Effect of Adoption of IFRS 11 ‘Joint Arrangements’

LONDON--()--

TATE & LYLE PLC
EFFECT OF ADOPTION OF IFRS 11 ‘JOINT ARRANGEMENTS’

29 May 2014

ACCOUNTING FOR JOINT VENTURES

With effect from 1 April 2014, Tate & Lyle adopted IFRS 11 ‘Joint Arrangements’ which will change significantly the basis of accounting for its interests in joint ventures.

Previously, the Group’s interests in joint ventures were accounted for by proportionate consolidation, whereby the Group’s share of the income and expenses, assets and liabilities and cash flows of joint ventures was combined on a line-by-line basis with those of Tate & Lyle PLC and its subsidiaries. IFRS 11 prohibits the use of proportionate consolidation and requires that joint ventures are accounted for using the equity method of accounting. Under the equity method of accounting, the Group’s share of the after tax profits and losses of the joint ventures are shown on one line of the consolidated income statement, its share of their net assets are shown on one line of the consolidated statement of financial position and the consolidated statement of cash flows reflects cash flows between the Group and the joint ventures (investments in and dividends received from joint ventures) within cash flows from investing activities.

The Group’s results announcements in respect of the year ending 31 March 2015 will include comparative amounts for the year ended 31 March 2014 restated in accordance with IFRS 11. In order to assist users in understanding the effect of this change, we publish today reconciliations showing the effect of IFRS 11 on the Group’s statutory results, financial position and cash flows for the year ended 31 March 2014 (‘FY14’) and for the six months ended 30 September 2013 (‘HY14’).

SUMMARY OF EFFECT

Whilst these changes do not affect the Group’s earnings or its net assets, they affect many of the individual line items presented in the Group’s financial statements. Going forward, however, the Group will present segment and adjusted financial information on a proportionate consolidation basis since this reflects the management of our joint ventures on an integrated basis with the Group’s subsidiaries. Accordingly, performance measures such as adjusted operating profit, adjusted profit before tax and adjusted diluted earnings per share will be unaffected by these changes. We summarise below the effect of the changes using the usual format for our presentation of the Group’s headline results.

  Year ended       Six months ended
31 March 2014 30 September 2013
Continuing operations   Previously   Previously
£m unless stated otherwise   Restated   reported Restated   reported
 
Adjusted results1
Adjusted sales 3 147 3 147 1 737 1 737
Adjusted operating profit2 349 349 187 187
Adjusted profit before tax3 322 322 173 173
Adjusted diluted earnings per share4 55.7p 55.7p 29.9p 29.9p
Adjusted free cash flow5 227 227 239 239
Adjusted net debt 353 353 336 336
 
Statutory results
Sales 2 754 3 147 1 516 1 737
Operating profit 251 325 139 176
Profit before tax 277 290 150 158
Profit for the year (on total operations) 273 273 130 130
Diluted earnings per share (on total operations) 58.0p 58.0p 27.6p 27.6p
Free cash flow5 141 227 193 239
Net debt 385 353 374 336
 
Dividend per share 27.6p 27.6p 7.8p 7.8p
                     
1     Adjusted results include the Group’s share of the results of joint ventures on a proportionate consolidation basis.
2 Adjusted operating profit for FY14 is before the amortisation of acquired intangible assets of £10 million (HY14 – £5 million) and a net exceptional charge of £14 million (HY14 – £6 million).
3 Adjusted profit before tax for FY14 is further adjusted for the Group’s share of the income tax expense of joint ventures of £13 million (HY14 – £8 million) and the net retirement benefit interest expense of £8 million (HY14 – £4 million).
4 Adjusted earnings per share for FY14 is based on earnings after the adjustments made in arriving at adjusted profit before tax and is further adjusted to deduct the tax credit on those adjustments of £15 million (HY14 – £4 million).
5 Free cash flow represents cash generated from operating activities, less net interest paid, less tax paid, less capital expenditure.
 

RESTATED FINANCIAL INFORMATION

Reconciliations showing the effect of IFRS 11 on the Group’s primary financial statements are presented on the following pages:

                                         
                  Six months            
Year ended At ended At At
31 March 31 March 30 September 30 September 31 March
        2014       2014       2013       2013       2013
Consolidated income statement       Page 3               Page 8                
Consolidated statement of comprehensive income       Page 4               Page 9                
Consolidated statement of financial position               Page 5               Page 10       Page 13
Consolidated statement of cash flows       Page 6               Page 11                
Consolidated statement of changes in equity       Page 7               Page 12                
 

ELIMINATION OF PROPORTIONATE CONSOLIDATION

In the attached reconciliations, the amounts described as the elimination of proportionate consolidation comprise the elimination of the Group’s share of the income and expenses, assets and liabilities, and cash flows of joint ventures and the reversal of the elimination of the Group’s share of transactions, balances and cash flows with joint ventures recognised by the Group’s subsidiaries.

SEGMENT INFORMATION

For the purposes of allocating resources and assessing the performance of the Group’s businesses the Board will continue to receive financial information that reflects the Group’s interests in joint ventures accounted for by proportionate consolidation. Accordingly, the measures of segment revenue (sales) and segment profit or loss (adjusted operating profit) that are presented in the consolidated financial statements will continue to be prepared on the proportionate consolidation basis. Similarly, segment net working capital information will continue to be presented to the Board on a proportionate consolidation basis. Segment information is presented on pages 14 and 15.

FREE CASH FLOW AND NET DEBT

We will present adjusted free cash flow and adjusted net debt on a proportionate consolidation basis. On pages 16 and 17, we present the Group's free cash flow, net debt and the reconciliation of reported cash flow to the movement in net debt for the above periods.

ADDITIONAL INFORMATION

We focus on a number of key financial performance indicators to measure the value generated by the Group's operations and to assess its financial strength. Our measures of financial strength, net debt to EBITDA and interest cover, are defined under the Group's banking covenants and are unchanged as a result of the adoption of IFRS 11. We also continue to calculate the other key performance indicators on a proportionate consolidation basis. On page 18, we present each of the Group's key financial performance measures for the above periods.

INVESTOR AND MEDIA CONTACTS

A copy of this announcement can be found on our website at www.tateandlyle.com. A hard copy of this announcement is also available from the Company Secretary, Tate & Lyle PLC, 1 Kingsway, London WC2B 6AT.

For more information contact Tate & Lyle PLC:

Mathew Wootton, Group VP, Investor and Media Relations
Tel: +44 (0) 20 7257 2110 or Mobile: +44 (0) 7500 100320

Andrew Lorenz, FTI Consulting
Tel: +44 (0) 20 7269 7113 or Mobile: +44 (0) 7775 641807

CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
YEAR ENDED 31 MARCH 2014

            Adoption of IFRS 11      
Elimination of       Adoption of
Previously proportionate equity
reported consolidation accounting Restated
        £m       £m       £m       £m
Continuing operations

Sales

     

3 147

     

(393)

     

     

2 754

 
Operating profit 325 (74) 251
Finance income 2 2
Finance expense (37) (37)
Share of profit after tax of joint ventures                   61       61
Profit before tax 290 (74) 61 277
Income tax expense       (45)       13             (32)
Profit for the year from continuing operations 245 (61) 61 245
Profit for the year from discontinued operations       28                   28
Profit for the year       273       (61)       61       273
 
Profit for the year attributable to:
– Owners of the Company 273 (61) 61 273
– Non-controlling interests                        
Profit for the year       273       (61)       61       273
 
Earnings per share      

Pence

     

Pence

     

Pence

     

Pence

Continuing operations:
– Basic 52.8p (13.1)p 13.1p 52.8p
– Diluted       52.1p       (13.0)p       13.0p       52.1p
 
Continuing and discontinued operations:
– Basic 58.8p (13.1)p 13.1p 58.8p
– Diluted       58.0p       (13.0)p       13.0p       58.0p
 
 
Analysis of adjusted profit before tax from continuing operations       £m       £m       £m       £m
Profit before tax 290 (74) 61 277
Adjusted for:
Exceptional items 14 14
Amortisation of acquired intangible assets 10 10
Net retirement benefit interest 8 8
Share of tax of joint ventures                   13       13
Adjusted profit before tax       322       (74)       74       322
 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
YEAR ENDED 31 MARCH 2014

            Adoption of IFRS 11      
Elimination of       Adoption of
Previously proportionate equity
reported consolidation accounting Restated
        £m       £m       £m       £m
Profit for the year       273       (61)       61       273
 
Other comprehensive (expense)/income
Items that may be reclassified to profit or loss
Fair value loss on cash flow hedges (1) (1) (2)
Loss on currency translation of foreign operations (130) 23 (107)
Fair value gain on net investment hedges 50 50
Share of other comprehensive expense of joint ventures                   (22)       (22)
        (81)       22       (22)       (81)
Items that will not be reclassified to profit or loss
Retirement benefit plans:
– Actual return lower than interest on plan assets (29) (29)
– Net actuarial gain 19 19
Tax expense relating to the above items       (22)                   (22)
        (32)                   (32)
Total other comprehensive expense       (113)       22       (22)       (113)
Total comprehensive income       160       (39)       39       160
 
Analysed by:
– Continuing operations 132 (39) 39 132
– Discontinued operations       28                   28
Total comprehensive income       160       (39)       39       160
 
Attributable to:
– Owners of the Company       160       (39)       39       160
 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
AT 31 MARCH 2014

            Adoption of IFRS 11      
Elimination of       Adoption of
Previously proportionate equity
reported consolidation accounting Restated
        £m       £m       £m       £m
ASSETS
Non-current assets
Goodwill and other intangible assets 389 (82) 307
Property, plant and equipment 865 (133) 732
Investments in joint ventures 308 308
Investments in associates 6 (2) 4
Available-for-sale financial assets 28 28
Derivative financial instruments 23 23
Deferred tax assets 7 (3) 4
Trade and other receivables       1       (1)            
        1 319       (137)       224       1 406
Current assets
Inventories 418 (46) 372
Trade and other receivables 314 (49) 265
Current tax assets 1 1
Derivative financial instruments 79 (1) 78
Cash and cash equivalents       396       (50)             346
        1 208       (146)             1 062
TOTAL ASSETS       2 527       (283)       224       2 468
 
EQUITY
Capital and reserves
Share capital 117 117
Share premium 406 406
Capital redemption reserve 8 8
Other reserves 58 1 (1) 58
Retained earnings       460       (225)       225       460
Equity attributable to owners of the Company 1 049 (224) 224 1 049
Non-controlling interests       1                   1
TOTAL EQUITY       1 050       (224)       224       1 050
 
LIABILITIES
Non-current liabilities
Trade and other payables 2 2
Borrowings 439 (2) 437
Derivative financial instruments 2 2
Deferred tax liabilities 45 (3) 42
Retirement benefit deficits 220 220
Provisions for other liabilities and charges       10       (1)             9
        718       (6)             712
Current liabilities
Trade and other payables 315 (32) 283
Current tax liabilities 40 (2) 38
Borrowings and bank overdrafts 339 (16) 323
Derivative financial instruments 50 (1) 49
Provisions for other liabilities and charges       15       (2)             13
        759       (53)             706
TOTAL LIABILITIES       1 477       (59)             1 418
TOTAL EQUITY AND LIABILITIES       2 527       (283)       224       2 468
 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
YEAR ENDED 31 MARCH 2014

            Adoption of IFRS 11      
Elimination of       Adoption of
Previously proportionate equity
reported consolidation accounting Restated
        £m       £m       £m       £m
Cash flows from operating activities
Profit before tax from continuing operations 290 (74) 61 277
Adjustments for:
– Depreciation of property, plant and equipment 97 (14) 83
– Amortisation of intangible assets 21 (1) 20
– Share-based payments 8 8
– Other non-cash items (6) (6)
– Finance income (2) (2)
– Finance expense 37 37
– Share of profit after tax of joint ventures (61) (61)
Change in working capital 38 (23) 15
Change in net retirement benefit obligations       (43)                   (43)
Cash generated from continuing operations 440 (112) 328
Interest paid (33) (33)
Income tax paid       (23)       14             (9)
Net cash generated from operating activities       384       (98)             286
 
Cash flows from investing activities
Purchase of intangible assets (45) (45)
Purchase of property, plant and equipment (114) 12 (102)
Proceeds on disposal of property, plant and equipment 34 (1) 33
Acquisitions of businesses, net of cash acquired (15) (15)
Disposal of businesses, net of cash disposed 3 3
Purchase of available-for-sale financial assets (4) (4)
Disposal of available-for-sale financial assets 2 2
Interest received 2 2
Dividends received from joint ventures             105             105
Net cash used in investing activities       (137)       116             (21)
 
Cash flows from financing activities
Purchase of own shares (29) (29)
Cash inflow from additional borrowings 4 4 8
Cash outflow from repayment of borrowings (46) (4) (50)
Repayment of capital element of finance leases (2) (2)
Dividends paid to the owners of the Company       (124)                   (124)
Net cash used in financing activities       (197)                   (197)
                                 
Net increase in cash and cash equivalents       50       18             68
 
Cash and cash equivalents
Balance at beginning of year 379 (74) 305
Net increase in cash and cash equivalents 50 18 68
Currency translation differences       (33)       6             (27)
Balance at end of year       396       (50)             346
 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
YEAR ENDED 31 MARCH 2014

 

     

Share capital
and share
premium

     

Capital
redemption
reserve

     

Other
reserves

     

Retained
earnings

     

Attributable to
the owners
of the Company

     

Non-
controlling
interests
(NCI)

     

Total
equity

        £m       £m       £m       £m       £m       £m       £m
At 31 March 2013       523       8       139       366       1 036             1 036
Year ended 31 March 2014
Profit for the year 273 273 273
Other comprehensive expense                   (81)       (32)       (113)             (113)
Total comprehensive (expense)/income (81) 241 160 160
Share-based payments 8 8 8
Purchase of own shares (29) (29) (29)
NCI in subsidiaries acquired 1 1
Initial recognition of put option on NCI (2) (2) (2)
Dividends paid                         (124)       (124)             (124)
At 31 March 2014       523       8       58       460       1 049       1       1 050
 

CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
SIX MONTHS ENDED 30 SEPTEMBER 2013

            Adoption of IFRS 11      
Elimination of       Adoption of
Previously proportionate equity
reported consolidation accounting Restated
        £m       £m       £m       £m
Continuing operations

Sales

     

1 737

      (221)      

      1 516
 
Operating profit 176 (37) 139
Finance income 1 1
Finance expense (19) (19)
Share of profit after tax of joint ventures                   29       29
Profit before tax 158 (37) 29 150
Income tax expense       (28)       8             (20)
Profit for the period from continuing operations 130 (29) 29 130
Profit for the period from discontinued operations                        
Profit for the period       130       (29)       29       130
 
Profit for the period attributable to:
– Owners of the Company 130 (29) 29 130
– Non-controlling interests                        
Profit for the period       130       (29)       29       130
 
Earnings per share      

Pence

     

Pence

     

Pence

     

Pence

Continuing operations:
– Basic 28.0p (6.3)p 6.3p 28.0p
– Diluted       27.6p       (6.2)p       6.2p       27.6p
 
Continuing and discontinued operations:
– Basic 28.0p (6.3)p 6.3p 28.0p
– Diluted       27.6p       (6.2)p       6.2p       27.6p
 
 
Analysis of adjusted profit before tax from continuing operations       £m       £m       £m       £m
Profit before tax 158 (37) 29 150
Adjusted for:
Exceptional items 6 6
Amortisation of acquired intangible assets 5 5
Net retirement benefit interest 4 4
Share of tax of joint ventures                   8       8
Adjusted profit before tax       173       (37)       37       173
 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
SIX MONTHS ENDED 30 SEPTEMBER 2013

            Adoption of IFRS 11      
Elimination of       Adoption of
Previously proportionate equity
reported consolidation accounting Restated
        £m       £m       £m       £m
Profit for the period       130       (29)       29       130
 
Other comprehensive (expense)/income
Items that may be reclassified to profit or loss
Fair value gain on cash flow hedges 1 (1)

Fair value gain on cash flow hedges transferred to the income statement

(1) (1)
Net currency translation differences (59) 14 (45)
Share of other comprehensive expense of joint ventures                   (13)       (13)
        (59)       13       (13)       (59)
Items that will not be reclassified to profit or loss
Re-measurement of retirement benefit plans (2) (2)
Tax expense relating to the above item       (16)                   (16)
        (18)                   (18)
Total other comprehensive expense       (77)       13       (13)       (77)
Total comprehensive income       53       (16)       16       53
 
Analysed by:
– Continuing operations 53 (16) 16 53
– Discontinued operations                        
Total comprehensive income       53       (16)       16       53
 
Attributable to:
– Owners of the Company       53       (16)       16       53
 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
AT 30 SEPTEMBER 2013

            Adoption of IFRS 11      
Elimination of       Adoption of
Previously proportionate equity
reported consolidation accounting Restated
        £m       £m       £m       £m
ASSETS
Non-current assets
Goodwill and other intangible assets 370 (83) 287
Property, plant and equipment 897 (138) 759
Investments in joint ventures 331 331
Investments in associates 6 (2) 4
Available-for-sale financial assets 28 28
Derivative financial instruments 39 (1) 38
Deferred tax assets 1 1
Trade and other receivables       2       (1)             1
        1 343       (140)       246       1 449
Current assets
Inventories 320 (51) 269
Trade and other receivables 339 (58) 281
Current tax assets 3 3
Derivative financial instruments 108 (8) 100
Cash and cash equivalents       449       (56)             393
        1 219       (173)             1 046
TOTAL ASSETS       2 562       (313)       246       2 495
 
EQUITY
Attributable to owners of the Company
Share capital 117 117
Share premium 406 406
Capital redemption reserve 8 8
Other reserves 80 (8) 8 80
Retained earnings       376       (238)       238       376
TOTAL EQUITY       987       (246)       246       987
 
LIABILITIES
Non-current liabilities
Borrowings 769 (3) 766
Derivative financial instruments 11 11
Deferred tax liabilities 48 (3) 45
Retirement benefit deficits 232 232
Provisions for other liabilities and charges       10       (1)             9
        1 070       (7)             1 063
Current liabilities
Trade and other payables 319 (36) 283
Current tax liabilities 55 (1) 54
Borrowings and bank overdrafts 52 (15) 37
Derivative financial instruments 57 (6) 51
Provisions for other liabilities and charges       22       (2)             20
        505       (60)             445
TOTAL LIABILITIES       1 575       (67)             1 508
TOTAL EQUITY AND LIABILITIES       2 562       (313)       246       2 495
 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED 30 SEPTEMBER 2013

            Adoption of IFRS 11      
Elimination of       Adoption of
Previously proportionate equity
reported consolidation accounting Restated
        £m       £m       £m       £m
Cash flows from operating activities
Profit before tax from continuing operations 158 (37) 29 150
Adjustments for:
– Depreciation of property, plant and equipment 49 (7) 42
– Amortisation of intangible assets 8 8
– Share-based payments 5 5
– Finance income (1) (1)
– Finance expense 19 19
– Share of profit after tax of joint ventures (29) (29)
Change in working capital 114 (14) 100
Change in net retirement benefit obligations       (23)                   (23)
Cash generated from continuing operations 329 (58) 271
Interest paid (15) (15)
Income tax paid (12) 7 (5)
Cash used in discontinued operations       (1)                   (1)
Net cash generated from operating activities       301       (51)             250
 
Cash flows from investing activities
Purchase of intangible assets (23) (23)
Purchase of property, plant and equipment (41) 5 (36)
Acquisitions of businesses, net of cash acquired (12) (12)
Disposal of businesses, net of cash disposed 3 3
Purchase of available-for-sale financial assets (2) (2)
Disposal of available-for-sale financial assets 1 1
Interest received 1 1
Dividends received from joint ventures             60             60
Net cash used in investing activities       (73)       65             (8)
 
Cash flows from financing activities
Purchase of own shares (16) (16)
Cash outflow from repayment of borrowings (32) (1) (33)
Repayment of capital element of finance leases (1) (1)
Dividends paid to the owners of the Company       (88)                   (88)
Net cash used in financing activities       (137)       (1)             (138)
                                 
Net increase in cash and cash equivalents       91       13             104
 
Cash and cash equivalents
Balance at beginning of period 379 (74) 305
Net increase in cash and cash equivalents 91 13 104
Currency translation differences       (21)       5             (16)
Balance at end of period       449       (56)             393
 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
SIX MONTHS ENDED 30 SEPTEMBER 2013

 

     

Share capital
and share
premium

     

Capital
redemption
reserve

     

Other
reserves

     

Retained
earnings

     

Attributable to
the owners
of the
Company

        £m       £m       £m       £m       £m
At 31 March 2013       523       8       139       366       1 036
Six months ended 30 September 2013
Profit for the period 130 130
Other comprehensive expense                   (59)       (18)       (77)
Total comprehensive income (59) 112 53
Share-based payments 2 2
Purchase of own shares (16) (16)
Dividends paid                         (88)       (88)
At 30 September 2013       523       8       80       376       987
 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
AT 31 MARCH 2013

            Adoption of IFRS 11      
Elimination of       Adoption of
Previously proportionate equity
reported consolidation accounting Restated
        £m       £m       £m       £m
ASSETS
Non-current assets
Goodwill and other intangible assets 356 (1) (85) 270
Property, plant and equipment 958 (146) 812
Investments in joint ventures 377 377
Investments in associates 6 (2) 4
Available-for-sale financial assets 27 27
Derivative financial instruments 54 54
Deferred tax assets 8 8
Trade and other receivables 3 (3)
Retirement benefit surplus       12                   12
        1 424       (150)       290       1 564
Current assets
Inventories 510 (72) 438
Trade and other receivables 383 (62) 321
Current tax assets 4 (1) 3
Derivative financial instruments 86 (2) 84
Cash and cash equivalents       379       (74)             305
        1 362       (211)             1 151
Assets held for sale       1                   1
        1 363       (211)             1 152
TOTAL ASSETS       2 787       (361)       290       2 716
 
EQUITY
Attributable to owners of the Company
Share capital 117 117
Share premium 406 406
Capital redemption reserve 8 8
Other reserves 139 (21) 21 139
Retained earnings       366       (269)       269       366
TOTAL EQUITY       1 036       (290)       290       1 036
 
LIABILITIES
Non-current liabilities
Trade and other payables 3 3
Borrowings 821 (5) 816
Derivative financial instruments 21 21
Deferred tax liabilities 24 (3) 21
Retirement benefit deficits 277 277
Provisions for other liabilities and charges       15                   15
        1 161       (8)             1 153
Current liabilities
Trade and other payables 382 (38) 344
Current tax liabilities 53 (1) 52
Borrowings and bank overdrafts 75 (17) 58
Derivative financial instruments 60 (5) 55
Provisions for other liabilities and charges       20       (2)             18
        590       (63)             527
TOTAL LIABILITIES       1 751       (71)             1 680
TOTAL EQUITY AND LIABILITIES       2 787       (361)       290       2 716
 

SEGMENT INFORMATION (UNAUDITED)

(a) Segment sales

             

Year ended
31 March
2014
£m

     

Six months
ended
30 September
2013
£m

External sales                  
Speciality Food Ingredients 983 519
Bulk Ingredients             2 164       1 218
Total sales 3 147 1 737
Elimination of proportionate consolidation             (393)       (221)
Group sales             2 754       1 516
 
(b) Segment results
             

Year ended
31 March
2014
£m

     

Six months
ended
30 September
2013
£m

Adjusted operating profit
Speciality Food Ingredients 213 112
Bulk Ingredients 172 92
Central             (36)       (17)
Total adjusted operating profit 349 187
Elimination of proportionate consolidation             (74)       (37)
Group adjusted operating profit 275 150
Adjusting items:
– Exceptional items (14) (6)
– Amortisation of acquired intangibles             (10)       (5)
Group operating profit 251 139
Finance income 2 1
Finance expense (37) (19)
Share of profit after tax of joint ventures             61       29
Group profit before tax             277       150
 
Adjusted operating margin
Speciality Food Ingredients 21.7% 21.5%
Bulk Ingredients 7.9% 7.5%
Central             n/a       n/a
Total             11.1%       10.8%
 

(c) Segment assets/(liabilities)

            At 31 March 2014
Assets       Liabilities       Net
              £m       £m       £m
Net working capital
Speciality Food Ingredients 242 (94) 148
Bulk Ingredients 447 (181) 266
Central             44       (42)       2
Total working capital 733 (317) 416
Elimination of proportionate consolidation             (96)       32       (64)
Group working capital 637 (285) 352
Other assets/(liabilities)             1 831       (1 133)       698
Group assets/(liabilities)             2 468       (1 418)       1 050
 
 
At 31 March 2013
Assets Liabilities Net
              £m       £m       £m
Net working capital
Continuing operations:
Speciality Food Ingredients 304 (115) 189
Bulk Ingredients 566 (223) 343
Central             23       (46)       (23)
893 (384) 509
Discontinued operations             3       (1)       2
Total working capital 896 (385) 511
Elimination of proportionate consolidation             (137)       38       (99)
Group working capital 759 (347) 412
Other assets/(liabilities)             1 957       (1 333)       624
Group assets/(liabilities)             2 716       (1 680)       1 036
 

ANALYSIS OF FREE CASH FLOW (UNAUDITED)

            Group       Effect of       Total
(Equity proportionate (Proportionate
accounted) consolidation consolidation)
              £m       £m       £m
Year ended 31 March 2014
Cash generated from continuing operations 328 112 440
Purchase of property, plant and equipment (102) (12) (114)
Purchase of intangible assets             (45)             (45)
Operating cash flow less capital expenditure 181 100 281
Interest paid (33) (33)
Interest received 2 2
Income tax paid             (9)       (14)       (23)
Free cash flow             141       86       227
 
 

Six months ended 30 September 2013

Cash generated from continuing operations 271 58 329
Purchase of property, plant and equipment (36) (5) (41)
Purchase of intangible assets             (23)             (23)
Operating cash flow less capital expenditure 212 53 265
Interest paid (15) (15)
Interest received 1 1
Income tax paid             (5)       (7)       (12)
Free cash flow             193       46       239
 

ANALYSIS OF NET DEBT (UNAUDITED)

            Group       Effect of       Total
(Equity proportionate (Proportionate
accounted) consolidation consolidation)
              £m       £m       £m
At 31 March 2014
Non-current borrowings (437) (2) (439)
Current borrowings and bank overdrafts (323) (16) (339)
Debt-related derivatives 29 29
Cash and cash equivalents             346       50       396
Net debt             (385)       32       (353)
 
At 30 September 2013
Non-current borrowings (766) (3) (769)
Current borrowings and bank overdrafts (37) (15) (52)
Debt-related derivatives 36 36
Cash and cash equivalents             393       56       449
Net debt             (374)       38       (336)
 
At 31 March 2013
Non-current borrowings (816) (5) (821)
Current borrowings and bank overdrafts (58) (17) (75)
Debt-related derivatives 38 38
Cash and cash equivalents             305       74       379
Net debt             (531)       52       (479)
 

MOVEMENT IN NET DEBT (UNAUDITED)

            Group       Effect of       Total
(Equity proportionate (Proportionate
accounted) consolidation consolidation)
              £m       £m       £m
Year ended 31 March 2014
Increase/(decrease) in cash and cash equivalents 68 (18) 50
Net decrease in borrowings             44             44
Decrease/(increase) in net debt resulting from cash flows 112 (18) 94
Debt in subsidiary acquired (3) (3)
Currency translation differences             37       (2)       35
Decrease in net debt/(funds) in the year             146       (20)       126
Net (debt)/funds at beginning of year             (531)       52       (479)
Net (debt)/funds at end of year             (385)       32       (353)
 
 
Six months ended 30 September 2013
Increase/(decrease) in cash and cash equivalents 104 (13) 91
Net decrease in borrowings             34       (1)       33
Decrease/(increase) in net debt resulting from cash flows 138 (14) 124
Debt in subsidiary acquired (3) (3)
Fair value and other movements (4) 1 (3)
Currency translation differences             26       (1)       25
Decrease in net debt/(funds) in the period             157       (14)       143
Net (debt)/funds at beginning of period             (531)       52       (479)
Net (debt)/funds at end of period             (374)       38       (336)
 

RATIO ANALYSIS (UNAUDITED) (a)

            Six months
Year ended ended
31 March 30 September
        2014       2013
 
Net debt to EBITDA(b)
 

= Net debt

373

351

Pre-exceptional EBITDA 467 463
= 0.8 times = 0.8 times
Interest cover (b)
 

= Operating profit before exceptional items and amortisation of intangible assets

359

351

Net finance expense 31 32

= 11.6 times

= 10.9 times

Earnings dividend cover
 

= Adjusted basic earnings per share from continuing operations

56.5

n/a
Dividend per share 27.6
= 2.0 times
Cash dividend cover (c)
 

= Free cash flow from continuing operations

227

239

Cash dividends 128 37
= 1.8 times = 6.5 times
Return on capital employed
 

= Profit before interest, tax and exceptional items from continuing operations

339

n/a
Average invested operating capital of continuing operations (d) 1 770
= 19.2%
 
Average quarterly cash conversion cycle (e) 39 days 43 days
 
 
At At
31 March 30 September
        2014       2013
 
Gearing
 

= Net debt

353

336

Total equity 1 050 987
= 34% = 34%
                 

Each of the ratios shown above is calculated based on the proportionate consolidation of the results, assets and liabilities and cash flows of the Group’s interests in joint ventures.

Notes:

(a)     All ratios are calculated based on unrounded figures.
(b) Net debt to EBITDA and interest cover are defined under the Group’s banking covenants. For the purpose of these ratios, the effect of new or revised accounting standards adopted by the Group subsequent to 1 April 2012 are ignored and net debt is calculated using average currency exchange rates.
(c) Free cash flow represents cash generated from continuing operations, less net interest paid, less income tax paid, less capital expenditure. Cash dividends represent dividends on ordinary shares paid or proposed in respect of the reporting period, excluding dividends reinvested in shares through the DRIP scheme.
(d) Average invested operating capital represents the average at the beginning and end of the period of shareholders’ equity excluding net debt, net tax assets/liabilities and net retirement benefit obligations.
(e) Average quarterly cash conversion represents controllable net working capital at the end of the quarter divided by sales in the quarter, multiplied by the number of days in the quarter and is calculated on a four-quarter rolling basis (a reduction in the number of days represents an improvement).
 

Short Name: Tate & Lyle PLC
Category Code: MSC
Sequence Number: 419303
Time of Receipt (offset from UTC): 20140528T204704+0100

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