GREAT FOOD...
ANNUAL REPORT 2020
CONTENTS
Our world
STRATEGIC REPORT
2
Our purpose
Our business today
8
At a glance
10 Chairman’s statement
12 Chief Executive’s review
18
20 Our business model
22 Our strategy
24 Key performance indicators
Review of the year
28 Food & Beverage Solutions
32 Primary Products
36
Innovation and Commercial
Development
38 Global Operations
40 Chief Financial Officer’s introduction
42 Group financial review
46 Our people
50 Environment, health and safety
58 Community involvement
60 Risk Report
GOVERNANCE REPORT
70 Board of Directors
74 Executive Committee
76
Corporate governance
91 Nominations Committee Report
94 Audit Committee Report
100 Directors’ Remuneration Report
121 Directors’ Report
123 Directors’ statement
of responsibilities
FINANCIAL STATEMENTS
126
Independent auditor’s report to
the members of Tate & Lyle PLC
134 Consolidated income statement
135 Consolidated statement of
comprehensive income
136 Consolidated statement of
137
financial position
Consolidated statement
of cash flows
138 Consolidated statement
of changes in equity
139 Notes to the consolidated financial
statements
188 Parent Company financial statements
USEFUL INFORMATION
196 Group five-year summary
198 Additional information
199 Information for investors
200 Glossary
201 Definitions/explanatory notes
Tate & Lyle is a global provider of
ingredients and solutions for the food,
beverage and industrial markets.
Every day, all over the world, millions
of people enjoy products containing
Tate & Lyle’s ingredients.
Inspired by our purpose of Improving
Lives for Generations, we work with our
customers to deliver sweetness, texture,
fibre enrichment and stabilisation to
food and drink, making people’s
favourite products even better.
IN THIS REPORT
Read more about our purpose
on pages 2 to 5
Read more about our
response to Covid-19 on
pages 13 and 15
Read more about what
we do on pages 20 and 21
SUMMARY OF FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2020 (AUDITED)
YEAR ENDED 31 MARCH1
CONTINUING OPERATIONS UNLESS STATED OTHERWISE
Revenue
Adjusted operating profit
- Food & Beverage Solutions
- Sucralose
- Primary Products
- Central
Adjusted operating profit
Net finance expense
Share of profit after tax of joint ventures
Adjusted profit before tax
Exceptional items
Amortisation of acquired intangible assets
Profit before tax
Income tax expense
Profit for the year
Earnings per share (pence)
Adjusted diluted
Diluted
Cash flow and net debt2
Adjusted free cash flow
Net debt
2020
£M
2 882
2019
£M
2 755
CHANGE
%
5%
CONSTANT
CURRENCY
CHANGE
%
2%
13%
4%
7%
(10%)
9%
(7%)
(8%)
7%
58%
–
23%
13%
35%
11%
35%
10%
1%
3%
(9%)
5%
(4%)
(9%)
4%
59%
–
20%
15%
31%
8%
31%
162
63
158
(52)
331
(28)
28
331
(24)
(11)
296
(51)
245
57.8p
52.1p
247
451
143
61
148
(47)
305
(26)
30
309
(58)
(11)
240
(59)
181
52.0p
38.6p
212
337
1 Adjusted results and a number of other terms and performance measures used in this document are not directly defined within IFRS. We have provided descriptions of the various
metrics and their reconciliation to the most directly comparable measures reported in accordance with IFRS and the calculation (where relevant) of any ratios in Notes 1 and 4.
IFRS 16 Leases was adopted at the beginning of the year, without restating comparatives. Lease payments are now classified as financing rather than operating cash flows, increasing
adjusted free cash flow in the year ended 31 March 2020 by £34 million. IFRS 16 lease liabilities increased net debt by £162 million at 31 March 2020.
2
Read more about our
financial results on pages
40 to 45
Read more about our
people on pages 46 to 49
Read more about our
environment, health and
safety performance on pages
50 to 57
Strategic report
...GREATER OUTCOMES
We help our customers make healthy food tastier,
and tasty food healthier.
Tate & Lyle PLC Annual Report 2020
1
Our purpose
IMPROVING LIVES
FOR GENERATIONS
We’ve been working to improve
people’s lives for over 160 years,
growing our business and making
a positive impact on society.
Our purpose is why we do what we do.
It inspires us and makes us strive to
do our best, helping us to make people’s
lives easier and more enjoyable.
Whether it’s by supporting healthy living,
building thriving communities
or caring for our planet, we seek
to live our purpose every day,
in everything we do.
G
RTIN
Y LIVI N
O
P
H
P
T
U
L
A
S
E
H
G
B
UIL
C
O
D
I
M
N
M
G
U
T
N
H
I
R
T
I
I
E
S
V
I
N
G
IMPROVING
LIVES FOR
GENERATIONS
CARING F O R
OUR PL A N E T
Read more on pages 3-5
2
Tate & Lyle PLC Annual Report 2020
Strategic report
SUPPORTING
HEALTHY LIVING
We help people make healthier
and tastier choices when they
eat and drink, and lead more
balanced lifestyles.
When I give my children a
snack that contains one of our
solutions, I can see first-hand the
positive impact our health and
wellness ingredients can have,
which makes me even more
excited about the work we do
to help our customers develop
healthier products.
Susanna Palatucci
Global Head of Health and Wellness, Innovation
and Commercial Development
Tate & Lyle PLC Annual Report 2020
3
BUILDING THRIVING
COMMUNITIES
We help build thriving
communities where we
operate and support people
to achieve their potential.
Everyone in the Shanghai team
has been part of our Healthy
Eating, Happy Learning
programme with local schools
to improve children’s health and
wellbeing. For me, this programme
not only fulfilled my personal wish
to do something good for society,
it also helped improve my
knowledge at work, since I’ve
learnt more about how parents
choose food for their children.
Philip Lin
Dairy Category Marketing Director, Asia Pacific,
Food & Beverage Solutions
4
Tate & Lyle PLC Annual Report 2020
Strategic report
CARING FOR
OUR PLANET
We care for our planet and
help protect its natural
resources for the benefit
of future generations.
Having grown up on a farm in
Illinois, I’m profoundly excited
about the effect our Company
can have on the world and local
farmers through our sustainable
agriculture programme, which
helps farmers understand both
their profitability and their
environmental impact. This is
a purpose that hits home for
me in a meaningful way.
Tim Meinhold
Senior Vice President, Chief Procurement Officer,
Global Operations
Tate & Lyle PLC Annual Report 2020
5
6
Tate & Lyle PLC Annual Report 2020
I am proud to work with our
customers to develop solutions
that make their products healthier
for people of all ages.
Flora Zhou
Senior Technical Service Specialist,
Shanghai, China
Strategic report
CONTENTS
OUR
BUSINESS
TODAY
At a glance
IN THIS SECTION
8
10 Chairman’s statement
12 Chief Executive’s review
18
20 Our business model
22 Our strategy
24
Our world
Key performance indicators
Tate & Lyle PLC Annual Report 2020
7
At a glance
INGREDIENTS AND SOLUTIONS FOR
CUSTOMERS ALL OVER THE WORLD
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.
TWO GLOBAL BUSINESS DIVISIONS
FOOD & BEVERAGE SOLUTIONS
We use smart science and technology to develop innovative
ingredients and solutions that add taste, texture, nutrition
and functionality to a wide range of foods and beverages.
Our extensive portfolio includes:
• Sweeteners
• Texturants
• Health and wellness ingredients
• Stabilisers
PRIMARY PRODUCTS
We provide high-volume products for customers mostly in the
food and beverage, and paper and packaging industries, primarily
in North America. Our portfolio includes:
• Bulk sweeteners
• Industrial starches
• Acidulants
• Animal nutrition
Read more on pages 28 to 31
Read more on pages 32 to 35
SUPPORTED BY TWO GLOBAL TEAMS
GLOBAL OPERATIONS
We produce high-quality ingredients from agricultural
raw materials mainly at large-volume corn wet mills, and
also at smaller blending facilities where we make bespoke
solutions for customers. We run our plants and manage the
global supply chain to ensure our ingredients reach our
customers on time and to the right specification.
INNOVATION AND COMMERCIAL DEVELOPMENT
We develop new products through a growing innovation
pipeline. We connect leading-edge science with market insight,
local knowledge and a deep understanding of our customers.
We work closely with customers through every stage of our
innovation process to move ideas quickly from concept to
commercial launch.
Read more on pages 38 and 39
Read more on pages 36 and 37
8
Tate & Lyle PLC Annual Report 2020
Financial highlights
Strategic report
STRONG FINANCIAL
PERFORMANCE
Year ended 31 March 2020
GLOBAL REACH
GROUP STATUTORY RESULTS
Sales1
Profit before tax1
£2,882m
2020
2019
2018
£2,882m
£2,755m
£2,710m
£296m
2020
2019
2018
£296m
£240m
£286m
Diluted earnings per share1
Net debt2
52.1p
2020
2019
2018
38.6p
52.1p
56.1p
£451m
2020
2019
2018
£451m
£337m
£392m
30
We have plants, labs
and offices in more
than 30 countries
4,200
We employ around
4,200 employees
worldwide
120
We serve customers
in more than 120
countries
1.5m
We process around
1.5m acres of corn
each year
INGREDIENTS FOR DAILY LIFE
ALTERNATIVE PERFORMANCE MEASURES
Adjusted diluted earnings per share1, 3
Return on capital employed3
57.8p
17.5%
2020
2019
2018
57.8p
52.0p
49.4p
2020
2019
2018
17.5%
17.1%
16.2%
Adjusted profit before tax1, 3
Adjusted free cash flow3
£331m
2020
2019
2018
£331m
£309m
£296m
£247m
2020
2019
2018
£247m
£212m
£196m
1 Continuing operations only.
2 Net debt is not itself defined by IFRS. It comprises line items that are IFRS–defined terms. See Note 26.
3 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.
Tate & Lyle PLC Annual Report 2020
9
Our food and beverage ingredients are primarily
used in beverages, dairy, soups, sauces and
dressings, and bakery. Our industrial ingredients
are used in paper and board, packaging, tapes and
adhesives, building products, detergents, and a
new market for us, personal care products.
Chairman’s statement
ACTING WITH AGILITY
AND COMPASSION
A good year for Tate & Lyle had a very tough ending as Covid-19 tested
all of us. I am exceptionally proud of our team’s magnificent response
in caring for our colleagues, our communities and our customers.
Last year I concluded my statement
with my confidence in a bright future for
our Company. And, with the way the
business has responded with such agility,
courage and compassion to the Covid-19
crisis, I feel that confidence even more
strongly today. In thinking about the future,
it’s important to differentiate between
the challenges of any given year and the
overall direction of travel which, for
Tate & Lyle, remains clear and very
promising.
A GOOD YEAR DESPITE THE
CHALLENGES
I am pleased to report that we delivered
another solid set of financial results. Food
& Beverage Solutions, with its focus on
sugar reduction and formulating healthier
food, delivered good top- and bottom-line
growth. While Primary Products continued
to face some market challenges – not least
the gradual decline in the consumption of
carbonated soft drinks and demand for
caloric sweeteners – it still managed to
deliver profit growth. This performance
is a testament to the determination and
capability of the Primary Products team to
find new ways to create value and diversify
its bulk sweeteners and starches into new
applications and markets.
Our people have had to face many
challenges this year. The Board and I
would like to thank everyone at Tate & Lyle
across the world for their hard work and
unstinting commitment to delivering this
year’s results, and for the way they have
responded to the Covid-19 pandemic.
UNDERSTANDING THE LOCAL
OPPORTUNITY
The global food and beverage industry is
attractive because people will always need
to eat and drink. And, in the industrial
markets we serve, our products are used
in essential, everyday household goods like
detergents, paper and packaging. Our deep
understanding of our end markets means
we’re well-placed to take advantage of the
opportunities they present.
10
Tate & Lyle PLC Annual Report 2020
One of the most fundamental and
fascinating aspects about food is that,
while general trends around health and
diet are universal, taste is very local. So
our approach to each market is heavily
influenced by our local teams. It was
therefore very rewarding for me to visit our
labs in Lübeck, Lille, Dubai, Shanghai and
Mexico City this year and see the technical
capabilities we’re building on the ground,
and how we’re finding the right balance
between global, science-driven innovation
and regional, consumer-driven applications
that reflect local tastes, traditions and food
distribution patterns.
It was also very exciting to see the
accelerating pace of change in our Asian
and Latin American markets. In Mexico,
for example, our customers are keenly
interested in the workshops we are holding
to raise awareness of healthier food,
while in China the focus is also on healthier
food for non-refrigerated distribution
to the many smaller food outlets in that
huge country.
These visits were part of a wider
programme of individual Board director
visits. Full Board visits, while logistically
challenging, can also be disruptive for
the business and can feel quite stage-
managed. A less formal visit by one or
two directors allows us to spend quality
time getting to know our people, their
communities, opportunities and
challenges. This intimacy helps us to
better understand our diverse business
around the world and make better
decisions. With travel currently off the
agenda, we’re looking at other ways such
as video links to continue to ‘visit’ with
our people across Tate & Lyle.
THE POWER OF OUR PURPOSE
Full Board visits do have their place,
of course, and on our trip to China in
September we had the privilege of visiting
one of the schools we sponsored through
our Healthy Eating, Happy Learning
programme. I know I speak for all my
Board colleagues in saying how inspiring
it was to see how we’re tangibly improving
children’s wellbeing. It’s a powerful
reflection of our purpose of Improving
Lives for Generations, which has
become a real motivator for our people
everywhere, as I’ve witnessed myself this
year. And it’s fundamental because, at a
human level, if we understand why we’re
doing something – its purpose – then the
strategy starts to make sense, and we will
work harder and more enthusiastically
to deliver it.
LOOKING TOWARDS LONGER-TERM
HORIZONS
Our purpose has been a key focus for the
Board as well this year. We’ve supported
our executive team in thinking about what
our business might look like in 10 or even
20 years, and the implications for what
we need to do now. Aside from the
consequences of Covid-19, which are still
unfolding, the biggest questions in our
minds have been sustainability and the
long-term challenges and opportunities
presented by climate change and the
global health issues that drive our
strategy. As a Board, our approach has
been less about challenging management
to come up with all the answers – that will
take time – but challenging ourselves as
a team to think through the big questions.
That’s why I’m very pleased with the new
commitments and targets we’ve made
around our purpose, which are
fundamental to our long-term future.
But, while looking to the long term, we
need to continue our focus on delivery now,
which is even more important given the
uncertainties of today. No one knows quite
what the world will look like when we come
out of lockdown, or what the new normal
will be. However, given the commitment,
quality and decency of our people, I am
confident that we can prosper in whatever
circumstances we find ourselves.
Gerry Murphy
Chairman
Strategic report
MEETING OUR PEOPLE
Our purpose has become a
powerful motivator for our
people everywhere.
Gerry Murphy
Chairman
The Board is recommending that the final dividend is
maintained at 20.8 pence per share, bringing the total
dividend for the year ended 31 March 2020 to 29.6 pence,
an increase of 0.7%.
Full-year dividend
29.6p
During the year, between us the
non-executive directors visited 16 sites,
in every region of the world. Most of our
visits were as individuals or in small
groups, which is a much better way to get
to know our people and understand their
motivations and challenges. It was a
really excellent programme, and all the
more valuable now that travel is currently
curtailed due to Covid-19.
Read more on page 84
Tate & Lyle PLC Annual Report 2020
11
Chief Executive’s review
PURPOSE
DRIVES
PERFORMANCE
The measure of a company
is how it delivers on its
commitments, and I’m
proud that we succeeded
in delivering on our
commitments this year,
despite circumstances more
unpredictable than usual.
HIGHLIGHTS
• A year of strong performance
– Double-digit profit growth in
Food & Beverage Solutions
– Sucralose performed solidly
– Higher profits in Primary Products
despite challenging market conditions
• Productivity programme ahead of
expectations
• Strong balance sheet
• An outstanding team effort in response
to Covid-19
12
Tate & Lyle PLC Annual Report 2020
Our purpose is at the core of
everything we do, and has driven
the outstanding response of our
people to Covid-19.
Nick Hampton
Chief Executive
Adjusted profit
before tax
Adjusted diluted
earnings per share
+4%
in constant currency
+8%
in constant currency
Food & Beverage
Solutions adjusted
operating profit
+10%
in constant currency
Strategic report
The performance of both divisions was
helped by another year of absolute focus
on operational execution and cost
discipline. Our four-year programme
to deliver US$100 million of productivity
benefits again performed ahead of
expectations and has now delivered
US$87 million of savings in its first two
years. Reflecting its good progress, we’ve
extended the programme by two years
and a further US$50 million to deliver
US$150 million of productivity benefits
over six years to 31 March 2024.
We achieved all this despite operating
in an increasingly complex geopolitical
landscape. The establishment 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 departure from
the EU, all had an impact on some of the
markets we operate in. Then, as we
entered the 2021 financial year, the
Covid-19 pandemic tested our people
and our operations.
MANAGING THE IMPACT OF COVID-19
From the outset of the pandemic, our
priority has been to ensure the safety of
our people, keep our operations running
and support our customers. In March, we
established a Global Pandemic Response
Team to develop, co-ordinate and execute
our plans, as well as local response teams
at every site. These teams are doing an
outstanding job managing all aspects of
our response. I am incredibly proud of the
way all our people have responded to the
unprecedented challenges of Covid-19. The
fact that our manufacturing facilities have
remained fully operational throughout the
pandemic reflects their resilience and
skill, and shows how quickly they have
adapted to new, challenging and socially
distanced ways of working.
RESPONDING TO COVID-19
Our people have responded incredibly
well to the unprecedented challenges
of Covid-19. We’ve acted swiftly to keep
them safe, support our local communities,
keep our operations running and serve our
customers. Summarised here are some
of the actions we’re taking.
OUR PEOPLE AND OPERATIONS
• Hygiene protocols at all our sites
• Fewer people on shifts
• Restructured working areas to maintain
social distancing
• Training on health protection and
sanitisation protocols
• New working procedures to enable key
capital projects to continue
• Full pay for colleagues ill with Covid-19
or in isolation
• Special cash bonus for our front-line
workers in plants, labs and other
key sites
• Programme to help colleagues working
from home stay connected and
productive, and feel supported during
lockdown
• Initiatives to support mental health
OUR COMMUNITIES
• Supporting food banks to provide
500,000 meals for people in need
• Reformulating our ethanol in the US
for use in hand sanitiser
• Donating PPE and hand sanitiser
to front-line health workers
OUR CUSTOMERS
• Video sessions on innovation projects
• Virtual tasting sessions with
prototypes sent to customers in
advance
• Video links in more of our labs
• Remote product training sessions
A STRONG BUSINESS,
GETTING STRONGER
This year’s results are a testament to the
hard work of everyone at Tate & Lyle who,
by living our purpose in everything they
do, and carrying out our strategy, have
ensured we delivered another year of
strong performance. I am very grateful
for their efforts, particularly at the end of
the year when we were all challenged
personally and professionally by Covid-19.
Although the incredible challenges of
Covid-19 are unprecedented in my lifetime,
we are well-placed to weather this period
and emerge an even stronger company.
Other than the outbreak of Covid-19, if
there is one issue that has come to the
forefront over the last 12 months it is
climate change. The climate isn’t changing,
it has changed, and we need to deal with
the consequences now, to protect our
planet’s natural resources for future
generations. This means thinking,
planning for, and investing over a longer-
term horizon – and it’s where our purpose
comes in, as I discuss later in my review.
But first – more on the results.
A YEAR OF DELIVERY
This was a year of strong financial
performance. Despite facing some
challenging market conditions, Group
adjusted profit before tax increased by
4%, adjusted diluted earnings per share
were 8% higher, and return on capital
employed was up 40 basis points at 17.5%.
Adjusted free cash flow was also good at
£247 million, supporting a strong balance
sheet and giving us the flexibility to invest
for long-term growth.
I’m particularly pleased that, if you look at
the detail behind the Group results, you’ll
see that our ‘Sharpen, Accelerate and
Simplify’ priorities are clearly supporting
our performance, as detailed on the next
page, and that our strategy is working.
Food & Beverage Solutions, our engine of
growth, delivered top-line growth, with a
double-digit increase in profit. Sucralose
also performed solidly with profit slightly
ahead of last year. Primary Products
delivered steady earnings. More detail
about the results of our two divisions and
the Group are on pages 28 to 45.
Tate & Lyle PLC Annual Report 2020
13
Chief Executive’s review (continued)
HOW OUR THREE PRIORITIES ARE SUPPORTING BUSINESS PERFORMANCE
Two years in, and our financial results are reflecting the good progress we’re
making in delivering our three key priorities: sharpen the focus on our customers;
accelerate portfolio development; and simplify the business and drive productivity.
SHARPEN
CLOSER TO CUSTOMERS
ACTIONS
• Becoming the growth
partner for our customers
• New ways of collaborating
• Growing our customer
project pipeline
• Becoming the ‘go to’
company for reformulation
and sugar reduction
EXAMPLES IN THE YEAR
• First fibre symposium held
for customers in the US
• Healthink customer
workshops rolled out in Asia
• New applications labs opened
in São Paulo and Singapore
• Stevia sweetener sales
increased by 23%1
+26%
Increase in calls with
customers focused on
growth during the year
ACCELERATE
FASTER INNOVATION
ACTIONS
• Closer and earlier customer
collaboration on key projects
• Bringing new products to
market faster
• Expanding our portfolio
including through
partnerships and acquisitions
• Collaborating with start-ups
EXAMPLES IN THE YEAR
• New Product sales
increased by 15%1
• 11 New Products launched
from pipeline including
CLARIA EVERLAST®
clean-label starch
• Partnership with innovative
enzyme start-up, Zymtronix
+18%
Increase in value of
innovation pipeline
during the year
SIMPLIFY
PRODUCTIVITY GAINS
ACTIONS
• Simplifying the organisation
• Investing to improve
operational efficiency
• Creating a culture of
continuous improvement
• Reducing costs and
increasing productivity
EXAMPLES IN THE YEAR
• Benefits from continuous
improvement projects
increased by 20%
• US$75 million investment in
a new co-generation facility
in Lafayette South, Indiana
• Simplified organisation of
customer-facing teams
US$87m
Total productivity benefits
delivered in the first two
years of our productivity
programme
1 Change in constant currency.
14
Tate & Lyle PLC Annual Report 2020
Strategic report
Trading in April 2020
While trading in March showed limited
impact from the Covid-19 pandemic, the
imposition of lockdowns in many countries
throughout April, most notably in our
largest markets of the US and Europe, led
to significant changes in demand patterns
for our products.
Food & Beverage Solutions and Sucralose
continued to perform well with volume for
Food & Beverage Solutions in line with the
comparative period and Sucralose 18%
higher due to phasing of customer orders.
Earlier in the month, demand was strong
for ingredients used in packaged and
shelf-stable foods, as consumers in North
America and Europe filled their pantries
for consumption at home. As the month
progressed, this was offset by lower
demand for products consumed out of
home, such as in the food service sector
in North America.
Primary Products volume was significantly
impacted by the first full month of
lockdown in the US. Bulk sweetener
volume was 26% lower from reduced
out-of-home consumption as bars,
cinemas and restaurants were shut and
sporting events cancelled. Industrial
starch volume was 9% lower reflecting
reduced demand for paper and packaging
following the closure of schools and
offices, and a decline in economic activity.
Commodities were also affected as
ethanol prices decreased sharply.
The financial impact of lower demand
was partially mitigated by actions taken in
March to reduce costs and preserve cash
as we saw the pandemic unfolding. These
included freezing salary increases and
recruitment, stopping non-essential
discretionary spend and reprioritising
capital commitments.
No employees have been furloughed and
no government aid sought.
Strong balance sheet
The current strength of our balance sheet
means we are well-placed to manage
through this challenging period. We have
low leverage with a net debt/EBITDA ratio
of 0.9 times at the end of the financial year
(0.6 times on a covenant basis), strong
liquidity with access to more than
US$1 billion through cash at hand and a
committed and undrawn revolving credit
facility, and significant covenant headroom
on borrowings. We also have no debt
maturing until 2023.
Looking ahead
The length and depth of the impact
of the pandemic remains uncertain and
is expected to vary by country. It’s also
difficult at this stage to predict how
consumer behaviour will evolve as
countries exit from lockdown. As a result,
we are not issuing guidance for the year
ending 31 March 2021. To keep all our
stakeholders informed of our progress
during these uncertain times, we will issue
an exceptional first quarter trading update
on 23 July 2020.
In the year ahead our priorities are clear
– to continue to look after our people and
communities, strengthen our relationships
with customers, continue to progress
our strategy and maintain our financial
strength. We will also look to adapt to, and
embrace, the new business environment
and ways of working. With the momentum
we have built over the last two years,
our high-quality product portfolio, the
attractive markets we operate in, the skill
of our people and our strong operating
capabilities, we are well-placed to emerge
from this period as an even stronger and
more agile business.
AN INCREASINGLY AMBITIOUS CULTURE
Last year I said we needed to inject more
pace and ambition into our culture and,
even before Covid-19, I saw a genuine
shift during the year. On a day-to-day
basis, I consistently saw people taking
the initiative to deliver above and beyond
for our customers, which resulted in
increasing customer interaction and more
joint development initiatives. This can-do
culture is core to how we support our
customers and will be vital as we navigate
the challenges we’re facing now and into
the coming year.
I’m particularly pleased by the progress
we are making on safety. While there’s
always further to go, our performance was
significantly better than last year. I believe
it’s because people are genuinely taking
responsibility for themselves and their
colleagues. During a leadership team
safety review meeting earlier this year,
I was very encouraged by the level of
challenge and desire to get to the bottom
of accidents, but without judgement.
This openness is at the heart of a good
safety programme.
To change, adapt, be flexible, all of which
are more essential than ever right now, we
have to be ambitious. And I know that the
increase in ambition we’ve seen from our
people over the year is because they are
inspired by our purpose. When people truly
believe in what they’re doing, they make
extraordinary efforts, which translate into
positive outcomes for all our stakeholders.
This was brought home to me at our
biennial Extraordinary People Awards
(EPA) in October which celebrated the
amazing things our people are doing all
over the world. The real strength of the
EPA is that people are nominated by
colleagues, and this year we received a
record 565 nominations. I have no doubt
that we will have much to celebrate in the
way our people have responded to today’s
uncertainties in the 2021 EPA awards.
OUR PURPOSE-DRIVEN VISION
FOR 2030 AND BEYOND
Thinking for the long term is at the heart
of our purpose – Improving Lives for
Generations. It inspires our people at
every level and in every part of the world,
because they see every day how we can
grow our business and have a positive
impact on society.
Our focus on supporting healthy living
is where our purpose has the biggest
impact in the world. Millions of people
everywhere facing obesity and diabetes
can benefit from our ingredients that
enable products to be lower in sugar,
calories and fat, and higher in fibre, as can
the many people who simply want to live a
healthier lifestyle. But overconsumption
isn’t everyone’s experience – many people
today still struggle to put food on the table,
which is why reducing hunger is one of the
areas we’re committed to as part of our
building thriving communities pillar. And,
while we have a strong focus on today’s
dietary and health challenges, we are not
losing sight of other major global challenges
– which is why caring for the planet is
so important.
Tate & Lyle PLC Annual Report 2020
15
Chief Executive’s review (continued)
New commitments for living our purpose
Given the trends in the world today, we
recognise that we need to be making
strategic investment choices now that will
deliver long after I and my leadership team
have handed over to the next generation.
So this year, we stepped up our thinking on
how we can create a sustainable business
for the next 10 years and beyond. We
analysed how we’re going to deliver
measurable progress against the three
pillars of our purpose, and set some
ambitious, yet achievable commitments
and targets for 2030, which are detailed on
page 17. Also this year, we completed an
analysis of our Scope 3 carbon emissions,
and have committed to establishing
science-based targets for reducing our
Scope 1, 2 and 3 CO2e emissions.
Investing to eliminate coal
Running our plants efficiently and
minimising our impact on the environment
has always been our goal. We are in the
middle of a multi-year capital investment
programme totalling more than
US$150 million to eliminate the use of coal
in our plants by 2025. This will have the
added benefit of making our plants more
efficient, which is good for our business as
well as the environment.
Supporting the UN SDGs
In making our new commitments, we also
considered which of the UN Sustainable
Development Goals (SDGs) are most
closely aligned to our purpose, and where
we can have most impact. We determined
that five are key for us: SDG 2 – zero
hunger; SDG 3 – good health and
wellbeing; SDG5 – gender equality;
SDG 12 – responsible consumption and
production; and SDG 13 – climate action.
To demonstrate our support for the UN
SDGs, in April 2020 we became a
participating member of the UN Global
Compact, a major global sustainability
initiative.
An industry first for sustainable
agriculture
A large proportion of our Scope 3 CO2e
emissions – and our environmental CO2e
impact as a whole – comes from corn,
our largest raw material. Last year we
announced a partnership with TruterraTM
(formerly Land O’Lakes SUSTAIN™) to
promote sustainable corn farming in the
16
Tate & Lyle PLC Annual Report 2020
OUR PURPOSE IS BASED ON THREE PILLARS
G H
G H
TIN
TIN
R
R
O
O
P
P
P
P
U
U
S
S
G
G
EALTH Y LIV I N
EALTH Y LIV I N
Balance d
lifestyle s
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Healthier
communities
IMPROVING
LIVES FOR
GENERATIONS
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BUIL
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S
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T
T
I
I
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E
S
S
CARING FOR O U R P L A N E
CARING FOR O U R P L A N E
T
T
As we go into next year, we’re absolutely
focused on continuing to deliver against
our strategy and priorities, managing
the impact of Covid-19, and building a
long-term plan for our business. How to
expand beyond our current platforms.
How to diversify further into emerging
markets. How to adapt our business model
as trade patterns change. How to build a
progressive agenda on sustainability. And
how, ultimately, to maximise our potential.
The decisions we make will be shaped and
informed by our purpose, which I know
will ensure that Tate & Lyle continues to
flourish well into the future.
Nick Hampton
Chief Executive
US Midwest, where we source most of
our corn. I’m delighted that this year
we expanded the partnership to cover
1.5 million acres – equivalent to the total
amount of corn we buy globally each year.
This is an industry first, and is important
to our customers too. The significance
of this programme goes beyond its
environmental impact – it’s also about
protecting farmers’ livelihoods, and
supporting the communities around
our US plants.
LOOKING AHEAD WITH CONFIDENCE
Our Extraordinary People Awards really
were the highlight of my year. Knowing we
have such talented, committed people
gives me real confidence in our ability to
meet the challenges ahead as we build
a long-term, sustainable future for our
business. And not just those challenges we
know about now, like climate change, the
pressures on global supply chains from
tariffs, and Covid-19, but those we cannot
foresee. I continue to believe, because of
the world we’re in and what we do, our
future is bright.
Strategic report
Aligning with the UN Sustainable Development Goals
We’re focusing on those goals which are closely aligned to our
purpose and where we can have most impact: hunger, health and
wellbeing, gender equality, responsible production and consumption,
and climate action. The SDGs aligned to each pillar are shown below.
LIVING OUR PURPOSE – OUR COMMITMENTS AND TARGETS1
SUPPORTING
HEALTHY LIVING
BUILDING THRIVING
COMMUNITIES
CARING FOR
OUR PLANET
Healthier lifestyles
• By 2025, we’ll have helped improve
the lives of over 250,000 people by
supporting programmes that promote
healthier lifestyles and activities.
Read more in Community involvement,
pages 58 and 59
Nutrition
• By 2025, through our low-/no-calorie
sweeteners and fibres, we’ll have
helped remove 9 million tonnes of
sugar from people’s diets, equivalent
to 36 trillion calories.
Read more in Food & Beverage Solutions,
pages 28 to 31
Personal wellbeing
• By 2025, we’ll have helped our
colleagues improve how they look
after their physical and mental
wellbeing so they can be their best at
work and in their daily lives.
Read more in Our people,
pages 46 to 49
Education
• By 2025, we’ll have supported the
education of over 100,000 children
and students through learning
programmes and grants,
helping them attain skills for life.
Hunger
• By 2025, we’ll have provided over
3 million nutritious meals for
people in need.
Carbon footprint
• By 2030, we’ll have delivered a 30%
absolute reduction in our Scope 1 and
2 CO2e emissions, with an ambition
to reach a 20% reduction by 2025.
• By 2030, we’ll have delivered a 15%
absolute reduction in our Scope 3
CO2e emissions.
• Our Scope 1, 2 and 3 CO2e emissions
reduction targets will be science-
based.
Read more in Community involvement,
pages 58 and 59
• By 2025, we’ll have eliminated coal
from all our operations.
Gender equality
• By 2025, we’ll achieve gender parity
Waste
• By 2030, 100% of our waste will be
in leadership roles.
Read more in Our people,
pages 46 to 49
beneficially used, with an ambition to
reach 75% by 2025.
Water
• By 2030, we’ll have reduced
water use by 15%.
Sustainable agriculture
• We’ll maintain sustainable acreage
equivalent to the volume of corn
we buy globally each year, currently
1.5 million acres, and through
partnerships we’ll accelerate the
adoption of conservation practices.
Read more in Environment,
health and safety, pages 50 to 57
1 The baseline for our supporting healthy living and building thriving communities targets is the year ended 31 March 2020. Like all our EHS targets, the baseline for caring
for our planet is the end of the 2019 calendar year.
Tate & Lyle PLC Annual Report 2020
17
Our world
WHAT’S HAPPENING
AROUND US
The food and beverage market has an inherent strength – people need to eat
and drink. Within that, a number of major global trends are shaping our industry
and creating opportunities for our business.
Our
business
Our
strategy
Our
world
Our
progress
THE OPPORTUNITY FOR TATE & LYLE
For food companies like Tate & Lyle,
these global trends present both risks and
opportunities. Driven by our purpose of
Improving Lives for Generations, we work
to create ingredients and solutions that
give people healthier and tastier choices
when they eat and drink and help them
lead more balanced lifestyles. At the same
time we are working to take care of our
planet and helping to protect its natural
resources. Whether through health and
wellness ingredients for a new generation
of popular brands, nutritive sweeteners at
an affordable price, or stabilising systems
that allow food to travel over long distances,
our goal is not just to feed people, but to
feed them well.
GLOBAL TRENDS
Factors like rapid population growth,
urbanisation, climate change, the use of
technology and, more recently Covid-19,
are driving major changes in people’s
lifestyles, and therefore in what they’re
eating and drinking.
Changing diets and lifestyles
No matter where you look, societies and
governments are facing significant food-
and health-related challenges. In today’s
more urbanised world, people are leading
less active ways of life. They’re generally
eating too much and moving too little,
and these progressively unbalanced
lifestyles are affecting their health. The
incidence of obesity and diabetes, and
concerns about digestive health, are
increasing rapidly. The International
Diabetes Federation estimates there are
463 million adults with diabetes today,
which will grow to 700 million by 2045.1
Healthcare costs are rising too, placing
health services in many countries under
increased pressure. In the UK, for example,
before the Covid-19 outbreak, 10% of the
National Health Service budget was
being spent on treating diabetes or its
complications.2 Overconsumption of sugar
is also seen as a major concern, with
an increasing number of countries
implementing taxes, for example on
sugary soft drinks. Around 40 national
governments have already introduced a
‘sugar tax’.3 And yet, while obesity is now
responsible for more deaths than hunger,
one in nine people in the world struggle
to find enough nutritious food to eat
every day.4
Growth of convenience
The middle class is expected to grow
to 5.3 billion people globally by 2030,
up from 2.8 billion in 2015.5 This growth,
especially in emerging markets, is
causing a long-term shift towards
greater convenience and time-saving
solutions. People are spending less time
in the kitchen and are buying more
pre-prepared, packaged foods, but want
what they eat to be no less nutritious.
They’re also spending less time going
shopping – online shopping is increasingly
popular, driving demand for sturdy
packaging, while environmental concerns
mean this packaging needs to be recyclable.
Sustainability and the rise of
plant-based foods
People’s concerns about their health,
lifestyle and the environment are
affecting food choices in many ways.
Their understanding and awareness of
climate change and the need to protect
the planet’s natural resources have
increased significantly in the last 12
months. While over 80% of food and
beverage purchases are driven by taste,6
other factors such as the sustainability
of the product and its packaging are
becoming increasingly important.
Demand for plant-based alternatives
is growing, as people adopt vegan,
vegetarian or ‘flexitarian’ diets, cutting
back on meat amid concerns for their
health and the effects of animal farming
on the environment. And they’re also
wanting to know exactly what goes into the
food they eat and where it comes from,
examining labels more closely and looking
for simpler or ‘more natural’ ingredients.
International Diabetes Federation, 2019 (age 20 – 79 years).
1
2 Diabetes UK.
3 Obesity Evidence Hub, 2019.
4 FAO: The State of Food Security and Nutrition in the World 2019.
5 Brookings; United Nations; World Bank.
6
7 United Nations.
8 World Health Organization.
9 Deloitte, 2019.
10 Our World in Data, November 2019.
International Food Information Council 2018.
18
Tate & Lyle PLC Annual Report 2020
Strategic report
SNAPSHOT OF TRENDS
30%
estimated increase in global
population by 20507
38 million
children under the age of five
overweight or obese in 20198
80%
estimated increase in North American
meat substitutes market by 2025 to
€1.8 billion, from 20189
26%
global greenhouse gas emissions
from food production10
Tate & Lyle PLC Annual Report 2020
19
Our business model
WHAT WE DO
Our
world
Our
business
Our
strategy
Our
progress
We improve lives by making food tastier and healthier; by making everyday
tasks easier; by promoting a safe, healthy working environment; and by
making a difference in our communities.
OUR RESOURCES
WHAT WE DO
SCIENTIFIC AND
TECHNICAL KNOW-HOW
LARGE-SCALE
MANUFACTURING
OPERATIONS
TALENTED PEOPLE
WE THINK AND CREATE
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 with our
ingredients for their local markets.
Read more on pages 36 and 37
WE SOURCE AND MANUFACTURE
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.
Read more on pages 38 and 39
CUSTOMERS
We serve customers, large and small, in more than 120 countries.
We are moving from being an ingredient supplier to a growth
partner for our customers.
STRONG BALANCE SHEET
AND DISCIPLINED USE
OF CAPITAL
LONG-TERM
RELATIONSHIPS WITH
STAKEHOLDERS
WE PARTNER AND SELL
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 that bring specific
functionality and nutrition to
their products.
Primary Products
We sell high-volume products
primarily into the food and beverage,
and paper and packaging industries,
and mainly in North America.
Leveraging our scale and cost-
competitive manufacturing base,
we compete mainly on price, quality
and service.
Read more on pages 28 to 31
Read more on pages 32 to 35
EVERYTHING WE DO IS UNDERPINNED BY…
20
Tate & Lyle PLC Annual Report 2020
Strategic report
THE VALUE WE CREATE FOR OUR STAKEHOLDERS
FOR SHAREHOLDERS
We balance investing in growth with
paying an attractive dividend.
FOR CUSTOMERS
We help our customers bring products
to market quickly that address society’s
changing needs.
FOR EMPLOYEES
We are committed to the health, safety
and wellbeing of our employees, and to
providing a culture that is both inclusive
and performance-driven.
£402m
dividends paid in the past three
financial years
£113m
revenue from New Products from
our innovation pipeline1
£353m
paid to employees1
FOR COMMUNITIES
We have a long history of community
involvement, helping us to make lasting
contributions to the places where we
live and work.
FOR SUPPLIERS
Corn is our largest input, and we have
long-term, mutually beneficial
relationships with farmers and other
supplier partners.
FOR THE ENVIRONMENT
Throughout our operations we look to
minimise our environmental impact by
reducing emissions and waste, and using
water sustainably.
450,000
meals given to people in need in our
local communities and beyond1
1 Year ended 31 March 2020.
1.5m
total acreage of corn purchased globally1
21.8%
reduction in CO2e emissions
since 2008
Our priorities
• Sharpen
• Accelerate
• Simplify
Our values
• Safety
• Integrity
• Respect
Our behaviours
• Partnership
• Agility
• Execution
Tate & Lyle PLC Annual Report 2020
21
Our strategy
HOW WE DELIVER VALUE
Our
world
Our
business
Our
strategy
Our
progress
We have a clear strategy to deliver top- and bottom-line growth in
Food & Beverage Solutions and steady earnings from Primary Products.
We produce our ingredients from
agricultural raw materials mainly at
large-volume corn wet mills, and also at
smaller blending facilities where we make
bespoke solutions for customers. We
operate as 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
and many common customers, and we
manage them together to optimise returns
for shareholders.
FOOD & BEVERAGE SOLUTIONS
Through this division, we provide
ingredients and solutions which add
specific functionality, nutrition and health
benefits to our customers’ products. This
division includes our sucralose business.
We work in partnership with 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, help
us deliver solutions for customers in their
local markets.
Our customers come to us for our expertise,
particularly in the following areas:
We deliver value in Primary Products in
the following ways.
• Sugar and calorie reduction: our
• Drive productivity and efficiency: the
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.
• 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.
PRIMARY PRODUCTS
Through this division, we provide high-
volume products to customers in the food
and beverage, and paper and packing
industries, primarily in North America.
We also sell co-products as animal feed
to customers around the world. Our two
main markets are bulk sweeteners and
industrial starches. These are both large,
mature markets but have high barriers to
entry. In these markets, we compete
primarily on quality, service and price.
more efficient our plants, the lower our
costs of production. We have four large
corn wet mills in the US, two smaller
corn wet mills 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 product and category mix:
with tight margins on our products,
small changes can make an important
difference to our performance. 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 silo
(elevator) storage network and our
relationships with the farmers who
supply us, and we manage inventory
carefully.
• Reduce 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 considerably. 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 futures
contracts to lock in future corn prices.
22
Tate & Lyle PLC Annual Report 2020
Strategic report
INVESTMENT CASE
OUR PURPOSE OF IMPROVING LIVES FOR GENERATIONS
SUPPORTING
HEALTHY LIVING
BUILDING THRIVING
COMMUNITIES
CARING FOR
OUR PLANET
CLEAR STRATEGY
FOOD & BEVERAGE SOLUTIONS
TOP- AND BOTTOM-LINE GROWTH
PRIMARY PRODUCTS
STABLE EARNINGS AND CASH GENERATION
By building leading positions in:
By managing our portfolio to:
• Three categories globally – beverages,
dairy and soups, sauces and dressings
• Two or three additional categories in each
region where we have local expertise,
such as bakery and snacks
SUCRALOSE
MANAGE FOR CASH – HIGH RETURN ON ASSETS
• Optimise product and category mix
• Drive productivity and operational efficiency
• Diversify into new and growing end markets
ACCELERATING PERFORMANCE THROUGH THREE PRIORITIES
SHARPEN THE FOCUS
ON OUR CUSTOMERS
ACCELERATE PORTFOLIO
DEVELOPMENT
SIMPLIFY THE BUSINESS
AND DRIVE PRODUCTIVITY
DELIVER RETURNS FOR SHAREHOLDERS
ACCELERATE GROWTH IN
EARNINGS PER SHARE
IMPROVE ORGANIC RETURN ON
CAPITAL EMPLOYED
MAINTAIN A PROGRESSIVE
DIVIDEND POLICY
Tate & Lyle PLC Annual Report 2020
23
Key performance indicators
HOW WE TRACK PROGRESS
Our
world
Our
business
Our
strategy
Our
progress
To keep us on track, we measure progress against our strategy: how we are
maintaining the financial flexibility to grow our business and to provide returns
to shareholders; and how we’re keeping our people safe at work.
CHANGES TO KPIs IN 2020
We have added one new strategic KPI
this year, profit from Primary Products,
because generating steady earnings
from this division is a key part of
delivering our strategy. We have also
removed one KPI related to maintaining
financial flexibility, interest cover, as this
is no longer a covenant on our borrowings.
CHANGES IN 2021
In next year’s Annual Report, we will
also report on the first year of progress
against the commitments we have made
for the three pillars of our purpose.
These are set out in the Chief Executive’s
review on page 17.
◊ LINK TO REMUNERATION
These KPIs are used in determining
executive directors’ annual bonuses and
for long-term incentive plans. Our safety
KPIs are also taken into account when
determining annual bonuses.
DELIVERING OUR STRATEGY
Food & Beverage Solutions – volume ◊
Food & Beverage Solutions – revenue ◊
3%
3%
2020
2019
2018
£942m
£889m
£850m
1%
2020
2019
2018
2ppts
Performance in 2020
Volume grew 1%. Momentum continued
in North America with growth of 2%,
and in Asia Pacific and Latin America
with growth of 1%. In Europe, volume
declined by 1% as we traded out of
lower-margin products.
Why we measure it
Top-line growth in Food & Beverage
Solutions is a key element of our strategy.
How we calculate it
As reported, excluding Sucralose.
5%
Performance in 2020
Revenue increased by 5% driven by good
price and mix management, and from
passing through higher net corn costs.
Why we measure it
To ensure we are successfully converting
our investments into revenue growth.
How we calculate it
In constant currency, excluding
Sucralose.
Food & Beverage Solutions – profit1, 2, ◊
Primary Products – profit1, 2
Group adjusted profit before tax1, ◊
2020
2019
2018
£162m
£143m
£137m
2020
2019
2018
£158m
£148m
£166m
2020
2019
2018
£331m
£309m
£296m
10%
3%
4%
Performance in 2020
Adjusted operating profit was 10% higher
driven by good revenue growth, cost
discipline and operating leverage.
Why we measure it
We invest in Food & Beverage Solutions,
our growth engine, and profit growth
demonstrates the return on those
investments.
How we calculate it
In constant currency, excluding
Sucralose.
Performance in 2020
Adjusted operating profit was 3%
higher, with good performance from
manufacturing and logistics and strong
cost discipline offsetting higher input
prices and weaker volume.
Why we measure it
We aim to deliver steady earnings by
offsetting declining demand from traditional
markets with ever more efficient production
and expansion into new markets.
Performance in 2020
Adjusted profit before tax increased by
4% with strong revenue and profit growth
from Food & Beverage Solutions and
steady earnings from Primary Products.
Why we measure it
To ensure we make good investment
decisions and execute our strategy
successfully.
How we calculate it
In constant currency.
How we calculate it
In constant currency.
1 Adjusted results and a number of other terms and performance measures used in this Annual Report are not defined by 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.
24
Tate & Lyle PLC Annual Report 2020
Strategic report
DELIVERING FOR OUR SHAREHOLDERS
Adjusted diluted earnings per share1, ◊
Adjusted free cash flow1
Return on capital employed1, ◊
2020
2019
2018
8%
57.8p
52.0p
49.4p
2020
2019
2018
£247m
£212m
£196m
2020
2019
2018
17.5%
17.1%
16.2%
£35m
40bps
Performance in 2020
Adjusted diluted earnings per share
increased by 8% in constant currency,
benefiting from the adjusted effective tax
rate in the year being 310 basis points
lower at 17.9%.
Why we measure it
To track the underlying performance of
the business and ensure revenue growth
translates into increased earnings.
Performance in 2020
Higher, reflecting increased earnings
and our strong focus on generating cash.
The adoption of IFRS 16 Leases led to an
increase of £34 million, while capital
expenditure was £36 million higher than
the prior year.
Why we measure it
To track how efficient we are at turning
profit into cash and to ensure that
working capital is managed effectively.
How we calculate it
As defined in Note 12, with growth rate
in constant currency.
How we calculate it
As defined in Note 4.
MAINTAINING FINANCIAL FLEXIBILITY
ACTING SAFELY
Performance in 2020
Higher, mainly due to increased earnings.
Why we measure it
To ensure we continue to generate a
strong rate of return on the assets we
employ, and to maintain a disciplined
approach to capital investment.
How we calculate it
The return as a percentage of our profit
before interest, tax and exceptional items
from continuing operations, divided by
average invested operating capital from
continuing operations.
Net debt to EBITDA multiple1
Recordable incident rate3
Lost-time rate3, 4
0.8x
0.9x
0.9x
2019
2018
2017
0.78
0.76
0.94
2019
2018
2017
0.42
0.47
0.45
2020
2019
2018
0.1x
Performance in 2020
The net debt to EBITDA ratio was slightly
higher at 0.9 times due to the adoption
of IFRS 16.
Why we measure it
To ensure we have the appropriate level
of financial gearing, and that our debt
is not a disproportionate burden on
the Company.
How we calculate it
The number of times our net debt
exceeds our EBITDA.
17% DECREASE
11% DECREASE
Performance in 2019
Our recordable incident rate improved with the number of accidents in the year
down from 60 to 52. The lost-time rates also improved. This improvement is a
positive sign that our Journey to EHS Excellence programme is being embedded
in the organisation.
Why we measure it
Ensuring safe and healthy conditions at all our locations is essential for
our success.
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 or restricted work
days per 200,000 hours.
2 Adjusted operating profit.
3 Measured by calendar year.
4 We are now reporting our lost-time rate in place of our lost-work case rate, because it includes lost-work incidents as well as restricted work incidents, and so is a more
comprehensive measure of safety performance.
Tate & Lyle PLC Annual Report 2020
25
26
Tate & Lyle PLC Annual Report 2020
I take pride in coming to work
every shift, knowing that the
ingredients I help pack go into
products that are helping
feed our nation and many
countries around the world.
Lawrence Kelly
Process Support Operator,
Sagamore, Indiana, USA
Strategic report
CONTENTS
REVIEW OF
THE YEAR
IN THIS SECTION
28 Food & Beverage Solutions
32 Primary Products
36
Innovation and Commercial
Development
38 Global Operations
40 Chief Financial Officer’s introduction
42 Group financial review
46 Our people
50 Environment, health and safety
58 Community involvement
60 Risk Report
Tate & Lyle PLC Annual Report 2020
27
Food & Beverage Solutions
STRONG PROFIT
PERFORMANCE
We work with our customers
to develop new products, and
reformulate existing ones, to
make food and drink healthier
while still tasting great.
I’m really pleased to see the
sharper focus on our customers
being reflected in our results.
Harry Boot
President, Asia Pacific, Food & Beverage Solutions
PARTNER AND SELL
WHAT WE DO
Our portfolio, combined with our technical expertise in key categories
such as beverages, dairy, and soups, sauces and dressings, helps us
deliver solutions for our customers.
Sweeteners
• Replace sugars
• Reduce calories
• Match sweetness
• Optimise taste
Health and wellness ingredients
• Replace sugar to reduce calories
while maintaining taste
• Add nutrition through fibre
enrichment
Texturants
• Add body and mouthfeel
• Improve shelf-life and stability
• Improve sensory appeal
Stabilisers
• Improve shelf-life
• Provide stability
28
Tate & Lyle PLC Annual Report 2020
Application scientists
at Hoffman Estates,
Illinois, USA
Harry runs Food & Beverage
Solutions in Asia Pacific and is
on the Executive Committee.
Here he discusses the division’s
performance this year, the
market and what lies ahead.
OUR MARKET
Q HOW IS FOOD & BEVERAGE
SOLUTIONS RESPONDING TO
MARKET TRENDS?
We are well-positioned to meet many of
the major challenges facing the world
today, from health issues around obesity
and diabetes to the desire for more
plant-based food for vegetarian, vegan and
flexitarian diets. People want food that is
healthy and tasty, but they also want it to
be fast and convenient and support their
modern lifestyles. That is where we come
in with our expertise in sugar reduction,
texture, fibre fortification, and stabilisation.
These skills are in demand, and customers
come to us to help them make the kind of
food and drink consumers across the
world want.
Q THAT SOUNDS QUITE GLOBAL, BUT
ISN’T THE FOOD AND BEVERAGE
MARKET LOCAL?
The trends are universal, but we address
them on a local level because food is local.
People’s tastes are different around the
world, and that’s why we continue to invest
in building applications labs in all our
regions. Customers come into our labs
to work with our food scientists to develop
new products or reformulate existing
ones, using our ingredients for their local
markets. Being on the ground with our
customers means we can respond more
quickly to their needs, which is increasingly
important as new product launches are
happening so much faster.
OUR YEAR
Q HOW IS THE STRATEGY PLAYING OUT
FOR FOOD & BEVERAGE SOLUTIONS?
The results say it all. We delivered on our
strategy with strong top- and bottom-line
growth. That’s because we are very
focused on what we are doing and clear
about where growth will come from in
each of our four regions. And, as a team,
we’re being more specific about the
targets we go after. In part, that’s thanks
to practical things, such as better tools,
processes and capabilities in our
customer-facing teams. But mainly
it’s thanks to us building much closer
relationships with our customers. Last
year, we changed the way our customer-
facing teams were organised to reflect
how our customers are organised – by
category – so we have a dairy team, a
beverage team and so on, just like they do.
This change is starting to really benefit
how we work with customers and it is
showing in our financial performance
as well.
Our success is also about cultural change:
this year we’ve become much faster and
more agile in what we do. Take Singapore,
where I work. We redeveloped our
applications labs and office in just three
months. And we did something similar in
São Paulo, Brazil. The world is changing
at a great pace, so our ability to act fast
is going to be even more important in
the future.
Q WHAT’S BEHIND THIS YEAR’S
RESULTS?
A lot of hard work from an outstanding
team across the world – along with strong
execution, discipline and a continuous
focus on our customers. It’s that sharper
focus that is really making a difference.
We’re constantly seeking new ways to
work more closely with customers. For
example, in the US we held our first
two-day Fibre Symposium for around 50
customers at our Innovation Centre in
Chicago, and in China, a two-day sugar-
reduction event in Shanghai with more
than 80 customers.
Strategic report
Q WHAT ROLE HAS PURPOSE PLAYED
IN THE RESULTS?
It’s been fundamental – because people
who believe in what they’re doing can move
mountains. And I see that all the time at
Tate & Lyle. It’s amazing to me that
something so simple as a sense of purpose
can have such a huge impact on everything
that we do. And that’s because it’s real. We
really can do good and increase profits at
the same time. Supporting healthy living is
a great example. When I began to research
the dietary and health issues in my own
Asia Pacific region, I realised just how
significant they are – and how well-placed
we are to tackle them. From that small
acorn of an idea, we are now working with
government departments in China and
Singapore to contribute to their countries’
healthy living programmes. Without our
purpose, this wouldn’t have happened.
OUR FUTURE
Q WHAT ARE YOUR PRIORITIES FOR
2020 AND BEYOND?
It’s actually quite simple – more of the
same! People need to eat and drink, and
they want to do that in a healthy way. And
that’s basically what we do. We just need
to do it better, and faster. Clearly, 2020 will
have some challenges as we navigate the
Covid-19 pandemic but there are plenty of
opportunities too. We’re on the right track
because we’re continuously reinvesting in
our people and our assets. And we have a
great team that’s united in their belief that
what we’re doing really matters. The true
unlock for us will be speed, and an even
greater focus on our customers. That’s
what we’ll be aiming for in the coming year.
Tate & Lyle PLC Annual Report 2020
29
Food & Beverage Solutions (continued)
OUR RESULTS
Volume
+1%
Revenue
Adjusted operating profit
+5%
in constant currency
+10%
in constant currency
YEAR ENDED 31 MARCH
CONTINUING OPERATIONS
Volume
North America
Asia Pacific and Latin America
Europe, Middle East and Africa
Total
YEAR ENDED 31 MARCH
CONTINUING OPERATIONS
Revenue
North America
Asia Pacific and Latin America
Europe, Middle East and Africa
Total
Adjusted operating profit
SUCRALOSE
YEAR ENDED 31 MARCH
CONTINUING OPERATIONS
Volume
Revenue
Adjusted operating profit
2020
VOLUME
CHANGE
2%
1%
(1%)
1%
2020
£M
470
214
258
942
162
2020
£M
161
63
CONSTANT
CURRENCY
CHANGE
%
CHANGE
%
9%
6%
0%
6%
6%
7%
1%
5%
13%
10%
CONSTANT
CURRENCY
CHANGE
%
(4%)
1%
CHANGE
%
(4%)
(2%)
4%
2019
£M
430
201
258
889
143
2019
£M
164
61
30
Tate & Lyle PLC Annual Report 2020
STRONG REVENUE AND
PROFIT GROWTH
Volume was 1% higher while revenue
increased by 5% in constant currency
to £942 million from good price and mix
management, as well as the impact of
passing through higher net corn costs.
Adjusted operating profit was 10% higher
in constant currency with good revenue
growth, cost discipline and operating
leverage. Operating margin increased by
110 basis points to 17.2%. The effect of
currency translation was to increase
revenue by £11 million and adjusted
operating profit by £5 million.
North America
Top-line momentum continued with
volume up 2% and revenue up 6% in
constant currency to £470 million,
with good progress across a range of
categories notably beverage, dairy, bakery
and nutrition. While growth in the overall
US food and beverage market remained
largely flat, we continued to see strong
customer demand in beverage, dairy,
bakery and nutrition, particularly to deliver
sugar and calorie reduction in packaged
and shelf-stable foods.
Asia Pacific and Latin America
Volume increased by 1%. Revenue
increased by 7% in constant currency to
£214 million with mid single-digit growth
in Asia Pacific and double-digit growth in
Latin America. In Asia Pacific, revenue
growth softened in the second half as
demand across China weakened in the
face of the Covid-19 pandemic, while
growth remained firm in South East Asia,
particularly in dairy and soups, sauces
and dressings. In Latin America, revenue
growth remained strong, with good growth
in Brazil and in the Andean region. In much
of Latin America new front-of-pack labelling
rules led to increased reformulation
opportunities with customers.
Europe, Middle East and Africa
Volume decreased by 1%, while revenue
at £258 million was 1% higher in constant
currency as we continued to exit lower-
margin texturant business to improve mix.
Revenue was in line with the prior year in
our more mature western European
business which included revenues from
our oats ingredients business which we
sold at the end of the prior year, while in
Strategic report
Turkey, Middle East and Africa we saw high
single-digit growth. In October 2019 we
opened the expansion of our facility in
Slovakia, doubling capacity of high-grade
maltodextrin (used in categories such as
baby food).
New Products
Revenue from New Products (products
launched in the last seven years) increased
by 15% in constant currency to £113 million
with each of our sweeteners, health and
wellness and texturants platforms
delivering double-digit revenue growth.
New Products now represent 12% of Food
& Beverage Solutions revenues. Sugar and
calorie reduction particularly in beverage,
dairy, confectionery and bakery is a key
focus for customers and consumers. As a
result, we saw strong growth in revenue
from stevia sweeteners, as well as
PROMITOR® Soluble Fibre, reflecting its
use as a sugar replacement and fibre
enrichment solution. We also saw good
growth in Non-GMO texturants and clean
label starches from our CLARIA® line of
functional starches.
SUCRALOSE
Solid results
Sucralose volume and revenue (in constant
currency) decreased by 4% reflecting the
impact of the prior year programme to
optimise inventory. Excluding the impact of
inventory optimisation, underlying volume
was 1% higher. Revenues were £161 million
with good customer mix management.
Adjusted operating profit at £63 million was
1% higher in constant currency reflecting
good cost management which offset a
£3 million one-off gain from a supply contract
in the prior year. Currency translation
increased revenue by £3 million and
adjusted operating profit by £2 million.
LIVING OUR PURPOSE
SUPPORTING
HEALTHY LIVING
Nutrition
By 2025, through our low-/no-
calorie sweeteners and fibres, we’ll
have helped remove 9 million tonnes
of sugar from people’s diets,
equivalent to 36 trillion calories
HARD SCIENCE PROVES A HIT
Part of our TEXTURE-
VANTAGE® Expert Systems
toolbox for customers,
Texture University is a series
of quarterly open webinars
to help formulators in the
challenging area of texture
science, explains Vicky
Stencel, Global Texturants
Platform Marketing Director.
‘Starches are vital ingredients in food
and beverage manufacturing, but act
very differently in different applications
and conditions. There aren’t many
starch specialists in the world, and
these in-depth webinars, delivered by
our scientists, make our great people
and expertise accessible to customers
everywhere. They’ve been a huge
success, with up to 1,000 people signing
up per session.’
ADDRESSING GLOBAL TRENDS
Our portfolio is well-placed to provide solutions for our
customers to meet global consumer trends.
SWEETENERS
HEALTH AND
WELLNESS
e
s
A l l u l o
Value
Taste
Nutrition
TEXTURANTS
STAMIST™ Starch
RESISTAMYL® Starch
Tate & Lyle PLC Annual Report 2020
31
Primary Products
STEADY EARNINGS
IN A CHALLENGING
YEAR
We sell high-volume products
to customers in the food and
beverage, and paper and
packaging industries, mainly
in North America.
We are totally focused
on getting the basics right
to make us the best supplier
to our customers.
Jim Stutelberg
President, Primary Products
PARTNER AND SELL
WHAT WE DO
The two main markets we operate in are bulk sweeteners, used
mainly in carbonated soft drinks, and industrial starches. Our
customers come to us for quality, reliability, service and price.
Some of our ingredients
• Nutritive sweeteners, such as high fructose
corn syrup and dextrose
• Industrial starches for paper, packaging and
industrial adhesives
• Acidulants, such as citric acid
• Commodities, such as corn gluten feed and
meal for animal nutrition, as well as corn oil
32
Tate & Lyle PLC Annual Report 2020
Members of the co-products
team testing feed quality at our
Sagamore plant in Indiana, USA
Strategic report
Jim explains the dynamics of
our Primary Products business,
and how we continued to deliver
steady earnings despite a
challenging year.
OUR YEAR
The other aspect is production costs.
For the best returns, our plants need to
operate at or close to capacity, and the
more efficient they are, the lower our
costs. The work our Global Operations
team has been doing to drive a relentless
focus on safety, productivity and efficiency
is key – described by Melissa Law on
pages 38 and 39.
For sweeteners, we’re seeing growth in
areas like craft beer and fermentation
applications. And in industrial starches,
we’re moving into new markets like
personal care – this year we launched
a new range of starches targeted at that
market. The recycling trend also has some
benefits for us, because recycled paper
needs more starch to hold it together.
Q ANOTHER GOOD YEAR IN
CHALLENGING CONDITIONS –
HOW DID YOU DO IT?
With such large volumes, even a small
margin improvement can have a big
impact on profitability. So we have
to be really good at the basics – price
management, product mix management,
cost control and customer service –
supported, of course, by Global Operations
managing our end-to-end supply chain
for maximum efficiency. And I’m pleased
to say we managed all these things well
again this year.
Q HOW ARE YOU DIFFERENTIATING
YOURSELVES TO CUSTOMERS?
Our big customers see us as a strategic
supply partner, because we are totally
focused on being the easiest supplier to
do business with. We have a great team
who see themselves as innovators in the
service of our customers, always thinking
about what they need and how we can
adapt whatever the environment. It paid
off this year – when late winter storms and
flooding disrupted both customers and
competitors, we continued delivering our
high levels of service.
Q HOW ARE YOU CONTROLLING COSTS
TO MAINTAIN PROFITABILITY?
Our main raw material and input cost is
corn. A secure supply is essential, and
we ensure this through our relationships
with farmers, and our own corn storage
facilities. In terms of cost, 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. So we use
a range of measures to manage our
exposure to corn prices as best we can,
from tolling contracts which pass raw
material costs on to customers, to using
futures contracts to lock in future
corn prices.
Q WHAT ROLE HAS PURPOSE PLAYED
IN YOUR RESULTS?
Our team has a genuine emotional
connection with our purpose. 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
a century and that 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 supporting local schools or sourcing
from local farmers, the overall contribution
we make to their lives really matters.
That’s why we were so proud this year to
become the first corn wet miller to support
sustainable acreage equivalent to all the
corn we buy globally each year.
In the future, I believe that the trend
towards bio-based innovation will help us,
as the world looks for replacements for
petrochemical-based substrates. We’re
already in that market through our
Bio-PDO™ joint venture with DuPont,
but it’s a long-term, gradual change.
OUR FUTURE
Q WHAT ARE YOUR PRIORITIES FOR
THE COMING YEAR?
In many ways, it’s more of the same.
We must focus on every opportunity for
continuous improvement, for operational
efficiency, for serving our customers just
that little bit better. We need to have a
mindset of squeezing out every little bit
of value we can, every day. And, with the
consequences of Covid-19 likely to have a
significant impact on our business in the
year ahead, that mindset has never been
more important.
OUR MARKET
Q HOW ARE YOU DEALING WITH
CHALLENGES IN THE MARKET?
Our two largest product lines, bulk
sweeteners and industrial starches, are in
gradual decline. People are drinking fewer
caloric carbonated beverages and using
less paper. 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. We are being
very intentional about identifying new and
profitable end markets for our products,
whether that’s with new customers or for
new uses.
Q HOW DO YOU KEEP UP THAT
RELENTLESS FOCUS ON VALUE?
It’s all about attitude, and that is why our
purpose is so important. We all want to be
part of something bigger than ourselves,
and when we believe in what we’re doing,
we have the tenacity and commitment to
stay relentless.
Tate & Lyle PLC Annual Report 2020
33
Primary Products (continued)
OUR RESULTS
Volume
(2%)
Revenue
Adjusted operating profit
+2%
in constant currency
+3%
in constant currency
YEAR ENDED 31 MARCH
CONTINUING OPERATIONS
Volume
North American Sweeteners
North American Industrial Starches
Total Primary Products
YEAR ENDED 31 MARCH
CONTINUING OPERATIONS
Revenue
Adjusted operating profit
Sweeteners and Starches
Commodities
Total Primary Products
2020
£M
1 779
133
25
158
2019
£M
1 702
CHANGE
%
5%
126
22
148
5%
17%
7%
2020
VOLUME
CHANGE
(2%)
(8%)
(2%)
CONSTANT
CURRENCY
CHANGE
%
2%
1%
17%
3%
PROFIT HIGHER DESPITE CHALLENGING
MARKET CONDITIONS
Volume was 2% lower with North
American Sweetener volume 2% lower
and North American Industrial Starch
volume 8% lower. Revenue at
£1,779 million was up 2% in constant
currency reflecting the pass through of
higher net corn costs. Adjusted operating
profit at £158 million was 3% higher in
constant currency. Currency translation
increased revenue by £51 million and
adjusted operating profit by £5 million.
Adjusted operating profit in Sweeteners
and Starches was 1% higher in constant
currency with good performance from
manufacturing and supply chain together
with strong cost discipline, offsetting
cost inflation and weaker volume. The
results also reflected the impact of the
£4 million insurance recovery in the prior
year. Commodities adjusted operating
profit at £25 million was 17% higher in
constant currency.
To simplify our business and focus capital
investment on key priorities, in December
2019 we closed our small, non-core,
savoury ingredients business after
deciding not to invest the significant capital
required to sustain it. This decision led to
an exceptional charge of £5 million, mainly
to write off the associated assets. This
business generated profit of £7 million
in the year ended 31 March 2020.
MOVING INTO NEW MARKETS
Chris Atkinson, Director
of Marketing, Industrial
Starches, shares an example
of how Primary Products is
finding new applications for
its ingredients.
34
Tate & Lyle PLC Annual Report 2020
TAKING CARE WITH TEXTURLUX®
‘Earlier this year, we entered the
personal care market in North America
with our TEXTURLUX® Personal Care
Additives range. These sustainable,
bio-based speciality polymers offer
exciting benefits to manufacturers of
skin, hair and sun care products, in
terms of functionality and natural
sourcing. This is part of our strategy to
move away from declining to growing
markets. And, while commercially it’s
still early days for us in this market, it’s
a promising direction for the future.’
Strategic report
Sweeteners
Volume was 2% lower due to lower
demand from our Bio-PDOTM joint
venture reflecting competitive cost
pressure for its products. Excluding this
impact, sweetener volume was slightly
higher than the prior year despite a
decline in carbonated soft drinks
consumption in the US, partly reflecting
higher pricing and lower promotional
intensity within that category.
Industrial Starches
Volume was 8% lower due to the closure
of paper capacity at a customer’s facility
combined with weaker demand for paper
and for packaging as e-commerce
operators sought to reduce packaging.
In the second half of the year our strategy
to diversify product mix and a recovery
of domestic paper production delivered
improved performance. An example
of this was our entry into the personal
care category in North America with
TEXTURLUX® Personal Care Additives.
This created a range of bio-based
speciality polymers for skin, hair and
sun care applications. Early customer
interest has been encouraging.
Commodities
Commodities delivered adjusted operating
profit of £25 million, 17% higher in
constant currency. Co-product recoveries
from corn gluten meal and corn oil were
stronger than the prior year while ethanol
cash margins declined and moved sharply
lower at the end of the year.
STARCH
(food and
industrial
ingredients)
58%
GLUTEN FROM
ENDOSPERM
(corn gluten meal)
4%
PERICARP – HULL
AND FIBRE
(corn gluten feed)
22%
WATER
13%
GERM (corn oil)
3%
USING EVERY BIT OF THE CORN KERNEL
Nothing is wasted in the
corn wet milling process.
Brad Morrison, Director,
Corn Procurement explains
how each part of the kernel
is used.
‘After steeping in water, the softened
kernels go through various milling
processes to separate out the starch,
fibre, gluten and oil. Starch is the
largest component and we extract
it from the endosperm to use in our
food and industrial ingredients.
Protein-rich gluten, also from the
endosperm, goes into corn gluten
meal, used in aquaculture feed and
pet food. Fibre from the hull is used
in corn gluten feed for livestock, and
we sell oil from the germ to the food
industry. We even use the steep-
water – it contains nutrients used in
animal feed and fermentation. In
these resource-constrained times,
it’s good to know we’re being efficient
and sustainable.’
Tate & Lyle PLC Annual Report 2020
35
Innovation and Commercial
Development
EVER CLOSER TO
OUR CUSTOMERS
Innovation is central to our
strategy. We develop new
ingredients and applications
for our customers, and new
ways of doing things that
make our business even
more efficient.
Our purpose is synonymous
with innovation – working
to improve lives is what we
do all day, every day.
Andrew Taylor
President, Innovation and Commercial Development
THINK AND CREATE
WHAT WE DO
Innovation and Commercial Development (ICD) consists
of seven areas working together as one team:
• Research and development
• Product management
• Nutrition science
• Regulatory
• Open innovation
• Global marketing
• Process technologies
36
Tate & Lyle PLC Annual Report 2020
Scientist at work at our
labs in Mexico City
into revenue. Our innovation pipeline
again increased in value by 18% this
year – and from a larger base. We also
made a significant contribution to our
simplify agenda by streamlining our
customer-facing organisation. As a result,
all our products, new and existing, are
now managed together within ICD which
makes us much more efficient as we
partner with customers in the regions.
Q YOU MENTION THE PURPOSE AS
SYNONYMOUS WITH ICD – WHAT
BENEFITS DOES THAT BRING?
The competition for the best technical
talent is fierce and we have been able to
build a great team. That’s because people
believe in what we’re doing; it’s the
reason they give their best. Our purpose
connects everything we do, from our
core work in creating healthier food to our
strategic work in open innovation. We also
work to help our manufacturing plants
manage their waste streams and become
more energy efficient.
OUR FUTURE
Q HOW IS COVID-19 AFFECTING
YOUR WORK?
The situation for everyone is very fluid
and uncertain, but it’s in this environment
that strong relationships with customers
really tell. We are adapting what we do
to ensure we can serve our customers in
the best way possible. For example, we
have intentionally slowed down some of
our development work on new molecules
so we can do more applications work
for customers in these challenging times.
If anything, this situation has brought out
the best in our people, not just in the way
we’re supporting each other in our own
team, but how we’re supporting our
customers too. Tate & Lyle people are
known for their integrity and being good
people to work with, and that will only
benefit us in the long run.
Strategic report
New Products revenue
£113m
Increase in value of innovation pipeline
+18%
Patents granted
36
ENABLING A NEW GENERATION
OF LONG-LIFE PRODUCTS
Our CLARIA® line of
functional starches delivers
great flavour, white colour
and consumer-friendly
labelling. The latest addition,
CLARIA EVERLAST®, brings
valuable new benefits. Jim
Smoot, Senior Manager
ICD, explains.
‘Food quality can be impaired by
processing, transportation and
storage. Our CLARIA EVERLAST®
clean-label starch line, launched in
March, maintains quality in frozen
meals, baked goods, sauces and
more, even in extreme conditions.
So manufacturers can formulate an
easily transportable, long-life yogurt,
for example, while meeting consumer
demand for taste and quality. At a
time when shelf-life has never been
more important, CLARIA
EVERLAST® is proving to be a
breakthrough ingredient.’
Tate & Lyle PLC Annual Report 2020
37
Andrew discusses how the
team is delivering results by
working increasingly closely
with customers to respond
to trends in the market.
OUR YEAR
Q HOW HAS THE MARKET EVOLVED
THIS YEAR?
One of the most positive things we’ve seen
this year is that customers are more open
to working together on joint development
initiatives than ever before. Even those who
have historically wanted a more transactional,
supplier-type relationship are now asking us
to help them reformulate their products.
This is a really positive affirmation for the
whole Tate & Lyle team who have worked
extremely hard to build our innovation
capabilities – and it’s also a reflection of how
the trends we’ve been seeing in the market
are getting stronger. Sugar reduction is a
key example – regulators are driving huge
change in the way formulations are done
around the world, from Chile to France to
Mexico to Singapore.
There’s also pressure to have a clean label
– if an ingredient is not in their pantry, many
consumers don’t want it on a label. And
they want to see a smaller number of
ingredients. Achieving objectives like these
in a way that consumers will accept – the
products still taste great – and that allows
customers to make money is hard. Our
ability to deliver on these trends is why we
now have a seat at the table with so many
customers across the world.
Q HOW HAS ICD CONTRIBUTED TO
OUR THREE BUSINESS PRIORITIES
THIS YEAR?
Our close relationships with customers
delivered a 15% growth (in constant
currency) in revenue of New Products this
year. We continued to see great uptake of
stevia, both our Reb M products as well as
those from our stevia partner, Sweet Green
Fields. In North America the change in
labelling for allulose (a low-calorie rare
sugar) championed by our regulatory team
(it is no longer labelled as sugar) has made
a big difference to customer projects in the
pipeline, which is starting to pull through
Global Operations
RELENTLESS
FOCUS ON
PRODUCTIVITY
We make and deliver high
quality ingredients to our
customers around the
world, focusing relentlessly
on safety, quality and
productivity.
We’re investing all the time in
better ways of doing things and
this is showing through in the
productivity gains we are making.
Melissa Law
President, Global Operations
SOURCE AND MANUFACTURE
WHAT WE DO
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
38
Tate & Lyle PLC Annual Report 2020
Working safely at
our Decatur, Illinois,
USA plant
Strategic report
OUR FUTURE
Q HOW WILL YOU KEEP UP THE
MOMENTUM ON PRODUCTIVITY?
We have a robust pipeline of productivity
projects – there’s a lot to go after. Also, I’m
really excited about our digital roadmap and
the investments we’re making in IT, which
are going beyond logistics and warehousing,
into our manufacturing plants. Another area
of focus this year will be to support our
people and local communities to adapt to
what is a rapidly changing world and
working environment, both inside and
outside our operations. Because, despite all
the large plants and machinery, we are a
people business and it’s our people that
make us the company we are.
RAILCAR REORGANISATION
BRINGS GREAT SAVINGS
Continuous improvement
(CI) is now firmly embedded
in our business and our
mindset and we’re seeing
the results in increased
efficiency and reduced
waste. Gerrit LaDage,
Regional CI Leader,
describes a project he led
this year at our Sagamore
plant, Indiana, USA.
‘We use railcars to deliver ingredients
to many large customers, and the
railroad company charges us for
every empty railcar stored on their
tracks. By expanding the remit of
what the cars could carry and
streamlining cleaning, we reduced
“dwell time” and the number of
railcars we needed. This saved us
more than US$750,000 per year. By
understanding the data, we were able
to make better decisions.’
Tate & Lyle PLC Annual Report 2020
39
friends. Our partnership with TruterraTM
to support sustainable farming across
the US Midwest is a huge deal. To know
that we’re helping farmers to improve
their livelihoods and those of future
generations gives us all a real sense of
pride in Tate & Lyle.
OUR YEAR
Q YOU MENTION INVESTMENTS
– ISN’T THE PRODUCTIVITY
PROGRAMME ABOUT SAVINGS?
The exciting thing about our productivity
programme is that it’s not about saving for
saving’s sake – it’s about doing things
better and it’s also about building the funds
to invest in growth. I’m really proud that
we’re continuing to beat our productivity
target, but what’s more exciting is how
we’re improving our ways of working. For
example, this year we invested in digital
technology within logistics to give people
access to real-time information, allowing
them to make more informed decisions
and partner better with our business
divisions to respond to customer needs.
We’ve also continued to make major
investments in operational efficiency like
the new US$75 million natural gas-fired
co-generation system at our corn wet mill
in Lafayette, Indiana.
Q ANY UNEXPECTED CHALLENGES
THIS YEAR?
In operations, there are always surprises
– it’s part of the job to be ready for the
unexpected! Really great operations
organisations roll with these surprises –
and my team did a fantastic job this year
adapting to new situations. The main one
that stands out was Covid-19, which really
challenged our people, how we run our
plants and the global supply chain. But
despite everything that’s been thrown at
them, the team has done a fantastic job
keeping our people safe, our plants
running and our customers served –
I couldn’t be more proud of them.
Melissa talks about how the
team continues to make our
operations efficient and
responsive to the needs of
Food & Beverage Solutions
and Primary Products and,
ultimately, our customers.
OUR BUSINESS
Q HOW DO YOU SERVICE THE
DIFFERENT NEEDS OF THE
TWO DIVISIONS?
For Food & Beverage Solutions, delivering
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. But,
while their needs from Global Operations
are different, the underlying principles of
how we serve all our customers flexibly
and efficiently are the same. How efficient
we are in running our operations and
delivering competitively priced ingredients
is fundamental to the economics of both
divisions. And nothing less than excellence
in EHS – environment, health and safety –
and quality across our operations will
do. Running efficient operations day in,
day out, is hard work because it requires
a relentless focus on doing everything
a little bit better each day, while keeping
safety and quality front and centre. And
that’s where the strength of our team
is so important.
Q WHAT KEEPS YOUR TEAM FOCUSED
ON EXCELLENCE EVERY DAY?
We’re investing all the time in better
ways of doing things, like continuous
improvement and maintenance
improvement programmes. But what
really makes the difference is people’s
attitude and belief in the value of what we
do, which is where our purpose comes in.
People in our manufacturing plants take
pride that our ingredients help feed the
world with tasty and nutritious food. And,
our community focus is also fundamental.
Many of our plants are located in farming
communities, and it’s really energising for
our people to see how they can have a
positive impact on their families and
Chief Financial Officer’s introduction
STRONG FINANCIAL
POSITION
Imran reflects on key aspects
of our results and looks
ahead with confidence despite
the near-term challenges
of Covid-19.
OUR YEAR
Q WHAT’S YOUR VIEW OF THE RESULTS
THIS YEAR?
I’m pleased with the results because we
faced some difficult market conditions
and our financial performance was slightly
ahead of our expectations coming into
the year. Cost discipline was good and
our productivity programme delivered
ahead of our expectations. Once again,
people across the business did what
they said they would do, which makes
me proud and gives me confidence for
the future.
Strong financial discipline gives
us the financial strength and
flexibility to invest in the future.
Imran Nawaz
Chief Financial Officer
Overall, it was another consistent year
of financial performance. Group adjusted
profit before tax of £331 million was
4% higher in constant currency. What
I’m really pleased about is that the mix
of earnings shows our strategy is working.
Food & Beverage Solutions, our engine
of growth, grew profit by 10%, while
Primary Products delivered steady
earnings, growing profit by 3%. This was
particularly commendable given some
tough market conditions for both its main
product lines, bulk sweeteners and
industrial starches, and is a real credit
to the team. Adjusted diluted earnings
per share were 8% higher in constant
currency at 57.8 pence, benefiting from
a lower effective tax rate of 17.9%
(2019 – 21.0%). And we delivered strong
adjusted free cash flow – £35 million
higher at £247 million.
Adjusted diluted
earnings per share
+8%
in constant currency
Adjusted free
cash flow
£247m
increase of £35 million
Return on
capital employed
17.5%
increase of 40bps
40
Tate & Lyle PLC Annual Report 2020
Q THE PRODUCTIVITY PROGRAMME IS
AHEAD OF TARGET – WHAT’S THE
STORY THERE?
Our programme isn’t only about saving for
the sake of saving, it’s also about building
the funds to invest in growth and in doing
things better. Our people have really
embraced that message, which is creating
a virtuous cycle. Over the first two years of
the productivity programme, we delivered
US$87 million of productivity benefits
which is more than we had targeted at this
stage. We believe we can do more,
so we’re increasing our target to
US$150 million and extending the
programme to six years ending in March
2024. Where will the savings come from?
The same sort of areas as before – such
as capital investments to reduce energy
costs, efficiency improvements in our
supply chain, simplifying the organisation,
reducing discretionary spend and
modernising our systems and processes.
Q WHERE ARE YOU INVESTING
CAPITAL?
We invested slightly more in productivity
and growth projects this year, so capital
investment increased to £166 million. We
also made investments in ensuring our
plants operate safely and efficiently.
A key part of our investment programme is
to enhance our environmental performance.
We’ve committed to replacing coal in all
our plants by 2025 and, as part of those
plans, during the year we announced a
US$75 million investment to build a new
natural gas-fired combined heat and
power system at our corn wet mill in
Lafayette, Indiana. This is similar to the
co-generation system we commissioned
in 2017 at our corn wet mill in Loudon,
Tennessee. These investments are a win/
win because, while replacing coal boilers
will deliver a substantial reduction in
carbon emissions, they make our plants
more efficient too.
Better IT systems have also been a
focus this year. We’ve invested in tools
like Workday®, our new global HR
platform which replaces nine legacy
platforms. We’re also completing the
rollout of SAP to our smaller sites, and
have introduced better communications
systems for virtual working, such as
Microsoft Teams. And we’re investing in
data systems for our logistics and plants,
as Melissa talks about on page 39. These
are essential for ensuring our growth is
efficient and profitable.
Strategic report
Q HOW CONFIDENT ARE YOU IN THE
FUTURE, GIVEN THE UNCERTAINTIES
IN THE WORLD?
In the near term, in light of Covid-19, the
team is managing what we can control and
making sure we’re prepared as best we
can for what we can’t. Tate & Lyle is a
resilient business and I am confident we
will get through this period successfully
and emerge a stronger company.
For the longer term, it’s about the strength
of the underlying business we’re in. I’ve
always worked in consumer goods
businesses, and personally I’m excited by
our purpose and how it promotes healthy
living, because it’s how we can directly
affect millions of people. And our growth
is coming from helping our customers
improve people’s lives by making food
healthier and tastier – something that will
never go out of fashion.
I’ve also seen for myself how our purpose
inspires our people, which makes them
more committed to the Company. And
committed people deliver results.
CAPITAL ALLOCATION
FRAMEWORK
We allocate capital as set out
below. In doing so, we aim to
maintain our investment-grade
credit rating.
INVEST IN ORGANIC
GROWTH
ACQUISITIONS, JOINT
VENTURES, PARTNERSHIPS
PROGRESSIVE DIVIDEND
POLICY
RETURN SURPLUS CAPITAL
TO SHAREHOLDERS
Tate & Lyle PLC Annual Report 2020
41
Q HOW STRONG IS TATE & LYLE’S
FINANCIAL POSITION?
We are in a strong position thanks to
the great work of our people across the
business. Our leverage is low with good
headroom and committed facilities, with
a net debt/EBITDA ratio at 0.9 times
(0.6 times on a covenant basis). Liquidity
is strong and we have access to more than
US$1 billion through cash at hand and a
committed and undrawn revolving credit
facility. The covenant headroom on our
borrowings is also significant, and we
have no debt to repay until 2023.
During the year we also took two actions
to strengthen and de-risk our balance
sheet. We supported the trustees of our
main UK pension scheme in completing
a £930 million bulk annuity insurance
‘buy-in’ of the scheme, and we refinanced
some of our debt at a lower cost.
LOOKING AHEAD
Q HOW ARE YOU RESPONDING TO
COVID-19?
From the outset of the pandemic, our
priority has been to keep our people safe,
our operations running and to support
our customers. The fact that we have
managed to do all three so far shows the
real resilience and commitment of the
whole Tate & Lyle team.
From a financial standpoint, we entered
this period in a strong position. In March,
as the pandemic unfolded, we acted to
reduce costs and preserve cash. This
included stopping non-essential
discretionary spend, freezing salary
increases and recruitment, and
reprioritising capital expenditure. These
are never easy decisions to take but are
necessary given that no one really knows,
at this stage, what the full impact of the
pandemic will be.
Q WHAT ARE YOUR IMMEDIATE
PRIORITIES FOR THE COMING YEAR?
Navigating the challenges of Covid-19,
preserving cash and maintaining the
strength of our balance sheet are clearly
key priorities for us. It’s also important we
don’t lose sight of the longer term. We are
fortunate that the strength of our balance
sheet enables us both to navigate Covid-19,
and to continue to invest selectively to
deliver long-term growth.
Group financial review
SUMMARY OF FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2020 (AUDITED)
YEAR ENDED 31 MARCH1
CONTINUING OPERATIONS UNLESS STATED OTHERWISE
Revenue
Adjusted operating profit
- Food & Beverage Solutions
- Sucralose
- Primary Products
- Central
Adjusted operating profit
Net finance expense
Share of profit after tax of joint ventures
Adjusted profit before tax
Exceptional items
Amortisation of acquired intangible assets
Profit before tax
Income tax expense
Profit for the year
Earnings per share (pence)
Adjusted diluted
Diluted
Cash flow and net debt2
Adjusted free cash flow
Net debt
2020
£M
2 882
2019
£M
2 755
CHANGE
%
5%
CONSTANT
CURRENCY
CHANGE
%
2%
13%
4%
7%
(10%)
9%
(7%)
(8%)
7%
58%
–
23%
13%
35%
11%
35%
10%
1%
3%
(9%)
5%
(4%)
(9%)
4%
59%
–
20%
15%
31%
8%
31%
162
63
158
(52)
331
(28)
28
331
(24)
(11)
296
(51)
245
57.8p
52.1p
247
451
143
61
148
(47)
305
(26)
30
309
(58)
(11)
240
(59)
181
52.0p
38.6p
212
337
1 Adjusted results and a number of other terms and performance measures used in this document are not directly defined within IFRS. We have provided descriptions of the various
metrics and their reconciliation to the most directly comparable measures reported in accordance with IFRS and the calculation (where relevant) of any ratios in Notes 1 and 4.
IFRS 16 Leases was adopted at the beginning of the year, without restating comparatives. Lease payments are now classified as financing rather than operating cash flows, increasing
adjusted free cash flow in the year ended 31 March 2020 by £34 million. IFRS 16 lease liabilities increased net debt by £162 million at 31 March 2020.
2
42
Tate & Lyle PLC Annual Report 2020
Strategic report
Sales from continuing operations of
£2,882 million were 5% higher than
the prior year (2% higher at constant
currency). On a statutory basis, profit
before tax from continuing operations
increased by £56 million to £296 million
driven by increased earnings and a lower
net exceptional charge of £24 million
(2019 – charge of £58 million).
Statutory diluted earnings per share
from continuing operations increased by
13.5 pence to 52.1 pence due to higher
earnings, lower exceptional charges and
a lower statutory effective tax rate of 17.1%
(2019 – 24.4%).
Adjusted profit before tax from continuing
operations at £331 million was £22 million
higher than the prior year (4% in constant
currency). Adjusted diluted earnings per
share from continuing operations increased
by 5.8 pence to 57.8 pence (8% in constant
currency) reflecting higher adjusted profit
before tax.
CENTRAL COSTS
Central costs, which include head office
costs and certain treasury and legal
activities, were 10% higher (9% in constant
currency) at £52 million, primarily driven
by incremental costs as part of our overall
Covid-19 response. Such increases were
partially offset by strong overhead cost
discipline.
NET FINANCE EXPENSE
Net finance expense from continuing
operations was £2 million higher at
£28 million, reflecting the adoption of the
new leasing standard, IFRS 16, which
increased finance expense by £6 million.
This has been partially offset by lower
borrowing costs.
The Group has raised new debt and
refinanced maturing debt, both lowering
its overall borrowing rates and increasing
its access to liquidity. In November 2019,
the Group issued a US$200 million private
placement, comprising US$100 million
3.31% notes due 2029 and US$100 million
3.41% notes due 2031, and used the
proceeds to refinance a £200 million 6.75%
bond maturing at that time. In May 2020,
the Group extended the maturity of its
US$800 million revolving credit facility
by a year to 2025 and priced a committed
US$200 million debt private placement
which will be issued on 6 August 2020, at
which point US$100 million 2.91% notes
maturing in 2030 and US$100 million
3.01% notes maturing in 2032 will be
drawn down.
Following the buy-in of the main UK
defined benefit pension scheme, interest
income of about £5 million per year on the
accounting surplus of the plan will no
longer be recognised from the start
of the 2021 fiscal year.
SHARE OF PROFIT AFTER TAX OF
JOINT VENTURES
The Group’s share of profit after tax of
joint ventures of £28 million was 8% lower
(9% lower in constant currency) principally
reflecting weaker demand at DuPont
Tate & Lyle Bio Products (Bio-PDOTM),
which is expected to continue into the
2021 fiscal year.
EXCEPTIONAL ITEMS FROM CONTINUING
OPERATIONS
The Group recorded a net exceptional
charge of £24 million, which principally
comprised £19 million of restructuring
charges for the previously-announced
simplification programme, consisting of
the following:
• £5 million of severance costs for roles
removed from the organisation; and
• £14 million of productivity costs
including the accelerated depreciation
of assets being replaced with more
efficient alternatives, Global Operations
cost-saving initiatives, and other
associated project costs.
The Group also recorded a £5 million
charge following the decision in the first
half of the year to exit the Primary
Products’ small, non-core savoury
ingredients business, mainly comprising
the cost of writing off the associated assets.
The exceptional cash outflows for the year
totalled £24 million, comprising £9 million
of cash outflows related to charges
recorded in the current financial year and
£15 million of cash outflows resulting from
exceptional costs recorded in the prior year.
In May 2018, as part of its simplification
programme, the Group announced a plan
to generate productivity benefits of
US$100 million over a four-year period to
2022, and that the cash costs of delivering
this would be around US$40 million.
During the year ended 31 March 2020,
exceptional cash costs in respect of this
programme of US$19 million were
recognised, bringing the total to date
to US$33 million.
During the year ended 31 March 2019, the
Group recorded a net exceptional charge
of £58 million which mainly comprised a
£43 million non-cash impairment charge
on the oats ingredients business.
TAXATION
The adjusted effective tax rate was 17.9%
(2019 – 21.0%). The rate was lower than the
prior year as a result of the recognition of
a deferred tax asset following the pension
buy-in transaction which enabled the
utilisation of some previously unrecognised
tax losses, the re-measurement of deferred
tax assets in the UK following the reversal
of the UK government’s previously enacted
decision to reduce the standard rate of
corporation tax from 19% to 17%, and the
expiry of the statute of limitations on a
number of uncertain tax provisions. Of these
items, the latter two were discrete items
recorded in the second half of the year
ended 31 March 2020, causing the full-year
rate to be lower than that of the first half.
We expect the rate for the year ended
31 March 2021 to be between 17% and 19%.
EARNINGS PER SHARE
Adjusted basic earnings per share
increased by 11% (8% in constant
currency) to 58.6 pence and adjusted
diluted earnings per share at 57.8 pence
were also 11% higher (8% in constant
currency). Statutory diluted earnings
per share increased by 13.5 pence to
52.1 pence reflecting increased earnings
and lower exceptional charges in the year.
Tate & Lyle PLC Annual Report 2020
43
Group financial review (continued)
CASH FLOW AND NET DEBT
Adjusted operating profit from continuing operations
Adjusted for:
Depreciation2 and adjusted amortisation
Share-based payments charge
Changes in working capital and other non-cash movements
Net retirement benefit obligations
Capital expenditure
Net interest and tax paid
Adjusted free cash flow3
Net debt4
YEAR ENDED 31 MARCH1
2020
£M
331
161
14
2
(21)
(166)
(74)
247
2020
£M
451
2019
£M
305
141
18
(16)
(25)
(130)
(81)
212
AT 31 MARCH
2019
£M
337
1 Adjusted results and a number of other terms and performance measures used in this document are not directly defined within IFRS. We have provided descriptions of the various
metrics and their reconciliation to the most directly comparable measures reported in accordance with IFRS and the calculation (where relevant) of any ratios in Notes 1 and 4.
2 Excludes £8 million of accelerated depreciation in exceptional items.
3
IFRS 16 Leases was adopted in the year without restating comparatives. Lease payments are now classified as financing rather than operating cash flows, increasing adjusted free
cash flow by £34 million.
IFRS 16 lease liabilities increased net debt by £162 million at 31 March 2020.
4
DIVIDEND
The Board is recommending an
unchanged final dividend of 20.8 pence per
share, bringing the full-year dividend to
29.6 pence per share (2019 – 29.4 pence),
up 0.7% on the prior year. The final
dividend is subject to approval by
shareholders at the AGM on 23 July 2020.
Subject to shareholder approval, the
final dividend will be due and payable
on 31 July 2020 to all shareholders on the
Register of Members on 19 June 2020.
In addition to the cash dividend option,
shareholders will continue to be offered a
Dividend Reinvestment Plan alternative.
CASH FLOW, NET DEBT AND LIQUIDITY
Adjusted free cash flow was £247 million
(2019 – £212 million). The increase of
£35 million reflects a favourable impact
of £34 million from IFRS 16. Excluding this
impact, the increase was £1 million, with
higher capital expenditure of £166 million
(2019 – £130 million) being offset by higher
operating profit, better working capital
performance and lower retirement benefit
contributions and tax payments.
We expect capital expenditure for the 2021
financial year to be between £140 million
and £160 million.
Overall net debt at 31 March 2020 of
£451 million was £114 million higher
than at 31 March 2019. The adoption of
IFRS 16 increased net debt by £162 million
at 31 March 2020. Excluding the impact
of IFRS 16, net debt would have been
lower due to net cash flow generated
from operating and investing activities,
partially offset by the translation
impact of the stronger US dollar on
US-denominated borrowings.
At 31 March 2020, the Group held cash
and cash equivalents of £271 million and
had a committed, undrawn revolving
credit facility of US$800 million.
Net debt/EBITDA ratio was 0.9 times
(2019 – 0.8 times), with the increase driven
by the impact of IFRS 16. On a covenant-
testing basis, net debt/EBITDA ratio was
0.6 times, which was significantly lower
than the covenant ratio of not greater
than 3.5 times, demonstrating significant
headroom above this covenant requirement.
44
Tate & Lyle PLC Annual Report 2020
Strategic report
RETIREMENT BENEFITS
The Group maintains pension plans for its
current employees and former employees
in a number of countries. Certain of these
arrangements are defined benefit pension
schemes. All funded schemes in the UK
and US are closed for further accrual. In
the US, the Group also continues to provide
an unfunded post-retirement medical
benefit scheme.
On 18 September, the Group further
de-risked its retirement benefit obligations
by supporting the trustees of the main
UK defined benefit pension scheme in
completing a £930 million bulk annuity
insurance policy ‘buy-in’ for that scheme.
The ‘buy-in’ secured an insurance asset
that fully matches the remaining pension
liabilities of the scheme, with the result
that the Company no longer bears any
investment, longevity, interest rate or
inflation risk.
As the scheme was in surplus on an
accounting basis, in accordance with the
relevant accounting standard the impact
of this transaction was to record a
re-measurement loss of £195 million to
other comprehensive income. There was
no impact on profit before tax and no
incremental funding by the Group
was required.
The other significant movements in
retirement benefit obligations relate
to actuarial losses recognised in other
comprehensive income of £46 million,
with the main driver being the reduction
in the discount rates applied to US pension
liabilities leading to increased liabilities
which were only partially offset by higher
returns on plan assets of £20 million.
While discount rates applied to UK pension
liabilities also decreased, this impact
was more than offset by the decrease
in inflation assumptions, resulting in an
overall actuarial gain for the UK pension
liabilities. However, for the main UK
pension plan, this actuarial gain was offset
by an equal and opposite decrease on
the return on plan assets because of the
nature of such assets following the ‘buy-in’
described above.
The Group’s retirement benefit obligations
are now in a net deficit of £203 million
(2019 – surplus of £24 million). Such
movement reflects the re-measurement
loss on the ‘buy-in’ described above. The
largest component of the net deficit are
certain deliberately unfunded schemes in
the US. The movement in the net retirement
deficit remains very sensitive to the
changes in the principal assumptions, the
impact of which is disclosed in Note 29.
As a result of the ‘buy-in’, cash
contributions into the main UK scheme
will cease, saving approximately
£20 million of cash annually from the
2021 financial year. In addition, the Group
will no longer record non-cash interest
income on the accounting surplus of
about £5 million per year.
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 28.
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.
In making this assessment, the Directors
have taken into consideration that, since
the balance sheet date, significant actions
have been taken by most governments to
contain the spread of Covid-19, which have
had a severe effect on economic activity in
the countries in which the Group operates.
While the Group’s trading in March
showed limited impact from the Covid-19
pandemic, the lockdowns in place in many
countries across the world throughout
April, most notably in its largest markets
of the US and Europe, have led to some
significant changes in demand patterns for
its products. Primary Products volume
was significantly impacted by the first full
month of lockdown in the US. Bulk
sweetener volume was 26% lower from
reduced out of home consumption as bars,
cinemas, restaurants and sporting events
were either shut or cancelled. Industrial
starch volume was 9% lower reflecting
reduced demand for paper and packaging
following the closure of schools, offices
and a decline in economic activity.
The impact of lower demand was
partially mitigated by actions taken in
March to optimise cash and reduce costs
as we saw the pandemic unfolding. These
include freezing salary increases and
recruitment, stopping non-essential
discretionary spend and reprioritising
capital commitments.
At the year end, the Group held cash and
cash equivalents of £271 million and had
an undrawn, committed revolving credit
facility of US$800 million (£642 million).
In addition, during May 2020, the Group
successfully obtained further committed
borrowings through a US$200 million US
private placement at an average coupon
of 2.96% and extended the term of its
US$800 million revolving credit facility
by one year to March 2025.
In concluding that the going concern
basis is appropriate, the Directors have
modelled the impact of a ‘worst case
scenario’ which includes the potential
impact in aggregate of three plausible
but severe downside risks. It specifically
included a severe extended impact from
lower out-of-home consumption across
our Primary Products and Food &
Beverage Solutions businesses due to
Covid-19. In addition, this ‘worst case
scenario’ also included two other risks
from the Group’s viability assessment
unrelated to Covid-19, being a major
operational failure causing an extended
shutdown of our largest manufacturing
facility and the loss of two of our largest
Food & Beverage Solutions customers.
Having reviewed this ‘worst case scenario’
forecast for the coming year, and having
applied reverse stress tests, the Directors
consider it remote that available liquidity
could be exhausted. In addition, even under
the ‘worst case scenario’ there remains no
forecast breach of the Group’s covenant
ratio of 3.5 times net debt to EBITDA.
Tate & Lyle PLC Annual Report 2020
45
Our people
UNITING TO
SUPPORT EACH
OTHER
In the final quarter of the financial year, we
simplified the organisation of, and ways of
working for, our customer-facing teams.
This is helping us to be more agile and
responsive, and get closer to our customers
in their local markets. I’m particularly
proud that the new organisation and ways
of working came from those best placed
to know what will work: a team of our own
people. And, of the nine pivotal new roles,
eight were internal appointments.
Another key area for us was mental
wellbeing. We brought forward the piloting
of our new mental wellbeing programme
to February, and will be rolling it out in
the first half of the new financial year
as part of our Journey to EHS Excellence
(J2EE) programme.
A GREAT CELEBRATION
OF OUR PEOPLE
A real highlight was our Extraordinary
People Awards held in Miami in October.
These awards celebrate individuals and
teams nominated by their peers for their
outstanding contribution to Tate & Lyle,
our customers and the communities we
operate in. What really stood out for me
was how touched people were – not just
winners but everyone and their guests.
The event was energising, joyful and
inspiring, not least because of the incredible
stories, from stopping a runaway barge in
Loudon, Tennessee, USA (not one of ours!),
to creating a spreadsheet tool that saved
people thousands of hours of work, to
commercialising a new ingredient in
record time.
ACHIEVING OUR GOALS
We know that the year ahead is going
to be tough for all of us as we deal with
the ongoing implications of Covid-19. But
it’s genuinely brought out the best in our
people and, as a result, we’re already
making progress on our ambitions around
managing people better, and promoting an
entrepreneurial culture of feedback and
honesty. I’ve seen for myself the ingenuity,
courage and decency of Tate & Lyle people
in adversity, and I know that together we
can achieve our goals.
Laura Hagan
Chief Human Resources Officer
Like every company this year, the biggest
challenge for our people has been adapting
to the new environment of Covid-19.
Personally, I’ve been so impressed by how
our people have united and supported each
other, whether that’s our production teams
going to work to keep our plants running
to serve our customers, or our many
office-based people adapting to working
at home with only virtual contact with their
colleagues and teams. This tremendous
combination of energy and compassion
has truly demonstrated the quality of
our people. Everywhere I look, people
are embodying our values and living
our purpose in their support for each
other, the Company, and the communities
around them.
INVESTING IN SYSTEMS AND PEOPLE
We’ve also been helped by the investments
we’ve made in HR systems during the year,
which have made it easier for people to
support each other in practical ways. In
January, we replaced nine legacy
administrative systems with one global
people system, Workday®, providing
higher-quality data and reducing
bureaucracy for managers and their
teams. It got off to a flying start, with 72%
of people logging in during the first six
weeks, and we’ve had great feedback on
how it’s making our people’s lives easier.
Laura celebrates the
fantastic work of our
people and reflects on
how we’re investing and
supporting them during
challenging times.
46
Tate & Lyle PLC Annual Report 2020
Strategic report
publicising them across Tate & Lyle.
We also publish standards for our
supply chain, and our statement on
anti-slavery and human trafficking can
be found at www.tateandlyle.com/
anti-slavery-statement.
FOSTERING AN INCLUSIVE CULTURE
Our policy is to employ the best candidates
for 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. But what does
‘best candidate’ mean for Tate & Lyle?
Skills and expertise are important, of
course, but these can be learned. What
matters most is that people have passion
for our purpose and culture, embracing
diversity of thought and experience.
Encouraging boldness and ambition
For us, the right culture is one based on
our values of safety, integrity and respect,
and which is truly inclusive as well as
performance-driven. People are at their
best when they feel they’re contributing
to the Group’s performance, while also
developing their own abilities. Our aim
this year was to inject more boldness
and ambition into our culture, and we’ve
definitely seen progress with people much
more confident about taking the initiative
and getting things done.
Focusing on gender as the
gateway to broader diversity
We believe that our focus on diversity
and inclusion is very important, because
people do their best work when they feel
they can be themselves. We’ve done a lot
of work around gender diversity this year,
but we still have much to do, which is
why we made one of our new purpose
commitments to achieve gender parity in
leadership roles by 2025. We have 128
senior managers, including statutory
directors, of whom 23% (30) are women.
OUR PEOPLE
OUR 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 12 languages and
publicised widely across the Group. We
relaunched the Code in 2018, and this year
continued to promote it through online
training for everyone and face-to-face
training for particular areas of risk, such
as sales and procurement. We strongly
encourage people to report breaches
through our Speak Up (whistleblowing)
programme, which is advertised across
our plants and offices, on our intranet and
in other internal communications. This
reflects our belief that prevention is the
best approach – if people understand
what’s expected of them and why, they’re
more likely to do the right thing.
Raising concerns
This year, concerns raised through
Speak Up, either directly or through our
independent third-party partner, Safecall,
doubled again from 34 to 70. This still
represents a small number of calls
compared with the number of employees,
and so we see this increase as a positive
reflection of our efforts to encourage
reporting. We also saw more people
raising questions or concerns about
Code-related issues directly with our
in-house legal team and the Head of Ethics
and Compliance, which we’re pleased
about because it means people are not
afraid to come forward. We investigate
all issues fully.
Communicating our standards
and policies
We support the Code with a set of
standards including Group Competition
(Anti-trust), Group Gifts and Hospitality,
Anti-Money Laundering and
Anti-Corruption/Bribery, and Agents and
Commissions. Our global HR policies
cover topics such as equal opportunities,
diversity and inclusion, employee training
and reward, and we publish these and our
standards on our intranet, as well as
OUR PEOPLE
Employee profile
(as at 31 March 2020)
4,218
(2019: 4,121)
Employees by geography (%)
NORTH AMERICA
EUROPE, MIDDLE EAST AND AFRICA
LATIN AMERICA
ASIA PACIFIC
6
10
EMPLOYEES BY
GEOGRAPHY
52
32
Gender diversity (%)
(as at 31 March 2020)
MEN
WOMEN
30
33
29
BOARD
EXECUTIVE
COMMITTEE
ALL
EMPLOYEES
70
67
71
Tate & Lyle PLC Annual Report 2020
47
Our people (continued)
establishment of different affinity
groups within the Company – LGBTQ+
for example – and we’re encouraging
our people to set up whatever groups
will best serve their needs.
Gender pay gap reporting
Although we are below the legislative
threshold for UK gender pay reporting, we
publish details of our gender pay gap on
our website. Using the UK government’s
methodology, our median gender pay gap
for UK employees was 15% (2019 – 9%).
This is because a large number of our
most senior roles are based in the UK,
and we have fewer women in those roles
than men.
LIVING OUR PURPOSE
BUILDING THRIVING
COMMUNITIES
Gender equality
By 2025, we’ll achieve gender
parity in leadership roles.
SUPPORTING EMPLOYEE WELLBEING
With modern ways of working, the dividing
line between work and personal life is
increasingly blurred. While this has its
benefits – flexible working patterns, the
ability to work from home and therefore
continue to work, for example during the
Covid-19 lockdowns this year – it also
brings additional stress as the workplace
gets faster and more intense. Mental
wellbeing is essential to people’s overall
ability to do their jobs well, and in the
world at large there’s been a positive shift
in openness about discussing mental
health issues.
Investing in mental health
Our purpose commitment to promote
personal wellbeing demonstrates how
important this area is to us, but it’s really
a natural evolution of the supportive
environment our people create for each
other. This year, alongside our many
site-based wellbeing initiatives – lunchtime
talks, on-site gym facilities, subsidised
massage and yoga, healthier options in
canteens, visits from occupational health
professionals – we’ve also invested in
mental health. We knew that some people
MENTAL HEALTH FIRST AIDERS
Saquib Ramday, Category
Director in London, UK,
trained as a Mental Health
First Aider.
LET’S KEEP TALKING
‘We all know stress can affect people,
so when I became leader of a large
team I wanted to create an environment
where people felt protected. It’s about
leading by example – opening up
conversations, spotting early signs and
encouraging people to take positive
steps towards self-care and extra
support, if needed. None of this
precludes high performance. In fact,
it drives it.’
were suffering ‘under the radar’, so
we wanted to make sure we offer an
environment in which people feel safe
to talk about mental health, and will
seek support.
We’ve introduced mental health first aiders
at our global head office in London, UK
and our Commercial Food and Innovation
Centre in Hoffman Estates, Illinois, USA,
who are trained to spot the signs and offer
support. And, as mentioned earlier, we
brought forward the piloting of our new
mental wellbeing programme to February,
and will be rolling it out across the Group
in the first half of the new financial year as
part of our J2EE programme.
We also expanded our Employee
Assistance Programme, which offers
information and counselling on health
and wellbeing, to include everyone across
Tate & Lyle.
MAKING OUR VOICES HEARD
Thais Isabel, Microbiologist,
set up the Professional
Women’s Network at our
citric acid plant in Santa
Rosa, Brazil.
‘We don’t have many women in our
factory and, as the J2EE Element
Owner for Engagement, I talk to
people a lot. I saw that women needed
more of a voice so I started the group.
It’s definitely helped us all mix and
speak more freely!’
We’re proud to have a strong professional
women’s network, which was set up by
employees and is proving very popular,
bringing together women across the Group
for networking, personal development and
socialising. Thanks to our non-executive
director, Anne Minto, who is on the Board
of the International Women’s Forum UK
(IWF), we have formed strong links with
the IWF and look forward to sponsoring
a future event (post Covid-19).
Gender balance differs across the
business. One area that’s particularly
difficult for gender parity is plant
management. This is largely to do with
the scarcity of women working in this area,
and we were therefore really pleased that
our first new safety engineer recruited
this year was a woman. Looking at our
Innovation and Commercial Development
team, we’re delighted to have reached
gender parity already. Gender is, of course,
only a subset of diversity, but it is the
easiest to focus on first, and it then
becomes the vanguard for other things
by opening up a wider conversation
about diversity. This has led to the
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Tate & Lyle PLC Annual Report 2020
Strategic report
This included a series of ‘virtual cafes’
where every employee had the opportunity
to speak to the Chief Executive and ask
him questions. This open approach to
communication during this difficult time
is really helping morale, as we know from
our internal surveys and from employees’
Yammer posts.
DEVELOPING TALENT AND ENHANCING
LEADERSHIP SKILLS
We want to be a company where people
are constantly learning, and this is as
much about attitude as it is about formal
training programmes. Traditional
face-to-face programmes still have their
place, but technology has given us the
opportunity to democratise learning, which
means offering people a range of training
options which they can take up in their own
time. This is also important because our
people are spread out all over the world,
and so providing online training means we
can reach people easily wherever they are.
There’s definitely a real appetite for
development, particularly among our
younger colleagues. But many mid-career
people are less clear what their needs
are or how best to tackle them, and are
similarly less used to asking for development
opportunities. We recognise that we need
to do more to create a better learning
culture for everyone.
In the coming year, we want to improve our
online leadership and inclusion training
programmes to help our people in these
important areas.
Tate & Lyle PLC Annual Report 2020
49
LIVING OUR PURPOSE
SUPPORTING
HEALTHY LIVING
Personal wellbeing
By 2025, we’ll have helped our
colleagues improve how they look
after their physical and mental
wellbeing so they can be their best
at work and in their daily lives.
ENSURING EMPLOYEES ARE MOTIVATED
AND RECOGNISED
Fair, performance-based remuneration
is fundamental to people’s motivation, and
our 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. We made a big
investment in pay this year, by expanding
the bonus pool, effectively doubling the
number of people eligible for an annual
cash bonus.
Celebrating our extraordinary people
Recognition is about far more than pay,
however, and we are very aware of the
importance of personal recognition to
feeling rewarded. This takes many forms,
from localised recognition moments in
team meetings, through to large events
such as our biennial Extraordinary
People Awards, which recognises truly
exceptional behaviour from our people
across the world. This year was an Awards
year, and we were delighted to receive
a record 565 nominations for our eight
categories, that were celebrated in Miami
in October.
Staying connected through regular
communications
On a day-to-day level, good internal
communications are essential for keeping
people connected and engaged, especially
in difficult times. We communicate with
our employees globally through a number
of channels. These include email, videos,
our intranet, our Yammer internal social
network, team meetings, employee town
halls, food tasting sessions and our global
employee magazine, which we publish
at least twice a year in English, with
SO MUCH TO CELEBRATE!
We’ve always honoured
people’s achievements, but
the Extraordinary People
Awards introduced three
years ago took things to the
next level. Chief Executive
Nick Hampton reflects on
this year’s event.
‘Colleagues in every part of our
business nominated ‘Tate & Lylers’
who are inventing, inspiring,
accelerating, sharpening, simplifying,
improving lives, being superstars,
keeping people and our planet safe,
and going above and beyond behind
the scenes. Our extraordinary people
are an inspiration to me and to all of
us – and we go all out to celebrate
them in style.’
summaries in nine other languages.
This year, we also delivered an employee
communications and community
involvement programme to celebrate
the 160th anniversary of the founding
of the business that would later become
Tate & Lyle. To ensure our communications
are effective and to understand what
people are thinking, we carry out periodic
pulse surveys.
As the Covid-19 pandemic unfolded, in
February 2020 our Chief Executive began
a weekly all-employee email, with short
video messages from himself and other
senior leaders. We also implemented an
extensive communication programme to
support our employees and keep them
informed of our Covid-19 response.
Environment, health and safety
AMBITIOUS NEW TARGETS TO
ACCELERATE OUR PROGRESS
The good progress we’ve made this
year is thanks to the efforts of our
people, who show their concern for
each other and the environment in
what they do every day.
Melissa Law
President, Global Operations
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Tate & Lyle PLC Annual Report 2020
We’re now into the third
year of our Journey to
Environment, Health and
Safety (EHS) Excellence
(J2EE). The aim of this
multi-year programme,
launched in January 2018,
is to deliver and sustain
world-class EHS
performance throughout
Tate & Lyle.
OUR YEAR IN SUMMARY
During the year, as we continued to embed
J2EE, we saw not only good progress in
EHS performance but also a positive shift
in our culture. We spent considerable time
looking at our impact on the world around
us and how we can truly live our purpose,
particularly in terms of caring for our
planet. As a result, we have developed
ambitious new environmental
commitments and targets for the next 10
years, as set out on page 52. They cover
carbon emissions (not just inside our
operations but across our whole value
chain), water, waste, and sustainable
agriculture. The last is where we can have
a considerable impact on our supply chain
which is why, during the year, we entered
into a ground-breaking partnership with
TruterraTM LLC (formerly Land O’Lakes
SUSTAIN™) to support sustainable
farming practices for 1.5 million acres of
US-grown corn, equivalent to all the corn
we buy globally each year.
At the end of the financial year, the
Covid-19 pandemic posed significant
challenges for the whole Group. The health
and safety of our people is our top priority,
and we took the necessary precautions to
protect and support them while enabling
our plants to remain in operation to supply
ingredients for food and beverage
customers across the world.
Strategic report
OVERVIEW OF J2EE
Our J2EE programme is designed to
involve everyone within Tate & Lyle in
strengthening our EHS culture and
performance. In practical terms, this
involves each site introducing standardised
behaviour and protocols and passing
through a series of stages, or tollgates
(seven in total), with the help of element
owners – colleagues who champion
a particular aspect of EHS. Passing a
tollgate involves a rigorous assessment
carried out by internal EHS experts.
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). This feeds into
our global EHS policy (available on our
website), which sets out a number of
principles designed to safeguard our
people and planet, along with a consistent
set of requirements and expected results.
We encourage all employees to share
their ideas and report concerns via our
cloud-based tool, Gensuite, which enables
us to manage EHS data efficiently and
consistently. Every week, the EHS team
shares with a wide group of employees the
latest EHS performance data, details of
any incidents and corrective actions taken,
and examples of good practice.
EHS governance
Our EHS Advisory Board oversees J2EE
and reviews performance. It meets
quarterly and is made up of senior
executives, including the Chief Executive,
and an external expert. The Board of
Directors receives monthly updates on
EHS performance, and a more detailed
review of progress at least twice a year.
Each year, senior executives visit sites
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.
Continuing good progress
It was a year of encouraging progress.
By the end of March 2020, 37 sites had
passed tollgate 1, 32 sites tollgate 2, and 16
sites tollgate 3. And, we were delighted
that three of our manufacturing sites had
passed tollgate 4, and one, tollgate 5.
We encourage employees to tell us about
any EHS concerns they may have, no
matter how large or small. This year, they
raised 5,413 concerns, and over 78% were
addressed within our target of 30 days,
a 4% improvement on 2018. Nonetheless,
cultural change is a gradual process, and
we still have work to do to ensure EHS
issues are fully understood across
Tate & Lyle.
ENVIRONMENT
INTRODUCTION
This year marked a real step-change in
our approach as we looked to deliver on
our purpose pillar, caring for our planet.
Protecting our planet’s natural resources,
and addressing climate change in
particular, are very real concerns for the
world, and businesses have an important
role to play in tackling these challenges.
That is why, during the year, we developed
a set of new, ambitious targets for our
environmental impacts, with a baseline
of the 2019 calendar year, as well as
making some important environmental
commitments like eliminating the use of
coal from our operations by 2025.
We measure our environmental footprint in
four main areas: our impact on the climate;
water use; beneficial use of waste; and
promoting sustainable agriculture.
HOW WE MANAGE
ENVIRONMENTAL RISK
Our global EHS management
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 to build
a sustainable EHS culture
• Communicating internally and
externally any changes in our
environmental strategy, risks
or opportunities
J2EE AIMS
• To build a strong, sustainable
EHS culture
• To prevent loss of life and injuries
• To prevent business disruption
• To provide clarity about the
behaviour we expect from those
who work for us and with us
• To manage our operational EHS
risks to minimise our
environmental footprint, while
ensuring compliance with
applicable regulation
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
AECOM has independently verified
selected environmental data from
pages 52 to 54. Their limited
assurance statement is at www.
tateandlyle.com/about-us/
environment.
We report EHS data by calendar year.
Tate & Lyle PLC Annual Report 2020
51
Environment, health and safety (continued)
Our total carbon footprint
During the year, with the support of an
external expert, we analysed our carbon
footprint throughout our entire value chain.
We found that just under 30% of our
carbon emissions came from Scope 1
and 2 CO2e emissions (energy used in or
purchased for our facilities), with more
than 70% from Scope 3 CO2e emissions
(indirect emissions from across our value
chain). We are using this data to consider
how best we can reduce our total carbon
footprint moving forward.
OUR TOTAL CARBON FOOTPRINT
SCOPE 1 (21%)
Direct emissions from owned or
controlled sources
SCOPE 2 (7%)
Indirect emissions from the generation
of purchased energy
SCOPE 3 (72%)1
34% – emissions related to our purchased
goods and services (principally corn)
26% – emissions related to processing
and use of our products
12% – other
7
21
TOTAL
CARBON
FOOTPRINT
72
1
Not assured. This will be included in our limited
assurance scope in 2021.
How we developed our new commitments
and targets
In setting these targets, rather than
starting from where we are, we looked at
where we believed we should be in 2030
and beyond, and then worked back to see
what that would mean for what we must
achieve by 2025 and then 2030. To make
our carbon footprint targets more
meaningful, they are based on absolute
rather than intensity reduction, and we
are committed to having them validated
as science-based by the Science Based
Target Initiative (SBTi). This means that,
by meeting our CO2e reduction targets by
2030, we will play our part in helping limit
global warming in line with the goals of the
Paris Agreement on Climate Change.
52
Tate & Lyle PLC Annual Report 2020
Our commitment to promoting sustainable
agriculture is fundamental to our overall
ability to meet our targets because of
the significant proportion of our climate
impact that comes from corn growing.
That is why we’ve committed to ensuring
we support sustainable farming equivalent
to the corn acreage we buy globally
each year – currently 1.5 million acres.
We’re proud to be leading the industry
as the first corn wet miller to introduce
this kind of programme. It has a wider
significance too, because sustainable
agricultural practices aren’t just about
their environmental impact – they’re
about supporting farmers’ livelihoods
and local communities, which also
aligns with our purpose pillar of building
thriving communities.
We’ve also signalled our commitment
to our new targets by ‘going green’ with
the refinancing of our US$800 million
revolving credit facility in May 2020. The
pricing of this is linked to us achieving our
Scope 1 and 2 CO2e emissions, water use
and waste reduction targets.
Building a sustainable EHS culture
The capital investments we’re making
in our plants, such as co-generation
systems to replace coal boilers, and in our
sustainable agriculture programme, are
of course vital for achieving our targets.
But what matters perhaps even more is the
behaviour and commitment of our people,
as we know from our work with J2EE. Many
of the incremental improvements we’ve
made have come from our own employees
understanding what we’re trying to achieve
and coming up with ideas.
At the same time, it’s important that we
educate employees to understand the
environmental impacts of decisions
they’re making. A key part of our work,
then, is to embed environmental concerns
into everyday working practices, in
the way that we have done with health
and safety.
LIVING OUR PURPOSE
CARING FOR
OUR PLANET
NEW COMMITMENTS AND
TARGETS
Carbon footprint
• By 2030, we’ll have delivered
a 30% absolute reduction in our
Scope 1 and 2 CO2e emissions,
with an ambition to reach a 20%
reduction by 2025.
• By 2030, we’ll have delivered
a 15% absolute reduction in our
Scope 3 CO2e emissions.
• Our Scope 1, 2 and 3 CO2e
emissions reduction targets will
be science-based.
• By 2025, we’ll have eliminated
coal from all our operations.
Waste
• By 2030, 100% of our waste will
be beneficially used, with an
ambition to reach 75% by 2025.
Water
• By 2030, we’ll have reduced
water use by 15%.
Sustainable agriculture
• We’ll maintain sustainable
acreage equivalent to the volume
of corn we buy globally each year,
currently 1.5 million acres, and
through partnerships we’ll
accelerate the adoption of
conservation practices.
Task Force on Climate-related
Financial Disclosures
During the year we brought together
a cross-functional team from around
Tate & Lyle and engaged an external
expert to help us analyse the requirements
of the Task Force on Climate-related
Financial Disclosures (TCFD), and
determine how we can meaningfully report
against them. This work is ongoing (see
Risk Report on page 62) and we expect to
report more fully against the TCFD in next
year’s Annual Report.
Strategic report
REDUCING CO2e EMISSIONS:
PERFORMANCE IN 2019
Our target for 2020 is to reduce CO2e
emissions (Scopes 1 and 2) from energy
use by 19% per tonne of production from
our 2008 baseline. We beat that target in
2018, and again this year, with a 21.8%
reduction. Contributions include our plant
in Koog, the Netherlands, where all energy
purchased from the grid is now certified
as being from renewable sources. And, in
Ossona, Italy, the solar panels we installed
in January 2019 are now generating
enough electricity to supply nearly 20%
(53,012 kWh) of the energy the site needs.
While these are a step in the right
direction, we recognise that we need to do
more, and our focus has now shifted to
delivering our new targets for 2030.
Investing to achieve our 2030 targets
We will achieve a significant proportion
of our Scope 1 target through investments
in our plants. We are in the middle of a
multi-year capital investment programme
totalling more than US$150 million to
eliminate coal from our plants by 2025.
These investments are a double win for
us, because they’ll make our plants more
efficient while being less carbon intensive,
and so will be good for our business as
well as the environment. Examples of
investments we are making include
a new boiler at our largest plant, Decatur,
Illinois, in the US, and a co-generation
energy system at our Lafayette, Indiana,
USA plant.
Eliminating coal from our
operations will reduce
our carbon emissions and
increase our efficiency – it’s
the right thing to do for our
planet and our business.
Jan-Jaap van der Bij
Senior Vice President,
Global EHS and Quality
ENERGY USE AND CARBON FOOTPRINT
Energy use1
Gigajoules (GJ) per tonne of production
20192
20183
20173
2008
37,643,000
37,254,000
36,992,000
37,459,000
Carbon footprint, Scopes 1 and 21
Tonnes CO2e
20192
623,0004
20183
765,000
2,619,000
1,995,0005
20173
695,000
2008
2,644,000
1,949,000
2,695,000
3,237,000
1,930,000
1,118,000
2,119,000
TOTAL
SCOPE 2 (INDIRECT EMISSIONS FROM THE GENERATION OF PURCHASED ENERGY)
SCOPE 1 (DIRECT EMISSIONS FROM OWNED OR CONTROLLED SOURCES)
1 Although we usually exclude UK sites from these figures because their environmental impact is negligible,
we have included them here to meet the UK’s Streamline Energy and Carbon Reporting (SECR) requirements.
2 UK use represents 0.014%.
3 Restated to reflect the sale of our Kimstad, Sweden facility in 2019.
4 UK emissions represent 0.052%.
5 UK emissions represent 0.004%.
Energy use intensity6
Tonnes CO2e per tonne of production
2019
20187
20177
2008
4.96
4.87
4.83
5.10
6 Excludes UK sites because they are too small to qualify for inclusion under our EHS Reporting Criteria.
7 Restated to reflect the sale of our Kimstad, Sweden facility in 2019.
Regarding our Scope 3 reduction target
of 15% by 2030, we expect to achieve the
majority of this through our sustainable
corn programme, discussed on page 55.
We’re also looking into where we can
make progress in other areas, for example
transport and packaging. This will be a key
area of focus for us going forward and our
ambition, over time, is to go beyond our
Scope 3 target.
Highlights of good practice this year
Nonetheless, investments can only take us
so far. The other essential part of achieving
our emissions targets comes from the
ongoing, everyday efforts of our employees
in making continuous improvements to
our operations. This year we’ve seen
some great work from colleagues across
Tate & Lyle, and we were particularly
pleased that our Lafayette, Indiana and
Loudon, Tennessee plants in the US were
again the only two corn wet mills in the
US to receive Energy Star certifications.
These are awarded annually by the US
Environmental Protection Agency for
outstanding energy efficiency performance.
Tate & Lyle PLC Annual Report 2020
53
Environment, health and safety (continued)
REDUCE WASTE
Most of our waste is organic matter that
comes from the corn wet milling process.
In most cases, it can be beneficially used,
particularly as nutrients for local farms,
which provides a nice circularity to our
process, given that these farms are often
those that supply us with corn.
Our target for 2020 is to reduce waste to
landfill by 30% from our 2008 baseline. In
the 2019 calendar year, we achieved a 9.3%
reduction, slightly worse than our result in
2018 of 10.7%1. This was mainly due to feed
at our Decatur, Illinois facility being used
to absorb waste liquid and then sent to
landfill, an issue we’ve since addressed.
Elsewhere, we saw examples of
encouraging progress. Our Mold, UK
and Ossona, Italy sites beneficially used
more than 99% of all their waste, and our
Loudon, Tennessee site in the US did the
same with its wastewater sludge. Our
McIntosh, Alabama site continued to divert
all its wastewater sludge from landfill to
fertilize local farmlands.
As with carbon emissions, we’re making
some changes to how we manage waste to
support progress towards our new target
of beneficially using 100% of our waste by
2030. For the coming year and beyond, we
have contracted a third party to collect and
beneficially use the waste from our four
large US corn wet mills, for example as
compost, as animal nutrition, or to
generate energy.
All our sites set an annual target for waste
management and reduction. Some already
beneficially use nearly all of the waste they
generate, while many have taken other
actions, for example switching from
single-use plastic, such as coffee and water
cups, to more sustainable alternatives.
REDUCING WATER USE
Corn wet milling is a water-intensive
process, and water is, of course a shared
resource, which means we need to ensure
that our use of water is sustainable not
only for ourselves, but for the communities
we operate in. Many of our plants are
located close to rivers or lakes and we
need to ensure that we use water as
efficiently as possible. We must also take
care not to allow any run-off from our sites
to pollute these local water courses.
Since water is essentially a local issue, we
need to understand the specific risks and
opportunities for water at each of our sites.
To this end, we completed a global risk and
opportunity assessment project in 2019,
which gave us the data we needed to set
our new target for reducing water use by
15% by 2030, and to determine where we
can have the most impact.
Given our consumption of water –
34.6 million m3 this year, slightly up on
2018 – our new target is a real challenge.
And it will become more difficult as we
increase our production of ingredients
for our Food & Beverage Solutions
division, which can be more water
intensive. We’re therefore developing a
model of what this increased production
might look like, so that we can plan the
right water reduction programmes.
To help us achieve this, we’ve assigned
an engineer from our Global Engineering
Team to work full-time on water
reduction initiatives.
Focus on stormwater and wastewater
Run-off is becoming an increasing issue
in many areas where, as a result of climate
change, rainfall is getting heavier and
floods more common. So, in 2019, we
increased our focus on wastewater and
‘stormwater’ (rain, snow or floodwater that
gets washed from our sites into local water
courses, carrying with it production or
waste matter).
Raising awareness of the impact of
stormwater and promoting good
housekeeping are key to managing this
issue. Ensuring nothing is left outside that
could get washed away, and spills are
cleaned up promptly, should mean that any
stormwater washing off our sites is free
of contaminants.
We’ve also made investments in
wastewater treatment, for example at our
Dayton, Ohio plant in the US, where we
installed a new system that will reduce
the chemical oxygen demand in the site’s
wastewater effluent by 85%. The system
also has an anaerobic digester that will
supply renewable energy later in the year.
We completed our global
water risk and opportunity
assessment project this
year, giving us the data to
understand where we can
make the most meaningful
water reductions.
Peter Lloyd-Jones
Project Lead – Global Water Reduction
Project
WASTE TO LANDFILL
WATER USE
Tonnes per 1,000 tonnes
of production
Cubic metres per tonne
of production
2019
20181
20171
2008
9.16
9.02
8.35
10.10
2019
20181
20171
2008
4.56
4.52
4.37
4.60
1 Restated to reflect the sale of our Kimstad, Sweden facility in 2019.
54
Tate & Lyle PLC Annual Report 2020
Strategic report
PROMOTING SUSTAINABLE
AGRICULTURE
Partnerships are essential to improving
sustainability across the entire value
chain. The highlight of our year in
environmental terms was bringing
1.5 million acres of corn in the US Midwest
– equivalent to the total amount of corn we
buy globally each year – into our sustainable
agriculture programme with TruterraTM, a
leading US resource stewardship solutions
provider. The first of its kind in our industry,
this programme aims to help farmers
understand the impact sustainable
practices will have on their crops and their
profitability, and to adopt them.
We initially launched the programme in
2018 by enrolling 310,000 acres. Following
the success of this pilot, in September 2019
we expanded it to cover the full amount of
corn we buy globally each year. And, we
won’t stop there – we are committed to
maintaining sustainable corn equivalent to
the amount we use. If our usage increases,
we will enrol more acres. This long-term
commitment is important because
changes in agricultural practices don’t
happen quickly, and measuring their
impact takes multiple growing seasons,
given uncontrollable factors such as
the weather.
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, particularly
for corn production. Our partnership with
TruterraTM is the largest registered
continuous improvement Field to Market
project. We also work closely with key
customers to enable them to meet their
commitments and realise their ambitions
for sustainable agriculture.
The first year’s results of our corn
programme with TruterraTM
In practical terms, TruterraTM uses
best-in-class technology to monitor
and improve air and soil quality on each
farm in its programme, working with
the farmers to understand the data and
make informed decisions on how to adopt
conservation practices and improve
profitability. In April 2020, we saw
encouraging early results from the
programme as described in the case
study above.
A CORN INDUSTRY FIRST
Early results of our
sustainable corn partnership
with Truterra™ are really
encouraging, explains Anna
Pierce, Sustainability Director.
Encouraging progress in the first year
‘In the first year, 2018, we engaged 196
farmers, bringing 310,000 acres into our
programme. We expanded it in 2019
to 1.5 million acres and more than
1,700 farmers.
‘In April 2020, we received results from
the 148,000 acres that have been in the
programme since the beginning, and
were really pleased that they
demonstrate an early positive impact.
For example, we’ve seen a 10%
reduction in greenhouse gas emissions,
equivalent to removing 1,254 cars
from the road each year. Soil quality
has improved by 4%, as measured
by the Soil Conditioning Index, while
topsoil erosion reduced by 6% –
equivalent to 1,085 truckloads staying
on the farm, although wind erosion
remained unchanged.
‘We are incredibly encouraged by
this progress, and are working closely
with key stakeholders to support
growers as they continue their
conservation journey.’
I’m really proud that we’re
the first corn wet milling
ingredient supplier to
launch a sustainable
agriculture programme
of this kind.
Anna Pierce
Sustainability Director
A more sustainable stevia supply chain
In 2019, we completed a sustainability
risk assessment of all our raw materials,
down to their agricultural source. These
include those we source directly, and
many more that we process as part
of our manufacturing operations. This
assessment will inform the development of
our sustainable agriculture programmes.
We are currently focusing on stevia,
following the review we commissioned in
2019 of the socio-environmental impact
of our stevia supply chain in China, where
most of our stevia is grown. This was
carried out by Earthwatch, an independent,
international science-based organisation.
The report has proved helpful in
understanding the areas of key impact,
and we are now looking at developing
a sustainable agriculture outreach
programme for stevia farmers.
Tate & Lyle PLC Annual Report 2020
55
Environment, health and safety (continued)
HEALTH AND SAFETY
The safety and wellbeing of our people –
all those who work at our sites, whether
employees or contractors – is our primary
concern. Covid-19 has posed some of the
most difficult challenges for our people
in our 160-year history, as our Chief
Executive discusses on page 13. As
explained in the Our people section on
pages 46 to 49, during the year we were
already taking steps to improve our
people’s health and wellbeing – initiatives
we adapted and accelerated in the face
of Covid-19.
Here we discuss health and safety in terms
of the occupational safety work covered by
our J2EE.
As a minimum, we expect everyone
working on a Tate & Lyle site – employees,
contractors and any other third parties –
to take responsibility in three ways:
• Comply with all safety rules and
regulations relevant to their work
• Intervene to prevent unsafe conditions
• Respect fellow workers and the
communities in which we work.
In 2018, we introduced a STOP Work
Authority across Tate & Lyle. It means
anyone conducting work or work-related
activities at our sites has 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
in those circumstances. And to prove that
we mean it, we have a weekly STOP Work
Authority award that recognises the top
action of that week.
As part of our J2EE, we developed 10
life-saving principles to prevent serious
injury or loss of life in areas such as
working at height, combustible dust,
railcar safety, and hot liquids, chemicals,
gases and steam. Each principle defines
the critical behaviours expected of leaders
and employees to ensure their own safety
and that of their teams. Although most of
our high-risk activities take place in our
plants, there are two that apply to all our
sites – driving or actions during emergency
situations (such as a fire evacuation).
56
Tate & Lyle PLC Annual Report 2020
OUR 10 LIFE-SAVING
PRINCIPLES
1. Permit to work
2. Lock/tag/try and electrical safety
3. Railcar safety
4. Working at height
5. Mobile-powered equipment
6. Transportation (driving)
7. Safety barrier management
8. Hot liquids, chemicals, gases
and steam
9. Combustible dust
10. Emergency situations
How we respond to potentially
severe events
When major, severe, or potentially severe
events (PSEs) occur, the site manager
reports them to our Incident Review Board
(IRB). The IRB is led by Jan-Jaap van der Bij,
Senior Vice President, Global EHS and
Quality, and is attended by senior leadership
from Global Operations, and plant and
site managers. It is an open forum for
discussion, and considers these questions:
• Do we understand what happened?
• Do we understand the root cause?
• Have we defined the right corrective
actions to prevent it from happening
again at this site?
• What do we need to do for other sites
with a similar situation, equipment,
process, product or procedure?
Any resulting actions are tracked to
completion by our Global Incident
Investigation Process Manager. During
2019, the IRB considered six PSEs.
Examples include the collapse of a water
reservoir tank, a potentially explosive dust
cloud and the cutting of a live wire by a
contractor. None of these incidents
resulted in any harm to either our people
or the environment, but action was taken
in all cases to prevent such events from
happening again.
2019 – improvements in key indicators
We report safety performance by
calendar year. For EHS reporting
purposes, employees include all those at
Tate & Lyle-owned operations and joint
ventures, and we also include contractors.
We said last year that we believed our
decline in performance during the 2018
calendar year was the result of much more
rigorous and thorough reporting, and
we’re pleased that this has been borne out
this year, with improvements in our lagging
and our leading indicators. Our recordable
incident rate improved by 17%, with the
number of incidents down from 60 in the
2018 calendar year to 52 this year, while
our lost-time rate1 was down by 11%. In
terms of leading indicators, we had six
potentially severe events, down from 11 in
2018. Learning from these events is really
important if we are to reduce both PSEs
and actual incidents, so we made some of
our PSEs into animated videos to share the
lessons with employees across our sites.
A new safety-focused engineering
role at our major plants
We’ve invested considerably in resources
this year, with the recruitment of full-time
safety engineers at all our major plants.
They work closely with the Global EHS
team and their sole focus is to lead their
site’s efforts around process safety,
particularly combustible dust. These
include ensuring global safety expectations
are met, identifying high risks, performing
risk assessments, and training.
We’ve also made some important
investments in equipment at our Loudon
and Lafayette plants in the US, replacing the
more hazardous anhydrous sulphur dioxide
systems with sulphur burners, which are
better for people and the environment.
The importance of culture
As with our environmental efforts, though,
real change comes through individuals’
behaviour. This is where our relentless focus
on safety through our site-by-site tollgate
programme, our managers leading by
example, and our ongoing communications,
make such a difference. And relentlessness
is important, because safety is an ongoing,
day-by-day, moment-by-moment activity.
Even though our indicators are going in the
right direction, accidents still occur, which
means we still have work to do to improve
our culture and our performance.
1 We are now reporting our lost-time rate in place of our
lost-work case rate, because it includes lost-work
incidents as well as restricted work incidents, and so is
a more comprehensive measure of safety performance.
PERFORMANCE IN 2019
Leading indicator – PSEs
6
(2018: 11)
Potentially severe events (PSEs) are events or incidents which could
have resulted in a major or severe incident.
Recordable incident rate1
Lost-time rate2
2019
2018
2017
0.73
0.91
0.78
0.91
1.03
0.94
0.64
0.76
1.14
2019
2018
2017
0.45
0.34
0.42
0.47
0.45
0.47
0.37
0.45
0.70
EMPLOYEES
CONTRACTORS
COMBINED (GROUP KPI)
1 Number of injuries requiring treatment beyond first aid per 200,000 hours.
2 Number of injuries that resulted in lost-work days or restricted work days
per 200,000 hours.
Number of incidents
combined
Number of lost-work and
restricted work cases combined
52
(2018: 60)
28
(2018: 30)
Nature of accidents (%)
2
2 2
2
2
4
19
5
8
8
NATURE OF
ACCIDENTS
15
10
11
10
STRUCK BY OR AGAINST
CAUGHT IN, UNDER, ON, OR BETWEEN
FALLS, SAME LEVEL
CONTACT WITH SHARP OBJECT
BODY POSITION OR POSTURE – BEND, LEAN
OR TWIST
LOWERING, LIFTING OR CARRYING
FALLS, DIFFERENT LEVEL
CONTACT WITH A CHEMICAL OR OTHER
SUBSTANCE
TASK REPETITION
STEPPED ON AN OBJECT
FORCEFUL EXERTION, PUSHING OR PULLING
EXPOSURE TO A SUBSTANCE
BITTEN OR STUNG
ILLNESS
Strategic report
NO HIDING PLACE FOR DUST
One of our new US-based
safety engineers, Brenda
Seggerman (pictured left),
talks about the work we’re
doing on combustible dust.
Corn dust, starch, gluten, other dry
ingredients… in certain conditions,
these innocuous-seeming powders
could cause devastating explosions,
which is why combustible dust is one
of our 10 life-saving principles. Even
a small amount of dust can cause
serious damage.
‘This year we analysed the risk of
dust across our processes, then
ensured our equipment is engineered
appropriately, with the correct
explosion protection installed. But
what’s more important is everyday
behaviour. Just like at home, dust can
build up in hidden areas, which is why
being scrupulous about
housekeeping is so critical – cleaning
dust from the tops of pipes and
beams for example. So we held
training programmes for employees
and contractors, and encourage
them to report even the smallest
concern, which is already having a
positive impact.
‘People always ask, “what is your
why?” Mine is the memory of an
incident from before I joined
Tate & Lyle. Thankfully no one was
injured, but I’ll never forget it. People
should be able to work safely, and
that’s what keeps me focused.’
Tate & Lyle PLC Annual Report 2020
57
Community involvement
IMPROVING
LIVES IN OUR
COMMUNITIES
OUR PROGRAMME
Our community involvement programme
is a key part of how we live our purpose,
brought to life through our pillar of building
thriving communities. At Tate & Lyle, we’ve
always found ways to give back to our
communities and, for our employees,
community involvement is fundamental
to who we are. The overall aim of our
programme is to build stronger, healthier
communities around our sites, and to
focus on those areas where we know we
can make most 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.
We know that engaging with communities
is not a one-size-fits-all activity. So, we
give employees at each site permission
to go out and champion a project or
organisation, to explore what’s needed
in their community and make a difference,
all under the Tate & Lyle banner.
Our partners include registered
charities, educational institutions and
non-governmental agencies that meet
our high standards for delivering services
and results. We plan and budget for our
community programme annually.
OUR YEAR
We’ve had another successful year.
We continued to develop existing
programmes like our Healthy Eating,
Happy Learning child health education
programme in Shanghai, and launched
new ones like our school support
programme in Dayton, Ohio and our
Breakfast Factory partnership with
Fondo Unido in Mexico City.
What makes our community
programme special is that every
project we do around the world
involves our employees.
Rowan Adams
Executive Vice President, Corporate Affairs
INVESTING IN COMMUNITIES
In the year ended 31 March 2020,
cash community spend and
charitable donations amounted to
£443,000
(2019 - £490,000)
58
Tate & Lyle PLC Annual Report 2020
HEALTH
EDUCATION
HUNGER
OTHER
5
24
AREAS OF
FOCUS (%)
43
28
HIGHLIGHTS OF THE YEAR
Strategic report
HEALTH
We supported health, nutrition and
wellbeing programmes for more than
HUNGER
We helped provide nutritious meals for
more than
EDUCATION
We gave educational support and
mentorship opportunities to more than
30,000
people across the world
450,000
people in need in our local communities
10,000
students of diverse ages and backgrounds
We each have the ability to
contribute in different ways, and
being an active member in our
community is a very rewarding
and positive experience.
Jason Doyle
Operations Manager, Decatur, Illinois,
USA
It’s heartwarming to make a
difference, and this was especially
true when we helped the Dayton
Food Bank give food to the families
affected by tornados last year.
Volunteering is a chance to make a
positive impact for our community
and our planet. It’s a beautiful
opportunity to express human
kindness in its purest form.
Renato Guerra
Plant Manager, Dayton, Ohio, USA
Gabriela Baptista
Customer Advocacy, São Paulo, Brazil
Examples
• Healthy Eating, Happy Learning
child health education programme
in Shanghai, China
• Food 4 Thought partnership to
provide nutritional support and
mentorship to children and their
families in Hoffman Estates,
Illinois, USA
• Volunteering at London Youth Games,
Europe’s largest youth sports festival
Examples
• Sponsoring and helping pack more
than 30,000 Holiday Meal Boxes
for families in need in Northern
Illinois, USA
• Supporting the local food bank to
provide nutritious meals on National
Food Collection Day in Ossona and
Noto, Italy
• Helping the food bank in Dayton,
Ohio, USA, provide food for people
devastated by tornados
Examples
• STEM-based teaching grants
provided to schools in our local
communities across the USA
• University scholarships and
bursaries provided to students in
the USA, Vietnam and South Africa
• Schools partnership programme
with Vaquitas Lecheras, Buenos
Aires, Argentina
• Supporting schoolchildren through
the Junior Achievement programme
in São Paulo, Brazil
During the year, we saw an increase in the
number of our employees getting involved
across all our regions. In the Americas, for
example, we’ve seen more employees than
ever supporting the United Way, which
provides a range of charitable services and
donations to local causes. And it’s not
unusual for a whole team or site to be
involved in a programme – for example in the
UK the whole finance team took a day out to
repaint a community hall in North London. In
Argentina, our team has been supporting 80
children in need with school supplies and
study skills for six years now, including
feeding them and their families weekly.
At the end of the year, the Covid-19
pandemic had a significant impact on many
of our local communities. In particular, the
level of food insecurity among some of the
most vulnerable people in these
communities increased significantly, with
many families no longer having access
to nutritious food. So, in April 2020, we
donated a total of US$100,000 to more
than 20 food bank partners across the
world. With this donation, they are
providing around 500,000 nutritious
meals for the elderly, families and children
in our local communities.
LIVING OUR PURPOSE
SUPPORTING
HEALTHY LIVING
Healthier lifestyles
By 2025, we’ll have helped improve
the lives of over 250,000 people by
supporting programmes that
promote healthier lifestyles
and activities.
LIVING OUR PURPOSE
BUILDING THRIVING
COMMUNITIES
Education
By 2025, we’ll have supported the
education of over 100,000 children
and students through learning
programmes and grants, helping
them attain skills for life.
Hunger
By 2025, we’ll have provided over
3 million nutritious meals for people
in need.
Tate & Lyle PLC Annual Report 2020
59
Risk Report
TAKING OWNERSHIP
OF RISK
We’ve also worked hard to get real
engagement on risk at every level within
Tate & Lyle. The risk team has been
spending more time engaging with the
business, and it’s paying off. We’re seeing
a real cultural shift, with people thinking
about risk in a different way – less as
a box to tick, more as an opportunity to
understand and manage the business
better, something to take ownership of.
This is also true of our Compliance and
Ethics programme and Code of Ethics
training, which are really gaining traction,
as discussed on page 47 in the Our people
section. Our Code also applies to our
business partners, and we’re continuing
to focus on third-party due diligence which
is increasingly important as our business
grows, particularly in emerging markets
where we use third-party distributors.
So this year we launched a strengthened
process for emerging markets, and trained
all our Chinese distributors and agents,
along with most in Turkey, the Middle East
and Africa. The feedback was really
positive, and we’ll be taking the programme
to Latin America in the coming year.
We’re also making the process of
managing risk easier for our people,
by investing in a new enterprise risk
management system – a single, central
repository for all risk information. This tool
allows people who manage risks at a local
level to input their information, and for the
risk, audit and internal controls team to
review it in real time. This gives us a much
more complete picture of how we’re
managing risk everywhere, which in turn
allows us to identify blind spots.
LOOKING AHEAD
With the new tools in place, our focus in
the next 12 months, along with navigating
the challenges of Covid-19, will be on
embedding our risk culture even further
within our teams and continuing to develop
a mindset of risk assessment in everything
we do, every day. And, we’ll be building our
strategic understanding of risk as part of
our longer-term plans for the business to
ensure that Tate & Lyle is well-placed to
take advantage of the opportunities the
future brings.
We’re seeing a real cultural shift, with people
thinking about risk in a different way – less
as a box to tick, more as an opportunity to
understand and manage the business better.
Lindsay Beardsell
Executive Vice President, General Counsel
OUR YEAR
One of the challenges for a global company
is ensuring a consistent understanding
of the end-to-end impacts of risk across
the business. So this year we set up an
executive Risk Committee to ensure that,
at the highest level, we are thinking in
a truly cross-functional way. It meets
quarterly and includes most of the
members of the Executive Committee, the
Company Secretary, the Head of Group
Audit and Assurance, and the Group
Financial Controller. It’s already helping
us have an even better understanding of
the Group-wide impact of today’s risks,
emerging risks, and ensure we are
managing risk effectively.
A BROAD STRATEGY FOR RISK
Effective risk management is like an
insurance policy – we identify what might
stop us from achieving our objectives and
decide how to minimise the effects on the
business. To get it right, therefore, we have
to think strategically and be imaginative
about scenarios that might occur.
We must of course be on top of our
short- and medium-term risks. This
has been shown by the outbreak of the
Covid-19 pandemic at the end of this
financial year. But we must also consider
the longer-term challenges facing the
world today. That’s why it’s important
we not only manage risk in the near term,
but also put in place plans and risk
management strategies now to ensure
the Group will flourish over the next 10
or even 20 years.
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Tate & Lyle PLC Annual Report 2020
Strategic report
HOW WE MANAGE RISK
We have a single, Group-wide programme to identify, analyse and assess risks, and then
to determine how we manage, control and monitor them.
THREE LINES OF DEFENCE
We manage significant risks at three distinct levels.
Our business and operational managers identify risks and create
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.
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 identify current
and emerging risks, and ensure we address any changes in the risk
landscape in good time. They also consider what the effects might be
if a combination of certain risks materialises together.
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.
1
RISK OWNERSHIP
AND CONTROL
2
MONITORING AND
COMPLIANCE
3
INDEPENDENT
ASSURANCE
OVERSIGHT
We oversee risk management at Group and operational levels to
ensure it is governed well.
BOARD
AUDIT
COMMITTEE
EXECUTIVE
COMMITTEE
RISK
COMMITTEE
Our Board has overall responsibility for how we manage and control
risk, and for setting the Group’s risk appetite. Every year, the Board
thoroughly assesses our principal risks to determine the nature and
extent of risk necessary to achieve our strategic objectives. They also
evaluate emerging risks.
Our internal audit plan, reviewed and approved by the Audit
Committee, is based on where our operational and Group risks
lie. The audit plan is part of our wider assurance plan which
involves our enterprise risk management, quality, and ethics and
compliance teams.
Executive Committee members oversee and direct risk management
in line with their respective responsibilities. They review our principal
risks and risk appetite, ensuring these remain relevant. They also
evaluate the potential impact of emerging risks.
Our Risk Committee, which approves the annual risk assessment
plan, reviews and challenges how the business assesses risk, looking
at both single risks and combinations of risk. Each quarter, they
review principal and emerging risks and progress against actions,
and do a deep dive into agreed risk areas.
Identifying risks
Each year, we hold bottom-up and
top-down reviews of our principal risks,
namely those that could threaten our
business model, strategy, performance,
solvency or liquidity, looking at a three-year
horizon. The bottom-up process involves
a rolling programme of workshops held
around the business, facilitated by our risk
team. These workshops help us to identify
current and potential risks, which we then
collate and report through functional and
divisional levels to our Risk Committee and
Executive Committee. We also consider any
areas and behaviours which could bring
about new risks, and different combinations
of risk with other potentially larger impacts.
Through these processes, we identify our
main business, strategic, financial,
operational and compliance risks and create
action plans and controls to mitigate them to
the extent appropriate to our risk appetite.
Principal risks
The top-down review involves the
Board assessing the output of this work,
confirming that our principal risks have
been captured and addressed, and that
emerging risks have been considered. Our
risk profile does of course evolve, and the
Board updates its view of principal risks
accordingly. This year, the Board decided
to add a new principal risk in relation to
external disruptive forces that might
materially impact our business. These
could include the impact of climate change
and of diseases such as the current
Covid-19 pandemic.
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.
Covid-19
The onset of the Covid-19 pandemic in the
final quarter of the financial year presented
significant challenges for the business, its
operations and employees. As explained in
the Chief Executive’s review on page 13, a
number of actions were taken to keep our
employees safe, our operations running
and our customers served. A Global
Pandemic Response Team was established
Tate & Lyle PLC Annual Report 2020
61
Risk Report (continued)
together with local response teams at every
site to manage our overall response and to
ensure business continuity, and mitigate the
risks identified. The Board reviewed the
progress of our response regularly. The
fact that all our production facilities have
remained fully operational during the
pandemic, and customer orders fulfilled, is
a testament to the commitment and skill of
our people as well as the effectiveness of the
actions taken. In light of our learnings from
the pandemic, as stated above, we are
introducing a new principal risk in relation
to disruptive forces, of which Covid-19 is a
clear example.
Determining our 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 risks
Individual members of the Executive
Committee have responsibility for
managing certain risks and their
mitigating controls. Senior management
formally confirms 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.
Brexit
The Board reviewed the impact of Brexit
and the contingency plans we put in place
in the event the UK left the EU without a
deal. As last year, the Board concluded
that Brexit is not a material risk for us.
Task Force on Climate-related Financial
Disclosures
The Board recognises the significant risks
posed by climate change and consideration
of these risks is part of our enterprise risk
framework. The increasing importance
of climate change risk is reflected in the
Board’s decision to introduce a new
principal risk this year in relation to
disruptive forces, external events which
could materially impact our business and
operations, including climate change, in
addition to climate change being a core
element of a number of our principal risks.
62
Tate & Lyle PLC Annual Report 2020
VIABILITY STATEMENT
In accordance with the requirements
of 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.
• A severe extended impact from
lower out-of-home consumption
across our Primary Products
and Food & Beverage Solutions
businesses due to Covid-19 (new).
Although our strategic plan, which the
Board reviews annually, forecasts
beyond three years, we create a detailed
three-year financial plan. This plan
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 2023.
To assess our viability, we stress-tested
our strategic plan under three downside
scenarios which might impact our
potential viability if one or more of the
downside risks set out below were to
occur. We assessed the potential impact
of these scenarios, individually and in
aggregate, both before and after
mitigating actions within our control.
The three downside scenarios
modelled were:
• A major operational failure causing
an extended shutdown of our largest
manufacturing facility;
• The loss of two of our largest
Food & Beverage Solutions
customers; and
Given the available cash and liquidity
position of the Group at 31 March 2020,
including a committed and undrawn
revolving credit facility of US$800
million, which is available for the
entire three-year period, the Directors’
assessment of viability is not contingent
on needing to secure additional financing
or any refinancing of existing facilities.
We measured the impact of these
risks by quantifying their individual
and aggregate 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.
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 2023.
The Board considers all the Group’s
principal risks, including climate change,
at least twice a year. Our Chief Executive is
ultimately responsible for oversight of our
climate change agenda, and is supported
by our EHS Advisory Board, which meets
four times a year. The delivery of our
purpose, including our sustainability and
climate change objectives, is part of
our strategic decision-making process,
including for capital investments. During
the year, the Board approved a new
sustainability programme including new
targets to deliver a 30% reduction in
Scope 1 and 2 CO2e emissions, and a 15%
reduction in Scope 3 CO2e emissions, by
2030. We are committed to these targets
being science-based, enabling us to play
our part in supporting the goals of the
Paris Agreement on Climate Change. More
information on our environmental metrics
can be found on pages 52 to 54.
We recognise the importance of disclosing
climate-related risks and opportunities
in line with the recommendations of the
Taskforce on Climate-related Financial
Disclosures (TCFD). During the year, we
brought together a cross-functional team
from around Tate & Lyle and engaged an
external expert to help us analyse the
requirements of the TCFD, and determine
how we can meaningfully report against
them. This work is ongoing and we expect
to report more fully against the TCFD in
next year’s Annual Report.
Strategic report
OUR PRINCIPAL RISKS
Link to our priorities
Trend compared with 2019
SHARPEN
ACCELERATE
SIMPLIFY
STRATEGIC RISKS
INCREASING
UNCHANGED
DECREASING
RISKS
HOW WE MITIGATE THE RISK
KEY WHAT WE’VE DONE THIS YEAR
TREND
1. Lack of growth in Food & Beverage Solutions
Failing to grow Food &
Beverage Solutions
would prevent us from
delivering against our
targets. This could reduce
our profitability over both
the shorter and longer
term and damage
investors’ view of us.
• Our organic and acquisitive growth plan supports
• We simplified the structure of our
our strategy.
• We have global and regional five-year plans focused
on key categories.
• Our M&A team works closely with Innovation and
Commercial Development (ICD) and with our divisions
to find acquisitions and partnerships that will help
us grow.
• We have incentive schemes and bonus programmes
for customer-facing teams tied to strategic as well as
operational targets.
customer-facing teams within our two
business divisions and ICD to get closer
to our customers and help commercialise
new products more quickly.
• We continued to strengthen our business
and presence in emerging markets with
investments in new applications labs in
Asia Pacific and Latin America.
• We strengthened our M&A team by
appointing a new, experienced head to
lead this function.
2. Failure to develop and commercialise new ingredients
New products are
essential to our ability to
lead the industry in our
chosen categories, and
thus to the long-term
growth of our business.
Without them, we might
be unable to meet our
customers’ future
requirements, which
could damage our
performance and
reputation and result
in customers switching
to competitors.
• We have a robust innovation process that, through
• We launched 11 New Products from our
internal development and open innovation, delivers
a strong pipeline of products.
• Our ICD team tracks emerging consumer trends and
works closely with commercial partners to create
new ingredients that will deliver growth.
• Our customer-facing teams’ incentive and bonus
schemes include targets for new product sales.
• We have an open innovation team that scouts for
breakthrough technologies.
• We prioritise partnership opportunities with
customers to accelerate development cycles and
bring new products to market more quickly.
innovation pipeline.
• We created a marketing centre of
excellence to ensure we are monitoring
global trends consistently and sharing
information across the regions.
• We expanded our ICD team into
Asia Pacific.
• We increased our focus on open innovation
through our involvement in the Terra Food
and Agricultural Incubator and entered
into a new partnership with an enzyme
technology start-up, Zymtronix.
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.
• Our remuneration policies are designed to attract,
retain and reward the best people.
• Our talent development plans give employees
opportunities and training to close gaps in their skills.
• We focused on increasing engagement
with our employees and invested in
internal communications with regular
formal and informal pulse surveys.
• We have initiatives to help us keep diversity front of
• We simplified our performance
mind everywhere.
• We have a single global performance management
system and talent planning process.
• We measure progress against cultural objectives and
carry out global employee surveys that help to tell us
what employees really think about working at
Tate & Lyle.
• Our Executive Committee and the Board plan
succession for business-critical roles.
management and reward processes to
ensure everyone understands how what
they do links to reward and recognition.
• We revamped our programme to promote
diversity and inclusion.
Tate & Lyle PLC Annual Report 2020
63
Risk Report (continued)
STRATEGIC RISKS (continued)
RISKS
HOW WE MITIGATE THE RISK
KEY WHAT WE’VE DONE THIS YEAR
TREND
4. Failure to adequately anticipate and minimise adverse impacts from global disruptive forces such as disease, climate change,
natural disaster, trade disruption or civil unrest
Global disruptive events
could have a significant
impact on our business
and our ability to conduct
manufacturing operations.
This could materialise at
any point along the supply
chain as well as affecting
global demand, capacity or
our customers’ needs.
• We have a global business continuity management
(BCM) framework to enable effective recovery
from a major disruption.
• Caring for the planet is one of the three pillars of our
purpose, and is central to how we make strategic
decisions.
• Having plants in different regions and countries
means we can serve customers from elsewhere
if a particular area is disrupted.
• Our Risk Committee oversees emerging risks to
ensure we are prepared for customers’ needs.
NEW
• We set up a Global Pandemic Response
Team to manage our response to and
minimise disruption from Covid-19.
• We developed a comprehensive
sustainability strategy including
environmental targets for 2030 which
will be science-based; we will be
publishing progress, including our
response to TCFD requirements, in next
year’s Annual Report.
• We began a project to strengthen further
both our business continuity capabilities
and our crisis management plans.
OPERATIONAL RISKS
5. Failure to act safely and operate our facilities safely and responsibly
Safety is not just a priority,
it’s foundational at
Tate & Lyle. Failure to
comply with laws and
regulations relating to
health, safety and the
environment could result
in us being unable to
protect our employees,
stakeholders and the wider
communities in which we
operate. It could also lead
to fines and have a negative
impact on our reputation.
• We have a continuous improvement plan for
environment, health and safety (EHS) in place at all
our sites (Journey to EHS Excellence, or J2EE).
It is visibly sponsored by the Chief Executive and
Executive Committee.
• Our EHS Advisory Board, which includes an external
EHS expert, receives EHS updates and reviews
performance quarterly. The Chief Executive attends
the meeting.
• Our Executive Committee and Board regularly review
• Nearly all our sites passed tollgate 2 (of
seven) as part of our J2EE programme.
• We put in place strict protocols at all our
sites to ensure we protected our people
during the Covid-19 pandemic including
sanitation, social distancing, hand
washing and wearing face masks.
• We increased investment in our EHS team,
recruiting new safety engineers at our
major plants.
EHS performance and progress against J2EE.
• We carried out in-depth EHS reviews at all
our plants to identify areas for
improvement to be built into each site’s
continuous improvement plan.
• We introduced virtual safety assessments
in light of Covid-19 to ensure we continued
to make progress with our safety
programme.
6. Failure to operate our plants continuously, manage our supply chain, and meet high standards of customer service
There are many risks in
operating plants which
could cause breaks in
production leading to
disruption and a
deterioration in customer
service. This, in turn,
could damage our ability
to grow and perform
as a business.
• Our plant network has a preventative maintenance
• We continued to implement our
programme.
• We have an ongoing programme to improve our
global supply chain processes.
• Business continuity capabilities enable us to supply
products to customers from alternative sources
quickly if there’s a natural disaster or major
equipment or plant failure.
• Our customer service team is part of Global
Operations so works closely with our plants, enabling
us to be agile and responsive.
• We have contingency plans to manage disruption
such as extreme winter weather.
maintenance improvement programme
at our major plants.
• We implemented new technology to
manage production schedules and
inventory, and improve customer service.
• We continued to undertake
de-bottlenecking and cost-reduction
projects to improve the reliability and
efficiency of our plants.
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Strategic report
OPERATIONAL RISKS (continued)
RISKS
HOW WE MITIGATE THE RISK
KEY WHAT WE’VE DONE THIS YEAR
TREND
7. Failure to maintain the quality and safety of our products
Poor quality products
could affect safety
and also damage
our reputation and
relationships with
customers. This could
have a negative effect on
our performance and
corporate reputation.
• We have strict quality control and product
testing procedures.
• We test our recall process frequently.
• We have a third-party audit programme,
supplemented by internal compliance audits.
• We assess our raw material suppliers, tollers and
third-party warehouses for food safety/quality risks.
• We centralised our recipe management
system to streamline how we manage
products and ingredients.
• We enhanced how we manage cross-
contamination risk by using the US Food
and Drug Administration (FDA) food
defence plan builder.
• We have a programme to manage allergens in
• We brought quality into the remit of the
our supply chain and ensure our ingredients are
either free from allergens or that any allergens
are disclosed.
EHS function so it could benefit from being
part of our Journey to EHS Excellence
(J2EE) programme.
8. Inability to manage fluctuations in the price and availability of raw materials, energy, freight and other operating inputs
• We have strategic relationships and multi-year
• We strengthened our regional
procurement teams to better serve our
needs in local markets.
• We implemented a new system to
manage freight more efficiently and
cost-effectively.
agreements with suppliers and trading companies.
• Our supply and tolling contracts with customers help
us reduce raw material risk.
• Our raw material and energy purchasing policies
increase the security of our supply.
• Our network of corn silos (elevators) enhances the
security of our supply.
• We manage our US corn position on a net basis,
which includes operating within certain pre-approved
limits on inventories of corn and co-products as well
as executory contracts for the purchase of corn and
sale of corn-based products.
• As part of this risk management strategy, the risk of
fluctuations in prices of certain commodities (mainly
corn) is also partially managed through the use of
certain derivatives (mainly corn futures sold and
purchased on the Chicago Mercantile Exchange).
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.
9. Failure to maintain the security of our information systems and data
A cyber security breach,
whether stemming from
human error, deliberate
action or a technology
failure, could lead to
unauthorised access to or
misuse of our information
systems, technology or
data. This, in turn, could
result in harm to our
assets, data loss and
business disruption – and
could bring legal risks
and reputational damage.
• Our cyber security enhancement programme
focuses on strengthening our defences in terms
of people, processes and technology.
• We run compulsory cyber security training and
breach scenario exercises.
• We strengthened our firewall protection.
• To help people working from home during
the Covid-19 pandemic, we rolled out
Microsoft Teams and ensured people had
company equipment to use.
• We have robust cyber security defences including a
• We stopped the use of USB sticks to add
continuous programme to detect any vulnerabilities.
another layer of cyber protection.
• Our plants run on separate IT systems which
increases their resilience.
• We have a 24/7, third-party security operations
centre to deal promptly with any issues.
Tate & Lyle PLC Annual Report 2020
65
Risk Report (continued)
LEGAL, REGULATORY AND GOVERNANCE
RISKS
HOW WE MITIGATE THE RISK
KEY WHAT WE’VE DONE THIS YEAR
TREND
10. Breach of legal or regulatory requirements including our Code of Ethics
If we don’t meet our
legal and/or regulatory
obligations, our
relationships with
customers are likely to
suffer, and we could be
subject to contractual
claims, threats to our
licences and, in extreme
cases, risks to our
directors and officers.
It could also affect our
performance and
corporate reputation.
• Our legal and regulatory teams work closely with our
commercial teams to identify legal and regulatory
risk and provide advice and solutions.
• We monitor legal and regulatory developments
regularly to make sure we know what could affect
Tate & Lyle.
• We review our key legal policies regularly.
• We run a legal and ethics and compliance training
programme.
• We have a third-party whistleblowing service that
gives our employees a way to raise concerns
anonymously if they’re not comfortable raising them
internally.
11. Failure to maintain an effective system of internal financial controls
Without effective internal
financial controls, we
could be exposed to
financial irregularities
and losses from events
that may affect our
performance and ability
to operate.
• We have financial policies and standards supported
by procedures for key financial processes, for
example, capital expenditure.
• We have a number of forums to monitor and manage
our financial risks, for example our monthly working
capital review and our regional Control Environment
Councils.
• Our Chief Executive and Chief Financial Officer review
the business and financials at least quarterly.
• At both the half year and the end of the financial year
we confirm to the Executive Committee, the Audit
Committee and the Board that our minimum control
standards are being met.
• We have built automated controls into our systems
wherever possible.
• Our well-resourced Group Audit and Assurance team
provides independent assurance to management and
the Board.
• We now have lawyers in each region
to work with commercial colleagues to
identify and mitigate legal risk from the
bottom up.
• We launched a new legal policy and
further strengthened our compliance
policies.
• We reviewed and updated key commercial
contractual processes and terms and
conditions, resulting in more consistent
management of legal risks and more
balanced contract terms.
• We have implemented a new document
management system to facilitate better
ways of working that are easier to audit.
• We continued to roll out legal and ethics
and compliance training as part of our
annual training plan.
• We continued to invest in our financial
controls function, expanding the team
as well as continuing to invest in training
and developing all our finance people.
• We continued to strengthen our controls
framework and to focus on the
segregation of duties and balance sheet
reconciliations.
• We established a project to look at how we
can improve and better use automation in
our key finance processes over the
medium term.
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Tate & Lyle PLC Annual Report 2020
Strategic report
LEGAL, REGULATORY AND GOVERNANCE (continued)
RISKS
HOW WE MITIGATE THE RISK
KEY WHAT WE’VE DONE THIS YEAR
TREND
12. Changes in consumer, customer or government attitudes to our products
The regulatory status
or perception of our
ingredients could be
affected by things like
changes in customers’
or consumers’ attitudes,
changes in food laws
and regulations, and/or
campaigns targeted at
specific ingredients or
technologies. These could
affect our ability or
freedom to operate.
• The science behind our ingredients (for example,
• We expanded our regulatory team in
Asia and Latin America to develop better
relationships with regulators in these
growth markets.
• We invested in our global nutrition team
with additional funding for studies
supporting the safety and efficacy of our
ingredients.
• We evolved how the Research Advisory
Group works to align it even more closely
with our strategy.
health claims or nutritional impact) is supported by
credible sources and is communicated clearly to and
understood by the relevant regulatory authorities.
• Our global regulatory team, supported by external
consultants, monitors any local regulatory
requirements that affect our products.
• Our global nutrition team initiates and monitors
research and publications on the use and
functionality of our ingredients, and maintains
a global advisory network of health and nutrition
clinicians, academics and experts.
• Membership of trade organisations gives us access
to broader sources of information and provides,
where necessary, a single voice for our industry on
issues (both regulatory and public interest) affecting
our ingredients.
• We have strong relationships with regulatory
authorities.
• We provide clear information on our ingredients’
provenance and traceability.
• Our Research Advisory Group, chaired by a non-
executive director and comprising leading scientific
experts, reviews key aspects of our innovation
activities and provides guidance to our team.
13. Failure to manage effectively changes in government regulations and/or trade policies
Government actions or
policies could cause
changes in tariffs or
customs duties.
Governments could also
impose import/export
limitations and other
barriers on our business.
These could lead to
additional costs, restrict
our growth and limit our
ability to operate in
certain markets.
• We engage with political parties, influencers and
regulatory authorities in the main countries in
which we operate.
• We are an active member of relevant industry trade
associations, such as the Corn Refiners Association
in the USA.
• Having plants in different countries means we can
serve customers from elsewhere where practical
if products from certain markets are restricted or
become less economically attractive.
• We make sure our business is diversified by
continuing to invest in resources and infrastructure
in different markets and geographies.
• We created a contingency plan in the
event the UK left the EU without a deal.
• We lobbied members of the US Congress
to support the ratification of the new trade
deal between the US, Mexico and Canada.
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 46 to 67.
SECTION 172(1) STATEMENT AND
STAKEHOLDER ENGAGEMENT
See page 87 within Governance for our
‘Section 172(1) Statement’. This describes
how the Directors have had regard to
stakeholders’ interests when discharging
the directors’ duties set out in Section 172 of
the Companies Act 2006. Our engagement
activities with stakeholders and the impact
of those interactions are set out from
pages 82 to 86.
The Board approved the strategic report
on pages 1 to 67 of this Annual Report on
20 May 2020.
By order of the Board
Claire-Marie O’Grady
Company Secretary
Tate & Lyle PLC Annual Report 2020
67
68
Tate & Lyle PLC Annual Report 2020
It gives me real satisfaction coming
to the lab every day knowing that
the projects I am working on,
like our sugar reduction and
clean-label initiatives, will help
address world problems like
diabetes and obesity.
Neeraj Kamath
Beverage Application Scientist, Singapore
Governance
CONTENTS
GOVERNANCE
IN THIS SECTION
70 Board of Directors
74 Executive Committee
76 Corporate governance
91 Nominations Committee Report
94 Audit Committee Report
100 Directors’ Remuneration Report
121 Directors’ Report
123 Directors’ statement of
responsibilities
Tate & Lyle PLC Annual Report 2020
69
Board of Directors
OUR BOARD
N
DR GERRY MURPHY
Chairman and Chair of the
Nominations Committee
Date appointed to Board: January 2017
Independent: Yes on appointment
Aged: 64
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 detailed understanding of
UK corporate governance requirements
enable him to provide the Board with
valuable leadership.
Current external commitments:
• Chairman of Burberry Group plc
Previous roles:
Chairman of The Blackstone Group’s
principal European entity (2009 to
September 2019). 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). He held non-executive
directorships in Intertrust NV, British
American Tobacco plc, Invest Europe,
Merlin Entertainments plc, Reckitt
Benckiser Group plc, Abbey National plc
and Novar plc.
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Tate & Lyle PLC Annual Report 2020
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
Independent: No
Aged: 53
Nationality: British
Aged: 46
Nationality: Luxembourger
Skills and expertise:
Imran brings 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 and operational Chief
Financial Officer.
Current external commitments:
None
Previous roles:
Senior Vice President Finance, Europe at
Mondele-z International. Prior to that he
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.
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:
Prior to being appointed Chief Executive,
he served as Chief Financial Officer of
Tate & Lyle. Before joining Tate & Lyle,
he 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.
Board Committees
Certain responsibilities are delegated to
three Board Committees, details of which
are provided on pages 92, 95 and 104.
A AUDIT COMMITTEE
R REMUNERATION COMMITTEE
N NOMINATIONS COMMITTEE
Governance
A N
R N
A R N
PAUL FORMAN
Senior Independent Director
LARS FREDERIKSEN
Non-executive director
Date appointed to Board: January 2015
Date appointed to Board: April 2016
Independent: Yes
Aged: 55
Nationality: British
Independent: Yes
Aged: 61
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, he held various
management positions at Chr. Hansen.
ANNE MINTO OBE
Non-executive director and Chair of the
Remuneration Committee
Date appointed to Board: December 2012
Independent: Yes
Aged: 66
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 deep knowledge 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, she held
senior management roles at Shell UK
and Smiths Group plc and was Deputy
Director-General of the Engineering
Employers’ Federation.
Tate & Lyle PLC Annual Report 2020
71
Board of Directors (continued)
Board Committees
Certain responsibilities are delegated to
three Board Committees, details of which
are provided on pages 92, 95 and 104.
A AUDIT COMMITTEE
R REMUNERATION COMMITTEE
N NOMINATIONS COMMITTEE
A N
A N
R N
KIMBERLY (KIM) NELSON
Non-executive director
Date appointed to Board: July 2019
Independent: Yes
Aged: 57
Nationality: American
DR AJAI PURI
Non-executive director and Chair of the
Research Advisory Group
Date appointed to Board: April 2012
Independent: Yes
Aged: 66
Nationality: Indian/American
SYBELLA STANLEY
Non-executive director
Date appointed to Board: April 2016
Independent: Yes
Aged: 58
Nationality: British
Skills and expertise:
Kim brings substantial experience in the
food and beverage industry and specific
insights into the US market having worked
for General Mills Inc. for nearly 30 years.
During her career at General Mills, she
held a number of senior brand and general
management roles, including serving as
President of the US$1 billion Snacks
operating division. She served as Senior
Vice President, External Relations,
leading on issues and crisis management,
environmental, social, governance and
global external stakeholder relations.
Current external commitments:
• None
Previous roles:
Previously President of the Snacks
operating division at General Mills Inc.
and was Senior Vice President, External
Relations, from 2010 until retirement
in 2018.
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 plc
• Non-executive director of The
Merchants Trust PLC
• Member of the Industrial Development
Advisory Board of the Department of
Business, Energy and Industrial
Strategy
• Co-chair of the Somerville College
Oxford Development Board
Previous roles:
Originally qualified as a barrister and,
before joining RELX in 1997, she was a
member of the M&A advisory team at
Citigroup and later Barings.
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
Food & Beverage Solutions portfolio.
Current external commitments:
• Non-executive director of Britannia
Industries Limited
• Non-executive director of Firmenich SA
• Non-executive director of the Global
Alliance for Improved Nutrition (GAIN)
• Non-executive director of Olam
International
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, he held
various management positions with The
Coca-Cola Company, culminating in Senior
Vice President Technical, The Minute
Maid Company.
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Tate & Lyle PLC Annual Report 2020
Governance
BOARD COMPOSITION
Gender diversity of directors
At 20 May 2020
MEN
WOMEN
3
GENDER
DIVERSITY OF
DIRECTORS
7
Directors’ nationalities
At 20 May 2020
BRITISH
AMERICAN
DANISH
IRISH
LUXEMBOURGER
1
1
12
2
1
DIRECTORS’
NATIONALITIES
5
Tenure of non-executive directors
At 20 May 2020
LESS THAN 3 YEARS
3 TO 6 YEARS
OVER 6 YEARS
2
2
TENURE OF
NON-EXECUTIVE
DIRECTORS
4
Tate & Lyle PLC Annual Report 2020
73
A R N
WARREN TUCKER
Non-executive director and Chair of the
Audit Committee
Date appointed to Board: November 2018
Independent: Yes
Aged: 57
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:
• Chairman of TT Electronics plc
Previous roles:
Executive director and Chief Financial
Officer on the board of Cobham Plc for
10 years until 2013. Most recently non-
executive director of Reckitt Benckiser
Group plc for a decade until 2020 and
non-executive director and chair of the
Audit Committee of Survitec Topco Ltd.
He also held senior finance roles at Cable
& Wireless and British Airways, and was
a non-executive director and chair of the
Remuneration Committee of Thomas Cook
Group plc and a non-executive director at
PayPoint plc.
Executive Committee
OUR EXECUTIVE TEAM
Responsible for delivering
our strategy and achieving
business results.
NICK HAMPTON
Chief Executive
Nationality: British
IMRAN NAWAZ
Chief Financial Officer
Nationality: Luxembourger
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.
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.
NATIONALITIES OF THE EXECUTIVE COMMITTEE
At 20 May 2020
BRITISH
AMERICAN
DUTCH
LUXEMBOURGER
1
1
NATIONALITIES
4
3
74
Tate & Lyle PLC Annual Report 2020
HARRY BOOT
President, Asia Pacific,
Food & Beverage Solutions
Nationality: Dutch
Harry joined Tate & Lyle in 2014 to lead our
Food & Beverage Solutions business in Asia.
In September 2019, he joined the Executive
Committee as President, Asia Pacific, Food &
Beverage Solutions. Prior to joining Tate &
Lyle, he was Chief Executive of Aqualyng in
Singapore, and before that, Chief Operations
Officer of Lonza based in Beijing. Harry has
a wealth of expertise growing businesses in
different parts of the world and this experience,
particularly in Asia, gives him the ideal
background to build our business in this
growing market.
Governance
JIM STUTELBERG
President, Primary Products
MELISSA LAW
President, Global Operations
Nationality: American
Nationality: American
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.
A chemist by training, Melissa joined
Tate & Lyle in 2017 after 20 years in the oil
industry. Before joining us, she was
President of the Global Specialities Division
of Baker Hughes, a GE company. Prior to
that, she held senior executive management
positions in Australasia and the Gulf of
Mexico in areas such as commercial
management, supply chain and research
and technology. Melissa currently serves as
a non-executive director for Cactus Inc.,
a US-based oilfield service provider. Her
commitment to making our operations safe
and productive places to work is making
a real difference across Tate & Lyle.
ANDREW TAYLOR
President, Innovation and
Commercial Development
Nationality: American
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.
LINDSAY BEARDSELL
Executive Vice President, General Counsel
LAURA HAGAN
Chief Human Resources Officer
ROWAN ADAMS
Executive Vice President, Corporate Affairs
Nationality: British
Nationality: British
Nationality: British
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.
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.
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
team. He became EVP, Corporate Affairs,
and joined the Executive Committee in
November 2014. His current responsibilities
include leading our global simplification and
sustainability programmes. He has deep
knowledge and understanding of the
Company and our industry.
Tate & Lyle PLC Annual Report 2020
75
Corporate governance
CHAIRMAN’S
INTRODUCTION
INTRODUCTION
Like every company in the world today, we’ve been tested by the
Covid-19 pandemic in ways that were unthinkable before. But, as
I said in my statement on page 10, I am immensely proud of the
outstanding way our people have risen to the challenge, keeping
our operations running safely and continuing to deliver to
customers, so that the food we all rely on remains available.
A crisis shows a company’s true colours, as it reinforces the need
for, and the benefits of, good governance. In our response to the
pandemic, I am reassured that our governance system is strong
in process, in implementation and, most significantly, in spirit. As
a Board, in March we had the novel experience of holding our first
Board and Committee meetings remotely via video conference.
We will continue to hold our meetings in this way, for the
foreseeable future, including any additional meetings which we
feel are necessary to ensure that we are on top of our response
to the Covid-19 pandemic and its impact on our business.
As we deal with these challenges and new ways of working and
reflect on the achievements of the past year, the Board’s primary
focus has been, and continues to be, on developing the right
strategy for our Group and implementing it in a coherent and
responsible way.
OUR PRIORITIES DURING THE YEAR
We have a well-developed Board calendar which ensures that,
over the course of the year, the Board regularly reviews a range
of topics including financial performance, risk management and
productivity initiatives; environmental, health and safety matters;
innovation initiatives and the performance and strategic progress
of our two business divisions, Primary Products and Food &
Beverage Solutions. As well as the Covid-19 pandemic, our
priorities during the year were strategy; building our business
in China; developing relationships with stakeholders; long-term
sustainability; and, as we do every year, a review of our
own effectiveness.
Developing our long-term strategy
Every year, we hold a strategy seminar with senior management
to consider our risks and opportunities. We’ve typically looked at a
medium-term (circa five-year) horizon, but this year we also took
a much longer-term view, looking at what our business might be
76
Tate & Lyle PLC Annual Report 2020
A crisis shows a company’s
true colours, as it reinforces the
need for, and the benefits of,
good governance.
Gerry Murphy
Chairman
like in 10 or even 20 years. We considered how a number of
extreme but quite plausible scenarios could provide risks and
opportunities for Tate & Lyle. These scenarios were developed
around key mega-trends including climate change; increasing
focus on health and wellbeing; reduction in international trade and
the increase of artificial intelligence. This exercise has kicked off
a rich and important discussion with management, which will
continue over the course of this year, about how we might respond
to these mega-trends in a way which will benefit our stakeholders.
This long-term perspective informed the development of our 2030
commitments and targets for the three pillars of our purpose, as
Nick discusses in his review from page 12.
Understanding our business in China
In September, the Board visited our offices and laboratories in
Shanghai and our fibre plant in Nantong to gain a deeper
understanding of our capabilities in China, the dynamics of the
Chinese market and the particular opportunities and challenges
for our growth in this key market. We enjoyed meeting many of our
employees at both sites and Nick and I held a Town Hall meeting
for staff in Shanghai. We also met a major customer and a
representative of the National Institute for Nutrition and Health
in China. While we were there, we visited various food retailers
in Shanghai to get a sense of the retail environment and
what people eat and drink, particularly in the categories served
by our ingredients.
But the real highlight for me was meeting children from one of the
schools which we sponsor as part of our Healthy Eating, Happy
Learning programme, which really brought home to me the value
of what we’re doing in China to support healthier lives, and the
power of our purpose in inspiring people.
Developing our relationships with stakeholders
Tate & Lyle has many stakeholders, all of whom are important to
our business. Although the Board is mindful of all the Group’s
stakeholders in its deliberations and decision-making, it is not
able to engage directly with all of them. However, during this last
year we did engage significantly with our people, our customers
and our shareholders as follows:
Governance
• Our people: this year, as planned, we stepped up our already
considerable engagement programme with our people, in
particular arranging for individual directors to meet a broader
cross-section of employees (see page 84 for details). I know I
speak for my fellow directors when I say that meeting staff at
our sites is the best part of any site visit, and makes all the
difference to our understanding of the business. At every Board
meeting, directors share feedback on their recent site visits,
on the capabilities and future potential of the people they have
met, and on the culture they have observed, particularly around
health and safety and the impact of our purpose. In these
uncertain times, it’s more important than ever that we stay
connected with our people, so we’re looking at how we can do
this in a different way if Covid-19 continues to restrict our ability
to travel.
• Customers: as I mentioned above, it was great to hear directly
from one of our major customers in China when we visited
Shanghai in September. I also met customers in Mexico, which
was very informative. As well as these personal interactions,
the Board takes close interest in, and receives regular updates
on, conversations Nick and his senior leadership team have had
with customers and on the feedback they’ve received. These
reports have helped us appreciate the positive impact that his
‘Sharpen, Accelerate, Simplify’ priorities are having on how
Tate & Lyle is serving customers and building ever closer
relationships with them.
• Shareholders: as in previous years, I spent time with
representatives of some of our major shareholders this year.
Climate change and the impact of business on the environment
were high on their agendas, as they were for the Board this
year, as I describe below. We also heard shareholders’ views
on executive remuneration, including the renewal of our
Remuneration Policy and in particular on pension contributions
for executive directors. Our Remuneration Committee took
these views into account in its decision-making this year, as set
out in more detail on page 115. I always enjoy meeting and
talking to those retail shareholders who attend our AGM, and
I shall be sorry if I am unable to meet them in person this year.
At the time of writing it is uncertain whether we will be able to
hold our AGM this year in the traditional manner, but we will do
what we can to engage with all our shareholders and will keep
them informed as our AGM plans develop.
Monitoring culture
As a Board, we take a keen interest in the culture at Tate & Lyle.
During the year we had many opportunities, both individually and
as a Board, to experience that culture for ourselves during our
visits. Key to our culture is health and safety. Nick updates us
on performance in this area at every Board meeting, and
we have an in-depth session on the progress of our Journey to
Environment, Health and Safety Excellence programme twice a
year. We’ve been very pleased with the progress we are making in
this critical area.
Acting with integrity is at the heart of Tate & Lyle, which is why our
compliance and ethics programme is so important. Each year we
review a report from our Head of Ethics and Compliance on the
progress of our programme, and the number and nature of
reports to our whistleblowing hotline. The Audit Committee
receives reports from the Head of Ethics and Compliance twice a
year. We also receive regular updates from Laura Hagan, our
Chief Human Resources Officer. These focus on her team’s
projects to understand the culture of the Group, to unlock any
barriers to effective working among our people, and to empower
employees to deliver Nick’s ‘Sharpen, Accelerate, Simplify’
priorities. While there is always more work to do, we are pleased
with the progress we’ve seen in these areas.
My fellow directors and I also take a strong interest in the
development of future generations of management at Tate & Lyle.
We want to understand the strength, breadth and diversity of the
people within our talent pipeline and the readiness of those
individuals, many of whom we meet on our site visits, to step into
more senior management roles over time. More broadly, we also
pay attention to the diversity of our workforce (particularly, in
terms of both gender and ethnicity) and the extent to which
that diversity reflects the communities in which we operate.
To further our understanding and respond to our challenges to
management, Laura also reports to the Board on talent
management programmes, succession planning, the results
of employee surveys, and inclusion and diversity initiatives.
Focusing on long-term sustainability
Our stakeholders, whether they be close to the business or wider
society, are increasingly demanding that companies do more to
address the climate emergency and other sustainability issues.
As Nick describes in his review from page 12, we have taken
significant measures this year to address the sustainability
of our business. These included the approval of our sustainable
agriculture programme with Truterra™ (formerly Land O’Lakes
SUSTAIN™); a co-generation project at our plant in Lafayette,
Indiana; and a revised sustainability strategy with new, ambitious
long-term commitments and targets for each pillar of our
purpose. The Board was pleased to approve these initiatives
which represent a significant step up in our sustainability journey
and which provide a foundation for further initiatives in the
coming years.
Our effectiveness as a Board
This year we again carried out the Board effectiveness review
internally. The Board invites members of management, who are
regular attendees at our meetings, as well as external advisors
Deloitte (for the Remuneration Committee) and our auditors EY
(for the Audit Committee) to share their views, too. The findings
show that the work we do as a Board and in our Committees
continues to be effective and that we successfully addressed the
areas we identified for greater focus in last year’s effectiveness
review. Our review also confirmed that our focus in the coming
year should continue to be on strategy, people and culture, and
succession and development.
OUR FOCUS FOR THE 2021 FINANCIAL YEAR
Aside from those areas I’ve mentioned, our immediate focus as
we move into the new financial year is, of course, to support
Nick and his team in managing the implications of the Covid-19
pandemic. Keeping our people safe has always been a key
concern of the Board, and it continues to be so as we try to
balance our role as an essential industry with the duty of care we
owe them.
Gerry Murphy
Chairman
Tate & Lyle PLC Annual Report 2020
77
Corporate governance (continued)
OUR GOVERNANCE STRUCTURE
LEADERSHIP
OUR GOVERNANCE STRUCTURE
The Group’s primary decision-making body is the Board. It is
accountable to shareholders for the Group’s financial and
operational performance, and is responsible for setting the
strategy and ensuring that risk is managed effectively. The Board
maintains a schedule of items which it is required to consider and
approve. We review this schedule regularly and update it to reflect
developments in corporate governance and emerging practice.
As shown in the diagram below, the Board has delegated certain
responsibilities to a number of committees. The Board retains
overall accountability and the Committee Chairs are responsible
for reporting back to the Board on the Committees’ activities.
Minutes of the Committees’ meetings are made available to all the
Directors on the web-based Board portal.
THE BOARD
CHAIR: DR GERRY MURPHY
• Accountable to shareholders for the Group’s financial and
operational performance
• Sets the Group’s strategy
• Oversees management’s implementation of the strategy
• Monitors the operational and financial performance of the Group
• Sets the Group’s risk appetite
• Ensures that appropriate risk management systems
and internal controls are in place
• Sets the Group’s ethics and culture,
and agrees the Group’s purpose and values
• Ensures good corporate governance practices are in place
CHIEF EXECUTIVE
NICK HAMPTON
AUDIT
COMMITTEE
NOMINATIONS
COMMITTEE
REMUNERATION
COMMITTEE
CHAIR: WARREN
TUCKER
• 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
CHAIR: 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
CHAIR: 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
Read more on page 94
Read more on page 91
Read more on page 100
EXECUTIVE COMMITTEE
RESEARCH ADVISORY GROUP
CHAIR: NICK HAMPTON
• Recommends strategic and operating plans to the Board
• Assists the Chief Executive in implementing the strategy
agreed by the Board
• Monitors the performance of the two business divisions and
global support functions
• Identifies, evaluates, manages and monitors risks
facing the Group
CHAIR: DR AJAI PURI
• Comprises external experts and senior Tate & Lyle managers
• Reviews the innovation pipeline
• Provides insights into how leading-edge science and
technology could enhance the portfolio of the Food &
Beverage Solutions division
The Executive Committee is supported by a number of operational committees, including the Environment, Health and Safety
(EHS) Advisory Board, the Operations Committee, the Risk Committee, the Capital Approval Committee and the Cyber Security
Committee. Committees may also be established for a finite period to oversee key strategic or operational priorities.
78
Tate & Lyle PLC Annual Report 2020
Governance
KEY RESPONSIBILITIES OF THE BOARD
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
CHIEF EXECUTIVE
RESPONSIBLE FOR THE EFFECTIVE OPERATION,
LEADERSHIP AND GOVERNANCE OF THE BOARD
• Chairs Board meetings, Nominations Committee meetings
and the Annual General Meeting
RESPONSIBLE FOR PROPOSING STRATEGY TO THE
BOARD AND DELIVERING IT
• Runs the business
• Communicates within the organisation the Board’s expectations
• Sets the Board agenda with the Chief Executive and
with regard to culture, values and behaviours
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
• Ensures the Board is aware of current business issues
CHIEF FINANCIAL OFFICER
NON-EXECUTIVE DIRECTORS
RESPONSIBLE FOR THE GROUP’S FINANCIAL AFFAIRS
• Contributes to the management of the Group’s business
• Supports the Chief Executive with the development and
implementation of the strategy
RESPONSIBLE FOR OVERSEEING THE DELIVERY
OF THE STRATEGY WITHIN THE RISK APPETITE
SET BY THE BOARD
• Advise and constructively challenge the executive directors
• Scrutinise the performance of management in meeting agreed
goals and objectives and monitor the reporting of performance
• Perform their 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
SENIOR INDEPENDENT DIRECTOR
COMPANY SECRETARY
RESPONSIBLE FOR ENSURING THAT THE CHAIRMAN’S
PERFORMANCE IS EVALUATED
• Acts as a sounding board for the Chairman and supports him
in the delivery of his objectives
• Serves as an intermediary with the Chairman for other Directors
if necessary
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
• Maintains a comprehensive understanding of the major issues
• Assists the Chairman and the Chief Executive in ensuring
of shareholders and is available if shareholders have any
concerns that they have been unable to resolve through the
normal channels
that the Directors are provided with relevant information in a
timely manner
• Organises inductions for new Directors and ongoing training
for all Directors
Tate & Lyle PLC Annual Report 2020
79
Corporate governance (continued)
BOARD ACTIVITY DURING THE
YEAR ENDED 31 MARCH 2020
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, with one meeting held at our offices and laboratories in Shanghai,
China, and our March 2020 meeting via video conference.
STRATEGY
FINANCIAL
OPERATIONAL/COMMERCIAL
• Undertook deep dives into each of
our Primary Products and Food &
Beverage Solutions divisions,
considering the key growth
drivers, markets and customers
in each
• Focused in particular on the
market, our capabilities and
growth strategy in China with a
Board visit to our Shanghai office
and our plant in Nantong
• Reviewed the priorities identified
for Innovation and Commercial
Development (ICD) and Food &
Beverage Solutions for the 2021
financial year and considered the
Group’s intellectual property
strategy
• Considered the longer-term
mega-trends which could impact
the Group and its customers over
the next 10 to 20 years and its
impact on our strategy
• Reviewed the Group’s five-year
strategic plan
• Reviewed and approved the
Group’s sustainability strategy
• Approved the full-year results
and financial statements and
the Annual Report and financial
statements for the 2019 financial
year
• Approved the half-year results
• Approved the payment of the
interim dividend for financial year
2020 and recommended payment
of the final dividend for financial
year 2019
• Approved the bulk annuity
insurance buy-in to de-risk the
Group’s UK pension scheme
• Considered and agreed treasury
and tax matters
• Approved the Group’s tax
strategy (available on the
Company’s website)
• Approved the Annual Operating
Plan for the year ending
31 March 2021
• Regularly reviewed the Group’s
financial performance and
forecasts
• Considered the financial position
and liquidity headroom in light of
the Covid-19 pandemic
• Received regular progress
updates on the Group’s
Environment, Health and Safety
(EHS) and Quality strategy
including from the independent
safety expert appointed to the
EHS Advisory Board
• Approved a number of capital
expenditure projects
• Received a review of the work
and priorities of the global
procurement function
• Reviewed the Simplification and
Productivity agenda and its
progress throughout the year
• Considered the potential impact
of the Covid-19 pandemic on the
safety of our people, the Group’s
operations and financial
performance and reviewed
management’s plans for
mitigating its impact on the
Group’s operations and customers
INTERNAL CONTROL AND
RISK MANAGEMENT
GOVERNANCE AND
STAKEHOLDERS
LEADERSHIP AND
EMPLOYEES
• Considered and agreed the
Group’s risk appetite and
principal risks
• Assessed the effectiveness of
our internal controls and risk
management systems
• Agreed the Viability Statement
as disclosed in the Annual
Report 2019
• Approved the adoption of a going
concern basis of accounting in
preparing the half- and full-year
results
• Agreed the Modern Slavery Act
statement, available on the
Company’s website
80
Tate & Lyle PLC Annual Report 2020
• Considered the output and
recommendations from the Board
effectiveness review
• Discussed feedback from
institutional shareholders
and analysts
• Approved a revised Board
Diversity Policy
• Reviewed and approved the
Directors’ register of interests
• Approved the appointment
of Kimberly (Kim) Nelson as
a non-executive director
• Approved the appointment of
Warren Tucker as Chair of the
Audit Committee and of Paul
Forman as Senior Independent
Director
• Endorsed the Chief Executive’s
appointment of Harry Boot to the
Executive Committee
• Held a Chief Executive and
Chairman-led Town Hall at our
offices in Shanghai, China, and in
London, UK
• Reviewed the Group’s people
agenda including diversity, talent
management and bench strength
within the organisation
Governance
DIRECTORS’ ATTENDANCE AT BOARD AND COMMITTEE MEETINGS DURING THE YEAR
NAME
Dr Gerry Murphy
Nick Hampton
Imran Nawaz
Paul Forman 2
Lars Frederiksen
Douglas Hurt3
Anne Minto
Kim Nelson4
Dr Ajai Puri2
Sybella Stanley2
Warren Tucker5
BOARD
AUDIT
COMMITTEE
NOMINATION
COMMITTEE
REMUNERATION
COMMITTEE
7/7
7/7
7/7
7/7
7/7
2/2
7/7
6/6
7/7
7/7
7/7
5/51
5/51
5/51
5/5
n/a
2/2
5/5
4/4
4/4
2/2
5/5
2/2
2/21
n/a
2/2
2/2
2/2
2/2
2/2
2/2
2/2
2/2
5/51
n/a
n/a
2/2
5/5
n/a
5/5
n/a
2/2
3/3
3/5
1 Although not a Committee member, attended the Committee meetings by invitation.
2 Following the changes to the composition of the Audit and Remuneration Committees that took place on 25 July 2019, the attendance represented the number of meetings the Directors
were expected to attend.
3 Resigned from the Board with effect from 25 July 2019.
4 Appointed a Director with effect from 1 July 2019.
5 Warren Tucker could not attend two Remuneration Committee meetings due to commitments made prior to him joining Tate & Lyle. He submitted comments to the Chair of the
Committee in advance.
BOARD EFFECTIVENESS REVIEW
This year’s internally facilitated evaluation of the Board and its Committees took the form of a questionnaire circulated to the relevant
Board members as well as to regular attendees from management and external advisors. The questionnaires sought input on a range
of matters including: composition; Board and Committee dynamics; engagement with management; effective oversight of matters
within remit, including risk; and quality of papers and presentations. Please see page 93 for information about the effectiveness
evaluations of each of the Committees and of individual Directors conducted this year.
2020 BOARD EFFECTIVENESS REVIEW
ISSUE/RECOMMENDATION
ACTION
Board succession planning
The Board will continue the composition and succession planning exercise which started
in 2018 with completion of the search to appoint a non-executive director with Asia
markets experience.
Executive Committee
succession planning
The Nominations Committee will review management succession and development plans.
The non-executive directors will meet with the Chief Executive during the year to discuss the
performance of members of the Executive Committee and senior management.
Bringing a wider group of people
to the Board
The Board will seek opportunities to invite third-party specialists to speak to the Board about
matters which could be relevant to Tate & Lyle’s strategy, markets and customers. The Board
will also look for opportunities to hear from a wider range of senior executives below the
Executive Committee.
Long-term strategy
The Board will build on the insights gained from the analysis of mega-trends at the 2019 Board
strategy day and continue to develop a long-term strategy for the business at the 2020 Board
strategy day.
Emerging markets expansion and
M&A execution
The Board will continue the focus on our strategy and capabilities in emerging markets and
on M&A opportunities and execution.
Customer needs and trends
The Board will continue to focus on understanding customer needs and trends through
deep dives into/by Food & Beverage Solutions, Primary Products and Innovation and
Commercial Development. It will also continue to receive feedback and insights from
customers via the Chief Executive’s regular updates and, where possible, directly from
customers at Board meetings.
Well-structured Board papers
While papers and presentations are generally of a high quality, management will work to
improve executive summaries and coach presenters in more effective and succinct delivery.
Tate & Lyle PLC Annual Report 2020
81
Corporate governance (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 summarises
the engagement that has been undertaken across the business,
including by the Board, during the year. In addition, the Board’s
engagement with our workforce is set out from page 84. How the
Board understands the interests of stakeholders, and how the
Board considers stakeholders’ interests in decision-making,
including examples of principal decisions made in the financial year
and our section 172(1) statement, are summarised on page 87.
STAKEHOLDER ENGAGEMENT
WHY THEY MATTER
ENGAGEMENT ACTIVITIES
OUTCOMES/IMPACT
Shareholders Our shareholders are investors in
and owners of our business,
providing the capital we need to
invest in and grow the business.
Customers
As a business-to-business
company, all the ingredients we
make are sold to our customers.
Listening to our customers helps
us to better understand their
needs and provide the products
and services they want.
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 Chair of the Remuneration
Committee engaged with our top
shareholders on the proposed
changes to the Remuneration Policy,
for which we are seeking approval
at the 2020 AGM.
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
Chief Executive to R&D, to Sales
and Marketing.
In 2019, Board members had the
opportunity to meet with a major
customer of our China business
during the Board visit to Shanghai
and to learn how Tate & Lyle
supports its growth ambitions.
Employees
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 which develop and
stretch our employees and helps
them both deliver our strategy and
fulfil their personal goals. Details
of the Board’s engagement with
employees are set out from page 84.
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.
The Board and management team are aware that
our shareholders, together with wider society, are
increasingly interested in environmental, social
and governance issues. The Board approved a
refreshed sustainability programme during the
year, and new ambitious long-term commitments
and targets for each pillar of our purpose,
including for the environment. See page 17 for
more information.
Our ingredients help our customers meet growing
consumer demand for food and drink which is lower
in sugar, calories and fat, and with added fibre, and
which also taste great. Our industrial starches
enhance the performance of our customers’
products, from paper production to adhesives, to
applications in building supplies.
Customer insight and market understanding plays
an important part in our decision-making process,
for example, in areas such as new product
development and capacity expansions.
Despite some significant supply chain challenges
posed by the Covid-19 pandemic, our teams worked
hard to ensure that our products continued to be
delivered to our customers, in some cases providing
additional products at very short notice to meet
increased demand.
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. This has never been more
important than during the Covid-19 pandemic, when
we put in place a number of initiatives to support
our people and keep them safe, well, connected and
productive. See from page 46 for more details on
our people and how we engage with them.
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Tate & Lyle PLC Annual Report 2020
Governance
STAKEHOLDER ENGAGEMENT
(continued)
WHY THEY MATTER
ENGAGEMENT ACTIVITIES
OUTCOMES/IMPACT
Suppliers
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.
During the year, the Board received a presentation
from the Chief Procurement Officer about how this
function supports the Company’s strategy and how
we work with suppliers.
Communities
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
employee involvement but as a
responsible and sustainable local
manufacturer.
Regulators
Before our new ingredients can be
incorporated into our customers’
products they must be approved by
regulatory authorities.
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 projects in
our local communities based on
these three areas.
Board members met with the
children and teachers of one of the
schools participating in our health
education programme in Shanghai
during their visit in 2019, and saw for
themselves the impact which our
local staff are having on the lives of
those children.
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.
Governments Government policies on trade,
safety and product quality,
transport, tax and inward
investment, among others, all have
an impact on how we do business.
We meet periodically with federal,
state and local officials in countries
where we have significant operations.
We are also members of major trade
associations in our key markets, such
as the Corn Refiners Association in
the US.
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
page 59 for more details.
The Board approved a refreshed sustainability
programme during the year, and new long-term
commitments and targets for each pillar of our
purpose, including for our communities. See page
17 for more information.
By helping regulators understand our ingredients
we speed up the process of regulatory approval.
For example, in March our PROMITOR® fibre
was given a gut health claim by Food Standards
Australia New Zealand (FSANZ). Then, more
recently, the Brazilian Health Regulatory Agency
(Anvisa) approved a claim for PROMITOR® fibre to
assist the absorption of calcium in food and its
retention in bones. This is the only fibre to have
such a claim approved in Brazil.
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.
During the year, together with our trade
associations, we worked to support the ratification
of a new trade agreement between the US, Mexico
and Canada, as well as a resolution of the trade
dispute between the US and China.
Tate & Lyle PLC Annual Report 2020
83
Corporate governance (continued)
PEOPLE AND CULTURE
Engaging with our people
Last year, the Board considered the 2018 UK Corporate Governance
Code requirements on workforce engagement. The Board
concluded that each director should be active in engaging with our
people in order to gather their views and to understand the culture
within the Group. The Board decided not to introduce any of the
three methods suggested in the Code but to develop an approach
which built on the mechanisms and practices which we already
had in place, in particular the non-executive director site visit
programme. The methods of engagement are set out below.
At each Board meeting, the Chairman and the non-executive
directors brief the Board on their interactions with, and
impressions of, our people, our sites and our culture. The Board
believes that these methods of engagement have enabled them
to learn the views of a wide cross-section of the workforce and
to understand how our strategy, purpose and ‘Sharpen,
Accelerate, Simplify’ priorities are being received, understood
and applied across Tate & Lyle. However, the Board is open to
implementing other mechanisms for engaging with the workforce
and will keep this under consideration, particularly in light of the
Covid-19 pandemic, which may impact travel to overseas sites for
some time.
At Tate & Lyle 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 do not include temporary contract labour (of less than three months),
service provision workers, outsourced contract consultants and staff at our joint ventures.
VISIT TO OUR GLOBAL SHARED SERVICE CENTRE
Warren Tucker, Chair of the Audit Committee conducting a
town hall meeting with 300 of our people at our Global Shared
Service Centre in Łódz(cid:5), Poland, as part of their site visit. He
was joined by members of the Audit Committee: Kim Nelson,
Dr Ajai Puri and Anne Minto.
ENGAGEMENT ACTIVITIES
Site visits
Non-executive directors made individual site visits to over 16 sites across all our regions. Each of those
visits included an opportunity to engage with members of the workforce working ‘on the ground’,
so to speak, at our plants, in our laboratories and in our offices, as well as with members of the local
management teams. At some of our smaller sites, Directors will have met with every member of the team.
The Board visited our offices and laboratories in Shanghai and our fibre plant in Nantong, both in China.
For more about this visit, see the Chairman’s introduction to corporate governance on page 76. Members
of the Audit Committee visited our Global Shared Service Centre in Łódz(cid:5), Poland. For more about this
visit, see the Audit Committee report from page 94.
Town Halls
During the year the Chief Executive held 16 Town Hall meetings at 12 sites across the globe.
The Chairman and other non-executive directors held or participated in seven Town Hall meetings
at seven sites.
Meetings with local
management and
high-potential
employees
Nick’s Blog
Research
Advisory Group
During site visits, Directors held meetings with members of local management teams and round tables
or receptions with high-potential employees.
The Chief Executive publishes a monthly blog to all the workforce which includes updates on business
performance, new initiatives and his impressions from his site visits. Staff are invited to submit their
questions and comments directly to Nick.
Dr Ajai Puri chairs the Research Advisory Group (RAG) which meets with members of the Innovation
and Commercial Development function, in person, twice a year at our Commercial and Food Innovation
Centre in Hoffman Estates, Illinois, USA. A feature of these visits is the ‘lunch and learn’ session with
an external expert speaker, hosted by Dr Ajai Puri and Andrew Taylor. This event is open to all staff at
Hoffman Estates. The Chairman also attended one of these meetings in 2020.
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Tate & Lyle PLC Annual Report 2020
Governance
ENGAGEMENT ACTIVITIES (continued)
Employee surveys and
engagement initiatives
The Chief Executive and the Chief Human Resources Officer regularly report to the Board on the outcome
of employee surveys and other engagement initiatives. The quarterly business performance dashboard
which is shared with the Board contains information on the number of open roles, regrettable
resignations and our gender diversity throughout the workforce.
Reaching the wider
workforce
The Spring edition of our Worldwide global employee magazine included a feature on the Board and the
visits they had made during the year. Our employee intranet carried ‘Get to Know’ videos with the
Chairman and the Chairs of the Audit and Remuneration Committees. Site leaders frequently share
photos and information about Directors’ visits with the wider workforce on Yammer.
Engaging in the
era of Covid-19
While the Covid-19 pandemic impacted a number of site visits and engagement opportunities planned for
the end of the 2020 financial year, engagement with the workforce has continued in new ways. Nick
Hampton shares a weekly Covid-19 and business update with the workforce via email and video, the first
of which was issued at the end of February 2020. He has also held ‘virtual cafés’, sometimes with other
members of the Executive Committee, with over 1,650 of our people at 20 sites since April 2020. As the
long-term impact of the measures taken to contain the pandemic becomes clearer, including the impact
on travel, the Board will consider alternative ways of remaining connected with the workforce.
The teams did a terrific job of welcoming
me and sharing their energy, commitment
and passion for what they do. I was
pleased to have had the opportunity to
meet a wide range of employees by
function, tenure and level.
Kim Nelson, a non-executive director, commenting on her visit
to a number of sites in the US
Investing in and rewarding our people
The Remuneration Committee considers remuneration
arrangements for our global workforce. 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 can
deliver consistently strong operational performance and financial
results. For more information, see our Directors’ Remuneration
Report from page 100.
Assessing and monitoring culture
As described in the Chairman’s introduction to corporate
governance on page 76, the Board has multiple touchpoints
throughout the year which provide opportunities for gauging and
monitoring the culture at Tate & Lyle and how it aligns with our
purpose and values. These touchpoints include individual Board
member engagement activities and management reports to the
Board and its Committees on a range of topics including:
environment, health and safety performance; results of employee
engagement surveys; diversity and inclusion statistics and
analysis; reports to the whistleblowing hotline; reports from the
Head of Group Audit and Assurance; and reviews of workforce
policies and practices. On those occasions where the Board is not
satisfied that policy, practices or behaviours are aligned with the
Company’s purpose, values and strategy it seeks assurance from
management that: (i) it has thoroughly understood the extent of
and the reasons for the issue; (ii) it has considered whether the
issue concerned could have implications across the wider Group;
(iii) corrective action has been taken to address the issue; and
(iv) any lessons which might be learned are identified and
communicated across the Group.
Ethics and whistleblowing programme
Speak Up, the Group’s whistleblowing programme, has been in
place for a number of years in all operations controlled by the
Group. This programme, which is monitored by the Board, 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. For more information about Speak Up, see page 47.
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 Board received an analysis of all reports submitted
via the Speak Up programme during the year. The Head of Ethics
and Compliance reports to the Audit Committee twice a year on
the ethics and compliance programme and its activities.
Tate & Lyle PLC Annual Report 2020
85
Corporate governance (continued)
SHAREHOLDER ENGAGEMENT
We are committed to maintaining an open dialogue with
shareholders, debt investors and potential investors and
recognise the importance of these relationships in the
governance process.
We have an 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 addition to roadshows with investors following our full-year and
half-year results, we also meet with investors outside of the
results cycle. Whilst we organise many of these meetings directly
with investors, we also participate in investor conferences which
are arranged by sell-side institutions. This year, to build deeper
relationships with investors, we held dinners with investors in
small groups to deepen their understanding of the Group
and have conversations more focused on our longer-term
strategic direction.
During the Covid-19 pandemic, investors and potential investors
have been keen to understand its impact on the Group’s
operations and the strength of our balance sheet. The Chief
Executive, Chief Financial Officer and VP, Investor Relations, were
keen to remain available to investors at this time, which included
reaching out to our largest shareholders.
Prior to the 2019 AGM, Dr Gerry Murphy held meetings with
a number of the Company’s larger institutional shareholders.
All Directors receive periodic updates on investor
communication activities, including at every Board meeting.
Feedback on our investor relations programme
Our corporate brokers regularly seek investor feedback following
key announcements and investor meetings. A summary of
feedback is communicated to all Directors.
Our advisers also provide us with updates on investor relations
best practice, which we seek to reflect in our programme.
Recent recommendations include continuing to build a broader
shareholder base in the UK and US, and placing increasing focus
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).
In November 2019, we issued notes as part of a US$200 million
debt private placement. To secure this funding the Chief Financial
Officer, the Assistant Group Treasurer and VP, Investor Relations,
met with, and answered questions from, investors. This exercise
was repeated for a second US$200 million debt private placement
in May 2020.
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.
Analysts
As well as the full-year and half-year results presentations to
investors and analysts, we host conference calls after trading
updates are issued. We publish presentations, together with the
associated announcements, on the Company’s website and we
also make audio recordings available for a short period after each
event. The Chief Financial Officer and VP, Investor Relations, also
meet regularly with analysts.
The details of the 2020 AGM are set out in the Notice of AGM.
Votes received in respect of each resolution put to the AGM,
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.
ENGAGING WITH SHAREHOLDERS
INVESTOR CALENDAR
Set out below is a summary of our major investor activity during the year:
May 2019
Full-year
results issued
Investor
roadshow
meetings
in the UK
June 2019
Investor
roadshow
meetings
in the US
Investor
conference
in France
Annual
Report
published
July 2019
Annual
General
Meeting
in the UK
Sept 2019
Investor
meetings
in the UK
Investor
conferences
in the UK
Nov 2019
Half-year
results issued
Investor
roadshow
meetings in
the UK
Investor
conference
in the US
Dec 2019
Investor
conference
in the UK
Jan 2020
Investor
roadshow
in the US
March 2020
Investor
conferences
in the UK
Feb 2020
Trading
statement
issued
Investor
meetings
in the UK
86
Tate & Lyle PLC Annual Report 2020
SECTION 172(1) STATEMENT
Governance
Section 172 of the Companies Act 2006 requires a director of a
company to act in the way he or she considers, in good faith, would
most likely promote the success of the company for the benefit of its
members as a whole. In doing this, section 172 requires a director to
have regard, among other matters, to the:
• likely consequences of any decisions in the long term;
• interests of the company’s employees;
• need to foster the company’s business relationships with
suppliers, customers and others;
• impact of the company’s operations on the community and
environment;
• desirability of the company maintaining a reputation for high
standards of business conduct, and
• need to act fairly as between members of the company.
In discharging our section 172 duties we have regard to the
factors set out above. We also have regard to other factors which
we consider relevant to the decision being made. Those factors,
for example, include the interests and views of our pensioners.
We acknowledge that every decision we make will not necessarily
result in a positive outcome for all our stakeholders. By
considering the Company’s purpose and values together with its
strategic priorities, and having a process in place for decision-
making, we do, however, aim to make sure that our decisions are
consistent and predictable.
For details on how our Board operates and the way in which we
reach decisions, including the matters we discussed and debated
during the year, the key stakeholder considerations that were
central to those discussions and the way in which we have had
regard to the need to foster the Company’s business relationship
with customers, suppliers and other stakeholders, please see the
Chairman’s introduction to corporate governance from page 76,
our corporate governance structure from page 78, Board
activities on page 80 and stakeholder engagement from page 82.
We set out below some examples of how the Directors have had
regard to the matters set out in section 172(1)(a)-(f) when
discharging our section 172 duty and the effect of that on
decisions taken by them.
ANNUAL STRATEGY REVIEW
Each year the Board carries out a review of the Group’s strategy.
In 2019, the Board considered how a number of extreme but
plausible scenarios could impact a range of our stakeholders,
including our people, our customers and our suppliers and how
those scenarios could present risks and opportunities for
Tate & Lyle. These scenarios were developed around key
mega-trends including climate change; health and wellbeing;
reduction in international trade; and the increase of artificial
intelligence. This exercise started a discussion between the Board
and management, which will continue in the 2021 financial year,
about how Tate & Lyle might respond to those mega-trends in a
way which will benefit all our stakeholders. This long-term
perspective informed the development of our 2030 commitments
and targets for the three pillars of our purpose, as discussed in
the Chief Executive’s review from page 12.
PENSIONS
During the year the Board and the trustee of the Group’s UK
pension scheme approved an agreement with Legal & General
Assurance Society Limited for a £930 million bulk annuity
insurance ‘buy-in’. In approving this agreement the Board
considered that it would provide certainty and security for those
current and future pensioners in the Tate & Lyle Group Pension
Scheme, while also removing future risk for Tate & Lyle and
saving £20 million of annual contributions.
CAPITAL EXPENDITURE
In July 2019, the Board approved a US$75 million capital
investment in a new co-generation system at our plant in
Lafayette, Indiana, USA. This project is part of a multi-year capital
investment programme totalling more than US$150 million to
eliminate coal in our plants by 2025. The Board considered the
positive impact this investment will have on the local community
and the environment by reducing our CO2e emissions while also
generating efficiency savings.
SUSTAINABILITY
During the course of this year, the Board approved another
initiative, in addition to the capital investment mentioned above,
which will have a significant positive impact on our communities
and the environment.
Partnership with TruterraTM: In May 2019, the Board approved an
agreement with Truterra™ (formerly Land O’Lakes SUSTAINTM)
to bolster the sustainability of 1.5 million acres of US-grown corn,
an acreage equivalent to Tate & Lyle’s entire global annual
corn purchases.
The Board weighed the financial cost of this initiative with the
benefits it brings to a number of the Group’s key stakeholders,
namely farmers, local communities, customers and the wider
society. Through this initiative, Tate & Lyle aims to enable
more sustainable farming practices, support its customers’
environmental initiatives and impact reporting, and ultimately
increase transparency throughout the food supply chain. For
more information about this programme, see page 55.
Sustainability programme: In March 2020, the Board reviewed
the progress of our sustainability programme and approved new
environmental targets to reduce CO2e emissions (including a
commitment for these targets to be science-based), reduce water
use, beneficially use 100% of the waste we generate, and to
continue to support sustainable agriculture. See pages 51 to 55
for more information.
PURPOSE COMMITMENTS
In addition to the environmental targets described above,
the Board also approved commitments under our two other
purpose pillars of supporting healthy living and building
thriving communities. To read more about these commitments,
see page 17.
Furthermore, the Board agreed that Tate & Lyle should join the
UN Global Compact, a major global corporate responsibility
initiative. It also agreed which of the UN Sustainable Development
Goals (five in total) most closely align with our purpose and where
we could have most impact. See pages 16 and 17.
Tate & Lyle PLC Annual Report 2020
87
Corporate governance (continued)
HOW WE HAVE APPLIED THE PRINCIPLES OF THE CORPORATE GOVERNANCE CODE
Compliance with the 2018 UK Corporate Governance Code: For the year ended 31 March 2020, we
are pleased to report that we have applied the principles and complied with the provisions of the
Code. The Code can be found at www.frc.org.uk.
1. BOARD LEADERSHIP AND COMPANY PURPOSE
A. THE ROLE OF THE BOARD:
Our Board comprises a diverse group of
skilled and experienced individuals as
described in their biographies from page
70. Working within the governance
structure set out on page 78 and through
a programme of regular meetings with
agendas which focus on financial
performance, strategic initiatives, risk
management, our people and Nick’s
‘Sharpen, Accelerate, Simplify’ priorities,
together with an annual strategy day,
the Board promotes the long-term
sustainable success of the Company
through the decisions it takes about the
products, customers, markets and
geographies in which the Group operates
and invests. The Board maintains a
dividend policy to share the value
generated by these operations with
shareholders. Tate & Lyle’s products,
many of which also support health and
wellbeing, and our sustainability strategy
contribute to the wider society.
For more information about the Group’s
strategy, see the Strategic Report from
page 8.
B. PURPOSE, VALUES AND CULTURE:
The Board fully endorses Tate & Lyle’s
purpose of ‘Improving Lives for
Generations’. This purpose informs our
strategy, our values and our culture and
inspires our people. The Board reviews
workforce culture and employee
engagement through a range of
touchpoints throughout the year. The
Audit Committee receives quarterly
updates from our Group Audit and
Assurance function as well as regular
updates from our Head of Ethics and
Compliance. These updates include
the results of internal audits and
whistleblowing and provide insights into
the culture of the Group and individual
areas of the business. The Committee
reviewed steps taken by management
to address any areas of concern and to
ensure follow-up actions were taken.
For more information about: our purpose see
page 2; workforce engagement see page 84;
Board oversight of culture see page 85 and
the work of the Audit Committee see page 94.
C. RESOURCES AND CONTROLS:
The Board ensures that the necessary
resources are in place for the Group to
meet its objectives and measure
performance against them. The Group
has established an executive Risk
Committee and operates a three lines of
defence model which provides a
framework for establishing a range of
internal controls and managing risk.
For more information see the Risk Report
from page 60 and the Audit Committee Report
from page 94.
CONFLICTS OF INTEREST:
The Board has a formal system in place
for Directors to declare a conflict, or
potential conflict of interest. A statement
of Directors’ interests in Company shares
is set out on page 114.
D. SHAREHOLDER AND STAKEHOLDER
ENGAGEMENT:
The Board maintains regular
engagement, whether directly or
indirectly, via feedback from the Chief
Executive and other members of
management, with shareholders as well
as a range of key stakeholders.
For more information on our engagement
with shareholders see the Chairman’s
introduction to corporate governance from
page 76, the shareholder engagement section
on page 86 and the Remuneration Committee
Chair’s Introduction to the Directors’
Remuneration Report on page 100.
For information on our approach to
stakeholder engagement see from page 82.
Our section 172(1) statement is set out on
page 87.
E. WORKFORCE POLICIES AND
PRACTICES:
Our Code of Ethics sets out our values
and the standards of behaviour we expect
from everyone at Tate & Lyle and those
who work with us. We encourage people
to report any breaches of the Code
through our Speak Up (whistleblowing)
programme which is available to all our
workforce and to third parties. The Board
is given access to the Code training
undertaken by our people and reviews the
operation of and reports from the Speak
Up programme.
For more information about this and our
approach to ethics and compliance
generally, see pages 46 and 85.
88
Tate & Lyle PLC Annual Report 2020
Governance
2. DIVISION OF RESPONSIBILITIES
F. THE ROLE OF THE CHAIR:
Dr Gerry Murphy, our non-executive
Chairman, leads the Board and facilitates
constructive and open dialogue and
debate between the Board and
management. Under his leadership the
Board is responsible for its overall
effectiveness in directing the Company
and, every year, the Board conducts a
review of its own effectiveness and those
of its Committees. The Chairman reviews
the performance of individual non-
executive directors and the Senior
Independent Director leads a review
of the Chairman. The Nominations
Committee reviews the performance
of the Executive Directors.
For information about the outcome of the
Board’s effectiveness review this year see
page 81 and the Nominations Committee
Report from page 91.
G. BOARD COMPOSITION AND DIVISION
OF RESPONSIBILITIES:
The Board comprises nine directors in
addition to the Chairman, two Executive
Directors (Chief Executive, Nick Hampton
and Chief Financial Officer, Imran Nawaz)
and seven independent non-executive
directors, one of whom is the Senior
Independent Director. None of the
Directors has served on the Board for
more than nine years. The Board
considers all the non-executive directors
to be independent. The Chairman was
deemed independent on appointment.
Membership of the Board and information
about individual directors is set out from
page 70. The responsibilities of the executive
and non-executive directors are described
on page 79.
H. ROLE OF THE NON-EXECUTIVE
DIRECTORS: The role of the non-
executive directors is to provide
constructive challenge, strategic
guidance, offer specialist advice and hold
management to account. Before every
Board meeting the Chairman holds a
pre-meeting without the Executive
Directors present to gather the views of
the non-executive directors on the papers
submitted and the topics to be discussed.
At the conclusion of each Board meeting,
the Chairman holds another meeting
without the Executive Directors present
to consider and discuss any matters that
have arisen during the meeting. The
Chair of the Audit Committee also holds
meetings without the Executive Directors
present at the end of each Audit
Committee meeting.
Time commitment: In accepting their
appointment to the Board of Tate & Lyle,
non-executive directors confirm that they
are able to allocate sufficient time to
discharge their duties effectively. Each
year the Nominations Committee reviews
the time commitments of the non-
executive directors, which indicates that
in a typical year, non-executive directors
spend between 30 and 46 days on
business relating to Tate & Lyle, with the
Chairs of the Audit and Remuneration
Committees and the Research Advisory
Group spending the most time. The
Chairman typically spends two days a
week on Tate & Lyle business. In 2019,
the Board agreed a framework for
determining the number of public
company directorships directors can
undertake in addition to their appointment
at Tate & Lyle in order to ensure that they
do not become over-committed.
The significant commitments of each
of the directors are included in the Board
biographies from page 70. For more
information, see meeting attendance in
the 2020 financial year on page 81.
I. ENSURING THE BOARD FUNCTIONS
EFFECTIVELY AND EFFICIENTLY:
The Company Secretary works with the
Chairman, the Chairs of the Committees,
the Chief Executive and other members of
management to ensure that the Board
has the policies, processes, information,
time and resources it needs in order to
function effectively and efficiently. All
Directors have access to the advice of the
Company Secretary who is responsible
for advising the Board on all governance
matters. Directors also have access to
the advice of the Executive Vice President,
General Counsel, as well as independent
professional advice at the expense of the
Company.
3. COMPOSITION, SUCCESSION AND EVALUATION
K. SKILLS, EXPERIENCE AND
KNOWLEDGE OF THE BOARD:
The Nominations Committee ensures
that the Board and its Committees have
a combination of skills, experience and
knowledge necessary to discharge their
oversight roles and to support the
management team in the execution of
the Company’s strategy.
For more information on the Board’s skills
and experience, see page 70 and the
Nominations Committee Report from
page 91.
L. BOARD EVALUATION:
In the 2020 financial year, the Board
undertook an internally-facilitated
evaluation. The Board expects to
commission an externally-facilitated
review in the second half of the 2021
financial year, in line with the UK
Corporate Governance Code guidance
that the evaluation should be externally-
facilitated every three years.
For more information, see the Board
evaluation on page 81.
J. SUCCESSION PLANNING
FOR THE BOARD:
The Nominations Committee (which
comprises all the non-executive directors
and the Chairman) is responsible for
succession planning for, and recommending
candidates for appointment to, the Board
and certain senior management positions.
It applies a formal, rigorous and
transparent process focused on finding
candidates who can support the strategic
priorities of the business while also
representing the diversity of our global
workforce and customer base. The UK
Corporate Governance Code provides that
all Directors should seek re-election on an
annual basis and all Directors will seek
re-election at the forthcoming AGM.
For more information about the work of the
Nominations Committee and the Board’s
policy on diversity and inclusion, see the
Nominations Committee Report from page 91.
Tate & Lyle PLC Annual Report 2020
89
Corporate governance (continued)
4. AUDIT, RISK AND INTERNAL CONTROL
M. ENSURING THE INDEPENDENCE
AND EFFECTIVENESS OF INTERNAL
AND EXTERNAL AUDIT:
The Audit Committee is responsible for
reporting to the Board on a range of
matters concerning audit, risk and
internal controls. In particular, the Audit
Committee reviews and monitors the
independence and performance of the
internal audit function, Group Audit and
Assurance, and the external auditors, EY.
The Audit Committee has established and
monitors a policy for non-audit work
which EY is permitted to conduct.
For further information about the role and
work of the Audit Committee, external audit
and Group Audit and Assurance, see from
page 94.
N. FAIR, BALANCED AND
UNDERSTANDABLE ASSESSMENT:
The Audit Committee reviews the
financial statements set out in the Group’s
annual and half-year results and reports
its findings and recommendations to the
Board. The Board, as a whole, considers
the recommendations of the Audit
Committee, the representations made by
management and the views of the internal
and external auditors in order to satisfy
itself of the integrity of the narrative and
financial statements and to determine
whether the financial and narrative
statements when taken together present
a fair, balanced and understandable
assessment of the Company’s position
and prospects.
O. RISK MANAGEMENT AND INTERNAL
CONTROLS:
The Audit Committee oversees the
internal controls framework and receives
regular reports from management
and the internal audit function on the
effectiveness of that framework. It
reports its findings to the Board. At
least twice a year, the Board reviews the
principal and emerging risks which apply
to the Group to ensure that they remain
current and that, to the extent possible,
there are mitigation plans in place to
manage those risks in accordance
with the risk appetite that the Board
determines, from time to time, is
appropriate to achieve the long-term
strategic objectives of the Group.
For further information, see the Audit
Committee Report from page 94 and the ‘fair,
balanced and understandable’ statement on
page 99.
For further information, see Risk Report
from page 60 and the Audit Committee Report
from page 94.
5. REMUNERATION
P. DESIGNING REMUNERATION
POLICIES:
The Remuneration Committee is
responsible for determining
remuneration policies and practices
which support the strategy and promote
the long-term sustainable success
of the Group.
For more information about the work of the
Remuneration Committee, see the Directors’
Remuneration Report from page 100.
R. REMUNERATION OUTCOMES AND
INDEPENDENT JUDGEMENT:
The Remuneration Committee
determines remuneration outcomes
for the Executive Directors and other
members of senior management and
in so doing exercises independent
judgement and discretion in the context of
Company and individual performance and
the wider circumstances. No Director or
member of management is involved in
determining his or her own pay.
For more information about the
Remuneration Committee and remuneration
outcomes, see the Directors’ Remuneration
Report from page 100.
Q. EXECUTIVE REMUNERATION:
During the year, the Remuneration
Committee reviewed the Directors’
Remuneration Policy to ensure that it
continues to: (i) align with corporate
governance best practice; (ii) enable the
attraction and retention of executive
talent to deliver against the Group’s
strategy; and (iii) promote the delivery
of the long-term strategy. As part of the
process for developing the Directors’
Remuneration Policy, the Chair of the
Remuneration Committee consulted
major institutional shareholders on the
Committee’s proposals.
Details of this engagement are set out in
the Directors’ Remuneration Report from
page 100.
The Directors’ Remuneration Policy, which is
to be put to shareholders for approval at the
2020 AGM, can be found from page 115.
90
Tate & Lyle PLC Annual Report 2020
Nominations Committee Report
Governance
CHAIR’S
INTRODUCTION
This year we focused on
long-term succession planning
for the Executive Directors.
SUCCESSION PLANNING
EXECUTIVE COMMITTEE MEMBERS
AND TALENT MANAGEMENT
This year we focused, as we said we would, on long-term
succession planning for the Executive Directors and other
members of our senior management team. We considered the
development needs of members of our Executive Committee
(ExCo) and of those individuals who are potential internal
succession candidates for ExCo roles.
In addition, the Board received a presentation from our Chief
Human Resources Officer on the status of the Company’s
succession plans for key roles below ExCo. Using new data
analytics, we learnt that our resilience in providing emergency
cover for key roles, and our bench of executives who are
developing their readiness for these roles, is strong. This analysis
also identified some gaps and provided a baseline from which
we can track, over the coming years, the success of our talent
development initiatives.
NON-EXECUTIVE DIRECTORS
As discussed in last year’s Nomination Committee Report, in 2018
we undertook an externally facilitated review of the Board’s
composition and its future compositional needs in order to ensure
that our Board has the right combination of skills and experience
to support management in delivering our strategy. That review
produced two recommendations. The first recommendation was
to appoint a non-executive director (NED) with relevant and recent
senior management experience in the US food and beverage
sector, which is so critical to our business. I’m pleased to say that
in July 2019, Kim Nelson joined our Board to fulfil that mandate.
The second recommendation was to appoint a NED with Asian
market experience to support our expansion in that region. This
search is currently ongoing and we hope to be able to announce
an appointment in the coming months. We approach these
appointments not just with a focus on expanding the skills and
experience of the Board but also with a focus on broadening our
diversity in all respects, and particularly with regard to gender
and ethnicity.
With the changes to the Board composition which took effect
around the time of our AGM last year (that is, the appointment
of Kim Nelson and the retirement of Douglas Hurt), we took the
opportunity to consider the combination of skills, experience
and knowledge on our Board Committees and to refresh their
membership. Paul Forman, who was already a member of the
Audit Committee and recently appointed Senior Independent
Director, stood down from the Remuneration Committee. Sybella
Stanley moved from the Audit Committee to the Remuneration
Committee and Dr Ajai Puri moved from the Remuneration
Committee to the Audit Committee.
DIVERSITY AT AND BELOW THE BOARD
During the year, the Nominations Committee discussed and
refreshed the Board Diversity Policy. We are pleased that our
Board is 30% women and 30% BAME (black, Asian or non-white
minority ethnic) because we believe that a diverse and inclusive
culture supports and promotes better business performance,
growth and innovation. We are mindful of the target set by the
Hampton-Alexander Review that by 2020 at least 33% of board
members in FTSE350 companies are women and we are making
progress towards this target. In our refreshed diversity policy, the
Board commits to maintain, as a minimum, the diversity in terms
of gender and ethnicity that is represented on our Board today.
The Board was also pleased to support management’s
commitment to 50% gender diversity in leadership roles by 2025
and will track progress against this target.
PRIORITIES FOR THE YEAR AHEAD
Notwithstanding the challenges posed by Covid-19, we will
continue our search for a NED with Asia markets experience.
In addition, we will begin to think about succession planning for
the Chair of the Remuneration Committee, as our current Chair,
Anne Minto, has now served seven years on our Board and has
chaired the Committee, with great distinction, for five years. We
will also continue to focus on long-term succession planning for
senior executives below the Board and to follow the progress of
management’s talent development initiatives.
Gerry Murphy
Chair of the Nominations Committee
Tate & Lyle PLC Annual Report 2020
91
Nominations Committee Report (continued)
COMMITTEE GOVERNANCE
Responsibilities
The Committee assists the Board by reviewing the size and
composition of the Board, including succession planning, and
the leadership needs of the Group generally. 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, which the Committee reviews
annually and can be found 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 81.
The Chief Executive and the Chief Human Resources Officer 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, as well
as succession planning for other members of the executive
management team and talent management in the wider
organisation.
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
During the course of the year, the Nominations Committee
commenced a search for a non-executive director with knowledge
and experience of the markets in Asia.
A detailed job specification was prepared and Heidrick &
Struggles was appointed to assist with the search, which is
ongoing, with a view to making an appointment before the end
of the year. Heidrick & Struggles is a signatory to the Voluntary
Code of Conduct for Executive Search Firms and has a good
understanding of the Group’s business.
Succession planning for senior management
The Committee also considered succession plans for senior
executive roles. During the year, members of the Committee
were consulted on the appointment of Harry Boot to the Executive
Committee as President, Asia Pacific, Food & Beverage Solutions.
Performance evaluation
The Committee evaluated the performance of each of
the Executive Directors and the other members of the
Executive Committee and reported its conclusions to the
Remuneration Committee.
BOARD DIVERSITY
As described in the Chair’s introduction to this Nominations
Committee Report, the Board believes that a diverse and inclusive
culture is a driver of superior business performance, growth and
innovation. During this year the Board reviewed and updated its
policy on diversity. In the new policy the Board commits to
maintain, as a minimum, the balance of gender diversity and
ethnic representation present on our Board at the date of the
policy and to improve it over time.
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 looks at
a number of different criteria, including gender, age, culture and
personal attributes such as thinking style. This is reflected in the
longlists 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 (three Directors) equates to
30% of the Board and BAME (black, Asian, and minority ethnic)
representation is also 30%.
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.
The Board supported management’s commitment to achieve 50%
gender diversity in leadership roles across the organisation by
2025 and will track progress against that target.
GENDER DIVERSITY OF SENIOR MANAGEMENT
AND THEIR DIRECT REPORTS1
At 20 May 2020
MEN
WOMEN
40
GENDER DIVERSITY
OF SENIOR
MANAGEMENT AND
THEIR DIRECT
REPORTS (%)
60
1
In accordance with the Code, senior management is defined as the Executive Committee
(including the Chief Executive and Chief Financial Officer) and the Company Secretary.
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Tate & Lyle PLC Annual Report 2020
Governance
Directors’ induction programme
In those years in which new Directors join the Board, the Company
Secretary works with each Director to tailor a comprehensive
induction programme which includes visits to key sites, meetings
with senior leaders to cover strategy, operations (including safety
and environmental performance), risk management and internal
controls, and UK corporate governance requirements.
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 the Directors
undertake any other professional development they consider
necessary to assist them in carrying out their duties.
During the year, in addition to the Board’s visit to our offices and
labs in Shanghai, the Chairman visited our sites in Dubai, Lille,
Lübeck and Mexico City and other non-executive directors visited
many of our sites around the globe. A summary of the number of
sites visited by the non-executive directors is set out below:
North America
Europe, Middle East and Africa
Latin America
Asia Pacific
5
7
1
3
These visits provide non-executive directors with the opportunity
to interact with local management and other members of the
workforce and to gain in-depth knowledge about the opportunities
and challenges for the Group’s operations across the world.
BOARD PERFORMANCE EVALUATION, INDUCTION
AND SITE VISIT PROGRAMME
Board 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. This year the Board and its
Committees carried out an internally facilitated effectiveness
questionnaire and reviewed the output and determined the
priorities for the 2021 financial year. The recommendations
of that review are set out on page 81.
Review of the Committees
In addition to the Board effectiveness review, the chairs of the
Nominations, Audit and Remuneration Committees led the
reviews of their Committees’ effectiveness. These reviews
confirmed that all Committees continue to provide effective
support to the Board.
Review of individual Directors
Each Director goes through a formal performance review process
as part of the annual Board effectiveness review. Dr Gerry Murphy
led performance reviews of the non-executive directors. All
Directors completed this process during the year and Anne Minto
and Dr Ajai Puri, who have both served for over six years, were
subject to particularly rigorous reviews.
The Nominations Committee reviewed the performance of
the Chief Executive and the Chief Financial Officer. The
Senior Independent Director, Paul Forman, led the review
of the Chairman.
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.
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Audit Committee Report
CHAIR’S
INTRODUCTION
We continued our practice of
looking in depth at certain
aspects of the control
environment.
AUDIT, RISK AND INTERNAL CONTROL
I am pleased to present my first Audit Committee Report for
Tate & Lyle. During the year, I engaged outside the formal
meetings of the Committee with a significant number of
stakeholders, including the Group Audit and Assurance (internal
audit) function, senior management and the external auditor
to understand their views of the risk and control framework
within the Group and the work of the Audit Committee. These
interactions have helped me gain a deeper understanding of
Tate & Lyle’s risk and control environment and I have shared my
observations with my colleagues.
REVIEWS DURING THE YEAR
The responsibilities of the Committee have not changed during
the year. We continued with our practice of looking in particular
depth at certain aspects of the control environment on a rotation
basis. This year these deep dives included a review of our
Food & Beverage Solutions finance function, a review of our
treasury and tax functions, an update on our ethics and
compliance programme, our insurance programme, retirement
benefits and our cyber security and IS/IT controls. Wherever
possible, the Committee hears from members of senior
management below the Executive Committee level, as this
provides an opportunity for us to assess the culture, engagement
and bench strength in the wider organisation. In addition, the
Committee holds a private session with the Chief Financial Officer
once a year to review, among other things, succession planning in
the finance team.
VISIT TO OUR GLOBAL SHARED SERVICE CENTRE
Together with three other members of the Committee, I visited
our Global Shared Service centre in Łódz(cid:5), Poland. We received
presentations and had discussions with the leadership group
and each of their teams on performance, engagement with
stakeholders in the business, the culture, and people
management. We found this visit to be highly valuable as it
enabled us to learn more of the finance and control operations
which are managed in Łódz(cid:5) on behalf of the whole Group. My
fellow directors and I also held an all-employee Town Hall
meeting with more than 300 of our people.
EXTERNAL AUDITORS
During the year, the external auditors, EY, briefed the Committee
on the data analytics tools which it uses to support its audit. For a
number of areas EY was able to demonstrate the assurance that
the data analytics provided. Accordingly, enhancements were
made to the agreed audit strategy.
The Committee also received a detailed briefing from
management and EY on our preparations for completing the
year-end close process and audit in light of the challenges
posed to our usual processes, and those of EY, by the Covid-19
pandemic. The Committee was reassured by the actions that
management and EY had taken to ensure that there was minimal
impact on the year-end audit timetable. The Committee and the
Board would like to thank the teams for rising to the challenge
and responding in such a positive manner.
CONCLUSION
Information on the following pages sets out in detail the
composition of the Committee, its activities and our priorities
looking forward.
I hope that you will find this report useful in understanding
our work and I welcome any comments from shareholders on
my report.
Warren Tucker
Chair of the Audit Committee
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COMMITTEE GOVERNANCE
Responsibilities
The Committee assists the Board by overseeing financial
reporting, internal controls and the risk management process, the
Group Audit and Assurance function and our relationship with the
external auditor. 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:
Warren Tucker (Chair), Anne Minto, Paul Forman, Dr Ajai Puri
and Kim Nelson. The Committee welcomed Kim Nelson to the
Committee upon her appointment to the Board on 1 July 2019
and Dr Ajai Puri on 23 July 2019. As part of Kim’s induction
programme, she met with the external auditors, VP Group
Financial Controller, VP Group Audit and Assurance and other
leaders of key functions to help her gain an understanding of
Tate & Lyle’s finance and controls framework. In addition, Sybella
Stanley left the Committee and Douglas Hurt stepped down
from the Board on 23 July 2019. On the same date Warren took
over the chairmanship.
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, 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. Warren Tucker meets this
requirement. Warren was Chief Financial Officer of Cobham plc
until 2013 and is a chartered accountant. He also served as an
independent non-executive director on a FTSE100 audit
committee from 2010 to May 2020.
The Company Secretary is the secretary to the Committee.
Governance
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 81. 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,
VP Group Financial Controller, EVP General Counsel and
representatives of the external auditor are invited to, and attend,
part of each meeting. The Chairman of the Board and Chief
Executive are also invited to, and attend, each Committee
meeting. In addition, senior finance and operational leaders attend
and present to the Committee on an ad hoc basis, depending on
the issues being discussed.
The Committee meets privately with: the Chief Financial Officer;
the VP Group Audit and Assurance; the Chief Executive; and the
Company’s external auditor on an individual basis to ensure the
effective flow of material information between the Committee and
management. The Committee also meets without management
present at the end of every meeting.
Effectiveness
The Committee Chair carried out an internally facilitated review
of its effectiveness and sought feedback from its Committee
members, certain members of senior management and the
external auditor. The output was discussed by the Committee.
This concluded that the Committee continued to operate
effectively throughout the year and identified areas of focus
for the 2021 financial year.
WORK UNDERTAKEN DURING THE YEAR
The Committee maintains a rolling 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 methodologies,
judgements and disclosures set out in the papers prepared by
management and determined, with the input from 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 96. Papers on the Group’s existing
and emerging litigation risks were also considered.
Tate & Lyle PLC Annual Report 2020
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Audit Committee Report (continued)
SIGNIFICANT MATTERS RELATING TO THE FINANCIAL STATEMENTS CONSIDERED BY THE COMMITTEE
AREA
BACKGROUND
COMMITTEE’S ACTIVITIES AND CONCLUSION
Commodity
accounting
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, can have a material
impact on the reported results of the Group.
The Committee considered the work performed by management and
the external auditors before concluding that the judgements made in
determining the accounting treatment and valuations of the corn and
co-products positions were appropriate. This continues to be a key
area of focus for the Committee.
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 43.
Impairment reviews
As required, we test all goodwill for impairment
annually and, additionally, test all assets where
there has been an indicator of potential
impairment.
The Committee reviewed the annual goodwill impairment
assessments and considered the appropriateness of management’s
assumptions, including consideration of the impact of Covid-19 on
such assessments.
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 tax exposures with local tax
authorities and reassess this as necessary at
the half year and year end. Our assessment is
underpinned by a range of judgements from tax
professionals and external advisors.
Retirement benefits
We have significant retirement benefit
obligations in the UK and the US, including
unfunded retirement medical plans in the US.
Management concluded that there was significant headroom
in its impairment reviews and, accordingly, no impairments were
required. The Committee agreed with this conclusion. The disclosure
is set out in Note 18.
The Committee reviewed the key judgements made in estimating the
Group’s tax charge along with the key disclosures, set out on page 43
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
current and historical Group financing arrangements, specific US tax
risks and global transfer pricing risks.
The Committee concluded that the measurement and disclosure of
these provisions were appropriate.
Prior to its execution during the first half of the year, the Committee
reviewed the accounting treatment of the proposal for a bulk annuity
insurance buy-in with Legal & General in relation to our main UK
defined benefit pension scheme.
The Committee challenged management on the risk, funding and
accounting impact of the proposal and agreed with management’s
recommendation.
Going concern and
Viability Statement
We have reviewed the going concern
assumptions and, in particular, the downside
scenarios modelled in the Viability Statement
in light of the Covid-19 pandemic.
The Committee probed management on the assumptions and
modelling to assess the Group’s resources to continue to operate for
a period of not less than 12 months and also the longer-term viability
of the Group.
The Committee was satisfied to recommend to the Board that the
Directors continue to adopt the going concern basis of accounting.
Further, the Committee was satisfied with work performed by
management to support the Group’s Viability Statement.
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Tate & Lyle PLC Annual Report 2020
Governance
Provision of non-audit services
The policy also sets out the circumstances in which the external
auditor 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 considers quarterly reports which set out any
non-audit services provided by the auditor and the fees incurred.
Under our policy on non-audit services, 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 itself. Any amounts approved
by the Chief Financial Officer are reported to the Audit Committee
at its next meeting.
The total amount payable in respect of the Group audit and audit
of subsidiaries was £2.5 million, and £0.1 million was in respect
of the review of the half-year results, being the only non-audit
service and it being standard practice. Fees paid in respect of
non-audit services therefore comprised 4% of the total fees
paid to EY.
Audit quality
To maintain audit quality, the Committee reviews and challenges
the proposed external audit plan, including its scope and
materiality, before approval, to make sure that EY has identified
all key risks and developed robust audit procedures and
communication plans. Throughout the year, the Committee looks
at the quality of the auditor’s reports and considers its response
to accounting, financial control and audit issues as they arise.
The Committee also meets with EY regularly without
management present, providing an opportunity to raise any
matters in confidence and for an open dialogue. This meeting
also gives the Committee the chance to monitor the performance
of the lead engagement partner both inside and outside
Committee meetings.
The Committee specifically considered the findings of the Audit
Quality Review Team’s (AQRT) review of EY’s 2019 audit on the
Group. The Committee noted the scope of the review, areas of
good practice identified, and the observations raised, alongside
EY’s proposed actions to address these. Overall, the Committee
was satisfied with the rating assigned to the review, noted the
findings did not raise any significant concerns in respect of audit
quality and were satisfied with EY’s proposals to address the
recommendations raised by the AQRT.
Engagement with regulators
During the year, we received a written request for information
from the Corporate Reporting Review team of the Financial
Reporting Council (FRC) in relation to the Group’s 2019 Annual
Report and financial statements. Management’s response was
reviewed by the Committee. Each of the questions raised by the
FRC was resolved satisfactorily and the information request was
closed without the FRC requiring any changes to our accounting
or disclosure. We have made a small number of enhancements to
the clarity of our disclosures as a result of the review. The FRC’s
review was not intended to provide assurance over the accuracy
of the 2019 Annual Report and financial statements, but was
designed to consider compliance with reporting requirements.
Focus areas for the Audit Committee in the 2021 financial year
In addition to the recurring matters on the Committee’s rolling
calendar, the Committee will focus on overseeing the completion
of the SAP rollout to the relatively few remaining sites in the
Group’s network and on completion of the Group risk assurance
map. The risk assurance map is a tool which describes the key
sources of assurance and controls across the three lines of
defence model against each of our principal risks. The Committee
will continue to carry out deep dives into the two business
divisions, both at Group functional level and at divisional business
levels, on a rotational basis. Reviewing cyber risk and IS/IT
controls will remain high on the Committee’s agenda, in
particular, in the context of the operational limitations imposed by
the working from home arrangements introduced as a result of
the Covid-19 pandemic.
External auditors
As part of the reporting of the half-year and full-year results
statements, EY reported to the Committee on its assessment of
the Group’s accounting judgements and estimates and its control
environment. EY did not report any significant deficiencies in
controls nor did it disagree with any of the Group’s accounting
judgements and estimates. Warren Tucker meets with EY prior to
each meeting and outside the meeting cycle on a regular basis,
with a particular focus on audit quality, mindset and objectivity.
Safeguarding the auditor’s independence
The independence of the external auditor is essential to the
provision of an objective opinion on the true and fair view
presented in the financial statements. Auditor independence and
objectivity are safeguarded by a number of control measures,
including limiting the nature and value of non-audit services
performed by the external auditor.
The Committee operates a policy to safeguard the objectivity and
independence of the external auditor. This policy sets out certain
disclosure requirements by the external auditor to the Committee;
restrictions on the employment of the external auditor’s former
employees; and partner rotation.
During the year, the Committee reviewed the operation and
results of this policy and confirmed that, in its opinion, the
external auditors remained independent.
Tate & Lyle PLC Annual Report 2020
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Audit Committee Report (continued)
Effectiveness of the external auditor
The effectiveness of the external auditor is assessed in
accordance with a process agreed by the Committee. As part of
the process, the auditors’ performance for the 2019 financial year
was reviewed against criteria set at the start of the audit, which
includes quality and experience of the audit team, audit planning
and adaptability to changes in business needs and the control
environment, providing objectivity and challenge, project
management, and reporting and communication. The Committee
also took into consideration the latest FRC’s guidance on
evaluating audit quality.
The review sought feedback from management at Group and
divisional levels most directly involved in the year-end audit and
feedback was also sought from EY on the contribution from our
management team to an effective audit.
The Committee considered the feedback received together with
its wider knowledge and concluded that the external audit process
for the 2019 financial year was effective and that EY provided
independent challenge to management. Areas of focus were
identified and used to develop an audit improvement plan for the
audit in the 2020 financial year.
Tenure
EY was appointed the Group’s external auditor at the Company’s
AGM in 2018 for the financial year 31 March 2019 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, ie after
the financial year ending on 31 March 2023.
The Committee recommended, and the Board intends to propose,
the reappointment of EY as the Company’s auditors for the 2021
financial year. It believes the independence and objectivity of the
external auditors and the effectiveness of the audit process are
safeguarded and remain strong.
The 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.
There are no contractual obligations that restrict the Committee’s
choice of external auditors.
Internal audit – Group Audit and Assurance
Group Audit and Assurance (GAA) is an internal function that
provides independent and objective assurance to all levels of
management up to the Board. Its responsibilities include
evaluating and reporting on the adequacy and effectiveness of the
systems of risk management and internal controls operated by
management. Management remains responsible for identifying
risks and for the design and operation of controls to manage
risk effectively.
GAA is staffed by professionally qualified and experienced
individual members located in London and Chicago. They report
to the VP, GAA, who is based in London, who in turn reports
directly to the Chairman of the Audit Committee and
the Chief Executive.
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The Committee received, considered and approved the internal
audit plan for the 2021 financial year, which was constructed using
a risk-based approach. This will be kept under review in light of
Covid-19 operational limitations. 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 2020 financial
year, 40 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.
The Committee also reviewed the effectiveness of GAA this year.
It was undertaken by way of a questionnaire and feedback was
sought from members of the Audit Committee, senior management
and external auditors. The Committee concluded that the function
continues to operate effectively.
Internal control and risk management
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. A formal process is in place which
aims to identify and evaluate risks including emerging risks and
how they are managed. Further details including the description
of principal risks are set out on pages 63 to 67.
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.
The Audit Committee continued to receive and consider regular
reports from management and the VP, GAA, on the effectiveness
of the Group’s internal controls and risk management system as
well as the external auditor on matters identified in the course
of its statutory audit work. The Board believes that the Group
maintains an effective, embedded system of internal controls.
Internal control over financial reporting
The Group has specific internal mechanisms that govern the
financial reporting process and the 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.
Governance
Annual 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 2020 review
was facilitated by GAA 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 2020. The Board then discussed the output at
its meeting in May 2020.
The 2020 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 checked the results of the review, ensuring that
the responses from management were consistent with the results
of its work during the year. The Audit Committee reported to the
Board that the process for monitoring and reviewing internal
control and risk management processes is robust and
appropriate for the size and scale of the business. It was noted
that no significant failing or weakness had been identified and
confirmed that it was satisfied the systems and processes were
functioning effectively.
The Group’s going concern and Viability Statement disclosures are
set out in the Strategic Report on pages 45 and 62 respectively.
CORPORATE GOVERNANCE
FAIR, BALANCED AND UNDERSTANDABLE REPORTING
Robust year-end governance processes are in place to
support the Board’s review of the Annual Report which include:
• ensuring that all of those involved in the preparation of
the Annual Report have been briefed on the ‘fair, balanced
and understandable’ requirements;
• internal verification by the Group Audit and Assurance
team of non-financial factual statements, key
performance indicators and descriptions used within
the narrative;
• regular engagement with, and feedback from, senior
management on proposed content and changes;
• feedback from external parties (corporate reporting
specialists, remuneration advisors, external auditor) to
enhance the quality of our reporting; and
• review by the Audit Committee of the governance
processes employed to provide assurance that the Annual
Report is fair, balanced and understandable, including
the opportunity to challenge members of management,
Group Audit and Assurance and the external auditor on
the robustness of those processes.
The Board considers that, taken as a whole, the Annual
Report is fair, balanced and understandable. The Board
further believes that the Annual Report provides the
necessary information for shareholders to adequately
assess the Company’s position and performance, business
model and strategy.
Tate & Lyle PLC Annual Report 2020
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Directors’ Remuneration Report
CHAIR’S
INTRODUCTION
BUSINESS PERFORMANCE CONTEXT AND COVID-19
As you will have read in the introductory statements in this
Annual Report, we are pleased to report a year of strong financial
performance in spite of a challenging external environment.
The Remuneration Committee is particularly mindful that the
Covid-19 pandemic has presented significant challenges for the
business and our customers, as well as for our workforce and the
communities in which we operate. The Committee has reflected
on these matters at length in our decision making, both in relation
to the year we are concluding and the year ahead. Despite the
near-term challenges of Covid-19, the fundamentals of the
business remain sound. We are making good progress executing
our strategy, the balance sheet remains strong and we are
maintaining the final dividend. No employees have been
furloughed and we have not sought government aid.
In terms of financial performance, highlights include:
•(cid:3) 4% increase1 in adjusted profit before tax
•(cid:3) 8% increase1 in adjusted diluted earnings per share
•(cid:3) Adjusted free cash flow £35 million higher at £247 million
•(cid:3) Productivity programme delivering ahead of expectations
•(cid:3) Final dividend maintained at 20.8p, making a full-year
dividend of 29.6p, up 0.7%.
1 Percentage change figures are in constant currency for continuing operations.
Alongside these financial headlines, the Remuneration Committee
recognises the significant actions that have been taken to
create value for our customers, suppliers and stakeholders
more broadly. The Chief Executive’s review highlights a number
of the actions and commitments the business has made to live
our purpose of Improving Lives for Generations, including:
•(cid:3) Committing to science-based targets to reduce (Scope
1, 2 and 3) CO2e emissions by 2030 including a commitment
to eliminate the use of coal in our operations by 2025
•(cid:3) Committing to gender parity in leadership roles by 2025
•(cid:3) Supporting specific UN Sustainable Development Goals
where we can have the greatest impact (see page 16)
•(cid:3) Leading the way with an industry-first agricultural
programme through our partnership with Truterra™
to promote sustainable corn farming in the US, which
was expanded during the year to cover 1.5 million acres,
equivalent to the volume of corn we buy globally each year.
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Tate & Lyle PLC Annual Report 2020
Our Policy renewal reflects the
changes we made to simplify our
arrangements last year, and
the reductions to remuneration
opportunity our Executive
Directors have agreed.
Anne Minto
Chair of the Remuneration Committee
At the same time, we have made significant progress in our
environment, health and safety agenda (see from page 50).
See page 21 for additional information regarding our community
and stakeholder initiatives, and pages 46 to 49 for some key
insights into the actions we are taking to engage and develop
our own people within our organisation – all aligned with
our purpose.
MODERATION IN EXECUTIVE PAY
With this broader focus for value creation from our business,
the Committee is pleased to report a number of specific actions
in relation to executive pay:
•(cid:3) The structural reduction in bonus opportunity which we
described in last year’s Annual Report is now adopted as
a formal Policy
•(cid:3) Executive Directors agreed changes to the level of their own
retirement benefits, to give up contractual entitlements and
reduce these so that they will be brought into line with the
broader workforce
•(cid:3) The 2020 Policy includes a commitment to a post-
employment shareholding requirement to underline
Executive Directors’ commitment to the long-term success
of the business
•(cid:3) Executive Directors have volunteered to forego a salary
increase, for a second year running
•(cid:3) Executive Directors have indicated that, as we start a new
financial year, they do not expect to receive a bonus payment
in relation to the year ahead, recognising the exceptional
circumstances we face as a global community, and the
Committee will take this into account at the end of the
financial year.
On behalf of the Board, I am grateful to Nick and Imran for their
willingness to show leadership on these issues. We would also
like to recognise the Executive Committee, the wider leadership
team, and all our employees for their unstinting efforts to
manage the business during the Covid-19 pandemic.
(cid:3)
INCENTIVE OUTCOMES FOR THE YEAR
Headline incentive outcomes for the year reflect the strong
operational and financial performance of the business:
•(cid:3) Annual bonus plan: awards for the year are at around
three-quarters of the maximum, reflecting strong profit
and cash performance relative to stretching targets set at
the start of the year; as well as key achievements against
strategic non-financial metrics.
•(cid:3) Performance Share Plan (PSP): awards made in 2017 will
vest at 62.5% of maximum, having reached the end of their
three-year performance period. Adjusted return on capital
employed in the year to 31 March 2020 of 17.5% results in full
vesting for that element; adjusted profit before tax compound
annual growth of 7.1% was within the target range; and
although profit growth in the Food & Beverage Solutions
division was double digit this year, it was not sufficient to
meet the stretching three-year profit growth target we set
at the start of the period.
•(cid:3) Total remuneration outcomes: these are above ’target’
but below ‘maximum’ policy levels. The CEO figure is lower
than the prior year; the CFO figure reflects a full year in role.
The Committee has reviewed performance and the associated
incentive plan outcomes carefully, and considers them to be
an appropriate reflection of the financial performance and
strategic progress of the business, in the context of stretching
performance targets set at the start of the period.
Payment of the cash part of the bonus will be deferred,
conditional on the approval of the dividend at the AGM, to
demonstrate greater alignment with shareholders. Part
of the annual bonus will be awarded as deferred shares,
in the normal way; and the Performance Share Plan award
is subject to a two-year post-vesting holding period.
RECOGNISING THE COMMITMENT OF ALL OUR COLLEAGUES
Alongside these outcomes, we are pleased to report some
important actions that have been taken to enable a broader
set of colleagues across the global workforce to share in the
success of the business this year:
•(cid:3) At the start of the year, we took the decision to broaden
the participation in our Group incentive arrangements,
more than doubling the overall population in our annual
bonus plan. The payments under this plan we are making
this year enable a much broader population to share in the
overall success of the business.
•(cid:3) Recognising the exceptional circumstances that we face as
we sign off this report, we have made a special cash payment
to nearly 2,000 of our ‘front line’ employees who we want to
recognise specifically for their commitment in keeping our
operations running and customers served through this
unprecedented period.
CONTINUING ENGAGEMENT WITH SHAREHOLDERS AND
POLICY RENEWAL
We have engaged proactively with shareholders over successive
years, and I am pleased to report that the level of shareholder
support for our remuneration policy and framework remains
strong (most recent policy and report resolutions both enjoying
support of c.97%).
Following a careful review, and recent consultation with a
significant number of our largest institutional shareholders,
we believe that our current Policy and approach – incorporating
the changes on which we consulted with shareholders in detail
ahead of our 2019 AGM – remains appropriate in the context
of our business strategy and shareholder expectations.
Accordingly, we are not proposing to make any material
changes to our Remuneration Policy.
(cid:3)
(cid:3)
Governance
Governance
The Policy reflects the following key updates:
•(cid:3) Reduction in bonus maximum: the reduction in maximum
bonus award from 175% to 150%, which we adopted last year,
is now reflected in our formal Policy.
•(cid:3) Executive Director benefits: all employment benefits –
including retirement benefits – provided to new appointments
to Executive Director roles in the UK will be aligned with the
benefits applicable to the majority of the UK workforce.
•(cid:3) Existing director retirement benefits will reduce: Executive
Directors have agreed changes to the level of their own
retirement benefits to give up contractual entitlements and
reduce these so that they will be brought into line with the
broader workforce within a two-year period. This results in
an immediate reduction in benefit for the CEO from 25% to
20% of salary with effect from 1 April 2020; with further steps
to reduce Executive Directors’ benefits as necessary, to align
with the employee benefit level over the next two years.
•(cid:3) Post-employment shareholding requirements: We are
adopting a formal post-employment shareholding policy
that requires a departing executive director to retain shares
in line with the normal shareholding policy (currently 4x
salary for the CEO and 3x salary for the CFO) or their actual
shareholding on departure, if lower, for a period of 24 months
following cessation, to ensure that departing Executive
Directors have a continuing alignment with the interests
of long-term shareholders.
We consulted ahead of the publication of this report with a
broad group including many of our largest 30 shareholders,
to explain our intended approach in reviewing the Policy and
the associated renewal of our Performance Share Plan rules,
and to capture any feedback. I am grateful to the shareholders
who spent time in consultation on these changes, and we
greatly value your continued support.
The Committee is satisfied that this Policy will continue to
provide for a strong alignment between Group performance
and the remuneration of the Executive Directors.
REMUNERATION REPORT AND REMUNERATION POLICY FOR
SHAREHOLDER APPROVAL
The information regarding Directors’ remuneration is presented
in two Reports: the first relates to the way in which our current
Policy has been implemented during the year and the second
part describes our Remuneration Policy which will apply from
the 2020 AGM. Resolutions to approve each of these Reports
will be proposed at the AGM on 23 July 2020. Our intention is
that the Policy approved by shareholders will apply for a period
of three years from the date of the AGM and will not be put to
an annual shareholder vote.
In closing, I would like to thank my fellow members of the
Committee for their diligence and engagement throughout the
year. 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.(cid:3)
KEY SECTIONS OF THIS REPORT
102–103 At a glance
- Remuneration strategy and key principles
- Overview of executive director remuneration framework
- Performance highlights and incentive outcomes for the year
- Remuneration Policy scenarios and single figure outcome
104–114 Annual Report on Remuneration
115–120 Directors’ Remuneration Policy
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
101
101
Directors’ Remuneration Report (continued)
AT A GLANCE
REMUNERATION STRATEGY AND KEY PRINCIPLES
The Group’s remuneration strategy and principles apply consistently to employees, managers and executives.
(cid:23)(cid:138)(cid:135)(cid:3)(cid:10)(cid:148)(cid:145)(cid:151)(cid:146)(cid:495)(cid:149)(cid:3)(cid:148)(cid:135)(cid:143)(cid:151)(cid:144)(cid:135)(cid:148)(cid:131)(cid:150)(cid:139)(cid:145)(cid:144)(cid:3)(cid:149)(cid:150)(cid:148)(cid:131)(cid:150)(cid:135)(cid:137)(cid:155)(cid:3)(cid:139)(cid:149)(cid:3)(cid:150)(cid:145)(cid:3)(cid:146)(cid:148)(cid:145)(cid:152)(cid:139)(cid:134)(cid:135)(cid:3)(cid:133)(cid:145)(cid:143)(cid:146)(cid:135)(cid:150)(cid:139)(cid:150)(cid:139)(cid:152)(cid:135)(cid:3)(cid:146)(cid:131)(cid:133)(cid:141)(cid:131)(cid:137)(cid:135)(cid:149)(cid:3)(cid:150)(cid:138)(cid:131)(cid:150)(cid:3)(cid:135)(cid:144)(cid:131)(cid:132)(cid:142)(cid:135)(cid:3)(cid:150)(cid:138)(cid:135)(cid:3)(cid:10)(cid:148)(cid:145)(cid:151)(cid:146)(cid:3)(cid:150)(cid:145)(cid:3)(cid:148)(cid:135)(cid:133)(cid:148)(cid:151)(cid:139)(cid:150)(cid:481)(cid:3)(cid:134)(cid:135)(cid:152)(cid:135)(cid:142)(cid:145)(cid:146)(cid:481)(cid:3)(cid:131)(cid:144)(cid:134)(cid:3)(cid:143)(cid:145)(cid:150)(cid:139)(cid:152)(cid:131)(cid:150)(cid:135)(cid:3)(cid:3)
(cid:138)(cid:139)(cid:137)(cid:138)(cid:486)(cid:133)(cid:131)(cid:142)(cid:139)(cid:132)(cid:148)(cid:135)(cid:3)(cid:139)(cid:144)(cid:134)(cid:139)(cid:152)(cid:139)(cid:134)(cid:151)(cid:131)(cid:142)(cid:149)(cid:3)(cid:139)(cid:144)(cid:3)(cid:150)(cid:138)(cid:135)(cid:3)(cid:143)(cid:131)(cid:148)(cid:141)(cid:135)(cid:150)(cid:149)(cid:3)(cid:139)(cid:144)(cid:3)(cid:153)(cid:138)(cid:139)(cid:133)(cid:138)(cid:3)(cid:153)(cid:135)(cid:3)(cid:145)(cid:146)(cid:135)(cid:148)(cid:131)(cid:150)(cid:135)(cid:3)(cid:514)(cid:3)(cid:150)(cid:145)(cid:3)(cid:149)(cid:135)(cid:148)(cid:152)(cid:135)(cid:3)(cid:145)(cid:151)(cid:148)(cid:3)(cid:133)(cid:151)(cid:149)(cid:150)(cid:145)(cid:143)(cid:135)(cid:148)(cid:149)(cid:481)(cid:3)(cid:131)(cid:144)(cid:134)(cid:3)(cid:150)(cid:145)(cid:3)(cid:134)(cid:135)(cid:142)(cid:139)(cid:152)(cid:135)(cid:148)(cid:3)(cid:133)(cid:145)(cid:144)(cid:149)(cid:139)(cid:149)(cid:150)(cid:135)(cid:144)(cid:150)(cid:3)(cid:146)(cid:135)(cid:148)(cid:136)(cid:145)(cid:148)(cid:143)(cid:131)(cid:144)(cid:133)(cid:135)(cid:3)(cid:131)(cid:144)(cid:134)(cid:3)
(cid:149)(cid:151)(cid:149)(cid:150)(cid:131)(cid:139)(cid:144)(cid:131)(cid:132)(cid:142)(cid:135)(cid:3)(cid:142)(cid:145)(cid:144)(cid:137)(cid:486)(cid:150)(cid:135)(cid:148)(cid:143)(cid:3)(cid:146)(cid:148)(cid:145)(cid:136)(cid:139)(cid:150)(cid:131)(cid:132)(cid:142)(cid:135)(cid:3)(cid:137)(cid:148)(cid:145)(cid:153)(cid:150)(cid:138)(cid:481)(cid:3)(cid:139)(cid:144)(cid:3)(cid:131)(cid:3)(cid:153)(cid:131)(cid:155)(cid:3)(cid:150)(cid:138)(cid:131)(cid:150)(cid:3)(cid:139)(cid:149)(cid:3)(cid:133)(cid:145)(cid:144)(cid:149)(cid:139)(cid:149)(cid:150)(cid:135)(cid:144)(cid:150)(cid:3)(cid:153)(cid:139)(cid:150)(cid:138)(cid:3)(cid:145)(cid:151)(cid:148)(cid:3)(cid:146)(cid:151)(cid:148)(cid:146)(cid:145)(cid:149)(cid:135)(cid:484)(cid:3)(cid:3)
•(cid:3) Our approach is designed to be equitable, transparent and globally
consistent, recognising that we recruit talented individuals and
operate in an international market
•(cid:3) Base pay and benefits are referenced to the comparative local
•(cid:3) 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
market, taking account of company size and operations
•(cid:3) Alignment with shareholders’ long-term interests is carefully
•(cid:3) Assessments of performance and potential provide meaningful
opportunities for career and salary progression, based on an
individual’s skills and contribution over time
•(cid:3) Individuals in key roles that can drive annual and longer-term
performance may be selected to participate in our sales incentive
plan, or the annual bonus plan, and/or the Performance Share Plan,
to encourage the achievement of genuinely stretching short-term
and long-term objectives
preserved by linking senior executive pay to performance; effective
governance around remuneration decisions; setting targets that
challenge management to drive high performance; the adoption of
shareholding guidelines at senior executive levels; and appropriate
malus and claw back provisions.
OVERVIEW OF OUR EXECUTIVE DIRECTOR REMUNERATION FRAMEWORK FOR THE YEAR ENDED 31 MARCH 2020
The table below summarises the operation of our current remuneration arrangements. We received strong shareholder support
for our Directors’ Remuneration Policy at the 2017 AGM and, following consultation with shareholders, a number of changes to
our incentive programmes were adopted in 2019. These changes, along with updates to our executive director pension benefits
and post-employment shareholding requirements, are being adopted into the Remuneration Policy for approval at the 2020 AGM.
BASE SALARY AND EMPLOYMENT BENEFITS
•(cid:3) Fixed compensation
Market competitive salary and benefits to attract the right calibre of executives:
•(cid:3) Benefits include health insurance, car benefit and defined contribution retirement benefits
•(cid:3) Executive Directors’ retirement benefit levels are reducing so that these will be in line with the levels of
benefits available to the majority of the UK workforce. This is effective immediately for any new appointments
Existing directors’ retirement benefits will reduce to 20% from 1 April 2020, and further reductions will be made
to align benefits with the workforce within a two-year period.
ANNUAL BONUS1 2019-2020 METRICS:
•(cid:3) 40% Group adjusted
operating profit
•(cid:3) 20% Food & Beverage
Solutions net sales
•(cid:3) 20% Group adjusted
operating cash flow
Rewards achievement against annual performance objectives:
•(cid:3) Target bonus is 75% of salary; maximum cash bonus is 100% of salary
•(cid:3) Maximum opportunity reduced (from 175%) to 150% of salary from 1 April 2019
•(cid:3) Any award over 100% is paid in shares, deferred for two years, subject to claw-back
•(cid:3) 80% of the bonus is calculated by reference to financial performance conditions
•(cid:3) 20% of the bonus is linked to strategic objectives to create additional value over time
•(cid:3) 20% Strategic objectives
No changes are proposed for 2020
PERFORMANCE SHARE PLAN1 AWARDS FROM 2019:
•(cid:3) 40% Group adjusted EPS
•(cid:3) 20% Food & Beverage
Solutions volume
•(cid:3) 40% Group adjusted ROCE
Supports the Group’s strategy to create shareholder value by incentivising sustained profit growth and
capital efficiency, growing the Food & Beverage Solutions division, and to motivate and retain senior talent:
•(cid:3) Maximum award is 300% of salary; 15% of the award vests at ‘threshold’
•(cid:3) Awards subject to a three-year performance period plus a two-year post-vesting holding period – five years
in total.
No changes are proposed for 2020
SHAREHOLDING REQUIREMENTS
•(cid:3) Chief Executive –
4 times salary
•(cid:3) Chief Financial Officer –
3 times salary
With the 2020 Policy renewal, a post-employment shareholding requirement is being introduced: for a period
of two years following cessation, an executive director will be required to maintain a shareholding in keeping
with the guideline prevailing at the time of their departure, or their actual holding on departure (if lower).
MALUS AND CLAW BACK PROVISIONS
Apply for two years after a bonus award or vesting of PSP awards.
With the 2020 Policy renewal, claw back provisions are being strengthened to include circumstances leading
to ‘corporate failure’
KEY: NUMBER OF YEARS: (cid:122) PERFORMANCE PERIOD (cid:123) DEFERRAL/HOLDING PERIOD (cid:88) ONGOING REQUIREMENTS
1 Food & Beverage Solutions metrics relate to the reportable segment.
(cid:3)
102
102
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
Governance
Governance
Incentive pay outcomes reflect good financial and operational performance despite a challenging external environment – leading
to total executive director remuneration outcomes for the year at above ‘target’ but below ‘maximum’ levels.
KEY PERFORMANCE INDICATORS FOR FINANCIAL YEAR 2020
Our remuneration arrangements have a clear link to key performance indicators (KPIs) which are aligned with our strategy.
Food & Beverage
Solutions volume
+1%
Adjusted profit
before tax1
+4%
in constant currency
Return on
capital employed1
Adjusted free
cash flow1
+40bps
£247m
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
Metrics
Group adjusted profit before tax (40%)
Food & Beverage Solutions net sales (20%)
Adjusted Group operating cash flow (20%)
Strategic (non-financial) metrics (20%)
Target1
£317m
US$1,382m
£313m
Actual1
£325m
US$1,378m
£336m
vs target
+£8m
-US$4m
+£23m
Achieved at above target but below maximum levels (see page 109)
Bonus award to Chief Executive: 78% of maximum; and to Chief Financial Officer: 78% of maximum
1 Bonus targets relate to adjusted metrics and are set and actual performance is assessed at budgeted exchange rates for comparability, consistent with our practice in prior years.
Performance may therefore differ from corresponding metrics included in the financial statements.
See pages 108 and 109 for more detail
Performance Share Plan (2017 Award)
Metric
Targets (threshold-stretch)
Actual (2017-2020)
Group Adjusted profit before tax from continuing operations (25%) 5% – 10% compound annual growth over three years 7.1% (in range)
Food & Beverage Solutions adjusted profit before tax from
continuing operations (25%)
8% – 13% compound annual growth over three years 7.6% (below threshold)
Adjusted Group ROCE from continuing operations (50%)
11% – 15% at the end of the performance period
17.5% (above stretch)
62.5% of the award made in 2017 will vest, based on Group adjusted profit before tax and Group adjusted ROCE performance.
See page 110 for more detail
REMUNERATION POLICY SCENARIOS AND ACTUAL OUTCOMES FOR THE YEAR ENDED 31 MARCH 2020
Chief Executive – Nick Hampton
Chief Financial Officer – Imran Nawaz1
s
0
0
0
£
n
o
i
t
a
r
e
n
u
m
e
r
f
o
n
o
i
t
i
s
o
p
m
o
C
4,000
3,000
2,000
1,000
0
£848
100%
Below
threshold
£3,841
52%
26%
22%
£2,345
43%
21%
36%
Target
Stretch
£2,499
35%
31%
34%
FY20
actual
BASE AND BENEFITS ANNUAL BONUS PERFORMANCE SHARE PLAN
1 Excludes compensatory share awards issued on appointment. (cid:3)
4,000
3,000
2,000
1,000
0
£2,692
53%
26%
21%
£1,635
43%
22%
35%
Target
Stretch
£1,227
45%
55%
FY20
actual
£577
100%
Below
threshold
(cid:3)
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
103
103
Directors’ Remuneration Report (continued)
ANNUAL REPORT ON REMUNERATION
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 marked as ‘(audited)’).
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 25 July 2019. The following voting outcomes were disclosed after the relevant AGM:
RESOLUTION
Directors’ Remuneration Policy – 27 July 20172
Annual Report on Remuneration – 25 July 20193
TOTAL FOR
(NUMBER OF
VOTES)
295 458 658
310 308 734
TOTAL AGAINST
(NUMBER OF
VOTES)
% OF VOTE
% OF VOTE
VOTES
WITHHELD1
(NUMBER OF
VOTES)
97.16
96.87
8 622 530
10 034 011
2.84
3.13
79 662
2 237 747
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 On 25 July 2019, there were 468,379,602 ordinary shares and 2,394,000 preference shares (which have limited voting rights) in issue.
IMPLEMENTATION OF THE REMUNERATION POLICY IN THE FINANCIAL YEAR ENDING 31 MARCH 2021
The Committee intends that the Policy approved by the shareholders at the AGM on 23 July 2020 will apply for a period of three
years from that date.
RESOLUTION TO APPROVE THE ANNUAL REPORT ON REMUNERATION AT THE 2020 AGM
A resolution to approve this Annual Report on Remuneration will be proposed at the AGM on 23 July 2020.
THE REMUNERATION COMMITTEE
MEETINGS DURING THE YEAR
The Remuneration Committee comprised the following independent non-executive directors during the year: Anne Minto (chair),
Lars Frederiksen, Warren Tucker, Sybella Stanley (appointed 25 July 2019), Dr Ajai Puri (stepped down 25 July 2019), and Paul
Forman (stepped down 25 July 2019). The Company Secretary serves as secretary to the Committee. Membership and attendance
during the year are set out on page 81.
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 met seven times during the year, and once after the end of the financial year and before the signing of this Annual
Report. The Committee’s external advisor 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.
MAIN RESPONSIBILITIES OF THE REMUNERATION COMMITTEE
The Committee has a formal calendar of items for consideration. The main responsibilities of the Committee include:
•(cid:3) Assessing the appropriateness of executive remuneration in
the context of the Group’s strategy and priorities as well as
overall competitiveness, informed by data from independent,
external sources
•(cid:3) 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
•(cid:3) Setting performance targets for awards made to senior
executives under the annual bonus plan and the long-term
incentive plan, and reviewing performance outcomes
•(cid:3) Reviewing the broader operation of the annual bonus and
Performance Share Plans, including participation and overall
share award levels
•(cid:3) Reviewing workforce remuneration policies and engagement
in accordance with the updated (2018) UK Corporate
Governance Code
•(cid:3) 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 EFFECTIVENESS
The Committee Chair carried out an internally facilitated review of its effectiveness and sought feedback from the Committee
members, certain members of senior management and the external advisor. The output was discussed by the Committee. This
concluded that the Committee continued to operate effectively throughout the year and confirmed the appropriate areas of focus
for the year ahead.
104
104
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
Governance
Governance
COMMITTEE ADVISOR
The Committee appointed Deloitte LLP to act as external advisor following a review and competitive tender process in 2012, with
a change in lead advisor in 2019. 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 £34,450 for the
year ended 31 March 2020, with fees charged on a time incurred basis. During the year ended 31 March 2020, Deloitte LLP also
provided unrelated services to the rest of the Group in respect of corporate finance, consulting, tax and compliance.
TOTAL SHAREHOLDER RETURN AND CHIEF EXECUTIVE’S PAY
The chart illustrates cumulative total shareholder return (TSR) performance of the Company against the FTSE 100 and FTSE 250
indices, which provide an appropriate comparison as they represent a broad equity market with constituents comparable in size
and complexity to the Company. The chart shows the value of £100 invested in each Index and the Company in the 10 years from
31 March 2010.
TATE & LYLE PLC (ORDINARY SHARES)
FTSE 100
FTSE 250
250
200
150
100
50
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
31 MARCH
2020
Chief Executive’s1 total remuneration (£000s per single figure table)
Nick Hampton
n/a
n/a
Javed Ahmed
3 277
11 1982
Iain Ferguson
nil
170
n/a
5 367
n/a
n/a
2 728
n/a
Annual bonus
(% of max)
LTI vesting
(% of max)
100%
58%
18%
1.6%
81%
100%
100%
67.7%
n/a
996
n/a
0%
0%
n/a
2 139
n/a
n/a
3 239
n/a
n/a
3 672
n/a
3 045
2 499
n/a
n/a
n/a
n/a
77%
80%
72%
53%
78%
10.9%
50%
100%
75%
62.5%
1 Nick Hampton has 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 This figure 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 2020 VS 31 MARCH 2019
Chief Executive
Broader employee population3
BASE SALARY
VALUE OF
BENEFITS1
ANNUAL
BONUS2
0%
0-3%4
0%
0%
+26%
31%
Includes deferred shares where applicable.
1 No changes to benefit policies were made in respect of the Chief Executive or employees during the year.
2
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 Salary increases (typically 3%) were awarded to employees in our manufacturing facilities, effective April 2020. Given the current economic situation, the normal process for awarding
discretionary salary increases for the broader management and executive population has been deferred.
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 2020
YEAR ENDED
31 MARCH 2019
£353m
£150m
£334m
£134m
% CHANGE
+5.7%
+11.9%
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, and the purchase of shares to satisfy share incentive awards. See Notes 9, 13 and 21 for further information.
(cid:3)
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Directors’ Remuneration Report (continued)
GENDER PAY RATIO
Our two employing businesses in the UK each employ fewer than the 250-employee threshold for reporting gender pay statistics.
Therefore, we elect to report voluntarily. The Committee advocate gender pay reporting and the actions taken in the business to
drive gender balance, supporting a culture of inclusion which is representative of our communities. We are committed to providing
opportunities based on capability and talent, irrespective of gender, ethnicity, or culture. See page 48 for more information.
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, we report on the ratio of CEO pay to UK employee
pay. Data representing employees at the ‘median’ and ‘upper’ and ‘lower’ quartiles are as follows:
CEO pay ratio vs UK employees
YEAR
2020 – pay ratio (total compensation)
2020 – Representative employee salary
2020 – Representative employee total compensation
2019 – pay ratio (total compensation)
LOWER
QUARTILE
55x
£40,418
£46,064
74x
MEDIAN
27x
£62,026
£93,677
39x
UPPER
QUARTILE
13x
£87,093
£201,522
20x
In the table above, total compensation has been calculated for all UK employees individually as at 31 March 2020 in a consistent
manner for comparison with the CEO ‘single figure’ total compensation figure in the table on page 112, adjusted only to provide
a consistent comparison of employee data on a full-time equivalent basis. (This approach is known as ‘Method A’ in the reporting
regulations, and was selected because it provides greater consistency in comparison).
The Committee notes that the median pay ratio figure of 27x has fallen year on year (2019 – 39, and 2018 – c.50). The 2020 change
is due in part to structural reductions in executive director bonus opportunity from 1 April 2019, as well as a lower vesting outcome
for the Performance Share Plan in the year.
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 to 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.
DIRECTORS’ SALARIES AND RETIREMENT BENEFITS
EXECUTIVE DIRECTOR SALARIES
The Remuneration Committee reviews salaries at the start of each financial year. At the Board meeting at the end of March 2020,
the Chief Executive recommended that Executive Directors, and members of the Executive Committee, would not receive a salary
increase at this time but to defer any decisions on salary for six months (along with all other employees eligible for a discretionary
pay increase). Neither Executive Director has been awarded an increase in salary since their original date of appointment.
TOTAL PENSION ENTITLEMENTS (AUDITED)
The Committee recognises the strength of feeling from some stakeholders regarding the level of executive directors’ retirement
benefit provisions, and considered this matter at length as part of our Policy renewal.
We have amended our Policy so that all employment benefits – including retirement benefits – provided to new appointments
to executive director roles in the UK will be aligned with the benefits applicable to the majority of the UK workforce.
At the same time, our Executive Directors have agreed changes to the level of their own retirement benefits to give up contractual
entitlements and reduce these so that they will be brought into line with the broader workforce within a two-year period. This
results in an immediate reduction in benefit for the CEO from 25% to 20% of salary with effect from 1 April 2020; with further
steps to reduce Executive Directors’ benefits in step at the start of subsequent financial years as necessary.
As part of this process, and within the remit of the Committee’s review of workforce policies, the Committee is reviewing the
corresponding employee arrangements (which are currently in a range up to 25% of salary), and expects the executive and
broader UK workforce rate to align at 15% of salary by the end of this period.
In giving up contractual benefits which were agreed in good faith, the Committee is grateful to Nick and Imran for their willingness
to show leadership on these issues.
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Governance
Governance
ANNUAL BONUS
OVERVIEW
For the financial year commencing April 2019, and in consultation with shareholders, the Committee updated the bonus plan to
reflect financial performance as well as the broader actions that are necessary to create value over time. This approach reflects
the guidance in the (2018) UK Corporate Governance 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’. As part of this review:
•(cid:3) The maximum bonus opportunity reduced to 150% (from 175% for the prior performance year).
•(cid:3) The relatively complex ‘multiplier’ approach was removed, in favour of independently weighted financial performance metrics.
This simplification enables us to demonstrate a clearer link between financial performance and the individual bonus outcomes.
•(cid:3) 20% of the overall bonus is linked to the achievement of specific ‘business strategic’ non-financial objectives, to capture the
actions and performance necessary to create additional value over time.
Objectives are established by the Committee at the start of the year, reflecting the Group’s corporate financial and strategic
priorities for the year ahead. Achievements against those objectives are reviewed by the Committee at the end of the year to
determine a bonus outcome.
In determining final bonus outcomes, the Committee has due regard to the shareholder experience and the overall financial
performance of the business in approving outcomes.
OPPORTUNITY
(% OF SALARY)
FINANCIAL METRICS (80% OF TOTAL BONUS OPPORTUNITY):
THRESHOLD: 20%
TARGET: 75%
MAXIMUM: 150%
GROUP ADJUSTED
OPERATING PROFIT
(40% OF TOTAL)
GROUP ADJUSTED
OPERATING CASH FLOW
(20%)
+
FOOD & BEVERAGE
SOLUTIONS NET SALES
(20%)
+
STRATEGIC
OBJECTIVES (20%
OF TOTAL BONUS
OPPORTUNITY)
+
ALIGNED TO
STRATEGIC AND
OPERATIONAL
PRIORITIES
A minimum level of profit must be achieved before a bonus can be earned for other metrics.
Awards are subject to Remuneration Committee discretion: taking into account underlying business performance; and environmental,
health and safety performance.
Note: Bonus metrics relate to adjusted metrics and targets are set and actual performance is assessed at budgeted exchange rates for comparability, consistent with our practice in prior
years. Performance may therefore differ from the corresponding metrics included in the financial statements.
To eliminate potential volatility due to the pass-through of corn price in our sales, Food & Beverage Solutions 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.
Adjusted operating cash flow is adjusted free cash flow before the impact of retirement cash contributions, net interest and tax paid, and excludes movements for corn-related derivative
and margin call movements compared with those included in the budget.
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 are 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 as part of the 2020 Policy renewal future awards will include ‘corporate failure’ within these provisions.
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.
BONUS ARRANGEMENTS FOR THE YEAR AHEAD
In the context of economic uncertainty relating to the Covid-19 pandemic as we start the current financial year, the Executive Directors have
indicated that they do not expect to receive a bonus payment in relation to the year ahead. While the ambition to pursue our strategic and
growth objectives remains as strong as ever, this stance recognises the exceptional circumstances we currently face as a global community
as we start a new financial year, and the Committee will take this into account at the year-end.
At this time, we have clear near-term priorities in the business: to keep our people safe; keep our operations running; continue to
serve our customers; maintain our financial strength; and to emerge from this period as a stronger business, delivering a positive
outcome for the business and all our stakeholders.
Any bonus awarded in relation to the ‘non-financial’ element would be linked to the Committee’s review of performance against
these objectives, subject to satisfactory minimum overall financial performance, and in the context of the wider shareholder
and stakeholder experience over the course of the year, which the Committee will consider at the end of the financial year.(cid:3)
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Directors’ Remuneration Report (continued)
BUSINESS AND PERFORMANCE OVERVIEW FOR THE YEAR ENDED 31 MARCH 2020
Awards are linked to stretching financial targets set at the start of the year against key metrics linked to our strategic goals.
Bonus awards as described below are considered appropriate in the context of strong financial performance and significant
strategic progress, and the actions taken to support our purpose, and our people:
Group financial highlights:
•(cid:3) 4% increase1 in adjusted profit before tax
•(cid:3) 8% increase1 in adjusted diluted earnings
per share
•(cid:3) Adjusted free cash flow higher at £247m
•(cid:3) Productivity programme delivering ahead
Commitments to broader stakeholders:
•(cid:3) Ambitious, science-based targets
established to reduce our carbon footprint,
including a commitment to eliminate coal
from our operations by 2025
•(cid:3) Committing to gender parity in leadership
of expectations
roles by 2025
•(cid:3) Final dividend maintained at 20.8p, making
•(cid:3) Supporting specific UN Sustainable
a full-year dividend of 29.6p, up 0.7%.
Development Goals where we can have the
greatest impact (including those relating
to hunger, and health and wellbeing)
•(cid:3) Leading the way with an industry-first
programme to support sustainable
agriculture expanded to cover 1.5 million
acres of corn (matching our global annual
corn requirements).
Recognising our colleagues:
•(cid:3) Extending participation in our Group
incentive arrangements, more than
doubling the overall population in our
annual bonus plan. The payments under
this plan we are making this year enable
a much broader population to share in
the overall success of the business.
•(cid:3) We have also made special cash payments
to nearly 2,000 of our ‘front line’
employees in the Group, reflecting their
commitment in keeping our operations
running and customers served in
unprecedented circumstances.
•(cid:3) Investment in safety equipment and
physical and technology infrastructure,
to support new ways of working during
the Covid-19 pandemic.
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 2020 (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 METRIC
LINK TO STRATEGY
WEIGHTING
THRESHOLD
TARGET
STRETCH
TARGET RANGE
ACTUAL PERFORMANCE
IN THE YEAR ENDED
31 MARCH 2020
BONUS OUTCOME
% OF MAX
% OF
SALARY
Group
adjusted operating profit
before tax, exceptional
items, amortisation
and net retirement
benefit interest
Food & Beverage
Solutions net sales
Group adjusted
operating cash flow
Measures the underlying
profit generated by the total
business and whether
management is converting
growth into profit effectively
Captures ‘top line’
value-based performance
of the Food & Beverage
Solutions division
Provides a focus on
managing working
capital and converting
profit into cash effectively
Non-financial personal
and strategic
performance
Measures non-financial
performance key to
achieving corporate goals
40%
£310m
£317m
£331m
£325m
77%
46%
20%
$1,327m $1,382m $1,410m
US$1,378m
47%
14%
20%
£298m
£313m
£328m
£336m
100%
30%
20%
See below for details
Chief Executive
Chief Financial Officer
90%
90%
27%
27%
Financial underpin
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.
Based on these performance outcomes, annual bonus awards to Executive Directors for the year ended 31 March 2020 have been
determined as follows:
Nick Hampton
Chief Executive
Imran Nawaz
Chief Financial Officer
% OF
MAX
78%
78%
% OF
SALARY
117%
117%
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.
1 Bonus targets are set and actual performance is assessed at constant (budget) exchange rates, reflecting consistent practice with prior years.
The bonus amount up to 100% of base salary will be paid in cash. The excess above 100% of base salary is paid in the form of
deferred shares.
Recognising the exceptional circumstances brought by Covid-19, payment of the cash part of the bonus will be deferred until
after the AGM, conditional on the approval of the final dividend at the AGM, to demonstrate greater alignment with shareholders.(cid:3)
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STRATEGIC NON-FINANCIAL OBJECTIVES
20% of each Executive Director’s bonus opportunity is linked to performance against individual business strategic measures.
Payment of this element of the bonus is subject to achievement of a minimum profit hurdle (which has been achieved for the year).
Non-financial objectives are established through a process involving the Nominations and Remuneration Committees at the start
of each year, reflecting corporate priorities for the year ahead and in particular the actions necessary to ‘Sharpen, Accelerate,
and Simplify’ our business, drive progress against EHS and broader purpose goals, and to develop the Group’s culture.
Achievements against those objectives, including specific KPIs, are reviewed by the Committee at the end of the financial year,
and a bonus outcome is determined accordingly. The Committee’s assessment of the bonus outcome, and key achievements
against specific objectives are shown below. Business strategic objectives such as M&A pipeline and customer relationships
are often commercially sensitive.
OBJECTIVES
CEO (NICK HAMPTON)
Objective(s):
CFO (IMRAN NAWAZ)
Objective(s):
Sharpen the focus
on our customers
and key categories
Accelerate
portfolio
development:
innovation,
partnerships,
strategy
development and
M&A readiness
Simplify the
business and
deliver productivity
improvements
•(cid:3) Drive customer focus and prioritisation of key categories
•(cid:3) Develop ‘top-to-top’ relationships with key global customers
•(cid:3) Lead capital and strategic investments focused on
expanding our key category offering and capabilities
to develop shared growth opportunities
Key achievement(s):
Key achievement(s):
•(cid:3) Led development of Asia Pacific growth strategy,
•(cid:3) Collaborated with key customers to develop relationships
enabling innovation and customer proximity
and new opportunities
•(cid:3) Re-focused Food & Beverage Solutions global organisation
to enable delivery of revenue and profit progression in
key regions
•(cid:3) Executed Primary Products strategy to offset market headwinds
Outcome:
Objective(s):
•(cid:3) Led refreshed investor engagement programme in
first full financial year since appointment, to build
strong connections with external stakeholders
Outcome:
Objective(s):
•(cid:3) Expand innovation model geographically
•(cid:3) Develop M&A deal pipeline and build relationships with
transformational deal targets
Key achievement(s):
•(cid:3) Refresh approach to long-term strategy development
and capability, drive value from key partnerships,
and pursue M&A agenda and pipeline
Key achievement(s):
•(cid:3) Expanded application labs in Singapore and São Paulo
•(cid:3) Restructured corporate strategy and M&A functions
to better serve regional customer requirements and reduce
innovation cycle time
to upgrade capability and drive greater pace
•(cid:3) Developing 10-year plan/horizon for long-term
•(cid:3) Deeper relationships established with strategic partners
to identify growth opportunities, for example with Sweet
Green Fields
strategic growth
Outcome:
Objective(s):
Outcome:
Objective(s):
•(cid:3) Review and optimise regional customer-facing organisations
and end-to-end execution model
Key achievement(s):
•(cid:3) Plan and execute actions to address cost base to
deliver US$100 million productivity programme
Key achievement(s):
•(cid:3) Simplified regional Food & Beverage Solutions management
•(cid:3) Established culture and process to drive stronger
structure and operating model established with direct
reporting line to CEO, simplifying organisation and improved
resource allocation to serve local customers
•(cid:3) Championed productivity improvements to enable customer
Culture and
Governance,
including EHS and
social purpose
benefits (see page 14)
Outcome:
Objective(s):
•(cid:3) Embed purpose in the organisation
•(cid:3) Develop future vision for EHS
Key achievement(s):
cost discipline; implemented zero-based budgeting
on overheads and established productivity reporting
•(cid:3) Delivered cumulative benefits of US$87m to 31 March
2020 (ahead of target), mitigating headwinds and cost
pressures across ingredients, energy and freight
Outcome:
Objective(s):
•(cid:3) Deliver ISIT system upgrades to enable more effective
collaboration across teams and improve financial
performance management
•(cid:3) Shared sense of organisational purpose now established through
Key achievement(s):
meaningful local and Group-wide initiatives
•(cid:3) Significant progress on the EHS ‘Journey to Excellence’
delivering on our commitment to our employees, communities
and wider stakeholders
•(cid:3) Developed new sustainability programme and commitments
to reduce carbon footprint, water and waste management,
and to support sustainable agriculture
Outcome:
Bonus outcome
(max 30% of salary,
20% of total bonus)
Overall outcome: 18 / 20
27% of salary
(90% of max)
(cid:3)
•(cid:3) Established new ways of working (across finance and
IS/IT), to drive improvements in partnering across the
business to improve collaboration, planning capability
and enable investments for growth
Outcome:
Overall outcome: 18 / 20
27% of salary
(90% of max)
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Directors’ Remuneration Report (continued)
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
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.
This overall limit has not been increased since 2010. The level of vesting if threshold conditions are met is 15% of the total award.
PERFORMANCE CONDITIONS APPLICABLE TO OUTSTANDING AWARDS GRANTED PRIOR TO 2019
Structural changes in the business in 2015 led to a review of the performance framework to ensure continued alignment with the
Group strategy. Targets 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.
VESTING OUTCOME FOR AWARDS MADE IN 2017
The conditions below apply to awards made in 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 table summarises the
conditions and assessment of actual performance and vesting outcome for the award made in 2017.
See pages 74 and 75 of our 2016 Annual Report for more details
METRICS FOR AWARDS
2017 AND 2018
LINK TO STRATEGY
TARGET RANGE
(THRESHOLD-STRETCH)
ACTUAL PERFORMANCE
OUTCOME FOR 2017
AWARD
COMBINED VESTING
OUTCOME FOR 2017 AWARD
FBS adjusted
operating profit (25%)
Group adjusted profit
before tax (25%)
Group adjusted
ROCE (50%)
Reflects our focus on growing
8% – 13% p.a. three-
7.6% p.a.
the FBS business
year compound growth
(below threshold)
Key performance metric to
drive sustainable long-term
profitable growth
Drives efficient investment for
value-added returns from the
total business
5% – 10% p.a.
three-year
compound growth
7.1% p.a.
(in range)
11% – 15%1 in the final
year of the three-year
performance period1
17.5%
(above stretch)
62.5% of the 2017 award
will vest – Group ROCE
outcome is above the
respective ‘stretch’ level
of performance while both
Group profit before tax and
FBS operating profit growth
performed in range
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.
1 As explained in last year’s Remuneration Report, ROCE performance targets for awards made up to 2019 were set prior to the adoption of IFRS16. The Committee has assessed the
impact of the accounting standard on our pro-forma reporting and determined that an adjustment to the ROCE target range is appropriate 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. Other conditions are similarly assessed on a like-for-like basis. Given overall
performance, this adjustment to ROCE does not impact the vesting outcome for the award made in 2017.
PERFORMANCE CONDITIONS APPLICABLE TO AWARDS GRANTED FROM 2019
As described in detail in last year’s Remuneration Report, the investment case we set out provides a strong logic for re-focusing
long-term performance metrics for PSP towards EPS growth and ROCE performance each with a 40% weighting, so that 80% of the
overall award is linked to ‘bottom line’ financial performance and capital efficiency. Alongside these, a Food & Beverage Solutions
(FBS) volume metric (with a 20% weighting) provides continued focus on our growth ambition for the FBS business within the Group
portfolio, complementing the ‘FBS sales’ metric in the annual bonus, and incentivising above-market performance in that division.
The metrics and targets and the strategic rationale for these are summarised below. The target ranges shown below for each
metric were carefully considered by the Committee, taking into account the investment case we set out for shareholders and
our ambition for growth, as well as historic company and competitor/customer financial performance. These metrics/targets
are intended to apply for awards made in the year ahead and will be kept under review ahead of the grant in any year to ensure
they remain appropriately stretching. We believe this approach places a clear focus on long-term strategic growth and FBS
market ‘out-performance’, to drive long-term value creation.
See pages 106 and 107 of our 2019 Annual Report for more details
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Governance
METRICS FOR AWARDS
FROM 2019 (WEIGHTING)
RATIONALE FOR METRIC
(LINK TO INVESTMENT CASE)
TARGET RANGE
(THRESHOLD-STRETCH)
FINANCIAL AND DIVIDEND UNDERPIN
Group adjusted earnings
per share (40%)
Key performance metric
5% – 10% p.a. three-year
to drive sustainable long-term
profitable growth
compound growth
FBS volume growth (20%)
Lead indicator of strategy
2% – 6% p.a. three-year
Adjusted Group
ROCE (40%)
execution and FBS value growth
compound growth
Drives disciplined and efficient
investment for value-added
returns from the total business
13%-17%1 in the final
year of the three-year
performance period
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.
Note: FBS metrics relate to the reportable segment. Targets are set and performance is assessed at reported exchange rates.
1 As described in last year’s Remuneration Report, ROCE performance targets for awards made to date were originally set prior to the adoption of IFRS16. The Committee has assessed
the impact of the accounting standard on our pro-forma reporting and determined that an adjustment to the ROCE target range is appropriate 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. Other conditions are similarly assessed on a like-for-like basis.
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; the combined total is five years. 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.
UPDATES TO PERFORMANCE SHARE PLAN RULES
We have adopted a number of ‘best practice’ features (claw-back and discretionary provisions, and post-vesting holding periods)
into the operation, in practice, of our plans to date. In conjunction with the renewal of our Remuneration Policy, a separate AGM
resolution seeks approval to update our formal plan documents to:
•(cid:3) strengthen these governance provisions – for example, specifically including ‘corporate failure’ within the claw-back provisions; and
•(cid:3) ensure that other standard provisions (e.g. the treatment of awards in the context of a change in control) continue to align with
expected good practice.
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. For awards made following the 2020 Policy renewal, ‘corporate failure’ will be included within these provisions.
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.
ANNUAL AND MAXIMUM AWARD LEVELS
The current shareholder-approved policy limit on PSP award levels is 300% of salary. The Committee believes this continues to be
appropriate in the context of our global business. 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 alongside the reduction in annual bonus maximum award to 150%.
PAYMENTS TO PAST DIRECTORS (AUDITED)
Javed Ahmed retired as Chief Executive and ceased employment with the Group on 1 April 2018. 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. The following awards vest in the period ended 31 March 2020:
•(cid:3) Deferred bonus from the year ending 31 March 2018: the value of which was previously disclosed in the single figure table on
page 86 of the Annual Report 2018
•(cid:3) PSP award from 2017: 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 110, having a value on vesting of £399,924 based on a share price of £6.412.
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. There are no further awards outstanding.
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
111
111
(cid:3)
Directors’ Remuneration Report (continued)
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.
SINGLE FIGURE TABLE (AUDITED)
£000s
YEAR ENDED
31 MARCH 2020
Chairman
SALARY/FEES
BENEFITS1
PENSION
TOTAL FIXED
REMUNERATION
ANNUAL
BONUS3
SHARE AWARDS
TOTAL VARIABLE
REMUNERATION
TOTAL
REMUNERATION
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Dr Gerry Murphy
350
350
–
–
–
–
350
350
–
–
–
–
–
–
350
350
665
470
665
313
17
113
17
109
166
94
166
63
848
677
848
485
778
550
616
224
8734 1 581
–
477
1 651 2 197
224
1 027
2 499 3 045
1 704
709
Executive directors
Nick Hampton
Imran Nawaz2
Non-executive
directors5
Paul Forman
Lars Frederiksen
Anne Minto
Kimberly Nelson6
Dr Ajai Puri
Sybella Stanley
Warren Tucker
Former directors
Douglas Hurt7
Javed Ahmed
75
68
82
51
93
68
80
32
–
68
68
82
–
93
68
25
97
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
75
68
82
51
93
68
80
68
68
82
–
93
68
25
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
75
68
82
51
93
68
80
32
–
68
68
82
–
93
68
25
97
21
2,421 5,102
4,626
Totals
2,034 1,829 130
–
–
11
137 260
–
32
–
10
–
229 2,424 2,205 1,328
97
21
–
–
–
–
–
–
840 1,350 1,581 2,678
1 Benefits for executive directors include health insurance and car allowance.
2 Imran Nawaz: £100,000 included with 'Benefits' relates to relocation support, as disclosed on appointment and on page 85 of the Annual Report 2018; the figure under ‘Share Awards’
relates to the vesting of the first tranche of the special share award awarded on joining, which vested 1 August 2019 at a closing price of £7.558.
3 Annual Bonus includes the value of deferred shares (based on the average share price over the period 1 January – 31 March 2020). The cash bonus award (with payment conditional
on approval of the dividend at the AGM) to Nick Hampton is £665,000 and to Imran Nawaz is £470,000.
4 This is the PSP award made in 2017. PSP award outcomes are discussed on page 110 and the value is included in this table above based on a share price of £6.412, being the closing
price on 19 May 2020 when the Remuneration Committee determined performance conditions were met.
5 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.
6 Kimberly Nelson was appointed to the Board on 1 July 2019.
7 Douglas Hurt retired as a Director on 25 July 2019.
EXECUTIVE DIRECTORS’ EXTERNAL APPOINTMENTS
Nick Hampton was appointed as a non-executive director of Great Portland Estates plc on 17 October 2016 and was paid remuneration
of £72,498 for the period to 31 March 2020 and under the terms of the policy is entitled to retain those fees.
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 annual review in March 2020, taking into account the stance taken by the Executive Directors and members of the Executive
Committee, it was agreed that any decision on fee increases would be deferred for six months. Fees, based on
individual director responsibilities, are shown in the table below:
FEES (PER ANNUM) AS AT 1 APRIL (£)
2020
2019
% 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
(cid:3)
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112
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Tate & Lyle PLC Annual Report 2020
(cid:3)
350 000
350 000
68 000
78 800
18 050
13 550
25 200
68 000
78 800
18 050
13 550
25 200
0%
0%
0%
0%
0%
0%
Governance
Governance
SHARE AWARDS MADE DURING THE YEAR ENDED 31 MARCH 2020 (AUDITED)
AWARD
Nick
Hampton
Performance
Share Plan1
TYPE OF
AWARD
Nil cost
option
DATE OF
GRANT
NUMBER OF
SHARES
FACE VALUE
OF AWARD
PERFORMANCE
CONDITIONS
PERFORMANCE
PERIOD
% OF VESTING
AT THRESHOLD
17 July 2019
287 278
£1 995 002
Imran
Nawaz
Performance
Share Plan1
Nil cost
option
17 July 2019
203 038
£1 409 997
20% CAGR of FBS
volume; 40% CAGR
of EPS; 40%
adjusted ROCE
20% CAGR of FBS
volume; 40% CAGR
of EPS; 40%
adjusted ROCE
Three financial
years ending
31 March 2022
plus two-year
holding period
Three financial
years ending
31 March 2022
plus two-year
holding period
15%
15%
1 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 £6.9445 pence per share for the 2019 award. In 2019, 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
2019 are described on page 110. Performance conditions for the 2019 award are fully described on page 110.
SHARE AWARDS MADE IN FINANCIAL YEARS TO 31 MARCH 2019 (AUDITED)
The table below sets out the current position of share-based awards made to Executive Directors.
AS AT
31 MARCH 2019
(NUMBER)
AWARDS
VESTED
DURING YEAR
(NUMBER)
AWARDS
LAPSED
DURING YEAR
(NUMBER)
AWARDS
EXERCISED
DURING YEAR
(NUMBER)
AS AT
31 MARCH 2020
(NUMBER)
MARKET PRICE
ON DATE
AWARDS
GRANTED
(PENCE)
MARKET PRICE
ON DATE
AWARDS
EXERCISED
(PENCE)1
VESTING DATE
Nick Hampton
Performance Share Plan2:
20173
2018
Group Bonus Plan:
2017
2018
217 855
330 380
40 739
22 629
Imran Nawaz
Performance Share Plan2:
2018
233 502
Restricted Share Award:
–
–
40 739
–
–
20184
126 103
63 052
–
–
–
–
–
–
40 739
–
–
–
–
217 855
330 380
–
22 629
723.72
603.85
723.72
603.85
– After 31/03/20
– After 31/03/21
725.80
25/05/2019
–
24/05/2020
233 502
603.85
– After 31/03/21
63 052
63 051
634.40
696.20
01/08/2020
1 Awards are structured as nil cost options; awards were exercised with a nil exercise price.
2 The performance conditions for the PSP awards made in 2017 and 2018 are 25% Food & Beverage Solutions adjusted operating profit; 25% Group adjusted profit; 50% adjusted
ROCE as described on page 110. The three-year performance period for these awards began on the first day of the financial year in which the award was granted.
3 The PSP award made in 2017 will vest at 62.5%, following the Committee’s assessment of performance conditions (as described on pages 110/111).
4 This award was made in connection with Imran Nawaz’s employment, to compensate him for incentives forfeited with his previous employer, as described on appointment via RNS,
and in the 2018 and 2019 Directors’ Remuneration Reports.
As announced on appointment, the Restricted Share Award (RSA) may vest in two equal tranches on the first and second anniversary of appointment, subject to employment and
specified performance conditions. The performance conditions attached to the RSA relate to strategic and operational milestone activities agreed by the Committee, the detailed
disclosure of which was considered to be commercially sensitive at the time of grant.
The Committee approved the vesting of the first tranches of the award, in full, on the first anniversary of his appointment date (being 1 August 2019), taking into account Imran
Nawaz’s specific contributions to the business, including:
•(cid:3) Rapidly established culture, mindset and clear process to enable cost base review and Productivity delivery in support of US$100 million Productivity target over 4 years.
•(cid:3) Enabled and lead delivery of cumulative benefits of US$87 million to 31 March 2020 (ahead of our stated Productivity goals, mitigating significant headwinds / cost pressures across
ingredients, energy and freight (as described in our 2019 results).
•(cid:3) Established new ways of working, to drive improvements in finance business partnering and control across the business to improve planning capability and enable investments
for growth.
Note that the value of this share award (at the date of vesting) is shown in the ‘single figure table’
Executive Directors may participate in the HMRC-approved Sharesave Plan, under which option awards are granted on the
same terms to all participating employees. These awards 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.
Nick Hampton
Savings-related options 2017
(cid:3)
(cid:3)
AS AT
1 APRIL 2019
(NUMBER)
OPTIONS
VESTED
DURING YEAR
(NUMBER)
OPTIONS
EXERCISED
DURING YEAR
(NUMBER)
OPTIONS
LAPSED
DURING YEAR
(NUMBER)
AS AT
31 MARCH 2020
(NUMBER)
EXERCISE
PRICE (PENCE)
EXERCISE
PERIOD
3 243
–
–
–
3 243
555.00
01/03/21 to
31/08/21
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Directors’ Remuneration Report (continued)
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.
•(cid:3) 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 2020, Mr Hampton holds
shares with a value of c. 5x salary, exceeding this requirement.
•(cid:3) 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 2020 is progressing
towards this target.
•(cid:3) Other Executive Committee members are subject to the share ownership policy, with target holdings at three times salary.
•(cid:3) 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.
We introduced a mandatory 2-year post-vesting holding period on PSP awards made to Executive Directors from 2016.
Post-employment shareholding policy
With the 2020 Policy renewal, a post-employment shareholding requirement is being introduced: Executive Directors will normally
be required to maintain a shareholding in keeping with the guideline prevailing at the time of their departure, or their actual holding
on departure (if lower), for a period of two years following cessation of employment.
DIRECTORS’ INTERESTS (AUDITED)
The interests held by each person who was a Director during the financial year in the ordinary shares of 25 pence each in the
Company are shown below. All these interests are beneficially held, and no Director had interests in any other class of shares.
The table also summarises the interests in shares held through the Company’s various share plans.
Chairman
Dr Gerry Murphy
Executive Directors
Nick Hampton
Imran Nawaz
Non-executive directors
Paul Forman
Lars Frederiksen
Anne Minto
Kimberly Nelson
Dr Ajai Puri5
Sybella Stanley
Warren Tucker
INTEREST IN
SHARES1
NIL COST OPTIONS –
CONDITIONAL ON
PERFORMANCE2
SHARES – NOT
CONDITIONAL ON
PERFORMANCE3
OPTIONS – NOT
CONDITIONAL ON
PERFORMANCE4
TOTAL AS AT
31 MARCH 2020
TOTAL AS AT
31 MARCH 2019
20 000
–
–
–
20 000
20 000
460 811
42 700
835 513
499 591
10 000
15 000
8 600
–
10 018
4 983
4 321
–
–
–
–
–
–
–
22 629
3 243
1 322 196
1 214 370
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
542 291
359 605
10 000
15 000
8 600
–
10 018
4 983
4 321
10 000
15 000
8 600
–
10 018
4 983
4 321
Includes shares owned by connected persons.
1
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.
There were no changes in Directors’ interests in the period from 1 April 2020 to 20 May 2020.
(cid:3)
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(cid:3)
Governance
Governance
2020 REMUNERATION POLICY
The Remuneration Committee presents the 2020 Directors’ Remuneration Policy, which is subject to shareholder approval
at the AGM on 23 July 2020. The Committee will operate within this Policy from that date.
Following a careful review, as described in the Committee Chairman’s letter (see page 100), the Committee believes that our current
Remuneration Policy and approach remain appropriate in the context of our business strategy and shareholder expectations.
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.
Our current Directors’ Remuneration Policy which was formally approved at the AGM in 2017 is proposed for renewal at the 2020
AGM on substantially the same basis. We have consulted with major shareholders on the development of the Policy and:
•(cid:3) recognise the strength of some investor sentiment around executive director retirement benefit provisions and intend to align
the Executive Directors’ retirement benefits with those available to the broader UK workforce within a two-year period (and
immediately in the case of new appointments);
•(cid:3) are implementing a post-employment shareholding requirement, reflecting updated UK Corporate Governance Code guidance;
•(cid:3) do not propose any other material changes to our Remuneration Policy. We consulted at length in 2018/19 in relation to changes
to the operation of our incentive plans, including a structural reduction in the maximum opportunity for executive directors,
and our proposed 2020 Remuneration Policy reflects this approach.
With these changes, we believe we continue to take a considered and balanced approach to director remuneration at Tate & Lyle.
The Committee retains discretion on specific aspects of policy and implementation, as described in the Remuneration Policy, along with an
overriding discretion to determine bonus outcomes and judge the level at which share awards vest, to ensure that payments are consistent
with the underlying financial health and performance of the business, within the maximum opportunity stated in the Policy tables.
The Committee may make minor changes to the Policy without seeking shareholder approval, for example to benefit the administration
of arrangements, or to take account of changes in legislation. Any such changes would be disclosed in the relevant Annual Report.
REMUNERATION STRATEGY AND KEY PRINCIPLES
The Group’s remuneration strategy and supporting principles, which apply consistently to employees, managers and
executives, are summarised below:
REMUNERATION STRATEGY
KEY PRINCIPLES
Our remuneration strategy is to
provide competitive packages
that enable the Group to recruit,
develop and motivate high-calibre
individuals in the markets in
which we operate – to serve our
customers, and to deliver
consistent performance and
sustainable long-term profitable
growth in a way that is consistent
with our purpose.
•(cid:3) Our approach is designed to be equitable, transparent and globally
consistent, recognising that we recruit talented individuals and operate
in an international market
•(cid:3) Base pay and benefits are referenced to the comparative local market,
taking account of company size and operations
•(cid:3) Assessments of performance and potential provide meaningful
opportunities for career and salary progression, based on an individual’s
skills and contribution over time
•(cid:3) Individuals in key roles that can drive annual and longer-term
performance may be selected to participate in our sales incentive plan, or
the annual bonus plan, or the Performance Share Plan, to encourage the
achievement of genuinely stretching short-term and long-term objectives
•(cid:3) 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
•(cid:3) Alignment with shareholders’ long-term interests is carefully preserved
by linking senior executive pay to performance; effective governance
around remuneration decisions; setting targets that challenge
management to drive high performance; the adoption of shareholding
guidelines at senior executive levels; and appropriate malus and claw
back provisions.
WE OPERATE IN AN INTERNATIONAL CONTEXT
Although we are UK-listed and headquartered in London, UK, only c.1% of our global sales 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.(cid:3)
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(cid:3)
Directors’ Remuneration Report (continued)
REMUNERATION POLICY FOR EXECUTIVE DIRECTORS
ELEMENT
PURPOSE
POLICY
MAXIMUM OPPORTUNITY
Providing market
competitive fixed
remuneration
to attract
executives of the
required calibre
•(cid:3) Salaries are referenced to the comparative
local market taking account of company size
and operations, the individual’s skills, experience,
personal performance and circumstances (e.g.
following promotion into a new or expanded role).
Base Salary
(cid:122)(cid:3)
Benefits
(cid:122)
•(cid:3) Increases are typically limited to the general
increase for Group employees in the same
local market.
•(cid:3) The value of non-cash benefits is
determined by the cost of provision,
e.g. third-party health insurance premiums
•(cid:3) Receipt of any benefits would be in
accordance with policies applicable more
generally to employees in the same location
•(cid:3) Retirement and/or cash benefits in lieu
of pension for existing UK directors will
be aligned with the rates available to
the majority of the UK workforce over a
2-year period from the date of this Policy
•(cid:3) Target is 75% of salary for executive directors
•(cid:3) Maximum cash bonus is 100% of salary
•(cid:3) Maximum total bonus opportunity is 150%
of salary, with any award over 100% paid in
shares, which are deferred for two years
•(cid:3) Deferred shares carry the right to receive
a cash payment in lieu of the dividend
during the deferral period
•(cid:3) Benefits are provided in line with comparative
local market practice and may include, e.g. car
(or allowance), health insurance, life cover, and
retirement benefits – on a similar basis to those
benefits provided to all employees in the location
•(cid:3) Situation dependent benefits may include:
–(cid:3) Reimbursement of reasonable expenses
incurred in the course of business, and
settlement of taxes where required
–(cid:3) Participation in benefits generally available
to the local employee population (including
e.g. HMRC-approved Sharesave plans)
–(cid:3) Relocation benefits, including healthcare
–(cid:3) Payment in lieu of dividends on specific awards
•(cid:3) The Annual Bonus Plan rewards achievement
of financial and other objectives established by
the Committee for the relevant financial year
•(cid:3) The bonus award may comprise cash and deferred
shares, depending on the level of award
•(cid:3) The final bonus award is made at the Committee’s
discretion. Subject to the overall maximum, the
Committee may make appropriate adjustments
to ensure that the bonus outcomes are a fair
reflection of the underlying performance of the
Company and may also take into account factors
such as Group safety, operational performance,
and personal performance
Annual bonus
(cid:122)(cid:123)(cid:123)(cid:3)
Max opportunity
150% of salary
Supporting
near-term
growth goals by
rewarding strong
annual financial
and performance
objectives
Performance
Share Plan
(cid:122)(cid:122)(cid:122)(cid:123)(cid:123)(cid:3)
Max opportunity
300% of salary
Supporting the
Group’s strategy
by incentivising
sustained profit
growth and
capital efficiency
over successive
three-year
performance
periods, and
retaining talent
•(cid:3) Awards over Tate & Lyle PLC shares may be made,
at the Committee’s discretion, on an annual basis
taking an individual executive’s contribution and
performance into account
•(cid:3) Awards will only vest to participants if demanding
financial performance requirements have been
achieved over a performance period of at least
three financial years commencing with the
financial year in which the award is made
•(cid:3) A 2-year post-vesting holding period follows
the 3- year performance period – so awards
to executive directors have a five-year horizon
•(cid:3) Flexibility to make awards of up to 300% of
base salary (at the time of award) to ensure
market competitiveness and taking account
of the Company’s performance
•(cid:3) The award will lapse entirely if threshold
performance targets are not achieved
•(cid:3) Only 15% of any award made to
executive directors vests for achieving
threshold performance
Personal share
ownership
Alignment
of long-term
interests with
shareholders
•(cid:3) Minimum shareholding requirements must be
built over a 5-year period following appointment
•(cid:3) Similar requirements apply to other senior roles.
•(cid:3) This policy is extended so that executive directors
are required to maintain a holding following
cessation of employment
•(cid:3) The shareholding guidelines are periodically
reviewed in light of market practice and
are currently:
–(cid:3) CEO: 4 x base salary
–(cid:3) CFO: 3 x base salary
KEY: NUMBER OF YEARS: (cid:122) PERFORMANCE PERIOD (cid:123) DEFERRAL/HOLDING PERIOD (cid:88) ONGOING REQUIREMENTS
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(cid:3)
Governance
Governance
OPERATION / PERFORMANCE FRAMEWORK
CHANGES TO POLICY
•(cid:3) Base salary reviews take into account increases awarded to employees below executive level,
and the impact on pension and other consequences of increases, and reflect personal performance
consistent with the approach applicable to employees generally
•(cid:3) Retirement benefits are provided by way of defined contribution or equivalent cash arrangements.
Contractual benefit levels were agreed on appointment as 25% for the CEO and 20% for the CFO.
The CEO contribution is reducing to 20% with effect from 1 April 2020, and further reductions will
be made to these rates as necessary to ensure that this benefit level is aligned with that available
to the majority of the UK workforce over a two year period from the date of this Policy
•(cid:3) Employment and incidental benefits are not performance-related by nature
•(cid:3) Payment in lieu of dividend may apply to specific awards where any applicable conditions have
been satisfied at vesting. Accordingly, no additional performance conditions apply
•(cid:3) No performance conditions are attached to Sharesave awards because the Sharesave plan is an
all-employee scheme
•(cid:3) No changes to the policy in favour
of directors have been made
•(cid:3) We are reducing the level of
executive directors’ retirement
benefits so that these will be in line
with the level of benefits available
to the majority of the UK workforce.
This will take effect immediately
for any new appointments and for
existing directors is intended to be
achieved within a two year period
following approval of this Policy
at the 2020 AGM
•(cid:3) Key financial performance metrics are selected by the Committee. Additionally, the Committee
•(cid:3) No changes to the policy in favour
may select quantifiable metrics aligned with strategic and/or operational objectives on a personal
or collective basis
•(cid:3) Targets for each metric are set at the start of each financial year, taking account of the business
strategy, performance in previous years, market expectations and the prevailing economic climate
•(cid:3) Financial performance has the greatest weighting
•(cid:3) A minimum profit hurdle applies before any bonus is payable against any of the metrics
•(cid:3) Malus and claw back provisions apply: cash and shares may be recouped in specific circumstances
during the two-year period following the end of the financial year to which the bonus relates
•(cid:3) For the current financial year, 80% of the bonus will relate to financial performance, as follows:
of directors have been made
•(cid:3) The maximum bonus has been
reduced from 175% to 150%
•(cid:3) Claw-back provisions have
been strengthened to include
circumstances leading to
’corporate failure’
–(cid:3) 50% Group adjusted operating profit
–(cid:3) 25% Food & Beverage Solutions net sales
–(cid:3) 25% Group adjusted operating cash flow
•(cid:3) The following performance metrics were adopted for awards made from 2019:
–(cid:3) 40%: Group adjusted earnings per share
–(cid:3) 20%: Food & Beverage Solutions volume growth
–(cid:3) 40%: adjusted return on capital employed (ROCE)
•(cid:3) These metrics are key determinants of shareholder value creation, reflecting: the effectiveness of
strategic investment decisions, the focus on growing our FBS division, and the growth in financial
value of the whole group. If material changes to the metrics are proposed, the Committee would
consult with key shareholders in advance of making a new award
•(cid:3) Targets are reviewed by the Committee ahead of each annual grant, to ensure these remain
appropriately stretching over the performance period
•(cid:3) The Committee must be satisfied that the level of vesting is justified by the broader underlying
financial performance of the Company
•(cid:3) A dividend underpin gives the Committee discretion to reduce PSP vesting if dividends over the
performance period do not conform to the dividend policy
•(cid:3) Malus / claw back provisions: awards may be recouped in specific circumstances during the two-year
period after the performance period
•(cid:3) The value of an executive’s interests in shares is directly affected by share price performance
over time
•(cid:3) For a period of two years following cessation of employment, an executive will be required to maintain
a share holding in keeping with the guideline prevailing at the time of their departure, or their actual
holding on departure (if lower)
•(cid:3) No changes to the Policy have
been made
•(cid:3) Revised metrics were adopted in
2019 (within the scope of the
Remuneration Policy), following
detailed consultation with
shareholders and with shareholder
approval of the Directors’
Remuneration Report at the
2019 AGM
•(cid:3) The post-vesting holding
period will continue to apply
post-employment
•(cid:3) Claw back provisions have
been strengthened to include
circumstances leading to
’corporate failure’
•(cid:3) A post-employment shareholding
requirement is being introduced
(cid:3)
(cid:3)
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
117
117
Directors’ Remuneration Report (continued)
REMUNERATION POLICY FOR THE CHAIRMAN AND NON-EXECUTIVE DIRECTORS
TERMS OF APPOINTMENT
The Chairman and non-executive directors have letters of appointment and do not have service contracts or notice periods.
Under the terms of their appointment, they are usually expected to serve on the Board for a maximum of nine years, subject to
their annual re-election by shareholders. The Company Chairman and non-executive directors receive a fee for their services,
and do not participate in the Group’s incentive or pension schemes, do not receive any other benefits, and have no right to
compensation if their appointment is terminated.
CHAIRMAN AND NON-EXECUTIVE DIRECTORS’ FEES
Non-executive directors’ fees (excluding the Chairman) are reviewed annually by the Chairman and Executive Directors
of the Board. The Chairman’s fee is reviewed annually by the Committee.
Aggregate fees depend on the responsibilities assumed by each non-executive director. A basic fee is paid to the Chairman,
to the Senior Independent Director and to each non-executive director. In addition, supplemental fees are payable to each
Committee chair. Accordingly, supplemental fees are paid to the chairs of the Audit and Remuneration Committees, and the
Research Advisory Group, to reflect the extra responsibilities required by each of these positions.
Increases in fees arising from the normal annual review will generally be limited to the market increase applicable to UK
employees generally. However, a higher or lower increase may be awarded to ensure that fees paid are commensurate with
those paid by other UK-listed companies over time and are set at a level to retain individuals with the necessary experience
and ability to make a substantial contribution to the Group.
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 providing for six months’ notice from the executive and 12 months’
notice from the Group.
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.
Beyond the items disclosed in this Report, there are no further obligations on the Company which could give rise to a remuneration
or loss of office payment to a director.
PROVISIONS IN RELATION TO INCENTIVE PLANS
Potential impact of mergers and acquisitions or other corporate activity
In the context of a merger or acquisition, or other relevant corporate activity, any potential impact on the incentive plans would
be specifically considered by the Committee. In such circumstances, the Committee retains the authority to vary the performance
target or the vesting outcome to ensure that outcomes are equitable for both the participant and shareholders.
Change of control
All of the Company’s share plans contain provisions relating to a change of control. Outstanding awards would normally vest
and become exercisable on a change of control, subject to the satisfaction of any performance conditions at that time, and,
at the Committee’s discretion, in proportion to the time served during the performance period.
POLICY ON THE TERMS OF DIRECTORS’ APPOINTMENT
In order to ensure the continued growth and success of the business over time, the Company must have the flexibility to appoint
new individuals to the Board, either by way of internal promotion or external appointment, on terms that are sufficient to attract
and motivate individuals of the highest calibre.
The following key principles describe our intended approach in these circumstances (and are consistent with the principles
that apply to the broader employee population).
•(cid:3) The starting point for structuring any package on appointment will be the annual remuneration framework under the
remuneration policy that has been approved by shareholders and is current at the time of the appointment.
•(cid:3) To respond to specific circumstances and/or to allow for differences in practice over time and by location, the Committee retains flexibility
outside policy to provide market-referenced benefits which are considered necessary or appropriate to the role, for example in relation to:
healthcare, insurance, transport, and security – in a manner that is consistent with provision to other employees of the Group.
118
118
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
Governance
Governance
•(cid:3) Where an appointment requires an individual to relocate, internationally or otherwise, the Company may agree to make
payment(s) to offset certain expenses incurred as a consequence of relocation or may provide benefits in line with our
global/domestic mobility policy, on appointment and on an ongoing basis, depending on the circumstances. Such benefits
may include, for example: travel; relocation and tax-related assistance; and similar repatriation benefits in due course.
•(cid:3) The current policy provides for a maximum level of variable remuneration that is equivalent to 450% of base salary in the
financial year of appointment. This is consistent with the aggregate current maxima under the Annual Bonus Plan and the
Performance Share Plan following the changes to reduce the bonus opportunity in 2019. The Committee retains flexibility
to alter the balance between short-term and long-term elements within this overall maximum, and awards may be made
on different terms.
•(cid:3) Where an internal candidate is appointed, contractual commitments that have been made prior to appointment to the Board,
along with any benefits and/or incentive awards that have been awarded at that time, may remain in effect and be honoured,
even if they would not otherwise be consistent with the shareholder-approved remuneration policy in effect at the time.
•(cid:3) In order to secure the appointment of a suitable external candidate, the Committee retains the flexibility to provide additional
compensation for the value of incentive awards or other benefits that are forfeited on leaving a former employer. In such
circumstances, the Committee may make use of cash and/or shares, as it considers appropriate in the circumstances. The
Committee will exercise careful judgement in formulating the terms on which such a compensatory award will be made, taking
into account the form of award(s) that are forfeited, the timeframes over which they may otherwise have been earned and any
performance conditions that would have applied.
This policy is intended to enable the Committee to structure an offer on terms that it considers to be in the best interests of
the Company and its shareholders. Depending on the circumstances, and any restrictions or requirements that may apply,
the Company may consult with key shareholders as part of this process and/or disclose terms on which a new appointment
is made through a regulatory information service.
POLICY ON PAYMENTS IN CONNECTION WITH LOSS OF OFFICE
It is the Company’s policy that executive directors are normally employed on contracts that provide for not more than 12 months’
notice from the Company and at least six months’ notice from the executive. To protect the Company’s interests, restrictive
covenants (non-compete/non-solicitation) apply for a period of 12 months following termination, less any period of ‘garden leave’.
The Chief Executive and Chief Financial Officer are each employed on contracts consistent with this policy.
The treatment of executive directors leaving the Company is designed to support a smooth transition from the Company,
encouraging an orderly transfer of responsibilities, and taking into account the interests of shareholders in securing the sustained
performance of the business beyond the executive’s departure.
Termination for dishonesty or misconduct are circumstances in which the executive would retain only the minimum contractual
entitlements on departure, consistent with the need to avoid providing any element of reward for failure. In these circumstances
no bonus award would be made, and unvested deferred shares or performance share awards would lapse. Dishonesty or
misconduct may lead to the operation of malus and/or claw back provisions.
An executive’s departure in compassionate circumstances such as death or permanent disability would generally result in the
most beneficial terms being received, summarised below.
If an executive departs from the Company in other circumstances, the treatment would be considered at the Committee’s
discretion and approved on a case-by-case basis, in keeping with the principles above. Such circumstances would potentially
result in treatment that is more favourable than the contractual minimum but no more generous than that which applies under
the ‘compassionate circumstances’ mentioned above.
TREATMENT IN COMPASSIONATE CIRCUMSTANCES (E.G. DEATH OR PERMANENT DISABILITY)
Salary and benefits
Annual bonus award
or Performance Share
Plan vesting
Deferred bonus awards
and PSP awards subject
to a holding period
Paid or provided pro-rata in the normal course to the termination date; the Company has the option to make
a payment in lieu of notice in relation to the fixed elements of remuneration only (base salary, pension, and
contractual benefits) in relation to any period of contractual notice that is not worked.
Subject to Committee discretion, any bonus or the vesting of Performance Share Plan award(s) will normally be
considered and approved based on the extent to which the original performance targets are assessed to have been
met at the end of the relevant performance period, reduced pro-rata for time over the relevant financial year(s)
prior to the termination date.
Deferred bonus awards may continue in effect, or be released early at the Committee’s discretion, depending on
the circumstances.
The post-vesting holding period applicable to Performance Share Plan awards made from 2020 will continue to
apply following cessation of employment.
In addition to contractual rights to any payment on loss of office, any employee, including executive directors, may have statutory
and/or common law or other rights to certain additional payments, for example in a redundancy situation. Similarly, additional
consideration may be provided, if necessary, to secure specific agreements following separation (for example an enhanced
non-compete provision) that protect the Company’s interests.
(cid:3)
(cid:3)
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
119
119
Directors’ Remuneration Report (continued)
Depending on the role and circumstances of departure, a director who has been relocated may be repatriated in accordance
with previously agreed terms. The Company may pay some or all of the costs incurred by the executive in respect of legal, financial,
outplacement or other relevant personal advisory services and/or expenses in connection with relocation. The Committee will
approve such arrangements on a case-by-case basis, with a view to maintaining compliance with regulatory requirements and
consistency with internal Company policies that may apply.
INCORPORATION OF PREVIOUSLY APPROVED REMUNERATION POLICY STATEMENTS
It is generally intended that provisions consistent with previously disclosed directors’ remuneration policies and/or incentive plans
previously approved by shareholders will continue to apply after the resolution to adopt the remuneration policy set out in this
Policy Report is approved. Such provisions will allow, without limitation:
•(cid:3) Contractual commitments entered into before the policy takes effect, or before an individual was subject to this policy on
directors’ remuneration, to be honoured.
•(cid:3) The satisfaction of awards and/or commitments made in relation to incentive plan awards (providing they were consistent
with the policy in effect at the time the original award/commitment was made).
EXECUTIVE DIRECTORS’ EXTERNAL APPOINTMENTS
The Board believes that the Company can benefit from executive directors holding external non-executive directorships.
Such appointments are subject to approval by the Board and are normally restricted to one position for each executive director.
Fees may be retained by the executive director concerned.
APPLICATION OF REMUNERATION POLICY FOR EXECUTIVE DIRECTORS
The charts below illustrate the value that may be delivered from each element of the package under different performance
scenarios, reflecting the structural reduction in bonus opportunity adopted in the 2020 Policy, and the pension changes applicable
for the financial year ahead (with further reductions to follow). The charts also illustrate the incremental value that would
be delivered under a ‘stretch’ performance scenario if the share price increased by 50% between award and release of the
long-term incentive award (under which scenario all shareholders would benefit from similar gains).
Chief Executive – Nick Hampton
Chief Financial Officer – Imran Nawaz
s
0
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5,000
4,000
3,000
2,000
1,000
0
£4,805
20%
42%
£3,808
53%
26%
21%
21%
17%
£2,311
43%
22%
35%
£815
100%
Threshold
Target
Stretch
Stretch +50%
share growth
5,000
4,000
3,000
2,000
1,000
0
£3,397
20%
42%
21%
17%
£2,692
53%
26%
21%
£1,635
43%
22%
35%
£577
100%
Threshold
Target
Stretch
Stretch +50%
share growth
BASE AND BENEFITS ANNUAL BONUS PERFORMANCE SHARE PLAN 50% SHARE PRICE GROWTH
STATEMENT OF CONSIDERATION OF EMPLOYMENT CONDITIONS IN THE GROUP
The principles on which we base remuneration decisions for executive directors as described on page 115 are broadly consistent
with those on which we base remuneration decisions for all employees, including setting base pay and performance targets for
incentives. 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.
We continue to schedule time to consider matters related to remuneration policies for the wider workforce, engaging with
employees on matters covered by the updated (2018) UK Corporate Governance Code, and considering the implications of
the gender pay and Chief Executive pay ratio analyses for our workforce as a whole.
On behalf of the Board
Anne Minto OBE
Chair of the Remuneration Committee
20 May 2020
120
120
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
Directors’ Report
Governance
ABOUT THE DIRECTORS’ REPORT
The Directors’ Report comprises the Board of Directors
(from pages 70 to 73), Governance section from pages 74
to 99, the Directors’ Report on pages 121 and 123 and the
Useful Information section from pages 196 to 201. 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 and performance of the
Company (throughout the Strategic Report)
• Human rights (page 47)
• Greenhouse gas emissions (pages 52 and 53)
• Relationship with employees (pages 46 to 49)
• Going concern (page 45)
• Financial instruments (Note 27)
• Post balance sheet events (Note 35).
RESULTS AND DIVIDEND
A review of the consolidated Group’s results can be found from
pages 8 to 67. An interim dividend of 8.8 pence per ordinary share
was paid on 3 January 2020. The Directors recommend a final
dividend of 20.8 pence per ordinary share to be paid on 31 July
2020 to shareholders on the register on 19 June 2020, subject
to approval at the 2020 Annual General Meeting (AGM). The
total dividend for the year is 29.6 pence per ordinary share
(2019 – 29.4 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 5,122,967 ordinary shares as at 31 March 2020.
RESEARCH AND DEVELOPMENT
The Group spent £34 million (2019 – £36 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 and 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 92, 95 and 104.
SHARE CAPITAL
As at 31 March 2020, the Company had nominal issued ordinary
and preference share capital of £119 million comprising £117
million in ordinary shares and £2 million in preference shares.
To satisfy obligations under employee share plans, the Company
issued 55,721 ordinary shares during the year. The Company
issued 6,030 shares during the period from 1 April 2020 to
20 May 2020. Further information about share capital is in Note
21. Information about options granted under the Company’s
employee share plans is in Note 30.
The Company was given authority at the 2019 AGM to make
market purchases of up to 46,836,341 of its own ordinary shares.
The Company made no purchases of its own ordinary shares
during the year ended 31 March 2020 and the EBT purchased
1,635,490 ordinary shares during the year. This authority will
expire at the 2020 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.
Tate & Lyle PLC Annual Report 2020
121
Directors’ Report (continued)
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.
DIRECTORS’ INDEMNITIES AND INSURANCE COVER
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.
The Company also maintains Directors’ and officers’ liability
insurance cover, and reviews the level of cover each year.
CHANGE OF CONTROL
At 31 March 2020, 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 US$600
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.
DTR RULE 5 DISCLOSURE
As at 31 March 2020, the Company had been notified under Rule 5
of the Disclosure and Transparency Rules of the following
holdings of voting rights in its shares:
Standard Life Aberdeen plc
NUMBER OF
SHARES1
17 175 029
% HELD1
3.67
1 As at the date of the transaction in the most recent notification to the Company. As
permitted under Rule 5, shareholders are not required to notify us of subsequent
changes within certain ranges.
In the period from 1 April 2020 to 20 May 2020, the Company has
not been notified of any changes 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 UK or in any country other than the
US. The Group’s US business made contributions during the year
totalling US$7,800 (£6,000) (2019 – US$14,300; £11,000) 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, five separate donations were made, the
largest being US$5,000 and the smallest being US$500.
US$12,000 (£9,200) (2019 – US$19,000; £14,600) was also
contributed by the Tate & Lyle Political Action Committee (PAC).
Nine separate donations were made, the largest being
US$3,000 and the smallest being 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.
SUBSIDIARIES AND BRANCHES
A list of the Group’s subsidiaries is set out in Note 37. A subsidiary
within the Group has a branch in New Zealand.
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
(1) Interest capitalised by the Group
(2) Unaudited financial information
(4) Long-term incentive scheme only involving a Director
(5) Directors’ waivers of emoluments
(6) Directors’ waivers of future emoluments
(7) Non pro-rata allotments for cash (issuer)
(8) Non pro-rata allotments for cash (major subsidiaries)
(9) Listed company is a subsidiary of another company
(10) Contracts of significance involving a Director
(11) Contracts of significance involving a controlling shareholder
(12) Waivers of dividends
(13) Waivers of future dividends
(14) Agreement with a controlling shareholder
122
Tate & Lyle PLC Annual Report 2020
PAGES
148
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Governance
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.
Each of the Directors, whose names and functions are
listed on pages 70 to 73, confirms that, to the best of his or
her knowledge:
• The Annual Report, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Company’s and the Group’s
position and performance, business model and strategy
• The Group financial statements, which have been prepared
in accordance with IFRSs as adopted by the EU, give a true
and fair view of the assets, liabilities, financial position and
profit of the Group
• The Company financial statements, which have been
prepared in accordance with UK GAAP (United Kingdom
Accounting Standards, comprising FRS 101 ‘Reduced
Disclosure Framework’ and applicable law) give a true and
fair view of the assets, liabilities, financial position and profit
of the Company
• The Strategic Report and the Directors’ Report include a fair
review of the development and performance of the business
and the position of the Group and the Company, together
with a description of the principal risks and uncertainties
that it faces.
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 70 to 99, pages 121 to 123 and
pages 196 to 201 and the Directors’ Remuneration Report from
pages 100 to 120 of this Annual Report were approved by the
Directors on 20 May 2020.
Claire-Marie O’Grady
Company Secretary
20 May 2020
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.
Tate & Lyle PLC Annual Report 2020
123
124
Tate & Lyle PLC Annual Report 2020
I have always cared about
personal wellbeing, and it’s
exciting to have the opportunity
to contribute every day to
improving the nutritional options
available for people.
Florence Kraus
Global Customer Account Director
Based in USA
Financial statements
CONTENTS
FINANCIAL
STATEMENTS
IN THIS SECTION
126 Independent auditor’s report to the
members of Tate & Lyle PLC
134 Consolidated income statement
135 Consolidated statement of
comprehensive income
136 Consolidated statement of financial
position
137 Consolidated statement of cash flows
138 Consolidated statement of changes
in equity
139 Notes to the consolidated financial
statements
188 Parent Company financial statements
Tate & Lyle PLC Annual Report 2020
125
Independent auditor’s report to the members of Tate & Lyle PLC
Opinion
In our opinion:
•(cid:3) 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 2020 and of the Group’s profit for the year
then ended;
•(cid:3) the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
•(cid:3) the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
•(cid:3) 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 2020
Balance sheet as at 31 March 2020
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 12 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 37 to the financial statements, including a
summary of significant accounting policies
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has
been applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards,
including FRS 101 ‘Reduced Disclosure Framework’ (United Kingdom Generally Accepted Accounting Practice).
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:
•(cid:3) the disclosures in the Annual Report set out from pages 63 to 67 that describe the principal risks and explain how they are being
managed or mitigated;
•(cid:3) the Directors’ confirmation set out on page 61 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;
•(cid:3) the Directors’ statement set out on page 45 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 12 months from the date of approval of the financial statements;
•(cid:3) 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
•(cid:3) the Directors’ explanation set out on page 62 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.
(cid:3)
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(cid:3)
Financial statements
Financial statements
OVERVIEW OF OUR AUDIT APPROACH
Key audit matters
Audit scope
•(cid:3) Commodity co-product valuation (Group)
•(cid:3) Revenue recognition, including the risk of management override (Group)
•(cid:3) The impact of Covid-19 (Group)
•(cid:3) Investments in subsidiaries (Parent Company)
•(cid:3) We performed an audit of the complete financial information of five components (Tate & Lyle PLC, Tate & Lyle
International Finance PLC, Tate & Lyle Ingredients Americas LLC, Tate & Lyle Grain Inc. 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).
•(cid:3) The components where we performed full or specific audit procedures accounted for 82% of the adjusted profit
before tax measure used to calculate materiality (as defined below), 81% of revenue and 76% of total assets.
Materiality
•(cid:3) We used an overall Group materiality of £16.6 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 judgment, 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
either inappropriate or
not being followed.
We concluded 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
valuation (Group)
The fair value adjustment of
co-product inventory executory
purchase and sale contracts is
£17 million (2019 – £18 million)
Refer to the Audit Committee Report
(page 96); Accounting policies
(pages 140 and 166); and Notes 2,
14, 27 and 28 of the Consolidated
Financial Statements
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
through purchase or sale of derivatives
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.
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.
(cid:3)
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.
To address the co-product valuation risk we performed the
following principal procedures:
•(cid:3) Lowered thresholds when determining sample sizes for
testing prices used in the valuation of co-product inventory
and forward sale and purchase contracts
•(cid:3) Compared market prices used to contracted prices of
companies in the sector that are collated by and quoted in
Jacobsen’s market publication and the Wall Street Journal,
which each represent widely recognised third party sources
•(cid:3) Given the correlation of corn meal to soybean meal (quoted
on Chicago Mercantile Exchange), we compared corn meal
prices to soybean meal prices to assist in evaluating the
reasonableness of selected forward corn meal prices
•(cid:3) Tested the clerical accuracy of the calculations of gains or
losses on contracts and reconciled values to the general ledger
•(cid:3) Compared selected market prices to the limited number
of broker quotes that are available and were obtained
by management
•(cid:3) Confirmed the terms of a sample of sales and purchase
contracts with counterparties
•(cid:3) Selected a sample of contracts executed prior to and
subsequent to period end and compared the consistency of
prices on the executed contracts to the market prices used
in valuation. For any significant variances to the year-end
market prices we held discussions with the traders to
understand the variances
•(cid:3) Performed trader inquiries to understand market dynamics
and factors impacting pricing as of period end
•(cid:3) We assessed the adequacy of the Group’s commodities hedging
documentation to assess compliance with IFRS 9 requirements
•(cid:3) Evaluated the adequacy and transparency of commodities
disclosures
The procedures detailed above were performed by component
audit teams and reviewed by the Group audit team.
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Independent auditor’s report to the members of Tate & Lyle PLC (continued)
KEY OBSERVATIONS COMMUNICATED
TO THE AUDIT COMMITTEE
Based on the procedures
performed, we did not identify
any evidence of material
misstatement in the revenue
recognised in the year.
RISK
OUR RESPONSE TO THE RISK
Revenue recognition, specifically in
relation to the risk of management
override (Group)
£2,882 million (2019 – £2,755 million)
Refer to the Accounting policies
(page 144); and Note 5 of the
Consolidated Financial Statements
The majority of the Group’s sales
arrangements are generally
straightforward, requiring little
judgement to be exercised.
However, management’s reward and
incentive schemes, based on achieving
sales and profit targets, may create
pressure to manipulate results.
There is a risk that management
may override controls to intentionally
misstate revenue through recording
fictitious revenue transactions in
the underlying subledgers or as
consolidation journals.
(cid:3)
•(cid:3) We performed walkthroughs of significant classes of revenue
transactions to understand related significant processes and
to identify and assess the design effectiveness of key controls
•(cid:3) We understood how each of the revenue recognition policies
are applied. We understood the relevant controls including
IT controls over the revenue applications, and tested controls
over revenue recognition
•(cid:3) We tested the underlying IT systems and the controls related to
manage access, manage change and IT operations to investigate
whether there was any evidence of override of the underlying
IT systems which could facilitate management override
•(cid:3) As part of our revenue testing, we used data analysis tools
on revenue populations in the year to test the correlation of
revenue to cash receipts to verify the occurrence of revenue.
We identified any material transactions which fell outside the
expected transactions flow and tested these to confirm that
they were valid business transactions and were appropriately
accounted for
•(cid:3) We performed cut-off testing over a sample of revenue
transactions around the year end date, to check that they
were recognised in the appropriate period
•(cid:3) We performed other audit procedures specifically designed
to address the risk of management override of controls.
This included journal entry testing, applying particular focus
to significant manual or unusual journal entries to ensure
each entry is supported by an appropriate, underlying business
rationale, is properly authorised and accounted for correctly
in the correct period
The procedures detailed above were performed principally by
component audit teams for all in scope locations with trading
revenues and reviewed by the Group audit team.
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KEY OBSERVATIONS COMMUNICATED
TO THE AUDIT COMMITTEE
We concluded that there is no
material uncertainty related to
the Group’s ability to continue
as a going concern.
Management’s conclusion
that there are no significant
changes impacting the Annual
Report and accounts as a
result of Covid-19 impacts
since 31 March 2020 is
appropriate.
We are satisfied that the
additional disclosures in
the financial statements are
consistent with our knowledge
from the audit.
RISK
OUR RESPONSE TO THE RISK
The impact of Covid-19 (Group)
Going concern
Refer to the Audit Committee Report
(page 96); Accounting policies (page
139); and Notes 1 and 18 of the
Consolidated Financial Statements
The Covid-19 pandemic is of an
unprecedented scale. It has severely
impacted the global economy and
businesses across all industries. There
is a significant degree of uncertainty
about the further spread of the virus
and the state of the world economy.
We considered the following matters
as part of our audit:
The Group’s Annual Report and
accounts are prepared on the going
concern basis of accounting. This basis
is dependent on a number of factors,
including the Group’s forecast financial
performance, the Group’s continued
access to bank borrowing facilities, the
Group’s ability to continue to operate
within its financial covenants and the
Group’s ability to manage the effects
of Covid-19 on certain processes
(e.g. staff shortages, supply
chain disruption).
The Directors concluded that no
material uncertainty over going
concern exists as, even under their
most severe stress test, the Group
maintains sufficient liquidity and there
is no projected breach of covenants.
The Directors also performed a reverse
stress test, demonstrating the severity
of the impact on the business that
would lead to a conclusion that the
Group was no longer a going concern,
and concluded that the chances of
such an impact were remote.
There is also a risk that management
has not appropriately disclosed the
impact of Covid-19 in the Annual
Report and accounts.
•(cid:3) We obtained management’s going concern cash flow model,
testing its mathematical accuracy
•(cid:3) We assessed management’s ability to forecast with reference
to historical accuracy of forecasts prepared for going concern
and impairment tests in prior periods
•(cid:3) We tested the inputs to the model, including cash on hand,
operating cash generation and financing commitments and
agreed them to the latest Board-approved forecasts that
factored in a number of Covid-19 scenarios
•(cid:3) We assessed the reasonableness of the key assumptions in
the context of other supporting evidence gained from our audit
work on goodwill impairments and on other external market
data, including analyst forecasts and competitor trading updates
•(cid:3) We assessed the potential downside scenarios, and potential
mitigations, that management had applied and assessed their
likelihood and whether other more severe scenarios could
apply and the associated impact on liquidity headroom
•(cid:3) We considered the appropriateness of key assumptions
in management’s reverse stress testing and assessed the
likelihood of the various scenarios (the impact of Covid-19,
extended shutdown of the largest manufacturing facility and
the loss of two of the largest Food & Beverage Solutions
customers as well as a further significant impact on
profitability) that could erode liquidity headroom
•(cid:3) We confirmed the details of the available facilities with
reference to agreements and to third party confirmations
•(cid:3) We performed testing to evaluate whether the covenant
requirements of the corporate debt facility would be met
under all base and stress scenarios
•(cid:3) We considered the performance of the business since year
end and compared it to cash flow forecasts
•(cid:3) We reviewed management’s basis of preparation note and the
Directors’ Report and validated that they accurately described
management’s going concern considerations
•(cid:3) We reviewed minutes of Board meetings analysts’ reports
and trading updates releases to the market from competitors
and suppliers with a view to identifying any matters which
may impact the going concern assessment and contradict
the findings made from the procedures we performed above.
Other disclosures in the Annual Report
•(cid:3) We assessed the adequacy of the relevant disclosures in the
Annual Report and accounts, including, the Directors’ Report,
principal risks and uncertainties, corporate governance and
the Audit Committee’s Report against the relevant reporting
requirements and compared them to our knowledge obtained
from our audit.
The audit procedures were designed and completed by the
Group audit team.
Investment in subsidiaries
(Parent Company)
£1,079 million (2019 – £1,070 million)
Refer to the Accounting policies
(page 190); and Note 2 of the Parent
Company Financial Statements
The Parent Company’s principal activity
is that of a holding company for the
investment in a number of subsidiaries.
There is a risk that these may be
impaired. As such the recoverable
value of these investments is a key
audit matter.
Procedures performed by the Group audit team were:
•(cid:3) We obtained details of the investment carrying amounts in
subsidiaries and compared this to the Parent Company’s
share of the net assets of those entities
•(cid:3) We assessed the reasonableness of key assumptions in
We concluded that the
carrying value of the
investments recognised in
the Parent Company balance
sheet is supportable.
management’s impairment test. We assessed the mathematical
accuracy and company-specific inputs of the discount rate
calculation, and assessed the cash flow projections with
reference to Board-approved budgets, considering the
historical precision of management’s forecasting. This
enabled us to confirm whether the carrying value of investments
was supportable at year end and confirmed management’s
conclusion that no impairment was required.
•(cid:3) We compared the market capitalisation of the Group to the
carrying value of the investments to identify if any indicators
of impairment existed
The audit procedures were designed and completed by the
Group audit team.
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Independent auditor’s report to the members of Tate & Lyle PLC (continued)
In the current year, following a re-assessment of the risk impacting revenue our key audit matters now include ‘revenue recognition,
including the risk of management override of controls’. Additionally, our key audit matters include ‘the impact of Covid-19’ due to the
downturn in the global economy as a result of the pandemic which is currently impacting the Group’s operating performance.
The prior year key audit matter ‘unrealised profit in inventory from intercompany sales’ is no longer considered a key audit matter based
on the results of our testing last year and the low level of volatility and subjectivity in the balance. In the prior year, management changed
the basis upon which goodwill was allocated and tested and accordingly we considered ‘assessment of the carrying value of goodwill and
other intangible assets’, to be a key audit matter. The basis of allocation and testing has been consistently applied in 2020 and therefore
the key audit matter has been removed in the current year.
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.
In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative coverage
of significant accounts in the financial statements, of the reporting components of the Group, we selected nine components covering
entities within the US, Brazil, China, Slovakia, Gibraltar and the UK, which represent the principal business units within the Group.
Of the nine components selected, we performed an audit of the complete financial information of five 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 82% (2019 – 85%) of the Group’s adjusted profit before
tax measure used to calculate materiality, 81% (2019 – 80%) of the Group’s revenue and 76% (2019 – 81%) of the Group’s total assets.
For the current year, the full scope components contributed 79% (2019 – 81%) of the Group’s adjusted profit before tax measure used
to calculate materiality, 69% (2019 – 68%) of the Group’s revenue and 74% (2019 – 76%) of the Group’s total assets. The specific scope
component contributed 3% (2019 – 4%) of the Group’s adjusted profit before tax measure used to calculate materiality, 12% (2019 – 12%)
of the Group’s revenue and 2% (2019 – 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. We also
performed specified procedures relating to inventory existence as a Group team at one location to gain sufficient coverage over the
inventory held at year end.
Of the remaining components that together represent 18% of the Group’s adjusted profit before tax measure used to calculate
materiality, none are individually greater than 10% of the Group’s adjusted profit before tax measure used to calculate materiality.
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.
COVERAGE OBTAINED BY OUR AUDIT TEAMS
18
3
ADJUSTED
PROFIT (%)
19
12
REVENUE (%)
24
2
TOTAL
ASSETS (%)
79
69
74
FULL SCOPE OF COMPONENTS
SPECIFIC SCOPE COMPONENTS
OTHER PROCEDURES
(cid:3)
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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 primary audit engagement team, or by component auditors from other EY global network firms operating under
our instruction. Of the five full scope components, audit procedures were performed on two of these directly by the primary audit team
with the remaining three 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. The Group audit team continued to follow a programme of planned visits that has been designed to ensure that a senior
member of the Group audit team visits all key locations of the Group audit during the current year. During the current year’s audit cycle,
visits were undertaken by the primary audit team to the component teams in the US, Brazil, China, the shared service centre in Poland
and 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 teams to discuss and direct its audit approach, meeting 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 team during various stages of the
audit, reviewed key working papers, attending planning and closing meetings and were responsible for the scope and direction of the
audit process. In addition, in the current year we worked with our component teams to develop and execute virtual stock counts in response
to Covid-19. 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 £16.6 million (2019 – £15 million), which is 5% (2019 – 5%) of profit before tax adjusted
for exceptional items and the Group’s share of tax of joint ventures. We believe that profit before tax adjusted for exceptional items and
the Group’s share of tax of joint ventures provided us with the most relevant profit basis as the exceptional items were non-recurring
and not related to the ongoing trading of the Group.
STARTING
BASIS
• £296 million
• Profit before tax
ADJUSTMENTS
• £24 million exceptional items
• £11 million Group’s share of tax of joint ventures
MATERIALITY
• Total £331 million (materiality basis)
• Materiality of £16.6 million (5% of materiality basis)
We determined materiality for the Parent Company to be £12.9 million (2019 – £12.6 million), which is 0.5% (2019 – 0.5%) of total assets.
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% (2019 – 75%) of our planning materiality, namely £12.5 million (2019 – £11.3 million). We have
set performance materiality at this percentage due to our assessment of the control environment and the low number of historical
audit findings.
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 £12.5 million to £1.2 million (2019 – £11.3 million to £1.1 million).
(cid:3)
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Independent auditor’s report to the members of Tate & Lyle PLC (continued)
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 £0.80 million (2019 – £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 1 to 125, 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:
•(cid:3) Fair, balanced and understandable set out on page 123 – 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
•(cid:3) Audit Committee reporting set out on page 95 – 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
•(cid:3) Directors’ statement of compliance with the UK Corporate Governance Code set out on page 88 – 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:
•(cid:3) 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
•(cid:3) the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
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:
•(cid:3) 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
•(cid:3) 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
•(cid:3) certain disclosures of Directors’ remuneration specified by law are not made; or
•(cid:3) 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 123, 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.
(cid:3)
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Financial statements
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:
•(cid:3) We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most
significant are those that relate to the reporting framework (IFRS as adopted by the European Union, United Kingdom Generally Accepted
Accounting Practice, 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, employee matters, food standards and
food safety.
•(cid:3) We understood how Tate & Lyle PLC is complying with those frameworks by making enquiries 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.
•(cid:3) 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 e(cid:3697)orts 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 (for example with respect to our work on revenue recognition noted on page 128 above) and were designed
to provide reasonable assurance that the financial statements were free from fraud or error.
•(cid:3) 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 www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor’s Report.
OTHER MATTERS WE ARE REQUIRED TO ADDRESS
•(cid:3) Following the recommendation of the Audit Committee we were appointed by the Company at its annual general meeting on 26 July 2018
to audit the financial statements for the year ending 31 March 2019 and subsequent financial periods. The period of total uninterrupted
engagement including previous renewals and re-appointments is two years, covering the years ending 31 March 2019 to 31 March 2020.
•(cid:3) 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.
•(cid:3) 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
20 May 2020
Notes:
1 The maintenance and integrity of the Tate & Lyle PLC website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
2 Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
133
133
NOTES
5
6
10
10
20
11
12
12
8
18
4
4, 11
4
YEAR ENDED 31 MARCH
2020
£M
2 882
296
5
(33)
28
296
(51)
245
–
245
2019
£M
2 755
236
5
(31)
30
240
(59)
181
–
181
PENCE
PENCE
52.8p
52.1p
52.8p
52.1p
£M
296
24
11
331
(59)
272
39.2p
38.6p
39.2p
38.6p
£M
240
58
11
309
(65)
244
Consolidated income statement
CONTINUING OPERATIONS
Revenue
Operating profit
Finance income
Finance expense
Share of profit after tax of joint ventures
Profit before tax
Income tax expense
Profit for the year – continuing operations
Profit for the year – discontinued operations
Profit for the year – total operations
Profit for the years presented from total operations is entirely attributable to owners of the Company.
Earnings per share
Continuing operations:
•(cid:3) basic
•(cid:3) diluted
Total operations:
•(cid:3) basic
•(cid:3) diluted
Analysis of adjusted profit for the year – continuing operations*
Profit before tax
Adjusted for:
Net exceptional charge
Amortisation of acquired intangible assets
Adjusted profit before tax
Adjusted income tax expense
Adjusted profit for the year
* Adjusted earnings per share information is presented in Note 12.
134
134
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
Consolidated statement of comprehensive income
Financial statements
Financial statements
Profit for the year
Other comprehensive income/(expense)
Items that have been/may be reclassified to profit or loss:
Gain on currency translation of foreign operations
Fair value loss on net investment hedges
Net loss on cash flow hedges
Share of other comprehensive (expense)/income of joint ventures
Items that will not be reclassified to profit or loss:
Re-measurement of retirement benefit plans:
•(cid:3) actual return (lower)/higher on plan assets
•(cid:3) impact of ‘buy-in’ on main UK pension scheme
•(cid:3) net actuarial gain/(loss) 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 (expense)/income
Total comprehensive income
NOTES
22
22
22
20, 22
29
29
29
17, 22
11
YEAR ENDED 31 MARCH
2020
£M
245
2019
£M
181
46
(18)
(1)
(3)
24
(58)
(195)
12
2
41
(198)
(174)
71
75
(24)
–
4
55
29
–
(34)
2
10
7
62
243
Total comprehensive income all relates to continuing operations and is entirely attributable to owners of the Company.
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
135
135
Consolidated statement of financial position
ASSETS
Non-current assets
Goodwill and other intangible assets
Property, plant and equipment
Investments in joint ventures
Investments in equities
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
Other current financial assets
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
Derivative financial instruments
Current liabilities
Borrowings
Trade and other payables
Provisions
Current tax liabilities
Derivative financial instruments
Other current financial liabilities
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
NOTES
AT 31 MARCH
2019
£M
2020
£M
18
19
20
17
29
11
16
27
14
16
11
27
27
15
21
21
22
24
29
11
31
27
24
23
31
11
27
27
340
1 190
91
63
4
30
–
1
1 719
456
323
10
5
67
271
1 132
2 851
117
406
8
239
629
1 399
1 399
682
207
42
11
2
944
40
370
21
38
20
19
508
1 452
2 851
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
The notes on pages 139 to 187 form part of these financial statements. The consolidated financial statements on pages 134 to 187 were
approved by the Board of Directors on 20 May 2020 and signed on its behalf by:
Nick Hampton
Director
Imran Nawaz
Director
136
136
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
Consolidated statement of cash flows
Cash flows from operating activities
Profit before tax from continuing operations
Adjustments for:
•(cid:3) depreciation of property, plant and equipment (excluding exceptional items)
•(cid:3) amortisation of intangible assets
•(cid:3) share-based payments
•(cid:3) exceptional income statement items
•(cid:3) net finance expense
•(cid:3) share of profit after tax of joint ventures
•(cid:3) net retirement benefit obligations
Changes in working capital and other non-cash movements
Cash generated from continuing operations
Net income tax paid
Interest paid
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
Purchase of equity investments
Disposal of equity investments
Interest received
Dividends received from joint ventures
Sale and leaseback of railcars (exceptional)
Other investing cash flows
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 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 (decrease)/increase in cash and cash equivalents
Currency translation differences
Balance at end of year
Financial statements
Financial statements
YEAR ENDED 31 MARCH
2020
£M
296
137
35
14
1
28
(28)
(21)
2
464
(49)
(30)
385
(141)
(1)
(25)
(6)
4
5
35
–
–
2019
£M
240
112
40
18
51
26
(30)
(25)
(16)
416
(58)
(28)
330
(103)
3
(27)
(20)
3
5
21
16
(9)
(129)
(111)
(22)
157
(234)
(37)
(137)
(273)
285
(17)
3
271
(8)
5
(1)
(2)
(134)
(140)
190
79
16
285
NOTES
19
18
30
8
10
20
25
8
17
17
20
8
21
36
13
26
26
15
A reconciliation of the movement in cash and cash equivalents to the movement in net debt is presented in Note 26.
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
137
137
Consolidated statement of changes in equity
At 1 April 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
IFRS 16 Leases adoption
At 1 April 2019 restated
Profit for the year – total operations
Other comprehensive income/(expense)
Total comprehensive income
Hedging gains transferred to inventory
Tax effect of the above item
Transactions with owners:
Share-based payments, net of tax
Purchase of own shares including net settlement (Note 21)
Dividends paid (Note 13)
Other movements
At 31 March 2020
Total equity is entirely attributable to owners of the Company.
Dividends on ordinary shares (pence per share)
In respect of the financial year:
•(cid:3) interim
•(cid:3) final
Paid in the financial year:
•(cid:3) interim – in respect of the financial year
•(cid:3) final – in respect of the previous financial year
SHARE
CAPITAL
AND SHARE
PREMIUM
£M
523
–
–
–
–
–
–
–
523
–
523
–
–
–
–
–
–
–
–
–
523
CAPITAL
REDEMPTION
RESERVE
£M
OTHER
RESERVES
£M
RETAINED
EARNINGS
£M
8
–
–
–
–
–
–
–
8
–
8
–
–
–
–
–
–
–
–
–
8
159
–
57
57
1
–
–
–
217
–
217
–
26
26
(6)
2
–
–
–
–
239
677
181
5
186
–
20
(8)
(134)
741
(8)
733
245
(200)
45
–
–
14
(22)
(137)
(4)
629
TOTAL
EQUITY
£M
1 367
181
62
243
1
20
(8)
(134)
1 489
(8)
1 481
245
(174)
71
(6)
2
14
(22)
(137)
(4)
1 399
YEAR ENDED 31 MARCH
2020
PENCE
2019
PENCE
NOTE
13
13
13
13
8.8
20.8
29.6
8.8
20.8
29.6
8.6
20.8
29.4
8.6
20.3
28.9
138
138
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
Notes to the consolidated financial statements
Financial statements
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 operating
segments: Food & Beverage Solutions, Sucralose and Primary
Products. The Group’s reportable segments are the same as its
operating segments. Segment information is presented in Note 5.
Accounting period
The Group’s annual financial statements are drawn up to 31 March.
These financial statements cover the year ended 31 March 2020
with comparative financials for the year ended 31 March 2019.
Basis of accounting
The consolidated financial statements on pages 134 to 187 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.
In making this assessment, the Directors have taken into
consideration that, since the balance sheet date, significant actions
have been taken by most governments to contain the spread of
Covid-19, which have had a severe effect on economic activity in
the countries in which the Group operates.
While the Group’s trading in March showed limited impact from
the Covid-19 pandemic, the lockdowns in place in many countries
across the world throughout April, most notably in its largest
markets of the US and Europe, have led to some significant changes
in demand patterns for its products. Primary Products volume was
significantly impacted by the first full month of lockdown in the US.
Bulk sweetener volume was 26% lower from reduced out-of-home
consumption as bars, cinemas, restaurants and sporting events
were either shut or cancelled. Industrial starch volume was 9%
lower reflecting reduced demand for paper and packaging following
the closure of schools, offices and a decline in economic activity.
The impact of lower demand was partially mitigated by actions
taken in March to optimise cash and reduce costs as we saw the
pandemic unfolding. These include freezing salary increases and
recruitment, stopping non-essential discretionary spend and
reprioritising capital commitments.
At the year end, the Group held cash and cash equivalents of
£271 million and had an undrawn, committed revolving credit facility
of US$800 million (£642 million). In addition, during May 2020, the
Group successfully obtained further committed borrowings through
a US$200 million US private placement at an average coupon of
2.96% and extended the term of its US$800 million revolving credit
facility by one year to March 2025.
In concluding that the going concern basis is appropriate, the
Directors have modelled the impact of a ‘worst case scenario’
which includes the potential impact in aggregate of three plausible
but severe downside risks. It specifically included a severe extended
impact from lower out-of-home consumption across our Primary
Products and Food & Beverage Solutions businesses due to Covid-19.
In addition, this ‘worst case scenario’ also included two other risks
from the Group’s viability assessment unrelated to Covid-19; being
a major operational failure causing an extended shutdown of our
largest manufacturing facility and the loss of two of our largest
Food & Beverage Solutions customers.
Having reviewed this ‘worst case scenario’ forecast for the coming
year, and having applied reverse stress tests, the Directors consider
it remote that available liquidity could be exhausted. In addition, even
under the ‘worst case scenario’ there remains no forecast breach
of the Group’s covenant ratio of 3.5 times net debt to EBITDA.
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. 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.
Accounting standards adopted during the year
In the current year, the Group has adopted, with effect from
1 April 2019, the following new accounting standards:
•(cid:3) IFRS 16 Leases
•(cid:3) IFRIC 23 Uncertainty over Income Tax Treatments
In accordance with the transitional provisions in IFRS 16
comparative figures have not been restated.
The adoption of IFRS 16 Leases had a material impact on Group
net debt and adjusted free cash flow. The adoption of IFRIC 23
Uncertainty over Income Tax Treatments did not have a material
impact. Refer to Note 36 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
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.
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.
Information about the accounting estimates and judgements made
in applying these accounting policies that have the most significant
effect on the amounts recognised in the consolidated financial
statements are set out below.
Fair value of purchases, sales and inventory of corn-based
products (Notes 14, 27 and 28)
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.
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
139
139
(cid:3)
Notes to the consolidated financial statements (continued)
2. SIGNIFICANT JUDGEMENTS AND ESTIMATES (continued)
Fair value of purchases, sales and inventory of
corn-based products (Notes 14, 27 and 28) (continued)
For the first time the Group has designated the components of
its US net corn position in effective fair value hedge accounting
relationships whereby the hedged item is a group of items with
offsetting risk positions. The Group uses financial instruments
(mainly corn futures contracts) as hedging instruments to manage
this net position. This does not change the accounting previously
adopted in that each element of the net corn position is marked to
market. The application of fair value hedge accounting is not itself
a significant accounting policy judgement. Recording all
components of the US net corn position at fair value also aligns
with the underlying economics and risk management of the
business. All changes in fair value of hedged items and hedging
instruments are recorded in operating costs. There is significant
estimation uncertainty in determining the fair values of certain
components of the hedged items and hedging instruments,
as set out in the table below.
In contrast to the US, the Group does not manage its European
corn and co-product positions (short: executory sales contracts;
long: executory purchase contracts and inventories) on a net basis,
it does not purchase or sell derivative financial instruments to
manage risk and its positions are not marked to market. As a
consequence, the Group measures and carries its European corn
and co-product inventories at the lower of cost and net realisable
value and executory sales and purchase contracts are not recorded
on the balance sheet.
Hedged items:
Corn purchase contracts
Corn sale contracts
Co-product sale contracts
Corn inventory
Co-products inventory
Total hedged items
Financial instrument products (hedging
instrument)
Net corn position
YEAR ENDED
31 MARCH
2020
£M
FOOTNOTES
(a)
(b)
(c)
(d)
(d)
(e)
(15)
40
23
(20)
(4)
24
(4)
20
Comparatives are not presented because the Group first applied
fair value hedge accounting in accordance with IFRS 9 to its US
net corn position from 1 April 2019. The adoption of this accounting
policy represents a change in documentation and has no impact on
amounts recognised in the income statement and has no impact on
net assets or cash flows compared to the Group’s previous IFRS 9
accounting policy. The fair value of certain components of the fair
value hedges contain significant accounting estimates, as set
out below.
The fair value for each element of the US net corn position
enumerated in the table above is determined as follows:
(a)(cid:3) Contracts for the purchase of corn: represent executory
contracts for the purchase of corn. The hedged risks are corn
price and basis. The fair value adjustments to price are made
with reference to corn futures traded on the Chicago Mercantile
Exchange and to a lesser extent a management estimate of
basis (with reference to market prices). Accordingly, these
are principally classified as Level 2 hedged item adjustments
(refer to Note 27) and shown within other current financial
assets and liabilities on the balance sheet.
(b)(cid:3) Contracts for the sale of corn-based finished goods:
represent executory contracts for the sale of corn-based finished
goods. The hedged risks are corn price, basis and a credit for
co-products. The fair value adjustments to price are made with
reference to corn futures traded on the Chicago Mercantile
Exchange, a management estimate of basis and management
estimate of co-product credits (with reference to market prices).
Accordingly, these are principally classified as Level 3 hedged
item adjustments (refer to Note 27) and shown within other
current financial assets and liabilities on the balance sheet.
(c)(cid:3) Co-product sale contracts: represent executory contracts
for the sale of co-products. The hedged risk is the change in
co-product pricing, which is based on management’s estimate
and reference to market prices. Accordingly, these are
principally classified as Level 3 hedged item adjustments
(refer to Note 27) and shown within other current financial
assets and liabilities on the balance sheet.
(d)(cid:3) Corn inventory and co-products inventory: represent
physical holdings of corn and co-product inventories. The
hedged risks are corn price, co-product price and basis. The
fair value adjustments are made with reference to a number
of inputs, including management’s own assessment of future
pricing and futures traded on the Chicago Mercantile Exchange,
where applicable.
(e)(cid:3) Financial instruments (mainly corn futures contracts):
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 27).
Of the components of the net corn positions set out above, those
components which have the greatest estimation uncertainty are the
fair values of basis and co-products. As a result, certain disclosures
about the nature of these items and the estimation uncertainty
inherent in them is required by IAS 1. Such disclosures are set
out in Note 27. The nature of these items is included below:
Basis represents the difference in price between the corn pricing
on the Chicago Mercantile Exchange and localised pricing that
can be achieved for physical delivery. It is typically driven by local
supply, demand and logistics factors. At 31 March 2020, the carrying
value of fair value adjustments made to basis was a net asset of
£7 million – it is included as a component within certain line items
set out above.
Co-products included in fair value hedges comprise corn gluten
feed, corn gluten meal and corn oil, which are manufactured as part
of the corn wet-milling process. The Group can hold either a net
long or short position for each co-product based on the volume of
co-products made, bought or forward sold at any point in time. The
net position of fair value adjustments made to co-product positions
is £23 million asset for sales contracts (including co-product credits
in corn sales contracts) and £4 million liability for inventories.
In addition to the above, the Group holds futures with a fair value
of £6 million (loss) to hedge the cash flow risk associated with
the purchases and sales of other commodities or purchases of
chemicals used in the manufacturing process which are designated
as cash flow hedges. The Group also holds futures contracts held
on behalf of customers with a fair value of £7 million (loss) which do
not impact the Group’s income statements as all risks and rewards
are borne by the customers.
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.
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 28
and valuation techniques and sensitivity analysis on the price of
co-products and basis (Level 3 financial instruments) in Note 27. (cid:3)
140
140
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
Financial statements
Financial statements
2. SIGNIFICANT JUDGEMENTS AND ESTIMATES (continued)
Taxation (Note 11)
Key sources of estimation uncertainty
The Group’s current and deferred tax balances are subject to
estimation uncertainty, which could also impact the effective tax
rate in the next financial year.
disclosure of material items of income, expense and cash flow as
exceptional items include, but are not limited to: significant
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.
The specific sources of estimation uncertainty are as follows:
(a)(cid:3) Resolution of uncertain tax provisions: at 31 March 2020,
the Group has recorded current tax liabilities of £57 million
(2019 – £52 million) for uncertain tax positions (refer to Note 11).
Such provisions arise because the Group operates in an
international tax environment and is subjected to periodic tax
examination and uncertainties in a number of jurisdictions.
Such examination can include, inter alia, transfer pricing
arrangements relating to the Group’s operating activities,
historical reorganisations and the deductibility of interest on
certain intra-group borrowing arrangements. The issues involved
are complicated and may take a number of years to resolve.
Each uncertainty is separately assessed and management applies
judgement in determining the recognition and measurement of
appropriate provision. While management is of the opinion that the
provisions represent its best estimate of the likely outcome, the
range of possible outcomes can be wide. Of the total of uncertain
tax positions at 31 March 2020 of £57 million, given statutes of
limitations and other factors, between £15 million and £25 million
of the balance could be resolved in the year ending 31 March 2021.
Such resolution could be favourable or unfavourable.
(b)(cid:3) Recognition of deferred tax assets: at 31 March 2020, the Group
has recorded deferred tax assets of £30 million and deductible
temporary differences for which the unrecognised deferred tax
asset is £168 million (2019 – £117 million) (refer to Note 11), the
most significant of which comprise unrecognised tax losses in
the UK. Management exercises judgement in its determination
of recognition of deferred tax assets.
In addition, the carrying value of tax assets and liabilities could
be impacted by changes in tax legislation for which the impact can
be significant.
Retirement benefit plans (Note 29)
At 31 March 2020, the present value of the benefit obligations of
the plans was £1,610 million (2019 – £1,647 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 and,
as a result, represent a significant accounting estimate.
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 29.
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
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. The classification of
income and expense as exceptional items is a significant judgement.
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 and non-derivative financial instruments in fair value
hedge relationships, 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:
•(cid:3) Revenue recognition (Note 5)
•(cid:3) Income taxes (Note 11)
•(cid:3) Goodwill and other intangible assets (Note 18)
•(cid:3) Foreign currency translation of subsidiaries (Note 22)
•(cid:3) Financial instruments (Notes 16, 23, 24 and 27)
•(cid:3) Retirement benefit obligations (Note 29)
•(cid:3) Share-based payments (Note 30)
•(cid:3) Leases (Note 36)
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 2019, and have not been adopted early:
Amendments to IFRS 3 Definition of a Business
Amendments to IAS 1 and IAS 8 Definition of material
The financial impact of these amendments are not expected to have
a material impact on the Group’s financial statements.
Amendments to IFRS 3 Definition of a Business
(effective for the year commencing 1 April 2020)
The amendments clarify that while businesses usually have outputs,
outputs are not required for an integrated set of activities and
assets to qualify as a business. To be considered a business an
acquired set of activities and assets must include, at a minimum,
an input and a substantive process that together significantly
contribute to the ability to create outputs.
Additional guidance is provided that helps to determine whether
a substantive process has been acquired.
The amendments introduce an optional concentration test that
permits a simplified assessment of whether an acquired set of
activities and assets is not a business. Under the optional
concentration test, the acquired set of activities and assets is not
a business if substantially all of the fair value of the gross assets
acquired is concentrated in a single identifiable asset or group of
similar assets. The amendments are applied prospectively to all
business combinations and asset acquisitions for which the
acquisition date is on or after the Group’s 2021 financial year
commencing on 1 April 2020.
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.
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
141
141
Notes to the consolidated financial statements (continued)
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:
•(cid:3) 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);
•(cid:3) Amortisation of acquired intangible assets (costs associated with amounts recognised through acquisition accounting that impact
earnings compared to organic investments); and
•(cid:3) 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.
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
Revenue
Operating profit
Net finance expense
Share of profit after tax of joint ventures
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 2020
YEAR ENDED 31 MARCH 2019
IFRS
REPORTED
ADJUSTING
ITEMS
ADJUSTED
REPORTED
IFRS
REPORTED
ADJUSTING
ITEMS
ADJUSTED
REPORTED
2 882
296
(28)
28
296
(51)
245
52.8p
52.1p
17.1%
–
35
–
–
35
(8)
27
2 882
2 755
331
(28)
28
331
(59)
272
236
(26)
30
240
(59)
181
–
69
–
–
69
(6)
63
2 755
305
(26)
30
309
(65)
244
5.8p
5.7p
0.8%
58.6p
57.8p
39.2p
38.6p
13.6p
13.4p
52.8p
52.0p
17.9%
24.4%
(3.4%)
21.0%
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 costs included in operating profit
Amortisation of acquired intangible assets
Total excluded from adjusted profit before tax
Tax credit on adjusting items
Total excluded from adjusted profit for the year
NOTES
8
18
11
YEAR ENDED 31 MARCH
2020
£M
24
11
35
(8)
27
2019
£M
58
11
69
(6)
63
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, after capital expenditure and excluding the impact of exceptional items.
The following table shows the reconciliation of adjusted free cash flow:
CONTINUING OPERATIONS
Adjusted operating profit
Adjusted for:
Depreciation and adjusted amortisation2
Share-based payments charge
Changes in working capital and other non-cash movements
Net retirement benefit obligations
Capital expenditure
Net interest and tax paid
Adjusted free cash flow1
YEAR ENDED 31 MARCH
2020
£M
331
161
14
2
(21)
(166)
(74)
247
2019
£M
305
141
18
(16)
(25)
(130)
(81)
212
1
IFRS 16 Leases was adopted in the year without restating comparatives. Lease payments are now classified as financing rather than operating cash flows increasing adjusted
free cash flow by £34 million.
2 Total depreciation of £145 million and amortisation of £35 million less £8 million of accelerated depreciation recognised in exceptional items and £11 million of amortisation
of acquired intangible assets.
142
142
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
Financial statements
Financial statements
4. RECONCILIATION OF ALTERNATIVE PERFORMANCE MEASURES (continued)
Financial strength measures
The Group uses two financial metrics as key performance measures to assess its financial strength. These are the net debt to EBITDA ratio,
and the return on capital employed ratio. The Group no longer uses the interest cover ratio and so this has been removed (principally as a
result of it no longer being a covenant for the US private placements).
Consistent with the prior year, 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. Refer to Note 28 for the calculation of the net debt to EBITDA ratio and
interest cover ratio (2019 only) using the calculation methodology used for financial covenants on the Group’s borrowing facilities.
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 debt1
Adjusted operating profit
Add back depreciation and adjusted amortisation
EBITDA2
Net debt to EBITDA ratio (times)
NOTE
26
2020
£M
451
331
161
492
0.9
31 MARCH
2019
£M
337
305
141
446
0.8
1
IFRS 16 Leases was adopted in the year without restating comparatives. For the ratio calculated at 31 March 2020, IFRS 16 lease liabilities increased net debt by £162 million and
EBITDA by £35 million. On a like-for-like basis, the net debt to EBITDA ratio was 0.6 times. The composition of line items that make up net debt is set out in Note 26.
2 EBITDA is calculated as adjusted operating profit (£331 million) adding back depreciation of £137 million (total depreciation of £145 million less £8 million of accelerated depreciation
recognised in exceptional items) and adding back amortisation of £24 million (total amortisation of £35 million less £11 million of amortisation of acquired intangible assets).
The return on capital employed ratio is as follows:
Calculation of return on capital employed
Adjusted operating profit1
Deduct 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 related derivatives2
Invested operating capital of continuing operations
Average invested operating capital3
Return on capital employed (ROCE) %
31 MARCH
2018
£M
360
965
385
1 710
2020
£M
331
(11)
320
340
1 190
409
1 939
1 832
17.5%
2019
£M
305
(11)
294
342
982
401
1 725
1 718
17.1%
1
IFRS 16 Leases was adopted in the year without restating comparatives. For the ratio calculated at 31 March 2020, IFRS 16 lease liabilities increased adjusted operating profit by
£5 million and property, plant and equipment by £143 million. On a like-for-like basis, the return on capital employed ratio was 17.9%.
2 All derivatives held at 31 March 2020 were non-debt related derivatives. For the purpose of this calculation other current financial assets and liabilities are also included.
3 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.
(cid:3)
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
143
143
Notes to the consolidated financial statements (continued)
5. SEGMENT INFORMATION
Revenue recognition
Revenue from contracts with customers is recognised when control of the goods or services is 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.
There is no material element of financing in sales which are made with credit terms in general between 30 to 60 days, which is
consistent with market practice.
Segment information is presented on a basis consistent with the information presented to the Board (the designated Chief Operating
Decision Maker (CODM)) for the purposes of allocating resources within the Group and assessing the performance of the Group’s
businesses. Continuing operations comprise three operating segments: Food & Beverage Solutions, Sucralose and Primary Products.
These operating segments are also the Group’s three reportable segments. The Group does not aggregate operating segments to form
reportable segments. 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 below 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) are 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. 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.
Segment results
CONTINUING OPERATIONS
Revenue
Adjusted operating profit1
Adjusted operating margin
Included within statutory operating profit2:
•(cid:3) depreciation
•(cid:3) amortisation
•(cid:3) share-based payments
FOOD & BEVERAGE
SOLUTIONS
£M
942
162
SUCRALOSE
£M
161
63
17.2%
39.3%
PRIMARY
PRODUCTS
£M
1 779
158
8.9%
41
25
4
9
–
1
88
8
4
1 Reconciled to statutory profit for the year in Note 4 .
2 Disclosure provided as either included in the measure of segment profit and loss or otherwise regularly provided to CODM.
CONTINUING OPERATIONS
Revenue
Adjusted operating profit1
Adjusted operating margin
Included within statutory operating profit2:
•(cid:3) depreciation
•(cid:3) amortisation
•(cid:3) share-based payments
FOOD & BEVERAGE
SOLUTIONS
£M
SUCRALOSE
£M
889
143
164
61
16.1%
37.0%
36
28
6
9
–
1
PRIMARY
PRODUCTS
£M
1 702
148
8.7%
66
10
5
1 Reconciled to statutory profit for the year in Note 4 .
2 Disclosure provided as either included in the measure of segment profit and loss or otherwise regularly provided to CODM.
(cid:3)
YEAR ENDED 31 MARCH 2020
CENTRAL
£M
–
(52)
n/a
7
2
5
TOTAL
£M
2 882
331
11.5%
145
35
14
YEAR ENDED 31 MARCH 2019
CENTRAL
£M
–
(47)
n/a
1
2
6
TOTAL
£M
2 755
305
11.1%
112
40
18
144
144
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
5. SEGMENT INFORMATION (continued)
Geographic disclosures
Revenue
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
Financial statements
Financial statements
YEAR ENDED 31 MARCH
2020
£M
470
214
258
942
161
1 683
96
1 779
2 882
2019
£M
430
201
258
889
164
1 588
114
1 702
2 755
Sales to customers in the United Kingdom totalled £36 million (2019 – £43 million). Sales to customers in the United States totalled
£2,060 million (2019 – £1,937 million). No customer contributed more than 10% of the Group’s external sales from continuing operations
(2019 – 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
(cid:3)
2020
£M
25
1 200
294
102
1 621
AT 31 MARCH
2019
£M
16
1 025
284
101
1 426
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
145
145
Notes to the consolidated financial statements (continued)
6. OPERATING PROFIT
Analysis of operating expenses by nature:
CONTINUING OPERATIONS
Revenue
Operating expenses
Cost of inventories (included in cost of sales)
Staff costs (of which £162 million (2019 – £150 million) was included in cost of sales)
Depreciation of property, plant and equipment:
•(cid:3) owned assets (of which £97 million (2019 – £103 million) was included in cost of sales1)
•(cid:3) leased assets (of which £24 million was included in cost of sales)
Exceptional costs
Amortisation of intangible assets:
•(cid:3) acquired intangible assets
•(cid:3) other intangible assets
Operating lease rentals
Impairment of trade receivables
Impairment of intangible assets
Impairment of property, plant and equipment
Net fair value (gain)/loss on commodity contracts
Total net foreign exchange gains2
Other operating expenses
Total operating expenses
Operating profit
NOTES
9
19
19, 36
8
18
18
16
1 Excludes £8 million of accelerated depreciation recognised in exceptional items.
2
Includes fair value movements on debt-related derivatives.
Research expenditure totalling £34 million (2019 – £36 million) is included within amounts above.
7. AUDITOR’S REMUNERATION
Fees payable to the Company’s external auditor, Ernst & Young LLP and its associates, were as follows:
Fees payable for the audit of the Company and consolidated financial statements
Fees payable for other services:
•(cid:3) the audit of the Company’s subsidiaries
•(cid:3) audit-related assurance services
Total
(cid:3)
YEAR ENDED 31 MARCH
2020
£M
2 882
1 465
353
106
31
24
11
24
–
5
1
1
(4)
(1)
570
2 586
296
2019
£M
2 755
1 368
334
110
2
58
11
29
37
1
1
–
1
(1)
568
2 519
236
YEAR ENDED 31 MARCH
2020
£M
1.1
1.4
0.1
2.6
2019
£M
1.0
1.4
0.1
2.5
146
146
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
8. EXCEPTIONAL ITEMS
Exceptional items recognised in arriving at operating profit were as follows:
CONTINUING OPERATIONS
Income statement
Restructuring costs
Primary Products’ savoury business exit
Oats ingredients business disposal
Gain on sale and leaseback of railcars
Asset remediation
Exceptional items included in profit before tax
Financial statements
Financial statements
YEAR ENDED 31 MARCH
2020
£M
2019
£M
(19)
(5)
–
–
–
(24)
(13)
–
(43)
14
(16)
(58)
FOOTNOTES
(a)
(b)
In the year ended 31 March 2020, costs recorded as exceptional related to the Group’s previously announced programme to simplify the
business and drive productivity. These are set out below:
(a)(cid:3) £19 million of restructuring charges, principally comprising £5 million of severance costs for roles removed from the organisation,
and £14 million of productivity costs including accelerated depreciation of assets being replaced with more efficient alternatives,
Global Operations cost-saving initiatives and other associated project costs. £5 million was recorded in each of the Food & Beverage
Solutions and Primary Products operating segments and £9 million was recognised within Central.
(b)(cid:3) A £5 million charge following the decision in the first half of the year to exit the Primary Products’ small, non-core savoury ingredients
business, mainly comprising the cost of writing off the associated assets of the business.
Of the £24 million exceptional charge recorded during the year, £9 million was reflected in exceptional cash flow. In addition, £15 million
of exceptional costs recorded in the prior year resulted in cash outflows in the year ended 31 March 2020, such that net cash outflow from
exceptional items was £24 million.
The most significant exceptional cost in the comparative period related to the impairment and subsequent disposal of the Group’s oats
ingredients business, all of which was recorded within the Food & Beverage Solutions operating segment. Other exceptional costs in the
prior year included a restructuring charge, the recognition of a provision to remediate environmental health and safety risks associated
primarily with idle assets at manufacturing sites in North America and a gain on sale and leaseback of railcars.
Further details in respect of cash flows from exceptional items are set out below:
Net cash (outflows)/inflows on exceptional items
Restructuring costs
Primary Products’ savoury business exit
Oats ingredients business disposal
Gain on sale and leaseback of railcars
Asset remediation
Net cash (outflows)/inflows
Exceptional cash flows
The total cash flows on exceptional items are included in the statement of cash flows as follows:
Reconciliation to the statement of cash flows
Exceptional charge included in profit before tax
Cash outflows relating to restructuring costs
Cash outflows relating to Primary Products’ savoury business exit
Cash outflows relating to asset remediation
As presented within cash flows from operating activities
Cash flows relating to oats ingredients business disposal
Cash inflows on gain on sale and leaseback of railcars
As presented within cash flows from investing activities
(cid:3)
FOOTNOTES
(a)
(b)
FOOTNOTES
(a)
(b)
YEAR ENDED 31 MARCH
2020
£M
(13)
(1)
(1)
–
(9)
(24)
2019
£M
(6)
–
3
16
(1)
12
YEAR ENDED 31 MARCH
2020
£M
24
(13)
(1)
(9)
1
(1)
–
(1)
2019
£M
58
(6)
–
(1)
51
3
16
19
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
147
147
Notes to the consolidated financial statements (continued)
9. STAFF COSTS
Staff costs were as follows:
Wages and salaries
Social security costs
Retirement benefit costs:
•(cid:3) defined benefit schemes
•(cid:3) defined contribution schemes
Share-based payments
Total
YEAR ENDED 31 MARCH
2020
£M
306
23
2
8
14
353
2019
£M
280
24
2
10
18
334
The average number of people employed by the Company and its subsidiaries, including part-time employees, is set out below:
By operating segment
CONTINUING OPERATIONS
Food & Beverage Solutions
Sucralose1
Primary Products
Central
Total
YEAR ENDED 31 MARCH
2020
2019
1 798
100
1 792
503
4 193
1 722
94
1 835
511
4 162
1 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 2020, the Group employed 4,218 people (2019 – 4,121 people) all within continuing operations. The Group’s three
operating 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
2020
£M
9
1
5
15
2019
£M
9
1
8
18
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 100 to 120. Members of the Executive Committee are identified on
pages 74 and 75. The aggregate gains made by key management on the exercise of share options were £6 million (2019 – £10 million).
In the prior 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. The amount outstanding has been repaid in full in the year ended 31 March 2020. No related party transactions
with close family members of the Group’s key management occurred in the current or comparative year.
10. FINANCE INCOME AND EXPENSE
CONTINUING OPERATIONS
Interest payable on bank and other borrowings
Fair value hedges:
•(cid:3) fair value loss on interest rate derivatives
•(cid:3) fair value adjustment of hedged borrowings
Lease interest
Finance expense
Finance income
Net finance expense
(cid:3)
148
148
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
NOTE
YEAR ENDED 31 MARCH
2020
£M
(26)
(3)
3
(7)
(33)
5
(28)
2019
£M
(30)
(4)
4
(1)
(31)
5
(26)
Financial statements
Financial statements
11. INCOME TAXES
Income tax on the profit for the year comprises current and deferred tax. Income tax is recognised in the income statement except
to the extent that it relates to items recognised directly in equity and other comprehensive income.
Current tax is the amount of tax expected to be payable or receivable on the taxable profit or loss for the current period. This amount
is amended for adjustments in respect of prior periods. Current tax is calculated using tax rates that have been written into law
(‘enacted’) or irrevocably announced/committed by the respective government (‘substantively enacted’) at the period-end date.
Income tax in the consolidated income statement will differ from the income tax paid in the consolidated cash flow statement primarily
because of deferred tax arising on temporary differences and payment dates for income tax occurring after the balance sheet date.
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. A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the
extent that it is no longer probable that the related tax benefit will be realised.
Current and deferred tax receivable (assets) and payable (liabilities) are offset only when there is a legal right to settle them net and
the Group intends to do so. This is generally true when the taxes are levied by the same tax authority.
Refer to Note 2 for key sources of estimation uncertainty relating to income taxes.
Analysis of charge for the year
CONTINUING OPERATIONS
Current tax
•(cid:3) United Kingdom
•(cid:3) Overseas
•(cid:3) Exceptional tax credit
•(cid:3) Adjustments in respect of previous financial years
Deferred tax
Expense for the year
Adjustments in respect of previous financial years
Exceptional tax credit/(expense)
Income tax expense
Statutory effective tax rate (%)
Reconciliation to adjusted income tax expense
Income tax expense
Taxation credit on exceptional items and amortisation of acquired intangibles
Adjusted income tax expense
Adjusted effective tax rate (%)
YEAR ENDED 31 MARCH
2020
£M
2019
£M
(8)
(42)
3
6
(41)
(10)
(2)
2
(51)
(7)
(47)
1
3
(50)
(4)
–
(5)
(59)
17.1%
24.4%
YEAR ENDED 31 MARCH
2020
£M
(51)
(8)
(59)
2019
£M
(59)
(6)
(65)
17.9%
21.0%
NOTES
4
At 31 March 2020, the carrying value of current tax assets totalled £10 million (2019 – £4 million) and the carrying value of the current tax
liabilities totalled £38 million (2019 – £45 million).
The Group’s current and deferred tax balances are subject to estimation uncertainty, which could also impact the effective tax rate in the
next financial year. The specific sources of estimation uncertainty are as follows:
(a)(cid:3) Resolution of uncertain tax provisions: at 31 March 2020, the Group has recorded current tax liabilities of £57 million (2019 – £52 million)
for uncertain tax positions (Note 2). Such provisions arise because the Group operates in an international tax environment and is
subjected to periodic tax examination and uncertainties in a number of jurisdictions. Such examination can include, inter alia, transfer
pricing arrangements relating to the Group’s operating activities, historical reorganisations and the deductibility of interest on certain
intra-group borrowing arrangements. The issues involved are complicated and may take a number of years to resolve.
Each uncertainty is separately assessed and management applies judgement in determining the recognition and measurement
of appropriate provision. While management is of the opinion that the provisions represent its best estimate of the likely outcome,
the range of possible outcomes can be wide. Of the total of uncertain tax positions at 31 March 2020 of £57 million, given statutes of
limitations and other factors, between £15 million and £25 million of the balance could be resolved in the year ending 31 March 2021.
Such resolution could be favourable or unfavourable.
(b)(cid:3) Recognition of deferred tax assets: at 31 March 2020, the Group has recorded deferred tax assets of £30 million and deductible
temporary differences for which the unrecognised deferred tax asset is £168 million (2019 – £117 million), the most significant of
which comprise unrecognised tax losses in the UK. Management exercises judgement in its determination of recognition of deferred
tax assets.
In addition to these items, the sustainability of the tax rate is likely to be impacted by changes to tax legislation and material changes to the
geographic mix of profits.
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
149
149
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
Parent Company and subsidiaries’ profit before tax
Corporation tax charge thereon at 19% (2019 – 19%)
Adjusted for the effects of:
•(cid:3) non-deductible expenses and other permanent items
•(cid:3) adjustments in respect of previous financial year
•(cid:3) losses not currently treated as being recoverable in future periods1
•(cid:3) losses now being treated as being recoverable in future periods2
•(cid:3) changes in tax rate
•(cid:3) impairment of assets not deductible3
•(cid:3) tax rates (above)/below the UK rate applied on overseas earnings4
Total tax charge
2020
£M
296
(28)
268
(51)
(4)
4
(3)
8
1
–
(6)
(51)
2019
£M
240
(30)
210
(40)
(1)
3
(14)
–
1
(11)
3
(59)
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 Where the Group now reasonably believes it is able to recover losses not previously expected to be recovered against future taxable profits these losses are recognised. This has
the effect of decreasing the Group’s overall effective tax rate.
Impairments were made to certain oats ingredients business assets in the prior year (refer to Note 8).
3
4 The Group is subject to tax rates in the jurisdictions in which it operates which are above the UK corporation tax rate (the Group’s reference rate) leading to an increase in total
tax charge. In the year ended 31 March 2019, the Group’s tax rate was favourably impacted by the realisation of uncertain tax positions leading to a decrease in total tax charge.
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
Restructuring costs
Primary Products’ savoury business exit
Oats ingredients business disposal
Gain on sale and leaseback of railcars
Asset remediation
Exceptional items
Amortisation of acquired intangibles
Total adjusting items
(cid:3)
YEAR ENDED 31 MARCH 2020
YEAR ENDED 31 MARCH 2019
NOTES
PRE-TAX
£M
TAX CREDIT
£M
PRE-TAX
£M
TAX CREDIT/
(CHARGE)
£M
8
8
8
8
8
18
4
(19)
(5)
–
–
–
(24)
(11)
(35)
4
1
–
–
–
5
3
8
(13)
–
(43)
14
(16)
(58)
(11)
(69)
2
–
1
(4)
4
3
3
6
150
150
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
11. INCOME TAXES (continued)
Deferred tax
The movements in deferred tax assets and liabilities during the year were as follows:
At 1 April 2018
Credited/(charged) to the income statement
•(cid:3) underlying
•(cid:3) exceptional
Credited to other comprehensive income
Credited directly to equity
Currency translation differences
At 31 March 2019
IFRS 16 Lease adoption
At 1 April 2019 restated
(Charged)/credited to the income statement
•(cid:3) underlying
•(cid:3) exceptional
Credited to other comprehensive income
(Charged)/credited directly to equity
Currency translation differences
At 31 March 2020
CAPITAL
ALLOWANCES
IN EXCESS OF
DEPRECIATION
£M
(101)
1
–
–
–
(9)
(109)
–
(109)
(12)
2
–
–
(4)
(123)
RETIREMENT
BENEFIT
OBLIGATIONS
£M
SHARE-
BASED
PAYMENTS
£M
TAX LOSSES
£M
–
–
–
1
–
3
4
–
4
(1)
–
39
–
1
43
4
–
–
–
1
–
5
–
5
–
–
–
(1)
–
4
30
(14)
–
–
–
1
17
–
17
4
–
–
–
(1)
20
Financial statements
Financial statements
OTHER1
£M
32
TOTAL
£M
(35)
9
(5)
–
–
4
40
3
43
(4)
(5)
1
1
(1)
(43)
3
(40)
(3)
(12)
–
–
2
2
44
2
39
1
(2)
(12)
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 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 £12 million liability (2019 – £43 million liability) is presented as
a £30 million deferred tax asset (2019 – £3 million asset) and a £42 million deferred tax liability (2019 – £46 million liability) in the Group’s
statement of financial position.
Unrecognised deferred tax asset/liabilities
No deferred tax assets have been recognised in respect of tax losses of £786 million (2019 – £667 million) as there is uncertainty as to
whether taxable profits against which these assets may be recovered, will be available. In the year ended 31 March 2020, no tax losses
expired (2019 – £nil). £10 million (2019 – £7 million) of the tax losses will expire within five years. The remaining tax losses have no
expiry date.
A deferred tax liability of £1 million (2019 – £1 million) has not been recognised in respect of taxable temporary differences associated
with investments in subsidiaries as there is control over the timing of the reversal of the temporary differences and it is probable
that the temporary differences will not reverse in the foreseeable future.
Changes in tax rates/tax law
In March 2020, the UK Government has utilised the Provisional Collection of Taxes Act 1968 to maintain the main corporation tax rate
at 19% (previously 17%) which was substantively enacted on 17 March 2020. As such, the Group has applied a 19% tax rate in calculating
deferred tax balances in respect of UK tax losses. This has increased the quantum of UK deferred tax recognised.
There was no impact from the imposition of new taxes.
Tax on items recognised in other comprehensive income
The total tax credit on other comprehensive income was £41 million (2019 – £10 million). This included credits to deferred tax on retirement
benefit obligations of £39 million (2019 – £1 million). The credits recorded in the current year include the deferred tax impact of the ‘buy-in’
of the main UK pension scheme described in Note 29. In addition the Group has recognised current tax credits of £2 million on retirement
benefit obligations (2019 – £9 million).
Tax on items recognised directly in equity
The total tax credit in equity was £2 million (2019 – £2 million). This included deferred tax credits on financial instruments of £2 million
(2019 – £nil), a deferred tax charge on share-based payments of £1 million (2019 – £1 million credit) and a £1 million current tax credit
on share-based payments (2019 – £1 million credit).
(cid:3)
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
151
151
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 733p (2019 – 658p). The dilutive effect of share-based
incentives was 6.4 million shares (2019 – 6.9 million shares).
YEAR ENDED 31 MARCH 2020
YEAR ENDED 31 MARCH 2019
CONTINUING
OPERATIONS
DISCONTINUED
OPERATIONS
TOTAL
OPERATIONS
CONTINUING
OPERATIONS
DISCONTINUED
OPERATIONS
TOTAL
OPERATIONS
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)
245
464.2
52.8p
470.6
52.1p
–
–
–
–
–
245
181
464.2
52.8p
462.6
39.2p
470.6
52.1p
469.5
38.6p
CALCULATION OF AVERAGE NUMBER OF ORDINARY SHARES
Weighted average number of ordinary shares – basic
Effects of dilution from:
•(cid:3) Sharesave plan
•(cid:3) Performance share plan/Restricted share awards/Group Bonus plan – deferred element
Weighted average number of ordinary shares – diluted
–
–
–
–
–
181
462.6
39.2p
469.5
38.6p
YEAR ENDED 31 MARCH
2020
MILLION
464.2
2019
MILLION
462.6
0.1
6.3
–
6.9
470.6
469.5
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:
•(cid:3) exceptional items
•(cid:3) amortisation of acquired intangible assets
•(cid:3) tax impact of adjusting items
Adjusted profit attributable to owners of the Company
Adjusted basic earnings per share (pence)
Adjusted diluted earnings per share (pence)
(cid:3)
NOTES
8
18
11
4
YEAR ENDED 31 MARCH
2020
£M
245
24
11
(8)
272
2019
£M
181
58
11
(6)
244
58.6p
57.8p
52.8p
52.0p
152
152
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
Financial statements
Financial statements
13. DIVIDENDS ON ORDINARY SHARES
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.
Dividends on ordinary shares in respect of the financial year:
Per ordinary share:
•(cid:3) interim dividend paid
•(cid:3) final dividend proposed
Total dividend
YEAR ENDED 31 MARCH
2020
PENCE
2019
PENCE
8.8
20.8
29.6
8.6
20.8
29.4
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 2020 to shareholders who are on the Register of Members on 19 June 2020.
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
2020
£M
97
40
137
2019
£M
94
40
134
Based on the number of ordinary shares outstanding at 31 March 2020 and the proposed amount, the final dividend for the financial year is
expected to amount to £96 million.
14. INVENTORIES
Inventories are carried at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable,
direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition
and is calculated using the ‘first in/first out’ or ‘weighted average’ methods, appropriate to the materials and production processes
involved. Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred
in marketing, selling and distribution. Provisions are made for any slow-moving, obsolete or defective inventories.
The carrying value of US net corn position inventories designated as hedged items (managed on a group basis for risk management) in
an effective fair value hedge accounting relationship is adjusted by the change in fair value attributable to the hedged risk. (See Note 2).
Raw materials and consumables
Work in progress
Finished goods
Total
2020
£M
232
20
204
4561
AT 31 MARCH
2019
£M
215
17
202
434
1
Includes a £24 million negative fair value adjustment as a result of being designated as a hedged item as part of the US net corn fair value hedging relationship.
Finished goods inventories of £2 million (2019 – £1 million) are carried at net realisable value, this being lower than cost.
During the year ended 31 March 2020, the Group recognised a write-down of inventories totalling £6 million (2019 – £9 million) included
in the cost of inventories.
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 (2019 – AAA or equivalent).
Short-term highly liquid investments
Cash at bank
Cash and cash equivalents
(cid:3)
2020
£M
222
49
271
AT 31 MARCH
2019
£M
239
46
285
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
153
153
Notes to the consolidated financial statements (continued)
15. CASH AND CASH EQUIVALENTS (continued)
The carrying amount of cash and cash equivalents was denominated in the following currencies:
US dollar
Euro
Sterling
Other
Total
16. TRADE AND OTHER RECEIVABLES
AT 31 MARCH
2019
£M
258
9
1
17
285
2020
£M
195
15
42
19
271
A trade receivable is recognised if an amount of consideration that is unconditional is due from the customer (i.e. only the passage of
time is required before payment of the consideration is due). Trade receivables that do not contain a significant financing component
are measured at the transaction price.
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 historical
rates of default then adjusted for forward-looking factors specific to the debtor and economic environment. The Group considers
a receivable to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding
contractual amounts. A receivable is written off when there is no reasonable expectation of recovering the contractual cash flows.
Trade receivables
Less loss allowance provision
Trade receivables – net
Prepayments and accrued income
Margin deposits
Other receivables
Total
The amounts above do not include non-current other receivables of £nil (2019 – £2 million).
The carrying amount of trade and other receivables was denominated in the following currencies:
US dollar
Euro
Sterling
Other
Total
AT 31 MARCH
2019
£M
298
(7)
291
15
6
13
325
AT 31 MARCH
2019
£M
223
55
9
40
327
2020
£M
306
(12)
294
16
2
11
323
2020
£M
227
53
4
39
323
The gross amount of receivables, reflecting the maximum exposure to credit risk, is £335 million (2019 – £334 million).
The loss allowance provision for trade receivables as at 31 March 2020 reconciles to the opening loss allowance for that provision as
follows. There was no additional impairment of trade receivables in the year (2019 – £1 million). The effect of expected credit loss on
other receivables is not material.
AT 31 MARCH 2020
£M UNLESS OTHERWISE STATED
Expected loss rate %
Gross carrying amount
Loss allowance provision
Expected loss rate %
Gross carrying amount
Loss allowance provision
154
154
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
CURRENT
30 – 60 DAYS
PAST DUE
60 – 90 DAYS
PAST DUE
GREATER
THAN 90 DAYS
PAST DUE
2%
280
5
0%
271
–
0%
18
–
0%
16
–
1%
100%
1
–
7
7
TOTAL
306
12
AT 31 MARCH 2019
1%
100%
4
–
7
7
298
7
16. TRADE AND OTHER RECEIVABLES (continued)
At 1 April
Utilisation of provision
Change in loss allowance recognised in the income statement during the year
At 31 March
17. INVESTMENTS IN EQUITIES
Financial statements
Financial statements
AT 31 MARCH
2020
£M
7
–
5
12
2019
£M
14
(7)
–
7
Investments in equities comprise financial assets recognised at fair value through profit or loss (FVPL) and financial assets recognised
at fair value through the statement of OCI (FVOCI). 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 2019
Total gains/(losses)
•(cid:3) in operating profit
•(cid:3) in other comprehensive income
Non-qualified deferred compensation arrangements
Purchases
Disposals
Currency translation differences
At 31 March 2020
At 1 April 20181
IFRS 9 transfer1
Total gains/(losses)
•(cid:3) in operating profit
•(cid:3) 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
£M
FINANCIAL
ASSETS
AT FVOCI
£M
TOTAL
INVESTMENTS
IN EQUITIES
£M
35
24
59
–
–
(2)
5
(4)
2
36
–
21
–
–
1
15
(3)
1
35
–
2
–
1
–
–
27
–
16
–
2
–
5
–
1
24
–
2
(2)
6
(4)
2
63
–
37
–
2
1
20
(3)
2
59
1
In the prior year, the Company adopted IFRS 9 which resulted in changes to the classification of items recognised in the financial statements. Assets with 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 profit and loss (FVPL). All other measurement
categories recognised under IAS 39 have remained the same under IFRS 9 .
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 a variable-priced call option to acquire the remaining 85% share at certain
points after the acquisition of the 15% equity holding. At 31 March 2020, this option was exercisable but had not been exercised (2019 – not
exercisable). After considering all the terms of the arrangement with Sweet Green Fields (including the call option) it was determined that
the Group neither controls nor has significant influence over Sweet Green Fields. Such consideration included, inter alia, the manner in
which decisions are made about relevant activities of Sweet Green Fields. In addition, the call option is not ‘in the money’ and the Group’s
potential voting rights are therefore not considered to represent substantive rights. Accordingly the 15% equity investment and the option
to purchase the remaining shares were recognised together as a financial asset at FVPL as at the years ended 31 March 2020 and 2019.
This is not considered a significant accounting judgement.
The non-qualified deferred compensation arrangements refers to a ‘Rabbi Trust’ which is a ‘non-qualified defined contribution’ pension
scheme split between corporate-owned life insurance (COLI) assets (values are determined by the performance of variable investment
sub-accounts, similar to mutual funds, but which are only available within a variable life insurance policy) and other assets invested directly
in mutual funds. This scheme is principally for the highest-paid members of the US salaried pension scheme for compensation above limits
set by the US Internal Revenue Service. These assets of £23 million (2019 – £24 million) do not qualify as IAS 19 pension assets on the basis
that the assets are available to the creditors in the event of the Company’s bankruptcy or insolvency. Movements in these assets were
largely offset by corresponding movements on retirement benefit liabilities. Refer to Note 29.
(cid:3)
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
155
155
Notes to the consolidated financial statements (continued)
17. INVESTMENTS IN EQUITIES (continued)
The carrying value of equity investments was denominated in the following currencies:
US dollar
Sterling
Euro
Total
AT 31 MARCH
2020
£M
55
3
5
63
2019
£M
50
5
4
59
18. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill arising in a business combination is recognised as an intangible asset and is allocated to the CGU or group of CGUs that
is expected to benefit from the synergies of the business combination. Goodwill is carried at cost less any recognised impairment
losses (impairment tested annually).
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 comprise product development and computer software (including global IS/IT systems) and are amortised on
a straight-line basis over the periods of their expected benefit to the Group. Product development is amortised over five to ten years. Capitalised
costs in respect of core global IS/IT systems included within computer software are being amortised over a period of five to seven years.
Product development costs incurred on the development, design and testing of new or improved products are capitalised only when the
technical and commercial feasibility of the product has been established and prior to the product going into full production. Research and
other related expenditures are charged to the income statement in the period in which they are incurred.
Changes to intangible assets’ useful economic lives are only made if there is objective evidence that the Group expects to receive economic
benefits from these intangible assets systems over a shorter or longer period.
Cost
At 1 April 2019
Additions at cost
Disposals and write-offs
Currency translation differences
At 31 March 2020
Accumulated amortisation and impairment
At 1 April 2019
Impairment charge
Amortisation charge
Disposals and write-offs
Currency translation differences
At 31 March 2020
Net book value at 31 March 2020
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
OTHER
ACQUIRED
INTANGIBLES
£M
TOTAL
ACQUIRED
INTANGIBLES
£M
OTHER
INTANGIBLE
ASSETS
£M
GOODWILL
£M
TOTAL
£M
210
200
410
291
701
–
–
2
–
–
4
–
–
6
25
(6)
10
25
(6)
16
212
204
416
320
736
12
–
–
–
(2)
10
202
218
–
(10)
2
210
14
10
–
(10)
(2)
12
198
165
177
–
11
–
3
179
25
205
–
(6)
1
200
158
3
11
(6)
(1)
165
35
–
11
–
1
189
227
423
–
(16)
3
410
172
13
11
(16)
(3)
177
233
182
1
24
(6)
6
207
113
254
31
(2)
8
291
145
4
29
(2)
6
182
109
359
1
35
(6)
7
396
340
677
31
(18)
11
701
317
17
40
(18)
3
359
342
At 31 March 2020 the carrying value of other intangible assets is represented by product development of £40 million (2019 – £39 million),
computer software of £68 million (2019 – £66 million) and assets under construction of £5 million (2019 – £4 million). (cid:3)
156
156
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Tate & Lyle PLC Annual Report 2020
(cid:3)
18. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)
Goodwill
The carrying amount of goodwill is allocated to groups of CGUs as follows:
Allocated by reportable segment
Food & Beverage Solutions
Primary Products
Total
Financial statements
Financial statements
AT 31 MARCH
2019
£M
168
30
198
2020
£M
171
31
202
Impairment tests carried out during the year
As is required, goodwill is tested annually. For both the goodwill allocated to Food & Beverage Solutions and Primary Products cash-
generating units, the recoverable amounts were calculated based on value-in-use.
The key assumptions in the value-in-use model are derived from the Group’s Board-approved five-year plan with the most sensitive
assumptions being: 1) operating profit growth rate; 2) discount rates; and 3) long-term growth rates.
The operating profit growth rate used to estimate the future economic performance is based on estimates from past performance, and
the Group’s five-year strategic plan, which incorporates the next year’s annual forecast. A one percent decrease in the growth rate across
the five-year cash flows would decrease headroom by 10% and 8% in the Food & Beverage Solutions and Primary Products models
respectively.
Based on the risk profile of the assets tested, cash flows were discounted using a pre-tax rate of 9.3% and 8.1% in the Food & Beverage
Solutions and Primary Products models respectively (2019 – 8.6% and 8.9%). The long-term nominal 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.
At the time of performing the test, very significant headroom existed for each of the two cash-generating units to which goodwill is
allocated and there was no reasonable scenario in which impairment would be required.
Impairment charge
No impairment charges in relation to goodwill have been recognised in the current financial year. In the prior financial year, following a
strategic review of its oats ingredients business, the Group completed the disposal of this business in March 2019. The exceptional loss
of £58 million 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
As explained above, at the time of carrying out the annual impairment test, there were no reasonably possible changes in assumptions
that would give rise to an impairment loss now or during the coming year.
Following the annual test, the results were revisited in light of the current impact of Covid-19 on the Group’s performance. If the same
reasonable ‘worst case’ scenarios considered as part of the Group’s assessment of going concern and longer-term viability were applied
to the value-in-use models for goodwill impairment testing, headroom would be reduced but there would remain significant headroom,
such that there is still no reasonable scenario in which impairment would be required, either now or in 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. 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:
•(cid:3) Freehold land
•(cid:3) Freehold buildings
•(cid:3) Leasehold improvements
•(cid:3) Plant and machinery
No depreciation
20 to 50 years
Up to the length of the lease
3 to 28 years
In the 2019 financial year, leases of property, plant and equipment where the Group assumes substantially all the risks and rewards of
ownership were classified as finance leases. All other leases were classified as operating leases. The Group has adopted IFRS 16 from
1 April 2019 using the modified retrospective approach and, as a result, such leased assets are included in property, plant and equipment.
The Group has lease contracts for various items of property, plant and equipment used in its operations and which primarily comprise
railcars, properties and other miscellaneous leases such as motor vehicles and machinery. More detail on leases is presented in Note 36.
Significant disposals
During the year, the Group recorded a £4 million accelerated depreciation charge related to the closure of its Primary Products’ small,
non-core savoury ingredients business. Refer to Note 8.
In the 2019 financial year following a strategic review of its oats ingredients business, the Group completed the disposal of this business in
March 2019. The exceptional loss of £58 million 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.
(cid:3)
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
157
157
Notes to the consolidated financial statements (continued)
19. PROPERTY, PLANT AND EQUIPMENT (continued)
Cost
At 1 April 2019
Recognition of right-of-use asset on initial application of IFRS 16
Adjusted balance at 1 April 2019
Additions at cost
Transfers on completion
Disposals and write-offs
Currency translation differences
At 31 March 2020
Accumulated depreciation and impairment
At 1 April 2019
Depreciation charge
Impairment charge
Disposals and write-offs
Currency translation differences
At 31 March 2020
Net book value at 31 March 2020
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
(cid:3)
LAND
AND BUILDINGS
£M
PLANT AND
MACHINERY
£M
ASSETS IN THE
COURSE OF
CONSTRUCTION
£M
596
51
647
5
17
(1)
26
694
307
27
–
(1)
15
348
346
2 440
100
2 540
18
84
(7)
101
2 736
1 798
118
1
(7)
74
1 984
752
556
2 278
–
7
(4)
37
596
270
16
2
(4)
23
307
289
–
17
61
(70)
154
2 440
1 625
96
23
(58)
112
1 798
642
8
51
–
51
142
(101)
–
–
92
–
–
–
–
–
–
92
26
97
(68)
(6)
2
51
–
–
–
–
–
–
51
–
TOTAL
£M
3 087
151
3 238
165
–
(8)
127
3 522
2 105
145
1
(8)
89
2 332
1 190
2 860
114
–
(80)
193
3 087
1 895
112
25
(62)
135
2 105
982
8
158
158
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
Financial statements
Financial statements
20. INVESTMENTS IN JOINT VENTURES
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets
of the arrangement. Investments in joint ventures are accounted for under the equity method. They are initially recognised at cost,
which includes transaction costs. Subsequently, the Group’s share of the profit 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.
The Group’s material joint ventures are Almidones Mexicanos S.A. de C.V. (Almex) and DuPont Tate & Lyle Bio Products Company, LLC
(Bio-PDO) (see Note 37). 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 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 (expense)/income (including exchange)
Dividends paid
Other movements (including contributions)
At 31 March
NOTE
22
YEAR ENDED 31 MARCH
2020
102
28
(3)
(35)
(1)
91
2019
85
30
4
(21)
4
102
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.
Income statement
Revenue
Depreciation and amortisation
Other expense
Net finance expense
Profit before tax
Income tax expense
Profit for the year from total operations
Other comprehensive (expense)/income (including exchange)
Total comprehensive income
Dividends
Revenue
Depreciation and amortisation
Other expense
Net finance expense
Profit before tax
Income tax expense
Profit for the year from total operations
Other comprehensive income (including exchange)
Total comprehensive income
Dividends
(cid:3)
ALMEX
£M
654
(2)
(583)
(1)
68
(20)
48
(10)
38
(50)
ALMEX
£M
658
(2)
(593)
(2)
61
(18)
43
4
47
(42)
YEAR ENDED 31 MARCH 2020
BIO-PDO
£M
92
(7)
(75)
–
10
(3)
7
4
11
(27)
TOTAL
£M
746
(9)
(658)
(1)
78
(23)
55
(6)
49
(77)
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)
Tate & Lyle PLC Annual Report 2020
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159
159
Notes to the consolidated financial statements (continued)
20. INVESTMENTS 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 investments in joint ventures
Opening net assets at 1 April 2019
Profit for the year from total operations
Other comprehensive (expense)/income (including exchange)
Dividends
Other movements (including contributions)
Closing net assets at 31 March 2020
Interest in joint venture (%)
Carrying value at 31 March 2020
Opening net assets at 1 April 2018
Profit for the year from total operations
Other comprehensive income (including exchange)
Dividends
Other movements (including contributions)
Closing net assets at 31 March 2019
Interest in joint venture (%)
Carrying value at 31 March 2019
(cid:3)
160
160
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
AT 31 MARCH 2020
ALMEX
£M
BIO-PDO
£M
TOTAL
£M
45
5
212
262
10
116
45
171
91
66
21
16
103
–
–
13
13
90
111
26
228
365
10
116
58
184
181
AT 31 MARCH 2019
ALMEX
£M
BIO-PDO
£M
TOTAL
£M
48
7
187
242
6
56
77
139
103
63
39
25
127
–
–
27
27
100
ALMEX
£M
BIO-PDO
£M
103
48
(10)
(42)
(8)
91
50%
46
98
43
4
(42)
–
103
50%
52
100
7
4
(27)
6
90
50%
45
72
16
5
–
7
100
50%
50
111
46
212
369
6
56
104
166
203
TOTAL
£M
203
55
(6)
(69)
(2)
181
91
170
59
9
(42)
7
203
102
21. SHARE CAPITAL AND SHARE PREMIUM
At 31 March 2019 and 31 March 2020
Financial statements
Financial statements
ORDINARY SHARE
CAPITAL
£M
SHARE
PREMIUM
£M
117
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 2020
YEAR ENDED 31 MARCH 2019
NUMBER OF
SHARES*
COST
£M
NUMBER
OF SHARES*
468 345 950
117
468 308 934
55 721
–
37 016
468 401 671
117
468 345 950
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 30). 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:
•(cid:3) into treasury
•(cid:3) into the EBT
Transferred to employees:
•(cid:3) from treasury
•(cid:3) from the EBT
At 31 March
YEAR ENDED 31 MARCH 2020
YEAR ENDED 31 MARCH 2019
NUMBER
OF SHARES
5 251 587
–
1 635 490
(805 138)
(958 972)
5 122 967
COST
£M
NUMBER
OF SHARES
38
7 350 698
–
13
(6)
(7)
38
–
–
(1 757 254)
(341 857)
5 251 587
COST
£M
52
–
–
(12)
(2)
38
1
In the prior 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 £9 million (2019 – £8 million) and has been recognised within
financing activities in the consolidated statement of cash flows.
Treasury shares
Shares held in the EBT
Total
(cid:3)
NUMBER
OF SHARES
–
5 122 967
5 122 967
AT 31 MARCH 2020
MARKET
VALUE
£M
% OF
OUTSTANDING
SHARE CAPITAL
NUMBER
OF SHARES
AT 31 MARCH 2019
MARKET
VALUE
£M
% OF
OUTSTANDING
SHARE CAPITAL
–
34
34
–
805 138
1.1%
1.1%
4 446 449
5 251 587
6
32
38
0.2%
0.9%
1.1%
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
161
161
Notes to the consolidated financial statements (continued)
22. OTHER RESERVES
At 1 April 2018
Cash flow hedges:
•(cid:3) fair value gain in the year
•(cid:3) reclassified and reported in the income statement
in the year (operating costs)
FVOCI financial assets:
•(cid:3) fair value gain in the year
Currency translation differences:
•(cid:3) gain on currency translation of foreign operations
•(cid:3) fair value loss on net investment hedges
Share of other comprehensive income of joint ventures
Hedging losses transferred to inventory
At 31 March 2019
Cash flow hedges:
•(cid:3) fair value loss in the year
•(cid:3) hedging gain transferred to inventory
•(cid:3) tax effect of the above items
FVOCI financial assets:
•(cid:3) fair value gain in the year
Currency translation differences:
•(cid:3) gain on currency translation of foreign operations
•(cid:3) fair value loss on net investment hedges
Share of other comprehensive income/(expense) of joint
ventures
At 31 March 2020
HEDGING
RESERVE
£M
FVOCI
RESERVE
£M
CURRENCY
TRANSLATION
RESERVE
£M
PRE-IFRS
RESERVES
£M
(1)
(3)
59
104
TOTAL
£M
159
–
–
–
–
–
1
1
1
(1)
(6)
2
–
–
–
2
(2)
–
–
2
–
–
–
–
(1)
–
–
–
2
–
–
–
1
–
–
–
75
(24)
3
–
113
–
–
–
–
46
(18)
(5)
136
–
–
–
–
–
–
–
104
–
–
–
–
–
–
–
104
–
–
2
75
(24)
4
1
217
(1)
(6)
2
2
46
(18)
(3)
239
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.
The currency translation reserve includes:
•(cid:3) 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.
•(cid:3) 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 27.
The pre-IFRS reserve relates to amounts previously recorded in reserves prior to transition to IFRS and relates predominantly to merger reserves.
For the year ended 31 March 2019, there was no tax effect on the above movements in reserves.
(cid:3)
162
162
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Tate & Lyle PLC Annual Report 2020
(cid:3)
23. TRADE AND OTHER PAYABLES
Trade payables are predominantly short-term and are initially recognised at fair value, which is generally the invoice amount. The effects
of the time-value of money are not material.
Financial statements
Financial statements
Current payables
Trade payables
Social security
Accruals and deferred income
Other payables
Total
AT 31 MARCH
2019
£M
2341
6
94
8
342
2020
£M
250
6
101
13
370
1
Included in the comparative trade payables total is £5 million related to lease accruals previously recognised with respect to operating leases which have been de-recognised on
transition to IFRS 16 and the amount included in the measurement of the right-of-use assets and lease liabilities. Refer to Note 36 for further details.
There were no non-current other payables as at 31 March 2020 (2019 – £nil).
The carrying amount of trade and other payables was denominated in the following currencies:
US dollar
Euro
Sterling
Other
Total
24. BORROWINGS
AT 31 MARCH
2019
£M
246
47
22
27
342
2020
£M
268
58
21
23
370
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.
The carrying amount of a borrowing may be adjusted where it is a hedged liability in a fair value hedge (see Note 27).
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 2023–2031 (US$600,000,000)
Bank loans (unsecured)
Total loan notes
Obligations under finance leases (IAS 17)
Lease liabilities (Note 36)1
Total non-current borrowings
AT 31 MARCH
2019
£M
2
54
308
–
364
9
–
373
2020
£M
2
56
480
3
541
–
141
682
1
IFRS 16 Leases was adopted in the year without restating comparatives which increased net debt by £162 million at 31 March 2020. Total lease liabilities at 31 March 2020 include
£9 million of previously recognised obligations under finance leases in accordance with IAS 17.
(cid:3)
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
163
163
Notes to the consolidated financial statements (continued)
24. BORROWINGS (continued)
Current borrowings
6.75% Guaranteed Notes 2019 (£200,000,000)
Short-term loans and facilities
Total loan notes
Obligations under finance leases (IAS 17)
Lease liabilities (Note 36)1
Total current borrowings
AT 31 MARCH
2019
£M
203
19
222
2
–
224
2020
£M
–
10
10
–
30
40
1
IFRS 16 Leases was adopted in the year without restating comparatives which increased net debt by £162 million at 31 March 2020. Total lease liabilities at 31 March 2020 include
£9 million of previously recognised obligations under finance leases in accordance with IAS 17.
On 19 November 2019, the Group refinanced its maturing £200 million 6.75% bond principally using the proceeds of drawing down
US$100 million (£77 million) 3.31% notes due 2029 and US$100 million (£77 million) 3.41% notes due 2031, with the remaining amount
made up from cash balances.
In May 2020, the Group priced a US$200 million debt private placement which will be issued on 6 August 2020 at which point US$100 million
2.91% notes maturing in 2030 and US$100 million 3.01% notes maturing in 2032 will be drawn down.
At 31 March 2020 there were no borrowings at amortised cost subject to fair value hedges (2019 – £150 million) and, consequently, no fair
value adjustments were made to the carrying value (2019 – £3 million).
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
Lease liabilities
Industrial Revenue Bonds 2023–2036 (US$70,100,000)2
6.75% Guaranteed Notes 2019 (£200,000,000)
US$100m 3.31% US Private Placement Notes 2029
US$100m 3.41% US Private Placement Notes 2031
Bank loans (unsecured) 3
YEAR ENDED 31 MARCH
2020
3.8%
4.1%
4.2%
3.4%
6.5%
3.8%
1.6%
–
3.3%
3.4%
5.2%
2019
3.8%
4.1%
4.2%
4.1%
6.5%
–
1.6%
6.4%
–
–
–
1 Floating rate note based on US six-month LIBOR + 1.47%.
2 As part of these arrangements the Group is required to obtain credit insurance from certain banks. The annual premium cost of the credit insurance is approximately 1% of the
principal which is not included in the effective interest rate disclosed above.
3 Floating rate loan based on Brazil CDI + 1.58%.
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
At 31 March 2020, the Group had access to a US$800 million five-year committed revolving credit facility maturing in March 2024. The
financial covenant thereon is described in the ‘Liquidity risk management’ section of Note 28. At 31 March 2020, the facility had a value
of £642 million (2019 – £615 million) and was undrawn. In May 2020, the Group extended the maturity of this US$800 million revolving
credit facility by a year to 2025.
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 (principally an expected covenant breach or
insolvency of the Group).
(cid:3)
164
164
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
Financial statements
Financial statements
YEAR ENDED 31 MARCH
2020
£M
(16)
11
19
(7)
(8)
(1)
3
2
2019
£M
(21)
(9)
8
1
3
(18)
2
(16)
YEAR ENDED 31 MARCH
2020
£M
(337)
(167)
(504)
(17)
114
97
(22)
2
(24)
53
(451)
2019
£M
(392)
–
(392)
79
(2)
77
(21)
(1)
–
55
(337)
TOTAL
£M
(392)
77
–
(21)
(1)
(337)
(167)
(504)
97
–
(22)
2
(24)
(451)
25. CHANGE IN WORKING CAPITAL AND OTHER NON-CASH MOVEMENTS
Increase in inventories
Decrease/(increase) in receivables
Increase in payables
Movement in derivative financial instruments (excluding debt-related derivatives)
(Decrease)/increase in provisions for other liabilities and charges
Change in working capital
Other non-cash movements
Change in working capital and other non-cash movements
26. NET DEBT
Reconciliation of the movement in cash and cash equivalents to the movement in net debt:
Net debt carried forward from the prior year
IFRS 16 adoption at beginning of the year1
Net debt at beginning of the year
Net (decrease)/increase in cash and cash equivalents
Net in-year decrease/(increase) in borrowings and leases
Decrease in net debt resulting from cash flows
Currency translation differences2
Fair value and other movements
Leases non-cash movements
Decrease in net debt in the year
Net debt at end of the year
1
2
IFRS 16 Leases was adopted in the year without restating comparatives. IFRS 16 lease liabilities increased net debt by £162 million at 31 March 2020.
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 2018
Decrease/(increase) from cash flows3
Reclassification
Currency translation differences2
Fair value and other movements
At 31 March 2019
IFRS 16 adoption at beginning of the year1
At 1 April 2019
Movement from cash flows
Reclassification
Currency translation differences2
Fair value and other movements
Leases non-cash movements
At 31 March 2020
CASH AND CASH
EQUIVALENTS
£M
BORROWINGS AND LEASE LIABILITIES
CURRENT
£M
NON-CURRENT
£M
DEBT-RELATED
DERIVATIVES
£M
190
79
–
16
–
285
–
285
(17)
–
3
–
–
271
(16)
(2)
(208)
–
2
(224)
(25)
(249)
242
(30)
1
5
(9)
(40)
(554)
–
208
(27)
–
(373)
(142)
(515)
(157)
30
(25)
–
(15)
(682)
(12)
–
–
(10)
(3)
(25)
–
(25)
29
–
(1)
(3)
–
–
IFRS 16 Leases was adopted in the year without restating comparatives. IFRS 16 lease liabilities increased net debt by £162 million at 31 March 2020.
Includes the foreign currency element of the fair value movement on cross currency swaps and the translation of foreign denominated borrowings.
1
2
3 In the prior year, net change in borrowings included repayments of capital elements of finance leases of £2 million.
At 31 March 2020, total liabilities arising from financing activities were £722 million (2019 – £622 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. These derivative financial instruments matured during the year at the date
of the refinancing of the £200 million bond, and no additional debt-related derivative financial instruments were entered into during the
year. As such, at 31 March 2020, the Group had no such derivatives. At 31 March 2019, the net fair value of these derivatives comprised
assets of £6 million and liabilities of £31 million.
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
165
165
Notes to the consolidated financial statements (continued)
26. NET DEBT (continued)
Net debt is denominated in the following currencies:
US dollar
Euro
Sterling
Other
Total
27. FINANCIAL INSTRUMENTS
2020
£M
(488)
14
13
10
(451)
AT 31 MARCH
2019
£M
(144)
(56)
(145)
8
(337)
Derivatives are measured at fair value with any related transaction costs expensed as incurred. The treatment of changes in the value
of derivatives depends on their use as explained below.
Fair value hedges Hedging relationships are classified as fair value hedges where the hedging instrument hedges the exposure to
changes in the fair value of a recognised asset or liability that is attributable to a particular risk. Where the hedging relationship is
classified as a fair value hedge, the carrying amount of the hedged asset or liability is adjusted by, or a firm commitment is recorded
for, the change in its fair value attributable to the hedged risk only and the resulting gain or loss is recognised in the income statement
where, to the extent that the hedge is effective, it offsets the fair value gain or loss on the hedging instrument.
As explained in Note 2, for the US net corn position, a group of items representing a net position and consisting of items that
individually are eligible hedged items and which are managed together on a group basis for risk management can be designated in a
hedging relationship as a net position hedged item. As such, the Group has designated the components of its US net corn position into
two effective fair value hedge accounting relationships (net corn (futures and basis) and net co-products) whereby the hedged item
is a group of items with offsetting risk positions.
Net investment hedges A net investment hedge is the hedge of the currency exposure on the retranslation of the Group’s net
investment in a foreign operation. Net investment hedges are accounted for similarly to cash flow hedges. Changes in the fair value
of the hedging instrument are, to the extent that the hedge is effective, recognised in other comprehensive income. In the event that
the foreign operation is disposed of, the cumulative fair value gain or loss recognised in other comprehensive income is transferred
to the income statement where it is included in the gain or loss on disposal of the foreign operation.
Cash flow hedges Derivatives are also held to hedge the uncertainty in timing or amount of future forecast cash flows. Such derivatives
are classified as being part of cash flow hedge relationships. For an effective hedge, gains and losses from changes in the fair value
of derivatives are recognised in equity. Cost of hedging, where material and opted for, is recorded in a separate account within equity.
Any ineffective elements of the hedge are recognised in the income statement. Ineffectiveness may occur if there are changes to the
expected timing of the hedged transaction. If the hedged cash flow relates to a non-financial asset, the amount accumulated in equity
is subsequently included within the carrying value of that asset. For other cash flow hedges, amounts deferred in equity are taken to
the income statement at the same time as the related cash flow. When a derivative no longer qualifies for hedge accounting, any
cumulative gain or loss remains in equity until the related cash flow occurs. When the cash flow takes place, the cumulative gain
or loss is taken to the income statement. If the hedged cash flow is no longer expected to occur, the cumulative gain or loss is taken
to the income statement immediately.
Financial instruments by category
Set out below is a comparison by category of carrying values and fair values of the Group’s financial assets and financial liabilities:
AMORTISED
COST/CASH
£M
DERIVATIVES IN
A HEDGING
RELATIONSHIP
£M
NOTES
HEDGED
ITEM (FAIR
VALUE
HEDGE)
£M
INVESTMENTS
IN EQUITIES
£M
TOTAL
CARRYING
VALUE
£M
FAIR VALUE
£M
AT 31 MARCH 2020
17
16
15
23
24
–
307
271
(364)
(722)
–
–
–
–
–
–
–
–
–
–
–
–
1
(17)
–
–
–
–
–
–
–
–
–
–
48
63
–
–
–
–
–
–
–
–
–
63
307
271
(364)
(722)
–
–
1
63
307
271
(364)
(727)
–
–
1
(17)
(17)
48
48
Investments in equities
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Borrowings
Derivative assets/(liabilities) used to manage net debt
•(cid:3) currency swaps
•(cid:3) interest rate swaps
Forward foreign exchange contract
Commodity derivative net liabilities
Other net financial assets
•(cid:3) commodity pricing contracts
(cid:3)
166
166
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
Financial statements
Financial statements
27. FINANCIAL INSTRUMENTS (continued)
Financial instruments by category (continued)
Investments in equities
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Borrowings
Derivative (liabilities)/assets used to manage net debt
•(cid:3) currency swaps
•(cid:3) interest rate swaps
Other derivative (liabilities)/assets
•(cid:3) commodity pricing contracts
AMORTISED
COST/CASH
£M
DERIVATIVES
IN A HEDGING
RELATIONSHIP
£M
NOTES
DERIVATIVES
NOT IN A
HEDGING
RELATIONSHIP
£M
INVESTMENTS
IN EQUITIES
£M
TOTAL
CARRYING
VALUE
£M
FAIR VALUE
£M
AT 31 MARCH 2019
17
16
15
23
24
–
312
285
(336)
(597)
–
–
–
–
–
–
–
–
(30)
5
–
–
–
–
–
–
–
(1)
27
59
–
–
–
–
–
–
–
59
312
285
(336)
(597)
(30)
5
59
312
285
(336)
(607)
(30)
5
26
26
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 £16 million (2019 – £15 million) relating to prepayments. Trade and other payables
presented above excludes £6 million (2019 – £6 million) relating to social security.
There are no listed bonds as at 31 March 2020. US Private Placement Notes with a carrying value of £480 million and a fair value of
£485 million, have a fair value measured by discounted estimated cash flows based on broker dealer quotations and are categorised as
Level 3 for fair value measurement. The remaining borrowings had 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.
As at 31 March 2019 borrowings with a carrying value of £203 million related to listed bonds with a fair value of £207 million according to
quoted market prices and were categorised as Level 1 for fair value measurement. Borrowings with a carrying value of £308 million related
to US Private Placement Notes with a fair value of £314 million according to broker dealer quotations and were categorised as Level 3 for
fair value measurement. The remaining borrowings had 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) and other financial assets/(liabilities) are presented in the statement of financial position as follows:
Non-current derivative financial instruments
Current derivative financial instruments
Other non-current financial assets/(liabilities)
Other current financial assets/(liabilities)
AT 31 MARCH 2020
AT 31 MARCH 2019
ASSETS
£M
1
5
6
–
67
67
LIABILITIES
£M
(2)
(20)
(22)
–
(19)
(19)
ASSETS
£M
LIABILITIES
£M
–
48
48
–
–
–
(1)
(46)
(47)
–
–
–
Derivatives are only used for economic hedging purposes and not as speculative investments.
Fair value hedges
In the 2019 financial year, the Group employed interest rate swap contracts to hedge interest rate risks associated with its borrowings.
This was achieved by swapping fixed for floating rates to meet the Group’s risk management objectives. Refer to Note 28. These derivative
financial instruments matured during the current year at the date of the refinancing of the £200 million bond and no additional debt-related
derivative financial instruments were entered into during the year. This fair value hedge was therefore discontinued during the year.
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 hedging instruments used to determine hedge effectiveness
Change in intrinsic value of hedging item used to determine hedge effectiveness
Weighted average floating interest rate achieved for the year
Ineffectiveness recognised in profit or loss
AT 31 MARCH
2019
£M
153
3
150
2020
£M
–
–
–
Nov 2019
Nov 2019
1:1
(3)
3
3.7%
–
1:1
(4)
4
3.6%
–
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
167
167
Notes to the consolidated financial statements (continued)
27. FINANCIAL INSTRUMENTS (continued)
The Group has designated the components of its US net corn position into two effective fair value hedge accounting relationships (net
corn (futures and basis) and net co-products) whereby the hedged item is a group of items with offsetting risk positions. Refer to Note 2.
US NET CORN POSITION (FUTURES AND BASIS) IN EFFECTIVE FAIR VALUE HEDGE ACCOUNTING RELATIONSHIPS
Nominal amounts of corn futures contracts (expressed in millions of bushels)
Gross carrying amount of outstanding hedged items: assets
Gross carrying amount of outstanding hedged items: liabilities
Carrying amount of hedging instrument
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
Ineffectiveness recognised in profit or loss
US NET CORN POSITION (NET CO-PRODUCTS) IN EFFECTIVE FAIR VALUE HEDGE ACCOUNTING RELATIONSHIPS
Nominal amounts of co-product futures contracts (expressed in metric tonnes)
Gross carrying amount of outstanding hedged items: assets
Gross carrying amount of outstanding hedged items: liabilities
Carrying amount of hedging instrument
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
Ineffectiveness recognised in profit or loss
AT 31 MARCH
2020
£M
37bu
41
(36)
(4)
1:1
(2)
4
2
AT 31 MARCH
2020
£M
–
27
(8)
–
1:1
–
2
2
Net investment hedges
The Group employs borrowings and currency swap contracts (no longer held as at 31 March 2020) to hedge the currency risk associated
with its net investments in subsidiaries located in the US and Europe. In addition, in the year ended 31 March 2020, a weighted average total
of £6 million of the Group’s liabilities were designated as a hedge of the net investment in the Group’s European operations. Translation of
these liabilities taken to reserves was a loss of £1 million. The currency swaps contracts matured during the current year at the date of the
refinancing of the £200 million bond and no additional debt-related derivative financial instruments were entered into during the year. This
net investment hedge was therefore discontinued during the year.
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
Carrying amount of hedging instrument
Maturity date
Hedge ratio
Change in intrinsic value of hedging instruments used to determine hedge effectiveness
Change in intrinsic value of hedging item used to determine hedge effectiveness
Weighted average foreign currency rate for the year (/£1)
Ineffectiveness gain recognised in profit or loss
Cumulative (loss)/gain remaining in translation reserve
(cid:3)
AT 31 MARCH
2019
£M
178
(9)
30
2020
£M
–
(1)
–
Nov 2019
Nov 2019
1:1
–
1
1:1
(8)
9
$1.25/€1.13
$1.31/€1.16
–
(32)/1
1
(31)/1
168
168
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
27. FINANCIAL INSTRUMENTS (continued)
Net investment hedges (continued)
BORROWINGS USED TO NET INVESTMENT HEDGE CURRENCY TRANSLATION RISK
Notional principal amounts of borrowings (weighted liability)
Translation of borrowings recognised in currency translation reserve
Carrying amount of hedging instrument
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
Cumulative loss remaining in translation reserve1
Financial statements
Financial statements
AT 31 MARCH
2019
£M
218
(16)
218
2020
£M
396
(16)
396
Oct 2023-Nov 2031 Oct 2023–2027
1:1
(16)
16
$1.27
–
(117)
1:1
(16)
16
$1.32
–
(101)
1 Cumulative loss remaining in translation reserve in relation to US Private Placement Notes is £61 million (2019 – £45 million).
Cash flow hedges
The Group employs pricing contracts, principally futures, to hedge cash flow risk associated with forecast purchases and sales of
commodities or purchases of chemicals used in the manufacturing process which are designated as cash flow hedges. The fair value
of these hedging instruments at 31 March 2020 is £6 million liability (2019 – £1 million liability). There was no ineffectiveness recorded
in the current or prior financial year. As at 31 March 2020 the Group also held forward foreign exchange contracts designated as cash flow
hedges with a fair value of £1 million assets (2019 – £nil).
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:
•(cid:3) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group 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.
•(cid:3) 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.
•(cid:3) 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 and fair value adjustments due to risks
hedged at 31 March 2020 and 31 March 2019:
Assets at fair value
Financial assets at FVPL
Financial assets at FVOCI
Derivative financial instruments:
•(cid:3) forward foreign exchange contracts
•(cid:3) commodity derivatives
Other financial assets (commodity pricing contracts)1
Assets at fair value
Liabilities at fair value
Derivative financial instruments:
•(cid:3) commodity derivatives
Other financial liabilities (commodity pricing contracts)1
Liabilities at fair value
1 Fair value adjustments due to risks hedged.
(cid:3)
NOTES
LEVEL 1
£M
LEVEL 2
£M
LEVEL 3
£M
TOTAL
£M
AT 31 MARCH 2020
17
17
–
–
–
5
–
5
(22)
–
(22)
–
–
1
–
–
1
–
(3)
(3)
36
27
–
–
67
130
–
(16)
(16)
36
27
1
5
67
136
(22)
(19)
(41)
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
169
169
Notes to the consolidated financial statements (continued)
27. FINANCIAL INSTRUMENTS (continued)
Financial instruments measured at fair value: the fair value hierarchy (continued)
Assets at fair value
Financial assets at FVPL
Financial assets at FVOCI
Derivative financial instruments:
•(cid:3) currency swaps
•(cid:3) interest rate swaps
•(cid:3) commodity pricing contracts
Assets at fair value
Liabilities at fair value
Derivative financial instruments:
•(cid:3) currency swaps
•(cid:3) commodity pricing contracts
Liabilities at fair value
NOTES
LEVEL 1
£M
LEVEL 2
£M
LEVEL 3
£M
TOTAL
£M
AT 31 MARCH 2019
17
17
–
–
–
–
2
2
–
(7)
(7)
–
–
1
5
1
7
(31)
(7)
(38)
35
24
–
–
39
98
–
(2)
(2)
35
24
1
5
42
107
(31)
(16)
(47)
Level 3 financial assets
The following table reconciles the movement in the Group’s net financial instruments and fair value adjustments due to risks hedged
classified in Level 3 of the fair value hierarchy:
At 1 April 2018
Income statement:
•(cid:3) prior year amounts settled
•(cid:3) current year net gain/(loss)1
Other comprehensive income
Non-qualified deferred compensation
arrangements (Note 17)
Purchases
Disposals
Currency translation differences
At 31 March 2019
Income statement:
•(cid:3) prior year amounts settled
•(cid:3) current year net gain/(loss)1
Other comprehensive income
Non-qualified deferred compensation
arrangements (Note 17)
Purchases
Disposals
Currency translation differences
At 31 March 2020
1 Unrealised.
COMMODITY
PRICING
CONTRACTS –
ASSETS
£M
COMMODITY
PRICING
CONTRACTS –
LIABILITIES
£M
FINANCIAL
ASSETS
AT FVPL
£M
11
(10)
38
–
–
–
–
–
39
(37)
65
–
–
–
–
–
67
(5)
5
(2)
–
–
–
–
–
(2)
2
(16)
–
–
–
–
–
(16)
21
–
–
–
1
15
(3)
1
35
–
–
–
(2)
5
(4)
2
36
FINANCIAL
ASSETS
AT FVOCI
£M
16
TOTAL
£M
43
–
–
2
–
5
–
1
24
–
–
2
–
1
–
–
(5)
36
2
1
20
(3)
2
96
(35)
49
2
(2)
6
(4)
2
27
114
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 28. The table below describes the valuation techniques in relation to Level 3 financial instruments
and isolates the unobservable inputs.
(cid:3)
170
170
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
Financial statements
Financial statements
27. FINANCIAL INSTRUMENTS (continued)
Level 3 financial assets (continued)
TYPE
VALUATION TECHNIQUE
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.
SIGNIFICANT
UNOBSERVABLE INPUTS
SENSITIVITY OF THE FAIR VALUE MEASUREMENT
IN REASONABLE CHANGES TO INPUTS
1. Co-products
1. 25% increase/(decrease) in the price of co-products
2. Basis
would result in a net increase/(decrease) in fair
value of £6 million (2019 – £5 million) in respect
of Level 3 financial instruments.
2. 25% increase/(decrease) in the cost of basis would
result in a net increase/(decrease) in fair value of
£2 million (2019 – £3 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.
As discussed in Note 2, there is significant estimation uncertainty in determining the fair values of the key unobservable inputs. The two
key unobservable inputs are shown in the table above, together with the impact of a reasonably possible change in assumptions on the
fair value of the level 3 financial assets/liabilities only.
28. 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 contracts, 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.
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 the commodity trading functions in the US and Europe. 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. As noted in Note 2, in order to manage the commodity price risk the Group has
designated the components of its US net corn position into two effective fair value hedge accounting relationships (net corn (futures
and basis) and net co-products) whereby the hedged item is a group of items with offsetting risk positions. In addition, the Group applies
a limited level of cash flow hedge accounting to its economic price exposure on the purchase and sales of certain commodities and
purchase of chemicals used in the production process.
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, 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 is set out
in Note 27.
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% change1
1 £nil impact at 31 March 2020 as the Group no longer held Euro currency swaps contracts.(cid:3)
AT 31 MARCH 2020
AT 31 MARCH 2019
INCOME
STATEMENT -/+
£M
1
–
EQUITY -/+
£M
44
–
INCOME
STATEMENT -/+
£M
–
1
EQUITY -/+
£M
42
5
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
171
171
Notes to the consolidated financial statements (continued)
28. RISK MANAGEMENT (continued)
Interest rate management
The Group has an exposure to interest rate risk, arising principally from changes in US dollar, sterling and euro interest rates. In the
2019 financial year, this risk was managed by fixing or capping portions of debt using interest rate derivatives to achieve a target level of
fixed/floating rate net debt, which aimed to optimise net finance expense and reduce volatility in reported earnings. In the 2020 financial
year, the same objective was achieved by ensuring an optimal mix of fixed and floating rate debt and the Group retains the option of
entering into interest rate swaps if required. The Group’s policy is that between 30% and 75% of Group net debt, excluding lease liabilities
under IFRS 16, is fixed for more than one year and that no interest rates are fixed for more than 12 years. However, an exemption to permit
a higher percentage applies where both the net debt/EBITDA ratio is below one times and net debt is lower than £500 million.
The proportion of net debt managed by the Group’s treasury function at 31 March 2020 that was fixed or capped for more than one
year was 140% (2019 – 70%). At 31 March 2020, the longest term of any fixed rate debt held by the Group was until November 2031
(2019 – October 2027).
Given the proportion of debt that is fixed rate debt, as at 31 March 2020, if interest rates increased by 100 basis points, Group profit before
tax would increase by £1 million (2019 – £1 million decrease). If interest rates decreased by 100 basis points, or less where applicable,
Group profit before tax would decrease by £nil (2019 – £1 million increase). If the Group maintains a consistent level of working capital
benefit in relation to supply-chain financing arrangements (see ‘Liquidity risk management’ section) then an increase in interest rates
of 100 basis points would decrease Group profit before tax by £2 million (2019 – £1 million).
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 aligns with the economics of the
business and minimises price risk volatility. The Group has designated the components of its US net corn position into two effective fair
value hedge accounting relationships (net corn (futures and basis) and net co-products) whereby the hedged item is a group of items with
offsetting risk positions. The Group uses financial instruments (mainly corn futures contracts) to manage this net position.
There is estimation required in determining the fair value of certain components of this net position. The nature of these estimates is
disclosed in Note 2. Given the net position for corn, as at 31 March 2020, a 50% increase/decrease in the price of corn would result in
a decrease/increase to the income statement of £2 million (2019 – £1 million) and related decrease/increase in other components of
equity of £1 million (2019 – £1 million).
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 27. Full details of the valuation technique are also included in Note 27.
Additionally, the Group employs limited pricing contracts, principally futures, to hedge cash flow risk associated with certain forecast
purchases and sales of commodities and purchases of chemicals used in the manufacturing process which are designated as cash flow
hedges. Refer to Note 27.
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 Credit Safe
(2019 – Dun & Bradstreet and Credit Risk Monitor). In cases where published financial ratings are not available or inconclusive, credit
application, reference checking, measurement of performance against agreed terms, 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 166. Refer to Note 16 for the effect
of expected credit loss on the Group’s trade receivables.
(cid:3)
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Tate & Lyle PLC Annual Report 2020
(cid:3)
Financial statements
Financial statements
28. RISK MANAGEMENT (continued)
Liquidity risk management
The Group manages its exposure to liquidity risk and ensures maximum flexibility in meeting changing business needs by maintaining
access to a wide range of funding sources, including capital markets and bank borrowings. 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 £271 million (2019 – £285 million) and had committed undrawn facilities
of £642 million (2019 – £615 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 2020, the average maturity of the Group’s committed financing was 7.2 years (2019 – 4.4 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 prior year and matures in 2024
(refer to Note 24). In May 2020 the Group extended the maturity of this US$800 million revolving credit facility by a year to 2025. 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$600 million of US Private Placement notes which mature between 2023 and 2031. These notes contain
financial covenants that the multiple of net debt to EBITDA, as defined in the note purchase agreement, should not be greater than
3.5 times. In May 2020, the Group priced a US$200 million debt private placement which will be issued on 6 August 2020 at which point
US$100 million 2.91% notes maturing in 2030 and US$100 million 3.01% notes maturing in 2032 will be drawn down.
The ratios for these financial covenants were:
Net debt/EBITDA1
Interest cover2
YEAR ENDED 31 MARCH
2020
TIMES
0.6
–
2019
TIMES
0.7
15.3
1 This financial covenant applies to both the revolving credit facility and US Private Placement notes at 31 March 2020 and 31 March 2019.
2 This financial covenant only applies to the US Private Placement notes at 31 March 2019 and does not apply at 31 March 2020.
The Group monitors compliance against all its financial obligations and it is Group policy to manage the consolidated statement of
financial position so as to operate well within these covenanted restrictions. In both the current and comparative reporting periods,
the Group complied with its financial covenants at all measurement points. (The Group is required to report on covenants after the
interim and year-end reporting dates).
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. In the prior year, 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. In the current year, the Group stopped the use of the interest cover KPI as it is no longer
a covenant for the US Private Placements notes. The simplified calculation of net debt to EBITDA is reported in Note 4.
(cid:3)
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173
173
Notes to the consolidated financial statements (continued)
28. 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 excluding leases
Lease liabilities1
Interest on borrowings
Trade and other payables
Derivative contracts:
•(cid:3) receipts
•(cid:3) payments
Commodity derivatives
Liquidity analysis
Borrowings including finance leases
Interest on borrowings
Trade and other payables
Derivative contracts:
•(cid:3) receipts
•(cid:3) payments
Commodity pricing contracts
AT 31 MARCH 2020
< 1 YEAR
£M
1 – 5 YEARS
£M
> 5 YEARS
£M
(2)
(36)
(19)
(364)
90
(90)
(16)
(112)
(110)
(69)
–
–
–
(1)
(431)
(48)
(54)
–
–
–
–
AT 31 MARCH 2019
< 1 YEAR
£M
1 – 5 YEARS
£M
> 5 YEARS
£M
(212)
(27)
(336)
362
(387)
(5)
(115)
(53)
(259)
(31)
–
–
–
–
–
–
–
–
1
IFRS 16 Leases was adopted in the year without restating comparatives. IFRS 16 lease liabilities increased net debt by £162 million by 31 March 2020.
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 (2019 only), forward exchange contracts and interest rate swaps (2019 only). Commodity
pricing contracts included above represent options and futures. Commodity pricing contracts classified within Level 2 and Level 3 of fair
value measurement (included in other current financial assets/(liabilities) on the balance sheet) 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.
The Group also participated in certain customer-led supply chain financing arrangements which resulted in an earlier payment through
an intermediary (usually a bank) at a discount. Other than a working capital benefit relating to these arrangements of £174 million in
the year ended 31 March 2020 (2019 – £139 million), there is no further impact on the Group’s accounting on the basis that once the
intermediary has settled the receivable there is no further recourse to the Group in the event the customer defaults on its payment to
the intermediary. The classification of the receivable is not changed as the Group is not able to instigate collection ahead of the contractual
terms of this arrangement meaning that the business model’s objective continues to be holding assets in order to collect contractual
cash flows. The discount incurred is recorded as a reduction of revenue.
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 2020,
the long-term credit rating from Moody’s was Baa2 (stable outlook) (2019 – Baa2) and from S&P was BBB (stable outlook) (2019 – BBB).
The Group regards its total capital as follows:
Net debt1
Equity attributable to owners of the Company
Total capital
NOTE
26
2020
£M
451
1 399
1 850
2019
£M
337
1 489
1 826
1 IFRS 16 Leases was adopted in the year without restating comparatives. IFRS 16 lease liabilities increased net debt by £162 million by 31 March 2020.
(cid:3)
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(cid:3)
Financial statements
Financial statements
29. RETIREMENT BENEFIT OBLIGATIONS
For accounting purposes a valuation of each of the defined benefit plans is carried out annually at 31 March using independent
qualified actuaries. Benefit obligations are measured using the projected unit credit method and are discounted using the market
yields on high-quality corporate bonds denominated in the same currency as, and of similar duration to, the benefit obligations.
Plan assets are measured at their fair value at the period-end date. Where a plan holds a qualifying insurance policy, the fair value
of the policy is equivalent to the present value of the related benefit obligations.
A deficit or surplus is recognised on each plan, representing the difference between the present value of the benefit obligation and
the fair value of the plan assets.
The costs of the defined benefit plan that are recognised in the income statement include the current service cost, any past service
cost and the interest on the net deficit or surplus. Gains or losses on curtailments or settlements of the plans are recognised in the
income statement in the period in which the curtailment or settlement occurs. Plan administration costs incurred by the Group are
also recognised in the income statement. Interest on the net deficit or surplus is calculated by applying the discount rate that is used
in measuring the present value of the benefit obligation to the opening deficit or surplus.
Re-measurements of the deficit or surplus are recognised in other comprehensive income. Re-measurements comprise differences
between the actual return on plan assets (less asset management expenses) and the interest on the plan assets and actuarial gains
and losses. Actuarial gains and losses represent the effect of changes in the actuarial assumptions made in measuring the present
value of the benefit obligation and experience differences between those assumptions and actual outcomes. Actuarial gains and
losses are recognised in full in the period in which they occur.
For defined contribution plans contributions made by the Group to defined contribution pension schemes are recognised in the income
statement in the period in which they fall due.
Plan information
The Group operates a number of defined benefit pension plans, principally in the UK and the US.
The UK plans primarily comprise funded retirement benefit plans where plan assets were previously held separately from those of the Group in funds
that were under the control of trustees.
On 18 September 2019, the Group supported the trustees of the main UK pension scheme in completing a £930 million bulk annuity insurance
policy ‘buy-in’ for that scheme. As a result, the assets of the main UK pension scheme were replaced with an insurance asset matching UK scheme
liabilities. Under a ‘buy-in’, an insurance company undertakes to ‘track’ the liability with an insurance policy that exactly matches the liability, thereby
enabling full netting of the liability being tracked. A ‘buy-in’ is not a settlement and the liability is not derecognised as the Group retains ultimate
responsibility for funding the plan. The impact of this transaction was to record a re-measurement loss of £195 million to other comprehensive
income. There was no impact on profit before tax.
The UK 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:
•(cid:3) two funded plans where plan assets are held separately from those of the Group in funds that are under the control of an investment
management committee. These plans are closed to new entrants and to future accrual
•(cid:3) 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
•(cid:3) a retirement benefit plan for certain employees which is unfunded and non-qualified for tax purposes
•(cid:3) 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 2020 was
£75 million (2019 – £77 million). The Group paid £4 million (2019 – £3 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.
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 £8 million (2019 – £10 million).
(cid:3)
Tate & Lyle PLC Annual Report 2020
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175
175
Notes to the consolidated financial statements (continued)
29. RETIREMENT BENEFIT OBLIGATIONS (continued)
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 (deficit)/surplus
Presented in the statement of financial position as:
Retirement benefit surplus
Retirement benefit deficit
Net (deficit)/surplus
AT 31 MARCH 2020
AT 31 MARCH 2019
UK PLANS*
£M
US PLANS
£M
TOTAL
£M
UK PLANS*
£M
US PLANS
£M
TOTAL
£M
(896)
(4)
(900)
881
(19)
3
(22)
(19)
(569)
(141)
(710)
526
(184)
1
(185)
(184)
(1 465)
(145)
(1 610)
1 407
(203)
(994)
(3)
(997)
1 178
181
4
(207)
(203)
201
(20)
181
(516)
(134)
(650)
493
(157)
6
(163)
(157)
(1 510)
(137)
(1 647)
1 671
24
207
(183)
24
*
Includes £4 million (2019 – £3 million) relating to legacy unfunded retirement benefit plans of European subsidiaries.
Net defined benefit asset/(liability) reconciliation
Net surplus/(deficit) at 1 April 2019
Income statement:
•(cid:3) current service costs
•(cid:3) administration costs
•(cid:3) Net interest income UK plans
•(cid:3) Net interest expense US plans
Other comprehensive income:
UK PLANS
£M
US PLANS
FUNDED
£M
US PLANS*
UNFUNDED
£M
181
(23)
(134)
TOTAL
£M
24
–
(1)
5
–
–
(1)
–
–
(2)
–
–
(5)
(2)
(2)
5
(5)
•(cid:3) actual return (lower)/higher than interest on plan assets
(78)
20
–
(58)
•(cid:3) actuarial (loss)/gain:
–(cid:3) impact of the ‘buy-in’
–(cid:3) changes in financial assumptions
–(cid:3) changes in demographic assumptions
–(cid:3) experience against assumptions
Other movements:
•(cid:3) employer’s contribution
•(cid:3) non-qualified deferred compensation arrangements
•(cid:3) currency translation differences
Net deficit at 31 March 2020
*
Included within US unfunded plans is the retirement medical plan of £75 million (2019 – £77 million).
(cid:3)
(195)
35
12
8
15
–
(1)
(19)
–
(50)
6
2
2
2
(1)
(43)
–
(10)
5
4
8
–
(7)
(195)
(25)
23
14
25
2
(9)
(141)
(203)
176
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Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
29. RETIREMENT BENEFIT OBLIGATIONS (continued)
Analysis of movement in the benefit obligations
At 1 April 2019
Income statement:
•(cid:3) current service costs
•(cid:3) interest costs
Other comprehensive income:
•(cid:3) actuarial (loss)/gain:
–(cid:3) changes in financial assumptions
–(cid:3) changes in demographic assumptions
–(cid:3) experience against assumptions
Other movements:
•(cid:3) benefits paid
•(cid:3) non-qualified deferred compensation arrangements
•(cid:3) currency translation differences
At 31 March 2020
Analysis of movement in plan assets
At 1 April 2019
Income statement:
•(cid:3) administration costs
•(cid:3) interest gains
Other comprehensive income:
•(cid:3) actual return (lower)/higher than interest on plan assets
•(cid:3) impact of the ‘buy-in’
Other movements:
•(cid:3) employer contributions
•(cid:3) benefits paid
•(cid:3) currency translation differences
At 31 March 2020
(cid:3)
Financial statements
Financial statements
UK PLANS
£M
US PLANS
FUNDED
£M
US PLANS
UNFUNDED
£M
TOTAL
£M
(997)
(516)
(134)
(1 647)
–
(23)
–
(19)
(2)
(5)
(50)
(10)
35
12
8
66
–
(1)
(900)
6
2
29
2
(23)
(569)
5
4
8
–
(7)
(2)
(47)
(25)
23
14
103
2
(31)
(141)
(1 610)
UK PLANS
£M
US PLANS
FUNDED
£M
US PLANS
UNFUNDED
£M
1 178
493
(1)
28
(78)
(195)
15
(66)
–
881
(1)
19
20
–
2
(29)
22
526
–
–
–
–
–
–
–
–
–
TOTAL
£M
1 671
(2)
47
(58)
(195)
17
(95)
22
1 407
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177
177
Notes to the consolidated financial statements (continued)
29. 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.
PRINCIPAL ASSUMPTIONS
Inflation rate
Expected rate of salary increases
Expected rate of pension increases:
•(cid:3) deferred pensions
•(cid:3) pensions in payment
Discount rate
Average life expectancy
•(cid:3) male aged 65 now/in 20 years
•(cid:3) female aged 65 now/in 20 years
AT 31 MARCH 2020
AT 31 MARCH 2019
UK
1.8%/2.8%
n/a
1.8%
2.8%
2.3%
US
2.5%
3.0%
n/a
n/a
2.9%
UK
2.3%/3.3%
n/a
2.3%
3.2%
2.4%
US
2.5%
3.5%
n/a
n/a
3.8%
21.1/22.8 years 20.6/22.2 years 21.3/23.0 years 20.5/22.2 years
23.5/25.2 years 22.5/24.1 years 23.4/25.2 years 22.6/24.2 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 (2019 – 7.0%), grading down to 6%
by 2023, and used a discount rate of 2.8% (2019 – 3.7%).
At 31 March 2020, 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 rate1
Life expectancy
Discount rate
INCREASE/(DECREASE) IN OBLIGATION
INCREASE IN
SURPLUS/
(DEFICIT)
£M
DECREASE IN
SURPLUS/
(DEFICIT)
£M
46
69
(94)
(43)
(68)
105
CHANGE IN
ASSUMPTIONS +/-
50 bp
1 year
50 bp
1
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
LDI fixed income
Cash
Unquoted
Investment funds
Derivatives
Insurance policies
YEAR ENDED 31 MARCH 2020
YEAR ENDED 31 MARCH 2019
UK3
£M
US
£M
TOTAL
£M
2
2
–
6
–
–
9
1
–
861
881
–
–
–
–
–
522
–
–
–
4
526
2
2
–
6
–
522
9
1
–
865
1 407
UK
£M
3
156
781
289
(334)
–
15
1
12
255
1 178
US
£M
–
332
157
–
–
–
–
–
–
4
493
TOTAL
£M
3
488
938
289
(334)
–
15
1
12
259
1 671
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.
3 During the year, the Group completed a £930 million bulk annuity insurance policy ‘buy-in’ for the main UK pension scheme.
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 £4 million (2019 – £3 million) into the US unfunded retirement medical plans and £4 million (2019 – £4 million) into the
US unfunded pension plans to meet the cost of providing benefits in the financial year.
(cid:3)
178
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Tate & Lyle PLC Annual Report 2020
(cid:3)
29. RETIREMENT BENEFIT OBLIGATIONS (continued)
Maturity profile
At 31 March 2020, the weighted average duration of the plans and the benefit payments expected by the plans are as follows:
Financial statements
Financial statements
Weighted average duration
Benefit payments expected:
•(cid:3) within 12 months
•(cid:3) between 1 to 5 years
•(cid:3) between 6 to 10 years
UK PLANS
£M
US PLANS
£M
13.9
11.4
42
167
215
41
165
197
TOTAL
£M
12.8
83
332
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 2019 was concluded during the
year ended 31 March 2020 and, given that the liabilities were secured through the purchase of a bulk annuity insurance policy, both core
contributions to the scheme and supplementary contributions to the secured funding account (£12 million per annum and £6 million per
annum, respectively), ceased with effect from 1 October 2019. Other than meeting ongoing administration costs the Group does not expect
to make any further contributions in relation to the main UK scheme until the financial year ending 31 March 2022 when the Group
anticipates a one-off contribution to settle a post transaction price adjustment in respect of the bulk annuity insurance policy. Payments to
the main UK scheme of £14 million in the year ended 31 March 2020 include a principal funding contribution of £6 million, a supplementary
contribution of £6 million and £2 million in fees and expenses met on behalf of the scheme.
During the year ending 31 March 2021 the Group expects to contribute approximately £9 million to its defined benefit pension plans and
to pay approximately £5 million in relation to retirement medical benefits.
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.
Risk mitigation
RISK
ACTION TAKEN
Investment and
longevity risks
The investment and longevity risks for the main UK scheme have been fully insured through the purchase of a
qualifying bulk annuity insurance policy during the year ended 31 March 2020, whilst the remaining assets of the
funded defined benefit plans in the US are predominately held in fixed interest security type investments, as a result
of the de-risking initiatives through the sale of equities and some investment funds. At 31 March 2020 £865 million
(2019 – £259 million) of the benefit obligation was fully matched by qualifying insurance policies that also mitigate
longevity and investment risks.
The bulk annuity insurance policy has nullified the interest rate risk for the main UK Scheme. For the US funded plans
the Group seeks to ensure that, as far as practicable, the investment portfolios are invested in securities with
maturities and in currencies that match the expected future benefit payments as they fall due.
Inflation risk for the main UK Scheme has also been nullified due to the bulk annuity policy. The deferred pensions and
pensions in payment in the US funded plans do not attract inflation increases. Some inflation risk exists in relation to
the employee members' benefits which is mitigated by holding index-linked government bonds and corporate bonds.
Interest rate
risk
Inflation risk
(cid:3)
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
179
179
Notes to the consolidated financial statements (continued)
30. SHARE-BASED PAYMENTS
All of the awards granted under the existing plans are classified as equity-settled awards. The Group recognises compensation expense
based on the fair value of the awards measured at the grant date using the Black-Scholes option pricing model. Fair value is not
subsequently re-measured unless relevant conditions attaching to the award are modified.
Fair value reflects any market performance conditions and all non-vesting conditions. Adjustments are made to the compensation
expense to reflect actual and expected forfeitures due to failure to satisfy service conditions or non-market performance conditions.
The resulting compensation expense is recognised in the income statement on a straight-line basis over the vesting period and a
corresponding credit is recognised in equity. In the event of the cancellation of an award the compensation expense that would have
been recognised over the remainder of the vesting period is recognised immediately in the income statement.
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 2020 and 2019 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 £14 million
(2019 – £18 million).
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. For awards made from 1 April 2019, up to 40% of each award vests dependent on the above mentioned
ROCE target. Up to 40% of each award vests based on the compound annual growth of the Group’s adjusted earnings per share with the
remaining 20% from compound annual growth of the Food & Beverage Solutions volume over the performance period.
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 relating to specific awards made to executive directors are set out in the Directors’ Remuneration Report on pages
100 to 120.
(cid:3)
180
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Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
30. SHARE-BASED PAYMENTS (continued)
Movements in the year
Movements in the awards outstanding during the year were as follows:
Outstanding at 1 April
Granted
Exercised
Lapsed
Outstanding at 31 March
Exercisable at 31 March
Financial statements
Financial statements
2020
WEIGHTED
AVERAGE
EXERCISE PRICE
(PENCE)
13p
15p
10p
10p
15p
AWARDS
(NUMBER)
11 452 236
3 768 268
(2 977 197)
(1 949 363)
10 293 944
AWARDS
(NUMBER)
11 113 907
4 745 186
(3 442 524)
(964 333)
11 452 236
59 749
254p
208 598
2019
WEIGHTED
AVERAGE
EXERCISE PRICE
(PENCE)
13p
9p
5p
15p
13p
63p
The weighted average market price of the Company’s ordinary shares on the dates on which awards were exercised during the year was
726p (2019 – 666p).
Awards granted in the year
During the year, PSP awards were granted over 3,592,831 shares (2019 – 4,094,623 shares), RSAs were granted over 78,984 shares
(2019 – 439,096 shares), no deferred shares issued under the Group Bonus Plan were granted in the year (2019 – 133,095 shares) and
Sharesave options were granted over 96,453 shares (2019 – 78,372 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 2020
YEAR ENDED 31 MARCH 2019
PSP
SHARESAVE
PSP
SHARESAVE
691p
–
166p
568p
601p
–
143p
548p
756p
748p
664p
695p
3 years 3.3/5.3 years
3 years
3.3/5.3 years
n/a 0.60%/0.63%
n/a
0.79%/0.92%
3.89%
n/a
3.96%
25%
4.34%
n/a
4.16%
25%
There were no deferred shares issued under the Group Bonus Plan during the year (2019 – 133,095 shares with fair value at the grant
date of 654p). 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
(cid:3)
AT 31 MARCH 2020
AT 31 MARCH 2019
WEIGHTED
AVERAGE
CONTRACTUAL
LIFE
(MONTHS)
46.7
30.9
46.3
WEIGHTED
AVERAGE
CONTRACTUAL
LIFE
(MONTHS)
47.7
31.5
47.4
AWARDS
(NUMBER)
11 177 411
274 825
11 452 236
AWARDS
(NUMBER)
10 011 329
282 615
10 293 944
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
181
181
Notes to the consolidated financial statements (continued)
31. PROVISIONS AND CONTINGENT LIABILITIES
A provision is a liability of uncertain timing or amount that is recognised when: 1) the Group has a present obligation (legal or
constructive) as a result of a past event; 2) it is more likely than not that a payment will be required to settle the obligation; and 3)
the amount can be reliably estimated.
Where a payment is not probable, or the amount of the obligation cannot be measured with sufficient certainty, a contingent liability is
disclosed. Contingent liabilities are also disclosed if a possible obligation arises from past events, but its existence will be confirmed
only by the occurrence or non-occurrence of uncertain future events.
Provisions
At 1 April 2018
Provided in the year
Released in the year
Utilised in the year
Exchange
At 31 March 2019
Provided in the year
Released in the year
Utilised in the year
Exchange
At 31 March 2020
Provisions are expected to be utilised as follows:
•(cid:3) within one year
•(cid:3) after more than one year but before five years
Total
INSURANCE
PROVISIONS
£M
RESTRUCTURING
AND CLOSURE
PROVISIONS
£M
ENVIRONMENTAL
HEALTH & SAFETY
PROVISION
£M
LITIGATION
AND OTHER
PROVISIONS
£M
7
5
–
(1)
1
12
–
–
(6)
1
7
–
11
–
(6)
–
5
8
–
(6)
–
7
–
16
–
(1)
–
15
–
–
(9)
1
7
13
2
(2)
(1)
–
12
4
(4)
(2)
1
11
2020
£M
21
11
32
TOTAL
£M
20
34
(2)
(9)
1
44
12
(4)
(23)
3
32
AT 31 MARCH
2019
£M
24
20
44
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.
Contingent liabilities
Passaic River
The Group remains subject to a legal case arising from the notification in 2007 by the U.S. Environmental Protection Agency (USEPA) that 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 2020 will have
a material adverse effect on the Group’s financial position.(cid:3)
182
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Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
Financial statements
Financial statements
32. COMMITMENTS
Total commitments for the purchase of tangible and intangible non-current assets are £51 million (2019 – £35 million). In addition,
commitments in respect of retirement benefit obligations are detailed in Note 29.
33. EQUITY ACQUISITIONS AND DISPOSALS
In the 2020 financial year:
There have been no equity acquisitions or disposals in the year ended 31 March 2020.
In the 2019 financial year:
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.
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 purchase agreement, the Group has a variable-priced call option to acquire the remaining 85% share at certain
points after the acquisition of the 15% equity holding. At 31 March 2020 this option was exercisable but had not been exercised (2019 – not
exercisable). After considering all the terms of the arrangement with Sweet Green Fields (including the call option) it was determined that
the Group neither controls nor has significant influence over Sweet Green Fields. Such consideration included, inter alia, the manner in
which decisions are made about relevant activities of Sweet Green Fields. The call option is not ‘in the money’ and the Group’s potential
voting rights are therefore not considered to represent substantive rights. Accordingly the 15% equity investment and the option to
purchase the remaining shares were recognised together as a financial asset at FVPL as at the years ended 31 March 2020 and 2019.
This is not considered a significant accounting judgement. Refer to Note 17.
34. 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
2020
£M
164
–
7
–
2019
£M
164
–
28
–
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.
35. EVENTS AFTER THE BALANCE SHEET DATE
In May 2020 the Group extended the maturity of its US$800 million revolving credit facility by a year to 2025 and priced a US$200 million
debt private placement which will be issued on 6 August 2020 at which point US$100 million 2.91% notes maturing in 2030 and US$100 million
3.01% notes maturing in 2032 will be drawn down. There are no other post balance sheet events requiring disclosure in respect
of the year ended 31 March 2020. (cid:3)
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
183
183
Notes to the consolidated financial statements (continued)
36. CHANGE IN ACCOUNTING POLICIES
As explained in Note 1, the Group has adopted IFRS 16 Leases and IFRIC 23 Uncertainty over Income Tax Treatments. The impact
of the adoption of these standards is set out below. Comparatives have not been restated.
IFRS 16 Leases
The Group has adopted IFRS 16 Leases from 1 April 2019 using the modified retrospective approach. The Group’s leases principally
comprise railcars, properties and other miscellaneous leases such as motor vehicles or machinery. The Group has not restated
comparatives for the 2019 financial year as permitted. The reclassifications and the adjustments arising from the new leasing standard
are therefore recognised in the opening balance sheet on 1 April 2019.
Adjustments recognised on adoption of IFRS 16
Non-current assets
Property, plant and equipment
Liabilities
Trade and other payables
Borrowings
Deferred tax liabilities
Equity
Retained earnings
31 MARCH 2019 AS
ORIGINALLY
PRESENTED
£M
ADJUSTMENT
£M
1 APRIL 2019
£M
982
342
597
46
741
151
1 133
(5)
167
(3)
(8)
337
764
43
733
The Group has recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the
principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the
lessee’s incremental borrowing rate as at 1 April 2019. The weighted average incremental borrowing rate applied to the lease liabilities
on 1 April 2019 was 4%. For leases previously classified as finance leases, the Group recognised the carrying amount of the lease asset
and lease liability immediately before transition as the carrying amount of the right-of-use asset and the lease liability at the date of
initial application.
Operating lease commitments disclosed as at 31 March 2019
Less: contract not recognised as an IFRS 16 lease
Discounted using the Group’s incremental borrowing rate at the date of initial application
Recognised as IFRS 16 leases at 31 March 2019
Add: finance lease liabilities as at 31 March 2019
Lease liability at 1 April 2019
Of which:
Current lease liabilities
Non-current lease liabilities
1 APRIL 2019
£M
308
(112)
(29)
167
11
178
26
152
At 31 March 2019 the Group had an IAS 17 operating lease of £112 million in respect of an energy procurement contract and related
infrastructure. This contract was not recognised as an IFRS 16 lease as the Group has determined that it does not have the right to direct
the use of the related asset.
Where practicable the associated right-of-use assets were measured on a retrospective basis, as if the new rules had always been applied.
Where this was not possible, right-of-use assets were measured at the amount equal to the lease liability as at 1 April 2019. There were no
onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application. The recognised
right-of-use assets relate to the following types of asset:
Railcars
Properties
Other
Right-of-use assets
1 APRIL 2019
£M
97
51
3
151
In applying IFRS 16 for the first time, the group has used the following practical expedients permitted by the standard:
•(cid:3) Reliance on previous assessments of whether leases are onerous
•(cid:3) Accounting for operating leases, with a remaining lease term of less than 12 months as at 1 April 2019, as short-term leases, and
•(cid:3) Excluding initial direct costs for the measurement of the right-of-use asset at the date of initial application.
(cid:3)
184
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Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
Financial statements
Financial statements
36. CHANGE IN ACCOUNTING POLICIES (continued)
IFRS 16 Leases (continued)
Accounting policy and key judgements
Having adopted IFRS 16 the Group applies the following approach. At the commencement date of the lease, the Group recognises lease
liabilities measured at the present value of lease payments to be made over the lease term which includes periods covered by renewal
options the Group is reasonably certain to exercise. In calculating the present value of lease payments, the Group uses the incremental
borrowing rate at the lease commencement date.
The Group recognises right-of-use assets at the commencement date of the lease. Right-of-use assets are measured at cost including
the amount of lease liabilities recognised and initial direct costs incurred less any incentives granted by the lessor. Right-of-use assets are
subject to impairment. Right-of-use assets are depreciated over the shorter of the lease term and the useful life of the right-of-use assets,
unless there is a transfer of ownership or purchase option which is reasonably certain to be exercised at the end of the lease term, in which
case depreciation is over the useful life of the underlying asset.
Leases of buildings usually have lease terms between 1 and 16 years, while plant and machinery generally have lease terms between
1 and 20 years. The Group also has certain leases of machinery with lease terms of 12 months or less and leases of office equipment with
low value (typically below US$5,000). The Group applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for
these leases and recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
The carrying amounts of assets recorded as a result of IFRS 16 (included under Property, plant and equipment) and movements during
the year are set out below:
LAND AND
BUILDINGS
£M
PLANT AND
MACHINERY
£M
TOTAL
£M
Cost
At 1 April 20191
Additions to right-of-use assets
Depreciation charge
Currency translation differences
At 31 March 2020
51
3
(7)
1
48
108
14
(24)
4
102
1 This includes £8 million of plant and machinery that was previously recognised as an asset held under finances leases in accordance with IAS 17.
The statement of profit or loss shows the following amounts relating to leases:
Depreciation expense of right-of-use assets
Interest expense on lease liabilities
Expense relating to short-term leases
Expense relating to leases of low value assets
Expense relating to variable lease payments not included in the measurement of lease liability
Income from sub-leasing right-of-use assets
At 31 March 2020
159
17
(31)
5
150
2020
£M
31
7
–
2
–
(1)
39
The total cash outflow for leases in the year ended 31 March 2020 was £37 million (excluding cash outflow of £2 million relating to leases
of low value items).
The Group has several lease contracts that include extension and termination options. These options are negotiated by management to
provide flexibility in managing the leased-asset portfolio and align with the Group’s business needs. Management exercises significant
judgement in determining whether these extension and termination options are reasonably certain to be exercised. The Group has
estimated that the potential future lease payments, should it exercise the extension option, would result in an increase in lease liability
of £1 million.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements
do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not
be used as security for borrowing purposes.
IFRIC 23 Uncertainty over Income Tax Treatments
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 interpretation specifically addresses the following:
•(cid:3) Whether an entity considers uncertain tax treatments separately
•(cid:3) The assumptions an entity makes about the examination of tax treatments by taxation authorities
•(cid:3) How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates
•(cid:3) How an entity considers changes in facts and circumstances.
The Group applies significant judgement in identifying uncertainties over income tax treatments and operates in a complex multinational
environment. Following a detailed assessment the Group has determined that the adoption of this interpretation has not had 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.
(cid:3)
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
185
185
Notes to the consolidated financial statements (continued)
37. 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
United Kingdom1
Astaxanthin Manufacturing Limited
G.C. Hahn and Company Limited
Hahntech International Limited
Harvey Steel Sugars Limited2
Histonpark Limited
Robinson Milling Systems
(Tewkesbury) Limited3
Tate & Lyle Export Holdings Limited2 1 Kingsway, London WC2B 6AT, UK
Tate & Lyle Group Services Limited
1 Kingsway, London WC2B 6AT, UK
Tate & Lyle Holdings Americas Limited 1 Kingsway, London WC2B 6AT, UK
Tate & Lyle Holdings Limited3
1 Kingsway, London WC2B 6AT, UK
Tate & Lyle Industrial Holdings Limited2 1 Kingsway, London WC2B 6AT, UK
Tate & Lyle Industries Limited
1 Kingsway, London WC2B 6AT, UK
Tate & Lyle International Finance PLC2 1 Kingsway, London WC2B 6AT, UK
Tate & Lyle Investments America
1 Kingsway, London WC2B 6AT, UK
Limited3
Tate & Lyle Investments Brazil Limited 1 Kingsway, London WC2B 6AT, UK
Tate & Lyle Investments Limited2,3
1 Kingsway, London WC2B 6AT, UK
1209 North Orange Street,
Tate & Lyle L.P.
Wilmington, DE 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
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
San Martín 140, 14th Floor, City of
Buenos Aires, Argentina
Building 2, 1425 Boundary Road,
Wacol QLD 4076, Australia
Industrielaan 4, Office 12, 9320 Aalst,
Belgium
Victoria Place, 5th Floor, 31 Victoria
Street, Hamilton HM10, 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
Rua Bruno Simili No. 380, Distrito
Industrial, City of Juiz de Fora, State
of Minas Gerais, 36092-050, Brazil
Canada
Tate & Lyle Ingredients Canada Limited Suite 400, Phoenix Square,
371 Queen Street, Fredericton
NB E3B 4Y9, Canada
186
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Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
Chile
Tate & Lyle Chile Commercial Ltda
Isidora Goyenechea 2800, Piso 43,
Las Condes, Santiago, Chile
China
Tate & Lyle Trading (Shanghai) Co. Ltd4 Room 1401, Building 11, No. 1582,
G.C. Hahn & Co. Food Stabiliser
Business (Shanghai) Ltd4
Tate & Lyle Food Ingredients
(Nantong) Company Limited4
Colombia
Tate & Lyle Colombia S.A.S.4
Costa Rica
Tate & Lyle Costa Rica Limitada
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
San Jose-San Jose Merced, Edificio
Torre Mercedes, Piso Octavo,
Oficinas De CDO Auditores,
Costa Rica
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
Ostravská 169, 339 01 Klatovy IV,
Czech Republic
87 Street 9, Maadi , Cairo, Egypt
2 Avenue de L’Horizon, 59650
Villeneuve-D’Ascq, France
Tate & Lyle Ingredients France S.A.S. 2 Avenue de L'Horizon, 59650
Villeneuve-D'Ascq, France
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.
Roggenhorster Strasse 31, 23556,
Lübeck, Germany
Roggenhorster Strasse 31, 23556,
Lübeck, Germany
Roggenhorster Strasse 31, 23556,
Lübeck, Germany
Suite 913, Europort, Gibraltar
69 K. N Papadaki, Thessaloniki,
54248 Thessaloniki, Greece
Block – E, 2nd Floor, The MIRA, Plot –
1&2, Ishwar Nagar, Mathura Road,
New Delhi – 110065, India
Via Verdi, 1-CAP 20010 Ossona,
Milano, Italy
2F Oak Minami-Azabu Building,
3-19-23 Minami-Azabu, Minato-ku,
Tokyo, Japan
E. Simkunaites Str. 10, Vilnius,
LT04130, Lithuania
37. RELATED UNDERTAKINGS (continued)
Financial statements
Financial statements
COMPANY NAME
REGISTERED ADDRESS
COMPANY NAME
REGISTERED ADDRESS
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.
Russia
Tate & Lyle CIS LLC4
Singapore
Tate & Lyle Asia Pacific Pte. Ltd.
Tate & Lyle Singapore 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 (cid:98)irketi
Ukraine
PII G.C. Hahn & Co. Kiev4
United Arab Emirates
Tate & Lyle DMCC
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
1541 KA, Koog aan de Zaan,
Lagendijk 5, The Netherlands
1541 KA, Koog aan de Zaan,
Lagendijk 5, The Netherlands
Sterlinga 8A, 91425, Łód(cid:461), Poland
Sterlinga 8A, 91425, Łód(cid:461), Poland
Leninskaya Sloboda,26, Floor -3,
Area IV, Room 179, 115280, Moscow,
Russian Federation
3 Biopolis Drive, #05-11-16 Synapse,
Singapore 138623
One Marina Boulevard #28-00,
1 Marina Boulevard, Singapore 018989
Boleraz 114, 91908 Boleraz, Slovakia
Boleraz 114, 91908 Boleraz, Slovakia
1 Gravel Drive, Kya Sand Business
Park, Kya Sand, 2163, South Africa
Av. Valencia, 15, 46171,
Casinos Valencia, Spain
Ps. de la Constitución 10, Entlo.
Dcha. , 50008, Zaragoza,
Zaragoza, Spain
Mäster Samuelsgatan 17, Box
1432, 111 84, Stockholm, Sweden
Esentepe Mah., Büyükdere Cad.,
193 Plaza Kat: 2 193/235A14 (cid:98)i(cid:404)li,
(cid:55)stanbul, Turkey
Mala Olexandriwka, Zentralna-Str.
2-B, Borispol, 08320 Kiew, Ukraine
Office n. 3805, Jumeirah Bay X3
Tower, Cluster X, Jumeirah Lakes
Towers, Dubai, United Arab Emirates
USA
Staley Holdings LLC
TLHUS, Inc.
TLI Holding LLC
Tate & Lyle Finance LLC
Tate & Lyle Ingredients
Americas LLC
Tate & Lyle Sucralose LLC
1209 North Orange Street,
Wilmington, DE 19801, USA
Tate & Lyle Custom Ingredients LLC 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
Tate & Lyle Domestic International
Sales Corporation
Tate & Lyle Grain, Inc.
Tate & Lyle Sugar Holdings, Inc.
Tate & Lyle Malic Acid LLC
Tate & Lyle Citric Acid LLC
Tate & Lyle Americas 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%)
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, DE 19801, USA
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.
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
187
187
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
Borrowings
Net current assets
Total assets less current liabilities
Creditors – amounts falling due after more than one year
Borrowings
Net assets
Capital and reserves
Called up share capital
Share premium account
Capital redemption reserve
Retained earnings
Total shareholders’ funds
NOTES
AT 31 MARCH
2019
£M
2020
£M
2
2
2
3
4
5
4
5
7
9
4
1 079
1 092
1 592
–
1 592
(1 320)
(1)
271
1 363
(2)
(9)
1
4
1 070
1 075
1 541
–
1 541
(1 318)
–
223
1 298
(2)
–
1 352
1 296
117
406
8
821
117
406
8
765
1 352
1 296
The Company recognised profit for the year of £199 million (2019 – £108 million).
The Parent Company’s financial statements on pages 188 to 193 were approved by the Board of Directors on 20 May 2020 and signed on its
behalf by:
Nick Hampton
Director
Imran Nawaz
Director
The notes on pages 190 to 193 form part of these financial statements.
Tate & Lyle PLC
Registered number: 76535
188
188
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
Parent Company statement of changes in equity
Financial statements
Financial statements
At 1 April 2018
Profit for the year
Purchase of own shares including net settlement
Share-based payments
Dividends paid
At 31 March 2019
IFRS 16 Lease adoption
At 1 April 2019 restated
Profit for the year
Purchase of own shares including net settlement
Share-based payments
Dividends paid
At 31 March 2020
CALLED UP
SHARE
CAPITAL
£M
117
SHARE
PREMIUM
ACCOUNT
£M
406
–
–
–
–
117
–
117
–
–
–
–
–
–
–
–
406
–
406
–
–
–
–
117
406
CAPITAL
REDEMPTION
RESERVES
£M
RETAINED
EARNINGS
£M
8
–
–
–
–
8
–
8
–
–
–
–
8
781
108
(8)
18
(134)
765
–
765
199
(22)
16
(137)
821
TOTAL
EQUITY
£M
1 312
108
(8)
18
(134)
1 296
–
1 296
199
(22)
16
(137)
1 352
At 31 March 2020, the Company had realised profits available for distribution in excess of £640 million (2019 – in excess of £625 million).
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
189
189
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 2020, with comparative figures
as at 31 March 2019.
For the reasons set out on page 139, 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 9.
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:
•(cid:3) the requirements of IAS 7 Statement of Cash Flows
•(cid:3) the requirements of paragraph 17 and 18(a) of IAS 24 Related
Party Disclosures
•(cid:3) 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
•(cid:3) 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, paragraph 73(e) of IAS 16 Property,
Plant and Equipment and 118(e) of IAS 38 Intangible assets
•(cid:3) the requirements of IFRS 7 Financial Instruments: Disclosures
•(cid:3) the requirements of paragraphs 30 and 31 of IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors
•(cid:3) the requirements of paragraphs 45(b) and 46 to 52 of IFRS 2
Share-Based Payments
•(cid:3) the requirements of paragraphs 91 to 99 of IFRS 13 Fair
Value Measurement
•(cid:3) 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), 111
(statement of cash flows) and 134 to 136 (capital management)
of IAS 1 Presentation of Financial Statements
•(cid:3) the requirements of paragraphs 52 and 58 of IFRS 16 Leases
•(cid:3) the requirements of paragraph 16 of IAS 1.
The Company intends to maintain these disclosure exemptions
in future years.
Accounting policies
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 30 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 and represents a key source of
estimation uncertainty.
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 8.
Dividend income received from subsidiary companies is recognised
when the right to receive the payment is established.
Debtors
Debtors are recognised initially at fair value. Subsequent to
initial recognition they are measured at amortised costs or their
recoverable amount. The Company recognises an allowance
for expected credit losses based on the difference between the
contractual cash flows due in accordance with the contract and
all the cash flows that the group expects to receive, discounted
at an approximation of the original effective interest rate.
190
190
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
2. FIXED ASSETS
Cost
At 1 April 2019
Recognition of right-of-use asset on initial application of IFRS 16
Adjusted balance at 1 April 2019
Additions
Disposals
At 31 March 2020
Accumulated depreciation/amortisation/impairment
At 1 April 2019
Depreciation/amortisation/impairment charge
Disposals
At 31 March 2020
Net book value at 31 March 2019
Net book value at 31 March 2020
3. DEBTORS
Due within one year
Current tax
Amounts owed by subsidiary undertakings
Other debtors
Total
Financial statements
Financial statements
LAND AND
BUILDINGS
PLANT AND
MACHINERY
£M
INTANGIBLE
ASSETS
£M
INVESTMENTS IN
SUBSIDIARIES
£M
–
9
9
–
–
9
–
1
–
1
–
8
5
–
5
–
–
5
4
–
–
4
1
1
7
–
7
1
–
8
3
1
–
4
4
4
1 628
–
1 628
9
(408)
1 229
558
–
(408)
150
1 070
1 079
2020
£M
48
1 541
3
1 592
AT 31 MARCH
2019
£M
26
1 512
3
1 541
The effective interest rate applicable to amounts owed by subsidiary undertakings at 31 March 2020 is 2.6% (2019 – 2.7%). 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
AT 31 MARCH
2019
£M
2020
£M
1 297
1 297
5
18
5
16
1 320
1 318
The effective interest rate applicable to amounts owed to subsidiary undertakings at 31 March 2020 was 3.1% (2019 – 3.3%). 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.
5. BORROWINGS
Borrowings of £10 million (2019 – £nil) of which £1 million is current relate to lease liabilities which had previously been classified as
‘operating leases’ under the principles of IAS 17. These liabilities were measured at the present value of the remaining lease payments,
discounted using lesee’s incremental borrowing rate as at 1 April 2019.
(cid:3)
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
191
191
Notes to the Parent Company financial statements (continued)
6. GUARANTEES AND FINANCIAL COMMITMENTS
At 31 March 2020, the Company had given guarantees in respect of committed financing of certain of its subsidiaries and joint ventures
totalling £1,282 million (2019 – £1,302 million), against which amounts drawn totalled £574 million (2019 – £612 million). The Company
had given guarantees in respect of lease commitments of certain of its subsidiaries and joint ventures totalling £242 million (2019 –
£260 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 10.
At 31 March 2020 and 31 March 2019, the Company had no outstanding capital commitments.
7. 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
2020
COST
£M
NUMBER
OF SHARES
468 345 950
117
468 308 934
55 721
–
37 016
468 401 671
117
468 345 950
2019
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.
8. DIVIDENDS ON ORDINARY SHARES
Dividends on ordinary shares in respect of the financial year:
Per ordinary share:
•(cid:3) interim dividend paid
•(cid:3) final dividend proposed
Total dividend
YEAR ENDED 31 MARCH
2020
PENCE
2019
PENCE
8.8
20.8
29.6
8.6
20.8
29.4
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 2020 to shareholders who are on the Register of Members on 19 June 2020.
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
2020
£M
97
40
137
2019
£M
94
40
134
Based on the number of ordinary shares outstanding at 31 March 2020 and the proposed amount, the final dividend for the financial year
is expected to amount to £96 million.
9. PROFIT AND LOSS ACCOUNT DISCLOSURES
The Company recognised a profit for the year of £199 million (2019 – £108 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 (2019 – £0.1 million).
The Company employed an average of 161 people (including Directors) during the year (2019 – 169). Staff costs are shown below:
Wages and salaries
Social security costs
Other pension costs
Share-based incentives
Total
YEAR ENDED 31 MARCH
2020
£M
27
5
3
5
40
2019
£M
27
5
2
6
40
Directors’ emoluments disclosures are provided in the Directors’ Remuneration Report on pages 100 to 120 and in Note 9 of the
consolidated financial statements.
No deferred tax assets have been recognised in respect of tax losses of £341 million (2019 – £341 million) as there is uncertainty as
to whether taxable profits against which these assets may be recovered will be available.
(cid:3)
192
192
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
(cid:3)
Financial statements
Financial statements
10. RETIREMENT BENEFIT OBLIGATIONS
Plan information
The Company participates in a defined benefit plan together with another subsidiary company, Tate & Lyle Industries Ltd. Refer to Note 29
of the consolidated financial statements for details of the £930 million bulk annuity insurance policy ‘buy-in’ completed for the main UK
scheme. The plan is closed to new entrants and future accruals. The Company has 310 pensioners and deferred pensioners out of a total
membership of circa 5,000 (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 (2019 – £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 every three years. The main UK scheme triennial valuation as at
31 March 2019 was concluded during 2019. Following the purchase of the bulk annuity insurance policy (buy-in) in the main UK scheme,
the previously agreed core funding contributions of £18 million per year has ceased and any funding triggers linked to the Company’s
financial strength, payable into the secured funding account, are now limited to the residual costs of the scheme. The Company will
continue to fund the UK plan administration costs.
For further details on the defined benefit plan see Note 29 in the consolidated financial statements.
11. CHANGE IN ACCOUNTING POLICIES
IFRS 16 Leases
The Company has adopted IFRS 16 Leases from 1 April 2019 using the modified retrospective approach. The Company has not restated
comparatives for the 2019 financial year as permitted. The reclassifications and the adjustments arising from the new leasing standard
are therefore recognised in the opening balance sheet on 1 April 2019.
The Company has recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the
principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the
lessee’s incremental borrowing rate as at 1 April 2019. The weighted average lessee’s incremental borrowing rate applied to the lease
liabilities on 1 April 2019 was 2.1%. The associated right-of-use assets were measured on a retrospective basis, as if the new rules had
always been applied and are included in property, plant and equipment.
As at the date of initial application of IFRS 16 the Company recognised right-of-use asset of £9 million and lease liability of £11 million,
and the reversal of accrual under IAS 17 of £2 million resulting in no impact to opening reserves.
In applying IFRS 16 for the first time, the group has used the following practical expedients permitted by the standard:
•(cid:3) Reliance on previous assessments of whether leases are onerous
•(cid:3) Accounting for operating leases, with a remaining lease term of less than 12 months as at 1 April 2019, as short-term leases, and
•(cid:3) Excluding initial direct costs for the measurement of the right-of-use asset at the date of initial application.
The total cash outflow for leases in the year ended 31 March 2020 was £2 million.
12. EVENTS AFTER THE BALANCE SHEET DATE
There are no post balance sheet events requiring disclosure in respect of the year ended 31 March 2020.
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
193
193
194
Tate & Lyle PLC Annual Report 2020
I have always been energized
by using science to create
ingredients that show up every day
in products in stores, and that
make people’s lives better.
It makes it especially easy to tell
my kids what we do at Tate & Lyle!
Dr Judy Whaley
Senior Vice President, R&D
Hoffman Estates, Illinois, USA
Useful information
CONTENTS
USEFUL
INFORMATION
IN THIS SECTION
196 Group five-year summary
198 Additional information
199 Information for investors
200 Glossary
201 Definitions/explanatory notes
Tate & Lyle PLC Annual Report 2020
195
Group five-year summary
Results summary
Continuing operations
Revenue
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
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
2016
£M
2017
£M
2018*
£M
2019
£M
2020
£M
YEAR ENDED 31 MARCH
2 355
2 753
2 710
2 755
2 882
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
331
(11)
(24)
296
(28)
–
(28)
28
296
(51)
245
–
–
245
331
* Restated as the Group now includes net retirement benefit interest and associated tax in its alternative performance measures. 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
(cid:3)
2016
£M
2017
£M
2018
£M
390
926
23
323
(208)
5
401
1 061
30
394
(139)
–
360
965
37
385
18
–
AT 31 MARCH
2019
£M
342
982
59
401
24
–
2020
£M
340
1 190
63
409
(203)
–
1 459
1 747
1 765
1 808
1 799
85
(434)
(81)
96
(452)
(59)
85
(392)
(91)
102
(337)
(84)
91
(451)
(40)
1 029
1 332
1 367
1 489
1 399
117
911
1 028
1
117
1 215
1 332
–
117
1 250
1 367
–
117
1 372
1 489
–
117
1 282
1 399
–
1 029
1 332
1 367
1 489
1 399
196
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Per share information
Earnings per share continuing operations:
•(cid:3) basic (pence)
•(cid:3) diluted (pence)
Basic earnings per share total operations:
•(cid:3) reported (pence)
•(cid:3) adjusted basic (pence)
Diluted earnings per share total operations:
•(cid:3) reported (pence)
•(cid:3) adjusted diluted (pence)
Dividends per ordinary share (pence)
Closing share price at 31 March (pence)
Useful information
Useful information
2016
2017
2018*
2019
2020
26.1p
25.9p
35.1p
34.9p
34.8p
34.7p
28.0p
55.0p
54.2p
55.2p
47.9p
54.4p
47.1p
28.0p
57.0p
56.1p
57.4p
50.3p
56.5p
49.4p
28.7p
39.2p
38.6p
39.2p
52.8p
38.6p
52.0p
29.4p
52.8
52.1
52.8
58.6
52.1
57.8
29.6
578.0p
764.5p
544.6p
725.8p
656.0p
Closing market capitalisation at 31 March (£million)
2 706
3 580
2 550
3 399
3 073
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
Gearing3
Net debt as a percentage of total net assets2
Adjusted operating margin
Adjusted operating profit as a percentage of revenue2
10.7x
13.9x
9.4x
11.6x
–
1.2x
0.9x
0.9x
0.8x
0.9x
42%
34%
29%
23%
32%
7.9%
9.6%
11.1%
11.1%
11.5%
Return on capital employed
11.3%
14.3%
16.2%
17.1%
17.5%
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
1.3x
1.2x
2.0x
1.7x
2.0x
1.8x
1.4x
1.8x
1.8x
2.0x
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.
3 During the year ended 31 March 2020 the Group adopted IFRS 16 without restating comparatives. On a like-for-like basis the ratios for Net debt to EBITDA, Gearing and Return
on capital employed were 0.6 times, 20% and 17.9%, respectively.
* Restated as the Group now includes net retirement benefit interest and associated tax in its alternative performance measures. Years prior to 2018 have not been restated.
Tate & Lyle PLC Annual Report 2020
Tate & Lyle PLC Annual Report 2020
197
197
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
2020
£1 =
1.27
1.14
1.25
1.13
2019
£1 =
1.31
1.13
1.30
1.16
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 2020 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
Revenue
Food & Beverage Solutions
Sucralose
Primary Products
Central
Adjusted operating profit
Net finance expense
Share of profit after tax of joint ventures
Adjusted profit before tax
Adjusted income tax expense
Adjusted profit after tax
Adjusted diluted EPS (pence)
2020
£M
2 882
162
63
158
(52)
331
(28)
28
331
(59)
272
2020 AT
CONSTANT
CURRENCY
£M
2 817
157
61
153
(51)
320
(27)
27
320
(58)
262
FX
£M
(65)
(5)
(2)
(5)
1
(11)
1
(1)
(11)
1
(10)
UNDERLYING
GROWTH
£M
62
14
–
5
(4)
15
(1)
(3)
11
7
18
2019
£M
2 755
143
61
148
(47)
305
(26)
30
309
(65)
244
57.8p
(1.7)p
56.1p
4.1p
52.0p
CHANGE IN
CONSTANT
CURRENCY
%
CHANGE
%
5%
13%
4%
7%
(10%)
9%
(7%)
(8%)
7%
9%
11%
11%
2%
10%
1%
3%
(9%)
5%
(4%)
(9%)
4%
11%
8%
8%
198
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(cid:3)
INFORMATION FOR INVESTORS
Useful information
SHAREHOLDER
ENQUIRIES
ORDINARY SHARES
Equiniti Limited
Information about 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
(ADS)
Citibank Shareholder Services
The Company’s shares trade in the US on
the over-the-counter (OTC) market in the
form of ADSs and these are evidenced by
American Depositary Receipts (ADRs).
The shares are traded under the ticker
symbol TATYY.
Telephone and email enquiries
Tel: 1-877-CITI-ADR (toll free)
Tel: 1-781-575-4555 (outside US)
Fax 1-201-324-3284
E-mail: Citibank@shareholders-online.com
Written enquiries
Citibank Shareholder Services
P.O. Box 43077
Providence,
Rhode Island 02940-3077
USA
TATE & LYLE WEBSITE AND SHARE
PRICE INFORMATION
Tate & Lyle’s website provides other
information relevant to shareholders of the
Company. The share price is available on
the website with a 20-minute delay.
FINANCIAL CALENDAR
2020 Annual General Meeting
Announcement of half-year results for the six months
to 30 September 2020
Announcement of full-year results for the year ending
31 March 2021
2021 Annual General Meeting
23 July 2020
5 Nov 20201
27 May 20211
29 July 20211
DIVIDENDS PAID ON ORDINARY SHARES DURING THE YEAR ENDED 31 MARCH 2020
PAYMENT
31 July 2019
3 January 2020
DIVIDEND
DESCRIPTION
Final 2019
Interim 2020
DIVIDEND
PER SHARE
20.8p
8.8p
2020
FINAL
2021
INTERIM
2021
FINAL
Announced
Payment date
21 May 2020
5 November 20201
27 May 20211
31 July 20202
6 January 20211
6 August 20211,2
1 Provisional date.
2 Subject to approval of shareholders.
DIVIDENDS PAID ON 6.5% CUMULATIVE PREFERENCE SHARES
Paid each 31 March and 30 September.
CAPITAL GAINS TAX
The market values on 31 March 1982 for the purposes of indexation up to April 1998 in
relation to capital gains tax of Tate & Lyle PLC shares then in issue were:
Ordinary share of £1 each
Equivalent value per ordinary share of 25p
6.5% cumulative preference share
201.00p
50.25p
43.50p
ELECTRONIC COMMUNICATIONS
Shareholder documents are only sent in paper format to shareholders who have
elected to receive documents in this way. This approach enables the Company to reduce
printing and distribution costs and the impact of the documents on the environment.
Shareholders who wish to receive email notification should register online at
www.shareview.co.uk, using their shareholder reference number that is on either
their share certificate or other correspondence.
DIVIDEND PAYMENTS
Dividend reinvestment plan
The Company operates a Dividend Reinvestment Plan (DRIP) which enables shareholders
to use their cash dividend to buy additional shares in Tate & Lyle PLC. Further information
can be obtained from Equiniti.
Direct into your bank account
We encourage shareholders to have their dividends paid directly into their bank or
building society account; dividend confirmations are then mailed to shareholders
separately. This method avoids the risk of dividend cheques being delayed or lost in the
post. If you live outside the UK, Equiniti also offers an overseas payment service whereby
your dividend is converted into your local currency. Further information on mandating
your dividend payments and the overseas payment service can be obtained from Equiniti.
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.
Tate & Lyle PLC Annual Report 2020
199
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, after capital
expenditure and 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.
200
Tate & Lyle PLC Annual Report 2020
N
Natural
A ‘natural’ description usually refers
to a food ingredient that is present in
nature and has been minimally processed.
However, interpretations vary according
to the different legal and regulatory
landscape in different countries.
New Products
New Products are products in the first
seven years after launch.
O
Operating profit (also referred to as
profit before interest and tax (PBIT))
Sales less net operating expense.
P
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.
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.
Sucralose
A reportable segment and part of the
Food & Beverage Solutions division.
T
TASTEVA® M Stevia Sweetener
A zero-calorie sweetener made from
stevia.
TEXTURLUX® Personal Care Additives
A range of bio-based polymers for use in
skin creams, lotions, gels, serums, hair
products and other personal care
formulations.
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 2020 performance at actual
exchange rates and at constant currency
exchange rates have been included in the
additional information on page 198.
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 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
High fructose corn syrup
High fructose corn syrup is widely used
as a substitute for sugar in North America.
Also called isoglucose in Europe.
K
KRYSTAR® Crystalline Fructose
A nutritive corn based sweetener.
DEFINITIONS/EXPLANATORY NOTES
Useful information
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 2020.
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.
The paper is Carbon Balanced with World
Land Trust, an international conservation
charity, which 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.
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.
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
Tate & Lyle PLC Annual Report 2020
201
WWW.TATEANDLYLE.COM