TIDMTATE
2 November 2017
TATE & LYLE PLC STATEMENT OF HALF YEAR RESULTS For the six
months to 30 September 2017
Statutory results Adjusted results1
Six months to 2017 2016 2017 2016 Constant currency change
30 September Change
Continuing operations
GBPm unless stated
otherwise
Sales 1 398 1 321 6%
Profit before 161 128 26% 169 140 13%
tax (PBT)
Diluted earnings 26.5p 27.4p (3%) 27.6p 24.3p 6%
per share
Net debt (comparative 371 452
31 March 2017)
Dividend per share 8.4p 8.2p
Strong First Half Performance
Key Headlines
-- 13%2 increase in Group adjusted PBT with volume growth in
both business divisions
-- GBP10m increase in Speciality Food Ingredients adjusted operating profit
to GBP104m:- 3% volume growth, return to growth in North
America
(+1%), good growth in other regions- 4%2 profit
growth after investments to grow business over longer term
-- GBP29m increase in Bulk Ingredients adjusted operating profit to GBP93m:-
16%2 profit growth in core, driven by strong execution,
good demand and firm margins- GBP10m profit from Commodities
(2016: loss of GBP3m)
-- 14% increase in sales from New Products3 to US$58m
-- GBP33m higher Group reported PBT with improved trading and currency
benefit
-- Adjusted effective tax rate 23.5% (2016: 18.3%); rate for fiscal 2018
expected in upper end of 21-24% guided range
-- 6%2 increase in adjusted diluted earnings per share from
continuing operations to 27.6p
-- Net debt at GBP371m, GBP81m lower than 31 March 2017 with stronger
adjusted free cash flow
-- Interim dividend increased by 0.2p to 8.4p
Javed Ahmed, Chief Executive, said:
"We have made a strong start to the year, with good performance
across the Group and higher adjusted diluted earnings per
share.
Speciality Food Ingredients delivered broad-based volume growth
in the core business, including North America despite market
conditions in that region remaining challenging. New Products once
again delivered double digit sales growth as customers continue to
seek innovative solutions to reduce sugar, calories and fat in food
and drink.
Bulk Ingredients had another period of excellent performance,
well ahead of a strong comparative period, with improved overall
earnings resulting from disciplined commercial execution and margin
expansion.
Turning to the outlook, we expect underlying adjusted profit
before tax in constant currency for the full year to be modestly
higher than we anticipated coming into the year driven by the
strong first half performance."
1 The results for the six months to 30 September 2017 have been
adjusted to exclude exceptional items, net retirement benefit
interest, amortisation of acquired intangible assets, the tax on
those adjustments and tax items that themselves meet these
definitions. A reconciliation of statutory and adjusted information
is included in Note 2 to the Financial Information
2 Percentage changes in constant currency
3 New Products represent products in the first seven years after
launch
FINANCIAL HIGHLIGHTS
Six months to 30 September 2017 2016 Constant currency
Continuing operations GBPm GBPm Change change
Sales: 509 487 5% (2%)
- Speciality Food Ingredients
- Bulk Ingredients 889 834 6% 0%
Sales 1 398 1 321 6% 0%
Adjusted operating profit 104 94 10% 4%
- Speciality Food Ingredients
- Bulk Ingredients 93 64 45% 36%
- Central (27) (25)
Adjusted operating profit 170 133 28% 20%
Adjusted net finance expense (14) (12)
Share of profit after 13 19 (32%) (37%)
tax of joint
ventures and associates
Adjusted profit before tax 169 140 21% 13%
Adjusted effective tax rate 23.5% 18.3%
Adjusted diluted earnings 27.6p 24.3p 14% 6%
per share
Adjusted free cash flow 151 138
Net debt at 30 September 371 452
(comparative
31 March 2017)
The results for the six months to 30 September 2017 have been
adjusted to exclude exceptional items, net retirement benefit
interest, amortisation of acquired intangible assets, the tax on
those adjustments and tax items that themselves meet these
definitions. A reconciliation of statutory and adjusted information
is included in Note 2 to the Financial Information.
The following commentary is principally focused on the adjusted
performance measures because they provide insight into the key
elements of the Group's statutory results:
-- Group adjusted operating profit increased by 20% in constant currency
to GBP170m.
-- Share of profit after tax of joint ventures and associates of GBP13m was
in line with share of profit in the second half of the 2017
financial
year, but GBP6m lower than the stronger first half comparative
period.
-- The adjusted effective tax rate for continuing operations in the
period was 23.5% (2016 - 18.3%). As previously communicated,
the
impact of changes in legislation and to our internal
financing
structure drove an increase in the adjusted effective tax rate,
with
the increasing mix of US profits further increasing the rate to
the
upper end of the 21% to 24% guided range. The adjusted effective
tax
rate for the full 2018 financial year is also expected to be in
the
upper end of this guided range. The statutory effective tax rate
was a
charge of 22.8% (2016 - credit of 0.9%).
-- Adjusted diluted earnings per share from continuing operations were
27.6p, up by 3.3p or 14% (6% in constant currency).
-- Statutory diluted earnings per share from continuing operations
decreased by 3% to 26.5p reflecting exceptional deferred tax
credits
of GBP26m in the comparative period partially offset by strong
operating
performance and favourable impact of currency translation.
-- Adjusted free cash flow increased to GBP151m benefiting from higher
earnings, lower capital expenditure at GBP61m (2016 - GBP77m)
and currency
translation. We continue to expect capital expenditure for the
full
financial year to be around GBP150m.
-- Net debt at GBP371m was GBP81m lower than at 31 March 2017, with strong
cash flow generation and the beneficial impact of foreign
exchange
translation of US dollar debt, partially offset by the final
2017
dividend payment of GBP92m. Net debt/EBITDA (on a financial
covenant
basis) reduced to 0.8x (31 March 2017 - 0.9x).
-- Interim dividend increased by 0.2p to 8.4p per share.
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 2017 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, 1
Kingsway, London WC2B 6AT.
SPLA® is a trademark of Heartland Consumer Products LLC.
Webcast and Conference Call Details
A presentation of the results by Chief Executive, Javed Ahmed
and Chief Financial Officer, Nick Hampton will be audio webcast
live at 10.00 (GMT) on Thursday 2 November 2017. To view and/or
listen to a live audio-cast of the presentation, visit
http://view-w.tv/p/797-1031-18784/en. Please note that remote
listeners will not be able to ask questions during the Q&A
session.
A webcast replay of the presentation will be available within
two hours of the end of the live broadcast on the link above.
For those unable to view the webcast, there will also be a
teleconference facility for the presentation. Details are given
below:
Dial in details:
UK dial in number: +44 (0) 20 3003 2666US dial in number: +1 212
999 6659Password: Tate & Lyle
14 day conference call replay:UK replay number: +44 (0) 20 8196
1998US replay number: +1 866 583 1035Access pin: 1475377#
For more information contact Tate & Lyle PLC:
Christopher Marsh, Group VP, Investor and Media RelationsTel:
+44 (0) 20 7257 2110 or Mobile: +44 (0) 7796 192 688
Andrew Lorenz, FTI Consulting (Media)Tel: +44 (0) 20 3727 1323
or Mobile: +44 (0) 7775 641 807
LEI: 2138008K14474WPKZ244DTR 6 Annex IR Classification: 1.2.
Half yearly financial reports and audit reports/limited reviews
DIVISIONAL OPERATING PERFORMANCE
Speciality Food Ingredients
Six months
to
30 September
Continuing
operations
Volume Sales Adjusted
Change operating profit
Constant Constant
2017 2016 Change Currency 2017 2016 Change Currency
GBPm GBPm % change GBPm GBPm % change
% %
North 1% 180 175 4% (1%)
America
Asia Pacific 6% 79 68 15% 8%
and
Latin
America
Europe, 8% 80 68 17% 9%
Middle
East
and Africa
Total: 3% 339 311 9% 3% 66 62 7% 3%
excluding
SPLA®Sucralose
and Food
Systems
Food Systems (5%) 94 92 2% (5%) 9 7 22% 13%
SPLA®Sucralose (17%) 76 84 (9%) (15%) 29 25 14% 5%
Total 3% 509 487 5% (2%) 104 94 10% 4%
Speciality
Food
Ingredients
Encouraging performance with broad-based volume growth in core
business, including modest growth in North America
Overall, volume increased by 3%. We saw broad-based volume
growth in the core business, including North America returning to
modest growth. This region benefited from our approach of focusing
on higher growth sub-categories and customer channels, while
continuing to provide high-quality service to our larger customers.
Adjusted operating profit grew 4% in constant currency with solid
performance in the core business as we focused on top-line growth
and continued to invest in the longer-term development of the
business.
The effect of currency translation was to increase sales by
GBP30 million and adjusted operating profit by GBP6 million.
Speciality Food Ingredients excluding SPLA® Sucralose and Food
Systems
Volume increased 3%, with sales also 3% higher in constant
currency.
Adjusted operating profit of GBP66 million increased by 3% in
constant currency, with adjusted operating margins flat in constant
currency reflecting both a focus on top-line growth and continued
investment in customer-facing capabilities, in areas such as sales
and applications, to deliver an increasingly solution-based
approach for customers.
In North America, volume grew by 1%, an improved performance in
the face of continued challenging market conditions. The overall US
food and beverage market remains sluggish, with consumers
increasingly seeking alternatives to traditional brands. As a
result, our largest customers in this region, where our top ten
customers represent around 40% of sales, continue to see
consumption softness. Modest volume growth was driven by progress
on three fronts: (1) share gains in our larger food and beverage
customers; (2) developing our business over time in customer
channels growing above market, such as food service and own label;
and (3) continuing to win new business in targeted higher-growth
sub-categories in areas such as health and nutrition, where our
technical depth and expertise and solutions are providing
increasing value to our customers. Sales for the region decreased
by 1% in constant currency to GBP180 million, driven by product mix
while gross margin was maintained.
In Asia Pacific and Latin America, volume was 6% higher, with
especially strong growth in Mexico and China. Sales for the overall
region increased by 8% in constant currency to GBP79 million. Latin
America delivered double-digit volume growth. In Mexico, we saw
broad-based growth, with particularly strong demand for our
sweeteners helped by favourable market dynamics. Our business in
Brazil grew modestly and we saw continued good growth in other
Southern and Central American operations. In Asia Pacific, we saw
good volume growth in the first quarter, with the second quarter
lower due to the phasing of sweetener shipments in the comparative
period. Our business in China continues to perform well,
particularly our fibres. During the period, we added both sales and
applications development resources in support of expansions to our
applications facilities in Singapore, Shanghai and Mexico City.
In Europe, Middle East and Africa, volume increased by 8%
benefiting from good growth in all platforms. We saw double digit
growth in fibres and sweeteners, strong growth in Southern Europe
including Turkey, and double digit growth in Central Europe. With
volume of maltodextrin sweeteners in line in the period due to
capacity constraints, we have recently committed to an extension of
capacity at our Slovakian facility. Sales increased by 9% in
constant currency to GBP80 million.
Food Systems
In our global blending business adjusted operating profit was
13% higher in constant currency at GBP9 million reflecting the
benefits of our restructured cost base following the consolidation
of our European blending sites. Volume was 5% lower and sales
decreased by 5% in constant currency. This principally reflected
two issues: firstly, lower shipments into the Russian market
following the termination of a distribution agreement in the second
half of the previous financial year due to a credit issue; and
secondly, the rebuilding of our wider European business following
supply constraints resulting from the consolidation of blending
facilities in this region. Our products are now available again in
Russia, and with the gradual realisation of benefits from our
manufacturing consolidation, we expect earnings in Europe to
improve over time.
SPLA® Sucralose
As expected, volume reduced by 17% reflecting the sale of excess
inventory in the comparative period following the successful
transition to our single facility at McIntosh, Alabama which was
completed in March 2016. This facility continues to operate well
and at capacity, with our business fully contracted with pricing
similar to the previous year. Sales decreased 15% in constant
currency to GBP76 million.
Adjusted operating profit increased to GBP29 million, an
increase of 5% in constant currency, supported by firm pricing and
lower manufacturing costs driven by fully sourcing product from our
McIntosh facility.
The overall market demand for sucralose continues to grow. While
the majority of our business is contracted to at least the end of
the current financial year, over the longer term, we continue to
expect that market prices are likely to be affected by changes in
industry supply in China.
New Products
Volume of New Products grew by 23%, and sales increased by 14%
to US$58 million or GBP45 million (2016 - US$51 million or GBP37
million) driven by growth across sweeteners and texturants.
Our partnership with Sweet Green Fields (SGF) shows good
potential, with high levels of customer interest in our expanded
stevia-based product line. We continued to develop the pipeline of
new sweetener products by introducing Star-Dri® NG, a non-GMO1
soluble maltodextrin product.
Our Claria® line of functional clean label starches is
performing well with a newly released line of Instant starches and
a robust customer project pipeline. Non-GMO remains an important
consumer trend, and we continue to broaden our offering in this
area. Our PromOat® Beta Glucan and PrOatein® products, as well as
several starches, recently received Non-GMO Project Verified
certification and will help food and beverage manufacturers benefit
from this growth.
1 Non-GMO means from a non-genetically modified source
Bulk Ingredients
Six months to
30 September Volume Change
Continuing operations
Volume
North American 2%
Sweeteners
North American 0%
Industrial
Starches
Total 2%
Bulk Ingredients
Change% Constant currency
2017 2016 change
GBPm GBPm %
Sales 889 834 6% 0%
Total
Bulk Ingredients
Adjusted operating
profit
Core Bulk Ingredients 83 67 24% 16%
Commodities 10 (3) n/a n/a
Total 93 64 45% 36%
Bulk Ingredients
Consistent execution and firm margins deliver strong profit
performance
Volume increased by 2% driven by North American sweetener growth
and reflecting good contract compliance.
Adjusted operating profit of GBP93 million increased by GBP29
million. Adjusted operating profit in core Bulk Ingredients
increased by 16% in constant currency benefiting from strong
commercial and supply chain execution. In addition, solid demand
and moderate margin gains secured in the 2017 calendar year
contracting round further benefited performance. Commodities
contributed profits of GBP10 million, an increase of GBP13
million.
The effect of currency translation was to increase sales by
GBP52 million and adjusted operating profit by GBP6 million.
Overall, the US corn wet milling industry remains relatively
well balanced, reflecting firm overall demand and stable industry
exports to Mexico, where demand for regular carbonated soft drinks
(CSDs) remained firm.
Corn prices
For the fourth consecutive year, the US corn crop is expected to
be good with strong yields resulting in high closing inventories.
Corn prices varied through the first half peaking in early July at
around $4.20 per bushel, ahead of full visibility of the strength
of the 2017 crop. Corn prices subsequently fell gradually, and
traded in the $3.40 to $3.60 per bushel range during September.
Relatively stable and low corn prices in the last few years have
benefited the competitive position of corn-derived products.
North American Sweeteners
Overall, volume increased 2%, led by growth in export volume to
Mexico. Shipments to US bulk sweetener customers saw modest growth
reflecting good contract compliance and supply chain execution.
Margin gains secured during the 2017 bulk sweetener pricing round,
active product mix management, and efficiency initiatives drove
improved profitability.
North American Industrial Starches
North American Industrial Starches volume was flat compared to
the prior period. Overall demand for paper remains steady with
growing demand for packaging and tissue, fueled by increasing
online shopping, offsetting declines in printing and writing paper.
Demand for starches in construction materials also remained steady
in a relatively stable US housing market.
Commodities
Commodities delivered a profit of GBP10 million mainly
reflecting market opportunities in Co-products and gains from the
sourcing of corn.
US ethanol cash margins have remained relatively steady and
towards the low-end of the historical range with industry
inventories high.
OTHER MATTERS
North American Free Trade Agreement (NAFTA)
The United States, Canada, and Mexico commenced discussions in
August 2017 to modernise NAFTA. NAFTA is very important to the US
food and agriculture sector, and Mexico in particular is a key
export market for the corn wet milling industry, particularly for
high fructose corn syrup. Talks between the three parties are
ongoing, and are expected to last at least into the first quarter
of the 2018 calendar year.
Prior to the commencement of the talks on NAFTA, in June 2017
the US Department of Commerce and the Mexican Secretariat of
Economy agreed revised Sugar Suspension Agreements. These
Agreements, originally put in place in 2014, suspend the
anti-dumping and countervailing duty investigations on imports of
Mexican sugar into the US. They also limit the amount of sugar that
Mexican companies can export to the US, and set price floors for
that sugar. The revised Agreements maintain a productive US trading
relationship with Mexico, and preserve cross-border trade of
sweeteners between the two countries.
Board Changes
Liz Airey, a Non-Executive Director, retired from the Board
after 10 years of service at the AGM on 27 July 2017.
Jeanne Johns, a Non-Executive Director, ceased to be a director
with effect from 31 October 2017. Jeanne has been appointed chief
executive officer of a company listed on the Australian Securities
Exchange and, as a result, is no longer able to commit the required
time to travel to the UK on a regular basis to attend Tate &
Lyle Board meetings.
Executive Team Appointments
During the period, the Group Executive Committee was further
strengthened with the following appointments:
i) Andrew Taylor was appointed President, Innovation and
Commercial Development from 5 September 2017. Andrew previously
worked at The Boston Consulting Group, where he was a Senior
Partner and Managing Director, and also led the global Innovation
Practice.
ii) Melissa Law was appointed President, Global Operations from
18 September 2017. Melissa previously worked at Baker Hughes, where
she led the Global Specialties Chemicals Division, a major part of
its Oilfield Service portfolio.
Summary of financial results for the period ended 30 September
2017 (unaudited)
Six months to 30 2017 2016 Change Constantcurrencychange%
September1 GBPm GBPm %
Continuing operations
Sales 1 398 1 321 6% 0%
Adjusted operating
profit
- Speciality Food 104 94 10% 4%
Ingredients
- Bulk Ingredients 93 64 45% 36%
- Central (27) (25)
Adjusted operating 170 133 28% 20%
profit
Adjusted net finance (14) (12)
expense
Share of profit after 13 19
tax of joint
ventures and associates
Adjusted profit 169 140 21% 13%
before tax
Exceptional items - (3)
Amortisation of acquired (5) (6)
intangible assets
Net retirement benefit (3) (3)
interest
Profit before tax 161 128
Income (37) 1
tax (expense)/credit
Profit for the period - 124 129
continuing operations
Profit for the period - 1
- discontinued
operations
Profit for the period 124 130
- total operations
Earnings per share
- continuing
operations (pence)
Basic 26.8p 27.7p (3%)
Diluted 26.5p 27.4p (3%)
Adjusted earnings per
share - continuing
operations (pence)
Basic 28.0p 24.6p 14% 7%
Diluted 27.6p 24.3p 14% 6%
Cash flow and net debt
Adjusted free cash flow 151 138
Net debt - At 371 452
30 September
(comparative
at 31 March 2017)
1 Adjusted results and a number of other terms and performance
measures used in this document are not directly defined within
accounting standards. 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
Sales from continuing operations of GBP1,398 million were 6%
higher than the prior year (flat at constant currency).
On a statutory basis, profit before tax from continuing
operations increased by GBP33 million to GBP161 million. Statutory
diluted earnings per share from continuing operations decreased by
0.9p to 26.5p as improved operating performance was more than
offset by the effect of an increased statutory tax charge of 22.8%.
In the comparative period, an effective tax rate of minus 0.9%,
reflected an exceptional tax credit driven by the recognition of a
deferred tax asset. As a result of the increased current period tax
charge, profit for the period from total operations decreased to
GBP124 million (2016 - GBP130 million).
Adjusted profit before tax from continuing operations was 21%
higher than last year (13% at constant currency), increasing to
GBP169 million, reflecting increased operating earnings. Adjusted
diluted earnings per share from continuing operations increased by
3.3p to 27.6p reflecting increased earnings partially offset by a
higher adjusted effective tax rate of 23.5% (2016 - 18.3%).
Central costs
Central costs, which include head office costs, treasury and
reinsurance activities, were GBP2 million higher at GBP27
million.
Net finance expense
Adjusted net finance expense from continuing operations, which
excludes net retirement benefit interest, was GBP2 million higher
at GBP14 million, mainly driven by lower capitalised interest
(principally related to the construction of the Loudon
co-generation facility, subsequently commissioned in the third
quarter of the 2017 financial year) and the impact of increased US
interest rates on floating rate debt.
Share of profit after tax of joint ventures and associates
The Group's share of profit after tax of joint ventures and
associates of GBP13 million was in line with share of profit in
second half of the 2017 financial year, but GBP6 million lower than
the stronger first half comparative period.
Exceptional items from continuing operations
During the six months to 30 September 2017, there were no
operating exceptional items from continuing operations (six months
to 30 September 2016 - net costs of GBP3 million).
There were no tax exceptional items in the period. In the six
months to 30 September 2016 an exceptional tax credit of GBP26
million was recorded reflecting the recognition of a deferred tax
asset arising from previously unrecognised tax losses in the UK
which are now expected to be utilised against future UK taxable
profits.
Taxation
The adjusted effective tax rate on earnings for continuing
operations for the six months to 30 September 2017 increased to
23.5% (2016 - 18.3%).
Two factors drove the increase in the adjusted effective tax
rate in the period to the upper end of the guided range of between
21% and 24%. Firstly, as a result of changes to UK legislation
arising from the OECD's Base Erosion and Profit Shifting (BEPS)
project and consequent changes to the internal financing structure
we use to fund our international businesses. Secondly, the results
of the Group in the period reflect an increase in profits from the
US, a jurisdiction with higher rates of corporation tax.
The reported effective tax rate (on statutory earnings) for the
period was a charge of 22.8% (2016 - credit of 0.9%). In the
comparative period, the Group recognised a deferred tax asset of
GBP26 million as explained in "Exceptional items from continuing
operations" above.
The recognition and measurement of deferred tax assets and
liabilities is dependent on a number of key judgements, estimates
and assumptions. Judgements in respect of this asset relate
principally to: the size and duration of future internal financing
arrangements; the interest coupon payable on these arrangements;
the future level of deductible expenses incurred in the UK; and
foreign currency exchange rates. Changes in assumptions, along with
future changes in legislation, for example, impacting the
utilisation of UK tax losses, could have a material impact on the
amount of deferred tax recognised in future accounting periods.
Legislation to limit the utilisation of carry forward losses in the
UK is expected to be enacted in the second half of the year. If
enacted, this may result in a write off of part of the deferred tax
asset booked in the 2017 financial year, with a consequent charge
to the statutory tax rate.
We estimate that the adjusted effective tax rate for the full
2018 financial year will be in the upper end of the previously
guided range of between 21% and 24%. Over time and across
accounting periods, we expect the rate of cash tax, being the
amount of tax paid as a percentage of adjusted profit before tax,
to align to the adjusted effective tax rate.
The list of key uncertainties affecting the Group's adjusted and
reported effective tax rates, as well as the factors that are
expected to influence the sustainability of the Group's effective
tax rates in the future, are set out on page 34 and 35 of the
Group's 2017 Annual Report, and remain unchanged.
Discontinued operations
There was no profit or loss or cash flows from discontinued
operations in the six months to 30 September 2017 (2016 - profit of
GBP1 million, cash used in discontinued operations GBP2 million
outflow).
Earnings per share
Adjusted basic earnings per share from continuing operations
increased by 14% (7% in constant currency) to 28.0p and adjusted
diluted earnings per share from continuing operations at 27.6p were
14% higher (6% in constant currency).
Dividend
An increase in the interim dividend for the six months to 30
September 2017 of 0.2p to 8.4p has been approved by the Board,
reflecting the Board's confidence in the business while at the same
time continuing to rebuild cash cover. This will be paid on 5
January 2018 to all shareholders on the Register of Members on 1
December 2017. In addition to the cash dividend option,
shareholders will continue to be offered a Dividend Reinvestment
Plan (DRIP) alternative.
Assets
Gross assets on a statutory basis of GBP2,617 million at 30
September 2017 were GBP154 million lower than at 31 March 2017,
mainly reflecting the negative impact of the weakening US
dollar.
Net assets decreased by GBP38 million to GBP1,294 million
primarily reflecting the payment for the final year dividend of
GBP92 million together with the negative impact of the weakening of
the US dollar, with significant net exchange losses recognised in
other comprehensive income of GBP43 million (six months to 30
September 2016 - gain of GBP93 million), partially offset by the
profit for the period.
Retirement benefits
The Group maintains pension plans for our employees in a number
of countries. Some of these arrangements are defined benefit
pension schemes and, although we have closed the main UK scheme and
the US salaried and hourly paid schemes to future accrual, certain
obligations remain. In the US, we also provide medical benefits as
part of retirement packages.
The net deficit on the Group's retirement benefits plans
decreased by GBP20 million to GBP119 million compared to 31 March
2017. The deficit improvement was driven primarily by a decrease in
the deficit of the US scheme largely as a result of foreign
exchange movements from the weakening of the US dollar against
sterling.
Under funding arrangements in connection with the 2016 actuarial
valuation, the Group committed to make core funding contributions
for the main UK scheme of GBP12 million per year and supplementary
contributions of GBP6 million per year until 31 March 2023 into a
secured funding account, payable to the Trustee on certain
triggering events.
Cash flow and net debt
Six months to 30 September1
2017 2016
GBPm GBPm
Adjusted operating profit from 170 133
continuing operations
Adjusted for:
Non-cash items in adjusted operating 95 133
profit and working capital
Net interest and tax paid (33) (31)
Net retirement benefit obligations (20) (20)
Capital expenditure (61) (77)
Adjusted free cash flow 151 138
At 30 September At 31 March
2017 2017
GBPm GBPm
Net debt 371 452
1 Adjusted results and a number of other terms and performance
measures used in this document are not directly defined within
accounting standards. 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
Adjusted free cash flow (representing cash generated from
continuing operations after net interest paid, income tax paid, and
capital expenditure, and excluding the impact of exceptional items)
was GBP151 million, GBP13 million higher than the prior period
principally reflecting higher earnings and lower capital
expenditure, partially offset by weaker inflows from the reduction
of working capital, following significant improvements delivered in
the comparative period.
Capital expenditure of GBP61 million, which included a GBP10
million investment in intangible assets, was 0.9 times the
depreciation and adjusted amortisation charge of GBP71 million and
reflects continued investment in capacity as well as efficiency and
sustaining investments. We expect capital expenditure for the full
2018 financial year to be around GBP150 million.
Other significant cash flows in arriving at net debt included:
GBP25 million of dividends received from joint ventures; external
dividend payments of GBP92 million; and the GBP14 million payment
for the purchase of shares to satisfy share option commitments.
Overall net debt at 30 September 2017 of GBP371 million was
GBP81 million lower than at 31 March 2017. Net debt decreased by
GBP60 million in the period (2016 - decrease of GBP60 million)
before the favourable impact of exchange rates. Foreign currency
translation, mainly from the impact of the weakening of the US
dollar, reduced net debt by GBP21 million.
Basis of preparation
The Group's principal accounting policies are unchanged compared
with the year ended 31 March 2017. A number of minor changes to
accounting policies have been adopted during the year, although
they have had no material effect on the Group's financial
statements.
Details of the basis of preparation, including information in
respect of the methodology used to calculate the Group's adjusted
performance metrics, can be found in Note 1 to the attached
financial information.
Going Concern
After making enquiries, the Directors are satisfied that the
Group has adequate resources to continue to operate for a period of
not less than 12 months from the date of approval of the financial
information and that there are no material uncertainties around
their assessment. For these reasons, the Directors continue to
adopt the going concern basis in preparing the consolidated
financial information of the Group.
Risks and uncertainties
The principal risks and uncertainties affecting the business
activities of the Group for the remaining six months of the
financial year remain those detailed on pages 38 to 41 of the Tate
& Lyle Annual Report 2017, a copy of which is available on the
Company's website at www.tateandlyle.com.
The principal risks set out in the 2017 Annual Report relate to:
acting safely and maintaining the safe operation of our facilities;
growing in speciality food ingredients; innovating and
commercialising new products; inability to attract, develop, engage
and retain key personnel; failure to comply with legal or
regulatory requirements and our Code of Ethics; maintaining the
security of our information systems and data; maintaining the
continuous operation of our plant network and supply chain,
including high standards of customer service; managing fluctuations
in prices and availability of raw materials, energy, freight and
other operating inputs; maintaining the quality and safety of our
products; changes in consumer, customer or government attitudes to
our products; maintaining an effective system of internal financial
controls; and changes in government regulations and/or trade
policies.
Impact of changes in exchange rates
The Group's reported financial performance at average rates of
exchange for the six months to 30 September 2017 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 2017 2016 2017 2016
US dollar : sterling 1.29 1.37 1.34 1.30
Euro : sterling 1.14 1.22 1.13 1.16
For the period ended 30 September 2017, foreign exchange
translation increased Speciality Food Ingredients adjusted
operating profit by GBP6 million, and increased Bulk Ingredients
adjusted operating profit by GBP6 million, with adjusted profit
before tax for the Group increasing by GBP11 million.
Statement of Directors' responsibilities
The Directors confirm: that this condensed set of consolidated
financial information has been prepared in accordance with
International Accounting Standard 34 Interim Financial Reporting as
adopted by the European Union; that the condensed 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 2017. The only
changes to the Board since 31 March 2017 being the retirement of
Liz Airey on 27 July 2017, and the resignation of Jeanne Johns with
effect from 31 October 2017.
For and on behalf of the Board of Directors:
Javed Ahmed Nick Hampton
Chief Executive Chief Financial Officer
1 November 2017
Independent review report to Tate & Lyle PLC
Report on the condensed consolidated financial statements
Our conclusion
We have reviewed Tate & Lyle PLC's condensed consolidated
financial statements (the "interim financial statements") in the
Statement of Half Year Results of Tate & Lyle PLC for the six
month period ended 30 September 2017. Based on our review, nothing
has come to our attention that causes us to believe that the
interim financial statements are not prepared, in all material
respects, in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European Union and
the Disclosure Guidance and Transparency Rules sourcebook of the
United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the consolidated statement of financial position as at 30 September
2017;
-- the consolidated income statement and consolidated statement of
comprehensive income for the period then ended;
-- the consolidated statement of cash flows for the period then ended;
-- the consolidated statement of changes in equity for the period then
ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Statement of
Half Year Results of Tate & Lyle PLC have been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 1 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors The Statement of
Half Year Results, including the interim financial statements, is
the responsibility of, and has been approved by, the Directors. The
Directors are responsible for preparing the Statement of Half Year
Results in accordance with the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the Statement of Half Year Results based on
our review. This report, including the conclusion, has been
prepared for and only for Tate & Lyle PLC for the purpose of
complying with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority and
for no other purpose. We do not, in giving this conclusion, accept
or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
What a review of interim financial statements involves We
conducted our review in accordance with International Standard on
Review Engagements (UK and Ireland) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Auditing Practices Board for use in the
United Kingdom. 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.
We have read the other information contained in the Statement of
Half Year Results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLPChartered Accountants1 November
2017London
Notes:
(a) The maintenance and integrity of the Tate & Lyle PLC
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the interim financial statements
since it was initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation
and dissemination of interim financial statements may differ from
legislation in other jurisdictions.
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
Six months to Six months to Year to
30 September 30 September 31 March
Notes 2017 2016 2017
GBPm GBPm GBPm
Continuing operations 3 1 398 1 321 2 753
Sales
Operating profit 3 165 124 233
Finance income 1 1 2
Finance expense (18) (16) (34)
Share of profit after 13 19 32
tax of joint
ventures and associates
Profit before tax 161 128 233
Income 5 (37) 1 22
tax (expense)/credit
Profit for the period - 124 129 255
continuing operations
Profit for the period 6 - 1 1
- discontinued
operations
Profit for the period 124 130 256
- total operations
Profit for the period
from total
operations is entirely
attributable to owners
of the Company.
Earnings per share Pence Pence Pence
Continuing operations 7
- basic 26.8p 27.7p 55.0p
- diluted 26.5p 27.4p 54.2p
Total operations: 7
- basic 26.8p 28.0p 55.2p
- diluted 26.5p 27.7p 54.4p
Analysis of adjusted GBPm GBPm GBPm
profit for the
period - continuing
operations
Profit before tax 161 128 233
- continuing
operations
Adjusted for:
Net charge for 4 - 3 19
exceptional
items
Amortisation of acquired 5 6 12
intangible assets
Net retirement benefit 13 3 3 7
interest
Adjusted profit 2 169 140 271
before tax
- continuing operations
Adjusted income 2, 5 (40) (26) (49)
tax expense
- continuing operations
Adjusted profit 2 129 114 222
for the period
- continuing operations
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Six months to Six months to Year to
30 September 30 September 31 March
Notes 2017 2016 2017
GBPm GBPm GBPm
Profit for the period 124 130 256
Other comprehensive
income/(expense)
Items that have
been/may
be reclassified
to profit or loss:
Fair value gain on - 1 1
cash flow hedges
Fair (2) 4 4
value (gain)/loss
on cash flow hedges
transferred to the
income statement
Reclassified and - - (1)
reported in
the income statement
in
respect
of
available-for-sale
financial assets
Fair value gain on 1 - -
available-for-sale
financial assets
(Loss)/gain on (65) 147 185
currency
translation
of foreign operations
Fair value gain/(loss) 22 (54) (69)
on
net investment hedges
Share of other (7) 4 7
comprehensive
(expense)/income
of joint ventures
and associates
Amounts transferred - (1) (1)
to
the income statement
upon disposal of
subsidiary
Tax effect of the (1) (2) -
above items
(52) 99 126
Items that will not
be reclassified
to profit or loss:
Re-measurement
of retirement
benefit plans:
- actual return 13 (14) 219 179
(lower)/higher
than interest on
plan assets
- net actuarial 13 1 (279) (106)
gain/(loss)
on net
retirement benefit
obligations
Tax effect of the 1 3 (30)
above items
(12) (57) 43
Total (64) 42 169
other comprehensive
(expense)/income
Total comprehensive 60 172 425
income
Analysed by:
- continuing 60 172 425
operations
- discontinued - - -
operations
Total comprehensive 60 172 425
income
Total comprehensive income is entirely attributable to owners of
the Company.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
At At At
Notes 30 September 30 September 31 March
2017 2016 2017
GBPm GBPm GBPm
ASSETS
Non-current assets
Goodwill and other 381 415 401
intangible assets
Property, plant 1 001 1 033 1 061
and equipment
Investments in 73 83 92
joint ventures
Investments in associates - 4 4
Available-for-sale 35 24 30
financial assets
Derivative financial 10 18 15
instruments
Deferred tax assets 13 29 22
Trade and other 1 - 1
receivables
Retirement benefit 13 123 8 120
surpluses
1 637 1 614 1 746
Current assets
Inventories 380 365 441
Trade and other 317 302 291
receivables
Current tax assets 1 2 1
Available-for-sale 1 4 -
financial assets
Derivative financial 35 58 31
instruments
Cash and cash equivalents 9 242 289 261
Assets classified 15 4 - -
as held for sale
980 1 020 1 025
TOTAL ASSETS 2 617 2 634 2 771
EQUITY
Capital and reserves
Share capital 117 117 117
Share premium 406 406 406
Capital redemption 8 8 8
reserve
Other reserves 201 226 253
Retained earnings 562 362 548
EQUITY ATTRIBUTABLE 1 294 1 119 1 332
TO OWNERS
OF THE COMPANY-TOTAL
EQUITY
LIABILITIES
Non-current liabilities
Trade and other payables 10 11 10
Borrowings 9 574 594 604
Derivative financial 27 32 37
instruments
Deferred tax liabilities 30 33 25
Retirement benefit 13 242 280 259
deficits
Provisions for other 16 15 17
liabilities
and charges
899 965 952
Current liabilities
Trade and other payables 316 323 315
Current tax liabilities 55 66 57
Borrowings and bank 9 28 105 88
overdrafts
Derivative financial 17 30 17
instruments
Provisions for other 8 26 10
liabilities
and charges
424 550 487
TOTAL LIABILITIES 1 323 1 515 1 439
TOTAL EQUITY AND 2 617 2 634 2 771
LIABILITIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Six months to Six months to Year to
30 September 30 September 31 March
Notes 2017 2016 2017
GBPm GBPm GBPm
Cash flows from operating
activities
Profit before tax from 161 128 233
continuing operations
Adjustments for:
Depreciation of property, 56 50 109
plant and equipment
Amortisation of 20 19 40
intangible
assets
Share-based payments 8 8 21
Exceptional items 4 (2) (10) (5)
Finance income (1) (1) (2)
Finance expense 18 16 34
Share of profit after (13) (19) (32)
tax of joint
ventures and associates
Changes in working 16 62 4
capital and
other non-cash movements
Net retirement benefit (20) (20) (36)
obligations
Cash generated from 243 233 366
continuing
operations
Interest paid (12) (15) (30)
Net income tax paid (22) (17) (35)
Cash used in discontinued - (2) (3)
operations
Net cash generated from 209 199 298
operating activities
Cash flows from investing
activities
Purchase of property, (51) (69) (127)
plant and equipment
Purchase of intangible (10) (8) (26)
assets
Disposal of property, - 2 2
plant and equipment
Cash adjustment - 3 3
in respect
of previous acquisitions
Disposal of businesses, - 3 3
net of cash disposed
Purchase (7) (3) (4)
of available-for-sale
financial assets
Disposal 1 1 4
of available-for-sale
financial assets
Interest received 1 1 2
Dividends received 25 22 29
from joint
ventures and associates
Net cash used (41) (48) (114)
in investing
activities
Cash flows from financing
activities
Purchase of own shares (14) - (18)
to trust or treasury
Cash inflow from 2 73 66
additional
borrowings
Cash outflow from (69) (182) (189)
repayment
of borrowings
Repayment of capital - - (1)
element
of finance leases
Dividends paid 8 (92) (92) (130)
to the owners
of the Company
Net cash used (173) (201) (272)
in financing
activities
Net decrease in cash 9 (5) (50) (88)
and cash equivalents
Cash and cash equivalents
Balance at beginning 261 317 317
of period
Net decrease in cash (5) (50) (88)
and cash equivalents
Currency translation (14) 22 32
differences
Balance at end of period 9 242 289 261
A reconciliation of the movement in cash and cash equivalents to
the movement in net debt is presented in Note 9.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Attributable
Share Capital to the owners Non-controlling Totalequity
capital and redemptionreserve Other Retained of the Interests GBPm
share GBPm reserves earnings Company (NCI)
premium GBPm GBPm GBPm GBPm
GBPm
At 1 April 2017 523 8 253 548 1 332 - 1 332
Six months to 30
September 2017:
Profit for - - - 124 124 - 124
the period
-
total operations
Other - - (52) (12) (64) - (64)
comprehensive
expense
Total - - (52) 112 60 - 60
comprehensive
(expense)/income
Share-based - - - 8 8 - 8
payments,
net of tax
Purchase of - - - (14) (14) - (14)
own shares
to trust or
treasury
Dividends paid - - - (92) (92) - (92)
(Note 8)
At 30 September 523 8 201 562 1 294 - 1 294
2017
At 1 April 2016 523 8 127 370 1 028 1 1 029
Six months to 30
September 2016:
Profit for - - - 130 130 - 130
the period
-
total operations
Other - - 99 (57) 42 - 42
comprehensive
income/(expense)
Total - - 99 73 172 - 172
comprehensive
income
Share-based - - - 8 8 - 8
payments,
net of tax
Derecognition - - - 3 3 - 3
of put
option on NCI
Movement on NCI - - - - - (1) (1)
Dividends paid - - - (92) (92) - (92)
At 30 September 523 8 226 362 1 119 - 1 119
2016
At 1 April 2016 523 8 127 370 1 028 1 1 029
Year to 31 March
2017:
Profit for - - - 256 256 - 256
the year
-
total operations
Other - - 126 43 169 - 169
comprehensive
income
Total - - 126 299 425 - 425
comprehensive
income
Share-based - - - 24 24 - 24
payments,
net of tax
Purchase of - - - (18) (18) - (18)
own shares
to trust or
treasury
Derecognition - - - 3 3 - 3
of put
option on NCI
Movement on NCI - - - - - (1) (1)
Dividends paid - - - (130) (130) - (130)
At 31 March 2017 523 8 253 548 1 332 - 1 332
TATE & LYLE PLC
NOTES TO THE FINANCIAL INFORMATION For the six months to 30
September 2017
1. Presentation of half year financial information
The principal activity of Tate & Lyle PLC and its
subsidiaries, together with its joint ventures and associated
undertakings, is the global provision of ingredients and solutions
to the food, beverage and other industries.
The Company is a public limited company incorporated and
domiciled in the United Kingdom and registered in England. The
address of its registered office is 1 Kingsway, London WC2B 6AT.
The Company has its primary listing on the London Stock
Exchange.
Basis of preparation
This condensed set of consolidated financial information for the
six months to 30 September 2017 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 (EU). The
condensed set of consolidated financial information should be read
in conjunction with the annual financial statements for the year to
31 March 2017, which have been prepared in accordance with IFRSs as
adopted by the EU.
Having reviewed the Group's latest projected results, cash
flows, liquidity position and borrowing facilities, the Directors
are satisfied that the Group has adequate resources to continue to
operate for a period not less than 12 months from the date of
approval of the condensed set of financial information and that
there are no material uncertainties around their assessment.
Accordingly, the Directors continue to adopt the going concern
basis of accounting in preparing the condensed set of consolidated
financial information.
The condensed set of consolidated financial information is
unaudited, but has been reviewed by the external auditors. The
condensed set of consolidated financial information in the
Statement of Half Year Results does not constitute statutory
accounts within the meaning of Section 434 of the Companies Act
2006. The Group's published consolidated financial statements for
the year to 31 March 2017 were approved by the Board of Directors
on 24 May 2017 and filed with the Registrar of Companies. The
report of the auditors on those accounts was unqualified and did
not contain an emphasis of matter paragraph or a statement under
Section 498 (2) or (3) of the Companies Act 2006. The condensed set
of consolidated financial information for the six months to 30
September 2017 on pages 15 to 34 was approved by the Board of
Directors on 1 November 2017.
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 2017, but also reflect the adoption, with effect from 1
April 2017, of new or revised accounting standards, as set out
below:
- IAS 12 Income taxes (Amendments) (effective 1 January
2017)
- IAS 7 Statement of Cash Flows (Amendments) (effective 1
January 2017)
- Annual Improvements to IFRS - 2014-16 cycle
The adoption of these amendments from 1 April 2017 has had no
material effect on the Group's financial statements.
The following new standards have been issued and are relevant to
the Group, but were not effective for the financial year beginning
1 April 2017, and have not been adopted early:
- IFRS 15 - Revenue from Contracts with Customers (effective for
the year ending 31 March 2019)
As disclosed in May 2017, the Group has undertaken a review of
its commercial arrangements across all significant revenue streams
and geographies including assessing the timing of revenue
recognition as well as focusing on the accounting for principal and
agency relationships, consignment stocks and discounts provided. As
a result of the review, the Group has concluded that the adoption
of IFRS 15 is not expected to have a material impact on reported
revenue or revenue growth rates, and will continue to review its
contracts and transactions with customers to ensure compliance with
IFRS 15 on adoption.
- IFRS 9 - Financial Instruments (effective for the year ending
31 March 2019)
As also disclosed in May 2017, the Group has undertaken a review
of the key areas of IFRS 9 focused principally on classification
and measurement of financial assets and liabilities, impairment of
financial assets and hedge accounting. The Group has concluded that
the adoption of IFRS 9 will not have a material impact on its
consolidated results or financial position, and will continue to
review its activities in these areas to ensure compliance with IFRS
9 upon adoption.
- IFRS 16 - Leases (effective for the year ending 31 March 2020,
subject to endorsement by the EU)
The standard eliminates the classification of leases as either
operating or finance leases and introduces a single accounting
model, and will require the Group to recognise substantially all of
its current operating lease commitments on the statement of
financial position. The Group will undertake a review of its lease
arrangements and intends to provide an update of the impact in the
Group's 2018 Annual Report.
-IFRIC 23 - Uncertainty over Income Tax Treatments (effective
for the year ending 31 March 2020, subject to EU endorsement)
The interpretation is to be applied to the determination of
taxable profit (tax loss), tax bases, unused tax losses, unused tax
credits and tax rates, when there is uncertainty over income tax
treatments under IAS 12. The financial impact of this, together
with any other implications of this interpretation, will be
assessed during the 2019 financial year.
There are no other new standards, new interpretations or
amendments to standards or interpretations that have been published
that are expected to have a significant impact on the Group's
financial statements.
Seasonality
The Group's principal exposure to seasonality is in relation to
working capital. The Group's inventories are subject to seasonal
fluctuations reflecting crop harvesting and purchases. Inventory
levels typically increase progressively from September to November
and gradually reduce in the first six months of the calendar
year.
Changes in constant currency
Where changes in constant currency are presented in this
statement, they are calculated by retranslating current period
results at prior period exchange rates. Reconciliations of the
movement in constant currency have been included in the 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, adjusted operating cash flow and
adjusted free cash flow, which are used for internal performance
analysis and incentive compensation arrangements for employees.
These measures are presented because they provide investors with
valuable additional information about the performance of the
business. For the periods presented, alternative performance
measures exclude, where relevant:
- Exceptional items (excluded as they relate to events which are
unlikely to recur, are outside the normal course of business and
therefore merit separate disclosure in order to provide a better
understanding of the Group's underlying financial performance);
- Amortisation of acquired intangible assets (costs associated
with amounts recognised through acquisition accounting that impact
earnings compared to organic investments);
- Net retirement benefit interest (accounting charges or credits
which are not linked to the underlying performance of the business.
The amounts excluded reflect the net interest cost of
post-retirement benefit plans substantially closed to future
accrual); and
- Tax on the above items and tax items that themselves meet
these definitions.
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.
Exceptional items
Exceptional items comprise items of income and expense,
including tax items that are material in amount, relate to events
which are unlikely to recur, are outside the normal course of
business and therefore merit separate disclosure in order to
provide a better understanding of the Group's underlying financial
performance. Examples of events that give rise to the disclosure of
material items of income and expense as exceptional items include,
but are not limited to: impairment events; significant business
transformation activities; disposals of operations or significant
individual assets; litigation claims by or against the Group;
changes in tax legislation; and restructuring of components of the
Group's operations.
All material amounts relating to exceptional items in the
Group's financial statements are classified on a consistent basis
across accounting periods.
Discontinued operations
An operation is classified as discontinued if it is a component
of the Group that: (i) has been disposed of, or meets the criteria
to be classified as held for sale; and (ii) represents a separate
major line of business or geographic area of operations or will be
disposed of as part of a single co-ordinated plan to dispose of a
separate major line of business or geographic area of operations.
The results, assets and liabilities and cash flows of discontinued
operations are presented separately from those of continuing
operations.
There was no activity classified within discontinued operations
in the six months to 30 September 2017.
Discontinued operations in the comparative periods related to
the disposal of the Group's Moroccan subsidiary. As part of a
broader transaction with Archer Daniels Midland Inc. (ADM), the
Group sold its corn wet mill in Casablanca, Morocco to ADM on 1
June 2016.
2.Reconciliation of alternative performance 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.
For the periods presented, these alternative performance
measures exclude, where relevant:
- exceptional items;
- the amortisation of acquired intangible assets;
- net retirement benefit interest; and
- tax on the above items and tax items that themselves meet
these definitions.
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 2017 Six months to 30 September 2016
GBPm IFRS Adjustingitems Adjusted IFRS Adjusting Adjusted
unless reported reported reported items reported
otherwise
stated
Continuing
operations
Sales 1 398 - 1 398 1 321 - 1 321
Operating 165 5 170 124 9 133
profit
Net finance (17) 3 (14) (15) 3 (12)
expense
Share of 13 - 13 19 - 19
profit
after
tax of
joint
ventures
and
associates
Profit 161 8 169 128 12 140
before
tax
Income (37) (3) (40) 1 (27) (26)
tax
(expense)/credit
Profit for 124 5 129 129 (15) 114
the year
Basic 26.8p 1.2p 28.0p 27.7p (3.1p) 24.6p
earnings
per share
Diluted 26.5p 1.1p 27.6p 27.4p (3.1p) 24.3p
earnings
per share
Effective 22.8% 23.5% (0.9%) 18.3%
tax rate
expense/(credit)
Year to 31 March 2017
Continuing operations IFRS Adjusting Adjusted
reported items reported
Sales 2 753 - 2 753
Operating profit 233 31 264
Net finance expense (32) 7 (25)
Share of profit after tax of joint 32 - 32
ventures and associates
Profit before tax 233 38 271
Income tax credit/(expense) 22 (71) (49)
Profit for the year 255 (33) 222
Basic earnings per share 55.0p (7.2p) 47.8p
Diluted earnings per share 54.2p (7.1p) 47.1p
Effective tax rate (credit)/expense (9.6%) 18.2%
The following table shows the reconciliation of the adjusting
items in the current and comparative periods:
Continuing Six months to Six months to Year to
operations 30 September 30 September 31 March
Notes 2017 2016 2017
GBPm GBPm GBPm
Exceptional 4 - 3 19
items in
operating profit
Amortisation 5 6 12
of acquired
intangible assets
Total excluded 5 9 31
from adjusted
operating profit
Net retirement 13 3 3 7
benefit
interest
Total excluded 8 12 38
from adjusted
profit before tax
Tax on adjusting 5 (3) (1) (6)
items
Exceptional 4, 5 - (26) (65)
deferred
tax credits
Total excluded 5 (15) (33)
from adjusted
profit for
the period
The Group also presents two alternative cash flow measures which
are defined as follows:
(a) Adjusted free cash flow represents cash generated from
continuing operations after net interest paid, income tax paid, and
capital expenditure, and excluding the impact of exceptional
items.
(b) Adjusted operating cash flow is defined as adjusted free
cash flow from continuing operations, adding back net interest and
tax paid, retirement cash contributions, and excluding derivative
and margin call movements within working capital.
The following table shows the reconciliation of these
alternative cash flow performance measures:
Six months to Six months to Year to31
30 September 30 September March
2017 2016 2017
GBPm GBPm GBPm
Adjusted operating profit from 170 133 264
continuing operations
Adjusted for:
Depreciation and adjusted 71 63 137
amortisation
Share-based payments charge 8 8 21
Changes in working capital and 16 62 4
other non-cash movements
Net retirement benefit (20) (20) (36)
obligations
Capital expenditure (61) (77) (153)
Net interest and tax paid (33) (31) (63)
Adjusted free cash flow 151 138 174
Add back: net interest 33 31 63
and tax paid
Add back: net retirement 25 23 42
cash contributions
Less: derivatives and margin 4 (7) (6)
call movements
within changes in
working capital
Adjusted operating cash flow 213 185 273
The Group presents certain financial measures as defined in its
external financial covenants as Key Performance Indicators. Net
debt to EBITDA and interest cover are defined under the Group's
financial covenants and are required to be reported on a
proportionate consolidation basis. For financial covenant purposes
these ratios are calculated based on the accounting standards that
applied for the 2014 financial year, with new accounting standards
adopted by the Group subsequent to 1 April 2014 disregarded, with
performance based on the preceding 12 months' results. Net debt is
calculated using average currency exchange rates. All ratios are
calculated based on unrounded figures in GBP million. The following
table presents the calculation of these alternative measures:
30 September 30 September 31 March
2017 2016 2017
GBPm GBPm GBPm
Calculation of Net debt
to EBITDA ratio
- on a financial covenant basis
Net debt (see Note 9) 371 418 452
Further adjustments set out
in financial covenants:
to reflect use of 28 (33) (13)
average exchange
rates in translating
net debt and proportionate
consolidation
Net debt - on a financial 399 385 439
covenant basis
Adjusted operating profit 301 221 264
Further adjustments set out
in financial covenants:
to reflect proportionate 40 54 48
consolidation
to exclude charges for 21 13 21
share-based payments
to add back depreciation and 145 116 137
adjusted amortisation
Pre-exceptional EBITDA - on 507 404 470
a financial covenant basis
Net debt to EBITDA ratio (times) 0.8 1.0 0.9
Calculation of interest
cover ratio
- on a financial covenant basis
Adjusted operating profit 301 221 264
Further adjustments set out
in financial covenants:
to reflect proportionate 36 47 43
consolidation
to exclude charges for 21 13 21
share-based payments
Operating profit before 358 281 328
exceptional
items and amortisation
of intangible assets - on
a financial covenant basis
Adjusted net finance expense 27 25 25
Less: Other financing costs (1) - -
Further adjustments set out in (1) (2) (1)
financial covenants including
proportionate consolidation
and other adjustments
Net finance expense - on a 25 23 24
financial covenant basis
Interest cover ratio (times) 14.5 12.2 13.9
3. Segment information
Segment information is presented on a basis consistent with the
information presented to the Board (the designated Chief Operating
Decision Maker) and with that presented in the Group's 2017 Annual
Report. 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. 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. Segment results were as follows:
(a)Segment sales
and results
Sales Notes Six months to Six months to Year to
30 September 30 September 31 March
2017 2016 2017
GBPm GBPm GBPm
Speciality Food 509 487 996
Ingredients
Bulk Ingredients 889 834 1 757
Sales - continuing 1 398 1 321 2 753
operations
Sales - discontinued - 3 3
operations
Sales - total operations 1 398 1 324 2 756
Adjusted operating profit
- continuing operations
Speciality Food 104 94 181
Ingredients
Bulk Ingredients 93 64 129
Central (27) (25) (46)
Adjusted operating profit 170 133 264
- continuing operations
Adjusting items:
- exceptional items 4 - (3) (19)
- amortisation of acquired (5) (6) (12)
intangible assets
Operating profit 165 124 233
- continuing
operations
Finance income 1 1 2
Finance expense (18) (16) (34)
Share of profit after 13 19 32
tax of joint
ventures and associates
Profit before tax 161 128 233
- continuing
operations
Profit before tax - 1 1
- discontinued
operations
Profit before tax - 161 129 234
total operations
Six months to Six months to Year to
30 September 30 September 31 March
2017 2016 2017
% % %
Adjusted operating margin
- continuing operations
Speciality Food Ingredients 20.4% 19.3% 18.2%
Bulk Ingredients 10.5% 7.7% 7.3%
Central n/a n/a n/a
Total 12.2% 10.1% 9.6%
(b) Segment assets/(liabilities)
At 30 September 2017
Assets Liabilities Net
GBPm GBPm GBPm
Net working capital
Speciality Food Ingredients 364 (136) 228
Bulk Ingredients 318 (158) 160
Central 16 (32) (16)
Group working capital - continuing 698 (326) 372
and total operations
Other assets/(liabilities) 1 919 (997) 922
Group assets/(liabilities) 2 617 (1 323) 1 294
At 30 September 2016
Assets Liabilities Net
GBPm GBPm GBPm
Net working capital
Speciality Food Ingredients 347 (145) 202
Bulk Ingredients 309 (151) 158
Central 11 (38) (27)
Group working capital - continuing 667 (334) 333
and total operations
Other assets/(liabilities) 1 967 (1 181) 786
Group assets/(liabilities) 2 634 (1 515) 1 119
At 31 March 2017
Assets Liabilities Net
GBPm GBPm GBPm
Net working capital
Speciality Food Ingredients 371 (129) 242
Bulk Ingredients 349 (146) 203
Central 13 (50) (37)
Group working capital - continuing 733 (325) 408
and total operations
Other assets/(liabilities) 2 038 (1 114) 924
Group assets/(liabilities) 2 771 (1 439) 1 332
4. Exceptional items
There were no exceptional items impacting the income statement
in the six months to 30 September 2017.
During the six months to 30 September 2016, the Group recognised
net operating exceptional costs of GBP3 million within continuing
operations and an exceptional tax credit of GBP26 million. The
exceptional tax credit related to the recognition of a deferred tax
asset following changes to UK tax legislation.
In the year to 31 March 2017, the Group recognised net operating
exceptional costs of GBP19 million within continuing operations.
The Group also recognised an exceptional tax credit of GBP65
million related to the recognition of deferred tax assets.
Further details of amounts previously recognised in the 2017
financial year can be found in the Group's 2017 Annual Report.
The exceptional cash flows in the current and comparative
periods were as follows:
Six months to Six months to Year to
30 September 30 September 31 March
2017 2016 2017
Net cash outflow on Footnote GBPm GBPm GBPm
exceptional items:
Continuing operations
Business re-alignment (a) (2) (13) (21)
- impairment,
restructuring and
other net costs
Asset impairments - - (3)
- related costs
Net cash outflow - (2) (13) (24)
exceptional items
Income statement - 3 19
charge
- included
in profit before tax
Adjustment for: (2) (10) (5)
exceptional
items
- per cash flow
statement
(a) In the six months to 30 September 2017, the Group made cash
payments of GBP2 million in respect of business re-alignment costs
for SPLA® Sucralose and its European operations. Further details of
comparative amounts can be found in the Group's 2017 Annual
Report.
5. Income tax expense
Continuing operations Six months to Six months to Year to
30 September 30 September 31 March
2017 2016 2017
GBPm GBPm GBPm
Current tax:
- United Kingdom - - -
- Overseas (23) (13) (23)
(23) (13) (23)
Deferred tax:
(Expense)/credit (14) 14 45
for the period
Income (37) 1 22
tax (expense)/credit
Reconciliation Note GBPm GBPm GBPm
to adjusted
income tax expense
Income (37) 1 22
tax (expense)/credit
Adjusted for:
Taxation (3) (1) (6)
on exceptional
items,
amortisation
of acquired
intangibles and
net retirement
benefit interest
Exceptional deferred - (26) (65)
tax credits
Adjusted income 2 (40) (26) (49)
tax expense
- continuing
operations
The Group recorded an income tax expense of GBP37 million in
continuing operations for the six months to 30 September 2017 (six
months to 30 September 2016 - credit of GBP1 million; year to 31
March 2017 - credit of GBP22 million).
The Group's statutory tax rate on continuing operations,
calculated on the basis of the reported income tax expense of GBP37
million as a proportion of profit before tax of GBP161 million was
22.8% (six months to 30 September 2016 - credit of 0.9%; year to 31
March 2017 - credit of 9.6%). In the six months to 30 September
2016, the income tax credit included an exceptional tax credit in
relation to the recognition of deferred tax assets of GBP26 million
arising from previously unrecognised tax losses in the UK which
following changes to UK legislation and internal financing
arrangements are now expected to be utilised. In the year to 31
March 2017 deferred tax assets totaling GBP65 million were
recognised (GBP34 million with respect to previously unrecognised
tax losses as above, and GBP31 million with respect to the transfer
at fair value of certain intellectual property assets).
The Group's adjusted effective tax rate on continuing
operations, calculated on the basis of the adjusted income tax
expense of GBP40 million as a proportion of adjusted profit before
tax of GBP169 million was 23.5% (six months to 30 September 2016 -
18.3%; year to 31 March 2017 - 18.2%). The adjusted effective tax
rate increased as a result of firstly, changes to UK legislation
and consequent changes to the internal financing structure we use
to fund our international businesses, and secondly, an increase in
profits from the US, a jurisdiction with higher rates of
corporation tax.
In March 2017, the UK government announced further draft changes
to UK loss utilisation rules which, if carried into legislation,
would impact our ability to utilise brought forward losses in the
future.
The standard rate of corporation tax in the United Kingdom
reduced from 20% to 19% on 1 April 2017 and is expected to reduce
from 19% to 17% with effect from 1 April 2020.
6. Discontinued operations
The discontinued operations of the Group are set out in Note 1.
There was no activity classified within discontinued operations in
the six months to 30 September 2017 (six months to 30 September
2016 - gain of GBP1 million; year to 31 March 2017 - gain of GBP1
million).
7. Earnings per share
Basic earnings per share is calculated using a consistent
methodology with that used at 31 March 2017 (see the Group's 2017
Annual Report for further details). The average market price of the
Company's ordinary shares during the six months to 30 September
2017 was 710p (six months to 30 September 2016 - 666p; year to 31
March 2017 - 695p). The dilutive effect of share-based incentives
was 6.7 million shares (30 September 2016 - 5.1 million shares; 31
March 2017 - 7.1 million shares).
Six months to 30 September 2017 Six months to 30 September 2016
Continuingoperations Discontinuedoperations Total Continuingoperations Discontinuedoperations Total
Profit attributable 124 - 124 129 1 130
to owners
of the Company
(GBP million)
Weighted average 463.0 463.0 463.0 464.4 464.4 464.4
number
of ordinary
shares (millions)
- basic
Basic earnings 26.8p - 26.8p 27.7p 0.3p 28.0p
per share
Weighted average 469.7 469.7 469.7 469.5 469.5 469.5
number
of ordinary
shares (millions)
- diluted
Diluted earnings 26.5p - 26.5p 27.4p 0.3p 27.7p
per share
Year to 31 March 2017
Continuingoperations Discontinuedoperations Total
Profit attributable 255 1 256
to owners
of the Company
(GBP million)
Weighted average 464.1 464.1 464.1
number
of ordinary
shares (millions)
- basic
Basic earnings 55.0p 0.2p 55.2p
per share
Weighted average 471.2 471.2 471.2
number
of ordinary
shares (millions)
- diluted
Diluted earnings 54.2p 0.2p 54.4p
per share
Adjusted earnings per share
A reconciliation between profit attributable to owners of the
Company from continuing operations and the equivalent adjusted
metric, together with the resulting adjusted earnings per share
metrics can be found below:
Continuing operations Notes Six months to Six months to Year to
30 September 30 September 31 March
2017 2016 2017
GBPm GBPm GBPm
Profit attributable to 124 129 255
owners of the Company
Adjusting items:
- exceptional items 4 - 3 19
- amortisation of acquired 5 6 12
intangible assets
- net retirement 13 3 3 7
benefit interest
- tax effect of the 5 (3) (1) (6)
above adjustments
- exceptional deferred 5 - (26) (65)
tax credits
Adjusted profit 2 129 114 222
attributable
to owners of the Company
Adjusted basic earnings 28.0p 24.6p 47.8p
per share
(pence) - continuing
operations
Adjusted diluted earnings 27.6p 24.3p 47.1p
per share
(pence) - continuing
operations
8. Dividends on ordinary shares
The Directors have declared an interim dividend of 8.4p per
share for the six months to 30 September 2017 (six months to 30
September 2016 - 8.2p per share), payable on 5 January 2018.
The final dividend for the year to 31 March 2017 of GBP92
million, representing 19.8p per share, was paid during the six
months to 30 September 2017.
9. Net debt
The components of the Group's net debt are as follows:
At At At
30 September 30 September 31 March
2017 2016 2017
GBPm GBPm GBPm
Non-current borrowings (574) (594) (604)
Current borrowings and (28) (105) (88)
bank overdrafts
Debt-related derivative (11) (8) (21)
financial instruments
Cash and cash equivalents 242 289 261
Net debt (371) (418) (452)
Debt-related derivative financial instruments represents the net
fair value of currency and interest rate swaps that are used to
manage the currency and interest rate profile of the Group's net
debt. At 30 September 2017, the net fair value of these derivatives
comprised assets of GBP17 million (30 September 2016 - GBP25
million; 31 March 2017 - GBP17 million) and liabilities of GBP28
million (30 September 2016 - GBP33 million; 31 March 2017 - GBP38
million).
Movements in the Group's net debt were as follows:
Six months to Six months to Year to
30 September 30 September 31 March
2017 2016 2017
GBPm GBPm GBPm
Net debt at beginning (452) (434) (434)
of the period
Decrease in cash and (5) (50) (88)
cash equivalents
in the period
Net decrease in borrowings* 67 109 124
Fair value and other movements (2) 1 3
Currency translation differences 21 (44) (57)
Decrease/(increase) in 81 16 (18)
net debt in the period
Net debt at end of the period (371) (418) (452)
* Where relevant, net change in borrowings includes repayments
of capital elements of finance leases (six months to 30 September
2017 - GBPnil, six months to 30 September 2016 - GBPnil; year to 31
March 2017 - GBP1 million).
At 30 September 2017, the Group had no US commercial paper
outstanding (30 September 2016 - GBP77 million; 31 March 2017 -
GBP70 million). During the six months to 30 September 2016, the
Group repaid a maturing US$250 million bond.
10. Contingent liabilities
Passaic River
The Group remains subject to a legal case arising from the
notification in 2007 by the U.S. Environmental Protection Agency
('USEPA') that Tate & Lyle, along with approximately 70+
others, is a potentially responsible party ('PRP') for a 17 mile
section of the northern New Jersey Passaic River, a major
'Superfund' Site. In March 2016, the USEPA issued its Record of
Decision ('ROD') on the likely cost for the remediation of the
lower 8 miles section of the river (the most contaminated). Whilst
Tate & Lyle will continue to vigorously defend itself in this
matter, in light of the publication of the ROD, the Group carries a
provision of GBP6 million in respect of this. The Group continues
to be unable to estimate a reasonably possible range of loss in
respect of the remaining 9 mile section of the river and therefore
has not recognised a provision in this regard.
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. 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 2017 will have a material adverse effect on the
Group's financial position.
11. Capital expenditure and commitments
In the six months to 30 September 2017, there were additions to
intangible assets (excluding goodwill and acquired intangibles) of
GBP10 million (30 September 2016 - GBP10 million; 31 March 2017 -
GBP26 million) and additions to property, plant and equipment of
GBP51 million (30 September 2016 - GBP70 million; 31 March 2017 -
GBP128 million).
Commitments at the balance sheet date were as follows:
At At At
30 September 30 September 31 March
2017 2016 2017
GBPm GBPm GBPm
Commitments for the purchase 2 - -
of intangible assets
Commitments for the purchase of 32 36 25
property, plant and equipment
Total commitments 34 36 25
12. Financial instruments
The table below shows the Group's financial assets and
liabilities measured at fair value at 30 September 2017. The fair
value hierarchy categorisation, valuation techniques and inputs,
consistent with those used in the year to 31 March 2017 (see Notes
2 and 29 of the Group's 2017 Annual Report) are:
- Level 1: Inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the Group can
assess at the measurement date;
- Level 2: Inputs are those, other than quoted prices included
in Level 1, that are observable either directly or indirectly;
and
- Level 3: Inputs are unobservable inputs. The Group generally
classifies assets or liabilities as Level 3 when the 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 observable inputs of the assets or
liabilities.
At 30 September 2017 At 31 March 2017
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Assets at
fair
value
Available-for-sale - - 36 36 - - 30 30
financial
assets
Derivative
financial
instruments:
- currency - - - - - 2 - 2
swaps
- interest - 17 - 17 - 15 - 15
rate swaps
- commodity 3 2 23 28 7 1 21 29
pricing
contracts
Assets at 3 19 59 81 7 18 51 76
fair
value
Liabilities
at
fair value
Derivative
financial
instruments:
- currency - (28) - (28) - (38) - (38)
swaps
- commodity (8) (5) (3) (16) (6) (7) (3) (16)
pricing
contracts
Liabilities (8) (33) (3) (44) (6) (45) (3) (54)
at
fair value
The commodity pricing contracts included within the Group's
Level 3 financial instruments are valued based on the Group's own
assessment of the particular commodity, its supply and demand and
expected pricing. The most significant unobservable input for those
written commodity contracts remains the future price of co-product
positions. The methodology used to value all Level 3 financial
instruments remains unchanged from that used at 31 March 2017 and
the sensitivity of the fair value of the Level 3 financial
instruments to changes in the price of commodity contracts is not
materially different to that disclosed at 31 March 2017. Further
detail can be found on page 157 of the Group's 2017 Annual
Report.
The following table reconciles the movement in fair value of net
financial instruments classified in 'Level 3' of the fair value
hierarchy:
Available-for- Commodity Commodity Total
sale financial pricing pricing GBPm
assets contract contract
GBPm - assets - liabilities
GBPm GBPm
At 31 March 2017 30 21 (3) 48
Total
gains/(losses):
- in operating - 15 (1) 14
profit
- (1) - - (1)
in other comprehensive
income
Re-measurement of 1 - - 1
non-qualified
deferred
compensation
arrangements
Purchases 7 - - 7
Settlements (1) (13) 1 (13)
At 30 September 2017 36 23 (3) 56
Fair value of borrowings
The fair value of borrowings is estimated to be GBP621 million
(30 September 2016 - GBP734 million; 31 March 2017 - GBP712
million) and has been determined using quoted market prices, broker
dealer quotations or discounted cash flow analysis. The carrying
value of other assets and liabilities held at amortised cost is not
materially different from their fair value. Further details of
these instruments and our associated accounting policies can be
found in Note 2 on page 112 of the Group's 2017 Annual Report.
13.Retirement benefit obligations
At 30 September 2017, the net liability in respect of retirement
benefits was GBP119 million (31 March 2017 - GBP139 million), which
is analysed as follows:
At 30 September 2017 At 31 March 2017
Pensions Medical benefits Total Pensions Medical benefits Total
GBPm GBPm GBPm GBPm GBPm GBPm
Present value (1 630) (72) (1 702) (1 693) (76) (1 769)
of benefit
obligations
Fair value of 1 583 - 1 583 1 630 - 1 630
plan assets
Net liability (47) (72) (119) (63) (76) (139)
Presented as:
Deficits (170) (72) (242) (183) (76) (259)
Surpluses 123 - 123 120 - 120
Net liability (47) (72) (119) (63) (76) (139)
Changes in the net liability during the period are analysed as
follows:
Six months to 30 September 2017
Pensions Medical Total
GBPm benefits GBPm
GBPm
Net liability at 1 April 2017 (63) (76) (139)
Income statement:
- service cost (2) (1) (3)
- plan administration costs (2) - (2)
- net interest expense (2) (1) (3)
Other comprehensive income:
- actual return lower than (14) - (14)
interest on plan assets
- actuarial gain/(loss) 2 (1) 1
Other movements:
- employer's contributions 23 2 25
- re-measurement of non-qualified (1) - (1)
deferred
compensation arrangements
- currency translation differences 12 5 17
Net liability at 30 September 2017 (47) (72) (119)
14.Related party disclosures
The Group's significant related parties are its associate and
joint ventures as disclosed in the 2017 Annual Report. There were
no material changes in related parties or in the nature of related
party transactions during the period.
15.Events after the reporting period and assets held for
sale
Tapioca Development Corporation, the Group's associate with a
carrying value of GBP4 million, was classified as held for sale at
30 September 2017, and was subsequently disposed on 2 October
2017.
TATE & LYLE PLC
ADDITIONAL INFORMATION
Calculation of changes in constant currency
Where changes in constant currency are presented in this
statement, they are calculated by retranslating current period
results at prior period exchange rates. The following table
provides a reconciliation between the six months to September 2017
performance 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 2017 2017 Underlying 2016 Changein
months GBPm FX at constant growth GBPm Change% constant
to GBPm currency GBPm currency
30 GBPm %
September
Adjusted
performance
Continuing
operations
Sales 1 398 (82) 1 316 (5) 1 321 6% -
Adjusted
operating
profit
Speciality 104 (6) 98 4 94 10% 4%
Food
Ingredients
Bulk 93 (6) 87 23 64 45% 36%
Ingredients
Central (27) 1 (26) (1) (25)
Adjusted 170 (11) 159 26 133 28% 20%
operating
profit
Adjusted (14) 1 (13) (1) (12)
net
finance
expense
Share 13 (1) 12 (7) 19 (32%) (37%)
of
profit
after
tax of
joint
ventures
and
associates
Adjusted 169 (11) 158 18 140 21% 13%
profit
before
tax
Adjusted (40) 3 (37) (11) (26) (55%) (43%)
income
tax
expense
Adjusted 129 (8) 121 7 114 13% 6%
profit
after
tax
Adjusted 27.6p (1.8p) 25.8p 1.5p 24.3p 14% 6%
diluted
EPS
(pence)
Ratio analysis
30 September 30 September 31 March
2017 2016 2017
Net debt to EBITDA - on a
financial covenant basis
= Net debt 399 385 439
Pre-exceptional EBITDA 507 404 470
= 0.8 times = 1.0 times = 0.9 times
Interest cover - on a financial
covenant basis
= Operating profit before
exceptional items
and amortisation of
intangible assets
Net finance expense
358 281 328
25 23 24
= 14.5 times = 12.2 times = 13.9 times
Cash dividend cover
= Adjusted free cash flow from 151 138 174
continuing operations
Cash dividends 39 38 130
= 3.9 times = 3.6 times = 1.3 times
Gearing
= Net debt 371 418 452
Total equity 1 294 1 119 1 332
= 29% = 37% = 34%
Note:
All ratios are calculated based on unrounded figures in GBP
million. Net debt to EBITDA, interest cover, adjusted free cash
flow and adjusted operating cash flow are defined and reconciled in
Note 2 of the attached financial information. Gearing is prepared
using equity accounted net debt and total equity from the
consolidated statement of financial position.
Cash dividends represent external dividends on ordinary shares
paid or proposed in respect of the reporting period.
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(END) Dow Jones Newswires
November 02, 2017 03:00 ET (07:00 GMT)
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