We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for streaming realtime charts, analysis tools, and prices.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Tate & Lyle Plc | LSE:TATE | London | Ordinary Share | GB00BP92CJ43 | ORD 29 1/6P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.50 | -0.08% | 655.00 | 658.00 | 659.00 | 664.00 | 643.00 | 643.00 | 861,135 | 16:35:13 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Flavoring Extract,syrup, Nec | 1.85B | 190M | 0.4730 | 13.93 | 2.65B |
TIDMTATE
3 November 2016
TATE & LYLE PLCSTATEMENT OF HALF YEAR RESULTSFor the six months to 30 September 2016
Hot Features
Premium
Six months to 30 September (Unaudited)
Continuing operationsGBPm unless 2016 Restated*2015 % change in constant currency
stated otherwise % change
Sales 1 321 1 170 13% 1%
Adjusted profit before tax* 140 103 37% 22%
Profit before tax 128 70 83% 63%
Adjusted diluted earnings 24.3p 18.1p 34% 19%
per share*
Diluted earnings per share 27.7p 10.4p 166% 144%
(on total operations)
Net debt (comparative 418 434
31 March 2016)
Dividend per share 8.2p 8.2p
* Adjusted results and a number of other terms and performance measures used in this document are not defined within accounting standards. For clarity, we have provided descriptions of restatements and, where relevant, ratio calculations in Notes 2 and 9, on pages 24, 35 and 36. Prior period results restated to reflect discontinued operations, refer to Note 1 on page 22.
Good Profit Growth in Both Divisions Drives Strong First Half
______________________________________________________________________________________________________________________________________
Key Headlines
-- 22%1 increase in Group adjusted profit before tax driven by
strong performance in both divisions
-- 12%1 increase in Speciality Food Ingredients adjusted
operating profit:
- Good growth in core business
- GBP15m increase in Sucralose supported by one-off inventory sell-down
- GBP6m decrease in Food Systems driven by lower volume in Europe
-- 18% increase in sales from New Products to US$51m
-- 36%1 increase in Bulk Ingredients adjusted operating profit
driven by solid demand, robust margins and strong manufacturing
performance
-- Currency translation increased adjusted profit before tax by GBP15m with
estimated2 full year impact of around GBP40m
-- GBP58m increase in profit before tax to GBP128m with improved operating
performance and lower exceptional costs
-- Adjusted free cash flow increased from GBP92m to GBP138m
-- Interim dividend maintained at 8.2 pence per share to continue to
build dividend cover
______________________________________________________________________________________________________________________________________
1 Percentage changes are in constant currency2 Estimate uses assumed average rates for the balance of the financial year: US dollar: GBP1 = $1.22; Euro: GBP1 = EUR1.10; Mexican Peso: GBP1 = 23.2 Peso; and Brazilian Real: GBP1 = 3.90 Real.
Javed Ahmed, Chief Executive, said:
"We have made a strong start to the year delivering good profit growth in both divisions supported by good US bulk sweetener demand in the key summer beverage season, and the benefit of the one-off sell-down of excess inventory in Sucralose. We continued to strengthen execution across the business, leading to further improvement in customer service and supply chain performance.
Speciality Food Ingredients performed well and consistent with our 2020 Ambitions, delivering double digit profit growth in the core business. All regions delivered solid volume performance other than North America where volume was held back by lower demand. Sales from New Products continued to gain good traction.
Bulk Ingredients performed particularly well, driven by solid demand, robust margins and strong manufacturing performance. We are continuing to actively position core Bulk Ingredients to deliver steadier earnings over the longer term, with an increasing focus on customer service, cost control and continuous manufacturing improvement.
Turning to the outlook, we expect adjusted profit before tax in constant currency for the full year to be higher than we anticipated coming into the year driven by the strong first half performance, with performance in the second half remaining in line with our expectations."
Financial Highlights
Constant
Continuing operations 2016 Restated*2015 Change currencychange
Six months to GBPm GBPm % %
30 September
Sales:
- Speciality Food 487 446 9% (2)%
Ingredients
- Bulk Ingredients 834 724 15% 3%
Sales 1 321 1 170 13% 1%
Adjusted operating
profit
- Speciality Food 94 76 25% 12%
Ingredients
- Bulk Ingredients 64 42 51% 36%
- Central (25) (18) (37%) (34%)
Adjusted operating 133 100 34% 18%
profit
Adjusted net finance (12) (10) (16%) (15%)
expense
Share of profit after 19 13 44% 44%
tax of joint
ventures and associates
Adjusted profit 140 103 37% 22%
before tax
Adjusted diluted 24.3p 18.1p 34% 19%
earnings
per share
Adjusted free cash flow 138 92 50%
Net debt (comparative 418 434 (4)%
31 March 2016)
The results for the six months to 30 September 2016 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 are themselves exceptional. A reconciliation of statutory and adjusted Income Statement information is included in Note 2 to the financial information.
* The results for the six months to 30 September 2015 have been restated to reflect operations which were treated as discontinued operations in the year to 31 March 2016 and for the deferral of income from joint ventures in discontinued operations previously incorrectly recognised in the period to 30 September 2015 see Note 1 and Note 6 to the financial information.
-- First half performance benefited from good growth in core Speciality
Food Ingredients, the benefit of the one-off sell-down of excess
inventory in Sucralose, and good US bulk sweetener demand in the key
summer beverage season.
-- Adjusted diluted earnings per share (continuing operations) were up
34% (19% in constant currency) at 24.3p (2015 - 18.1p) with 3.4p of
growth driven by underlying performance and 2.8p by currency
translation. Statutory diluted earnings per share (continuing
operations) were 27.4p (2015 - 14.3p).
-- Currency translation increased adjusted profit before tax by GBP15m.
-- Volume in both divisions benefited from the acquisition of 100% of the
Slovakian facility in the second half of the 2016 financial year.
-- The adjusted effective tax rate for continuing operations in the first
half was 18.3% (2015 - 17.9%). We expect the adjusted effective tax
rate for the full year to be around 18%, rising to slightly above 20%
in the next financial year.
-- Following the recent changes in UK tax legislation, the reported
effective tax rate was a credit of 0.9% (2015 - charge of 4.5%)
reflecting the recognition of a GBP26m deferred tax asset as an
exceptional credit.
-- Adjusted free cash flow increased to GBP138m benefiting from higher
earnings, lower capital expenditure and currency translation.
Improvements in working capital management generated an inflow of GBP62m
in the period, an improvement of GBP9m.
-- Net debt was GBP16m lower at GBP418m despite GBP44m adverse impact of
foreign exchange translation.
Safety
In September, one of our employees and a local farmer died following an industrial accident at one of our grain elevators in the US. The tragic loss of these two lives greatly saddens the entire Tate & Lyle family. We are reviewing all our safety protocols and procedures, not limited to the specific areas related to this accident, which will be supported by a comprehensive external review.
Our key safety indicators are measured annually and therefore are not included in the half year results.
______________________________________________________________________________________________________________________________________
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 2016 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 3 November 2016. To view and/or listen to a live audio-cast of the presentation, visit http://view-w.tv/797-1031-17616/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: 6799254#
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
DIVISIONAL OPERATING PERFORMANCE
Speciality Food Ingredients
Continuing operations Six
months to 30 September
Volume Change Sales Adjusted
operating profit
2016GBPm 2015(restated*)GBPm change% change in constant 2015(restated*)GBPm change% change in constant currency%
currency% 2016GBPm
North America (3%) 175 163 7% (3%)
Asia Pacific and 7% 68 60 15% (1%)
Latin America
Europe, Middle East 17% 68 51 36% 20%
and Africa
Total 3% 311 274 14% 2% 62 53 20% 13%
excluding SPLA®Sucralose
and Food Systems
Food Systems (7%) 92 95 (3%) (12%) 7 13 (44%) (49%)
SPLA®Sucralose 3% 84 77 9% (3%) 25 10 150% 87%
Total Speciality 2% 487 446 9% (2%) 94 76 25% 12%
Food Ingredients
* Prior period measures restated to reflect discontinued operations.
Good performance with profit growth and margin expansion in the core business
Adjusted operating profit grew 12% in constant currency with better mix driving improved margins in the core business and SPLA® Sucralose benefiting from the sell-down of excess inventory carried into the year following the consolidation of the sucralose manufacturing footprint.
The division delivered 230bps operating margin improvement, driven by strong SPLA® Sucralose performance and good growth in the core business.
Adjusted operating profit in Food Systems was 49% lower in constant currency as we managed customer credit exposure and restructured our blending facilities across Europe to reduce our cost base and build a stronger platform for future growth.
The effect of currency translation was to increase sales by GBP49 million and adjusted operating profit by GBP10 million.
Speciality Food Ingredients excluding SPLA® Sucralose and Food Systems
Adjusted operating profit increased by 13% in constant currency, benefiting from good commercial execution, strong manufacturing performance and lower input costs. Volume grew by 3% with good growth in the second quarter following a softer than anticipated first quarter. Excluding the impact of the acquisition of 100% of the Slovakian facility, volume was 1% lower in the half.
In North America, volume was 3% lower driven by softer than expected demand from some of our larger customers, as growth in some of the categories they operate in continued to be challenging, and the overall US food and beverage market continued to be sluggish. We continue to secure new business as we demonstrate higher levels of customer service from existing and new capacity. We have re-aligned resources to pursue our focused approach of targeting specific higher growth sub-segments and broadening our customer base.
Volume in Asia Pacific and Latin America increased by 7%. As expected Asia Pacific delivered solid growth in the second quarter after lower sweetener volumes in Japan resulted in a softer than expected first quarter. Our business in China grew strongly in the second quarter and we continue to see good progress building our fibres and texturants businesses in several key categories, including dairy. In Latin America, we saw an encouraging return to growth driven strongly by our Mexican business. We also saw new speciality sweeteners and fibres business in Brazil despite the continued macro-economic challenges.
In Europe, Middle East and Africa, volume increased by 17% driven by increased sweetener volume from the full ownership of the facility in Slovakia, while growth of our fibres business continued.
Food Systems
In our global blending business, volumes were 7% lower. During the period, we proactively managed credit exposure to a large European customer and saw lower volume in Europe as the result of a restructuring of our blending sites undertaken to position the business for future growth. As a result, adjusted operating profit decreased by GBP6 million in constant currency.
In China, we have decided to change our food systems go-to-market approach to allow us to better serve customers and maximise our potential in that market. In October 2016, we agreed to sell our interest in Jiangsu Tate & Lyle Howbetter Food Co., Ltd. ("Howbetter") back to our partner. We have taken an exceptional charge of GBP5 million in respect of this investment, see Note 4. Howbetter was expected to be approximately break-even in the current year.
SPLA® Sucralose
Volume increased by 3%. We carried higher than normal SPLA® Sucralose inventory into the period as we transitioned to a single manufacturing facility at McIntosh. This transition reached planned production levels earlier than expected and allowed us to reduce inventory in the period. The one-off sell-down of this excess inventory more than offset the expected double digit decline resulting from the reduced manufacturing capacity.
The rate of decline in selling prices slowed. We were able to secure favourable spot prices for the excess inventory, with the majority of our volume committed to customers who value the benefits of our product quality and service.
Accordingly, adjusted operating profit increased by GBP15 million benefiting from incremental profit from the sale of the excess inventory and lower manufacturing costs.
In the second half of the financial year we expect double digit volume decline in line with our lower overall capacity and pricing to revert to the level of our contracted business.
New Products
Volume of New Products grew by 28% with growth across our three platforms of sweeteners, texturants and health and wellness. Sales increased by 18% to US$51 million or GBP37 million (2015 - US$43 million or GBP28 million).
Delivering innovative new products and solutions which meet customers' and consumers' needs in areas such as sugar and calorie reduction, 'clean-label' texturants and fibre enrichment, is a key enabler of growth. These can be breakthrough innovations or incremental extensions to existing product families. For example, we continued to develop our sweeteners range with MULTIVANTAGE® Syrup, a low sugar, low viscosity sweetener, and extended our range of clean label texturants with the launch of CLARIA® Delight, a line of tapioca-based functional clean label starches.
Given current phasing of the project pipeline, second half volume growth is expected to accelerate from that of the first half, with a strong pipeline of customer launches expected across the portfolio.
Bulk Ingredients
Continuing VolumeChange
operations
Six
months to 30
September
Volume
North American (2%)
Sweeteners
North American 2%
Industrial
Starches
Total 2%
Bulk Ingredients
2015(restated*)GBPm change% change in
2016 GBPm constant
currency%
Sales 834 724 15% 3%
Total
Bulk Ingredients
Adjusted
operating
profit
Core 67 44 52% 37%
Bulk Ingredients
Commodities (3) (2) (60%) (45%)
Total 64 42 51% 36%
Bulk Ingredients
* Prior period measures restated to reflect discontinued operations.
Strong profit performance driven by solid demand, robust margins and strong manufacturing performance
Volume increased by 2% driven by modest sweetener growth in the core US business and the acquisition of 100% of the Slovakian facility.
Adjusted operating profit grew 36% in constant currency benefiting from solid demand, robust margins and strong manufacturing performance. Adjusted operating margin increased by 190 bps to 7.7%.
Operating margin gains were driven by favourable industry dynamics, strong customer contract compliance, manufacturing efficiencies, and the benefit of lower energy costs.
The overall effect of currency translation was to increase sales by GBP91 million and adjusted operating profit by GBP6 million.
The US corn wet milling industry remains well balanced, reflecting capacity reductions in the industry at the beginning of 2015 and more robust industry exports to Mexico where demand for regular carbonated soft drinks (CSDs) remained firm and where currently sugar prices are relatively high.
We are continuing to actively position our Bulk Ingredients business in North America to deliver steadier earnings over the longer term. We have refocused the business from a regional to a product line approach to strengthen our focus on product mix management and to lower costs across the supply chain, and established a dedicated team to generate continuous process improvements within the plant network. In addition, we continue to invest in further improving the longer-term efficiency of our plants such as the new combined heat and power facility in Loudon, Tennessee which is progressing to schedule and is expected to deliver benefits from the fourth quarter of this financial year. Commercial execution continues to improve, delivering stronger customer service supported by improving demand forecasting and supply chain decision-making.
Corn prices
The 2016 US corn crop is projected to be a record, with the USDA1 currently estimating that corn yields will increase 3.0% from 2015. Overall US corn production is forecast to surpass 15 billion bushels for the first time in history, driving expected stocks to their highest levels in nearly 30 years.
Corn prices varied through the first half peaking in June 2016 at around $4.40 per bushel ahead of visibility of the 2016 crop. With the 2016 crop more evident, the expected higher corn supply drove prices down to the $3.00 to $3.50 per bushel range for the majority of the second quarter. Relatively stable and low corn prices in the last two years have benefited the competitive position of corn derived products.
1 USDA is the US Department of Agriculture
North American Sweeteners
We saw modest growth in shipments to US bulk sweetener customers. Overall, volume declined 2% led by lower export volume into Mexico where, despite overall growing industry export demand, our shipments were lower than the unusually high levels in the comparative period.
The US consumption of regular carbonated soft drinks has been relatively stable with consumption decreasing slightly by 0.7%1 in the financial year-to-date. This resulted in strong sweetener shipments through the summer beverage season. In addition, customers pulled volume strongly against their contracts resulting in good contract compliance, helping to optimise the efficiency of our plants.
As we exit the stronger demand in the key summer beverage season, we expect profit growth in our bulk sweetener business in the second half to be slower than the growth experienced in the first half.
1 Source: IRI Infoscan Reviews, Total US Multi-Outlet + Convenience(FDM, WMT, Dollar Club, Convenience Stores)
North American Industrial Starches
Volumes remained robust with shipments up 2% and improved overall mix.
Demand for paper and board remains steady in a balanced market, where continued higher packaging and tissue demand offset a decline in demand for printing and writing paper. Demand for starches for building materials remained strong during the first half, in a relatively stable US housing market.
Commodities
Overall, the Commodities business remained modestly loss-making, led by US ethanol where industry margins remain around 80% lower than the same period two years ago. As long as industry production remains high in the current demand environment, we see no near term sign of improvement in the US ethanol industry.
OTHER MATTERS
Foreign currency impacts and the UK's referendum on EU membership
Average rates for the first half of the financial year were US dollar: GBP1 = $1.37; Euro: GBP1 = EUR1.22; Mexican Peso: GBP1 = 25.3 Peso; and Brazilian Real: GBP1 = 4.65 Real. Sterling has weakened significantly since 30 September 2016. If current exchange rates were to prevail for the remainder of the financial year, we estimate that our reported full year earnings would increase by around GBP40 million (including the GBP15 million increase reported in these first half results). In estimating this impact we have used the following assumed average rates for the balance of the year: US dollar: GBP1 = $1.22; Euro: GBP1 = EUR1.10; Mexican Peso: GBP1 = 23.2 Peso; and Brazilian Real: GBP1 = 3.90 Real.
Changes in foreign currencies also led to an increase in the Group's free cash flow, and therefore at current rates are expected to have a beneficial impact on the Group's full year cash dividend cover. The movement in closing exchange rates, particularly the US dollar, also led to an increase in net debt as a result of the translation of dollar-denominated debt.
Following the UK's referendum on EU membership on 23 June 2016, we have assessed the impact of the result on our business. The Group generates less than 2% of its revenues in the United Kingdom, with most revenues being US dollar based. The outcome of this referendum is not expected to have a material near-term impact on our business and we are well-placed to continue to grow our global business without significant disruption.
Board Changes
On 26 October 2016 Jeanne Johns joined the Board as a Non-Executive Director and a member of the Corporate Responsibility, Remuneration and Nominations Committees. During Jeanne's 30 year career with BP, she most recently served as the Head of Safety and Operational Risk for BP's global downstream business from 2011 to 2015 and was responsible for overhauling the safety and operational risk organisation.
Bill Camp will retire as a Director on 31 March 2017, having served on the Board since May 2010. On Bill's retirement Jeanne will assume the chairmanship of the Corporate Responsibility Committee.
Financial Review
Overview of Group financial performance - continuing operations
Sales from continuing operations increased by 13% (1% in constant currency) to GBP1,321 million. Adjusted operating profit was 34% higher (18% in constant currency) at GBP133 million with adjusted profit before tax up 37% (22% in constant currency) at GBP140 million. On a statutory basis, profit before tax increased by GBP58 million to GBP128 million.
Central costs
Central costs, which include head office costs, treasury and reinsurance activities were GBP7 million higher at GBP25 million largely reflecting earlier recognition of the cost of Group-wide employee incentive awards.
Exceptional items
During the period to 30 September 2016, a net exceptional charge of GBP3 million has been recognised in operating profit within continuing operations. This includes a GBP3 million net charge in respect of the business re-alignment announced on 21 April 2015, a GBP6 million non-cash charge in respect of the impairment of certain redundant assets at our Decatur facility in the US, together with a GBP5 million charge in respect of exiting our interest in Jiangsu Tate & Lyle Howbetter Food Co., Ltd., and a GBP9 million non-cash gain in respect of the settlement of certain elements of our US retirement benefit plan obligations. A full summary of exceptional items can be found in Note 4 to the financial information.
The prior year net exceptional charge of GBP25 million related mainly to business re-alignment costs, predominantly associated with consolidation of Sucralose production through the closure of the Singapore facility.
For continuing operations, the Group recognised a GBP3 million tax charge on exceptional items in operating profit (2015 - GBP13 million credit), together with an exceptional tax credit of GBP26 million in respect of a deferred tax asset recognised in the period arising from the expected utilisation of UK losses (see Taxation section).
Adjusted net finance expense
The adjusted net finance expense, which excludes net retirement benefit interest, was GBP2 million higher at GBP12 million. This increase was principally due to steps taken to extend the weighted average maturity of debt. Proceeds from the draw down of the Group's US$400 million private debt, with a blended fixed rate notes coupon of around 4%, were partially used to repay short term commercial paper in October 2015.
During the six months to 30 September 2016, the Group repaid a maturing US$250 million bond.
Share of profit after tax of joint ventures
The Group's share of profit after tax of our joint ventures and associates of GBP19 million was GBP6 million higher than in the prior period, reflecting strong performance at our Almex joint venture in Mexico which benefited from solid demand for bulk sweeteners and the benefit of currency transaction gains arising from the strengthening of the US dollar against the Mexican Peso. Our Bio-PDOTM joint venture also delivered a stronger performance in the period.
Taxation
The adjusted effective tax rate (on adjusted earnings and excluding exceptional items) for continuing operations for the six months to 30 September 2016, which reflects the anticipated effective tax rate for the 2017 full financial year, was 18.3% (six months to 30 September 2015 - 17.9%).
As a result of recent changes in UK legislation arising from the OECD's Base Erosion and Profit Shifting (BEPS) project and changes to the internal financing arrangements we use to fund our international businesses, we have recognised a deferred tax asset of GBP26 million arising from previously unrecognised tax losses in the UK, which are now expected to be utilised against future UK taxable profits. In the current period the recognition of this deferred tax asset lowers the reported effective tax rate (on statutory earnings) to a credit of 0.9%.
Following this restructuring, we expect the adjusted effective tax rate for the year to be around 18% rising to slightly above 20% in the next financial year. We expect the rate of cash tax, being the amount of cash tax paid as a percentage of profit before tax, will align to the adjusted effective tax rate over time.
The deferred tax asset recognised of GBP26 million reflects a number of judgments related 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 these 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.
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 27 and 28 of the 2016 Annual Report.
Earnings per share
Adjusted diluted earnings per share on continuing operations increased by 34% (19% in constant currency) to 24.3p. Statutory diluted earnings per share on continuing operations increased by 92% (74% in constant currency) to 27.4p.
Discontinued operations
Six months to 30 September 2016 RestatedSix months to 30 September 2015
Eaststarch / Morocco Total Discontinued Eaststarch /Morocco Sugars /EU Starch TotalDiscontinued
Discontinued operations GBPm GBPm GBPm GBPm GBPm
Sales 3 3 6 - 6
Operating 1 1 (2) (18) (20)
profit/(loss) including
exceptional items
Share of profit after - - 2 - 2
tax of joint
ventures and associates
Profit/(loss) before tax 1 1 - (18) (18)
Profit/(loss) for the period 1 1 - (18) (18)
Diluted earnings/loss 0.3p (3.9p)
per share
In the six months to 30 September 2016, the Group recognised a GBP1 million exceptional gain resulting from the recycling of cumulative foreign exchange translation gains from reserves to the Income Statement upon completion of the disposal of its corn wet mill in Casablanca, Morocco.
The discontinued loss for the six months to 30 September 2015 predominantly comprised an exceptional legal settlement of GBP18 million relating to the sale of the Group's former EU Sugars business in September 2010. The Eaststarch transaction completed in the second half of the 2016 financial year.
Assets
Gross assets of GBP2,634 million at 30 September 2016 were GBP80 million higher than at 31 March 2016 on a statutory basis, reflecting principally the positive impact of the strengthening US dollar. Net assets increased by GBP90 million to GBP1,119 million.
Retirement benefits
We maintain pension plans for our employees in a number of countries. Some of these arrangements are defined benefit pension schemes, although we have closed the UK scheme and the main US salaried and hourly paid schemes to future accrual. In the US, we also provide medical benefits as part of the retirement package.
During the period, employer contributions in respect of pension and other post-retirement schemes totalled GBP23 million (2015 - GBP23 million). In addition, we took further steps to reduce our pension risk, settling certain elements of our US retirement benefit obligations. An exceptional gain of GBP9 million was recorded on this transaction, for more information see Note 4.
Following the UK's referendum on EU membership, asset values in the UK schemes and UK corporate bond yields (the rate used to value UK plan liabilities under accounting rules) have changed significantly. An increase in the liability (of GBP279 million) in excess of the increase in assets (of GBP219 million) was the principal driver for the overall increase in the net deficit on the Group's retirement benefit plans of GBP64 million to GBP272 million. Both of these adjustments are recognised within Other Comprehensive Income.
The 31 March 2016 actuarial valuation for the main UK Scheme is underway.
Dividend
The Board has approved an unchanged interim dividend for the six months to 30 September 2016 of 8.2p. This will be paid on 3 January 2017 to all shareholders on the Register of Members on 25 November 2016. In addition to the cash dividend option, shareholders will continue to be offered a Dividend Reinvestment Plan (DRIP) alternative.
Net Debt
Net debt at 30 September 2016 decreased by GBP16 million to GBP418 million (31 March 2016 - GBP434 million). Adjusted free cash flow generated from operations (which is for continuing operations and before cash flows from exceptional items) was GBP138 million. The net cash outflow in respect of exceptional items was GBP13 million. We received a net GBP6 million in respect of the Eaststarch re-alignment and gross consideration from the Morocco disposal. The Group received GBP22 million in cash dividends from its joint ventures and paid the 2016 final dividend of GBP92 million during the period. An adverse exchange rate impact increased net debt by GBP44 million, principally as a result of the stronger US dollar against sterling.
Cash Flow
Six months to 30 September
2016 2015*
GBPm GBPm
Adjusted operating profit from 133 100
continuing operations
Adjusted for:
Depreciation and amortisation 63 51
Share-based payments charge 8 4
Changes in working capital 62 53
Net retirement benefit obligations (20) (22)
Capital expenditure (77) (81)
Net interest and tax paid (31) (13)
Adjusted free cash flow 138 92
Add back: Net interest and tax paid 31 13
Add back: Net retirement cash contributions 23 23
Less: Derivatives and margin call movements (7) (3)
within Changes in working capital
Adjusted operating cash flow 185 125
* Restated to reflect exclusion of operating post-retirement benefit costs
Adjusted free cash flow (representing cash generated from continuing operations excluding the impact of exceptional items less net interest paid, less income tax paid, less capital expenditure) at GBP138 million, was GBP46 million higher than the prior period, reflecting higher profit and improved working capital inflows partially offset by higher US cash tax payments. Capital expenditure of GBP77 million, which included an GBP8 million investment in intangible assets, was 1.2 times the depreciation and adjusted amortisation charge of GBP63 million. We continue to expect the 2017 financial year capital expenditure to be around GBP150 million.
Adjusted operating cash flow, which further excludes the impact of net retirement benefit obligations, derivative financial instruments, and tax and net interest, improved by GBP60 million to GBP185 million.
Basis of preparation
Details of the basis of preparation can be found in Note 1 to the attached financial information. The Group's principal accounting policies are consistent with those used for the Group's Annual Report and Accounts for the year ended 31 March 2016. A number of minor amendments to accounting policies have been adopted during the year, although they have had no material effect on the Group's financial statements.
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 remain those detailed on pages 31 to 33 in the Tate & Lyle Annual Report 2016, a copy of which is available on the Company's website at www.tateandlyle.com. In the view of the Board there is no material change in these risks in respect of the remaining six months of the financial year.
The risks highlighted in the Annual Report are: failure to act safely and to maintain the safe operation of our facilities; failure to grow in speciality food ingredients; failure to innovate and commercialise new products; failure to maintain the quality and safety of our products, and high standards of customer service; inability to attract, develop, engage and retain key personnel; breach of legal or regulatory requirements; failure to maintain the continuous operation of our plant network and supply chain; cyber security breach leads to the misuse of information systems, or data; fluctuations in prices and availability of raw materials, energy, freight and other operating inputs; changes in consumer or government perception of our products and regulatory risks; failure to maintain an effective system of internal financial controls; and failure to manage shareholders' expectations.
Impact of changes in exchange rates
The Group's reported financial performance at average rates of exchange for the six months to 30 September 2016 was favourably impacted by currency translation. The effect of exchange translation was to increase adjusted profit before tax by GBP15 million compared with the comparative period principally as a result of a weakening of sterling against most other currencies following the UK's vote to leave the EU. The average and closing US dollar exchange rates used to translate reported results were as follows:
Six months to Six months to Year to
30 September 30 September 31 March
Average foreign 2016 2015 2016
exchange rates
US dollar GBP1 = $ 1.37 1.54 1.51
At At At
30 September 30 September 31 March
Period end foreign 2016 2015 2016
exchange rates
US dollar GBP1 = $ 1.3 1.51 1.44
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) of the 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 2016. The only change to the Board since 31 March 2016 being the appointment of Jeanne Johns with effect from 26 October 2016.
For and on behalf of the Board of Directors:
Javed Ahmed Nick Hampton Chief Executive Chief Financial Officer
2 November 2016
Independent review report to Tate & Lyle PLC
Report on the condensed set of consolidated financial information
Our conclusion We have reviewed Tate & Lyle PLC's condensed set of consolidated financial information in the Statement of Half Year Results of Tate & Lyle PLC for the six month period to 30 September 2016. Based on our review, nothing has come to our attention that causes us to believe that the condensed set of consolidated financial information is 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 Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority.
What we have reviewed The condensed set of consolidated financial information comprises:
-- the consolidated statement of financial position as at 30 September
2016;
-- 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 condensed set of consolidated financial
information.
The condensed set of consolidated financial information included in the Statement of Half Year Results has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1 to the condensed set of consolidated financial information, 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 condensed set of consolidated financial information and the review
Our responsibilities and those of the Directors The Statement of Half Year Results, including the condensed set of consolidated financial information, 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 Rules and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the condensed set of consolidated financial information 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 Rules and Transparency Rules 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 condensed set of consolidated financial information 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 Ireland) 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 condensed set of consolidated financial information.
PricewaterhouseCoopers LLPChartered AccountantsLondon2 November 2016
Notes:
a) The maintenance and integrity of the Tate & Lyle PLC website (www.tateandlyle.com) 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 condensed set of consolidated financial information since they were initially presented on the website.b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
Notes Six months to Restated*Six Year to
30 September months to30 31 March2016GBPm
2016 GBPm September2015GBPm
Continuing 3 1 321 1 170 2 355
operations
Sales
Operating 3 124 71 127
profit
Finance 1 - 1
income
Finance (16) (14) (30)
expense
Share of 19 13 28
profit
after
tax of
joint
ventures
and
associates
Profit 128 70 126
before
tax
Income 5 1 (3) (5)
tax
credit/(expense)
Profit for 129 67 121
the
period -
continuing
operations
Profit/(loss) 6 1 (18) 42
for
the period
-
discontinued
operations
Profit for 130 49 163
the period
-
total
operations
Profit for
the period
attributable
to:
- Owners 130 49 163
of the
Company
- - - - Non-controlling interests Profit for 130 49 163 the period Earnings Pence Pence Pence per share Continuing 7 operations: - Basic 27.7p 14.4p 26.1p - Diluted 27.4p 14.3p 25.9p Total 7 operations: - Basic 28.0p 10.5p 35.1p - Diluted 27.7p 10.4p 34.8p Analysis of adjusted profit for the GBPm GBPm GBPm period - continuing operations Profit before tax - continuing 128 70 126 operations Adjusted for: - Net charge for exceptional items 4 3 25 50 - Amortisation of acquired 6 4 11 intangible assets - Net retirement benefit interest 13 3 4 6 Adjusted profit before tax 2 140 103 193 - continuing operations Adjusted income tax expense 2,5 (26) (18) (32) - continuing operations Adjusted profit for the period 2 114 85 161 - continuing operations
* Restated (see Notes 1 and 6)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Six months to Restated*Six
30 September months to30 Year
2016 GBPm September2015GBPm to31 March2016GBPm
Profit for Notes 130 49 163
the period
Other
comprehensive
income/(expense)
Items that
have
been/may
be
reclassified
to profit
or loss:
Fair 1 (2) -
value
gain/(loss)
on cash flow
hedges
Fair value 4 1 2
loss on
cash flow
hedges
transferred to
profit
or loss
Fair value - (1) -
loss on
available-for-sale
financial
assets
Gain/(loss) 147 (23) 60
on
currency
translation
of foreign
operations
Fair (54) 8 (18)
value
(loss)/gain
on
net
investment
hedges
Share of 4 (11) (12)
other
comprehensive
income/(expense)
of
joint ventures
and
associates
Amounts (1) - -
transferred
to
income
statement
upon
disposal
of subsidiary
Amounts - - 34
transferred
to
income
statement
upon disposal
of joint
ventures
Tax expense (2) - -
relating
to the above
items
99 (28) 66
Items that
will not
be
reclassified
to profit
or loss:
Re-measurement
of retirement
benefit
plans:
- Actual 13 219 (81) (52)
return
higher/(lower)
than interest
on
plan assets
- 13 (279) 102 45
Net actuarial
(loss)/gain
on net
retirement
benefit
obligation
Tax 3 (2) 2
income/(expense)
relating
to the above
items
(57) 19 (5)
Total 42 (9) 61
other
comprehensive
income/(expense)
Total 172 40 224
comprehensive
income
Analysed by:
- Continuing 172 64 156
operations
- - (24) 68
Discontinued
operations
Total 172 40 224
comprehensive
income
Attributable
to:
- Owners 172 40 224
of the
Company
- - - -
Non-controlling
interests
Total 172 40 224
comprehensive
income
* Restated (see Notes 1 and 6)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
At 30 September Restated*At30 At31 March2016GBPm
Notes 2016 GBPm September2015GBPm
ASSETS
Non-current
assets
Goodwill and 415 309 390
other
intangible
assets
Property, 1 033 772 926
plant
and equipment
Investments 83 117 82
in
joint
ventures
Investments 4 4 3
in
associates
Available-for-sale 24 16 19
financial
assets
Derivative 18 25 21
financial
instruments
Deferred tax 29 9 3
assets
Trade and - 1 1
other
receivables
Retirement 13 8 54 45
benefit
surplus
1 614 1 307 1 490
Current
assets
Inventories 365 340 389
Trade and 302 270 301
other
receivables
Current tax 2 9 3
assets
Available-for-sale 4 6 4
financial
assets
Derivative 58 57 43
financial
instruments
Cash and cash 9 289 234 317
equivalents
Assets - 210 7
classified
as held for
sale
1 020 1 126 1 064
TOTAL ASSETS 2 634 2 433 2 554
EQUITY
Capital and
reserves
Share capital 117 117 117
Share premium 406 406 406
Capital 8 8 8
redemption
reserve
Other 226 33 127
reserves
Retained 362 323 370
earnings
Equity 1 119 887 1 028
attributable
to
owners of the
Company
Non-controlling - 1 1
interests
TOTAL EQUITY 1 119 888 1 029
LIABILITIES
Non-current
liabilities
Trade and 11 13 13
other
payables
Borrowings 9 594 285 556
Derivative 32 13 19
financial
instruments
Deferred tax 33 36 21
liabilities
Retirement 13 280 237 253
benefit
deficit
Provisions 15 8 13
for other
liabilities
and charges
965 592 875
Current
liabilities
Trade and 323 337 337
other
payables
Current 66 54 66
tax
liabilities
Borrowings 9 105 494 200
and bank
overdrafts
Derivative 30 27 22
financial
instruments
Provisions 26 41 23
for other
liabilities
and charges
Liabilities - - 2
classified
as held for
sale
550 953 650
TOTAL 1 515 1 545 1 525
LIABILITIES
TOTAL EQUITY 2 634 2 433 2 554
AND
LIABILITIES
* Restated (see Notes 1 and 6)
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Six months to Restated *Six Year
30 September months to31 March2016GBPm
Notes 2016 GBPm to30
September2015GBPm
Cash flows
from
operating
activities
Profit before 128 70 126
tax from
continuing
operations
Adjustments
for:
Depreciation 50 39 80
of property,
plant
and equipment
Amortisation 19 16 35
of
intangible
assets
Share-based 8 4 9
payments
Exceptional 4 (10) 27 17
items
Finance income (1) - (1)
Finance 16 14 30
expense
Share of (19) (13) (28)
profit
after
tax of joint
ventures and
associates
Changes in 62 53 24
working
capital
Net retirement (20) (22) (38)
benefit
obligations
Cash generated 233 188 254
from
continuing
operations
Interest paid (15) (9) (21)
Net income (17) (4) (16)
tax paid
Cash used in 6 (2) (2) (29) discontinued operations Net 199 173 188 cash generated from operating activities Cash flows from investing activities Purchase of (69) (77) (179) property, plant and equipment Purchase of (8) (4) (19) intangible assets Acquisition of - - (54) businesses, net of cash acquired Cash 3 - - adjustment in respect of previous acquisitions Disposal - - 240 of joint ventures Disposal 3 - - of businesses, net of cash disposed Purchase (3) (1) (4) of available-for-sale financial assets Disposal 1 18 18 of available-for-sale financial assets Disposal of 2 - - property, plant and equipment Interest 1 - 1 received Dividends 22 9 83 received from joint ventures and associates Net cash (used (48) (55) 86 in)/from investing activities Cash flows from financing activities Purchase of - - (7) own shares to trust or treasury Cash inflow 73 19 261 from additional borrowings Cash outflow (182) (3) (286) from repayment of borrowings Repayment of - (1) (4) capital element of finance leases Dividends paid 8 (92) (92) (130) to the owners of the Company Net cash used (201) (77) (166) in financing activities Net 9 (50) 41 108 (decrease)/increase in cash and cash equivalents Cash and cash equivalents Balance at 317 195 195 beginning of period Net (50) 41 108 (decrease)/increase in cash and cash equivalents Currency 22 (2) 14 translation differences Balance at end 9 289 234 317 of period
* Restated (see Notes 1 and 6)
A reconciliation of the movement in cash and cash equivalents to the movement in net debt is presented in Note 9.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Attributable to
Share capital & Capital the owners Non-controlling Total equity
share premium redemption Other reserves Retained of the Company interests
reserve earnings
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 April 523 8 127 370 1 028 1 1 029
2016
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
non- controlling
interest
Movement - - - - - (1) (1)
on
non-controlling
interest
Dividends - - - (92) (92) - (92)
paid
At 523 8 226 362 1 119 - 1 119
30 September
2016
At 1 April 523 8 61 343 935 1 936
2015
Six months
to 30
September
2015:
Profit for - - - 49 49 - 49
the period
-
total
operations
Other - - (28) 19 (9) - (9)
comprehensive
(expense)/income
Total - - (28) 68 40 - 40
comprehensive
(expense)/income
Share based - - - 4 4 - 4
payments,
net of tax
Dividends - - - (92) (92) - (92)
paid
At 523 8 33 323 887 1 888
30 September
2015
(Restated)*
At 1 April 523 8 61 343 935 1 936
2015
Year to 31
March
2016:
Profit for - - - 163 163 - 163
the year
-
total
operations
Other - - 66 (5) 61 - 61
comprehensive
income/(expense)
Total - - 66 158 224 - 224
comprehensive
income
Share based - - - 6 6 - 6
payments,
net of tax
Purchase of - - - (7) (7) - (7)
own shares
to trust or
treasury
Dividends - - - (130) (130) - (130)
paid
At 31 March 523 8 127 370 1 028 1 1 029
2016
* Restated (see Notes 1 and 6)
TATE & LYLE PLC
NOTES TO THE FINANCIAL INFORMATIONFor the six months to 30 September 2016
1. Presentation of half year financial information
The principal activity of Tate & Lyle PLC and its subsidiaries, together with its joint ventures and associated undertakings, is the global provision of ingredients and solutions to the food, beverage and other industries.
The Company is a public limited company incorporated and domiciled in the United Kingdom. The address of its registered office is 1 Kingsway, London WC2B 6AT. The Company has its primary listing on the London Stock Exchange.
Basis of preparation
This condensed set of consolidated financial information for the six months to 30 September 2016 has been prepared on a going concern basis in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34 Interim Financial Reporting as adopted by the European Union. The condensed set of consolidated financial information should be read in conjunction with the annual financial statements for the year to 31 March 2016, which have been prepared in accordance with IFRSs as adopted by the European Union.
Having reviewed the Group's latest projected results, cash flows, liquidity position and borrowing facilities, the Directors are satisfied that the Group has adequate resources to continue to operate for a period not less than 12 months from the date of approval of the financial information and that there are no material uncertainties around their assessment. Accordingly, the Directors continue to adopt the going concern basis of accounting in preparing the condensed set of consolidated financial information.
The condensed set of consolidated financial information is unaudited, but has been reviewed by the external auditors. The condensed set of consolidated financial information in the Statement of Half Year Results does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The Group's published consolidated financial statements for the year to 31 March 2016 were approved by the Board of Directors on 25 May 2016 and filed with the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain an emphasis of matter paragraph or a statement under Section 498 (2) or (3) of the Companies Act 2006. The condensed set of consolidated financial information for the six months to 30 September 2016 on pages 16 to 39 was approved by the Board of Directors on 2 November 2016.
Changes in accounting policy and disclosures
The accounting policies adopted in the preparation of the condensed set of consolidated financial information are consistent with those of the Group's Annual Report and Accounts for the year to 31 March 2016, but also reflect the adoption, with effect from 1 April 2016, of new or revised accounting standards, as set out below:
-- IFRS 11 Joint arrangements (Amendments)
-- IAS 16 Property plant and equipment (Amendments)
-- IAS 38 Intangible assets (Amendments)
-- IAS 27 Separate financial statements (Amendments)
-- IAS 1 Presentation of financial statements (Amendments)
-- Annual Improvements to IFRS - 2012-14 cycles
The adoption of these amendments has not had a material effect on the Group's financial statements.
The following new standards, new interpretations and amendments to standards and interpretations have been issued and are potentially relevant to the Group, but were not effective for the financial year beginning 1 April 2016, and have not been adopted early:
-- IFRS 9 Financial instruments (effective 1 January 2018)
-- IFRS 15 Revenue from Contracts with Customers (effective 1 January
2018)
-- IFRS 16 Leases (effective 1 January 2019)
-- IFRS 2 Share-based Payment (Amendments) (effective 1 January 2018)
-- IAS 12 Income taxes (Amendments) (effective 1 January 2017)
-- IAS 7 Statement of Cash Flows (Amendments) (effective 1 January 2017)
The Group is carrying out an assessment of the impacts of these changes ahead of their various effective dates.
Seasonality
The Group's principal exposure to seasonality is in relation to working capital. The Group's inventories are subject to seasonal fluctuations reflecting crop harvesting and purchases. Inventory levels typically increase progressively from September to November and gradually reduce in the first six months of the calendar year.
Changes in constant currency
Where changes in constant currency are presented in this statement, they are calculated by retranslating current period results at prior period exchange rates. This represents a change to the methodology applied in previous years, which involved retranslating prior period results at current period exchange rates. This change, which has not had a material impact, has been made to align with how the majority of external stakeholders view constant currency performance comparisons.
Use of adjusted measures
The Group presents adjusted performance measures, including adjusted operating profit, adjusted profit before tax, adjusted earnings per share, adjusted operating cash flow and adjusted free cash flow, which are used for internal performance analysis and incentive compensation arrangements for employees.
These measures are presented because they provide investors with valuable additional information about theperformance of the business. For the periods presented, adjusted performance measures exclude, where relevant:
- Exceptional items (excluded as they relate to events which are unlikely to recur, are outside the normal course of business and therefore merit separate disclosure in order to provide a better understanding of the Group's underlying financial performance);
- Amortisation of acquired intangible assets (costs associated with amounts recognised through acquisition accounting that impact earnings compared to organic investments);
- Net retirement benefit interest (accounting charges or credits which are not linked to the underlying performance of the business. The amounts excluded reflect the net interest cost of post-retirement benefit plans substantially closed to future accrual);
- Tax on the above items and tax items that are themselves exceptional items by definition.
Adjusted performance measures reported by the Group are not defined terms under IFRS and may therefore not be comparable with similarly-titled measures reported by other companies. Reconciliations of the adjusted performance measures to the most directly comparable IFRS measures are presented in Note 2.
Exceptional items
Exceptional items comprise items of income and expense, including tax items that are material in amount, relate to events which are unlikely to recur, are outside the normal course of business and therefore merit separate disclosure in order to provide a better understanding of the Group's underlying financial performance. Examples of events that give rise to the disclosure of material items of income and expense as exceptional items include, but are not limited to, impairment events, significant business transformation activities, disposals of operations or significant individual assets, litigation claims by or against the Group, changes in tax legislation and restructuring of components of the Group's operations.
All material amounts relating to exceptional items in the Group's financial statements are classified on a consistent basis across accounting periods.
Restated comparative financial information
The comparative financial information for the six months to 30 September 2015 has been restated to reflect operations which were treated as discontinued operations in the year to 31 March 2016 and for the deferral of income from joint ventures in discontinued operations previously incorrectly recognised in the six months to 30 September 2015.
In the six months to 30 September 2015, the Group incorrectly recognised income in discontinued operations of GBP15 million representing the share of profit after tax attributable to the Group whilst its investments in parts of the Eaststarch joint venture were classified as held for sale. Under IAS 28 guidance, the profit attributable to a joint venture business whilst held for sale should have been deferred and recognised as part of the profit on disposal. Whilst this had no impact on the Group's results for the full year to 31 March 2016, restatement has been made in the comparative amounts for the period ended 30 September 2015 reported within this statement. The restatement reduces both basic and diluted earnings per share from total operations by 3.3p each, from 13.8p and 13.7p to 10.5p and 10.4p respectively. For continuing operations, there was no change in operating profit, earnings per share metrics or adjusted profit and adjusted earnings per share metrics.
Discontinued operations
An operation is classified as discontinued if it is a component of the Group that: (i) has been disposed of, or meets the criteria to be classified as held for sale; and (ii) represents a separate major line of business or geographic area of operations or will be disposed of as part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations. The results, assets and liabilities and cash flows of discontinued operations are presented separately from those of continuing operations. Discontinued operations comprised the following activities:
- Eaststarch / Morocco
On 31 October 2015, the Group completed the re-alignment of its Eaststarch joint venture leading to the disposal of the majority of the Group's European Bulk Ingredients business. In a related agreement, the Group also agreed to sell its corn wet mill in Casablanca, Morocco to Archer Daniels Midland Inc. (ADM) and the assets and liabilities to be disposed of as part of the transaction were classified as held for sale as at 31 March 2016.
Comparative financial information has been restated to reflect the disclosure of the financial performance of these operations as discontinued operations. There is no overall effect on the Group's prior period profit from total operations.
- Sugars and European Starch Pensions settlements
The Group announced on 29 September 2015, that the Commercial Court in London had handed down a decision in a case brought by American Sugar Refining, Inc. (ASR) in which it made a number of claims in relation to its acquisition of the Group's European Sugars business in 2010. The European Sugars business formed part of the Group's discontinued Sugars segment, and accordingly the costs associated with those claims were recognised within discontinued operations.
During the year to 31 March 2016, the Group made a settlement payment of GBP2 million to transfer all remaining obligations under a legacy pension scheme related to the Group's discontinued European Wheat Starch business, which was disposed of in the 2008 financial year.
2.Reconciliation of adjusted performance measures
For the reasons set out in Note 1, the Group presents adjusted performance measures including adjusted operating profit, adjusted profit before tax and adjusted earnings per share.
For the periods presented, these adjusted performance measures exclude, where relevant:- exceptional items;- the amortisation of acquired intangible assets;- net retirement benefit interest; and- tax on the above items.
The following table shows the reconciliation of the key income statement adjusted performance measures to the most directly comparable measures reported in accordance with IFRS:
Restated*
Six months to 30 September 2016 Six months to 30 September 2015
GBPm IFRS Adjusting Adjusted IFRS Adjusting Adjusted
unless
otherwise
stated
Reported items Reported Reported items Reported
Continuing
operations
Sales 1 321 - 1 321 1 170 - 1 170
Operating 124 9 133 71 29 100
profit
Net finance (15) 3 (12) (14) 4 (10)
expense
Share of 19 - 19 13 - 13
profit
after tax
of
joint ventures
and
associates
Profit 128 12 140 70 33 103
before
tax
Income 1 (27) (26) (3) (15) (18)
tax
credit/(expense)
Non-controlling - - - - - -
interests
Profit 129 (15) 114 67 18 85
attributable
to
owners
of the
Company
Basic 27.7p (3.1p) 24.6p 14.4p 3.8p 18.2p
earnings
per share
Diluted 27.4p (3.1p) 24.3p 14.3p 3.8p 18.1p
earnings
per share
Effective (0.9%) 18.3% 4.5% 17.9%
tax rate
Year to 31 March 2016
IFRS Adjusting Adjusted
Reported items Reported
Continuing
operations
Sales 2 355 - 2 355
Operating 127 61 188
profit
Net finance (29) 6 (23)
expense
Share of 28 - 28
profit
after tax
of
joint ventures
and
associates
Profit 126 67 193
before
tax
Income tax (5) (27) (32)
expense
Non-controlling - - -
interests
Profit 121 40 161
attributable
to
owners
of the
Company
Basic 26.1p 8.6p 34.7p
earnings
per share
Diluted 25.9p 8.6p 34.5p
earnings
per share
Effective 4.0% 16.5%
tax rate
* Restated (see Notes 1 and 6)
The Group also presents two adjusted cash flow measures: Adjusted operating cash flow(a); and Adjusted free cash flow(b) which are defined as follows:
(a) Adjusted operating cash flow is defined as adjusted cash flow from continuing operations, excluding the impact of exceptional items, post-retirement benefits, derivative financial instruments, tax, interest and acquisitions less capital expenditure.
(b) Adjusted free cash flow represents cash generated from continuing operations excluding the impact of exceptional items, less net interest paid, less income tax paid, less capital expenditure.
3.Segment information
Segment information is presented on a consistent basis with the information presented to the Board (the designated Chief Operating Decision Maker) and with that presented in the Group's 2016 Annual Report. Segment results were as follows:
(a) Segment
sales
and results
Notes Six months to Restated*Six Year
30 September months to31
2016 GBPm to30 March2016GBPm
September2015GBPm
Sales
Speciality 487 446 897
Food
Ingredients
Bulk 834 724 1 458
Ingredients
Sales 1 321 1 170 2 355
-
continuing
operations
Sales 6 3 6 13
-
discontinued
operations
Sales - 1 324 1 176 2 368
total
operations
Adjusted
operating
profit
-
continuing
operations
Speciality 94 76 150
Food
Ingredients
Bulk 64 42 84
Ingredients
Central (25) (18) (46)
Adjusted 133 100 188
operating
profit
-
continuing
operations
Adjusting
items:
- 4 (3) (25) (50)
Exceptional
items
- (6) (4) (11)
Amortisation
of acquired
intangible
assets
Operating 124 71 127
profit
-
continuing
operations
Finance 1 - 1
income
Finance (16) (14) (30)
expense
Share of 19 13 28
profit
after
tax of
joint
ventures
and
associates
Profit 128 70 126
before
tax
-
continuing
operations
Profit/(loss) 6 1 (18) 47
before
tax -
discontinued
operations
Profit 129 52 173
before
tax -
total
operations
Six months to Six months to Year to
30 September 30 September 31 March
2016 2015 2016
GBPm GBPm GBPm
Adjusted operating
margin
Speciality Food 19.3% 17.0% 16.7%
Ingredients
Bulk Ingredients 7.7% 5.8% 5.8%
Central n/a n/a n/a
Total - continuing 10.1% 8.5% 8.0%
operations
* Restated (see Notes 1 and 6)
(b) Segment assets/(liabilities)
At 30 September 2016
Assets Liabilities Net
GBPm GBPm GBPm
Net working
capital
Speciality Food 347 (145) 202
Ingredients
Bulk 309 (151) 158
Ingredients
Central 11 (38) (27)
Group working capital 667 (334) 333
- continuing
and total operations
Other 1 967 (1 181) 786
assets/(liabilities)
Group 2 634 (1 515) 1 119
assets/(liabilities)
At 30 September 2015(Restated*)
Assets Liabilities Net
GBPm GBPm GBPm
Net working
capital
Speciality Food 317 (141) 176
Ingredients
Bulk 281 (151) 130
Ingredients
Central 9 (57) (48)
Group working capital - 607 (349) 258
continuing operations
Group working capital 4 (1) 3
- discontinued
operations
Group working capital 611 (350) 261
- total operations
Other 1 822 (1 195) 627
assets/(liabilities)
Group 2 433 (1 545) 888
assets/(liabilities)
At 31 March 2016
Assets Liabilities Net
GBPm GBPm GBPm
Net working
capital
Speciality Food 339 (150) 189
Ingredients
Bulk 341 (146) 195
Ingredients
Central 11 (54) (43)
Group working capital - 691 (350) 341
continuing operations
Group working capital 5 (2) 3
- discontinued
operations
Group working capital 696 (352) 344
- total operations
Other 1 858 (1 173) 685
assets/(liabilities)
Group 2 554 (1 525) 1 029
assets/(liabilities)
* Restated (see Notes 1 and 6). Segmental assets/(liabilities) at 30 September 2015 restated to reflect segmental allocation rules updated in light of the Group's restructuring in the second half of the 2016 financial year.
4. Exceptional items
Exceptional items recognised in arriving at operating profit were as follows:
Footnote Six months to 30 September 2016 Six months toSeptember2015 Year to31 March
GBPm 2015 2016
GBPm GBPm
Continuing operations
Business re-alignment (a) (3) (32) (48)
- impairment,
restructuring and
othernet costs
Asset (b) (6) - 3
impairments/impairment
reversals
Howbetter impairment (c) (5) - -
and related costs
US retirement benefit (d) 9 - -
obligation
settlement gain
Tate & Lyle Ventures - net (e) 2 9 7
investment disposal profit
SPLA® Sucralose (f) - (2) (2)
- revised table
top commercial agreement
US litigation (g) - - (15)
Slovakia re-measurement (h) - - 5
gain
Exceptional items (3) (25) (50)
- continuing
operations
Discontinued operations
Business re-alignment (i) 1 (2) 64
- Eaststarch
and Morocco disposals
ASR litigation settlement (j) - (18) (18)
Exceptional items 1 (20) 46
- discontinued
operations
Exceptional items - (2) (45) (4)
total operations
In addition, the following
exceptional tax items were
recognised in the current
and comparative periods:
Footnote Six months to 30 September 2016 Six months to30 September2015 Year to31 March2016
GBPm GBPm GBPm
Continuing operations
Recognition of UK deferred (k) 26 - -
tax assets
Exceptional tax credit - 26 - -
continuing operations
Discontinued operations
Moroccan taxation matters (l) - - (5)
Exceptional tax charge - - - (5)
discontinued operations
Exceptional 26 - (5)
tax credit/(charge)
- total operations
Continuing operations - within operating profit
(a) In the six months to 30 September 2016, the Group recognised a further net GBP3 million charge (GBP4 million of additional cash costs offset by a GBP1 million non-cash credit) in respect of the re-alignment of SPLA® Sucralose and its European operations. The net GBP3 million of costs were recognised within the Speciality Food Ingredients segment.
Cumulative business re-alignment costs relating to the Group's restructuring programme announced in April 2015 now total GBP169 million, with GBP59 million being cash costs and GBP110 million being non-cash costs. Further details of amounts previously recognised in the 2015 and 2016 financial years can be found in the Group's 2016 Annual Report.
(b) In the six months to 30 September 2016, the Group recognised a GBP6 million non-cash charge in respect of the impairment of certain redundant assets at our Decatur facility in the US, that are no longer in use in the business. The charge was recognised within the Bulk Ingredients segment.
In the year to 31 March 2016, the Group recognised a non-cash exceptional credit of GBP3 million in respect of the recognition of a partial reversal of an impairment of plant and equipment assets which were previously impaired through an exceptional charge.
(c) In the six months to 30 September 2016, the Group recognised a GBP5 million charge in respect of its equity interest in Jiangsu Tate & Lyle Howbetter Food Co., Ltd, its Food Systems subsidiary in China, for which it reached agreement to sell after 30 September 2016. The charge comprised a GBP3 million cost reflecting the impact of impairing and deconsolidating the Group's investment (itself a cash generating unit), together with a GBP2 million charge for associated costs. Accordingly, the Group has derecognised the GBP3 million financial liability previously recorded in equity for the written put option over the minority shareholder's equity interest. This charge was recognised within the Speciality Food Ingredients segment.
(d) During the six months to 30 September 2016, the Group recognised a GBP9 million non-cash gain in respect of the settlement of certain elements of its US retirement benefit plan obligations. Under the settlement, some deferred members of the plans elected to receive a lump sum during the six months to 30 September 2016, in exchange for surrendering their rights to future payments under the scheme. The exceptional gain was recognised within the Bulk Ingredients segment (GBP6 million) and Speciality Food Ingredients segment (GBP3 million).
(e) In the six months to 30 September 2016, the Group recognised a GBP2 million gain, primarily in respect of deferred consideration received following disposal of part of its venture fund portfolio which was previously classified as an available-for-sale financial asset. This profit was classified within central costs. In the year to 31 March 2016, the Group recognised a net GBP7 million gain (GBP9 million profit on the disposal in the first half and a GBP2 million impairment in the second half) from its ventures portfolio. Further details can be found in the Group's 2016 Annual Report.
(f) In the first half of the year to 31 March 2016, the Group recognised a net GBP2 million charge in respect of the revision of its SPLA® brand table top commercial agreement. Further details can be found in the Group's 2016 Annual Report.
(g) In the year to 31 March 2016, the Group recognised a GBP15 million exceptional charge in respect of two US litigation cases: one brought by the American Sugar Association; and another in respect of the Passaic River litigation. Further details can be found in the Group's 2016 Annual Report.
(h) In the year to 31 March 2016, as part of the re-alignment of the Eaststarch joint venture, the Group recognised an exceptional gain of GBP5 million within continuing operations reflecting the re-measurement to fair value of its existing investment in Slovakia. Further details can be found in the Group's 2016 Annual Report.
The tax on exceptional items within continuing operations was a GBP3 million charge (six months to 30 September 2015 - GBP13 million credit; year to 31 March 2016 - GBP21 million credit). Tax credits on exceptional costs are only recognised to the extent that losses incurred are expected to result in tax recoverable in the future.
Discontinued operations within operating profit
(i) On 1 June 2016, the Group completed the sale of its corn wet mill in Casablanca, Morocco to ADM, receiving gross cash proceeds of GBP4 million. The Group had previously recognised an impairment charge of GBP4 million in the year to 31 March 2016, aligning book value with expected proceeds after allowing for working capital and cash extracted from the business before completion. In the six months to 30 September 2016, the Group recognised a GBP1 million exceptional gain resulting from the recycling of cumulative foreign exchange translation gains from reserves to the income statement upon completion of the disposal. This non-cash gain was recognised within the Bulk Ingredients segment.
(j) In the year to 31 March 2016, the Group recognised an GBP18 million exceptional charge within discontinued operations for settlement made with American Sugar Refining, Inc. ("ASR") in respect of claims made in relation to its acquisition of the Group's EU Sugars business in September 2010. Further details can be found in the Group's 2016 Annual Report.
There was no tax impact on discontinued exceptional items in either the current or comparative periods.
Continuing operations - exceptional taxation items
(k) During the six months to 30 September 2016, the Group recognised an exceptional tax credit of GBP26 million arising from the recognition of deferred tax assets following changes to UK tax legislation.
Discontinued operations - exceptional taxation items
(l) During the year to 31 March 2016, the Group recognised an exceptional tax charge of GBP5 million in discontinued operations in respect of historical tax matters relating to the Moroccan facility which the Group has now sold to ADM.
Exceptional
cash flows
Six months to Six months to Year to
30 September 30 September 31 March
2016 2015 2016
Net Footnote GBPm GBPm GBPm
cash
(outflow)/inflow
on exceptional
items:
Continuing
operations
Business (a) (13) (3) (29)
re-alignment
- impairment,
restructuring
and
other net costs
SPLA®Sucralose (f) - 5 5
- revised table
top commercial
agreement
US litigation (g) - - (9)
Net (13) 2 (33)
cash
(outflow)/inflow
- exceptional
items
Income 3 25 50
statement
charge
- included
in profit
before
tax
Exceptional (10) 27 17
items
- per
cash
flow statement
5. Income tax
expense
Continuing Six months to Six months to Year to
operations
30 September 30 September 31 March
2016 2015 2016
GBPm GBPm GBPm
Current tax:
In respect
of the
current year
- UK - - -
- Overseas (13) (7) (32)
Adjustments - - 2
in respect
of previous
years
(13) (7) (30)
Deferred tax 14 4 24
credit
Adjustments - - 1
in respect
of previous
years
Income 1 (3) (5)
tax
credit/(expense)
Reconciliation Note GBPm GBPm GBPm
to adjusted
income tax
expense
Income 1 (3) (5)
tax
credit/(expense)
Adjusted for:
Taxation (1) (15) (27)
on exceptional
items,
amortisation
of
acquired intangibles
and
net retirement
benefit
interest
Exceptional (26) - -
deferred
tax credit
Adjusted income 2 (26) (18) (32)
tax expense
- continuing
operations
The Group recorded an income tax credit of GBP1 million in continuing operations for six months to 30 September 2016 (six months to 30 September 2015 - expense of GBP3 million; year to 31 March 2016 - expense of GBP5 million). This included an income tax credit of GBP1 million (six months to 30 September 2015 - credit of GBP15 million; year to 31 March 2016 - credit of GBP27 million) in respect of exceptional items, amortisation of acquired intangibles and net retirement benefit interest (see Note 2) together with an exceptional tax credit of GBP26 million (see Note 4) in relation to deferred tax assets arising from UK losses recognised following changes to UK tax legislation (six months to 30 September 2015 - GBPnil; year to 31 March 2016 - GBPnil). In March 2016, the UK government announced further draft changes to UK loss utilisation rules which if or when carried into legislation, may impact our ability to utilise brought forward losses in the future.
The Group's adjusted effective tax rate on continuing operations, calculated on the basis of the adjusted income tax expense of GBP26 million (six months to 30 September 2015 - GBP18 million; year to 31 March 2016 - GBP32 million) as a proportion of adjusted profit before tax of GBP140 million (six months to 30 September 2015 - GBP103 million; year to 31 March 2016 - GBP193 million) was 18.3% (six months to 30 September 2015 - 17.9%; year to 31 March 2016 - 16.5%).
The Group's reported tax rate on continuing operations, calculated on the basis of the reported income tax credit of GBP1million (six months to 30 September 2015 - charge of GBP3 million; year to 31 March 2016 - charge of GBP5 million) as a proportion of profit before tax of GBP128 million (six months to 30 September 2015 - GBP70 million; year to 31 March 2016 - GBP126 million) was a credit of 0.9% (six months to 30 September 2015 - charge of 4.5%; year to 31 March 2016 - charge of 4.0%).
The standard rate of corporation tax in the United Kingdom will reduce from 20% to 19% with effect from 1 April 2017 and from 19% to 17% with effect from 1 April 2020.
6. Discontinued operations
The discontinued operations of the Group are disclosed in Note 1.
The results of the discontinued operations which have been included in the consolidated income statement in the six months to 30 September 2016 and the comparative periods were as follows:
Six months to 30
September 2016
Discontinued Notes Eaststarch / Total Discontinued GBPm
operations Morocco GBPm
Sales 3 3 3
Operating profit 1 1
including
exceptional
items
Profit for 1 1
the period
- discontinued
operations
Basic and 7 0.3p
diluted
earnings
per share
- discontinued
operations
On 1 June 2016, the Group completed the sale of its corn wet mill in Casablanca, Morocco to ADM, receiving gross cash proceeds of GBP4 million. The Group recognised a GBP1 million exceptional gain in the six months to 30 September 2016 resulting from the transaction (see Note 4).
Restated* Six
months
to 30 September
2015
Discontinued Notes Eaststarch Sugars /EU StarchGBPm TotalDiscontinuedGBPm
operations /MoroccoGBPm
Sales 3 6 - 6
Operating loss (2) (18) (20)
Share of 2 - 2
profit
after
tax of joint
ventures and
associates
Loss for the - (18) (18)
period
- discontinued
operations
Basic and 7 (3.9p)
diluted
loss per share
- discontinued
operations
* Restated (see Note 1 and text below)
In the year to 31 March 2016, the Group realised an exceptional profit on disposal of GBP68 million in respect of the disposal of the Hungarian, Bulgarian and Turkish Eaststarch plants. The profit on disposal included an amount of GBP17 million representing the share of profit after tax attributable to the Group whilst the investments were classified as held for sale, GBP15 million of which was incorrectly recognised in the Statement of Half Year Results for the six months to 30 September 2015. Under IAS 28 guidance, the profit attributable to a joint venture business whilst held for sale should have been deferred and recognised as part of the profit on disposal. Whilst this has no impact on the Group's full year results, restatement has been made in the comparative amounts reported above.
Year to 31
March 2016
Discontinued Notes Eaststarch Sugars /EU StarchGBPm TotalDiscontinuedGBPm
operations /MoroccoGBPm
Sales 3 13 - 13
Operating 65 (20) 45
profit/(loss)
including
exceptional items
Share of profit 2 - 2
after
tax of joint
ventures and
associates
Profit/(loss) 67 (20) 47
before tax
Income tax charge (5) - (5)
(exceptional
item)
Profit/(loss) 62 (20) 42
for the year
- discontinued
operations
Basic earnings 7 9.0p
per share -
discontinued
operations
Diluted earnings 7 8.9p
per share
- discontinued
operations
The results of the discontinued operations which have been included in the consolidated cash flow statement were as follows:
Six months to 30
September 2016
Discontinued Eaststarch / Total Discontinued GBPm
operations Morocco GBPm
Profit before 1 1
tax from
discontinued
operations
Adjustment for: (3) (3)
Exceptional items
and changes
in working capital
Cash used in (2) (2)
discontinued
operations
Restated*Six months to
30 September 2015
Eaststarch Sugars /EU starch TotalDiscontinued
/Morocco
Discontinued GBPm GBPm GBPm
operations
Loss before - (18) (18)
tax from
discontinued
operations
Adjustment for: - 18 18
Exceptional items
and changes
in working capital
Share of profit (2) - (2)
after
tax of joint
ventures and
associates
Cash used in (2) - (2)
discontinued
operations
* Restated (see Notes 1 and text on the previous page)
Year to 31
March 2016
Discontinued Eaststarch Sugars /EU starchGBPm TotalDiscontinuedGBPm
operations /MoroccoGBPm
Profit/(loss) 67 (20) 47
before
tax from
discontinued
operations
Adjustment for: (69) (5) (74)
Exceptional items
and changes
in working capital
Share of profit (2) - (2)
after
tax of joint
ventures and
associates
Cash used in (4) (25) (29)
discontinued
operations
7. Earnings per share
Basic earnings per share is calculated using a consistent methodology with that used as at 31 March 2016 (see the Group's 2016 Annual Report for further details). The average market price of the Company's ordinary shares during the six months to 30 September 2016 was 666p (six months to 30 September 2015 - 562p; year to 31 March 2016 - 574p). The dilutive effect of share-based incentives was 5.1 million shares (30 September 2015 - 2.3 million shares; 31 March 2016 - 3.4 million shares).
Restated*
Six months to 30 September 2016 Six months to 30 September 2015
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
Profit/(loss) 129 1 130 67 (18) 49
attributable
to owners
of
the
Company (GBPmillion)
Weighted average 464.4 464.4 464.4 464.2 464.2 464.2
number
of ordinary
shares (millions)
- basic
Basic 27.7p 0.3p 28.0p 14.4p (3.9p) 10.5p
earnings/(loss)
per share
Weighted average 469.5 469.5 469.5 466.5 466.5 466.5
number
of ordinary
shares (millions)
- diluted
Diluted 27.4p 0.3p 27.7p 14.3p (3.9p) 10.4p
earnings/(loss)
pershare
* Restated (see
Notes 1 and 6)
Year to 31 March 2016
Continuingoperations Discontinuedoperations Total
Profit 121 42 163
attributable
to owners
ofthe Company
(GBPmillion)
Weighted average 464.3 464.3 464.3 number of ordinary shares (millions) - basic Basic earnings 26.1p 9.0p 35.1p per share Weighted average 467.7 467.7 467.7 number of ordinary shares (millions) - diluted Diluted earnings 25.9p 8.9p 34.8p 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
2016 2015 2016
GBPm GBPm GBPm
Profit attributable 129 67 121
to
owners of the Company
Adjusting items:
- Net charge for 4 3 25 50
exceptional
items
- Amortisation 6 4 11
of acquired
intangible assets
- Net retirement 13 3 4 6
benefit interest
- Tax effect of the 5 (1) (15) (27)
above adjustments
- Exceptional 5 (26) - -
deferred
tax credit
Adjusted profit 2 114 85 161
attributable
to owners of
the Company
Adjusted basic 24.6p 18.2p 34.7p
earnings
per share
(pence) - continuing
operations
Adjusted diluted 24.3p 18.1p 34.5p
earnings
per share
(pence) - continuing
operations
8. Dividends on ordinary shares
The Directors have declared an interim dividend of 8.2p per share for the six months to 30 September 2016 (six months to 30 September 2015 - 8.2p per share), payable on 3 January 2017.
The final dividend for the year to 31 March 2016 of GBP92 million, representing 19.8p per share, was paid during the six months to 30 September 2016.
9. Net debt
The components of the Group's net debt are as follows:
At30 At30 At31 March2016GBPm
September2016GBPm September2015GBPm
Non-current (594) (285) (556)
borrowings
Current (105) (494) (200)
borrowings
and
bank
overdrafts
Debt-related (8) 24 5
derivative
financial
instruments
Cash and cash 289 234 317
equivalents
Net debt (418) (521) (434)
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 2016, the net fair value of these derivatives comprised assets of GBP25 million (30 September 2015 - GBP37 million; 31 March 2016 - GBP24 million) and liabilities of GBP33 million (30 September 2015 - GBP13 million; 31 March 2016 - GBP19 million).
Movements in the Group's net debt were as follows:
Six Six Year
months months to31 March2016GBPm
to30 to30
September2016GBPm September2015GBPm
Net debt at (434) (555) (555)
beginning
of the period
Net (50) 41 108
(decrease)/increase
in cash and
cash
equivalents
in the period
Net 109 (15) 29
decrease/(increase)
in borrowings#
Fair value 1 2 (1)
and other
movements
Currency (44) 6 (15)
translation
differences
Decrease in 16 34 121
net debt
in the period
Net debt (418) (521) (434)
at end
of the period
# Where relevant, net change in borrowings includes repayments of capital elements of finance leases (six months to 30 September 2016 - GBPnil, six months to 30 September 2015 - GBP1 million; year to 31 March 2016 - GBP4 million).
During the six months to 30 September 2016, the Group repaid a maturing US$250 million bond.
Gearing and banking covenants metrics(a):
30 September 30 September 31 March
2016 2015 2016
Gearing
= Net debt 418 521 434
Total equity 1 119 888* 1 029
= 37% = 59% = 42%
Net debt to EBITDA
- on banking
covenant basis (b)
= Net debt 385 428 423
Pre-exceptional 404 384 345
EBITDA
= 1.0 times = 1.1 times = 1.2 times
Interest cover
- on banking
covenant basis (b)
= Operating profit
before
exceptional items
and amortisation of
intangible assets
Net finance expense
281 269 235
23 21 22
= 12.2 times = 12.8 times = 10.7 times
* Gearing restated (see Notes 1 and 6)
Notes:
(a) All ratios are calculated based on unrounded figures in GBP million.
(b) Net debt to EBITDA and interest cover are defined under the Group's banking covenants and reported on a proportionate consolidation basis. For banking covenant purposes these ratios are calculated based on the accounting standards that applied in the annual accounts immediately preceding the period in which the financing was agreed, with no adjustment for subsequent changes in accounting standards adopted by the Group. Net debt is calculated using average currency exchange rates.
10. Contingent liabilities
Passaic River
As noted in the Statement of Full Year Results released on 26 May 2016, the Group is 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 took an exceptional charge of GBP6 million in the year to 31 March 2016 in respect of this matter. 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. See the Group's 2016 Annual Report for further details.
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 2016 will have a material adverse effect on the Group's financial position.
11. Capital expenditure and commitments
In the six months to 30 September 2016, there were additions to intangible assets (excluding goodwill and acquired intangibles) of GBP10 million (30 September 2015 - GBP6 million; 31 March 2016 - GBP19 million) and additions to property, plant and equipment of GBP70 million (30 September 2015 - GBP69 million; 31 March 2016 - GBP175 million).
Commitments at the balance sheet date were as follows:
At30 September2016 At30 September2015 At31 March2016
GBPm GBPm GBPm
Commitments for - 1 1
the purchase
of intangible
assets
Commitments 36 62 47
for the
purchase of
property, plant
and equipment
Total 36 63 48
commitments
12. Financial Instruments
The table below shows the Group's financial assets and liabilities measured at fair value at 30 September 2016. The fair value hierarchy categorisation, valuation techniques and inputs are consistent with those used in the year to 31 March 2016 (see Notes 2 and 29 of our 2016 Annual Report):
-- 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 inputs, 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 2016 At 31 March 2016
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 - - 28 28 - - 23 23
financial
assets
Derivative
financial
instruments:
- Currency - 1 - 1 - 5 - 5
swaps
- Interest - 24 - 24 - 19 - 19
rate swaps
- Commodity 5 26 20 51 1 13 26 40
pricing
contracts
Assets at 5 51 48 104 1 37 49 87
fair
value
Liabilities
at
fair value
Other - - (2) (2) - - (2) (2)
financial
liability
(within other
payables)
Derivative
financial
instruments:
- Currency - (33) - (33) - (19) - (19)
swaps
- Forward - (1) - (1) - (1) - (1)
foreign
exchange
contracts
- Commodity (9) (14) (5) (28) (13) (5) (3) (21)
pricing
contracts
Liabilities (9) (48) (7) (64) (13) (25) (5) (43)
at
fair value
The most significant element of the Group's Level 3 financial instruments are written commodity contracts, which 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 price of co-product positions. The methodology used to value all level 3 financial instruments remains unchanged from that used as at 31 March 2016 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 as at 31 March 2016. Further detail can be found on page 130 of the Group's 2016 Annual Report.
The fair value of borrowings is estimated to be GBP734 million (30 September 2015 - GBP798 million; 31 March 2016 - GBP775 million) and has been determined using quoted market prices or discounted cash flow analysis. The carrying value of other assets and liabilities held at amortised cost are not materially different from their fair values. Further details of these instruments and our associated accounting policies can be found in Note 2 on page 94 of our 2016 Annual Report.
The following table reconciles the movement in the Group's net financial instruments classified in 'Level 3' of the fair value hierarchy:
Commoditypricingcontract- Commoditypricingcontract- Available-for-salefinancialassetsGBPm Otherfinancialliabilities*GBPm Total
assetsGBPm liabilitiesGBPm GBPm
At 31 March 2016 26 (3) 23 (2) 44
Gains in operating profit - - 2 - 2
Purchases 14 (5) 3 - 12
Settlements (20) 3 - - (17)
At 30 September 2016 20 (5) 28 (2) 41
* Within other payables
13.Retirement benefit obligations
At 30 September 2016, the net liability in respect of retirement benefits was GBP272 million (31 March 2016 - GBP208 million), which is analysed as follows:
At 30 September 2016 At 31 March 2016
PensionsGBPm MedicalbenefitsGBPm TotalGBPm PensionsGBPm MedicalbenefitsGBPm TotalGBPm
Present value (1 857) (75) (1 932) (1 568) (66) (1 634)
of benefit
obligations
Fair value of 1 660 - 1 660 1 426 - 1 426
plan assets
Net liability (197) (75) (272) (142) (66) (208)
Presented as:
Deficits (205) (75) (280) (187) (66) (253)
Surpluses 8 - 8 45 - 45
Net liability (197) (75) (272) (142) (66) (208)
Changes in the net liability during the period are analysed as follows:
Six months to 30 September 2016
PensionsGBPm MedicalbenefitsGBPm TotalGBPm
Net liability at 1 April 2016 (142) (66) (208)
Income statement:
- Plan admin costs (2) - (2)
- Service cost (1) - (1)
- Net Interest expense (2) (1) (3)
- Settlement gain 9 - 9
(exceptional
item - see Note 4d)
Other comprehensive income:
- Actual return higher than 219 - 219
interest on plan assets
- Actuarial loss (276) (3) (279)
Other movements:
- Employer's contributions 21 2 23
- Currency translation (23) (7) (30)
differences
Net liability at 30 (197) (75) (272)
September 2016
14. Acquisitions and disposals
Completion of Moroccan Disposal
On 1 June 2016, the Group completed the sale of its corn wet mill in Casablanca, Morocco to ADM, receiving gross cash proceeds of GBP4 million. The investment had previously been classified as held for sale as at 31 March 2016. The Group recognised an impairment charge of GBP4 million in the year to 31 March 2016, aligning book value with expected proceeds after allowing for working capital and cash extracted from the business before completion. In the six months to 30 September 2016, the Group recognised a GBP1 million exceptional gain resulting from the recycling of cumulative foreign exchange translation gains from reserves to the income statement upon disposal of the investment.
During the year to 31 March 2016, the Group recognised an exceptional tax charge of GBP5 million in discontinued operations in respect of historic tax matters in Morocco. There have been no further material developments in respect of these matters in the six months to 30 September 2016.
Eaststarch re-alignment update
In the six months to 30 September 2016 the Group recognised a GBP1 million increase to the provisional goodwill in respect of the acquisition of the remaining 50% of the plant in Slovakia, Amylum Slovakia s.r.o (subsequently renamed Tate & Lyle Boleraz s.r.o.) following a remeasurement of net assets acquired.
In the year to 31 March 2016, the Group completed the re-alignment of its Eaststarch operations. The Group recognised an exceptional gain on disposal of GBP68 million within discontinued operations from exiting the predominantly bulk ingredient plants in Bulgaria, Turkey and Hungary. The Group also recognised a GBP5 million gain reflecting the re-measurement to fair value of its existing investment in the more speciality food ingredients-focused plant in Slovakia.
15. Related party disclosures
The Group's significant related parties are its associates and joint ventures as disclosed in the 2016 Tate & Lyle Annual Report. In the period to 30 September 2016, the Group completed the disposal of its interest in its corn wet mill in Casablanca, Morocco.
During the period, the Group deconsolidated its equity interest in Jiangsu Tate & Lyle Howbetter Food Co, Ltd, its Food Systems business in China. An agreement to sell this interest was reached after 30 September 2016.
There were no other material changes in related parties or in the nature of related party transactions during the period. In the year to 31 March 2016, the Group re-aligned its Eaststarch joint venture.
16.Events after the reporting period
There were no material post balance sheet events requiring disclosure in respect of the six months to 30 September 2016.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161103005368/en/
This information is provided by Business Wire
(END) Dow Jones Newswires
November 03, 2016 03:00 ET (07:00 GMT)
1 Year Tate & Lyle Chart |
1 Month Tate & Lyle Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
