Making
the everyday
extraordinary
A N N U A L R E P O R T 2 0 1 9
Financial highlights
Year ended 31 March 2019
G R O U P S TAT U TO R Y R E S U LT S
Sales1 (£m)
£2,755m
2019
2018
2017
2,755
2,710
2,753
Profit before tax1 (£m)
£240m
2019
2018
2017
240
233
286
Diluted earnings per share1 (pence)
Net debt (£m)
38.6p
2019
2018
2017
38.6
56.1
54.2
£337m
2019
2018
2017
337
392
452
A LT E R N AT I V E P E R FO R M A N C E M E A S U R E S
Return on capital
employed2 (%)
17.1%
2019
2018
2017
17.1
16.2
14.3
Adjusted diluted earnings
per share1, 2 (pence)
52.0p
2019
2018*
2017*
52.0
49.4
46.2
Adjusted profit
before tax1, 2 (£m)
£309m
2019
2018*
2017*
309
296
264
Adjusted free cash
flow2 (£m)
£212m
2019
2018
2017
212
196
174
* Comparatives restated as the Group now includes net retirement benefit interest and the associated tax in its
alternative performance measures.
1 Continuing operations only.
2 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 accordance with IFRS, and the calculations,
where relevant, of any ratios, in Notes 1 and 4.
In this report
Strategic report
Our business today
10 Chairman’s statement
12 Chief Executive’s review and strategy
16 Our markets
20 Our business model
Reviewing our year
24 Key performance indicators
26 Chief Financial Officer’s introduction
28 Group financial review
32 Presidents’ reviews
32 Food & Beverage Solutions
36 Primary Products
40
Innovation and
Commercial Development
42 Global Operations
44 Our people
48 Environment, health and safety
56 Community involvement
58 Risk report
Governance report
68 Board of Directors
72 Executive Committee
74 Chairman’s introduction to
corporate governance
76 Corporate governance
88 Audit Committee report
92 Nominations Committee report
94 Directors’ remuneration report
112 Directors’ report
113 Directors’ statement of responsibilities
Financial statements
116 Independent auditor’s report to the
members of Tate & Lyle PLC
125 Consolidated income statement
126 Consolidated statement of
comprehensive income
127 Consolidated statement of
financial position
128 Consolidated statement of cash flows
129 Consolidated statement of changes
in equity
130 Notes to the consolidated
financial statements
176 Parent Company financial statements
Useful information
184 Group five-year summary
186 Additional information
187 Information for investors
188 Glossary
189 Definitions/explanatory notes
Tate & Lyle is a global provider of
ingredients and solutions for food,
beverage and industrial markets.
Inspired by our purpose of Improving
Lives for Generations, we work with
our customers to make food and
drink healthier and tastier. Through
our expertise in key categories, we
deliver sweetness, texture and fibre
enrichment to products enjoyed by
millions of people every day.
Read how our teams are putting our strategy into action:
Perfect texture,
perfect snack
p8
Making the
complex simpler
p22
Changing formulations,
changing lives
p66
Let’s stick together
Thinking like a challenger
p114
p182
This Annual Report is also available
on www.tateandlyle.com
W W W . T A T E A N D L Y L E . C O M | 1
This is
Tate & Lyle
Open any fridge or kitchen cupboard,
in any household in practically any part of the world,
and you’re likely to find products containing our
ingredients. Especially if the packet, jar or bottle
says ‘reduced sugar’, ‘added fibre’, ‘low fat’,
or, of course, ‘same great taste’.
We serve customers
in more than
120
countries
2 | T A T E & L Y L E P L C A N N U A L R E P O R T 20 19
We processed
1.5m
acres of corn in the
US this year
For each of those ingredients, the
kitchen shelf is nearly the end of a
remarkable journey.
This journey begins when a single
kernel of corn – or grain of tapioca,
or leaf of stevia – passes through our
complex, carefully orchestrated
manufacturing processes.
These break the raw materials down
into their constituent parts, creating
high-quality ingredients with widely
different applications each destined
for our customers’ products.
W W W . T A T E A N D L Y L E . C O M | 3
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Scientific, technical and engineering
ingenuity – guided always by market
insight, local knowledge and deep
understanding of our customers –
goes into everything we produce.
Category expertise in
beverage,
dairy, and
soups, sauces
and dressings
We employ
around
4,100
people worldwide
4 | T A T E & L Y L E P L C A N N U A L R E P O R T 20 19
STRATEGIC REPORT Whether it’s great-tasting, low-calorie
sweeteners that take trillions of calories
out of the world’s diet, gut-friendly
fibres that add proven health benefits,
nutritive sweeteners that offer a tasty
treat at an affordable price, texturants
that make the desserts you love
smooth and creamy, stabilising
solutions that keep every mouthful
delicious for weeks, or an industrial
starch that makes it possible for online
retailers to use recyclable packaging
to deliver goods in perfect condition –
we make the everyday extraordinary.
Plants, labs
and offices in
more than
30
countries
W W W . T A T E A N D L Y L E . C O M | 5
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Which brings us back to the final,
most important stage of the journey
to the kitchen shelf: being tasted.
For consumers, taste is essential –
for most people, it’s why they buy a
favourite product.
So everything we do, all the new
science we are creating with our
food ingredients, has great taste at
its heart.
6 | T A T E & L Y L E P L C A N N U A L R E P O R T 20 19
Supporting local
communities to address
health,
hunger and
education
STRATEGIC REPORT These things, taken together, explain
how we create value for our shareholders
and stakeholders. How we partner
with the best customers, suppliers
and innovators. How we engage
the talents of all our people, and
support their safety and wellbeing.
And how, every day, we demonstrate
our purpose:
Improving Lives for Generations.
In the past three financial
years, we paid just under
£400m
in dividends to
shareholders
W W W . T A T E A N D L Y L E . C O M | 7
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Strategy in action story
Sharpen the focus on our customers
Perfect texture,
perfect snack
You may not realise it, but the thickening action of
starches in foods and drinks is a highly complex
science. For manufacturers, it’s about maintaining
the delicate mouthfeel, taste and appearance of
creamy, crunchy and gel-filled products, throughout
fairly harsh processes like heating and freezing.
Our CLARIA® Functional Clean-Label Starches
are star performers in that regard. They offer high
performance which is perfect for customers who
not only want great functionality, but also want
to formulate with a ‘clean-label’ ingredient that
consumers demand.
The right solution, fast
Imagine you’ve just had a workout in the gym, and
are looking forward to a tasty, sensory boost from a
snack with a fruity filling. But when you bite into it,
the filling squirts unbecomingly down your shirt.
Such are the challenges of texturant stabilisation.
One of our customers found themselves with this
challenge when testing a new snack prototype. So
they came to us. We’ve worked with this customer
for many years, providing manufacturing support as
well as formulation expertise. They knew we could
deliver the right solution, fast. And speed would be
crucial, because by that time the plant trial was just
10 days away.
Working in the customer’s lab, we broke down the
problem into a two-step process. Stabilise the filling
to perfect the texture (we found that different fruit
fillings required different concentrations of
CLARIA®); then ensure the combined product baked
as intended. The trial was approved and, soon after,
the new snack was in full production.
76%
of consumers say they read
ingredient labels when they buy
food or drink.
Source: Tate & Lyle proprietary
research, 2017
8 | T A T E & L Y L E P L C A N N U A L R E P O R T 20 19
Strategic report
Our business today
10 Chairman’s statement
12 Chief Executive’s review
and strategy
16 Our markets
20 Our business model
Our applications team testing different jam fillings
in our kitchens at Hoffman Estates, Illinois, USA
C H A I R M A N ’ S S T A T E M E N T
Clarity of purpose
in a complex world
T here is great power in simplicity in a complex
and challenging world. Under Nick Hampton’s
leadership, Tate & Lyle now has a clear
purpose – Improving Lives for Generations –
expressed in clear language. My strong sense
over the last few years to build a broader geographical
presence, new systems and processes, and new technical
and sales capabilities are now coming through in our
financial results.
going around our company is that our people are really
energised by a purpose which, put simply, is about
making healthy food tastier and tasty food healthier.
The Board and I are excited by the energy and ambition
we see across the business, critical for driving
innovation and competitiveness in a fast-changing and
dynamic marketplace.
This year’s performance is testimony to the hard work
and unstinting commitment of our people around the
world. My thanks and the Board’s, to everyone at
Tate & Lyle for delivering another year of progress.
Enhancing the Board’s understanding
of the business
As a Board, we recognise the importance of good
governance but, in my view, the most important
contribution any board can make is to support the
executive team in developing strategy and implementing
it in a focused and responsible way – doing the right
things in the right way at all times.
To this end, my colleagues and I spent a lot of time
this year getting to understand better the strategic
opportunities and challenges across the world for
Tate & Lyle. We have, as a matter of policy, reduced the
number of site visits we make as a group in favour of
visits by individual non-executive directors. Individual
visits give Board members more opportunities to spend
time in our factories, offices and labs, listening to and
talking to our people. This is more powerful than being
presented to as a group, and gives us a much better
understanding of what teams are really doing on
the ground.
Meeting our people and partners in Asia
This year, I spent most of my visiting time understanding
our opportunities in the world’s fastest-growing
markets, specifically in Asia, a key development region
for Tate & Lyle. I met with our teams in Shanghai and
Singapore, and also visited our new stevia sweetener
partner, Sweet Green Fields, in China.
Good momentum
Tate & Lyle delivered solid results in the face of a
number of headwinds this year, and we can be proud
of this resilience. I’m particularly pleased with the
momentum we’re seeing in our global Food & Beverage
Solutions business. The investments we’ve been making
10 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
Primary Products had a more challenging year as it
faced significant industry cost increases but, thanks to
our team’s ingenuity and flexibility, still delivered volume
in line with the prior year. I’m also very pleased that the
fundamental importance of our Primary Products
business to the future of Tate & Lyle is now clearer to all
our stakeholders. Together, our two businesses enable
Tate & Lyle to offer the choices consumers want for a
balanced lifestyle.
Strengthening the leadership team and
the Board
The Board is very pleased with the progress made in
refreshing and strengthening the executive team this
year. This included the appointment of Imran Nawaz as
Chief Financial Officer. Imran joined Tate & Lyle and the
Board on 1 August 2018, and has already made a strong
contribution, leading our drive to deliver US$100 million
in productivity benefits over four years.
Under Nick’s leadership, and with Imran and our other
key executive appointments this year, I’m convinced we
have the right management team for the next phase of
Tate & Lyle’s development. Through embodying our
three strategic priorities to Sharpen, Accelerate and
Simplify our Group, the team is already driving a real
sense of pace and ambition across the business.
We have also strengthened the Board, with the
appointment of Warren Tucker on 19 November 2018
and Kimberly Nelson, who will join us on 1 July 2019,
as non-executive directors. Warren brings a broad range
of financial, industrial and technology-based business
experience, while Kimberly has substantial experience
in the food and beverage industry.
Final dividend
20.8p
The Board is recommending a final dividend of
20.8p per share bringing the total dividend for the
year ended 31 March 2019 to 29.4p, an increase
of 2.4%.
STRATEGIC REPORT I’m excited by the energy
and ambition I am seeing
across the business.
GERRY MURPHY, CHAIRMAN
I’d like to thank my fellow Board members for their
commitment to and support of Tate & Lyle over the last
year. In particular, I’d like to pay tribute to Douglas Hurt,
who steps down at this year’s annual general meeting.
On behalf of the entire Board, I’d like to thank him for
his tremendous service over the last nine years as a
non-executive director and most recently as Chair of our
Audit Committee and Senior Independent Director.
An evolving global environment
We continue to face an evolving and challenging
geopolitical landscape. With just under 2% of our sales
in the UK, the departure of the UK from the EU will have
only a modest impact on our business, and we have
plans in place for different Brexit scenarios to ensure
we can continue to serve our customers across Europe.
Given our large US manufacturing base, it’s critical to
have competitive access to global markets. With that in
mind, we were pleased that the US, Mexico and Canada
announced an agreement in principle to replace the
existing North American Free Trade Agreement
(NAFTA). We are also continuing to monitor closely the
ongoing trade talks between the US and China.
Bright future
Overall, Tate & Lyle is in a good position. We have a
robust balance sheet, a strong leadership team,
and a portfolio of ingredients well placed to benefit
from growing global consumer demand for tastier
and healthier foods and drinks. The framework for
success is all there, and I look forward to working
with the Board in the coming year to support Nick
and the executive team in delivering another year of
good progress.
Gerry Murphy
Chairman
11
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION C H I E F E X E C U T I V E ’ S R E V I E W A N D S T R A T E G Y
A bright future
I start my second year as Chief Executive proud of
our achievements this year and with an even greater
sense of excitement about the opportunities that lie
ahead for Tate & Lyle. I am encouraged by our
progress over the past year. As well as delivering
against our financial targets, we made good progress on
our key priorities, our operational performance was
excellent, and we continued to invest for future growth.
My thanks to all my colleagues for their hard work in
delivering these results and, most of all, for their
commitment to our purpose – Improving Lives
for Generations.
A purpose-driven approach to meet
changing consumer needs
Today’s consumers have a much better understanding
of the link between diet and health, which is shown by
the food and drink they buy. Consumers are looking for
healthier products that are lower in sugar, calories and
fat, and higher in fibre. At the same time, governments
are looking to change consumer behaviour, in part due
to rising healthcare costs from increasing levels of
obesity and diabetes, and this is placing a greater
focus on regulation, such as sugar taxes, and
healthier lifestyle programmes. But overconsumption
isn’t everyone’s experience – there are many people
in the world today, notably in our key markets, who
struggle to put food on the table, and need affordable
food and nutrition. Our customers are coming under
pressure to address many of these issues and grow
their businesses at the same time.
This is where Tate & Lyle comes in – we deliver ingredients
and solutions to meet all these needs. Our speciality
sweeteners and fibres help reduce sugar and calories.
Our fibres enrich food and improve digestive health.
Our texturants and stabilising systems help make food
manufacturing easier and extend shelf-life. Our bulk
sweeteners deliver great tasting products at an
affordable cost. And our industrial starches give
strength to the packaging used to deliver online goods
to millions of homes every day.
What really drives us is why we do what we do. Our purpose
– Improving Lives for Generations. Part of my role as
Chief Executive is to give our people the support and
opportunity to live our purpose, and as I look around at
my colleagues, I see the deep pride they have for what
they do. And when I meet our customers, it is clear our
purpose resonates with them too. I passionately believe
that, through it, we can successfully grow our business
and make a positive impact on society.
NICK HAMPTON, CHIEF EXECUTIVE
12
STRATEGIC REPORT We also had to navigate a challenging geopolitical
landscape. The negotiation of a new trilateral trade
agreement between the US, Mexico and Canada, the
imposition of trade tariffs by the US and China, and to
a lesser extent, the UK’s negotiations to leave the EU,
all had an impact on some of the markets we operate in.
This uncertainty is likely to continue in the year ahead.
Sharpen, Accelerate, Simplify – a year on
This time last year, I announced three key priorities to
accelerate business performance: sharpen the focus on
our customers; accelerate portfolio development; and
simplify the business and drive productivity. We made
good progress against each priority during the year,
and I’m really pleased with the way they are being
embraced across Tate & Lyle.
Sharpen the focus on our customers
This is about moving from being a valued ingredient
supplier to a growth partner for our customers. To achieve
this, both divisions need strong relationships at all levels
of our customers’ organisations. This is why, during the
year, we significantly increased the number of interactions
with our customers at Chief Executive, R&D, and Sales
and Marketing levels. Through these meetings, I’m seeing
first-hand a deepening in our relationships with many of
our key customers, and they tell me they’re experiencing
a positive change in the way we are working together.
A good example is our work with our customer, Tung Lok,
to reduce sugar in their products as part of the Singapore
government’s ’war on diabetes’. You can read about this
in more detail on page 66.
Accelerate portfolio development
This is about accelerating new product development,
building more external partnerships to speed up
innovation, and making selective acquisitions and
joint ventures in line with our strategy. A great example
of fast innovation this year was the launch of our
TASTEVA® M Stevia Sweetener. By working in partnership
with an enzyme company, Codexis, we were able to cut
development time by a year, as described on page 182.
Stevia is a key part of our sweetener platform and
during the year we also acquired a 15% shareholding
in Sweet Green Fields, a leading stevia player.
An integrated business delivering
solid results
We delivered good operational and solid financial
performance during the year, despite facing significant
external cost pressures. Tate & Lyle is one integrated
business made up of two trading divisions, both with
distinct roles to play. Food & Beverage Solutions is
focused on delivering growth, with Primary Products
focused on delivering cash and steady earnings.
They share a cost-efficient asset base, many common
customers, and we manage them together to optimise
returns for shareholders. This approach served us well
during the year.
Although market conditions were challenging, adjusted
profit before tax and adjusted diluted earnings per share
were 4% higher, and return on capital employed was
90 basis points higher at 17.1%. Cash generation was
also good, supporting a strong balance sheet and
enabling us to increase the full-year dividend by 2.4%
to 29.4 pence. More detail about the results of our two
divisions and the Group can be found on pages 32 to 39.
Our performance was all the more creditable because
the external environment was far more challenging than
we expected at the start of the year. We had to absorb
around £25 million of higher costs than expected in areas
such as transport and materials in North America.
However, our productivity programme and strong cost
discipline offset these higher costs.
This wasn’t the only challenge we faced. In the winter,
our US plant network experienced extremely cold
weather, resulting from a polar vortex. Despite this,
our Global Operations team kept our plants running
and our customers served – no easy task in such
severe conditions.
Adjusted profit
before tax
+4%
in constant currency
Adjusted diluted
earnings per
share
+4%
in constant currency
Food & Beverage
Solutions sales
+5%
in constant currency
K E Y H I G H L I G H T S
Group delivered solid financial progress
Food & Beverage Solutions
maintained momentum
Sucralose performed strongly
Primary Products volume in line with
prior year despite challenging
market conditions
Progress on each of ‘Sharpen, Accelerate,
Simplify’ priorities
Four-year US$100m productivity programme
on track, with benefits offsetting cost
inflation
Strengthened balance sheet provides
flexibility to invest in long-term growth
W W W . T A T E A N D L Y L E . C O M | 13
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION C H I E F E X E C U T I V E ’ S R E V I E W A N D S T R A T E G Y (continued)
We made good progress against our ‘Sharpen,
Accelerate, Simplify’ priorities during the year,
and I’m really pleased with the way they are
being embraced across the business.
Simplify the business and drive productivity
This is about making our company simpler and easier
to work in – streamlining our organisation, simplifying
processes, and creating a culture of continuous
improvement in which we are productive, sensible about
costs and avoid waste. This will increase productivity,
reduce costs, and make us more agile and quicker at
making decisions – all of which means more time to
focus on our customers. As part of this priority, we are
targeting US$100 million of productivity benefits over a
four-year period. Thanks to strong cost discipline, the
continuous improvement programme in our plants, and
actions to simplify our systems and processes, we are
on track to deliver our four-year productivity programme.
We also simplified our portfolio during the year, disposing
of our oats ingredients business which no longer fits well
with the mainstream food categories on which we focus.
Injecting ambition and pace
When setting out these priorities, I also stated my aim
to build a dynamic culture based on partnership, agility
and execution. In doing this, I wanted to challenge our
people to focus more on our customers, be more
entrepreneurial, and move faster in delivering on
our commitments. I wanted our people to have more
pace and ambition – whether dealing with a customer,
delivering innovation, or simply working with a colleague.
I’m pleased to say that, one year on, I’m seeing some
real change across the business, with people beginning
to get things done with greater pace and agility. We intend
to drive even greater ambition and we need to keep up
the pace in the year ahead.
Working in a sustainable way
This year also marked the first year of our new
multi-year environment, health and safety (EHS)
programme, Journey to EHS Excellence. Although in its
early stages, it’s clear from my travels around the Group
that this programme is having a very positive impact on
our EHS culture. The more rigorous reporting systems
and the open environment we have fostered around EHS
have meant that more concerns and accidents are being
logged than in previous years. This has contributed to a
worsening of our safety statistics in the 2018 calendar
year. However, as the new programme starts to take
hold, we expect performance to improve, as we’ve seen
in the first few months of the 2019 calendar year.
14 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
Ensuring we have a sustainable and transparent
supply chain is increasingly important for us and our
customers. In November, we formed a partnership with
US conservation organisation Land O’Lakes SUSTAINTM,
to improve farming practices among Midwest farmers,
and specifically in sourcing sustainable corn. Then,
in February, we announced a research project with
international environmental organisation Earthwatch,
to assess the sustainability of our stevia supply chain
in China.
Outlook
For the year ending 31 March 2020, we expect
continuing progress in Food & Beverage Solutions and
gains from productivity initiatives to offset both lower
Sucralose profits and continued market challenges in
Primary Products. As a result we expect earnings per
share growth in constant currency to be broadly flat to
low-single digit.
Looking ahead to the new financial year
from a position of strength
At the start of the year, I set out a clear focus and
direction for the business – to execute our strategy
through three key priorities and to build an organisation
with a strong sense of purpose and a dynamic culture.
I am pleased that we’ve made good progress in all these
areas and that we’re entering the new financial year in a
strong position. Our focus is to build on this momentum
in the year ahead.
I’m delighted that, during the year, Imran Nawaz joined
us as Chief Financial Officer, Lindsay Beardsell as
Executive VP, General Counsel and Laura Hagan as
Chief Human Resources Officer. Together with the existing
members of the Executive Committee, we now have a
strong and diverse leadership team with the experience,
energy and ambition to unlock our growth potential.
This strong leadership, allied with the expertise
and commitment of our people, the power of our
purpose, and a portfolio of products aligned to
growing global demand for healthier and tastier food
and drink, gives me real confidence that we have a
bright future ahead.
Nick Hampton
Chief Executive
STRATEGIC REPORT Investment case
W E H AV E A C L E A R S T R AT E GY FO R O U R B U S I N E S S E S ...
FO O D & B E V E R AG E S O LU T I O N S
P R I M A R Y P R O D U CT S
TO P A N D B OT TO M
L I N E G R OW T H
S TA B L E E A R N I N G S
A N D CA S H G E N E R AT I O N
By building leading positions in:
By managing its portfolio to:
Three categories globally – beverage, dairy,
and soups, sauces and dressings
Two or three additional categories in each
region where we have local expertise
S U C R A LO S E
M A N AG E FO R CA S H ;
H I G H R E T U R N O N A SS E T S
Optimise product and category mix
Drive operational efficiency
Diversify into new and growing
end-markets
.. . D R I V E N B Y T H R E E P R I O R I T I E S TO AC C E L E R AT E P E R FO R M A N C E
S H A R P E N
T H E FO C U S O N
O U R C U S TO M E R S
ACC E L E R AT E
P O R T FO L I O
D E V E LO P M E N T
S I M P L I F Y
T H E B U S I N E S S A N D
D R I V E P R O D U CT I V I T Y
.. . TO D E L I V E R R E T U R N S FO R S H A R E H O L D E R S
E A R N I N G S P E R S H A R E 1 – AC C E L E R AT E G R OW T H
O R G A N I C R E T U R N O N CA P I TA L E M P LO Y E D 2 – I M P R OV E R E T U R N S
D I V I D E N D – M A I N TA I N P R O G R E S S I V E D I V I D E N D P O L I CY
1 Adjusted diluted earnings per share from continuing operations in constant currency.
2 In constant currency.
W W W . T A T E A N D L Y L E . C O M | 15
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
O U R M A R K E T S
Global trends
driving our markets…
The food and beverage market has inherent strengths –
people need to eat and drink – and in the world today, there
are a number of systemic global trends which are shaping
our industry and creating opportunities for our business.
Changing diets and ways of life
Factors like rapid population growth,
urbanisation and the use of technology are
driving major changes in people’s diets and
lifestyles. The growth of middle-class
consumers, especially in emerging markets,
is also causing a long-term shift towards
greater convenience and time-saving
products. People are buying more pre-
prepared, packaged foods, spending less
time in the kitchen, and increasingly looking
for nutritious food on the go. At the same
time, consumers are demanding greater
transparency and authenticity from their
food, and more natural ingredients. Online
shopping is increasingly popular, driving
demand for sturdy packaging, while
environmental concerns mean that this
packaging needs to be recyclable.
Concerns about climate change and the
health of the planet are being matched by
concerns about our own health and what we
eat. In today’s more urbanised world, people
are leading more sedentary and less active
ways of life. People are generally eating too
much and moving too little, and these
progressively unbalanced lifestyles are affecting
their health. The incidence of diseases like
obesity and diabetes, and concerns about
digestive health, are increasing rapidly.
81%
of food and beverage
purchases are driven
by taste1
1 International Food Information Council, 2018.
16 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
STRATEGIC REPORT And yet, while obesity is now responsible
for more deaths worldwide than hunger,
one in nine people in the world struggle to
find enough nutritious food to eat every day.
Healthcare costs are rising too, placing
health services in many countries under
increased pressure. Overconsumption of
sugar is seen as a major concern resulting
in a number of countries, including the UK,
implementing taxes, for example, on soft
drinks. What is clear is that, no matter
where you look, societies and governments
are facing significant food- and
health-related challenges.
Promoting balanced lifestyles
For food companies like Tate & Lyle, these
global trends present both challenges and
opportunities. Driven by our purpose of
Improving Lives for Generations, we’re
working in partnership with our customers
to create ingredients and solutions to give
people healthier and tastier choices when
they eat and drink, and to help them lead
more balanced lifestyles. Whether it’s
health and wellness ingredients for a new
generation of popular brands, or nutritive
sweeteners at an affordable price, our goal is
not just to feed people, but to feed them well.
30%
40m
estimated increase in global
population by 20501
people in the US struggle to put
food on the table every day5
2.8bn
35
people in middle-class globally in 2015;
forecast to grow to 5.3 billion by 20302
national governments, states and
cities have introduced a ‘sugar tax’6
70m
10%
children projected to be overweight
or obese globally by 20253
of the UK’s National Health Service
budget is spent on treating diabetes
or complications from diabetes7
114m
estimated number of adults with
diabetes in China in 20174
1.79bn
online buyers globally in 2018
had boxes delivered to their
home or offices8
1 United Nations.
2 Brookings; United Nations; World Bank.
3 World Health Organization.
4 International Diabetes Federation.
5 Feeding America.
6 World Health Organization; Statista
Beverages Daily; et al as at the end
of 2018 calendar year.
7 Diabetes UK.
8 Statista.
W W W . T A T E A N D L Y L E . C O M | 17
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION O U R M A R K E T S (continued)
…and our response
Food & Beverage Solutions
Food & Beverage Solutions (which includes Sucralose)
provides ingredients and solutions which add specific
functionality, nutrition and health benefits to our
customers’ products.
Key trends within our markets
Healthy living
People of all ages are actively seeking healthier food
and drink, whether this means prebiotic fibres to
support a healthy gut, more calcium for strong bones,
or fewer calories to manage weight.
Sugar reduction
With obesity and diabetes on the rise, people want
lower-sugar, lower-calorie, lower-fat, higher-fibre foods.
Many of our customers are setting sugar reduction
targets, both to meet this demand and in light of
increasing government regulation.
Clean label
People want to understand the ingredients on food and
drink labels. They want to know where their food comes
from, and are increasingly choosing products they feel are
less processed, or they think are simpler or ‘more natural’.
Convenience and healthy snacking
Convenience is often seen as coming at the expense of
nutrition – but it doesn’t have to. People want fast,
on-the-go food and drink that’s nutritious, healthy and
tastes good.
Plant power
Consumers across the world are increasingly interested
in plant-based diets and many are eating less meat and
fewer dairy products as part of either a vegan or
’flexitarian’ diet.
S O M E O F O U R I N G R E D I E N T S
Global speciality
food ingredients
market
size1
US$49bn
growth1
4%
Sugar reduction
and fibre
growth2
23%
global product
launches with low
or no, or reduced
sugar claims and
fibre ingredients
Delivering solutions
We work in partnership with our customers to develop new
products, and reformulate existing ones, to make food and
drink healthier but still taste great. It sounds simple, but
it’s far more complicated than just swapping one
ingredient for another. Taste, texture, mouthfeel, shelf-life,
stability – all these things have to be taken into account
when reformulating food and drink. Taste is inherently
local, which means that food and beverages also need to
be adapted to different regions and countries. Our portfolio
of sweeteners, starches and fibres, combined with our
technical expertise in key categories, helps us deliver
solutions for customers in their local markets.
Sugar and calorie reduction
Our understanding of sweeteners, built over many years,
has given us a unique expertise in sugar and calorie
reduction. Our sweeteners and fibres help reduce sugar
and calories without compromising the taste and texture
consumers know and want.
Fibre enrichment
Our portfolio of fibres offers a range of nutritional
and functional benefits, alongside exceptional
digestive tolerance.
Clean label
growth2
13%
product launches in
Asia Pacific with
clean label claims
Texture
Our starches add body, lengthen shelf-life and replace fat
while preserving the texture and mouthfeel people want.
Stabilisation
With our deep knowledge of ingredients and complex
food systems, we create customised stabiliser systems
(highly functional ingredient blends) that ensure
products maintain their stability and appetising
texture throughout their shelf-life.
1 Euromonitor; IHS; Grandview; GMI; Bain analysis;
Company analysis, 2017. Estimated growth by value;
CAGR calendar years 2017 to 2022.
2 Mintel GNPD, CAGR April 2016 to March 2019.
e
s
u l o
l
A l
Soluble Fibre
DOLCIA PRIMA®
Allulose
Rare sugar providing great
taste and mouthfeel without
all the calories of sugar.
PROMITOR®
Soluble Fibre
Fibre enrichment solution
with excellent
digestive tolerance.
CLARIA®
Clean-Label Starches
Enable label-friendly products
without compromising
their quality.
TASTEVA® M
Stevia Sweetener
Great-tasting natural,
zero-calorie stevia sweetener
with no bitter aftertaste.
18 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
STRATEGIC REPORT
Primary Products
Primary Products
Delivering value
profits
>90%
from the North
American market
Primary Products
sales
48%
from bulk
sweeteners in the
year ended
31 March 2019
Drive productivity and efficiency
The more efficient our plants, the lower our costs of
production. We have four large corn wet mills in the US,
two smaller plants in Europe, and acidulants plants in
the US and Brazil. For the best returns, they need to
operate at, or close to, capacity. We have global and
local programmes which ensure a relentless focus on
safety, productivity and efficiency at every plant.
Optimise customer and product mix
With tight margins on our products, small changes can
make a difference to the performance of our business.
We look very closely at what we sell, to whom, and into
which markets, moving production where we can from
declining to growing product lines, and targeting new
and growing markets.
Secure corn supply
Corn is our largest raw material, and a secure supply is
essential. We invest in our corn elevator storage
network and our relationships with the farmers who
supply us, and manage inventory carefully.
Reducing exposure to volatile commodity markets
Every part of the corn kernel has some commercial
value, but the selling price of commodities such as corn
oil and corn meal is set by the market and can vary
widely. We use a range of measures to manage our
exposure as best we can, from tolling contracts which
pass the raw material costs on to customers, to using
forward contracts to lock corn prices into the future.
Primary Products provides high-volume, largely
undifferentiated products to customers in the food and
beverage, and paper and packaging industries, primarily
in North America. We also manufacture acidulants in
the US and Latin America and sell co-products as
animal feed to customers globally. The two main
markets we operate in, bulk sweeteners and industrial
starches, are large but mature and have high barriers to
entry. In these markets, we compete primarily on
quality, service and price.
Key market drivers
Capacity utilisation in the US corn wet milling industry
The balance between demand (orders from customers
in the market) and supply (the capacity available to serve
the market) is a key driver of profitability in the US corn
wet milling industry.
Corn market
The US corn wet milling industry processes around 9%
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.
Regular carbonated soft drinks
The main end-market for our bulk sweeteners is regular
carbonated soft drinks in the US. Demand in this market
has been declining modestly over recent years, although
this has been largely offset by exports to Mexico and
higher demand for corn syrup.
Packaging for online sales
The majority of industrial starch produced in North
America is used in the paper and packaging industry.
While demand for writing paper is declining, demand
for packaging is growing, driven by increasing
online shopping.
S O M E O F O U R P R O D U CT S
High fructose corn syrup
Sweetener used in carbonated
soft drinks, beverages and a
range of foods.
Industrial starches
Enhance performance, such
as thickness and texture of
paper and packaging, and
used in building supplies.
Acidulants
Enhance flavour and preserve
foods, beverages and
pharmaceuticals; also used as
a cleaning agent in detergents.
Commodities
Corn-based co-products
providing an excellent source
of protein for pets, farm
animals and fish.
W W W . T A T E A N D L Y L E . C O M | 19
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION O U R B U S I N E S S M O D E L
How we
create value
Our resources What we do
Scientific
and technical
know-how
Large-scale
manufacturing
operations
Talented people
Strong balance
sheet and disciplined
capital allocation
Long-term
relationships with
stakeholders
T H I N K A N D C R E AT E
PA R T N E R A N D S E L L
Innovation and Commercial
Development
Food & Beverage
Solutions
page 40
page 32
CUSTOMERS
S O U R C E A N D
M A N U FACT U R E
Global Operations
Primary Products
page 42
page 36
O U R P R I O R I T I E S
O U R VA LU E S
O U R B E H AV I O U R S
Sharpen
Accelerate
Simplify
Safety
Integrity
Respect
Partnership
Agility
Execution
20 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
STRATEGIC REPORT Our purpose, Improving Lives for Generations, inspires everything we do.
Whether by making food healthier and tastier; helping to make everyday
tasks easier; promoting a safe working environment; or making a difference
to our local communities, we believe we can successfully grow our business
and have a positive impact on society.
O U R C U S TO M E R S
We serve customers, large and small, in more than
120 countries worldwide. We are moving from being an
ingredient supplier to a growth partner for our customers.
T H I N K A N D C R E AT E
Innovation and Commercial Development
Our scientists and nutritionists research, develop and test
ingredients to create solutions for our customers. We work
closely with them through every stage of our innovation
process to move ideas quickly from concept to commercial
launch. Consumer preferences are different across the
world, which is why our customers come to our local
applications labs to work with us to reformulate their
products, using our solutions, for their local markets.
S O U R C E A N D M A N U FACT U R E
Global Operations
Our ingredients come largely from agricultural crops,
principally corn. We produce them mainly at large-volume
corn wet mills shared by both divisions, and also at smaller
blending facilities. Wherever we are in the process, from
field to customer, our priorities are safety, quality and
consideration for the environment.
PA R T N E R A N D S E L L
Food & Beverage Solutions
We have strong technical knowledge of the interplay between
sweetness, texture, fibre enrichment and stabilisation.
Through this, we provide customers across the world with
solutions which bring specific functionality and nutrition
to their products, making them healthier and tastier.
Primary Products
We sell high-volume, largely undifferentiated ingredients
into the food and beverage, and paper and packaging
industries, mainly in North America. Leveraging our scale
and cost-competitive manufacturing base, we compete
mainly on price, quality and service.
The value we create
S H A R E H O L D E R S
We balance investing in growth
with paying an attractive dividend.
c£400m
dividends paid in the past
three financial years
C U S TO M E R S
We help our customers bring
products to market quickly that
address society’s changing needs.
29%
growth in global sales
customer pipeline1, 2
E M P LOY E E S
We are committed to the health,
safety and wellbeing of our 4,100
employees, and to providing a
culture that is both inclusive and
performance-driven.
£334m
total paid to employees2
C O M M U N I T I E S
We have a long history of community
involvement, helping to make a
lasting contribution to the places
where we live and work.
300,000
meals given to those in
need across the world2
S U P P L I E R S
Corn is our largest input,
and we have long-term, mutually
beneficial relationships with farmers
and other supplier partners.
1.5m
total acreage of US corn
purchased2
E N V I R O N M E N T
Throughout our operations we
look to minimise our
environmental impact by reducing
emissions and waste, and using
water sustainably.
20.4%
reduction in CO2e
emissions since 2008
1 Food & Beverage Solutions only.
2 Year ended 31 March 2019.
W W W . T A T E A N D L Y L E . C O M | 21
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Strategy in action story
Simplify the business and drive productivity
Making the
complex simpler
Continuous improvement
Our manufacturing capability, supply chain, and the
systems supporting them, are the beating heart of
our business – which is why we must run them
safely, efficiently and productively. To this end, we
use methodologies such as Continuous Improvement,
and also have rigorous programmes to manage
our environmental impact, for health and safety,
and for plant maintenance and reliability. These give
us the framework and tools we need to capture,
share and implement best practice – and mean that
engineering and problem-solving expertise is
ingrained in our teams.
So when we talk about concepts like productivity,
what we’re really talking about is people. Empowering,
supporting and enhancing their expertise is the
ultimate aim of everything we do in our operations.
Take the technician at our Sagamore, Indiana,
US corn wet mill. Concerned about the downtime,
difficulty and expense of repairing the automated
arm on a starch-packing line, he designed a better
one. His supervisors backed him from business case
to blueprint; and now a prototype is keeping the line
running smoothly.
Or the member of the pump-servicing team at
our Lafayette, Indiana, US plant. Inspired by the
continuous improvement principle of poka-yoke
(avoiding mistakes), he took the simple but effective
step of colour-coding spare pumps, so colleagues
can instantly see what they’re for and where they
should be reinstalled.
Or there’s the team who took on the task of
reconfiguring our computer system, to make it
easier to maintain complex machinery, and further
the growth of a reliability culture in our plants.
These are just some examples of the countless
initiatives across the business that are transforming
our operations worldwide, and making sure that
best practice becomes standard practice.
22 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
Strategic report
(continued)
Reviewing our year
24 Key performance indicators
26 Chief Financial
Officer’s introduction
28 Group financial review
32 Presidents’ reviews
32 Food & Beverage
Solutions
36 Primary Products
40 Innovation and
Commercial
Development
42 Global Operations
44 Our people
48 Environment, health
and safety
56 Community involvement
58 Risk report
Engineers carrying out investigative maintenance
at our Decatur, Illinois, US plant
K E Y P E R F O R M A N C E I N D I C A T O R S
How we track progress
D E L I V E R I N G O U R S T R AT E GY
Food & Beverage Solutions volume
Food & Beverage Solutions sales
Group adjusted profit before tax1
2019
2018
2017
1%
3% increase
3%
3%
2019
2018
2017
£889m
£850m
£834m
2019
20183
20173
£309m
£296m
£264m
5%2 increase
4%2 increase
How we calculate it
As reported, excluding Sucralose, continuing
operations only.
How we calculate it
As reported, excluding Sucralose, continuing
operations only.
Why we measure it
To ensure we are successful in growing
the business.
Why we measure it
To ensure we are successfully converting
our investments into increasing sales.
How we calculate it
As reported, continuing operations only.
Why we measure it
To ensure that we make good investment
decisions and execute our strategy
successfully.
Comments
Volume grew at 3% reflecting continuing
momentum, driven by 3% growth in North
America and 15% growth in Asia Pacific and
Latin America. In Europe, Middle East and
Africa volume was 2% lower.
Comments
Sales grew by 5% in constant currency, with
growth of 2% in North America, 13% growth
in Asia Pacific and Latin America, and 4% in
Europe, Middle East and Africa.
Comments
Profit before tax increased by 4% in constant
currency as a result of higher adjusted
operating profit, higher share of profits from
joint ventures and lower net finance costs.
Adjusted diluted earnings
per share1
Return on capital employed1
Adjusted free cash flow1
2019
20183
20173
52.0p
49.4p
46.2p
2019
2018
2017
17.1%
16.2%
14.3%
2019
2018
2017
£212m
£196m
£174m
4%2 increase
+90bps increase
£16m increase
How we calculate it
As reported, continuing operations only.
Why we measure it
To track the underlying performance of
the business and ensure sales growth
translates into increased earnings.
Comments
As outlined above, adjusted profit before
tax increased by 4% in constant currency.
In addition, the effective tax rate in the year
was 50bps lower in the year at 21.0%.
How we calculate it
The return as a percentage of our adjusted
profits from continuing operations divided by
invested capital.
Why we measure it
To ensure we continue to generate a strong
rate of return on the assets we employ, and
have a disciplined approach to
capital investment.
Comments
Higher, mainly as a result of increased
earnings, driven by profit growth in Food &
Beverage Solutions and Sucralose.
How we calculate it
As reported, continuing operations only.
Why we measure it
To track how efficient we are in turning
profit into cash and to ensure that working
capital is managed effectively.
Comments
Higher, reflecting increased earnings and
a strong cash focus in the business.
Capital expenditure was held in line with
the prior year.
24 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
STRATEGIC REPORT M A I N TA I N I N G F I N A N C I A L F L E X I B I L I T Y
Net debt to EBITDA multiple1
Interest cover1
2019
20184
20174
0.8x
0.9x
1.1x
2019
20184
20174
11.6x
9.4x
8.2x
0.1x decrease
2.2x increase
How we calculate it
The number of times our net borrowing
exceeds our earnings.
How we calculate it
The number of times our earnings exceed
interest payments made to service our debt.
Why we measure it
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 providers of
both debt and equity capital.
Comments
The net debt to EBITDA ratio strengthened to 0.8 times, reflecting the increased strength
of the balance sheet, and provides flexibility and capacity to invest in long-term growth.
ACT I N G S A F E LY 5
Recordable incident rate
Lost-work case rate
2018
2017
2016
0.94
0.76
0.76
2018
2017
2016
0.25
0.19
0.11
0.18 increase
0.06 increase
How we calculate it
The number of injuries requiring treatment
beyond first aid per 200,000 hours.
How we calculate it
The number of injuries that resulted in
lost-work days per 200,000 hours.
Why we measure it
Ensuring safe and healthy conditions at all our locations is essential for our success.
Comments
This year, our recordable incident rate worsened by 24% and our lost-work case rate by
32%. We believe the implementation of our new reporting systems, and the resulting
increase in incident reporting and information, was a contributing factor to the worsening
of our safety results in the 2018 calendar year. Over the longer term, our more rigorous
approach to reporting will give us a better understanding of safety risks, which should help
us to reduce both the frequency and severity of incidents.
We focus on a number of
financial and non-financial
performance measures
to ensure we deliver our
strategy, we have the
financial flexibility to
grow our business, and
we are protecting our
people at work.
C H A N G E S TO K P I s
I N 2019
We have changed our Key
Performance Indicators (KPIs) this
year to include additional key
indicators of value creation, and align
with the metrics we use to manage
the business. Under the changes, we
have added Group adjusted operating
profit before tax (which is also a bonus
metric), and volume growth in Food &
Beverage Solutions and adjusted diluted
earnings per share (both of which are
performance metrics used for our
long-term employee incentive schemes).
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 accordance with
IFRS, and the calculations, where
relevant, of any ratios, in Notes 1 and 4.
2 Growth in constant currency.
3 Comparatives have been restated to
include net retirement benefit interest
and associated tax.
4 Comparatives have been restated in line
with the new calculation methodology.
See Note 4.
5 Measured by calendar year.
W W W . T A T E A N D L Y L E . C O M | 25
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION C H I E F F I N A N C I A L O F F I C E R ’ S I N T R O D U C T I O N
A solid financial
performance
“We delivered a solid set of results in the face of significant external
cost pressure. People across the business did what they said they
would do, which means we’re entering the new financial year in a
sound financial position.”
IMRAN NAWAZ, CHIEF FINANCIAL OFFICER
Imran reflects on key aspects
of our results this year, and
the delivery of our
productivity programme.
Q. What’s the story behind
the results?
A. Food & Beverage Solutions delivered
good volume growth, thanks to growing
global demand for our ingredients and
solutions which help to reduce sugar,
calories and fat, and add fibre. It’s been a
more challenging year for Primary Products,
which had to balance a softer market for
our bulk sweeteners in North America, a
weaker year of Commodities profits, and
higher costs than we expected at the start
of the year in areas such as transport and
materials in North America.
Overall, we’ve succeeded in delivering solid
results. Group adjusted profit before tax of
£309 million was 4% higher in constant
currency, reflecting a solid performance by
both divisions, good cost discipline, lower
finance costs and good performance by
our joint ventures. These factors combined
to help offset the impact of higher input
costs in North America and lower profits
from Commodities.
Adjusted diluted earnings per share
were 4% higher in constant currency at
52.0 pence.
We delivered strong cash flow – adjusted
free cash flow was higher, driving down net
debt to £337 million. We’re in a sound
financial position and enter the new
financial year in good shape.
I’m proud that our purpose
translates into financial results –
it’s a good basis for success.
Q. How important is Tate & Lyle’s
purpose in delivering results?
A. Our purpose really translates into
financial results. Growth is coming from
helping our customers improve consumers’
lives by making food healthier. For example,
if we reduce the sugar content of a major
global brand by, say, 30%, that can have a
ripple effect across the millions of people
who buy it. And within Tate & Lyle, I’ve seen
for myself how people are making our
purpose their own. It’s why they are
committed to Tate & Lyle and want to do
their best work. And when people are doing
their best work, they deliver results.
Q. How is the US$100 million
productivity programme going?
A. We launched it at the start of the
2019 financial year, targeting benefits of
US$100 million over four years, and I’m
pleased with our progress so far. We are
on track to reach our target.
We expect around 60% of the productivity
benefits to come from our manufacturing
operations and supply chain, and around
40% from general overheads where we’re
implementing zero-based budgeting (ZBB).
From my experience, the ZBB process
leads to a cultural change in the way money
is spent, and I’m already starting to see a
positive cultural shift in how our business
spends money. True productivity is about
finding ways of operating more efficiently
and spending only what’s needed, while
investing the benefits in growth – and I
believe our people understand that.
26 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
STRATEGIC REPORT Q. What are your priorities for the
coming year?
A. Simply put – meeting our targets. The role
of finance is a bit like a board: we’re here to
support the business and drive strategic
growth, while safeguarding our assets by
holding people to account through reporting,
audit and compliance. Together, these
enable us to meet our promises.
More specifically, we need to ensure we’re
getting a good return on the investments we
are making to grow our business. Our return
on capital employed of 17.1% is a key strength
of the business, and we must continue to
build on it. We also need to ensure we
deliver the second year of benefits from our
productivity programme – the second year
is always harder than the first. I expect
the external cost environment will remain
challenging in the coming year, and so
continuing to drive productivity and maintain
tight cost discipline will be very important.
Q. How do you see the long-term
potential at Tate & Lyle?
A. I joined Tate & Lyle in August 2018
because I believed it had great potential.
After just under a year in the business,
I’m more convinced than ever of the
opportunities ahead. We have two businesses
with strong value propositions and a healthy
financial position giving us the flexibility to
invest for long-term growth.
What makes this possible is our people.
They are dedicated, hard-working and very
good at what they do. I’m particularly
fascinated by the science of our ingredients
– our scientists are achieving things that are
very hard to replicate. This really differentiates
Tate & Lyle and gives us the ability to
create long-term, sustainable value for
shareholders and stakeholders alike.
2 0 1 9 R E S U L T S
Adjusted profit before tax
+4%
in constant currency
Adjusted diluted earnings
per share
+4%
in constant currency
Adjusted free cash flow
£212m
Return on capital employed
+90bps
increase to 17.1%
W W W . T A T E A N D L Y L E . C O M | 27
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION G R O U P F I N A N C I A L R E V I E W
Summary of financial results for the year ended 31 March 2019 (audited)
Year ended 31 March1
Continuing operations unless stated otherwise
Sales
Adjusted operating profit
— Food & Beverage Solutions
— Sucralose
— Primary Products
— Central
Adjusted operating profit
Net finance expense
Share of profit after tax of joint ventures and associates
Adjusted profit before tax
Exceptional (loss)/gain
Amortisation of acquired intangible assets
Profit before tax
Income tax 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
Cash flow and net debt
Adjusted free cash flow
Net debt – At 31 March
Change
%
2%
5%
10%
(11%)
2%
7%
4%
(31%)
(31%)
5%
5%
Constant
currency change
%
2%
3%
11%
(11%)
1%
9%
4%
4%
4%
2019
£m
2 755
Restated*
2018
£m
2 710
143
61
148
(47)
305
(26)
30
309
(58)
(11)
240
(59)
181
–
181
39.2p
38.6p
52.8p
52.0p
137
55
166
(58)
300
(32)
28
296
2
(12)
286
(23)
263
2
265
57.0p
56.1p
50.3p
49.4p
212
337
196
392
* Comparatives restated as the Group now includes net retirement benefit interest and the associated tax in its alternative performance measures.
Refer to Note 1.
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 reconciliations to the most directly comparable measures reported in accordance with IFRS,
and the calculations, where relevant, of any ratios, in Notes 1 and 4.
28 | T A T E & L Y L E P L C A N N U A L R E P O R T 2 019
STRATEGIC REPORT Earnings per share
Adjusted basic earnings per share from
continuing operations increased by 5%
(4% in constant currency) to 52.8p and
adjusted diluted earnings per share from
continuing operations at 52.0p were also 5%
higher (4% in constant currency). Statutory
diluted earnings per share from continuing
operations decreased by 17.5p or 31% to
38.6p reflecting higher exceptional charges
and an increased statutory effective tax rate.
Dividend
The Board is recommending a 0.5p or
2.5% increase in the final dividend to 20.8p
(2018 – 20.3p) per share. This increased
final dividend makes a full-year dividend of
29.4p (2018 – 28.7p) per share, up 2.4% on
the prior year. Subject to shareholder
approval, the proposed final dividend will be
due and payable on 31 July 2019 to all
shareholders on the Register of Members
on 21 June 2019. In addition to the cash
dividend option, shareholders will continue
to be offered a Dividend Reinvestment Plan
(DRIP) alternative.
Sales from continuing operations of
£2,755 million were 2% higher than the
prior year (2% higher at constant currency).
On a statutory basis, profit before tax
from continuing operations decreased
by £46 million to £240 million driven
predominantly by a net exceptional charge
of £58 million (2018 – gain of £2 million).
Statutory diluted earnings per share from
continuing operations decreased by 17.5p to
38.6p due to higher exceptional charges and
an increased statutory effective tax rate of
24.4% (2018 – 8.1%).
Adjusted profit before tax from continuing
operations at £309 million was £13 million
higher than the prior year (4% in constant
currency). Adjusted diluted earnings per
share from continuing operations increased
by 2.6p to 52.0p (4% in constant currency)
reflecting higher adjusted profit before tax.
Central costs
Central costs, which include head office
costs, treasury and legal activities, were
£11 million lower at £47 million, reflecting
cost discipline and lower insurance costs.
Net finance expense
Net finance expense from continuing
operations was £6 million lower compared
to the prior year at £26 million, driven by
lower net retirement benefit interest
expense following the prior year decision to
accelerate funding of the main US pension
schemes, and increased finance income
from cash deposits.
Share of profit after tax of joint
ventures and associates
The Group’s share of profit after tax of joint
ventures and associates of £30 million was
9% higher in constant currency reflecting
stronger operating performance at DuPont
Tate & Lyle Bio Products (Bio-PDOTM) which
also benefited from lower US tax rates.
Exceptional items from continuing
operations
In the year ended 31 March 2019, the Group
recognised a net exceptional charge of
£58 million, and a net exceptional cash
inflow of £12 million. Exceptional items
arose from actions to focus the portfolio and
simplify the business and comprised:
— £43 million charge on disposal of the oats
ingredients business after a strategic
review (£3 million cash inflow).
— £13 million restructuring charge as part
of the simplification programme
(£6 million cash outflow).
— £14 million net gain from the sale
and leaseback of railcars (£16 million
cash inflow).
— £16 million provision for asset
remediation following the Group-wide
safety review (£1 million cash outflow).
During the year ended 31 March 2018,
the Group recognised a net exceptional
gain of £2 million.
More details on the exceptional items can be
found in Note 8.
Taxation
The adjusted effective tax rate on earnings
for continuing operations for the year ended
31 March 2019 decreased to 21.0% (2018 –
21.5%) primarily reflecting favourable tax
settlements. The reported effective tax rate
(on statutory earnings) was 24.4% (2018 –
8.1%), the increase reflecting net exceptional
costs recognised during the year, the majority
of which were not tax deductible. In the year
ended 31 March 2018, the Group’s effective
tax rate of 8.1% reflected the recognition of
significant exceptional deferred tax credits
recorded in that year.
The recognition and measurement of
deferred tax assets and liabilities is
dependent on a number of key judgements,
estimates and assumptions. Changes in
assumptions, along with future changes
in legislation, could have a material impact
on the amount of tax recognised in future
accounting periods.
We estimate that the adjusted effective tax
rate for the 2020 fiscal year will be in the
range of 21.5% to 23.5%.
W W W . T A T E A N D L Y L E . C O M | 29
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION G R O U P F I N A N C I A L R E V I E W (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 retirement benefit obligations
Less: accelerated US defined benefit schemes contribution (exceptional cash flows)
Capital expenditure
Net interest and tax paid
Less: cash tax benefit on accelerated contribution (exceptional cash flows)
Adjusted free cash flow
Net debt
Year ended 31 March1
2019
£m
305
143
(25)
–
(130)
(81)
–
212
2019
£m
337
2018
£m
300
121
(94)
56
(131)
(36)
(20)
196
At 31 March
2018
£m
392
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 reconciliations to the most directly comparable measures reported in accordance with IFRS,
and the calculations, where relevant, of any ratios, in Notes 1 and 4.
Adjusted free cash flow (representing cash
generated from continuing operations after
net interest paid, income tax paid, and capital
expenditure, and excluding the impact of
exceptional items) was £212 million,
£16 million higher than the prior year.
Capital expenditure of £130 million, which
included a £27 million investment in
intangible assets, was 0.9 times the
depreciation and adjusted amortisation
charge of £141 million and reflects continued
investment in capacity as well as safety,
efficiency and sustaining investments.
Other significant cash flows in arriving at
net debt included: £21 million of dividends
received from joint ventures; external
dividend payments of £134 million;
£8 million payment related to satisfying
share option commitments, net cash inflows
relating to exceptional items of £12 million;
and £29 million investments in equity
interests and non-controlling interests.
Overall, net debt at 31 March 2019 of
£337 million was £55 million lower than
at 31 March 2018. Net debt decreased by
£76 million in the year (2018 – decrease of
£25 million) before the adverse impact
of exchange rates. Foreign currency
translation, mainly due to the stronger US
dollar, increased net debt by £21 million.
Adoption of new IFRS
leasing standard
IFRS 16 Leases was adopted on 1 April 2019
using the ‘modified retrospective’ adoption
methodology, meaning that comparative
financial information will not be restated.
Adoption of the standard will have no
business impact, but will change some key
performance measures including a reduction
in diluted earnings per share. As a result,
adjusted diluted earnings per share growth
in fiscal 2020 is expected to reduce by circa
one percentage point.
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 post-retirement
medical benefits.
The Group’s retirement benefits moved into
an overall net surplus in the 2018 financial
year, primarily as a result of an exceptional
funding payment into the US scheme.
The net surplus increased by £6 million to
£24 million as at 31 March 2019.
Under funding arrangements in connection
with the 2016 actuarial valuation, the Group
committed to make core funding
contributions for the main UK scheme of
£12 million per year and supplementary
contributions of £6 million per year until
31 March 2023 into a secured funding
account, payable to the Trustee on certain
triggering events or as mutually agreed
between the Company and Trustee. In the
year ended 31 March 2019, cash flows in
respect of post-retirement benefit
obligations of £29 million included core
funding contributions of £12 million, the
supplementary contribution of £6 million as
well as payments to the US plan and US
retirement medical plan of £4 million and
£3 million respectively.
The next triennial valuation for the UK main
scheme is due as at 31 March 2019 and is
expected to be concluded in calendar 2020.
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 27.
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.
30 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
STRATEGIC REPORT
Commitments under operating leases to pay
rentals in future years totalled £308 million
(2018 – £274 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
2019 in respect of continuing operations were
£37 million (2018 – £35 million).
Use and fair value of financial
instruments
In the normal course of business we use
both derivative and non-derivative financial
instruments. The fair value of Group net
debt at the year end was £347 million
against a book value of £337 million
(2018 – fair value £398 million, book value
£392 million). Derivative financial instruments
used to manage the interest rate and currency
of borrowings had a fair value of £25 million
liability (2018 – £12 million liability). The main
types of instrument used are interest rate
swaps and cross-currency interest rate swaps.
The Group employs commodity pricing
contracts, principally futures, to hedge
cash flow risk associated with forecast
purchases which are designated as
cash flow hedges. The fair value of these
hedging instruments at 31 March 2019 is
£1 million liability (2018 – £2 million liability).
When managing currency exposure, we use
spot and forward purchases and sales, and
options. The fair value of other derivative
financial instruments not in a hedging
relationship was a £27 million asset (2018
– £13 million asset).
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 2018. Two new accounting
standards have been adopted during the
year, although they have had no material
effect on the Group’s financial statements.
Refer to Note 35 for further details.
Details of the basis of preparation, including
information in respect of the Group’s
alternative performance measures, can be
found in Note 1. Growth percentages are
calculated on unrounded numbers.
Impact of changes in exchange rates
The Group’s reported financial performance at average rates of exchange for the year ended 31 March 2019 was favourably impacted by
currency translation. The average and closing US dollar and euro exchange rates used to translate reported results were as follows:
Year ended 31 March
US dollar:sterling
Euro:sterling
Average rates
Closing rates
2019
1.31
1.13
2018
1.33
1.13
2019
1.30
1.16
2018
1.40
1.14
For the year ended 31 March 2019, net foreign exchange translation increased Food & Beverage Solutions adjusted operating profit by
£3 million, decreased Sucralose adjusted operating profit by £1 million and had no net impact on Primary Products adjusted operating
profit, with adjusted profit before tax for the Group increasing in total by £2 million. The sensitivity of the Group’s results to changes in
US dollar currency translation rates for the year ending 31 March 2020 is expected to be around £2.2 million for the annual impact of a
one cent change on adjusted profit before tax.
W W W . T A T E A N D L Y L E . C O M | 31
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION F O O D & B E V E R A G E S O L U T I O N S
Good top-line
momentum
“Food & Beverage Solutions is on an exciting journey. We participate
in attractive and growing markets and work closely with our
customers to solve some very real problems the world is facing
around diet and health.”
JOAN BRACA, PRESIDENT, FOOD & BEVERAGE SOLUTIONS
P A R T N E R A N D S E L L
W H AT W E D O
We’re experts in sweetness, texture,
fibre enrichment and stabilisation.
We have deep expertise globally in
beverages, dairy, and soups, sauces
and dressings, and regionally in
categories such as bakery and snacks.
We work with global and local food
and beverage manufacturers to give
their products specific functional and
nutritional benefits.
S O M E O F O U R
I N G R E D I E N T S
Speciality sweeteners, eg,
KRYSTAR® Crystalline Fructose
and DOLCIA PRIMA® Allulose
High-intensity sweeteners, eg,
SPLENDA® Sucralose and
TASTEVA® M Stevia Sweetener
Texturants, eg,
REZISTA® Starches and
CLARIA® Functional Clean-Label
Starches
Fibres, eg,
PROMITOR® Soluble Fibre and
STA-LITE® Polydextrose
Stabilising blends, eg,
HAMULSION® Stabiliser System
32 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
Joan Braca talks about the industry,
the year’s results and key priorities
for Food & Beverage Solutions.
Q. Why is your business well positioned in
today’s market?
A. We have two key capabilities in particular that are
right on trend. First, based on our strong sweetening
heritage, we are experts in providing sweetener
solutions. For our customers, this means we can take
sugar and calories out of food and drink while still
keeping the great taste consumers want. Second, our
ability to stabilise food. In a world where the global
population is expected to grow by about a third by 20501,
the ability to stabilise food and allow it to travel over
long distances and time is a very important skill.
Q. Can you say a bit more about the sugar
reduction opportunity?
A. It sounds incredible but most people today live in
countries where more people die from being overweight
than underweight. There’s definitely a greater urgency
around sugar and calorie reduction, with governments
turning to taxes, labelling schemes and other levers to
deal with it. If I think about our sales today, at least a third
come from replacing sugar and putting nutritious
ingredients back in, like fibre. And, if we look at our
pipeline, it’s between a third to a half of future projects.
Replacing sugar is not only about replacing sweetness
– sugar has many other properties, including
stabilisation, adding bulk, and providing texture and
mouthfeel. It’s a complex issue that requires complex
science, which is where our technical expertise and
portfolio of sweeteners, texturants and fibres come into
play. Being a leader at taking sugar out of food and drink
is a key reason we’re a great partner for our customers.
STRATEGIC REPORT I’m excited to see the
investments we’ve made in
the past few years starting to
come through in our results.
Q. What’s behind the results this year?
A. It’s thanks to the team and their efforts across
the board – strong execution and discipline, and a real
focus on our customers. We’re also starting to see the
benefits of our investments over the past few years in
new processes, tools and capabilities in customer-
facing areas such as sales, applications and technical
services. Take sales as an example. Our new customer
management pipeline tool, Salesforce.com, has helped
free up our sales team’s time to do more with customers.
As a result, we have increased by nearly 40% the number
of discussions we’re having with customers each month
about growing our business with them.
Q. How are you sharpening your focus on
your customers?
A. This year, we completed our move to a category
model, meaning we have organised ourselves to match
how our customers are organised. We now have
a dairy team, a beverage team and so on, just like our
customers. It means we’re talking with them in the
same language. We’re also taking steps to broaden our
interactions at executive, R&D and commercial levels.
All this means our customers are starting to see us as
their innovation and growth partner.
We’re also increasingly acting as thought leaders,
helping to shape the industry through our understanding
of categories and the solutions we can offer to help
address dietary issues. Our work in Singapore, where
the government asked us to be a key partner in their
‘war on diabetes’, alongside a customer, is a great
example (see page 66). And we want to do more.
Q. What role does purpose play for
your team?
A. Our aim to tackle societal issues through our
ingredients and solutions reflects our purpose:
Improving Lives for Generations. This is very inspiring
for our people. They’re incredibly dedicated – they
believe in what we’re doing and come to work fired up to
make change happen. That’s an incredible strength for
the business – our people are truly our greatest asset,
and their belief in what we do is our fuel.
Q. What are your priorities for the
coming year?
A. We’ve had some good top-line momentum this
year and we want to build on that. We must continue
our laser focus on serving customers, build our
category expertise and increase new product sales
further. And we need to accelerate our position as
thought leaders in nutrition, which paves the way for
developing more strategic partnerships with our
customers and other stakeholders. Finally, our simplify
priority is really important. Our people love what we do,
but it’s not always easy to get things done. We need to
accelerate simplification because it creates opportunities
to invest further, serve our customers more effectively,
and to make our people’s lives better. And after all, it’s
our people who make the business run.
1 United Nations 2015.
W W W . T A T E A N D L Y L E . C O M | 33
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION F O O D & B E V E R A G E S O L U T I O N S (continued)
Year ended 31 March
Continuing operations
Volume
North America
Asia Pacific and Latin America
Europe, Middle East and Africa
Total
2019
Volume
change
3%
15%
(2%)
3%
Year ended 31 March
Continuing operations
Sales
North America
Asia Pacific and Latin America
Europe, Middle East and Africa
Total
2019
£m
2018
£m
Change
%
Constant
currency
change
%
430
201
258
889
416
184
250
850
3%
9%
3%
5%
2%
13%
4%
5%
Adjusted operating profit
143
137
5%
3%
Sucralose
Year ended 31 March
Continuing operations
2019
£m
2018
£m
Change
%
Volume
Sales
Adjusted operating profit
164
61
146
55
16%
12%
10%
Constant
currency
change
%
13%
11%
Overview of results
Volume was 3% higher while sales at
£889 million increased by 5% in constant
currency. Adjusted operating profit was 3%
higher in constant currency with the benefit
of higher volume partially offset by the
absorption of growth investments in
emerging markets in fiscal 2018, and higher
input costs. Productivity benefits partially
offset increased input costs. The effect of
currency translation was to decrease sales
by £3 million, but increase adjusted
operating profit by £3 million.
In March 2019, we completed the sale of our
oats ingredients business as it no longer fits
well with the mainstream food categories on
which we focus. An exceptional charge of
£43 million was recognised in relation to
this sale.
North America
We saw continued top-line momentum with
volume up 3%. Growth was delivered despite
the overall US food and beverage market
being largely flat.
We continue to pursue our long-term strategy
of driving growth in three main areas:
(1) Winning new business in targeted
higher-growth sub-categories across dairy,
beverage, bakery and health and nutrition,
where our technical depth, expertise and
solutions are providing increasing value to
our customers;
(2) Developing our business in customer
channels growing faster than the overall
market, such as food service and own
label; and
(3) Gaining share in larger food and beverage
customers by partnering with them to drive
productivity, helping them grow in faster-
growing sub-categories and reformulating
to provide healthier alternatives.
Higher volume was driven by progress
across a range of categories, notably in
beverages and dairy, bakery and nutrition,
and by gaining share in our larger
customers. Sales at £430 million grew by
2% in constant currency.
34 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
STRATEGIC REPORT Asia Pacific and Latin America
Volume was 15% higher, with double-digit
growth in both regions. Sales increased by
13% in constant currency to £201 million.
In Asia Pacific, we grew volume in all
sub-regions, with growth in dairy in China,
and double-digit volume growth in
beverages and soups, sauces and dressings
mainly in South East Asia.
In Latin America, we saw strong growth in
Mexico in beverages, and in the Southern
Cone in soups, sauces and dressings and in
bakery. Volume was lower in Brazil reflecting
weaker macroeconomic conditions.
Europe, Middle East and Africa
Volume decreased by 2%, while sales at
£258 million increased by 4% in constant
currency as we exited some lower margin
texturant business to improve mix.
The capacity expansion of high-grade
maltodextrin (used in categories such as
baby food) at our facility in Slovakia is
progressing well, and is expected to come
on line in the second half of the 2019
calendar year.
New Products
Sales of New Products increased by
2% in constant currency to £95 million.
Three ingredients were removed from
New Products during the year since they
were launched more than seven years ago;
had those ingredients been included in
New Products, sales growth in constant
currency would have been 42%.
Consumers are increasingly seeking foods
and beverages with reduced sugar and our
PROMITOR® Soluble Fibre saw increased
use in formulating sugar out, with strong
growth in beverages and confectionery, and
as a fibre enrichment solution in bakery. We
saw good growth from our stevia sweetener
portfolio, mainly in beverages, while non-GM
texturants and clean label starches from
our CLARIA® line of functional starches also
grew strongly.
In April 2019, the US Food and Drug
Administration published draft guidance
exempting allulose from the ‘Sugars’ and
‘Added Sugars’ line of the Nutrition Facts
Panel in the US. This decision clears the
way for food and beverage manufacturers in
the US to incorporate allulose in their products
to deliver calorie and sugar reduction.
Sucralose
Strong results
Sucralose volume increased 16% benefiting
from a programme to improve production
efficiency at our facility in McIntosh, Alabama,
USA and the optimisation of inventory levels.
Sales were 13% higher in constant currency
at £164 million following softer pricing
driven by surplus industry capacity. Higher
volume, higher North American input costs
and a £3 million one-off gain from a supply
contract, combined to deliver 11% higher
adjusted operating profit in constant currency,
at £61 million.
While overall market demand for sucralose
continues to grow, market prices are
expected to continue to moderate reflecting
increases in industry supply from
Chinese manufacturers.
The effect of currency translation was to
reduce sales by £1 million, and adjusted
operating profit by £1 million.
O U R P O R T FO L I O I S W E L L P L AC E D TO P R OV I D E S O LU T I O N S FO R O U R C U S TO M E R S
TO M E E T G LO B A L C O N S U M E R T R E N D S
Sweeteners
Replace sugars
Reduce calories
Match sweetness
Optimise product bulk
and mouthfeel
Soluble Fibre
e
s
u l o
l
A l
Value
Taste
Nutrition
RESISTAMYL® Starch
STA-MIST™ Starch
Health and wellness
Replace sugar to reduce
calories while
maintaining taste
Add nutrition through
fibre enrichment
Texturants
Add body and mouthfeel when
sugars, fat or gluten are taken out
Improve shelf-life
Provide stability
Improve sensory appeal
W W W . T A T E A N D L Y L E . C O M | 35
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION P R I M A R Y P R O D U C T S
Operating in a
challenging
environment
“I’m pleased with the agility and tenacity of the team in adjusting
quickly to a more challenging external environment.”
JIM STUTELBERG, PRESIDENT, PRIMARY PRODUCTS
P A R T N E R A N D S E L L
W H AT W E D O
We sell high-volume, largely
undifferentiated products for the
food and beverage, and paper and
packaging industries, mainly in
North America.
We are supported by a large-scale,
cost-competitive asset base.
E X A M P L E S O F O U R
I N G R E D I E N T S
Nutritive sweeteners,
eg, high fructose corn syrup
and dextrose
Industrial starches for packaging
and as industrial adhesives
Acidulants, eg, citric acid, malic acid
and fumaric acid
Commodities, eg, corn gluten feed
and meal, and corn oil
36 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
Jim Stutelberg shares his thoughts
on Primary Products’ performance,
and priorities for the year ahead.
Q. How do you generate returns?
A. We need to be very good at the basics – price
management, product mix management, cost control
and customer service – supported, of course, by our
Global Operations colleagues managing our end-to-end
supply chain for safety and maximum efficiency. With
such large volumes, even a small margin improvement
can have a big impact on profitability. This helps us
deliver steady earnings and cash flows, while balancing
our exposure to commodities.
A key strength is our close, long-term relationships with
our big customers who see us as a strategic supply
partner. We must be really attuned to our customers’
needs in everything we do, for example simplifying
our processes to make sure we’re the easiest supplier
to do business with. On a day-to-day basis, we must be
focused on our customers and efficient in all that we do.
Q. What about the results this year?
A. I’m pleased with the way we managed the business
this year, with earnings in our main business excluding
Commodities only slightly lower, despite greater
challenges than we expected, namely significant cost
inflation in areas such as transport and materials in
North America.
Q. How are you evolving your business?
A. The markets for our two largest product lines, bulk
sweeteners and industrial starches, are large and stable
but are both in gradual long-term, structural decline.
STRATEGIC REPORT Having a culture in
which people see
themselves as
innovators in service
of our customers is
very important.
So to maximise performance in the short term, we
manage our portfolio by optimising product and
customer mix, and by driving operational efficiencies
through our continuous improvement programme. But
there is also plenty of opportunity for long-term value
creation in our core businesses. Here, success is about
identifying new and profitable end markets for our
ingredients, whether that’s new customers or new uses.
We’re being very intentional in moving volume away
from declining markets into growing categories for
sweeteners, like craft beer and fermentation
applications. Likewise, in industrial starches, we’re
moving away from the declining market for writing
paper, into packaging and labelling, which is seeing
solid growth as more people shop online. In addition,
through our Bio-PDOTM joint venture with DuPont,
we are providing customers with renewably sourced
ingredients used in a wide range of growing end
markets including clothing and cosmetics. We’re really
championing an innovative mindset in everything we do.
Q. How can a large-volume business be
innovative?
A. It’s true that innovation is associated in people’s
minds with new ingredients, but having an innovation
mindset is also essential for our long-term success –
it’s something we spend a lot of time thinking about
as a team. Whether it’s how we work together, how we
use our plant network, our processes, and our product
portfolio – having a culture in which people see themselves
as innovators in the service of our customers, and in
delivering steady earnings, is very important.
A good example this year is an idea that came from our
sweeteners team. They found that by changing how we
make one of our more profitable products, we could also
debottleneck the production line of two other products,
allowing us to improve the mix of our business and
increase overall profits. The important thing about this
example is that it was about everyone understanding the
goal – salespeople, engineers, customer services – and
working together across functions to find new ways of
achieving it.
Q. What does purpose mean to your team?
A. I see a genuine emotional connection with our
purpose of Improving Lives for Generations. From
adding great taste to beverages, to making paper
smoother, to helping cardboard boxes stay sealed, our
sweeteners, starches and acidulants help make the
lives of millions of people easier and more enjoyable
every day. We have been doing that for over 100 years
and it makes us proud. In Primary Products, our people
also identify heavily with colleagues in our plants, and
the farmers who supply our corn. We come from those
communities, and so, whether it’s by sourcing
sustainably farmed acreage or supporting local
schools, the overall contribution we make to their
lives really matters.
Q. What are your priorities for the
coming year?
A. In many ways, more of the same – but with even
more energy! It’s been really pleasing this year to see
the agility and tenacity of the team in adjusting quickly
in a more challenging external environment, and I’m
confident we can continue to do that.
W W W . T A T E A N D L Y L E . C O M | 37
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION P R I M A R Y P R O D U C T S (continued)
Year ended 31 March
Continuing operations
Volume
2019
Volume
change
North American Sweeteners
0%
North American Industrial
Starches
Total Primary Products
(2%)
0%
Year ended 31 March
Continuing operations
Sales
Adjusted operating profit
Sweeteners and Starches
Commodities
Total Primary Products
2019
£m
2018
£m
Change
%
Constant
currency
change
%
1 702
1 714
(1%)
(1%)
126
22
148
134
32
166
(6%)
(30%)
(11%)
(5%)
(33%)
(11%)
Endosperm
Starch
Starch and
gluten
Hull and fibre
Germ
Overview of results
Overall volume was in line with the
prior year. Adjusted operating profit of
£148 million decreased by £18 million.
Adjusted operating profit in Sweeteners and
Starches was 5% lower than the prior year
in constant currency reflecting the adverse
impact of materials and transport cost
inflation in North America. Mix management,
cost discipline and productivity gains
partially mitigated this inflationary pressure,
while production at our plant network stood
up well to the extreme cold weather
conditions in the US in early 2019. The year
also benefited from a £4 million insurance
recovery. Commodities profit reduced by
£10 million to £22 million following
exceptionally strong profits in the 2018
financial year. The effect of currency
translation was to increase sales by
£6 million, with no material impact on
adjusted operating profit.
Sweeteners
Volume was in line with the prior year as
increased demand from our Bio-PDOTM joint
venture and firm exports to Mexico offset
weaker demand for bulk sweeteners in the
US. This was driven by lower demand for
carbonated soft drinks in the US, which
weakened during the year, reflecting higher
pricing and lower promotional intensity
within that category. Bulk sweetener unit
margins for the 2018 calendar year had
been contracted at levels broadly in line with
the previous year. As a result, margins
during the 2019 financial year were
impacted by higher input costs.
The 2019 calendar year bulk sweetener
pricing round delivered unit margins broadly
in line with the previous year.
Using the whole corn kernel
We use every part of the corn kernel, ensuring that nothing is wasted. Corn is
broken down into 58% corn starch (used to make food and industrial ingredients);
22% corn gluten feed (made from the hull and fibre and used in cattle feed);
4% corn gluten meal (extracted from the endosperm and used in aquaculture feed
and pet food); 3% corn oil (made from the germ and used by the food industry);
and the remaining 13% is water.
38 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
STRATEGIC REPORT Industrial Starches
Volume was 2% lower as we managed mix
by reallocating grind to optimise returns
from our corn wet milling assets. In the
overall industrial starch market, growth in
demand for tissue and packaging, fuelled by
increased online shopping, has offset a
decline in printing and writing paper.
Commodities
Commodities delivered a profit of
£22 million, £10 million lower than the prior
year, following an exceptionally strong
performance in fiscal 2018. Weaker prices
for soy, a competitive animal nutrition
source, reduced opportunities for the
Group’s co-products in the year. Returns on
corn oil were also lower. US ethanol cash
margins weakened and remain at the low
end of the historical range with industry
inventories high.
The geopolitical trade environment
On 30 September 2018, the United States,
Mexico and Canada announced they had
reached agreement in principle on a new
trilateral trade agreement to replace the
North American Free Trade Agreement
(or NAFTA) called The United States-
Mexico-Canada Agreement (USMCA).
This represented an important step forward,
particularly as Mexico is a key export
market for the corn wet milling industry,
notably for high fructose corn syrup.
Each of the three countries is now in the
process of ratifying USMCA through their
constitutional channels.
Trade discussions between the United
States and China are ongoing and, like other
US exporters into China, we continue to
monitor progress closely.
Our grain elevator in
Wapella, Illinois, USA
W W W . T A T E A N D L Y L E . C O M | 39
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION I N N O V A T I O N A N D C O M M E R C I A L D E V E L O P M E N T
A portfolio of
opportunities
“Changing consumer demand means our customers are facing a
number of challenges: reduce sugar and calories; increase the
nutritional content of products; clean label; great taste – and all at a
lower cost. They’re looking for innovation partners and solution
providers, which is where we come in.”
ANDREW TAYLOR, PRESIDENT, INNOVATION AND COMMERCIAL DEVELOPMENT
T H I N K A N D C R E AT E
S I X A R E A S W O R K I N G
TO G E T H E R A S O N E T E A M
Research and development
Platform strategy
Nutrition science
Regulatory
Open innovation
Process technologies
New product sales1
£95m
Innovation pipeline1
24%
increase in expected value
of innovation pipeline
1 Year ended 31 March 2019.
40 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
Andrew Taylor gives an overview of
Innovation and Commercial
Development (ICD), its priorities and
opportunities for growth.
Q. Is ICD’s role to invent new ingredients?
A. Partly, yes – but we’re more than just a traditional
R&D department. ICD brings scientific and commercial
functions into one team to provide an integrated
approach. This helps us launch great products faster.
We don’t just invent ‘new to the world’ products, like our
CLARIA® Functional Clean-Label Starches and DOLCIA
PRIMA® Allulose, but also develop extensions to existing
product lines. During the year, we rebalanced our
portfolio more towards line extensions as these tend to
have faster financial returns. Overall, we have a portfolio
of many opportunities that together deliver growth.
Q. How do you work with Food & Beverage
Solutions to serve customers?
A. We do it together. We have direct relationships,
scientist to scientist, with our customers’ R&D teams,
as part of an overall approach led by Food & Beverage
Solutions. Between us, we tailor our capabilities and
solutions to serve the customer. One new thing we’ve
introduced this year, which is helping us work smarter
and faster with customers, is to have an ICD person on
all our major customer account teams. We’re also
developing more projects in partnership with customers
as this speeds up the innovation process and improves
customer adoption.
STRATEGIC REPORT Q. What is the biggest challenge customers
are facing?
A. There are many, but sugar reduction is probably
number one. That is why our deep expertise of how food
ingredients work across the food matrix is so valuable to
our customers. We help improve the nutritional profile
of their products by using innovative ingredients, such
as dietary fibres and natural or low-calorie sweeteners,
without compromising the taste, texture and mouthfeel
that consumers want.
Q. Speed to market is important for
customers. How are you addressing that?
A. Speed is as much a priority for Tate & Lyle as it is
for our customers. One way we are accelerating is by
building external partnerships. For example, this year
we launched our new TASTEVA® M Stevia Sweetener
product 12 months earlier than we could have done on
our own by partnering with enzyme specialist, Codexis
(see story on page 182). We see partnerships in
innovation playing an increasing role in our future.
That’s why, during the year, we expanded our open
innovation efforts (developing relationships with
universities, research institutions and start-ups) by
forming a new partnership with several incubators while
also establishing our own relationships.
Patents granted
this year
84
at 31 March 2019
Patents in issue
356
at 31 March 2019
Patents pending
290
at 31 March 2019
Q. How do you support Primary Products
and Global Operations?
A. As Tate & Lyle’s focus for growth is Food & Beverage
Solutions, we naturally spend most of our time on
projects for that business. But we support Primary
Products too in targeted areas. We also work closely
with Global Operations, since developing new
ingredients is as much about the engineering as it is
about the science. We are also increasingly helping with
projects targeted at cost reduction in partnership with
Global Operations.
Q. What’s the focus for the year ahead?
A. Continue to drive joint-product development with
customers, expand and diversify our portfolio, build
more external partnerships and alliances, and
accelerate pace to reduce the time from idea to market.
But what really inspires us in thinking about the future
is our purpose – how we can Improve Lives for
Generations by using science to help give people
healthier and tastier choices when they eat and drink.
That’s what drives us, every day.
We have a member
of ICD on every major
customer account team.
W W W . T A T E A N D L Y L E . C O M | 41
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION G L O B A L O P E R A T I O N S
Productivity
and excellence in
everything we do
“To serve our business and deliver excellence to our customers,
Global Operations must run like a well-oiled machine.”
MELISSA LAW, PRESIDENT, GLOBAL OPERATIONS
S O U R C E A N D
M A N U F A C T U R E
W H AT W E D O
We make and deliver high-quality
ingredients to our customers around
the world.
We run our plants and manage the
global supply chain to ensure our
ingredients reach our customers on
time and to the right specification.
Raw material sourcing
Manufacturing
Quality
Procurement
Logistics
Customer service
Continuous improvement
Environment, health and safety
42 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
Melissa Law describes how Global
Operations delivers for customers
through a relentless focus on safety,
quality and productivity.
Q. How do you support both Food &
Beverage Solutions and Primary Products?
A. All our corn wet mills make ingredients for both
divisions, and we work closely with them to serve our
customers flexibly and efficiently. For Food & Beverage
Solutions, delivering solutions to customers is a complex
process with multiple ingredients travelling around the
world. For Primary Products, volumes are larger but
our customers are mostly in North America, so our
ingredients generally travel shorter distances. How efficient
we are in running our operations and delivering
competitively priced ingredients is fundamental to the
economics of both divisions. Also fundamental is our focus
on EHS (environment, health and safety) and quality.
Nothing less than excellence in both will do.
Q. How do you keep a focus on excellence,
day in, day out?
A. It’s a challenge! But key to success is our mindset:
that we all need to come to work every day looking for
opportunities to do better. That’s at the heart of our
Journey to EHS Excellence, launched in January 2018.
It’s a multi-year programme through which we aim to
deliver and sustain world-class EHS performance at all
our operations. This means improving the lives of our
people by focusing even more closely on their safety,
and reducing our impact on the environment. It’s
gaining real traction (as explained in more detail on
STRATEGIC REPORT pages 48 to 55), and the change in culture I’m seeing
among our people is my personal highlight of this year.
Another example of how we’re focusing on excellence is
through our continuous improvement programme,
which currently has over 300 projects in the pipeline.
Most are small, incremental changes, but when added
together, they make a big difference to the productivity
of our operations (see story on page 22).
We operate
20
production facilities
across the world
Q. What’s Global Operations’ role in
delivering the four-year US$100 million
productivity benefits programme?
A. About 60% of the productivity benefits are expected
to come from manufacturing operations and supply
chain. We are working to deliver this through four areas:
continuous improvement projects, as I’ve already
mentioned; capital investments to reduce costs and
drive efficiencies; an enhanced maintenance and
reliability programme across our plants; and new
processes, tools and systems to improve our supply
chain. To give you an example, during the year, we
implemented a new automated transportation
management system in North America to manage
better our transportation network and our railcars in
particular. This will bring significant annual savings
and also enhance the way we serve our customers.
More than
300
continuous
improvement
projects
in our pipeline
Nothing less than
excellence in EHS and
quality will do.
Q. Can you tell us a bit more about how you
manage logistics?
A. Our goal is to be flexible enough to meet our
customers’ needs. To do this, we have a global planning
process supported by regional planning resources for
our two divisions and a global network of warehouses
and transfer stations where we keep products close to
our customers. Given the rapid growth we’re seeing in
our business in Asia Pacific, during the year, we
appointed a dedicated supply chain leader in
the region to work more closely with customers.
Q. What were the main challenges you
faced during the year?
A. We saw a significant increase in costs in areas such
as transport and materials in North America, which
made our focus on productivity even more important.
Then, at the end of the financial year, our US operations
were hit by incredibly cold weather conditions. It’s no
small task running operations at -30˚ to -40˚C, and I
was very proud of the resilience and focus shown by our
people in keeping our plants operating safely and
continuing to serve our customers.
Q. What are your priorities for the
coming year?
A. Put simply, more of the same. Running efficient
operations is about doing everything a little bit better, each
and every day. And that’s tough because we’re human, and
we can’t be perfect all the time. But we must do our best,
which means making sure we all adopt a continuous
improvement mindset – ‘do, learn; do, learn’, while always
keeping safety and quality front and centre.
W W W . T A T E A N D L Y L E . C O M | 43
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION O U R P E O P L E
Building a culture for
long-term success
“ The success of our business comes
from the wide range of talents and
contributions of our people. It’s only
through their efforts that we can
continue to grow our business and
make a positive impact on society.”
A business with unique strengths
Our diversity is, I believe, one of our greatest strengths.
Many of our sites across the world have strong, unique
identities. Nurturing these local strengths while including
everyone in our wider Tate & Lyle culture – a culture
based on our values of safety, integrity and respect, and
which is truly inclusive as well as performance-driven
– is essential for building the capabilities we need for
our success.
Better systems to support our teams
Part of building a strong, common culture across an
organisation is having a common management system
used by everyone. To streamline and integrate our
people processes, and improve our ways of working,
during the year we started a project to implement
Workday®, a global people management system.
It is easy to use, and will be accessible by all employees
on any device. Workday® should be up and running
across Tate & Lyle during the 2020 calendar year.
Enabling our people to do their best
As an employer of a multi-generational workforce –
like many companies with a manufacturing heritage,
in some plants we have up to three different generations
working together – we need to create an environment
that appeals to and gets the best out of everyone,
whatever their expectations. One aspect of that is a
focus on supporting a healthy work/life balance, which
is why I was very pleased that, at the end of the year,
we introduced paid parental leave for our salaried
employees in the US.
Another aspect is training. Current employees need
to develop their skills to meet the demands of a
changing workplace, while new employees joining
the workforce are looking to learn new skills and build
their careers at Tate & Lyle. That is why, during the
year, we significantly enhanced a number of our
management and employee training programmes.
44 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
For example, over 400 colleagues in Global Operations
were trained in continuous improvement principles,
while our sales and technical services teams in Food &
Beverage Solutions completed over 900 training days
between them.
LAURA HAGAN
CHIEF HUMAN
RESOURCES
OFFICER
United by our purpose
Common systems, programmes and training are very
useful for creating a sense of cohesion. But we have a
far more important unifying factor that appeals across
generations, countries and cultures – our purpose.
Everyone, whatever they do and wherever they are, in
some way contributes to making great ingredients and
solutions for customers, through which we can improve
people’s lives for generations. Building on this is a great
opportunity, and one we will focus on as we develop our
people strategy in the coming year.
STRATEGIC REPORT We support the Code with a set of standards
including the Group Competition (Anti-trust)
Standard, Group Gifts and Hospitality
Standard, Anti-Money Laundering and
Anti-Corruption/Bribery Standard, and
Agents and Commissions Standard.
Our global human resources policies are
published on our intranet and communicated
across the Group, covering topics such as
equal opportunities, diversity and inclusion,
employee training and reward. We also publish
our standards for our supply chain, and our
statement on anti-slavery and human
trafficking. The latter of these is available on
www.tateandlyle.com/anti-slavery-statement.
E M P L O Y E E P R O F I L E
( A S A T 3 1 M A R C H
2 0 1 9 )
Employees
4,121
(2018: 4,192)
Employees by geography
A commitment to integrity and
human rights
We expect everyone at Tate & Lyle, and all
who work with us, to act in accordance with
our values and live up to our standards.
We set out what this means in our Code of
Ethics, available in 13 languages, and
publicised widely throughout the Group.
We updated the Code in 2018, supported by
online training for everyone and face-to-face
training for particular areas of risk, such as
sales and procurement. We encourage
people to report any breaches through our
Speak Up (whistleblowing) programme,
which is advertised across our plants and
offices, on our intranet and in other
internal communications.
This year, the reports raised through
Speak Up, either directly or through our
independent third-party partner, Safecall,
doubled. Statistically, our number of reports
per person had been very low, so we see
this as a positive change, a result of better
communication and therefore higher levels
of reporting. We investigate every report.
Living by our Code
’Our updated Code of Ethics, published in
2018, is intended to be a tool for use by
everyone in the business, both internally and
with customers and suppliers, to help drive
business success,’ says Carolyn Lindsey,
Head of Ethics and Compliance. ’Everyone I’ve
spoken to has been open and enthusiastic
about the Code – people want to talk about
what they should be doing and the questions
they should be asking, and that’s really
positive. Each employee has received a hard
copy, and the messages in the Code are
supported by 42 Ethics Ambassadors around
the business. So far, we’ve reached 96% of our
target audience for online Code training.’
51% North America
33% Europe, Middle East
and Africa
10% Latin America
6% Asia Pacific
W W W . T A T E A N D L Y L E . C O M | 45
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION G E N D E R D I V E R S I T Y
( A S A T 3 1 M A R C H
2 0 1 9 )
Board
20% (2) women
80% (8) men
Executive
Committee
44% (4) women
56% (5) men
All employees
29% (1,195) women
71% (2,926) men
O U R P E O P L E (continued)
Fostering an inclusive culture
Having the right culture is central to our
success. People are at their best when they
feel they are contributing to the Company’s
performance, while also developing their
own abilities. And, of course, they must feel
they can be themselves at work, which is
why we’re committed to a culture of
diversity and inclusion. Our policy is to
employ the best candidates available in
every position regardless of gender, sexual
orientation, age, nationality, colour, disability,
race, religion or philosophical beliefs,
marriage or civil partnership, pregnancy,
maternity, gender reassignment or ethnic or
national origin.
We’ve launched a number of initiatives to
make sure we keep diversity front of mind
everywhere. For example, in Global
Operations, our Inclusion & Diversity
Council is working towards ensuring that
employees at our plants reflect the societies
and communities they work in. We’ve also
launched unconscious bias training for
leaders in key front-line business units.
Gender diversity is an increasingly important
issue for UK companies, and here we’re
looking to take a lead. While overall, we
employ 71% men (2,926) and 29% women
(1,195), we are one of the few companies
in the FTSE 250 to have an almost gender-
balanced Executive Committee – 44%
women (4) and 56% men (5). We have 23%
women (27) and 77% men (91) senior
managers including statutory directors.
We also have a strong Professional Women’s
Network which brings together women
across the company for networking,
personal development and socialising.
Gender pay gap reporting
Although we are below the threshold for
UK gender pay reporting legislation,
we publish details of our gender pay gap
on our website.
Using the UK Government’s methodology,
Tate & Lyle reports a median gender pay
gap of 9% across all UK employees
(compared to 11% reported last year).
The overall gender pay gap arises as a
result of having fewer women in the most
senior roles in the UK at the reporting date
(April 2018).
Across the Group, while female
representation in our senior management
population has risen significantly over
successive years, we recognise this remains
a focus area. With this in mind, we are
pleased to have improved the gender mix of
our Executive Committee, with two female
appointments made during the year.
Ensuring employees are
motivated and recognised
Good internal communications are critical
to creating and sustaining employee
engagement. We communicate with our
employees around the world through a
number of channels. These include email,
videos, our intranet, our Yammer internal
social network, team meetings, employee
town halls (group meetings of all employees
at a site), and our global employee magazine,
whose aim is to be the forum for employees
telling their own stories. We publish the
magazine every four months in English,
with summaries in nine other languages.
Of course, we need to know whether our
communications are effective, and what
people are thinking. We therefore carry out
periodic pulse surveys, which provide rich
insight on important employee trends and
sentiments to help us refine our approaches
to employee engagement.
Communication is important for people to
feel engaged and motivated – but fair,
performance-based remuneration is also
fundamental. Incentive arrangements are
based on both Group and individual
performance measures, while we ensure
our packages are fair by benchmarking
them regularly against the market.
International Day of Women and Girls
in Science
To highlight and raise awareness of our proactive
approach to gender issues, we organised an array of
events and campaigns around International Day of
Women and Girls in Science on 11 February 2019. This
included asking female colleagues in science-related
roles about the impact of gender on their careers, and
sharing their experiences, insights and tips for the next
generation on our intranet, our website and on
social media.
46 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
STRATEGIC REPORT But recognition is about more than pay –
we also have a strong focus on non-financial
recognition. This takes many forms, from
localised recognition moments in team
meetings, through to large events such as
our biennial Extraordinary People Awards,
which recognise truly exceptional behaviour
from our people across the world.
Developing talent and enhancing
leadership skills
We want to be a place where people are
constantly learning – it’s essential for our
success as a business, and people’s personal
satisfaction in their work. We’ve focused
particularly on our behaviours this year,
continuing our programme to embed our three
leadership behaviours of partnership, agility
and execution. This has seen more than 200
global front-line managers and supervisors
go through core management development
programmes, and more than 40 high-potential
leaders taking part in our flagship Global
Leadership Development programme.
We have also invested in the technical
capabilities of our front-line sales and
technical teams. And, we’re making it
easier for employees to complete regular
online training programmes, by making
eLearning courses available on smartphones
and tablets.
Supporting employee wellbeing
Improving Lives for Generations starts with
our employees, and this year we’ve
increased our focus on wellbeing, including
work/life balance. A great example is our
introduction of paid parental leave (PPL) for
colleagues in the US with no legal right to it.
Under our new PPL policy, all eligible
employees – those welcoming a new
addition to their family, whether a new baby,
or an adopted or fostered child of any age
– will have 10 consecutive days of paid leave.
At Group level, our Global Challenge is our
most high-profile commitment to wellbeing.
This year, over 1,000 employees from
19 countries took more than one billion
steps over 100 days to improve their fitness
and help them live more balanced lifestyles.
At site level, we encourage people’s
initiatives and support their ideas about
what will work best to promote wellbeing.
Some examples include subsidising
healthier food options in plant canteens,
and organising visits from health and
wellbeing experts and occupational
health professionals.
Winning ways in wellbeing
at Łódz�, Poland
Last year, our team in Łódz� devised a
new health and wellness programme
that’s having a real impact on
colleagues – and contributed to
the team winning a Diamond Award
from the Association of Business
Service Leaders (ABSL) in Poland
in December 2018. The award
recognised the team’s holistic
approach to employee wellbeing and
development through their ’I Love My
Job’ programme. The wellbeing
agenda includes ongoing group
exercise activities alongside a
programme of weekly, monthly and
yearly initiatives including healthy
catering choices, workshops
on diet, sport and lifestyle, and
physiotherapist consultations.
1.4 billion steps and 57 million calories
In 2018, 177 teams (1,180 people) took part in our annual Global Challenge – racking
up an incredible 1.4 billion steps and equivalent to burning 57 million calories.
Three-quarters of participants exceeded the recommended daily 10,000 steps, and
the total miles covered exceeded 560,000, with walking, running and cycling the most
popular activities. Germany, Slovakia and Brazil topped the league table with a daily
average of 18,855, 17,549 and 16,848 steps respectively per person.
W W W . T A T E A N D L Y L E . C O M | 47
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION E N V I R O N M E N T , H E A L T H A N D S A F E T Y
Continuing our journey
to excellence
“Our Journey to environment, health and safety (EHS) Excellence
(J2EE) is a multi-year programme which aims to deliver and sustain
world-class EHS performance throughout the Group. Our ultimate
goal is to provide a safe working environment for everyone and to
operate sustainably with minimal impact on the environment.”
MELISSA LAW, PRESIDENT, GLOBAL OPERATIONS
As we reported last year, in January 2018, we launched
J2EE, bringing environment and safety together under one
umbrella. This followed a comprehensive Group-wide
safety review in 2017 conducted by an independent
external expert consultancy.
A summary of J2EE
Our J2EE programme helps us ensure we’re protecting
our employees’ health, keeping them safe, and
protecting our environment. It’s designed to strengthen
our EHS culture and performance to create a strong
EHS community, led by senior management. In practical
terms, this involves each site introducing standardised
protocols and passing through a series of stages, or
tollgates, with the help of element owners – colleagues
who champion a particular aspect of EHS.
J2EE is supported by a global EHS management system
aligned with the requirements of international standards
for the environment, occupational health and safety,
and risk management (ISO 14001 and ISO 45001).
Our approach includes a global EHS policy (available
on www.tateandlyle.com) which sets out a number of
principles designed to keep our people safe, along with
a consistent set of requirements and expected results.
These include areas such as working at height,
combustible dust, railcar safety and hot liquids,
chemicals and steam. We’ve also introduced Gensuite,
a cloud-based tool for managing EHS data efficiently
and consistently.
Enhancing our oversight of EHS
During the year, we established a new EHS Advisory
Board to oversee the implementation of the J2EE
programme and review our EHS performance generally.
This board, which meets quarterly, is made up of senior
executives, including the Chief Executive, plus an
external expert.
48 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
J2EE aims
— To prevent loss of life and injuries
— To provide clarity about the behaviour we expect from those
who work for us and with us
— To manage our operational environmental risks to
minimise our environmental footprint while ensuring
compliance with local regulators
STRATEGIC REPORT I have been greatly inspired by the energy
and commitment I’ve seen across Tate & Lyle
and the way everyone has embraced J2EE.
It gives us real encouragement that we are on
the right course.
JAN-JAAP VAN DER BIJ, SENIOR VICE PRESIDENT, GLOBAL EHS
Supporting the UN Sustainable
Development Goals (SDGs)
Our J2EE is linked to our wider contribution to
society and the world, as many of the issues it
addresses are highly material to our stakeholders
and overlap with some of the UN’s Sustainable
Development Goals (SDGs). We’re considering
which goals are most relevant to our business,
namely where we can have the most impact.
We will be reporting on this in the coming year.
The Board of Directors receives updates on EHS
performance at every meeting, and a more detailed
review of progress at least twice a year, which includes a
report from our external expert. EHS updates are also
provided regularly to the Executive Committee and,
every week, we email a wide group of employees with
the latest EHS performance data, details of any
incidents in the previous week and corrective actions
taken, and examples of EHS best practice.
Senior executives visit sites around the world to meet
employees and contractors to discuss EHS and identify
key issues. This first-hand insight helps us review and
improve our EHS practices and address any specific
concerns employees may have.
New ways of thinking about EHS risk
We’ve made good progress in several areas over the past
year. For example, our new hazard management process
has helped to identify and evaluate high-risk processes.
We classify risks as either ‘lions’ or ‘tigers’. Both are
potentially dangerous, but lions hunt in the open and are
relatively easy to spot and avoid (like easier-to-identify
occupational safety issues), while tigers hide and use
surprise (like harder-to-identify process safety issues).
During 2018, we completed ‘tiger hunts’ at all our sites.
When we find a risk during a ‘tiger hunt’, we identify the
barriers currently in place to mitigate it and, using a
scenario-based audit, ensure they’re working as intended.
If they are not, we change them to make sure they do.
Speaking up
about EHS
4.5k
concerns raised
We encourage
employees to tell us
about any EHS
concerns they may
have, no matter how
large or small. This
year, they raised
more than 4,500
concerns, and over
70% were addressed
within 30 days.
Good early progress
The aim of J2EE is to deliver sustained EHS
improvement over several years. We are only in our
second year of J2EE, and so there is still more we need
to do, but progress so far is encouraging. As of May
2019, 33 of our sites have reached the first tollgate,
while 21 have reached the second tollgate. We are
particularly pleased that three of our manufacturing
sites – McIntosh and Sycamore, USA and Santa Rosa,
Brazil – have reached the third tollgate. There are seven
tollgates in total.
As we develop and learn from our J2EE programme,
during the year we also took the opportunity to review
our 2020 environmental targets. We decided to revise
our sustainable agriculture target to focus on
supporting sustainably farmed corn, which is the
agricultural material we use by far the most. We are
looking at setting new targets for all our environmental
impacts for 2025, and will report on them in due course.
Public reporting
We explain the scope, principles and
methodologies we use to report our EHS
performance in ‘EHS Reporting Criteria’ at
www.tateandlyle.com/about-us/corporate-
responsibility.
Assurance
Bureau Veritas UK Ltd have independently
verified selected environment data on pages 53
and 54. Their assurance statement is at
www.tateandlyle.com/about-us/corporate-
responsibility.
We report EHS data by calendar year.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION E N V I R O N M E N T , H E A L T H A N D S A F E T Y (continued)
Health and safety
R E C O R DA B L E I N C I D E N T R AT E 1
As part of the J2EE programme, this year we introduced
a new, more rigorous reporting system, and trained our
people on how to use it. We’re pleased that this, along
with the more open environment we are fostering
through J2EE, has resulted in people reporting
more incidents in more detail, giving us a better
understanding of our safety risks and performance.
As part of the system, we also introduced centralised
reporting of leading indicators – EHS concerns, near
misses, critical safety device activations and
combustible dust events – which are essential for
understanding potentially hazardous situations, and
enabling us to take better, faster, preventative action
across the Group. We believe the implementation of our
new reporting systems, and the resulting increase in
incident reporting and information, was a contributing
factor to the worsening of our safety results in the 2018
calendar year, with the recordable incident rate
worsening by 24% and our lost-work case rate by 32%.
Recordable injuries also increased from 49 in the 2017
calendar year to 60 this calendar year, although the
number of injuries reduced in the second half of the
year. Over the longer term, our more rigorous approach
to reporting and our focus on leading indicators will
give us a better understanding of safety risks, which
should help us to reduce both the frequency and
severity of incidents.
We report safety performance by calendar year. For EHS
reporting purposes, employees include all those at
Tate & Lyle owned operations and joint ventures.
Leading indicator
11
Potentially severe events (PSE)
PSEs are events or incidents
which could have resulted in a
major or severe incident.
Life-saving principles to promote
safe working
When we launched J2EE in January 2018, we adopted 10
life-saving principles in areas such as working at height,
combustible dust, railcar safety, and hot liquids,
chemicals and steam. Each principle defines critical
behaviours expected of leaders and employees to
ensure their own safety and that of their teams.
50 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
4
1
.
1
6
7
.
0
4
6
.
0
3
0
.
1 1
9
.
0
4
9
.
0
0
8
.
0
6
7
.
0
4
7
.
0
2016
2017
2018
Number of incidents combined
60
2017: 49
Employees
Contractors
Combined
(Group KPI)
1 Number of injuries requiring
treatment beyond first aid
per 200,000 hours.
LO S T - WO R K CA S E R AT E 1
4
4
.
0
9
1
.
0
5
2
.
0
6
2
.
0
5
2
.
0
2
1
.
0
1
1
.
0
0
1
.
0
0
1
.
0
2016
2017
2018
Number of lost-work
cases combined
16
2017: 12
1 Number of injuries that
resulted in lost-work days
per 200,000 hours.
Employees
Contractors
Combined
(Group KPI)
See Group key performance indicators, including recordable
incident rate and lost-work case rate, on pages 24 and 25.
STRATEGIC REPORT N AT U R E O F AC C I D E N T S
Compared with our previous system of
reporting, our new Gensuite management
system has many more categories. This
means we can be much more specific about
the nature of an incident when reporting it.
17% caught in, under, on, between
14% contact with sharp object
10% struck by or against
10% falls, same level
10% falls, different level
10% body position or posture – bend,
lean or twist
7% slip or trip (no fall)
7% lowering, lifting or carrying
5% forceful exertion, pushing or pulling
5% contact with chemical or
other substance
3% task repetition
1% stepped on
1% exposure to
285
STOP Works in 2018
Each week, we
recognise the top
STOP Work report
with an award.
STOP Work Authority
We have introduced a STOP Work Authority
across the Group. It means all employees,
contractors, and people who are conducting
work or work-related activities at our sites have
the authority and responsibility to stop any
activity they believe is not being done safely or
that poses an environmental risk. It doesn’t
matter how critical the activity is for our
operations. We will always support a decision to
stop work that is not being done safely or poses
an environmental risk.
Award-winning authority
Each week, we recognise the top STOP Work
report with an award. Here are just a few of this
year’s examples. At Mold, UK, a maintenance
engineer entered the boiler house to repair a
pipe. He smelled natural gas and immediately
stopped all work and reported the incident –
which indeed turned out to be a gas leak.
A similar event occurred at Dayton, Ohio, USA,
where a colleague smelled high levels of
ammonia and stopped work on a tank until the
level could be reduced. STOP Work awards aren’t
only for employees. We were pleased that a
contractor at our Kya Sand, South Africa site
stopped work when he discovered that a safety
switch was not operating correctly on a blender.
He immediately isolated the energy source
and had the problem corrected.
W W W . T A T E A N D L Y L E . C O M | 51
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION E N V I R O N M E N T , H E A L T H A N D S A F E T Y (continued)
Environment
We measure our environmental footprint in terms of our
energy use, our water use and our generation of waste.
While we consider our impacts principally within our
own operations, we are expanding our focus to include
sustainable agriculture, particularly for our principal
raw material, corn.
Although we did not improve our overall environmental
performance this year, we saw positive progress at
several of our major facilities as a result of productivity,
efficiency and reliability gains from continuous
improvement projects. And, we made progress on our
sustainable agriculture programme through a new
partnership with Land O’Lakes SUSTAINTM that will
enable us to better measure and manage our impact.
Looking to 2020, we believe that the implementation of
our new performance assurance system through J2EE,
and the resulting improvements in how we’re managing
our performance, will help us work towards meeting
our targets.
How we manage environmental risk
As part of J2EE, we’ve implemented a global EHS
management system to help us measure and control
our environmental performance consistently. It lays the
foundations for achieving ISO 14001 certification for
effective environmental management. The system includes:
— Identifying and measuring environmental risks to
prevent and mitigate our impacts
— Planning, setting targets, measuring progress, and
tracking actions to achieve our objectives
— Documenting all legal and other environmental
obligations and their fulfilment
— Investing in our employees’ environmental knowledge,
skills and capabilities
— Communicating internally and externally any changes
in our environmental strategy, risks, or risk controls
Our Boleraz,
Slovakia site, where
we’ve reduced
energy consumption
by 12,600 MWh
per year.
52 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
STRATEGIC REPORT E N E R GY U S E A N D CA R B O N
E M I SS I O N S
Climate change risks and opportunities are considered
as part of our strategic decision-making process,
and we’re considering the recommendations of the
Task Force on Climate-related Financial Disclosures.
Since 2008, we’ve reduced our CO2e emissions
by 20.4% and energy e per tonne of production by 4.5%.
However, despite performance improvements at several
facilities this year, our CO2e emissions increased by
1.7% and our energy use by 0.6%, due primarily to
issues with a turbine and the commissioning of a new
natural gas boiler at our Decatur, Illinois, US plant.
Now operational, this boiler will reduce CO2e emissions
by 55,000 tonnes per year with the added benefits of
reducing costs and increasing reliability and productivity.
Our Group greenhouse gas emissions for the 2018
calendar year in tonnes of carbon dioxide equivalent
(tCO2e) were 2,695,000.
Highlights of good practice
— Our US sites, Lafayette South and Loudon, in Indiana
and Tennessee, respectively, were again the only two
corn wet mills in the US to receive Energy Star
certifications in 2018. These are awarded by the
US Environmental Protection Agency (EPA) for
outstanding energy efficiency performance.
— Our Boleraz, Slovakia site used innovative approaches
alongside established continuous improvement
methodologies to reduce its energy consumption by
12,600 MWh per year.
G R E E N H O U S E GA S E M I SS I O N S , S C O P E S 1
A N D 2
Tonnes CO2e
0
0
0
,
7
3
2
,
3
0
0
0
,
8
1
1
,
1
0
0
0
,
9
1
1
,
2
0
0
0
,
6
7
9
,
2
0
0
0
,
1
0
0
,
1
0
0
0
,
5
7
9
,
1
0
0
0
,
4
4
6
,
2
0
0
0
,
9
4
9
,
1
0
0
0
,
5
9
6
0
0
0
,
5
9
6
,
2
0
0
0
,
5
6
7
0
0
0
,
0
3
9
,
1
2008
2016
2017
2018
Scope 1
(combustion of
fuel/operation
of facilities)
Scope 2 (electricity,
heat, steam and
cooling purchased)
Total
Intensity (tonnes of CO2e per tonne
of production)
2018
2017
2016
2008
0.351
0.345
0.395
0.441
TA R G E T B Y E N D 2020
E N E R GY U S E
Reduce CO2e emissions (scopes 1 and 2) from energy
use by 19% per tonne of production (baseline year 2008).
Gigajoules (GJ) per tonne
of production
Progress
20.4%
reduction since 2008
Commentary
We’ve beaten our 2020 target and continue to plan
energy reduction projects that will minimise our
CO2e footprint.
2018
2017
2016
2008
4.87
4.84
4.82
5.10
W W W . T A T E A N D L Y L E . C O M | 53
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION E N V I R O N M E N T , H E A L T H A N D S A F E T Y (continued)
WAT E R
In 2018, despite several efficiency projects, Group
consumption increased by 3.7% due primarily to a water
leak at our McIntosh, Alabama, US facility (since repaired)
and the start-up of an additional groundwater well at
our Dayton, Ohio, US facility. In the future, this well will
contribute to a decrease in water use at Dayton since
much of the well water will be reused.
Water is a shared resource, and we’re committed to
ensuring that, wherever we operate, our water use is
sustainable for both ourselves and the local community.
To maximise the efficiency of our water use, we’ve
begun working on a two-year initiative to complete
in-depth water risk and opportunities assessments at
all major sites. This analysis will enable us to set a
meaningful water use minimisation target for 2025.
Highlights of good practice
Our Lafayette South, Indiana, US plant has implemented
water reuse and minimisation continuous improvement
projects that will reduce our water discharge by
80 million gallons per year. By reusing condensates
instead of fresh water and by significantly minimising
the water used in a key purification process, we are
minimising our environmental footprint while
significantly reducing our water and wastewater
treatment costs.
WAT E R U S E
Cubic metres per tonne
of production
2018
2017
2016
2008
4.52
4.36
4.53
4.60
WA S T E TO L A N D F I L L
Since 2008, we’ve reduced waste to landfill by 10.9%,
although compared with 2017, it increased by 7.8% in
2018. This increase was due to key waste streams,
previously diverted, at our Decatur, Illinois; Loudon,
Tennessee; and Sagamore, Indiana, US plants being
sent to landfill.
This year we implemented a new process to measure
and minimise the impact of our waste through our new
digital data management system, Gensuite. This will
help us ensure that any decisions we make around
waste will be environmentally responsible and cost
effective, and overall minimise our waste to landfill.
Highlights of good practice
Our McIntosh, Alabama, US facility diverted all
its wastewater sludge from landfill to fertilise
local farmlands.
WA S T E TO L A N D F I L L
Tonnes per 1,000 tonnes
of production
2018
2017
2016
2008
9.00
8.35
8.61
10.10
TA R G E T B Y E N D 2020
Reduce waste to landfill by 30%
(baseline year 2008).
Progress
10.9%
reduction since 2008
Commentary
Waste to landfill increased this year, making
it more challenging to achieve our 2020
target. Our progress in 2019, through landfill
diversion and waste minimisation projects,
will be a key factor as we work towards our
2020 target.
54 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
STRATEGIC REPORT S U S TA I N A B L E S O U R C I N G
We reviewed our sustainable sourcing
strategy this year. We decided to focus our
efforts initially on ways to improve our
sustainable agricultural practices in the
corn supply chain as we use far more corn
than any other raw material.
In November 2018, we entered a partnership
with Land O’Lakes SUSTAINTM, a leading US
resource stewardship solutions provider, to
support sustainable corn farming in the US.
As well as a direct environmental impact,
this partnership will also, through Land
O’Lakes SUSTAINTM’s analytical software,
The TruterraTM Insights Engine, help farmers
understand the impact sustainable practices
will have on their crops and their profitability.
We’re also active members of the US Corn
Refiners Association and of Field to Market,
the US alliance for sustainable agriculture,
which helps define, measure and promote
sustainability in US agriculture, particularly
for corn production. We also work closely
with key customers to enable them to meet
their commitments and realise their
ambitions for sustainable agriculture.
We’re not restricting our efforts to corn,
however. This year also saw the launch
of a partnership with Earthwatch, an
independent, international science-based
organisation to undertake a review of our
stevia supply chain in China to understand
its socio-environmental impact. The project,
which began in early 2019, will last a full
annual growing cycle. Based on the research
collected, Earthwatch will recommend
practical steps we can take to reduce risks
and maximise opportunities for business
and environmental sustainability.
We use far more
corn than any other
raw material and
we’re looking at
sustainable
practices in the
supply chain.
We recognise the importance of
partnerships along the entire value
chain to improve sustainability,
lessen environmental impact and
improve profitability.
ANNA PIERCE
GLOBAL SUSTAINABILITY MANAGER
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION C O M M U N I T Y I N V O L V E M E N T
Improving lives
in our communities
“We have a proud history of community involvement and, today,
supporting our local communities is as important to us as it
was 100 years ago.”
ROWAN ADAMS, EXECUTIVE VICE PRESIDENT, CORPORATE AFFAIRS
Putting our purpose into action
In support of our purpose of Improving Lives
for Generations, the aim of our community
involvement programme is to build stronger,
healthier local communities. We know that
engaging with communities is not a
one-size-fits-all activity, and employees at
our sites work in a wide range of ways to
make a contribution. Our aim is to focus
on areas where we know we can make a
difference. That’s why our community
involvement programme is centred around
three main areas, with a particular
emphasis on supporting children and
young adults.
— Health: we support projects which
improve the health and wellbeing of
people of all ages, helping them
understand the roles played by nutrition
and physical activity in a well-balanced
life.
— Hunger: we work with organisations to
give people in need in our communities,
and beyond, access to nutritious meals.
— Education: we work with local schools,
education foundations and other
community partners to help prepare
students for healthier, brighter futures.
Within our broader global framework, we
empower employees at each location to
make their own decisions about which
projects they wish to support and what
partnerships they want to develop. We
regularly review our programmes and
the partners and projects we support.
Our partners include registered charities,
educational institutions and non-
governmental agencies that meet our high
standards for delivering services and
results. Our plan and budget for community
involvement are developed and approved as
part of our annual operating plan process.
How we invest in communities
In the year ended 31 March 2019, cash community
spend and charitable donations were £490,000
(2018 – £479,000).
52% health
29% education
12% hunger
7% other
Volunteering pays
dividends all round
Last year, we began working with
Enders-Salk, an elementary
school near our Hoffman Estates,
Illinois, US facility. We began by
sponsoring a free breakfast
programme for students in need,
and it soon expanded into other
areas too. Our latest project was
to help the children plant and
harvest their school garden, with
potatoes, beans and tomatoes a
popular choice. This helped the
children learn about the
importance of eating more
healthily and living a balanced
lifestyle. The project also had
some unexpected personal and
professional benefits for our own
people in terms of teambuilding
and personal fulfilment.
56 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
STRATEGIC REPORT Our people are the heart and soul of our
community involvement work, volunteering
their time and talent to make a difference.
JENNIFER WALKER, DIRECTOR, GLOBAL COMMUNITY RELATIONS
Highlights of the year
Health
Through a range of
wellbeing
programmes we’ve
reached more than
1,000 students, their
teachers and parents
with the information
and practical skills
they need to live
healthier lifestyles.
Programmes include:
— Healthy Eating, Happy Learning (Shanghai, China): second
year of our programme with the Shanghai Nutrition Society
in two schools to help children and their parents make
healthier choices.
— Food 4 Thought (Hoffman Estates, Illinois, USA):
partnership with the District 54 Education Foundation to
provide a nutritious breakfast, nutrition education and
mentorship to school children and their families.
— London Youth Games (London, UK): volunteers from our
head office helped primary school children have a great time
while learning the benefits of taking part in sport (pictured).
Hunger
Through our support
of food bank partners
and community-wide
food drives, we’ve
helped provide
300,000 meals to
people in need.
Initiatives include:
— Holiday Meal Boxes (Hoffman Estates and Sycamore,
both Illinois, USA): for the second year, we sponsored the
Northern Illinois Food Bank’s Holiday Meal Box project,
packing more than 30,000 holiday meal boxes for families
in need.
— The WSOY Community Food Drive (Decatur, Illinois, USA):
we’ve been a partner for 17 years; this year, the overall
programme collected 1.5 million pounds of food in just 12 hours.
— The Trussell Trust (London, UK): our London team ran
events to raise money for the Trussell Trust Food Bank
network which supports families across the UK.
— National Food Collection Day (Ossona and Noto, Italy): our
Italian teams joined Banco Alimentare to help ensure people
in need across Italy had access to nutritious food.
— Mobile Donation (Melbourne and Brisbane, Australia):
our Australian teams collected food and made deliveries for
OzHarvest and The Food Bank, helping to provide meals and
educate communities about food waste (pictured).
Education
Through funding
STEM grant
programmes and
providing scholarships
and other educational
support, we’ve helped
more than 7,000
students across
the world get a
better education.
Partners include:
— STEM Grants Programme (US): we work with district
education foundations where we have sites in the US to
provide STEM-based teaching grants.
— University Scholarships (US, Vietnam and South Africa):
we provide scholarships that help students work towards a
college degree.
— Vaquitas Lecheras (Buenos Aires, Argentina): for the past
six years, our team has been working with local families in
need providing school supplies, study support and
mentorship (pictured).
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION R I S K R E P O R T
Building on a strong
risk culture
“With the growth of our business
comes a changing risk profile,
particularly as we look to expand in
new markets. During the year, we
started a process to take a fresh look
at how we identify, challenge and
mitigate risk in a changing world.”
Owning risk across the business
Coming new into the business this year, it’s encouraging
to see how hard the risk team has worked to embed
an understanding of risk from the bottom up, and
encourage ownership across the business. Tate & Lyle
people are clearly committed to taking responsibility for
risk in their own areas. This is particularly evident when
it comes to environment, health and safety (EHS).
There has been real investment through our ongoing
Journey to EHS Excellence (J2EE), for example through
the recruitment of safety engineers at our plants.
I’ve seen for myself how people across the Group
have been embracing the J2EE programme – EHS at
Tate & Lyle is not just a priority, it’s foundational.
Enhancing ethics and compliance
We have also been investing in ethics and compliance.
We now have a full-time Global Head of Ethics and
Compliance, and we relaunched our Code of Ethics
(Code) this year. In principle, there should be no
difference in the way we do business anywhere we
operate, and our Code sits at the heart of how we work.
It’s part of our contracts and we have a zero-tolerance
approach to bribery and corruption. We enhanced our
programme of Code training with the rollout of a new
online module for all computer-based employees and
with targeted, in-person training for higher-risk groups
such as sales and procurement. To date, over 500 people
have received in-person ethics and compliance training,
and the online training course has been completed by
96% of our target audience.
We take a risk-based approach to third-party due
diligence, and monitor ethics and compliance risks
through our regional Control Environment Councils.
We also aim to ensure that the business practices of all
our partners are in line with our Code. This is naturally
58 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
LINDSAY
BEARDSELL
EXECUTIVE VICE
PRESIDENT,
GENERAL
COUNSEL
more difficult to do in some jurisdictions, and the risks
increase as we work with more and more partners.
We therefore seek to continually improve our processes
to meet the needs of all markets and to develop closer
relationships with our partners.
Taking a fresh look at risk
Looking ahead to the coming year, an area of focus is
to reflect and improve our top-down approach and
holistic view of risk. We’re therefore reviewing the way
that we identify, challenge and mitigate risks across
the Group to ensure that we have a full view of their
end-to-end impact. As part of this, we’ll be considering
the longer-term implications of our global growth
strategy, which is likely to involve further investment
in new markets.
Our strong risk culture will be important here. Good risk
management is not about being overly cautious or
avoiding risk, it’s about ensuring that we understand
fully what our risks are, the level of risk we want to take,
and are clear about how they should be managed. It’s
also about making sure our people own the risks in their
area, and we will continue to ensure that we do this as
our risk profile develops.
I’m excited about the growth potential of our business
and our aim is to ensure our risk management activities
both support and enable that potential.
STRATEGIC REPORT How we manage risk
Our risk management programme
We have a single, Group-wide programme to identify, analyse and assess risks to our
business, and then to determine how we manage, control and monitor those risks.
T H R E E L I N E S O F D E F E N C E
We manage significant risks at three distinct levels.
1
R I S K OW N E R S H I P
A N D C O N T R O L
Our business and operational managers identify risks and bring in policies
and procedures to maintain effective controls day-to-day. They also update
our front-line controls regularly in response to our changing risk profile.
2
M O N I TO R I N G
A N D C O M P L I A N C E
Our Group functional teams help management to monitor key risk areas
and make sure the first line of defence is working as intended. These teams
include risk management, finance, quality, ethics and compliance, and
environment, health and safety. They also identify current and emerging
risks, and ensure we address any changes in the risk landscape in
good time.
3
I N D E P E N D E N T
A S S U R A N C E
Our Group Audit and Assurance team (internal audit) and external
assurance providers give independent assurance over our risk
management, control, and governance processes and systems.
OV E R S I G H T
See the governance section, pages 76 to 83, for more information.
B OA R D
Our Board, Audit Committee and Executive Committee oversee and direct
risk management in line with their respective responsibilities.
A U D I T C O M M I T T E E
E X E C U T I V E C O M M I T T E E
Our Board has overall responsibility for how we manage and control risk,
and for setting the Group’s risk appetite. Every year, the Board makes a
robust assessment of the principal risks facing our business to determine
the nature and extent of risk necessary to achieve our strategic objectives.
They also evaluate emerging risks in line with good practice.
W W W . T A T E A N D L Y L E . C O M | 59
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION R I S K R E P O R T (continued)
Our approach to risk
Identifying risks
Each year, we hold bottom-up and top-down
reviews of our principal risks, looking at a
three-year horizon.
The bottom-up process involves a rolling
programme of workshops held around the
business, facilitated by our risk
management team. These workshops help
us to identify current and potential risks,
which we then collate and report through
functional and divisional levels to our
Executive Committee. We also consider any
areas and behaviours which could bring
about new risks, or different combinations
of risk with other potentially larger impacts.
The top-down review involves the Board
assessing the output of this work,
confirming that the principal risks have
been captured and addressed, and that
emerging risks have been considered.
Through these processes, we identify our
main business, strategic, financial, operational
and compliance risks and create action
plans and controls to mitigate them to the
extent appropriate to our risk appetite.
Risk appetite
As part of our annual risk assessment
process, our Board and Executive
Committee consider the nature and extent
of our risk appetite. The outcome of this
exercise informs our strategic planning
activities, and helps us to set the level of
mitigation needed to achieve our strategic
objectives – accepting, of course, that some
level of risk is necessary.
Managing and reviewing risks
Individual executives have responsibility for
managing certain risks and their mitigating
controls. Our senior executives formally
confirm (and report to the Audit Committee)
once a year that risks are being managed
appropriately in their area of responsibility,
and that controls are in place and effective.
Our Executive Committee reviews our
principal risks regularly – at least three
times a year – and reports to the Board any
changes in the level or velocity of the risks,
and the associated mitigating actions.
Our Board reviews the principal risks at
least every six months.
Brexit
The Board reviewed the impact of Brexit and
the contingency plan we have in place in the
event the UK leaves the EU without a deal;
and concluded that Brexit is not a material
risk for us.
Principal risks
It is ultimately the Board’s responsibility
to decide what is considered a principal
risk to the business – namely one that could
threaten our business model, performance,
solvency or liquidity. Our risk profile does,
of course, evolve and the Board updates its
view of principal risks accordingly. This year,
the Board decided that no changes to the
principal risks were needed. See pages 61
to 65 for our list of principal risks and
examples of mitigating actions.
The Board confirms that a robust
assessment of our principal risks was
carried out this year.
Viability statement
In line with the UK Corporate Governance Code, 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 our strategic plan, which the Board reviews annually, forecasts beyond three
years, we create a detailed three-year financial plan, which includes anticipated
capital and funding requirements. For this reason, the Directors agree that it is
appropriate to assess our viability over a three-year period to 31 March 2022.
To assess our viability, we stress-tested our strategic plan under four downside
scenarios which would stress our potential viability if one or more of our principal
risks were to occur. We assessed the potential impact of these scenarios, individually
and in combinations, both before and after mitigation.
The four downside scenarios modelled were:
A major operational failure causing an extended shutdown of a large
manufacturing facility
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
Government actions or policies restricting or preventing our ability to operate
in key markets
In each case, we assumed we would still be able to secure financing or refinancing
in capital markets in all plausible market conditions.
We measured the impact of these risks by quantifying their financial impact on our
strategic plan, and on our viability when set against measures such as liquidity, credit
rating and financial covenant requirements. We also considered operational and
commercial impacts. This exercise showed that, over this three-year period, the
Group would be able to withstand the impact of the most severe combination of these
risks if we adjusted our strategic plan and capital allocation priorities, and took other
available mitigating actions.
Based on this assessment, the Directors have a reasonable expectation that we will
be able to continue operating and meet our liabilities as they fall due between now
and 31 March 2022.
60 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
STRATEGIC REPORT Our principal risks
S T R AT E G I C R I S K S
Risk
How we manage the risk
1. Lack of growth in Food & Beverage Solutions
Failing to grow Food & Beverage
Solutions could prevent us from
delivering our performance
against targets. This could reduce
our profitability over both the
shorter and the longer term and
damage investors’ view of us as
an innovative solutions provider
to our customers.
Policies and procedures in place
w An organic and acquisitive growth plan which supports our strategy.
w Global and regional five-year plans focused on key categories.
w An M&A team which works closely with Innovation and Commercial Development (ICD) and our
divisions to identify and deliver acquisitions and partnerships focused on growth.
w Incentive schemes and bonus programmes for customer-facing teams tied to strategic as well
as operational targets.
Key developments this year
w We refreshed our product development ‘StageGate’ process to ensure we focus on those
opportunities most likely to deliver growth.
w We strengthened our customer-facing and innovation teams in Food & Beverage Solutions.
w We rolled out a global programme to increase customer focus in key areas such as customer
account management and planning.
2. Failure to innovate and commercialise new products
New products are essential to
the long-term growth of our
business, and our ability to lead
the industry in our chosen
categories. Without them, we
might be unable to meet our
customers’ future requirements,
which could damage our
performance and reputation and
result in customers moving to
work with competitors.
Policies and procedures in place
w A robust innovation process that delivers a strong pipeline of products through internal
development and open innovation.
w An ICD team that tracks emerging consumer trends and works closely with commercial
partners to deliver innovation, with all strategies aligned to deliver targeted growth.
w Targets for new product sales tied to incentive and bonus schemes for customer-facing teams
w An open innovation team scouting for breakthrough technologies.
w A marketing team that gives insights into consumer and key category trends, and supports new
product launches.
w Partnership opportunities with customers prioritised to accelerate development cycles and
bring new ingredients to market more quickly.
Key developments this year
w We restructured the ICD team to focus on category strategy and growth and to ensure
clear accountability.
w We improved our model for testing new ideas before commercial roll-out.
3. Inability to attract, develop, engage and retain key people
To be successful, we must have
great people in the right roles.
Without them, we may be unable
to deliver our strategy.
Policies and procedures in place
w Remuneration policies designed to attract, retain and reward the best people.
w Talent development that provides opportunities for employees and training to close skill gaps.
w Initiatives to make sure we keep diversity front of mind everywhere.
w A single global performance management system, as well as talent planning processes.
w Progress measured against cultural objectives and global employee surveys that help to reveal
what employees really think about working at Tate & Lyle.
w Executive Committee and Board focus on succession planning for business-critical roles.
Key developments this year
w We revamped our internal and external communications plans.
w We engaged closely with our global leadership team to support engagement and ensure
alignment around key priorities.
w We reviewed our incentive programmes to ensure they are aligned with strategy and continue to
provide an attractive employee proposition, to drive engagement and individual performance.
w We launched a programme to put our purpose at the heart of who we are and how we operate.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION R I S K R E P O R T (continued)
O P E R AT I O N A L R I S K S
Risk
How we manage the risk
4. Failure to act safely and operate our facilities safely and responsibly
Safety is not just a priority –
it’s foundational at Tate & Lyle.
Failure to comply with laws and
regulations relating to health,
safety and the environment
could result in us being unable
to protect our employees,
stakeholders and the wider
communities in which we
operate. It could also lead to
fines and have a negative impact
on our reputation.
Policies and procedures in place
w Continuous improvement plan for environment, health and safety (EHS) in place at all
our sites (Journey to EHS Excellence, or J2EE), visibly sponsored by the Chief Executive and
Executive Committee.
w Quarterly EHS Advisory Board receives EHS updates and reviews performance; attended by the
Chief Executive, and includes an external EHS expert.
w Regular reviews by Executive Committee and Board of EHS performance and progress against J2EE.
w SafeStart® behavioural safety training programme at all sites.
Key developments this year
w We increased investment in our EHS team including the recruitment of safety engineers at our
major plants.
w We completed deep-dive EHS reviews at all plants to identify areas that require improvement or
greater focus. These areas are built into a continuous improvement plan.
w We continued to invest in J2EE including:
w Introducing a new EHS digital management system, Gensuite
w Implementing two new initiatives, Life Saving Principles and STOP Work Authority.
5. Failure to operate our plants continuously, manage our supply chain, and meet high standards of
customer service
There are many risks in
operating plants which could
cause breaks in production,
leading to disruption and a
deterioration in customer
service. This, in turn, could
damage our ability to grow and
perform as a business.
Policies and procedures in place
w A preventative maintenance programme across our plant network.
w An ongoing programme to improve our global supply chain processes.
w Business continuity capabilities to enable us to supply products to customers from alternative
sources quickly if there’s a natural disaster or major equipment or plant failure.
w Customer service capabilities managed by Global Operations as part of an integrated end-to-end
supply chain process.
w Plans for the continued operation of our US plants in extreme winter weather.
Key developments this year
w We strengthened our maintenance programmes across our major plants.
w We refreshed our business continuity plans to support long-term strategic growth.
w We aligned our sales and operational planning process with product line management teams
to strengthen our ability to balance supply and demand.
w We invested in digital technology to improve customer service.
w We enhanced the way we manage inventory to improve customer service and our ability to supply.
62 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
STRATEGIC REPORT O P E R AT I O N A L R I S K S (continued)
Risk
How we manage the risk
6. Failure to maintain the quality and safety of our products
Poor quality products could affect
safety and also damage our
reputation and relationships
with customers. This could
have a negative effect on
our performance and
corporate reputation.
Policies and procedures in place
w Strict quality control and product testing procedures.
w Recall process running and tested.
w Third-party audit programme, supplemented by internal compliance audits.
w Suppliers assessed for food safety/quality risks, including raw material suppliers,
tollers and warehouses.
w Allergen management programme.
Key developments this year
w We implemented a recipe management system to centralise the management of our products
and ingredients.
w We updated our hazard analysis and critical control points plans at all plants to ensure
compliance with the new US Food Safety Modernization Act.
w We established a Quality Incident Review Board to investigate incidents and share resulting best
practice across all sites.
w We continued to focus on minimising the risk of cross-contamination at our plants by upgrading
our food defence programmes using the US Food and Drug Administration (FDA) food defence
plan builder.
7. Inability to manage fluctuations in the price and availability of raw materials, energy, freight
and other operating inputs
Fluctuations in crop prices could
affect our margins. These changes
could stem from things like
alternative crops, co-product
values and varying local or
regional harvests because of,
for example, weather conditions,
crop disease, climate change or
crop yields. In some cases, due
to the basis for pricing in sales
contracts or due to competitive
markets, we may not be able
to pass the full increase in
raw material prices, or higher
energy, freight or other operating
costs, on to our customers.
Our margins might also be
affected by customers not
taking expected volumes.
Policies and procedures in place
w Strategic relationships and multi-year agreements with suppliers and trading companies.
w A balanced portfolio of supply and tolling contracts with customers that helps to balance raw
material prices and product sales prices and volume risks.
w Raw material and energy purchasing policies that increase the security of our supply.
w A network of corn elevators which enhances the security of our supply.
w New or back-up supply sources (for chemicals, for example) in case primary suppliers face
localised challenges.
w The use of derivatives and forward contracts, where practical, to hedge and manage our
exposure to raw material and co-product prices.
Key developments this year
w We added procurement resources regionally to better manage local market variances.
w We combined our transportation procurement and logistics teams to improve how we manage
suppliers and better serve customers.
w We reorganised our global engineering teams to allow our engineers to spend more time on
improvement and problem solving.
8. Failure to maintain the security of our information systems and data
A cyber-security breach, whether
stemming from human error,
deliberate action or a technology
failure, could lead to unauthorised
access to or misuse of our
information systems, technology
or data. This, in turn, could result
in harm to our assets, data loss
and business disruption – and
could bring legal risks and
reputational damage.
Policies and procedures in place
w A cyber-security enhancement programme focused on strengthening our people, process and
technology defences.
w Compulsory cyber-security training and cyber-security breach scenario exercises.
w Advanced perimeter defences, as well as continuous vulnerability detection and defences.
w Separate systems across our plant network to provide resilience.
w A 24/7, third-party security operations centre.
Key developments this year
w We revised our privacy guidelines to align with the EU General Data Protection Regulation.
w We introduced a security operations centre and computer emergency response team.
w We added specific cyber-security terms and conditions to new contracts.
w We ran a number of cyber-security communications campaigns to raise awareness with
our employees.
w We invested in a range of technology defences, from next-generation firewalls to enhanced
email security.
W W W . T A T E A N D L Y L E . C O M | 63
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION R I S K R E P O R T (continued)
L E G A L , R E G U L ATO R Y A N D G OV E R N A N C E R I S K S
Risk
How we manage the risk
9. Breach of legal or regulatory requirements including our Code of Ethics
If we don’t meet our legal and/or
regulatory obligations, our
relationships with customers
could be damaged, and there
could be contractual claims,
threats to our licences and, in
extreme cases, risks to our
directors and officers. It could
also affect our performance and
corporate reputation.
Policies and procedures in place
w Legal and regulatory teams working in partnership with commercial teams to identify legal and
regulatory risk and to provide advice and solutions.
w Regular monitoring of legal and regulatory developments to identify those that could affect
Tate & Lyle.
w Key legal policies.
w Ethics and compliance training programme.
w Third-party-hosted whistleblowing process giving employees a way to raise concerns
anonymously if they’re not comfortable raising them internally.
w A full-time Global Head of Ethics and Compliance.
Key developments this year
w We restructured our Legal and Compliance teams to strengthen legal resources in the
regional businesses.
w We reviewed our legal and ethics and compliance programmes to make sure they focus on
priority areas to drive efficiency and support growth.
w We updated and relaunched our Code of Ethics.
w We introduced ethics and compliance monitoring of high-risk countries.
w We rolled out an ethics training programme and trained around 1,000 employees on data protection.
10. Failure to maintain an effective system of internal financial controls
Without effective internal
financial controls, we could
be exposed to financial
irregularities and losses
from events that may affect
our performance and ability
to operate.
Policies and procedures in place
w Financial policies and standards supported by procedures for key financial processes,
for example, capital expenditure.
w A number of forums to monitor and manage our financial risks, for example, our monthly
working capital review and our regional Control Environment Councils.
w Detailed quarterly business and financial reviews by our Chief Executive and Chief Financial Officer.
w Confirmation of minimum control standards at the half year and the end of the financial year.
w Automated controls built into our systems wherever possible.
w A well-resourced Group Audit and Assurance team which provides independent assurance to
management and the Board.
Key developments this year
w We continued to strengthen our framework for enterprise controls, and to focus on the
segregation of duties and quality of our balance sheet reconciliations.
w We evolved our risk and control matrix and rolled this out in Europe, Middle East and Africa and
North America.
w We implemented a new finance operating model in Asia Pacific and Latin America to make
better use of our shared service centre.
64 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
STRATEGIC REPORT L E G A L , R E G U L ATO R Y A N D G OV E R N A N C E R I S K S (continued)
Risk
How we manage the risk
11. Changes in consumer, customer or government attitudes to our products
The regulatory status or
perception of our products
could be affected by things like
changes in customers’ or
consumers’ attitudes, changes
in food laws and regulations,
and/or campaigns targeted
at specific ingredients or
technologies. These could
affect our ability or freedom
to operate.
Policies and procedures in place
w Science behind our ingredients (for example, health claims or nutritional impact) supported by
credible sources, clearly communicated and understood by the relevant regulatory authorities.
w A global regulatory team, supported by external consultants, that monitors local regulatory
requirements affecting our products.
w A global nutrition team which initiates and monitors research and publications on the use and
functionality of our ingredients, and maintains a global network of health and nutrition
clinicians, academics and experts.
w Membership of trade organisations giving us access to broader sources of information and
provide, where appropriate, a single voice for the industry on the issues (both regulatory and
public interest) affecting our ingredients.
w Strong relationships with regulatory authorities.
w Clear information on our ingredients’ provenance and traceability.
w A Research Advisory Group, chaired by a non-executive director and comprising leading scientific
experts, which reviews critical aspects of our innovation activities and provides guidance.
Key developments this year
w We expanded non-GM alternatives for a number of key product areas (such as texturants) and
developed constructive relationships with certification companies.
w We integrated our global regulatory team into ICD to ensure that the development of new
ingredients goes hand-in-hand with regulatory approvals.
12. Failure to manage effectively changes in government regulations and/or trade policies
Government actions or policies
could cause changes in tariffs or
customs duties or impose
import/export limitations and
other barriers. These could lead
to additional costs for our
business, restrict our growth
and limit our ability to operate in
certain markets.
Policies and procedures in place
w Strategic engagement with political parties, influencers and regulatory authorities in the main
countries in which we operate.
w Active member of relevant industry trade associations, such as the Corn Refiners Association in
the US.
w A network optimisation model that enables us to adapt and optimise production across our
plant network if there are market restrictions in certain countries, for example, by switching
production to other plants.
w A global plant network that allows customers to be served from different countries if products
from certain markets are restricted or become less economically attractive.
w Continued investment in resources and infrastructure across different markets and geographies
that diversifies our business mix.
Key developments this year
w We carried out scenario-planning exercises to assess the impact of the change from the North
American Free Trade Agreement to the new United States-Mexico-Canada Agreement.
w We put in place a contingency plan in the event the UK leaves the EU without a deal.
Non-financial information regulation
Under sections 414CA and 414CB of the Companies Act 2006,
as amended by The Companies, Partnerships and Groups
(Accounts and Non-Financial Reporting) Regulations 2016, we
must include in our Strategic Report, a non-financial information
statement. Information required by these Regulations is included
in Our business model (pages 20 and 21), Our people,
Environment, health and safety, Community Involvement and
Risk report from pages 44 to 65.
The Board approved the Strategic Report on pages 1 to 65
of this Annual Report on 22 May 2019.
By order of the Board
Claire-Marie O’Grady
Company Secretary
W W W . T A T E A N D L Y L E . C O M | 65
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Strategy in action story
Sharpen the focus on our customers
Changing
formulations,
changing lives
Cutting sugar in a traditional sweet treat
We are increasingly working with governments and
public health bodies keen to improve the health of
their citizens. When the Singapore government
identified diabetes as one of the country’s most
pressing health issues, they directed their Health
Promotion Board (HPB) to encourage food
manufacturers to produce healthier options.
The HPB and a key customer, Tung Lok Group,
approached us to help.
As the leading manufacturer of a highly popular
traditional sweet treat, the mooncake, Tung Lok was
keen to reduce its sugar content. Our DOLCIA
PRIMA® Allulose was the perfect fit; not only is it a
great-tasting, low-calorie sugar, it doesn’t raise
blood glucose or insulin levels – as HPB and Tung
Lok found out for themselves when they visited our
London HQ to try it.
No half measures
Reformulating with DOLCIA PRIMA® Allulose and
polydextrose fibre, our technical teams had to learn
how these ingredients behaved in lotus-seed paste,
a novel application for us. With Tung Lok turning
most of their mooncake production over to the new,
healthier version, only success would do.
Through our expertise in the complex science of
sugar reduction, we were able to deliver the full
package of taste, texture and better-for-you
benefits. But would consumers like it? A double-
digit jump in sales after the August 2018 launch
gave a resounding ‘yes’ and further collaborations
were soon in the pipeline.
Tung Lok’s lower-sugar mooncakes
25%
less sugar
40%
less saturated fat
67%
more fibre
66 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
Governance report
68 Board of Directors
72 Executive Committee
74 Chairman’s introduction
to governance
76 Corporate governance
88 Audit Committee report
92 Nominations Committee
report
94 Directors’ remuneration
report
112 Directors’ report
113 Directors’ statement
of responsibilities
Our team in Singapore working
on the Tung Lok project
B O A R D O F D I R E C T O R S
Our Board
N
NICK HAMPTON
CHIEF EXECUTIVE
IMRAN NAWAZ
CHIEF FINANCIAL OFFICER
Date appointed to Board: September 2014
Date appointed to Board: August 2018
Date appointed Chief Executive: April 2018
Independent: No
Aged: 45
Nationality: Luxembourger
Skills and expertise:
Imran brings with him deep experience of
the global food industry and a proven track
record of financial leadership. His broad
financial, business and international
experience with large multinational
organisations makes him a versatile
operational Chief Financial Officer.
Current external commitments:
— None
Previous roles:
Senior Vice President Finance, Europe at
Mondele�z International and prior to that
held a number of senior financial roles
across Europe, the Middle East and Africa
over a 16-year career at Mondele�z and Kraft
Foods. In his earlier career, Imran worked for
Deloitte and Philip Morris in corporate audit.
Independent: No
Aged: 52
Nationality: British
Skills and expertise:
Nick brings a wealth of food industry insights
to the Board. His general management,
financial and operational experience in
senior management roles in a major
multinational food and beverage business,
combined with his experience in leading
transformational projects provides him with
the skillset required to inspire and lead
the Group.
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.
Prior to being appointed Chief Executive,
he served as Chief Financial Officer of
Tate & Lyle.
DR GERRY MURPHY
CHAIRMAN AND CHAIR OF
NOMINATIONS COMMITTEE
Date appointed to Board: January 2017
Independent: Yes on appointment
Aged: 63
Nationality: Irish
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
enable him to provide the Board with
valuable leadership.
Current external commitments:
— Chairman of The Blackstone Group’s
principal European entity
— Chairman of Burberry Group plc.
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
Intertrust NV, British American Tobacco plc,
Invest Europe, Merlin Entertainments plc,
Reckitt Benckiser plc, Abbey National plc
and Novar plc.
68 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
GOVERNANCE Board Committees
Certain responsibilities are
delegated to three Board
Committees, details of which
are provided on pages 88 to 111.
A Audit Committee
R Remuneration Committee
N Nominations Committee
A
R
N
R
N
A
N
PAUL FORMAN
NON-EXECUTIVE DIRECTOR*
LARS FREDERIKSEN
NON-EXECUTIVE DIRECTOR
Date appointed to Board: January 2015
Date appointed to Board: April 2016
Independent: Yes
Aged: 54
Nationality: British
Independent: Yes
Aged: 60
Nationality: Danish
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 company.
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
are invaluable to the Board as Tate & Lyle
continues to evolve. He also brings
operational expertise and an understanding
of how to attract and retain talent in a
global business.
Current external commitments:
— Chairman of Matas A/S
— Chairman of Atos Medical AB
— 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
becoming CEO, held various management
positions at Chr. Hansen.
DOUGLAS HURT
SENIOR INDEPENDENT DIRECTOR AND
CHAIR OF THE AUDIT COMMITTEE*
Date appointed to Board: March 2010
Independent: Yes
Aged: 62
Nationality: British
Skills and expertise:
Douglas is a chartered accountant and 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
— Senior Independent Director and
Chairman of the Audit Committee of
Countryside Properties PLC.
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.
W W W . T A T E A N D L Y L E . C O M | 69
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
B O A R D O F D I R E C T O R S (continued)
A
R
N
R
N
A
N
ANNE MINTO OBE
NON-EXECUTIVE DIRECTOR AND CHAIR
OF THE REMUNERATION COMMITTEE
DR AJAI PURI
NON-EXECUTIVE DIRECTOR AND CHAIR
OF THE RESEARCH ADVISORY GROUP
SYBELLA STANLEY
NON-EXECUTIVE DIRECTOR
Date appointed to Board: April 2016
Independent: Yes
Aged: 57
Nationality: British
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 is 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
— Co-chair 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 team at Citigroup and
later Barings.
Date appointed to Board: December 2012
Date appointed to Board: April 2012
Independent: Yes
Aged: 65
Nationality: British
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 experience 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 of ExlService
Holdings, Inc.
— Chairman of the University of Aberdeen
Development Trust
— Non-executive director of the Court of the
University of Aberdeen.
Previous roles:
Non-executive director and chairman of the
Remuneration Committee of Shire PLC
(until April 2018). 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.
Independent: Yes
Aged: 65
Nationality: Indian/American
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. His
experience in the Asia Pacific region is of
particular benefit as Tate & Lyle continues
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 Food &
Beverage Solutions portfolio.
Current external commitments:
— Non-executive director of Britannia
Industries Limited
— Non-executive director of Firmenich SA
— Non-executive director of Global Alliance
for Improved Nutrition (GAIN).
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.
70 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
GOVERNANCE Board Committees
Certain responsibilities are delegated to
three Board Committees, details of which
are provided on pages 88 to 111.
A Audit Committee
R Remuneration Committee
N Nominations Committee
G E N D E R D I V E R S I T Y
O F D I R E CTO R S
At 22 May 2019
Men – 8
Women – 2
D I R E CTO R S ’ N AT I O N A L I T I E S
At 22 May 2019
British – 6
American – 1
Danish – 1
Irish – 1
Luxembourger – 1
T E N U R E O F N O N - E X E C U T I V E
D I R E CTO R S
At 22 May 2019
Less than 3 years – 2
4 to 6 years – 3
Over 6 years – 3
W W W . T A T E A N D L Y L E . C O M | 71
A
R
N
WARREN TUCKER
NON-EXECUTIVE DIRECTOR*
Date appointed to Board: November 2018
Independent: Yes
Aged: 56
Nationality: British
Skills and expertise:
Warren is a chartered accountant and
has extensive experience as a former
Chief Financial Officer of a large global
manufacturing group where he also co-led
the company’s organic and strategic growth.
His experience in large multinational and
business-to-business organisations across
several geographies and industries enables
him to provide valuable insights to the
Board. He also brings an understanding of
the London investment community and UK
shareholder institutions.
Current external commitments:
— Non-executive director of Reckitt
Benckiser Group plc
— Non-executive director and Chairman of
the Audit Committee of Survitec Topco Ltd.
Previous roles:
Executive director and Chief Financial Officer
on the board of Cobham Plc for 10 years
until 2013. Most recently non-executive
director and Chairman of the Remuneration
Committee of Thomas Cook Group plc. Also
held senior finance roles at Cable & Wireless
and British Airways, and a non-executive
directorship at PayPoint plc.
* Board changes
Douglas Hurt will retire from the Board on 25 July 2019, following the
Company’s Annual General Meeting. Upon conclusion of the AGM,
several further changes to Board responsibilities will come into
effect, including the appointment of Warren Tucker as Chair of the
Audit Committee and Paul Forman as Senior Independent Director.
Kimberly Nelson will join the Board as a non-executive director on
1 July 2019.
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
E X E C U T I V E C O M M I T T E E
Our executive team
Responsible for delivering
our strategy and achieving
business results.
NICK HAMPTON CHIEF EXECUTIVE
Nick became Chief Executive in April 2018, having joined
as Chief Financial Officer in September 2014. He brings a
wealth of food industry insights from his 20-year career
at PepsiCo. He has general management, financial and
operational experience through senior management
roles, as well as experience in leading transformational
projects. This provides him with the skills and attributes
to inspire and lead the Tate & Lyle team.
Favourite food:
Marmite on toast
for breakfast
Nationality:
British
IMRAN NAWAZ CHIEF FINANCIAL
OFFICER
Imran joined Tate & Lyle in August 2018,
bringing with him deep experience of the
global food industry and a proven track
record in financial leadership from his time
at Mondele�z International and Kraft Foods.
His experience at these and other large
multinational organisations, along with his
commercial acumen, makes him a key
member of our leadership team.
Favourite food:
Sushi
Nationality:
Luxembourger
JOAN BRACA PRESIDENT,
FOOD & BEVERAGE SOLUTIONS
Joan joined us in 2013 and led our Asia Pacific
business before being appointed President,
Food & Beverage Solutions, and to the
Executive Committee, in May 2014. Joan spent
18 years in the speciality chemicals industry
with Rohm & Haas in a diverse range of
operational, commercial, and general
management roles. She has worked in
Singapore, China, Sweden, USA and the UK.
As an inspirational leader with a strong track
record of growing speciality businesses,
Joan is well suited to lead our Food &
Beverage Solutions business. She is also a
non-executive director of Univar Solutions.
Favourite food:
Vietnamese Pho soup
Nationality:
American
72 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
GOVERNANCE JIM STUTELBERG PRESIDENT, PRIMARY PRODUCTS
Jim joined Tate & Lyle in 2014 from Pennsylvania-based
PPG Industries Inc, where he led its Automotive
Coatings business. Before that, he spent 17 years
with Dow Corning Corporation in a variety of senior
roles including five years working in Shanghai,
China. His wide global and commercial experience
makes him well-placed to lead our Primary
Products business.
Favourite food:
Spicy hot pot from
Western China
Nationality:
American
MELISSA LAW PRESIDENT, GLOBAL OPERATIONS
A chemist by training, Melissa joined Tate & Lyle in 2017
after 20 years in the oil industry. Before joining us, she was
Head of the Global Specialities Division of Baker
Hughes, a GE company. Prior to that, she held a
series of senior management positions in Australasia
and Gulf of Mexico in areas such as supply chain and
research and technology. Her commitment to making
our operations safe and productive places to work is
making a real difference across Tate & Lyle.
Favourite food:
‘I couldn’t
function without
my morning
protein shake.’
Nationality:
American
ANDREW TAYLOR PRESIDENT, INNOVATION AND
COMMERCIAL DEVELOPMENT
Andrew joined Tate & Lyle in 2017 having spent
20 years at management consultancy firm Boston
Consulting Group (BCG) where he was a Senior
Partner and Managing Director working for clients
all over the world. From 2008 he led BCG’s global
innovation practice. His wide experience of the food
industry, and deep understanding of driving
innovation in a global marketplace, is key to
delivering our growth strategy.
Favourite food:
‘Rocky Road ice
cream – it’s my
dessert of choice.’
Nationality:
American
LINDSAY BEARDSELL EXECUTIVE VICE PRESIDENT,
GENERAL COUNSEL
Lindsay joined in September 2018 from GVC Holdings PLC
where she was Group General Counsel. She studied
local and European law in the UK, France and
Germany, giving her a broad understanding of different
legal environments. Lindsay brings a wide knowledge
of corporate law and practical legal experience from
her early career at Freshfields Bruckhaus Deringer, as
well as from her years working in FTSE companies
across a diverse range of sectors.
Favourite food:
‘Fruit and veg –
I went veggie
when I was 10.’
Nationality:
British
LAURA HAGAN CHIEF HUMAN RESOURCES OFFICER
Laura joined Tate & Lyle in September 2018 from Dyson
Ltd where she helped the business grow its global
employee base more than tenfold, influencing the
hiring and promotion of the top team. Her
entrepreneurial spirit and understanding of how to
get the best out of people, sharpened by previously
setting up and running her own talent business,
are crucial for the development of Tate & Lyle’s
people strategy.
Favourite food:
‘I’d be happy to
snack on
charcuterie and
cheese all day.’
Nationality:
British
ROWAN ADAMS EXECUTIVE VICE PRESIDENT,
CORPORATE AFFAIRS
Rowan is the longest serving employee on our Executive
Committee. He joined in 2001 and has since held a
number of senior roles including leading our global
strategy and communications teams. He became EVP,
Corporate Affairs, and joined the Executive Committee
in November 2014, and his current responsibilities
include leading our global simplification programme.
He has deep knowledge and understanding of the
company and our industry.
Favourite food:
’I always order
prawn cocktail if
it’s on the menu’
Nationality:
British
W W W . T A T E A N D L Y L E . C O M | 73
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION G OV E R N A N C E
C H A I R M A N ’ S I N T R O D U C T I O N T O C O R P O R A T E G O V E R N A N C E
A year focused
on strategy
and stakeholders
The Board has been following closely the evolving
corporate governance landscape and, specifically, the
implications of the new UK Corporate Governance Code
for Tate & Lyle. We wholeheartedly support the Code’s
emphasis on continuing board renewal and companies’
responsibilities to a broader range of stakeholders.
Nevertheless, the most valuable contribution we can
make as a board, aside from good governance, is to
support our executive team in developing the right
strategy for our Group and implementing it in a
focused and responsible way. This has been, and
continues to be, our primary focus.
Our priorities during the year
Developing strategy
We’ve taken a number of ‘deep dives’ into key elements
of our strategy, both during our annual strategy review
and spread over our Board calendar. We looked at our
organisational capability and culture in light of Nick’s
determination to Sharpen, Accelerate and Simplify
Tate & Lyle. In particular, we looked at our sales and
technical capabilities, our innovation pipeline, our
emerging markets strategy and our productivity agenda.
Prioritising EHS
Our Journey to environment, health and safety
Excellence (J2EE) was launched in January 2018.
As we review its first full year, we’re pleased to see
real traction right across the Group, clearly visible
as we go around our plants, offices and labs.
Environment, health and safety (EHS) has been a big
focus for the Board and will continue to be so alongside
a wider view of sustainability. Nick reports EHS
performance at every Board meeting, and our President
of Global Operations and SVP Global EHS presented to
us twice during the year on this topic. During these
sessions, our recently appointed independent EHS
expert also shared his perspectives on the progress of
our J2EE relative to best-in-class standards.
Engaging with our workforce
How a board engages with a company’s stakeholders,
particularly its workforce, is a hot topic for corporate
governance, specifically called out in the new UK Code.
We agree with this emphasis. Put simply, our people are
the key to the success of our Group. So we see it as the
Board’s responsibility to understand how our strategy is
being received, understood and applied across Tate & Lyle.
74 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
GERRY MURPHY
CHAIRMAN
I believe that as a Board we already have good
engagement with our workforce in many parts of the
world. Nick and Imran speak openly with colleagues
whenever they visit our plants and offices. In his first
year as Chief Executive, Nick held nine town hall
meetings at sites outside our London headquarters and
has introduced new dialogue initiatives such as his
monthly blog.
We also have an active programme of individual site
visits by non-executive directors and this year we
covered a number of sites in the US and Asia. I visited
our plant in Loudon, Tennessee, USA and our offices
and labs in Chicago, Shanghai and Singapore. The visits
to Asia have enabled me to see and hear first-hand how
our teams are grasping the opportunities and thinking
about the challenges we face as we seek to expand
our operations in the region, particularly in China.
Loudon is a great facility that demonstrates the
versatility of our Primary Products business as we seek
new and profitable outlets for our starch substrate.
I had some very valuable conversations with colleagues
during the town hall meetings in the US and Asia, which
gave me some new perspectives.
The most valuable contribution we can make
as a board, aside from good governance, is to
support our executive team in developing the
right strategy for our Group.
GERRY MURPHY, CHAIRMAN
We have just completed an internal self-assessment of
the effectiveness of our Board and its committees this
year. Our findings showed that the changes we made
during the year have had a positive impact. This review
also helped us to prioritise the activities of the Board
and the Nominations Committee for the coming year.
We will be paying greater attention to long-term
succession planning at Board and executive level, and to
managing and developing talent across Tate & Lyle.
Our focus for the 2020 financial year
Aside from this long-term succession planning,
our energies this year will continue to be applied to
supporting and challenging Nick and the management
team to help deliver our strategy, particularly around
people (including more direct engagement), productivity
and growth, especially in emerging markets. We will
also be keeping a close eye on how J2EE is progressing
while considering a more holistic approach to
sustainability for Tate & Lyle.
Gerry Murphy
Chairman
We held our March 2019 Board meeting at our
Commercial and Food Innovation Centre in Hoffman
Estates, Illinois, USA, during which Nick and I co-hosted
a town hall for everyone at the site (employees and
contractors) attended by our non-executive directors.
As a Board, we discussed how we would enhance our
engagement with our people in the 2020 financial year
and beyond (see page 87 for more information).
Our shareholders
As our owners, our shareholders are one of our key
stakeholders. Understanding their views and concerns
is fundamentally important to the Board. This year,
I again spent valuable time with representatives of some
of our major shareholders, both in one-to-one meetings
and at our Capital Markets Day at the Commercial and
Food Innovation Centre in Hoffman Estates, Illinois,
USA in September, while our management and our
brokers regularly update us on their interactions with
shareholders. I also met some of our retail shareholders
at our AGM.
During the year, we invited an independent consultant to
survey shareholder sentiment and discuss this with the
Board, while our Remuneration Committee Chair, Anne
Minto, talked to shareholders about the proposed
changes to bonuses and long-term incentive plans for
executive management. These conversations told us
that our executive management team is generally well
perceived by investors; that our strategy and business
model is well understood; and that Nick’s focus on
effective execution of the strategy is supported by
our shareholders.
As always, I look forward to meeting shareholders who
are able to attend our AGM on 25 July 2019.
Reviewing the effectiveness of our Board
Last year’s externally facilitated review of Board
effectiveness yielded some valuable pointers for
improving our work and I’m pleased to say that we’ve
acted on every one of these over the course of this year.
Most notably, we reviewed our Board composition and
succession planning (see our Nominations Committee
report on page 92 to 93 for more details), and as
mentioned above, we reviewed our executive incentives
to make sure these continue to support our strategy
(see our Directors’ remuneration report on page 94
to 111).
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION C O R P O R A T E G O V E R N A N C E
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.
The Board
Chaired by Dr Gerry Murphy
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 Chairs 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.
Accountable to shareholders for the Group’s financial and
Sets the Group’s risk appetite
operational performance
Sets the Group’s strategy
Ensures that appropriate risk management systems and
internal controls are in place
Oversees management’s implementation of the strategy
Sets the Group’s ethics and culture, and agrees the Group’s
Monitors the operational and financial performance of
purpose and values
the Group
Ensures good corporate governance practices are in place
Chief Executive
Nick Hampton
Audit Committee
Nominations 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.
* From 25 July 2019 chaired by
Warren Tucker.
Chaired by Dr Gerry Murphy
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.
Oversees succession
planning for Directors and
senior management
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
Find out more p88 to 91
Find out more p92 and 93
Find out more p94 to 111
Executive Committee
Chaired by Nick Hampton
Research Advisory Group
Chaired by Dr Ajai Puri
Recommends strategic and operating plans to the Board
Comprises external experts and senior
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
Tate & Lyle managers
Reviews the innovation pipeline
Provides insights into how leading-edge science and
technology could enhance the portfolio of the Food &
Beverage Solutions division
The Executive Committee is supported by a number of operational committees, including the Environment, health and safety (EHS)
Advisory Board, Operations Committee, Capital Approval Committee and Cyber Security Committee. Committees may also be
established for a finite period to oversee key strategic or operational priorities.
76 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
GOVERNANCE K E Y R E S P O N S I B I L I T I E S O F T H E B OA R D
At the date of this Annual Report, the Board comprises the Chairman, two executive directors and seven 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
Responsible for overseeing the delivery of the strategy within the
risk appetite set by the Board
— Advise and constructively challenge the executive directors
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
— Scrutinise the performance of management in meeting agreed
goals and objectives and monitor the reporting of performance
— Perform his/her duties diligently and use best endeavours to
promote, protect, develop and extend the business of the Group
— Devote time to develop and refresh knowledge and skills
Chief Executive
Senior Independent Director
Responsible for proposing strategy to the Board and delivering it
— Runs the business
— Communicates within the organisation the Board’s expectations
Responsible for ensuring that the Chairman’s performance is
evaluated
— Acts as a sounding board for the Chairman and supports him in
with regard to culture, values and behaviours
— Ensures the Board is aware of current business issues
the delivery of his objectives
— Serves as an intermediary with the Chairman for other Directors
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
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 Chairs
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 April 2016 is the standard against which
we are required to measure ourselves for the year ended 31 March 2019. Throughout the year, the Company has applied the principles
and fully complied with the Code.
The Code can be found at www.frc.org.uk.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION C O R P O R A T E G O V E R N A N C E (continued)
B OA R D A CT I V I T Y D U R I N G T H E Y E A R E N D E D 31 M A R C H 2019
The Board holds six scheduled meetings each year at Group locations and an off-site meeting to discuss strategy. This year’s scheduled
meetings were held in London at the Group’s headquarters and at our Commercial and Food Innovation Centre in Hoffman Estates,
Illinois, USA.
Strategy
— Undertook deep dives into each of our
Primary Products and Food & Beverage
Solutions divisions, considered the
key growth drivers, markets and
customers in each
— Reviewed the priorities identified
for Innovation, Commercial and
Development (ICD) and Food & Beverage
Solutions in emerging markets
in the 2020 financial year
— Approved the strategic review and
subsequent sale of the oats ingredients
business
— Reviewed the Group’s strategic plan
Financial
— Approved the payment of the interim dividend and recommended payment
of the final dividend
— Considered and agreed treasury and tax matters
— Approved the tax strategy
— Approved the Annual Operating Plan for the year ending 31 March 2020
— Approved the Annual Report 2018, the half- and full-year results and
associated announcements
— Regular review of financial performance and forecasts
Operational/commercial
— Received presentations on projects underway to sharpen
Internal control and risk management
— Considered and agreed the Group’s risk appetite and
our sales and technical applications capabilities
principal risks
— Received regular progress updates of the Group’s new
— Assessed the effectiveness of our internal controls
EHS strategy including from the independent safety expert
appointed to the EHS Advisory Board
— Approved capital expenditure projects
— Reviewed developments in accelerating the impact of
innovation in ICD
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 2018
— Reviewed the Simplification/Productivity agenda and
— Approved the adoption of a going concern basis of
progress against it throughout the year
accounting in preparing the half- and full-year results
Governance and stakeholders
— Considered the output and recommendations from the Board
effectiveness review
— Discussed feedback from institutional shareholders and analysts
— Considered the implications of the UK Corporate Governance Code
2018 and determined the actions necessary to implement the new
provisions for the 2020 financial year
— Reviewed and approved Directors’ register of interests
Leadership and employees
— Approved the appointments of Imran Nawaz as
Chief Financial Officer and Warren Tucker as a
non-executive director
— Endorsed the Chief Executive’s appointment of
Lindsay Beardsell and Laura Hagan to the
Executive Committee
— Held a Chief Executive and Chairman-led Town
Hall at our Commercial and Food Innovation
Centre in Hoffman Estates, Illinois, USA and a
Chairman-led Town Hall at our Singapore office
— Reviewed diversity, talent management and bench
strength within the organisation
78 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
GOVERNANCE D I R E CTO R S ’ AT T E N D A N C E AT B OA R D A N D C O M M I T T E E M E E T I N G S D U R I N G T H E Y E A R
Directors as at 31 March 2019
Board
Audit
Committee
Nominations
Committee
Remuneration
Committee
Dr Gerry Murphy
Nick Hampton
Imran Nawaz2
Paul Forman
Lars Frederiksen
Douglas Hurt
Anne Minto
Dr Ajai Puri
Sybella Stanley
Warren Tucker3
1 Although not a Committee member, attended the Committee meetings by invitation.
2 Appointed a Director with effect from 1 August 2018.
3 Appointed a Director with effect from 19 November 2018.
8/8
8/8
5/5
8/8
8/8
8/8
8/8
8/8
8/8
3/3
5/51
n/a
n/a
5/5
n/a
5/5
5/5
n/a
5/5
2/2
2/2
n/a
n/a
2/2
2/2
2/2
2/2
2/2
2/2
1/1
7/71
n/a
n/a
7/7
7/7
n/a
7/7
7/7
n/a
2/2
Effectiveness
The Board regularly reviews the balance of experience, skills,
gender and diversity of thinking styles around the boardroom table
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 10 Directors
with deep knowledge and experience in diverse business sectors
within global markets: the Chairman, who has no executive
responsibilities; two executive directors; and seven non-executive
directors. The names, skills and experience of the Directors are set
out on pages 68 to 71.
Appointment to the Board
The Nominations Committee has responsibility for the appointment
of non-executive and executive directors and recommends new
appointments to the Board. In April 2018, the Nominations
Committee recommended the appointment of Imran Nawaz as Chief
Financial Officer. During the year, the Nominations Committee
carried out Board composition and succession planning generally
and in respect of the role of Audit Committee Chair and Senior
Independent Director. The Board approved the Nominations
Committee’s recommendation that Warren Tucker be appointed as a
non-executive director and subsequently approved in May 2019, that
he become Audit Committee Chair designate; that Paul Forman be
appointed Senior Independent Director designate; and that Kimberly
Nelson be appointed a non-executive director. Further details about
these appointment processes are set out in the Nominations
Committee report on page 93.
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 Douglas Hurt),
including Kimberly Nelson who will be joining the Board on 1 July 2019,
will seek re-election at the forthcoming AGM. The Directors standing
for re-election, with the exception of Nick Hampton and Imran Nawaz,
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,
Anne Minto and Dr Ajai Puri, who have both served for over
six years, have 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 to be independent, including Douglas
Hurt who, although he had served nine years on the Board in March
2019, continues to provide rigorous, independent challenge to
management. In light of the Code’s independence provisions, Douglas
will not be seeking re-election at the forthcoming AGM.
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 111.
Directors’ induction programme
In those years in which new Directors join the Board, the Company
Secretary works with each Director to tailor an induction
programme which covers strategy, operations (including safety and
environmental performance), risk management and internal control.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION C O R P O R A T E G O V E R N A N C E (continued)
2019 Board effectiveness review
The Board conducted an internally facilitated review for the 2019 financial year having conducted an externally facilitated review in 2018
financial year. This was a confidential questionnaire-based review of the Board and its Committees. The questionnaires were completed by
regular management attendees as well as by the Directors. The results were analysed and the findings and suggested follow-up actions
were discussed with the Chairman and provided to all Directors. The main recommendations identified by the review and the actions agreed
by the Board include:
Issue/recommendation
Action
Board and Committee
composition and
succession planning
Executive Committee
succession planning
Overseeing the culture,
purpose and values of
the organisation
Long-term strategy and
macro-trends
— The Nominations Committee will consider Board Committee composition and succession planning in
the 2020 financial year.
— Consider succession planning over the longer term for the Executive Directors and members of the
Executive Committee.
— The Board will continue to focus on culture and how our purpose is embedded throughout the
organisation through business reviews at the Board, feedback from the Chief Executive and the newly
appointed Chief Human Resources Officer and through its workforce engagement activities.
— As part of its annual strategy day meeting, the Board will consider the longer-term strategy for the
Group and the impact of changing consumer trends on our customers.
Emerging markets strategy
— The Board will continue to hold deep dives into key areas of the business with a focus on our
emerging markets’ strategy and capabilities.
Review of the Committees
In addition to the Board effectiveness review, the chairs of the
Nominations, Audit and Remuneration Committees led the review
of their 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.
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.
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. 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.
During the year, in addition to the Board’s visit to the Commercial
and Food Innovation Centre in Hoffman Estates, Illinois, USA, the
Chairman visited our sites in Shanghai, Singapore and Loudon,
Tennessee and other non-executive directors visited our sites in
Singapore, Hoffmas Estates, Illinois, USA and Dayton, Ohio, USA.
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.
80 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
GOVERNANCE 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.
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.
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 59 and 60.
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
82 with details of those people or functions responsible for
managing or monitoring risks set out on page 83.
2019 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 Committee, conducts its own
review of the effectiveness of the systems of risk management and
internal control. As last year, the 2019 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
Committee discussing the results of the review at their meetings in
March and May 2019. The Board then discussed the output at its
meeting in May 2019.
The 2019 review covered financial, operational and compliance
controls, our 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 the Board as appropriate.
The Board considers that none of the areas identified for
improvement constituted a significant failing or weakness.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION C O R P O R A T E G O V E R N A N C E (continued)
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 and
local GAAP
— 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 had been monitored by the
Audit Committee, 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 Committee and the Board received analysis of all reports
submitted via the Speak Up programme during the year.
In accordance with the 2018 Corporate Governance Code, the Speak
Up programme will be monitored by the Board with effect from
1 April 2019.
K E Y F E AT U R E S O F T H E I N T E R N A L
C O N T R O L SY S T E M
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
Our values framework and Code of Ethics
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
Information and communication controls
Board and Executive Committee
reporting framework
Communication protocols for
external communications
Whistleblowing process
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
82 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
GOVERNANCE Internal control system
Body
Responsibilities
The Board
— 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 Committee
— Reviews aspects of the risk management and internal control systems for risks within its remit and
reports to the Board.
— Discusses regular reports from the VP, Group Audit and Assurance (internal audit).
— Carries out a formal review of the effectiveness of the internal control and risk management systems
and reports 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 Committee which considers cyber security risks, and the
regional Control Environment Councils which consider regional financial risks and controls.
Group Audit and Assurance
(internal audit)
— Provides objective assessment of the appropriateness and effectiveness of the Group’s internal
control systems to the Audit Committee 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 Committee and
which is regularly updated.
External assurance providers
— The external auditors and other specialists commissioned by the Board from time to time to
supplement internal processes as appropriate.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION C O R P O R A T E G O V E R N A N C E (continued)
Stakeholder engagement
At Tate & Lyle, we engage with a wide range of stakeholders, all of whom are essential in enabling us to do business across the world.
The table below describes our key stakeholders and why they are important to us. It gives a flavour of the types of interactions we have with
them and the positive benefits those interactions can bring.
Shareholders
Customers
Employees
Suppliers
Communities
Regulators
Governments
We serve a wide range
of customers in more than
120 countries worldwide,
from large multinationals,
to regional companies,
to smaller family-run
businesses. These customers
operate mainly in the food,
beverage and industrial markets.
As a business-to-business
company, all the ingredients
we make are sold to our
customers. Our ingredients are
valuable to our customers
because they add functionality,
taste and nutrition to
their products.
Our aim is to move from
being an ingredient supplier
to a growth partner for our
customers. To do this, we
maintain close relationships
with our customers at all
levels of their organisation,
from the CEO to R&D to Sales
and Marketing.
Our ingredients help our
customers meet growing
consumer demand for food and
drink which is lower in sugar,
calories and fat, and with more
fibre, and also that taste great.
Our industrial starches also
enhance the performance of
our customers’ products, from
paper production to adhesives,
to applications in
building supplies.
Who they are
Our shareholders take many forms from major
investors (including pension funds) to individual
‘retail’ shareholders, many of whom are,
or have been, Tate & Lyle employees.
Why they
matter
Our shareholders are investors in and owners
of our business, providing the capital we need
to invest in and grow the business.
How we
engage
with them
Engagement takes various forms throughout
the year: by members of management, our
Chairman and our Investor Relations team.
For more information see page 86.
The impact
of those
interactions
Our engagement activities provide
opportunities for management and the Board
to communicate our strategy and performance,
and to listen and understand shareholders’
views and concerns.
Our major investors have told us that our
strategy is well understood and the
management team which the Chief Executive
has put in place is generally well perceived.
The Board and management team are aware
that our shareholders are increasingly
interested in environmental, social and
governance issues. This was one of the
reasons why we disbanded our Corporate
Responsibility Committee last year, bringing
these matters back under the direct
supervision of the full Board.
84 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
Over 4,100 talented people with
a range of capabilities and
skills who work to deliver for
our customers every day
across the world.
We work with a wide range
The communities in which our
We engage with national
We interact with governments
of third-party suppliers.
plants and offices are based
and supra-national regulators
and their agencies at a federal,
For example the farmers who
are quite diverse. They include,
who approve the safety of,
state and local level in many of
grow and supply the corn we
for example, towns in more
and determine the labelling
the countries in which operate.
rural areas of the Mid-West,
specifications for our ingredients.
Everyone at Tate & Lyle plays a
key role in driving our success
by partnering with each other
in an agile way to deliver a
consistently great service for
our customers, to ensure our
plants run safely and efficiently,
and that new products are
created that provide solutions
to address our customers’ and
consumers’ needs.
We listen to our employees to
gain their insight and feedback
through a range of channels
such as team meetings, town
halls and pulse surveys. This
feedback helps us to take
actions and establish
programmes to develop and
stretch our employees in order
to help them both deliver our
strategy and fulfil their
personal goals.
Having the right culture is
central to our success. People
are at their best when they feel
they are contributing to the
Group and are fully engaged
and happy in their work. See
pages 44 to 47 for more details
on our people and how we
engage with them.
use in our ingredients, the
contractors who carry-out
maintenance at our plants,
IT systems and software
business and freight and
logistics companies who
transport our products.
US or Slovakia where we
are a major local employer,
to large cosmopolitan cities
Sao Paulo where we have
offices and labs.
providers who optimise our
like London, Shanghai and
We cannot conduct or grow our
It’s where our employees and
Before our new ingredients
Government policies on
business without the products,
their families live and where
can be incorporated into
trade and tariffs, safety and
expertise, advice and support
we recruit many of the people
our customers’ products
product quality, tax and inward
of our suppliers.
who work for us. It’s also
they must be approved by
investment, among others,
important that, as a significant
regulatory authorities.
all have an impact on how we
do business.
local employer in some
locations, we support the local
community not only through
charitable involvement but as a
responsible and sustainable
local manufacturer.
We have a dedicated
Our community involvement
We have a dedicated team of
We meet periodically with
Procurement function based
programme is centred around
regulatory experts based
federal, state and local officials
around the world which
three main areas: health,
around the world who actively
in most of the countries where
engages with our suppliers to
hunger, and education, with a
engage with regulators to
we have operations. We are
optimise the way we work with
particular emphasis on
provide evidence of and answer
also members of major trade
them. We build relationships
supporting children and young
enquiries about the safety and
associations in our key markets,
globally, regionally and locally
adults. We support local
quality of our ingredients.
such as the Corn Refiners
Association in the US.
with our suppliers to better
projects within these areas
understand the markets where
based on local needs.
we source.
By leveraging third-party
Through a range of wellbeing
By helping regulators
Government policies and
relationships we are able to be
programmes, STEM grant
understand our ingredients we
legislation, in areas such as
more agile and meet ever-
programmes, and partnerships
speed up the process of
trade and tax, can have an
changing customer demands.
with local food banks, we have
regulatory approval.
impact on our ability to operate
This also limits our supply risk
helped to improve the lives of
For example, we recently
competitively, and sell and
across an increasingly complex
thousands of people in our
received a decision by the US
transport our products around
global supply network.
local communities. See pages
Food and Drug Administration
the world. At a more local
56 and 57 for more detail. We
(FDA) to exempt allulose from
level, permits are needed
have also taken actions to
the ‘Sugars’ and ‘Added
to operate or expand our
improve our environmental
Sugars’ lines of the Nutrition
production facilities.
performance reducing CO2e
Facts Panel in the US and
emissions from our plants by
simply label allulose in the
20.4% since 2008 (see page 53
ingredients list. This enables
for more detail).
our customers to deliver both
calorie and sugar reduction in
consumer end products where
the ingredient is used.
GOVERNANCE Shareholders
Customers
Employees
Suppliers
Communities
Regulators
Governments
Who they are
Our shareholders take many forms from major
We serve a wide range
Over 4,100 talented people with
investors (including pension funds) to individual
of customers in more than
a range of capabilities and
‘retail’ shareholders, many of whom are,
120 countries worldwide,
skills who work to deliver for
or have been, Tate & Lyle employees.
from large multinationals,
our customers every day
to regional companies,
to smaller family-run
businesses. These customers
operate mainly in the food,
beverage and industrial markets.
across the world.
Why they
matter
Our shareholders are investors in and owners
As a business-to-business
Everyone at Tate & Lyle plays a
of our business, providing the capital we need
company, all the ingredients
key role in driving our success
to invest in and grow the business.
we make are sold to our
by partnering with each other
How we
engage
with them
Engagement takes various forms throughout
Our aim is to move from
We listen to our employees to
the year: by members of management, our
being an ingredient supplier
gain their insight and feedback
Chairman and our Investor Relations team.
to a growth partner for our
through a range of channels
For more information see page 86.
customers. To do this, we
such as team meetings, town
customers. Our ingredients are
in an agile way to deliver a
valuable to our customers
consistently great service for
because they add functionality,
our customers, to ensure our
taste and nutrition to
their products.
plants run safely and efficiently,
and that new products are
created that provide solutions
to address our customers’ and
consumers’ needs.
maintain close relationships
halls and pulse surveys. This
with our customers at all
feedback helps us to take
levels of their organisation,
actions and establish
from the CEO to R&D to Sales
programmes to develop and
and Marketing.
stretch our employees in order
to help them both deliver our
strategy and fulfil their
personal goals.
The impact
of those
interactions
Our engagement activities provide
Our ingredients help our
Having the right culture is
opportunities for management and the Board
customers meet growing
central to our success. People
to communicate our strategy and performance,
consumer demand for food and
are at their best when they feel
and to listen and understand shareholders’
drink which is lower in sugar,
they are contributing to the
views and concerns.
Our major investors have told us that our
calories and fat, and with more
Group and are fully engaged
fibre, and also that taste great.
and happy in their work. See
strategy is well understood and the
Our industrial starches also
management team which the Chief Executive
enhance the performance of
has put in place is generally well perceived.
our customers’ products, from
pages 44 to 47 for more details
on our people and how we
engage with them.
The Board and management team are aware
that our shareholders are increasingly
interested in environmental, social and
governance issues. This was one of the
reasons why we disbanded our Corporate
Responsibility Committee last year, bringing
these matters back under the direct
supervision of the full Board.
paper production to adhesives,
to applications in
building supplies.
We work with a wide range
of third-party suppliers.
For example the farmers who
grow and supply the corn we
use in our ingredients, the
contractors who carry-out
maintenance at our plants,
IT systems and software
providers who optimise our
business and freight and
logistics companies who
transport our products.
We cannot conduct or grow our
business without the products,
expertise, advice and support
of our suppliers.
We have a dedicated
Procurement function based
around the world which
engages with our suppliers to
optimise the way we work with
them. We build relationships
globally, regionally and locally
with our suppliers to better
understand the markets where
we source.
By leveraging third-party
relationships we are able to be
more agile and meet ever-
changing customer demands.
This also limits our supply risk
across an increasingly complex
global supply network.
The communities in which our
plants and offices are based
are quite diverse. They include,
for example, towns in more
rural areas of the Mid-West,
US or Slovakia where we
are a major local employer,
to large cosmopolitan cities
like London, Shanghai and
Sao Paulo where we have
offices and labs.
It’s where our employees and
their families live and where
we recruit many of the people
who work for us. It’s also
important that, as a significant
local employer in some
locations, we support the local
community not only through
charitable involvement but as a
responsible and sustainable
local manufacturer.
Our community involvement
programme is centred around
three main areas: health,
hunger, and education, with a
particular emphasis on
supporting children and young
adults. We support local
projects within these areas
based on local needs.
Through a range of wellbeing
programmes, STEM grant
programmes, and partnerships
with local food banks, we have
helped to improve the lives of
thousands of people in our
local communities. See pages
56 and 57 for more detail. We
have also taken actions to
improve our environmental
performance reducing CO2e
emissions from our plants by
20.4% since 2008 (see page 53
for more detail).
We engage with national
and supra-national regulators
who approve the safety of,
and determine the labelling
specifications for our ingredients.
We interact with governments
and their agencies at a federal,
state and local level in many of
the countries in which operate.
Before our new ingredients
can be incorporated into
our customers’ products
they must be approved by
regulatory authorities.
Government policies on
trade and tariffs, safety and
product quality, tax and inward
investment, among others,
all have an impact on how we
do business.
We have a dedicated team of
regulatory experts based
around the world who actively
engage with regulators to
provide evidence of and answer
enquiries about the safety and
quality of our ingredients.
We meet periodically with
federal, state and local officials
in most of the countries where
we have operations. We are
also members of major trade
associations in our key markets,
such as the Corn Refiners
Association in the US.
Government policies and
legislation, in areas such as
trade and tax, can have an
impact on our ability to operate
competitively, and sell and
transport our products around
the world. At a more local
level, permits are needed
to operate or expand our
production facilities.
By helping regulators
understand our ingredients we
speed up the process of
regulatory approval.
For example, we recently
received a decision by the US
Food and Drug Administration
(FDA) to exempt allulose from
the ‘Sugars’ and ‘Added
Sugars’ lines of the Nutrition
Facts Panel in the US and
simply label allulose in the
ingredients list. This enables
our customers to deliver both
calorie and sugar reduction in
consumer end products where
the ingredient is used.
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S H A R E H O L D E R E N GAG E M E N T
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 Relations
maintain a programme of meetings with institutional shareholders
from the UK, Europe, North America and Asia.
In September, we held a Capital Markets event at the Commercial
and Food Innovation Centre in Hoffman Estates, Illinois, USA and at
the Sagamore corn wet mill in Lafayette, Indiana, USA. Presentations
were made by members of the Executive Committee, and the event
was attended by institutional investors and financial analysts.
The Chairman also attended. The presentation materials from this
event are available on the Company’s website.
Prior to the AGM 2018, Dr Gerry Murphy held meetings with a
number of the Company’s larger institutional shareholders.
Anne Minto, Chair of the Remuneration Committee, offered
meetings to the Company’s principal investors in relation to the
review of executive incentive arrangements (see page 94 for more
information). All Directors received periodic updates on investor
communication activities.
Analysts
As well as the full-year and half-year results presentations to
investors and analysts, we host conference calls after any trading
updates are issued. 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 Relations also
meet regularly with analysts.
Independent feedback on our investor relations
programme
In the financial year, an external investor relations advisor
undertook a comprehensive review of investor perceptions of the
Group, management, strategy and communications. The output
from this review was presented to the Board in January 2019 and
actions taken forward by management. Recommendations included
continuing to build a broader shareholder base in the UK and US,
and putting increasing emphasis on the Group’s Environmental,
Social and Governance (ESG) credentials as these are becoming
increasingly important to investors.
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.
The 2019 AGM will be held at Glaziers Hall in London on Thursday
25 July 2019 at 10.30 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
Set out below is a summary of our major investor activity during
the year.
May 2018
— Full-year results issued
— Investor roadshow
meetings in UK
June 2018
— Investor roadshow
meetings in UK and US
— Investor conference in
France
— Annual Report published
July 2018
— Annual General Meeting
in UK
September 2018
— Capital Markets event in US
— Investor conference in UK
November 2018
— Half-year results issued
— Investor roadshow
meetings in UK and US
— Investor conferences in US
— Remuneration Committee
Chair consultation
programme
February 2019
— Trading statement issued
December 2018
— Investor conference in UK
March 2019
— Investor conferences in UK
— Investor meetings in UK
86 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
GOVERNANCE E M P LOY E E A N D W I D E R WO R K FO R C E E N GAG E M E N T
The Board considered the 2018 UK Corporate Governance Code requirements on workforce engagement and developed an approach,
explained further below, to comply with the Code which applies to Tate & Lyle from 1 April 2019.
Our approach: to build on the mechanisms and practices we already have in place, in particular the individual non-executive director site
visit programme, and to broaden the scope of engagement below the senior management levels of the organisation.
Understanding our workforce
Increase
employee voice
Introduce local site ambassadors who will act as conduits for two-way
communication between the local site and management/the Board.
Mechanisms
for wider
engagement
Where practical, Chairman/Committee Chairs will host town halls for
the workforce when on site visits.
Individual non-executive director site visits will include round tables
and/or listening/focus groups with members of the workforce.
We will expand the pool of management attendees at Board meeting
lunches and receptions.
We will create opportunities for Chairman/non-executive directors to
meet high-potential talent at local sites when on site visits.
Our Worldwide employee magazine will include interviews with the
Chairman and other Board members.
Board members will have the opportunity to meet local site
ambassadors while on site visits.
Feedback from
Board members
Board members will continue to brief the full Board following their
interactions with members of the workforce.
Increase
information
to the Board
The Chief Executive’s regular management report to the Board will include
more information on people, communications and engagement, with inputs
from the Chief Human Resources Officer and the VP, Global Communications.
Reporting back
to the workforce
We will communicate actions taken as a result of the engagement via a
combination of: the Chief Executive; the Chief Human Resources Officer;
the VP, Global Communications; the Worldwide employee magazine; the
Chairman; and our local site ambassadors.
Our workforce: we consider our workforce to include employees, contractors (in post for three months or more),
representatives in countries where we do not have employees and contingent labour. We will not include temporary
contract labour (of less than three months), service provision workers, outsourced contracts consultants and staff at
our joint ventures.
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A U D I T C O M M I T T E E R E P O R T
Focusing on a smooth
audit transition
The Committee has been focused on
ensuring a smooth audit transition and
monitored EY’s review of the Group’s
accounting practices, policies and processes.
As Audit Committee Chair, I am pleased to present the
Committee’s report for 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 an impact assessment of new accounting
standards, in particular IFRS 16, a review of our Food &
Beverage Solutions and Global Operations Finance
functions, receiving an update on our ethics and
compliance programme and cyber and IS/IT controls.
The Committee joined by other Board members also
reviewed the key risks, processes and controls within
our Commodities operations. Our external auditor, Ernst
& Young LLP (EY), also joined this session providing an
independent view and feedback on how our processes
and practices compare to other companies in our
industry. Finance and operational leaders attended the
Committee meetings at which these detailed reviews
were held.
As disclosed previously, EY became our external auditor
from the beginning of the 2019 financial year following
a formal audit tender process and having received
shareholder approval at the Company’s 2018 AGM.
The Committee has been focused on ensuring a
smooth audit transition and monitored EY’s review
of the Group’s accounting practices, policies and
processes to understand any differences in approach
or interpretation.
During the year, a new head of Group Audit and Assurance
(internal audit) was appointed and the Committee led
the appointment process. Further details of the role and
activities of the function are set out on page 91.
I look forward to meeting those shareholders who are
able to attend our forthcoming AGM.
Douglas Hurt
Chair of the Audit Committee
88 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
DOUGLAS HURT
CHAIR OF THE AUDIT COMMITTEE
Committee governance
Responsibilities
The Committee assists the Board by overseeing
financial reporting, internal controls and the risk
management process, the Group Audit and Assurance
(internal audit) function 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
The Committee currently comprises five independent
Directors: Douglas Hurt (Chair), Anne Minto, Paul
Forman, Sybella Stanley, and we welcomed Warren
Tucker on to the Committee upon his appointment to
the Board on 19 November 2018.
The Code stipulates that:
i. the Committee as a whole shall have competence
relevant to the sector in which the Company operates.
The Committee considered that it does, as a whole,
have extensive experience of global manufacturing and
supply organisations, and of business-to-business
groups, some experience of commercialisation of
innovation pipelines and a wealth of knowledge and
understanding of the London investment community
and governance matters. It continues to strengthen
the competencies of its members through ongoing
development programmes and updates.
ii. at least one Committee member should have recent and relevant
financial experience. Douglas Hurt and Warren Tucker met this
requirement. Douglas was Finance Director at IMI plc and is a
Fellow of the Institute of Chartered Accountants in England and
Wales. Warren was Chief Financial Officer of Cobham plc and is a
chartered accountant.
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 and considers quarterly reports
which set out any non-audit services provided by the auditors and
the fees incurred. Under our policy on non-audit services, which is
in accordance with the Revised Ethical Standard 2016 published by
the Financial Reporting Council, the Chief Financial Officer has
authority to approve the permitted services up to £10,000 with any
amounts above that limit requiring approval of the Committee Chair
or the Committee.
The total amount payable in respect of the Group audit and audit of
subsidiaries was £2.4 million, and £0.1 million was in respect of the
review of the half-year results. Fees paid in respect of non-audit
services therefore comprised 4% of the total fees paid to EY.
Effectiveness of the external auditors
Following the conclusion of the audit for the year ended 31 March 2018,
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 June 2018 on the audit quality inspection of PwC
— 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.
Feedback was also sought from PwC on the contribution from our
management team to an effective audit.
The Committee concluded that the external audit process was
effective and that PwC provided effective and independent challenge
to management.
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 is set out
on page 79.
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 Chair carried out an internally facilitated review of
its 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 next year which include
effectiveness of the new external auditors, resources of the finance
function and the effectiveness of the overall risk management
infrastructure.
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 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 90.
The Committee also considered management’s review of reported
and adjusted earnings, reviewed and challenged the impairment
assessments performed during the year, 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
PricewaterhouseCoopers LLP (PwC) were the Group’s auditors for
the financial year ending on 31 March 2018. Following an audit
tender described in our Annual Report 2018, EY was appointed the
Group’s auditors at the Company’s AGM on 26 July 2018 for the
financial year ended 31 March 2019. In accordance with the
Competition and Markets Authority Order and the Committee’s
terms of reference, the Committee agreed the fee and scope of the
statutory audit for the year ended 31 March 2019.
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A U D I T C O M M I T T E E R E P O R T (continued)
Significant accounting matters considered by the Committee
Area
Background
Committee’s activities and conclusion
Commodity risk
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.
Taxation
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.
Adoption of IFRS 16 We have operating lease agreements for certain
land, buildings, plant and equipment that are
short, medium and long term in duration.
A number of judgements are required when
assessing the impact of adopting IFRS 16.
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.
The Committee considered the work performed by management
and the external auditors before concluding that the judgements
made in determining the accounting treatments and valuations of
the corn and co-products positions were appropriate. This will
continue to be a key area of focus for the Committee.
The Committee and members of the Board had a deep dive
session on Commodities in March 2019. This session was jointly
presented by senior management and EY, who provided an
independent view and feedback on how we compared to other
comparable companies.
The Committee reviewed the key judgements made in estimating
the Group’s tax charge along with the key disclosures, set out on
page 29 and in Note 11. The Committee was satisfied that the
judgements made in estimating the Group’s tax charge were
reasonable, and that the disclosures were appropriate.
The Committee considered the appropriateness of tax provisions
at the balance sheet date, including amounts provided in respect
of Group financing structures, US tax risks and global transfer
pricing risks.
The Committee concluded that the measurement and disclosure
of these provisions were appropriate.
The Committee received regular feedback on the work
performed by management to assess the impact of IFRS 16 on
the Group’s financial statements and key performance measures.
The Committee constructively challenged management on the
proposed transition approach and the key decisions (including
determining discount rates and the classification of agreements
potentially within the scope of the new standard).
The Committee concluded that the transition approach, the
disclosure and key judgements were appropriate. Disclosure on
the impacts of adoption are disclosed on page 30. The Company
will adopt IFRS 16 from the year commencing 1 April 2019.
The Committee reviewed the annual goodwill impairment
assessment. In light of the continued integration of its operating
businesses during the 2019 financial year, management reviewed
the allocation of goodwill, and determined that in most cases the
synergies to which the goodwill relates are now realised at the
level of the Group reportable segments. In cases where operating
businesses are not integrated into the respective business
divisions, it will be tested on a standalone basis. The Committee
scrutinised management’s rationale for the proposed approach,
and subsequently concluded that it was appropriate.
The Committee concurred with management’s assessment that
other than the oats ingredients business, no impairments were
required and concluded that the impairment disclosures were
appropriate. Further disclosure is set out in Note 18.
Exceptional items
We exclude from our alternative performance
measures exceptional items which are material
in amount and that are outside the normal
course of business or relate to events which
do not frequently recur, and therefore merit
separate disclosure in the financial statements.
The Committee constructively challenged the judgement of
management regarding the measurement and classification
of exceptional items. The Committee also considered the
appropriateness of the associated disclosures and concluded
that both the judgements made and the disclosures proposed
were reasonable. See page 29 and Note 8 for further details.
90 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
During the year, the Chair of the Committee led the appointment
of the new VP, GAA and an external search firm was used to assist
with this appointment. A list of candidates from a diverse range of
individuals meeting the attributes required for the role was prepared
and interviewed by a working party. The final candidate was
recommended for approval by the Committee.
The Committee also reviewed the effectiveness of GAA this year.
It was undertaken by way of a questionnaire and feedback was sought
from senior management and external auditors. The Committee
concluded that the function continues to operate effectively.
Internal control and risk management
The Committee continued to receive and consider regular reports
from management and the VP, GAA on the effectiveness of the
Group’s risk management system during the year.
The Committee also reviewed the operation of the Group’s
whistleblowing programme (Speak Up) and the analysis of reports
submitted via the Speak Up programme, and receives updates on
the Ethics and Compliance programme. See page 82 for further
information on Speak Up.
Throughout the year, the Committee focused in particular on
strengthening the financial control environment and the impact of
this on 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 and then
reported to the Board. Further details about this review are on
page 81.
External auditors (continued)
Effectiveness of the external auditors (continued)
Following the appointment of EY as external auditors, the Committee
and EY agreed the process and criteria for assessing the effectiveness
of the audit for the financial year under review. This will be by way of a
questionnaire to be completed by the Committee members and certain
members of senior management at Group and divisional level.
Additionally, the assessment will include a face-to-face interview by a
senior EY partner, who is independent of the audit process, with the
chair of the Committee, the Chief Financial Officer and the Group VP,
Finance and Control. The outcome of the assessment will be used to
develop an audit improvement plan for the following year’s audit.
The Committee carried out an initial assessment of performance
and effectiveness of EY, taking into account input from
management, and considered that the transition had been executed
satisfactorily and the first full year audit had been effective and
brought fresh perspective and challenge.
The Committee recommended and the Board intends to propose the
reappointment of EY as the Company’s auditors for the 2020
financial year. Accordingly, a resolution to reappoint EY as auditors
will be put to the shareholders at the Company’s 2019 AGM.
Tenure of the external auditors
As mentioned earlier in the report, EY was appointed by
shareholders in 2018 following a formal tender process. Subject to
continuing satisfactory performance, we anticipate that the lead
audit partner, Lloyd Brown, will rotate after his fifth year as lead
audit partner i.e. after the financial year 31 March 2023. It is the
intention of the Company to put the external audit contract out to
tender at least every 10 years.
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 (GAA) is an internal function that
services the Board and all levels of management. It provides
objective assurance to add value and improve the Group’s
operations. Its responsibilities include evaluating and reporting on
the adequacy and effectiveness of the systems of risk management
and internal controls as operated by management. Management
remains responsible for identifying risks and for the design and
operation of controls to manage risk.
GAA operates on a global basis through professionally qualified and
experienced individual members located in London, UK and the US.
They report to the VP, GAA, based in London, who in turn reports
directly to the Chairman of the Audit Committee. The Committee
received, considered and approved the internal audit plan for the
2019 financial year which was constructed using a risk-based
approach to cover the Group’s control environment. The plan was
based on the premise that all businesses are audited at least once
every three years, with the exception of our businesses based in
emerging markets which are visited more frequently. In the 2019
financial year, a total of 42 audit assignments were undertaken
covering a broad range of areas including financial controls
compliance and operational effectiveness. The Committee received
a report from the VP, GAA at each of its meetings detailing progress
against the agreed plan, key trends and findings and an update on
the progress made towards resolving open issues.
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Board
composition
This year, we’ve strengthened the Board to
help support our new management team to
deliver our strategy over the coming years.
Executive directors
Last year, my first as Chairman of Tate & Lyle,
our Nominations Committee focused on identifying and
appointing our executive directors. We appointed Nick
Hampton as Chief Executive to succeed Javed Ahmed,
and, in April 2018, announced the appointment of Imran
Nawaz as Chief Financial Officer to replace Nick.
Non-executive directors
This past financial year, my fellow directors and I have
focused on the succession of non-executive directors,
in two ways.
First, we planned for the succession of the Audit
Committee Chair. In light of the Corporate Governance
Code provisions on tenure, namely that non-executive
directors (NEDs) should stay for nine years at most,
Douglas Hurt (Audit Committee Chair and Senior
Independent Director) will not be seeking re-election at
this year’s AGM. Warren Tucker, who joined the Board in
November 2018, will take over from Douglas as Audit
Committee Chair and Paul Forman will become the Senior
Independent Director following our AGM on 25 July 2019.
Second, we reviewed the overall composition of the Board
to make sure we have the right skills and experience to
support our new management team in delivering our
strategy over the coming years. We worked with an
external consultant, who interviewed the Board and
executive team. With her input, we made a number of
recommendations, which we will seek to implement
over the coming years. The first, recognising the
importance of the US, both in terms of our customers
and our operations, was the appointment of a new
NED with both US and food and beverage experience.
I’m delighted to welcome Kimberly (Kim) Nelson to our
Board from 1 July 2019.
Diversity at and below the Board
We believe that a diverse and inclusive culture supports
better business performance, growth and innovation.
So we’re pleased that our Board will be 30% women and
30% BAME (black, Asian or non-white minority ethnic)
as of 25 July 2019. We are mindful of the target set by the
Hampton-Alexander Review that, by 2020, at least 33%
of board members in FTSE 350 companies are women,
92 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
GERRY MURPHY
CHAIR OF THE NOMINATIONS COMMITTEE
and we have made good progress towards this target.
However, the most important factor when choosing a
new NED will always be their skills and expertise, and
we will continue to choose the best available candidate
regardless of their background. Of course, we will
continue to insist on diverse candidate lists for each
appointment to make sure we are casting our net as
widely as possible.
I’m pleased to see that at the executive management
team level, the appointment in 2018 of Lindsay Beardsell
and Laura Hagan to Nick’s Executive Committee means
that 44% of his leadership team are now women.
Priorities for the year ahead
Now that we have a new executive team in place, our
Nominations Committee will begin looking at long-term
succession planning for the executive directors and
other members of the management team. We believe
that good succession planning starts well in advance of
any need for change and requires a good understanding
of potential internal candidates and their development
needs. Therefore, we will be reviewing the talent
management processes throughout Tate & Lyle, to
make sure that we are able to develop our people to
their fullest potential. Also, given that two of our NEDs
have been in post for seven years, we’re starting to think
about their successors.
Gerry Murphy
Chair of the Nominations Committee
GOVERNANCE
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. It recommends candidates
for appointment as Directors and as Company Secretary and reviews
the performance of the Executive Directors. Further details of 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 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 two scheduled meetings during
the year.
Attendance during the year is set out on page 79.
The Chief Executive, the Chief Human Resources Officer 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
The Committee carried out an internally facilitated review of its
effectiveness and the output was discussed by the Committee.
This concluded that the Committee continued to operate effectively
and confirmed that the focus for the coming year would continue to
be on Board succession planning, particularly long-term planning
for the Executive Directors, as well as succession planning for other
members of the executive management team.
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 Warren Tucker as a non-executive director
As part of its routine succession planning for the Audit Committee,
the Nominations Committee commenced a search to appoint a new
non-executive director with financial expertise. The Committee
retained Spencer Stuart to assist with the search.
A Board sub-Committee identified the skills and experience
necessary and desirable for a Board member and a member of the
Audit Committee and potential Audit Committee Chair and the
search advisors prepared lists of potential candidates meeting the
specification. The Board appointed Warren Tucker, with effect from
19 November 2018.
Appointment of Kimberly Nelson as a non-executive director
During the course of the year, the Board appointed Milena Djurdjevic
of Calibro Consulting to assist the Board in a review of its composition
and its future compositional needs. Milena interviewed the Board and
executive team and made a number of recommendations. As a first
step, Board members decided to appoint a new non-executive
director with US and food and beverage experience.
A detailed job specification was prepared and Heidrick & Struggles
were appointed to assist with the search. All members of the Board
interviewed a number of potential candidates.
Following the recommendation of the Nominations Committee,
Kimberly Nelson will become a director of the Board with effect
from 1 July 2019.
Both Spencer Stuart and Heidrick & Struggles are signatories to the
Voluntary Code of Conduct for Executive Search Firms and have a
good understanding of the Group’s business.
Board diversity
As described in the Nominations Committee Chair’s report, 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 overall 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.
When considering candidate directors, the Committee looked at a
number of different criteria, including gender, age, culture and
personal attributes such as thinking style. This was reflected in the
long lists and shortlists of possible candidates.
As at the date of this Annual Report, the Board comprises the
Chairman, two executive directors and seven non-executive
directors. Female representation (two Directors) equates to 20%
of the Board.
Diversity below the Board
We recognise that to be a successful company, we must be both
diverse and inclusive. We expect everyone, everywhere, to play
a role in ensuring we become a truly diverse and inclusive
organisation where differences are respected and everyone’s
contributions are valued.
Our Group human resources policy records our commitment to
providing opportunities for all colleagues irrespective of (among
other things) sex, race, ethnicity, colour, religion, background, age
and sexual orientation.
Succession planning
The Committee also considered succession plans for senior
executive roles. During the year, members of the Committee
participated in two new appointments to the Executive Committee:
Lindsay Beardsell, Executive Vice President, General Counsel and
Laura Hagan, Chief Human Resources Officer.
Performance evaluation
The Committee evaluated the performance of each of the
Executive Directors and reported its conclusions to the
Remuneration Committee.
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Aligned remuneration
and strategy
Proposed changes to the incentive
framework simplify our arrangements and
are aligned with our investment case.
Business performance context
As you will have read in the introductory statements in
this Annual Report, we are pleased to report good
operational and solid financial performance during the
year, despite facing significant external cost pressures.
Group financial highlights include:
— 4% increase1 in adjusted profit before tax
— 4% increase1 in adjusted diluted earnings per share
— Adjusted free cash flow higher at £212 million
— Four-year US$100 million productivity programme on
track, with benefits offsetting inflationary headwinds
— Full-year dividend increased by 2.4%
ANNE MINTO
CHAIR OF THE REMUNERATION COMMITTEE
Review of incentive plans to accelerate
business performance
As referenced in my introductory statement last year,
the Committee has completed a review of incentive
arrangements to ensure they support the Group
strategy and long-term growth ambition of the
business, which is aligned with the priorities to
accelerate performance approved by the Board
following Nick Hampton’s appointment as CEO on
1 April 2018.
The specific proposals (described in detail on pages
104,106 and 107) are within the scope of our existing
shareholder approved Remuneration Policy, and will
simplify our overall approach and drive alignment with our
strategy and priorities for long-term growth. The proposals
will also reduce the maximum executive director’s
remuneration opportunity going forward.
We consulted in detail on these proposals with a broad
group of our largest shareholders in the latter part of
2018, and are pleased with the level of support that
shareholders indicated for the new framework.
1 Percentage change figures are in constant currency for
continuing operations.
Incentive outcomes for the year
The headline incentive outcomes for the year reflect the
operational and financial performance of the business:
— Annual bonus plan: awards for the year are at
around half of the maximum, reflecting solid profit
and cash performance relative to stretching targets
set at the start of the year; and Food & Beverage
Solutions delivered 3% volume growth.
— Performance Share Plan (PSP): awards made in
2016 will vest at 75% of maximum, having reached
the end of their three-year performance period.
Adjusted return on capital employed in the year to
31 March 2019 of 17.1% and adjusted profit before tax
compound annual growth of 16.9% over the three-
year period both exceeded the performance required
for maximum vesting; while the component linked to
three-year profit growth in the Food & Beverage
Solutions division did not meet the stretching target
we set at the start of the period.
— Total remuneration outcomes: are above ’target’ but
below ‘maximum’ policy levels, which the Committee
considers to be consistent with the performance and
financial health of the business.
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New incentive framework (within existing Policy)
Annual bonus:
— Replace current, relatively complex, ‘multiplier’ approach
with a simpler model with metrics that operate independently,
to improve transparency and clarity
— 80% will remain based on financial performance – Group profit
has the greatest weighting (counting for half of this element)
— Introduce an element (20% of total) linked to the achievement of
non-financial strategic objectives, to focus on the actions and
performance necessary to create additional value over time
— Reduce the maximum potential bonus to 150% of salary (175%
in current policy), with threshold at 20% (previously nil) and
target remains at 75% of salary, being 50% of maximum.
Performance Share Plan:
— Align performance metrics with the investment case to drive
long-term value creation: EPS growth (40%), ROCE (40%)
with Food & Beverage Solutions volume growth (20%) as a
lead indicator of value growth.
— Retain 3-year performance period and subsequent 2-year
holding period.
Other key activities during the year
In addition to the responsibilities of the Committee (which are described
in summary on page 100), the Committee spent significant time on
matters relating to the following key items during the year:
— Senior executive appointments: during the year, key appointments
at Executive Committee level were made to ensure we continue to
have a strong balance of skills and experience across the broader
executive team. The Committee carefully considered appropriate
remuneration terms in relation to each of these appointments.
— Policy on retirement benefit levels: the Committee considered this
topic, noting emerging external guidance. Retirement benefit levels
were reduced in 2018/19 to 25% of salary for the CEO (previously 35%)
and 20% for CFO (previously 25%). The Committee has adopted a limit,
in practice, of 20% of salary for new appointments, in line with the
benefit level currently provided to a broader group of employees in the
business. The Committee will keep emerging practice under review
ahead of formal Policy renewal at the 2020 AGM.
Post-employment shareholding requirements: the Committee
considers that a number of features in our existing arrangements
provide for a continuing alignment with shareholders’ interests
post-employment, for example: existing ‘good leaver’ provisions
do not result in accelerated vesting. We introduced a post-vesting
holding period on PSP awards from 2016; and our demanding
personal shareholding requirements (4x salary for the CEO; and
3x salary for other Executive Committee members) ensure that
executives build a meaningful stake in the business. We will keep
these provisions under review as we renew our Policy in 2020.
Executive director pay and the broader workforce
The Committee recognises that a good understanding of broader
workforce pay and conditions can provide helpful context for
the Committee’s decision-making on executive director pay,
alongside other relevant factors. The Committee currently draws
on information relating to broader pay practices in a number of
ways, for example: as part of the annual salary review, review of gender
pay and CEO pay ratios, and ensuring the same principles apply in
setting targets for incentive programmes, as well as considering
executive director incentive outcomes in the context of the broader
senior management population.
Building on this approach, the Committee has set aside time in the
annual cycle of meetings for the year ahead to specifically consider
workforce remuneration and related policies in greater detail.
Gender pay and CEO pay ratios
We employ a relatively small proportion of our people in the UK
and our two employing businesses in the UK are each significantly
below the 250 employee threshold for reporting gender pay statistics.
However, the Committee oversaw our voluntary reporting relating to
gender pay, as well as the actions taken in the business to drive
gender balance. These actions continue, and we firmly believe that
all employees contribute to the performance of the Group and
should have equal opportunity to develop according to their
individual abilities.
The Committee has, for a number of years, reviewed CEO pay ratio
data on an aggregated global basis, and is pleased to include with
this report a snapshot of our CEO–employee pay ratio for the UK
business on a voluntary basis this year (see page 98).
Remuneration Policy and shareholder approval
Our Policy was approved by shareholders at the 2017 AGM with 97%
of votes in favour.
The Committee is satisfied that this Policy continues to provide for a
strong alignment between Group performance and the remuneration
of executive directors and, as stated in this Report, we intend to
continue to operate within this approved Policy during the financial
year ending 31 March 2020.
A resolution to approve the Report, which contains key information
on the way in which our Policy has been implemented during the
year ended 31 March 2019, will be proposed at the AGM on
25 July 2019.
In closing, I would like to thank my fellow members of the
Committee for their diligence and engagement through the year,
particularly with regard to the additional matters we have considered
in relation to the review of incentive arrangements and senior
executive appointments. Additionally, I would like to personally
thank our advisors, Deloitte, and the members of the internal team
for the excellent support they have provided to the Committee.
Key sections of this Report
At a glance
96 Remuneration strategy and
key principles
96 Overview of executive director
remuneration framework
97 Performance highlights and
incentive outcomes for the year
97 Remuneration Policy scenarios for
the year to which this Report relates
Directors’ Remuneration Policy
Annual Report on Remuneration
98 Context for Directors
Remuneration Policy
99 Directors’ Remuneration
Policy statements
100 The Remuneration Committee
101 Shareholder return and spend on pay
102 Directors’ salaries and fees
103 Annual bonus outcomes and arrangements for the
coming year
105 Long-term incentive – Performance Share Plan award
outcomes and arrangements or the coming year
108 Single figure table and other audited disclosures
111 Directors’ shareholdings and share interests
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D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T (continued)
AT A GLANCE
Remuneration strategy and key principles
The Group’s remuneration strategy and supporting principles, which apply consistently to employees, managers and executives,
are summarised below:
The Group’s remuneration strategy is to provide competitive 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 consistently strong operational performance
and financial results
— Base pay and benefits are referenced to the comparative local
market, taking account of company size and operations
— For all employees, our framework for assessing performance and
potential provides meaningful opportunities for career and salary
progression, based on each individual’s skills and contribution
over time
— 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
— Incentive opportunities for eligible roles provide meaningful
rewards for superior performance and encourage the
achievement of genuinely stretching short-term and
long-term objectives
— 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
— All aspects of remuneration are designed to encourage a focus on
long-term, sustained performance and risk management. Outcomes
must be achieved in a way that is consistent with the Group’s values
and Code of Ethics, and that foster sustainable, profitable growth
— Alignment with shareholders’ long-term interests is carefully
preserved, for example, through: a significant proportion of
senior executive pay being based on performance; effective
governance around remuneration decisions; a considered
approach to setting demanding performance targets that
challenge management to drive superior performance; the
adoption of shareholding guidelines at senior executive levels;
and malus and claw back provisions on incentive awards.
Overview of our executive director remuneration framework for year ended 31 March 2019
We received strong shareholder support for our Directors’ Remuneration Policy (Policy) at the 2017 AGM, and no changes to the Policy are
proposed for the year ahead. As planned in last year’s Report, we undertook a review of the operation of our incentive programmes and
have consulted widely with our largest shareholders on proposed changes for the year ahead. These proposals, and the rationale for the
changes, are discussed in detail on pages 104, 106 and 107.
Base salary and employment
benefits
— Market competitive elements to attract the right calibre of executives (including health cover,
car and defined contribution retirement benefits). Retirement benefit levels were reduced in
2018/19 to: 25% for CEO and 20% for CFO relative to previous Policy levels.
Annual bonus1
2018-2019 metrics:
– Group profit
– FBS volume
– Cash flow
— Rewards achievement against annual performance objectives:
— Max cash bonus is 100% of salary
— Max opportunity is 175% of salary; reducing to 150% in the year ahead
— Any award over 100% of salary is paid in shares, deferred for two years
— Chief Executive target: 75% of salary
— Chief Financial Officer target: 50% of salary
Performance Share Plan:
– Group profit growth (25%)
– FBS1 profit growth (25%)
– Group ROCE (50%)
— Supports the Group’s strategy to create shareholder value from Food & Beverage
Solutions-led growth and to motivate and retain senior talent:
— Max award is 300% of salary
— 15% vesting at ‘threshold’
— Awards subject to a three-year performance period plus a two-year post vesting holding
period – five years in total
Shareholding requirements
— Chief Executive – 4 times salary
— Chief Financial Officer – 3 times salary
Claw back and malus
provisions
— Apply for two years after a bonus award or vesting of PSP awards
Key: Number of years: Performance period Deferral/holding period Ongoing requirements
1 Food & Beverage Solutions (FBS) metrics relate to the reportable segment.
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Incentive pay outcomes reflect good operational and solid financial performance during the year, despite facing significant external cost
pressures – leading to total executive director remuneration outcomes for the year at between ‘target’ and ‘stretch’ levels.
Key performance indicators for financial year 2019
Our remuneration arrangements have a clear link to key performance indicators (KPIs) which are aligned with our business strategy.
Food & Beverage
Solutions volume
+3%
Adjusted profit
before tax1
+4%
in constant currency
Return on capital
employed1
+90bps
Adjusted free
cash flow1
£212m
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.
Performance highlights and incentive outcomes for the year
Annual bonus
Metric
Group adjusted profit before tax
Target1
£287m
Actual1
£291m
vs target
+£4m
Food & Beverage Solutions volume
+4.5% vs prior year
+3% vs prior year
- 1.5%
Adjusted operating cash flow
£270m
£285m
+£15m
Bonus award to Chief Executive: 53% of maximum and Chief Financial Officer: 41% of maximum
1 Bonus targets and actual performance are assessed at constant (budget) exchange rates.
See page 103 for more detail
Performance Share Plan (2016 Award)
Adjusted Group profit before tax from continuing operations (25%)
Food & Beverage Solutions profit before tax from continuing
operations (25%)
Adjusted Group ROCE on continuing operations (50%)
Targets
(threshold-stretch)
Actual
(2016-2019)
5% – 10% compound annual
growth over three years
8% – 13% compound annual
growth over three years
12% – 16% at the end of the
performance period
16.9% (above stretch)
3.9% (below threshold)
17.1% (above stretch)
75% of the award made in 2016 will vest, based on the combination of Group profit before tax and ROCE performance.
See page 105 for more detail
Remuneration Policy scenarios and actual outcome for the year (CEO / CFO)
Chief Executive (£000s) – Nick Hampton
Total
£5m
Chief Financial Officer (£000s) – Imran Nawaz1
Total
£1 517
£5m
£2 810
£3 045
£1 210
£2 345
£4 007
£848
£577
£709
£818
£4m
£3m
£2m
£1m
£0m
5%
25%
70%
100%
43%
21%
36%
50%
29%
21%
Below
threshold
Threshold
Target
Stretch
52%
20%
28%
FY19
actual
£4m
£3m
£2m
£1m
£0m
100%
4%
26%
70%
47%
15%
38%
50%
29%
21%
Below
threshold
Threshold
Target
Stretch
32%
68%
FY19
actual
Base and benefits
Annual bonus
Performance Share Plan
1 FY19 actual reflects part year figures, reflecting an appointment date of 1 August 2018.
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D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T (continued)
This Report has been prepared in accordance with the requirements of the Companies Act 2006 (the Act) and Schedule 8 to the Large and
Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, the Listing Rules of the UK Listing Authority and the UK
Corporate Governance Code. Ernst & Young LLP have audited such content as required by the Act (the information on pages 108 to 111
marked as ‘(audited)’.
CONTEXT FOR DIRECTORS’ REMUNERATION POLICY
We operate in an international context
Although we are UK-listed and headquartered in London, UK, only c.2% of our sales1 are made to the UK and only c.6% of our global workforce
are located in the UK. Accordingly, it is important that our remuneration arrangements are competitive in that international context.
1 Geographic sales (from continuing operations) as per Note 5.
Consideration of shareholder views
The Chair of the Remuneration Committee engages with our major institutional shareholders each year specifically on remuneration topics,
alongside the Board’s shareholder engagement programme.
The Committee also receives regular updates on investors’ views and corporate governance matters. These lines of communication ensure
that emerging best practice principles are factored into the Committee’s decision-making during the year.
During the past year, the Chair consulted with a broad group of our largest shareholders, regarding proposed changes to the operation of
our incentive arrangements for the year ahead (as discussed on pages 104,106 and 107), and we are pleased to note the levels of support
expressed during those discussions.
Our current Directors’ Remuneration Policy was formally approved at the AGM in 2017, and the proposed changes to our remuneration
arrangements do not require any change to the scope of that Policy.
Statement of consideration of employment conditions in the Group
The principles on which we base remuneration decisions for executives (as described on page 96) are broadly consistent with those on which
we base remuneration decisions for all employees. In particular, the Committee takes into account the general pay and employment
conditions of other employees of the 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 executives’ incentives as for other relevant employees of the Group. The Committee also reviews information on bonus payments
and share awards made to the broader management of the Group when determining awards and outcomes at executive director level.
During the year, the Committee considered the provisions of the updated FRC Corporate Governance Code, and has developed plans for the
year ahead to consider workforce remuneration in greater detail, and to engage with employees on the matters covered by the Code.
Gender pay ratio
We employ a relatively small proportion of our people in the UK and our two employing businesses in the UK are each significantly below
the 250 employee threshold for reporting gender pay statistics. However, the Committee oversaw our voluntary reporting relating to gender
pay, as well as the actions taken in the business to drive gender balance. As discussed in Our people report (see page 46), we aim to attract
an inclusive and diverse workforce that reflects the communities in which we operate. We firmly believe that all employees contribute to the
performance of the Group and should have equal opportunity to develop fully according to their individual abilities.
CEO pay ratio
Key principles of our people strategy are to provide competitive remuneration for each role in a way that enables the Group to recruit, retain
and motivate high-calibre individuals so that we may deliver consistently strong operational performance and financial results; and to
provide opportunities to employees for career and salary progression over time, reflecting each individual’s contribution and capabilities.
Reflecting our commitment to high standards of governance and transparency, the Committee is pleased to provide a voluntary disclosure
of the ratio of CEO pay to UK employee pay. Data representing employees at the ‘median’ and ‘upper’ and ‘lower’ quartiles is as follows:
CEO Pay ratio vs UK employees
Year
2019 – pay ratio (total compensation)
Representative employee salary
Representative employee total compensation
Lower Quartile
Median
Upper Quartile
74x
£37,250
£41,240
39x
£61,760
£77,670
20x
£107,993
£155,140
In the table above, total compensation has been calculated for individual UK employees as at 31 March 2019 for comparison with the CEO
‘single figure’ total compensation figure in the table on page 108, adjusted only to provide a consistent comparison of employee data on a
full-time equivalent basis.
The Committee notes that the median pay ratio figure of 39 has fallen year on year (2018 – c.50). This in part reflects structural reductions
in base salary and retirement benefit levels for the CEO role from 1 April 2018, as well as lower comparable incentive plan outcomes.
The Committee notes that the ‘median’ employee is not a participant in the long-term performance share plan. As such, the ratio remains
sensitive to financial performance and consequently incentive plan outcomes and share price performance (which may lead to greater
variability in the CEO pay figure as compared with the broader employee group) over time.
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DIRECTORS’ REMUNERATION POLICY
Executive directors’ remuneration consists of base salary, annual bonus, long-term incentives, and retirement and other benefits as
summarised in the ‘at a glance’ section on page 96. Each component has a clear purpose, and the variable elements are driven by KPIs
which have a clear link to strategy. Malus and claw back provisions apply to incentive awards following release, and a strong alignment
with shareholders’ interests is maintained through significant personal shareholding requirements imposed on each Director. Safety and
broader corporate responsibility matters are specific factors that the Committee may factor into decisions on pay and annual incentive
plan outcomes.
The Directors’ Remuneration Policy (Policy) is published on pages 78 to 85 of our Annual Report 2017, and is available on the Company’s
website (www.tateandlyle.com/annualreport2017). The Policy was formally approved by shareholders at the AGM on 27 July 2017 (with 97%
of votes cast to support the resolution).
As a Committee, we believe that our Policy continues to provide an effective overall framework that is aligned with long-term success and
returns to shareholders. No changes have been made to the Policy, and we intend to operate within this Policy (incorporating the changes
to incentive plans described in this Report which are within the scope of the Policy) during the financial year ending 31 March 2020.
The Committee retains discretion on specific aspects of Policy and implementation, as described in the 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
arrangements, or to take account of changes in legislation. Any such changes would be disclosed in the relevant Annual Report.
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, as well as 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 that provide for six months’ notice from the
executive and 12 months’ notice from the Company.
The Chairman and non-executive directors have letters of appointment and do not have service contracts or notice periods. Under the
terms of their appointment, they are usually expected to serve on the Board for between three and nine years, subject to their re-election
by shareholders. The Chairman and non-executive directors receive a fee for their services, and do not participate in the Group’s incentive
or pension schemes, do not receive any other benefits, and have no right to compensation if their appointment is terminated.
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.
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.
ANNUAL REPORT ON REMUNERATION
Statement of shareholder voting
The Remuneration Policy was approved by shareholders at the AGM on 27 July 2017. The last Annual Report on Remuneration was
approved by shareholders at the AGM on 26 July 2018. The following voting outcomes were disclosed after the relevant AGM:
Resolution
Directors’ Remuneration Policy – 27 July 2017
Annual Report on Remuneration – 26 July 2018
Total for
(number of votes)
295 458 658
251 899 633
% of vote
97.16
91.06
Total against
(number of votes)
8 622 530
24 742 882
% of vote
2.84
8.94
1 Votes withheld are not counted in the calculation of the proportion of votes for or against a resolution.
2 At the AGM on 27 July 2017, there were 465,684,612 ordinary shares in issue and eligible to vote, excluding treasury shares.
3 At the AGM on 26 July 2018, there were 467 322 424 ordinary shares in issue and eligible to vote, excluding treasury shares.
Votes
withheld1
(number of
votes)
79 6622
2 939 9393
Implementation of the Remuneration Policy in the financial year ending 31 March 2020
The Committee intends that the Policy approved by the shareholders at the AGM on 27 July 2017 will apply for a period of three years from
that date. The changes to the operation of our incentive plans described on pages 106 and 107, on which we have consulted with
shareholders, are within this Policy.
Resolution to approve the Annual Report on Remuneration at the 2019 AGM
A resolution to approve this Annual Report on Remuneration will be proposed at the AGM on 25 July 2019.
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D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T (continued)
THE REMUNERATION COMMITTEE
Meetings during the year
The Remuneration Committee comprised the following independent non-executive directors during the year: Anne Minto (Chair), Paul Forman,
Lars Frederiksen, and Dr Ajai Puri, and Warren Tucker (from 19 November 2018). The Committee met seven times during the year.
Membership and attendance during the year are set out on page 79.
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 Chief Human Resources Officer; and the VP, Global
Compensation and Benefits may be invited to attend meetings to assist the Committee, although none is present or involved when his or
her own remuneration is discussed. 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 to ensure that the
Committee’s decisions take Group strategy and the needs of the business into account, while reflecting investor and governance
expectations around good practice.
Main responsibilities of the Remuneration Committee
The Committee has a formal calendar of items for consideration. 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 Chairman
of the Board (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
share award levels
— Reviewing its own effectiveness each year.
The Committee’s terms of reference, which are reviewed annually, are available on the Company’s website, www.tateandlyle.com.
Committee advisor
The Committee appointed Deloitte LLP to act 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 £48,500 for the year ended 31 March 2019, with fees being charged on a time incurred
basis. During the year ended 31 March 2019, Deloitte LLP also provided services to the rest of the Group on corporate finance, consulting,
systems, tax compliance and accounting.
100 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
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GOVERNANCE
Javed Ahmed
Iain Ferguson
Annual bonus
(% of max)
LTI vesting
(% of max)
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 250
Indices. 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 10 years from 31 March 2009.
Tate & Lyle PLC (ordinary shares)
450
FTSE 100
FTSE 250
)
£
(
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
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
31 March
2018
31 March
2019
Chief Executive’s1 total remuneration (£000s per single figure table)
Nick Hampton
n/a
n/a
n/a
n/a
977
3 277
11 1982
5 367
1 312
nil
170
n/a
n/a
2 728
n/a
n/a
n/a
3 045
n/a
2 139
n/a
3 239
3 672
n/a
n/a
86%
100%
58%
18%
1.6%
0%
81%
100%
100%
67.7%
77%
80%
72%
10.9%
50%
100%
1 Nick Hampton served as Chief Executive since his appointment on 1 April 2018. Javed Ahmed served as Chief Executive from his appointment on 1 October
2009 until 1 April 2018. Iain Ferguson was Chief Executive prior to 1 October 2009.
2 The total remuneration figure shown for the year ended 31 March 2012 includes one-off compensatory appointment awards.
Comparison of movement in Chief Executive and broader employee remuneration
Change in value: year ended 31 March 2019 vs 31 March 2018
Base salary
Value of benefits3
Annual bonus4
Chief Executive1
Broader employee population2
-8%
3%
-59%
4%
-32%
-29%
1 Nick Hampton was appointed Chief Executive on 1 April 2018. The % figures therefore illustrate the difference vs the previous Chief Executive.
2 No changes to benefit policies were made in respect of the Chief Executive or employees during the year. The percentage change in Chief Executive benefits
reflects the fact that Nick Hampton does not receive any allowance in relation to international healthcare. The percentage change in the employee benefits
figure is the result of differences in employee participation levels in elective benefits and changes in the cost of insured benefits, including healthcare.
3 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.
4 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 2019
Year ended
31 March 2018
£334m
£134m
£336m
£158m
% change
-0.6%
-15.2%
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.
The year-on-year change in ‘distributions to shareholders’ reflects a £3 million increase in dividend payments compared to the prior year,
offset by reductions in the purchase of shares to satisfy share incentive awards.
See Notes 9, 13 and 21 for further information.
W W W . T A T E A N D L Y L E . C O M | 101
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n/a
996
n/a
0%
0%
n/a
n/a
53%
75%
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
G OV ERN ANC E
D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T (continued)
DIRECTORS’ SALARIES AND FEES
Executive director salaries
Nick Hampton was appointed Chief Executive with effect from 1 April 2018 with an annual salary of £665,000.
Imran Nawaz was appointed Chief Financial Officer with effect from 1 August 2018 with an annual salary of £470,000.
The Remuneration Committee reviews salaries at the start of each financial year. At the Board meeting at the end of March 2019, the Chief
Executive recommended that executive directors and members of the Executive Committee would not receive a salary increase, stating the
Executive Committee’s desire to set a leadership example in the context of the broader actions associated with the Group’s cost base
review. The Committee acknowledged this gesture, and accepted the recommendation for the year ahead. Employees within the Group are
not affected by this decision, and the average increase for employees across the Group was c.3% globally.
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 £66,280 in
the year to 31 March 2019 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 2019 review, taking into account the stance taken by executive directors and members of the Executive Committee, while noting
the level of increase applicable to UK employees more generally, it was agreed that no fee increase would be awarded for the year ahead.
Fees, based on individual director responsibilities, are shown in the table below:
Fees (per annum) as at 1 April (£)
2019
2018
% change
Basic fees
Chairman
Non-executive director
Senior Independent Director
Supplemental fees
Chair of Audit Committee
Chair of Remuneration Committee
Chair of Research Advisory Group
ANNUAL BONUS
350 000
68 000
78 800
18 050
13 550
25 200
350 000
68 000
78 800
18 050
13 550
25 200
0%
0%
0%
0%
0%
0%
Overview
As referenced in the introductory statement, this is the last year that the bonus framework operates with a ‘multiplier’ approach, and for
the year ahead we have simplified the bonus arrangement to drive a clearer alignment with our strategy and strategic priorities.
The bonus for the year was based on performance against three objectives: Group profitability; Food & Beverage Solutions (FBS) volume
growth; and Group operating cash flow. Before any bonus is payable, a minimum level of Group profit must be achieved, 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 level 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
Step 2
Step 3
Profitability multiplier
(once minimum level
is achieved)
X
X
FBS volume growth
multiplier
Operating cash flow
multiplier
X
=
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%.
Malus and 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. The Committee reviewed these provisions during the year,
and has agreed that going forward, ‘corporate failure’ will be included within these provisions.
102 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
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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.
Overview for the year ended 31 March 2019
Awards are linked to stretching financial
targets set at the start of the year against
key metrics:
— Group adjusted profit – measures the
underlying profit generated by the total
business and whether management is
converting growth into profit effectively
— Food & Beverage Solutions volume –
measures whether management is growing
the Food & Beverage Solutions segment
— Group adjusted operating cash flow –
provides a focus on managing working capital
and converting profit into cash effectively.
Bonus awards reflect solid operational and financial performance
— 4% increase in adjusted profit before tax1, despite challenging market conditions and
significant external cost pressures
— Primary Products delivered 11% lower adjusted operating profit, while volume was in
line with the prior year
— Food & Beverage Solutions adjusted operating profit was 3% higher, while volume
was 3% higher overall, 3% higher in North America; 15% higher in Emerging
Markets; 2% lower in Europe, Middle East and Africa
— 4% increase in adjusted diluted earnings per share2
— Good cash generation driving a reduction in net debt
— Four year US$100m productivity programme on track, with benefits offsetting
inflationary headwinds
— Full-year dividend increased by 2.4% to 29.4p per share
1 Adjusted operating profit, percentage change in constant currency.
2 Adjusted diluted earnings per share from continuing operations in constant currency.
Annual bonus for the year ended 31 March 2019 (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
Profitability
Growth
Cash management
Adjusted profit before tax
Food & Beverage Solutions volume Adjusted operating cash flow
Adjusted profit before tax,
exceptional items, amortisation
and net retirement benefit interest
Measures the underlying profit
performance of the total business
Volume targets are set relative to
prior year performance
Adjusted group operating cash flow,
based on the average of half-year and
full-year figures
Measures whether management is
growing the Food & Beverage
Solutions business
Measures effective management of
working capital and effective
conversion of profit into cash
Metric
Definition
Rationale
Threshold
Target
Stretch
£279m
£287m
£300m
Actual performance1
£291m
Equal to prior year
+4.5% vs prior year
+5.5% vs prior year
+3% vs prior year
£255m
£270m
£285m
£285m
1 Bonus targets are set and actual performance is assessed at constant (budget) exchange rates, reflecting consistent practice with prior years.
The Committee also considers the Group’s safety and overall financial performance to ensure that the results are a true reflection of
the underlying strength and performance of the Group. On the basis of these performance outcomes, annual bonus awards were made to
executive directors for the year ended 31 March 2019 as follows. No discretion has been exercised by the Committee in relation to
these awards.
Bonus award (% of salary)
Bonus award (% of max)
Nick Hampton
Chief Executive
Imran Nawaz
Chief Financial Officer
93%
72%
53%
41%
Target bonus is 75% of salary for the Chief Executive and 50% of salary for the Chief Financial Officer. Maximum for both roles is 175% of
salary. Any bonus up to 100% of base salary is paid in cash and any balance is paid in the form of deferred shares as described above.
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l
D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T (continued)
Bonus arrangements for the coming year
As summarised in the introductory statement, we propose to simplify the bonus framework to drive a clearer alignment with our strategy
and strategic priorities in the business to generate long-term growth.
The bonus structure is summarised in the following illustration, and the key changes and the rationale for each of these are
discussed below:
Opportunity
(% of salary)
Financial metrics (80% of total bonus opportunity):
Threshold: 20%
Group operating
Group cash flow
Target: 75%
Maximum: 150%
profit
(40% of total)
+
(20%)
Food & Beverage
Solutions sales
+
(20%)
Minimum profit requirements: must be achieved before bonus can be earned for other metrics.
Strategic objectives
(20% of total bonus
opportunity)
+
Aligned to strategic
and operational
priorities
Subject to Remuneration Committee discretion: based on underlying business and environmental, health and safety performance.
Note: Bonus targets are set and actual performance is assessed at constant (budget) exchange rates, reflecting consistent practice with prior years.
To eliminate potential volatility due to the pass through of corn price in our sales, Food & Beverage Solutions (FBS) sales targets will be set and actual
performance will be assessed at constant corn price and exchange rates, to ensure a like-for-like assessment.
Key changes compared to the approach for year ended 31 March 2019:
— Replace current, relatively complex, ‘multiplier’ approach with a simpler model with metrics that operate independently, to improve
transparency and communication:
The bonus structure which has been in place since 2010, operated on a multiplier basis (as described above). For the year ahead, we will
adopt a more conventional approach, with independently weighted metrics. This will simplify the arrangement and enable us to
demonstrate a clearer link between performance against each metric and the individual bonus outcomes in a given year.
— Introduce an element (20% of total) linked to the achievement of (non-financial) strategic objectives, to capture the actions and
performance necessary to create additional value over time:
The Committee recognises shareholders’ desire that incentives are linked to the actions and performance necessary to create value over
time, and notes the specific guidance in the FRC Code that ‘using a range of financial, non-financial and strategic measures can help
ensure that overall goals are aligned with how the company will deliver value over the long term’. Accordingly, a proportion of the bonus
(20% of the total) will be linked to the achievement of specific ‘business strategic’ non-financial objectives.
— Clear objectives will be established by the Committee at the start of each year, reflecting the Group’s corporate and strategic priorities
for the year ahead, as well as to drive progress against environment, health and safety (EHS) and broader social purpose goals and
develop company culture. Examples might therefore include quantifiable value-added objectives relating to our focus on our
customers and key categories, accelerating portfolio development, innovation, driving productivity, and EHS goals.
— Achievements against those objectives, including specific KPIs, will be reviewed by the Committee at the end of the financial year,
and a bonus outcome will be determined accordingly.
— Business strategic objectives are often commercially sensitive, so these are not set out in full detail for the year ahead at this stage.
The Committee intends to disclose the specific achievements against each relevant priority / objective for the year in review, along with
the Committee’s determination of the bonus outcome.
— This ‘non-financial’ component is intended to focus on activities that enhance shareholder value, and the Committee will have due
regard to the shareholder experience and the overall financial performance of the business in approving outcomes in relation to
this element.
— 80% will remain based on financial performance – Group profit has the greatest weighting (counting for half of this element):
We will continue to use Group operating profit and Group cash flow as key financial performance metrics. We propose to replace
‘FBS volume’ (in our current framework) with FBS sales to better capture the US$-value of total FBS top line performance. This will
reinforce the management discipline needed to drive both volume and price to deliver margin-accretive, value-added growth in the
FBS business.
— Reduce the maximum potential bonus to 150% of salary (vs 175% in current policy):
The maximum bonus opportunity will be reduced to 150% of salary (a reduction of 25% of salary vs 175% in our current framework).
Any bonus earned in excess of 100% of salary will continue to be made in the form of deferred shares, in keeping with our current
arrangements. In rebalancing the bonus structure, we propose to align executive director arrangements with a simpler standard
structure with the ‘threshold’ value being 20% of salary (previously nil) and ‘target’ remains at 75% of salary (aligned with current
CEO ‘target’).
The Board considers that financial bonus targets for the year ahead are commercially sensitive because they may reveal information about
the business plan that may damage our competitive advantage, and accordingly does not disclose these on a prospective basis. However,
the Committee seeks to set targets that are challenging and which encourage management to deliver superior operational and financial
performance; and we will continue our established practice of reporting targets in full, alongside the level of performance actually
achieved, for the year just ended (including the element linked to non-financial objectives going forward).
LONG-TERM INCENTIVE – PERFORMANCE SHARE PLAN (PSP)
Overview
the interests of shareholders over the long term.
Maximum award level
The PSP provides a share-based incentive to closely align executive directors’ and senior executives’ interests with the strategy and with
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 appropriate 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 applicable to outstanding awards
The performance framework was reviewed in 2016 to ensure continued alignment with the Group strategy following the structural
changes in the business in 2015. The threshold and stretch targets for each of the metrics were considered carefully by the Committee,
taking into account a number of reference points, including internal and external benchmarks of performance and global market growth
in the Food & Beverage Solutions (FBS) industry. Overall, performance at these levels requires our Food & Beverage Solutions (and Sucralose)
and Primary Products businesses to perform strongly in their respective markets. We consulted with a broad group of our largest
shareholders on these arrangements, which were endorsed by shareholders at the 2016 AGM. These conditions apply to awards made in
2016, 2017 and 2018.
Targets are set and performance is assessed at reported exchange rates. The level of vesting at threshold is limited to 15% of the maximum for
executive directors. The Committee carefully reviews the appropriateness of metrics and targets ahead of the grant of awards in any year to
ensure they remain appropriately stretching.
See pages 74 and 75 of our 2016 Annual Report for more details.
Metrics for Awards
2016, 2017, 2018
Link to strategy
Target range
(threshold-stretch)
Actual performance
Combined vesting outcome
outcome for 2016 award
for 2016 award
FBS adjusted operating
Reflects our focus on growing
8% – 13% p.a.
3.9% p.a.
75% of the 2016 award will vest
profit (25%)
the FBS business
(below threshold)
– as Group profit before tax and
three-year
compound growth
Group adjusted profit
Key performance metric to
before tax (25%)
drive sustainable long-term
5% – 10% p.a.
three-year
16.9% p.a.
(above stretch)
profitable growth
compound growth
Group adjusted ROCE
Drives efficient investment for
12% – 16% in the final
17.1%
(50%)
value-added returns from the
year of the three-year
(above stretch)
total business
performance period
Group ROCE outcomes are both
above the respective ‘stretch’
levels of performance while
FBS operating profit growth did
not meet the requirement over
this period
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.
Recognising the importance of the dividend to our investors, the Committee retains a specific discretion to reduce PSP
vesting if dividends paid by the Group over the performance period do not conform with our dividend policy.
Note: Food & Beverage Solutions metrics relate to the reportable segment.
Post-vesting holding period
For awards made since 2016, executive directors are 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 is five years in total). This holding period sits alongside the
existing personal shareholding requirements and claw back/malus provisions, and demonstrates a strong long-term alignment with
shareholder interests.
Malus and claw back provisions
Awards made under the PSP 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. The Committee reviewed these provisions
during the year, and has agreed that going forward, ‘corporate failure’ will be included within these provisions.
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GOVERNANCE
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.
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 appropriate 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 applicable to outstanding awards
The performance framework was reviewed in 2016 to ensure continued alignment with the Group strategy following the structural
changes in the business in 2015. The threshold and stretch targets for each of the metrics were considered carefully by the Committee,
taking into account a number of reference points, including internal and external benchmarks of performance and global market growth
in the Food & Beverage Solutions (FBS) industry. Overall, performance at these levels requires our Food & Beverage Solutions (and Sucralose)
and Primary Products businesses to perform strongly in their respective markets. We consulted with a broad group of our largest
shareholders on these arrangements, which were endorsed by shareholders at the 2016 AGM. These conditions apply to awards made in
2016, 2017 and 2018.
Targets are set and performance is assessed at reported exchange rates. The level of vesting at threshold is limited to 15% of the maximum for
executive directors. The Committee carefully reviews the appropriateness of metrics and targets ahead of the grant of awards in any year to
ensure they remain appropriately stretching.
See pages 74 and 75 of our 2016 Annual Report for more details.
Metrics for Awards
2016, 2017, 2018
Link to strategy
Target range
(threshold-stretch)
Actual performance
outcome for 2016 award
Combined vesting outcome
for 2016 award
FBS adjusted operating
profit (25%)
Reflects our focus on growing
the FBS business
Group adjusted profit
before tax (25%)
Key performance metric to
drive sustainable long-term
profitable growth
8% – 13% p.a.
three-year
compound growth
5% – 10% p.a.
three-year
compound growth
3.9% p.a.
(below threshold)
16.9% p.a.
(above stretch)
Group adjusted ROCE
(50%)
Drives efficient investment for
value-added returns from the
total business
12% – 16% in the final
year of the three-year
performance period
17.1%
(above stretch)
75% of the 2016 award will vest
– as Group profit before tax and
Group ROCE outcomes are both
above the respective ‘stretch’
levels of performance while
FBS operating profit growth did
not meet the requirement over
this period
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.
Recognising the importance of the dividend to our investors, the Committee retains a specific discretion to reduce PSP
vesting if dividends paid by the Group over the performance period do not conform with our dividend policy.
Note: Food & Beverage Solutions metrics relate to the reportable segment.
Post-vesting holding period
For awards made since 2016, executive directors are 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 is five years in total). This holding period sits alongside the
existing personal shareholding requirements and claw back/malus provisions, and demonstrates a strong long-term alignment with
shareholder interests.
Malus and claw back provisions
Awards made under the PSP 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. The Committee reviewed these provisions
during the year, and has agreed that going forward, ‘corporate failure’ will be included within these provisions.
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G OV ERN ANC E
D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T (continued)
Changes to the PSP for the year ahead:
As referenced in the introductory statement, the investment case
we have set out provides a strong logic for refocusing long-term
performance metrics on EPS growth and ROCE performance, with a
dividend underpin.
It is proposed that, going forward, Group EPS and Group ROCE will
each have a 40% weighting so, as a result, 80% is linked to total
Group ‘bottom line’ financial performance and capital efficiency.
Alongside these, a Food & Beverage Solutions (FBS) volume metric
(with a 20% weighting) will provide continued focus on our growth
ambition for the FBS business. This metric will complement the
‘FBS sales’ metric in the Annual Bonus; reflecting our ambition for
FBS growth within the Group portfolio, incentivising above-market
performance in that division. This choice also eliminates
‘duplication’ across FBS profit and Group profit metrics in the
current PSP framework.
The approach is summarised below. We believe this places a
clear focus on long-term strategic growth and FBS market
‘out-performance’, to drive long-term value creation.
Investment case
W E H AV E A C L E A R S T R AT E GY
FO R O U R B U S I N E S S E S ...
... D R I V E N B Y T H R E E P R I O R I T I E S
TO AC C E L E R AT E P E R FO R M A N C E
... TO D E L I V E R R E T U R N S FO R S H A R E H O L D E R S
E A R N I N G S P E R S H A R E 1 – AC C E L E R AT E G R OW T H
O R GA N I C R E T U R N O N CA P I TA L E M P LO Y E D 2 –
I M P R OV E R E T U R N S
D I V I D E N D – M A I N TA I N P R O G R E S S I V E
D I V I D E N D P O L I CY
1 Adjusted diluted earnings per share from continuing operations in
constant currency.
2 In constant currency.
Read more about our full Investment case on page 15.
Metrics for Awards from
2019 (weighting)
Rationale for metric
(link to Investment case)
Target range
(threshold-stretch)
Rationale for target ranges
Group adjusted
earnings per share
(40%)
Key performance
metric to drive
sustainable long-term
profitable growth
5% – 10% p.a.
three-year
compound growth
FBS volume growth
(20%)
Lead indicator of
strategy execution and
FBS value growth
2% – 6% p.a.
three-year
compound growth
Adjusted Group ROCE
(40%)
Drives disciplined and
efficient investment
for value-added
returns from the
total business
14% – 18% in the final
year of the three-year
performance period
• Targets are consistent with execution of Group strategy:
managing PP for stable earnings, with profitable growth driven
by FBS growth ahead of market, and with Sucralose managed
for cash.
• Target range is consistent with the current 5%-10% range
applicable to the profit before tax metric it replaces, while the
EPS metric provides a more holistic assessment of shareholder
value creation.
• Targets are consistent with our strategic goal to deliver strong
FBS growth at above global market growth rates.
• The threshold is in line with our latest view of the global market
growth rate (at around 2%), representing a benchmark for future
performance that is ahead of our recent trend; and stretch
represents very strong performance at c.3x the global growth rate.
• Targets returns that are higher than the current range (12%-16%),
and incremental organic return on capital employed over time.
• Incentivises ROCE performance in excess of our current
weighted average cost of capital (WACC) of c.7%.
• Allows flexibility for investment in the business.
The target ranges shown above for each metric have been carefully considered by the Committee, taking into account the investment case
we have set out for shareholders and our ambition for growth, as well as historic company and competitor/customer financial performance,
and will be kept under review ahead of the grant in any year to ensure they remain sufficiently stretching.
The Committee believes that these proposed target ranges align with and demonstrate the growth ambition and would constitute strong
and successful financial and strategic delivery in the round. In order for PSP awards to vest in full we would have to: (i) grow Food &
Beverage Solutions significantly above global market growth rates; (ii) double Group profit every seven-eight years (10% CAGR); while (iii)
maintaining and increasing ROCE at a margin well in excess of our average cost of capital.
Performance at these levels will require both our Food & Beverage Solutions and Primary Products businesses to perform strongly in their
respective markets: growing Food & Beverage Solutions volume ahead of the global market, and managing the Primary Products business
for steady earnings against a US bulk sweeteners market that has been flat in the last four years.
Before any award vests, the Committee must also be satisfied that the level of vesting based on performance against these targets is
justified by the broader underlying financial performance of the Group.
The Committee has specific discretion to reduce any PSP vesting if dividends paid by the Company over the performance period do not
conform to the stated (progressive) dividend policy. This feature recognises the importance of the dividend to investors, and underlines the
We adopted a post-vesting shareholding period in 2016 (so that the combination of performance and holding is five years in total), and this
Company’s commitment in this regard.
Post-vesting holding period
will continue to apply.
Impact of capital events
In keeping with our existing Policy, in the context of a merger or acquisition, or other significant 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 targets (or the vesting outcome) to ensure that these are neither easier nor more demanding than the
original targets. This principle remains important as we seek to grow the business through organic sales growth and improved organic
returns, as well as value-added strategic M&A-related activity over time.
Impact of accounting changes and adoption of IFRS16
The adoption of IFRS16 is expected to impact the assessment of certain PSP metrics when it comes into effect from the year ending
31 March 2020 (see page 30 ‘IFRS16 Leases’). The performance metrics and targets described in this report were established pre-IFRS16,
and the Committee has agreed that an appropriate adjustment will be made to ensure that actual performance against target can be
assessed on a like-for-like basis and that conditions are not easier nor harder to achieve.
Annual and maximum award levels
As part of an integrated proposal, and recognising the 25% of salary reduction proposed in relation to the annual bonus opportunity,
the current shareholder-approved policy limit on PSP award levels will be retained (at 300% of salary). The Committee believes this
continues to be appropriate in the context of our global business – with c.98% of sales and 94% of employees outside the UK, and significant
international diversity across our executive leadership team. The Committee will continue to retain full discretion in respect of each
individual annual award, and we will retain the ‘threshold’ level of vesting at 15% of the award. This approach ensures the focus remains
weighted towards long-term performance.
Financial and
dividend 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.
Recognising the importance of the dividend to our investors, the Committee retains a specific discretion to reduce
PSP vesting if dividends paid by the Group over the performance period do not conform with our stated dividend policy.
Malus and claw back provisions apply for up to two years post vesting.
Post-vesting
holding period
Executive directors are 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 is five years in total).
Note: FBS metrics relate to the reportable segment. Targets are set and performance is assessed at reported exchange rates.
The level of vesting at threshold is limited to 15% of the maximum for executive directors.
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GOVERNANCE
The target ranges shown above for each metric have been carefully considered by the Committee, taking into account the investment case
we have set out for shareholders and our ambition for growth, as well as historic company and competitor/customer financial performance,
and will be kept under review ahead of the grant in any year to ensure they remain sufficiently stretching.
The Committee believes that these proposed target ranges align with and demonstrate the growth ambition and would constitute strong
and successful financial and strategic delivery in the round. In order for PSP awards to vest in full we would have to: (i) grow Food &
Beverage Solutions significantly above global market growth rates; (ii) double Group profit every seven-eight years (10% CAGR); while (iii)
maintaining and increasing ROCE at a margin well in excess of our average cost of capital.
Performance at these levels will require both our Food & Beverage Solutions and Primary Products businesses to perform strongly in their
respective markets: growing Food & Beverage Solutions volume ahead of the global market, and managing the Primary Products business
for steady earnings against a US bulk sweeteners market that has been flat in the last four years.
Before any award vests, the Committee must also be satisfied that the level of vesting based on performance against these targets is
justified by the broader underlying financial performance of the Group.
The Committee has specific discretion to reduce any PSP vesting if dividends paid by the Company over the performance period do not
conform to the stated (progressive) dividend policy. This feature recognises the importance of the dividend to investors, and underlines the
Company’s commitment in this regard.
Post-vesting holding period
We adopted a post-vesting shareholding period in 2016 (so that the combination of performance and holding is five years in total), and this
will continue to apply.
Impact of capital events
In keeping with our existing Policy, in the context of a merger or acquisition, or other significant 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 targets (or the vesting outcome) to ensure that these are neither easier nor more demanding than the
original targets. This principle remains important as we seek to grow the business through organic sales growth and improved organic
returns, as well as value-added strategic M&A-related activity over time.
Impact of accounting changes and adoption of IFRS16
The adoption of IFRS16 is expected to impact the assessment of certain PSP metrics when it comes into effect from the year ending
31 March 2020 (see page 30 ‘IFRS16 Leases’). The performance metrics and targets described in this report were established pre-IFRS16,
and the Committee has agreed that an appropriate adjustment will be made to ensure that actual performance against target can be
assessed on a like-for-like basis and that conditions are not easier nor harder to achieve.
Annual and maximum award levels
As part of an integrated proposal, and recognising the 25% of salary reduction proposed in relation to the annual bonus opportunity,
the current shareholder-approved policy limit on PSP award levels will be retained (at 300% of salary). The Committee believes this
continues to be appropriate in the context of our global business – with c.98% of sales and 94% of employees outside the UK, and significant
international diversity across our executive leadership team. The Committee will continue to retain full discretion in respect of each
individual annual award, and we will retain the ‘threshold’ level of vesting at 15% of the award. This approach ensures the focus remains
weighted towards long-term performance.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
G OV ERN ANC E
D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T (continued)
Other audited disclosures
SINGLE FIGURE TABLE (AUDITED)
£000s
Salary/fees
Benefits1
Annual bonus
Share awards
Pension
Total
Year ended 31 March
2019
2018
2019
2018
2019
20182
20195
2018
2019
2018
2019
2018
Chairman
Dr Gerry Murphy
350
350
–
Executive directors
Nick Hampton3
Imran Nawaz4
Non-executive
directors6
Paul Forman
Lars Frederiksen
Douglas Hurt
Anne Minto
Dr Ajai Puri
Sybella Stanley
Warren Tucker7
Former directors8
Javed Ahmed9
Liz Airey
Jeanne Johns
Totals
665
313
526
–
17
109
68
68
97
82
93
68
25
–
–
–
66
66
95
80
91
66
–
721
22
46
–
–
–
–
–
–
–
11
–
–
1 829
2 129
137
–
13
–
–
–
–
–
–
–
–
41
–
–
54
–
–
–
–
–
–
350
350
662
1 581
1444
616
224
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
908
–
–
–
–
–
–
–
–
–
–
–
–
166
63
131
3 045
2 776
–
709
–
–
–
–
–
–
–
–
–
–
–
–
–
–
68
68
97
82
93
68
25
66
66
95
80
91
66
–
–
–
–
–
–
–
–
–
1750
10
252
21
3 672
–
–
–
–
–
–
–
–
22
46
840
1 570
1 581
3194
239
383
4 626
7 330
1 Benefits for executive directors include health insurance and car allowance.
2 Bonus includes the value of deferred shares if bonus awards in the year are more than 100% of salary. For 2019, the bonus awards were made in cash.
3 Nick Hampton was appointed Chief Executive on 1 April 2018 (previously serving as Chief Financial Officer).
4 Imran Nawaz was appointed 1 August 2018. £100,000 included with ‘benefits’ relates to relocation support, as disclosed on appointment and on page 85 of
the Annual Report 2018.
5 This is the PSP Award made in 2016. PSP awards outcomes are discussed on page 105, and the value is included in the table above based on a share price of
£7.92, being the closing share price on 20 May 2019 when the Remuneration Committee determined performance conditions were met.
6 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.
7 Warren Tucker was appointed to the Board on 19 November 2018.
8 Liz Airey retired as a Director on 27 July 2017. Jeanne Johns stepped down as a Director on 31 October 2017.
9 Javed Ahmed retired as Chief Executive on 1 April 2018 (arrangements on departure were disclosed on page 87 of the 2018 Annual Report). An amount
included with ‘benefits’ represents payment in lieu of unused holiday allowance on cessation, in keeping with the policy applicable to all employees.
Pension includes an individual voluntary contribution.
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 25% for Nick Hampton as Chief Executive,
reflecting his contract on appointment in 2014, and 20% for Imran Nawaz, as agreed on appointment in 2018.
The Committee has considered investor sentiment regarding pension benefit levels for executive directors, and included this topic in
consultation with our largest shareholders regarding the changes to our incentive plans. The Committee recognises the sensitivity relating
to this benefit and has adopted a reduced limit, in practice, at 20% of salary for new appointments. The Committee adopted this approach
when appointing Imran Nawaz as Chief Financial Officer during the year.
This 20% level is in line with the benefit level currently provided to a broader group of employees in the business, and represents a material
reduction from the 25%-35% level that historically applied under our current policy for executive directors. The Committee will keep
emerging practice under review ahead of formal Policy renewal at the 2020 AGM.
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Payments to past directors (audited)
Javed Ahmed retired as Chief Executive and ceased employment with the Group on 1 April 2018. His salary and other benefits all ceased
with effect from this date. As set out on page 87 of the Annual Report 2018, the Committee determined that Javed would retain Deferred
Bonus awards earned in prior years, and pro-rated interests in previously granted but unvested Performance Share Plan awards,
in accordance with our Policy and the relevant Plan rules and subject to performance conditions where applicable. In accordance with
those arrangements, the following awards have vested in the period to which this report relates:
— Deferred bonus from 2017 financial year; the value of which was previously disclosed in the single figure table on page 94 of the Annual
Report 2017
— PSP award from 2016; the number of shares having been pro-rated to reflect the proportion of the three-year vesting period during
which he was employed, and subject to the assessment of performance conditions applicable to the award, as described on page 105,
having a value on vesting of £1,484,000, based on a share price of £7.92.
The Committee has not exercised any discretion in relation to the assessment of any performance conditions or the timing of vesting,
or the basis on which relevant awards have been pro-rated.
Payments for loss of office
There have been no other payments to past directors other than as disclosed in this Report. No loss of office payments have been made
during the year.
Share awards made during the year ended 31 March 2019 (audited)
Award
Type of
award
Date of grant
Number
of shares
Face value
of award
Performance conditions
Performance
period
% of vesting
at threshold
Nick Hampton
Group Bonus Plan
(31 March 2018)1
Nil cost
option
Performance
Share Plan2
Nil cost
option
5 July 2018
22 629
£136 645 None
Two-year
deferral
5 July 2018
330 380
£1 994
999
25% FBS
adjusted operating
profit; 25% Group
adjusted profit;
50% adjusted ROCE
Three financial
years ending
31 March 2021
plus two-year
holding period
Imran Nawaz
Restricted Share
Award3
Nil cost
option
9 August
126 103
£799 997
See note 3
2018
1 August 2019
– 1 August
2020
Performance
Share Plan2,3
Nil cost
option
9 August
233 502
2018
£1 410
002
25% FBS
adjusted operating
profit; 25% Group
adjusted profit;
50% adjusted ROCE
Three financial
years ending
31 March 2021
plus two-year
holding period
n/a
15%
n/a
15%
Former director
Javed Ahmed
Group Bonus Plan
(31 March 2018)1
Nil cost
option
5 July 2018
31,044
£187 459 None
Two-year
deferral
n/a
1 Deferred bonus awards were granted under the annual bonus plan (as described on page 103). 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 2018 and is similarly included in the 2018 figure in the
single figure table on page 108 of this Report. The share allocation was made during the year ended 31 March 2019, and shown in the table above, based on
the average share price over the last three months of the preceding financial year, being 603.85 pence per share for the 2018 award. Deferred bonus awards
were subject to performance conditions in the year ended 31 March 2018, and remain subject to continued employment in accordance with the Scheme rules.
2 Under the terms of the Performance Share 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 603.85 pence per share for the 2018 award. In 2018, 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. Performance conditions applicable to PSP awards made in 2018 are described on page 105.
3 Imran Nawaz was appointed Chief Financial Officer with effect from 1 August 2018 and his remuneration details were provided on the announcement of his
appointment on 17 April 2018, and in our Annual Report 2018. Consistent with our shareholder-approved Policy on the terms of directors’ appointment,
we made provision to compensate Imran for specific short-term and long-term incentives given up by him as a consequence of him leaving his former
employer. As announced, these compensatory awards comprised a one-off Restricted Stock Award (RSA) of £800,000 worth of shares in Tate & Lyle PLC,
subject to continued employment and subject to the achievement of specified individual business performance conditions; and it was agreed that in 2018,
he received a PSP award at 300% of his full annual salary subject to normal PSP performance conditions. The RSA award was made by reference to a share
price of £6.3440, being the average price over the five dealing days following his appointment. The performance conditions attached to the RSA relate to
strategic and operational milestone activities agreed by the Committee, the detailed disclosure of which would be commercially sensitive at this time.
The RSA and 2018 PSP awards will be subject to forfeiture/repayment if he ceases to be employed in the first 36 months of employment due to his
resignation or dismissal for cause.
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G OV ERN ANC E
D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T (continued)
Share awards made in financial years to 31 March 2018 (audited)
The table below sets out the current position of share-based awards made to executive directors.
As at
31 March 2018
Awards vested
during year
(number)
(number)
Awards
lapsed during
year (number)
Awards
exercised
during year
(number)
As at
31 March 2019
(number)
Market price
on date
awards
granted
(pence)
Market price
on date
awards
exercised
(pence)2
Vesting date
Nick Hampton
Performance Share Plan1:
2015
20163
2017
Group Bonus Plan:
2016
2017
241 251
241 251
266 064
217 855
–
–
29 368
29 368
40 739
–
–
–
–
–
–
241 251
–
616.04
666.40 After 31/03/18
–
–
266 064
217 855
578.15
723.72
– After 31/03/19
– After 31/03/20
29 368
–
578.15
666.40
–
40 739
723.72
–
25/05/18
23/05/19
1 The performance conditions for the PSP awards made in 2016, 2017 and 2018 are 25% Food & Beverage Solutions adjusted operating profit; 25% Group
adjusted profit; 50% adjusted ROCE as described on page 105. The three-year performance period for these awards began on the first day of the financial
year in which the award was granted.
2 These awards are structured as nil cost options; awards were exercised with a nil exercise price.
3 The PSP award made in 2016 will vest at 75%, following the Committee’s assessment of performance conditions (as described on page 105).
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 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.
As at
1 April 2018
(number)
Options vested
during year
(number)
Options
exercised
during year
(number)
Options lapsed
during year
As at
31 March 2019
Exercise
(number)
(number)
price (pence) Exercise period
Nick Hampton
Savings-related options 2017
3,243
–
–
–
3,243
01/03/21 to
31/08/21
555.00
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GOVERNANCE
STATEMENT OF DIRECTORS’ SHAREHOLDING AND SHARE INTERESTS (AUDITED)
Personal share ownership requirements (policy on executive share ownership)
The Committee believes that 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 considered to be more demanding and extend to a greater number of senior executives in the
Group when compared with similar sized UK-listed companies.
— The Chief Executive has a target share ownership requirement of four times base salary, to be achieved within five years of appointment.
Nick Hampton was appointed Chief Executive from 1 April 2018, and as at 31 March 2019, Mr Hampton holds shares in accordance with
this policy with a value of just under four times his current salary.
— The Chief Financial Officer has a target shareholding requirement of three times base salary to be achieved within five years of
appointment. Imran Nawaz was appointed Chief Financial Officer on 1 August 2018, and as at 31 March 2019, being seven months in post,
has a meaningful interest in Company shares by virtue of the compensatory and incentive share awards made to him on appointment.
— 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 deferred shareholdings is assessed net of income tax, at the prevailing share price.
The Committee monitors progress against the share ownership requirements annually.
Post-employment shareholding requirements: having reviewed the totality of our arrangements, the Committee considers that a number
of features in our existing arrangements provide for a continuing alignment with shareholders’ interests post-employment, for example:
demanding personal shareholding requirements apply, as described above; existing good leaver provisions do not result in accelerated
vesting, so in a situation where a departing executive retains interests in share awards, these will continue in effect on a phased basis
post-employment, providing for a continuing aligned interest; and we introduced a post-vesting holding period on PSP awards from 2016.
We will keep these provisions under review as we renew our Policy in 2020.
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.
Interest in shares1
Nil cost options –
conditional on
performance2
Shares – not
conditional on
performance3
Options – not
conditional on
performance4
Total as at
31 March 2019
Total as at
31 March 2018
Chairman
Dr Gerry Murphy
Executive directors
Nick Hampton
Imran Nawaz
Non-executive directors
Paul Forman
Lars Frederiksen
Douglas Hurt
Anne Minto
Dr Ajai Puri5
Sybella Stanley
Warren Tucker
Former directors
Javed Ahmed6
20 000
–
–
–
20 000
20 000
333 460
–
814 299
359 605
10 000
15 000
10 000
8 600
10 018
4 983
4,321
–
–
–
–
–
–
–
63 368
3 243
1 214 370
988 552
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
359 605
–
10 000
15 000
10 000
8 600
10 018
4 983
4 321
10 000
15 000
10 000
8 600
10 018
4 983
–
3 431 568
965 594
82 592
5 941
4 485 695
4 485 695
1 Includes shares owned by connected persons.
2 Awards under the PSP and the RSA award made to Mr Nawaz in 2018. These awards were made as options with a nil exercise price.
3 Deferred share awards made under the Group Bonus Plan.
4 These are HMRC-approved Sharesave Plan awards.
5 Includes 8,000 shares held as 2,000 ADRs.
6 Javed Ahmed ceased to be a Director on 1 April 2018, and interests in shares (other than in the column titled 31 March 2018) are shown as at 1 April 2018.
There were no changes in Directors’ interests in the period from 1 April 2019 to 22 May 2019.
On behalf of the Board
Anne Minto OBE
Chair of the Remuneration Committee
22 May 2019
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
D I R E C T O R S ’ R E P O R T
About the Directors’ Report
The Directors’ Report comprises the
Governance section from pages 68 to 93,
the Directors’ Report on pages 112 and
113 and the Useful Information section
from pages 184 to inside back cover.
Other information that is relevant to the
Directors’ Report, and which is
incorporated by reference into the
Directors’ Report, is disclosed as follows:
— Likely future developments of the
Company (throughout the Strategic
Report)
— Human rights (page 45)
— Greenhouse gas emissions
(page 53)
— Relationship with employees
(pages 44 to 47)
— Financial instruments (Note 26)
— Post balance sheet events (Note 34).
Results and dividend
A review of the consolidated Group’s results can
be found on the inside front cover to page 51.
An interim dividend of 8.6 pence per
ordinary share was paid on 4 January 2019.
The Directors recommend a final dividend of
20.8 pence per ordinary share to be paid on
31 July 2019 to shareholders on the register
on 21 June 2019, subject to approval at
the 2019 Annual General Meeting (AGM).
The total dividend for the year is 29.4 pence
per ordinary share (2018 – 28.7 pence).
The Trustees of the Tate & Lyle PLC
Employee Benefit Trust (the EBT) have
waived their right to receive dividends over
their total holding of 4,446,449 ordinary
shares as at 31 March 2019.
Research and development
The Group spent £36 million (2018 – £35 million)
on research and development during the year.
Articles of Association
The Articles of Association set out the
internal regulation of the Company and
cover such matters as the rights of
shareholders, the appointment or removal
of Directors, and the conduct of the Board
and general meetings. Copies are available
on request and are displayed on the
Company’s website, www.tateandlyle.com.
In accordance with the Articles of Association,
Directors can be appointed or removed by the
Board or by shareholders in general meeting.
Amendments to the Articles of Association have
to be approved by at least 75% of those voting
in person or by proxy at a general meeting of
the Company. Subject to UK company law and
the Articles of Association, the Directors may
exercise all the powers of the Company,
and may delegate authorities to committees,
and may delegate day-to-day management
and decision making to individual executive
directors. Details of the Board Committees can
be found on pages 88 to 93 and on page 100.
Share capital
As at 31 March 2019, the Company had nominal
issued ordinary and preference share capital of
£119 million comprising £117 million in ordinary
shares, including £0.2 million in treasury
shares and £2 million in preference shares.
To satisfy obligations under employee share
plans, the Company issued 37,016 ordinary
shares during the year and reissued 1,757,254
ordinary shares from treasury. The Company
issued 16,783 shares during the period from
1 April 2019 to 22 May 2019. Further information
about share capital is in Note 21. Information
about options granted under the Company’s
employee share plans is in Note 29.
The Company was given authority at the
2018 AGM to make market purchases of
up to 46,577,021 of its own ordinary shares.
The Company made no purchases of its
own ordinary shares during the year ended
31 March 2019 and the EBT did not purchase
any shares during the year. This authority will
expire at the 2019 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 2019, 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 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 9.8.4C
Interest capitalised by the Group
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)
Page(s)
141
None
109
None
Not applicable
112
None
Listed company is a subsidiary of another company
Not applicable
Contracts of significance involving a Director
None
Contracts of significance involving a controlling shareholder
Not applicable
Waivers of dividends
Waivers of future dividends
112
112
Agreement with a controlling shareholder
Not applicable
(1)
(2)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
112 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
GOVERNANCE DTR Rule 5 disclosure
In the period under review to 31 March 2019,
the Company had been notified under Rule 5
of the Disclosure and Transparency Rules of
the following holdings of voting rights in
its shares:
SEB Investment
Management AB
Standard Life
Aberdeen plc
Number
of shares1
%
held1
13 996 009
2.99
30 968 958
6.62
1 As at the date of the transaction in the most
recent notification to the Company.
In the period from 1 April 2019 to
22 May 2019, there have been no changes
notified to the Company to the holdings as
disclosed above.
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$14,350
(£11,000) (2018 – US$26,200; £18,700) to
state political party committees or political
action committees, and to the campaign
committees of state or local candidates
affiliated to the major parties. In all, seven
separate donations were made, the largest
being US$5,000 and the smallest US$250.
US$19,000 (£14,600) (2018 – US$12,700;
£9,000) was also contributed by the Tate &
Lyle Political Action Committee (PAC).
Thirteen separate donations were made, the
largest being US$4,000 and the smallest
US$500. The PAC is funded entirely by US
employees. Employee contributions are
entirely voluntary and no pressure is placed
on US employees to participate. No funds
are provided to the PAC by Tate & Lyle but
under US law, an employee-funded PAC
must bear the name of the
employing company.
Directors’ statement of responsibilities
The Directors are responsible for preparing
the Annual Report, the Directors’
Remuneration Report and the financial
statements in accordance with applicable
law and 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 year.
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.
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 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 68 to 71,
confirms that, to the best of his or
her knowledge:
— The Annual Report, taken as a whole, is
fair, balanced and understandable and
provides the information necessary for
shareholders to assess the Company’s and
the Group’s position and performance,
business model and strategy
— The Group financial statements, which
have been prepared in accordance with
IFRSs as adopted by the EU, give a true
and fair view of the assets, liabilities,
financial position and profit of the Group
— The Company financial statements, which
have been prepared in accordance with
UK GAAP (United Kingdom Accounting
Standards, comprising FRS 101 ‘Reduced
Disclosure Framework’ and applicable
law) give a true and fair view of the
assets, liabilities, financial position and
profit of the Company
— The Strategic Report and the Directors’
report include a fair review of the
development and performance of the
business and the position of the Group
and the Company, together with a
description of the principal risks and
uncertainties that it faces.
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 68 to 93,
pages 112 and 113 and pages 184 to the
inside back cover and the Directors’
Remuneration Report from pages 94 to 111
of this Annual Report were approved by the
Directors on 22 May 2019.
On behalf of the Board
Claire-Marie O’Grady
Company Secretary
22 May 2019
W W W . T A T E A N D L Y L E . C O M | 113
STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION Strategy in action story
Sharpen the focus on our customers
Let’s stick together
Innovative industrial starches for
recyclable tape
We supply over 100 types of industrial starch made
from corn to the paper, building, oil drilling and
other industries. And just as with our food and
beverage customers, we’re able to help these
customers overcome the changing challenges
of their sectors.
One of our customers supplies brown paper sticking
tape to online retailers for sealing their cardboard
packaging. Our starch goes into the glue on the tape.
But when a leading retailer started using recyclable
linerboard (the thin cardboard facing onto
corrugated board), our customer’s usual tape, which
relies on pressure to create a seal, didn’t stick.
Diving into the chemistry
This apparently simple issue led to a deep
exploration of the chemistry of stickiness. Our tape
customer shared their polymerisation technology
with our scientists, and together we came up with
a ‘wettable’ adhesive.
Now our customer can supply their retailers with a
tape that’s super-sticky, protecting goods during
transit. It can’t be lifted off and reapplied, which
helps with security. And it’s easy for warehouse staff
to work with. What’s more, these properties don’t
come from industrial-strength chemicals, but from
renewable corn starch.
What made that collaboration possible was over
100 years’ experience of industrial starch
production, a longstanding relationship of trust with
our customer, and exceptional scientific expertise
and capabilities.
Who knew that something called STA-TAPE™ Waxy
Acid Modified Starch would contain all that magic?
17%
of our industrial starches
now used in packaging
and tape
114 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
Financial statements
116 Independent auditor’s
report to the members
of Tate & Lyle PLC
125 Consolidated income
statement
126 Consolidated statement
of comprehensive income
127 Consolidated statement
of financial position
128 Consolidated statement
of cash flows
129 Consolidated statement
of changes in equity
130 Notes to the consolidated
financial statements
176 Parent Company financial
statements
The industrial starch chemists at our lab
in our Decatur, Illinois, US plant
F IN ANCI AL S TAT E MENT S
Independent auditor’s report
to the members of Tate & Lyle PLC
Opinion
In our opinion:
— Tate & Lyle PLC’s Group financial statements and Parent Company financial statements (the ‘financial statements’) give a true and fair
view of the state of the Group’s and of the Parent Company’s affairs as at 31 March 2019 and of the Group’s profit for the year then ended;
— the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
— the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 ‘Reduced Disclosure Framework’,
and applicable law); and
— the financial statements have been prepared in accordance with the requirements of the Companies Act 2006, and, as regards the Group
financial statements, Article 4 of the IAS Regulation.
We have audited the financial statements of Tate & Lyle PLC which comprise:
Group
Parent Company
Consolidated statement of financial position as at 31 March 2019
Balance sheet as at 31 March 2019
Consolidated income statement for the year then ended
Statement of changes in equity for the year then ended
Consolidated statement of comprehensive income for the year
then ended
Related notes 1 to 9 to the financial statements including a
summary of significant accounting policies
Consolidated statement of changes in equity for the year then ended
Consolidated statement of cash flows for the year then ended
Related notes 1 to 36 to the financial statements, including a
summary of significant accounting policies
The financial reporting framework that has been applied in their preparation of the Group financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report
below. We are independent of the Group and Parent Company in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to principal risks, going concern and viability statement
We have nothing to report in respect of the following information in the Annual Report, in relation to which the ISAs (UK) require us to
report to you whether we have anything material to add or draw attention to:
— the disclosures in the Annual Report set out on pages 61 to 65 that describe the principal risks and explain how they are being managed
or mitigated;
— the Directors’ confirmation set out on page 60 in the Annual Report that they have carried out a robust assessment of the principal risks
facing the entity, including those that would threaten its business model, future performance, solvency or liquidity;
— the Directors’ statement set out on page 31 in the financial statements about whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their identification of any material uncertainties to the entity’s ability to continue to
do so over a period of at least twelve months from the date of approval of the financial statements;
— whether the Directors’ statement in relation to going concern required under the Listing Rules in accordance with Listing Rule 9.8.6R(3)
is materially inconsistent with our knowledge obtained in the audit; or
— the Directors’ explanation set out on page 60 in the Annual Report as to how they have assessed the prospects of the entity, 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 entity 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.
116 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
1 1 6 | T AT E & LYL E PL C ANNUAL REP OR T 2 01 9
Internal Use Only
FINANCIAL STATEMENTS
Overview of our audit approach
Key audit matters
Audit scope
— Commodity risk (Group)
— Goodwill and other intangible asset impairment (Group)
— Unrealised profit in inventory from intercompany sales (Group)
— Investment in subsidiaries (Parent Company)
— We performed an audit of the complete financial information of four components (Tate & Lyle PLC, Tate & Lyle
International Finance PLC, Tate & Lyle Ingredients Americas LLC, and Tate & Lyle Sucralose LLC) and audit
procedures on specific balances for a further four components (Tate & Lyle Brasil S.A., Tate & Lyle Trading
(Shanghai) Co. Ltd, Tate & Lyle Slovakia, s.r.o., and Tate & Lyle Insurance (Gibraltar) Limited).
— The components where we performed full or specific audit procedures accounted for 85% of our profit measure
(as defined below), 80% of revenue and 81% of total assets.
Materiality
— Overall Group materiality of £15 million which represents 5% of profit before tax adjusted for exceptional items
and the Group’s share of tax of joint ventures.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we
identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a
whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
Key observations communicated
to the Audit Committee
No matters were identified
that would indicate that the
risk management and
accounting policies were
not being followed.
Based on the procedures
performed, we conclude that
the valuation of co-product
inventory and forward purchase
and sale contracts are
materially correct.
Risk
Our response to the risk
Commodity co-product risk (Group)
The fair value adjustment of co-product
inventory and forward purchase and sale
contracts £18 million (2018 – £17 million)
We understood and evaluated management’s process for
managing the price risk inherent within its co-product
positions and compared it with management’s underlying
risk management and accounting policies.
The Group is exposed to price risk on the three
co-products (corn gluten meal, corn gluten
feed and corn oil) that result from the corn
milling process.
The price risk associated with the three
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 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.
The valuation of co-products is identified as a
key audit matter due to the significant
judgement involved in the valuation of
co-product positions.
Refer to the Audit Committee Report (page 90);
accounting policies (page 130); and Notes 2, 14, 26
and 27 of the consolidated financial statements
The procedures detailed below were performed
principally by component audit teams.
To address the co-product valuation risk we performed
the following principal procedures:
— Lowered thresholds when determining sample sizes
for testing prices used in the valuation of co-product
inventory and forward sale and purchase contracts
— Compared market prices used to contracted prices of
industry companies that are collated by and quoted in
Jacobsens market publication and the Wall Street Journal
— Given the correlation of corn meal to soybean meal
(quoted on the Chicago Mercantile Exchange), we
compared corn meal prices to soybean meal prices to
assist in evaluating the reasonableness of selected
forward corn meal prices
— Tested the clerical accuracy of the calculations of
gains or losses on contracts and reconciled values to
the general ledger
— Compared selected market prices to the limited
number of broker quotes obtained by management
— Confirmed the terms of a sample of sales and
purchase contracts with counterparties
— Selected a sample of contracts executed prior to and
subsequent to period end and compared the prices on
the executed contracts to the market prices used in
valuation. For any significant variances we held
discussions with the traders to understand the variances
— Performed trader inquiries to understand market
dynamics and factors impacting pricing as of period end
— Evaluated the adequacy and transparency of
commodities disclosures.
Internal Use Only
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Key observations communicated
to the Audit Committee
We reported our conclusions to
the Audit Committee that the
assumptions relating to the
impairment models fell within
acceptable ranges.
Based on the procedures
performed, we agree with
management’s conclusion
that no material impairment
of goodwill and acquired
intangibles or development
costs was required at year end.
F IN ANCI AL S TAT E MENT S
Independent auditor’s report
to the members of Tate & Lyle PLC (continued)
Risk
Our response to the risk
Assessment of the carrying value of goodwill
and other intangible assets (Group)
£342 million (2018 – £360 million)
At 31 March 2019 the Group was carrying
£198 million of goodwill and £144 million
of other non-current intangible assets.
Management applies judgement in assessing
the recoverability of these assets, particularly in
estimating future cash flows and deriving the
appropriate discount rates. As a result, there is
a risk that impairments are not identified and
the value of the Group’s non-current assets
is overstated.
Goodwill is now allocated by reportable
segment, Food & Beverage Solutions and
Primary Products. This is because the
continued integration of the operating
businesses means that the synergies of the
related acquisitions are now considered to be
realised principally at the Group operating
segment reporting level. As a result, there was
a reallocation of goodwill at the Food &
Beverage Solutions and Primary Products
division level based on an assessment of their
relative fair values.
Other intangible assets total £144 million, of
which the capitalisation and recoverability of
development costs is the most subjective.
Refer to the Audit Committee Report (page 90);
accounting policies (page 132); and Note 18 of the
consolidated financial statements
Procedures on the carrying value of goodwill and
acquired intangible assets were performed centrally
by the Group audit team. In scope component teams
completed testing where intangible assets were held
locally. Procedures completed were:
Goodwill and acquired intangibles
— We developed our understanding of the methodology
applied by management in performing its impairment
test for the cash generating units (CGUs). We challenged
the determination of the CGUs themselves focusing
on the justification for the reallocation in the year and
the basis on which it was performed
— We walked through the key controls over the goodwill
and other acquired intangibles process
— We reviewed and challenged the key information
and assumptions used in determining the valuation.
These assumptions include the discount rate, where
we re-performed the calculation with the support of
our specialists, and cash flow forecasts, which we
compared to historic trends, industry trends and
approved Board forecasts, and long-term growth
rates, which we compared to market projections
— We also conducted a sensitivity analysis to
understand by how much these projections would
need to change by for there to be an indicator
of impairment
— We challenged management’s consideration as
to whether indicators of impairment existed for
acquired intangible assets, through reference to the
performance of the specific assets and projections for
their ongoing use, leveraging the work performed at
the CGU level where appropriate
— We assessed the adequacy of the disclosures
made against the requirements of IAS 36 Impairment
of assets.
For development costs specifically:
— We walked through management’s process,
identifying key controls and seeking evidence of
sufficient documentary evidence of project approvals.
This included minutes from monthly management
meetings, where the viability of individual projects are
assessed and documented
— We vouched a sample of these additions to invoices to
confirm the valuation of the capitalised amounts
— We compared projected cash flows of individual
projects, challenging the recoverability of these
projects when compared to management’s forecasts.
118 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
1 1 8 | T AT E & LYL E PL C ANNUAL REP OR T 2 01 9
Internal Use Only
FINANCIAL STATEMENTS
Risk
Our response to the risk
Key observations communicated
to the Audit Committee
Unrealised profit in inventory from
intercompany sales (Group)
There are significant intercompany flows from
manufacturing plants to sales entities globally.
Due to the volume of intercompany sales in the
Group, adjustments made for unrealised profits
are material and could pose a risk for
management manipulation.
The principal risk is in relation to the Food
& Beverage Solutions division including
Sucralose where a significant proportion
of products sold are sourced from Group
manufacturing facilities.
Procedures on the unrealised profit in inventory on
Based on the procedures
performed, we are satisfied that
the inputs to the calculation of
unrealised profit in inventory
calculation are appropriate and
complete and the elimination
adjustment is fairly stated.
intercompany sales were performed centrally by the
Group audit team.
We performed the following procedures to address
the specific risk in Food & Beverage Solutions
including Sucralose:
— We completed a walkthrough of the process,
identifying the key controls and inputs into
the calculations
— We discussed the year-end calculation with divisional
management and the shared service centre to
validate our understanding
— We tested the key inputs to the year-end calculation
on a sample basis, in particular intercompany margin
and inventory balances, agreeing to underlying
records and transfer pricing documentation
— We confirmed the posting of the year-end journal
entries to the general ledger
— We performed overall analytical review procedures
by segment on the total balance at the year-end as
compared to the prior year-end, investigating any
material variances
— We performed a reasonableness test applying
the third party sale margins to intercompany stock
on hand and compared this to the year-end
unrealised profit in inventory from intercompany
sale adjustment.
Investment in subsidiaries (Parent Company)
Procedures performed by the Group audit team were:
Based on the procedures
£1,070 million (2018 – £1,037 million)
— We obtained details of the investment carrying
The Parent Company’s principal activity is that
of a holding company for the investment in a
number of subsidiaries. As such the carrying
value of these investments is a key audit matter.
Refer to accounting policies (page 178);
and Note 2 of the Parent Company
financial statements
amounts in subsidiaries and compared this to the
Parent Company’s share of the net assets of
those entities
— We leveraged the Group impairment work to test
whether the carrying value of investments is
supportable at year end and confirmed
management’s conclusion that no impairment was
required. This was primarily substantiated through
mapping the output of the Group CGU testing to the
relevant subsidiaries that the parent entity holds,
and ensuring that the value in use for each exceeded
the carrying value
— We compared the market capitalisation of the Group
to the carrying value of the investments to identify if
any indicators of impairment existed.
performed, we believe that the
carrying value of the
investments recognised in the
Parent Company balance sheet
is supportable.
The risks of material misstatement as set out in the table above are consistent with those reported by Tate & Lyle PLC’s previous external
auditor, with the exception of the inclusion in 2019 of unrealised profit in inventory from intercompany sales and the removal of complex tax
accounting and uncertain tax positions (Group) and retirement benefit obligations and assets (Group) which we do not consider to be key
audit matters this year.
Internal Use Only
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
F IN ANCI AL S TAT E MENT S
Independent auditor’s report
to the members of Tate & Lyle PLC (continued)
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each
entity within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. We take into account
size, risk profile, the organisation of the Group and effectiveness of group-wide controls, changes in the business environment and other
factors such as recent internal audit results when assessing the level of work to be performed at each entity.
Of the eight components selected, we performed an audit of the complete financial information of four components (‘full scope components’)
which were selected based on their size or risk characteristics. For the remaining four components (‘specific scope components’),
we performed audit procedures on specific accounts within that component that we considered had the potential for the greatest impact
on the significant accounts in the financial statements either because of the size of these accounts or their risk profile.
The reporting components where we performed audit procedures accounted for 85% of our profit measure, 80% of the Group’s revenue and
81% of the Group’s total assets. For the current year, the full scope components contributed 81% of our profit measure (as defined above),
68% of the Group’s revenue and 76% of the Group’s total assets. The specific scope components contributed 4% of our profit measure (as
defined above), 12% of the Group’s revenue and 5% of the Group’s total assets. The audit scope of these components may not have included
testing of all significant accounts of the component but will have contributed to the coverage of significant accounts tested for the Group.
Of the remaining components that together represent 15% of our profit measure (as defined above), 20% of the Group’s revenue and
19% of the Group’s total assets, none are individually greater than 10% of our profit measure (as defined above). For these components,
we performed other procedures, including analytical review, specified procedures on material accounts, testing of consolidation journals
and intercompany eliminations and foreign currency translation recalculations to respond to any potential risks of material misstatement
to the Group financial statements.
The charts below illustrate the coverage obtained from the work performed by our audit teams.
P R O F I T
*
R E V E N U E
T O T A L A S S E T S
81% – Full scope components
68% – Full scope components
76% – Full scope components
4% – Specific scope components
12% – Specific scope components
5% – Specific scope components
15% – Other procedures
20% – Other procedures
19% – Other procedures
* Profit as defined above
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FINANCIAL STATEMENTS
Involvement with component teams
In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each of the
components by us, as the Group audit engagement team, or by component auditors from other EY global network firms operating under
our instruction. Of the four full scope components, audit procedures were performed on two of these directly by the Group audit team,
with the remaining two being completed by component auditors. For the four specific scope components, where the work was performed
by component auditors, we determined the appropriate level of involvement to enable us to determine that sufficient audit evidence had
been obtained as a basis for our opinion on the Group as a whole.
At the start of the audit, a global team planning event was held in Chicago, with representatives from the UK Group, US and Polish shared
service centre teams in attendance. The UK Group team held planning calls with all other in-scope locations. Detailed instructions were
sent to all in-scope teams. These instructions covered the significant areas that should be addressed by the component team auditors
(which included the relative risks of material misstatement detailed above) and set out the information to be reported back to the Group
audit team. In addition, during the period the Senior Statutory Auditor or other senior members of the Group audit team visited the shared
service centre in Poland, Brazil and the US. Additionally, we met with the non-EY firm audit team for the Group’s joint venture in Mexico.
These visits involved meeting with our component team to discuss and direct its audit approach, reviewing and understanding the
significant audit findings in response to the risk areas, holding meetings with local management, undertaking plant tours and obtaining an
update on IT systems and local regulatory matters including tax, pensions and legal. The Group audit team interacted regularly with the
component teams and Polish shared service centre audit team during various stages of the audit, reviewed key working papers and were
responsible for scope and direction of the audit process. This, together with the additional procedures performed at Group level, gave us
appropriate evidence for our opinion on the Group financial statements.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit
and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group to be £15 million, which is 5% of profit before tax adjusted for exceptional items and the Group’s
share of tax of joint ventures. Profit before tax provided the most relevant performance measure, as the exceptional items were non-
recurring and not related to the ongoing trading of the Group.
Starting basis
— £240 million
— Profit before tax
Add back
adjustments
— £58 million exceptional items
— £12 million Group’s share of tax of joint ventures
Materiality
— Totals £310 million (materiality basis)
— Materiality of £15 million (5% of materiality basis)
We determined materiality for the Parent Company to be £12.6 million, which is 0.5% of total assets.
Internal Use Only
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F IN ANCI AL S TAT E MENT S
Independent auditor’s report
to the members of Tate & Lyle PLC (continued)
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that
performance materiality was 75% of our planning materiality, namely £11.3 million. We have set performance materiality at this percentage
due to our assessment of the control environment and judgement.
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is undertaken
based on a percentage of total performance materiality. The performance materiality set for each component is based on the relative scale
and risk of the component to the Group as a whole, and our assessment of the risk of misstatement at that component. In the current year,
the range of performance materiality allocated to components was £11.3 million to £1.1 million.
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £0.75 million, which is set
at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other
relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the Annual Report and accounts set out on pages 182 to 189, other than the
financial statements and our auditor’s report thereon. The Directors are responsible for the other information.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to
report that fact.
We have nothing to report in this regard.
In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the other
information and to report as uncorrected material misstatements of the other information where we conclude that those items meet the
following conditions:
— Fair, balanced and understandable set out on page 113 – the statement given by the Directors that they consider the Annual Report and
financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to
assess the Group’s performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; or
— Audit Committee reporting set out on page 89 – the section describing the work of the Audit Committee does not appropriately address
matters communicated by us to the Audit Committee or is materially inconsistent with our knowledge obtained in the audit; or
— Directors’ statement of compliance with the UK Corporate Governance Code set out on page 77 – the parts of the Directors’ statement
required under the Listing Rules relating to the Company’s compliance with the UK Corporate Governance Code containing provisions
specified for review by the auditor in accordance with Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant
provision of the UK Corporate Governance Code.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies
Act 2006.
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.
122 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
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FINANCIAL STATEMENTS
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the
audit, we have not identified material misstatements in the strategic report or the Directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if,
in our opinion:
— 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 Parent Company financial statements and the part of the Directors’ remuneration report to be audited are not in agreement with the
accounting records and returns; or
— certain disclosures of Directors’ remuneration specified by law are not made; or
— we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ statement of responsibilities set out on page 113, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group and Parent Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
The objectives of our audit, in respect to fraud, are; to identify and assess the risks of material misstatement of the financial statements
due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through
designing and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity
and management.
Our approach was as follows:
— We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most
significant frameworks which are directly relevant to specific assertions in the financial statements are those that relate to the reporting
framework (IFRS, FRS 101, the Companies Act 2006 and the UK Corporate Governance Code) and the relevant tax compliance regulations
in the jurisdictions in which the Group operates. In addition, we concluded that there are certain significant laws and regulations which
may have an effect on the determination of the amounts and disclosures in the financial statements being the Listing Rules of the UK
Listing Authority, and those laws and regulations relating to health and safety and employee matters. We understood how the Group is
complying with those frameworks by making enquires of management, internal audit, those responsible for legal and compliance
procedures and the company secretary. We corroborated our enquiries through our review of Board minutes and papers provided to the
Audit Committee.
— We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur by
meeting with management from various parts of the business to understand where it considered there was susceptibility to fraud. We
also considered performance targets and their propensity to influence efforts made by management to manage earnings or influence the
perceptions of analysts. We considered the programmes and controls that the Group has established to address risks identified, or that
otherwise prevent, deter and detect fraud; and how senior management monitors those programmes and controls. Where the risk was
considered to be higher, we performed audit procedures to address each identified fraud risk. These procedures included testing manual
journals and were designed to provide reasonable assurance that the financial statements were free from fraud or error.
— Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures
involved: journal entry testing, with a focus on manual consolidation journals and journals indicating large or unusual transactions based
on our understanding of the business; enquiries of legal counsel, Group management, internal audit, and divisional management and all
full and specific scope management; and focused testing, as referred to in the key audit matters section above.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website
at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor’s Report.
Internal Use Only
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
F IN ANCI AL S TAT E MENT S
Independent auditor’s report
to the members of Tate & Lyle PLC (continued)
Other matters we are required to address
— Following the recommendation of the Audit Committee, we were appointed as auditor by the shareholders and signed an engagement
letter on 7 November 2018. We were appointed by the Company at the AGM on 26 July 2018 to audit the financial statements for the
period ended 31 March 2019. The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the
Parent Company and we remain independent of the Group and the Parent Company in conducting the audit.
— The audit opinion is consistent with the additional report to the Audit Committee.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Lloyd Brown
(Senior statutory auditor)
For and on behalf of Ernst & Young LLP, Statutory Auditor
London
22 May 2019
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Internal Use Only
FINANCIAL STATEMENTS
Consolidated income statement
Continuing operations
Sales
Operating profit
Finance income
Finance expense
Share of profit after tax of joint ventures and associates
Profit before tax
Income tax expense
Profit for the year – continuing operations
Profit for the year – discontinued operations
Profit for the year – total operations
Notes
5
6
10
10
20
11
Profit for the years presented from total operations is entirely attributable to owners of the Company.
Earnings per share
Continuing operations:
— basic
— diluted
Total operations:
— basic
— diluted
Analysis of adjusted profit for the year – continuing operations
Profit before tax
Adjusted for:
Net exceptional charge/(gain)
Amortisation of acquired intangible assets
Adjusted profit before tax
Adjusted income tax expense
Adjusted profit for the year
12
12
8
18
4
4, 11
4
Year ended 31 March
2019
£m
2 755
236
5
(31)
30
240
(59)
181
–
181
2018
£m
2 710
290
2
(34)
28
286
(23)
263
2
265
Pence
Pence
39.2p
38.6p
39.2p
38.6p
£m
240
58
11
309
(65)
244
57.0p
56.1p
57.4p
56.5p
Restated*
£m
286
(2)
12
296
(64)
232
* Comparatives restated as the Group now includes net retirement benefit interest and the associated tax in its alternative performance measures.
Refer to Note 1.
Internal Use Only
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
F IN ANCI AL S TAT E MENT S
Consolidated statement of comprehensive income
Year ended 31 March
Profit for the year
Other comprehensive income/(expense)
Items that have been/may be reclassified to profit or loss:
Gain/(loss) on currency translation of foreign operations
Fair value (loss)/gain on net investment hedges
Share of other comprehensive income/(expense) of joint ventures and associates
Amounts transferred to the income statement upon disposal of associate
Fair value gain on cash flow hedges transferred to the income statement
Fair value gain on available-for-sale financial assets
Tax effect of the above items
Items that will not be reclassified to profit or loss:
Re-measurement of retirement benefit plans:
– return on plan assets
– net actuarial (loss)/gain on retirement benefit obligations
Changes in the fair value of equity investments at fair value through OCI
Tax effect of the above items
Total other comprehensive income/(expense)
Total comprehensive income
Analysed by:
– continuing operations
– discontinued operations
Total comprehensive income
Total comprehensive income is entirely attributable to owners of the Company.
Notes
22
22
20, 22
22, 32
22
22
11, 22
28
28
17, 22
11
2019
£m
181
75
(24)
4
–
–
–
–
55
29
(34)
2
10
7
62
243
243
–
243
2018
£m
265
(122)
39
(9)
(1)
(4)
3
–
(94)
2
41
–
(33)
10
(84)
181
179
2
181
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Internal Use Only
FINANCIAL STATEMENTS
Consolidated statement of financial position
Notes
2019
£m
At 31 March
2018
£m
ASSETS
Non-current assets
Goodwill and other intangible assets
Property, plant and equipment
Investments in joint ventures
Investments in equities
Available-for-sale financial assets
Retirement benefit surplus
Deferred tax assets
Trade and other receivables
Derivative financial instruments
Current assets
Inventories
Trade and other receivables
Current tax assets
Derivative financial instruments
Cash and cash equivalents
TOTAL ASSETS
EQUITY
Capital and reserves
Share capital
Share premium
Capital redemption reserve
Other reserves
Retained earnings
Equity attributable to owners of the Company
TOTAL EQUITY
LIABILITIES
Non-current liabilities
Borrowings
Retirement benefit deficit
Deferred tax liabilities
Provisions
Trade and other payables
Derivative financial instruments
Current liabilities
Borrowings
Trade and other payables
Provisions
Current tax liabilities
Derivative financial instruments
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
18
19
20
17
17
28
11
16
26
14
16
11
26
15
21
21
22
24
28
11
30
23
26
24
23
30
11
26
342
982
102
59
–
207
3
2
–
1 697
434
325
4
48
285
1 096
2 793
117
406
8
217
741
1 489
1 489
373
183
46
20
–
1
623
224
342
24
45
46
681
1 304
2 793
360
965
85
–
37
178
7
3
8
1 643
419
294
1
24
190
928
2 571
117
406
8
159
677
1 367
1 367
554
160
42
15
10
21
802
16
312
5
57
12
402
1 204
2 571
The notes on pages 130 to 175 form part of these financial statements. The consolidated financial statements on pages 125 to 175 were
approved by the Board of Directors on 22 May 2019 and signed on its behalf by:
Nick Hampton
Director
Imran Nawaz
Director
Internal Use Only
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
F IN ANCI AL S TAT E MENT S
Consolidated statement of cash flows
Cash flows from operating activities
Profit before tax from continuing operations
Adjustments for:
— depreciation of property, plant and equipment
— amortisation of intangible assets
— share-based payments
— exceptional income statement items
— net finance expense
— share of profit after tax of joint ventures and associates
Net retirement benefit obligations, comprising:
— accelerated US defined benefit schemes contribution (exceptional)
— underlying funding
Changes in working capital and other non-cash movements
Cash generated from continuing operations
Net income tax paid, comprising:
— cash tax benefit on accelerated contribution (exceptional)
— net underlying income tax paid
Interest paid
Cash used in discontinued operations
Net cash generated from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Disposal of property, plant and equipment (exceptional)
Investments in intangible assets
Disposal of associates
Purchase of equity investments
Disposal of equity investments
Purchase of available-for-sale financial assets
Disposal of available-for-sale financial assets
Acquisition of non-controlling interest
Interest received
Dividends received from joint ventures and associates
Sale and leaseback of railcars (exceptional)
Net cash used in investing activities
Cash flows from financing activities
Purchase of own shares including net settlement
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
Cash and cash equivalents
Balance at beginning of year
Net increase/(decrease) in cash and cash equivalents
Currency translation differences
Balance at end of year
Notes
19
18
29
8
10
20
8
8
8
17
17
32
20
8
21, 29
13
25
25
15
Year ended 31 March
2019
£m
240
112
40
18
51
26
(30)
–
(25)
(16)
416
–
(58)
(28)
–
330
(103)
3
(27)
–
(20)
3
–
–
(9)
5
21
16
2018
£m
286
114
40
15
(4)
32
(28)
(56)
(38)
(36)
325
20
(31)
(27)
(1)
286
(111)
–
(20)
5
–
–
(8)
4
–
2
26
–
(111)
(102)
(8)
5
(1)
(2)
(134)
(140)
190
79
16
285
(27)
4
(77)
(1)
(131)
(232)
261
(48)
(23)
190
A reconciliation of the movement in cash and cash equivalents to the movement in net debt is presented in Note 25.
128 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
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Internal Use Only
FINANCIAL STATEMENTS
Consolidated statement of changes in equity
Share
capital
and share
premium
£m
523
–
–
–
–
–
–
523
–
–
–
–
–
–
–
523
At 1 April 2017
Profit for the year – total operations
Other comprehensive (expense)/income
Total comprehensive (expense)/income
Share-based payments, net of tax
Purchase of own shares to trust or treasury (Note 21)
Dividends paid (Note 13)
At 31 March 2018
Profit for the year – total operations
Other comprehensive income
Total comprehensive income
Hedging losses transferred to inventory
Transactions with owners:
Share-based payments, net of tax
Purchase of own shares including net settlement (Note 21)
Dividends paid (Note 13)
At 31 March 2019
Total equity is entirely attributable to owners of the Company.
Dividends on ordinary shares (pence per share)
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
Capital
redemption
reserve
£m
Other
reserves
£m
Retained
earnings
£m
8
–
–
–
–
–
–
8
–
–
–
–
–
–
–
8
253
–
(94)
(94)
–
–
–
159
–
57
57
1
–
–
–
217
Note
13
13
13
13
Total
equity
£m
1 332
265
(84)
181
12
(27)
(131)
1 367
181
62
243
1
20
(8)
(134)
1 489
548
265
10
275
12
(27)
(131)
677
181
5
186
–
20
(8)
(134)
741
Year ended 31 March
2019
Pence
2018
Pence
8.6
20.8
29.4
8.6
20.3
28.9
8.4
20.3
28.7
8.4
19.8
28.2
Internal Use Only
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
F IN ANCI AL S TAT E MENT S
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 three reportable
segments: Food & Beverage Solutions, Sucralose and Primary
Products. Segment information is presented in Note 5.
provide investors with additional information about the performance
of the business which the Directors consider to be valuable.
Reconciliations of the alternative performance measures to the
most directly comparable IFRS measures are presented in Note 4.
Restatement of alternative performance measures
Following the payments in the year ended 31 March 2018 to enhance
the funding status of the Group’s US pension schemes which reduced
net retirement benefit interest to an immaterial level, the Group
now includes net retirement benefit interest and the associated tax
in its alternative performance measures. The adjusted results for
the year ended 31 March 2018 have been restated accordingly.
Accounting period
The Group’s annual financial statements are drawn up to 31 March.
These financial statements cover the year ended 31 March 2019
with comparative financials for the year ended 31 March 2018.
Adjusted profit before tax
Adjusted income tax expense
Adjusted profit for the year
Continuing operations
£m unless otherwise stated
Year ended 31 March 2018
As
reported
Adjusting
items
Restated
301
(66)
235
(5)
2
(3)
296
(64)
232
Basis of accounting
The consolidated financial statements on pages 125 to 175 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 have been consistently
applied throughout the year. Descriptions and specific accounting
policy information on how the Group has applied the requirements
of IFRS are included throughout the notes to these financial
statements. All amounts are rounded to the nearest million,
unless otherwise indicated.
Foreign currency
The consolidated financial statements are presented in pounds
sterling, which is also the Company’s functional currency.
Adjusted basic earnings per share
Adjusted diluted earnings per share
50.9p
50.1p
(0.6p)
(0.7p)
50.3p
49.4p
Adjusted effective tax rate
21.9%
(0.4%)
21.5%
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.
2. 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.
Where changes in constant currency are presented, they are
calculated by retranslating current year results at prior year
exchange rates. Calculations of changes in constant currency have
been included in ‘Additional information’ within this document.
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.
Accounting standards adopted during the year
In the current year, the Group has adopted, with effect from
1 April 2018, the following new accounting standards:
— IFRS 9 Financial instruments
— IFRS 15 Revenue from contracts with customers
In accordance with the transitional provisions in IFRS 9 and IFRS 15
comparative figures have not been restated.
The adoption of these new accounting standards has not had a
material effect on the Group’s financial statements. Refer to
Note 35 for further details.
Alternative performance measures
The Group also presents alternative performance measures,
including adjusted operating profit, adjusted profit before tax,
adjusted earnings per share and adjusted free cash flow, which are
used for internal performance analysis and incentive compensation
arrangements for employees. They are presented because they
Fair value of purchases, sales and inventory of corn-based
products (Notes 14, 26 and 27)
The Group manages its US net corn position, comprising the
purchase, sale and inventory of corn and corn-based goods,
including co-products, on a net basis. Each element of the net corn
position is marked to market on the basis that carrying all elements
of the position at market value aligns with the underlying economics
of the business. The Group uses financial instruments (mainly corn
futures contracts) to manage this net position.
There is judgement used in the application of fair value accounting
and estimation uncertainty in determining those fair values.
Corn and co-product positions in Europe are measured and carried
at the lower of cost and net realisable value, since the European
business does not currently have the potential to hedge corn price
risk on a similar basis to the US.
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FINANCIAL STATEMENTS
2. SIGNIFICANT JUDGEMENTS
AND ESTIMATES continued
Fair value of purchases, sales and inventory of corn-based
products (Notes 14, 26 and 27) continued
Year ended 31 March
Corn purchase contracts
Corn and co-products sale
contracts
Financial instrument products
Total recorded in derivative
financial instruments (Note 26)
Footnotes
(a)
(b)
(c)
Corn and co-products inventory
(d)
Less: futures contracts held on
behalf of customers*
Net corn position
2019
£m
(10)
41
(5)
26
(14)
3
15
2018
£m
5
6
–
11
6
(2)
15
* Movements on these items do not affect the income statement.
Key sources of judgement
Each element of the US net corn position is accounted for as follows:
(a) Contracts for the physical purchase of corn are marked to
market in accordance with IFRS 9 with any gains or losses
recognised immediately in the income statement. Fair value is
determined by reference to the Chicago Mercantile Exchange.
These are principally classified as Level 2 Financial instruments
(refer to Note 26).
(b) Contracts for the sale of corn-based finished goods, including
co-products, are marked to market in accordance with IFRS 9
with any gains or losses recognised immediately in the income
statement. Contracts for the sale of corn and corn-based
products are deemed to be ‘net settled’ as there is considered to
be an established practice of settling similar contracts on a net
basis. Fair value is determined by reference to management’s
own assessment of future pricing and the Chicago Mercantile
Exchange as applicable. These are principally classified as
Level 3 Financial instruments (refer to Note 26).
(c) Financial instruments (mainly corn futures contracts) are
carried at fair value with any gains or losses recognised
immediately in the income statement. Fair value is determined
by reference to quoted prices for these instruments on the
Chicago Mercantile Exchange. These are classified as Level 1
Financial instruments (refer to Note 26).
(d) Corn inventories are measured at net realisable value reflecting
an established practice within the industry. Gains or losses are
recognised immediately in the income statement. The net
realisable value of inventory is considered to be the same
as its fair value as it is referenced to sales contracts which
themselves are recognised at fair value. Fair value is determined
by reference to management’s own assessment of future pricing
and the Chicago Mercantile Exchange as applicable.
Key sources of estimation uncertainty
Management uses estimates in deriving these fair values, which
involves calculating the basis and the price at which the Group will
purchase or sell its net corn position in the future. Basis refers to the
difference between the futures price of corn and the local cash price.
The inputs in these calculations are classified as observable where
referenced to a quoted market or unobservable when determined by
in-house experts, with reference to sources such as the expected
pricing for co-products.
The Group discloses its sensitivity to the corn price in Note 27
and valuation techniques and sensitivity analysis on the price of
co-products and basis (Level 3 financial instruments) in Note 26.
Due to the complexity and interdependence of related assumptions,
the overall net realised value could be different.
Taxation (Note 11)
Key sources of estimation uncertainty
The key sources of estimation uncertainty affecting the sustainability
of the Group’s effective tax rate are as follows:
— Changes to tax legislation: changes in the US or in other
jurisdictions in which the Group operates, including the application
of legislation determining taxable income in a given jurisdiction,
could materially impact the effective tax rate in the future.
— The timing of recognising tax benefits from brought-forward
losses in the UK: the extent of UK taxable profits utilised in
subsequent years may be subject to variability, impacting the
Group’s tax charge.
— Material changes in the geographic mix of profits: the Group’s
effective tax rate is sensitive to the geographic mix of profits. If the
geographic mix of profits were to change materially, through
changes in the composition of the Group’s business or changes in
performance, the effective tax rate could change materially.
— 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. Assessment of uncertainties regarding enquiries raised
and additional tax assessments issued are made using in-house
tax experts, professional firms and previous experience as
applicable. Provisions if required have been measured using the
most likely outcome approach. The outcome of these challenges is
inherently uncertain, potentially resulting in a different tax charge
from the amounts initially provided. At 31 March 2019, the Group
carried provisions in respect of uncertain tax positions totalling
£52 million (2018 – £57 million).
Retirement benefit plans (Note 28)
At 31 March 2019, the present value of the benefit obligations of the
plans was £1,647 million (2018 – £1,612 million). The present value
of the benefit obligations is based on key assumptions including
actuarial estimates of the future benefits that will be payable to the
members of the plans. Changes to key assumptions could have a
material impact on the reported amounts.
Key source of judgement
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 UK
schemes are currently in a net surplus position of £181 million
(2018 – £157 million).
The Group considers that it has an unconditional right to the surplus
relating to the UK plan as the scheme rules state that as agreed
with the trustees any surplus should be returned to the Group in the
event that there are no members left in the pension scheme.
Key sources of estimation uncertainty
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 inflation rates. Sensitivity
analysis is included in Note 28.
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F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
2. SIGNIFICANT JUDGEMENTS
AND ESTIMATES continued
Retirement benefit plans (Note 28) continued
Key sources of estimation uncertainty continued
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.
Exceptional items (Note 8)
Key source of judgement
Exceptional items comprise items of income, expense and cash
flow, including tax items that: are material in amount; and are
outside the normal course of business or relate to events which do
not frequently recur, 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, expense and cash flow 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.
For tax items to be treated as exceptional, amounts must be
material and their treatment as exceptional enable a better
understanding of the Group’s underlying financial performance.
Exceptional items in the Group’s financial statements are classified
on a consistent basis across accounting periods.
3. KEY ACCOUNTING POLICIES
The consolidated financial statements have been prepared under
the historical cost convention, modified in respect of the revaluation
to fair value of certain investments in equities, derivative financial
instruments, certain inventories, assets held by defined benefit
pension plans and intangible and tangible assets acquired in a
business combination.
Descriptions and specific accounting policy information on how the
Group has applied the requirements of IFRS are included
throughout the notes to these financial statements.
Key accounting policies, where information can be found in the
applicable note, include:
— Revenue recognition (Note 5)
— Income taxes (Note 11)
— Goodwill and other intangible assets (Note 18)
— Foreign currency translation of subsidiaries (Note 22)
— Financial instruments (Note 26)
— Retirement benefit obligations (Note 28)
— Share-based payments (Note 29)
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 2018, and have not been adopted early:
IFRS 16 Leases (effective for the year commencing 1 April 2019)
The standard eliminates the classification of leases as either
operating or finance leases and introduces a single accounting
model, requiring the recognition of lease commitments on the
statement of financial position as liabilities and the recognition of
associated ‘right-of-use’ (ROU) assets if the recognition criteria is
met. The standard has no economic impact on the Group. It does
not affect how the business is run and has no impact on cash flows.
The Group intends to use the modified retrospective transition
approach and as permitted by the standard will not restate
comparatives. Wherever practicable the Group will recognise ROU
assets at the present value of the future lease payments at the
original start of each lease, net of the implied accumulated
depreciation up to the date of adoption of the standard.
The Group expects that the impact of adoption as at 1 April 2019 will
be to create ROU assets of around £150 million recognised within
non-current assets and lease liabilities of around £170 million
recognised within current and non-current liabilities.
Key points arising on the adoption of the standard are as follows:
1. There will be a reduction in operating expenses and an
increase in finance costs as operating lease costs are replaced
with depreciation and lease interest expense. The overall
impact on the income statement is expected to reduce adjusted
diluted earnings per share growth in the 2020 financial year by
circa 1 percent.
2. Upon adoption net debt is likely to increase by around £170
million, reflecting the value of lease liabilities brought onto the
balance sheet. Net debt to EBITDA is expected to increase by
around 0.3 times.
3. Adjusted free cash flow, one of the Group’s alternative
performance measures, is expected to increase by around
£30 million to £35 million as lease payments will be classified
as financing rather than operating cash outflows.
4. The Group has opted to use the available practical expedients
in respect of leases of less than 12 months duration and
leases for low value items and excluded them from the scope
of IFRS 16.
5. The adoption of IFRS 16 will require the Group to make a
number of judgements, estimates and assumptions.
These include:
— The term of each lease is assumed to be the original lease
term unless management judges that it is reasonably
certain to exercise options to extend the lease.
— The discount rates used to discount future lease payments
are the Group’s estimated incremental borrowing rates
applicable to each asset. These rates reflect the underlying
lease terms and are based on observable inputs.
IFRIC 23 Uncertainty over Income Tax Treatments (effective for the
year commencing 1 April 2019)
The interpretation is to be applied to the determination of taxable
profit, tax bases, unused tax losses, unused tax credits and tax
rates, when there is uncertainty over income tax treatments under
IAS 12. The financial impact of this, together with any other
implications of this interpretation is not expected to have a material
impact on the Group’s financial statements.
No other new standards, new interpretations or amendments
to standards or interpretations have been published which
are expected to have a significant impact on the Group’s
financial statements.
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FINANCIAL STATEMENTS 4. RECONCILIATION OF ALTERNATIVE PERFORMANCE MEASURES
Income statement 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 (excluded as they are material in amount; and are outside the normal course of business or relate to events which do
not frequently recur, 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); and
— Tax on the above items and tax items that themselves meet these definitions. For tax items to be treated as exceptional, amounts must
be material and their treatment as exceptional enable a better understanding of the Group’s underlying financial performance.
Following the payments in the year ended 31 March 2018 to enhance the funding status of the Group’s US pension schemes which reduced
net retirement benefit interest to an immaterial level, the Group now includes net retirement benefit interest and the associated tax in its
alternative performance measures. The adjusted results for the year ended 31 March 2018 have been restated accordingly as presented in
Note 1.
The following table shows the reconciliation of the key income statement alternative performance measures to the most directly
comparable measures reported in accordance with IFRS:
Continuing operations
£m unless otherwise stated
Sales
Operating profit
Net finance expense
Share of profit after tax of joint ventures and
associates
Profit before tax
Income tax expense
Profit for the year
Basic earnings per share (pence)
Diluted earnings per share (pence)
Effective tax rate expense %
Year ended 31 March 2019
Restated*
Year ended 31 March 2018
IFRS
reported
2 755
236
(26)
30
240
(59)
181
39.2p
38.6p
24.4%
Adjusting
items
–
69
–
–
69
(6)
63
Adjusted
reported
2 755
305
(26)
30
309
(65)
244
13.6p
13.4p
(3.4%)
52.8p
52.0p
21.0%
IFRS
reported
2 710
290
(32)
28
286
(23)
263
57.0p
56.1p
8.1%
Adjusting
items
–
10
–
–
10
(41)
(31)
Adjusted
reported
2 710
300
(32)
28
296
(64)
232
(6.7p)
(6.7p)
13.4%
50.3p
49.4p
21.5%
* Comparatives restated as the Group now includes net retirement benefit interest and the associated tax in its alternative performance measures.
Refer to Note 1.
The following table shows the reconciliation of the adjusting items impacting adjusted profit for the year in the current and comparative year:
Continuing operations
Exceptional loss/(gain) in operating profit
Amortisation of acquired intangible assets
Total excluded from adjusted profit before tax
Tax credit on adjusting items
Exceptional tax credits
Total excluded from adjusted profit for the year
Notes
8
18
11
8, 11
Year ended 31 March
2019
£m
Restated*
2018
£m
58
11
69
(6)
–
63
(2)
12
10
(3)
(38)
(31)
* Comparatives restated as the Group now includes net retirement benefit interest and the associated tax in its alternative performance measures.
Refer to Note 1.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
4. RECONCILIATION OF ALTERNATIVE PERFORMANCE MEASURES continued
Cash flow measure
The Group also presents an alternative cash flow measure, ‘Adjusted free cash flow’ which is defined as cash generated from continuing
operations, after net interest and tax paid, and capital expenditure and excluding the impact of exceptional items. In the prior year the
Group presented an additional cash flow alternative performance measure, ‘Adjusted operating cash flow’ but this is no longer used by the
Group and so has been removed.
The following table shows the reconciliation of adjusted free cash flow:
Year ended 31 March
Continuing operations
Adjusted operating profit
Adjusted for:
Depreciation and adjusted amortisation
Share-based payments charge
Changes in working capital and other non-cash movements
Net retirement benefit obligations
Less: accelerated US defined benefit schemes contribution (exceptional cash flows)
Capital expenditure
Net interest and tax paid
Less: cash tax benefit on accelerated contribution (exceptional cash flows)
Adjusted free cash flow
2019
£m
305
141
18
(16)
(25)
–
(130)
(81)
–
212
2018
£m
300
142
15
(36)
(94)
56
(131)
(36)
(20)
196
Financial strength measures
The Group uses three financial metrics as key performance measures to assess its financial strength. These are the net debt to EBITDA
ratio, the interest cover ratio and the return on capital employed ratio.
In the past the net debt to EBITDA ratio and the interest cover ratio were reported in line with the calculation methodology used for financial
covenants on the Group’s borrowing facilities. Following the refinancing of the US$800 million revolving credit facility in the year (refer to
Note 24) the new facility adopted amended covenant definitions. For the purposes of KPI reporting, the Group has simplified the calculation
of these KPIs to make them more directly related to information in the Group’s financial statements.
All ratios are calculated based on unrounded figures in £ million.
The net debt to EBITDA ratio is as follows:
Calculation of net debt to EBITDA ratio
Net debt
Adjusted operating profit
Add back depreciation and adjusted amortisation
Pre-exceptional EBITDA
Net debt to EBITDA ratio (times)
25
2019
£m
337
305
141
446
0.8
* Comparatives have been restated in line with the new calculation methodology. The net debt to EBITDA ratio calculated on the financial covenant
methodology is 0.7 times (2018 – 0.8 times). Refer to Note 27.
The interest cover ratio is as follows:
Calculation of interest cover ratio
Adjusted operating profit
Net finance expense
Interest cover ratio (times)
2019
£m
305
26
11.6
10
31 March
2018*
£m
392
300
142
442
0.9
31 March
2018*
£m
300
32
9.4
* Comparatives have been restated in line with the new calculation methodology. The interest cover ratio calculated on the financial covenant methodology is
15.3 times (2018 – 14.6 times). Refer to Note 27.
134 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
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FINANCIAL STATEMENTS
4. RECONCILIATION OF ALTERNATIVE PERFORMANCE MEASURES continued
Financial strength measures continued
The return on capital employed ratio is as follows:
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
Invested operating capital of continuing operations
Average invested operating capital*
Return on capital employed (ROCE) %
2019
£m
305
(11)
294
342
982
401
2018
£m
300
(12)
288
360
965
385
1 725
1 718
17.1%
1 710
1 783
16.2%
31 March
2017
£m
401
1 061
394
1 856
* Average invested operating capital represents the average at the beginning and end of the year of goodwill and other intangible assets, property, plant and
equipment, working capital, provisions and non-debt derivatives.
5. SEGMENT INFORMATION
Segment information is presented on a basis consistent 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 three reportable segments: Food & Beverage Solutions, Sucralose and Primary Products. Food &
Beverage Solutions operates in the key categories of beverages, dairy and soups. Sucralose, a high intensity sweetener, is used in various
food categories and beverages. Primary Products has strong market positions in high-volume sweeteners and industrial starches.
Central, which comprises central costs including head office, treasury and insurance activities, does not meet the definition of an operating
segment under IFRS 8 Operating segments but is included in order to be consistent with the presentation of segment information
presented to the Board. The 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 manufacturing
facility-based depreciation) and allocation keys for all indirect costs (including share-based payments and amortisation) 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 8.
Revenue recognition
Revenue from contracts with customers (referred to as ‘sales’) is recognised when control of the goods or services are transferred to the
customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.
The Group has generally concluded that it is the principal in its revenue arrangements because it typically controls the goods or services
before transferring them to the customer at a point in time.
Discounts mainly comprise volume-driven rebates. Revenue from these sales is recognised based on the price specified in the contract,
net of the estimated volume discounts. A liability is recognised for expected volume discounts payable to customers in relation to sales
made until the end of the reporting period.
Where costs are paid to obtain a contract in advance, the resultant asset is amortised against revenue in accordance with performance
under the agreement.
No element of financing is deemed present as the sales are made with a credit term in general between 30 to 60 days, which is consistent
with market practice.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
Food & Beverage
Solutions
£m
889
143
16.1%
36
28
6
Food & Beverage
Solutions
£m
850
137
16.1%
38
30
3
Sucralose
£m
164
61
37.0%
9
–
1
Sucralose
£m
146
55
37.7%
9
–
1
Primary
Products
£m
1 702
148
8.7%
66
10
5
Primary
Products
£m
1 714
166
9.7%
66
9
4
5. SEGMENT INFORMATION continued
Segment results
Continuing operations
Sales
Adjusted operating profit*
Adjusted operating margin
Included within operating profit:
— depreciation
— amortisation
— share-based payments
* Reconciled to statutory profit for the year in Note 4.
Continuing operations
Sales
Adjusted operating profit*
Adjusted operating margin
Included within operating profit:
— depreciation
— amortisation
— share-based payments
Geographic disclosures
Sales
Continuing operations
Food & Beverage Solutions
North America
Asia Pacific and Latin America
Europe, Middle East and Africa
Food & Beverage Solutions – total
Sucralose – total
Primary Products
Americas
Rest of the world
Primary Products – total
Total
Year ended 31 March
Central
£m
–
(47)
n/a
1
2
6
Total
£m
2 755
305
11.1%
112
40
18
Year ended 31 March
Central
£m
–
(58)
n/a
1
1
7
Total
£m
2 710
300
11.1%
114
40
15
Year ended 31 March
2019
£m
430
201
258
889
164
1 588
114
1 702
2 755
2018
£m
416
184
250
850
146
1 590
124
1 714
2 710
Sales to the United Kingdom totalled £43 million (2018 – £39 million). No customer contributed more than 10% of the Group’s external sales
from continuing operations (2018 – no customer contributed more than 10%).
Location of non-current assets
The location of non-current assets, other than financial instruments (including long-term receivables) deferred tax assets, and retirement
benefits are as follows:
United Kingdom
United States
Other European countries
Rest of the world
Non-current assets
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2019
£m
16
1 025
284
101
1 426
At 31 March
2018
£m
16
963
331
100
1 410
FINANCIAL STATEMENTS
6. OPERATING PROFIT
Analysis of operating expenses by nature:
Continuing operations
Sales
Operating expenses
Cost of inventories (included in cost of sales)
Staff costs (of which £150 million (2018 – £151 million) was included in cost
of sales)
Depreciation of property, plant and equipment:
— owned assets (of which £103 million (2018 – £104 million) was included in cost
of sales)
— leased assets (included in cost of sales)
Exceptional loss/(gain)
Amortisation of intangible assets:
— acquired intangible assets
— other intangible assets
Operating lease rentals
Impairment of trade receivables
Impairment of intangible assets (non-exceptional items)
Net fair value loss/(gain) on commodity contracts
Total net foreign exchange gains*
Other operating expenses
Total operating expenses
Operating profit
Notes
Year ended 31 March
2019
£m
2 755
2018
£m
2 710
1 368
1 362
9
334
336
19
19
8
18
18
16
110
2
58
11
29
37
1
1
1
(1)
568
2 519
236
113
1
(2)
12
28
35
1
1
(3)
(2)
538
2 420
290
* Includes fair value movements on debt-related derivatives.
Research expenditure totalling £36 million (2018 – £35 million) is included within amounts above.
7. AUDITORS’ REMUNERATION
Fees payable to the Company’s external auditors, Ernst & Young LLP and its associates, were as follows. The comparative period relates to
fees paid to PricewaterhouseCoopers LLP, the Group’s previous auditors.
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 assurance services
Total
Year ended 31 March
2019
£m
1.0
1.4
0.1
2.5
2018
£m
0.7
1.6
0.1
2.4
In the prior financial year the auditors received additional remuneration of £0.1 million relating to the audit of the Group’s pension scheme
and £0.1 million related to the Group’s joint ventures.
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F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
8. EXCEPTIONAL ITEMS
Exceptional items recognised in arriving at operating profit were as follows:
Continuing operations
Income statement
Oats ingredients business disposal
Restructuring costs
Gain on sale and leaseback of railcars
Asset remediation
Tate & Lyle Ventures gain on disposals
Exceptional items included in profit before tax
US tax adjustments
UK tax adjustments
Exceptional items included in income tax
Total exceptional items
Footnotes
Year ended 31 March
2019
£m
2018
£m
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(43)
(13)
14
(16)
–
(58)
–
–
–
(58)
–
–
–
–
2
2
36
2
38
40
Exceptional items arising from simplifying the business and driving productivity
In the year ended 31 March 2019, a number of exceptional items have been recognised arising from the Group’s activities to focus the
portfolio and simplify the business:
(a) Following a strategic review of its oats ingredients business conducted during the financial year, the Group completed the disposal
of this business in March 2019, for cash proceeds of £3 million, with a cash outflow of £1 million expected in the 2020 financial year.
The exceptional loss recognised in the year ended 31 March 2019, including an impairment charge of £40 million recognised in the first
half of the financial year, totalled £43 million. The total charge was recognised within the Food & Beverage Solutions segment.
(b)
(c)
(d)
In May 2018, the Group announced a programme to deliver US$100 million of productivity benefits. The cash cost to implement these
savings is estimated at up to US$40 million (£31 million), with any further non-cash costs to be reported as incurred. In the year ended
31 March 2019, the Group recognised a restructuring charge of £13 million, of which £2 million was non-cash, mainly in respect of
employee severance and associated programme costs. £6 million was paid during the year. £5 million of the £13 million exceptional
charge was recognised within the Food & Beverage Solutions segment and £8 million was classified as central costs.
In the year ended 31 March 2019, the Group exercised an option to buy certain railcars previously held under operating leases.
The railcars were subsequently sold and leased back generating an exceptional cash gain of £16 million partially offset by a
non-cash charge of £2 million. The net £14 million gain was recognised within the Primary Products segment.
In the year ended 31 March 2019, the Group recognised an exceptional provision of £16 million to remediate environmental health and
safety risks associated primarily with idle assets at manufacturing sites in North America. A charge of £14 million was recognised
within the Primary Products segment and a charge of £2 million was recognised in the Food & Beverage Solutions segment.
The remediation programme is expected to last 24 months and result in total cash outflows of £16 million, of which £1 million has
been paid in the year ended 31 March 2019.
Overall, exceptional items before tax in the year totalled non-cash charges of £49 million and cash charges of £9 million (of which
£12 million was received in the year; the remaining cash outflow of £21 million will be recognised over the next 24 months).
Other exceptional items
(e) Tate & Lyle Ventures gain on disposals – in the year ended 31 March 2018 the Group recognised a £2 million cash gain, in respect
of the disposal of an investment held as part of its venture fund portfolio. The gain was recognised within central costs.
(f)
In the year ended 31 March 2018, the Group recognised an exceptional tax credit of £36 million, principally reflecting the revaluation
downwards of net US deferred tax liabilities following the reduction in the US federal corporation tax rate from 1 January 2018.
US deferred tax liabilities primarily comprised amounts arising from accelerated tax depreciation on assets.
(g)
In the year ended 31 March 2018, two significant changes drove an exceptional net credit of £2 million resulting from the increase in
UK deferred tax assets:
i. UK legislation to limit to 50% the utilisation of brought-forward losses was enacted during the 2018 financial year, resulting in a
£16 million write down of the previous deferred tax asset recognised in relation to the Group’s internal financing arrangements;
ii. Anticipated changes to the Group’s internal financing arrangements, enabled by amendments to US tax legislation, led to the
recognition of an increase in the deferred tax asset of £18 million.
In addition, in the year ended 31 March 2018 an exceptional tax credit of £2 million was recognised in discontinued operations.
138 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
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FINANCIAL STATEMENTS
8. EXCEPTIONAL ITEMS continued
Exceptional cash flows
Net cash flows on exceptional items were as follows:
Net cash inflows/(outflows) on exceptional items
Footnotes
Oats ingredients business disposal
Restructuring costs
Gain on sale and leaseback of railcars
Asset remediation
Tate & Lyle Ventures gain on disposals
Business re-alignment
Accelerated US defined benefit schemes contribution
Cash tax benefit on accelerated contribution
Net cash inflows/(outflows)
(a)
(b)
(c)
(d)
(e)
(h)
(i)
(i)
Net cash flows on exceptional items are included in the consolidated statement of cash flows as follows:
Reconciliation to the statement of cash flows
Exceptional charge/(gain) included in profit before tax
Less: restructuring costs
Less: asset remediation
Less: business re-alignment
Exceptional items included within cash generated from operating activities
Accelerated US defined benefit schemes contribution
Cash tax benefit on accelerated contribution
Exceptional items included within cash generated from other operating activities
Oats ingredients business disposal
Gain on sale and leaseback of railcars
Tate & Lyle Ventures gain on disposals
Exceptional items included within cash flows from investing activities
Footnotes
(b)
(d)
(h)
(i)
(i)
(a)
(c)
(e)
Year ended 31 March
2018
£m
–
–
–
–
2
(2)
(56)
20
(36)
Year ended 31 March
2018
£m
(2)
–
–
(2)
(4)
(56)
20
(36)
–
–
2
2
2019
£m
3
(6)
16
(1)
–
–
–
–
12
2019
£m
58
(6)
(1)
–
51
–
–
–
3
16
–
19
(h)
(i)
In the year ended 31 March 2018, the Group paid cash of £2 million to utilise remaining provisions in respect of the business
re-alignment of Sucralose and its European operations, but recognised no charges in this respect during the year.
In the year ended 31 March 2018, the Group made an accelerated cash contribution of £56 million into the US defined benefit pension
schemes against which the Group received a cash tax benefit of £20 million leading to an overall cash outflow of £36 million. This cash
contribution was incremental to the on-going annual scheme payments.
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F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
9. STAFF COSTS
Staff costs were as follows:
Wages and salaries
Social security costs
Retirement benefit costs:
— defined benefit schemes
— defined contribution schemes
Share-based payments
Total
Year ended 31 March
2019
£m
280
24
2
10
18
334
2018
£m
282
25
4
10
15
336
The average number of people employed by the Company and its subsidiaries, including part-time employees, is set out below:
By reportable segment
Continuing operations
Food & Beverage Solutions
Sucralose*
Primary Products
Central
Total
Year ended 31 March
2019
2018
1 722
94
1 835
511
4 162
1 811
90
1 754
534
4 189
* The Food & Beverage Solutions division operates with a single commercial team. It is not practicable to split this team between the two segments
comprising this division, and therefore the entire headcount of the commercial team has been included within the Food & Beverage Solutions segment.
At 31 March 2019, the Group employed 4,121 people (2018 – 4,192) all within continuing operations. The Group’s three reportable segments
are supported by Global Operations, a single manufacturing network, 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 Food & Beverage Solutions,
Sucralose and Primary Products segments.
Key management compensation
Salaries and short-term employee benefits
Retirement benefits
Share-based payments
Total
Year ended 31 March
2019
£m
9
1
8
18
2018
£m
10
1
6
17
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 94 to 111. Members of the Executive Committee are identified on
pages 72 and 73. The aggregate gains made by the Directors on the exercise of share options were £10 million (2018 – £7 million).
During the year a short-term loan was made to a key management person of which £0.5 million was outstanding at 31 March 2019.
No interest was charged. No related party transactions with close family members of the Group’s key management occurred in the
current or comparative year.
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FINANCIAL STATEMENTS
10. FINANCE INCOME AND EXPENSE
Continuing operations
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
Note
28
Year ended 31 March
2019
£m
(30)
(4)
4
(1)
–
–
(31)
5
(26)
2018
£m
(27)
(6)
6
(1)
(5)
(1)
(34)
2
(32)
Interest payable on other borrowings includes £0.2 million (2018 – £0.2 million) of dividends in respect of the Group’s 6.5% cumulative
preference shares.
11. INCOME TAXES
Analysis of charge for the year
Continuing operations
Current tax
— United Kingdom
— Overseas
— Adjustments in respect of previous financial year
Deferred tax
(Expense)/credit for the year
Income tax expense
Statutory effective tax rate (%)
Reconciliation to adjusted income tax expense
Income tax expense
Taxation on exceptional items and amortisation of acquired intangibles
Exceptional US tax credit
Exceptional UK tax credit
Adjusted income tax expense
Adjusted effective tax rate (%)
Notes
8
8
4
Year ended 31 March
2018
£m
(9)
(45)
–
(54)
31
(23)
8.1%
Year ended 31 March
Restated*
2018
£m
(23)
(3)
(36)
(2)
(64)
21.5%
2019
£m
(7)
(46)
3
(50)
(9)
(59)
24.4%
2019
£m
(59)
(6)
–
–
(65)
21.0%
* Comparatives restated as the Group now includes net retirement benefit interest and the associated tax in its alternative performance measures.
Refer to Note 1.
In the year ended 31 March 2018 the Group’s effective tax rate was 8.1% as a result of significant exceptional deferred tax items recorded in
that year. An analysis of the taxation on exceptional items can be found in the ‘Analysis of exceptional tax items’ section of this note.
At 31 March 2019, the carrying value of current tax assets totalled £4 million (2018 – £1 million) and the carrying value of the current tax
liabilities totalled £45 million (2018 – £57 million). 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.
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.
At 31 March 2019, the Group carried provisions in respect of uncertain tax positions totalling £52 million (2018 – £57 million) which are
principally recognised within current tax payables where they are offset by other amounts owed by or from tax authorities in those jurisdictions.
A description of the key judgements and estimates affecting the sustainability of the effective tax rate can be found in Note 2.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
11. 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
Continuing operations
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 19% (2018 – 19%)
Adjusted for the effects of:
— non-deductible expenses and other permanent items
— adjustments in respect of previous financial year
— manufacturing credits
— losses not currently treated as being recoverable in future periods1
— exceptional tax credits2
— impairment of assets not deductible3
— tax rates below/(above) the UK rate applied on overseas earnings
Total tax charge
2019
£m
240
(30)
210
(40)
(1)
3
–
(13)
–
(11)
3
(59)
2018
£m
286
(28)
258
(49)
(2)
–
1
(2)
38
–
(9)
(23)
1 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.
2 In 2018 changes in UK and US tax legislation led to exceptional tax credits totalling £38 million which included a £3 million current tax charge (refer to
Note 8).
3 Impairments were made to certain oats ingredients business assets in the year (refer to Note 8).
Analysis of exceptional tax items
An analysis of tax charged or credited on adjusting items and exceptional tax items within continuing operations is set out below:
Continuing operations
Exceptional items
Oats ingredients business disposal
Restructuring costs
Gain on sale and leaseback of railcars
Asset remediation
Tate & Lyle Ventures gain on disposals
Exceptional items
Amortisation of acquired intangibles
Adjusting items
Exceptional deferred tax items
Exceptional US tax credit
Exceptional UK tax credit
Exceptional deferred tax items
Total
Year ended 31 March 2019
Year ended 31 March 2018
Restated*
Notes
Pre-tax
£m
Tax credit/
(charge)
£m
Pre-tax
£m
Tax
credit
£m
8
8
8
8
8
18
4
8
8
8
4
(43)
(13)
14
(16)
–
(58)
(11)
(69)
–
–
–
(69)
1
2
(4)
4
–
3
3
6
–
–
–
6
–
–
–
–
2
2
(12)
(10)
–
–
–
(10)
–
–
–
–
–
–
3
3
36
2
38
41
* Comparatives restated as the Group now includes net retirement benefit interest and the associated tax in its alternative performance measures.
Refer to Note 1.
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FINANCIAL STATEMENTS
11. INCOME TAXES continued
Deferred tax
The movements in deferred tax assets and liabilities during the year were as follows:
At 1 April 2017
(Charged)/credited to the income statement
— underlying
— exceptional
Charged to other comprehensive income
Charged directly to equity
Currency translation differences
At 31 March 2018
Credited/(charged) to the income statement
— underlying
— exceptional
Credited to other comprehensive income
Credited directly to equity
Currency translation differences
At 31 March 2019
Capital
allowances in
excess of
depreciation
Retirement
benefit
obligations
£m
(169)
(2)
52
–
–
18
(101)
1
–
–
–
(9)
(109)
£m
64
4
1
(60)
–
(9)
–
–
–
1
–
3
4
Share-
based
payments
£m
Tax losses
£m
Other1
£m
7
–
–
–
(3)
–
4
–
–
–
1
–
5
40
(5)
(4)
–
–
(1)
30
(14)
–
–
–
1
17
55
(7)
(8)
–
–
(8)
32
9
(5)
–
–
4
40
Total
£m
(3)
(10)
41
(60)
(3)
–
(35)
(4)
(5)
1
1
(1)
(43)
1 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 is provided based on temporary differences between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date. 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.
Deferred tax assets and liabilities are offset where there is a legally enforceable right of offset and there is an intention to net settle the
balances. After taking these offsets into account, the net position of £43 million liability (2018 – £35 million liability) is presented as a
£3 million deferred tax asset (2018 – £7 million asset) and a £46 million deferred tax liability (2018 – £42 million liability) in the Group’s
statement of financial position.
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 £667 million (2018 – £556 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 2019.
Discontinued operations
In the current year there was no tax related to discontinued operations. An exceptional income tax credit of £2 million was recognised in the
year ended 31 March 2018 in respect of discontinued operations.
Tax on items recognised in other comprehensive income
The total tax credit on other comprehensive income was £10 million (2018 – £33 million charge). This included deferred tax credits on
retirement benefit obligations of £1 million (2018 – £60 million charge) and current tax credits of £9 million (2018 – £27 million credit).
Tax on items recognised directly in equity
The total tax credit in relation to share-based payments was £2 million recognised directly in equity (2018 – £3 million charge). This included
£1 million of deferred tax credit (2018 – £3 million charge) and £1 million of current tax credit (2018 – £nil).
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
12. 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 shares held by the Company and 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 assuming conversion of
potentially dilutive ordinary shares, reflecting vesting assumptions on employee share plans, as well as the deemed profit attributable to
owners of the Company for any proceeds on such conversions.
The average market price of the Company’s ordinary shares during the year was 658p (2018 – 676p). The dilutive effect of share-based
incentives was 6.9 million shares (2018 – 7.7 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 2019
Year ended 31 March 2018
Continuing
operations
Discontinued
operations
Total
operations
Continuing
operations
Discontinued
operations
Total
operations
181
462.6
39.2p
469.5
38.6p
–
–
–
–
–
181
263
2
265
462.6
39.2p
462.3
57.0p
462.3
0.4p
462.3
57.4p
469.5
38.6p
470.0
56.1p
470.0
0.4p
470.0
56.5p
Adjusted earnings per share
A reconciliation between profit attributable to owners of the Company from continuing operations and the equivalent adjusted measure,
together with the resulting adjusted earnings per share measure can be found below:
Continuing operations
Profit attributable to owners of the Company
Adjusting items:
— exceptional loss/(gain)
— amortisation of acquired intangible assets
— tax effect of the above adjustments
— exceptional deferred tax credits
Adjusted profit attributable to owners of the Company
Adjusted basic earnings per share (pence)
Adjusted diluted earnings per share (pence)
Notes
8
18
11
8, 11
4
Year ended 31 March
Restated*
2019
£m
181
58
11
(6)
–
244
2018
£m
263
(2)
12
(3)
(38)
232
52.8p
52.0p
50.3p
49.4p
* Comparatives restated as the Group now includes net retirement benefit interest and the associated tax in its alternative performance measures.
Refer to Note 1.
144 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
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Internal Use Only
FINANCIAL STATEMENTS
13. DIVIDENDS ON ORDINARY SHARES
Dividends on ordinary shares in respect of the financial year:
Per ordinary share:
— interim dividend paid
— final dividend proposed
Total dividend
Year ended 31 March
2019
Pence
8.6
20.8
29.4
2018
Pence
8.4
20.3
28.7
The Directors propose a final dividend for the financial year of 20.8p per ordinary share that, subject to approval by shareholders, will be
paid on 31 July 2019 to shareholders who are on the Register of Members on 21 June 2019.
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
2019
£m
94
40
134
2018
£m
92
39
131
Based on the number of ordinary shares outstanding at 31 March 2019 and the proposed amount, the final dividend for the financial year is
expected to amount to £96 million.
14. INVENTORIES
Raw materials and consumables
Work in progress
Finished goods
Total
2019
£m
215
17
202
434
At 31 March
2018
£m
201
17
201
419
Agricultural produce after harvest of £110 million (2018 – £103 million) is carried at net realisable value. Additionally, finished goods
inventories of £1 million (2018 – £1 million) are carried at net realisable value, this being lower than cost.
During the year ended 31 March 2019, the Group recognised a write down of inventories totalling £9 million (2018 – £3 million) included in
the cost of inventories, of which £4 million was recognised as part of the oats ingredients business disposal.
15. CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash held with banks and other short-term highly liquid investments with original maturities of three
months or less. The credit rating of short-term highly liquid investments is AAA or equivalent (2018 – AAA or equivalent).
Short-term highly liquid investments
Cash at bank
Cash and cash equivalents
The carrying amount of cash and cash equivalents was denominated in the following currencies:
US dollar
Euro
Sterling
Other
Total
Internal Use Only
2019
£m
239
46
285
2019
£m
258
9
1
17
285
At 31 March
2018
£m
129
61
190
At 31 March
2018
£m
161
16
4
9
190
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
16. TRADE AND OTHER RECEIVABLES
Trade receivables
Less provision for doubtful debts
Trade receivables – net
Prepayments and accrued income
Margin deposits
Other receivables
Total
2019
£m
298
(7)
291
15
6
13
325
At 31 March
2018
£m
280
(14)
266
16
1
11
294
The amounts above do not include non-current other receivables of £2 million (2018 – £3 million).
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 so the effects of time-value of money are
not considered material.
The carrying amount of trade and other receivables was denominated in the following currencies:
US dollar
Euro
Sterling
Other
Total
2019
£m
223
55
9
40
327
At 31 March
2018
£m
201
40
14
42
297
The Group applies the simplified approach for measuring expected credit losses prescribed by IFRS 9, which permits the use of the lifetime
expected loss provision for all trade receivables. The Group has established a provision matrix that is based on the historic rates of default
then adjusted for forward looking factors specific to the debtor and economic environment. In the prior year the impairment of trade
receivables did not incorporate forward looking information. The gross amount of receivables, reflecting the maximum exposure to credit
risk, is £334 million (2018 – £311 million). The effect of expected credit loss on other receivables is not material.
At 31 March 2019
£m unless otherwise stated
Expected loss rate
Gross carrying amount
Loss allowance provision
Expected loss rate
Gross carrying amount
Loss allowance provision
Current
30 – 60 days
past due
60 – 90 days
past due
Greater than
90 days past
due
0%
271
–
0%
248
–
0%
16
–
0%
14
–
4
–
5%
3
–
1%
100%
7
7
Total
298
7
At 31 March 2018
91%
15
14
280
14
The loss allowance provision for trade receivables as at 31 March 2019 reconciles to the opening loss allowance for that provision as
follows. Additionally there was £1 million impairment of trade receivables in the year (2018 – £1 million).
At 1 April – calculated under IAS 39
Amounts restated through opening retained earnings
Opening loss allowance as at 1 April 2018 – calculated under IFRS 9
Utilisation of provision
Change in loss allowance recognised in the income statement during the year
At 31 March
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Internal Use Only
2019
£m
14
–
14
(7)
–
7
At 31 March
2018
£m
14
n/a
14
–
–
14
FINANCIAL STATEMENTS
17. INVESTMENTS IN EQUITIES
As a result of the adoption of IFRS 9 the assets previously described as Available-for-sale (AFS) assets are now described as financial
assets at fair value through profit or loss (FVPL) or financial assets at fair value through the statement of OCI (FVOCI). These assets are
reported as ‘Investments in equities’. Further detail on the adoption of IFRS 9 can be found in Note 35.
Investments in equities do not meet the IFRS 9 criteria for classification at amortised cost because their cash flows do not represent solely
payments of principal and interest. For certain investments the available election to recognise equity securities as FVOCI has been taken
because these investments are held as long-term strategic investments that are not expected to be sold in the short to medium term.
All other investments are recognised at FVPL.
At 1 April 2018
IFRS 9 transfer
Total gains/(losses)
— in operating profit
— in other comprehensive income
Non-qualified deferred compensation arrangements
Purchases
Disposals
Currency translation differences
At 31 March 2019
Investments in equities
Financial assets at
FVPL
Financial assets at
FVOCI
Total investments
in equities
£m
–
21
–
–
1
15
(3)
1
35
£m
–
16
–
2
–
5
–
1
24
£m
–
37
–
2
1
20
(3)
2
59
Available-for-sale
financial assets
£m
37
(37)
–
–
–
–
–
–
–
Total
£m
37
–
–
2
1
20
(3)
2
59
On 7 December 2018, the Group completed the acquisition of a 15% equity holding in Sweet Green Fields for US$15 million (£12 million).
Under the terms of the purchase agreement, the Group has an option to acquire the remaining 85% share in due course. After considering
all the terms of the arrangement with Sweet Green Fields it has been determined that the Group does not have significant influence.
Accordingly the 15% equity investment and the option to purchase the remaining shares have been recognised together as a financial asset
at FVPL. The fair value was initially determined to be US$15 million and will be assessed periodically with any changes in the fair value
being recognised in the income statement.
The non-qualified deferred compensation arrangements refers to movements on retirement benefit assets which do not qualify as IAS 19
pension assets. These were offset by corresponding movements on retirement benefit liabilities. Refer to Note 28.
The carrying value of equity investments was denominated in the following currencies:
US dollar
Sterling
Euro
Total
2019
£m
50
5
4
59
At 31 March
2018
£m
31
2
4
37
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F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
18. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
£m
Patents and
other IP
Other acquired
intangibles
Total acquired
intangibles
£m
£m
£m
Other
intangible
assets
£m
Cost
At 1 April 2018
Additions at cost
Disposals and write-offs
Currency translation differences
At 31 March 2019
Accumulated amortisation and impairment
At 1 April 2018
Impairment charge
Amortisation charge
Disposals and write-offs
Currency translation differences
At 31 March 2019
Net book value at 31 March 2019
Cost
At 1 April 2017
Additions at cost
Currency translation differences
At 31 March 2018
Accumulated amortisation and impairment
At 1 April 2017
Impairment charge
Amortisation charge
Currency translation differences
At 31 March 2018
Net book value at 31 March 2018
218
–
(10)
2
210
14
10
–
(10)
(2)
12
198
229
–
(11)
218
17
–
–
(3)
14
204
40
–
(6)
–
34
38
3
–
(6)
(1)
34
–
41
–
(1)
40
37
–
1
–
38
2
165
–
–
1
166
120
–
11
–
–
131
35
166
–
(1)
165
112
–
11
(3)
120
45
423
–
(16)
3
410
172
13
11
(16)
(3)
177
233
436
–
(13)
423
254
31
(2)
8
291
145
4
29
(2)
6
182
109
254
20
(20)
254
166
123
–
12
(6)
172
251
1
28
(7)
145
109
Total
£m
677
31
(18)
11
701
317
17
40
(18)
3
359
342
690
20
(33)
677
289
1
40
(13)
317
360
Acquired intangible assets, principally customer relationships and know-how, were recognised as part of previous business combinations
and are amortised on a straight-line basis over the periods of their expected benefit to the Group, which range from three to 15 years.
Other intangible assets relate to product development, computer software and global IS/IT systems. 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
core global IS/IT systems are being amortised over a period of five to seven years.
Goodwill
Goodwill is carried at cost less any recognised impairment losses. The carrying amount of goodwill is allocated to groups of CGUs
as follows:
Allocated by reportable segment
Food & Beverage Solutions
Primary Products
Allocated by geographical area
United States
Europe
Total
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2019
£m
168
30
198
–
–
–
198
At 31 March
2018
£m
21
2
23
72
109
181
204
FINANCIAL STATEMENTS
18. GOODWILL AND OTHER INTANGIBLE ASSETS continued
Goodwill continued
Review of allocation methodology
The Group changed its reporting segments in the prior financial year and in light of the continued integration of its operating businesses
during the 2019 financial year, has reviewed the allocation of goodwill and determined that the synergies to which the goodwill relates
are now realised at the level of the Group’s segments Food & Beverage Solutions and Primary Products, apart from £3 million of
goodwill where the synergies are realised at a regional sub-level of Food & Beverage Solutions. No goodwill was allocated to the
Sucralose segment.
Accordingly, an exercise to allocate goodwill was completed in the year based on an assessment of their relative fair values and goodwill
was tested on this basis. As part of this exercise a further review was performed on the prior year basis which arrived at the same result.
Synergies from future acquisitions will continue to be assessed to determine appropriate allocation as they occur.
Impairment tests carried out during the year
Goodwill is required to be tested annually. For both the goodwill allocated to Food & Beverage Solutions and Primary Products, the recoverable
amount was calculated based on value-in-use. The key assumptions in the value-in-use model are derived from the Group’s Board-reviewed
five-year plan. The long-term growth rate after year five does not exceed 2% reflecting a conservative long-term assumption for the Food &
Beverage Solutions and Primary Products markets respectively. Based on the risk profile of the assets tested, cash flows were discounted
using a pre-tax rate of 9.3% (2018 – 8.9%). Significant headroom exists and management has concluded that no impairment is required.
Impairment charge in the year
Following a strategic review of its oats ingredients business conducted during the financial year, the Group completed the disposal of this
business in March 2019. The exceptional loss recognised in the year ended 31 March 2019 included an impairment charge of £10 million
relating to goodwill and £4 million relating to other intangible assets. Refer to Note 8.
Possibility of impairment in the near future
Management considers that there is no reasonably possible change in one or more of the key assumptions used in the impairment tests for
goodwill that would give rise to an impairment loss during the coming year.
19. PROPERTY, PLANT AND EQUIPMENT
Land and buildings mainly comprise manufacturing sites, application laboratories and administrative facilities. Plant and machinery mainly
comprise equipment used in the manufacturing and operating process. Assets in 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.
Leases of property, plant and equipment where the Group assumes substantially all the risks and rewards of ownership are classified as
finance leases. All other leases are classified as operating leases.
Property, plant and equipment is reviewed for impairment when any changes in circumstances indicate that their carrying amounts may not
be recoverable.
Useful economic lives, applied on a straight-line basis, are as follows:
Asset class
Freehold land
Freehold buildings
Useful economic life
No depreciation
20 to 50 years
Leasehold improvements
Up to the length of the lease
Plant and machinery
3 to 28 years
Oats ingredients business disposal
Following a strategic review of its oats ingredients business conducted during the financial year, the Group completed the disposal of this
business in March 2019. The exceptional loss recognised in the year ended 31 March 2019 included an impairment charge of £25 million
relating to property, plant and equipment. Refer to Note 8.
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F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
19. PROPERTY, PLANT AND EQUIPMENT continued
Land
and buildings
£m
Plant and
machinery
£m
Assets in the
course of
construction
£m
Cost
At 1 April 2018
Additions at cost
Transfers on completion
Disposals and write-offs
Currency translation differences
At 31 March 2019
Accumulated depreciation and impairment
At 1 April 2018
Depreciation charge
Impairment charge
Disposals and write-offs
Currency translation differences
At 31 March 2019
Net book value at 31 March 2019
Including assets held under finance leases
Cost
At 1 April 2017
Additions at cost
Transfers on completion
Disposals and write-offs
Currency translation differences
At 31 March 2018
Accumulated depreciation and impairment
At 1 April 2017
Depreciation charge
Disposals and write-offs
Currency translation differences
At 31 March 2018
Net book value at 31 March 2018
Including assets held under finance leases
556
–
7
(4)
37
596
270
16
2
(4)
23
307
289
–
569
5
43
(4)
(57)
556
289
14
(3)
(30)
270
286
–
2 278
17
61
(70)
154
2 440
1 625
96
23
(58)
112
1 798
642
8
2 433
4
111
(18)
(252)
2 278
1 729
100
(17)
(187)
1 625
653
8
26
97
(68)
(6)
2
51
–
–
–
–
–
–
51
–
77
104
(154)
(1)
–
26
–
–
–
–
–
26
–
Total
£m
2 860
114
–
(80)
193
3 087
1 895
112
25
(62)
135
2 105
982
8
3 079
113
–
(23)
(309)
2 860
2 018
114
(20)
(217)
1 895
965
8
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FINANCIAL STATEMENTS
20. INVESTMENT IN JOINT VENTURES
The Group’s material joint ventures, which are accounted for under the equity method, are Almidones Mexicanos S.A. de C.V. (Almex) and
DuPont Tate & Lyle Bio Products Company, LLC (Bio-PDO) (see Note 36). These joint ventures complement the Group’s wholly owned
activities. Almex produces and distributes corn-based products and Bio-PDO produces bio-based 1,3-propanediol (Bio-PDO).
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.
The movements in the carrying value of the Group’s investment in joint ventures are summarised as follows:
At 1 April
Share of profit after tax of joint ventures – total operations
Other comprehensive income/(expense) (including exchange)
Dividends paid
Contributions to joint venture
At 31 March
Note
22
Year ended 31 March
2019
85
30
4
(21)
4
102
2018
92
28
(9)
(26)
–
85
The information set out below 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. The statutory reporting date of Almex is 31 December due to local statutory requirements and so results are
consolidated on the basis of management accounts for the year to 31 March. Bio-PDO’s statutory reporting date is 31 March.
Investments in joint ventures are initially recognised at cost, which includes transaction costs. Subsequently, the Group’s share of the profit
or loss, other comprehensive income and net assets are shown on one line of the relevant primary financial statements, until the date on
which joint control ceases. Distributions received from the investee reduce the carrying amount of the investment.
Income statement
Sales
Depreciation and amortisation
Other expense
Finance expense
Profit before tax
Income tax expense
Profit for the year from total operations
Other comprehensive income (including exchange)
Total comprehensive income
Dividends
Sales
Depreciation and amortisation
Other expense
Profit before tax
Income tax expense
Profit for the year from total operations
Other comprehensive expense
Total comprehensive income
Dividends
Almex
£m
658
(2)
(593)
(2)
61
(18)
43
4
47
(42)
Almex
£m
627
(2)
(564)
61
(17)
44
(12)
32
(53)
Year ended 31 March 2019
Bio-PDO
£m
109
(7)
(79)
–
23
(7)
16
5
21
–
Total
£m
767
(9)
(672)
(2)
84
(25)
59
9
68
(42)
Year ended 31 March 2018
Bio-PDO*
£m
97
(7)
(71)
19
(7)
12
(5)
7
–
Total
£m
724
(9)
(635)
80
(24)
56
(17)
39
(53)
* This includes £1 million of other comprehensive expense relating to other joint ventures and associates which have since been disposed of.
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F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
20. INVESTMENT IN JOINT VENTURES continued
Statement of financial position
Assets
Non-current assets
Cash and cash equivalents
Other current assets
Liabilities
Non-current liabilities
Current borrowings
Other current liabilities
Net assets
Assets
Non-current assets
Cash and cash equivalents
Other current assets
Liabilities
Non-current liabilities
Current borrowings
Other current liabilities
Net assets
Reconciliation of summarised financial information to the Group’s investment in joint ventures
Opening net assets at 1 April 2018
Profit for the year from total operations
Other comprehensive income (including exchange)
Dividends
Contributions to joint venture
Closing net assets at 31 March 2019
Interest in joint venture (%)
Carrying value at 31 March 2019
Opening net assets at 1 April 2017
Profit for the year from total operations
Other comprehensive expense (including exchange)
Dividends
Closing net assets at 31 March 2018
Interest in joint venture (%)
Carrying value at 31 March 2018
Almex
£m
Bio-PDO
£m
48
7
187
242
6
56
77
139
103
63
39
25
127
–
–
27
27
100
At 31 March 2019
Total
£m
111
46
212
369
6
56
104
166
203
Almex
£m
Bio-PDO
£m
Total
£m
At 31 March 2018
43
2
161
206
4
47
57
108
98
Almex
£m
98
43
4
(42)
–
103
50%
52
119
44
(12)
(53)
98
50%
49
46
27
20
93
–
–
21
21
72
Bio-PDO*
£m
72
16
5
–
7
100
50%
50
65
12
(5)
–
72
50%
36
89
29
181
299
4
47
78
129
170
Total
£m
170
59
9
(42)
7
203
102
184
56
(17)
(53)
170
85
* In relation to 2018 this includes £1 million of other comprehensive expense relating to other joint ventures and associates which have since been disposed of.
152 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
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FINANCIAL STATEMENTS
21. SHARE CAPITAL AND SHARE PREMIUM
At 31 March 2018 and 31 March 2019
Ordinary share
capital
£m
117
Share
premium
£m
406
Total
£m
523
Ordinary shares carry the right to participate in dividends and each share entitles the holder to one vote on matters requiring shareholder
approval.
Allotted, called up and fully paid equity share capital
At 1 April
Allotted under share option schemes
At 31 March
* The nominal value of each share is 25 pence.
Year ended 31 March 2019
Year ended 31 March 2018
Number of
shares*
468 308 934
37 016
468 345 950
Cost
£m
Number
of shares*
117
468 256 866
–
52 068
117
468 308 934
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 29). Own shares are held either by the Company in treasury or by an Employee Benefit Trust (EBT) that
was established by the Company. The EBT is included in the consolidated accounts.
Movements in own shares held were as follows:
At 1 April
Purchased in the market1:
— into treasury
— into the EBT
Transferred to employees:
— from treasury
— from the EBT
At 31 March
Year ended 31 March 2019
Year ended 31 March 2018
Number
of shares
7 350 698
Cost
£m
52
Number
of shares
5 529 597
–
–
–
–
–
3 900 000
(1 757 254)
(341 857)
5 251 587
(12)
(2)
38
(1 010 461)
(1 068 438)
7 350 698
Cost
£m
37
–
27
(6)
(6)
52
1 During the year, the Company adopted the amendment to IFRS 2 permitting net settled share-based payments to be treated as equity-settled in full, if
certain criteria were met, rather than the tax element being cash-settled. Therefore, in the year ended 31 March 2019 the Group did not purchase treasury or
EBT shares in the market. The amount transferred to the tax authorities in the year was £8 million and has been recognised within financing activities in the
consolidated statement of cash flows.
Treasury shares
Shares held in the EBT
Total
Number
of shares
805 138
4 446 449
5 251 587
Market
value
£m
6
32
38
At 31 March 2019
% of outstanding
share capital
0.2%
0.9%
1.1%
Number
of shares
2 562 392
4 788 306
7 350 698
Market
value
£m
14
26
40
At 31 March 2018
% of outstanding
share capital
0.6%
1.0%
1.6%
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F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
FVOCI reserve
Currency
translation reserve
22. OTHER RESERVES
At 1 April 2017
Cash flow hedges:
— reclassified and reported in the income statement
in the year
Available-for-sale financial assets:
— fair value gain in the year
Currency translation differences:
— loss on currency translation of foreign operations
— fair value gain on net investment hedges
Share of other comprehensive expense of joint ventures
and associates
Items transferred to income statement on disposal
of associate
At 31 March 2018
Cash flow hedges:
— fair value gain in the year
— reclassified and reported in the income statement
in the year
FVOCI financial assets:
— fair value gain 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
and associates
Hedging losses transferred to inventory
At 31 March 2019
Hedging reserve
£m
3
(4)
–
–
–
–
–
£m
(6)
–
3
–
–
–
–
(1)
(3)
–
–
–
–
–
1
1
1
–
–
2
–
–
–
–
(1)
£m
152
–
–
(122)
39
(9)
(1)
59
–
–
–
75
(24)
3
–
113
Pre-IFRS
reserves
£m
104
–
–
–
–
–
–
Total
£m
253
(4)
3
(122)
39
(9)
(1)
104
159
–
–
–
–
–
–
–
104
–
–
2
75
(24)
4
1
217
Gains or losses relating to the effective portion of hedging instruments where cash flow hedge accounting is applied are recognised in OCI
within the hedging reserve. Amounts accumulated in the hedging reserve are reclassified in the periods when the hedged item affects the
income statement. For a non-financial asset (such as inventory), the hedging gains and losses are transferred to the cost of inventory and
then subsequently recognised in the income statement or else recognised immediately in the income statement.
The FVOCI reserve includes cumulative gains or losses on FVOCI assets. Prior to the adoption of IFRS 9 from the start of the 2019 financial
year, this referred to cumulative gains or losses on available-for-sale financial assets recognised through OCI.
The currency translation reserve includes:
— Gains/losses on currency translation of foreign operations: 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.
— Fair value gains/losses on 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 by recognising changes in the fair value of
the hedging instrument and, to the extent that the hedge is effective, recognised in other comprehensive income. Further detail on net
investment hedges can be found in Note 26.
The pre-IFRS reserve relates to amounts previously recorded in reserves prior to transition to IFRS.
For the years ended 31 March 2019 and 31 March 2018, there was no tax effect on the above movements in reserves.
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FINANCIAL STATEMENTS
23. TRADE AND OTHER PAYABLES
Current payables
Trade payables
Social security
Accruals and deferred income
Other payables
Total
2019
£m
234
6
94
8
342
At 31 March
2018
£m
192
7
91
22
312
The above amounts do not include non-current other payables of £nil (2018 – £10 million).
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.
The carrying amount of trade and other payables was denominated in the following currencies:
US dollar
Euro
Sterling
Other
Total
24. 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 loan notes
Obligations under finance leases
Total non-current borrowings
Current borrowings
6.75% Guaranteed Notes 2019 (£200,000,000)
Short-term loans and facilities
Total loan notes
Obligations under finance leases
Total current borrowings
2019
£m
246
47
22
27
342
2019
£m
2
54
308
–
364
9
373
2019
£m
203
19
222
2
224
At 31 March
2018
£m
220
43
29
30
322
At 31 March
2018
£m
2
50
285
207
544
10
554
At 31 March
2018
£m
–
14
14
2
16
Included within borrowings are £150 million (2018 – £150 million) of borrowings at amortised cost subject to fair value hedges. Included in
the carrying value is £3 million relating to fair value adjustments (2018 – £7 million).
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.
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.
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F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
24. BORROWINGS continued
Effective interest rates
Taking into account the Group’s interest rate and cross currency swap contracts, the effective interest rates of its borrowings are as follows:
US$25m 3.83% US Private Placement Notes 2023
US$180m 4.06% US Private Placement Notes 2025
US$100m 4.16% US Private Placement Notes 2027
US$95m US Private Placement FRN1 2023
2,394,000 6.5% cumulative preference shares of £1 each
Industrial Revenue Bonds 2023–2036 (US$70,100,000)
6.75% Guaranteed Notes 2019 (£200,000,000)
1 Floating rate note based on US six-month LIBOR + 1.47%.
Year ended 31 March
2019
3.8%
4.1%
4.2%
4.1%
6.5%
1.6%
6.4%
2018
3.8%
4.1%
4.2%
3.1%
6.5%
1.1%
5.4%
Short-term loans
Short-term loans mature within the next 12 months. Short-term loans are arranged at floating rates of interest and expose the Group to
cash flow interest rate risk.
Credit facilities and arrangements
The Group’s US$800 million five-year committed revolving credit facility was refinanced during the year. The term was extended to March
2024 and the financial covenants thereon were changed (also refer to the ‘Liquidity risk management’ section of Note 27). At 31 March 2019,
the facility had a value of £615 million (2018 – £570 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
2019
Present value
of minimum
lease payments
£m
Minimum lease
payments
£m
2
9
–
11
3
10
–
13
(2)
11
3
10
1
14
(2)
12
At 31 March
2018
Present value
of minimum
lease payments
£m
2
9
1
12
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.
156 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
1 5 6 | T AT E & LYL E PL C ANNUAL REP OR T 2 01 9
Internal Use Only
FINANCIAL STATEMENTS
25. NET DEBT
Reconciliation of the movement in cash and cash equivalents to the movement in net debt:
Net debt at beginning of the year
Net increase/(decrease) in cash and cash equivalents
Net (increase)/decrease in borrowings1
Decrease in net debt resulting from cash flows
Currency translation differences2
Fair value and other movements
Decrease in net debt in the year
Net debt at end of the year
Year ended 31 March
2019
£m
(392)
79
(2)
77
(21)
(1)
55
2018
£m
(452)
(48)
74
26
35
(1)
60
(337)
(392)
1 Net change in borrowings includes repayments of capital elements of finance leases of £2 million (2018 – £1 million).
2 Includes the foreign currency element of the fair value movement on cross currency swaps and the translation of foreign denominated borrowings.
Movements in the Group’s net debt were as follows:
At 1 April 2017
(Increase)/decrease from cash flows1
Reclassification
Currency translation differences2
Fair value and other movements
At 31 March 2018
Decrease/(increase) from cash flows1
Reclassification
Currency translation differences2
Fair value and other movements
At 31 March 2019
Cash and cash
equivalents
£m
261
(48)
–
(23)
–
190
79
–
16
–
285
Borrowings and finance leases
Current
£m
(88)
74
(3)
3
(2)
(16)
(2)
(208)
–
2
(224)
Non-current
£m
(604)
–
3
41
6
(554)
–
208
(27)
–
(373)
Debt-related
derivatives
£m
(21)
–
–
14
(5)
(12)
–
–
(10)
(3)
(25)
Total
£m
(452)
26
–
35
(1)
(392)
77
–
(21)
(1)
(337)
1 Net change in borrowings includes repayments of capital elements of finance leases of £2 million (2018 – £1 million).
2 Includes the foreign currency element of the fair value movement on cross currency swaps and the translation of foreign denominated borrowings.
At 31 March 2019, total liabilities arising from financing activities were £622 million (2018 – £582 million).
Debt-related derivative financial instruments represent the net fair value of currency and interest rate swaps that are used to manage the
currency and interest rate profile of the Group’s net debt. At 31 March 2019, the net fair value of these derivatives comprised assets of
£6 million (2018 – £10 million) and liabilities of £31 million (2018 – £22 million).
Net debt is denominated in the following currencies:
US dollar
Euro
Sterling
Other
Total
Internal Use Only
2019
£m
(144)
(56)
(145)
8
(337)
At 31 March
2018
£m
(276)
(36)
(56)
(24)
(392)
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
26. FINANCIAL INSTRUMENTS
Financial instruments by category
Set out below is a comparison by category of carrying values and fair values of all the Group’s financial assets and financial liabilities as at
31 March 2019 and 31 March 2018.
Investments in equities
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Borrowings
Derivative assets/(liabilities) used to manage net debt
— currency swaps
— interest rate swaps
Other derivative assets/(liabilities)
— commodity pricing contracts
Amortised
cost/cash
£m
Derivatives
in a hedging
relationship
£m
Notes
Derivatives
not in a
hedging
relationship
£m
17
16
15
23
24
–
312
285
(336)
(597)
–
–
–
–
–
–
–
–
(30)
5
–
–
–
–
–
–
–
(1)
27
Investments
in equities
£m
59
–
–
–
–
–
–
–
At 31 March 2019
Total
carrying
value
£m
Fair value
£m
59
312
285
(336)
(597)
(30)
5
59
312
285
(336)
(607)
(30)
5
26
26
At 31 March 2018
Amortised
cost/cash
Derivatives in
a hedging
relationship
Derivatives
not in a
hedging
relationship
Available-for-
sale financial
assets
Total
carrying
value
Available-for sale assets
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Borrowings
Derivative assets/(liabilities) used to manage net debt
— currency swaps
— interest rate swaps
Other derivative assets/(liabilities)
— commodity pricing contracts
Notes
£m
£m
£m
17
16
15
23
24
–
281
190
(315)
(570)
–
–
–
–
–
–
–
–
(21)
9
–
–
–
–
–
–
–
(2)
13
£m
37
–
–
–
–
–
–
–
£m
37
281
190
(315)
(570)
(21)
9
Fair value
£m
37
281
190
(315)
(576)
(21)
9
11
11
Investments in equities comprise financial assets recognised as fair value through the income statement (FVPL) and financial assets
recognised as fair value through OCI (FVOCI). Further analysis is provided in Note 17.
Trade and other receivables presented above excludes £15 million (2018 – £16 million) relating to prepayments. Trade and other payables
presented above excludes £6 million (2018 – £7 million) relating to social security.
Borrowings with a carrying value of £203 million (2018 – £207 million) relate to listed bonds with a fair value of £207 million (2018 – £217
million) according to quoted market prices and are categorised as Level 1 for fair value measurement. Borrowings with a carrying value of
£308 million (2018 – £285 million) relate to US Private Placement Notes with a fair value of £314 million (2018 – £281 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.
Derivatives assets/(liabilities) are presented in the statement of financial position as follows:
Non-current derivative financial instruments
Current derivative financial instruments
At 31 March 2019
At 31 March 2018
Liabilities
£m
Assets
£m
Liabilities
£m
(1)
(46)
(47)
8
24
32
(21)
(12)
(33)
Assets
£m
–
48
48
Derivatives are only used for economic hedging purposes and not as speculative investments.
158 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
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Internal Use Only
FINANCIAL STATEMENTS
26. FINANCIAL INSTRUMENTS continued
Fair value hedges
The Group employs interest rate swap contracts to hedge interest rate risks associated with its borrowings. This is achieved by swapping
fixed for floating rates to meet the Group’s risk management objectives. Refer to Note 27.
Interest rate swaps used to fair value hedge interest rate risk
Carrying amount of hedged item (weighted liability)
Accumulated amount of fair value included in carrying amount of hedged item
Notional principal amounts of interest rate swap contracts
Maturity date
Hedge ratio
Change in intrinsic value of outstanding hedging instruments used to determine hedge effectiveness
Change in intrinsic value of outstanding hedging item used to determine hedge effectiveness
Weighted average floating interest rate achieved for the year
Ineffectiveness recognised in profit or loss
2019
£m
153
3
150
At 31 March
2018
£m
157
7
150
Nov 2019
Nov 2019
1:1
(4)
4
3.6%
–
1:1
(6)
6
3.3%
–
Net investment hedges
The Group employs currency swap contracts and borrowings to hedge the currency risk associated with its net investments in subsidiaries
located in the US and Europe. In the 2018 financial year a weighted average total of £25 million of the Group’s liabilities were designated as
a net investment hedge in the Group’s Swedish operation. This was disposed of in the 2019 financial year and accordingly there is no net
investment hedge at 31 March 2019.
Foreign currency swaps used to net investment hedge currency translation risk
Notional principal amounts of outstanding currency swap contracts (weighted liability)
Translation of swap contract recognised in currency translation reserve
Maturity date
Hedge ratio
Change in intrinsic value of outstanding hedging instruments used to determine hedge effectiveness
Change in intrinsic value of outstanding hedging item used to determine hedge effectiveness
Weighted average foreign currency rate for the year (/£1)
Ineffectiveness gain recognised in profit or loss
Borrowings used to net investment hedge currency translation risk
Notional principal amounts of borrowings (weighted liability)
Translation of borrowings recognised in currency translation reserve
Maturity date
Hedge ratio
Change in intrinsic value of outstanding hedging instruments used to determine hedge effectiveness
Change in intrinsic value of outstanding hedging item used to determine hedge effectiveness
Weighted average foreign currency rate for the year (/£1)
Ineffectiveness recognised in profit or loss
2019
£m
178
(9)
At 31 March
2018
£m
169
14
Nov 2019
Nov 2019
1:1
(8)
9
1:1
15
(14)
$1.31/€1.16
$1.38/€1.14
1
1
2019
£m
218
(16)
At 31 March
2018
£m
198
24
Oct 2023-2027 Oct 2023-2027
1:1
(16)
16
$1.32
–
1:1
24
(24)
$1.36
–
Cash flow hedges
The Group employs commodity pricing contracts, principally futures, to hedge cash flow risk associated with forecast purchases which are
designated as cash flow hedges. The fair value of these hedging instruments at 31 March 2019 is £1 million liability (2018 – £2 million
liability). There was no ineffectiveness recorded in the current or prior financial years.
Internal Use Only
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
26. FINANCIAL INSTRUMENTS continued
Financial instruments measured at fair value: the fair value hierarchy
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
Group 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 re-assessing categorisation (based on the lowest level of input that is significant
to the fair value measurement as a whole) at the end of the reporting period.
The following tables illustrate the Group’s financial assets and liabilities measured at fair value at 31 March 2019 and 31 March 2018:
At 31 March 2019
Notes
Level 1
£m
Level 2
£m
Level 3
£m
17
17
Notes
17
Assets at fair value
Financial assets at FVPL
Financial assets at FVOCI
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 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
160 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
1 6 0 | T AT E & LYL E PL C ANNUAL REP OR T 2 01 9
Internal Use Only
–
–
–
–
2
2
–
(7)
(7)
–
–
1
5
1
7
(31)
(7)
(38)
35
24
–
–
39
98
–
(2)
(2)
Total
£m
35
24
1
5
42
107
(31)
(16)
(47)
Level 1
£m
Level 2
£m
Level 3
£m
Total
£m
At 31 March 2018
–
–
–
5
5
–
(5)
(5)
–
1
9
6
16
(22)
(1)
(23)
37
–
–
11
48
–
(5)
(5)
37
1
9
22
69
(22)
(11)
(33)
FINANCIAL STATEMENTS
26. FINANCIAL INSTRUMENTS continued
Level 3 financial assets
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 2017
Income statement:
— prior year amounts settled
— current year net (loss)/gain2
Non-qualified deferred compensation
arrangements
Purchases
Disposals
At 31 March 2018
IFRS 9 reclassification1
Income statement:
— prior year amounts settled
— current year net (loss)/gain2
Other comprehensive income
Non-qualified deferred compensation
arrangements (Note 17)
Purchases
Disposals
Currency translation differences
At 31 March 2019
Commodity pricing
contracts –
assets
Commodity pricing
contracts –
liabilities
£m
21
(21)
11
–
–
–
11
–
(10)
38
–
–
–
–
–
39
£m
(3)
3
(5)
–
–
–
(5)
–
5
(2)
–
–
–
–
–
(2)
Financial
assets
at FVPL1
£m
30
–
(1)
2
8
(2)
37
(16)
–
–
–
1
15
(3)
1
35
Financial
assets
at FVOCI
£m
–
–
–
–
–
–
–
16
–
–
2
–
5
–
1
24
Total
£m
48
(18)
5
2
8
(2)
43
–
(5)
36
2
1
20
(3)
2
96
1 Prior to 1 April 2019 and the adoption of IFRS 9 (Refer to Note 35) financial assets at FVPL and financial assets at FVOCI were classified together as
available-for-sale financial assets. These are presented in the financial assets at FVPL category above for the 2018 financial year.
2 Unrealised.
The full impact to the income statement of movements in the corn price on the net corn and co-product position is described within the
‘Price risk management’ section of Note 27. The table below describes the valuation techniques in relation to Level 3 financial instruments
and isolates the unobservable inputs.
Type
Valuation technique
Significant unobservable inputs
Sensitivity of the fair value measurement in reasonable changes to inputs
Net corn position
(refer to ‘Fair value
of purchases, sales
and inventory of
corn-based products
section in Note 2).
Based on the
Group’s own
assessment of the
commodity, supply
and demand, as well
as expected pricing.
1. Co-products
1. 10% increase/(decrease) in the price of co-products
would result in a net increase/(decrease) in fair value
of £2 million (2018 – £3 million) in respect of
Level 3 financial instruments.
2. Basis
2. 10% increase/(decrease) in the cost of basis would
result in a net increase/(decrease) in fair value of £1 million
(2018 – £2 million) in respect of Level 3
financial instruments.
In addition to the above, the Group’s FVOCI and FVPL financial assets are sensitive to a number of market and non-market factors.
Internal Use Only
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
27. RISK MANAGEMENT
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. The Group applies a limited level of hedge accounting to its economic
price exposure hedges.
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 manages foreign exchange transaction risk using economic hedging principles including managing working capital levels and
entering into offsetting arrangements wherever possible. The Group uses limited foreign exchange forward contracts to hedge its exposure
to foreign currency risk in some circumstances. There is no material amount recognised in the statement of financial position or hedging
reserve in the current or prior period.
Translation exposure
The Group manages the foreign exchange exposure to net investments in overseas operations, particularly in the US and Europe, by
borrowing in US dollars, which provide a partial match for the Group’s major foreign currency assets. The detail of these net investment
hedges can be found in Note 26.
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 income statement impact is due to
changes in the fair value of monetary assets and liabilities including non-designated foreign currency derivatives. 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 2019
At 31 March 2018
Income
statement -/+
£m
–
1
Equity -/+
£m
42
5
Income
statement -/+
£m
1
1
Equity -/+
£m
27
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 2019, the longest term of
any fixed rate debt held by the Group was until October 2027 (2018 – October 2027). The proportion of net debt managed by the Group’s
treasury function at 31 March 2019 that was fixed or capped for more than one year was 70% (2018 – 68%).
As at 31 March 2019, if interest rates increased by 100 basis points, Group profit before tax would decrease by £1 million (2018 – £2 million
decrease). If interest rates decreased by 100 basis points, or less where applicable, Group profit before tax would increase by £1 million
(2018 – £1 million increase).
Price risk management
The Group manages its US net corn position, comprising the purchase, sale and recognition of corn and corn derived co-product inventory
on a net basis. Each element of the net corn position is marked to market on the basis that doing so avoids accounting mismatch. The
Group uses financial instruments (mainly corn futures contracts) to manage this net position. Accordingly this position is not designated in
a hedge accounting relationship.
162 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
1 6 2 | T AT E & LYL E PL C ANNUAL REP OR T 2 01 9
Internal Use Only
FINANCIAL STATEMENTS
27. RISK MANAGEMENT continued
Price risk management continued
There are significant judgements and estimates used in applying marked to market/fair value accounting. These judgements and estimates
are disclosed in Note 2. As at 31 March 2019, a 10% increase/decrease in the price of corn would result in a decrease/increase to the
income statement of £1 million (2018 – £1 million) and related decrease/increase in other components of equity of £1 million (2018 – £nil).
The Group discloses sensitivity analysis on the key areas of estimation uncertainty (price of co-products and basis) and the carrying
amounts impacted by estimation uncertainty in Note 26. Full details of the valuation technique are also included in Note 26.
Additionally, the Group employs limited commodity pricing contracts, principally futures, to hedge cash flow risk associated with certain
forecast purchases which are designated as cash flow hedges. Refer to Note 26.
Credit risk management
Counterparty credit risk arises from the placing of deposits (refer to Note 15) 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 from major credit rating agencies. 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. 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 are largely comprised of 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 158.
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. 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.
At the year end, the Group held cash and cash equivalents of £285 million (2018 – £190 million) and had committed undrawn facilities of
£615 million (2018 – £570 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.
At 31 March 2019, the average maturity of the Group’s committed financing was 4.4 years (2018 – 5.4 years), taking account of undrawn
committed facilities.
The Group has a core committed revolving credit facility of US$800 million which was refinanced in the year and matures in 2024 (refer to
Note 24). This facility is unsecured and contains one financial covenant, that the multiple of net debt to EBITDA, as defined in the facility
agreement, should not be greater than 3.5 times.
In addition, the Group has US$400 million of US private placement notes which mature between 2023 and 2027. These notes contain
financial covenants that the interest cover ratio should not be less than 2.5 times and that the multiple of net debt to EBITDA, as defined in
the note purchase agreement, should not be greater than 3.5 times.
The ratios for these financial covenants were:
Net debt/EBITDA1
Interest cover2
Year ended 31 March
2019
Times
0.7
15.3
2018
Times
0.8
14.6
1 This financial covenant applies to both the revolving credit facility and US private placement notes at 31 March 2019 and 31 March 2018.
2 This financial covenant only applies to the US private placement notes at 31 March 2019. It applied to both the revolving credit facility and US private
placement notes at 31 March 2018.
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.
In the past the net debt to EBITDA ratio and the interest cover ratio were reported as key performance metrics in line with the calculation
methodology used for financial covenants on the Group’s borrowing facilities. Following the refinancing of the revolving credit facility and
the amended covenant definitions, the Group simplified the calculation of these KPIs to make them more directly related to information in
the Group’s financial statements. As such simplified calculations of net debt to EBITDA and interest cover are reported in Note 4.
Internal Use Only
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F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
27. RISK MANAGEMENT continued
Liquidity 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
(212)
(27)
(336)
362
(387)
(5)
< 1 year
£m
(8)
(25)
(305)
113
(110)
1
(115)
(53)
–
–
–
–
1 – 5 years
£m
(210)
(63)
(10)
166
(183)
–
At 31 March 2019
> 5 years
£m
(259)
(31)
–
–
–
–
At 31 March 2018
> 5 years
£m
(339)
(38)
–
–
–
–
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. Commodity pricing contracts classified within Level 2 and Level 3 of fair value measurement are not
included in the liquidity analysis above as they are not settled for cash.
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 PLC has contractual relationships with Moody’s and Standard & Poor’s (S&P) for the provision of credit ratings. At 31 March 2019,
the long-term credit rating from Moody’s was Baa2 (stable outlook) (2018 – Baa2) and from S&P was BBB (stable outlook) (2018 – BBB).
The Group regards its total capital as follows:
Net debt
Equity attributable to owners of the Company
Total capital
Note
25
2019
£m
337
1 489
1 826
2018
£m
392
1 367
1 759
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FINANCIAL STATEMENTS
28. RETIREMENT BENEFIT OBLIGATIONS
Plan information
The Group operates a number of defined benefit pension plans, principally in the UK and the US.
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. 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.
The UK plans primarily comprise funded retirement benefit plans where plan assets are held separately from those of the Group in funds
that are under the control of trustees. These plans are closed to new entrants and to future accrual. In the UK, scheme 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 US plans, presented below, principally comprise
— two funded plans where plan assets are held separately from those of the Group in funds that are under the control of trustees.
These plans are closed to new entrants and to future accrual.
— an unfunded retirement medical plan where the costs of providing these benefits are recognised in the period in which they are incurred.
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 liability associated with this plan at 31 March 2019 was
£77 million (2018 – £63 million). The Group paid £3 million (2018 – £5 million) into this plan in the year. Details on assumptions applied in
the calculation of the liability and sensitivity analysis thereon is included in this note.
— a retirement benefit plan to certain employees which is funded but the associated assets do not qualify for recognition as IAS 19 plan
assets. As such the plan is presented below as funded. The related assets are recognised as FVPL assets within investments in equities
(refer to Note 17). This is referred to as ‘non-qualified deferred compensation arrangements’ within this note.
— a retirement benefit plan for certain employees which is unfunded and non-qualified for tax purposes.
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 £10 million (2018 – £10 million).
Movement in net defined benefit asset/(liability)
Analysis of net defined benefit asset/(liability)
Benefit obligations:
Funded plans
Unfunded plans
Fair value of plan assets
Net surplus/(deficit)
Presented in the statement of financial position as:
Retirement benefit surplus
Retirement benefit deficit
Net surplus/(deficit)
At 31 March 2019
At 31 March 2018
UK plans*
£m
US plans
£m
Total
£m
UK plans*
£m
US plans
£m
Total
£m
(994)
(3)
(997)
1 178
181
201
(20)
181
(516)
(134)
(650)
493
(157)
6
(163)
(157)
(1 510)
(137)
(1 647)
1 671
24
207
(183)
24
(1 008)
(2)
(1 010)
1 167
157
174
(17)
157
(483)
(119)
(602)
463
(139)
4
(143)
(139)
(1 491)
(121)
(1 612)
1 630
18
178
(160)
18
* Includes £3 million (2018 – £2 million) relating to legacy unfunded retirement benefit plans of European subsidiaries.
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Notes to the consolidated financial statements (continued)
28. RETIREMENT BENEFIT OBLIGATIONS continued
Net defined benefit asset/(liability) reconciliation
Net surplus/(deficit) at 1 April 2018
Income statement:
— current service costs
— administration costs
— net interest expense
Other comprehensive income:
— actual return higher than interest on plan assets
— actuarial (loss)/gain:
— changes in financial assumptions
— changes in demographic assumptions
— experience against assumptions
Other movements:
— employer’s contribution
— non-qualified deferred compensation arrangements
— currency translation differences
Net surplus/(deficit) at 31 March 2019
* Included within US plans is the retirement medical plan of £77 million (2018 – £63 million).
Analysis of movement in the benefit obligations
At 1 April 2018
Income statement:
— current service costs
— interest costs
Other comprehensive income:
— actuarial (loss)/gain:
— changes in financial assumptions
— changes in demographic assumptions
— experience against assumptions
Other movements:
— benefits paid
— non-qualified deferred compensation arrangements
— currency translation differences
At 31 March 2019
Analysis of movement in plan assets
At 1 April 2018
Income statement:
— administration costs
— interest gains
Other comprehensive income:
— actual return higher than interest on plan assets
Other movements:
— employer contributions
— benefits paid
— currency translation differences
At 31 March 2019
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Internal Use Only
UK plans
£m
US plans*
£m
157
(139)
Total
£m
18
(1)
(1)
5
25
(33)
10
(2)
22
–
(1)
181
(1)
(1)
(5)
4
(13)
7
(3)
7
(1)
(12)
(157)
(2)
(2)
–
29
(46)
17
(5)
29
(1)
(13)
24
UK plans
£m
US plans
£m
Total
£m
(1 010)
(602)
(1 612)
(1)
(25)
(1)
(24)
(33)
10
(2)
65
–
(1)
(13)
7
(3)
35
(1)
(48)
(2)
(49)
(46)
17
(5)
100
(1)
(49)
(997)
(650)
(1 647)
UK plans
£m
1 167
US plans
£m
463
Total
£m
1630
(1)
30
(1)
19
25
4
22
(65)
–
1 178
–
(28)
36
493
(2)
49
29
22
(93)
36
1 671
FINANCIAL STATEMENTS
28. RETIREMENT BENEFIT OBLIGATIONS continued
Significant assumptions
For accounting purposes, the benefit obligation of each plan is based on assumptions made by the Group on the advice of independent actuaries.
For the UK defined benefit pension plan these ’best estimate’ IAS 19 assumptions are different to the more prudent assumptions used for funding
valuation purposes. For the US defined benefit pension plan, the funding valuation assumptions are identical to the IAS 19 assumptions.
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.
Principal assumptions
At 31 March 2019
At 31 March 2018
Inflation rate
Expected rate of salary increases
Expected rate of pension increases:
— deferred pensions
— pensions in payment
Discount rate
Average life expectancy
UK
2.3%/3.3%
n/a
2.3%
3.2%
2.4%
US
2.5%
3.5%
n/a
n/a
3.8%
UK
2.2%/3.2%
n/a
2.2%
3.1%
2.6%
US
2.5%
3.5%
n/a
n/a
4.0%
— male aged 65 now/ in 20 years
— female aged 65 now/ in 20 years
21.3/23.0 years
20.5/22.2 years
21.4/23.2 years 20.8/22.4 years
23.4/25.2 years
22.6/24.2 years
23.5/25.3 years 22.7/24.3 years
Principal assumptions used in calculating the US medical benefit obligation are medical cost inflation and the discount rate applied to the
expected benefit payments. The Group has assumed medical cost inflation at 7.0% per annum (2018 – 7.5%), grading down to 5% by 2023,
and used a discount rate of 3.7% (2018 – 3.9%).
At 31 March 2019, the sensitivity of the net surplus/(deficit) on the plans to changes in the principal assumptions was as follows (assuming
in each case that the other assumptions are unchanged):
Inflation rate*
Life expectancy
Discount rate
Increase/(decrease)
in obligation
Change in
assumptions +/-
Increase in
surplus/(deficit)
£m
Decrease in
surplus/(deficit)
£m
50 bp
1 year
50 bp
56
66
(103)
(54)
(74)
114
* Inflation rate sensitivity covers the inflation assumption, expected rate of salary increases assumption and expected rate of pensions in payment increases assumption.
Analysis of plan assets
Quoted1
Equities
Corporate bonds
Government bonds
Investment funds
Repurchase agreements2
Cash
Unquoted
Investment funds
Derivatives
Insurance policies
UK
£m
3
156
781
289
(334)
15
1
12
255
1 178
Year ended 31 March 2019
Year ended 31 March 2018
US
£m
–
332
157
–
–
–
–
–
4
493
Total
£m
3
488
938
289
(334)
15
1
12
259
1 671
UK
£m
79
162
811
205
(383)
15
1
15
262
1 167
US
£m
–
331
128
–
–
–
–
–
4
463
Total
£m
79
493
939
205
(383)
15
1
15
266
1 630
1 Quoted assets contain certain pooled funds where the underlying assets are quoted.
2 Repurchase agreements are used to manage liquidity and hedge the liabilities. They relate to the repurchase of bonds and as such are presented together
within quoted assets.
The fair value of the insurance policies is deemed to be equivalent to the present value of the related benefit obligation. The Group also paid
an additional £3 million (2018 – £5 million) into the US unfunded retirement medical plans and £4 million (2018 – £4 million) into the US
unfunded pension plans to meet the cost of providing benefits in the financial year.
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F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
28. RETIREMENT BENEFIT OBLIGATIONS continued
Maturity profile
At 31 March 2019, the weighted average duration of the plans and the benefit payments expected by the plans are as follows:
Weighted average duration
Benefit payments expected:
— within 12 months
— between 1 to 5 years
— between 6 to 10 years
UK plans
£m
US plans
£m
15.9
11.2
41
165
217
39
159
195
Total
£m
14.0
80
324
412
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. The main UK scheme triennial valuation as at 31 March 2016 was concluded during 2017, with
agreed core funding contributions maintained at £12 million per year, and the Group also committing to extend the supplementary
contributions payable into the secured funding account of £6 million per year until 31 March 2023. This funding is payable to the trustees on
certain triggering events or as mutually agreed between the Company and Trustee. Payments of £22 million in the year to 31 March 2019
included one principal funding contribution of £12 million and the supplementary contribution of £6 million. The Group will continue to fund
the UK plan administration costs. The next triennial valuation is due as at 31 March 2019 and is expected to be concluded in 2020.
During the year ending 31 March 2020 the Group expects to contribute approximately £26 million to its defined benefit pension plans and to
pay approximately £4 million in relation to retirement medical benefits.
Risk mitigation
Risk
Investment and
longevity risks
Action taken
The remaining assets of the funded defined benefit plans in the UK and US are now predominately held in fixed
interest security type investments as a result of de-risking initiatives through the sale of the equities and some
investment funds.
The Group seeks to ensure that, as far as practicable, the investment portfolios of the funded plans are invested in
securities with maturities and in currencies that match the expected future benefit payments as they fall due.
Repurchase agreements are used to manage liquidity and hedge the liabilities.
At 31 March 2019 £259 million (2018 – £266 million) of the benefit obligation was fully matched by qualifying insurance
policies that also mitigate longevity and investment risks.
Interest rate risk In the UK interest rate derivatives are used to achieve close matching where matching fixed-interest securities are not
available in the market. At 31 March 2019 the ratio of non-insured liabilities under the main UK plan which had been
hedged for both interest rate and inflation rate risks was 87% (2018 – 87%). For interest rate purposes it is the economic
liability risk which is hedged rather than the IAS 19 accounting liability risk, i.e. the hedging is linked to movements in
government bond yields rather than high quality AA corporate bond yields. The economic liability risk is hedged in this
way as it impacts the funding position which, in turn, drives the Company’s cash contribution requirements.
Inflation risk
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 inflation derivatives.
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Internal Use Only
FINANCIAL STATEMENTS
29. 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 2019 and 2018 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 £18 million (2018 – £15 million).
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. During the year, the Company adopted the amendment to IFRS 2 permitting net settled share-based payments to be
treated as equity-settled in full, if certain criteria were met, rather than the tax element being cash-settled. The amount transferred to the
tax authorities in the year was £8 million and has been recognised within financing activities in the consolidated statement of cash flows.
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 are 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 Food & Beverage
Solutions adjusted operating profit.
The performance period is the period of three financial years beginning with the financial year in which the award is granted.
Group Bonus Plan – deferred element
Bonuses earned under the Group Bonus Plan (GBP) 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.
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%.
Restricted Share Awards
The Company has made a Restricted Share Award (RSA) to a number of eligible employees. Awards made normally vest provided the
participant remains in the Group’s employment during the performance period and other conditions, specific to the individual awards,
are met.
Further information for these awards made in relation to executive directors are set out in the Directors’ Remuneration Report on pages 94
to 111.
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
2019
2018
Awards
(number)
Weighted average
exercise price
(pence)
Awards
(number)
Weighted average
exercise price
(pence)
11 113 907
4 745 186
(3 442 524)
(964 333)
11 452 236
208 598
13p
12 435 492
9p
5p
15p
13p
63p
4 262 759
(2 130 967)
(3 453 377)
11 113 907
485 268
10p
15p
13p
5p
13p
17p
The weighted average market price of the Company’s ordinary shares on the dates on which awards were exercised during the year was
666p (2018 – 704p).
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F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
29. SHARE-BASED PAYMENTS continued
Awards granted in the year
During the year, PSP awards were granted over 4,094,623 shares (2018 – 3,807,789 shares), RSAs were granted over 439,096 shares
(2018 – 124,011 shares), the deferred element of GBP awards were granted over 133,095 shares (2018 – 216,727 shares) and Sharesave
options were granted over 78,372 shares (2018 – 114,232 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
Exercise price
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 2019
Year ended 31 March 2018
PSP
601p
–
664p
Sharesave
PSP
Sharesave
143p
548p
627p
–
695p
687p
133p
555p
684p
3 years
3.3/5.3 years
3 years
3.3/5.3 years
n/a
0.79%/0.92%
n/a
0.62%/0.86%
4.34%
n/a
4.16%
4.08%
25%
n/a
4.12%
25%
In addition the 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 654p (2018 – 795p). The RSAs were granted, with employment related conditions and expected life of the award, specific to
each individual grant.
The fair value of the awards was measured using a Black-Scholes option pricing methodology, taking into account factors such as
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 2019
Weighted average
contractual life
(months)
47.7
31.5
47.4
At 31 March 2018
Weighted average
contractual life
(months)
46.7
33.8
46.4
Awards
(number)
10 853 697
260 210
11 113 907
Awards
(number)
11 177 411
274 825
11 452 236
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FINANCIAL STATEMENTS
30. PROVISIONS AND CONTINGENT LIABILITIES
Provisions
At 1 April 2017
Provided in the year
Released in the year
Utilised in the year
Exchange and other movements
At 31 March 2018
Provided in the year
Released in the year
Utilised in the year
Exchange and other movements
At 31 March 2019
Provisions are expected to be utilised as follows:
— within one year
— after more than one year
Total
Insurance
provisions
Restructuring and
closure provisions
£m
£m
Environmental
Health & Safety
provision
£m
9
2
–
(3)
(1)
7
5
–
(1)
1
12
3
–
–
(2)
(1)
–
11
–
(6)
–
5
–
–
–
–
–
–
16
–
(1)
–
15
Litigation and other
provisions
£m
15
1
(1)
(1)
(1)
13
2
(2)
(1)
–
12
2019
£m
24
20
44
Total
£m
27
3
(1)
(6)
(3)
20
34
(2)
(9)
1
44
At 31 March
2018
£m
5
15
20
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.
Insurance provisions include amounts provided by the Group’s captive insurance subsidiary in respect of the expected level of
insurance claims.
Restructuring provisions relate to a Group programme to deliver US$100 million of productivity benefits. 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. Refer to Note 8 for further detail.
£16 million of provisions have been recognised in the year ended 31 March 2019 to remediate environmental health and safety risks
associated with idle assets at manufacturing sites in North America. Refer to Note 8 for further detail.
The difference between the carrying value and the discounted present value was not material in either year. All provisions classified as
greater than one year are expected to be utilised within five years.
Contingent liabilities
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.
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 it,
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 the Group will continue to vigorously defend itself in this matter, in light of
the publication of the ROD, the Group has maintained a provision of £6 million in respect of this. 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 for this section.
Other claims
The Group is subject to claims and litigation generally arising in the ordinary course of its business. Provision is made when liabilities are
considered likely to arise and the expected quantum of the exposure is estimable. The risk in relation to claims and litigation is monitored
on an ongoing basis and provisions amended accordingly. It is not expected that claims and litigation existing at 31 March 2019 will have a
material adverse effect on the Group’s financial position.
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F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
31. OPERATING LEASES AND OTHER COMMITMENTS
Operating lease payments represent rentals payable by the Group for certain of its land, buildings, plant and equipment. The Group
determines that it has an operating lease when it has an arrangement in which it has the right to control the use of output from a specific
asset. 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
2019
£m
37
126
145
308
At 31 March
2018
£m
35
106
133
274
The future minimum sublease payments expected to be received under non-cancellable subleases at the end of the reporting period is
£2 million (2018 – £2 million).
Total commitments for the purchase of tangible and intangible non-current assets are £35 million (2018 – £26 million). In addition,
commitments in respect of retirement benefit obligations are detailed in Note 28.
32. EQUITY ACQUISITIONS AND DISPOSALS
In the 2019 financial year:
Completion of Sweet Green Fields investment
On 7 December 2018, the Group completed the acquisition of a 15% equity holding in Sweet Green Fields for US$15 million (£12 million).
Under the terms of the agreement, the Group has an option to acquire the remaining 85% share in due course. After considering all the
terms of the arrangement with Sweet Green Fields it has been determined that the Group does not have significant influence. Accordingly
the investment has been recognised within investment in equities. Refer to Note 17.
Completion of acquisition of non-controlling interest of Gemacom
On 30 November 2018, the Group completed the acquisition of the remaining non-controlling interest in Gemacom for £9 million in satisfaction
of the put and call option arrangement and deferred consideration due. There was no income statement gain or loss as result of this
transaction.
In the 2018 financial year:
Completion of Tapioca Development Corporation disposal
On 2 November 2017, the Group completed the sale of its 33.3% share in an associated undertaking, the Tapioca Development Corporation.
This sale resulted in cash proceeds of £5 million and a profit on disposal of £2 million, after recycling of cumulative foreign exchange
translation gains of £1 million from reserves to the income statement upon disposal.
33. RELATED PARTY DISCLOSURE
Identity of related parties
The Group has related party relationships with its joint ventures, the Group’s pension schemes and with key management, being its
Directors and executive officers. Key management compensation is disclosed in Note 9. There were no other related party transactions with
key management. There were no material changes in related parties or in the nature of related party transactions during the year and no
material related party transactions containing unusual commercial terms in the current or prior year.
Subsidiaries and joint ventures
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
2019
£m
164
–
28
–
2018
£m
147
–
20
–
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.
34. EVENTS AFTER THE BALANCE SHEET DATE
There are no post balance sheet events requiring disclosure in respect of the year ended 31 March 2019.
172 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
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FINANCIAL STATEMENTS
35. CHANGE IN ACCOUNTING POLICIES
As explained in Note 1, the Group has adopted IFRS 9 Financial instruments and IFRS 15 Revenue from contracts with customers.
The adoption of these accounting standards has not had a material effect on the financial statements, although it has resulted in changes
to the classification of items recognised in the financial statements. The Group has also adopted an amendment to IFRS 2.
IFRS 9 and 15 have been adopted with the initial application date of 1 April 2018 and without restating comparatives.
The following table shows that the impact of the adoption of these new accounting standards on the relevant financial statement line item
has been limited to a reclassification within non-current assets. There is no impact on other financial statement line items.
Non-current assets
Available-for-sale financial assets
Financial assets at FVOCI
Financial assets at FVPL
Current assets
Trade and other receivables
Equity
Other reserves
Retained earnings
IFRS 9 Financial Instruments
31 March 2018 as
originally
presented
£m
IFRS 9
£m
IFRS 15
£m
1 April 2018
£m
37
–
–
294
159
677
(37)
16
21
–
–
–
–
–
–
–
–
–
–
16
21
294
159
677
Measurement of financial instruments
The Group has trade receivables which are financial assets subject to IFRS 9’s new expected credit loss (ECL) model. The Group was
required to revise its impairment methodology under IFRS 9. For these trade receivables, the Group applies the simplified approach to
providing for expected credit losses, prescribed by IFRS 9, which requires the use of the lifetime expected loss provision for all trade and
other receivables. The Group has a low level of default on its receivables and as such the impact of adopting the simplified ECL model is not
material. Further detail is disclosed in Note 16.
Classification of financial instruments
Assets with a fair value of £37 million were reclassified from available-for-sale financial assets to financial assets at fair value through OCI
(FVOCI) and fair value through the profit or loss (FVPL). Further detail is disclosed in Note 17. All other measurement categories used
under IAS 39 have remained the same under IFRS 9.
Hedge accounting
IFRS 9 amends some of the requirements for the application of hedge accounting. The foreign currency and certain commodity forwards in
place as at 31 March 2018 qualified as cash flow hedges under IFRS 9. The Group’s risk management strategies and hedge documentation
are aligned with the requirements of IFRS 9 and these relationships therefore continue to be treated as hedges.
Gains or losses relating to the effective portion of hedging instruments are recognised in OCI within the hedging reserve. Amounts
accumulated in the hedging reserve are reclassified in the periods when the hedged item affects the income statement as follows:
— Where the hedged item subsequently results in the recognition of a non-financial asset (such as inventory), the hedging gains and losses
are included within the cost of inventory. The deferred amounts are ultimately recognised in the income statement as the hedged item
affects the income statement (for example, through cost of sales).
— Where the hedged item does not subsequently result in the recognition of a non-financial asset, the hedging gains and losses are
recognised directly in the income statement as the hedged item affects the income statement.
IFRS 15 Revenue from contracts with customers
The Group has completed its review of 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 has not had a material
impact on reported revenue or revenue growth rates. There are however a number of additional disclosures (refer to Note 5).
IFRS 2 Amendment: Classification and measurement of share-based payment transactions
During the year, the Company adopted the amendment to IFRS 2 permitting net settled share-based payments to be treated as equity-
settled in full, if certain criteria were met, rather than the tax element being cash-settled. The amount transferred to the tax authorities in
the year was £8 million and has been recognised within financing activities in the consolidated statement of cash flows. There is no material
impact of adopting this amendment on the financial statements in the current or previous financial year.
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F IN ANCI AL S TAT E MENT S
Notes to the consolidated financial statements (continued)
36. RELATED UNDERTAKINGS
A full list of related undertakings, comprising subsidiaries and joint ventures, is set out below. All are 100% owned directly or indirectly by
the Group except where percentage ownership is indicated with (X)%.
Subsidiaries
Company name
Registered address
Company name
Registered address
1 Kingsway, London WC2B 6AT, UK
1 Kingsway, London WC2B 6AT, UK
1 Kingsway, London WC2B 6AT, UK
1 Kingsway, London WC2B 6AT, UK
1 Kingsway, London WC2B 6AT, UK
1 Kingsway, London WC2B 6AT, UK
1 Kingsway, London WC2B 6AT, UK
United Kingdom1
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) Limited3
T.L.S.S. Pension Nominees Limited2
1 Kingsway, London WC2B 6AT, UK
Tate & Lyle Export Holdings Limited2 1 Kingsway, London WC2B 6AT, UK
1 Kingsway, London WC2B 6AT, UK
Tate & Lyle Group Services Limited
1 Kingsway, London WC2B 6AT, UK
Tate & Lyle Holdings Americas
Limited
Tate & Lyle Holdings Limited3
Tate & Lyle Industrial Holdings
Limited2
Tate & Lyle Industries Limited
1 Kingsway, London WC2B 6AT, UK
Tate & Lyle International Finance PLC2 1 Kingsway, London WC2B 6AT, UK
1 Kingsway, London WC2B 6AT, UK
Tate & Lyle Investments
(Gulf States) Limited
Tate & Lyle Investments America
Limited3
Tate & Lyle Investments Brazil
Limited
Tate & Lyle Investments Limited2,3
Tate & Lyle L.P.
1 Kingsway, London WC2B 6AT, UK
1209 North Orange Street,
1 Kingsway, London WC2B 6AT, UK
1 Kingsway, London WC2B 6AT, UK
1 Kingsway, London WC2B 6AT, UK
1 Kingsway, London WC2B 6AT, UK
Tate & Lyle Overseas Limited
Tate & Lyle Pension Trust Limited2
Tate & Lyle Share Shop Limited2
Tate & Lyle Technology Limited2
Tate & Lyle UK Limited2
Tate & Lyle Ventures II LP
Tate & Lyle Ventures Limited2
Tate & Lyle Ventures LP
Argentina
Tate & Lyle Argentina SA4
Australia
Tate & Lyle ANZ Pty Limited
Belgium
Tate & Lyle Services (Belgium) N.V.2
Bermuda
Tate & Lyle Management & Finance
Limited
Brazil
Tate & Lyle Brasil S.A.4
G.C. Hahn & Co. do Brasil
Estabilizantes e Tecnologia para
Alimentos Ltda.4
Tate & Lyle Gemacom Tech
Indústria e Comércio S.A.4
Wilmington, Delaware 19801, USA
1 Kingsway, London WC2B 6AT, UK
1 Kingsway, London WC2B 6AT, UK
1 Kingsway, London WC2B 6AT, UK
1 Kingsway, London WC2B 6AT, UK
1 Kingsway, London WC2B 6AT, UK
1 Kingsway, London WC2B 6AT, UK
1 Kingsway, London WC2B 6AT, UK
1 Kingsway, London WC2B 6AT, UK
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
No. 380, Distrito Industrial, City of
Juiz de Fora, State of Minas Gerais
at Rua B, 36092-050, Brazil
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Canada
Tate & Lyle Ingredients
Canada Limited
Chile
Tate & Lyle Chile Commercial Ltda
China
Tate & Lyle Trading (Shanghai)
Co. Ltd4
G.C. Hahn & Co. Food Stabiliser
Business (Shanghai) Ltd4
Tate & Lyle Food Ingredients
(Nantong) Company Limited4
Colombia
Tate & Lyle Colombia S.A.S.4
Suite 400, Phoenix Square, 371 Queen
Street, Fredericton NB E3B 4Y9, Canada
Isidora Goyenechea 2800, Piso 43,
Las Condes, Santiago, Chile
Room 1401, Building 11, No. 1582,
Gumei Road, Xuhui District,
Shanghai, 200233, China
Unit A, Room 1301, Building 11,
No. 1582, Gumei Road, Xuhui
District, Shanghai, 200233, China
New & Hi-Tech Industrial
Development District, Rudong
county, Nantong city, 226400, China
Calle 11 #100-121 Of 309,
Cali, Colombia
Croatia
G.C. Hahn & Co. d.o.o. Za distribuciju
stabilizacionih sistema
Donji Banovec 15, Koprivnica,
48000, Croatia
Czech Republic
G.C. Hahn & Co. stabilizacni
technika, s.r.o.
Egypt
Tate & Lyle Egypt LLC
France
G.C. Hahn & Cie. SARL
Tate & Lyle Ingredients France
S.A.S.
Germany
G.C. Hahn & Co.
Stabilisierungstechnik GmbH
G.C. Hahn & Co.
Cooperationsgesellschaft GmbH
Tate & Lyle Germany GmbH
Gibraltar
Tate & Lyle Insurance (Gibraltar)
Limited
Greece
Tate & Lyle Greece A.E. (95%)
India
Tate & Lyle Investments (India)
Private Ltd
Italy
Tate & Lyle Italia S.P.A.
Japan
Tate & Lyle Japan KK
Lithuania
UAB G.C. Hahn & Co.
Ostravská 169, 339 01 Klatovy IV,
Czech Republic
87 Street 9, Maadi, Cairo, Egypt
76, rue du Maréchal Lyautey, 78100
Saint Germain En Laye, France
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
Suite 913, Europort, Gibraltar
54248 Thessaloniki, K. Papadaki 69,
Greece
C-367, Defense Colony, New Delhi,
110 024, India
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
FINANCIAL STATEMENTS
36. RELATED UNDERTAKINGS continued
Company name
Registered address
Company name
Registered address
Piso 2, Av. Universidad 749,
Col del Valle Sur, Ciudad de Mexico,
03100, México
Calle lago de tequesquitengo,
No 111 Col. Cuahutemoc C.P. 62430,
Morelos, México
Piso 2, Av. Universidad 749,
Col del Valle Sur, Ciudad de Mexico,
03100, México
22, Rue du Parc, Casa Théâtre
Centre, Anfa, Casablanca, Morocco
USA
Staley Holdings LLC
Tate & Lyle Custom Ingredients LLC
Tate & Lyle Finance LLC
TLHUS, Inc.
Tate & Lyle Ingredients
Americas LLC
Tate & Lyle Sucralose LLC
TLI Holding LLC
1541 KA, Koog aan de Zaan, Lagedijk
5, The Netherlands
1541 KA, Koog aan de Zaan, Lagedijk
5, The Netherlands
Tate & Lyle Domestic International
Sales Corporation
Tate & Lyle Grain, Inc.
Mexico
Tate & Lyle México, S. de R.L.
de C.V.4
Mexama, S.A. de C.V.4 (65%)
Talo Services de Mexico, S.C.4
Morocco
T&L Casablanca S.A.R.L.
Netherlands
Nederlandse Glucose Industrie B.V.
Tate & Lyle Netherlands B.V.
Poland
G.C. Hahn & Co. Technika
stabilizowania Sp.z o.o.
Tate & Lyle Global Shared Services
Sp.z o.o.
Tate & Lyle Poland Sp.z o.o.
Russia
Tate & Lyle CIS LLC4
Singapore
Tate & Lyle Asia Pacific Pte. Ltd.
Tate & Lyle Singapore Pte Ltd
Tate & Lyle Singapore Holdings
Pte Ltd
Slovakia
Tate & Lyle Boleraz s.r.o.
Tate & Lyle Slovakia, s.r.o.
South Africa
Tate and Lyle South Africa
Proprietary Limited
Spain
G.C. Hahn Estabilizantes y
Tecnologia para Alimentos
Ebromyl S.L.
Sweden
Tate & Lyle Sweden AB
Turkey
Tate and Lyle Turkey Gıda Hizmetleri
Anonim Şirketi
Ukraine
PII G.C. Hahn & Co. Kiev4
United Arab Emirates
Tate & Lyle DMCC
Sterlinga 8A, 91425, Łódź, Poland
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
16 Raffles Quay, #22-00 Hong Leong
Building Singapore 048581
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
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, 08320 Kiew, Ukraine
Cluster X, Tower X3, Office n. 3805.,
Jumeirah Lake Towers, Dubai,
United Arab Emirates
1209 North Orange Street,
Wilmington, DE 19801, USA
1209 North Orange Street,
Wilmington, DE 19801, USA
1209 North Orange Street,
Wilmington, DE 19801, USA
1209 North Orange Street,
Wilmington, DE 19801, USA
1209 North Orange Street,
Wilmington, DE 19801, USA
1209 North Orange Street,
Wilmington, DE 19801, USA
1209 North Orange Street,
Wilmington, DE 19801, USA
1209 North Orange Street,
Wilmington, DE 19801, USA
1209 North Orange Street,
Wilmington, DE 19801, USA
1209 North Orange Street,
Wilmington, DE 19801, USA
1209 North Orange Street,
Wilmington, DE 19801, USA
1209 North Orange Street,
Wilmington, DE 19801, USA
1209 North Orange Street,
Wilmington, DE 19801, USA
1209 North Orange Street,
Wilmington, DE 19801, USA
1209 North Orange Street,
Wilmington, DE 19801, USA
Registered address
Calle 26 No. 2756, Zona Industrial,
Guadalajara, Jal., 44940, Mexico
Calle 26 No. 2756, Zona Industrial,
Guadalajara, Jal., 44940, Mexico
Calle 26 No. 2756, Zona Industrial,
Guadalajara, Jal., 44940, Mexico
1209 North Orange Street,
Wilmington, Delaware 19801,
United States
Tate & Lyle Malic Acid LLC
Tate & Lyle Sugar Holdings, Inc.
Tate & Lyle Americas LLC
Tate & Lyle Citric Acid LLC
Staley International Inc.
G. C. Hahn USA LLC
Joint Ventures
Company name
Mexico
Almidones Mexicanos S.A.
de C.V. 4 (50%)
Promotora de Productos y Mercados
Mexicanos, S.A. de C.V.4 (50%)
Estacion de Transferencia
Coatzacoalcos, S.A. de C.V. 4 (50%)
USA
DuPont Tate & Lyle Bio Products
Company, LLC (50%)
1 Registered in England and Wales, except Tate & Lyle L.P. which is
registered in Delaware, USA.
2 Direct subsidiaries of Tate & Lyle PLC.
3 Entity also issues preference shares which are 100% attributable to
Tate & Lyle PLC.
4 Non-coterminous year end (31 December) due to local statutory requirements.
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.
Changes in the Group’s ownership interest in a subsidiary that
do not result in a loss of control would be accounted for within
equity. Any gain or loss upon loss of control would be recognised in
the income statement.
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F IN ANCI AL S TAT E MENT S
Parent Company balance sheet
ASSETS
Fixed assets
Tangible fixed assets
Intangible assets
Investments in subsidiary undertakings
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
2019
£m
At 31 March
2018
£m
2
2
2
3
4
4
6
1
4
1 070
1 075
1 541
–
1 541
(1 318)
223
1 298
(2)
1 296
117
406
8
765
3
2
1 037
1 042
1 480
–
1 480
(1 208)
272
1 314
(2)
1 312
117
406
8
781
1 296
1 312
The Company recognised profit for the year of £108 million (2018 – £180 million).
The Parent Company’s financial statements on pages 176 to 181 were approved by the Board of Directors on 22 May 2019 and signed on its
behalf by:
Nick Hampton
Director
Imran Nawaz
Director
The notes on pages 178 to 181 form part of these financial statements.
Tate & Lyle PLC
Registered number: 76535
176 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
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FINANCIAL STATEMENTS
Parent Company statement of changes in equity
At 1 April 2017
Profit for the year
Purchase of own shares
Share-based payments
Dividends paid
At 31 March 2018
Profit for the year
Purchase of own shares including net settlement
Share-based payments
Dividends paid
At 31 March 2019
Called up
share
capital
£m
117
Share
premium
account
£m
406
–
–
–
–
–
–
–
–
117
406
–
–
–
–
–
–
–
–
117
406
Capital
redemption
reserves
£m
Retained
earnings
£m
8
–
–
–
–
8
–
–
–
–
8
744
180
(27)
15
(131)
781
108
(8)
18
(134)
765
Total
equity
£m
1 275
180
(27)
15
(131)
1 312
108
(8)
18
(134)
1 296
At 31 March 2019, the Company had realised profits available for distribution in excess of £625 million (2018 – in excess of £650 million).
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F IN ANCI AL S TAT E MENT S
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 the
Companies Act 2006 as at 31 March 2019, with comparative figures
as at 31 March 2018.
For the reasons set out on page 130, 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 8.
The results of the Company are included in the preceding Group
financial statements.
The following disclosure 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
preceding 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
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.
Investments in subsidiary undertakings represent interests that are
directly owned by the Company and are stated at cost less amounts
written off for any permanent diminution in value.
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.
Share-based payments
As described in Note 29 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.
Estimating fair value for share-based transactions requires
determination of the most appropriate valuation model
which depends on the terms and conditions of each individual grant.
This estimation also requires determination of the most appropriate
inputs to the valuation model.
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 a Black-Scholes option pricing methodology.
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.
Guarantees
From time to time, the Company provides guarantees to third
parties in respect of the indebtedness of its subsidiary undertakings
and joint ventures. The Directors consider these guarantees to be
insurance arrangements and, therefore, the Company recognises a
liability in respect of such guarantees only in the event that it
becomes probable that the guarantee will be called upon and the
Company will be required to make a payment to the third party.
Own shares
Own shares represent the Company’s ordinary shares that are held
by the Company in treasury or by a sponsored Employee Benefit
Trust that are used to satisfy awards made under the Company’s
share-based incentive plans. When own shares are acquired, the
cost of purchase in the market is deducted from the profit and
loss account reserve. Gains or losses on the subsequent transfer
or sale of own shares are also recognised in the profit and loss
account reserve.
Dividends
Dividends on the Company’s ordinary shares are recognised when
they have been appropriately authorised and are no longer at the
Company’s discretion. Accordingly, interim dividends are
recognised when they are paid and final dividends are recognised
when they are declared following approval by shareholders at the
Company’s AGM. Dividends are recognised as an appropriation of
shareholders’ funds. Details of dividends paid and proposed are set
out in Note 7.
Dividend income received from subsidiary companies is recognised
when the right to receive the payment is established.
178 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
1 7 8 | T AT E & LYL E PL C ANNUAL REP OR T 2 01 9
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FINANCIAL STATEMENTS
2. FIXED ASSETS
Cost
At 1 April 2018
Additions
Disposals
At 31 March 2019
Accumulated depreciation/amortisation/impairment
At 1 April 2018
Depreciation/amortisation/impairment charge
Disposals
At 31 March 2019
Net book value at 31 March 2018
Net book value at 31 March 2019
3. DEBTORS
Due within one year
Current tax
Amounts owed by subsidiary undertakings
Other debtors
Total
Plant and
machinery
£m
Intangible
assets
£m
Investments in
subsidiaries
£m
6
–
(1)
5
3
1
–
4
3
1
5
2
–
7
3
–
–
3
2
4
1 595
33
–
1 628
558
–
–
558
1 037
1 070
2019
£m
26
1 512
3
1 541
At 31 March
2018
£m
8
1 469
3
1 480
The effective interest rate applicable to amounts owed by subsidiary undertakings at 31 March 2019 is 2.7% (2018 – 2.1%). Amounts owed by
subsidiary undertakings are receivable on demand. There is no security for non-trading amounts.
4. CREDITORS
Due within one year
Amounts owed to subsidiary undertakings
Other creditors
Accruals and deferred income
Total
2019
£m
1 297
5
16
1 318
At 31 March
2018
£m
1 187
5
16
1 208
The effective interest rate applicable to amounts owed to subsidiary undertakings at 31 March 2019 was 3.3% (2018 – 2.5%). Amounts owed
to subsidiary undertakings are repayable on demand. There is no security for non-trading amounts.
In addition there are £2 million of cumulative preference shares due after one year. 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.
Internal Use Only
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
F IN ANCI AL S TAT E MENT S
Notes to the Parent Company financial statements (continued)
5. GUARANTEES AND FINANCIAL COMMITMENTS
At 31 March 2019, the Company had given guarantees in respect of committed financing of certain of its subsidiaries and joint ventures
totalling £1,302 million (2018 – £1,196 million), against which amounts drawn totalled £612 million (2018 – £571 million). The Company had
given guarantees in respect of operating lease commitments of certain of its subsidiaries and joint ventures totalling £260 million
(2018 – £234 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 9.
Operating lease rentals payable during the year were £2 million (2018 – £1 million), all in respect of land and buildings. At 31 March 2019,
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
2019
£m
2
7
4
13
At 31 March 2019 and 31 March 2018, the Company had no outstanding capital commitments.
6. 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
468 308 934
37 016
468 345 950
2019
Cost
£m
117
–
117
Number
of shares
468 256 866
52 068
468 308 934
At 31 March
2018
£m
2
7
5
14
2018
Cost
£m
117
–
117
See Note 21 in the consolidated financial statements for details of treasury shares and shares held in the Employee Benefit Trust.
7. 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
2019
pence
8.6
20.8
29.4
2018
pence
8.4
20.3
28.7
The Directors propose a final dividend for the financial year of 20.8p per ordinary share that, subject to approval by shareholders, will be
paid on 31 July 2019 to shareholders who are on the Register of Members on 21 June 2019.
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
2019
£m
94
40
134
2018
£m
92
39
131
Based on the number of ordinary shares outstanding at 31 March 2019 and the proposed amount, the final dividend for the financial year is
expected to amount to £96 million.
180 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
1 8 0 | T AT E & LYL E PL C ANNUAL REP OR T 2 01 9
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FINANCIAL STATEMENTS
8. PROFIT AND LOSS ACCOUNT DISCLOSURES
The Company recognised a profit for the year of £108 million (2018 – £180 million).
Fees payable to the Company’s external auditors, Ernst & Young LLP, for the audit of the Company’s financial statements amounted to
£0.1 million (2018 – £0.1 million). The comparative period relates to fees paid to PricewaterhouseCoopers LLP as the Group changed
auditor during the year.
The Company employed an average of 169 people (including Directors) during the year (2018 – 168). Staff costs are shown below:
Wages and salaries
Social security costs
Other pension costs
Share-based incentives
Total
Year ended 31 March
2019
£m
27
5
2
6
40
2018
£m
27
5
2
7
41
Directors’ emoluments disclosures are provided in the Directors’ Remuneration Report on pages 94 to 111 and in Note 9 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.
9. RETIREMENT BENEFIT OBLIGATIONS
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 318 pensioners and deferred pensioners out of a total membership of circa 5,500 (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 (2018 – £2 million).
The Company has provided a full liability guarantee in respect of the pension obligations of Tate & Lyle Industries Ltd, the other
participating employer.
Funding commitments of the plan
As required by UK regulations, actuarial valuations are carried out at least every three years. The current funding commitments for the
main UK Scheme are those which were established upon completion of the last triennial valuation as at 31 March 2016, with agreed core
funding contributions maintained at £12 million per year, and supplementary contributions payable into the secured funding account of
£6 million per year until 31 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 28 in the consolidated financial statements.
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STRATEGIC REPORTGOVERNANCEFINANCIAL STATEMENTSUSEFUL INFORMATION
Strategy in action story
Accelerate portfolio development
Thinking like
a challenger
Speed to market for a natural sweetener
In a world of challengers and disruptors a
company’s size, reputation and history are no
guarantee of success. But our latest stevia story
shows how these attributes, skilfully deployed, can
deliver extraordinary advantages.
Stevia, the intensely sweet, zero-calorie extract of
the stevia rebaudiana leaf, is a global trend in sugar
reduction. Our TASTEVA® Stevia Sweetener has long
been regarded as one of the best tasting on the
market. But when sweetener companies started
racing to launch their own better-tasting stevias,
we had to act fast to stay ahead of the market.
First-generation stevia is made from the most
abundant compound, known as Reb A, in the stevia
leaf. It’s relatively easy to extract, but has a bitter
aftertaste when used at higher concentrations.
Another compound, Reb M, doesn’t have this
aftertaste, but is rarer and so more expensive to
extract from the leaf. So the challenge was to produce
it fast, at a competitive cost.
Matching science with nature
Partnering with stevia specialists and growers
Sweet Green Fields in 2017 had given us a consistent
supply of leaf. We had the intellectual capital too,
at our Innovation and Commercial Development
Centre but what we didn’t have was time.
Enter Codexis, enzyme engineering specialists.
By pooling our expertise, we were able to use
enzyme technology to transform abundant stevia
leaf extract into the rarer Reb M.
Then it was simply a matter of putting our
production, procurement, quality, regulatory and
marketing teams and resources into action to meet
the needs of customers and consumers.
We did it, and were more than a little pleased when
TASTEVA® M Stevia Sweetener took centre stage at
IFT 2018 – the world’s leading food expo – and was
welcomed as one of the best-tasting Reb M
ingredients that starts with the leaf.
12
months from concept to launch
182 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
Useful information
184 Group five-year summary
186 Additional information
187 Information for investors
188 Glossary
189 Definitions/explanatory notes
Scientists at our ICD lab in Hoffman Estates, Illinois, USA,
investigating the properties of stevia
U SE FUL INF ORMAT IO N
Group five-year summary
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
Adjusted profit before tax
2015
£m
2016
£m
2017
£m
Year ended 31 March
2018*
£m
2019
£m
2 341
184
(9)
(142)
33
(23)
(8)
(31)
23
25
(21)
4
26
–
30
184
2 355
2 753
2 710
2 755
188
(11)
(50)
127
(23)
(6)
(29)
28
126
(5)
121
42
–
163
193
264
(12)
(19)
233
(25)
(7)
(32)
32
233
22
255
1
–
256
271
300
(12)
2
290
(27)
(5)
(32)
28
286
(23)
263
2
–
265
296
305
(11)
(58)
236
(26)
–
(26)
30
240
(59)
181
–
–
181
309
* Restated as the Group now includes net retirement benefit interest and associated tax in its alternative performance measures. Refer to Note 1. For the 2018
year presented above net retirement benefit interest is separated however adjusted net finance expense as restated was £32 million. Years prior to 2018
have not been restated.
Employment of capital
Goodwill and intangible assets
Property, plant and equipment
Other assets
Working capital (including provisions and non-debt
derivatives)
Net pension (deficit)/surplus
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
Total equity
2015
£m
340
750
33
339
(227)
–
2016
£m
390
926
23
323
(208)
5
2017
£m
401
1 061
30
394
(139)
–
At 31 March
2019
£m
342
982
59
401
24
–
2018
£m
360
965
37
385
18
–
1 235
1 459
1 747
1 765
1 808
327
(555)
(71)
936
117
818
935
1
936
85
(434)
(81)
96
(452)
(59)
85
(392)
(91)
102
(337)
(84)
1 029
1 332
1 367
1 489
117
911
1 028
1
1 029
117
1 215
1 332
–
117
1 250
1 367
–
117
1 372
1 489
–
1 332
1 367
1 489
184 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
1 8 4 | T AT E & LYL E PL C ANNUAL REP OR T 2 01 9
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USEFUL INFORMATION
Per share information
Earnings per share continuing operations:
— basic (pence)
— diluted (pence)
Basic earnings per share total operations:
— reported (pence)
— adjusted basic (pence)
Diluted earnings per share total operations:
— reported (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
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
Adjusted operating margin
Adjusted operating profit as a percentage of sales2
2015
2016
2017
2018*
2019
0.9p
0.8p
6.6p
38.0p
6.5p
37.7p
28.0p
597.5p
2 798
26.1p
25.9p
35.1p
34.9p
34.8p
34.7p
28.0p
578.0p
2 706
55.0p
54.2p
55.2p
47.9p
54.4p
47.1p
28.0p
764.5p
3 580
57.0p
56.1p
57.4p
50.3p
56.5p
49.4p
28.7p
544.6p
2 550
39.2p
38.6p
39.2p
52.8p
38.6p
52.0p
29.4p
725.8p
3 399
10.7x
10.7x
13.9x
9.4x
11.6x
1.3x
59%
1.2x
42%
0.9x
0.9x
0.8x
34%
29%
23%
7.8%
7.9%
9.6%
11.1%
11.1%
Return on capital employed
12.2%
11.3%
14.3%
16.2%
17.1%
Profit before interest, tax and exceptional items as a
percentage of invested operating capital2
Dividend cover (times)
Basic earnings per share divided by dividends per share2
Adjusted basic earnings per share divided by dividends
per share2
0.2x
1.4x
1.3x
1.2x
2.0x
2.0x
1.7x
1.8x
1.4x
1.8x
1 Following the refinancing of the revolving credit facility in the year (refer to Note 24) the amended covenant definitions were adopted. In light of this, the
Group has simplified the calculation of these KPIs to make them more directly related to information in the Group’s financial statements. Years prior to the
2018 financial year have not been restated here and are calculated based on the applicable covenant definition. Refer to Note 4.
2 These metrics have been calculated using the results of both continuing and discontinued operations.
* Restated as the Group now includes net retirement benefit interest and associated tax in its alternative performance measures. Refer to Note 1. Years prior
to 2018 have not been restated.
Internal Use Only
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U SE FUL INF ORMAT IO N
Additional information
Currency exchange rates
The principal exchange rates used to translate the results, assets and liabilities and cash flows of the Group’s foreign operations into
pounds sterling were as follows:
Average rates
US dollar
Euro
Year-end closing rates
US dollar
Euro
Year ended 31 March
2019
£1 =
1.31
1.13
1.30
1.16
2018
£1 =
1.33
1.13
1.40
1.14
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. The following table provides a reconciliation between the 2019 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
Food & Beverage Solutions
Sucralose
Primary Products
Central
Adjusted operating profit
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
2019
£m
2 755
143
61
148
(47)
305
(26)
30
309
(65)
244
2019 at
constant
currency
£m
2 753
140
62
148
(47)
303
(26)
30
307
(65)
242
Underlying
growth
£m
43
3
7
(18)
11
3
6
2
11
(1)
10
FX
£m
(2)
(3)
1
–
–
(2)
–
–
(2)
–
(2)
2018*
£m
2 710
137
55
166
(58)
300
(32)
28
296
(64)
232
Adjusted diluted EPS (pence)
52.0p
(0.5p)
51.5p
2.1p
49.4p
Change
%
2%
5%
10%
(11%)
18%
2%
17%
7%
4%
(2%)
5%
5%
Change in
constant
currency
%
2%
3%
11%
(11%)
18%
1%
17%
9%
4%
(2%)
4%
4%
* Restated as the Group now includes net retirement benefit interest and associated tax in its alternative performance measures. Refer to Note 1.
186 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
1 8 6 | T AT E & LYL E PL C ANNUAL REP OR T 2 01 9
Internal Use Only
USEFUL INFORMATION
Information for investors
S H A R E H O L D E R E N Q U I R I E S
Ordinary shares
Financial calendar
2019 Annual General Meeting
25 July 2019
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.
Announcement of half-year results for the six months to 30 September 2019
7 Nov 2019
Announcement of full-year results for the year ending 31 March 2020
2020 Annual General Meeting
21 May 20201
23 July 20201
Dividends paid on ordinary shares during the year ended 31 March 2019
Dividend per
share
Dividend
description
Payment date
1 August 2018
4 Jan 2019
Final 2018
Interim 2019
20.3p
8.6p
Dividend calendar for dividends on ordinary shares
Announced
Payment date
1 Provisional date.
2 Subject to approval of shareholders.
2019 final
2020 interim
2020 final
23 May 2019
7 November 20191
21 May 20201
31 July 20192
3 January 20201
29 July 20201, 2
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
Telephone and email enquiries
+1 888 269 2377 (for US calls)
+1 201 680 6825 (for calls from outside the US)
shrrelations@cpushareownerservices.com
Electronic communications
Shareholder documents are only sent in paper format to shareholders who have elected to
receive documents in this way. This approach enables the Company to reduce printing and
distribution costs and the impact of the documents on the environment.
Written enquiries
BNY Mellon Shareowner Services
PO Box 505000
Louisville, KY 40233-5000
USA
Tate & Lyle website and share
price information
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.
W W W . T A T E A N D L Y L E . C O M | 187
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Operating profit (also referred to as profit
before interest and tax (PBIT))
Sales less net operating expense.
P
Primary capacity
Processing capacity for the first stage of
production, at 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.
R
REZISTA® Starches
A modified starch made from waxy corn
which builds and protects texture in foods.
S
SPLENDA® Sucralose
A zero-calorie sweetener, the manufacturing
process for which starts with sugar.
Stabiliser Systems
Systems customising ingredient blends to
improve product mouthfeel, texture and
stability profile.
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.
STA-TAPETM Waxy Acid Modified Starch
An industrial starch used for adhesives.
Sucralose
A reportable segment and part of the
Food & Beverage Solutions division.
T
TASTEVA® M Stevia Sweetener
A zero-calorie sweetener made from stevia.
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 free cash flow
Adjusted free cash flow represents cash
generated from continuing operations after
net interest and tax paid, and capital
expenditure, excluding the impact of
exceptional items.
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 and net exceptional items.
B
Bio-PDOTM
Multi-purpose monomer propanediol made
from corn (as opposed to being made from a
petrochemical source). Used in cosmetics,
detergents, carpets and textiles.
C
Carbon dioxide equivalent (CO2e)
One metric tonne of carbon dioxide or an
amount of any other greenhouse gas with
an equivalent global warming potential,
calculated consistently with international
carbon reporting practices.
CLARIA® Functional Clean-Label Starches
A line of clean-label starches with neutral taste
and colour comparable to normal modified
starches that is versatile across a broad range
of applications and sophisticated processes.
‘Clean label’
A term used in the food and beverage
industry generally to refer to shorter or
simpler ingredient lists or less processed
ingredients 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. Reconciliation between
the 2019 performance at actual exchange
rates and at constant currency exchange
rates have been included in the additional
information on page 186.
Continuing operations
Operations of the Group excluding
any discontinued operations
(as defined separately).
Co-products
Corn gluten feed, corn gluten meal and
corn oil.
Corn gluten feed
The largest Tate & Lyle co-product, used in
animal feed for dairy and beef cattle.
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.
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 widely used as
a substitute for sugar in North America.
Also called isoglucose in Europe.
K
KRYSTAR® Crystalline Fructose
A nutritive corn based 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.
188 | T A T E & L Y L E P L C A N N U A L R E P O R T 201 9
USEFUL INFORMATION Definitions/explanatory notes
Trademarks
SPLENDA® and the SPLENDA® logo are
trademarks of Heartland Consumer
Products LLC.
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
— ‘during the year’ means during the
financial year ended 31 March 2019.
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
Heaven 42 and UPM Fine offset, which are
both Forest Stewardship Council® (FSC®)
certified paper.
Printed in the UK by Pureprint Group, a
CarbonNeutral® Company with
FSC® certification.
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 paper is Carbon Balanced with World
Land Trust, an international conservation
charity, who offset carbon emissions
through the purchase and preservation of
high conservation value land. Through
protecting standing forests, under threat of
clearance, carbon is locked in that would
otherwise be released. These protected
forests are then able to continue absorbing
carbon from the atmosphere, referred to as
REDD (Reduced Emissions from
Deforestation and forest Degradation).
This is now recognised as one of the most
cost-effective and swiftest ways to arrest the
rise in atmospheric CO2 and global warming
effects. Additional to the carbon benefits is
the flora and fauna this land preserves,
including a number of species identified at
risk of extinction on the IUCN Red List of
Threatened Species.
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
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