REG-Tate & Lyle PLC Half-year Report <Origin Href="QuoteRef">TATE.L</Origin> - Part 2
03/11/2016 07:05
- Part 2: For the preceding part double click ID:nBw1k1ryKa
13 3 4 6
Adjusted profit before tax - continuing operations 2 140 103 193
Adjusted income tax expense - continuing operations 2,5 (26) (18) (32)
Adjusted profit for the period - continuing operations 2 114 85 161
* Restated (see Notes 1 and 6)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Six months to Restated* Year to
30 September Six months to 31 March
2016 30 September 2016
£m 2015 £m
£m
Profit for the period Notes 130 49 163
Other comprehensive income/(expense)
Items that have been/may be reclassified to profit or loss:
Fair value gain/(loss) on cash flow hedges 1 (2) –
Fair value loss on cash flow hedges transferred 4 1 2
to profit or loss
Fair value loss on available-for-sale financial assets – (1) –
Gain/(loss) on currency translation of foreign operations 147 (23) 60
Fair value (loss)/gain on net investment hedges (54) 8 (18)
Share of other comprehensive income/(expense) of joint 4 (11) (12)
ventures and associates
Amounts transferred to income statement upon disposal of (1) – –
subsidiary
Amounts transferred to income statement upon disposal of – – 34
joint ventures
Tax expense relating to the above items (2) – –
99 (28) 66
Items that will not be reclassified to profit or loss:
Re-measurement of retirement benefit plans:
- Actual return higher/(lower) than interest on plan assets 13 219 (81) (52)
- Net actuarial (loss)/gain on net retirement benefit obligation 13 (279) 102 45
Tax income/(expense) relating to the above items 3 (2) 2
(57) 19 (5)
Total other comprehensive income/(expense) 42 (9) 61
Total comprehensive income 172 40 224
Analysed by:
- Continuing operations 172 64 156
- Discontinued operations – (24) 68
Total comprehensive income 172 40 224
Attributable to:
- Owners of the Company 172 40 224
- Non-controlling interests – – –
Total comprehensive income 172 40 224
* Restated (see Notes 1 and 6)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
Notes At Restated* At
30 September At 31 March
2016 30 September 2016
£m 2015 £m
£m
ASSETS
Non-current assets
Goodwill and other intangible assets 415 309 390
Property, plant and equipment 1 033 772 926
Investments in joint ventures 83 117 82
Investments in associates 4 4 3
Available-for-sale financial assets 24 16 19
Derivative financial instruments 18 25 21
Deferred tax assets 29 9 3
Trade and other receivables – 1 1
Retirement benefit surplus 13 8 54 45
1 614 1 307 1 490
Current assets
Inventories 365 340 389
Trade and other receivables 302 270 301
Current tax assets 2 9 3
Available-for-sale financial assets 4 6 4
Derivative financial instruments 58 57 43
Cash and cash equivalents 9 289 234 317
Assets classified as held for sale – 210 7
1 020 1 126 1 064
TOTAL ASSETS 2 634 2 433 2 554
EQUITY
Capital and reserves
Share capital 117 117 117
Share premium 406 406 406
Capital redemption reserve 8 8 8
Other reserves 226 33 127
Retained earnings 362 323 370
Equity attributable to owners of the Company 1 119 887 1 028
Non-controlling interests – 1 1
TOTAL EQUITY 1 119 888 1 029
LIABILITIES
Non-current liabilities
Trade and other payables 11 13 13
Borrowings 9 594 285 556
Derivative financial instruments 32 13 19
Deferred tax liabilities 33 36 21
Retirement benefit deficit 13 280 237 253
Provisions for other liabilities and charges 15 8 13
965 592 875
Current liabilities
Trade and other payables 323 337 337
Current tax liabilities 66 54 66
Borrowings and bank overdrafts 9 105 494 200
Derivative financial instruments 30 27 22
Provisions for other liabilities and charges 26 41 23
Liabilities classified as held for sale – – 2
550 953 650
TOTAL LIABILITIES 1 515 1 545 1 525
TOTAL EQUITY AND LIABILITIES 2 634 2 433 2 554
* Restated (see Notes 1 and 6)
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Notes Six months to Restated * Year to
30 September Six months to 31 March
2016 30 September 2016
£m 2015 £m
£m
Cash flows from operating activities
Profit before tax from continuing operations 128 70 126
Adjustments for:
Depreciation of property, plant and equipment 50 39 80
Amortisation of intangible assets 19 16 35
Share-based payments 8 4 9
Exceptional items 4 (10) 27 17
Finance income (1) – (1)
Finance expense 16 14 30
Share of profit after tax of joint ventures and associates (19) (13) (28)
Changes in working capital 62 53 24
Net retirement benefit obligations (20) (22) (38)
Cash generated from continuing operations 233 188 254
Interest paid (15) (9) (21)
Net income tax paid (17) (4) (16)
Cash used in discontinued operations 6 (2) (2) (29)
Net cash generated from operating activities 199 173 188
Cash flows from investing activities
Purchase of property, plant and equipment (69) (77) (179)
Purchase of intangible assets (8) (4) (19)
Acquisition of businesses, net of cash acquired – – (54)
Cash adjustment in respect of previous acquisitions 3 – –
Disposal of joint ventures – – 240
Disposal of businesses, net of cash disposed 3 – –
Purchase of available-for-sale financial assets (3) (1) (4)
Disposal of available-for-sale financial assets 1 18 18
Disposal of property, plant and equipment 2 – –
Interest received 1 – 1
Dividends received from joint ventures and associates 22 9 83
Net cash (used in)/from investing activities (48) (55) 86
Cash flows from financing activities
Purchase of own shares to trust or treasury – – (7)
Cash inflow from additional borrowings 73 19 261
Cash outflow from repayment of borrowings (182) (3) (286)
Repayment of capital element of finance leases – (1) (4)
Dividends paid to the owners of the Company 8 (92) (92) (130)
Net cash used in financing activities (201) (77) (166)
Net (decrease)/increase in cash and cash equivalents 9 (50) 41 108
Cash and cash equivalents
Balance at beginning of period 317 195 195
Net (decrease)/increase in cash and cash equivalents (50) 41 108
Currency translation differences 22 (2) 14
Balance at end of period 9 289 234 317
* Restated (see Notes 1 and 6)
A reconciliation of the movement in cash and cash equivalents to the movement
in net debt is presented in Note 9.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Share Capital Other Retained Attributable Non- Total
capital & redemption reserves earnings to the owners controlling equity
share reserve of the interests
premium Company
£m £m £m £m £m £m £m
At 1 April 2016 523 8 127 370 1 028 1 1 029
Six months to 30 September 2016:
Profit for the period - total operations – – – 130 130 – 130
Other comprehensive income/(expense) – – 99 (57) 42 – 42
Total comprehensive income – – 99 73 172 – 172
Share based payments, net of tax – – – 8 8 – 8
Derecognition of put option on non- – – – 3 3 – 3
controlling interest
Movement on non-controlling interest – – – – – (1) (1)
Dividends paid – – – (92) (92) – (92)
At 30 September 2016 523 8 226 362 1 119 – 1 119
At 1 April 2015 523 8 61 343 935 1 936
Six months to 30 September 2015:
Profit for the period - total operations – – – 49 49 – 49
Other comprehensive (expense)/income – – (28) 19 (9) – (9)
Total comprehensive (expense)/income – – (28) 68 40 – 40
Share based payments, net of tax – – – 4 4 – 4
Dividends paid – – – (92) (92) – (92)
At 30 September 2015 (Restated)* 523 8 33 323 887 1 888
At 1 April 2015 523 8 61 343 935 1 936
Year to 31 March 2016:
Profit for the year - total operations – – – 163 163 – 163
Other comprehensive income/(expense) – – 66 (5) 61 – 61
Total comprehensive income – – 66 158 224 – 224
Share based payments, net of tax – – – 6 6 – 6
Purchase of own shares to trust or treasury – – – (7) (7) – (7)
Dividends paid – – – (130) (130) – (130)
At 31 March 2016 523 8 127 370 1 028 1 1 029
* Restated (see Notes 1 and 6)
TATE & LYLE PLC
NOTES TO THE FINANCIAL INFORMATION
For the six months to 30 September 2016
1. Presentation of half year financial information
The principal activity of Tate & Lyle PLC and its subsidiaries, together with
its joint ventures and associated undertakings, is the global provision of
ingredients and solutions to the food, beverage and other industries.
The Company is a public limited company incorporated and domiciled in the
United Kingdom. The address of its registered office is 1 Kingsway, London
WC2B 6AT. The Company has its primary listing on the London Stock Exchange.
Basis of preparation
This condensed set of consolidated financial information for the six months to
30 September 2016 has been prepared on a going concern basis in accordance
with the Disclosure and Transparency Rules of the Financial Conduct Authority
and with IAS 34 Interim Financial Reporting as adopted by the European Union.
The condensed set of consolidated financial information should be read in
conjunction with the annual financial statements for the year to 31 March
2016, which have been prepared in accordance with IFRSs as adopted by the
European Union.
Having reviewed the Group’s latest projected results, cash flows, liquidity
position and borrowing facilities, the Directors are satisfied that the Group
has adequate resources to continue to operate for a period not less than 12
months from the date of approval of the financial information and that there
are no material uncertainties around their assessment. Accordingly, the
Directors continue to adopt the going concern basis of accounting in preparing
the condensed set of consolidated financial information.
The condensed set of consolidated financial information is unaudited, but has
been reviewed by the external auditors. The condensed set of consolidated
financial information in the Statement of Half Year Results does not
constitute statutory accounts within the meaning of Section 434 of the
Companies Act 2006. The Group’s published consolidated financial statements
for the year to 31 March 2016 were approved by the Board of Directors on 25
May 2016 and filed with the Registrar of Companies. The report of the auditors
on those accounts was unqualified and did not contain an emphasis of matter
paragraph or a statement under Section 498 (2) or (3) of the Companies Act
2006. The condensed set of consolidated financial information for the six
months to 30 September 2016 on pages 16 to 39 was approved by the Board of
Directors on 2 November 2016.
Changes in accounting policy and disclosures
The accounting policies adopted in the preparation of the condensed set of
consolidated financial information are consistent with those of the Group’s
Annual Report and Accounts for the year to 31 March 2016, but also reflect the
adoption, with effect from 1 April 2016, of new or revised accounting
standards, as set out below:
* IFRS 11 Joint arrangements (Amendments)
* IAS 16 Property plant and equipment (Amendments)
* IAS 38 Intangible assets (Amendments)
* IAS 27 Separate financial statements (Amendments)
* IAS 1 Presentation of financial statements (Amendments)
* Annual Improvements to IFRS – 2012-14 cycles
The adoption of these amendments has not had a material effect on the
Group’s financial statements.
The following new standards, new interpretations and amendments to standards
and interpretations have been issued and are potentially relevant to the
Group, but were not effective for the financial year beginning 1 April 2016,
and have not been adopted early:
* IFRS 9 Financial instruments (effective 1 January 2018)
* IFRS 15 Revenue from Contracts with Customers (effective 1 January 2018)
* IFRS 16 Leases (effective 1 January 2019)
* IFRS 2 Share-based Payment (Amendments) (effective 1 January 2018)
* IAS 12 Income taxes (Amendments) (effective 1 January 2017)
* IAS 7 Statement of Cash Flows (Amendments) (effective 1 January 2017)
The Group is carrying out an assessment of the impacts of these changes ahead
of their various effective dates.
Seasonality
The Group's principal exposure to seasonality is in relation to working
capital. The Group's inventories are subject to seasonal fluctuations
reflecting crop harvesting and purchases. Inventory levels typically increase
progressively from September to November and gradually reduce in the first six
months of the calendar year.
Changes in constant currency
Where changes in constant currency are presented in this statement, they are
calculated by retranslating current period results at prior period exchange
rates. This represents a change to the methodology applied in previous years,
which involved retranslating prior period results at current period exchange
rates. This change, which has not had a material impact, has been made to
align with how the majority of external stakeholders view constant currency
performance comparisons.
Use of adjusted measures
The Group presents adjusted performance measures, including adjusted operating
profit, adjusted profit before tax, adjusted earnings per share, adjusted
operating cash flow and adjusted free cash flow, which are used for internal
performance analysis and incentive compensation arrangements for employees.
These measures are presented because they provide investors with valuable
additional information about the performance of the business. For the periods
presented, adjusted performance measures exclude, where relevant:
- Exceptional items (excluded as they relate to events which are unlikely to
recur, are outside the normal course of business and therefore merit separate
disclosure in order to provide a better understanding of the Group's
underlying financial performance);
- Amortisation of acquired intangible assets (costs associated with amounts
recognised through acquisition accounting that impact earnings compared to
organic investments);
- Net retirement benefit interest (accounting charges or credits which are not
linked to the underlying performance of the business. The amounts excluded
reflect the net interest cost of post-retirement benefit plans substantially
closed to future accrual);
- Tax on the above items and tax items that are themselves exceptional items
by definition.
Adjusted performance measures reported by the Group are not defined terms
under IFRS and may therefore not be comparable with similarly-titled measures
reported by other companies. Reconciliations of the adjusted performance
measures to the most directly comparable IFRS measures are presented in Note
2.
Exceptional items
Exceptional items comprise items of income and expense, including tax items
that are material in amount, relate to events which are unlikely to recur, are
outside the normal course of business and therefore merit separate disclosure
in order to provide a better understanding of the Group's underlying financial
performance. Examples of events that give rise to the disclosure of material
items of income and expense as exceptional items include, but are not limited
to, impairment events, significant business transformation activities,
disposals of operations or significant individual assets, litigation claims by
or against the Group, changes in tax legislation and restructuring of
components of the Group’s operations.
All material amounts relating to exceptional items in the Group’s financial
statements are classified on a consistent basis across accounting periods.
Restated comparative financial information
The comparative financial information for the six months to 30 September 2015
has been restated to reflect operations which were treated as discontinued
operations in the year to 31 March 2016 and for the deferral of income from
joint ventures in discontinued operations previously incorrectly recognised in
the six months to 30 September 2015.
In the six months to 30 September 2015, the Group incorrectly recognised
income in discontinued operations of £15 million representing the share of
profit after tax attributable to the Group whilst its investments in parts of
the Eaststarch joint venture were classified as held for sale. Under IAS 28
guidance, the profit attributable to a joint venture business whilst held for
sale should have been deferred and recognised as part of the profit on
disposal. Whilst this had no impact on the Group’s results for the full year
to 31 March 2016, restatement has been made in the comparative amounts for the
period ended 30 September 2015 reported within this statement. The restatement
reduces both basic and diluted earnings per share from total operations by
3.3p each, from 13.8p and 13.7p to 10.5p and 10.4p respectively. For
continuing operations, there was no change in operating profit, earnings per
share metrics or adjusted profit and adjusted earnings per share metrics.
Discontinued operations
An operation is classified as discontinued if it is a component of the Group
that: (i) has been disposed of, or meets the criteria to be classified as held
for sale; and (ii) represents a separate major line of business or geographic
area of operations or will be disposed of as part of a single co-ordinated
plan to dispose of a separate major line of business or geographic area of
operations. The results, assets and liabilities and cash flows of discontinued
operations are presented separately from those of continuing operations.
Discontinued operations comprised the following activities:
- Eaststarch / Morocco
On 31 October 2015, the Group completed the re-alignment of its Eaststarch
joint venture leading to the disposal of the majority of the Group’s
European Bulk Ingredients business. In a related agreement, the Group also
agreed to sell its corn wet mill in Casablanca, Morocco to Archer Daniels
Midland Inc. (ADM) and the assets and liabilities to be disposed of as part of
the transaction were classified as held for sale as at 31 March 2016.
Comparative financial information has been restated to reflect the disclosure
of the financial performance of these operations as discontinued operations.
There is no overall effect on the Group’s prior period profit from total
operations.
- Sugars and European Starch Pensions settlements
The Group announced on 29 September 2015, that the Commercial Court in London
had handed down a decision in a case brought by American Sugar Refining, Inc.
(ASR) in which it made a number of claims in relation to its acquisition of
the Group’s European Sugars business in 2010. The European Sugars business
formed part of the Group’s discontinued Sugars segment, and accordingly the
costs associated with those claims were recognised within discontinued
operations.
During the year to 31 March 2016, the Group made a settlement payment of £2
million to transfer all remaining obligations under a legacy pension scheme
related to the Group’s discontinued European Wheat Starch business, which
was disposed of in the 2008 financial year.
2. Reconciliation of adjusted performance measures
For the reasons set out in Note 1, the Group presents adjusted performance
measures including adjusted operating profit, adjusted profit before tax and
adjusted earnings per share.
For the periods presented, these adjusted performance measures exclude, where
relevant:
– exceptional items;
– the amortisation of acquired intangible assets;
– net retirement benefit interest; and
– tax on the above items.
The following table shows the reconciliation of the key income statement
adjusted performance measures to the most directly comparable measures
reported in accordance with IFRS:
Restated*
Six months to 30 September 2016 Six months to 30 September 2015
£m unless otherwise stated IFRS Adjusting Adjusted IFRS Adjusting Adjusted
Reported items Reported Reported items Reported
Continuing operations
Sales 1 321 – 1 321 1 170 – 1 170
Operating profit 124 9 133 71 29 100
Net finance expense (15) 3 (12) (14) 4 (10)
Share of profit after tax of joint 19 – 19 13 – 13
ventures and associates
Profit before tax 128 12 140 70 33 103
Income tax credit/(expense) 1 (27) (26) (3) (15) (18)
Non-controlling interests – – – – – –
Profit attributable to owners of 129 (15) 114 67 18 85
the Company
Basic earnings per share 27.7p (3.1p) 24.6p 14.4p 3.8p 18.2p
Diluted earnings per share 27.4p (3.1p) 24.3p 14.3p 3.8p 18.1p
Effective tax rate (0.9%) 18.3% 4.5% 17.9%
Year to 31 March 2016
IFRS Adjusting Adjusted
Reported items Reported
Continuing operations
Sales 2 355 – 2 355
Operating profit 127 61 188
Net finance expense (29) 6 (23)
Share of profit after tax of joint 28 – 28
ventures and associates
Profit before tax 126 67 193
Income tax expense (5) (27) (32)
Non-controlling interests – – –
Profit attributable to owners of 121 40 161
the Company
Basic earnings per share 26.1p 8.6p 34.7p
Diluted earnings per share 25.9p 8.6p 34.5p
Effective tax rate 4.0% 16.5%
* Restated (see Notes 1 and 6)
The Group also presents two adjusted cash flow measures: Adjusted operating
cash flow((a)); and Adjusted free cash flow((b)) which are defined as follows:
(a) Adjusted operating cash flow is defined as adjusted cash flow from
continuing operations, excluding the impact of exceptional items,
post-retirement benefits, derivative financial instruments, tax, interest and
acquisitions less capital expenditure.
(b) Adjusted free cash flow represents cash generated from continuing
operations excluding the impact of exceptional items, less net interest paid,
less income tax paid, less capital expenditure.
3. Segment information
Segment information is presented on a consistent basis with the information
presented to the Board (the designated Chief Operating Decision Maker) and
with that presented in the Group’s 2016 Annual Report. Segment results were
as follows:
(a) Segment sales and results
Sales Notes Six months to Restated* Year to
30 September Six months to 31 March
2016 30 September 2016
£m 2015 £m
£m
Speciality Food Ingredients 487 446 897
Bulk Ingredients 834 724 1 458
Sales – continuing operations 1 321 1 170 2 355
Sales – discontinued operations 6 3 6 13
Sales – total operations 1 324 1 176 2 368
Adjusted operating profit – continuing operations
Speciality Food Ingredients 94 76 150
Bulk Ingredients 64 42 84
Central (25) (18) (46)
Adjusted operating profit – continuing operations 133 100 188
Adjusting items:
– Exceptional items 4 (3) (25) (50)
– Amortisation of acquired intangible assets (6) (4) (11)
Operating profit – continuing operations 124 71 127
Finance income 1 – 1
Finance expense (16) (14) (30)
Share of profit after tax of joint ventures and associates 19 13 28
Profit before tax – continuing operations 128 70 126
Profit/(loss) before tax – discontinued operations 6 1 (18) 47
Profit before tax – total operations 129 52 173
Six months to 30 September 2016 £m Six months to 30 September 2015 £m Year to 31 March 2016 £m
Adjusted operating margin
Speciality Food Ingredients 19.3% 17.0% 16.7%
Bulk Ingredients 7.7% 5.8% 5.8%
Central n/a n/a n/a
Total – continuing operations 10.1% 8.5% 8.0%
* Restated (see Notes 1 and 6)
(b) Segment assets/(liabilities)
At 30 September 2016
Assets Liabilities Net
£m £m £m
Net working capital
Speciality Food Ingredients 347 (145) 202
Bulk Ingredients 309 (151) 158
Central 11 (38) (27)
Group working capital – continuing and total operations 667 (334) 333
Other assets/(liabilities) 1 967 (1 181) 786
Group assets/(liabilities) 2 634 (1 515) 1 119
At 30 September 2015 (Restated*)
Assets Liabilities Net
£m £m £m
Net working capital
Speciality Food Ingredients 317 (141) 176
Bulk Ingredients 281 (151) 130
Central 9 (57) (48)
Group working capital – continuing operations 607 (349) 258
Group working capital – discontinued operations 4 (1) 3
Group working capital – total operations 611 (350) 261
Other assets/(liabilities) 1 822 (1 195) 627
Group assets/(liabilities) 2 433 (1 545) 888
At 31 March 2016
Assets Liabilities Net
£m £m £m
Net working capital
Speciality Food Ingredients 339 (150) 189
Bulk Ingredients 341 (146) 195
Central 11 (54) (43)
Group working capital – continuing operations 691 (350) 341
Group working capital – discontinued operations 5 (2) 3
Group working capital – total operations 696 (352) 344
Other assets/(liabilities) 1 858 (1 173) 685
Group assets/(liabilities) 2 554 (1 525) 1 029
* Restated (see Notes 1 and 6). Segmental assets/(liabilities) at 30 September
2015 restated to reflect segmental allocation rules updated in light of the
Group’s restructuring in the second half of the 2016 financial year.
4. Exceptional items
Exceptional items recognised in arriving at operating profit were as follows:
Footnote Six months to Six months to Year to
30 September September 31 March
2016 2015
£m 2015 2016
£m £m
Continuing operations
Business re-alignment – impairment, restructuring and other (a) (3) (32) (48)
net costs
Asset impairments/impairment reversals (b) (6) – 3
Howbetter impairment and related costs (c) (5) – –
US retirement benefit obligation settlement gain (d) 9 – –
Tate & Lyle Ventures – net investment disposal profit (e) 2 9 7
SPLENDA (®)Sucralose – revised table top commercial (f) – (2) (2)
agreement
US litigation (g) – – (15)
Slovakia re-measurement gain (h) – – 5
Exceptional items – continuing operations (3) (25) (50)
Discontinued operations
Business re-alignment – Eaststarch and Morocco disposals (i) 1 (2) 64
ASR litigation settlement (j) – (18) (18)
Exceptional items – discontinued operations 1 (20) 46
Exceptional items – total operations (2) (45) (4)
In addition, the following exceptional tax items were recognised in the current and comparative periods:
Footnote Six months to Six months to Year to
30 September 30 September 31 March
2016 2015 2016
£m £m £m
Continuing operations
Recognition of UK deferred tax assets (k) 26 – –
Exceptional tax credit – continuing operations 26 – –
Discontinued operations
Moroccan taxation matters (l) – – (5)
Exceptional tax charge – discontinued operations – – (5)
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