Interim Results - Part 1
Tate & Lyle PLC
8 November 2001
PART 1
ANNOUNCEMENT OF INTERIM RESULTS
For the six months ended 30 September 2001
----------------------------------------------------------------
INTERIM RESULTS TO SEPTEMBER 2001 2000
----------------------------------------------------------------
Sales £2,133m £2,122m
Profit before interest, goodwill
amortisation and exceptional items £97m £107m
Profit before tax, goodwill amortisation and £64m £68m
exceptional items
Profit before taxation £64m *£2m
Diluted earnings per share before goodwill 9.4p *9.3p
amortisation and exceptional items
Interim dividend declared 5.5p 5.5p
----------------------------------------------------------------
- Overall trading in line with expectation
- Net debt reduced by £115 million
- Amylum/Staley integration well advanced
- Domino disposal completed after period end
'Substantial progress has been made in our strategy to reshape
Tate & Lyle. The important completion of the disposal of Domino
was announced on 6 November 2001. The integration of Amylum and
Staley continues according to plan.
Overall, trading in this half year has been in line with our
expectations. The outlook for the second half year is positive
notwithstanding increasingly difficult global economic conditions.
We remain committed to improving overall shareholder returns and
rebuilding interest and dividend cover.'
Sir David Lees Larry Pillard
Chairman Chief Executive
An interim statement incorporating the Group profit and loss
account for the six months ended 30 September 2001 will be posted
to shareholders.
Copies of this Announcement are available from:
Robert Gibber, Company Secretary, Tate & Lyle PLC,
Sugar Quay, Lower Thames Street, London EC3R 6DQ
* Comparative figures have been restated following the adoption
of a new accounting standard FRS 19 on deferred taxation.
PAGE ONE OF THIRTEEN
INTERIM REPORT
Comparisons are with the 27-week period to 30 September 2000
unless stated otherwise. The comparatives have been restated
to reflect the adoption of FRS 19 on deferred taxation.
Overview
Profit before tax, goodwill amortisation and exceptional items
for the six months to 30 September 2001 was £64 million. As
expected, this was below the £68 million achieved in the
corresponding period to 30 September 2000, mainly because of a
£10 million increase, to £19 million, in losses before
interest in the US sugar businesses. Progress on the disposal
of these businesses is referred to below.
Trading in our three main businesses has been equal to or
ahead of the comparative period. Energy costs increased by £11
million in the half year before mitigation by internal action
on energy conservation. In the second half year we hope to
contain the increase to single figures.
We announced on 26 September 2001 the signing of an agreement
to realign our sucralose activities into a new global alliance
with McNeil Nutritionals ('McNeil'), a Johnson & Johnson
Company. Under this agreement, Tate & Lyle has received the
first of three annual advance license fees from McNeil of
US$10 million each. These annual fees are effective from
1 October and had no impact on the first half year results. In
the second half year, profit before interest will include £3
million (US$5 million) from the first instalment.
We continue to refocus the Group towards higher-margin and
higher-growth businesses, disposing of underperforming or non-
core assets and eliminating costs. The sale of Zambia Sugar
together with the disposal of other smaller businesses and
surplus assets generated proceeds of £20 million. This,
together with the containment of capital expenditure below the
level of depreciation and a reduction in working capital,
enabled net debt to be reduced by
£115 million.
We announced on 6 November 2001 that we have completed the
disposal of Tate & Lyle North American Sugars ('Domino') for a
cash consideration of £86 million (US$125 million). Total
proceeds are the same as detailed in the announcement of the
sale dated 26 July 2001, except for an adjustment for the
level of working capital. This disposal again demonstrates
that we are delivering on our strategy to retain only those
assets that produce acceptable returns. Proceeds will be used
to further reduce Group debt.
We announced on 26 September 2001 that the sale of the Western
Sugar Company is progressing more slowly than anticipated and
the date for closing has been extended to 31 January 2002 to
coincide with the completion of the current beet processing
campaign.
The Board has declared an unchanged interim dividend of 5.5p
per share, to be paid on 15 January 2002 to shareholders
registered on 7 December 2001.
Results for the six months to 30 September 2001
Sales were £2,133 million (£2,122 million). Profit before
interest and exceptional items was
£93 million (£106 million) after a £4 million (£1 million)
charge for amortisation of goodwill relating to the purchase
of minorities in Amylum and Staley in August 2000.
Exceptional items totalled a profit of £4 million (loss £65
million), mainly comprising profit on the sale of assets.
PAGE TWO OF THIRTEEN
Profit before tax, goodwill amortisation and exceptional items
was £64 million (£68 million). Currency movements reduced
profits by £2 million, mainly due to the impact of the
Zimbabwe Dollar on ZSR Corporation. Profit before tax and
after goodwill amortisation and exceptional items was also £64
million (£2 million).
The underlying rate of tax on profit before goodwill
amortisation and exceptional items of 30% increased by 3
percentage points due to the adoption of Financial Reporting
Standard 19 on deferred taxation. The prior period tax charge
has been restated (and increased by 2 percentage points to
29%) to reflect this change.
Diluted earnings per share before goodwill amortisation and
exceptional items were 9.4p (9.3p), and after exceptional
items and goodwill amortisation were 9.4p (loss of 5.8p).
The Group generated strong net cash inflow from operating
activities of £215 million (£195 million). Capital expenditure
at £39 million (£57million), remained below depreciation.
Interest cover improves from 2.3 times in the 53 weeks to
31 March 2001 to 3.0 times in the half year to 30 September 2001.
On a proforma basis had the sale of Domino taken place at the
beginning of the half year interest cover would have been 3.8 times.
Amylum Integration
Good progress has been made on the integration of Amylum and
Staley as part of our global ingredients business. As
anticipated, little net benefit has accrued in the six month
period to 30 September 2001 because of one-off integration
costs. We are in consultation with works councils throughout
our European operations to discuss the cost improvement
programme. We remain confident that we will achieve our
original target for annual benefits of £50 million by the
financial year ending March 2004.
Segmental Analysis before Exceptional Items
Americas
Profits in the segment were £45 million (£57 million). This
was after a £10 million increase in losses in the US sugar
businesses to £19 million. Domino accounted for £18 million of
this loss, Western £1 million.
Profits at Staley were higher, despite increased energy costs
and a reduced performance from the citric acid product line.
Sweetener volumes increased and margins improved reflecting
price rises announced at the beginning of the calendar year.
Starch volumes increased but industrial starch margins
continue to suffer from lower pricing, in particular from the
paper industry. The contribution from ethanol improved. Energy
conservation measures partially offset increased energy costs.
By-product pricing, especially corn oil, has improved from the
low level of last year. The citric acid industry faces
competition from Asian imports and new capacity. We have
undertaken a number of cost reduction initiatives to respond
to this challenge. These included the eight-week closure of
the Mexican factory, which we re-opened in September with a
reduced workforce, the sourcing of lower-cost raw materials in
the USA, and delivering energy efficiency improvements in
Brazil.
In our North American sugar business Redpath, our Canadian
refiner, performed well despite overall profits being lower
due to the recent fall in world raw sugar prices. In the US
sugar businesses, the sugar market remained substantially
oversupplied and losses increased by
£10 million as margins and volumes were squeezed in the early
part of the financial year. As the six months progressed the
situation eased. There are signs of an improvement in sugar
prices as a result of a smaller beet crop in the US and the
impact of the renewal of the government 'Payment In Kind'
programme.
PAGE THREE OF THIRTEEN
Europe
Profits in the segment improved to £53 million (£48 million).
Amylum, our European cereal sweetener and starch business,
showed improved results due to a combination of better
pricing, volumes (related to good summer weather), and higher
by-product revenues. Results were enhanced by efficiency
improvements and energy conservation efforts, which partially
offset the effect of higher energy prices and increased raw
material and ingredient costs.
In European Sugar, our refineries in London and Lisbon
performed well. The European Union beet sugar regime was
renewed from July 2001. A reduction in export revenues as a
consequence of the removal of the storage levy had a minor
impact on profits. Our beet operations in Central Europe
continued to make satisfactory returns, with better margins
compensating for lower volumes.
Rest of the World
The sale of Zambia Sugar, which was the largest unit in this
segment, was completed on 2 April 2001. In Zimbabwe, ZSR
Corporation remained profitable in local currency but its
contribution fell in Sterling terms. Profits from sugar
production in Vietnam increased with both higher volumes and
margins.
Animal Feed and Bulk Storage
Profit in this sector, now mainly molasses and storage, was £1
million (£2 million), due to a competitive market in the UK.
The molasses business is expected to improve in the second
half year following the normal seasonal trend.
Other Businesses and Activities
Our reinsurance business had a modest exposure to the
terrorist attacks in the USA on 11 September and this,
combined with the mark to market of investments associated
with its business, reduced profits by £6 million.
The Board
Lord Walker retired from the Board at the end of the Annual
General Meeting in August having served the Board with great
distinction since 1990. We thank him again for his outstanding
service and contribution.
Outlook
Substantial progress has been made in our strategy to reshape
Tate & Lyle. The important completion of the disposal of Domino
was announced on 6 November 2001. The integration of Amylum and
Staley continues according to plan.
Overall, trading in this half year has been in line with our
expectations. The outlook for the second half year is positive
notwithstanding increasingly difficult global economic
conditions. We remain committed to improving overall shareholder
returns and rebuilding interest and dividend cover.
Sir David Lees Larry Pillard
Chairman Chief Executive
7 November 2001 7 November 2001
PAGE FOUR OF THIRTEEN
TATE & LYLE
GROUP PROFIT AND LOSS ACCOUNT
Unaudited results for the 6 months to 30 September 2001
---------------------------------------------------------------------
Unaudited for the 6 months Unaud- Audit-
to 30 September 2001 ited ed
resta- resta-
Ongo- West- Contin- Discon ted** ed**
ing ern uing tinued 27 53
acti- Sugar* activi- activi- weeks weeks
vities ties ties Total to 30 to 31
£million £million £million £million £million Sept March
2000 2000
£million £million
---------------------------------------------------------------------
Sales (Note 1)
Group subsidiaries 1,636 75 1,711 246 1,957 1,947 3,827
Share of joint 176 - - 176 175 319
ventures and
associates --------------------------------------------------
1,812 75 1,887 246 2,133 2,122 4,146
==================================================
Group operating profit
before goodwill 100 (1) 99 (18) 81 91 156
amortisation
Goodwill amortisation (4) - (4) - (4) (1) (5)
------------------------------------------------
Group operating profit 96 (1) 95 (18) 77 90 151
Share of operating
profits of joint 16 - 16 - 16 16 29
ventures and associates
------------------------------------------------
Total operating
profit: Group and
share of joint 112 (1) 111 (18) 93 106 180
ventures and associates
Exceptional write
downs on planned sales - - - - - (70) (307)
of businesses
Exceptional
(loss)/profit on sale - - - (2) (2) 5 9
of businesses
Exceptional profit on 6 - 6 - 6 - -
sale of fixed assets
--------------------------------------------------
Profit/(loss) before
interest 118 (1) 117 (20) 97 41 (118)
(Note 2) -----------------------------
Net interest payable (27) (35) (67)
Share of joint
ventures' and (6) (4) (5)
associates' interest -----------------------
Profit/(loss) before 64 2 (190)
taxation
Taxation (19) (24) (40)
-----------------------
Profit/(loss) after 45 (22) (230)
taxation
Minority interests - (5) (6)
-----------------------
Profit/(loss) for the 45 (27) (236)
period
Dividends paid and (26) (28) (86)
proposed
-----------------------
Retained profit/(loss) 19 (55) (322)
=======================
Earnings/(losses) per
share (Note 3)
- basic 9.4p (5.8)p (50.0)p
- diluted 9.4p (5.8)p (50.0)p
-----------------------------------------------------------------------------
Before goodwill amortisation and
exceptional items
Profit before taxation 64 68 113
(£ million)
Diluted earnings per share (penc 9.4p 9.3p 14.8p
* It is planned to dispose of this business, which is therefore
shown separately.
** Comparative figures have been restated following the adoption
of a new accounting standard FRS 19 on deferred taxation,
as described in note 9.
PAGE FIVE OF THIRTEEN
TATE & LYLE
GROUP BALANCE SHEET
Summarised balance sheet as at 30 September 2001
Unaudited Audited
Unaudited restated* restated*
30 Sept 30 Sept 31 March
2001 2000 2001
£ million £ million £ million
-------------------------------------------------------------------
Fixed assets
Intangible assets 162 166 169
Tangible assets 1,414 1,535 1,488
Investments 215 176 203
----- ----- -----
1,791 1,877 1,860
----- ----- -----
Current assets
Stocks 408 375 497
Debtors 478 475 547
Investments and cash at bank 166 176 117
and in hand (Note 6) ----- ----- -----
1,052 1,026 1,161
Creditors - due within one
year
Borrowings (Note 6) (443) (158) (426)
Other (440) (418) (493)
----- ----- -----
Net current assets 169 450 242
----- ----- -----
Total assets less current 1,960 2,327 2,102
liabilities
Creditors - due after more
than one year
Borrowings (Note 6) (571) (856) (654)
Other (2) (7) (3)
Provisions for liabilities (351) (339) (383)
and charges ----- ----- -----
Total net assets 1,036 1,125 1,062
----- ----- -----
Capital and reserves
Called up share capital 123 123 123
Share premium account and 499 496 502
other reserves
Profit and loss account 378 460 383
----- ----- -----
Shareholders' funds 1,000 1,079 1,008
Minority interests 36 46 54
----- ----- -----
1,036 1,125 1,062
===== ===== =====
* Comparative figures have been restated following the adoption of a
new accounting standard FRS 19 on deferred taxation, as
described in note 9.
PAGE SIX OF THIRTEEN
TATE & LYLE
STATEMENT OF CASH FLOWS
For the 6 months to 30 September 2001
Unaudited Unaudited Audited
6 months 27 weeks 53 weeks
to to to
31 March 30 September 30 September
2001 2000 2001
£million £million £million
Net cash inflow from operating 215 195 219
activities (Note 4)
Dividends from joint ventures and 6 7 9
associates
Returns on investment and servicing
of finance ---- ---- ----
Net interest paid (31) (44) (64)
Dividends paid to minority interests (1) (1) (2)
in subsidiary undertakings ---- ---- ----
(32) (45) (66)
Taxation paid (5) (34) (36)
Capital expenditure and financial
investment ---- ---- ----
Purchase of tangible fixed assets (39) (57) (124)
Sale of tangible fixed assets 9 - 5
Purchase of fixed asset investments (15) - (2)
Sale of fixed asset investments - - 1
---- ---- ----
(45) (57) (120)
Acquisitions and disposals ---- ---- ----
Purchase of businesses and - (217) (217)
subsidiaries (net of cash acquired)
Sale of businesses1 10 153 165
Refinancing of existing joint - - (5)
ventures
Sale of interests in joint ventures 1 15 15
and associates ---- ----- ----
11 (49) (42)
Equity dividends paid (58) (42) (68)
---- ---- ----
Net cash inflow/(outflow) before
financing and management of liquid 92 (25) (104)
resources ==== ==== ====
* In addition, £12 million of borrowings were transferred out of the
Group as part of the disposal of subsidiaries in the 6 months to
30 September 2001 (53 weeks to 31 March 2001 - £8 million).
PAGE SEVEN OF THIRTEEN
TATE & LYLE
COMBINED STATEMENT OF TOTAL RECOGNISED
GAINS AND LOSSES AND RECONCILIATION OF
MOVEMENTS IN SHAREHOLDERS' FUNDS
For the 6 months to 30 September 2001
Unaudited Audited
Unaudited restated* restated*
6 months 27 weeks 53 weeks
to to to
30 Sept 30 Sept 31 March
2001 2000 2001
£million £million £million
-------------------------------------------------------------------------
Profit/(loss) for the period 45 (27) (236)
Currency difference on foreign (27) 47 93
currency net investments
Reversal of past revaluation - (7) (7)
----- ----- -----
Total recognised gains/(losses) 18 13 (150)
for the period
Dividends (26) (28) (86)
Issue of shares - 69 69
Goodwill transferred to profit and - 43 193
loss account
----- ----- -----
Net (reduction)/increase in (8) 97 26
shareholders' funds
----- ----- -----
Opening shareholders' funds as 1,100 1,101 1,101
previously reported
Prior period adjustment (as (92) (119) (119)
described in note 9) ----- ----- -----
Opening shareholders' funds 1,008 982 982
restated ----- ----- -----
Closing shareholders' funds 1,000 1,079 1,008
===== ===== =====
* Comparative figures have been restated following the adoption of
a new accounting standard FRS 19 on deferred taxation,
as described in note 9.
PAGE EIGHT OF THIRTEEN
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