Notes to the consolidated financial statements

General information

The principal activities of Tate & Lyle PLC are the development, manufacture and marketing of food and industrial ingredients that have been made from renewable resources. The Group operates more than 45 production facilities and in numerous partnerships and joint ventures throughout Europe, the Americas and South East Asia.

The Company is a public limited company incorporated and domiciled in the United Kingdom. The Company has its primary listing on the London Stock Exchange.

Basis of preparation

These consolidated financial statements are presented on the basis of International Financial Reporting Standards (IFRSs) adopted by the European Union and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) and have been prepared in accordance with the Listing Rules of the UK Financial Services Authority and the Companies Act 2006, as applicable to companies reporting under IFRS.

These consolidated financial statements have been prepared in accordance with the accounting policies set out in Note 2 and under the historical cost convention, except where modified by the revaluation of certain financial instruments and commodities.

These consolidated financial statements are presented in pounds sterling, which is the Group’s presentational currency.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity and areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3.

The financial information for the year ended 31 March 2009 is derived from the statutory financial statements for that year, except certain comparative information has been re-presented to conform with the current year presentation.

In addition in accordance with IAS 1 (revised), the Group has re-presented the following comparative information to conform with current year presentation. Finance income and finance expense in the income statement for the year ended 31 March 2009 have been re-presented to disclose £17 million of the receipts and payments under interest rate swaps net, as opposed to gross, so as to reflect the economic substance of the underlying derivatives. The associated cash flows have also been re-presented.

The Group has also re-presented certain derivatives held for trading in the statement of financial position from current assets or liabilities to non-current assets or liabilities based upon contractual maturity date. £13 million of assets and £15 million of liabilities have been re-presented. There is no overall effect on the Group’s profit for the year, equity or net increase in cash and cash equivalents from these re-presentations.

There is no overall effect on the Group’s income statement, net assets or overall cash flows from continuing operations from these re-presentations.

Use of adjusted measures

Tate & Lyle presents adjusted profit before tax and adjusted earnings per share information. These measures are used by Tate & Lyle for internal performance analysis and incentive compensation arrangements for employees. The terms ‘adjusted’ and ‘exceptional items’ are not defined terms under IFRS and may therefore not be comparable with similarly titled measures reported by other companies. They are not intended to be a substitute for, or superior to, GAAP measurements of profit. The term ‘adjusted’ refers to the relevant measure being reported, excluding exceptional items and amortisation of intangible assets arising on acquisition of businesses. A reconciliation of statutory to adjusted information is provided in Note 42.

New IFRS standards and interpretations adopted

From 1 April 2009 the Group has adopted the following new and amended IFRSs and IFRIC interpretations:

IFRS 8 Operating Segments replaces IAS 14 Segment Reporting. IFRS 8 takes the management view to determine the operating and reportable segments, rather than the risks and reward model and the primary and secondary segments required by IAS 14. The impact of adopting IFRS 8 is stated in Note 4.

IAS 1 (revised) Presentation of Financial Statements introduces some terminology changes and changes in presentation and disclosure, in particular, the introduction of the consolidated statement of changes in shareholders’ equity as a primary statement. Under IAS 1 (revised), the Group has elected to present two income statements, a consolidated income statement and a consolidated statement of comprehensive income.

Amendment to IFRS 7 Financial Instruments: Disclosures introduces disclosures about financial instruments. The impact of adopting these amendments is included in Note 19.

The following amendments and interpretations have not had a material impact on the results or financial position of the Group:

  • IFRIC 13 Customer Loyalty Programmes
  • IFRIC 15 Agreements for the Construction of Real Estate
  • IFRIC 16 Hedges of a Net Investment in a Foreign Operation
  • Amendment to IFRS 2 Share-based Payment – Vesting conditions and cancellations
  • Revised IAS 23 Borrowing Costs
  • Amendment to IAS 27 Consolidated and Separate Financial Statements – Cost of an investment in a subsidiary, jointly controlled entity or associate
  • Amendment to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements on Puttable financial instruments and obligations arising on liquidation
  • IASB’s 2009 annual improvements project

New IFRS standards and interpretations not adopted

The following standards, amendments and interpretations are not yet effective and have not been adopted early by the Group:

  • IFRIC 17 Distributions of Non-cash Assets to Owners
  • IFRIC 18 Transfers of Assets from Customers
  • Amendment to IAS 27 Consolidated and Separate Financial Statements
  • Amendment to IAS 39 Financial Instruments: Recognition and Measurement – Eligible hedged items
  • Amendment to IAS 32 Financial Instruments: Disclosure and Presentation – Presentation on classification of rights issues
  • IFRS 2 Share-based Payment – Group cash-settled share-based payment transactions
  • IFRIC 19 Extinguishing financial liabilities with equity instruments
  • Amendment to IAS 24 Related Party Disclosures
  • IAS 19 Employee Benefits – Prepayments of a minimum funding requirement

The adoption of these standards, amendments and interpretations is not expected to have a material impact on the Group’s profit for those years or equity. The adoptions may affect disclosures in the Group’s financial statements.

The revised IFRS 3 Business Combinations includes the immediate expensing of acquisition-related costs rather than inclusion in goodwill, and the recognition and measurement at fair value of contingent consideration at acquisition date with subsequent changes to income. The adoption of this revised standard may impact the Group’s profit for the year and equity.

In November 2009, the IASB issued IFRS 9 Financial Instruments Classification and Measurement which altered the classification and measurement of financial instruments. Under the new standard only two possible classifications arise, rather than the four existing classifications currently available under IAS 39, and will result in all financial assets being valued at amortised cost or fair value through profit and loss. Financial liabilities are excluded from the scope of the standard. The standard is not mandatory before 2013 year-ends and is yet to be endorsed by the European Union. The adoption of this standard may impact the Group’s profit, equity and disclosures in the Group’s financial statements.

The parent company, Tate & Lyle PLC, has not adopted IFRS as its statutory reporting basis. Audited financial statements for the parent company, prepared in accordance with UK GAAP, are set out in the Parent company financial statements.