Annual Report
2015
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WHO WE ARE
We are a global provider
of ingredients and solutions
to the food, beverage
and other industries.
Adjusted operating profit1 (£m)
£247m
2015
2014
2013
247
349
356
Adjusted diluted earnings per share (pence)
WHAT WE DO
Our ingredients and
solutions add taste, texture,
nutrition and functionality
to products used or
consumed by millions
of people every day.
37.7p
2015
2014
2013
37.7
55.7
56.6
Dividend per share (pence)
28.0p
2015
2014
2013
28.0
27.6
26.2
Net debt (£m)
£504m
2015
2014
2013
353
504
479
Statutory results
Sales1
Profit before tax1
(after exceptional items)
Profit for the year
(on total operations)
Diluted earnings per share
(on total operations)
2015
2014 2
£2 356m £2 754m
£51m
£277m
£30m
£273m
6.5p
58.0p
1 For continuing operations including the results of Eaststarch,
which is not treated as a discontinued operation for the
financial year ended 31 March 2015.
2 Restated for the adoption of IFRS 11, see Note 42.
Adjusted operating profit, adjusted profit before tax and
adjusted earnings per share
Unless otherwise stated in this Annual Report: adjusted sales
includes proportionate consolidation of sales of joint ventures;
adjusted operating profit includes proportionate consolidation
of operating profit of joint ventures and is before exceptional items
and amortisation of acquired intangible assets; and, adjusted
profit before tax is before proportionate consolidation of tax on
joint ventures and retirement benefit interest and, for adjusted
diluted earnings per share, the after tax effect of all adjusted items.
Trademarks
SPLENDA® and the SPLENDA® logo are trademarks of McNeil
Nutritionals, LLC.
Definitions/cautionary statement
Please see the explanatory notes on the inside back cover.
Despite challenges we
faced during the year,
we’ve taken concrete
action in line with
our strategy.
Throughout this Annual Report
we explain our vision and
strategy for growth.
Strategic Report
02 Our Group at a Glance
04 Our Operations
06 Chairman’s Statement
08 Chief Executive’s Review
13 Group Executive Committee
14 Our Marketplace
16 Our Business Model
18 Our Strategy
20 Our Strategy in Action
22 Key Performance Indicators
24 Speciality Food Ingredients
26 Bulk Ingredients
28 Group Financial Results
34 Risks
37 Corporate Responsibility
Governance
44 Board of Directors
46 Statement from the Chairman
47 Corporate Governance
53 Audit Committee Report
55 Nominations Committee Report
56 Corporate Responsibility
Committee Report
58 Directors’ Remuneration Report
79 Directors’ Report
80 Directors’ Statement of Responsibilities
Financial Statements
81
Independent Auditors’ Report
to the Members of Tate & Lyle PLC
85 Consolidated Income Statement
86 Consolidated Statement of
Comprehensive Income
87 Consolidated Statement
of Financial Position
88 Consolidated Statement of Cash Flows
89 Consolidated Statement of
Changes in Equity
90 Notes to the Consolidated
Financial Statements
149 Parent Company Financial Statements
Useful Information
156 Five-year Summary
158 Pro-forma impact of Eaststarch
disposal on adjusted income statement
159 Information for Investors
160 Glossary and Definitions/
explanatory notes
STRATEGIC REPORT | OUR GROUP AT A GLANCE
What do we do?
We are a global business, serving customers through our two divisions:
Speciality Food Ingredients and Bulk Ingredients.
We are dedicated to serving our
customers from over 30 locations
worldwide
Our operations include a network of corn wet mills in the US and Europe which
are shared by our two business divisions. We also operate two SPLENDA®
Sucralose facilities in the US and Singapore, and a number of other ingredient
processing plants and blending facilities worldwide. We work closely with
customers all over the world through our network of applications and technical
facilities, centred around our global innovation hub, the Commercial and Food
Innovation Centre in Chicago, USA.
1 Including proportionate consolidation of sales of joint ventures.
2 Includes employees of joint ventures on a proportionate basis.
Adjusted profit before tax1
£224m
(2014 – £322m)
Adjusted sales1
£2,694m
(2014 – £3,147m)
Employees worldwide2
4,759
(2014 – 4,523)
Americas
Europe, Middle East and Africa
Asia Pacific
Key:
Tate & Lyle operations including manufacturing facilities, application/technical services facilities and Group operations.
Our principal manufacturing assets in
the US include four major corn wet mills.
Three are located in the Midwest, and one
in Tennessee. Other key sites include our
SPLENDA® Sucralose facility in McIntosh,
Alabama, a citric acid plant in Ohio and
a Food Systems blending facility in Illinois.
In Europe, our operations include five major
corn wet mills, including our wholly-owned
plant in the Netherlands and four joint-
venture plants located mainly in the Eastern
European corn belt. In April 2015, we
announced the re-alignment of this joint
venture, see page 10 for more details.
We have expanded our presence in
Latin America by the acquisition of a
majority stake in Gemacom Tech in Brazil.
This Food Systems business includes
both blending facilities and a customer-
facing applications laboratory. Other
manufacturing assets in the region include
our citric acid plant in Brazil and our
joint-venture corn wet mill in Mexico.
Our oat-based fibres facility in Sweden has
been key to enhancing Tate & Lyle’s health
and wellness portfolio. Other assets in Europe
include our four Food Systems facilities in
Italy, Germany and the UK.
In the Middle East and Africa, we operate
a corn wet mill in Morocco and a Food
Systems blending facility in South Africa.
In line with our strategy to grow our
speciality food ingredients business in
emerging markets, we have in recent years
significantly enhanced our presence in
China through our Food Systems business,
Tate & Lyle Howbetter. During the year,
we completed the acquisition of Winway
Biotechnology – a business in the
fast-growing fibre category in China.
In April 2015 we announced the closure
of our SPLENDA® Sucralose plant in
Singapore from spring 2016, as part
of re-focusing and re-structuring our
SPLENDA® Sucralose business (see
page 9). In the region, we also have a
Food Systems blending facility in Australia.
Manufacturing
facilities
Applications/technical
services facilities
Manufacturing
facilities
Applications/technical
services facilities
Manufacturing
facilities
Applications/technical
services facilities
12
7
14
5
4
4
02 | Tate & Lyle PLC | Annual Report 2015
Adjusted sales by division
1. Speciality Food Ingredients 34%
2. Bulk Ingredients 66%
Adjusted operating profit2
1. Speciality Food Ingredients 53%
2. Bulk Ingredients 47%
Sales by geography1
1. UK 1%
2. US 60%
3. Other European countries 14%
4. Rest of world 25%
1
2
4
3
1 Sales by destination (from continuing operations),
see Note 4 to the Group Financial Statements.
SPECIALITY FOOD INGREDIENTS
Leveraging technology
and applications expertise
1
1
2
2
2 Excluding central costs.
BULK INGREDIENTS
Efficient scale
production
What do we make?
Speciality Food Ingredients (SFI) provides food and beverage
customers with ingredients and solutions to address global
consumer trends including: convenience; health and wellness
(for example, lower calorie, lower fat, lower salt, higher fibre);
and ‘clean label’. We work across the range of food and beverage
categories, leveraging our manufacturing facilities, innovative
technology and formulation expertise to help create great tasting,
cost-effective and ‘better-for-you’ products.
What do we make?
Our main Bulk Ingredients (BI) products are sweeteners for food
and beverage customers and industrial starches mainly used in
the paper and construction industries. Other products include
acidulants which are used by food and beverage customers and
the personal care industry, and fuel ethanol sold to blenders.
We also sell our corn co-products, predominantly animal feed,
to agricultural customers. BI also partners with bio-based
materials companies to leverage our fermentation expertise.
Our product categories include:
• Sweeteners
• Texturants
• Health and wellness
• Food systems
Who do we do it for?
• Large, multi-national food and beverage manufacturers
• Small- and medium-sized food and beverage manufacturers
• Private label food and beverage manufacturers
Our product categories include:
• Liquid sweeteners
• Industrial starches
• Citric acid
• Bio-fuels
• Animal feed
Who do we do it for?
• Large, multi-national food and beverage manufacturers
• Paper and board producers
• Gasoline suppliers
• Textile manufacturers
• Animal feed compounders
p24 Speciality Food Ingredients
p26 Bulk Ingredients
For more detailed information, visit www.tateandlyle.com
Tate & Lyle PLC | Annual Report 2015 | 03
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION STRATEGIC REPORT | OUR OPERATIONS
How do we support our divisions?
Speciality Food Ingredients and Bulk Ingredients are supported
by our Innovation and Commercial Development group and
our new Global Operations group.
Innovation and Commercial
Development (ICD)
ICD is a key enabler of Tate & Lyle’s growth strategy. It brings
together open innovation, research and development, global
marketing and platform management into one global team,
to provide an integrated approach towards developing and
commercialising innovative new products and technologies.
While ICD supports both of Tate & Lyle’s divisions, it
concentrates particularly on SFI. As a result, ICD’s resources
are predominantly focused on three broad platforms within
the global speciality food ingredients market – sweeteners,
texturants and health and wellness.
Ideas are generated from both internal and external sources.
Internally, these come from work done by our own scientists.
Externally, we generate ideas from engagement with our
customers and from our dedicated Open Innovation team
which seeks to develop partnerships with universities, research
institutions and start-ups specialising in food science and
novel ingredients.
Global Operations
Global Operations, established in November 2014, is responsible
for safety, manufacturing, transportation and logistics, sales
and operations planning, customer service, corn procurement,
sustainability, and process technology.
The creation of Global Operations represents an important step
towards simplifying our global structure and allowing the different
parts of the business to focus on what they do best – our
commercial divisions on serving customers, and Global Operations
on delivering operational and supply chain excellence.
The Group also has a Global Quality team which is responsible for
overseeing the application of strict quality control procedures and
testing of all product lines. The Global Quality team is independent
of the Global Operations group.
d welln e s s
n
h a
lt
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H
Open
innovation
S
w
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t
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n
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r
s
Platform
management
Innovation
and Commercial
Development
Research and
development
Global
marketing
Textura n t s
Safety
Process
technology
Manufacturing
Sustainability
Global
Operations
Transportation
/logistics
Corn
procurement
Sales and
operations
planning
Customer
service
Global Shared Services Centre
Our Global Shared Services Centre, based in Łód´z, Poland,
supports a common way of working across our business. We have
standardised our systems and financial processes, to provide a
platform to deliver efficiency gains by eliminating the unnecessary
duplication of resources. Our team of over 220 multilingual
employees, scalable office space and team structure mean
it can be a centre of excellence that grows with the business.
Global IS/IT system
The core of our business operates a single integrated information
systems and information technology (IS/IT) system, which was
specifically designed for the increasingly global nature of our
business and the progressively more complex supply chains we
have around the world. The new system will allow us to gather
and process information more quickly, enabling us to be more
responsive to customers.
04 | Tate & Lyle PLC | Annual Report 2015
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The strength of Tate & Lyle’s
business derives from
four main areas:
1
3
Attractiveness
of our global
markets
Resilient, cash
generative Bulk
Ingredients
business
2
Strong foundation
for growth in
Speciality Food
Ingredients
4
Strong financial
position
OUR MARKETPLACE
An increasingly
competitive marketplace
OUR BUSINESS MODEL
How our business
creates value
STRATEGY IN ACTION
How we are executing
our strategy
p14
p16
p20
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION
STRATEGIC REPORT | CHAIRMAN’S STATEMENT
How would you
sum up the year?
It has been a very challenging
year for the Group but the
determination of our employees
across the business to
improve our performance
has been unwavering.
06 | Tate & Lyle PLC | Annual Report 2015
Summary
This has been a very challenging year
for the Group as we have experienced a
number of challenges which have had
a significant impact on our financial and
operating performance. In the face of these
challenges, Javed and his team are taking
the necessary actions to identify and
address the root causes, and minimise
our exposure in the future.
Notwithstanding this, I am pleased the
Group continues to make progress against
our strategic objective set out in 2010 of
building a foundation on which to deliver
steady, sustainable growth in Speciality
Food Ingredients.
Safety
Once again, I am greatly saddened to have
to report a fatality at one of our facilities. In
June, one of our employees died in a tractor
accident at one of our grain storage facilities
in the US. This was in addition to two
fatalities, as a result of the accident that
I reported last year that occurred in
Singapore in April 2014. The tragic loss of
these lives reminds us yet again why safety
is, and must always be, our first priority.
While extensive analysis of the five fatalities
which have occurred over the last two years
has not revealed any common cause, during
the year we undertook a thorough review
across the Group of our safety management
programme and accident prevention
initiatives. This included the use of external
safety auditors to review safety management
and controls at our major manufacturing
sites. Based on the findings of the review,
a number of actions have been taken to
further strengthen our safety processes,
details of which are set out in the Corporate
Responsibility section on page 39.
Dividend
The Board recognises the importance
of dividends to shareholders and remains
committed to the dividend policy it
implemented in 2009. Underpinned by
the confidence it has in the strategy of the
business, the Board intends to recommend
an unchanged final dividend for the year
ended 31 March 2015 of 19.8p to make a
total for the year of 28.0p, an increase of
1.4%. Further, the Board intends to maintain
the total dividend payment at 28.0p for the
year ending 31 March 2016.
Subject to shareholder approval, the
proposed final dividend will be due and
payable on 31 July 2015 to all shareholders
on the Register of Members at 3 July 2015.
Capital allocation policy
The effective use of capital on behalf of
shareholders is our primary objective. To
support our growth strategy we believe in
maintaining an efficient, but prudent, capital
structure, while retaining the flexibility to
invest in growing the business. As such, our
balance sheet will continue to be managed
to maintain debt ratios within an investment
grade credit rating. Our priorities for the
allocation of capital are as follows:
• First of all we want to ensure that we
have sufficient resources to invest in the
business to fund working capital and
growth in Speciality Food Ingredients
• Second, is our commitment to a
progressive dividend policy, where we aim
to grow the dividend over time taking into
account the earnings prospects of the
business
• Third, we will look to maintain flexibility to
accelerate our strategy through selective
acquisitions.
Conclusion
It has been a very challenging year for the
Group but the determination of our
employees across the business to improve
our performance has been unwavering.
I would like to acknowledge their hard work
and, on behalf of the Board, thank them for
their outstanding commitment and support.
Sir Peter Gershon
Chairman
27 May 2015
Strategic progress
During the year, we further strengthened our
Speciality Food Ingredients business with the
launch of two major new products and by
the completion of two ‘bolt-on’ acquisitions.
On 21 April 2015, just after the year end,
we announced two major actions to re-align
our business to further strengthen and focus
on Speciality Food Ingredients.
The first is reaching an agreement to re-align
our European Eaststarch joint venture with
Archer Daniels Midland Company. Through
this re-alignment, which is subject to
regulatory clearances and is expected to
close in the summer, we will exit the
predominantly Bulk Ingredients plants in
Bulgaria, Turkey and Hungary and acquire
full ownership of the more speciality-focused
plant in Slovakia.
The second is our decision to re-focus
and re-structure our SPLENDA® Sucralose
business. As a result of significantly changed
industry economics, we decided to make
some fundamental changes to how we
approach the sucralose market and our
manufacturing footprint. More specifically,
in addition to pursuing a rigorous value-
based approach to securing volume,
we will materially lower our cost base by
consolidating all SPLENDA® Sucralose
production into our US facility, and by
closing our Singapore facility in spring 2016.
These actions will position SPLENDA®
Sucralose as a more focused, low-cost and
sustainable business.
Operational performance
The particularly prolonged and severe
2013/14 winter in the US meant that we
entered the year with significantly reduced
inventory levels which impacted our ability
to fulfil customer orders. Our ability to meet
orders for SPLENDA® Sucralose was also
impacted by the extended shutdown of the
Singapore plant following the accident in
April 2014. These factors, together with
unexpectedly strong demand in emerging
markets, placed significant pressure on our
global supply chain, leading to additional
costs of fulfilment and some missed sales
opportunities.
As a result of these issues, a detailed review
of our global planning and supply chain
processes was conducted. We have also
confirmed that, although no material
incremental capital investment was required
to better manage customer needs beyond
the programme of capital expenditure
announced as part of our May 2014 full year
results, improvements were needed in
our operating and supply chain planning
capabilities and to other internal planning
processes. A programme to implement
these improvements is underway.
Board composition
On 1 September, Nick Hampton joined
Tate & Lyle as Chief Financial Officer having
spent 20 years working at PepsiCo. Nick
brings extensive financial, commercial and
technical experience to Tate & Lyle and is
a very welcome addition to our executive
team and our Board.
The decision to close the Singapore facility,
which has played an important role in
establishing the prominent position of
SPLENDA® Sucralose in the global high-
intensity sweetener market, was not taken
lightly by the Board. While this decision
results in an impairment charge of
£113 million, even taking into account the
anticipated closure costs, the facility has
provided strong returns to investors over
its life-cycle which have been well in excess
of our cost of capital.
We are very grateful to Tim Lodge for his
important contribution in his six years as
Chief Financial Officer and throughout his
25-year career with Tate & Lyle. We wish him
every success in the next stage of his career.
At the end of December, Robert Walker
stepped down from the Board following the
completion of his term of appointment and
I would like to thank Robert for his
commitment and hard work during his
tenure.
I would like to thank all our employees in
the Eaststarch joint venture and at our
Singapore facility who will be leaving the
Group, for their support and commitment
over the years. I wish them well for the future.
In January, we welcomed Paul Forman to
the Board as a non-executive director and
a member of the audit, remuneration and
nominations committees. Paul’s wide
experience of managing international
businesses, developing business-to-business
customer and market-led strategies, and
commercialising innovation pipelines will be
of significant benefit to the Board.
Tate & Lyle PLC | Annual Report 2015 | 07
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION STRATEGIC REPORT | CHIEF EXECUTIVE’S REVIEW
How did we address
the challenges faced
this year?
We put in place a programme
to implement improvements
required to operating and supply
chain planning capabilities and
to internal planning processes.
Headlines
• Group adjusted profit before tax in line
with February guidance, 30% lower at
£224m (2014 – £322m):
– Costs from operational and supply
chain disruption of £20m
– SPLENDA® Sucralose adjusted
operating profits lower by £46m
(£43m in constant currency)
– European Bulk Ingredients adjusted
operating profit lower by £17m
• Speciality Food Ingredients adjusted
operating profit 29% lower in constant
currency at £149m (2014 – £213m)
• Bulk Ingredients adjusted operating
profit 19% lower in constant currency
at £133m (2014 – £172m)
• Business re-alignment announced on
21 April 2015 to further focus on and
strengthen Speciality Food Ingredients:
– Re-focus SPLENDA® Sucralose on
rigorous value-based strategy and
consolidate production into one
facility: impairment charge of £113m
included in total exceptional charges
of £142m (2014 – £14m)
– Re-align Eaststarch European joint
venture by acquiring full ownership
of the more speciality-focused plant
in Slovakia and exiting predominantly
Bulk Ingredients plants in Bulgaria,
Turkey and Hungary. We will receive
€240m in cash on completion of the
transaction
• Implementation of new supplementary
disclosure framework to provide more
detail on business performance,
including new disclosure on Innovation;
volume from new products nearly
doubled in the year
• Two major new product launches:
DOLCIA PRIMATM Allulose and
CLARIA® Functional Clean-Label
Starches
• Speciality Food Ingredients completed
two ‘bolt-on’ acquisitions in Asia Pacific
and Latin America
• Proposed final dividend of 19.8p,
making a total dividend of 28.0p
(2014 – 27.6p), up 1.4% on prior year
• The Board intends to maintain the total
dividend payment at 28.0p for the year
ending 31 March 2016
08 | Tate & Lyle PLC | Annual Report 2015
Overview of the Group’s performance
The Group’s performance for the year was
significantly held back by three main factors:
first, the impact of operational and supply
chain issues experienced mainly in the first
half of the financial year; secondly, the
continued extremely competitive market
for SPLENDA® Sucralose; and thirdly, the
impact in the second half of the financial
year of volatility and lower pricing in some
of the commodity markets in which our Bulk
Ingredients business operates.
Adjusted sales for the year were £2,694
million (2014 – £3,147 million), 14% lower
than the prior year (11% in constant
currency), with adjusted sales in Speciality
Food Ingredients down 8% (4% in constant
currency) to £908 million (2014 – £983
million) and 17% lower in Bulk Ingredients
(14% in constant currency) at £1,786 million
(2014 – £2,164 million). Adjusted operating
profit was 29% lower (27% in constant
currency) at £247 million (2014 – £349
million), with adjusted operating profit in
Speciality Food Ingredients down 30%
(29% in constant currency) to £149 million
(2014 – £213 million), and 23% lower (19%
in constant currency) in Bulk Ingredients at
£133 million (2014 – £172 million). Adjusted
profit before tax was 30% lower (28% in
constant currency), at £224 million (2014 –
£322 million), and adjusted diluted earnings
per share was 32% lower (29% in constant
currency) at 37.7p (2014 – 55.7p).
Balance sheet and financial
management
Net debt of £504 million at 31 March 2015
was higher than at the end of the prior year
(2014 – £353 million), resulting mainly from
lower earnings, capital investments in
growth of Speciality Food Ingredients,
dividend payments and adverse exchange
movements of £46 million (including
£7 million from joint ventures), primarily as
a result of an increase in the value of dollar-
denominated debt due to the strengthening
of the US dollar against sterling.
The key performance indicators (KPIs) of
our financial strength, the ratio of net debt
to pre-exceptional earnings before interest,
tax, depreciation and amortisation (EBITDA)
and interest cover, remain well within our
internal thresholds. At 31 March 2015,
the net debt to EBITDA ratio was 1.3 times
(2014 – 0.8 times), against our internal
threshold of 2.0 times, and interest cover
on total operations was 10.7 times,
(2014 – 11.6 times), comfortably ahead
of our minimum threshold of 5.0 times.
The return we generate on our assets
decreased during the year due to lower
earnings with a return on capital employed
of 13.9% (2014 – 19.2%), although this
remains well ahead of our weighted average
cost of capital.
Our average quarterly cash conversion
cycle worsened by eight days to 47 days
(2014 – 39 days) resulting primarily from
higher inventory days, as we rebuilt inventory
and recovered from supply chain disruption,
and higher receivables days, partially offset
by higher payables days.
Safety
As a result of the four tragic accidents that
occurred in the 2013 and 2014 calendar
years which led to five fatalities, during the
year we undertook a thorough review of our
safety management and accident prevention
programmes across the Group. This
included the use of external safety auditors
to review safety management and controls
at all of our major manufacturing sites.
Based on these reviews, we have further
strengthened our safety and accident
prevention programmes, which are being
overseen by the Corporate Responsibility
Committee of the Board. Our clear priority
going forward is to re-establish the
consistently high level of safety performance
we have achieved in previous years.
New supplementary disclosure
framework
To provide more detail on our business
performance, in addition to the segmental
disclosure required under IFRS (which
remains unchanged), and given the evolving
nature of the business including the changes
announced in April, we intend to disclose
additional information regarding the
performance of our operating segments.
We believe this will provide a clearer
understanding of the drivers of performance,
better highlight the impact of commodity
volatility, and drive a greater understanding
of the sustainable growth potential of the
business. Details of the additional
disclosures are set out on page 31.
Operational and supply chain
disruption
Internal operational and supply chain
disruption significantly impacted our
business during the year, leading both to
additional costs of order fulfilment totalling
£20 million and some missed sales
opportunities. This disruption occurred due
to a combination of factors. The unusually
prolonged and severe 2013/14 winter in
the US caused operational difficulties in our
US plants which led us to enter the 2015
financial year with much lower inventories
than usual. Then, in the first quarter of the
financial year, following an industrial
accident, our SPLENDA® Sucralose facility
in Singapore had to take an extended
shutdown. These events materially disrupted
our supply chain as we had to manage a
combination of operational challenges in
our plant network, low absolute levels of
inventory, and misalignments between
customer demand and inventory location.
As a result of these issues, in September
2014, we initiated a detailed review of our
global demand, supply and planning
processes. This review, which was
completed in February 2015, confirmed
that the programme of incremental capacity
expansion announced as part of our May
2014 full year results, together with ongoing
actions to increase inventory held closer
to our customers, will allow us to better
manage customer needs. The additional
capacity is expected to come on stream
in the second half of the 2016 financial year
as planned. The review also highlighted that
improvements were required to operating
and supply chain planning capabilities and
to the robustness of internal planning
processes. A programme to implement
these improvements is progressing well and
a number of actions are already in place. We
will continue to execute these improvements
during the course of the 2016 financial year.
SPLENDA® Sucralose
Adjusted operating profit from SPLENDA®
Sucralose for the year ended 31 March 2015
was £16 million, 73% lower than the prior
year (2014 – £62 million). As a result of this
significant deterioration in profitability, during
the year we undertook a detailed analysis
of this business to evaluate how best to
maximise returns. This analysis found that,
while demand for sucralose remains strong
driven largely by consumer desire for more
calorie-reduced food and drink and by the
superior taste and functionality that
sucralose delivers, a substantial increase in
industry capacity, particularly over the past
two years, had led to supply being well in
excess of demand. This had caused
industry behaviour and economics to
change significantly and we do not expect
this situation to change materially in the
medium term.
Accordingly, on 21 April 2015, we
announced our SPLENDA® Sucralose
business would be re-focused in two ways.
First, by taking a rigorous valued-based
approach to securing volume by focusing
on the areas where we see value with
customers who fully value the benefits
of our SPLENDA® Sucralose product
including quality, provenance, food safety
and responsible manufacturing and
environmental practices. Secondly, by
materially lowering the manufacturing cost
base of the business by consolidating all
production into our McIntosh, Alabama
facility in the US from spring 2016. After a
phased transition over the next 12 months,
the Singapore facility will close permanently.
We expect to invest around £18 million
to consolidate production in McIntosh.
This mainly relates to the transfer of
equipment from Singapore to McIntosh
and for additional equipment at McIntosh
to produce all our SPLENDA® Sucralose
Tate & Lyle PLC | Annual Report 2015 | 09
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION STRATEGIC REPORT
Chief Executive’s Review continued
product forms. When the transfer is
complete in spring 2016, McIntosh will be
capable of supplying our customers’ existing
and ongoing needs.
The Singapore facility has played an
important role in establishing the prominent
position of SPLENDA® Sucralose in the
global high-intensity sweetener market and
has provided strong returns to investors over
its life-cycle which have been well in excess
of our cost of capital. However, the
combined effect of lower market pricing and
higher energy and other production costs
at the location, led us to conclude that the
facility will not be cost competitive going
forward. The McIntosh facility operating
at a higher scale and utilisation level than
it does currently will provide a materially
lower-cost manufacturing position from
which to operate.
SPLENDA® Sucralose is an integral
ingredient in many of our customers’
products, and sucralose continues to be
the most incorporated high-intensity
sweetener in new product launches globally.
The fundamental changes we are making
to how we approach the market and our
manufacturing footprint will position
SPLENDA® Sucralose as a more focused,
low-cost and sustainable business. We
expect this business to be around
breakeven before the impact of exceptional
items in the year ending 31 March 2016, with
some anticipated transition costs offsetting
a lower depreciation charge, and looking
further ahead, we expect the business to
return to modest profitability
in the 2017 financial year.
Re-alignment of the Eaststarch
European joint venture
On 21 April 2015, we signed an agreement
with Archer Daniels Midland Company
(ADM) to re-align our Eaststarch C.V.
(Eaststarch) joint-venture corn wet milling
business in Europe in which we each own
a 50% equity share. Under the terms of the
agreement, we will:
• Strengthen our Speciality Food
Ingredients business by acquiring full
ownership of the more speciality-focused
plant in Slovakia
• Substantially reduce our European Bulk
Ingredients footprint by exiting the
predominantly Bulk Ingredients plants
in Bulgaria, Turkey and Hungary which
will transfer to ADM
• Receive a cash sum of €240 million at
closing, subject to customary closing
adjustments, including for net cash and
working capital, and an additional payment
of up to €20 million in 2019 conditional on
future corn and sugar pricing
• Continue to supply our European
customers with crystalline fructose, a
speciality sweetener, by being appointed
as exclusive distributor for crystalline
fructose produced from the plant in Turkey
under a long-term agreement
• Focus our European business on
speciality food ingredients by appointing
ADM as exclusive agent for bulk
ingredients produced from the plant in
Slovakia and Tate & Lyle’s wholly-owned
corn wet mill in the Netherlands under
a long-term agreement.
Completion of the agreement is conditional
upon regulatory clearances which we
expect in summer 2015.
The reform of the EU Sugar Regime in
October 2017 opens the way to greater
competition between isoglucose and sugar
in the EU that will bring with it the need for
potentially significant capital investment in
bulk sweeteners. Our strategy since 2010
has been to invest for growth in Speciality
Food Ingredients and, therefore, the
re-alignment of the joint venture enables
us to realise good value from our European
Bulk Ingredients’ assets before a decision
on capital investment is required.
In the year ended 31 March 2014, Eaststarch
had adjusted operating profit of £107 million
of which the Group has a 50% share. Due
to lower EU sugar prices, the results of
Eaststarch for the year ended 31 March
2015 were around 23% lower at £83 million.
Had the transaction taken effect from 1 April
2014, Group adjusted operating profit in the
year ended 31 March 2015 would have been
reduced by £32 million and diluted earnings
per share would have been reduced by
5.5 pence. Depending on the timing of
completion of the transaction and the final
transition arrangements, we anticipate the
reduction on Group earnings will be
somewhat lower in the year ending 31 March
2016. We anticipate that, following the
impact of re-structuring the European
operations, from the start of the year ending
31 March 2017 the dilution in earnings as a
result of the transaction will be around
3 pence per share.
The re-alignment of Eaststarch represents
another important step in the evolution of
Tate & Lyle into a global speciality food
ingredients business. The plant in Slovakia
provides a solid base from which to grow
our speciality food ingredients business
in Europe, and we intend to increase the
production of speciality food ingredients
at the plant over time. As a result of the
re-alignment, the proportion of Group
adjusted operating profit from Speciality
Food Ingredients (excluding SPLENDA®
Sucralose) will increase from 47% to around
55%, and in Europe, Speciality Food
Ingredients will effectively contribute all
of the profit.
Reducing volatility in Bulk Ingredients
Our strategy is to progressively re-position
our Bulk Ingredients division to dampen
volatility and create a more stable, cash-
generative business. The re-alignment
of the Eaststarch joint venture, which will
result in the Group substantially exiting
bulk sweeteners in Europe and therefore
reducing our exposure to volatility in the
EU sugar market (which impacted our profits
in the second half of the 2015 financial year),
is fully in line with that strategy.
Following the re-alignment, Bulk Ingredients
will become a predominantly North
American business. In North America,
Bulk Ingredients benefits from strong
positions in mature but large markets such
as bulk sweeteners and industrial starches,
long-standing customer relationships, and
scale, efficient manufacturing assets. In the
US, these manufacturing assets (corn wet
mills) are integrated with the production of
speciality food ingredients and therefore
also provide an efficient manufacturing
base from which to support growth in
that business.
North America also has structural
advantages which enable better
management of the volatility inherent in this
business. For example, in the US, unlike in
Europe, we have access to a corn futures
market which allows us to hedge US corn
exposures. In addition, we continue to
proactively manage the business to
dampen volatility where possible, such
as by moving more customers in the US
to tolling contracts which now represent
around 75% of US bulk sweetener volumes.
Increasing the number of toll customers
helps to reduce the risk of underlying
commodity movements.
10 | Tate & Lyle PLC | Annual Report 2015
in given growing strong consumer demand.
For example, global product launches
containing fibres between calendar years
2011 and 2014 increased by a compound
annual growth rate (CAGR) of 33%, reflecting
increased consumer awareness of the
importance of fibre in diets.
During the year, we launched two major
new products which directly address two
of the consumer trends we are focusing
on – calorie reduction and ‘clean label’.
Both these new products were developed
at our three year-old global Commercial and
Food Innovation Centre in Chicago, USA,
demonstrating the innovation capabilities
we are steadily beginning to build.
In September, we launched our new
CLARIA® line of functional ‘clean-label’
starches. CLARIA® starches, developed
through a proprietary patent-pending
process, provide food manufacturers
with functionality similar to modified food
starches but with the benefits of a cleaner
colour, a cleaner taste, and a ‘clean label’
(ie they label simply as ‘starch’).
Then, in February, we launched DOLCIA
PRIMATM Allulose, a low-calorie sugar in the
US. DOLCIA PRIMATM is our brand name for
allulose, a sugar that exists in nature but that
has 90% fewer calories than sucrose (table
sugar). To produce allulose, we developed a
unique, patent-protected process to convert
basic agricultural raw materials (currently
corn in the US) into allulose. DOLCIA
PRIMATM is expected to allow food and
beverage manufacturers to significantly
reduce the calories in products while
maintaining the same great taste and texture
of sugar which consumers enjoy.
Both these new product launches have
attracted strong customer interest reflecting
the health and wellness benefits they bring
to consumers and their relevance to our
customers’ development priorities. A range of
projects with customers are underway giving
us confidence in their long-term potential.
New products, although still relatively small,
are growing strongly with an 86% volume
CAGR rate between the 2011 and 2015
financial years, and volume in the 2015
financial year almost double the prior year.
The pipeline remains robust with a number
of projects at various stages of development
including four in the final stages with
expected launches in the next 12-24 months.
Solid strategic progress in Speciality
Food Ingredients
While the financial performance of the
Speciality Food Ingredients division during
the year was held back by supply constraints
and price erosion in SPLENDA® Sucralose,
the underlying business and demand for our
products remains strong, and we made good
progress on a number of fronts.
We continue to build our technical expertise
and infrastructure in the higher growth
markets of Asia Pacific and Latin America,
in which adjusted sales for the business
excluding SPLENDA® Sucralose and Food
Systems now represent 15% of total adjusted
sales in Speciality Food Ingredients, up from
8% in 2011. Asia Pacific and Latin America
(excluding Food Systems) now represent
nearly 20% of the employees in Speciality
Food Ingredients.
We executed two ‘bolt-on’ acquisitions in
Asia Pacific and Latin America during the
year. In August, we completed the acquisition
of Winway Biotechnology Nantong Co., Ltd
based in Nantong, China. Winway is a
producer of polydextrose fibre in China and
this acquisition provides a strong base from
which to accelerate the growth of our dietary
fibres business in Asia Pacific. In December,
we acquired a majority equity interest in
Gemacom Tech Indústria e Comércio S.A.
(Gemacom), the leading domestically-owned
food systems business in Brazil. During
December, we paid £12 million to terminate
distribution rights previously held by a
third party to sell our crystalline fructose
to customers primarily in Asia Pacific.
We continue to actively explore further
opportunities, including acquisitions and
partnerships, with a strong focus on Asia
Pacific and Latin America.
Robust innovation pipeline
Innovation is a key driver of long-term growth
for Tate & Lyle. Our innovation approach
starts with a deep understanding of the
consumer and to ensure that changing
consumer perceptions and trends influence
the categories we operate in. Our
understanding of these long-term global
consumer trends drives our innovation
approach and priorities, such as the
increasing demand for convenience food,
a much greater focus on health and wellness
particularly in light of the rising incidence of
obesity and diabetes worldwide, and an
increasing preference for ‘natural’ and
‘clean-label’ foods. Our aim is to help
consumers make healthier and tastier
choices whenever they eat or drink and to
deliver this we focus our resources and
expertise in three main areas of market
opportunity: calorie, sugar, salt and fat
reduction; fibre enrichment; and ‘clean label’.
These are attractive spaces to operate
Strengthening the executive
management team
The senior leadership team was substantially
strengthened during the year with the
objective of leading the Group into the next
stage of its development. During the year,
the following appointments were made to
the Group Executive Committee:
i) Gabriella Parisse was appointed
President, Innovation and Commercial
Development from 1 May 2014. Gabriella
joined Tate & Lyle in September 2012 as
Senior Vice President, Global Marketing,
having previously spent 25 years at
Johnson & Johnson.
ii) Nick Hampton was appointed Chief
Financial Officer (and a member of the
Board of Directors) from 1 September
2014. Nick joined Tate & Lyle from
PepsiCo where he worked for 20 years.
iii) Joan Braca was appointed President,
Speciality Food Ingredients from
1 November 2014. Joan joined Tate & Lyle
in January 2013 as Senior Vice President
& General Manager, Asia Pacific,
Speciality Food Ingredients. Prior to
joining Tate & Lyle, Joan spent nearly
20 years in the speciality chemicals
industry mainly with Rohm and Haas
(part of the Dow Chemical Company
since 2009).
iv) Rowan Adams was appointed Executive
Vice President, Corporate Affairs from
13 November 2014 with global
responsibility for communications and risk
management. Rowan joined Tate & Lyle
from National Westminster Bank in 2001.
v) Pierre Schoumacher was appointed
President of the newly formed Global
Operations unit from 13 November 2014
with responsibility for activities from
raw material procurement through to
manufacturing, supply chain and
logistics. Pierre joined Tate & Lyle from
Procter & Gamble in 2000.
vi) Jim Stutelberg joined Tate & Lyle on
1 December 2014 and was appointed
President, Bulk Ingredients. Jim joined
from PPG Industries where he led its
Automotive Coatings business. Prior to
that, he spent 13 years with Dow Corning.
Delivering a global IS/IT system
In August, we successfully rolled out our
single, global IS/IT system to our North
American business. This followed the
upgrade of this system in our European
business (not including the Food Systems
business) in May. We are now focused
on fully embedding the new processes
and systems.
Tate & Lyle PLC | Annual Report 2015 | 11
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION STRATEGIC REPORT
Chief Executive’s Review continued
Key performance indicators (KPIs)
Our KPIs for the year ended 31 March 2015
are detailed on pages 22 and 23.
Outlook
The year ahead will be one of structural
change as we re-align the Eaststarch joint
venture and SPLENDA® Sucralose, embed
changes to improve our global supply chain
capabilities, and bring on line additional
growth capacity for Speciality Food
Ingredients. We anticipate that, in this year of
change, adjusted profit before tax for the year
ending 31 March 2016 will be broadly in line
with the 2015 financial year on a pro-forma1
basis assuming the Eaststarch transaction
completes in the summer as expected.
The longer term outlook for the business
remains positive. We expect the global
market for speciality food ingredients to
grow at mid-single digits and our objective
is to grow modestly ahead of the market via
organic growth supplemented by ‘bolt-on’
acquisitions. We continue to target sustained
cash flows from Bulk Ingredients and to
dampen volatility where possible. As the
mix of the Group moves towards our higher
margin Speciality Food Ingredients business
augmented by operational improvements,
over time we expect to steadily enhance
Group profit and returns on capital.
Javed Ahmed
Chief Executive
27 May 2015
Conclusion
The long-term transformation of Tate & Lyle
continues to be a major undertaking with
nearly all areas of the global business
impacted in some way. Infrastructure,
systems, processes and the organisation
have all been materially changed. In some
areas such as innovation, our customer-
facing capabilities, our presence in Asia
Pacific and Latin America, and the strength
of our people, we have made very good
progress. In others, such as our global
supply chain, we have faced major
challenges and work is underway to address
these. I would like to thank all employees
across Tate & Lyle for their continued hard
work and dedication during what has been
a challenging year.
While our financial performance in the year
has been disappointing, the underlying
business and demand for our products
remains strong. With a portfolio of products
with strong market positions, an expanding
global footprint, and a steady flow of new
products targeted at addressing major
consumer trends, particularly in the health
and wellness space, our Speciality Food
Ingredients business is structurally well-
positioned for the future.
By re-aligning the Eaststarch joint venture,
Bulk Ingredients will reduce its exposure to
volatility in the form of European sugar price
fluctuations, and become a predominantly
North American business with strong market
positions and scale, efficient assets. These
assets also provide a low cost manufacturing
base from which to support continuing
growth in Speciality Food Ingredients.
We are firmly focused on improving our
performance and continuing the evolution
of Tate & Lyle into a global Speciality Food
Ingredients business supported by cash
generated from Bulk Ingredients. As we enter
the new financial year, we believe Tate & Lyle
is a more streamlined, focused and higher
quality business, capable of generating
sustained growth over the long term.
1 Assumes foreign exchange rate of GBP:USD
£1.00/$1.54 and completion of the Eaststarch
transaction on 30 June 2015. See unaudited
pro forma profit before tax for the year ended
31 March 2014 on page 31.
12 | Tate & Lyle PLC | Annual Report 2015
STRATEGIC REPORT | GROUP EXECUTIVE COMMITTEE
Who is responsible for
delivering our strategy?
The Group Executive Committee comprises the two
Executive Directors and seven senior executives.
The team oversees
the development and
execution of the Group’s
strategy, and has overall
responsibility for achieving
business results.
We made the following changes to
the Group Executive Committee (ExCo)
during the year as part of the executive
succession planning activity and
following the reorganisation of the
Group’s operations: Nick Hampton
joined the Board and the Committee
on 1 September 2014, Gabriella Parisse
and Joan Braca were promoted on
1 May 2014 and 1 November 2014
respectively, and Rowan Adams and
Pierre Schoumacher were promoted
on 13 November 2014. Jim Stutelberg
joined the Group on 1 December 2014.
Read the biographies of ExCo
members at www.tateandlyle.com
Javed Ahmed
Chief Executive
Nick Hampton
Chief Financial Officer
Joan Braca
President, Speciality Food Ingredients
Jim Stutelberg
President, Bulk Ingredients
Pierre Schoumacher
President, Global Operations
Gabriella Parisse
President, Innovation and
Commercial Development
Rowan Adams
Executive Vice President,
Corporate Affairs
Robert Gibber
Executive Vice President,
General Counsel
Rob Luijten
Executive Vice President,
Human Resources
Tate & Lyle PLC | Annual Report 2015 | 13
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION
STRATEGIC REPORT | OUR MARKETPLACE
What does the global
marketplace look like?
We segment the global ingredients market into speciality ingredients
which add specific functionality and value to customers’ products, and
mature high-volume bulk ingredients which are largely undifferentiated
and compete primarily on price and service.
SPECIALITY FOOD INGREDIENTS
Strong consumer trends
The global market for speciality food
ingredients is large and growing, underpinned
by strong consumer trends: increasing demand
for convenience food; and also for ingredients
with health and wellness benefits; and
consumers requiring ‘clean-label’ ingredients.
Focus and depth
Our strategy is to focus on three core
platforms and to have deep expertise within
each one:
• Sweeteners
• Texturants
• Health and wellness.
Global speciality food
ingredients market
By major product category
(worth approximately
US$42 billion in total)
1. Sweeteners 11%
2. Texturants 23%
3. Functional food
ingredients 14%
4. Colours and
preservatives 9%
5. Flavours 36%
6. Other 7%
6
1
2
3
5
4
Tate & Lyle Speciality Food Ingredients
products in these categories:
1. Sweeteners
• SPLENDA® Sucralose
• Speciality corn-based sweeteners
• PUREFRUITTM Monk Fruit Extract
• TASTEVA® Stevia Sweetener
• DOLCIA PRIMATM Allulose
2. Texturants
• Speciality food starches
• Food stabiliser systems
• CLARIA® Functional Clean-Label Starches
3. Functional food ingredients
• PROMITOR® Soluble Corn Fiber
• STA-LITE® Polydextrose
• SODA-LO® Salt Microspheres
• PromOat® Beta Glucan
• PrOateinTM Oat Protein
Source: Leatherhead; LMC International; Company analysis; data as at 2013.
BULK INGREDIENTS
Mature consolidated industry
Bulk Ingredients operates in a mature,
consolidated industry, manufacturing largely
commodity products, where the level of
profitability is related to the level of industry
capacity utilisation.
Steady sustained cash generation
Our strategy is to generate sustained
long-term cash flows to help fund growth
in Speciality Food Ingredients:
• Optimise margins
• Optimise and fill grind capacity
• Ensure security of raw material supply
• Dampen volatility.
US corn wet milling
industry output1
By major product category in
2014 (76 billion lbs)
1. Liquid sweeteners
(commercial weight) 44%
2. Starch 9%
3. Ethanol 12%
4. Co-products 35%
1
4
3
2
Tate & Lyle Bulk Ingredients products
in these categories:
1. Liquid sweeteners
• High fructose corn syrup
• Glucose
• Dextrose
2. Starch
• Industrial starch
3. Ethanol
• Fuel ethanol
4. Co-products
• Corn oil
• Corn gluten feed
• Corn gluten meal
1
Industry output and includes speciality and bulk ingredients in relevant categories.
Sources: The Corn Refiners Association (CRA) based on 2014 data from the US Department of Agriculture,
Renewable Fuels Association, American Coalition for Ethanol, press reports, and from industry data
compiled for CRA by Veris Consulting, Inc. Corn marketing year ended 31 August 2014.
14 | Tate & Lyle PLC | Annual Report 2015
Convenience
• Changes in consumer lifestyles continue
to increase the demand for packaged and
convenience foods.
• Product launches with a ‘convenient’ claim
in 2014 were nearly 50% higher than three
years ago.
• 77% of global convenience product launches
in 2014 had a ‘health and wellness’ claim.
• Tate & Lyle’s ingredients and expertise in
convenience foods draw on decades of
development across a wide range of
products, including ready meals, soups,
sauces, dressings, fillings, toppings and
instant powder concepts.
Health and wellness
• Consumers are increasingly aware of the
link between diet and health and are seeking
products enhanced or fortified with
ingredients such as fibre.
• The number of product launches containing
fibres increased by 12% globally in 2014.
Since 2012, the increase is around 75%
globally.
• In addition to our strong fibres portfolio,
we address another important health and
wellness trend – salt reduction – through
our SODA-LO® Salt Microspheres.
‘Clean label’
• Food and beverage manufacturers are
launching more ‘clean-label’ products in
response to increasing consumer demand
across a broad range of categories for
products which are seen as more ‘natural’
or ‘free from’.
• Around 25% of new product launches
globally were positioned as label-friendly
in 2014.
• We offer manufacturers a portfolio of
label-friendly solutions; the most recent
addition is our CLARIA® Functional
Clean-Label Starches launched in
September 2014.
Global convenience product
launches1,2,3
Global product launches
containing fibres1,2,4
Global ‘clean-label’ product
launches1,2,5
2014
2013
2012
150,946
145,560
115,108
2014
2013
2012
8,247
7,339
4,717
2014
2013
2012
59,060
52,114
41,011
Corn market dynamics
• The US corn wet milling industry processes
around 11% of the US crop annually.
• The 2014/15 corn harvest in the US delivered
a record crop with production slightly ahead
of the previous harvest. As a result, US corn
prices trended lower in the first half of the
year and were at an average of around
$4 a bushel in the second half.
• The industry’s returns depend on capacity
utilisation. The closure of a competitor plant in
January 2015 has tightened industry capacity.
• In Europe, corn prices declined in the first
half of the year but increased slightly in the
second half and are currently lower than a
year ago.
Bulk corn sweeteners
• Demand for US bulk corn sweeteners,
including HFCS, is closely linked to the
consumption of regular sweetened
carbonated soft drinks (CSDs).
• During the year, demand for regular CSDs
in the US was relatively stable, although
production challenges in the 2013/14 winter
meant sweeteners supply was tight.
• Demand for US HFCS in Mexico was lower
due to continued low Mexican sugar prices
(a substitute for HFCS) and the effect of
calorie consumption taxes.
• In Europe, the market operates under a
volume quota system. The continued decline
in EU sugar prices placed significant
pressure on EU sweetener prices.
Industrial markets
• Starch demand in the paper industry was
steady, with a decline in printing and writing
paper demand offset by growth in packaging
papers and tissue.
• In Europe, additional starch capacity,
particularly from wheat processors, was
balanced by a robust packaging sector.
• Whilst US ethanol margins were healthy in
the first half of the year, conditions in the
industry deteriorated in the second half as
inventories rose to a three-year high towards
the end of financial year 2015.
US corn production (million bushels)6
US regular carbonated soft drinks
sales volume year-on-year change (%)
(year ended 31 March)7
US ethanol – estimated industry
net margin (over all costs) in the year
ended 31 March 2015 by quarter ($/ga)8
2014
2013
2012
14,216
13,829
2015
2014
-2.3
0.1
10,755
2013
-3.4
Q1
Q2
Q3
Q4
0.43
0.32
0.04
0.68
1 Source: Innova Market Insights.
2 Data is based on calendar years.
3
Definition: product launches that have at least one of these claims – convenient
consumption, easy-to-prepare, ready prepared, time saving.
Definition: products that contain soluble fibres in their formulation.
Definition: product launches claiming no additives/preservatives, natural, organic, and/or
without genetically modified organisms (non-GMO).
4
5
6
7
8
In marketing year beginning 1 September. Source: US Department of Agriculture.
Source: IRI Infoscan Reviews, Total US Multi-Outlet and Convenience (FDM, WMT, Dollar,
Club, Convenience Stores).
Source: Iowa State University. Based on dry miller net margin (Renewable Fuels Association
states that c.90% of US ethanol industry uses dry mill process).
Tate & Lyle PLC | Annual Report 2015 | 15
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION
STRATEGIC REPORT | OUR BUSINESS MODEL
How does the business
create value?
OUR BUSINESS MODEL
We use our know-how,
built up over many years, to
transform raw materials into
high-quality food ingredients.
These ingredients are used
by our customers to create
foods consumed by millions
of people every day.
Raw
materials
Global
Operations
p4
How do we deliver value
to our customers?
Consumer insights drive our product development,
and, together with the sector knowledge of our food
scientists, differentiate us from our competitors and
help our customers meet consumer needs. We apply
our manufacturing know-how to turn agricultural raw
materials into high-quality food ingredients for delivery
to our customers worldwide.
Sourcing raw materials
Most of our ingredients are produced from crops,
predominantly corn, and we have a sustainable
agriculture programme in place. Ensuring we have
a reliable source of corn is essential. This involves
understanding commodity markets and developing
long-term, mutually beneficial relationships with
producers to secure supply.
16 | Tate & Lyle PLC | Annual Report 2015
p42 Sustainable agriculture
How has our business
model evolved this year?
We established Global Operations, a single global organisation with
responsibility for raw material procurement, manufacturing, supply
chain and logistics.
What differentiates us?
Customer relationships
We work closely with customers to provide them with high quality
ingredients and solutions to address the challenge of creating great
tasting, healthy food that meets the needs of consumers. Our local
customer teams work in regional application centres to solve
customers’ taste, ingredient and formulation challenges locally.
A truly global operating model
We operate through two global divisions – Speciality Food
Ingredients and Bulk Ingredients. Each division has its own sales
force and commercial operations to provide the necessary focus
and expertise to customers in their respective end markets.
Both divisions are supported by a single manufacturing network
producing high-quality ingredients.
Sp e ci a lit y F ood Ingredie
n
t
s
Innovation
and Commercial
Development
p4
B
ulk Ingre d i e
n t s
Customers
Consumers
Producing high-quality
ingredients in a
sustainable way
During the year our production facilities included:
• A network of corn wet mills in North America and Europe
that manufacture both bulk and speciality ingredients
• Two large-scale continuous SPLENDA® Sucralose processing
facilities in the US and Singapore
• A number of other ingredient processing plants and
smaller-scale blending facilities.
Environmental sustainability
• We work to address environmental considerations
across the life-cycle of our products
• We seek to improve environmental
sustainability by using resources such as
energy and water more efficiently, and
reducing waste.
Provenance, quality
and ethical standards
Food safety, quality, provenance and traceability are
very high priorities for our business. Our manufacturing
facilities are externally certified to the Global Food Safety
Initiative each year. Supply chain ethics are important
to us and our customers. We work with our suppliers to
help them achieve our clear standards, both operational
and ethical, and meet our compliance needs. We use
the Sedex social and ethical compliance system across
our manufacturing facilities and increasingly in our
supply chain.
p42 Product safety, quality and sustainability
p43 Standards in our supply chain
Tate & Lyle PLC | Annual Report 2015 | 17
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION STRATEGIC REPORT | OUR STRATEGY
How will we deliver our vision?
Our vision is to become the leading global provider
of speciality food ingredients and solutions.
SPECIALITY FOOD INGREDIENTS
Deep customer
engagement
We believe that getting closer
to our customers, developing
a better understanding of their
needs, and changing the ways
we interact with them, is a key
part of delivering sustainable
long-term growth.
SPECIALITY FOOD INGREDIENTS
Innovation
Creating a world-class innovation
capability is a key part of our
growth strategy. The Innovation
and Commercial Development
group (ICD) provides a fully
integrated approach to developing
and commercialising innovation to
meet our customers’ needs.
SPECIALITY FOOD INGREDIENTS
New markets and
customer channels
Our aim is to build our presence
significantly in emerging markets
and in those parts of the speciality
food ingredients market where
historically we have been
under-represented.
BULK INGREDIENTS
Sustained cash
generation
Within Bulk Ingredients, our
strategy is to provide stable,
long-term cash flow to help
fund growth in Speciality
Food Ingredients.
18 | Tate & Lyle PLC | Annual Report 2015
What is our focus?
Global network
Our global Commercial and Food Innovation Centre in Chicago, USA is helping us
transform the way we work with our customers. It has:
• Teams of highly qualified food technologists and other specialists
• Full sensory capabilities
• Full culinary capabilities
• High-tech food laboratories
• An advanced pilot plant.
We have also developed a global network of regional applications and
technical services facilities enabling us to interact directly with customers
across our markets, helping them develop new concepts and get them to
market faster.
What is our focus?
Ideas within our innovation pipeline are derived from three sources:
In-house innovation
• New products or technologies generated by in-house scientists
Open innovation
• Leverages our global network of research institutions, start-ups and universities
• Provides route to market for technologies or products close to commercial launch
Tate & Lyle venture funds
• Invests in early-stage speciality food ingredients concepts by partnering with
research institutions, other venture funds, universities and entrepreneurs
What were our priorities for the year?
• Broaden customer interaction through our
global network of innovation, applications
and technical services facilities.
• Improve quality and size of customer
project pipeline.
• Convert more customer relationships
into strategic partnerships.
What have we achieved?
• Robust number of customer visits to
our major innovation centres.
• Invested in building strategic partnerships
with customers.
• Rolled out customer management
programme training across our Speciality
Food Ingredients global sales force.
What’s next?
We will:
• Continue to broaden customer
interaction through our global
network of innovation, applications
and technical services facilities
• Increase the conversion rates from
our customer project pipeline
• Convert more customer relationships
into strategic partnerships.
What were our priorities for the year?
What have we achieved?
We will:
• Launch new products from within
our innovation pipeline.
• Increase sales from recently launched
products.
• Commercialised recent innovations.
• Added CLARIA® Functional Clean-Label
Starches to our texturants portfolio.
• Launched DOLCIA PRIMA™ Allulose,
• Continue to leverage open innovation
a low-calorie sugar, as part of our
network and partnerships.
sweeteners offering.
• Continued to progress projects through
our innovation pipeline.
• Launch new products from within our
innovation pipeline
• Increase sales from recently launched
products
• Work collaboratively with customers
through the innovation cycle to
accelerate post launch growth.
What is our focus?
Expanding in new markets and customer channels
• Building dedicated speciality food ingredients businesses in both Asia Pacific
and Latin America
• Investing in local infrastructure with the opening of regional applications and
technical services facilities in Asia Pacific and Latin America
• Changing the way we work with local and multinational food and beverage
manufacturers by establishing more direct relationships
• Selective acquisitions to broaden geographic presence
What were our priorities for the year?
What have we achieved?
We will:
• Deliver another year of strong organic
• Continued organic growth in Asia Pacific
• Deliver strong organic growth
growth in emerging markets.
• Complete acquisition of Winway
Biotechnology and continue to expand our
presence in emerging markets.
and Latin America.
• Expanded presence in Asia Pacific and
Latin America through two acquisitions
and re-purchase of distribution rights.
• Leverage dedicated resources to develop
• Created teams in North America to
relationships with both SMEs and food
specifically focus on different market
service customers.
segments.
What is our focus?
We aim to achieve sustained cash generation by:
• Dampening earnings volatility by diversifying our income streams
into new areas and reducing our exposures to commodity price volatility
• Optimising margins by gradually moving the corn that we grind away
from markets that are in long-term structural decline into higher margin
speciality food ingredients
• Ensuring the security of our supply of raw materials
• Reducing costs and continuing to improve operational efficiency
• Managing cash flows by consistent focus on converting our profits to cash
What were our priorities for the year?
What have we achieved?
• Optimise margins by improving product
• Took further actions to dampen volatility.
mix and delivering further operational
• Margins weakened during the year
efficiencies.
• Divert a greater share of corn grind
to Speciality Food Ingredients.
• Further investment in strengthening
security of raw material supply.
• Leverage bulk processing assets and
expertise to drive diversification.
principally as a result of supply
constraints.
• Leveraged bulk processing expertise
in supporting the development of a new
product launch.
in emerging markets
• Fully integrate Tate & Lyle Gemacom
Tech operations in Brazil and
continue to expand our presence
in emerging markets
• Drive growth in emerging markets
through sales teams focused on
specific customer channels and
• Pursue bolt-on acquisitions
solutions
selectively.
We will:
• Drive performance through leveraging
strong customer relationships and
customer service excellence
• Optimise margins by improving
product mix and delivering further
operational efficiencies
• Divert a greater share of corn grind
to Speciality Food Ingredients
• Leverage bulk processing assets
and expertise to drive further
diversification and accretive
earnings growth.
SPECIALITY FOOD INGREDIENTS
Deep customer
engagement
We believe that getting closer
to our customers, developing
a better understanding of their
needs, and changing the ways
we interact with them, is a key
part of delivering sustainable
long-term growth.
Innovation
Creating a world-class innovation
capability is a key part of our
growth strategy. The Innovation
and Commercial Development
group (ICD) provides a fully
integrated approach to developing
and commercialising innovation to
meet our customers’ needs.
New markets and
customer channels
Our aim is to build our presence
significantly in emerging markets
and in those parts of the speciality
food ingredients market where
historically we have been
under-represented.
BULK INGREDIENTS
Sustained cash
generation
Within Bulk Ingredients, our
strategy is to provide stable,
long-term cash flow to help
fund growth in Speciality
Food Ingredients.
What is our focus?
Global network
Our global Commercial and Food Innovation Centre in Chicago, USA is helping us
transform the way we work with our customers. It has:
• Teams of highly qualified food technologists and other specialists
• Full sensory capabilities
• Full culinary capabilities
• High-tech food laboratories
• An advanced pilot plant.
We have also developed a global network of regional applications and
technical services facilities enabling us to interact directly with customers
across our markets, helping them develop new concepts and get them to
market faster.
Ideas within our innovation pipeline are derived from three sources:
• New products or technologies generated by in-house scientists
In-house innovation
Open innovation
• Leverages our global network of research institutions, start-ups and universities
• Provides route to market for technologies or products close to commercial launch
Tate & Lyle venture funds
• Invests in early-stage speciality food ingredients concepts by partnering with
research institutions, other venture funds, universities and entrepreneurs
What were our priorities for the year?
• Broaden customer interaction through our
global network of innovation, applications
and technical services facilities.
• Improve quality and size of customer
project pipeline.
• Convert more customer relationships
into strategic partnerships.
What have we achieved?
• Robust number of customer visits to
our major innovation centres.
• Invested in building strategic partnerships
with customers.
• Rolled out customer management
programme training across our Speciality
Food Ingredients global sales force.
What’s next?
We will:
• Continue to broaden customer
interaction through our global
network of innovation, applications
and technical services facilities
• Increase the conversion rates from
our customer project pipeline
• Convert more customer relationships
into strategic partnerships.
What were our priorities for the year?
• Launch new products from within
our innovation pipeline.
• Increase sales from recently launched
products.
• Continue to leverage open innovation
network and partnerships.
What have we achieved?
• Commercialised recent innovations.
• Added CLARIA® Functional Clean-Label
Starches to our texturants portfolio.
• Launched DOLCIA PRIMA™ Allulose,
a low-calorie sugar, as part of our
sweeteners offering.
• Continued to progress projects through
our innovation pipeline.
We will:
• Launch new products from within our
innovation pipeline
• Increase sales from recently launched
products
• Work collaboratively with customers
through the innovation cycle to
accelerate post launch growth.
SPECIALITY FOOD INGREDIENTS
What is our focus?
SPECIALITY FOOD INGREDIENTS
What is our focus?
Expanding in new markets and customer channels
• Building dedicated speciality food ingredients businesses in both Asia Pacific
and Latin America
• Investing in local infrastructure with the opening of regional applications and
technical services facilities in Asia Pacific and Latin America
• Changing the way we work with local and multinational food and beverage
manufacturers by establishing more direct relationships
• Selective acquisitions to broaden geographic presence
What were our priorities for the year?
• Deliver another year of strong organic
What have we achieved?
• Continued organic growth in Asia Pacific
growth in emerging markets.
• Complete acquisition of Winway
Biotechnology and continue to expand our
presence in emerging markets.
• Leverage dedicated resources to develop
relationships with both SMEs and food
service customers.
and Latin America.
• Expanded presence in Asia Pacific and
Latin America through two acquisitions
and re-purchase of distribution rights.
• Created teams in North America to
specifically focus on different market
segments.
What is our focus?
We aim to achieve sustained cash generation by:
• Dampening earnings volatility by diversifying our income streams
into new areas and reducing our exposures to commodity price volatility
• Optimising margins by gradually moving the corn that we grind away
from markets that are in long-term structural decline into higher margin
speciality food ingredients
• Ensuring the security of our supply of raw materials
• Reducing costs and continuing to improve operational efficiency
• Managing cash flows by consistent focus on converting our profits to cash
What were our priorities for the year?
• Optimise margins by improving product
mix and delivering further operational
efficiencies.
• Divert a greater share of corn grind
to Speciality Food Ingredients.
• Further investment in strengthening
security of raw material supply.
• Leverage bulk processing assets and
expertise to drive diversification.
What have we achieved?
• Took further actions to dampen volatility.
• Margins weakened during the year
principally as a result of supply
constraints.
• Leveraged bulk processing expertise
in supporting the development of a new
product launch.
We will:
• Deliver strong organic growth
in emerging markets
• Fully integrate Tate & Lyle Gemacom
Tech operations in Brazil and
continue to expand our presence
in emerging markets
• Drive growth in emerging markets
through sales teams focused on
specific customer channels and
solutions
• Pursue bolt-on acquisitions
selectively.
We will:
• Drive performance through leveraging
strong customer relationships and
customer service excellence
• Optimise margins by improving
product mix and delivering further
operational efficiencies
• Divert a greater share of corn grind
to Speciality Food Ingredients
• Leverage bulk processing assets
and expertise to drive further
diversification and accretive
earnings growth.
Tate & Lyle PLC | Annual Report 2015 | 19
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION STRATEGIC REPORT | OUR STRATEGY IN ACTION
How have we been
executing our strategy?
INNOVATION
DEEP
CUSTOMER
ENGAGEMENT
Number of
application and
technical services
facilities to work
closely with
customers
16
Strengthening customer relationships
During the year we have been working more
closely with customers in a number of ways.
Our main customer facing facility in Chicago,
USA, has been the centre for a number of
significant projects, including CLARIA®
Functional Clean-Label Starches, launched
in September 2014. We involved customers
very early in the development of CLARIA®,
which was essential for ensuring its
commercial viability. Six months on, we have
customer wins in North America, Asia Pacific
and Latin America and, at the date of this
Annual Report, are conducting a joint trial of
the product with one of the world’s largest
fruit preparation manufacturers.
Meanwhile, in Europe, our innovation
centres have been working together to host
customers. One key highlight was a visit to
our European centres by a major Asian dairy
customer, reinforcing our strategic
partnership.
Working with customers is not limited to
our innovation centres and our sales
organisation, however, we also encourage
customers to visit our plants, which helps
deepen the relationship at every level. This
year, US manufacturing sites hosted senior
executives and employees from across
marketing, manufacturing and supply chain
functions, to meet with their counterparts
at Tate & Lyle. This provides a valuable
opportunity to learn more about our
operations, share best practices and
develop ideas for how we can further
strengthen our partnerships in the future.
20 | Tate & Lyle PLC | Annual Report 2015
Major new
product launches
2
Bringing new products to market
In February 2015, we launched our exciting
new ingredient, DOLCIA PRIMA™ Allulose,
a low-calorie sugar. Because of the
challenges of replacing standard table sugar
with sweeteners, low-calorie sugar is a very
attractive proposition for the food industry,
but one that, until now, has not been
technically possible on a commercial scale.
Allulose is a sugar that exists in nature, but
has 90% fewer calories than sucrose (table
sugar), and to launch DOLCIA PRIMA™,
we have developed an innovative production
process that is unique to Tate & Lyle.
We worked closely with selected customers
at various stages in the development
of DOLCIA PRIMA™ to obtain their
invaluable input.
We also expect to launch a number of other
products over the next 12-24 months –
our innovation pipeline includes a range
of projects across the various stages of
development, from original concept,
through to more developed commercial,
manufacturing and execution planning,
and includes several projects in the later
stages. We aim for a balanced pipeline,
with a combination of next-generation,
breakthrough projects and line extensions
across our three platforms. We aim to
engage customers at an early stage of the
development cycle, which helps ensure we
have the right technical and commercial
strategy for each product.
Adjusted sales in
Asia Pacific and
Latin America
(excluding
SPLENDA®
Sucralose and
Food Systems) as
a percentage of
total Speciality
Food Ingredients
adjusted sales
15%
Delivering growth in Asia Pacific and
Latin America
We continued to invest in Asia Pacific and
Latin America by acquiring businesses that
will help accelerate our growth. In December
2014, we acquired a majority equity interest
in Gemacom Tech, the leading domestically-
owned food systems business in Brazil.
Established in 1990, and strategically located
close to the key markets of São Paulo, Rio de
Janeiro and Belo Horizonte, Gemacom Tech
has built a reputation for quality and customer
service with its range of food quality
standards and certifications. Its commitment
to safety also makes the company an
excellent partner for Tate & Lyle.
In Asia, we completed the acquisition of
Winway Biotechnology Nantong Co., Ltd,
a Chinese producer of polydextrose dietary
fibre based in Nantong, China, and also
re-purchased certain distribution rights to
sell crystalline fructose directly to customers
primarily in Asia Pacific.
Our investments in the higher growth Asia
Pacific and Latin America have generated
strong returns, with adjusted sales for the
business, excluding SPLENDA® Sucralose
and Food Systems, now representing
15% of total adjusted sales of Speciality
Food Ingredients.
Percentage of US
corn sweetener
volumes in toll
contracts
75%
Providing stable long-term cash flow
We have continued to pursue a strategy
to dampen volatility in our Bulk Ingredients
division and deliver sustained cash
generation. We have progressively
re-positioned our US business such that
tolling contracts (contracts often 12 months
or longer, in which the customer pays a
manufacturing margin and takes on the
primary corn commodity price risk) now
represent around 75% of US corn sweetener
volumes. In Europe, where tolling is less
common and sweetener prices are
referenced to EU sugar prices, prices and
margins are more volatile, particularly given
the absence of an efficient futures market to
hedge corn prices such as exists in the US.
This price volatility, especially ahead of the
reform of the EU Sugar Regime (which
comes into effect from October 2017) and the
future capital investment that this is expected
to require, were key factors in our decision
to substantially exit this business in Europe.
In light of the operational challenges
experienced as a result of the prolonged
and severe winter in the US in 2013/14, we
have carried out a number of preventative
measures to protect our plants from the
effects of severe winter weather. These
actions included the implementation of
specific operating protocols as part of our
plants’ winterisation programme, as well
as engaging with other industries that have
significant operating experience in extreme
cold conditions.
Sustainable cash generation from Bulk
Ingredients to support Speciality Food
Ingredients’ growth is a critical element of
our strategy. The actions we have taken to
minimise manufacturing disruption, together
with the investment made over the past few
years in an expanded corn elevator storage
network to further strengthen our security
of supply, provide key underpins to this.
NEW MARKETS
AND CUSTOMER
CHANNELS
SUSTAINED CASH
GENERATION
£
Tate & Lyle PLC | Annual Report 2015 | 21
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION STRATEGIC REPORT | KEY PERFORMANCE INDICATORS
How do we measure
our performance?
Performance
We focus on a number of financial
performance measures to ensure
that our strategy successfully
delivers increased value for our
shareholders.
Adjusted sales of speciality food
ingredients
What do we measure?
Adjusted operating profit
Why we do we measure it?
How did we perform?
Comment
• To ensure we are successful in growing
the division, which is the key area of
strategic focus for the business.
• Performance metric for the
Annual Bonus Plan.
• To track the underlying performance of
the business and to ensure sales growth
translates into increased profits.
• Performance metric for the
Annual Bonus Plan.
Return on capital employed:
adjusted operating profit divided by adjusted
average invested operating capital2
for continuing operations.
• To ensure that we continue to generate a
strong rate of return on the assets that we
employ and have a disciplined approach
to capital investment.
• Performance metric for the
Performance Share Plan.
Cash conversion cycle3:
controllable working capital divided by
quarterly sales, multiplied by the number
of days in the quarter.
• To track how efficient we are in turning
increased sales into cash and to ensure
that working capital is managed
effectively.
Net debt to EBITDA multiple4:
the number of times the Group’s net
borrowing exceeds its trading cash flow.
EBITDA is earnings before exceptional
items, interest, tax, depreciation and
amortisation.
• To ensure that we have the appropriate
level of financial gearing and that we
generate sufficient profits to service over
debt. These measures are a key focus
for banks and providers of both debt
and equity capital.
Interest cover 4:
the number of times the Group’s operating
profit before exceptional items and
amortisation of intangibles exceeds interest
payments made to service its debt.
Recordable incident rate:
the number of injuries per 200,000 hours
that require more than first aid, for
employees and contractors.
Lost-work case rate:
the number of injuries that resulted in
lost-work days per 200,000 hours,
for employees and contractors.
• The safety of our employees and
contractors is of paramount importance.
Ensuring safe and healthy conditions
at all our locations is essential to our
operation as a successful business.
• Safety performance is a specific
consideration that the Remuneration
Committee may factor into decisions
on remuneration.
p8 Chief Executive’s Review
Financial
strength
We look at measures of financial
strength to ensure that we
maintain the financial flexibility
to grow the business whilst
maintaining investment-grade
credit ratings.
p28 Group Financial Results
Corporate
responsibility1
It is important that we act
responsibly and consider carefully
the impact our activities have on all
stakeholders including employees,
customers and the communities
in which we operate.
p37 Corporate Responsibility
1 Measured on a calendar year basis.
2 Defined as shareholders’ equity excluding net debt, net tax
assets/liabilities and net retirement benefit obligations.
22 | Tate & Lyle PLC | Annual Report 2015
3 Defined as controllable working capital divided by
quarterly sales, multiplied by the number of days in
the quarter on a four-quarter rolling basis (a reduction
in the number of days represents an improvement).
2015
2014
2013
2015
2014
2013
2015
2014
2013
2015
2014
2013
2015
2014
2013
2015
2014
2013
2014
2013
2012
2014
2013
2012
£908m
£983m
Change
-4%
£947m
(constant currency)
Sucralose.
Volume growth of 2% in Speciality Food Ingredients held back
by supply constraints with value sales growth lower reflecting the
pass through of lower corn prices and lower prices for SPLENDA®
£247m
£349m
Change
-27%
£356m
(constant currency)
Both divisions were impacted by supply disruption costs and the
lapping of one-off gains reported in the prior year. In addition to
these factors, Speciality Food Ingredients, which was down 29%,
was also impacted by lower selling prices for SPLENDA® Sucralose
and Bulk Ingredients was also lower, down 19%, and was also
impacted by weaker bulk sweetener prices in Europe.
13.9%
Change
Reduction mainly attributable to the lower adjusted operating profit
19.2%
19.7%
-5.3 ppts
in the year.
47 days
39 days
42 days
Change
Worsened by
8 days
Higher inventory days as we rebuilt inventory and recovered from
supply chain disruption and higher receivables days, partially offset by
higher payables days. The Group has reviewed the appropriateness
of Cash Conversion Cycle as its cash flow KPI, and concluded that
Adjusted Group Operating Cash Flow5 is a more effective measure
of overall cash management. Accordingly, with effect from the 2016
financial year, we intend to replace Cash Conversion Cycle with
Adjusted Group Operating Cash Flow as a Group KPI.
0.8x
1.0x
1.3x
Change
Worsened by
0.5x
The worsening reflects both higher net debt, as we continue to
invest in our Speciality Food Ingredients business, and lower
earnings in the year as described under adjusted operating profit
above. The ratio remains comfortably inside our internal maximum
threshold of 2.0x.
10.7x
11.6x
11.1x
Change
Worsened by
0.9x
Ratio remains comfortably inside our internal minimum threshold
of 5.0x.
0.58
0.85
0.85
0.32
0.13
0.26
Our safety KPIs both increased in 2014, reflecting higher accident
levels. We undertook a thorough review of safety management
and accident prevention this year, including external safety audits
at all our major sites, following a total of five fatalities during the last
two calendar years. As a result, we have completely overhauled
our safety programme and accident prevention arrangements at
Group and site level. Further details are provided in the Chairman’s
Statement on page 6, the Chief Executive’s Review on page 8
and the Corporate Responsibility section on page 37.
Performance
We focus on a number of financial
performance measures to ensure
that our strategy successfully
delivers increased value for our
shareholders.
Adjusted operating profit
Adjusted sales of speciality food
• To ensure we are successful in growing
ingredients
the division, which is the key area of
strategic focus for the business.
• Performance metric for the
Annual Bonus Plan.
• To track the underlying performance of
the business and to ensure sales growth
translates into increased profits.
• Performance metric for the
Annual Bonus Plan.
Return on capital employed:
• To ensure that we continue to generate a
adjusted operating profit divided by adjusted
strong rate of return on the assets that we
average invested operating capital2
for continuing operations.
employ and have a disciplined approach
to capital investment.
• Performance metric for the
Performance Share Plan.
Cash conversion cycle3:
controllable working capital divided by
quarterly sales, multiplied by the number
• To track how efficient we are in turning
increased sales into cash and to ensure
that working capital is managed
of days in the quarter.
effectively.
We look at measures of financial
amortisation.
Net debt to EBITDA multiple4:
the number of times the Group’s net
borrowing exceeds its trading cash flow.
EBITDA is earnings before exceptional
items, interest, tax, depreciation and
• To ensure that we have the appropriate
level of financial gearing and that we
generate sufficient profits to service over
debt. These measures are a key focus
for banks and providers of both debt
and equity capital.
Interest cover 4:
the number of times the Group’s operating
profit before exceptional items and
amortisation of intangibles exceeds interest
payments made to service its debt.
Recordable incident rate:
• The safety of our employees and
the number of injuries per 200,000 hours
contractors is of paramount importance.
that require more than first aid, for
employees and contractors.
Lost-work case rate:
the number of injuries that resulted in
lost-work days per 200,000 hours,
for employees and contractors.
Ensuring safe and healthy conditions
at all our locations is essential to our
operation as a successful business.
• Safety performance is a specific
consideration that the Remuneration
Committee may factor into decisions
on remuneration.
p8 Chief Executive’s Review
Financial
strength
strength to ensure that we
maintain the financial flexibility
to grow the business whilst
maintaining investment-grade
credit ratings.
p28 Group Financial Results
Corporate
responsibility1
It is important that we act
responsibly and consider carefully
the impact our activities have on all
stakeholders including employees,
customers and the communities
in which we operate.
p37 Corporate Responsibility
What do we measure?
Why we do we measure it?
How did we perform?
Comment
2015
2014
2013
2015
2014
2013
2015
2014
2013
2015
2014
2013
2015
2014
2013
2015
2014
2013
2014
2013
2012
2014
2013
2012
£908m
Change
£983m
£947m
-4%
(constant currency)
Volume growth of 2% in Speciality Food Ingredients held back
by supply constraints with value sales growth lower reflecting the
pass through of lower corn prices and lower prices for SPLENDA®
Sucralose.
£247m
Change
-27%
(constant currency)
£349m
£356m
13.9%
Change
19.2%
19.7%
-5.3 ppts
Both divisions were impacted by supply disruption costs and the
lapping of one-off gains reported in the prior year. In addition to
these factors, Speciality Food Ingredients, which was down 29%,
was also impacted by lower selling prices for SPLENDA® Sucralose
and Bulk Ingredients was also lower, down 19%, and was also
impacted by weaker bulk sweetener prices in Europe.
Reduction mainly attributable to the lower adjusted operating profit
in the year.
47 days
39 days
42 days
Change
Worsened by
8 days
Higher inventory days as we rebuilt inventory and recovered from
supply chain disruption and higher receivables days, partially offset by
higher payables days. The Group has reviewed the appropriateness
of Cash Conversion Cycle as its cash flow KPI, and concluded that
Adjusted Group Operating Cash Flow5 is a more effective measure
of overall cash management. Accordingly, with effect from the 2016
financial year, we intend to replace Cash Conversion Cycle with
Adjusted Group Operating Cash Flow as a Group KPI.
0.8x
1.0x
1.3x
Change
Worsened by
0.5x
The worsening reflects both higher net debt, as we continue to
invest in our Speciality Food Ingredients business, and lower
earnings in the year as described under adjusted operating profit
above. The ratio remains comfortably inside our internal maximum
threshold of 2.0x.
10.7x
11.6x
11.1x
Change
Worsened by
0.9x
Ratio remains comfortably inside our internal minimum threshold
of 5.0x.
0.58
0.85
0.85
0.32
0.13
0.26
Our safety KPIs both increased in 2014, reflecting higher accident
levels. We undertook a thorough review of safety management
and accident prevention this year, including external safety audits
at all our major sites, following a total of five fatalities during the last
two calendar years. As a result, we have completely overhauled
our safety programme and accident prevention arrangements at
Group and site level. Further details are provided in the Chairman’s
Statement on page 6, the Chief Executive’s Review on page 8
and the Corporate Responsibility section on page 37.
4 These ratios have been calculated under the Group’s bank
covenant definitions.
5 Defined as Adjusted Cash Flow from Continuing Operating Activities
(excluding pensions, derivative financial instruments, tax, interest and
acquisitions) less Capital Expenditure.
Tate & Lyle PLC | Annual Report 2015 | 23
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION STRATEGIC REPORT | SPECIALITY FOOD INGREDIENTS
How did the division
perform this year?
Although constrained by the
impact of internal supply chain
disruption, we delivered volume
growth in all regions except North
America, with particularly strong
volume growth in Asia Pacific.
Joan Braca
President, Speciality Food Ingredients
PERFORMANCE
Building a platform
for future growth
GROUP FINANCIAL SUMMARY
Adjusted sales
£908m
Adjusted operating profit
£149m
Starch-based speciality ingredients
Adjusted sales
£562m
High-intensity sweeteners
Adjusted sales
£162m
Food Systems
Adjusted sales
£184m
24 | Tate & Lyle PLC | Annual Report 2015
1 Source: Leatherhead; LMC International; Company analysis;
data as at 2013.
2 Source: Innova Market Insights. Definition: product launches
that have at least one of these claims – convenient
consumption, easy-to-prepare, ready prepared, time saving.
3 Source: Innova Market Insights. Definition: product launches
claiming no additives/preservatives, natural, organic, and/or
without genetically modified organisms (non-GMO).
Adjusted sales
Adjusted operating profit
Adjusted operating margin
Market conditions and trends
The global market for speciality food
ingredients is worth around US$42 billion1,
approximately half of which we currently
address. The areas of the market where we
compete continue to benefit from strong
underlying global consumer trends including
convenience, health and wellness, natural
and ‘clean label’.
Changes in consumer lifestyles have
increased the demand for packaged and
convenience foods, for consumption both
at home and ‘on the go’. In the 2014 calendar
year, product launches with a ‘convenient’
claim were nearly 50% higher than three
years previously2. Convenience products
are also increasingly catering to consumer
demands for healthier foods, with 77%
of global convenience product launches in
2014 also making a ‘health and wellness’
claim2. Demand for convenience is a global
trend, with demand growing in developed
markets, as well as in developing markets
with increasing urbanisation and associated
lifestyle changes. Convenience foods are a
key driver for speciality food ingredients that
provide functionality such as stability, texture
and extended shelf-life.
The rising incidence of diabetes and obesity
in both developed and developing markets
is one of a number of global health concerns
driving both consumers and governments
to focus on the link between diet and health.
In response to heightening consumer
awareness, manufacturers are responding
to the demand for ‘healthier’ products. In
addition to products which address sugar,
calorie and weight management, consumers
are also increasingly seeking solutions for
digestive health, including fibre-enhanced
products, and for heart health including
lower sodium products.
In response to increasing consumer demand
for more natural products across a wide
range of categories, and to concerns around
the provenance of finished and unfinished
goods, and ingredient labelling, food and
beverage manufacturers are launching more
‘clean-label’ products. Around 25% of all
new products launched globally in 2014
were positioned as label-friendly3.
Against the backdrop of continuing
challenging macroeconomic conditions
in many countries and tighter household
budgets, cost optimisation also continues
to be a theme with food and beverage
customers looking at ways to reduce costs
Year ended 31 March
2014
£m
983
213
21.7%
2015
£m
908
149
16.4%
Reported
(8)%
(30)%
(5.3)ppts
Change
Constant
currency
(4)%
(29)%
and provide more value-based alternatives
for consumers without compromising taste.
the significant lower corn prices following
the record 2013/14 corn crop.
Our Speciality Food Ingredients business,
with its deep technical expertise and
portfolio of sweetener, texturising and health
and wellness products, supplemented by
new products launched from the innovation
pipeline, is well-placed to benefit from these
global consumer trends.
Financial performance
Within Speciality Food Ingredients, volumes
grew by 2%. Although constrained by the
impact of supply chain disruption, we
delivered volume growth in all regions
except North America. We estimate supply
disruption impacted volume growth by
approximately three to four percentage
points. Adjusted sales decreased by 8%
(4% lower in constant currency) to £908
million (2014 – £983 million) reflecting the
pass through of lower corn prices and the
lower prices for SPLENDA® Sucralose.
Adjusted operating profit was lower than the
prior year (down 29% in constant currency)
at £149 million (2014 – £213 million) mainly
as a result of lower selling prices for
SPLENDA® Sucralose and the impact of
supply chain disruption. The prior year also
included the majority of the £6 million one-off
gain from the purchase, sale and leaseback
of our building in Hoffman Estates, Illinois,
and £7 million representing the final annual
payment received from McNeil Nutritionals
as part of the re-alignment of the sucralose
business in 2004. The effect of currency
translation was to decrease adjusted
operating profit by £5 million.
Volume from new products nearly doubled
in the year and adjusted sales reached
£43 million or around 5% of total adjusted
sales for the Speciality Food Ingredients
division.
This division comprises three broad product
categories: starch-based speciality
ingredients, high-intensity sweeteners, and
Food Systems.
Starch-based speciality ingredients
In starch-based speciality ingredients,
adjusted sales decreased by 5% (3% in
constant currency) to £562 million (2014 –
£595 million). Volumes increased by 1%
despite supply constraints, with strong
growth in Asia Pacific and particularly strong
demand for texturants. The lower value of
sales reflects the impact of passing through
In food starches we saw overall volume
growth, with strong growth in Asia Pacific,
particularly in dairy applications, and
broad-based European growth offset by
North America where volume was
particularly constrained.
In speciality corn sweeteners, volume was
lower due to supply constraints. We saw
good growth in Asia Pacific, where our
business also benefited from the decision
in December to terminate distribution rights
previously held by a third party to sell our
crystalline fructose primarily in the region.
Volume for fibres was slightly lower than
the comparative period due to supply
constraints.
During the year we completed the acquisition
of Winway Biotechnology Nantong Co., Ltd.
a polydextrose fibre business in China.
We also launched two major new products
– the new CLARIA® Functional Clean-Label
Starches and DOLCIA PRIMATM Allulose,
a low-calorie sugar.
High-intensity sweeteners
Adjusted sales in this product category,
which comprises SPLENDA® Sucralose
and our no-calorie natural sweeteners, were
18% lower than the prior year (15% lower
in constant currency) at £162 million (2014 –
£198 million) driven primarily by SPLENDA®
Sucralose price declines. Volumes were
1% higher.
Food Systems
Adjusted sales were 3% lower than the
prior year (4% higher in constant currency)
at £184 million (2014 – £190 million), with
volumes 15% higher. In December, we
acquired a majority equity interest in
Gemacom, the leading domestically-owned
food systems business in Brazil, thereby
adding to our Food Systems presence in
the higher growth Latin American region.
Excluding Gemacom, and on a constant
currency basis, adjusted sales and profit
were in line with the prior year, with the
business continuing to benefit from the
decision taken two years ago to focus
on higher margin blends.
Tate & Lyle PLC | Annual Report 2015 | 25
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION STRATEGIC REPORT | BULK INGREDIENTS
How did the division
perform this year?
In the Americas, bulk corn
sweetener volumes decreased
by 2%. This was due to supply
constraints driven by the
unusually prolonged and severe
2013/14 winter in the US which
caused operational difficulties in
our US plants and led us to enter
the 2015 financial year with much
lower inventories than usual.
Jim Stutelberg
President, Bulk Ingredients
PERFORMANCE
Managing supply
constraints and
commodity volatility
GROUP FINANCIAL SUMMARY
Adjusted sales
£1,786m
Adjusted operating profit
£133m
Sweeteners
Adjusted sales
£831m
Industrial starches, acidulants and ethanol
Adjusted sales
£543m
Co-products
Adjusted sales
£412m
26 | Tate & Lyle PLC | Annual Report 2015
1 USDA is the US Department of Agriculture.
2 Source: IRI Infoscan Reviews, Total US Multi-Outlet+
Convenience (FDM, WMT, Dollar Club, Convenience Stores).
3 Source: US Census Bureau, HTS Export data.
Adjusted sales
Adjusted operating profit
Adjusted operating margin
Market conditions and trends
The 2014/15 corn harvest in the US delivered
a record crop with production slightly higher
than the previous harvest which itself was a
record crop. The stocks-to-use ratio remains
healthy at around 13%. As a result, US corn
prices trended lower through the first half,
and market prices were low at an average
of about $4 a bushel in the second half.
The latest production estimate for the
2015/16 corn harvest from the USDA1 is
13.6 billion bushels or 4% lower than the
previous year. However, corn supplies in
2015/16 are projected at a record 15.5 billion
bushels, up slightly from the previous year,
as higher opening stocks more than offset
lower production.
Demand in the US for regular carbonated
soft drinks, a key end-market for high
fructose corn syrup (HFCS), recovered in
summer 2014 following weak demand in the
prior year. In the three-month period to end
June 2014, regular carbonated soft drinks
sales in the US grew by 1.4%2 against the
weaker comparative period, with sales
volume over the full year 0.1% higher.
However, the prolonged and severe 2013/14
US winter caused operational and supply
chain challenges across the industry
through the first half of the 2014 calendar
year which, when combined with relatively
firmer beverage demand, led to tight supply
of bulk sweeteners. Despite the more stable
demand in the 2015 calendar year, we
continue to regard the US market for regular
carbonated soft drinks to be in gradual,
long-term structural decline.
Low Mexican sugar prices and the
introduction, in January 2014, of calorie
consumption taxes resulted in a 6%3 volume
reduction in exports of US HFCS to Mexico
in the 2014 calendar year.
Sugar prices in Europe, which provide
a reference price for our European bulk
sweeteners, declined markedly reflecting
volatile market conditions in anticipation
of the reform of the EU Sugar Regime in
October 2017.
The North American paper industry, a key
source of demand for industrial starches,
experienced healthy utilisation rates with a
continued decline in printing and writing
paper demand offset by growth in packaging
and tissue. In Europe, whilst additional starch
capacity, particularly from wheat plants,
entered the market, a robust packaging
sector helped mitigate this impact.
Year ended 31 March
2014
£m
2 164
172
7.9%
2015
£m
1 786
133
7.4%
Reported
(17)%
(23)%
(0.5)ppts
Change
Constant
currency
(14)%
(19)%
Conditions in the US ethanol industry
deteriorated sharply in the second half of
the financial year on the back of US ethanol
inventories rising to a three-year high
towards the end of the 2015 financial year,
and lower retail gasoline prices.
Two consecutive strong corn crops in the
US have led to a healthy supply situation.
During the first half, as the strength of the
2014/15 harvest became more evident,
prices for co-products fell, with corn gluten
meal and corn gluten feed both ending the
first half at significantly lower prices. During
the second half, prices were more stable.
Financial performance
Adjusted sales were 17% lower (14% lower
in constant currency) at £1,786 million
(2014 – £2,164 million) largely due to the pass
through of lower corn prices. Volumes
decreased by 2%. Adjusted operating profit
was 23% lower (19% lower in constant
currency) at £133 million (2014 – £172 million)
as a result of supply chain issues caused by
the unusually prolonged and severe 2013/14
winter in the US, and lower EU sugar prices
which affected bulk sweetener prices in
Europe. We were also impacted by capacity
constraints in the wider US transportation
network. The prior year also included a
one-off gain of £3.5 million from the on-sale
of Orsan China (a monosodium glutamate
producer in which Tate & Lyle previously held
a stake and which was sold in 2009). The
effect of currency translation was to decrease
adjusted operating profit by £7 million.
This division comprises three product
categories: bulk sweeteners; industrial
starches, acidulants and ethanol; and
co-products.
Bulk sweeteners
In the Americas, bulk corn sweetener volumes
decreased by 2%. This was due to supply
constraints driven by the unusually prolonged
and severe 2013/14 winter in the US which
caused operational difficulties in our US plants
and led us to enter the 2015 financial year with
much lower inventories than usual. Adjusted
sales decreased by 20% (down 17% in
constant currency) to £711 million (2014 –
£889 million) as a result of the lower volumes
and the significant reduction in corn prices
following the record corn crop. The supply
constraints resulted in profits well below the
prior year. We have increased tolling contracts
to around 75% of US corn sweetener volumes
as another vehicle to dampen volatility.
Contracts in the 2015 calendar year pricing
round for the remaining 25% of corn
sweetener volumes were renewed at higher
unit margins.
Operating profits from Almex, our Mexican
joint venture, were lower than the
comparative period reflecting reduced
volumes and lower margins as a result of
greater competition from Mexican sugar.
In Europe, bulk corn sweetener volumes
increased by 3% while adjusted sales
declined by 19% (11% in constant currency)
to £120 million (2014 – £148 million), as lower
EU sugar pricing (which sets the reference
price for isoglucose in Europe) and the pass
through of lower EU corn prices impacted
sales. Profits for the year were below the
prior year due to the impact of lower EU
sugar pricing in the second half.
Industrial starches, acidulants and
ethanol
Adjusted sales were 14% lower than the
comparative period (down 12% in constant
currency) at £543 million (2014 – £635 million).
In industrial starches, volumes were 3%
lower. In the US, where we contract for
longer periods than in Europe, profit was
ahead of the prior year as a result of firmer
pricing and favourable product mix, more
than offsetting lower volumes. In Europe,
lower volumes, reflecting the continued
diversification of capacity to Speciality Food
Ingredients along with the pricing pressure
from increased industry capacity, drove a
decrease in profits. This business remains
particularly sensitive to changes in the
macroeconomic environment.
Profit in our citric acid business was lower
than the prior year, with reduced volumes
partially mitigated by higher selling prices.
The performance of our Bio-PDOTM joint
venture improved in the year as a result of
slightly higher volumes and lower corn costs.
In US ethanol, the sharp deterioration in
margins reduced profits in the second half
of the year largely offsetting improved
market conditions and a stronger profit
performance earlier in the year. Overall
performance for the year was somewhat
stronger than the prior year.
Co-products
Sales of co-products decreased by 16%
(13% in constant currency) to £412 million
(2014 – £492 million). Overall returns on
co-products were broadly in line with our
expectations at the start of the year.
Tate & Lyle PLC | Annual Report 2015 | 27
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION STRATEGIC REPORT | GROUP FINANCIAL RESULTS
How would you sum
up the financial
position?
Despite a challenging year
our balance sheet remains
robust and allows us to
continue investing in
growing our Speciality
Food Ingredients business.
28 | Tate & Lyle PLC | Annual Report 2015
Financial headlines
• Group adjusted profit before tax in line
with February guidance, 30% lower at
£224m (2014 – £322m):
– Costs from operational and supply
chain disruption of £20m
– SPLENDA® Sucralose adjusted
operating profit lower by £46m
(£43m in constant currency)
– European Bulk Ingredients adjusted
operating profit lower by £17m
• Speciality Food Ingredients adjusted
operating profit 29% lower in constant
currency at £149m (2014 – £213m)
• Bulk Ingredients adjusted operating
profit 19% lower in constant currency
at £133m (2014 – £172m)
• Proposed final dividend held at 19.8p,
making a total dividend of 28.0p
(2014 – 27.6p), up 1.4% on prior year
Adjusted sales from continuing operations
of £2,694 million (2014 – £3,147 million) were
14% lower than the prior year (11% in
constant currency). Sales in Speciality Food
Ingredients decreased by 8% (4% in constant
currency) to £908 million (2014 – £983 million),
with volumes increasing by 2%. Sales in Bulk
Ingredients decreased by 17% (14% in
constant currency) to £1,786 million (2014
– £2,164 million), with volumes 2% lower.
Adjusted operating profit decreased by 29%
(27% in constant currency) to £247 million
(2014 – £349 million). In Speciality Food
Ingredients, adjusted operating profit was
30% lower (down 29% in constant currency)
than the prior year at £149 million (2014 –
£213 million). Bulk Ingredients adjusted
operating profit decreased by 23% (19%
in constant currency) to £133 million (2014 –
£172 million).
Five key factors have combined to reduce
adjusted operating profit by £97 million in
this financial year. Firstly, on a constant
currency basis, the adjusted operating profit
of our SPLENDA® Sucralose business was
lower by £43 million due principally to price
erosion in an extremely competitive market.
The second significant factor was the
impact of the operational and supply chain
disruption which led to costs totalling around
£20 million in the year. These costs exclude
the impact of lost sales which constrained
volume growth in Speciality Food
Ingredients in the year by approximately
three to four percentage points. Thirdly,
adjusted operating profit in our Bulk
Ingredients business in Europe was £13
million lower than the previous financial year
as pricing for EU sugar, which provides the
reference price for isoglucose in Europe fell,
and the 2014 financial year included a
Summary of financial results
Year ended 31 March
Continuing operations
Adjusted sales
Adjusted operating profit
Adjusted net finance expense
Adjusted profit before tax
Exceptional items
Amortisation of acquired intangible assets
Net retirement benefit interest
Share of tax of joint ventures and
associates
Profit before tax
Income tax expense
Profit for the year from continuing
operations
Profit for the year from discontinued
operations
Profit for the year
Earnings per share – continuing
operations
Basic
Diluted
Adjusted earnings per share –
continuing operations
Basic
Diluted
Dividends per share
Interim paid
Final proposed
Net debt at 31 March
Restated1
2014
£m
Change
(reported)
%
Change
(constant
currency)
%
(14%)
(29%)
(11%)
(27%)
(30%)
(28%)
Exceptional items from continuing
operations
During the year the Group recognised
an exceptional charge of £142 million,
comprising £12 million of business
transformation costs associated with
completing the implementation of the
common global IS/IT system; £12 million to
terminate distribution rights previously held
by a third party to sell our crystalline fructose
to customers primarily in Asia Pacific; and
£118 million of costs associated with the
business re-alignment exercise announced
on 21 April 2015. Further detail can be found
in Note 6 to the Group Financial Statements.
(82%)
(81%)
(88%)
(87%)
(89%)
(88%)
Net finance expense
After excluding net retirement benefit
interest, adjusted net finance expense
from continuing operations decreased to
£23 million (2014 – £27 million) with a
reduction in underlying net interest expense
following the repayment of our $500 million
bond in November 2014.
2015
£m
2 694
247
(23)
224
(142)
(9)
(8)
(14)
51
(21)
30
–
30
3 147
349
(27)
322
(14)
(10)
(8)
(13)
277
(32)
245
28
273
6.6p
6.5p
52.8p
52.1p
(88%)
(87%)
38.0p
37.7p
8.2p
19.8p
28.0p
504
56.5p
55.7p
7.8p
19.8p
27.6p
353
(32%)
(29%)
5.1%
0%
1.4%
1 Restated for the adoption of IFRS 11 ‘Joint Arrangements’
one-off gain from the on-sale of Orsan
China, a business in which we previously
held a stake and which was sold in 2009.
In addition, adjusted operating profit for
the year ended 31 March 2014 included
a number of further one-off gains totalling
£9 million, the largest item of which was
the profit of £6 million on the purchase,
sale and leaseback of our Hoffman Estates
building in Chicago. Finally, foreign exchange
translation also reduced adjusted operating
profit by £12 million.
Adjusted net finance expense (excluding net
retirement benefit interest) decreased from
£27 million to £23 million following the
repayment of our $500 million bond in
November 2014.
Adjusted profit before tax was 30% lower
(28% in constant currency) than last year
decreasing from £322 million in 2014, to
£224 million in 2015. Adjusted diluted
earnings per share decreased by 32% (29%
in constant currency) to 37.7p (2014 – 55.7p).
On a statutory basis, profit before tax from
continuing operations decreased by 82%
(down 81% in constant currency) to
£51 million (2014 – £277 million) and reflects
£142 million of exceptional costs, primarily
the £113 million impairment charge in
respect of the Singapore sucralose plant.
Profit for the year from total operations
decreased to £30 million (2014 – £273
million), with the prior period benefiting from
an exceptional income tax credit of £28
million following the favourable resolution
of outstanding tax matters in Spain.
Central costs
Central costs, which include head office,
treasury and reinsurance activities,
decreased by £1 million to £35 million.
One-off costs in the first half of the 2015
financial year (primarily driven by captive
insurance costs relating to the impact of the
Singapore extended shut down) were offset
by lower share-based payments charges.
Taxation
Our tax policy is to manage our obligations
in compliance with all relevant tax laws,
disclosure requirements and regulations.
We seek to ensure that our approach to
tax and the tax payments we make in all
territories in which we have operations are
fully consistent with local requirements,
taking into account available tax incentives
and allowances, and are aligned with the
Group’s wider business strategy.
We seek to develop good, open working
relationships with tax authorities and to
engage with them proactively, recognising
that tax legislation can be complex and may
be subject to differing interpretations. In
instances where this might arise, we seek
to engage with the relevant tax authorities in
open discussion of any such differences as
early as possible to remove uncertainty and
obtain resolution.
Tate & Lyle’s tax strategy and the
management of tax risk is primarily the
responsibility of the Chief Financial Officer
and the Vice President, Group Tax and it
is reviewed by the Board and the Audit
Committee to ensure responsible tax
practices are maintained across the
Group’s businesses.
Our tax rate is sensitive to the geographic
mix of profits and reflects a combination of
higher rates in certain jurisdictions such as
the US, nil effective rates in Singapore (due
to pioneer status which we were granted in
2008 to reflect our investment in innovative
technology) and the UK, and rates that lie
somewhere in between, for example, in
certain East European countries. The
adjusted effective tax rate for the year
Tate & Lyle PLC | Annual Report 2015 | 29
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION
STRATEGIC REPORT
Group Financial Results continued
increased to 21.2%. (2014 – 18.5%), driven
by the geographic mix in profits shifting
away from lower tax jurisdictions, notably
Singapore, partially offset by the settlement
of some outstanding tax issues in the year
which benefited the headline rate by around
100 basis points. As a result of the
continued shift in geographic mix of our
profits, we anticipate that the effective tax
rate in the 2016 financial year will be slightly
above the underlying 2015 rate.
Our UK earnings are now relatively small
following the sale of our legacy sugars and
molasses businesses. Less than 1% of our
total Group sales (2015 – £21 million) are
derived from UK operations which are offset
by our corporate costs, primarily the interest
we pay on our borrowings. As a result, we
pay no corporation tax in the UK.
Discontinued operations and legacy
issues
The Group did not report any operations
as being discontinued during the year ended
31 March 2015. Continuing operations
include the results of Eaststarch which is not
treated as a discontinued operation for the
financial year ended 31 March 2015.
During the year ended 31 March 2014, the
Group recognised a non-cash exceptional
income tax credit of £28 million following
the favourable resolution of outstanding
tax matters associated with the starch
facilities which formed part of the Group’s
former Food and Industrial Ingredients,
Europe segment.
Earnings per share
Adjusted diluted earnings per share from
continuing operations at 37.7p (2014 – 55.7p)
were 32% lower (29% in constant currency).
Adjusted basic earnings per share from
continuing operations decreased by 33%
(down 30% in constant currency) to 38.0p.
Total basic earnings per share decreased to
6.6p (2014 – 58.8p).
Dividend
The Board recognises the importance
of dividends to shareholders and remains
committed to the dividend policy it
implemented in 2009. Underpinned by
the confidence it has in the strategy of the
business, the Board intends to recommend
an unchanged final dividend of 19.8p
(2014 – 19.8p) making a full-year dividend
of 28.0p (2014 – 27.6p) per share, an
increase of 1.4% on the prior year. Subject
to shareholder approval, the proposed final
dividend will be due and payable on 31 July
2015 to all shareholders on the Register
of Members on 3 July 2015. In addition
to the cash dividend option, shareholders
will continue to be offered a Dividend
Reinvestment Plan (DRIP) alternative.
30 | Tate & Lyle PLC | Annual Report 2015
Net debt
(46)
(29)
(12)
(504)
(353)
284
(130)
(166)
(52)
2014
PBITEA
and other
operating
items
Working
capital
including
pensions
Capex
Dividends Acquisitions
and other
Share
issue/
purchase
Exchange
2015
Net debt
Net debt increased to £504 million (2014 –
£353 million). Adjusted free cash flow from
continuing businesses of £66 million was
offset by dividend payments of £130 million
and the repurchase of ordinary shares to
satisfy the Group’s share option schemes.
An adverse exchange rate impact increased
net debt by £46 million (including £7 million
from joint ventures) principally as a result of
the stronger US dollar. During the year, net
debt peaked at £567 million in January 2015
reflecting the normal seasonal increase in
payments to farmers in the US. The average
net debt was £404 million, an increase of
£32 million from £372 million in the prior year.
Retirement benefits
We maintain pension plans for our
employees in a number of countries. Some
of these arrangements are defined pension
schemes and, although we have now closed
the main UK scheme and the US salaried
hourly paid schemes to future accrual at
most locations, certain obligations remain.
In the US, we also provide medical benefits
as part of the retirement package.
The net deficit on our retirement benefit
and health plans increased by £7 million
to £227 million (2014 – £220 million): the
net deficit on the Group’s pension plans
decreased by £8 million; and the liabilities
associated with unfunded retirement medical
plans in the US increased by £15 million.
The main UK pension scheme showed a
reduction in liability of £52 million where the
impact of a lower discount rate was more
than offset by the return on assets and
Company cash contributions. The liability
associated with the US pension plan
increased by £42 million with the impact of
the longer mortality assumptions and lower
discount rate partially offset by the return
on assets and Company contributions.
Other plan liabilities increased by £2 million.
The liabilities associated with unfunded
retirement medical plans in the US increased
by £15 million to £69 million (2014 – £54
million) due to the adverse effect of exchange
translation (£6 million), and a decrease in the
applicable discount rate and higher claims
experience (£9 million).
Employer contributions in respect of pension
and post retirement schemes totalled
£52 million (2014 – £47 million), comprising
£28 million in respect of the main UK
schemes, £1 million in respect of the other
UK schemes, £19 million in respect of US
pension schemes and £4 million in respect
of US retirement medical plans.
As previously announced, the funding
arrangements in connection with the
31 March 2013 actuarial valuation for the
main UK Scheme were agreed with the
Scheme Trustee during the year. Under
the new arrangements core funding
contributions remain at £12 million per year.
A new secured funding account was
established, whereby supplementary
contributions of £6 million per year will be
made during the first six years, payable to
the Trustee on certain triggering events
such as under-performance of the Scheme’s
investments or a deterioration in the strength
of Tate & Lyle PLC’s financial covenant. The
first two annual payments amounting to
£12 million were credited to the secured
funding account upon its establishment in
October 2014 and have been accounted for
as additional contributions to the Scheme
in the second half of the year.
New supplementary disclosure framework and pro-forma adjustment
for Eaststarch re-alignment
To provide more details on our business performance, in addition to the segmental disclosure required under IFRS (which remains unchanged),
and given the evolving nature of the business including the changes announced in April, we intend to disclose additional information regarding the
performance within our operating segments. We believe the revised approach will provide a clearer understanding of the drivers of performance; better
highlight the impact of commodity volatility on performance; and drive a greater understanding of the sustainable growth potential of the business.
For Speciality Food Ingredients, we will disclose our business through the major components of SPLENDA® Sucralose, our full Food Systems
business and the rest of the business. For these, we will disclose volume growth as a percentage, adjusted sales in millions of pounds, and adjusted
operating profit in £ millions. We will provide additional information on the geographical split of the business excluding Food Systems and SPLENDA®
Sucralose, specifically North America, the combination of Asia Pacific and Latin America, and Europe, Middle East and Africa (EMEA). For these
geographic regions we will disclose volume growth as a percentage and adjusted sales in £ millions. On the same basis, to provide greater insight
into the progress we are making on innovation, we will also disclose innovation-related growth within Speciality Food Ingredients.
For Bulk Ingredients, we will disclose the performance of the division as a single segment, but also provide volume growth for the key North
American bulk sweetener and North American industrial starches businesses as we believe volume growth rather than sales value is the key metric
for the business, with sales values being clouded by the pass through of corn costs. We also want to give greater insight into the impact that
commodities volatility has on this business. We aim to dampen volatility in Bulk Ingredients wherever we can. We actively do this through raw
material hedging, the use of tolling contracts and decisions on forward co-product sale commitments. As a result, for most of our business we are
generally able to generate solid cash flows. However, there are some parts of the business, mainly in ethanol and co-product pricing, where our
ability to dampen volatility is limited and no viable hedging options exist. While we expect conditions in the commodity markets will vary from year
to year, for these commodities our approach will continue to be to plan for a normal year, and we will provide guidance as the year progresses on
the expected impact of these commodities on the performance of Bulk Ingredients.
In the new supplementary disclosure framework information for the year ended 31 March 2015, which is presented on a pro-forma basis, Group
adjusted sales and adjusted operating profit have been reduced by £101 million and £32 million respectively to reflect the pro-forma impact of
re-alignment of the Eaststarch European joint venture, assuming that the transaction had taken effect from 1 April 2014.
Pro-forma financial information1 (unaudited)
Speciality Food Ingredients
North America
Asia Pacific and Latin America
EMEA
Total excluding SPLENDA® Sucralose and Food Systems
Food Systems2
SPLENDA® Sucralose
Total Speciality Food Ingredients
Year ended 31 March 2015
Volume
growth
%
Adjusted
sales
£m
Adjusted
operating
profit
£m
(2)%
5%
7%
1%
15%
1%
2%
317
140
133
590
190
148
928
108
27
16
151
In the year ended 31 March 2015, volume of Innovation products grew by 98% and adjusted sales were £43 million, which are also included
in Speciality Food Ingredients pro-forma information above. Reflecting the time taken to commercialise new products for the food and beverage
industry, Innovation includes the results of new products in their first seven years after launch.
Pro-forma financial information1 (unaudited)
Bulk Ingredients
North American bulk sweeteners
North American industrial starches
Total Bulk Ingredients
Pro-forma financial information1 (unaudited)
Adjusted operating profit
Adjusted net finance expense
Adjusted profit before tax
Adjusted diluted earnings per share
Year ended 31 March 2015
Adjusted
operating
profit
£m
Adjusted
sales
£m
1,665
99
Volume
growth
%
(1)%
(2)%
(3)%
Year ended
31 March
2015
£m
215
(22)
193
32.2p
The pro-forma results for the year ended 31 March 2015 above, including the adjusted profit before tax of £193 million, assume the transaction to
re-align Eaststarch had taken effect from 1 April 2014. Looking forward, and to provide a direct and consistent pro-forma comparative for the year
ending 31 March 2016, adjustment to the pro-forma 31 March 2015 adjusted profit before tax is required to align foreign exchange rates and to
include profits for the first quarter to 30 June (reflecting a modelling assumption that the Eaststarch transaction will complete on that date). Taking
these items into account the adjusted profit before tax for the year ended 31 March 2015 on a consistent basis becomes £208 million3, having
increased pro-forma profit by £7 million to align to prevailing foreign exchange rates and by adding back £8 million to reflect the first quarter’s
results of Eaststarch.
1 Pro-forma assuming the transaction to re-align Eaststarch had taken effect from 1 April 2014.
2 Includes £6 million sales of some non-blended products through the Food Systems organisation.
3 Assumes forecast foreign exchange rate of GBP:USD £1.00:$1.54 and completion of the transaction on 30 June 2014.
Tate & Lyle PLC | Annual Report 2015 | 31
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION
STRATEGIC REPORT
Group Financial Results continued
Assets
Gross assets of £2,423 million at 31 March
2015 were £45 million lower than the prior
year on a statutory basis, with capital
expenditure above depreciation and the
positive impact of the strengthening US
dollar more than offset by lower levels of
cash and cash equivalents and the
impairment of the Singapore sucralose
facility. Net assets decreased by £114 million
to £936 million, with profits generated in the
year being more than offset by dividend
payments and share re-purchases.
Cash flow
Adjusted operating cash flow from
continuing operations was £279 million
(2014 – £440 million). Working capital was
broadly flat in the 2015 financial year, as
higher inventories (driven by an increase in
finished goods) and higher receivables were
broadly offset by higher payables. The cash
flow impact from the Group’s retirement
benefit plans amounted to £47 million
(2014 – £43 million).
Year ended
31 March
2014
£m
2015
£m
Adjusted operating profit from
continuing operations
247
349
Adjustments for:
Depreciation and amortisation
Share-based payments charge
Other non-cash items
Cash expenditure on
exceptional items
Changes in working capital
Net retirement benefit
113
–
–
108
8
(6)
(29)
(5)
(14)
38
obligations
(47)
Adjusted operating cash flow 279
(166)
Capital expenditure
Adjusted operating cash flow
less capital expenditure
Net Interest and tax paid
Adjusted free cash flow
113
(47)
66
(43)
440
(159)
281
(54)
227
Capital expenditure of £166 million,
which included a £34 million investment
in intangible assets, was 1.5 times the
depreciation and amortisation charge of
£113 million. Net interest paid decreased
by £2 million to £29 million, principally as a
result of the repayment of our $500 million
bond in November 2014. Net income
tax payments were £18 million
(2014 – £23 million).
Adjusted free cash inflow (representing cash
generated from continuing operations after
working capital, interest, taxation, and capital
expenditure) at £66 million was £161 million
lower than the prior year largely as a result
of lower earnings and working capital
(£5 million outflow from working capital
versus a £38 million inflow in the prior year).
During the year we spent £12 million on
the repurchase of ordinary shares to satisfy
obligations under share option schemes.
Parent Company cash dividends paid were
£130 million, £6 million higher than the
prior year.
Post balance sheet events
On 21 April 2015, the Group announced
a major business re-alignment to further
focus on and strengthen our Speciality
Food Ingredients segment. The re-alignment
includes the restructuring of our Eaststarch
European joint venture and steps to
re-focus and restructure our SPLENDA®
Sucralose business. Further detail and
pro-forma financial information can be
found on page 31.
Financial risk factors
Our key financial risk factors are market
risks, such as foreign exchange, transaction
and translation exposures, and credit and
liquidity risks, as explained in Note 20.
Off balance sheet arrangements
In the ordinary course of business, to
manage our operations and financing, we
enter into certain performance guarantees
and commitments for capital and other
expenditure. The aggregate amount of
indemnities and other performance
guarantees, on which no material loss has
arisen, including those related to joint
ventures and associates, was £nil million at
31 March 2015 (2014 – £1 million). We aim
to optimise financing costs in respect of
all financing transactions. Where it is
economically beneficial, we choose to lease
rather than purchase assets. Leases for
property, plant and equipment where the
lessee does not assume substantially all the
risks and rewards of ownership are treated
as operating leases, with annual rentals
charged to the income statement over the
term of the lease. Commitments under
operating leases to pay rentals in future years
totalled £194 million (2014 – £174 million) and
related primarily to railcar leases in the US.
Rental charges for the year ended 31 March
2015 in respect of continuing operations
were £18 million (2014 – £17 million).
Use and fair value of financial
instruments
In the normal course of business we use
both derivative and non-derivative financial
instruments. The fair value of Group net
borrowings at the year end was £528 million
against a book value of £504 million (2014 –
fair value £387 million; book value £353
million). Derivative financial instruments used
to manage the interest rate and currency of
borrowings had a fair value of £18 million
asset (2014 – £29 million asset).
The main types of instrument used are
interest rate swaps, interest rate options
(caps or floors), and cross-currency interest
rate swaps. The fair value of other derivative
financial instruments hedging future
currency and commodity transactions was
£4 million liabilities (2014 – £1 million assets).
When managing currency exposure, we use
spot and forward purchases and sales, and
options. The fair value of other derivative
financial instruments accounted for as held
for trading was a £38 million asset (2014 –
£20 million asset).
Fair value estimation
The fair value of derivative financial
instruments is based on the market price
of comparable instruments at the balance
sheet date if they are publicly traded. The
fair value of the forward currency contracts
was determined based on market forward
exchange rates at the balance sheet date.
The fair values of short-term deposits,
receivables, payables, loans and overdrafts
with a maturity of less than one year are
assumed to approximate their book values.
The fair values of bonds, bank and other
loans, including finance lease liabilities due
in more than one year, are estimated by
discounting the future contractual cash flows
at the current market interest rate available
to the Group for similar financial instruments,
adjusted for the fair valuation effects of
currency and interest rate risk exposures,
where those instruments form part of related
hedging relationship agreements, financial
and commodity forward contracts and
options, and commodity futures. The values
of certain items of merchandisable
agricultural commodities that are included
in inventories are based on market prices.
32 | Tate & Lyle PLC | Annual Report 2015
Going concern
The Group’s business activities, together
with the factors likely to affect its future
development, performance and position are
set out in this Strategic Report. The financial
position of the Group, its cash flows, liquidity
position and borrowing facilities are described
in the same sections. In addition, Note 20
includes the Group’s objectives, policies and
processes for managing capital; financial risk
management objectives; details of financial
instruments and hedging activities; and
exposures to credit risk and liquidity risk.
As set out in the sections and Notes
referenced above, the market conditions of
the areas in which the Group operates have
been affected, and are likely to continue to
be affected, by large movements in input
prices. However, with some 70% of revenues
from food and beverage ingredients, the
Group has a measure of resilience (although
not immunity) to economic challenges.
In addition, the Group has access to
considerable financial resources through its
facilities as described in Note 20. In making
their assessment of the going concern basis,
the Directors have reviewed the maturities of
these facilities, the headroom available from
them and the Group’s ability to meet the
covenant requirements of certain of them.
As a consequence, the directors believe that
the Group is well placed to manage its
business risks successfully.
After making enquiries, the Directors have
a reasonable expectation that the Company
and the Group have adequate resources
to continue in operational existence for the
foreseeable future. Accordingly, they
continue to adopt the going concern basis
in preparing this Annual Report.
Basis of preparation
At the beginning of the year, the Group
adopted IFRS 11 ‘Joint Arrangements’. While
not affecting the Group’s profit for the year
or net assets, the adoption has affected a
number of the individual line items disclosed
in the Group’s financial statements.
Previously, the Group had accounted for
interest in joint ventures on a proportionate
consolidation basis, whereby the Group’s
share of the income and expenses, assets
and liabilities and cash flows of joint ventures
was combined on a line-by-line basis with
those of Tate & Lyle PLC and its subsidiaries.
IFRS 11 prohibits the use of proportionate
consolidation and requires that joint
ventures are accounted for using the equity
method of accounting. Under the equity
method of accounting, the Group’s share
of the after-tax profits and losses of the joint
ventures is shown on a single line of the
consolidated income statement; its share
of their net assets is shown on one line of
the consolidated statement of financial
position; and the consolidated statement
of cash flows reflects cash flows between
the Group and the joint ventures within
cash flows from investing activities. Trading
balances with joint ventures and associates
are included within current payables or
receivables. Accordingly, the Group has
restated comparative financial information
where appropriate. The Group also adopted
IFRS 12 ‘Disclosures of Interests in Other
Entities’ at the beginning of the year,
which stipulates enhanced disclosure
requirements for non-controlling interests,
joint ventures, and associates. Enhanced
disclosure of the Group’s joint-venture
holdings and associates can be found in
Note 16 to the Financial Statements. There
are no material non-controlling interests in
the Group.
With the exception of the changes arising
from the adoption of IFRS 11 and IFRS 12
the Group’s principal accounting policies are
unchanged compared with the year ended
31 March 2014.
Adjusted performance measures
We report adjusted performance measures
because they provide both management and
investors with valuable additional information
on the performance of the business. The
Group has presented adjusted financial
information on a proportionate consolidation
basis, as this reflects the management of its
joint ventures on an integrated basis with
the Group’s subsidiaries, and the basis upon
which management information is reported
to the Board (the designated Chief Operating
Decision Maker). Accordingly, performance
measures such as adjusted sales, adjusted
operating profit, adjusted profit before tax
and adjusted diluted earnings per share are
unaffected by the adoption of IFRS 11.
In addition to the adjustment for
proportionate consolidation, the following
items are excluded from these adjusted
measures:
• Exceptional items (Note 6)
• Amortisation of intangible assets acquired
through business combinations
• Net retirement benefit interest (Note 9)
• Tax on the adjusting items (Note 10)
• Results of discontinued operations
(Note 11).
This adjusted information is used internally
for analysing the performance of the
business. A reconciliation of reported and
adjusted information is included in Note 41.
Impact of changes in exchange rates
In comparison to the prior year, the Group’s
reported financial performance was
adversely affected by currency translation.
A weakening of the average US dollar and
euro exchange rates against sterling has
reduced profits. The movement in period-
end exchange rates, particularly the
strengthening US dollar, led to an increase
in net debt as a result of the translation of
dollar-denominated debt. The average and
closing exchange rates used to translate
reported results were as follows:
Average rates Closing rates
US dollar:sterling
Euro:sterling
2014
2015
2014
2015
1.61 1.59 1.49 1.67
1.28 1.19 1.38 1.21
Nick Hampton
Chief Financial Officer
Tate & Lyle PLC | Annual Report 2015 | 33
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION STRATEGIC REPORT | RISKS
How do we effectively
manage the risks we face?
Tate & Lyle is exposed to
a number of risks which
could have a material
adverse effect on our
reputation, operations
and financial performance.
Identify risks
Review and
monitor risks
Assess
risks and
interactions
Risk framework
Respond
to risks
Prioritise risks
The Board has overall responsibility for the
Group’s system of risk management and
internal control. The schedule of matters
reserved to the Board ensures that the
Directors control, among other matters,
all significant strategic, financial and
organisational risks.
Approach
Annual process to identify risks
The Group-wide risk management and
reporting process helps us to identify,
assess, prioritise and mitigate risk. It follows
the Committee of Sponsoring Organizations
of the Treadway Commission (COSO)
Enterprise Risk framework.
Our process is both bottom-up and
top-down. The bottom-up aspect of the
process involves a rolling programme of
workshops, facilitated by the risk
management team, held around the Group.
During these workshops, we identify current
and forward-looking risks which are collated
and reported through functional and
divisional levels to the Group Executive
Committee. The top-down aspect involves
the Board assessing what it believes to be
the key risks facing Tate & Lyle. We combine
the results of these processes to identify the
Group’s key business, financial, operational
and compliance risks, and then develop
action plans and controls to mitigate them
as far as possible, to the extent deemed
appropriate taking account of the Group’s
risk appetite. These risks are then reviewed
again by the Board. This process takes
place annually. As part of this annual risk
assessment process, the Board also reviews
emerging and ‘black swan’ risks facing the
Group. The process reviews risks over a
time period of between two and five years.
Managing risks
Individual executives in each division are
assigned responsibility for managing
key risks and their associated mitigating
controls. As part of the process, senior
executive management formally confirms
once a year that these key risks are being
managed appropriately within their
operations and that controls have been
examined and are effective. The
confirmations and any exceptions are
discussed at the Audit Committee and
Corporate Responsibility Committee, and,
where appropriate, reported to the Board.
The Board and the Group Executive
Committee undertake an annual exercise
to consider the nature and extent of the
Group’s risk appetite. The results of this
34 | Tate & Lyle PLC | Annual Report 2015
exercise, which includes a review of how
the previous year’s risk appetite had been
applied in practice, are used as part of our
strategic planning activities, and in setting
ongoing mitigating actions.
Key risks
Key risks and uncertainties identified as part
of the risk management process undertaken
during the year, together with some of the
mitigating actions we are taking, are set out
on pages 35 and 36. However, it is not
possible to identify or anticipate every risk
that may affect the Group.
The individual risks in relation to the
operational and supply chain disruption
which occurred during the year were
identified as part of the risk management
process. However, the scale, velocity and
combination of these risks significantly
increased their overall impact on the Group.
As a result, we reviewed our processes and
made some enhancements, for example, by
placing a greater focus on those areas and
behaviours which could potentially trigger
risk combinations in the future.
What key risks and uncertainties
have been identified?
Risks
How do we manage the risk?
Safety
Failure to act safely and to maintain the safe operation
of our facilities
The safety of our employees, contractors, suppliers, and
the communities in which we operate is paramount. We must
operate within local laws, regulations, rules and ordinances relating
to health, safety and the environment, including emissions. Failure
to act safely may give rise to fines or penalties for breach of safety
laws, interruptions in operations or loss of licence to operate, liability
payments and costs arising from injuries or damage and damage
to reputation.
Strategy
Failure to grow in speciality food ingredients
Tate & Lyle’s strategy is to become the leading global provider of
speciality food ingredients and solutions. Our ability to deliver the
strategy may be affected by a number of factors such as delivering
growth in emerging markets, acquisitions, customer readiness to
adopt new ingredients and incorporate them in new product
launches, competitor actions, and growing key product or product
families. Failure to deliver our strategy over the longer term would
negatively affect our credibility, reputation and profitability.
Innovation
Failure to innovate and commercialise new products
Failure to identify important consumer trends and provide innovative
solutions, and the inability to successfully commercialise new
products, could impact the delivery of our strategy. This would affect
our performance and reputation.
• Health and safety policies and procedures at all facilities with
dedicated staff to ensure they are embedded and measured
• Regular review of performance and policies by the Corporate
Responsibility Committee
• Maintenance of suitable insurance programme
• Programme of global compliance audits; senior executives also
undertake annual executive audits at most sites
Following a challenging year, in mid-2014 we hired external safety auditors
to carry out a thorough audit of safety at all our major locations. This
allowed us to understand how each site was following our procedures
and permit systems, and what improvements were needed. During the
year we began carrying out their recommendations, particularly with
regards to behavioural safety and leadership by example. This is helping
our teams improve their understanding of and approach to safety.
• Investments to increase our sales and technical resources,
including in emerging markets
• New staff recruited and development of existing staff to upgrade
skill sets, particularly in customer-facing areas and innovation
• Enhancement of internal capabilities to help promote growth through
acquisition
• Establishment of a global programme to enhance customer
account management, planning and execution
• Innovation and Commercial Development (ICD) team works closely with
customers and other external organisations to identify emerging trends
• Open innovation team actively scouts for breakthrough technologies
and opportunities across industries and universities
• Global Marketing organisation in place to provide support for new
product launches as well as core business
• Prioritisation of ‘partnership’ opportunities with customers to accelerate
development cycles and time to market for new ingredients
• Tate & Lyle Ventures invests in early-stage companies in the areas
of food sciences and technologies by partnering with research
institutions, other venture funds, universities and entrepreneurs
Quality
Failure to maintain the quality of our products
and high standards of customer service
The safety of consumers of our products is critical. Poor quality
or sub-standard products or poor customer service could have a
negative impact on our reputation and relationships with customers.
• Strict quality control procedures and testing of all product lines to
ensure products are released only with full quality control clearance
• Quality policies, procedures and performance reviewed regularly
by the Corporate Responsibility Committee
• Third-party audit programme supplemented by internal global
compliance audits
• Recall simulation exercises undertaken
People
Failure to attract, develop, engage and retain key personnel
Performance, knowledge and skills of employees are central to our
success. We must attract, integrate, engage and retain the talent
required to deliver our strategy, and have the appropriate processes
and culture in place. Being unable to retain key people and
adequately plan for succession could have a negative impact
on the Company’s performance.
• Remuneration policies designed to attract, retain and reward
employees with ability and experience to execute Group strategy
• Talent development strategy to provide opportunities for employees,
as well as training to close skill gaps
• Single global performance management system and talent planning
processes in place
• Greater focus by the Board on succession planning for business-critical
roles
• Measurement of progress against cultural objectives (for example,
global employee surveys)
Tate & Lyle PLC | Annual Report 2015 | 35
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION STRATEGIC REPORT | RISKS CONTINUED
Key:
New key risks since last year’s Annual Report
Risks
How do we manage the risk?
Legal, IS/IT and compliance
Failure to comply with legislation and regulation and to
protect the integrity of our data and information systems
We operate in a variety of markets and are therefore exposed
to a wide range of legal and regulatory frameworks. We must
understand and comply with all applicable legislation. Any breach
could have a financial impact and damage our reputation.
• Regular monitoring and review of changes in law and regulation
in such areas as health and safety, environment, quality, food safety
and corporate governance
• Legal teams maintain compliance policies in areas such as anti-trust
and anti-corruption law; and provide ongoing training to employees
• Cyber security enhancement programme in place
Operations
Failure to maintain the continuous operation of our plant
network and supply chain
The operation of plants involves many risks, which could cause
temporary or permanent breaks in production. We must have a
robust sales and operations planning system to avoid disruption
to the supply chain and an inability to service our customers. Failure
to do so could have a material adverse effect on our performance.
• Business continuity capabilities in place to enable supply, as quickly
as practicable, of product to customers from alternative sources in
the event of a natural disaster or major equipment or plant failure
• Dedicated internal resources allocated to key projects in conjunction
with business teams to ensure business continuity is not compromised.
External resources and expertise used where required
• Programme in place to improve global supply chain processes
• New protocols implemented to enhance plants’ ability to operate in
extreme cold conditions
Raw materials
Fluctuations in prices and availability of raw materials,
energy, freight and other operating inputs
Margins may be affected by fluctuations in crop prices due to factors
such as alternative crops, co-product values and the variability of
local or regional harvests caused by, for example, weather
conditions, crop disease, climate change, and 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 on to customers
the full increase in raw material prices or higher energy, freight or
other operating costs. Additionally, margins may be affected by
customers not taking expected volumes.
• Strategic relationships with suppliers and trading companies including
multi-year agreements
• Balanced portfolio of supply and tolling contracts in operation with
customers to manage balance of raw material prices and product sales
prices and volume risks
• Raw material and energy purchasing policies to provide security
of supply
• Expanding network of corn elevators to enhance security of supply
• New or back-up supply sources in place in case primary suppliers face
localised challenges
• Use of derivatives and forward contracts (where possible) to hedge
and manage raw materials and co-product price exposures
Food regulation/consumer concerns
Changes in consumer or government perception of our
products and regulatory risks impacting freedom to operate
Our freedom to operate may be affected by changes in food
regulation, consumer concerns, political campaigns targeted at
specific ingredients or technologies or other factors that may impact
the regulatory status or perception of our products or of their
functionality, efficacy or use. We must ensure that the science
behind our ingredients (for example, health claims, nutritional impact,
biotechnology in crops or other material for food use) is supported
by credible sources, clearly communicated and understood by
relevant regulatory authorities. Failure to do so may restrict the
markets for our products.
• Global regulatory team, supported by external consultants, monitors
local regulatory requirements affecting our products
• Global nutrition team initiates and monitors research and publications
concerning the use and functionality of our ingredients and maintains
global network of health and nutrition clinicians, academics and experts
• Membership of trade organisations to provide access to broader sources
of information and to ensure, where appropriate, a single voice for the
industry on regulatory and public interest issues affecting our ingredients
• Maintenance of relations with regulatory authorities
• Providing clear information on ingredients provenance and traceability
• Research Advisory Group chaired by a non-executive director
comprising leading scientific experts to review selected critical aspects
of the Group’s innovation activities and provide guidance
Finance
Failure to manage the balance sheet, particularly during
periods of economic uncertainty
We must manage our finances within strictly controlled parameters,
particularly when external financial conditions are uncertain and
volatile. Our existing transformation programme consists of a
number of capital expenditure projects which, if not delivered
successfully, could negatively affect our performance and reputation.
• Capital expenditure procedures to control and monitor allocation
and spend
• All new investments evaluated against clear strategic and financial
criteria; those approved are reviewed for execution against milestones
• External resources and expertise used where required
• Exposure to liquidity risk is managed by maintaining access to a wide
range of funding sources, and by effective management of our cash
resources
Finance
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 acts which could have a
significant impact on the ability of the business to operate. We must
safeguard business assets and ensure the accuracy and reliability
of our records and financial reporting.
• Finance policies and standards are in place supported by procedures
for key finance processes, for example, capital expenditure
• Finance risk assessments are undertaken and key finance risks
monitored through the Treasury Risk Committee
• Chief Executive and Chief Financial Officer undertake detailed quarterly
business and financial reviews
• Additional control oversight, monitoring and processes are introduced
through periods of significant change, for example, the implementation
of the new global IS/IT system
• Core controls embedded in systems and processes are routinely
reviewed for effectiveness, for example, segregation of duties to control
access rights within Group systems
Shareholder expectations
Failure to manage shareholders’ expectations
We must communicate a clear strategic vision, deliver the annual
operating plan and provide accurate and timely information to the
market to enable the investment community to efficiently assess the
Company’s value, and reduce the risk of uncertainty and volatility
in the share price. Failure to do so could impact our reputation and
credibility with shareholders.
• Implementation of new business performance management capability
and cycle to improve performance management and steer 2016
Annual Operating Plan delivery
• New forward disclosure framework to improve presentation of
business results
• Investor Relations team in place with improved communications and
disclosure framework
36 | Tate & Lyle PLC | Annual Report 2015
STRATEGIC REPORT | CORPORATE RESPONSIBILITY
What progress have we made
on our sustainability journey?
We approach corporate responsibility (CR) from a stakeholder perspective;
in terms of our workplace, the environment, our marketplace and the
communities of which we are a part. We seek to continually improve the
way that we manage, perform in and report on CR matters.
Our Values
Our Values define what we stand for
and how we behave with our customers,
suppliers, investors, the communities
we operate in and with each other.
We have a combined team of Values
and Ethics ‘Ambassadors’ who promote
our Values and the right way of doing
business to colleagues across the Group.
bility P e r
ta
n
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o
c
c
A
f o r mance Values
Safety
Core
Values
A
c
h
i
e
v
e
m
e
n
t
Respect
Integrity
C
r
e
a
ti
v
it
y
Speed
work
T e a m
Governance
Management and performance
Engagement and reporting
Governance of CR is overseen by
the Board’s Corporate Responsibility
Committee (see page 56).
The Chief Executive is the director with
specific responsibility for CR.
CR matters are considered within the
Group’s risk management and reporting
processes (see page 34).
Workplace
We have undertaken a thorough review of
safety management and accident prevention
this year, including the introduction of external
auditors to review safety management and
controls at all our major sites (see page 38).
Environment
Our Sagamore plant in Lafayette, US
changed from coal to gas, to fuel its
combined heat and power (CHP) energy
system; thereby reducing CO2e emissions
by up to 56,000 tonnes per year.
Marketplace
We are on track to surpass our sustainable
agriculture target, with programmes currently
being implemented for 24 agricultural raw
materials and ingredients (see page 42).
Community
We support communities locally and globally
in the areas of well-being, education and
environment (see page 43).
Engagement
We have worked more closely with
stakeholders this year, particularly
customers, and use their feedback to inform
our approach to and reporting on CR.
FTSE4Good
Tate & Lyle is a member of the FTSE4Good
CR index (www.ftse.com/products/
indices/FTSE4Good).
Reporting
The scope, principles and methodologies
we use in reporting CR performance are
provided in ‘CR Reporting Criteria Annual
Report 2015’ at www.tateandlyle.com/
CR2015.
Our internal audit function reviewed the CR
information and data in this Annual Report
to confirm its accuracy.
We gained independent external
assurance over selected environmental
data on pages 41 to 42 in this Annual
Report from Bureau Veritas UK Ltd.
Their assurance statement is at
www.tateandlyle.com/CR2015.
Tate & Lyle PLC | Annual Report 2015 | 37
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION
STRATEGIC REPORT
Corporate Responsibility continued
Safety
We have no higher priority than safety, for
our employees and for everyone who comes
to our sites. Our Executive Safety Steering
Committee, chaired by our Chief Executive,
meets throughout the year to review our
safety performance and improvement
programmes. Our senior executives
undertake annual executive safety audits
at the majority of our sites around the world
each year.
Our ultimate goal is to have no accidents
and no injuries. We have undertaken a
thorough review of our safety management
programme during the year, including the
introduction of external auditors to review
safety management and control at our major
manufacturing sites. As a result, we have
overhauled our safety programme and
accident prevention arrangements at
Group and site level, as explained below.
Performance
As reported in last year’s Annual Report,
three contractor employees working at our
Singapore facility were severely burned
when performing a steam line break
procedure in April 2014: two of them later
died. Then, in June 2014, the site manager
of one of our grain elevators died when a
farm utility tractor he was driving overturned.
We very deeply regret these tragic
accidents. They have been thoroughly
investigated, both internally and externally.
Actions, based on findings, have been taken
to prevent these types of accidents from
reoccurring, as explained below.
Lost-work
Recordable
case rate
incident rate
Change
Change
versus
versus
2013
2013
2014
70% 0.29 222%
20% 0.39
77%
47% 0.32 146%
2014
0.73
1.13
0.85
Employees
Contractors
Combined
In 2014, two of our US plants won four US
Corn Refiners Association (CRA) Safety
Awards between them. Our annual global
safety week saw many employees and their
families, alongside contractors, taking part in
activities across our sites worldwide. We also
conduct regular ‘contractor safety summits’,
to discuss expectations and share best
practice with contractors, and to support
our plant-level contractor safety programme.
External benchmarking
To put our safety performance in context
and because many of our employees are
located in the US, we compare our results
with US industry averages, as shown in the
graphs on page 39.
How are we
overhauling our
safety programme?
Current key initiatives include:
• Global implementation of the
‘SafeStart’ training programme
Calendar year
• Elimination and engineering out
of hazards
• Reinforcing administrative controls
(for example, Permits to Work for
higher risk activities)
• Improving behavioural safety and
a strong safety culture
• Contractor safety programme
• Ergonomics, manual handling and
hand safety initiatives.
Fatalities
2014
31
2013
22
2012
0
1 One employee and two contractors.
2 One employee and one external truck driver.
The safety performance indicators of
recordable incident rate and lost-work
case rate – for employees and contractors
combined – saw an increase of 47% and
146% respectively during calendar year
2014: both the number and severity of
incidents increased compared with calendar
year 2013, when we had our lowest levels
ever recorded. The more severe incidents
(ie those that require more time off work)
were predominantly ergonomic/manual
handling issues; therefore we are currently
reviewing and reinforcing our ergonomics
and manual handling programme.
Workplace
Our employees are critical in delivering our
strategy. In line with our Values, we believe
that everyone should be safe at work and
be treated fairly and with respect.
Our policies and control arrangements
addressing human rights include:
• Our Code of Ethics, and the internal and
external communication and training
around it
• The Company’s position and practices
on equal opportunities and diversity
• The Company’s Speak Up
(whistleblowing) arrangements (see
page 52)
• Our controls for managing standards
in the supply chain (see page 43).
Employee profile
At 31 March 2015, Tate & Lyle employed
4,7591 people (2014 – 4,523). The number
of employees increased during the year,
primarily due to our acquisition of Winway
Biotechnology in China and the formation
of Tate & Lyle Gemacom Tech in Brazil.
Employees by division1
as at 31 March 2015
1. Bulk Ingredients 47%
2. Speciality Food Ingredients 44%
3. Central functions 9%
3
1
2
Employees by geography1
as at 31 March 2015
1. North America 44%
2. Europe, Middle East and Africa 36%
3. Latin America 12%
4. Asia Pacific 8%
4
1
3
2
1 Includes employees of joint ventures
on a proportionate basis.
38 | Tate & Lyle PLC | Annual Report 2015
Safety performance1
Recordable incident rate
Number of injuries requiring treatment
beyond first aid per 200,000 hours
Lost-work case rate
Number of injuries that resulted in lost-work
days per 200,000 hours
● Tate & Lyle employees
● Contractors
● Tate & Lyle employees
● Contractors
2014
0.73
2014
0.29
2013
0.43
1.13
0.94
2013
0.09
0.39
0.22
0.19
2012
0.63
2012
1.43
0.43
Number of incidents combined (2014)
Number of cases combined (2014)
67
25
US industry sector employee averages
20132 and Tate & Lyle employees 2014
US industry sector employee averages
20132 and Tate & Lyle employees 2014
Beverage
and tobacco
5.5
Food
manufacturing
5.0
3.8
Construction
3.3
Private industry
2.0
Chemical manufacturing
1.6
Energy products manufacturing
1.5
Beverage
and tobacco
Construction
1.5
Food
manufacturing
1.3
1.0
Private industry
0.5
0.5
Chemical manufacturing
Energy products manufacturing
0.73
Tate & Lyle
0.29
Tate & Lyle
1 We report safety performance by calendar year.
2 Source: US Department of Labor, December 2014.
Taking action to prevent accidents
Early in 2014 we analysed 10 years of safety
data. This analysis indicated that 47% of
our serious incidents were related to working
at height. Therefore, we implemented a fall
prevention/protection campaign across
all sites, using external experts on the
‘hierarchy of safety controls’ to address
hazards and prevent incidents, and installed
new equipment to make it safer to work at
height. For example, we replaced barrier
chains with self-closing gates; installed
platforms instead of using ladders and
scaffolding; and installed pedestrian
barricades/anchorage points near potential
floor and wall openings.
During the year, we appointed external
auditors to carry out a thorough review of
our safety systems and procedures at our
major manufacturing sites. This has been
very helpful in identifying improvements both
at global and site level. Overall, the auditors
concluded that Tate & Lyle does have a
good safety management programme, and
that people generally know what is expected
of them; whilst key areas on which to focus
for ongoing improvement were identified
as eliminating and engineering out hazards,
ensuring the safe design of process
equipment and improving behavioural
safety. Below we report on some of the
actions we have taken so far in these areas.
Eliminating and engineering out hazards
Looking for ways to eliminate and engineer
out hazards – so preventing accidents before
they occur – is a key area of activity, and we
used external experts to improve our
understanding of ‘prevention through design’
– for example, by removing hazards before
new equipment is installed. We reviewed
and updated our minimum standards on
equipment safety and communicated these
to all sites, and launched a ‘Lifesaver’
campaign to eliminate hazards of severe
injury. We also looked at vehicle safety, and
have implemented an on-site vehicle safety
programme globally, including with our
contractors, based on the US Occupational
Safety & Health Administration (OSHA)
standard for powered industrial trucks.
Ensuring the safe condition and design
of process equipment
We work hard to ensure that all equipment
is checked thoroughly through preventative
maintenance programmes and periodic
risk assessments. We carry out internal
risk assessments on driers and storage
systems, and integrity checks on concrete
silos, tall structures and other process
equipment. We also brought in external
trainers to help us with mechanical integrity,
combustible dust, flammable liquids and
vapours, static electricity hazards,
hazardous area classifications, and process
safety management.
Behavioural safety and safety culture
How people behave each and every day
is at the heart of staying safe. Many of our
plants had previously been trained on the
‘SafeStart’ (www.safestart.com) behavioural
safety programme, and we have been
holding refresher training and also
introducing the programme at those sites
not previously covered. We also developed
a ‘PAR’ campaign, communicating that
everyone has the ‘permission, ability and
responsibility’ to act by stopping operations
and processes if they see an unsafe act or
condition. Using these two programmes,
we reinforced the importance of conducting
thorough pre-job hazard assessments.
Occupational health and well-being
We contract with external occupational
health professionals to monitor and
safeguard the health of employees at work,
and to provide information, advice and
support to them on general health and
wellness matters.
Relationship with employees
We believe in equal opportunities for all,
regardless of gender, sexual orientation,
age, marital status, disability, race, religion
or other beliefs and ethnic or national origin.
Our policies, practices and procedures
for recruitment, training and career
development promote equality of opportunity.
We are committed to treating people with
disabilities fairly in all respects, including
regarding applications, training, promotion
and career development. An employee who
becomes disabled would, where appropriate,
be offered retraining for a more suitable role.
Diversity and inclusion
We believe in a culture where all employees
contribute to the performance of the Group
and have the opportunity to develop fully
according to their individual abilities. We aim
to attract a diverse workforce that reflects
the communities in which we operate. Our
Diversity and Inclusion Council works on
creating awareness of diversity and inclusion
issues, tracking inclusion metrics, and
championing our diversity and inclusion
programme across the Group.
Tate & Lyle PLC | Annual Report 2015 | 39
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION
STRATEGIC REPORT
Corporate Responsibility continued
Progress during the year included:
Gender diversity (as at 31 March 2015)
• Appointment of two women to the Group’s
Executive Committee
• Establishing Employee Resource Groups
across five different areas of interest; and
providing platforms for employees to
support and celebrate our unique
strengths
• Enhanced cultural diversity from the
acquisition of Winway Biotechnology, the
Chinese manufacturer of polydextrose and
the formation of Tate & Lyle Gemacom
Tech in Brazil
• Further embedding diversity and inclusion
into our recruitment practices.
Board of Directors
1. Men 70% (7)
2. Women 30% (3)
1
2
Employee engagement
We believe that employees who are
committed to Tate & Lyle, our goals, Values
and strategy, and to each other, are happier
and ultimately deliver better results.
Senior managers and statutory
directors1
1. Men 82% (122)
2. Women 18% (27)
Good internal communication is essential to
this. We communicate with our employees in
a number of ways, from Group-wide media
including our intranet and our quarterly
employee magazine which is published in
13 languages, to face-to-face dialogue such
as site-wide meetings, functional meetings
and small group or team meetings.
We continue to invest in helping employees
and managers stay up to date with the latest
requirements of their roles. Courses provided
during the year included a supervisors’
development programme, a people
management development programme,
stakeholder management and influencing,
and sales training. A significant amount of
training was provided to further embed our
performance management principles and
our refreshed employee induction process.
1
2
All employees2
1. Men 74% (3,042)
2. Women 26% (1,094)
1
2
1 Gender diversity for senior managers, excluding
statutory directors, is 44 (77%) men and 13
(23%) women.
2 Excludes employees of joint ventures where we
do not have management control.
40 | Tate & Lyle PLC | Annual Report 2015
Environment
We aim to operate our business with
a strong regard for environmental
sustainability. By using resources such
as energy and water more efficiently, and
reducing waste, we seek to improve our
environmental sustainability while also
controlling operating costs. We work to
address environmental considerations
across the life-cycle of our products, from
our agricultural supply chain to how our
products are packaged and transported.
Implementing our strategy, by growing
our Speciality Food Ingredients business,
is gradually changing the shape of our
manufacturing operations. We are
producing more speciality products which
involve additional manufacturing steps
compared with Bulk Ingredients products,
and this generally means using more energy
and water resources and producing more
waste. We are working to mitigate this
through continual improvements in resource
and operational efficiency, and waste
reduction programmes.
Policy and standards
Our environmental policy and standards
apply to all our activities globally and we aim
to integrate environmental considerations
into all major decisions. We review our
environmental policy annually and undertake
communication and awareness across the
Group, including through induction and
other training at our manufacturing facilities.
Our policy is available on our corporate
website www.tateandlyle.com.
Our facilities operate under local
environmental authorisations and permits
and we require strict compliance with these
at all times. If a site breaches an operating
limit, we seek to take steps immediately to
resolve the issue and prevent reoccurrence.
Our internal global compliance audit
programme confirms conformity with our
environmental and food safety, quality and
health and safety management standards.
Additionally, our rolling programme of
external, independent environmental
compliance audits assures compliance
with regulatory requirements.
Within our own operations and joint ventures,
we focus on those aspects of our activities
that have the greatest potential impact on
the environment, namely the use of energy
(and consequent air emissions and carbon
footprint), water use, and waste management.
Beyond our own operations we focus our
attention on our agricultural raw material and
ingredient supply chain, the transportation
of our products to our customers, and our
product packaging.
Environmental sustainability targets and achievements
We have four medium-term environmental sustainability targets.
Target by end of 2016
Calendar year 2014 status
Examples
Reduce CO2e emissions
from energy use by 12.5% per
tonne of production (baseline
year 2008)1
10% reduction in CO2e emissions
per tonne of production versus
2008
In October 2014 our Sagamore plant in Lafayette, US changed from
coal to gas, to fuel its combined heat and power (CHP) energy
system; thereby reducing CO2e emissions by up to 56,000 tonnes
per year.
Implement packaging
reduction programmes with
customers representing >50%
of sales (£)
Implement transport
efficiency programmes with
customers representing >50%
of sales (£)
Implement sustainable
agricultural sourcing
programmes for our top 20
agricultural raw materials and
ingredients by volume
Programmes initiated with
customers representing >35%
of sales (£)
Recent projects include changing from shrink wrap to stretch wrap
to secure pallet loads at a Food Systems manufacturing facility in
Europe, reducing their wrapping film use by about 75%; and moving
additional product sacks from bleached to unbleached paper stock.
Programmes initiated with
customers representing >35%
of sales (£)
We are on track to surpass our
sustainable agriculture target,
with programmes currently being
implemented for 24 agricultural
raw materials/ingredients (see
Our Marketplace section for
more details)
We have implemented several projects shifting regional product
distribution from road to rail in the US.
Corn is by far our largest agricultural raw material/ingredient by
volume. We buy corn from the ‘corn belts’ of the US and Europe.
We are engaging with the US National Corn Growers Association
(NCGA), with other growers’ representatives, and with corn growers
directly, on sustainable agriculture – alongside other matters such as
food safety and quality.
1 We recognise that installing new air emissions control equipment at several locations over the next few years, and the manufacture of more speciality products,
will make it more challenging to reduce our energy use and CO2e emissions in the medium term.
Environmental performance1
Energy use
Gigajoules (GJ) per tonne production
Water use
Cubic metres per tonne production
20142
2013
2012
4.62
4.62
4.59
20142
2013
2012
4.50
4.34
4.29
Primary carbon footprint
Tonnes CO2e per tonne production
Waste to landfill
Tonnes per 1,000 tonnes production
20142
2013
2012
0.375
0.376
0.371
20142
2013
2012
8.80
7.25
7.11
1 We report environmental performance by calendar year. Data for 2012 and 2013 is restated to include
our McIntosh facility (which reopened in 2012) in line with our methodology for incorporating new sites
(set out at www.tateandlyle.com/CR2015).
2 Refers to 2014 data that has been externally assured by Bureau Veritas UK Ltd. Their assurance
statement is at www.tateandlyle.com/CR2015.
Operational performance
Our biggest challenge is that our strategy
– to grow our Speciality Food Ingredients
business – means producing a greater
proportion of speciality ingredients, which
are generally more resource-intensive to
manufacture than bulk ingredients. We are
working therefore on capital projects and
operational practices that will help us control
this in terms of our direct environmental
performance; whilst also working on
transport and packaging, and sustainable
agriculture in our supply chain.
Energy use and carbon emissions
In calendar year 2014, compared with 2013,
energy use per tonne of production was flat.
Since 2008 we have reduced energy use
per tonne of production by 6%. Our carbon
footprint from energy use reduced slightly
(down 0.3%) per tonne of production in
2014. Since 2008 we have reduced CO2e
emissions per tonne of production by 10%.
Group greenhouse gas (GHG) emissions for
the period 1 January to 31 December 2014
in tonnes of carbon dioxide equivalent
(tCO2e) were:
• From combustion of fuel and operation
of facilities (Scope 1) – 2,266,975 tCO2e2
(2013 – 2,291,9991)
• From electricity, heat, steam and cooling
purchased (Scope 2) – 1,247,700 tCO2e2
(2013 – 1,213,0991)
• In total (Scope 1 and 2) – 3,514,675 tCO2e2
(2013 – 3,505,0981) which equates to an
intensity of 0.375 tCO2e2 (2013 – 0.3761)
per tonne of production.
Tate & Lyle PLC | Annual Report 2015 | 41
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION STRATEGIC REPORT
Corporate Responsibility continued
We have reported on all of the material
emission sources required under The
Companies Act 2006 (Strategic Report
and Directors’ Report) Regulations 2013.
We report GHG emissions in line with the
GHG Protocol Corporate Accounting and
Reporting Standard. The scope, principles
and methodologies we use in reporting
CR performance are provided in ‘CR
Reporting Criteria Annual Report 2015’
at www.tateandlyle.com/CR2015.
Water use
Water use per tonne of production increased
by 3.8% in 2014, due to the increased
production of speciality ingredients, and
one-off site-specific factors such as the
replacement of a cooling tower at our
Decatur, US facility, which caused a
significant but temporary increase in water
use. Since 2008 we have reduced water use
per tonne of production by 2%. During the
year, new water re-use and recycling projects
were implemented across many of our sites,
including Dayton and McIntosh, US.
Waste to landfill
Our waste to landfill increased significantly
by 21% per tonne of production in 2014. This
was due to a number of factors, including:
process changes at our Decatur, US facility
that, whilst improving the operational
efficiency of process equipment, led to a
significant increase in the volume of inert
waste going to landfill; severe winter
conditions in the first quarter of 2014 that
disrupted our waste water treatment plant at
Lafayette Sagamore, US; and construction
waste being created by expansion work at
several sites including Loudon and
Sagamore, US. Since 2008 we have
reduced waste to landfill per tonne of
production by 8%.
Marketplace
The food and beverage industry is our
largest market sector and accounts for 70%
of Group sales. Other industry sectors we
sell into include industrial, animal feed and
personal care.
Over the last few years, stakeholders such
as customers and investors have been
looking for increasing volumes of information
around sustainability and corporate
responsibility matters. In 2013, we carried
out a review with the help of an independent
consultant to confirm our understanding
of the CR issues of most interest to our
stakeholders. The most important issues
for external stakeholders are: the safety,
integrity and functionality of our products;
the sustainability of our agricultural raw
materials/ingredients; and the CR standards
within our own business and supply chain.
42 | Tate & Lyle PLC | Annual Report 2015
During 2014, we saw a significant increase in
interest from customers around two of these
areas in particular, in terms of how we can
help them meet their own objectives and
targets on sustainable agriculture, and our
use of the Sedex (www.sedexglobal.com)
ethical compliance platform within our own
business and our supply chain.
Product safety, quality and
sustainability
Our products adhere to the highest
standards of food safety, quality and
traceability. Each year, all of our
manufacturing facilities are externally
certified to the Global Food Safety Initiative,
and the international quality standard
ISO 9000, and we have well-established
global processes and procedures to ensure
that we comply with these standards. Our
control arrangements include: in-process
testing; our global compliance audit
programme; annual product traceability and
recall testing, both globally and locally at
each facility; and independent food safety
audits of every manufacturing site.
We consider sustainability criteria in the
development of new products, and use a
sustainability evaluation tool as part of our
innovation pipeline to:
• Identify any potential sustainability
concerns early in the product
development process
• Evaluate sustainability issues as product
development progresses, to avoid or
reduce any potential adverse impacts
such as the use of energy and non-
renewable resources, and to leverage
positive impacts such as health and
wellness benefits.
Our aim is to help our customers provide
consumers with healthy, nutritious foods
and beverages as part of a normal balanced
diet. We aim to ensure that our ingredients,
and any claims we make regarding their
benefits or efficacy, are supported by clear,
demonstrated science.
In line with our strategy, we focus particularly
on growing our Speciality Food Ingredients
division, and as such the majority of our new
product development is in this area. Many of
our speciality sweeteners and fibres improve
stability, thereby helping to extend consumer
product shelf life and assist in avoiding food
waste, which is an important food industry
sustainability issue. Our platforms deliver
innovative ingredients with substantiated
health benefits to customers worldwide.
For example, DOLCIA PRIMATM Allulose, a
new product we launched in February 2015,
is a monosaccharide (simple sugar) found
in nature and made from corn, and has
90% fewer calories than, and is 70% as
sweet as sucrose (normal table sugar),
but tastes just like it.
Sustainable agriculture
Our products are derived from agricultural
raw materials, principally corn, and it is
important that we have a robust, sustainable
supply chain. In 2012 we announced a
sustainable agriculture target, to implement
sustainable agricultural sourcing
programmes for our top 20 agricultural raw
materials/ingredients by volume, by the end
of 2016. We are on track to surpass this
target, with programmes currently being
implemented for 24 agricultural raw
materials/ingredients.
Our programme has five steps:
1. Initial sustainability (social, environmental
and economic) risk assessment for each
of our agricultural raw materials/
ingredients
2. Requests to individual suppliers for
ingredient-specific information on social,
ethical and environmental matters,
standards and certifications
3. Follow-up discussions with suppliers on
their responses
4. Establishing sustainable sourcing criteria
for each material/ingredient
5. Monitoring of compliance against the
agreed criteria; whilst seeking continuous
improvement in management, reporting
and performance.
Our customers are increasingly interested
in this area, and we are working closely with
several key customers to support them in
their own targets and ambitions around
sustainable agriculture.
In 2014 we joined Field to Market
(www.fieldtomarket.org), the US alliance
for sustainable agriculture, to help define,
measure and advance sustainability in US
agriculture, particularly with regard to corn.
Conduct of commercial relationships
We are committed to ensuring a safe, open
and responsible culture in all our business
dealings wherever we operate, in line with
our Code of Ethics (our Code), and we
expect the same standards of our business
partners and suppliers as we do of our own
employees. Our Code is made available
in 13 languages and is communicated
internally via our intranet, through local
‘Ethics and Values Ambassadors’ across
the business, and via training programmes.
Externally, we require all our suppliers and
business partners to comply with the
standards set out in the Code.
Our Code is supported by a set of Standards
on particular subjects, and this year we
carried out a review and updated several
of these, including the Group Competition
(Anti-trust) Standard, the Group Gifts and
Hospitality Standard, and the Group
Standard on the Engagement of Agents and
Payment of Commissions. We also carried
out ‘train-the-trainer’ meetings for our local
Ethics and Values Ambassadors in the US
and in Europe, Middle East and Africa, to
enable them to help their colleagues uphold
the Code both internally and with our
business partners and suppliers.
Standards in our supply chain
We communicate our Code to our suppliers
through our contracts and other
engagement with them. Our purchase
contract terms and conditions include the
requirement that suppliers comply with the
standards set out in our Code, and that they
should require similar standards from their
own suppliers. Specifically, suppliers must
uphold international business standards and
be fully compliant with all applicable laws
and regulations, including but not limited to
those regarding freedom of association and
collective bargaining, non-discrimination,
anti-corruption/anti-bribery, and the
prevention of child or forced labour.
Our procurement function has a process to
assesses the environmental, social and
governance risks of suppliers based on their
source country (where independent ratings
of human rights risk are applied), and the
item itself being supplied (with reference to
an external sustainability risk assessment
of our agricultural raw materials/ingredients).
As set out above, our sustainable agriculture
programme specifically addresses these
issues in our agricultural raw materials/
ingredient supply chain (see page 42).
In addition, having used the Sedex social
and ethical compliance system
(www.sedexglobal.com) across our own
manufacturing facilities for almost 10 years,
we are now using it with our suppliers as
one of the tools to promote and assure
good practices.
Reporting concerns
We encourage our employees and
business partners to come forward with
any information concerning actual or
alleged breaches of our Code. We provide
an independent, anonymous third-party
reporting service through free phone
numbers in 47 countries and by email.
We promote this ‘Speak Up’ service across
the Group, and externally via our corporate
website. Any issues reported are
investigated by members of our Speak Up
Committee (see page 52).
.
Community
We have a strong history of community
involvement and during the year we
continued to support communities both
local to our operations and globally.
Our approach
For Tate & Lyle, community involvement
is about having a positive and lasting
relationship with the community: changing
lives for the better. We focus on three
specific areas:
• Well-being: to provide practical assistance
in the area of well-being from health issues
including nutrition through to general
welfare, such as supporting food banks
• Education: to develop young people’s
knowledge and understanding of science,
technology, engineering and mathematics
(STEM subjects), and their preparedness
for a career in a STEM-based discipline,
either academically or vocationally
• Environment: to promote environmental
sustainability and good environmental
management, addressing issues of
climate change, natural resources and
conservation.
Overview of the year
In the year ended 31 March 2015, charitable
donations were £435,000 (2014 – £501,000).
Local programmes/partnerships
We seek to engage with local communities
where our principal facilities are located.
Employees at each location can make their
own decisions as to the specific projects
they support and the partnerships that they
develop. As a result, we support a range of
initiatives and organisations in our local
communities worldwide.
• Well-being: we supported a wide variety
of well-being initiatives this year, including:
child community care centres in
Johannesburg, South Africa; and local
hospices, healthcare and food aid
charities in Europe and the US.
• Education: this year, support provided,
included enhanced maths and science
delivery in the Decatur, Lafayette, Loudon
and McIntosh school districts in the US;
road safety events for children near Mold,
UK for the second year running; and,
bursary/scholarship funds to help students
access higher education.
• Environment: this year we supported
a number of environmental initiatives,
including improvement works to local park
and conservation areas, and the provision
of a rejuvenated local parking and
community information area in Koog,
Netherlands.
Global partnerships
We have further developed our global
partnership programmes during the year.
• Well-being: for the third year running,
we have supported the homeless charity
Crisis (www.crisis.org.uk) in the UK
and the Northern Illinois Food Bank
(www.solvehungertoday.org) in the US.
Both organisations provide immediate,
practical assistance to those in need.
• Education: we are progressing
development of a wider bursary/
scholarship programme across selected
universities internationally, assisting
undergraduates to access courses in
STEM disciplines. This year we provided
the first four (of eight) fellowships to
University leaders in Vietnam, building
capacity in higher education by increasing
skills in educational leadership and
governance. We also provided bursaries/
scholarships to the University of Illinois,
Purdue University and Richland
Community College, US; and, ran a US
National Merit scholarship programme.
• Environment: we are entering our
third year as a corporate partner
of the environmental research and
engagement charity Earthwatch
(www.eu.earthwatch.org), with whom
we are working on the ecology,
conservation and sustainable
harvesting of seaweed in Asia.
Community spend by area
Year ended 31 March 2015
1. Well-being 42%
2. Education 27%
3. Environment 21%
4. Other 10%
4
1
3
2
The Strategic Report from page 1 to
page 43 of this Annual Report was
approved by the Board on 27 May 2015.
On behalf of the Board
Lucie Gilbert
Company Secretary
27 May 2015
Tate & Lyle PLC | Annual Report 2015 | 43
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION GOVERNANCE | BOARD OF DIRECTORS
Who is on our Board?
Sir Peter Gershon CBE
Chairman and Chairman
of the Nominations Committee
Joined the Board in February 2009.
Appointed Chairman in July 2009.
Aged 68. British.
Skills and experience
Sir Peter has broad business experience
gained in large and complex international
organisations and has held various
leadership roles in the UK private and public
sector. He was formerly Chairman of
Premier Farnell plc; Chief Executive of the
Office of Government Commerce; Managing
Director of Marconi Electronic Systems;
and a member of the UK Defence Academy
Advisory Board.
Other directorships
• Chairman of National Grid plc
• Chairman of the Aircraft Carrier Alliance
• Member of the advisory board of
The Sutton Trust
Javed Ahmed
Chief Executive
Joined the Board as Chief Executive in
October 2009. Aged 55. Pakistani/
American.
Skills and experience
Javed has extensive international experience
from a wide variety of senior management
roles. He started his career with Procter &
Gamble and then spent five years with
Bain & Co. before joining Benckiser (later
Reckitt Benckiser plc) in 1992 where he
gained significant experience of international
consumer goods markets and held positions
including Senior Vice President, Northern
Europe; President, North America; Executive
Vice President, North America, Australia
and New Zealand; and Executive Vice
President, Europe.
Other directorships
• Member of Mosaic Advisory Board
Nick Hampton
Chief Financial Officer
Joined the Board on 1 September 2014
as Chief Financial Officer. Aged 48. British.
Skills and experience
Prior to joining Tate & Lyle, Nick held a
number of senior roles over his 20-year
career at PepsiCo, most recently as Senior
Vice President and Chief Financial Officer,
Europe in 2008, a position he held until 2013
when he was appointed PepsiCo’s
President, West Europe Region and Senior
Vice President Commercial, Europe.
Other directorships
None
Douglas Hurt
Non-Executive Director and Chairman
of the Audit Committee
Joined the Board in March 2010.
Aged 58. British.
Skills and experience
Douglas is a Chartered Accountant. He
held a number of financial and operational
roles, including US and European senior
management positions, at GlaxoSmithKline
and was Finance Director of IMI plc between
2006 and 2015.
Other directorships
• Senior Independent Director of
Vesuvius plc
Virginia Kamsky
Non-Executive Director
Joined the Board in December 2012.
Aged 61. American.
Skills and experience
Ginny is Chairman and Chief Executive
Officer of Kamsky Associates, Inc. She
also served as an Executive Vice President
of Foamex International, Inc. and held a
variety of leadership roles at Chase
Manhattan Bank.
Other directorships
• Non-executive director of Dana Holding
Corporation
• Member of the US Secretary of the Navy
Advisory Panel
Anne Minto OBE
Non-Executive Director and Chairman
of the Remuneration Committee
Joined the Board in December 2012.
Aged 61. British.
Skills and experience
Anne was Group Director of Human
Resources at Centrica plc from 2002 until her
retirement in 2011. She previously held senior
management roles at Shell UK and Smiths
Group plc and was Deputy Director-General
of the Engineering Employers’ Federation.
Other directorships
• Non-executive director of Shire PLC
• Vice Chairman of the University of
Aberdeen Development Trust
• Trustee of the China Institute in America
• Non-executive director of the Court of
the University of Aberdeen
• Non-executive director of ExlService
Holdings, Inc.
44 | Tate & Lyle PLC | Annual Report 2015
Liz Airey
Senior Independent Director
Joined the Board in January 2007.
Aged 56. British.
Skills and experience
Liz was an investment banker and has
extensive financial experience in the UK
and internationally. She was formerly
Finance Director of Monument Oil and
Gas plc.
Other directorships
• Chairman of Jupiter Fund Management
PLC
• Senior Independent Director of Dunedin
Enterprise Investment Trust PLC
William Camp
Non-Executive Director and Chairman
of the Corporate Responsibility
Committee
Joined the Board in May 2010.
Aged 66. American.
Skills and experience
Bill worked for 22 years for Archer Daniels
Midland Company, before retiring in 2007,
and held a variety of management positions
including Executive Vice President, Asia
Strategy; Executive Vice President,
Processing; and Senior Vice President,
Global Oil Seeds, Cocoa and Wheat Milling.
Other directorships
• Senior Advisor, Naxos Capital
• Director of Culligan International
• Director of First Illinois Corporation
Paul Forman
Non-Executive Director
Joined the Board on 1 January 2015.
Aged 50. British.
Skills and experience
Paul is Group Chief Executive of Coats
Group plc, a leading global industrial thread
and consumer textiles crafts business.
Prior to joining Coats in 2009, he was Group
Chief Executive of Low & Bonar PLC, a
global performance materials group, and
was previously Managing Director at Unipart
International, a leading European automotive
aftermarket supplier. Paul also served as
a non-executive director at Brammer PLC
from 2006 to 2010.
Other directorships
• Group Chief Executive of Coats Group plc
Dr Ajai Puri
Non-Executive Director and Chairman
of the Research Advisory Group
Joined the Board in April 2012.
Aged 61. Indian/American.
Skills and experience
Ajai has a PhD in Food Science from the
University of Maryland, USA. He was
President – Research, Development and
Product Integrity and a member of the
Executive Board of Koninklijke Numico N.V.
from 2003 to 2007. Prior to this, Ajai held
various management positions with The
Coca-Cola Company, culminating in Senior
Vice President Technical, The Minute Maid
Company.
Other directorships
• Non-executive director of Britannia
Industries Limited
• Non-executive director of Firmenich SA
Lucie Gilbert
Company Secretary
Appointed Company Secretary in August
2012. Aged 43. British.
Skills and experience
Lucie was appointed Deputy Company
Secretary in 2008 and previously held senior
company secretarial roles in several listed
companies, including Experian PLC and Brit
Insurance Holdings PLC. Lucie is a Fellow
of the Institute of Chartered Secretaries
and Administrators and an Associate of
the Chartered Insurance Institute.
Directorships
None
Who is on the
Board Committees?
Certain responsibilities are delegated to
four Board Committees, details of which
are provided on pages 53 to 57 and on
page 70.
Audit Committee
Douglas Hurt (Chairman), Liz Airey,
Paul Forman, Anne Minto
Remuneration Committee
Anne Minto (Chairman), William Camp,
Paul Forman, Sir Peter Gershon1,
Dr Ajai Puri
Nominations Committee
Sir Peter Gershon (Chairman),
Javed Ahmed, Liz Airey, William Camp,
Paul Forman, Douglas Hurt, Virginia
Kamsky, Anne Minto, Dr Ajai Puri
Corporate Responsibility
(CR) Committee
William Camp (Chairman), Douglas Hurt,
Sir Peter Gershon, Virginia Kamsky,
Dr Ajai Puri
1 Sir Peter Gershon will cease to be a member
of the Remuneration Committee with effect
from 1 June 2015.
Tate & Lyle PLC | Annual Report 2015 | 45
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION GOVERNANCE | STATEMENT FROM THE CHAIRMAN
How do we provide oversight?
Dear shareholder
As discussed in this Annual Report,
Tate & Lyle has faced a number of challenges
in our operations and our business
environment which have significantly
impacted on our performance over the
course of the past year.
We have discussed our individual and
collective learnings from this experience
and have implemented actions to address
the issues that have arisen over the year.
Board effectiveness review
Following on from the 2014 review which
was facilitated by Schneider Ross, the
Board agreed that the 2015 review should
be facilitated by our Senior Independent
Director, Liz Airey. The review identified
a number of improvements that could be
made to how we manage ourselves as a
Board during times of turbulence in our
business environment and change within
the organisation itself. Further details are
contained in the section on the Board
effectiveness review on page 49.
Board composition
We welcomed two new directors to the
Board this year: Nick Hampton succeeded
Tim Lodge as Chief Financial Officer on
1 September 2014 and Paul Forman joined
the Board as a non-executive director on
1 January 2015. I am delighted that we
have been able to attract strong talent
to the Board.
Robert Walker retired as a director on
31 December 2014 having served on the
Board for nine years, latterly as Senior
Independent Director and Chairman of the
Remuneration Committee. Liz Airey and
Anne Minto respectively were appointed to
succeed him in these roles. I would like to
thank Tim and Robert for their commitment
and hard work during their tenures with us.
Tenure of non-executive directors
1. 0 to 3 years 3
2. 4 to 6 years 3
3. over 7 years 1
1
3
2
Focus for the 2016 financial year
We regularly review the Board’s areas of
focus. The key areas to which we will
continue to devote significant time at Board
and Committee level are as follows:
• Safety, including the ongoing
implementation of initiatives to improve
hazard identification and accident
prevention at all our sites
• The implementation of the new planning
and forecasting system
• The execution of action plans relating
to the restructuring of our SPLENDA®
Sucralose business and the re-alignment
of our Eaststarch European joint venture
• The performance of the Speciality Food
Ingredients and Bulk Ingredients divisions
• Communications with shareholders,
employees, customers and other
stakeholders
• Talent management, senior recruitment
and succession planning activities
• The Group’s innovation pipeline.
I look forward to meeting shareholders
at our forthcoming AGM.
Sir Peter Gershon
Chairman
46 | Tate & Lyle PLC | Annual Report 2015
Corporate Governance
UK Corporate Governance Code
The UK Corporate Governance Code,
dated September 2012 (the Code) and
issued by the Financial Reporting Council,
is applicable to companies with a premium
listing on the London Stock Exchange. As
such, we are required to state how we have
applied the principles contained in the Code
and to disclose whether we have complied
with the provisions of the Code during the
year. Throughout the year from 1 April 2014
to 31 March 2015 the Company has
complied fully with the Code.
This Governance section of the Annual
Report, including the Directors’
Remuneration Report plus the disclosures
contained in the Risks section on pages 34
to 36, provides details of how the Company
applies the principles and complies with
the provisions of the Code. The Directors’
responsibilities for the preparation of
financial statements are explained in the
Directors’ Statement of Responsibilities on
page 80. Their statement on going concern
is on page 33. Further information on the
Code can be found on the Financial
Reporting Council’s website www.frc.org.uk.
The Board
The role of the Board
The Board is collectively responsible for
promoting the success of the Company and
for providing entrepreneurial leadership within
a framework of prudent and effective controls
that enable risk to be assessed and
managed. It sets the Company’s objectives,
ensures that the Company has the necessary
financial resources and people to meet them,
and reviews management’s performance.
The Board also sets the Company’s Values
and ensures that its obligations to
shareholders and others are met.
There is a schedule of matters reserved
to the Board for decision, which includes
approval of:
• Group strategy
• Annual budget and operating plans
• Major capital expenditure, acquisitions
or divestments
• Interim dividends
• Full-year and half-year results
• Board and Company Secretary
appointments
• Senior management structure and
responsibilities
• Treasury policies
• Directors’ conflicts of interest
• Systems of internal control and risk
management.
Governance structure
Board
Audit
Committee
Corporate
Responsibility
Committee
Nominations
Committee
Remuneration
Committee
Chief
Executive
Board committees
The Board has delegated certain
responsibilities to committees, details of
which can be found on pages 53 to 57
and on page 70.
Research Advisory Group
The Research Advisory Group (RAG) is
chaired by Dr Ajai Puri and comprises
external subject matter experts and senior
Tate & Lyle managers. The RAG’s remit
covers reviewing the innovation pipeline
and providing insight into how leading-edge
science and technology can be applied
to enhance the Group’s speciality food
ingredients portfolio. The RAG meets
regularly, principally at the global Commercial
and Food Innovation Centre in Chicago,
USA and Dr Puri provides regular updates
to the Board on the work of the RAG.
Operation of the Board
Board meetings
The Board and its Committees meet
regularly according to a schedule linked
to key events in the Company’s corporate
calendar. Ad hoc meetings are also arranged
to consider matters requiring review and
decision outside the scheduled meetings.
Six scheduled Board meetings were held
during the year ended 31 March 2015,
including one held at the global Commercial
and Food Innovation Centre in Chicago,
USA. Three additional Board meetings were
also held to consider proposals relating
to the Group’s business transformation
programme and to review business
performance and the impact of changes
in the business environment on the Group’s
performance. The Board also met on one
other occasion during the year under review
to focus on strategy. It has also met twice
since the end of the financial year and prior
to the signing of this Annual Report.
The rolling programme of items for
discussion by the Board is reviewed at each
Board meeting and updated to reflect
topical matters. All substantive agenda items
have comprehensive briefing papers which
Research
Advisory
Group
Executive
Committee
are distributed via the electronic Board
portal, generally five working days before
the meeting. In the few instances where a
director is unable to attend a meeting, his
or her comments on the briefing papers
are given in advance to the Chairman.
Meetings are structured to facilitate open
debate, and all directors participate in
discussing safety, strategy, trading, financial
performance and risk management.
Members of executive management attend
Board meetings and regularly make
presentations.
The Chairman continued to hold a short
discussion with the non-executive directors
collectively both immediately before and
after each scheduled Board meeting.
Directors’ attendance at Board meetings
Directors as at
31 March 2015
Sir Peter Gershon
Javed Ahmed
Nick Hampton1
Liz Airey
William Camp
Paul Forman2
Douglas Hurt
Virginia Kamsky
Anne Minto3
Dr Ajai Puri
Former directors
Tim Lodge4
Robert Walker5
Number of
meetings
eligible to
attend
9
9
5
9
9
3
9
9
9
9
Number of
meetings
attended
9
9
5
9
9
3
9
9
8
9
4
6
4
6
1 Joined the Board on 1 September 2014.
2 Joined the Board on 1 January 2015.
3 Unable to attend one meeting due to illness.
4 Ceased to be a director on 31 August 2014.
5 Ceased to be a director on 31 December 2014.
Tate & Lyle PLC | Annual Report 2015 | 47
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION GOVERNANCE
Corporate Governance continued
Work undertaken during the year
During the year, the Board continued to
oversee the ongoing transformation of
the Group’s culture and business and
considered all matters within its remit,
focusing in particular on the following:
• Safety
• Operational performance including the
performance of the Speciality Food
Ingredients (SFI) and Bulk Ingredients (BI)
divisions and the effectiveness of the
manufacturing facilities and the global
supply chain
• The Group’s approach to customer
engagement and collaboration
• The implementation of the project to
create one global IS/IT system
• Talent management and succession
planning activities
• Major capital expenditure projects
• Restructuring of the Group’s SPLENDA®
Sucralose business
• Re-alignment of the Eaststarch European
joint venture.
In the 2016 financial year, the Board will
focus in particular on the areas listed on
page 46.
Board allocation of time
The chart below shows the approximate
time the Board has spent discussing agenda
items during the year, separated into broad
categories.
1. Strategy 30%
2. Risk 23%
3. Business results 12%
4. Execution of strategy 28%
5. Governance 7%
5
1
4
3
2
Division of responsibilities
The roles of the Chairman, Chief Executive
and Senior Independent Director are
separated and their responsibilities are set
out in writing and agreed by the Board.
48 | Tate & Lyle PLC | Annual Report 2015
The Chairman
Key responsibilities include:
• The effective operation, leadership and
governance of the Board
• Ensuring the effectiveness of the Board,
and each director individually
• Setting the style and tone of Board
discussions
• Ensuring the directors receive accurate,
timely and clear information.
The Chief Executive
Key responsibilities include:
• Proposing strategy to the Board and
delivering it
• Running the business
• Communicating the Board’s expectations
with regard to culture, values and
behaviours
• Ensuring the Board is aware of the
executive directors’ views on business
issues.
The Senior Independent Director
Key responsibilities include:
• Acting as a sounding board for the
Chairman
• Conducting an annual review of the
Chairman’s performance
• Being available to shareholders if they
have any concerns that they have been
unable to resolve through the normal
channels.
Board effectiveness
Board diversity
As set out in the Board’s statement on
diversity, published on the Group’s website,
the Directors believe that Board composition
is a key element of Board effectiveness and
each member, and potential member, of
the Board must be able to demonstrate the
skills, experience and knowledge required
to contribute to the effectiveness of the
Board. Subject to that overriding principle,
the Directors believe that the Board’s
perspective and approach can be greatly
enhanced through gender, age and cultural
diversity. It is the Board’s policy to consider
overall Board balance and diversity when
appointing new directors.
Board composition
At the date of this Annual Report, the Board
comprised ten directors with deep
knowledge and experience in diverse
business sectors within global markets: the
Chairman, who has no executive
responsibilities; two executive directors; and
seven non-executive directors. The names
and biographies of the directors are on
pages 44 and 45.
Independence
With the exception of the Chairman, who
is presumed under the Code not to be
independent, the Board considers all the
non-executive directors to be independent.
The Senior Independent Director, Liz Airey,
is available to shareholders if they have any
issues or concerns which they have not
resolved through the usual channels, and
leads the annual review of the Chairman’s
performance.
The non-executive directors have a wide
range of skills and knowledge and combine
broad business and commercial experience
with independent and objective judgement.
The terms and conditions of appointment
of the non-executive directors can be
inspected at the Company’s registered
office and will be available for inspection
at the Annual General Meeting (AGM).
As part of the annual Board effectiveness
review, each director goes through a formal
performance review process. All directors
completed this process during the year and,
in line with the Code, Sir Peter Gershon and
Liz Airey, who have served for over six years,
have been subject to a particularly rigorous
review.
Time commitment
All directors have disclosed any significant
external commitments to the Board and
confirmed that they continue to have
sufficient time to discharge their duties
to Tate & Lyle. The other significant
commitments of the Directors are set out on
pages 44 and 45. The time commitment of
all non-executive directors and the Chairman
is reviewed annually and the Board is
comfortable that all Directors continue to
devote the necessary time to the Company.
Advice and support
The appointment and removal of the
Company Secretary is a matter for the
Board as a whole. All directors have access
to the advice and services of the Company
Secretary, Lucie Gilbert, who is responsible
for ensuring that Board processes are
followed and that applicable rules and
regulations are complied with.
There is also a formal procedure whereby
directors can obtain independent
professional advice, if necessary, at the
Company’s expense.
Information and professional
development
The Chairman, assisted by the Company
Secretary, is responsible for ensuring that
the directors receive accurate, timely and
clear information on all relevant matters.
Directors receive ongoing training and
updates on relevant issues as appropriate,
taking into account their individual
qualifications and experience. The Company
Secretary helps directors undertake any
other professional development they
consider necessary to assist them in
carrying out their duties. Visits to external
events are also arranged to help non-
executive directors in particular to gain a
deeper insight into the Group’s operating
environment. During the year, in addition to
the Board’s visit to Chicago, the Chairman
and the non-executive directors visited five
of the Group’s sites in Europe and the US
as part of their independent site visit
programme. These visits provide directors
with the opportunity to interact with local
management and gain in-depth knowledge
about the challenges being faced by the
Group’s operations across the world. Over
the past three years, the Chairman and
non-executive directors have visited 20
of the Group’s principal locations as part
of this programme.
Directors’ induction programme
Two new directors joined the Board during
the financial year, Nick Hampton, Chief
Financial Officer, and Paul Forman,
non-executive director. On appointment to
the Board, each of the directors received
background reading about the Group and
details of Board procedures and other
matters related to governance. The Company
Secretary then worked with Paul Forman to
deliver a tailored induction programme, and
the VP, Global Talent worked with Nick
Hampton to develop and implement an
appropriate induction programme reflecting
his executive responsibilities.
Director
Aim of induction programme
Details of programme
Paul Forman
Non-executive director
To increase Paul’s knowledge of the Group’s
business, processes and its people.
Paul visited the global Commercial and Food Innovation
Centre in Chicago, USA, the Group’s plants in Lafayette,
Indiana, and the London head office where he met with
senior operational management and key functional heads.
Nick Hampton
Chief Financial Officer
To accelerate Nick’s transition into the CFO role
and to increase his understanding of the Group’s
business and operations, in particular the global
finance team and support functions.
Nick met with the external auditors, external advisers and
Group lawyers. He has also visited the Global Commercial
and Food Innovation Centre in Chicago, USA, and group
sites in the US, Brazil, Germany and Poland.
Performance evaluation
A review of the Board’s effectiveness is undertaken each year. The process is conducted by an external facilitator at least every third year
and internally in the intervening years. In 2013, the process was led by the Chairman and in 2014 by an external facilitator, Schneider Ross.
For the 2015 review, the Board decided that the Senior Independent Director, Liz Airey, should facilitate an internal review, supported by the
Company Secretary, Lucie Gilbert. The objective was to introduce a fresh approach and a new perspective.
2014 Board effectiveness review
The actions undertaken after the 2014 Board effectiveness review are set out below.
Recommendations
Board dynamics
Actions taken
• Chief Executive to meet with executives who attend
Board meetings immediately afterwards to discuss
how the Board operated as a whole and to reflect
on any learnings
• Thinking styles of candidates for the Board and
Executive Committee to be taken into consideration
once skill set and experience have been confirmed
• Undertake an externally-facilitated session for the
Board focusing on boardroom dynamics, relationships
and how to make even better use of Board diversity
Board specifics
• The practice of a post-meeting review with executive attendees is now well
embedded and feedback is provided to the Chairman via the Chief Executive.
• The Nominations Committee considered the need for diversity of thinking
styles when leading the process which led to the appointment of Paul
Forman as a director
• In March 2015, all Directors participated in a project to review and build upon
the diversity of thinking and behavioural styles across the Board. See page
50 for more details
• Building on the progress made in 2013, further
proposals to be developed to drive customer-
centricity in the boardroom
• Board Committees to oversee the executive focus
on building an inclusive culture
• The Board’s insights into customers’ perceptions, needs and behaviours
continued to evolve during the year with interactions with customer-facing
managers within and outside formal Board meetings. The Board also met
with representatives from a major customer during its visit to the global
Commercial and Food Innovation Centre in Chicago, USA
• Revisit the timing and location of the scheduled Board
meetings, in particular the timing of the annual Board
strategy day
• The CR, Remuneration and Nominations Committees have reviewed actions
to support and drive forward an inclusive culture through their work during
the year
• The location of one Board meeting and the timing of the Board strategy day
have been changed, as recommended
Board mechanics
• Ways to further improve the support for incoming
presenters to be considered and implemented
• A working party to be established to identify ways
to enhance site visits
• Incoming presenters are offered a one-to-one session with committee
chairmen, the Chairman of the Board, or the Company Secretary before
their first attendance at a meeting
• A Board group has been established to support interaction at site visits
Tate & Lyle PLC | Annual Report 2015 | 49
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION GOVERNANCE
Corporate Governance continued
How are we
leveraging our
diverse thinking
styles?
A key recommendation from the 2014
Board effectiveness review was that,
in addition to the annual effectiveness
review, an externally-facilitated session
should be carried out focusing on
boardroom dynamics, relationships
and how to make better use of the
Board’s diversity.
Accordingly, in February 2015, each
director completed a number of
questionnaires on their psychological
preferences, how they make decisions
and their personal thinking styles. Their
responses were analysed by a business
psychologist, Voula Grand, who
presented her findings to the Board in
March 2015. This formed the basis of an
engaged Board discussion, facilitated by
Voula, during which the Board reviewed
collective and individual experiences and
agreed how the findings could be used
to enhance the Board’s effectiveness.
A number of actions were agreed,
including: a review of how the Board
allocates its time when it is together for
meetings; obtaining feedback from
meeting attendees; and building
relationships outside the boardroom. This
was considered to be a valuable exercise
and Voula will be invited back during the
2016 financial year to review progress.
learnt from the experiences of the past year.
These actions are now being implemented
and include the following:
• Improving the robustness of our investor
communications and processes
• Improving the way information is
presented to the Board to allow more time
for discussion of key issues during Board
and Committee meetings
• Ensuring issues are fully surfaced in Board
presentations through pre- and post-
Board meeting reviews
• Applying additional disciplines to
operational or strategic proposals that are
submitted to the Board for consideration
• Driving forward succession planning
and talent development at senior
management levels.
Progress will be monitored by the Chairman,
the Senior Independent Director and the
Company Secretary throughout the 2016
financial year and regular updates will be
provided to the Board.
Whilst the discussion focused on areas
for improvement, the Board acknowledged
that the feedback from the participants
recognised that the Board operates
effectively and works well as a team in
many areas. Numerous positive attributes
were also identified, including the recent
changes to the Board, and the actions
taken during the year to refresh the senior
management team.
2015 Board effectiveness review
Review of the committees
The effectiveness of the Board’s committees
was also reviewed, with each of the
individual committee chairmen facilitating
their own committee’s review. It was
confirmed that all committees continue
to provide effective support to the Board.
Areas for further focus are noted in the
individual committee reports.
Review of individual directors
The review of the Chairman was carried out
by Liz Airey, who sought the individual views
of each of the executive and non-executive
directors, led a meeting of the non-executive
directors to discuss the feedback and then
provided feedback to the Chairman.
The Chairman led performance reviews
of the non-executive directors and the
performance of the Chief Executive and
Chief Financial Officer was considered by
the Nominations Committee, in line with its
terms of reference. These reviews confirmed
that each director continues to make an
effective contribution to the Board’s work
and is well-prepared and informed about
issues they needed to consider. In every
case, their commitment remains strong.
2015 Board effectiveness review
Review of the Board
The process involved the preparation of a
short questionnaire by Liz Airey, the Senior
Independent Director, working with Lucie
Gilbert, the Company Secretary. This was
then circulated to all directors, the Executive
VP General Counsel and the Company
Secretary. The results were then analysed
and a report produced.
The Board’s discussions primarily focused
on: the Group’s recent under-performance;
specific challenges faced within the business
environment over the year; and how
effectively the Board had handled these.
It also discussed feedback from investors
and other stakeholders on how the Board
had responded to, and communicated,
the consequential under-performance. A
number of individual and collective actions
were developed to address the lessons
In this review, we were
determined to address the
hard lessons we had learnt
during this very difficult year
When the Board asked me to lead this
year’s effectiveness review, we all agreed
that it was imperative that a clear, frank
and honest assessment of the Board’s
performance during the past year should
be conducted. It was also agreed that the
review should specifically assess whether
the lessons from the events of this year
had been fully taken on board.
My boardroom colleagues provided an
invaluable array of thoughtful and
constructive comments and these, together
with comments from other stakeholders,
formed the basis of my discussion paper for
the Board. The Board fully engaged with the
issues raised in a healthy debate (which
I led) at our March 2015 Board meeting.
Whilst we agreed that the Board is generally
effective, our discussion focused on what
we had learnt from the events of the last
year and what we needed to do to improve
our performance as a Board going forward.
This includes: how we address and follow
up key concerns which surface during
discussions in the boardroom; how
proposals are presented to us; and how we
communicate both externally and internally.
We will be taking a number of steps to
address the personal and collective actions
that we agreed this year and I will be
working with the Chairman, the Chief
Executive and the Company Secretary to
ensure that these actions are appropriately
implemented. Our progress will be reported
in next year’s Annual Report.
Liz Airey
Senior Independent Director
50 | Tate & Lyle PLC | Annual Report 2015
Re-election of directors
The Company’s Articles of Association
require all directors to seek re-election
by shareholders at least once every three
years. In addition, any directors appointed
by the Board must stand for re-election
at the first AGM following his or her
appointment. Any non-executive directors
who have served for more than nine years
are subject to annual re-election.
The Code provides that all directors should
seek re-election on an annual basis and
all directors will seek re-election at the
forthcoming AGM. The directors standing
for re-election, with the exception of Javed
Ahmed and Nick Hampton, do not have
service contracts.
At no time during the year has any director
had any material interest in a contract with
the Group, being a contract of significance in
relation to the Group’s business. A statement
of directors’ interests in Company shares is
set out on page 78.
Directors’ conflicts of interest
As permitted under the Companies Act
2006, the Company’s Articles of Association
allow directors to authorise conflicts of
interest and the Board has a policy and
procedures for managing and, where
appropriate, authorising, actual or potential
conflicts of interest. Under those
procedures, directors are required to
declare all directorships or other
appointments to organisations that are not
part of the Group and which could result
in actual or potential conflicts of interest,
as well as other situations which could result
in a potential conflict of interest. The Board
is required to review directors’ actual or
potential conflicts of interest at least
annually. Directors are required to disclose
proposed new appointments to the
Chairman before taking them on, to ensure
that any potential conflicts of interest can
be identified and addressed appropriately.
Any potential conflicts of interest in relation
to proposed directors are considered by
the Board prior to their appointment.
Directors’ indemnities and
insurance cover
As at the date of this Annual Report,
indemnities are in force under which the
Company has agreed to indemnify the
directors, to the extent permitted by the
Companies Act 2006, against claims from
third parties in respect of certain liabilities
arising out of, or in connection with, the
execution of their powers, duties and
responsibilities as directors of the Company
or any of its subsidiaries. The directors are
also indemnified against the cost of
defending a criminal prosecution or a claim
by the Company, its subsidiaries or a
regulator provided that where the defence is
unsuccessful the director must repay those
defence costs. These indemnities are
qualifying indemnity provisions for the
purposes of Sections 232 to 234 of the
Companies Act 2006 and copies are
available for inspection at the registered
office of the Company during business
hours on any weekday except UK public
holidays. Equivalent indemnities remain in
force for Tim Lodge and Robert Walker who
ceased to be directors on 31 August 2014
and 31 December 2014 respectively.
The Company also maintains directors’ and
officers’ liability insurance cover, the level of
which is reviewed annually.
Accountability
Internal control
The Board has overall responsibility for
the Group’s system of internal control and
risk management and for reviewing its
effectiveness. The objective of internal
control within Tate & Lyle is to support
efficient implementation of the Group’s
strategy and effective operations whilst
enabling it to respond appropriately to
significant business, operational, financial,
compliance and other risks to achieving
the Company’s objectives. The system of
internal controls is designed to safeguard
the assets of the Group and to ensure the
reliability of financial information for both
internal use and external publication and
to comply with guidance published by the
Financial Reporting Council, ‘Internal
Control: Revised Guidance for Directors’
(formerly the Turnbull Guidance). The Board
recognises that internal control systems are
designed to identify and manage, rather
than eliminate, the risk of failure to achieve
business objectives, and can only provide
reasonable and not absolute assurance
against material mis-statement or losses
and the breach of laws and regulations.
Internal control system
The Board determines the level of risk that
it is prepared to accept in the business (risk
appetite) and oversees the strategies for
significant risks that have been identified.
Executive management works within the
risk appetite and develops the mechanisms
and processes to direct the organisation,
through setting the tone and expectations
from the top, delegating authority and
monitoring compliance. Line management
has primary responsibility for compliance
with Group policies, principles and
compliance requirements. In certain
functions, notably safety and product
quality, executive management has also
established separate assurance teams to
oversee the effective execution of controls.
The risk management function works with
executive management and the divisions to
help identify, measure, monitor and report
significant risks. The units report regularly
on progress with the implementation of the
Group’s strategy, including its impact on
the risk environment. Key risks are reviewed
regularly by the Board. Further information
on the Group’s risk management process
can be found on page 34.
The internal audit function provides
independent and objective assessment of
the appropriateness and effectiveness of the
Group’s internal control systems to the Audit
and CR Committees, and to the Board. It
has the authority to review any relevant
aspect of the business and a duty to report
on any material weaknesses. The Group
has a risk-based internal audit plan which is
approved by the Audit and CR Committees.
It is updated regularly to reflect changes to
the control environment.
The findings from audits are discussed with
executive management and action plans
put in place where appropriate. Progress
against these plans is monitored regularly
by the internal audit function. Summaries
of both audits and progress on any actions
are discussed regularly at meetings of the
Audit and CR Committees.
The Board also commissions external
specialists to supplement internal processes
as appropriate. Given the significant
business transformation activity undertaken
during the year, in addition to regular reports
from the internal audit function, the Board
received reports from external specialists
retained to review key elements of the
transformation programme.
Key features of the internal
control system
The Group’s internal control system has a
number of key features which ensure that
risk is monitored and managed throughout
the year, including those listed below.
• The schedule of matters reserved to the
Board which ensures that the directors
control, among other matters, all
significant strategic, financial and
organisational issues.
• A clear organisational structure and limits
of authority in respect of items such as
capital expenditure, pricing and contract
authorisation.
• A comprehensive planning and budgeting
system for all items of expenditure with
an annual budget approved by the Board.
Performance is reported monthly against
budget and prior year results; significant
variances are investigated; and revised
forecasts for the current financial year and
financial projections for future years are
prepared regularly.
• The Group has comprehensive safety,
product quality assurance and
environmental management systems.
Where appropriate, these are
independently certified to internationally
recognised standards; they are also subject
to a regular independent audit process.
Tate & Lyle PLC | Annual Report 2015 | 51
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION GOVERNANCE
Corporate Governance continued
• The Audit and CR Committees oversee
the operation of controls and report
regularly to the Board. If a failure of control
has a material impact, then a detailed
investigation, analysis and action plan
would be provided to and considered by
the Audit Committee, the CR Committee
and the Board (as appropriate).
Speak Up (whistleblowing)
Speak Up, the Group’s whistleblowing
programme, has been in place for a number
of years in all operations controlled by the
Group. This programme, which is monitored
by the Audit and CR Committees, is
designed to enable employees, contractors,
customers, suppliers and other stakeholders
to raise concerns confidentially in cases
where conduct is deemed to be contrary
to the Group’s Values. It may include, for
example, actions that may endanger safety;
unethical practices; or criminal offences.
The Speak Up programme provides a
number of alternative ways to raise concerns
including a telephone reporting line, email,
and a web-based reporting facility. The
multilingual communication facilities are
operated by independent service providers
who submit a report to the Speak Up
Committee for investigation.
Reports received during the year were
kept strictly confidential and the concerns
identified were referred to appropriate
managers within the Group for resolution.
Where appropriate, action was taken to
address the issues raised. The reports were
analysed and monitored to ensure the
process continued to be effective. There
were no cases of fraud that were significant
or that demonstrated material weaknesses
in internal controls.
Controls over financial reporting
The financial reporting control system
covers the financial reporting process
and the Group’s process for preparing
consolidated accounts, and includes
policies and procedures which provide for:
• The maintenance of records that, in
reasonable detail, accurately and fairly
reflect transactions including the
acquisition and disposal of assets
• Reasonable assurance that transactions
are recorded as necessary to permit
preparation of financial statements in
accordance with International Financial
Reporting Standards
• Reasonable assurance regarding the
prevention or timely detection of
unauthorised use of the Group’s assets.
In addition, specific disclosure controls
and procedures are in place to support the
approval of the Group’s financial statements.
Twice a year, representatives from SFI and
BI certify that their reported information
provides a true and fair view of the state
52 | Tate & Lyle PLC | Annual Report 2015
of the financial affairs of their division and
its results for the period. The results of this
financial disclosure process are reported
to the Audit Committee.
Joint ventures
All material joint ventures, as set out in Note
16, follow either the Group’s formal systems
of internal control, or their own internal
control procedures. These separate
procedures are subject to review by the
Group’s internal audit function, and the
Group works with its partners to ensure
that action plans are in place to address
any issues identified during those reviews.
2015 review of the effectiveness of the
system of internal control
The effectiveness of the Group’s internal
control system is monitored throughout the
year. Once a year the Board, with the
assistance of the Audit and CR Committees,
conducts its own review of the effectiveness
of the systems of risk management and
internal control. In 2015, this review was
once again facilitated by the internal audit
function and covered the period from the
start of the financial year to the date of this
Annual Report. The process included a
two-stage review to facilitate discussion,
with the Audit and CR Committees
discussing the results of the review at their
meetings in March and May 2015. The
Board then discussed the output at its
meeting in May 2015.
The 2015 review covered financial,
operational and compliance controls, Values
and behaviours, and the risk management
process, and included questionnaires and
representation letters completed by
management. The internal audit function
monitored and selectively checked the
results of the review, ensuring that the
responses from management were
consistent with the results of its work during
the year. As part of this process, areas for
enhancements to internal controls, and
associated action plans to deliver them, were
identified. Delivery of these enhancements
is being monitored by the Audit Committee
or CR Committee as appropriate.
As set out in the Chief Executive’s Review,
supply chain disruption significantly affected
our business in the financial year, leading to
both additional costs of order fulfilment and
missed sales opportunities. The Board
asked Nick Hampton to lead a full diagnostic
review of global demand, supply and
planning processes, details of which are
on page 9. The review confirmed that
improvements were needed to operating
and supply chain planning capabilities and
to the robustness of internal planning
processes and a programme to implement
these improvements is progressing well,
with a number of actions already in place.
The Board considers that no other areas
identified for enhancement constituted a
significant weakness.
Remuneration
The Board has delegated to the
Remuneration Committee responsibility
for agreeing the remuneration policy for the
Chairman, Chief Executive, Chief Financial
Officer and senior executives. The Chairman
was a member of the Remuneration
Committee during the year but was not
involved in any aspect of his own
remuneration. The Directors’ Remuneration
Report on pages 58 to 78 sets out the
remuneration policy and the way in which
it has been implemented.
Relations with shareholders
Shareholder communications
The Chief Executive, Chief Financial Officer
and Group VP, Investor and Media Relations
maintain a regular programme of visits and
presentations to institutional shareholders
both in the UK and overseas. The Chairman
also undertook separate visits to institutional
shareholders and Liz Airey also met with
a number of institutional shareholders
following her appointment as Senior
Independent Director. Feedback on
interaction with institutional shareholders
is provided to all directors. The Investor
Relations team provides the Board with
a report on any meetings with major
institutional shareholders at each scheduled
Board meeting. All directors receive copies
of analysts’ reports on the Company. In
addition, the Company’s external advisors
give an annual briefing on investors’
perceptions of Tate & Lyle and its investor
relations activities. The non-executive
directors are encouraged to attend the
full-year and half-year results presentations.
The Company aims to present a balanced
and clear assessment in all its
communications with shareholders. Key
announcements, financial reports and
other information about the Group can
be found on the Company’s website,
www.tateandlyle.com.
Annual General Meeting
The 2015 AGM will be held at The QEII
Centre in London on Wednesday 29 July
2015 at 11.00 am. Full details are set out in
the Notice of Meeting. Shareholders have
the opportunity to put questions to the
Board at the AGM on matters relating to
the Group’s operations and performance.
Resolutions are decided by means of a poll
and the votes received in respect of each
Resolution, together with the level of
abstentions, are notified to the London
Stock Exchange and published on the
Company’s website. Shareholders are
offered the choice of receiving shareholder
documentation, including the Annual
Report, electronically or in paper format,
as well as the choice of submitting proxy
votes either electronically or by post.
Audit Committee
Report
Dear shareholder
I am pleased to present the activities of
the Audit Committee during the year.
On 1 January 2015, we welcomed Paul
Forman to the Board and this Committee;
and I succeeded Liz Airey as Committee
Chairman on 1 March 2015. I would like
to thank Liz for her diligent leadership.
During the year, in addition to our usual
matters, including the financial results for
the full year and half year and the interim
management statements, applicable
accounting policies and going concern
assumptions, we continued to undertake
in-depth reviews of key topics. These
included a review of the functional and
presentational currencies used by the
Group, the finance controls used in
Speciality Food Ingredients and
commodities risk management.
Earlier in the Annual Report, we set out the
issues relating to the supply chain disruption
that significantly affected our business
during the financial year under review. While
this would ordinarily be an area of focus for
both the Committee and the CR Committee,
the directors agreed that the issue would be
addressed and monitored by the Board.
Further information is set out on page 52.
I led a review of the Committee’s
effectiveness which concluded that the
Committee continued to operate effectively
and identified a number of topics for
additional focus this year.
I look forward to meeting with shareholders
at the forthcoming AGM on 29 July 2015.
Douglas Hurt
Chairman of the Audit Committee
Composition and constitution
The Audit Committee, which comprises
four non-executive directors, oversees the
Group’s financial reporting and internal
controls and provides a formal reporting link
with the external auditors. The Committee’s
terms of reference, which are reviewed
annually, are available on the Company’s
website, www.tateandlyle.com.
Main responsibilities of the Audit
Committee
These include:
• Overseeing the Group’s financial reporting
process and monitoring the integrity of
the financial statements and formal
announcements relating to the Group’s
financial performance
• Reviewing significant financial reporting
issues and accounting policies and
disclosures in financial reports
• Reviewing the effectiveness of the Group’s
internal control procedures and risk
management systems
• Reviewing the effectiveness of the internal
audit function
• Overseeing the Group’s relationship with
the external auditors including the level
of fees
• Reviewing and monitoring the external
auditors’ independence and objectivity
and the effectiveness of the audit process
• Making recommendations to the Board
on the appointment or reappointment of
the Group’s external auditors.
Meetings during the year
The Committee met six times during the
year and the minutes of each meeting are
made available to all directors via the Board
portal. Membership of the Committee and
attendance during the year were as follows:
Directors as at
31 March 2015
Douglas Hurt1
Liz Airey
Paul Forman2
Anne Minto
Number of
meetings
eligible to
attend
6
6
2
6
Number of
meetings
attended
6
6
2
6
1 Succeeded Liz Airey as Chairman of the Audit
Committee on 1 March 2015.
2 Appointed as director and a member of the Audit
Committee with effect from 1 January 2015.
The Committee also met twice since the end
of the financial year and prior to the signing
of this Annual Report.
All the Committee members have extensive
management experience in large international
organisations. It is a requirement of the Code
that at least one Committee member has
recent and relevant financial experience.
Two members meet this requirement:
Douglas Hurt was Finance Director at IMI plc
until 28 February 2015 and is a member of
the Institute of Chartered Accountants in
England and Wales and Liz Airey was an
investment banker and former finance
director of Monument Oil and Gas plc.
The Chief Financial Officer; VP, Group Audit
and Assurance; Group VP, Finance and
Control; Executive VP, General Counsel;
and representatives of the external auditors
are normally invited to attend each meeting.
The Chairman of the Board and Chief
Executive attend meetings of the Committee
by invitation. In addition, the Committee
continues to enhance its exposure to the
business through its programme of key
topics for in-depth review, which involves
operational and other key senior managers
presenting to the Committee.
The VP, Group Audit and Assurance and
the external auditors have direct access to,
and meet regularly with, the Chairman of
the Committee outside formal Committee
meetings.
Independence of the external auditors
The Group’s external auditors are
PricewaterhouseCoopers LLP (PwC) and
the Committee operates a policy to safeguard
their objectivity and independence.
This policy sets out certain disclosure
requirements by the external auditors to the
Committee; restrictions on the employment
of the external auditors’ former employees;
and partner rotation. During the year, the
Committee reviewed the processes that the
external auditors have in place to safeguard
their independence, and received a letter
from the external auditors confirming that,
in their opinion, they remained independent.
The policy also sets out the circumstances
in which the external auditors may be
permitted to undertake non-audit services.
The Chief Financial Officer and Chairman of
the Committee have authority to approve the
provision of certain services up to £100,000
or £250,000 respectively. The Committee
must approve any proposed non-audit
services that exceed those thresholds.
Such proposals must be justified and, if
appropriate, be subject to tender. In addition,
the policy specifies the services which are
not permitted under any circumstances,
such as the provision of remuneration advice
and internal audit outsourcing.
The Committee reviews the policy on an
annual basis and considers quarterly reports
which set out the ongoing non-audit
services provided by the auditors and the
fees incurred.
In June 2014, restrictions around the
provision of non-audit services by the
auditors and a 70% non-audit services fee
cap came into effect at EU level. These
proposals are likely to come into force at
UK level during 2016 and the Committee
will revise the policy to reflect the new
requirements as they take effect.
Tate & Lyle PLC | Annual Report 2015 | 53
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION GOVERNANCE
Corporate Governance continued
A breakdown of the fees paid to the external
auditors in respect of audit- and non-audit-
related work is included in Note 7. The total
amount paid in respect of the Group audit,
audit of subsidiaries and the half-year review
was £2.0 million, and £0.2 million was paid in
respect of non-audit-related services. Fees
paid in respect of non-audit-related services
therefore comprised 10% of the total fees
paid to PwC.
Work undertaken during the year
The Committee maintains a calendar of
items for consideration at each meeting.
In addition to the activities outlined in the
statement from the Committee Chairman,
during the year and up to the date of this
Annual Report, the work undertaken by
the Committee fell under four main areas:
financial reporting; oversight of the external
auditors; oversight of the internal audit
function; and internal control and risk
management.
Financial reporting
At each of its meetings, the Audit Committee
reviewed accounting papers prepared by
management and determined, with the
perspective of the external auditors, the
appropriateness of key accounting policies,
estimates and judgements. The significant
issues considered by the Committee in
relation to the financial statements for the
year ended 31 March 2015 are listed below.
Sucralose assets
As explained in the Chief Executive’s Review,
the Group undertook a detailed analysis of
our SPLENDA® Sucralose business to
evaluate how to maximise returns in a
competitive market. The Board agreed to
re-focus the SPLENDA® Sucralose business
in two ways: by taking a rigorous valued
based approach to securing volume, and
by materially lowering the manufacturing
cost base of the business by consolidating
all production into the McIntosh, Alabama
facility and closing the facility in Singapore.
The Committee reviewed the carrying value
of the Group’s SPLENDA® Sucralose assets
and determined that the full carrying value
of the Singapore facility should be written off
in advance of the closure of the facility. The
Committee further determined, that based
on the analysis of the business and future
cost base, no impairment was required in
respect of the McIntosh assets.
Commodity risk
The Group uses corn commodity contracts
to manage and hedge its corn positions in
the US. The valuation of the corn book, which
is underpinned by a number of judgements,
has a material impact on the reported results
of the Group. The Committee received
regular updates on the key commodity risks
and the risk management framework in place
to mitigate these risks. In addition, the
Committee considered the work performed
54 | Tate & Lyle PLC | Annual Report 2015
by the external auditors before concluding
that the judgments made in determining the
valuation were appropriate. This will continue
to be a key area of focus for the Committee
going forward.
Implementation of Common IS/IT system
As set out in the Chief Executive’s Review,
the Group deployed its global IS/IT platform
in the North American business and in
Singapore during the year, following
deployment in Europe in 2012. The
Committee closely monitored plans to
mitigate the risk of breakdown in internal
financial controls during the transition and
the increased risk of inaccurate or
incomplete migration of financial data.
Following implementation, the Committee
continues to monitor the controls in place
as part of its ongoing oversight role.
Taxation
The Group operates in a number of tax
jurisdictions and provision for potential direct
tax exposures with local tax authorities is
underpinned by a range of judgements.
The Committee reviewed the Group’s
principles and processes for managing tax
risks during the year and reviewed the key
judgements made in estimating the Group’s
tax charge along with the key disclosures,
including a statement of tax principles,
included in the Annual Report (set out on
page 29 and in Notes 10 and 28). The
Committee was satisfied that the judgements
made in estimating the Group’s tax charge
were reasonable, and that the disclosures
in the Annual Report were appropriate.
Retirement obligations
The Group has significant retirement benefit
obligations in the UK and the US, including
unfunded retirement medical plans in the
US and a number of judgements have to
be made when calculating the fair value of
the Group’s legacy retirement obligations.
The Committee reviewed the assumptions
proposed by management (reflecting advice
from the Group’s external actuary) which
have driven an increase in the pension
and healthcare net liability (see Note 29)
and considered reports from the external
auditors before agreeing that the
assumptions were reasonable.
Reported and adjusted earnings
The Committee considered management’s
review of reported and adjusted earnings,
and satisfied itself that significant one-off
items of income and expense had been
correctly classified and that external
disclosure of these items was appropriate.
The Committee also reviewed
management’s annual goodwill impairment
assessment paper, considering future
performance of the underlying divisions,
including discussion of the discount rates
used and forecast assumptions and
sensitivities. The Committee was satisfied
that, other than in respect of the SPLENDA®
Sucralose plant in Singapore, no impairment
charges, or reversal of impairments, were
required. Papers on the Group’s existing and
emerging litigation risks were considered.
External auditors
PwC (or its predecessor firms) have been
the Company’s auditors since 1989. The
lead audit partner is rotated on a five-yearly
basis. The current lead audit partner, John
Waters, has been in place since the audit for
the year ended 31 March 2014. Accordingly,
he is due to rotate off at the conclusion of
the audit for the year ending 31 March 2018.
Following the conclusion of the audit for the
year ended 31 March 2014, the Committee
conducted an internal review of the
effectiveness of the auditors (the last
external review being in 2010). As part of
the process, the Committee reviewed the
auditors’ performance against criteria set at
the start of the audit, together with feedback
from management at Group level and at
divisional level and considered the most
recent public report on the inspection of
PwC which was issued by the FRC in May
2014. The Committee concluded that the
external audit process was operating
effectively and that PwC continued to
provide effective and independent challenge
to management. The review identified a
number of areas for process enhancements
which were implemented and incorporated
into the criteria set for the audit in respect
of the year ended 31 March 2015.
The Code states that FTSE 350 companies
should tender the provision of audit services
at least every ten years or explain their
approach, if different. The Competition &
Markets Authority has published additional
proposals which came into effect in January
2015. These require FTSE 350 companies
to put their statutory audit engagement out
to tender at least every ten years. In addition
to this, the European Parliament’s
proposals, which include the requirement
that audit firms of all EU companies listed
on a regulated market are subject to
retender after ten years and rotate off after
20 years, came into force at EU level in June
2014. The Committee continues to keep
under review the legal and regulatory
developments in this regard.
Nominations
Committee Report
Dear shareholder
This year, the Committee continued to focus
on both Board succession plans and
executive succession planning and the
outcomes are set out in this report.
I led the review of the Committee’s
effectiveness. The review concluded that the
Committee was functioning effectively and
recommended some process changes that
we have already implemented.
Looking ahead, this year, we plan to focus
in particular on talent management and
succession planning for critical roles outside
the Board and Group Executive Committee
to ensure that our talent pipeline is
appropriately resourced and supported.
Sir Peter Gershon
Chairman of the
Nominations Committee
Under the transitional provisions attached to
the EU rules, the Group would be required
to change auditors for the next audit
appointment after 17 June 2020. As a result,
the final year that PwC could be appointed
would be the year ending 31 March 2020
and an audit tender to appoint new external
auditors would need to take place in time for
the Group’s Annual General Meeting in 2020
at the latest.
The Committee discussed the timing of a
tender on a regular basis during the financial
year ended 31 March 2015. In light of the
change in Chief Financial Officer and the
ongoing embedding of the global IS/IT
system, the Committee agreed to revisit
timing of the tender during the year ending
31 March 2016. The Committee has
recommended to the Board that PwC
continue to act as auditors to the Group.
PwC has indicated its willingness to
continue in office; a resolution that PwC be
reappointed will be proposed at the AGM.
Internal audit function
The Committee reviewed the remit,
organisation, annual plan and resources
of the internal audit function and concluded
that the function continued to operate
effectively. The last external review was
undertaken in November 2013.
Internal control and risk management
The Committee continued to receive and
consider regular reports from management
and the VP, Group Audit and Assurance
on the effectiveness of the Group’s risk
management system. The reports from
the latter included the findings from reviews
of internal financial controls and actions to
address any weaknesses in those controls.
The Committee also reviewed the operation
of the independent confidential reporting line.
Throughout the year, the Committee
focused in particular on the impact of the
implementation of the new IS/IT system
and associated changes to the control
environment, together with any potential
impact on financial reporting processes.
It also reviewed controls to mitigate fraud
risk and the Group assurance map outlining
the key risks and associated assurance
processes. In addition, the Committee
reviewed the output from the annual review
of the effectiveness of internal financial
reporting controls and then reported to
the Board on that review.
Composition and constitution
The Nominations Committee comprises
the Chairman of the Company, the Chief
Executive and all the non-executive
directors. It ensures that the balance of
skills and experience of the Board remains
appropriate for the needs of the Group.
The Committee’s terms of reference, which
are reviewed annually, are available on the
Company’s website, www.tateandlyle.com.
Main responsibilities of the Committee
These include:
• Reviewing the size and composition of the
Board, including succession planning, and
the leadership needs of the Group generally
• Recommending candidates for
appointment as executive and non-
executive directors and as Company
Secretary, taking into account the balance
of the Board and the required blend of
skills and experience, bearing in mind the
need for diversity
• Making recommendations on the process
for the appointment of the Chairman of
the Board
• Reviewing annually the performance of
each member of the Group Executive
Committee and reporting on that review
to the Remuneration Committee.
Meetings during the year
The Committee met five times during the
year. Membership of the Committee and
attendance during the year were as follows:
Directors as at
31 March 2015
Sir Peter Gershon1
Javed Ahmed
Liz Airey
William Camp
Paul Forman2
Douglas Hurt
Virginia Kamsky
Anne Minto
Dr Ajai Puri
Former directors
Robert Walker3
Number of
meetings
eligible to
attend
5
5
5
5
1
5
5
5
5
Number of
meetings
attended
5
5
5
5
1
5
5
5
5
4
4
1 Committee Chairman.
2 Joined the Board on 1 January 2015.
3 Ceased to be a director on 31 December 2014.
The Committee has also met once since
the end of the financial year and prior to
the signing of this Annual Report.
Work undertaken during the year
During the year and up to the date of this
Annual Report, in addition to the work set
out in the Chairman’s letter above, the work
undertaken by the Nominations Committee
included:
Tate & Lyle PLC | Annual Report 2015 | 55
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION GOVERNANCE
Corporate Governance continued
Board succession planning
Appointment of Nick Hampton
Following Tim Lodge’s indication that he was
ready for a new challenge, the Committee,
supported by the Executive VP, Human
Resources, appointed The Zygos
Partnership to assist them in the search
for a new Chief Financial Officer. Zygos
Partnership, which is a signatory to the
Executive Search Firms Voluntary Code of
Conduct, has worked on other assignments
with the Group and proposed a number of
candidates who were interviewed by the
Chief Executive and Executive VP, Human
Resources. The final candidate, Nick
Hampton, was then interviewed by the
Chairman and four non-executive directors.
In line with our standard process for senior
executive recruitment, an independent
external assessment of capabilities was
undertaken by YSC, a specialist business
psychology company, before the Committee
recommended that Nick Hampton be
appointed Chief Financial Officer from
1 September 2014. The recommendation
was approved by the Board.
Appointment of Paul Forman
As explained last year, the Committee
retained Spencer Stuart to assist the
Committee with the search for an additional
non-executive director who could serve on
the Audit and Remuneration Committees.
Spencer Stuart is a signatory to the
Executive Search Firms Voluntary Code
of Conduct and has a good understanding
of the Group’s business as it has previously
assisted in the identification of individuals
to fill other senior executive roles. Spencer
Stuart prepared a ‘long list’ comprising
a diverse range of potential candidates
meeting the specification. The search
consultants and the Chairman then
identified a subset of this long list to meet
face-to-face with the Chairman. Following
these initial interviews, the Chairman
recommended a short list of candidates
to be interviewed by a working party
comprising the Chief Executive and two
other members of the Committee.
The Committee subsequently discussed
the results of these interviews and also
reviewed the candidates’ anticipated ability
to provide the necessary time commitment
to Tate & Lyle. The Committee recommended
that Paul Forman be appointed as an
additional non-executive director. This
recommendation, together with the
Committee memberships proposed for
Paul, was approved by the Board and
he joined the Board on 1 January 2015.
Senior Independent Director
In addition, the Committee recommended
that Liz Airey, with eight years of Board
service and having very good experience
of the UK market and institutional
shareholders, should be appointed as
Senior Independent Director with effect
from 1 January 2015.
Chairmanship of Committees
The Committee reviewed the chairmanship
of the Board committees and recommended
that Anne Minto, who has significant
remuneration experience, be appointed
chairman of the Remuneration Committee
with effect from 1 January 2015. The
Committee also recommended that
Douglas Hurt, with his extensive experience
as the former Finance Director of IMI plc,
be appointed as Chairman of the Audit
Committee with effect from 1 March 2015.
Committee membership
With regard to the composition of the Board’s
Committees, the Committee recommended
that Sir Peter Gershon step down as a
member of the Remuneration Committee
with effect from 1 June 2015, in line with
practice in other large listed companies.
All recommendations were approved by
the Board.
Succession planning – Group Executive
Committee
Another key area of focus this year was
the refreshment of the Group Executive
Committee. Members of the Committee
participated in the interview processes and
met with the Chief Executive and Executive
VP, Human Resources to provide feedback.
The Committee agreed that Gabriella
Parisse, Joan Braca, Jim Stutelberg,
Pierre Schoumacher and Rowan Adams
be appointed to the Group Executive
Committee during the year and these
appointments were subsequently approved
by the Board.
Talent management
The Committee also reviewed the wider
succession plans and talent management
process and the progress made to embed
HR processes to assist in retaining and
developing existing employees while
attracting new talent into the Group.
Performance evaluation
The Committee undertook a performance
evaluation of each member of the Group
Executive Committee and reported its
conclusions to the Remuneration Committee.
56 | Tate & Lyle PLC | Annual Report 2015
Corporate
Responsibility
Committee Report
Dear shareholder
Last year, I wrote of our deep shock and
sadness at the tragic fatalities at three of
our sites.
As explained on page 6, very sadly, two
contractors died in an accident that
occurred in April 2014 and then in June
2014, one of our colleagues died in a tractor
accident at one of our grain elevators.
We are extremely saddened by these losses
at our sites. These accidents have been
thoroughly investigated internally and
externally and we have ensured that the
families and others affected by the accidents
have been supported.
Against this tragic backdrop, the Group’s
safety performance has improved
significantly since June 2014. We have
overseen management’s efforts to re-focus
and refresh our approach to safety which is
set out on page 38, and I have personally
visited a number of our sites in the US during
the year to meet local safety management
and review safety activities. We continue to
review safety at each Committee meeting.
On 1 March 2015, we welcomed Douglas
Hurt to the Committee as he succeeded Liz
Airey as Chairman of the Audit Committee.
I would like to thank Liz for her contribution
to the Committee since its inception and
look forward to working with Douglas on
the Committee.
I look forward to meeting shareholders at
our AGM.
William Camp
Chairman of the CR Committee
Composition and constitution
The Committee comprises four non-
executive directors and the Chairman of
the Company. The Committee oversees the
Group’s processes and measures used to
manage social, environmental and ethical
risks and associated internal controls.
Work undertaken during the year
As explained in the Audit Committee report,
the directors agreed that the issues relating
to the supply chain disruption experienced
during the year would be addressed and
monitored by the Board. Further information
is set out on page 52.
The Committee’s terms of reference, which
are reviewed annually, can be found on the
Company’s website, www.tateandlyle.com.
Main responsibilities of the Corporate
Responsibility Committee
These include:
• Monitoring the Group’s approach to
corporate responsibility and ensuring it
aligns with Group strategy
• Reviewing the effectiveness of the Group’s
policies and procedures relating to a safe
working environment
• Approving, or recommending to the Board
for approval, CR policies
• Reviewing the implementation of
appropriate environmental policies
• Monitoring the effectiveness of workplace
policies concerning employee relations,
equal opportunities, travel, entertainment
and conflicts of interest
• Reviewing whistleblowing arrangements
• Satisfying itself that the Group has
appropriate policies, systems and controls
in place in respect of the risks falling within
the Committee’s remit.
Meetings during the year
The Committee met five times during the
year. Membership of the Committee and
attendance during the year were as follows:
Number of
meetings
eligible to
attend
5
5
1
5
5
Directors as at
31 March 2015
William Camp1
Sir Peter Gershon
Douglas Hurt2
Virginia Kamsky
Dr Ajai Puri
Former Committee members
Liz Airey3
Number of
meetings
attended
5
5
1
5
5
4
4
1 Committee Chairman.
2 Joined the Committee on 1 March 2015.
3 Ceased to be a member of the Committee on
28 February 2015.
The Committee has also met once since
the end of the financial year and prior to the
signing of this Annual Report.
During the year and up to the date of this
Annual Report, in addition to the work
outlined in the Committee Chairman’s letter,
the work undertaken by the CR Committee
included the following:
Safety
The Committee undertook a series of
detailed reviews focusing first on proposals
to re-focus and refresh the approach to
safety and subsequently on the
implementation and evolution of the
initiatives. The Committee also received
reports from the VP, Global Quality and
Food Safety on the operation of the Group’s
quality assurance processes.
Diversity and inclusion
The Committee received an update on
the implementation of diversity and
inclusion initiatives and agreed the areas
of management focus for the next 12 to
18 months.
Business practices
The Global Ethics Director provided regular
updates on the implementation of the Ethics
Strategy across the Group. In addition,
the Committee reviewed the operation of
the independent confidential reporting
(whistleblowing) line. Further information
on this is on page 52.
Community
The Committee received an update on
implementation of the community
involvement programme and the evaluation
of the global partnership programmes.
Environment
The VP, Sustainability provided the
Committee with updates on the Group’s
environmental performance and initiatives
on a regular basis.
Internal control and risk
The Committee received regular reports
from management and the VP, Group Audit
and Assurance in respect of the policies,
systems and controls in place in respect of
the risks falling within the Committee’s remit.
The Committee reviewed the output from the
annual review of the effectiveness of controls
falling within its terms of reference and then
reported to the Board on this review.
The Committee also undertook a detailed
review of the Group’s approach to managing
intellectual property, focusing in particular
on actions being taken to protect our new
products and new product pipeline. In
addition it continued to monitor the ongoing
efforts to tackle cyber security and agreed
to review this more frequently over the
course of the year ahead given the quickly-
evolving nature of this general risk.
Committee effectiveness
The Committee Chairman led the 2015
effectiveness review which concluded
that the Committee continues to operate
effectively. The Committee agreed to revisit
the scope of its work to ensure that it
continues to focus on, and devote sufficient
discussion to, the appropriate issues going
forward. The Committee also agreed to
provide more direct feedback to presenters
and authors of papers to ensure that the
information provided evolves in line with
requirements. The Committee Chairman
will continue to meet with presenters before
each meeting and also share feedback
with them after meetings.
Tate & Lyle PLC | Annual Report 2015 | 57
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION GOVERNANCE
Directors’ Remuneration Report
Dear shareholder
As Chairman of the Remuneration
Committee, I am pleased to present our
Remuneration Report for the financial year
ended 31 March 2015. This introduction
provides context for the Committee’s
decision-making during the year, and
summarises key points from the Report,
including those relating to performance and
incentive plan outcomes, and Committee
activities during the year.
I succeeded Robert Walker as Chairman
of the Committee on 1 January 2015, and
I would like to thank him for his stewardship.
Business performance context
The year under review has been very
challenging, with financial performance
held back by some key factors which are
discussed in the Chief Executive’s Review
and Chairman’s Statement, primarily:
• Significant disruption to our supply chain
resulting from prolonged and severe
winter conditions in the US which led to
the Company starting the financial year
with much lower inventory than usual
• Supply constraints, resulting from an
extended shutdown of the SPLENDA®
Sucralose facility in Singapore at the start
of the financial year, coupled with
extremely competitive market conditions.
• Senior executive appointments:
During the year, a number of changes
at Executive Committee level were made
to strengthen the broader executive team.
The Committee has carefully considered
appropriate remuneration terms for each
of these appointments, taking account
of individual skills and experience,
in conjunction with the Nominations
Committee.
• Review and planning: The remuneration
framework has essentially been in place
in its current form since 2010. In January
2015, the Committee set aside time to
consider, with input from management
and our external advisor, whether there
were opportunities to improve the
effectiveness of our arrangements. Based
on this review, the Committee noted that:
– The overall framework is considered to
be fit for purpose, providing for a clear
alignment between Company
performance and Directors’
remuneration
– The remuneration policy conforms to a
number of ‘good practice’ expectations,
and is supported by shareholders
– Both the Annual Bonus Plan and
Performance Share Plan require careful
calibration of targets against the business
strategy and outlook, to ensure the
continued effectiveness of these plans
– The inclusion of non-financial objectives
within the Annual Bonus Plan (consistent
with our remuneration policy) would
provide an opportunity to align the
organisation behind some critical
strategic and operational priorities to
strengthen the business through the
year ending 31 March 2016 and beyond.
Accordingly, I can confirm that no changes
are proposed to the remuneration policy
which was approved by shareholders at the
2014 AGM.
In March 2015, I led the annual review of
the Committee’s effectiveness. The review
concluded that the Committee appropriately
fulfilled its role and carried out its duties
against the responsibilities described in its
terms of reference.
Notwithstanding these challenges, the
fundamentals of the business remain strong
and the Company continues to make clear
strategic progress:
• We completed two bolt-on acquisitions in
the emerging markets during the year,
including a joint venture with Gemacom
Tech, the leading domestically-owned
Food Systems business in Brazil.
• We continue to see the benefits of the
investment we have made in our
innovation capabilities with two major new
product launches: CLARIA® Functional
Clean-Label Starches, boosts our
texturant offering; and in February, we
launched in the US, DOLCIA PRIMA™
Allulose, a low-calorie sugar that provides
many of the same attributes as table
sugar, but with 90% fewer calories.
Remuneration outcomes for the year
As set out in this report, remuneration
outcomes for the year were as follows:
• Annual Bonus Plan: No bonus is
payable to executive directors for the year
ending 31 March 2015, as profit fell below
the threshold level that was set by the
Committee at the start of the year.
• Performance Share Plan: Our
published adjusted return on capital
employed in the year to 31 March 2015
was 13.9%, which exceeds the threshold
requirement of 13.4% and is in excess of
our cost of capital. Earnings per share
(EPS) targets have not been achieved.
Accordingly, a vesting level just above
threshold was achieved. Javed Ahmed
has informed the Committee
that, having taken into account financial
performance in the round, he would waive
his entitlement to the award.
Key Committee activities during
the year
In addition to the responsibilities of the
Committee (which are described in
summary on page 70), the Committee spent
significant time on matters relating to the
following key items during the year:
• Executive director changes: Nick
Hampton was appointed Chief Financial
Officer and joined the Group on
1 September 2014; Tim Lodge stepped
down as Chief Financial Officer on
31 August 2014. The Committee
considered and approved remuneration
terms in respect of these transitions,
operating within the remuneration policy
that shareholders approved at the
Company’s Annual General Meeting
(AGM) on 24 July 2014. Further details
are provided in this Report and key terms
are summarised on page 71.
58 | Tate & Lyle PLC | Annual Report 2015
About these Reports
The information regarding directors’
remuneration is presented in two Reports:
the first relates to our remuneration policy
(the Directors’ Remuneration Policy Report),
and the second relates to the way in which
our established policy has been
implemented during the year under review
(the Annual Report on Remuneration).
A resolution to approve the Annual Report
on Remuneration will be proposed at the
AGM on 29 July 2015.
The Directors’ Remuneration Policy Report
was formally approved by shareholders at
the AGM in 2014 and it remains our intention
that the policy will apply for a period of three
years from the date of that AGM.
These Reports have been prepared in
accordance with the requirements of
the Companies Act 2006 (the Act) and
Schedule 8 of the Large and Medium Sized
Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013
(the Regulations), the Listing Rules of
the UK Listing Authority and the UK
Corporate Governance Code.
PricewaterhouseCoopers LLP has audited
such content as required by the Act
(the information on pages 73 to 78 marked
as ‘(audited)’).
Business re-alignment to focus on and
strengthen Speciality Food Ingredients
On 21 April 2015, we announced a
restructuring of our European and SPLENDA®
Sucralose businesses to establish a more
focused Company through which to
accelerate the delivery of our strategy.
These actions improve our strategic
positioning and are expected to improve
our long-term outlook and ability to maximise
returns in a competitive market. However,
the structural and mid-term financial
considerations will also impact the
appropriateness of the performance
conditions attached to future incentive
awards. We therefore expect to review the
PSP conditions that will apply for awards
made in 2015, in keeping with our approved
remuneration policy, and to consult with
shareholders, as appropriate, later in the year.
Remuneration Report and
implementation of policy for the
year ahead
Our Remuneration Policy was approved
by shareholders at last year’s AGM with
97.87% of votes in favour.
The Committee is satisfied that this
policy provides for a strong alignment
between Company performance and the
remuneration of executive directors and,
as stated in this Report, we intend to
continue to operate within this approved
remuneration policy during the financial
year ending 31 March 2016.
Anne Minto
Chairman of the
Remuneration Committee
Directors’
Remuneration
Policy Report
Introduction
This Report sets out the Company’s policy
in relation to directors’ remuneration, which
was approved by shareholders at the 2014
AGM. This approach was originally
established in 2010 in connection with the
review of the business strategy following
Javed Ahmed’s appointment as Chief
Executive, and the policy and remuneration
framework we have today is fundamentally
unchanged from that set out in the Annual
Reports since 2011.
Specifically, no changes have been made
to the Remuneration Policy which was
approved by our shareholders at the 2014
AGM (and which is included in this Report).
We intend to operate within this policy
during the financial year ending
31 March 2016.
The Committee retains discretion on specific
aspects of policy and implementation, as
described in this Report, along with an
overriding discretion to determine bonus
outcomes and judge the level at which
share awards vest, in order to ensure that
payments are consistent with the underlying
health and performance of the business,
within the maximum opportunity stated in
the policy tables.
The Committee may make minor changes
to the policy without seeking shareholder
approval, for example, to benefit the
administration of arrangements, or to take
account of changes in legislation. Any such
changes would be disclosed in the relevant
Annual Report.
Tate & Lyle PLC | Annual Report 2015 | 59
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION GOVERNANCE
Directors’ Remuneration Report continued
Remuneration strategy and key principles
The Company’s remuneration strategy, and supporting principles which apply consistently across employee, management and executive
populations, is summarised in the table below.
Remuneration strategy Key principles
The Company’s
remuneration strategy
is to provide packages
that enable the Company
to recruit, retain and
motivate high-calibre
individuals in the
markets in which
we operate to deliver
superior operational
performance and
outstanding
financial results
• Base pay and benefits are generally positioned at local market ‘median’ levels
• For all employees, our pay for performance framework provides for meaningful differentiation in salary
progression and opportunities for career progression, based on each individual’s contribution
• The total package opportunity should provide meaningful reward for superior performance and encourage
the achievement of genuinely stretching short-term and long-term objectives
• Below executive level, key individuals who have a specific accountability for driving annual and longer-term
performance may be selected to participate variously in our sales incentive plan, the Annual Bonus Plan,
and/or the Performance Share Plan
• Alignment with shareholders’ long-term interests is carefully preserved, for example, through: a significant
proportion of pay being based on performance; effective governance around remuneration decisions;
a considered approach to setting performance targets; the adoption of shareholding guidelines at senior
executive levels; and malus and claw back provisions on incentive awards
• All aspects of remuneration are designed to encourage a focus on long-term, sustained performance
and risk management
• Our approach is intended to be equitable and transparent and operate across the Group, recognising
that we recruit talented individuals and operate in an international market
• Outcomes must be achieved in a way that is consistent with the Group’s core Values and Code of Ethics,
and that fosters sustainable, profitable growth
The charts below illustrate the international nature of our business – although we are UK-listed and headquartered in London, a very
significant proportion of our people, our shareholders, and our customers are based outside the UK. Accordingly, it is important that
our remuneration arrangements are appropriately competitive in that international context.
Our sales1
1. UK 1%
2. US 60%
3. Other European countries 14%
4. Rest of world 25%
Our shareholders2
1. UK 49%
2. North America 26%
3. Other European countries 19%
4. Rest of world 6%
Our employees
1. UK 4%
2. US 44%
3. Other European countries 27%
4. Rest of world 25%
1
2
4
3
4
1
1 2
3
4
2
3
1 Sales by destination (from continuing operations) as per Note 4 to the Financial Statements.
2 Analysis of shareholder register as at 28 April 2015.
60 | Tate & Lyle PLC | Annual Report 2015
A clear link between our strategy and directors’ remuneration
The Company’s remuneration arrangements place a clear emphasis on driving Company performance, through incentives that are directly
linked to the key performance indicators (KPIs) which come from our business strategy. In this way, we maintain a keen focus on delivering
long-term growth, thereby enhancing long-term value for shareholders.
The table below summarises the KPIs that we use to measure the Group’s success against our strategy. The right-hand column describes
how these KPIs link directly to remuneration arrangements.
p22 Key Performance Indicators
Key performance indicators
Link to directors’ remuneration
Financial results
Adjusted operating profit
This is a key determinant of awards under the Annual Bonus Plan
Adjusted diluted EPS growth
Awards under the Performance Share Plan depend on this metric
Dividend per share
Net debt
The dividend has a direct impact through individual executive share ownership
and dividend equivalents on deferred bonus awards
Objectives are reflected in incentive plan target setting, but this metric does not
directly impact remuneration
Performance and financial strength (in addition to the above)
Speciality Food Ingredients sales growth
Informs the sales target in the Annual Bonus Plan that is set by the Committee
each year
Return on capital employed
Awards under the Performance Share Plan depend on this metric
Cash conversion cycle
This is a performance metric in the Annual Bonus Plan
Net debt to EBITDA and interest cover
Objectives are reflected in Annual Bonus Plan targets, but this metric does not
directly impact remuneration
Corporate responsibility
Safety metrics
Safety and broader corporate responsibility matters are specific factors that the
Committee may factor into decisions on pay and annual incentive plan outcomes
Key components of directors’ remuneration
As a Committee, we believe that our approach to remuneration provides a relatively simple but effective overall framework that is aligned
with long-term success and returns to shareholders.
The executive directors’ remuneration consists of base salary, annual bonus, long-term incentives, and retirement and other benefits as
described in the table overleaf. Malus and claw back provisions apply to incentive awards following release (as described in the policy table
on pages 62 to 65), and a strong alignment with shareholders’ interests is maintained through significant personal shareholding
requirements imposed on each director.
The key components of the remuneration framework for executive directors are summarised in the table below, and the full policy in relation
to each item is described in the tables that follow.
Key components of directors’ remuneration
Fixed
Variable (short-term)
Variable (long-term)
Base salary: providing fixed remuneration
which reflects the market value of the role
Annual bonus: to deliver the Company’s
annual financial performance objectives
Long-term share incentive: to deliver
shareholder value linked to efficient use of
capital and profitable long-term growth
Employment/retirement benefits:
consistent with local market practice
Malus and claw back provisions mean cash and share incentives may be recouped
in specific circumstances
Personal share ownership: strengthens alignment between executives
and shareholders
Tate & Lyle PLC | Annual Report 2015 | 61
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION GOVERNANCE
Directors’ Remuneration Report continued
Executive directors’ remuneration policy table
Purpose and alignment with strategy
Operation
Opportunity
Performance framework
Commentary
Base salary (short-term, fixed remuneration)
To provide fixed remuneration that reflects
the market value of the individual, his or her
skills and experience and performance
• Base salaries are positioned at around the
median of the relevant market based on
company size and operations (for UK
directors, the Committee currently has
regard to the 50th to 130th largest
UK-listed companies), and taking account
of personal performance, as well as
individual circumstances (for example
following promotion into a new role)
Employment and retirement benefits (short-term, fixed remuneration)
• To provide employment and retirement
benefits in line with the relevant local
market
• Retirement benefits are provided by way
of defined contribution arrangements,
or an equivalent cash allowance
• Other employment benefits include car
(or car allowance), health insurance, group
income protection and, where appropriate,
life cover
Annual bonus (short-term, performance-related remuneration)
• To support the Company’s strategy by
• The discretionary Annual Bonus Plan
rewarding the achievement of the
Company’s annual performance
objectives
rewards the achievement of financial and
other objectives established by the
Committee for the relevant financial year
• The bonus award is made, subject to
the Committee’s approval, following the
end of the financial year and the audit
of full-year results
• The bonus award may comprise cash and
deferred shares, depending on the level of
award that is made
• Base salary reviews take into account
increases awarded to employees
below executive level, and the impact
on pension and other consequences
of increases
• Increases arising from the normal
annual review will normally be limited
to the local market increase applicable
to employees at the same location
generally. However, the Committee
may use its discretion to award a higher
or lower increase to ensure that salaries
remain appropriately aligned with the
external market, and to reflect changes
in experience, role or responsibility
• The value of retirement and/or cash
benefits in lieu of pension is set by
reference to external market practice
(using the same market reference point
as for base salary), and is subject to
periodic review
• The value of non-cash benefits is
determined by the cost of provision,
for example, third-party health
insurance premiums
• No bonus is payable if performance
is below ‘threshold’, regardless of
performance against other metrics
• The ‘target’ bonus is 75% of base
salary for the Chief Executive, and 50%
of base salary for the Chief Financial
Officer
• The maximum cash bonus is 100%
of base salary; any annual bonus above
100% of base salary is delivered in
Tate & Lyle PLC shares which are
deferred for two years
• The maximum cash and share bonus
is 175% of base salary
• Deferred shares carry the right to
receive a cash payment in lieu of the
dividend that would have been paid
on those shares between award
and release
• Base salary is a fixed element of the remuneration package, paid monthly
• Employees generally participate in a merit-based review, which means that the
general market increase which applies will be sufficient to maintain competitiveness
against the local market, while individual high performers may be rewarded with higher
salary increases
• A consistent framework applies to
employees generally – salaries are
positioned by reference to the local
market median, and salary reviews
take into account local market
increases, external benchmarking,
and personal performance
• No changes to the policy for executive
directors have been made in the year
or are proposed for the year ahead
retirement benefits to executive directors
is consistent with our policy and approach
for employees generally: appropriate
benefits are provided in line with local
competitive market practice
• No changes to the policy for executive
directors have been made in the year
or are proposed for the year ahead
• Benefits are a fixed part of the remuneration package, and typically accrue monthly
• The provision of employment and
• Retirement benefits are defined contribution in nature, limiting the financial risk and
potential costs to the Company
• Performance is assessed over the relevant financial year
• Performance metrics are selected by the Committee at the start of the relevant year,
• Malus and claw back provisions apply,
which means cash and share elements
and are drawn from key financial metrics. Additionally, the Committee may select
may be recouped in specific circumstances
quantifiable metrics that are aligned with our strategic and/or operational objectives
on a personal or collective basis
during the two-year period following the
end of the financial year to which the
• Targets for each metric are set at the start of each financial year, taking account of
bonus relates
the business strategy, performance in previous years, market expectations and the
• The discretionary Annual Bonus Plan
prevailing economic climate
• The greatest weighting will be given to financial performance; specifically, a minimum
profit hurdle applies before any bonus is payable against any of the metrics
• The final bonus award is made at the Committee’s discretion. Subject to the overall
outcomes are a fair reflection of the underlying performance of the Company and may
also take into account factors such as Group safety, operational performance, and
personal performance
maximum, the Committee may make appropriate adjustments to ensure that the bonus
objectives. The Annual Bonus Plan
applies to a broad population who have
roles which allow them to contribute
materially to the successful delivery
of the Company’s annual performance
operates within a consistent framework
for all participants, with financial targets
typically set by reference to the business
area that is most relevant to the
employee’s role
• No changes to the policy for executive
directors have been made in the year
or are proposed for the year ahead
62 | Tate & Lyle PLC | Annual Report 2015
Executive directors’ remuneration policy table
Base salary (short-term, fixed remuneration)
Purpose and alignment with strategy
Operation
Opportunity
Performance framework
Commentary
To provide fixed remuneration that reflects
• Base salaries are positioned at around the
• Base salary reviews take into account
the market value of the individual, his or her
median of the relevant market based on
increases awarded to employees
skills and experience and performance
company size and operations (for UK
directors, the Committee currently has
regard to the 50th to 130th largest
below executive level, and the impact
on pension and other consequences
of increases
UK-listed companies), and taking account
• Increases arising from the normal
• Base salary is a fixed element of the remuneration package, paid monthly
• Employees generally participate in a merit-based review, which means that the
general market increase which applies will be sufficient to maintain competitiveness
against the local market, while individual high performers may be rewarded with higher
salary increases
Employment and retirement benefits (short-term, fixed remuneration)
• To provide employment and retirement
• Retirement benefits are provided by way
• The value of retirement and/or cash
benefits in line with the relevant local
of defined contribution arrangements,
benefits in lieu of pension is set by
market
• Benefits are a fixed part of the remuneration package, and typically accrue monthly
• Retirement benefits are defined contribution in nature, limiting the financial risk and
potential costs to the Company
of personal performance, as well as
individual circumstances (for example
following promotion into a new role)
annual review will normally be limited
to the local market increase applicable
to employees at the same location
generally. However, the Committee
may use its discretion to award a higher
or lower increase to ensure that salaries
remain appropriately aligned with the
external market, and to reflect changes
in experience, role or responsibility
or an equivalent cash allowance
• Other employment benefits include car
reference to external market practice
(using the same market reference point
(or car allowance), health insurance, group
as for base salary), and is subject to
income protection and, where appropriate,
periodic review
life cover
• The value of non-cash benefits is
determined by the cost of provision,
for example, third-party health
insurance premiums
Annual bonus (short-term, performance-related remuneration)
• To support the Company’s strategy by
• The discretionary Annual Bonus Plan
• No bonus is payable if performance
rewarding the achievement of the
Company’s annual performance
objectives
rewards the achievement of financial and
other objectives established by the
is below ‘threshold’, regardless of
performance against other metrics
Committee for the relevant financial year
• The ‘target’ bonus is 75% of base
• The bonus award is made, subject to
the Committee’s approval, following the
end of the financial year and the audit
salary for the Chief Executive, and 50%
of base salary for the Chief Financial
Officer
of full-year results
• The maximum cash bonus is 100%
• The bonus award may comprise cash and
of base salary; any annual bonus above
deferred shares, depending on the level of
100% of base salary is delivered in
award that is made
Tate & Lyle PLC shares which are
deferred for two years
• The maximum cash and share bonus
is 175% of base salary
• Deferred shares carry the right to
receive a cash payment in lieu of the
dividend that would have been paid
on those shares between award
and release
• Performance is assessed over the relevant financial year
• Performance metrics are selected by the Committee at the start of the relevant year,
and are drawn from key financial metrics. Additionally, the Committee may select
quantifiable metrics that are aligned with our strategic and/or operational objectives
on a personal or collective basis
• Targets for each metric are set at the start of each financial year, taking account of
the business strategy, performance in previous years, market expectations and the
prevailing economic climate
• The greatest weighting will be given to financial performance; specifically, a minimum
profit hurdle applies before any bonus is payable against any of the metrics
• The final bonus award is made at the Committee’s discretion. Subject to the overall
maximum, the Committee may make appropriate adjustments to ensure that the bonus
outcomes are a fair reflection of the underlying performance of the Company and may
also take into account factors such as Group safety, operational performance, and
personal performance
• A consistent framework applies to
employees generally – salaries are
positioned by reference to the local
market median, and salary reviews
take into account local market
increases, external benchmarking,
and personal performance
• No changes to the policy for executive
directors have been made in the year
or are proposed for the year ahead
• The provision of employment and
retirement benefits to executive directors
is consistent with our policy and approach
for employees generally: appropriate
benefits are provided in line with local
competitive market practice
• No changes to the policy for executive
directors have been made in the year
or are proposed for the year ahead
• Malus and claw back provisions apply,
which means cash and share elements
may be recouped in specific circumstances
during the two-year period following the
end of the financial year to which the
bonus relates
• The discretionary Annual Bonus Plan
applies to a broad population who have
roles which allow them to contribute
materially to the successful delivery
of the Company’s annual performance
objectives. The Annual Bonus Plan
operates within a consistent framework
for all participants, with financial targets
typically set by reference to the business
area that is most relevant to the
employee’s role
• No changes to the policy for executive
directors have been made in the year
or are proposed for the year ahead
Tate & Lyle PLC | Annual Report 2015 | 63
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION GOVERNANCE
Directors’ Remuneration Report continued
Executive directors’ remuneration policy table continued
Purpose and alignment with strategy
Operation
Opportunity
Performance framework
Commentary
Performance Share Plan (long-term, performance-related remuneration)
To support the Company’s strategy
by incentivising sustained profit growth
and capital efficiency over successive three-
year performance periods, and to help
retain senior executive talent
• Awards over Tate & Lyle PLC shares may
be made, at the Committee’s discretion,
on an annual basis taking an individual
executive’s contribution and performance
into account
• Awards will only vest to participants
if demanding financial performance
requirements have been achieved over
a period of at least three financial years
commencing with the financial year
in which the award is made
• The Committee has the flexibility to
make awards of up to 300% of base
salary (at the time of award) if
appropriate to ensure market
competitiveness and taking account
of the Company’s performance
• The award will lapse entirely if threshold
performance targets are not achieved
• Only 15% of any award made to
executive directors vests for achieving
threshold performance
Personal share ownership requirements (this information is provided here to explain a key feature of the remuneration
framework, but these requirements do not form part of the binding ‘policy’)
To strengthen long-term alignment
of interests between senior executives
and the Company’s shareholders
• Executive directors are subject to
individual minimum share ownership
requirements
• Specified holdings must be built up over
an initial five-year period following the
adoption of the policy (or appointment,
if later) and retained for the duration of
employment
• Share ownership requirements for
executive directors are as follows:
– Chief Executive: four times base
salary
– Chief Financial Officer: three times
base salary
Other (potential) benefits
Operation
Opportunity
Performance framework
Commentary
To address specific commercial or
administrative situations, the following
benefits may be provided:
• Director relocation and associated
benefits, including international healthcare
• Payment in lieu of dividend on specific
share awards
• UK savings-related share options
(Sharesave Plan)
• If a director is required to relocate at
• No directors currently receive
the Company’s request, for example, as a
result of changing business requirements,
additional benefits may arise in accordance
with the Group relocation policy. Benefits
may include (without limitation): relocation
assistance; health cover; travel;
accommodation; and tax equalisation
• Certain share awards carry the right to
receive a cash payment in lieu of the
dividend that would have been paid on
those shares pending delivery
• The Company operates a Sharesave Plan
which is open to all employees in the UK,
and provides a mechanism for employees
to purchase shares at a discounted price
through savings that accumulate from
monthly deductions from net salary
relocation benefits
• The cost of provision will be determined
by the policy and will depend on the
specific circumstances
• Specific benefits and the cost of
provision would be approved by the
Remuneration Committee at the time
• The value of any payment in lieu of
dividend will depend on: the value of the
relevant dividends paid over the relevant
period, and the number of shares to
which the participant is entitled
• The value of individual grants is capped
by reference to maximum participant
savings (monthly savings/deductions
from salary may not exceed HMRC
limits, and a savings contract may run
for a three- or five-year period)
64 | Tate & Lyle PLC | Annual Report 2015
• Long-term performance is assessed over three financial years, commencing
with the year in which the award is made
• Malus and claw back provisions apply
to awards made from 2013, which means
• Awards are subject to the achievement of financial performance metrics which are
they may be recouped in specific
confirmed by the Committee in advance of each new grant. Two performance metrics
circumstances during the two-year period
have applied to awards made since 2010, and equal weight has been given to each:
following the end of the performance
– Growth in adjusted diluted earnings per share from continuing operations (EPS) over
period (as described on page 75)
the three-year performance period
– Adjusted return on capital employed (ROCE) achieved at the end of the
performance period
• These metrics were selected because together they represent key determinants
of shareholder value creation: measuring the effectiveness of strategic investment
decisions and the quality of earnings generated. If material changes to the metrics
or weightings are proposed, the Committee would consult with key shareholders
in advance of making a new award
• Targets for each new award are carefully considered by the Committee ahead of the
• Participation in the Performance Share
Plan is extended to a targeted population
of senior executives who are expected to
make material individual contributions to
the successful delivery of the Company’s
strategy and long-term performance.
All awards under the Performance Share
Plan are subject to the same performance
framework, ensuring alignment and focus
grant of awards in any year, to ensure these remain appropriately stretching over the
on our financial goals
three-year performance period, taking into account: the business strategy and
long-term financial plan, market expectations and the prevailing economic climate
• No changes to the policy for executive
directors have been made in the year
• Before any shares are released at the end of the performance period, the Committee
or are proposed for the year ahead
must also be satisfied that the level of vesting determined by performance against these
targets is justified by the broader underlying financial performance of the Company
• The value of an individual director’s interests in shares is directly affected by share
• Similar share ownership requirements
price performance
• Relocation benefits are fixed in accordance with Group policy
• The payment in lieu of dividend is a benefit attached to specific awards, where
applicable conditions have been satisfied at vesting. Accordingly, no additional
performance conditions apply
Plan is an all-employee scheme
• No performance conditions are attached to Sharesave awards because the Sharesave
dividends will be included in the ‘single
extend to Executive Committee members
(at three times base salary), and to a
broader group of executives in senior
leadership roles (at a level equal to their
base salary)
• No changes to the policy for executive
directors have been made in the year
or are proposed for the year ahead
• Any such benefits would be payable in
accordance with policies applicable more
generally to employees within the Group
• The value of any payment in lieu of
figure’ table in the year the payment
• Executive directors are entitled to
participate in the Sharesave Plan because
the plan must be open to all employees
is made
in the UK
Executive directors’ remuneration policy table continued
Performance Share Plan (long-term, performance-related remuneration)
To support the Company’s strategy
by incentivising sustained profit growth
• Awards over Tate & Lyle PLC shares may
• The Committee has the flexibility to
be made, at the Committee’s discretion,
make awards of up to 300% of base
and capital efficiency over successive three-
on an annual basis taking an individual
year performance periods, and to help
executive’s contribution and performance
salary (at the time of award) if
appropriate to ensure market
retain senior executive talent
into account
• Awards will only vest to participants
if demanding financial performance
requirements have been achieved over
a period of at least three financial years
commencing with the financial year
in which the award is made
competitiveness and taking account
of the Company’s performance
• The award will lapse entirely if threshold
performance targets are not achieved
• Only 15% of any award made to
executive directors vests for achieving
threshold performance
Personal share ownership requirements (this information is provided here to explain a key feature of the remuneration
framework, but these requirements do not form part of the binding ‘policy’)
To strengthen long-term alignment
of interests between senior executives
and the Company’s shareholders
• Executive directors are subject to
individual minimum share ownership
requirements
• Share ownership requirements for
executive directors are as follows:
– Chief Executive: four times base
• Specified holdings must be built up over
salary
an initial five-year period following the
adoption of the policy (or appointment,
if later) and retained for the duration of
employment
– Chief Financial Officer: three times
base salary
To address specific commercial or
administrative situations, the following
benefits may be provided:
• Director relocation and associated
benefits, including international healthcare
• Payment in lieu of dividend on specific
• UK savings-related share options
share awards
(Sharesave Plan)
• If a director is required to relocate at
• No directors currently receive
the Company’s request, for example, as a
relocation benefits
result of changing business requirements,
• The cost of provision will be determined
additional benefits may arise in accordance
by the policy and will depend on the
with the Group relocation policy. Benefits
specific circumstances
may include (without limitation): relocation
• Specific benefits and the cost of
assistance; health cover; travel;
accommodation; and tax equalisation
provision would be approved by the
Remuneration Committee at the time
• Certain share awards carry the right to
• The value of any payment in lieu of
receive a cash payment in lieu of the
dividend that would have been paid on
those shares pending delivery
dividend will depend on: the value of the
relevant dividends paid over the relevant
period, and the number of shares to
• The Company operates a Sharesave Plan
which the participant is entitled
which is open to all employees in the UK,
• The value of individual grants is capped
and provides a mechanism for employees
to purchase shares at a discounted price
through savings that accumulate from
monthly deductions from net salary
by reference to maximum participant
savings (monthly savings/deductions
from salary may not exceed HMRC
limits, and a savings contract may run
for a three- or five-year period)
Purpose and alignment with strategy
Operation
Opportunity
Performance framework
Commentary
• Long-term performance is assessed over three financial years, commencing
• Malus and claw back provisions apply
with the year in which the award is made
• Awards are subject to the achievement of financial performance metrics which are
confirmed by the Committee in advance of each new grant. Two performance metrics
have applied to awards made since 2010, and equal weight has been given to each:
– Growth in adjusted diluted earnings per share from continuing operations (EPS) over
the three-year performance period
– Adjusted return on capital employed (ROCE) achieved at the end of the
performance period
• These metrics were selected because together they represent key determinants
of shareholder value creation: measuring the effectiveness of strategic investment
decisions and the quality of earnings generated. If material changes to the metrics
or weightings are proposed, the Committee would consult with key shareholders
in advance of making a new award
• Targets for each new award are carefully considered by the Committee ahead of the
grant of awards in any year, to ensure these remain appropriately stretching over the
three-year performance period, taking into account: the business strategy and
long-term financial plan, market expectations and the prevailing economic climate
• Before any shares are released at the end of the performance period, the Committee
must also be satisfied that the level of vesting determined by performance against these
targets is justified by the broader underlying financial performance of the Company
to awards made from 2013, which means
they may be recouped in specific
circumstances during the two-year period
following the end of the performance
period (as described on page 75)
• Participation in the Performance Share
Plan is extended to a targeted population
of senior executives who are expected to
make material individual contributions to
the successful delivery of the Company’s
strategy and long-term performance.
All awards under the Performance Share
Plan are subject to the same performance
framework, ensuring alignment and focus
on our financial goals
• No changes to the policy for executive
directors have been made in the year
or are proposed for the year ahead
• The value of an individual director’s interests in shares is directly affected by share
• Similar share ownership requirements
price performance
extend to Executive Committee members
(at three times base salary), and to a
broader group of executives in senior
leadership roles (at a level equal to their
base salary)
• No changes to the policy for executive
directors have been made in the year
or are proposed for the year ahead
Other (potential) benefits
Operation
Opportunity
Performance framework
Commentary
• Relocation benefits are fixed in accordance with Group policy
• The payment in lieu of dividend is a benefit attached to specific awards, where
applicable conditions have been satisfied at vesting. Accordingly, no additional
performance conditions apply
• No performance conditions are attached to Sharesave awards because the Sharesave
Plan is an all-employee scheme
• Any such benefits would be payable in
accordance with policies applicable more
generally to employees within the Group
• The value of any payment in lieu of
dividends will be included in the ‘single
figure’ table in the year the payment
is made
• Executive directors are entitled to
participate in the Sharesave Plan because
the plan must be open to all employees
in the UK
Tate & Lyle PLC | Annual Report 2015 | 65
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION GOVERNANCE
Directors’ Remuneration Report continued
Remuneration policy for the Chairman
and non-executive directors
Terms of appointment
The Chairman and non-executive
directors have letters of appointment and
do not have service contracts or notice
periods. Under the terms of their
appointment, they are usually expected
to serve on the Board for between three
and nine years, subject to their re-
election by shareholders. The Company
Chairman and non-executive directors
receive a fee for their services, and do
not participate in the Group’s incentive
or pension schemes, do not receive any
other benefits, and have no right to
compensation if their appointment
is terminated.
Chairman and non-executive
directors’ fees
Non-executive directors’ fees (excluding
the Chairman) are reviewed annually
by the Chairman and executive directors
of the Board. The Chairman’s fee is
reviewed annually by the Committee
(excluding the Chairman).
Aggregate fees depend on the
responsibilities assumed by each
non-executive director. A basic fee is
paid to the Chairman, to the Senior
Independent Director and to each
non-executive director. In addition,
supplemental fees are payable to each
Committee chairman. Accordingly,
supplemental fees are paid to the
chairmen of the Audit, Corporate
Responsibility, Remuneration
Committees, and the Research Advisory
Group, to reflect the extra responsibilities
required by each of these positions.
Increases in fees arising from the normal
annual review will generally be limited to
the market increase applicable to UK
employees generally. However, a higher
or lower increase may be awarded to
ensure that fees paid are commensurate
with those paid by other UK-listed
companies over time and are set at a
level to retain individuals with the
necessary experience and ability to make
a substantial contribution to the Group.
Status of previously approved
Remuneration policy statements
It is intended that provisions consistent
with previously disclosed directors’
remuneration policies and/or incentive plans
previously approved by shareholders will
continue to apply after the resolution to
adopt the remuneration policy set out
in this Policy Report is approved. Such
provisions will allow, without limitation:
• Contractual commitments entered into
before the policy takes effect, or before
an individual was subject to this policy on
directors’ remuneration, to be honoured
• The satisfaction of awards and/or
commitments made in relation to
short-term and long-term incentive plan
awards (providing they were consistent
with the policy in effect at the time the
original award/commitment was made).
Such arrangements shall remain in effect
and be included in the current remuneration
policy by reference, even if they are not
specifically provided for within the policy set
out in this Policy Report.
Executive directors’ external
appointments
The Board believes that the Company
can benefit from executive directors holding
external non-executive directorships. Such
appointments are subject to approval by
the Board and are normally restricted to
one position for each executive director.
Fees may be retained by the executive
director concerned.
Additional share plan disclosures
Potential impact of mergers and
acquisitions or other corporate activity
In the context of a merger or acquisition,
or other relevant corporate activity, any
potential impact on the incentive plans
would be specifically considered by the
Committee. In such circumstances, the
Committee retains the authority to vary the
performance target or the vesting outcome
to ensure that outcomes are equitable for
both the participant and shareholders.
Change of control and voting
All of the Company’s share plans contain
provisions relating to a change of control.
Outstanding awards would normally vest
and become exercisable on a change of
control, subject to the satisfaction of any
performance conditions at that time, and
in proportion to the time served during
the performance period.
Service contracts
The Company’s policy regarding
executive directors’ service contracts
and appointment terms is to take account
of market practice, and to ensure that
provisions in relation to notice periods
or termination payments are not excessive,
as well as to ensure that contracts provide
appropriate protection for the Company,
for example, in relation to restrictions on
competition, solicitation of customers
or employees, and the protection of
intellectual property.
Executive directors are employed under
service contracts commencing on dates
as follows: Javed Ahmed (Chief Executive)
– 10 October 2009; Nick Hampton (Chief
Financial Officer) – 1 September 2014. The
contracts provide for six months’ notice from
the executive and 12 months’ notice from
the Company.
Service contracts for executive directors
and letters of appointment for the Chairman
and non-executive directors are available
for inspection at the Company’s
registered office.
Beyond the items disclosed in this Report,
there are no further obligations on the
Company which could give rise to a
remuneration or loss of office payment
to a director.
Policy on the terms of directors’
appointment
In order to ensure the continued growth
and success of the business over time,
the Company must have the flexibility to
appoint new individuals to the Board, either
by way of internal promotion or external
appointment, on terms that are sufficient
to attract and motivate individuals of the
highest calibre.
66 | Tate & Lyle PLC | Annual Report 2015
The Committee’s policy in respect of the
treatment of executive directors leaving the
Company is summarised in this section.
The key principles are that the framework
is designed to support a smooth transition
from the Company, encouraging an orderly
transfer of responsibilities, and taking into
account the interests of shareholders in
securing the sustained performance of the
business beyond the executive’s departure.
Termination for dishonesty or misconduct
are circumstances in which the executive
would retain the minimum contractual
entitlements on departure (as described
in column ‘A’ of the table on page 68),
consistent with the need to avoid providing
any element of reward for failure. An
executive’s departure in compassionate
circumstances such as death or permanent
disability would generally result in the
most beneficial terms being received
(as described in column ‘B’ of the table
on page 68).
The terms that will apply if an executive
departs from the Company in other
circumstances would be considered at
the Committee’s discretion and approved
on a case-by-case basis, in keeping with
the principles above. Such circumstances
would potentially result in treatment that
is more favourable than the minimum but
no more generous than that which applies
in the compassionate circumstances
described above.
The following key principles describe our
intended approach in these circumstances
(and are consistent with the principles that
apply to the broader employee population).
• The starting point for negotiating any
package on appointment will be the
structure of the annual package within
the remuneration policy that has been
approved by shareholders and is current
at the time of the appointment.
• We will review the appropriateness of
the total package (both fixed and variable
elements), to ensure that it is appropriate
in the context of relevant external market
practice, the complexity and scope of
the role, the particular needs and
requirements of the Company at the time,
internal relativities, and the appointee’s
skills, experience and qualifications.
• To respond to specific circumstances
and/or to allow for differences in practice
over time and by location, the Committee
accepts that employment benefits may
need to be structured differently from
the specific provisions in place for current
directors. The Committee therefore retains
flexibility to make appropriate adjustments
in provision, as considered appropriate, to
provide market-referenced benefits which
are necessary or appropriate in the proper
performance of the role, for example in
relation to: healthcare and insurance;
transport and security; and provision
for retirement.
• Where an appointment requires an
individual to relocate, internationally
or otherwise, the Company may agree
to make payment(s) to offset certain
expenses incurred as a consequence of
relocation or may provide benefits in line
with our global/domestic mobility policy,
on appointment and on an ongoing basis,
depending on the circumstances. Such
benefits may include, without limitation:
travel; relocation and tax-related
assistance; and similar benefits
on repatriation at the end of the term.
• The current policy provides for a maximum
level of variable remuneration that is
equivalent to 475% of base salary in the
financial year of appointment. This is
consistent with the aggregate current
maximum award under the Annual Bonus
Plan (including any deferred shares) and
the maximum award value under our
Performance Share Plan, although the
balance between short-term and
long-term elements may be different from
the current policy, and awards may be
made on different terms.
• Where an internal candidate is appointed,
contractual commitments that have been
made prior to appointment to the Board,
along with any benefits and/or incentive
awards that have been awarded at that
time, may remain in effect and be
honoured, even if they would not
otherwise be consistent with the
shareholder-approved remuneration
policy in effect at the time.
• In order to secure the appointment
of a suitable external candidate, the
Committee retains the flexibility to provide
additional compensation for the value of
incentive awards or other benefits that are
forfeited on leaving a former employer. In
such circumstances, the Committee may
make use of cash and/or shares, as it
considers appropriate in the
circumstances. The Committee will
exercise careful judgement in formulating
the terms on which such a compensatory
award will be made, taking into account
the form of award(s) that are forfeited,
the timeframes over which they may
otherwise have been earned and any
performance conditions that would
have applied.
This policy is intended to enable the
Committee to structure an offer on terms
that it considers to be in the best interests
of the Company and its shareholders.
Depending on the circumstances, and
any restrictions or requirements that may
apply, the Company may consult with
key shareholders as part of this process
and/or disclose terms on which a
new appointment is made through
the Regulatory Information Service,
or in the following Annual Report.
Policy on payments in connection
with loss of office
It is the Company’s policy that executive
directors are normally employed on
contracts that provide for not more than
12 months’ notice from the Company
and at least six months’ notice from the
executive. To protect the Company’s
interests, restrictive covenants (non-
compete/non-solicitation) apply for a period
of 12 months following termination, less
any period of ‘garden leave’. The Chief
Executive and Chief Financial Officer are
each employed on contracts consistent with
this policy.
Tate & Lyle PLC | Annual Report 2015 | 67
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION GOVERNANCE
Directors’ Remuneration Report continued
Summary of policy on payments in connection with loss of office
(A) Termination for dishonesty or misconduct
(B) Death or permanent disability
Fixed elements of
remuneration:
• Base salary
• Pension
• Benefits
Cash elements, including accrued holiday pay, are
paid pro rata to the termination date. Non-cash
benefits may continue to be provided until the
termination date, or paid as a cash equivalent
(based on the cost of provision) on a pro rata basis.
Cash elements, including accrued holiday pay, are paid
pro rata to the end of the relevant notice period. Non-cash
benefits may continue to be provided until the end of the notice
period, or paid as a cash equivalent (based on the cost
of provision) on a pro rata basis.
Annual bonus
awards
Deferred share
awards
No discretionary bonus would be awarded in
these circumstances. More generally, no
discretionary bonus will normally be awarded
unless an individual is in active employment on
the payment date (for cash awards) and/or the
award date (for deferred share awards).
Dishonesty or misconduct may lead to the
operation of malus and/or claw back provisions
within the terms of the plan.
Unvested deferred shares will lapse.
Vested awards that have not been transferred/
released/exercised prior to cessation will lapse.
Dishonesty or misconduct may lead to the
operation of malus and/or claw back provisions
within the terms of the plan.
Long-term share
incentive
(Performance
Shares Plan)1
Unvested awards will lapse.
Vested awards that have not been transferred,
released or exercised prior to cessation will lapse.
Dishonesty or misconduct may lead to the
operation of malus and/or claw back provisions
within the terms of the plan.
Any discretionary bonus that is payable will be approved
on a case-by-case basis by the Committee.
Any bonus will normally be pro-rated to reflect the portion
of the financial year prior to cessation, and would be paid
at the normal time, reflecting the extent to which the original
performance targets have been met.
However, within a discretionary bonus framework, the
Committee retains the flexibility to approve the timing and
amount of the bonus on some other basis.
Previously vested but unexercised awards may be released
in the normal way.
In respect of unvested awards:
• If a participant dies, a deferred bonus award will vest in full
on that date
• In the event of permanent disability, a deferred bonus award
will continue on its existing terms, unless the Committee
exercises its discretion to approve the release of the award
on an earlier date.
In the event of a change of control, an award may, at the
Committee’s discretion, be released on or prior to the event,
or be exchanged for a replacement award with an acquiring
company.
Previously vested but unexercised awards may be released
during a period ending six months following cessation.
In respect of unvested awards:
• Awards made in prior years will remain in effect and, unless
the Committee determines that awards should vest on some
other basis, an individual may receive a proportion of the
potential award depending on the extent to which the original
performance conditions have been achieved at the end of the
normal performance period
• Other than in the case of death or permanent disability,
awards will generally be reduced to reflect the proportion of
the performance period which has elapsed prior to cessation.
The same provisions apply in the event of a change of control,
but for the fact that the achievement of performance conditions
will be assessed when the change of control is effective.
Provision for
payments in lieu of
notice, and
requirements for
mitigation
The Company has the option to make a payment in lieu of notice in relation to the fixed elements of remuneration only
(base salary, pension, and contractual benefits). Depending on the circumstances, such a payment may be subject
to a duty of mitigation. The Chief Financial Officer’s contract gives the Company the contractual right to phase the
payments and to reduce them if the executive mitigates his loss.
Other elements of remuneration described in the table are not affected by these provisions.
1 Savings-related share options granted under the HMRC-approved Sharesave Plan will vest or lapse in keeping with HMRC regulations applicable to the
circumstances at the relevant date.
68 | Tate & Lyle PLC | Annual Report 2015
In addition to contractual rights to any payment on loss of office, any employee, including executive directors, may have statutory and/or
common law or other rights to certain additional payments, for example in a redundancy situation. Similarly, additional consideration may
be provided, if necessary, to secure specific agreements following separation (for example an enhanced non-compete provision) that protect
the Company’s interests.
Depending on the role and circumstances of departure, a director who has been relocated may be repatriated in accordance with previously
agreed terms. The Company may pay some or all of the costs incurred by the executive in respect of legal, financial, outplacement or other
relevant personal advisory services and/or expenses in connection with relocation. The Committee will approve such arrangements on a
case-by-case basis, with a view to maintaining compliance with regulatory requirements and consistency with internal Company policies
that may apply.
Application of remuneration policy
The tables and charts below illustrate the application of the remuneration policy described in this report, by showing the value that may be
delivered from each element of the package under different performance scenarios during the financial year to which the Report relates.
Element/value (£000s)
Base salary
Pension allowance
Other benefits
Annual bonus1
Performance Share Plan2
Total potential value
Chief Executive
Chief Financial Officer3
Below
threshold
721
252
23
0
0
996
Threshold
721
252
23
0
324
1 320
Target
721
252
23
541
1 244
2 781
Stretch
721
252
23
1 262
2 163
4 421
Below
threshold
480
120
19
0
0
619
Threshold
480
120
19
0
216
835
Target
480
120
19
240
828
1687
Stretch
480
120
19
840
1 440
2 899
£5m
£4m
£3m
£2m
£1m
£0m
100%
Below
threshold
49%
29%
22%
45%
19%
36%
25%
75%
Threshold
Target
Stretch
26%
74%
49%
14%
37%
50%
29%
21%
Threshold
Target
Stretch
100%
Below
threshold
1 Annual bonus shows cash and deferred shares. No bonus is paid at or below threshold; the ‘target’ opportunity is 75% for the CEO and 50% for the CFO; while
the maximum is 175% of salary.
2 The maximum award is 300% of base salary. 15% vests at threshold, and the ‘target’ shown is halfway between threshold and stretch (ie 57.5% of maximum).
3 Nick Hampton joined the Company on 1 September 2014. The values shown here represent the annual value of the core remuneration terms on which he was
appointed (and are not pro-rated for the part-year). This does not include the potential value from one-off awards made in connection with his appointment
(details are given in the Annual Report on Remuneration).
Consideration of shareholder views
The remuneration strategy and policy described here were established in 2010 following a review and extensive consultation with major
shareholders. Shareholders overwhelmingly approved the continuing use of the Performance Share Plan as our long-term incentive
at the AGM in 2012, and formally approved the Remuneration Policy at the AGM in 2014.
The Committee (led by the Committee Chairman) engages with our major institutional shareholders each year specifically on remuneration
topics, alongside the Board’s wider-ranging shareholder engagement programme.
The Committee also receives regular updates on investors’ views and corporate governance matters. These lines of communication ensure
that emerging best practice principles are factored into the Committee’s decision making during the year.
Statement of consideration of employment conditions elsewhere in the Company
The principles on which we base remuneration decisions for executives (as described on page 60) are broadly consistent with those on
which we base remuneration decisions for all employees. In particular, the Committee takes into account the general pay and employment
conditions of other employees of the Company when making decisions on executive directors’ remuneration. This includes considering
the levels of base salary increase for employees below executive level, and ensuring that the same principles apply in setting performance
targets for executives’ incentives as for other employees of the Group. The Committee also reviews information on bonus payments and
share awards made to the broader management of the Group when determining awards and outcomes at executive director level.
Tate & Lyle PLC | Annual Report 2015 | 69
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION GOVERNANCE
Directors’ Remuneration Report continued
Annual Report on Remuneration
Introduction
As explained on page 59, this Report sets out how our established remuneration policy has been implemented during the year. The Report
also covers details relating to the composition and key responsibilities of the Remuneration Committee and provides more information on how
our incentive plans have operated.
Implementation of the remuneration policy in the financial year ending 31 March 2016
The Company intends to continue to operate within this approved directors’ remuneration policy for the financial year ending 31 March 2016.
Meetings during the year
The Remuneration Committee comprises independent non-executive directors and the Chairman of the Board. The Committee met five times
during the year. In addition, the Committee held a review and planning meeting in January 2015, as referenced in the Chairman’s introduction
on page 58. Membership and attendance during the year were as follows:
Directors as at 31 March 2015
Anne Minto1 (Committee Chairman)
Sir Peter Gershon
William Camp
Paul Forman2
Dr Ajai Puri
Former directors
Robert Walker3
Number of meetings
eligible to attend
Number of
meetings attended
5
5
5
2
5
3
5
5
5
2
5
3
1 Anne Minto succeeded Robert Walker as Chairman of the Committee on 1 January 2015.
2 Paul Forman joined the Board and the Committee on 1 January 2015.
3 Robert Walker ceased to be a director and Chairman of the Remuneration Committee on 31 December 2014.
The Committee also met twice since the end of the financial year, and before the signing of the Annual Report. The Company Secretary serves
as secretary to the Committee. The Chief Executive; the Executive VP, Human Resources; the VP, Global Compensation and Benefits; and the
Executive VP, General Counsel are normally invited to attend meetings to assist the Committee, although none is present or involved when his
or her own remuneration is discussed.
Main responsibilities of the Remuneration Committee
The main responsibilities of the Committee include:
• Assessing the appropriateness of executive remuneration in the context of the Company’s strategy and priorities as well as overall
competitiveness, taking into account data from independent, external sources
• Setting the detailed remuneration of the executive directors, designated members of senior management, and the Company Chairman
(in consultation with the Chief Executive), including: base salary or fees; annual bonus; long-term incentives; benefits; and contractual terms
• Setting performance targets for awards made to senior executives under the Annual Bonus Plan and the long-term incentive plan, and
reviewing performance outcomes
• Reviewing the broader operation of the Annual Bonus and Performance Share Plans, including participation and overall award levels
• Reviewing the effectiveness of the Committee on an annual basis.
The Committee has a formal calendar of items for consideration. The Committee’s terms of reference, which are reviewed annually,
are available on the Company’s website, www.tateandlyle.com.
Committee advisor
The Committee appointed Deloitte LLP as its external advisor following a review and competitive tender process during 2012. As part of
its annual processes, the Committee considered and confirmed that advice received during the year from Deloitte LLP was objective and
independent. Deloitte LLP is a signatory to the Remuneration Consultants’ Code of Conduct; this gives the Committee additional confidence
that the advice received is objective and independent of conflicts of interest.
Fees charged by Deloitte LLP for the provision of remuneration advice to the Committee amounted to £65,650 for the year ended 31 March 2015,
with fees being charged on a time incurred basis. During the year, Deloitte LLP also provided services to the rest of the Group on corporate
finance, consulting, internal audit, systems, tax compliance and accounting.
Statement of shareholder voting
Resolutions to approve the Directors’ Remuneration Policy Report and the Annual Report on Remuneration were passed at the AGM on
24 July 2014. The voting outcome, which was disclosed following the AGM, was as follows:
Resolution
Directors’ Remuneration
Policy Report
Annual Report on Remuneration
Total for
(number of votes)
289 561 233
% of vote
97.87
Total against
(number of votes)
6 296 870
% of vote
2.13
Votes withheld1
(number of votes)
2 779 849
290 831 905
98.79
3 572 147
1.21
4 233 899
1 Votes withheld are not counted in the calculation of the proportion of votes for or against a resolution. On 24 July 2014, there were 467,386,228 ordinary shares in
issue (excluding treasury shares).
70 | Tate & Lyle PLC | Annual Report 2015
Chart showing total shareholder return and Chief Executive pay
The chart, as required under the Regulations, illustrates the cumulative total shareholder return (TSR) performance of Tate & Lyle PLC against
the FTSE 100 Index over the past six years. The FTSE 100 Index is considered to be an appropriate benchmark for this purpose since it is a
broad equity market index with constituents comparable in size to Tate & Lyle over the period. The graph shows the value of £100 invested
in the FTSE 100 Index and Tate & Lyle in the six years from 31 March 2009.
The table provides the accompanying statistics required by the Regulations: a total compensation figure (determined on the same basis as
for the single figure) for amounts paid to the individual serving as Chief Executive; and the proportion of any annual bonus and long-term
incentive (LTI) that vested in the year (as a percentage of the maximum opportunity).
450
400
350
300
250
200
150
100
50
0
Tate & Lyle PLC
(ordinary shares)
FTSE 100
31 March 2009
31 March 2010
31 March 2011
31 March 2012
31 March 2013
31 March 2014
31 March 2015
Chief Executive1 total remuneration
(£000s per single figure)
Javed Ahmed
Iain Ferguson
Annual bonus (% of maximum)
LTI vesting (% of maximum)
977
1 312
86%
0%
3 277
nil
100%
81%
11 198
170
58%
100%
5 367
n/a
18%
100%
2 728
n/a
1.6%
67.7%
996
n/a
0%
0%
1 Javed Ahmed has served as Chief Executive since his appointment on 1 October 2009. Iain Ferguson was Chief Executive prior to that date. The total
remuneration figure shown for the year ended 31 March 2012 includes the value from a number of one-off compensatory awards made to Javed Ahmed on his
appointment, as disclosed and explained in the 2009 and 2012 Annual Reports.
Comparison of movement in Chief Executive and broader employee remuneration
Change in value: year ended 31 March 2015 vs 31 March 2014
Chief Executive
Broader employee population2
Base salary
0%
3%
Value of benefits
0%
-8%1
Annual bonus3
-100%
-74%
1 No changes to benefit policies or provision were made in respect of employees during the year. The % change shown vs prior year is the result of differences
in employee participation levels and reductions in the cost of insured benefits.
2 The broader employee population refers to a global population of salaried employees for salary comparison and the UK employee population for the benefits
comparison, reflecting the context in which executive directors’ salaries and benefits are determined; for the bonus comparisons, it refers to the global group
of participants in the Annual Bonus Plan so that the combination of business performance across our divisions that contributes to the Group’s results is
appropriately represented.
3 Includes deferred shares where applicable.
Relative importance of spend on pay
Remuneration paid to or receivable by all employees of the Group1
Distributions to shareholders (by way of dividend and purchase of ordinary shares into treasury)
1 See Note 8 to the Financial Statements relating to continuing operations (with 2014 restated).
Year ended
31 March 2014
£232m
£153m
Year ended
31 March 2015
£225m
£142m
% change
-3.0%
-7.2%
The sections that follow provide more information on remuneration decisions and the operation of incentive plans during the year ended
31 March 2015.
Executive director changes during the year
Appointment of Nick Hampton as Chief Financial Officer
Nick Hampton’s appointment as Chief Financial Officer was announced on 24 June 2014, along with details of the remuneration terms on
which he was appointed. Nick’s remuneration, benefits and incentives are consistent with the policy on directors’ remuneration approved
by shareholders.
Consistent with our remuneration policy relating to the terms of directors’ appointment, as approved by shareholders, we have made
provision to compensate Nick for specific short-term and long-term incentives given up by him as a consequence of him leaving his former
employer. As announced at the time of his appointment, these compensatory awards comprised a one-off Restricted Stock Award (RSA) of
£1,200,000 worth of shares in Tate & Lyle PLC (subject to employment and specified performance conditions) and an award of £1,440,000
worth of shares in Tate & Lyle PLC (subject to the same EPS and ROCE performance conditions that are applicable to 2014 awards under
Tate & Lyle PLC | Annual Report 2015 | 71
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION GOVERNANCE
Directors’ Remuneration Report continued
the Performance Share Plan). Nick joined the Board on 1 September 2014 and, in light of the matters covered in the trading updates issued
on 23 September 2014 which had their origins prior to his arrival and the associated market reaction, the Committee re-considered the
compensatory awards. Following consultation with a number of the Company’s largest shareholders which indicated a broad level of support,
and in keeping with our shareholder approved policy in relation to the terms of directors’ appointments, the Company has agreed to make a
restricted stock award to Nick with a face value of £700,000 on grant, to honour the agreed value of the compensatory awards. This award will
vest following the announcement of results for the year ending 31 March 2017. As a condition of the grant of this award, Nick will be required to
surrender the award that was made over £1,440,000 worth of shares.
Tim Lodge
As announced on 24 June 2014, and to enable an orderly transition of responsibilities, Tim Lodge stepped down as Chief Financial Officer
on 31 August 2014 and ceased employment with the Group on 31 December 2014. Arrangements relating to his departure were disclosed
at the time and are set out on page 75.
Base salary
Executive directors’ salaries are reviewed annually, with effect from 1 April. At the 2015 review, the Committee agreed executive director
salaries for the year ahead, taking current market positioning into account. The average increase awarded to employees across the Group
was approximately 3%.
Executive directors’ base salaries as at 1 April (£)
Javed Ahmed
Nick Hampton1
2015
721 000
495 400
2014
721 000
480 000
% change
nil
3.2%
1 Nick Hampton was appointed on 1 September 2014 and the figure for 2014 reflects the full annual salary on appointment.
Chairman’s and non-executive directors’ fees
Fees are reviewed annually, in accordance with our stated policy, by the Committee (excluding the Chairman) in respect of the Chairman’s fee,
and by the Chairman and the executive directors in respect of other non-executive directors’ fees.
At the 2015 review, taking into account the competitiveness of current fees against the comparable market position, and the time commitment
required of each role, it was agreed that no changes would be made for the year ahead.
Fees (per annum) as at 1 April (£)
Basic fees
Chairman1
Non-executive director
Senior Independent Director
Supplemental fees (per annum)
Chairman of Audit Committee
Chairman of Remuneration Committee
Chairman of Corporate Responsibility Committee
Chairman of Research Advisory Group
2015
2014
% change
324 500
62 850
72 850
16 650
12 500
11 100
23 300
324 500
62 850
72 850
16 650
12 500
11 100
23 300
nil
nil
nil
nil
nil
nil
nil
1 The Chairman’s fee includes his role as Chairman of the Nominations Committee.
Annual bonus
The bonus structure described here applied during the year ended 31 March 2015 and will be retained for the year ending 31 March 2016
with a change to the cash metric, as described below.
The bonus focused performance on three objectives: profitability; sales performance; and cash conversion. Before any bonus is payable,
a minimum level of profit has to be achieved by the Company, regardless of performance against other metrics.
For each performance metric, there is a corresponding multiplier, which varies between threshold, target and stretch levels of performance.
Once the minimum profit threshold is achieved, bonuses are calculated by applying the multipliers which have the effect of increasing or
decreasing the value of the bonus depending on performance against each metric in turn. To achieve the maximum payout, performance
against all three metrics must be at or above the stretch level.
Step 1
Step 2
Step 3
Target bonus
(% of base salary)
Chief Executive (75%)
Chief Financial Officer
(50%)
X
Profitability multiplier
(once minimum
threshold is achieved)
X
Sales performance
multiplier
X
Cash conversion
multiplier
=
Bonus achieved
(as % of base salary)
Profit performance is the most important of the three metrics, so multipliers for the profitability factor are more heavily geared than for the other
two metrics, that is, improvements in profitability have the greatest impact on bonus payments. All multipliers and their weightings are agreed
by the Committee when targets are set at the start of the year, reflecting the importance of each of the metrics in the context of the progress
made against the Company’s long-term business strategy.
72 | Tate & Lyle PLC | Annual Report 2015
Annual bonus for the year ended 31 March 2015 (audited)
The table below provides further information on each metric. The Board considers that bonus targets are commercially sensitive because
they may reveal information about the business plan in the year ahead that may damage our competitive advantage, and accordingly does
not disclose these on a prospective basis. However, we continue our practice of reporting the level of performance required to achieve
maximum bonus for the year just ended relative to the prior year’s performance, and the level of performance actually achieved against
those targets.
Bonus objective
Profitability
Sales performance
Cash management
Metric
Definition
Rationale
Performance
required for
maximum bonus
PBTEA
Net sales less cost of raw materials
Cash conversion cycle
Adjusted profit before tax,
exceptional items, amortisation and
net retirement benefit interest
Gross sales net of associated selling
costs, less the costs of raw
materials used in production
Measures the underlying profit
generated by the business and
whether management is converting
growth into profit effectively
Measures whether management is
growing the business: by assessing
growth after deducting the cost of
raw materials, this metric better
reflects the value added by the
business
The number of days between cash
expenditure and collection, taking
account of inventory, payables and
receivables; based on the average
of the four quarter-end results
Measures whether the business is
managing its working capital and
converting profit into cash effectively
2.3% increase vs prior year
5.5% increase vs prior year
1.8% improvement vs prior year
Actual performance
28% reduction vs prior year
5.9% increase vs prior year
17.5% lengthening vs prior year
Bonus outcome
Below threshold
Above stretch
Below threshold
Comments on actual
performance
Performance in both divisions was
adversely impacted by supply chain
disruption. Speciality Food
Ingredients’ operating profit, lower
by 30%, was also impacted by the
price erosion in SPLENDA®
Sucralose. Bulk Ingredients’
operating profit was lower by 23%
as a result of the supply chain
issues and the impact of price
volatility in commodity markets
Lower reported sales largely driven
by supply chain disruption and
SPLENDA® Sucralose pricing as
well as exchange rate movements
Our average quarterly cash
conversion cycle worsened by eight
days, primarily as a result of higher
inventories (driven by an increase
in finished goods year on year) and
higher receivables following the
deployment of our upgraded IS/IT
system in North America
Performance is measured on the basis of constant exchange rates for the Group’s continuing operations. The Committee reviews and
approves the performance outcomes, considers the Group’s safety performance, and then may make adjustments on an exceptional basis
to ensure that the results are a true reflection of the underlying strength and performance of the Company.
On the basis of these performance outcomes, no annual bonus (0% of base salary) was awarded by the Committee to either the Chief
Executive or the Chief Financial Officer for the year ended 31 March 2015.
Arrangements for the coming year
As described above, this framework is retained for the year ahead, with a change to the cash metric. Having considered the effectiveness
of the cash conversion cycle metric over the past few years, the Committee has agreed that targets for the year ahead will be set against
Adjusted Group Operating Cash Flow. The Committee believes this simpler metric will have greater impact on promoting effective overall
cash management in the business, and is more closely aligned with shareholders’ interests.
Deferral and malus/claw back provisions
Any bonus amount up to 100% of base salary is paid in cash. Any excess above 100% of base salary is paid in the form of deferred shares.
The shares are released after two years subject to the executive director remaining in service with the Company, and carry the right to
receive a payment in lieu of dividend between award and release.
Both the cash and share elements are subject to malus and claw back provisions for a period of 24 months following award, which mean
that they may be recouped in whole or in part, at the discretion of the Committee, in the exceptional event that results were found to have
been misstated or if an executive director commits an act of gross misconduct.
Long-term incentive – Performance Share Plan
The Performance Share Plan (PSP) was reviewed in 2010 to provide a long-term incentive that is consistent with the business strategy.
We consulted with shareholders in detail at that time and again when we renewed the PSP on the same key terms in 2012. The PSP closely
aligns executive directors’ and senior executives’ interests with the strategy and with the interests of shareholders over the long term, and
is therefore an important component of the overall package. At the 2012 AGM, 98% of shareholder votes cast supported the resolution to
approve the PSP.
Tate & Lyle PLC | Annual Report 2015 | 73
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Directors’ Remuneration Report continued
Maximum award level
Since the 2010 AGM, awards to executive directors and other senior executives have been granted at the discretion of the Committee, with
flexibility for the Committee to make awards of up to 300% of base salary where necessary to ensure market competitiveness, while taking
into account Company performance.
Performance conditions
The release of awards depends on the Group’s performance during the three-year performance period beginning on 1 April in the year
of the award. For awards made since 2010, the performance conditions comprised two elements, explained in the table below, consistent
with the principles established following the review and consultation with shareholders at that time.
Metric
Adjusted diluted earnings per share (EPS)
Adjusted return on capital employed (ROCE)
Definition
Performance is measured by comparing the compound
annual growth rate (CAGR) of the Company’s adjusted
diluted EPS from continuing operations over the
performance period against pre-determined targets
Performance is measured by the adjusted ROCE
on continuing operations achieved at the end of the
three-year performance period against the pre-
determined targets1
Weighting
50% of the award depends on this metric
50% of the award depends on this metric
Rationale
The Committee selected this metric as it is a key
determinant of shareholder value creation
The Committee selected this metric as it is a good
indicator of the effectiveness of strategic investment
decisions and of the quality of earnings generated
Vesting
schedule (2012,
2013, 2014
awards)
EPS performance
(CAGR)
Below 6%
6%
Between 6% and 15%
At or above 15%
Vesting outcome
(% of maximum)
Nil
15%
On a straight line
between 15% and 100%
100%
ROCE performance
Below 13.4%
13.4%
Between 13.4% and 16.4%
At or above 16.4%
Vesting outcome
(% of maximum)
Nil
15%
On a straight line between
15% and 100%
100%
1 The ROCE outcome may be adjusted downward in the event of an asset impairment (adding this back into capital employed); this is to encourage a prudent investment
strategy. For this reason, in the event of there being an impairment of assets during the performance period, the ROCE figure for PSP purposes can be significantly
lower than the unadjusted ROCE number reported in the Company’s accounts. In relation to the closure of Singapore, no adjustments have been made to the reported
ROCE on the basis that the impairment is a non-cash item and the underlying investment has delivered strong cash returns to the business over the full life-cycle.
The Committee reviews the appropriateness of metrics and targets ahead of the grant of awards in any year to ensure these remain
sufficiently stretching. In practice, no changes to the performance targets have been made since they were established in 2010, and
accordingly shares awarded under the PSP in 2012, 2013 and 2014 may vest in accordance with the schedule set out in the table above.
Before any shares are released, the Committee must also be satisfied that the level of vesting determined by performance against these
targets is justified by the broader underlying financial performance of the Company.
2015 awards
As noted in the Chairman’s introduction, our review of current arrangements indicated that incentive awards require careful calibration
of targets against the business strategy and outlook, to ensure their continued effectiveness.
On 21 April 2015, we announced a restructuring of our European and SPLENDA® Sucralose businesses to establish a more focused
company from which to accelerate the delivery of our strategy.
These actions improve our strategic positioning and are expected to improve our long-term outlook and ability to maximise returns in a
competitive market. However, the structural and mid-term financial considerations will also impact the appropriateness of the performance
conditions attached to future incentive awards. We therefore expect to review the PSP conditions that will apply for awards made in 2015,
in keeping with our approved remuneration policy, and to consult with shareholders, as appropriate, later in the year.
2012 PSP awards vesting by reference to the period ended 31 March 2015 (audited)
PSP awards made in 2012 were dependent on EPS growth and ROCE targets as described above, with each condition applicable to half
of the award. Performance against these conditions and the vesting outcome is indicated in the table below.
Performance
condition
EPS growth
ROCE
Weighting
Performance
outcome
Vesting outcome
for this element
Combined vesting outcome
50%
50%
12.3% reduction
nil
13.9%
Above threshold
Based on the combination of EPS and ROCE
performance, the Committee has confirmed
that 14.7% of the PSP awards made in 2012
are capable of vesting. However, the Chief
Executive has informed the Committee that,
having taken into account financial
performance in the round, he has waived
his entitlement to the award.
In confirming any vesting outcome, the Committee also considers the broader underlying financial performance of Tate & Lyle over the
performance period, to ensure that vesting results based on these performance outcomes are consistent with a broader view of the financial
health and performance of the business.
74 | Tate & Lyle PLC | Annual Report 2015
Malus and claw back provisions
Awards made under the PSP from 1 April 2013 are subject to malus and claw back provisions for a period following the vesting date and
extending to the fifth anniversary following the date of grant. During this period, the Committee may determine that an award will lapse wholly
or in part (or may require that a participant shall repay up to 100% of the value of any award that has vested by virtue of performance), in
the event of circumstances including the following: material misstatement of financial results; misconduct which justifies, or could justify,
summary dismissal of the participant; or if information has emerged which would have affected the value of the original award that was
granted to a participant, or the level at which the performance conditions were judged to have been satisfied.
Salary/fees
2015
2014
Benefits1
2015
2014
Annual bonus
2015
2014
PSP shares2
2015
2014
Pension
Total
2015
2014
2015
2014
Single figure table (audited)
£000s
Year ended 31 March
Chairman
Sir Peter Gershon
Executive directors
Javed Ahmed
Nick Hampton3
Non-executive directors
Liz Airey
William Camp
Paul Forman
Douglas Hurt
Virginia Kamsky
Anne Minto
Dr Ajai Puri
Former directors
Tim Lodge4
Robert Walker5
Totals
81
74
16
64
63
66
86
169
64
2 009
325
316
721
280
721
–
78
72
–
62
62
62
84
406
79
1 942
–
23
19
–
–
–
–
–
–
–
6
–
48
–
23
–
–
–
–
–
–
–
–
15
–
38
–
–
–
–
–
–
–
–
–
–
–
–
–
–
20
–
–
–
–
–
–
–
–
8
–
28
–
–
–
–
–
–
–
–
–
–
–
–
–
325
316
1 712
–
252
70
252
–
996
369
2 728
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
81
74
16
64
63
66
86
78
72
62
62
62
84
142
–
142
903
–
2 615
42
–
364
101
–
353
359
64
2 563
1 433
79
4 976
1 Benefits for executive directors include health insurance and car allowance.
2 PSP awards outcomes are discussed on page 74.
3 Nick Hampton joined the Group on 1 September 2014.
4 Tim Lodge stepped down as Chief Financial Officer and as a director on 31 August 2014 and ceased to be an employee of the Group on 31 December 2014.
The amounts shown in the single figure table above relate to the period while he was in office as a director. Arrangements on departure were included in our
announcement on 24 June 2014, and are set out below in detail.
5 Robert Walker ceased to be a director on 31 December 2014.
Total pension entitlements (audited)
Directors participate in arrangements that are defined contribution in nature. Contributions made to or in lieu of pension in respect of each
director during the year are shown in the single figure table.
As a deferred member of the Group Pension Scheme, Tim Lodge’s total accrued pension from the Group Scheme at the end of the year
amounted to £198,088 per annum (31 March 2014 – £193,340). The Scheme was closed to future accrual from April 2011; the year-on-year
change relates only to the inflation-linked contractual uplift in deferred pension values that applies under the Scheme rules. Tim’s normal
retirement date is the end of the month in which he attains age 62. No additional benefits arose when he ceased to be an employee of the
Group on 31 December 2014.
Termination and loss of office and payments to past directors (audited)
As announced on 24 June 2014, and to enable an orderly transition of responsibilities, Tim Lodge stepped down as Chief Financial Officer
on 31 August 2014 and ceased employment with the Group on 31 December 2014. As previously announced, Tim received his normal
contractual remuneration until 31 December 2014, and received a contractual payment of salary in lieu of the six-month balance of his notice
period from that date. Remuneration earned in the period to 31 August 2014 as a director is shown in the single figure table above.
Remuneration relating to his employment in the period 1 September to 31 December 2014 amounted to £135,273 in salary, £4,896 in
benefits, and £33,818 in pension contributions. The payment in relation to the balance of his notice period was £203,000.
As we announced at the time, and in keeping with our shareholder approved policy, the Committee determined that Tim would retain rights to
previously granted PSP awards which may vest subject to the rules of the Performance Share Plan and the relevant performance criteria, on
a time prorated basis reflecting the proportion of the three-year vesting period during which he was employed (as shown in the table on page
77). The Committee has not exercised any discretion in relation to the assessment of performance conditions or the timing of such vesting.
There have been no other payments to past directors other than as disclosed in this Report. No loss of office payments have been made
during the year.
Tate & Lyle PLC | Annual Report 2015 | 75
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION
GOVERNANCE
Directors’ Remuneration Report continued
Share awards made during the year (audited)
Award
Javed Ahmed Performance
Share Plan
Type of award
Date of grant
Nil cost option 7 July 2014
Number of
shares
305 584
Face value
of award
£2 163 0151
Sharesave
Scheme3
Savings-
related
options
5 Dec 2014
5 941
£30 299
Nick
Hampton
Share Award4 Nil cost
18 Nov 2014
232 033
£1 440 000
option
Restricted
Share Award4
Nil cost
option
18 Nov 2014
193 361
£1 200 000
Sharesave
Scheme3
Savings-
related
options
5 Dec 2014
3 529
£17 997
% of vesting
at threshold
15%
Performance
period
Three
financial
years ending
31 March
2017
1 March 2020 –
15%
0%
Three
financial
years ending
31 March
2017
1 September
2014 –
1 September
2016
1 March 2018 –
Performance
conditions
50% adjusted
diluted EPS
growth;
50% adjusted
ROCE2
Continued
employment
(SAYE)
50% adjusted
diluted EPS
growth;
50% adjusted
ROCE2
Continued
employment
and specified
performance
conditions
Continued
employment
(SAYE)
1 Under the terms of the Plan approved by shareholders, the number of shares comprising an award in any year is calculated based on the average share price
over the last three months of the preceding financial year, being 707.83 pence per share for the 2014 award. During the year, the Committee approved an award
of 300% of salary, in accordance with our approved remuneration policy.
2 Performance conditions are described on page 74.
3 Savings-related share options are options granted under the HMRC-approved Sharesave Plan. Options are granted on the same terms to all participating
employees, are not subject to performance conditions, and are normally exercisable during the six-month period following the end of the relevant three- or
five-year savings contract. The exercise price per share for these shares under option is 510.00 pence, reflecting a 20% discount to market value permitted under
HMRC rules, which is applicable to all participants. The share price value on the date of grant was 637.00 pence.
4 These awards are the compensatory awards made in connection with Nick Hampton’s appointment, as previously disclosed to shareholders and described
on page 72, being:
• A one-off ‘Share Award’ award of £1,440,000 worth of shares in Tate & Lyle PLC, subject to the same EPS and ROCE performance conditions that are
applicable to 2014 awards under the Performance Share Plan2.
• A one-off ‘Restricted Share Award’ (RSA) of £1,200,000 worth of shares in Tate & Lyle, PLC vesting in two equal tranches on the first and second anniversary
of appointment, subject to employment and specified performance conditions.
As these awards are intended to compensate for incentives forfeited with his previous employer, specific provisions were agreed at the time of Nick’s appointment
in relation to the minimum value that may be realisable in the specific circumstances relating to a change in control prior to 31 March 2016. The performance
conditions attached to the RSA relate to strategic and operational milestone activities agreed by the Committee, the detailed disclosure of which would be
commercially sensitive at this time.
These awards have been made based on an average share price over the five days prior to the date of award, being 620.60 pence per share.
As described on page 72, the Committee has agreed to make a restricted stock award to Nick, with a face value of £700,000 on grant, to honour the agreed
value of the compensatory awards. This follows a consultation with our largest shareholders, which indicated broad support, and is in keeping with our
shareholder-approved policy in relation to the terms of directors’ appointments. As a condition of the grant of this award, Nick will be required to surrender
the share award shown in the table above that was made over £1,440,000 worth of shares.
Historic awards under all-employee schemes (audited)
The table below sets out the current position of options to subscribe for ordinary shares of the Company that were granted to current and
former executive directors in the years prior to the current reporting year.
Savings-related share options are options granted under the HMRC-approved Sharesave Scheme. Options are not subject to performance
conditions and are normally exercisable during the six-month period following the end of the relevant (three- or five-year) contract.
Current director
Javed Ahmed (Chief Executive)
Savings-related options 2009
Former director
Tim Lodge (former Chief Financial Officer)
Savings-related options 2012
As at
1 April 2014
(number)
Options
granted
during year
(number)
Options
exercised
during year
(number)
Options
lapsed
during year
(number)
As at
31 March
2015
(number)
Exercise
price
(pence)
Exercise
period
3 720
2 471
–
–
–
–
–
3,720
418.00
2 471
–
607.00
01/03/15 to
31/08/15
01/03/18 to
31/08/18
76 | Tate & Lyle PLC | Annual Report 2015
Share awards made in prior years (audited)
The table below sets out the current position of share-based awards made to executive directors.
As at
1 April 2014
(number)
Awards
vested
during year
(number)
Awards
lapsed
during year
(number)
Awards
exercised
during year
(number)
As at
31 March
2015
(number)
Market price
on date
awards
granted
(pence)
Market price
on date
awards
vested
(pence) Vesting date
Current director
Javed Ahmed
Share-incentive arrangements
on recruitment:
Compensatory Award A1
Compensatory Award C2,3
Long-term incentive Award A2,3
Long-term incentive Award B2,4
Long-term incentive Award C2,5,6
Performance Share Plan2,7:
20128
2013
Deferred shares from annual bonus9:
2011 bonus year
Former director
Tim Lodge
Performance Share Plan2,7:
20116
20128
2013
Deferred shares from annual bonus9:
2011 bonus year
419 403
257 870
656 640
473 042
378 337
310 567
267 418
2 010
–
–
–
–
256 134
–
–
–
–
122 203
–
–
–
–
–
–
–
–
–
–
–
–
–
–
419 403
257 870
656 640
473 042
256 134
444.90
444.90
444.90
440.20
590.50
632.50
676.50
676.50
875.50
668.50
310 567
671.00
267 418
817.50
–
–
01/10/11
29/05/12
29/05/12
28/05/13
27/05/14
After
31/03/15
After
31/03/16
2 010
671.00
701.50
29/05/14
212 950
135 010
77 940
135 010
–
590.50
668.50
174 805
150,518
1 131
–
–
14 36910
62 63110
–
–
160 436
671.00
87 887
817.50
–
–
–
1 131
–
676.5
701.50
29/05/14
27/05/14
After
31/03/15
After
31/03/16
1
This award, to compensate Javed Ahmed for certain long-term incentives given up by him as a consequence of leaving his former employer, is not subject to
performance conditions. The shares were available to exercise from 1 October 2011, being the second anniversary of Javed Ahmed joining the Company, and
will remain exercisable until 30 September 2017. Pending delivery, he receives a payment in lieu of dividend on these shares which is subject to the deduction
of tax. In the event of a change in control, the shares would be delivered immediately.
The three-year performance period for these awards begins on the first day of the financial year in which the award is granted.
2
This award is subject to the same performance conditions as PSP awards made in 2009.
3
4
This award is subject to the same performance conditions as PSP awards made in 2010.
5 This award is subject to the same performance conditions as PSP awards made in 2011.
6 This award vested by 67.7%, based on the achievement of adjusted diluted EPS growth, and adjusted ROCE performance, as described in the Annual Report 2014.
7 The performance conditions for PSP awards made in 2012, 2013 and 2014 are 50% adjusted diluted EPS and 50% adjusted ROCE, as described in this Report.
8 The PSP award made in 2012 will vest at just above threshold, following the Committee’s assessment of performance conditions (as described on page 74).
As described on page 74, Javed Ahmed has informed the Committee that he has elected to waive his award.
9 Deferred shares are granted under the annual bonus scheme (as described on page 73). The full value of these awards has been disclosed previously in the
emoluments table(s) in the relevant bonus year(s). For example, the values of deferred shares relating to performance in the year ended 31 March 2012 are
included in the emoluments table for the year ended 31 March 2012 (contained within the Annual Report 2012).
10 Tim Lodge’s awards have been adjusted to reflect the proportion of the performance period during which he was employed, and accordingly, this number
represents the number of shares that are no longer capable of vesting.
Tate & Lyle PLC | Annual Report 2015 | 77
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION
GOVERNANCE
Directors’ Remuneration Report continued
Statement of directors’ shareholding and share interests (audited)
Personal share ownership requirements (policy on executive share ownership)
The Committee and executive management believe that personal investment in Company shares is an important part of our overall
remuneration framework. Material personal investment in Company shares serves to strengthen the long-term alignment of interests
between senior executives and shareholders.
Our executive shareholding requirements are more demanding and extend to a greater number of senior executives in the Group when
compared with similar UK-listed companies.
• The Chief Executive has a target share ownership requirement of four times base salary, and his shareholding currently exceeds
this target.
• The Chief Financial Officer has a target shareholding of three times base salary, to be achieved within five years of appointment. In this
capacity, Tim Lodge’s shareholding exceeded this target. Nick Hampton joined Tate & Lyle in September 2014, and therefore has until
September 2019 to meet this target.
• Other Executive Committee members are subject to the share ownership policy, with target holdings at three times salary.
• This policy extends to a broader group of executives who have senior leadership roles within the Company. The shareholding targets
for this group is equal to their base salary.
The Committee monitors progress against the share ownership requirements annually.
Directors’ interests (audited)
The interests held by each person who was a director during the financial year in the ordinary shares of 25 pence each in the Company
are shown below. All of the interests set out in the table are beneficially held and no director had interests in any class of shares other than
ordinary shares. The table also summarises the interests in shares held through the Company’s various share plans.
Chairman
Sir Peter Gershon
Executive directors
Javed Ahmed
Nick Hampton
Non-executive directors
Liz Airey
William Camp
Paul Forman
Douglas Hurt
Virginia Kamsky
Anne Minto
Dr Ajai Puri
Former directors
Tim Lodge5
Robert Walker6
Interest in shares1
Shares –
conditional on
performance2
Shares – not
conditional on
performance3
Options – not
conditional on
performance4
Total as at
31 March 2015
Total as at
31 March 2014
106 006
–
–
–
106 006
82 080
1 288 407
10 000
883 5693
425 3943
2 065 0993
–
9 661
3 529
4 246 736
438 923
3 973 464
n/a
–
–
–
–
26 000
4 800
–
10 000
10 000
8 600
6 018
400 789
22 841
248 323
–
–
–
–
–
–
–
–
–
–
–
–
–
26 000
4 800
–
10 000
10 000
8 600
6 018
16 000
2 200
n/a
10 000
5 000
8 600
2 018
649 112
22 841
858 226
22 162
1 Includes shares owned by connected persons.
2 Includes awards under the Performance Share Plan and the special arrangements that were put in place to facilitate Javed Ahmed’s and Nick Hampton’s
recruitment which are subject to performance conditions (as described on page 76).
3 Includes deferred share awards made under the Annual Bonus Plan and vested but unexercised awards granted to Javed Ahmed, and unexercised awards
granted to Nick Hampton in connection with their respective appointments.
4 Includes HMRC-approved Sharesave Plan awards, of which 3,720 relating to Javed Ahmed are vested but unexercised as at the date of this Report.
5 As at cessation of directorship on 31 August 2014.
6 As at cessation of directorship on 31 December 2014.
There were no changes in directors’ interests in the period from 1 April 2015 to 27 May 2015.
The market price of the Company’s ordinary shares at the close of business on 31 March 2015 was 597.50 pence, and the range during the
year ended 31 March 2015 was 558.00 pence to 743.50 pence.
On behalf of the Board
Anne Minto
Chairman of the Remuneration Committee
27 May 2015
78 | Tate & Lyle PLC | Annual Report 2015
Directors’ Report
About the Directors’ Report
The Directors’ Report comprises the
Governance section from pages 44 to 57,
the Directors’ Report on pages 79 and
80 and the Useful Information section
from pages 156 to the inside back cover.
Other information that is relevant to the
Directors’ Report, and which is
incorporated by reference into the
Directors’ Report, is disclosed as follows:
• Likely future developments of the
Company (throughout the Strategic
Report)
• Human rights (page 38)
• Greenhouse gas emissions
(pages 41 and 42)
• Relationship with employees (page 39)
• Financial instruments (Note 18).
Results and dividend
A review of the results can be found on
pages 1 to 43.
An interim dividend of 8.2 pence per
ordinary share was paid on 2 January 2015.
The Directors recommend a final dividend
of 19.8 pence per ordinary share to be paid
on 31 July 2015 to shareholders on the
register on 3 July 2015, subject to approval
at the 2015 Annual General Meeting (AGM).
The total dividend for the year is 28.0 pence
per ordinary share (2014 – 27.6 pence).
The Trustees of the Tate & Lyle PLC Employee
Benefit Trust have waived their right to receive
dividends over their total holding of 2,889,210
ordinary shares as at 31 March 2015.
Research and development
The Group spent £32 million (2014 –
£33 million) on research and development
during the year.
Articles of Association
The Articles of Association set out the
internal regulation of the Company and
cover such matters as the rights of
shareholders, the appointment or removal
of directors, and the conduct of the Board
and general meetings. Copies are available
on request and are displayed on the
Company’s website, www.tateandlyle.com.
In accordance with the Articles of Association,
directors can be appointed or removed by the
Board or by shareholders in general meeting.
Amendments to the Articles of Association
have to be approved by at least 75% of those
voting in person or by proxy at a general
meeting of the Company. Subject to UK
company law and the Articles of Association,
the Directors may exercise all the powers of
the Company, and may delegate authorities
to committees, and may delegate day-to-day
management and decision making to
individual executive directors. Details of the
Board Committees can be found on pages
53 to 57 and on page 70.
Share capital
As at 31 March 2015, the Company had
nominal issued ordinary and preference
share capital of £119 million comprising
£117 million in ordinary shares, including
£0.5 million in treasury shares and £2 million
in preference shares.
To satisfy obligations under employee share
plans, the Company issued 21,092 ordinary
shares during the year and reissued
1,628,492 ordinary shares from treasury.
The Company issued 1,630 shares during
the period from 1 April 2015 to 27 May 2015.
Further information about share capital is in
Note 23. Information about options granted
under the Company’s employee share plans
is in Note 25.
The Company was given authority at
the 2014 AGM to make market purchases
of up to 46,585,888 of its own ordinary
shares. The Company purchased 1,315,000
of its own ordinary shares during the year
ended 31 March 2015; these shares are held
in treasury to satisfy awards made under
performance share plans. This authority
will expire at the 2015 AGM and approval
will be sought from shareholders for a similar
authority to be given for a further year.
Restrictions on holding shares
There are no restrictions on the transfer of
shares and prior approval is not required from
the Company nor from other holders for such
a transfer. No limitations are placed on the
holding of shares and no share class carries
special rights of control of the Company.
There are no restrictions on voting rights other
than those outlined below on preference
shares. The Company is not aware of any
agreements between shareholders that may
restrict the transfer or exercise of voting rights.
Shareholders’ rights
Holders of ordinary shares have the rights
accorded to them under UK company law,
including the rights to receive the Company’s
annual report and accounts, attend and
speak at general meetings, appoint proxies
and exercise voting rights.
Holders of preference shares have limited
voting rights and may not vote on: the
disposal of surplus profits after the dividend
on the preference shares has been provided
for; the election of directors or their
remuneration; any agreement between the
directors and the Company; or the alteration
of the Articles of Association dealing with
any such matters. Further details regarding
the rights and obligations attached to share
classes are contained in the Articles of
Association which are available on the
Company’s website, www.tateandlyle.com.
DTR Rule 5 disclosure
As at 27 May 2015, the Company had been
notified under Rule 5 of the Disclosure and
Transparency Rules of the following holdings
of voting rights in its shares:
Number
of shares2 % held2
9.97
46 514 801
28 452 377
22 890 148
Black Rock, Inc1
The Capital Group
Companies, Inc.
AXA S.A.1
Artemis Investment
Management LLP1
23 207 193
Invesco Limited1
23 111 061
Schroders plc
23 098 654
Barclays Global Investors1 17 568 133
13 988 192
Norge Bank
6.10
4.98
4.97
4.95
4.59
3.59
3.00
1 Notification was made over 12 months ago; as
permitted under Rule 5, shareholders may not
be required to notify us of subsequent changes
within certain ranges.
2 As at the date in the notification to the Company.
Disclosure table pursuant to Listing Rule LR9.8.4C
In accordance with LR 9.8.4C, the table below sets out the location of the information
required to be disclosed, where applicable.
Applicable sub-paragraph within LR 9.8.4
Interest capitalised by the Group
Unaudited financial information
Page(s)
103
31 and 158
Long-term incentive scheme only involving a director
71 to 72 and 76
Directors’ waivers of emoluments
Directors’ waivers of future emoluments
Non pro-rata allotments for cash (issuer)
Non pro-rata allotments for cash (major subsidiaries)
None
74
79
None
Listed company is a subsidiary of another company
Not applicable
(1)
(2)
(4)
(5)
(6)
(7)
(8)
(9)
(10) Contracts of significance involving a director
None
(11) Contracts of significance involving a controlling shareholder
Not applicable
(12) Waivers of dividends
(13) Waivers of future dividends
79
79
(14) Agreement with a controlling shareholder
Not applicable
Tate & Lyle PLC | Annual Report 2015 | 79
STRATEGIC REPORTFINANCIAL STATEMENTSGOVERNANCEUSEFUL INFORMATION GOVERNANCE
Directors’ Report continued
Change of control
The Company has a committed bank facility
of US$800 million, which matures in 2019.
Under the terms of this facility, the banks
can give notice to Tate & Lyle to prepay
outstanding amounts and cancel the
commitments where there is a change of
control of the Company. The Company is
the guarantor of a £200 million bond issue
by its subsidiary, Tate & Lyle International
Finance PLC, dated 25 November 2009,
which is repayable in 2019. Under the terms
of the bond issue, noteholders have the
option to request an early repayment where
there is a change of control of the Company.
Political donations
Again this year, in line with the Group’s
policy, no political donations were made in
the European Union (EU). Outside the EU,
the Group’s US business made contributions
during the year totalling US$26,700;
(£17,000) (2014 – US$22,000; £14,000) to
state political party committees and to the
campaign committees of state candidates
affiliated to the major parties. In all, 14
separate donations were made, the largest
being of $5,000 and the smallest $500.
US$11,500; (£7,000) (2014 – US$14,000;
£9,000) was also contributed by the
Tate & Lyle Political Action Committee (PAC).
All of the Company’s share plans contain
provisions relating to a change of control.
Further information is on page 66.
Eight separate donations were made, the
largest being of $2,500 and the smallest
$500. The PAC is funded entirely by US
employees. Employee contributions are
entirely voluntary and no pressure is placed
on US employees to participate. No funds are
provided to the PAC by Tate & Lyle but under
US law, an employee-funded PAC must bear
the name of the employing company.
Directors’ Statement of Responsibilities
The Directors are responsible for preparing
the Annual Report, the Directors’
Remuneration Report and the Financial
Statements in accordance with applicable
law and regulations.
Company law requires the Directors to
prepare financial statements for each
financial year. Under that law the Directors
have prepared the Group Financial
Statements in accordance with International
Financial Reporting Standards (IFRSs) as
adopted by the EU, and the Parent
Company Financial Statements in
accordance with United Kingdom Generally
Accepted Accounting Practice (United
Kingdom Accounting Standards and
applicable law). Under company law the
Directors must not approve the financial
statements unless they are satisfied that they
give a true and fair view of the state of affairs
of the Company and the Group and of the
profit or loss of the Group for that period.
In preparing these financial statements,
the Directors are required to:
• Select suitable accounting policies and
then apply them consistently
• Make judgements and accounting
estimates that are reasonable and prudent
• State whether IFRSs as adopted by
the EU and, with regard to the Parent
Company Financial Statements, applicable
UK Accounting Standards have been
followed, subject to any material
departures disclosed and explained in
the Group and Parent Company Financial
Statements respectively
• Prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the Company’s
transactions and disclose with reasonable
accuracy at any time the financial position
of the Company and the Group and enable
them to ensure that the financial statements
and the Directors’ Remuneration Report
comply with the Companies Act 2006 and,
as regards the Group Financial Statements,
Article 4 of the IAS Regulation. They are also
responsible for safeguarding the assets of
the Company and the Group and hence for
taking reasonable steps for the prevention
and detection of fraud and other irregularities.
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 44 and 45,
confirm 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 performance, business
model and strategy
• The Group Financial Statements, which
have been prepared in accordance with
IFRSs as adopted by the EU, and the
Parent Company Financial Statements
in accordance with UK Accounting
Standards, give a true and fair view of
the assets, liabilities, financial position and
profit of the Group and Parent 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,
together with a description of the principal
risks and uncertainties that it faces.
Disclosure of information to auditors
So far as each director is aware, there is
no relevant audit information of which the
Company’s auditors are unaware; and he
or she has taken all the steps that he or she
ought to have taken as a director in order
to make himself or herself aware of any
relevant audit information and to establish
that the Company’s auditors are aware
of that information.
The Directors’ Report on pages 44 to 57,
pages 79 and 80 and pages 156 to the
inside back cover and the Directors’
Remuneration Report from pages 58 to 78
of this Annual Report were approved by
the Directors on 27 May 2015.
On behalf of the Board
Lucie Gilbert
Company Secretary
27 May 2015
80 | Tate & Lyle PLC | Annual Report 2015
Independent Auditors’ Report to the Members
of Tate & Lyle PLC
Report on the Group financial
statements
Our opinion
In our opinion, Tate & Lyle PLC’s Group
financial statements (the ‘Group financial
statements’) defined below:
• give a true and fair view of the state of the
Group’s affairs as at 31 March 2015 and of its
profit and cash flows for the year then ended;
• have been properly prepared in accordance
with International Financial Reporting
Standards (‘IFRSs’) as adopted by the
European Union; and
• have been prepared in accordance with the
requirements of the Companies Act 2006
and Article 4 of the IAS Regulation.
What we have audited
The Group financial statements comprise:
• the consolidated statement of financial
position as at 31 March 2015;
• the consolidated income statement and
consolidated statement of comprehensive
income for the year then ended;
• the consolidated statement of cash flows
for the year then ended;
• the consolidated statement of changes
in equity for the year then ended; and
• the notes to the consolidated financial
statements, which include a summary
of significant accounting policies and other
explanatory information.
The financial reporting framework that has
been applied in the preparation of the Group
financial statements is applicable law and
IFRSs as adopted by the European Union.
Our audit approach
Overview
Materiality
• Overall Group materiality: £10 million which
represents 5% of profit before tax adding
back the share of tax of joint ventures and
associates and exceptional items, as defined
in Note 2 in the Group financial statements.
Audit scope
• Our audit included full-scope audits of six
reporting components (Tate & Lyle PLC,
Tate & Lyle International Finance, the US
Bulk Ingredients business, the US Speciality
Food Ingredients business, Sucralose
Singapore and Food Systems Germany)
with specified audit procedures performed
at a further 13 reporting components.
• Taken together, the components at which
audit work was performed accounted for
87% of consolidated sales and 66% of
consolidated profit before tax and covered
all components that individually contributed
more than 15% of sales and profit before tax.
Areas of focus
• Commodity risk
• SAP implementation
• Uncertain tax positions
• Retirement benefit obligations
• Impairment of SPLENDA® Sucralose assets
The scope of our audit and our areas
of focus
We conducted our audit in accordance with
International Standards on Auditing (UK and
Ireland) (‘ISAs (UK & Ireland)’).
We designed our audit by determining
materiality and assessing the risks of material
misstatement in the Group financial statements.
In particular, we looked at where the Directors
made subjective judgements, for example in
respect of significant accounting estimates that
involved making assumptions and considering
future events that are inherently uncertain.
As in all of our audits, we also addressed the
risk of management override of internal controls,
including evaluating whether there was evidence
of bias by the directors that represented a risk
of material misstatement due to fraud.
The risks of material misstatement that had
the greatest effect on our audit, including the
allocation of our resources and effort, are
identified as ‘areas of focus’ in the table below.
We have also set out how we tailored our audit
to address these specific areas in order to
provide an opinion on the Group financial
statements as a whole, and any comments we
make on the results of our procedures should
be read in this context. This is not a complete
list of all risks identified by our audit.
For each area of focus below, where
appropriate, we evaluated the design and
tested the operating effectiveness of key
internal controls over financial reporting,
including testing the operation of IT systems
from which financial information is generated.
Area of focus
Commodity risk
Refer to Notes 3, 18 and 19 in the Group financial
statements.
The Group’s accounting policy for its US business is to mark
to market its commodity positions at each balance sheet
date, including forward sales and purchase contracts with
customers and grain suppliers, and physical inventory,
in line with common industry practice. The Group manages
the commodity price risk on sales and purchase contracts
by taking certain long and short positions of physical
contracts, and through the use of derivative financial
instruments, primarily futures and options contracts. This
is an area of focus due to the complexity of the calculations
and the judgement involved in the valuation of certain
commodities, most notably co-products that do not have an
actively traded futures market. These co-products include
corn gluten feed, corn gluten meal and corn oil. Additionally,
basis adjustments are made to certain commodity
valuations to reflect market conditions, which necessitate
further management judgement.
The fair values of commodities pricing contracts were
assets of £58 million and liabilities of £25 million.
How our audit addressed the area of focus
We understood and evaluated management’s process for managing the
commodity price risk inherent within its commodity positions, and compared it to
management’s underlying risk management and accounting policy. No matters
were identified that would indicate the risk management and accounting policies
are not being followed.
We obtained management’s forward pricing sheet for all commodities used in the
fair value calculations. For those commodities with an actively traded market, we
assessed the consistency of the forward prices with those published by the Chicago
Mercantile Exchange or similar exchange. For those commodities where an active
futures market does not exist (principally co-products) and for the basis adjustments
made, we have understood and challenged management’s methodology for
determining these valuations, including the inputs and assumptions used. To further
assess the reasonableness of the estimated forward prices, we have performed
trend analyses against similar market or exchange traded commodities and
compared certain ratios of co-product prices against historical ratios. In addition to
testing the forward price estimates, we have audited the calculations of the fair value
and associated unrealised gains and losses on the commodity-based positions. We
found that management’s forward price estimates and the calculation of fair value
of these contract positions were reasonable and supported by market observable
data, where appropriate. Where management had calculated values by reference
to non-market observable data, we found that these were within acceptable ranges.
Where derivative financial instruments, including futures and options contracts
with third-party brokers were used to manage the commodity price risk, we
independently confirmed these positions with the brokerage houses, and
recalculated the confirmed fair value of the positions held. We found that the fair
values of these derivative financial instruments were supported by these
confirmations and recalculations.
Tate & Lyle PLC | Annual Report 2015 | 81
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Independent Auditors’ Report to the Members
of Tate & Lyle PLC continued
Area of focus
SAP implementation
The Group continues to rationalise and simplify its finance
processes. As part of this, the Group has designed and
developed a common SAP system. During the current year,
this common system was implemented in the US Bulk
Ingredients and US Speciality Food Ingredients businesses.
These represent the two largest components of the
Group audit.
The implementation introduced heightened risk as controls
and processes that have been established and embedded
over a number of years were updated and migrated into
the new environment.
There was an increased risk of breakdown in internal
financial controls during the transition and an increased
risk of inaccurate or incomplete migration of financial data,
which in turn increased the risk of material misstatements
in the Group financial statements.
Uncertain tax positions
How our audit addressed the area of focus
We understood and evaluated management’s project governance and data
migration plan, and validated certain controls over the migration and go-live
processes, and found these to be operating effectively. We understood and
evaluated IT general controls and segregation of duties within the new
environment. While IT general controls were largely operating effectively, we did
not place reliance on automated controls in respect of managing segregation of
duties risks, and instead we validated management’s mitigating manual controls
which we found to be operating effectively.
In addition to the validation of management’s controls we also independently
verified the migration of data for a sample of general ledger, sub-level and
transaction level items. Based on the procedures performed, we did not identify
any material unresolved matters in respect of the system implementation that
had an impact on the Group financial statements.
Refer to Notes 3, 10 and 28 in the Group financial statements.
The nature of the Group’s multinational and cross-border
operations exposes the Group to complicated tax
regulations. This requires management to exercise
judgement in determining the appropriate amount of tax
to provide in a number of jurisdictions. In particular, certain
financing arrangements that the Group has entered into,
while not uncommon or unduly aggressive, have been
previously subject to enquiry by tax authorities. Changes in
management’s estimates of the likely result of enquiries by
tax authorities could materially affect the quantum of tax
provisions recognised in the Group financial statements.
Using our specialist tax knowledge, we evaluated and challenged management’s
judgements in respect of estimates of tax exposures and contingencies in order
to assess the adequacy of the Group’s tax provisions. This included obtaining a
detailed understanding of the Group’s key technical tax matters and risks related
to business and legislative developments.
We recalculated management’s valuations of direct tax provisions and
determined whether the calculations were in line with the Group’s methodology
and principles and whether they had been applied consistently with previous
years. We also examined management’s ongoing analysis of its financing
arrangements and considered recent correspondence with the tax authorities.
From the evidence obtained, we considered the level of provisioning to be at
the prudent end of an acceptable range.
Retirement benefit obligations
Refer to Notes 3 and 29 in the Group financial statements.
The Group has significant retirement benefit obligations in
the UK and the US, including unfunded retirement medical
plans in the US. At 31 March 2015 the present value of
these obligations was £1,761 million (2014 – £1,525 million).
These obligations were determined based on a number of
actuarial assumptions and calculations, which were subject
to significant judgement and estimate. Changes in these
assumptions can have a material impact on the quantum
of obligations recognised.
We understood and evaluated the assumptions used by the Group’s actuaries
and management in calculating the retirement benefit obligations for the defined
benefit pension plans in the UK and the US, and the unfunded retirement medical
scheme in the US.
We challenged each of the actuarial assumptions by comparing these to
benchmark ranges based on market conditions and expectations at 31 March
2015. In each case we found that the actuarial assumption used was reasonable,
sat within our acceptable range, and was applied consistently with the prior year.
In addition, we independently confirmed the pension assets held by the UK and
US schemes with third-party investment custodians and fund managers. We did
not identify any exceptions in this work.
Carrying value of SPLENDA® Sucralose assets
Refer to Notes 6 and 37 in the Group financial statements.
As part of the re-focus and restructure of its SPLENDA®
Sucralose business, the Group took the decision to write-off
the assets of its Singapore facility in advance of the
anticipated closure of this facility in Spring 2016. At the same
time, given the continued competitive pricing pressure on
this business, the Group undertook an impairment
assessment of the carrying value of the SPLENDA®
Sucralose assets at McIntosh, which had a carrying value of
£103 million at 31 March 2015, which principally comprises
property, plant and equipment and working capital.
We focused on this area, as the impairment review contains
a number of significant judgements and estimates, of which
the most significant is the anticipated future pricing the
Group will achieve on sales of SPLENDA® Sucralose.
82 | Tate & Lyle PLC | Annual Report 2015
Leveraging our specialist valuations knowledge, we obtained the Group’s
impairment analysis and tested the reasonableness of key assumptions, including
anticipated future pricing within the revenue assumption, the terminal growth rate
applied and the determination of the discount rate. We challenged management
to substantiate its assumptions, including considering the output of external
advice the Group took as part of its strategic review of the SPLENDA® Sucralose
business.
We obtained and evaluated management’s sensitivity analyses to ascertain the
impact of reasonably possible changes and we performed our own independent
sensitivity calculations to quantify the downside changes to management’s model
required to result in impairment.
As a result of our work, we determined that the decision to fully write-off the
Singapore facility at 31 March 2015 was appropriate and that management’s
conclusion that the McIntosh facility was not impaired was also appropriate. We
found that this judgement was supported by reasonable assumptions that would
require significant downside changes before any impairment was necessary.
FINANCIAL STATEMENTS How we tailored the audit scope
In identifying these areas of focus, we tailored the scope of our audit to ensure that we performed sufficient work to be able to issue an opinion
on the Group financial statements as a whole, taking into account the geographic structure of the Group, the accounting processes and controls
and the industry in which the Group operates.
The Group is primarily structured across two divisions; Speciality Food Ingredients and Bulk Ingredients, with a central support function. The
Group financial statements are a consolidation of the Group’s reporting units, spread across these two divisions, which comprise the Group’s
operating businesses and centralised functions covering more than 250 individual components.
In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed at the reporting units by us,
as the Group engagement team, or component auditors from other PwC network firms operating under our instructions. Where the work was
performed by component auditors, we determined the level of involvement we needed to have in the audit work at those components to be able
to conclude whether sufficient and appropriate audit evidence had been obtained as a basis for our opinion on the Group financial statements as
a whole. This involvement included oversight visits and review of working papers at the Group’s significant components in the US and at the Global
Shared Services audit in Poland, and attendance at clearance meetings. In addition, we met with component management in China and Singapore.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate
the effect of any misstatements, both individually and on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall Group materiality
£10 million (2014 – £15 million)
How we determined it
5% of profit before tax (£51 million) adding back the share of tax of joint ventures and associates
(£14 million) and exceptional items (£142 million), as defined in Note 2 in the Group financial statements.
Rationale for benchmark applied
The Group’s principal measure of earnings is adjusted profit before tax, which excludes exceptional
items, amortisation of acquired intangible assets and net retirement benefit interest from profit before
tax. The Group adjusts for exceptional items as it believes that doing so is necessary to provide an
understanding of financial performance. We have not used adjusted profit before tax, as defined above,
as our benchmark since the amortisation of acquired intangible assets and net retirement benefit
interest are recurring items. Materiality is lower than last year due to the reduction in the Group’s profit.
We agreed with the Audit Committee that we would report to it misstatements identified during our audit above £750,000 (2014 – £1 million) as well
as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Going concern
Under the Listing Rules we are required to review the Directors’ statement, set out on page 33, in relation to going concern. We have nothing to
report having performed our review.
As noted in the Directors’ statement, the Directors have concluded that it is appropriate to prepare the Group financial statements using the going
concern basis of accounting. The going concern basis presumes that the Group has adequate resources to remain in operation, and that the
Directors intend it to do so, for at least one year from the date the financial statements were signed. As part of our audit we have concluded that
the Directors’ use of the going concern basis is appropriate.
However, because not all future events or conditions can be predicted, these statements are not a guarantee as to the Group’s ability to continue
as a going concern.
Other required reporting
Consistency of other information
Companies Act 2006 opinion
In our opinion, the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are
prepared is consistent with the financial statements.
ISAs (UK & Ireland) reporting
Under ISAs (UK & Ireland) we are required to report to you if, in our opinion:
• Information in the Annual Report is:
– materially inconsistent with the information in the audited financial statements; or
– apparently materially incorrect based on, or materially inconsistent with, our knowledge of the
We have no exceptions to report arising
from this responsibility.
Group acquired in the course of performing our audit; or
– otherwise misleading.
• the statement given by the Directors on page 80, in accordance with provision C.1.1 of the
UK Corporate Governance Code (‘the Code’), that they consider the Annual Report taken
as a whole to be fair, balanced and understandable and provides the information necessary
for members to assess the Group’s performance, business model and strategy is materially
inconsistent with our knowledge of the Group acquired in the course of performing our audit.
We have no exceptions to report arising
from this responsibility.
• the section of the Annual Report on page 53, as required by provision C.3.8 of the Code,
describing the work of the Audit Committee does not appropriately address matters
communicated by us to the Audit Committee.
We have no exceptions to report arising
from this responsibility.
Tate & Lyle PLC | Annual Report 2015 | 83
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Independent Auditors’ Report to the Members
of Tate & Lyle PLC continued
Other matter
We have reported separately on the Parent
Company financial statements of Tate & Lyle
PLC for the year end 31 March 2015 and on
the information in the Directors’ Remuneration
Report that is described as having been
audited.
John Waters (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
27 May 2015
Notes:
(a) The maintenance and integrity of the Tate & Lyle
PLC website is the responsibility of the Directors;
the work carried out by the auditors does not
involve consideration of these matters and,
accordingly, the auditors accept no responsibility
for any changes that may have occurred to the
financial statements since they were initially
presented on the website.
(b) Legislation in the United Kingdom governing
the preparation and dissemination of financial
statements may differ from legislation in other
jurisdictions.
Adequacy of accounting records and
information and explanations received
Under the Companies Act 2006 we are
required to report to you if, in our opinion, we
have not received all the information and
explanations we require for our audit. We have
no exceptions to report arising from this
responsibility.
Directors’ remuneration
Directors’ Remuneration Report –
Companies Act 2006 opinion
In our opinion, the part of the Directors’
Remuneration Report to be audited has been
properly prepared in accordance with the
Companies Act 2006.
Other Companies Act 2006 reporting
Under the Companies Act 2006 we are
required to report to you if, in our opinion,
certain disclosures of Directors’ remuneration
specified by law are not made. We have no
exceptions to report arising from this
responsibility.
Corporate governance statement
Under the Listing Rules we are required to
review the part of the Corporate Governance
Statement relating to the Parent Company’s
compliance with ten provisions of the UK
Corporate Governance Code. We have
nothing to report having performed our review.
Responsibilities for the financial
statements and the audit
Our responsibilities and those of the
Directors
As explained more fully in the Directors’
Statement of Responsibilities set out on page
80, the Directors are responsible for the
preparation of the Group financial statements
and for being satisfied that they give a true and
fair view.
Our responsibility is to audit and express an
opinion on the Group financial statements in
accordance with applicable law and ISAs (UK
& Ireland). Those standards require us to
comply with the Auditing Practices Board’s
Ethical Standards for Auditors.
This report, including the opinions, has been
prepared for and only for the Company’s
members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act
2006 and for no other purpose. We do not,
in giving these opinions, accept or assume
responsibility for any other purpose or to
any other person to whom this report is
shown or into whose hands it may come
save where expressly agreed by our prior
consent in writing.
What an audit of financial statements
involves
An audit involves obtaining evidence about
the amounts and disclosures in the Group
financial statements sufficient to give
reasonable assurance that the Group financial
statements are free from material
misstatement, whether caused by fraud
or error. This includes an assessment of:
• whether the accounting policies are
appropriate to the Group’s circumstances
and have been consistently applied and
adequately disclosed;
• the reasonableness of significant accounting
estimates made by the Directors; and
• the overall presentation of the Group
financial statements.
We primarily focus our work in these areas
by assessing the Directors’ judgements
against available evidence, forming our own
judgements, and evaluating the disclosures
in the Group financial statements.
We test and examine information, using
sampling and other auditing techniques, to
the extent we consider necessary to provide
a reasonable basis for us to draw conclusions.
We obtain audit evidence through testing
the effectiveness of controls, substantive
procedures or a combination of both.
In addition, we read all the financial and
non-financial information in the Annual Report
to identify material inconsistencies with the
audited financial statements and to identify
any information that is apparently materially
incorrect based on, or materially inconsistent
with, the knowledge acquired by us in the
course of performing the audit. If we become
aware of any apparent material misstatements
or inconsistencies we consider the
implications for our report.
84 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS Consolidated Income Statement
Continuing operations
Sales
Operating profit
Finance income
Finance expense
Share of profit after tax of joint ventures and associates
Profit before tax
Income tax expense
Profit for the year from continuing operations
Profit for the year from discontinued operations
Profit for the year
Profit for the year attributable to:
– owners of the Company
– non-controlling interests
Profit for the year
Earnings per share
Continuing operations:
– basic
– diluted
Continuing and discontinued operations:
– basic
– diluted
Analysis of adjusted profit from continuing operations
Profit before tax
Adjusted for:
Exceptional items
Amortisation of acquired intangible assets
Net retirement benefit interest
Share of tax of joint ventures and associates
Adjusted profit before tax
Adjusted income tax expense
Adjusted profit after tax
The Notes on pages 90 to 148 form part of these financial statements.
Year ended 31 March
Restated*
2014
£m
2015
£m
2 356
33
1
(32)
49
51
(21)
30
–
30
30
–
30
2 754
251
2
(37)
61
277
(32)
245
28
273
273
–
273
pence
pence
6.6p
6.5p
6.6p
6.5p
52.8p
52.1p
58.8p
58.0p
Year ended 31 March
Restated*
2014
£m
277
2015
£m
51
142
9
8
14
224
(48)
176
14
10
8
13
322
(60)
262
Notes
4
4, 5
9
9
16
10
11
12
12
Notes
6
14
9,29
16
10
41
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
Tate & Lyle PLC | Annual Report 2015 | 85
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Consolidated Statement of Comprehensive Income
Profit for the year
Other comprehensive income/(expense)
Items that have been/may be reclassified to profit or loss
Fair value loss on cash flow hedges
Fair value gain on cash flow hedges transferred to profit or loss
Fair value gain on available-for-sale financial assets
Gain/(loss) on currency translation of foreign operations
Fair value (loss)/gain on net investment hedges
Share of other comprehensive expense of joint ventures
Tax income relating to the above items
Items that will not be reclassified to profit or loss
Retirement benefit plans:
– actual return higher/(lower) than interest on plan assets
– net actuarial (loss)/gain on retirement benefit obligations
Tax income/(expense) relating to the above items
Total other comprehensive expense
Total comprehensive income
Analysed by:
– continuing operations
– discontinued operations
Total comprehensive income
Attributable to:
– owners of the Company
– non-controlling interests
Total comprehensive income
The Notes on pages 90 to 148 form part of these financial statements.
Notes
24
24
24,17
24
24
24,16
10
29
29
10
11
Year ended 31 March
Restated*
2014
£m
273
2015
£m
30
(5)
(2)
2
56
(32)
(18)
2
3
161
(186)
20
(5)
(2)
28
28
–
28
28
–
28
(2)
–
–
(104)
50
(25)
–
(81)
(29)
19
(22)
(32)
(113)
160
132
28
160
160
–
160
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
86 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS
Consolidated Statement of Financial Position
ASSETS
Non-current assets
Goodwill and other intangible assets
Property, plant and equipment
Investments in joint ventures
Investments in associates
Available-for-sale financial assets
Derivative financial instruments
Deferred tax assets
Trade and other receivables
Retirement benefit surplus
Current assets
Inventories
Trade and other receivables
Current tax assets
Available-for-sale financial assets
Derivative financial instruments
Other financial assets
Cash and cash equivalents
Assets held for sale
TOTAL ASSETS
EQUITY
Capital and reserves
Share capital
Share premium
Capital redemption reserve
Other reserves
Retained earnings
Equity attributable to owners of the Company
Non-controlling interests
TOTAL EQUITY
LIABILITIES
Non-current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Deferred tax liabilities
Retirement benefit deficits
Provisions for other liabilities and charges
Current liabilities
Trade and other payables
Current tax liabilities
Borrowings and bank overdrafts
Derivative financial instruments
Provisions for other liabilities and charges
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Notes
14
15
16
16
17
19
28
22
29
21
22
17
19
17
32
17
23
23
24
26
27
19
28
29
30
26
27
19
30
At 31 March
Restated*
2014
£m
At 1 April
Restated*
2013
£m
307
732
308
4
28
23
4
–
–
1 406
372
265
1
–
78
–
346
1 062
–
1 062
2 468
117
406
8
58
460
1 049
1
1 050
2
437
2
42
220
9
712
283
38
323
49
13
706
1 418
2 468
270
812
377
4
27
54
8
–
12
1 564
438
321
3
–
84
–
305
1 151
1
1 152
2 716
117
406
8
139
366
1 036
–
1 036
3
816
21
21
277
15
1 153
344
52
58
55
18
527
1 680
2 716
2015
£m
340
750
323
4
15
30
4
2
25
1 493
363
290
2
16
62
2
195
930
–
930
2 423
117
406
8
61
343
935
1
936
13
463
15
32
252
8
783
316
45
305
25
13
704
1 487
2 423
The Notes on pages 90 to 148 form part of these financial statements.
The consolidated financial statements on pages 85 to 148 were approved by the Board of Directors on 27 May 2015 and signed on its behalf by:
Javed Ahmed, Nick Hampton Directors
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
Tate & Lyle PLC | Annual Report 2015 | 87
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Consolidated Statement of Cash Flows
Cash flows from operating activities
Profit before tax from continuing operations
Adjustments for:
– depreciation of property, plant and equipment
– amortisation of intangible assets
– share-based payments
– exceptional items (non-cash)
– other non-cash items
– finance income
– finance expense
– share of profit after tax of joint ventures and associates
Change in working capital
Net retirement benefit obligations
Cash generated from continuing operations
Interest paid
Income tax paid
Net cash generated from operating activities
Cash flows from investing activities
Purchase of intangible assets
Purchase of property, plant and equipment
Proceeds on disposal of property, plant and equipment
Acquisitions of businesses, net of cash acquired
Disposal of businesses, net of cash disposed
Purchase of available-for-sale financial assets
Disposal of available-for-sale financial assets
Interest received
Dividends received from joint ventures and associates
Net cash used in investing activities
Cash flows from financing activities
Purchase of own shares
Cash inflow from additional borrowings
Cash outflow from repayment of borrowings
Repayment of capital element of finance leases
Dividends paid to owners of the Company
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents
Balance at beginning of year
Net (decrease)/increase in cash and cash equivalents
Currency translation differences
Balance at end of year
Year ended 31 March
Restated*
2014
£m
2015
£m
Notes
51
85
24
–
113
–
(1)
32
(49)
8
(47)
216
(30)
(7)
179
(34)
(121)
–
(26)
–
(2)
2
1
16
(164)
(12)
278
(319)
(2)
(130)
(185)
(170)
346
(170)
19
195
277
83
20
8
–
(6)
(2)
37
(61)
15
(43)
328
(33)
(9)
286
(45)
(102)
33
(15)
3
(4)
2
2
105
(21)
(29)
8
(50)
(2)
(124)
(197)
68
305
68
(27)
346
15
14
25
9
9
31
36
36
17
17
16
23
13
33
33
32
A reconciliation of the movement in cash and cash equivalents to the movement in net debt is presented in Note 33.
The Notes on pages 90 to 148 form part of these financial statements.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
88 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS
Consolidated Statement of Changes in Equity
At 1 April 2013*
Year ended 31 March 2014*
Profit for the year
Other comprehensive expense
Total comprehensive (expense)/income
Share-based payments, net of tax
Purchase of own shares (Note 23)
Non-controlling interests in subsidiaries acquired
Initial recognition of put option on non-controlling
interest (Note 36)
Dividends paid (Note 13)
At 31 March 2014*
Year ended 31 March 2015
Profit for the year
Other comprehensive income/(expense)
Total comprehensive income
Share-based payments, net of tax
Purchase of own shares (Note 23)
Dividends paid (Note 13)
At 31 March 2015
Share capital
and share
premium
(Note 23)
£m
523
Capital
redemption
reserve
£m
8
Other
reserves
(Note 24)
£m
139
Attributable to
the owners
of the
Company
£m
1 036
Retained
earnings
£m
366
Non-
controlling
interests
£m
–
–
–
–
–
–
–
–
–
523
–
–
–
–
–
–
523
–
–
–
–
–
–
–
–
8
–
–
–
–
–
–
8
–
(81)
(81)
–
–
–
–
–
58
–
3
3
–
–
–
61
273
(32)
241
8
(29)
–
(2)
(124)
460
30
(5)
25
–
(12)
(130)
343
273
(113)
160
8
(29)
–
(2)
(124)
1 049
30
(2)
28
–
(12)
(130)
935
–
–
–
–
–
1
–
–
1
–
–
–
–
–
–
1
Total
equity
£m
1 036
273
(113)
160
8
(29)
1
(2)
(124)
1 050
30
(2)
28
–
(12)
(130)
936
* The adoption of IFRS 11 ‘Joint Arrangements’ did not impact on the opening or closing equity balance for the 2014 financial year.
Other comprehensive income/(expense) recognised in retained earnings relates wholly to retirement benefit plans. An analysis of other
comprehensive income/(expense) recognised in other reserves by component of equity is presented in Note 24.
At 31 March 2015, retained earnings included a deduction of £37 million (2014 – £37 million) for the cumulative cost of own shares held in relation
to share-based incentive plans. Further information on own shares is presented in Note 23.
Dividends on ordinary shares
Per ordinary share:
– interim paid
– final proposed
The Notes on pages 90 to 148 form part of these financial statements.
Year ended 31 March
2015
pence
8.2p
19.8p
28.0p
2014
pence
7.8p
19.8p
27.6p
Tate & Lyle PLC | Annual Report 2015 | 89
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Notes to the Consolidated Financial Statements
1 Basis of preparation
Description of business
Tate & Lyle PLC (the Company) is a public
limited company incorporated and domiciled
in the United Kingdom. The Company’s
ordinary shares are listed on the London
Stock Exchange.
The Company, and its subsidiaries, joint
ventures and associates (together ‘the Group’)
provides ingredients and solutions to the food,
beverage and other industries. The Group
operates from more than 30 production
facilities around the world.
The Group’s continuing operations comprise
two operating segments: Speciality Food
Ingredients and Bulk Ingredients. Segment
information is presented in Note 4.
Accounting period
The Group’s annual financial statements
are drawn up to 31 March. These financial
statements cover the year ended
31 March 2015 with comparative amounts
for the year ended 31 March 2014. The Group
has also presented a statement of financial
position as at 1 April 2013 following the
adoption of IFRS 11 ‘Joint Arrangements’.
Basis of accounting
The consolidated financial statements on
pages 85 to 148 have been prepared on the
going concern basis in accordance with
International Financial Reporting Standards
(IFRS) and related interpretations as adopted
for use in the European Union and those parts
of the Companies Act 2006 that are applicable
to companies reporting under IFRS. The
consolidated financial statements have been
prepared under the historical cost convention,
modified in respect of the revaluation to fair
value of available-for-sale financial assets,
derivative financial instruments, assets
classified as held for sale and assets held
by defined benefit pension plans.
The Group’s principal accounting policies are
set out in Note 2.
Company financial statements
The Company has not adopted IFRS and
prepares its separate financial statements
in accordance with applicable law and UK
Accounting Standards (UK GAAP). The
Company’s separate financial statements
are set out on pages 150 to 155.
Going concern
For the reasons set out on page 33, the
Directors have adopted the going concern
basis in preparing the Company’s and the
Group’s financial statements.
Discontinued operations
In the Group’s financial statements, the
results, assets and liabilities and cash flows
of discontinued operations are presented
separately from those of continuing
operations. An operation is classified as
discontinued if it is a component of the Group
that: (i) has been disposed of, or meets the
90 | Tate & Lyle PLC | Annual Report 2015
criteria to be classified as held for sale; and (ii)
represents a separate major line of business
or geographic area of operations or will be
disposed of as part of a single co-ordinated
plan to dispose of a separate major line of
business or geographic area of operations.
As the Eaststarch disposal transaction was
not highly probable at the balance sheet date,
the assets are not classified as held for sale.
Continuing operations therefore include the
results of Eaststarch.
Fair value measurement
Fair value is the price that would be received
from the sale of an asset, or paid to transfer
a liability in an orderly transaction between
market participants at the measurement date,
regardless of whether that price is directly
observable or estimated using another
valuation technique. In estimating the fair value
of an asset or a liability, the Group takes into
account the characteristics of the asset or
liability if market participants would take those
characteristics into account when pricing the
asset or liability at the measurement date.
Fair value measurements are categorised into
Level 1, 2 or 3 based on the degree to which
the inputs to the fair value measurements are
observable and the significance of the inputs
to the fair value measurement in its entirety,
as follows:
• Level 1 inputs are quoted prices
(unadjusted) in active markets for identical
assets or liabilities that the entity can
assess at the measurement date
• Level 2 inputs are inputs, other than
quoted prices included in Level 1, that
are observable for the asset or liability
either directly or indirectly
• Level 3 inputs are unobservable inputs
for the asset or liability.
Use of adjusted measures
Tate & Lyle presents adjusted performance
measures including adjusted sales, operating
profit, profit before tax and earnings per share
that are used for internal performance analysis
and incentive compensation arrangements for
employees and are presented because they
provide investors with valuable additional
information about the performance of the
business. For the periods presented, adjusted
performance measures exclude, where
relevant, exceptional items, the amortisation
of acquired intangible assets, net retirement
benefit interest and tax on those adjustments.
Adjusted measures are also presented using
proportionate consolidation reflecting the
Group’s management of its joint ventures on
an integrated basis with its subsidiaries.
Adjusted performance measures reported by
the Group are not defined terms under IFRS
and may therefore not be comparable with
similarly-titled measures reported by other
companies. The Directors do not regard these
measures as a substitute for, or superior to,
the equivalent measures presented in
accordance with IFRS.
Reconciliations of the adjusted performance
measures to the most directly comparable
measures presented in accordance with IFRS
are presented in Note 41.
Accounting standards adopted during
the year
In the current year, the Group has adopted
a number of new or revised accounting
standards that are outlined below. With the
exception of the changes arising from the
adoption of IFRS 11 ‘Joint Arrangements’,
and IFRS 12 ‘Disclosure of Interests in Other
Entities’ the Group’s principal accounting
policies are unchanged compared with
the year ended 31 March 2014.
IFRS 10 Consolidated Financial
Statements
IFRS 10 replaces the parts of IAS 27
‘Consolidated and Separate Financial
Statements’ that deal with consolidated
financial statements and SIC-12 ‘Consolidation
– Special Purpose Entities’. IFRS 10
establishes a single control model for
consolidation that applies to all entities,
including special purpose entities.
IFRS 11 Joint Arrangements
With effect from 1 April 2014, the Group
adopted IFRS 11 ‘Joint Arrangements’ which
has significantly changed the basis of
accounting for its interests in joint ventures
while not affecting the Group’s earnings or
net assets.
Previously, the Group had accounted for its
interests in joint ventures on a proportionate
consolidation basis, whereby the Group’s
share of the income and expenses, assets
and liabilities and cash flows of joint ventures
are combined on a line-by-line basis with
those of Tate & Lyle PLC and its subsidiaries.
IFRS 11 prohibits the use of proportionate
consolidation and requires that joint ventures
are accounted for using the equity method
of accounting. Under the equity method of
accounting, the Group’s share of the after tax
profits and losses of joint ventures is shown on
one line of the consolidated income statement,
its share of their net assets is shown on one
line of the consolidated statement of financial
position and the consolidated statement of
cash flows reflects cash flows between the
Group and the joint ventures within cash flows
from investing activities.
Comparative amounts for 2014 have been
restated on a consistent basis. An explanation
and analysis of the effect of IFRS 11 on the
Group’s financial information is presented in
Note 42. In accordance with IAS 1, the Group
has also presented a third statement of
financial position as at 1 April 2013.
IAS 27 (Revised 2011) Separate Financial
Statements
IAS 27 (Revised 2011) now only deals with the
requirements to prepare separate financial
statements because the requirements to
prepare consolidated financial statements are
now contained in IFRS 10.
FINANCIAL STATEMENTS 1 Basis of preparation
continued
IAS 28 (Revised 2011) Investments in
Associates and Joint Ventures
IAS 28 was revised as a consequence of the
issuance of IFRS 11 in order to set out the
requirements for the application of the equity
method when accounting for joint ventures.
IFRS 12 Disclosure of Interests in Other
Entities
IFRS 12 is a new standard that prescribes
disclosure requirements for all forms of
interests in other entities, including joint
ventures and associates.
• Interest in subsidiaries
IFRS 12 requires disclosures for each of
an entity’s subsidiaries that have material
non-controlling interests. As of 31 March
2015, the Group did not have any subsidiaries
with a material non-controlling interest.
• Interest in Joint Ventures and Associates
IFRS 12 has significantly changed the way
that the Group presents and discloses
information about its interests in joint
ventures and associates. The disclosures for
individual joint ventures and associates are
more prescriptive than previously required by
IAS 31 ‘Interests in Joint Ventures’, and IAS
28 ‘Investments in Associates’. As presented
in Note 16, for those joint ventures which are
material to the Group, summarised financial
information has been provided. The
information disclosed reflects the amounts
required to be presented in the financial
statements of the joint ventures, together
with the Group’s share of those amounts.
Comparative amounts for 2014 have also
been provided on a consistent basis.
Other standards
Amendment to IAS 32 Financial Instruments:
Presentation on offsetting financial assets and
financial liabilities. This amendment clarifies that
the right of set-off must not be contingent on a
future event. It must also be legally enforceable
for all counterparties in the normal course of
business, as well as in the event of default,
insolvency or bankruptcy. The amendment also
considers settlement mechanisms.
Amendments to IAS 36 Impairment of Assets
on the recoverable amount disclosures for
non-financial assets. This amendment
removed certain disclosures of the recoverable
amount of CGUs which had been included in
IAS 36 by the issue of IFRS 13.
Amendment to IAS 39 Financial Instruments:
Recognition and measurement on the novation
of derivatives and the continuation of hedge
accounting. This amendment considers
legislative changes to ‘over-the-counter’
derivatives and the establishment of central
counterparties. Under IAS 39 novation of
derivatives to central counterparties would
result in discontinuance of hedge accounting.
The amendment provides relief from
discontinuing hedge accounting when
novation of a hedging instrument meets
specified criteria.
2 Principal accounting policies
Basis of consolidation
(a) Subsidiaries
Subsidiaries are all entities (including
structured entities) over which the Group has
control. The Group controls an entity when the
Group is exposed to, or has rights to, variable
returns from its involvement with the entity and
has the ability to affect those returns through
its power over the entity. Subsidiaries are fully
consolidated from the date on which the Group
obtains control. They are deconsolidated from
the date that control ceases.
A non-controlling interest in a subsidiary
represents the share of the net assets of the
subsidiary that is attributable to the equity
interest in the subsidiary that is not owned
by the Group.
The Group’s income and expenses, assets
and liabilities and cash flows include those of
each of its subsidiaries from the date on which
the Company obtains control until such time
as control is lost. Inter-company transactions,
balances and unrealised gains on transactions
between group companies are eliminated.
Unrealised losses are also eliminated. When
necessary, amounts reported by subsidiaries
have been adjusted to conform with the
Group’s accounting policies.
(b) Joint ventures
A joint venture is a contractual arrangement
under which the Group and other parties
undertake an activity that is subject to joint
control, whereby strategic financial and
operating policy decisions require unanimous
consent of the Group and the other parties.
The Group’s interests in joint ventures are
accounted for under the equity method,
whereby the Group’s share of the profit or loss,
other comprehensive income and net assets
are shown on one line of the relevant primary
financial statements.
Losses of a joint venture in excess of the
Group’s interest in the entity are not
recognised, except to the extent that the
Group has incurred obligations or made
payments on behalf of the joint venture.
Unrealised profits or losses on transactions
between the Group and its joint ventures are
normally eliminated to the extent of the
Group’s interest in the joint venture. Losses
are, however, recognised in full where they
represent a reduction in the net realisable
value of a current asset or an impairment loss.
(c) Associates
An associate is an entity over which the Group
has significant influence. Significant influence
is the power to participate in financial and
operating policy decisions but not to control
or jointly control them. Significant influence
generally exists where the Group holds more
than 20% and less than 50% of the
shareholders’ voting rights. Associates are
accounted for under the equity method,
whereby the Group’s share of the profit or loss,
other comprehensive income and net assets
are shown on one line of the relevant primary
financial statements.
Losses of an associate in excess of the
Group’s interest in the entity are not
recognised, except to the extent that the
Group has incurred obligations or made
payments on behalf of the associate.
Unrealised profits or losses on transactions
between the Group and its associates are
normally eliminated to the extent of the
Group’s interest in the associate. Losses
are, however, recognised in full where they
represent a reduction in the net realisable
value of a current asset or an impairment loss.
Business combinations
A business combination is a transaction or
other event in which the Group obtains control
over a business.
Business combinations are accounted for
using the acquisition method.
Goodwill arising in a business combination
represents the excess of the sum of the
consideration transferred, the amount of
any non-controlling interest in the acquired
business and, in a business combination
achieved in stages, the fair value at the
acquisition date of the Group’s previously
held equity interest, over the net total of the
identifiable assets and liabilities of the acquired
business at the acquisition date. Any shortfall
is recognised immediately as a gain in the
income statement.
Consideration transferred represents the
sum of the fair values at the acquisition date
of the assets given, liabilities incurred or
assumed and equity instruments issued by
the Group in exchange for control over the
acquired business.
Acquisition-related costs are charged to the
income statement in the period in which they
are incurred.
Identifiable assets and liabilities of the acquired
business are measured at their fair value at the
acquisition date, except for certain items that
are measured in accordance with the relevant
Group accounting policy, including retirement
benefit obligations and deferred tax assets
and liabilities.
Any non-controlling interest in the acquired
business is measured either at fair value or
at the non-controlling interest’s proportionate
share of the identifiable assets and liabilities
of the business.
Tate & Lyle PLC | Annual Report 2015 | 91
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Notes to the Consolidated Financial Statements
continued
2 Principal accounting policies
continued
Put options issued by the Group over
non-controlling interests are initially recognised
as a liability measured at fair value with a
corresponding charge directly to equity.
Subsequently, the liability is measured at
amortised cost using the effective interest
method and changes in its carrying amount
are recognised in the income statement.
Changes in the Group’s ownership interest in a
subsidiary that do not result in a loss of control
are accounted for within equity. Any gain or
loss on loss of control is recognised in the
income statement.
Foreign currency translation
At entity level, transactions in foreign
currencies are translated into the entity’s
functional currency at the exchange rate ruling
at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies
are translated at the exchange rate ruling at
the period-end date. Currency translation
differences arising at entity level are
recognised in the income statement.
The consolidated financial statements are
presented in pounds sterling which is the
Company’s functional currency.
On consolidation, the results of foreign
operations are translated into pounds sterling
at the average rate of exchange for the period
and their assets and liabilities are translated
into pounds sterling at the exchange rate ruling
at the period-end date. Currency translation
differences arising on consolidation are
recognised in other comprehensive income
and taken to the currency translation reserve.
Goodwill and fair value adjustments arising
on the acquisition of a foreign operation are
treated as assets and liabilities of the foreign
operation and translated accordingly.
In the event that a foreign operation is sold,
the gain or loss on disposal recognised in the
income statement is determined after taking
into account the cumulative currency translation
differences arising on consolidation of the
operation subsequent to the adoption of IFRS.
In the cash flow statement, the cash flows of
foreign operations are translated into pounds
sterling at the average exchange rate for
the period.
Revenue recognition
(a) Sales of goods and services
Sales comprise the amount receivable in
the ordinary course of business, net of value
added and sales taxes, for goods and services
provided. It comprises the fair value of the
consideration received or receivable for the
sale of goods and services. Sales are
recognised at the point or points at which
the Group has performed its obligations in
connection with the contractual terms of the
sales agreement, primarily at the point of
delivering to the customer, and in exchange
obtains the right to consideration.
92 | Tate & Lyle PLC | Annual Report 2015
(b) Interest income
Interest income is recognised on a time-
proportion basis using the effective interest
rate method.
(c) Dividend income
Dividend income is recognised when the right
to receive payment is established.
Exceptional items
Exceptional items comprise items of income
and expense, including tax items, that are
material in amount and unlikely to recur and
which merit separate disclosure in order to
provide an understanding of the Group’s
underlying financial performance. Examples of
events giving rise to the disclosure of material
items of income and expense as exceptional
items include, but are not limited to,
impairment events, significant business
transformation activities, disposals of
operations or significant individual assets,
litigation claims by or against the Group and
the restructuring of components of the
Group’s operations.
Borrowing costs
Borrowing costs directly arising from the
purchase, construction or production of an
asset are capitalised as part of the cost of
that asset.
Goodwill
Goodwill arising in a business combination
is recognised as an intangible asset and is
allocated to the cash-generating unit (CGU)
or group of CGUs that is expected to benefit
from the synergies of the business
combination.
Goodwill is not amortised but is tested for
impairment annually and whenever there are
events or changes in circumstances that
indicate that its carrying amount may not
be recoverable.
Goodwill is carried at cost less any recognised
impairment losses.
Other intangible assets
Other intangible assets are stated at cost less
accumulated amortisation and any recognised
impairment losses. Other than goodwill, all
intangible assets recognised by the Group
have finite useful lives.
(a) Acquired in business combinations
An intangible resource acquired in a business
combination is recognised as an intangible
asset if it is separable from the acquired
business or arises from contractual or legal
rights. Acquired intangible assets, for example,
patents and customer relationships, are
amortised on a straight-line basis so as to
charge their cost, which represents their fair
value at the date of acquisition, over the
periods of their expected benefit to the Group,
which are in the range three to 15 years.
(b) Other intangibles
Other intangible assets mainly comprise
certain product development expenditure,
marketing-related intangibles, computer
software costs and capitalised costs relating
to the common global IS/IT system.
Costs incurred on the development,
design and testing of new or improved
products are capitalised only when the
technical and commercial feasibility of the
product has been proven and prior to the
product going into full production. Research
and other development expenditures are
charged to the income statement in the
period in which they are incurred.
Other intangibles include marketing-related
intangibles relating to several key customers.
Other intangible assets are amortised on a
straight-line basis so as to charge their cost
over the periods of their expected benefit to
the Group, which are in the range of three to
10 years.
Capitalised costs in respect of the global IS/IT
system are being amortised over seven years.
Property, plant and equipment
Land and buildings mainly comprise
manufacturing sites and administrative facilities.
Plant and machinery mainly comprises
equipment used in the manufacturing and
operating process. Assets under the course
of construction comprise property, plant and
equipment which is in the process of being
completed and not ready for use.
Property, plant and equipment is stated at
historical cost less accumulated depreciation
and impairment. Historical cost includes
expenditure that is directly attributable to the
acquisition of the items. Subsequent costs
are included in the asset’s carrying amount
or recognised as a separate asset, as
appropriate, only when it is probable that
future economic benefits associated with the
expenditure will flow to the Group and the cost
of the item can be measured reliably. All
repairs and maintenance expenditures are
charged to the income statement during the
period in which they are incurred.
Depreciation is calculated using the straight-
line method to allocate the cost of each asset
to its residual value over its useful economic
life as follows:
Freehold land
Freehold buildings
Leasehold property
Bulk liquid storage tanks
Plant and machinery
No depreciation
20 to 50 years
Period of the lease
12 to 20 years
3 to 28 years
Residual values and useful lives are reviewed
at each period-end date and adjusted if
appropriate. An asset’s carrying amount is
written down immediately to its recoverable
amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined
by comparing the disposal proceeds with
the carrying amount and are included in the
income statement.
FINANCIAL STATEMENTS 2 Principal accounting policies
continued
Leased assets
Leases of property, plant and equipment
where the Group assumes substantially all the
risks and rewards of ownership are classified
as finance leases. Assets held under finance
leases are capitalised at the lower of the fair
value of the leased asset and the present
value of the minimum lease payments. The
corresponding leasing commitments, net
of finance charges, are included in liabilities.
Leasing payments are analysed between
capital and interest components so that the
interest element is charged to the income
statement over the period of the lease at a
constant periodic rate of interest on the
remaining balance of the liability outstanding.
Depreciation on assets held under finance
leases is charged to the income statement,
and depreciated over the shorter of the lease
term and its useful life. All other leases are
treated as operating leases with annual rentals
charged to the income statement, net of any
incentives granted to the lessee, over the term
of the lease with incentives recognised over the
period of the lease at a constant periodic rate.
Impairment of non-financial assets
Goodwill, other intangible assets and property,
plant and equipment are tested for impairment
whenever events or circumstances indicate
that their carrying amounts may not be
recoverable. Additionally, goodwill and
intangible assets not subject to amortisation
are subject to an annual impairment test.
An asset is impaired to the extent that its
carrying amount exceeds its recoverable
amount. An asset’s recoverable amount
represents the higher of the asset’s value in
use and its fair value less costs of disposal.
An asset’s value in use represents the present
value of the future cash flows expected to
be derived from continued use of the asset.
Fair value less costs of disposal is the
amount obtainable from the sale of the asset
in an arm’s length transaction between
knowledgeable, willing parties, less the costs
of disposal.
Where it is not possible to estimate the
recoverable amount of an individual asset,
the recoverable amount is determined for
the CGU to which the asset belongs. An
asset’s CGU is the smallest group of assets
that includes that asset and generates cash
inflows that are largely independent of the cash
inflows from other assets or groups of assets.
Goodwill does not generate cash inflows
independently of other assets and is, therefore,
tested for impairment at the level of the CGU or
group of CGUs to which it is allocated.
Value in use is based on estimates of pre-tax
cash flows discounted at a pre-tax discount
rate that reflects the risks specific to the CGU
to which the asset belongs.
Where necessary, impairment of non-financial
assets other than goodwill is recognised before
goodwill is tested for impairment. When
goodwill is tested for impairment and the
carrying amount of the CGU or group of CGUs
to which it is allocated exceeds its recoverable
amount, the impairment is allocated first to
reduce the carrying amount of the goodwill and
then pro-rata to the other non-financial assets
belonging to the CGU or group of CGUs on
the basis of their respective carrying amounts.
Impairment losses are recognised in the
income statement. Impairment losses
recognised in previous periods for assets other
than goodwill are reversed if there has been
a change in the estimates used to determine
the asset’s recoverable amount, but only to the
extent that the carrying amount of the asset
does not exceed its carrying amount had
no impairment been recognised in previous
periods. Impairment losses recognised in
respect of goodwill cannot be reversed.
Inventories
Inventories are stated at the lower of cost and
net realisable value with the exception of
certain items of merchandisable agricultural
commodities in the US which are stated at
market value, in line with regional industry
accounting practices.
Cost comprises direct materials and, where
applicable, direct labour costs and those
overheads that have been incurred in bringing
the inventories to their present location and
condition. Cost is calculated using the ‘first in/
first out’ or ‘weighted average’ cost methods,
appropriate to the materials and production
processes involved. Net realisable value
represents the estimated selling price less all
estimated costs to completion and costs to be
incurred in marketing, selling and distribution.
Provisions are made for any slow moving,
obsolete or defective inventories.
Financial instruments
(a) Trade receivables
Trade receivables are recognised initially
at fair value and subsequently measured at
amortised cost using the effective interest
method, less provision for impairment. A
provision for impairment of trade receivables
is established when there is objective evidence
that the Group will not be able to collect all
amounts due according to the original terms of
the receivables. Significant financial difficulties
of the debtor, probability that the debtor will
enter bankruptcy or financial reorganisation,
and default or delinquency in payments are
considered indicators that the trade receivable
is impaired. The amount of the provision is
the difference between the asset’s carrying
amount and the present value of estimated
future cash flows, discounted at the original
effective interest rate. The carrying amount
of the asset is reduced through the use of an
allowance account, and the amount of the loss
is recognised in the income statement within
operating expenses. When a trade receivable
is uncollectable, it is written off against the
allowance account for trade receivables.
Subsequent recoveries of amounts previously
written off are credited against operating
expenses in the income statement.
(b) Trade payables
Non-current and current trade payables
are recognised initially at fair value and
subsequently measured at amortised cost
using the effective interest rate method.
(c) Cash and cash equivalents
Cash and cash equivalents include cash in
hand, deposits held at call with banks and
other short-term highly liquid investments with
original maturities of three months or less and,
for the purposes of the cash flow statement
only, bank overdrafts where the legal right of
offset exists.
(d) Available-for-sale financial assets
and other financial assets
Equity instruments held by the Group and
designated as available-for-sale are carried
at fair value, with movements in fair value
recognised in other comprehensive income.
Where fair value cannot be reliably measured,
the assets are approximated at cost.
Cumulative fair value gains or losses on an
asset are recycled through the income
statement when the asset is disposed or
impaired. A significant or prolonged decline
in the fair value of a security below its cost is
considered as an indicator that the securities
are impaired. Impairments are recognised
in the income statement. Other financial assets
represent cash held in an escrow account and
are carried at fair value.
(e) Borrowings
Borrowings are initially measured at fair value,
net of transaction costs incurred. Borrowings
are subsequently measured at amortised cost
using the effective interest rate method,
whereby any difference between the proceeds
(net of transaction costs) and the initial fair
value is recognised in the income statement
over the period of the borrowings. As explained
under ‘Hedge accounting’ (see following page),
the carrying amount of a borrowing may be
subject to adjustment where it is a hedged
liability in a fair value hedge.
Borrowings are classified as current liabilities
unless the Group has an unconditional right
to defer settlement of the liability for at least
12 months after period-end date.
Dividends on preference shares are recognised
in the income statement as interest expense.
(f) Derivative financial instruments
The Group uses derivative financial instruments
to reduce its exposure to commodity price,
currency exchange rate and interest rate
movements. The Group does not hold or issue
derivatives for speculative purposes.
All derivative financial instruments held by the
Group are recognised as assets or liabilities
measured at their fair values at the period-end
date. As explained under ‘Hedge accounting’
below, unless and to the extent that a
derivative is in a designated and effective cash
flow or net investment hedging relationship,
Tate & Lyle PLC | Annual Report 2015 | 93
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Notes to the Consolidated Financial Statements
continued
2 Principal accounting policies
continued
fair value gains and losses on derivatives are
recognised in the income statement.
statement. If a hedged forecast transaction is
no longer expected to occur, the cumulative
fair value gain or loss is immediately transferred
to the income statement.
Derivative financial instruments that are not
in a designated hedging relationship are
classified as held for trading.
(g) Embedded derivatives
Where an embedded derivative is not closely
related to the host contract and where the
host contract itself is not already recognised
at fair value, movements in the fair value of the
embedded derivative are separated from the
associated transaction and, except where the
embedded derivative is designated as a cash
flow hedging instrument, recognised in the
income statement.
(h) Offsetting financial instruments
Financial assets and financial liabilities are
offset and the net amount presented in the
statement of financial position where there
is a legally enforceable right to offset the
recognised amounts and there is an intention
to settle on a net basis or realise the asset and
settle the liability simultaneously.
Hedge accounting
For a hedging relationship to qualify for
hedge accounting, it must be documented
at inception together with the Group’s risk
management objective and strategy for
initiating the hedge and it must both be
expected to be highly effective in offsetting the
changes in cash flows or fair value attributed
to the hedged risk and actually be highly
effective in doing so.
(a) Cash flow hedges
Hedging relationships are classified as cash
flow hedges where the hedging instrument
hedges exposure to variability in cash flows
that are attributable either to a particular risk
associated with a recognised asset or liability
(such as interest payments on variable rate
debt), a highly probable forecast transaction
(such as commodity purchases) or the foreign
currency risk in a firm commitment (such as
the purchase of an item of equipment).
Where a hedging relationship is classified as a
cash flow hedge, to the extent that the hedge
is effective, changes in the fair value of the
hedging instrument are recognised in other
comprehensive income rather than in the
income statement. When the hedged item
affects the income statement, the cumulative
fair value gain or loss recognised in other
comprehensive income is transferred to the
income statement. When a hedged firm
commitment results in the recognition of a
non-current asset, the initial carrying amount
of the asset is adjusted for the cumulative fair
value gain or loss.
If the hedging instrument expires or is sold, or
if the hedging relationship no longer meets the
conditions for hedge accounting, the cumulative
fair value gain or loss remains in equity until the
forecast transaction is recognised in the income
94 | Tate & Lyle PLC | Annual Report 2015
(b) Net investment hedges
A net investment hedge is the hedge of the
currency exposure on the retranslation of the
Group’s net investment in a foreign operation.
Net investment hedges are accounted for
similarly to cash flow hedges. Changes in the
fair value of the hedging instrument are, to the
extent that the hedge is effective, recognised
in other comprehensive income.
In the event that the foreign operation is
disposed of, the cumulative fair value gain or
loss recognised in other comprehensive
income is transferred to the income statement
where it is included in the gain or loss on
disposal of the foreign operation.
(c) Fair value hedges
Hedging relationships are classified as fair
value hedges where the hedging instrument
hedges the exposure to changes in the fair
value of a recognised asset or liability that is
attributable to a particular risk (such as the fair
value of fixed rate debt).
Where the hedging relationship is classified as
a fair value hedge, the carrying amount of the
hedged asset or liability is adjusted by the
change in its fair value attributable to the hedged
risk and the resulting gain or loss is recognised
in the income statement where, to the extent
that the hedge is effective, it offsets the fair
value gain or loss on the hedging instrument.
Provisions
A provision is a liability of uncertain timing or
amount that is recognised when the Group
has a present obligation (legal or constructive)
as a result of a past event, it is more likely than
not that a payment will be required to settle the
obligation and the amount can be estimated
reliably.
Where the effect is material, the expected
future payments are discounted using a
pre-tax discount rate that reflects current
market assessments of the time value of
money and, where appropriate, the risks
specific to the liability. The unwinding of any
discount is recognised in the income statement
within finance expense.
Provision is made for restructuring costs
when a detailed formal plan for the
restructuring has been determined and
the plan has been communicated to those
affected by it. Gains from the expected
disposal of assets are not taken into account
in measuring restructuring provisions.
Provisions are not recognised for future
operating losses.
Provisions are recognised for onerous
contracts to the extent that the benefits
expected to be derived from a contract are
lower than the unavoidable cost to the Group
of meeting its obligations under the contract.
Income taxes
Current tax is the amount of tax payable or
recoverable in respect of the taxable profit or
loss for the period. Taxable profit differs from
accounting profit because it excludes income
and expenses that are recognised in the
period for accounting purposes but are either
not taxable or not deductible for tax purposes
or are taxable or deductible in earlier or
subsequent periods. Current tax is calculated
using tax rates that have been enacted or
substantively enacted at the period-end date.
Deferred tax is tax payable or recoverable on
temporary differences between the carrying
amount of an asset or liability in the financial
statements and its tax base used in the
computation of taxable profit. Deferred tax
is accounted for using the liability method,
whereby deferred tax liabilities are generally
recognised for all taxable temporary
differences and deferred tax assets are
recognised to the extent that it is probable
that taxable profits will be available in the
foreseeable future against which deductible
temporary differences can be utilised.
Deferred tax assets and liabilities are not
recognised if the temporary differences arise
from the initial recognition of goodwill or from
the initial recognition of other assets and
liabilities in a transaction other than a business
combination that affects neither accounting
profit nor taxable profit.
Deferred tax liabilities are recognised for
taxable temporary differences arising on
investments in foreign subsidiaries and
associates, and interests in joint ventures,
except where the Group is able to control
the reversal of the temporary difference and
it is probable that it will not reverse in the
foreseeable future.
Deferred tax is calculated using the enacted or
substantively enacted rates that are expected
to apply when the asset is recovered or the
liability is settled.
Current tax assets and liabilities are offset
when there is a legally enforceable right to set
off the amounts and management intends to
settle on a net basis. Deferred tax assets and
liabilities are offset when they relate to income
taxes levied by the same taxation authority
and the Group intends to settle its current tax
assets and liabilities on a net basis.
Current and deferred tax is recognised in
the income statement unless it relates to
an item that is recognised in the same or a
different period outside the income statement,
in which case it too is recognised outside the
income statement, either in other
comprehensive income or directly in equity.
FINANCIAL STATEMENTS 2 Principal accounting policies
continued
Retirement benefits
As described in Note 29, the Group operates
pension plans in most of the countries in which
it operates. Defined benefit pension plans are
principally in the UK and the US and, until
December 2013, were also in the Netherlands,
and the Group operates a number of defined
contribution pension plans. The Group also
operates defined benefit retirement medical
plans in the US.
(a) Defined benefit plans
A valuation of each of the defined benefit plans
for accounting purposes is carried out
annually at 31 March by independent qualified
actuaries. Benefit obligations are measured
using the projected unit credit method and
are discounted using the market yields on high
quality corporate bonds denominated in the
same currency as, and of similar duration to,
the benefit obligations. Plan assets are
measured at their fair value at the period-end
date. Where a plan holds a qualifying
insurance policy, the fair value of the policy is
deemed to be equivalent to the present value
of the related benefit obligations. A deficit or
surplus is recognised on each plan which
represents the difference between the present
value of the benefit obligation and the fair value
of the plan assets. Where a plan is in surplus,
the surplus recognised is limited to the present
value of any amounts that the Group expects
to recover by way of refunds or a reduction in
future contributions.
The defined benefit cost recognised in the
income statement comprises the current
service cost, any past service cost and the
net interest on the deficit or surplus. Gains
or losses on curtailments or settlements of
the plans are also recognised in the income
statement in the period in which the
curtailment or settlement occurs.
Remeasurements of the deficit or surplus are
recognised in other comprehensive income.
Current service cost represents the increase
in the present value of the benefit obligation
due to benefits accrued during the period, less
employee contributions. Past service cost
represents the change in the present value of
the benefit obligation that arises from benefit
changes that are applied retrospectively to
benefits accrued in previous years. Any past
service cost is recognised in full in the period
in which the benefit changes are made.
Net interest on the deficit or surplus is
calculated by applying the discount rate that
is used in measuring the present value of
the benefit obligation to the deficit or surplus.
Plan administration costs incurred by the
Group are also recognised in the income
statement.
Remeasurements comprise differences
between the actual return on plan assets (less
asset management expenses) and the interest
on the plan assets and actuarial gains and
losses. Actuarial gains and losses represent
the effect of changes in the actuarial
assumptions made in measuring the present
value of the benefit obligation and experience
differences between those assumptions and
actual outcomes. Actuarial gains and losses
are recognised in full in the period in which
they occur.
(b) Defined contribution plans
Contributions made by the Group to defined
contribution pension schemes are recognised
in the income statement in the period in which
they fall due.
Share-based incentives
As described in Note 25, the Company
operates share-based compensation plans
under which it grants awards over its ordinary
shares to its own employees and to those of
its subsidiaries. All of the awards granted
under the existing plans are classified as
equity-settled awards. The Group recognises
a compensation expense that is based on the
fair value of the awards measured at the grant
date using the Black-Scholes option pricing
formula. Fair value is not subsequently
remeasured unless relevant conditions
attaching to the award are modified.
Fair value reflects any market performance
conditions and all non-vesting conditions.
Adjustments are made to the compensation
expense to reflect actual and expected
forfeitures due to failure to satisfy service
conditions or non-market performance
conditions.
Generally, the resulting compensation expense
is recognised in the income statement on
a straight-line basis over the vesting period
and a corresponding credit is recognised in
equity. In the event of the cancellation of an
award, whether by the Group or a participating
employee, the compensation expense
that would have been recognised over the
remainder of the vesting period is recognised
immediately in the income statement.
Dividends
Dividends on the Company’s ordinary
shares are recognised when they have been
appropriately authorised and are no longer at
the Company’s discretion. Accordingly, interim
dividends are recognised when they are paid
and final dividends are recognised when they
are declared following approval by
shareholders at the Company’s AGM.
Dividends are recognised as an appropriation
of shareholders’ equity.
Own shares
Own shares represent the Company’s ordinary
shares that are held by the Company in treasury
or by a sponsored Employee Benefit Trust that
are used to satisfy awards made under the
Company’s share-based incentive plans. When
own shares are acquired, the cost of purchase
in the market is deducted from equity. Gains
or losses on the subsequent transfer or sale
of own shares are also recognised in equity.
Assets held for sale
An asset or group of assets is classified as held
for sale if its carrying amount will be principally
recovered through a sale transaction rather
than through continuing use in the business,
it is available for immediate sale in its present
condition and management has committed to,
and has initiated, a plan to sell the asset which,
when initiated, was expected to result in a
completed sale within 12 months. Assets that
are classified as held for sale are measured at
the lower of their carrying amount when they
were classified as held for sale and their fair
value less costs to sell.
Accounting standards issued but not
yet adopted
A number of new standards and amendments
to standards and interpretations have been
issued that are relevant to the Group but had
not been adopted at 31 March 2015.
(a) IFRS 9 Financial instruments
IFRS 9 addresses the classification,
measurement and recognition of financial
assets and financial liabilities. The complete
version of IFRS 9 was issued in July 2014.
It replaces the guidance in IAS 39 that relates
to the classification and measurement of
financial instruments. IFRS 9 retains but
simplifies the mixed measurement model
and establishes three primary measurement
categories for financial assets: amortised
cost, fair value through other comprehensive
income and fair value through the income
statement. The standard is effective for
accounting periods beginning on or after
1 January 2018. Early adoption is permitted
subject to EU endorsement.
(b) IFRS 15 Revenue from contracts with
customers
IFRS 15 deals with revenue recognition and
establishes principles for reporting useful
information to users of financial statements
about the nature, amount, timing and
uncertainty of revenue and cash flows arising
from an entity’s contracts with customers.
Revenue is recognised when a customer
obtains control of a good or service and
thus has the ability to direct the use and
obtain the benefits from the good or service.
The standard will replace IAS 18 Revenue
and IAS 11 Construction contracts and
related interpretations. The IASB is
considering deferring the adoption until
at least 1 January 2018.
(c) IAS 19 Defined Benefit Plans:
Employee Contributions (Amendments)
The Amendments clarify how employee
contributions that are linked to service should
be attributed to periods of service and when
such contributions may be treated as a
reduction in the service cost that is recognised
in the income statement. Subject to its
endorsement for use in the EU, the Group
will adopt the Amendments with effect from
1 April 2015.
Tate & Lyle PLC | Annual Report 2015 | 95
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Notes to the Consolidated Financial Statements
continued
2 Principal accounting policies
continued
(d) Other pronouncements
Various minor improvements to accounting
standards arising from the IASB’s 2010-2012,
2011-2013 and 2012-2014 review cycles.
The directors do not expect that the adoption
of the Standards listed above will have a
material impact on the financial statements
of the Group in future periods, except that
IFRS 9 will impact both the measurement and
disclosures of financial instruments and IFRS 15
may have an impact on revenue recognition
and related disclosures. Beyond the information
above, it is not practical to provide a reasonable
estimate of the effect of IFRS 9 and IFRS 15
until a detailed review has been completed.
3 Critical accounting estimates
and judgements
In order to prepare these consolidated financial
statements in accordance with the accounting
policies set out in Note 2, management has
used estimates and judgements to establish
the amounts at which certain items are
recorded. Critical accounting estimates and
judgements are those that have the greatest
impact on the financial statements and require
the most difficult, subjective and complex
judgements about matters that are inherently
uncertain. Estimates are based on factors
including historical experience and
expectations of future events that management
believes to be reasonable. However, given the
judgemental nature of such estimates, actual
results could be different from the assumptions
used. The critical accounting estimates and
judgements are set out below.
Taxation
The Group operates in a large number of tax
jurisdictions around the world. Tax regulations
generally are complex and in some jurisdictions
agreeing tax liabilities with local tax authorities
can take several years. Consequently, at the
period-end date, tax liabilities and assets are
based on management’s best estimate of the
future amounts that will be settled. While the
Group aims to ensure that the estimates
recorded are accurate, the actual amounts
could be different from those expected.
Deferred tax assets mainly arise from asset
impairments and retirement benefit obligations
that the Group expects to recover at some
time in the future and by their nature the
amounts recorded are therefore dependent on
management’s judgement about future events.
Further details are set out in Notes 10 and 28.
Derivatives and hedge accounting
The Group uses derivative financial
instruments to reduce its exposure to
commodity price, currency exchange rate and
interest rate movements.
In particular, the Group uses corn and other
commodity contracts to manage and hedge
its corn book in the US. The US corn book
96 | Tate & Lyle PLC | Annual Report 2015
comprises the commodity contracts, inventory
and contracts for the purchase and sale of
corn and co-products, some elements of
which are expected to mature in more than
12 months’ time, and is measured at fair value
at each period-end date. The valuation of the
corn book, which is underpinned by a number
of judgements, has a material impact on the
reported results of the Group.
At 31 March 2015, the Group recognised
derivative assets of £92 million (including
commodity pricing contracts of £58 million)
and derivative liabilities of £40 million (including
commodity pricing contracts of £25 million).
The fair value of derivatives continually
changes in response to changes in prevailing
market conditions affecting future corn and
other commodity prices, currency exchange
rates and interest rates. Where practicable,
the Group uses hedge accounting to mitigate
the impact of changes in the fair value of its
hedging instruments on the income statement,
but the Group’s results may be affected by
these fair value changes where hedge
accounting cannot be applied or due to hedge
ineffectiveness.
Retirement benefits
The Group operates defined benefit pension
plans principally in the UK and the US and
unfunded retirement medical plans in the US.
Generally, a deficit or surplus is recognised
on each plan which represents the difference
between the present value of the benefit
obligation and the fair value of the plan assets
(any surplus may be restricted in certain
circumstances).
At 31 March 2015, the present value of the
benefit obligations on the plans was
£1,761 million (2014 – £1,525 million), including
£69 million (2014 – £54 million) in respect of
the unfunded medical plans. The present value
of the benefit obligations is based on actuarial
estimates of the future benefits that will be
payable to the members of the plans. As such,
the benefit obligations are based on a number
of assumptions, changes to which could have
a material impact on the reported amounts.
With regard to the pension plans, the present
value of the benefit obligations is most
sensitive to the discount rate applied to the
benefit obligations, assumed life expectancies,
and expected future price inflation rates. At
31 March 2015, a reduction in the discount rate
of 100 basis points would have increased the
obligations by £304 million, an increase of one
year in life expectancy would have increased
the obligations by £74 million, and an increase
in future price inflation of 50 basis points would
have increased the obligations by £78 million.
At 31 March 2015, the assets held by the
pension plans amounted to £1,534 million
(2014 – £1,305 million), of which £367 million
(2014 – £346 million) comprised qualifying
insurance policies. Plan assets are measured
at their fair value at the period-end date. The
fair values of qualifying insurance policies held
by the plans are deemed to be equivalent
to the present value of the related benefit
obligations. Otherwise, the carrying amounts
of the plan assets are affected more by market
risks, including interest rate risk, and other
risks than by assumptions made in estimating
the fair values of unquoted assets.
Whilst changes in the assumptions used in
determining the present value of the benefit
obligations will have an impact on the Group’s
income statement through their effect on the
service cost and the net interest on the deficit
or surplus in the plans, most of the impact
of such changes, together with fluctuations
in the actual return on the plan assets, will be
reflected in other comprehensive income.
Full details of the assumptions made, which
are based on advice from the Group’s
actuaries, are set out in Note 29.
Impairment of assets
Asset impairments have the potential to
significantly impact operating profit. In order
to determine whether impairments are
required the Group estimates the recoverable
amount of the asset. This calculation is usually
based on projecting future cash flows over a
five-year period and using a terminal value to
incorporate expectations of growth thereafter.
A discount factor is applied to obtain a present
value (‘value in use’). The ‘fair value less costs
of disposal’ of an asset is used if this results
in an amount in excess of ‘value in use’.
Estimated future cash flows for impairment
calculations are based on management’s
expectations of future volumes and margins
based on plans and best estimates of the
productivity of the assets in their current
condition. Future cash flows therefore exclude
benefits from major expansion projects
requiring future capital expenditure where
that expenditure has not been approved
on the dates the assets are tested.
Future cash flows are discounted using a
discount rate based on the Group’s weighted
average cost of capital, adjusted if appropriate
for circumstances specific to the asset being
tested. The weighted average cost of capital is
impacted by estimates of interest rates, equity
returns and market and country-related risks.
The Group’s weighted average cost of capital
is reviewed on an annual basis.
If the cash flow or discount rate assumptions
were to change because of market conditions,
the level of impairment could be different
and could result in the asset impairment
being increased or reversed, in part or in full,
at a future date. Goodwill impairment is
never reversed.
Sensitivities are performed around the
discount rate and operating profit growth
which are considered the critical assumptions
in the review.
Further details are set out in Notes 14 and 15.
FINANCIAL STATEMENTS 3 Critical accounting estimates and judgements continued
Provisions
The Group recognises a provision where a legal or constructive obligation exists at the period-end date and a reliable estimate can be made of the
likely outcome. Where appropriate, future cash outflows that are expected to arise over a number of years are discounted to a present value using
a relevant discount rate.
At 31 March 2015, provisions included amounts for insurance claims payable by the Group’s reinsurance company, legal matters, employee
termination and other restructuring costs.
Although provisions are reviewed on a regular basis and adjusted for management’s best current estimates, the judgemental nature of these items
means that future amounts settled may be different from those provided. Further details are set out in Note 30.
4 Segment information
Segment information is presented on a consistent basis with the information presented to the Board (the designated Chief Operating Decision
Maker) for the purposes of allocating resources within the Group and assessing the performance of the Group’s businesses. Continuing operations
comprise two operating segments: Speciality Food Ingredients and Bulk Ingredients. Central, which comprises central costs including head office,
treasury and re-insurance activities, does not meet the definition of an operating segment under IFRS 8 ‘Operating Segments’ but no sub-total is
shown for the Group’s operating segments in the tables below so as to be consistent with the presentation of segment information to the Board.
Both segments are served by a single manufacturing network, and receive services from a number of global support functions. The segmental
information presented in Note 4 and Note 8 reflects the allocation of assets and costs based on the most appropriate methodology in each case,
consistently applied over time.
The Board uses adjusted operating profit as the measure of the profitability of the Group’s businesses. Adjusted operating profit is, therefore,
the measure of segment profit presented in the Group’s segment disclosures. Adjusted operating profit represents operating profit before specific
items that are considered to hinder comparison of the trading performance of the Group’s businesses either year-on-year or with other businesses.
During the years presented, the items excluded from operating profit in arriving at adjusted operating profit were the amortisation of acquired
intangible assets and exceptional items. The Group has presented segment and adjusted financial information on a proportionate consolidation
basis, as this reflects the management of its joint ventures on an integrated basis with the Group’s subsidiaries. The segmental classification of
exceptional items is defined in Note 6.
An analysis of total assets and total liabilities by operating segment is not presented to the Board but it does receive segmental analysis of net working
capital (inventories, trade and other receivables, less trade and other payables). Accordingly, the amounts presented for segment assets and segment
liabilities in the tables below represent those assets and liabilities that comprise elements of net working capital. The segment results were as follows:
(a) Segment sales
Sales
Speciality Food Ingredients
Bulk Ingredients
Adjusted sales
Elimination of proportionate consolidation
Sales
(b) Segment results
Operating profit
Speciality Food Ingredients
Bulk Ingredients
Central
Adjusted operating profit
Elimination of proportionate consolidation
Adjusting items:
– Exceptional items
– Amortisation of acquired intangible assets
Operating profit
Finance income
Finance expense
Share of profit after tax of joint ventures and associates
Profit before tax
Year to
31 March
2015
£m
Notes
908
1 786
2 694
(338)
2 356
Year to
31 March
2015
£m
149
133
(35)
247
(63)
184
(142)
(9)
33
1
(32)
49
51
6
14
9
9
16
Restated*
Year to
31 March
2014
£m
983
2 164
3 147
(393)
2 754
Restated*
Year to
31 March
2014
£m
213
172
(36)
349
(74)
275
(14)
(10)
251
2
(37)
61
277
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
Tate & Lyle PLC | Annual Report 2015 | 97
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Notes to the Consolidated Financial Statements
continued
Year to
31 March
2015
Percentage
Year to
31 March
2014
Percentage
16.4%
7.4%
n/a
9.2%
21.7%
7.9%
n/a
11.1%
Liabilities
£m
At 31 March 2015
Net
£m
(132)
(199)
(37)
(368)
39
(329)
(1 158)
(1 487)
174
209
11
394
(68)
326
610
936
Restated*
At 31 March 2014
Net
£m
Liabilities
£m
(94)
(181)
(42)
(317)
32
(285)
(1 133)
(1 418)
148
266
2
416
(64)
352
698
1 050
Year to
31 March
2015
£m
Restated*
Year to
31 March
2014
£m
40
56
2
98
(13)
85
38
55
4
97
(14)
83
Assets
£m
306
408
48
762
(107)
655
1 768
2 423
Assets
£m
242
447
44
733
(96)
637
1 831
2 468
Notes
16
15
4 Segment information continued
Adjusted operating margin
Speciality Food Ingredients
Bulk Ingredients
Central
Total
(c) Segment assets/(liabilities)
Net working capital
Speciality Food Ingredients
Bulk Ingredients
Central
Total working capital
Elimination of proportionate consolidation
Group working capital
Other assets/(liabilities)
Group assets/(liabilities)
Net working capital
Speciality Food Ingredients
Bulk Ingredients
Central
Total working capital
Elimination of proportionate consolidation
Group working capital
Other assets/(liabilities)
Group assets/(liabilities)
(d) Other information – Depreciation
Depreciation
Speciality Food Ingredients
Bulk Ingredients
Central
Adjusted depreciation
Elimination of proportionate consolidation
Total
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
98 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS 4 Segment information continued
(e) Other information – Amortisation
Amortisation
Speciality Food Ingredients
Bulk Ingredients
Central
Adjusted amortisation
Elimination of proportionate consolidation
Total
(f) Other information – Share-based payments
Share-based payments
Speciality Food Ingredients
Bulk Ingredients
Central
Adjusted share based payments
Elimination of proportionate consolidation
Total
Year to
31 March
2015
£m
Restated*
Year to
31 March
2014
£m
20
3
1
24
–
24
18
2
1
21
(1)
20
Year to
31 March
2015
£m
Restated*
Year to
31 March
2014
£m
(1)
–
1
–
–
–
2
1
5
8
-
8
Notes
16
14
Notes
25
(g) Other information – Capital investment
Capital investment comprises the cost of acquisition of businesses and capital expenditure on property, plant and equipment, intangible assets
(including amounts accrued) and investments.
Capital investment
Speciality Food Ingredients
Bulk Ingredients
Central
Adjusted capital investment
Elimination of proportionate consolidation
Total
(h) Geographical information – Sales by destination
Sales by destination
United Kingdom
United States
Other European countries
Rest of the world
Adjusted sales by destination
Elimination of proportionate consolidation
Total
Year to
31 March
2015
£m
105
84
17
206
(11)
195
Restated*
Year to
31 March
2014
£m
88
66
35
189
(11)
178
Year to
31 March
2015
£m
Restated*
Year to
31 March
2014
£m
41
1 617
367
669
2 694
(338)
2 356
64
1 858
520
705
3 147
(393)
2 754
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
Tate & Lyle PLC | Annual Report 2015 | 99
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Notes to the Consolidated Financial Statements
continued
4 Segment information continued
(i) Geographical information – Sales by origin
Sales by origin
United Kingdom
United States
Other European countries
Rest of the world
Adjusted sales by origin
Elimination of proportionate consolidation
Total
Year to
31 March
2015
£m
Restated*
Year to
31 March
2014
£m
21
1 934
462
277
2 694
(338)
2 356
22
2 282
546
297
3 147
(393)
2 754
Concentration of revenue
During the financial year 2015, one customer contributed 11% of the Group’s external sales from continuing operations (2014 restated* – one
customer contributed 12%).
(j) Geographical information – location of non-current assets
The United Kingdom is the home country of the Parent Company. Non-current assets, other than financial instruments, deferred tax assets and
retirement benefits in the principal territories are as follows:
Restated*
Year to
31 March
2014
£m
25
734
433
159
1 351
United Kingdom
United States
Other European countries
Rest of the world
Non-current assets
Year to
31 March
2015
£m
31
874
426
88
1 419
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
100 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS 5 Operating profit
Analysis of operating expenses/(income) by nature:
External sales
Operating expenses/(income)
Cost of inventories (included in cost of sales)
Staff costs (of which £127 million (2014 – £121 million) was included in cost of sales)
Gain on settlement of defined benefit pension plan
Depreciation of property, plant and equipment:
– owned assets (of which £77 million (2014 – £77 million) was included in cost of sales)
– leased assets (included in cost of sales)
Exceptional items
Amortisation of intangible assets:
– acquired intangible assets
– other intangible assets
Operating lease rentals:
– plant and machinery
Research and development expenditure
Decrease in allowance for doubtful debts
Gain on disposal of property, plant and equipment
Other operating expenses
Total operating expenses
Operating profit
6 Exceptional items
Exceptional items recognised in arriving at operating profit were as follows:
Continuing operations
Business transformation costs (a)
Business re-alignment – impairment and related costs (b)
Termination of distribution rights agreement (c)
Total
Year ended
31 March 2015
Continuing
operations
£m
2 356
Restated*
Year ended
31 March 2014
Continuing
operations
£m
2 754
Notes
4
8
29
15
15
6
14
14
22
1 319
225
–
82
3
142
9
15
18
32
–
–
478
2 323
33
1 724
232
(4)
78
5
14
10
10
17
33
(1)
(3)
388
2 503
251
Year ended 31 March
2014
£m
2015
£m
(12)
(118)
(12)
(142)
(14)
–
–
(14)
Continuing operations
(a) During the year, the Group completed the implementation of a common global IS/IT system, and recognised costs of £12 million (2014 –
£14 million) which did not meet the criteria to be capitalised. These costs are classified within Central costs in each of the above disclosed
periods. During the year, in total we incurred £22 million of costs associated with the implementation of the common global IS/IT system.
This brings total expenditure on the project to £146 million, including £5 million of hardware, software and associated costs.
(b) As part of the major business re-alignment announced on 21 April 2015, the Group announced its intention to consolidate all SPLENDA®
Sucralose production into our facility in the US, and close the Singapore facility which will not be cost competitive going forward. The Group
recognised an impairment charge of £113 million within the Speciality Food Ingredients segment, comprising a full impairment of the property,
plant and equipment (£108 million) and associated intangible assets (£5 million). In addition the Group incurred £5 million of one-off costs
associated with the business re-alignment (primarily consultancy and redundancy costs) which were classified as Central costs.
(c) The Group made a payment of £12 million in December 2014 to terminate distribution rights previously awarded to a third party to sell
our crystalline fructose principally in Asia Pacific. The expense was recognised within the Speciality Food Ingredient segment.
The tax impact on exceptional items was a £8 million credit (2014 – £9 million credit). Tax credits on exceptional costs are only recognised
to the extent that losses incurred will result in tax recoverable in the future.
Discontinued operations
The Group did not recognise any exceptional items in respect of discontinued operations during the year to 31 March 2015.
During the year to 31 March 2014, the Group recognised an exceptional tax credit of £28 million in discontinued operations (see Note 11) following
the favourable resolution of outstanding tax matters associated with the starch facilities which formed part of the Group’s former Food & Industrial
Ingredients, Europe segment.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
Tate & Lyle PLC | Annual Report 2015 | 101
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Notes to the Consolidated Financial Statements
continued
7 Auditors’ remuneration
Fees payable to the Company’s auditors, PricewaterhouseCoopers LLP, and its associates were as follows:
Fees payable for the audit of the Company and consolidated financial statements
Fees payable for other services:
– the audit of the Company’s subsidiaries
– audit-related services
– other non-audit services1
Fees in respect of the audit of the Group’s pension schemes
Total
Year ended 31 March
Restated*
2014
£m
0.7
2015
£m
0.7
1.2
0.1
0.2
2.2
0.1
2.3
1.2
–
–
1.9
0.1
2.0
1 Non-audit services related primarily to a project to identify potential cost savings in US logistics activities.
The audit and non-audit fees related to joint ventures payable to PricewaterhouseCoopers LLP and its associates, excluded from the table above,
were £0.1 million (2014 – £0.1 million) and £nil (2014 – £0.1 million) respectively.
8 Staff costs
Staff costs were as follows:
Wages and salaries
Social security costs
Other pension costs:
– defined benefit pension schemes
– defined contribution pension schemes
Retirement medical benefits
Share-based payments
Total
Year ended
31 March 2015
Continuing
operations
£m
199
18
Restated*
Year ended
31 March 2014
Continuing
operations
£m
197
17
4
5
(1)
–
225
5
3
2
8
232
Notes
29
29
29
25
The monthly average number of people employed by the Company and its subsidiaries is set out below. As required by the Companies Act 2006,
this includes part-time employees:
By operating segment
Continuing operations
Speciality Food Ingredients
Bulk Ingredients
Central
Discontinued operations
Total
Year ended 31 March
Restated*
2014
2015
2 017
1 633
414
4 064
–
4 064
1 795
1 619
432
3 846
–
3 846
At 31 March 2015, the Group employed 4,136 (31 March 2014 – 3,899) people, all in continuing operations.
Following the adoption of IFRS 11 ‘Joint Arrangements’, the staff numbers presented above exclude employees of the Group’s joint ventures and
associates. Employee numbers are presented to management on a proportionate consolidation basis (including employees from the Group’s joint
ventures) as this better reflects the management of joint ventures on an integrated basis with the Group’s subsidiaries. When including those
additional employees, at 31 March 2015 the Group employed 4,759 (31 March 2014 – 4,523) people, all in continuing operations.
Central includes shared service employees who perform activities for the whole Group, including the Speciality Food Ingredients and Bulk
Ingredients segments.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
102 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS
8 Staff costs continued
Key management compensation
Salaries and short-term employee benefits
Retirement benefits
Share-based payments
Total
Year ended 31 March
2014
£m
5
1
4
10
2015
£m
6
1
–
7
Key management is represented by the Group Executive Committee and the Company’s directors. Remuneration details of the Company’s
directors are given in the Directors’ Remuneration Report on pages 58 to 78. Members of the Group Executive Committee are identified on page 13.
As determined in accordance with the Companies Act 2006, the aggregate gains made by the directors on the exercise of share options were
£5 million (2014 – £4 million).
9 Finance income and finance expense
Finance income
Interest receivable
Total finance income
Finance expense
Interest payable on bank and other borrowings
Fair value hedges:
– fair value loss on interest rate derivatives
– fair value adjustment of hedged borrowings
Finance lease interest
Net retirement benefit interest
Total finance expense
Net finance expense
Notes
19
19
29
Year ended 31 March
Restated*
2014
£m
2015
£m
1
1
(23)
(3)
3
(1)
(8)
(32)
(31)
2
2
(28)
(20)
20
(1)
(8)
(37)
(35)
Finance expense is shown net of borrowing costs of £1 million (2014 – £2 million) capitalised within intangible assets at a capitalisation rate
of 3.4% (2014 – 3.9%).
Interest payable on other borrowings includes £0.2 million (2014 – £0.2 million) of dividends in respect of the Group’s 6.5% cumulative preference shares.
Finance income and finance expense relate wholly to continuing operations.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
Tate & Lyle PLC | Annual Report 2015 | 103
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Notes to the Consolidated Financial Statements
continued
10 Income tax expense
Analysis of charge for the year
Continuing operations
Current tax:
In respect of current period
– United Kingdom (UK)
– Overseas
Adjustments in respect of previous years
Deferred tax:
Charge for the year
Adjustments in respect of previous years
Income tax expense
Note
28
Year ended 31 March
Restated*
2014
£m
2015
£m
–
15
(2)
13
8
–
21
–
27
–
27
10
(5)
32
Profit for the year from continuing operations reflected an income tax expense of £21 million (2014 – expense of £32 million), including an income
tax credit of £8 million (2014 – credit of £9 million) in respect of exceptional items (see Note 6).
Adjustments to current tax in respect of previous years for the year ended 31 March 2015 totalled £2 million (2014 – £nil) reflecting non-recurring
tax credits relating to prior years in several European jurisdictions.
Adjustments to deferred tax in respect of prior years totalled £nil (2014 – credit of £5 million). The amount recognised in the prior year reflects
non-recurring tax credits in relation to prior years in the US, following a detailed review of underlying tax information.
The standard rate of corporation tax in the UK reduced from 21% to 20% with effect from 1 April 2015.
The tax on the Group’s profit before tax differs from the standard rate of corporation tax in the UK as follows:
Profit before tax
Less share of profit after tax of joint ventures and associates
Parent Company and subsidiaries profit before tax
Corporation tax charge thereon at 21% (2014 – 23%)
Adjusted for the effects of:
– items not taxable
– losses not recognised
– adjustments to tax in respect of previous years
– different tax rates applied on overseas earnings
Total
Year ended 31 March
Restated*
2014
£m
2015
£m
51
(49)
2
–
23
11
(2)
(11)
21
277
(61)
216
50
2
3
(5)
(18)
32
The Group’s adjusted effective tax rate is sensitive to the geographic mix of profits and losses and reflects a combination of higher tax rates in
certain jurisdictions such as the US, nil effective tax rates in the UK (due to brought forward tax losses) and in Singapore (due to having ‘pioneer
status’ awarded by the government in 2008) and rates that lie somewhere in between, for example, in certain eastern European countries. Our tax
rate is favourably affected by our internal financing which involves borrowing by our US operations from the UK, the interest on which has the effect
of reducing the amount of tax payable in the US.
The Group’s adjusted effective tax rate on continuing operations, calculated on the basis of the adjusted income tax expense of £48 million
(2014 – £60 million) as a proportion of adjusted profit before tax of £224 million (2014 – £322 million) was 21.2% (2014 – 18.5%).
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
104 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS 10 Income tax expense continued
Discontinued operations
Profit for the prior year from discontinued operations reflected an exceptional income tax credit of £28 million as explained in Note 11.
Tax charge relating to components of other comprehensive income
Retirement benefit obligations
Cash flow hedges
Tax credit/(charge) relating to components of other comprehensive income
Deferred tax
Tax on items recognised directly in equity
Current tax credit on share-based payments
Deferred tax charge on share-based payments
Total
Note
28
Year ended 31 March
2014
£m
(22)
–
(22)
(22)
2015
£m
20
2
22
22
Year ended 31 March
Restated*
2014
£m
(1)
1
–
2015
£m
–
–
–
11 Discontinued operations
The Group did not recognise any operations as being discontinued during the year ended 31 March 2015. Continuing operations include the
results of Eaststarch which is not treated as a discontinued operation for the financial year ended 31 March 2015.
During the year ended 31 March 2014, the Group recognised a non-cash exceptional income tax credit of £28 million following the favourable
resolution of outstanding tax matters associated with the starch facilities which formed part of the Group’s former Food & Industrial Ingredients,
Europe segment.
Operating profit
Profit before tax
Income tax credit
Profit for the year
Non-controlling interests
Profit attributable to owners of the Company
Note
Year ended 31 March
2014
£m
2015
£m
–
–
–
–
–
–
–
–
28
28
–
28
12 Earnings per share
Basic
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company by the weighted average number of ordinary
shares in issue during the year, excluding an average of 4 million shares (2014 – 4 million shares) held by the Company or the Employee Benefit
Trust to satisfy awards made under the Group’s share-based incentive plans.
Profit attributable to owners of the
Company (£million)
Weighted average number of ordinary shares
in issue (millions)
Basic earnings per share
Year ended 31 March 2015
Year ended 31 March 2014
Continuing
operations
Discontinued
operations
30
464.2
6.6p
–
464.2
–
Total
30
464.2
6.6p
Continuing
operations
Discontinued
operations
245
464.1
52.8p
28
464.1
6.0p
Total
273
464.1
58.8p
Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue to assume conversion of all
potentially dilutive ordinary shares. Potentially dilutive ordinary shares arise from awards made under the Group’s share-based incentive plans.
Where the vesting of these awards is contingent on satisfying a service or performance condition, the number of potentially dilutive ordinary shares
is calculated based on the status of the condition at the end of the period. Potentially dilutive ordinary shares are actually dilutive only when the
average market price of the Company’s ordinary shares during the period exceeds their exercise price (options) or issue price (other awards).
The greater any such excess, the greater the dilutive effect. The average market price of the Company’s ordinary shares during the year was 640p
(2014 – 788p). The dilutive effect of share-based incentives was 3.8 million shares (2014 – 6.4 million shares).
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
Tate & Lyle PLC | Annual Report 2015 | 105
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Notes to the Consolidated Financial Statements
continued
12 Earnings per share continued
Profit attributable to owners of the
Company (£million)
Weighted average number of diluted
ordinary shares (millions)
Diluted earnings per share
Year ended 31 March 2015
Year ended 31 March 2014
Continuing
operations
Discontinued
operations
30
468.0
6.5p
–
468.0
–
Total
30
468.0
6.5p
Continuing
operations
Discontinued
operations
245
470.5
52.1p
28
470.5
5.9p
Total
273
470.5
58.0p
Adjusted earnings per share
Adjusted earnings per share measures are calculated based on profit for the year from continuing operations attributable to owners of the
Company before adjusting items as follows:
Continuing operations
Profit attributable to owners of the Company
Adjusting items:
– exceptional items
– amortisation of acquired intangible assets
– net retirement benefit interest
– tax effect of the above adjustments
Adjusted profit attributable to owners of the Company
Adjusted basic earnings per share
Adjusted diluted earnings per share
13 Dividends on ordinary shares
Dividends on ordinary shares in respect of the financial year:
Per ordinary share:
– interim dividend paid
– final dividend proposed
Total dividend
Notes
6
14
9,29
41
Year ended 31 March
Restated*
2015
£m
30
142
9
8
(13)
176
2014
£m
245
14
10
8
(15)
262
38.0p
37.7p
56.5p
55.7p
Year ended 31 March
2014
pence
2015
pence
8.2
19.8
28.0
7.8
19.8
27.6
The Directors propose a final dividend for the financial year of 19.8p per ordinary share that, subject to approval by shareholders, will be paid
on 31 July 2015 to shareholders who are on the Register of Members on 3 July 2015.
Dividends on ordinary shares paid in the year:
Final dividend paid relating to the prior year
Interim dividend paid relating to the year
Total dividend paid
Year ended 31 March
2014
£m
88
36
124
2015
£m
92
38
130
Based on the number of ordinary shares outstanding at 31 March 2015 and the proposed amount, the final dividend for the financial year is
expected to amount to £92 million.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
106 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS
14 Goodwill and other intangible assets
Cost
At 1 April 2014 (Restated*)
Subsidiaries acquired
Additions at cost
Disposals and write-offs
Currency translation differences
At 31 March 2015
Accumulated amortisation and impairment
At 1 April 2014 (Restated*)
Impairment charge
Disposals and write-offs
Amortisation charge
Currency translation differences
At 31 March 2015
Net book value at 31 March 2015
Cost
At 1 April 2013 (Restated*)
Subsidiaries acquired
Additions at cost
Currency translation differences
At 31 March 2014 (Restated*)
Accumulated amortisation and impairment
At 1 April 2013 (Restated*)
Amortisation charge
Currency translation differences
At 31 March 2014 (Restated*)
Net book value at 31 March 2014 (Restated*)
(a) Goodwill
The carrying amount of goodwill is allocated as follows:
Allocated by geographical area
United States
Allocated by business segment
Speciality Food Ingredients
Bulk Ingredients
Total
Patents and other
intellectual
property
£m
Other acquired
intangible
assets
£m
Total acquired
intangible assets
£m
Goodwill
£m
Other
intangible
assets
£m
133
27
–
–
(2)
158
–
–
–
–
–
–
158
132
10
–
(9)
133
–
–
–
–
133
39
–
–
–
1
40
31
–
–
2
–
33
7
34
5
–
–
39
28
3
–
31
8
114
–
–
–
(7)
107
72
–
–
7
(3)
76
31
119
–
–
(5)
114
68
7
(3)
72
42
286
27
–
–
(8)
305
103
–
–
9
(3)
109
196
285
15
–
(14)
286
96
10
(3)
103
183
165
–
34
(1)
5
203
41
5
(1)
15
(1)
59
144
114
–
57
(6)
165
33
10
(2)
41
124
2015
£m
62
95
1
96
158
Total
£m
451
27
34
(1)
(3)
508
144
5
(1)
24
(4)
168
340
399
15
57
(20)
451
129
20
(5)
144
307
At 31 March
Restated*
2014
£m
55
77
1
78
133
(i) Impairment tests carried out during the year
Goodwill is tested for impairment annually and whenever there is an indication of impairment at the level of the cash-generating unit (CGU) or group
of CGUs to which it is allocated. Tate & Lyle is principally managed as an integrated network in the United States and Europe, with a large amount
of interdependency between plants servicing both the Speciality Food Ingredients and Bulk Ingredients segments. Goodwill is therefore tested
for impairment on a geographical basis, except where it can be allocated to a specific CGU or group of CGUs.
A description of the impairment tests conducted in relation to the most significant goodwill amounts are set out on the following page. In each
case, the recoverable amount was calculated based on value in use. Value in use was calculated based on budgets and plans covering the next
five years that have been reviewed by the Board. Cash flows were projected during the five-year period based on budgeted operating profit and
management’s expectations of market developments. Beyond the five-year plan, cash flows were generally assumed to grow at the long-term
growth rate for the relevant geographical markets based on forecasts included in industry reports. Cash flows were discounted using pre-tax rates
that are based on the Group’s weighted average cost of capital adjusted, where appropriate, to reflect differences between the risk profile of the
geographical areas or CGUs concerned and that of the Group as a whole.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
Tate & Lyle PLC | Annual Report 2015 | 107
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Notes to the Consolidated Financial Statements
continued
14 Goodwill and other intangible assets continued
Goodwill allocated by geographical area
United States
Goodwill allocated to the US single ingredients operations of £62 million (2014 – £55 million) relates to the Staley acquisition in 1988. The key
assumptions in the model are derived from the Group’s Annual Operating Plan for 2016, which includes mid-single digit volume growth in Speciality
Food Ingredients and flat volumes in Bulk Ingredients. From 2017 onwards, volumes are projected to grow broadly in line with 2016 expectations,
and operating profit is assumed to increase by 3% for Speciality Food Ingredients and 1% for Bulk Ingredients thereafter, based on management’s
long term industry expectations. Cash flows were discounted using a pre-tax rate of 10.0% (2014 – 10.1%). Significant headroom exists and
management concluded that no impairment is required.
Goodwill allocated by operating segment
Speciality Food Ingredients
Goodwill allocated to the Speciality Food Ingredients segment includes £53 million (2014 – £61 million) that relates to the European Food Systems
acquisitions of G.C. Hahn and Company in June 2007 and that of Cesalpinia Foods in December 2005. As these businesses are operationally
integrated, they are tested for impairment as one CGU. The key assumptions in the model are derived from the Group’s Annual Operating Plan for
2016, with mid-single digit operating profit growth assumed over a five year period. Cash flows were discounted using a pre-tax rate of 10.0% (2014
– 10.1%). Management concluded that no impairment is required.
The only other CGU within the Speciality Food Ingredients operating segment with individually material goodwill is the Brazilian Food Systems
business (Gemacom), which contains provisional goodwill of £24 million (see Note 36). Cash flows in 2016 are based on the Annual Operating Plan
approved by the Board. Cash flows are then expected to grow at a compound annual rate of around 40% over the subsequent four years, and at
5% thereafter reflecting the long-term growth rate for this market. Cash flows were discounted using a pre-tax rate of 16.7% (2014 – N/A). The value
in use of this CGU exceeds its carrying value, and management concluded that no impairment is required.
There are no other individually material elements of goodwill allocated to either the Speciality Food Ingredients or Bulk Ingredients operating
segments.
(ii) Possibility of impairment in the near future
Management considers that there is no reasonably possible change in one or more of the key assumptions used in the impairment tests for
goodwill and other intangible assets that would give rise to an impairment loss during the coming year.
(b) Other intangible assets
Other intangible assets include capitalised development costs with a carrying amount of £72 million (net of impairment and amortisation) (2014 –
£77 million) relating to the common global IS/IT platform.
During the year, the system was successfully deployed across our US operations (having previously been deployed in our European Single
Ingredient operations). As part of the major business re-alignment, the Group recognised a £5 million impairment charge relating to these assets in
our SPLENDA® Sucralose facility in Singapore. The charge was recognised as an exceptional item (see Note 6).
15 Property, plant and equipment
Cost
At 1 April 2014 (Restated*)
Additions at cost
Subsidiaries acquired
Transfer on completion
Disposals and write-offs
Currency translation differences
At 31 March 2015
Accumulated depreciation and impairment
At 1 April 2014 (Restated*)
Depreciation charge
Impairment charge
Disposals and write offs
Currency translation differences
At 31 March 2015
Net book value at 31 March 2015
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
108 | Tate & Lyle PLC | Annual Report 2015
Land and
buildings
£m
Plant and
machinery
£m
Assets in the
course of
construction
£m
390
–
9
7
–
36
442
195
11
19
–
20
245
197
1 757
8
3
52
(1)
158
1 977
1 278
74
64
(1)
108
1 523
454
58
125
–
(59)
–
–
124
–
–
25
–
–
25
99
Total
£m
2 205
133
12
–
(1)
194
2 543
1 473
85
108
(1)
128
1 793
750
FINANCIAL STATEMENTS
15 Property, plant and equipment continued
Cost
At 1 April 2013 (Restated*)
Additions at cost
Subsidiaries acquired
Transfers on completion
Disposals and write-offs
Currency – translation differences
At 31 March 2014 (Restated*)
Accumulated depreciation and impairment
At 1 April 2013 (Restated*)
Depreciation charge
Disposals and write-offs
Currency translation differences
At 31 March 2014 (Restated*)
Net book value at 31 March 2014 (Restated*)
Land and
buildings
£m
Plant and
machinery
£m
Assets in the
course of
construction
£m
432
16
1
9
(31)
(37)
390
203
10
(2)
(16)
195
195
1 849
4
2
72
(5)
(165)
1 757
1 323
73
(4)
(114)
1 278
479
57
82
–
(81)
–
–
58
–
–
–
–
–
58
Total
£m
2 338
102
3
–
(36)
(202)
2 205
1 526
83
(6)
(130)
1 473
732
In December 2013, the Group completed the back-to-back purchase, sale and leaseback under an operating lease of its building at the global
Commercial and Food Innovation Centre in Chicago, USA. The transaction generated a one-off gain of £6 million in the 2014 financial year, which
comprised a gain of £3 million on the recognition of the remainder of the lease incentive on the original lease and a gain of £3 million on the sale of
the property. The majority of the gain was included in the results of the Speciality Food Ingredients segment.
Impairment reviews
As part of the major business re-alignment the Group recognised a £108 million impairment charge relating to the property, plant and equipment in
our SPLENDA® Sucralose facility in Singapore. The charge was recognised as an exceptional item (see Note 6).
Management conducted impairment reviews of other property, plant and equipment during the year and concluded that there was no further
impairment.
Leased assets
Property, plant and equipment includes plant and machinery held under finance leases with a net book value of £10 million (2014 – £15 million).
16 Investments in associates and joint ventures
The amounts recognised in the Group consolidated income statement are as follows:
Associates
Joint ventures
The amounts recognised in the Group consolidated statement of financial position are as follows:
Associates
Joint ventures
Year ended 31 March
Restated*
2014
£m
–
61
2015
£m
–
49
At 31 March
Restated*
2014
£m
4
308
2015
£m
4
323
Associates
The Group’s principal associate, which is accounted for under the equity method, is Tapioca Development Corporation (see Note 40). The associate
has share capital consisting solely of ordinary shares, which are held directly by the Group and the country of incorporation or registration is also
their principal place of business. Tapioca Development Corporation is a private company and there is no quoted market price available for its shares.
In the opinion of the Directors this associate is not considered to be material to the Group and there are no contingent liabilities relating to the
Group’s interest in the associate.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
Tate & Lyle PLC | Annual Report 2015 | 109
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Notes to the Consolidated Financial Statements
continued
16 Investments in associates and joint ventures continued
The amounts equity accounted in (a) the Group consolidated income statement; and (b) the Group consolidated statement of financial position are
summarised below:
Associates
At 31 March 2014 (Restated*)
Exchange and other movements
At 31 March 2015
(a) Income statement
Sales
Expenses
Profit before and after tax
b) Statement of financial position
Assets
Liabilities
Net assets
£m
4
–
4
Year ended 31 March
Restated*
2014
£m
4
(4)
–
2015
£m
4
(4)
–
At 31 March
Restated*
2014
£m
10
(6)
4
2015
£m
7
(3)
4
Joint ventures
In the opinion of the directors, the Group’s material joint ventures, which are accounted for under the equity method, are Eaststarch C.V.
(Eaststarch), Almidones Mexicanos SA (Almex) and DuPont Tate & Lyle Bio Products Company, LLC (Bio-PDOTM) (see Note 40). The joint ventures
listed above have share capital consisting solely of ordinary shares, which are held directly by the Group (and its joint venture partners) and are
private companies. No quoted market price is available for their shares. There are no contingent liabilities relating to the Group’s interest in the joint
ventures. There are guarantees in respect of banking facilities of Eaststarch totalling £8 million (2014 – £9 million).
The movements in the carrying value of the Group’s investment in joint ventures are summarised as follows:
Investment in Joint ventures
At 1 April 2014
Profit for the year
Other comprehensive expense
Dividends
At 31 March 2015
At 1 April 2013
Profit for the year
Other comprehensive expense
Dividends
At 31 March 2014
£m
308
49
(18)
(16)
323
£m
377
61
(25)
(105)
308
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
110 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS
16 Investments in associates and joint ventures continued
Set out below is the summarised financial information for each material joint venture accounted for using the equity method.
The information reflects the amounts presented in the financial statements of the joint ventures (and not the Group’s share of those amounts)
adjusted for differences in accounting policies between the Group and the joint ventures to make it consistent with the Group’s accounting policies.
Income Statement
Sales
Depreciation and amortisation
Finance income
Finance expense
Other expense
Profit before tax
Income tax expense
Profit for the year from continuing operations
Other comprehensive (expense)/income related to assets and
liabilities
Other comprehensive expense related to goodwill
Total comprehensive income
Dividends
Income Statement
Sales
Depreciation and amortisation
Finance income
Finance expense
Other expense
Profit before tax
Income tax expense
Profit for the year from continuing operations
Other comprehensive expense related to assets and liabilities
Other comprehensive expense related to goodwill
Total comprehensive income
Dividends
Eaststarch
£m
266
(18)
1
–
(165)
84
(18)
66
(39)
–
27
–
Eaststarch
£m
319
(22)
1
–
(190)
108
(16)
92
(25)
(3)
64
(181)
Almex
£m
434
(2)
–
–
(400)
32
(10)
22
(4)
–
18
(28)
Almex
£m
500
(2)
–
(1)
(462)
35
(10)
25
(16)
–
9
(29)
Bio-PDOTM
£m
60
(6)
–
–
(44)
10
–
10
7
–
17
–
Bio-PDOTM
£m
61
(6)
–
–
(50)
5
–
5
(3)
–
2
–
Statement of financial position
Assets
Non-current assets
Cash and cash equivalents
Other current assets
Liabilities
Other non-current liabilities
Current borrowings
Other current liabilities
Net assets
* Excludes investment of joint venture holding companies.
Eaststarch
£m
Almex
£m
Bio-PDOTM
£m
156
146
88
390*
10
8
38
56
334
38
2
164
204
7
54
63
124
80
54
15
11
80
–
–
15
15
65
Year ended 31 March 2015
Total
£m
760
(26)
1
–
(609)
126
(28)
98
Other
£m
–
–
–
–
–
–
–
–
–
–
–
(4)
(36)
–
62
(32)
Year ended 31 March 2014
Total
£m
880
(30)
1
(1)
(702)
148
(26)
122
(44)
(3)
75
(210)
Other
£m
–
–
–
–
–
–
–
–
–
–
–
–
At 31 March 2015
Total
£m
Other
£m
1
–
1
2
–
–
–
–
2
249
163
264
676
17
62
116
195
481
Tate & Lyle PLC | Annual Report 2015 | 111
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Notes to the Consolidated Financial Statements
continued
16 Investments in associates and joint ventures continued
Eaststarch
£m
Almex
£m
Bio-PDOTM
£m
At 31 March 2014
Total
£m
Other
£m
Statement of financial position
Assets
Non-current assets
Cash and cash equivalents
Other current assets
Liabilities
Other non-current liabilities
Current borrowings
Other current liabilities
Net assets
180
107
113
400*
11
33
49
93
307
44
11
109
164
3
20
51
74
90
52
12
7
71
–
16
7
23
48
2
3
1
6
–
–
–
–
6
* Excludes investment of joint venture holding companies.
Reconciliation of the summarised financial information presented to the carrying amount of the Group’s interest in joint ventures.
Reconciliation of summarised financial information
Opening net assets at 1 April 2014
Profit for the year
Other comprehensive (expense)/income related to assets and
liabilities (excluding goodwill)
Dividends
Closing net assets at 31 March 2015
Interest in Joint venture (%)
Interest in Joint venture at share
Goodwill at 1 April 2014
Other comprehensive expense related to goodwill
Goodwill at 31 March 2015
Carrying value
Reconciliation of summarised financial information
Opening net assets at 1 April 2013
Profit for the year
Other comprehensive expense related to assets and liabilities
(excluding goodwill)
Dividends
Closing net assets at 31 March 2014
Interest in Joint venture (%)
Interest in Joint venture at share
Goodwill at 1 April 2013
Other comprehensive expense related to goodwill
Goodwill at 31 March 2014
Carrying value
Eaststarch
£m
307
66
(39)
–
334
50%
167
82
–
82
249
Eaststarch
£m
421
92
(25)
(181)
307
50%
154
85
(3)
82
236
Almex
£m
90
22
(4)
(28)
80
50%
40
–
–
–
40
Almex
£m
110
25
(16)
(29)
90
50%
45
–
–
–
45
Bio-PDOTM
£m
48
10
7
–
65
50%
33
–
–
–
33
Bio-PDOTM
£m
46
5
(3)
–
48
50%
24
–
–
–
24
Other
£m
6
–
–
(4)
2
50%
1
–
–
–
1
Other
£m
6
–
–
–
6
50%
3
–
–
–
3
112 | Tate & Lyle PLC | Annual Report 2015
278
133
230
641
14
69
107
190
451
Total
£m
451
98
(36)
(32)
481
241
82
–
82
323
Total
£m
583
122
(44)
(210)
451
226
85
(3)
82
308
FINANCIAL STATEMENTS
17 Available-for-sale financial assets and other financial assets
At 1 April 2013 (includes £1 million classified as held for sale)
Additions
Disposals
Currency translation differences
At 31 March 2014
Additions
Disposals
Fair value gain in other comprehensive income
Fair value loss in operating profit
Currency translation differences
At 31 March 2015
Presented in the statement of financial position as follows:
Current assets
Non-current assets
Total
£m
28
4
(2)
(2)
28
2
(2)
2
(2)
3
31
2015
£m
16
15
31
At 31 March
2014
£m
–
28
28
Available-for-sale financial assets comprise £31 million (2014 – £28 million) of unlisted securities. The fair values of available-for-sale financial assets
are approximated at cost where fair value cannot be reliably measured. The carrying value of the available-for-sale financial assets are denominated
in the following currencies:
US dollar
Sterling
Total
2015
£m
20
11
31
At 31 March
2014
£m
23
5
28
The Group also paid £2 million (2014 – £nil) into an escrow account to which the Group has restricted access, as part of the acquisition of
Winway Biotechnology Nantong Co., Ltd (see Note 36). The amount is presented as ‘Other financial assets’ on the statement of financial position.
18 Financial instruments by category
Set out below is a comparison by category of carrying values and fair values of all of the Group’s financial assets and financial liabilities as at
31 March 2015 and 31 March 2014.
Available-for-sale financial assets
Other financial assets
Trade and other receivables
Cash and cash equivalents
Derivative financial instruments – assets
Borrowings
Derivative financial instruments – liabilities
Trade and other payables
Total
Amortised
cost /cash
£m
–
–
281
195
–
(768)
–
(327)
(619)
Derivatives
in a hedging
relationship
£m
–
–
–
–
34
–
(20)
–
14
Notes
17
17
22
32
19
27
19
26
Available-
for-sale
and other
financial
assets
£m
31
2
–
–
–
–
–
–
33
Held for
trading
£m
–
–
–
–
58
–
(20)
–
38
At 31 March 2015
Total
carrying
value
£m
31
2
281
195
92
(768)
(40)
(327)
(534)
Fair value
£m
31
2
281
195
92
(792)
(40)
(327)
(558)
Tate & Lyle PLC | Annual Report 2015 | 113
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Notes to the Consolidated Financial Statements
continued
18 Financial instruments by category continued
Available-for-sale financial assets
Trade and other receivables
Cash and cash equivalents
Derivative financial instruments – assets
Borrowings
Derivative financial instruments – liabilities
Trade and other payables
Total
Amortised
cost/cash
cost
£m
–
252
346
–
(760)
–
(283)
(445)
Derivatives
in a hedging
relationship
£m
–
–
–
35
–
(5)
–
30
Notes
17
22
32
19
27
19
26
Held for
trading
£m
–
–
–
66
–
(46)
–
20
Available-
for-sale
£m
28
–
–
–
–
–
–
28
Restated*
At 31 March 2014
Fair value
£m
28
252
346
101
(794)
(51)
(283)
(401)
Total
carrying
value
£m
28
252
346
101
(760)
(51)
(283)
(367)
Trade and other receivables presented above excludes £11 million (2014 – £13 million) relating to prepayments.
Trade and other payables presented above excludes £2 million (2014 – £2 million) relating to social security.
Included in borrowings are items in a hedging relationship which are held at amortised cost, with a fair value adjustment applied, as these items are
held in a fair value hedge.
Fair value hierarchy
Set out on page 115 is how the Group’s financial instruments measured at fair value, fit within the following fair value hierarchy:
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)
• Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (Level 2)
• Inputs for the asset or liability that are not based on observable market data (Level 3).
The following tables illustrate the Group’s net financial assets and liabilities measured at fair value at 31 March 2015 and 31 March 2014:
Assets at fair value
Available-for-sale financial assets
Other financial assets
Derivative financial instruments:
– currency swaps
– interest rate swaps
– forward foreign exchange contracts
– commodity pricing contracts
Assets at fair value
Liabilities at fair value
Other financial liability (within other payables)
Derivative financial instruments:
– currency swaps
– interest rate swaps
– commodity pricing contracts
Liabilities at fair value
Notes
Level 1
£m
Level 2
£m
At 31 March 2015
Total
£m
Level 3
£m
17
17
19
19
19
19
36
19
19
19
–
2
–
–
–
2
4
–
–
–
(12)
(12)
–
–
9
24
1
19
53
–
(15)
–
(7)
(22)
31
–
–
–
–
37
68
(2)
–
–
(6)
(8)
31
2
9
24
1
58
125
(2)
(15)
–
(25)
(42)
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
114 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS
18 Financial instruments by category continued
Assets at fair value
Available-for-sale financial assets
Derivative financial instruments:
– currency swaps
– interest rate swaps
– forward foreign exchange contracts
– commodity pricing contracts
Assets at fair value
Liabilities at fair value
Derivative financial instruments:
– currency swaps
– interest rate swaps
– commodity pricing contracts
Liabilities at fair value
Notes
Level 1
£m
Level 2
£m
Restated*
At 31 March 2014
Total
£m
Level 3
£m
17
19
19
19
19
19
19
19
–
–
–
–
9
9
–
–
(13)
(13)
–
3
33
1
13
50
(2)
(5)
(10)
(17)
28
–
–
–
42
70
–
–
(21)
(21)
28
3
33
1
64
129
(2)
(5)
(44)
(51)
Level 1 financial instruments
The fair value of financial instruments traded in active markets (commodity futures) is based on quoted market prices at the period-end date.
A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service,
or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.
Level 2 financial instruments
The fair values of financial instruments that are not traded in an active market (interest rate swaps, cross currency swaps, commodity pricing
contracts and forward foreign exchange contracts) are determined by using valuation techniques. These valuation techniques maximise the use
of observable market data where it is available and rely as little as possible on entity-specific estimates.
The fair value of interest rate swaps, currency swaps and forward foreign exchange contracts is calculated as the present value of the future
cash flows based on observable inputs drawn from interest yield curves sourced from a reputable third-party source.
Level 3 financial instruments
The fair value of financial instruments is based on unobservable inputs that are supported by little or no market activity at the statement of financial
position date. These inputs generally reflect the entity’s own assumptions about how a market participant would reasonably be expected to
determine the price of a financial instrument.
For commodity pricing contracts, in evaluating the significance of fair value inputs, the Group generally classifies assets or liabilities as Level 3 when
their fair value is determined using unobservable inputs that individually, or when aggregated with other unobservable inputs, represent more than
10% of the fair value of the observable inputs of the assets or liabilities. An explanation of the key inputs used in calculating the fair value of these
contracts is set out in Note 3 under the heading ‘Derivatives and hedge accounting’.
Available-for-sale financial assets which are analysed at Level 3 primarily represent investments in unlisted securities. The fair values of the unlisted
securities are principally approximated at cost. Values are adjusted for permanent impairments and fair value movements as disclosed in Note 17.
For financial instruments in Level 3, the Group does not consider that changes to inputs to reasonable alternatives would have a material impact
on the income statement or equity.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
Tate & Lyle PLC | Annual Report 2015 | 115
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Notes to the Consolidated Financial Statements
continued
18 Financial instruments by category continued
The following table reconciles the movement in the Group’s net financial instruments classified in ‘Level 3’ of the fair value hierarchy:
At 1 April 2013 (Restated*)
Total gains/(losses):
– in operating profit
– in other comprehensive income
Purchases
Settlements
At 31 March 2014 (Restated*)
Total gains/(losses):
– in operating profit
– in other comprehensive income
Purchases
Settlements
At 31 March 2015
19 Derivative financial instruments
Non-current derivative financial instruments used
to manage the Group’s net debt profile
Currency swaps:
– net investment hedges
Interest rate swaps:
– fair value hedges
Current derivative financial instruments used
to manage the Group’s net debt profile
Interest rate swaps:
– accrued interest
– fair value hedges
– held for trading
Total derivative financial instruments used
to manage the Group’s net debt profile
Other current derivative financial instruments
Forward foreign exchange contracts:
– cash flow hedges
Commodity pricing contracts:
– cash flow hedges
– held for trading
Total other derivative financial instruments
Total derivative financial instruments
Presented in the statement of financial position as follows:
Non-current derivative financial instruments
Current derivative financial instruments
Commodity
pricing
contracts
– assets
£m
53
Commodity
pricing
contracts
– liabilities
£m
(21)
Available-
for-sale
assets
£m
27
Other
financial
liability
£m
–
42
–
–
(53)
42
37
–
–
(42)
37
(21)
–
–
21
(21)
(6)
–
–
21
(6)
–
(2)
4
(1)
28
(2)
5
2
(2)
31
–
–
–
–
–
–
–
(2)
–
(2)
Total
£m
59
21
(2)
4
(33)
49
29
5
–
(23)
60
At 31 March 2015
Liabilities
£m
Assets
£m
Restated*
At 31 March 2014
Liabilities
£m
Assets
£m
9
21
30
3
–
–
3
33
1
–
58
59
59
92
30
62
92
(15)
–
(15)
–
–
–
–
(15)
–
(5)
(20)
(25)
(25)
(40)
(15)
(25)
(40)
3
20
23
6
4
3
13
36
1
1
63
65
65
101
23
78
101
(2)
–
(2)
(2)
–
(3)
(5)
(7)
–
(1)
(43)
(44)
(44)
(51)
(2)
(49)
(51)
The ineffective portion recognised in operating profit that arises from cash flow hedges amounts to £nil (2014 – £nil).
The ineffective portion recognised in operating profit that arises from net investment hedges amounts to £nil (2014 – £nil).
The ineffective portion recognised in net finance expense that arises from fair value hedges amounts to £nil (2014 – £nil).
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
116 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS
19 Derivative financial instruments continued
Cash flow hedges
The Group employs forward foreign exchange contracts and commodity pricing contracts to hedge cash flow risk associated with forecast
transactions. The notional principal amounts of the outstanding forward foreign exchange contracts are as follows:
US dollar
Singapore dollar
Brazilian real
Euro
Other
At 31 March
Restated*
2014
£m
(71)
49
25
2
(3)
2015
£m
(29)
20
7
4
(3)
Gains and losses recognised in the hedging reserve in equity (Note 24) on forward foreign exchange and commodity pricing contracts at
31 March 2015 are expected to be reclassified to the income statement at various dates until December 2016.
Fair value hedges
The Group employs interest rate swap contracts to hedge interest rate risks associated with its borrowings. The notional principal amounts of the
outstanding interest rate swap contracts applied in fair value hedging relationships as of 31 March 2015 were £204 million (2014 – £345 million).
Net investment hedges
The Group employs currency swap contracts to hedge the currency risk associated with its net investments in subsidiaries located primarily
in the US and Europe. The notional principal amounts of the outstanding currency swap contracts applied in net investment hedging
relationships as of 31 March 2015 were £154 million (2014 – £147 million). Within net investment hedging gains/losses, a fair value loss of
£7 million (2014 – £12 million gain) on translation of the currency swap contracts to pounds sterling at the period-end date was recognised
in the translation reserve in shareholders’ equity (Note 24).
In addition, at 31 March 2015, of the Group’s borrowings, a total of £373 million (2014 – £456 million) are designated as hedges of the net
investments in overseas subsidiaries.
Debt-related derivatives held for trading
Some of the Group’s interest rate swap contracts hedge the Group’s exposure to interest rate risk, but do not qualify for hedge accounting. The
notional amounts of the outstanding interest rate swap contracts not designated within hedge relationships as of 31 March 2015 were £nil (2014 –
£210 million).
Trading contracts
Commodity pricing contracts held for trading relate to the Group’s commodity trading activities which are undertaken for the purposes of
supporting underlying operations.
20 Financial risk factors
Management of financial risk
The key financial risks faced by the Group are credit risk, liquidity risk, and market risks, which include interest rate risk, foreign exchange risk and
certain commodity price risks. The Board regularly reviews these risks and approves written policies covering the use of financial instruments to
manage these risks and sets overall risk limits. The derivative financial instruments approved by the Board of Tate & Lyle PLC to manage financial
risks include swaps, both interest rate and currency, swaptions, caps, forward rate agreements, foreign exchange and commodity forward
contracts and options, and commodity futures.
The Chief Financial Officer retains the overall responsibility for management of financial risk for the Group. Most of the Group’s financing, interest
rate and foreign exchange risk are managed through the Group treasury company, Tate & Lyle International Finance PLC, whose operations are
controlled by its board. Group interest rate and currency exposures are concentrated either in the treasury company or in appropriate holding
companies through market-related transactions with Group subsidiaries. Tate & Lyle International Finance PLC arranges funding and manages
interest rate, foreign exchange and bank counterparty risks within limits approved by the Board of Tate & Lyle PLC.
Commodity price risks are managed through divisional commodity trading functions in the US and Europe. These functions are controlled by
divisional management who are responsible for ratifying general strategy and overseeing performance on a monthly basis. Commodity price
contracts are categorised as being held either for trading or for hedging price exposures. Commodity contracts held for trading within the Group
are limited, confined only to tightly controlled areas within the corn pricing areas.
Market risks
Foreign exchange management
Tate & Lyle operates internationally and is exposed to foreign exchange risks arising from commercial transactions (transaction exposure),
and from recognised assets, liabilities and investments in overseas operations (translation exposure).
Transaction exposure
The Group’s policy requires subsidiaries to hedge transactional currency exposures against their functional currency once the transaction is
committed or highly probable, mainly through the use of forward foreign exchange contracts. The amounts deferred in equity from derivative
financial instruments designated as cash flow hedges are released to the income statement and offset against the movement in underlying
transactions only when the forecast transactions affect the income statement.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
Tate & Lyle PLC | Annual Report 2015 | 117
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Notes to the Consolidated Financial Statements
continued
20 Financial risk factors continued
Translation exposure
The Group manages the foreign exchange exposure to net investments in overseas operations, particularly in the US and Europe, by borrowing
principally in US dollars and euro, which provide a partial match for the Group’s major foreign currency assets. The Group also manages some of
its foreign exchange exposure to net investments in overseas operations through the use of currency swap contracts and borrowings. The amount
deferred in equity from derivative financial instruments designated as net investment hedges is offset against the foreign currency translation effect
of the net investment in overseas operations, and is released to the income statement upon disposal of those investments.
A weakening of the US dollar and euro against sterling would result in exchange gains on net debt denominated in these currencies which would
be offset against the losses on the underlying foreign currency assets.
At the year end, net debt amounting to £504 million (2014 – £353 million) was held in the following currencies: net borrowings of US dollars 105%
(2014 – 112%), euro net deposits 1% (2014 – net deposits 2%), net borrowing of pounds sterling 1% (2014 – net deposits 9%) and other currencies
net deposits 5% (2014 – net deposits 1%). The Group’s interest cost through the income statement is impacted by changes in the relevant
exchange rates.
The following table illustrates only the Group’s sensitivity to the fluctuation of the major currencies on its financial assets and liabilities, as defined
and set out in Note 18:
Sterling/US dollar 10% change
Sterling/euro 10% change
At 31 March 2015
At 31 March 2014
Income
statement
–/+£m
1
3
Equity
–/+£m
47
5
Income
statement
–/+£m
–
3
Equity
–/+£m
37
6
Interest rate management
The Group has an exposure to interest rate risk, arising principally from changes in US dollar, sterling and euro interest rates. This risk is managed
by fixing or capping portions of debt using interest rate derivatives to achieve a target level of fixed/floating rate net debt, which aims to optimise net
finance expense and reduce volatility in reported earnings. The Group’s policy is that between 30% and 75% of Group net debt (excluding the
Group’s share of joint-venture net debt) is fixed for more than one year and that no interest rates are fixed for more than 12 years. At 31 March 2015,
the longest term of any fixed rate debt held by the Group was until November 2019 (2014 – November 2019). The proportion of net debt at 31
March 2015 (excluding the Group’s share of joint-venture net debt) that was fixed or capped for more than one year was 31% (2014 – 40%).
The Group considers a 100 basis point change in interest rates a reasonably possible change except where rates are less than 100 basis points. In
these instances it is assumed that the interest rates increase by 100 basis points and decrease to zero for the purpose of performing the sensitivity
analysis. The impact is calculated with reference to the gross debt and cash held as at 31 March 2015 assuming that other variables remain
unchanged.
As at 31 March 2015 if interest rates increase by 100 basis points, Group’s profit before tax will decrease by £3 million (2014 – no impact). If interest
rates decrease by 100 basis points, or less where applicable, Group profit before tax will increase by £2 million (2014 – £1 million increase).
Price risk management
Tate & Lyle participates mainly in four markets: food and beverage; industrial ingredients; pharmaceutical and personal care; and animal feed. Food
and beverage and industrial ingredients are the most significant. All ingredients are produced from renewable crops, predominantly corn (maize).
Tate & Lyle is exposed to movements in the future prices of commodities in those domestic and international markets where the Group buys and
sells corn (and related co-products) and energy for production. Commodity futures, forwards and options are used where available to hedge
inventories and the costs of raw materials for unpriced and prospective contracts not covered by forward product sales. In most cases, these
hedging contracts mature within one year and are either traded on recognised exchanges or over the counter.
The table below illustrates the sensitivity of the Group’s commodity pricing contracts as at 31 March to the price movement of commodities:
Corn 50% change
At 31 March 2015
At 31 March 2014
Income
statement
–/+£m
1
Equity
–/+£m
–
Income
statement
–/+£m
1
Equity
–/+£m
–
The majority of the Group’s commodity pricing contracts are held for trading and changes in mark-to-market values of these contracts are taken
directly into the income statement. Amounts deferred in equity from commodity pricing contracts designated as cash flow hedges are released
to the income statement and offset against the movement in underlying transactions when they occur.
Credit risk management
Counterparty credit risk arises from the placing of deposits and entering into derivative financial instrument contracts with banks and financial
institutions, as well as credit exposures inherent within the Group’s outstanding receivables.
The Group manages credit risk by entering into financial instrument contracts only with highly credit-rated authorised counterparties which are
reviewed and approved annually by the Board.
118 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS 20 Financial risk factors continued
The Group has Board approved maximum counterparty exposure limits for specified banks and financial institutions based on the long-term credit
ratings of Standard & Poor’s and Moody’s (typically single A long-term credit ratings or higher). Trading limits assigned to commercial customers
are based on ratings from Dun & Bradstreet and Credit Risk Monitor. In cases where published financial ratings are not available or inconclusive,
credit application, reference checking, and obtaining of customers’ financial information such as liquidity and turnover ratio, are required to evaluate
customers’ credit worthiness.
Analysis of amounts set off
The following tables set out the financial assets and financial liabilities which are subject to offsetting, enforceable master netting arrangements and
similar agreements. Amounts which are set off against financial assets and liabilities in the Group’s statement of financial position are set out below.
Amounts not offset but which could be offset under certain circumstances are also shown.
At 31 March 2015
Trade and other receivables
Derivative financial assets
Cash and cash equivalents
Total
Trade and other payables
Derivative financial liabilities
Bank loans and overdrafts
Total
At 31 March 2014 (Restated*)
Trade and other receivables
Derivative financial assets
Cash and cash equivalents
Total
Trade and other payables
Derivative financial liabilities
Bank loans and overdrafts
Total
Gross financial
assets/
(liabilities)
£m
281
92
195
568
Gross financial
(liabilities)/
assets set off
£m
–
–
–
–
Net financial
assets/
(liabilities)
£m
281
92
195
568
Related
amounts not
set off
£m
–
(15)
–
(15)
(327)
(40)
(768)
(1 135)
–
–
–
–
(327)
(40)
(768)
(1 135)
–
15
–
15
Gross financial
assets/
(liabilities)
£m
252
101
346
699
Gross financial
(liabilities)/
assets set off
£m
–
–
–
–
(283)
(51)
(760)
(1 094)
–
–
–
–
Net financial
assets/
(liabilities)
£m
252
101
346
699
(283)
(51)
(760)
(1 094)
Related
amounts not
set off
£m
–
(5)
–
(5)
–
5
–
5
Notes
18
19
32
18
19
27
Notes
18
19
32
18
19
27
Net
£m
281
77
195
553
(327)
(25)
(768)
(1 120)
Net
£m
252
96
346
694
(283)
(46)
(760)
(1 089)
Amounts which do not meet the criteria for offsetting on the statement of financial position but could be settled net in certain circumstances
principally relate to derivative transactions under International Swaps and Derivatives Association (ISDA) agreements where each party has
the option to settle amounts on a net basis in the event of default of the other party.
Analysis of maximum credit exposure
Counterparties’ positions are monitored on a regular basis to ensure that they are within the approved limits and there are no significant
concentrations of credit risks.
The Group considers its maximum exposure to credit risk at the year end date is as follows:
Cash and cash equivalents
Trade and other receivables
Derivative financial instruments – assets
Other financial assets
Available-for-sale financial assets
At 31 March
Restated*
2014
£m
346
252
101
–
28
2015
£m
195
281
92
2
31
Notes
32
22
19
17
17
The Group’s trade receivables are short term in nature and largely comprise amounts receivable from business customers. Concentrations of
credit risk with respect to trade receivables are limited due to the Group’s having a number of key quality customers and a customer base which
is large, unrelated and internationally dispersed.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
Tate & Lyle PLC | Annual Report 2015 | 119
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Notes to the Consolidated Financial Statements
continued
20 Financial risk factors continued
Liquidity risk management
The Group manages its exposure to liquidity risk and ensures maximum flexibility in meeting changing business needs, by maintaining access
to a wide range of funding sources, including capital markets and bank borrowings. Capital market issues outstanding at 31 March 2015 include
the US$250 million 6.625% 144A bond maturing in June 2016, and the £200 million 6.75% bond maturing in November 2019.
The Group ensures that it has sufficient undrawn committed bank facilities to provide liquidity back-up to cover its funding requirements for the
foreseeable future. The Group has a core committed bank facility of US$800 million which was renewed in July 2014 and matures in July 2019.
This facility is unsecured and contains common financial covenants for Tate & Lyle and its subsidiary companies that the pre-exceptional and
amortisation interest cover ratio should not be less than 2.5 times and the multiple of net debt to EBITDA, as defined in our financial covenants,
should not be greater than 3.5 times. The Group intends to refinance the core committed bank facility no later than 12 months prior to the facility’s
maturity in July 2019. The Group monitors compliance against all its financial obligations and it is Group policy to manage the consolidated
statement of financial position so as to operate well within these covenanted restrictions. In both the current and comparative reporting period,
the Group complied with its financial covenants at all measurement points. The majority of the Group’s borrowings are raised through the Group
treasury company, Tate & Lyle International Finance PLC, and are then on-lent to the business units on an arm’s length basis.
Current Group policy is to ensure that, after subtracting the total of undrawn committed facilities, no more than 10% of gross debt matures within
12 months and at least 35% has a maturity of more than 2.5 years. At 31 March 2015, after subtracting total undrawn committed facilities, there
was no debt maturing within 12 months (2014 – none) and 24% maturing within two and a half years (2014 – 29%). The average maturity of the
Group’s gross debt was 4.2 years (2014 – 3.9 years). At the year end the Group held cash and cash equivalents of £195 million (2014 – £346 million)
and had committed facilities of £539 million (2014 – £480 million) of which £539 million (2014 – £480 million) was undrawn. These resources are
maintained to provide liquidity back-up and to meet the projected maximum cash outflow from debt repayment, capital expenditure and seasonal
working capital needs foreseen for at least a year into the future at any one time.
The table below analyses the Group’s non-derivative financial liabilities and derivative assets and liabilities based on the remaining period at the
statement of financial position date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Liquidity analysis
Borrowings including finance leases
Interest on borrowings
Trade and other payables
Derivative contracts:
– receipts
– payments
Commodity contracts
Liquidity analysis
Borrowings including finance leases
Interest on borrowings
Trade and other payables
Derivative contracts:
– receipts
– payments
Commodity contracts
<1 year
£m
(307)
(25)
(316)
67
(60)
(8)
<1 year
£m
(321)
(38)
(283)
99
(86)
(10)
1–5 years
£m
(385)
(60)
(13)
At 31 March 2015
> 5 years
£m
(57)
(1)
–
217
(206)
–
–
–
–
Restated*
At 31 March 2014
> 5 years
£m
(255)
(14)
–
1–5 years
£m
(164)
(69)
(2)
244
(226)
–
–
–
–
Included in borrowings are £2,394,000 of 6.5% cumulative preference shares. Only one year’s worth of interest payable on these shares is included
in the less than one year category.
Interest on borrowings is calculated based on borrowings held at year end without taking into account future issues. Floating-rate interest
is calculated using forward interest rates derived from interest rate yield curves as at year end.
Derivative contracts include currency swaps, forward exchange contracts and interest rate swaps. All commodity pricing contracts such as options
and futures are shown separately under commodity contracts.
Commodity contracts include only net settled commodity derivative contracts and gross settled commodity purchase contracts with negative fair
values. Purchase contracts outflows represent actual contractual cash flows under the purchase contracts and not their fair values. Cash outflows
from the purchase contracts are offset by cash inflows received from sale contracts; however, these inflows are not included as part of this analysis.
Financial assets and liabilities denominated in currencies other than pounds sterling are converted to pounds sterling using year end exchange rates.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
120 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS 20 Financial risk factors continued
Capital risk management
The Group’s primary objectives in managing its capital are to safeguard the business as a going concern; to maintain the dividend policy; to
maintain sufficient financial flexibility to undertake its investment plans and to retain as a minimum an investment grade credit rating which enables
consistent access to debt capital markets. The Group’s financial profile and level of financial risk is assessed on a regular basis in the light of
changes to the economic conditions, business environment, the Group’s business profile and the risk characteristics of its businesses.
Tate & Lyle has contractual relationships with Moody’s and Standard & Poor’s (S&P) for the provision of credit ratings, and it is the Group’s policy
to keep them informed of all major developments. At 31 March 2015, the long-term credit rating from Moody’s was Baa2 (stable outlook) and from
S&P was BBB (stable outlook). The Group is committed to maintaining investment grade credit ratings.
The Group regards its total capital as follows:
Net debt (including share of net cash of joint ventures)
Equity attributable to owners of the Company
Total capital
Note
33
2015
£m
504
935
1 439
At 31 March
2014
£m
353
1 049
1 402
The Board has set two ongoing key performance indicators (KPIs) to measure the Group’s financial strength. The target levels for these financial
KPIs are that the ratio of net debt/EBITDA should not exceed two times and interest cover should exceed five times. These ratios are calculated
on the same basis as the external financial covenants noted above. The ratios for these KPIs for the financial years ended 31 March 2015 and
31 March 2014 are:
Net debt/EBITDA
Interest cover
21 Inventories
Raw materials and consumables
Work in progress
Finished goods
Total
Year ended 31 March
2014
times
0.8
11.6
2015
times
1.3
10.7
At 31 March
Restated*
2014
£m
218
19
135
372
2015
£m
172
22
169
363
Finished goods inventories of £5 million (2014 – £4 million) are carried at realisable value, this being lower than cost. Inventories of £96 million
(2014 – £150 million) are carried at market value. During the year to 31 March 2015, the Group did not recognise a net impairment charge against
inventories (2014 – £nil).
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
Tate & Lyle PLC | Annual Report 2015 | 121
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Notes to the Consolidated Financial Statements
continued
22 Trade and other receivables
Non-current trade and other receivables
Other receivables
Total
Current trade and other receivables
Trade receivables
Less: allowance for doubtful debts
Trade receivables – net
Prepayments and accrued income
Margin deposits
Other receivables
Total
The carrying amounts of trade and other receivables were denominated in the following currencies:
US dollar
Euro
Sterling
Other
Total
At 31 March
Restated*
2014
£m
–
–
At 31 March
Restated*
2014
£m
239
(8)
231
13
6
15
265
At 31 March
Restated*
2014
£m
143
64
11
47
265
2015
£m
2
2
2015
£m
256
(8)
248
11
7
24
290
2015
£m
177
70
13
32
292
Allowance for doubtful debts
Trade receivables are subject to limited credit risk because the Group has a number of key customers of good credit quality and a large
number of internationally dispersed customers. Trade receivables are regularly reviewed for collectibility and an allowance has been established for
doubtful debts against which trade receivables are written-off when they are no longer considered to be collectible. Movements on the allowance
for doubtful debts were as follows:
At 1 April
Net credit/(expense) for the year (Note 5)
Currency translation differences
At 31 March
Year ended 31 March
Restated*
2014
£m
(10)
1
1
(8)
2015
£m
(8)
–
–
(8)
As at 31 March 2015, trade receivables of £22 million (2014 – £18 million) were past due but not impaired because they were considered to be
collectible. The ageing analysis of these trade receivables was as follows:
Up to 30 days past due
1–3 months past due
Over 3 months past due
Total
Trade receivables are not generally interest-bearing but interest may be charged to customers on overdue amounts.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
122 | Tate & Lyle PLC | Annual Report 2015
At 31 March
Restated*
2014
£m
18
–
–
18
2015
£m
13
5
4
22
FINANCIAL STATEMENTS
23 Share capital and share premium
At 31 March 2014 and 31 March 2015
Ordinary
share capital
£m
117
Share
premium
£m
406
Total
£m
523
Ordinary shares carry the right to participate in dividends and each share entitles the holder to one vote on matters requiring shareholder approval.
Allotted, called up and fully paid equity share capital
At 1 April
Allotted under share option schemes
At 31 March
Year ended 31 March 2015
Year ended 31 March 2014
Shares
468 202 883
21 092
468 223 975
£m
117
–
117
Shares
468 192 900
9 983
468 202 883
£m
117
–
117
Own shares
Own shares represent the Company’s ordinary shares that are acquired to meet the Group’s expected obligations under share-based incentive
arrangements (see Note 25). Own shares are held either by the Company in treasury or by an Employee Benefit Trust that was established by the
Company.
Movements in own shares held were as follows:
At 1 April
Purchased in the market
Transferred to employees
At 31 March
Year ended 31 March 2015
Cost
£m
37
12
(12)
37
Number
4 706 429
2 025 551
(1 713 348)
5 018 632
Year ended 31 March 2014
Cost
£m
29
29
(21)
37
Number
4 413 175
3 545 000
(3 251 746)
4 706 429
During the year, 1,315,000 (2014 – 3,045,000) shares were purchased into treasury at a cost of £8 million (2014 – £25 million) and 710,551 (2014
– 500,000) shares were purchased into the Employee Benefit Trust at a cost of £4 million (2014 – £4 million).
During the year, 1,628,492 (2014 – 2,443,619) shares held in treasury and 84,856 (2014 – 808,127) shares held in the Employee Benefit Trust were
transferred to employees to satisfy vested share awards.
At 31 March 2015, 2,129,422 (2014 – 2,442,914) shares were held in treasury with a market value of £13 million (2014 – £16 million) and 2,889,210
(2014 – 2,263,515) shares were held in the Employee Benefit Trust with a market value of £17 million (2014 – £15 million).
At 31 March 2015, own shares held represented 1.1% (2014 – 1.0%) of the Company’s called up share capital.
Analysis of ordinary shareholders
Number of shares of 25p each
Up to 500
501 – 1 000
1 001 – 1 500
1 501 – 2 000
2 001 – 5 000
5 001 – 10 000
10 001 – 200 000
200 001 – 500 000
Above 500 000
Total
Number of
holdings
4 693
3 735
1 888
1 193
1 915
504
589
96
130
14 743
At 31 March 2015
Total
%
1 228 327
31.83%
2 922 371
25.33%
2 358 680
12.81%
2 144 189
8.09%
5 905 692
12.99%
3 513 836
3.42%
29 139 092
4.00%
0.65%
31 191 604
0.88% 389 820 184
100.00% 468 223 975
%
0.26%
0.63%
0.50%
0.46%
1.26%
0.75%
6.22%
6.66%
83.26%
100.00%
Tate & Lyle PLC | Annual Report 2015 | 123
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Notes to the Consolidated Financial Statements
continued
24 Other reserves
At 1 April 2013*
Other comprehensive income
Cash flow hedges:
– Fair value losses in the year
Currency translation differences:
– Loss on currency translation of foreign operations
– Gain on net investment hedges
Share of other comprehensive expenses of joint ventures
At 31 March 2014*
Other comprehensive income
Cash flow hedges:
– Fair value losses in the year
– Reclassified and reported in the income statement in the year
– Tax effect of the above movements
Gain on revaluation of available-for-sale financial assets
Currency translation differences:
– Gain on currency translation of foreign operations
– Loss on net investment hedges
Share of other comprehensive expenses of joint ventures
At 31 March 2015
Hedging
reserve
£m
2
Currency
translation
reserve
£m
40
Other
reserves
£m
97
(2)
–
–
1
1
(5)
(2)
2
–
–
–
–
(4)
–
(104)
50
(26)
(40)
–
–
–
–
56
(32)
(18)
(34)
–
–
–
–
97
–
–
–
2
–
–
–
99
Total
£m
139
(2)
(104)
50
(25)
58
(5)
(2)
2
2
56
(32)
(18)
61
* The adoption of IFRS 11 ‘Joint Arrangements’ did not impact on the opening or closing balance of Other reserve for the 2014 financial year.
25 Share-based incentives
The Company operates share-based incentive arrangements for the executive directors, senior executives and other eligible employees under
which awards and options are granted over the Company’s ordinary shares. All of the arrangements under which awards and options were
outstanding during the 2015 and 2014 financial years are classified as equity-settled. During the year, the compensation expense recognised
in profit or loss in respect of share-based incentives was £nil million (2014 – £8 million).
Background
Performance Share Plan
The Group’s principal ongoing share-based incentive arrangement is the Performance Share Plan (PSP). Participation in the PSP is restricted
to the executive directors and other senior executives. Awards made under the PSP normally vest provided the participant remains in the Group’s
employment during the performance period and the Group achieves earnings per share (EPS) and return on capital employed (ROCE) targets.
Up to 50% of each award vests dependent on the compound annual growth rate of the Group’s adjusted diluted EPS from continuing operations
reaching specified levels over the performance period. Up to 50% of each award vests dependent on the Group’s adjusted ROCE from continuing
operations reaching specified levels at the end of the performance period. The performance period is the period of three financial years beginning
with the financial year in which the award is granted. During the 2015 and 2014 financial years, the Group recognised an expense in relation to
share-based incentives that were awarded to the Chief Executive Officer in 2010 and 2011 that were subject to the same performance conditions
that applied to awards made under the PSP in those years. From 2012, the Chief Executive Officer has participated in the PSP.
Further information on the PSP is set out in the Directors’ Remuneration Report on pages 58 to 78.
Group Bonus Plan – Deferred Element
Bonuses earned under the Group Bonus Plan are normally paid in cash up to 100% of the base salary of the participating executive. Any excess
above 100% of base salary is paid in the form of deferred shares that are released after two years subject to the executive remaining in the Group’s
employment. During the vesting period, payments in lieu of dividends are made in relation to the deferred shares.
Further information on the Group Bonus Plan is set out in the Directors’ Remuneration Report.
Sharesave Plan
Options are granted from time to time under the Company’s Sharesave Plan, which is open to all employees in the UK. It offers eligible employees
the option to buy shares in the Company after a period of three or five years funded from the proceeds of a savings contract to which they
contribute on a monthly basis.
Executive Share Option Scheme
Options are outstanding under the Company’s legacy executive share option scheme. The last grant of options was made under this scheme in
2004 and those options vested in 2007.
Restricted Share Awards
The Company has made restricted share awards to a number of eligible employees. Awards made normally vest provided the participant remains
in the Group’s employment during the performance period and other conditions, specific to the individual awards are met.
Further information for these awards made in relation to executive directors are set out in the Directors’ Remuneration Report on page 58 to 78.
124 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS 25 Share-based incentives continued
Movements in the year
Movements in the awards outstanding during the year were as follows:
Outstanding at 1 April
Granted
Exercised
Lapsed
Outstanding at 31 March
Exercisable at 31 March
Year ended 31 March 2015
Weighted
average
exercise
price
(Pence)
10p
17p
24p
12p
10p
–
Awards
(Number)
9 858 384
3 946 005
(1 734 440)
(2 174 467)
9 895 482
2 093 156
Year ended 31 March 2014
Weighted
average
exercise
price
(Pence)
10p
11p
14p
20p
10p
16p
Awards
(Number)
10 838 115
2 591 210
(3 261 729)
(309 212)
9 858 384
1 981 524
The weighted average market price of the Company’s ordinary shares on the dates on which awards were exercised during the year was 670p
(2014 – 817p).
Awards granted in the year
During the year, PSP awards were granted over 2,878,550 shares (2014 – 2,548,235 shares), Restricted Share Awards were granted over 938,914
shares (2014 – nil) and Sharesave options were granted over 128,541 shares (2014 – 42,975 shares). The compensation expense recognised in
relation to these awards is based on the fair value of the awards at their respective grant dates. The weighted average fair values of the awards
granted during the year and the principal assumptions made in measuring those fair values were as follows:
Fair value at grant date
Principal assumptions:
Share price on grant date
Expected life of the awards
Risk-free interest rate
Dividend yield on the Company’s shares
Volatility of the Company’s shares
Year ended 31 March 2015
Year ended 31 March 2014
PSP
598p
Sharesave
127p
PSP
752p
Sharesave
198p
660p
605p
3 years 3.3/5.3 years
1.2%/1.95%
3.4%
25%
–
4.2%
n/a
817p
3 years
–
3.5%
n/a
782p
3.3/5.3 years
0.45%/0.9%
3.5%
30%
The fair value of the awards was measured using the Black-Scholes option pricing formula, taking into account factors such as non-transferability,
exercise restrictions and behavioural considerations.
Expected volatility was based on the historical volatility of the market price of the Company’s shares over the expected life of the awards.
No deferred shares were issued under the Group Bonus Plan during this, or the prior year.
Awards outstanding at the end of the year
The range of exercise prices and the weighted average remaining contractual life of awards outstanding at the end of the year were as follows:
Exercise price
Nil
200p to 399p
400p to 799p
Total
At 31 March 2015
Weighted
average
contractual
life
(Months)
49.3
–
38.7
49.1
Awards
(Number)
9 705 477
–
190 005
9 895 482
At 31 March 2014
Weighted
average
contractual
life
(Months)
48.2
14.2
34.5
47.7
Awards
(Number)
9 638 499
98 694
121 191
9 858 384
Tate & Lyle PLC | Annual Report 2015 | 125
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Notes to the Consolidated Financial Statements
continued
26 Trade and other payables
Non-current payables
Other payables
Accruals and deferred income
Total
Current payables
Trade payables
Social security
Accruals and deferred income
Margin payables
Other payables
Total
27 Borrowings
Non-current borrowings
Unsecured borrowings
2,394,000 6.5% cumulative preference shares of £1 each
Industrial Revenue Bonds 2016–2036 (US$77,655,000)
6.625% Guaranteed Notes 2016 (US$250,000,000)
6.75% Guaranteed Notes 2019 (£200,000,000)
Total
Bank loans
Variable unsecured loans
Total
Other borrowings
Obligations under finance leases
Total
Total non-current borrowings
At 31 March
Restated*
2014
£m
–
2
2
At 31 March
Restated*
2014
£m
198
2
59
1
23
283
At 31 March
Restated*
2014
£m
2
47
157
214
420
–
–
17
17
437
2015
£m
13
–
13
2015
£m
228
2
73
–
13
316
2015
£m
2
52
173
218
445
2
2
16
16
463
On a return of capital on a winding-up, the holders of 6.5% cumulative preference shares shall be entitled to £1 per share, in preference to
all other classes of shareholders. Holders of these shares are entitled to vote at meetings, except on the following matters: any question as
to the disposal of the surplus profits after the dividend on these shares has been provided for; the election of directors; their remuneration;
any agreement between the directors and the Company; or the alteration of the Articles of Association dealing with any such matters.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
126 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS
27 Borrowings continued
Current borrowings
Unsecured borrowings
5.0% Guaranteed Notes 2014 (US$500,000,000)
US commercial paper
Short-term loans
Loans from joint ventures
Total
Other borrowings
Obligations under finance leases
Total current borrowings
At 31 March
Restated*
2014
£m
304
–
13
4
321
2
323
2015
£m
–
252
11
40
303
2
305
Included within borrowings are £204 million (2014 – £345 million) of borrowings subject to fair value hedges, of which amortised cost has been
increased by £22 million (2014 – £24 million) in the tables above.
Secured borrowings
Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.
Fair values
The fair values of the Group’s borrowings compared with their book values are as follows:
Non-current unsecured borrowings
Non-current bank loans
Other non-current borrowings
Current borrowings
Total
Book value
£m
445
2
16
305
768
At 31 March 2015
Fair value
£m
469
2
16
305
792
Restated*
At 31 March 2014
Fair value
£m
451
–
17
326
794
Book value
£m
420
–
17
323
760
The fair value of borrowings has been determined using either quoted market prices, broker dealer quotations or discounted cash flow analysis.
Interest rate risks and maturity of borrowings
The maturity profile of the Group’s non-current borrowings is as follows:
One to two years
Two to five years
After five years
Total non-current borrowings
At 31 March
Restated*
2014
£m
3
167
267
437
2015
£m
181
226
56
463
Floating rate borrowings bear interest based on relevant national LIBOR equivalents. If the interest rates applicable to the Group’s floating rate debt
and cash held as at 31 March 2015 rise by an average of 1% over the year to 31 March 2016, there would be £3 million impact on the Group’s profit
before tax (2014 – £nil).
Taking into account the Group’s interest rate and cross currency swap contracts, the effective interest rates of its borrowings are as follows:
2,394,000 6.5% cumulative preference shares of £1 each
Industrial Revenue Bonds 2016–2036 (US$77,655,000)
5.0% Guaranteed Notes 2014 (US$500,000,000)
6.625% Guaranteed Notes 2016 (US$250,000,000)
6.75% Guaranteed Notes 2019 (£200,000,000)
2015
6.5%
0.1%
n/a
4.1%
4.4%
At 31 March
2014
6.5%
0.1%
2.8%
4.1%
4.3%
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
Tate & Lyle PLC | Annual Report 2015 | 127
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Notes to the Consolidated Financial Statements
continued
27 Borrowings continued
Short-term loans and overdrafts
Current short-term loans mature within the next 12 months and overdrafts are repayable on demand. Both short-term loans and bank overdrafts
are arranged at floating rates of interest and expose the Group to cash flow interest rate risk.
Credit facilities and arrangements
Tate & Lyle International Finance PLC holds a US$800 million five year committed multi-currency club facility with a core of highly-rated banks
that was refinanced in July 2014, and matures in July 2019.
As at 31 March 2015, this committed facility remains undrawn. The facility has a value of £539 million (2014 – £480 million). This facility incurs
commitment fees at market rates prevailing when the facility was arranged. The facility may only be withdrawn in the event of specified events
of default. In addition, the Group has substantial uncommitted facilities.
Finance lease commitments
Amounts payable under finance lease commitments are as follows:
Within one year
Between one and five years
After five years
Total
Less future finance charges
Present value of minimum lease payments
At 31 March 2015
Present value
of minimum
lease
payments
£m
2
9
7
18
Minimum
lease
payments
£m
4
10
9
23
(5)
18
At 31 March 2014
Present value
of minimum
lease
payments
£m
2
9
8
19
Minimum
lease
payments
£m
4
10
11
25
(6)
19
28 Deferred tax
Deferred tax is calculated on temporary differences arising between the carrying amount of assets and liabilities for accounting purposes and
their respective tax values. Deferred tax liabilities arise where the carrying amount is higher than the tax value (more tax deduction has been taken).
This can happen where we invest in capital assets, as governments often encourage investment by allowing tax depreciation to be recognised
faster than accounting depreciation. This reduces the tax value of the asset relative to its carrying amount. Deferred tax liabilities are generally
provided on all taxable temporary differences. Deferred tax assets arise where the carrying amount is lower than the tax value (less tax benefit
has been taken). This can happen where we have trading losses, which cannot be offset in the current period but can be carried forward and we
consider it probable that we will be able to offset the losses against future taxable profits.
Movements in deferred income tax net assets/(liabilities) in the year are as follows:
Deferred tax
At 1 April 2013 (Restated*)
Charged to the income statement
Charged to other comprehensive income
Charged directly to equity
Currency translation differences
At 31 March 2014 (Restated*)
Charged to the income statement
Credited to other comprehensive income
Charged directly to equity
Currency translation differences
At 31 March 2015
£m
(13)
(5)
(22)
(1)
3
(38)
(8)
22
–
(4)
(28)
Of the amounts of deferred tax charged to the income statement and other comprehensive income, a charge of £nil million (2014 – £1 million) arose
from changes in tax rates. There was no impact from the imposition of new taxes.
Deferred tax assets in respect of unutilised tax losses of £664 million (2014 – £614 million) have not been recognised to the extent that they exceed
taxable profits against which these assets may be recovered. No unrelieved tax losses expired under current tax legislation in the year ended
31 March 2015.
The total deferred tax on unremitted earnings is £3 million (2014 – £3 million) of which £nil (2014 – £nil) has been recognised. The Group has not
recognised the amount as it is able to control the timing of the reversal of these temporary differences and it is probable that they will not reverse
in the foreseeable future. The aggregate amount of temporary differences arising from unremitted profits at the period-end date was approximately
£3 million (2014 – £3 million).
Other deferred tax liabilities principally relate to deferred tax on acquired intangible assets.
Other deferred tax assets principally relate to deferred tax on provisions.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
128 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS
28 Deferred tax continued
The movements in deferred tax assets and liabilities during the year are as follows:
Deferred tax liabilities
At 1 April 2013 (Restated*)
Transfers between categories
Credited to the income statement
Currency translation differences
At 31 March 2014 (Restated*)
Transfers between categories
Credited to the income statement
Currency translation differences
At 31 March 2015
Deferred tax assets
At 1 April 2013 (Restated*)
Transfers between categories
(Charged)/credited to the income statement
Charged to other comprehensive income
Charged directly to equity
Currency translation differences
At 31 March 2014 (Restated*)
Transfers between categories
Charged to the income statement
Credited to other comprehensive income
Charged directly to equity
Currency translation differences
At 31 March 2015
Capital
allowances
in excess of
depreciation
£m
(134)
–
1
12
(121)
–
1
(12)
(132)
Tax losses
£m
42
–
(23)
–
–
(3)
16
–
(5)
–
–
2
13
Other
£m
(30)
3
23
2
(2)
(1)
4
(2)
(1)
Other
£m
2
(3)
1
–
–
–
–
1
(2)
2
–
–
1
Total
£m
(164)
3
24
14
(123)
(1)
5
(14)
(133)
Total
£m
151
(3)
(29)
(22)
(1)
(11)
85
1
(13)
22
–
10
105
Retirement
benefit
obligations
£m
100
–
(6)
(22)
–
(8)
64
–
(5)
20
–
8
87
Share-based
payments
£m
7
–
(1)
–
(1)
–
5
–
(1)
–
–
–
4
Deferred tax assets and liabilities are offset where there is a legally enforceable right of offset and there is an intention to settle the balances net.
As a result of these offsets, the deferred tax balances are presented in the statement of financial position as follows:
Deferred tax liabilities
Deferred tax assets
Net deferred tax liability
At 31 March
Restated*
2014
£m
(42)
4
(38)
2015
£m
(32)
4
(28)
29 Retirement benefit obligations
(a) Plan information
(i) Pensions
The Group operates a number of defined benefit pension plans, principally in the UK and the US and, until December 2013, in the Netherlands.
Generally, the pension benefits provided under these plans are determined based on the pensionable salary and period of pensionable service
of the individual members. Most of the plans are funded and the plan assets held separately from those of the Group in funds that are under the
control of trustees. The extent of the powers of the trustees, in particular in respect of funding and investment strategy, varies and is dependent
on local regulations and the rules of each plan. Payments made by the Group to the plans principally comprise funding contributions agreed with
the trustees that are determined in accordance with local regulations to ensure that appropriate funding levels are maintained and funding deficits
are eliminated over a reasonable period of time. All of the significant defined benefit pension plans operated by the Group are closed to new
entrants and most are closed to future accrual.
The Group operates defined contribution pension plans in a number of countries. Contributions payable by the Group to these plans during the
year amounted to £5 million (2014 – £3 million).
(ii) Other benefits
The Group’s subsidiaries in the US provide unfunded retirement medical plans to the majority of their employees. Such plans provide financial
assistance in meeting various costs including medical, dental and prescription drugs. Employees are required to contribute to the cost of benefits
received under the plans. The Group meets the remaining costs of providing these benefits in the period in which they are incurred.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
Tate & Lyle PLC | Annual Report 2015 | 129
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Notes to the Consolidated Financial Statements
continued
29 Retirement benefit obligations continued
(b) Summary of financial effect
(i) Analysis of amounts presented in the income statement
Charged/(credited) to operating profit
Defined benefit plans:
– Current service cost
Pension plans
Medical plans
– Past service cost
Pension plans
Medical plans
– Gain on settlement
– Plan administration expenses
Defined contribution plans
Net charge to operating profit
Charged/(credited) to finance expense
Interest on benefit obligations
Interest on plan assets
Net charge to finance expense
Year ended 31 March
2014
£m
2015
£m
3
1
1
(2)
–
3
6
5
11
62
(54)
8
5
2
(4)
2
5
3
8
64
(56)
8
During the year ended 31 March 2014, the assets and liabilities of the defined benefit pension plan in the Netherlands were transferred to a new
collective defined contribution plan and the defined benefit plan was closed. For accounting purposes, this transfer was treated as a settlement
on which the Group recognised a gain of £4 million (of which £2 million was attributed to the Bulk Ingredients segment and £2 million was attributed
to the Speciality Food Ingredients segment).
(ii) Analysis of amounts presented in other comprehensive income
Return on plan assets
Actual return on plan assets (net of asset management expenses)
Interest on plan assets
Actual return higher/(lower) than interest on plan assets
Actuarial gains/(losses)
(Loss)/gain from changes in financial assumptions
Loss from changes in demographic assumptions
Gain/(loss) from experience against assumptions
Net actuarial (loss)/gain
Year ended 31 March
2014
£m
2015
£m
215
(54)
161
(155)
(46)
15
(186)
27
(56)
(29)
60
(40)
(1)
19
During the year ended 31 March 2014, the trustees of the Amylum UK Pension Scheme agreed a full buy-in of its benefit obligations at a cost of
£82 million (which was partially funded by an additional contribution from the Group of £6 million). For accounting purposes, the related benefit
obligation was valued at £69 million such that there was a loss on plan assets of £13 million.
(iii) Analysis of defined benefit liability
Benefit obligations:
Funded plans
Unfunded plans
Fair value of plan assets
Net deficit
Presented in the statement of financial position:
Retirement benefit surplus
Retirement benefit deficit
130 | Tate & Lyle PLC | Annual Report 2015
At 31 March 2015
At 31 March 2014
Pensions
£m
Medical
benefits
£m
Total
£m
Pensions
£m
Medical
benefits
£m
(1 636)
(56)
(1 692)
1 534
(158)
25
(183)
(158)
–
(69)
(69)
–
(69)
–
(69)
(69)
(1 636)
(125)
(1 761)
1 534
(227)
25
(252)
(227)
(1 425)
(46)
(1 471)
1 305
(166)
–
(166)
(166)
–
(54)
(54)
–
(54)
–
(54)
(54)
Total
£m
(1 425)
(100)
(1 525)
1 305
(220)
–
(220)
(220)
FINANCIAL STATEMENTS 29 Retirement benefit obligations continued
(iv) Analysis of movements in the net deficit
At 1 April 2013
Year ended 31 March 2014
– Decrease in the benefit obligation
– Decrease in the fair value of plan assets
At 31 March 2014
Year ended 31 March 2015
– Increase in the benefit obligation
– Increase in the fair value of plan assets
At 31 March 2015
Pensions
£m
(185)
Medical benefits
£m
(80)
121
(102)
(166)
(221)
229
(158)
26
–
(54)
(15)
–
(69)
Total
£m
(265)
147
(102)
(220)
(236)
229
(227)
(c) Defined benefit obligations
(i) Principal assumptions
Pensions
For accounting purposes, the benefit obligation of each plan has been calculated in accordance with IAS 19 based on data gathered for the most
recent actuarial valuation and by applying assumptions made by the Group on the advice of independent actuaries.
As required by local regulations, actuarial valuations of the US pension plans are carried out each year and those of the UK pension plans are
carried out at least every three years. An actuarial valuation at 31 March 2013 of the Tate & Lyle Group Pension Scheme (Scheme) has been
concluded. Under the new arrangements core funding contributions remain at £12 million per year. A new secured funding account was
established where supplimentary contributions of £6 million per year will be made during the first six years, payable to the Trustee on certain
triggering events such as under performance of the Scheme’s investments or a deterioration in the strength of Tate & Lyle’s financial covenant.
The first two annual payments amounting to £12 million were credited to the secured funding account upon its establishment in October 2014 and
have been accounted for as additional contributions to the Scheme in the second half of the year. An actuarial valuation of the Amylum UK Pension
Scheme was last carried out at 30 June 2011.
Principal assumptions used in calculating the benefit obligation were as follows:
Inflation rate
Expected rate of salary increases
Expected rate of pension increases:
– Deferred pensions
– Pensions in payment
Discount rate
Inflation rate
Expected rate of salary increases
Expected rate of pension increases:
– Deferred pensions
– Pensions in payment
Discount rate
UK
CPI 2.0%
RPI 3.0%
n/a
2.0%
2.8%
3.3%
UK
CPI 2.4%
RPI 3.4%
n/a
2.4%
3.2%
4.2%
At 31 March 2015
US
Other
2.5%
3.5%
n/a
n/a
3.8%
n/a
n/a
n/a
n/a
n/a
At 31 March 2014
US
Other
2.5%
3.5%
n/a
n/a
4.3%
2.0%
2.0%
1.6%
1.6%
3.5%
Assumptions regarding future mortality rates of members of the Group’s pension plans are based on published statistics and taking into account
the profile of the plan members. On this basis, the average life expectancies assumed for members of the plans are as follows:
Male aged 65 now
Male aged 65 in 20 years’ time
Female aged 65 now
Female aged 65 in 20 years’ time
At 31 March 2015
At 31 March 2014
UK
23 years
26 years
24 years
27 years
US
22 years
23 years
24 years
25 years
UK
23 years
26 years
24 years
27 years
US
19 years
20 years
21 years
22 years
Shorter longevity assumptions are used for members who retire on grounds of ill health.
Tate & Lyle PLC | Annual Report 2015 | 131
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Notes to the Consolidated Financial Statements
continued
29 Retirement benefit obligations continued
Medical benefits
Principal assumptions used in calculating the benefit obligation are medical cost inflation and the discount rate applied to the expected benefit
payments. Management assumed medical cost inflation at 6.0% per annum (2014 – 6.0%), grading down to 5% by 2016, and used a discount rate
of 3.5% (2014 – 4.1%).
(ii) Analysis of movements in the benefit obligation
At 1 April 2013
Year ended 31 March 2014
Service cost
Plan administration costs
Interest on benefit obligation
Actuarial gains/(losses):
– Changes in financial assumptions
– Changes in demographic assumptions
– Experience against assumptions
Net actuarial (loss)/gain
Employees’ contributions
Benefits paid
Transfer on settlement
Currency translation differences
(Increase)/decrease in the benefit obligation
At 31 March 2014
Year ended 31 March 2015
Service cost current
Service cost past
Plan administration costs
Interest on benefit obligation
Actuarial gains/(losses):
– Changes in financial assumptions
– Changes in demographic assumptions
– Experience against assumptions
Net actuarial loss
Employees’ contributions
Benefits paid
Currency translation differences
Increase in the benefit obligation
At 31 March 2015
UK
£m
(998)
–
(2)
(41)
23
(39)
(7)
(23)
–
49
–
2
(15)
(1 013)
–
–
(3)
(41)
(115)
(1)
15
(101)
–
51
(2)
(96)
(1 109)
US
£m
(519)
(1)
–
(19)
21
(1)
3
23
–
26
–
45
74
(445)
(1)
(1)
–
(19)
(35)
(41)
3
(73)
–
25
(54)
(123)
(568)
Pension benefits
Total
£m
(1 592)
Other
£m
(75)
Medical benefits
£m
(80)
(4)
–
(1)
(2)
–
1
(1)
(1)
2
67
–
62
(13)
(2)
–
–
–
–
–
–
–
–
–
–
(2)
(15)
(5)
(2)
(61)
42
(40)
(3)
(1)
(1)
77
67
47
121
(1 471)
(3)
(1)
(3)
(60)
(150)
(42)
18
(174)
–
76
(56)
(221)
(1 692)
(2)
–
(3)
18
–
2
20
–
4
–
7
26
(54)
(1)
2
–
(2)
(5)
(4)
(3)
(12)
–
4
(6)
(15)
(69)
(iii) Maturity of obligations
At 31 March 2015, the weighted average duration of the significant defined benefit obligations was as follows:
Pension plans:
– UK
– US
Medical benefits
At 31 March 2015, the benefits expected to be paid by the plans over the next 10 years were as follows:
UK
£m
48
48
148
257
US
£m
28
29
91
161
Pension benefits
Total
£m
Other
£m
Medical benefits
£m
–
–
–
–
76
77
239
418
5
4
13
22
Benefit payments:
– Within 12 months
– Between 1 to 2 years
– Between 2 to 5 years
– Between 5 to 10 years
132 | Tate & Lyle PLC | Annual Report 2015
Total
£m
(1 672)
(7)
(2)
(64)
60
(40)
(1)
19
(1)
81
67
54
147
(1 525)
(4)
1
(3)
(62)
(155)
(46)
15
(186)
–
80
(62)
(236)
(1 761)
Duration
18 years
13 years
10 years
Total
£m
81
81
252
440
FINANCIAL STATEMENTS 29 Retirement benefit obligations continued
(d) Plan assets
(i) Investment strategy
Principal risks
The defined benefit pension plans expose the Group to actuarial risks such as interest rate, longevity, inflation and investment risk.
Interest rate risk
Inflation risk
Volatility in the financial markets can have a significant effect on the
benefit obligation as the calculation of the obligation involves
discounting based on yields on AA-rated corporate bonds. A
decrease in the bond yield will increase the benefit obligation.
Inflation risk arises where pensionable salaries, deferred pensions or
pensions in payment are subject to inflation increases. A higher rate of
inflation will lead to a higher benefit obligation.
Longevity risk
Investment risk
Longevity (or life expectancy) represents a risk because the longer
members of the plans live the higher benefit payments to them will be.
An increase in life expectancy beyond that assumed will increase the
benefit obligation.
If the return on the plan assets is lower than the discount rate applied
to the benefit obligation, there will be an increase in the deficit (or
reduction in the surplus) on the plan.
Mitigation of risk
The Group encourages the trustees of the plans to adopt an investment policy that seeks to mitigate these risks, which involves investing a
significant proportion of the plan assets in liability-driven investment portfolios that mitigate interest rate, inflation and investment risks. The Group
seeks to ensure that, as far as is practicable, the investment portfolios of the funded plans are invested in long-term fixed interest securities with
maturities and in currencies that match the expected future benefit payments as they fall due. In the UK, interest rate derivatives are used to
achieve close matching where matching fixed-interest securities are not available in the market. Most of the inflation risk for the Group arises in the
UK since deferred pensions and pensions in payment in the US do not attract inflation increases. Inflation risk is mitigated by holding index-linked
government bonds and corporate bonds and, in the UK, inflation derivatives. At 31 March 2015, £367 million (2014 – £346 million) of the benefit
obligation was matched by qualifying insurance policies that also mitigate longevity risk. The plans also maintain a portfolio of return-seeking
investments, principally in the form of equities and property.
(ii) Plan assets by category
Equities – quoted
Corporate bonds – quoted
Government bonds – quoted
Property – unquoted
Insurance policies – unquoted
Other assets – unquoted
Equities – quoted
Corporate bonds – quoted
Government bonds – quoted
Property – unquoted
Insurance policies – unquoted
Other assets – unquoted
UK
£m
291
125
250
26
364
66
1 122
UK
£m
237
148
105
45
343
96
974
At 31 March 2015
Total
£m
US
£m
101
230
57
21
3
–
412
US
£m
95
173
43
17
3
–
331
392
355
307
47
367
66
1 534
At 31 March 2014
Total
£m
332
321
148
62
346
96
1 305
Plan assets do not include any direct investments in securities issued by the Group or any property occupied by or other assets used by the Group.
Assets are classified as quoted only if they have a quoted market price in an active market as defined by IFRS 13 ‘Fair Value Measurement’.
All other assets are classified as unquoted.
Tate & Lyle PLC | Annual Report 2015 | 133
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Notes to the Consolidated Financial Statements
continued
29 Retirement benefit obligations continued
(iii) Analysis of movements in the plan assets
At 1 April 2013
Year ended 31 March 2014
Interest on plan assets
Actual return (lower)/higher than interest on plan assets
Employer’s contributions
Employees’ contributions
Benefits paid
Transfer on settlement
Currency translation differences
Decrease in fair value of plan assets
At 31 March 2014
Year ended 31 March 2015
Interest on plan assets
Actual return higher than interest on plan assets
Employer’s contributions
Employees’ contributions
Benefits paid
Currency translation differences
Increase in fair value of plan assets
At 31 March 2015
UK
£m
999
42
(41)
24
–
(49)
–
(1)
(25)
974
40
129
29
–
(51)
1
148
1 122
US
£m
346
13
12
18
–
(26)
–
(32)
(15)
331
14
32
19
–
(25)
41
81
412
Other
£m
62
1
–
1
1
(2)
(63)
–
(62)
–
–
–
–
–
–
–
–
–
Total
£m
1 407
56
(29)
43
1
(77)
(63)
(33)
(102)
1 305
54
161
48
–
(76)
42
229
1 534
Employer contributions to the pension plans for the year ended 31 March 2015 were £48 million (2014 – £43 million). The Company also paid an
additional £4 million (2014 – £4 million) to the US unfunded retirement medical plans to meet the cost of providing the benefits in the financial year.
(e) Funding of the plans
A full valuation is performed by actuaries for the trustees of each plan to determine the level of funding required. Employer contributions are agreed
between the trustees of each plan and the Group on the basis of these valuations. The assumptions used by the trustees for funding purposes may
differ from the assumptions made by the Group for accounting purposes. As a result, the funding deficits or surpluses on the plans may be very
different from the accounting deficits or surpluses.
During the year ending 31 March 2016, the Group expects to contribute approximately £41 million to its defined benefit pension plans and to pay
approximately £5 million in relation to retirement medical benefits.
(f) Sensitivity analysis
At 31 March 2015, the sensitivity of the net deficit on the plans to changes in the principal assumptions was as follows (assuming in each case that
the other assumptions are unchanged):
Change
in assumption
+/-
Increase/(decrease) in obligation
Decrease
in assumption
£m
Increase
in assumption
£m
50 bp
1 year
100 bp
50 bp
100 bp
78
74
(245)
3
(7)
(53)
(74)
304
(2)
8
Pension plans
Inflation rate
Life expectancy
Discount rate
Medical benefits
Medical cost inflation
Discount rate
134 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS 30 Provisions for other liabilities and charges
At 31 March 2014 – Restated*
Provided in the year
Released in the year
Utilised in the year
Exchange and other movements
At 31 March 2015
Provisions are expected to be utilised as follows:
– within one year
– after more than one year
Total
Insurance
funds
£m
6
4
–
(1)
(2)
7
Restructuring
and closure
provisions
£m
2
–
–
(1)
–
1
Other
provisions
£m
14
–
–
(1)
–
13
Total
£m
22
4
–
(3)
(2)
21
At 31 March
Restated*
2014
£m
13
9
22
2015
£m
13
8
21
Insurance funds represent amounts provided by the Group’s captive insurance subsidiary in respect of the expected level of insurance claims.
These provisions are expected to be utilised within five years.
Restructuring and closure provisions relate to restructuring within the Group and are expected to be utilised within five years.
Other provisions primarily relate to Group legal matters and previously disposed businesses and are expected to be utilised within five years.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
Tate & Lyle PLC | Annual Report 2015 | 135
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Notes to the Consolidated Financial Statements
continued
31 Change in working capital
Continuing operations
Decrease in inventories
(Increase)/decrease in receivables
Increase/(decrease) in payables
Increase/(decrease) in derivative financial instruments (excluding debt-related derivatives)
Decrease in provisions for other liabilities and charges
Decrease in working capital
32 Cash and cash equivalents
Year ended 31 March
Restated*
2014
£m
44
34
(56)
(3)
(4)
15
2015
£m
6
(9)
1
13
(3)
8
Cash at bank and in hand
Short-term bank deposits
Total
Presented in the financial statements as follows:
Cash and cash equivalents
Total
2015
£m
108
87
195
2015
£m
195
195
The effective interest rate on short-term deposits was 0.3% (2014 – 0.3%), with an average maturity of three days (2014 – four days).
The carrying amount of cash and cash equivalents are denominated in the following currencies:
Euro
US dollar
Sterling
Other
Total
33 Net debt
Reconciliation of the (decrease)/increase in cash and cash equivalents to the movement in net debt:
2015
£m
31
107
29
28
195
At 31 March
Restated*
2014
£m
191
155
346
At 31 March
Restated*
2014
£m
346
346
At 31 March
Restated*
2014
£m
33
238
52
23
346
Net (decrease)/increase in cash and cash equivalents
Net decrease in borrowings
Decrease in net debt resulting from cash flows
Fair value and other movements
Debt acquired on acquisition of subsidiaries
Currency translation differences
Movement in share of net cash in joint ventures
(Increase)/decrease in net debt in the year
Net debt at beginning of year
Net debt at end of year
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
136 | Tate & Lyle PLC | Annual Report 2015
Year ended 31 March
Restated*
2014
£m
68
44
112
–
(3)
37
(20)
126
(479)
(353)
2015
£m
(170)
43
(127)
1
(5)
(39)
19
(151)
(353)
(504)
FINANCIAL STATEMENTS 33 Net debt continued
Movements in the Group’s net debt are as follows:
At 1 April 2013 – Restated*
Decrease/(increase) resulting from cash flows
Fair value and other movements
Reclassification
Debt acquired on acquisition of subsidiaries
Currency translation differences
At 31 March 2014 – Restated*
(Increase)/decrease resulting from cash flows
Fair value movements/other
Reclassification
Debt acquired on acquisition of subsidiaries
Currency translation differences
At 31 March 2015
Cash and cash
equivalents
£m
305
68
–
–
–
(27)
346
(170)
–
–
–
19
195
Borrowings and finance leases
Current
£m
(58)
40
–
(304)
(3)
2
(323)
40
6
–
(4)
(24)
(305)
Non-current
£m
(816)
4
21
304
–
50
(437)
3
(1)
–
(1)
(27)
(463)
Net debt is denominated in the following currencies:
Euro
US dollar
Sterling
Other
Total
34 Contingent liabilities
Trade guarantees
Trade guarantees
Debt related
derivatives
Net cash of
joint ventures
£m
38
–
(21)
–
–
12
29
–
(4)
–
–
(7)
18
£m
52
(18)
–
–
–
(2)
32
26
–
–
–
(7)
51
2015
£m
5
(530)
(5)
26
(504)
Total
£m
(479)
94
–
–
(3)
35
(353)
(101)
1
–
(5)
(46)
(504)
At 31 March
Restated*
2014
£m
9
(397)
32
3
(353)
2015
£m
–
At 31 March
2014
£m
1
No trade guarantees have been given in the normal course of business by the Group as at 31 March 2015 (2014 – £1 million). The guarantees
outstanding as at 31 March 2014 were in respect of Revenue and Customs, ECGD recourse agreements, letters of credit and tender and
performance bonds.
Sale of EU Sugars
As previously announced, American Sugar Holdings (ASR) raised a number of claims totalling in the region of £40 million that it believes it has
under the Share and Business Sale Agreement relating to its acquisition of the Group’s EU Sugars business in September 2010. These claims in
large part relate to the turbulence in the supply of raw sugar to the EU during the period prior to closing and the increase in certain rolling re-export
commitments of the business. Some, but not all, of these issues were considered in the expert adjudication on the closing accounts in which,
as noted in the 2012 Annual Report, the expert strongly supported Tate & Lyle’s position. ASR (through its subsidiary T&L Sugars Limited) has
commenced formal proceedings in respect of these claims which the Group intends to defend vigorously. A trial of these proceedings was held
in the Commercial Court in London in early May 2015, with the judge’s verdict expected later in the year.
Other claims
The Group is subject to claims and litigation generally arising in the ordinary course of its business, some of which are for substantial amounts. All
such actions are strenuously defended but provision is made for liabilities that are considered likely to arise on the basis of current information and
legal advice and after taking into account the Group’s insurance arrangements. While there is always uncertainty as to the outcome of any claim or
litigation, it is not expected that claims and litigation existing at 31 March 2015 will have a material adverse effect on the Group’s financial position.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
Tate & Lyle PLC | Annual Report 2015 | 137
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Notes to the Consolidated Financial Statements
continued
35 Commitments
Capital commitments
Commitments for the purchase of intangible assets
Commitments for the purchase of property, plant and equipment
Total
At 31 March
Restated*
2014
£m
1
36
37
2015
£m
4
71
75
Operating lease arrangements
Operating lease payments represent rentals payable by the Group for certain of its land, buildings, plant and equipment. Certain operating lease
agreements allow for renewal at the end of the original term at the option of the Group.
At the period-end date, the Group has outstanding commitments under non-cancellable operating leases which fall due as follows:
Within one year
Between one year and five years
After five years
Total
At 31 March
Restated*
2014
£m
21
68
85
174
2015
£m
20
70
104
194
36 Acquisitions and disposals
Year ended 31 March 2015
Acquisitions
On 1 August 2014, the Group completed its acquisition of the trade and assets of Winway Biotechnology Nantong Co., Ltd, a polydextrose
producer in China. Total consideration was £8 million, of which £2 million has been deferred in escrow as security against a number of general
warranties and representations detailed in the acquisition agreement. The provisionally determined fair value of net assets acquired totalled
£5 million, with provisional goodwill of £3 million recognised.
On 4 December 2014, the Group acquired a 90% equity interest in Gemacom Tech Indústria E Comércio S.A., a leading Food Systems business
in Brazil. The new venture, Tate & Lyle Gemacom (Gemacom), provides the Group with local infrastructure and capabilities to accelerate the growth
of its Food Systems business in Brazil. At the acquisition date, the Group entered into put and call option arrangements, whereby at a future date it
could be required to purchase, or could itself opt to purchase the remaining 10% equity interest in the company for a fixed £3 million option price
(present value £2 million). In addition, deferred cash consideration of £9 million which is payable at the end of five years from acquisition date had
been recognised at its present value of £6 million. No non-controlling interest was recognised as the risks and rewards of the ownership had been
assumed by the Group. Contingent consideration of £2 million in relation to the expected profit share payable to the minority shareholders over five
years from the acquisition date has been recognised, representing the present value of the relevant share of forecast profits of Gemacom for the
next five years. Therefore, total consideration was £27 million (consisting of cash consideration of £19 million, deferred consideration of £6 million,
and contingent consideration of £2 million). The contingent consideration has been disclosed as a ‘Level 3’ financial instrument (see Note 18). The
fair value of net assets acquired totalled £5 million, with provisional goodwill of £24 million recognised.
Cash consideration
Deferred consideration
Contingent consideration
Total consideration
Add: Liability recognised in respect of put option
Less: Net assets acquired
Provisional goodwill
Cash flows:
Cash consideration paid
Cash acquired
Cash outflow on acquisitions
Winway
£m
8
–
–
8
–
(5)
3
8
–
8
Gemacom
£m
19
6
2
27
2
(5)
24
19
(1)
18
2015
£m
27
6
2
35
2
(10)
27
27
(1)
26
Goodwill recognised during the year was attributable to the broadening of the Group’s product offering and other synergies expected to be
achieved with the Group’s existing businesses. None of the goodwill arising on these acquisitions is currently tax deductible.
Businesses acquired during the year contributed sales of £8 million and profit before tax of £nil to the Group’s results. Had they been acquired
at the beginning of the year, the Group’s financial results would not have been materially different.
Acquisition related costs were around £1 million.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
138 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS 36 Acquisitions and disposals continued
Year ended 31 March 2014
Acquisitions
On 17 May 2013, the Group acquired a 100% equity interest in Biovelop, an early-stage Swedish manufacturer of oat beta glucan. The acquisition
broadened the Group’s health and wellness offering and added an oat-based ‘clean label’, speciality fibre with strong health claims to its existing
corn-based portfolio.
On 8 October 2013, the Group acquired a 51% equity interest in Jiangsu Howbetter Food Co., Ltd, a leading Food Systems business in China.
The new venture, Tate & Lyle Howbetter, provides the Group with local infrastructure and capabilities to accelerate the growth of its Food Systems
business in China. At the acquisition date, the Group entered into put and call option arrangements whereby at a future date it could be required
to purchase, or could itself opt to purchase, the 49% non-controlling interest in Tate & Lyle Howbetter for an amount in cash based on the future
results of that business. The Group initially recognised a liability of £2 million in relation to the put option and a corresponding debit to equity
attributable to owners of the Company reflecting the non-controlling interests of the minority shareholders. Aggregate goodwill of £10 million was
recognised on business combinations during the year which was determined as follows:
Cash consideration
Non-controlling interests (share of net assets acquired)
Less: Net assets acquired
Goodwill
Cash flows:
Cash consideration paid
Cash outflow on acquisitions
Biovelop
£m
12
–
(4)
8
Howbetter
£m
3
1
(2)
2
12
12
3
3
2014
£m
15
1
(6)
10
15
15
Goodwill recognised during the year was attributable to the broadening of the Group’s product offering and other synergies expected to be
achieved with the Group’s existing businesses. None of the goodwill recognised during the year is expected to be deductible for tax purposes.
Business acquired during the year contributed revenue of £2 million and a loss before tax of £2 million to the Group’s results. Had they been
acquired at the beginning of the year, their contribution to the Group’s results would not have been materially different.
Acquisition-related costs were less than £1 million.
Disposal
On 31 May 2013, the on-sale by the acquirer of Orsan (a monosodium glutamate producer in which Tate & Lyle held a stake that was sold in 2009)
resulted in a one-off operating gain of £3 million.
37 Events after the reporting period
Major business re-alignment
Re-alignment of Eaststarch European joint venture
On 21 April 2015, the Group announced the exit from the substantial part of its European Bulk Ingredients business. Tate & Lyle and Archer Daniels
Midland Company (ADM) signed an agreement to re-align Eaststarch C.V. (Eaststarch), their joint venture corn wet milling business in Europe in
which each owns a 50% equity share. Eaststarch owns and operates three corn wet mills located in Slovakia, Bulgaria and Turkey, and has a 50%
equity share in Europe’s largest corn wet mill in Hungary. Tate & Lyle will:
• Acquire full ownership of the plant in Slovakia
• Exit the predominantly Bulk Ingredients plants in Bulgaria, Turkey and Hungary which will be acquired by ADM
• Receive a cash sum of €240 million at closing, subject to customary closing adjustments, including for net cash and working capital, and an
additional payment of up to €20 million in 2019 conditional on future corn and sugar pricing
• Continue to supply its European customers with crystalline fructose, a speciality sweetener, by being appointed as distributor for crystalline
fructose produced from the plant in Turkey under a long-term agreement
• Appoint ADM as exclusive agent for Bulk Ingredients produced from the plant in Slovakia and Tate & Lyle’s wholly-owned corn wet mill in
the Netherlands under a long-term agreement.
Completion is conditional upon regulatory clearances which are expected in the summer. Net cash proceeds from this agreement to be received
by Tate & Lyle will be retained to provide flexibility to invest for growth in Speciality Food Ingredients. In the year ended 31 March 2015, Eaststarch
had adjusted operating profit of £83 million, 23% lower than in 2014 reflecting lower EU sugar prices. The pro-forma impact on the adjusted income
statement for 2015 (assuming the transaction occurred at 1 April 2014) is disclosed as additional financial information on page 158.
Tate & Lyle PLC | Annual Report 2015 | 139
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Notes to the Consolidated Financial Statements
continued
37 Events after the reporting period continued
Re-focus and restructure SPLENDA® Sucralose
On 21 April 2015, the Group announced that it had decided to consolidate SPLENDA® Sucralose production into its facility in the US, and close
its Singapore facility by Spring 2016.
Exceptional cost impact of the business re-alignment
The re-structuring of the European Bulk Ingredients business is expected to give rise to a pre-tax exceptional profit on disposal of approximately
£60 million subject to exchange rate movements and the timing of completion.
In total, exceptional charges of up to around £185 million will be recognised from these business re-alignment actions. These include charges of
£118 million recognised in the year ended 31 March 2015, and a further exceptional charge to be recognised in the year ending 31 March 2016
of around £65 million. These exceptional charges consist of:
• An exceptional charge of around £163 million for the re-structuring of the SPLENDA® Sucralose business. This consists of £113 million for the
impairment of the full carrying value of the Singapore facility recognised in the year ended 31 March 2015. The impairment charge comprises
a full write-down of the property, plant and equipment (£108 million) and associated intangible assets (£5 million). Anticipated cash closure costs
of up to £50 million will be recognised in the year ending 31 March 2016.
• An exceptional charge of up to £20 million in relation to the restructuring of our European operations to be predominantly recognised in the year
ending 31 March 2016. This consists of up to £15 million of anticipated exceptional cash costs (of which £5 million have been recognised in the
year ended 31 March 2015) and around £5 million of non-cash items.
38 Related party disclosures
Identity of related parties
The Group has related party relationships with its subsidiaries, joint ventures and associates, the Group’s pension schemes and with key
management being its directors and executive officers. No related party transactions with close family members of the Group’s key management
occurred in the current or comparative year.
Subsidiaries, joint ventures and associates
Transactions entered into by the Company 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. Transactions and balances with and between joint ventures
are as shown below. There are no such transactions with associates.
Year ended 31 March
Restated*
2014
£m
2015
£m
142
265
2015
£m
24
16
–
40
154
304
At 31 March
Restated*
2014
£m
10
21
8
12
Continuing operations
Sales of goods and services
– to joint ventures
Purchases of goods and services
– from joint ventures
Receivables
– due from joint ventures
Payables
– due to joint ventures
Financing
– loans to joint ventures
– deposits from joint ventures
The Group had no material related party transactions containing unusual commercial terms
The Group provides guarantees in respect of banking facilities of a joint venture totalling £8 million (2014 – £9 million).
Key management compensation
Key management compensation is disclosed in Note 8.
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
140 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS
39 Currency exchange rates
The principal exchange rates used to translate the results, assets and liabilities and cash flows of the Group’s foreign operations into pounds
sterling were as follows:
Average rate
US dollar
Euro
Year-end rate
US dollar
Euro
40 Subsidiaries, joint ventures and associates
Subsidiaries based in the United Kingdom1
Company
Astaxanthin Manufacturing Limited
Cesalpinia (UK) Limited
G.C. Hahn and Company Limited
Hahntech International Limited
Harvey Steel Sugars Limited2
Histonpark Limited
Robinson Milling Systems (Tewkesbury) Limited
T.L.S.S. Pension Nominees Limited
Tate & Lyle Group Services Limited
Tate & Lyle Holdings Americas Limited
Tate & Lyle Holdings Limited2
Tate & Lyle Industrial Holdings Limited2
Tate & Lyle Industries Limited
Tate & Lyle International Finance PLC2
Tate & Lyle Investments (Gulf States) Limited
Tate & Lyle Investments Brazil Limited
Tate & Lyle Investments Limited2
Tate & Lyle Overseas Limited
Tate & Lyle Pension Trust Limited2
Tate & Lyle Share Shop Limited2
Tate & Lyle Technology Limited2
Tate & Lyle Trading & Developments Limited2
Tate & Lyle UK Limited2
Tate & Lyle Ventures II LP
Tate & Lyle Ventures Limited2
Tate & Lyle Ventures LP
Tate & Lyle LLC
Year ended 31 March
2014
£1 =
2015
£1 =
1.61
1.28
2015
£1 =
1.49
1.38
1.59
1.19
At 31 March
2014
£1 =
1.67
1.21
Percentage of
equity attributable
to Tate & Lyle PLC
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Type of business
Dormant
Dormant
Blending
Dormant
Dormant
Dormant
Dormant
Dormant
Holding company
Holding company
Dormant
Dormant
Holding company
In-house treasury company
Dormant
Holding company
Holding company
Dormant
Pension company
Dormant
Holding company
Dormant
Holding company
Holding company
Holding company
Holding company
Holding company
1 Registered in England and Wales, except Tate & Lyle LLC which is registered in Delaware, US.
2 Direct subsidiaries of Tate & Lyle PLC.
Tate & Lyle PLC | Annual Report 2015 | 141
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Notes to the Consolidated Financial Statements
continued
40 Subsidiaries, joint ventures and associates continued
Subsidiaries operating overseas
Country of
incorporation
or registration
Argentina
Australia
Company
Tate & Lyle Argentina SA
Tate & Lyle ANZ Pty Limited
Belgium
Bermuda
Brazil
Tate & Lyle Services (Belgium) N.V.2
Tate & Lyle Management & Finance Limited
Tate & Lyle Brasil S.A.1
G.C. Hahn & Co. do Brasil Estabilizantes e Tecnologia para
Alimentos Ltda
Tate & Lyle Holdings Brasil LTDA
Tate & Lyle Gemacom Tech Ltda
Tate & Lyle Ingredients Canada Limited
Tate & Lyle Chile Commercial Ltda
Tate & Lyle Trading (Shanghai) Co. Ltd1
G.C. Hahn & Co. Food Stabilizer Business (Shanghai) Ltd1
Tate & Lyle Howbetter Co. Ltd1
Tate & Lyle Food Ingredients (Nantong) Company Limited
Tate & Lyle Colombia S.A.S
G.C. Hahn & Co. d.o.o. Za distribuciju stabilizacionihsistema
G.C. Hahn & Co. Stabilizacni technika, s.r.o.
Tate & Lyle Egypt LLC
G.C. Hahn & Cie. S.A.R.L.
Tate & Lyle Ingredients France S.A.S.
G.C. Hahn & Co. Stabilisierungstechnik GmbH
G.C. Hahn & Co. Cooperationsgeschaft mbH
HAHN International GmbH
HL Handelskontor GmbH
Tate & Lyle Germany GmbH
Tate & Lyle Insurance (Gibraltar) Limited
Tate & Lyle Greece S.A.
Tate & Lyle Investments (India) Private Ltd
Tate & Lyle Israel Limited
Gamtal Foods Ltd
Tate & Lyle Italia S.P.A.
Tate & Lyle Japan KK
UAB G.C. Hahn & Co.
Tate & Lyle Mexico, S. de R.L. de C.V.
Mexama, S.A. de C.V.
Talo Services
Tate & Lyle Morocco SA
Nederlandse Glucose Industrie B.V.
Tate & Lyle Netherlands B.V.
Tate & Lyle Biomaterials Europe B.V.
G.C. Hahn & Co. Technika stabilizowania Sp.z.o.o.
Tate & Lyle Global Shared Services Sp.z.o.o.
Tate & Lyle Poland Sp.z o.o.
OOO Hahntech Service1
Tate & Lyle Slovakia, s.r.o.
Tate & Lyle Singapore Pte Ltd
Tate & Lyle Singapore Holdings Pte Ltd
Tate & Lyle Singapore WWT Pte. Ltd.
Tate & Lyle South Africa Proprietary Limited
Canada
Chile
China
Colombia
Croatia
Czech Republic
Egypt
France
Germany
Gibraltar
Greece
India
Israel
Italy
Japan
Lithuania
Mexico
Morocco
Netherlands
Poland
Russian
Federation
Slovakia
Singapore
South Africa
142 | Tate & Lyle PLC | Annual Report 2015
Type of business
SFI distribution and sales support
Food systems production and SFI
distribution
Internal service provider
Internal service provider
Citric acid production and SFI
distribution
Dormant
Holding company
Food systems production and
sales
SFI sales support
SFI distribution and sales support
SFI distribution and sales support
Food systems sales
Food systems production
Polydextrose production
SFI distribution and sales support
Food systems sales
Food systems sales
Dormant
Food systems sales
Research and development centre
Food systems production
Holding company
Dormant
Dormant
BI and SFI sales support
Reinsurance
BI distribution and SFI sales
support
Dormant
Dormant
Dormant
Food systems production and SFI
sales support
SFI distribution
Food systems sales
SFI distribution and sales support
Dormant
Internal service provider
BI and SFI production
Holding company
BI and SFI production
Dormant
Dormant
Internal service provider
BI & SFI sales support
Food systems sales
Internal service provider
Sucralose production
Holding company
Internal service provider
Food systems production and SFI
distribution
Percentage of
equity attributable
to Tate & Lyle PLC
100
100
100
100
100
100
100
90
100
100
100
100
51
100
100
100
100
100
100
100
100
100
100
100
100
100
95
100
100
65
100
100
100
100
65
100
100
100
100
100
100
100
100
100
100
100
100
100
100
FINANCIAL STATEMENTS 40 Subsidiaries, joint ventures and associates continued
Country of
incorporation
or registration
Spain
Sweden
Ukraine
United Arab
Emirates
US
Company
G.C. Hahn Estabilizantes y Tecnologia para Alimentos
Ebromyl S.L.
Talan Iberica SA
Tate & Lyle Sweden AB
PII G.C. Hahn & Co. Kiev1
Tate & Lyle DMCC
Staley Holdings LLC
Tate & Lyle Custom Ingredients LLC
Tate & Lyle Finance LLC
TLHUS, Inc.
Tate & Lyle Ingredients Americas LLC
Tate & Lyle Sucralose LLC
TLI Holding LLC
Tate & Lyle Domestic International Sales Corporation
Tate & Lyle Grain, Inc.
Tate & Lyle Malic Acid LLC
Tate & Lyle Sugar Holdings, Inc.
Tate & Lyle Americas LLC
Tate & Lyle Citric Acid LLC
Staley International Inc.
G.C. Hahn USA LLC
Type of business
Food systems sales
Dormant
Dormant
Oat protein and Beta Glucan
production
Food systems sales
Food systems and SFI sales support
Holding company
Food systems production
In-house finance
Holding company
BI and SFI production
Sucralose production
In-house finance
Internal service provider
Grain products
Dormant
Holding company
Internal service provider
Citric acid production
Cereal sweeteners & starches
Dormant
Percentage of
equity attributable
to Tate & Lyle PLC
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
1 Non-coterminous year end.
2 Direct subsidiaries of Tate & Lyle PLC.
Joint ventures
Country of
incorporation
or registration
Austria
Bulgaria
Hungary
Mexico
Netherlands
Romania
Slovakia
Turkey
US
Company
Eaststarch Austria GmbH1
Amylum Bulgaria Marketing and Logistics EOOD1
Amylum Bulgaria EAD1,2
Hungrana Kft1,2
Greenpower E851
Hungranatrans Kft1
SzSzV Kft1
Almidones Mexicanos SA2
Promotora de Productos y Mercados Mexicanos, S.A. de C.V.
Eaststarch C.V.
Eastern Sugar B.V.
Amylum Romania S.R.L.1
Amylum Slovakia spol s.r.o.1
Eastern Sugar s.r.o.
Eastern Sugar Slovensko, a.s. v likvidacii
Amylum Nisasta Sanayi Ve Ticaret Anonim Sireketi1
DuPont Tate & Lyle Bio Products Company, LLC
Type of business
Internal service provider
Dormant
BI and SFI production
BI and SFI production
BI and SFI production
BI and SFI production
Holding company
BI and SFI production
BI and SFI production
Holding company
Holding company
BI and SFI sales support
BI and SFI production
Dormant
Dormant
BI and SFI production
Industrial ingredients
1 Share capital held by Eaststarch C.V.
2 Non-coterminous year end.
Percentage of
equity attributable
to Tate & Lyle PLC
50
50
50
25
25
25
25
50
50
50
50
50
50
50
50
50
50
Tate & Lyle PLC | Annual Report 2015 | 143
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Notes to the Consolidated Financial Statements
continued
40 Subsidiaries, joint ventures and associates continued
Associates
Country of incorporation or registration
Thailand
Company
Tapioca Development Corporation1
Type of business
Starch production
1 Indirect associate of Tate & Lyle PLC.
Percentage of
equity attributable
to Tate & Lyle PLC
33.3
The results, assets and liabilities and cash flows of those entities whose financial years are not coterminous with that of the Group are consolidated
in the Group’s financial statements on the basis of management accounts for the year to 31 March.
41 Reconciliation of adjusted performance measures
For the reasons set out in Note 1, Tate & Lyle presents adjusted performance measures including adjusted sales, adjusted operating profit,
adjusted profit before tax and adjusted earnings per share. Reported measures are also adjusted to reflect the presentation of Group financial
information on a proportionate consolidation basis. For periods presented, these adjusted performance measures exclude, where relevant,
exceptional items, the amortisation of acquired intangible assets, net retirement benefit interest, and tax on those adjustments.
The following table shows the reconciliation of the adjusted performance measures to the most directly comparable measures presented in
accordance with IFRS.
£m (unless otherwise stated)
Continuing operations
Sales
Operating profit
Net finance expense
Profit after tax of joint ventures and associates
Profit before tax
Income tax expense
Non-controlling interests
Profit attributable to owners of the Company
Basic earnings per share
Diluted earnings per share
Effective tax rate
Discontinued operations
Income tax credit
Profit for the year
Non-controlling interests
Profit attributable to owners of the Company
Basic earnings per share
Diluted earnings per share
Total operations
Sales
Operating profit
Net finance expense
Profit after tax of joint ventures and associates
Profit before tax
Income tax expense
Non-controlling interests
Profit attributable to owners of the Company
Basic earnings per share
Diluted earnings per share
Effective tax rate
Reported
Year ended 31 March 2015
Adjusting
items
Adjusted
Reported
Restated*
Year ended 31 March 2014
Adjusting
items
Adjusted
2 356
33
(31)
49
51
(21)
–
30
6.6p
6.5p
40.5%
–
–
–
–
–
–
2 356
33
(31)
49
51
(21)
–
30
6.6p
6.5p
40.5%
338
214
8
(49)
173
(27)
–
146
31.4p
31.2p
–
–
–
–
–
–
338
214
8
(49)
173
(27)
–
146
31.4p
31.2p
2 694
247
(23)
–
224
(48)
–
176
38.0p
37.7p
21.2%
–
–
–
–
–
–
2 694
247
(23)
–
224
(48)
–
176
38.0p
37.7p
21.2%
2 754
251
(35)
61
277
(32)
–
245
52.8p
52.1p
11.6%
28
28
–
28
6.0p
5.9p
2 754
251
(35)
61
277
(4)
–
273
58.8p
58.0p
1.5%
393
98
8
(61)
45
(28)
–
17
3.7p
3.6p
(28)
(28)
–
(28)
(6.0)p
(5.9)p
393
98
8
(61)
45
(56)
–
(11)
(2.3)p
(2.3)p
3 147
349
(27)
–
322
(60)
–
262
56.5p
55.7p
18.5%
–
–
–
–
–
–
3 147
349
(27)
–
322
(60)
–
262
56.5p
55.7p
18.5%
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
144 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS
41 Reconciliation of adjusted performance measures continued
The Group also continues to use proportionately consolidated cash flow financial information for management of the business. The following tables
shows the reconciliation of the adjusted performance measures to the most directly comparable measures presented in accordance with IFRS.
Cash flows from operating activities
Profit before tax from continuing operations
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Exceptional items (non cash)
Other non-cash items
Finance income
Finance expense
Share of profit after tax of joint ventures and associates
Changes in working capital
Changes in net retirement benefit obligations
Cash generated from continuing operations
Interest paid
Net income tax paid
Net cash generated from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds on disposal of property, plant and equipment
Acquisition of businesses, net of cash acquired
Disposal of businesses, net of cash disposed
Purchase of available-for-sale financial assets
Disposal of available-for-sale financial assets
Interest received
Dividends received from joint ventures and associates
Net cash used in investing activities
Cash flows from financing activities
Purchase of own shares
Cash inflow from additional borrowings
Cash outflow from repayment of borrowings
Repayment of capital element of finance leases
Dividends paid to the owners of the Company
Net cash used in financing activities
Net decrease in cash and cash equivalents
Year ended 31 March 2015
Eliminate
equity
accounting
£m
Add
proportionate
consolidation
£m
Reported
pre IFRS 11
£m
Reported
£m
51
85
24
113
–
(1)
32
(49)
8
(47)
216
(30)
(7)
179
(121)
(34)
–
(26)
–
(2)
2
1
16
(164)
(12)
278
(319)
(2)
(130)
(185)
(170)
(49)
–
–
–
–
–
–
49
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
63
13
–
–
–
–
–
–
(13)
–
63
–
(11)
52
(11)
–
1
–
–
–
–
–
(16)
(26)
–
(3)
(7)
–
–
(10)
16
65
98
24
113
–
(1)
32
–
(5)
(47)
279
(30)
(18)
231
(132)
(34)
1
(26)
–
(2)
2
1
–
(190)
(12)
275
(326)
(2)
(130)
(195)
(154)
Tate & Lyle PLC | Annual Report 2015 | 145
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Notes to the Consolidated Financial Statements
continued
41 Reconciliation of adjusted performance measures continued
Year ended 31 March 2014
Eliminate
equity
accounting
£m
Add
proportionate
consolidation
£m
Reported
pre IFRS 11
£m
Restated*
£m
277
83
20
8
–
(6)
(2)
37
(61)
15
(43)
328
(33)
(9)
286
(102)
(45)
33
(15)
3
(4)
2
2
105
(21)
(29)
8
(50)
(2)
(124)
(197)
68
(61)
–
–
–
–
–
–
–
61
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
74
14
1
–
–
–
–
–
–
23
–
112
–
(14)
98
(12)
–
1
–
–
–
–
–
(105)
(116)
–
(4)
4
–
–
–
(18)
290
97
21
8
–
(6)
(2)
37
–
38
(43)
440
(33)
(23)
384
(114)
(45)
34
(15)
3
(4)
2
2
–
(137)
(29)
4
(46)
(2)
(124)
(197)
50
Cash flows from operating activities
Profit before tax from continuing operations
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Share-based payments
Exceptional items
Other non-cash items
Finance income
Finance expense
Share of profit after tax of joint ventures and associates
Changes in working capital
Changes in net retirement benefit obligations
Cash generated from continuing operations
Interest paid
Net income tax paid
Net cash generated from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds on disposal of property, plant and equipment
Acquisition of businesses, net of cash acquired
Disposal of businesses, net of cash disposed
Purchase of available-for-sale financial assets
Disposal of available-for-sale financial assets
Interest received
Dividends received from joint ventures and associates
Net cash used in investing activities
Cash flows from financing activities
Purchase of own shares
Cash inflow from additional borrowings
Cash outflow from repayment of borrowings
Repayment of capital element of finance leases
Dividends paid to the owners of the Company
Net cash used in financing activities
Net increase in cash and cash equivalents
* Restated for the adoption of IFRS 11 ‘Joint Arrangements’ (see Note 42).
146 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS
42 Adoption of IFRS 11 ‘Joint Arrangements’
With effect from 1 April 2014, the Group adopted IFRS 11 ‘Joint Arrangements’ which changed significantly the accounting for its interests in joint
ventures. Before adoption of the standard, the Group’s interests in joint ventures were accounted for by proportionate consolidation, whereby the
Group’s share of the income and expenses, assets and liabilities and cash flows of joint ventures were combined on a line-by-line basis with those
of Tate & Lyle PLC and its subsidiaries. IFRS 11 prohibits the use of proportionate consolidation and requires that joint ventures are accounted for
using the equity method of accounting. Under the equity method of accounting, the Group’s share of the after tax profits and losses of the joint
ventures has been shown on one line of the consolidated income statement, its share of their net assets has been shown on one line of the
consolidated statement of financial position and the consolidated statement of cash flows reflects cash flows between the Group and the joint
ventures within cash flows from investing activities. While these changes have not affected the Group’s earnings or its net assets, they have
affected many of the individual line items presented in the Group’s financial statements. In accordance with IAS 1, the Group has also presented
a third statement of financial position (as at 1 April 2013) following the adoption of this accounting policy.
Comparative financial information for 2014 has been restated to adopt the new standard. An analysis of the effect of the impact on the Group’s
results for 2015 and 2014 is presented below:
Under previous
policy
£m
Elimination of
proportionate
consolidation
£m
Adoption of
equity
accounting
£m
As reported
£m
Year ended 31 March 2015
Consolidated profit or loss and comprehensive income
Year ended 31 March 2015
Continuing operations
Sales
Operating profit
Finance income
Finance expense
Share of profit after tax of joint ventures and associates
Profit before tax
Income tax expense
Profit from continuing operations
Profit from discontinued operations
Profit for the year
Other comprehensive expense
Total comprehensive income
Consolidated cash flows
Year ended 31 March 2015
Net cash inflow from operating activities
Net cash outflow from investing activities
Net cash outflow from financing activities
Net cash inflow
Consolidated assets and liabilities
At 31 March 2015
Non-current assets
Current assets
Total assets
Total equity
Non-current liabilities
Current liabilities
Total equity and liabilities
2 694
96
1
(32)
–
65
(35)
30
–
30
(2)
28
231
(190)
(195)
(154)
1 378
1 102
2 480
936
790
754
2 480
(338)
(63)
–
–
–
(63)
14
(49)
–
(49)
18
(31)
(52)
26
10
(16)
(124)
(172)
(296)
(239)
(7)
(50)
(296)
–
–
–
–
49
49
–
49
–
49
(18)
31
–
–
–
–
239
–
239
239
–
–
239
2 356
33
1
(32)
49
51
(21)
30
–
30
(2)
28
179
(164)
(185)
(170)
1 493
930
2 423
936
783
704
2 423
Going forward, the Group will continue to present segment and adjusted financial information on a proportionate consolidation basis since this
reflects the management of our joint ventures on an integrated basis with the Group’s subsidiaries.
Tate & Lyle PLC | Annual Report 2015 | 147
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Notes to the Consolidated Financial Statements
continued
42 Adoption of IFRS 11 ‘Joint Arrangements’ continued
Consolidated profit or loss and comprehensive income
Year ended 31 March 2014
Continuing operations
Sales
Operating profit
Finance income
Finance expense
Share of profit after tax of joint ventures and associates
Profit before tax
Income tax expense
Profit from continuing operations
Profit from discontinued operations
Profit for the year
Other comprehensive expense
Total comprehensive income
Consolidated cash flows
Year ended 31 March 2014
Net cash inflow from operating activities
Net cash outflow from investing activities
Net cash outflow from financing activities
Net cash inflow
Consolidated assets and liabilities
At 31 March 2014
Non-current assets
Current assets
Total assets
Total equity
Non-current liabilities
Current liabilities
Total equity and liabilities
Under previous
policy
£m
Elimination of
proportionate
consolidation
£m
Adoption of
equity
accounting
£m
As reported
£m
Year ended 31 March 2014
3 147
325
2
(37)
–
290
(45)
245
28
273
(113)
160
384
(137)
(197)
50
1 319
1 208
2 527
1 050
718
759
2 527
(393)
(74)
–
–
–
(74)
13
(61)
–
(61)
25
(36)
(98)
116
–
18
(137)
(146)
(283)
(224)
(6)
(53)
(283)
–
–
–
–
61
61
–
61
–
61
(25)
36
–
–
–
–
224
–
224
224
–
–
224
2 754
251
2
(37)
61
277
(32)
245
28
273
(113)
160
286
(21)
(197)
68
1 406
1 062
2 468
1050
712
706
2 468
148 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS Independent Auditors’ Report to the Members
of Tate & Lyle PLC
Report on the Parent Company
financial statements
Our opinion
In our opinion, Tate & Lyle PLC’s Parent
Company financial statements (the ‘financial
statements’):
• give a true and fair view of the state of the
Parent Company’s affairs as at 31 March
2015;
• have been properly prepared in accordance
with United Kingdom Generally Accepted
Accounting Practice; and
• have been prepared in accordance with the
requirements of the Companies Act 2006.
What we have audited
Tate & Lyle PLC’s financial statements
comprise:
• the Parent Company Balance Sheet as at
31 March 2015; and
• the notes to the financial statements, which
include a summary of significant accounting
policies and other explanatory information.
Certain required disclosures have been
presented elsewhere in the Annual Report,
rather than in the notes to the financial
statements. These are cross-referenced from
the financial statements and are identified
as audited.
The financial reporting framework that
has been applied in the preparation of the
financial statements is applicable law and
United Kingdom Accounting Standards
(United Kingdom Generally Accepted
Accounting Practice).
In applying the financial reporting framework,
the Directors have made a number of
subjective judgements, for example in respect
of significant accounting estimates. In making
such estimates, they have made assumptions
and considered future events.
Other required reporting
Consistency of other information
Companies Act 2006 opinion
In our opinion, the information given in the
Strategic Report and the Directors’ Report
for the financial year for which the financial
statements are prepared is consistent with
the financial statements.
ISAs (UK & Ireland) reporting
Under International Standards on Auditing
(UK and Ireland) (‘ISAs (UK & Ireland)’) we are
required to report to you if, in our opinion,
information in the Annual Report is:
• materially inconsistent with the information
in the audited financial statements; or
• apparently materially incorrect based on, or
materially inconsistent with, our knowledge
of the Parent Company acquired in the
course of performing our audit; or
• otherwise misleading.
We have no exceptions to report arising from
this responsibility.
Adequacy of accounting records and
information and explanations received
Under the Companies Act 2006 we are
required to report to you if, in our opinion:
• we have not received all the information
and explanations we require for our audit; or
• adequate accounting records have not been
kept by the Parent Company, or returns
adequate for our audit have not been
received from branches not visited by us; or
• the financial statements and the part of the
Directors’ Remuneration Report to be
audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from
this responsibility.
Directors’ remuneration
Directors’ remuneration report –
Companies Act 2006 opinion
In our opinion, the part of the Directors’
Remuneration Report to be audited has been
properly prepared in accordance with the
Companies Act 2006.
Other Companies Act 2006 reporting
Under the Companies Act 2006 we are
required to report to you if, in our opinion,
certain disclosures of Directors’ remuneration
specified by law are not made. We have no
exceptions to report arising from this
responsibility.
Responsibilities for the financial
statements and the audit
Our responsibilities and those
of the Directors
As explained more fully in the Directors’
Statement of Responsibilities set out on page
80, the Directors are responsible for the
preparation of the financial statements and
for being satisfied that they give a true and
fair view.
Our responsibility is to audit and express
an opinion on the financial statements in
accordance with applicable law and ISAs
(UK & Ireland). Those standards require us
to comply with the Auditing Practices Board’s
Ethical Standards for Auditors.
This report, including the opinions, has
been prepared for and only for the Parent
Company’s members as a body in
accordance with Chapter 3 of Part 16 of
the Companies Act 2006 and for no other
purpose. We do not, in giving these opinions,
accept or assume responsibility for any other
purpose or to any other person to whom this
report is shown or into whose hands it may
come save where expressly agreed by our
prior consent in writing.
What an audit of financial statements
involves
We conducted our audit in accordance with
ISAs (UK & Ireland). An audit involves obtaining
evidence about the amounts and disclosures
in the financial statements sufficient to give
reasonable assurance that the financial
statements are free from material
misstatement, whether caused by fraud
or error. This includes an assessment of:
• whether the accounting policies are
appropriate to the Parent Company’s
circumstances and have been consistently
applied and adequately disclosed;
• the reasonableness of significant accounting
estimates made by the Directors; and
• the overall presentation of the financial
statements.
We primarily focus our work in these areas
by assessing the Directors’ judgements
against available evidence, forming our own
judgements, and evaluating the disclosures
in the financial statements.
We test and examine information, using
sampling and other auditing techniques, to
the extent we consider necessary to provide
a reasonable basis for us to draw conclusions.
We obtain audit evidence through testing the
effectiveness of controls, substantive
procedures or a combination of both.
In addition, we read all the financial and
non-financial information in the Annual Report
to identify material inconsistencies with the
audited financial statements and to identify
any information that is apparently materially
incorrect based on, or materially inconsistent
with, the knowledge acquired by us in the
course of performing the audit. If we become
aware of any apparent material misstatements
or inconsistencies we consider the
implications for our report.
Other Matter
We have reported separately on the Group
financial statements of Tate & Lyle PLC for the
year ended 31 March 2015.
John Waters (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
27 May 2015
(a) The maintenance and integrity of the Tate & Lyle
PLC website (www.tateandlyle.com) is the
responsibility of the Directors; the work carried
out by the auditors does not involve consideration
of these matters and, accordingly, the auditors
accept no responsibility for any changes that
may have occurred to the financial statements
since they were initially presented on the website.
(b) Legislation in the United Kingdom governing
the preparation and dissemination of financial
statements may differ from legislation
in other jurisdictions.
Tate & Lyle PLC | Annual Report 2015 | 149
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Parent Company Balance Sheet
Fixed assets
Tangible fixed assets
Investments in subsidiary undertakings
Investment in associate
Total
Current assets
Debtors
Cash at bank
Creditors – amounts falling due within one year
Net current liabilities
Total assets less current liabilities
Creditors – amounts falling due after more than one year
Net assets
Capital and reserves
Called up share capital
Share premium account
Capital redemption reserve
Profit and loss account
Total shareholders’ funds
Notes
2
3
4
5
6
7
10
11
11
11
2015
£m
18
1 003
1
1 022
1 586
1
1 587
(1 635)
(48)
974
(2)
972
117
406
8
441
972
At 31 March
2014
£m
13
999
1
1 013
1 501
1
1 502
(1 533)
(31)
982
(2)
980
117
406
8
449
980
The Parent Company’s financial statements on pages 150 to 155 were approved by the Board of Directors on 27 May 2015 and signed on its
behalf by:
Javed Ahmed, Nick Hampton Directors
The Notes on pages 151 to 155 form part of these financial statements.
Tate & Lyle PLC
Registered number: 76535
150 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS
Notes to the Parent Company Financial Statements
1 Principal accounting policies
Accounting basis
Tate & Lyle PLC (the Company) is a public
limited company incorporated and domiciled
in the United Kingdom. The Company’s
ordinary shares are listed on the London
Stock Exchange.
The Company’s financial statements are
prepared under the historical cost convention
in accordance with the Companies Act 2006
and applicable UK accounting standards.
The Company’s principal accounting policies
are unchanged compared with the year ended
31 March 2014.
For the reasons set out on page 33, the
Company’s financial statements are prepared
on a going concern basis.
As permitted by Section 408(2) of the
Companies Act 2006, the Company’s profit
and loss account and statement of total
recognised gains and losses are not presented
in these financial statements. Profit and loss
account disclosures are presented in Note 14.
Tangible fixed assets
Tangible fixed assets are stated at historical
purchase cost less accumulated depreciation.
Cost includes the original purchase price of
the asset and the costs attributable to bringing
the asset to its working condition for its
intended use. Depreciation is provided on
a straight-line basis to write off the cost of
tangible fixed assets over their estimated
useful life. Tangible fixed assets comprise
furniture, fixtures, fittings and computer
software which are depreciated over a period
of five to ten years. Impairment reviews are
undertaken if there are indications that the
carrying values may not be recoverable.
Investments
An undertaking is regarded as a subsidiary
undertaking if the Company has control over
its operating and financial policies.
An undertaking is regarded as an associate if
the Company holds a participating interest and
has significant influence, but not control, over
its operating and financial policies. Significant
influence generally exists where the Company
holds more than 20% and less than 50% of
the shareholders’ voting rights.
Investments in subsidiary undertakings and in
associates represent interests that are directly
owned by the Company and are stated at cost
less amounts written-off for any permanent
diminution in value.
Amounts owed by or to subsidiary
undertakings
Amounts owed by or to subsidiary
undertakings are stated at amortised cost
using the effective interest method. Amounts
owed by subsidiary undertakings are written
off where deemed unrecoverable.
Research and development
All expenditure on research and development
is charged to the profit and loss account
when incurred.
Leases
Operating lease payments are charged to the
profit and loss account on a straight-line basis
over the lease term.
Retirement benefits
The Company participates in a defined benefit
pension scheme in which certain of its
subsidiaries also participate. The Company,
which is not the principal employer, cannot
identify its share of the underlying assets and
liabilities of the scheme. Accordingly, as
permitted by FRS 17 Retirement Benefits,
the Company accounts for the scheme as
a defined contribution scheme and charges
its contributions to the scheme to the profit
and loss account in the periods in which
they fall due.
Deferred tax
Deferred tax is recognised on a discounted full
provision basis on timing differences between
the recognition of gains and losses in the
financial statements and their recognition for
tax purposes that have arisen but not reversed
at the balance sheet date. Deferred tax is not
recognised on permanent differences or on
timing differences arising on unremitted profits
of overseas subsidiaries. Deferred tax assets
are recognised only to the extent that it is
considered more likely than not that there will
be sufficient future taxable profits to permit tax
relief of the underlying timing differences.
Foreign currency translation
Transactions denominated in foreign
currencies are translated into pounds sterling
at the exchange rate ruling on the date of the
transaction. Monetary assets and liabilities
denominated in foreign currencies are
retranslated into pounds sterling at the
exchange rate ruling on the balance sheet date.
Currency translation differences are credited or
charged to the profit and loss account.
Non-monetary assets denominated in
foreign currencies are not usually retranslated.
An investment in an overseas subsidiary
undertaking or associate is, however,
retranslated if it is financed by foreign currency
borrowings and the borrowings are designated
as a hedging instrument in relation to the
investment. If this is the case, the resulting
translation gain or loss on the investment is
recognised in the profit and loss account
where, to the extent that the hedge is effective,
it will be offset by the translation gain or loss
on the related borrowings.
Share-based incentives
As described in Note 25 to the Group financial
statements, the Company operates share-
based incentive plans under which it grants
awards over its ordinary shares to its own
employees and to those of its subsidiary
undertakings. All of the awards granted
under the existing plans are classified
as equity-settled awards.
For awards granted to its own employees,
the Company recognises an expense that is
based on the fair value of the awards measured
at the grant date using the Black-Scholes
option pricing formula. Fair value reflects any
market performance conditions and all
non-vesting conditions. Adjustments are
made to the compensation expense to reflect
actual and expected forfeitures due to failure
to satisfy service conditions or non-market
performance conditions.
Generally, the expense is recognised in the
profit and loss account on a straight-line basis
over the vesting period and a corresponding
credit is recognised in the profit and loss
account reserve.
For awards granted to employees of
its subsidiary undertakings, the Company
recognises a capital contribution to the
subsidiary and a corresponding credit
to equity calculated on the same basis as
the expense that it recognises for awards
to its own employees.
Provisions
Provisions are recognised when the Company
has a present obligation as a result of a past
event, it is probable that a transfer of
economic benefits will be required to settle
the obligation, and a reliable estimate can be
made of the amount of the obligation.
Guarantees
From time to time, the Company provides
guarantees to third parties in respect of the
indebtedness of its subsidiary undertakings
and joint ventures. The Directors consider
these guarantees to be insurance
arrangements and, therefore, the Company
recognises a liability in respect of such
guarantees only in the event that it becomes
probable that the guarantee will be called
upon and the Company will be required to
make a payment to the third party.
Own shares
Own shares represent the Company’s ordinary
shares that are held by the Company in
treasury or by a sponsored Employee Benefit
Trust that are used to satisfy awards made
under the Company’s share-based incentive
plans. When own shares are acquired, the
cost of purchase in the market is deducted
from the profit and loss account reserve.
Gains or losses on the subsequent transfer
or sale of own shares are also recognised
in the profit and loss account reserve.
Dividends
Dividends on the Company’s ordinary
shares are recognised when they have been
appropriately authorised and are no longer
at the Company’s discretion. Accordingly,
interim dividends are recognised when they
are paid and final dividends are recognised
when they are declared following approval
by shareholders at the Company’s AGM.
Dividends are recognised as an appropriation
of shareholders’ funds. Details of dividends
paid and proposed are set out in Note 12.
Tate & Lyle PLC | Annual Report 2015 | 151
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT FINANCIAL STATEMENTS
Notes to the Parent Company Financial Statements
continued
2 Tangible fixed assets
Cost
At 1 April 2014
Additions
At 31 March 2015
Accumulated depreciation
At 1 April 2014
Charge for the year
At 31 March 2015
Net book value at 31 March 2014
Net book value at 31 March 2015
3 Investments in subsidiary undertakings
Cost
At 1 April 2014
Additions
Currency translation differences
At 31 March 2015
Impairment
At 1 April 2014
Provision for impairment
Currency translation differences
At 31 March 2015
Net book value at 31 March 2014
Net book value at 31 March 2015
£m
17
6
23
4
1
5
13
18
£m
1 563
11
(11)
1 563
564
6
(10)
560
999
1 003
A list of the Company’s principal subsidiaries is presented in Note 40 of the Group financial statements.
The provision for impairment during the year reflects an adjustment to the recoverable amount of the Company’s investment in Tate & Lyle Services
(Belgium) N.V. The directors believe that the carrying value of the investments is supported by the value of their underlying net assets.
During the year, the Company made capital contributions to subsidiary undertakings in respect of share-based incentive awards granted to their
employees of £nil (2014 – £nil).
4 Investment in associate
The Company holds a 16.6% interest of ordinary shares in Tapioca Development Corporation, a company incorporated in Thailand.
5 Debtors
Due within one year
Amounts owed by subsidiary undertakings
Other debtors
Total
2015
£m
1 584
2
1 586
At 31 March
2014
£m
1 495
6
1 501
The effective interest rate applicable to amounts owed by subsidiary undertakings at 31 March 2015 is 2.2% (2014 – 2.1%). Amounts owed by
subsidiary undertakings are receivable on demand. There is no security for non-trading amounts.
152 | Tate & Lyle PLC | Annual Report 2015
6 Creditors – amounts falling due within one year
Amounts owed to subsidiary undertakings
Other creditors
Accruals and deferred income
Total
2015
£m
1 623
4
8
1 635
At 31 March
2014
£m
1 518
6
9
1 533
The effective interest rate applicable to amounts owed to subsidiary undertakings at 31 March 2015 was 2.3% (2014 – 2.2%). Amounts owed to
subsidiary undertakings are repayable on demand. There is no security for non-trading amounts.
7 Creditors – amounts falling due after more than one year
Preference shares
Total
2015
£m
2
2
At 31 March
2014
£m
2
2
On a return of capital on a winding-up, the holders of 6.5% cumulative preference shares shall be entitled to £1 per share, in preference
to all other classes of shareholders. Holders of these shares are entitled to vote at meetings, except on the following matters: any question
as to the disposal of the surplus profits after the dividend on these shares has been provided for; the election of directors; their remuneration;
any agreement between the directors and the Company; or the alteration of the Articles of Association dealing with any such matters.
8 Contingent liabilities
At 31 March 2015, the Company had given guarantees in respect of loans and overdraft facilities of certain of its subsidiaries and joint ventures
totalling £2,709 million (2014 – £1,535 million), against which amounts drawn totalled £1,743 million (2014 – £859 million). Other trade guarantees
have been given in the normal course of business by Tate & Lyle PLC in respect of Revenue and Customs, ECGD recourse agreements, letters of
credit, and tender and performance bonds.
9 Financial commitments
Operating lease rentals payable during the year were £1 million (2014 – £1 million), all in respect of land and buildings.
As at 31 March 2015, the Company had annual commitments under non-cancellable operating leases expiring as follows (all in respect of land
and buildings):
Within one year
Between one and five years
After five years
Total
At 31 March 2015, the Company had outstanding capital commitments of £nil (2014 – £nil).
2015
£m
–
–
1
1
At 31 March
2014
£m
–
–
1
1
Tate & Lyle PLC | Annual Report 2015 | 153
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Notes to the Parent Company Financial Statements
continued
10 Called up share capital
Allotted, called up and fully paid equity share capital
At 1 April
Allotted under share option schemes
At 31 March
11 Reconciliation of movements in shareholders’ funds
At 1 April 2013
Year ended 31 March 2014
Loss for the year
Purchase of own shares
Share-based payments
Ordinary dividends paid (Note 12)
At 31 March 2014
Year ended 31 March 2015
Profit for the year
Purchase of own shares
Share-based payments
Ordinary dividends paid (Note 12)
At 31 March 2015
Year ended 31 March 2015
Year ended 31 March 2014
Shares
468 202 883
21 092
468 223 975
£m
117
–
117
Shares
468 192 900
9 983
468 202 883
Share
premium
account
£m
406
Capital
redemption
reserve
£m
8
Profit
and loss
account
£m
611
–
–
–
–
406
–
–
–
–
406
–
–
–
–
8
–
–
–
–
8
(11)
(29)
2
(124)
449
123
(12)
11
(130)
441
Called up
share capital
£m
117
–
–
–
–
117
–
–
–
–
117
£m
117
–
117
Total
£m
1 142
(11)
(29)
2
(124)
980
123
(12)
11
(130)
972
At 31 March 2015, the profit and loss account reserve was stated after a deduction of £37 million (2014 – £37 million) for the cumulative cost of own
shares held indirectly in an Employee Benefit Trust or directly as treasury shares in relation to share-based compensation plans. Further information
on own shares is presented in Note 23 to the Group financial statements.
Ordinary shares carry the right to participate in dividends and each share entitles the holder to one vote on matters requiring shareholder
approval except for ordinary shares held in the Employee Benefit Trust or as treasury shares. The amount available for the payment of dividends
by the Company at 31 March 2015 was £441 million (2014 – £449 million).
12 Dividends
Dividends on ordinary shares in respect of the financial year:
Per ordinary share:
– interim dividend paid
– final dividend proposed
Total dividend
Year ended 31 March
2014
pence
2015
pence
8.2p
19.8p
28.0p
7.8p
19.8p
27.6p
The Directors propose a final dividend for the financial year of 19.8 pence per ordinary share that, subject to approval by shareholders, will be paid
on 31 July 2015 to shareholders who are on the Register of Members on 3 July 2015.
Final dividend paid relating to the prior year
Interim dividend paid relating to the year
Total dividend paid
Year ended 31 March
2014
£m
88
36
124
2015
£m
92
38
130
Based on the number of ordinary shares outstanding at 31 March 2015, the final dividend for the financial year is expected to amount to £92 million.
154 | Tate & Lyle PLC | Annual Report 2015
FINANCIAL STATEMENTS 13 Related parties
As permitted by FRS 8 Related Party Disclosures, related party transactions with the Company’s wholly-owned subsidiaries are not disclosed.
There were no transactions with other related parties except for the provision of guarantees in respect of banking facilities of a joint venture
totalling £8 million (2014 – £9 million).
14 Profit and loss account disclosures
The Company recognised a profit for the year of £123 million (2014 – loss of £11 million).
Fees payable to the Company’s auditors, PricewaterhouseCoopers LLP, for the audit of the Company’s financial statements amounted
to £0.1 million (2014 – £0.1 million).
The Company employed an average of 132 people (including Directors) during the year (2014 – 136). Staff costs are shown below:
Wages and salaries
Social security costs
Other pension costs
Share-based incentives
Total
Year ended 31 March
2014
£m
11
1
1
3
16
2015
£m
11
1
1
–
13
Directors’ emoluments disclosures are provided in the Directors’ Remuneration Report on pages 58 to 78 and in Note 8 of the Group financial
statements.
At 31 March 2015, 5,896,726 (2014 – 5,862,890) outstanding share options were attributable to employees and directors of the
Company as follows:
Sharesave Scheme – 3 year options
Sharesave Scheme – 5 year options
Performance Share Plan
Restricted Share Awards
Javed Ahmed – compensatory awards
Javed Ahmed – long-term incentive awards
Group Bonus Plan
Year issued
2011
2012
2013
2014
2009
2010
2011
2012
2013
2014
2008
2009
2010
2011
2012
2013
2014
2013
2014
2014
2014
2015
2009
2009
2009
2010
2011
2012
Number of
shares
8 150
9 484
1 766
65 807
3 720
4 989
4 346
5 436
5 980
21 030
814
995
10 383
11 097
1 091 670
942 646
1 040 974
9 535
96 681
96 680
232 033
167 411
419 403
257 870
656 640
473 042
256 134
2 010
Subscription
prices (pence)
552.00
607.00
652.00
510.00
418.00
488.00
552.00
607.00
652.00
510.00
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Dates normally
exercisable
2015
2016
2017
2018
2015
2016
2017
2018
2019
2020
2011-2017
2012-2018
2013-2019
2014-2020
2015-2021
2016-2022
2017-2023
2020-2021
2015-2021
2016-2022
2017-2023
2017-2023
2011-2017
2012-2018
2012-2018
2013-2019
2014-2020
2014-2019
Tate & Lyle PLC | Annual Report 2015 | 155
USEFUL INFORMATIONFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Five-year summary
Per share information
Earnings per share:
– basic1
– adjusted basic1
Earnings per share:
– diluted1
– adjusted diluted1
Dividends per ordinary share
Closing share price at 31 March
Closing market capitalisation at 31 March (£million)
Business ratios
Interest cover (times)2
Adjusted profit before tax divided by net finance expense
Gearing
Net debt as a percentage of total net assets1
Adjusted operating margin
Adjusted operating profit as a percentage of sales1
Return on net operating assets
Adjusted operating profit as a percentage of average
net operating assets1
Dividend cover (times)
Basic earnings per share divided by dividends per share1
Adjusted basic earnings per share divided by dividends
per share1
Pre IFRS 11
Post IFRS 11
Year ended 31 March
2011
2012
2013
2014
2015
33.7p
44.2p
33.2p
43.5p
23.7p
577.5p
2 703
6.9x
48%
9.6%
63.8p
55.9p
62.7p
54.8p
24.9p
705.0p
3 301
11.1x
45%
58.6p
55.8p
57.4p
54.7p
26.2p
850.0p
3 980
11.1x
46%
58.8p
56.5p
58.0p
55.7p
27.6p
667.5p
3 125
11.6x
34%
11.1%
10.7%
11.1%
6.6p
38.0p
6.5p
37.7p
28.0p
597.5p
2 798
10.7x
54%
9.2%
20.0%
22.8%
21.5%
21.9%
15.5%
1.4x
1.9x
2.6x
2.2x
2.2x
2.1x
2.1x
2.0x
0.2x
1.4x
1 These metrics have been calculated using the results of both continuing and discontinued operations.
2 Interest cover has been calculated using the same basis as set out in the Group’s external bank covenants.
156 | Tate & Lyle PLC | Annual Report 2015
USEFUL INFORMATION
Five-year summary continued
Employment of capital
Goodwill and intangible assets
Property, plant and equipment
Other assets
Working capital
Net pension deficit
Net assets held for sale (excluding cash included in net debt)
Net operating assets
Net debt
Share of net cash in joint ventures
Net tax asset/(liability)
Total net assets
Capital employed
Called up share capital
Reserves
Non-controlling interests
Results summary
Continuing operations
Adjusted sales
Adjusted operating profit
Elimination of proportionate consolidation
Amortisation of acquired intangible assets
Exceptional items
Operating profit
Adjusted net finance expense
Net retirement benefit interest expense
Net finance expense
Share of profit after tax of joint ventures and associates
Profit before tax
Income tax expense
Profit for the year from continuing operations
(Loss)/profit for the year from discontinued operations
Non-controlling interests
Profit for the year attributable to owners of the Company
Continuing operations
Adjusted profit before tax2
Earnings per share:
– basic
– diluted
Pre IFRS 11
Post IFRS 11
At 31 March
2013
£m
356
958
33
497
(265)
1
1 580
(479)
–
(65)
1 036
117
919
1 036
–
1 036
2014
£m
307
732
340
351
(220)
–
1 510
(353)
(32)
(75)
1 050
117
932
1 049
1
1 050
2015
£m
340
750
360
339
(227)
–
1 562
(504)
(51)
(71)
936
117
818
935
1
936
Pre IFRS 11
Post IFRS 11
Year ended 31 March
2013
£m
3 256
356
–
(10)
(12)
334
(29)
(4)
(33)
–
301
(46)
255
18
(1)
272
327
54.9p
53.8p
2014
£m
3 147
349
(74)
(10)
(14)
251
(27)
(8)
(35)
61
277
(32)
245
28
–
273
322
52.8p
52.1p
2015
£m
2 694
247
(63)
(9)
(142)
33
(23)
(8)
(31)
49
51
(21)
30
–
–
30
224
6.6p
6.5p
2012
£m
325
922
28
370
(140)
63
1 568
(476)
–
(34)
1 058
117
916
1 033
25
1 058
2012
£m
3 088
346
–
(12)
68
402
(30)
(4)
(34)
–
368
(69)
299
2
(4)
297
316
64.2p
63.0p
2011
£m
320
855
24
279
(139)
62
1 401
(464)
–
36
973
117
833
950
23
973
2011
£m
2 720
319
–
(13)
(5)
301
(54)
(13)
(67)
–
234
(45)
189
(29)
(4)
156
265
40.9p
40.3p
1 Following the adoption of IFRS 11, the Group has restated comparative statutory financial information for the 2014 financial year, however statutory financial
information for financial years 2011-2013 has not been restated. Since the Group reverses the impact of equity accounting in its adjusted performance metrics
(see Note 42), all adjusted metrics presented in this summary remain directly comparable across all periods.
2 Adjusted profit before tax excludes exceptional items, the amortisation of acquired intangible assets and net retirement benefit interest.
Tate & Lyle PLC | Annual Report 2015 | 157
FINANCIAL STATEMENTSUSEFUL INFORMATIONSTRATEGIC REPORTGOVERNANCE
Pro-forma impact of Eaststarch disposal
on adjusted income statement
As set out in Note 37, the Group announced the exit from the substantial part of its European Bulk Ingredients business on 21 April 2015 as part
of a wider business re-alignment.
Had the transaction taken effect from 1 April 2014, Group adjusted operating profit in the year ended 31 March 2015 would have been reduced
by £32 million and diluted earnings per share would have been reduced by 5.5 pence:
Adjusted income statement1
Unaudited pro-forma information
Adjusted sales
– Speciality Food Ingredients
– Bulk Ingredients
– Group
Adjusted operating profit
– Speciality Food Ingredients
– Bulk Ingredients
– Central
Group adjusted operating profit
Adjusted net interest expense
Adjusted profit before tax
Adjusted income tax
Adjusted profit attributable to owners of the company
Adjusted diluted earnings per share (pence)
1 Adjusted financial information as defined in Note 1 to the Group Financial Statements.
2 Had the transaction taken effect from 1 April 2014.
Disclosed
adjusted
results
£m
Year ended 31 March 2015
Pro-forma
adjusted
results
£m
Impact of
Eaststarch
disposal2
£m
908
1 786
2 694
149
133
(35)
247
(23)
224
(48)
176
37.7p
20
(121)
(101)
2
(34)
–
(32)
–
(32)
6
(26)
(5.6p)
928
1 665
2 593
151
99
(35)
215
(23)
192
(42)
150
32.1p
158 | Tate & Lyle PLC | Annual Report 2015
USEFUL INFORMATION Information for Investors
Shareholding enquiries
General enquiries
Information on how to manage your
shareholdings can be found at
www.shareview.co.uk. The website also
provides answers to commonly asked
shareholder questions and has links to
downloadable forms, guidance notes
and company history fact sheets.
Email enquiries (Equiniti Shareview
Enquiry Service)
If your question is not answered by the
information provided online you can send
your enquiry via secure email from the
above website. You will be asked to
complete a structured form and to provide
your shareholder reference number, name
and address. You will also need to provide
your email address if this is how you would
like to receive your response.
Telephone enquiries
0871 384 2063 (for UK calls)1
+44 (0)121 415 0235 (for calls from outside
the UK).
1 Calls to this number are charged at 8p per
minute plus network extras. Lines are open
from Monday to Friday, 8.30 am to 5.30 pm
UK time (excluding UK public holidays).
Written enquiries
Equiniti Limited, Aspect House, Spencer
Road, Lancing, West Sussex BN99 6DA.
Individual Savings Account (ISA)
Tate & Lyle’s ordinary shares can be held
in an ISA. For information, please call the
Equiniti ISA Helpline on 0871 384 2244.
Financial calendar
2015 Annual General Meeting
Announcement of half-year results for the six months to 30 September 2015
Announcement of full-year results for the year ending 31 March 2016
2016 Annual General Meeting
29 July 2015
5 Nov 20151
26 May 20161
21 July 20161
1 Provisional date.
Dividends paid on ordinary shares during the year ended 31 March 2015
Payment date
1 Aug 2014
2 Jan 2015
Dividend description
Final 2014
Interim 2015
Dividend per share
19.8p
8.2p
Dividend calendar for dividends on ordinary shares
Announced
Payment date
1 Provisional date.
2 Subject to approval of shareholders.
2015 final
28 May 2015
31 July 20152
2016 interim
5 Nov 20151
4 Jan 20161
2016 final
26 May 20161
29 July 20161, 2
Dividends paid on 6½% cumulative preference shares
Paid each 31 March and 30 September.
Capital gains tax
The market values on 31 March 1982 for the purposes of indexation up to April 1998 in relation
to capital gains tax of Tate & Lyle PLC shares then in issue were:
Ordinary share of £1 each
Equivalent value per ordinary share of 25p
6½% cumulative preference share
201.00p
50.25p
43.50p
Tate & Lyle American Depositary Shares (ADSs)
The Company’s shares trade in the US on the over the counter (OTCQX) market in the form
of ADSs and these are evidenced by American Depositary Receipts (ADRs). The shares are
traded under the ticker symbol TATYY. Each ADS is equivalent to four ordinary shares. For more
information, contact The Bank of New York Mellon at:
Tate & Lyle website and
share price information
Tate & Lyle’s website provides direct links
to other Group company sites and to sites
providing financial and other information
relevant to the Company. The share price
is available on the website with a
20-minute delay.
www.tateandlyle.com
BNY Mellon Shareowner Services
PO Box 30170
College Station
TX 77842-3170
Tel: +1 888 269 2377 (for US calls)
+1 201 680 6825 (for calls from outside the US)
On 10 April 2007, Tate & Lyle was approved for the International PremierQX tier of International
OTCQX. This provides a gateway to US securities markets for international companies that are
listed on a qualified international exchange. Tate & Lyle’s ADR is identified with an International
PremierQX logo and investors can find current financial information and other disclosures on
www.otcqx.com and www.pinksheets.com.
Electronic communications
Shareholder documents are only sent in paper format to shareholders who have elected to receive
documents in this way. This approach enables the Company to reduce printing and distribution
costs and its impact on the environment.
Shareholders who have not elected to receive paper copies are sent a notification whenever
shareholder documents are published, to advise them how to access the documents via the
Tate & Lyle website, www.tateandlyle.com. Shareholders may also choose to receive this
notification via email with a link to the relevant page on the website. Shareholders who wish
to receive email notification should register online at www.shareview.co.uk, using their
shareholder reference number that is either on their share certificate or other correspondence.
Beware of share fraud
Shareholders should be very wary of any unsolicited calls or correspondence offering to buy
or sell shares at a discounted price. These calls are typically from fraudsters operating ‘boiler
rooms’. Boiler rooms use increasingly sophisticated means to approach investors and often leave
their victims out of pocket. If you are concerned that you may have been targeted by fraudsters
please contact the FCA Consumer Helpline on 0800 111 6768.
Tate & Lyle PLC | Annual Report 2015 | 159
FINANCIAL STATEMENTSUSEFUL INFORMATIONSTRATEGIC REPORTGOVERNANCE Glossary
A
Acidulants Ingredients such as citric acid
that are used to add a ‘sour’ taste to foods
and soft drinks and to act as a preservative.
Adjusted Group Operating Cash Flow
Adjusted cash flow from continuing operating
activities (excluding pensions, derivative
financial instruments, tax, interest and
acquisitions) less capital expenditure.
Adjusted operating profit (PBITEA)
Operating profit (as defined separately),
adjusted for amortisation of acquired intangible
assets and net exceptional items and prepared
on a proportionately consolidated basis (see
Note 1 to the Group Financial Statements).
Adjusted profit before tax (PBTEA)
Profit before taxation (as defined separately),
adjusted for amortisation of acquired
intangible assets, net exceptional items and
net retirement benefit interest and prepared
on a proportionately consolidated basis
(see Note 1 to the Group Financial
Statements).
Adjusted sales Sales prepared on a
proportionately consolidated basis
(see Note 1 to the Group Financial Statements).
Animal feed compounder Blends raw
materials and additives. These blends are
formulated according to the specific
requirements of the animal and generally come
in the form of a pellet or granular meal/powder.
B
BI Bulk Ingredients division.
Bio-PDOTM Multi-purpose monomer
propanediol made from corn sugar (as opposed
to being made from a petrochemical source).
Used in cosmetics, detergents, carpets
and textiles.
C
Carbon dioxide equivalent (CO2e) One
metric tonne of carbon dioxide or an amount
of any other greenhouse gas with an
equivalent global warming potential, calculated
consistently with international carbon reporting
practice.
Cash conversion cycle Defined for the
purposes of the Annual Bonus Plan as the
number of days between cash expenditure
and collection, taking account of inventory,
payables and receivables; based on the
average of the four quarter-end results.
CLARIA® Functional Clean-Label Starches.
‘Clean label’ A term used in the food and
beverage industry generally to refer to simpler
ingredient lists that appeal more to consumers
than those containing complex ingredients.
Interpretations may vary.
160 | Tate & Lyle PLC | Annual Report 2015
Constant currency Changes in constant
currency are calculated by retranslating
comparative period results at current period
exchange rates.
Continuing operations Operations of the
Group excluding any discontinued operations
(as defined separately).
Co-products Corn gluten feed, corn gluten
meal and corn oil.
Corn gluten feed The largest Tate & Lyle
co-product, used by dairy and beef
cattle markets.
CR Corporate responsibility.
D
Discontinued operations An operation is
classified as discontinued if it is a component
of the Group that: (i) has been disposed of,
or meets the criteria to be classified as held
for sale; and (ii) represents a separate major
line of business or geographic area of
operations or will be disposed of as part
of a single co-ordinated plan to dispose of a
separate major line of business or geographic
area of operations.
DOLCIA PRIMA™ Allulose low-calorie sugar.
F
Food Systems The Tate & Lyle blending
business which is part of SFI and which
sources ingredients and uses them to develop
bespoke combinations of ingredients for
customers.
Functional food ingredients Ingredients
that offer benefits that go beyond the basic
nutritional role of the ingredient. For example,
some carbohydrates are reported to have
other benefits such as improved
gastrointestinal function.
G
Greenhouse gas (GHG) Any of the following:
carbon dioxide (CO2), methane (CH4),
nitrous oxide (N2O), hydrofluorocarbons
(HFCs), perfluorocarbons (PFCs), sulphur
hexafluoride (SF6).
H
HFCS High fructose corn syrup, also called
isoglucose in Europe.
I
ICD Innovation and Commercial Development
group, supporting our two business divisions,
SFI and BI.
K
KPI Key performance indicator.
L
Label friendly Denotes ingredients that,
when listed on product ingredient labels, may
appeal more to some consumers who show
a preference for ingredients in food products
which they feel are more transparent,
authentic, simpler and easier to understand
than alternatives which may be perceived by
some consumers as being artificial, chemical
or in some ways less authentic.
N
Natural A ‘natural’ description usually
refers to a food ingredient that is present
in nature and has been minimally processed.
However, interpretations vary according to
the different legal and regulatory landscape
in different countries.
O
Operating profit (also referred to as profit
before interest and tax (PBIT)) Sales less
net operating expense.
P
Profit before tax (PBT) Sales, less net
operating expense, less net finance expense.
PROMITOR® Soluble Corn Fiber A prebiotic
soluble fibre.
PrOatein™ Oat Protein A natural protein
concentrate from oats.
PromOat® Beta Glucan A soluble fibre
made from wholegrain oats used to bring
the health benefits of oat beta glucan to
food and beverages.
PUREFRUIT™ Monk Fruit Extract
A zero-calorie sweetener made from monk fruit.
S
SFI Speciality Food Ingredients division.
SME Small- and medium-sized enterprises.
For Tate & Lyle, this means regional or global
customers with turnover below the level of
approximately £500 million.
SODA-LO® Salt Microspheres A low salt
ingredient made from salt.
SPLENDA® Sucralose A zero-calorie
sweetener made from sugar.
STA-LITE® Polydextrose A soluble fibre with
prebiotic properties made from corn and used
to provide body and texture in reduced calorie,
no-added sugar and high-fibre foods.
T
TASTEVA® Stevia Sweetener A zero-calorie
sweetener made from stevia.
Trading cash flows The Group’s adjusted
operating profit stated before the non-cash
charges for depreciation and amortisation.
U
USDA US Department of Agriculture.
USEFUL INFORMATION Definitions/explanatory notes
Non-reliance statement
This Annual Report has been prepared
solely to provide additional information to
shareholders to assess the Group’s strategy
and the potential of that strategy to succeed,
and should not be relied upon by any other
party or for any other purpose.
Cautionary statement
This Annual Report contains certain forward-
looking statements with respect to the
financial condition, results, operations and
businesses of Tate & Lyle PLC. These
statements and forecasts involve risk and
uncertainty because they relate to events and
depend upon circumstances that may occur in
the future. There are a number of factors that
could cause actual results or developments
to differ materially from those expressed or
implied by these forward-looking statements
and forecasts.
Tate & Lyle PLC
Tate & Lyle PLC is a public limited company
listed on the London Stock Exchange and is
registered in England and Wales. More
information about Tate & Lyle can be found on
the Company’s website, www.tateandlyle.com.
Basis of preparation
Unless stated otherwise, the Group’s financial
statements are prepared in accordance with
International Financial Reporting Standards
(IFRSs) as adopted by the EU.
Amortisation
Unless stated otherwise, the use of the
word ‘amortisation’ on pages 1 to 80 in this
Annual Report relates to the amortisation
of intangible assets acquired through
business combinations.
Continuing operations
Unless stated otherwise, all comments
in this Annual Report refer to the continuing
operations adjusted to exclude exceptional
items, amortisation of intangible assets
acquired through business combinations and
net retirement benefit interest. A reconciliation
of reported and adjusted information is
included in Note 41.
Definitions
In this Annual Report, ‘Company’ means
Tate & Lyle PLC; ‘Tate & Lyle’ or ‘Group’
means Tate & Lyle PLC and its subsidiary
and joint-venture companies.
Environmental statement
This Annual Report has been printed on
UPM Fine offset, a paper produced using
wood fibre from fully sustainable forests
with Forest Stewardship Council® (FSC®)
certification. All pulps used are elemental
chlorine free and the manufacturing mill holds
the ISO 14001 and the EMAS accreditations
for environmental management.
Printed in the UK by Pureprint using vegetable
inks and its Alcofree and Pureprint
environmental printing technology. Pureprint
is a CarbonNeutral® company, is registered
to the Environmental Management System ISO
14001 and is FSC chain-of-custody certified.
If you have finished with this Annual Report
and no longer wish to retain it, please pass
it on to other interested readers or dispose
of it in your recycled paper waste.
The CO2 emissions from the production
and distribution of this Annual Report have
been offset through the purchase of carbon
credits in the Pureprint Gold programme. The
offsets are always in Gold Standard accredited
projects and currently come from the Basa
Magogo project in South Africa. The first Gold
Standard project of its kind in the world, this
innovative behaviour-change programme
teaches local communities in South Africa
to burn coal more efficiently, thereby reducing
carbon emissions and reducing health risks
by producing less smoke.
Registered office
Tate & Lyle PLC
1 Kingsway
London WC2B 6AT
Tel: +44 (0)20 7257 2100
Fax: +44 (0)20 7257 2200
Company number: 76535
www.tateandlyle.com
Credits
Photography
David Hares
Designed and produced by
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