TIDMTATE
RNS Number : 6878B
Tate & Lyle PLC
10 June 2019
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:
http://www.morningstar.co.uk/uk/NSM.
1. Annual Report 2019;
2. Notice of Annual General Meeting 2019;
3. Notice of Availability; and
4. Proxy Form.
The Annual Report 2019, Notice of Annual General Meeting 2019
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 2019 and Notice of Annual General Meeting
2019 will be posted to shareholders, who have requested for them,
on or around 18 June 2019.
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 2019
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 2019 full-year results announcement,
released on 23 May 2019, 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
10 June 2019
APPIX A
RISK FACTORS
Principal risks
It is ultimately the Board's responsibility to decide what is
considered a principal risk to the business - namely one that could
threaten our business model, performance, solvency or liquidity.
Our risk profile does, of course, evolve and the Board updates its
view of principal risks accordingly. This year, the Board decided
that no changes to the principal risks were needed. See pages 61 to
65 for our list of principal risks and examples of mitigating
actions.
The Board confirms that a robust assessment of our principal
risks was carried out this year.
Strategic Risks
1. Lack of growth in Food & Beverage Solutions
Failing to grow Food & Beverage Solutions could prevent us
from delivering our performance against targets. This could reduce
our profitability over both the shorter and the longer term and
damage investors' view of us as an innovative solutions provider to
our customers.
Policies and procedures in place
-- An organic and acquisitive growth plan which supports our strategy.
-- Global and regional five-year plans focused on key categories.
-- An M&A team which works closely with Innovation and
Commercial Development (ICD) and our divisions to identify and
deliver acquisitions and partnerships focused on growth.
-- Incentive schemes and bonus programmes for customer-facing
teams tied to strategic as well as operational targets.
Key developments this year
-- We refreshed our product development 'StageGate' process to
ensure we focus on those opportunities most likely to deliver
growth.
-- We strengthened our customer-facing and innovation teams in Food & Beverage Solutions.
-- We rolled out a global programme to increase customer focus
in key areas such as customer account management and planning.
2. Failure to innovate and commercialise new products
New products are essential to the long-term growth of our
business, and our ability to lead the industry in our chosen
categories. Without them, we might be unable to meet our customers'
future requirements, which could damage our performance and
reputation and result in customers moving to work with
competitors.
Policies and procedures in place
-- A robust innovation process that delivers a strong pipeline
of products through internal development and open innovation.
-- An ICD team that tracks emerging consumer trends and works
closely with commercial partners to deliver innovation, with all
strategies aligned to deliver targeted growth.
-- Targets for new product sales tied to incentive and bonus schemes for customer-facing teams
-- An open innovation team scouting for breakthrough technologies.
-- A marketing team that gives insights into consumer and key
category trends, and supports new product launches.
-- Partnership opportunities with customers prioritised to
accelerate development cycles and bring new ingredients to market
more quickly.
Key developments this year
-- We restructured the ICD team to focus on category strategy
and growth and to ensure clear accountability.
-- We improved our model for testing new ideas before commercial roll-out.
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.
Policies and procedures in place
-- Remuneration policies designed to attract, retain and reward the best people.
-- Talent development that provides opportunities for employees
and training to close skill gaps.
-- Initiatives to make sure we keep diversity front of mind everywhere.
-- A single global performance management system, as well as talent planning processes.
-- Progress measured against cultural objectives and global
employee surveys that help to reveal what employees really think
about working at Tate & Lyle.
-- Executive Committee and Board focus on succession planning for business-critical roles.
Key developments this year
-- We revamped our internal and external communications plans.
-- We engaged closely with our global leadership team to support
engagement and ensure alignment around key priorities.
-- We reviewed our incentive programmes to ensure they are
aligned with strategy and continue to provide an attractive
employee proposition, to drive engagement and individual
performance.
-- We launched a programme to put our purpose at the heart of who we are and how we operate.
Operational risks
4. 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.
Policies and procedures in place
-- Continuous improvement plan for environment, health and
safety (EHS) in place at all our sites (Journey to EHS Excellence,
or J2EE), visibly sponsored by the Chief Executive and Executive
Committee.
-- Quarterly EHS Advisory Board receives EHS updates and reviews
performance; attended by the Chief Executive, and includes an
external EHS expert.
-- Regular reviews by Executive Committee and Board of EHS
performance and progress against J2EE.
-- SafeStart(R) behavioural safety training programme at all sites.
Key developments this year
-- We increased investment in our EHS team including the
recruitment of safety engineers at our major plants.
-- We completed deep-dive EHS reviews at all plants to identify
areas that require improvement or greater focus. These areas are
built into a continuous improvement plan.
-- We continued to invest in J2EE including:
o Introducing a new EHS digital management system, Gensuite
o Implementing two new initiatives, Life Saving Principles and
STOP Work Authority.
5. 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.
Policies and procedures in place
-- A preventative maintenance programme across our plant network.
-- An ongoing programme to improve our global supply chain processes.
-- Business continuity capabilities to enable us to supply
products to customers from alternative sources quickly if there's a
natural disaster or major equipment or plant failure.
-- Customer service capabilities managed by Global Operations as
part of an integrated end-to-end supply chain process.
-- Plans for the continued operation of our US plants in extreme winter weather.
Key developments this year
-- We strengthened our maintenance programmes across our major plants.
-- We refreshed our business continuity plans to support long-term strategic growth.
-- We aligned our sales and operational planning process with
product line management teams to strengthen our ability to balance
supply and demand.
-- We invested in digital technology to improve customer service.
-- We enhanced the way we manage inventory to improve customer
service and our ability to supply.
6. 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.
Policies and procedures in place
-- Strict quality control and product testing procedures.
-- Recall process running and tested.
-- Third-party audit programme, supplemented by internal compliance audits.
-- Suppliers assessed for food safety/quality risks, including
raw material suppliers, tollers and warehouses.
-- Allergen management programme.
Key developments this year
-- We implemented a recipe management system to centralise the
management of our products and ingredients.
-- We updated our hazard analysis and critical control points
plans at all plants to ensure compliance with the new US Food
Safety Modernization Act.
-- We established a Quality Incident Review Board to investigate
incidents and share resulting best practice across all sites.
-- We continued to focus on minimising the risk of
cross-contamination at our plants by upgrading our food defence
programmes using the US Food and Drug Administration (FDA) food
defence plan builder.
7. 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, coproduct
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.
Policies and procedures in place
-- Strategic relationships and multi-year agreements with suppliers and trading companies.
-- A balanced portfolio of supply and tolling contracts with
customers that helps to balance raw material prices and product
sales prices and volume risks.
-- Raw material and energy purchasing policies that increase the security of our supply.
-- A network of corn elevators which enhances the security of our supply.
-- New or back-up supply sources (for chemicals, for example) in
case primary suppliers face localised challenges.
-- The use of derivatives and forward contracts, where
practical, to hedge and manage our exposure to raw material and
co-product prices.
Key developments this year
-- We added procurement resources regionally to better manage local market variances.
-- We combined our transportation procurement and logistics
teams to improve how we manage suppliers and better serve
customers.
-- We reorganised our global engineering teams to allow our
engineers to spend more time on improvement and problem
solving.
8. 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.
Policies and procedures in place
-- A cyber-security enhancement programme focused on
strengthening our people, process and technology defences.
-- Compulsory cyber-security training and cyber-security breach scenario exercises.
-- Advanced perimeter defences, as well as continuous vulnerability detection and defences.
-- Separate systems across our plant network to provide resilience.
-- A 24/7, third-party security operations centre.
Key developments this year
-- We revised our privacy guidelines to align with the EU General Data Protection Regulation.
-- We introduced a security operations centre and computer emergency response team.
-- We added specific cyber-security terms and conditions to new contracts.
-- We ran a number of cyber-security communications campaigns to
raise awareness with our employees.
-- We invested in a range of technology defences, from
next-generation firewalls to enhanced email security.
Legal, Regulatory and Governance Risks
9. 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 could be damaged, and there could be
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.
Policies and procedures in place
-- Legal and regulatory teams working in partnership with
commercial teams to identify legal and regulatory risk and to
provide advice and solutions.
-- Regular monitoring of legal and regulatory developments to
identify those that could affect Tate & Lyle.
-- Key legal policies.
-- Ethics and compliance training programme.
-- Third-party-hosted whistleblowing process giving employees a
way to raise concerns anonymously if they're not comfortable
raising them internally.
-- A full-time Global Head of Ethics and Compliance.
Key developments this year
-- We restructured our Legal and Compliance teams to strengthen
legal resources in the regional businesses.
-- We reviewed our legal and ethics and compliance programmes to
make sure they focus on priority areas to drive efficiency and
support growth.
-- We updated and relaunched our Code of Ethics.
-- We introduced ethics and compliance monitoring of high-risk countries.
-- We rolled out an ethics training programme and trained around
1,000 employees on data protection.
10. 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.
Policies and procedures in place
-- Financial policies and standards supported by procedures for
key financial processes, for example, capital expenditure.
-- A number of forums to monitor and manage our financial risks,
for example, our monthly working capital review and our regional
Control Environment Councils.
-- Detailed quarterly business and financial reviews by our
Chief Executive and Chief Financial Officer.
-- Confirmation of minimum control standards at the half year and the end of the financial year.
-- Automated controls built into our systems wherever possible.
-- A well-resourced Group Audit and Assurance team which
provides independent assurance to management and the Board.
Key developments this year
-- We continued to strengthen our framework for enterprise
controls, and to focus on the segregation of duties and quality of
our balance sheet reconciliations.
-- We evolved our risk and control matrix and rolled this out in
Europe, Middle East and Africa and North America.
-- We implemented a new finance operating model in Asia Pacific
and Latin America to make better use of our shared service
centre.
11. Changes in consumer, customer or government attitudes to our
products
The regulatory status or perception of our products 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.
Policies and procedures in place
-- Science behind our ingredients (for example, health claims or
nutritional impact) supported by credible sources, clearly
communicated and understood by the relevant regulatory
authorities.
-- A global regulatory team, supported by external consultants,
that monitors local regulatory requirements affecting our
products.
-- A global nutrition team which initiates and monitors research and publications on the use and functionality of our ingredients, and maintains a global network of health and nutrition clinicians, academics and experts.
-- Membership of trade organisations giving us access to broader
sources of information and provide, where appropriate, a single
voice for the industry on the issues (both regulatory and public
interest) affecting our ingredients.
-- Strong relationships with regulatory authorities.
-- Clear information on our ingredients' provenance and traceability.
-- A Research Advisory Group, chaired by a non-executive
director and comprising leading scientific experts, which reviews
critical aspects of our innovation activities and provides
guidance.
Key developments this year
-- We expanded non-GM alternatives for a number of key product
areas (such as texturants) and developed constructive relationships
with certification companies.
-- We integrated our global regulatory team into ICD to ensure
that the development of new ingredients goes hand-in-hand with
regulatory approvals.
12. Failure to manage effectively changes in government
regulations and/or trade policies
Government actions or policies could cause changes in tariffs or
customs duties or impose import/export limitations and other
barriers. These could lead to additional costs for our business,
restrict our growth and limit our ability to operate in certain
markets.
Policies and procedures in place
-- Strategic engagement with political parties, influencers and
regulatory authorities in the main countries in which we
operate.
-- Active member of relevant industry trade associations, such
as the Corn Refiners Association in the US.
-- A network optimisation model that enables us to adapt and
optimise production across our plant network if there are market
restrictions in certain countries, for example, by switching
production to other plants.
-- A global plant network that allows customers to be served
from different countries if products from certain markets are
restricted or become less economically attractive.
-- Continued investment in resources and infrastructure across
different markets and geographies that diversifies our business
mix.
Key developments this year
-- We carried out scenario-planning exercises to assess the
impact of the change from the North American Free Trade Agreement
to the new United States-Mexico-Canada Agreement.
-- We put in place a contingency plan in the event the UK leaves the EU without a deal.
APPENDIX B
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the UK governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions. Each of the Directors,
whose names and functions are listed on pages 68 to 71, 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
-------------------------------------- ----------------------
2019 2018
GBPm GBPm
-------------------------------------- ---------- ----------
Sales of goods and service to joint
ventures 164 147
Purchases of goods and services from - -
joint ventures
Receivables due from joint ventures 28 20
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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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