Tate & Lyle Announces Preliminary Results for the Year Ended March 31, 2005.LONDON -- Tate & Lyle PLC, a world leader in renewable ingredients, today announced preliminary results for the year ended March 31, 2005.
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PRELIMINARY RESULTS TO MARCH 31
2005 2005 2004 2004
(Audited) GBP million $million(1) GBP million $million
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Total sales GBP 3,342m $6,183m GBP 3,167m $5,859m
Profit before tax,
exceptional items and
amortization(2) GBP 255m $472m GBP 227m $420m
Profit before taxation GBP 197m $364m GBP 224m $414m
Free cash flow(3) GBP 103m $191m GBP 62m $115m
Diluted earnings per share
before exceptional items
and amortization 38.0p 70.3cents 33.9p 62.7cents
Diluted earnings per share 29.4p 54.4cents 32.6p 60.3cents
Dividend per share 19.4p 35.9cents 18.8p 34.8cents
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(1)US dollar conversions provided at the average rate for the period
of $1.85 = GBP 1
(2) Before exceptional charges of GBP 45 million ($83 million) (2004 -
credits of GBP 5 million, $9 million) and amortization of GBP 13
million ($24 million) (2004 - GBP 8 million, $15 million).
(3) Pre-exceptional operating cash flow after interest, taxation and
capital expenditure.
--Strong full year performance from SPLENDA(R) Sucralose sucralose: see sweetener, artificial. and increased profits from our other value added ingredient products --Value added contribution increased from 39% to 49% of profit before interest, exceptional items and amortization --Profit before tax, exceptional items and amortization up 12% and at constant exchange rates up 18% --Free cash flow up 66% at GBP 103 million ($191 million) with interest cover of 11.3 times --Diluted earnings per share before exceptional items and amortization up 12% --Proposed total dividend per share increased by 3.2% to 19.4p (35.9cents) "Tate & Lyle reports a strong financial performance in the year to March 31, 2005 led by growth in SPLENDA(R) Sucralose and other value added ingredients. Strong cash generation further improved our financial position and supports our investment in future growth. In the year to March 31, 2006 we expect further progress although our results will reflect increased start-up costs relating to our new value added facilities. Looking further ahead, the pressures for reform of the EU sugar regime have intensified with the recent WTO dispute panel appeal having ruled against the EU. Reform will adversely affect the future performance of our European Sugar and Food & Industrial Ingredients businesses, although we cannot quantify the consequences at this stage. The European Commission has indicated that formal proposals for reform will be tabled on June 22, 2005. It is our intention to publish our quantification of the range of potential impacts upon our businesses after the EU Commission proposals are formally published. Across the business we have a number of expansion projects under way to stimulate longer term growth in our value added segment. We have announced capital projects to more than triple the sucralose production capacity acquired under the realignment of the SPLENDA(R) Sucralose activities and our new joint venture plant with DuPont to produce Bio-3G(TM) from renewable resources should begin to come on stream in our financial year ending March 31, 2007. All of these projects are progressing satisfactorily. The growth in value added products, especially the strong performance of SPLENDA(R) Sucralose, and the improvement in the quality of our earnings together with our increased strategic focus enable us to view the future with confidence." Sir David Lees Chairman Copies of the Annual Report for the year ended March 31, 2005 will be available to shareholders shortly, and will be obtainable from The Company Secretary, Tate & Lyle PLC, Sugar Quay, Lower Thames Street, London EC3R 6DQ. SPLENDA(R) is a trademark of McNeil Nutritionals, LLC. CHAIRMAN'S STATEMENT Results Tate & Lyle has had a good year marked by our re-entry into the FTSE100 FTSE100 - Financial Times / Stock Exchange index of 100 main share (UK) index after a seven year absence. Both sales and profit before tax and exceptional items increased, driven mainly by the successful realignment of our SPLENDA(R) Sucralose activities with McNeil Nutritionals effective from April 2004. Total sales increased to GBP 3,342 million ($6,183 million) (2004 - GBP 3,167 million, $5,859 million) and profit before tax, exceptional items and amortization was GBP 255 million ($472 million), a 12% improvement on the prior year (2004 - GBP 227 million, $420 million), after a negative exchange impact of GBP 12 million ($22 million). Diluted earnings per share before exceptional items and amortization for the year to March 31, 2005 were up 12% at 38.0p (70.3cents) (2004 - 33.9p, 62.7cents), and after exceptional items and amortization were 29.4p (54.4cents) (2004 - 32.6p, 60.3cents). The return on net operating assets improved, to 16.7%, exceeding the Group's initial target of 15%. The net charge for exceptional items of GBP 45 million ($83 million) includes the charge previously reported of GBP 55 million ($100 million) in respect of the settlement of the high fructose corn syrup class action suit in the US. Profit before tax after exceptional items and amortization was GBP 197 million ($364 million) (2004 - GBP 224 million, $414 million). After investment and capital expenditure (including significant expenditure on sucralose), net debt increased by GBP 63 million ($117 million) to GBP 451 million ($834 million). Free cash flow was GBP 103 million ($191 million) (2004 - GBP 62 million, $115 million) and interest cover improved further to 11.3 times (2004 - 9.3 times). Dividend In line with its progressive dividend policy, the Board proposes an increase of 0.6p (1.1cents) (3.2%) in the total dividend for the year to 19.4p (35.9cents). This is covered 2.0 times by earnings before exceptional items and amortization. The proposed final dividend of 13.7p (25.3cents) will be due and payable on August 3, 2005 to all shareholders on the register at July 8, 2005. Directors The composition of the Board continues to evolve with four non-executive directors retiring during the year. Keith Hopkins and Mary Jo Jacobi retired on July 29, 2004 following nine and five years service respectively. Larry Pillard retired on December 31, 2004 after eleven years service, nine of which he served as an executive director and two as a non-executive director. David Fish stepped down from the Board on September 30, 2004 due to pressure of other commitments. The Board thanks each of them for their contribution to the development of the Company. Allen Yurko will be retiring as a non-executive director at the forthcoming Annual General Meeting on July 28, 2005 having served on the Board for nine years. The Board thanks him for his work as Chairman of the Remuneration Committee since 2001 and for his wise counsel and commitment to the Company. Kai Nargolwala, a Group Executive Director of Standard Chartered PLC, was appointed as a non-executive director from December 1, 2004. His considerable financial and commercial experience, and particularly his knowledge of the Asia Pacific region, will be of great benefit to the Board. Dr. Barry Zoumas was appointed as a non-executive director from May 1, 2005. He is currently the Alan R. Warehime Professor of Agribusiness and Professor of Food Science and Nutrition at The Pennsylvania State University, USA, having worked for most of his career for the Hershey Foods Corporation. His background as both a scientist and businessman adds diversity and strength to the Board. Corporate Social Responsibility We remain committed to a policy of continuous improvement in applying sound safety, environmental and social standards in our dealings with all of our stakeholders. This commitment is upheld by striving for continuous progress in achieving the highest standards of safety, considering the environmental impact of every aspect of what we do, and treating our employees, suppliers and the communities in which we work as long-term partners. The Annual Report will set out our policies and performance. It is pleasing to report further improvement in the Group Safety Index, this year by 19.9%, to another record low. The Group continues to be a constituent of the FTSE4Good, the UK corporate social responsibility index. In March 2005, the Group was awarded a Food and Drink Federation Community Partnership Award in the Education Category (large company) for the "Ideas Factory", an outstanding educational project for children. Ideas Factory, developed in conjunction with Tate Britain, is an innovative literacy project for primary school children that develops language, reading and writing skills by using works of art as sources of inspiration. Tate & Lyle was also one of the first companies to pledge support to help victims of the Asian tsunami disaster. Our pledge was a corporate donation of GBP 75,000 ($139,000) and a commitment to match the amount raised by employees at least one-to-one. The generosity of our employees has resulted in a final combined donation of GBP 200,000 ($370,000), which has been disbursed equally across the four affected countries of India, Sri Lanka, Indonesia and Thailand. A particularly good example of our long-term partnership with stakeholders is that with suppliers of raw sugar for our European Union (EU) refining business. Tate & Lyle plays a key role as the conduit for the EU's policy of providing advantageous prices to the sugar industries in African, Caribbean and Pacific (ACP) countries as well as from suppliers in Least Developed and other Developing Countries, giving them a bridge for 1.25 million tons of sugar each year into European markets. This will be considered in more detail in the Corporate Social Responsibility section of the Annual Report. Corporate Governance During the year the Board carried out a review of its effectiveness and that of its Committees led by myself. The 2005 evaluation was the second stage of a two year process agreed by the Board in 2004. The conclusions of both the 2004 and 2005 evaluations were that the Board and its Committees were operating effectively. Recommendations such as the introduction of a full day strategy review and some changes to the balance of strategic and operational information provided to the Board have been implemented. With effect from April 1, 2005, the Group will prepare its accounts using International Financial Reporting Standards (IFRS). In order to clearly communicate the anticipated impacts of transition from UK generally accepted accounting principles, we are publishing, as an Appendix to this announcement, unaudited restatements of the Group's 2005 primary statements under IFRS. Strategy We have made good strategic progress and this is ongoing. We have united our businesses under the Tate & Lyle name and have maintained our focus as a high quality low cost producer, winning customer and industry awards. We have increased the focus on the value added component of our business which has grown both in absolute profit terms and as a proportion of the Group total. This has been achieved firstly, through a good performance from our global food ingredients sales force, secondly through innovation in marketing where we have changed what we take to market and how we go to market, and thirdly through the successful acquisition and integration of sucralose manufacturing and ingredient sales as part of the realignment of the SPLENDA(R) Sucralose business in April 2004. Outlook Tate & Lyle reports a strong financial performance in the year to March 31, 2005 led by growth in SPLENDA(R) Sucralose and other value added ingredients. Strong cash generation further improved our financial position and supports our investment in future growth. In the year to March 31, 2006 we expect further progress although our results will reflect increased start-up costs relating to our new value added facilities. Looking further ahead, the pressures for reform of the EU sugar regime have intensified with the recent WTO dispute panel appeal having ruled against the EU. Reform will adversely affect the future performance of our European Sugar and Food & Industrial Ingredients businesses, although we cannot quantify the consequences at this stage. The European Commission has indicated that formal proposals for reform will be tabled on June 22, 2005. It is our intention to publish our quantification of the range of potential impacts upon our businesses after the EU Commission proposals are formally published. Across the business we have a number of expansion projects under way to stimulate longer term growth in our value added segment. We have announced capital projects to more than triple the sucralose production capacity acquired under the realignment of the SPLENDA(R) Sucralose activities and our new joint venture plant with DuPont to produce Bio-3G(TM) from renewable resources should begin to come on stream in our financial year ending March 31, 2007. All of these projects are progressing satisfactorily. The growth in value added products, especially the strong performance of SPLENDA(R) Sucralose, and the improvement in the quality of our earnings together with our increased strategic focus enable us to view the future with confidence. Sir David Lees Chairman Chief Executive's Review Overview The Tate & Lyle Group has performed well during the 2005 financial year and has achieved good profit growth. We have also made significant progress in implementing our strategy and in progressing key investments to lay the foundations for future growth. The SPLENDA(R) Sucralose business performed strongly in its first full year under our management and we also increased the contribution from our other value added ingredient products, offsetting the effects of exchange rate translation, higher export licence costs at Sugars, Europe and rising global energy costs. These results reflect the quality and commitment of our people around the world and I would like to thank them for their contribution to our business. We have also made good progress in building a common Group identity and culture - Tate & Lyle everywhere - through our Vision Into Action program. This involved the participation of around 6,000 people, at some 40 locations around the world. Changing lifestyles mean that consumers are challenging food manufacturers to increase the pace of innovation and to reformulate and fortify their products. We have set up a global marketing network and are working more closely than ever with our customers to help them meet this challenge. Our objective is for Tate & Lyle to become synonymous with creating innovative food ingredient platforms that balance taste, health and nutrition. We have trademarked key marketing propositions under our CORE range, Create(TM), Optimise(TM), Rebalance(TM)and Enrich(TM). We are investing in consumer research and sensory testing to validate our unique market propositions and are also refocusing our investment in research and development, where we have recruited an additional 19 scientists and technicians this year. Research and development expenditure increased by 12% to GBP 19 million ($35 million) in the year (2004 - GBP 17 million, $31 million). We have also announced that we will be investing a further GBP 25 million ($46 million) in innovation over a five year period through Tate & Lyle Ventures, a new fund that we are establishing to invest in new products and technologies that are closely aligned with our strategy. This will complement our existing research and development and partnering activities. Group profit before tax, exceptional items and amortization of GBP 255 million ($472 million) was a 12% improvement on the prior year (2004 - GBP 227 million, $420 million) and an 18% improvement at constant exchange rates. Group profit before tax after exceptional items and amortization was GBP 197 million ($364 million) (2004 - GBP 224 million, $414 million). Net debt has risen from GBP 388 million ($718 million) at March 31, 2004 to GBP 451 million ($834 million) at March 31, 2005, mainly reflecting the investment in the realignment of the sucralose business. The net debt to EBITDA (earnings before exceptional items and before interest, tax, depreciation and amortization) multiple has increased slightly from 1.2 times to 1.3 times. Group Targets Tate & Lyle has made further progress against most of its targets in the year to March 31, 2005 and we have revised targets for future financial years where appropriate. --We have increased the contribution of value added products as a percentage of Group profit before interest, exceptional items and amortization from 39% to 49%. This measure has been restated for the March 2004 financial year, mainly to reflect a change in the allocation of costs and products. The March 2005 financial year includes start-up costs relating to the Bio-3G(TM) and Aquasta(TM) astaxanthin projects. A key element of our strategy is to grow the value added business and we aim to increase this contribution to 60% in the next few years. --The overall Group Return on Net Operating Assets (RONOA RONOA - Return on Net Operating Assets) improved further to 16.7% (2004 - 15.4% after restatement for adoption of UITF UITF - Urgent Issue Task Force 38). Having achieved our short term target of 15%, we now aim to reach our longer term target of 20%. We expect the return in the year to March 2006 to be broadly stable as we invest for future growth with earnings from new investments being seen in later years. --Interest cover has again increased with cover at 11.3 times, underpinning our investments in future growth and our progressive dividend policy. Our minimum target is 5.0 times. --All businesses have a target on both economic and environmental grounds to reduce energy consumption on a per unit basis by 3% per year. Overall, in the 2004 calendar year, the shift in product mix towards more value added products (which typically require greater processing and higher energy usage) means that the Group narrowly failed to achieve the target, with an actual energy reduction per unit of 2.4%. Adjusting for this change in product-mix the reduction would have been 3.6%. Performance of Main Businesses SPLENDA(R) Sucralose performed strongly after the realignment of the business (which was reported in last year's Annual Report) in April 2004. In the first full year under our management, sales of GBP 115 million ($213 million) and profit before interest exceptional items and amortization of GBP 52 million ($96 million) compared to proforma results for the year to December 2003 (the last full year of operation by McNeil Nutritionals) of GBP 70 million ($130 million) and GBP 21 million ($39 million) respectively. Integration costs at GBP 3 million ($6 million) were lower than we had previously indicated. We saw a number of exciting product launches by our SPLENDA(R) Sucralose customers throughout the year and product innovation remains strong. Our current production capacity is fully utilized and we have announced three investments in new capacity to satisfy existing and projected demand. The first of the two expansions to the sucralose facility in McIntosh, Alabama, USA is being progressively brought on stream and will be completed in January 2006. The second is on track to commence production in April 2006. The building of the new Singapore facility will be completed by January 2007 by which time we will have more than tripled the production capacity we acquired under the realignment. Like any new facility, this will require some time to build up to full production. These projects will incur start-up costs during our 2006 financial year due to commissioning and the employment and training of staff. Food & Industrial Ingredients, Americas incurred higher energy and other manufacturing costs, and the weak dollar reduced earnings on translation. Food ingredients and industrial starches improved due to higher volumes and increased gross margins, increasing the contribution from value added products. Sweetener volumes were slightly down, in line with the market, and overall sweetener gross margins were lower. Net corn costs were slightly higher. Ethanol margins were higher than in the previous year as a result of higher gasoline prices. In the 2005 calendar year pricing round we succeeded in recovering the increase in net corn costs and higher energy prices and expect to at least maintain sweetener total net margins at 2004 calendar year levels. The construction of the Bio-3G(TM) joint venture plant in Loudon, Tennessee, is progressing satisfactorily. The Bio-3G(TM) project has been selected to receive the 2005 DuPont Sustainable Growth Award. This is awarded by a committee composed of representatives from DuPont and leading environmental organizations. The nomination stated that the "teams invented, developed, and demonstrated, through pilot scale, a novel biological process for the production of 1,3-propanediol (Bio-3G(TM)), a key ingredient to DuPont(TM) Sorona(R) polymer, the newest and most advanced polymer platform introduced by DuPont in over six decades". We are pleased to be partners in this business and to share in this prestigious award. At Food & Industrial Ingredients, Europe, overall profits in the business were lower than the comparative year. The 2004 calendar year pricing round failed to recover all of the cereal cost increase, which arose due to a drought in 2003. During 2004, cereal prices reduced to more normal levels enabling margins to increase. Sales volumes in both sweeteners and starches increased. In a disappointing pricing round in the 2005 calendar year and despite the impact of higher energy costs, the industry was unable to retain any of the net gain from lower cereal prices. Total sweetener and starch net margins are, therefore, expected to be lower in the 2005 calendar year. Eaststarch, the joint venture operations in Central and Eastern Europe, also suffered from raw material price increases due to the drought but achieved better sales pricing on the accession of Slovakia and Hungary into the European Union (EU). Overall, profits improved over the prior year. Our EU cane sugar operations have delivered profits in line with the prior year and generated strong cash flow. This was despite the impact of surplus sugar in the EU leading to increased competition for export licences and driving up the cost of these licences at auction. Traditionally export licences have been sold by auction at under EUR 12 per tonne. Recent auctions have seen this increase to above EUR 90 per tonne as a result of oversupply in the EU. This has reduced the profitability of exports in the second half year by GBP 4 million ($7 million) and is expected to impact further in the year to March 2006. The current sugar regime does not allow cane refiners to sell their product through intervention (unlike beet processors). Our refineries typically export between 250,000 to 300,000 tonnes per annum. Legislative proposals on the reform of the EU sugar regime are expected on June 22, 2005. This issue is considered in greater detail later. Our Canadian sugar refinery performed in line with the previous year. The DuPont Oval Logo, DuPont(TM), Sorona(R) and The miracles of science(TM) are trademarks or registered trademarks of E.I. du Pont Nemours and Company. Performance of Other Businesses Eastern Sugar, the joint venture European sugar beet business, returned to a modest profit following the accession of the Czech Republic, Slovakia and Hungary to the EU. Whilst no resolution has been achieved in the North American Free Trade Agreement dispute on access for high fructose corn syrup (HFCS HFCs: see chlorofluorocarbons.) into Mexico and the Mexican tax on drinks containing HFCS remains in place, certain of our customers have been granted injunctions exempting them from this tax. Consequently at Almex, the Mexican cereal sweeteners and starch business, profits improved over the comparative period. Our sugar operation, Occidente, reported lower profits as a result of higher cane prices. Nghe An Tate & Lyle, our cane sugar factory in Vietnam, operated well with better selling prices. International sugar trading performed well on better margins. Implementing our strategy for growth required increased expenditure in customer management, marketing and innovation. This, together with higher personnel costs and professional fees, has resulted in increased central costs. European Sugar Regime Looking forward, the reform of the EU sugar regime, due to take effect from July 1, 2006, is an important focus for the management team. The reform will adversely affect our European businesses in the financial year ending March 31, 2007. There are external and internal pressures for change. These include:- --the need to bring the structure of the sugar regime into line with the reforms which have been made to most of the EU's other commodity regimes; --a challenge before the World Trade Organization (WTO) to the legitimacy of the EU's quota and non-quota "C" sugar export programs. In 2004 the WTO Dispute Panel found against the EU and the EU recently learned that its appeal against that decision has also been unsuccessful. The consequence of this ruling is that pressure on the EU to limit production further in order to prevent future exports of "C" sugar has been significantly intensified; --changes necessary to ensure the EU can negotiate constructively in the WTO Doha Development Round; and --the announcement by the EU Trade Commission in February 2001 that a list of Least Developed Countries would be permitted duty free imports into the EU of everything but arms (the EBA initiative). From July 2009 (i.e. within the period of the next renewal) sugar from these countries will be granted unlimited duty free access, disrupting the traditional balance of supply and demand. In July 2004 the European Commission published a White Paper on possible mechanisms for sugar regime reform. The main thrust of the White Paper was aimed at achieving a significant reduction in EU sugar prices, quota beet production and exports. Since the publication of the White Paper, Member State Governments, the sugar industry, its suppliers (beet farmers and cane producers), customers and the European Institutions have been examining the Commission's ideas in depth and have been making their views widely and strongly known and promoting possible alternatives. Tate & Lyle has been participating fully in this process to ensure that its interests and concerns, and those of its suppliers, are fully and adequately understood. The EU Commission is actively formulating definitive proposals for regime reform along with an accompanying legal text and has indicated that these proposals will take account of the recent adverse outcome of the EU's appeal to the WTO. The Commission has indicated that these formal proposals will be tabled on June 22, 2005. They will then be the subject of negotiation and possible further amendment in the Council of Ministers and will also be presented to the European Parliament. The British Government assumes the EU Presidency on July 1, 2005 and, along with the EU Commission, has committed to securing a "political agreement" in time for the next WTO ministerial negotiating session in Hong Kong in December 2005. As often occurs, there have been a number of rumors and apparent leaks of discussion drafts of formal proposals that might be published by the EU Commission on June 22, 2005. We continue to be encouraged by the support from the UK Government and the continuing work being undertaken on cane refining by the EU Commission, but we remain concerned whether there will be adequate protection for the interests of isoglucose quota holders. It is not possible to comment in detail on the likely consequences at this time as we do not have the definitive proposals and in the light of the delicate state of negotiations and lobbying that is taking place prior to the June 22, 2005 publication date. However, it is our intention to publish our quantification of the range of potential impacts upon our businesses after the EU Commission proposals are formally published. The EU Commission has specifically assured Tate & Lyle that during policy formulation "it will have in mind during this process that the Community cane refining industry can maintain its competitiveness under fair conditions". We believe the EU Commission will do everything it can to ensure that this is the case. The policy of the British Government has consistently been that, in seeking reform of the sugar regime, it would look for arrangements that provide fair terms of competition between the beet and cane sectors. It should be stressed that June will see the start of a process that the EU Commission expects to run until at least the end of November. Our principal areas for concern arising from sugar regime reform are that:- --reductions in sugar selling prices and raw material prices (beet and cane) could result in a corresponding reduction in the beet processors' and cane refiners' margins. It is essential that a competitive balance is maintained between beet and cane producers; --at Food & Industrial Ingredients, Europe, isoglucose (produced from wheat and corn, the prices for which are not linked to that of sugar) is typically priced at a discount to sugar and so a reduction in the sugar price will lead to a reduction in isoglucose selling prices. Isoglucose producers will seek adequate compensation for the effect of such lower prices, for example through increased quotas; --Food & Industrial Ingredients, Europe also supplies other products which compete with sugar, where margins could be adversely affected by changes in the regime; and --to ensure their global competitiveness, our Citric Acid operations in Europe, which currently benefit from production refunds available to the EU chemical and fermentation industry, will require continued access to the raw materials they use in the form of sugar or dextrose at world market prices. The pressures for reform of the sugar regime which lay behind the publication of the White Paper have intensified with the recent WTO dispute panel appeal ruling against the EU and this leads us to the view that the reform will adversely affect the future performance of our European Sugar and Food & Industrial Ingredients businesses, although we cannot quantify the nature and scale of the financial and accounting consequences at this stage. It should be noted that the interactions and inter-dependencies are very complex, so it is possible that definitive information may not be available in sufficient detail until after the negotiations, which start with the June publication, are complete. We have always maintained that our businesses have an important role to play in the European sweeteners industry and, in an unregulated market, would be able to compete effectively with other domestic producers and imports. This remains our view, but we rely on the European Commission to ensure that proposals are advanced which do not prejudice the ability of our operations to compete to their full capability in that evolving market place. The potential of the reform to impact on the total Group results is reduced by the successful implementation of our strategy to grow the value added component of our business, a consistent objective since 1999. Segmental Reporting We will be adopting a new basis for segmental financial reporting with effect from April 1, 2005. This analysis will be presented along product lines, compared to the existing geographic analysis given today. We believe that this will give a more meaningful analysis of our activities. Safety Tate & Lyle is committed to providing safe and healthy conditions for its employees, contractors and visitors. The Group has no higher priority than safety and we target continuous improvement to reduce recordable injury and lost time accident rates to zero in every plant. We measure and report our safety performance in calendar years and, for 2004, most Tate & Lyle locations equalled or improved their 2003 performance, including 25 that reported no lost-time accidents and nine that reported no recordable injuries for the year. For example, employees at Houlton, USA took their record to 12 years and over 1.2 million employee hours without a lost-time accident. Community Involvement Tate & Lyle aims to play a positive role in all the communities in which we operate. Over the years we have developed a Group-wide community involvement policy to underpin our ethical behavior. Our program involves building long-term relationships with local partners to deliver on a shared objective: to establish strong, safe and healthy communities by investing time and resources into projects that directly address local needs. Our community partnerships are very well supported by our people, many of whom take part in programs. Tate & Lyle's community involvement benefits our people by enhancing their own local community, offering significant personal development opportunities and making Tate & Lyle a company for which they are proud to work. The community involvement policy is reviewed annually by the Board. Conclusion These results demonstrate the success of our strategy of focusing on growing the value added segment of our business and building the future of the Group around one common identity, as Tate & Lyle everywhere. The SPLENDA(R) Sucralose business has been successfully integrated and has seen exciting demand from our customers. We have laid the foundation for future growth with investment in both sucralose and in the Bio-3G(TM) joint venture with DuPont, and have demonstrated good organic growth with the launch of a range of new functional value added ingredients. At Tate & Lyle we understand the drivers that are affecting the food and beverage industry as consumers become more sophisticated, demanding and health conscious than ever before. We are committed to developing innovative solutions (often containing leading edge ingredients that are unique to us) to enable our customers to meet these product challenges. This approach will be the driver of value added growth in the future. Iain Ferguson CBE Chief Executive Operating and Financial Review Summary of Financial Results Total sales of GBP 3,342 million were GBP 175 million or 6% above last year. Exchange rate translation reduced sales by GBP 168 million. Underlying sales growth was driven by sucralose sales of GBP 115 million, an increase of GBP 41 million in sales of other value added products, an increase of GBP 66 million resulting from higher prices within the sugar trading business and growth of GBP 121 million within the rest of the business. Profit before interest, tax, exceptional items and amortization increased by 10% from GBP 251 million to GBP 276 million reflecting the impact of profits from the sucralose ingredients business following the realignment of the Group's relationship with McNeil Nutritionals. Exchange impacts, principally arising from the weaker US dollar, reduced profit before interest by GBP 13 million compared to the comparative period. The margin of profit before interest, tax, exceptional items and amortization as a percentage of total sales increased from 7.9% to 8.3%. Profit before interest and tax after exceptional items of GBP 45 million (2004 - GBP nil million) and the amortization charge of GBP 13 million (2004 - GBP 8 million) was GBP 218 million, compared with GBP 243 million in the year to March 31, 2004. Interest costs, before exceptional credits of GBP nil million (2004 - GBP 5 million), reduced from GBP 24 million to GBP 21 million. Subsidiaries' interest cover before amortization and exceptional items increased from 9.3 times to 11.3 times. After amortization and exceptional items, subsidiaries' interest cover reduced from 8.7 times to 8.6 times. Profit before tax, exceptional items and amortization was GBP 255 million, GBP 28 million or 12% above last year's profit of GBP 227 million. Profit before tax, exceptional items and amortization at constant exchange rates increased by 18%, after adjusting for the GBP 12 million adverse impact of exchange translation. Profit before tax, after exceptional items and amortization was GBP 197 million compared with GBP 224 million in the year to March 31, 2004. Diluted earnings per share before exceptional items and amortization for the year to March 31, 2005 were 38.0p (2004 - 33.9p). Diluted earnings per share after exceptional items and amortization were 29.4p (2004 - 32.6p). The Board is recommending a 0.5p per share increase in the final dividend from 13.2p to 13.7p to bring the total dividend for the year to 19.4p per share. The proposed dividend is covered 2.0 times by earnings before amortization and exceptional items, 0.2 times higher than the previous year. Earnings after exceptional items and amortization covered the dividend 1.5 times (2004 - 1.7 times). Net debt increased by GBP 63 million from GBP 388 million to GBP 451 million. Exceptional Items and Amortization Exceptional items totalled a net charge of GBP 45 million (2004 - credit of GBP 5 million). An operating exceptional charge of GBP 55 million was recognized reflecting the payment made to end the long running high fructose corn syrup civil legal case in the US. Non-operating exceptional items totalled a credit of GBP 10 million. A gain of GBP 16 million following settlement of the outstanding balance due on the loan notes issued by the purchaser of Western Sugar was partially offset by a GBP 2 million loss on disposal of operations within the UK animal feed and bulk storage business and an anticipated loss on disposal of GBP 2 million in respect of the Group's monosodium glutamate business in China. A loss of GBP 2 million arose from disposal of fixed assets in a number of locations. Amortization of capitalized intangibles totalled GBP 13 million in the year (2004 - GBP 8 million). This comprised patent amortization of GBP 4 million (2004 - GBP nil) and goodwill amortization of GBP 9 million (2004 - GBP 8 million). Segmental Analysis of Profit Before Interest The following paragraphs refer to profit before interest and exceptional items but after the amortization of intangible assets. Sweeteners & Starches - Americas Profits before exceptional items and interest increased by GBP 34 million to GBP 161 million. Exchange rate translation reduced profits by GBP 10 million. Sucralose generated profits of GBP 47 million (2004 - GBP nil, GBP 9 million of profits were reported in the Other Businesses and Activities segment in 2004). Food & Industrial Ingredients, Americas Our US Food & Industrial Ingredients business achieved good growth within its value added product lines, although overall performance was below the comparative period due to reduced sweetener gross margins and the impact of higher operating costs. Corn prices were somewhat higher than in the comparative period, although higher co-product prices largely mitigated the impact of this increase. Continued focus on value added products underpinned higher gross margins within food ingredients, where sales volumes increased. Industrial products generated strong results, fuelled by improved demand from the US paper industry, which drove volumes and selling prices above last year. Total gross margins on industrial starch products increased significantly. Results of food ingredients and industrial products were also enhanced by further development of global export sales initiatives. Obesity concerns and dietary trends continued to increase demand for bottled water and diet soft drinks, at the expense of nutritively-sweetened carbonated beverages. Sales volumes of sweetener products were below prior year, although overall market share remained constant. Gross margins were lower due to reduced volumes and selling prices not keeping pace with increased raw material costs. The contribution from ethanol was significantly increased; selling prices rose in response to higher retail gasoline prices and demand growth fuelled by more US states banning the alternative oxygenate, methyl tertiary butyl ether (MTBE). Manufacturing operations experienced higher variable costs due to increased energy, chemicals and packaging materials costs. Fixed costs were above the prior year due to higher maintenance and research costs. Our bio-gum semi works facility was successfully commissioned during the year. A new wellness starch semi works facility is under construction and is expected to be commissioned by the end of the calendar year. During 2005, the Group invested GBP 12 million from a total anticipated investment of GBP 27 million in the Bio-3G(TM) joint venture. Development continues to be in line with Group's original expectations. Start-up losses within this joint venture of GBP 2 million were borne by the Group in the year to March 31, 2005 and are expected to be higher in the year to March 31, 2006 as we commission the plant. At Almex, our joint venture in Mexico, profits were above the comparative period. High fructose corn syrup (HFCS) volumes increased, reflecting improved sales made to non soft drink markets and additional demand from customers granted exemption from the tax on soft drinks containing HFCS. Starch volumes were also considerably higher. Access into Mexico for US HFCS under the North American Free Trade Agreement remains unresolved between the Mexican and US governments. The citric acid business generated higher profits in 2005 due to firmer pricing as the global citric acid market continued to improve. Increased market demand, coupled with continued industry rationalization by ourselves and competitors, pushed selling prices some 8% above the prior year. Operating costs were also higher due to increased substrate and energy costs. Our joint venture facility to produce Aquasta(TM), a natural source of astaxanthin which acts as a nutrient and pigment for farm-raised fish, was commissioned. Selling prices were in line with expectations, and, with start-up costs, the business reported a loss during the year. Sucralose The SPLENDA(R) Sucralose ingredient business has enjoyed an excellent first year within the Group, with sales of GBP 115 million (US$212 million) and profit before interest, exceptional items and amortization of GBP 52 million (US$95 million) in the year to March 31, 2005. This compares to proforma sales of GBP 70 million (US$130 million) and profit before interest, exceptional items and amortization of GBP 21 million (US$38 million) in the twelve months to December 31, 2003, the last full financial year of operation prior to realignment of the alliance with McNeil Nutritionals. One-off costs relating to the realignment totalled GBP 3 million (US$6 million). SPLENDA(R) Sucralose is now approved in over 80 countries. The approval process in the European Union (EU) was finally completed in January 2005 when the provisions of the amended Sweeteners Directive came into effect in all member states. Over 4,000 products globally are now sweetened with SPLENDA(R) Sucralose across a broad range of product categories. Demand continues to be exceptionally strong and exceeds current plant output. Sales growth is actively being managed within these constraints, in close collaboration with the existing customer base. To meet the increasing demand, two capacity expansions at the Alabama facility have been announced at a total cost of over GBP 40 million. These expansions are expected to be completed by April 2006, by which time the capacity from the Alabama site will be more than double its level at the time of the realignment. In November 2004, we announced an investment in a second sucralose manufacturing plant in Singapore. This will cost around GBP 100 million, and is scheduled for completion in January 2007 with a capacity of approximately two thirds of the expanded Alabama facility. We expect start-up costs in relation to the Singapore plant to approach GBP 10 million in the year to March 31, 2006. Overall prospects for the SPLENDA(R) Sucralose business remain strong, and calendar year 2005 will see further product launches in the USA from the major soft drink manufacturers: a new Diet Coke, and reformulated Diet 7UP and Pepsi One, all of which are sweetened with SPLENDA(R) Brand Sweetener. SPLENDA(R) Sucralose's development in Europe will be constrained by product availability, but will be a key component of the Group's Solution Set roll-out during 2006. Patents, both process and product related, continue to be filed to strengthen the proprietary intellectual property position where we deem this appropriate. Sugars, Americas Our Canadian sugar business performed broadly in line with the prior year. Our sugar refining operation produced profits above the prior year. Volumes were slightly ahead of the prior period, while selling prices were lower. Ocean freight costs increased significantly, although these were offset by improved efficiencies within other areas of manufacturing costs. The increase in the world price of raw sugar resulted in a stockholding gain of GBP 2 million compared with a GBP 2 million loss in the previous year. Our blending and packaging operation in Niagara performed below the level of prior year, with selling prices adversely impacted by the weaker US dollar. Anti-dumping and countervailing duties which provide protection to the Canadian domestic sugar industry are due to be reviewed during the 2006 financial year. Occidente, our joint venture cane sugar business in Mexico, enjoyed a satisfactory year, although reported profits were lower than the previous year as a result of significantly higher cane costs. Driven by the tax on products containing HFCS, selling prices and volumes were both above the prior period, although operational issues during the 2004 crop year led to lower production volumes and higher manufacturing costs. The prospects for the coming year remain good. Sweeteners & Starches - Europe Profit before exceptional items and interest decreased by 3%, from GBP 111 million to GBP 108 million. Exchange rate translation reduced profits by GBP 1 million. Food & Industrial Ingredients, Europe Our European Food & Industrial Ingredients business reported lower profits following the high raw material costs during the first half of the year, which were not fully recovered through higher selling prices. The harvest in the summer of 2003 suffered from dry growing conditions, leading to low yields and sharp increases in prices, which were expected to remain until the new harvest. However, it became clear during early summer 2004 that growing conditions for cereals were ideal across Europe, resulting in record crops. Consequently, raw material prices declined faster than had been anticipated. Co-product prices were weaker not only because of lower cereal prices but also from imports which were made competitive by the weak US dollar and the large global soya harvest. Vital wheat gluten prices did not return to levels seen before the impact of the poor 2003 harvest. Export volumes reduced as dietary trends changed in the USA. Sales volumes of both sweetener and starch products increased. Sales of value added food ingredients from recent investments were encouraging. Export margins were reduced by the weaker US dollar. Energy and fuel prices increased but were partially offset by improved energy efficiency. The Eaststarch joint ventures in Central and Eastern Europe contributed an improved profit over last year. Sales prices improved in both Slovakia and Hungary following accession to the EU in May 2004 but the higher raw material costs were felt across Europe. Sales in Turkey were higher. Following a competitive annual pricing round in Europe, net margins during calendar year 2005 in both sweetener and starch products are expected to be slightly below the level achieved during calendar year 2004. Sugars, Europe The UK and Portuguese sugar businesses generated profits in line with the prior year. The UK operations benefited from increased production volumes and lower manufacturing costs. Higher UK gas prices were offset by improved energy efficiency and forward cover. The higher cost of export licences in the second half of the year reduced gross margins by GBP 4 million. Export licence costs are expected to increase again in the 2006 financial year. Capital expenditure continued to be below depreciation and the businesses contributed strong cash flow to the Group. Tate & Lyle Light Cane was launched with much success during the year, combining the strengths of our traditional sugar business with sucralose. The renewal of the EU sugar regime, expected from July 2006, is covered in detail in the Chief Executive's Review. Eastern Sugar The Eastern Sugar Group, our European beet sugar joint venture, operates in Hungary, Slovakia and the Czech Republic, which all acceded to the EU on May 1, 2004. The business returned to profitable trading in the 2005 financial year, reflecting the positive impact of alignment with the EU sugar regime during the year. Competitive pricing pressures reduced selling prices slightly during the second half of the year. All of Eastern Sugar's factories had a successful beet sugar campaign in the current year with production significantly above the prior year. Sweeteners & Starches - Rest of the World Profit before exceptional items and interest increased from GBP 8 million to GBP 13 million. Exchange rate translation reduced profits by GBP 1 million. Profit from our sugar trading business was above that in 2004, with higher profits generated in Thailand. This was a result of India switching from being a net exporter to a net importer of sugar which pushed prices to record highs throughout Asia. Profits from Brazil were in line with the previous year. Nghe An Tate & Lyle (NAT&L), the Group's cane sugar business in Vietnam, achieved an increase in profit. Adverse weather conditions affected the industry widely and the business experienced a reduction in sugar production of some 25 percent to 105,000 tons. However, tightening of supply within the region served to increase wholesale prices within the Vietnamese market by almost one third during the year. The year was marked by safety milestones being passed and the launch of the sugar brand 'Melli' specifically targeted at the Vietnamese market. Drought conditions have continued locally and are expected to impact the cane crop for 2006. Animal Feed and Bulk Storage Profit before exceptional items and interest increased by GBP 1 million to GBP 7 million. Exchange translation reduced profit by GBP 1 million. The demand for molasses in Europe remained high in the first half of the financial year and, combined with strong demand in Asia in the second half, resulted in higher margins in this segment. In the UK, the Group terminated a number of molasses and storage operations, which resulted in improved profitability. Other Businesses and Activities This segment includes head office activities and, in the year to March 31, 2004, licence fee income arising under the previous Global Alliance Agreement with McNeil Nutritionals. Net costs increased by GBP 17 million, of which GBP 9 million relates to the inclusion of licence fee income in the comparative period. The balance of GBP 8 million included costs related to our growth strategy together with higher personnel costs and professional fees. The Group's Bermuda-based captive reinsurance company recognized a small underwriting loss on the policies provided to Group businesses. The company continues the process of running-off existing third party liabilities, of which approximately half have now been commuted or settled. A small underwriting profit was reported in the year from these third party activities. The Group continues to believe it can minimize the effect of higher insurance costs as well as provide price and coverage stability to Group businesses by retaining risk and premium in its own reinsurance company. Interest, Tax and Dividend Interest The net Group interest charge was GBP 21 million compared with GBP 24 million in the year to March 31, 2004. The comparative period included credits of GBP 6 million relating to interest income from the loan notes issued to the purchasers of Domino and Western Sugar. Underlying expense was below the comparative period due principally to lower interest rates and the favorable impact of exchange translation. The average net debt of Tate & Lyle PLC and its subsidiaries was GBP 498 million, an increase of GBP 47 million from GBP 451 million in the prior year. The interest rate for subsidiaries in the year when measured against average net debt was 4.2% (2004 - 5.1%). Interest cover based on profit before exceptional items, amortization and interest of Tate & Lyle PLC and its subsidiaries increased from 9.3 times to 11.3 times. Profit before Taxation Profit before taxation but after exceptional items and amortization was GBP 197 million, compared with GBP 224 million in the prior year. Taxation The Group taxation charge was lower, at GBP 53 million (2004 - GBP 69 million), principally due to tax relief on the 2005 operating exceptional item. The effective rate of tax, on profit before exceptional items and amortization, was 27.7% (2004 - 29.0%). We expect the tax rate in the 2006 financial year to be slightly higher than 2005. Dividend A final dividend of 13.7p will be recommended as an ordinary dividend to be paid on August 3, 2005 to shareholders on the register on July 8, 2005. This represents an increase in the total dividend for the year of 0.6p per share. An interim dividend of 5.7p (2004 - 5.6p) was paid on January 11, 2005. Earnings before exceptional items and amortization covered the proposed total dividend 2.0 times. Retirement Benefits As permitted under the transitional provisions of FRS 17 'Retirement Benefits' the Group continued to account for retirement benefits under SSAP SSAP - Senior Service Alert Program SSAP - Session Service Access Point SSAP - Source Service Access Point SSAP - Statement of Standard Accountancy Practice (UK) SSAP - Statements of Standard Accounting Practice SSAP - Statistical Signal and Array Processing SSAP - Strategic Safety Action Plan SSAP - Students for Suicide Awareness and Prevention (Colorado State University) SSAP - Submarine Sonar Adaptive Processor 24 in the year to March 31, 2005. The UK Tate & Lyle Group Pension Scheme fund was actuarially valued at March 31, 2003, which identified a deficit of GBP 13 million under SSAP 24. As previously reported, we are funding the deficit and future costs of the scheme over five years. During the year, regular contributions of GBP 7 million were supplemented by additional contributions of GBP 10 million. An actuarial valuation of the scheme is being prepared at March 31, 2005. SSAP 24 Under SSAP 24, pension costs for defined benefit pension and post-retirement healthcare schemes are charged to the profit and loss account so as to accrue the cost over the service lives of employees in the schemes on the basis of a constant percentage of earnings. Any surplus or deficit arising under SSAP 24 is amortized through the profit and loss account over a period representing the estimated remaining service lives of the employees. The charge to operating profit for retirement benefits in the year to March 31, 2005 was GBP 25 million (2004 - GBP 30 million). In the UK, the regular service cost was lower due to a reduction in active members. In the US, a change in funding regulations reduced the service cost during the 2005 financial year. Under SSAP 24 the net pension asset increased by GBP 21 million to GBP 32 million, and the US healthcare provision reduced by GBP 4 million to GBP 97 million. FRS 17 FRS 17 uses different assumptions to value post-retirement obligations and requires any surplus or deficit in a defined benefit scheme to be included in the balance sheet. The profit and loss account contains two main elements: a service charge to operating profit, representing the annual ongoing cost of providing benefits to active members; and a net finance cost or credit, representing the difference between return on the assets in the fund and interest on servicing future liabilities, calculated using a corporate bond yield. The calculations under FRS17 would result in increased volatility in the financial statements. The balance sheet is impacted by changes in the market values of assets and liabilities, while the finance charge in the profit and loss account fluctuates depending on the changes in returns and the bond yield used to discount the liabilities. If the accounts had been prepared under FRS17, the net position for all Group defined benefit pension schemes at March 31, 2005 would have been a deficit of GBP 128 million, GBP 22 million lower than the FRS 17 deficit of GBP 150 million that would have been recorded at March 31, 2004. The potential US healthcare liability would have increased from GBP 81 million at March 31, 2004 to GBP 105 million at March 31, 2005 due to higher claims during the 2005 year and an increase in future medical cost trend assumptions. After taking account of deferred tax, the Group's net assets at March 31, 2005 would have reduced by GBP 112 million from GBP 1,047 million under SSAP24 to GBP 935 million. Profit before interest would have increased by GBP 5 million, compared with a GBP 10 million increase in the previous year, and the net interest charge would have increased by GBP 2 million, compared with GBP 10 million in the previous year. The total charge to profit under FRS17 would have been GBP 22 million, GBP 3 million less than the charge under SSAP24. Sucralose Realignment We announced the realignment of our SPLENDA(R) Sucralose activities with McNeil Nutritionals in February 2004. The main elements of the transaction were as follows: --The cash price of GBP 72 million was paid in April 2004. In addition, the terms of the realignment included contingent deferred payments and receipts that reflect continued participation in the success of each party's ongoing sucralose activities; --Tate & Lyle became the sole manufacturer of sucralose and sells SPLENDA(R) Sucralose as an ingredient to food and beverage companies worldwide; and --McNeil Nutritionals buys sucralose from Tate & Lyle and sells SPLENDA(R) Brand tabletop products worldwide. The cash price of GBP 72 million reflected payment to acquire tangible and intangible assets with a fair value of GBP 78 million and GBP 32 million respectively. Under the deferred payment terms, the Group recognized a provision for amounts due to McNeil Nutritionals of GBP 57 million, representing the best estimate of amounts due under the deferred payment obligation. No value has been recognized for future deferred receipts from McNeil Nutritionals, which are expected to at least match the deferred payments. The formal unwinding of the earlier arrangements, which included the termination of certain pre-existing contractual rights and obligations as well as mutual intellectual property and other asset transfers, gave rise to a tax liability of GBP 19 million. A related deferred tax asset with a discounted value of GBP 15 million has been recognized reflecting timing differences. The net impact of the realignment led to initial goodwill under UK GAAP of GBP 23 million. The estimate of deferred payments may be revised as further information becomes available with corresponding adjustments to goodwill. Deferred payments under the realignment agreements which arose during the year to March 31, 2005 have been reflected in the movement of provisions. Deferred receipts have been reflected as deductions to goodwill. International Financial Reporting Standards The Group currently prepares its financial statements under UK GAAP. From April 1, 2005 onwards, the Group is required to prepare its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and implemented in the UK. To explain how the Group's reported performance and financial position are affected by this change, Appendix 1 sets out unaudited financial information for the year to March 31, 2005 prepared under IFRS. Segmental Reporting Following a period of five years in which the Group has focused on its core activities through disposal, and to reflect the evolving strategy of the Group, a new basis for providing segmental financial information will be adopted with effect from April 1, 2005. The following reported segments will be disclosed: --Food & Industrial Ingredients, Americas; --Food & Industrial Ingredients, Europe; --Sugars, Americas and Asia; --Sugars, Europe; and --Sucralose. These business segments will represent the primary basis of segmentation as required under IFRS. Historical information for the year to March 31, 2005 in these segments will be published prior to the 2006 interim announcement. Cash Flow and Balance Sheet Cash Flow and Debt Operating cash flow, after operating exceptional items, totalled GBP 263 million compared with GBP 289 million in the previous year. There was an operating working capital outflow of GBP 35 million (2004 - GBP 31 million outflow) reflecting supplementary payments to the Group's pension funds of GBP 11 million and payments made against provisions. Contributions to the Group's pension funds, both regular and supplementary, totalled GBP 35 million, marginally above GBP 34 million in the comparative period. Interest paid totalled GBP 20 million, broadly in line with the charge recognized in the profit and loss account. Net taxation paid remained at GBP 74 million. Capital expenditure of GBP 121 million was marginally above depreciation of GBP 115 million. An operating exceptional outflow of GBP 55 million related to the settlement of the HFCS civil legal case in the US. Free cash flow (representing operating cash flow after interest, taxation and capital expenditure), before the impact of this exceptional cash flow, totalled GBP 103 million (2004 - GBP 62 million). Equity dividends of GBP 89 million (2004 - GBP 87 million) were offset by other net dividend inflows of GBP 22 million (2004 - GBP 7 million). In total, a net GBP 87 million (2004 - GBP 115 million) was paid to providers of finance as dividends and interest. Investment expenditure was GBP 86 million, primarily reflecting an investment of GBP 70 million in sucralose (after the impact of deferred payment streams during the year) and GBP 12 million in the Bio-3G(TM) joint venture. We expect capital expenditure for the year to March 31, 2006 to be at least twice depreciation. We received GBP 25 million proceeds from the disposal of businesses and assets during the year to March 31, 2005, compared with GBP 63 million in the previous year. GBP 21 million was received in consideration for the remaining balance due on the loan notes issued by the purchaser of Western Sugar. Proceeds from the sale of tangible fixed assets totalled GBP 4 million. A net inflow of GBP 10 million was received from employees exercising share options during the year. Exchange translation, and other non-cash movements, reduced net debt by GBP 7 million. The Group's net borrowings increased from GBP 388 million to GBP 451 million. The ratio of net borrowings to earnings before interest, tax, depreciation and amortization (EBITDA) (before exceptional items) increased from 1.2 times to 1.3 times and gearing (defined as the ratio of net borrowings to total net assets) increased to 43% at March 31, 2005 (2004 - 40% after restatement for adoption of UITF 38). During the year net debt peaked at GBP 576 million in August 2004 (April 2003 during the year ended March 31, 2004 - GBP 498 million). Funding and Liquidity Management The Group funds its operations through a mixture of retained earnings and borrowing facilities, including capital markets and bank borrowings. In order to ensure maximum flexibility in meeting changing business needs, the Group seeks to maintain access to a wide range of funding sources. In November 2004, Tate & Lyle International Finance PLC issued a US$500 million 5.00% bond in the US 144A bond market maturing in 2014. The proceeds of the issue have been used to repay certain debt obligations and for general corporate purposes. Other capital market borrowings include the EUR 300 million 5.75% bond maturing in 2006, the EUR 150 million Floating Rate Note maturing in 2007 and the GBP 200 million 6.50% bond maturing in 2012. At March 31, 2005 the Group's long term credit ratings from Moody's and Standard and Poor's were Baa2 and BBB respectively. The Group ensures that it has sufficient undrawn committed bank facilities to provide liquidity back-up for its US commercial paper program and other short term money market borrowing for the foreseeable future. The Group has committed bank facilities of US$615 million which mature in 2009 with a core of highly rated banks. These facilities are unsecured and contain common financial covenants for Tate & Lyle and its subsidiary companies that subsidiaries' pre-exceptional and amortization interest cover ratio should not be less than 2.5 times and the ratio of net debt to EBITDA, as defined in our financial covenants, should not be greater than 4 times. The Group monitors compliance against all its financial obligations and it is Group policy to manage the consolidated balance sheet so as to operate well within covenanted restrictions at all times. The majority of the Group's borrowings are raised through the Group treasury company, Tate & Lyle International Finance PLC, and are then on-lent to the business units on an arms-length basis. The Group manages its exposure to liquidity risk by ensuring a diversity of funding sources and debt maturities. Group policy is to ensure that, after subtracting the total of undrawn committed facilities, no more than 30% of gross debt matures within 12 months and at least 50% has a maturity of more than two and a half years. At the end of the year, after subtracting total undrawn committed facilities, there was no debt maturing within 12 months and 98% of debt had a maturity of two and a half years or more (2004 - 0% and 100%). The average maturity of the Group's gross debt was 5.8 years (2004 - 4.9 years). At the year end the Group held cash and current asset investments of GBP 355 million (2004 - GBP 154 million) and had undrawn committed facilities of GBP 327 million (2004 - GBP 277 million). These resources are maintained to provide liquidity back-up and to meet the projected maximum cash outflow from debt repayment and seasonal working capital needs foreseen for at least a year into the future at any one time. Funding not Treated as Debt In respect of all financing transactions, the Group seeks to optimize its financing costs. The following items are not included in net debt under UK GAAP UK GAAP - United Kingdom Generally Accepted Accounting Principles. Our European Food & Industrial Ingredients business receives cash from selling amounts receivable from customers. The facility allows the sale of up to US$85 million (GBP 45 million) of receivables, and was fully utilized at both March 31, 2005 and March 31, 2004. From April 1, 2005, the amounts used under this facility will be included in debt under IFRS. Where economically beneficial, operating leases are undertaken in preference to purchasing assets. Commitments under operating leases to pay rentals in future years totalled GBP 212 million (2004 - GBP 180 million) and related primarily to railcar leases in the USA. We do not expect the treatment of these commitments to change under IFRS. Net debt of joint ventures and associates totalling GBP 45 million at March 31, 2005 (2004 - GBP 66 million) is not consolidated in the Group balance sheet. GBP 20 million of this debt was subject to recourse to the Group. Tate & Lyle's share of net debt of joint ventures and associates totalled GBP 20 million. As we intend to proportionately consolidate joint ventures under IFRS, our share of their net borrowings will be included in Group net debt from April 1, 2005. A description of the impacts on Group net debt arising from the adoption of IFRS is provided in Appendix 1.
Iain Ferguson CBE Simon Gifford Stanley Musesengwa
Chief Executive Group Finance Director Chief Operating Officer
TATE & LYLE
GROUP PROFIT AND LOSS ACCOUNT
Year to March 31, 2005
---------------------------------
Year to
Before March
exceptional Exceptional 31, 2004
items items Total GBP
GBP million GBP million GBP million million
----------------------------------------------------------------------
Group sales 3 001 - 3 001 2 874
Share of sales of joint
ventures and associates 341 - 341 293
-------------------------------------------
Total sales (Note 2) 3 342 - 3 342 3 167
-------------------------------------------
Group operating profit
before amortization
and operating exceptional
items 238 - 238 214
Amortization (13) - (13) (8)
Operating exceptional items
(Note 4) - (55) (55) -
-------------------------------------------
Group operating profit 225 (55) 170 206
Share of operating profits
of joint ventures
and associates before
exceptional items 38 - 38 37
Share of operating
exceptional items of joint
ventures and associates - - - 6
-------------------------------------------
Total operating profit 263 (55) 208 249
Non-operating exceptional
items (Note 4):
Exceptional profit/(loss)
on sale or termination
of businesses - 12 12 (6)
Exceptional loss on sale
of fixed assets - (2) (2) -
-------------------------------------------
Profit before interest 263 (45) 218 243
Interest receivable and
similar income 35 - 35 27
Interest payable and
similar charges (56) - (56) (50)
Share of net interest
payable of joint ventures
and associates - - - (1)
Share of joint ventures'
and associates' exceptional
interest items (Note 4) - - - 5
-------------------------------------------
Profit before taxation
(Note 3) 242 (45) 197 224
------------------------
Taxation (53) (69)
-------------------
Profit after taxation 144 155
Minority interests - equity (4) (1)
-------------------
Profit for the year 140 154
Dividends paid and proposed (92) (88)
-------------------
Retained profit for the year 48 66
-------------------
Earnings per share (Note 5)
Basic 29.7p 32.7p
Diluted 29.4p 32.6p
-------------------
----------------------------------------------------------------------
Before amortization and exceptional items
Profit before taxation 255 227
Diluted earnings per share (Note 5) 38.0p 33.9p
----------------------------------------------------------------------
TATE & LYLE
SUMMARIZED GROUP BALANCE SHEET
As at
As at March 31,
March 31, 2004
2005 (restated)
GBP million GBP million
----------------------------------------------------------------------
Fixed assets
Intangible assets 173 136
Tangible assets 1 111 1 062
Investments 229 216
----------- ----------
1 513 1 414
----------- ----------
Current assets
Stocks 288 273
Debtors 421 337
Investments and cash at bank and
in hand (Note 6) 355 154
----------- ----------
1 064 764
Creditors - due within one year
Borrowings (Note 6) (23) (30)
Other (435) (407)
----------- ----------
Net current assets 606 327
----------- ----------
Total assets less current liabilities 2 119 1 741
Creditors - due after more than one year
Borrowings (Note 6) (783) (512)
Other (8) (5)
Provisions for liabilities and charges (281) (246)
----------- ----------
Total net assets 1 047 978
=========== ==========
Capital and reserves
Called up share capital 124 123
Share premium account and other reserves 508 501
Profit and loss account 386 327
----------- ----------
Shareholders' funds 1 018 951
Minority interests - equity 29 27
----------- ----------
1 047 978
=========== ==========
TATE & LYLE
STATEMENT OF GROUP CASH FLOWS
Year to
Year to March 31,
March 31, 2004
2005 (restated)
GBP GBP
million million
----------------------------------------------------------------------
--------- ---------
Operating profit before exceptional items 225 206
Depreciation of tangible fixed assets 115 106
Operating exceptional items (55) -
Amortization 13 8
Change in working capital (35) (31)
--------- ---------
Net cash inflow from operating activities 263 289
Dividends from joint ventures and associates 23 8
Returns on investment and servicing of finance
--------- ---------
Interest paid (40) (58)
Interest received 20 23
Dividends paid to minority interests in
subsidiary undertakings (1) (1)
--------- ---------
(21) (36)
Taxation paid (74) (74)
Capital expenditure and financial investment
--------- ---------
Purchase of tangible fixed assets (121) (118)
Sale of tangible fixed assets 4 2
Purchase of fixed asset investments (1) (1)
Sale of fixed asset investments 21 22
--------- ---------
(97) (95)
Acquisitions and disposals
--------- ---------
Acquisition of subsidiaries (73) -
Sale of subsidiaries - 39
Acquisition of joint ventures and associates (12) (15)
--------- ---------
(85) 24
Equity dividends paid (89) (87)
--------- ---------
Net cash (outflow)/inflow before financing and
management of liquid resources (80) 29
========= =========
Net cash outflows before taxation from exceptional items were GBP
30 million (2004 - inflow GBP 63 million) comprising: sale of tangible
fixed assets of GBP 4 million (2004 - GBP 2 million); sale of fixed
asset investments of GBP 21 million (2004 - GBP 22 million); sale of
subsidiaries of GBP nil million (2004 - GBP 39 million), and
settlement of the high fructose corn syrup class action suit in the US
of GBP 55 million (2004 - GBP nil million).
Reconciliation of cash flow to net debt
----------------------------------------------------------------------
Net cash (outflow)/inflow before financing and
management of liquid resources (80) 29
Issue of shares 11 2
Net purchase of own shares (1) (10)
Changes in debt not involving cash flow:
- Exchange movements 8 49
- (Amortization)/redemption of bond discount (1) 13
(Increase)/reduction in net debt (63) 83
Net debt at start of year (388) (471)
Net debt at end of year (Note 6) (451) (388)
TATE & LYLE
COMBINED STATEMENT OF TOTAL RECOGNIZED
GAINS AND LOSSES AND RECONCILIATION OF
MOVEMENTS IN SHAREHOLDERS' FUNDS
Year to
Year to March 31,
March 31, 2004
2005 (restated)
GBP GBP
million million
----------------------------------------------------------------------
Profit for the year
- Group 136 125
- Joint ventures and associates 4 29
--------- ---------
140 154
Exchange difference on foreign currency net
investments 8 (63)
Taxation on exchange difference on foreign
currency net investments (1) (28)
--------- ---------
Total recognized gains and losses for the year 147 63
Dividends (92) (88)
Issue of shares 11 2
Purchase of own shares 1 (10)
--------- ---------
Net increase/(reduction) in shareholders' funds 67 (33)
--------- ---------
Opening shareholders' funds as previously stated 989 1 012
Prior period adjustment to reflect own shares
deducted from shareholders' funds (Note 9) (38) (28)
--------- ---------
Opening shareholders' funds as restated 951 984
--------- ---------
Closing shareholders' funds 1 018 951
========= =========
TATE & LYLE PLC
NOTES TO STATEMENTS
For the year to March 31, 2005
1. Basis of preparation
(a) Audited information
The financial information contained in this announcement is
derived from the Group's financial statements for the year
ended March 31, 2005 and does not constitute full accounts
within the meaning of section 240 of the Companies Act 1985
(as amended). The Group's financial statements, on which the
Company's auditors, PricewaterhouseCoopers LLP, have given an
unqualified report which does not contain a statement under
section 237(2) or (3) of the Companies Act 1985, will be filed
with the Registrar of Companies following the Company's Annual
General Meeting on July 28, 2005, subject to their adoption by
shareholders.
(b) Accounting policies
The Group's accounting policies are unchanged compared with
the year ended March 31, 2004, apart from the adoption of UITF
38 and UITF 17 (as revised) (see Note 9).
TATE & LYLE
NOTES TO STATEMENTS (continued)
For the year to March 31, 2005
2. Segmental analysis of sales
----------------------------------------------------------------------
Year to Year to
March 31, March 31,
2005 2004
GBP GBP
million million
----------------------------------------------------------------------
Sweeteners and starches
- Americas 1 273 1 219
- Europe 1 449 1 336
- Rest of the world 435 412
--------- ---------
3 157 2 967
Animal feed and bulk storage 182 195
Other businesses and activities 3 5
--------- ---------
3 342 3 167
========= =========
Included in the analysis of total sales are the following amounts
relating to joint ventures and associates.
Year to Year to
March 31, March 31,
2005 2004
Joint ventures and associates GBP GBP
million million
----------------------------------------------------------------------
Sweeteners and starches
- Americas 124 123
- Europe 211 163
- Rest of the world 2 4
--------- ---------
337 290
Animal feed and bulk storage 4 3
--------- ---------
341 293
========= =========
All results to March 31, 2005 and March 31, 2004 arise from continuing
activities.
TATE & LYLE
NOTES TO STATEMENTS (continued)
For the year to March 31, 2005
3. Segmental analysis of profit before taxation
----------------------------------------------------------------------
Before After
exceptional Exceptional exceptional
items items items
Year to March 31, 2005 GBP million GBP million GBP million
----------------------------------------------------------------------
Sweeteners and starches
- Americas 161(1) (39) 122(1)
- Europe(3) 108(2) (2) 106(2)
- Rest of the world 13 (2) 11
----------- ----------- -----------
282 (43) 239
Animal feed and bulk storage 7 (2) 5
Other businesses and activities (26) - (26)
----------- ----------- -----------
263 (45) 218
Net interest expense (21) - (21)
----------- ----------- -----------
Profit before taxation 242 (45) 197
----------- ----------- -----------
(1) These profit figures each include GBP 8 million of amortization.
(2) These profit figures each include GBP 5 million of amortization.
(3) The reform of the EU sugar regime will adversely affect our
European businesses in the financial year ending March 31, 2007.
We cannot quantify the nature and scale of the financial and
accounting consequences at this stage but our principal areas for
concern are set out in the Chief Executive's Review.
----------------------------------------------------------------------
Before After
exceptional Exceptional exceptional
items items items
Year to March 31, 2004 GBP million GBP million GBP million
----------------------------------------------------------------------
Sweeteners and starches
- Americas 127(4) 2 129(4)
- Europe 111(4) - 111(4)
- Rest of the world 8 - 8
----------- ----------- -----------
246 2 248
Animal feed and bulk storage 6 (2) 4
Other businesses and activities (9) - (9)
----------- ----------- -----------
243 - 243
Net interest expense (24) 5 (19)
----------- ----------- -----------
Profit before taxation 219 5 224
----------- ----------- -----------
(4) These profit figures each include GBP 4 million of amortization.
All results to March 31, 2005 and March 31, 2004 arise from continuing
activities.
TATE & LYLE
NOTES TO STATEMENTS (continued)
For the year to March 31, 2005
4. Exceptional items
----------------------------------------------------------------------
Profit/(loss) Profit/(loss)
before Minority for the
tax Tax Interests year
GBP GBP GBP GBP
Year to March 31, 2005 million million million million
----------------------------------------------------------------------
Operating exceptional (55) 22 - (33)
Profit on sale or
termination of
businesses 12 (7) - 5
Loss on sale of fixed
assets (2) 1 - (1)
------------- -------- ---------- -------------
(45) 16 - (29)
------------- -------- ---------- -------------
The net charge for exceptional items of GBP 45 million consists of
an operating charge of GBP 55 million in respect of the settlement of
the high fructose corn syrup class action suit in the US, together
with net non operating exceptional credits totalling GBP 10 million.
GBP 2 million arises in respect of write-down on planned sale of
business; GBP 2 million arises in respect of the loss on termination
of businesses, offset by a credit of GBP 16 million following
settlement of the remaining balance due on the loan note issued by the
purchaser of Western Sugar; GBP 2 million arises in respect of loss on
sale of fixed assets.
----------------------------------------------------------------------
Profit/(loss) Profit/(loss)
before Minority for the
tax Tax Interests year
GBP GBP GBP GBP
Year to March 31, 2004 million million million million
----------------------------------------------------------------------
Operating exceptional 6 (2) - 4
Loss on sale or
termination of
businesses (6) - 1 (5)
Interest exceptional 5 (2) - 3
------------- -------- ---------- -------------
5 (4) 1 2
------------- -------- ---------- -------------
Exceptional items totalled a net credit of GBP 5 million in the
year to March 31, 2004. This comprises an operating credit of GBP 6
million and an interest credit of GBP 5 million, representing refunds
of duty, and non-operating charges of GBP 6 million arising on sale or
termination of businesses.
5. Earnings per share
----------------------------------------------------------------------
Basic earnings per share is calculated by dividing profit after
taxation, minority interests and preference dividends of GBP 140
million (2004 - GBP 154 million), by the weighted average number of
ordinary shares in issue during the period of 471.7 million shares
(2004 - 471.4 million shares). For this purpose, the weighted average
number of ordinary shares in issue excludes an average of 12.4 million
shares (2004 - 10.9 million shares) held by an ESOP trust that have
not vested unconditionally in the participating employees.
Diluted earnings per share take into account the dilutive effect
of share options outstanding under the Company's employee share
schemes that are anticipated to be exercisable.
Diluted earnings per share before amortization and exceptional
items is presented in order to assist in the understanding of the
underlying performance of the Group's business.
Year to March 31, 2005 Year to March 31, 2004
-------------------------- --------------------------
Earnings Shares Earnings Earnings Shares Earnings
GBP millions per GBP millions per
million share million share
pence pence
----------------------------------------------------------------------
Basic 140 471.7 29.7 154 471.4 32.7
Dilutive effect
of share options - 4.8 (0.3) - 1.2 (0.1)
-------- -------- -------- -------- -------- --------
Diluted 140 476.5 29.4 154 472.6 32.6
Amortization* 12 - 2.5 8 - 1.7
Exceptional items 29 - 6.1 (2) - (0.4)
-------- -------- -------- -------- -------- --------
Diluted before
amortization and
exceptional
items 181 476.5 38.0 160 472.6 33.9
======== ======== ======== ======== ======== ========
*After a tax credit of GBP 1 million in 2005 (2004 - GBP nil).
6. Analysis of net debt
----------------------------------------------------------------------
March 31, March 31,
2005 2004
GBP GBP
million million
----------------------------------------------------------------------
Investments and cash at bank and in hand 355 154
Borrowings due within one year (23) (30)
Borrowings due after more than one year (783) (512)
--------- ---------
Net debt (451) (388)
========= =========
7. Exchange rates
----------------------------------------------------------------------
Average rate Year end rate
Year to Year to
March 31, March 31, March 31, March 31,
2005 2004 2005 2004
----------------------------------------------------------------------
US Dollar GBP 1 = $ 1.85 1.69 1.88 1.84
Euro GBP 1 = EUR 1.47 1.44 1.45 1.49
Canadian Dollar GBP 1 = C$ 2.36 2.29 2.28 2.42
8. Net margin analysis (profit before interest as a percentage of
total sales)
----------------------------------------------------------------------
Before amortization and exceptional items Year Year
to to
March March
31, 31,
2005 2004
----------------------------------------------------------------------
% %
Sweeteners and starches
- Americas 13.3 10.7
- Europe 7.8 8.6
- Rest of the world 3.0 1.9
Sweeteners and starches average 9.3 8.6
Animal feed and bulk storage 3.8 3.1
Group 8.3 7.9
After amortization and exceptional items
----------------------------------------------------------------------
Sweeteners and starches
- Americas 9.6 10.6
- Europe 7.3 8.3
- Rest of the world 2.5 1.9
Sweeteners and starches average 7.6 8.4
Animal feed and bulk storage 2.7 2.1
Group 6.5 7.7
9. Prior period adjustments
----------------------------------------------------------------------
The Group has adopted Urgent Issues Task Force, Abstract 38 (UITF
38) 'Accounting for ESOP Trusts' in the year to March 31, 2005. As a
result, shares in the Company held through an employee share scheme
trust which were previously reported as investments are now recorded
as a deduction from equity shareholders' funds. At March 31, 2004, the
carrying value of these shares was GBP 38 million which has been set
against the profit and loss reserve of the balance sheet. The
comparative figures for balance sheet, profit and loss reserve and
classifications within the cash flow statement have been restated to
reflect the change in treatment such that shareholders' funds at March
31, 2004 have been reduced by GBP 38 million.
The Group has also adopted UITF 17 (as revised) which results in
the cost of the awards made under the Group's share schemes now being
calculated with reference to the fair value of the shares at the date
of award rather than the cost of the shares purchased by the Group.
The impact of this revision on the charges made in respect of the
share schemes is not material.
TATE & LYLE
NOTES TO STATEMENTS (continued)
For the year to March 31, 2005
10. Ratio analysis
----------------------------------------------------------------------
Year to
Year to March 31,
March 31, 2004
2005 (restated)
----------------------------------------------------------------------
Net Borrowings to EBITDA - Tate & Lyle PLC
and its subsidiaries
Net borrowings
--------------
Pre-exceptional EBITDA 451 388
------------ ------------
353 320
= 1.3 times = 1.2 times
Gearing
Gearing = Net borrowings
-------------------------
Total net assets 451 388
------------ ------------
1 047 978
= 43% = 40%
Interest Cover - Tate & Lyle PLC and its subsidiaries
= Operating profit before amortization and exceptional items
----------------------------------------------------------
Net interest payable (before exceptional items)
238 214
------------- ------------
21 23
= 11.3 times = 9.3 times
Dividend Cover before amortization and exceptional items
= EPS (basic)
-----------
Total ordinary dividend/share
38.4 34.0
------------- ------------
19.4 18.8
= 2.0 times = 1.8 times
Return on Net Operating Assets
= Profit before interest, tax and exceptional items
-------------------------------------------------
Average net operating assets
263 243
------------- ------------
1 574 1 576
= 16.7% = 15.4%
Net operating assets are calculated as:
Total net assets 1 047 978
Add back: Net borrowings 451 388
Add back unallocated liabilities - dividends
and tax 129 155
------------- ------------
Net operating assets 1 627 1 521
------------- ------------
Average net operating assets 1 574 1 576
TATE & LYLE PLC
Appendix 1
Adoption of International Financial
Reporting Standards (IFRS)
Adoption of International Financial Reporting Standards (IFRS) Introduction The Group currently prepares its financial statements in accordance with UK generally accepted accounting principles (UK GAAP). With effect from April 1, 2005, in accordance with European law, we will be preparing financial statements under International Financial Reporting Standards (IFRS). In order to explain how the Group's reported performance and financial position are affected by this change, the following unaudited financial information is provided below: --Consolidated balance sheets under IFRS as at April 1, 2004, September 30, 2004 and March 31, 2005; --Consolidated income statements under IFRS for the six months to September 30, 2004 and year to March 31, 2005; --Consolidated statements of recognized income and expense under IFRS for the six months to September 30, 2004 and year to March 31, 2005; --Consolidated statements of changes in equity under IFRS for the six months to September 30, 2004 and March 31, 2005; --Consolidated statements of cash flows under IFRS for the six months to September 30, 2004 and year to March 31, 2005; --Reconciliation of consolidated income statements under IFRS to UK GAAP for the six months to September 30, 2004 and year to March 31, 2005; --Reconciliation of consolidated balance sheets under IFRS to UK GAAP as at April 1, 2004, September 30, 2004 and March 31, 2005; and --Proforma changes in reported Group net borrowings at April 1, 2005 under IFRS. It should be noted that, although this financial information has been prepared on the basis of IFRS expected to be in place for use by EU-listed companies as at March 31, 2006, these standards are subject to ongoing review and endorsement by the European Commission and are, therefore, still subject to potential change. Information contained within this appendix may require further updating for audit adjustments or subsequent amendments to IFRS, and related guidance. The IFRS information contained in this appendix is unaudited. Basis of preparation The financial information contained in this appendix has been prepared based on IFRS published by March 31, 2005. It has been assumed that the European Commission will subsequently endorse the amendment to IAS 19 Employee Benefits - Actuarial Gains and Losses, Group Plans and Disclosures. Transitional arrangements and transition date The rules for first-time adoption of IFRS are set out in IFRS 1 First-time Adoption of International Financial Reporting Standards. Since the financial statements for the year to March 31, 2006 include comparatives for the year to March 31, 2005, the Group's date of transition to IFRS will be April 1, 2004. As required by IFRS 1, estimates carried forward at the transition date, including but not limited to assessments of provisions and contingent liabilities (and, where applicable, adjusted to comply with IFRS) are consistent with estimates made prior to transition. In accordance with IFRS 1, the Group must define accounting policies compliant with IFRS at its first reporting date and apply these policies retrospectively to each period presented. IFRS 1 allows a number of optional exemptions and also contains certain mandatory exceptions to this principle in order to ease the transition requirements of first-time adoption. The Group has applied the following exemptions available under IFRS 1: --The Group has applied IFRS 3 Business Combinations prospectively with effect from the transition date. The effect of this decision is detailed in paragraph (d) below. --Certain items of property, plant and equipment are carried under UK GAAP at amounts based upon valuations. The Group has applied the exemption which permits a first-time adopter to use a previous GAAP revaluation of an item of property, plant and equipment as deemed cost. Consequently, there is no adjustment to the previous carrying value under UK GAAP. --As permitted by IFRS 1 the Group has recognized all cumulative actuarial gains and losses at the transition date for all employee benefit plans falling within the scope of IAS 19 Employee Benefits. This means that the net deficit on the Group's employee benefit plans will be included within net assets at April 1, 2004. --The Group has applied the IFRS 1 exemption from the requirement for retrospective application of IAS 21 The Effects of Changes in Foreign Exchange Rates in respect of cumulative translation differences. This means that the Group has elected not to classify any retained earnings arising prior to April 1, 2004 within cumulative translation differences, which are, therefore, deemed to be zero at the transition date. --The Group has applied the IFRS 1 exemption from the requirement to restate its comparative information for the effects of adopting IAS 32 Financial Instruments: Disclosure and Presentation, IAS 39 Financial Instruments: Recognition and Measurement and IFRS 4 Insurance Contracts. The Group will not restate comparative information at April 1, 2004 or for the year to March 31, 2005 for these standards. --As permitted under IFRS 1 and IFRS 2 Share-based Payment, the Group has made no adjustment in either the income statement or balance sheet for share option grants that occurred prior to November 7, 2002. Key changes in accounting policies The following notes highlight the main differences between UK GAAP and IFRS that have a material effect on the financial statements of the Group. The full list of the Group's accounting policies under IFRS will be included in the 2005 Annual Report. (a) Share-based payment Under UK GAAP, the Group recognized a charge in respect of employee share options based on the difference between the exercise price of the option and the market value of a Tate & Lyle share at the grant date. Accordingly, only grants made under the Tate & Lyle 2003 Performance Share Plan attracted a charge under UK GAAP, based on their intrinsic value. IFRS 2 requires the Group to recognize a charge reflecting the fair value of all employee share options granted since November 7, 2002 that had not vested by the date of transition of April 1, 2004. The UK GAAP charge for the year to March 31, 2005 totalled GBP 2 million, reflecting expense for two years of option grants. The impact of IFRS on profit before taxation for the year to March 31, 2005 is an additional charge of GBP 2 million (six months to September 30, 2004 - additional charge of GBP 1 million). In the year to March 31, 2006, the IFRS charge will increase to reflect expense covering three years of option grants. Net assets increase by GBP 3 million at March 31, 2005 (September 30, 2004 - GBP 1 million; April 1, 2004 - GBP nil million) reflecting the deferred taxation impact. (b) Employee benefits Tate & Lyle operates a number of pension and post-retirement healthcare schemes and has both defined benefit and defined contribution plans. Under UK GAAP, the Group accounted for these schemes in accordance with SSAP 24, which requires that the expected cost be charged to the profit and loss account so as to accrue cost over the service lives of employees on the basis of a constant percentage of earnings. Under IAS 19, the net surplus or deficit for each defined benefit scheme is calculated based on the present value of the discounted obligation less the fair value of the plan assets. The Group has elected to adopt early the amendment to IAS 19 issued by the IASB on 16 December 2004, which allows all actuarial gains and losses to be immediately charged or credited to equity through the statement of recognized income and expense. The charge to the income statement under IAS 19 comprises the current service cost, interest cost on scheme liabilities, expected return on scheme assets, past service cost and the impact of any settlements or curtailments. The impact on profit before taxation for the year to March 31, 2005 is a credit of GBP 4 million (six months to September 30, 2004 - GBP 2 million). Net assets at March 31, 2005 reduced by GBP 117 million (September 30, 2004 - GBP 105 million; April 1, 2004 - GBP 99 million). The impact on net assets reflects the reversal of prepayments and liabilities previously reported under UK GAAP and recognition of assets and liabilities measured in accordance with IFRS, including those of joint ventures, adjusted for the impact of deferred taxation. (c) Intangible assets Research and development Under UK GAAP, the Group expensed all research and development costs as incurred. Under IFRS, the Group is required to capitalize development costs where this expenditure meets the recognition criteria set out in IAS 38 Intangible Assets. Research costs continue to be expensed as incurred. The capitalization under IFRS of development costs expensed during the 2005 financial year under UK GAAP increased profit before taxation under IFRS by GBP 1 million in the year to March 31, 2005 (six months to September 30, 2004 - GBP 1 million). The charge in the year to March 31, 2005 under IFRS for the amortization of development costs capitalised in previous periods reduces profit before taxation by GBP 1 million compared to UK GAAP (six months to September 30, 2004 - GBP 1 million). Overall, the impact on profit before tax in the year to March 31, 2005 is GBP nil million (six months to September 30, 2004 GBP nil million). The impact on net assets under IFRS, reflecting the capitalization of costs previously expensed as incurred under UK GAAP, after adjusting for the impact of deferred taxation, is an increase of GBP 5 million at March 31, 2005 (September 30, 2004 - GBP 5 million; April 1, 2004 - GBP 5 million). Reclassification of capitalized software costs Under UK GAAP, software assets were included as part of property, plant and equipment, whereas under IFRS, unless they are integral to another fixed asset, they are included as part of intangible assets. In the balance sheet, a reclassification of GBP 4 million from property, plant and equipment to intangible assets was reflected under IFRS at March 31, 2005 (September 30, 2004 - GBP 4 million; April 1, 2004 - GBP 4 million). There was no impact on either profit before taxation or total net assets under IFRS. The treatment of goodwill under IFRS is discussed in the following note. (d) Business combinations IFRS 3 Business Combinations introduces significant changes to the accounting for acquisitions compared to UK GAAP. The international standard requires recognition of all intangible assets that meet the IAS 38 recognition criteria. Any goodwill arising from business combinations is not amortized under IAS 38, but is subject to impairment tests annually or whenever there is an indication of impairment. Negative goodwill is recognized immediately in the income statement. The requirement to cease amortizing goodwill has the impact of increasing profit before taxation by GBP 9 million in the year to March 31, 2005 (six months to September 30, 2004 - GBP 5 million). Net assets at March 31, 2005 increased by GBP 9 million (September 30, 2004 - GBP 5 million; April 1, 2004 - GBP nil million). IFRS 3 requires the Group to record inventories acquired in a business combination at an amount equivalent to the selling price of those inventories, less costs of disposal and a reasonable profit allowance for the subsequent selling effort of the Group. UK GAAP requires acquired inventories to be recorded at cost. In the case of the sucralose realignment, this leads to the Group's acquired inventory being valued at an amount GBP 4 million higher under IFRS than under UK GAAP, resulting in an increased charge under IFRS during both the year to March 31, 2005 and the six months to September 30, 2004 of GBP 4 million. Net assets at March 31, 2005 reduced by GBP 4 million (September 30, 2004 - GBP 4 million; April 1, 2004 - not applicable). (e) Accounting for joint ventures Under UK GAAP, the Group accounted for joint ventures using the gross equity method, showing its share of joint venture turnover as part of total turnover, and its share of operating profit separately on the face of the profit and loss account. Under IFRS, the Group has elected to account for joint ventures using proportionate consolidation, whereby its share of each of the assets, liabilities, income and expenses is combined line by line with similar items in the Group's financial statements. While this change does not alter total net assets, it has a significant impact on the classification of assets and liabilities within the Group's balance sheet. Profit before taxation remains unchanged for all periods presented. (f) Taxation There is no difference in accounting for current taxation between UK GAAP and IFRS. In respect of deferred taxation, under UK GAAP, the Group recognized deferred taxation only on timing differences that arose from the inclusion of gains and losses in tax assessments in periods different from those in which they were recognized in the financial statements. Under IAS 12 Income Taxes, deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. Under UK GAAP, the Group elected to discount deferred tax as permitted by FRS 19. Discounting of deferred tax is not permitted under IFRS. The impact on the taxation charge for the year to March 31, 2005 is a credit of GBP 2 million (six months to September 30, 2004 - GBP 1 million) reflecting the reversal of the discounting effect recognized under UK GAAP. Net assets at March 31, 2005 reduced by GBP 29 million (September 30, 2004 - GBP 31 million; April 1, 2004 - GBP 30 million), due to the reversal of the discounting effect recognized under UK GAAP, as well as the recognition of deferred taxation in respect of the unremitted earnings of certain overseas investments. (g) Other Events after the balance sheet date Under UK GAAP, the Group recognized a provision for the dividend declared within its financial statements. IFRS specifically states that dividends approved by the relevant authority after the reporting date do not meet the definition of a present obligation and should not therefore be recognized. The impact of this is to increase net assets at March 31, 2005 by GBP 65 million (September 30, 2004 - GBP 27 million; April 1, 2004 - GBP 62 million). Other Other adjustments, relating to sundry reclassifications and remeasurements, increase net assets by GBP 6 million at March 31, 2005 (September 30, 2004 - GBP 5 million; April 1, 2004 - GBP 5 million). Financial instruments There is currently no standard that comprehensively addresses accounting for financial instruments under UK GAAP. As noted above, the Group has applied the IFRS 1 exemption from the requirement to restate its comparative information for the effects of adopting IAS 32 Financial Instruments: Disclosure and Presentation, IAS 39 Financial Instruments: Recognition and Measurement and IFRS 4 Insurance Contracts. Therefore, the Group will adopt these standards with effect from April 1, 2005. The Group distinguishes between financial instruments held for trading purposes and those held for hedging purposes. Under UK GAAP, trading instruments were marked to market using externally derived market prices. Gains or losses were recognized immediately in the profit and loss account. The Group will continue to account for financial instruments held for trading under IFRS on the same basis. For hedging instruments, the Group applied a form of hedge accounting which enabled changes in the market value of financial instruments to be matched in the profit and loss account with recognition of the underlying hedged exposure. Under IFRS, the Group will recognize all derivative financial instruments on the balance sheet at inception at fair value. IAS 39 places significant restrictions on the use of hedge accounting as specific designation and effectiveness criteria must be satisfied. The use of fair values in measuring derivative financial instruments may lead to greater volatility in the Group's balance sheet. Since the Group may not achieve hedge accounting for all instruments used for hedging purposes, the income statement may become more volatile under IFRS. Our European Food & Industrial Ingredients business operates a securitization program under which it receives cash from selling amounts receivable from customers. The facility of US$85 million (GBP 45 million) was fully utilised at March 31, 2005. Under UK GAAP, the amounts received under this facility are linked in presentation to the original amounts receivable. Under IAS 39, the amounts received will be included in borrowings. Proforma changes in Group net borrowings The adoption of IFRS does not have any impact on the underlying cash flows of the Group. However, the adoption is expected to lead to a number of recognition and classification differences that are likely to impact the Group's reported net borrowings. The following table summarizes the anticipated effect of these differences.
Proforma net debt at April 1, 2005 under IFRS
GBP million
Net debt at March 31, 2005 under UK GAAP 451
Net debt of joint ventures recognized under proportionate
consolidation 20
Net debt at March 31, 2005 under IFRS 471
Adjustments upon adoption of IAS 39:
Reclassification of receivables securitization 45
Net debt at April 1, 2005 under IFRS 516
Note: The fair value component of derivative financial instruments
used to modify the currency profile of the Group's borrowings will
continue to be classified within net debt.
TATE & LYLE
Consolidated Balance Sheets
prepared in accordance with IFRS
As at As at As at
March 31, September April 1,
2005 30, 2004 2004
GBP GBP GBP
million million million
Unaudited Unaudited Unaudited
----------------------------------------------------------------------
ASSETS
Non-current assets
Property, plant and equipment 1 262 1 266 1 195
Intangible assets 198 212 156
Investments in associates 3 3 3
Other non-current assets 29 37 42
--------- --------- ---------
1 492 1 518 1 396
--------- --------- ---------
Current Assets
Inventories 372 321 344
Trade and other receivables 418 418 351
Current asset investments 1 14 14
Cash and cash equivalents 384 130 157
--------- --------- ---------
1 175 883 866
--------- --------- ---------
TOTAL ASSETS 2 667 2 401 2 262
--------- --------- ---------
SHAREHOLDERS' EQUITY
Capital and reserves attributable to the
Company's equity holders:
Share capital and capital reserves 483 465 469
Other reserves 122 125 125
Retained earnings 351 315 300
--------- --------- ---------
956 905 894
Minority interest 29 30 27
--------- --------- ---------
TOTAL SHAREHOLDERS' EQUITY 985 935 921
--------- --------- ---------
LIABILITIES
Non-current liabilities
Trade and other payables 8 2 8
Borrowings 788 527 524
Deferred income tax liabilities 29 35 47
Retirement benefit obligations 244 245 242
Provisions for other liabilities and
charges 118 115 69
--------- --------- ---------
1 187 924 890
--------- --------- ---------
Current Liabilities
Bank overdrafts 15 11 15
Trade and other payables 404 358 342
Current income tax liabilities 23 27 42
Borrowings 53 146 52
--------- --------- ---------
495 542 451
--------- --------- ---------
TOTAL LIABILITIES 1 682 1 466 1 341
--------- --------- ---------
--------- --------- ---------
TOTAL LIABILITIES AND EQUITY 2 667 2 401 2 262
--------- --------- ---------
The adjustments made to previously reported UK GAAP financial
information are explained on pages 35 to 40.
TATE & LYLE
Consolidated Income Statements
prepared in accordance with IFRS
Year to Six months to
March 31, September 30,
2005 2004
GBP GBP
million million
Unaudited Unaudited
----------------------------------------------------------------------
Sales 3 339 1 666
---------- --------------
Operating profit 229 96
Share of net result of associates - -
Net finance cost (24) (13)
---------- --------------
Profit before taxation 205 83
Taxation (51) (19)
---------- --------------
Profit for the period 154 64
---------- --------------
Attributable to:
Equity holders of the Company 150 61
Minority interest 4 3
---------- --------------
154 64
---------- --------------
Profit before tax, amortization and UK GAAP
exceptional items 254 128
---------- --------------
Earnings per share expressed in pence per share
Basic 31.8p 12.9p
---------- --------------
Diluted 31.4p 12.9p
---------- --------------
Adjusted * 38.2p 18.9p
---------- --------------
* Before amortization and UK GAAP exceptional items.
The adjustments made to previously reported UK GAAP financial
information are explained on pages 35 to 40.
TATE & LYLE
Consolidated Statement of Recognized Income and Expense
prepared in accordance with IFRS
Six
months to
Year to September
March 31, 30,
2005 2004
GBP GBP
million million
Unaudited Unaudited
----------------------------------------------------------------------
Profit for the period 154 64
Employee post-employment benefits:
- net actuarial losses on post-employment benefits
plans (19) (7)
- deferred taxation recognized directly in equity 5 3
--------- ---------
Total recognized income for the period 140 60
--------- ---------
TATE & LYLE
Consolidated Statement of Changes in Equity
prepared in accordance with IFRS
Attributable
to the
equity
holders of Minority Total
the Company interest equity
GBP GBP GBP
million million million
Unaudited Unaudited Unaudited
----------------------------------------------------------------------
Balance at April 1, 2004 894 27 921
Profit for the six months to
September 30, 2004 61 3 64
Net actuarial losses on defined
benefits obligations, net of tax (4) - (4)
Net exchange adjustments, net of tax 22 1 23
Employee share option scheme:
- value of employee services 2 - 2
- deferred taxation recognized
directly in equity 1 - 1
Ordinary shares acquired (7) - (7)
Deferred taxation on unremitted
earnings (2) - (2)
Dividends paid (62) (1) (63)
------------ --------- ---------
Balance at September 30, 2004 905 30 935
------------ --------- ---------
Profit for the six months to
March 31, 2005 89 1 90
Net actuarial losses on defined
benefits obligations, net of tax (10) - (10)
Net exchange adjustments, net of tax (20) (2) (22)
Employee share option scheme:
- value of employee services 2 - 2
- deferred taxation recognized
directly in equity 1 - 1
Ordinary shares issued 15 - 15
Deferred taxation on unremitted
earnings 1 - 1
Dividends paid (27) - (27)
------------ --------- ---------
Balance at March 31, 2005 956 29 985
------------ --------- ---------
The adjustments made to previously reported UK GAAP financial
information are explained on pages 35 to 40.
TATE & LYLE
Consolidated Cash Flow Statements
prepared in accordance with IFRS
Six
months
Year to to
March 31, September
2005 30, 2004
GBP GBP
million million
Unaudited Unaudited
----------------------------------------------------------------------
Cash flows from operating activities
Profit before taxation for the period 205 83
Adjustments for:
Depreciation and impairment losses 127 64
Amortization 5 2
Cost of employee share scheme 4 2
Loss on sale of property, plant and equipment 6 2
Profit on sale of other non-current assets (16) (16)
Interest income (34) (6)
Interest expense 58 19
Changes in working capital (38) (40)
--------- ---------
Cash generated from operations 317 110
Interest paid (42) (12)
Income tax paid (84) (42)
--------- ---------
Net cash generated from operating activities 191 56
--------- ---------
Cash flows from investing activities
Proceeds on disposal of property, plant and
equipment 4 3
Proceeds on disposal of non-current asset
investments 21 22
Proceeds on disposal of current asset
investments 13 -
Interest received 21 1
Acquisitions of subsidiaries, net of cash
acquired (73) (74)
Purchases of property, plant and equipment (141) (63)
Purchases of other non-current assets (1) (1)
--------- ---------
Net cash flows used in investing activities (156) (112)
--------- ---------
Cash flows from financing activities
Proceeds from issuance of ordinary shares 11 1
Proceeds from borrowings 258 91
Cash paid to acquire own shares (1) (6)
Dividends paid to minority shareholders of
subsidiaries (1) -
Dividends paid to the Company's equity holders (89) (62)
--------- ---------
Net cash flows from financing activities 178 24
--------- ---------
--------- ---------
Net increase/(decrease) in cash and cash
equivalents 213 (32)
Cash and cash equivalents:
At beginning of period 157 157
Effect of changes in foreign exchange rates 14 5
--------- ---------
At end of period 384 130
--------- ---------
Cash and cash equivalents presented in accordance with IFRS
include cash and cash equivalents of joint ventures, accounted for
under the proportionate consolidation method, of GBP 30 million at
March 31, 2005 (September 30, 2004 - GBP 28 million; April 1, 2004 -
GBP 17 million), and exclude certain current asset investments, as
presented in the Group's UK GAAP disclosure of net debt (page 30), of
GBP 1 million at March 31, 2005 (September 30, 2004 - GBP 14 million;
April 1, 2004 - GBP 14 million).
TATE & LYLE
Reconciliations of UK GAAP financial information to IFRS
Consolidated Balance Sheet as at April 1, 2004
Share-
UK GAAP based Employee
in IFRS payments benefits Intangible Business
format GBP GBP assets GBP combinations
GBP million million million GBP million
million Note (a) Note (b) Note (c) Note (d)
----------------------------------------------------------------------
ASSETS
Non-current assets
Property, plant
and equipment 1,062 - - (4) -
Intangible assets 136 - - 11 -
Investments in
associates 3 - - - -
Investments in
joint ventures 194 - - - -
Other non-current
assets 57 - (31) - -
-------- --------- -------- ---------- -------------
1,452 - (31) 7 -
-------- --------- -------- ---------- -------------
Current assets
Inventories 273 - - - -
Trade and other
receivables 299 - - - -
Current asset
investments 112 - - - -
Cash and cash
equivalents 42 - - - -
-------- --------- -------- ---------- -------------
726 - - - -
-------- --------- -------- ---------- -------------
TOTAL ASSETS 2,178 - (31) 7 -
-------- --------- -------- ---------- -------------
SHAREHOLDERS'
EQUITY
Capital and
reserves
attributable to
the Company's
equity holders:
Share capital
and capital
reserves 468 1 - - -
Other reserves 118 - - - -
Retained
earnings 365 (1) (99) 5 -
-------- --------- -------- ---------- -------------
951 - (99) 5 -
Minority interest 27 - - - -
-------- --------- -------- ---------- -------------
TOTAL
SHAREHOLDERS'
EQUITY 978 - (99) 5 -
-------- --------- -------- ---------- -------------
LIABILITIES
Non-current
liabilities
Trade and other
payables 5 - - - -
Borrowings 512 - - - -
Deferred income
tax liabilities 65 - (52) 2 -
Retirement benefit
obligations 121 - 120 - -
Provisions for
other liabilities
and charges 60 - - - -
-------- --------- -------- ---------- -------------
763 - 68 2 -
-------- --------- -------- ---------- -------------
Current
liabilities
Bank overdrafts 5 - - - -
Trade and other
payables 370 - - - -
Current income tax
liabilities 37 - - - -
Borrowings 25 - - - -
-------- --------- -------- ---------- -------------
437 - - - -
-------- --------- -------- ---------- -------------
TOTAL LIABILITIES 1,200 - 68 2 -
-------- --------- -------- ---------- -------------
-------- --------- -------- ---------- -------------
TOTAL LIABILITIES
AND EQUITY 2,178 (31) 7 -
-------- --------- -------- ---------- -------------
Joint
ventures Taxation Other
GBP GBP GBP IFRS
million million million GBP
Note (e) Note (f) Note (g) million
----------------------------------------------------------------------
ASSETS
Non-current assets
Property, plant and equipment 130 - 7 1 195
Intangible assets 9 - - 156
Investments in associates - - - 3
Investments in joint ventures (194) - - -
Other non-current assets 16 - - 42
--------- -------- -------- --------
(39) - 7 1 396
--------- -------- -------- --------
Current assets
Inventories 72 - (1) 344
Trade and other receivables 52 - - 351
Current asset investments - - (98) 14
Cash and cash equivalents 17 - 98 157
--------- -------- -------- --------
141 - (1) 866
--------- -------- -------- --------
TOTAL ASSETS 102 - 6 2 262
--------- -------- -------- --------
SHAREHOLDERS' EQUITY
Capital and reserves attributable
to the Company's equity holders:
Share capital and capital
reserves - - - 469
Other reserves - - 7 125
Retained earnings - (30) 60 300
--------- -------- -------- --------
- (30) 67 894
Minority interest - - - 27
--------- -------- -------- --------
TOTAL SHAREHOLDERS' EQUITY - (30) 67 921
--------- -------- -------- --------
LIABILITIES
Non-current liabilities
Trade and other payables 3 - - 8
Borrowings 12 - - 524
Deferred income tax liabilities 2 30 - 47
Retirement benefit obligations 1 - - 242
Provisions for other liabilities
and charges 9 - - 69
--------- -------- -------- --------
27 30 - 890
--------- -------- -------- --------
Current liabilities
Bank overdrafts 10 - - 15
Trade and other payables 33 - (61) 342
Current income tax liabilities 5 - - 42
Borrowings 27 - - 52
--------- -------- -------- --------
75 - (61) 451
--------- -------- -------- --------
TOTAL LIABILITIES 102 30 (61) 1 341
--------- -------- -------- --------
--------- -------- -------- --------
TOTAL LIABILITIES AND EQUITY 102 - 6 2 262
--------- -------- -------- --------
TATE & LYLE
Reconciliations of UK GAAP financial information to IFRS
Consolidated Balance Sheet as at September 30, 2004
Share-
UK GAAP based Employee Intangible
in IFRS payments Benefits assets
format GBP GBP GBP
GBP million million million
million Note (a) Note (b) Note (c)
-------- --------- -------- ----------
ASSETS
Non-current assets
Property, plant and equipment 1 128 - - (4)
Intangible assets 191 - - 11
Investments in associates 2 - - -
Investments in joint ventures 197 - - -
Other non-current assets 72 - (50) -
-------- --------- -------- ----------
1 590 - (50) 7
-------- --------- -------- ----------
Current assets
Inventories 275 - - -
Trade and other receivables 360 - - -
Current asset investments 14 - - -
Cash and cash equivalents 102 - - -
-------- --------- -------- ----------
751 - - -
-------- --------- -------- ----------
TOTAL ASSETS 2 341 - (50) 7
-------- --------- -------- ----------
SHAREHOLDERS' EQUITY
Capital and reserves
attributable to the Company's
equity holders:
Share capital and capital
reserves 463 2 - -
Other reserves 118 - - -
Retained earnings 421 (1) (105) 5
-------- --------- -------- ----------
1 002 1 (105) 5
Minority interest 30 - - -
-------- --------- -------- ----------
TOTAL SHAREHOLDERS' EQUITY 1 032 1 (105) 5
-------- --------- -------- ----------
LIABILITIES
Non-current liabilities
Trade and other payables 1 - - -
Borrowings 523 - - -
Deferred income tax liabilities 53 (1) (53) 2
Retirement benefit obligations 134 - 108 -
Provisions for other
liabilities and charges 108 - - -
-------- --------- -------- ----------
819 (1) 55 2
-------- --------- -------- ----------
Current liabilities
Bank overdrafts 5 - - -
Trade and other payables 347 - - -
Current income tax liabilities 20 - - -
Borrowings 118 - - -
-------- --------- -------- ----------
490 - - -
-------- --------- -------- ----------
TOTAL LIABILITIES 1 309 (1) 55 2
-------- --------- -------- ----------
-------- --------- -------- ----------
TOTAL LIABILITIES AND EQUITY 2 341 - (50) 7
-------- --------- -------- ----------
Joint
Business ventures Taxation Other
combinations GBP GBP GBP
GBP million million million million IFRS GBP
Note (d) Note (e) Note (f) Note (g) million
------------- -------- -------- -------- --------
ASSETS
Non-current assets
Property, plant and
equipment - 135 - 7 1 266
Intangible assets 1 9 - - 212
Investments in
associates - 1 - - 3
Investments in joint
ventures - (197) - - -
Other non-current
assets - 15 - - 37
------------- -------- -------- -------- --------
1 (37) - 7 1 518
------------- -------- -------- -------- --------
Current assets
Inventories - 47 - (1) 321
Trade and other
receivables - 58 - - 418
Current asset
investments - - - - 14
Cash and cash
equivalents - 28 - - 130
------------- -------- -------- -------- --------
- 133 - (1) 883
------------- -------- -------- -------- --------
TOTAL ASSETS 1 96 - 6 2 401
------------- -------- -------- -------- --------
SHAREHOLDERS' EQUITY
Capital and reserves
attributable to the
Company's equity
holders:
Share capital and
capital
reserves - - - - 465
Other reserves - - - 7 125
Retained earnings 1 - (31) 25 315
------------- -------- -------- -------- --------
1 - (31) 32 905
Minority interest - - - - 30
------------- -------- -------- -------- --------
TOTAL SHAREHOLDERS'
EQUITY 1 - (31) 32 935
------------- -------- -------- -------- --------
LIABILITIES
Non-current
liabilities
Trade and other
payables - 1 - - 2
Borrowings - 4 - - 527
Deferred income tax
liabilities - 3 31 - 35
Retirement benefit
obligations - 3 - - 245
Provisions for other
liabilities and
charges - 7 - - 115
------------- -------- -------- -------- --------
- 18 31 - 924
------------- -------- -------- -------- --------
Current liabilities
Bank overdrafts - 6 - - 11
Trade and other
payables - 37 - (26) 358
Current income tax
liabilities - 7 - - 27
Borrowings - 28 - - 146
------------- -------- -------- -------- --------
- 78 - (26) 542
------------- -------- -------- -------- --------
TOTAL LIABILITIES - 96 31 (26) 1 466
------------- -------- -------- -------- --------
------------- -------- -------- -------- --------
TOTAL LIABILITIES
AND EQUITY 1 96 - 6 2 401
------------- -------- -------- -------- --------
TATE & LYLE
Reconciliations of UK GAAP financial information to IFRS
Consolidated Balance Sheet as at March 31, 2005
Share-
UK GAAP based Employee
in IFRS payments Benefits Intangible
format GBP GBP assets GBP
GBP million million million
million Note (a) Note (b) Note (c)
-------- --------- -------- ----------
ASSETS
Non-current assets
Property, plant and equipment 1 111 - - (4)
Intangible assets 173 - - 11
Investments in associates 2 - - -
Investments in joint ventures 211 - - -
Other non-current assets 76 - (51) -
-------- --------- -------- ----------
1 573 - (51) 7
-------- --------- -------- ----------
Current assets
Inventories 288 - - -
Trade and other receivables 361 - - -
Current asset investments 296 - - -
Cash and cash equivalents 59 - - -
-------- --------- -------- ----------
1 004 - - -
-------- --------- -------- ----------
TOTAL ASSETS 2 577 - (51) 7
-------- --------- -------- ----------
SHAREHOLDERS' EQUITY
Capital and reserves
attributable to the Company's
equity holders:
Share capital and capital
reserves 478 5 - -
Other reserves 115 - - -
Retained earnings 425 (2) (117) 5
-------- --------- -------- ----------
1 018 3 (117) 5
Minority interest 29 - - -
-------- --------- -------- ----------
TOTAL SHAREHOLDERS' EQUITY 1 047 3 (117) 5
-------- --------- -------- ----------
LIABILITIES
Non-current liabilities
Trade and other payables 8 - - -
Borrowings 783 - - -
Deferred income tax liabilities 53 (3) (58) 2
Retirement benefit obligations 116 - 124 -
Provisions for other
liabilities and charges 112 - - -
-------- --------- -------- ----------
1 072 (3) 66 2
-------- --------- -------- ----------
Current liabilities
Bank overdrafts 4 - - -
Trade and other payables 416 - - -
Current income tax liabilities 19 - - -
Borrowings 19 - - -
-------- --------- -------- ----------
458 - - -
-------- --------- -------- ----------
TOTAL LIABILITIES 1 530 (3) 66 2
-------- --------- -------- ----------
-------- --------- -------- ----------
TOTAL LIABILITIES AND EQUITY 2 577 - (51) 7
-------- --------- -------- ----------
Joint
Business Ventures Taxation
combinations GBP GBP Other GBP
GBP million million million million IFRS GBP
Note (d) Note (e) Note (f) Note (g) million
------------- --------- -------- ------------ --------
ASSETS
Non-current
assets
Property,
plant and
equipment - 148 - 7 1 262
Intangible
assets 5 9 - - 198
Investments in
associates - 1 - - 3
Investments in
joint
ventures - (211) - - -
Other non-
current
assets - 4 - - 29
------------- --------- -------- ------------ --------
5 (49) - 7 1 492
------------- --------- -------- ------------ --------
Current assets
Inventories - 85 - (1) 372
Trade and
other
receivables - 56 - 1 418
Current asset
investments - - - (295) 1
Cash and cash
equivalents - 30 - 295 384
------------- --------- -------- ------------ --------
- 171 - - 1 175
------------- --------- -------- ------------ --------
TOTAL ASSETS 5 122 - 7 2 667
------------- --------- -------- ------------ --------
SHAREHOLDERS'
EQUITY
Capital and
reserves
attributable
to the
Company's
equity
holders:
Share
capital
and
capital
reserves - - - - 483
Other
reserves - - - 7 122
Retained
earnings 5 - (29) 64 351
------------- --------- -------- ------------ --------
5 - (29) 71 956
Minority
interest - - - - 29
------------- --------- -------- ------------ --------
TOTAL
SHAREHOLDERS'
EQUITY 5 - (29) 71 985
------------- --------- -------- ------------ --------
LIABILITIES
Non-current
liabilities
Trade and
other
payables - - - - 8
Borrowings - 5 - - 788
Deferred
income tax
liabilities - 6 29 - 29
Retirement
benefit
obligations - 4 - - 244
Provisions for
other
liabilities
and charges - 7 - (1) 118
------------- --------- -------- ------------ --------
- 22 29 (1) 1 187
------------- --------- -------- ------------ --------
Current
liabilities
Bank
overdrafts - 11 - - 15
Trade and
other
payables - 51 - (63) 404
Current income
tax
liabilities - 4 - - 23
Borrowings - 34 - - 53
------------- --------- -------- ------------ --------
- 100 - (63) 495
------------- --------- -------- ------------ --------
TOTAL
LIABILITIES - 122 29 (64) 1 682
------------- --------- -------- ------------ --------
------------- --------- -------- ------------ --------
TOTAL
LIABILITIES
AND EQUITY 5 122 - 7 2 667
------------- --------- -------- ------------ --------
TATE & LYLE
Reconciliations of UK GAAP financial information to IFRS
Consolidated Income Statement for the six months to September 30, 2004
Share-
UK GAAP based Employee
in IFRS payments benefits Intangible Business
format GBP GBP assets GBP Combinations
GBP million million million GBP million
million Note (a) Note (b) Note (c) Note (d)
-------- --------- -------- ---------- ------------
Sales 1 504 - - - -
-------- --------- -------- ---------- ------------
Operating Profit 73 (1) 3 - 1
Share of net
result of
associates and
joint ventures 20 - - - -
Net finance cost (12) - (1) - -
-------- --------- -------- ---------- ------------
Profit before tax 81 (1) 2 - 1
Income tax
expense (20) 1 (1) - -
-------- --------- -------- ---------- ------------
Profit for the
period 61 - 1 - 1
-------- --------- -------- ---------- ------------
Attributable to:
Equity holders of
the Company 58 - 1 - 1
Minority interest 3 - - - -
-------- --------- -------- ---------- ------------
61 - 1 - 1
-------- --------- -------- ---------- ------------
Profit before
tax,
amortization and
UK GAAP
exceptional
items 130 (1) 2 1 (4)
-------- --------- -------- ---------- ------------
Earnings per share expressed in pence per share
Basic 12.3 - 0.2 - 0.2
Diluted 12.3 - 0.2 - 0.2
Adjusted * 19.1 - 0.2 0.2 (0.8)
Taxation Other
Joint ventures GBP GBP
GBP million million million IFRS GBP
Note (e) Note (f) Note (g) million
-------------- ---------- ---------- ---------
Sales 162 - - 1 666
-------------- ---------- ---------- ---------
Operating Profit 20 - - 96
Share of net result of
associates and joint
ventures (20) - - -
Net finance cost - - - (13)
-------------- ---------- ---------- ---------
Profit before tax - - - 83
Income tax expense - 1 - (19)
-------------- ---------- ---------- ---------
Profit for the period - 1 - 64
-------------- ---------- ---------- ---------
Attributable to:
Equity holders of the
Company - 1 - 61
Minority interest - - - 3
-------------- ---------- ---------- ---------
- 1 - 64
-------------- ---------- ---------- ---------
Profit before tax,
amortization and UK
GAAP exceptional
items - - - 128
-------------- ---------- ---------- ---------
Earnings per share expressed in pence per share
Basic - 0.2 - 12.9
Diluted - 0.2 - 12.9
Adjusted * - 0.2 - 18.9
* Before amortization and UK GAAP exceptional items.
TATE & LYLE
Reconciliations of UK GAAP financial information to IFRS
Consolidated Income Statement for the year to March 31, 2005
Share-
UK GAAP based Employee
in IFRS payments Benefits Intangible Business
format GBP GBP assets GBP combinations
GBP million million million GBP million
million Note (a) Note (b) Note (c) Note (d)
-------- --------- -------- ---------- ------------
Sales 3 001 - - - -
-------- --------- -------- ---------- ------------
Operating Profit 181 (2) 6 - 5
Share of net
result of
associates
and joint
ventures 38 - - - -
Net finance cost (22) - (2) - -
-------- --------- -------- ---------- ------------
Profit before tax 197 (2) 4 - 5
Income tax
expense (53) 1 (1) - -
-------- --------- -------- ---------- ------------
Profit for the
year 144 (1) 3 - 5
-------- --------- -------- ---------- ------------
Attributable to:
Equity holders of
the Company 140 (1) 3 - 5
Minority interest 4 - - - -
-------- --------- -------- ---------- ------------
144 (1) 3 - 5
-------- --------- -------- ---------- ------------
Profit before
tax,
amortization and
UK GAAP
exceptional
items 255 (2) 4 1 (4)
-------- --------- -------- ---------- ------------
Earnings per share expressed in pence per share
Basic 29.7 (0.2) 0.6 - 1.1
Diluted 29.4 (0.2) 0.6 - 1.0
Adjusted * 38.0 (0.2) 0.6 0.2 (0.8)
Joint Taxation Other
Ventures GBP GBP
GBP million million million IFRS GBP
Note (e) Note (f) Note (g) million
------------- ---------- -------- --------
Sales 338 - - 3 339
------------- ---------- -------- --------
Operating Profit 38 - 1 229
Share of net result of
associates
and joint ventures (38) - - -
Net finance cost - - (24)
------------- ---------- -------- --------
Profit before tax - - 1 205
Income tax expense - 2 - (51)
------------- ---------- -------- --------
Profit for the year - 2 1 154
------------- ---------- -------- --------
Attributable to:
Equity holders of the
Company - 2 1 150
Minority interest - - - 4
------------- ---------- -------- --------
- 2 1 154
------------- ---------- -------- --------
Profit before tax,
amortization and UK GAAP
exceptional items - - - 254
------------- ---------- -------- --------
Earnings per share expressed in pence per share
Basic - 0.4 0.2 31.8
Diluted - 0.4 0.2 31.4
Adjusted * - 0.4 - 38.2
* Before amortization and UK GAAP exceptional items. |
|
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