements of Configuration or Customisation Costs in a Cloud Computing
Arrangement (IAS 38 Intangible Assets) - Agenda Paper 2). See Notes 2 and 17.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 31 March
2022 2021
Notes £m £m
Cash flows from operating activities - total operations
Profit before tax from total operations 296 283
Adjustments for:
Depreciation of property, plant and equipment (including right-of-use assets 74 142
and excluding exceptional items)
Amortisation of intangible assets 26 33
Share-based payments 12 8
Net impact of exceptional income statement items 5 36 10
Net finance expense 6, 8 28 30
Share of profit after tax of joint ventures (8) (26)
Net retirement benefit obligations (7) (8)
Other non-cash movements (38) 9
Changes in working capital (250) (33)
Cash generated from total operations 169 448
Net income tax paid (45) (57)
Interest paid (21) (22)
Net cash generated from operating activities 103 369
Cash flows from investing activities
Purchase of property, plant and equipment (132) (134)
Disposal of property, plant and equipment - 5
Acquisition of businesses, net of cash acquired 1 (62)
Investments in intangible assets (16) (18)
Purchase of equity investments (4) (4)
Disposal of equity investments 4 3
Interest received 1 1
Dividends received from joint ventures 33 4
Net cash used in investing activities (113) (205)
Cash flows from financing activities
Purchase of own shares including net settlement (13) (5)
Cash inflow from additional borrowings 2 154
Cash outflow from repayment of borrowings (60) (5)
Repayment of leases (32) (36)
Dividends paid to the owners of the Company 10 (144) (137)
Net cash used in financing activities (247) (29)
Net (decrease)/increase in cash and cash equivalents 11 (257) 135
Cash and cash equivalents
Balance at beginning of year 371 271
Net (decrease)/increase in cash and cash equivalents (257) 135
Currency translation differences 13 (35)
Balance at end of year 11 127 371
A reconciliation of the movement in cash and cash equivalents to the movement
in net debt is presented in Note 11.
Included in the total cash and cash equivalents of £127 million at 31 March
2022, is £17 million classified as held for sale.
The cash flows from discontinued operations included above are presented in
Note 8.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital and share premium Attributable to the owners of the Company Non- controlling interests
Capital redemption reserve
Other reserves Retained earnings Total
equity
£m £m £m £m £m £m £m
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 year - total operations - - - 253 253 - 253
Other comprehensive (expense)/income - - (104) 36 (68) - (68)
Total comprehensive (expense)/income - - (104) 289 185 - 185
Hedging losses transferred to inventory - - 12 - 12 - 12
Tax effect of the above item - - (3) - (3) - (3)
Transactions with owners:
Share-based payments, net of tax - - - 10 10 - 10
Issue of share capital 1 - - - 1 - 1
Purchase of own shares including net settlement - - - (5) (5) - (5)
Non-controlling interests in subsidiaries acquired - - - - - 1 1
Dividends paid (Note 10) - - - (137) (137) - (137)
Other movements - - - (3) (3) - (3)
At 31 March 2021 - restated* 524 8 144 777 1 453 1 1 454
Profit for the year - total operations - - - 236 236 - 236
Other comprehensive income/(expense) - - 97 (3) 94 - 94
Total comprehensive income - - 97 233 330 - 330
Hedging gains transferred to inventory - - (26) - (26) - (26)
Tax effect of the above item - - 7 - 7 - 7
Transactions with owners:
Share-based payments, net of tax - - - 12 12 - 12
Purchase of own shares including net settlement - - - (13) (13) - (13)
Non-controlling interests in subsidiaries acquired - - - - - - -
Dividends paid (Note 10) - - - (144) (144) - (144)
At 31 March 2022 524 8 222 865 1 619 1 1 620
* Prior year restated for change in accounting policy (to adopt the
requirements of Configuration or Customisation Costs in a Cloud Computing
Arrangement
(IAS 38 Intangible Assets) - Agenda Paper 2). See Notes 2 and 17.
NOTES TO THE FINANCIAL INFORMATION
FOR THE YEAR ENDED 31 MARCH 2022
1. Background
The financial information on pages 20 to 45 is extracted from the Group's
consolidated financial statements for the year ended 31 March 2022, which were
approved by the Board of Directors on 8 June 2022.
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
UK-adopted international accounting standards.
The Company's auditor, Ernst & Young LLP, has given an unqualified report
on the consolidated financial statements for the year ended 31 March 2022. The
auditor's report did not include reference to any matters to which the auditor
drew attention without qualifying its report and did not contain any statement
under section 498 of the Companies Act 2006. The consolidated financial
statements will be filed with the Registrar of Companies, subject to their
approval by the Company's shareholders on 28 July 2022 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 2022
have been prepared in accordance with UK-adopted international accounting
standards.
Notwithstanding the application of IFRS 5 - 'Non-current Assets Held for Sale
and Discontinued Operations' to the Primient business, the Group's principal
accounting policies are unchanged compared with the year ended 31 March 2021
with one exception being the treatment of Software-as-a-Service arrangements
as described below. The Group's principal accounting policies have been
consistently applied throughout the year. Descriptions and specific accounting
policy information on how the Group has applied the requirements of UK-adopted
international accounting standards will be included throughout the notes to
the Group's 2022 Annual Report.
All amounts are rounded to the nearest million, unless otherwise indicated.
Accounting standards adopted during the year
In the current year, the Group has adopted, with effect from 1 April 2021, the
following new accounting standards:
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16 Interest Rate
Benchmark Reform - Phase 2
The adoption of these amendments from 1 April 2021 has had no material effect
on the Group's financial statements.
Accounting standards issued but not yet adopted
No other new standards, new interpretations or amendments to standards or
interpretations have been published which are expected to have a significant
impact on the Group's financial statements.
Future accounting of the Group's investment in Primient
The Directors have determined that there is a significant accounting judgement
with respect to the Group's future accounting for its 49.9% interest in the
Primient business following the completion of the disposal. 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 Primient. Instead, important operational decisions
will be decided by a majority vote by the Primient Board (KPS have the right
to appoint four directors and the Group has the right to appoint two) with
more significant strategic matters requiring unanimous agreement of each of
the two shareholders. In addition, from completion, the Group and Primient
entered into certain long-term agreements, principally relating to the supply
of product between one another; such agreements do 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 Primient will meet the
definition of a joint venture.
Changes in accounting policy and disclosures
Prior year restatements
Restatement of comparative financial information - discontinued operations and
application of Held for Sale
On 12 July 2021 the Group announced that it had entered into an agreement to
sell a controlling stake in a new company and its subsidiaries ('Primient' or
the 'Primient 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'). The Transaction completed on 1 April 2022 and Tate & Lyle
now holds a 49.9% interest in Primient.
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 became
Primient on 1 April 2022 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 of discontinued operations are
presented separately from those of continuing operations. Accordingly, the
results for the year ended 31 March 2021 have been restated impacting the
consolidated income statement. Refer to Note 8 for further details on
discontinued operations.
Restatement of comparative financial information - upfront configuration or
customisation costs incurred in implementing Software-as-a-Service
arrangements
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 year ended
31 March 2022, the Group has revised its accounting policy in relation to
upfront configuration or 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 17.
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.
Neither prior period restatement represents the correction of an error.
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 this
assessment, the Directors have considered the Group's balance sheet position
and forecast earnings and cash flows for the period from the date of approval
of these financial statements to 31 March 2024. The sale of a controlling
stake in Primient is included in 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 31 March 2022, the Group has significant available liquidity, including
£127 million of cash and US$800 million (£608 million) of committed and
undrawn revolving credit facility, which does not mature before March 2025.
The earliest maturity date for any of the Group's loans 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 also considered the impact of net proceeds of the sale of a
controlling stake in Primient of £0.9 billion after one-off transaction and
separation costs and estimated tax liabilities, the return of capital to
shareholders via a special dividend of approximately £500 million on 16 May
2022 and the associated share consolidation (refer to Note 16) and the
commitment to acquire Quantum (refer to Note 15).
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 1.1 times at 31 March 2022. As set out below, for a covenant breach
to occur it would require a significant reduction in Group profit. Such
reduction is considered to be unlikely.
In concluding that the going concern basis is appropriate, the Directors have
modelled the impact of a 'worst case scenario' to the Base Case by including
the same three plausible but severe downside risks also used for the Group's
viability statement, being: a major operational failure causing an extended
shutdown of our largest manufacturing facility retained in the US following
the Primient transaction; the loss of two of our largest Food & Beverage
Solutions customers; and significant energy, raw material and commodity
inflation due to the consequences of conflict in Ukraine. In aggregate, such
'worst case scenario' does not result in any material uncertainty to the
Group's going concern assessment and the resultant position still has
significant headroom above the Group's debt covenant requirement. The
Directors have 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' shows that the forecast
Group profit would have to reduce significantly in order to cause a breach.
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 consolidated financial information of the Group as at
31 March 2022.
Changes in constant currency
Where year-on-year changes in constant currency are presented in this
statement, they are calculated by retranslating current year results at prior
year exchange rates. Reconciliations of the movement in constant currency have
been included in 'Additional Information' within this document.
Alternative performance measures
The Group also presents alternative performance measures, including adjusted
operating profit, adjusted profit before tax, adjusted earnings per share and
adjusted free cash flow, which are used for internal performance analysis and
incentive compensation arrangements for employees. They are presented because
they provide investors with additional information about the performance of
the business which the Directors consider to be valuable. For the years
presented, alternative performance measures exclude, where relevant:
- Exceptional items (excluded as they are material in amount; and are
outside the normal course of business or relate to events which do not
frequently recur, and therefore merit separate disclosure in order to provide
a better understanding of the Group's underlying financial performance);
Amortisation of acquired intangible assets (costs associated with amounts
recognised through acquisition accounting that impact earnings compared to
organic investments);
- 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 Primient 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 year ended 31 March 2022 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
prior year.
Alternative performance measures reported by the Group are not defined terms
under UK-adopted international accounting standards 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 and Note 8.
This document also contains pro-forma financial information for Tate &
Lyle for the year ended 31 March 2022 together with comparative information,
which shows the impact of further adjustments reflecting additional factors
that came into effect at or following completion of the Transaction. Refer to
'Additional Information' on pages 48 and 49.
Exceptional items
Exceptional items comprise items of income, expense and cash flow, including
tax items that: are material in amount; and are outside the normal course of
business or relate to events which do not frequently recur, and therefore
merit separate disclosure in order to provide a better understanding of the
Group's underlying financial performance. Examples of events that give rise to
the disclosure of material items of income, expense and cash flow as
exceptional items include, but are not limited to:
· significant impairment events;
· significant business transformation activities;
· disposals of operations or significant individual assets;
· litigation claims by or against the Group; and
· restructuring of components of the Group's operations.
For tax items to be treated as exceptional, amounts must be material and their
treatment as exceptional enable a better understanding of the Group's
underlying financial performance.
Exceptional items in the Group's financial statements are classified on a
consistent basis across accounting periods.
3. Reconciliation of alternative performance measures
Income statement measures
For the reasons set out in Note 2, the Group presents alternative performance
measures including adjusted operating profit, adjusted profit before tax and
adjusted earnings per share.
The following table shows the reconciliation of the key income statement
alternative performance measures to the most directly comparable measures
reported in accordance with IFRS:
Restated*
Year ended 31 March 2022 Year ended 31 March 2021
Continuing operations IFRS Adjusting items Adjusted IFRS Adjusting Adjusted
£m unless otherwise stated reported reported reported items reported
Revenue 1 375 - 1 375 1 211 - 1 211
Operating profit 67 103 170 116 44 160
Profit before tax 42 103 145 90 44 134
Income tax expense (16) (12) (28) (1) (15) (16)
Profit for the year 26 91 117 89 29 118
Effective tax rate expense % 38.4% 19.3% 1.2% 12.1%
Earnings per share:
Number of ordinary shares(1) - basic 465.1 465.1 464.2 464.2
Basic earnings per share (pence) 5.5p 19.7p 25.2p 19.3p 6.1p 25.4p
Number of ordinary shares(1) - diluted 470.4 470.4 469.4 469.4
Diluted earnings per share (pence) 5.5p 19.4p 24.9p 19.1p 6.1p 25.2p
1. Weighted average (millions).
* Restated to reflect discontinued operations (see Notes 2 and 8).
The following table shows the reconciliation of the adjusting items impacting
adjusted profit for the year:
Year ended 31 March
Restated*
2022 2021
£m
£m
Continuing operations Notes
Exceptional costs included in operating profit 5 93 34
Amortisation of acquired intangible assets 10 10
Total excluded from adjusted profit before tax 103 44
Tax credit on adjusting items 7 (24) (8)
Exceptional tax charge/(credit) 5, 7 12 (7)
Total excluded from adjusted profit for the year 91 29
* Restated to reflect discontinued operations (see Notes 2 and 8).
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, after capital expenditure and excluding the impact of
exceptional items.
The following table shows the reconciliation of adjusted free cash flow
relating to total operations:
Year ended 31 March
2022 2021
£m £m
Adjusted operating profit from total operations 312 339
Adjusted for:
Adjusted depreciation and adjusted amortisation(1) 90 165
Share-based payments charge 12 8
Other non-cash movements 4 9
Changes in working capital (250) (33)
Net retirement benefit obligations (7) (8)
Capital expenditure (148) (152)
Net interest and tax paid (65) (78)
Held for sale adjustment(2) 68 -
Adjusted free cash flow from total operations 16 250
1. Total depreciation of £74 million (2021 - £148 million) and amortisation
of £26 million (2021 - £33 million) less £nil (2021 - £6 million) of
accelerated depreciation recognised in exceptional items and £10 million
(2021 - £10 million) of amortisation of acquired intangible assets.
2. Total held for sale adjustment of £110 million, comprises £68 million of
adjusted depreciation and amortisation included in adjusted operating profit
of £312 million. The remaining £42 million is dividend income from Almex and
Bio-PDO recognised after these investments were recorded as held for sale,
which is not included in either adjusted operating profit or adjusted free
cash flow.
The following table shows the reconciliation of adjusted free cash flow
relating to continuing operations:
Year ended 31 March
2022 2021
£m £m
Adjusted operating profit from continuing operations 170 160
Adjusted for:
Adjusted depreciation and adjusted amortisation(1) 70 87
Share-based payments charge 10 5
Other non-cash movements 4 -
Changes in working capital (68) (8)
Net retirement benefit obligations (7) (8)
Capital expenditure (75) (60)
Net interest and tax paid (32) (23)
Adjusted free cash flow from continuing operations 72 153
1. Total depreciation of £56 million (2021 - £71 million) and amortisation
of £24 million (2021 - £26 million) less £10 million (2021 - £10 million)
of amortisation of acquired intangible assets.
Financial strength measures
The Group uses two financial metrics as key performance measures to assess its
financial strength. These are the net debt to EBITDA ratio and the return on
capital employed ratio. For the purposes of KPI reporting, the Group uses a
simplified calculation of these KPIs to make them more directly related to
information in the Group's financial statements.
All ratios are calculated based on unrounded figures in £ million.
The net debt to EBITDA ratio is as follows:
At 31 March
2022 2021
£m £m
Calculation of net debt to EBITDA ratio - total operations
Net debt (Note 11) 626 417
Adjusted operating profit - total operations 312 339
Add back adjusted depreciation and adjusted amortisation 158 165
EBITDA - total operations 470 504
Net debt to EBITDA ratio (times) 1.3 0.8
The reconciliation of adjusted depreciation and adjusted amortisation included
in the calculation of EBITDA is shown in the table below :
At 31 March
2022 2021
Reconciliation of adjusted depreciation and adjusted amortisation £m £m
Depreciation - total operations 74 148
Amortisation - total operations 26 33
Depreciation and amortisation - total operations 100 181
Add held for sale adjustment (cessation of depreciation and amortisation) 68 -
Less accelerated depreciation recognised in exceptional items - (6)
Less amortisation of acquired intangibles (10) (10)
Adjusted depreciation and adjusted amortisation 158 165
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 1.1 times with the difference being driven by specific
covenant definitions or requirements (e.g. exclusion of leases).
The return on capital employed (ROCE) calculation is as follows:
At 31 March
Restated* Restated*
2022 2021 2020
£m £m £m
Calculation of ROCE - total operations
Adjusted operating profit 312 339
Deduct: amortisation of acquired intangible assets (10) (10)
Profit before interest, tax and exceptional items from total operations for 302 329
ROCE
Goodwill and other intangible assets*(1) 335 345 331
Property, plant and equipment(1) 1 141 1 105 1 190
Working capital, provisions and non-debt-related derivatives(2,3) 701 421 409
Invested operating capital - total operations 2 177 1 871 1 930
Average invested operating capital(4) 2 024 1 901
ROCE % - total operations 14.9% 17.3%
* Prior years restated for change in accounting policy (to adopt the
requirements of Configuration or Customisation Costs in a Cloud Computing
Arrangement (IAS 38 Intangible Assets) - Agenda Paper 2). See Notes 2 and
17.
1. Excludes the impact of IFRS 5 held for sale adjustments on intangible
assets and property plant and equipment of £4 million and £64 million
respectively
2. All derivatives held were non-debt-related. For the purpose of this
calculation other current financial assets and liabilities are also included.
3. Excludes the dividend receivable from Joint ventures of £26 million.
4. Average invested operating capital represents the average of (1) the
beginning and (2) end of the year for goodwill and other intangible assets,
property, plant and equipment, working capital, provisions and
non-debt-related derivatives.
4. Segment information
Despite the classification of Primient as a disposal group held for sale and
discontinued operation, there was 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 year ended 31 March
2022 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 year ended 31 March 2022
a) IFRS 8 Segment results
Year ended 31 March 2022
Total operations Food & Beverage Solutions Central Total
£m Primary £m £m
Sucralose Products
£m £m
Revenue(*) 1 111 163 1 858 - 3 132
Adjusted operating profit(1) 190 61 112 (51) 312
Adjusted operating margin 17.2% 37.1% 6.0% n/a 10.0%
* Includes £1,757 million of revenue recognised in discontinued operations.
1. Reconciled to statutory profit for the year for continuing operations in
Note 3 and for discontinued operations in Note 8.
Reconciliation of IFRS 8 segmental disclosures to the consolidated income
statement and to Additional Commentary in financial statements:
(i) Revenue
Year ended 31 March 2022
Continuing operations Food & Beverage Solutions Central Total
£m Primary £m £m
Sucralose Products
£m £m
Segmental revenue - as above 1 111 163 1 858 - 3 132
Reclassification to discontinued operations - - (1 757) - (1 757)
Transfer of European PP business to F&BS 101 - (101) - -
As presented in Additional Commentary in financial statements (page 13) 1 212 163 - - 1 375
(ii) Adjusted operating profit
Year ended 31 March 2022
Continuing operations Food & Beverage Solutions Central Total
£m Primary £m £m
Sucralose Products
£m £m
Segmental adjusted operating profits - as above 190 61 112 (51) 312
Transfer of European PP business to F&BS(1) (21) - 21 - -
Reclassification to discontinued operations(1) (9) - (133) - (142)
As presented in Additional Commentary in financial statements (page 13)(2) 160 61 - (51) 170
Adjusted operating margin 13.2% 37.1% n/a n/a 12.4%
1. Food & Beverage Solutions adjustment relates to the inclusion of the
European Primary Products business which is not subject to the disposal of the
Primient 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 in Note 3.
Segmental results for the year ended 31 March 2021
a) IFRS 8 Segment results Year ended 31 March 2021
Total operations Food & Beverage Solutions Central Total
£m Primary £m £m
Sucralose Products
£m £m
Revenue(*) 970 151 1 686 - 2 807
Adjusted operating profit(1) 177 55 158 (51) 339
Adjusted operating margin 18.3% 36.8% 9.4% n/a 12.1%
* Includes £1,596 million of revenue recognised in discontinued operations.
1. Reconciled to statutory profit for the year for continuing operations in
Note 3 and for discontinued operations in Note 8.
Reconciliation of IFRS 8 segmental disclosures to the consolidated income
statement and to Additional Commentary in financial statements:
(i) Revenue
Restated*
Year ended 31 March 2021
Continuing operations Food & Beverage Solutions Central Total
£m Primary £m £m
Sucralose Products
£m £m
Segmental revenue - as above 970 151 1 686 - 2 807
Reclassification to discontinued operations - - (1 596) - (1 596)
Transfer of European PP business to F&BS 90 - (90) - -
As presented in Additional Commentary in financial statements (page 13) 1 060 151 - - 1 211
* Restated to reflect discontinued operations (see Notes 2 and 8)
(ii) Adjusted operating profit
Restated*
Year ended 31 March 2021
Continuing operations Food & Beverage Solutions Central Total
£m Primary £m £m
Sucralose Products
£m £m
Segmental adjusted operating profits - as above 177 55 158 (51) 339
Transfer of European PP business to F&BS(1) (14) - 14 - -
Reclassification to discontinued operations(1) (7) - (172) - (179)
As presented in Additional Commentary in financial statements (page 13)(2) 156 55 - (51) 160
Adjusted operating margin 14.7% 36.8% n/a n/a 13.3%
* Restated to reflect discontinued operations (see Notes 2 and 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
Primient 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 in Note 3.
Geographic disclosures: revenue - total operations
Year ended 31 March
2022 2021
£m £m
Food & Beverage Solutions
North America 542 485
Asia, Middle East, Africa and Latin America 325 269
Europe 244 216
Food & Beverage Solutions - total 1 111 970
Sucralose - total 163 151
Primary Products
Americas 1 757 1 596
Rest of the World 101 90
Primary Products - total 1 858 1 686
Total 3 132 2 807
Revenue - reconciliation to the consolidated income statement
Year ended 31 March
2022 2021
£m £m
Revenue - geographic disclosure - total operations 3 132 2 807
Reclassified to discontinued operations (1 757) (1 596)
Revenue - continuing operations 1 375 1 211
5. Exceptional items
Exceptional (costs)/income recognised in the income statement are as follows:
Year ended 31 March
Restated*
2022 2021
Income statement - continuing operations Footnotes £m £m
Costs associated with the separation and disposal of Primient (a) (79) (19)
Impairment related to the disposal of Primient (b) (13) -
US pension plan past service credit (c) 9 -
Stabiliser product contamination (d) (9) -
Restructuring costs (e) (1) (12)
Historical legal matters (f) - (3)
Exceptional items included in profit before tax (93) (34)
UK tax (charge) (g) (6) -
US tax (charge)/credit (g) (6) 7
Exceptional items included in income tax (12) 7
Exceptional items - continuing operations (105) (27)
Discontinued operations
Restructuring costs (3) (8)
Exceptional items - discontinued operations (3) (8)
Exceptional items - total operations (108) (35)
* Restated to reflect discontinued operations (see Notes 2 and 8)
Continuing operations
(a) In the year ended 31 March 2022, the Group announced it had entered into
an agreement to sell a controlling interest in Primient. The associated
transaction and separation costs during this year totalled £79 million which
consisted principally of external advisor fees, which were recognised within
Central.
(b) Following this agreement to sell a controlling interest in Primient,
the Group assessed all assets for impairment. This resulted in no impairment
of the assets held for sale. However, for the assets remaining with the
Group, an impairment charge of £13 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) Following a plan amendment made to its US pension plans, the Group has
recognised net exceptional income of £9 million within Food & Beverage
Solutions. The plan amendment resulted in a past service credit of £13
million which has been partially offset by a cash charge of £4 million
associated with an incremental contribution made, of which £1 million was
paid in the year. The Group expects to make two further payments in the 2023
and 2024 financial years, which are included in the total expected cash charge
of £4 million.
(d) During the year, the Group's stabilisers business was impacted by
contaminated products manufactured by certain third-party suppliers in China.
The contamination impacted not only the Group, but also the wider industry. As
a result, the Group recorded £6 million of costs for write-off of impacted
inventories and receivables and a further £3 million of impairment charges
for certain fixed assets. The £9 million charge was recognised within Food
& Beverage Solutions.
(e) The Group recorded £1 million of restructuring costs relating to
productivity and simplification projects, principally in relation to Global
Operations cost-saving initiatives. The £1 million charge was recognised
within Food & Beverage Solutions.
(f) During the year, the income statement impact of historical legal
matters in the US was a net nil, as exceptional income and costs offset one
another.
(g) As a result of the agreement to sell a controlling interest in
Primient, 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 £6 million. In addition, the amount of US state tax credits
the Group expects to be able to utilise in the future has reduced as the Group
will no longer have a presence in certain states also giving rise to an
exceptional tax charge of £6 million.
Of the net £93 million exceptional charge recorded in operating profit in
continuing operations during the year, £46 million was reflected in
exceptional cash flow. In addition, £12 million of exceptional costs
recorded in prior year resulted in cash outflows in the year ended 31 March
2022, such that cash outflow from exceptional items in continuing operations
was £58 million. There was a further net cash outflow of £2 million
recognised in discontinued operations.
The most significant exceptional costs in the comparative year were costs
incurred in relation to the Primient 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
year 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 £21 million.
Discontinued operations
The exceptional costs in the current year were restructuring costs relating to
productivity and simplification projects totaling £3 million which were
mainly related to Global Operations cost saving initiatives.
Cash flows from total operations
Further details in respect of cash flows from exceptional items are set out
below.
Year ended 31 March
Restated*
2022 2021
Net operating cash outflows on exceptional items Footnotes £m £m
Costs associated with the separation and disposal of Primient (a) (48) (15)
US pension plan past service credit (c) (1) -
Restructuring costs (e) (5) (9)
Historical legal matters (f) (4) 1
Asset remediation - (1)
Net cash outflows - continuing operations (58) (24)
Net cash outflows - discontinued operations (2) (8)
Net cash outflows - total operations (60) (32)
* Restated to reflect discontinued operations (see Notes 2 and 8)
Exceptional cash flows
The total cash adjustment relating to exceptional items presented in the cash
flow statement of £36 million (inflow) (2021 - £10 million (inflow))
reflects the exceptional costs in profit before tax of £96 million in total
operations (2021 - £42 million) which were £36 million higher (2021 - £10
million higher) than net cash outflows of £60 million (2021 - £32 million)
set out in the table above.
6. Finance income and finance expense
Year ended 31 March
Continuing operations Note Restated*
2022 2021
£m £m
Interest payable on bank and other borrowings (21) (20)
Lease interest (2) (2)
Net retirement benefit interest 12 (3) (5)
Finance expense (26) (27)
Finance income - income on cash balances 1 1
Net finance expense (25) (26)
* Restated to reflect discontinued operations (see Notes 2 and 8)
7. Income tax expense
Income tax for the year is presented as follows:
· Statutory current and deferred taxes from continuing operations of
£16 million, which when divided by statutory profit before tax from
continuing operations of £42 million gives a statutory effective tax rate of
38.4%;
· 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 £28 million,
which when divided by adjusted profit before tax from continuing operations of
£145 million gives an adjusted effective tax rate of 19.3%; and
· Income tax on discontinued operations is shown in Note 8.
Analysis of charge for the year Year ended 31 March
Continuing operations Restated*
2022 2021
£m £m
Current tax - 3
United Kingdom
Overseas (40) (26)
Tax credit on exceptional items 5 5
US exceptional tax credit - 7
Expense in respect of previous financial years (1) -
(36) (11)
Deferred tax
Credit for the year 12 8
Credit in respect of previous financial years 4 2
Tax credit on exceptional items 16 -
UK exceptional tax charge (6) -
US exceptional tax charge (6) -
Income tax expense - continuing operations (16) (1)
Statutory effective tax rate % - continuing operations 38.4% 1.2%
* Restated to reflect discontinued operations (see Notes 2 and 8)
Reconciliation to adjusted income tax expense
Year ended 31 March
Restated*
2022 2021
Continuing operations Notes £m £m
Income tax expense (16) (1)
Add back the impact of:
Tax credit on exceptional items (21) (5)
Tax credit on amortisation of acquired intangibles (3) (3)
UK exceptional tax charge 5 6 -
US exceptional tax charge/(credit) 5 6 (7)
Adjusted income tax expense - continuing operations 3 (28) (16)
Adjusted effective tax rate % 19.3% 12.1%
* Restated to reflect discontinued operations (see Notes 2 and 8)
8. Discontinued operations
As described in Note 2, on 12 July 2021 the Group announced that it had
entered into an agreement to sell to KPS a controlling stake in Primient
(refer to Note 16 for further details). This transaction completed on 1
April 2022.
The Primient 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 year ended 31 March 2022 and the
prior year were as follows:
Year ended 31 March
Discontinued operations 2022 2021
£m £m
£m unless otherwise stated
Revenue 1 757 1 596
Operating expenses (1 508) (1 425)
Operating profit 249 171
Finance expense (3) (4)
Share of profit after tax of joint ventures 8 26
Profit before tax 254 193
Income tax charge (44) (29)
Profit for the year from discontinued operations(1) 210 164
Basic earnings per share from discontinued operations (pence) 45.2p 35.1p
Diluted earnings per share from discontinued operations (pence) 44.7p 34.7p
1. Attributable to owners of the Company.
These profit per share figures were calculated by dividing the net gain
attributable to equity holders of the Company from discontinued operations by
the weighted average number of ordinary shares, both for basic and diluted
amounts, shown in Note 9.
Adjusted discontinued operations measures are set out on the next page.
On classification as held for sale, the net assets of the Primient 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 Statement of Cash Flows were as follows:
Year ended 31 March
Discontinued operations 2022 2021
£m £m
Operating 15 181
Investing (40) (88)
Financing (21) (24)
Net cash (outflow)/inflow (46) 69
For discontinued operations 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 2022 Year ended 31 March 2021
Discontinued operations IFRS Adjusting Adjusted IFRS Adjusting Adjusted
£million unless otherwise stated reported items reported reported items reported
Revenue 1 757 - 1 757 1 596 - 1 596
Operating profit 249 (107) 142 171 8 179
Finance expense (3) - (3) (4) - (4)
Share of profit after tax of joint ventures 8 27 35 26 - 26
Profit before tax 254 (80) 174 193 8 201
Income tax expense (44) 16 (28) (29) (3) (32)
Profit for the year 210 (64) 146 164 5 169
Effective tax rate % 17.5% 16.1% 15.4% 15.8%
Earnings per share:
Number of ordinary shares(1) - basic 465.1 465.1 464.2 464.2
Basic earnings per share (pence) 45.2p (13.7p) 31.5p 35.1p 1.4p 36.5p
Number of ordinary shares(1) - diluted 470.4 470.4 469.4 469.4
Diluted earnings per share (pence) 44.7p (13.6p) 31.1p 34.7p 1.3p 36.0p
1. Weighted average (millions)
The following table shows the reconciliation of the adjusting items:
Year ended 31 March
Discontinued operations Note 2022 2021
£m
£m
Exceptional costs in operating profit 5 3 8
Held for sale adjustment(1) (110) -
Total excluded from adjusted operating profit (107) 8
Held for sale adjustment(2) - share of profit after tax of joint ventures 27 -
Total excluded from adjusted profit before tax (80) 8
Tax effect of adjusting items 16 (3)
Total excluded from adjusted profit for the year (64) 5
1. Held for sale adjustments include: cessation of depreciation and
amortisation (reduction in operating costs of £68 million) and
reclassification of dividends from joint ventures (income of £42 million).
2. Held for sale adjustment relates to cessation of equity accounting
(reduction in share of profit after tax of joint ventures of £27 million).
The following table shows the reconciliation of adjusted free cash flow:
Year ended 31 March
2022 2021
£m
£m
Adjusted operating profit from discontinued operations 142 179
Adjusted for:
Adjusted depreciation and adjusted amortisation(1) 20 78
Share-based payments charge 2 3
Changes in working capital and other non-cash movements (182) (16)
Capital expenditure (73) (92)
Net interest and tax paid (33) (55)
Held for sale adjustment(2) 68 -
Adjusted free cash flow from discontinued operations (56) 97
1. Total depreciation of £18 million (2021 - £77 million) and amortisation
of £2 million (2021 - £7 million) less £nil (2021 - £6 million) of
accelerated depreciation recognised in exceptional items.
2. Total held for sale adjustment of £110 million, comprises £68 million of
depreciation and amortisation included in adjusted operating profit of £142
million. The remaining £42 million relates to dividend income from Almex and
Bio-PDO, which is not included in either adjusted operating profit or adjusted
free cash flow.
The major classes of assets and liabilities of Primient classified as held for
sale are as follows:
At 31 March 2022
£m
Assets
Goodwill and other intangible assets 56
Property, plant and equipment (including right-of-use assets) 708
Investments in joint ventures 105
Investments in equities 12
Inventories 398
Trade and other receivables 246
Current tax assets 1
Derivative financial instruments 65
Other current financial assets 58
Cash and cash equivalents 17
Assets classified as held for sale 1 666
At 31 March 2022
£m
Liabilities
Retirement benefit deficit 28
Trade and other payables 253
Lease liabilities 74
Derivative financial instruments 5
Other current financial liabilities 40
Liabilities directly associated with assets held for sale 400
Net assets 1 266
Cumulative income and expense recognised in other comprehensive income are
shown below:
At 31 March 2022
£m
Currency translation reserve 81
Actuarial gain (net of deferred tax) 7
Net gain on cash flow hedges (net of deferred tax) 49
Reserves of disposal group classified as held for sale 137
9. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
owners of the Company by the weighted average number of ordinary shares in
issue during the year (excluding shares held by the Company and the Employee
Benefit Trust to satisfy awards made under the Group's share-based incentive
plans).
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares in issue assuming conversion of potentially dilutive
ordinary shares, reflecting vesting assumptions on employee share plans, as
well as the deemed profit attributable to owners of the Company for any
proceeds on such conversions.
The average market price of the Company's ordinary shares during the year was
721p (2021 - 679p). The dilutive effect of share-based incentives was 5.3
million shares (2021 - 5.2 million shares).
Restated*
Year ended 31 March 2022 Year ended 31 March 2021
Continuing operations Discontinued operations Total Continuing operations Discontinued
operations Total
Profit attributable to owners of the Company (£ million) 26 210 236 89 164 253
Weighted average number of ordinary shares (million) - basic 465.1 465.1 465.1 464.2 464.2 464.2
Basic earnings per share (pence) 5.5p 45.2p 50.7p 19.3p 35.1p 54.4p
Weighted average number of ordinary shares (million) - diluted 470.4 470.4 470.4 469.4 469.4 469.4
Diluted earnings per share (pence) 5.5p 44.7p 50.2p 19.1p 34.7p 53.8p
* Restated to reflect discontinued operations (see Notes 2 and 8)
Adjusted earnings per share
A reconciliation between profit attributable to owners of the Company from
continuing operations and the equivalent adjusted measure, together with the
resulting adjusted earnings per share measure, is shown below:
Year ended 31 March
Continuing operations 2022 Restated*
£m 2021
Notes £m
Profit attributable to owners of the Company 26 89
Adjusting items:
- exceptional costs in operating profit 5 93 34
- amortisation of acquired intangible assets 3 10 10
- tax credit on adjusting items 7 (24) (8)
- exceptional tax charge/(credit) 5, 7 12 (7)
Adjusted profit attributable to owners of the Company 3 117 118
Adjusted basic earnings per share (pence) - continuing operations 25.2p 25.4p
Adjusted diluted earnings per share (pence) - continuing operations 24.9p 25.2p
* Restated to reflect discontinued operations (see Notes 2 and 8)
Year ended 31 March
Total operations Notes Restated*
2022 2021
£m £m
Adjusted profit attributable to owners of the Company - continuing operations 3 117 118
Adjusted profit attributable to owners of the Company - discontinued 8 146 169
operations
Adjusted profit attributable to owners of the Company - total operations 263 287
Adjusted basic earnings per share (pence) - total operations 56.7p 61.9p
Adjusted diluted earnings per share (pence) - total operations 56.0p 61.2p
* Restated to reflect discontinued operations (see Notes 2 and 8)
10. Dividends on ordinary shares
Dividends on ordinary shares in respect of the financial year:
Year ended 31 March
2022 2021
Pence Pence
Per ordinary share:
Interim dividend paid 9.0 8.8
Final dividend proposed 12.8 22.0
Total dividend 21.8 30.8
The Directors propose a final dividend for the financial year of 12.8p per
ordinary share that, subject to approval by shareholders, will be paid on 5
August 2022 to shareholders who are on the Register of Members on 1 July 2022.
Dividends on ordinary shares paid in the financial year:
Year ended 31 March
2022 2021
£m £m
Final dividend paid relating to the prior financial year 102 97
Interim dividend paid relating to the financial year 42 40
Total dividend paid 144 137
Based on the number of ordinary shares outstanding at 31 March 2022, adjusted
to reflect the impact of the share consolidation on 16 May 2022, and the
proposed dividend per share, the final dividend for the financial year is
expected to amount to
£51 million.
For details of the special dividend paid after the year end refer to Note 16.
11. Net debt - total operations
The components of the Group's net debt are as follows:
At 31 March
2022 2021
£m £m
Borrowings (620) (645)
Lease liabilities(1) (133) (143)
Cash and cash equivalents(2) 127 371
Net debt (626) (417)
1. Includes £74 million of leases included in liabilities directly associated
with assets held for sale as at 31 March 2022 (2021 - £nil). Refer to Note 8.
2. Includes £17 million of cash and cash equivalents included in assets held
for sale as at 31 March 2022 (2021 - £nil). Refer to Note 8.
On 15 and 22 December 2021, the Industrial Revenue Bonds were repaid in full
totalling US$70 million (£53 million).
In the prior year, the Group issued a US$200 million (£152 million) debt
private placement comprising US$100 million 2.91% notes maturing in 2030 and
US$100 million 3.01% notes maturing in 2032.
Reconciliation of the movement in cash and cash equivalents to the movement in
net debt:
Year ended 31 March
2022 2021
£m £m
Net debt at beginning of the year (417) (451)
Net (decrease)/ increase in cash and cash equivalents (257) 135
Net decrease/(increase) in borrowings and lease liabilities 90 (113)
(Increase)/decrease in net debt resulting from cash flows (167) 22
Currency translation differences (24) 39
Subsidiaries acquired - (7)
Leases non-cash movements (18) (20)
(Increase)/decrease in net debt in the year (209) 34
Net debt at end of the year (626) (417)
Movements in the Group's net debt were as follows:
Cash and cash equivalents Borrowings and lease liabilities Total
£m
£m
£m
At 1 April 2021 371 (788) (417)
Movements from cash flows (257) 90 (167)
Currency translation differences 13 (37) (24)
Lease and non-cash movements - (18) (18)
At 31 March 2022 (1,2) 127 (753) (626)
1. Borrowings and lease liabilities includes £74 million of leases included
in liabilities directly associated with the assets held for sale as at 31
March 2022 (see Note 8).
2. Cash and cash equivalents includes £17 million of cash and cash
equivalents included in assets held for sale as at 31 March 2022 (see Note 8).
12. Retirement benefit obligations
At 31 March 2022, the Group's retirement benefit obligations are in a net
deficit of £107 million (31 March 2021 - net deficit of £140 million). On
disposal of the Primient business, the Group retains 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 who transitioned to the Primient business (together a net deficit of
£28 million) were disposed of and were therefore classified as held for sale.
The decrease of £33 million is principally due to classification of certain
plans as held for sale as mentioned above. Excluding the impact of the held
for sale classification, the net deficit decreased by £5 million. The
closing total net deficit substantially comprises the unfunded schemes in the
US.
The UK plans primarily comprise funded retirement benefit plans where plan
assets were previously held separately from those of the Group in funds that
were under the control of trustees.
The significant movements in the net deficit in the year are as follows (only
the second adjustment had an income statement impact, recorded in exceptional
items):
· Reclassification of £28 million of defined benefit obligation to
liabilities directly associated with assets held for sale in the balance
sheet;
· A reduction of the plans' liability value by £13 million as a
result of a plan amendment made to the US pension plans. The past service
credit of £13 million was recognised in exceptional items (see Note 5);
· A lower value being placed on plan liabilities as a result of
financial assumptions which included an increase in corporate bond yields in
both the US and UK leading to higher discounts rates. However this was
partially offset by worse 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 £6 million (excluding the exceptional past service credit
mentioned above), employer contributions of £10 million and an increase in
the net deficit for currency translation of £8 million.
These movements are set out in the table below.
Year ended 31 March 2022
UK plans US plans US plans Total
£m (funded) (unfunded) £m
£m £m
Net deficit at 1 April 2021 (18) (14) (108) (140)
Income statement:
- current service costs - - (1) (1)
- administration costs (1) (1) - (2)
- net interest expense US plans - 1 (4) (3)
- US pension past service credit - 13 - 13
Other comprehensive income:
- actual return lower than interest on plan assets (42) (28) - (70)
- actuarial gain/(loss):
- changes in financial assumptions 60 24 1 85
- changes in demographic assumptions 2 (2) 2 2
- experience against assumptions (19) (2) 1 (20)
Other movements:
- employer's contribution 2 - 8 10
- non-qualified deferred compensation arrangements - (1) - (1)
- currency translation differences (2) (2) (4) (8)
Reclassification to liabilities directly associated with assets held for sale - 12 16 28
Net deficit at 31 March 2022 (18) - (89) (107)
Following the UK plan 'buy-in' in the 2020 financial year, actuarial movements
recorded in other comprehensive income in relation to the main UK plan's
liabilities are matched by an equal and opposite movement recorded in other
comprehensive income on its assets. The net £1 million gain recorded in other
comprehensive income is in relation to UK obligations not yet subject to the
'buy-in'.
During the year ending 31 March 2023 the Group expects to contribute
approximately £5 million to its defined benefit pension plans and to pay
approximately £4 million in relation to retirement medical benefits,
principally in the US. The Group also expects to make in the first half of the
year a one-off contribution of approximately £11 million to settle a post
transaction price adjustment in respect of the bulk annuity policy 'buy in' of
the main UK plan.
13. Contingent liabilities
The Group is subject to claims and litigation generally arising in the
ordinary course of its business. Provision is made when liabilities are
considered likely to arise and the expected quantum of the exposure can be
estimated reliably. The risk in relation to claims and litigation is monitored
on an ongoing basis and provisions amended accordingly. It is not expected
that claims and litigation existing at 31 March 2022 will have a material
adverse effect on the Group's financial position.
14. Capital expenditure and commitments
In the year ended 31 March 2022, there were additions to intangible assets
(excluding goodwill and acquired intangible assets) of £16 million (2021 -
£19 million) and additions to property, plant and equipment of £143 million
(2021 - £155 million). Total commitments for the purchase of tangible and
intangible non-current assets are £51 million (2021 - £33 million).
Commitments in respect of retirement benefit obligations are detailed in Note
12.
15. Acquisitions and disposals
In the 2022 financial year:
No acquisitions or disposals were completed.
Quantum
On 31 March 2022, the Group announced it has signed an agreement to acquire
Quantum Hi-Tech (Guangdong) Biological Co., Ltd (Quantum), a leading prebiotic
dietary fibre business in China from ChemPartner Pharmatech Co., Ltd
(ChemPartner) for a total consideration of US$237 million. Closing of the
transaction is expected to occur in the second quarter of the 2022 calendar
year.
The acquisition of Quantum which engages in the research, development,
production and sale of fructo-oligosaccharides and galacto-oligosaccharides,
significantly strengthens Tate & Lyle's position as a leading global
player in dietary fibres, bringing a high-quality portfolio of speciality
fibres, strong R&D capabilities and proprietary manufacturing processes
and technologies. The acquisition expands Tate & Lyle's ability to
provide added-fibre solutions for its customers across a range of categories
including dairy, beverages, bakery and nutrition (including infant nutrition),
and to meet growing consumer interest in gut health. It also significantly
expands Tate & Lyle's presence in China and Asia, and extends its
capabilities to create solutions across food and drink utilising its leading
speciality ingredient portfolio.
In the 2021 financial year:
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 year ended 31 March 2022, following the
finalisation of the completion accounts and working capital adjustment, the
final all cash consideration in respect of the acquisition is £60 million
(including the fair value of the 15% that the Group already owned) and the
final fair value for identifiable net assets is £26 million, including £1
million cash and cash equivalents. This has resulted in a final goodwill
balance at the date of acquisition of £34 million. This is not deductible for
tax purposes.
The acquired business contributed revenue of £7 million and an operating loss
of £2 million for the period from acquisition on 30 November 2020 until the
end of the 2021 financial year (including the amortisation of acquired
intangibles recognised from the acquisition). Had the business been acquired
at the beginning of the 2021 financial year, it would have contributed revenue
of £41 million and an operating profit of £nil in the 2021 financial year.
Chaodee Modified Starch Co., Ltd ("CMS")
On 10 February 2021, the Group acquired 85% of the shares of CMS (increased to
93% at March 2022 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 year ended 31 March
2022, there have been no changes to the provisional consideration, provisional
fair value for identifiable net assets and resultant goodwill disclosed in the
prior year Annual Report.
The Group has elected to measure the non-controlling interests in the acquiree
at fair value.
16. Events after the balance sheet date
Sale of controlling stake in Primient
Further to the announcement of 12 July 2021, the Group announced that on 1
April 2022 it completed the sale of a controlling stake in Primient,
comprising its 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, to KPS Capital Partners, LP
("KPS"). KPS now holds a 50.1% interest in Primient. The Group holds a 49.9%
interest in Primient. The provisional cash consideration is US$1.4 billion
and US$30 million of contingent consideration. The exercise to finalise the
completion accounts is in progress and will be disclosed in the Group's
Interim Results that will be published in November 2022. Details of assets
held for sale are provided in Note 8.
Special Dividend
Following the announcement on 1 April 2022 of the completion of the sale of a
controlling stake in Primient, and following shareholder approval at the
General Meeting held on 26 April 2022, the Group returned £497 million on 16
May 2022 to ordinary shareholders by way of a special dividend of £1.07 per
existing ordinary share in the capital of Tate & Lyle PLC. In order to
maintain the comparability, so far as possible, of Tate & Lyle PLC's share
price before and after the special dividend, the Group also completed a share
consolidation resulting in ordinary shareholders receiving six new ordinary
shares with a nominal value of 29 1/6 pence each for every seven existing
ordinary shares that they held. The new ordinary shares are traded on the
London Stock Exchange in the same way as the previously existing ordinary
shares and have the same rights under the Articles to the previously existing
ordinary shares. The total number of ordinary shares after the share
consolidation was 401.6 million shares.
A return of funds was also completed for ADR holders on the ADR register on 19
May 2022. As a result of the share consolidation, existing ADRs were
cancelled and new ADRs issued in the ratio of six new ADRs to replace every
seven existing ADRs.
17. Change in accounting policy
As explained in Note 2, the Group has revised its accounting policy in
relation to upfront configuration or customisation costs incurred in
implementing Software-as-a-Service (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
£m
£m
£m
Goodwill and other intangible assets 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 31 March 2021 As reported Adjustment As restated
£m
£m
£m
Goodwill and other intangible assets 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 ended 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 year
ended 31 March 2021.
ADDITIONAL INFORMATION
FOR THE YEAR ENDED 31 MARCH 2022
Calculation of changes in constant currency
Where changes in constant currency are presented in this statement, they are
calculated by retranslating current year results at prior year exchange rates.
The following table provides a reconciliation between the 2022 performance at
actual exchange rates and at constant currency exchange rates. Absolute
numbers presented in the tables are rounded for presentational purposes,
whereas the growth percentages are calculated on unrounded numbers.
Adjusted performance 2022 FX 2022 Underlying Restated* Change % Change in
Continuing operations
£m
£m
at constant
growth
constant
currency
£m 2021
currency
£m
£m
%
Revenue 1 375 58 1 433 222 1 211 14% 18%
Food & Beverage Solutions 160 7 167 11 156 3% 7%
Sucralose 61 3 64 9 55 9% 15%
Central (51) - (51) - (51) 1% -
Adjusted operating profit 170 10 180 20 160 6% 12%
Net finance expense (25) (1) (26) - (26) 4% -
Adjusted profit before tax 145 9 154 20 134 8% 14%
Adjusted income tax expense (28) (3) (31) (15) (16) (72%) (91%)
Adjusted profit after tax 117 6 123 5 118 (1%) 4%
Adjusted diluted EPS (pence) 24.9p 1.2p 26.1p 0.9p 25.2p (1%) 4%
Impact of changes in exchange rates
The Group's reported financial performance at average rates of exchange for
the year ended 31 March 2022 was unfavourably impacted by currency
translation. The average and closing US dollar and euro exchange rates used to
translate reported results were as follows:
Average rates Closing rates
Year ended 31 March 2022 2021 2022 2021
US dollar : sterling 1.37 1.31 1.32 1.38
Euro : sterling 1.18 1.12 1.19 1.17
For the year ended 31 March 2022, net foreign exchange translation decreased
Food & Beverage Solutions adjusted operating profit by £7 million and
decreased Sucralose adjusted operating profit by £3 million, with adjusted
operating profit for the Group decreasing by £10 million.
RATIO ANALYSIS
31 March 2022 31 March 2021
Net debt to EBITDA
= Net debt 626 417
EBITDA 470 504
=1.3 times = 0.8 times
Earnings dividend cover
= Adjusted basic earnings per share from total operations 56.7 61.9
Dividend per share 31.0 29.6
=1.8 times = 2.1 times
Cash dividend cover
= Adjusted free cash flow from total operations 16 250
Cash dividends 144 137
=0.1 times = 1.8 times
Return on capital employed
= Profit before interest, tax and exceptional items from total 302 329
operations
Average invested operating capital from total operations 2 024 1 901
=14.9% = 17.3%
Gearing
= Net debt 626 417
Total equity 1 620 1 454
=39% = 29%
All ratios are calculated based on unrounded figures in £ million. Net debt
to EBITDA, Adjusted free cash flow, Average invested operating capital and
Return on capital employed are defined and reconciled in Note 3 of the
attached financial information.
Summary of pro-forma financial results for the year ended 31 March 2022
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 ("Primient") -
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 came into effect at completion of the Transaction.
These adjustments were for:
· The financial impact of certain long-term agreements that will
exist between the Group and Primient; and
· The Group's equity-accounted share of profits of the Primient
business from completion of the Transaction.
Because the adjustments are also not included in the continuing operations
information contained within the results for the year ended 31 March 2022
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.
Pro-forma - year ended 31 March Food & Beverage Solutions Joint Central 2022 2021 Change in
constant
£m Sucralose Venture £m Total Total
currency
%
£m £m £m £m
Adjusted operating profit - continuing operations 160 61 - (51) 170 160 12%
Impact of long-term agreements (7) - - - (7) (7) -
Pro-forma adjusted operating profit 153 61 - (51) 163 153 13%
Pro-forma share of Primient Joint Venture profit - - 61 - 61 74 (13%)
Net finance expense - - - (25) (25) (26) -
Pro-forma adjusted profit before tax 153 61 61 (76) 199 201 5%
Pro-forma adjusted tax charge (37) (34) (13%)
Pro-forma adjusted profit for the year 162 167 3%
The table above starts with the adjusted operating profit set out in Note 4
(year ended 31 March 2022, section (ii) Adjusted operating profit) and then
gives pro-forma effect to the financial impact of certain long-term agreements
between the Group and Primient, and the Group's equity accounted share of
profits of Primient from completion.
The resultant pro-forma adjusted operating margins are as follows:
Food & Beverage Solutions Central Total
Sucralose
Pro-forma adjusted operating margin 12.6% 37.1% n/a 11.9%
Pro-forma comparative for the year ended 31 March 2021 - Food & Beverage
Solutions: 14.1%, Sucralose: 36.8%, Total: 12.7%
Year ended 31 March 2022 As reported Pro-forma
total operations
Earnings Per Share
Diluted weighted average number of ordinary shares (millions) 470.4 403.5
Adjusted diluted EPS (pence) 56.0p 40.0p
Following the completion of the special dividend and share consolidation in
May 2022, pro-forma EPS has been updated to give effect to all components of
the Transaction and the share consolidation. For better comparability in
future, the share consolidation is included as if it were effected on 1 April
2021. On a pro-forma basis, adjusted diluted EPS of 40.0p represents
dilution of 29% compared to adjusted diluted EPS from total operations as
reported.
The Group's share of the Primient joint venture profit is set out in the table
below:
Year ended 31 March
Share of Primient joint venture profit: 2022 2021
£m £m
Adjusted profit before tax from discontinued operations(1) 174 201
Pro-forma effect of Primient's financing facilities(2) (45) (45)
Impact of long-term agreements 7 7
Additional standalone costs in Primient(3) (14) (14)
Adjusted pro-forma profit before tax of Primient 122 149
Share of Primient joint venture profit at 49.9% pro-forma equity interest 61 74
1. Primient joint venture's adjusted profit before tax of £174 million (2021
- £201 million) is before charging exceptional items of £3 million (2021 -
£8 million) and the impact of held for sale adjustments of £83 million.
2. Updated to reflect final borrowings in Primient of $1.1 billion.
3. Represents additional costs required in Primient in order to replicate
back-office activities previously shared across Tate & Lyle PLC.
Summary of pro-forma Return on Capital employed for the year ended 31 March
2022 for continuing operations
As set out in Note 3, Return on Capital Employed (ROCE) % for total operations
was 14.9% (2021 - 17.3%). Set out below is the pro-forma return on capital
employed calculation:
Year ended 31 March
2022 2021
£m £m
Calculation of ROCE - pro-forma
Adjusted operating profit - continuing operations 170
Impact of long-term agreements (7)
Deduct: amortisation of acquired intangible assets (10)
Profit before interest, tax and exceptional items for ROCE - pro-forma(1) 153
Invested operating capital - total operations 2 177 1 871
Less: impact of Primient invested operating capital and Add: impact of LTAs (1 258) (942)
Invested operating capital of continuing operations - pro-forma 919 929
Average invested operating capital of continuing operations - pro-forma(2) 924
ROCE % - pro-forma 16.5%
1. Excludes pro-forma share of profits of Primient.
2. Excludes pro-forma impact of investment in Primient joint venture
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