TIDMTATE
RNS Number : 8595S
Tate & Lyle PLC
09 November 2023
Half-year results for the six months to 30 September 2023
Robust revenue, profit and cash performance
Adjusted performance (1) Statutory performance
================================================ ======================================
2023 vs 2022 2023 vs 2022
============================ ======== ======== ================== ======== ========
Revenue GBP857m 4% Revenue GBP857m 1%
Food & Beverage
Food & Beverage Solutions GBP707m 5% Solutions GBP707m 2%
Sucralose GBP89m (5)% Sucralose GBP89m (9)%
EBITDA GBP178m 7% Primary Products GBP61m - %
Europe
Food & Beverage Solutions GBP153m 10%
Sucralose GBP28m (14)%
EBITDA margin 20.8% 70bps
Share of profit of
Primient GBP17m 32%
Profit before tax GBP156m 16% Operating profit GBP123m 8%
Earnings per share 30.1p 19% Profit before tax GBP130m 92%
Diluted earnings
Free cash flow GBP77m GBP15m per share 25.4p 90%
============================ ======== ======== ================== ======== ========
Key highlights
-- Revenue growth +4%, with Food & Beverage Solutions (FBS) +5%
-- Adjusted EBITDA +7%, driven by mix management, pricing, productivity and cost discipline
-- Adjusted profit before tax +16%, strong FBS growth, increased
Primient share of profit, lower finance charges
-- Free cash flow(1) GBP77m, GBP15m higher reflecting cash conversion of 69%, 14ppts higher
-- Investment in innovation and solution selling 11% higher
-- Solutions new business wins by value up 4ppts to 22% of pipeline
-- Major investment underway in new capacity for dietary fibres
at manufacturing facility in Slovakia
-- 0.8p increase in interim dividend, up to 6.2p per share;
reflecting one third of prior year full-year dividend
Nick Hampton, Chief Executive said:
"Tate & Lyle delivered a robust financial performance in the
first half despite challenging market conditions and made good
progress on its growth-focused strategy.
Food & Beverage Solutions performed well with double-digit
profit growth. Revenue was higher benefiting from a combination of
our focus on mix and margin expansion as well as the recovery of
inflation, partially offset by softer consumer demand and customer
de-stocking. In Sucralose, underlying customer demand remained
steady with the lower first-half performance reflecting the phasing
of orders in the comparative period.
To deliver our commitment to 'Science, Solutions, Society', we
increased i nvestment in innovation and solution selling, announced
a major expansion of growth capacity for dietary fibres, and
expanded the use of renewable energy across our operations. These
investments strengthen customer partnerships and drive long-term
growth.
The strategic re-positioning of Tate & Lyle to focus on
speciality food and beverage solutions is enhancing the quality of
the business and driving performance. Our strong ingredient
portfolio and solutions capabilities in sweetening, mouthfeel and
fortification mean we are well-placed to benefit from the long-term
trends towards healthier, tastier and more sustainable food and
drink."
1. Revenue growth, adjusted EBITDA and adjusted EBITDA margin,
share of adjusted profit of Primient, adjusted earnings per share,
free cash flow, return on capital employed (ROCE), net debt and net
debt to EBITDA are non-GAAP measures (see pages 8 to 11). Changes
in adjusted performance metrics are in constant currency and for
continuing operations
Outlook
We expect to deliver progress in-line with our five-year
ambition to 31 March 2028 with revenue reflecting both strategic
momentum and the impact of the expected pass through of input cost
deflation in the second half. Therefore, for the year ending 31
March 2024, in constant currency, we expect to deliver:
-- Revenue slightly ahead of the prior year; and
-- EBITDA growth of 7% to 9%.
We continue to expect stronger profits from our minority holding
in Primient.
Overview
Our business
Tate & Lyle is a growth-focused speciality food and beverage
solutions business with a strong sense of purpose and clear
strategic focus.
-- Global leader in sweetening, mouthfeel and fortification,
creating solutions for our customers to meet growing consumer
trends for healthier food and drink.
-- Science-driven business, with an established record of innovation and scientific expertise.
-- Well-balanced and global business with a strong presence in
developed markets and a platform for accelerated growth in the
large markets of Asia, Middle East, Africa and Latin America.
-- Strong balance sheet providing flexibility to invest for
growth, and an experienced management team with a track record of
delivery.
Tate & Lyle has been re-positioned to be at the centre of
the future of food, operating in segments of the market which are
seeing significant growth. This supports our five-year financial
ambition to 31 March 2028, to deliver:
-- Revenue growth of 4% to 6% each year
-- Adjusted EBITDA growth of 7% to 9% each year
-- Improved return on capital employed by up to 50 basis points on average each year
-- US$100m of productivity savings.
As stated at our Capital Markets Event on 8 February 2023,
revenue growth is on an underlying basis excluding the impact of
abnormal inflation and deflation.
We also have the potential to further accelerate growth through
partnerships and M&A.
Delivering our growth-focused strategy
We continued to invest in the first half to progress our
growth-focused strategy in line with our commitment to 'Science,
Solutions, Society'.
Science
-- Investment in innovation and solutions selling was 11%
higher, with investments in new customer-facing labs, new
technology and strengthening capabilities in areas such as sensory
and open innovation.
-- New Product revenue was up 18% on a like-for-like basis (i.e.
no products are removed from disclosure due to age) with strong
growth in the mouthfeel platform; revenue was broadly in line on a
reported basis.
-- We expanded our sweetener portfolio by launching TASTEVA(R)
SOL Stevia Sweetener, a patent-protected breakthrough in stevia
technology to help customers solve stevia solubility
challenges.
-- New automated lab established at our Customer Innovation and
Collaboration Centre in Singapore with advanced technology to
accelerate the development and speed-to-market of mouthfeel
solutions.
-- We added 18 patents to our patent portfolio and now have over
500 patents granted and over 320 pending.
Solutions
-- The value of solutions-based new business wins increased by
4ppts to 22% of revenue, with strong solutions performance in Asia,
Middle East, Africa and Latin America.
-- Value of new business pipeline increased by 1%, with 38% of
the total pipeline coming from New Products.
-- We opened a new Customer Innovation and Collaboration Centre
in Jakarta, Indonesia, bringing our global network of Centres to
seventeen.
-- Investment programme underway to add new capacity for non-GMO
PROMITOR(R) Soluble Fibres in Boleráz, Slovakia. Production of
fibres from the first phase, a EUR25 million investment, will start
in mid-2024.
Society
-- We advanced our sustainability agenda:
- Our production facility in Guarani, Brazil became our first
site to be 100% powered by renewable energy.
- Our production facilities in the Netherlands, UK and Italy are
buying 100% of their electricity from renewable sources.
- Intervention programmes are underway with corn farmers in the
US, such as managing nitrogen levels in the soil to increase crop
yields, improve soil health and minimise the impact on local
watersheds.
- Around 90% of all waste generated is being beneficially
used.
-- 45% of leadership and management roles (500 positions) are held by women.
-- Since 31 March 2020, our low- and no-calorie sweeteners and
our fibres have removed 7.0 million tonnes of sugar from people's
diets, equivalent to 28 trillion calories.
Strong cash generation
Free cash flow was GBP15 million higher at GBP77 million,
benefiting from an improvement in working capital of
GBP47 million. Capital expenditure increased by GBP20 million to
GBP46 million to deliver capacity expansion in our Food &
Beverage Solutions business, particularly for dietary fibres in
Europe. Overall, cash conversion increased to 69%, 14ppts higher.
We are on track to deliver our ambition to increase the conversion
of our profit into cash to 75% over the five years to 31 March
2028.
At 30 September 2023, net debt was GBP249 million, GBP11 million
higher than at 31 March 2023, with net debt to EBITDA at 0.8x, and
liquidity of over GBP1.0 billion.
Productivity
We have made a good start to our US$100 million five-year
productivity target to 31 March 2028, with savings delivered in the
first half of US$17 million from areas such as operational
efficiencies, supply chain and other cost savings. We expect
benefits from this programme for the full-year to be more than
US$25 million.
Group performance
Revenue Adjusted EBITDA
======================= =========================
Half-year Change(1) Half-year Change(1)
=========== ========== ========== ===========
GBP857m 4% GBP178m 7%
=========== ========== ========== =============
1 Growth in constant currency.
Overview
The Group delivered a robust financial performance. Revenue was
up 4% reflecting good mix management, pricing and the recovery of
inflation. Adjusted EBITDA was 7% higher with adjusted profit
before tax 16% higher.
Food & Beverage Solutions performed well delivering revenue
growth, particularly in Europe, and adjusted EBITDA growth. The
underlying performance of the Sucralose business remained steady,
with the phasing of orders into the comparative period resulting in
lower profits. The optimisation of Primary Products Europe is
continuing with losses significantly reduced.
We continued to intentionally reset Tate & Lyle as a
growth-focused speciality business through a focus on revenue
growth and margin expansion, ahead of volume, by way of solution
selling (by value up 4ppts to 22% for new business wins), mix
management and pricing. This approach, together with softer
consumer demand, customer de-stocking and the ongoing transition of
capacity out of Primary Products Europe combined to deliver 4%
revenue growth.
Following consecutive periods of high input cost inflation which
significantly accelerated revenue growth, we are now seeing input
cost deflation with revenue in the second half expected to reflect
the pass through of these lower costs as customer contracts for the
2024 calendar year are renewed.
For Primient, the adjusted share of joint venture profit was
GBP17 million, 32% higher. Operating performance improved,
supported by robust demand for sweetener products, strong 2023
calendar year contracting and improving operational performance,
while increased interest rates drove finance charges higher. We
expect continued improvement in performance in the second half of
the 2024 financial year. Tate & Lyle received US$17 million in
cash dividends from Primient in the half, with a further US$37
million cash dividend received on 2 November 2023.
Reporting segments
Food & Beverage Solutions
83% of Group revenue and 86% of Group adjusted EBITDA
Revenue Revenue Drivers Adjusted EBITDA
======================= ==================== =====================
Half-year Change(1) Volume(2) Price Half-year Change(1)
Mix(2)
=========== ========== ======== ========== ============
North America GBP334m 2% (8)% 10% - -
Asia, Middle
East, Africa
and Latin America GBP200m 1% (8)% 9% - -
--------
Europe GBP173m 19% (6)% 25% - -
==================== ============ ========== ========== ======== ========== ============
Total GBP707m 5% (8)% 13% GBP153m 10%
==================== ============ ========== ========== ======== ========== ============
Revenue was 5% higher in constant currency at GBP707 million.
Lower volume from softness in consumer demand and customer
destocking led to 8ppts reduction in revenue. Price mix increased
revenue by 13ppts, reflecting 6ppts from our focus on strategic mix
management and solution selling and 7ppts from the pass-through of
input cost inflation (including higher corn costs).
Looking at the three regions, North America revenue was stable,
Asia, Middle East, Africa and Latin America was mixed with pockets
of growth and some regional challenges, while Europe was strong
reflecting the pricing through of significant input cost
inflation.
-- North America : Revenue was 2% higher. We saw good gains in
the beverage, confectionery, and bakery categories, particularly
with our largest customers. However, cost of living pressures on
consumers and customer destocking led to softer demand.
-- Asia, Middle East, Africa and Latin America : Revenue was 1%
higher. In Asia, revenue was broadly in line with the comparative
period. Revenue growth in China was robust supported by good growth
in the dairy category, while revenue was lower in both south-east
and north Asia. In Latin America, revenue declined driven by lower
priced imports from outside the region, especially in Mexico, while
revenue from central America was solid. In Middle East and Africa,
strong demand in north and west Africa more than offset weaker
demand in southern Africa.
-- Europe: Revenue was 19% higher. We saw good revenue growth
across all categories, especially in dairy. We continued to exit
some low margin business and saw increased competition from imports
from outside the region.
Adjusted EBITDA was up 10% in constant currency at GBP153
million benefiting from mix management and the pricing through of
input cost inflation. This, together with the benefit from
productivity and strong cost control, saw adjusted EBITDA margins
expand by 90bps in constant currency. The effect of currency
translation decreased adjusted EBITDA by GBP5 million.
1 Growth in constant currency.
2 To reflect the underlying drivers of revenue growth, the total
percentages for volume and price mix have been adjusted by 5ppts to
exclude the impact from our focus on mix management and margin
expansion. Without this adjustment, the values for both volume and
price mix would be 5ppts greater.
Innovation and solution selling
Investment New Product Revenue Solutions
======================== ============================ ----------
Innovation and solution Value Growth % of FBS % of new
selling revenue business
wins
======================== ======== ======= ========= ==========
11% GBP109m (1)% 15% 22%
======================== ======== ======= ========= ==========
Revenue from New Products was 1% lower. On a like-for-like
basis, which assumes the same ingredients are included in New
Products revenues in both the current and comparative periods (i.e.
no products are removed from New Product disclosure due to age),
New Products revenue was 18% higher. On this like-for like basis,
the mouthfeel platform saw good growth, reflecting growth in clean
label starches and cost optimisation, while Quantum helped to
accelerate growth in fortification.
Investment in innovation and customer-facing solution selling
capabilities including sensory and open innovation was 11% higher.
Targeted programmes to develop new ways of working with customers
and build stronger solutions-based partnerships helped increase
solutions new business wins by value to 22%. We have set an
ambition to increase this to 32% over the five years to 31 March
2028.
Sucralose
10% of Group revenue and 15% of Group adjusted EBITDA
Revenue Revenue Drivers Adjusted EBITDA
======================= ======================
Half-year Change(1) Volume Price Mix Half-year Change(1)
=========== ========== ======= ========== ========== ==========
GBP89m (5)% (8)% 3% GBP28m (14)%
=========== ========== ======= ========== ========== ==========
Underlying customer demand for Sucralose remained steady. We
delivered attractive returns however revenue and adjusted EBITDA
were lower than the comparative period which benefited from the
phasing of orders into the half. Revenue declined by 5% reflecting
more normal phasing and the recovery of inflation. EBITDA declined
as cost inflation across a range of inputs increased production
costs and multi-year contracts with our larger customers limited
our near-term recovery of these increases. Currency translation
decreased adjusted EBITDA by GBP1 million.
Primary Products Europe
7% of Group revenue and (1%) of Group adjusted EBITDA
Revenue Revenue Drivers Adjusted EBITDA
======================= ======================
Half-year Change(1) Volume Price Mix Half-year Change(1)
=========== ========== ======= ========== ========== ==========
GBP61m (2)% (25)% 23% GBP(3)m 51%
=========== ========== ======= ========== ========== ==========
We continue to optimise the financial performance of Primary
Products Europe through the transition of capacity to speciality
ingredients. Lower volume also reflected reduced co-products.
Revenue was slightly lower partially mitigated by improved pricing
from more favourable market conditions and the recovery of input
cost inflation. Adjusted EBITDA losses were significantly
reduced.
1 Growth in constant currency.
Webcast details
Following this statement's release on 9 November 2023 at 07.00am
(UK time), a live webcast will be held at 10.00am via this link . A
replay of the webcast and presentation will be made available
afterwards at this link . Only sell-side analysts and any
pre-registered buy-side investors will be able to ask questions
during the Q&A session. Sell-side analysts will be
automatically pre-registered. To pre-register, please contact Lucy
Huang at lucy.huang@tateandlyle.com .
Commentary on the financial statements
Constant
currency
2023 2022 change
Six months to 30 September GBPm GBPm %
---------------------------------------------------- ------ ------- ----------
Adjusted EBITDA
Food & Beverage Solutions 153 144 10%
Sucralose 28 34 (14%)
Primary Products Europe (3) (6) 51%
Adjusted EBITDA 178 172 7%
Depreciation and adjusted amortisation (35) (35) (3%)
---------------------------------------------------- ------ ------- ----------
Adjusted operating profit 143 137 8%
Net finance expense (4) (11) 64%
Adjusted share of profit of Primient joint venture 17 13 32%
---------------------------------------------------- ------ ------- ----------
Adjusted profit before tax 156 139 16%
---------------------------------------------------- ------ ------- ----------
Net finance expense
Net finance expense at GBP4 million was 64% lower in constant
currency, mainly reflecting higher net income on the Group's cash
balances. Because almost all of the Group's borrowings in the year
were at fixed rates of interest, the Group was not exposed to
significant changes in interest rates on its borrowings.
Exceptional items
Net exceptional charges of GBP8 million were included in profit
before tax. Of these costs, GBP7 million related to organisational
improvements to the Food & Beverage Solutions business and
activities to drive productivity savings. Exceptional cash outflows
for the period totalled GBP11 million. (For more information see
Note 5).
Adjusted share of profit of Primient joint venture
Constant
currency
2023 2022(1) change
Six months to 30 September GBPm GBPm %
---------------------------------------------------------------- ------ ---------- ----------
Adjusted operating profit 73 48 59%
Net finance expense (46) (35) (38%)
Adjusted share of profit from its own joint ventures after tax 10 18 (41%)
---------------------------------------------------------------- ------ ---------- ----------
Adjusted profit before tax 37 31 25%
---------------------------------------------------------------- ------ ---------- ----------
Adjusted share of profit of Primient joint venture(2) 17 13 32%
---------------------------------------------------------------- ------ ---------- ----------
1 Reclassification adjustment: adjusted operating profit has
been increased by GBP5 million and adjusted share of profit from
its own joint ventures after tax reduced by the same amount.
2 The Group's share of the adjusted profit of Primient joint
venture is based on profit after tax. Primient is a US partnership
(so its partners rather than Primient itself are responsible for
tax on its US income), tax of GBP4 million (2022 - GBP5 million)
has been deducted from profit before tax relating to tax on income
earned by Primient's Brazilian subsidiary.
Adjusted operating profit was 59% higher in constant currency at
GBP73 million reflecting robust demand for sweeteners, strong 2023
calendar year contracting and improved operational performance in
Primient's plants. Net finance expense increased in the half
reflecting higher US interest rates. Lower profits in Primient's
own joint ventures reflected lower volumes in Covation PDO, and
adverse foreign currency impacts in Almex.
Tate & Lyle received a cash dividend from Primient of US$17
million in the half. A further cash dividend of US$37 million was
paid on 2 November 2023 bringing the total dividend for the year
to-date to US$54 million.
Taxation
The adjusted effective tax rate for the period was 21.9% (2022 -
21.9 %). Looking ahead, we continue to expect the adjusted
effective tax rate for the year ending 31 March 2024 to be one to
two percentage points higher than the full-year effective tax rate
for the prior year of 19.9%. The expected increase in the full-year
rate reflects more profit taxed in higher rate jurisdictions and
the increase in the rate of UK corporation tax from 19% to 25%.
The reported effective tax rate (on statutory earnings) for the
period was 21.3% (2022 - 18.4%). The lower rate in the comparative
period was due to higher tax deductions on exceptional items
recorded by Primient.
Earnings per share
Adjusted earnings per share at 30.1p were 19% higher (in
constant currency). This increase reflects 16% higher profits after
tax and benefit from a lower weighted number of shares of 3ppts,
reflecting the share consolidation completed on 3 May 2022.
Statutory diluted earnings per share for continuing operations
increased significantly to 25.4p (2022 - 13.3p), reflecting mainly
higher exceptional costs in, and therefore a lower share of profit
from, joint ventures in the comparative period.
Return on capital employed (ROCE)
ROCE for the 12 months ended 30 September 2023 at 16.8% was
lower than the 12 months ended 31 March 2023, reflecting the impact
of the acquisition of Quantum part way through the comparative
period. ROCE increased by 10bps on an organic basis.
Dividend
In line with the policy announced in our Capital Markets Event
in February 2023 that interim dividends will be at the level of one
third of the previous year's full-year dividend, the Board has
approved an interim dividend for the six months to 30 September
2023 of 6.2p (2022 - 5.4p) per share. This dividend will be paid on
5 January 2024 to all shareholders on the Register of Members on 24
November 2023. As well as the cash dividend option, shareholders
will be offered a Dividend Reinvestment Plan alternative.
Within the context of its growth-focused strategy the Board
operates a progressive dividend policy with the overall aim of
balancing growing the dividend with further strengthening dividend
earnings and cash cover over the medium term.
Cash flow, net debt and liquidity
Free cash flow was GBP77 million (2022 - GBP62 million), an
increase of GBP15 million. This reflected both higher profits and a
strong focus on cash generation which delivered a GBP47 million
improvement in net working capital compared to the comparative
period. Investments in infrastructure, capacity and technology
drove capital expenditure to GBP46 million, GBP20 million higher in
the period. Overall, cash conversion for the period improved by
14ppts to 69%(1) .
Looking ahead, we continue to expect capital expenditure for the
year ending 31 March 2024 to be in the
GBP90 million to GBP100 million range.
Net debt at 30 September 2023 was GBP249 million, GBP11 million
higher than at 31 March 2023. Strong free cash flow generation and
dividends received from Primient of US$17 million were more than
offset by outflows including the payment of the final dividend to
shareholders of GBP52 million and payments in respect of share
incentive schemes of GBP25 million. In April 2023, to reduce
interest costs and in line with on-going balance sheet
optimisation, the Group repaid a US private placement debt floating
rate note of US$95 million ahead of its maturity using cash. On 30
October 2023, a US$25 million US private placement 3.83% fixed rate
note was repaid on maturity using cash.
At 30 September 2023, the Group had access to GBP1.0 billion of
available liquidity through readily available cash and cash
equivalents and access to a committed, undrawn revolving credit
facility of US$800 million (GBP655 million). Reported leverage at
30 September 2023 was 0.8 times net debt to EBITDA. On a covenant
testing basis, the net debt to EBITDA ratio was 0.6 times, which
was much lower than the covenant threshold of 3.5 times.
1 Free cash conversion calculated as: free cash flow before
capital expenditure divided by adjusted EBITDA
Non-GAAP measures
Some performance discussion and narrative in this announcement
includes measures which are not defined by generally accepted
accounting principles (GAAP) such as IFRS. The Group believes this
information, together with comparable GAAP measures, is useful to
investors in providing a basis for measuring our operating
performance, cash generation and financial strength. The Group uses
these alternative performance measures for internal performance
analysis and incentive compensation arrangements for employees.
These measures are not defined terms and may therefore not be
comparable with similarly-titled measures reported by other
companies. Wherever appropriate and practical, reconciliations are
provided to relevant GAAP measures.
Alternative performance measures are used for and refer to
continuing operations only.
The Group uses constant currency percentages and movements,
using constant exchange rates which exclude the impact of
fluctuations in foreign currency exchange rates. We calculate
constant currency values by retranslating current year results at
prior year exchange rates into British Pounds. 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 2023 2022 2023 2022
---------------------------- ------- ------- ------- -------
US dollar : sterling 1.26 1.21 1.22 1.11
Euro : sterling 1.16 1.17 1.15 1.14
---------------------------- ------- ------- ------- -------
Items adjusted in alternative performance income statement
measures (Adjustment items)
Several alternative performance measures are adjusted to exclude
items due to their size, nature and / or frequency of
occurrence.
1. Adjusted items excluded from earnings before interest, tax,
depreciation and amortisation (adjusted EBITDA) are: exceptional
items (as they are material in amount; and are outside the normal
course of business or relate to events which do not frequently
recur), amortisation of acquired intangible assets and the unwind
of fair value adjustments.
2. Additional adjusted items excluded from adjusted profit after
tax are: tax on the above items and tax items that themselves are
exceptional as they meet these definitions. For tax items to be
treated as exceptional, amounts must be material and their
treatment as exceptional enable a better understanding of the
Group's underlying financial performance. Included in adjusted
profit after tax is the adjusted share of profit of Primient (the
Group's non-controlling joint venture interest, where the results
of Primient have been adjusted for items meeting the Group's
definitions herein).
Income statement measures
Adjusted revenue change
Adjusted revenue growth refers to the change in revenue for the
period, in constant currency. This is analysed between the drivers
of revenue growth attributable to:
1. Volume - this means, for the applicable period, the change in
revenue in the period attributable to volume excluding those
related to the re-positioning of the Food & Beverage Solutions
business through a focus on mix management and margin
expansion.
2. Price mix - this means, for the applicable period, the change
in revenue in such period calculated as the sum of i) the change in
revenue attributable to changes in prices during the period; and
ii) the change in revenue attributable to the composition of
revenue in the period, including the volume effect of the impact of
the re-positioning of the Food & Beverage Solutions business
through a focus on mix management and margin expansion.
In the narrative where acquisitions are referred to in
explaining revenue growth, this means changes in revenue resulting
from acquisitions.
Adjusted EBITDA
Adjusted EBITDA is used as the Group's primary profit measure
for internal performance analysis. Adjusted EBITDA is calculated as
follows:
2023 2022
Six months to 30 September GBPm GBPm
---------------------------------- ------ ------
Operating profit 123 114
Depreciation 29 29
Amortisation 18 18
Exceptional items 8 11
Unwind of fair value adjustments - -
---------------------------------- ------ ------
Adjusted EBITDA 178 172
Revenue 857 849
Adjusted EBITDA margin 20.8% 20.2%
----------------------------------- ------ ------
Adjusted earnings per share
Adjusted earnings per share (adjusted EPS) is calculated as the
adjusted profit for continuing operations attributable to
shareholders' equity divided by the diluted average number of
ordinary shares. In calculating adjusted profit attributable to
shareholders' equity, net profit attributable to shareholders'
equity is adjusted to eliminate the post-tax impact of all excluded
adjustment items. Refer to note 8 for reconciliation of net profit
attributable to shareholders' equity to adjusted profit
attributable to shareholders equity.
Change in adjusted earnings per share is shown in constant
currency.
C ash flow measure
The Group also presents an alternative cash flow measure, ' free
cash flow' which is defined as cash generated from operating
activities after net capital expenditure, net interest and tax
payments, and excludes the impact of exceptional items, tax
payments on behalf of Primient and the impact of acquisitions and
disposals.
The reconciliation of net cash flow from operating activities to
free cash flow is as follows:
2023 2022
Six months to 30 September GBPm GBPm
--------------------------------------------------------------------------------------- ------ ------
Net cash flow from operating activities 86 38
Capital expenditure (net) (46) (26)
Tax paid in respect of Primient partnership 4 4
Exceptional cash flows(1) 23 52
Interest received 10 2
Collection on behalf of previous owners of Quantum and share based payment adjustment - (15)
Free cash flow attributable to discontinued operations - 7
--------------------------------------------------------------------------------------- ------ ------
Free cash flow 77 62
--------------------------------------------------------------------------------------- ------ ------
1. Includes exceptional cash flow of GBP11 million (2022 - GBP37
million) and tax paid in relation to gain on disposal of Primient
of GBP12 million (2022: GBP15 million)
2023 2022
Six months to 30 September GBPm GBPm
------------------------------------- ------ ------
Adjusted EBITDA 178 172
Adjusted for
Changes in working capital (28) (75)
Capital expenditure (net) (46) (26)
Net retirement benefit obligations (3) (3)
Net interest and tax paid (30) (13)
Share-based payment charge 8 7
Other non-cash movements (2) -
------------------------------------- ------ ------
Free cash flow 77 62
------------------------------------- ------ ------
Financial strength measures
The Group uses three financial metrics as key performance
measures to assess its financial strength. These are net debt, the
net debt to EBITDA ratio and the return on capital employed ratio.
For the purposes of KPI reporting, the Group uses a simplified
calculation of these KPIs to make them more directly related to
information in the Group's financial statements.
All ratios are calculated based on unrounded figures in GBP
million.
Net debt
Net debt is a measure that provides valuable additional
information on the summary presentation of the Group's net
financial liabilities. Net debt is defined as the excess of
borrowings and lease liabilities over cash and cash
equivalents.
The components of the Group's net debt are as follows:
At At
30 September 31 March
2023 2023
GBPm GBPm
--------------------------- -------------- ----------
Borrowings (588) (659)
Lease liabilities (52) (54)
Cash and cash equivalents 391 475
Net debt (249) (238)
--------------------------- -------------- ----------
Net debt to EBITDA ratio
The net debt to EBITDA ratio shows how well a company can cover
its debts if net debt and EBITDA are held constant.
The net debt to EBITDA ratio is as follows:
At At
30 September 31 March
2023 2023
GBPm GBPm
----------------------------------------- -------------- ----------
Calculation of net debt to EBITDA ratio
Net debt 249 238
Adjusted EBITDA 326 320
Net debt to EBITDA ratio (times) 0.8 0.7
----------------------------------------- -------------- ----------
Return on capital employed (ROCE)
Return on capital employed (ROCE) is a measure of the return
generated on capital invested by the Group. The measure encourages
compounding reinvestment within business and discipline around
acquisitions, as such it provides a guardrail for long-term value
creation. ROCE is a component of the Group's five-year performance
ambition to 31 March 2028 and is used in incentive
compensation.
ROCE is calculated as underlying operating profit excluding
exceptional items divided by the average invested operating capital
(calculated as the average for each month of goodwill, intangible
assets, property, plant and equipment, working capital, provisions
and non-debt related derivatives). As such the average invested
operating capital is derived from the management balance sheet and
does not reconcile directly to the statutory balance sheet. All
elements of average invested operating capital are calculated in
accordance with IFRS.
30 September 31 March
2023 2023
Twelve months ended GBPm GBPm
--------------------------------------------- ------------- ---------
Adjusted EBITDA 326 320
Deduct:
Depreciation (59) (59)
Amortisation (36) (36)
Unwind of fair value adjustments (1) (1)
Profit before interest, tax and exceptional
items for ROCE 230 224
--------------------------------------------- ------------- ---------
Average invested operating capital 1 366 1 278
--------------------------------------------- ------------- ---------
ROCE % 16.8% 17.5%
--------------------------------------------- ------------- ---------
Changes to the Board of Directors
-- Dr Gerry Murphy stepped down as Chair of the Board on 1
September 2023. The Board appointed Warren Tucker as Interim Chair
from that date.
-- On 8 November 2023, it was announced that David Hearn was
appointed as a Director and Chair of the Tate & Lyle Board from
1 January 2024. On his appointment, Warren Tucker will step down as
Interim Chair but will continue to serve as a non-executive
director and as Chair of the Audit Committee.
-- Mr Paul Forman, the Senior Independent Director and who led
the Chair's succession process, will retire from the Board on 31
December 2023 having served his nine-year term. As previously
announced, Kimberly (Kim) Nelson will become Senior Independent
Director on 1 January 2024.
Cautionary statement
This statement of Half-Year Results for the six months to 30
September 2023 (Statement) 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 can be found on our website at www.tateandlyle.com. A
hard copy of the Statement is also available from the Company
Secretary, Tate & Lyle PLC, 5 Marble Arch, London W1H 7EJ.
Enquiries
For more information contact Tate & Lyle PLC:
Christopher Marsh, VP Investor Relations
Tel: Mobile: +44 (0) 7796 192 688
Nick Hasell, FTI Consulting (Media)
Tel: Mobile: +44 (0) 7825 523 383
CONDENSED (INTERIM) CONSOLIDATED INCOME STATEMENT
(UNAUDITED)
Six months Six months Year to
to to 31 March
30 September 30 September 2023
Notes 2023 2022 GBPm
GBPm GBPm
------------------------------ -------- -------------- -------------- ---------------
Continuing operations
Revenue 4 857 849 1 751
------------------------------ -------- -------------- -------------- ---------------
Operating profit 123 114 196
Finance income 9 4 12
Finance expense (13) (15) (32)
Share of profit/(loss) of
joint venture 11 (35) (24)
Profit before tax 130 68 152
Income tax expense 6 (28) (12) (25)
------------------------------ -------- -------------- -------------- ---------------
Profit for the period -
continuing operations 102 56 127
Profit for the period -
discontinued operations - 65 63
------------------------------ -------- -------------- -------------- ---------------
Profit for the period -
total operations 102 121 190
------------------------------ -------- -------------- -------------- ---------------
Attributable to:
------------------------------ -------- -------------- -------------- ---------------
Owners of the Company 102 121 190
Profit for the period -
total operations 102 121 190
------------------------------ -------- -------------- -------------- ---------------
Earnings per share Pence Pence Pence
------------------------------ -------- -------------- -------------- ---------------
Continuing operations:
- basic 8 25.8p 13.5p 31.3p
- diluted 8 25.4p 13.3p 30.8p
------------------------------ -------- -------------- -------------- ---------------
Total operations:
- basic 8 25.8p 29.4p 47.0p
- diluted 8 25.4p 29.0p 46.2p
------------------------------ -------- -------------- -------------- ---------------
CONDENSED (INTERIM) CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME (UNAUDITED)
Six months Six months Year to
to to 31 March
30 September 30 September 2023
Note 2023 2022 GBPm
GBPm GBPm
----------------------------------------------------------- -------
Profit for the period - total
operations 102 121 190
----------------------------------------------------------- ------- -------------- -------------- ----------
Other comprehensive income /
(expense)
Items that have been/may be
reclassified to profit or loss:
(Loss)/gain on currency translation
of foreign operations (13) 137 62
Fair value loss on net investment
hedges (6) (71) (33)
Fair value loss on net investment
hedges transferred to the income
statement - 28 28
Gain on currency translation
of foreign operations transferred
to the income statement on sale
of a subsidiary - (81) (81)
Fair value gain on cash flow
hedges transferred to the income
statement on sale of a subsidiary - (48) (48)
Net (loss)/gain on cash flow
hedges (2) 3 (2)
Recycling of cost of hedging - 5 5
Share of other comprehensive
income/(expense) of joint ventures 14 43 (5)
Tax effect of the above items (2) (1) 6
----------------------------------------------------------- ------- -------------- -------------- ----------
(9) 15 (68)
----------------------------------------------------------- ------- -------------- -------------- ----------
Items that will not be reclassified
to profit or loss:
Re-measurement of retirement
benefit plans:
- actual return lower on plan
assets (52) (329) (289)
- net actuarial gain on retirement
benefit obligations 66 335 295
Changes in the fair value of
equity investments at fair value
through OCI 11 (16) 10 3
Tax effect of the above items (3) 1 -
----------------------------------------------------------- ------- -------------- -------------- ----------
(5) 17 9
----------------------------------------------------------- ------- -------------- -------------- ----------
Total other comprehensive (expense)/income (14) 32 (59)
----------------------------------------------------------- ------- -------------- -------------- ----------
Total comprehensive income -
total operations 88 153 131
----------------------------------------------------------- ------- -------------- -------------- ----------
Analysed by:
------------------------------------ --- ---- ----
- Continuing operations 88 88 68
- Discontinued operations - 65 63
------------------------------------- --- ---- ----
Total comprehensive income - total
operations 88 153 131
------------------------------------- --- ---- ----
All amounts are attributable to owners of the Company.
CONDENSED (INTERIM) CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
At 30 September At 30 September At 31 March
2023 2022 2023
GBPm GBPm GBPm
Notes
---------------------------------- ------- ---------------- ---------------- ------------
ASSETS
Non-current assets
Goodwill and other intangible
assets 430 498 452
Property, plant and equipment
(including right-of-use assets
of GBP38 million (30 September
2022 -
GBP44 million, 31 March 2023
- GBP39 million)) 505 502 488
Investments in joint venture 211 247 199
Investments in equities 11 27 49 42
Retirement benefit surplus 25 13 18
Deferred tax assets 16 11 13
Trade and other receivables 12 1 11
Derivative financial instruments 11 - 4 -
1 226 1 325 1 223
---------------------------------- ------- ---------------- ---------------- ------------
Current assets
Inventories 409 446 446
Trade and other receivables 299 410 351
Current tax assets 4 3 9
Derivative financial instruments 11 1 13 3
Cash and cash equivalents 10 391 516 475
----------------------------------- ------- ---------------- ---------------- ------------
1 104 1 388 1 284
---------------------------------- ------- ---------------- ---------------- ------------
TOTAL ASSETS 2 330 2 713 2 507
----------------------------------- ------- ---------------- ---------------- ------------
EQUITY
Capital and reserves
Share capital 117 117 117
Share premium 408 407 408
Capital redemption reserve 8 8 8
Other reserves 120 240 143
Retained earnings 556 449 513
----------------------------------- ------- ---------------- ---------------- ------------
Equity attributable to owners
of the Company 1 209 1 221 1 189
Non-controlling interests 1 1 1
----------------------------------- ------- ---------------- ---------------- ------------
TOTAL EQUITY 1 210 1 222 1 190
LIABILITIES
Non-current liabilities
Borrowings (including lease
liabilities of GBP42 million
(30 September 2022 - GBP52
million,
31 March 2023 - GBP44 million)) 10 597 770 592
Retirement benefit deficit 110 125 118
Deferred tax liabilities 26 62 30
Provisions 4 8 5
737 965 745
---------------------------------- ------- ---------------- ---------------- ------------
Current liabilities
Borrowings (including lease
liabilities of GBP10 million
(30 September 2022 - GBP11
million,
31 March 2023 - GBP10 million)) 10 43 27 121
Trade and other payables 270 416 372
Provisions 15 13 13
Current tax liabilities 53 66 62
Derivative financial instruments 11 2 4 4
383 526 572
---------------------------------- ------- ---------------- ---------------- ------------
Total liabilities 1 120 1 491 1 317
----------------------------------- ------- ---------------- ---------------- ------------
TOTAL EQUITY AND LIABILITIES 2 330 2 713 2 507
----------------------------------- ------- ---------------- ---------------- ------------
CONDENSED (INTERIM) CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Six months Six months Year to
to 30 September to 30 September 31 March
2023 2022 2023
Notes GBPm GBPm GBPm
Cash flows from operating activities
- total operations
Profit before tax from total operations 130 166 248
Adjustments for:
Depreciation of property, plant
and equipment (including right-of-use
assets and excluding exceptional
items) 29 29 59
Amortisation of intangible assets 18 18 36
Share-based payments 8 8 20
Net impact of exceptional income
statement items 5 (3) (124) (129)
Net finance expense 4 11 20
Share of (profit)/loss of joint
ventures (11) 35 24
Net retirement benefit obligations (3) (3) (9)
Other non-cash movements (2) - (7)
Changes in working capital (28) (68) (110)
Cash generated from total operations 142 72 152
Net income tax paid (31) (8) (19)
Exceptional tax paid on gain on
disposal of Primient (12) (15) (42)
Interest paid (13) (11) (25)
Net cash generated from operating
activities 86 38 66
------------------------------------------- -------- ----------------- ----------------- ----------
Cash flows from investing activities
Purchase of property, plant and
equipment (42) (28) (70)
Acquisition of businesses, net of
cash acquired - (192) (192)
Disposal of subsidiary (net of cash) 7 12 1 021 1 045
Investments in intangible assets (4) (5) (8)
Purchase of equity investments 11 (3) (2) (3)
Disposal of equity investments 11 2 9 10
Interest received 10 2 11
Dividends received from joint venture 13 13 41
Redemption of shares held in joint
venture - 1 1
Net cash (used in)/generated from
investing activities (12) 819 835
------------------------------------------- -------- ----------------- ----------------- ----------
Cash flows from financing activities
Purchase of own shares including
net settlement (25) (4) (13)
Preference share buy-back advance - (2) -
payment
Cash inflow from additional borrowings 2 2 1
Cash outflow from repayment of borrowings (78) (2) (3)
Repayment of leases (6) (6) (13)
Dividends paid to the owners of
the Company 9 (52) (548) (570)
Net cash used in financing activities (159) (560) (598)
------------------------------------------- -------- ----------------- ----------------- ----------
Net (decrease)/increase in cash
and cash equivalents 10 (85) 297 303
------------------------------------------- -------- ----------------- ----------------- ----------
Cash and cash equivalents
Balance at beginning of period 475 127 127
Net (decrease)/increase in cash
and cash equivalents (85) 297 303
Currency translation differences 1 92 45
------------------------------------------- -------- ----------------- ----------
Balance at end of period 10 391 516 475
------------------------------------------- -------- ----------------- ----------------- ----------
A reconciliation of the movement in cash and cash equivalents to
the movement in net debt is presented in Note 10.
CONDENSED (INTERIM) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(UNAUDITED)
Share
capital Attributable
and Capital to owners Non-controlling
share redemption Other Retained of the interests Total
premium reserve reserves earnings Company equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ --------- ------------- ----------- ----------- --------------- ------------------ ---------
At 1 April 2023 525 8 143 513 1 189 1 1 190
------------------ --------- ------------- ----------- ----------- --------------- ------------------ ---------
Profit for the
period
- total
operations - - - 102 102 - 102
Other
comprehensive
(expense) /
income - - (25) 11 (14) - (14)
------------------ --------- ------------- ----------- ----------- --------------- ------------------ ---------
Total
comprehensive
(expense) /
income - - (25) 113 88 - 88
Hedging losses
transferred
to inventory - - 2 - 2 - 2
Transactions with
owners:
Share-based
payments,
net of tax - - - 7 7 - 7
Purchase of own
shares
including net
settlement - - - (25) (25) - (25)
Dividends paid
(Note
9) - - - (52) (52) - (52)
------------------ --------- ------------- ----------- ----------- --------------- ------------------ ---------
At 30 September
2023 525 8 120 556 1 209 1 1 210
------------------ --------- ------------- ----------- ----------- --------------- ------------------ ---------
At 1 April 2022 524 8 222 865 1 619 1 1 620
------------------ --------- ------------- ----------- ----------- --------------- ------------------ ---------
Profit for the
period
- total
operations - - - 121 121 - 121
Other
comprehensive
income - - 25 7 32 - 32
------------------ --------- ------------- ----------- ----------- --------------- ------------------ ---------
Total
comprehensive
income - - 25 128 153 - 153
Hedging gains
transferred
to inventory - - (11) - (11) - (11)
Tax effect of the
above
item - - 4 - 4 - 4
Transactions with
owners:
Share-based
payments,
net of tax - - - 8 8 - 8
Purchase of own
shares
including net
settlement - - - (4) (4) - (4)
Dividends paid - - - (548) (548) - (548)
------------------ --------- ------------- ----------- ----------- --------------- ------------------ ---------
At 30 September
2022 524 8 240 449 1 221 1 1 222
------------------ --------- ------------- ----------- ----------- --------------- ------------------ ---------
At 1 April 2022 524 8 222 865 1 619 1 1 620
----------------------------- ---- ----- ------ ------ ------
Profit for the year
- total operations - - - 190 190 - 190
Other comprehensive
(expense) / income - - (65) 6 (59) - (59)
----------------------------- ---- ----- ------ ------ ------
Total comprehensive
(expense) / income - - (65) 196 131 - 131
Hedging gains transferred
to inventory - - (19) - (19) - (19)
Tax effect of the above
item - - 5 - 5 - 5
Transactions with owners:
Share-based payments,
net of tax - - - 22 22 - 22
Issue of share capital 1 - - - 1 - 1
Purchase of own shares
including net settlement - - - (13) (13) - (13)
Dividends paid - - - (570) (570) - (570)
Other movements - - - 13 13 - 13
At 31 March 2023 525 8 143 513 1 189 1 1 190
----------------------------- ---- ----- ------ ------ ------
TATE & LYLE PLC
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS TO 30 SEPTEMBER 2023
1. Presentation of half year financial information
The principal activity of Tate & Lyle PLC and its
subsidiaries, together with its joint venture, 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 5 Marble Arch, London W1H 7EJ.
The Company has its primary listing on the London Stock
Exchange.
2. Basis of preparation
The Group's principal accounting policies are unchanged compared
with the year ended 31 March 2023 . This condensed set of
consolidated financial information for the six months to 30
September 2023 has been prepared on a going concern basis and on
the basis of the accounting policies set out in the Group's 2023
Annual Report, in accordance with UK adopted IAS 34, 'Interim
Financial Reporting' and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
The Directors are satisfied that the Group has adequate
resources to continue to operate as a going concern for the
foreseeable future and that no material uncertainties exist with
respect to this assessment. In making the assessment, the Directors
have considered the Group's balance sheet position and forecast
earnings and cash flows for the period from the date of approval of
this condensed set of consolidated financial information to 31
March 2025. The business plan used to support the going concern
assessment (the "base case") is derived from Board-approved
forecasts together with certain downside sensitivities.
Further details of the Directors' assessment are set out
below:
At 30 September 2023, the Group has significant available
liquidity, including GBP391 million of cash and
US$800 million (GBP655 million) from a committed and undrawn
revolving credit facility, of which US$100 million matures in March
2025 and US$700 million matures in March 2026. In April 2023, the
Group repaid, ahead of maturity and from existing cash, a US$95
million (GBP77 million) US Private Placement Note which matured in
October 2023. A further US$25 million relating to a US Private
Placement Note has also been repaid on maturity from cash after the
balance sheet date. The next earliest maturity date for any of the
Group's US Private Placement notes is October 2025, when US$180
million will mature.
The Group has only one debt covenant requirement which is to
maintain a net debt to EBITDA ratio of not more than 3.5 times. On
the covenant-testing basis this was 0.6 times at 30 September 2023.
For a covenant breach to occur it would require a significant
reduction in Group profit. Such reduction is considered to be
extremely unlikely.
As set out in our 31 March 2023 Annual Report, during May 2023,
the Directors modelled the impact of a 'worst case scenario' to the
'base case' by including the same two plausible but severe downside
risks also used for the Group's viability statement, being: an
extended shutdown of one of our large corn wet mill manufacturing
facilities following operational failure or energy shortage; and
the loss of two of our largest Food & Beverage Solutions
customers. In aggregate, such 'worst case scenarios' did not result
in any material uncertainty to the Group's going concern assessment
and the resultant position still had significant headroom above the
Group's debt covenant requirement. The Directors also calculated a
'reverse stress test' which represents the changes that would be
required to the 'base case' in order to breach the Group's debt
covenant. Such 'reverse stress test' showed that the forecast Group
profit would have to reduce significantly in order to cause a
breach.
Since the assessment in May, the Directors updated the model to
consider similar downside cases and to reflect the most recent
Board approved forecasts incorporating the current inflationary
outlook. Based on this assessment, the Directors concluded that in
both the base case and worst case scenario, the Group has
significant liquidity and covenant headroom throughout the period
to 31 March 2025. Accordingly, the Directors have concluded that
there are no material uncertainties with respect to going concern
and have adopted the going concern basis in preparing the condensed
consolidated financial information of the Group as at 30 September
2023.
The condensed set of consolidated financial information is
unaudited but has been reviewed by the external auditor and its
report to the Company is set out on page 33. The information shown
for the year ended 31 March 2023 does not constitute statutory
accounts as defined in Section 435 of the Companies Act 2006 and
has been extracted from the Group's 2023 Annual Report which has
been approved by the Board of Directors on 24 May 2023 and filed
with the Registrar of Companies.
The report of the auditor on the financial statements contained
within the Group's 2023 Annual Report was unqualified and did not
contain a statement under either Section 498(2) or Section 498(3)
of the Companies Act 2006. The interim financial statements should
be read in conjunction with the annual consolidated financial
statements for the year ended 31 March 2023, which were prepared in
accordance with UK adopted International Accounting Standards.
The condensed set of consolidated financial information for the
six months to 30 September 2023 on pages 12 to 30 was approved by
the Board of Directors on 8 November 2023.
Risks and uncertainties
The principal risks and uncertainties affecting the business
activities of the Group are detailed on pages 67 to 75 of the Tate
& Lyle Annual Report 2023, a copy of which is available on the
Company's website at www.tateandlyle.com . The Board considers that
the principal risks set out in the Annual Report 2023 remain
unchanged and that actions continue to be taken to substantially
mitigate the impact of such risks, should they materialise.
Discontinued operations and application of Held for Sale
On 1 April 2022 the Group completed the disposal of a
controlling stake in a new company and its subsidiaries ('Primient'
or the 'Primient business' or 'Primient disposal group'),
comprising its Primary Products business in North America and Latin
America to KPS Capital Partners, LP ('KPS') (the 'Transaction').
The Group currently holds a 49.7% interest in Primient.
In accordance with IFRS 5 'Non-current Assets Held for Sale and
Discontinued Operations', from 1 July 2021 the Group classified the
business that became Primient on 1 April 2022 as a disposal group
held for sale and a discontinued operation. 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 coordinated plan to dispose of a separate major
line of business or geographic area of operations. The results of
discontinued operations are presented separately from those of
continuing operations.
New accounting standards
On 1 April 2023, the Group adopted IFRS 17 'Insurance
Contracts'. The standard introduces a new model for accounting for
insurance contracts. The adoption of this standard has had no
material impact on the Group's financial statements.
On 23 May 2023, amendments to IAS 12 'Income Taxes' came into
effect relating to International Tax Reform - Pillar Two Model
Rules, which were endorsed by the UK Endorsement Board on 19 July,
whereby an entity shall disclose qualitative and quantitative
information about its exposure to Pillar Two income taxes at the
end of the reporting period. The amendments provide a temporary
mandatory exemption from deferred tax accounting for the top-up
tax, which is effective immediately. The expected impact of this
amendment will be disclosed within the 2024 Annual Report.
No other new standards, new interpretations or amendments to
standards or interpretations that are effective or that have been
published but are not yet effective, are expected to have a
material impact on the Group's financial statements.
Use of alternative performance measures
The Group also presents alternative performance measures,
including adjusted earnings before interest, tax, depreciation and
amortisation ('adjusted EBITDA'), adjusted profit before tax,
adjusted earnings per share, free cash flow, net debt to EBITDA and
return on capital employed. These 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. Refer to further details on pages 8 to 11
('Non-GAAP measures').
Reconciliations of the alternative performance measures to the
most directly comparable IFRS measures are presented in Note 3.
Exceptional items
Exceptional items comprise items of income, expense and cash
flow, including tax items that: are material in amount; and are
outside the normal course of business or relate to events which do
not frequently recur, and therefore merit separate disclosure in
order to provide a better understanding of the Group's underlying
financial performance. Exceptional items in the Group's financial
statements are classified on a consistent basis across accounting
periods. Examples of events that give rise to the disclosure of
material items of income, expense and cash flow as exceptional
items include, but are not limited to:
-- significant impairment events;
-- significant business transformation activities;
-- disposals of operations or significant individual assets;
-- litigation claims by or against the Group; and
-- restructuring of components of the Group's operations.
For tax items to be treated as exceptional, amounts must be
material and their treatment as exceptional enable a better
understanding of the Group's underlying financial performance.
3. Reconciliation of alternative performance measures
Income statement measures
The Group presents alternative performance measures including
adjusted earnings before interest, tax, depreciation and
amortisation ('adjusted EBITDA'), adjusted profit before tax and
adjusted earnings per share.
The following table shows the reconciliation of the key income
statement alternative performance measures to the most directly
comparable measures reported in accordance with IFRS:
Six months to 30 September Six months to 30 September
2023 2022
---------------------------------- ----------------------------------
Continuing operations
GBPm unless otherwise IFRS Adjusting Adjusted IFRS Adjusting Adjusted
stated reported items reported reported items reported
---------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Revenue 857 - 857 849 - 849
---------------------------- ---------- ---------- ---------- ---------- ---------- ----------
EBITDA 170 8 178 161 11 172
(29
Depreciation(1) ) 1 (28 ) (29) - (29)
Amortisation (18) 11 (7 ) (18) 12 (6)
---------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Operating profit 123 20 143 114 23 137
Net finance expense (4) - (4) (11) - (11)
Share of profit/(loss)
of joint venture 11 6 17 (35) 48 13
---------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Profit before tax 130 26 156 68 71 139
Income tax expense (28) (6) (34) (12) (18) (30)
---------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Profit for the period 102 20 122 56 53 109
---------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Effective tax rate expense
% 21.3% 21.9% 18.4% 21.9%
---------- ---------- ---------- ---------- ---------- ----------
Earnings per share:
Basic earnings per share
(pence) 25.8p - - 13.5p - -
Diluted earnings per
share (pence) 25.4p 4.7p 30.1p 13.3p 12.8p 26.1p
---------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Year ended 31 March 2023
----------------------------------
Continuing operations
GBPm unless otherwise IFRS Adjusting Adjusted
stated reported items reported
---------------------------- ---------- ---------- ----------
Revenue 1 751 - 1 751
---------------------------- ---------- ---------- ----------
EBITDA 291 29 320
Depreciation(1) (59) 1 (58)
Amortisation (36) 23 (13)
---------------------------- ---------- ---------- ----------
Operating profit 196 53 249
Net finance expense (20) - (20)
Share of (loss)/profit
of joint venture (24) 48 24
---------------------------- ---------- ---------- ----------
Profit before tax 152 101 253
Income tax expense (25) (25) (50)
---------------------------- ---------- ---------- ----------
Profit for the year 127 76 203
---------------------------- ---------- ---------- ----------
Effective tax rate expense
% 16.8% 19.9%
---------- ---------- ----------
Earnings per share:
Basic earnings per share 31.3p - -
(pence)
Diluted earnings per
share (pence) 30.8p 18.5p 49.3p
---------------------------- ---------- ---------- ----------
1. For the six months to 30 September 2023, depreciation
includes depreciation of GBP1 million related to the Quantum
acquisition fair value adjustments which is excluded from adjusted
operating profit (30 September 2022 - GBPnil; 31 March 2023 - GBP1
million).
The following table shows the reconciliation of the adjusting
items in the current and comparative periods:
Six months
Six months to Year to
to 30 September 30 September 31 March
2023 2022 2023
Continuing operations Note GBPm GBPm GBPm
----------------------------------------- ------ ----------------- -------------- ----------
Exceptional costs included in operating
profit 5 8 11 28
Amortisation of acquired intangible
assets 11 12 23
Unwind of fair value adjustments(1) 1 - 2
Adjusting items excluded from share
of profit of joint venture (as
shown below) 6 48 48
------------------------------------------ ------ ----------------- -------------- ----------
Total excluded from adjusted profit
before tax 26 71 101
Tax credit on adjusting items (6) (18) (25)
Total excluded from adjusted profit
for the period 20 53 76
------------------------------------------ ------ ----------------- -------------- ----------
1. For the six months to 30 September 2023, unwind of fair value
adjustments includes depreciation of GBP1 million (six months to 30
September 2022 - GBPnil; year ended 31 March 2023 - GBP1
million).
The following table shows the reconciliation of the Primient
joint venture adjusting items impacting adjusted profit after
tax:
Six months
Six months to Year to
to 30 September 30 September 31 March
Primient adjusting items at Group's 2023 2022 2023
share GBPm GBPm GBPm
----------------------------------------- ----------------- -------------- ----------
Exceptional costs included in operating
profit 1 51 52
Amortisation of acquired intangibles
and other fair value adjustments 5 (3) (4)
------------------------------------------- ----------------- -------------- ----------
Total excluded from adjusted share
of profit 6 48 48
------------------------------------------- ----------------- -------------- ----------
The Group's share of exceptional costs of Primient in the six
months to 30 September 2022 and year ended 31 March 2023 comprises
certain non-recurring costs incurred by Primient as part of the
Transaction and separation including the re-charge of shareholder
costs. In addition, this included the unwind of fair value
adjustments determined by the purchase price allocation which
included certain net corn position fair value adjustments no longer
recorded by Primient.
Cash flow measure
The Group also presents an alternative cash flow measure, 'free
cash flow', which is defined as cash generated from total
operations, after net interest and tax paid, after capital
expenditure and excluding the impact of exceptional items.
Tax paid refers to tax paid for the Group's operations excluding
any tax paid for its share of the Primient joint venture's results.
The Group receives specific dividends from Primient in order to
settle such tax liabilities. As all dividends received are excluded
from free cash flow it is appropriate to exclude tax paid out of
the receipt of these dividends.
The following table shows the reconciliation of free cash flow
relating to continuing operations:
Six months Six months Year to
to to 31 March
30 September 30 September 2023
2023 2022 GBPm
GBPm GBPm
Adjusted operating profit from continuing
operations 143 137 249
Adjusted for:
Adjusted depreciation and adjusted amortisation
(1) 35 35 71
Share-based payments charge 8 7 20
Other non-cash movements (2) (2) - (8)
Changes in working capital (3) (28) (75) (105)
Net retirement benefit obligations (3) (3) (9)
Net capital expenditure (46) (26) (71)
Net interest and tax paid (4) (30) (13) (28)
Free cash flow from continuing operations 77 62 119
-------------------------------------------------- -------------- --------------- ---------------
1. Total depreciation of GBP29 million (30 September 2022 -
GBP29 million; 31 March 2023 - GBP59 million) less GBP1 million of
depreciation related to Quantum acquisition fair value adjustments
(30 September 2022 - GBPnil; 31 March 2023 - GBP1 million) and
amortisation of GBP18 million (30 September 2022 - GBP18 million;
31 March 2023 - GBP36 million) less GBP11 million (30 September
2022 - GBP12 million; 31 March 2023 - GBP23 million) of
amortisation of acquired intangible assets.
2. In the year ended 31 March 2023, other non-cash movements
excludes an inflow of GBP1 million not included in adjusted
operating profit.
3. In the six months to 30 September 2022, changes in working
capital exclude a cash inflow of GBP14 million collected on behalf
of Quantum's previous owners which was returned to the previous
owners in the second half of the prior year. In the six months to
30 September 2022 and in the year ended 31 March 2023, changes in
working capital excludes the 2022 financial year bonus of GBP7
million to employees who have transitioned to Primient which is
classified as a discontinued cash outflow. In the year ended 31
March 2023, this impact is partially offset by the increase of a
legal provision relating to discontinued operations.
4. Net interest and tax paid excludes tax payments of GBP16
million relating to the Group's share of Primient's tax (30
September 2022 - GBP19 million; 31 March 2023 -
GBP47 million) including the exceptional tax on the gain on
disposal of Primient of GBP12 million (30 September 2022 - GBP15
million; 31 March 2023 - GBP42 million) .
The following table shows the reconciliation of free cash flow
to net cash generated from operating cash flows:
Six months Six months to Year to
to 30 September 2022 31 March
30 September GBPm 2023
2023 GBPm
GBPm
Free cash flow from continuing operations 77 62 119
Adjusted for:
Add: Adjusted free cash flow relating
to discontinued operations - (7) (7)
Less: exceptional cash flow (11) (37) (59)
Less: tax payments relating to Primient
and gain on disposal (16) (19) (47)
Less: interest received (10) (2) (11)
Add: share-based payment charge included
in exceptional items - 1 -
Add: cash flow collected on behalf of
previous owners of Quantum - 14 -
Add: net capital expenditure 46 26 71
Net cash generated from operating activities
- total operations 86 38 66
---------------------------------------------- -------------- -------------------- ----------
4. Segment information
Segment information is presented on a basis consistent with the
information presented to the Board (the designated Chief Operating
Decision Maker (CODM)) for the purposes of allocating resources
within the Group and assessing the performance of the Group's
businesses.
The Group's core operations comprise three operating segments as
follows: Food & Beverage Solutions, Sucralose and Primary
Products Europe. These operating segments are also reportable
segments. The Group does not aggregate operating segments to form
reportable segments. Food & Beverage Solutions operates in the
core categories of beverages, dairy, soups, sauces and dressings
and bakery and snacks.
Sucralose, a high-intensity sweetener and a sugar reduction
ingredient, is used in various food categories and beverages.
Primary Products Europe focuses principally on high-volume
sweeteners and industrial starches. The Group is executing a
planned transition away from these lower margin products in order
to use the capacity to fuel growth in the Food & Beverage
Solutions operating segment.
Whilst not part of the Group's core operations, its 49.7%
investment in the Primient joint venture is also an operating
segment and reportable segment. Primient is a leading producer of
food and industrial ingredients, principally bulk sweeteners and
industrial starches. Key products include nutritive sweeteners
(such as high fructose corn syrup and dextrose), industrial
starches, acidulants (such as citric acid) and commodities (such as
corn gluten feed and meal and corn oil). Primient includes
interests in the Almex and Bio-PDO joint ventures.
Central costs including head office, treasury and insurance
activities have been allocated to segments. The allocation
methodology is based on firstly attributing total selling and
general administrative costs by the support provided to each
segment directly, then allocating non-directly attributed costs
mainly on the basis of segment share of Group gross profit.
Adjusted EBITDA is used as the measure of the profitability of
the Group's businesses. For the Primient operating segment, the
Board uses the Group's share of adjusted profit of the Primient
joint venture as the measure of profitability of this business.
Adjusted EBITDA and the Group's share of adjusted profit of the
Primient Joint Venture are therefore the measures of segment profit
presented in the Group's segment disclosures for the relevant
operating segments.
All revenue is from external customers.
IFRS 8 Segment results
Six months to 30 September 2023
------------------------ ------------ -------------------------------------------
Primary
Food & Beverage Products
Solutions Sucralose Europe Primient Joint Venture Total
Total operations GBPm GBPm GBPm GBPm GBPm
------------------------ ------------------------ ------------ ---------- ----------------------- ------
Revenue 707 89 61 - 857
Adjusted EBITDA(1) 153 28 (3) - 178
--------------------------- ------------------------ ------------ ---------- ----------------------- ------
Adjusted EBITDA margin 21.7% 30.8% (4.2%) - 20.8%
--------------------------- ------------------------ ------------ ---------- ----------------------- ------
Adjusted share of profit
of joint venture(1) - - - 17 17
--------------------------- ------------------------ ------------ ---------- ----------------------- ------
1. Reconciled to statutory profit for the period for continuing
operations in Note 3 .
Six months to 30 September 2022*
------------------------ ------------ -------------------------------------------
Primary
Food & Beverage Products
Solutions Sucralose Europe Primient Joint Venture Total
Total operations GBPm GBPm GBPm GBPm GBPm
------------------------ ------------------------ ------------ ---------- ----------------------- ------
Revenue 691 97 61 - 849
Adjusted EBITDA(1) 144 34 (6) - 172
--------------------------- ------------------------ ------------ ---------- ----------------------- ------
Adjusted EBITDA margin 20.8% 34.5% (8.8%) - 20.2%
--------------------------- ------------------------ ------------ ---------- ----------------------- ------
Adjusted share of profit
of joint venture(1) - - - 13 13
--------------------------- ------------------------ ------------ ---------- ----------------------- ------
* Restated to reflect change in operating segments .
1. Reconciled to statutory profit for the period for continuing
operations in Note 3
Year ended 31 March 2023
------------------------ ------------ -------------------------------------------
Primary
Food & Beverage Products
Solutions Sucralose Europe Primient Joint Venture Total
Total operations GBPm GBPm GBPm GBPm GBPm
------------------------ ------------------------ ------------ ---------- ----------------------- ------
Revenue 1 438 184 129 - 1 751
Adjusted EBITDA(1) 271 58 (9) - 320
--------------------------- ------------------------ ------------ ---------- ----------------------- ------
Adjusted EBITDA margin 18.8% 31.3% (6.5%) - 18.3%
--------------------------- ------------------------ ------------ ---------- ----------------------- ------
Adjusted share of profit
of joint venture (1) - - - 24 24
--------------------------- ------------------------ ------------ ---------- ----------------------- ------
1. Reconciled to statutory profit for the year for continuing
operations in Note 3 .
Geographic disclosures
Six months to Six months to Year to
30 September 30 September 31 March
2023 2022 2023
Revenue - total operations GBPm GBPm GBPm
---------------------------------------------- -------------- -------------- ----------
Food & Beverage Solutions
North America 334 340 687
Asia, Middle East, Africa and Latin America 200 208 432
Europe 173 143 319
------------------------------------------------ -------------- -------------- ----------
Food & Beverage Solutions - total 707 691 1 438
------------------------------------------------ -------------- -------------- ----------
Sucralose 89 97 184
------------------------------------------------ -------------- -------------- ----------
Primary Products Europe 61 61 129
Total 857 849 1 751
------------------------------------------------ -------------- -------------- ----------
5. Exceptional items
Exceptional (costs)/income recognised in the income statement
are as follows:
Six months Six months Year to
to to 31 March
30 September 30 September
2023 2022 2023
Income statement - continuing Footnotes GBPm GBPm GBPm
operations
-------------------------------------- ----------- --------------- --------------- -----------
Restructuring costs (a) (7) (1) (5)
Costs associated with the separation
and disposal of Primient (b) (1) (13) (25)
Stabiliser product contamination - - (1)
Historical legal matters - 3 3
Exceptional items included in
profit before tax (8) (11) (28)
--------------------------------------------------- --------------- --------------- -----------
Exceptional items - continuing
operations (8) (11) (28)
--------------------------------------------------- --------------- --------------- -----------
Discontinued operations
Gain on disposal of Primient - 98 98
Exceptional items - discontinued
operations - 98 98
--------------------------------------------------- --------------- --------------- -----------
Exceptional items - total operations (8) 87 70
--------------------------------------------------- --------------- --------------- -----------
Continuing operations for the six months to 30 September
2023
(a) As part of the Group ' s previously announced commitment to
deliver US$100 million of productivity savings in the five years
ending 31 March 2028, a GBP7 million charge has been recognised
related to organisational improvements to the Food & Beverage
Solutions business and activities to drive productivity savings.
This charge includes severance costs, project costs and information
technology (IT) initiatives .
(b) The Group incurred certain separation costs related to the
Primient disposal which totalled GBP1 million. These costs consist
principally of IT costs and relate to the final separation of IT
infrastructure following the cessation of the transition services
arrangement for IT support to Primient at the end of the prior
financial year.
The net GBP8 million exceptional costs recorded in operating
profit in continuing operations during the period resulted in GBP6
million (outflow) disclosed in exceptional operating cash flow. In
addition, exceptional costs recorded in the prior year resulted in
cash outflows in the period of GBP5 million.
In the prior period, the most significant exceptional costs
related to the Primient disposal separation costs including, IT
costs to separate the Group's and Primient's IT.
Tax credits or charges on exceptional items are only recognised
to the extent that gains or losses incurred are expected to result
in tax recoverable or payable in the future. The total tax impact
of these exceptional items was a tax credit of GBP2 million.
Discontinued operations
In the six months to 30 September 2022 and year ended 31 March
2023, the Group recorded a gain of GBP98 million relating to the
disposal on 1 April 2022 of a 50.1% controlling interest in
Primient in exchange for gross cash proceeds of US$1.4 billion
(GBP1.1 billion). An exceptional tax charge of GBP33 million arose
on this gain. Further details on the gain on disposal, and the
associated tax charge, are set out in Note 7.
Cash flows from total operations
Further details in respect of cash flows from exceptional items
are set out below.
Six months Year to
to Six months 31 March
30 September to 30 September 2023
Net operating cash outflows on 2023 2022 GBPm
exceptional items Footnotes GBPm GBPm
-------------------------------------- ----------- -------------- ----------------- ----------
Restructuring costs (a) (4) - (3)
Costs associated with the separation
and disposal of Primient (b) (5) (35) (52)
US pension plan past service credit - - (1)
Stabiliser product contamination - - (1)
Historical legal matters (2) (2) (2)
Net operating cash outflows -
continuing operations (11) (37) (59)
--------------------------------------------------- -------------- ----------------- ----------
Net operating cash outflows -
discontinued operations - - (42)
--------------------------------------------------- -------------- ----------------- ----------
Net operating cash outflows -
total operations (11) (37) (101)
--------------------------------------------------- -------------- ----------------- ----------
Exceptional cash flows
The total cash adjustment relating to exceptional items
presented in the cash flow statement of GBP3 million outflow
reflects the net exceptional charge in profit before tax for total
operations of GBP8 million which was GBP3 million lower than net
cash outflows of
GBP11 million set out in the table above.
6. Income tax expense
Income tax for the period is presented as follows:
-- Statutory current and deferred taxes from continuing
operations of GBP28 million, which when divided by statutory profit
before tax from continuing operations of GBP130 million gives a
statutory effective tax rate of 21.3%.
-- Adjusted income tax expense from continuing operations of
GBP34 million, which when divided by adjusted profit before tax
from continuing operations of GBP156 million gives an adjusted
effective tax rate of 21.9%. Adjusted income tax is different to
statutory income tax due to the tax effect of adjusting and
exceptional items.
Analysis of charge for the period
Six months to Six months to Year to
30 September 30 September 31 March
2023 2022 2023
Continuing operations GBPm GBPm GBPm
--------------------------------------------------------- -------------- -------------- ----------
Current tax :
United Kingdom (3) (2) (1)
Overseas (38) (16) (66)
Tax credit on exceptional items 2 2 6
(Charge)/credit in respect of previous financial years (1) - 16
----------------------------------------------------------- -------------- -------------- ----------
(40) (16) (45)
Deferred tax:
Credit/(charge) for the period 9 (3) 13
Credit/(charge) in respect of previous financial years 3 (5) (6)
Tax credit on Primient exceptional items - 12 13
Income tax expense (28) (12) (25)
----------------------------------------------------------- -------------- -------------- ----------
Statutory effective tax rate % 21.3% 18.4% 16.8%
----------------------------------------------------------- -------------- -------------- ----------
Reconciliation to adjusted income tax expense
Six months to Six months to Year to
30 September 30 September 31 March
2023 2022 2023
Continuing operations GBPm GBPm GBPm
-------------------------------------------------------------------- -------------- -------------- ----------
Income tax expense: (28) (12) (25)
Add back the impact of:
Tax credit on exceptional items (2) (2) (6)
Tax credit on Primient exceptional items - (12) (13)
Tax credit on amortisation of acquired intangibles and other fair
value adjustments (3) (3) (7)
Tax (credit)/charge on amortisation of Primient acquired intangibles
and other fair value
adjustments (1) (1) 1
Adjusted income tax expense (34) (30) (50)
---------------------------------------------------------------------- -------------- -------------- ----------
Adjusted effective tax rate % 21.9% 21.9% 19.9%
---------------------------------------------------------------------- -------------- -------------- ----------
7. Discontinued operations
As described in Note 2, on 1 July 2021 the Group classified the
business that became Primient and in which a controlling stake was
sold to KPS on 1 April 2022 as a disposal group held for sale and a
discontinued operation.
The Primient business consists of the following operations:
-- Corn wet mills in the US in Decatur, Illinois; Lafayette, Indiana; and Loudon, Tennessee.
-- Acidulants plants in Dayton, Ohio; Duluth, Minnesota; and Santa Rosa, Brazil.
-- Shareholdings in two joint ventures - Almex in Guadalajara,
Mexico and Covation Biomaterials (formerly Bio-PDO), in Loudon,
Tennessee.
-- Grain elevator network and bulk transfer stations in North America.
Primary Products' European operations were not included in this
transaction and are therefore not part of the discontinued
operations.
Primient disposal
On 1 April 2022 the Group completed the disposal of a 50.1%
controlling interest in Primient in exchange for gross cash
proceeds of US$1.4 billion (GBP1.1 billion), resulting in an
exceptional gain on disposal before tax of GBP98 million (see Note
5).
A reconciliation of gross cash proceeds received is shown in the
tables below:
Six months
to Year to
30 September 31 March
2022 2023
Reconciliation of gross cash proceeds (US$m) US$m US$m
Cash consideration 330 330
Less: completion accounts adjustments in favour
of the Group not yet received (15) (15)
Add: cash received for intercompany loan notes,
payables and transaction costs 1 089 1 089
Add: contingent consideration received - 31
Disposal of Primient, gross proceeds 1 404 1 435
------------------------------------------------- -------------- ----------
Six months
to Year to
30 September 31 March
2022 2023
Reconciliation of gross cash proceeds (GBPm) GBPm GBPm
Cash consideration 253 253
Less: completion accounts adjustments in favour
of the Group not yet received (12) (12)
Add: cash received for intercompany loan notes,
payables and transaction costs 830 830
Add: contingent consideration received - 24
Disposal of Primient, gross proceeds 1 071 1 095
------------------------------------------------- -------------- ----------
In the six months to 30 September 2023, the completion accounts
adjustment in favour of the Group of GBP12 million was
received.
Six months Year ended
to 30 September 31 March
2022 2023
Gain on disposal GBPm GBPm
Cash consideration - as shown in table above(1) 253 253
Contingent consideration received(2) 24 24
Fair value of investment in Primient joint venture
on initial recognition 253 253
--------------------------------------------------------- ------------ ---------------- -----------
Total consideration for equity 530 530
Primient net assets derecognised on disposal on
1 April 2022(3) (539) (539)
Recycling of accumulated foreign exchange from
other comprehensive income to the income statement 81 81
Recycling of cash flow hedges from other comprehensive
income to the income statement 48 48
Impact of deal contingent forward(4) (33) (33)
Other amounts 11 11
Gain on disposal before tax 98 98
Tax on gain on disposal (33) (33)
--------------------------------------------------------- ------------ ---------------- -----------
Gain on disposal 65 65
--------------------------------------------------------- ------------ ---------------- -----------
1 Included deferred consideration relating to the completion
accounts adjustment not yet received of GBP12 million.
2 Contingent consideration was based on the dividend payable by
Almex relating to the period under the Group's ownership.
3 Net assets held for sale at 31 March 2022 were GBP1 337
million. This amount excluded intercompany payable and loan
balances which eliminated on consolidation prior to completion of
the Transaction. Net assets derecognised on disposal included such
amounts.
4 The Group entered into a deal contingent forward to hedge the
currency risk associated with the consideration received from the
Transaction which was partly used for the shareholder distribution
on 16 May 2022. The fair value loss on this forward and the impact
of the cost of hedging were recycled from other comprehensive
income to the income statement on completion of the
Transaction.
The tax charge arising on the gain on disposal of Primient was
GBP54 million. Of this amount, GBP42 million has been paid in the
year ended 31 March 2023. This tax charge was partially offset by a
deferred tax credit of GBP21 million reflecting the change in
measurement of the difference between the tax basis and carrying
value of the investment. This resulted in a net tax charge on the
gain on disposal of GBP33 million.
A reconciliation to the consolidated statement of cash flows is
shown in the table below:
Six months Year ended
to 30 September 31 March
2022 2023
Cash flows GBPm GBPm
-------------------- -----------
Total cash consideration of GBP253 million less
completion accounts adjustments not yet received
of GBP12 million - as shown above 241 241
Repayment of intercompany loan notes and payables
and transaction costs 830 830
Less: cash outflow relating to deal contingent
forward (33) (33)
Less: net cash derecognised on disposal (17) (17)
Add: contingent consideration received - as shown
above - 24
---------------------------------------------------- ---------- -------------- -------------
Disposal of business, net of cash derecognised
on disposal 1 021 1 045
---------------------------------------------------- ---------- -------------- -------------
8. Earnings per share
Basic earnings per share is calculated by dividing the profit
attributable to owners of the Company by the weighted average
number of ordinary shares in issue during the period (excluding
shares held by the Company and the Employee Benefit Trust to
satisfy awards made under the Group's share-based incentive
plans).
Diluted earnings per share is calculated by dividing the profit
attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the
period plus the weighted average number of ordinary shares that
would be issued on conversion of all the dilutive potential
ordinary shares into ordinary shares.
The average market price of the Company's ordinary shares during
the six months to 30 September 2023 was 751p (30 September 2022 -
762p; 31 March 2023 - 752p). The dilutive effect of share-based
incentives was 6.2 million shares (30 September 2022 - 5.3 million
shares; 31 March 2023 - 7.3 million shares).
Six months to 30 September Six months to 30 September
2023 2022
------------------------------- ------------------------------------ -------------------------------------
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
------------------------------- ------------ ------------- ------- ------------ ------------- --------
Profit attributable to owners
of the Company (GBP million) 102 - 102 56 65 121
Weighted average number of
shares (million) - basic 398.2 n/a 398.2 410.5 410.5 410.5
Basic earnings per share
(pence) 25.8p - 25.8p 13.5p 15.9p 29.4p
Weighted average number of
shares (million) - diluted 404.4 n/a 404.4 415.8 415.8 415.8
Diluted earnings per share
(pence) 25.4p - 25.4p 13.3p 15.7p 29.0p
Year ended 31 March 2023
Continuing Discontinued
operations operations Total
------------ -------------
Profit attributable to owners
of the Company (GBP million) 127 63 190
Weighted average number of
shares (million) - basic 404.1 404.1 404.1
Basic earnings per share
(pence) 31.3p 15.7p 47.0p
Weighted average number of
shares (million) - diluted 411.4 411.4 411.4
Diluted earnings per share
(pence) 30.8p 15.4p 46.2p
Adjusted earnings per share
A reconciliation between profit attributable to owners of the
Company from continuing operations and the equivalent adjusted
measure, together with the resulting adjusted earnings per share
measure, is shown below:
Six months Six months
to to Year to
30 September 30 September 31 March
2023 2022 2023
Continuing operations Notes GBPm GBPm GBPm
------------------------------------------------------------- --------------
Profit attributable to owners of
the Company 102 56 127
Adjusting items:
- exceptional costs in operating
profit 5 8 11 28
* amortisation of acquired intangible assets and other
fair value adjustments 3 12 12 25
* adjusting items excluded from share of profit of
joint venture 3 6 48 48
- tax credit on adjusting items 3, 6 (6) (18) (25)
Adjusted profit attributable to
owners of the Company 3 122 109 203
------------------------------------------------------------- --------------
Weighted average number of shares
(million) - diluted 404.4 415.8 411.4
Adjusted earnings per share (pence)
- continuing operations 30.1p 26.1p 49.3p
------------------------------------------------------------- --------------
Six months Six months
to to Year to
30 September 30 September 31 March
2023 2022 2023
Total operations Note GBPm GBPm GBPm
--------------
Adjusted profit attributable to
owners of the Company - Continuing
operations 3 122 109 203
Adjusted loss attributable to owners
of the Company - Discontinued operations - - (2)
Adjusted profit attributable to
owners of the Company - Total operations 122 109 201
Adjusted earnings per share (pence)
- total operations 30.1p 26.1p 48.9p
--------------
9. Dividends on ordinary shares
The Directors have declared an interim dividend of 6.2p per
share for the six months to 30 September 2023 (six months to
30 September 2022 - 5.4p per share), payable on 5 January
2024.
The final dividend for the year ended 31 March 2023 of GBP52
million, representing 13.1p per share, was paid during the six
months to 30 September 2023.
On 16 May 2022, the Group returned GBP497 million to ordinary
shareholders by way of a special dividend of GBP1.07 per Existing
Ordinary share in the capital of Tate & Lyle PLC. In order to
maintain the comparability, so far as possible, of Tate & Lyle
PLC's share price before and after the special dividend, the Group
also completed a share consolidation resulting in ordinary
shareholders receiving six New Ordinary shares with a nominal value
of 29 1/6 pence each for every seven Existing Ordinary shares that
they held.
10. Net debt - total operations
Movements in the Group's net debt were as follows:
Cash and cash equivalents Borrowings and lease liabilities Total
GBPm GBPm GBPm
At 1 April 2023 475 (713) (238)
Movements from cash flows (85) 82 (3)
Currency translation differences 1 (7) (6)
Lease liabilities - (4) (4)
Other non-cash movements - 2 2
At 30 September 2023 391 (640) (249)
In April 2023, the Group repaid, ahead of maturity and from
existing cash, US$95 million relating to its US Private Placement
Note which matured in October 2023.
11. Investments in equities and financial instruments
Carrying amount versus fair value
The fair values of the Group's cash and cash equivalents, trade
and other receivables and trade and other payables approximate
their carrying amounts due to their short-term nature. The fair
value of borrowings, excluding lease liabilities, is estimated to
be GBP520 million (30 September 2022 - GBP656 million; 31 March
2023 - GBP608 million) and has been determined by discounted
estimated cash flows with an applicable market quoted yield, using
quoted market prices, discounted estimated cash flows based on
broker dealer quotations or quoted market prices. The carrying
value of other assets and liabilities held at amortised cost is not
materially different from their fair value.
Fair value measurements recognised in the balance sheet
The table below shows the Group's financial assets and
liabilities measured at fair value at 30 September 2023. The fair
value hierarchy categorisation, valuation techniques and inputs,
are consistent with those used in the year ended 31 March 2023.
At 30 September 2023 At 31 March 2023
Level Level Level Total Level Level Level Total
1 2 3 GBPm 1 2 3 GBPm
GBPm GBPm GBPm GBPm GBPm GBPm
Assets at fair value
Financial assets at FVPL(1) - - 20 20 - - 20 20
Financial assets at FVOCI(1) - - 7 7 - - 22 22
Derivative financial instruments:
- commodity derivatives 1 - - 1 3 - - 3
Assets at fair value 1 - 27 28 3 - 42 45
Liabilities at fair value
Derivative financial instruments:
* commodity derivatives (2) - - (2) (4) - - (4)
Liabilities at fair value (2) - - (2) (4) - - (4)
1. Included in Investment in equities in the Consolidated Statement of Financial Position.
Included in investments in equities are assets classified as
FVOCI. These relate principally to long-term strategic investments
that the Group does not control, nor has significant influence
over. The investments are non-listed and are mainly start-ups or in
the earlier stages of their lifecycle. Therefore, fair value has
been determined based on the most recent funding rounds adjusted
for indicators of impairment. The fair values assigned to each of
the investments have different significant unobservable inputs.
For assets and liabilities that are recognised in the financial
statements at fair value on a recurring basis, the Group determines
whether transfers have occurred between levels in the hierarchy by
re-assessing categorisation (based on the lowest level of input
that is significant to the fair value measurement as a whole) at
the end of the reporting period. There were no transfers between
Level 1 and Level 2 fair value measurements during the period, and
no transfers into or out of Level 3 fair value measurements during
the six months to 30 September 2023.
The following table reconciles the movement in the Group's net
financial assets classified in 'Level 3' of the fair value
hierarchy:
Financial assets at FVPL Financial assets at FVOCI Total
GBPm GBPm GBPm
At 1 April 2023 20 22 42
Other comprehensive income (1) - (16) (16)
Purchases 2 1 3
Disposals (2) - (2)
At 30 September 2023 20 7 27
1. The GBP16 million charge recognised in other comprehensive
income relates to the full impairment of the Group's investment in
Infinant Health. At the balance sheet date it is considered
unlikely that the Group will participate in the forthcoming funding
round which will result in the Group's interest in that company
being fully diluted.
12. Events after the balance sheet date
On 30 October 2023, the Group repaid its US$25 million US
private placement 3.83% fixed rate note on maturity using cash.
On 2 November 2023, the Group received dividend payments of
US$37 million from Primient.
There are no other material post balance sheet events requiring
disclosure in respect of the six months to 30 September 2023.
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 current period and the six
months to September 2022 at actual exchange rates and at constant
currency exchange rates. Absolute numbers presented in the tables
are rounded for presentational purposes, whereas the growth
percentages are calculated on unrounded numbers.
2023 Change
Six months to 30 at constant Underlying in
September 2023 FX currency growth Change constant
Adjusted performance GBPm GBPm GBPm GBPm 2022* % currency
Continuing operations GBPm %
Revenue 857 22 879 30 849 1% 4%
Food & Beverage Solutions 153 5 158 14 144 7% 10%
Sucralose 28 1 29 (5) 34 (18%) (14%)
Primary Products
Europe (3) - (3) 3 (6) 52% 51%
Adjusted EBITDA 178 6 184 12 172 4% 7%
Adjusted operating
profit 143 5 148 11 137 4% 8%
Net finance expense (4) - (4) 7 (11) 65% 64%
Share of adjusted
profit of joint venture 17 - 17 4 13 26% 32%
Adjusted profit before
tax 156 5 161 22 139 12% 16%
Adjusted income tax
expense (34) (1) (35) (5) (30) (12%) (16%)
Adjusted profit after
tax 122 4 126 17 109 12% 16%
Adjusted EPS (pence) 30.1p 1.1p 31.2p 5.1p 26.1p 15% 19%
* Restated to reflect change in operating segments and use of
adjusted EBITDA.
Currency Sensitivities
Currency-sensitivity information for the six months to 30
September 2023 is summarised below. This sets out the sensitivity
to a 5% strengthening of pound sterling impacting the Group's
revenue and EBITDA in the six months to 30 September 2023:
Currency Six months Six months Change (%)(3) Six months impact (GBPm)
to 30 September to of
2023(1) 30 September 5% strengthening of GBP
2022(2) (vs 2023 average rate)(4)
Revenue EBITDA
USD 1.26 1.21 3.5% (21) (7)
EUR 1.16 1.17 (1.5%) (13) (3)
Other(5) (6) -
1. Based on average daily spot rates from 1 Apr 2023 to 30 Sep 2023
2. Based on average daily spot rates from 1 Apr 2022 to 30 Sep 2022
3. Change verses average spot rates for the previous period
4. Based on best prevailing assumptions around currency profiles
5. Other currencies include CNY, AUD, JPY, MXN, PLN, ZAR, BRL, AED, THB
TATE & LYLE PLC
ADDITIONAL INFORMATION
FOR THE SIX MONTHS TO 30 SEPTEMBER 2023
Statement of Directors' responsibilities
The Directors confirm: that this condensed consolidated set of
financial information has been prepared on the basis of the
accounting policies set out in the Group's 2023 Annual Report, and
in accordance with UK adopted International Accounting Standard 34
"Interim Financial Reporting"; that the condensed consolidated 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 2023. The
following changes have been made to the Board in the six months to
30 September 2023.
Dr Gerry Murphy stepped down as Chair of the Board on 1
September 2023. The Board appointed Warren Tucker as Interim Chair
from that date.
On 8 November 2023, it was announced that David Hearn was
appointed as a Director and Chair of the Tate & Lyle Board
from
1 January 2024. On his appointment, Warren Tucker will step down
as Interim Chair but will continue to serve as a non-executive
director and as Chair of the Audit Committee.
Mr Paul Forman, the Senior Independent Director and who led the
Chair's succession process, will retire from the Board on
31 December 2023 having served his nine-year term. As previously
announced, Kimberly (Kim) Nelson will become Senior Independent
Director on 1 January 2024.
For and on behalf of the Board of Directors:
Nick Hampton Dawn Allen
Chief Executive Chief Financial Officer
8 November 2023
INDEPENT REVIEW REPORT TO TATE & LYLE PLC
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2023 which comprises the condensed
(interim) consolidated income statement, condensed (interim)
consolidated statement of comprehensive income, condensed (interim)
consolidated statement of financial position, condensed (interim)
consolidated statement of cash flows, condensed (interim)
consolidated statement of changes in equity and the related
explanatory notes 1 to 12. We have read the other information
contained in the half yearly financial report and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2023 is not prepared, in all material respects, in
accordance with UK adopted International Accounting Standard 34 and
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK) "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" (ISRE) issued by the Financial Reporting Council. 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.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting'.
Conclusions relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
Conclusion section of this report, nothing has come to our
attention to suggest that management have inappropriately adopted
the going concern basis of accounting or that management have
identified material uncertainties relating to going concern that
are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with this ISRE, however future events or conditions may
cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK) "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
8 November 2023
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END
IR UWUKROKUARAA
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