REG-Tate & Lyle PLC Half-yearly Report <Origin Href="QuoteRef">TATE.L</Origin> - Part 3
24/11/2014 14:57
- Part 3: For the preceding part double click ID:nBwcpz5kb
464.3 464.3
Basic earnings per share 14.7p - 14.7p 28.0p - 28.0p
Year to
31 March 2014
Continuing Discontinued Total
operations operations
Profit attributable to owners of the Company (£m) 245 28 273
Weighted average number of ordinary shares in issue (millions) 464.1 464.1 464.1
Basic earnings per share 52.8p 6.0p 58.8p
Diluted
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares in issue to assume conversion of all potentially
dilutive ordinary shares. Potentially dilutive ordinary shares arise from awards
made under the Group`s share-based incentive plans. Where the vesting of these
awards is contingent on satisfying a service or performance condition, the
number of potentially dilutive ordinary shares is calculated based on the status
of the condition at the end of the period. Potentially dilutive shares are
actually dilutive only when the average market price of the Company`s ordinary
shares during the period exceeds their exercise price (options) or issue price
(other awards). The greater any such excess, the greater the dilutive effect.
The average market price of the Company`s ordinary shares during the six months
to 30 September 2014 was 673p (six months to 30 September 2013 - 829p). The
dilutive effect of share-based incentives was 4.1 million shares (30 September
2013 - 6.1 million shares).
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 diluted shares (millions) 468.5 468.5 468.5 470.4 470.4 470.4
Diluted earnings per share 14.6p - 14.6p 27.6p - 27.6p
Year to
31 March 2014
Continuing Discontinued Total
operations operations
Profit attributable to owners of the Company (£m) 245 28 273
Weighted average number of diluted shares (millions) 470.5 470.5 470.5
Diluted earnings per share 52.1p 5.9p 58.0p
Adjusted earnings per share
Adjusted earnings per share measures are calculated based on profit for the
period from continuing operations attributable to owners of the Company after
adjusting items as follows:
Six months to Six months to Year to
30 September 30 September 31 March
Continuing operations Notes 2014 2013 2014
£m £m £m
Profit attributable to owners of the Company 68 130 245
Adjusting items:
- exceptional items 3 9 6 14
- amortisation of acquired intangible assets 4 5 10
- net retirement benefit interest 4 4 4 8
- tax effect on the above adjustments 5 (4) (4) (15)
Adjusted earnings 81 141 262
Adjusted basic earnings per share 17.5p 30.3p 56.5p
Adjusted diluted earnings per share 17.3p 29.9p 55.7p
7. Dividends
The Directors have declared an interim dividend of 8.2p per share for the six
months to 30 September 2014 (six months to 30 September 2013 - 7.8p per share),
payable on 2 January 2015.
The final dividend for the year to 31 March 2014 of £92 million, representing
19.8p per share, was paid during the six months to 30 September 2014.
8. Net debt
The components of the Group`s net debt profile are as follows:
30 September 30 September 31 March
2014 2013 2014
£m £m £m
Non-current borrowings (440) (766) (437)
Current borrowings and bank overdrafts (356) (37) (323)
Debt-related derivative instruments 30 36 29
Cash and cash equivalents 323 393 346
Share of net cash in joint ventures 60 38 32
Net debt - including share of net cash in joint ventures (383) (336) (353)
Derivative financial instruments presented within assets and liabilities in the
statement of financial position of £65 million net asset (30 September 2013 -
£76 million; 31 March 2014 - £50 million) comprise net debt-related instruments
of £30 million asset (30 September 2013 - £36 million; 31 March 2014 - £29
million) and non net debt-related instruments of £35 million asset (30 September
2013 - £40 million; 31 March 2014 - £21 million).
Movements in the Group`s net debt (including share of net cash in joint
ventures), are as follows:
Six months to Six months to Year to
30 September 30 September 31 March
2014 2013 2014
£m £m £m
Net debt at beginning of the period (353) (479) (479)
(Decrease)/increase in cash and cash equivalents in the period (28) 104 68
Net cash (inflow)/outflow from movement in borrowings (note a) (22) 34 44
Debt in subsidiary acquired - (3) (3)
Fair value and other movements (1) (4) -
Currency translation differences (7) 26 37
Movements in share of net cash in joint ventures 28 (14) (20)
(Increase)/decrease in net debt in the period (30) 143 126
Net debt at end of the period (383) (336) (353)
(a) Net cash flow from movement in borrowings includes repayment of capital
element of finance leases.
9. Capital commitments
In the six months to 30 September 2014, there were additions to intangible
assets of £20 million (30 September 2013 - £22 million; 31 March 2014 - £57
million) and additions to property, plant and equipment of £49 million (30
September 2013 - £35 million; 31 March 2014 - £102 million).
Commitments at the balance sheet date were as follows:
30 September 30 September 31 March
2014 2013 2014
(restated*) (restated*)
£m £m £m
Commitments for the purchase of intangible assets - - 1
Commitments for the purchase of property, plant and equipment 41 25 36
Total commitments 41 25 37
* Restated for the adoption of IFRS 11 `Joint Arrangements` (see note 1)
10. Contingent liabilities
Sale of EU Sugars
As previously announced, American Sugar Holdings (ASR) raised a number of claims
totalling in the region of £40 million that it believes it has under the Share
and Business Sale Agreement relating to its acquisition of the Group`s EU Sugars
business in September 2010. These claims in large part relate to the turbulence
in the supply of raw sugar to the EU during the period prior to closing and the
increase in certain rolling re-export commitments of the business. Some, but not
all, of these issues were considered in the expert adjudication on the closing
accounts in which, as noted in the 2012 Annual Report, the expert strongly
supported Tate & Lyle`s position. ASR (through its subsidiary T&L Sugars
Limited) has commenced formal proceedings in respect of these claims which the
Group intends to defend vigorously.
Other claims
The Group is subject to claims and litigation generally arising in the ordinary
course of its business, some of which are for substantial amounts. All such
actions are strenuously defended but provision is made for liabilities that are
considered likely to arise on the basis of current information and legal advice
and after taking into account the Group`s insurance arrangements. While there is
always uncertainty as to the outcome of any claim or litigation, it is not
expected that claims and litigation existing at 30 September 2014 will have a
material adverse effect on the Group`s financial position.
11. Acquisition
On 1 August 2014, the Group completed its acquisition of the trade and assets
from Winway Biotechnology Nantong Co., Ltd, a leading polydextrose producer in
China. Total consideration was £8 million, of which £2 million has been deferred
in escrow as security against a number of general warranties and representations
detailed in the acquisition agreement. The provisionally determined fair value
of net assets acquired totalled £5 million, with provisional goodwill of £3
million recognised in relation to the acquisition.
12. Related party disclosures
The Group`s significant related parties are its associates and joint ventures as
disclosed in the Tate & Lyle Annual Report 2014. There were no material
differences in related parties or in the nature of related party transactions
during the period.
13. Foreign exchange rates
The following exchange rates have been applied to translate the financial
statements of the Group`s principal overseas operations:
Six months to Six months to Year to
30 September 30 September 31 March
Average foreign exchange rates 2014 2013 2014
US Dollar £1 = $ 1.68 1.54 1.59
Euro £1 = € 1.24 1.18 1.19
30 September 30 September 31 March
Period end foreign exchange rates 2014 2013 2014
US Dollar £1 = $ 1.62 1.62 1.67
Euro £1 = € 1.28 1.19 1.21
14. Financial instruments
The below table shows the Group`s financial assets and liabilities measured at
fair value at 30 September 2014 and 31 March 2014. The fair value hierarchy
categorisation, valuation techniques and inputs are consistent with those used
at the year ended 31 March 2014 and disclosed in Note 19 on pages 102 to 104 of
the 2014 Annual Report www.tateandlyle.com/annualreport2014:
- Quoted price (unadjusted) in active markets for identical assets or
liabilities (level 1);
- Inputs other than quoted prices included within level 1, directly or
indirectly observable for the asset or liability (level 2); and
- Inputs for the assets or liability that are not based on observable market
data (level 3).
30 September 2014 31 March 2014 (restated*)
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
Available for sale financial assets - - 29 29 - - 28 28
Other financial assets 2 - - 2 - - - -
Derivative financial instruments:
- currency swaps - 6 - 6 - 3 - 3
- interest rate swaps - 31 - 31 - 33 - 33
- forward foreign exchange contracts - 1 - 1 - 1 - 1
- commodity pricing contracts 19 32 45 96 9 13 42 64
Assets at fair value 21 70 74 165 9 50 70 129
30 September 2014 31 March 2014 (restated*)
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£m £m £m £m £m £m £m £m
Liabilities at fair value
Derivative financial instruments:
- currency swaps - (5) - (5) - (2) - (2)
- interest rate swaps - (2) - (2) - (5) - (5)
- commodity pricing contracts (26) (21) (15) (62) (13) (10) (21) (44)
Liabilities at fair value (26) (28) (15) (69) (13) (17) (21) (51)
* Restated for the adoption of IFRS 11 `Joint Arrangements` (see note 1)
For commodity pricing contracts, in evaluating the significance of fair value
inputs, the Group generally classifies assets or liabilities as level 3 when
their fair value is determined using unobservable inputs that individually, or
when aggregated with other unobservable inputs represent more than 10% of the
fair value of the observable inputs of the assets or liabilities.
Available-for-sale financial assets which are analysed at level 3 primarily
represent investments in unlisted securities. The fair values of the unlisted
securities are principally approximated at cost where the fair value cannot be
reliably measured. The following table reconciles the movement in the Group`s
financial instruments classified in level 3 of the fair value hierarchy:
Commodity Commodity Available-
pricing pricing for-sale
contracts contracts financial
assets liabilities assets Total
£m £m £m £m
At 31 March 2013 53 (21) 27 59
Total gains/(losses):
- in operating profit 42 (21) - 21
- in other comprehensive income - - (2) (2)
Purchases - - 4 4
Settlements (53) 21 (1) (33)
At 31 March 2014 42 (21) 28 49
Total gains/(losses):
- in operating profit 45 (15) - 30
Purchases - - 1 1
Settlements (42) 21 - (21)
At 30 September 2014 45 (15) 29 59
The fair value of borrowings is estimated to be £823 million (30 September 2013
- £835 million; 31 March 2014 - £794 million) and has been determined using
quoted market prices or discounted cash flow analysis. The value of other assets
and liabilities held at amortised cost are not materially different from their
fair values.
15. Reconciliation of adjusted financial information
As described in Notes 1 and 2, Tate & Lyle present adjusted performance measures
including adjusted sales, adjusted operating profit, adjusted profit before tax
and adjusted earnings per share. Reported measures are also adjusted to reflect
the presentation of Group financial information on a proportionate consolidation
basis.
For the periods presented, these adjusted performance measures exclude, where
relevant:
- exceptional items
- the amortisation of acquired intangible assets
- net retirement benefit interest, and
- tax on the above adjustments.
The following table shows the reconciliation of the adjusted performance
measures to the most directly comparable measures presented in accordance with
IFRS.
Six months to 30 September 2014 Six months to 30 September 2013
(restated*)
Adjusting Adjusting
Reported items Adjusted Reported items Adjusted
£m £m £m £m £m £m
Continuing and total operations
Sales 1 200 180 1 380 1 516 221 1 737
Operating profit 68 49 117 139 48 187
Net finance expense (17) 4 (13) (18) 4 (14)
Profit after tax of joint ventures and associates 28 (28) - 29 (29) -
Profit before tax 79 25 104 150 23 173
Income tax expense (11) (12) (23) (20) (12) (32)
Non-controlling interests - - - - - -
Profit attributable to the Owners of the Company 68 13 81 130 11 141
Basic earnings per share (pence) 14.7 2.8 17.5 28.0 2.3 30.3
Diluted earnings per share (pence) 14.6 2.7 17.3 27.6 2.3 29.9
Tax rate 13.9% 22.0% 13.3% 18.7%
* Restated for the adoption of IFRS 11 `Joint Arrangements` (see note 1)
16. Post balance sheet events
The funding arrangements in connection with the 31 March 2013 actuarial
valuation for the Tate & Lyle Group Pension Scheme, the Group`s main defined
benefit plan, were agreed with the Scheme Trustee on 20 October 2014. In
addition to the annual funding payments into the scheme of £12 million a year
for 10 years, the Group will make supplementary contributions of £12 million
into a secured funding account and show the associated cash outflow in the
second half of the financial year. These contributions will be followed by
further supplementary contributions of £6 million per annum into the secured
funding account over the next four years.
ADDITIONAL INFORMATION
Ratio analysis (a)
As at As at Year to
30 September 30 September 31 March
2014 2013 2014
Net debt to EBITDA (b)
= Net debt 374 351 373
Pre-exceptional EBITDA 394 463 467
= 0.9 times = 0.8 times = 0.8 times
Interest cover (b)
= Operating profit before amortisation of acquired intangible assets and exceptional items
Net interest and finance expense
286 351 359
27 32 31
= 10.6 times = 10.9 times 11.6 times
Cash dividend cover (c)
= Adjusted free cash flow from continuing operations 81 239 227
Cash dividends 38 37 128
= 2.1 times = 6.5 times = 1.8 times
Cash conversion cycle (d)
Average quarterly cash conversion cycle 41 days 43 days 39 days
Gearing
= Net debt 383 336 353
Total equity 1 045 987 1 050
= 37% = 34% = 34%
Notes:
(a) All ratios are calculated based on unrounded figures.
(b) Net debt to EBITDA and interest cover are defined under the Group`s banking covenants. For the purpose of these ratios, the effect of new or revised accounting standards adopted by the Group subsequent to 31 March 2014 are ignored and net debt is calculated using average currency exchange rates.
(c) Adjusted free cash flow represents cash generated from continuing operations, less net interest paid, less income tax paid, less capital expenditure, all of which are calculated on a proportionately consolidated basis. Cash dividends represent dividends on ordinary shares paid or proposed in respect of the reporting period, excluding dividends that are reinvested in shares through the DRIP scheme.
(d) Average quarterly cash conversion represents controllable net working capital at the end of the quarter divided by adjusted sales in the quarter, multiplied by the number of days in the quarter and is calculated on a four-quarter rolling basis (a reduction in the number of days represents an improvement).
Tate & Lyle PLC
Copyright Business Wire 2014Recent news on Tate & Lyle
See all newsREG - Tate & Lyle PLC - Trading Statement
AnnouncementREG - Tate & Lyle PLC - Holding(s) in Company
AnnouncementREG - Tate & Lyle PLC Aviva PLC - Holding(s) in Company
AnnouncementREG - Tate & Lyle PLC - Directorate change
AnnouncementREG - Tate & Lyle PLC - Holding(s) in Company
Announcement