Tate & Lyle PLC

Annual Financial Report and Notice of Annual General Meeting 2023

In accordance with Listing Rule 9.6.1, Tate & Lyle PLC (the 'Company' or 'Tate & Lyle') 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 2023;

2.   Notice of Annual General Meeting 2023;

3.   Notice of Availability; and

4.   Proxy Form.

The Annual General Meeting 2023 will be held at Thistle London Marble Arch, Bryanston Street, London, W1H 7EH at 10.30am on 27 July 2023.

The Annual Report 2023, Notice of Annual General Meeting 2023, Notice of Availability and Proxy Form are also available on the Investors Hub section of the Company's website. Mailing of the Annual Report 2023, Notice of Annual General Meeting 2023, Notice of Availability and Proxy Form to shareholders who have requested or are entitled to receive them will occur shortly.

We will notify shareholders of any significant updates to our Annual General Meeting 2023 arrangements via a regulatory information service and on the Investors Hub section of the Company's website.

Annual Financial Report

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 2023 in unedited full text and page numbers in the text refer to page numbers in that document. This information should be read in conjunction with the Company's 2023 full-year results announcement, released on 25 May 2023, which contained a condensed set of financial statements and 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

6 June 2023

For more information contact:

Investors and analysts

Christopher Marsh, VP Investor Relations

Mobile: +44 (0) 7796 192 688

APPENDIX A

PRINCIPAL RISKS AND UNCERTAINTIES

Strategic risks

1.   Strategy delivery

Failing to grow Food & Beverage Solutions would prevent us from delivering against our Group targets. This could reduce our profitability over both the short and long term and damage investors' view of us.

How we mitigate the risk

·      Revenue and EBITDA, and M&A activity, are key components of successfully growing our business and we have a five-year strategic plan in place to support this.

·      Our organic and acquisitive growth plan supports our strategy. We have global and regional five-year plans focused on key categories.

·      Our Board regularly reviews and challenges the strategic direction of the business to ensure we remain competitive and are successful in our chosen markets.

·      Our Executive Committee regularly reviews our strategic progress, financial performance, opportunities in our markets and competitor activities.

·      Our M&A team works closely with Innovation and Commercial Development and with Food & Beverage Solutions to find acquisitions and partnerships that will help us grow.

·   We have incentive schemes and bonus programmes for customer-facing teams tied to strategic, commercial and operational targets.

What we've done this year

·      We strengthened our customer offering and presence in Asia with the acquisition of Quantum Hi-Tech in China, a leader in FOS and GOS dietary fibres.

·      We acquired Nutriati, a small ingredient technology business making chickpea protein and flour to expand our customer offering in plant-based proteins.

·      We expanded our sweetener platform with a distribution agreement to supply erythritol.

·      We invested in further building our solution selling capabilities in areas such as sensory, nutrition, regulatory and in consumer and category insight.

·      We executed targeted programmes to develop new ways of working with customers to build stronger solutions-based partnerships.

·      We expanded our global network of Customer Innovation and Collaboration Centres, opening a new Centre in Santiago, Chile and extending our Centre in Singapore.

·      We delivered new training and tools for our customers, such as recipe selection and cost analysis for sugar reduction, to increase customer collaboration and knowledge sharing.

Trend compared with 2022 financial year: unchanged

2.   Innovation

Developing and commercialising New Products are essential to our ability to lead the industry in our chosen categories, and therefore 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 both in-house development and external open innovation, delivers a strong pipeline of new ingredients and solutions for our customers.

·      Our Innovation and Commercial Development (ICD) team monitors consumer and category trends, and works closely with commercial partners to ensure New Products and solutions meet our customers' needs.

·      Our ICD team develops and connects with external organisations, including biotech, pharma, and food tech ecosystems, to identify and leverage scalable innovation and new product opportunities.

·      We prioritise partnership opportunities with customers to accelerate development cycles and bring New Products to market faster.

What we've done this year

·      Investment in innovation and solution selling capabilities such as sensory, nutrition, regulatory and consumer and category insights, increased by 11%.

·      New Product revenue grew by 17% with strong growth in mouthfeel and fortification platforms.

·      New Product revenue as a percentage of Food & Beverage Solutions revenue increased to 17%.

·      We executed targeted programmes to develop new ways of working with customers to build stronger solutions-based partnerships, leading to solutions revenue from new business wins increasing to 18%.

·      We strengthened our solutions offering for customers with acquisitions of

Quantum (dietary fibre) and Nutriati (chickpea protein).

·      To improve the ability of customer-facing teams to drive customer intimacy and business development relationships, we invested in, and increased, insights-specific resources within our regions.

·      We expanded our Customer Innovation and Collaboration Centre in Singapore to include an automated mouthfeel and texturants laboratory, and opened a new Centre in Santiago, Chile.

Trend compared with 2022 financial year: unchanged

3.   People and talent

To be a successful and purpose-led global business, and to deliver our strategy, having the right capabilities and people is critical. We have active strategies in place to recruit, develop and retain our people and to build a diverse and inclusive workforce.

How we mitigate the risk

·      Our talent development plans give employees opportunities and training to build their capabilities and resilience.

·      We have initiatives in place at Group, local and functional levels to progress equity, diversity and inclusion across the organisation. We also have employees dedicated to developing and measuring our progress on equity, diversity and inclusion.

·      We have set a number of targets up to 2030 to track our progress on delivering equity, diversity and inclusion.

·      We have a mix of short- and long-term incentives. This includes a bonus scheme available to a broad population of employees.

·      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 tell us what employees really think about working at Tate & Lyle.

·      Our Board and Executive Committee plan succession for business-critical roles.

·      We encourage open and transparent feedback from our people so we are able to react to any challenges that emerge.

What we've done this year

·      Each year we carry out a global employee engagement survey managed by an external organisation. This year, the response rate was high at 82% and showed an encouragingly strong level of employee engagement.

·      We provided specific support as needed to employees most impacted by high inflation and the cost-of-living crisis such as one-off payments to some employees and higher salary increases for those on lower pay.

·      We have a Group-wide programme to support the physical and mental wellbeing of our employees.

·      We have six Employee Resource Groups which play an important part in enabling employees to experience solidarity, support, education, growth and development.

·      We introduced policies to promote equity and better work life balance, such as a global policy on equal parental leave, and enhancements to our healthcare offering and vacation policy in North America.

·      We established four behaviours to underpin our growing culture of innovation and experimentation: courage, challenge, curiosity and create flow.

·      We accelerated adoption of e-learning for all employees by providing access to learning tools such as LinkedIn Learning and Workday®.

Trend compared with 2022 financial year: unchanged

4.   Climate Change and Sustainability

Physical and transition climate change risks, such as extreme weather events, temperature rises, water stress and increased regulation, may result in increased volatility in the supply of raw materials, distribution in our supply chain, production costs, capacity constraints and higher costs of compliance. In addition, the failure to meet our long-term sustainability goals could result in financial loss and reputational damage amongst customers, consumers, investors and other stakeholders. The longevity and success of the business fundamentally depends on the health of the natural environment.

How we mitigate the risk

·      Caring for our planet is one of the three pillars of our purpose, and consideration of the impact of climate change is embedded in our key processes including capital investment, new product development and acquisitions.

·      We have established a governance process to oversee and monitor our sustainability programme including a Sustainability Committee, chaired by the Chief Executive, which meets at least twice a year, and a Sustainability Working Group which meets at least quarterly.

·      We have established targets to 2030 for reduction in absolute greenhouse gas emissions, use of waste, water reduction and sustainable agriculture (see pages 54 to 61).

·      Communication programmes are in place to share the impact of, and support actions to reduce our impact on, climate change.

·      Our risk management and sustainability teams work within the business to identify and mitigate where possible resource-scarcity issues especially within agricultural ingredient sourcing, and manufacturing, water and energy.

·      We encourage our people's commitment to environmental improvements and efficiency through our J2E programme (see page 51).

What we've done this year

·      We made good progress against our 2030 sustainability targets (see pages 54 to 61).

·      We carried out a comprehensive analysis of what a pathway to net zero emissions would look like for Tate & Lyle, including detailed Scope 1 and 2 decarbonisation reviews at our four largest facilities and an in-depth review of our Scope 3 emissions. As a result of this work, we made a commitment for Tate & Lyle to be net zero by 2050.

·      We expanded our sustainable agriculture programme for stevia in China working in partnership with the NGO, Earthwatch Europe, and Nanjing Agricultural University.

·      Through our sustainable agriculture programme in the US with Primient and Truterra LLC, we maintained sustainable acreage equivalent to the volume of corn we use globally each year.

·      We undertook an ESG (environmental, social and governance) materiality assessment to identify and prioritise key issues and areas affecting our business now and in the future.

·      We started to explore carbon pricing as an internal mechanism to drive deeper understanding of the impact of our energy choices and capital investments.

Trend compared with 2022 financial year: increasing

Operational risks

5.   Operating Safely

Safety is not just a priority at Tate & Lyle, it's foundational. 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, Safety, Quality and Security (EHSQS) in place at all our sites, known as the J2E programme. It is visibly sponsored by the Chief Executive and Executive Committee.

·      Our EHS Advisory Board, which includes our Chief Executive, receives EHSQS updates and reviews performance quarterly. Our Executive Committee and Board regularly review safety performance and progress against J2E.

·      The Incident Review Board conducts reviews of major, severe or potentially severe events.

·      Benchmark, a cloud-based tool, is used to manage EHS data and facilitate EHS reporting.

What we've done this year

·      We supported our teams in China through an intense period of Covid-19 infections after the government lifted its Covid-19 restrictions at the end of 2022.

·      Improved safety performance by contractors who did not have any recordable injuries.

·      By the end of the year, in J2E, 26 sites had passed tollgate 2, 22 sites tollgate 3, 21 sites tollgate 4, six sites tollgate 5, and three sites tollgate 6. Our site in McIntosh, Alabama, US became the first to pass the final stage, tollgate 7.

·      We completed investments to reduce site risks based on findings from Process Risk and Dust Hazard Assessments.

·      We integrated the EHS and Quality Management systems.

·      Following lifting of Covid-19 restrictions, the global EHSQS team resumed on-site assessments and providing hands-on support to all facilities.

·      Employee wellbeing continued to be included in the J2E programme.

Trend compared with 2022 financial year: unchanged

6.   Product Quality

Poor quality products could cause safety issues 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 in place.

·      We regularly test our recall process.

·      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 and 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.

·      Our Quality Incident Review Board investigates incidents and shares best practice across our sites.

·      A governance process is in place for Tate & Lyle and Primient to review on a regular basis compliance with the long-term supply and other agreements which determine the safety and quality standard that products sold to each business must meet.

What we've done this year

·      We started to build a new quality lab within our facility in Hoffman Estates, Illinois, US to enable in-house micro-testing and support.

·      Our environmental monitoring programme was fully implemented at all sites.

·      We supported the importation, testing, and management of non-GMO waxy corn from the US into Europe for use in our plants.

·      Our product recall processes were externally assessed and validated, and a simulation exercise conducted.

·      We integrated the acquired Quantum Hi-Tech business into our quality policies and processes.

·      We implemented a new Incident Management programme for quality and delivered the necessary training.

Trend compared with 2022 financial year: unchanged

7.   Supply chain

Fluctuations in crop prices could affect our margins. Climate and weather-related events, disease, lower yields, competition for acreage and freight restrictions can impact crop availability and therefore price. 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 may 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 raw material and energy purchasing policies increase the security of our supply.

·      A governance process is in place for Tate & Lyle and Primient to review on a regular basis the delivery of the long-term supply agreements we have in place, and related corn procurement services.

·      We benefit from the scale and expertise of Primient's corn procurement services, providing us with supply security and allowing us to lock in corn prices when we secure customer contracts, thereby reducing cost volatility.

·      We maintain a strong partnership with our joint venture partner in Primient, KPS Capital Partners.

What we've done this year

·      Following the outbreak of the conflict in Ukraine, we formed an executive steering committee that met weekly for most of the year to analyse the impact on our supply chain and our customers, and to develop appropriate mitigating actions.

·      We enhanced our supplier risk programme to add further resilience to our supply base.

·      We have reviewed our corn supply contracts to allow for improved volume and price management.

·      Our transportation procurement and logistics teams work together to manage and optimise supplier and customer service levels.

·      We created additional flexibility in our standard contracts.

Trend compared with 2022 financial year: unchanged

8.   Business disruption

Business disruptions can occur for a range of reasons, including pandemics, natural disasters, and geopolitical turbulence. There are also many risks in operating our plants which could cause breaks in production leading to disruption to our business and a deterioration in customer services. In all cases, this could impact our financial performance and damage our ability to grow our business.

How we mitigate the risk

·      We have a global business continuity management framework to enable effective recovery from a major disruption.

·      Our Risk Committee oversees existing and emerging risks to ensure mitigating actions are in place wherever possible to meet customers' needs.

·      Having plants in different regions and countries means we can serve customers where practical from elsewhere if a particular area or plant is disrupted, and diversifies our business into different markets and geographies.

·      Our plant network has a preventative maintenance programme.

·      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 from extreme winter weather to the extent possible.

·      Governance process is in place for Tate & Lyle and Primient to review on a regular basis the delivery of the long-term supply and other related agreements.

What we've done this year

·      We analysed learnings from our Global Pandemic Response Team to ensure we can respond quickly and effectively to future major events such as pandemics.

·      We operated strict hygiene protocols at all our sites to ensure our people are protected, and our plants kept running.

·      We continued to implement and refresh our business continuity management framework across the organisation.

·      In the face of significant supply chain disruption, we worked closely with our external suppliers and customers to manage volatility and minimise business disruption.

·      We enhanced our sales and operational planning (S&OP) programme by leveraging technology to improve our ability to forecast effectively and strengthen how we supply customers.

·      We improved the way we manage our inventories in order to better position our ingredients across our markets and support our customers' growth.

·      Our productivity programme delivered US$21 million of savings.

Trend compared with 2022 financial year: unchanged

9.   Cyber and IT resilience

We need to maintain the continuing operation and 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 programme focuses on maintaining and strengthening our defences in terms of our processes, people and technology.

·      We run compulsory cyber security awareness training which includes simulated phishing campaigns.

·      We have robust cyber security defences including a continuous programme to detect threats and vulnerabilities, and we undertake independent penetration tests.

·      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.

·      We have investment plans in place to update ageing equipment and address new threats as they emerge.

·      Acquisitions are aligned to our operational and cyber model as part of their integration journey.

What we've done this year

·      We completed the separation of our IT systems with Primient.

·      We improved our email protection by leveraging new monitoring technology, and observing communication threats between us, our suppliers and customers.

·      We introduced new reporting and dashboarding capabilities across our cyber and operations landscape.

·      We further developed our monitoring capabilities and automation.

·      We completed integrations of new businesses acquired in Asia to align them with our operational and cyber model.

·      We established a separate IT security environment for countries of high risk to improve our resilience.

·      We further updated and strengthened our Cyber Security Incident Response Plan.

Trend compared with 2022 financial year: increased

Legal, regulatory and governance risks

10.  Legal and Compliance

If we don't meet our legal and/or regulatory obligations, our relationships with customers and suppliers 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 colleagues globally to identify legal and regulatory risk, and provide advice and solutions to mitigate it.

·      We monitor legal and regulatory developments to make sure we know what could affect Tate & Lyle.

·      We review our key policies and training material regularly.

·      We run a comprehensive 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.

·      We have lawyers in each region to work with colleagues to identify and mitigate legal and regulatory risk from the bottom up.

What we've done this year

·      We continued to embed our contract documentation processes including the tracking of customer terms and conditions, and provided in-depth training to our sales teams.

·      We worked with our procurement team to strengthen their legal and compliance processes.

·      We continued to provide legal and ethics and compliance training across the organisation as part of our annual training plan, including training on Code of Ethics, anti-trust/competition, modern slavery, criminal finances and trade secrets.

·      We reinforced our sanctions procedures and continued to provide training.

·      We recruited local lawyers in Singapore and China to increase the focus on compliance in the Asia region.

Trend compared with 2022 financial year: unchanged

11.  Financial controls

Without effective internal financial controls, we could be exposed to the risk of fraud and error in our financial reporting as well as losses from events which may then affect our performance and ability to operate.

How we mitigate the risk

·      We have a well-established framework of financial policies and standards supported by procedures and controls over key processes - where possible, these controls are automated and we maximise the use of preventative controls.

·      The design and operating effectiveness of controls are monitored on an ongoing basis and the results are reported regularly to the Audit Committee and Executive Committee.

·      We have several forums to monitor and manage our financial controls effectiveness, such as our quarterly regional Control Environment Councils chaired by the relevant General Manager.

·      The Chief Executive and Chief Financial Officer review the business and financial performance at least monthly.

·      At both the half year and the end of the financial year, confirmation is provided to the Executive Committee, the Audit Committee and the Board that minimum control standards are operating effectively.

·      Our well-resourced Group Audit and Assurance team provides independent assurance to management and the Board.

What we've done this year

·      We continued to invest in our financial controls function and our centres of excellence within our Global Shared Services Centre in Poland.

·      We continued to leverage our Finance Global Process Ownership Forum, to maintain consistency and effectiveness of financial controls at all Group locations.

·      We continued to provide refresher training for our senior finance team on more complicated areas of finance and accounting which require more judgement, and the importance of effective financial controls.

·      We created new roles to manage areas of increasing relevance such as sustainability reporting and accounting.

·      Following completion of the separation of Primient in April 2022, we established additional financial controls to manage the financial impact of the long-term agreements between Tate & Lyle and Primient. We monitor the operating effectiveness of these controls within our established risk and controls framework.

Trend compared with 2022 financial year: unchanged

12.  Regulatory and trade risks

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. Government actions or policies 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

·      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.

·      We work closely with thought-leading customers around the world to jointly focus on the science and consumer benefits of our ingredients.

·      We are members of trade organisations which give us access to broader sources of information and provide, where necessary, a single voice for our industry on issues, both regulatory and public interest, affecting our ingredients.

·      We engage with political parties, influencers and regulatory authorities in the main countries in which we operate.

What we've done this year

·      We worked with national and state trade associations as well as local authorities in the US, China and other key countries where we operate to progress our commercial and sustainability goals.

·      We continued to develop our regulatory team in the Asia, Middle East, Africa and Latin America regions to strengthen relationships with regulators in these markets.

·      We continued to invest in our Global Nutrition team with funding for studies supporting the safety and efficacy of our ingredients and maintain differentiation against competitors.

·      We expanded our advocacy programme in key markets; including building partnerships with key customers and by taking up the positions on the Board and as Committee Chair on various key trade associations.

·      We continued to expand our online Nutrition Centre which includes independent scientific contributions by external experts on key topics of public health and on our ingredients.

Trend compared with 2022 financial year: increased

APPENDIX B

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with Disclosure Guidance and Transparency Rule 4.1, the directors confirm, to the best of their knowledge that:

•     the Group financial statements, prepared in accordance with UK-adopted international accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Company and undertakings included in the consolidation taken as a whole;

·      the Annual Report, including the Strategic Report, includes a fair review of the development and performance of the business and the position of the Company and undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

·      they consider the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's and Company's position, performance, business model and strategy.

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.

As a result of the sale of the controlling stake in the Primient business, Tate & Lyle now holds a 49.7% interest in Primient, effective from 1 April 2022. Primient comprises of the Group's former Primary Products business in North America and Latin America and its former interests in the Almidones Mexicanos S.A de C.V ('Almex') and Covation Biomaterials LLC, formerly 'Bio-PDO' ('Covation') joint ventures. There were no other 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.

Related party transactions with joint ventures and outstanding balances

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.

Sales of goods and services to the Primient joint venture are considered in scope of IFRS 15 and relate to the Group's commitment under the long-term agreements in operation following the completion of the Transaction to produce industrial starches for Primient under a tolling arrangement whereby Primient retains control of the net raw material at all times. The Group earns a manufacturing margin for this production when the service is provided. All associated income is earned in North America. The Group considers it appropriate to exclude this amount from revenue and record the income in operating profit on the basis that this income is generated with a related party, is not part of the Group's normal revenue generating activities (where revenue is recognised when control of the goods is transferred), only arises because of the relationship that exists in which Primient is a supplier of the Group, and is outside the Group's core focus on speciality food and beverage solutions.