Annual Financial Report

Annual Financial Report

Tate & Lyle PLC

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: www.Hemscott.com/nsm.do.

1. Annual Report and Accounts 2011;

2. Notice of Annual General Meeting 2011; and

3. Proxy Form.

The Annual Report and Accounts 2011 and Notice of Annual General Meeting 2011 are also available on Tate & Lyle’s website at www.tateandlyle.com/annual_report.

The Company announced its full year results on 27 May 2011. Attached to this announcement is additional information for the purposes of compliance with the Disclosure and Transparency Rules which has been extracted from the Annual Report and Accounts 2011 and the page numbers in the text refer to the page numbers in that document.

Lucie Gilbert

Deputy Company Secretary

21 June 2011

APPENDIX A

RISK FACTORS

The following information is set out on pages 19 to 21 of the Annual Report 2011.

Risk management

Tate & Lyle could be affected by a number of risks, which might have a material adverse effect on our reputation, operations and financial performance.

The Board of directors has overall responsibility for the Group’s system of risk management and internal control. The schedule of matters reserved to the Board ensures that the directors control, among other matters, all significant strategic, financial and organisational issues.

Approach

The Group’s enterprise-wide risk management and reporting process helps management to identify, assess, prioritise and mitigate risk. The process involves an ongoing programme of workshops, facilitated by the risk management function, held around the Group. The risks identified are collated and reported through functional and divisional levels to the Group Executive Committee. This culminates in the identification of the Group’s key business, financial, operational and compliance risks with associated action plans and controls to mitigate them where possible (and to the extent deemed appropriate taking account of costs and benefits). The output is then reviewed by the Board. Responsibility for managing each key risk and the associated mitigating controls is allocated to an individual executive within each division. As part of the process, senior executive management formally confirms that these key risks are being managed appropriately within their operations and that controls have been examined and are effective. The confirmations and any exceptions are discussed at the Audit Committee and Corporate Responsibility Committee once a year.

During the year ended 31 March 2011, the risk management process was enhanced further through an exercise undertaken by the Board of directors and the Group Executive Committee to consider the nature and extent of the Group’s risk appetite. The results of this exercise are being used as part of the Group’s strategic planning activities, and in considering ongoing mitigating actions.

The Group’s risk management process continues to follow the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Enterprise Risk framework. The COSO framework provides a process to manage the risk of failure to achieve business objectives and assurance against material loss or misstatement.

KEY RISKS

Key risks and uncertainties identified as part of the risk management process undertaken during the year, together with some of the mitigating actions that we are taking, are set out below. It is not possible to identify or anticipate every risk that may affect the Group. Our overall success as a global business depends, in part, upon our ability to succeed in different economic, social and political environments and to manage and to mitigate these risks.

Failure to act safely and to maintain the safe and continuous operation of our facilities

The safety of our employees, contractors, suppliers, and the communities in which we operate is paramount. We must operate within local laws, regulations, rules and ordinances relating to health, safety and the environment, including emissions. The operation of plants involves many risks, including failure or sub-standard performance of critical equipment; improper installation or operation of equipment; failure of critical supplier; and natural disasters. If these risks cause a temporary or permanent stoppage in production, this could have a material adverse effect on the Group.

Examples of mitigating actions

• Corporate Responsibility Committee in place
• Board annual review of Group safety/environmental performance/policies
• Separate central global function established, Group Operational Efficiency and Sustainability, outside business unit control, to set and monitor standards
• Health and safety policies and procedures at all facilities with dedicated staff to ensure policies are embedded and measured
• Environmental management systems at production facilities
• Business continuity plans in place to enable supply, as quickly as practicable, of product to customers from alternative sources in the event of a natural disaster or major equipment or plant failure backed by appropriate insurance coverage against business interruption
• Periodic review of critical supply or supplier dependencies in principal manufacturing operations.

Failure to maintain the quality of our products and high standards of customer service

The safety of consumers of our products is critical. Poor quality or sub-standard products or poor customer service could have a negative impact on our reputation and relationships with customers.

Examples of mitigating actions

• Central global function, Group Operational Efficiency and Sustainability, manages Group-wide quality process and procedures
• Product safety and quality policies and procedures in place to prevent contamination
• Dedicated staff at all locations to ensure policies are embedded and measured
• Third-party audits completed
• Recall simulation exercises undertaken.

Failure to attract, develop and retain key personnel

Performance, knowledge and skills of employees are central to success. We must attract, integrate and retain the talent required to fulfil our ambitions and deliver the Group’s strategy. Inability to retain key knowledge and adequately plan for succession could have a negative impact on Company performance.

Examples of mitigating actions

• Remuneration policies designed to attract, retain and reward employees with ability and experience to execute Group strategy
• Talent strategy to provide opportunities for employees to develop careers
• Single global performance appraisal system in place
• New Commercial and Food Innovation Centre in Chicago, USA to help attract and retain new talent to the Group.

Non-compliance with legislation and regulation

The Group operates in diverse markets and therefore is exposed to a wide range of legal and regulatory frameworks. We must understand and comply with all applicable legislation. Any breach could have a financial impact and damage our reputation.

Examples of mitigating actions

• Regulatory managers monitor changes in legislation and develop action plans
• Legal teams maintain compliance policies in areas such as antitrust, money laundering and anti-corruption laws; and provide ongoing training to employees
• External consultants provide quarterly reports on regulatory change.

Fluctuations in prices, offtake and availability of raw materials, energy, freight and other operating inputs

Margins may be affected by fluctuations in crop prices due to factors such as harvest and weather conditions, crop disease, crop yields, alternative crops and co-product values. In some cases, due to the basis for pricing in sales contracts, or due to competitive markets, we may not be able to pass on to customers the full amount of raw material price increases or higher energy, freight or other operating costs.

Examples of mitigating actions

• Strategic relationships with suppliers and trading companies
• Multiple-source supply agreements for key ingredient supplies
• Balanced portfolio of supply and tolling contracts in operation with customers to manage balance of raw material prices and product sales prices and volume risks
• Raw material and energy purchasing policies to provide security of supply
• Derivatives used where possible to hedge exposure to movements in future prices of commodities

Failure to protect intellectual property

Our commercial success depends, in part, on obtaining and maintaining patent protection on certain products and technology. We must successfully defend patents against third-party challenges or infringements.

Examples of mitigating actions

• Group legal department, supported by expert patent lawyers, monitors all patents
• Group Intellectual Property (IP) committee in place, chaired by the President of Innovation and Commercial Development, to oversee the Group’s IP management
• Organised and secure process for identifying and recording innovations, trade secrets and potential patentable ideas.

Competitors may achieve significant advantage through technological step change or higher service levels

Competitors could introduce a major technological step change, such as significantly improving the efficiency of a production process and lowering costs (and thereby commoditising products); or introduce a new product with better functionality which in turn could lead to a decline in our sales and/or profitability. We must ensure we exceed or at least match competitors’ service and quality performance.

Examples of mitigating actions

• Innovation and Commercial Development team to produce innovations in product development, applications, manufacturing technology and customer services
• Global key account managers in place for major customers
• Improved customer relationship management capabilities as part of the programme to implement a common global IS/IT platform and global support services.

Failure to implement the Group’s programme to transform its operational capabilities

The Group has committed to a programme to transform its operational capabilities, primarily by implementing a common global IS/IT platform and global support services. If this programme is not implemented as planned, this would have an adverse impact on the Group’s ability to achieve its strategy.

Examples of mitigating actions

• Dedicated resources allocated to the project
• Project scope set out in detailed legal contracts with external system integrator and other providers, with appropriate governance and remedy mechanisms
• Detailed project implementation plan subject to both internal and external audit and review
• Formal steering committee (executive management) and Board/Audit Committee review of project progress against agreed milestones and timelines.

Failure to counter negative perceptions of the Group’s products

We must be fully prepared to counter unexpected/ unfounded negative publicity about our products.

Examples of mitigating actions

• Innovation and Commercial Development and regulatory teams substantiate relevant product claims
• Media relations department monitors Group press coverage and has action plans to deal with any negative publicity.

Failure to identify important consumer trends and innovate could impact the business’s ability to grow

Falling behind the curve on emerging dietary trends and/or an inability to innovate could impact the delivery of the Group’s strategy. This would impact its performance and reputation.

Examples of mitigating actions

• Innovation and Commercial Development team works closely with customers and advisors to identify emerging trends
• Consumer-facing research to ensure we are aware of consumers’ needs and expectations
• Global key account managers in place for major customers
• New Commercial and Food Innovation Centre in Chicago, USA will enable scientists, marketing, sales and technical experts to collaborate more closely with customers
• Recruitment and training policies in place to strengthen and upgrade staff skill sets.

Failure to manage capital expenditure and working capital, and deliver key projects

We must manage our finances within strictly controlled parameters, particularly when external financial conditions are uncertain and highly changeable. The change programme currently being undertaken by the Group consists of a number of projects which, if not delivered successfully, could impact the Group’s performance and reputation.

Examples of mitigating actions

• Significant projects approved and monitored by the Board
• Debt and working capital levels monitored constantly and reported monthly to the Board
• Capital expenditure procedures to control and monitor allocation and spend
• Major or key projects have dedicated teams
• External resources and expertise used where required or as appropriate.

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 acts which could have a significant impact on the ability of the business to operate. We must safeguard business assets and ensure accuracy and reliability of records and financial reporting.

Examples of mitigating actions

• Authorisation policies ensure that key tasks are segregated to safeguard assets
• Detailed internal finance and capital expenditure manuals set out procedure
• Group financial performance monitored with monthly Board reports and regular forecasting
• Chief Executive and Chief Financial Officer undertake detailed quarterly business and financial reviews
• Internal audit function provides assurance.

APPENDIX B

DIRECTORS’ RESPONSIBILITY STATEMENT

The following statement is extracted from page 59 of the Annual Report 2011:

Each of the directors, whose names and functions are listed on pages 32 and 33, confirms that, to the best of his or her knowledge:

• 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; and
• the business review contained in the directors’ report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

APPENDIX C

RELATED PARTY DISCLOSURES

The following is extracted from Note 40 on page 108 of the Annual Report 2011:

Identity of related parties

The Group has related party relationships with its subsidiaries, joint ventures and associates, the Group’s pension schemes and with key management being its directors and executive officers. No related party relationships with close family members of the Group’s key management existed in the current or comparative year.

Subsidiaries, joint ventures and associates

Transactions entered into by the Company 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. Similarly, the Group’s share of transactions entered into by the Company and its subsidiaries with joint ventures and between joint ventures as well as the Group’s share of the resultant balances of receivables and payables are eliminated on consolidation. Transactions and balances with joint ventures (before consolidation eliminations) and with associates are as follows:

	Â	Â	Â	31 March
Continuing		2011 £m		2010 £m
Sales of goods and services
– to joint ventures and associates		150		111
Purchases of goods and services
– from joint ventures and associates		221		174
Receivables
– due from joint ventures and associates		15		18
Payables
– due to joint ventures and associates		17		8
Financing
– loans to joint ventures and associates		18		10
– deposits from joint ventures and associates		25		3

The Group had no material related party transactions containing unusual commercial terms.

The Group provides guarantees in respect of banking facilities of a joint venture totalling £10 million (2010 – £21 million).

Key management

Key management compensation is disclosed in Note 9.

END