Making food
extraordinary
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Annual Report 2017
Tate & Lyle is
a global provider
of ingredients
and solutions
We work with our customers to make
food healthier and tastier, creating
extraordinary food for consumers
Meeting
global
demand for
healthier
food
Investing in
higher-
growth
markets
Driving
innovation
and new
products
Delivering
high-quality
ingredients
at scale
Year of strong financial, operational
and cash performance
Year ended 31 March 2017
Change
Adjusted profit before tax on continuing operations1
£271m
+20%2
Reported basic earnings per share for continuing
operations
55.0p
+28.9p
Adjusted free cash flow from continuing operations1
£174m
+£121m
Dividend for the year per share
28.0p
1 Adjusted results and a number of other terms and performance measures used in this Annual Report are not directly
defined within accounting standards. For clarity we have provided descriptions of the various metrics and their
reconciliations to the most directly comparable measures reported in IFRS, and the calculations where relevant of any
ratios, in Notes 1 and 4.
2 Change in constant currency.
Contents
Strategic Report
10 At a Glance
12 Chairman’s Statement
14 Investment Case
15 Chief Executive’s Review
22 Business Model
24 Key Performance Indicators
26 Speciality Food Ingredients
29 Innovation and
Commercial Development
30 Bulk Ingredients
32 Global Operations
33 Group Financial Results
38 Risks
42 Corporate Responsibility
Governance
52 Board of Directors
56 Chairman’s introduction to
Corporate Governance
57 Corporate Governance
66 Audit Committee Report
69 Nominations Committee Report
72 Corporate Responsibility
Committee Report
74 Directors’ Remuneration Report
98 Directors’ Report
99 Directors’ Statement
of Responsibilities
Financial Statements
100 Independent Auditors’ Report to
the Members of Tate & Lyle PLC
106 Consolidated
Income Statement
107 Consolidated Statement of
Comprehensive Income
108 Consolidated Statement of
Financial Position
109 Consolidated Statement of
Cash Flows
110 Consolidated Statement of
Changes in Equity
111 Notes to the Consolidated
Financial Statements
178 Parent Company
Financial Statements
Useful Information
187 Group Five-year Summary
189 Additional Information
190 Information for Investors
191 Glossary
Trademarks
SPLENDA® and the SPLENDA® logo
are trademarks of Heartland
Consumer Products LLC.
Definitions/cautionary
statement
Please see the explanatory notes on
the inside back cover.
www.tateandlyle.com 1
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Meeting global
demand for
healthier food
Consumers across the world are looking for
healthier foods and drinks
Our wide range of ingredients and solutions helps to enrich foods with fibre,
to reduce sugar, calories and fat, and to improve texture while never
compromising taste.
53%1
65%2
90%3
of consumers look
for foods high in fibre
of consumers look for
calorie information on a
package label
of consumers say
taste is their top
purchasing motivator
1 Tate & Lyle multi-country consumer research 2015.
2 FoodMinds (US), 2014.
3 Nielsen and Mintel consulting (US) 2013.
2 Tate & Lyle PLC Annual Report 2017
www.tateandlyle.com 3
Investing in
higher-growth
markets
Strong opportunities for growth in developing,
faster-paced markets
We continue to invest in higher-growth markets such as Asia Pacific and
Latin America. We have built a network of applications laboratories and
added sales and technical service resources, to enable us to work with our
customers to help them launch new products, and reformulate existing
products, in their local markets.
11%1
Growth in yoghurt in Asia Pacific
5%1
Growth in soups, sauces and
dressings in Asia Pacific
6%1
Growth in sports and energy
drinks in Latin America
1 Euromonitor 2014-2016 Compound Annual Growth Rates (market growth – total volume).
4 Tate & Lyle PLC Annual Report 2017
www.tateandlyle.com 5
Driving innovation
and new products
Using leading-edge science to
create food for modern-day life
People all over the world are looking for
healthier foods and drinks which fit into their
busy lifestyles — from reduced-sugar drinkable
yoghurts to creamy dressings with a fraction of
the fat. Our teams of food scientists and
nutritionists are continuously researching and
testing ingredients to create solutions which
allow our customers to provide the nutritious,
great-tasting foods people want.
13%1
15%1
Growth in products
launched globally with
a clean-label claim
Growth in products
launched globally with a
sugar reduction claim
592
New patents granted
globally to Tate & Lyle
in the year ended
31 March 2017
1 Innova Market Insights 2013-2016 Compound Annual Growth Rates.
2 A granted patent means a single patent granted in one country. Data includes patent applications where we
have received a Notice of Allowance from a national patent office and the patent is in the final stages of the
grant process.
6 Tate & Lyle PLC Annual Report 2017
Driving innovation
and new products
www.tateandlyle.com 7
Delivering
high-quality
ingredients
at scale
Our ingredients are used in
products consumed by millions
of people every day
Our Bulk Ingredients business provides
high-volume food ingredients and industrial
products to customers who operate on a large
scale. Maintaining the highest standards
of food safety, quality and traceability of our
ingredients, and of responsible manufacturing,
is of the utmost importance to us and
our customers.
1.4m
We process around 2%
or about 1.4 million acres
of the annual corn crop
in the US
‘A’ rating
BRC (Global Food Safety
Initiative) has rated our
manufacturing plants
globally ‘A’ or ‘AA’
10.4%
Reduction in CO2e
emissions per tonne of
production since 2008
8 Tate & Lyle PLC Annual Report 2017
Delivering
high-quality
ingredients
at scale
www.tateandlyle.com 9
At a Glance
Our business…
Our business divisions
Speciality Food Ingredients
Growth engine
Bulk Ingredients
Steady earnings and cash generation
Overview
Develops innovative ingredients
and solutions for customers
globally that meet consumer
demand for great tasting,
healthier food and drink.
Portfolio includes:
• Texturants which provide
key functionality such as
thickening, shelf stability
and fat reduction
• Sweeteners which help
reduce sugar and calories
• Health and wellness
ingredients including fibres
and proteins
Read more on pages 16, 17
and 26 to 28
Strategic
positioning
• Leading positions in
attractive markets
• Strong expertise in
categories such as dairy,
beverages and soups,
sauces and dressings
• Broad product portfolio
and geographical
diversification
• Strong innovation focus
• Growing customer base
Overview
Provides high volume food
ingredients and industrial
products primarily for customers
in the North American market.
Strategic
positioning
• Focus on relatively
more stable North
American market
Main product lines are:
• Bulk sweeteners for food
and beverages
• Industrial starches for paper
and construction industries
• Acidulants to enhance flavour
and preserve foods, beverages
and pharmaceuticals
• Strong market positions
• Integrated, scale and
efficient assets
• Long-standing
customer relationships
Read more on pages 16, 17,
30 and 31
Our business divisions are supported by two global teams
Innovation and Commercial Development
Innovation and Commercial Development manages the innovation pipeline and
is responsible for new product development. It connects consumer needs with
leading-edge science to provide innovative ingredients and solutions which our
customers use to meet growing global consumer demand for healthier food and drink.
Read more on page 29
Global Operations
Global Operations delivers high-quality products to our customers across the world.
It is responsible for the efficient operation of our manufacturing facilities, supply and
demand planning, raw material sourcing, customer service and logistics, safety,
sustainability, and the continuous improvement of our operations.
Read more on page 32
10 Tate & Lyle PLC Annual Report 2017
…delivering strong
performance
Financial summary
Statutory results
Adjusted results1
Year ended 31 March 2017
(continuing operations, £m unless stated otherwise)
Sales
Profit before tax
Diluted earnings per share
Net debt
Dividend for the year per share
2017
2 753
233
54.2p
452
28.0p
2016
2 355
126
25.9p
434
28.0p
2017
2016
change in
constant
currency
271
47.1p
193
34.5p
20%
16%
change
17%
85%
109%
Continuing operations1
Adjusted profit
before tax (£m)
£271m
Adjusted diluted
earnings per share
(pence)
47.1p
271
47.1
184
193
34.5
32.0
Adjusted
free cash flow (£m)
Return on capital
employed (%)
£174m
14.3%
174
14.3
12.2
11.3
53
54
2015
2016
2017
2015
2016
2017
2015
2016
2017
2015
2016
2017
1 Adjusted results and a number of other terms and performance measures used in this Annual Report are not directly defined within accounting standards. For clarity
we have provided descriptions of the various metrics and their reconciliations to the most directly comparable measures reported in IFRS, and the calculations where
relevant of any ratios, in Notes 1 and 4.
www.tateandlyle.com 11
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Chairman’s Statement
A year of
excellent
progress
Tate & Lyle delivered a strong
performance with impressive
financial results
I am delighted to be making my first annual
statement to you following my appointment as
Chairman of Tate & Lyle from 1 April 2017.
I am passionate about food, having started my career
as a food scientist, and have remained close to the
industry ever since. My path has crossed Tate & Lyle’s
on several occasions during my career and I am very
excited to join a company that I have long admired for
its strong heritage, values and expertise.
I am honoured to succeed Sir Peter Gershon who
retired on 31 March 2017 after serving on the Board
for eight years. I would like to thank him sincerely for
his outstanding service and significant contribution
to Tate & Lyle during his tenure. Peter leaves the
Company in great shape, performing well with a
clear strategy and strong governance.
I look forward to working with the Board and the
executive team to realise Tate & Lyle’s potential
for development, growth and value creation for
shareholders.
Delivering for shareholders
I am pleased to report that Tate & Lyle delivered
excellent performance in the year ended 31 March 2017
with profits and earnings per share both well ahead
of the prior year. Cash generation was particularly
strong and the balance sheet remains robust,
providing flexibility to support future growth whilst
maintaining dividend distribution to shareholders.
The Board recognises the importance to our
shareholders not only of the dividend, but also
of its sustainability, and the need to re-build cash
dividend cover over time. Accordingly, the Board
recommends an unchanged final dividend for the
year ended 31 March 2017 of 19.8p to make an
unchanged total for the year of 28.0p. Looking to the
future, as dividend cover is re-built, we remain
committed to a progressive policy of growing the
dividend over time, taking into account the earnings
prospects and investment needs of the business.
12 Tate & Lyle PLC Annual Report 2017
Dr Gerry Murphy, Chairman
Delivering responsibly
Tate & Lyle is committed to achieving strong
performance for shareholders whilst maintaining a
sharp and relentless focus on the safety and
sustainability of our business.
In January, we launched an extensive Group-wide
review of all our safety processes and procedures,
supported by an independent external expert
consultancy with deep experience in global safety
assessments. This follows an industrial accident at
one of our grain elevators in the US, in September
2016, when sadly one of our employees and a local
farmer died. A number of significant management
actions have already been implemented in our US
grain elevator network to strengthen safety
processes, further explained in the Corporate
Responsibility section on page 44.
We expect the external review will conclude in the
first half of the current financial year. The Board and
the executive team will work together to ensure that
the review’s findings are carefully considered and
recommended actions implemented
comprehensively and with urgency. Our ultimate
goal remains to have no accidents and no injuries
and this incident has made us all the more
determined to build a safer Tate & Lyle for all our
employees, contractors and visitors. There is no
higher priority in the Group.
Four years ago, Tate & Lyle set itself ambitious
sustainability targets to reduce the environmental
impact of the business. We achieved our targets for
packaging and sustainable agriculture and at the
end of March 2017 we had exceeded our 2016 CO2e
emissions target. We also achieved a leadership
position of A- in the CDP (formerly the Carbon
Disclosure Project). Building on these achievements,
we have set ourselves new stretching targets for
2020 (full details on page 48).
Our commitment to the United Nations (UN)
Sustainable Development Goals (SDG) remains
a key part of our sustainability agenda. A key
objective for the year ahead is the acceleration
of our progress towards the UN SDG targets.
Summary
Tate & Lyle has performed well this year and I would
like to thank our management team and employees
for all the hard work, dedication and skill essential
to this success. Since my appointment to the Board,
I have already visited a number of the Group’s
facilities in North America and Europe and look
forward to seeing some of our sites in Asia and
Latin America in the coming months. I have been
impressed by the unwavering passion, enthusiasm
and commitment of all the colleagues I have met.
Like many global businesses, we are facing an
evolving and challenging geopolitical landscape, but
we do so with confidence as a strong and financially
solid company. I am excited about Tate & Lyle’s
future. With our clear strategy, strong product
portfolio and outstanding people, we are well-
positioned for continuing and sustainable growth.
I look forward to working with the
Board and the executive team to
realise Tate & Lyle’s potential for
development, growth and value
creation for shareholders.
Gerry Murphy
Chairman
24 May 2017
Governance and Board composition
There have been a number of changes to the
Board since the last AGM. I joined the Board on
1 January 2017, succeeding Sir Peter Gershon
as Chairman on 1 April 2017. Liz Airey retired as
Senior Independent Director on 31 December 2016
and, after 10 years of service, will retire from the
Board at the AGM in July 2017. Douglas Hurt
assumed the role of Senior Independent Director
from 1 January 2017, in addition to his role as
chairman of the Audit Committee. William Camp
stepped down as a Non-Executive Director and
chairman of the Corporate Responsibility Committee
on 31 March 2017, having served on the Board since
2010. On behalf of the Board, I would like to thank
both Liz and William for their outstanding service
and significant contribution both to the Board and
to Tate & Lyle.
In October 2016, Jeanne Johns joined the Board
as a Non-Executive Director. Jeanne assumed
chairmanship of the Corporate Responsibility
Committee on 1 April 2017 and is also a member
of the Nominations and Remuneration Committees.
During her 30-year career in the oil industry with
BP, Jeanne held numerous leadership roles in
Europe, the US and China and latterly served as the
Head of Safety and Operational Risk for BP’s global
downstream business.
www.tateandlyle.com 13
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Investment case
We focus our business...
Speciality Food Ingredients
• Grow on average modestly ahead
of the market
• Margin expansion over time
• Broaden geographic sales mix
• US$200 million sales from
New Products by 2020
Bulk Ingredients
• Core business to provide steady
earnings through product
line focus, efficiency and
continuous improvement
• Dampen volatility in Commodities
...to deliver results...
Grow earnings
Improve cash flow
Rigorous capital
allocation
...and create value for shareholders
Attractive dividend with
growing cash cover
Strong
balance sheet
A business increasingly
focused on Speciality
Food Ingredients
14 Tate & Lyle PLC Annual Report 2017
Chief Executive’s Review
Delivering on
our strategic
objectives
We continue to perform well and to
build a stronger business
Javed Ahmed, Chief Executive
Key highlights
• Strong Group financial and operational
performance
• Bulk Ingredients delivered particularly
good results
• Speciality Food Ingredients performed well,
with continued New Products growth but a
significant decline in Food Systems
• Strong balance sheet and cash generation
• Improving dividend cover
• Continued progress towards 2020 Ambition
Overview of Group performance
Tate & Lyle delivered a strong performance in
the year. Both business divisions delivered profit
growth with Bulk Ingredients delivering particularly
good results, driven by excellent commercial
execution and solid manufacturing performance.
Adjusted profit before tax increased by 40% (20% in
constant currency) to £271 million. Movements in
foreign currencies, especially the strength of the US
dollar against sterling, increased adjusted profit
before tax by £40 million.
Speciality Food Ingredients performed well with
adjusted profit up 21% (5% in constant currency) at
£181 million. The business, excluding SPLENDA®
Sucralose and Food Systems, delivered an increase in
adjusted operating profit of 8% in constant currency,
with volume growth in all regions except North
America where growth remained challenging.
SPLENDA® Sucralose’s adjusted operating profit was
£30 million higher as it benefited from lower costs
from a single production facility and a one-off
inventory sell-down. Food Systems’ adjusted
operating profit was £19 million lower with a
significant decline in Europe where sales were
constrained by a consolidation of our blending sites,
which took longer than expected, and a credit issue
which restricted access to the Russian market.
Sales of New Products, which represent products in
the first seven years after launch, grew by 22% in
the year. Sales from New Products have grown by a
compound average growth rate of 43% over the past
five years.
Bulk Ingredients had a particularly strong year
with adjusted operating profit increasing by 54%
(32% in constant currency) at £129 million. This
performance was driven by strong commercial
execution, good US bulk sweetener demand, robust
margins, and solid manufacturing performance
across the plant network. The relatively well-
balanced North American corn wet milling industry
also benefited the business.
Our joint-venture businesses performed well with
profits 16% higher at £32 million.
Adjusted diluted earnings per share from continuing
operations increased by 37% (16% in constant
currency) to 47.1p.
www.tateandlyle.com 15
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Chief Executive’s Review continued
Cash generation during the year was excellent. Adjusted free
cash flow was more than three times higher than the prior
year, and more than covered the dividend. Net debt was
£18 million higher at £452 million, with a £57 million adverse
impact from foreign exchange translation offsetting the strong
free cash flow generation.
Overall, the Group’s performance in the year was extremely
encouraging. With both divisions performing well, higher
operating margins, and a robust balance sheet, the Group is
well positioned for the future.
Strategic progress
We have a clear corporate strategy which we have executed
against in a disciplined way since the 2011 financial year – to
focus on growing Speciality Food Ingredients supported by
steady earnings from Bulk Ingredients. During the year we
continued to make good progress against this strategy.
Consumers across the world are increasingly looking for
healthier nutrition, particularly given the rising incidence of
obesity and diabetes worldwide. Our Speciality Food
Ingredients business is well-placed to help our customers
meet these demands, as our ingredients help to reduce sugar,
calories and fat, and also to add fibre, in consumer products.
We are steadily bringing new products to market to address
these consumer trends, both through in-house innovation and
by establishing strategic partnerships. During the year, we
expanded our range of texturants with the launch of CLARIA®
Bliss, a clean-label starch which provides great taste and
texture to products such as dairy desserts and chilled ready
meals. We also developed our sweetener range with a new
crystalline version of DOLCIA PRIMA® Allulose, a rare sugar
with a similar taste and texture to sucrose but only a very small
fraction of the calories. Overall, we invested £37 million in
research and development in the year, an increase of £8 million,
part of which was driven by foreign currency translation.
In March 2017, we announced an exclusive partnership with
Sweet Green Fields, one of the largest fully integrated global
stevia players, to distribute their innovative stevia ingredients,
and bring their leading stevia-based sweetening solutions to
our customers worldwide. Early customer interest in our
expanded stevia offering has been encouraging.
We continue to see strong growth in emerging markets.
During the year, we increased our applications and technical
service resources in Latin America and Asia Pacific, and
our sales and applications resources in the Middle East.
Our vision and strategy
Our vision is to become a leading global provider of
speciality food ingredients and solutions.
Our strategy is to deliver this vision through:
• A disciplined focus on growing our Speciality Food
Ingredients business
– deeper customer engagement
– continuous innovation
– stronger positions in higher-growth markets
• Driving Bulk Ingredients for sustained cash
generation to fuel this growth.
16 Tate & Lyle PLC Annual Report 2017
Marketplace
The markets we operate in
Speciality Food Ingredients
Ingredients and solutions which add
specific functionality and value to
customers’ products
The global market for speciality food ingredients is large
and growing.
Size
c.US$51bn1
Annual growth
c.4-5%2
We focus on three areas of this market.
• Sweeteners
Products include high intensity sweeteners (e.g. SPLENDA®
Sucralose) and speciality sweeteners (e.g. KRYSTAR®
Crystalline Fructose, DOLCIA PRIMA® Allulose).
• Texturants
Products include corn-based starches (e.g. REZISTA®),
clean-label starches (e.g. CLARIA®) and our range of
stabiliser systems.
• Health and wellness
Products include dietary fibres (e.g. PROMITOR® Soluble Fibre,
PromOat® Beta Glucan, STA-LITE® Polydextrose), and oat protein.
1 IHS 2014; Speciality Chemicals update Program: Food Additives; Leatherhead
2014: The Global Food Additives Market; and other sources.
2 Leatherhead; LMC International; Company analysis; data as at 2013, five year
CAGR 2009-2013.
Bulk Ingredients
High volume ingredients which
are largely undifferentiated and
compete primarily on price
Bulk Ingredients primarily serves the North American market.
% of Bulk Ingredients profit from North America
>90%
Driving efficient operations
We manage Bulk Ingredients for steady earnings. In the mature
markets this division operates in, we aim to deliver this by:
• optimising product mix and margins
• maintaining capital expenditure discipline
• continuously driving productivity and efficiency
• maintaining a mix of tolling and non-tolling contracts
• reducing exposure to commodity markets where we can, by
dampening volatility by using conservative hedging strategies;
actively managing co-product sales; and investing in the corn
elevator storage network to secure raw material supply.
Global consumer trends
The market for speciality food ingredients is
being driven by a number of global
consumer trends.
Healthier
With obesity and diabetes on the rise worldwide,
consumers are looking to reduce calories, sugar
and fat, while also adding beneficial ingredients
to food and drink such as fibre and protein.
‘Clean-label’
Consumers want to understand the ingredients
on food and drink labels. Increasingly, they are
choosing products with labels with ingredients
that they feel are less processed, or they perceive
to be simpler or ‘natural’.
‘Free from’
Intolerance to certain ingredients is leading to
increased demand for allergen-free foods such
as gluten-free and dairy-free.
‘On the go’
People have busy lives and sometimes
convenience can come at the cost of healthy
nutrition. Consumers are demanding food and
drink that offers fast, ‘grab-and-go’ nutrition,
but which also makes it easier to make
healthier choices.
Main product lines
Bulk Ingredients main product lines largely serve
mature and consolidated markets.
Bulk sweeteners
Bulk sweeteners provide sweetness and
mouthfeel to regular carbonated soft drinks,
confectionery and other foods and drinks.
Industrial starches
Industrial starches strengthen and improve the
surface conditions of paper and cardboard and
are also used in adhesives for building products.
Acidulants
Acidulants are used mainly to enhance flavour
and preserve foods, beverages and
pharmaceuticals.
Commodities
Commodities include co-products such as corn
gluten meal and corn gluten feed (sold mainly as
animal feed) and corn oil.
We also produce some ethanol at our Loudon,
Tennessee facility as a means of optimising the
production balance and efficiency.
Meeting consumer demand
Our ingredients and solutions help our customers
meet growing consumer demand for healthier
food and drink. We leverage our deep technical
expertise and understanding of categories such as
dairy and beverages to provide our customers with
the solutions they need.
Sugar and calorie reduction
Through our wide portfolio of speciality
sweeteners and fibres, we create solutions that
reduce sugar and calories without compromising
the sweetness and texture consumers want.
Enrichment
Our diverse portfolio of fibres offers a range of
nutritional and functional benefits – from fibre
enrichment to sugar and calorie reduction –
while delivering exceptional digestive tolerance.
Texture
Our range of starches provides key functionality
for foods such as thickening, shelf-stability and
fat reduction, while still providing the texture
consumers want.
Stabilisation
Through our in-depth knowledge of ingredients
and complex food systems, we create customised
stabiliser systems (highly functional ingredient
blends) that ensure products maintain stability
and appetising texture throughout their shelf life.
Key market factors
Industry capacity utilisation
Our bulk ingredients are produced mainly at four
large corn wet mills in the US and two smaller mills
in Europe. Supply/demand balance is a key driver of
profitability in the US corn wet milling industry and
the industry was well balanced in the year.
Corn market
The US corn wet milling industry processes around
10% of the US corn crop. Recent harvests have been
strong with corn inventory high and prices relatively
low and stable. Corn is largely a pass-through cost.
Carbonated soft drinks
Demand in the US for regular carbonated soft
drinks, the main end-market for our bulk
sweeteners, declined by 0.7%1 in the year.
Re-deploying capacity
We seek to manage the long-term gradual decline
in demand for our bulk ingredients by steadily
re-deploying primary capacity in our corn wet mills
to support growth in Speciality Food Ingredients.
1 Source: IRI, Total US – Multi Outlet and Convenience Stores.
www.tateandlyle.com 17
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Chief Executive’s Review continued
2020 Ambition
We are also in the process of more than doubling the size of
our applications laboratory in Singapore. This facility will
provide customers with access to more sophisticated analytical
equipment and services, including pilot-plant scale food-
processing equipment, to enable them to perform product
trials on site.
Significant benefits have been realised from the re-alignment
of the SPLENDA® Sucralose business we undertook in the prior
year. The implementation of a rigorous value-based approach to
securing volume, and the consolidation of production into a single
facility in Alabama, US, has helped to increase profitability and
position sucralose as a more focused, low-cost and sustainable
business. During the year, we also celebrated the 40th anniversary
of the discovery of sucralose. This ingredient has helped to
reshape the global sweetener landscape by enabling our
customers to create a wide range of great-tasting, low-calorie
foods and beverages for consumers. Since its discovery in 1976,
the amount of SPLENDA® Sucralose produced by Tate & Lyle has
been enough to replace over 19 million tonnes of sugar in the
human diet, which is the equivalent of removing 77 trillion
calories from consumers’ diets globally.
Food Systems had a challenging year as we worked through
some key changes. In Europe, we consolidated our blending
facilities from three sites to two to lower our cost base going
forward. We also refocused our site in Germany on applications
and solutions development for customers. In China, we decided
to simplify our go-to-market approach by selling our interest in
Jiangsu Tate & Lyle Howbetter Food Co., Ltd. back to our
partner. Together, these actions will allow Food Systems to
serve its customers better and re-position the business for
future growth.
Bulk Ingredients had a very strong year. The decision and steps
taken in 2015 to re-align our European business and focus
Bulk Ingredients predominantly on the relatively more stable
North American market have served us well. Our objective is
for Bulk Ingredients to deliver steady earnings from the core
business and to dampen volatility in Commodities, and we
continue to take the necessary actions to prosecute this
strategy. We have evolved our operating model to provide a
greater focus on product mix and margin management, and we
remain focused on tight cost control. We continue to invest in
our plant network for long-term efficiency gains, and to drive
productivity across our broader supply chain network.
Progress against 2020 Ambition
In November 2015, we communicated our 2020 Ambition to
further strengthen our business with three key outcomes.
Our progress against this ambition is set out opposite. By way
of summary:
• 54% of the Group’s adjusted operating profit came from
Speciality Food Ingredients. While profits from Speciality Food
Ingredients are growing broadly in line with our expectations,
profits from Bulk Ingredients are well ahead of our
expectations. The very strong performance by Bulk
Ingredients in the year has resulted in the overall percentage
of profits from Speciality Food Ingredients being lower than
last year.
• Speciality Food Ingredients sales from Asia Pacific and Latin
America grew by 6% in constant currency and have
increased to 23% of the core business’s sales.
• We continue to see good momentum from New Products with
sales of US$105 million, 22% higher than last year.
18 Tate & Lyle PLC Annual Report 2017
Mix of Group profits
70%
from Speciality Food Ingredients
Adjusted operating profit1
30% Bulk
Ingredients
20% Europe,
Middle East
and Africa
70% Speciality
Food Ingredients
1 Speciality Food Ingredients (SFI) profit includes SFI share of profit
after tax of joint ventures and associates. Group profit is before
Central costs and interest, but includes share of profit after tax of
joint ventures and associates.
Progress in year ended
31 March 2017
Mix of Group profits
54%
• Adjusted operating profit of Speciality Food Ingredients
increased by 5% in constant currency in the year.
• However, exceptionally strong profit growth from
Bulk Ingredients (32% higher in constant currency)
meant that Speciality Food Ingredients profits were
54% of Group profits, down from 60% last year.
2020 Ambition
Broaden geographic mix of Speciality
Food Ingredients sales2
Increase sales from
New Products3 to
30%
from Asia Pacific and Latin America
Speciality Food Ingredients sales
30% Asia
Pacific and
Latin
America
20% Europe,
Middle East
and Africa
50%
North
America
US$200m
New Products sales
$200m
$69m
2 Percentage of sales excluding SPLENDA® Sucralose and
3 New Products are products in the first seven years after launch.
Food Systems.
2015
2020
Progress in year ended
31 March 2017
Progress in year ended
31 March 2017
Geographic mix of Speciality
Food Ingredients sales
23%
Sales from New Products
US$105m
• Sales in Asia Pacific and Latin America grew by 6%
• Sales from New Products grew by 22% in the year
in constant currency in the year.
• Sales in these two regions represented 23% of
Speciality Food Ingredients core business’s sales,
up from 21% last year.
or by US$19 million to US$105 million.
• Good growth was delivered across all three
platforms of texturants, sweeteners and health
and wellness.
www.tateandlyle.com 19
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Executive Committee
Responsible for delivering our strategy
and achieving business results
Javed Ahmed
Chief Executive
Javed joined Tate & Lyle as Chief Executive in October
2009. He brought extensive international experience
from a wide variety of senior management roles at
Reckitt Benckiser plc in North America, Europe,
Australia and New Zealand. He also worked for
Procter & Gamble and Bain & Co. prior to joining
Reckitt Benckiser.
Nick Hampton
Chief Financial Officer
Nick joined Tate & Lyle as Chief
Financial Officer in September 2014.
He held a number of senior roles
over a 20-year career at PepsiCo,
including as PepsiCo’s CFO Europe;
President, West Europe Region;
and Senior Vice President
Commercial, Europe.
Chief Executive’s Review continued
I remain very encouraged by our
progress as we continue to build
a stronger business with higher-
quality earnings.
Safety
As reported in our half-year results announcement, we have
launched an extensive Group-wide review of our safety
processes and procedures, supported by an independent
external expert consultancy with deep experience in global
safety assessments. This follows an industrial accident at one
of our grain elevators in the US in September 2016 when sadly
one of our employees and a local farmer died. We expect the
review will conclude in the first half of the 2018 financial year.
For the 2016 calendar year, in relation to our two main
safety-related key performance indicators, the Recordable
Incident rate remained at 0.76 and the Lost-work Case rate
improved from 0.16 to 0.11. Fatalities are recorded separately
and are not included in these rates.
People
Our employees across Tate & Lyle bring a huge amount of
energy and passion to work every day, and I would like to thank
them for their hard work and dedication. Our strong
performance this year is a testament to the talent and the
commitment of our people and I look forward to working with
them in the next financial year as we continue to execute
our strategy.
Outlook
Turning to the outlook, we are confident the Group will continue
to make underlying progress in the 2018 financial year.
Summary
Overall, our results for the 2017 financial year reflect strong
delivery against our strategy and towards our 2020 Ambition.
I remain very encouraged by our progress, as we continue to
build a stronger business with higher-quality earnings, capable
of delivering sustainable long-term growth.
Javed Ahmed
Chief Executive
24 May 2017
20 Tate & Lyle PLC Annual Report 2017
Jim Stutelberg
President, Bulk Ingredients
Jim joined Tate & Lyle in 2014 from
Pennsylvania-based PPG Industries
Inc. where he led its Americas
Automotive Coatings business.
Prior to that, he spent 16 years with
Dow Corning Corporation in a variety
of senior marketing, sales and
general management roles, including
five years working in Shanghai, China.
Joan Braca
President, Speciality Food
Ingredients
Joan joined Tate & Lyle in 2013 as
Senior Vice President and General
Manager, Asia Pacific. She was then
appointed President, Speciality Food
Ingredients from November 2014.
Prior to joining Tate & Lyle, Joan
spent nearly 20 years with Rohm
and Haas Company in a variety of
operational and general management
roles in the US, Europe and
Asia Pacific.
Pierre Schoumacher
President, Global Operations
Pierre joined Tate & Lyle in 2000 from
Procter & Gamble. During his career
at Tate & Lyle he has held a number
of senior operational and commercial
roles, and was appointed President,
Global Operations, in November 2014.
Rowan Adams
Executive Vice President,
Corporate Affairs
Rowan joined Tate & Lyle in 2001
from National Westminster Bank.
During his career at Tate & Lyle he
has held a number of senior roles
and was appointed Executive Vice
President, Corporate Affairs in
November 2014 with global
responsibility for public affairs,
communications and risk.
Rob Luijten
Executive Vice President,
Human Resources
Rob joined Tate & Lyle as Executive
Vice President, Human Resources
in 2010. Prior to joining Tate & Lyle,
he was Human Resources Director
for Africa, Middle East and Asia for
BG Group PLC. He also spent ten
years with GE Plastics in a number
of senior human resources roles in
both Europe and Asia.
Robert Gibber
Executive Vice President,
General Counsel
Rob joined Tate & Lyle in 1990 as a
commercial lawyer having started
his career in private practice. He was
appointed General Counsel in 1997
and was Company Secretary between
2001 and 2012. Rob has global
responsibility for legal, regulatory
affairs and quality.
www.tateandlyle.com 21
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Business Model
How our business works
Our business model is evolving as we implement our strategy to
grow Speciality Food Ingredients supported by steady earnings from
Bulk Ingredients. As we deliver this strategy, we are becoming an
increasingly customer-focused and innovation-driven business
supported by a strong manufacturing base.
How we create value
Our ingredients and solutions are valuable because they are highly functional. They help to reduce sugar, calories and fat, as well
as add taste, texture and nutrition to products consumed by millions of people every day. The revenue from the sale of our
ingredients and solutions generates cash flow which, after meeting our costs, helps fund business investments, meet our debt
obligations, and provide returns to shareholders through dividends.
Consumer insight
We use our expertise in areas
such as sensory, culinary and
marketing to obtain a deep
understanding of what the
consumer wants. This insight
drives our product development
programme, and how
we collaborate with
our customers.
Generating value
and delivering
shareholder
returns
Delivering to
customers
We aim to deliver our ingredients
to customers on time, in full and to
the right specification. For Speciality
Food Ingredients, this is a complex
process with multiple ingredients and
formulations travelling around
the world. For Bulk Ingredients,
volumes are larger but products
travel relatively shorter
distances to customers.
Innovation
Our team of scientists and
nutritionists continuously
research and test ingredients
to create solutions for our
customers. We work closely
with our customers to
understand their needs.
Engaging with them earlier
and throughout the innovation
process helps drive quicker
adoption cycles.
Scale
manufacturing
Most of our ingredients are made
from agricultural crops, mainly
corn. They are mainly produced at
large-volume corn wet mills (shared
by both divisions) and smaller
blending facilities. Safety, quality,
traceability and environmental
impact are all high priorities in our
raw material sourcing and
production process.
Local customer
solutions
Consumer taste and texture
preferences are different across
the world, which is why we have a
global network of application
labs. Customers come to our
labs to work with our food
scientists to reformulate their
products using our ingredients
for their local markets.
22 Tate & Lyle PLC Annual Report 2017
What drives us
Our goal is to deliver sweet taste, texture, fibre enrichment and stabilisation in food and drink, focusing on sugar, calorie
and fat reduction. To do this, we focus our resources and investments on those categories which have strong growth
potential, where we have strong functional expertise, and where we have the potential to steadily build our competitive
advantage over time. These categories include beverages, dairy and soups, sauces and dressings. Our speciality food
ingredients and solutions are highly relevant because they help meet growing consumer, customer and societal needs for
healthier food and drink in the face of growing global levels of obesity and diabetes, and digestive health issues.
What makes us different
We have a number of strengths which, in combination, differentiate us in the market.
Leading functional
expertise
We have strong technical
expertise in the cross-section of
sweetness, texture and fibre
enrichment, through our leading
portfolio of sweeteners, highly
functional speciality starches,
and fibres with specific
nutritional and health benefits.
Deep category
understanding
Through our teams of food
scientists, nutritionists and other
experts, we have an increasingly
deep understanding globally and
locally of the categories we focus
on such as beverages, dairy and
soups, sauces and dressings.
Delivering tailored
solutions
The combination of our strong
innovation pipeline and the
blending expertise of our Food
Systems business, enables us to
deliver tailored solutions for our
customers which meet growing
consumer demand for healthier
food and drink.
Global
manufacturing base
Our scale manufacturing base
and know-how enables us to
drive operational efficiencies and
a high level of product quality.
They also provide a cost effective
supply of ingredients for
distribution through our global
supply chain.
Clear focus for bulk
business
A key driver of our success is our
clear focus on delivering steady
earnings from the large
businesses within Bulk
Ingredients – bulk sweeteners,
industrial starches and
acidulants. The cash they
generate is used to fuel growth in
Speciality Food Ingredients.
Talented people
Our people are passionate,
dedicated and highly skilled. We
invest in training and developing
our employees and also recruit
high-calibre talent to ensure we
have the right people, teams and
skills to grow our business.
What underpins our business
Safety
We have no higher priority than
the safety of our people and have
an extensive safety management
programme in place. We
measure safety performance at
every site monthly.
Values
Our Values define what we stand
for and how we behave with our
customers, suppliers, investors,
partners, the communities in
which we operate, and
each other.
Board oversight
The Board of Directors oversees
the activities of the Group through
regular meetings, its four
committees and visits to our
operations around the globe.
Read more on page 44
Read more on page 42
Read more on page 57
www.tateandlyle.com 23
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Key Performance Indicators
Measuring progress
Delivering our strategy
We focus on a number of financial performance measures to ensure our strategy successfully delivers increased value for
our shareholders.
Read more on pages 15 to 20
Sales of Speciality
Food Ingredients
-3% in constant currency
Adjusted profit
before tax1
+20% in constant currency
Return on capital
employed1
+300 bps
Adjusted operating
cash flow1
+120%
£996m
£865m
£897m
£271m
£193m
£184m
14.3%
12.2%
11.3%
£273m
£124m
£130m
2015
2016
2017
2015
2016
2017
2015
2016
2017
20152 20162
2017
How we calculate it
As reported, continuing
operations only.
As reported, continuing
operations only.
Why we measure it
• To ensure we are successful
• To track the underlying
in growing the division.
• The Group has concluded
that change in volume (in
metric tonnes) of Speciality
Food Ingredients is a more
effective measure of growth
and will adopt this measure
from the 2018 financial year.
(See also Directors’
Remuneration Report).
Comments
Sales were 3% lower overall in
Speciality Food Ingredients,
driven by growth in the core
business in the Europe, Middle
East and Africa, and Asia Pacific
and Latin America regions,
offset by continuing weakness in
the North American core
business. Sales in Food Systems
declined with volume lower. As
planned, sales and volume were
lower in SPLENDA® Sucralose
where production capacity
was reduced.
performance of the business
and to ensure sales growth
translates into increased
profits.
Adjusted profit before tax was 40%
higher in reported currency and
20% higher in constant currency.
Adjusted operating profit in
Speciality Food Ingredients grew
5% in constant currency, and in
Bulk Ingredients was 32% higher
in constant currency. Central
costs were flat, while adjusted net
finance expenses increased by
£2 million. The Group’s share of
profit after tax of joint ventures
and associates increased by 13%
in constant currency.
The percentage return of the
Group’s earnings from
continuing operations on its
invested capital.
Adjusted cash flow from continuing
operations excluding the impact of
exceptional items, pensions, derivative
financial instruments, tax, interest and
acquisitions, less capital expenditure.
• 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.
• To track how efficient we are in
turning increased profit into cash
and to ensure that working capital
is managed effectively.
The return generated on capital
employed increased during the
year driven by higher earnings.
The return on capital employed
remains well ahead of our
weighted average cost
of capital.
Adjusted operating cash flow
increased to £273 million, fully
covering the full-year dividend on
a cash basis.
1 Adjusted results and a number of other terms and performance measures used in this Annual Report are not defined within accounting standards. For clarity we have
provided descriptions of the various metrics and their reconciliations to the most directly comparable measures reported in IFRS, and the calculations where relevant
of any ratios, in Notes 1 and 4.
2 Restated to reflect exclusion of operating post-retirement benefit costs.
24 Tate & Lyle PLC Annual Report 2017
How we calculate it
Why we measure it
Comments
Maintaining financial flexibility
We look at measures of financial strength to ensure we have
the flexibility to grow the business whilst maintaining
investment grade credit ratings.
Acting safely4
The safety of our employees and contractors is of paramount
importance, which is why we have key performance indicators
for safety.
Read more on pages 33 to 37
Read more on pages 44 to 46
Net debt to EBITDA
multiple1, 3
decreased 0.3x
Interest cover1, 3
increased 3.2x
Recordable
incident rate
Lost-work
case rate
1.3
1.2
0.9
10.7x
10.7x
13.9x
0.85
0.76
0.76
0.32
0.16
0.11
2015
2016
2017
2015
2016
2017
2014
2015
2016
2014
2015
2016
The number of times the Group’s
net borrowing exceeds
its earnings.
The number of times the Group’s
earnings exceed interest payments
made to service its debt.
The number of injuries per
200,000 hours that required more
than first aid, for employees
and contractors.
The number of injuries that
resulted in lost-work days per
200,000 hours, for employees
and contractors.
• To ensure that we have the appropriate level of financial gearing
and that we generate sufficient profits to service our debt. These
measures are a key focus for banks and providers of both debt and
equity capital.
• 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.
The net debt to EBITDA ratio reduced to 0.9 times. Cash flow generation
was strong although net debt increased with an adverse impact of
foreign exchange translation offsetting strong free cash flow
generation. EBITDA increased by 36%. Our net debt to EBITDA ratio
remains comfortably ahead of our internal threshold of 2.0 times.
Interest cover increased to 13.9 times, again comfortably ahead of our
internal minimum threshold of 5.0 times.
For employees and contractors, the combined recordable injuries
decreased by 12% in the calendar year 2016 and the lost-work cases
decreased by 38%. The combined recordable incident rate remained flat
in 2016. The combined lost-work case rate decreased by 31% compared
to 2015.
Fatalities are recorded separately and not included in the rates above.
3 Ratios calculated under the Group’s bank covenants definitions and reported on a proportionate consolidation basis.
4 Measured on a calendar year basis.
www.tateandlyle.com 25
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Speciality Food Ingredients
Growth engine
Good performance with profit growth and margin expansion in the
core business
At a glance
Continuing operations
Year ended 31 March
North America
Asia Pacific and Latin America
Europe, Middle East and Africa
Total excluding SPLENDA®
Sucralose and Food Systems
Volume
change
Sales
%
(3%)
2%
14%
2017
£m
357
148
145
2016
£m
327
119
109
Change
%
9%
25%
32%
Constant
currency
change
%
(3%)
6%
15%
Adjusted
operating
profit
2017
£m
2016
£m
Change
%
Constant
currency
change
%
2%
650
555
17%
2%
125
105
19%
8%
Food Systems
SPLENDA® Sucralose
Total Speciality Food Ingredients
(8%)
(5%)
1%
184
162
996
186
156
897
(1%)
4%
11%
(13%)
(7%)
(3%)
4
52
181
23
22
150
(82%)
134%
21%
(84%)
77%
5%
Key highlights
• Good performance overall, with adjusted operating
profit 5% higher in constant currency
• Core business performed well, despite continued
weaker performance in North America
• Food Systems had a difficult year, with a significant
decline in Europe
• SPLENDA® Sucralose performance was strong,
benefiting from actions taken to re-focus
the business
• New Product momentum continues to be strong
Overview
Adjusted operating profit grew 5% in constant currency as we
drove better product mix and improved margins in the core
business and SPLENDA® Sucralose performance benefited
from the consolidation of its manufacturing footprint completed
at the end of the prior year, and the sell-down of excess
inventory. Food Systems’ adjusted operating profit declined
sharply to £4 million, with sales constrained by both lower
volume in Europe following the consolidation of our blending
facilities to lower our long-term cost base, which took longer
than expected, and the management of a credit issue that
restricted our access to the Russian market.
The division delivered 150bps operating margin improvement,
driven by good growth in the core business and strong
SPLENDA® Sucralose performance.
The effect of currency translation was to increase sales by
£122 million and adjusted operating profit by £23 million.
26 Tate & Lyle PLC Annual Report 2017
Speciality Food Ingredients excluding
SPLENDA® Sucralose and Food Systems
Volume grew by 2%, with particularly good growth in Europe,
Middle East and Africa, which benefited from the acquisition of
the Slovakian facility. On a like-for-like basis, volume was
1% lower.
Adjusted operating profit increased by 8% in constant currency
to £125 million, benefiting from strong commercial execution
and good supply chain performance.
In North America, volume was 3% lower driven by softer
demand in the overall US food and beverage market which
continued to be sluggish in the year. In this region, we have a
relatively high concentration of larger customers, and the
softness these customers are experiencing in the current
market environment, driven by lower consumer demand for
their products, has more than offset new business we secured.
As a consequence, we continue to pursue a longer-term shift in
our business by evolving our go-to-market approach to focus
more on higher-growth sub-categories which benefit from our
expertise in sugar and calorie reduction, and fibre enrichment.
In the health and nutrition category for example, we have
selectively targeted sub-categories including energy and
nutrition bars, where we grew volume by 9% in the year. In
those areas where we believe we can accelerate progress, we
are investing in sales, applications, technical service, and
nutrition resources. The new business we are securing gives us
confidence in our ability, over time, to grow ahead of the US
market, and we expect to make progress against this goal as
we move through the 2018 financial year.
In Asia Pacific and Latin America, volume was 2% higher
reflecting strong performance in the wider Asia Pacific region
and double-digit growth in Latin America somewhat offset by
lower sweetener sales in Japan. Sales were 6% higher in
constant currency. In Asia Pacific, excluding Japan, our
“ We are well-placed to benefit from
increasing global consumer trends for
healthier food and drink.”
Joan Braca
President, Speciality Food Ingredients
business continued to grow strongly especially in China,
benefiting from the investment in local commercial and
technical capability over recent years. In Brazil, weak economic
conditions and weak consumer offtake resulted in volume
softness but this was more than offset by broad-based growth
across the rest of the Latin American region. Our Latin
American business is well positioned for further growth despite
the continued weak macroeconomic conditions in Brazil.
In Europe, Middle East and Africa (EMEA), volume increased by
14% benefiting from good growth in the speciality sweetener
business largely driven by the full ownership of the Slovakian
facility from November 2015. Excluding the impact of this
acquisition, EMEA delivered low single-digit volume growth
with particular strength in our fibres portfolio.
Food Systems
In our global blending business, volumes were 8% lower largely
reflecting weakness in Europe, where performance was
impacted by two issues. Firstly, the continued management of a
credit exposure to a large customer materially restricted our
access to the Russian market. This credit issue is now closed
and we are starting to sell product in Russia again. Secondly,
the consolidation of our European blending sites, which took
longer than anticipated, held back production and constrained
sales. The consolidation is now complete and will reduce our
cost base in Europe going forward.
These European issues affected performance, with adjusted
operating profit 82% lower (84% lower in constant currency) at
£4 million. Included in the profit for the year is a one-off charge
of £5 million in respect of the provision against receivables
related to the European credit issue.
In the first half, we executed a change to our Food Systems
go-to-market approach in China to allow us to better serve
customers and maximise our potential in that market. As a
result we agreed to sell our interest in Jiangsu Tate & Lyle
Howbetter Food Co., Ltd. back to our partner. We have
recognised an exceptional charge of £7 million in respect of
this investment.
We also recognised a net £13 million exceptional charge in
respect of our Brazilian Food Systems business, Tate & Lyle
Gemacom (Gemacom). The charge comprises an impairment
of goodwill, reflecting lower growth expectations against the
backdrop of a significantly weakened macroeconomic outlook
in Brazil, partially offset by a reduction in contingent
consideration payable. Gemacom remains an important part of
our global Food Systems business, with high-quality assets
and a strong market position.
Looking forward, with the benefits of our restructuring, we
expect performance to improve over the course of the 2018
financial year.
www.tateandlyle.com 27
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Speciality Food Ingredients continued
SPLENDA® Sucralose
Adjusted operating profit increased by 77% in constant currency
to £52 million, benefiting from better than expected pricing
and the sale of excess inventory in the first half following the
successful transition to a single manufacturing facility in
McIntosh, Alabama. The second half saw the full benefit from
significantly lower production costs at our single facility.
As anticipated, after a strong start to the year, volume declined
by 12% in the second half in line with our lower production
capacity. As a result, volume for the full year was lower by 5%.
The rate of decline of selling prices for SPLENDA® Sucralose
slowed, resulting in better pricing than expected during the
year with favourable spot prices being secured in the first half
for the sale of the excess inventory, and with a benefit from
contracting in the second half. We continued to pursue a
rigorous value-based approach by focusing on those customers
who fully value the benefits of our quality and customer
service offering.
In our 2018 financial year, with our business largely contracted,
we expect the full-year benefit of lower costs to offset lower
volumes. Looking further ahead, while the market for
sucralose is expected to continue to grow, industry capacity
remains in excess of demand and therefore we expect further
pricing pressure in the market.
New Products
New Products, representing products in the first seven years
after launch, continued to perform strongly. Volume of New
Products grew by 37%, with sales increasing by 22%. Sales of
New Products exceeded US$100 million for the first time,
reaching US$105 million (or £81 million), with sales growth
across all three platforms of sweeteners, texturants (where
non-GMO starches grew strongly), and health and wellness.
Since we opened our global Commercial and Food Innovation
Centre in Chicago in 2012, New Product sales have delivered a
43% compound annual growth rate, demonstrating the quality
of our innovation pipeline.
Innovation is a key enabler of long-term growth, and our focus
continues to be on delivering innovative new products and
solutions which meet customer and consumer needs in areas
such as sugar and calorie reduction, ‘clean-label’ texturants,
and fibre enrichment. These can be breakthrough innovations
or incremental extensions to existing product families.
For example, during the year we further expanded our
sweetener range with MULTIVANTAGE® Syrup, a low-sugar,
low-viscosity sweetener, as well as adding a crystalline format
of DOLCIA PRIMA® Allulose. We also extended our range of
‘clean-label’ texturants with the launch of CLARIA® Bliss1.
Our focus continues to be on
delivering innovative new products
and solutions which meet
customer and consumer needs in
areas such as sugar and calorie
reduction, texture and
fibre enrichment.
In March 2017, we entered into an exclusive partnership with
Sweet Green Fields (SGF), one of the largest fully integrated
global stevia players, to distribute their innovative stevia
ingredients and bring their leading stevia-based sweetening
solutions to our customers around the world, alongside our
existing TASTEVA® Stevia offering. The partnership combines
our sweetener expertise and global sales and distribution
network with SGF’s leading portfolio of stevia-based
ingredients and integrated stevia supply chain. Sales of SGF’s
stevia ingredients and stevia-based sweetening solutions will
be reported in New Products sales.
1 CLARIA® Bliss was previously called CLARIA® Delight outside the European Union.
Case study
A customer in Asia wanted to launch a
drink product that would appeal to a
younger market. Our application
scientists got to work and developed a
new concept – a jelly drink. The drink
contained a customised stabiliser system
which provided unique functionality –
it starts as a liquid when served at an
ambient temperature and gels as it is
chilled. This enabled our customer to
launch a new line of drinks into the kids’
beverage category and position its brand
as youthful and contemporary.
28 Tate & Lyle PLC Annual Report 2017
Innovation and Commercial Development
Connecting consumers
and science
Innovation and Commercial Development (ICD) is a key enabler
of our growth strategy. ICD connects deep consumer and
category understanding with leading-edge science to create
solutions for customers which address growing consumer
demand for healthier food and drink.
ICD is based at our global Commercial and Food Innovation
Centre in Chicago, USA. At the Centre, we offer a full range of
facilities and services including sensory evaluation, culinary
development, human nutrition and regulatory expertise,
state-of-the-art research and application laboratories, and a
pilot plant. Through the Centre, and our global network of
applications and technical services laboratories, we work
closely with our customers to drive new product validation and
bring new products to market quickly.
ICD supports both business divisions but its resources are
largely focused on three broad platforms within the global
speciality food ingredients market – sweeteners, texturants
and health and wellness.
The innovation pipeline is managed through a disciplined
process with clear milestones. A rigorous, multi-step ‘Stage
Gate’ process is used to assess the size and viability of a
potential idea through to final launch into the market.
ICD brings together scientific and commercial functions into
one team to provide an integrated approach to developing and
commercialising new products and technologies.
Global Marketing: operates a market research programme
designed to build deep consumer and category understanding
of our three platforms. It carries out primary research
supplemented by insights from syndicated research services
such as Euromonitor.
Platform Management: takes consumer and category
understanding and translates it into focused strategies for our
three platforms aligned to large market opportunities.
Research and Development: uses leading-edge science to
deliver innovative new products which target large
market opportunities.
Open Innovation: complements in-house science by developing
relationships with universities and research institutions
specialising in food science and technologies. For earlier stage
opportunities, Tate & Lyle Ventures invests in companies in the
food ingredient and technology space.
Each platform has a clear strategic focus aligned to large market opportunities
Sweeteners
Focused on driving sugar substitution
by developing a range of low-calorie
and no-calorie alternatives to sugar.
Reducing calories from sugar
consumption is an increasingly
important priority not only for
consumers but also for governments.
Texturants
Focused on delivering highly functional
and ‘clean-label’ starches. In the food
industry, starches play a key functional
role in providing texture and shelf-
stability, replacing fat and calories,
as well as managing costs.
Health and wellness
Focused on delivering wellness
through enrichment by developing
soluble fibres and expanding our
range of oat-based ingredients. Fibres
support healthy digestion and have
other functional benefits such as fat,
sugar and calorie reduction.
Translating innovation into a commercial portfolio
®
Low-calorie sugar that
offers a superior, new
taste experience
Great-tasting natural, zero
calorie stevia sweetener
with no bitter after-taste
High-performing
‘clean-label’ starch
allowing the launch of
label-friendly products
without compromising
their quality
Soluble Fibre
Fibre enrichment solution
with excellent digestive
tolerance
Natural, heart healthy
soluble oat fibre that
supports healthy
blood cholesterol
levels
Information about our New Products can be found on www.tateandlyle.com
www.tateandlyle.com 29
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Bulk Ingredients
Steady earnings and
cash generation
Strong profit performance driven by commercial and operational
execution, good demand and robust margins
At a glance
Continuing operations
Year ended 31 March 2017
Volume
North American Sweeteners
North American Industrial Starches
Total Bulk Ingredients
Sales
Total Bulk Ingredients
Adjusted operating profit
Core Bulk Ingredients
Commodities
Total Bulk Ingredients
Volume
change
%
-%
3%
3%
2017
£m
2016
£m
Change
%
Constant
currency
change
%
1 757
1 458
21%
4%
121
8
129
93
(9)
84
31%
183%
54%
13%
166%
32%
Key highlights
• Strong performance with adjusted operating profit
32% higher in constant currency
• Solid demand across the portfolio
• Strong commercial execution
• Robust margins with industry well balanced
• Performance underpinned by good
manufacturing performance
Overview
Volume increased by 3% driven by industrial starch growth and
the acquisition of 100% of the Slovakian facility in the prior year.
North American bulk sweetener volume was flat. Overall,
volume on a like-for-like basis was flat. Sales for the division
increased by 4% in constant currency to £1,757 million.
Adjusted operating profit was 32% higher in constant currency
at £129 million, benefiting from good commercial and
operational execution across the business and robust margins.
Commodities contributed profits of £8 million, an increase of
£17 million in the year. Operating margin for the division
strengthened by 150bps.
The effect of exchange translation was to increase sales by
£239 million and adjusted operating profit by £18 million.
The US corn wet milling industry remains well balanced,
reflecting capacity reductions in the industry at the beginning
of 2015 and more robust industry exports to Mexico where
demand for regular carbonated soft drinks remained firm and
sugar prices are relatively high at present.
30 Tate & Lyle PLC Annual Report 2017
We continue to position our Bulk Ingredients business in North
America to deliver steady earnings over the longer term. We
have adopted a product line approach to further increase our
focus on product mix management and lower costs across the
supply chain. We have also established a dedicated team to
generate continuous process improvements within the plant
network. We continue to look for ways to further improve the
longer-term efficiency of our plants, with the new combined
heat and power facility in Loudon, Tennessee, which was
brought into use in the third quarter of the financial year, being
an example. Commercial execution continues to strengthen,
with stronger customer service driven from improved demand
forecasting and supply chain decision-making which has been
supported by the implementation of our global SAP system.
Corn prices
For the third consecutive year the corn harvest was strong, with
the autumn 2016 harvest setting a production record at
15.1 billion bushels1, and US corn inventories increasing to
their highest levels in the past 30 years. Three consecutive
strong harvests have led to a period of sustained lower US corn
prices with market prices trading below $4.00 per bushel for
the majority of the financial year. The stocks-to-use ratio for
the US market for 2016/2017 is estimated at 16%, reflecting
inventories around one third higher being carried into the
2017/2018 corn year.
North American Sweeteners
North American bulk sweetener volume was flat, despite a
modest decline in consumption, driven by strong commercial
execution and the benefit of strong demand in Mexico.
Consumption of regular carbonated soft drinks is the main
driver of high fructose corn syrup demand in the US. In the year
ended 31 March 2017, US regular carbonated soft drinks
consumption declined by only 0.7%2, a slightly slower decline
than the historical trend.
Unit margins for contracts renewed for the 2016 calendar year
increased, benefiting from continued good industry supply
demand balance following capacity reductions. Our unit
margins further benefited from mix improvements from our
product line focus and manufacturing and supply chain
efficiencies. Contracts renewed for the 2017 calendar year
contracting round delivered modestly higher unit margins,
benefiting the fourth quarter of the 2017 financial year.
North American Industrial Starches
North American industrial starches volume was 3% higher,
somewhat ahead of underlying market growth. Demand for paper
and board remained steady, as continued higher packaging and
tissue demand offset a decline in demand for printing and writing
paper. Demand for starches used in building materials has been
robust in a relatively stable US housing market.
Commodities
Co-product values in the US have stabilised towards the low
end of historical price levels. Strong recent production of corn
and soybeans has sustained large year-to-year inventory
carryover of both products and kept prices for both grains and
co-products relatively stable. US ethanol margins remained
relatively steady at the low end of the historical range during
the year.
Commodities overall reported a profit of £8 million, an increase
of £17 million from the 2016 financial year. The higher profits
from Commodities were driven by better market demand for
proteins, including corn gluten meal. Ethanol performance was
largely flat.
US political environment
The new US Administration is seeking to reform the North
American Free Trade Agreement (NAFTA). NAFTA is very
important to the US food and agricultural sector, and Mexico in
particular is a key export market for the corn wet milling
industry, particularly for high fructose corn syrup. Until we have
clarity on the nature of any proposed changes, it is difficult to
estimate what the impact, if any, will be.
1 USDA (the US Department of Agriculture) data.
2 Source: IRI, Total US – Multi Outlet + Convenience Stores.
“ We continue to position our Bulk
Ingredients business in North America
to deliver steady earnings over the
longer term.”
Jim Stutelberg
President, Bulk Ingredients
www.tateandlyle.com 31
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Global Operations
Delivering operational excellence
Global Operations is responsible for the delivery of high-quality
products to our customers across the world. It ensures the
efficient and cost effective operation of our manufacturing
assets, and that our ingredients reach customers on time, in
full and to a high quality. Through the application of process
technologies and continuous improvement programmes,
Global Operations drives cost and production efficiencies to
ensure we remain cost competitive in the markets in which
we operate.
Safety
Global Operations is responsible for the global safety
programme, details of which can be found on pages 44 to 46.
Global manufacturing
Global Operations manages our principal manufacturing
assets. In the US these include four major corn wet mills, three
of which are in the mid-west and one in Tennessee. In Europe,
we operate two corn wet mills, in the Netherlands and in
Slovakia. All our corn wet mills make both speciality food
ingredients and bulk ingredients.
Other key sites include our SPLENDA® Sucralose facility in the
US, and our citric acid plants in the US and Brazil. Smaller
manufacturing sites include an oat-based fibres facility in
Sweden and a polydextrose fibre facility in China.
As well as serving domestic US markets, our US corn wet mills
are also the main source of products sold in Latin America and
Asia Pacific.
Global supply chain
Global Operations manages the storage, transportation and
delivery of products from our plants to our customers. Global
supply and demand planning processes are in place, supported
by demand data from our global IS/IT system, including a
common process for gathering a robust demand signal from
the global business. Demand planning resources are based in
each region in which Speciality Food Ingredients operates.
The regional output provided, in a common format, is assessed
against our supply capabilities allowing us to make faster,
better-quality decisions.
Customer service, raw material sourcing
and sustainability
Global Operations provides customer service operations for
both business divisions. It operates regional customer service
functions with dedicated teams managing customer
communications from order receipt to delivery.
Corn is our largest raw material input. Global Operations
manages corn procurement and the elevator network of
storage facilities in the US to manage the cost effectiveness
and security of our corn supply. While operating the production
facilities as efficiently as we can, Global Operations is also
focused on managing our impact on the environment and the
communities in which we operate.
Continuous Improvement
A dedicated Continuous Improvement team is in place to lead
productivity and efficiency projects across our manufacturing
and broader supply chain network.
The new co-generation plant, a natural gas-fired combined
heat and power system, at our corn wet milling facility in
Loudon, Tennessee.
Two examples of projects completed by Global Operations during the year
Loudon co-generation
In the third quarter of the 2017 financial year, a new, natural
gas-fired combined heat and power system was
commissioned at our corn wet mill in Loudon, Tennessee.
This new system, a US$60 million investment, will
significantly improve energy and operational efficiency at
the facility, and also substantially reduce greenhouse gas
emissions at the site.
SPLENDA® Sucralose production
In the first half of the year, following completion of the
project to consolidate production of SPLENDA® Sucralose
at one site, the facility in McIntosh, Alabama was brought
up to planned production levels earlier than expected,
enabling security inventory levels to be reduced quicker
than originally planned.
32 Tate & Lyle PLC Annual Report 2017
Group Financial Results
Delivering
stronger
results
Key headlines
• 20%2 increase in Group adjusted PBT
with good performance and increased
margins in both business divisions
• 5%2 increase in Speciality Food
Ingredients adjusted operating profit
to £181m:
– 8%2 profit growth in core business,
despite North America volume
growth remaining challenging
– £30m increase in SPLENDA®
Sucralose profit following actions
taken to refocus the business
– £19m decrease in Food Systems
profit with significant decline
in Europe
• 22% increase in sales from New
Products to US$105m
• 32%2 increase in Bulk Ingredients
adjusted operating profit to £129m:
– Strong commercial and operational
execution, good demand and
robust margins
– £17m higher profit from
Commodities
• £40m benefit from currency
translation in adjusted profit before tax
• £121m increase in adjusted free cash
flow from higher earnings, lower
capital expenditure and
currency translation
• Exceptional impairment charges of
£26m
1 Adjusted results and a number of other terms and
performance measures used in this Annual Report
are not directly defined within accounting
standards. For clarity we have provided
descriptions of the various metrics and their
reconciliations to the most directly comparable
measures reported in IFRS, and the calculations
where relevant of any ratios, in Notes 1 and 4.
2 Percentage changes in constant currency.
Nick Hampton, Chief Financial Officer
Summary of financial results1 for the year ended
31 March 2017 (audited)
Year ended 31 March
Continuing operations
Sales
Adjusted operating profit
– Speciality Food Ingredients
– Bulk Ingredients
– Central
Adjusted operating profit
Adjusted net finance expense
Share of profit after tax of joint ventures
and associates
Adjusted profit before tax
Exceptional items
Amortisation of acquired intangible assets
Net retirement benefit interest
Profit before tax
Income tax credit/(expense)
Profit for the year – continuing operations
Profit for the year – discontinued operations
Profit for the year – total operations
Earnings per share – continuing
operations (pence)
Basic
Diluted
Adjusted earnings per share –
continuing operations (pence)
Basic
Diluted
Dividends per share (pence)
Interim paid
Final proposed
Cash flow and net debt
Adjusted free cash flow
Net debt – at 31 March
2017
£m
2016
£m
Change
(reported) %
Constant
currency
change %
17%
21%
54%
–
40%
(9%)
2%
5%
32%
(1%)
18%
2%
40%
20%
2 753
2 355
181
129
(46)
264
(25)
32
271
(19)
(12)
(7)
233
22
255
1
256
150
84
(46)
188
(23)
28
193
(50)
(11)
(6)
126
(5)
121
42
163
55.0p
54.2p
26.1p
25.9p
111%
109%
47.8p
47.1p
34.7p
34.5p
38%
37%
17%
16%
8.2p
19.8p
28.0p
8.2p
19.8p
28.0p
174
452
53
434
www.tateandlyle.com 33
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Group Financial Results continued
Sales from continuing operations of £2,753 million were 17%
higher than the prior year (2% higher at constant currency).
Adjusted operating profit from continuing operations increased
by 40% (18% at constant currency) to £264 million with profits
ahead in both divisions.
Adjusted profit before tax from continuing operations was 40%
higher than last year (20% at constant currency), increasing to
£271 million. Adjusted diluted earnings per share from
continuing operations increased by 12.6p to 47.1p.
On a statutory basis, profit before tax from continuing
operations increased by £107 million to £233 million. Statutory
diluted earnings per share from continuing operations
increased by 28.3p to 54.2p reflecting improved operating
performance, lower operating exceptional items and a tax
credit in the year driven by exceptional tax items (2016 – tax
charge). Profit for the year from total operations increased to
£256 million (2016 – £163 million) with the prior year benefiting
from a £42 million profit for the year from discontinued
operations which included £62 million of profit after tax in
respect of disposed elements of the Eaststarch joint venture
and the Moroccan subsidiary.
Central costs
Central costs, which include head office costs, treasury and
reinsurance activities, of £46 million were in line with the
prior year.
Net finance expense
Adjusted net finance expense from continuing operations, which
excludes net retirement benefit interest, was £2 million higher at
£25 million, principally reflecting steps taken to extend the
weighted average maturity of debt as proceeds from the
drawdown of the Group’s US$400 million private debt, with a
blended fixed rate notes coupon of around 4%, were used to repay
short-term commercial paper in October 2015.
The Group repaid a US$250 million bond on its maturity in June
2016.
Share of profit after tax of joint ventures
and associates
The Group’s share of profit after tax of joint ventures and
associates of £32 million was £4 million higher than in the prior
year reflecting strong underlying performance at both Almex in
Mexico (due to strong demand for bulk sweeteners) and our
Bio-PDO joint venture in the US.
Exceptional items from continuing operations
During the year, the Group recognised a net exceptional charge
of £19 million within continuing operations. Included in
exceptional costs were net impairment charges totalling
£26 million. The Group incurred a net £13 million charge in
respect of the Group’s Brazilian Food Systems business,
Gemacom, reflecting lower growth expectations against the
backdrop of a weaker macroeconomic outlook in Brazil. The
Group also incurred a £7 million charge in respect of exiting
our interest in Jiangsu Tate & Lyle Howbetter Food Co., Ltd. in
China together with a £6 million charge in respect of the
impairment of certain redundant assets at our Decatur facility
in the US.
34 Tate & Lyle PLC Annual Report 2017
Also included in exceptional charges was a £9 million non-cash
gain in respect of the settlement of certain elements of our US
retirement benefit plan obligations, a £5 million net business
re-alignment charge in respect of sucralose and the Group’s
European operations, and a £3 million gain from disposals by
Tate & Lyle Ventures. A full summary of exceptional items can
be found in Note 7.
There was no tax credit on exceptional items (2016 –
£21 million credit), although the Group did recognise
exceptional deferred tax credits totalling £65 million (2016 –
£nil) following recent changes to the Group’s internal financing
structure, and a transfer of intellectual property assets related
to SPLENDA® Sucralose to align ownership with the underlying
manufacturing base.
Net exceptional costs from continuing operations in the prior
year totalled £50 million, predominantly reflecting business
re-alignment costs.
Taxation
The Group’s 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 the UK due to
available tax losses, and rates that lie somewhere in between.
The adjusted effective tax rate on earnings for continuing
operations for the year ended 31 March 2017 increased to
18.2% (2016 – 16.5%).
The reported effective tax rate (on statutory earnings) for the
year was a credit of 9.6% (2016 – a charge of 4.0%), lower as a
result of the recognition of two significant exceptional deferred
tax credits totalling £65 million.
Firstly, as a result of recent changes in UK legislation arising
from the OECD’s Base Erosion and Profit Shifting (BEPS)
project and changes to the internal financing arrangements we
use to fund our international businesses, we have recognised
an exceptional deferred tax credit of £34 million arising from
previously unrecognised tax losses in the UK, which, based on
enacted legislation, are now expected to be utilised against
future UK taxable profits.
Secondly, the Group transferred at fair value its sucralose
intellectual property assets from the UK, to align ownership
with its corresponding manufacturing base in the US, following
the move to consolidate all sucralose production into our US
facility in the 2016 financial year. This transfer led to the
recognition of an exceptional deferred tax credit of £31 million.
The recognition and measurement of deferred tax assets and
liabilities is dependent on a number of key judgements and
estimates. The deferred tax asset of £34 million arising from
the utilisation of UK tax losses following changes to the
internal financing arrangements reflects judgements related
principally to: the size and duration of future internal financing
arrangements; the interest coupon payable on these
arrangements; the future level of deductible expenses incurred
in the UK; and foreign currency exchange rates. Changes in
these assumptions, along with future changes in legislation, for
example impacting the utilisation of UK tax losses, could have
a material impact on the amount of deferred tax recognised in
future accounting periods.
We estimate that, with an increasing mix of US profits, the
impact of changes to our internal financing structure, and
under currently enacted legislation, the adjusted effective tax
rate for the 2018 financial year will be between 21% and 24%.
We expect the rate of cash tax, being the amount of tax paid as
a percentage of adjusted profit before tax, to align to the
adjusted effective tax rate over time.
Discontinued operations
In the year ended 31 March 2017, the Group recognised a
£1 million exceptional gain, resulting from the recycling of
cumulative foreign exchange translation gains from reserves to
the income statement upon completion of the disposal of its
corn wet mill in Casablanca, Morocco on 1 June 2016.
The discontinued profit for the year ended 31 March 2016
principally comprised a net exceptional profit before tax on
disposal from Eaststarch and Morocco of £64 million (as the
Group disposed of the predominantly bulk ingredients plants in
Bulgaria, Turkey, Hungary and Morocco as part of the overall
re-alignment), and an exceptional legal charge of £18 million
relating to the sale of the Group’s former EU Sugars business
in September 2010.
Earnings per share
Adjusted basic earnings per share from continuing operations
increased by 38% to 47.8p and adjusted diluted earnings per
share from continuing operations at 47.1p were 37% higher.
Total diluted earnings per share increased to 54.4p (2016 – 34.8p).
Dividend
The Board proposes an unchanged final dividend for the year
ended 31 March 2017 of 19.8p to make an unchanged total for
the year of 28.0p.
Subject to shareholder approval at the Company’s AGM on
27 July 2017, the proposed final dividend will be paid on
1 August 2017 to all shareholders on the Register of Members
on 30 June 2017. In addition to the cash dividend option,
shareholders will continue to be offered a Dividend
Reinvestment Plan (DRIP) alternative.
Assets
Gross assets of £2,771 million at 31 March 2017 were
£217 million higher than the prior year on a statutory basis
reflecting profit for the year and the positive impact of the
strengthening US dollar, with significant exchange gains
on translation of foreign operations recognised in other
comprehensive income. Net assets increased by £303 million
to £1,332 million.
Retirement benefits
The Group maintains pension plans for our employees in a
number of countries. Some of these arrangements are defined
benefit pension schemes and, although we have closed the
main UK scheme and the US salaried and hourly paid schemes
to future accrual, certain obligations remain. In the US, we also
provide medical benefits as part of retirement packages.
The net deficit on the Group’s retirement benefits plans
decreased by £69 million to £139 million. The deficit
improvement was driven primarily by an increase in the surplus
of the main UK scheme reflecting an increase in the value of all
asset classes and lower retirement benefit obligations driven
by changes in mortality assumptions, partially offset by a
reduction in the discount rate used to discount future
pension obligations.
Under funding arrangements in connection with the 2013
actuarial valuation, the Group committed to make core funding
contributions for the main UK scheme of £12 million per year
and supplementary contributions for six years of £6 million per
year into a secured funding account, payable to the Trustee on
certain triggering events.
The main UK scheme triennial valuation as at 31 March 2016
was concluded during the year, with core funding contributions
maintained at £12 million per year, with the Group also
committing to extend the supplementary contributions payable
into the secured funding account of £6 million per year until
31 March 2023.
www.tateandlyle.com 35
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Group Financial Results continued
Cash flow and net debt
Adjusted operating profit from continuing operations
Adjusted for:
Non-cash items in adjusted operating profit and working capital
Net interest and tax paid
Net retirement benefit obligations
Capital expenditure
Adjusted free cash flow
Net debt
Adjusted free cash flow (representing cash generated from
continuing operations excluding the impact of exceptional
items less net interest paid, income tax paid, and capital
expenditure) was £174 million, £121 million higher than the
prior year principally reflecting higher earnings (after adjusting
for non-cash items) and lower capital expenditure.
Net interest paid increased by £8 million, mostly owing to
timing of interest payments. Taxation paid was £19 million
higher reflecting higher taxable profits in the US.
Capital expenditure of £153 million, which included a
£26 million investment in intangible assets, was 1.1 times the
depreciation and adjusted amortisation charge of £137 million
and reflects continued investment in capacity as well as
efficiency and maintenance investments. We expect capital
expenditure for the 2018 financial year to be around the
same level.
Other significant cash flows in arriving at net debt included:
£29 million of dividends received from joint ventures; external
dividend payments of £130 million; exceptional cash outflows of
£24 million; and the £18 million payment for the purchase of
shares to satisfy share option commitments.
Adjusted free cash flow
For the year ended 31 March
+£45m
(£27m)
+£2m
£174m
+£101m
Year ended 31 March1
2017
£m
264
162
(63)
(36)
(153)
174
2017
£m
452
2016
£m
188
137
(36)
(38)
(198)
53
At 31 March
2016
£m
434
Overall, on a constant currency basis, net debt decreased by
£39 million in the year, reflecting strong free cash generation in
the year, which exceeded dividend payments. However, net debt
at 31 March 2017 of £452 million increased by £18 million due
to the adverse impact of exchange rates of £57 million, mainly
as a result of the impact of the stronger US dollar on the
Group’s US dollar denominated debt.
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 29.
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. 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 £318 million (2016 – £303 million)
and related primarily to railcar leases in the US and our
commitment for a gas pipeline to supply our Loudon facility.
Rental charges for the year ended 31 March 2017 in respect of
continuing operations were £32 million (2016 – £24 million).
£53m
FY16
Adjusted
free cash
flow
Higher
EBITDA
and stable
working
capital
Lower
capex
Interest
and tax
Pensions
FY17
Adjusted
free cash
flow
1 Adjusted results and a number of other terms and performance measures
used in this Annual Report are not directly defined within accounting standards.
We have provided descriptions of the various metrics and their reconciliation to
the most directly comparable measures reported in accordance with IFRS, and
the calculation where relevant of any ratios in Notes 1 and 4.
36 Tate & Lyle PLC Annual Report 2017
Impact of changes in exchange rates
The Group’s reported financial performance at average rates of
exchange for the year ended 31 March 2017 was favourably
impacted by currency translation. The effect of exchange
translation was to increase adjusted profit before tax by
£40 million compared with the comparative year principally as
a result of a weakening of sterling against most other
currencies following the UK’s vote to leave the EU. The average
and closing US dollar and euro exchange rates used to
translate reported results were as follows:
US dollar: sterling
Euro: sterling
Average rates
Closing rates
2017
1.30
1.19
2016
1.51
1.37
2017
1.25
1.17
2016
1.44
1.26
Foreign currency impacts and the UK’s
referendum on EU membership
Sterling has weakened significantly since the UK’s referendum
on EU membership in June 2016. Average rates for the
financial year were US dollar:£1 = $1.30; Euro:£1 = €1.19;
Mexican peso:£1 = 25.11 peso; and Brazilian real:£1 = 4.32 real.
For the year ended 31 March 2017, foreign exchange
translation increased Speciality Food Ingredients adjusted
operating profit by £23 million; and increased Bulk Ingredients
adjusted operating profit by £18 million, with adjusted profit
before tax for the Group increasing by £40 million.
We have assessed the impact of the UK referendum result
on our business. The Group generates less than 2% of its
revenues in the United Kingdom. The outcome of this
referendum is not expected to have a material near-term
impact on our business.
Nick Hampton
Chief Financial Officer
24 May 2017
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 debt at the year end was £472 million against a book value
of £452 million (2016 – fair value £453 million, book value
£434 million). Derivative financial instruments used to manage
the interest rate and currency of borrowings had a fair value
of £21 million liability (2016 – £5 million asset). The main types
of instrument used are interest rate swaps and cross-currency
interest rate swaps. The fair value of other derivative financial
instruments hedging future currency and commodity
transactions was £2 million asset (2016 – £4 million liability).
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 an £11 million asset (2016 – £22 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.
Going concern
The Directors are satisfied that the Group has adequate
resources to continue to operate for a period not less than
12 months from the date of approval of the financial statements
and that there are no material uncertainties around their
assessment. Accordingly, the Directors continue to adopt the
going concern basis of accounting.
Basis of preparation
The Group’s principal accounting policies are unchanged
compared with the year ended 31 March 2016. A number of
minor changes to accounting policies have been adopted
during the year, although they have had no material effect on
the Group’s financial statements.
Details of the basis of preparation, including information in
respect of the methodology used to calculate the Group’s
adjusted performance metrics, can be found in Notes 1 and 4.
www.tateandlyle.com 37
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Risks
Managing our
risks effectively
The Group faces a number of risks which could have a material
adverse effect on our strategy, performance, results, financial
condition and reputation
How we manage risks
Tate & Lyle’s enterprise risk management (ERM)
programme facilitates a common, Group-wide
approach to the identification, analysis and assessment
of risks and the way risks are managed, controlled
and monitored.
1
Identify
risks
5
Review and
monitor risks
2
Assess
risks and
interactions
4
Respond to
and mitigate
risks
3
Prioritise
risks
Risk framework
The Board has overall responsibility for the Group’s
system of risk management and internal control,
and for setting the Group’s risk appetite. The
schedule of matters reserved to the Board ensures
that the Board makes a robust assessment of,
among other matters, the principal risks facing the
Group, and determines the nature and extent of risk
it is willing to take for the Group to achieve its
strategic objectives.
Approach
Process to identify risks
The Group-wide risk management and reporting
process helps to identify, assess, prioritise and
mitigate risk. Principal risks are considered over a
time period of three years. This annual process is
both bottom-up and top-down.
The top-down aspect involves the Board assessing
what it believes to be the principal risks facing
Tate & Lyle. 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, current
and forward-looking risks are identified which are
collated and reported through functional and
divisional levels to the Executive Committee. Areas
and behaviours which could potentially trigger risk
combinations are also considered.
We combine the results of these processes to
identify the Group’s key business, strategic,
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, which also reviews emerging and black
swan risks.
38 Tate & Lyle PLC Annual Report 2017
Risk appetite
As part of the annual risk assessment process,
the Board and Executive Committee undertake an
exercise to consider the nature and extent of the
Group’s risk appetite. This exercise was refreshed
during the year with the help of an external risk
expert facilitator. The results of this exercise are
used as part of strategic planning activities, and in
setting ongoing mitigating actions.
Managing risks
Individual executives in each division are assigned
responsibility for managing risks and their
associated mitigating controls. As part of the
process, senior executive management formally
confirms once a year that 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 Executive Committee reviews the principal risks
regularly and formally on a quarterly basis, and
reports any changes in the level or velocity of the
risks, and associated mitigating actions, to the
Board. The Board reviews the principal risks at least
every six months.
Principal risks
The Board has carefully considered the type and
extent of the principal risks to the Group achieving
its objectives. While the Group seeks to manage risk
carefully, at the same time the Board recognises
that some risk needs to be taken for the Group to
achieve its strategic goals.
Over time, the risk profile of the Group evolves and
the Board’s view of the principal risks is updated
accordingly. This year, ‘shareholder expectations’
has been removed as a principal risk following the
stabilisation and then improvement in the Group’s
financial performance over the last two years.
Conversely, given increasing geopolitical uncertainty
over the last year in some of the markets we
operate in, the Board has decided to add
‘government regulations and trade policies’ as a
principal risk this year.
The Board confirms that a robust assessment of the
principal risks facing the Company, including those
that would threaten its business model,
performance, solvency and liquidity, has been
carried out. The principal risks identified as part of
the process undertaken during the year, together
with examples of the mitigating actions being taken,
are set out on pages 40 and 41. It is not possible to
identify or anticipate every risk that may affect
the Group.
Viability statement
In accordance with the provisions of the UK
Corporate Governance Code issued in September
2014, the Directors have assessed the viability of the
Group, taking into account our current position and
the potential impact of the principal risks we face.
Although the Group’s strategic plan, which the
Board reviews annually, forecasts beyond three
years, the current planning process provides for
the preparation of a detailed financial plan over a
three-year period, built bottom-up on a divisional
basis, including anticipated capital and funding
requirements. For this reason, the Directors have
determined that a three-year period to 31 March
2020 is an appropriate period over which to
assess viability.
To assess viability, we stress-tested the strategic
plan under four downside scenarios. These were
seen as key outcomes that would stress the
potential viability of the Group if one or more of
the principal risks set out in this Annual Report
occurred. The potential impact of these scenarios
was assessed individually, and in combinations,
on both a gross (before mitigation) and a net (after
mitigation) basis. The four downside scenarios
modelled were a major operational failure causing
the shutdown of a large manufacturing facility for
an extended period of time, a sharp decline in
sales in one or more of our major product lines,
the loss of one or more of our key global customers,
and government actions or policies restricting or
preventing our ability to operate in key markets.
In each case, it was assumed that our ability to
acquire financing or re-financing in the capital
markets remained available in all plausible
market conditions.
The impact of these risks occurring was measured
by quantifying their financial impact on the strategic
plan, and on the Group’s viability when set against
measures including liquidity, credit rating and
financial covenant requirements. We also
considered operational and commercial impacts.
The results of this stress testing showed that the
Group would, over the three-year period, be able
to withstand the impact of the most severe
combination of the risks modelled by making
adjustments to our strategic plan and capital
allocation priorities, and other available
mitigating actions.
Based on this assessment, the Directors confirm
that they have a reasonable expectation that the
Group will be able to continue in operation and meet
its liabilities as they fall due over the period to
31 March 2020.
www.tateandlyle.com 39
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Risks continued
Principal risks
Safety
Act safely and 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, which could lead to loss of life or serious injury, may give
rise to fines or penalties for breach of safety laws, interruptions in
operations or loss of our licence to operate, liability payments and
costs arising from injuries or damage, and damage to our
reputation.
Examples of how we manage the risk
• 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
• Process safety management system in place to manage use of
hazardous chemicals
• SafeStart® behavioural safety training programme rolled out
across plants, offices and labs
• Comprehensive review of Group-wide safety protocols, procedures
and culture being undertaken with the support of an independent
external expert consultancy
Strategy
Growth in speciality food ingredients
Tate & Lyle’s strategy is to become a leading global provider of
speciality food ingredients and solutions. Our ability to deliver that
strategy may be affected by a number of factors such as delivering
growth in emerging markets, acquisitions, customers’ 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.
• Investments to increase sales and technical resources, and
infrastructure, particularly in emerging markets
• New staff recruited and existing staff developed to upgrade skill
sets in customer-facing areas and innovation
• Enhancement of internal capabilities to promote growth through
acquisition and partnerships, for example the new distribution
agreement with Sweet Green Fields for stevia ingredients
announced during the year
• Global programme to increase customer focus in key areas such
as customer account management, planning and execution
Innovation
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.
People
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 our
performance.
• Innovation and Commercial Development team conducts research
and works closely with customers and other external
organisations to identify emerging consumer trends
• Open innovation team actively scouts for breakthrough
technologies and opportunities across industries and universities
• Global marketing organisation provides support for new product
launches and consumer and category insight
• 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 science and technology by partnering with research
institutions, entrepreneurs and other venture funds
• 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 skills 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
Legal and compliance
Comply with legal or regulatory requirements, and our
Code of Ethics
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 areas such as health and safety, environment, quality, food
safety, corporate governance and data protection
• Legal teams maintain compliance policies in areas such as
anti-trust and anti-corruption law; and provide ongoing training
to employees
• Ethics training provided to employees
• Whistleblowing process in place (Speak Up programme)
Cyber security
Maintain the security of our information systems and data
A cyber security breach, whether as a result of human error,
deliberate action or the failure of technology systems, could result in
unauthorised access to or misuse of information systems,
technology or data. This could cause harm to our assets, loss of
data, business disruption, legal liabilities and damage to our
reputation.
• Cyber security enhancement programme in place focused on
strengthening people, process and technology defences
• Compulsory cyber security training
• Cyber security breach scenario exercises
• Advanced perimeter defences in place
• Continuous vulnerability detection and defences
• Separation of systems within plant network
• Third-party Security Operations Centre providing 24/7 security
monitoring, security event correlation and threat counter-
measures
40 Tate & Lyle PLC Annual Report 2017
Principal risks
Examples of how we manage the risk
Operations and supply chain
Maintain the continuous operation of our plant network and
supply chain, including high standards of customer service
Operating plants involves many risks which could cause temporary
or permanent breaks in production. We must have a robust sales
and operations planning process to avoid disruption to the supply
chain and maintain high standards of customer service. Failure to do
any of these things could have a material adverse effect on our
performance and reputation.
• Preventive maintenance programme across the plant network
• Ongoing programme to improve global supply chain processes
• 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
• Customer service managed by Global Operations as part of
integrated end-to-end supply chain process
Raw materials
Fluctuations in prices and availability of raw materials,
energy, freight and other operating inputs
Our 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 or crop yields.
In some cases, due to the basis for pricing in sales contracts, or due
to competitive markets, we may not be able to pass 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
• 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 practical, to hedge
and manage our exposure to raw material and co-product prices
Quality
Maintain the quality and safety of our products
The safety of the consumers of our products is critical. Poor quality
or sub-standard products could have a negative impact on consumer
safety and on our reputation and relationships with customers.
Consumer concerns and food regulation
Changes in consumer, customer or government attitudes
to our products
Our freedom or ability to operate may be affected by changes in
consumer or customer attitudes, food law and regulatory changes,
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) is supported by credible sources, clearly
communicated and understood by relevant regulatory authorities.
Failure to do so may restrict the markets for our products.
Government regulations and trade policies
Changes in government regulations and/or trade policies
Government actions or policies causing changes in quotas, tariffs or
customs duties, or imposing import/export limitations, or other
barriers, may lead to our business incurring additional costs, or may
restrict opportunities for growth or prevent our ability to operate in
certain markets.
Financial controls
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.
Key: new principal risk this year
• Strict quality control and product testing procedures to ensure
products are released only with full quality control clearance
• Quality policies, procedures and performance reviewed regularly
by the Corporate Responsibility Committee
• Immediate response Recall Committee meets promptly if a recall
event occurs
• Third-party audit programme supplemented by internal global
compliance audits
• Regular recall simulation exercises
• 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 provides access to broader
sources of information and ensures, where appropriate, a single
voice for the industry on regulatory and public interest issues
affecting our ingredients
• Maintenance of relations with regulatory authorities
• Provision of clear information on ingredients’ provenance
and traceability
• Research Advisory Group, chaired by a non-executive director and
comprising leading scientific experts, reviews critical aspects of
the Group’s innovation activities and provides guidance
• Programme in place to ensure that we actively engage in
discussions with political parties, influencers and regulatory
authorities in the main countries we operate in
• Active member of relevant industry trade associations
• Model in place enabling production across the plant network to be
adapted or optimised in the event of market restrictions in certain
countries
• Operation of a global plant network means customers can be
served from different countries if products from certain markets
are restricted or become economically less attractive
• Continue to invest in resources and infrastructure across different
markets and geographies to diversify business mix
• Financial policies and standards are in place supported by procedures
for key financial processes, for example, capital expenditure
• Financial risks are monitored and managed through a number of
forums, for example, the regional Control Environment Councils
• Chief Executive and Chief Financial Officer undertake detailed
quarterly business and financial reviews
• Process controls were reviewed during the year for existence and
effectiveness
• Automated controls are built into systems where possible
www.tateandlyle.com 41
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Corporate Responsibility
Building a sustainable
business
Our approach to corporate responsibility focuses on our workplace, the safety of our
people, the environment, our marketplace, and the communities of which we are a part
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.
f o r mance Values
Safety
r
e
bility P
ta
n
u
o
c
c
A
Core
Values
A
c
h
i
e
v
e
m
e
n
t
Respect
Integrity
C
r
e
a
tivity Speed
T ea m work
Governance
The governance of Corporate Responsibility (CR) is
overseen by the Board’s Corporate Responsibility
Committee (see page 72). The Chief Executive is the Board
Director with specific responsibility for CR and issues
relating to CR are considered within the Group’s risk
management and reporting processes (see page 38).
Public reporting
We explain the scope, principles and methodologies we
use to report our CR performance in ‘CR Reporting Criteria
Annual Report 2017’ at
www.tateandlyle.com/about-us/corporate-responsibility
Workplace
Our employees are the key to 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 covering ethical conduct and human
rights include:
• Our Code of Ethics, and related internal and external
communication and training
• The Group’s global human resources policies, and our
position and practices on equal opportunities and diversity
• Our ‘Speak Up’ programme (system that supports
whistleblowing)
• Our controls for managing standards in the supply chain (see
page 50).
Employee profile
At 31 March 2017, Tate & Lyle employed 4,146 people (2016 –
4,326). During the year we have closed the Singapore sucralose
plant, sold our interest in Jiangsu Tate & Lyle Howbetter Food
Co, Ltd in China back to our partner, and restructured our Food
Systems blending sites in Europe. At the same time, we
continued to expand our commercial teams in Asia Pacific and
Latin America, and added staff at our Global Shared Service
Centre in Poland.
Employees by division
as at 31 March 2017
3
1
Assurance
Bureau Veritas UK Ltd have independently verified
selected environmental data on page 47. Their assurance
statement is at
www.tateandlyle.com/about-us/corporate-responsibility
2
1 Speciality Food
Ingredients: 46%
2 Bulk Ingredients : 42%
3 Central functions: 12%
42 Tate & Lyle PLC Annual Report 2017
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 are designed to promote equality of
opportunity. We are committed to treating people with
disabilities fairly in all respects, including job applications,
training, promotion and career development. If an employee
became disabled we would, where appropriate, aim to retrain
them for a more suitable role.
Employee engagement
We believe that employees who are committed to Tate & Lyle’s
goals, Values and strategy are happier and ultimately deliver
better results.
Good internal communication is the key to creating real
employee engagement. We communicate with our employees
across the world in a number of ways, using channels such as
our intranet, our Yammer internal social network, our global
employee magazine published every four months in English
and summarised in nine languages, team meetings and
face-to-face dialogue.
We invest in helping employees and managers stay up to date
with the latest requirements of their roles. During the year, this
included a supervisors’ development programme and a people
management development programme. We also trained
managers in the latest techniques for conducting performance
reviews and engaging in active dialogue with their people
throughout the year.
In June 2016 we conducted a Group-wide ‘pulse survey’ to
measure our progress in those areas identified for action in
the 2015 global employee survey. 77% of our employees
participated in the survey, which showed that we had made
good progress in the areas identified, with further
improvements planned to be made during the year.
Diversity and inclusion
We believe that all employees contribute to the performance of
the Group and should 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. Through our Employee Resource Groups, company
magazine, internal website and various other communication
channels, we work to create awareness of diversity and
inclusion issues and to promote equal opportunities.
Gender diversity (as at 31 March 2017)
Board of Directors
Board of Directors
2
2
1 Men: 69% (9)
2 Women: 31% (4)
1 Men: 69% (9)
2 Women: 31% (4)
1
1
Senior managers and statutory directors1
Senior managers and statutory directors1
2
2
Employees by geography
as at 31 March 2017
4
3
1
1 North America: 52%
2 Europe, Middle East
and Africa: 33%
3 Latin America:10%
4 Asia Pacific: 5%
2
All employees
All employees
2
2
1 Men: 81% (113)
2 Women: 19% (27)
1 Men: 81% (113)
2 Women: 19% (27)
1 Men: 73% (3,022)
2 Women: 27% (1,124)
1 Men: 73% (3,022)
2 Women: 27% (1,124)
1
1
1
1
1 Gender diversity for senior managers, excluding statutory directors, is 73% (47)
men and 27% (17) women.
www.tateandlyle.com 43
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Corporate Responsibility continued
Safety
Our ultimate goal is to have no accidents and no injuries. Our
Executive Safety Steering Committee, chaired by our Chief
Executive, meets throughout the year to review our safety
performance and safety improvement programmes. In addition,
our senior executives personally undertake executive safety
audits at all major sites around the world every year.
Performance
For employees and contractors, the combined recordable
injuries decreased by 12%1 in the calendar year 2016 and the
lost-work cases decreased by 38%, as shown on page 45. The
combined recordable incident rate remained flat in 2016. The
combined lost-work case rate decreased by 31% compared to
2015, as indicated in the table below. The majority of incidents
requiring treatment beyond first aid were the result of being
struck by or struck against an object.
Despite the overall improvement in our safety performance, the
year was overshadowed by an industrial accident in which an
employee and a local farmer tragically lost their lives at one of
our grain elevators in the US. The incident is still under
investigation.
Following the accident, we instructed our grain elevator insurer
to conduct safety assessments at every grain elevator and
revised our safety policies and the technical standards for
bucket elevators, as well as making a number of targeted
safety-related investments. Finally, we conducted safety
training for all grain elevator operators and staff.
In early 2017, we launched a comprehensive Group-wide safety
review supported by an independent external expert consultancy
experienced in heavy processing industries. The objective was to
assess our facilities’ safety performance in terms of processes,
organisation and culture and to highlight improvement
opportunities.
As part of the Group-wide safety assessment, our global safety
management systems were also reviewed, and an all-employee
Group-wide safety culture survey was carried out.
The learnings from this review will make a critical contribution
to ensure that all our employees, contractors and visitors are
kept safe at all times.
Safety performance by calendar year
External benchmarking
To put our safety performance in context (and to reflect the fact
that the majority of our employees are located in the US), we
compare our results with US industry averages, as shown in
the graphs on page 45.
Safety improvements
We work hard to continuously improve our safety programmes,
controls and performance. During 2016 we put in place the
following initiatives:
• Reducing contractor accidents: We set out to improve our
contractor safety culture to reduce the number and severity
of contractor accidents. As part of this we introduced a
‘teamwork’ approach, combining safety statistics, milestone
achievements and celebrations with those of our employees,
and invited contractors to our safety committee meetings. In
the US, Brazil and Mexico, we also invited contractors to
monthly incident calls, and conducted monthly calls with
contractor safety directors and our insurer to discuss safety
audit trends and action plans. We also required our
manufacturing sites to put in place a contractor hazard
recognition and reporting programme, if they did not already
have one.
• Machine guarding: We conducted training on machine
guarding and required all sites to continue making
improvements in this area.
• Annual global safety week: This annual event saw many
employees and their families, as well as contractors, taking
part in activities across our sites worldwide. Our annual
children’s safety calendar drawing contest, for employees’
families, encourages the next generation to be aware
of safety.
Ergonomics
In 2016, we asked all sites to make at least one ergonomic
improvement at their facility to improve material handling and
work posture. Examples included sites buying pallet lifts so
employees no longer have to lift from floor level, as well as
changing the seats used by security guards to make them
more comfortable and supportive during long periods of sitting.
We hope to see the benefit from these improvements in 2017.
Employee
Contractor
Combined
Recordable incident rate
Lost-work case rate
2016
0.74
0.80
0.76
Change versus 2015
61%
-46%
0%
2016
0.12
0.10
0.11
Change versus 2015
0%
-62%
-31%
1 All safety statistics are measured on a calendar year basis.
44 Tate & Lyle PLC Annual Report 2017
Safety performance charts1
Recordable incident rate
Lost-work case rate
1.43
1.47
1.13
0.94
0.73
0.43
0.46
0.63
0.74 0.80
0.43
0.19
0.22
0.09
0.39
0.29
0.26
0.12
0.12 0.10
2012
2013
2014
2015
2016
2012
2013
2014
2015
2016
Number of injuries requiring treatment beyond first
aid per 200,000 hours
Number of injuries that resulted in lost-work days
per 200,000 hours
Tate & Lyle employees
Contractors
Tate & Lyle employees
Contractors
Number of incidents combined2
(2016)
53
(2015: 60)
Number of lost-work cases combined2
(2016)
8
(2015: 13)
US industry sector employee
recordable incident case rate 20153
and Tate & Lyle combined 2016
US industry sector employee
lost-work case rate 20153
and Tate & Lyle combined 2016
5.3
4.7
3.5
3.0
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0.6
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T
1 We report safety performance by calendar year and for all employees at both Tate & Lyle owned operations and joint ventures.
2 Tate & Lyle employees and contractors combined.
3 Source: U.S. Bureau of Labor Statistics, U.S. Department of Labor, October 2016.
www.tateandlyle.com 45
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Corporate Responsibility continued
Hand safety
In July, we launched our hand safety campaign that included
monthly communications, posters and safety meetings that
looked at everything from rotating machinery and electrical
safety to gloves. This campaign ran for 10 months.
Safe design and condition of tall structures
and process storage
Further to our progress in 2015, we continued our programme
of structural integrity checks carried out by external engineers.
Our aim was to make sure all our tall buildings and process
storage structures and equipment were safely designed and in
good condition. In 2016, we carried out structural integrity
assessments at our grain elevators and bulk syrup stations.
Behavioural safety
In 2016, we continued to roll out SafeStart® behavioural safety
training at our global manufacturing facilities, together with
safety intervention and feedback training for management at
our US corn plants. We also provided SafeStart® training for
employees in our offices and labs.
‘Let’s Stay Safe’ booklet
In 2016, we continued to roll out our ‘Let’s Stay Safe’ booklet
which was first launched in 2015 and is designed to increase
awareness and promote programmes that prevent serious
injuries and fatalities.
Occupational health and well-being
We use external occupational health professionals to monitor
and safeguard the health of employees at work. These experts
also provide information, advice and support for general health
and well-being.
We aim to promote an active lifestyle across the Group. A good
example is our participation in the Global Corporate Challenge,
a workplace engagement programme undertaken by
companies around the world every year. In 2016, 924 employees
across all areas and levels of Tate & Lyle took part in this
100-day challenge, working in teams of seven to take more
than 10,000 steps every day. We are proud to say our employees
achieved an average of 12,855 steps each day, beating the
global benchmark of 12,700. Learn more at
https://globalchallenge.virginpulse.com/.
Teams of Tate & Lyle employees also took part in events such
as the JP Morgan Corporate Challenge in Chicago and London,
and other local sports events.
Environment
We aim to reduce our environmental impact, and we
continuously work to reduce energy, water and waste
throughout our global operations.
We address environmental considerations across the life-cycle
of our products, from our agricultural supply chain, processing,
and through to how our products are packaged
and transported.
Policy and standards
Our environmental policy and standards apply to all our
activities around the world, and we aim to integrate
environmental considerations in all major decisions. We
promote environmental communication and awareness across
the Group, including during induction sessions and other
training opportunities at our manufacturing facilities.
Our environmental policy is available on the Company’s
website, www.tateandlyle.com.
All our facilities are subject to local environmental
authorisations and permits, and we do our best to comply with
these at all times. If a site breaches an operating limit, we aim
to immediately resolve the issue. Our internal environmental
audit programmes reinforce adherence to our management
standards.
Within our own operations and joint ventures, we focus our
attention on activities that have the greatest potential impact
on the environment. We aim to reduce energy use, our carbon
footprint, waste to landfill and water use. In 2016, we achieved
a leadership position of A- in the CDP.
Outside our own operations we focus on our agricultural raw
material and ingredient supply chain, the transportation of our
products to our customers and our product packaging.
Performance
As set out in last year’s Annual Report, this year we have
restated all our environmental performance measures for all
years back to 2008, for the effect of the disposed Eaststarch
plants. Performance between 2015 and 2016 based on the
revised baseline shows underlying improvement across all
environmental metrics, as shown in the environmental
performance charts on page 47.
46 Tate & Lyle PLC Annual Report 2017
Water use
We reduced our water use per tonne of production by 2.6% in
2016, due to water efficiency projects and programmes we
implemented during the year. Since 2008 we have reduced
water use per tonne of production by 1.5%.
Waste to landfill
We reduced waste to landfill by 15.8% per tonne of production
in 2016 and since 2008 waste to landfill per tonne of production
has reduced by 14.8%.
Energy use and carbon emissions
In calendar year 2016, we decreased our energy use per tonne
of production by 1% compared with 2015, and since 2008 we
have reduced energy use per tonne of production by 5.5%.
Since 2008 we have achieved a 10.4% reduction in CO2e
emissions per tonne of production, a decrease of 1.5% per
tonne of production in 2016. The number for CO2e emissions in
last year’s Annual Report was prior to restatement and is not
reflective of the underlying trend.
Group greenhouse gas (GHG) emissions for the period
1 January to 31 December 2016 in tonnes of carbon dioxide
equivalents (tCO2e) were:
• From combustion of fuel and operation of facilities (Scope 1)
– 1,975,058 tCO2e2 (2015 – 1,908,004 tCO2e)
• From electricity, heat, steam and cooling purchased (Scope
2) – 1,001,033 tCO2e2 (2015 – 1,106,766 tCO2e)
• In total (Scope 1 and 2) – 2,976,091 tCO2e2 which equates to
an intensity of 0.395 tCO2e2 per metric tonne of production
(2015 – 3,014,770 tCO2e and intensity 0.401 tCO2e).
Environmental performance1 (by calendar year)
Energy use
Gigajoules (GJ) per tonne
of production
Primary carbon
footprint
Tonnes CO2e per tonne
of production
Waste to landfill
Tonnes per 1,000 tonnes
of production
Water use
Cubic metres per tonne
of production
4.72
4.87
4.82
0.403 0.401 0.395
4.64
4.65
4.53
10.13
10.22
8.61
2014
20152 20162
2014
20152 20162
2014
20152 20162
2014
20152 20162
1 We report environmental performance by calendar year and for all sites – both Tate & Lyle owned and joint ventures. In line with our established methodology for
separating the data of disposed sites and incorporating the data of new sites as set out at www.tateandlyle.com/CR2016, the Eaststarch manufacturing sites in
Bulgaria, Hungary, Morocco and Turkey that we disposed of during 2015 are excluded from the data in this Annual Report and data for the manufacturing site we
acquired in Sweden in 2013 is included.
2 Refers to 2015 and 2016 data that has been externally assured by Bureau Veritas UK Ltd. Their assurance statement is at www.tateandlyle.com/about-us/corporate-
responsibility.
www.tateandlyle.com 47
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Corporate Responsibility continued
Environment targets – 2016 performance progress
This table summarises our performance against our 2016 year-end targets for CO2e reduction, packaging, transport and
sustainable agriculture.
Target by end of 2016
Reduce CO2e emissions from energy use
by 12.5% per tonne of production
(baseline year 2008)
2016 year-end performance
Achieved 10.4% reduction
in CO2e emissions per
tonne of production,
since 2008
Implement packaging reduction
programmes with customers
representing >50% of sales(£)
Programmes initiated with
customers representing
>50% of sales (£)
Implement transport efficiency
programmes with customers
representing >50% of sales (£)
Programmes initiated with
customers representing
49% of sales (£)
Implement sustainable agricultural
sourcing programmes for our top
20 agricultural raw materials and
ingredients by volume
We have programmes in
place for 25 agricultural
raw materials/ingredients
Commentary
Whilst we did not achieve the CO2e emissions target at the
end of the calendar year 2016, we exceeded the 12.5%
target at the end of March 2017. Our new US$60 million 50
mega-watt co-generation facility in Loudon, Tennessee will
further reduce our global CO2e emissions.
Our focus on industrial pallets achieved 100% recycling of
waste wood that is reused in recycled pallets or made into
landscape mulch.
Introduced 100% recyclable industrial bags.
We expanded the Reciprocal Wash Program. By optimising
product-type shipments we are reducing the volume of hot
wash water used. Partnering with key customers we are
reducing water use, wastewater, energy and costs.
Building on the five stages of our Sustainable Agriculture
Programme our focus has been to assess risk to
understand the social and environmental impacts
associated with each ingredient. Going forward, we will
strengthen our programme based on risk analysis and
deepen our engagement with customers and suppliers.
New environment targets – 2017 to 2020
Building on the progress of our 2016 year-end targets, we have set three new medium-term targets out to 2020.
Reduce CO2e emissions
by 19% per tonne
of production
(baseline 2008)
Reduce waste to
landfill by 30% per
tonne of production
(baseline 2008)
Implement sustainable
sourcing for top
35 agricultural raw
materials and ingredients
by risk and spend (£)
48 Tate & Lyle PLC Annual Report 2017
Marketplace
The five stages of our Sustainable
Agriculture Programme:
The food and beverage industry is our largest market sector.
Other industry sectors we sell into include industrial, animal
feed and personal care.
Increasingly, investors recognise that a proactive approach to
corporate responsibility is important for business success.
Our customers expect us to understand and respond to the key
sustainability challenges affecting their industry. Climate
change, water use, packaging waste, sustainable agriculture
and labour standards in the supply chain are among the most
critical issues for customers and investors. We are actively
putting in place programmes to address these issues.
During 2016, our customers have increasingly looked beyond
their own operations to set ambitious objectives and targets to
reduce the impact of their supply chain. We continue to work
with our customers and our suppliers to find new ways to help
them meet these objectives.
Product safety, quality and sustainability
Our products are produced to the highest quality, traceability
and food safety standards. Our manufacturing facilities are
externally certified to make sure they meet the Global Food
Safety Initiative. Our control arrangements include: in-process
testing; our global compliance audit programme; annual
product traceability and recall testing scheme (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. We use a sustainability evaluation tool as part of our
innovation pipeline to identify any potential sustainability
concerns early in the product development process. This tool
also helps us assess sustainability issues during product
development, helping us avoid or reduce the use of energy and
non-renewable resources, and to increase positive impacts
such as health and wellness benefits.
We help our customers offer their consumers healthy,
nutritious food and beverages that form an important part of a
balanced diet. We aim to ensure that our ingredients, and any
claims we make about their benefits, are supported by clear,
authoritative evidence.
Sustainable agriculture
The majority of our products are derived from agricultural raw
materials. The biggest of these by volume is corn, but we also
buy a large number of other ingredients, for specific applications.
In 2012, we announced our plans to introduce sustainable
agricultural sourcing programmes for our top 20 agricultural
raw materials (by volume) by the end of 2016.
We have established criteria for priority ingredients including
corn, sugar cane, palm oil and soy-derived ingredients.
Building on the five stages of our Sustainable Agriculture
Programme, our focus has been to assess risk to understand
the social and environmental impacts associated with each
ingredient. Going forward, we will strengthen our programme
to deepen our engagement with customers and suppliers.
1
2
3
4
5
Risk Assessment, checking the social and
environmental impacts, risks and opportunities
associated with each ingredient.
Supply Chain Investigation, gathering information
from suppliers on current sustainability
standards and programmes in the supply chain.
Standard Setting, establishing Sustainable
Sourcing Criteria for each ingredient, including
mandatory and desired criteria.
Engagement, explaining criteria to suppliers and
discussing how to implement them.
Monitoring to encourage continuous
improvement in the supply chain, as well as
checking compliance against mandatory criteria.
Building on this progress we are now extending our
Sustainable Agriculture Programme, with a target to cover a
total of 35 ingredients by 2020.
We continue to work closely with key customers to help them
meet their targets and realise their ambitions for
sustainable agriculture.
In 2014, we joined Field to Market (www.fieldtomarket.org), the
US alliance for sustainable agriculture, in order to help define,
measure and advance sustainability in US agriculture,
particularly with regard to corn. We have been developing a
farm-level sustainable agriculture project for US corn through
the Field to Market programme.
www.tateandlyle.com 49
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Corporate Responsibility continued
Conduct of commercial relationships
Our Code of Ethics (Code) commits us to ensuring a safe,
open and responsible business culture wherever we operate.
We expect the same high standards from our business
partners and suppliers as we do of our own employees.
Our Code is available in 13 languages; it is accessible via the
Company’s website, our local ‘Ethics and Values Ambassadors’,
and our various training programmes.
We support our Code with a set of Group Standards including
the Group Competition (Anti-trust) Standard, the Group Gifts
and Hospitality Standard, the Anti-Money Laundering and
Anti-Corruption/Bribery Standard and the Agents and
Commissions Standard. In 2016, our legal team provided Code
training, helping colleagues uphold the Code both internally
and externally.
Standards in our supply chain
Our Code is part of our terms and conditions, contracts and
other supplier engagements. We expect suppliers to comply
with the standards set out in our Code, and that in turn they
should expect the same from their suppliers.
Our anti-slavery and human trafficking statement can be seen
at the link below:
www.tateandlyle.com/anti-slavery-statement.
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 in 47 countries via a free phone
number and by email.
We promote this ‘Speak Up’ service both across the Group and
externally through the Company’s website. Any issues reported
are investigated by members of our Speak Up Committee.
Community
We have a long and proud history of community involvement
that has continued during the year.
Approach
For Tate & Lyle, community involvement is about having a
positive and lasting relationship with the communities we
operate in: improving lives for the better. Together with our
partners, employees across the world share their time, talent
and resources to make a real difference to the communities
they live in. Globally, we focus our efforts in three broad areas:
• Well-being: We support health and wellness projects within
our communities such as food accessibility schemes,
nutrition education, and physical activity programmes
designed to help develop healthy bodies and active minds.
• Education: We foster passion and creativity in young people
by supporting STEM-based grants (science, technology,
engineering and mathematics) for classroom teachers and
student bursaries, inspiring the next generation of big
thinkers.
• Environment: We promote environmental sustainability and
good stewardship of natural resources through education
and research programmes, and conservation work
encouraging community connection, awareness
and participation.
Employees from our Global Shared Service Centre in Łódz�,
Poland, helping local children to create a small garden in the
city centre.
50 Tate & Lyle PLC Annual Report 2017
Our STEM grants support schools in the communities close to
our US sites, encouraging local students to create, explore and
connect with challenging science and maths concepts.
Volunteers from our Asia Pacific team helped to build bicycles
for a school for orphans and abandoned children in Vietnam.
Overview of the year
In the year ended 31 March 2017, cash charitable donations
were £660,000 (2016 – £529,000).
Community spend by area
Year ended 31 March 2017
3
4
2
1
1 Well-being: 35%
2 Education: 36%
3 Environment: 23%
4 Other: 6%
Programmes and partnerships
We seek to engage with local communities where our principal
facilities are located. Within the broader global framework,
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
Making sure that members of the communities in which we
operate have enough to eat remains a global priority for us.
During the year, we provided donations and support, working
with local groups, to fund, collect and distribute food to those in
need, working with charities such as the Northern Illinois Food
Bank (www.solvehungertoday.org) in the US, and the homeless
charity Crisis (www.crisis.org.uk) in the UK. We also helped
support local and regional agencies who work in our
communities to provide nutrition and wellness education
and programming.
Education
During the year, in the US we supported STEM-focused grants
and student challenges in schools close to our plants in
Loudon, Decatur, Lafayette and McIntosh. We continued to
provide a number of scholarships to students in the US and
abroad, helping them to advance their education, and provided
fellowships to university leaders in Vietnam, building capacity in
higher education by increasing skills in educational leadership
and governance.
Environment
Our environmental outreach work continues to focus on
supporting research, educational programming and
partnerships that celebrate the environment and aim to
conserve resources for the future.
During the year, employees participated in various projects
including a community clean-up programme in Mold, UK, and
community gardening and planting campaigns in Łódz�, Poland.
We continued to work with the environmental research and
engagement charity Earthwatch (www.earthwatch.org), with
whom we are working on and supporting a long-term research
project on the ecology, conservation and sustainable harvesting
of seaweed in Asia. We use ingredients derived from seaweed
in our Food Systems business.
The Strategic Report from pages 1 to 51 of this Annual
Report was approved by the Board on 24 May 2017.
By order of the Board
Claire-Marie O’Grady
Company Secretary
24 May 2017
www.tateandlyle.com 51
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Board of Directors
Dr Gerry Murphy
Javed Ahmed
Nick Hampton
Chief Executive
Date appointed to Board: October 2009
Independent: No
Aged: 57. Nationality: Pakistani/
American
Board Committees
N
Skills and expertise:
Javed has extensive experience of global
consumer goods markets. The depth and
breadth of his experience as a global
business leader in multinational
companies and tenure with a major
strategy consulting group provides the
skillset required to drive and transform
an organisation, inspire its workforce
and show leadership in the Company’s
culture and values.
Current external commitments:
• None
Previous roles:
Joined Benckiser (later Reckitt
Benckiser plc) in 1992, 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.
Chief Financial Officer
Date appointed to Board:
September 2014
Independent: No
Aged: 50. Nationality: British
Skills and expertise:
Nick brings a wealth of food industry
insights to the Board, leveraging his
general management, financial and
operational experience in senior
management roles in a major
multinational food and beverage
business, making him a versatile
operational CFO. His experience in
leading transformational projects is
particularly important as the Group
continues its transformation.
Current external commitments:
• Non-executive director and Chairman
of the Audit Committee of Great
Portland Estates plc
Previous roles:
Held a number of senior roles over a
20-year career at PepsiCo, including
Senior Vice President and Chief Financial
Officer, Europe and President, West
Europe Region and Senior Vice President
Commercial, Europe.
Chairman and Chairman of
Nominations Committee
Date appointed to Board: 1 January 2017
Appointed Chairman: 1 April 2017
Independent: Yes on appointment
Aged: 61. Nationality: Irish
Board Committees
N
C
Skills and expertise:
Gerry started his career in the food and
drinks sector and received his PhD in food
technology. He has held a number of chief
executive roles and has also been an
investor and independent director in a
number of international listed companies.
His significant business and board level
experience and a detailed understanding
of UK corporate governance requirements
enables him to provide the Board with
valuable leadership.
Current external commitments:
• Chairman of The Blackstone Group’s
principal European entity
• Chairman of Invest Europe (until 20
June 2017)
• Non-executive director of Intertrust N.V.
Previous roles:
Senior Managing Director in
Blackstone’s Private Equity group (2008
to 2017). CEO of Greencore Group plc,
Exel plc, Carlton Communications plc
and most recently Kingfisher plc (2003 to
2008). Held non-executive directorships
in British American Tobacco plc, Merlin
Entertainments plc, Reckitt Benckiser plc,
Abbey National plc and Novar plc.
Board Committees
Certain responsibilities are delegated to four Board Committees, details of
which are provided on pages 66 to 73 and on page 87.
A Audit Committee
N Nominations Committee
R Remuneration Committee
C Corporate Responsibility
Committee
52 Tate & Lyle PLC Annual Report 2017
Liz Airey
Paul Forman
Lars Frederiksen
Non-executive director
Date appointed to Board: January 2007
Non-executive director
Date appointed to Board: January 2015
Non-executive director
Date appointed to Board: April 2016
Independent: Yes
Independent: Yes
Independent: Yes
Aged: 58. Nationality: British
Aged: 52. Nationality: British
Aged: 58. Nationality: Danish
Board Committees
Board Committees
Board Committees
A
N
A
R
N
C
R
N
Skills and expertise:
Liz’s experience of the London
investment community is of immense
value to the Board, especially when
considering market communications,
strategy and long-term financial
planning and pensions. As Chairman
and non-executive director of another
London-listed company, she also brings
a detailed understanding of UK corporate
governance and the investment markets.
Her longer tenure has provided
invaluable continuity and a historical
perspective throughout a period of
change.
Current external commitments:
• Chairman of Jupiter Fund
Management PLC
Previous roles:
Finance Director of Monument Oil and
Gas plc.
Skills and expertise:
Paul has wide experience in global
manufacturing, commercial, as well as
strategy consultancy and M&A advisory
services. He brings insight to the
commercialisation of innovation
pipelines and the implementation of
business-to-business customer and
market-led strategies in a large
multinational business-to-business
context. His experience as a CEO of a
number of global companies enables
him to provide valuable insights to
the Board.
Current external commitments:
• Chief Executive of Essentra plc
Previous roles:
Group Chief Executive of Coats plc and
Low & Bonar PLC. Served as a non-
executive director at Brammer PLC.
Skills and expertise:
As the former CEO of a global speciality
food ingredients business, Lars led a
successful business transformation and
his insights will be invaluable to the Board
as Tate & Lyle continues to evolve. He
brings operational expertise and insights
and an understanding of how to attract
and retain talent in a global business.
Current external commitments:
• Chairman of Matas A/S
• Non-executive director of Falck A/S
• Chairman of the Danish Committee
for Good Corporate Governance
• Chairman of the Hedorf Foundation
Previous roles:
CEO of Chr. Hansen Holding A/S from
2005 until retirement in March 2013,
leading a transformation of the business
and a successful listing on the
Copenhagen stock exchange during that
period. Prior to CEO, held various
management positions at Chr. Hansen.
www.tateandlyle.com 53
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Board of Directors continued
Douglas Hurt
Jeanne Johns
Anne Minto OBE
Non-executive director and
Chairman of the Corporate
Responsibility Committee
Date appointed to Board:
26 October 2016
Independent: Yes
Aged: 54. Nationality: American
Board Committees
C
R
N
Skills and expertise:
Jeanne’s significant experience of
building organisational cultures with the
highest standards in safety and ethics,
together with her experience in a range
of global leadership roles, managing
multinational businesses, and global
strategic business development, will be
of significant benefit to the Board. She
most recently served as the Head of
Safety and Operational Risk for BP’s
global downstream business from 2011
to 2015 and was responsible for
overhauling the safety and operational
risk organisation. This experience will be
invaluable in her role as Chairman of the
Corporate Responsibility Committee.
Current external commitments:
• Non-executive director of Parsons
Corporation, a US engineering,
construction, technical, and
management services organisation
Previous roles:
Head of Safety and Operational Risk for
BP’s global downstream business from
2011 to 2015. Prior to this role, held
numerous leadership roles in Europe,
the US and China, managing
multinational businesses and global
strategic business development.
Non-executive director and
Chairman of the Remuneration
Committee
Date appointed to Board: December 2012
Independent: Yes
Aged: 63. Nationality: British
Board Committees
A
R
N
Skills and expertise:
Anne’s extensive career in general
management and human resources is
particularly useful to the Board when
considering succession planning, talent
management, executive remuneration
and other employee-related activities.
She has a detailed understanding of how
to attract and retain global talent and her
roles on the boards of companies listed
in both London and New York provide her
with a detailed understanding of global
executive remuneration practices and UK
and US remuneration governance
requirements.
Current external commitments:
• Non-executive director and chairman
of the Remuneration Committee of
Shire PLC
• Non-executive director of ExlService
Holdings, Inc.
• Vice Chairman of the University of
Aberdeen Development Trust
• Non-executive director of the Court of
the University of Aberdeen
Previous roles:
Group Director of Human Resources at
Centrica plc from 2002 until retirement
in 2011. Prior to that, held senior
management roles at Shell UK and
Smiths Group plc and was Deputy
Director-General of the Engineering
Employers’ Federation.
Senior Independent Director
and Chairman of the Audit
Committee
Date appointed to Board: March 2010
Independent: Yes
Aged: 60. Nationality: British
Board Committees
A
C
N
Skills and expertise:
Douglas has extensive experience as a
former finance director of a global
manufacturing and business-to-
business engineering group, and also in
senior management roles in the US and
Europe, which provides the Board with
valuable perspectives and insights into
financial and operational issues. In
addition, his understanding of the
London investment community and
pension matters supports the Board in
its oversight and decision-making roles.
Current external commitments:
• Senior Independent Director and
chairman of the Audit Committee of
Vesuvius plc
• Non-executive director of BSI Group
Previous roles:
Finance Director of IMI plc and held a
number of financial and operational
roles, including US and European senior
management positions, at
GlaxoSmithKline plc.
A Audit Committee
R Remuneration Committee
N Nominations Committee
C Corporate Responsibility
Committee
54 Tate & Lyle PLC Annual Report 2017
Gender diversity
of Directors
At 24 May 2017
1
Dr Ajai Puri
Sybella Stanley
Non-executive director and
Chairman of the Research
Advisory Group
Date appointed to Board: April 2012
Independent: Yes
Aged: 63. Nationality: Indian/American
Board Committees
C
R
N
Skills and expertise:
Ajai’s food science background and
career in research and development in
global food and beverage companies
provides the Board with detailed
technical knowledge and insights into
market perceptions, nutrition and food
and regulatory trends relevant to the
speciality food ingredients business.
His experience in the Asia Pacific region
is of particular benefit as we continue to
focus on growth in emerging markets.
His work with regulatory bodies and
knowledge of nutrition, science and food
regulation provides him with the skillset
required to chair the Research Advisory
Group and to support the Board and
Tate & Lyle with valuable insights into
how leading-edge science and technology
can be successfully deployed as part of
the Group’s Speciality Food Ingredients
portfolio.
Current external commitments:
• Non-executive director of Britannia
Industries Limited
• Non-executive director of
Firmenich SA
Previous roles:
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, held
various management positions with The
Coca-Cola Company, culminating in
Senior Vice President Technical, The
Minute Maid Company.
Non-executive director
Date appointed to Board: April 2016
2
Independent: Yes
Aged: 55. Nationality: British
Board Committees
A
N
Skills and expertise:
Sybella has extensive commercial and
financial experience and brings a wealth
of knowledge about the London
investment community and substantial
experience of communicating with this
and other investment communities
outside the UK. Her long career in
corporate finance and M&A will be
invaluable to the Board’s consideration of
strategic opportunities.
Current external commitments:
• Director of Corporate Finance at RELX
Group plc
• Non-executive director of The
Merchants Trust PLC
• Member of the Department of
Business, Energy and Industrial
Strategy’s Industrial Development
Advisory Board
• Member of the Somerville College
Oxford Development Board
Previous roles:
Originally qualified as a barrister and,
before joining RELX Group in 1997, was a
member of the M&A advisory teams at
Citigroup and later Barings.
1 Male (7)
2 Female (4)
Directors’ nationalities
At 24 May 2017
4
1
3
2
1 British (6 directors)
2 American (3 directors)
3 Irish (1 director)
4 Danish (1 director)
Tenure of non-executive
directors
At 24 May 2017
1
3
2
1 Less than 3 years (4 directors)
2 4 to 6 years (2 directors)
3 Over 7 years (2 directors)
www.tateandlyle.com 55
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Chairman’s introduction to Corporate Governance
Inheriting
a strong
governance
culture
Dr Gerry Murphy, Chairman
Dear shareholder
Since joining Tate & Lyle on 1 January, I have had the
opportunity to experience the strong governance culture of our
Board and the seriousness with which it takes its responsibility
for setting strategy, monitoring its execution and managing the
Group’s risks.
Board effectiveness
As Chairman, it is my responsibility to lead the Board and to
ensure its effectiveness in all aspects of its remit.
The Board last undertook an externally moderated evaluation
of its effectiveness in 2014. The UK Corporate Governance Code
recommends such an external evaluation every three years but,
in view of the succession of both Chairman and Senior
Independent Director, the Board decided to proceed instead
with an internal effectiveness review in the year ended
31 March 2017. I am grateful to our new Senior Independent
Director, Douglas Hurt, for conducting this review and to him
and the other Committee Chairs, Anne Minto and Jeanne
Johns, for reviewing the work of their respective Committees.
Following the changes in Board composition last year, we will
undertake an external evaluation of the Board’s effectiveness in
the current financial year. As part of this review we will look at
the alignment of our Board processes and deliberations with
the strategic needs of the business in the years ahead.
Focus for the 2018 financial year
The Board continues to devote significant time to the drivers of
growth in the business and the challenges and opportunities
the Group faces in its markets. As such, the areas of emphasis
in the coming year will include:
• Performance of the Speciality Food Ingredients business
• Programmes to strengthen further our commercial focus
and execution
• Strategic initiatives, including acquisition opportunities
• Innovation pipeline
• Reviewing talent management and succession planning.
Notwithstanding our commercial priorities, operating our
business responsibly and safely continues to be an
overriding imperative.
Shareholder engagement
As part of my induction, I met with a number of our larger
shareholders to understand their views of the business, its
performance and strategic direction and I very much appreciate
the insights from those conversations. The Board is committed
to maintaining an open dialogue with shareholders and I, and
my fellow Directors, welcome the opportunity to meet with
those of you who are able to attend our Annual General
Meeting on 27 July 2017.
Gerry Murphy
Chairman
56 Tate & Lyle PLC Annual Report 2017
Corporate Governance
Leadership
Our governance structure
The Group’s primary decision-making body is the Board. It is accountable to shareholders for the Group’s financial and
operational performance, and is responsible for setting the strategy and ensuring that risk is managed effectively. The Board
maintains a schedule of items which it is required to consider and approve. We review this schedule regularly and update it to
reflect developments in corporate governance and emerging practice.
As shown in the diagram below, the Board has delegated certain responsibilities to a number of Committees. The Board
retains overall accountability and the Committee Chairmen are responsible for reporting back to the Board on the Committees’
activities. Minutes of the Committees’ meetings are made available to all Directors on the web-based Board portal.
The Board
Dr Gerry Murphy appointed Chairman on 1 April 2017. Chaired by Sir Peter Gershon until 31 March 2017.
• Accountable to shareholders
for the Group’s financial and
operational performance
• Sets the Group’s strategy
• Oversees management’s
implementation of the strategy
• Monitors the operational and
• Sets the Group’s ethical culture and
financial performance of the Group
agrees the Group’s Values
• Sets the Group’s risk appetite
• Ensures that appropriate risk
management systems and internal
controls are in place
• Ensures good corporate governance
practices are in place
Chief
Executive
Audit
Committee
Chaired by
Douglas Hurt
• Oversees financial
reporting, internal
financial controls
and risk management
systems, the risk
management process,
the internal audit
function and the
Group’s relationship
with the external
auditors.
Remuneration
Committee
Chaired by Anne Minto
• Recommends the
Group’s Remuneration
Policy for executive
directors. Sets and
monitors the level
and structure of
remuneration for the
executive directors and
other senior executives
• Sets the Chairman’s
fee.
Corporate
Responsibility
Committee
Jeanne Johns appointed
Chairman of this
Committee on
1 April 2017
Chaired by William Camp
up to 31 March 2017.
• Oversees a range of
operational controls
and risk management
systems, focusing on
safety, product quality,
cyber security,
environmental
performance and the
implementation of the
Code of Ethics.
Nominations
Committee
Dr Gerry Murphy
appointed Chairman
on 1 April 2017
Chaired by the Chairman,
Sir Peter Gershon up to
31 March 2017.
• Makes
recommendations
to the Board regarding
the structure, size,
composition and
succession needs of the
Board and its
Committees
• Reviews the
performance of the
executive directors and
the members of the
Executive Committee.
Oversees succession
planning for Directors
and senior
management.
More on page 66
More on page 69
More on page 72
More on page 74
Executive Committee
Chaired by Javed Ahmed
Research Advisory Group
Chaired by Dr Ajai Puri
• Recommends strategic and operating plans to the Board
• Assists the Chief Executive in implementing the strategy agreed
by the Board
• Monitors the performance of the two business divisions and
global support functions
• Identifies, evaluates, manages and monitors risks facing the Group.
• Comprises external experts and senior Tate & Lyle managers
• Reviews the innovation pipeline
• Provides insights into how leading-edge science and technology
could enhance the portfolio of the Group’s Speciality Food
Ingredients business division.
The Executive Committee is supported by a number of operational committees, including the Executive Safety Steering Committee,
Operations Committee, Capital Expenditure Committee, Cyber Security Committee, Business Continuity Committee, IS/IT Portfolio Review
Committee and the Group Intellectual Property Committee. Committees may also be established for a finite period to oversee key strategic
or operational priorities.
www.tateandlyle.com 57
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Corporate Governance continued
Key responsibilities of the Board
At the date of this Annual Report, the Board comprises the Chairman, two executive directors and eight non-executive directors.
Their responsibilities are summarised below. There is a clear division of responsibilities: the Chairman leads the Board and the
Chief Executive leads the business.
Chairman
Non-executive directors
Responsible for the effective operation,
leadership and governance of the Board
• Chairs Board meetings, Nominations Committee meetings
and the Annual General Meeting
• Sets the Board agenda with the Chief Executive and
Company Secretary
• Facilitates active engagement by all Directors
• Sets the style and tone of Board discussions
• Ensures the Directors receive accurate, timely and
clear information
Chief Executive
Responsible for proposing strategy to the Board
and delivering it
• Runs the business
• Communicates within the organisation the Board’s
expectations with regard to culture, Values and behaviours
• Ensures the Board is aware of current business issues
Chief Financial Officer
Responsible for the Group’s financial affairs
• Contributes to the management of the Group’s business
• Supports the Chief Executive with the development and
implementation of the strategy
Responsible for overseeing the delivery of
the strategy within the risk appetite set by
the Board
• Advise and constructively challenge the executive directors
Senior Independent Director
Responsible for ensuring that the Chairman’s
performance is evaluated
• Acts as a sounding board for the Chairman and supports him
in the delivery of his objectives
• Serves as an intermediary with the Chairman for other
Directors if necessary
• Maintains a comprehensive understanding of the major
issues of shareholders and is available if shareholders have
any concerns that they have been unable to resolve through
the normal channels
Company Secretary
Responsible for maintaining the governance
and listing rules compliance framework
• Supports the Chairman, Chief Executive and Committee
Chairmen in setting agenda items for Board and Committee
meetings
• Advises the Board on developments in corporate governance,
legislation and regulation
• Assists the Chairman and the Chief Executive in ensuring
that the Directors are provided with relevant information in a
timely manner
• Organises inductions for new Directors and ongoing training
for all directors
Compliance with the Code
The UK Corporate Governance Code (the Code) issued by the Financial Reporting Council in September
2014 is the standard against which we are required to measure ourselves for the year ended
31 March 2017. Throughout the year the Company has complied fully with the Code except for provision
B.6.2 to do with Board evaluation. With respect to this provision, we did not use an external facilitator
this year for the reason set out in the Chairman’s letter on page 56.
The Code can be found at www.frc.org.uk.
58 Tate & Lyle PLC Annual Report 2017
Board activity during the year ended 31 March 2017
The Board holds six scheduled meetings each year at Group locations and an off-site meeting to discuss strategy. In the few
instances where a Director is unable to attend a meeting, he or she provides comments in advance to the Chairman. This
year’s scheduled meetings were held in London at the Group’s headquarters and at our Commercial and Food Innovation
Centre in Chicago, USA.
Strategy
• One session focused on our operating model and
capabilities, plus the execution of key growth drivers in
Speciality Food Ingredients and new market trends
• Another session focused on the strategic framework
and the five-year plan
• A session looked at our network optimisation strategy
Financial
• Approved the payment of the interim dividend and
recommended payment of the final dividend
• Considered and agreed treasury and tax matters
• Approved the Annual Operating Plan for the year
ending 31 March 2018
• Approved the Annual Report 2016, the half- and
full-year results and associated announcements
Internal control and
risk management
• Considered and agreed the
Group’s risk appetite and
principal risks
• Assessed the effectiveness of
our internal controls and risk
management systems
• Agreed the Modern Slavery
Act statement available on
the Company’s website
• Agreed the Viability
statement as disclosed in the
Annual Report 2016
Board activity
during the year
ended 31 March
2017
Operational/
commercial
• Reviewed the performance of
the two business divisions
• Approved capital expenditure
projects. Considered
post-investment reviews and
lessons learnt
• Reviewed the development of
the innovation pipeline
• Met with a customer of our
Speciality Food Ingredients
business in North America
to understand the customer’s
perspective on the innovation
process and scope for further
collaboration in the future
Leadership and employees
• Approved the appointment of Jeanne Johns as
non-executive director, Dr Gerry Murphy as non-
executive director and Chairman-designate, and
Douglas Hurt as the Senior Independent Director
• Discussed the Group’s safety performance
• Convened an additional Board meeting to focus on
safety after the accident at one of our US sites,
including a review of the status of the investigation
into the root cause of the accident, consideration of
an internal review of safety in the grain network and
a proposal for an external review of safety across
the Group
• Reviewed the results of the Group-wide employee
engagement survey and proposed follow up actions
Governance and stakeholders
• Considered the output and recommendations from the
Board effectiveness review
• Reviewed and approved Directors’ conflicts of interest
• Discussed feedback from institutional shareholders
and analysts
• Received updates on developments in corporate
governance and the impact of regulatory changes on
the Group, in particular the Market Abuse Regulations
www.tateandlyle.com 59
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Corporate Governance continued
Effectiveness
The Board reviews the balance of experience, skills, gender
and diversity of thinking styles around the boardroom table
regularly to ensure that the composition of the Board and
its Committees is appropriate for the Group as it continues
to evolve and implement the strategy. The Board and its
Committees carry out a formal effectiveness review process
once a year which provides new insights into the operation of
the Board and areas for development or particular focus.
Board composition
At the date of this Annual Report, the Board comprised 11
directors with deep knowledge and experience in diverse
business sectors within global markets: the Chairman, who
has no executive responsibilities; two executive directors;
and eight non-executive directors. The names, skills and
experience of the Directors are set out on pages 52 to 55.
Appointments to the Board
The Nominations Committee has responsibility for the
appointment of non-executive and executive directors and
recommends new appointments to the Board. During the year,
the Nominations Committee carried out a search exercise
for two additional non-executive directors (including the
Chairman-designate). The Board approved the Nominations
Committee’s recommendations and Jeanne Johns and
Dr Gerry Murphy joined the Board on 26 October 2016 and
1 January 2017 respectively. Further details about the
appointment process are set out in the Nominations
Committee report on pages 70 and 71.
Re-election of Directors
The Code provides that all Directors should seek re-election
on an annual basis and all Directors, with the exception of
Liz Airey, 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. Each Director goes through a formal performance
review process as part of the annual Board effectiveness
review. All Directors completed this process during the year
and, in line with the Code, Douglas Hurt, who has served for
over six years, has been subject to a particularly
rigorous review.
Independence
The Code provides that the Board should state its reasons if it
determines that a Director is independent notwithstanding the
existence of relationships or circumstances which may appear
relevant to its determination, including if the Director has
served on the Board for more than nine years from the date of
his or her first election.
With the exception of Dr Gerry Murphy, who, as Chairman, is
presumed under the Code not to be independent, the Board
considers all the non-executive directors who are seeking
re-election to be independent.
Directors’ interests
During the year, no Directors had a material interest in any
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 97.
Directors’ induction programme
On appointment, Jeanne Johns and Dr Gerry Murphy received background reading about the Group and details of Board
procedures and other governance matters. The Company Secretary then worked with each Director to tailor the induction
programme, which covers strategy, operations (including safety and environmental performance), risk management
and internal control. An overview of their programmes to date is set out below.
Director
Jeanne Johns
Dr Gerry Murphy
Aim of induction programme
To increase Jeanne’s knowledge of
the Group’s processes and people
and the UK-listed company
environment
To increase Gerry’s knowledge of
the Group’s strategy, business,
processes, people and financial
control environment
Details of programme to date
Jeanne visited our global Commercial and Food Innovation
Centre in Chicago, USA, our corn wet milling plants in
Decatur, Lafayette South and Sagamore, grain elevators and
the London head office. At these sites she met a number of
senior operational managers and key functional heads.
Gerry has visited eight sites including our global Commercial
and Food Innovation Centre in Chicago, USA where he met
with senior operational managers and key functional heads
to gain a detailed understanding of the Group. He also met
key shareholders and external advisors while he was
Chairman-designate.
60 Tate & Lyle PLC Annual Report 2017
Review of the Committees
In addition to the Board effectiveness review, the chairman of
each of the Committees facilitated a review of his or her own
Committee’s effectiveness. These reviews 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
Dr Gerry Murphy led performance reviews of the non-executive
directors, while the Nominations Committee reviewed the
performance of the Chief Executive, Chief Financial Officer and
the other members of the Executive 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 each case, their commitment remains strong.
Professional development and independent
site visit programme
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.
During the year, in addition to the Board’s visits to the
Commercial and Food Innovation Centre in Chicago, USA, the
Chairman and/or various of the non-executive directors visited
five of the Group’s sites in Europe and four of the Group’s sites
in the US as part of their independent site visit, or induction,
programmes. These visits provide Directors with the
opportunity to interact with local management and to gain
in-depth knowledge about the opportunities and challenges
for the Group’s operations across the world.
Advice and support
All Directors have access to the advice and services of the
Company Secretary, who is responsible for ensuring that the
Board follows due process, and that the Company complies
with applicable rules and regulations.
There is also a formal procedure whereby Directors can
obtain independent professional advice, if necessary,
at the Company’s expense.
2017 Board effectiveness review
In the ordinary course of business, the Board would have
carried out an externally facilitated review of its effectiveness
this year. However, in view of the number of changes to the
Board, in particular the appointment of the Chairman-
designate and the change in Senior Independent Director, the
Directors agreed to defer the externally facilitated review until
after the appointment of the new Chairman. This review will
take place in the 2018 financial year instead.
This year, Douglas Hurt, the Senior Independent Director from
1 January 2017, led the internal review of Board effectiveness
with support from the Company Secretary. The process
involved the preparation of two questionnaires. The first
focused on the strategic framework, progress and priorities
and the other on Board mechanics, agenda and general
effectiveness. The output from the questionnaires was
summarised in a report that was discussed by the Board.
From this, the Directors concluded that they are satisfied that
the Board and its Committees continued to operate effectively
and agreed a number of action points, including:
• Reviewing the remits of the Audit Committee and Corporate
Responsibility Committee to address any areas of potential
overlap
• Considering opportunities to align management and Board
information reporting to minimise multiple reporting formats
• Identifying more time in the Board calendar to focus on the
strategy to deliver progression towards the 2020 Ambition.
Directors’ attendance at Board meetings
during the year
Directors as at 31 March 2017
Sir Peter Gershon
Dr Gerry Murphy1
Javed Ahmed
Nick Hampton
Liz Airey
William Camp
Paul Forman
Lars Frederiksen2
Douglas Hurt
Jeanne Johns3
Anne Minto
Dr Ajai Puri
Sybella Stanley
Number
of
meetings
attended
7
2
7
7
7
7
7
6
7
4
7
7
7
Number
of
meetings
eligible to
attend
7
2
7
7
7
7
7
7
7
4
7
7
7
1 Appointed as a Director with effect from 1 January 2017.
2 Unable to attend one meeting due to a pre-existing commitment.
3 Appointed as a Director with effect from 26 October 2016.
www.tateandlyle.com 61
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Corporate Governance continued
Directors’ conflicts of interest
Directors have a statutory duty to avoid situations in which they
may have interests that conflict with those of the Company,
unless that conflict is first authorised by the Board. As
permitted under the Companies Act 2006, the Company’s
Articles of Association allow Directors to authorise conflicts of
interest and the Board has an established policy and set of
procedures for managing and, where appropriate, authorising,
actual or potential conflicts of interest.
The key elements of those procedures are as follows:
• 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, for instance through
the agreement and implementation of guidelines and
protective measures regarding the ongoing management
of any situational conflict
• Directors are required to declare other situations which
could result in a potential conflict of interest
• Any potential conflicts of interest in relation to proposed
Directors are considered by the Board prior to their
appointment
• The Board reviews Directors’ actual or potential conflicts of
interest at least annually.
During the year, the Board assessed and approved potential
conflicts, together with guidelines and protective measures
as appropriate.
Directors’ indemnities and insurance cover
As at the date of this Annual Report, 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 and 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 our registered office
during business hours on any weekday except UK public
holidays. Equivalent indemnities remain in force for Sir Peter
Gershon and William Camp who ceased to be Directors on
31 March 2017.
The Company also maintains Directors’ and officers’ liability
insurance cover, and reviews the level of cover each year.
Accountability
The Board is responsible for determining the nature and extent
of the principal risks it is willing to take in achieving the Group’s
strategic objectives and for maintaining sound risk
management and internal control systems.
Risk management and internal control
A formal process is in place which aims to identify and evaluate
risks and how they are managed, further details of which are
set out on pages 38 and 39.
The objective of the internal control system is to protect the
Group’s assets and reputation and to ensure the reliability of
financial information for both internal use and external
publication. The systems of internal control and risk
management cannot eliminate the risk of failure to achieve
business objectives and can only provide reasonable, not
absolute, assurance against material misstatement or loss.
An overview of the Group’s internal control system is set out on
page 63 with details of those people or functions responsible
for managing or monitoring risks set out on page 64.
2017 review of the effectiveness of the
system of internal control
The Board monitors the effectiveness of the Group’s systems of
internal control and risk management throughout the year.
Once a year, the Board, supported by the Audit and Corporate
Responsibility Committees, conducts its own review of the
effectiveness of the systems of risk management and internal
control. As last year, the 2017 review was facilitated by Group
Audit and Assurance 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 Corporate Responsibility Committees discussing the
results of the review at their meetings in March and May 2017.
The Board then discussed the output at its meeting in May 2017.
The 2017 review covered financial, operational and compliance
controls, Values and behaviours, and the risk management
process, and included questionnaires and representation
letters completed by management. Group Audit and Assurance
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 Corporate Responsibility Committee
as appropriate.
The Board considers that none of the areas identified for
improvement constituted a significant weakness.
62 Tate & Lyle PLC Annual Report 2017
Key features of the internal control system
Monitoring controls
• Controls monitoring by dedicated
teams covering, for instance,
finance, safety, product quality,
intellectual property and
cyber security
• Framework of reviews by
appropriately qualified people
Information and
communication controls
• Board and Executive Committee
reporting framework
• Communication protocols for
external communications
• Whistleblowing process
System
of internal
control
The system has four
broad areas
Risk assessment
• Risk assessments are undertaken
as part of ‘business as usual’ as
well as through a more formalised
Enterprise Risk Management
process
Tone from the top and
business environment
controls
• The Values framework
(see page 42)
• The Group policies framework
• Business performance
management processes, covering
planning, budgeting and
performance
• Schedule of matters reserved to
the Board and terms of reference
for Board Committees
• A clear organisational structure
with responsibility, accountability
and limits of authority clearly
defined for employees
• Segregation of duties of
employees
Financial reporting internal control system
This system covers the financial reporting process and
the Group’s process for preparing consolidated accounts.
It includes policies and procedures which require:
• 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.
We also have specific disclosure controls and procedures
around the approval of the Group’s financial statements. Twice
a year, representatives from the business units certify that they
have complied with the minimum control standards and that
their reported information provides a true and fair view of the
state 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.
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
Corporate Responsibility Committees, is designed to enable
employees, contractors, customers, suppliers and other
stakeholders to raise concerns confidentially about conduct
they consider contrary to the Group’s Values. It may include, for
example, unsafe or unethical practices, or criminal offences.
The Speak Up programme provides a number of ways to raise
concerns including a telephone reporting line, email, and a
web-based reporting facility. These multilingual communication
channels are operated by independent service providers who
submit reports to the Speak Up Committee for investigation
as necessary.
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. The Audit and Corporate Responsibility
Committees received analysis of all reports submitted via
the Speak Up programme during the year.
www.tateandlyle.com 63
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Corporate Governance continued
Internal control system
Body
The Board
Responsibilities
• Determines the level of risk that it is prepared to accept in the business (risk appetite)
• Agrees the Group’s principal risks for disclosure in the Annual Report
• Oversees the strategies for managing principal risks
Audit and Corporate
Responsibility
Committees
• Review aspects of the risk management and internal control systems and report to the Board
• Discuss regular reports from the VP, Group Audit and Assurance (internal audit)
• Carry out a formal review of the effectiveness of the internal control and risk management systems
and report to the Board on the output of that review at least once a year
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
• Manages risk and ensures that mitigation is operated across the business which is appropriate and
in accordance with the accountability framework
• Has primary responsibility for compliance with Group policies, our Values and legal requirements
• Within certain functions, notably safety and product quality, separate assurance teams oversee the
effective operation of controls
Employees
• Manage risks within their predefined accountabilities
• Are trained on, for example, safety, cyber security, competition law and anti-bribery and corruption to
increase their awareness of risks (training may be tailored and/or mandatory)
Group risk manager
• Works with executive and line management to help identify, measure, mitigate, monitor and report
principal risks
Risk management
committees
• Review certain risks and controls and monitor initiatives to strengthen controls
• Comprise senior management and functional specialists
• Examples include the Cyber Security Steering Committee which considers cyber security risks and
the Treasury Risk Committee which focuses on financial risks
Global Audit
and Assurance
(internal audit)
• Provides objective assessment of the appropriateness and effectiveness of the Group’s internal
control systems to the Audit and Corporate Responsibility Committees, and to the Board
• Has the authority to review any relevant aspect of the business and a duty to report on any
material weaknesses
• Develops and works to a risk-based internal audit plan which is approved by the Audit and Corporate
Responsibility Committees and which is regularly updated
External specialists
• Commissioned by the Board from time to time to supplement internal processes as appropriate
64 Tate & Lyle PLC Annual Report 2017
Engagement with shareholders
and others
We are committed to maintaining an open dialogue with
shareholders, debt investors and potential investors and
recognise the importance of that relationship in the
governance process.
We have a focused investor relations programme that aims to
help existing and potential investors understand the Group.
We provide feedback from the investment community to all
Directors regularly to ensure they understand the views
expressed by major investors.
Institutional investors
The Chief Executive, Chief Financial Officer and VP, Investor
and Media Relations maintain a regular programme of
meetings with institutional shareholders in the UK, Europe
and North America.
After joining the Board on 1 January 2017, Dr Murphy held
meetings with a number of institutional shareholders. The
Chief Financial Officer and VP, Investor and Media Relations
attended a group meeting arranged by the UK Shareholders’
Association during the year. Anne Minto, Chairman of the
Remuneration Committee, met with governance
representatives of a number of the Company’s principal
investors and discussed remuneration matters (see page 84 for
more information). All Directors received periodic updates on
investor activity and meetings.
Analysts
As well as the full-year and half-year results presentations to
investors and analysts, we host conference calls after each
trading update. We publish any presentations, together with the
associated announcements, on the Company’s website and we
also make any audio recordings available for a short period
after each event. The Chief Financial Officer and VP, Investor
and Media Relations also meet regularly with analysts.
Independent feedback on our investor relations
programme
Each year, an external investor relations advisor undertakes a
comprehensive review of investor perceptions of the Group,
management, strategy and communications. The output from
this review was presented to the Board in November 2016 and
actions taken forward by management. Recommendations
included a re-focusing of the Group’s investor targeting
programme in North America, and increasing the time
the Chief Financial Officer spends with analysts.
Other capital providers
The Chief Financial Officer and Group Treasurer regularly meet
with our committed lending banks and bond holders and
ratings agencies (Standard & Poor’s and Moody’s).
Private (retail) shareholders
We encourage private shareholders to provide feedback to the
Board via the Company Secretary. We also include a questions
card with the AGM documentation sent to shareholders so that
those who cannot attend the meeting have the opportunity to
ask questions.
Annual General Meeting
The AGM provides all shareholders with the opportunity to
question the Board on matters put to the meeting, including
this Annual Report. Shareholders who attended last year’s AGM
received a presentation from the Chief Executive on the Group’s
activities and performance and also had the opportunity to
sample some of our ingredients after the meeting.
The 2017 AGM will be held at The QEII Centre in London on
Thursday 27 July 2017 at 11.00 am. Full details are set out in the
Notice of AGM. Resolutions are decided by means of a poll and
the votes received in respect of each resolution, together with the
number of abstentions, are announced through a regulatory
information service and published on the Company’s website.
Shareholders can choose to receive shareholder documentation,
including the Annual Report, electronically or in paper format,
and may submit proxy votes and any questions either
electronically or by post.
Investor calendar
April 2016
May 2016
• Trading update issued
• Full-year results issued
• Remuneration Committee
Chairman consultation
programme
June 2016
July 2016
• Investor roadshow meetings
• Trading statement issued
in the UK
• Annual General Meeting
• Annual Report published
in London
• Investor group meeting
in London
September 2016
November 2016
• Investor meetings in
Switzerland and Ireland
• Half-year results issued
• Investor roadshow meetings
• Investor conference
in the UK and US
in London
• Investor conferences in
New York and London
December 2016
January 2017
• Investor meetings in the US
• UK Shareholders’
• North American investor
group meeting in London
• Investor group meeting
in London
Association arranged group
investor meeting
• Chairman-designate
meeting with investors
February 2017
March 2017
• Trading statement issued
• Chairman-designate
• Investor meetings in London
• Chairman-designate
meeting with investors
meeting with investors
• Investor meetings in the US
www.tateandlyle.com 65
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Corporate Governance continued
Audit Committee Report
Committee governance
Responsibilities
The Committee assists the Board by overseeing financial
reporting, internal controls, the risk management process,
the internal audit function (Group Audit and Assurance) and our
relationship with the external auditors. Further details of its
responsibilities are in the Committee’s terms of reference,
on the Company’s website, www.tateandlyle.com.
Composition
During the year, the Committee comprised five independent
Directors. All members have extensive management
experience in large international organisations and bring a
wide range of financial and commercial experience from
various industries. The Code stipulates that at least one
Committee member should have recent and relevant financial
experience. Two members met this requirement: Douglas Hurt
was Finance Director at IMI plc and is a Fellow 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 Company Secretary is the
secretary to the Committee.
Meetings during the year
Meetings are generally scheduled in line with key times in the
Group’s financial reporting calendar. The Committee held five
scheduled meetings during the year. Attendance during the
year was as follows:
Directors as at
31 March 2017
Douglas Hurt
(Chr)
Liz Airey
Paul Forman
Anne Minto
Sybella Stanley
Date of appointment
to the Committee
9 March 2010
1 January 2007
1 January 2015
1 December 2012
1 April 2016
Number
of
meetings
attended
Number
of
meetings
eligible to
attend
5
5
5
5
5
5
5
5
5
5
The Committee has also met once since the end of the
financial year and prior to the signing of this Annual Report.
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 and attend each meeting. The Chairman of the Board
and Chief Executive are also invited to and attend Committee
meetings. In addition, senior finance and operational leaders
attend and present to the Committee on an ad hoc basis,
depending on the issues being discussed.
Effectiveness
The Committee Chairman and Company Secretary led a review
of the Committee’s effectiveness and the output was discussed
by the Committee. This concluded that the Committee
continued to operate effectively and identified a number of
areas to focus on during next year’s deep dive programme,
including treasury, business performance management, the
finance function of the Speciality Food Ingredients division and
further aspects of our Commodities operations.
Douglas Hurt, Chairman of the Audit Committee
This year, we continued our practice
of looking in depth at certain
aspects of the control environment.
Dear shareholder
This report aims to provide an insight into the work of the
Audit Committee and how we fulfilled our responsibilities
during the year.
In addition to our usual matters, including the financial results
for the full year and half year, applicable accounting policies
and going concern assumptions, we continued with our
practice of looking in depth at certain aspects of the control
environment. These included commodities risk management,
an impact assessment of new accounting standards, in
particular IFRSs 15 and 9, and a review of our Global Shared
Services Centre in Łódz�, Poland. Finance and operational
leaders attended the meeting for these detailed reviews.
As disclosed previously, we aim to appoint new external
auditors for the financial year ending 31 March 2019, to
coincide with the rotation of the incumbent audit engagement
partner. We have started the tender process and I will report
the outcome to you when we have completed it.
During the year, I held separate one-to-one meetings with the
Chief Financial Officer, the VP, Group Audit and Assurance and
PwC, our external auditors. These meetings enabled me to
probe any issues and areas of concern, to ensure that my
fellow Committee members had an appropriate level of
information, and that we had enough time to devote to the
issues in our formal meetings.
Looking ahead, we will continue to focus on the impact of the
evolving nature of the Group on our accounting policies and
practices, and associated disclosure. In addition, we will maintain
our programme of in-depth reviews of the control environment.
I look forward to meeting you at our forthcoming AGM on
27 July 2017.
Douglas Hurt
Chairman of the Audit Committee
66 Tate & Lyle PLC Annual Report 2017
Work undertaken during the year
The Committee maintains a calendar of items for consideration
at each meeting and reviews and updates it regularly. As well
as the work referred to above, the Committee focused on 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 and
constructively challenged the accounting judgements and
disclosures set out in the papers prepared by management
and determined, with the help of the external auditors, the
appropriateness of these. The significant issues considered by
the Committee in relation to this year’s financial statements
are listed on page 68.
The Committee also 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 appropriately disclosed. Papers on
the Group’s existing and emerging litigation risks were
also considered.
External auditors
PwC (or its predecessor firms) have been the Group’s auditors
since 1989. The lead audit partner is rotated every five years.
The current lead audit partner, John Waters, has been in post
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.
In accordance with the Competition and Markets Authority
Order and the Committee’s terms of reference, the Committee
Chairman, on behalf of the Committee, negotiated and agreed
the fee and scope of the statutory audit for the year ended
31 March 2017.
Safeguarding the auditors’ independence
The Committee operates a policy to safeguard the objectivity
and independence of the external auditors. 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.
Provision of non-audit services
The policy also sets out the circumstances in which the
external auditors may be permitted to undertake non-audit
services and 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 each year and considers
quarterly reports which set out the ongoing non-audit services
provided by the auditors and the fees incurred. During the year,
we reviewed and updated the policy on non-audit services in
accordance with the Revised Ethical Standard 2016 published
by the Financial Reporting Council. Under our new policy, the
Chief Financial Officer has authority to approve the permitted
services up to £10,000 and the Chairman of the Committee has
authority to approve up to £100,000. In all other cases, the
Committee must approve any proposed, permitted, non-audit
services.
A breakdown of the fees paid to the external auditors in respect
of audit- and non-audit related work is included in Note 9.
The total amount paid in respect of the Group audit and audit
of subsidiaries was £2.4 million, and £0.1 million was paid in
respect of non-audit-related services. Fees paid in respect of
non-audit-related services therefore comprised 4% of the total
fees paid to PwC.
Effectiveness of the external auditors
Following the conclusion of the audit for the year ended
31 March 2016, the Committee conducted an internal review
of the effectiveness of the external auditors. 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 and divisional levels.
It also considered:
• The most recent report by the Financial Reporting Council
(FRC) in May 2016 on the audit quality inspection of PwC.
The priority sectors for inspection in this report included
the sector the Group operated in i.e. the food, drink and
consumer goods sector
• The FRC’s guidance on evaluating audit quality which
suggested reviewing the external auditors’ competence
in the following areas:
– making appropriate judgements about materiality
– identifying and focusing on the areas of greatest risk
– designing and carrying out effective audit procedures
– understanding and interpreting the evidence they obtain
– making reliable evaluations of that evidence
– reporting clearly and honestly.
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 recommendations where we
could improve processes including planning and communication
for the US component audit, and these were implemented
and incorporated into the criteria set for the audit for the
current year. The Committee discussed progress against
these criteria regularly.
www.tateandlyle.com 67
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Corporate Governance continued
Significant accounting matters considered by the Committee
Issues
Commodity
risk
Taxation
Background
We use commodity contracts to manage
and hedge our corn positions in the US.
The valuations of the corn book and the
co-products produced as part of the corn
wet milling process, which are both
underpinned by a number of judgements,
have a material impact on the reported
results of the Group.
We operate and pay taxes in a number
of jurisdictions, which requires the
interpretation of complex tax law. As
such, we make provision for potential
direct tax exposures with local tax
authorities and reassess this as
necessary at the half-year and year-end.
Our assessment is underpinned by a
range of judgements from tax
professionals and external advisors.
Retirement
obligations
We have significant retirement benefit
obligations in the UK and the US,
including unfunded retirement medical
plans in the US. A number of judgements
have to be made when calculating the
fair value of the Group’s legacy
retirement obligations.
Impairments We test all goodwill for impairment
annually, and, additionally, test all
assets where there has been a previous
impairment or where an indicator of
potential impairment is considered
to exist.
Viability
statement
The Code provides that the Directors
should explain in the Annual Report how
they have assessed the prospects of the
Group, including the appropriateness of
the period used in this assessment.
Committee’s activities and conclusion
The Committee received regular updates on the key commodity risks
and the risk management framework in place to mitigate these risks.
The Committee also considered the work performed by the external
auditors before concluding that the judgements made in determining
the valuations of the corn and co-products positions were
appropriate. This will continue to be a key area of focus for the
Committee in the coming year.
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, set out on page
34 and in Note 12. The Committee was satisfied that the judgements
made in estimating the Group’s tax charge were reasonable, and that
the disclosures were appropriate.
The key factors likely to affect the future tax charge, as well as the
key risks and uncertainties, were considered and the Committee
agreed the disclosure of these factors in this Annual Report.
The Committee considered the treatment of material tax
transactions undertaken during the year, and concluded that the
measurement and disclosure of these, including the transfer of
certain sucralose intellectual property assets to the US and the UK
deferred tax asset recognised following changes to our internal
financing structure, were appropriate.
The Committee discussed and constructively challenged the
assumptions proposed and methodologies used by management and
considered reports from the external auditors before agreeing that
the assumptions were reasonable.
The Committee reviewed the annual goodwill impairment
assessment. The future performance of the underlying businesses,
including the discount rates used and forecast assumptions and
sensitivities, were discussed and constructively challenged.
The Committee concluded that the assumptions were acceptable,
and the conclusions, including the net £13 million impairment in
respect of Tate & Lyle Gemacom Tech Indústria e Comércio S.A.,
were appropriate.
The Committee discussed the appropriateness of the assessment
period and the scenarios to stress-test the business model ahead
of the full assessment by the Board. The Directors subsequently
concluded that they have a reasonable expectation that the Group
will be able to continue in operation and meet its liabilities as they
fall due over the three-year period of their detailed assessment.
Tenure of the external auditors
The Competition and Markets Authority’s order issued in
October 2014 requires FTSE 350 companies to tender
their statutory audit engagement at least every ten years.
In addition to this, EU regulations require that audit firms
of all EU companies listed on a regulated market rotate off
after 20 years.
Under the transitional provisions attached to the EU rules,
we would be required to change auditors for the next audit
appointment after 17 June 2020. As set out in the introduction
from the Committee Chairman, the process for an external
audit tender has begun and our intention is to have the new
auditors in place for the financial year ending 31 March 2019.
68 Tate & Lyle PLC Annual Report 2017
The Committee has recommended to the Board that PwC
continues to act as auditors to the Group for the year to 31
March 2018. PwC has indicated its willingness to continue in
office; resolutions on the reappointment of PwC and
authorising the Audit Committee on behalf of the Board to
determine PwC’s remuneration will be proposed at the AGM.
The Audit Committee considers that the Company has
complied with the Competition and Markets Authority’s
Statutory Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive Tender Processes
and Audit Committee Responsibilities) Order 2014 for the
financial year under review.
Internal audit – Group Audit and Assurance
Group Audit and Assurance is an internal review function that
services the Board and all levels of management. It provides
objective assurance to add value and improve the
organisation’s operations. Its responsibilities include assessing
the principal risks of the organisation and examining,
evaluating and reporting on the adequacy and effectiveness of
the systems of risk management and internal control as
operated by management. Management remains responsible
for identifying risks and for the design and operation of controls
to manage risk. During the year, the Committee reviewed the
remit, organisation, annual plan, resources and effectiveness of
Group Audit and Assurance and concluded that the function
continued to operate effectively. It is the intention to assess the
effectiveness of the Group Audit and Assurance function using
an external party in the 2018 financial year as the last third-
party review was undertaken in the 2014 financial year.
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 during the year.
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 our independent confidential reporting line,
Speak Up. Throughout the year, the Committee focused in
particular on strengthening the financial control environment
and the impact of this on the financial reporting processes.
The Committee reviewed controls to mitigate fraud risk and the
Group assurance map, a tool which sets out the assurance
processes and the three lines of defence model. It also
considered the results of the annual review of the effectiveness
of internal financial reporting controls, which took into account
the Group Risk Manager’s support to the risk management
process, and then reported to the Board. Further details about
this review are on page 62.
Nominations Committee Report
Dr Gerry Murphy, Chairman of the
Nominations Committee
This year we will further
strengthen our processes and
planning for succession at and
below the Board.
Dear shareholder
I am pleased to take on the role of Chairman of the
Nominations Committee and to work with my fellow
Committee members over the coming years to ensure that the
Board continues to have the appropriate structure, size and
composition to progress the delivery of the Group’s strategy.
After a year in which the Committee focused on Chairman
succession and the appointment of a new non-executive
director, Jeanne Johns, our focus this year will be on further
strengthening our processes and planning for talent
management and succession at and below the Board.
I feel privileged to have joined a Board which is well balanced in
terms of ethnic and gender diversity and clearly recognises the
benefits that such diversity brings. The Board has considered
the recent Hampton-Alexander Review into gender diversity
and the Parker Review into ethnic diversity and will pay careful
attention to these important reports when considering the
effectiveness of our succession planning and talent
management processes throughout the organisation.
Gerry Murphy
Chairman
www.tateandlyle.com 69
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Work undertaken during the year
The Committee maintains a calendar of items for consideration
at each meeting and reviews and updates it regularly.
Board succession planning
Appointment of Dr Gerry Murphy
After seven years as the Chairman of the Company, Sir Peter
Gershon indicated his desire to begin the process to identify his
successor. Liz Airey, the Senior Independent Director at the
time, led the search. The Committee retained Spencer Stuart
to assist it with the search. Spencer Stuart is a signatory to the
Voluntary Code of Conduct for Executive Search Firms and has
a good understanding of the Group’s business as it has
previously assisted in the identification of individuals to fill
non-executive director roles and other senior executive roles.
The Committee identified, in particular, the following attributes
of potential candidates as highly desirable:
• City experience and competence
• international track record
• strong strategic and communication skills
• industry sector experience
together with the ability to devote the time necessary to
the role.
Spencer Stuart prepared a ‘long list’ comprising a diverse
range of potential candidates meeting the specifications.
The search consultants and Liz Airey then identified a subset
of this long list to meet face-to-face with a working party
of the Nominations Committee. This working party then
recommended the candidates who went through to a second
round of meetings with other members of the Board and who
were also given the opportunity to hold a due diligence meeting
with Sir Peter Gershon and to meet members of the Executive
Committee.
The Committee reviewed the output of the discussions held
with the potential candidates and recommended the
appointment of Dr Gerry Murphy to the Board from 1 January
2017. Dr Murphy became the Chairman on 1 April 2017.
Corporate Governance continued
Committee governance
Responsibilities
The Committee assists the Board by reviewing the size and
composition of the Board, including succession planning, and
the leadership needs of the Group generally, recommending
candidates for appointment as directors and as Company
Secretary and reviewing annually the performance of each
member of the Executive Committee. Further details on its
responsibilities are in the Committee’s terms of reference,
on the Company’s website, www.tateandlyle.com.
Composition
During the financial year under review, the Committee
comprised the Chairman of the Company, the Chief Executive
and all independent Directors. The Company Secretary is the
secretary to the Committee.
Meetings during the year
Meetings are generally held around the time of scheduled
Board meetings. The Committee held four scheduled meetings
during the year and also met on four additional occasions to
discuss the progress of the search for an additional non-
executive director and a new Chairman.
Attendance during the year was as follows:
Directors as at
31 March 2017
Sir Peter Gershon
(Chr)
Dr Gerry Murphy
Javed Ahmed
Liz Airey
William Camp
Paul Forman
Lars Frederiksen1
Douglas Hurt
Jeanne Johns
Anne Minto
Dr Ajai Puri
Sybella Stanley
Date of appointment
to the Committee
1 February 2009
1 January 2017
1 October 2009
1 January 2007
1 May 2010
1 January 2015
1 April 2016
9 March 2010
26 October 2016
1 December 2012
1 April 2012
1 April 2016
1 Unable to attend due to a pre-existing commitment.
Number
of
meetings
attended
Number
of
meetings
eligible to
attend
5
2
8
8
8
8
6
8
4
8
8
8
5
2
8
8
8
8
8
8
4
8
8
8
The Executive VP, Human Resources and the VP, Global Talent
are invited to attend and present to the Committee on an ad
hoc basis, depending on the issues being discussed.
Effectiveness
Sir Peter Gershon, the Committee Chairman up to 31 March
2017, led a review of the Committee’s effectiveness and the
output was discussed by the Committee. This concluded that
the Committee continued to operate effectively.
70 Tate & Lyle PLC Annual Report 2017
Board diversity
The Board believes that a diverse and inclusive culture is
a driver of superior business performance, growth and
innovation. The Board has a clear policy on diversity that
acknowledges that the Board’s perspective and approach can
be greatly enhanced through gender, age and cultural diversity,
notwithstanding the overriding principle that 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. Wherever feasible,
the Committee uses search firms who are signatories to the
Voluntary Code of Conduct for Executive Search Firms which
seeks to address gender diversity on boards and best practice
for the related search processes.
As set out elsewhere in this report, when considering the
candidates for non-executive directors the Committee looked
at a number of different criteria, including gender, age and
cultural diversity and personal attributes such as thinking style.
This was reflected in the long lists and shortlists of possible
candidates.
With regard to the specific issue of gender diversity, the Board
welcomes the decision not to impose in the UK quotas
regarding gender balance. As at the date of this report, the
Board comprises the Chairman, two executive directors and
eight non-executive directors. Female representation (four
Directors) equates to 36% of the Board.
Succession planning
The Committee reviewed succession plans for senior executive
roles and the progress of action plans to address any gaps. The
Committee continues to review progress on a regular basis.
Performance evaluation
The Committee evaluated the performance of each member of
the Executive Committee and reported its conclusions to the
Remuneration Committee.
Appointment of Jeanne Johns
The Committee reviewed the succession needs of the Board
and determined that it would be appropriate to seek an
additional US-based non-executive director.
The Committee retained Korn Ferry to assist it with the search.
Korn Ferry is a signatory to the Voluntary Code of Conduct for
Executive Search Firms.
Korn Ferry prepared a long list comprising a diverse range of
potential candidates meeting the specification. The search
consultants and the Chairman (Sir Peter Gershon) then
identified a subset of this long list to meet face-to-face with the
Chairman. Following these initial interviews, Sir Peter Gershon
recommended a shortlist of candidates and the Committee set
up a working party to interview the candidates.
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 Jeanne Johns be appointed as
an additional non-executive director. This recommendation,
together with the proposed membership and chairmanship of
the Corporate Responsibility Committee, were approved by the
Board and Jeanne joined the Board on 26 October 2016.
Senior Independent Director
In addition, the Committee recommended that Douglas Hurt,
with over six 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 2017.
Company Secretary
Following the resignation of Lucie Gilbert, the Committee
commenced a process to appoint a successor, using
independent executive search firm, Hedley May. Claire-Marie
O’Grady was appointed on 1 February 2017.
Director independence
The Committee is responsible for making recommendations to
the Board concerning the independence of non-executive
directors. The Code provides that the Board should determine
whether there are relationships or circumstances which are
likely to affect, or could appear to affect, a Director’s judgement
and lists tenures in excess of nine years as a circumstance
which may appear relevant to its determination. Liz Airey joined
the Board in January 2007 and, as the Senior Independent
Director, led the process to identify the successor for the
Chairman. As previously announced, Ms Airey will be stepping
down from the Board at the 2017 AGM and, therefore, will not
be seeking re-election as a Director.
www.tateandlyle.com 71
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Corporate Governance continued
Corporate Responsibility
Committee Report
Jeanne Johns, Chairman of the Corporate
Responsibility Committee
Safety is the primary focus of
the Corporate Responsibility
Committee.
Dear shareholder
This is my first report as the chairman of the Corporate
Responsibility Committee. On behalf of the Committee, I would
like to thank William Camp for his significant contribution to
the work of the Committee during his tenure and for the time
he has taken to share his knowledge and experience of the
Company with me during this period of transition. As we
move forward, we will continue to focus on the key areas
of responsibility – safety, product quality, cyber security
and sustainability.
The Group has no higher priority than safety and safety is the
primary focus of the Corporate Responsibility Committee.
Sadly, our safety performance during the year was over-
shadowed by an industrial accident at one of our grain
elevators in the US, in which one of our employees and a local
farmer died. As well as investigating the root causes of this
tragic incident, the executive management team, with the full
support of the Board and the Corporate Responsibility
Committee, instigated a comprehensive end-to-end review of
the Group’s safety programme and safety culture. This ongoing
review started in January and is being supported by leading
external experts in safety. As part of their review, these experts
will visit over 30 manufacturing and other locations. The review
will be completed in the summer with a full report to
management and the Board. Throughout the review process,
the Committee will have regular updates on key themes
emerging from it, and will review the actions taken by
management to address the review’s findings.
72 Tate & Lyle PLC Annual Report 2017
As part of my induction as a new Board member, I visited the
Mattoon and Coles grain elevators after the industrial accident
to observe the revised processes and targeted investments
being implemented there. I also visited the Decatur, Lafayette
South and Sagamore plants and was able to see first-hand how
committed the teams there are to safety and how receptive they
are to safety risk management improvements. Implementation
of the comprehensive Group-wide safety review will enable the
next level of safety risk management.
Before taking over as Chair of the Corporate Responsibility
Committee, I held meetings with the President Global
Operations; VP, Safety; the Group VP and CIO; VP, Group Audit
and Assurance; and VP, Sustainability to discuss items on the
Committee’s agenda. I propose to hold meetings of this nature
with regular management attendees of the Committee and
other senior operational leaders in advance of future
Committee meetings. I believe that these meetings will provide
me with an invaluable opportunity to discuss risk areas and
help me to ensure that the Committee has the appropriate
information to discharge its responsibilities effectively.
Looking ahead, the Committee’s priority for the 2018 financial
year will be safety, focusing on the effective implementation
of the recommendations from the Group-wide safety review,
including the external experts’ report. We will also continue
to devote significant time to product quality, cyber security
and sustainability.
Jeanne Johns
Chairman of the Corporate Responsibility
Committee
Committee governance
Responsibilities
The Committee assists the Board by overseeing the Group’s
approach to corporate responsibility, including the effectiveness
of policies and procedures relating to a safe working
environment, product quality, environmental performance,
employee relations, equal opportunities, legal and ethical
matters, and cyber security. Further details on its
responsibilities are in the Committee’s terms of reference,
on the Company’s website, www.tateandlyle.com.
Composition
Typically, the Committee comprises four Directors. Jeanne
Johns was appointed to the Board and the Committee with
effect from 26 October 2016. The Company Secretary is the
secretary to the Committee.
Meetings during the year
Meetings generally take place around the time of scheduled
Board meetings. The Committee held four scheduled meetings
during the year and attendance during the year was as follows:
Directors as at
31 March 2017
William Camp
(Chr)
Jeanne Johns
Lars Frederiksen1
Sir Peter Gershon
Douglas Hurt
Dr Gerry Murphy
Dr Ajai Puri1
Date of appointment
to the Committee
1 July 2011
26 October 2016
1 April 2016
1 July 2011
1 March 2015
1 January 2017
1 April 2012
Number
of
meetings
attended
Number
of
meetings
eligible to
attend
4
2
3
4
4
2
3
4
2
4
4
4
2
4
1 Unable to attend one meeting due to a pre-existing commitment.
The Committee has also met once since the end of the
financial year and prior to the signing of this Annual Report.
The Chief Executive; VP, Group Audit and Assurance; and VP,
Group Safety are normally invited and attend each meeting. The
President Global Operations; the VP, Sustainability; the Group
VP and CIO; and the VP, Global Quality attend and present to
the Committee on an ad hoc basis, depending on the issues
being discussed.
Effectiveness
The Committee Chairman and Company Secretary led a review
of the Committee’s effectiveness and the output was discussed
by the Committee. This concluded that the Committee
continued to operate effectively and identified a number of
areas for increased focus during the forthcoming financial year.
Work undertaken during the year
The Committee maintains a calendar of items for consideration
at each meeting. This is regularly reviewed and updated. The
work undertaken by the Committee in the 2017 financial year
fell under the following main areas:
Safety
At each of its meetings, the Committee discussed an update
from the VP, Safety covering matters such as the development
and implementation of initiatives to refresh the Group’s
approach to personal safety. In addition to the updates into the
incident at one of our US grain elevators in 2016, during the
course of the year, the Committee identified areas for additional
safety reporting to be produced by management for review at
routine Committee meetings.
Product quality
The VP, Global Quality updated the Committee on the status of
global quality key performance indicators; regulatory priorities
for the quality organisation; and the result of certain recall
simulation activities in the business.
Cyber security
The Committee is responsible for overseeing the policies and
systems to address cyber security threats. Updates on cyber
security matters were provided to the Committee twice during
the year in addition to regular updates to the Board.
Diversity and inclusion
The Committee received an update on the actions taken to
embed the Group’s diversity and inclusion initiatives, and the
priorities of management for the next 12 months.
Business practices
The Committee considered the effectiveness of the
independent confidential reporting line. Further information on
this is on page 63. The Committee also reviewed the Company’s
Modern Slavery Statement which was subsequently approved
by the Board.
Environment
The VP, Sustainability provided the Committee with updates on
the Group’s environmental performance and initiatives and the
Committee approved new targets for 2020 (see page 48).
Community
The Committee discussed the delivery of the annual charitable
and community involvement programme and the proposed
programme for the year ending 31 March 2018.
Internal control and risk management
In September, the Committee reviewed progress made in the
Company’s business continuity management programme and
those areas of focus for continued improvement over the
following 12 months.
During the year, 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. In addition,
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.
www.tateandlyle.com 73
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION 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 2017.
This introduction explains how we made decisions during
the year, and summarises key points from the Report,
including performance and incentive plan outcomes,
and Committee activities.
Business performance context
As you will read in the introductory statements in this
Annual Report, we are pleased to report a year of strong
performance with overall results reflecting delivery against
our strategy and progress towards our 2020 Ambition.
Both business divisions delivered profit growth in constant
currency, with Bulk Ingredients (BI) delivering particularly
strong results, driven by good commercial and manufacturing
performance. Speciality Food Ingredients (SFI) performed well,
delivering profit growth and margin expansion and continues to
take the necessary actions to strengthen its focus on customer
service and commercial execution. The innovation pipeline
Anne Minto, Chairman of the Remuneration
Committee
This year, the Committee
considered the renewal of our
Remuneration Policy and approach.
At a glance
1.
Overview of our remuneration framework:
no changes proposed in 2017 Policy
1. Our Remuneration
Policy and approach
are aligned with
long-term business
objectives and received
strong shareholder
support – no changes
are proposed at the
2017 AGM.
2. The Group’s strong
financial performance
against stretching
targets is reflected in
incentive outcomes for
the year.
3. Overall remuneration
outcomes are between
target and maximum
policy levels.
Base salary and
employment benefits
Market competitive elements to attract the right
calibre of executives (including health cover, car
and defined contribution retirement benefits)
Annual bonus
Group financial performance:
2016-2017 metrics:
• Profit
• Sales
• Cash flow
Performance Share Plan:
• Group profit growth (25%)
• SFI profit growth (ex SPLENDA®
Sucralose) (25%)
• Group ROCE (50%)
• Pre 2016: EPS (50%), ROCE (50%)
Rewards achievement against annual
performance objectives:
• Max cash bonus is 100% of salary
• Max opportunity is 175% of salary
• Any award over 100% is paid in shares,
deferred for two years
• Chief Executive target: 75% of salary
• Chief Financial Officer target: 50% of salary
Supports the Group’s strategy and 2020 Ambition,
to create shareholder value from profitable
SFI-led growth and to motivate and retain
senior talent:
• Max award is 300% of salary
• 15% vesting at ‘threshold’
• Awards since 2016 subject to a two-year post
vesting holding period
Shareholding requirements
Chief Executive – 4x salary
Chief Financial Officer – 3x salary
Claw back and malus provisions
Apply for two years after a bonus award or vesting
of PSP awards
Number of years:
Performance period
Deferral/holding period
Ongoing requirements
74 Tate & Lyle PLC Annual Report 2017
continues to be healthy with New Product sales exceeding
US$100 million for the first time.
Some of the key financial highlights include:
• Group adjusted profit before tax increased by 20%1
• 5%1 increase in SFI adjusted operating profit to £181m
• 32%1 increase in BI adjusted operating profit to £129m
• 22% increase in sales from New Products to US$105m
• ROCE increase by 300bps to 14.3%
• £121m increase in adjusted free cash flow, enabling net
debt/EBITDA to reduce to 0.9x (2016 – 1.2x).
1 Percentage changes are in constant currency.
Incentive outcomes for the year
As set out in this Report, headline incentive outcomes for the
year were as follows:
• Annual bonus plan: awards for the year reflect strong
financial performance, with Group profit and cash
performance ahead of stretching targets set at the start of
the year. Actual awards, at below maximum levels, reflect an
assessment of safety performance
• Performance Share Plan (PSP): awards made in 2014
reached the end of their three-year performance period.
Our adjusted return on capital employed in the year to
31 March 2017 exceeded the maximum vesting requirement
and is in excess of our cost of capital. EPS targets for the
three-year period have not been achieved. Accordingly, a
vesting level of 50% of maximum was achieved.
Total remuneration outcomes are above ’target’ but below
‘maximum’ policy levels, which the Committee considers to be
consistent with the underlying financial health and
performance of the business.
Remuneration Policy and shareholder approval
Following a careful review, we believe that our current
Remuneration Policy and approach (with the changes made
last year to the operation of the PSP) remain appropriate in the
context of our business strategy and our shareholders’
expectations. Accordingly, we are not proposing to make any
material changes to the Policy which was formally approved by
shareholders in 2014. The Policy presented in this Report is
therefore essentially the same, although we have taken the
opportunity to simplify some elements.
2.
Performance highlights and incentive
outcomes for 2017
3.
Remuneration Policy scenarios and
actual outcome for the year
Annual bonus
Metric
Group adjusted profit
before tax (PBTEA)
Net sales less cost
of raw materials
Operating cash flow
Actual2
£233m
Target2
£206m
vs target
+£27m
(+13%)
£1 343m £1 397m +£54m
£97m
£114m
(+4%)
+£17m
(+18%)
Bonus award to Chief Executive: 80% of maximum
Bonus award to Chief Financial Officer: 90% of maximum
2 Bonus targets and actual performance is assessed at constant (budget)
exchange rates.
See page 89 for more detail
Chief Executive (£000s)
Total
£5m
£4m
£3m
£2m
£1m
£0m
£1 015
£1 339
£2 800
£4 440
£3 239
24%
76%
45%
19%
36%
49%
28%
23%
38%
31%
31%
Threshold
Target
Stretch
Actual
100%
Below
threshold
Chief Financial Officer (£000s)
£670
£906
£1 840
£3 167
£1 462
Total
£5m
£4m
£3m
£2m
Performance
Share Plan
(2014 Award)
EPS (50%)
Actual
(2014-2017)
-5%
(below
threshold)
16%
(above
stretch)
50% of the award made in 2014 will vest, based on the
combination of EPS and ROCE performance
Targets
(threshold-stretch)
6% – 15% compound
annual growth over
three years
12.6% – 15.6% at
the end of the
performance period
ROCE (50%)
See page 91 for more detail (includes ROCE definition)
£1m
£0m 100%
Below
threshold
26%
50%
74%
Threshold
36%
Target
50%
29%
21%
Stretch
14%
55%
45%
Actual3
Base and benefits
Annual bonus
Performance Share Plan
3 Does not include the value from compensatory share awards made on
employment (see page 96).
www.tateandlyle.com 75
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Directors’ Remuneration Report continued
The Committee formed this view thoughtfully, taking a number
of factors into account, as described below.
Since the 2014 Policy was adopted, we have continued to
engage proactively with shareholders
• We have engaged proactively with shareholders over
successive years, and I am pleased to report that the level of
shareholder support for our core remuneration framework
remains strong (most recent policy and report resolutions
enjoying support of 97.9% and 93.0% respectively)
• We made specific changes to the long-term incentive (PSP)
framework last year, which were the subject of detailed
consultation with shareholders, and which align well with
our business strategy and long-term ambition for growth
• We consulted ahead of the publication of this report with a
broad group including many of our largest 30 shareholders,
offering meetings with me, to explain our intended approach
in reviewing the Policy, and to capture any feedback.
We have been responsive to prevailing investor and
governance themes
Since the current policy was adopted, the Committee has been
attentive to governance developments and changes in
shareholders’ expectations, and our practice has evolved over
that time to adopt several governance-friendly features, for
example:
• We were early adopters of claw back and malus provisions
• Our personal shareholding requirements continue to be
more demanding than typical (four times salary for the Chief
Executive; three times salary for other executive directors
and Executive Committee members)
• We have introduced a holding period for PSP awards, so a
combination of a three-year vesting period and two-year
holding period means that awards made since 2016 have a
five-year time horizon
• A ‘dividend underpin’ supplements the existing financial
performance underpin, providing the Committee discretion
to reduce the vesting outcome in certain circumstances, and
providing shareholders with additional comfort that PSP
awards will only vest if dividends over the period conform
with our Policy
• We also remain committed to maintaining the quality of our
remuneration-related disclosure (for example, disclosing
bonus targets in full).
We intentionally operate a simple overall remuneration
framework
While the regulatory disclosures are detailed, our remuneration
framework remains simple:
• The components of remuneration (salary and benefits, an
annual bonus and a single long-term incentive plan) each
have a clear purpose, and incentive plan metrics are aligned
with our business strategy, and with the successful delivery
of long-term financial growth and returns to shareholders,
and are consistent with our 2020 Ambition
• We maintain a strong alignment with shareholders’ interests
by requiring executive directors to maintain significant
personal shareholdings through the post-vesting holding
period applicable to PSP awards and through safeguards
such as malus and claw back provisions which apply to
incentive awards following their release.
No material changes to Policy; retaining flexibility to reflect
the needs of the business
There are no material changes to the Policy, although we have
simplified the wording in some areas (for example, the
description of how leavers are treated), and tidied up a few
housekeeping matters with input from our external advisors
(for example, to ensure that incidental benefits are
appropriately captured within the Policy).
Remuneration Report and Remuneration
Policy for the year ahead
Our Remuneration Policy was approved by shareholders at the
2014 AGM with 97.9% of votes in favour. Changes to the
operations of the PSP (in existing Policy) were endorsed by
shareholders through a 93.0% vote in favour of the
Remuneration Report in 2016. The Committee is satisfied that
this Policy and approach provide strong alignment between
Group performance and the remuneration of executive
directors.
The information regarding Directors’ remuneration is
presented in two Reports: the first relates to our Remuneration
Policy and the second relates to the way in which our Policy
has been implemented during the year.
Resolutions to approve each of these Reports will be proposed
at the AGM on 27 July 2017. Our intention is that the Policy
approved by shareholders will apply for a period of three years
from the date of the AGM, and will not be put to an annual
shareholder vote.
Anne Minto OBE
Chairman of the Remuneration Committee
76 Tate & Lyle PLC Annual Report 2017
Key Committee activities during the year
In addition to the responsibilities of the Committee
(summarised on page 87), during the year, the Committee:
• Completed our consultation with shareholders regarding
the changes to PSP metrics which were endorsed by
shareholders at the 2016 AGM. The Committee
specifically deferred the grant of 2016 PSP awards until
after the AGM to ensure shareholder support for the
new arrangements. We were pleased to note that the
Directors’ Remuneration Report resolution was strongly
supported, with 93% of shareholders voting in favour
• Scheduled additional time for Committee meetings,
and the annual agenda incorporates a programme of
regular updates on market, investor and governance/
regulatory topics
• Continued to engage with other stakeholders on director
remuneration topics (including the Investment
Association Working Group and BEIS consultations
on remuneration)
About these Reports
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 have audited such content as
required by the Act (the information on pages 94 to
97 marked as ‘(audited)’).
• Reviewed the effectiveness of changes previously made
to the Annual Bonus Plan to ensure stronger
links between our annual planning process and the
establishment of bonus targets; and adopted SFI volume
growth as a quantitative strategic ‘top line’ metric in
place of ‘net sales less cost of raw materials’ for the year
ahead, to place a greater focus on the necessary actions
to grow the SFI business in pursuit of our 2020 Ambition.
In January 2017, the Committee Chairman 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, noting also the
additional time the Committee had spent during the
year considering external updates on market and
governance developments.
We were pleased to note that our Remuneration Report
published last year was awarded the Building Public
Trust in Corporate Reporting Award for executive
remuneration reporting in the FTSE 250; and, this year,
we have sought to preserve our standard of disclosure
for the benefit of our stakeholders.
Key sections of this Report are as follows:
Directors’ Remuneration Policy Report
78
80
82
82
85
Remuneration strategy and context
Remuneration Policy for executive directors
Remuneration Policy for the Chairman and
non-executive directors
Other Policy items
Application of Remuneration Policy
Annual Report on Remuneration
86
88
89
91
94
97
The Remuneration Committee
Directors’ salaries and fees
Annual bonus
Long-term incentive – Performance Share Plan
Single figure table and other audited disclosures
Directors’ shareholdings and share interests
www.tateandlyle.com 77
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Directors’ Remuneration Report continued
Directors’ Remuneration Policy Report
Introduction
This Report sets out the Company’s policy in relation to Directors’ remuneration.
Following a careful review, as described in the Committee Chairman’s letter (see page 74), the Committee believes that our
current Remuneration Policy and approach (with the changes made last year to the operation of the PSP, within the scope of our
existing policy) remains appropriate in the context of our business strategy and our shareholders’ expectations. Accordingly, we
are not proposing to make any material changes to the Policy which was formally approved by shareholders in 2014. The Policy
presented in this report is therefore essentially the same, although we have taken the opportunity to simplify some elements.
Subject to shareholder approval at the AGM on 27 July 2017, the Committee will operate within this Policy from that date.
The Committee retains discretion on specific aspects of policy and implementation, as described in the Remuneration Policy,
along with an overriding discretion to determine bonus outcomes and judge the level at which share awards vest, to ensure that
payments are consistent with the underlying financial 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.
Remuneration strategy and key principles
The Group’s remuneration strategy and supporting principles, which apply consistently to employees, managers and
executives, are summarised in the table below.
Remuneration strategy
Key principles
The Group’s
remuneration strategy
is to provide packages
that enable the Group
to recruit, retain and
motivate high-calibre
individuals in the
markets in which
we operate so that
we may deliver
superior operational
performance and
outstanding financial
results
• Base pay and benefits are referenced to the comparative local market, taking
account of company size and operations
• 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 rewards 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 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 Values and
Code of Ethics, and that fosters sustainable, profitable growth
78 Tate & Lyle PLC Annual Report 2017
We operate in an international context
The charts below illustrate the international nature of our business. Although we are UK-listed and headquartered in London, UK,
a very significant proportion of our sales, employees and shareholders are based outside the UK. Accordingly, it is important that
our remuneration arrangements are competitive in that international context.
Our sales1
1
4
3
1 UK 1%
2 US 75%
3 Other European
countries 11%
4 Rest of world 13%
Our employees
Our shareholders2
5
1
4
1 UK 6%
2 US 52%
3 Europe (excluding
UK) Middle East
and Africa 27%
4 Latin America 10%
5 Asia Pacific 5%
4
3
1
1 UK 45%
2 US 29%
3 Other European
countries 22%
4 Rest of world 4%
2
2
3
2
1 Sales by destination (from continuing operations) as per Note 5.
2 Analysis of shareholder register as at 3 April 2017.
A clear link between our long-term business strategy and executive directors’ remuneration
The Group’s remuneration arrangements place a clear emphasis on driving Group performance, through incentives that are
directly linked to key performance indicators (KPIs) which are aligned with our business strategy. In this way, we maintain a keen
focus on delivering long-term growth and value for shareholders.
The table below summarises the performance metrics that we use to measure the Group’s progress against our strategy, and
describes how these link to remuneration arrangements.
Adjusted diluted
EPS growth1,2
+16% (47.1p)
Adjusted profit
before tax1,2
+20% (£271m)
Link to directors’ remuneration
Underlying profit performance
is a key determinant of awards
under the Annual Bonus Plan
and for awards under the
Performance Share Plan
from 2016
Awards under the Performance
Share Plan up to 2015 depend
on this metric
Net debt to EBITDA
multiple
decreased 0.3x (0.9x)
Interest cover
increased 3.2x (13.9x)
These objectives are reflected in incentive plan target setting, and
the corresponding impact on remuneration is primarily through
the cash and profit metrics in the annual bonus
Sales of Speciality
Food Ingredients1
Return on capital
employed
Adjusted operating
cash flow
Safety and
corporate
responsibility
+300bps (14.3%)
-3% (£996m)
Link to directors’ remuneration
Informs the sales targets in
the Annual Bonus Plan. A
volume metric will apply
from the 2018 financial year,
being a more effective
measure of growth
Awards under the
Performance Share Plan
depend on this metric
1 Changes in constant currency.
2 Continuing operations.
See our Key Performance Indicators on page 24
+120% (£273m)
This is a performance metric
in the Annual Bonus Plan
Safety and broader
corporate responsibility
matters may be factored
into the Committee’s
decisions on pay and annual
incentive plan outcomes
www.tateandlyle.com 79
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Directors’ Remuneration Report continued
Remuneration Policy for executive directors
Element
Base salary
Benefits
Purpose
Policy
Providing competitive
fixed remuneration to
attract executives of
the required calibre
• Salaries are referenced to the comparative local market
taking account of company size and operations, the
individual’s skills, experience, personal performance and
circumstances (for example, following promotion into a
new or expanded role).
Maximum opportunity
• Increases are typically limited to
the general increase for Group
employees in the same location.
• Benefits are provided in line with comparative local
• Retirement and/or cash benefits
• Retirement benefits are provided by way of defined contribution or equivalent cash
market practice and may include, for example: car (or
allowance), health insurance, life cover, and retirement
benefits.
Incidental (situation-dependent) benefits may include:
• Reimbursement of out-of-pocket expenses incurred in the
course of business, and settlement of taxes in accordance
with HMRC rules
• Participation in benefits generally available to the local
employee population (including for example HMRC-
approved sharesave plans)
• Relocation benefits, including healthcare
• Payment in lieu of dividends on specific awards.
in lieu of pension are referenced to
external market practice.
• The value of non-cash benefits is
determined by the cost of
provision, e.g. third-party health
insurance premiums.
• Receipt of any benefits would be in
accordance with policies applicable
more generally to employees in the
same location.
Operation/performance framework
Changes to policy
• Base salary reviews take into account increases awarded to employees below executive level,
• No changes to the policy have been made.
and the impact on pension and other consequences of increases. They reflect personal
performance consistent with the approach applicable to employees generally.
• The reference to incidental benefits
clarifies that directors may participate in
benefits that are generally available to local
employees; and provides for the settlement
of expenses incurred in the normal course
of business.
arrangements. Contribution levels are 35% of salary for the Chief Executive and 25% of salary
for the Chief Financial Officer, reflecting contractual commitments on appointment.
• Employment and incidental benefits are not performance-related.
• Payment in lieu of dividends may apply to specific awards where any 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.
Annual bonus
Key drivers:
• Profit
• Sales
• Cash flow
Max opportunity:
175% of salary
Supporting
near-term growth
goals by rewarding
strong annual
financial and
performance
objectives
Supporting the
Group’s strategy
by incentivising
sustained profit
growth and capital
efficiency over
successive three-year
performance periods,
and retaining talent
Performance
Share Plan
Key drivers:
• SFI operating
profit (excluding
SPLENDA®
Sucralose)
• Group operating
profit
• Group ROCE
Max opportunity:
300% of salary
Personal share
ownership1
Alignment of
long-term interests
with shareholders
• The Annual Bonus Plan rewards achievement of financial
and other objectives established by the Committee for the
relevant financial year.
• Target is 50% of salary for
the Chief Financial Officer and
75% for the Chief Executive
• Key financial performance metrics are selected by the Committee. Additionally, the Committee
• No changes to the policy have been made.
may select quantifiable metrics aligned with strategic and/or operational objectives on a
personal or collective basis.
• The bonus award may comprise cash and deferred shares,
• Maximum cash bonus is 100% of
• Targets for each metric are set at the start of each financial year, taking account of the business
depending on the level of award.
salary.
strategy, performance in previous years, market expectations and the prevailing economic
• 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 the Group’s safety
performance, operational performance, and personal
performance.
• Awards over Tate & Lyle PLC shares may be made each
year, at the Committee’s discretion 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
performance period of at least three financial years
commencing with the financial year in which the award
is made.
• A two-year post-vesting holding period follows the
three-year performance period, so awards to executive
directors have a five-year horizon.
• Maximum total bonus opportunity
is 175% of salary, with any award
over 100% paid in shares, which
are deferred for two years.
• Deferred shares carry the right to
receive a cash payment in lieu of
the dividend during the deferral
period.
• Flexibility to make awards of up to
300% of base salary (at the time of
award) to ensure market
competitiveness and taking
account of the Group’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.
climate.
• Financial performance has the greatest weighting.
• A minimum profit hurdle applies before any bonus is payable against any of the metrics.
• Malus and claw back provisions apply: bonus payments and shares may be recouped in specific
circumstances during the two-year period following the end of the financial year to which the
bonus relates.
• The following performance metrics were adopted for awards from 2016:
• No changes to the policy have been made.
– 25%: SFI adjusted operating profit (excluding SPLENDA® Sucralose)
• Revised metrics were adopted in
– 25%: Group adjusted profit before tax
– 50%: adjusted return on capital employed (ROCE).
• These metrics are key determinants of shareholder value creation, because they reflect: the
effectiveness of strategic investment decisions; the focus on growing our SFI business; and the
growth in financial value of the whole Group. If material changes to the metrics are proposed,
the Committee would consult with key shareholders in advance of making a new award.
• Targets are reviewed by the Committee ahead of each annual grant, to ensure they remain
appropriately stretching over the performance period.
• The Committee must be satisfied that the level of vesting is justified by the broader underlying
financial performance of the Company.
• A dividend underpin gives the Committee discretion to reduce PSP vesting if dividends over the
performance period do not conform to the dividend policy.
• Malus/claw back provisions: awards may be recouped in specific circumstances during the
two-year period after the performance period.
2016 (within the scope of the Remuneration
Policy), following detailed consultation with
shareholders, and shareholders’ approval
of the Directors’ Remuneration Report at
the 2016 AGM.
• The post-vesting holding period and
dividend underpin were adopted as part of
this review.
• Minimum shareholding requirements must be built over a
• Chief Executive: four times base
• The value of an executive’s interests in shares is directly affected by share price performance
• No changes to the requirements have
five-year period following appointment
salary
over time.
been made.
• Similar requirements apply to other senior roles
• Chief Financial Officer: three times
base salary
1 Included here as a key feature but does not form part of formal ‘policy’.
Number of years:
Performance period
Deferral/holding period
Ongoing requirements
80 Tate & Lyle PLC Annual Report 2017
Base salary
Benefits
Annual bonus
Key drivers:
• Profit
• Sales
• Cash flow
Max opportunity:
175% of salary
Supporting
near-term growth
goals by rewarding
strong annual
financial and
performance
objectives
• Benefits are provided in line with comparative local
• Retirement and/or cash benefits
market practice and may include, for example: car (or
in lieu of pension are referenced to
allowance), health insurance, life cover, and retirement
external market practice.
benefits.
Incidental (situation-dependent) benefits may include:
• Reimbursement of out-of-pocket expenses incurred in the
course of business, and settlement of taxes in accordance
with HMRC rules
• Participation in benefits generally available to the local
employee population (including for example HMRC-
approved sharesave plans)
• Relocation benefits, including healthcare
• Payment in lieu of dividends on specific awards.
• The value of non-cash benefits is
determined by the cost of
provision, e.g. third-party health
insurance premiums.
• Receipt of any benefits would be in
accordance with policies applicable
more generally to employees in the
same location.
• The Annual Bonus Plan rewards achievement of financial
• Target is 50% of salary for
and other objectives established by the Committee for the
the Chief Financial Officer and
relevant financial year.
75% for the Chief Executive
depending on the level of award.
salary.
• The final bonus award is made at the Committee’s
• Maximum total bonus opportunity
discretion. Subject to the overall maximum, the
is 175% of salary, with any award
Committee may make appropriate adjustments to ensure
over 100% paid in shares, which
that the bonus outcomes are a fair reflection of the
are deferred for two years.
underlying performance of the Company and may also
take into account factors such as the Group’s safety
performance, operational performance, and personal
performance.
• Deferred shares carry the right to
receive a cash payment in lieu of
the dividend during the deferral
period.
Supporting the
Group’s strategy
by incentivising
sustained profit
growth and capital
efficiency over
successive three-year
performance periods,
• Awards over Tate & Lyle PLC shares may be made each
• Flexibility to make awards of up to
year, at the Committee’s discretion taking an individual
300% of base salary (at the time of
executive’s contribution and performance into account.
• Awards will only vest to participants if demanding financial
performance requirements have been achieved over a
performance period of at least three financial years
award) to ensure market
competitiveness and taking
account of the Group’s
performance.
commencing with the financial year in which the award
• The award will lapse entirely if
is made.
threshold performance targets are
• Group operating
and retaining talent
• A two-year post-vesting holding period follows the
not achieved.
three-year performance period, so awards to executive
• Only 15% of any award made to
directors have a five-year horizon.
executive directors vests for
achieving threshold performance.
Performance
Share Plan
Key drivers:
• SFI operating
profit (excluding
SPLENDA®
Sucralose)
profit
• Group ROCE
Max opportunity:
300% of salary
Element
Purpose
Policy
Maximum opportunity
Operation/performance framework
Changes to policy
Providing competitive
• Salaries are referenced to the comparative local market
• Increases are typically limited to
• Base salary reviews take into account increases awarded to employees below executive level,
• No changes to the policy have been made.
fixed remuneration to
taking account of company size and operations, the
the general increase for Group
individual’s skills, experience, personal performance and
employees in the same location.
and the impact on pension and other consequences of increases. They reflect personal
performance consistent with the approach applicable to employees generally.
attract executives of
the required calibre
circumstances (for example, following promotion into a
new or expanded role).
• Retirement benefits are provided by way of defined contribution or equivalent cash
arrangements. Contribution levels are 35% of salary for the Chief Executive and 25% of salary
for the Chief Financial Officer, reflecting contractual commitments on appointment.
• Employment and incidental benefits are not performance-related.
• Payment in lieu of dividends may apply to specific awards where any 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.
• The reference to incidental benefits
clarifies that directors may participate in
benefits that are generally available to local
employees; and provides for the settlement
of expenses incurred in the normal course
of business.
• The bonus award may comprise cash and deferred shares,
• Maximum cash bonus is 100% of
• Targets for each metric are set at the start of each financial year, taking account of the business
• Key financial performance metrics are selected by the Committee. Additionally, the Committee
• No changes to the policy have been made.
may select quantifiable metrics aligned with strategic and/or operational objectives on a
personal or collective basis.
strategy, performance in previous years, market expectations and the prevailing economic
climate.
• Financial performance has the greatest weighting.
• A minimum profit hurdle applies before any bonus is payable against any of the metrics.
• Malus and claw back provisions apply: bonus payments and shares may be recouped in specific
circumstances during the two-year period following the end of the financial year to which the
bonus relates.
• The following performance metrics were adopted for awards from 2016:
– 25%: SFI adjusted operating profit (excluding SPLENDA® Sucralose)
– 25%: Group adjusted profit before tax
– 50%: adjusted return on capital employed (ROCE).
• These metrics are key determinants of shareholder value creation, because they reflect: the
effectiveness of strategic investment decisions; the focus on growing our SFI business; and the
growth in financial value of the whole Group. If material changes to the metrics are proposed,
the Committee would consult with key shareholders in advance of making a new award.
• Targets are reviewed by the Committee ahead of each annual grant, to ensure they remain
appropriately stretching over the performance period.
• The Committee must be satisfied that the level of vesting is justified by the broader underlying
financial performance of the Company.
• A dividend underpin gives the Committee discretion to reduce PSP vesting if dividends over the
performance period do not conform to the dividend policy.
• Malus/claw back provisions: awards may be recouped in specific circumstances during the
two-year period after the performance period.
• No changes to the policy have been made.
• Revised metrics were adopted in
2016 (within the scope of the Remuneration
Policy), following detailed consultation with
shareholders, and shareholders’ approval
of the Directors’ Remuneration Report at
the 2016 AGM.
• The post-vesting holding period and
dividend underpin were adopted as part of
this review.
Personal share
Alignment of
ownership1
long-term interests
with shareholders
• Similar requirements apply to other senior roles
• Chief Financial Officer: three times
salary
base salary
• Minimum shareholding requirements must be built over a
• Chief Executive: four times base
• The value of an executive’s interests in shares is directly affected by share price performance
• No changes to the requirements have
five-year period following appointment
over time.
been made.
1 Included here as a key feature but does not form part of formal ‘policy’.
Number of years:
Performance period
Deferral/holding period
Ongoing requirements
www.tateandlyle.com 81
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Directors’ Remuneration Report continued
Remuneration Policy for the Chairman
and non-executive directors
Other Policy items
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 a maximum
of nine years, subject to their annual re-election by
shareholders. The Company Chairman and non-executive
directors receive a fee for their services, 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. Supplemental fees are paid to each
Committee chairman. Accordingly, supplemental fees are
paid to the chairmen of the Audit, Corporate Responsibility
and Remuneration Committees, and of 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. Fees are set
at a level to retain individuals with the necessary experience
and ability to make a substantial contribution to the Group.
The Company may reimburse out-of-pocket expenses
incurred in the normal course of business and settle taxes
on these in accordance with HMRC rules.
Incorporation of previously approved
remuneration policy statements
We intend that provisions consistent with previously disclosed
directors’ remuneration policies and/or incentive plans
previously approved by shareholders will continue to apply
after shareholders have approved the resolution to adopt the
Remuneration Policy set out in this report. Such provisions
will allow, without limitation:
• The honouring of contractual commitments entered into
before the Policy takes effect, or before an individual was
subject to this Policy
• The satisfaction of awards and/or commitments made in
relation to incentive plan awards (providing they were
consistent with the Policy in effect at the time the original
award/commitment was made).
Executive directors’ external appointments
The Board believes that the Group 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.
Other incentive plan provisions
• 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 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 Group’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. Our policy
is also to ensure that contracts provide appropriate protection
for the Group, 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 Group.
82 Tate & Lyle PLC Annual Report 2017
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
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.
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 structuring any package on
appointment will be the annual remuneration framework
under the Remuneration Policy that has been approved by
shareholders and is current at the time of the appointment.
• To respond to specific circumstances and/or to allow for
differences in practice over time and by location, the
Committee retains flexibility outside the Policy to provide
market-referenced benefits which are considered necessary
or appropriate to 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, for example travel, relocation and
tax-related assistance, and similar repatriation benefits in
due course.
• 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 maxima under the Annual Bonus Plan
and the Performance Share Plan. The Committee retains
flexibility to alter the balance between short-term and
long-term elements within this overall maximum, 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.
• 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, with the
principle that such awards be made on a like-for-like basis.
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 our 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 a regulatory information service.
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 Group’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.
The treatment of executive directors leaving the Company 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. At the same time, the Committee is mindful of the
need to avoid providing any element of reward for failure.
Termination for dishonesty or misconduct or poor performance
are circumstances in which the executive director would retain
only the minimum contractual entitlements on departure.
In these circumstances no bonus award would be made, and
unvested deferred shares or performance share awards would
lapse. Dishonesty or misconduct may lead to the operation of
malus and/or claw back provisions.
An executive director’s departure in compassionate
circumstances such as death or permanent disability would
generally result in the most beneficial terms being received,
as summarised below.
If an executive director departs from the Company in other
circumstances, the treatment 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 contractual minimum but no more generous than that
which applies under the compassionate circumstances
mentioned above.
www.tateandlyle.com 83
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Directors’ Remuneration Report continued
Element of remuneration
Treatment in compassionate circumstances (e.g. death or permanent disability)
Salary and benefits
Paid or provided pro-rata to the termination date.
Annual bonus award or
Performance Share Plan vesting
Any bonus or the vesting of Performance Share Plan award(s) will normally
be considered and approved based on the extent to which the original performance
targets are assessed to have been met at the relevant year-end, reduced
pro-rata for time over the relevant financial year(s) prior to the termination date.
The Committee retains the flexibility to approve the timing and value of any award
on a different basis, depending on the circumstances (for example to release
awards on cessation in the case of death/disability).
Deferred bonus awards and Performance
Share Plan awards subject to a
holding period
Deferred bonus awards may continue in effect, or be released early at the
Committee’s discretion, depending on the circumstances. The post-vesting holding
period applicable to Performance Share Plan awards will cease on termination
of employment.
Provisions 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 this table are not
affected by these provisions.
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 Group’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 director 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.
Consideration of shareholders’ views
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 2016, the Committee chairman engaged with many of our 30 largest institutional shareholders and representatives,
primarily to consult on proposed changes to the Performance Share Plan (PSP).
The Committee has been attentive to the need for simplification of pay structures and the need for transparent communication in
relation to remuneration decisions, alongside the detailed remuneration principles issued by many institutional investors and
representative bodies. These perspectives have guided the Committee’s thinking through the year, and informed our decisions.
Our approach to remuneration has been relatively consistent since 2010, evolving over the intervening period to remain closely
aligned with executional priorities and strategy, including our 2020 Ambition which was launched in 2015 (resulting in changes to
performance metrics in the annual bonus and PSP); and to keep in step with good practice in relation to features that improve the
alignment with and protect shareholders’ interests. These include adopting malus and claw back provisions in 2013, and
incorporating a two-year post-vesting share holding period and dividend underpin for PSP awards in 2016.
Shareholders overwhelmingly approved the continuing use of the PSP as our long-term incentive, with changes to the metrics in
2016. Shareholders formally approved the current Remuneration Policy at the AGM in 2014 (97.9% in favour). Our intention is that
the Policy approved by shareholders at the 2017 AGM will apply for a period of three years from that date.
84 Tate & Lyle PLC Annual Report 2017
Application of Remuneration Policy for executive directors
The tables and charts below illustrate the value that may be delivered from each element of the package under different
performance scenarios.
Chief Executive (Javed Ahmed)
Below
threshold
Threshold
Target
Stretch
Chief Financial Officer (Nick Hampton)
Below
threshold
Threshold
Target
Stretch
Element/value (£000s)
Base salary
Pension allowance
Other benefits
Annual bonus1
Performance
Share Plan2
721
252
42
–
–
Total potential value
1 015
£5m
£4m
£3m
£2m
£1m
£0m
100%
Below
threshold
721
252
42
–
324
1 339
721
252
42
541
1 244
2 800
24%
76%
45%
19%
36%
721
252
42
1 262
2 163
4 440
49%
£5m
£4m
£3m
28%
£2m
Threshold
Target
Stretch
23%
£1m
£0m
100%
Below
threshold
526
131
13
–
–
670
526
131
13
–
236
906
526
131
13
263
907
1 840
526
131
13
920
1 577
3 167
26%
74%
Threshold
14%
50%
36%
Target
50%
29%
21%
Stretch
1 Annual bonus shows cash and deferred shares. No bonus is paid at or below threshold; the target opportunity is 75% of base salary for the Chief Executive and 50% for
the Chief Financial Officer, while the maximum is 175%.
2 The maximum award is 300% of base salary. 15% vests at threshold, and the ‘target’ shown is half-way between threshold and stretch (i.e. 57.5% of the maximum).
Statement of consideration of employment conditions elsewhere in the Group
The principles on which we base remuneration decisions for executive directors (as described on page 78) are congruent 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 Group 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 executive directors’ incentives as for other employees of the Group. The
Committee also reviews information on bonus payments and share awards made to the wider management group when
determining awards and outcomes at executive director level.
Our approach to
remuneration operates
consistently across
the Group, recognising
that we recruit talented
individuals so that
we may deliver
superior operational
performance and
outstanding financial
results
• Salary and benefits (including e.g. healthcare or retirement benefits, where
appropriate) are competitive in the relevant local market
• Our pay for performance framework provides employees with opportunities for
meaningful salary and career progression over time
• Remuneration arrangements provide a competitive reward opportunity to
encourage the achievement of genuinely stretching short-term and long-term
objectives
• Key individuals with specific accountabilities for driving annual and longer-term
performance participate variously in our sales incentive plan, the annual bonus
plan, and the Performance Share Plan
• All aspects of remuneration are designed to encourage a focus on long-term,
sustained performance and risk management
www.tateandlyle.com 85
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Directors’ Remuneration Report continued
Annual Report on Remuneration
Introduction
This Report sets out how our established Remuneration Policy has been implemented during the year. It 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 2018
The Committee intends that the Policy contained in this Annual Report, subject to shareholder approval at the AGM on
27 July 2017, will apply for a period of three years from the date of the AGM.
Resolution to approve the Report on Remuneration at the 2017 AGM
A resolution to approve this Annual Report on Remuneration will be proposed at the AGM on 27 July 2017.
Statement of shareholder voting
The Remuneration Policy was approved by shareholders at the AGM on 24 July 2014. The last Annual Report on Remuneration
was approved by shareholders at the AGM on 21 July 2016. The following voting outcomes were disclosed after the relevant AGM:
Resolution
Directors’ Remuneration Policy Report
Annual Report on Remuneration
Total for
(number of
votes)
289 561 233
295 781 004
Total against
(number of
votes)
6 296 870
22 275 432
% of vote
97.87
93.00
% of vote
2.13
7.00
Votes
withheld1
(number of
votes)
2 779 8492
2 415 7213
1 Votes withheld are not counted in the calculation of the proportion of votes for or against a resolution.
2 On 24 July 2014, there were 467,386,228 ordinary shares in issue, excluding treasury shares.
3 On 21 July 2016, there were 466,659,112 ordinary shares in issue, excluding treasury shares.
The Remuneration Committee
Meetings during the year
The Remuneration Committee comprises independent non-executive directors. The Committee met six times during the year.
Membership and attendance during the year were as follows:
Directors as at 31 March 2017
Anne Minto (Chr)
William Camp
Paul Forman
Lars Frederiksen1
Jeanne Johns
Dr Ajai Puri
Number of
meetings
attended
6
6
6
4
4
6
Number of
meetings
eligible to
attend
6
6
6
6
4
6
1 Unable to attend meetings due to pre-existing conflicts, one of which included an induction meeting at an overseas Tate & Lyle location.
The Committee met twice after the end of the financial year, and before the signing of this Annual Report. The Company Secretary
serves as secretary to the Committee. The Chairman of the Board; 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. The Chairman-designate
was invited to attend meetings following his appointment to the Board on 1 January 2017. The Committee’s external advisor
(Deloitte LLP) attends each meeting to provide independent advice, and also provides regular updates to the Committee on
relevant corporate governance and market-related developments.
86 Tate & Lyle PLC Annual Report 2017
Main responsibilities of the Remuneration Committee
The main responsibilities of the Committee include:
• Assessing the appropriateness of executive remuneration in the context of the Group’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 its own effectiveness each year.
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
We appointed Deloitte LLP as our 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 £59,100 for the year ended 31 March 2017, 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, systems, tax compliance and accounting.
Chart showing total shareholder return and Chief Executive’s pay
The chart illustrates the cumulative total shareholder return (TSR) performance of the Company against the FTSE 100 and FTSE
350 Indices over the past eight years. These Indices are considered to provide an appropriate comparison as they represent a
broad equity market with constituents comparable in size and complexity to the Company over the period to which the chart
relates. The graph shows the value of £100 invested in each Index and the Company in the eight years from 31 March 2009.
Tate & Lyle PLC (ordinary shares)
FTSE 100
FTSE 350
)
£
(
d
e
t
s
e
v
n
i
0
0
1
£
f
o
e
u
l
a
v
d
e
x
e
d
n
I
450
400
350
300
250
200
150
100
50
0
31 March
2009
31 March
2010
31 March
2011
31 March
2012
31 March
2013
31 March
2014
31 March
2015
31 March
2016
31 March
2017
Chief Executive’s1 total remuneration (£000s per single figure table)
Javed Ahmed
Iain Ferguson
Annual bonus
(% of maximum)
LTI vesting
(% of maximum)
977
1 312
86%
3 277
nil
100%
11 1982
170
58%
5 367
n/a
18%
2 728
n/a
1.6%
0%
81%
100%
100%
67.7%
996
n/a
0%
0%
2 139
n/a
77%
3 239
n/a
80%
10.9%
50%
1 Javed Ahmed has served as Chief Executive since his appointment on 1 October 2009. Iain Ferguson was Chief Executive prior to that date.
2 The total remuneration figure shown for the year ended 31 March 2012 includes one-off compensatory appointment awards.
www.tateandlyle.com 87
Marker 1.6mm x 1.6mm
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Directors’ Remuneration Report continued
Comparison of movement in Chief Executive and broader employee remuneration
Change in value: year ended 31 March 2017 vs 31 March 2016
Chief Executive
Broader employee population2
Base salary
0%
3%
Value of
benefits1 Annual bonus3
4%
22%
110%
16%
1 No changes to benefit policies were made in respect of the Chief Executive or employees during the year. The percentage change in the employee benefits figure is the
result of differences in employee participation levels and changes in the cost of insured benefits, including healthcare. The increase in the Chief Executive’s benefits figure
reflects the increased cost of international healthcare since the position was originally established on appointment in 2009, driven by periodic premium renewals and the
rates based on age and medical inflation trends over time (as described on page 76 of last year’s report).
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 employees of the Group (continuing operations)
Distributions to shareholders (by way of dividend and purchase of ordinary shares)
Year ended
31 March 2017
£328m
£148m
Year ended
31 March 2016
£262m
£137m
% change
25.2%
8.0%
The year on year variance in employee remuneration is attributable to factors including foreign exchange rate movements
(reflecting our significant US employee base) as well as variable pay arrangements driven by Group financial performance.
See Notes 10, 14 and 22 for further information.
Directors’ salaries and fees
The sections that follow provide more information on remuneration decisions and the operation of incentive plans during the year
ended 31 March 2017.
Base salary
Executive directors’ salaries are reviewed annually, with effect from 1 April. At the 2017 review, the Committee agreed executive
directors’ 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 Hampton
2017
721 000
525 550
2016
721 000
512 750
% change
0%
2.5%
Executive directors’ external appointments
Nick Hampton was appointed as a non-executive director of Great Portland Estates plc on 17 October 2016, and received fees of
£31,319 in the period to 31 March 2017 which he is entitled to retain.
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 2017 review, taking into account the competitiveness of current fees against the comparable market position, and the time
commitment required of each role and the level of increase applicable to UK employees, it was agreed that fees would be
increased as summarised in the table below.
Fees (per annum) as at 1 April (£)
Basic fees
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
2017
2016
% change
66 350
76 900
17 600
13 200
11 750
24 600
64 750
75 050
17 150
12 900
11 450
24 000
2.5%
2.5%
2.5%
2.5%
2.5%
2.5%
Dr Gerry Murphy was appointed Chairman on 1 April 2017 and will receive a total annual fee of £350,000 which will not be
reviewed until 2019.
88 Tate & Lyle PLC Annual Report 2017
Annual bonus
Overview
The bonus structure described here applied during the year ended 31 March 2017 and will be retained for the year ending
31 March 2018, with a change to the top-line sales/growth metric, as described below.
The bonus is based on performance against three objectives: profitability; sales performance; and operating cash flow. Before any
bonus is payable, a minimum level of profit has to be achieved by the Group, regardless of performance against the 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.
Target bonus
(% of base salary)
Chief Executive
(75%)
Chief Financial
Officer
(50%)
Step 1
Profitability
multiplier
(once minimum
threshold is
achieved)
Step 2
Sales performance
multiplier
Step 3
Operating cash
flow multiplier
Bonus achieved
(as % of
base salary)
At target level of performance, the multiplier is one for each metric, so if performance is ‘at target’ against each metric, the result
is a ‘target’ bonus outcome. To achieve the maximum payout, performance against all three metrics must be at or above the
stretch level. 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 a significantly greater 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 Group’s long-term business strategy.
The maximum bonus opportunity is 175%. Above a certain level of performance, the bonus calculation for the Chief Executive is
made on the basis that the bonus ‘target’ is 50% (rather than 75%) of salary.
Malus/claw back provisions
Both the cash and share elements are subject to malus and claw back provisions for a period of 24 months following the award.
This means 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.
Deferral into shares
The bonus amount up to 100% of base salary is paid in cash. The 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 Group, 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, as set out above.
Arrangements for the coming year
This overall framework will be retained for the year ahead, with a change to the top-line ‘growth’ metric. The Committee has
agreed that targets for the year ahead will be set against an SFI volume growth metric, which is a key driver of our long-term
business strategy and 2020 Ambition. The selection of an SFI volume metric is consistent with our reported KPIs, and does not
suffer from the impact of fluctuating corn price in the way that an equivalent sales metric would. We understand shareholders
regard this metric as a key indicator of progress against our strategy, and we believe this metric will place greater focus on the
necessary actions to grow the SFI business consistent with our business strategy. The overall bonus framework will continue to
give the greatest weighting to the Group profit metric, and retains the requirement that a minimum level of profit must be
achieved before any bonus is payable regardless of performance against other metrics.
The Board considers that bonus targets for the year ahead 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 targets in full, and the level of performance actually achieved,
for the year just ended.
www.tateandlyle.com 89
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Directors’ Remuneration Report continued
Overview for the year ended 31 March 2017
Awards are linked to
stretching financial targets
set at the start of the year
Bonus awards at near maximum levels reflect very strong
underlying financial performance
• 20%1 increase in Group adjusted profit before tax, driven by good
performance in both divisions
• SFI operating profit +5%1, with 8%1 profit growth in core business despite
North America volume growth remaining challenging. New Products sales
increased 22% to US$105 million
• BI operating profit +32%1 driven by strong commercial execution, good
demand, robust margins and solid manufacturing performance
• Cash delivery was outstanding with adjusted free cash flow more than
three times higher than the prior year, driven by higher earnings,
management of capital expenditure and currency translation.
1 At constant currency.
Annual bonus for the year ended 31 March 2017 (audited)
The table below provides further information on each metric, the targets set at the start of the year and actual performance for
the year.
Bonus objective
Metric
Profitability
Adjusted profit before tax
Definition
Rationale
Adjusted profit before tax,
exceptional items, amortisation
and net retirement benefit
interest
Measures the underlying profit
generated by the business and
whether management is
converting growth into profit
effectively
1
s
t
e
g
r
a
T
Threshold
Target
Stretch
Actual performance1
£192m
£206m
£216m
£233m
Growth
Net sales less cost of raw
materials
Net sales less costs of raw
materials used in production
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
£1 257m
£1 343m
£1 370m
£1 397m
Cash management
Operating cash flow
Adjusted group operating cash
flow, based on the average of
half-year and full-year figures
Measures whether the business
is managing its working capital
and converting profit into cash
effectively
£87m
£97m
£107m
£114m
1 Bonus targets are set and actual performance is assessed at constant (budget) exchange rates, reflecting consistent practice with prior years.
Actual performance in the year against each of the three performance metrics has exceeded the corresponding ‘stretch’ targets.
In determining final bonus awards, the Committee also considers the Group’s overall operational and financial performance to
ensure the results are consistent with the Group’s underlying strength and performance. Having taken the Group’s safety
performance into account, the Committee exercised its discretion to reduce the level of bonus payable to executive directors and
other members of the Executive Committee. For the Chief Executive, this reduction was 20% and for the Chief Financial Officer
this reduction was 10%. Accordingly, the Committee has approved awards of 140% of salary for the Chief Executive and 158% of
salary for the Chief Financial Officer.
90 Tate & Lyle PLC Annual Report 2017
Long-term incentive – Performance Share Plan (PSP)
Overview
The PSP provides a share-based incentive to closely align executive directors’ and senior executives’ interests with the strategy
and with the interests of shareholders over the long term. It is therefore an important component of the overall package.
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 Group performance. Individual awards made in any year are considered by the
Committee on a case-by-case basis.
Performance conditions for awards to 2015
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 in the years 2010 to 2015 (inclusive), the performance conditions comprised two elements,
explained in the table below. These metrics were selected following the review and consultation with shareholders at that time, as
they represented key drivers of shareholder value creation for the Group as a whole.
Metric
Definition
Weighting
Vesting
schedule
(2013, 2014
and 2015
awards)
Return on capital employed (ROCE)
Adjusted ROCE on continuing operations achieved at
the end of the three-year performance period1, 2
Earnings per share (EPS)
Compound annual growth rate (CAGR) of the Group’s
adjusted diluted EPS from continuing operations over
the performance period
50% of the award depends on this metric
EPS performance (CAGR)
Below 6%
6%
Between 6% and 15%
At or above 15%
50% of the award depends on this metric
ROCE performance
Vesting outcome
(% of maximum)
Nil
15%
On a straight line
between 15% and 100%
100%
Below 12.6%
12.6%
Between 12.6%
and 15.6%
At or above 15.6%
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. In these circumstances, the ROCE figure for PSP purposes can be significantly lower than would otherwise be reported.
2 ROCE performance for awards made in 2013, 2014, and 2015 is assessed on the basis of proportionate consolidation of joint ventures, consistent with the basis on which
targets were set for these awards prior to their grant.
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 Group.
2014 PSP awards vesting by reference to the period ended 31 March 2017 (audited)
PSP awards made in 2014 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
50%
50%
Performance outcome
-5.4%
16.0%1
Vesting outcome
for this element
nil (below threshold) Based on the combination of EPS
full vesting
(above stretch)
and ROCE performance, 50% of the
PSP awards made in 2014 will vest.
Combined vesting outcome
1 ROCE performance is shown under proportionate accounting consistent with the basis on which the targets for the 2014 award were established.
The performance period applicable to 2014 awards is 1 April 2014 to 31 March 2017. Over this period, earnings per share did not
meet threshold, and accordingly the 50% of the award which relates to that performance metric will lapse. Over the same period,
the business has maintained clear principles in relation to the disciplined use of capital, and ROCE performance of 16.0% (under
proportionate accounting) will result in 50% of the total award being permitted to vest.
In confirming the vesting outcome, the Committee also considered the broader underlying financial performance of the Group
over the performance period, including the impact of impairments, 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.
www.tateandlyle.com 91
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Directors’ Remuneration Report continued
2016 PSP framework aligns with the long-term Group strategy
The performance framework for awards made from 2016 was carefully developed to reflect the strategy and 2020 Ambition.
The metrics detailed below align the PSP with our strategic priorities to deliver long-term value by:
• Incentivising overall growth in the value of the Group.
• Focusing on above-market growth in our higher value SFI business.
• Incentivising the maintenance of a strong balance sheet.
With this approach, the Committee remains confident that PSP awards remain appropriately aligned with the strategy and
priorities of the business, and our long-term outlook as expressed in the 2020 Ambition.
We consulted with a broad group of our largest shareholders on these proposals, and note that the proposals met with high
levels of support during that consultation, and were strongly endorsed by shareholders at the 2016 AGM.
See pages 74 and 75 of our 2016 Annual Report for more details.
Performance conditions for awards from 2016
In summary, the metrics and targets for awards made from 2016 are:
• ROCE performance applies to half of the award, as we continue to believe very strongly in the efficient deployment of
Group capital.
• The other half of the award is focused on profit growth: to best reflect our business mix and growth priorities, half of this
element relates to growth in Group adjusted profit before tax, while half relates to growth in SFI adjusted operating profit
excluding SPLENDA® Sucralose.
Appropriate threshold and stretch targets for each of these metrics were considered carefully by the Committee taking into
account a number of reference points, as indicated below. Overall, performance at these levels requires both our Speciality Food
Ingredients (SFI) and Bulk Ingredients (BI) businesses to perform strongly in their respective markets. SFI should grow modestly
ahead of the global market (which is expected to grow at c. 4-5%), and the BI business should be managed for steady earnings
against a US bulk sweeteners market that is in long-term structural decline (see pages 16 and 17 for more details in Marketplace).
Metrics for 2016
Awards
(weighting)
SFI adjusted
operating profit
(excluding
SPLENDA®
Sucralose) (25%)
Group adjusted
profit before tax
(25%)
Group adjusted
ROCE (50%)
Target range
(threshold-
stretch)
8% – 13% p.a.
three-year
compound
growth
Rationale for
metric
Consistent
with the SFI
growth-led
business strategy
and investment
case
Key performance
metric to drive
sustainable
long-term
profitable growth
5% – 10% p.a.
three-year
compound
growth
Drives efficient
investment for
value-added
returns from the
total business
12% – 16% in
the final year of
the three-year
performance
period
Rationale for target ranges
• Targets above-market SFI growth and significant New Product
sales expressed in 2020 Ambition
• Value generative in the context of global market growth of 4-5%
and our historic operating profit growth trend of c. 7% (excluding
SPLENDA® Sucralose)
• Growth rates reflect 2020 Ambition that Group profits from SFI
increase to 70% over time
• Targets are consistent with execution of Group strategy: steady
earnings from BI (currently c. 40-50% of profits, redeploying
capacity to SFI over time), with profitable SFI growth ahead of the
market
• Targets are aligned with our long-term plan and the realities of
our operating model (without growth investment in BI)
• ROCE targets drive disciplined/efficient approach to capital
allocation
• Reflects geographic footprint (post exit from European
bulk business)
• Incentivises ROCE progression from current levels
Financial
underpin
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 Group.
Targets are set and performance is assessed at reported exchange rates.
The Committee reviews the appropriateness of metrics and targets ahead of the grant of awards in any year to ensure they remain
sufficiently stretching.
The level of vesting at threshold is limited to 15% of the maximum for executive directors.
92 Tate & Lyle PLC Annual Report 2017
Post-vesting holding period and dividend underpin
• A post-vesting holding period. Executive directors will be required to hold shares for a two-year period after the end of the
three-year performance period (i.e. the combination of performance and holding period will be five years in total). This holding
period will sit alongside the existing personal shareholding requirements and claw back/malus provisions, and demonstrates a
strong long-term alignment with shareholder interests.
• A dividend underpin supplements the existing financial performance underpin. The Committee retains a specific additional
discretion to reduce PSP vesting for the performance period, regardless of the level of achievement against the applicable
performance conditions, if dividends paid by the Group over the performance period do not conform to the stated dividend policy.
We have made a commitment to a progressive dividend policy, where we aim to grow the dividend over time taking into account
the earnings prospects of the business. This approach recognises the importance of the dividend to investors, and underlines
the Group’s commitment to the stated dividend policy.
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 emerges 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.
www.tateandlyle.com 93
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Directors’ Remuneration Report continued
Other audited disclosures
Single figure table (audited)
£000s
Year ended 31 March
Chairman
Sir Peter Gershon
Executive directors
Javed Ahmed
Nick Hampton
Non-executive directors2, 6
Liz Airey
William Camp
Paul Forman
Lars Frederiksen
Douglas Hurt
Jeanne Johns
Anne Minto
Dr Gerry Murphy
Dr Ajai Puri
Sybella Stanley
Former director
Virginia Kamsky6
Totals
Salary/fees
Benefits1
2017
2016
2017
2016
Annual bonus
20173
2016
Share awards
Pension
Total
2017
2016
2017
2016
2017
2016
334
325
721
513
721
495
72
76
65
65
84
28
78
88
89
65
73
74
63
–
80
–
75
–
86
–
–
42
13
–
–
–
–
–
–
–
–
–
–
–
20
13
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
334
325
1 009
808
968
665
1 2154
1 6765
178
5215
252
128
252
123
3 239
3 138
2 139
1 817
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
72
76
65
65
84
28
78
88
89
65
73
74
63
–
80
–
75
–
86
–
–
2 278
16
2 008
–
55
–
33
–
1 817
–
1 633
–
2 891
–
699
–
380
–
375
–
7 421
16
4 748
1 Benefits for executive directors include health insurance and car allowance. As stated last year, the cash value of the healthcare benefit provided to the Chief Executive has
increased to reflect the cost of provision of international healthcare benefits since the position was originally established on appointment in 2009 (driven by periodic
premium renewals and the rates based on age and medical inflation trends over time).
2 In accordance with the Group’s expenses policies, non-executive directors receive reimbursement for their reasonable expenses for attending Board meetings. In instances
where those costs are treated by HMRC as taxable benefits, the Group also meets the associated tax cost to the non-executive director through a PAYE settlement
agreement with HMRC. Amounts are minimal and do not show in the table after rounding.
3 Bonus includes the value of deferred shares. The cash bonus award to Javed Ahmed was £721,000 and the cash bonus award to Nick Hampton was £512,750.
4 This is the PSP Award made in 2014. PSP awards outcomes are discussed on page 91.
5 This relates to compensatory share awards made in connection with Mr Hampton’s employment. Further details are provided on page 96.
6 Year-on-year changes reflect changes in Committee chairmanship and Senior Independent Director responsibilities (see page 13). Dr Gerry Murphy, Lars Frederiksen,
Jeanne Johns and Sybella Stanley joined the Board during the year; Virginia Kamsky stepped down as a Director on 1 July 2015.
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, and are equivalent to 35% of salary for the
Chief Executive and 25% for the Chief Financial Officer.
Payments to past directors (audited)
There have been no payments to past directors other than as disclosed in this Report. No loss-of-office payments have been made
during the year.
94 Tate & Lyle PLC Annual Report 2017
Share awards made during the year (audited)
Javed
Ahmed
Award
Group Bonus
Plan (31 March
2016)
Performance
Share Plan3
Date of grant
25 May 2016
Number
of shares
42 742
Face value of
award
£247 1131
Performance
conditions
None2
Performance
period
Two years
% of
vesting at
threshold
n/a
Type of
award
Nil cost
option
Nil cost
option
10 August
2016
374 124
£2 162 9983
Nick
Hampton
Group Bonus
Plan (31 March
2016)
Performance
Share Plan3
Nil cost
option
25 May 2016
29 368
£169 7911
Nil cost
option
10 August
2016
266 064
£1 538 2493
15%
Three
financial
years ending
31 March 2019
Two years
n/a
15%
Three
financial
years ending
31 March 2019
25% SFI
adjusted
operating profit
(excluding
SPLENDA®);
25% Group
adjusted profit;
50% adjusted
ROCE4
None2
25% SFI
adjusted
operating profit
(excluding
SPLENDA®);
25% Group
adjusted profit;
50% adjusted
ROCE4
1 Deferred shares are granted under the annual bonus plan (as described on page 89). The full value of these awards has been previously disclosed for each Director in the
‘single figure’ table in last year’s Annual Report for the year ended 31 March 2016. The share allocation is made during the year ending 31 March 2017, and shown in the
table above, based on the average share price over the last three months of the preceding financial year, being 578.15 pence per share for the 2016 award.
2 Deferred bonus awards were subject to performance conditions in the year ending 31 March 2016, and remain subject to continued employment.
3 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 578.15 pence per share for the 2016 award. During the year, the Committee approved awards of 300% of salary for the
Chief Executive and 300% of salary for the Chief Financial Officer, which is within our approved Remuneration Policy.
4 Performance conditions applicable to Performance Share Plan awards made in 2016 are described on page 92.
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 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 reflects a 20% discount to
market value as permitted under HMRC rules, and is applicable to all participants.
Javed Ahmed
Savings-related options 2014
Nick Hampton
Savings-related options 2014
As at
1 April 2016
(number)
5 941
Options
vested
during year
(number)
–
Options
exercised
during year
(number)
–
Options
lapsed
during year
(number)
–
As at
31 March
2017
(number)
5 941
Exercise
price (pence)
510.00
3 529
–
–
–
3 529
510.00
Exercise
period
01/03/20 to
31/08/20
01/03/20 to
31/08/20
www.tateandlyle.com 95
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Directors’ Remuneration Report continued
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
31 March
2016
(number)
Awards
vested
during
year
(number)
Awards
lapsed
during
year
(number)
Awards
exercised
during
year
(number)
As at
31 March
2017
(number)
Market
price on
date
awards
granted
(pence)
Market
price on
date
awards
exercised
(pence)
Vesting date
Javed Ahmed
Share-incentive arrangements
on recruitment:
Compensatory Award A1
Performance Share Plan2,3:
2013
20144
2015
Nick Hampton
Share incentive arrangements
on recruitment5:
2014 Restricted Share Award
2015 Restricted Share Award
Performance Share Plan2,3:
2015
419 403
–
–
267 418
305 584
292 595
29 148
–
–
238 270
–
–
–
–
–
–
419 403
444.90
29 148
305 584
292 595
817.50
707.83
616.04
–
–
–
–
01/10/11
15/06/16
After 31/03/17
After 31/03/18
96 681
96 680
121 781
–
96 680
–
241 251
–
–
–
–
–
96 681
96 680
–
–
–
121 781
620.60
620.60
574.80
738.50
696.00
–
01/09/15
01/09/16
After 31/03/17
–
241 251
616.04
–
After 31/03/18
1 This award, to compensate Javed Ahmed for certain long-term incentives given up by him as a consequence of leaving his former employer, was not subject to
performance conditions. The shares were available to exercise from 1 October 2011, being the second anniversary of Javed Ahmed joining the Group, 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.
2 The three-year performance period for these awards began on the first day of the financial year in which the award was granted.
3 The performance conditions for PSP awards made in 2013, 2014 and 2015 are 50% adjusted diluted EPS and 50% adjusted ROCE, as described in this Report.
4 The PSP award made in 2014 will vest at 50%, following the Committee’s assessment of performance conditions (as described on page 91).
5 These awards were made in connection with Nick Hampton’s employment, to compensate him for incentives forfeited with his previous employer, as described in the 2014
and 2015 Directors’ Remuneration Reports (which were subject to advisory shareholder votes at the 2014 and 2015 AGMs):
• 2014 Restricted Share Award (RSA): As described on pages 71 and 76 of the 2015 Annual Report, the 2014 RSA may vest in two equal tranches on the first and
second anniversary of appointment, subject to employment and specified performance conditions. The Committee approved the vesting of the first tranche of the
award on 1 September 2015, as described on page 78 of the 2016 Annual Report. The Committee approved the vesting of the second tranche of the award, in full, on
1 September 2016, being the second anniversary of appointment, taking into account Nick Hampton’s specific strategic and operational contributions to the
business, including:
• Establishing a Business Performance Management function and leading global procurement initiatives to deliver material financial benefits reflected in Group
financial performance through FY16, in the context of very significant commodities weakness (adverse £29m, as reported with our financial results for the period
ending 31 March 2016), as well as demonstrable improvements in working capital and cash flow performance over the same period.
• Leadership of a robust long-term financial planning exercise linked to our stated 2020 Ambition and associated Capital Markets event in January 2016.
Implementation of a revised approach to better link the longer-term commercial and capital expenditure plans through to annual operating planning objectives
and execution plans. These processes are underpinned by strengthened sales forecasting and operational (supply chain and demand planning) processes to
enable the business to deliver more stable financial performance compared with when Nick joined the business, and to enable the Group to better respond to
market challenges and unforeseen risks during the year.
• Strong overall stewardship of the major change projects executed during FY16 (Eaststarch business realignment and consolidation of Sucralose manufacturing),
with the final outcomes delivered to the planned time-horizons and with exceptional cash costs lower than planned.
• Leading the improvements in our communications with the market, including the development of the enhanced disclosure framework, a refreshed equity story
and clear articulation of the 2020 Ambition with our half-year results in November 2015, and the Capital Markets event in January 2016, that received positive
investor feedback.
• 2015 Restricted Share Award (RSA): as described on page 71 of the 2015 Annual Report, this award was made to compensate Mr Hampton for incentives forfeited
with his previous employer and will vest, based on continued employment and satisfactory personal performance, following the announcement of results for the
year ending 31 March 2017.
96 Tate & Lyle PLC Annual Report 2017
Statement of Directors’ shareholding and share interests
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. At 31 March 2017, he holds shares in
accordance with this policy with a value in excess of 30 times base salary.
• The Chief Financial Officer has a target shareholding of three times base salary, to be achieved within five years of appointment.
Nick Hampton joined the Group in September 2014, and therefore has until September 2019 to meet this target. At 31 March
2017, he holds shares in accordance with the policy with a value of just under two times base salary.
• 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 Group. The shareholding target
for this group is equal to their base salary.
Under the shareholding policy, the value of shareholdings is assessed net of tax, at the prevailing share price, and executives are
expected to reach the required level of shareholding within five years of appointment. 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 these interests are beneficially held and no Director had interests in any other class of 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
Lars Frederiksen
Douglas Hurt
Jeanne Johns
Anne Minto
Dr Gerry Murphy
Dr Ajai Puri
Sybella Stanley
Interest in
shares1
Shares
– conditional on
performance2
Shares – not
conditional on
performance3
Options – not
conditional on
performance4
Total as at
31 March
2017
Total as at
31 March
2016
155 146
–
–
–
155 146
149 729
3 098 850
122 161
972 303
507 315
491 293
151 149
5 941
3 529
4 568 387
784 154
4 319 633
579 922
26 000
6 800
10 000
15 000
10 000
–
8 600
10 000
10 018
4 983
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
26 000
6 800
10 000
15 000
10 000
–
8 600
10 000
10 018
4 983
26 000
6 800
10 000
–
10 000
–
8 600
–
6 018
–
1 Includes shares owned by connected persons.
2 Includes awards under the PSP. These awards were made as options with a nil exercise price.
3 Includes vested but unexercised awards granted to Javed Ahmed and Nick Hampton, and unvested awards made to Nick Hampton in connection with his appointment.
These awards were made as options with a nil exercise price.
4 These are HMRC-approved Sharesave Plan awards.
There were no changes in Directors’ interests in the period from 1 April 2017 to 24 May 2017.
The market price of the Company’s ordinary shares at the close of business on 31 March 2017 was 764.50 pence, and the range
during the year ended 31 March 2017 was 574.50 pence to 807.00 pence.
On behalf of the Board
Anne Minto OBE
Chairman of the Remuneration Committee
24 May 2017
www.tateandlyle.com 97
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Directors’ Report
About the Directors’ Report
The Directors’ Report comprises the
Governance section from pages 52 to
73, the Directors’ Report on pages 98
and 99 and the Useful Information
section from pages 187. 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 42)
• Greenhouse gas emissions (pages
47 and 48)
• Relationship with employees
(page 43)
• Financial instruments (Note 29)
• Post balance sheet events (Note 35).
Results and dividend
A review of the consolidated Group’s
results can be found on pages 1 to 51.
An interim dividend of 8.2 pence per
ordinary share was paid on 3 January 2017.
The Directors recommend a final dividend
of 19.8 pence per ordinary share to be
paid on 1 August 2017 to shareholders on
the register on 30 June 2017, subject to
approval at the 2017 Annual General
Meeting (AGM). The total dividend for the
year is 28.0 pence per ordinary share
(2016 – 28.0 pence).
The Trustees of the Tate & Lyle PLC
Employee Benefit Trust have waived their
right to receive dividends over their total
holding of 1,956,744 ordinary shares as
at 31 March 2017.
Research and development
The Group spent £37 million
(2016 – £29 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
98 Tate & Lyle PLC Annual Report 2017
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 66 to 73 and on page 87.
Share capital
As at 31 March 2017, the Company had
nominal issued ordinary and preference
share capital of £119 million comprising
£117 million in ordinary shares, including
£0.9 million in treasury shares and
£2 million in preference shares.
To satisfy obligations under employee
share plans, the Company issued 20,922
ordinary shares during the year and
reissued 230,619 ordinary shares from
treasury. The Company issued 1,086
shares during the period from
1 April 2017 to 24 May 2017. Further
information about share capital is in
Note 22. Information about options
granted under the Company’s employee
share plans is in Note 31.
The Company was given authority at the
2016 AGM to make market purchases of
up to 46,643,284 of its own ordinary
shares. The Company purchased
2,000,000 of its own ordinary shares
during the year ended 31 March 2017;
these shares are held in treasury to
satisfy awards made under performance
share plans. This authority will expire at
the 2017 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 ordinary and preference shares in the
capital of the Company.
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 in ‘Shareholders’
rights’ 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.
Change of control
At 31 March 2017, the Group had a
committed bank facility of US$800 million
with a number of relationship banks
which contains change of control clauses.
The Group also had £200 million of
Guaranteed Notes and US$400 million
of Private Placement Notes which
contain change of control provisions.
In aggregate, this financing is considered
significant to the Group and in the event
of a takeover (change of control) of the
Company, these contracts may be
cancelled, become immediately payable
or be subject to acceleration.
All of the Company’s share plans contain
provisions relating to a change of control.
Further information is set out in the
Directors’ Remuneration Policy.
Disclosure table pursuant to Listing Rule LR 9.8.4C
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
(1)
Page(s)
135
(2)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
Unaudited financial information
Long-term incentive scheme only involving a Director
Directors’ waivers of emoluments
Directors’ waivers of future emoluments
Non pro-rata allotments for cash (issuer)
Non pro-rata allotments for cash (major subsidiaries)
Listed company is a subsidiary of another company
Contracts of significance involving a Director
None
95
None
Not applicable
98
None
Not applicable
None
Contracts of significance involving a controlling shareholder
Not applicable
(12) Waivers of dividends
(13) Waivers of future dividends
98
98
(14)
Agreement with a controlling shareholder
Not applicable
DTR Rule 5 disclosure
As at 31 March 2017, the Company had
been notified under Rule 5 of the
Disclosure and Transparency Rules of the
following holdings of voting rights in
its shares:
In the period from 1 April 2017 to
24 May 2017, Deutsche Bank AG held
23,418,534 shares (5.04%) in the
Company. Also during this period, and
as notified, its holding reduced to below
the 5% reporting threshold.
Number
of shares2
Black Rock, Inc.1
46 514 801
Ameriprise Financial, Inc. 23,767,456
%
held2
9.97
5.10
1 Notification was made over 12 months ago; as
permitted under Rule 5, shareholders are not
required to notify us of subsequent changes within
certain ranges.
2 As at the date in the notification to the Company.
The Capital Group
Companies, Inc.
23,129,245
4.96
23,045,106
Artemis Investment
Management LLP1
AXA S.A.1
Invesco Limited1
Schroders plc1
23 098 654
Barclays Global Investors1 17 568 133
22,890,148
23 111 061
4.94
4.98
4.95
4.59
3.59
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$22,000 (£17,000) (2016 – US$13,000;
£9,000) to state political party
committees and to the campaign
committees of state candidates affiliated
to the major parties. In all, 11 separate
donations were made, the largest being
US$5,000 and the smallest US$300.
US$17,450 (£13,000) (2016 – US$10,500;
£7,000) was also contributed by the
Tate & Lyle Political Action Committee
(PAC). Eight separate donations were
made, the largest being of US$4,500 and
the smallest US$250. 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 regulation.
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 Company Financial Statements in
accordance with UK GAAP (United
Kingdom Accounting Standards,
comprising FRS 101 ‘Reduced Disclosure
Framework’ 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 applicable IFRSs as
adopted by the EU have been followed
for the Group Financial Statements
and United Kingdom Accounting
Standards, comprising FRS 101, have
been followed for the Company
Financial Statements, subject to any
material departures disclosed and
explained in the Financial Statements
• Prepare the Financial Statements on
the going concern basis unless it is
inappropriate to presume that the
Company will continue in business.
assets, liabilities, financial position
and profit of the Group
The Directors are responsible for
keeping adequate accounting records
that are sufficient to show and explain
the Group and Company’s transactions
and disclose with reasonable accuracy at
any time the financial position of the
Company and the Group. These records
should 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. The Directors 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 52 to 55,
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 position and
performance, business model
and strategy
• The Group Financial Statements,
which have been prepared in
accordance with IFRSs as adopted by
the EU, give a true and fair view of the
• The Company Financial Statements,
which have been prepared in
accordance with UK GAAP (United
Kingdom Accounting Standards,
comprising FRS 101 ‘Reduced
Disclosure Framework’ and applicable
law) give a true and fair view of the
assets, liabilities, financial position and
profit of the Company
• The Strategic Report and the
Directors’ Report include a fair review
of the development and performance
of the business and the position of the
Group and the Company, together with
a description of the principal risks and
uncertainties that it faces.
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 Group and Company’s
auditors are aware of that information.
The Directors’ Report on pages 52 to 73,
pages 98 and 99 and pages 187 to the
inside back cover and the Directors’
Remuneration Report from pages 74 to
97 of this Annual Report were approved
by the Directors on 24 May 2017.
On behalf of the Board
Claire-Marie O’Grady
Company Secretary
24 May 2017
www.tateandlyle.com 99
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION 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 ‘financial statements’):
• give a true and fair view of the state of the Group’s affairs as
at 31 March 2017 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 at 31 March
2017;
• 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.
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 Group financial statements is IFRSs
as adopted by the European Union and applicable law.
Our audit approach
Context
The context of our audit was set by the Group’s major activities
in the year ended 31 March 2017 (‘FY17’). FY17 was the first year
since the Group’s re-alignment of the Eaststarch joint venture in
Europe and the restructuring of activities in Singapore.
Consequently these are no longer included as specific areas of
focus for FY17. By comparison, FY17 involved fewer significant
business changes, although the Group sold its interest in
Howbetter, China and restructured its Food Systems blending
sites in Europe.
The goodwill associated with Gemacom, the Group’s Food
Systems business in Brazil was previously identified by
management as sensitive to reasonably possible changes in
assumptions. Subsequently management has recorded an
impairment of £16 million in FY17. Goodwill and intangible asset
impairment has been added as an area of focus given
management judgement is exercised in this area.
Our other areas of focus have been further refined to reflect
certain developments in the Group during FY17.
Materiality
Audit Scope
Areas of
Focus
Materiality
Overall Group materiality: £12 million, which represents approximately 5% of profit before
tax from continuing operations adding back the Group’s share of tax of joint ventures and
associates and exceptional items, which is our defined profit measure.
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, the US Sucralose business and G.C. Hahn and Company
Limited in Wales) with specified audit procedures performed at a further three reporting
components (Tate & Lyle Services Slovakia, T&L Insurance Gibraltar and the US Tax Group).
Taken together, the components at which audit work was performed accounted for 82%
of consolidated sales and 63% of our profit measure (as defined above). This percentage
is calculated on an absolute basis, which aggregates component profits and losses,
ignoring sign convention.
Our audit covered all components that individually contributed more than 10% of
consolidated sales and of our profit measure (as defined above).
Areas of focus
• Commodity risk;
• Complex tax accounting and uncertain tax positions;
• Retirement benefit obligations and assets; and
• Goodwill and intangible asset impairment.
Consolidated sales
2
1 Reporting
components: 82%
2 Other
1
components: 18%
Profit1
2
1 Reporting
components: 63%
2 Other
components: 37%
1
1 As defined above.
100 Tate & Lyle PLC Annual Report 2017
100 Tate & Lyle PLC Annual Report 2017
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 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 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.
Area of focus
How our audit addressed the area of focus
Commodity risk
Refer to Notes 2, 28 and 29.
The Group’s accounting policy is to mark-to-market at each
balance sheet date its commodity positions, including its forward
sales and purchase contracts with customers and grain
suppliers. In addition, certain commodity raw material
inventories are measured at net realisable value. The Group
manages the commodity price risk on sales and purchase
contracts by taking long and short positions and through the use
of derivative financial instruments.
This was an area of focus due to the complexity of the
calculations and the judgement involved in the valuation of
certain commodities positions, 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 as at 31 March
2017 were assets of £29 million and liabilities of £16 million.
We understood and evaluated management’s process for
managing the commodity price risk inherent within its
commodity positions and compared it with management’s
underlying risk management and accounting policies. No
matters were identified that would indicate that the risk
management and accounting policies were not being followed.
We obtained management’s forward pricing sheet for
commodities used in its mark-to-market 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. For those commodities
where an active futures market does not exist (principally
co-products) and for the basis adjustments made, we
understood and challenged management’s methodology
for determining the valuations, including the inputs and
assumptions used. To further assess the reasonableness of
the forward prices estimated by management, we 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 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
calculations of fair value of 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.
For derivative financial instruments, which were used to
manage the commodity price risk, we independently confirmed
these positions with the counterparty and recalculated the fair
value of the positions held. We found that the fair values of
these derivative financial instruments were supported by the
confirmations and recalculations.
www.tateandlyle.com
www.tateandlyle.com 101
101
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Independent Auditors’ Report to the Members
of Tate & Lyle PLC continued
Area of focus
How our audit addressed the area of focus
Complex tax accounting and uncertain tax positions
Refer to Notes 2 and 12.
The nature of the Group’s multinational and cross-border
operations exposes it to complicated tax regulations. This
requires management to exercise judgement in determining the
appropriate amount of tax to provide in respect of tax obligations
in a number of jurisdictions. In addition, certain financing
arrangements that the Group has entered into, while not
uncommon or unduly aggressive, have been previously subject
to enquiry by tax authorities. The result of enquiries by tax
authorities could materially affect the quantum of tax provisions
recognised in the Group financial statements. At 31 March 2017
Tate & Lyle had centrally held provisions for uncertain tax
positions of £34 million (2016 – £31 million).
Additionally, the Group has executed transactions during FY17
for which the accounting and current and deferred tax
considerations required substantial analysis. These transactions
have given rise to exceptional deferred tax assets of £65 million.
Retirement benefit obligations and assets
Refer to Notes 2 and 30.
The Group has significant retirement benefit obligations in the
UK and the US, including unfunded retirement medical plans in
the US. At 31 March 2017 the present value of these obligations
was £1,769 million (2016 – £1,634 million) offset by plan assets at
fair value of £1,630 million (2016 – £1,426 million) in respect of
funded schemes.
These retirement benefit 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 recorded in the consolidated statement of financial
position.
During FY17, a triennial valuation was completed on the main
UK scheme and a gain was recorded in the US following a
lump-sum settlement in the year.
Goodwill and intangible asset impairment
Refer to Notes 2 and 19.
At 31 March 2017 the Group has a net balance of £212 million of
goodwill (2016 – £204 million). In addition, the Group has £189
million of intangible assets (2016 – £186 million) comprising
patents and other intellectual property, capitalised development
expenses and other acquired intangible assets.
The carrying values of goodwill and intangible assets are contingent
on future cash flows and there is a risk that the assets will be
impaired if these cash flows do not meet the Group’s expectations.
The impairment reviews performed by the Group contained a
number of judgements and estimates including revenue growth,
the success of market and capacity expansion, profit margin, cash
conversion, terminal values and discount rates. Changes in these
assumptions could lead to an impairment to the carrying value of
intangible assets and goodwill.
During the year, the Group recognised a £16 million impairment
charge against the carrying value of goodwill relating to the
Gemacom business in Brazil, £2 million against the goodwill relating
to Howbetter in China and £5 million in respect of other intangibles.
102 Tate & Lyle PLC Annual Report 2017
102 Tate & Lyle PLC Annual Report 2017
In conjunction with our UK, US and international tax and transfer
pricing specialists, 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 valuation of its tax provisions and
determined whether the calculations were in line with the Group’s
methodology and principles, and whether they had been applied on
a basis consistent 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 concluded that the level of
provisioning was acceptable.
Additionally, we assessed the appropriateness of judgements and
estimates, as they pertain to taxation in transactions executed
during FY17 and concluded they were appropriate.
The valuation of the exceptional deferred tax assets of £65 million
was judgemental and we assessed the key assumptions made by
the Group and concluded they were appropriate. In respect of the
deferred tax asset of £34 million relating to previously
unrecognised tax losses, we also confirmed its recoverability as
reasonable against expected future taxable profit.
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.
In conjunction with our pensions specialists we challenged the
actuarial assumptions by comparing these against benchmark
ranges based on the market conditions and expectations at
31 March 2017. Based on our review of the assumptions,
in each case we found that the actuarial assumptions used
were reasonable and sat within our acceptable range and,
where appropriate, were applied on a basis consistent with
previous years.
In addition, we independently confirmed the pension assets
held by the UK and US schemes with the third-party custodians
and fund managers. We also performed an independent
assessment of the asset valuations and concluded that they
were appropriate.
We obtained the Group’s annual impairment analyses and
tested the reasonableness of key assumptions, including profit
and cash flow growth or decline, terminal values and the
selection of discount rates. We assessed the appropriateness of
the discount rate and challenged management’s other key
assumptions, including comparing relevant assumptions with
industry and economic forecasts.
We obtained and evaluated management’s sensitivity analyses
to ascertain the impact of reasonably possible changes in key
assumptions and we performed our own independent
sensitivity calculations to quantify the downside changes to
management’s models required to result in impairment.
With the exception of Biovelop, 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.
As a result of our work, we determined that the impairment
charges recognised during the year were appropriate.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the 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 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 the two divisions, which comprise
the Group’s operating businesses and centralised functions of 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 PwC UK or other PwC network firms operating under our
instruction. 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, in order to be able to conclude whether sufficient 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,
meetings with management and review of working papers at the Group’s two significant components in the US and at the Global
Shared Services centre in Poland. We also attended the clearance meetings for these components. In addition, we met with
management in Slovakia and Wales, and the non-PwC firm audit team for the Group’s joint venture in Mexico, and instructed
PwC Mexico to review the working papers in respect of the audit work they performed.
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 on the individual financial statement line items and disclosures and in evaluating the effect of 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
How we determined it
Rationale for benchmark applied
£12 million (2016 – £10 million).
Approximately 5% of profit before tax from continuing
operations (£233 million) adding back the Group’s share of tax
of joint ventures and associates (£12 million) and exceptional
items (£18 million), as defined in Note 3 to the Group financial
statements.
The Group’s principal measure of earnings is adjusted profit
before tax from continuing operations, 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 the Group’s principal measure,
as defined above, as our benchmark since the amortisation of
acquired intangible assets and net retirement benefit interest
are recurring items.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £500,000 (2016:
£500,000) 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 99, in relation to going concern. We have
nothing to report having performed our review.
Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation to
the Directors’ statement about whether they considered it appropriate to adopt the going concern basis in preparing the financial
statements. We have nothing material to add or to draw attention to.
As noted in the Directors’ statement, the Directors have concluded that it is appropriate to adopt the going concern basis in
preparing the financial statements. 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.
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103
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Independent Auditors’ Report to the Members
of Tate & Lyle PLC continued
Other required reporting
Consistency of other information and compliance with applicable requirements
Companies Act 2006 reporting
In our opinion, based on the work undertaken in the course of the audit:
• 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; and
• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
In addition, in light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we are
required to report if we have identified any material misstatements in the Strategic Report and the Directors’ Report. We have
nothing to report in this respect.
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 Group acquired in the course of performing our audit; or
otherwise misleading.
• the statement given by the Directors on page 99, 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 position and performance, business
model and strategy is materially inconsistent with our knowledge of the Group
acquired in the course of performing our audit.
• the section of the Annual Report on page 66, 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.
We have no exceptions to report.
We have no exceptions to report.
The Directors’ assessment of the prospects of the Group and of the principal risks that would threaten the solvency or
liquidity of the Group
Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation to:
• the Directors’ confirmation on page 39 of the Annual Report, in accordance with
provision C.2.1 of the Code, that they have carried out a robust assessment of the
principal risks facing the Group, including those that would threaten its business
model, future performance, solvency or liquidity.
We have nothing material to add or to
draw attention to.
• the disclosures in the Annual Report that describe those risks and explain how they
are being managed or mitigated.
• the Directors’ explanation on page 39 of the Annual Report, in accordance with
provision C.2.2 of the Code, as to how they have assessed the prospects of the Group,
over what period they have done so and why they consider that period to be
appropriate, and their statement as to whether they have a reasonable expectation
that the Group will be able to continue in operation and meet its liabilities as they fall
due over the period of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
We have nothing material to add or to
draw attention to.
We have nothing material to add or to
draw attention to.
Under the Listing Rules we are required to review the Directors’ statement that they have carried out a robust assessment of the
principal risks facing the Group and the Directors’ statement in relation to the longer-term viability of the Group. Our review was
substantially less in scope than an audit and only consisted of making inquiries and considering the Directors’ process supporting
their statements; checking that the statements are in alignment with the relevant provisions of the Code; and considering whether
the statements are consistent with the knowledge acquired by us in the course of performing our audit. We have nothing to report
having performed our review.
Adequacy of 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
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 ten further
provisions of the Code. We have nothing to report having
performed our review.
104 Tate & Lyle PLC Annual Report 2017
104 Tate & Lyle PLC Annual Report 2017
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 99, 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
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
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 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 any 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.
With respect to the Strategic Report and Directors’ Report,
we consider whether those reports include the disclosures
required by applicable legal requirements.
Other matters
We have reported separately on the Parent Company financial
statements of Tate & Lyle PLC for the year ended 31 March 2017
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
24 May 2017
Notes:
(a) The maintenance and integrity of the Tate & Lyle PLC website (http://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.
www.tateandlyle.com
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105
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes
Year ended 31 March
2017
£m
2016
£m
5
6
11
11
21
12
8
13
13
7
19
11, 30
4
4, 12
4
2 753
2 355
233
2
(34)
32
233
22
255
1
256
256
–
256
127
1
(30)
28
126
(5)
121
42
163
163
–
163
Pence
Pence
55.0p
54.2p
55.2p
54.4p
£m
233
19
12
7
271
(49)
222
26.1p
25.9p
35.1p
34.8p
£m
126
50
11
6
193
(32)
161
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 credit/(expense)
Profit for the year – continuing operations
Profit for the year – discontinued operations
Profit for the year – total operations
Profit for the year attributable to:
– owners of the Company
– non-controlling interests
Profit for the year
Earnings per share
Continuing operations:
– basic
– diluted
Total operations:
– basic
– diluted
Analysis of adjusted profit for the year – continuing operations
Profit before tax – continuing operations
Adjusted for:
Net charge for exceptional items
Amortisation of acquired intangible assets
Net retirement benefit interest
Adjusted profit before tax – continuing operations
Adjusted income tax expense – continuing operations
Adjusted profit for the year – continuing operations
106 Tate & Lyle PLC Annual Report 2017
106 Tate & Lyle PLC Annual Report 2017
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 gain on cash flow hedges
Fair value loss on cash flow hedges transferred to the income statement
Reclassified and reported in the income statement in respect of
available-for-sale financial assets
Gain on currency translation of foreign operations
Fair value loss on net investment hedges
Share of other comprehensive income/(expense) of joint ventures and
associates
Amounts transferred to the income statement upon disposal of subsidiary
Amounts transferred to the income statement upon disposal of joint ventures
Tax effect of the above items
Items that will not be reclassified to profit or loss:
Re-measurement of retirement benefit plans:
– actual return higher/(lower) than interest on plan assets
– net actuarial (loss)/gain on net retirement benefit obligations
Tax effect of the above items
Notes
23
23
23
23
23
21, 23
23, 34
23, 34
12, 23
30
30
12
Total other comprehensive income
Total comprehensive income
Analysed by:
– continuing operations
– discontinued operations
Total comprehensive income
Attributable to:
– owners of the Company
– non-controlling interests
Total comprehensive income
Year ended 31 March
2017
£m
256
1
4
(1)
185
(69)
7
(1)
–
–
126
179
(106)
(30)
43
169
425
425
–
425
425
–
425
2016
£m
163
–
2
–
60
(18)
(12)
–
34
–
66
(52)
45
2
(5)
61
224
156
68
224
224
–
224
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107
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Consolidated Statement of Financial Position
Notes
2017
£m
At 31 March
2016
£m
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
Cash and cash equivalents
Assets classified as 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 deficit
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
Liabilities classified as held for sale
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
19
20
21
21
18
28
12
17
30
15
17
12
18
28
16
8
22
22
23
24
25
28
12
30
32
24
12
25
28
32
8
401
1 061
92
4
30
15
22
1
120
1 746
441
291
1
–
31
261
–
1 025
2 771
117
406
8
253
548
1 332
–
1 332
10
604
37
25
259
17
952
315
57
88
17
10
–
487
1 439
2 771
390
926
82
3
19
21
3
1
45
1 490
389
301
3
4
43
317
7
1 064
2 554
117
406
8
127
370
1 028
1
1 029
13
556
19
21
253
13
875
337
66
200
22
23
2
650
1 525
2 554
The notes on pages 111 to 177 form part of these financial statements. The consolidated financial statements on pages 106 to 177
were approved by the Board of Directors on 24 May 2017 and signed on its behalf by:
Javed Ahmed, Nick Hampton
Directors
108 Tate & Lyle PLC Annual Report 2017
108 Tate & Lyle PLC Annual Report 2017
Consolidated Statement of Cash Flows
Year ended 31 March
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
– finance income
– finance expense
– share of profit after tax of joint ventures and associates
Changes in working capital and other non-cash movements
Net retirement benefit obligations
Cash generated from continuing operations
Interest paid
Net income tax paid
Cash used in discontinued operations
Net cash generated from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Disposal of property, plant and equipment
Cash adjustment in respect of previous acquisitions
Disposal of businesses, net of cash disposed
Acquisition of businesses, net of cash acquired
Disposal of joint ventures
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)/from investing activities
Cash flows from financing activities
Purchase of own shares to trust or treasury
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)/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
Notes
20
19
31
7
11
11
21
26
8
34
34
34
18
21
14
27
27
27
16
2017
£m
233
109
40
21
(5)
(2)
34
(32)
4
(36)
366
(30)
(35)
(3)
298
(127)
(26)
2
3
3
–
–
(4)
4
2
29
(114)
(18)
66
(189)
(1)
(130)
(272)
(88)
317
(88)
32
261
2016
£m
126
80
35
9
17
(1)
30
(28)
24
(38)
254
(21)
(16)
(29)
188
(179)
(19)
–
–
–
(54)
240
(4)
18
1
83
86
(7)
261
(286)
(4)
(130)
(166)
108
195
108
14
317
A reconciliation of the movement in cash and cash equivalents to the movement in net debt is presented in Note 27.
www.tateandlyle.com
www.tateandlyle.com 109
109
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Consolidated Statement of Changes in Equity
Share capital
and share
premium
£m
Capital
redemption
reserve
£m
Other
reserves
£m
8
–
–
–
–
–
–
8
–
–
–
–
–
–
–
–
8
61
–
66
66
–
–
–
127
–
126
126
–
–
–
–
–
253
At 1 April 2015
Year ended 31 March 2016:
Profit for the year – total operations
Other comprehensive income/(expense)
Total comprehensive income
Share-based payments, net of tax
Purchase of own shares to trust or treasury
Dividends paid (Note 14)
At 31 March 2016
Year ended 31 March 2017:
Profit for the year – total operations
Other comprehensive income
Total comprehensive income
Share-based payments, net of tax
Purchase of own shares to trust or treasury
Derecognition of put option on NCI
Movement on NCI
Dividends paid (Note 14)
At 31 March 2017
523
–
–
–
–
–
–
523
–
–
–
–
–
–
–
–
523
Dividends on ordinary shares (pence per share)
Proposed in respect of the financial year:
– interim
– final
Paid in the financial year:
– interim – in respect of the financial year
– final – in respect of the previous financial year
Retained
earnings
£m
343
163
(5)
158
6
(7)
(130)
370
256
43
299
24
(18)
3
–
(130)
548
Attributable
to the
owners
of the
Company
£m
935
163
61
224
6
(7)
(130)
1 028
256
169
425
24
(18)
3
–
(130)
1 332
Notes
14
14
Non-
controlling
interests
(NCI)
£m
1
–
–
–
–
–
–
1
–
–
–
–
–
–
(1)
–
–
Total
equity
£m
936
163
61
224
6
(7)
(130)
1 029
256
169
425
24
(18)
3
(1)
(130)
1 332
Year ended 31 March
2017
Pence
2016
Pence
8.2
19.8
28.0
8.2
19.8
28.0
8.2
19.8
28.0
8.2
19.8
28.0
110 Tate & Lyle PLC Annual Report 2017
110 Tate & Lyle PLC Annual Report 2017
Notes to the Consolidated Financial Statements
1. Basis of preparation
Description of business
Tate & Lyle PLC (the Company) is a public limited company
incorporated in the United Kingdom and registered in England.
The Company’s ordinary shares are listed on the London
Stock Exchange.
The Company and its subsidiaries (together ‘the Group’) provide
ingredients and solutions to the food, beverage and other
industries. The Group operates from numerous production
facilities around the world.
The Group’s continuing operations comprise two operating
segments: Speciality Food Ingredients (SFI) and Bulk
Ingredients (BI). Segment information is presented in Note 5.
Accounting period
The Group’s annual financial statements are drawn up to
31 March. These financial statements cover the year ended
31 March 2017 with comparative financials for the year ended
31 March 2016.
Basis of accounting
The consolidated financial statements on pages 106 to 177
have been prepared 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 directors are satisfied that the Group has adequate
resources to continue to operate for a period not less than 12
months from the date of approval of the financial statements
and that there are no material uncertainties around their
assessment. Accordingly, the directors continue to adopt the
going concern basis of accounting.
The Group’s principal accounting policies are set out in Note 2
and Note 3 and have been consistently applied throughout the
year.
Functional and presentation currency
The consolidated financial statements are presented in pounds
sterling, which is also the Company’s functional currency. All
amounts are rounded to the nearest million, unless otherwise
indicated.
Accounting standards adopted during the year
In the current year, the Group has adopted, with effect from
1 April 2016, new or revised accounting standards as set
out below:
• IFRS 11 Joint arrangements (Amendments)
• IAS 16 Property, plant and equipment (Amendments)
• IAS 38 Intangible assets (Amendments)
• IAS 27 Separate financial statements (Amendments)
• IAS 1 Presentation of financial statements (Amendments)
• Annual Improvements to IFRS – 2012-14 cycles
The adoption of these amendments has had no material effect
on the Group’s financial statements.
Use of alternative performance measures
The Group also presents alternative performance measures,
including adjusted operating profit, adjusted profit before tax,
adjusted earnings per share, adjusted operating cash flow and
adjusted free cash flow, which are used for internal
performance analysis and incentive compensation
arrangements for employees.
These measures are presented because they provide investors
with valuable additional information about the performance of
the business. For the years presented, adjusted performance
measures exclude, where relevant:
• Exceptional items (excluded as they relate to events which are
unlikely to recur, are outside the normal course of business
and therefore merit separate disclosure in order to provide a
better understanding of the Group's underlying financial
performance);
• Amortisation of acquired intangible assets (costs associated
with amounts recognised through acquisition accounting that
impact earnings compared to organic investments);
• Net retirement benefit interest (accounting charges or credits
which are not linked to the underlying performance of the
business. The amounts excluded reflect the net interest cost
of post-retirement benefit plans substantially closed to future
accrual); and
• Tax on the above items and tax items that themselves meet
these definitions.
Alternative 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.
Reconciliations of the alternative performance measures to the
most directly comparable IFRS measures are presented in
Note 4.
Changes in constant currency
Where changes in constant currency are presented, they are
calculated by retranslating current year results at prior year
exchange rates. This represents a change to the methodology
applied in previous years, which involved retranslating prior year
results at current year exchange rates. This change, which has
not had a material impact, has been made to align with how the
majority of external stakeholders view constant currency
performance comparisons. Reconciliations of the movement
in constant currency have been included in the additional
information within this document.
2. Principal accounting policies requiring
significant judgements and estimates
In preparing these consolidated financial statements,
management has made judgements and used estimates and
assumptions in establishing the reported amounts of assets,
liabilities, income and expense under the Group’s accounting
policies. Judgements are based on the best evidence available
to management. Estimates are based on factors including
historical experience and expectations of future events,
corroborated with external information where possible.
Judgements and estimates and their underlying assumptions
are reviewed and updated on an ongoing basis, with any
revisions being recognised prospectively. However, given the
inherent uncertainty of such estimates, the actual results might
differ significantly from the anticipated ones.
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Notes to the Consolidated Financial Statements continued
Judgements and estimates
Corn and co-product inventories held in the US business are
measured at net realisable value since they are considered to be
agricultural produce after harvest. The Group uses financial
instruments (mainly forward contracts) to manage price risk
within its US business, by hedging the contracted amount of
corn when either business division (Bulk Ingredients or
Speciality Food Ingredients) enters into a finished good sales
contract.
The elements of the Group’s US net corn position are accounted
for as follows:
• Contracts for the physical purchase of corn in respect of
corresponding committed sales of finished goods are marked
to market in accordance with IAS 39 with any gains or losses
recognised in the income statement
• Contracts for the sale of corn and corn based products are
marked to market in accordance with IAS 39 with any gains or
losses recognised in the income statement
• Corn inventories are measured at net realisable value in
accordance with IAS 2.3, with any gains or losses recognised
in the income statement
• Financial instruments (futures and options) are carried at fair
value with any gains or losses recognised immediately in the
income statement.
Although the Group manages corn price risk by entering into
offsetting ‘back-to-back’ corn positions, there is still underlying
price risk on the basis cost that must be paid to get delivery of
the corn to its plants. This basis is the difference in price
between that at which a farmer will sell and the price on the
Chicago Mercantile Exchange (CME), and is typically driven by
local supply, demand and logistics factors, requiring estimation
for valuation purposes.
The production of finished goods from corn also results in the
production of three co-products (corn gluten feed, corn gluten
meal and corn oil). The price risk associated with these
co-products cannot readily be hedged as there are no actively
traded markets for these commodities. Whilst the Group actively
manages its overall co-product positions in the US, the Group
can hold either a net long or short position for each co-product
based on the volume of co-products made, bought (or short
sold) and forward sold at any point in time. These positions are
measured at fair value at each reporting date, with gains and
losses recognised in the income statement.
Management exercises significant judgement in deriving these
fair values, which involves estimating the basis and the price at
which the Group will purchase or sell these co-product positions
in the future. These inputs are classified as unobservable, and
are derived by in-house experts, with reference to sources such
as: the expected supply and demand for corn and substitute
products, expectations of weather conditions, and historical
published co-product pricing levels over a period of up to three
months from the balance sheet date.
Whilst it is possible to model the sensitivity of profit to changes
in any one of the key assumptions, it is important to note that,
due to the complexity and interdependence of related
assumptions, the overall (net) impact in reality is likely to
be different.
2. Principal accounting policies requiring
significant judgements and estimates continued
The accounting policies and information about the accounting
estimates and judgements made in applying these accounting
policies that have the most significant effect on the amounts
recognised in the consolidated financial statements are set
out below.
Fair value measurement
(this accounting policy applies principally to Available-for-sale
financial assets; Derivatives and hedge accounting; Financial
instruments – fair value and risk management; and Retirement
benefit obligations – see Notes 18, 28, 29, and 30)
A number of the Group’s accounting policies and disclosures
require the measurement of fair value for either financial or
non-financial assets and liabilities. Examples of the former
include loans, interest rate swaps and commodity contracts;
examples of the latter include intangibles and property, plant
and equipment acquired in a business combination.
Fair value is the amount of money, or other consideration,
expected to be exchanged for an asset or a liability in an arm’s
length transaction. When measuring fair value, the Group takes
into account the characteristics of the asset or liability and uses
observable market data, such as prices quoted on a recognised
exchange, to the greatest extent possible. Where such data
is not available, the Group has an established framework in
place that deals with setting, monitoring and evaluating
non-observable inputs, including the respective classification
of the fair value measurements. Such unobservable inputs
are based on management’s own assessment of market and
other conditions currently prevailing or expected to prevail.
Fair value measurements are categorised into three different
levels based on the degree to which the inputs used to arrive at
the fair value of the assets and liabilities 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. The prices of equity shares
or bonds quoted on the London Stock Exchange are examples
of Level 1 inputs
• Level 2 inputs are those, other than quoted prices included in
Level 1, that are observable either directly or indirectly. Most
interest rate swaps fall in this category as their prices are
referenced to a published rate curve, but it is not price
specific to the swap itself
• Level 3 inputs are unobservable 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. This would include expected future cash
flows from budgets and forecasts the entity has made.
Certain elements of the Group’s commodity contract portfolio
also fall into this category, as their values include significant
management-derived assumptions.
For assets and liabilities that are recognised in the financial
statements at fair value on a recurring basis, the Group
determines whether transfers have occurred between levels in
the hierarchy by reassessing categorisation (based on lowest
level of input that is significant to the fair value measurement as
a whole) at the end of the reporting period.
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The accounting for corn and co-product positions can create
significant volatility in the Group’s income statement, although
the use of such contracts is critical to the business as it
effectively limits the Group’s exposure to fluctuating market
prices.
Whilst it is not practical to quantify all elements included in fair
value measurements, the Group discloses sensitivity analysis on
the key areas of judgement (price of co-products and basis) and
the carrying amounts impacted by estimation uncertainty in
Note 29. Full details of the valuation technique are also included
in Note 29.
Taxation
(this accounting policy principally applies to Income taxes – see
Note 12)
Taxable profit differs from accounting profit because it excludes
certain items of income and expense that are recognised in the
financial statements but are treated differently for tax purposes.
Current tax is the amount of tax expected to be payable or
receivable on the taxable profit or loss for the current period.
This amount is then amended for any adjustments in respect of
prior periods. Current tax is calculated using tax rates that have
been written into law (‘enacted’) or irrevocably
announced/committed by the respective government
(‘substantively enacted’) at the period-end date.
Current tax receivable (assets) and payable (liabilities) are offset
only when there is a legal right to settle them net and the entity
intends to do so. This is generally true when the taxes are levied
by the same tax authority.
Because of the differences between accounting and taxable
profits and losses reported in each period, temporary
differences arise on the amount certain assets and liabilities are
carried at for accounting purposes and their respective tax
values. Deferred tax is the amount of tax payable or recoverable
on these temporary differences.
Deferred tax liabilities arise where the carrying amount of an
asset is higher than the tax value (more tax deduction has been
taken). This can happen where the Group invests 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 accounting carrying amount. Deferred tax liabilities are
generally provided on all taxable temporary differences. The
periods over which such temporary differences reverse will vary
depending on the life of the related asset or liability.
Deferred tax assets arise where the carrying amount of an asset
is lower than the tax value (less tax benefit has been taken).
This can happen where the Group has trading losses, which
cannot be offset in the current period but can be carried
forward. Deferred tax assets are recognised only where the
Group considers it probable that it will be able to obtain the
benefit of them in the future (for example, use such losses by
offsetting them against future taxable profits).
Taxable temporary differences can also arise on investments
in foreign subsidiaries and associates, and interests in joint
ventures. Where the Group is able to control the reversal of
these differences and it is probable that these will not reverse in
the foreseeable future, then no deferred tax is provided.
Deferred tax is calculated using the enacted or substantively
enacted rates that are expected to apply when the asset is
realised or the liability is settled.
Similarly to current taxes, deferred tax assets and liabilities are
offset only when there is a legal right to settle them net and the
entity intends to do so. This normally requires both assets and
liabilities to have arisen in the same country.
Income tax expense reported in the financial statements
comprises current tax as well as the effects of changes in
deferred tax assets and liabilities. Tax expense/credits are
generally recognised in the same place as the items to which
they relate. For example, the tax associated with a gain on
disposal is recognised in the income statement, in line with the
gain on disposal. Equally, the tax associated with pension
obligation actuarial gains and losses is recognised in other
comprehensive income, in line with the actuarial gains and
losses.
Judgements and estimates
The Group operates in a large number of countries around the
world. Uncertainties exist in relation to the interpretation of
complex tax legislation, changes in tax laws, and the amount
and timing of future taxable income. In some jurisdictions,
agreeing tax liabilities with local tax authorities can take several
years. This could necessitate future adjustments to taxable
income and expense already recorded.
At the period-end date, tax liabilities and assets are based on
management’s best judgements around the application of the
tax regulations and management’s estimate of the future
amounts that will be settled. Management considers tax
exposures individually, and arrives at judgements with support
from experienced tax professionals and external advisors. There
is, however, a risk that the Group’s judgements are challenged
by the tax authorities, resulting in a different tax payable or
recoverable from the amounts that have been provided.
As described in Note 12, the Group has internal funding
structures that favourably affect the amount of tax payable.
In management’s view, these structures are compliant with
the relevant tax regulations.
Deferred tax assets are recognised for unused tax losses only to
the extent that it is probable that taxable profit will be available
against which the losses can be utilised. Management
judgement is required to determine the amount of deferred tax
that should be recognised, dependent on the anticipated timing
and quantum of future taxable profit.
The main uncertainties impacting taxation arise from potential
changes to legislation. Firstly, the OECD’s Base Erosion and
Profit Shifting (BEPS) project has been one of the most
significant multilateral initiatives in recent years for modifying
international tax rules. As these recommendations continue to
evolve and are adopted into local tax legislation over the coming
years, this may continue to impact the Group’s effective tax rate.
Secondly, the UK government has announced changes to UK tax
legislation in respect of restrictions to interest relief and the use
of carry forward losses. Whilst this legislation has yet to be
enacted, these changes may impact our ability to deduct interest
and fully utilise brought forward losses in the UK in the future.
Lastly, potential reform of the US tax system could impact
the Group’s effective tax rate, depending on the nature of any
such reforms.
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Notes to the Consolidated Financial Statements continued
2. Principal accounting policies requiring
significant judgements and estimates continued
Taxation continued
Judgements and estimates continued
The Group’s operating model involves cross-border supply of
significant volumes of goods into numerous end markets, and
the provision of services from one jurisdiction to another. There
is a risk that different tax authorities could seek to assess higher
profits (or lower costs) to activities being undertaken in their
jurisdiction, potentially leading to higher total tax payable by
the Group.
Retirement benefit plans
(this accounting policy principally applies to Retirement benefit
obligations – see Note 30)
The Group operates both defined contribution and defined
benefit pension plans principally in the UK and the US and
unfunded retirement medical plans in the US.
a) Defined benefit plans
For accounting purposes a valuation of each of the defined
benefit plans is carried out annually at 31 March using
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, representing 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 costs of the defined benefit plan that are recognised in
the income statement include the current service cost, any
past service cost and the interest on the net deficit or surplus.
Gains or losses on curtailments or settlements of the plans
are recognised in the income statement in the period in which
the curtailment or settlement occurs. Plan administration
costs incurred by the Group are also recognised in the income
statement.
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.
Interest on the net 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.
Re-measurements of the deficit or surplus are recognised in
other comprehensive income. Re-measurements 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
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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.
Judgements and estimates
At 31 March 2017, the present value of the benefit obligations of
the plans was £1,769 million (2016 – £1,634 million), including
£76 million (2016 – £66 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.
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. Whilst
the Group establishes the assumptions on a consistent basis
reflecting advice from qualified actuaries, based on published
indices and other actuarial data, management must apply
judgement in selecting the most appropriate value from within
an acceptable range.
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 interest on the net deficit or surplus in the plans.
However, 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.
Impairment of non-financial assets
(this accounting policy principally applies to Goodwill and other
intangibles; and Property, plant and equipment – see Notes 19
and 20)
Property, plant and equipment and intangible assets are
reviewed for impairment whenever any events or changes in
circumstances indicate that their carrying amounts may not
be recoverable.
If such an indication exists, then the recoverable amount of
the asset is estimated. In addition, goodwill is tested for
impairment annually.
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 benefit which the entity expects to
derive from the asset over its life, discounted to present value
(value in use) and the net price for which the entity can sell the
asset in the open market (fair value less costs of disposal).
The discount rate used for the value in use calculation is a
pre-tax rate that reflects the risks specific to the asset or
groups of assets tested.
For the purpose of impairment testing, assets are grouped
together into the smallest group of assets which has cash
inflows that are largely independent of the cash inflows from
other assets or groups of assets. This could also be a single
asset. Goodwill does not generate cash inflows independently
and is, therefore, tested for impairment at the level of the Cash
Generating Unit (‘CGU’) or group of CGUs to which it is allocated.
Note 19 shows the allocation of material elements of goodwill to
CGUs for impairment testing purposes.
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. Such reversals are limited to the carrying amount of
the asset had no impairment been recognised in previous
periods. Impairment losses recognised in respect of goodwill
cannot be reversed.
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 may be used where this
results in an amount in excess of ‘value in use’.
Judgements and estimates
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 and committed on the dates the assets
are tested (unless a fair value less costs of disposal model
is used).
Future cash flows are discounted using a discount rate
appropriate for the CGU being tested. The discount rate is
impacted by estimates of interest rates, equity returns and
market and country-related risks. The Group’s weighted
average cost of capital, which is used as the initial reference
point for the discount rate before any asset specific adjustments
are made, is reviewed on a regular 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, excepting
goodwill, reversed, in part or in full, at a future date.
Provisions and contingent liabilities
(see Note 32)
A provision is a liability of uncertain timing or amount that is
recognised when: 1) the Group has a present obligation (legal or
constructive) as a result of a past event; 2) it is more likely than
not that a payment will be required to settle the obligation; and
3) the amount can be reliably estimated.
Where a payment is not probable, or the amount of the
obligation cannot be measured with sufficient certainty, a
contingent liability is disclosed.
Contingent liabilities are also disclosed if a possible obligation
arises from past events, but its existence will be confirmed only
by the occurrence or non-occurrence of uncertain future events.
Provisions are determined by discounting the expected future
payments 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. The impact of any discounting is not material to the
Group.
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. Future operating losses
are not provided for.
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. Before establishing the amount
of the provision, any impairment losses on assets associated
with the contract are recognised.
Judgements and estimates
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.
Whilst 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 2017 will have a material adverse effect
on the Group’s financial position.
At 31 March 2017, provisions included amounts for insurance
claims payable by the Group’s reinsurance company, legal
matters, employee termination and other restructuring costs.
These have been based on management’s judgement as to
whether any obligation, legal or otherwise, existed at the balance
sheet date and if so, management’s estimate of the likelihood,
magnitude and timing of future payments related to the obligation.
3. Other principal accounting policies
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, certain inventories, assets classified as
held for sale, assets held by defined benefit pension plans and
intangible and tangible assets acquired in a business combination.
Basis of consolidation
a) 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, the key elements of
which are set out below.
Identifiable assets and liabilities of the acquired business are
generally measured at their fair value at the acquisition date.
Retirement benefit obligations and deferred tax assets and liabilities
are measured in accordance with the Group’s accounting policies.
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.
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Notes to the Consolidated Financial Statements continued
3. Other principal accounting policies continued
Basis of consolidation continued
a) Business combinations continued
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.
Put options written by the Group over non-controlling interests
are initially recognised as a liability measured at the present
value of the exercise price with a corresponding charge directly
to equity. Subsequently, the liability is measured at the present
value of the expected redemption amount and re-measured in
accordance with IAS 39 (at amortised cost), with changes
recognised in the income statement.
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,
where a business combination is 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
re-measurement gain or loss on the previously held equity
interest is recognised in the income statement. Any shortfall,
or negative goodwill, is recognised immediately as a gain 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 upon loss of control is recognised in the
income statement.
b) 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
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 or losses on transactions between Group
companies are eliminated.
c) Equity accounted investments
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.
A joint venture is an entity or a contractual arrangement under
which the Group and other parties undertake activities that are
subject to joint control, whereby the Group has rights to the net
assets of the arrangement rather than to the arrangement’s
assets or obligations for its liabilities.
Interests in associates and joint ventures (together ‘Equity
accounted investments’) are accounted for under the equity
method. They are initially recognised at cost, which includes
transaction costs. Subsequently, the Group’s share of the profit
116 Tate & Lyle PLC Annual Report 2017
116 Tate & Lyle PLC Annual Report 2017
or loss, other comprehensive income and net assets are shown
on one line of the relevant primary financial statements, until
the date on which significant influence or joint control ceases.
Losses of an equity accounted investment 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 investment.
Unrealised profits or losses on transactions between the Group
and its equity accounted investments are eliminated to the
extent of the Group’s interest. Losses are, however, recognised
in full where they represent a reduction in the net realisable
value of a current asset or an impairment loss.
Discontinued operations
(see Note 8)
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.
The results, assets and liabilities and cash flows of discontinued
operations are presented separately from those of continuing
operations.
Discontinued operations comprised the following activities:
- Eaststarch / Morocco
On 31 October 2015, the Group completed the re-alignment of
its Eaststarch joint venture leading to the disposal of the
majority of the Group’s European Bulk Ingredients business.
In a related agreement, the Group also agreed to sell its corn
wet mill in Casablanca, Morocco to Archer Daniels Midland Inc.
(ADM) and completed this disposal on 1 June 2016.
- Sugars and European Starch pension settlements
The Group announced on 29 September 2015, that the
Commercial Court in London had handed down a decision in a
case brought by American Sugar Refining, Inc. (ASR) in which it
made a number of claims in relation to its acquisition of the
Group’s European Sugars business in 2010. The European
Sugars business formed part of the Group’s discontinued
Sugars segment, and accordingly the costs associated with
those claims were recognised within discontinued operations.
During the year ended 31 March 2016, the Group also made a
settlement payment of £2 million to transfer all remaining
obligations under a legacy pension scheme related to the
Group’s discontinued European Wheat Starch business, which
was disposed of in the 2008 financial year.
Foreign currency translation
(this accounting policy applies to all transactions and net assets
in foreign currencies)
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. 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.
When a foreign operation is sold, the gain or loss on disposal
recognised in the income statement is determined after taking
into account the recycling of 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
(this accounting policy relates to Notes 5 and 6)
a) Sales of goods and services
Revenue comprises the fair value of consideration receivable in
the ordinary course of business, net of value added and sales
taxes, rebates and discounts and after eliminating sales within
the Group. 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. Discounts mainly comprise volume driven
rebates. The Group accrues for discounts against agreed
customer terms reflecting latest expectations of amounts likely
to fall due under the terms of the customer contract,
subsequently adjusted for actual performance.
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
(this accounting policy principally relates to Note 7)
Exceptional items comprise items of income and expense,
including tax items that are material in amount, relate to events
which are unlikely to recur, are outside the normal course of
business and therefore merit separate disclosure in order to
provide a better understanding of the Group's underlying
financial performance. Examples of events that give 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 restructuring of components of the
Group’s operations.
All material amounts relating to exceptional items in the
Group’s financial statements are classified on a consistent basis
across accounting periods.
Goodwill and other intangible assets
(see Note 19)
a) Goodwill
Goodwill arising in a business combination is recognised as an
intangible asset and is allocated to the 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.
Goodwill is carried at cost less any recognised
impairment losses.
b) Intangible assets other than goodwill
Intangible assets other than goodwill are stated at cost less
accumulated amortisation and any recognised impairment
losses.
c) Acquired in business combinations
An intangible resource acquired in a business combination is
recognised as an intangible asset at its fair value at the date
of acquisition, 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 over the periods of their
expected benefit to the Group, which range from three to
15 years.
d) Other intangibles
Other intangible assets mainly comprise certain capitalised
costs relating to product development, marketing, computer
software and the 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 intangible assets are amortised on a straight-line basis
over the periods of their expected benefit to the Group, which
are in the range of three to ten years. Capitalised costs in
respect of the core global IS/IT system are being amortised over
seven years.
Property, plant and equipment
(see Note 20)
Land and buildings mainly comprise manufacturing sites and
administrative facilities. Plant and machinery mainly comprise
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.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
Financial instruments
(see Notes 16, 17, 18, 24, 25, 28 and 29)
a) Trade receivables
Trade receivables are initially recognised at fair value, which is
generally the same as the invoiced amount, and subsequently
measured at amortised cost, or their recoverable amount. Trade
receivables are predominantly short term and the effects of
time-value of money are not considered material.
Where there is objective evidence that the Group will not be able
to collect all amounts due according to the original terms of the
receivable, the receivable is considered to be impaired.
Significant financial difficulties of the debtor, probability that the
debtor will enter bankruptcy or financial reorganisation, and
default or delinquency in payments are considered to be
objective evidence of impairment. The amount of the
impairment, and related provision, is the difference between the
receivable’s original value and the present value of the
estimated future cash flows, discounted at the original effective
interest rate. The impairment is recognised in the income
statement immediately, and the provision is netted against the
value of the receivable. When a trade receivable is deemed
uncollectable, it is written off against the related provision.
Subsequent recoveries of amounts previously written off are
credited against operating expenses in the income statement in
the period in which they are recovered.
b) Trade payables
Trade payables are predominantly short-term and are initially
recognised at fair value, which is generally the invoice amount.
The effects of time-value of money are not considered material.
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
Equity instruments held by the Group are generally available-
for-sale and are carried at fair value, with movements in fair
value recognised in other comprehensive income. The Group
does not trade equity instruments and does not manage them
on a fair value basis. Where fair value cannot be reliably
measured, the assets are carried 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. Impairment losses recognised in profit or
loss for an investment in an available-for-sale equity instrument
are not reversed through profit or loss. However, if the fair value
of an impaired available-for-sale debt security subsequently
increases and the increase can be related objectively to an event
occurring after the impairment loss was recognised, then the
impairment is reversed through profit or loss.
3. Other principal accounting policies continued
Property, plant and equipment continued
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
Plant and machinery
No depreciation
20 to 50 years
Period of the lease
3 to 28 years
Residual values and useful lives are reviewed at each period-end
date and adjusted as appropriate, with any resulting changes
recognised in the income statement prospectively.
Gains and losses on disposals are determined by comparing the
disposal proceeds with the carrying amount and are included in
the income statement.
Leased assets
(see Notes 20, 25, 29 and 33)
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 lease 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 rate of interest.
Depreciation on assets held under finance leases is charged to
the income statement, on a straight-line basis over the shorter
of the lease term and its useful life.
All other leases are treated as operating leases. The total
amount payable under the operating lease, including lease
incentives and guaranteed lease increases, is spread over the
lease period on a straight-line basis. Where termination or
extension options are available to the Group, management
considers whether it is reasonably certain of exercising these
options in determining the lease period.
Inventories
(see Note 15)
Corn and co-product inventories held in the US business are
measured at net realisable value since they are considered to be
agricultural produce after harvest, in accordance with IAS 2.3.
Gains and losses are recognised in the income statement.
All other inventories are carried at the lower of cost and net
realisable value. 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 and is calculated using the ‘first in/first
out’ or ‘weighted average’ 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.
118 Tate & Lyle PLC Annual Report 2017
118 Tate & Lyle PLC Annual Report 2017
e) Borrowings
Borrowings are initially measured at fair value, net of
transaction costs incurred, which is generally the amount of
proceeds received. Borrowings are subsequently measured at
amortised cost using the effective interest rate method, whereby
the net proceeds are gradually increased to the amount that will
be ultimately settled using a constant rate of interest. This
constant rate of return is used to calculate the amount
recognised as interest expense in the income statement.
As explained under ‘Hedge accounting’ (see below), the carrying
amount of a borrowing may be adjusted 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 the period-end date.
Dividends on preference shares that are classified as a liability
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, fair value gains and losses on derivatives are
recognised in the income statement.
Derivative financial instruments that are not in a designated
hedging relationship are classified as held for trading.
g) Embedded derivatives
Some contracts may include features that are similar to and
expose the Group to the same risks as standalone derivatives.
Where such an embedded derivative is not closely related to the
host contract and where the host contract itself is not already
recognised at fair value, the embedded derivative is separated
from the host contract and accounted as a standalone
derivative. The hedge accounting principles described below
equally apply to embedded derivatives.
h) Offsetting financial instruments
Financial assets and financial liabilities are offset and the net
amount presented in the statement of financial position only
where there is a legally enforceable right to offset them and the
Group intends to either settle them on a net basis or realise the
asset and settle the liability simultaneously.
Hedge accounting
(see Notes 28 and 29)
As described in Note 29, the Group uses derivatives to mitigate
risk. In many cases, the changes in the fair value of the
derivatives are recognised before the hedged risk affects the
Group income statement. For example, when the Group takes
out a forward foreign currency contract to fix the exchange
rate on committed or highly probable future sales in a foreign
currency, changes in the fair value of the forward foreign
exchange contract will be recognised in the income statement
immediately, whereas the future sale will not affect the income
statement until it is made. This creates a mismatch in the
timing of recognition for compensating gains and losses.
Hedge accounting seeks to mitigate this mismatch by applying
specific accounting rules, if strict criteria are met, to the items
that create the exposure to risk and the items used to manage
that risk.
A hedging relationship principally consists of two items: the
hedged item and the hedging instrument. The hedged item is
the transaction or balance that exposes the Group to a risk that
can be identified and the hedging instrument is the transaction
or balance that is used to manage the risk. In the above
example, the contract to sell goods at a future date in a foreign
currency gives rise to foreign currency transaction exposure for
the Group. As exchange rates change, the eventual proceeds
from the future sale when expressed in the entity’s functional
currency will also change, creating risk. This is the hedged item.
In this example, the foreign currency exchange contract the
Group takes out locks in a known functional currency value for
its foreign currency cash receipt and therefore eliminates the
volatility in cash flows on the sale. The forward currency
exchange contract is the hedging instrument.
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. The
hedge 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. This relationship
is demonstrated by matching the terms of hedging instruments
very closely to the hedged items, or where the Group uses more
complex arrangements, by the use of statistical methods that
show the relationship between the hedging pairs.
There are three hedging models that apply to different types of
transactions.
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
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.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
3. Other principal accounting policies continued
Hedge accounting continued
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 only 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.
Share-based payments
(see Note 31)
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 model. Fair value is
not subsequently re-measured 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.
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.
Assets held for sale
(see Note 8)
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
and the following conditions are met:
• it is available for immediate sale in its present condition;
• management has committed to, and has initiated, a plan to
sell the asset; and
120 Tate & Lyle PLC Annual Report 2017
120 Tate & Lyle PLC Annual Report 2017
• the sale is expected to complete within 12 months of the
balance sheet date, and must be highly probable.
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. Any impairment
loss on a disposal group is allocated first to goodwill and then,
on a pro-rata basis, to the remaining assets and liabilities other
than inventories, financial instruments, investment property,
employee benefits and deferred tax assets, which continue to be
measured in accordance with the relevant Group accounting
policies.
Impairment on the initial recognition of held for sale assets, and
gains or losses on subsequent re-measurement, are recognised
in the income statement.
Once classified as held for sale, property, plant and equipment
and intangible assets are no longer depreciated or amortised.
Equity accounted investments are no longer equity accounted
when classified as held for sale.
Accounting standards issued but not yet
adopted
The following new standards have been issued and are relevant
to the Group, but were not effective for the financial year
beginning 1 April 2016, and have not been adopted early:
a) IFRS 15 – Revenue from Contracts with Customers
(effective for the year ending 31 March 2019)
The Group has undertaken a review of its commercial
arrangements across all significant revenue streams and
geographies including assessing the timing of revenue
recognition as well as focusing on the accounting for principal
and agency relationships, consignment stocks and discounts
provided. As a result of the review, the Group has concluded that
the adoption of IFRS 15 is not expected to have a material
impact on reported revenue or revenue growth rates, and will
continue to review its contracts and transactions with
customers to ensure compliance with IFRS 15 on adoption.
b) IFRS 9 – Financial Instruments (effective for the year
ending 31 March 2019)
The Group has undertaken a review of the key areas of IFRS 9
focused principally on classification and measurement of
financial assets and liabilities, impairment of financial assets
and hedge accounting. The Group has concluded that the
adoption of IFRS 9 will not have a material impact on its
consolidated results or financial position, and will continue to
review its activities in these areas to ensure compliance with
IFRS 9 upon adoption.
c) IFRS 16 – Leases (effective for the year ending 31 March
2020)
The standard eliminates the classification of leases as either
operating or finance leases and introduces a single accounting
model, and will require the Group to recognise substantially all
of its current operating lease commitments on the statement of
financial position. The financial impact of this, together with any
other implications of the standard, will be assessed during the
2018 financial year.
There are no other new standards, new interpretations or
amendments to standards or interpretations that have been
published that are expected to have a significant impact on the
Group’s financial statements.
4. Reconciliation of alternative performance measures
For the reasons set out in Note 1, the Group presents alternative performance measures including adjusted operating profit,
adjusted profit before tax and adjusted earnings per share.
For the years presented, these alternative performance measures exclude, where relevant:
• exceptional items
• the amortisation of acquired intangible assets
• net retirement benefit interest
• tax on the above items and tax items that themselves meet these definitions.
The following table shows the reconciliation of the key alternative performance measures to the most directly comparable
measures reported in accordance with IFRS:
Year ended 31 March 2017
Year ended 31 March 2016
IFRS
reported
Adjusting
items
Adjusted
reported
IFRS
reported
Adjusting
items
Adjusted
reported
£m unless otherwise stated
Continuing operations
Sales
Operating profit
Net finance expense
Share of profit after tax of joint ventures and
associates
Profit before tax
Income tax credit/(expense)
Non-controlling interests
Profit attributable to owners of the Company
Basic earnings per share (pence)
Diluted earnings per share (pence)
Effective tax rate
2 753
233
(32)
32
233
22
–
255
55.0p
54.2p
(9.6%)
–
31
7
–
38
(71)
–
(33)
(7.2p)
(7.1p)
2 753
2 355
264
(25)
32
271
(49)
–
222
47.8p
47.1p
18.2%
127
(29)
28
126
(5)
–
121
26.1p
25.9p
4.0%
The following table shows the reconciliation of the adjusting items in the current and comparative year:
Continuing operations
Exceptional items in operating profit
Amortisation of acquired intangible assets
Total excluded from adjusted operating profit
Net retirement benefit interest
Total excluded from adjusted profit before tax
Tax on adjusting items
Exceptional deferred tax credits
Total excluded from adjusted profit attributable to owners of the Company
Notes
7
19
11
12
7, 12
–
61
6
–
67
(27)
–
40
8.6p
8.6p
2 355
188
(23)
28
193
(32)
–
161
34.7p
34.5p
16.5%
Year ended 31 March
2017
£m
2016
£m
19
12
31
7
38
(6)
(65)
(33)
50
11
61
6
67
(27)
–
40
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
4. Reconciliation of alternative performance measures continued
The Group also presents two alternative cash flow measures which are defined as follows:
(a) Adjusted free cash flow represents cash generated from continuing operations excluding the impact of exceptional
items, less net interest paid, less income tax paid, less capital expenditure.
(b) Adjusted operating cash flow is defined as adjusted free cash flow from continuing operations, adding back net
interest paid, tax paid and retirement cash contributions, and excluding derivative and margin call movements
within working capital.
The following table shows the reconciliation of these alternative cash flow performance measures:
Year ended 31 March
Adjusted operating profit from continuing operations
Adjusted for:
Depreciation and adjusted amortisation
Share-based payments charge
Changes in working capital and other non-cash movements
Net retirement benefit obligations
Capital expenditure
Net interest and tax paid
Adjusted free cash flow
Add back: net interest and tax paid
Add back: net retirement cash contributions
Less: derivatives and margin call movements within changes in working capital
Adjusted operating cash flow
* Restated to reflect exclusion of operating post-retirement benefit costs.
2017
£m
264
137
21
4
(36)
(153)
(63)
174
63
42
(6)
273
2016*
£m
188
104
9
24
(38)
(198)
(36)
53
36
40
(5)
124
The Group presents certain financial measures as defined in its external financial covenants as well as return on capital employed
(ROCE) metrics as Key Performance Indicators. Net debt to EBITDA and interest cover are defined under the Group’s financial
covenants and reported on a proportionate consolidation basis. For financial covenant purposes these ratios are calculated based
on the accounting standards that applied for the 2014 financial year, with new accounting standards adopted by the Group
subsequent to 1 April 2014 disregarded. Net debt is calculated using average currency exchange rates. Average invested operating
capital represents the average at the beginning and end of the period of shareholders’ equity excluding net debt, net tax
assets/liabilities, investment in joint ventures and associates and net retirement benefit obligations. All ratios are calculated based
on unrounded figures in £ million. The following tables present the calculation of these alternative measures:
Calculation of net debt to EBITDA ratio – on a financial covenant basis
Net debt
Further adjustments set out in financial covenants:
to reflect use of average exchange rates in translating net debt
Net debt – on a financial covenant basis
Note
27
Adjusted operating profit
Further adjustments set out in financial covenants:
to reflect proportionate consolidation
to exclude charges for share-based payments
to add back depreciation and adjusted amortisation
Pre-exceptional EBITDA
Net debt to EBITDA ratio (times)
122 Tate & Lyle PLC Annual Report 2017
122 Tate & Lyle PLC Annual Report 2017
2017
£m
452
(13)
439
264
48
21
137
470
0.9
31 March
2016
£m
434
(11)
423
188
44
9
104
345
1.2
4. Reconciliation of alternative performance measures continued
Calculation of interest cover ratio – on a financial covenant basis
Adjusted operating profit
Further adjustments set out in financial covenants:
to reflect proportionate consolidation
to exclude charges for share-based payments
Operating profit before exceptional items and amortisation of intangible assets
– on a financial covenant basis
Adjusted net finance expense
Further adjustments set out in financial covenants:
to reflect proportionate consolidation
other
Net finance expense – on a financial covenant basis
Interest cover ratio (times)
Calculation of return on capital employed
Adjusted operating profit
Add back amortisation on acquired intangible assets
Profit before interest, tax and exceptional items from continuing operations for
ROCE
Goodwill and other intangible assets
Property, plant and equipment
Working capital, provisions and non-debt derivatives
Other
Invested operating capital of continuing operations
Average invested operating capital
Return on capital employed (ROCE) %
2017
£m
264
(12)
252
401
1 061
394
–
1 856
1 762
14.3
2017
£m
264
43
21
328
25
–
(1)
24
31 March
2016
£m
188
38
9
235
23
–
(1)
22
13.9
10.7
31 March
2015
£m
340
750
339
31
1 460
2016
£m
188
(11)
177
390
926
323
29
1 668
1 564
11.3
www.tateandlyle.com
www.tateandlyle.com 123
123
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
5. 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 subtotal is shown for the Group’s two operating segments in the
tables below so as to be consistent with the presentation of segment information presented to the Board. Both segments are served
by a single manufacturing network, and receive services from a number of global support functions. The segmental allocation of
costs is performed using standard product costs to allocate all direct costs (including plant-based depreciation) and allocation keys
for all indirect costs (including share-based payments and amortisation) which reflect the value of service provided to each
operating unit, 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 year-on-year. 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 segmental classification of exceptional items is
detailed in Note 7.
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 segmental split of working capital allocates raw material and co-product inventories, and
associated payables, based on the segmental split of primary capacity. Other payables, work in progress and finished goods
inventories and receivables are allocated based on the products to which they relate. The segment results were as follows:
a) Segment sales
Speciality Food Ingredients
Bulk Ingredients
Sales – continuing operations
Sales – discontinued operations
Sales – total operations
Note
8
Year ended 31 March
2017
£m
996
1 757
2 753
3
2 756
2016
£m
897
1 458
2 355
13
2 368
b) Segment results
Adjusted operating profit, as defined in Notes 1 and 4, is the measure of profitability of the Group’s businesses used by the Board as
it is considered to be the best measure to compare the results over time.
Year ended 31 March
Speciality Food Ingredients
Bulk Ingredients
Central
Adjusted operating profit – continuing operations
Adjusting items:
– exceptional items
– amortisation of acquired intangible assets
Operating profit – continuing operations
Finance income
Finance expense
Share of profit after tax of joint ventures and associates
Profit before tax – continuing operations
Profit before tax – discontinued operations
Profit before tax – total operations
124 Tate & Lyle PLC Annual Report 2017
124 Tate & Lyle PLC Annual Report 2017
Notes
7
19
11
11
21
8
2017
£m
181
129
(46)
264
(19)
(12)
233
2
(34)
32
233
1
234
2016
£m
150
84
(46)
188
(50)
(11)
127
1
(30)
28
126
47
173
5. Segment information continued
Adjusted operating margin
Speciality Food Ingredients
Bulk Ingredients
Central
Total – continuing operations
Year ended 31 March
2017
%
2016
%
18.2%
16.7%
7.3%
n/a
9.6%
5.8%
n/a
8.0%
c) Segment assets/(liabilities)
Segment assets and segment liabilities include net working capital (inventories, trade and other receivables, less trade and other
payables). An analysis of total assets and total liabilities by operating segment is not presented to the Board.
Net working capital
Speciality Food Ingredients
Bulk Ingredients
Central
Group working capital – continuing and total operations
Other assets/(liabilities)
Group assets/(liabilities)
Net working capital
Speciality Food Ingredients
Bulk Ingredients
Central
Group working capital – continuing operations
Group working capital – discontinued operations
Group working capital – total operations
Other assets/(liabilities)
Group assets/(liabilities)
d) Other information – depreciation
Speciality Food Ingredients
Bulk Ingredients
Central
Depreciation – continuing operations
Depreciation – discontinued operations
Depreciation – total operations
Assets
£m
371
349
13
733
2 038
2 771
Liabilities
£m
(129)
(146)
(50)
(325)
(1 114)
(1 439)
At 31 March 2017
Net
£m
242
203
(37)
408
924
1 332
At 31 March 2016
Assets
£m
Liabilities
£m
339
341
11
691
5
696
1 858
2 554
(150)
(146)
(54)
(350)
(2)
(352)
(1 173)
(1 525)
Net
£m
189
195
(43)
341
3
344
685
1 029
Year ended 31 March
2017
£m
45
63
1
109
–
109
2016
£m
33
46
1
80
1
81
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
5. Segment information continued
e) Other information – amortisation
Speciality Food Ingredients
Bulk Ingredients
Central
Amortisation – continuing operations
Amortisation – discontinued operations
Amortisation – total operations
f) Other information – share-based payments
Speciality Food Ingredients
Bulk Ingredients
Central
Share-based payments – continuing operations
Share-based payments – discontinued operations
Share-based payments – total operations
Year ended 31 March
2017
£m
30
9
1
40
–
40
2016
£m
27
7
1
35
–
35
Year ended 31 March
2017
£m
7
6
8
21
–
21
2016
£m
3
3
3
9
–
9
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 is allocated based on the product(s) to which the
investment relates. Where capital expenditure relates to plant sustaining or cost reduction projects, the cost is allocated based on
the segmental split of the product mix by plant.
Year ended 31 March
2017
£m
66
73
19
158
–
158
2016
£m
162
75
15
252
–
252
Year ended 31 March
2017
£m
34
2 057
306
356
2 753
3
2 756
2016
£m
31
1 736
288
300
2 355
13
2 368
Note
8
Speciality Food Ingredients
Bulk Ingredients
Central
Capital investment – continuing operations
Capital investment – discontinued operations
Capital investment – total operations
h) Geographical information – sales by destination
United Kingdom
United States
Other European countries
Rest of the world
Sales – continuing operations
Sales – discontinued operations
Sales – total operations
126 Tate & Lyle PLC Annual Report 2017
126 Tate & Lyle PLC Annual Report 2017
5. Segment information continued
i) Geographical information – sales by origin
United Kingdom
United States
Other European countries
Rest of the world
Sales – continuing operations
Sales – discontinued operations
Sales – total operations
Note
8
Year ended 31 March
2017
£m
37
2 173
335
208
2 753
3
2 756
2016
£m
19
1 828
319
189
2 355
13
2 368
j) Concentration of revenue
During the year ended 31 March 2017, no customer contributed more than 10% of the Group’s external sales from continuing
operations (2016 – no customer contributed more than 10%).
k) Geographical information – location of non-current assets
The parent company is based in the United Kingdom. The location of non-current assets, other than financial instruments, deferred
tax assets and retirement benefits are as follows:
United Kingdom
United States
Other European countries
Rest of the world
Non-current assets
2017
£m
20
1 088
343
108
1 559
At 31 March
2016
£m
20
956
327
99
1 402
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
6. Operating profit
Analysis of operating expenses by nature:
Continuing operations
External sales
Operating expenses
Cost of inventories (included in cost of sales)
Staff costs (of which £153 million (2016 – £131 million) was included in cost
of sales)
Depreciation of property, plant and equipment:
– owned assets (of which £99 million (2016 – £71 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
Impairment of trade receivables
Impairment of intangible assets (non-exceptional items)
Other operating expenses
Total operating expenses
Operating profit
Notes
10
20
20
7
19
19
17
Year ended 31 March
2017
£m
2 753
2016
£m
2 355
1 449
1 268
328
262
106
3
19
12
28
32
37
5
5
496
2 520
233
79
1
50
11
24
24
29
–
–
480
2 228
127
Included within discontinued operations are operating expenses totalling £3 million (2016 – £14 million) partially offset by a net
exceptional gain of £1 million (2016 – more than offset by £46 million net exceptional gain).
128 Tate & Lyle PLC Annual Report 2017
128 Tate & Lyle PLC Annual Report 2017
7. Exceptional items
Exceptional items recognised in arriving at operating profit were as follows:
Continuing operations
Business re-alignment – impairment, restructuring and other net costs
Asset (impairments)/reversals and related costs
US retirement benefit obligation settlement gain
Tate & Lyle Ventures disposals
SPLENDA® Sucralose – revised table top commercial agreement
US litigation
Slovakia re-measurement gain
Exceptional items – continuing operations*
Discontinued operations
Business re-alignment – Eaststarch and Morocco disposals
ASR litigation settlement
Exceptional items – discontinued operations
Exceptional items – total operations
Footnotes
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Year ended 31 March
2017
£m
(5)
(26)
9
3
–
–
–
(19)
1
–
1
(18)
2016
£m
(48)
3
–
7
(2)
(15)
5
(50)
64
(18)
46
(4)
* There was net tax on exceptional items within continuing operations of £nil (2016 – £21 million credit).
In addition, the following exceptional deferred tax items were recognised in the current and comparative year:
Continuing operations
Recognition of UK tax losses
Sucralose IP transfer
Exceptional deferred tax credit – continuing operations
Discontinued operations
Moroccan tax matters
Exceptional tax charge – discontinued operations
Exceptional tax credit/(charge) – total operations
Footnotes
Year ended 31 March
2017
£m
2016
£m
(j)
(k)
(l)
34
31
65
–
–
65
–
–
–
(5)
(5)
(5)
Continuing operations – within operating profit
a)
In the year ended 31 March 2017, the Group recognised a further net £5 million charge (£6 million of additional cash
costs offset by a £1 million non-cash credit) in respect of the business re-alignment of SPLENDA® Sucralose and its
European operations. Cash payments in respect of this re-alignment were £21 million. The net £5 million charge was
recognised within the Speciality Food Ingredients segment.
In the year ended 31 March 2016, the Group recognised exceptional costs relating to business re-alignment totalling
£48 million. Of this charge, £43 million was recognised within the Speciality Food Ingredients segment, and £5 million was
classified within Central costs. Of the total charge, £29 million was paid in cash in 2016.
The final total of business re-alignment costs relating to the Group’s restructuring programme announced in April 2015 was
£171 million, with £61 million being cash costs and £110 million being non-cash costs.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
7. Exceptional items continued
Continuing operations – within operating profit continued
b)
In the year ended 31 March 2017, the Group recognised a net £13 million non-cash exceptional charge in respect of its
Brazilian food systems business, Tate & Lyle Gemacom Tech Indústria E Comércio S.A.. The charge comprised a partial
impairment of goodwill totalling £16 million, reflecting lower growth expectations against the backdrop of a weaker
macroeconomic outlook in Brazil, and a credit of £3 million arising from lower contingent consideration now expected to
fall due in 2019 under the terms of the December 2014 acquisition agreement. The net charge was recognised within the
Speciality Food Ingredients segment.
In the year ended 31 March 2017, the Group recognised a £7 million charge in respect of its equity interest in Jiangsu
Tate & Lyle Howbetter Food Co., Ltd., its Food Systems subsidiary in China, which the Group sold on 23 December 2016.
The charge comprised a £3 million cost reflecting the impact of impairing and deconsolidating the Group’s investment
(itself a cash generating unit) before disposal, together with a £4 million charge for associated costs. Accordingly, the
Group has derecognised the £3 million financial liability previously recorded in equity for the written put option over the
minority shareholder’s equity interest. Cash payments for costs totalled £3 million to date. This charge was recognised
within the Speciality Food Ingredients segment.
Also recognised in the year ended 31 March 2017 was a non-cash charge of £6 million in respect of the impairment of certain
redundant assets at our Decatur facility in the US, that are no longer in use in the business. The charge was recognised within
the Bulk Ingredients segment.
In the year ended 31 March 2016, the Group recognised a non-cash exceptional credit of £3 million in respect of the recognition
of a partial reversal of an impairment of plant and equipment assets which were previously impaired through an exceptional
charge. The exceptional credit was classified within the Bulk Ingredients segment.
In the year ended 31 March 2017, the Group recognised a £9 million non-cash gain in respect of the settlement of certain
elements of its US retirement benefit plan obligations. Under the settlement, some deferred members of the plans
elected to receive a lump sum during the year ended 31 March 2017, in exchange for surrendering their rights to future
payments under the scheme. The exceptional gain was recognised within the Bulk Ingredients segment (£6 million) and
the Speciality Food Ingredients segment (£3 million).
In the year ended 31 March 2017, the Group recognised a £3 million cash gain, primarily in respect of deferred
consideration received following disposal of part of its venture fund portfolio which was previously classified as an
available-for-sale financial asset. This profit was classified within central costs.
In the year ended 31 March 2016, the Group recognised a net £7 million gain (£9 million gain partially offset by £2 million loss),
primarily from disposals in its venture fund portfolio.
In the year ended 31 March 2016, the Group received cash compensation of £5 million related to SPLENDA® Sucralose
and the renegotiation of our commercial agreements for the SPLENDA® Sucralose brand table top business. The Group
also wrote off a marketing-related intangible asset (loss of £9 million) and wrote back an associated payable (gain of
£2 million). These amounts were all classified within the Speciality Food Ingredients segment.
In the year ended 31 March 2016, the Group recognised a £15 million exceptional charge in respect of two US litigation
cases: one brought by the American Sugar Association (£9 million – cash settled); and another in respect of the Passaic
River litigation (£6 million). See Note 32 for further details.
In the year ended 31 March 2016, as part of the re-alignment of the Eaststarch joint venture, the Group recognised an
exceptional gain of £5 million within continuing operations reflecting the re-measurement to fair value of its existing
investment in Slovakia. This gain was classified within the Speciality Food Ingredients segment.
c)
d)
e)
f)
g)
Net tax on exceptional items within continuing operations was £nil (2016 – £21 million credit). Tax credits/charges on exceptional
items are only recognised to the extent that gains/losses incurred are expected to result in tax recoverable/payable in the future.
Discontinued operations – within operating profit
h) On 1 June 2016, the Group completed the sale of its corn wet mill in Casablanca, Morocco to Archer Daniels Midland Inc.
(ADM), receiving gross cash proceeds of £4 million. In the year ended 31 March 2017, following completion of this
disposal, the Group recognised a £1 million exceptional gain resulting from the recycling of cumulative foreign exchange
translation gains from reserves to the income statement. This non-cash gain was recognised within the Bulk Ingredients
segment.
In the year ended 31 March 2016, the Group recognised a net exceptional gain of £64 million in relation to the exit from a
substantial part of its European Bulk Ingredients business. The Group recognised an exceptional profit on disposal of
£68 million in respect of the disposal of its share in the Eaststarch joint venture (see Note 34). The Group also recognised a
£4 million non-cash impairment charge in respect of its Bulk Ingredients facility in Morocco with an agreement reached with
ADM to purchase this facility. The impairment represented the excess of book carrying value over the expected proceeds.
130 Tate & Lyle PLC Annual Report 2017
130 Tate & Lyle PLC Annual Report 2017
7. Exceptional items continued
Discontinued operations – within operating profit continued
i)
In the year ended 31 March 2016, the Group recognised an £18 million exceptional charge within discontinued operations
for settlement made with American Sugar Refining, Inc. (‘ASR’) in respect of claims made in relation to its acquisition of
the Group’s EU Sugars business in September 2010.
There was no tax on discontinued exceptional items in either the current or comparative year.
Continuing operations – exceptional deferred tax items
j)
In the year ended 31 March 2017, following changes in UK tax legislation and changes to the internal financing
arrangements we use to fund our international businesses, the Group recognised an exceptional deferred tax credit of
£34 million, reflecting previously unrecognised tax losses in the UK, which, based on enacted legislation, are now
expected to be utilised against future UK taxable profits.
k) During the year ended 31 March 2017, the Group undertook the transfer at fair value of its sucralose intellectual property
assets from the UK to the US, to align ownership with the corresponding manufacturing base following the move to
consolidate all sucralose production into our US facility in the 2016 financial year. This transaction led to the recognition
of an exceptional deferred tax credit of £31 million, reflecting the anticipated future tax benefits.
Discontinued operations – exceptional tax items
l) During the year ended 31 March 2016, the Group recognised an exceptional tax charge of £5 million in discontinued
operations in respect of historical tax matters relating to the Moroccan facility which the Group has now sold to ADM.
Exceptional cash flows
Net cash outflow on exceptional items were as follows:
Continuing operations
Business re-alignment – impairment, restructuring and other net costs
Asset (impairment)/reversals and related costs
SPLENDA® Sucralose – revised table top commercial agreement
US litigation
Net cash outflow – exceptional items
Income statement charge – included in profit before tax
Adjustment for: exceptional items – per cash flow statement
Footnotes
(a)
(b)
(e)
(f)
Year ended 31 March
2017
£m
(21)
(3)
–
–
(24)
19
(5)
2016
£m
(29)
–
5
(9)
(33)
50
17
In addition, in the year ended 31 March 2017, there were exceptional cash flows relating to the sale of assets from the Group’s
venture fund portfolio totalling £2 million (2016 – £18 million) recognised within cash from investing activities.
www.tateandlyle.com
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131
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
8. Discontinued operations and assets classified as held for sale
The discontinued operations of the Group are disclosed and discussed further in Note 3.
The results of the discontinued operations which have been included in the consolidated income statement were as follows:
Discontinued operations
Sales
Operating profit including exceptional items
Profit for the year – discontinued operations
Year ended 31 March 2017
Eaststarch/Morocco
total discontinued
Notes
5
£m
3
1
1
Basic and diluted earnings per share (pence) – discontinued operations
13
0.2p
On 1 June 2016, the Group completed the sale of its corn wet mill in Casablanca, Morocco to ADM, receiving gross cash proceeds of
£4 million and recognising a £1 million exceptional gain in the year ended 31 March 2017 (see Note 7).
Discontinued operations
Sales
Operating profit/(loss) including exceptional items
Share of profit after tax of joint ventures and associates
Profit/(loss) before tax
Income tax charge (exceptional item)
Profit/(loss) for the year – discontinued operations
Basic earnings per share (pence) – discontinued operations
Diluted earnings per share (pence) – discontinued operations
Notes
Eaststarch/
Morocco
£m
Sugars/
EU Starch
£m
Total
discontinued
£m
Year ended 31 March 2016
13
65
2
67
(5)
62
–
(20)
–
(20)
–
(20)
13
45
2
47
(5)
42
9.0p
8.9p
21
7, 12
13
13
In the year ended 31 March 2016, sales of £13 million were recognised by the Group’s corn wet mill in Casablanca, Morocco. The
Group realised an exceptional profit on disposal of £68 million in respect of the disposal of the Hungarian, Bulgarian and Turkish
Eaststarch plants. This exceptional profit was partially offset by a £3 million operating loss in relation to the Group’s corn wet mill in
Casablanca, Morocco which included an exceptional impairment charge of £4 million (see Note 7). The £20 million loss relating to
Sugars and EU Starch comprised the £18 million ASR charge described in Note 7 and £2 million Amylum UK Pension Scheme
payment (see Note 30).
The results of the discontinued operations which have been included in the consolidated statement of cash flows were as follows:
Year ended 31 March 2017
Eaststarch/Morocco
total discontinued
£m
1
(4)
(3)
Year ended 31 March 2016
Eaststarch/
Morocco
Sugars/
EU Starch
£m
67
(69)
(2)
(4)
£m
(20)
(5)
–
(25)
Total
discontinued
£m
47
(74)
(2)
(29)
Discontinued operations
Profit before tax from discontinued operations
Adjustment for:
Exceptional items and changes in working capital
Cash used in discontinued operations
Discontinued operations
Profit/(loss) before tax from discontinued operations
Adjustments for:
Exceptional items and changes in working capital
Share of profit after tax of joint ventures and associates
Cash used in discontinued operations
132 Tate & Lyle PLC Annual Report 2017
132 Tate & Lyle PLC Annual Report 2017
8. Discontinued operations and assets classified as held for sale continued
Assets held for sale
There were no assets or liabilities classified as held for sale at 31 March 2017.
The assets and liabilities of Tate & Lyle Morocco SA were classified as held for sale at 31 March 2016, based on the agreement to
sell to ADM, which completed on 1 June 2016. The carrying amounts of assets and liabilities totalled £5 million (consisting of assets
totalling £7 million and liabilities totalling £2 million) after recognition of a £4 million impairment charge (see Note 7).
9. Auditors’ remuneration
Fees payable to the Company’s external 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 services
Fees in respect of the audit of the Group’s pension schemes
Total
Year ended 31 March
2017
£m
0.7
1.7
0.1
0.1
2.6
0.1
2.7
2016
£m
0.7
1.2
0.1
0.2
2.2
0.1
2.3
The audit and non-audit fees related to joint ventures payable to PricewaterhouseCoopers LLP and its associates, excluded from the
table above, were £nil (2016 – £nil) and £nil (2016 – £nil) respectively.
10. 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 2017
Year ended 31 March 2016
Continuing
operations
£m
Discontinued
operations
£m
275
22
2
7
1
21
328
–
–
–
–
–
–
–
Continuing
operations
£m
233
17
2
4
(3)
9
262
Discontinued
operations
£m
1
–
–
–
–
–
1
The average number of people employed by the Company and its subsidiaries, including part-time employees, is set out below:
By operating segment
Continuing operations
Speciality Food Ingredients
Bulk Ingredients
Central
Total
Year ended 31 March
2017
2016
1 931
1 731
489
4 151
2 092
1 621
448
4 161
In addition, the average number of people employed relating to discontinued operations was 15 (2016 – 93).
At 31 March 2017, the Group employed 4,146 (2016 – 4,326) people within continuing operations. The number of people employed
by the Group relating to discontinued operations at 31 March 2017 was nil (2016 – 91). The Group’s two operating segments are
supported by Global Operations, which is responsible for running the Group’s manufacturing facilities. The Group allocates the
headcount of the Global Operations team to segments based on the split of primary capacity at each location. Central includes
shared-service employees who perform activities for the whole Group, including the Speciality Food Ingredients and
Bulk Ingredients segments.
www.tateandlyle.com
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
10. Staff costs continued
Key management compensation
Salaries and short-term employee benefits
Retirement benefits
Share-based payments
Total
Year ended 31 March
2017
£m
11
1
9
21
2016
£m
10
1
2
13
Key management is represented by the Executive Committee and the Company’s Directors. Remuneration details of the Company’s
Directors, are given in the Directors’ Remuneration Report on pages 74 to 97. Members of the Executive Committee are identified on
pages 20 and 21. The aggregate gains made by the Directors on the exercise of share options were £4 million (2016 – £9 million).
11. Finance income and expense
Continuing operations
Net 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
Unwinding of discount on liabilities
Finance expense
Finance income
Net finance expense
Reconciliation to adjusted net finance expense
Net finance expense
Net retirement benefit interest
Adjusted net finance expense – continuing operations
Note
Year ended 31 March
2017
£m
2016
£m
(25)
(4)
4
(1)
(7)
(1)
(34)
2
(32)
£m
(32)
7
(25)
(22)
(4)
4
(1)
(6)
(1)
(30)
1
(29)
£m
(29)
6
(23)
30
Notes
30
4
Finance expense is shown net of borrowing costs capitalised within property, plant and equipment of £2 million (2016 – £2 million) at
a capitalisation rate of 3.8% (2016 – 3.3%).
Interest payable on other borrowings includes £0.2 million (2016 – £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.
134 Tate & Lyle PLC Annual Report 2017
134 Tate & Lyle PLC Annual Report 2017
12. Income taxes
Analysis of charge for the year – continuing operations
Continuing operations
Current tax:
– United Kingdom (UK)
– Overseas
Adjustments in respect of previous years
Deferred tax:
Credit for the year
Adjustments in respect of previous years
Income tax credit/(expense) – continuing operations
Reconciliation to adjusted income tax expense
Notes
Income tax credit/(expense)
Taxation on exceptional items, amortisation of acquired intangibles and
net retirement benefit interest
Exceptional deferred tax credits
Adjusted income tax expense – continuing operations
7
4
Year ended 31 March
2017
£m
2016
£m
–
(23)
–
(23)
45
–
22
£m
22
(6)
(65)
(49)
–
(32)
2
(30)
24
1
(5)
£m
(5)
(27)
–
(32)
The Group’s adjusted effective tax rate on continuing operations, calculated on the basis of the adjusted income tax expense of
£49 million (2016 – £32 million) as a proportion of adjusted profit before tax of £271 million (2016 – £193 million) was 18.2%
(2016 – 16.5%).
The Group’s reported tax rate on continuing operations, calculated on the basis of the reported income tax credit of £22 million
(2016 – charge of £5 million) as a proportion of profit before tax of £233 million (2016 – £126 million) was a credit of 9.6%
(2016 – charge of 4.0%).
The Group’s income tax credit for the year ended 31 March 2017 of £22 million (2016 – charge of £5 million) is stated after
recognition of a net deferred tax credit of £45 million (2016 – £25 million). The deferred tax credit comprises exceptional deferred tax
credits of £65 million (2016 – £nil) partially offset by underlying net deferred tax charges of £20 million (2016 – £25 million net credit).
Exceptional deferred tax credits recognised in the year of £65 million comprised two items. Firstly, changes to UK tax legislation and
the Group’s internal financing structure which led to the recognition of an exceptional deferred tax credit of £34 million arising from
previously unrecognised tax losses in the UK, which, based on enacted legislation, are now expected to be utilised against future UK
taxable profits. Secondly, the Group also transferred at fair value its sucralose intellectual property assets from the UK to the US.
This transfer led to the recognition of an exceptional deferred tax credit of £31 million. Further details can be found in Note 7.
The Group’s adjusted income tax charge of £49 million (2016 – £32 million) is stated before the exceptional deferred tax credits
above, and the tax impact of the adjustments made between reported and adjusted profit before tax (being adjustments for
amortisation of acquired intangibles, exceptional items in operating profit and net retirement benefit interest items).
The standard rate of corporation tax in the UK reduced from 20% to 19% with effect from 1 April 2017 and is expected to reduce
from 19% to 17% with effect from 1 April 2020.
The Group recognised no tax charge in the UK in the year (2016 – £nil), as costs, together with brought forward losses, exceeded
current year taxable income. The remaining UK losses have been treated as partially recoverable in future periods, as reflected in
the deferred tax asset booked for the year (see page 137).
At 31 March 2017, the carrying value of current tax assets totalled £1 million (2016 – £3 million) and the carrying value of the current
tax liabilities totalled £57 million (2016 – £66 million).
www.tateandlyle.com
www.tateandlyle.com 135
135
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
12. Income taxes continued
An analysis of tax (charged)/credited on adjusting items and exceptional tax items within continuing operations is set out below:
Year ended 31 March 2017
Year ended 31 March 2016
Notes
Pre-tax
£m
Tax (charge)/
credit
£m
Pre-tax
£m
Tax (charge)/
credit
£m
Exceptional items
Business re-alignment – impairment,
restructuring and other net costs
Asset (impairments)/reversals and related costs
US retirement benefit obligation settlement gain
Tate & Lyle Ventures disposals
SPLENDA® Sucralose agreement
US litigation
Slovakia re-measurement gain
Exceptional items
Amortisation of acquired intangibles
Net retirement benefit interest
Adjusting items
Exceptional deferred tax items
Recognition of UK tax losses
Sucralose IP transfer
Exceptional deferred tax items
Total – continuing operations
4
4, 7
4
(5)
(26)
9
3
–
–
–
(19)
(12)
(7)
(38)
(38)
1
2
(3)
–
–
–
–
–
3
3
6
34
31
65
71
(48)
3
–
7
(2)
(15)
5
(50)
(11)
(6)
(67)
(67)
15
(1)
–
–
1
6
–
21
3
3
27
–
–
–
27
136 Tate & Lyle PLC Annual Report 2017
136 Tate & Lyle PLC Annual Report 2017
12. Income taxes continued
Reconciliation of the effective tax rate
As the Group’s head office and parent company are domiciled in the UK, the Group uses the UK corporation tax rate to reference its
effective tax rate, notwithstanding that only a small proportion of the Group’s business is in the UK. The tax on the Group’s profit
before tax differs from the standard rate of corporation tax in the UK as follows:
Year ended 31 March
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 20% (2016 – 20%)
Adjusted for the effects of:
– non-deductible expenses and other permanent items
– impairment of assets not deductible
– benefits from internal financing arrangements1
– sale of investments not taxable
– manufacturing credits2
– losses not currently treated as being recoverable in future periods3
– losses previously considered irrecoverable, now expected to be recoverable
– exceptional deferred tax credits4
– adjustments to tax in respect of prior years5
– tax rates above the UK rate applied on overseas earnings6
Total tax credit/(charge) – continuing operations
2017
£m
233
(32)
201
(40)
–
(5)
21
1
6
(4)
3
65
–
(25)
22
2016
£m
126
(28)
98
(19)
1
–
25
1
3
(10)
–
–
3
(9)
(5)
1 The Group’s tax rate is favourably affected by its internal financing arrangements which involve borrowing by its US operations from the UK, the interest on which has the
effect of reducing the amount of tax payable.
2 The Group benefits from certain tax incentives available to manufacturing companies.
3 The Group incurs expenses in jurisdictions where it does not currently expect to be able to recover these amounts against future taxable profits. This has the effect of
increasing the Group’s overall effective tax rate.
4 The Group undertook certain intragroup transactions in the 2017 financial year which resulted in the recognition of deferred tax assets in respect of UK losses now expected
to be utilised. This amount comprised the exceptional credit of £34 million relating to the Group’s internal financing transaction and an exceptional credit of £31 million
relating to the sale of Sucralose IP.
5 The Group benefited from the favourable settlement of certain prior year tax matters in the previous year.
6 The Group is subject to tax rates in the jurisdictions in which it operates which are above the UK corporation tax rate (the Group’s reference rate) leading to an increase in
total tax charge.
Key factors impacting the sustainability of the effective tax rate are as follows:
1. Our ability to continue to operate an efficient internal financing arrangement
One of our internal financing arrangements involves borrowing by our US operations from the UK, the interest on which has the
effect of reducing the amount of tax payable. This delivered a benefit of £21 million in the 2017 financial year (2016 – £25 million).
As a result of recent changes in UK legislation arising from the OECD’s Base Erosion and Profit Shifting (BEPS) project and changes
to the internal financing arrangements we use to fund our international businesses, we have recognised a deferred tax asset of
£34 million arising from previously unrecognised tax losses in the UK, which are now expected to be utilised against future UK
taxable profits. In the current period, the recognition of this deferred tax asset lowers the reported effective tax rate (on statutory
earnings). If our ability to operate this revised arrangement was constrained in the future, due to legislative change or other factors,
our tax rate could increase materially.
2. The timing of recognising tax benefits from brought forward losses in the UK
The Group expects to recognise taxable profits in the UK in future periods and, as such, has recognised historical losses in the form
of deferred tax assets expected to be utilised to offset these profits. However, legislative changes in the UK have been announced
which will restrict the utilisation of these brought forward losses by 50%. Upon substantive enactment of these changes, the Group
will be required to adjust the deferred tax asset recognised in respect of historical losses, which is expected to lead to a significant
taxation charge in the Group’s income statement. To the extent that UK taxable profits exceed current year losses in any subsequent
year, the Group’s ability to relieve these profits against prior year losses will be limited, resulting in a UK tax charge.
3. Material changes in the geographic mix of profits
The Group’s effective 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 the UK due to the availability of losses and rates that lie somewhere in between.
If the geographic mix of profits were to change materially, through changes in the composition of the Group’s business or changes
in performance, our tax rate could change materially.
www.tateandlyle.com
www.tateandlyle.com 137
137
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
12. Income taxes continued
Key factors impacting the sustainability of the effective tax rate are as follows continued:
4. Changes in tax rates
Changes in tax rates in the jurisdictions in which the Group operates could have a material effect on the Group’s effective tax rate.
An increase in geopolitical uncertainties in the US (following the election of President Trump) and elsewhere, increases the
likelihood of material tax reform. The precise nature of any such reform, and its impact on the Group, remains uncertain.
5. Resolution of tax judgements arising from current or future tax issues
At any one time, the Group can be subject to a number of challenges by tax authorities in the jurisdictions in which it operates.
The outcome of these challenges is inherently uncertain, potentially resulting in a different tax charge from the amounts
initially provided.
At 31 March 2017, the Group carried a central provision in respect of uncertain tax positions totalling £34 million (2016 – £31 million)
within current tax payables. Based on all substantively enacted legislation, the Group believes that no reasonably possible change in
assumptions would lead to a material change in this number.
Exceptional deferred tax credits
In the year ended 31 March 2017, the Group recognised exceptional deferred tax credits totalling £65 million in respect of recent
changes to UK tax legislation and the Group’s internal financing structure, and a transfer of intellectual property assets related to
SPLENDA® Sucralose to align ownership with the underlying US manufacturing base. Further details can be found in Note 7.
Deferred tax
Deferred tax is calculated on differences between the accounting value of assets and liabilities and their respective tax values.
The movements in deferred tax assets and liabilities during the year were as follows:
At 1 April 2015
Credited/(charged) to the income statement
(underlying)
Credited to the income statement (exceptional)
Credited to other comprehensive income
Charged directly to equity
Acquisitions/disposals
Currency translation differences
At 31 March 2016
(Charged)/credited to the income statement
(underlying)
Credited to the income statement (exceptional)
Charged to other comprehensive income
Credited directly to equity
Currency translation differences
At 31 March 2017
Capital
allowances in
excess of
depreciation
£m
(132)
Retirement
benefit
obligations
£m
87
4
–
–
–
–
(6)
(134)
(11)
–
–
–
(24)
(169)
(6)
–
2
–
–
–
83
(6)
–
(30)
–
17
64
Share-
based
payments
£m
4
1
–
–
(3)
–
–
2
2
–
–
3
–
7
Tax losses
£m
13
Other1
£m
–
(8)
–
–
–
–
1
6
–
34
–
–
–
40
13
21
–
–
(7)
(2)
25
(5)
31
–
–
4
55
Total
£m
(28)
4
21
2
(3)
(7)
(7)
(18)
(20)
65
(30)
3
(3)
(3)
1 During the year the Group rationalised ownership of its Sucralose IP to align it with the underlying US manufacturing base. This resulted in the recognition of a deferred tax
asset of £31 million. Other deferred tax items include temporary differences arising from accounting provisions, where the timing of the tax deduction is different from the
timing of accounting recognition, and business combinations.
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. After taking these offsets into account, the net position of £3 million liability (2016 – £18 million liability) is presented as
a £22 million deferred tax asset (2016 – £3 million asset) and a £25 million deferred tax liability (2016 – £21 million liability) in the
Group’s statement of financial position.
138 Tate & Lyle PLC Annual Report 2017
138 Tate & Lyle PLC Annual Report 2017
12. Income taxes continued
Deferred tax continued
Changes in enacted tax rates had no effect on the amount of deferred tax charged to the income statement and other
comprehensive income or equity. There was no impact from the imposition of new taxes. No deferred tax assets have been
recognised in respect of tax losses of £508 million (2016 – £753 million) as there is uncertainty as to whether taxable profits against
which these assets may be recovered, will be available. No unrelieved tax losses expired under current tax legislation in the year
ended 31 March 2017.
The total deferred tax on unremitted earnings is £3 million (2016 – £4 million) of which £2 million (2016 – £nil) has been recognised.
The Group has not recognised the full amount as it is able to control the timing of the reversal of certain of these temporary
differences and it is not probable that they will reverse in the foreseeable future.
Discontinued operations
The income tax charge in respect of discontinued operations (Note 8) in the year ended 31 March 2017 was £nil (2016 – £5 million).
The prior year charge reflected an exceptional cost in respect of historical tax matters at the Moroccan facility, which the Group sold
to ADM during the 2017 financial year.
Tax on other comprehensive income
The following table sets out the tax arising on components of other comprehensive income:
Retirement benefit obligations
Deferred tax (credit)/charge relating to components of other comprehensive income
Year ended 31 March
2017
£m
(30)
(30)
2016
£m
2
2
Tax on items recognised directly in equity
A deferred tax credit of £3 million, in relation to share-based payments, was recognised directly in equity (2016 – £3 million charge).
13. Earnings per share
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 (2016 – 4 million shares) held by the Company
or the Employee Benefit Trust to satisfy awards made under the Group’s share-based incentive plans.
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue to assume
conversion of potentially dilutive ordinary shares, reflecting vesting assumptions on employee share plans, as well as the profit
attributable to owners of the Company for any proceeds on such conversions. 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 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). Otherwise, the effect of exercising such
options or awards would be to increase the earnings per share rather than to dilute.
The greater any such excess, the greater the dilutive effect. The average market price of the Company’s ordinary shares during the
year was 695p (2016 – 574p). The dilutive effect of share-based incentives was 7.1 million shares (2016 – 3.4 million shares).
Profit attributable to owners of the
Company (£ million)
Weighted average number of ordinary shares
(million) – basic
Basic earnings per share (pence)
Weighted average number of ordinary shares
(million) – diluted
Diluted earnings per share (pence)
Year ended 31 March 2017
Year ended 31 March 2016
Continuing
operations
Discontinued
operations
Total
operations
Continuing
operations
Discontinued
operations
Total
operations
255
1
256
121
42
163
464.1
55.0p
464.1
0.2p
464.1
55.2p
464.3
26.1p
464.3
9.0p
464.3
35.1p
471.2
54.2p
471.2
0.2p
471.2
54.4p
467.7
25.9p
467.7
8.9p
467.7
34.8p
www.tateandlyle.com
www.tateandlyle.com 139
139
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
13. Earnings per share continued
Adjusted earnings per share
A reconciliation between profit attributable to owners of the Company from continuing operations and the equivalent adjusted
metric, together with the resulting adjusted earnings per share metrics can be found below:
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
– exceptional deferred tax credits
Adjusted profit attributable to owners of the Company
Adjusted basic earnings per share (pence) – continuing operations
Adjusted diluted earnings per share (pence) – continuing operations
14. 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
7
19
11, 30
12
7, 12
4
Year ended 31 March
2017
£m
255
19
12
7
(6)
(65)
222
2016
£m
121
50
11
6
(27)
–
161
47.8p
47.1p
34.7p
34.5p
Year ended 31 March
2017
Pence
8.2
19.8
28.0
2016
Pence
8.2
19.8
28.0
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 1 August 2017 to shareholders who are on the Register of Members on 30 June 2017.
Dividends on ordinary shares paid in the financial year:
Final dividend paid relating to the prior financial year
Interim dividend paid relating to the financial year
Total dividend paid
Year ended 31 March
2017
£m
92
38
130
2016
£m
92
38
130
Based on the number of ordinary shares outstanding at 31 March 2017 and the proposed amount, the final dividend for the financial
year is expected to amount to £92 million.
15. Inventories
Raw materials and consumables
Work in progress
Finished goods
Total
2017
£m
206
19
216
441
At 31 March
2016
£m
187
12
190
389
Finished goods inventories of £4 million (2016 – £7 million) are carried at net realisable value, this being lower than cost. Agricultural
produce after harvest of £103 million (2016 – £101 million) is carried at net realisable value. During the year ended 31 March 2017,
the Group recognised a write-down of inventories totalling £6 million, which relates to the normal course of business and is included
in the cost of inventories. During the year ended 31 March 2016, the Group recognised a write-down of inventories totalling
£4 million, of which £3 million related to the normal course of business and was included in the cost of inventories. The remaining
£1 million related to the write-down of sucralose inventories as part of the business re-alignment costs (see Note 7).
140 Tate & Lyle PLC Annual Report 2017
140 Tate & Lyle PLC Annual Report 2017
16. Cash and cash equivalents
Cash at bank and in hand
Short-term bank deposits
Total
2017
£m
261
–
261
At 31 March
2016
£m
208
109
317
At 31 March 2017, the Group held £nil short-term deposits. The effective interest rate on short-term deposits at 31 March 2016 was
0.5%, with an average maturity of 19 days.
The carrying amount of cash and cash equivalents was denominated in the following currencies:
US dollar
Euro
Sterling
Other
Total
17. Trade and other receivables
Trade receivables
Less provision for doubtful debts
Trade receivables – net
Prepayments and accrued income
Margin deposits
Other receivables
Total
The above amounts do not include non-current other receivables of £1 million (2016 – £1 million).
The carrying amount of trade and other receivables was denominated in the following currencies:
US dollar
Euro
Sterling
Other
Total
2017
£m
226
12
2
21
261
2017
£m
264
(14)
250
15
3
23
291
2017
£m
184
46
12
50
292
At 31 March
2016
£m
217
10
63
27
317
At 31 March
2016
£m
246
(8)
238
17
15
31
301
At 31 March
2016
£m
183
63
10
46
302
During the year, the Group recognised impairments or write-offs of receivables totalling £5 million (2016 – £nil). At 31 March 2017,
trade receivables of £7 million (2016 – £9 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
2017
£m
6
1
–
7
At 31 March
2016
£m
8
1
–
9
Trade receivables are not generally interest-bearing but interest may be charged to customers on overdue amounts.
www.tateandlyle.com
www.tateandlyle.com 141
141
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
18. Available-for-sale financial assets
Available-for-sale financial assets comprise £30 million (2016 – £23 million) of unlisted securities. The fair values of available-for-
sale financial assets are carried at cost where fair value cannot be reliably measured.
At 1 April 2015
Year ended 31 March 2016:
Additions
Disposals
Impairment loss
At 31 March 2016
Year ended 31 March 2017:
Additions
Disposals
Re-measurement of non-qualified deferred compensation arrangements
Currency translation differences
At 31 March 2017
The carrying value of the available-for-sale financial assets was denominated in the following currencies:
US dollar
Sterling
Euro
Total
Presented in the statement of financial position as follows:
Non-current assets
Current assets
Total
Note
30
2017
£m
25
2
3
30
2017
£m
30
–
30
£m
31
4
(9)
(3)
23
4
(2)
2
3
30
At 31 March
2016
£m
19
2
2
23
At 31 March
2016
£m
19
4
23
142 Tate & Lyle PLC Annual Report 2017
142 Tate & Lyle PLC Annual Report 2017
19. Goodwill and other intangible assets
Goodwill
£m
Patents and
other IP
Other acquired
intangibles
Total acquired
intangibles
£m
£m
£m
Other
intangible
assets
£m
Total
£m
Cost
At 1 April 2016
Re-measurement of acquisition
Additions at cost
Disposals and write-offs
Currency translation differences
At 31 March 2017
Accumulated amortisation and impairment
At 1 April 2016
Impairment charge
Disposals and write-offs
Amortisation charge
Currency translation differences
At 31 March 2017
Net book value at 31 March 2017
Cost
At 1 April 2015
Subsidiaries acquired
Additions at cost
Disposals and write-offs
Transfer to assets held for sale
Currency translation differences
At 31 March 2016
Accumulated amortisation and impairment
At 1 April 2015
Disposals and write-offs
Amortisation charge
Currency translation differences
At 31 March 2016
Net book value at 31 March 2016
Goodwill
The carrying amount of goodwill is allocated as follows:
204
1
–
(2)
26
229
–
18
(2)
–
1
17
212
158
32
–
–
–
14
204
–
–
–
–
–
204
40
–
–
–
1
41
35
–
–
2
–
37
4
40
–
–
–
–
–
40
33
–
2
–
35
5
Allocated by geographical area
United States
Allocated by operating segment
Speciality Food Ingredients
Bulk Ingredients
Total
150
394
204
598
–
–
–
16
166
91
–
–
10
11
112
54
107
33
–
–
–
10
150
76
–
9
6
91
59
1
–
(2)
43
–
26
(1)
25
436
254
126
18
(2)
12
12
166
270
305
65
–
–
–
24
394
109
–
11
6
126
268
82
5
–
28
8
123
131
203
–
19
(24)
(1)
7
204
59
(5)
24
4
82
122
1
26
(3)
68
690
208
23
(2)
40
20
289
401
508
65
19
(24)
(1)
31
598
168
(5)
35
10
208
390
2017
£m
74
136
2
138
212
At 31 March
2016
£m
65
137
2
139
204
(i) Impairment tests carried out during the year
The Group is principally operated 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.
www.tateandlyle.com
www.tateandlyle.com 143
143
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
19. Goodwill and other intangible assets continued
(i) Impairment tests carried out during the year continued
A description of the impairment tests conducted in relation to the most significant goodwill amounts are set out as follows. In
each case, the recoverable amount was calculated based on value in use, with the exception of Brazilian Food Systems business
Tate & Lyle Gemacom Tech Indústria e Comércio S.A. (’Gemacom’), Tate & Lyle Boleraz s.r.o and Tate & Lyle Sweden AB
(‘Biovelop’). Value in use was calculated based on budgets and plans covering the next five years that have been approved 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.
Goodwill allocated by geographical area
United States
Goodwill allocated to the US single ingredients operations of £74 million (2016 – £65 million) relates to the Staley acquisition in 1988.
The key assumptions in the model are derived from the Group’s Annual Operating Plan for 2018 and Board-approved five-year plan,
which includes mid-single-digit volume growth in Speciality Food Ingredients and flat volumes in Bulk Ingredients. Operating profit
is assumed to increase by low single digits for both Speciality Food Ingredients and Bulk Ingredients, based on management’s
long-term industry expectations. Based on the risk profile of the assets tested, cash flows were discounted using a pre-tax rate of
8.8% (2016 – 9.6%). 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 £63 million (2016 – £58 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 2018. Volumes are expected to grow at a mid-single digit compound annual growth rate
over the subsequent four years and the model anticipates a recovery to profitability over the five-year timeframe. Cash flows were
discounted using a pre-tax rate of 8.8% (2016 – 9.6%). Management concluded that no impairment is required.
During the year ended 31 March 2016, the Group completed the re-alignment of the Eaststarch joint venture whereby the remaining
50% of Amylum Slovakia s.r.o. was purchased (subsequently renamed Tate & Lyle Boleraz s.r.o.). This entity has goodwill of
£43 million (2016 – provisionally recorded as £35 million at the acquisition date of 31 October 2015 (see Note 34)). The acquisition
business case assumes expansion beyond normal maintenance capital expenditure and the recoverable amount was determined
based on fair value less costs of disposal. The fair value was determined based on a discounted cash flow model using a post-tax
discount rate and cash inflows and outflows from future expansion. Cash flows from 2018 onwards are expected to grow at a
mid-single digit compound annual rate over the subsequent four years. Cash flows were discounted using a post-tax rate of 7.1%.
Management concluded that no impairment is required.
Goodwill allocated to the Speciality Food Ingredients segment includes £23 million (pre-impairment) (2016 – £18 million) that relates
to Gemacom. The impairment model assumes expansion beyond normal maintenance capital expenditure and the recoverable
amount was calculated based on fair value less costs of disposal. The fair value was determined based on a discounted cash flow
model using a post-tax discount rate and cash inflows and outflows from future expansion. The model assumes a return to
profitability over the first two years with volume and contribution margin growth in low double digits over the five years. Long-term
growth rate is assumed to be 5% thereafter, reflecting the long-term growth expectations for this market. Cash flows were
discounted using a post-tax rate of 12% (2016 – 14% post-tax). It was concluded that the recoverable amount of this CGU was lower
than its carrying value. As a result of this analysis, management has recognised an impairment charge of £16 million which has
been recognised within other expenses as an exceptional item. Refer to Note 7 for further details.
Goodwill of £10 million allocated to the Speciality Food Ingredients segment relates to the acquisition of Biovelop, the PromOat®
Beta Glucan plant in Sweden, in the 2014 financial year. The key assumptions in the model are derived from the Group’s Annual
Operating Plan for 2018, and the model assumes significant operating profit growth as the facility expansion is completed.
Management concluded that no impairment is required. Cash flows were discounted using a post-tax rate of 7.1% (2016 – 7.8%).
However, this calculation resulted in a low level of headroom compared with the carrying value as growth has been below the level
in the prior year’s model. The amount of headroom was particularly sensitive to the discount rate and volumes sold. Reasonably
possible changes in these assumptions, being changes in excess of an increase in the discount rate of 30bps, and a reduction in
volumes sold of 200bps could lead to an impairment.
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, with the exception of Biovelop, 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.
144 Tate & Lyle PLC Annual Report 2017
144 Tate & Lyle PLC Annual Report 2017
20. Property, plant and equipment
Cost
At 1 April 2016
Additions at cost
Transfers on completion
Disposals and write-offs1
Currency translation differences
At 31 March 2017
Accumulated depreciation and impairment
At 1 April 2016
Depreciation charge
Impairment charge
Disposals and write-offs1
Currency translation differences
At 31 March 2017
Net book value at 31 March 2017
Including assets held under finance leases
Cost
At 1 April 2015
Additions at cost
Subsidiaries acquired
Transfers on completion
Disposals and write-offs
Transfers to assets held for sale
Currency translation differences
At 31 March 2016
Accumulated depreciation and impairment
At 1 April 2015
Depreciation charge
Impairment charge2
Reversal of impairment losses
Disposals and write-offs
Transfers to assets held for sale
Currency translation differences
At 31 March 2016
Net book value at 31 March 2016
Including assets held under finance leases
Land
and buildings
£m
Plant and
machinery
£m
Note
Assets in the
course of
construction
£m
485
1
43
(30)
70
569
265
14
3
(30)
37
289
280
–
442
–
14
16
–
(2)
15
485
245
11
1
–
–
(1)
9
265
220
–
2 142
5
199
(249)
336
2 433
1 633
95
4
(247)
244
1 729
704
10
1 977
10
30
54
(3)
(11)
85
2 142
1 523
69
–
(9)
(1)
(7)
58
1 633
509
9
34
Total
£m
2 849
128
–
(304)
406
3 079
1 923
109
7
(302)
281
2 018
1 061
10
2 543
175
47
–
(3)
(13)
100
222
122
(242)
(25)
–
77
25
–
–
(25)
–
–
77
–
124
165
3
(70)
–
–
–
222
2 849
25
1 793
–
–
–
–
–
–
25
197
–
80
1
(9)
(1)
(8)
67
1 923
926
9
1
In the year ended 31 March 2017, the formerly impaired assets at the Singapore plant were decommissioned and removed from the fixed asset register.
2 Excludes impairment charge in relation to assets held for sale (see Note 8).
Impairment reviews
During the year, the Group recognised an impairment charge of £6 million in respect of the impairment of certain redundant assets
at the Decatur facility in the US (see Note 7). As part of the impairment and deconsolidation of the Group's equity interest in Jiangsu
Tate & Lyle Howbetter Food Co., Ltd, the Group recognised a £1 million charge (see Note 7). Management conducted impairment
reviews of other property, plant and equipment during the year and concluded that there were no other impairments.
In the year ended 31 March 2016, the Group recognised an impairment charge of £1 million related to assets in the European Food
Systems business.
www.tateandlyle.com
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
21. Equity accounted investments
The amounts recognised in the Group consolidated income statement are as follows:
Associates – continuing operations
Joint ventures – continuing operations
Joint ventures – discontinued operations
Total operations
Note
8
The amounts recognised in the Group consolidated statement of financial position are as follows:
Associates
Joint ventures
Year ended 31 March
2017
£m
–
32
–
32
2017
£m
4
92
2016
£m
–
28
2
30
At 31 March
2016
£m
3
82
Associates
The Group’s only associate, which is accounted for under the equity method, is Tapioca Development Corporation (see Note 38).
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 its 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.
The investment in the associate as at 31 March 2017 was £4 million (2016 – £3 million). The Group recognised £nil net profit
(2016 – £nil) in its consolidated income statement. During the year ended 31 March 2017, the Group received £nil dividend
(2016 – £1 million) from its associate.
Joint ventures
In the opinion of the Directors, the Group’s material joint ventures, which are accounted for under the equity method, are Almidones
Mexicanos SA (Almex) and DuPont Tate & Lyle Bio Products Company, LLC (Bio-PDO) (see Note 38). The joint ventures 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.
On 31 October 2015, the Group disposed of its investment in Eaststarch C.V. As a result, the Group no longer has any guarantees
in respect of banking facilities of Eaststarch. The Group received pre-disposal dividends from Eaststarch joint venture totalling
€94 million (£68 million).
The movements in the carrying value of the Group’s investment in joint ventures are summarised as follows:
Investments in joint ventures
At 1 April 2016
Share of profit after tax of joint ventures – total operations
Other comprehensive income (including exchange)
Dividends paid
At 31 March 2017
At 1 April 2015
Share of profit after tax of joint ventures – total operations
Disposal (including goodwill)
Other comprehensive expense (including exchange)
Dividends
At 31 March 2016
146 Tate & Lyle PLC Annual Report 2017
146 Tate & Lyle PLC Annual Report 2017
Note
23
Note
23
£m
82
32
7
(29)
92
£m
323
30
(177)
(12)
(82)
82
21. Equity accounted investments 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
Other expense
Profit before tax
Income tax expense
Profit for the year from total operations
Other comprehensive income
Total comprehensive income
Dividends
Income Statement
Sales
Depreciation and amortisation
Finance income
Other expense
Profit before tax
Income tax expense
Profit for the year from total operations
Other comprehensive (expense)/income
Total comprehensive (expense)/income
Dividends
Almex
£m
618
(2)
(546)
70
(20)
50
5
55
(33)
Almex
£m
490
(2)
–
(426)
62
(19)
43
(9)
34
(17)
Year ended 31 March 2017
Bio-PDO
£m
Other
£m
90
(7)
(65)
18
(4)
14
10
24
(24)
–
–
–
–
–
–
(1)
(1)
–
Total
£m
708
(9)
(611)
88
(24)
64
14
78
(57)
Year ended 31 March 2016
Bio-PDO
£m
Other
£m
65
(6)
–
(50)
9
(1)
8
2
10
(11)
–
–
–
–
–
–
–
–
–
–
Total
£m
715
(11)
1
(623)
82
(22)
60
(24)
36
(164)
Eaststarch*
£m
160
(3)
1
(147)
11
(2)
9
(17)
(8)
(136)
* Eaststarch comprises the results of Amylum Slovakia from 1 April 2015 until it became a subsidiary on 31 October 2015 and the results of the disposal group from
1 April 2015 until it became held for sale on 21 April 2015. The profit on disposal is included as an exceptional item (see Note 7). For further details see Note 34.
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
Almex
£m
Bio-PDO
£m
Other
£m
45
7
155
207
4
22
62
88
119
53
10
14
77
–
–
13
13
64
1
–
–
1
–
–
–
–
1
At 31 March 2017
Total
£m
99
17
169
285
4
22
75
101
184
www.tateandlyle.com
www.tateandlyle.com 147
147
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
21. Equity accounted investments continued
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
Almex
£m
Bio-PDO
£m
Other
£m
Total
£m
At 31 March 2016
37
4
163
204
6
38
63
107
97
51
10
13
74
–
–
10
10
64
1
–
1
2
–
–
–
–
2
89
14
177
280
6
38
73
117
163
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 2016
Profit for the year from total operations
Other comprehensive income/(expense)
Dividends
Closing net assets at 31 March 2017
Interest in joint venture (%)
Interest in joint venture at share
Carrying value at 31 March 2017
Almex
£m
97
50
5
(33)
119
50%
59
59
Reconciliation of summarised financial information
Eaststarch
£m
Almex
£m
Opening net assets at 1 April 2015
Profit for the year from total operations
Disposal
Other comprehensive (expense)/income
Dividends
Closing net assets at 31 March 2016
Interest in joint venture (%)
Interest in joint venture at share
Goodwill at 1 April 2015
Goodwill disposed
Goodwill at 31 March 2016
Carrying value at 31 March 2016
334
9
(190)
(17)
(136)
–
50%
–
82
(82)
–
–
80
43
–
(9)
(17)
97
50%
49
–
–
–
49
Bio-PDO
£m
Other
£m
64
14
10
(24)
64
50%
32
32
Bio-PDO
£m
65
8
–
2
(11)
64
50%
32
–
–
–
32
2
–
(1)
–
1
50%
1
1
Other
£m
2
–
–
–
–
2
50%
1
–
–
–
1
Total
£m
163
64
14
(57)
184
92
92
Total
£m
481
60
(190)
(24)
(164)
163
82
82
(82)
–
82
148 Tate & Lyle PLC Annual Report 2017
148 Tate & Lyle PLC Annual Report 2017
22. Share capital and share premium
At 31 March 2017 and 31 March 2016
Ordinary share
capital
£m
117
Share
premium
£m
406
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
* The nominal value of each share is 25 pence.
Number of
shares*
468 235 944
20 922
468 256 866
2017
Cost
£m
117
–
117
Number
of shares*
468 223 975
11 969
468 235 944
Total
£m
523
2016
Cost
£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 31). Own shares are held either by the Company in treasury or by an Employee Benefit
Trust (EBT) that was established by the Company.
Movements in own shares held were as follows:
At 1 April
Purchased in the market:
– into treasury
– into the EBT
Transferred to EBT*
Transferred to employees:
– from treasury
– from the EBT
At 31 March
Number
of shares
4 161 942
2 000 000
541 110
15 572
(230 619)
(958 408)
5 529 597
2017
Cost
£m
28
14
4
–
(2)
(7)
37
Number
of shares
5 018 632
–
1 151 484
–
(325 950)
(1 682 224)
4 161 942
2016
Cost
£m
37
–
7
–
(2)
(14)
28
* Shares held for the benefit of untraceable shareholders and bearer warrant holders transferred to the trust at nil cost.
Treasury shares
Shares held in the EBT
Total
Number
of shares
3 572 853
1 956 744
5 529 597
At 31 March 2017
Market
value
£m
% of
outstanding
share capital
27
15
42
0.8
0.4
1.2
Number
of shares
1 803 472
2 358 470
4 161 942
At 31 March 2016
Market
value
£m
% of
outstanding
share capital
10
14
24
0.4
0.5
0.9
www.tateandlyle.com
www.tateandlyle.com 149
149
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
23. Other reserves
At 1 April 2015
Other comprehensive income/(expense):
Cash flow hedges:
– reclassified and reported in the income statement
in the year
Currency translation differences:
– gain on currency translation of foreign operations
– fair value loss on net investment hedges
Share of other comprehensive expense of joint ventures
Items transferred to income on disposal of joint ventures
At 31 March 2016
Other comprehensive income/(expense):
Cash flow hedges:
– fair value gain in the year
– reclassified and reported in the income statement
in the year
– tax effect of the above movements
Available-for-sale financial assets:
– reclassified and reported in the income statement
in the year
Currency translation differences:
– gain on currency translation of foreign operations
– fair value loss on net investment hedges
Share of other comprehensive income of joint ventures
Items transferred to income statement on disposal
of subsidiary
At 31 March 2017
24. Trade and other payables
Current payables
Trade payables
Social security
Accruals and deferred income
Other payables
Total
Hedging reserve
Currency
translation reserve
Other reserves
£m
(4)
2
–
–
–
–
(2)
1
4
–
–
–
–
–
–
3
£m
(34)
–
60
(18)
(12)
34
30
–
–
–
–
185
(69)
7
(1)
152
£m
99
–
–
–
–
–
99
–
–
–
(1)
–
–
–
–
98
2017
£m
185
6
107
17
315
The above amounts do not include non-current other payables of £10 million (2016 – £13 million).
The carrying amount of trade and other payables was denominated in the following currencies:
US dollar
Euro
Sterling
Other
Total
150 Tate & Lyle PLC Annual Report 2017
150 Tate & Lyle PLC Annual Report 2017
Total
£m
61
2
60
(18)
(12)
34
127
1
4
–
(1)
185
(69)
7
(1)
253
At 31 March
2016
£m
218
5
98
16
337
At 31 March
2017
£m
242
22
32
29
325
25. Borrowings
Non-current borrowings
2,394,000 6.5% cumulative preference shares of £1 each
Industrial Revenue Bonds 2023–2036 (US$70,100,000)
US Private Placement 2023-2027 (US$400,000,000)
6.75% Guaranteed Notes 2019 (£200,000,000)
Total
Other bank loans
Total
Other borrowings
Obligations under finance leases
Total
Total non-current borrowings
Current borrowings
US commercial paper
6.625% Guaranteed Notes 2016 (US$250,000,000)
Industrial Revenue Bond 2016 (US$7,555,0001)
Short-term loans
Unsecured bank overdrafts
Total
Other borrowings
Obligations under finance leases
Total current borrowings
2017
£m
2
56
319
212
589
1
1
14
14
604
2017
£m
70
–
–
16
1
87
1
88
At 31 March
2016
£m
2
49
277
215
543
2
2
11
11
556
At 31 March
2016
£m
–
175
5
14
5
199
1
200
Included within borrowings are £150 million (2016 – £206 million) of borrowings subject to fair value hedges, the amortised cost of
which has been increased by £13 million (2016 – £17 million) in the tables above.
Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default. There are no
other securities on borrowings.
Taking into account the Group’s interest rate and cross currency swap contracts, the effective interest rates of its borrowings
are as follows:
$25m 3.83% US Private Placement Notes 2023
$180m 4.06% US Private Placement Notes 2025
$100m 4.16% US Private Placement Notes 2027
$95m US Private Placement FRN2 2023
2,394,000 6.5% cumulative preference shares of £1 each
Industrial Revenue Bonds 2023–2036 (US$70,100,0001)
6.625% Guaranteed Notes 2016 (US$250,000,000)
6.75% Guaranteed Notes 2019 (£200,000,000)
1 The US$7,555,000 Industrial Revenue Bond matured in December 2016.
2 Floating rate based on US six-month LIBOR + 1.47%.
Year ended 31 March
2017
3.8%
4.1%
4.2%
2.4%
6.5%
0.7%
–
5.2%
2016
3.8%
4.1%
4.2%
2.0%
6.5%
0.1%
4.2%
4.7%
www.tateandlyle.com
www.tateandlyle.com 151
151
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
25. Borrowings continued
Short-term loans and overdrafts
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 revolving credit facility with a core of highly rated
banks which matures between July 2020 and 2021. At 31 March 2017, the facility has a value of £638 million (2016 – £556 million) and
was undrawn. The facility incurs commitment fees at market rates prevailing when the facility was arranged. The lenders have the
right, but not the obligation, to cancel their commitments 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
Minimum lease
payments
£m
2017
Present value
of minimum
lease payments
£m
Minimum lease
payments
£m
1
10
4
15
1
12
5
18
(3)
15
1
8
6
15
(3)
12
At 31 March
2016
Present value
of minimum
lease payments
£m
1
7
4
12
26. Change in working capital and other non-cash movements
Continuing operations
Decrease/(increase) in inventories
Decrease in receivables
(Decrease)/increase in payables
(Increase)/decrease in derivative financial instruments (excluding debt-related derivatives)
(Decrease)/increase in provisions for other liabilities and charges
Change in working capital
Other non-cash movements
Change in working capital and other non-cash movements
Year ended 31 March
2017
£m
13
35
(47)
(4)
(2)
(5)
9
4
2016
£m
(8)
14
1
13
4
24
–
24
152 Tate & Lyle PLC Annual Report 2017
152 Tate & Lyle PLC Annual Report 2017
27. Net debt
Reconciliation of the (decrease)/increase in cash and cash equivalents to the movement in net debt:
Year ended 31 March
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
Currency translation differences
(Increase)/decrease in net debt in the year
Net debt at beginning of the year
Net debt at end of year
Movements in the Group’s net debt are as follows:
At 1 April 2015
Decrease/(increase) resulting from
cash flows
Fair value and other movements
Reclassification
Currency translation differences
At 31 March 2016
(Increase)/decrease resulting from
cash flows
Fair value and other movements
Reclassification
Currency translation differences
At 31 March 2017
Cash and cash
equivalents
£m
195
108
–
–
14
317
(88)
–
–
32
261
Borrowings and finance leases
Current
£m
(305)
Non-current
£m
(463)
282
–
(169)
(8)
(200)
124
4
(2)
(14)
(88)
(253)
2
169
(11)
(556)
–
2
2
(52)
(604)
Net debt is denominated in the following currencies:
US dollar
Euro
Sterling
Other
Total
2017
£m
(88)
124
36
3
(57)
(18)
(434)
(452)
Debt-related
derivatives
£m
18
–
(3)
–
(10)
5
–
(3)
–
(23)
(21)
2017
£m
(347)
(41)
(46)
(18)
(452)
2016
£m
108
29
137
(1)
(15)
121
(555)
(434)
Total
£m
(555)
137
(1)
–
(15)
(434)
36
3
–
(57)
(452)
At 31 March
2016
£m
(442)
(41)
56
(7)
(434)
www.tateandlyle.com
www.tateandlyle.com 153
153
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
28. Derivatives and hedge accounting
Non-current derivative financial instruments used to
manage the Group’s net debt profile
Currency swaps
Interest rate swaps
Current derivative financial instruments used to manage
the Group’s net debt profile
Currency swaps
Interest rate swaps
Total derivative financial instruments used to manage
the Group’s net debt profile
Other current derivative financial instruments
Forward foreign exchange contracts
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
At 31 March 2017
At 31 March 2016
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
2
13
15
–
2
2
17
–
3
26
29
46
15
31
46
(37)
–
(37)
(1)
–
(1)
(38)
–
(1)
(15)
(16)
(54)
(37)
(17)
(54)
5
16
21
–
3
3
24
–
–
40
40
64
21
43
64
(19)
–
(19)
–
–
–
(19)
(1)
(3)
(18)
(22)
(41)
(19)
(22)
(41)
All hedges are considered to be highly effective. The ineffectiveness recognised in profit or loss in the current and prior periods is
not material.
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 amounts of the outstanding forward foreign exchange contracts are as follows:
US dollar
Singapore dollar
Brazilian real
Euro
South African rand
Other
2017
£m
2
–
–
4
(6)
–
At 31 March
2016
£m
3
1
1
6
(11)
(1)
Gains and losses recognised in the hedging reserve in equity (Note 23) on forward foreign exchange and commodity pricing
contracts at 31 March 2017 are expected to be reclassified to the income statement at various future dates.
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 2017 were
£150 million (2016 – £206 million).
154 Tate & Lyle PLC Annual Report 2017
154 Tate & Lyle PLC Annual Report 2017
28. Derivatives and hedge accounting continued
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 2017 were £182 million (2016 – £161 million). Within net investment hedging
gains/losses, a fair value loss of £21 million (2016 – £8 million loss) 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 23).
In addition, at 31 March 2017, of the Group’s liabilities, a total of £188 million (2016 – £312 million) are designated as hedges of the
net investments in foreign operations.
29. Financial instruments – fair value and risk management
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 2017 and 31 March 2016.
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
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
£m
Derivatives in
a hedging
relationship
£m
Derivatives
held for
trading
£m
Available-for-
sale financial
assets
£m
Total carrying
value
£m
Notes
Fair value
£m
At 31 March 2017
18
17
16
28
25
28
24
–
277
261
–
(692)
–
(319)
(473)
–
–
–
20
–
(39)
–
(19)
–
–
–
26
–
(15)
–
11
30
–
–
–
–
–
–
30
30
277
261
46
(692)
(54)
(319)
(451)
30
277
261
46
(712)
(54)
(319)
(471)
Amortised
cost/cash
£m
Derivatives in a
hedging
relationship
Derivatives
held for
trading
Available-for-
sale financial
assets
Total carrying
value
£m
£m
£m
£m
Notes
Fair value
£m
At 31 March 2016
18
17
16
28
25
28
24
–
285
317
–
(756)
–
(345)
(499)
–
–
–
24
–
(23)
–
1
–
–
–
40
–
(18)
–
22
23
–
–
–
–
–
–
23
23
285
317
64
(756)
(41)
(345)
(453)
23
285
317
64
(775)
(41)
(345)
(472)
Trade and other receivables presented above excludes £15 million (2016 – £17 million) relating to prepayments. Trade and other
payables presented above excludes £6 million (2016 – £5 million) relating to social security.
Borrowings with a carrying value of £212 million (2016 – £390 million) relate to listed bonds with a fair value of £229 million
(2016 – £409 million) according to quoted market prices and are categorised as Level 1 for fair value measurement. Borrowings
with a carrying value of £319 million (2016 – £277 million) relates to US Private Placement Notes with a fair value of £322 million
(2016 – £277 million) according to broker dealer quotations and are categorised as Level 3 for fair value measurement. The
remaining borrowings have a fair value measured by discounted estimated cash flows with an applicable market quoted yield and
are categorised as Level 2 for fair value measurement.
www.tateandlyle.com
www.tateandlyle.com 155
155
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
29. Financial instruments – fair value and risk management continued
Fair value hierarchy
The following tables illustrate the Group’s financial assets and liabilities measured at fair value at 31 March 2017 and
31 March 2016 (refer to Note 2 for a description of the three levels of fair value measurement):
Assets at fair value
Available-for-sale financial assets
Derivative financial instruments:
– currency swaps
– interest rate swaps
– commodity pricing contracts
Assets at fair value
Liabilities at fair value
Derivative financial instruments:
– currency swaps
– commodity pricing contracts
Liabilities at fair value
Assets at fair value
Available-for-sale financial assets
Derivative financial instruments:
– currency swaps
– interest rate swaps
– commodity pricing contracts
Assets at fair value
Liabilities at fair value
Other financial liability
(within other payables)
Derivative financial instruments:
– currency swaps
– forward foreign exchange contracts
– commodity pricing contracts
Liabilities at fair value
Notes
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
At 31 March 2017
18
28
28
28
28
28
–
–
–
7
7
–
(6)
(6)
–
2
15
1
18
(38)
(7)
(45)
30
–
–
21
51
–
(3)
(3)
30
2
15
29
76
(38)
(16)
(54)
Notes
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
At 31 March 2016*
18
28
28
28
28
28
28
–
–
–
1
1
–
–
–
(13)
(13)
–
5
19
1
25
–
(19)
(1)
(4)
(24)
23
–
–
38
61
(2)
–
–
(4)
(6)
23
5
19
40
87
(2)
(19)
(1)
(21)
(43)
* During the year the Group reviewed and enhanced its methodology for classifying commodity pricing contracts within the fair value hierarchy. Prior year numbers have been
restated to reflect presentation using this new methodology.
156 Tate & Lyle PLC Annual Report 2017
156 Tate & Lyle PLC Annual Report 2017
29. Financial instruments – fair value and risk management continued
Financial instruments measured at fair value
The following table shows the methodology used to measure Level 3 fair values. The table isolates the unobservable inputs;
however, the full impact on the Group’s income statement is described within the price risk management section.
Type
Valuation technique
Significant unobservable inputs
Written commodity
contract
Based on the Group’s own
assessment of the
commodity, supply and
demand, as well as
expected pricing.
1. Price of co-product
positions (refer to fair
value measurement
section in Note 2).
2. Basis (refer to fair value
measurement section in
Note 2).
Sensitivity of the fair-value measurement in
reasonable changes to inputs
1. 10% increase/(decrease) in the price of
the co-products would result in a net
increase/(decrease) in fair value of £nil in
respect of Level 3 financial instruments.
2. 10% increase/(decrease) in the cost of
basis would result in a net increase/
(decrease) in fair value of £2 million in
respect of Level 3 financial instruments.
In addition to the above, the Group’s available-for-sale financial assets are sensitive to a number of market and non-market
factors.
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 2015
Total gains/(losses):
– in operating profit
Purchases
Settlements
Transfers between levels
At 31 March 2016
Total gains/(losses):
– in operating profit
– in other comprehensive income
Re-measurement of non-qualified deferred
compensation arrangements
Purchases
Settlements
At 31 March 2017
Commodity pricing
contracts –
assets
Commodity pricing
contracts –
liabilities
Available-for-
sale financial
assets
Other financial
liability
£m
37
21
–
(32)
12
38
21
–
–
–
(38)
21
£m
(6)
(3)
–
6
(1)
(4)
(3)
–
–
–
4
(3)
£m
31
6
4
(18)
–
23
–
3
2
4
(2)
30
£m
(2)
–
–
–
–
(2)
3
(1)
–
–
–
–
Total
£m
60
24
4
(44)
11
55
21
2
2
4
(36)
48
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 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 directed by its board. 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. The performance of the commodity trading function is monitored against its ability to match the Group’s needs for raw
materials with purchase contracts, as well as the Group’s output of co-products with sales contracts. Commodity price contracts
are categorised as being held either for trading or for hedging price exposures. The Group applies a limited level of hedge
accounting to its economic price exposure hedges.
www.tateandlyle.com
www.tateandlyle.com 157
157
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
29. Financial instruments – fair value and risk management continued
Market risks
Foreign exchange management
The Group operates internationally and is exposed to foreign exchange risks arising from commercial transactions (transaction
exposure), and from recognised assets, liabilities and investments in foreign 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, although exceptions can
be approved by the Chief Financial Officer. The amounts deferred in equity from derivative financial instruments designated as cash
flow hedges are released to the income statement or statement of financial position and offset against the movement in underlying
transactions only when the forecast transactions affect the income statement or statement of financial position respectively.
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, 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 foreign operations through the use of currency swap
contracts and other liabilities. The amount deferred in equity from the hedging instruments designated as net investment hedges is
offset against the foreign currency translation effect of the net investment in foreign operations, and is released to the income
statement upon disposal of those investments.
The following table illustrates only the Group’s sensitivity to the fluctuation of the Group’s major currencies against sterling on its
income statement and other components of equity, assuming that each exchange rate moves in isolation. The equity impact for
foreign exchange sensitivity relates to derivative and non-derivative financial instruments hedging the Group’s net investments in its
European and US operations.
Sterling/US dollar 10% change
Sterling/euro 10% change
At 31 March 2017
At 31 March 2016
Income
statement -/+
£m
–
1
Equity -/+
£m
31
5
Income
statement -/+
£m
1
–
Equity -/+
£m
42
5
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 is fixed for more than one year and that no interest rates are fixed for more than 12 years. At 31 March
2017, the longest term of any fixed rate debt held by the Group was until October 2027 (2016 – October 2027). The proportion of net
debt managed by the Group’s treasury function at 31 March 2017 that was fixed or capped for more than one year was 65%
(2016 – 60%).
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 2017 assuming that other variables remain unchanged.
As at 31 March 2017, if interest rates increased by 100 basis points, Group profit before tax would decrease by £2 million (2016 –
£1 million). If interest rates decreased by 100 basis points, or less where applicable, Group profit before tax would increase by
£1 million (2016 – £1 million increase).
Price risk management
The Group 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.
The Group 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. Some of the contracts are used to hedge co-product pricing, for which there is no active market. The pricing is
established by the Group, based on a number of inputs, as discussed on pages 112 to 113. Due to the seasonality of corn production,
at certain points in time throughout the year, the exposure to commodity pricing contracts may be higher.
As at 31 March 2017, a 50% increase/decrease in the price of corn will result in a decrease/increase to the income statement of
£3 million (2016 – £nil) and related decrease/increase in other components of equity of £nil (2016 – £1 million).
158 Tate & Lyle PLC Annual Report 2017
158 Tate & Lyle PLC Annual Report 2017
29. Financial instruments – fair value and risk management continued
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 substantially with investment grade counterparties
approved by the Board.
The Board has 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. 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 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’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, with our customer base including large, unrelated and
internationally dispersed customers.
The Group considers its maximum exposure to credit risk at the year-end date is the carrying value of each class of financial assets
as disclosed under financial instruments by category on page 155.
Analysis of amounts set-off
The Group does not offset financial assets and liabilities in its statement of financial position as the Group has no intention to net
settle, except as described below.
Derivative assets and liabilities of £17 million (2016 – £19 million) could be offset under an enforceable master netting agreement.
Amounts which do not meet the criteria for offsetting in 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.
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 2017 are listed in Note 25.
At the year end, the Group held cash and cash equivalents of £261 million (2016 – £317 million) and had committed undrawn
facilities of £638 million (2016 – £556 million). 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 Group has a core committed bank facility of US$800 million, of which US$80 million matures in 2020 and US$720 million in
2021. This facility is unsecured and contains financial covenants for the Group that the 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. Refer
to Note 4 for the calculation of these measures for financial covenant purposes. 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 periods, 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 taking into account the total of undrawn committed facilities, no more than 10% of gross
debt matures within 12 months and at least 35% matures beyond 2.5 years. At 31 March 2017, after taking account of undrawn
committed facilities, the Group was compliant with the policy. The average maturity of the Group’s gross debt was 6.2 years (2016 –
6.6 years), taking account of undrawn committed facilities.
www.tateandlyle.com
www.tateandlyle.com 159
159
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
29. Financial instruments – fair value and risk management continued
The table below analyses the undiscounted cash flows related to the Group’s non-derivative financial liabilities and derivative assets
and liabilities.
Liquidity analysis
Borrowings including finance leases
Interest on borrowings
Trade and other payables
Derivative contracts:
– receipts
– payments
Commodity pricing contracts
Liquidity analysis
Borrowings including finance leases
Interest on borrowings
Trade and other payables
Derivative contracts:
– receipts
– payments
Commodity pricing contracts
< 1 year
£m
1 – 5 years
£m
(79)
(26)
(315)
107
(105)
3
< 1 year
£m
(200)
(29)
(337)
77
(71)
(15)
(212)
(79)
(10)
179
(206)
(1)
1 – 5 years
£m
(208)
(82)
(13)
197
(198)
(1)
At 31 March 2017
> 5 years
£m
(383)
(54)
–
–
–
–
At 31 March 2016
> 5 years
£m
(334)
(55)
–
–
–
–
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.
Derivative contracts include currency swaps, forward exchange contracts and interest rate swaps. Commodity pricing contracts
included above represent options and futures.
Financial assets and liabilities denominated in currencies other than pounds sterling are translated to pounds sterling using year-
end exchange rates.
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 an investment grade credit rating
which enables 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. At 31 March
2017, the long-term credit rating from Moody’s was Baa2 (stable outlook) and from S&P was BBB (stable outlook).
The Group regards its total capital as follows:
Net debt
Equity attributable to owners of the Company
Total capital
Note
27
2017
£m
452
1 332
1 784
At 31 March
2016
£m
434
1 028
1 462
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 2017 and 31 March 2016 were:
Net debt/EBITDA
Interest cover
160 Tate & Lyle PLC Annual Report 2017
160 Tate & Lyle PLC Annual Report 2017
Note
4
4
2017
Times
0.9
13.9
2016
Times
1.2
10.7
30. 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. 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 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 £7 million (2016 – £4 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.
b) Movement in net defined benefit (liability)/asset
(i) Analysis of net defined benefit liability
At 31 March 2017
At 31 March 2016
Benefit obligations:
Funded plans
Unfunded plans
Fair value of plan assets
Net deficit
Presented in the statement of financial
position as:
Retirement benefit surplus
Retirement benefit deficit
Net defined benefit liability reconciliation:
At 1 April 2015
Year ended 31 March 2016
– net decrease in the benefit obligation
– net decrease in the fair value of plan assets
At 31 March 2016
Year ended 31 March 2017
– net increase in the benefit obligation
– net increase in the fair value of plan assets
At 31 March 2017
Pensions
£m
Medical
benefits
£m
Total
£m
Pensions
£m
Medical
benefits
£m
(1 630)
(63)
(1 693)
1 630
(63)
120
(183)
(63)
–
(76)
(76)
–
(76)
–
(76)
(76)
(1 630)
(139)
(1 769)
1 630
(139)
(1 513)
(55)
(1 568)
1 426
(142)
120
(259)
(139)
45
(187)
(142)
Pensions
£m
(158)
124
(108)
(142)
(125)
204
(63)
–
(66)
(66)
–
(66)
–
(66)
(66)
Medical
benefits
£m
(69)
3
–
(66)
(10)
–
(76)
Total
£m
(1 513)
(121)
(1 634)
1 426
(208)
45
(253)
(208)
Total
£m
(227)
127
(108)
(208)
(135)
204
(139)
www.tateandlyle.com
www.tateandlyle.com 161
161
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
30. Retirement benefit obligations continued
(ii) Analysis of movements in the benefit obligation
At 1 April 2015
Year ended 31 March 2016
Service cost – current
Service credit – past
Plan administration costs
Interest on benefit obligation
Actuarial gains:
– changes in financial assumptions
– changes in demographic assumptions
– experience against assumptions
Net actuarial gain
Benefits paid
Settlement loss (buy-out transaction)
Settlements
Currency translation differences
Decrease in the benefit obligation
At 31 March 2016
Year ended 31 March 2017
Service cost – current
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
Benefits paid
Settlement gain (see Note 7)
Re-measurement of non-qualified deferred
compensation arrangements (see Note 18)
Currency translation differences
Increase in the benefit obligation
At 31 March 2017
Pension benefits
UK
£m
(1 109)
US
£m
(568)
Other
£m
(15)
Total
£m
(1 692)
Medical
benefits
£m
(69)
Total
£m
(1 761)
–
–
(3)
(36)
21
–
13
34
50
(2)
81
–
124
(985)
–
(3)
(33)
(177)
53
12
(112)
51
–
–
(2)
(99)
(1 084)
(1)
–
–
(20)
–
7
2
9
28
–
–
(16)
–
(568)
–
–
(23)
16
10
(19)
7
69
9
–
(83)
(21)
(589)
–
–
–
–
–
–
–
–
–
–
–
–
–
(1)
–
(3)
(56)
21
7
15
43
78
(2)
81
(16)
124
(1)
3
–
(2)
1
1
–
2
4
–
–
(3)
3
(2)
3
(3)
(58)
22
8
15
45
82
(2)
81
(19)
127
(15)
(1 568)
(66)
(1 634)
(2)
–
–
–
–
–
–
–
–
(2)
(1)
(5)
(20)
(2)
(3)
(56)
(161)
63
(7)
(105)
120
9
(2)
(86)
(125)
(1 693)
(1)
–
(2)
(2)
1
–
(1)
4
–
–
(10)
(10)
(76)
At 31 March 2017, the benefits expected to be paid by the plans over the next ten years were as follows:
UK
£m
41
42
127
220
430
US
£m
34
35
108
182
359
Pension benefits
Other
£m
Total
£m
Medical
benefits
£m
–
–
–
–
–
75
77
235
402
789
5
5
16
26
52
Benefit payments:
– within 12 months
– between 1 to 2 years
– between 3 to 5 years
– between 6 to 10 years
Total expected benefit payments
for the next ten years
162 Tate & Lyle PLC Annual Report 2017
162 Tate & Lyle PLC Annual Report 2017
(3)
(3)
(58)
(163)
64
(7)
(106)
124
9
(2)
(96)
(135)
(1 769)
Total
£m
80
82
251
428
841
30. Retirement benefit obligations continued
In the UK, members can elect to forego a portion of their future pension benefits, in return for a lump sum payment, or a transfer
out to other arrangements. These amounts are excluded from future benefit projections.
The pension benefits paid in respect of US plans, in the 2017 financial year were £35 million higher than those projected for the
2018 financial year, due to the settlement made by some deferred members during the year which resulted in the recognition of a
£9 million exceptional gain (as detailed in Note 7c).
At 31 March 2017, the weighted average duration of the significant defined benefit obligations was as follows:
Pension plans:
– UK
– US
Medical benefits
Duration
16 years
11 years
10 years
Assumptions
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.
The principal assumptions used in calculating the benefit obligation were as follows:
At 31 March 2017
Inflation rate
Expected rate of salary increases
Expected rate of pension increases:
– deferred pensions
– pensions in payment
Discount rate
At 31 March 2016
Inflation rate
Expected rate of salary increases
Expected rate of pension increases:
– deferred pensions
– pensions in payment
Discount rate
UK
2.3/3.3%
n/a
2.3%
3.1%
2.4%
UK
2.0/3.0%
n/a
2.0%
2.8%
3.4%
US
2.5%
3.5%
n/a
n/a
4.0%
US
2.5%
3.5%
n/a
n/a
3.8%
Assumptions regarding future mortality rates of members of the Group’s pension plans are based on published statistics and take
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 2017
At 31 March 2016
UK
US
UK
US
21.6 years
20.9 years
22.7 years
21.2 years
23.7 years
22.5 years
26.6 years
22.9 years
23.8 years
22.9 years
23.9 years
23.2 years
26.1 years
24.5 years
27.0 years
24.9 years
Shorter longevity assumptions are used for members who retire on grounds of ill health.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
30. 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. The Group has assumed medical cost inflation at 8.0% per annum (2016 – 6.0%), grading down to 5% by
2023, and used a discount rate of 3.9% (2016 – 3.6%).
At 31 March 2017, 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):
Increase/(decrease) in obligation
Change in
assumptions +/-
Increase in
assumption
Decrease in
assumption
Pension plans
Inflation rate
Life expectancy
Discount rate
Medical benefits
Medical cost inflation
Discount rate
(iii) Analysis of movements in the plan assets
At 1 April 2015
Year ended 31 March 2016
Interest on plan assets
Actual return lower than interest on plan assets
Employer’s contributions (including £2 million related to buy-out transaction)
Benefits paid
Settlements
Currency translation differences
Decrease in fair value of plan assets
At 31 March 2016
Year ended 31 March 2017
Interest on plan assets
Actual return higher than interest on plan assets
Employer’s contributions
Benefits paid
Currency translation differences
Increase in fair value of plan assets
At 31 March 2017
50 bp
1 year
100 bp
50 bp
100 bp
UK
£m
1 122
37
(35)
25
(50)
(81)
–
(104)
1 018
34
164
22
(51)
–
169
1 187
62
71
(220)
3
(7)
US
£m
412
15
(17)
13
(28)
–
13
(4)
408
17
15
16
(69)
56
35
443
(49)
(71)
280
(3)
8
Total
£m
1 534
52
(52)
38
(78)
(81)
13
(108)
1 426
51
179
38
(120)
56
204
1 630
164 Tate & Lyle PLC Annual Report 2017
164 Tate & Lyle PLC Annual Report 2017
30. Retirement benefit obligations continued
Analysis of plan assets
Equities – quoted
Corporate bonds – quoted
Government bonds – quoted
Other assets – quoted
Property – unquoted
Insurance policies – unquoted
Equities – quoted
Corporate bonds – quoted
Government bonds – quoted
Other assets – quoted
Property – unquoted
Insurance policies – unquoted
UK
£m
324
138
385
62
–
278
1 187
UK
£m
285
124
312
31
–
266
1 018
At 31 March 2017
Total
£m
434
392
438
62
22
282
1 630
At 31 March 2016
Total
£m
386
358
361
31
20
270
1 426
US
£m
110
254
53
–
22
4
443
US
£m
101
234
49
–
20
4
408
The fair value of the insurance policies are deemed to be equivalent to the present value of the related benefit obligation.
The Group also paid an additional £4 million (2016 – £4 million) to the US unfunded retirement medical plans to meet the cost of
providing the benefits in the financial year.
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.
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 Group considers that it has an unconditional right to the surplus
relating to the UK plan as the scheme rules state that any surplus should be returned to the Group in the event that there are no
members left in the pension scheme.
c) Mitigation of risk
The defined benefit pension plans expose the Group to actuarial risks such as interest rate, longevity, inflation and investment 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 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 2017, £282 million (2016 – £270 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.
d) Funding of the plans
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. During the year, the actuarial valuation at 31 March 2016 of the Tate & Lyle Group
Pension Scheme (Scheme) was concluded with core funding contributions remaining at £12 million per year. The secured funding
account established under the previous actuarial valuation will continue to receive supplementary contributions of £6 million per
year until March 2023, payable to the trustees on certain triggering events such as under performance of the Scheme’s investments
or a deterioration in the strength of the Group’s financial covenant. The Group will continue to fund the UK plan administration costs.
During the year the Amylum UK Pension Scheme was formally wound up. This followed the final settlement of £2 million in the prior
year included in discontinued operations.
During the year ending 31 March 2018, the Group expects to contribute approximately £39 million to its defined benefit pension plans
and to pay approximately £5 million in relation to retirement medical benefits.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
31. Share-based payments
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 2017 and 2016 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 £21 million (2016 – £9 million). The
following arrangements existed during the period:
a) 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 until the end of the performance period, and subject to the satisfaction of performance
conditions.
The conditions applicable to PSP awards made from 1 April 2016 relate to the achievement of the Group adjusted return on capital
employed (ROCE) and adjusted profit targets. 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. Up to 25% of each award vests dependent on
the compound annual growth in the Group’s adjusted profit before tax with the remaining 25% from compound annual growth of the
Speciality Food Ingredients business adjusted operating profit (excluding SPLENDA® Sucralose).
The conditions applicable to PSP awards made prior to 31 March 2016 relate to the achievement of 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.
b) 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.
c) 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. The exercise price reflects a discount to market value of up to 20%.
d) 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.
e) Conditional Share Award
During the year, the Company has made a Conditional Share Award (CSA) to eligible employees. Up to 50% of each award vests
dependent on an adjusted Group profit after tax on continuing operations for the year ended 31 March 2017. Up to 50% of each
award vests dependent on the Group’s adjusted ROCE from continuing operations as at 31 March 2017. The award vests as soon as
practicable after 31 March 2017, however, some employees are subject to an additional retention period ending 31 March 2018. The
vesting level of the awards may be reduced in other circumstances specified at award.
Further information for these awards made in relation to executive directors (a, b and c only) are set out in the Directors’
Remuneration Report on pages 74 to 97.
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
2017
2016
Awards
(number)
Weighted average
exercise price
(pence)
Awards
(number)
Weighted average
exercise price
(pence)
10 607 961
5 875 352
(1 209 949)
(2 837 872)
12 435 492
603 939
10p
6p
10p
5p
10p
3p
9 895 482
5 264 964
(2 020 143)
(2 532 342)
10 607 961
548 530
10p
8p
3p
10p
10p
–
The weighted average market price of the Company’s ordinary shares on the dates on which awards were exercised during the year
was 684p (2016 – 529p).
166 Tate & Lyle PLC Annual Report 2017
166 Tate & Lyle PLC Annual Report 2017
31. Share-based payments continued
Awards granted in the year
During the year, PSP awards were granted over 4,177,420 shares (2016 – 3,502,180 shares), no Restricted Share Awards were
granted (2016 – 166,367 shares), Conditional Share Awards were granted over 1,474,000 shares (2016 – 1,515,000 shares), the
deferred element of Group Bonus Plan awards were granted over 161,503 shares (2016 – nil) and Sharesave options were granted
over 62,429 shares (2016 – 81,417 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 2017
Year ended 31 March 2016
PSP
Sharesave
662p
102p
CSA
582p
PSP
Sharesave
540p
119p
CSA
467p
722p
3 years
–
3.87%
n/a
667p
3.3/5.3
years
0.37%/
0.76%
4.20%
25%
621p
0.9/1.9
years
–
4.51%
n/a
591p
608p
3 years
–
3.3/5.3
years
1.01%/
1.40%
504p
0.9/1.9
years
–
4.61%
4.74%
5.56%
n/a
25%
n/a
In addition, deferred shares issued under the Group Bonus Plan during the year have an expected life of 2.0 years with a fair value at
the grant date of 614p. No deferred shares were issued under the Group Bonus Plan during the prior year.
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.
Awards outstanding at the end of the year
The range of exercise prices and the weighted average remaining contractual life of the awards outstanding at the end of the year
were as follows:
Exercise price
Nil
400p to 799p
Total
At 31 March 2017
Weighted average
contractual life
(months)
44.9
32.1
44.7
At 31 March 2016
Weighted average
contractual life
(months)
45.4
35.3
45.2
Awards
(number)
10 396 563
211 398
10 607 961
Awards
(number)
12 207 008
228 484
12 435 492
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
32. Provisions and contingent liabilities
Provisions
At 1 April 2015
Year ended 31 March 2016
Provided in the year
Released in the year
Utilised in the year
Exchange and other movements
At 31 March 2016
Year ended 31 March 2017
Provided in the year
Released in the year
Utilised in the year
Exchange and other movements
At 31 March 2017
Provisions are expected to be utilised as follows:
– within one year
– after more than one year
Total
Insurance
provisions and
reserves
£m
7
3
–
–
2
12
1
(1)
(5)
2
9
Restructuring and
closure provisions
Other provisions
£m
1
13
–
–
–
14
3
(1)
(14)
1
3
£m
13
6
(1)
(9)
1
10
3
–
–
2
15
2017
£m
10
17
27
Total
£m
21
22
(1)
(9)
3
36
7
(2)
(19)
5
27
At 31 March
2016
£m
23
13
36
Provisions primarily relate to Group legal matters and previously disposed businesses, restructuring and closure provisions relating
to restructuring within the Group and insurance funds representing amounts provided by the Group’s captive insurance subsidiary in
respect of the expected level of insurance claims. All provisions are expected to be utilised within five years.
The difference between the carrying value and the discounted present value was not material in either year.
Contingent liabilities
Passaic River
The Group remains subject to a legal case arising from the notification in 2007 by the U.S. Environmental Protection Agency
(‘USEPA’) that Tate & Lyle, along with approximately 70+ others, is a potentially responsible party (‘PRP’) for a 17 mile section of the
northern New Jersey Passaic River, a major ‘Superfund’ site. In March 2016, the USEPA issued its Record of Decision (‘ROD’) on the
likely cost for the remediation of the lower eight mile section of the river (the most contaminated). Whilst Tate & Lyle will continue to
vigorously defend itself in this matter, in light of the publication of the ROD, the Group took an exceptional charge of £6 million in the
year ended 31 March 2016. The Group continues to be unable to estimate a reasonably possible range of loss in respect of the
remaining nine mile section of the river and therefore has not recognised a provision in this regard.
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. 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 2017 will have a material adverse effect on the Group’s
financial position.
168 Tate & Lyle PLC Annual Report 2017
168 Tate & Lyle PLC Annual Report 2017
33. Commitments
Capital commitments
Commitments for the purchase of intangible assets
Commitments for the purchase of property, plant and equipment
Total
2017
£m
–
25
25
At 31 March
2016
£m
1
47
48
In addition, commitments in respect of retirement benefit obligations are detailed in Note 30.
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 year-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
2017
£m
34
116
168
318
At 31 March
2016
£m
28
106
169
303
34. Acquisitions and disposals
Completion of Moroccan disposal
On 1 June 2016, the Group completed the sale of its corn wet mill in Casablanca, Morocco to ADM, receiving gross cash proceeds of
£4 million, £3 million net after cash disposed. The investment had previously been classified as held for sale at 31 March 2016. The
Group recognised an operating exceptional impairment charge of £4 million in the year ended 31 March 2016, aligning book value
with expected proceeds after allowing for working capital and cash extracted from the business before completion. In the current
financial year, the Group recognised a £1 million exceptional gain resulting from the recycling of cumulative foreign exchange
translation gains from reserves to the income statement upon disposal of the subsidiary.
During the year ended 31 March 2016, the Group recognised an exceptional tax charge of £5 million within discontinued operations
in respect of historical tax matters in Morocco.
Completion of Howbetter disposal
On 23 December 2016, the Group completed the disposal of Jiangsu Tate & Lyle Howbetter Food Co., Ltd, its Food Systems
subsidiary in China, recognising a £7 million operating exceptional charge (within other expenses) in respect of impairing and
deconsolidating the entity prior to disposal, and associated costs (see Note 7).
Eaststarch re-alignment
Update in current financial year
During the year ended 31 March 2017, the Group concluded its purchase price allocation in respect of the acquisition of the
remaining 50% of the plant in Slovakia, Amylum Slovakia s.r.o. (subsequently renamed Tate & Lyle Boleraz s.r.o.). The Group
recognised a £1 million increase to the provisional goodwill that was recognised at 31 March 2016 following a re-measurement of
net assets acquired.
Eaststarch re-alignment made during the year ended 31 March 2016
On 31 October 2015, the Group completed the re-alignment of its Eaststarch joint venture with ADM. Under the re-alignment, the
Group disposed of the predominantly bulk ingredients plants in Bulgaria, Turkey and Hungary and acquired the remaining 50%
interest in the more speciality food ingredients focused plant in Slovakia not already owned by the Group. The Group received net
cash consideration of £173 million (€240 million) at closing.
Although the cash consideration was received as a single net amount, IFRS required this consideration to be grossed-up to
determine the cash effectively paid to acquire the 50% interest in the Slovakia business and the cash received for the disposal of
the Group’s interests in the plants in Bulgaria, Turkey and Hungary. In addition, as the acquisition of the Slovakian business was a
step acquisition, the Group’s existing interest in this plant was required to be re-measured to its fair value, which was then included
as a component of the consideration paid for the acquisition. This gross-up of the net cash consideration was done at fair value.
The result was that consideration of £112 million (€156 million) was deemed to be paid for the acquired business, comprising
£56 million (€78 million) of cash consideration and £56 million (€78 million) for the fair value of the Group’s existing interest in
Slovakia. Each of the components of the Eaststarch re-alignment, comprising the acquisition accounting for the Slovakia business,
the gain on re-measurement of the Group’s existing interest in that plant and the disposal of the plants in Bulgaria, Turkey and
Hungary, are set out on pages 170 and 171.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
34. Acquisitions and disposals continued
Acquisition of Amylum Slovakia s.r.o.
As noted on the previous page, as part of the re-alignment of the Eaststarch joint venture, the Group acquired the remaining 50%
of the more speciality focused plant in Slovakia, Amylum Slovakia s.r.o., and subsequently renamed it Tate & Lyle Boleraz s.r.o.
Total consideration in respect of the Slovakian acquisition was £115 million. The fair value of identifiable net assets acquired was
£80 million, resulting in provisional goodwill as at 31 March 2016 of £35 million (which was not deductible for tax purposes).
The plant in Slovakia provides a solid base from which to grow the Group’s Speciality Food Ingredients business in Europe and an
opportunity to increase production at the plant over time. Provisional goodwill of £35 million primarily represented the premium paid
to acquire an established business with a proven workforce and growth potential in the speciality food ingredients market.
At the same time, two long-term distribution agreements were also put in place under which the Group distributes crystalline
fructose, a speciality sweetener, produced by ADM in Turkey and ADM acts as exclusive distributor for bulk ingredients, produced in
the Group’s Slovakia and Netherlands facilities.
The acquired business in Slovakia contributed sales of £52 million and an operating profit of £2 million for the period from
acquisition on 31 October 2015 until the end of the 2016 financial year (including the amortisation of acquired intangibles recognised
from the acquisition). Had the business been acquired at the beginning of the 2016 financial year, it would have contributed sales of
£130 million and an operating profit of £5 million in the 2016 financial year. Acquisition related costs were recognised as part of the
overall Eaststarch re-alignment transaction costs (within exceptional items) and in cash flows from operating activities in the
consolidated statement of cash flows.
The following tables provide a summary of the acquisition accounting:
Consideration
Non cash consideration (fair value of existing interest in Slovakian joint venture)
Purchase price adjustments
Total consideration
Less: fair value of net assets acquired
Provisional goodwill
Cash flows:
Total consideration (including purchase price adjustments)
Less: net cash and working capital adjustments
Acquisition of business, net of cash acquired
The fair value of net assets acquired is comprised as follows:
Intangible assets (customer relationships £20 million,
distribution agreement £9 million)
Property, plant and equipment
Inventories
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Tax liabilities (deferred tax liability £6 million)
Net assets on acquisition
* Subsequently amended in the year ended 31 March 2017; see Eaststarch re-alignment earlier in this note.
Book value on
acquisition
£m
Fair value
adjustments
£m
–
48
9
9
6
(10)
(4)
58
29
(1)
–
–
–
–
(6)
22
2016
£m
56
56
3
115
(80)
35
(59)
5
(54)
2016
£m
29
47
9*
9
6
(10)
(10)
80
170 Tate & Lyle PLC Annual Report 2017
170 Tate & Lyle PLC Annual Report 2017
34. Acquisitions and disposals continued
Disposals made during the year ended 31 March 2016
As a result of the Eaststarch re-alignment the Group exited the predominantly bulk ingredient plants in Bulgaria, Turkey and
Hungary. The re-alignment of the Group’s interest in Eaststarch resulted in a gain on re-measurement/disposal of £73 million.
50%
Interest in Slovakia
Other Eaststarch
plants
Note
£m
56
2
58
(52)
–
(1)
5
Consideration
Purchase price adjustments
Total consideration
Total assets disposed
Foreign exchange recycled from other comprehensive income
Disposal cost
Gain on re-measurement/disposal – reported within
exceptional items
7
Cash flows:
Disposal of joint ventures
Transaction costs (within exceptional cash flow)
Net cash inflow on disposals
Exceptional gain on re-measurement/disposal reported as follows:
Re-measurement of interest in Slovakia – continuing operations
Disposal of other Eaststarch joint ventures – discontinued operations
Total gain on re-measurement/disposal – exceptional items
35. Events after the balance sheet date
There were no post balance sheet events requiring disclosure in respect of the year ended 31 March 2017.
£m
229
11
240
(133)
(34)
(5)
2016
£m
285
13
298
(185)
(34)
(6)
68
73
240
(4)
236
2016
£m
5
68
73
Note
7
7
www.tateandlyle.com
www.tateandlyle.com 171
171
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
36. Related party disclosure
Identity of related parties
The Group has related party relationships with its joint ventures and associates, the Group’s pension schemes and with key
management, being its Directors and executive officers. No related party transaction 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, Tate & Lyle PLC, with subsidiaries and between subsidiaries as well as the resultant
balances of receivables and payables are eliminated on consolidation and are not required to be disclosed. Transactions and
balances with and between joint ventures are as shown below. There are no such transactions with associates.
In the year ended 31 March 2017, the Group disposed of, and therefore ceased to have related party transactions with two of its
subsidiaries. The Group disposed of its equity interest in Jiangsu Tate & Lyle Howbetter Food Co., Ltd., its Food Systems business in
China. The Group also completed the disposal of its interest in its corn wet mill in Casablanca, Morocco. There were no other
material changes in related parties or in the nature of related party transactions during the year. Further details can be found in
Note 34.
In the year ended 31 March 2016, the Group re-aligned its Eaststarch joint venture and therefore ceased to have related party
transactions with it.
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
Year ended 31 March
2017
£m
133
–
2017
£m
24
–
2016
£m
137
132
At 31 March
2016
£m
12
–
The Group had no material related party transactions containing unusual commercial terms in the current or prior year.
Key management compensation is disclosed in Note 10. There were no other related party transactions with key management.
37. 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:
Year ended 31 March
2017
£1 =
1.30
1.19
2017
£1 =
1.25
1.17
2016
£1 =
1.51
1.37
At 31 March
2016
£1 =
1.44
1.26
Average rate
US dollar
Euro
Year-end rate
US dollar
Euro
172 Tate & Lyle PLC Annual Report 2017
172 Tate & Lyle PLC Annual Report 2017
38. Full listing of subsidiaries, joint ventures and associates
Subsidiaries based in the United Kingdom1
Percentage of
ordinary shares
attributable to
Tate & Lyle PLC
Type of business
Percentage of
preference
shares
attributable to
Tate & Lyle PLC Registered address
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
Dormant
Dormant
Blending
Dormant
Dormant
Dormant
Dormant
T.L.S.S. Pension Nominees Limited
Dormant
Tate & Lyle Export Holdings Limited2
Holding company
Tate & Lyle Group Services Limited
Holding company
Tate & Lyle Holdings Americas Limited
Holding company
Tate & Lyle Holdings Limited
Tate & Lyle Industrial Holdings Limited2
Dormant
Dormant
Tate & Lyle Industries Limited
Holding company
Tate & Lyle International Finance PLC2
Tate & Lyle Investments (Gulf States)
Limited
In-house treasury
company
Dormant
Tate & Lyle Investments America Limited Holding company
Tate & Lyle Investments Brazil Limited
Holding company
Tate & Lyle Investments Limited2
Holding company
Tate & Lyle L.P.
Tate & Lyle Overseas Limited
Investment
partnership
Dormant
Tate & Lyle Pension Trust Limited2
Pension company
Tate & Lyle Share Shop Limited2
Dormant
Tate & Lyle Technology Limited2
Holding company
Tate & Lyle UK Limited2
Holding company
Tate & Lyle Ventures II LP
Investment
partnership
Tate & Lyle Ventures Limited2
Holding company
Tate & Lyle Ventures LP
Investment
partnership
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
100
1 Registered in England and Wales, except Tate & Lyle L.P. which is registered in Delaware, USA.
2 Direct subsidiaries of Tate & Lyle PLC.
– 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
100 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
100 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
100 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
100 1 Kingsway, London WC2B 6AT, United Kingdom
– 1209 North Orange Street, Wilmington, Delaware
19801, United States
– 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
– 1 Kingsway, London WC2B 6AT, United Kingdom
www.tateandlyle.com
www.tateandlyle.com 173
173
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
38. Full listing of subsidiaries, joint ventures and associates continued
Subsidiaries operating overseas
Percentage of
ordinary shares
attributable to
Tate & Lyle PLC
Percentage of
preference
shares
attributable to
Tate & Lyle PLC
Registered address
Country of
incorporation
or registration
Company
Type of business
Argentina
Tate & Lyle Argentina SA1
SFI distribution and sales
support
Australia
Tate & Lyle ANZ Pty Limited
Food Systems production and
SFI distribution
Belgium
Tate & Lyle Services
Internal service provider and
(Belgium) N.V.2
sales support
Bermuda
Tate & Lyle Management &
Reinsurance
Finance Limited
Brazil
Tate & Lyle Brasil S.A.1
Citric acid production and SFI
distribution
G.C. Hahn & Co. do Brasil
Dormant
Estabilizantes e Tecnologia
para Alimentos Ltda.1
Tate & Lyle Brasil Holdings
Holding company
LTDA1
100
100
100
100
100
100
100
Tate & Lyle Gemacom Tech
Indústria e Comércio S.A.1
Food Systems production and
90
support
Canada
Tate & Lyle Ingredients
SFI sales support
Canada Limited
Chile
China
Tate & Lyle Chile
Commercial Ltda
SFI distribution and sales
support
Tate & Lyle Trading
(Shanghai) Co. Ltd1
SFI distribution and sales
support
100
100
100
Colombia
Tate & Lyle Colombia S.A.S.1 SFI distribution and sales
Croatia
Czech
Republic
support
Food Systems sales
G.C. Hahn & Co. d.o.o. Za
distribuciju stabilizacionih
sistema
G.C. Hahn & Co. stabilizacni
Food Systems sales
technika, s.r.o.
Egypt
Tate & Lyle Egypt LLC
Dormant
France
G.C. Hahn & Cie. SARL
Food Systems sales
100
100
100
100
100
174 Tate & Lyle PLC Annual Report 2017
174 Tate & Lyle PLC Annual Report 2017
– San Martín 140, 14th Floor,
City of Buenos Aires,
Argentina
– Building 2, 1425 Boundary
Road, Wacol QLD 4076,
Australia
– Industrielaan 4 box 10/1, 9320
Aalst, Belgium
– Canon's Court, 22 Victoria
Street, Hamilton, Bermuda
– Santa Rosa do Viterbo, State
of São Paulo, Fazenda Amália,
São Paulo, 14270-000, Brazil
– Rua Sapetuba Nº 211, CEP:-
005510-001- Vila Pirajussara,
Estado de São Paulo, Brazil
– Rodovia Santa Rosa Cajuru,
Km 6, Fazenda Amalia, Santa
Rosa de Viterbo, Sao Paulo,
14270-000, Brazil
– No. 380, Distrito Industrial,
City of Juiz de Fora, State of
Minas Gerais at Rua B, 36092-
050, Brazil
– Suite 400, Phoenix Square, 371
Queen Street, Fredericton NB
E3B 1B1, Canada
– Isidora Goyenechea 2800, Piso
43, Las Condes, Santiago,
Chile
– Room 201, 2F, XingLian
Scientific Research, Building
2, 1535 Hong Mei Road,
Shanghai, 200233, China
Development District, Rudong
county, Nantong city, China
226400
– Calle 11 #100-121 Off 309,
Cali, Colombia
– Donji Banovec 15, Koprivnica,
48000, Croatia
– Ostravská 169, 339 01 Klatovy
IV, Czech Republic
– 87 Street 9, Maadi , Cairo,
Egypt
– 113 Chemin de Ronde Croissy
III - Batiment 3, 78290,
Croissy-Sur-Seine, France
G.C. Hahn & Co. Food
Stabiliser Business
(Shanghai) Ltd1
Tate & Lyle Food Ingredients
(Nantong) Company Limited1
Food Systems sales
100
– Room 201, 2F, XingLian
Scientific Research, Building
2, 1535 Hong Mei Road,
Shanghai, 200233, China
Polydextrose production
100
– New & Hi-Tech Industrial
38. Full listing of subsidiaries, joint ventures and associates continued
Subsidiaries operating overseas continued
Country of
incorporation
or registration
Company
Type of business
Tate & Lyle Ingredients
Research and development
France S.A.S.
centre and SFI sales support
Germany
G.C. Hahn & Co.
Stabilisierungstechnik
GmbH
Food Systems research and
development and SFI sales
support
G.C. Hahn & Co.
Holding company
Cooperationsgesellschaft
mbH
HAHN International GmbH
Dormant
HL Handelskontor GmbH
Dormant
Tate & Lyle Germany GmbH
SFI sales support
Gibraltar
Tate & Lyle Insurance
(Gibraltar) Limited
Reinsurance
Greece
Tate & Lyle Greece A.E.
SFI sales support
India
Tate & Lyle Investments
Dormant
(India) Private Ltd
Israel
Tate & Lyle Israel Limited
Dormant
Gamtal Foods Ltd
Dormant
Italy
Tate & Lyle Italia S.P.A.
Food Systems production and
SFI sales support
Japan
Tate & Lyle Japan KK
SFI distribution
Lithuania
UAB G.C. Hahn & Co.
Food Systems sales
Mexico
Tate & Lyle México, S. de
SFI distribution and sales
R.L. de C.V.1
support
Mexama, S.A. de C.V.1
Dormant
Talo Services1
Internal service provider
Morocco
T&L Casablanca S.A.R.L.
SFI sales support
Netherlands Nederlandse Glucose
Holding company
Industrie B.V.
Tate & Lyle Netherlands
BI and SFI production
B.V.
Poland
G.C. Hahn & Co. Technika
stabilizowania Sp.z o.o.
Dormant
Percentage of
ordinary shares
attributable to
Tate & Lyle PLC
Percentage of
preference
shares
attributable to
Tate & Lyle PLC
Registered address
100
100
100
100
100
100
100
95
100
100
65
100
100
100
100
65
100
100
100
100
100
– 2 Avenue de L'Horizon, 59650
Villeneuve-D'Ascq, France
– Roggenhorster Strasse 31,
23556, Lübeck, Germany
– Roggenhorster Strasse 31,
23556, Lübeck, Germany
– Roggenhorster Strasse 31,
23556, Lübeck, Germany
– Roggenhorster Strasse 31,
23556, Lübeck, Germany
– Roggenhorster Strasse 31,
23556, Lübeck, Germany
– Suite 913, Europort, Gibraltar
– 54248 Thessaloniki, K.
Papadaki 69, Greece
– C-367, Defense Colony, New
Delhi, 110 024, India
– 16 Hatidhar st Ra'annana,
Raanana, 4088, Israel
– 7 Anatot, Tel Aviv Jaffa,
6908007, Israel
– Via Verdi, 1-Ossona, Milano,
Italy
– 2F Oak Minami-Azabu Building,
3-19-23 Minami-Azabu,
Minato-ku, Tokyo, Japan
– E. Simkunaites Str. 10, ,
Vilnius, LT04130, Lithuania
– Insurgentes Sur 863, Piso 12,
Colonia Nápoles, 03810,
México
– Calle lago de tequesquitengo ,
No 111 Col. Cuahutemoc C.P.
62430 , Morelos, México
–
Insurgentes Sur 863, Piso 12,
Colonia Nápoles, 03810, D.F,
México
– 22, Rue du Parc, Casa Théâtre
Centre, Anfa, Casablanca,
Morocco
100 1541 KA, Kong aan de Zaan,
Lage dijk 5, The Netherlands
– 1541 KA, Kong aan de Zaan,
Lage dijk 5, The Netherlands
– ul. Bagienna 1 Chyby k.
Poznania, 62-081,
Przezmierowo, Poland
www.tateandlyle.com
www.tateandlyle.com 175
175
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Consolidated Financial Statements continued
38. Full listing of subsidiaries, joint ventures and associates continued
Subsidiaries operating overseas continued
Percentage of
ordinary shares
attributable to
Tate & Lyle PLC
Percentage of
preference
shares
attributable to
Tate & Lyle PLC
Country of
incorporation
or registration
Russian
Federation
Company
Type of business
Tate & Lyle Global
Internal service provider
Shared Services Sp.z o.o.
Tate & Lyle Poland
SFI sales support
Sp.z o.o.
Tate & Lyle CIS LLC1
Food Systems sales
Singapore
Tate & Lyle Asia Pacific
Pte. Ltd.
SFI sales and ASPAC
regional head office
Tate & Lyle Singapore
Sucralose production
Pte Ltd
(now decommissioned)
Tate & Lyle Singapore
Holding company
Holdings Pte Ltd
Slovakia
Tate & Lyle Boleraz s.r.o. BI and SFI production
Tate & Lyle Slovakia,
Internal service provider
South Africa
s.r.o.
Tate and Lyle South
Africa Proprietary
Limited
Food Systems production
and SFI distribution
Spain
G.C. Hahn Estabilizantes
Food Systems sales
y Tecnologia para
Alimentos
Ebromyl S.L.
Dormant
Talan Iberica SA
Dormant
Sweden
Tate & Lyle Sweden AB
Oat protein and Beta
Glucan production
Turkey
Tate and Lyle Turkey
SFI sales support
Gıda Hizmetleri Anonim
Şirketi
Ukraine
PII G.C. Hahn & Co. Kiev1 Food Systems sales
United Arab
Emirates
Tate & Lyle DMCC
Food Systems and SFI
sales support
USA
Staley Holdings LLC
Holding company
Tate & Lyle Custom
Ingredients LLC
Food Systems production
Tate & Lyle Finance LLC
In-house finance
TLHUS, Inc.
Holding company
Tate & Lyle Ingredients
BI and SFI production
Americas LLC
Tate & Lyle Sucralose
Sucralose production
LLC
TLI Holding LLC
In-house finance
Tate & Lyle Domestic
Internal service provider
International
Sales Corporation
176 Tate & Lyle PLC Annual Report 2017
176 Tate & Lyle PLC Annual Report 2017
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
–
–
–
Registered address
Sterlinga 8A, 91425, Łódź, Poland
Sterlinga 8A, 91425, Łódź, Poland
Leninskaya Sloboda,26, Area 2, Room
100, 115280, Moscow, Russian
Federation
3 Biopolis Drive, #05-11 Synapse,
Singapore 138623
– One Marina Boulevard #28-00
Singapore 018989
– One Marina Boulevard #28-00
Singapore 018989
– Boleraz 114, 91908 Boleraz, Slovakia
– Boleraz 114, 91908 Boleraz, Slovakia
–
1 Gravel Drive, Kya Sands Business
Park, Kya Sands, 2163, South Africa
– Av. Valencia, 15, 46171, Casinos
Valencia, Spain
– Paseo Independencia, 6- PLT 3, 50004,
Zaragoza, Zaragoza, Spain
–
28 Raimundo Fernández Villaverde,
28003, Madrid, Spain
– Älvåsvägen 1, 610 20, Kimstad, Sweden
– Esentepe Mah., Büyükdere Cad. , 193
Plaza Kat: 2 193 / 235A14 Şişli, İstanbul,
Turkey
– Mala Olexandriwka, Zentralna-Str. 2-B,
Borispol, 08320KIEW, UKRAINE
– Cluster X, Tower X3, Office n. 3805.,
Jumeira Lake Towers, Dubai, United
Arab Emirates
–
–
–
–
–
–
–
–
1209 North Orange Street, Wilmington,
Delaware 19801, United States
1209 North Orange Street, Wilmington,
Delaware 19801, United States
1209 North Orange Street, Wilmington,
Delaware 19801, United States
1209 North Orange Street, Wilmington,
Delaware 19801, United States
1209 North Orange Street, Wilmington,
Delaware 19801, United States
1209 North Orange Street, Wilmington,
Delaware 19801, United States
1209 North Orange Street, Wilmington,
Delaware 19801, United States
1209 North Orange Street, Wilmington,
Delaware 19801, United States
38. Full listing of subsidiaries, joint ventures and associates continued
Subsidiaries operating overseas continued
Country of
incorporation
or registration
Company
Type of business
Tate & Lyle Grain, Inc.
Grain products
Tate & Lyle Malic Acid
Dormant
LLC
Tate & Lyle Sugar
Holding company
Holdings, Inc.
Tate & Lyle Americas
Internal service provider
LLC
Tate & Lyle Citric Acid
Citric acid production
LLC
Staley International Inc.
Cereal sweeteners and
G. C. Hahn USA LLC
Dormant
starches
1 Non-coterminous year-end.
2 Direct subsidiaries of Tate & Lyle PLC.
Joint ventures
Country of
incorporation
or registration
Company
Type of business
Mexico
Almidones Mexicanos
BI and SFI production
SA1
Promotora de Productos
y Mercados Mexicanos,
S.A. de C.V.
BI and SFI production
Netherlands Eastern Sugar B.V.
Holding company
USA
DuPont Tate & Lyle Bio
Products Company, LLC
Industrial ingredients
1 Non-coterminous year-end.
Associates
Percentage of
ordinary shares
attributable to
Tate & Lyle PLC
Percentage of
preference
shares
attributable to
Tate & Lyle PLC
Registered address
100
100
100
100
100
100
100
– 1209 North Orange Street,
Wilmington, Delaware 19801,
United States
– 1209 North Orange Street,
Wilmington, Delaware 19801,
United States
– 1209 North Orange Street,
Wilmington, Delaware 19801,
United States
– 1209 North Orange Street,
Wilmington, Delaware 19801,
United States
– 1209 North Orange Street,
Wilmington, Delaware 19801,
United States
– 208 So. LaSalle Street, Suite 814,
Chicago, IL 560604, United States
– 1209 North Orange Street,
Wilmington, Delaware 19801,
United States
Percentage of
ordinary shares
attributable to
Tate & Lyle PLC
Percentage of
preference
shares
attributable to
Tate & Lyle PLC
Registered address
50
50
50
50
– Calle 26 No. 2756, Zona Industrial,
Guadalajara, Jal., 44940, Mexico
– Calle 26 No. 2756, Zona Industrial,
Guadalajara, Jal., 44940, Mexico
– Zwanebloem 31, 4823 MV Breda,
The Netherlands
– 1209 North Orange Street,
Wilmington, Delaware 19801,
United States
Country of
incorporation
or registration
Company
Type of business
Percentage of
ordinary shares
attributable to
Tate & Lyle PLC
Percentage of
preference
shares
attributable to
Tate & Lyle PLC
Registered address
Thailand
Tapioca Development
Starch production
33.3
– 8th floor Thai Wah Tower 1, 21/19
Corporation1
1 Direct associate of Tate & Lyle PLC.
South Sathorn Rd., Tungmahamek,
Sathorn, Bangkok 10120, Thailand
The results, assets and liabilities and cash flows of those entities whose financial years are not coterminous with that of the
Group are consolidated or equity accounted in the Group’s financial statements on the basis of management accounts for the year
to 31 March.
www.tateandlyle.com
www.tateandlyle.com 177
177
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
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
2017;
• 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
The financial statements, included within the
Annual Report, comprise:
• the Parent Company Balance Sheet as at
31 March 2017;
• the Parent Company Statement of Changes
in Equity for the year then ended; 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 United Kingdom Accounting
Standards, comprising FRS 101 ‘Reduced
Disclosure Framework’, and applicable law
(United Kingdom Generally Accepted
Accounting Practice).
Other required reporting
Consistency of other information
and compliance with applicable
requirements
Companies Act 2006 opinion
In our opinion, based on the work undertaken in
the course of the audit:
• 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; and
• the Strategic Report and the Directors’
Report have been prepared in accordance
with applicable legal requirements.
In addition, in light of the knowledge and
understanding of the Company and its
environment obtained in the course of the audit,
we are required to report if we have identified
any material misstatements in the Strategic
Report and the Directors’ Report. We have
nothing to report in this respect.
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 99, 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. With respect to the Strategic
Report and Directors’ Report, we consider
whether those reports include the disclosures
required by applicable legal requirements.
Other matter
We have reported separately on the Group
financial statements of Tate & Lyle PLC for the
year ended 31 March 2017.
John Waters (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
24 May 2017
• 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.
• Legislation in the United Kingdom governing
the preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions.
178 Tate & Lyle PLC Annual Report 2017
178 Tate & Lyle PLC Annual Report 2017
Parent Company Balance Sheet
ASSETS
Fixed assets
Tangible fixed assets
Intangible assets
Investments in subsidiary undertakings
Investments in associates
Total
Current assets
Debtors
Cash at bank
Creditors – amounts falling due within one year
Net current assets
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
Retained earnings
Total shareholders’ funds
Notes
2017
£m
At 31 March
2016
£m
2
3
4
5
6
7
8
11
2
3
1 028
4
1 037
1 554
–
1 554
(1 314)
240
1 277
(2)
1 275
117
406
8
744
3
3
1 018
2
1 026
1 617
–
1 617
(1 531)
86
1 112
(2)
1 110
117
406
8
579
1 275
1 110
The Company recognised profit for the year of £298 million (2016 – £260 million).
The Parent Company’s financial statements on pages 179 to 186 were approved by the Board of Directors on 24 May 2017 and
signed on its behalf by:
Javed Ahmed, Nick Hampton
Directors
The notes on pages 181 to 186 form part of these financial statements.
Tate & Lyle PLC
Registered number: 76535
www.tateandlyle.com
www.tateandlyle.com 179
179
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Parent Company Statement of Changes in Equity
At 1 April 2015
Year ended 31 March 2016:
Profit for the year
Purchase of own shares
Share-based payments
Ordinary dividends paid
At 31 March 2016
Year ended 31 March 2017:
Profit for the year
Purchase of own shares
Share-based payments
Ordinary dividends paid
At 31 March 2017
Called up
share
capital
£m
117
Share
premium
account
£m
406
–
–
–
–
–
–
–
–
117
406
–
–
–
–
–
–
–
–
117
406
Capital
redemption
reserves
£m
8
–
–
–
–
8
–
–
–
–
8
Retained
earnings
£m
446
260
(7)
10
(130)
579
298
(18)
15
(130)
744
Total
equity
£m
977
260
(7)
10
(130)
1 110
298
(18)
15
(130)
1 275
At 31 March 2017, the Company had realised profits available for distribution in excess of £625 million.
180 Tate & Lyle PLC Annual Report 2017
180 Tate & Lyle PLC Annual Report 2017
Notes to the Parent Company Financial Statements
1. Principal accounting policies
Basis of preparation
Tate & Lyle PLC (the Company) is a public limited company
incorporated in the United Kingdom and registered in England.
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 Financial
Reporting Standard 101 ‘Reduced Disclosure Framework’ (‘FRS
101’) and with UK accounting presentation as at 31 March 2017,
with comparative figures as at 31 March 2016.
For the reasons set out on page 111, the Company’s financial
statements are prepared on a going concern basis.
As permitted by Section 408 of the Companies Act 2006, the
Company’s profit and loss account is not presented in these
financial statements. Profit and loss account disclosures are
presented in Note 13.
The results of the Company are included in the preceding Group
financial statements.
The following exemptions from the requirements of IFRS have
been applied in the preparation of these financial statements, in
accordance with FRS 101:
• the requirements of IAS 7 Statement of Cash Flows
• the requirements of paragraph 17 and 18(a) of IAS 24 Related
Party Disclosures
• the requirements in IAS 24 Related Party Disclosures to
disclose related party transactions entered into between two
or more members of a group, provided that any subsidiary
which is a party to the transaction is wholly owned by such a
member
• the requirement in paragraph 38 of IAS 1 Presentation of
Financial Statements to present comparative information in
respect of paragraph 79(a)(iv) of IAS 1
• the requirements of IFRS 7 Financial Instruments:
Disclosures
• the requirements of paragraphs 30 and 31 of IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors
• the requirements of IFRS 2 Share Based Payments
• the requirements of paragraphs 91 to 99 of IFRS 13 Fair Value
Measurement
• the requirements of paragraphs 10(d) (statement of cash
flows), 10(f) (statement of financial position as at the
beginning of the proceeding period when an entity applies an
accounting policy retrospectively), 38(A to D) (comparative
information), 40(A to D) (presentation of third balance sheet),
111 (statement of cash flows) and 134 to 136 (capital
management) of IAS 1 Presentation of Financial Statements.
The Company intends to maintain these disclosure exemptions
in future years.
Judgements and key sources of uncertainty
Estimating fair value for share-based transactions requires
determination of the most appropriate valuation model
which depends on the terms and conditions of the grant.
This estimation also requires determination of the most
appropriate inputs to the valuation model.
Tangible fixed assets
Tangible fixed assets are 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.
Residual values and useful lives are reviewed at each
period-end date and adjusted as appropriate, with any resulting
changes recognised in the income statement prospectively.
Gains and losses on disposals are determined by comparing the
disposal proceeds with the carrying amount and are included in
the income statement.
Intangible assets
Other intangible assets comprise certain computer software
and the global IS/IT system. Costs incurred on the development,
design and testing of the software and systems are capitalised
only when their technical feasibility has been proven. Costs
associated with maintenance are charged to the income
statement in the period in which they are incurred. Other
intangible assets are amortised on a straight-line basis over the
periods of their expected benefit to the Company, which are in
the range of three to seven years.
Investments
Subsidiaries are all entities over which the Company has
control. The Company controls an entity when it 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.
An associate is an entity over which the Company has significant
influence. Significant influence is the power to participate in
financial and operating policy decisions but not to control or
jointly control them.
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.
www.tateandlyle.com
www.tateandlyle.com 181
181
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Parent Company Financial Statements continued
1. Principal accounting policies continued
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 IAS 19 Employee 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 in respect of all temporary
differences that have originated but which have not reversed at
the balance sheet date where transactions or events have
occurred at that date that will result in an obligation to pay
more, or a right to pay less, or to receive more tax. Deferred tax
assets are recognised to the extent that they are regarded as
recoverable. Assets are regarded as recoverable when it is
regarded as more likely than not there will be suitable taxable
profits from which the future reversal of the underlying timing
differences can be deducted.
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 and carried at historical cost are translated using the
exchange rate ruling on the date of transaction.
Share-based payments
As described in Note 31 to the consolidated 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. Commitments in respect of
retirement benefit obligations are detailed in Note 14.
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.
Dividend income received from subsidiary companies is
recognised when the right to receive the payment is established.
182 Tate & Lyle PLC Annual Report 2017
182 Tate & Lyle PLC Annual Report 2017
2. Tangible fixed assets
Cost
At 1 April 2016
Disposals
At 31 March 2017
Accumulated depreciation
At 1 April 2016
Depreciation charge
Disposals
At 31 March 2017
Net book value at 31 March 2016
Net book value at 31 March 2017
3. Intangible assets
Cost
At 1 April 2016
Additions
At 31 March 2017
Accumulated amortisation
At 1 April 2016
Amortisation charge
At 31 March 2017
Net book value at 31 March 2016
Net book value at 31 March 2017
4. Investments in subsidiary undertakings
Cost
At 1 April 2016
Additions
At 31 March 2017
Impairment
At 1 April 2016
Reversal of impairment
At 31 March 2017
Net book value at 31 March 2016
Net book value at 31 March 2017
Plant and
machinery
£m
7
(2)
5
4
1
(2)
3
3
2
Other
intangible
assets
£m
4
1
5
1
1
2
3
3
£m
1 580
7
1 587
562
(3)
559
1 018
1 028
5. Investments in associates
The Company’s interest of ordinary shares in Tapioca Development Corporation, a company incorporated in Thailand, is 33.3%
(2016 – 33.3%).
www.tateandlyle.com
www.tateandlyle.com 183
183
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Parent Company Financial Statements continued
6. Debtors
Due within one year
Amounts owed by subsidiary undertakings
Other debtors
Total
2017
£m
1 551
3
1 554
At 31 March
2016
£m
1 614
3
1 617
The effective interest rate applicable to amounts owed by subsidiary undertakings at 31 March 2017 is 1.8% (2016 – 2.3%). Amounts
owed by subsidiary undertakings are receivable on demand. There is no security for non-trading amounts.
7. Creditors – amounts falling due within one year
Amounts owed to subsidiary undertakings
Other creditors
Accruals and deferred income
Total
2017
£m
1 292
6
16
At 31 March
2016
£m
1 509
4
18
1 314
1 531
The effective interest rate applicable to amounts owed to subsidiary undertakings at 31 March 2017 was 2.3% (2016 – 2.7%).
Amounts owed to subsidiary undertakings are repayable on demand. There is no security for non-trading amounts.
8. Creditors – amounts falling due after more than one year
Total
2017
£m
2
At 31 March
2016
£m
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.
9. Contingent liabilities
At 31 March 2017, the Company had given guarantees in respect of long-term bonds, bank facilities and a US Commercial Paper
Programme of certain of its subsidiaries and joint ventures totalling £2,117 million (2016 – £2,227 million), against which amounts
drawn totalled £700 million (2016 – £730 million). The Company had given guarantees in respect of operating lease commitments of
certain of its subsidiaries and joint ventures totalling £288 million (2016 – £270 million). The Company provides other guarantees in
the normal course of business. The Company has assessed the probability of material loss under these guarantees as remote.
In addition, commitments in respect of retirement benefit obligations are detailed in Note 14.
10. Financial commitments
Operating lease rentals payable during the year were £1 million (2016 – £1 million), all in respect of land and buildings. At 31 March
2017, the Company 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 2017, the Company had outstanding capital commitments of £nil (2016 – £nil).
2017
£m
1
6
6
13
At 31 March
2016
£m
1
6
8
15
184 Tate & Lyle PLC Annual Report 2017
184 Tate & Lyle PLC Annual Report 2017
11. Share capital and share premium
Allotted, called up and fully paid equity share capital
At 1 April
Allotted under share option schemes
At 31 March
Number
of shares
468 235 944
20 922
468 256 866
2017
Cost
£m
117
–
117
Number
of shares
468 223 975
11 969
468 235 944
2016
Cost
£m
117
–
117
See Note 22 in the consolidated financial statements for details of treasury shares and shares held in the Employee Benefit Trust.
12. 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
Year ended 31 March
2017
pence
8.2
19.8
28.0
2016
pence
8.2
19.8
28.0
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 1 August 2017 to shareholders who are on the Register of Members on 30 June 2017.
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
2017
£m
92
38
130
2016
£m
92
38
130
Based on the number of ordinary shares outstanding at 31 March 2017 and the proposed amount, the final dividend for the financial
year is expected to amount to £92 million.
13. Profit and loss account disclosures
The Company recognised a profit for the year of £298 million (2016 – £260 million).
Fees payable to the Company’s external auditors, PricewaterhouseCoopers LLP, for the audit of the Company’s financial statements
amounted to £0.1 million (2016 – £0.1 million).
The Company employed an average of 149 people (including Directors) during the year (2016 – 133). Staff costs are shown below:
Wages and salaries
Social security costs
Other pension costs
Share-based incentives
Total
Year ended 31 March
2017
£m
26
5
2
8
41
2016
£m
21
3
1
3
28
Directors’ emoluments disclosures are provided in the Directors’ Remuneration Report on pages 74 to 97 and in Note 10 of the
consolidated financial statements.
No deferred tax assets have been recognised in respect of tax losses of £341 million as there is uncertainty as to whether taxable
profits against which these assets may be recovered will be available.
www.tateandlyle.com
www.tateandlyle.com 185
185
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Notes to the Parent Company Financial Statements continued
14. Employee benefits
Plan information
The Company participates in a defined benefit plan together with another subsidiary company, Tate & Lyle Industries Ltd. Payments
made by contributing companies principally comprise funding contributions agreed with the trustees that are determined to ensure
that appropriate funding levels are maintained and funding deficits are eliminated over a reasonable period of time. The plan is
closed to new entrants and future accruals. The Company has 342 pensioners and deferred pensioners out of a total membership of
circa 5,800 (excluding dependent beneficiaries).
The Company also operates a defined contribution pension plan. Contributions payable by the Company to the plan during the year
amounted to £2 million (2016 – £1 million).
The Company has provided a full liability guarantee in respect of the pension obligations of Tate & Lyle Industries Ltd, the other
participating employer. Whilst there is no agreed allocation of deficit or surplus, the trustees have discretion to distribute any
surplus on winding up as they consider appropriate, after increase of benefits consistent with Inland Revenue Limits which applied
up to 5 April 2006.
Funding commitments of the plan
As required by UK regulations, actuarial valuations are carried out at least every three years. Core funding contributions are
£12 million per annum (2016 – £12 million). In addition, supplementary contributions of £6 million (2016 – £6 million) will be made
into a secured funding account until March 2023. The deficit or surplus in the plan impacts the future contributions which are
determined with reference to the triennial actuarial valuations.
For further details on the defined benefit plan see Note 30 in the consolidated financial statements.
186 Tate & Lyle PLC Annual Report 2017
186 Tate & Lyle PLC Annual Report 2017
Group Five-year Summary
Employment of capital
Goodwill and intangible assets
Property, plant and equipment
Other assets
Working capital (including provisions and non-debt
derivatives)
Net pension deficit
Net assets held for sale (excluding cash included in net debt)
Net operating assets
Investment in joint ventures and associates
Net debt
Net tax liability
Total net assets
Capital employed
Called up share capital
Reserves
Non-controlling interests
Results summary
Continuing operations
Sales
Adjusted operating profit
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)/credit
Profit for the year from continuing operations
Profit for the year from discontinued operations
Non-controlling interests
Profit for the year attributable to owners of the Company
Pre IFRS 11*
2013
£m
356
958
33
497
(265)
1
2014
£m
307
732
28
351
(220)
–
2015
£m
340
750
33
339
(227)
–
Post IFRS 11#
At 31 March
2016
£m
2017
£m
390
926
23
323
(208)
5
401
1 061
30
394
(139)
–
1 580
1 198
1 235
1 459
1 747
–
(479)
(65)
312
(385)
(75)
1 036
1 050
117
919
1 036
–
117
932
1 049
1
1 036
1 050
Pre IFRS 11*
327
(555)
(71)
936
117
818
935
1
936
85
(434)
(81)
96
(452)
(59)
1 029
1 332
117
911
1 028
1
117
1 215
1 332
–
1 029
1 332
Post IFRS 11#
Year ended 31 March
2013
£m
2014
£m
2015
£m
2016
£m
2017
£m
3 256
2 737
2 341
2 355
2 753
356
(10)
(12)
334
(29)
(4)
(33)
–
301
(46)
255
18
(1)
272
274
(10)
(14)
250
(27)
(8)
(35)
22
237
(32)
205
68
–
273
184
(9)
(142)
33
(23)
(8)
(31)
23
25
(21)
4
26
–
30
188
(11)
(50)
127
(23)
(6)
(29)
28
126
(5)
121
42
–
163
264
(12)
(19)
233
(25)
(7)
(32)
32
233
22
255
1
–
256
Adjusted profit before tax
327
269
184
193
271
* Year 2013 presented on a proportionate consolidation basis for both statutory and adjusted metrics.
# Years 2014-2017 prepared on an equity accounted basis for statutory and adjusted metrics.
www.tateandlyle.com
www.tateandlyle.com 187
187
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Group Five-year Summary continued
Per share information
Earnings per share continuing operations:
– basic (pence)
– diluted (pence)
Earnings per share total operations:
– basic (pence)
– adjusted basic (pence)
Earnings per share total operations:
– diluted (pence)
– adjusted diluted (pence)
Dividends per ordinary share (pence)
Closing share price at 31 March (pence)
Closing market capitalisation at 31 March (£million)
Business ratios
Interest cover (times)1
Operating profit before exceptional items and amortisation
of intangible assets divided by net finance expense
Net debt to EBITDA (times)1
Net debt divided by pre-exceptional EBITDA
Gearing
Net debt as a percentage of total net assets2
Pre IFRS 11*
Post IFRS 11#
Year ended 31 March
2013
2014
2015
2016
2017
54.9p
53.8p
58.6p
55.8p
57.4p
54.7p
26.2p
850.0p
3 980
44.2p
43.6p
58.8p
56.5p
58.0p
55.7p
27.6p
667.5p
3 125
0.9p
0.8p
6.6p
38.0p
6.5p
37.7p
28.0p
26.1p
25.9p
35.1p
34.9p
34.8p
34.7p
28.0p
55.0p
54.2p
55.2p
47.9p
54.4p
47.1p
28.0p
597.5p
578.0p
764.5p
2 798
2 706
3 580
11.1x
11.6x
10.7x
10.7x
13.9x
1.0x
0.8x
1.3x
1.2x
0.9x
46%
37%
59%
42%
34%
Adjusted operating margin
10.7%
10.0%
7.8%
7.9%
9.6%
Adjusted operating profit as a percentage of sales2
Return on net operating assets
21.5%
21.7%
14.4%
13.1%
15.7%
Profit before interest, tax and exceptional items as a
percentage of average net operating assets2
Dividend cover (times)
Basic earnings per share divided by dividends per share2
Adjusted basic earnings per share divided by dividends
per share2
2.2x
2.1x
2.1x
2.0x
0.2x
1.3x
2.0x
1.4x
1.2x
1.7x
* Year 2013 presented on a proportionate consolidation basis for both statutory and adjusted metrics.
# Years 2014-2017 prepared on an equity accounted basis for statutory and adjusted metrics.
1 Interest cover and net debt to EBITDA have been calculated using the same basis as set out in the Group’s external financial covenants.
2 These metrics have been calculated using the results of both continuing and discontinued operations.
188 Tate & Lyle PLC Annual Report 2017
188 Tate & Lyle PLC Annual Report 2017
Additional Information
Calculation of changes in constant currency
Where changes in constant currency are presented in this statement, they are calculated by retranslating current year results at
prior year exchange rates. This represents a change to the methodology applied in previous years, which involved retranslating prior
year results at current year exchange rates. This change, which has not had a material impact, has been made to align with how the
majority of external stakeholders view constant currency performance comparisons. The following tables provide reconciliation
between 2017 performance at actual exchange rates and at constant currency exchange rates. Absolute numbers presented in the
tables are rounded for presentational purposes, whereas the growth percentages are calculated on unrounded numbers.
Adjusted performance
Continuing operations
Sales
Speciality Food Ingredients
Bulk Ingredients
Central
Adjusted operating profit
Adjusted net finance expense
Share of profit after tax of joint
ventures and associates
Adjusted profit before tax
Adjusted income tax expense
Adjusted profit after tax
2017
£m
2 753
FX
£m
(361)
2017 at
constant
currency
£m
2 392
181
129
(46)
264
(25)
32
271
(49)
222
(23)
(18)
(1)
(42)
3
(1)
(40)
7
(33)
158
111
(47)
222
(22)
31
231
(42)
189
Underlying
growth
£m
37
8
27
(1)
34
1
3
38
(10)
28
2016
£m
2 355
150
84
(46)
188
(23)
28
193
(32)
161
Adjusted diluted EPS (pence)
47.1p
(7.0p)
40.1p
5.6p
34.5p
Change
%
17%
21%
54%
–
40%
(9%)
16%
40%
(55%)
37%
37%
Change in
constant
currency
%
2%
5%
32%
(1%)
18%
2%
13%
20%
(33%)
17%
16%
www.tateandlyle.com
www.tateandlyle.com 189
189
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Information for Investors
Shareholder enquiries
Ordinary shares
Equiniti Limited
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. You can
also send your enquiry via secure email
from the Shareview website.
Telephone enquiries
0371 384 2063 (for UK calls)1
+44 (0)121 415 0235 (for calls from
outside the UK)
1 Lines open 8.30am to 5.30pm (UK time), Monday
to Friday (excluding public holidays in England
and Wales).
Written enquiries
Equiniti Limited, Aspect House, Spencer
Road, Lancing, West Sussex BN99 6DA.
American Depositary Shares
(ADSs)
The Bank of New York Mellon
The Company’s shares trade in the US
on the over-the-counter (OTC) market in
the form of ADSs and these are
evidenced by American Depositary
Receipts (ADRs). The shares are traded
under the ticker symbol TATYY.
Telephone enquiries
+1 888 269 2377 (for US calls)
+1 201 680 6825 (for calls from
outside the US)
Written enquiries
BNY Mellon Shareowner Services
PO Box 30170
College Station
TX 77842-3170
USA
Tate & Lyle website and share
price information
Financial calendar
2017 Annual General Meeting
Announcement of half-year results
for the six months to 30 September 2017
Announcement of full-year results
for the year ending 31 March 2018
2018 Annual General Meeting
27 July 2017
2 Nov 20171
24 May 20181
26 July 20181
Dividends paid on ordinary shares during the year ended
31 March 2017
Payment date
29 July 2016
3 Jan 2017
Dividend
description
Final 2016
Interim 2017
Dividend per
share
19.8p
8.2p
Dividend calendar for dividends on ordinary shares
Announced
Payment date
1 Provisional date.
2017 final
25 May 2017
1 August 20172
2018 interim
2 Nov 20171
5 Jan 20181
2018 final
24 May 20181
1 August 20181,2
2 Subject to approval of shareholders.
Dividends paid on 6.5% 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
6.5% cumulative preference share
201.00p
50.25p
43.50p
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 the impact of the documents on
the environment.
Shareholders who wish to receive email notification should register online at
www.shareview.co.uk, using their shareholder reference number that is on either
their share certificate or other correspondence.
Dividend payments
Dividend reinvestment plan
The Company operates a Dividend Reinvestment Plan (DRIP) which enables
shareholders to use their cash dividend to buy additional shares in Tate & Lyle PLC.
Further information can be obtained from Equiniti.
Direct into your bank account
We encourage shareholders to have their dividends paid directly into their bank or
building society account; dividend confirmations are then mailed to shareholders
separately. This method avoids the risk of dividend cheques being delayed or lost in
the post. If you live outside the UK, Equiniti also offers an overseas payment service
whereby your dividend is converted into your local currency. Further information on
mandating your dividend payments and the overseas payment service can be
obtained from Equiniti.
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.
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 Financial Conduct
Authority (FCA) Consumer Helpline on 0800 111 6768.
190 Tate & Lyle PLC Annual Report 2017
Glossary
A
Acidulants
Ingredients such as citric acid that are
used to add a ‘sour’ taste to food and soft
drinks and to act as a preservative.
Adjusted operating cash flow
Adjusted operating cash flow is defined
as adjusted free cash flow from
continuing operations, adding back net
interest paid, tax paid and retirement
cash contributions, and excluding
derivative and margin call movements
within working capital.
Adjusted operating profit
(PBITEA)
Operating profit (as defined separately),
adjusted for amortisation of acquired
intangible assets and net
exceptional items.
Adjusted profit before tax
(PBTEA)
Profit before tax (as defined separately),
adjusted for amortisation of acquired
intangible assets, net exceptional items
and net retirement benefit interest.
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
Capex
Capital expenditure.
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 practices.
CDP
CDP is an international environmental
reporting and benchmarking
organisation that holds and publishes
the largest collection globally of
self-reported climate change, water and
forest-risk data from companies and
cities worldwide. Through CDP,
investors, companies and cities are
better able to mitigate risk, capitalise on
opportunities and make investment
decisions that drive action towards a
more sustainable world.
CLARIA®
Functional Clean-Label Starches.
‘Clean label’
A term used in the food and beverage
industry generally to refer to shorter or
simpler ingredient lists that appeal more
to some consumers than those
containing complex ingredients.
Interpretations may vary.
Commodities
Commodities include US ethanol and
co-products.
Constant currency
Where changes in constant currency are
presented, they are calculated by
retranslating current year results at
prior year exchange rates. This
represents a change to the methodology
applied in previous years, which involved
retranslating prior year results at
current year exchange rates. This
change, which has not had a material
impact, has been made to align with how
the majority of external stakeholders
view constant currency performance
comparisons. Reconciliations of the
movement in constant currency have
been included in the additional
information on page 189.
Continuing operations
Operations of the Group excluding any
discontinued operations (as defined
separately).
Corn gluten feed
The largest Tate & Lyle co-product, used
by dairy and beef cattle markets.
CSDs
Carbonated soft drinks.
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 that offers a superior,
new taste experience.
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.
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.
Co-products
Corn gluten feed, corn gluten meal and
corn oil.
I
Core Bulk Ingredients
Bulk Ingredients excluding Commodities.
ICD
Innovation and Commercial Development
group, supporting our two business
divisions, SFI and BI.
www.tateandlyle.com 191
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Glossary continued
K
P
KRYSTAR® Crystalline
Fructose
A nutritive corn based sweetener.
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 or easier
to understand than alternatives which
may be perceived by some consumers as
being artificial, chemical or in some way
less authentic.
M
MULTIVANTAGE® Syrup
A low-sugar, low-viscosity sweetener.
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.
New Products
New Products are products in the first
seven years after launch.
O
Operating profit (also referred
to as profit before interest and
tax (PBIT))
Sales less net operating expense.
Primary capacity
The processing capacity, at the first stage
of production, in which the agricultural
raw material enters the
production process.
Profit before tax (PBT)
Sales, less net operating expense, less
net finance expense and including the
Group’s share of profit after tax of
joint ventures.
PROMITOR® Soluble Fibre
A prebiotic soluble fibre.
PromOat® Beta Glucan
A soluble fibre made from wholegrain
oats used to bring the health benefits of
oat beta glucan to food and beverages.
R
REZISTA® speciality food starch
A modified starch made from waxy corn
which builds and protects texture
in foods.
S
SFI
Speciality Food Ingredients division.
SPLENDA® Sucralose
A zero-calorie sweetener, the
manufacturing process for which starts
with 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.
U
USDA
US Department of Agriculture.
192 Tate & Lyle PLC Annual Report 2017
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.
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 their
environmental management systems.
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 Standard 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.
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 99 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, net retirement
benefit interest and tax on the above
items and tax items that themselves
meet these definitions. A reconciliation
of reported and adjusted information is
included in Note 4 of the consolidated
financial statements.
Definitions
In this Annual Report:
• ‘Company’ means Tate & Lyle PLC
• ‘Tate & Lyle’, ‘Group’, ‘we’, ‘us’ or ‘our’
means Tate & Lyle PLC and
its subsidiaries
• ‘Gemacom’ means Tate & Lyle
Gemacom Tech Indústria e Comércio
S.A.
• ‘Almex’ means Almidones
Mexicanos SA
• ‘Bio-PDO’ means DuPont Tate & Lyle
Bio Products Company, LLC
• ‘review during the year’ means review
during the financial year ended
31 March 2017.
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
Designed and produced by
Black Sun Plc
www.tateandlyle.com
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION T
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