TIDMTATE
RNS Number : 4376P
Tate & Lyle PLC
09 June 2020
Tate & Lyle PLC
Annual Financial Report
Tate & Lyle PLC (the "Company") confirms that copies of the
following documents have been submitted to the National Storage
Mechanism and will shortly be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
1. Annual Report 2020;
2. Notice of Annual General Meeting 2020;
3. Notice of Availability; and
4. Proxy Form.
The Annual Report 2020, Notice of Annual General Meeting 2020
and Notice of Availability are also available on Tate & Lyle's
website at www.tateandlyle.com/investors/annual-reports . A hard
copy of the Annual Report 2020 and Notice of Annual General Meeting
2020 will be posted to shareholders, who have requested for them,
on or around 19 June 2020.
For the purposes of complying with Disclosure Guidance and
Transparency Rule (DTR) 6.3.5R and the requirements it imposes on
issuers as to how to make public annual financial reports, we set
out below:
- in Appendix A, the principal risks and uncertainties facing the Company;
- in Appendix B, the Directors' responsibility statement; and
- in Appendix C, the disclosure regarding related party transactions.
The appendices have been extracted from the Annual Report 2020
in unedited full text and the page numbers in the text refer to the
page numbers in that document. This information should be read in
conjunction with the Company's 2020 full-year results announcement,
released on 21 May 2020, which contained a condensed set of
financial statements and which can be found at
www.tateandlyle.com/investors/results-and-presentations . Together,
these constitute the material required by DTR 6.3.5R to be
communicated to the media in unedited full text through a
Regulatory Information Service.
Claire-Marie O'Grady
Company Secretary
9 June 2020
APPIX A
RISK FACTORS
Identifying risks
Each year, we hold bottom-up and top-down reviews of our
principal risks, namely those that could threaten our business
model, strategy, performance, solvency or liquidity, looking at a
three-year horizon. The bottom-up process involves a rolling
programme of workshops held around the business, facilitated by our
risk team. These workshops help us to identify current and
potential risks, which we then collate and report through
functional and divisional levels to our Risk Committee and
Executive Committee. We also consider any areas and behaviours
which could bring about new risks, and different combinations of
risk with other potentially larger impacts. Through these
processes, we identify our main business, strategic, financial,
operational and compliance risks and create action plans and
controls to mitigate them to the extent appropriate to our risk
appetite.
Principal risks
The top-down review involves the Board assessing the output of
this work, confirming that our principal risks have been captured
and addressed, and that emerging risks have been considered. Our
risk profile does, of course, evolve and the Board updates its view
of principal risks accordingly. This year, the Board decided to add
a new principal risk in relation to external disruptive forces that
might materially impact our business. These could include the
impact of climate change and of diseases such as the current
Covid-19 pandemic.
For more information on how we manage risks, please see pages 61
and 62.
Strategic Risks
1. Lack of growth in Food & Beverage Solutions
Failing to grow Food & Beverage Solutions would prevent us
from delivering against our targets. This could reduce our
profitability over both the shorter and longer term and damage
investors' view of us.
How we mitigate the risk
-- Our organic and acquisitive growth plan supports our strategy.
-- We have global and regional five-year plans focused on key categories.
-- Our M&A team works closely with Innovation and Commercial
Development (ICD) and with our divisions to find acquisitions and
partnerships that will help us grow.
-- We have incentive schemes and bonus programmes for
customer-facing teams tied to strategic as well as operational
targets.
--
What we've done this year
-- We simplified the structure of our customer-facing teams
within our two business divisions and ICD to get closer to our
customers and help commercialise new products more quickly.
-- We continued to strengthen our business and presence in
emerging markets with investments in new applications labs in Asia
Pacific and Latin America.
-- We strengthened our M&A team by appointing a new, experienced head to lead this function.
Link to our priorities
-- Sharpen
-- Accelerate
-- Simplify
Trend compared with 2019: unchanged
2. Failure to develop and commercialise new ingredients
New products are essential to our ability to lead the industry
in our chosen categories, and thus to the long-term growth of our
business. Without them, we might be unable to meet our customers'
future requirements, which could damage our performance and
reputation and result in customers switching to competitors.
How we mitigate the risk
-- We have a robust innovation process that, through internal
development and open innovation, delivers a strong pipeline of
products.
-- Our ICD team tracks emerging consumer trends and works
closely with commercial partners to create new ingredients that
will deliver growth.
-- Our customer-facing teams' incentive and bonus schemes include targets for new product sales.
-- We have an open innovation team that scouts for breakthrough technologies.
-- We prioritise partnership opportunities with customers to
accelerate development cycles and bring new products to market more
quickly.
Key developments this year
-- We launched 11 New Products from our innovation pipeline.
-- We created a marketing centre of excellence to ensure we are
monitoring global trends consistently and sharing information
across the regions.
-- We expanded our ICD team into Asia Pacific.
-- We increased our focus on open innovation through our
involvement in the Terra Food and Agricultural Incubator and
entered into a new partnership with an enzyme technology start-up,
Zymtronix.
Link to our priorities
-- Sharpen
-- Accelerate
Trend compared with 2019: unchanged
3. Inability to attract, develop, engage and retain key people
To be successful, we must have great people in the right roles.
Without them, we may be unable to deliver our strategy.
How we mitigate the risk
-- Our remuneration policies are designed to attract, retain and reward the best people.
-- Our talent development plans give employees opportunities and
training to close gaps in their skills.
-- We have initiatives to help us keep diversity front of mind everywhere.
-- We have a single global performance management system and talent planning process.
-- We measure progress against cultural objectives and carry out
global employee surveys that help to tell us what employees really
think about working at Tate & Lyle.
-- Our Executive Committee and the Board plan succession for business-critical roles.
Key developments this year
-- We focused on increasing engagement with our employees and
invested in internal communications with regular formal and
informal pulse surveys.
-- We simplified our performance management and reward processes
to ensure everyone understands how what they do links to reward and
recognition.
-- We revamped our programme to promote diversity and inclusion.
Link to our priorities
-- Sharpen
-- Simplify
Trend compared with 2019: unchanged
4. Failure to adequately anticipate and minimise adverse impacts
from global disruptive forces such as disease, climate change,
natural disaster, trade disruption or civil unrest
Global disruptive events could have a significant impact on our
business and our ability to conduct manufacturing operations. This
could materialise at any point along the supply chain as well as
affecting global demand, capacity or our customers' needs.
How we mitigate the risk
-- We have a global business continuity management (BCM)
framework to enable effective recovery from a major disruption.
-- Caring for the planet is one of the three pillars of our
purpose, and is central to how we make strategic decisions.
-- Having plants in different regions and countries means we can
serve customers from elsewhere if a particular area is
disrupted.
-- Our Risk Committee oversees emerging risks to ensure we are prepared for customers' needs.
Key developments this year
-- We set up a Global Pandemic Response Team to manage our
response to and minimize disruption from Covid-19.
-- We developed a comprehensive sustainability strategy
including environmental targets for 2030 which will be
science-based; we will be publishing progress, including out
response to TCFD requirements, in next year's Annual Report.
-- We began a project to strengthen further both our business
continuity capabilities and our crisis management plans.
Link to our priorities
-- Sharpen
-- Accelerate
Trend compared with 2019: new
Operational risks
5. Failure to act safely and operate our facilities safely and responsibly
Safety is not just a priority, it's foundational at Tate &
Lyle. Failure to comply with laws and regulations relating to
health, safety and the environment could result in us being unable
to protect our employees, stakeholders and the wider communities in
which we operate. It could also lead to fines and have a negative
impact on our reputation.
How we mitigate the risk
-- We have a continuous improvement plan for environment, health
and safety (EHS) in place at all our sites (Journey to EHS
Excellence, or J2EE).
-- It is visibly sponsored by the Chief Executive and Executive Committee.
-- Our EHS Advisory Board, which includes an external EHS
expert, receives EHS updates and reviews performance quarterly. The
Chief Executive attends the meeting.
-- Our Executive Committee and Board regularly review EHS performance and progress against J2EE.
Key developments this year
-- Nearly all our sites passed tollgate 2 (of seven) as part of our J2EE programme.
-- We put in place strict protocols at all our sites to ensure
we protected our people during the Covid-19 pandemic including
sanitation, social distancing, hand washing and wearing face
masks.
-- We increased investment in our EHS team, recruiting new safety engineers at our major plants.
-- We carried out in-depth EHS reviews at all our plants to
identify areas for improvement to be built into each site's
continuous improvement plan.
-- We introduced virtual safety assessments in light of Covid-19
to ensure we continued to make progress with our safety
programme.
Link to our priorities
-- Sharpen
-- Accelerate
-- Simplify
Trend compared with 2019: unchanged
6. Failure to operate our plants continuously, manage our supply
chain, and meet high standards of customer service
There are many risks in operating plants which could cause
breaks in production leading to disruption and a deterioration in
customer service. This, in turn, could damage our ability to grow
and perform as a business.
How we mitigate the risk
-- Our plant network has a preventative maintenance programme.
-- We have an ongoing programme to improve our global supply chain processes.
-- Business continuity capabilities enable us to supply products
to customers from alternative sources quickly if there's a natural
disaster or major equipment or plant failure.
-- Our customer service team is part of Global Operations so
works closely with our plants, enabling us to be agile and
responsive.
-- We have contingency plans to manage disruption such as extreme winter weather.
Key developments this year
-- We continued to implement our maintenance improvement programme at our major plants.
-- We implemented new technology to manage production schedules
and inventory, and improve customer service.
-- We continued to undertake de-bottlenecking and cost-reduction
projects to improve the reliability and efficiency of our
plants.
Link to our priorities
-- Sharpen
-- Accelerate
Trend compared with 2019: unchanged
7. Failure to maintain the quality and safety of our products
Poor quality products could affect safety and also damage our
reputation and relationships with customers. This could have a
negative effect on our performance and corporate reputation.
How we mitigate the risk
-- We have strict quality control and product testing procedures.
-- We test our recall process frequently.
-- We have a third-party audit programme, supplemented by internal compliance audits.
-- We assess our raw material suppliers, tollers and third-party
warehouses for food safety/quality risks.
-- We have a programme to manage allergens in our supply chain
and ensure our ingredients are either free from allergens or that
any allergens are disclosed.
Key developments this year
-- We centralised our recipe management system to streamline how
we manage products and ingredients.
-- We enhanced how we manage cross-contamination risk by using
the US Food and Drug Administration (FDA) food defence plan
builder.
-- We brought quality into the remit of the EHS function so it
could benefit from being part of our Journey to EHS Excellence
(J2EE) programme.
Link to our priorities
-- Sharpen
-- Simplify
Trend compared with 2019: unchanged
8. Inability to manage fluctuations in the price and
availability of raw materials, energy, freight and other operating
inputs
Fluctuations in crop prices could affect our margins. These
changes could stem from things like alternative crops, co-product
values and varying local or regional harvests because of, for
example, weather conditions, crop disease, climate change or crop
yields. In some cases, due to the basis for pricing in sales
contracts or due to competitive markets, we may not be able to pass
the full increase in raw material prices, or higher energy, freight
or other operating costs, on to our customers. Our margins might
also be affected by customers not taking expected volumes.
How we mitigate the risk
-- We have strategic relationships and multi-year agreements
with suppliers and trading companies.
-- Our supply and tolling contracts with customers help us reduce raw material risk.
-- Our raw material and energy purchasing policies increase the security of our supply.
-- Our network of corn silos (elevators) enhances the security of our supply.
-- We manage our US corn position on a net basis, which includes
operating within certain pre-approved limits on inventories of corn
and co-products as well as executory contracts for the purchase of
corn and sale of corn-based products.
-- As part of this risk management strategy, the risk of
fluctuations in prices of certain commodities (mainly corn) is also
partially managed through the use of certain derivatives (mainly
corn futures sold and purchased on the Chicago Mercantile
Exchange).
Key developments this year
-- We strengthened our regional procurement teams to better serve our needs in local markets.
-- We implemented a new system to manage freight more efficiently and cost-effectively.
Link to our priorities
-- Sharpen
-- Accelerate
Trend compared with 2019: unchanged
9. Failure to maintain the security of our information systems and data
A cyber security breach, whether stemming from human error,
deliberate action or a technology failure, could lead to
unauthorised access to or misuse of our information systems,
technology or data. This, in turn, could result in harm to our
assets, data loss and business disruption - and could bring legal
risks and reputational damage.
How we mitigate the risk
-- Our cyber security enhancement programme focuses on
strengthening our defences in terms of people, processes and
technology.
-- We run compulsory cyber security training and breach scenario exercises.
-- We have robust cyber security defences including a continuous
programme to detect any vulnerabilities.
-- Our plants run on separate IT systems which increases their resilience.
-- We have a 24/7, third-party security operations centre to deal promptly with any issues.
Key developments this year
-- We strengthened our firewall protection.
-- To help people working from home during the Covid-19
pandemic, we rolled out Microsoft Teams and ensured people had
company equipment to use.
-- We stopped the use of USB sticks to add another layer of cyber protection.
Link to our priorities
-- Sharpen
-- Accelerate
-- Simplify
Trend compared with 2019: unchanged
Legal, Regulatory and Governance Risks
10. Breach of legal or regulatory requirements including our
Code of Ethics
If we don't meet our legal and/or regulatory obligations, our
relationships with customers are likely to suffer, and we could be
subject to contractual claims, threats to our licences and, in
extreme cases, risks to our directors and officers. It could also
affect our performance and corporate reputation.
How we mitigate the risk
-- Our legal and regulatory teams work closely with our
commercial teams to identify legal and regulatory risk and provide
advice and solutions.
-- We monitor legal and regulatory developments regularly to
make sure we know what could affect Tate & Lyle.
-- We review our key legal policies regularly.
-- We run a legal and ethics and compliance training programme.
-- We have a third-party whistleblowing service that gives our
employees a way to raise concerns anonymously if they're not
comfortable raising them internally.
Key developments this year
-- We now have lawyers in each region to work with commercial
colleagues to identify and mitigate legal risk from the bottom
up.
-- We launched a new legal policy and further strengthened our compliance policies.
-- We reviewed and updated key commercial contractual processes
and terms and conditions, resulting in more consistent management
of legal risks and more balanced contract terms.
-- We have implemented a new document management system to
facilitate better ways of working that are easier to audit.
-- We continued to roll out legal and ethics and compliance
training as part of our annual training plan.
Link to our priorities
-- Sharpen
-- Simplify
Trend compared with 2019: decreasing
11. Failure to maintain an effective system of internal
financial controls
Without effective internal financial controls, we could be
exposed to financial irregularities and losses from events that may
affect our performance and ability to operate.
How we mitigate the risk
-- We have financial policies and standards supported by
procedures for key financial processes, for example, capital
expenditure.
-- We have a number of forums to monitor and manage our
financial risks, for example our monthly working capital review and
our regional Control Environment Councils.
-- Our Chief Executive and Chief Financial Officer review the
business and financials at least quarterly.
-- At both the half year and the end of the financial year we
confirm to the Executive Committee, the Audit Committee and the
Board that our minimum control standards are being met.
-- We have built automated controls into our systems wherever possible.
-- Our well-resourced Group Audit and Assurance team provides
independent assurance to management and the Board.
Key developments this year
-- We continued to invest in our financial controls function,
expanding the team as well as continuing to invest in training and
developing all our finance people.
-- We continued to strengthen our controls framework and to
focus on the segregation of duties and balance sheet
reconciliations
-- We established a project to look at how we can improve and
better use automation in our key finance processes over the medium
term.
Link to our priorities
-- Sharpen
-- Accelerate
-- Simplify
Trend compared with 2019: unchanged
12. Changes in consumer, customer or government attitudes to our
products
The regulatory status or perception of our ingredients could be
affected by things like changes in customers' or consumers'
attitudes, changes in food laws and regulations, and/or campaigns
targeted at specific ingredients or technologies. These could
affect our ability or freedom to operate.
How we mitigate the risk
-- The science behind our ingredients (for example, health
claims or nutritional impact) is supported by credible sources and
is communicated clearly to and understood by the relevant
regulatory authorities.
-- Our global regulatory team, supported by external
consultants, monitors any local regulatory requirements that affect
our products.
-- Our global nutrition team initiates and monitors research and
publications on the use and functionality of our ingredients, and
maintains a global advisory network of health and nutrition
clinicians, academics and experts.
-- Membership of trade organisations gives us access to broader
sources of information and provides, where necessary, a single
voice for our industry on issues (both regulatory and public
interest) affecting our ingredients.
-- We have strong relationships with regulatory authorities.
-- We provide clear information on our ingredients' provenance and traceability.
-- Our Research Advisory Group, chaired by a nonexecutive
director and comprising leading scientific experts, reviews key
aspects of our innovation activities and provides guidance to our
team.
Key developments this year
-- We expanded our regulatory team in Asia and Latin America to
develop better relationships with regulators in these growth
markets.
-- We invested in our global nutrition team with additional
funding for studies supporting the safety and efficacy of our
ingredients.
-- We evolved how the Research Advisory Group works to align it
even more closely with our strategy.
Link to our priorities
-- Sharpen
-- Simplify
Trend compared with 2019: unchanged
13. Failure to manage effectively changes in government
regulations and/or trade policies
Government actions or policies could cause changes in tariffs or
customs duties. Governments could also impose import/export
limitations and other barriers on our business. These could lead to
additional costs, restrict our growth and limit our ability to
operate in certain markets.
How we mitigate the risk
-- We engage with political parties, influencers and regulatory
authorities in the main countries in which we operate.
-- We are an active member of relevant industry trade
associations, such as the Corn Refiners Association in the USA.
-- Having plants in different countries means we can serve
customers from elsewhere where practical if products from certain
markets are restricted or become less economically attractive.
-- We make sure our business is diversified by continuing to
invest in resources and infrastructure in different markets and
geographies.
Key developments this year
-- We created a contingency plan in the event the UK left the EU without a deal.
-- We lobbied members of the US Congress to support the
ratification of the new trade deal between the US, Mexico and
Canada.
Link to our priorities
-- Sharpen
-- Accelerate
Trend compared with 2019: increasing
APPENDIX B
DIRECTORS' RESPONSIBILITY STATEMENT
Each of the Directors, whose names and functions are listed on
pages 70 to 73, confirms that, to the best of his or her
knowledge:
-- The Annual Report, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Company's and the Group's position and
performance, business model and strategy
-- The Group financial statements, which have been prepared in
accordance with IFRSs as adopted by the EU, give a true and fair
view of the assets, liabilities, financial position and profit of
the Group
-- The Company financial statements, which have been prepared in
accordance with UK GAAP (United Kingdom Accounting Standards,
comprising FRS 101 'Reduced Disclosure Framework' and applicable
law) give a true and fair view of the assets, liabilities,
financial position and profit of the Company
-- The Strategic Report and the Directors' Report include a fair
review of the development and performance of the business and the
position of the Group and the Company, together with a description
of the principal risks and uncertainties that it faces.
APPENDIX C
RELATED PARTY DISCLOSURES
Identity of related parties
The Group has related party relationships with its joint
ventures, the Group's pension schemes and with key management,
being its Directors and executive officers. Key management
compensation is disclosed in Note 9. There were no other related
party transactions with key management. There were no material
changes in related parties or in the nature of related party
transactions during the year and no material related party
transactions containing unusual commercial terms in the current or
prior year.
Subsidiaries and joint ventures
Year ended 31 March
-------------------------------------- ----------------------
2020 2019
GBPm GBPm
-------------------------------------- ---------- ----------
Sales of goods and services to joint
ventures 164 164
Purchases of goods and services from - -
joint ventures
Receivables due from joint ventures 7 28
Payables due to joint ventures - -
-------------------------------------- ---------- ----------
Transactions entered into by the Company, Tate & Lyle PLC,
with subsidiaries and between subsidiaries as well as the resultant
balances of receivables and payables are eliminated on
consolidation and are not required to be disclosed.
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END
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