Tate & Lyle Regulatory News (TATE)

Tate & Lyle PLC

Annual Financial Report

Tate & Lyle PLC (the "Company") confirms that copies of the following documents have been submitted to the National Storage Mechanism and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism. 

1. Annual Report 2020; 

2. Notice of Annual General Meeting 2020; 

3. Notice of Availability; and 

4. Proxy Form.

The Annual Report 2020, Notice of Annual General Meeting 2020 and Notice of Availability are also available on Tate & Lyle's website at www.tateandlyle.com/investors/annual-reports. A hard copy of the Annual Report 2020 and Notice of Annual General Meeting 2020 will be posted to shareholders, who have requested for them, on or around 19 June 2020.

For the purposes of complying with Disclosure Guidance and Transparency Rule (DTR) 6.3.5R and the requirements it imposes on issuers as to how to make public annual financial reports, we set out below:

- in Appendix A, the principal risks and uncertainties facing the Company;

- in Appendix B, the Directors' responsibility statement; and

- in Appendix C, the disclosure regarding related party transactions.

The appendices have been extracted from the Annual Report 2020 in unedited full text and the page numbers in the text refer to the page numbers in that document. This information should be read in conjunction with the Company's 2020 full-year results announcement, released on 21 May 2020, which contained a condensed set of financial statements and which can be found at www.tateandlyle.com/investors/results-and-presentations. Together, these constitute the material required by DTR 6.3.5R to be communicated to the media in unedited full text through a Regulatory Information Service.

Claire-Marie O'Grady

Company Secretary

9 June 2020

APPENDIX A

RISK FACTORS

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.

For more information on how we manage risks, please see pages 61 and 62.

Strategic Risks

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.

How we mitigate the risk

· Our organic and acquisitive growth plan supports 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.

·

What we've done this year

· We simplified the structure of our 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.

Link to our priorities

· Sharpen

· Accelerate

· Simplify

Trend compared with 2019: unchanged

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.

How we mitigate the risk

· We have a robust innovation process that, through 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.

Key developments this year

· We launched 11 New Products from our 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.

Link to our priorities

· Sharpen

· Accelerate

Trend compared with 2019: unchanged

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.

How we mitigate the risk

· 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 have initiatives to help us keep diversity front of 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.

Key developments this year

· We focused on increasing engagement with our employees and invested in internal communications with regular formal and informal pulse surveys.

· We simplified our performance 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.

Link to our priorities

· Sharpen

· Simplify

Trend compared with 2019: unchanged

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.

How we mitigate the risk

· 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.

Key developments this year

· We set up a Global Pandemic Response Team to manage our response to and minimize 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 out 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.

Link to our priorities

· Sharpen

· Accelerate

Trend compared with 2019: new

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.

How we mitigate the risk

· 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 EHS performance and progress against J2EE.

Key developments this year

· 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.

· 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.

Link to our priorities

· Sharpen

· Accelerate

· Simplify

Trend compared with 2019: unchanged

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.

How we mitigate the risk

· Our plant network has a preventative maintenance 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.

Key developments this year

· We continued to implement our 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.

Link to our priorities

· Sharpen

· Accelerate

Trend compared with 2019: unchanged

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.

How we mitigate the risk

· 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 have a programme to manage allergens in our supply chain and ensure our ingredients are either free from allergens or that any allergens are disclosed.

Key developments this year

· 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 brought quality into the remit of the EHS function so it could benefit from being part of our Journey to EHS Excellence (J2EE) programme.

Link to our priorities

· Sharpen

· Simplify

Trend compared with 2019: unchanged

8. Inability to manage fluctuations in the price and availability of raw materials, energy, freight and other operating inputs

Fluctuations in crop prices could affect our margins. These changes could stem from things like alternative crops, co-product values and varying local or regional harvests because of, for example, weather conditions, crop disease, climate change or crop yields. In some cases, due to the basis for pricing in sales contracts or due to competitive markets, we may not be able to pass the full increase in raw material prices, or higher energy, freight or other operating costs, on to our customers. Our margins might also be affected by customers not taking expected volumes.

How we mitigate the risk

· We have strategic relationships and multi-year 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).

Key developments this 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.

Link to our priorities

· Sharpen

· Accelerate

Trend compared with 2019: unchanged

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.

How we mitigate the risk

· 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 have robust cyber security defences including a continuous programme to detect any vulnerabilities.

· 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.

Key developments this year

· 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 stopped the use of USB sticks to add another layer of cyber protection.

Link to our priorities

· Sharpen

· Accelerate

· Simplify

Trend compared with 2019: unchanged

Legal, Regulatory and Governance Risks

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.

How we mitigate the risk

· 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.

Key developments this year

· 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.

Link to our priorities

· Sharpen

· Simplify

Trend compared with 2019: decreasing

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.

How we mitigate the risk

· 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.

Key developments this year

· 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.

Link to our priorities

· Sharpen

· Accelerate

· Simplify

Trend compared with 2019: unchanged

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.

How we mitigate the risk

· The science behind our ingredients (for example, 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 nonexecutive director and comprising leading scientific experts, reviews key aspects of our innovation activities and provides guidance to our team.

Key developments this year

· 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.

Link to our priorities

· Sharpen

· Simplify

Trend compared with 2019: unchanged

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.

How we mitigate the risk

· 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.

Key developments this year

· 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.

Link to our priorities

· Sharpen

· Accelerate

Trend compared with 2019: increasing

APPENDIX B

DIRECTORS' RESPONSIBILITY STATEMENT

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.

APPENDIX C

RELATED PARTY DISCLOSURES

Identity of related parties

The Group has related party relationships with its joint ventures, the Group's pension schemes and with key management, being its Directors and executive officers. Key management compensation is disclosed in Note 9. There were no other related party transactions with key management. There were no material changes in related parties or in the nature of related party transactions during the year and no material related party transactions containing unusual commercial terms in the current or prior year.

Subsidiaries and joint ventures

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.