REG-Tate & Lyle PLC Half-yearly Report <Origin Href="QuoteRef">TATE.L</Origin> - Part 2
24/11/2014 14:57
- Part 2: For the preceding part double click ID:nBwcpz5ka
(77) (113)
Total comprehensive income 84 53 160
Analysed by:
- Continuing operations 84 53 132
- Discontinued operations - - 28
Total comprehensive income 84 53 160
Attributable to:
- Owners of the Company 84 53 160
- Non-controlling interests - - -
Total comprehensive income 84 53 160
* Restated for the adoption of IFRS 11 `Joint Arrangements` (see note 1).
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
30 September 30 September 31 March
Notes 2014 2013 2014
(restated*) (restated*)
£m
£m
£m
ASSETS
Non-current assets
Goodwill and other intangible assets 318 287 307
Property, plant and equipment 756 759 732
Investments in joint ventures 328 331 308
Investments in associates 4 4 4
Available-for-sale financial assets 29 28 28
Derivative financial instruments 25 38 23
Deferred tax assets 5 1 4
Trade and other receivables 1 1 -
1 466 1 449 1 406
Current assets
Inventories 252 269 372
Trade and other receivables 375 281 265
Current tax assets 1 3 1
Derivative financial instruments 109 100 78
Other financial assets 2 - -
Cash and cash equivalents 8 323 393 346
1 062 1 046 1 062
TOTAL ASSETS 2 528 2 495 2 468
EQUITY
Capital and reserves
Share capital 117 117 117
Share premium 406 406 406
Capital redemption reserve 8 8 8
Other reserves 49 80 58
Retained earnings 464 376 460
Equity attributable to Owners of the Company 1 044 987 1 049
Non-controlling interests 1 - 1
TOTAL EQUITY 1 045 987 1 050
LIABILITIES
Non-current liabilities
Trade and other payables 2 - 2
Borrowings 8 440 766 437
Derivative financial instruments 6 11 2
Deferred tax liabilities 51 45 42
Retirement benefit deficit 189 232 220
Provisions for other liabilities and charges 8 9 9
696 1 063 712
Current liabilities
Trade and other payables 323 283 283
Current tax liabilities 30 54 38
Borrowings and bank overdrafts 8 356 37 323
Derivative financial instruments 63 51 49
Provisions for other liabilities and charges 15 20 13
787 445 706
TOTAL LIABILITIES 1 483 1 508 1 418
TOTAL EQUITY AND LIABILITIES 2 528 2 495 2 468
* Restated for the adoption of IFRS 11 `Joint Arrangements` (see note 1).
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Six months to Six months to Year to
30 September 30 September 31 March
Notes 2014 2013 2014
(restated*) (restated*)
£m
£m
£m
Cash flows from operating activities
Profit before tax from continuing operations 79 150 277
Adjustments for:
Depreciation of property, plant and equipment 41 42 83
Amortisation of intangible assets 10 8 20
Share-based payments 3 5 8
Other non-cash items - - (6)
Finance income 2,4 - (1) (2)
Finance expense 2,4 17 19 37
Share of profit after tax of joint ventures and associates (28) (29) (61)
Changes in working capital 42 100 15
Changes in net retirement benefit obligations (16) (23) (43)
Cash generated from continuing operations 148 271 328
Interest paid (13) (15) (33)
Net income tax paid (11) (5) (9)
Cash used in discontinued operations - (1) -
Net cash generated from operating activities 124 250 286
Cash flows from investing activities
Purchase of property, plant and equipment (51) (36) (102)
Purchase of intangible assets (22) (23) (45)
Proceeds on disposal of property, plant and equipment - - 33
Acquisition of businesses, net of cash acquired (8) (12) (15)
Disposal of businesses, net of cash disposed - 3 3
Purchase of available-for-sale financial assets (1) (2) (4)
Disposal of available-for-sale financial assets - 1 2
Interest received - 1 2
Dividends received from joint ventures and associates - 60 105
Net cash used in investing activities (82) (8) (21)
Cash flows from financing activities
Purchase of own shares - (16) (29)
Cash inflow from additional borrowings 23 7 8
Cash outflow from repayment of borrowings - (40) (50)
Repayment of capital element of finance leases (1) (1) (2)
Dividends paid to the owners of the Company 7 (92) (88) (124)
Net cash used in financing activities (70) (138) (197)
Net (decrease)/increase in cash and cash equivalents 8 (28) 104 68
Cash and cash equivalents:
Balance at beginning of period 346 305 305
Net (decrease)/increase in cash and cash equivalents (28) 104 68
Currency translation differences 5 (16) (27)
Balance at end of period 8 323 393 346
* Restated for the adoption of IFRS 11 `Joint Arrangements` (see note 1).
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Share Attributable
capital & Capital to the owners Non-
share redemption Other Retained of the controlling Total
premium reserve reserves earnings Company interests equity
£m £m £m £m £m £m £m
At 31 March 2014 523 8 58 460 1 049 1 1 050
Six months to 30 September 2014:
Profit for the period - - - 68 68 - 68
Other comprehensive (expense)/income - - (9) 25 16 - 16
Total comprehensive (expense)/income - - (9) 93 84 - 84
Share-based payments, net of tax - - - 3 3 - 3
Dividends paid - - - (92) (92) - (92)
At 30 September 2014 523 8 49 464 1 044 1 1 045
At 31 March 2013 523 8 139 366 1 036 - 1 036
Year to 31 March 2014:
Profit for the year - - - 273 273 - 273
Other comprehensive expense - - (81) (32) (113) - (113)
Total comprehensive (expense)/income - - (81) 241 160 - 160
Share-based payments, net of tax - - - 8 8 - 8
Purchase of own shares - - - (29) (29) - (29)
Non-controlling interest (NCI) in subsidiaries acquired - - - - - 1 1
Initial recognition of put option on NCI - - - (2) (2) - (2)
Dividends paid - - - (124) (124) - (124)
At 31 March 2014 523 8 58 460 1 049 1 1 050
At 31 March 2013 523 8 139 366 1 036 - 1 036
Six months to 30 September 2013:
Profit for the period - - - 130 130 - 130
Other comprehensive expense - - (59) (18) (77) - (77)
Total comprehensive (expense)/income - - (59) 112 53 - 53
Share-based payments, net of tax - - - 2 2 - 2
Purchase of own shares - - - (16) (16) - (16)
Dividends paid - - - (88) (88) - (88)
At 30 September 2013 523 8 80 376 987 - 987
Dividends on ordinary shares: Six months to Six months to Year to
30 September 30 September 31 March
2014 2013 2014
Pence Pence Pence
Per ordinary share
- Proposed in respect of the period 8.2 7.8 19.8
- Paid in the period 19.8 18.8 26.6
1. Presentation of half year financial information
General information
The principal activity of Tate & Lyle PLC and its subsidiary and associated
undertakings together with its joint ventures is the global provision of
ingredients and solutions to the food, beverage and other industries.
The Company is a public limited company incorporated and domiciled in the United
Kingdom. The address of its registered office is 1 Kingsway, London WC2B 6AT.
The Company has its primary listing on the London Stock Exchange.
Basis of preparation
This condensed set of consolidated financial information for the six months
ended 30 September 2014 has been prepared on a going concern basis in accordance
with the Disclosure and Transparency Rules of the Financial Conduct Authority
and with IAS 34 Interim Financial Reporting as adopted by the European Union.
The condensed set of consolidated financial information should be read in
conjunction with the annual financial statements for the year ended 31 March
2014, which have been prepared in accordance with IFRSs as adopted by the
European Union.
Having reviewed the Group`s latest projected results, cash flows, liquidity
position and borrowing facilities, the Directors have a reasonable expectation
that the Group has adequate resources to continue in existence for the
foreseeable future. Accordingly, it is appropriate to continue to adopt the
going concern basis in preparing the condensed set of consolidated financial
information.
In the current year there were no results classified within discontinued
operations. The prior year discontinued activity relates to the Group`s former
Food & Industrial Ingredients, Europe segment, and the former Sugars segment.
The condensed set of consolidated financial information is unaudited, but has
been reviewed by the external auditors. The condensed set of consolidated
financial information in the Statement of Half Year Results does not constitute
statutory accounts within the meaning of Section 434 of the Companies Act 2006.
The Group`s published consolidated financial statements for the year ended 31
March 2014 were approved by the Board of Directors on 28 May 2014 and filed with
the Registrar of Companies. The report of the auditors on those accounts was
unqualified and did not contain an emphasis of matter paragraph or a statement
under Section 498 (2) or (3) of the Companies Act 2006. The condensed set of
consolidated financial information for the six months ended 30 September 2014 on
pages 14 to 32 was approved by the Board of Directors on 5 November 2014.
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 ended 31 March 2014, other than the
adoption, with effect from 1 April 2014, of new or revised accounting standards,
as set out below:
- IFRS 10 Consolidated Financial Statements
- IFRS 11 Joint Arrangements
- IFRS 12 Disclosure of Interests in Other Entities
- Amendments to IAS 27 (Revised 2011) Separate Financial Statements
- Amendments to IAS 28 (Revised 2011) Investments in Associates and Joint
Ventures
The adoption of these standards and interpretations has not had a material
effect on the results or financial position of the Group. However, the adoption
of IFRS 11 (while not affecting the Group`s earnings or net assets) has impacted
a number of the individual line items disclosed in the Group`s financial
statements. Previously, the Group had accounted for its interest in joint
ventures on a proportionate consolidation basis, whereby the Group`s share of
the income and expenses, assets and liabilities and cash flows of joint ventures
was combined on a line-by-line basis with those of Tate & Lyle PLC and its
subsidiaries. IFRS 11 prohibits the use of proportionate consolidation and
requires that joint ventures are accounted for using the equity method of
accounting. Under the equity method of accounting, the Group`s share of the
after tax profits and losses of the joint ventures are shown on a single line of
the consolidated income statement, its share of their net assets are shown on
one line of the consolidated statement of financial position and the
consolidated statement of cash flows reflects cash flows between the Group and
the joint ventures within cash flows from investing activities. Trading balances
with joint ventures and associates are included within current payables or
receivables. Accordingly, the Group has restated comparative financial
information where appropriate.
The Group has presented segment and adjusted financial information on a
proportionate consolidation basis, as this reflects the management of its joint
ventures on an integrated basis with the Group`s subsidiaries and the basis upon
which management information is reported to the Chief Operating Decision Maker.
Accordingly, performance measures such as adjusted sales, adjusted operating
profit, adjusted profit before tax and adjusted diluted earnings per share are
unaffected by IFRS 11.
The following new standards, new interpretations and amendments to standards and
interpretations have been issued but are not effective for the financial year
beginning 1 April 2014 and have not been adopted early:
- IFRS 9 Financial instruments (expected to be effective 1 January 2018)
- IFRS 14 Regulatory Deferral Accounts (effective 1 January 2016)
- IFRS 15 Revenue from Contracts with Customers (expected to be effective 1
January 2017)
- Amendment to IFRS 11 Accounting for Acquisitions of Interest in Joint
Operations (effective 1 January 2016)
- Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of
Depreciation and Amortisation (effective 1 January 2016)
- Amendments to IAS 16 Agriculture: Bearer Plants (effective 1 January 2016)
- Amendments to IAS 27 Equity Method in Separate Financial Statements
(effective 1 January 2016)
Use of adjusted measures
Tate & Lyle presents adjusted sales, operating profit, profit before tax and
earnings per share information. These measures are used by Tate & Lyle for
internal performance analysis and incentive compensation arrangements for
employees. The terms `adjusted` and `exceptional items` are not defined terms
under IFRS and may therefore not be comparable with similarly titled measures
reported by other companies. They are not intended to be a substitute for, or
superior to, IFRS measurements of profit. The term `adjusted` refers to the
relevant measure being reported excluding exceptional items, post-retirement
benefit interest and amortisation of intangible assets acquired through business
combinations. Adjusted measures are also presented using proportionate
consolidation reflecting the Group`s management of its joint ventures on an
integrated basis with its subsidiaries. Reconciliation to reported information
is provided in Note 15.
Seasonality
The Group's principal exposure to seasonality is in relation to working capital.
The Group's inventories are subject to seasonal fluctuations reflecting crop
harvesting and purchases. Inventory levels typically increase progressively from
September to November and gradually reduce in the first six months of the
calendar year.
2. Segment information
Segment information is presented on a consistent basis with the information
presented to the Board for the purposes of allocating resources within the Group
and assessing the performance of the Group`s businesses. Continuing operations
comprise two operating segments: Speciality Food Ingredients and Bulk
Ingredients. Central, which comprises central costs including head office,
treasury and reinsurance activities, does not meet the definition of an
operating segment under IFRS 8 `Operating Segments` but no sub-total is shown
for the Group`s operating segments in the tables below so as to be consistent
with the presentation of segment information to the Board.
The Board uses adjusted operating profit as the measure of the profitability of
the Group`s businesses. Adjusted operating profit is, therefore, the measure of
segment profit presented in the Group`s segment disclosures. Adjusted operating
profit represents operating profit before specific items that are considered to
hinder comparison of the trading performance of the Group`s businesses either
year-on-year or with other businesses. During the periods presented, the items
excluded from operating profit in arriving at adjusted operating profit were the
amortisation of acquired intangible assets and exceptional items. The Group has
presented segment and adjusted financial information on a proportionate
consolidation basis, as this reflects the management of its joint ventures on an
integrated basis with the Group`s subsidiaries.
An analysis of total assets and total liabilities by operating segment is not
presented to the Board but it does receive segmental analysis of net working
capital (inventories, trade and other receivables, less trade and other
payables). Accordingly, the amounts presented for segment assets and segment
liabilities in the tables below represent those assets and liabilities that
comprise elements of net working capital. The segment results were as follows:
(a) Segment sales Notes Six months to Six months to Year to
30 September 30 September 31 March
2014
2013
2014
(restated*)
(restated*)
£m
£m
£m
External sales
Speciality Food Ingredients 446 519 983
Bulk Ingredients 934 1 218 2 164
Adjusted sales 1 380 1 737 3 147
Elimination of proportionate consolidation (180) (221) (393)
Sales 1 200 1 516 2 754
(b) Segment results Six months to Six months to Year to
30 September 30 September 31 March
2014
2013
2014
(restated*)
(restated*)
£m
£m
£m
Adjusted operating profit
Speciality Food Ingredients 66 112 213
Bulk Ingredients 76 92 172
Central (25) (17) (36)
Adjusted operating profit 117 187 349
Elimination of proportionate consolidation (36) (37) (74)
81 150 275
Adjusting items:
- Exceptional items 3 (9) (6) (14)
- Amortisation of acquired intangible assets (4) (5) (10)
Operating profit 68 139 251
Finance income 4 - 1 2
Finance expense 4 (17) (19) (37)
Share of profit after tax of joint ventures and associates 28 29 61
Profit before tax 79 150 277
* Restated for the adoption of IFRS 11 `Joint Arrangements` (see note 1).
Six months to Six months to Year to
30 September 30 September 31 March
2014
2013
2014
Percentage
Percentage
Percentage
Adjusted operating margin
Speciality Food Ingredients 14.8% 21.5% 21.7%
Bulk Ingredients 8.1% 7.5% 7.9%
Central n/a n/a n/a
Total 8.5% 10.8% 11.1%
(c)Segment assets / (liabilities)
30 September 2014
Assets Liabilities Net
£m £m £m
Net working capital
Speciality Food Ingredients 285 (111) 174
Bulk Ingredients 395 (212) 183
Central 41 (35) 6
Total working capital 721 (358) 363
Elimination of proportionate consolidation (93) 33 (60)
Group working capital 628 (325) 303
Other assets/(liabilities) 1 900 (1 158) 742
Group assets/(liabilities) 2 528 (1 483) 1 045
31 March 2014 (restated*)
Assets Liabilities Net
£m £m £m
Net working capital
Speciality Food Ingredients 242 (94) 148
Bulk Ingredients 447 (181) 266
Central 44 (42) 2
Total working capital 733 (317) 416
Elimination of proportionate consolidation (96) 32 (64)
Group working capital 637 (285) 352
Other assets/(liabilities) 1 831 (1 133) 698
Group assets/(liabilities) 2 468 (1 418) 1 050
30 September 2013 (restated*)
Assets Liabilities Net
£m £m £m
Net working capital
Speciality Food Ingredients 278 (101) 177
Bulk Ingredients 343 (178) 165
Central 40 (40) -
Total working capital 661 (319) 342
Elimination of proportionate consolidation (110) 36 (74)
Group working capital 551 (283) 268
Other assets/(liabilities) 1 944 (1 225) 719
Group assets/(liabilities) 2 495 (1 508) 987
* Restated for the adoption of IFRS 11 `Joint Arrangements` (see note 1).
3. Exceptional items Six months to Six months to Year to
30 September
30 September
31 March
2014
2013
2014
£m
£m
£m
Continuing operations (9) (6) (14)
Business transformation costs
(9) (6) (14)
During the year, the Group incurred further business transformation costs on the
implementation of a common global IS/IT platform of which £9 million (six months
to 30 September 2013 - £6 million; year to 31 March 2014 - £14 million) which
did not meet the criteria to be capitalised. These costs are classified within
Central costs in each of the above disclosed periods.
The tax impact on exceptional items is a £2 million credit (six months to 30
September 2013 - £1 million credit; year to 31 March 2014 - £9 million credit).
Tax credits on exceptional costs are only recognised to the extent that losses
incurred will result in tax recoverable in the future.
During the year to 31 March 2014, the Group recognised an exceptional tax credit
of £28 million in discontinued operations following the favourable resolution of
outstanding tax matters associated with the starch facilities which formed part
of the Group`s former Food and Industrial Ingredients, Europe segment.
4. Finance income and finance expense
Six months to Six months to Year to
30 September 30 September 31 March
2014 2013 2014
(restated*)
(restated*)
Continuing operations £m £m £m
Finance income - 1 2
Interest receivable
Total finance income - 1 2
Finance expense
Interest payable on bank and other borrowings (12) (14) (28)
Fair value hedges:
- fair value loss on interest rate derivatives (4) (13) (20)
- fair value adjustment of hedged borrowings 4 13 20
Finance lease interest (1) (1) (1)
Net retirement benefit interest (4) (4) (8)
Total finance expense (17) (19) (37)
Net finance expense (17) (18) (35)
Reconciliation to adjusted net finance expense £m £m £m
Net finance expense (17) (18) (35)
Net retirement benefit interest 4 4 8
Adjusted net finance expense (13) (14) (27)
Finance expense is shown net of borrowing costs of £1 million (six months to 30
September 2013 - £1 million; year to 31 March 2014 - £2 million) capitalised
into the cost of assets.
* Restated for the adoption of IFRS 11 `Joint Arrangements` (see note 1)
5. Income tax expense
Six months to Six months to Year to
30 September 30 September 31 March
2014 2013 2014
(restated*) (restated*)
Continuing operations £m £m £m
Current tax:
In respect of the current period
- UK - - -
- Overseas 3 8 27
Deferred tax charge 3 8 27
8
15
10
Adjustments in respect of previous years - (3) (5)
Income tax expense 11 20 32
Reconciliation to adjusted income tax expense £m £m £m
Income tax expense 11 20 32
Tax on exceptional items, amortisation of acquired intangibles and net retirement benefit interest 4 4 15
Share of tax of joint ventures and associates 8 8 13
Adjusted income tax expense 23 32 60
Continuing operations
The effective tax rate on adjusted profit before tax (see note 15) is 22.0% (six
months to 30 September 2013 - 18.7%; year to 31 March 2014 - 18.5%).
* Restated for the adoption of IFRS 11 `Joint Arrangements` (see note 1)
6. Earnings per share
Basic
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 ordinary shares purchased by the Company or in the
Employee Benefit Trust to satisfy awards made under the Group`s share-based
incentive plans.
Six months to Six months to
30 September 2014 30 September 2013
Continuing Discontinued Total Continuing Discontinued Total
operations operations operations operations
Profit attributable to owners of the Company (£m) 68 - 68 130 - 130
Weighted average number of ordinary shares in issue (millions) 464.4 464.4 464.4 464.3
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