A plug flow reactor is a tubular reactor.
In an ideal plug flow reactor, fluid elements move through the reactor like plugs.
There is no mixing in the axial direction.
That means there is no back mixing along the direction of flow.
However, lateral or radial mixing is assumed to be present.
Because of lateral mixing, concentration and temperature are uniform over any cross-section of the reactor.
But concentration and temperature change along the length of the reactor.
Therefore, a plug flow reactor is characterised by:
\[
\text{presence of lateral mixing}
\]
It is not characterised by axial mixing.
Constant composition and temperature throughout the reactor is the characteristic of an ideal mixed reactor, not a plug flow reactor.
Hence, the correct answer is:
\[
\text{Presence of lateral mixing}
\]