REG - Tate & Lyle PLC - Half-year Report
10/11/2022 07:00
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RNS Number : 9042F Tate & Lyle PLC 10 November 2022
Half year results for the six months to 30 September 2022
Issued: Thursday 10 November 2022
Strong first half performance with good progress delivering growth-focused
strategy
HEADLINES
· Strong first half performance with Group revenue +20% and adjusted
operating profit +29%
· Good progress delivering growth strategy as newly focused speciality
food and beverage solutions business:
− Food & Beverage Solutions revenue +21% including inflation
price-through and mix management
− New Products revenue +19% benefiting from focus on innovation and
customer collaboration
− Integration of Quantum Hi-Tech acquisition, a leading dietary fibre
business in China, progressing well
· Managing impact of cost inflation through strategic mix management,
pricing, productivity and cost discipline
· Adjusted profit before tax(1) +10% with strong Tate & Lyle and
significantly lower Primient joint venture profits
· Strong balance sheet and cash delivery underpins investment for growth
and progressive dividend policy
· Outlook for year to 31 March 2023 - adjusted profit before tax to be
in-line with current market expectations
FINANCIAL SUMMARY
Adjusted results(1, 2, 3) Statutory results(4)
2022 2021 vs 2021 2022 2021 vs 2021
Revenue £849m £656m +20% £849m £656m +29%
Operating profit £137m £94m +29% £114m £33m >99%
Profit before tax £139m £112m +10% £68m £21m >99%
Diluted earnings per share 26.6p 21.4p +9% 13.3p 2.5p >99%
Free cash flow £62m £20m £42m
Net debt (comparative 31 March) £281m £626m
Dividend per share 5.4p 9.0p (40%)
NICK HAMPTON, CHIEF EXECUTIVE SAID
"Our strong first-half represents an excellent start to Tate & Lyle's
first full year as a growth-focused, science-driven, speciality food and
beverage solutions business. Food & Beverage Solutions delivered another
half of strong revenue and profit performance with broad-based growth across
all regions. We continued to see robust customer demand for solutions which
make healthier food and drink, and to benefit from our increasing focus on
innovation and close customer collaboration.
We have seen significant inflation and supply chain volatility in raw
materials, energy and logistics costs, especially in Europe. We have worked
closely with our customers to provide visibility of increasing input costs and
continue to follow this approach as we enter discussions for 2023 calendar
year contract renewals.
The separation of the Primient joint venture was executed successfully in
April to the great credit of both the Tate & Lyle and Primient teams.
While Primient had a difficult first half due to inflation and operational
challenges, underlying demand remains robust and with a focus on cash
generation we have received US$76m in cash dividends this year.
The strategic re-positioning of Tate & Lyle to focus on speciality food
and beverage solutions has significantly enhanced the quality and resilience
of our business. Despite the uncertain economic outlook, we remain confident
that the strength of our ingredient portfolio across attractive categories and
regions, our focus on serving our customers, and the expertise and commitment
of our people will enable us to successfully deliver our growth-focused
strategy."
_________________________________________________________________________________
1 Comparatives for adjusted results for the six months to 30 September 2021
are pro-forma financial information published on pages 44 and 45 of the half
year results statement for that period issued on 4 November 2021. Free cash
flow comparative is continuing operations only.
2 The adjusted results for the six months to 30 September 2022 exclude
exceptional items, amortisation of acquired intangible assets and other fair
value adjustments, the tax on those adjustments and tax items that are
themselves exceptional. A reconciliation of statutory and adjusted
information is included in Note 2 to the Financial Information. Growth
percentages are calculated on unrounded numbers. Changes in adjusted
performance metrics are in constant currency throughout this statement.
3 Pro-forma adjusted diluted EPS has been calculated based on the earnings for
the period and the shares in issue adjusted for impact of the 6 for 7 share
consolidation as if it occurred on 1 April 2021.
4 Statutory results are continuing operations only
KEY HIGHLIGHTS(1)
Food & Beverage Solutions: continued strong revenue momentum
· Underlying volume +2% from robust customer demand; reported volume (8%)
lower reflecting the planned transition of Primary Products Europe capacity,
supply chain challenges and one-off factors
· Revenue +21% with double-digit organic growth across all regions
− Volume excluding Primary Products Europe (5%) lower delivering +21%
revenue growth from 13ppts inflation price-through, 12ppts strategic mix
management and 1ppt acquisitions
· Adjusted operating profit +26% at £113m
Continued focus on innovation and customer collaboration driving New Products
revenue growth
· New Products revenue +19%(2) reflecting good demand for fortification
and mouthfeel solutions
· New Products represent 15% of Food & Beverage Solutions revenue
Sucralose delivers steady earnings
· Volume +9% due to strong customer demand, a phasing benefit and modest
optimisation of production
· Revenue +12% with higher volume and benefits from customer mix
· Adjusted operating profit 8% higher at £39m
Group results reflect strong Tate & Lyle profits and significantly lower
profits in Primient joint venture
· Revenue +20%; adjusted operating margin +110bps in constant currency;
adjusted profit before tax +10%
· Share of adjusted profit of Primient joint venture 62% lower(1) due to
inflation and operational challenges
− Primient executed in-year supplementary pricing where possible with
the ability to further price-through inflation during the 2023 calendar year
bulk sweetener contracting round
· Received US$76m in cash dividends from Primient, the full amount
expected for the 2023 financial year
· Proforma adjusted diluted EPS +9% after adjusted effective tax rate at
21.9%
· Statutory profit after tax on total operations up £19m at £121m from
the profit on disposal of Primient offset by the inclusion in the current year
of only 49.7% of profits from the retained interest in the joint venture
· Free cash flow of £62m (2021 - £20m) benefiting from higher profits
and working capital in-line with the comparative period despite the impact
from inflation
· Net debt £345m lower at £281m at 30 September 2022
− Primient net receipts of £1.0bn; acquisition of Quantum £(184)m;
special dividend £(497)m
− Net debt to EBITDA ratio 1.0x
· Interim dividend of 5.4p reflects new earnings base, share
consolidation and special dividend in May 2022
Continuing to invest in delivering growth-focused strategy
· Strengthened customer-facing solutions capability in areas such as
nutrition, sensory and regulatory
· Acquired Nutriati, an ingredient technology business producing chickpea
protein and flour
· Opened new Innovation and Customer Collaboration Centre in Santiago,
Chile
· Capital projects to deliver growth expansion and ease capacity
constraints progressing well
Effective management of significant cost inflation
· £85m of gross cost inflation mitigated by strategic mix management,
pricing, productivity and cost discipline
· Quarterly supplemental pricing programme in place since May 2022
· For key production inputs such as corn and energy, forward purchase
agreements and hedging are used to help manage input cost volatility and to
build supply continuity
Integration of Quantum, a leading dietary fibre business in China, acquired in
June progressing well
· Quantum significantly strengthens fortification solutions offering for
customers in China and Asia
· Integration on track supported by strong customer relationships and
good operating discipline
Good progress on purpose programme and building a more agile and inclusive
culture
· Expanded sustainable agriculture programme for stevia
· Food bank partnership programme increased to support local communities
· 42% of top 500 managers are women
---------------------------------------------------------------------------------
1. Adjusted metrics percentage changes are in constant currency,
Comparatives for adjusted results for the six months to 30 September 2021 are
pro-forma financial information published on pages 44 and 45 of the half year
results statement for that period. Pro-forma adjusted diluted EPS has been
calculated based on the earnings for the period and the shares in issue
adjusted for impact of the 6 for 7 share consolidation completed on 3 May
2022.
2. Definition of New Products updated to reflect nature of innovation
launches see page 47. On previous definition revenue was 16% higher in
period.
OUTLOOK
For the year ending 31 March 2023, we continue to expect:
· Revenue growth reflecting current top-line momentum
· To offset input cost inflation through strategic mix management,
pricing, productivity and cost discipline
· Adjusted profit before tax to be in line with current market
expectations with stronger profits in Food & Beverage Solutions offsetting
lower profits from the minority holding in Primient.
OVERVIEW OF THE HALF-YEAR
Business environment and trading
The Group has made an excellent start to the year. Revenue in the first half
was 20% higher reflecting the pricing-through of inflation and strong
strategic mix management to deliver higher margin business in a period of
capacity constraint. Adjusted operating profit was 29% higher. Adjusted
profit before tax was 10% higher reflecting strong performance from the core
business and weaker performance from our minority holding in the Primient
joint venture.
Tate & Lyle is a global leader in sweetening, mouthfeel and fortification
and we saw revenue growth across each of these platforms in the half. Our
broad portfolio and technical capabilities provide customers with solutions
that reduce sugar, calories and fat, and add fibre to their products, and
consumer demand for healthier food and drink remained robust across the
period. Underlying volume was slightly ahead of the comparative period at 2%
higher. However, reported volume was 8% lower due to three factors each with
around equal impact. Firstly, the planned transition of Primary Products
capacity in Europe. Secondly, challenges in the operating environment from
Covid-19 lockdowns in China and supply chain disruption. Thirdly, one-off
factors including our decision to exit certain low margin business and the
impact of industrial action at our corn wet mill in The Netherlands over a
two-week period, which is now concluded.
We are mindful of the uncertain economic outlook and are closely monitoring
consumer and customer demand as we move forward. Our experience during the
pandemic, when demand for our speciality ingredients and solutions remained
robust with some fluctuations across categories and regions, gives us
confidence we can adapt to changing demand patterns.
Input inflation and supply volatility
Our teams have demonstrated agility in successfully navigating significant
inflation and supply chain disruption. In the first half, we saw gross cost
inflation totaling £85 million in areas such as corn, energy, consumables and
transportation. This was mitigated by a combination of strategic mix
management, pricing, productivity and cost discipline.
We entered the 2022 calendar year with renewed customer contracts that offset
expected inflation. However, the conflict in Ukraine has caused significant
further inflation in raw materials (including corn), energy and logistics
costs, especially in Europe. It has also created supply chain volatility
across a range of inputs (including packaging and chemicals) consumed in our
production facilities across the world.
In May 2022, we implemented a programme of supplementary price increases
across our main markets to recover incremental input costs. Under this
programme, we have worked closely with customers to provide visibility of
increasing input costs and are adjusting customer prices on a rolling
quarterly basis. Together with a continued focus on delivering productivity
and strong cost discipline, this has allowed us to offset input cost
inflation. Normal industry practice sees customer contracts in North America
and Europe renewed annually from 1 January each year. We will continue to
adopt our approach of working closely with customers as we go through the 2023
calendar year contracting round in these regions.
We use forward purchase commitments globally and hedging for corn and energy
in the US to help manage inflation and to build supply continuity. Such
arrangements delay the impact of incremental cost increases. In addition,
business continuity plans are in place should energy supplies to our two
European corn wet mills in the Netherlands and Slovakia be limited or
interrupted, which include optimising production to prioritise speciality
ingredients.
Delivering progress on our growth-focused strategy
On 1 April 2022, following the sale of a controlling stake in Primary Products
in the Americas ('Primient'), Tate & Lyle was re-positioned as a leading
global speciality food and beverage solutions business focused on faster
growing markets. During the half, we made good progress delivering our growth
strategy and increasing our focus on innovation:
· Double-digit organic revenue growth in each region
· New Products revenue up 19% in constant currency (23% on a
like-for-like basis)
· New Products revenue 15% of Food & Beverage Solutions revenue
· Risk adjusted revenue of innovation pipeline up 29% since 31 March
2022.
Growth is being driven by the delivery of our strategic growth framework which
is centered on four pillars. Progress across these four pillars during the
half include:
Integrated solutions for customers
· We continued to invest in strengthening our customer-facing solutions
capabilities in areas like sensory, nutrition, regulatory and category and
consumer insights. Targeted programmes to develop new ways of working with
customers are progressing well and helping to build stronger solutions-based
partnerships.
Market focus
· In May, we opened a new Customer Innovation and Collaboration Centre in
Santiago, Chile to accelerate the innovation process for customers in southern
Latin America.
· In our sweetener platform, to meet growing customer demand across our
key markets, we are investing in our stevia facility in China and have just
increased capacity in our stevia production line in the US.
Portfolio expansion
· In April, we acquired Nutriati, an ingredient technology business
developing and producing chickpea protein and flour, expanding our capability
to offer customers sustainable, plant-based solutions. We have seen strong
revenue growth and customer interest for both product lines.
· In June, we completed 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$238 million. Quantum has a high-quality
portfolio of fructo-oligosaccharides (FOS) and galacto-oligosaccharides (GOS),
and the acquisition strengthens our fortification platform and our position as
a leading global player in the fast-growing dietary fibres market. The
integration of Quantum is on track and, despite some challenges with Covid-19
related lockdowns in China, the business is performing well.
Accelerate innovation
· New Product revenue grew by 19% with the fortification platform up 79%
driven by high demand for fibre solutions and the Quantum acquisition. Revenue
from our mouthfeel platform was 10% higher reflecting customer demand for
innovation, cleaner labels and cost optimsation. Revenue from the sweetener
platform was 1% higher reflecting capacity constraints, especially in stevia.
· We extended our scientific partnership with APC Microbiome Ireland
through a new two-year research project to increase understanding of how
dietary fibres can impact the functioning of the gut microbiome. In August, we
announced a jointly filed international patent application for a synbiotic
fibre technology that has shown positive preliminary results in improving
metabolic health.
Maintaining our financial strength
· Free cash flow generation at £62 million was £42 million higher than
the comparative period (continuing operations) benefiting from a strong focus
on working capital management, especially important given the headwinds from
input cost inflation.
· Our minority holding in Primient offers an attractive cash dividend
stream. We have received US$76 million in cash dividends from Primient
representing the full amount expected for the 2023 financial year.
· Productivity remains a key focus, driving further efficiencies in our
business. We have made good progress delivering against our target for
productivity benefits of US$10 million for the 2023 financial year. We now
expect productivity benefits of around US$15 million in the year.
· Proceeds from the Primient transaction further strengthened the balance
sheet supporting the acquisition of Quantum (£184 million) and the payment of
the special dividend (£497 million). At the end of the half, net debt had
decreased by £345 million to £281 million and net leverage was 1.0x net debt
to EBITDA. Our strong balance sheet is ready to support further investment
for organic and inorganic growth.
Living our Purpose
With continued challenges across the world including Covid-19, climate change,
the cost-of-living crisis and the conflict in Ukraine, we remain as determined
as ever to deliver on our purpose. Our new more ambitious purpose of
'Transforming Lives through the Science of Food', introduced in April, is
gaining strong traction with employees, customers and community partners. We
continue to make good progress in each of our three purpose pillars.
Supporting healthy living
· In June, in partnership with the UAE's F&B Manufacturers Business
Group, we completed the Middle East's first Sugar and Calorie Reduction
Knowledge Building Programme, held at our Customer Innovation and
Collaboration Centre in Dubai. The programme focused on supporting food and
beverage manufacturers in the region to reduce sugar and calories in their
products, with around 400 delegates participating including many customers and
officials from regional government food authorities.
· In September, working with the British Nutrition Foundation, we
launched a new online fibre calculator. This tool asks people eight
questions to assess their current eating habits before giving an overall fibre
score and offering simple tips and personalised advice on how to increase
their fibre intake.
· In October, we announced support for a three-year research programme by
The University of Aberdeen's Rowett Institute to investigate how issues around
poverty, food insecurity and obesity may affect shopping habits in the UK. As
the only food and drink ingredient solutions supplier on the research panel,
our support will include sharing industry insight on reformulation and
expertise on nutrition.
Building thriving communities
· Demand for food banks is increasing significantly and so our
partnerships with many food banks and other charitable partners across the
world have never been more important. Since 2020, we have donated around 3
million meals to people in need in our local communities.
· We continue to make good progress against our target of achieving
gender parity in leadership and management roles by 2025. At 30 September
2022, 42% of the top 500 managers in Tate & Lyle are women. Our UK
median gender pay gap (at 1 April 2022) also increased to 9.6% in favour of
women, up from 1.7% in favour of women in 2021.
Caring for our Planet
· We have expanded our stevia sustainable agriculture programme in China
working with Earthwatch and Nanjing Agricultural University. This programme
focuses on improving the environmental and social impacts of stevia production
such as reducing fertiliser use and improving soil health through regular
testing. Stevia growers are also being supported to pursue
sustainability-related verification.
· We continue to make excellent progress on waste management. Over 90% of
the waste we generate is beneficially used, for example as nutrients for local
farms.
Later this year we will be publishing our third annual Purpose Report
describing how our purpose is being lived across Tate & Lyle and progress
against our purpose targets and commitments.
PRIMIENT
On 1 April 2022, we completed the sale of a controlling stake in Primient
comprising the Primary Products business in North America and Latin America
and 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).
Following the transaction KPS held a 50.1% interest in Primient and has Board
and operational control, while Tate & Lyle held a 49.9% interest. An
exceptional profit on disposal of £98 million has been recorded in the
period. Subsequently, upon the issue of share incentives to Primient
management, Tate & Lyle's interest in Primient was diluted to 49.7%. Our
relationship with KPS has started positively, and the 20-year agreements put
in place to provide supply and economic security for both businesses are
operating effectively.
During the first half, Primient saw sweetener volume marginally higher with
industrial starch volume materially lower as robust demand was more than
offset by operational challenges. Revenue was moderately higher reflecting
both the pass-through of higher corn costs and in-year supplementary pricing
which was executed where possible. Operational challenges in its network of
corn wet mills reduced both throughput and efficiency and this, combined with
the impact of cost inflation, resulted in significantly lower profits. The
2023 calendar year bulk sweetener contracting round provides the ability to
further price-through inflation.
Tate & Lyle has received US$76 million in cash dividends from Primient
representing the full amount expected for the 2023 financial year. Of this
amount, US$31 million relates to distributions from profits earned by a former
joint venture prior to disposal, and US$15 million to settle tax obligations
on Primient profits. A dividend of US$15m was received in first half and the
remaining US$61m in early November.
DIVIDENDS
£497 million special dividend and associated share consolidation
Following the sale of a controlling stake in Primient, £497 million was
returned to ordinary shareholders by way of a special dividend of £1.07 per
existing ordinary share on 16 May 2022. To maintain comparability, so far as
possible, of the Company's share price before and after the special dividend,
this 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. The share
consolidation applied to ordinary shareholders on the Register on 29 April
2022.
Interim dividend for six months to 30 September 2022
The Board has approved an interim dividend for the six months to 30 September
2022 of 5.4p (2021 - 9.0p). The interim dividend represents a 40% per share
reduction from the prior year's interim dividend. After the effect of the
share consolidation implemented in May 2022, this reduction is in-line with
the previously communicated approach and reflects the smaller consolidated
earnings base following the sale of the controlling stake in Primient, and is
consistent with the step down in the final dividend for the year ended 31
March 2022. An underlying growth of 2.5% has been applied to the interim
dividend. This dividend will be paid on 4 January 2023 to all shareholders on
the Register of Members on 25 November 2022. As well as the cash dividend
option, shareholders will be offered a Dividend Reinvestment Plan alternative.
BOARD AND MANAGEMENT
Board of Directors
· Dawn Allen joined the Board on 16 May 2022 as Chief Financial
Officer.
· Dr Isabelle Esser joined the Board as a non-executive director on
1 June 2022.
Executive Committee
· Jim Stutelberg, President, Primary Products stepped down from the
Executive Committee to take up the role as Chief Executive, Primient on 1
April 2022.
OTHER MATTERS
We will be holding a Capital Markets event on 8 February 2023.
OPERATING PERFORMANCE
Six months to 30 September 2022 Volume change Revenue Revenue growth Adjusted operating profit(1) Adjusted operating profit change
North America (2%) £340m +14% - -
Asia, Middle East, Africa and Latin America (3%) £208m +29% - -
Europe (14%) £204m +23% - -
Food & Beverage Solutions (8%) £752m +21% £113m +26%
Sucralose +9% £97m +12% £39m +8%
Central costs (£15m) +23%
Total (8%) £849m +20% £137m +29%
The adjusted results for the six months to 30 September 2022 have been
adjusted to exclude exceptional items, amortisation of acquired intangible
assets and other fair value adjustments, the tax on those adjustments and tax
items that are themselves exceptional. A reconciliation of statutory and
adjusted information is included in Note 2 to the Financial Information.
Growth percentages are calculated on unrounded numbers. Changes in revenue
and adjusted operating profit are in constant currency.
1 Comparatives for adjusted results for the six months to 30 September 2021
are pro-forma financial information published on pages 44 and 45 of the half
year results statement for that period.
FOOD & BEVERAGE SOLUTIONS
Strong revenue and profit growth
Underlying volume was 2% ahead of the comparative period. Reported volume was
8% lower due to three factors each with around equal impact. Firstly, the
planned transition of Primary Products capacity in Europe (this transition is
expected to continue into future financial years). Secondly, challenges in the
operating environment from Covid-19 lockdowns in China and supply chain
disruption. Thirdly, one-off factors including our decision to exit low margin
business and the impact of industrial action at our corn wet mill in the
Netherlands, which is now concluded.
Revenue was 21% higher in constant currency at £752 million with double-digit
growth across all regions. Strong price/mix leverage in Food & Beverage
Solutions of 26ppts starting from volume of 5% lower (this excludes a decline
of 3ppts from Primary Products Europe) delivered revenue growth of 21%. This
was delivered through 12ppts of leverage from strategic mix management to
deliver higher margin business in a period of capacity constraint, 13ppts of
leverage from the pricing through of input cost inflation and higher corn
costs, and 1ppt of leverage from acquisitions.
Adjusted operating profit was 26% higher in constant currency at £113 million
benefiting from strong strategic mix management, a transparent approach with
customers to the pricing-through of input cost inflation and good cost
discipline. We entered the 2022 calendar year with renewed customer contracts
that offset expected inflation. This, together with supplementary pricing
from May to recover incremental inflation across our main markets, and the
benefit from productivity, saw operating margins in the period expand by 60bps
in constant currency. Operating losses in the European Primary Products
business reduced by £6 million to £4 million reflecting the pass-through of
higher corn cost and improved pricing. Hedging and forward purchase
commitments are used to mitigate input cost inflation and to build supply
continuity. These arrangements have delayed the impact of incremental cost
increases for inputs, with further increases to be priced-through in the
second half.
The effect of currency translation increased revenue by £55 million and
adjusted operating profit by £12 million.
North America
In North America volume was 2% lower while revenue was 14% higher in constant
currency at £340 million. Demand was robust across our focus categories
with revenue higher in beverage and soups, sauces and dressings as we targeted
higher margin fortification and mouthfeel solutions. Significant volume to
revenue growth reflected strategic mix management and the passing through of
input cost inflation. Growth was partly held back by supply chain disruption,
including the impact of reduced availability of key inputs.
Asia, Middle East, Africa and Latin America
Volume was 3% lower reflecting the exit of low margin business and Covid-19
lockdowns in China. Revenue at £208 million increased by 29% in constant
currency with double-digit growth in each region. Revenue growth reflected the
benefit of mix management, pricing through of input cost inflation and
acquisitions.
In Asia, revenue growth was strong across all sub-regions. Good mix
management, especially through the exit of low margin business, contributed to
strong price/mix leverage, particularly in south east Asia and China. In June,
we acquired Quantum, a leading prebiotic dietary fibre business in China,
which strengthens our fortification platform, enhances our solutions
capabilities and extends our customer offering in China and Asia. Quantum
contributed 11ppts in revenue growth in Asia.
In Latin America, revenue was double-digit higher reflecting strong mix
management and pricing which more than offset the impact of capacity
constraints. Revenue benefited from good progress in fibre and sweetener
solutions into bakery and soups, sauces and dressings categories in Mexico,
and good growth in southern Latin America. Solutions for customers
addressing front-of-pack labelling regulations continue to be a driver of
growth in the region.
In the Middle East and Africa, volume and revenue were ahead reflecting good
performance in mouthfeel and fibre solutions.
Europe
Volume was 14% lower and revenue was 23% higher in constant currency at £204
million. Revenue includes £61 million from the European Primary Products
business. Robust demand, the exit from low-margin sweetener business and
pricing through of inflation more than offset the impact of supply chain
challenges especially from industrial action at our corn wet mill in the
Netherlands. We saw good revenue growth across the bakery and soups, sauces
and dressings categories. Volume to revenue growth reflected mix management
and the pricing through of inflation. Revenue for New Products in Europe
increased strongly across all platforms. European Primary Products revenue was
strongly higher reflecting improved pricing and the pass-through of higher
corn costs.
New Products
Revenue from New Products increased by 19% in constant currency to £114
million, representing 15% of Food & Beverage Solutions revenue. On a
like-for-like basis, which assumes the same ingredients are included in New
Products revenues in both the current and comparative periods (i.e. no
products are removed from New Product disclosure due to age), New Product
revenues were 23% higher. We saw revenue growth across all three platforms of
sweeteners, mouthfeel and fortification. Revenue from Quantum helped to
accelerate growth in the fortification platform and overall New Product
revenue. Revenue in the mouthfeel platform also grew strongly reflecting good
demand for innovation, clean label starches and cost optimisation.
To reflect the differentiated profiles of ingredients launched from the
innovation pipeline we have adapted the periods from launch for which we
consider ingredients to be New Products. We have extended the life cycle for
launches which are transformational entrants into the market and take longer
to commercialise to 15 years and reduced the life cycle of ingredients which
are extensions of products already in our portfolio to five years. Further
information is the Additional Information section at the back of this
document. Previously, all launches were considered New Products for the first
seven years from their launch. On the previous methodology, New Products
revenue for the six months to 30 September 2022 was 16% higher than the
comparative period.
SUCRALOSE
Strong performance
Sucralose volume increased by 9% driven by strong customer demand, some
phasing of orders into the half and the benefit of modest production
optimisation 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 12% in
constant currency to £97 million reflecting strong volume growth and a
benefit from customer mix.
Adjusted operating profit at £39 million was 8% higher in constant currency
reflecting the operational leverage of higher volume which was mitigated by
input cost inflation. Currency translation increased revenue by £9 million
and adjusted operating profit by £6 million.
ADDITIONAL COMMENTARY IN FINANCIAL STATEMENTS
Six months to 30 September(1) 2022 Pro-Forma Change Constant
Continuing operations
£m
% currency
2021 change
£m %
Revenue 849 656 29% 20%
Adjusted operating profit
- Food & Beverage Solutions 113 80 41% 26%
- Sucralose 39 31 25% 8%
- Central (15) (17) 20% 23%
Adjusted operating profit 137 94 47% 29%
Adjusted share of profit of joint venture 13 30 (58%) (62%)
Net finance expense (11) (12) 10% 19%
Adjusted profit before tax(2) 139 112 24% 10%
Six months to 30 September 2022 Reported Change Constant
Continuing operations
£m
2021 % currency
£m change
%
Adjusted profit before tax 139 85 64% 45%
Exceptional items (11) (59) 82% 83%
Amortisation of acquired intangible assets and other fair value adjustments (12) (5) (>99%) (>99%)
Adjusting items excluded from share of profit of joint venture (48) - n/a n/a
Profit before tax 68 21 >99% >99%
Income tax expense(3) (12) (9) (33%) -
Profit for the period - continuing operations 56 12 >99% >99%
Profit for the period - discontinued operations 65 90 (28%) (26%)
Profit for the period - total operations 121 102 18% 17%
Earnings per share (pence) - continuing operations
Adjusted diluted (pro-forma basis)(4) 26.6p 21.4p 24% 9%
Diluted 13.3p 2.5p >99% >99%
Earnings per share (pence) - total operations
Diluted 29.0p 21.7p 34% 32%
Cash flow and net debt - total operations
Adjusted free cash flow 62 127
Net debt - At 30 September (comparative 31 March 2022) 281 626
1. Adjusted results and certain other terms and performance measures
used in this document are not directly defined within IFRS. We have provided
descriptions of such metrics and their reconciliations to the most directly
comparable measures reported in accordance with IFRS and the calculation
(where relevant) of any ratios in Note 2. Comparatives for adjusted results
for the six months to 30 September 2021 are pro-forma financial information
published on pages 44 and 45 of the half year results statement for that
period issued on 4 November 2021.
2. For the six months to 30 September 2021 pro-forma adjusted profit
before tax of £112 million includes the impact of long-term agreements (cost
of £3 million) and the pro-forma share of Primient joint venture profit
(income of £30 million). Adjusted profit before tax for continuing operations
for this period of £85 million excludes these pro-forma adjustments.
3. Statutory income tax expense on continuing operations of £12
million (2021 - £9 million) includes an adjusted income tax charge of £30
million (2021 - £17 million) and a tax credit on adjusting items of £18
million (2021 - £14 million). Additionally, the comparative period included
an exceptional tax charge of £6 million. Refer to Note 5. The proforma
adjusted tax charge for the six months to 30 September 2021 was £24 million
(year to 31 March 2022 - £37 million).
4. For better comparability, adjusted diluted EPS has been adusted in
both the current and comparative period to use the weighted average number of
shares as if the share consolidation were effected on 1 April 2021, before
including the dilutive impact for the respective periods. Additionally, the
adjusted diluted EPS in the comparative period has been re-calculated based on
the earnings for the period, adjusted for the pro-forma impact of the Primient
disposal as if it had taken place on 1 April 2021.
Central costs
Central costs, which include head office costs and certain treasury and legal
activities, were 23% lower than the comparative period in constant currency at
£15 million reflecting further investment in customer-facing solutions
capabilities which was more than offset by strong cost discipline and one-off
income of £2 million from an investment in a former joint venture.
Net finance expense and liquidity
Net finance expense at £11 million was 19% lower in constant currency than
the comparative period, mainly reflecting higher net income on the Group's
cash balances. Because approximately 90% of the Group's borrowings are at
fixed rates of interest, the Group is not exposed to significant changes in
interest rates.
Exceptional items
The Group recorded net exceptional expense of £11 million in profit before
tax from continuing operations. Such items principally included the following:
· £13 million of cash costs associated with the transaction to dispose
of Primient, mainly related to continuing IT separation costs to ensure
Primient is fully independent by end of the current financial year;
· £3 million exceptional credit relating to historical legal matters
following the release of provision for a favourable ruling; and
· £1 million of cash costs relating to productivity and simplification
projects in our operations.
The operating exceptional cash outflows for the period totalled £37 million,
comprising £8 million of cash outflows related to charges recorded in the
current period and £29 million of cash outflows resulting from exceptional
costs recorded in prior years.
In total operations, the Group recorded net exceptional income of £87
million. This included the gain on disposal of Primient of £98 million. Refer
to the discontinued operations below.
In the comparative period, the Group recorded a net exceptional charge of £65
million in continuing operations (including £6 million relating to an
exceptional tax charge).
Adjusted share of profit of Primient joint venture
The Group's share of the Primient joint venture profit is set out in the table
below:
Six months to 30 September 2022 Pro-forma Change Constant
% currency
£m 2021 change
%
£m
Adjusted operating profit 43 70 (38%) (45%)
Net finance expense (35) (24) (47%) (26%)
Adjusted share of profit from its own joint ventures 23 15 54% 31%
Adjusted profit before tax(1) 31 61 (49%) (55%)
Adjusted share of profit of Primient joint venture at 49.7% equity interest 13 30
(58%) (62%)
Statutory share of loss of Primient joint venture at 49.7% equity interest (35) n/a
n/a n/a
1. For the six months to 30 September 2021 pro-forma adjusted profit
before tax of £61 million includes the pro-forma impact of long-term
agreements (income of £3 million), additional standalone costs in Primient
(cost of £7 million) and the pro-forma effect of Primient's financing
liabilities (finance expense of £22 million). Adjusted profit before tax for
discontinued operations for this period of £87 million excludes these
pro-forma adjustments.
Adjusted operating profit was 45% lower in constant currency at £43 million
reflecting operational disruption in its plants and inflationary cost
pressures.
The Group's share of statutory profit of the Primient joint venture, at a loss
of £35m, reflects certain exceptional items linked to the separation from the
Tate & Lyle PLC Group.
The Primient joint venture was set up under a US partnership arrangement.
Under this arrangement, the partnerhip does not pay tax on its US income as
the partners are responsible for this tax. Primient however, pays tax on
income earned by its Brazilian subsidiary.
Taxation
The adjusted effective tax rate on continuing operations was 21.9% (30
September 2021 - 21.8% on a pro-forma basis). The rates in both the current
and the comparative periods reflect the prevailing rates of corporation tax in
the US and UK, the jurisdictions most applicable to the Group's newly
speciality focused activities. We expect the adjusted effective tax rate for
the year ending 31 March 2023 to be similar to that of the first half of the
year.
The reported effective tax rate (on statutory earnings) was 18.4% (30
September 2021 continuing operations - 44.7%). The higher effective tax rate
in the comparative period reflected a £6 million exceptional tax charge
recorded in that period as well as higher tax deductions on exceptional items
recorded by Primient in the current period.
Earnings per share
For continuing operations, on a proforma basis, adjusted basic earnings per
share increased by 24% (9% in constant currency) to 26.9p and proforma
adjusted diluted earnings per share at 26.6p were also 24% higher (9% in
constant currency). The increase in constant currency reflects strong business
operating performance partially offset by lower share of profits from the
Primient joint venture and a higher adjusted effective tax rate. Statutory
diluted earnings per share on total operations increased by 7.3p to 29.0p,
principally reflecting the gain on disposal of Primient.
Discontinued operations
Statutory profit after tax for discontinued operations was £65 million. This
only reflects the £98 million provisional gain on the disposal of Primient
partially offset by tax of £33 million. Confirmation of the gain remains
subject to the finalisation of the completion accounts process expected in the
second half of the financial year. It is considered very unlikely that this
process will result in any reduction in disposal proceeds.
Cash flow, net debt and liquidity
Six months to 30 September 2022 2021(2) Change
Adjusted free cash flow(1)
£m
£m
£m
Continuing operations
Adjusted operating profit 137 97 40
Adjusted depreciation and adjusted amortisation 35 41 (6)
Share-based payments charge 7 4 3
Changes in working capital (75) (75) -
Net retirement benefit obligations (3) (2) (1)
Net capital expenditure (26) (25) (1)
Net interest and tax paid (13) (20) 7
Adjusted free cash flow - continuing operations 62 20 42
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 2.
2. Comparative year is not on a pro-forma basis.
Adjusted free cash flow from continuing operations was £62 million (2021 -
£20 million), an increase of £42 million mainly reflecting higher profits.
We saw a £75 million working capital outflow in the period. Overall, this
was in line with the comparative period. This is despite significantly higher
inflation in the period and reflects the focus on working capital
optimisation.
Excluding the impact of the disposal of certain small equity investments,
capital expenditure of £33 million was £8 million higher than the
comparative period reflecting investment in capacity for growth and investment
in recently-acquired businesses. We expect full year capital expenditure for
the 2023 financial year to be in the £90 million to £100 million range (year
ended 31 March 2022 - £75 million).
Net debt at 30 September 2022 of £281 million decreased by £345 million
since 31 March 2022. The Group received gross cash proceeds of £1.1 billion
from the disposal of its controlling stake in Primient and subsequently
returned £497 million to shareholders by way of a special dividend. In June
2022, the Group paid net £184 million to acquire Quantum Hi-Tech, a prebiotic
dietary fibre business in China, and paid a final dividend for the 2022
financial year of £51 million. Net debt has been further reduced since 30
September 2022 following receipt of US$61 million (£54 million) of dividends
from Primient.
At 30 September 2022 the Group had access to £1.2 billion of available
liquidity through readily available cash and cash equivalents and access to a
committed, undrawn revolving credit facility of US$800 million (£719
million). Reported leverage at 30 September 2022 was 1.0 times net debt to
(LTM) EBITDA. On a covenant-testing basis the net debt to EBITDA ratio was 0.7
times, which was materially lower than the covenant threshold of 3.5 times.
Retirement benefits
The Group maintains pension plans for certain of its current and former
employees in a number of countries. Certain of these arrangements are defined
benefit pension schemes. All funded schemes in the UK and US are closed for
further accrual. In the UK, the Group's main pension scheme was subject to a
bulk annuity insurance policy 'buy-in' whereby the scheme's assets were
replaced with an insurance asset matching UK scheme liabilities. In the US,
the Group also continues to provide an unfunded post-retirement medical
benefit scheme. The largest component of the net deficit continues to relate
to schemes in the US that are by their nature unfunded schemes (e.g. US
post-retirement medical benefit scheme).
On disposal of Primient, the Group has retained all US defined benefit pension
schemes. However, certain funded non-qualified deferred compensation
arrangements as well as the unfunded post-retirement medical plans relating to
employees who transitioned to Primient have been disposed (£28 million
liability).
At 30 September 2022, the Group's retirement benefit obligations were in a net
deficit of £112 million, increasing by £5 million (31 March 2022, excluding
liabilities held for sale - net deficit of £107 million). The principal
driver for this increase was unfavourable foreign currency translations
differences leading to a £17 million increase in the net deficit. This was
only partially offset by a net £6 million actuarial gain. Whilst there was a
reduction in the valuation of plan liabilities as a result of the impact of
the significant increase in corporate bond yields on the discount rate, this
was mostly offset by worse than expected returns on plan assets in the US (and
matched by the UK Group scheme 'buy-in' policy). Other notable movements
included employer's contributions of £5 million, which were in line with the
comparative period. The remaining movements led to a net £1 million decrease
in the net deficit.
Basis of preparation
The Group's principal accounting policies are unchanged compared with the year
ended 31 March 2022. This condensed set of consolidated financial information
for the six months to 30 September 2022 has been prepared on a going concern
basis, on the basis of the accounting policies set out in the Group's 2022
Annual Report, in accordance with UK adopted IAS 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Details of the basis of preparation, including information in respect of the
Group's alternative performance measures, can be found in Note 1 to the
attached financial information.
Going Concern
The Directors are satisfied that the Group has adequate resources to continue
to operate as a going concern for the foreseeable future and that no material
uncertainties exist with respect to this assessment. In making the assessment,
the Directors have considered the Group's balance sheet position and forecast
earnings and cash flows for the period from the date of approval of this
condensed set of consolidated financial information to 31 March 2024. The
business plan used to support the going concern assessment (the "Base case")
is derived from Board-approved forecasts together with certain downside
sensitivities.
Further details of the Directors' assessment are set out below:
At 30 September 2022, the Group has significant available liquidity, including
£516 million of cash and US$800 million (£719 million) from a committed and
undrawn revolving credit facility, of which US$100 million matures in 2025 and
US$700 million matures in 2026. The earliest maturity date for any of the
Group's US Private Placement notes is October 2023, when US$120 million will
mature. For the purpose of the going concern assessment it is anticipated that
this debt will be repaid from existing cash.
The Group has only one debt covenant requirement which is to maintain a net
debt to EBITDA ratio of not more than 3.5 times. On the covenant-testing basis
this was 0.7 times at 30 September 2022 (refer to Note 2). For a covenant
breach to occur it would require a significant reduction in Group profit. Such
reduction is considered to be extremely unlikely.
As set out in our 31 March 2022 Annual Report, during May 2022, the Directors
modelled the impact of a 'worst case scenario' to the Base case by including
the same three plausible but severe downside risks also used for the Group's
viability statement, being: an extended shutdown of one of our large corn wet
mill manufacturing facilities following operational failure or energy
shortage; the loss of our two 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'
did not result in any material uncertainty to the Group's going concern
assessment and the resultant position still had significant headroom above the
Group's debt covenant requirement. The Directors also calculated a 'reverse
stress test', which represents the changes that would be required to the Base
case in order to breach the Group's debt covenant. Such 'reverse stress test'
showed that the forecast Group profit would have to reduce significantly in
order to cause a breach.
Since the assessment in May, the Directors updated the model such that it
considered similar downside cases and reflected the most recent Board approved
forecasts reflecting the current inflationary outlook. Based on this
assessment, the Directors concluded that in both the Base case and worst case
scenario, the Group has significant liquidity and covenant headroom throughout
the period to 31 March 2024. Accordingly, the Directors have concluded that
there are no material uncertainties with respect to going concern and have
adopted the going concern basis in preparing the condensed consolidated
financial information of the Group as at 30 September 2022.
Risks and uncertainties
The principal risks and uncertainties affecting the business activities of the
Group are detailed on pages 71 to 75 of the Tate & Lyle Annual Report
2022, a copy of which is available on the Company's website at
www.tateandlyle.com (http://www.tateandlyle.com) . The Board considers that
the principal risks set out in the Annual Report 2022 remain unchanged and
that actions continue to be taken to substantially mitigate the impact of such
risks, should they materialise.
CAUTIONARY STATEMENT AND CONFERENCE CALL DETAILS
Cautionary statement
This statement of Half Year Results contains certain forward-looking
statements with respect to the financial condition, results, operations and
businesses of Tate & Lyle PLC. These statements and forecasts involve risk
and uncertainty because they relate to events and depend upon circumstances
that will occur in the future. There are a number of factors that could cause
actual results or developments to differ materially from those expressed or
implied by these forward-looking statements and forecasts.
A copy of this statement of Half Year Results for the six months to 30
September 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 (GMT) on Thursday 10 November 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 (GMT), 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/3995521/2E9FB3F410E882D8F5FC0F29A887DE35
(https://eur03.safelinks.protection.outlook.com/?url=https%3A%2F%2Fevent.on24.com%2Fwcc%2Fr%2F3995521%2F2E9FB3F410E882D8F5FC0F29A887DE35&data=05%7C01%7Carchi.quddus%40tateandlyle.com%7Cfd126a4c26b34b4df51108dabd93aa5b%7C39cc8f4f7ada4a2a9685c30a4321498c%7C0%7C0%7C638030739178754264%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=vOCsIUpAn%2FcWUuDy4bs15ggpb%2FK9LlFhgEzRqF05kNQ%3D&reserved=0)
. 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
CONDENSED (INTERIM) CONSOLIDATED INCOME STATEMENT (UNAUDITED)
Continuing operations Notes
Six months to Six months to Year to
31 March
30 September 30 September
2022
2022 2021
£m
£m
£m
Revenue 3 849 656 1 375
Operating profit 2 114 33 67
Finance income 4 - 1
Finance expense (15) (12) (26)
Share of loss of joint venture 14 (35) - -
Profit before tax 68 21 42
Income tax expense 5 (12) (9) (16)
Profit for the period - continuing operations 56 12 26
Profit for the period - discontinued operations 6 65 90 210
Profit for the period - total operations 121 102 236
Profit for the period attributable to:
- Owners of the Company 121 102 236
- Non-controlling interests - - -
Profit for the period - total operations 121 102 236
Earnings per share Pence Pence Pence
Continuing operations
- basic 7 13.5p 2.5p 5.5p
- diluted 7 13.3p 2.5p 5.5p
Total operations
- basic 7 29.4p 21.9p 50.7p
- diluted 7 29.0p 21.7p 50.2p
Analysis of adjusted profit for the period - continuing operations £m £m £m
Profit before tax 68 21 42
Adjusted for:
Net charge for exceptional items 4 11 59 93
Amortisation of acquired intangible assets and other fair value adjustments 2 12 5 10
Adjusting items excluded from share of profit of joint venture 2 48 - -
Adjusted profit before tax 2 139 85 145
Adjusted income tax expense 2 (30) (17) (28)
Adjusted profit for the period - continuing operations 2 109 68 117
CONDENSED (INTERIM) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Notes
Six months to Six months to Year to
30 September 30 September 31 March
2022 2021 2022
£m
£m
£m
Profit for the period - total operations 121 102 236
Other comprehensive income/(expense):
Items that have been/may be reclassified to profit or loss:
Gain on currency translation of foreign operations 137 41 86
Fair value loss on net investment hedges (71) (28) (52)
Fair value loss on net investment hedges transferred to the income statement
28 - -
Gain on currency translation of foreign operations transferred to the income
statement on sale of a subsidiary
(81) - -
Fair value gain on cash flow hedges transferred to the income statement on (48) - -
sale of a subsidiary
Net gain on cash flow hedges 3 40 82
Recycling of cost/(cost) of hedging 5 (2) (5)
Share of other comprehensive income of joint ventures 14 43 5 10
Tax effect of the above items (1) (10) (20)
15 46 101
Items that will not be reclassified to profit or loss:
Re-measurement of retirement benefit plans:
- return on plan assets 11 (329) 35 (70)
- net actuarial gain/(loss) on retirement benefit obligations 11 335 (35) 67
Change in the fair value of FVOCI investments 10 10 (1) (4)
Tax effect of the above items 1 - -
17 (1) (7)
Total other comprehensive income 32 45 94
Total comprehensive income - total operations 153 147 330
Analysed by:
- Continuing operations 88 2 9
- Discontinued operations 65 145 321
Total comprehensive income - total operations 153 147 330
Attributable to:
- Owners of the Company 153 147 330
- Non-controlling interests - - -
Total comprehensive income - total operations 153 147 330
CONDENSED (INTERIM) CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
Restated(*) Restated(*)
At 30 September
At 31 March
Notes At 30 September
2021 2022
2022
£m £m
£m
ASSETS
Non-current assets
Goodwill and other intangible assets 498 290 278
Property, plant and equipment (including right-of-use assets of £44 million 502 426 431
(30 September 2021 -
£46 million, 31 March 2022 - £40 million))
Investments in joint venture 14 247 - -
Investments in equities 10 49 50 46
Retirement benefit surplus 11 13 22 23
Deferred tax assets 11 44 9
Trade and other receivables 1 1 1
Derivative financial instruments 10 4 - 3
1 325 833 791
Current assets
Inventories 446 263 317
Trade and other receivables 410 251 270
Current tax assets 3 11 11
Derivative financial instruments 10 13 3 13
Other current financial assets 10 - - 2
Cash and cash equivalents 9 516 385 110
1 388 913 723
Assets classified as held for sale 6 - 1 372 1 737
1 388 2 285 2 460
TOTAL ASSETS 2 713 3 118 3 251
EQUITY
Capital and reserves
Share capital 117 117 117
Share premium 407 407 407
Capital redemption reserve 8 8 8
Other reserves 240 196 222
Retained earnings 449 779 865
Equity attributable to owners of the Company 1 221 1 507 1 619
Non-controlling interests 1 1 1
TOTAL EQUITY 1 222 1 508 1 620
LIABILITIES
Non-current liabilities
Borrowings (including lease liabilities of £52 million 9 770 699 658
(30 September 2021 - £53 million,
31 March 2022 - £49 million))
Retirement benefit deficit 11 125 136 130
Deferred tax liabilities 62 74 51
Provisions 8 13 12
965 922 851
Current liabilities
Borrowings (including lease liabilities of £11 million 9 27 25 21
(30 September 2021 - £9 million,
31 March 2022 - £10 million))
Trade and other payables 416 211 294
Provisions 13 16 11
Current tax liabilities 66 15 23
Derivative financial instruments 10 4 17 31
526 284 380
Liabilities directly associated with the assets held for sale 6 - 404 400
526 688 780
Total liabilities 1 491 1 610 1 631
TOTAL EQUITY AND LIABILITIES 2 713 3 118 3 251
* For the reclassification of certain items between net assets classified as
held for sale and the continuing Tate & Lyle Group refer to Note 1.
CONDENSED (INTERIM) CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Six months to 30 September 2022 Six months to 30 September 2021 Year to
£m £m 31 March
2022
£m
Notes
Cash flows from operating activities - total operations
Profit before tax from total operations 166 131 296
Adjustments for:
Depreciation of property, plant and equipment (including right-of-use assets 29 47 74
and excluding exceptional items)
Amortisation of intangible assets 18 14 26
Share-based payments 8 6 12
Net impact of exceptional income statement items 4 (124) 46 36
Net finance expense 11 14 28
Share of loss/(profit) of joint ventures 35 (8) (8)
Net retirement benefit obligations (3) (2) (7)
Other non-cash movements - (9) (38)
Changes in working capital (68) (19) (250)
Cash generated from total operations 72 220 169
Net income tax paid (23) (31) (45)
Interest paid (11) (10) (21)
Net cash generated from operating activities 38 179 103
Cash flows from investing activities
Purchase of property, plant and equipment (28) (62) (132)
Acquisition of businesses, net of cash acquired (192) 1 1
Disposal of subsidiary (net of cash) 6 1 021 - -
Investments in intangible assets (5) (5) (16)
Purchase of equity investments 10 (2) (2) (4)
Disposal of equity investments 10 9 2 4
Interest received 2 - 1
Dividends received from joint venture 14 13 25 33
Redemption of shares held in joint venture 14 1 - -
Net cash generated/(used) in investing activities 819 (41) (113)
Cash flows from financing activities
Purchase of own shares including net settlement (4) (4) (13)
Preference share buy-back advance payment (2) - -
Cash inflow from additional borrowings 2 1 2
Cash outflow from repayment of borrowings (2) - (60)
Repayment of leases (6) (16) (32)
Dividends paid to the owners of the Company 8 (548) (102) (144)
Net cash used in financing activities (560) (121) (247)
Net increase/(decrease) in cash and cash equivalents 9 297 17 (257)
Cash and cash equivalents
Balance at beginning of period 127 371 371
Net increase/(decrease) in cash and cash equivalents 297 17 (257)
Currency translation differences 92 8 13
Balance at end of period 9 516 396 127
A reconciliation of the movement in cash and cash equivalents to the movement
in net debt is presented in Note 9.
Included in the total cash and cash equivalents of £396 million held at 30
September 2021 (31 March 2022 - £127 million), is £11 million (31 March 2022
- £17 million) classified as held for sale. See Note 6.
The cash flows from discontinued operations included above are presented in
Note 6.
CONDENSED (INTERIM) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Share capital and share premium
Attributable to owners of the Company
Capital redemption reserve Non-controlling interests Total equity
Other reserves Retained earnings
£m £m £m £m £m £m £m
At 1 April 2022 524 8 222 865 1 619 1 1 620
Profit for the period - total operations - - - 121 121 - 121
Other comprehensive income - - 25 7 32 - 32
Total comprehensive income - - 25 128 153 - 153
Hedging gains transferred to inventory - - (11) - (11) - (11)
Tax effect of the above item - - 4 - 4 - 4
Transactions with owners:
Share-based payments, net of tax - - - 8 8 - 8
Purchase of own shares including net settlement - - - (4) (4) - (4)
Dividends paid (Note 8) - - - (548) (548) - (548)
At 30 September 2022 524 8 240 449 1 221 1 1 222
At 1 April 2021 524 8 144 777 1 453 1 1 454
Profit for the period - total operations - - - 102 102 - 102
Other comprehensive income - - 45 - 45 - 45
Total comprehensive income - - 45 102 147 - 147
Hedging losses transferred to inventory - - 9 - 9 - 9
Tax effect of the above item - - (2) - (2) - (2)
Transactions with owners:
Share-based payments, net of tax - - - 6 6 - 6
Purchase of own shares including net settlement - - - (4) (4) - (4)
Dividends paid - - - (102) (102) - (102)
At 30 September 2021 524 8 196 779 1 507 1 1 508
At 1 April 2021 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)
Dividends paid - - - (144) (144) - (144)
At 31 March 2022 524 8 222 865 1 619 1 1 620
TATE & LYLE PLC
NOTES TO THE FINANCIAL INFORMATION
For the six months to 30 September 2022
1. Presentation of half year financial information
The principal activity of Tate & Lyle PLC and its subsidiaries, together
with its joint venture, is the global provision of ingredients and solutions
to the food, beverage and other industries.
The Company is a public limited company incorporated and domiciled in the
United Kingdom and registered in England. The address of its registered office
is 5 Marble Arch, London W1H 7EJ. The Company has its primary listing on the
London Stock Exchange.
Basis of preparation
The Group's principal accounting policies are unchanged compared with the year
ended 31 March 2022. This condensed set of consolidated financial information
for the six months to 30 September 2022 has been prepared on the basis of the
accounting policies set out in the Group's 2022 Annual Report, as well as
being on a going concern basis, in accordance with UK adopted IAS 34, 'Interim
Financial Reporting' and the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
The Directors are satisfied that the Group has adequate resources to continue
to operate as a going concern for the foreseeable future and that no material
uncertainties exist with respect to this assessment. In making the assessment,
the Directors have considered the Group's balance sheet position and forecast
earnings and cash flows for the period from the date of approval of this
condensed set of consolidated financial information to 31 March 2024. The
business plan used to support the going concern assessment (the "Base case")
is derived from Board-approved forecasts together with certain downside
sensitivities.
Further details of the Directors' assessment are set out below:
At 30 September 2022, the Group has significant available liquidity, including
£516 million of cash and US$800 million (£719 million) from a committed and
undrawn revolving credit facility, of which US$100 million matures in 2025 and
US$700 million matures in 2026. The earliest maturity date for any of the
Group's US Private Placement notes is October 2023, when US$120 million will
mature. For the purpose of the going concern assessment it is anticipated
that this debt will be repaid from existing cash.
The Group has only one debt covenant requirement which is to maintain a net
debt to EBITDA ratio of not more than 3.5 times. On the covenant-testing basis
this was 0.7 times at 30 September 2022 (Refer to Note 2). For a covenant
breach to occur it would require a significant reduction in Group profit. Such
reduction is considered to be extremely unlikely.
As set out in our 31 March 2022 Annual Report, during May 2022, the Directors
modelled the impact of a 'worst case scenario' to the Base case by including
the same three plausible but severe downside risks also used for the Group's
viability statement, being: an extended shutdown of one of our large corn wet
mill manufacturing facilities following operational failure or energy
shortage; the loss of our two 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'
did not result in any material uncertainty to the Group's going concern
assessment and the resultant position still had significant headroom above the
Group's debt covenant requirement. The Directors also calculated a 'reverse
stress test', which represents the changes that would be required to the Base
case in order to breach the Group's debt covenant. Such 'reverse stress test'
showed that the forecast Group profit would have to reduce significantly in
order to cause a breach.
Since the assessment in May, the Directors updated the model such that it
considered similar downside cases and reflected the most recent Board approved
forecasts reflecting the current inflationary outlook. Based on this
assessment, the Directors concluded that in both the Base case and worst case
scenario, the Group has significant liquidity and covenant headroom throughout
the period to 31 March 2024. Accordingly, the Directors have concluded that
there are no material uncertainties with respect to going concern and have
adopted the going concern basis in preparing the condensed consolidated
financial information of the Group as at 30 September 2022.
The condensed set of consolidated financial information is unaudited but has
been reviewed by the external auditor and its report to the Company is set out
on page 49. The information shown for the year ended 31 March 2022 does not
constitute statutory accounts as defined in Section 435 of the Companies Act
2006 and has been extracted from the Group's 2022 Annual Report which has been
approved by the Board of Directors on 8 June 2022 and filed with the Registrar
of Companies.
The report of the auditor on the financial statements contained within the
Group's 2022 Annual Report was unqualified and did not contain a statement
under either Section 498(2) or Section 498(3) of the Companies Act 2006. The
interim financial statements should be read in conjunction with the annual
consolidated financial statements for the year ended 31 March 2022, which were
prepared in accordance with UK adopted International Accounting Standards.
The condensed set of consolidated financial information for the six months to
30 September 2022 on pages 15 to 45 was approved by the Board of Directors on
9 November 2022.
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 49.7%
interest in Primient (decreased from the 49.9% interest held immediately on
completion of the Transaction due to the redemption of a number of shares held
by the Group for the return of £1 million to the Group).
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 as a disposal group held for sale and a discontinued operation in the
comparative periods presented. 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. Refer to Note 6 for further details on discontinued
operations.
Prior period restatements
The tax structure relating to the Transaction continued to evolve subsequent
to the prior year interim announcement. In finalising the structure it was
identified that certain North American deferred tax balances would be retained
by the continuing business and were therefore incorrectly excluded at 30
September 2021. This was correctly treated at 31 March 2022. As a result, the
balance sheet at 30 September 2021 has been restated to include such deferred
tax balances within the continuing Tate & Lyle Group (impact increasing
Deferred tax liabilities and decreasing Liabilities held for sale by £66
million). In addition, following the completion accounts exercise which has
taken place after the Transaction date, the balance sheet at 31 March 2022 has
been restated to correctly reflect certain additional non-current assets being
assigned to the Primient disposal group held for sale (impact on non-current
assets: reducing Property, Plant and equipment by £66 million, reducing
Goodwill and other intangible assets by £5 million and increasing Assets held
for sale by £71 million).
Both restatements impacted the respective balance sheets only; the income
statement, cash flow statement and statement of changes in equity are
unaffected.
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 2022 but also reflect the
adoption, with effect from 1 April 2022, of new or revised accounting
standards, as set out below.
On completion of the Primient disposal transaction on 1 April 2022, the Group
has continued to apply cash flow hedge accounting to manage its economic price
exposure on the purchase of chemicals used in the production process. All
corn procurement transferred to Primient on completion of the disposal and the
Group procures corn from Primient (both for the manufacturing of corn-based
finished goods in the Group's US manufacturing sites and for corn embedded in
the finished goods manufactured by Primient and sold to the Group under
long-term agreements). The Group has ceased to apply fair value hedge
accounting to manage the net corn risk and now manages the corn price risk by
using economic hedging principles such as entering into offsetting positions
with its supplier (Primient) and customers. As a result of this change the
fair value of purchases, sales and inventory of corn-based products is no
longer a source of estimation uncertainty.
Several amendments apply for the first time from 1 April 2022 but do not have
a material impact on the Group's financial statement.
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, and none have been early adopted.
Seasonality
In previous financial years the Group's principal exposure to seasonality was
in relation to working capital as the level of inventories and payables held
reflected the timing of crop harvests in North America and purchases. As a
result of the disposal of Primient, the Group is no longer subjected to the
same degree of seasonality.
Changes in constant currency
Where year-on-year changes in constant currency are presented in this
statement, they are calculated by retranslating current year results at prior
year exchange rates. Reconciliations of the movement in constant currency have
been included in 'Additional information' within this document.
Use of alternative performance measures
The Group also presents alternative performance measures, including adjusted
operating profit, adjusted profit before tax, adjusted earnings per share and
adjusted free cash flow, which are used for internal performance analysis and
incentive compensation arrangements for employees. They are presented
because they provide investors with additional information about the
performance of the business which the Directors consider to be valuable. For
the periods presented, alternative performance measures exclude, where
relevant:
- Exceptional items (excluded as they are material in amount; and
are outside the normal course of business or relate to events which do not
frequently recur, and therefore merit separate disclosure in order to provide
a better understanding of the Group's underlying financial performance);
- Amortisation of acquired intangible assets (costs associated
with amounts recognised through acquisition accounting that impact earnings
compared to organic investments);
- Amoritisation of other fair value adjustments on acquisition
(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 six-month period to 30 September 2021 and year to 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 comparative periods.
The change for the exclusion of 'amortisation of other fair value adjustments
on acquisition' reflects the relative size of the Quantum acquisition compared
to previous recent Group acquisions and was made to treat the amortisation of
all fair value adjustments consistently with the amortisation of acquired
intangibles. This change does not impact any of the comparative periods
presented.
Note also that given the size of the Group's retained share in the Primient
joint venture, the Group's adjusted profit before tax will exclude its share
of any of the above items relating to the Primient joint venture. This change
does not impact any of the comparative periods presented.
Due to the significance of the Primient disposal, where relevant, the Group
has also provided pro-forma information in order to provide investors with
better comparability of the performance of the continuing operations.
Certain comparative information for adjusted results is pro-forma information
as published on pages 44 and 45 of the half year results statement for that
period issued on 4 November and as published on pages 48 and 49 of the full
year results statement for that year issued on 9 June 2022. Pro-forma adjusted
diluted earnings per share, for the six months to 30 September 2022 as well as
for the comparative periods, has been calculated based on the earnings for the
period and the shares in issue adjusted for impact of the 6 for 7 share
consolidation as if it occurred on 1 April 2021.
Alternative performance measures reported by the Group are not defined terms
under IFRS and may therefore not be comparable with similarly-titled measures
reported by other companies. Reconciliations of the alternative performance
measures to the most directly comparable IFRS measures are presented in Note 2
and Note 6.
Exceptional items
Exceptional items comprise items of income, expense and cash flow, including
tax items that: are material in amount; and are outside the normal course of
business or relate to events which do not frequently recur, and therefore
merit separate disclosure in order to provide a better understanding of the
Group's underlying financial performance. Examples of events that give rise to
the disclosure of material items of income, expense and cash flow as
exceptional items include, but are not limited to:
· significant impairment events;
· significant business transformation activities;
· disposals of operations or significant individual assets;
· litigation claims by or against the Group; and
· restructuring of components of the Group's operations.
For tax items to be treated as exceptional, amounts must be material and their
treatment as exceptional enable a better understanding of the Group's
underlying financial performance.
Exceptional items in the Group's financial statements are classified on a
consistent basis across accounting periods.
2. Reconciliation of alternative performance measures
Income statement measures
For the reasons set out in Note 1, the Group presents alternative performance
measures including adjusted operating profit, adjusted profit before tax and
adjusted earnings per share. Comparatives below are not presented on a
pro-forma basis. The impact of pro-forma adjustments to adjusted operating
profit (of £3 million in the six months to 30 September 2021 and of £7
million in the year to 31 March 2022) is shown within the segment results set
out in Note 3.
The following table shows the reconciliation of the key alternative
performance measures to the most directly comparable measures reported in
accordance with IFRS:
Six months to 30 September 2022 Six months to 30 September 2021
£ million unless otherwise stated IFRS Adjusting Adjusted IFRS Adjusting Adjusted
Continuing operations reported items reported reported items reported
Revenue 849 - 849 656 - 656
Operating profit 114 23 137 33 64 97
Share of (loss)/profit of joint venture (35) 48 13 - - -
Profit before tax 68 71 139 21 64 85
Income tax expense (12) (18) (30) (9) (8) (17)
Profit for the period 56 53 109 12 56 68
Effective tax rate % 18.4% 21.9% 44.7% 20.2%
Earnings per share:
Number of ordinary shares(1) - basic 410.5 410.5 465.2 465.2
Basic earnings per share (pence) 13.5p 13.0p 26.5p 2.5p 12.0p 14.5p
Number of ordinary shares(1) - diluted 415.8 415.8 469.6 469.6
Diluted earnings per share (pence) 13.3p 12.8p 26.1p 2.5p 11.9p 14.4p
1. Weighted average (millions)
Year to 31 March 2022
£ million unless otherwise stated IFRS Adjusting Adjusted
Continuing operations reported items reported
Revenue 1 375 - 1 375
Operating profit 67 103 170
Profit before tax 42 103 145
Income tax expense (16) (12) (28)
Profit for the year 26 91 117
Effective tax rate % 38.4% 19.3%
Earnings per share:
Number of ordinary shares(1) - basic 465.1 465.1
Basic earnings per share (pence) 5.5p 19.7p 25.2p
Number of ordinary shares(1) - diluted 470.4 470.4
Diluted earnings per share (pence) 5.5p 19.4p 24.9p
1. Weighted average (millions)
The following table shows the reconciliation of the adjusting items in the
current and comparative periods:
Continuing operations Note Six months to 30 September 2022 Six months to Year to
£m
30 September 2021
31 March
£m
2022
£m
Exceptional costs in operating profit 4 11 59 93
Amortisation of acquired intangible assets and other fair value adjustments 12 5 10
Adjusting items excluded from share of profit of joint venture 14 48 - -
Total excluded from adjusted profit before tax 71 64 103
Tax credit on adjusting items (18) (14) (24)
Exceptional tax charge 4 - 6 12
Total excluded from adjusted profit for the period 53 56 91
Cash flow measure
The Group also presents an alternative cash flow measure, 'Adjusted free cash
flow', which is defined as cash generated from total operations after net
interest and tax paid, and net capital expenditure, and excluding the impact
of exceptional items.
Net Capital expenditure is the net impact of the purchase and sale of
property, plant and equipment, intangible assets and certain equity
investments. The definition of adjusted free cash flow has been amended to
make clear that capital expenditure is measured on a net basis i.e. net cash
received/paid for property, plant and equipment, intangible assets and certain
equity investments. This change has been made to bring the definition more
in line with other similar companies. This change does not impact any of the
comparative periods presented.
Tax paid refers to tax paid for the Group's operations excluding any tax paid
for its share of the Primient joint venture's results.The Group receives
specific dividends from Primient in order to settle such tax liabilities.
As all dividends received are excluded from free cash flow it is appropriate
to exclude tax paid out of the receipt of these dividends. This change does
not impact any of the comparative periods presented.
The following table shows the reconciliation of adjusted free cash flow
relating to continuing operations:
Continuing operations Six months to Year to
30 September
31 March
2022 Six months to
2022
£m
30 September 2021
£m
£m
Adjusted operating profit 137 97 170
Adjusted for:
Depreciation and adjusted amortisation(1) 35 41 70
Share-based payments charge 7 4 10
Other non-cash movements - - 4
Changes in working capital(2) (75) (75) (68)
Net retirement benefit obligations (3) (2) (7)
Net Capital expenditure (26) (25) (75)
Net interest and tax paid(3) (13) (20) (32)
Adjusted free cash flow 62 20 72
1. Total depreciation of £29 million (30 September 2021 - £33 million; 31
March 2022 - £56 million) and amortisation of £18 million (30 September 2021
- £13 million; 31 March 2022 - £24 million) less £12 million (30 September
2021 - £5 million; 31 March 2022 - £10 million) of amortisation of acquired
intangibles and other fair value adjustments.
2. Changes in working capital exclude a cash inflow of £14 million (30
September 2021 - £nil ; 31 March 2022 - £nil) collected on behalf of
Quantum's previous owners which will be returned to the previous owners. It
also excludes the 2022 financial year bonus payment of £7 milllion to
employees who have transitioned to Primient. The latter is classified as a
discontinued cash outflow. Refer to Note 6.
3. Net interest and tax paid excludes tax payments of £19 million relating
to the Group's share of Primient's tax including the exceptional tax on the
gain on disposal of Primient.
The following table shows the reconciliation of adjusted free cash flow to net
cash generated from operating cash flows:
Total operations Six months to
30 September
2022
£m
Note
Adjusted free cash flow 62
Adjusted for:
Add: Adjusted free cash flow relating to discontinued operations
6 (7)
Less: exceptional cash flow (37)
Less: tax payments relating to Primient and gain on disposal (19)
Less: interest received (2)
Add: share-based payment charge included in exceptional items 1
Add: cash flow collected on behalf of previous owners of Quantum 14
Add: net capital expenditure 26
Net cash generated from operating activities 38
Financial strength measure
The Group uses the net debt to EBITDA ratio to assess its financial strength.
Performance is based on the previous 12 months' results. For the purposes of
KPI reporting, the Group uses a simplified calculation of this KPI to make it
more directly related to information in the Group's half year results. The
ratio is calculated based on unrounded figures in £ million.
Calculation of net debt to EBITDA ratio(1) 30 September 31 March
2022
2022
£m
£m
Continuing Operations Total Operations
Net debt (Note 9) 281 626
Adjusted operating profit 210 312
Add back depreciation, adjusted amortisation and amortisation of other fair 64 158
value adjustments
EBITDA(1) 274 470
Net debt to EBITDA ratio (times) 1.0 1.3
1. The net debt to EBITDA ratio for the previous 12 months' results to
30 September 2022 has been based on continuing operations as the lower net
debt reflects the disposal of Primient. The net debt to EBITDA ratio for the
12 months to 31 March 2022 is based on total operations as the level of net
debt held was to support the larger Group before the Primient disposal.
The reconciliation of adjusted depreciation and adjusted amortisation included
in the calculation of EBITDA is shown in the table below:
Reconciliation of adjusted depreciation, adjusted amortisation 30 September 31 March
2022
2022
£m
£m
Depreciation(1) 52 74
Amortisation(1) 29 26
Depreciation and amortisation 81 100
Add held for sale adjustment (cessation of depreciation and amortisation) - 68
Less amortisaton of acquired intangibles (17) (10)
Adjusted depreciation and adjusted amortisation 64 158
1. Values for 30 September 2022 are based on the previous 12 months'
results.
The Group has a core committed revolving credit facility of US$800 million
(£719 million) which is unsecured and contains one financial covenant, that
the multiple of net debt to EBITDA, as defined in the facility agreement,
should not be greater than 3.5 times. The net debt to EBITDA ratio for the
purpose of the financial covenant is 0.7 times with the difference being
driven by specific covenant definitions or requirements (e.g. exclusion of
leases).
3. Segment information
Segment information is presented on a basis consistent with the information
presented to the Board (the designated Chief Operating Decision Maker (CODM))
for the purposes of allocating resources within the Group and assessing the
performance of the Group's businesses Following the completion of the
Transaction on 1 April 2022, the Group has changed its operating segments to
reflect the Group's structure. The Group has three operating segments as
follows: The Food & Beverage Solutions, Sucralose and Primient.
The Food & Beverage Solutions and Sucralose operating segments remain
unchanged from the prior year. The former now includes the European Primary
Products business and certain operating costs associated with the Group's
former Primary Products operating segment that have remained with the Group.
Food & Beverage Solutions operates in the key categories of beverages,
dairy, soups, sauces and dressings. Sucralose, a high-intensity sweetener, is
used in various food categories and beverages. The Primient operating segment
consists of the Group's share of profit in the Primient joint venture. These
operating segments are also the Group's three reportable segments; the Group
does not aggregate operating segments to form reportable segments.
Central, which comprises central costs including head office, treasury and
insurance activities, does not meet the definition of an operating segment
under IFRS 8 Operating Segments but is included below in order to be
consistent with the presentation of segment information presented to the
Board.
For the Food & Beverage Solutions and Sucralose operating segments, the
Board continues to use adjusted operating profit as the meansure of
profitability of the businesses. For the Primient operating segment, the
Board uses the Group's share of adjusted profit of the Primient joint venture
as the measure of profitability of this business. Adjusted operating profit
and the Group's share of adjusted profit of the joint venture are therefore
the measures of segment profit presented in the Group's segmental disclosures
for the relevant operating segments. In the years presented, the items
excluded from the statutory profit measure in arriving at the relevant
adjusted profit measure were the amortisation of acquired intangible assets
and exceptional items.
As a result of the change in the Group's operating segments, where relevant
the Group has restated the comparative periods segmental disclosure which is
consistent with the disclosure provided in the prior periods segment
information note (reconciliation of segmental disclosures to the additional
commentary in financial statements).
All revenue is from external customers.
Segment results
Six months to 30 September 2022
Continuing operations Food & Beverage Solutions Central Total
£m £m £m
Sucralose Primient
£m £m
Revenue 752 97 - 849
Adjusted operating profit(1) 113 39 - (15) 137
Adjusted operating margin 15.0% 39.7% n/a n/a 16.2%
Adjusted share of profit of joint venture(1) - - 13 - 13
1. Reconciled to statutory profit for the period for continuing operations
in Note 2.
Restated*
Six months to 30 September 2021
Continuing operations Food & Beverage Solutions Central Total
£m £m £m
Sucralose Primient
£m £m
Revenue 578 78 - - 656
Adjusted operating profit(1) 83 31 - (17) 97
Adjusted operating margin 14.5% 39.3% n/a n/a 14.8%
Pro-forma impact of long-term agreements (3) - - - (3)
Pro-forma operating margin(2,3) 13.9% 39.3% n/a n/a 14.3%
Pro-forma adjusted share of profit of joint venture 30 30
* Restated to reflect change in operating segments (see page 26).
1. Reconciled to statutory profit for the period for continuing operations
in Note 2.
2. Comparative information for the adjusted operating margin for the six
months to 30 September 2021 is pro-forma information as published on pages 44
and 45 of the half year results statement for that period issued on 4
November.
3. Adjusted operating margin for the six months to 30 September 2022 has
increased by 190 bps compared to the comparative period measured on a
pro-forma basis. In constant currency, this growth rate is 110 bps.
Restated*
Year to 31 March 2022
Continuing operations Food & Beverage Solutions Central Total
£m £m £m
Sucralose Primient
£m £m
Revenue 1 212 163 - - 1 375
Adjusted operating profit(1) 160 61 - (51) 170
Adjusted operating margin 13.2% 37.1% n/a n/a 12.4%
Pro-forma impact of long-term agreements (7) - - - (7)
Pro-forma operating margin(2) 12.6% 37.1% n/a n/a 11.9%
Pro-forma adjusted share of profit of joint venture 61 61
* Restated to reflect change in operating segments (see page 26).
1. Reconciled to statutory profit for the year for continuing operations
in Note 2.
2. Comparative information for the adjusted operating margin for the year
to 31 March 2022 is pro-forma information as published on pages 48 and 49 of
the full year results statement for that year issued on 9 June 2022.
Geographic disclosures: revenue - total operations
Six months to Six months to Year to
30 September 30 September 31 March
2022 2021 2022
£m £m £m
Food & Beverage Solutions
North America 340 260 542
Asia, Middle East, Africa and Latin America 208 151 325
Europe 204 167 345
Food & Beverage Solutions - total 752 578 1 212
Sucralose - total 97 78 163
Primary Products
Americas - 891 1 757
Primary Products - total - 891 1 757
Total 849 1 547 3 132
Revenue - reconciliation to the income statement
Six months to Six months to Year to
30 September 30 September 31 March
2022 2021 2022
£m £m £m
Revenue - geographic disclosure - total operations 849 1 547 3 132
Reclassified to discontinued operations - (891) (1 757)
Revenue - continuing operations 849 656 1 375
4. Exceptional items
Exceptional items recognised in the income statement are as follows:
Six months to Six months to Year to
30 September 30 September 31 March
2022 2021 2022
Income statement - continuing operations Footnotes £m £m £m
Costs associated with the separation and disposal of Primient (13) (41) (79)
(a)
Impairment related to the disposal of Primient - (13) (13)
US pension plan past service credit - - 9
Stabiliser product contamination - - (9)
Restructuring costs (1) (2) (1)
Historical legal matters (b) 3 (3) -
Exceptional items included in profit before tax (11) (59) (93)
US tax charge - - (6)
UK tax charge - (6) (6)
Exceptional items included in income tax - (6) (12)
Exceptional items - continuing operations (11) (65) (105)
Discontinued operations
Gain on disposal of Primient 98 - -
Restructuring costs - (2) (3)
Exceptional items - discontinued operations 98 (2) (3)
Exceptional items - total operations 87 (67) (108)
Continuing operations in the six months to 30 September 2022
a) The Group incurred certain transaction and separation costs related
to the Primient disposal which totalled £13 million. The majority of these
costs are separation in nature and consist principally of information
technology (IT) costs to ensure the Group's and Primient's IT systems are
fully independent by the end of this financial year, being the date that the
transition services arrangement for IT support ends.
b) The Group recognised a credit of £3 million in relation to a release
of an existing provision reflecting a favourable ruling in the relevant legal
case.
The net £11 million exceptional costs recorded in operating profit in
continuing operations during the period resulted in £8 million (outflow)
disclosed in exceptional operating cash flow. In addition, £29 million of
exceptional costs recorded in prior periods resulted in cash outflows, such
that operating cash outflow from exceptional items in continuing operations
was £37 million.
The most significant exceptional costs in the comparative periods were costs
incurred in relation to the Primient disposal including the impairment of
certain assets remaining with the Group which will no longer be used following
the disposal. Other exceptional costs and income in the comparative periods
related to a past service credit linked to a plan amendment made to the
Group's US pension plans, costs associated with a stabiliser product
contamination, historical legal matters and one-off tax charges as a result
of the Primient transaction due to a reduction of brought forward UK tax
losses and US state tax credits that are expected to be able to be utilised in
the future.
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 £2 million. Refer to Note 5.
Discontinued operations in the six months to 30 September 2022
The Group recorded a gain of £98 million relating to the disposal on 1 April
2022 of a 50.1% controlling interest in Primient in exchange for gross cash
proceeds of US$1.4 billion (£1.1 billion). Further details of the gain on
disposal are set out in Note 6.
The exceptional costs in the prior periods were restructuring costs relating
to productivity and simplification projects which were mainly related to
Global Operations cost saving initiatives.
Cash flows from total operations
Cash flows from exceptional items are set out below:
Net operating cash outflows on exceptional items Footnotes Six months to Six months to 30 September 2021 Year to
30 September
31 March 2022
2022 £m
£m
£m
Costs associated with the separation and disposal of Primient (35) (10) (48)
(a)
US pension plan past service credit - - (1)
Restructuring costs - (4) (5)
Historical legal matters (b) (2) - (4)
Net operating cash outflows - continuing operations (37) (14) (58)
Net operating cash outflows - discontinued operations - (1) (2)
Net operating cash outflows - total operations (37) (15) (60)
Exceptional cash flows
The total cash adjustment relating to exceptional items presented in the
operating section of the cash flow statement of £124 million (outflow)
reflects the net exceptional gain in profit before tax for total operations of
£87 million which were £124 million higher than net cash outflows of £37
million set out in the table above.
5. Income tax expense
Income tax for the six months is presented as follows:
· Statutory current and deferred taxes from continuing operations
of £12 million, which when divided by statutory profit before tax from
continuing operations of £68 million gives a statutory effective tax rate of
18.4%;
· The impact on this income tax charge of the tax effect of
adjusting and exceptional items, such that adjusted income tax expense from
continuing operations is £30 million, which when divided by adjusted profit
before tax from continuing operations of £139 million gives an adjusted
effective tax rate of 21.9%; and
· Income tax on discontinued operations recognised in the period is
shown in Note 6.
Six months to Six months to Year to
30 September 30 September 31 March
Continuing operations 2022 2021 2022
£m £m £m
Current tax:
- United Kingdom (2) 5 -
- Overseas (16) (20) (40)
- Tax credit on exceptional items 2 10 5
- Expense in respect of previous financial years - - (1)
(16) (5) (36)
Deferred tax:
(Charge)/credit for the period (3) (3) 12
(Charge)/credit in respect of previous financial years (5) - 4
Changes in tax rate - 3 -
Tax credit on exceptional items - 2 16
Tax credit in Primient exceptional items 12 - -
UK exceptional tax charge - (6) (6)
US exceptional tax charge - - (6)
Income tax expense - continuing operations (12) (9) (16)
Statutory effective tax rate % - continuing operations 18.4% 44.7% 38.4%
Reconciliation to adjusted income tax expense
Six months to Six months to Year to
30 September 30 September 31 March
2022 2021 2022
Continuing operations £m £m £m
Income tax expense: (12) (9) (16)
Add back the impact of:
Tax credit on exceptional items (2) (12) (21)
Tax credit on Primient exceptional items (12) - -
Tax credit on amortisation of acquired intangibles (3) (2) (3)
Tax credit on amortisation of Primient acquired intangibles (1) - -
Exceptional UK tax charge - 6 6
Exceptional US tax charge - - 6
Adjusted income tax expense (30) (17) (28)
Adjusted effective tax rate % 21.9% 20.2% 19.3%
6. Discontinued operations
As described in Note 1, the Group sold a controlling stake in Primient to KPS
on 1 April 2022.
Primient 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;
· Shareholdings in two joint ventures - Almex in Guadalajara,
Mexico and Bio-PDO, in Loudon, Tennessee; and
· Grain elevator network and bulk transfer stations in North
America.
Primary Products' European operations were not included in this transaction
and are therefore not part of the discontinued operations.
The statutory results of the discontinued operations which have been included
in the consolidated income statement for the six months to 30 September 2022
and comparative periods were as follows:
Discontinued operations Six months to Six months to Year to
30 September 30 September 31 March
2022 2021 2022
£m
£m £m
Revenue - 891 1 757
Operating income/(expenses) 98 (787) (1 508)
Operating profit 98 104 249
Finance expense - (2) (3)
Share of profit after tax of joint ventures - 8 8
Profit before tax 98 110 254
Income tax charge (33) (20) (44)
Profit for the period from discontinued operations(1) 65 90 210
Basic earnings per share from discontinued operations (pence) 15.9p 19.4p 45.2p
Diluted earnings per share from discontinued operations (pence) 15.7p 19.2p 44.7p
1. Attributable to owners of the Company
These earnings 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, for basic and diluted amounts,
as shown in Note 7.
On classification as held for sale on 1 July 2021, 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:
Discontinued operations Six months to Six months to Year to
30 September 30 September 31 March
2022 2021 2022
£m
£m £m
Operating(1) (7) 148 15
Investing(2) 1 021 (17) (40)
Financing - (10) (21)
Net cash inflow/(outflow) 1 014 121 (46)
1. Operating cash outflow of £7 million is in relation to the 2022
financial year bonus payment to employees who have transitioned to Primient.
2. Investing cash inflow of £1 021 million relates to the disposal of
Primient.
The following table shows for discontinued operations the reconciliation of
the key alternative performance measures to the most directly comparable
measures reported in accordance with IFRS:
Six months to 30 September 2022
Six months to 30 September 2021
£ million unless otherwise stated IFRS Adjusting Adjusted IFRS Adjusting Adjusted
Discontinued operations reported items reported reported items reported
Revenue - - - 891 - 891
Operating profit 98 (98) - 104 (30) 74
Finance expense - - - (2) - (2)
Profit after tax of joint ventures - - - 8 7 15
Profit before tax 98 (98) - 110 (23) 87
Income tax expense (33) 33 - (20) 5 (15)
Profit for the period 65 (65) - 90 (18) 72
Effective tax rate % 18.3% 17.3%
Earnings per share:
Number of ordinary shares(1) - basic 410.5 410.5 465.2 465.2
Basic earnings per share (pence) 15.9p (15.9p) - 19.4p (3.8p) 15.6p
Number of ordinary shares(1) - diluted 415.8 415.8 469.6 469.6
Diluted earnings per share (pence) 15.7p (15.7p) - 19.2p (3.8p) 15.4p
1. Weighted average (millions)
Year to 31 March 2022
£ million unless otherwise stated IFRS Adjusting Adjusted
Discontinued operations reported items reported
Revenue 1 757 - 1 757
Operating profit 249 (107) 142
Finance expense (3) - (3)
Profit after tax of joint ventures 8 27 35
Profit before tax 254 (80) 174
Income tax expense (44) 16 (28)
Profit for the period 210 (64) 146
Effective tax rate % 17.5% 16.1%
Earnings per share:
Number of ordinary shares(1) - basic 465.1 465.1
Basic earnings per share (pence) 45.2p (13.7p) 31.5p
Number of ordinary shares(1) - diluted 470.4 470.4
Diluted earnings per share (pence) 44.7p (13.6p) 31.1p
1. Weighted average (millions)
The following table shows the reconciliation of the adjusting items:
Discontinued operations Note Six months to Six months to Year to
30 September 2022
30 September 2021
31 March
£m
£m
2022
£m
Exceptional (income)/costs in operating profit 4 (98) 2 3
Held for sale adjustment(1) - (32) (110)
Total excluded from adjusted operating profit (98) (30) (107)
Held for sale adjustment(2) - profit after tax of joint ventures - 7 27
Total excluded from adjusted profit before tax (98) (23) (80)
Tax effect of adjusting items 33 5 16
Total excluded from adjusted profit for the period (65) (18) (64)
1. Held for sale adjustments include: cessation of depreciation and
amortisation (reduction in operating costs, six months to 30 September 2021 -
£23 million; year to 31 March 2022 - £68 million), reclassification of
dividends from joint ventures (income; six months to 30 September 2021 - £9
million; year to 31 March 2022 - £42 million).
2. Held for sale adjustment relates to cessation of equity accounting
(reduction in share of profit after tax of joint ventures; six months to
30 September 2021 - £7 million; year to 31 March 2022 - £27 million).
The following table shows the reconciliation of adjusted free cash flow:
Discontinued operations Six months to Six months to Year to
30 September 2022
30 September 2021
31 March
£m
£m
2022
£m
Adjusted operating profit - 74 142
Adjusted for:
Adjusted depreciation and adjusted amortization - 15 20
Share-based payments charge - 2 2
Changes in working capital and other non-cash movements (7) 56 (182)
Capital expenditure - (42) (73)
Net interest and tax paid - (21) (33)
Held for sale adjustment - 23 68
Adjusted free cash flow (used in)/from discontinued operations (7) 107 (56)
The adjusted free cash flow from discontinued operations for the six months to
30 September 2022 is a cash outflow of £7 million related to the 2022
financial year bonus payment to employees who have transitioned to Primient.
Held for sale
The major classes of assets and liabilities of Primient classified as held for
sale are as follows:
Restated* Restated*
At 30 September 2021 At 31 March
£m
2022
£m
Assets
Goodwill and other intangible assets 49 61
Property, plant and equipment 714 774
Investments in joint ventures 101 105
Investments in equities 11 12
Inventories 252 398
Trade and other receivables 141 246
Current tax assets - 1
Derivative financial instruments 55 65
Other current financial assets 38 58
Cash and cash equivalents 11 17
Assets classified as held for sale 1 372 1 737
* Refer to Note 1 for details for the reclassification between net
assets classified as held for sale and the continuing Tate & Lyle Group.
Restated* Restated*
At 30 September At 31 March
2021 2022
£m
£m
Liabilities
Retirement benefit deficit 28 28
Trade and other payables 267 253
Lease liabilities 81 74
Derivative financial instruments 3 5
Other current financial liabilities 25 40
Liabilities directly associated with the assets held for sale 404 400
Net assets 968 1 337
* Refer to Note 1 for details for the reclassification between net
assets classified as held for sale and the continuing Tate & Lyle Group.
Cumulative income and expense recognised in other comprehensive income are
shown below:
Six months to Year to
30 September 2021
31 March
£m
2022
£m
Currency translation reserve 38 81
Actuarial gain (net of deferred tax) 7 7
Net gain on cash flow hedges (net of deferred tax) 28 49
Reserves of disposal group classified as held for sale 73 137
Primient disposal
On 1 April 2022 the Group completed the disposal of a 50.1% controlling
interest in Primient in exchange for gross cash proceeds of $1.4 billion
(£1.1 billion), resulting in an exceptional gain on disposal of £98 million
(see Note 4). The completion accounts process is ongoing and is expected to
be finalised in the second half of the financial year. A reconciliation of
gross cash proceeds received is shown in the table below:
Gross cash received (in US dollars and Pounds sterling) Six months to Six months to
30 September 30 September
2022 2022
US$m £m
Cash consideration - as shown in gain on disposal table below 330 253
Less: completion accounts adjustments in favour of Tate & Lyle not yet (15) (12)
received
Add: cash received for intercompany loan notes and payables and transaction 1 089 830
costs
Disposal of business, gross proceeds 1 404 1 071
The provisional gain on disposal is shown in the table below:
Gain on disposal (provisional) Six months to
30 September
Note 2022
£m
Cash consideration - as shown above(1) 253
Contingent consideration(2) 24
Fair value of investment in Primient joint venture on initial recognition 14 253
Total consideration for equity 530
Primient net assets derecognised on disposal on 1 April(3) (539)
Recycling of accumulated foreign exchange from other comprehensive income to 81
the income statement
Recycling of cash flow hedges from other comprehensive income to the income 48
statement
Impact of deal contingent forward(4) (33)
Other amounts 11
Gain on disposal before tax 4 98
1. Includes deferred consideration relating to the completion accounts
adjustment not yet received of £12 million
2. Contingent consideration is based on the dividend payable by Almex
relating to the period under the Group's ownership.
3. Net assets held for sale at 31 March 2022 were £1 337 million.
This amount excluded intercompany payable and loan balances which eliminated
on consolidation prior to completion of the transaction. Net assets
derecognised on disposal included such amounts.
4. The Group entered into a deal contingent forward to hedge the
currency risk associated with the consideration received from the Transaction
which was partly used for the shareholder distribution on 16 May 2022. The
fair value loss on this forward and the impact of the cost of hedging have
been recycled from other comprehensive income to the income statement on
completion of the Transaction.
The tax charge arising on the gain on disposal of Primient was £54 million.
Of this amount, circa 50% has been paid already with the remaining balance
expected to be paid in the second half of the financial year. This tax
charge has been partially offset by a deferred tax credit of £21 million
reflecting the change in measurement of the difference between the tax basis
and carrying value of the investment. This results in a net tax charge on
the gain on disposal of £33 million.
A reconciliation to the consolidated statement of cash flows is shown in the
table below:
Cash flows Provisional
Six months to
30 September
2022
£m
Total cash consideration of £253 million less completion accounts adjustments 241
not yet received of £12 million - as shown above
Repayment of intercompany loan notes and payables and transaction costs 830
Less: cash outflow relating to deal contingent forward (33)
Less: net cash derecognised on disposal (17)
Disposal of business, net of cash derecognised on disposal 1 021
7. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
owners of the Company by the weighted average number of ordinary shares in
issue during the year (excluding shares held by the Company and the Employee
Benefit Trust to satisfy awards made under the Group's share-based incentive
plans). Diluted earnings per share is calculated by adjusting the weighted
average number of ordinary shares in issue assuming conversion of potentially
dilutive ordinary shares, reflecting vesting assumptions on employee share
plans, as well as the deemed profit attributable to owners of the Company for
any proceeds on such conversions.
The average market price of the Company's ordinary shares during the six
months to 30 September 2022 was 762p (six months to 30 September 2021 - 752p;
year to 31 March 2022 - 721p). The dilutive effect of share-based incentives
was 5.3 million shares (six months to 30 September 2021 - 4.4 million shares;
year to 31 March 2022 - 5.3 million shares).
The significant decrease in weighted average number of shares compared to the
comparative periods is due to share consolidation in May 2022 which resulted
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. This share consolidation was completed at the same time as the Group
returned £497 million to ordinary shareholders by way of a special dividend
in order to maintain the comparability, so far as possible, of Tate & Lyle
PLC's share price before and after the special dividend.
Six months to 30 September 2022 Six months to 30 September 2021
Continuing operations Discontinued operations Total Continuing operations Discontinued operations Total
Profit attributable to owners of the Company (£ million) 56 65 121 12 90 102
Weighted average number of ordinary shares (million) - basic 410.5 410.5 410.5 465.2 465.2 465.2
Basic earnings per share (pence) 13.5p 15.9p 29.4p 2.5p 19.4p 21.9p
Weighted average number of ordinary shares (million) - diluted 469.6 469.6 469.6
415.8 415.8 415.8
Diluted earnings per share (pence) 13.3p 15.7p 29.0p 2.5p 19.2p 21.7p
Year to 31 March 2022
Continuing operations Discontinued operations Total
Profit attributable to owners of the Company (£ million) 26 210 236
Weighted average number of ordinary shares (million) - basic 465.1 465.1 465.1
Basic earnings per share (pence) 5.5p 45.2p 50.7p
Weighted average number of ordinary shares (million) - diluted 470.4 470.4 470.4
Diluted earnings per share (pence) 5.5p 44.7p 50.2p
Adjusted earnings per share
A reconciliation between profit attributable to owners of the Company from
continuing operations, total operations and the equivalent adjusted metrics,
together with the resulting adjusted earnings per share metrics is set out
below:
Continuing operations Notes Six months to Six months to Year to
30 September 30 September 31 March
2022 2021 2022
£m £m £m
Profit attributable to owners of the Company 56 12 26
Adjusting items:
- exceptional costs in operating profit 4 11 59 93
- amortisation of acquired intangible assets and other fair value adjustments 2 12 5 10
- adjusting items excluded from share of profit of joint venture 14 48 - -
- tax credit on adjusting items 5 (18) (14) (24)
- exceptional tax charge 5 - 6 12
Adjusted profit attributable to owners of the Company 2 109 68 117
Adjusted basic earnings per share (pence) - 26.5p 14.5p 25.2p
Continuing operations
Adjusted diluted earnings per share (pence) - 26.1p 14.4p 24.9p
Continuing operations
Total operations Notes Six months to Six months to Year to
30 September 30 September 31 March
2022 2021 2022
£m £m £m
Adjusted profit attributable to owners of the Company - Continuing operations 2 109 68 117
Adjusted profit attributable to owners of the Company - Discontinued 6 - 72 146
operations
Adjusted profit attributable to owners of the Company - Total operations 109 140 263
Adjusted basic earnings per share (pence) - 26.5p 30.1p 56.7p
Total operations
Adjusted diluted earnings per share (pence) - 26.1p 29.8p 56.0p
Total operations
Pro-forma earnings per share
Pro-forma adjusted diluted earnings per share, for the six months to 30
September 2022 as well as for the comparative periods, has been calculated
based on the pro-forma earnings for the period and the shares in issue
adjusted for impact of the 6 for 7 share consolidation as if it occurred on 1
April of the respective year. Pro-forma information for the comparative
periods is as published on pages 44 and 45 of the 30 September 2021 half year
results statement issued on 4 November and as published on pages 48 and 49 of
the 31 March 2022 full year results statement issued on 9 June 2022.
Pro-forma earnings per share is set out in the tables below:
Continuing operations - pro-forma earnings per share Six months to Six months to Year to
30 September 30 September 31 March
2022 2021 2022
£m £m £m
Adjusted pro-forma profit attributable to owners of the Company (£ million) 109 88 162
Pro-forma weighted average number of ordinary shares (million) - basic 403.5 403.5 403.5
Basic pro-forma earnings per share (pence) 26.9p 21.7p 40.0p
Weighted average number of ordinary shares (million) - diluted 408.8 407.9 408.8
Diluted pro-forma earnings per share (pence) 26.6p 21.4p 39.5p
8. Dividends on ordinary shares
The Directors have declared an interim dividend of 5.4p per share for the six
months to 30 September 2022 (six months to
30 September 2021 - 9.0p per share), payable on 4 January 2023.
The final dividend for the year to 31 March 2022 of £51 million, representing
12.8p per share, was paid during the six months to
30 September 2022.
In addition, on 16 May 2022, the Group returned £497 million 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.
9. Net debt - total operations
The components of the Group's net debt are as follows:
At 30 September At 30 September At 31 March
2022 2021 2022
£m £m £m
Borrowings (734) (662) (620)
Lease liabilities(1) (63) (143) (133)
Cash and cash equivalents(2) 516 396 127
Net debt (281) (409) (626)
1. Includes £81 million of leases included in liabilities held for
sale as at 30 September 2021 (31 March 2022 - £74 million). Refer to Note
6.
2. Includes £11 million of cash and cash equivalents included in
assets held for sale as at 30 September 2021 (31 March 2022 - £17 million)
Refer to Note 6.
A reconciliation of the movement in cash and cash equivalents to the movement
in net debt is as follows:
Six months to Six months to Year to
30 September 30 September 31 March
2022 2021 2022
£m £m £m
Net debt at beginning of the period (626) (417) (417)
Net increase/(decrease) in cash and cash equivalents 297 17 (257)
Net decrease in borrowings and leases 6 15 90
Decrease/(increase) in net debt resulting from cash flows 303 32 (167)
Currency translation differences (26) (10) (24)
Leases liabilities(1) 69 (14) (18)
Other non-cash movements (1) - -
Decrease/(increase) in net debt in the period 345 8 (209)
Net debt at end of the period (281) (409) (626)
1. Lease liabilities movement in the six months to 30 September 2022
is principally due to the disposal of Primient.
Movements in the Group's net debt were as follows:
Cash and cash equivalents Borrowings and lease liabilities Total
£m
£m £m
At 31 March 2022(1,2) 127 (753) (626)
Movements from cash flows 297 6 303
Currency translation differences 92 (118) (26)
Lease liabilities - 69 69
Other non-cash movements - (1) (1)
At 30 September 2022 516 (797) (281)
1. Borrowings and lease liabilities include £74 million of leases
included in liabilities directly associated with assets held for sale as at
31 March 2022. Refer to Note 6.
2. Cash and cash equivalents include £17 million of cash and cash
equivalents included in assets held for sale at 31 March 2022.
Refer to Note 6.
10. Investments in equities and financial instruments
Carrying amount versus fair value
The fair value of borrowings, excluding lease liabilities, is estimated to be
£656 million (30 September 2021 - £691 million; 31 March 2022 - £602
million) and has been determined by discounted estimated cash flows with an
applicable market quoted yield, using quoted market prices, discounted
estimated cash flows based on broker dealer quotations or quoted market
prices. The carrying value of other assets and liabilities held at amortised
cost is not materially different from their fair value.
Fair value measurements recognised in the balance sheet
The table below shows the Group's financial assets and liabilities measured at
fair value at 30 September 2022. The fair value hierarchy categorisation,
valuation techniques and inputs, are consistent with those used in the year to
31 March 2022. However, the Group has ceased to apply fair value hedge
accounting to manage the net corn risk and now manages the corn price risk by
using economic hedging principles such as entering into offsetting positions
with its supplier (Primient) and customers. As a result of this change, the
fair value of purchases and sales of corn-based products (commodity pricing
contracts in the table below) is no longer recognised (see Note 1).
At 30 September 2022 At 31 March 2022
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£m £m £m £m £m £m £m £m
Assets at fair value
Investments in equities(1) - - 49 49 - - 58 58
Derivative financial instruments:
- forward foreign exchange contracts - - - - - - - -
- energy/commodity derivatives(2) 17 - - 17 81 - - 81
Other financial assets (commodity pricing contracts) (3)
- - - - - 36 24 60
Assets at fair value 17 - 49 66 81 36 82 199
Liabilities at fair value
Derivative financial instruments:
- forward foreign exchange contracts - - - - - (31) - (31)
- energy/commodity derivatives (4) - - (4) (5) - - (5)
Other financial liabilities (commodity pricing contracts)(3)
- - - - - (2) (38) (40)
Liabilities at fair value (4) - - (4) (5) (33) (38) (76)
1. Includes FVPL assets of £20 million (31 March 2022 - £32 million)
and FVOCI assets of £29 million (31 March 2021 - £26 million).
2. £17 million (31 March 2022 - £60 million) relates to derivatives
to hedge cash flow risk associated with forecast purchases of energy and
chemicals used in the manufacturing process which are designated as cash flow
hedges. The comparative number also includes derivatives to hedge cash flow
risk associated with forecasted purchases and sales of commodities.
3. Fair value adjustments due to risks hedged.
Investments in equities are presented in the consolidated statement of
financial position as follows:
At 30 September 2022 At 31 March 2022
Assets Assets
£m £m
Investments in equities 49 46
Classified as assets held for sale - 12
Derivative financial assets/(liabilities) and other financial
assets/(liabilities) are presented in the consoilidated statement of financial
position as follows:
At 30 September 2022 At 31 March 2022
Assets Liabilities Assets Liabilities
£m £m £m £m
Non-current derivative financial instruments 4 - 13 -
Current derivative financial instruments 13 (4) 68 (36)
Reclassified as (assets)/liabilities held for sale (Note 6) - - (65) 5
Total derivative financial instruments(1) 17 (4) 16 (31)
Other non-current financial assets/(liabilities) - - - -
Other current financial assets/(liabilities) - - 60 (40)
Reclassified as (assets)/liabilities held for sale (Note 6) - - (58) 40
Total other financial assets/(liabilities) - - 2 -
1. Total derivative financial instruments at 31 March 2022 are
presented as £3 million in non-current derivative assets and £13 million in
current derivative assets, and £nil in non-current derivative liabilities and
£31 million in current derivative liabilities.
Included in assets held for sale at 31 March 2022 were cash flow hedges
totalling £44 million that relate to discontinued operations, of which the
most significant related to cash flow hedging using natural gas futures. The
Group did not cease cash flow hedging such items upon classification of
Primient as held for sale but did so upon completion of the Transaction.
Included in investments in equities are assets classified as FVOCI. These
relate principally to long-term strategic investments that the Group does not
control, nor has significant influence over. The investments are non-listed
and are mainly start-ups or in the earlier stages of their lifecycle.
Therefore, fair value has been determined based on the most recent funding
rounds adjusted for indicators of impairment. The fair values assigned to each
of the investments have different significant unobservable inputs.
For assets and liabilities that are recognised in the financial statements at
fair value on a recurring basis, the Group determines whether transfers have
occurred between levels in the hierarchy by re-assessing categorisation (based
on the lowest level of input that is significant to the fair value measurement
as a whole) at the end of the reporting period. There were no transfers
between Level 1 and Level 2 fair value measurements during the period, and no
transfers into or out of Level 3 fair value measurements during the six months
to 30 September 2022.
The following table reconciles the movement in the Group's net financial
instruments and fair value adjustments due to risks hedged classified in
'Level 3' of the fair value hierarchy:
Commodity Commodity Financial assets at FVPL Financial assets at FVOCI Total
pricing pricing £m £m £m
contracts contracts
- assets
- liabilities
£m £m
At 1 April 2022 2 - 20 26 48
Income statement:
- prior year amounts derecognised (2) - - - (2)
Other comprehensive income - - - 10 10
Non-qualified deferred compensation arrangements - - (4) - (4)
Purchases - - 2 - 2
Disposals - - (2) (7) (9)
Currency translation differences - - 4 - 4
At 30 September 2022 - - 20 29 49
11. Retirement benefit obligations
At 30 September 2022, the Group's retirement benefit obligations are in a net
deficit position of £112 million (31 March 2022 - deficit of £107 million).
On disposal of the Primient business, the Group retained all US defined
benefit pension schemes but certain obligations were disposed of including
funded non-qualified deferred compensation arrangements as well as the
unfunded post-retirement medical plan relating to employees who transitioned
to the Primient business (a net deficit of £28 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.
In the six months to 30 September 2022, the significant movements in the net
deficit in the year are as follows:
· A reduction of £339 million due to the significant increase in
corporate bond yields in both the US and UK leading to higher discount rates
and decreasing the value of plan liabilities;
· An increase of £329 million due to the worse than expected
returns on assets in the US plans and matched by the UK Group Scheme 'buy-in'
policy; and
· An increase of £4 million as a result of the experience loss
against previously set assumptions. This was principally related to the main
UK plan and was due to inflation being significantly higher in the six months
to 30 September 2022, partially offset by a gain recognised on the post
transaction price adjustment in respect of the bulk annuity policy 'buy in' of
the main UK plan.
Other movements in retirement benefit obligations comprise a net income
statement charge of £3 million, employer contributions of £5 million and an
increase in the net deficit for currency translation of £17 million.
These movements are set out in the following table:
Six months to 30 September 2022
UK plans US plans US plans Total
£m (funded) (unfunded) £m
£m £m
Net deficit at 31 March 2022 (18) - (89) (107)
Income statement:
- current service costs - - - -
- administration costs (1) (1) - (2)
- net interest expense - 1 (2) (1)
Other comprehensive income:
- actual return lower than interest on plan assets (243) (86) - (329)
- actuarial gain/(loss):
- changes in financial assumptions 256 71 12 339
- experience against assumptions (5) - 1 (4)
Other movements:
- employer's contributions 1 - 4 5
- non-qualified deferred compensation arrangements - 4 - 4
- currency translation differences (1) (2) (14) (17)
Net deficit at 30 September 2022 (11) (13) (88) (112)
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 £8 million gain recorded in other
comprehensive income is in relation to UK obligations not subject to this
'buy-in' and due to the favourable post transaction price adjustment in
respect of the bulk annuity policy 'buy in' of the main UK plan.
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.
12. Contingent liabilities
The Group is subject to claims and litigation generally arising in the
ordinary course of its business. Provision is made when liabilities are
considered likely to arise and the expected quantum of the exposure can be
estimated reliably. The risk in relation to claims and litigation is monitored
on an ongoing basis and provisions amended accordingly. It is not expected
that claims and litigation existing at 30 September 2022 will have a material
adverse effect on the Group's financial position.
13. Acquisitions
In the 2023 fiancial year:
Nutriati acquisition
On 29 April 2022 the Group completed the acquisition of Nutriati, an
ingredient technology business developing and producing chickpea protein and
flour, expanding its capability to offer customers sustainable, plant-based
solutions. This transaction was structured as an asset purchase and is being
accounted for as a business combination. Total consideration was £10
million, including £1 million of deferred consideration and £1 million of
non-cash consideration. Included within the identifiable assets acquired are
inventories of £3 million and intangible assets of £6 million. Goodwill of
£1 million, which is not deductible for tax purposes, has been recorded on
the acquisition.
Quantum acquisition
On 9 June 2022 the Group completed the acquisition for 100% of the equity of
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$238 million (£188 milion).
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 research and development capabilities and proprietary
manufacturing processes and technologies. The acquisition also 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.
Details of the acquisition are provided in the tables below:
Goodwill At 30 September
2022
£m
Total consideration - including purchase price adjustments and amounts paid to 188
escrow
Less: fair value of net assets acquired (102)
(Provisional) goodwill 86
Cash flows Six months to
30 September
2022
£m
Total consideration - including purchase price adjustments and amounts paid to 188
escrow
Less: net cash acquired (4)
Acquisition of business, net of cash acquired 184
Fair value of net assets acquired Book value on acquisition Fair value adjustment
£m £m Total fair value
£m
Intangible assets (customer relationships,
technology/know-how)
- 100 100
Property, plant and equipment 12 6 18
Inventories 4 1 5
Trade and other receivables 5 - 5
Cash and cash equivalents 4 - 4
Trade and other payables (3) - (3)
Deferred tax liabilities - (27) (27)
(Provisional) net assets on acquisition 22 80 102
The provisional goodwill, which is not deductible for tax purposes, primarily
represents the premium paid to acquire an established business with a leading
and sustainable market position in China with the potential to expand
beyond. It also represents the future value to the Group of being able to
leverage its technology and products, which are highly complementary to the
Group's existing fibres portfolio, to offer an enhanced range of fibre
solutions to existing customers.
The acquired business contributed revenue of £13 million and an operating
profit of £4 million for the period from acquisition on 9 June 2022 until 30
September 2022 (excluding the amortisation of acquired intangibles recognised
from the acquisition). Had the business been acquired at the beginning of the
2023 financial year, it would have contributed revenue of £20 million and an
operating profit of £10 million in the six months to 30 September 2022.
Reconciliation of total Group goodwill
A reconciliation of the carrying amount of goodwill on the Group's
consolidated statement of financial position at the beginning and end of the
reporting period is presented below:
Goodwill Provisional
At 30 September
2022
£m
Gross carrying amount
At 1 April 2022 213
Acquisitions of subsidiaries/businesses 87
Currency translation differences 25
At 30 September 2022 325
Accumulated impairment
At 1 April 2022 10
Currency translation differences -
At 30 September 2022 10
Net book value at 30 September 2022 315
14. Investment in Joint venture
The Group acquired a 49.7% interest in Primient, a joint venture which is a
leading producer of food and industrial ingredients, principally bulk
sweetners and industrial starches. Key products include nutritive sweetners
(such as high fructose corn syrup and dextrose), industrial starches,
acidulants (such as citric acid) and commodities (such as corn gluten feed and
meal and corn oil). Primient comprises the Group's former Primary Products
business in North America and Latin America and its former interests in the
Almidones Mexicanos S.A de C.V ('Almex') and DuPont Tate & Lyle
Bio-Products Company, LLC ('Bio-PDO') joint ventures.
The Group's interest in the Primient joint venture decreased from the 49.9%
interest held immediately on completion of the Transaction to a 49.7% interest
following a redemption of shares held by the Group for the return of £1
million. Primient subsequently re-issued the same number of shares in order
to award these to Primient management as performance incentives.
The Group's interest in Primient is accounted for using the equity method.
Primient has share capital consisting of ordinary shares, which is held
directly by the Group (and its joint venture partner) and is a private
company. No quoted market price is available for its shares. There are no
contingent liabilities relating to the Group's interest in the joint
venture.
The movements in the carrying value of the Group's investment in Primient is
summarised as follows:
Primient
£m
At 1 April 2022 -
Fair value of investment in Primient joint venture on initial recognition 253
Share of loss of joint venture (35)
Other comprehensive income 43
Share redemption (1)
Dividends paid by joint venture (13)
At 30 September 2022 247
The following tables summarise the financial information of Primient as
included in its own financial statements, adjusted for fair value adjustments
at the Transaction date (disposal of 100% of Primient and acquisition of the
Group's share) and differences in accounting policies.
Statement of total comprehensive income
Primient Six months to
30 September 2022
£m
At 100%
Revenue 1 309
Depreciation and amortisation (44)
Other expenses (1 202)
Exceptional items (102)
Net finance expense (35)
Loss before tax (74)
Income tax expense(1) (5)
Loss after tax at 100% (79)
Other comprehensive income at 100% 9
Total comprehensive expense at 100% (70)
At 49.7%
Group's share of loss for the period (39)
Amortisation of fair value adjustments on initial recognition of Primient 3
Other adjustments 1
Group's share of loss of joint venture (35)
Group's share of other comprehensive income 4
Group adjustments to other comprehensive income 39
Group's share of other comprehensive income 43
Group's share of total comprehensive income 8
1. Tax expense relates principally to tax on Primient's Brazilian
subsidiary.
Statement of financial position
Primient At 30 September 2022
£m
Assets
Non-current assets 1 040
Cash and cash equivalents 47
Other current assets 717
Liabilities
Non-current liabilities (1 017)
Current borrowings (10)
Other current liabilities (377)
Net assets at 100% 400
Group's share of net assets 199
(Provisional) goodwill and fair value adjustments (net of amortisation) 48
Carrying amount of investment in Primient 247
As discussed in Note 1, the Group's adjusted profit before tax excludes
certain items relating to the Primient joint venture. The following table
shows the reconciliation of such adjusting items in the current period:
Continuing operations Note Six months to
30 September 2022
£m
Primient exceptional costs (102)
Group's share of Primient exceptional costs (51)
Amortisation of fair value adjustments and other adjustments on initial 3
recognition of Primient
Total excluded from the Group's adjusted profit before tax 2 (48)
The Group's share of exceptional costs of Primient comprise certain
non-recurring costs incurred by Primient as part of the Transaction and
separation including the re-charge of shareholder costs. In addition this
included the unwind of fair value adjustments determined by the purchase price
allocation which included certain net corn position fair value adjustments no
longer recorded by Primient.
15. Related party disclosure
The Group has related party relationships with its Primient joint venture, the
Group's pension schemes and with key management, being its Directors and
executive officers. Remuneration was paid to key management, there were no
other related party transactions with key management.
As a result of the sale of the controlling stake in the Primient Business,
Tate & Lyle now holds a 49.7% interest in Primient, effective from 1 April
2022. Primient comprises of the Group's former Primary Products business in
North America and Latin America and its former interests in the Almidones
Mexicanos S.A de C.V ('Almex') and DuPont Tate & Lyle Bio-Products
Company, LLC ('Bio-PDO') joint ventures.
There were no other material changes in the nature of related party
transactions and no material related party transactions containing unusual
commercial terms in the six months to 30 September 2022 or comparative
periods.
As a result of the one new material related party, Primient, further
disclosure is provided below:
Related party transactions and outstanding balances 30 September 2022
£m
Sales of goods and services to the joint venture 25
Purchases of goods and services from the joint venture (132)
Receivables due from the joint venture 15
Payables due to the joint venture (19)
Sales of goods and services to the joint venture are considered in scope of
IFRS 15 and relate to the Group's commitment under the long term agreements in
operation following the completion of the Transaction to produce industrial
starches for Primient under a tolling arrangement whereby Primient retains
control of the net raw material at all times. The Group earns a
manufacturing margin for this production when the service is provided. All
associated income is earned in North America. The Group considers it
appropriate to exclude this amount from revenue and record the income in
operating profit on the basis that this income is generated with a related
party, is not part of the Group's normal revenue generating activities (where
revenue is recognised when control of the goods is transferred), only arises
because of the relationship that exists in which Primient is a supplier of the
Group, and is outside the Group's core focus on speciality food and beverage
solutions.
16. Events after the reporting period
On 4 October 2022, a reduction of the Company's capital was completed, through
the cancellation and repayment of all of its 2,394,000 6½ per cent cumulative
preference shares of £1 each.
On 3 November 2022, the Group received dividend payments of $61 million (£54
million) from Primient.
There are no other material post balance sheet events requiring disclosure in
respect of the six months to 30 September 2022.
TATE & LYLE PLC
ADDITIONAL INFORMATION
For the six months to 30 September 2022
Calculation of changes in constant currency - Pro-forma
Where changes in constant currency are presented in this statement, they are
calculated by retranslating current period results at prior period exchange
rates. The following table provides a reconciliation between the current
period and the six months to September 2021 performance on a pro-forma basis
at actual exchange rates and at constant currency exchange rates. Absolute
numbers presented in the table are rounded for presentational purposes,
whereas the growth percentages are calculated on unrounded numbers.
Six months to 30 September Adjusted performance 2022 FX 2022 Underlying Pro-forma(1) Change % Change in
Continuing operations
£m
£m
at constant
growth
constant
currency
£m 2021
currency
£m
£m
%
Revenue 849 (64) 785 129 656 29% 20%
Food & Beverage Solutions 113 (12) 101 21 80 41% 26%
Sucralose 39 (6) 33 2 31 25% 8%
Central (15) 2 (13) 4 (17) 20% 23%
Adjusted operating profit 137 (16) 121 27 94 47% 29%
Net finance expense (11) 1 (10) 2 (12) 10% 19%
Share of profit of joint venture
13 (1) 12 (18) 30 (58%) (62%)
Adjusted profit before tax 139 (16) 123 11 112 24% 10%
Adjusted income tax expense (30) 3 (27) (3) (24) (25%) (10%)
Adjusted profit after tax 109 (13) 96 8 88 24% 9%
Adjusted diluted EPS (pence) Pro-forma(2) 26.6p (3.2p) 23.4p 2.0p 21.4p 24% 9%
1. Comparative information for the adjusted operating margin for the six
months to 30 September 2021 is pro-forma information as published on pages 44
and 45 of the half year results statement for that period issued on 4
November.
2. Pro-forma adjusted diluted earnings per share, for the six months to 30
September 2022 as well as for the comparative periods, has been calculated
based on the earnings for the period and the shares in issue adjusted for
impact of the 6 for 7 share consolidation as if it occurred on 1 April.
Impact of changes in exchange rates
The Group's reported financial performance at average rates of exchange for
the six months to 30 September 2022 was favourably impacted by currency
translation. The average and closing US dollar and Euro exchange rates used to
translate reported results were as follows:
Average rates Closing rates
Six months to 30 September 2022 2021 2022 2021
US dollar : sterling 1.21 1.39 1.11 1.35
Euro : sterling 1.17 1.16 1.14 1.16
For the six months to 30 September 2022, net foreign exchange increased Food
& Beverage Solutions adjusted operating profit by £12 million and
increased Sucralose adjusted operating profit by £6 million, with adjusted
profit before tax for the continuing operations of the Group increasing by
£16 million.
Change in definition of New Products
To reflect the differentiated profiles of ingredients launched from the
innovation pipeline we have adapted the periods from launch for which we
consider ingredients to be New Products as follows:
Innovation type Description Examples New Product life cycle
Breakthrough 'New to the world' products or processes that create a new market entrant Allulose, Reb M stevia 15 years
Next generation Breakthrough process technology to make an existing product or a new addition Claria clean label starches, Non-GMO fibres 7 years
to our portfolio but not to market
Line extensions New product that extends already existing functionality or range Organic or non-GMO versions of existing products, new stabiliser blends 5 years
Launches from our innovation pipeline will be considered New Products for the
years of their life cycle from the year of first launch.
Statement of Directors' responsibilities
The Directors confirm: that this condensed consolidated set of financial
information has been prepared on the basis of the accounting policies set out
in the Group's 2022 Annual Report, and in accordance with UK adopted
International Accounting Standard 34 "Interim Financial Reporting"; that the
condensed consolidated set of financial statements gives a true and fair view
of the assets, liabilities, financial position and profit or loss as required
by the Disclosure Guidance and Transparency Rules (DTRs) sourcebook of the
United Kingdom's Financial Conduct Authority, paragraph DTR 4.2.4; and that
the interim management report herein includes a fair review of the information
required by paragraphs DTR 4.2.7 and DTR 4.2.8, namely:
· an indication of important events that have occurred during the
first six months and their impact on the condensed set of consolidated
financial information;
· a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
· material related party transactions in the first six months and
any material changes in the related party transactions described in the last
Annual Report.
The Directors are responsible for the maintenance and integrity of the
Company's website. UK legislation governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
The Directors of Tate & Lyle PLC are listed in the Tate & Lyle Annual
Report for the year ended 31 March 2022. The following changes have been
made to the Board in the six months to 30 September 2022.
· On 16 May 2022, Dawn Allen joined the Board as Chief Financial
Officer.
· On 1 June 2022, Dr Isabelle Esser joined the Board as a
non-executive director.
For and on behalf of the Board of Directors:
Nick
Hampton
Dawn Allen
Chief
Executive
Chief Financial Officer
9 November 2022
INDEPENDENT REVIEW REPORT TO TATE & LYLE PLC
Conclusion
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2022 which comprises the condensed (interim) consolidated income
statement, condensed (interim) consolidated statement of comprehensive income,
condensed (interim) consolidated statement of financial position, condensed
(interim) consolidated statement of cash flows, condensed (interim)
consolidated statement of changes in equity and the related explanatory notes
1 - 16. We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed set of
financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2022 is not prepared,
in all material respects, in accordance with UK adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" (ISRE) issued by the Financial
Reporting Council. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with UK adopted international accounting standards. The
condensed (interim) set of financial statements included in this half-yearly
financial report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusions relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of (interim) financial statements in
the half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
9 November 2022
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