Notes to the consolidated financial statements

General information

The principal activity of Tate & Lyle PLC is the global provision of ingredients and solutions to the food, beverage and other industries. It operates from more than 30 production facilities around the world.

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 modified to include revaluation of certain financial instruments and commodities, share options and pension assets and liabilities.

These consolidated financial statements are presented in pounds sterling, which is the Group’s functional and 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 2010 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.

Following a change in the organisational structure, the segments disclosed under the provisions of IFRS 8 Operating Segments have been changed to Speciality Food Ingredients, Bulk Ingredients, Sugars and Central costs. The comparative segmental information for the year ended 31 March 2010 has been reclassified.

Following the disposal of the EU Sugar Refining operations (‘EU Sugars’) to American Sugar Refining, Inc, the sale of Molasses to W&R Barnett Ltd and the announcement of the proposed sale of Vietnam Sugar and commitment to sell the Israel operations, the Sugars segment has been reclassified as discontinued operations in the current and comparative periods. In the current year, the assets and liabilities of Vietnam Sugar and the sugar operations in Israel have been included within assets and liabilities held for sale.

There is no overall effect on the Group’s comparative 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 the amortisation of intangible assets arising on acquisition of businesses. A reconciliation of statutory to adjusted information is provided in Note 43.

New IFRS standards and interpretations adopted

From 1 April 2010 the Group has adopted the following new and amended IFRSs and IFRIC interpretations:

  • IFRS 1 (revised) First time adoption
  • IFRIC 17 Distribution of Non-cash Assets to Owner s
  • Amendment to IAS 27 (revised) Consolidated and Separate Financial Statements
  • IFRS 3 (revised) Business Combinations
  • IFRS 2 Share-based Payment – group cash-settled share-based payment transactions
  • Amendment to IAS 32 Financial Instruments: Presentation on classification of rights issues
  • Amendment to IAS 39 Financial Instruments: Recognition and Measurement – eligible hedged items
  • IFRIC 18 Transfer of Assets from Customers
  • IFRIC 16 Hedges of a net investment in a foreign operation.

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 these revised standards has not had a material impact on the Group’s profit for the year and equity.

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:

  • IFRS 9 Financial Instruments: Classification and Measurement
  • Amendment to IAS 24 Related Party Disclosures
  • Amendments to IFRIC 14, IAS 19, Prepayments of a Minimum Funding Requirement
  • IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
  • IFRS Annual Improvements 2010
  • Amendment to IFRS 7 Financial Instruments: Disclosures on derecognition
  • Amendments to IFRS 1 First time adoption – financial instrument disclosures

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.

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. In October 2010, the IASB issued additions to IFRS 9 relating to financial liabilities. The main change in the additions is that in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch. 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.

On 12 May, 2011, the IASB issued IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in Other Entities which are all effective for accounting periods beginning on or after 1 January 2013. The Group is still continuing to assess the impact of these standards but initial assessments suggest that while net profit and net assets will remain unchanged, the presentation of the Consolidated Income Statement and Consolidated Statement of Financial Position will change significantly as IFRS 11 prohibits the proportional consolidation of Joint Arrangements.

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.