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| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| -1.50 | -0.23% | 645.00 | 645.50 | 646.50 | 650.00 | 633.00 | 633.00 | 838,581 | 16:35:11 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Flavoring Extract,syrup, Nec | 1.85B | 190M | 0.4730 | 13.66 | 2.59B |
TIDMTATE
2 November 2017
TATE & LYLE PLC STATEMENT OF HALF YEAR RESULTS For the six months to 30 September 2017
Hot Features
Premium
Statutory results Adjusted results1
Six months to 2017 2016 2017 2016 Constant currency change
30 September Change
Continuing operations
GBPm unless stated
otherwise
Sales 1 398 1 321 6%
Profit before 161 128 26% 169 140 13%
tax (PBT)
Diluted earnings 26.5p 27.4p (3%) 27.6p 24.3p 6%
per share
Net debt (comparative 371 452
31 March 2017)
Dividend per share 8.4p 8.2p
Strong First Half Performance
Key Headlines
-- 13%2 increase in Group adjusted PBT with volume growth in
both business divisions
-- GBP10m increase in Speciality Food Ingredients adjusted operating profit
to GBP104m:- 3% volume growth, return to growth in North America
(+1%), good growth in other regions- 4%2 profit
growth after investments to grow business over longer term
-- GBP29m increase in Bulk Ingredients adjusted operating profit to GBP93m:-
16%2 profit growth in core, driven by strong execution,
good demand and firm margins- GBP10m profit from Commodities
(2016: loss of GBP3m)
-- 14% increase in sales from New Products3 to US$58m
-- GBP33m higher Group reported PBT with improved trading and currency
benefit
-- Adjusted effective tax rate 23.5% (2016: 18.3%); rate for fiscal 2018
expected in upper end of 21-24% guided range
-- 6%2 increase in adjusted diluted earnings per share from
continuing operations to 27.6p
-- Net debt at GBP371m, GBP81m lower than 31 March 2017 with stronger
adjusted free cash flow
-- Interim dividend increased by 0.2p to 8.4p
Javed Ahmed, Chief Executive, said:
"We have made a strong start to the year, with good performance across the Group and higher adjusted diluted earnings per share.
Speciality Food Ingredients delivered broad-based volume growth in the core business, including North America despite market conditions in that region remaining challenging. New Products once again delivered double digit sales growth as customers continue to seek innovative solutions to reduce sugar, calories and fat in food and drink.
Bulk Ingredients had another period of excellent performance, well ahead of a strong comparative period, with improved overall earnings resulting from disciplined commercial execution and margin expansion.
Turning to the outlook, we expect underlying adjusted profit before tax in constant currency for the full year to be modestly higher than we anticipated coming into the year driven by the strong first half performance."
1 The results for the six months to 30 September 2017 have been adjusted to exclude exceptional items, net retirement benefit interest, amortisation of acquired intangible assets, the tax on those adjustments and tax items that themselves meet these definitions. A reconciliation of statutory and adjusted information is included in Note 2 to the Financial Information
2 Percentage changes in constant currency
3 New Products represent products in the first seven years after launch
FINANCIAL HIGHLIGHTS
Six months to 30 September 2017 2016 Constant currency Continuing operations GBPm GBPm Change change Sales: 509 487 5% (2%) - Speciality Food Ingredients - Bulk Ingredients 889 834 6% 0% Sales 1 398 1 321 6% 0% Adjusted operating profit 104 94 10% 4% - Speciality Food Ingredients - Bulk Ingredients 93 64 45% 36% - Central (27) (25) Adjusted operating profit 170 133 28% 20% Adjusted net finance expense (14) (12) Share of profit after 13 19 (32%) (37%) tax of joint ventures and associates Adjusted profit before tax 169 140 21% 13% Adjusted effective tax rate 23.5% 18.3% Adjusted diluted earnings 27.6p 24.3p 14% 6% per share Adjusted free cash flow 151 138 Net debt at 30 September 371 452 (comparative 31 March 2017)
The results for the six months to 30 September 2017 have been adjusted to exclude exceptional items, net retirement benefit interest, amortisation of acquired intangible assets, the tax on those adjustments and tax items that themselves meet these definitions. A reconciliation of statutory and adjusted information is included in Note 2 to the Financial Information.
The following commentary is principally focused on the adjusted performance measures because they provide insight into the key elements of the Group's statutory results:
-- Group adjusted operating profit increased by 20% in constant currency
to GBP170m.
-- Share of profit after tax of joint ventures and associates of GBP13m was
in line with share of profit in the second half of the 2017 financial
year, but GBP6m lower than the stronger first half comparative period.
-- The adjusted effective tax rate for continuing operations in the
period was 23.5% (2016 - 18.3%). As previously communicated, the
impact of changes in legislation and to our internal financing
structure drove an increase in the adjusted effective tax rate, with
the increasing mix of US profits further increasing the rate to the
upper end of the 21% to 24% guided range. The adjusted effective tax
rate for the full 2018 financial year is also expected to be in the
upper end of this guided range. The statutory effective tax rate was a
charge of 22.8% (2016 - credit of 0.9%).
-- Adjusted diluted earnings per share from continuing operations were
27.6p, up by 3.3p or 14% (6% in constant currency).
-- Statutory diluted earnings per share from continuing operations
decreased by 3% to 26.5p reflecting exceptional deferred tax credits
of GBP26m in the comparative period partially offset by strong operating
performance and favourable impact of currency translation.
-- Adjusted free cash flow increased to GBP151m benefiting from higher
earnings, lower capital expenditure at GBP61m (2016 - GBP77m) and currency
translation. We continue to expect capital expenditure for the full
financial year to be around GBP150m.
-- Net debt at GBP371m was GBP81m lower than at 31 March 2017, with strong
cash flow generation and the beneficial impact of foreign exchange
translation of US dollar debt, partially offset by the final 2017
dividend payment of GBP92m. Net debt/EBITDA (on a financial covenant
basis) reduced to 0.8x (31 March 2017 - 0.9x).
-- Interim dividend increased by 0.2p to 8.4p per share.
Cautionary statement
This Statement of Half Year Results contains certain forward-looking statements with respect to the financial condition, results, operations and businesses of Tate & Lyle PLC. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts.
A copy of this Statement of Half Year Results for the six months to 30 September 2017 can be found on our website at www.tateandlyle.com. A hard copy of this statement is also available from the Company Secretary, Tate & Lyle PLC, 1 Kingsway, London WC2B 6AT.
SPLA® is a trademark of Heartland Consumer Products LLC.
Webcast and Conference Call Details
A presentation of the results by Chief Executive, Javed Ahmed and Chief Financial Officer, Nick Hampton will be audio webcast live at 10.00 (GMT) on Thursday 2 November 2017. To view and/or listen to a live audio-cast of the presentation, visit http://view-w.tv/p/797-1031-18784/en. Please note that remote listeners will not be able to ask questions during the Q&A session.
A webcast replay of the presentation will be available within two hours of the end of the live broadcast on the link above.
For those unable to view the webcast, there will also be a teleconference facility for the presentation. Details are given below:
Dial in details:
UK dial in number: +44 (0) 20 3003 2666US dial in number: +1 212 999 6659Password: Tate & Lyle
14 day conference call replay:UK replay number: +44 (0) 20 8196 1998US replay number: +1 866 583 1035Access pin: 1475377#
For more information contact Tate & Lyle PLC:
Christopher Marsh, Group VP, Investor and Media RelationsTel: +44 (0) 20 7257 2110 or Mobile: +44 (0) 7796 192 688
Andrew Lorenz, FTI Consulting (Media)Tel: +44 (0) 20 3727 1323 or Mobile: +44 (0) 7775 641 807
LEI: 2138008K14474WPKZ244DTR 6 Annex IR Classification: 1.2. Half yearly financial reports and audit reports/limited reviews
DIVISIONAL OPERATING PERFORMANCE
Speciality Food Ingredients
Six months
to
30 September
Continuing
operations
Volume Sales Adjusted
Change operating profit
Constant Constant
2017 2016 Change Currency 2017 2016 Change Currency
GBPm GBPm % change GBPm GBPm % change
% %
North 1% 180 175 4% (1%)
America
Asia Pacific 6% 79 68 15% 8%
and
Latin
America
Europe, 8% 80 68 17% 9%
Middle
East
and Africa
Total: 3% 339 311 9% 3% 66 62 7% 3%
excluding
SPLA®Sucralose
and Food
Systems
Food Systems (5%) 94 92 2% (5%) 9 7 22% 13%
SPLA®Sucralose (17%) 76 84 (9%) (15%) 29 25 14% 5%
Total 3% 509 487 5% (2%) 104 94 10% 4%
Speciality
Food
Ingredients
Encouraging performance with broad-based volume growth in core business, including modest growth in North America
Overall, volume increased by 3%. We saw broad-based volume growth in the core business, including North America returning to modest growth. This region benefited from our approach of focusing on higher growth sub-categories and customer channels, while continuing to provide high-quality service to our larger customers. Adjusted operating profit grew 4% in constant currency with solid performance in the core business as we focused on top-line growth and continued to invest in the longer-term development of the business.
The effect of currency translation was to increase sales by GBP30 million and adjusted operating profit by GBP6 million.
Speciality Food Ingredients excluding SPLA® Sucralose and Food Systems
Volume increased 3%, with sales also 3% higher in constant currency.
Adjusted operating profit of GBP66 million increased by 3% in constant currency, with adjusted operating margins flat in constant currency reflecting both a focus on top-line growth and continued investment in customer-facing capabilities, in areas such as sales and applications, to deliver an increasingly solution-based approach for customers.
In North America, volume grew by 1%, an improved performance in the face of continued challenging market conditions. The overall US food and beverage market remains sluggish, with consumers increasingly seeking alternatives to traditional brands. As a result, our largest customers in this region, where our top ten customers represent around 40% of sales, continue to see consumption softness. Modest volume growth was driven by progress on three fronts: (1) share gains in our larger food and beverage customers; (2) developing our business over time in customer channels growing above market, such as food service and own label; and (3) continuing to win new business in targeted higher-growth sub-categories in areas such as health and nutrition, where our technical depth and expertise and solutions are providing increasing value to our customers. Sales for the region decreased by 1% in constant currency to GBP180 million, driven by product mix while gross margin was maintained.
In Asia Pacific and Latin America, volume was 6% higher, with especially strong growth in Mexico and China. Sales for the overall region increased by 8% in constant currency to GBP79 million. Latin America delivered double-digit volume growth. In Mexico, we saw broad-based growth, with particularly strong demand for our sweeteners helped by favourable market dynamics. Our business in Brazil grew modestly and we saw continued good growth in other Southern and Central American operations. In Asia Pacific, we saw good volume growth in the first quarter, with the second quarter lower due to the phasing of sweetener shipments in the comparative period. Our business in China continues to perform well, particularly our fibres. During the period, we added both sales and applications development resources in support of expansions to our applications facilities in Singapore, Shanghai and Mexico City.
In Europe, Middle East and Africa, volume increased by 8% benefiting from good growth in all platforms. We saw double digit growth in fibres and sweeteners, strong growth in Southern Europe including Turkey, and double digit growth in Central Europe. With volume of maltodextrin sweeteners in line in the period due to capacity constraints, we have recently committed to an extension of capacity at our Slovakian facility. Sales increased by 9% in constant currency to GBP80 million.
Food Systems
In our global blending business adjusted operating profit was 13% higher in constant currency at GBP9 million reflecting the benefits of our restructured cost base following the consolidation of our European blending sites. Volume was 5% lower and sales decreased by 5% in constant currency. This principally reflected two issues: firstly, lower shipments into the Russian market following the termination of a distribution agreement in the second half of the previous financial year due to a credit issue; and secondly, the rebuilding of our wider European business following supply constraints resulting from the consolidation of blending facilities in this region. Our products are now available again in Russia, and with the gradual realisation of benefits from our manufacturing consolidation, we expect earnings in Europe to improve over time.
SPLA® Sucralose
As expected, volume reduced by 17% reflecting the sale of excess inventory in the comparative period following the successful transition to our single facility at McIntosh, Alabama which was completed in March 2016. This facility continues to operate well and at capacity, with our business fully contracted with pricing similar to the previous year. Sales decreased 15% in constant currency to GBP76 million.
Adjusted operating profit increased to GBP29 million, an increase of 5% in constant currency, supported by firm pricing and lower manufacturing costs driven by fully sourcing product from our McIntosh facility.
The overall market demand for sucralose continues to grow. While the majority of our business is contracted to at least the end of the current financial year, over the longer term, we continue to expect that market prices are likely to be affected by changes in industry supply in China.
New Products
Volume of New Products grew by 23%, and sales increased by 14% to US$58 million or GBP45 million (2016 - US$51 million or GBP37 million) driven by growth across sweeteners and texturants.
Our partnership with Sweet Green Fields (SGF) shows good potential, with high levels of customer interest in our expanded stevia-based product line. We continued to develop the pipeline of new sweetener products by introducing Star-Dri® NG, a non-GMO1 soluble maltodextrin product.
Our Claria® line of functional clean label starches is performing well with a newly released line of Instant starches and a robust customer project pipeline. Non-GMO remains an important consumer trend, and we continue to broaden our offering in this area. Our PromOat® Beta Glucan and PrOatein® products, as well as several starches, recently received Non-GMO Project Verified certification and will help food and beverage manufacturers benefit from this growth.
1 Non-GMO means from a non-genetically modified source
Bulk Ingredients
Six months to
30 September Volume Change
Continuing operations
Volume
North American 2%
Sweeteners
North American 0%
Industrial
Starches
Total 2%
Bulk Ingredients
Change% Constant currency
2017 2016 change
GBPm GBPm %
Sales 889 834 6% 0%
Total
Bulk Ingredients
Adjusted operating
profit
Core Bulk Ingredients 83 67 24% 16%
Commodities 10 (3) n/a n/a
Total 93 64 45% 36%
Bulk Ingredients
Consistent execution and firm margins deliver strong profit performance
Volume increased by 2% driven by North American sweetener growth and reflecting good contract compliance.
Adjusted operating profit of GBP93 million increased by GBP29 million. Adjusted operating profit in core Bulk Ingredients increased by 16% in constant currency benefiting from strong commercial and supply chain execution. In addition, solid demand and moderate margin gains secured in the 2017 calendar year contracting round further benefited performance. Commodities contributed profits of GBP10 million, an increase of GBP13 million.
The effect of currency translation was to increase sales by GBP52 million and adjusted operating profit by GBP6 million.
Overall, the US corn wet milling industry remains relatively well balanced, reflecting firm overall demand and stable industry exports to Mexico, where demand for regular carbonated soft drinks (CSDs) remained firm.
Corn prices
For the fourth consecutive year, the US corn crop is expected to be good with strong yields resulting in high closing inventories. Corn prices varied through the first half peaking in early July at around $4.20 per bushel, ahead of full visibility of the strength of the 2017 crop. Corn prices subsequently fell gradually, and traded in the $3.40 to $3.60 per bushel range during September. Relatively stable and low corn prices in the last few years have benefited the competitive position of corn-derived products.
North American Sweeteners
Overall, volume increased 2%, led by growth in export volume to Mexico. Shipments to US bulk sweetener customers saw modest growth reflecting good contract compliance and supply chain execution. Margin gains secured during the 2017 bulk sweetener pricing round, active product mix management, and efficiency initiatives drove improved profitability.
North American Industrial Starches
North American Industrial Starches volume was flat compared to the prior period. Overall demand for paper remains steady with growing demand for packaging and tissue, fueled by increasing online shopping, offsetting declines in printing and writing paper. Demand for starches in construction materials also remained steady in a relatively stable US housing market.
Commodities
Commodities delivered a profit of GBP10 million mainly reflecting market opportunities in Co-products and gains from the sourcing of corn.
US ethanol cash margins have remained relatively steady and towards the low-end of the historical range with industry inventories high.
OTHER MATTERS
North American Free Trade Agreement (NAFTA)
The United States, Canada, and Mexico commenced discussions in August 2017 to modernise NAFTA. NAFTA is very important to the US food and agriculture sector, and Mexico in particular is a key export market for the corn wet milling industry, particularly for high fructose corn syrup. Talks between the three parties are ongoing, and are expected to last at least into the first quarter of the 2018 calendar year.
Prior to the commencement of the talks on NAFTA, in June 2017 the US Department of Commerce and the Mexican Secretariat of Economy agreed revised Sugar Suspension Agreements. These Agreements, originally put in place in 2014, suspend the anti-dumping and countervailing duty investigations on imports of Mexican sugar into the US. They also limit the amount of sugar that Mexican companies can export to the US, and set price floors for that sugar. The revised Agreements maintain a productive US trading relationship with Mexico, and preserve cross-border trade of sweeteners between the two countries.
Board Changes
Liz Airey, a Non-Executive Director, retired from the Board after 10 years of service at the AGM on 27 July 2017.
Jeanne Johns, a Non-Executive Director, ceased to be a director with effect from 31 October 2017. Jeanne has been appointed chief executive officer of a company listed on the Australian Securities Exchange and, as a result, is no longer able to commit the required time to travel to the UK on a regular basis to attend Tate & Lyle Board meetings.
Executive Team Appointments
During the period, the Group Executive Committee was further strengthened with the following appointments:
i) Andrew Taylor was appointed President, Innovation and Commercial Development from 5 September 2017. Andrew previously worked at The Boston Consulting Group, where he was a Senior Partner and Managing Director, and also led the global Innovation Practice.
ii) Melissa Law was appointed President, Global Operations from 18 September 2017. Melissa previously worked at Baker Hughes, where she led the Global Specialties Chemicals Division, a major part of its Oilfield Service portfolio.
Summary of financial results for the period ended 30 September 2017 (unaudited)
Six months to 30 2017 2016 Change Constantcurrencychange% September1 GBPm GBPm % Continuing operations Sales 1 398 1 321 6% 0% Adjusted operating profit - Speciality Food 104 94 10% 4% Ingredients - Bulk Ingredients 93 64 45% 36% - Central (27) (25) Adjusted operating 170 133 28% 20% profit Adjusted net finance (14) (12) expense Share of profit after 13 19 tax of joint ventures and associates Adjusted profit 169 140 21% 13% before tax Exceptional items - (3) Amortisation of acquired (5) (6) intangible assets Net retirement benefit (3) (3) interest Profit before tax 161 128 Income (37) 1 tax (expense)/credit Profit for the period - 124 129 continuing operations Profit for the period - 1 - discontinued operations Profit for the period 124 130 - total operations Earnings per share - continuing operations (pence) Basic 26.8p 27.7p (3%) Diluted 26.5p 27.4p (3%) Adjusted earnings per share - continuing operations (pence) Basic 28.0p 24.6p 14% 7% Diluted 27.6p 24.3p 14% 6% Cash flow and net debt Adjusted free cash flow 151 138 Net debt - At 371 452 30 September (comparative at 31 March 2017)
1 Adjusted results and a number of other terms and performance measures used in this document are not directly defined within accounting standards. We have provided descriptions of the various metrics and their reconciliation to the most directly comparable measures reported in accordance with IFRS, and the calculation where relevant of any ratios, in Note 2
Sales from continuing operations of GBP1,398 million were 6% higher than the prior year (flat at constant currency).
On a statutory basis, profit before tax from continuing operations increased by GBP33 million to GBP161 million. Statutory diluted earnings per share from continuing operations decreased by 0.9p to 26.5p as improved operating performance was more than offset by the effect of an increased statutory tax charge of 22.8%. In the comparative period, an effective tax rate of minus 0.9%, reflected an exceptional tax credit driven by the recognition of a deferred tax asset. As a result of the increased current period tax charge, profit for the period from total operations decreased to GBP124 million (2016 - GBP130 million).
Adjusted profit before tax from continuing operations was 21% higher than last year (13% at constant currency), increasing to GBP169 million, reflecting increased operating earnings. Adjusted diluted earnings per share from continuing operations increased by 3.3p to 27.6p reflecting increased earnings partially offset by a higher adjusted effective tax rate of 23.5% (2016 - 18.3%).
Central costs
Central costs, which include head office costs, treasury and reinsurance activities, were GBP2 million higher at GBP27 million.
Net finance expense
Adjusted net finance expense from continuing operations, which excludes net retirement benefit interest, was GBP2 million higher at GBP14 million, mainly driven by lower capitalised interest (principally related to the construction of the Loudon co-generation facility, subsequently commissioned in the third quarter of the 2017 financial year) and the impact of increased US interest rates on floating rate debt.
Share of profit after tax of joint ventures and associates
The Group's share of profit after tax of joint ventures and associates of GBP13 million was in line with share of profit in second half of the 2017 financial year, but GBP6 million lower than the stronger first half comparative period.
Exceptional items from continuing operations
During the six months to 30 September 2017, there were no operating exceptional items from continuing operations (six months to 30 September 2016 - net costs of GBP3 million).
There were no tax exceptional items in the period. In the six months to 30 September 2016 an exceptional tax credit of GBP26 million was recorded reflecting the recognition of a deferred tax asset arising from previously unrecognised tax losses in the UK which are now expected to be utilised against future UK taxable profits.
Taxation
The adjusted effective tax rate on earnings for continuing operations for the six months to 30 September 2017 increased to 23.5% (2016 - 18.3%).
Two factors drove the increase in the adjusted effective tax rate in the period to the upper end of the guided range of between 21% and 24%. Firstly, as a result of changes to UK legislation arising from the OECD's Base Erosion and Profit Shifting (BEPS) project and consequent changes to the internal financing structure we use to fund our international businesses. Secondly, the results of the Group in the period reflect an increase in profits from the US, a jurisdiction with higher rates of corporation tax.
The reported effective tax rate (on statutory earnings) for the period was a charge of 22.8% (2016 - credit of 0.9%). In the comparative period, the Group recognised a deferred tax asset of GBP26 million as explained in "Exceptional items from continuing operations" above.
The recognition and measurement of deferred tax assets and liabilities is dependent on a number of key judgements, estimates and assumptions. Judgements in respect of this asset relate principally to: the size and duration of future internal financing arrangements; the interest coupon payable on these arrangements; the future level of deductible expenses incurred in the UK; and foreign currency exchange rates. Changes in assumptions, along with future changes in legislation, for example, impacting the utilisation of UK tax losses, could have a material impact on the amount of deferred tax recognised in future accounting periods. Legislation to limit the utilisation of carry forward losses in the UK is expected to be enacted in the second half of the year. If enacted, this may result in a write off of part of the deferred tax asset booked in the 2017 financial year, with a consequent charge to the statutory tax rate.
We estimate that the adjusted effective tax rate for the full 2018 financial year will be in the upper end of the previously guided range of between 21% and 24%. Over time and across accounting periods, we expect the rate of cash tax, being the amount of tax paid as a percentage of adjusted profit before tax, to align to the adjusted effective tax rate.
The list of key uncertainties affecting the Group's adjusted and reported effective tax rates, as well as the factors that are expected to influence the sustainability of the Group's effective tax rates in the future, are set out on page 34 and 35 of the Group's 2017 Annual Report, and remain unchanged.
Discontinued operations
There was no profit or loss or cash flows from discontinued operations in the six months to 30 September 2017 (2016 - profit of GBP1 million, cash used in discontinued operations GBP2 million outflow).
Earnings per share
Adjusted basic earnings per share from continuing operations increased by 14% (7% in constant currency) to 28.0p and adjusted diluted earnings per share from continuing operations at 27.6p were 14% higher (6% in constant currency).
Dividend
An increase in the interim dividend for the six months to 30 September 2017 of 0.2p to 8.4p has been approved by the Board, reflecting the Board's confidence in the business while at the same time continuing to rebuild cash cover. This will be paid on 5 January 2018 to all shareholders on the Register of Members on 1 December 2017. In addition to the cash dividend option, shareholders will continue to be offered a Dividend Reinvestment Plan (DRIP) alternative.
Assets
Gross assets on a statutory basis of GBP2,617 million at 30 September 2017 were GBP154 million lower than at 31 March 2017, mainly reflecting the negative impact of the weakening US dollar.
Net assets decreased by GBP38 million to GBP1,294 million primarily reflecting the payment for the final year dividend of GBP92 million together with the negative impact of the weakening of the US dollar, with significant net exchange losses recognised in other comprehensive income of GBP43 million (six months to 30 September 2016 - gain of GBP93 million), partially offset by the profit for the period.
Retirement benefits
The Group maintains pension plans for our employees in a number of countries. Some of these arrangements are defined benefit pension schemes and, although we have closed the main UK scheme and the US salaried and hourly paid schemes to future accrual, certain obligations remain. In the US, we also provide medical benefits as part of retirement packages.
The net deficit on the Group's retirement benefits plans decreased by GBP20 million to GBP119 million compared to 31 March 2017. The deficit improvement was driven primarily by a decrease in the deficit of the US scheme largely as a result of foreign exchange movements from the weakening of the US dollar against sterling.
Under funding arrangements in connection with the 2016 actuarial valuation, the Group committed to make core funding contributions for the main UK scheme of GBP12 million per year and supplementary contributions of GBP6 million per year until 31 March 2023 into a secured funding account, payable to the Trustee on certain triggering events.
Cash flow and net debt
Six months to 30 September1
2017 2016
GBPm GBPm
Adjusted operating profit from 170 133
continuing operations
Adjusted for:
Non-cash items in adjusted operating 95 133
profit and working capital
Net interest and tax paid (33) (31)
Net retirement benefit obligations (20) (20)
Capital expenditure (61) (77)
Adjusted free cash flow 151 138
At 30 September At 31 March
2017 2017
GBPm GBPm
Net debt 371 452
1 Adjusted results and a number of other terms and performance measures used in this document are not directly defined within accounting standards. We have provided descriptions of the various metrics and their reconciliation to the most directly comparable measures reported in accordance with IFRS, and the calculation where relevant of any ratios, in Note 2
Adjusted free cash flow (representing cash generated from continuing operations after net interest paid, income tax paid, and capital expenditure, and excluding the impact of exceptional items) was GBP151 million, GBP13 million higher than the prior period principally reflecting higher earnings and lower capital expenditure, partially offset by weaker inflows from the reduction of working capital, following significant improvements delivered in the comparative period.
Capital expenditure of GBP61 million, which included a GBP10 million investment in intangible assets, was 0.9 times the depreciation and adjusted amortisation charge of GBP71 million and reflects continued investment in capacity as well as efficiency and sustaining investments. We expect capital expenditure for the full 2018 financial year to be around GBP150 million.
Other significant cash flows in arriving at net debt included: GBP25 million of dividends received from joint ventures; external dividend payments of GBP92 million; and the GBP14 million payment for the purchase of shares to satisfy share option commitments.
Overall net debt at 30 September 2017 of GBP371 million was GBP81 million lower than at 31 March 2017. Net debt decreased by GBP60 million in the period (2016 - decrease of GBP60 million) before the favourable impact of exchange rates. Foreign currency translation, mainly from the impact of the weakening of the US dollar, reduced net debt by GBP21 million.
Basis of preparation
The Group's principal accounting policies are unchanged compared with the year ended 31 March 2017. A number of minor changes to accounting policies have been adopted during the year, although they have had no material effect on the Group's financial statements.
Details of the basis of preparation, including information in respect of the methodology used to calculate the Group's adjusted performance metrics, can be found in Note 1 to the attached financial information.
Going Concern
After making enquiries, the Directors are satisfied that the Group has adequate resources to continue to operate for a period of not less than 12 months from the date of approval of the financial information and that there are no material uncertainties around their assessment. For these reasons, the Directors continue to adopt the going concern basis in preparing the consolidated financial information of the Group.
Risks and uncertainties
The principal risks and uncertainties affecting the business activities of the Group for the remaining six months of the financial year remain those detailed on pages 38 to 41 of the Tate & Lyle Annual Report 2017, a copy of which is available on the Company's website at www.tateandlyle.com.
The principal risks set out in the 2017 Annual Report relate to: acting safely and maintaining the safe operation of our facilities; growing in speciality food ingredients; innovating and commercialising new products; inability to attract, develop, engage and retain key personnel; failure to comply with legal or regulatory requirements and our Code of Ethics; maintaining the security of our information systems and data; maintaining the continuous operation of our plant network and supply chain, including high standards of customer service; managing fluctuations in prices and availability of raw materials, energy, freight and other operating inputs; maintaining the quality and safety of our products; changes in consumer, customer or government attitudes to our products; maintaining an effective system of internal financial controls; and changes in government regulations and/or trade policies.
Impact of changes in exchange rates
The Group's reported financial performance at average rates of exchange for the six months to 30 September 2017 was favourably impacted by currency translation. The average and closing US dollar and euro exchange rates used to translate reported results were as follows:
Average rates Closing rates
Six months to 30 September 2017 2016 2017 2016
US dollar : sterling 1.29 1.37 1.34 1.30
Euro : sterling 1.14 1.22 1.13 1.16
For the period ended 30 September 2017, foreign exchange translation increased Speciality Food Ingredients adjusted operating profit by GBP6 million, and increased Bulk Ingredients adjusted operating profit by GBP6 million, with adjusted profit before tax for the Group increasing by GBP11 million.
Statement of Directors' responsibilities
The Directors confirm: that this condensed set of consolidated financial information has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as adopted by the European Union; that the condensed set of financial statements gives a true and fair view of the assets, liabilities, financial position and profit or loss as required by the Disclosure Guidance and Transparency Rules (DTRs) sourcebook of the United Kingdom's Financial Conduct Authority, paragraph DTR 4.2.4; and that the interim management report herein includes a fair review of the information required by paragraphs DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during the first
six months and their impact on the condensed set of consolidated
financial information;
-- a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
-- material related party transactions in the first six months and any
material changes in the related party transactions described in the
last Annual Report.
The Directors are responsible for the maintenance and integrity of the Company's website. UK legislation governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors of Tate & Lyle PLC are listed in the Tate & Lyle Annual Report for the year ended 31 March 2017. The only changes to the Board since 31 March 2017 being the retirement of Liz Airey on 27 July 2017, and the resignation of Jeanne Johns with effect from 31 October 2017.
For and on behalf of the Board of Directors:
Javed Ahmed Nick Hampton Chief Executive Chief Financial Officer
1 November 2017
Independent review report to Tate & Lyle PLC
Report on the condensed consolidated financial statements
Our conclusion
We have reviewed Tate & Lyle PLC's condensed consolidated financial statements (the "interim financial statements") in the Statement of Half Year Results of Tate & Lyle PLC for the six month period ended 30 September 2017. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the consolidated statement of financial position as at 30 September
2017;
-- the consolidated income statement and consolidated statement of
comprehensive income for the period then ended;
-- the consolidated statement of cash flows for the period then ended;
-- the consolidated statement of changes in equity for the period then
ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Statement of Half Year Results of Tate & Lyle PLC have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors The Statement of Half Year Results, including the interim financial statements, is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Statement of Half Year Results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim financial statements in the Statement of Half Year Results based on our review. This report, including the conclusion, has been prepared for and only for Tate & Lyle PLC for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
What a review of interim financial statements involves We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Statement of Half Year Results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.
PricewaterhouseCoopers LLPChartered Accountants1 November 2017London
Notes:
(a) The maintenance and integrity of the Tate & Lyle PLC website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim financial statements since it was initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and dissemination of interim financial statements may differ from legislation in other jurisdictions.
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
Six months to Six months to Year to
30 September 30 September 31 March
Notes 2017 2016 2017
GBPm GBPm GBPm
Continuing operations 3 1 398 1 321 2 753
Sales
Operating profit 3 165 124 233
Finance income 1 1 2
Finance expense (18) (16) (34)
Share of profit after 13 19 32
tax of joint
ventures and associates
Profit before tax 161 128 233
Income 5 (37) 1 22
tax (expense)/credit
Profit for the period - 124 129 255
continuing operations
Profit for the period 6 - 1 1
- discontinued
operations
Profit for the period 124 130 256
- total operations
Profit for the period
from total
operations is entirely
attributable to owners
of the Company.
Earnings per share Pence Pence Pence
Continuing operations 7
- basic 26.8p 27.7p 55.0p
- diluted 26.5p 27.4p 54.2p
Total operations: 7
- basic 26.8p 28.0p 55.2p
- diluted 26.5p 27.7p 54.4p
Analysis of adjusted GBPm GBPm GBPm
profit for the
period - continuing
operations
Profit before tax 161 128 233
- continuing
operations
Adjusted for:
Net charge for 4 - 3 19
exceptional
items
Amortisation of acquired 5 6 12
intangible assets
Net retirement benefit 13 3 3 7
interest
Adjusted profit 2 169 140 271
before tax
- continuing operations
Adjusted income 2, 5 (40) (26) (49)
tax expense
- continuing operations
Adjusted profit 2 129 114 222
for the period
- continuing operations
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Six months to Six months to Year to
30 September 30 September 31 March
Notes 2017 2016 2017
GBPm GBPm GBPm
Profit for the period 124 130 256
Other comprehensive
income/(expense)
Items that have
been/may
be reclassified
to profit or loss:
Fair value gain on - 1 1
cash flow hedges
Fair (2) 4 4
value (gain)/loss
on cash flow hedges
transferred to the
income statement
Reclassified and - - (1)
reported in
the income statement
in
respect
of
available-for-sale
financial assets
Fair value gain on 1 - -
available-for-sale
financial assets
(Loss)/gain on (65) 147 185
currency
translation
of foreign operations
Fair value gain/(loss) 22 (54) (69)
on
net investment hedges
Share of other (7) 4 7
comprehensive
(expense)/income
of joint ventures
and associates
Amounts transferred - (1) (1)
to
the income statement
upon disposal of
subsidiary
Tax effect of the (1) (2) -
above items
(52) 99 126
Items that will not
be reclassified
to profit or loss:
Re-measurement
of retirement
benefit plans:
- actual return 13 (14) 219 179
(lower)/higher
than interest on
plan assets
- net actuarial 13 1 (279) (106)
gain/(loss)
on net
retirement benefit
obligations
Tax effect of the 1 3 (30)
above items
(12) (57) 43
Total (64) 42 169
other comprehensive (expense)/income Total comprehensive 60 172 425 income Analysed by: - continuing 60 172 425 operations - discontinued - - - operations Total comprehensive 60 172 425 income
Total comprehensive income is entirely attributable to owners of the Company.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
At At At
Notes 30 September 30 September 31 March
2017 2016 2017
GBPm GBPm GBPm
ASSETS
Non-current assets
Goodwill and other 381 415 401
intangible assets
Property, plant 1 001 1 033 1 061
and equipment
Investments in 73 83 92
joint ventures
Investments in associates - 4 4
Available-for-sale 35 24 30
financial assets
Derivative financial 10 18 15
instruments
Deferred tax assets 13 29 22
Trade and other 1 - 1
receivables
Retirement benefit 13 123 8 120
surpluses
1 637 1 614 1 746
Current assets
Inventories 380 365 441
Trade and other 317 302 291
receivables
Current tax assets 1 2 1
Available-for-sale 1 4 -
financial assets
Derivative financial 35 58 31
instruments
Cash and cash equivalents 9 242 289 261
Assets classified 15 4 - -
as held for sale
980 1 020 1 025
TOTAL ASSETS 2 617 2 634 2 771
EQUITY
Capital and reserves
Share capital 117 117 117
Share premium 406 406 406
Capital redemption 8 8 8
reserve
Other reserves 201 226 253
Retained earnings 562 362 548
EQUITY ATTRIBUTABLE 1 294 1 119 1 332
TO OWNERS
OF THE COMPANY-TOTAL
EQUITY
LIABILITIES
Non-current liabilities
Trade and other payables 10 11 10
Borrowings 9 574 594 604
Derivative financial 27 32 37
instruments
Deferred tax liabilities 30 33 25
Retirement benefit 13 242 280 259
deficits
Provisions for other 16 15 17
liabilities
and charges
899 965 952
Current liabilities
Trade and other payables 316 323 315
Current tax liabilities 55 66 57
Borrowings and bank 9 28 105 88
overdrafts
Derivative financial 17 30 17
instruments
Provisions for other 8 26 10
liabilities
and charges
424 550 487
TOTAL LIABILITIES 1 323 1 515 1 439
TOTAL EQUITY AND 2 617 2 634 2 771
LIABILITIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Six months to Six months to Year to
30 September 30 September 31 March
Notes 2017 2016 2017
GBPm GBPm GBPm
Cash flows from operating
activities
Profit before tax from 161 128 233
continuing operations
Adjustments for:
Depreciation of property, 56 50 109
plant and equipment
Amortisation of 20 19 40
intangible
assets
Share-based payments 8 8 21
Exceptional items 4 (2) (10) (5)
Finance income (1) (1) (2)
Finance expense 18 16 34
Share of profit after (13) (19) (32)
tax of joint
ventures and associates
Changes in working 16 62 4
capital and
other non-cash movements
Net retirement benefit (20) (20) (36)
obligations
Cash generated from 243 233 366
continuing
operations
Interest paid (12) (15) (30)
Net income tax paid (22) (17) (35)
Cash used in discontinued - (2) (3)
operations
Net cash generated from 209 199 298
operating activities
Cash flows from investing
activities
Purchase of property, (51) (69) (127)
plant and equipment
Purchase of intangible (10) (8) (26)
assets
Disposal of property, - 2 2
plant and equipment
Cash adjustment - 3 3
in respect
of previous acquisitions
Disposal of businesses, - 3 3
net of cash disposed
Purchase (7) (3) (4)
of available-for-sale
financial assets
Disposal 1 1 4
of available-for-sale
financial assets
Interest received 1 1 2
Dividends received 25 22 29
from joint
ventures and associates
Net cash used (41) (48) (114)
in investing
activities
Cash flows from financing
activities
Purchase of own shares (14) - (18)
to trust or treasury
Cash inflow from 2 73 66
additional
borrowings
Cash outflow from (69) (182) (189)
repayment
of borrowings
Repayment of capital - - (1)
element
of finance leases
Dividends paid 8 (92) (92) (130)
to the owners
of the Company
Net cash used (173) (201) (272)
in financing
activities
Net decrease in cash 9 (5) (50) (88)
and cash equivalents
Cash and cash equivalents
Balance at beginning 261 317 317
of period
Net decrease in cash (5) (50) (88)
and cash equivalents
Currency translation (14) 22 32
differences
Balance at end of period 9 242 289 261
A reconciliation of the movement in cash and cash equivalents to the movement in net debt is presented in Note 9.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Attributable
Share Capital to the owners Non-controlling Totalequity
capital and redemptionreserve Other Retained of the Interests GBPm
share GBPm reserves earnings Company (NCI)
premium GBPm GBPm GBPm GBPm
GBPm
At 1 April 2017 523 8 253 548 1 332 - 1 332
Six months to 30
September 2017:
Profit for - - - 124 124 - 124
the period
-
total operations
Other - - (52) (12) (64) - (64)
comprehensive
expense
Total - - (52) 112 60 - 60
comprehensive
(expense)/income
Share-based - - - 8 8 - 8
payments,
net of tax
Purchase of - - - (14) (14) - (14)
own shares
to trust or
treasury
Dividends paid - - - (92) (92) - (92)
(Note 8)
At 30 September 523 8 201 562 1 294 - 1 294
2017
At 1 April 2016 523 8 127 370 1 028 1 1 029
Six months to 30
September 2016:
Profit for - - - 130 130 - 130
the period
-
total operations
Other - - 99 (57) 42 - 42
comprehensive
income/(expense)
Total - - 99 73 172 - 172
comprehensive
income
Share-based - - - 8 8 - 8
payments,
net of tax
Derecognition - - - 3 3 - 3 of put option on NCI Movement on NCI - - - - - (1) (1) Dividends paid - - - (92) (92) - (92) At 30 September 523 8 226 362 1 119 - 1 119 2016 At 1 April 2016 523 8 127 370 1 028 1 1 029 Year to 31 March 2017: Profit for - - - 256 256 - 256 the year - total operations Other - - 126 43 169 - 169 comprehensive income Total - - 126 299 425 - 425 comprehensive income Share-based - - - 24 24 - 24 payments, net of tax Purchase of - - - (18) (18) - (18) own shares to trust or treasury Derecognition - - - 3 3 - 3 of put option on NCI Movement on NCI - - - - - (1) (1) Dividends paid - - - (130) (130) - (130) At 31 March 2017 523 8 253 548 1 332 - 1 332
TATE & LYLE PLC
NOTES TO THE FINANCIAL INFORMATION For the six months to 30 September 2017
1. Presentation of half year financial information
The principal activity of Tate & Lyle PLC and its subsidiaries, together with its joint ventures and associated undertakings, is the global provision of ingredients and solutions to the food, beverage and other industries.
The Company is a public limited company incorporated and domiciled in the United Kingdom and registered in England. The address of its registered office is 1 Kingsway, London WC2B 6AT. The Company has its primary listing on the London Stock Exchange.
Basis of preparation
This condensed set of consolidated financial information for the six months to 30 September 2017 has been prepared on a going concern basis in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34 Interim Financial Reporting as adopted by the European Union (EU). The condensed set of consolidated financial information should be read in conjunction with the annual financial statements for the year to 31 March 2017, which have been prepared in accordance with IFRSs as adopted by the EU.
Having reviewed the Group's latest projected results, cash flows, liquidity position and borrowing facilities, the Directors are satisfied that the Group has adequate resources to continue to operate for a period not less than 12 months from the date of approval of the condensed set of financial information and that there are no material uncertainties around their assessment. Accordingly, the Directors continue to adopt the going concern basis of accounting in preparing the condensed set of consolidated financial information.
The condensed set of consolidated financial information is unaudited, but has been reviewed by the external auditors. The condensed set of consolidated financial information in the Statement of Half Year Results does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The Group's published consolidated financial statements for the year to 31 March 2017 were approved by the Board of Directors on 24 May 2017 and filed with the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain an emphasis of matter paragraph or a statement under Section 498 (2) or (3) of the Companies Act 2006. The condensed set of consolidated financial information for the six months to 30 September 2017 on pages 15 to 34 was approved by the Board of Directors on 1 November 2017.
Changes in accounting policy and disclosures
The accounting policies adopted in the preparation of the condensed set of consolidated financial information are consistent with those of the Group's Annual Report and Accounts for the year to 31 March 2017, but also reflect the adoption, with effect from 1 April 2017, of new or revised accounting standards, as set out below:
- IAS 12 Income taxes (Amendments) (effective 1 January 2017)
- IAS 7 Statement of Cash Flows (Amendments) (effective 1 January 2017)
- Annual Improvements to IFRS - 2014-16 cycle
The adoption of these amendments from 1 April 2017 has had no material effect on the Group's financial statements.
The following new standards have been issued and are relevant to the Group, but were not effective for the financial year beginning 1 April 2017, and have not been adopted early:
- IFRS 15 - Revenue from Contracts with Customers (effective for the year ending 31 March 2019)
As disclosed in May 2017, the Group has undertaken a review of its commercial arrangements across all significant revenue streams and geographies including assessing the timing of revenue recognition as well as focusing on the accounting for principal and agency relationships, consignment stocks and discounts provided. As a result of the review, the Group has concluded that the adoption of IFRS 15 is not expected to have a material impact on reported revenue or revenue growth rates, and will continue to review its contracts and transactions with customers to ensure compliance with IFRS 15 on adoption.
- IFRS 9 - Financial Instruments (effective for the year ending 31 March 2019)
As also disclosed in May 2017, the Group has undertaken a review of the key areas of IFRS 9 focused principally on classification and measurement of financial assets and liabilities, impairment of financial assets and hedge accounting. The Group has concluded that the adoption of IFRS 9 will not have a material impact on its consolidated results or financial position, and will continue to review its activities in these areas to ensure compliance with IFRS 9 upon adoption.
- IFRS 16 - Leases (effective for the year ending 31 March 2020, subject to endorsement by the EU)
The standard eliminates the classification of leases as either operating or finance leases and introduces a single accounting model, and will require the Group to recognise substantially all of its current operating lease commitments on the statement of financial position. The Group will undertake a review of its lease arrangements and intends to provide an update of the impact in the Group's 2018 Annual Report.
-IFRIC 23 - Uncertainty over Income Tax Treatments (effective for the year ending 31 March 2020, subject to EU endorsement)
The interpretation is to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12. The financial impact of this, together with any other implications of this interpretation, will be assessed during the 2019 financial year.
There are no other new standards, new interpretations or amendments to standards or interpretations that have been published that are expected to have a significant impact on the Group's financial statements.
Seasonality
The Group's principal exposure to seasonality is in relation to working capital. The Group's inventories are subject to seasonal fluctuations reflecting crop harvesting and purchases. Inventory levels typically increase progressively from September to November and gradually reduce in the first six months of the calendar year.
Changes in constant currency
Where changes in constant currency are presented in this statement, they are calculated by retranslating current period results at prior period exchange rates. Reconciliations of the movement in constant currency have been included in the additional information within this document.
Use of alternative performance measures
The Group also presents alternative performance measures, including adjusted operating profit, adjusted profit before tax, adjusted earnings per share, adjusted operating cash flow and adjusted free cash flow, which are used for internal performance analysis and incentive compensation arrangements for employees. These measures are presented because they provide investors with valuable additional information about the performance of the business. For the periods presented, alternative performance measures exclude, where relevant:
- Exceptional items (excluded as they relate to events which are unlikely to recur, are outside the normal course of business and therefore merit separate disclosure in order to provide a better understanding of the Group's underlying financial performance);
- Amortisation of acquired intangible assets (costs associated with amounts recognised through acquisition accounting that impact earnings compared to organic investments);
- Net retirement benefit interest (accounting charges or credits which are not linked to the underlying performance of the business. The amounts excluded reflect the net interest cost of post-retirement benefit plans substantially closed to future accrual); and
- Tax on the above items and tax items that themselves meet these definitions.
Alternative performance measures reported by the Group are not defined terms under IFRS and may therefore not be comparable with similarly-titled measures reported by other companies. Reconciliations of the alternative performance measures to the most directly comparable IFRS measures are presented in Note 2.
Exceptional items
Exceptional items comprise items of income and expense, including tax items that are material in amount, relate to events which are unlikely to recur, are outside the normal course of business and therefore merit separate disclosure in order to provide a better understanding of the Group's underlying financial performance. Examples of events that give rise to the disclosure of material items of income and expense as exceptional items include, but are not limited to: impairment events; significant business transformation activities; disposals of operations or significant individual assets; litigation claims by or against the Group; changes in tax legislation; and restructuring of components of the Group's operations.
All material amounts relating to exceptional items in the Group's financial statements are classified on a consistent basis across accounting periods.
Discontinued operations
An operation is classified as discontinued if it is a component of the Group that: (i) has been disposed of, or meets the criteria to be classified as held for sale; and (ii) represents a separate major line of business or geographic area of operations or will be disposed of as part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations. The results, assets and liabilities and cash flows of discontinued operations are presented separately from those of continuing operations.
There was no activity classified within discontinued operations in the six months to 30 September 2017.
Discontinued operations in the comparative periods related to the disposal of the Group's Moroccan subsidiary. As part of a broader transaction with Archer Daniels Midland Inc. (ADM), the Group sold its corn wet mill in Casablanca, Morocco to ADM on 1 June 2016.
2.Reconciliation of alternative performance measures
For the reasons set out in Note 1, the Group presents alternative performance measures including adjusted operating profit, adjusted profit before tax and adjusted earnings per share.
For the periods presented, these alternative performance measures exclude, where relevant:
- exceptional items;
- the amortisation of acquired intangible assets;
- net retirement benefit interest; and
- tax on the above items and tax items that themselves meet these definitions.
The following table shows the reconciliation of the key alternative performance measures to the most directly comparable measures reported in accordance with IFRS:
Six months to 30 September 2017 Six months to 30 September 2016
GBPm IFRS Adjustingitems Adjusted IFRS Adjusting Adjusted
unless reported reported reported items reported
otherwise
stated
Continuing
operations
Sales 1 398 - 1 398 1 321 - 1 321
Operating 165 5 170 124 9 133
profit
Net finance (17) 3 (14) (15) 3 (12)
expense
Share of 13 - 13 19 - 19
profit
after
tax of
joint
ventures
and
associates
Profit 161 8 169 128 12 140
before
tax
Income (37) (3) (40) 1 (27) (26)
tax
(expense)/credit
Profit for 124 5 129 129 (15) 114
the year
Basic 26.8p 1.2p 28.0p 27.7p (3.1p) 24.6p
earnings
per share
Diluted 26.5p 1.1p 27.6p 27.4p (3.1p) 24.3p
earnings
per share
Effective 22.8% 23.5% (0.9%) 18.3%
tax rate
expense/(credit)
Year to 31 March 2017
Continuing operations IFRS Adjusting Adjusted
reported items reported
Sales 2 753 - 2 753
Operating profit 233 31 264
Net finance expense (32) 7 (25)
Share of profit after tax of joint 32 - 32
ventures and associates
Profit before tax 233 38 271
Income tax credit/(expense) 22 (71) (49)
Profit for the year 255 (33) 222
Basic earnings per share 55.0p (7.2p) 47.8p
Diluted earnings per share 54.2p (7.1p) 47.1p
Effective tax rate (credit)/expense (9.6%) 18.2%
The following table shows the reconciliation of the adjusting items in the current and comparative periods:
Continuing Six months to Six months to Year to
operations 30 September 30 September 31 March
Notes 2017 2016 2017
GBPm GBPm GBPm
Exceptional 4 - 3 19
items in
operating profit
Amortisation 5 6 12
of acquired
intangible assets
Total excluded 5 9 31
from adjusted
operating profit
Net retirement 13 3 3 7
benefit
interest
Total excluded 8 12 38
from adjusted
profit before tax
Tax on adjusting 5 (3) (1) (6)
items
Exceptional 4, 5 - (26) (65)
deferred
tax credits
Total excluded 5 (15) (33)
from adjusted
profit for
the period
The Group also presents two alternative cash flow measures which are defined as follows:
(a) Adjusted free cash flow represents cash generated from continuing operations after net interest paid, income tax paid, and capital expenditure, and excluding the impact of exceptional items.
(b) Adjusted operating cash flow is defined as adjusted free cash flow from continuing operations, adding back net interest and tax paid, retirement cash contributions, and excluding derivative and margin call movements within working capital.
The following table shows the reconciliation of these alternative cash flow performance measures:
Six months to Six months to Year to31
30 September 30 September March
2017 2016 2017
GBPm GBPm GBPm
Adjusted operating profit from 170 133 264
continuing operations
Adjusted for:
Depreciation and adjusted 71 63 137
amortisation
Share-based payments charge 8 8 21
Changes in working capital and 16 62 4
other non-cash movements
Net retirement benefit (20) (20) (36)
obligations
Capital expenditure (61) (77) (153)
Net interest and tax paid (33) (31) (63)
Adjusted free cash flow 151 138 174
Add back: net interest 33 31 63
and tax paid
Add back: net retirement 25 23 42
cash contributions
Less: derivatives and margin 4 (7) (6)
call movements
within changes in
working capital
Adjusted operating cash flow 213 185 273
The Group presents certain financial measures as defined in its external financial covenants as Key Performance Indicators. Net debt to EBITDA and interest cover are defined under the Group's financial covenants and are required to be reported on a proportionate consolidation basis. For financial covenant purposes these ratios are calculated based on the accounting standards that applied for the 2014 financial year, with new accounting standards adopted by the Group subsequent to 1 April 2014 disregarded, with performance based on the preceding 12 months' results. Net debt is calculated using average currency exchange rates. All ratios are calculated based on unrounded figures in GBP million. The following table presents the calculation of these alternative measures:
30 September 30 September 31 March
2017 2016 2017
GBPm GBPm GBPm
Calculation of Net debt
to EBITDA ratio
- on a financial covenant basis
Net debt (see Note 9) 371 418 452
Further adjustments set out
in financial covenants:
to reflect use of 28 (33) (13)
average exchange
rates in translating
net debt and proportionate
consolidation
Net debt - on a financial 399 385 439
covenant basis
Adjusted operating profit 301 221 264
Further adjustments set out
in financial covenants:
to reflect proportionate 40 54 48
consolidation
to exclude charges for 21 13 21
share-based payments
to add back depreciation and 145 116 137
adjusted amortisation
Pre-exceptional EBITDA - on 507 404 470
a financial covenant basis
Net debt to EBITDA ratio (times) 0.8 1.0 0.9
Calculation of interest
cover ratio
- on a financial covenant basis
Adjusted operating profit 301 221 264
Further adjustments set out
in financial covenants:
to reflect proportionate 36 47 43
consolidation
to exclude charges for 21 13 21
share-based payments Operating profit before 358 281 328 exceptional items and amortisation of intangible assets - on a financial covenant basis Adjusted net finance expense 27 25 25 Less: Other financing costs (1) - - Further adjustments set out in (1) (2) (1) financial covenants including proportionate consolidation and other adjustments Net finance expense - on a 25 23 24 financial covenant basis Interest cover ratio (times) 14.5 12.2 13.9
3. Segment information
Segment information is presented on a basis consistent with the information presented to the Board (the designated Chief Operating Decision Maker) and with that presented in the Group's 2017 Annual Report. An analysis of total assets and total liabilities by operating segment is not presented to the Board but it does receive segmental analysis of net working capital. Accordingly, the amounts presented for segment assets and segment liabilities in the tables below represent those assets and liabilities that comprise elements of net working capital. Segment results were as follows:
(a)Segment sales
and results
Sales Notes Six months to Six months to Year to
30 September 30 September 31 March
2017 2016 2017
GBPm GBPm GBPm
Speciality Food 509 487 996
Ingredients
Bulk Ingredients 889 834 1 757
Sales - continuing 1 398 1 321 2 753
operations
Sales - discontinued - 3 3
operations
Sales - total operations 1 398 1 324 2 756
Adjusted operating profit
- continuing operations
Speciality Food 104 94 181
Ingredients
Bulk Ingredients 93 64 129
Central (27) (25) (46)
Adjusted operating profit 170 133 264
- continuing operations
Adjusting items:
- exceptional items 4 - (3) (19)
- amortisation of acquired (5) (6) (12)
intangible assets
Operating profit 165 124 233
- continuing
operations
Finance income 1 1 2
Finance expense (18) (16) (34)
Share of profit after 13 19 32
tax of joint
ventures and associates
Profit before tax 161 128 233
- continuing
operations
Profit before tax - 1 1
- discontinued
operations
Profit before tax - 161 129 234
total operations
Six months to Six months to Year to
30 September 30 September 31 March
2017 2016 2017
% % %
Adjusted operating margin
- continuing operations
Speciality Food Ingredients 20.4% 19.3% 18.2%
Bulk Ingredients 10.5% 7.7% 7.3%
Central n/a n/a n/a
Total 12.2% 10.1% 9.6%
(b) Segment assets/(liabilities)
At 30 September 2017
Assets Liabilities Net
GBPm GBPm GBPm
Net working capital
Speciality Food Ingredients 364 (136) 228
Bulk Ingredients 318 (158) 160
Central 16 (32) (16)
Group working capital - continuing 698 (326) 372
and total operations
Other assets/(liabilities) 1 919 (997) 922
Group assets/(liabilities) 2 617 (1 323) 1 294
At 30 September 2016
Assets Liabilities Net
GBPm GBPm GBPm
Net working capital
Speciality Food Ingredients 347 (145) 202
Bulk Ingredients 309 (151) 158
Central 11 (38) (27)
Group working capital - continuing 667 (334) 333
and total operations
Other assets/(liabilities) 1 967 (1 181) 786
Group assets/(liabilities) 2 634 (1 515) 1 119
At 31 March 2017
Assets Liabilities Net
GBPm GBPm GBPm
Net working capital
Speciality Food Ingredients 371 (129) 242
Bulk Ingredients 349 (146) 203
Central 13 (50) (37)
Group working capital - continuing 733 (325) 408
and total operations
Other assets/(liabilities) 2 038 (1 114) 924
Group assets/(liabilities) 2 771 (1 439) 1 332
4. Exceptional items
There were no exceptional items impacting the income statement in the six months to 30 September 2017.
During the six months to 30 September 2016, the Group recognised net operating exceptional costs of GBP3 million within continuing operations and an exceptional tax credit of GBP26 million. The exceptional tax credit related to the recognition of a deferred tax asset following changes to UK tax legislation.
In the year to 31 March 2017, the Group recognised net operating exceptional costs of GBP19 million within continuing operations. The Group also recognised an exceptional tax credit of GBP65 million related to the recognition of deferred tax assets.
Further details of amounts previously recognised in the 2017 financial year can be found in the Group's 2017 Annual Report.
The exceptional cash flows in the current and comparative periods were as follows:
Six months to Six months to Year to
30 September 30 September 31 March
2017 2016 2017
Net cash outflow on Footnote GBPm GBPm GBPm
exceptional items:
Continuing operations
Business re-alignment (a) (2) (13) (21)
- impairment,
restructuring and
other net costs
Asset impairments - - (3)
- related costs
Net cash outflow - (2) (13) (24)
exceptional items
Income statement - 3 19
charge
- included
in profit before tax
Adjustment for: (2) (10) (5)
exceptional
items
- per cash flow
statement
(a) In the six months to 30 September 2017, the Group made cash payments of GBP2 million in respect of business re-alignment costs for SPLA® Sucralose and its European operations. Further details of comparative amounts can be found in the Group's 2017 Annual Report.
5. Income tax expense
Continuing operations Six months to Six months to Year to
30 September 30 September 31 March
2017 2016 2017
GBPm GBPm GBPm
Current tax:
- United Kingdom - - -
- Overseas (23) (13) (23)
(23) (13) (23)
Deferred tax:
(Expense)/credit (14) 14 45
for the period
Income (37) 1 22
tax (expense)/credit
Reconciliation Note GBPm GBPm GBPm
to adjusted
income tax expense
Income (37) 1 22
tax (expense)/credit
Adjusted for:
Taxation (3) (1) (6)
on exceptional
items,
amortisation
of acquired
intangibles and
net retirement
benefit interest
Exceptional deferred - (26) (65)
tax credits
Adjusted income 2 (40) (26) (49)
tax expense
- continuing
operations
The Group recorded an income tax expense of GBP37 million in continuing operations for the six months to 30 September 2017 (six months to 30 September 2016 - credit of GBP1 million; year to 31 March 2017 - credit of GBP22 million).
The Group's statutory tax rate on continuing operations, calculated on the basis of the reported income tax expense of GBP37 million as a proportion of profit before tax of GBP161 million was 22.8% (six months to 30 September 2016 - credit of 0.9%; year to 31 March 2017 - credit of 9.6%). In the six months to 30 September 2016, the income tax credit included an exceptional tax credit in relation to the recognition of deferred tax assets of GBP26 million arising from previously unrecognised tax losses in the UK which following changes to UK legislation and internal financing arrangements are now expected to be utilised. In the year to 31 March 2017 deferred tax assets totaling GBP65 million were recognised (GBP34 million with respect to previously unrecognised tax losses as above, and GBP31 million with respect to the transfer at fair value of certain intellectual property assets).
The Group's adjusted effective tax rate on continuing operations, calculated on the basis of the adjusted income tax expense of GBP40 million as a proportion of adjusted profit before tax of GBP169 million was 23.5% (six months to 30 September 2016 - 18.3%; year to 31 March 2017 - 18.2%). The adjusted effective tax rate increased as a result of firstly, changes to UK legislation and consequent changes to the internal financing structure we use to fund our international businesses, and secondly, an increase in profits from the US, a jurisdiction with higher rates of corporation tax.
In March 2017, the UK government announced further draft changes to UK loss utilisation rules which, if carried into legislation, would impact our ability to utilise brought forward losses in the future.
The standard rate of corporation tax in the United Kingdom reduced from 20% to 19% on 1 April 2017 and is expected to reduce from 19% to 17% with effect from 1 April 2020.
6. Discontinued operations
The discontinued operations of the Group are set out in Note 1. There was no activity classified within discontinued operations in the six months to 30 September 2017 (six months to 30 September 2016 - gain of GBP1 million; year to 31 March 2017 - gain of GBP1 million).
7. Earnings per share
Basic earnings per share is calculated using a consistent methodology with that used at 31 March 2017 (see the Group's 2017 Annual Report for further details). The average market price of the Company's ordinary shares during the six months to 30 September 2017 was 710p (six months to 30 September 2016 - 666p; year to 31 March 2017 - 695p). The dilutive effect of share-based incentives was 6.7 million shares (30 September 2016 - 5.1 million shares; 31 March 2017 - 7.1 million shares).
Six months to 30 September 2017 Six months to 30 September 2016
Continuingoperations Discontinuedoperations Total Continuingoperations Discontinuedoperations Total
Profit attributable 124 - 124 129 1 130
to owners
of the Company
(GBP million)
Weighted average 463.0 463.0 463.0 464.4 464.4 464.4
number
of ordinary
shares (millions)
- basic
Basic earnings 26.8p - 26.8p 27.7p 0.3p 28.0p
per share
Weighted average 469.7 469.7 469.7 469.5 469.5 469.5
number
of ordinary
shares (millions)
- diluted
Diluted earnings 26.5p - 26.5p 27.4p 0.3p 27.7p
per share
Year to 31 March 2017
Continuingoperations Discontinuedoperations Total
Profit attributable 255 1 256
to owners
of the Company
(GBP million)
Weighted average 464.1 464.1 464.1
number
of ordinary
shares (millions)
- basic
Basic earnings 55.0p 0.2p 55.2p
per share
Weighted average 471.2 471.2 471.2
number
of ordinary
shares (millions)
- diluted
Diluted earnings 54.2p 0.2p 54.4p
per share
Adjusted earnings per share
A reconciliation between profit attributable to owners of the Company from continuing operations and the equivalent adjusted metric, together with the resulting adjusted earnings per share metrics can be found below:
Continuing operations Notes Six months to Six months to Year to
30 September 30 September 31 March
2017 2016 2017
GBPm GBPm GBPm
Profit attributable to 124 129 255
owners of the Company
Adjusting items:
- exceptional items 4 - 3 19
- amortisation of acquired 5 6 12
intangible assets
- net retirement 13 3 3 7
benefit interest
- tax effect of the 5 (3) (1) (6)
above adjustments
- exceptional deferred 5 - (26) (65)
tax credits
Adjusted profit 2 129 114 222
attributable
to owners of the Company
Adjusted basic earnings 28.0p 24.6p 47.8p
per share
(pence) - continuing
operations
Adjusted diluted earnings 27.6p 24.3p 47.1p
per share
(pence) - continuing
operations
8. Dividends on ordinary shares
The Directors have declared an interim dividend of 8.4p per share for the six months to 30 September 2017 (six months to 30 September 2016 - 8.2p per share), payable on 5 January 2018.
The final dividend for the year to 31 March 2017 of GBP92 million, representing 19.8p per share, was paid during the six months to 30 September 2017.
9. Net debt
The components of the Group's net debt are as follows:
At At At
30 September 30 September 31 March
2017 2016 2017
GBPm GBPm GBPm
Non-current borrowings (574) (594) (604)
Current borrowings and (28) (105) (88)
bank overdrafts
Debt-related derivative (11) (8) (21)
financial instruments
Cash and cash equivalents 242 289 261
Net debt (371) (418) (452)
Debt-related derivative financial instruments represents the net fair value of currency and interest rate swaps that are used to manage the currency and interest rate profile of the Group's net debt. At 30 September 2017, the net fair value of these derivatives comprised assets of GBP17 million (30 September 2016 - GBP25 million; 31 March 2017 - GBP17 million) and liabilities of GBP28 million (30 September 2016 - GBP33 million; 31 March 2017 - GBP38 million).
Movements in the Group's net debt were as follows:
Six months to Six months to Year to
30 September 30 September 31 March
2017 2016 2017
GBPm GBPm GBPm
Net debt at beginning (452) (434) (434)
of the period
Decrease in cash and (5) (50) (88)
cash equivalents
in the period
Net decrease in borrowings* 67 109 124
Fair value and other movements (2) 1 3
Currency translation differences 21 (44) (57)
Decrease/(increase) in 81 16 (18)
net debt in the period
Net debt at end of the period (371) (418) (452)
* Where relevant, net change in borrowings includes repayments of capital elements of finance leases (six months to 30 September 2017 - GBPnil, six months to 30 September 2016 - GBPnil; year to 31 March 2017 - GBP1 million).
At 30 September 2017, the Group had no US commercial paper outstanding (30 September 2016 - GBP77 million; 31 March 2017 - GBP70 million). During the six months to 30 September 2016, the Group repaid a maturing US$250 million bond.
10. Contingent liabilities
Passaic River
The Group remains subject to a legal case arising from the notification in 2007 by the U.S. Environmental Protection Agency ('USEPA') that Tate & Lyle, along with approximately 70+ others, is a potentially responsible party ('PRP') for a 17 mile section of the northern New Jersey Passaic River, a major 'Superfund' Site. In March 2016, the USEPA issued its Record of Decision ('ROD') on the likely cost for the remediation of the lower 8 miles section of the river (the most contaminated). Whilst Tate & Lyle will continue to vigorously defend itself in this matter, in light of the publication of the ROD, the Group carries a provision of GBP6 million in respect of this. The Group continues to be unable to estimate a reasonably possible range of loss in respect of the remaining 9 mile section of the river and therefore has not recognised a provision in this regard.
Other claims
The Group is subject to claims and litigation generally arising in the ordinary course of its business, some of which are for substantial amounts. All such actions are strenuously defended but provision is made for liabilities that are considered likely to arise on the basis of current information and legal advice. While there is always uncertainty as to the outcome of any claim or litigation, it is not expected that claims and litigation existing at 30 September 2017 will have a material adverse effect on the Group's financial position.
11. Capital expenditure and commitments
In the six months to 30 September 2017, there were additions to intangible assets (excluding goodwill and acquired intangibles) of GBP10 million (30 September 2016 - GBP10 million; 31 March 2017 - GBP26 million) and additions to property, plant and equipment of GBP51 million (30 September 2016 - GBP70 million; 31 March 2017 - GBP128 million).
Commitments at the balance sheet date were as follows:
At At At
30 September 30 September 31 March
2017 2016 2017
GBPm GBPm GBPm
Commitments for the purchase 2 - -
of intangible assets
Commitments for the purchase of 32 36 25
property, plant and equipment
Total commitments 34 36 25
12. Financial instruments
The table below shows the Group's financial assets and liabilities measured at fair value at 30 September 2017. The fair value hierarchy categorisation, valuation techniques and inputs, consistent with those used in the year to 31 March 2017 (see Notes 2 and 29 of the Group's 2017 Annual Report) are:
- Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can assess at the measurement date;
- Level 2: Inputs are those, other than quoted prices included in Level 1, that are observable either directly or indirectly; and
- Level 3: Inputs are unobservable inputs. The Group generally classifies assets or liabilities as Level 3 when the fair value is determined using unobservable inputs that individually, or when aggregated with other unobservable inputs, represent more than 10% of the fair value of observable inputs of the assets or liabilities.
At 30 September 2017 At 31 March 2017
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Assets at
fair
value
Available-for-sale - - 36 36 - - 30 30
financial
assets
Derivative
financial
instruments:
- currency - - - - - 2 - 2
swaps
- interest - 17 - 17 - 15 - 15
rate swaps
- commodity 3 2 23 28 7 1 21 29
pricing
contracts
Assets at 3 19 59 81 7 18 51 76
fair
value
Liabilities
at
fair value
Derivative
financial
instruments:
- currency - (28) - (28) - (38) - (38)
swaps
- commodity (8) (5) (3) (16) (6) (7) (3) (16)
pricing
contracts
Liabilities (8) (33) (3) (44) (6) (45) (3) (54)
at
fair value
The commodity pricing contracts included within the Group's Level 3 financial instruments are valued based on the Group's own assessment of the particular commodity, its supply and demand and expected pricing. The most significant unobservable input for those written commodity contracts remains the future price of co-product positions. The methodology used to value all Level 3 financial instruments remains unchanged from that used at 31 March 2017 and the sensitivity of the fair value of the Level 3 financial instruments to changes in the price of commodity contracts is not materially different to that disclosed at 31 March 2017. Further detail can be found on page 157 of the Group's 2017 Annual Report.
The following table reconciles the movement in fair value of net financial instruments classified in 'Level 3' of the fair value hierarchy:
Available-for- Commodity Commodity Total
sale financial pricing pricing GBPm
assets contract contract
GBPm - assets - liabilities
GBPm GBPm
At 31 March 2017 30 21 (3) 48
Total
gains/(losses):
- in operating - 15 (1) 14
profit
- (1) - - (1)
in other comprehensive
income
Re-measurement of 1 - - 1
non-qualified
deferred
compensation
arrangements
Purchases 7 - - 7
Settlements (1) (13) 1 (13)
At 30 September 2017 36 23 (3) 56
Fair value of borrowings
The fair value of borrowings is estimated to be GBP621 million (30 September 2016 - GBP734 million; 31 March 2017 - GBP712 million) and has been determined using quoted market prices, broker dealer quotations or discounted cash flow analysis. The carrying value of other assets and liabilities held at amortised cost is not materially different from their fair value. Further details of these instruments and our associated accounting policies can be found in Note 2 on page 112 of the Group's 2017 Annual Report.
13.Retirement benefit obligations
At 30 September 2017, the net liability in respect of retirement benefits was GBP119 million (31 March 2017 - GBP139 million), which is analysed as follows:
At 30 September 2017 At 31 March 2017
Pensions Medical benefits Total Pensions Medical benefits Total
GBPm GBPm GBPm GBPm GBPm GBPm
Present value (1 630) (72) (1 702) (1 693) (76) (1 769)
of benefit
obligations
Fair value of 1 583 - 1 583 1 630 - 1 630
plan assets
Net liability (47) (72) (119) (63) (76) (139)
Presented as:
Deficits (170) (72) (242) (183) (76) (259)
Surpluses 123 - 123 120 - 120
Net liability (47) (72) (119) (63) (76) (139)
Changes in the net liability during the period are analysed as follows:
Six months to 30 September 2017
Pensions Medical Total
GBPm benefits GBPm
GBPm
Net liability at 1 April 2017 (63) (76) (139)
Income statement:
- service cost (2) (1) (3)
- plan administration costs (2) - (2)
- net interest expense (2) (1) (3)
Other comprehensive income:
- actual return lower than (14) - (14)
interest on plan assets
- actuarial gain/(loss) 2 (1) 1
Other movements:
- employer's contributions 23 2 25
- re-measurement of non-qualified (1) - (1)
deferred
compensation arrangements
- currency translation differences 12 5 17
Net liability at 30 September 2017 (47) (72) (119)
14.Related party disclosures
The Group's significant related parties are its associate and joint ventures as disclosed in the 2017 Annual Report. There were no material changes in related parties or in the nature of related party transactions during the period.
15.Events after the reporting period and assets held for sale
Tapioca Development Corporation, the Group's associate with a carrying value of GBP4 million, was classified as held for sale at 30 September 2017, and was subsequently disposed on 2 October 2017.
TATE & LYLE PLC
ADDITIONAL INFORMATION
Calculation of changes in constant currency
Where changes in constant currency are presented in this statement, they are calculated by retranslating current period results at prior period exchange rates. The following table provides a reconciliation between the six months to September 2017 performance at actual exchange rates and at constant currency exchange rates. Absolute numbers presented in the table are rounded for presentational purposes, whereas the growth percentages are calculated on unrounded numbers.
Six 2017 2017 Underlying 2016 Changein months GBPm FX at constant growth GBPm Change% constant to GBPm currency GBPm currency 30 GBPm % September Adjusted performance Continuing operations Sales 1 398 (82) 1 316 (5) 1 321 6% - Adjusted operating profit Speciality 104 (6) 98 4 94 10% 4% Food Ingredients Bulk 93 (6) 87 23 64 45% 36% Ingredients Central (27) 1 (26) (1) (25) Adjusted 170 (11) 159 26 133 28% 20% operating profit Adjusted (14) 1 (13) (1) (12) net finance expense Share 13 (1) 12 (7) 19 (32%) (37%) of profit after tax of joint ventures and associates Adjusted 169 (11) 158 18 140 21% 13% profit before tax Adjusted (40) 3 (37) (11) (26) (55%) (43%) income tax expense Adjusted 129 (8) 121 7 114 13% 6% profit after tax Adjusted 27.6p (1.8p) 25.8p 1.5p 24.3p 14% 6% diluted EPS (pence)
Ratio analysis
30 September 30 September 31 March
2017 2016 2017
Net debt to EBITDA - on a
financial covenant basis
= Net debt 399 385 439
Pre-exceptional EBITDA 507 404 470
= 0.8 times = 1.0 times = 0.9 times
Interest cover - on a financial
covenant basis
= Operating profit before
exceptional items
and amortisation of
intangible assets
Net finance expense
358 281 328
25 23 24
= 14.5 times = 12.2 times = 13.9 times
Cash dividend cover
= Adjusted free cash flow from 151 138 174
continuing operations
Cash dividends 39 38 130
= 3.9 times = 3.6 times = 1.3 times
Gearing
= Net debt 371 418 452
Total equity 1 294 1 119 1 332
= 29% = 37% = 34%
Note:
All ratios are calculated based on unrounded figures in GBP million. Net debt to EBITDA, interest cover, adjusted free cash flow and adjusted operating cash flow are defined and reconciled in Note 2 of the attached financial information. Gearing is prepared using equity accounted net debt and total equity from the consolidated statement of financial position.
Cash dividends represent external dividends on ordinary shares paid or proposed in respect of the reporting period.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171102005298/en/
This information is provided by Business Wire
(END) Dow Jones Newswires
November 02, 2017 03:00 ET (07:00 GMT)
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