Source - LSE Regulatory
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 performance1

Statutory performance

 

2023

vs 2022

 

2023

vs 2022

Revenue

£857m

4%

Revenue

£857m

1%

   Food & Beverage Solutions

£707m

5%

   Food & Beverage Solutions

£707m

2%

   Sucralose

£89m

(5)%

   Sucralose

£89m

(9)%

EBITDA

£178m

7%

   Primary Products Europe

£61m

- %

   Food & Beverage Solutions

£153m

10%

 

 


   Sucralose

£28m

(14)%




EBITDA margin

20.8%

70bps




Share of profit of Primient

£17m

32%




Profit before tax

£156m

16%

Operating profit

£123m

8%

Earnings per share

30.1p

19%

Profit before tax

£130m

92%

Free cash flow

£77m

£15m

Diluted earnings 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 flow1 £77m, £15m 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 investment 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® 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® Soluble Fibres in Boleráz, Slovakia.  Production of fibres from the first phase, a €25 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 £15 million higher at £77 million, benefiting from an improvement in working capital of
£47 million. Capital expenditure increased by £20 million to £46 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 £249 million, £11 million higher than at 31 March 2023, with net debt to EBITDA at 0.8x, and liquidity of over £1.0 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

Change1

Half-year

         Change1

 

£857m

4%

£178m

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 £17 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

Change1

Volume2

Price Mix2

Half-year

Change1

North America

£334m

2%

(8)%

10%

-

-

Asia, Middle East, Africa and Latin America

£200m

1%

(8)%

9%

-

-

Europe

£173m

19%

(6)%

25%

-

-

Total

£707m

5%

(8)%

13%

£153m

10%

 

Revenue was 5% higher in constant currency at £707 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 £153 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 £5 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 selling

Value

Growth

% of FBS revenue

% of new business wins

11%

£109m

(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

Change1

Volume

Price Mix

Half-year

Change1

£89m

(5)%

(8)%

3%

£28m

(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 £1 million.

 

 

Primary Products Europe

7% of Group revenue and (1%) of Group adjusted EBITDA

 

Revenue

Revenue Drivers

Adjusted EBITDA

Half-year

Change1

Volume

Price Mix

Half-year

Change1

£61m

(2)%

(25)%

23%

£(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

 

 

Six months to 30 September

2023 

£m 

 

2022 

£m 

Constant 
currency 
change 
 % 

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 £4 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 £8 million were included in profit before tax.  Of these costs, £7 million related to organisational improvements to the Food & Beverage Solutions business and activities to drive productivity savings.  Exceptional cash outflows for the period totalled £11 million.  (For more information see Note 5).

 

Adjusted share of profit of Primient joint venture

Six months to 30 September

2023 

£m 

 

20221

£m 

Constant 
currency 
change 
 % 

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 venture2

17 

13 

32% 

1     Reclassification adjustment: adjusted operating profit has been increased by £5 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 £4 million (2022 - £5 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 £73 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 £77 million (2022 - £62 million), an increase of £15 million. This reflected both higher profits and a strong focus on cash generation which delivered a £47 million improvement in net working capital compared to the comparative period.  Investments in infrastructure, capacity and technology drove capital expenditure to £46 million, £20 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
£90 million to £100 million range.

 

Net debt at 30 September 2023 was £249 million, £11 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 £52 million and payments in respect of share incentive schemes of £25 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 £1.0 billion of available liquidity through readily available cash and cash equivalents and access to a committed, undrawn revolving credit facility of US$800 million (£655 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:

 

Six months to 30 September

 

2023 

£m 

2022 

£m 

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.

 

Cash 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:

 

Six months to 30 September

2023 

£m 

2022 

£m 

Net cash flow from operating activities

86 

38 

Capital expenditure (net)

(46)

(26)

Tax paid in respect of Primient partnership

4 

4 

Exceptional cash flows1

23 

52 

Interest received

10 

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 £11 million (2022 - £37 million) and tax paid in relation to gain on disposal of Primient of £12 million (2022: £15 million)

 

Six months to 30 September

2023 

£m 

2022 

£m 

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 

   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 £ 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

30 September

2023 

£m 

At

31 March

2023 

£m 

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

30 September

2023 

£m 

At

31 March

2023 

£m 

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

£m 

£m 

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)

 

 

 

 

 

 

Notes

Six months to  

30 September 

 2023 
£m
 

Six months to 

 30 September 

2022 
£m 

Year to 
31 March 

2023 
£m 

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)

 

 


 

 

 

Note

Six months to  

30 September 

 2023 
£m
 

Six months to 

 30 September 

2022 
£m 

Year to 
31 March 

2023 
£m 

 

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 

 

Share of other comprehensive income/(expense) of joint ventures


14 

43 

(5)

 

Tax effect of the above items


(2)

(1)

 



(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 

 

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)

 





Notes


At 30 September 

2023

£m 

At 30 September 

2022 

£m 

At 31 March 

2023 

£m 

ASSETS


 





Non-current assets


 





Goodwill and other intangible assets


 


430

498

452

Property, plant and equipment (including right-of-use assets of £38 million (30 September 2022 -
£44 million, 31 March 2023 - £39 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 £42 million
(30 September 2022 - £52 million,
31 March 2023 - £44 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 £10 million
(30 September 2022 - £11 million,
31 March 2023 - £10 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)

 


 

 

 

Notes

Six months to 30 September 2023

£m

Six months to 30 September 2022

£m

Year to

31 March
2023

£m

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 

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 

10 

Interest received

 

10 

11 

Dividends received from joint venture


13 

13 

41 

Redemption of shares held in joint venture


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 payment

 

(2)

- 

Cash inflow from additional borrowings

 

2 

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 and share premium

 

 

Capital redemption reserve

 

 

 

Other reserves

 

 

 

Retained earnings

 

Attributable to owners of the Company

 

 

Non-controlling interests

 

 

Total equity


£m 

£m 

£m 

£m 

£m 

£m 

£m 

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

Transactions with owners:

 

 

 

 

 

 

 

Share-based payments, net of tax

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 

1 210 

 

 

 

 

 

 

 

 

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

Transactions with owners:








Share-based payments, net of tax

Purchase of own shares including net settlement

(4)

(4)

(4)

Dividends paid

(548)

(548)

(548)

At 30 September 2022

524 

240 

449 

1 221 

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 

- 

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 £391 million of cash and
US$800 million (£655 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 (£77 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 2023


Six months to 30 September 2022

Continuing operations

£m unless otherwise stated 

IFRS 

reported 

Adjusting  items 

Adjusted

reported


IFRS 

reported 

Adjusting 

items 

Adjusted 

reported 

Revenue

857 

- 

857 

 

849 

- 

849 

EBITDA

170 

8 

178 

 

161 

11 

172 

Depreciation1

(29)

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

£m unless otherwise stated 

IFRS 

reported 

Adjusting  items 

Adjusted

reported

 

Revenue

1 751 

- 

1 751 

 

EBITDA

291 

29 

320 

 

Depreciation1

(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 (pence)

31.3p

- 

- 

 

Diluted earnings per share (pence)

30.8p

18.5p

49.3p

 

1.     For the six months to 30 September 2023, depreciation includes depreciation of £1 million related to the Quantum acquisition fair value adjustments which is excluded from adjusted operating profit (30 September 2022 - £nil; 31 March 2023 - £1 million).

 

The following table shows the reconciliation of the adjusting items in the current and comparative periods:

 

Continuing operations





Note

Six months to 30 September 2023
£m

Six months to
30 September 2022
£m


Year to
31 March

2023
£m

Exceptional costs included in operating profit


5

8 

11 


28 

Amortisation of acquired intangible assets



11 

                   12 


23 

Unwind of fair value adjustments1



1 


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 £1 million (six months to 30 September 2022 - £nil; year ended 31 March 2023 - £1 million).

 

The following table shows the reconciliation of the Primient joint venture adjusting items impacting adjusted profit after tax:

Primient adjusting items at Group's share



Six months to 30 September 2023
£m

Six months to
30 September 2022
£m


Year to
31 March

2023
£m

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 to 
30 September 
2023 
£m 

 

Six months to
30 September 2022
£m


Year to 
31 March 
2023 
£m 

Adjusted operating profit from continuing operations

143 

137 

249 

Adjusted for:

 



Adjusted depreciation and adjusted amortisation1

35 

35 

71 

Share-based payments charge

8 

20 

Other non-cash movements2

(2)

(8)

Changes in working capital3

(28)

(75)

(105)

Net retirement benefit obligations

(3)

(3)

(9)

Net capital expenditure

(46)

(26)

(71)

Net interest and tax paid4

(30)

(13)

(28)

Free cash flow from continuing operations

77 

62 

119 

1. Total depreciation of £29 million (30 September 2022 - £29 million; 31 March 2023 - £59 million) less £1 million of depreciation related to Quantum acquisition fair value adjustments (30 September 2022 - £nil; 31 March 2023 - £1 million) and amortisation of £18 million (30 September 2022 - £18 million; 31 March 2023 - £36 million) less £11 million (30 September 2022 - £12 million; 31 March 2023 - £23 million) of amortisation of acquired intangible assets.

2. In the year ended 31 March 2023, other non-cash movements excludes an inflow of £1 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 £14 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 £7 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 £16 million relating to the Group's share of Primient's tax (30 September 2022 - £19 million; 31 March 2023 -
£47 million) including the exceptional tax on the gain on disposal of Primient of £12 million (30 September 2022 - £15 million; 31 March 2023 - £42 million) .

 

The following table shows the reconciliation of free cash flow to net cash generated from operating cash flows:

 

 


Six months to 
30 September 
2023 
£m 

 

Six months to
30 September 2022
£m


Year to 
31 March 
2023 
£m 

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

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

Total operations




Food & Beverage Solutions

£m

 

 

Sucralose

£m

Primary

Products

Europe

£m

Primient Joint Venture 

£m 

Total 

£m 

Revenue

707 

89 

61 

857 

Adjusted EBITDA1

153 

28 

(3)

- 

178 

Adjusted EBITDA margin


 

 

21.7%

30.8%

(4.2%)

- 

20.8%

Adjusted share of profit of joint venture1


 

 

- 

- 

- 

17 

17 

1. Reconciled to statutory profit for the period for continuing operations in Note 3.

 

 






Six months to 30 September 2022*

Total operations




Food & Beverage Solutions

£m

 

 

Sucralose

£m

Primary

Products

Europe

£m

Primient Joint Venture 

£m 

Total 

£m 

Revenue

691 

97 

61 

849 

Adjusted EBITDA1

144 

34 

(6)

172 

Adjusted EBITDA margin


 

 

20.8%

34.5%

(8.8%)

20.2%

Adjusted share of profit of joint venture1


 

 

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

Total operations




Food & Beverage Solutions

£m

 

 

Sucralose

£m

Primary

Products

Europe

£m

Primient Joint Venture

£m 

Total 

£m 

Revenue

1 438 

184 

129 

1 751 

Adjusted EBITDA1

271 

58 

(9)

320 

Adjusted EBITDA margin


 

 

18.8%

31.3%

(6.5%)

18.3%

Adjusted share of profit of joint venture1

24 

24 

1. Reconciled to statutory profit for the year for continuing operations in Note 3.

 

Geographic disclosures 

 

 

 

 

Revenue - total operations


 

Six months to 

30 September  

2023 

£m 

Six months to 

30 September 

2022 

£m 

Year to 

31 March 

2023 

£m 

Food & Beverage Solutions


 

 



North America


 

334 

340 

687 

Asia, Middle East, Africa and Latin America


 

200 

208 

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 to 

30 September 

 

Six months to 

30 September 

 

Year to 

31 March 



2023 

2022 

2023 

Income statement - continuing operations

Footnotes

£m 

£m 

£m 

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


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 £7 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 £1 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 £8 million exceptional costs recorded in operating profit in continuing operations during the period resulted in £6 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 £5 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 £2 million.

Discontinued operations

In the six months to 30 September 2022 and year ended 31 March 2023, the Group recorded a gain of £98 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 (£1.1 billion). An exceptional tax charge of £33 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.

 

Net operating cash outflows on exceptional items

Footnotes

Six months to 
30 September
 
2023
 

£m 

Six months to 30 September 2022

£m

Year to
31 March 2023
£m

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 £3 million outflow reflects the net exceptional charge in profit before tax for total operations of £8 million which was £3 million lower than net cash outflows of
£11 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 £28 million, which when divided by statutory profit before tax from continuing operations of £130 million gives a statutory effective tax rate of 21.3%.

·     Adjusted income tax expense from continuing operations of £34 million, which when divided by adjusted profit before tax from continuing operations of £156 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

 

 

 

Continuing operations


 

Six months to 

30 September  

2023 

£m 

Six months to 

30 September 

2022 

£m 

Year to 

31 March 

2023 

£m 

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

 

 

 

Continuing operations


 

Six months to 

30 September  

2023 

£m 

Six months to 

30 September 

2022 

£m 

Year to 

31 March 

2023 

£m 

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 (£1.1 billion), resulting in an exceptional gain on disposal before tax of £98 million (see Note 5).

A reconciliation of gross cash proceeds received is shown in the tables below:

Reconciliation of gross cash proceeds (US$m)

Six months to

30 September

2022
US$m

Year to

31 March

2023
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 

 

Reconciliation of gross cash proceeds (£m)

Six months to

30 September

2022
£m

Year to

31 March

2023
£m

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 £12 million was received.

 

 

Gain on disposal


Six months to 30 September 2022

£m

Year ended 31 March 2023

£m

 

Cash consideration - as shown in table above1


253 

253 

Contingent consideration received2

 

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 20223

 

(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 forward4

 

(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 £12 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 £1 337 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 £54 million. Of this amount, £42 million has been paid in the year ended 31 March 2023. This tax charge was partially offset by a deferred tax credit of £21 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 £33 million.

A reconciliation to the consolidated statement of cash flows is shown in the table below:

Cash flows


Six months to 30 September  2022

£m

Year ended 31 March  2023

£m

 

Total cash consideration of £253 million less completion accounts adjustments not yet received of £12 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 2023

 

Six months to 30 September 2022

 

Continuing operations

Discontinued operations

Total

 

Continuing operations

Discontinued

operations

 

Total

Profit attributable to owners of the Company (£ 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 operations

Discontinued operations

Total

 

Profit attributable to owners of the Company (£ 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:

 

Continuing operations

Notes

Six months to 
30 September 
2023 
£m 

Six months to 
30 September 
2022 
£m 

Year to 
31 March 
2023 
£m 

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

 

 

Total operations

Note

Six months to 
30 September 
2023 
£m 

Six months to 
30 September 
2022 
£m 

Year to 
31 March 
2023 
£m 

 

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 £52 million, representing 13.1p per share, was paid during the six months to 30 September 2023. 

On 16 May 2022, the Group returned £497 million to ordinary shareholders by way of a special dividend of £1.07 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
£m

Borrowings and lease liabilities
£m

Total

£m

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 £520 million (30 September 2022 - £656 million; 31 March 2023 - £608 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 1 

£m 

Level 2  

£m  

Level 3 

£m 

Total 

£m 

 

Level 1 

£m 

Level 2 

£m 

Level 3 

 £m 

Total 

£m 

Assets at fair value

 




 

 




Financial assets at FVPL1

20 

20 

 

20 

20 

Financial assets at FVOCI1

7 

7 

 

22 

22 

Derivative financial instruments:

 

 

 

 

 





- commodity derivatives

1 

1 

 

Assets at fair value

1 

27 

28 

 

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 
£m 

Financial assets at FVOCI 
£m 

Total 
£m 

At 1 April 2023

 

 

20 

22 

42 

Other comprehensive income1

 

 

(16)

(16)

Purchases

 

 

Disposals

 

 

(2)

(2)

At 30 September 2023



20 

27 

1.     The £16 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.

Six months to 30 September

Adjusted performance
Continuing operations



2023
 
£m
 



FX  
£m

 2023  
at constant 
currency  
£m 


Underlying  
growth 
£m 



2022* 
£m 



Change % 

Change in  
constant  
currency  

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 to 30 September 20231

Six months to
30 September 20222

Change (%)3

 

Six months impact (£m) of

5% strengthening of GBP

(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)

Other5





(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

 

 

 

INDEPENDENT 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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