Full year results for the year ended 31 March 2022

Issued: Thursday 9 June 2022

HEADLINES

·   Continuing operations (new Tate & Lyle) delivered +18% revenue and +14% profit¹ growth

·   Significant acceleration in innovation with +35% New Product revenue growth

·   Effective management of cost inflation through pricing, productivity and cost discipline

·   Major strategic divestment re-positions Tate & Lyle as growth-focused food & beverage solutions business

·   Acquisition of leading dietary fibre business in China significantly strengthens fortification platform

·   Double-digit reduction in GHG emissions in last two years² and new carbon net zero commitment by 2050

·   Strong balance sheet enables investment for growth and payment of £500m special dividend in May 2022

FINANCIAL SUMMARY³

NICK HAMPTON, CHIEF EXECUTIVE SAID:

"This has been a landmark year for the company. New Tate & Lyle delivered double-digit organic revenue growth across all regions and double-digit profit¹ growth despite significant inflation across the supply chain. We also passed a major strategic milestone by refocusing the Group on our faster growing speciality food and beverage solutions business. To do this during a global pandemic, while serving our customers, accelerating innovation and living our purpose is a testament to the resilience, ambition and agility of all my colleagues.

Tate & Lyle is now a focused global leader in sweetening, mouthfeel and fortification, and very well-placed to benefit from growing consumer demand for healthier food and drink. Our strong balance sheet allows us to invest in organic and inorganic growth and the acquisition of Quantum Hi-Tech, a leading dietary fibre business in China, demonstrates our ability to further strengthen our portfolio and deliver on our growth agenda.

We entered the 2023 financial year with strong top-line momentum, innovation gathering pace and our productivity programme continuing to deliver benefits. Customer demand remains high and while the conflict in Ukraine has caused significant inflation in raw material, energy and logistics costs globally, we are taking actions to mitigate these pressures including supplementary pricing. 

For the year ending 31 March 2023, we expect further progress with adjusted profit before tax in line with market expectations and revenue growth reflecting top-line momentum and the pricing through of higher input costs.

In the near term, our focus remains on continuity of supply, serving our customers and maintaining our financial strength and strategic progress. We have emerged from the pandemic a stronger, more ambitious business, and are excited about our future growth potential."

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1 Adjusted profit before tax for continuing operations

2 Scope 1 and 2 absolute greenhouse gas (GHG) emissions in total operations in two years from the baseline of year ended 31 December 2019

3 Continuing operations is Food & Beverage Solutions (including European Primary Products business and certain stranded costs); Sucralose; and Central costs.  Discontinued operations is the disposed Primary Products business (now called Primient). Total operations are continuing and discontinued operations combined.

4 The adjusted results for the year ended 31 March 2022 exclude exceptional items, amortisation of acquired intangible assets, the tax on those adjustments and tax items that are themselves exceptional. The adjusted results of discontinued operations have also been adjusted to exclude the impact of IFRS 5 held for sale accounting. A reconciliation of statutory and adjusted information is included in Note 3 and Note 8 to the Financial Information. Growth percentages are calculated on unrounded numbers.  Changes in adjusted performance metrics are in constant currency throughout this statement.

HIGHLIGHTS¹

Continuing operations (new Tate & Lyle) delivers strong revenue and profit growth

·   Revenue +18% and adjusted profit before tax +14%

·   Food & Beverage Solutions maintains positive top-line momentum:

−   Volume +5% with particularly strong performance from Asia, Middle East, Africa and Latin America

−   Revenue +19% with double-digit organic growth across all regions; 2ppts growth from acquisitions

−   Profit² +12% benefitting from positive mix; profit² +7% including Primary Products Europe at £160m

·   Robust performance from Sucralose:

−   Volume +15% led by strong demand in beverages and the benefit of production optimisation

−   Revenue +13% with higher volume partially offset by customer mix

−   Profit² +15% at £61m

·   Adjusted diluted EPS +4% reflecting a significantly lower adjusted effective tax rate in the prior year

·   Pro-forma adjusted diluted EPS³ at 40.0p assumes full-year effect of share consolidation

·  Free cash flow of £72m (2021 - £153m) despite higher working capital requirements of £41m due to business separation planning

Significant acceleration in innovation and New Product revenue growth

·   New Product revenue +35% reflecting strong demand for sugar reduction and clean label solutions

·   New Products represent 14% of Food & Beverage Solutions revenue (16% ex-Primary Products Europe)

·   Integration of tapioca and stevia businesses acquired in the 2021 financial year progressing well

Major strategic milestone passed to re-position Tate & Lyle as a growth-focused business

·   Completed sale of controlling stake in Primary Products in the Americas creating Primient joint venture

·   Tate & Lyle re-positioned as a focused global leader in sweetening, mouthfeel and fortification

Acquisition of Quantum Hi-Tech, a leading dietary fibre business in China

·   Significantly strengthens fortification platform and solutions offering for customers

·   Further expands business and presence in higher growth markets of China and Asia

Effective management of cost inflation in year through pricing, productivity and cost discipline

·   Continuing operations: £100m inflation mitigated by pricing, productivity, cost discipline and volume/mix

·   Six-year productivity programme to deliver US$150m benefits achieved two years ahead of schedule

Profit⁴ from total operations (Group) in-line with last year due to weaker discontinued operations

·   Discontinued operations (Primient) volume in-line; adjusted profit after tax (9)% lower at £146m

−    Sweeteners & Starches profit² down (42)% as operational disruption outweighed firm demand

−    Commodities profit² 52% higher benefiting from exceptionally strong market conditions

·   Statutory profit after tax (7)% lower at £236m

−    Exceptional costs of £96m partially offset by £83m benefit from held for sale accounting adjustments

·   Adjusted diluted EPS (4)% lower at 56.0p; profit before tax in line with prior year and tax rate higher

·  Net cash from operating activities of £103m, £(266)m lower mainly reflecting £(217)m higher working capital and £(60)m of exceptional cash costs (mainly Primient disposal related)

·   Return on capital employed of 14.9%, down 240bps impacted by discontinued operations lower profits

·   Net debt £209m higher at £626m at 31 March 2022; net debt to EBITDA ratio 1.3x pre-Primient closing

Strong balance sheet enables investment for growth and c.£500m special dividend paid in May

·  Gross cash proceeds from sale of Primient business of approximately £1.1bn (including favourable working capital adjustment to recover working capital investment) subject to post-completion adjustments

·   Returned c.£500m to shareholders in May 2022 by a special dividend and associated share consolidation

·   Recommended final dividend of 12.8p reflects new earnings base and associated share consolidation

Good progress on sustainability programme and building a more agile and inclusive culture

·   Scope 1 and 2 absolute GHG emissions 12% lower⁵; new commitment to be carbon net zero by 2050

·   Building agile, ambitious and diverse culture; 42% of top 500 managers in new Tate & Lyle are women

·   New targets established to progress equity, diversity and inclusion over next 2, 5 and 10 years

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1 Adjusted metrics percentage changes are in constant currency

2 Adjusted operating profit

3 Pro-forma EPS calculation shown in Additional Information at the end of this statement

4 Adjusted profit before tax

5 Reduction against baseline of year ended 31 December 2019; total operations

MAJOR MILESTONE PASSED IN STRATEGIC TRANSFORMATION

Tate & Lyle re-positioned as a growth-focused speciality food and beverage solutions business

Following the sale of a controlling stake in Primary Products in the Americas, now called 'Primient' (this transaction is explained in more detail later in this statement), Tate & Lyle has been re-positioned as a leading global speciality food and beverage solutions business focused on faster growing markets.  With our leading expertise in sweetening, mouthfeel and fortification, this provides the opportunity to further:

·   Benefit from growing global consumer demand for healthier food and drink

·   Accelerate growth through a step-up in R&D investment and innovation

·   Increase the focus on solutions development to support and strengthen customer relationships.

During the year, we made good progress accelerating growth in Food & Beverage Solutions and positioning the business for future growth:

·   Double-digit revenue growth in each region with New Product revenue up 35% in constant currency

·   New Product revenue is 14% of Food & Beverage Solutions revenue (16% ex-Primary Products Europe)

·   Value of wins from new business pipeline increased by 23%

·   10 New Products and more than 30 stevia-based sweetener solutions launched from innovation pipeline

·   Agreement to acquire Quantum Hi-Tech (Guangdong) Biological Co., Ltd, a leading dietary fibre business in China

·   Projects to build growth capacity in progress with total capital expenditure in 2023 financial year expected to be in the £90 million to £100 million range.

We plan to increase investment in R&D and innovation to more than 4% of Food & Beverage Solutions revenue each year (year ended 31 March 2022 - 3.4%), and expect to grow revenue from New Products to around 20% of Food & Beverage Solutions revenue by the financial year ending 31 March 2027.

With our new strategic focus, positive top-line momentum, and plans to increase investment in R&D and innovation, we are confident we have a strong platform to drive organic growth, supplemented by acquisitions. Our ambition for the five years ending 31 March 2027 is to deliver:

·   Organic revenue growth of mid-single digit percent per annum

·   Operating margin expansion of at least 50 to 100 basis points per annum on average

·   Organic return on capital employed improvement of 50 basis points per annum on average.

The performance of Food & Beverage Solutions over the four years ended 31 March 2022 with a compound annual revenue growth of 8%¹ validates this ambition and demonstrates the potential of the new Tate & Lyle as a growth-focused business. 

Primient well-positioned for the future

Primient is a leading producer of food and industrial ingredients made from plant-based, renewable sources. It has a strong future as a privately owned business, supported by Tate & Lyle as owners of a 49.9% interest, and controlled by our partner KPS Capital Partners, LP (KPS).

KPS has a proven track record of successfully creating value in manufacturing and industrial businesses. As partners, we have worked closely together since the transaction was announced to set up Primient for the future and the business is now well-positioned to pursue its strategic growth opportunities, with a strong and established management team.

The twenty-year supply agreements we have in place will ensure both parties continue to work together for the benefit of the two businesses. Tate & Lyle will also benefit from an ongoing cash dividend stream from Primient and potential future value creation from the retained equity stake.

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1 Excludes Sucralose and retained European Primary Products business

OVERVIEW OF THE YEAR

Business environment and trading

The year saw improved customer demand in many of our key markets although the trading environment remained challenging as we managed significant supply chain disruption, evolving Covid-19 restrictions, rapidly increasing cost inflation and, latterly, uncertainty related to the conflict in Ukraine.

In continuing operations (new Tate & Lyle), Food & Beverage Solutions saw strong demand as in-home consumption remained robust and out-of-home consumption continued to recover. The business continues to benefit from increasing global consumer awareness of the importance of a healthier diet.  With its broad portfolio and technical capabilities in sweetening, mouthfeel and fortification, Food & Beverage Solutions provides customers with solutions to reduce sugar, calories and fat, and add fibre to their products.  These capabilities, together with good commercial execution including a positive 2022 calendar year pricing round, and the impact of acquisitions, supported strong top-line delivery in the year.  Operating profit benefited from strong mix management, cost discipline in the face of inflationary headwinds and productivity benefits mitigated by selective investments in future growth.

Sucralose benefited from a combination of recovering out-of-home consumption leading to strong volume growth in beverages, increased volume from the optimisation of production at our plant in McIntosh, Alabama, and being the only sucralose plant based outside China.

In the continuing business (new Tate & Lyle), we saw cost inflation totaling £100 million during the year in areas such as energy, labour, consumables and transportation.  This was mitigated by a combination of pricing, productivity benefits, cost discipline, and volume growth and mix improvement.

In discontinued operations (Primient), sweetener volume was in line with the prior year with stronger demand offset by operational disruption including from the installation of new gas turbines at the facility in Lafayette, Indiana, to increase long-term efficiency and environmental performance. This, together with cost inflation particularly in the third quarter of the financial year (before calendar year contracts were renewed in the fourth quarter), resulted in lower profits.  Commodities saw higher profits due to exceptionally strong market conditions.

We entered the 2022 calendar year with renewed customer contracts that offset expected inflation.  Since then, the conflict in Ukraine has caused significant further inflation in raw material (including corn), energy and logistics costs globally, especially in Europe.  A programme of supplementary price increases has been implemented across our main markets to recover incremental input costs together with a continued focus on productivity and cost control. To ensure supply continuity we have committed agreements in place for key production inputs such as corn and energy covering the majority of the first half of the 2023 financial year.

Delivering strategic progress

Growth within new Tate & Lyle is being driven by the delivery of our strategic growth framework. This framework is centered on four pillars - market focus; portfolio expansion; accelerate innovation; and creating integrated solutions for customers.  Progress in each pillar during the year is summarised below.

Market focus

·   We aim to maximise opportunities in all our markets, to grow above the market in developed markets and accelerate growth in the faster growing markets of Asia, Middle East, Africa and Latin America.

·   We focus on four global categories - dairy, beverage, bakery and soups, sauces and dressings - as well as two or three regional categories where we have local expertise such as confectionery and snacks. This category focus, combined with our expertise in sweetening, mouthfeel and fortification, provides a bespoke and attractive offering for customers.

·   During the year, in North America revenue from bakery and snacks grew by 19% and from beverages by 12% supported by demand for our fibre and stevia solutions.  In Europe, dairy grew by 14% helped by demand for our clean label solutions.  In Asia, Middle East, Africa and Latin America, revenue grew by 25% with good progress across our focus categories as customers continued to demand solutions that reduce sugar, calories and fat in their products.

Portfolio expansion

·   The integration of the two businesses acquired at the end of the 2021 financial year (Sweet Green Fields, a leading global stevia solutions business, and Chaodee Modified Starch Co., Ltd. a speciality tapioca food starch business in Thailand) is progressing well. 

−   The expanded stevia business delivered revenue 92% higher. To meet growing customer demand, we are investing in our stevia facility in Anji, China and our production line in the US to increase capacity, and diversifying leaf sourcing beyond China.

−  The three-year capital investment programme at our facility in Thailand to significantly increase capacity of higher functionality tapioca starches is underway.

·  In March 2022, we announced the acquisition of Quantum Hi-Tech (Guangdong) Biological Co., Ltd (Quantum), a leading prebiotic dietary fibre business in China for a total consideration of US$237 million. Quantum has a high-quality portfolio of fructo-oligosaccharides (FOS) and galacto-oligosaccharides (GOS), and this acquisition strengthens our position as a leading global player in the fast-growing global dietary fibres market.  It also strengthens our fortification platform, enhances our integrated solutions capabilities, and significantly extends our presence and customer offering in China and Asia.

Accelerate Innovation

·  We continued to invest in R&D by building our strong in-house scientific expertise and with external partners through open innovation to create a leading portfolio of New Products and drive top-line growth.

·   Investment in R&D increased to 3.4% of Food & Beverage Solutions revenue.

·   New Product revenue grew by 35% with the sweetener platform up 97% driven by high demand for stevia solutions. Revenue from our mouthfeel platform was 19% higher reflecting consumer demand for cleaner labels.

·   In April 2022, we acquired Nutriati, an ingredient technology business developing and producing chickpea protein and flour, expanding our capability to offer customers sustainable, plant-based solutions.

Integrated Solutions

·   We continued to focus on creating integrated science-based solutions for our customers to strengthen our position as their growth partner. Our deep understanding of how ingredients interact across the food matrix in our core categories, together with our leading product portfolio and technical expertise, allows us to provide customers with a bespoke solutions offering.

·  We continue to invest in accelerating our solutions offering by strengthening our customer-facing capabilities in areas such as sensory, prototyping and category and consumer insights. Pilot programmes are underway to further develop our ways of working with customers and build stronger solutions-based partnerships.

·   In October 2021, we opened a new Customer Innovation and Collaboration Centre in Dubai to serve customers in the Middle East and Africa region, where consumer demand for healthier food and drink is increasing. The Centre's state-of-the-art technology is accelerating the innovation process for customers. In May 2022, we opened another Customer Innovation and Collaboration Centre in Santiago, Chile.

·   In April 2021, to support our solutions offering, we launched the Stabiliser University™, an online modular course designed to help formulators and food scientists solve even the toughest stabiliser formulation challenges. This follows the success of three other curriculums - Texture University™, Sweetener University™ and Fibre University™ - which have attracted thousands of attendees worldwide.

Delivering on our near-term priorities as we entered the 2022 financial year

Looking after our colleagues and communities

·   Appropriate Covid-19 safety protocols remain in place to ensure our workplaces are safe for our people.

·   Established an Employee Resource Group to provide support and information on mental health.

·   Created a new team dedicated to progressing equity, diversity and inclusion.

·   Guided by our purpose, we are actively supporting humanitarian relief efforts for the Ukrainian people, in particular by supporting charities that are providing food, clothes and shelter to refugees arriving in the regions of Poland and Slovakia where we have operations.

Strengthen our relationships with customers

·   Partnered with Coca-Cola, Nutrição em Pauta, a leading nutrition education platform in Brazil, and the Brazilian Society for Food and Nutrition, to offer health and food industry professionals a free-to-access digital course to explain the origins, safety and efficacy of low and no calorie sweeteners.

·   Partnered with the Kellogg's Nutrition and Health Institute to launch an online course to share the latest science on dietary fibres with health clinicians, nutritionists, and industry professionals in Latin America. 

Continue to progress our strategy

·   On 12 July 2021, we entered into an agreement to sell a controlling stake in a new company and its subsidiaries (Primient), comprising our Primary Products business in North America and Latin America and our interests in the Almidones Mexicanos S.A de C.V and DuPont Tate & Lyle Bio-Products Company, LLC joint ventures, to KPS Capital Partners, LP (KPS) (the Transaction). The Transaction was approved by Ordinary Shareholders at a general meeting on 30 September 2021 and completed on 1 April 2022.  As a result, KPS holds a 50.1% interest in Primient and has Board and operational control. Tate & Lyle holds a 49.9% interest in Primient.

·   Further details of how we are progressing our strategy is in the 'Delivering strategic progress' section.

Maintain our financial strength

·   We continued to execute against our productivity programme to deliver US$150 million of benefits over a six-year period ending 31 March 2024. In total operations, US$34 million of benefits were delivered during the year of which US$26 million was realised from projects in our operations and US$8 million from SG&A savings.  Total benefits since the programme started are now US$158 million, delivering the targeted benefits two years ahead of schedule. 

·   Productivity remains an important part of the culture of the new Tate & Lyle, helping to drive further efficiencies in our business. In continuing operations, we are targeting a further US$10 million of benefits in the 2023 financial year.

·   Free cash flow from continuing operations was lower at £72 million, due in part to rising inflation later in the financial year and decisions we took to preserve service to customers ahead of closing the Primient transaction. Nonetheless, the Primient transaction has left Tate & Lyle with a strong balance sheet ready to support investment for growth with pro-forma¹ net leverage of less than 1.0x net debt to EBITDA.

DIVIDENDS

Proceeds from sale of controlling stake in Primient

On completion of the Transaction, Tate & Lyle received gross cash proceeds of approximately £1.1 billion (US$1.4 billion), taking into account estimates of cash, debt, debt-like items and working capital balances at completion. After one-off transaction and separation costs, as well as estimated tax liabilities associated with the Transaction, net proceeds were approximately £0.9 billion (US$1.2 billion) subject to customary post-completion adjustments in accordance with the Transaction documentation.

£500 million special dividend and associated share consolidation

Having taken into account all relevant considerations, the Board decided to return approximately £500 million to ordinary shareholders by way of a special dividend of £1.07 per existing ordinary share.  To maintain comparability, so far as possible, of the Company's share price before and after the special dividend, it was accompanied by a consolidation and division of the Company's ordinary share capital resulting in ordinary shareholders receiving six new ordinary shares for every seven existing ordinary shares they held.  Information about the special dividend and share consolidation was set out in the shareholder circular dated 7 April 2022. The special dividend and share consolidation were approved by shareholders at a General Meeting on 26 April 2022.  The share consolidation applied to ordinary shareholders on the Register on 29 April 2022, while the special dividend was paid on 16 May 2022.

Final dividend for year ended 31 March 2022

As previously communicated, the sale of the controlling stake in Primient reduces the Group's earnings base by around 50%. As a result, the Board has decided to reduce the dividend to reflect this new base.  The pay-out ratio (dividend cost compared to the Group's earnings base) has been maintained at the same level, and the Board intends to operate a progressive dividend policy from the new base. The share consolidation reduced the number of ordinary shares in issue, allowing dividends to be paid over a smaller number of shares, with the result that dividends per share reduce by less than the 50%. The Board is recommending a final dividend for the year ended 31 March 2022 of 12.8p (2021 - 22.0p) per share, bringing the full year dividend to 21.8p per share (2021 - 30.8p).  This will be paid on 5 August 2022 to all shareholders on the Register on 1 July 2022. As well as the cash dividend option, shareholders will be offered a Dividend Reinvestment Plan alternative.  The interim dividend for the year ending 31 March 2023 is expected to be similarly adjusted to reflect the new earnings base.

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1 Pro-forma leverage on 1 April 2022 calculated after: completion of Primient disposal; the £500 million (approx.) special dividend paid to shareholders and the acquisition of Quantum Hi-Tech (US$237 million).

PURPOSE

New purpose statement

With the challenges of Covid-19, the past year has made us even more determined to deliver on our purpose. As the new Tate & Lyle, we will be more ambitious with our purpose and positively impact the world through the science of food. So that is why, while our three purpose pillars remain unchanged, we have evolved our purpose statement from 'Improving Lives for Generations' to 'Transforming Lives through the Science of Food'.

We remain committed to delivering our existing 2025 purpose targets for our Supporting Healthy Living and Building Thriving Communities purpose pillars - information on progress against our targets for these two purpose pillars will be published in our Annual Report 2022. Progress on our targets for our Caring for our Planet purpose pillar are set out below.

Good progress against our 2030 sustainability targets and commitments

In May 2020, we announced a set of ambitious environmental targets for 2030 to reduce our greenhouse gas emissions (GHG), beneficially use all the waste we generate, reduce water use and continue to support sustainable agriculture. We also committed to eliminate the use of coal in all our operations by 2025. In September 2020, our Scope 1 and 2 and Scope 3 absolute GHG emissions reduction targets were validated as science-based by the Science Based Targets initiative, meaning they are in line with the goals of the Paris Agreement.  

In light of the separation of the Tate & Lyle and Primient businesses, we have recalculated the 2019 baseline for our environmental targets (details will be in our Annual Report 2022).  Despite the material change in Tate & Lyle's operational footprint, we remain committed to delivering our existing targets for GHG emissions, waste and water use by 2030.

In both total operations (Tate & Lyle Group) and continuing operations (new Tate & Lyle), we made good progress against our 2030 targets in the second year of measurement against our 2019 baseline, as shown in the table below.

1    In the two calendar years from the baseline of the year ended 31 December 2019

The 12% reduction in Scope 1 and 2 absolute GHG emissions in total operations was driven by the completion of projects to replace coal-fired boilers with natural gas-fired heat and power systems at the plants in Lafayette, Indiana and Decatur, Illinois (both now part of Primient).  Both projects were the final stage of a multi-year US$150 million capital investment programme to reduce GHG emissions and increase operational efficiency in our plants.  With the completion of these projects, we delivered on our commitment to eliminate the use of coal in all our operations four years ahead of schedule. 

During the year, we continued to operate our sustainable corn programme in the US Midwest with Truterra LLC, the only one of its kind in our industry. In line with our commitment to maintain sustainable acreage equivalent to the volume of corn we buy annually, we supported 1.4 million acres of sustainable corn in the year. We also expanded our sustainability programme for stevia farmers in China, developed in partnership with Earthwatch Europe and the Nanjing Agricultural University, which helps growers lower their environmental impact and improve their economic returns. With the decreased concentration of corn-based products in the new Tate & Lyle, we are working on expanding our sustainable agriculture commitment to cover more crops than corn, such as stevia.

In addition to our existing targets, we are setting a new target that, by 2030, we will purchase renewable energy to supply 100% of the electricity we use, therefore eliminating our Scope 2 GHG emissions. We will report our progress on this new target next year.

Tate & Lyle commits to being carbon net zero by 2050

During the year, we carried out an analysis of what a net zero carbon emissions pathway would look like for Tate & Lyle, including comprehensive Scope 1 and 2 decarbonisation reviews at our four largest plants (after business separation) and an in-depth review of our Scope 3 emissions. On the basis of this work, Tate & Lyle is committing to being carbon net zero by 2050. More details will be provided in our Annual Report 2022.

New targets and commitments for equity, diversity and inclusion

We believe people are at their best when they feel they can be themselves, and businesses are at their best when everyone can be seen, heard and valued.  This is why equity, diversity and inclusion is a key part of our purpose and a business-wide priority. During the year we launched a set of actionable targets and commitments for the next two, five and ten years to progress equity, diversity and inclusion inside our business and also working with our customers, suppliers and local communities.  These targets, which are set out in full in our Purpose Report 2021 (on our website), include:

·   By 2025, we will achieve gender parity in leadership and management roles

·   By 2030, teams at all levels will be representative of their local communities

·  By 2030, we will expand our spend with diverse suppliers globally, with interim goals for North America supplier diversity by 2027.

We are already making positive progress. On gender equality, for example, in April 2021 our UK gender pay gap was -1.7% in favour of women. Currently, 56% of our Executive Committee and 45% of our Board are women. In addition, of the top 500 managers in new Tate & Lyle, 42% are women.

BOARD AND MANAGEMENT

Changes to the Board of Directors

·      Patrícia Corsi joined the Board as a non-executive director on 1 May 2021.

·     Dawn Allen joined the Board on 16 May 2022 as Chief Financial Officer.  She replaced Vivid Sehgal, who stepped down from the Board on 3 November 2021.

·      Dr Isabelle Esser joined the Board as a non-executive director on 1 June 2022.

Changes to the Executive Committee

·    William 'Bill' Magee was appointed as President, North America and as a member of Tate & Lyle's Executive Committee, with effect from 1 October 2021.

·      Jim Stutelberg, President, Primary Products stepped down from the Executive Committee to take up his new role as Chief Executive, Primient on 1 April 2022.

·      Vivid Sehgal stepped down from the Executive Committee on 31 December 2021.

OPERATING PERFORMANCE - CONTINUING OPERATIONS (NEW TATE & LYLE)

Reporting changes

Following the Transaction to sell the controlling stake in Primient which was announced in July 2021, Primient was classified as held for sale and met the definition of a discontinued operation under IFRS 5. As a result, Primient is treated as a discontinued operation for all of the year ended 31 March 2022 and this classification has been adopted in this results statement. The continuing operations comprise: Food & Beverage Solutions (into which the European Primary Products business, which is not part of the Transaction, and certain stranded costs have been combined); Sucralose; and Central costs. The results for the comparative period have been restated on a consistent basis. From 1 April 2022 our interest in Primient will be reported as a joint venture.

The adjusted results for the year ended 31 March 2022 have been adjusted to exclude exceptional items, amortisation of acquired intangible assets, the tax on those adjustments and tax items that are themselves exceptional. A reconciliation of statutory and adjusted information is included in Note 3 to the Financial Information. Growth percentages are calculated on unrounded numbers.  Changes in revenue and adjusted operating profit are in constant currency. 

1 Includes loss from the retained European Primary Products business for the year ended 31 March 2022 £(21) million loss (2021 - £(14) million loss) and cost reallocations (stranded costs) of £(9) million (2021 - £(7) million).

FOOD & BEVERAGE SOLUTIONS

Excellent top-line growth

Volume increased by 5% with revenue 19% higher in constant currency at £1,212 million. Customer demand for ingredients used for in-home consumption, such as packaged and shelf-stable foods, remained strong, supplemented by increasing demand for ingredients used in food and drink consumed out-of-home.  Consumer demand for healthier food and beverages that are lower in sugar and calories, with cleaner labels and added fibre, also continued to grow. Strong mix management, together with pricing through of input cost inflation and higher corn costs contributed 12ppts of price/mix leverage. Acquisitions contributed 2ppts to revenue growth. European Primary Products is now included in the Food & Beverage Solutions division.

Looking through the impact of the Covid-19 pandemic and before the impact of reporting changes, compared to the year ended 31 March 2020, volume was 10% higher and revenue 28% higher.

Adjusted operating profit was 7% higher in constant currency at £160 million with the benefit of strong mix management, cost discipline in the face of inflationary headwinds and productivity benefits mitigated by selected investments in future growth.  Input cost inflation impacted profit, especially in the final quarter of the 2021 calendar year, before customer contracts for the 2022 calendar year were renewed that offset expected inflation while seeking to at least maintain absolute unit margins. Operating losses in the European Primary Products business increased by £7 million to £21 million reflecting the impact of higher corn and other input costs.  Excluding this, adjusted operating profit for the division was 12% higher in constant currency. The effect of currency translation decreased revenue by £50 million and adjusted operating profit by £7 million.

North America

Top-line momentum continued with volume 2% higher as strong demand for in-home consumption continued supported by improving out-of-home demand, especially for customers in the food service channel.  Demand for solutions which make food and beverage healthier remained strong in our focus categories in North America, driving volume growth ahead of the overall food and beverage market (which remained in line with the prior year).  Growth was driven by good performance across categories such as beverage, confectionery, dairy,  bakery and nutrition especially for solutions using our fibre, no- or low-calorie sweetener and clean label texturant portfolios.

Revenue was 16% higher in constant currency at £542 million. Significant volume to revenue growth leverage reflects good mix with particularly strong growth from the fibre portfolio and New Products, the impact of acquisitions and the pricing through of input cost inflation. Revenue for New Products increased by 43% in North America, with high customer demand for stevia and allulose sweeteners and fibre solutions.

Asia, Middle East, Africa and Latin America

Volume was 15% higher reflecting double-digit growth in each region, the impact of acquisitions and a comparative period impacted by the pandemic. Revenue increased by 25% in constant currency to £325 million.  Revenue growth was strong in each region benefiting from good mix and pricing, higher volume and the impact of acquisitions.

In Asia, revenue growth was strong in the South East and North Asia, with both benefiting from customers rebuilding inventory after the pandemic, together with good revenue growth in both tapioca and stevia. In China, revenue was slightly higher as good demand in some dairy sub-categories and stevia demand was partially offset by the exit from some lower margin business.

In March 2022, we agreed to acquire Quantum Hi-Tech (Guangdong) Biological Co., Ltd (Quantum), a leading prebiotic dietary fibre business in China.  Quantum will strengthen our fortification platform, enhance our integrated solutions capabilities, and extend our presence and customer offering in China and Asia.

In Latin America, sugar reduction solutions for customers addressing new front-of-pack labelling regulations accelerated growth in the Mexico and Central American region, while growth was also robust in southern Latin America driven by stevia performance.  In Brazil, revenue was lower reflecting a sustained impact from the pandemic.  In Middle East and Africa, revenue grew strongly reflecting good performance in the United Arab Emirates, following the opening of our new Customer Innovation and Collaboration Centre in Dubai in the year, and also in Turkey and South Africa.

Europe

Volume was 4% higher.  Revenue for the region was £345 million including £101 million from the retained European Primary Products business. Revenue was 19% higher in constant currency both before and after the inclusion of the European Primary Products business.  Revenue growth benefited from strong performance in the beverage, bakery and confectionery categories, good mix management, the pricing through of input cost inflation and the impact of the pandemic in the prior year.  European Primary Products revenue growth reflected higher pricing.

New Products

Revenue from New Products (products launched in the last seven years) increased by 35% in constant currency to £173 million, representing 14% of Food & Beverage Solutions revenue (16% excluding European Primary Products), with revenue growth across the three platforms of sweeteners, mouthfeel and fortification.  Acquisitions, particularly the Sweet Green Fields stevia business, helped to accelerate New Product revenue growth.

The sweeteners platform delivered exceptionally strong performance with revenue nearly doubling in the year driven mainly by demand for stevia solutions.  Stevia is an important natural sweetening ingredient for customers and consumers and our stevia solutions are used to reduce sugar and calories in products across a range of categories such as beverage, dairy, confectionery and bakery.  Revenue in the mouthfeel platform also grew strongly reflecting good demand for clean label and higher functionality tapioca starches.

SUCRALOSE

Robust demand

Sucralose volume increased by 15% driven by strong customer demand in the beverage category as out-of-home consumption recovered and the benefit of optimisation of production at our facility in Alabama. Industry demand for sucralose continues to grow in support of sugar reduction initiatives, while the strong demand for our sucralose also reflected high customer service levels in a challenged global supply chain environment.

Revenue increased by 13% in constant currency to £163 million reflecting strong volume growth partially offset by the modest impact of customer mix.

Looking through the impact of the Covid-19 pandemic, compared to the year ended 31 March 2020, volume was 16% higher and revenue 12% higher.

Adjusted operating profit at £61 million was 15% higher in constant currency reflecting both operational leverage of higher volume and input cost inflation.  Currency translation decreased revenue by £8 million and adjusted operating profit by £3 million.

The optimisation of production is expected to continue in the 2023 financial year generating small volume growth opportunities and creating mitigation for modest pricing headwinds and ongoing input cost inflation.

OPERATING PERFORMANCE - DISCONTINUED OPERATIONS (PRIMIENT)

The adjusted results for the year ended 31 March 2022 have been adjusted to exclude exceptional items, amortisation of acquired intangible assets, the tax on those adjustments and tax items that are themselves exceptional. Adjusted results for discontinued operations have also been adjusted to exclude the impact of IFRS 5 'held for sale' accounting. A reconciliation of statutory and adjusted information is included in Note 8 to the Financial Information. Growth percentages are calculated on unrounded numbers.  Changes in revenue and adjusted operating profit are in constant currency. 

1 Excludes European Primary Products, which has been retained.  Reflects cost reallocations (stranded costs) transferred to Food & Beverage Solutions reflecting separation of the businesses (see Note 3).

2 Adjusted results for the former Primary Products operating segment which included European Primary Products, consistent with how the Group disclosed the results of the Primary Products operating segment in prior years.

A challenging year

Volume was in line with the prior year with sweetener volume also in line and industrial starch volume 8% higher.  Sweetener volume benefited from improved out-of-home demand for beverages but was impacted by operational and wider supply chain disruption.  Industrial starch volume benefited from its strategy to focus on packaging markets as well as a weak prior year impacted by Covid-19. Revenue at £1,757 million increased by 15% in constant currency reflecting the pass through of higher corn costs and significantly higher revenue from Commodities due to higher co-product prices.

Looking through the impact of the Covid-19 pandemic and before reporting changes, compared to the year ended 31 March 2020, volume was 5% lower and revenue was 16% higher.

Adjusted operating profit was 16% lower in constant currency at £142 million.  Adjusted operating profit in Sweeteners and Starches at £68 million was 42% lower in constant currency reflecting increased costs in our operations including productivity-related operational disruption at the Lafayette, Indiana facility of £6 million, and other costs from global supply chain pressures, partially mitigated by benefits from the productivity programme.  Input cost inflation impacted adjusted operating profit, especially in the final quarter of the 2021 calendar year, before customer contracts for the 2022 calendar year were renewed that offset expected inflation.  Commodities adjusted operating profit at £74 million was 52% higher in constant currency reflecting exceptionally strong pricing in North American commodities markets.

Currency translation decreased revenue by £81 million and adjusted operating profit by £8 million.

Sweeteners

Volume was in line with the prior year as out-of-home consumption continued to recover after declining during Covid-19 lockdowns.  The benefit of recovering demand was offset by the impact of operational disruption. Volume for customers in the domestic US market increased slightly, while exports to Mexico declined.

Industrial Starches

Volume was 8% higher as demand for paper and packaging recovered compared to weaker demand in the prior year. We continued to pursue our strategy to partner with customers focused on higher growth segments of the packaging market and more sustainable, plant-based packaging.

Commodities

Commodities delivered adjusted operating profit of £74 million, 52% higher in constant currency.  Supply chain capacity concerns positively impacted North American commodities pricing driving co-product recoveries higher, especially in corn oil and corn gluten feed. Dynamics in the US ethanol market also improved, with pricing stronger on increased industry demand.