Associated British Foods Annual Report 2023

FY2023 Annual Report · Associated British Foods

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Annual Report 2023

Investing
for tomorrow
Delivering
today

Strategic report

Governance

Financial statements

Introduction
Chairman’s statement
Chief Executive’s statement
Our strategy and business model
Key performance indicators

1
5
7
9
12
14 Operating review
14 Grocery
18
Ingredients
22 Agriculture
26
Sugar
30 Retail
37
40
46 Responsibility
56 Climate-related Financial
Disclosures (TCFD)
Principal risks and uncertainties
Viability statement and
going concern

Financial review
Section 172 and our stakeholders

68
76

Chairman’s introduction
78
Board of Directors
80
Corporate governance matters
82
100 Directors’ Remuneration Report
116 Directors’ Report
119 Statement of directors’

responsibilities

120 Independent Auditor’s Report

128 Consolidated income statement
129 Consolidated statement

of comprehensive income

130 Consolidated balance sheet
131 Consolidated cash flow statement
132 Consolidated statement
of changes in equity

133 Significant accounting policies
139 Accounting estimates
and judgements
140 Notes forming part of

the financial statements
194 Company financial statements
201 Progress report
202 Glossary
203 Company directory

Group revenue

£19.8bn

(2022: £17.0bn)

Adjusted operating profit*

Operating profit

£1,513m

(2022: £1,435m)

£1,383m

(2022: £1,178m)

Profit before tax

£1,340m

(2022: £1,076m)

Adjusted profit before tax*

Adjusted earnings per share*

£1,473m

(2022: £1,356m)

141.8p

(2022: 131.1p)

Net cash before lease
liabilities*

Net debt including lease
liabilities*

£895m

(2022: £1,488m)

£2,265m

(2022: £1,764m)

Gross investment*

£1,171m

(2022: £930m)

Return on average capital
employed* (ROACE)

Dividends per share (including
special dividend)

Basic earnings per share

13.6%

(2022: 14.0%)

60.0p

(2022: 43.7p)

134.2p

(2022: 88.6p)

On the cover: An Allied Mills
employee at our Manchester
flour mill

* Alternative Performance Measures (APMs) as

defined on pages 189 to 191.

Associated British Foods is a highly diversified
group, with a range of food and ingredients
businesses as well as our retail brand, Primark.
We are united in our purpose: to provide safe,
nutritious and affordable food, and clothing that
is great value for money.

Investing
for tomorrow
Delivering
today

We invest in our businesses to create long-term
value for our shareholders and our stakeholders
including customers, employees and suppliers.
We believe that this investment, with the process
of ambition and renewal that accompanies it, builds
momentum and sharpens focus across the Group.

In our Annual Report this year we highlight how
we are continuing to invest in new technologies,
in products and processes, in our people, and in
capital and acquisitions despite a year of economic
volatility and high inflation. We show how our
businesses are increasingly well-placed to grow
sustainably from this year’s delivery of sales
and profits.

Associated British Foods plc Annual Report 2023

OUR GROUP AT A GLANCE

About us

133,000
employees

55%
of our total workforce
are women

55
countries operated in,
across Europe, Africa,
the Americas, Asia
and Australia

96%
of our people have
access to an employee
assistance programme

One of the
largest
fashion retailers
in Europe

188
food manufacturing
sites globally

83%
of the waste* we
generated was sent for
recycling, recovery or
other beneficial use

58%
of the energy we used
came from renewables

Our values

Respecti n
e ’ s
everyo n
dignit y

l
i
v

r
i
g

ring

P r

c
ti

inte

r
i
t

g ressin
t h ro ugh
o lla b oratio

Our consumer brands

Our operating businesses

Grocery

Our Grocery division employs more than 15,000 people
and comprises brands which occupy leading positions
in markets across the globe. In the UK, nine out
of 10 households use our brands.

Revenue
£4,198m
(2022: £3,735m)

Twinings and
Ovaltine are enjoyed
in more than 100
countries worldwide

Read more on pages 54 and 55

The Group data in this report on our environmental and safety KPIs covered the period 1 August to 31 July, excluding Primark selling space and number
of countries of operation; and employee numbers.
∆ EY has provided limited independent assurance over the 2023 metrics. See the 2023 ABF Responsibility Report, page 114, for EY’s assurance statement.
* Impacted by COVID-19 pandemic.

Associated British Foods plc Annual Report 2023

2
3
,
5
6
6

‘19

2
2
,
8
7
7

‘20

2
1
,
9
9
0

‘21

2
1
,
0
4
6

‘22

2
1
,
1
8
3
∆

‘23

Operating review

Grocery

Grocery comprises brands
which occupy leading
positions in markets across
the globe. In the UK, nine
out of 10 households use
our brands.
Revenue

£4,198m

2022: £3,735m

Actual currency: up 12%
Constant currency: up 11%

Adjusted operating proﬁt

£448m

2022: £399m

Actual currency: up 12%
Constant currency: up 8%

Adjusted operating proﬁt margin

10.7%

2022: 10.7%

Operating profit

£402m

2022: £369m

Actual currency: up 9%

Return on average capital
employed

30.0%

2022: 29.3%

A selection of grocery products from
our businesses around the world

Associated British Foods plc Annual Report 2023

About Grocery
International
Twinings has been blending tea since it was founded in 1706 and
now sells premium teas and infusions in more than 100 countries.
Ovaltine malted beverages and snacks are consumed throughout
the day in countries across the globe. Patak’s is the original spice
blending expert and is recognised around the world for creating
authentic Indian food that is quick and easy to prepare. Jordans
has a heritage of using traditional methods to produce delicious
wholegrain breakfast cereals. Blue Dragon offers authentic, simple
and convenient ingredients to create delicious dishes from China,
Thailand, Japan and Vietnam. Mazzetti is our leading brand
of Balsamic Vinegar of Modena.

North America focused
We make and market leading US, Mexican and Canadian cooking
and baking branded products. These include Mazola and Capullo
cooking oils, Fleischmann’s yeast, Karo corn syrup and Argo corn
starch. Anthony’s Goods is a leading brand of organic and natural
better-for-you ingredients and superfoods which are sold online
in the US. We also have a 50% ownership in Stratas Foods,
the leading US supplier of packaged oils, margarines, mayonnaise,
sauces and dressings for the foodservice market, specialist packaged
oils and fats for food ingredients, and private-label bottled oil for
the retail market.

UK focused
We have a broad set of food brands and businesses focused in the
UK. Kingsmill produces a range of bakery products for the whole
family. Dorset Cereal’s award-winning muesli and granolas are
renowned for the quality of the ingredients. Ryvita is the UK
category leader in crispbreads. Silver Spoon and Billington’s are
our two retail sugar brands in the UK. We are also a leading supplier
to the Indian, Chinese and Thai foodservice sectors with well-known
brands including Lucky Boat noodles.

Australia and New Zealand focused
We are one of Australia and New Zealand’s largest food
manufacturers. Tip Top is one of the most recognised brands in
Australia with an extensive range of bread and baked goods. Our
Don business manufactures a variety of bacon, ham and meat
products. Yumi’s produces hommus, vegetable dips and snacks
and is the leader in the Australian market.

For a full list of our businesses and brands visit https://www.abf.co.
uk/our-businesses/a-z-finder.

Operating review

Our Grocery businesses performed with great resilience in what
were challenging inflationary conditions. Revenues were strongly
ahead of last year driven primarily by price increases through the
course of the year to mitigate cost inflation. Despite the challenges
of dealing with inflation volatility, adjusted operating profit margin
held at 10.7%, helped in part by a recovery in our Allied Bakeries
business. Adjusted operating profit for the year was 8% higher
at £448m. In the first half of the year revenues were 10% higher
than the same period a year ago. In the second half, revenues
were 12% higher. The difference in the growth rates predominantly
reflects the lag between the input cost inflation of the prior year
and the first half of this financial year and the time taken to
implement pricing. As this year progressed, inflation abated
somewhat. Adjusted operating profit in the first half was £173m,
down 10% on the same period a year ago. However, in the second
half adjusted operating profit increased by 23% to £275m as the
effect of pricing came through.

Our group of international brands – Twinings, Ovaltine, Blue Dragon,
Patak’s, Jordans and Mazzetti – largely performed well. Sales at
Twinings moved higher on pricing to recover input cost inflation,
with volumes broadly flat. Within this, there were good
performances in the US, UK, Australia and France. The brand
conducted a number of marketing trials in the year as a prelude to
deploying marketing spend to drive further growth. Sales of fruit and
herbal infusion teas have increased significantly and are now close
to those of black teas. Ovaltine sales also moved higher, with good
performances in Brazil, Switzerland and Nigeria partially offset by
lower foodservice sales in China and by difficult trading conditions
in Myanmar. We saw an increase in sales of Ready-to-drink products
in Thailand but lower sales of higher margin powder products.
Patak’s and Blue Dragon both traded well. Half the sales of Patak’s
are now located outside the UK where we delivered good growth,
and the brand also delivered strong growth in the US and good
growth in Australia. Blue Dragon delivered strong value growth,
increasing further its proportion of international sales with growth in
the US and Canada. Jordans had a resilient year, broadly maintaining
its international sales. The Mazzetti brand of balsamic vinegars
continued its international growth and nearly half of sales are now
outside Europe.

As noted above, in the US our international brands performed well.
Our US focused brands and businesses also traded well. Mazola,
the leading brand in the US edible oils category, delivered strong
volumes and profitability supported by new production capabilities.
Sales of our Fleischmann’s yeast and baking ingredients products
have also been strong. Stratas, our joint venture in the US that
supplies oils and other products to the foodservice, ingredients and
retail markets, traded strongly due to improved sales mix and good
procurement of oils.

In our UK focused brands and businesses, the sales trajectory
of Allied Bakeries improved considerably through the course
of the year due to higher volumes, stronger pricing and operational
improvement. We continue to work on improvements to the
financial performance of this business. Ryvita continues to
underperform but is investing in a brand relaunch and early results
are positive. Shortly after the period end we acquired the Capsicana
range of Latin American products such as tortillas, pastes, kits and
seasoning mixes, broadening further our range of world foods.

In our Australian focused brands and businesses, sales at our Tip
Top brand increased due to pricing taken to mitigate cost inflation.
Performance at Don was held back by high meat costs, labour
shortages and the insolvency of a major distribution business.
As a result, we have conducted a value in use assessment which
has led to a non-cash exceptional impairment charge of £41m.

Investment continued, with major projects including the
re-construction of the Canning Vale bakery in Western Australia
which will secure Tip Top’s position as the leading supplier in that
state and the first part of Ovaltine’s investment in a production
facility in Nigeria to serve markets across West Africa. We have
also invested in increased edible oil production capacity in the US.
The division has also stepped up its investment in core
technology platforms.

Associated British Foods plc Annual Report 2023

OPERATING REVIEW – GROCERY CONTINUED

Tip Top’s expanded foodservice offering
Tip Top is a key player in Australia’s bakery
market, serving both the retail channel and
the foodservice channel, which includes
restaurants, cafés and clubs. The retail bakery
market is quite mature, but we have leveraged
drivers of growth such as ‘out of home’ dining
and premiumisation to deliver impressive sales
growth in the foodservice channel over the
last three years.

Despite the challenges brought on by the pandemic, when
many restaurants and cafés were forced to close, the trend for
consumers to dine ‘out of home’ bounced back and continues
to grow. This is demonstrated by foodservice’s impressive
five-year growth rate of 8%, significantly above the 5% growth
rate achieved in retail sales over the same period. Over the past
two years, Tip Top has outperformed the market and driven
sales by focusing on premiumisation of its product range and
a revitalised channel strategy, which focuses on our three key
routes to market: ‘quick service restaurants’ (QSR), distributors
and direct accounts.

A great example of this progress is in burger buns, where
we have significantly improved our product offering. Our new
range of premium buns – which are glazed, noticeably softer
and better-tasting – have been very well received by our QSR
customers and, importantly, by consumers too. This new
range – which includes potato, brioche-style and milk buns
– has driven impressive sales growth and transformed the
performance of the burger bun category. This trajectory looks
set to continue as we partner with our customers in the QSR
segment and expand our customer base in the fast-growing
and high-value hotels, restaurants and cafés segment. As we
like to say – it’s the bun that makes the burger!

Strong brand propositions driving
growth in the US
This year has been notable for the strong
progression in the US enjoyed by a number
of our brands despite a challenging
retail environment.

Twinings is now the fastest-growing tea brand in the
American market. Our products are enjoyed in half a million
more households compared with three years ago, the
greatest increase in household penetration of any tea brand.
We achieved this outperformance by broadening our offering,
both in terms of ranges and pack sizes; by evolving our
marketing to become more modern, distinctive and relevant
to today’s consumers; and by building strong relationships with
our retail partners.

In addition to strong growth in traditional retail, we are now
the number one selling tea brand on Amazon. We have
developed a powerful, collaborative partnership with Amazon
and revamped our brand store to showcase compelling content.
We keep the consumer at the heart of what we do, creating
meaningful and engaging advertising, enhancing search engine
optimisations and making it easier for consumers to find and
buy the Twinings products they are looking for.

Our Mazola cooking oil brand bucked the category trend, which
was impacted by inflation resulting in a decline in the overall
market. It grew market share to return to its position as the
number one branded cooking oil in the US.

We accomplished this by using targeted digital and TV
advertising to strengthen brand loyalty and remind consumers
of the heart-healthy benefits of Mazola corn oil.

A poster advertising Tip Top’s new premium bun range

Thai consumers favour Ovaltine’s
Ready-to-drink products
Ovaltine has been a household name and
staple product in Thailand for more than
80 years. This year, as the Thai economy
continued to recover from the effects of the
COVID-19 pandemic, we saw consumers
favouring our Ready-to-drink (RTD) format.

Our RTD products grew by 17.1%, driving growth across the
malted beverage category but also significantly outperforming it.
This surge in popularity was due not only to advertising but also
to a desire for convenience, with RTD growth stronger in urban
centres where this format is even more important to consumers.
Our new advertising helped strengthen the brand image, with
the campaign ‘Promoting love and warmth in the family’
resonating well.

In the past year, Ovaltine Ready-to-drink reached its highest
consumption at 243 million serves, an increase of more than
20% on the previous year.

An advert for Ovaltine Smart and Ovaltine Base, two of our
popular Ovaltine RTD products in Thailand

Some of our branded products that have proved particularly
successful in the US

Our Fleischmann’s yeast brand also used digital and social
media to promote the brand, extolling the benefits of home
baking to consumers and helping us grow the category and
our market share. The cost-of-living crisis is cited as the reason
behind declining volumes across 86% of US grocery categories
but, with home-baking remaining elevated, commercial
activities to promote Fleischmann’s helped the yeast category
grow more than 5%.

Our Blue Dragon and Patak’s world food brands have been
available on the US market for many years but the pandemic
was a pivotal moment for them. With restaurants closed,
consumers wanted to enjoy international cuisines by cooking
them at home, a trend that continued post-pandemic.
Growth was also fuelled by changing consumer trends, with
professional chefs finding innovative ways to use rice and nori
wrappers, including frying them or adding them as a topping
to salads and poke bowls.

The Asian food category is worth $1bn annually and Blue
Dragon is one of many players in this market. However, we
have the added advantage of being pan-Asian, offering Thai,
Chinese, Vietnamese and Japanese ranges. Blue Dragon is
now the number one spring roll wrapper in the US and we are
broadening our offering to include Asian sauces and a selection
of egg, rice and soba noodles, as well as a range of products
including Thai paste and coconut milk to help consumers make
authentic Thai curries at home.

Associated British Foods plc Annual Report 2023

Operating review

Ingredients

Our Ingredients businesses
are leaders in yeast and
bakery ingredients as well as
in specialty ingredients for
the food, human and animal
nutrition, pharmaceutical
and various other industries.
Revenue

£2,157m

2022: £1,827m

Actual currency: up 18%
Constant currency: up 15%

Adjusted operating proﬁt

£214m

2022: £159m

Actual currency: up 35%
Constant currency: up 28%

Adjusted operating proﬁt margin

9.9%

2022: 8.7%

Operating profit

£201m

2022: £141m

Actual currency: up 43%

Return on average capital
employed

16.1%

2022: 14.8%

Ohly process engineer sampling
product to ensure quality

About Ingredients
ABF Ingredients (ABFI)
ABFI is a global leader in specialty ingredients offering innovative,
differentiated, sustainable and value-added products to the food,
health and nutrition, pharmaceutical, animal health and industrial
sectors. Our ingredients are an essential part of products that are
just as likely to be found in the kitchen and medicine cabinet as
in production units and research laboratories.

We have over 1,200 employees and serve customers in more than
50 countries from manufacturing and R&D facilities in 15 countries
across Europe, the Americas and India. ABFI comprises seven
businesses which operate worldwide with distinct identities.

AB Biotek Human Nutrition and Health uses fermentation
technology to provide microbiome modulating solutions for health
and nutrition applications.

AB Enzymes is an industrial biotech business specialising in
enzymes. Applications derived from our technology are used in the
bakery and other food and beverage markets, as well as in animal
nutrition, pulp and paper, detergent and other technical markets.

ABITEC Corp. supplies specialty lipids, surfactants and reagents for
the pharmaceutical, nutritional and specialty chemical industries.

Fytexia is a life science company specialising in the identification,
characterisation and development of polyphenol-based active
nutrients, extracted from botanicals, and used by the dietary
supplements industry.

Ohly produces a range of innovative yeast extracts and culinary
powders specially developed to enhance the taste of customer food
recipes, as well as yeast-based functional ingredients for both
animal and human nutrition and health.

PGP International produces specialty flours and extruded
ingredients for use in a wide range of nutritional products such
as energy bars.

SPI Pharma supplies antacids, pharmaceutical excipients and drug
delivery solutions to the pharmaceutical industry.

AB Mauri
AB Mauri has a global presence in bakers’ yeast with significant
market positions in the Americas, Europe and Asia. We have over
5,000 employees and sell our products to customers in over 100
countries, operating from 52 plants across 32 countries. We are a
technology leader in bakery ingredients, supplying bread improvers,
dough conditioners and bakery mixes to industrial and craft bakers
across the globe. The business employs experts who have
extensive knowledge and understanding of the functionality of yeast
and bakery ingredients and of the raw materials and processes to
produce them. In addition to bakers’ yeast, AB Mauri supplies
specialty yeast products to a wide range of other markets, providing
associated technologies and fermentation capability to the alcoholic
beverages, bioethanol and animal nutrition markets.

Mauri ANZ
Mauri ANZ is a baking ingredient company, with production and
milling capacity in Australia and New Zealand. Our product portfolio
includes bakers and speciality flours, yeast, dough improvers and
pre-mixes for cakes and breads.

New Food Coatings
We also have a 50% ownership in New Food Coatings, one of
the leading suppliers of customised breaders, batters, seasonings,
sauces and functional ingredients to the food manufacturing and
food service markets across Australia, New Zealand and south
east Asia.

Operating review

Ingredients had a very strong year with substantial increases in both
revenues and profits and, significantly for the future development
of these businesses, higher investment in both production capacity
and capability.

Revenues were well ahead of last year primarily due to pricing
action to recover large increases in raw material and other input
costs which were apparent both this year and in the prior financial
year. Revenues in the first half of the financial year were ahead of
the same period last year by 27% at £1,088m. In the second half
of this financial year, revenues were 6% ahead at £1,069m.

Profitability this year was well ahead of the last financial year as the
benefits of pricing were felt, with volumes proving generally resilient
and a particularly strong performance by AB Mauri, our yeast and
bakery ingredients business. In the first half of the financial year,
Ingredients’ adjusted operating profit was 48% higher than the
same period a year ago at £102m; in the second half of the period,
adjusted operating profit was 14% higher at £112m.

AB Mauri had a very strong year with significant increases in both
revenues and profit. Price increases lagged prior year input cost
inflation as customer contracts came up for renewal. As these
contracts were repriced, the benefits came through strongly with
little impact on volumes. Demand for yeast remained good, both
from industrial bakers and from consumers who returned to home
baking during the pandemic. Sales and profitability were particularly
strong in the US. Elsewhere, hyperinflation continued in Argentina,
Venezuela and Turkey with a consequent need for frequent
repricing. Transition of our China business to our joint venture
was completed.

We continue to invest in effluent treatment plants at many sites
to deliver on our commitment to maintain appropriate standards
of water quality, this investment being significant in recent years.
More broadly, the company’s water strategy focuses on reducing
its water-intensity ratio defined as the quantity of water consumed
per tonne of product produced, excluding by-products. AB Mauri
has reduced its overall water-intensity ratio by 25% since 2017/18.

ABF Ingredients, our portfolio of specialty ingredients businesses,
delivered a solid increase in revenues derived from pricing taken
to offset input cost inflation, partially offset by a small decline in
volumes, particularly in the second half of the period as customers
destocked following the stabilisation of supply chains. Profits were
slightly lower year-on-year as we continue to invest in these growth
businesses to enhance capability in both research and development
and in commercial activities.

Specifically, AB Enzymes, specialising in food and feed enzymes,
had flat sales with pricing offsetting lower volumes caused by
destocking. Ohly, specialising in yeast extracts, delivered good
revenue growth driven by robust demand from food and
bionutrients customers. SPI Pharma, specialising in pharmaceutical
excipients, continued to progress with pricing and volume growth
and an improvement in manufacturing efficiency. ABITEC,
specialising in lipids, delivered a modest increase in sales driven
by a solid performance in the Pharma and Nutritional Science
sectors. Fytexia, our life sciences businesses acquired last year,
continued to perform well. PGPI, which specialises in extruded
proteins, saw volumes fall due to lower consumer demand for
nutrition bars in the US.

Investment continued, with major projects including a powder
packing line for AB Enzymes at Rajamaki, Finland, and increased
capacity at Ohly’s fermentation and spray dryer operations in
Hamburg. In Mauri ANZ, investment in our animal feed mill in Hope
Valley in Western Australia was completed and commissioned. Our
specialty yeast plant in Hull has now been commissioned.

Associated British Foods plc Annual Report 2023

OPERATING REVIEW – INGREDIENTS CONTINUED

Celebrating the centennial of an iconic brand in bakery ingredients
In Argentina this year we celebrated the 100th anniversary of Calsa, AB Mauri’s consumer
yeast brand. Calsa is well known there for its high quality, innovation and customer service,
a reputation which we have developed over the past century.

It is this consistency that has made our levadura fresca product,
or fresh yeast, a household name in the country since its origins
in 1923. Calsa, which was created as a high-quality yeast for
legendary Argentine bakery Virgen, has evolved to become
AB Mauri’s flagship product in Argentina.

Calsa’s dedication to the skilled craft of bakery has endured
for decades, particularly in the 1960s, when the brand featured
a much-expanded product, and in the 1970s when we
introduced a school of bakery. With the launch of this
educational initiative we deepened our business strategy,
thereby delivering on Calsa’s ultimate mission and purpose:
to help develop the artisan bakers of tomorrow. The bakery
school still serves as a trusted mentor to home and commercial
bakers across Argentina.

Fast-forwarding to the 1990s, Calsa underwent further
significant development with the addition of a premium lineup
of silver-branded bakery and pastry ingredients which has
proved important to its current success.

Today the collection is led by Calsa’s traditional fresh yeast as
well as other innovative products featuring added sourdough,
better kneading and mixing capabilities, and more.

Calsa continues to lead the industry by staying true to the
purpose established a century ago, prioritising what is important
for artisan and home bakers in Argentina. We continue to
nurture this reputation through the creation of the freshest,
highest-quality handmade bakery products and our focus on
consistent and well-executed service to customers.

An advert celebrating the
100th anniversary of Calsa,
our consumer yeast brand

Ohly project engineers looking at site plans

Capacity expansion at Ohly’s Hamburg plant
After multiple years of sales and volume
growth at our Hamburg plant, where we
produce innovative yeast extracts, we
implemented a significant programme of
investment to increase capacity and efficiency
to enable us to continue to service increasing
customer demand.

This investment will also improve environmental performance
and enhance our ability to tailor products to customer needs.

Ohly’s strong growth has been driven by our product-led
commercial teams, who have developed deeper insights into
both their sectors and customers’ needs in key markets such as
food, health and nutrition, animal health, and bionutrients.

We have invested in a state-of-the-art drying tower which, once
complete, will enable us to dry a significant proportion of our
yeast extract products on-site, reducing the distance our
products have to travel during processing. This new equipment
will also reduce the amount of electricity and water used during
the drying process by 10%, enhancing our efficiency and
improving our environmental footprint.

We have also invested in a new on-site fermentation facility.
This cutting-edge system has been designed specifically for
the manufacture of our products and will increase production
capacity by 50%. The investment should also enable us to run
our fermentation process using approximately 40% less water,
30% less natural gas and 25% less electricity.

These two investments will enable us to meet customer
demand, which has nearly doubled over the last seven years. It
will also provide us with the capability to tailor our products to
these markets, as well as the potential for further innovation.

Associated British Foods plc Annual Report 2023

Operating review

Agriculture

AB Agri is an international
agri-food business and a
leader in the UK supplying
farm performance services,
animal feed, speciality
ingredients and supplements
to farms, feed manufacturers,
food producers and retailers.
Revenue

£1,840m

2022: £1,722m

Actual currency: up 7%
Constant currency: up 7%

Adjusted operating proﬁt

£41m

2022: £47m

Actual currency: down 13%
Constant currency: down 15%

Adjusted operating proﬁt margin

2.2%

2022: 2.7%

Operating profit

£32m

2022: £41m

Actual currency: down 22%

Return on average capital
employed

8.4%

2022: 10.3%

An AB Vista laboratory technician
preparing testing solution for feed
sample analysis using our automated
analyser technology

About Agriculture

Operating review

AB Agri revenues were up 7% against the same period last
year driven by pricing taken to mitigate input cost inflation,
partially offset by lower volumes in the UK and China compound
feed businesses. By period, revenue in the first half grew
15% compared to the same period a year ago but fell by 1%
year-on-year in the second half, largely reflecting movements in
input commodity prices. As a result of these challenging market
conditions, adjusted operating profit reduced to £41m despite
a modest recovery in the second half of the financial year.

There was a decline in the size of the European pig and poultry
sectors as a result of disease and high cost of inputs, reducing
sales volumes and margins in our compound feed and starter
feed businesses. The dairy sector was more resilient, and we
saw higher revenues and profits in our businesses serving that
sector. In China, lockdowns caused by the pandemic depressed
demand for pork products and reduced pig herd sizes, resulting
in a decline in that market. AB Vista, our international feed
additives business, traded robustly with sales and profits both
slightly higher. The performance at Frontier, our joint venture
specialising in farm crop inputs and grain marketing, was only
slightly lower than the record results achieved last year as grain
and fertiliser trading normalised.

We believe there is an opportunity to develop a unique full
service offer to the dairy sector. In August 2023 we completed
the acquisition of National Milk Records for £48m which
provides services to the dairy supply industry including
testing services and management information which are
complementary to AB Agri’s existing services. This follows our
acquisition in November 2022 of Kite Consulting and Advance
Sourcing which also serve customers in this sector.

AB Agri employs more than 3,000 people around the world.
We sell products and services into more than 100 countries and
our global operations continue to grow.

We have an expert understanding of agriculture and animal
nutrition and we combine data and technology with industry
expertise to enable the production of nutritious and
affordable food.

Our core capabilities include:

Creating innovative nutrition and technology-based
products – we are a major investor in innovation of speciality
feed ingredients for livestock, equine and pet foods. We
develop pioneering ingredients including feed additive products,
high-quality bespoke vitamin and mineral pre-mixes, starter
feeds and alternative proteins.

Making animal feed – AB Agri is one of the UK’s largest
compound feed businesses for pig and poultry customers and
one of the UK’s largest marketers of co-products from the
food and drink industries for dairy and beef farmers. We have
international manufacturing capabilities extending into Europe
and China and plan to increase global manufacturing further.

Delivering farm performance services for the agri-food
industry – our data and technology platforms deliver targeted
insights that help create continuous improvement for agricultural
supply chains. We work with major food processors, retailers
and directly with farmers, enabling them to:

• increase productivity and yields sustainably;
• improve animal wellbeing and husbandry; and
• develop quality assurance and operate in a more

sustainable way.

Our products, insights and technological solutions enable our
customers to produce high-yielding, safe and nutritious food
using fewer chemicals whilst safeguarding natural resources
and reducing environmental impact.

We also have a 50% ownership in Frontier, the UK’s largest
arable farm inputs and grain marketing business. Its customers
are some 25% of arable farmers in the UK and many UK food
producers and processors. It supplies seed, crop protection
products and fertiliser to farmers, as well as providing specialist
agronomy and crop marketing advice. Frontier also works with
farmers to increase the biodiversity of their farms and implement
practices which help productivity and carbon reduction and
sustainability. Its food customers look to Frontier for reliable
supplies of quality agricultural products as well as procurement
advice and logistics service.

Associated British Foods plc Annual Report 2023

OPERATING REVIEW – AGRICULTURE CONTINUED

AB Vista’s evolution from enzymes to a feed
additive business
AB Vista is a leader in feed enzymes and one
of the largest suppliers of yeast and natural
betaine to the global animal nutrition industry.
We recently broadened our portfolio through
acquisitions and in-house product development
into the highly profitable additives market.

We are focused on better protecting animal gut health in
livestock agriculture through additive solutions to help animals
better cope with environmental and biological challenges that
could otherwise result in both ill health and reduced productivity.

We launched Signis, an AB Vista product that is proven to
accelerate the fermentation of fibre in the gut. We also acquired
the intellectual property for Progres, a patented natural feed
material derived from coniferous trees. Developed in Finland,
where resin has been used as a natural treatment for centuries
due to its natural antiviral, antibacterial and anti-inflammatory
properties, Progres is the only natural feed material on the
market with a proven direct effect on intestinal integrity.
Its active ingredients, resin acids, reduce the damage caused
by inflammation, with proven application so far in poultry and
livestock. Having acquired Progres, we can now leverage our
global supply chain to bring this product to new markets while
continuing to develop our portfolio to support our customers
in the journey to produce feed and food more responsibly.

One of our AB Agri consultants with a
client farmer on their farm in Somerset

Expanding AB Dairy through acquisition
As the global population increases, the need
to provide nutritious, affordable protein that can
be produced sustainably has never been greater.

The dairy industry stands to benefit from this demand and milk,
as one of the lowest-emitting and affordable animal proteins,
is particularly well positioned. There is also ample scope to
improve productivity through the integration of insights and
technology to inform nutrition, genetics and feeding strategies.

In the UK, data is routinely collected across a range of inputs,
such as diet and genetics, and outputs such as milk production
volumes and quality. However, this data is yet to be collated and
interpreted in a way that gives farmers a deeper understanding
of optimal dairy cow performance. Building on our 30 years’
experience supplying feed and providing nutritional expertise,
we have acquired three businesses to help the industry
respond to these challenges and enable more sustainable
and profitable dairy farming.

Kite Consulting is a specialist dairy consultancy, providing
practical and strategic advice on dairy farm performance across
the food supply chain from farmers and food processors right
through to retailers. Kite is known for its technical and business
consultancy service, which supports dairy farmers in their

efforts to improve the efficiency of their business and herd, and
for its sustainability advisory service, which helps them reduce
the carbon footprint of dairy production.

International Farm Comparison Network (IFCN) is a global dairy
research network, providing globally comparable economic data
and forecasts through partnerships with researchers, dairy
companies and organisations in over 100 countries. Its dairy
farm economics model is accepted as the global standard for
comparing and understanding dairy systems, helping to secure
profitability and sustainability in dairy farming by enabling users
to understand the drivers that contribute to better performance.

National Milk Records (NMR) provides a range of milk quality,
herd health and genomic testing services to farmers and milk
buyers, as well as providing an independent source of data for
third parties such as vets, farm consultants and breed societies.
Data is used to provide the phenotypic database for UK genetic
evaluation, and the milk recording database is used to provide
the basis of food provenance schemes run by major
supermarket retailers.

Together, these businesses provide unrivalled capability to
combine milk, health, genomics and dairy industry insights,
as well as the ability to help farmers consistently use these
insights to make more precise and timely decisions.

An AB Vista laboratory technician
preparing testing solution for manual
analysis of our phytase products

Associated British Foods plc Annual Report 2023

Operating review

Sugar

ABF Sugar produces a range
of food, feeds, fuels and
other products from sugar
cane, sugar beet and wheat
in Africa, the UK, Spain and
China.
Revenue

£2,547m

2022: £2,016m

Actual currency: up 26%
Constant currency: up 29%

Adjusted operating proﬁt

£169m

2022: £162m

Actual currency: up 4%
Constant currency: up 8%

Adjusted operating proﬁt margin

6.6%

2022: 8.0%

Operating profit

£119m

2022: £164m

Actual currency: down 27%

Return on average capital
employed

9.7%

2022: 10.3%

British Sugar refinery technician
monitoring sugar crystallisation

British Sugar production levels were exceptionally low at
0.74 million tonnes, 27% lower than the prior year’s campaign,
the result of a sequence of unusually poor weather conditions which
reduced the crop size and lowered beet yields and sugar content.
The business secured alternative sources of supply in order to fulfil
customer contracts but profitability was significantly reduced
as a consequence in the second half of the year. In the course
of the year energy costs remained at elevated levels, but were
partially offset by strong pricing for electricity produced and other
co-products. Profitability for the year at British Sugar was lower
as a result of the combination of these factors.

Azucarera, our Spanish sugar business, benefitted in the course of
the year from the higher prices, partially offset by elevated costs for
beet, raw sugars and energy. Beet sugar production was lower than
the prior year due to hot and dry weather, and additional purchasing
of raw sugars for refining was required in order to support sales.
Overall production was down 20% at some 0.45 million tonnes.

Our Illovo Sugar Africa business performed very well. The business
continues to develop sales and higher margin routes to market
for pre-packed branded sugar in Malawi, Tanzania and Zambia.
Overall, Illovo sugar production was 1.53 million tonnes compared
to 1.45 million tonnes in the previous financial year reflecting the
recovery in production in Eswatini and good production in Malawi
and South Africa partially offset by the impact of flooding in
Mozambique. The combination of higher volumes and strong
pricing resulted in both sales and profit being well ahead of last year.
Construction of our new sugar mill in Tanzania continues and will
increase our production capacity considerably in that country.

At the end of February, severe flooding in Mozambique affected
our cane estate at Maragra and most of our partner-grower
operations. The Maragra mill will not open for sugar production
this season and as such we have taken a non-cash exceptional
impairment charge of £35m in these accounts to write down
the net asset value of this business.

The trading performance of AB Sugar China was below last year
as a result of lower demand caused by lockdowns earlier in the year.
More recently the relaxation of restrictions has caused sugar prices
to recover strongly. However, trading remains difficult and we have
reviewed our outlook for this business, including the forecast for the
evolution of beet crop area and yields. As a result, we have taken
a one-off non-cash adjustment of £15m as an exceptional
impairment charge this year.

Vivergo incurred substantial losses in the first half due to high wheat
and energy costs and low bioethanol prices. The second half of the
year saw much reduced losses and a significant improvement in
margin and operating performance, particularly in the fourth quarter.

Sugar made good progress in its decarbonisation programme in
the financial year. It completed 17 decarbonisation projects across
various sugar processes, which contributed to a 4% reduction
in greenhouse gas emissions compared with 2022. Among the
projects completed are modifications in the UK to replace coal with
natural gas in the dryers at our Bury St Edmunds processing plant,
improvements to gas turbine performance at our Wissington plant,
the elimination of heavy fuel oil at Cantley, and the installation
of more efficient slicer machines at Bury St Edmunds. In addition,
Sugar has also published its transition plan to a low carbon
economy by 2030.

About Sugar

ABF Sugar is a group of agribusinesses which together employ
30,000 people and operate 20 plants in nine countries, with the
capacity to produce some 4.5 million tonnes of sugar annually.
We farm more than 330,000 hectares worldwide by ourselves, and
by over 25,000 growers.

In Africa, we have sugar cane operations in Eswatini, Malawi,
Mozambique, South Africa, Tanzania and Zambia, and packing
operations in Rwanda. We are the largest sugar producer in Spain
and in the UK we are the sole processor of the beet sugar crop
and one of the largest bioethanol producers. We also have a sugar
business in China.

Our sugar-making plants are efficient bio-refineries that enable us
to produce a range of products including sugar, animal feed, biofuels
and a number of speciality products. We have the market leading
consumer brand in over half our markets, including Silver Spoon in
the UK, Azucarera in Spain, Bwana Sukari in Tanzania, White Spoon
in Zambia and Illovo in multiple markets. We are also a large-scale
power generator, with renewable sources providing 60% of our
own energy use as well as significant renewable energy exports
into national grids.

Although we have a global portfolio, we operate on a local basis,
working together to do what is right in each location and market.
As we continue to evolve to meet the changing needs of
customers, growers and others, our role is to ensure we use
resources responsibly, build strong rural economies and support
local communities.

We also have a 42.5% ownership in Czarnikow Group Limited (CZ),
a global supply chain management and advisory company
specialising in the food and beverage sector.

Operating review

Sales were well ahead of last year with a strong performance
by Illovo, our African sugar business, which delivered both higher
sugar production and strong pricing actions. Illovo also made good
progress in developing new and higher margin routes to market
through pre-pack branded sugar facilities. In Europe, production was
lower due to adverse weather conditions, but the resulting impact
on profitability was partially offset by good co-product sales.

Revenues were strongly ahead of the prior year driven by higher
sugar pricing, a recovery in production and sales in Eswatini
in Africa following strike action last year, and much higher sales
from Vivergo, our bioethanol plant in Hull. European sugar prices
moved higher this year, building on the price levels seen in the
previous year and driven by lower European sugar production
and higher world market prices. Prices in Africa also increased.
Sales volumes increased modestly, with higher volumes at Illovo
more than offsetting declines at British Sugar and Azucarera.
Total production, at 2.8 million tonnes, is 8% down on last year
reflecting lower volumes as a result of adverse weather affecting
European crops, partly mitigated by strong co-product performance
and partially offset by higher production in Africa driven by the
recovery in Eswatini and good factory performances in Malawi and
South Africa. By period, revenue in the first half increased 27%
to £1.2bn against the same period a year ago; in the second half,
revenue rose 31% to £1.4bn.

Adjusted operating profit was modestly ahead of last year at £169m.
Overall, the contribution from higher sales prices was partially offset
by higher costs for beet, cane and energy. Specifically, profit was
impacted by the need for British Sugar to buy and import sugar
to make good a shortfall in beet sugar production. Overall profits
were held back by the substantial trading losses incurred by Vivergo
in the first half of the year. First half Sugar adjusted operating profit
was 5% ahead of the same period last year at £86m while second
half adjusted operating profit was 11% higher at £83m.

Associated British Foods plc Annual Report 2023

OPERATING REVIEW – SUGAR CONTINUED

Pulp processing improvement programme
at British Sugar
At British Sugar, one of the most valuable
co-products we produce is animal feed. We
make and sell over 500,000 tonnes of feed a
year from sugar beet pulp, the fibrous material
left over from the sugar-making process.

To produce the feed, the wet pulp needs to be dried. The first
step of this process involves mechanically squeezing the pulp
to remove as much residual water as possible, before drying
it at a high temperature in rotating drums which uses a lot
of energy. We have therefore been working to find ways to
increase the efficiency of this mechanical squeezing process.
This has included an investment programme to transform our
systems, increasing profitability and reducing energy costs
across our UK sites.

In September 2022, we upgraded the sugar beet pulp press
station at our Wissington factory to include a new, larger,
self-draining press as well as making improvements across
three other pulp presses. These improvements increased the
quantity of water squeezed from the pulp, reducing the energy
required to dry it.

In just over a year of operation the improvements at
Wissington alone have delivered a number of substantial
efficiencies, including:

Success in Azucarera’s grower base in
northern Spain
We have transformed our relationship with
sugar beet growers supplying Azucarera’s
factories in northern Spain to deliver an
impressive 70% increase in growing area
for our 2022/23 campaign.

Over the last five years we have developed a commercially
viable model that delivers a tailored, grower-centric proposition
to build confidence in growing beet. The approach is about
much more than price: it is focused on developing a collaborative
model that encourages all parties to work together to minimise
risk and overcome barriers to growing the crop successfully.
Our team negotiates directly with growers to agree a tailor-
made model that works for them. This model encompasses
all aspects of the growing process including buying the inputs
needed to develop the beet crop, selecting the service providers,
and defining the responsibilities and workload. This approach
means all parties are aligned to deliver the best possible
outcomes, resulting in a more equitable share of risk between
us, the growers and service providers.

Our collaborative model also gives growers access to
Azucarera’s significant data capabilities, which provide valuable
insights that can improve yields. Our ‘Visor’ platform gives
growers access to real-time monitoring of crop health, of
irrigation levels and of the evolving sugar content in the crop.
Visor aggregates data across our grower sites, offering
personalised advice and best practice to individual farms to
improve beet yields. Equally, Visor gives Azucarera a significant
competitive advantage as growers are incentivised to work with
us in order to access this powerful monitoring tool that would
otherwise be unavailable to them.

• a 6% overall improvement in the dry content of the pulp;
• a reduction in gas usage of 12% at site and 6% across

the business; and

• a CO2 emission reduction of more than 5,000 tonnes

per annum.

This strategy is being replicated across all other sites to deliver
considerable savings and significant carbon reductions.

An operator at our Wissington plant holding pressed pulp
and dried animal feed from the pulp processing station

The success is testament to our team’s commitment to
collaboration. By promoting a grower-centric approach,
underpinned by data and technology, we have significantly
increased the growing area and fostered trust and confidence
among our partners to grow beet more efficiently and
more sustainably.

One of our Azucarera employees demonstrating the
Visor platform to a Spanish sugar beet farmer on their farm

An Illovo employee with a customer at their container
store at the Thabwa Trading Centre in Chikwawa district,
southern Malawi

We also expanded our geographic footprint by appointing
new distributors, opening new container shops in strategic
locations and significantly scaling up our secondary distribution.
This combination of improved delivery and an expanded
footprint has transformed market penetration and ensures
easier and more reliable access to Illovo products in rural areas.

These improvements contributed to a significant increase in our
domestic sales, which have increased by 40% over the last
three years.

Looking ahead, we are committed to refining our processes to
promote closer and stronger relationships with our customers,
improve the availability of sugar in the domestic market and
grow volume and value for our stakeholders.

Optimising sugar distribution in Illovo Malawi
In Malawi, we have successfully redesigned
Illovo Sugar’s routes to market to put
customers’ needs at the heart, helping us
to improve sugar margins and connections with
distributors and stockists. This helped increase
sugar sales to both consumers and industrial
customers across the country.

We did this by developing and implementing a standardised
process across the country, with one of the most important
changes being the introduction of our improved delivery
network. In delivering products to customers instead of them
having to travel to collect stock, this eliminated price disparities
arising from transportation costs being added to the selling
price of our sugar.

Associated British Foods plc Annual Report 2023

Operating review

Retail

Primark is one of the largest
clothing retailers in Europe,
with the highest sales by
volume in the UK and a
growing presence in the US.
In total, we have 432 stores
in 16 countries across Europe
and the US.
Revenue

£9,008m

2022: £7,697m

Actual currency: up 17%
Constant currency: up 15%

Adjusted operating proﬁt

£735m

2022: £756m

Actual currency: down 3%
Constant currency: down 3%

Adjusted operating proﬁt margin

8.2%

2022: 9.8%

Operating profit

£717m

2022: £550m

Actual currency: up 30%

Return on average capital
employed

12.0%

2022: 12.9%

Womenswear in our Oxford Street
East store

About Retail
About Primark
Primark is a leading international retailer with 18.2 million sq ft
of selling space across 432 stores in 16 countries with more
than 76,000 colleagues. Founder Arthur Ryan opened our first
store in 1969 in Mary Street and this remains our flagship Dublin
city centre store and home of the global headquarters. Today
Primark has stores in the UK, Ireland, Europe and the US with
ambitious expansion plans: we expect to trade from 530 stores
by the end of 2026, including from 60 in the US. We have
expanded but remain true to our roots: offering unbeatable
value alongside great quality products.

We target a wide customer base, offering quality essentials
and affordable fashion across women’s, men’s and kidswear,
as well as beauty, homeware, accessories and licensed ranges
with some of the biggest names in entertainment, sport and
food. Through our Primark Cares strategy, we have set open
and measurable targets relating to product, planet and people
and we are evolving how we operate. This is alongside
our existing commitment to high ethical trading standards.
Our intention is to use our scale for good, deploying it to have
the most benefit across our end-to-end supply chain, so
ultimately enabling customers to access more sustainable
products affordably.

Primark is a retail store business and the store model centres
on finding the right-sized stores in the right locations. We seek
to continually improve our in-store experience, creating exciting
retail destinations with additional services including beauty, food
and beverage and our vintage concession WornWell. We focus
on cost alongside price leadership; keeping our operating costs
low and maximising efficiencies across our supply chain and
operations to keep prices competitive and maintain margins.

Digital is a core enabler of how we showcase our offering to
customers and drive footfall into stores. We have now launched
our enhanced customer website into all our markets, significantly
improving our customers’ digital experience. The new site
has increased traffic in all markets and we believe it is driving
incremental growth in store sales. We have also launched
a Click + Collect trial across selected stores in the UK to offer
customers more choice and convenience to browse and order
online before coming into store to collect their purchase.

Operating review

Primark revenues rose strongly in this financial year,
up 15% and exceeding our expectations a year ago.
This reflects a sales increase in all our markets driven by
a number of factors, including carefully selected price increases
taken to partially offset high and volatile input cost inflation,
well-received product ranges and the resulting appeal of our
offer to new and existing customers. Good footfall, strongly
performing new stores and the rollout of our enhanced
customer website also contributed to the strong sales
performance. Sales increased in both halves of the year:
in the first half, by 17% to £4.2bn against the same period
in the prior year; and in the second half, by 14% to £4.8bn.

We believe that our product offer was a source of differentiation
and competitive advantage throughout the year. Cold weather
essentials and other seasonal product lines, including our
well-received velvet plush leggings, drove strong sales leading
into a record Christmas season which included a resurgence
in women's partywear, tailoring separates and beauty products

as a return to festive socialising gathered pace. In the new year
sales of beachwear and luggage were exceptionally strong as
customers looked early to holidays. Our summer trading was
good, led by our boho-inspired design trend. Throughout the
year we further broadened our ranges and collaborations to
appeal to customers trying Primark for the first time alongside
existing customers. We expanded our Edit collection, our more
premium essentials range for women, across more stores
which sold well. We also continued our successful UK and
European collaborations with Stacey Solomon, Kem Cetinay,
and Paula Echevarria, and launched our first truly international
partnership with Rita Ora whose first collection sales have
surpassed expectations. Sales of licensed products grew
significantly year-on-year, in particular over Christmas across
our growing portfolio of brand partners including Disney, Netflix,
The Grinch, and US sports partners NFL and NBA. Our summer
Barbie collection with Mattel also proved very successful.

Trading was influenced in the second half of the year by
weather. We saw good sales through the early summer with
the exception of Iberia which suffered unusually poor weather
in May. In July, there was very poor weather in the UK and
Ireland and heatwaves in Southern Europe, followed by warm
conditions in August and September which coincided with
the launch of our Autumn / Winter ranges. Despite these
unseasonal conditions, we generally traded well with our
core product ranges remaining in robust demand and partially
offsetting inevitable volatility in sales more dependent on
fashion and season.

Like-for-like sales growth was 8.5% for the year. In the first half,
like-for-like sales rose by 10% driven by higher average selling
prices and higher unit volumes partially offset by smaller basket
sizes. Footfall increased in both the UK and Europe, against
a comparative period which featured some disruption from the
pandemic. In the second half of the year like-for-like growth was
lower than in the first half at 7%. This growth was driven
by a slightly greater benefit from selective pricing taken to
part-mitigate inflation, the benefits of which were partially offset
in turn by lower unit volumes, smaller basket sizes and slightly
lower footfall. Space growth contributed sales growth of 6%,
driven by the increase in selling space across a number of our
markets, in particular Italy, France and the US, and higher sales
densities in most new stores.

Adjusted operating profit margin for the full year was 8.2%,
down on the previous financial year’s 9.8%. Adjusted operating
profit margin in the first half was 8.3%, down on the same
period a year ago due to our decision not to fully recover
all the inflation in input costs. In the first half the higher costs
of bought-in goods, higher freight rates, higher labour costs and
higher energy costs outweighed the benefits of our selective
price increases and an improvement in store sales densities due
to higher footfall. In the second half, compared with the same
period a year ago, the cost of bought-in goods was higher again
including a more significant impact of the strength of the US
dollar against sterling and the euro when we placed orders for
our Spring / Summer ranges several months earlier. This higher
cost of goods was offset somewhat by the benefit of like-for-
like sales growth and sales from new store openings and by
the benefit of additional pricing being implemented in the spring
and summer ranges. Freight costs fell in the fourth quarter,
but labour costs were higher than the same period a year ago.
Second half operating profit margin was 8.0%, slightly below
the first half of the year, and also held back by higher than
expected stock loss and a modest amount of German
restructuring costs, albeit helped by lower markdowns.

Associated British Foods plc Annual Report 2023

OPERATING REVIEW – RETAIL CONTINUED

In the UK, sales increased by 11% against the previous financial
year, driven by like-for-like growth of 10% helped in particular by
our new customer website that has now been running for more
than a year. This sales performance was achieved despite
unhelpful weather impacts in the third and fourth quarters which
resulted in slightly lower footfall in contrast to the first half of
the year when footfall was significantly higher. Primark’s market
share1 grew in the financial year, increasing from 6.4% last year
to 6.7% this year.

In Europe excluding the UK, sales increased by 18%
on the previous financial year, with like-for-like growth of 8%
despite weaker trading at times due to unseasonable weather.
Our store estates in all the countries in which we operate
delivered like-for-like sales growth, with good performances
in Iberia, France, Germany, Belgium, the Netherlands and
Eastern Europe. Italy delivered strong total sales growth
and continues to operate on high sales densities. We opened
17 stores in the European region in the period to strong
customer demand and good resulting footfall. Sales densities
in most of these new stores continue to be higher than average.
Primark’s share of the total clothing, footwear and accessories
market by value increased in both Spain and France. In Germany
we closed two stores in the period and, after period end,
we closed one more store and agreed two further closures.
In addition we have started our rightsizing programme with
two stores in the period and the signs are encouraging.
Two further stores were resized in September after the period
end. We continue to consider further resizing. We are also
developing plans to open new stores smaller than average
in new locations with merchandise selected to appeal
to local customer demand.

In the US, total net sales were 24% higher than last year driven
by space expansion. We opened eight new stores in the period,
largely in the Northeast, taking the estate to 21 stores trading
from 0.9 million sq ft and are on track to meet our US store
expansion target of around 60 stores by the end of 2026.
We are pleased with trading in our new stores which are
benefitting from our growing knowledge of the US consumer
and the wider retail market. We have refined the design, size
and layout of our stores and continue to tailor our ranges to suit
the US consumer. We continued to expand our footprint beyond
the Northeast with further progress in the new store pipeline
and two leases signed recently in Texas. Investment in
infrastructure to support this expansion continues with work
ongoing at our new Jacksonville logistics centre where we
expect to be operational in the spring.

Further progress has been made implementing our wide-ranging
sustainability strategy unveiled two years ago, itself an evolution
of an earlier and long-standing ethical trade and sustainability
programme. During the year we further embedded the
processes and capabilities needed to drive and accelerate
change both internally and across our value chain. Some 55%
of all the clothing units we sold in the financial year contained
recycled or more sustainably sourced materials, up from
45% last year and up from 25% at launch two years ago.
This represents good progress in the delivery of our

commitment that all our clothes will be made from recycled
or sustainably sourced materials by 2030. Within this, 46%
of our cotton clothing now contains cotton that is organic,
recycled or sourced from our Primark Sustainable Cotton
Programme (PSCP), up from 40% last year. Our commitment
to reduce our carbon emissions across our value chain by 50%
by 2030 was validated by the Science Based Targets initiative
(SBTi). While carbon emissions increased this year by 11%
compared to our baseline 2018/19 financial year, this is as
expected: Scope 1 and 2 emissions reduced but there was
an increase in our Scope 3 emissions due to an increase in the
volume of materials used to produce the higher number of
products sold in the period year-on-year. In the short term,
this trend is likely to continue, but emissions will decline
in time as we increase the use of more sustainably sourced
materials across our product ranges. In our own store estate,
some 70% of our stores are now powered by renewable
or low-carbon electricity and 141 stores have switched
to energy-efficient lighting.

Primark continues to build and invest in transforming its digital
capability. This year we successfully rolled out our new and
improved website to all 16 markets. Since launching the new
website, we have seen a positive customer reaction and strong
traffic uplift in all trading markets, led by the UK and the
Republic of Ireland which were the first two countries to move
on to the new platform. Usage of the stock checker facility
ranged broadly between 15%-20% of website sessions across
our markets. We are also putting more focus on increasing
traffic growth to www.primark.com through organic search,
CRM and selected performance marketing trials and, overall,
working in closer alignment with our already strong social media
engagement. We believe our digital platform is already
beginning to support good uplifts in footfall and that it is
contributing to store like-for-like sales across our markets.

In April we announced the expansion of our Click + Collect trial
to an additional 32 stores in London, taking the total number
offering this service to 57 stores, one third of our UK estate.
On 13 September 2023 we extended the service to include
womenswear, alongside the existing offer on kidswear.
Although this remains a trial, we are encouraged by the early
results. In addition, we implemented self-checkouts in 22 stores
in the period. This service has seen high utilisation and
customer engagement and the roll-out continues.

Retail selling space overall increased by just under 1 million sq ft
since the last financial year end and on 16 September 2023
we were trading from 432 stores and 18.2 million sq ft of selling
space. We added 27 stores in the period: eight in the US;
six in Central and Eastern Europe with three in Poland, two in
Romania and our first store in Slovakia marking our 15th and 16th
market; four in Italy and France respectively; three in Spain; and
two in the UK. As referred to above, two stores in Germany
were closed during the year. We fully reopened our Bank
Buildings store in the heart of Belfast, which was damaged by
fire in 2018, and closed our temporary store in Donegal Place.
We also re-started our store refurbishment programme.

We remain on track to grow to 530 stores by the end of 2026
and have visibility for continued footprint expansion beyond.

1. Kantar, Primark market share of the total UK clothing, footwear and accessories market including online by value, 52-week data to 16 September 2023.

New store openings in the year ended 16 September 2023:

UK
Craigavon –Rushmere S.C.
Salisbury

Romania
AFI Palace, Bucharest
Park Lake, Bucharest

US
Arundel Mills, Baltimore, MD
Crossgates, Albany, NY
City Point, Brooklyn, NYC
Green Acres, Long Island, NY
Jamaica Ave, Queens, NYC
Jersey Gardens, Newark, NJ
Roosevelt Field, Long Island, NY
Walden Galleria, Buffalo, NY

France
Brest, Coat Ar Gueven S.C.
L’Atoll Angers
Mulhouse, Ponte Jeune
Saint-Etienne, Centre Deux S.C.

Slovakia
Bratislava – Eurovea

Italy
Caserta Campania
Bari Casamassima
Turin Le Gru
Venice Nave de Vero

Spain
Lanzarote Arreclife
Melilla
Toledo Luz de Tajo

Poland
Bonarka S.C., Krakow
Katowice Silesia City Centre
Magnolia Park S.C., Wroclaw

UK
Spain
Germany
France
Republic of Ireland
Netherlands
US
Italy
Belgium
Portugal
Austria
Poland
Czechia
Romania
Slovenia
Slovakia
Total

Year ended
16 September 2023

Year ended
17 September 2022

# of stores
192
59
30
24
37
20
21
15
8
10
5
5
2
2
1
1
432

sq ft 000
7,725
2,390
1,605
1,203
1,165
1,016
873
747
403
383
242
197
89
75
46
39
18,198

# of stores
191
56
32
20
37
20
13
11
8
10
5
2
2
–
1
–
408

sq ft 000
7,620
2,305
1,841
1,044
1,121
1,016
563
552
403
383
242
77
89
–
46
–
17,302

Broadening our reach and attracting new
customers through expanded ranges, still with
value at their heart
Primark was founded with the aim of making
great quality fashion affordable for everyone.

The Edit – our collection of quality investment pieces for
women featuring more premium fabrics, blends and detailing
– continues to go from strength to strength following its
successful launch in Autumn/Winter 21. This range caters
for customers seeking more premium products at the value
Primark is famous for and has been extended to include
products such as jewellery and elevated knitwear with
cashmere and merino wool content. Due to its success,
the collection has gone from being offered in selected stores
and is now in more than 60% of our stores internationally.

The Edit’s ultimate heavyweight t-shirt is a bestseller. It comes
in six colours and sells for £12/$16/€14, representing incredible
value versus other comparable heavyweight t-shirts on the high
street. And this t-shirt is, of course, only part of our offering.
We have a comprehensive selection of t-shirts across our
ranges, which start with our essential t-shirt at £3/$4.50/€3.50
through to our more premium styles.

Alongside The Edit, we have also broadened our offer
through collaborations. In September 2023 we launched our
collaboration with global superstar and style icon Rita Ora.
The first in a series of collections with Rita, it was made
available in all our stores across all our markets. This more
trend-led collection appeals to the style conscious and
fashion-led consumer, and while it retails at slightly higher
prices, it offers excellent value-for-money by giving customers
the opportunity to shop Rita’s famous style for less.

Spring Summer 23 shot from Primark’s ‘The Edit’ collection

Associated British Foods plc Annual Report 2023

OPERATING REVIEW – RETAIL CONTINUED

Our ‘Supporting Women for Life’ collection,
making specialist collections more accessible
and affordable
At Primark, we want all our customers to
feel seen, included and understood but after
listening to them, we realised many of the
products women rely on during key moments
of their lives were, for many, out of budget.

For example, post-surgery bras for breast cancer patients
were often expensive and not widely available on the high
street. Period underwear, which has become more popular
in recent years, was in many cases prohibitively expensive.
We challenged ourselves to think about the different products
we could create for women offering the same functionality
but at Primark prices. As a result, we created our Supporting
Women for Life collection, offering a range of more specialist
clothing, lingerie and nightwear at affordable prices.

We started with our maternity range in January 2021, when
maternity wear was not widely available on the high street and
often sold online only. We followed with period underwear,
designed as an alternative to single-use sanitary products.
Since then, we have launched a dedicated breast cancer range
comprising leisurewear, underwear, nightwear and accessories
for women. We extended our underwear sizing across all our
ranges to include fuller bust and bigger brief sizes, and to
include a greater variety of skin tones. We also introduced
innovative new fabrics – for example, our menopause collection
contains anti-flush technology and cooling yarns across
nightwear, underwear and base layers, which to date have
only been available at a premium price elsewhere.

Using self-checkouts to enhance customers’
in-store experience
At Primark, we think about every stage of
a customer’s journey with us and we know
how important it is that they have a good
experience, including when they pay in-store.

With more customers using card and contactless payments and
self-checkouts becoming commonplace, we took the decision
to launch a trial to understand the benefits these technologies
might bring to our customers, colleagues and business.

Today, our Supporting Women for Life collection is made up
of six ranges, representing almost £100m in sales and growing.
We are continuing to work with our customers, colleagues and
specialist organisations to better understand consumers’ needs
and experiences and will continue to bring to market more
inclusive and specialist products at accessible prices for women
at their different stages of life.

Some of the products in our ‘Supporting Women for Life’ range

We started with self-checkouts in two UK stores, Sheffield and
Northampton, which had higher-than-average numbers of card
transactions. The initial response from both customers and
colleagues was very positive, with high adoption rates from
customers who were given the option to use either the
self-checkouts or the staffed checkouts as before.

We then extended the trial to three additional UK stores of
different sizes, formats and locations. With an average overall
satisfaction rating of 88%, speed, convenience and reduced
queue times were cited as the biggest draws for the service.

The benefits to the business are already apparent and have the
potential to be very significant. These innovations free up
colleagues to focus on where they are most needed – for
example re-stocking the shop floor, helping customers or
manning fitting rooms – relieving recruitment pressures faced
by the business in a tight labour market.

Due to the initial success of the trial, we have added self-
checkouts to 22 stores across the UK, the US, Ireland and Poland,
both incorporating them into existing stores and fitting them
in new ones. Today, around two thirds of our customers choose
to use our self-checkouts when they have the option to do so,
with many customers saying they prefer this check-out method.

We are excited by the benefits that self-checkouts can bring to
the business and are rolling them out more widely to new and
existing stores.

Self-checkouts in Magnolia Park, Wroclaw, Poland

An overview of our growth and success in Spain
As part of our expansion strategy, we continue
to explore not just new markets and regions
but also the potential of our more established
markets. Our presence in Spain, which was
our first market outside the UK and Ireland,
is a great example of this organic growth.

Since opening our first store in Madrid in 2006, Spain has grown
to become our second biggest market in terms of both store
numbers and sales. We have 59 stores in Spain and employ
more than 9,500 colleagues with 2.4 million sq ft of selling space.

The Primark offer has resonated with Spanish shoppers who
love us for our style credentials and everyday affordable
essentials for the whole family. In particular, our kids collections
and licensed collections have been received really well, as
customers love the quality and choice we offer at such
affordable prices. Our collaboration with Spanish influencer
Paula Echevarría has proven notably successful and helped to
attract new customers in this market. We have also tailored our
in-store experiences to local tastes and culture, partnering with
other domestic brands such as Llaollao frozen yoghurt, Granier
cafés and Hello Nails beauty.

We have enjoyed strong growth in Spain and that track record
gives us confidence as we continue to invest and grow our
presence there. We will invest €100m in our Spanish business
between April 2023 and the end of 2024 in both new store
openings and upgrading existing stores.

In this financial year, we have opened three stores to a strong
customer response: the first in April, in the city of Toledo; the
second in June on the Canary Island of Lanzarote; and last but
not least in September a store in the autonomous city of Melilla
on the North African coastline.

Looking ahead to next year, we have plans for more new stores.
Madrid remains as important to us today as it was 17 years ago
when we first came to Spain. It is the city with the second
highest number of Primark stores, after London. Today, there
are eight stores across the city and we plan to open as many as
four more in the next financial year, including our second
flagship store in Madrid, in the iconic Cine Salamanca building.

We continue to invest in and improve our existing stores too.
With a strong pipeline of store extensions and upgrades, our
Spanish customers can continue to expect to see the very
best of Primark.

Our Spanish flagship store in Gran Vía, Madrid

Associated British Foods plc Annual Report 2023

Financial review

Group performance
Group revenue was £19.8bn, 15% ahead of last year at
constant currency, with sales growth in each of our businesses,
benefitting from the build of price increases taken to offset
inflation. However, as expected, adjusted operating profit margin
declined, from 8.4% last year to 7.7% this year as a result of the
overall inflation. The Group generated an adjusted operating
profit of £1,513m, an increase of 5% at actual rates ahead of
last year, a strong result given the scale of input cost increases.

Statutory operating profit for the Group of £1,383m was 17%
ahead, after charging exceptional items of £109m
(2022 – £206m).

For the full year the average rates used to translate the income
statement resulted in a translation gain of £17m, primarily driven
by the strengthening of the US dollar, particularly in the first half
compared to the first half of 2022. The weakness of sterling
against some of our trading currencies also drove a benefit
on translation of our non-sterling earnings.

Segmental summary

At actual rates
Grocery
Ingredients
Agriculture
Sugar
Retail
Central

Revenue

Adjusted operating profit

2023
£m
4,198
2,157
1,840
2,547
9,008
–
19,750

2022
£m
3,735
1,827
1,722
2,016
7,697
–
16,997

Change
%
+12.4
+18.1
+6.9
+26.3
+17.0
–
+16.2

2023
£m
448
214
41
169
735
(94)
1,513

2022
£m
399
159
47
162
756
(88)
1,435

Change
%
+12.3
+34.6
-12.8
+4.3
-2.8
-6.8
+5.4

The segmental analysis by division is set out in the operating reviews. The segmental analysis by geography is set out in note 1
on page 140. Of note is the increase in adjusted operating profit in North America which is driven by the success of our Grocery
and Ingredients’ businesses there.

Adjusted earnings per share

Adjusted operating profit

Net finance income/(expense) before lease interest
Other financial income
Lease interest

Adjusted profit before tax

Taxation on adjusted profit

Adjusted profit after tax
Adjusted earnings attributable to equity shareholders
Adjusted earnings per share (in pence)

Net finance income and other financial income
Finance income increased as a result of higher interest rates
earned on our cash deposits. Other financial income increased
this year as a consequence of the higher surplus in the Group’s
UK defined benefit pension scheme at the beginning of the
financial year. Lease interest increased during the year because
of more leases being entered into from our continued store
expansion programme, particularly in the US, Italy and France.

As a result, on an adjusted basis, profit before tax was
up 8.6%, to £1,473m.

Taxation
This year’s tax charge on the adjusted operating profit before
tax was £346m, with an increase in adjusted effective tax rate
to 23.5% from 22.2% last year. This rate includes the impact
on the blended tax rate for the full year of the increase in UK
corporation tax rate from 19% to 25% in April 2023.

2023
£m
1,513
11
40
(91)
1,473
(346)
1,127
1,103
141.8p

2022
£m
1,435
(11)
13
(81)
1,356
(302)
1,054
1,034
131.1p

Change
%
+5.4
+200.0
+207.7
-12.3
+8.6
-14.6
+6.9
+6.7
+8.2

The Group is exposed to a range of uncertain tax positions.
The provision at the financial year end for these tax positions
was £55m (2022 – £102m). The reduction in the provision is due
to the conclusion of UK tax audits covering several businesses
and years. This reduction in the provision between last
financial and this financial year was due to partial utilisation
and also translated into a one-off benefit to the effective
tax rate for the year.

We expect the Group’s effective tax rate in 2024 to be broadly
in line with 2023. This includes the full year impact of the
increase in the UK corporation tax rate in April 2023 and changes
to the mix of profits by jurisdiction.

Associated British Foods plc Annual Report 2023

FINANCIAL REVIEW CONTINUED

Adjusted earnings per share increased by 8.2% to a record
141.8p per share. This increase follows from the higher adjusted
profit and the higher financial income, more than offsetting the
slightly higher adjusted effective tax rate. The adjusted earnings
per share also benefit from the reduction in weighted average
number of shares, from 789 million for 2022 to 778 million for
2023, as a result of the buyback programme.

In Retail, the German Primark portfolio recognised exceptional
impairment charges relating to stores that were impaired in the
previous year: £13m as a result of additional right-of-use assets
being recognised due to rent indexation adjustments on
right-of-use assets that were impaired, a further £5m non-cash
exceptional charge for the right-sizing of four stores and the fair
value write-down of a store.

+24.5
+23.6
+48.3

Earnings attributable to equity shareholders were
£1,044m and basic earnings per share were 134.2p,
52% ahead of last year.

1,044

700

+49.1

Cash flow

134.2p

88.6p

+51.5

Adjusted EBITDA

Basic earnings per share

Adjusted profit before tax
Acquired inventory fair
value adjustments
Amortisation of non-
operating intangibles
Exceptional items
Profits less losses on sale
and closure of businesses
Profits less losses on
disposal of non-current
assets
Transaction costs

Profit before tax

Taxation
Profit after tax
Earnings attributable to equity
shareholders
Basic earnings per share
(in pence)

2023
£m
1,473

2022
£m
1,356

Change
%
+8.6

(3)

(5)

(41)
(109)

(47)
(206)

(3)

(23)

28
(5)
1,340
(272)
1,068

7
(6)
1,076
(356)
720

Profit before tax of £1,340m was 24.5% ahead of last year,
benefitting from the lower level of exceptional items in 2023.

Exceptional items

Grocery – Impairment
Sugar – Impairments
Retail – Impairments, rightsizing and
fair value writedowns

2023
£m
41
50

18
109

2022
£m
–
–

206
206

The income statement this year included a non-cash exceptional
impairment charge of £109m. In Grocery, the Don business has
been impacted by inflationary pressures, a surplus supply of
fresh pork in the market, labour constraints, equipment reliability
causing production shortfalls and additional transportation costs
following the unforeseen liquidation of its distribution partner.
As a result we recognised impairment write-downs of £39m
against property, plant and equipment, £1m against right-of-use
assets and £1m against intangible assets.

In Sugar, the China Sugar North business recognised a £15m
impairment write-down against property, plant and equipment.
This business was held for sale in the previous year but that
process was halted in the second half of the year. Due to
severe flooding in Mozambique, the related damage to the
sugar crop fields and the inability to plant for the foreseeable
future Illovo Mozambique recognised £25m impairment
write-downs against property, plant and equipment, £7m
against current biological assets, £2m of personnel costs
and £1m write-down against inventory.

The prior year exceptional impairment charge of £206m
comprised non-cash write-downs of assets in Primark Germany,
£72m against property plant and equipment and £134m against
right-of-use assets.

Total tax charge for the year was £272m. This includes
the positive benefit of deferred tax on exceptional items from
the prior year, when a £63m exceptional charge was included
in the Group's total tax charge reflecting the de-recognition
of the deferred tax assets relating to Primark Germany.
A significant proportion of that asset had been deemed
to be irrecoverable and was written off as an exceptional
tax charge last year. As a result of further work undertaken this
year it has been determined that more of this deferred tax asset
is recoverable and so, an exceptional non-cash tax credit of
£58m was recognised in the first half.

Repayment of lease liabilities net
of incentives received
Working capital
Capital expenditure
Purchase of subsidiaries, joint
ventures and associates
Sale of subsidiaries, joint ventures
and associates
Net interest paid
Taxation
Share of adjusted profit after tax from
joint ventures and associates
Dividends received from joint ventures
and associates
Other

Free cash flow

Share buyback
Dividends
Movement in loans and current
asset investments

Cash flow

2023
£m
2,361

2022
£m
2,261

(246)
(216)
(1,073)

(275)
(729)
(769)

(94)

(154)

4
(74)
(341)

–
(97)
(304)

(127)

(112)

107
(32)
269
(448)
(345)

(10)
(534)

93
2
(84)
–
(380)

196
(268)

There was free cash inflow in the year totalling £269m
as a result of the operating profit generated by the Group,
despite cash outflows driven by higher capital expenditure
than the prior year and a working capital outflow.

The capital expenditure increase was driven by the number
of large capital projects and a step up following low levels
of the last few years. The increase of the investment in our
food businesses primarily relates to projects to build capacity.
In Primark the increase reflects the acceleration of our new
store programme and expenditure to expand our capabilities
in warehouse automation and technology. We expect this
higher level of investment to continue over the medium term.

The main factors driving the increase in working capital were
twofold: the impact of inflation across all our food businesses
and higher inventories, particularly in our Sugar and Primark
businesses. As a reminder Primark inventories a year ago were
too low and reflected the logistics and supply chain difficulties
experienced in the prior year. We do expect a working capital
inflow in 2024 as Primark inventory levels normalise.

Cash tax increased in the year driven by the increase in profit
before tax. We expect a reduced level of cash tax in 2024 due
to the reallocation of historic overpayments and favourable
settlements of historical enquiries and returns.

There was cash outflow of £448m for our share buyback
programme, with the remainder of the £500m programme
completed after the year end. We also paid £345m for total
dividends in this financial year, which reflects the final 2022
dividend and interim 2023 dividend. The £380m paid in the prior
year included a special dividend that was declared in respect of
the 2021 financial year.

Acquisitions and disposals
The spend on acquisitions this financial year was £94m.
The most significant of these were the acquisitions
of National Milk Records, Kite Consulting and Advance
Sourcing in Agriculture.

For disposals, a non-cash provision of £6m was included
in profit less losses on sale and closure of business in respect
of Illovo's investment in Gledhow.

Financing and liquidity

Short-term loans
Long-term loans
Lease liabilities

Total debt

Cash at bank and in hand, cash
equivalents and overdrafts
Current asset investments

Total net debt
Leverage ratio

2023
£m
(99)
(394)
(3,160)
(3,653)

1,388
–
(2,265)
0.96

2022
£m
(31)
(480)
(3,252)
(3,763)

1,995
4
(1,764)
0.78

At 16 September 2023, the Group held cash balances of
£1,388m. In addition, the Group has an undrawn Revolving
Credit Facility (RCF) for £1.5bn. This facility is free from
performance covenants and was extended in June 2023 for
a further year, bringing the maturity to 2028. Our £400m bond,
launched last year, at 2.5% is due in 2034, and our final $100m
Private Placement notes are due in March 2024.

Total liquidity at year end was £2.7bn, comprising the £1.5bn
of cash, less £0.2bn of short-term loans and overdrafts
and £0.1bn of inaccessible cash, plus the £1.5bn RCF.
This compares to £3.4bn at the end of 2022.

Pensions
The Group’s defined benefit pension schemes aggregate
surplus increased by 5% to £1,377m at year end compared
to last year’s £1,314m. The UK scheme, which accounts for
around 90% of the Group’s gross pension assets was in surplus
by £1,397m (2022 – £1,366m). A significant increase in the
pension surplus in the prior year was driven by an increase in
bond yields reducing liabilities. Details of the assumptions made
in the current and previous year are disclosed in note 12 of the
financial statements together with the bases on which those
assumptions have been made.

The charge for the year for the Group’s defined contribution
schemes, which was equal to the contributions made,
amounted to £95m (2022 – £87m). This compared with
the cash contribution to the defined benefit schemes
of £36m (2022 – £36m).

The most recent triennial actuarial valuation of the UK scheme
was carried out as of 5 April 2023. This last valuation showed
a funding surplus of £1,013m. This is a clear improvement on
the previous valuation undertaken at 5 April 2020, which
showed a deficit of £302m. As agreed with the trustees in
September, as a result of this significant increase in the surplus,
the Group will receive a cash flow benefit of approximately
£70m per year from the abatement of UK employer pension
contributions on both the defined benefit and defined
contribution schemes. This will take effect from the start
of the new financial year.

Dividend and shareholder returns
We announced a share buyback programme of £500m in
November 2022. In the financial year we purchased 23.7 million
shares for £446m and the shares bought back were cancelled.
At the end of the financial year we had 765 million ordinary
shares in issue. The weighted average number of shares for
the year was 778 million which compared to 789 million for the
last financial year. This share buyback has resulted in a positive
impact on our reported adjusted earnings per share of 1.8p.
Since the financial year end, a further 2.8 million shares were
purchased, completing the total £500m buyback programme.
The Group has announced the continuation of a buyback
programme, targeting an additional amount of £500m
over the next 12 months.

This year the Board declared an interim dividend of 14.2p
per share (2022 – 13.8p), an increase of 3% compared to
prior year. The Board is proposing a final dividend of 33.1p
per share. It is also declaring a special dividend of 12.7p per
share to be paid as a second interim dividend. Taken with the
first interim dividend of 14.2p per share, the aggregate total
dividend for the year is 60.0p per share, 37% higher than the
total dividend of 43.7p in 2022, which comprised an interim
dividend of 13.8p, and a final dividend of 29.9p.

Eoin Tonge
Finance Director

Associated British Foods plc Annual Report 2023

SECTION 172 STATEMENT | OUR STAKEHOLDERS

Engaging with our stakeholders

This approach necessarily involves a high degree of delegation
of communication with stakeholders to the management of the
Group businesses. Where the directors of the Company have
not themselves directly engaged with stakeholders, those
stakeholder issues are considered at Board level both through
reports to the Board by the Chief Executive and/or Finance
Director and also by the senior management of the Group’s
businesses. Senior management are requested, when
presenting to the Board on strategy and principal decisions,
to ensure that the presentations cover what impact the strategy/
principal decision has on the relevant stakeholders and how
the views of those stakeholders have been taken into account.

In the following pages, we set out the key stakeholder groups
with whom engagement is fundamental to the Group’s
ongoing success.

Stakeholder engagement
We engage regularly with stakeholders at Group and/or
business level, depending on the particular issue.

As illustrated in our Group business model and strategy section
on pages 9 to 11, the role of the Group, and therefore of the
Board, is to provide a framework in which the Group businesses
have the freedom and decision-making authority to pursue
opportunities with entrepreneurial flair and to manage risks at
the level at which the businesses operate. We consider this to
be an important factor in the success of the Group.

Authority for the operational management of the Group’s
businesses is delegated to the Chief Executive for execution
or for further delegation by the Chief Executive to the senior
management teams of the businesses. This is to ensure the
effective day-to-day running and management of the Group.
The chief executive of each business within the Group has
authority for that business and reports directly to the
Chief Executive.

While day-to-day operational decisions are generally made
locally, the Board not only provides input on the principal
decisions and strategy, but also supports individual businesses
by facilitating the sharing of best practice and know-how
between the businesses.

Employees
We employ approximately 133,000 people. Our people are central to our success.

Key matters

• Health and safety
• Diversity, equity and

inclusion
• Cost of living

• Culture and wellbeing
• Engagement and
development

How the businesses engage with this
stakeholder group

• Intranet
• Newsletters
• Surveys
• Email
• Training

• Notice boards
• Health and Safety

programmes

• Town halls
• Meetings

How the Board engages and/or is kept informed and takes matters into account

• So as to seek to ensure that the ‘voice’ of each workforce in

the Group is heard at Board level, Richard Reid, as designated
Non-Executive Director for engagement with the workforce,
meets with employees from a selection of businesses.
Each business division also specifically reports to the Board
on workforce engagement within that division. The Board also
receives two specific updates each year from Richard Reid
and the Chief People and Performance Officer in respect
of progress on workforce engagement and resulting actions.

• The Group Safety and Environment Manager provides the
Board with updates on safety trends and progress against
key performance indicators, supplemented by updates from
the divisions.

• The Chief Executive and Finance Director continue to engage
with Company employees both at the corporate centre and at
the regional businesses through town halls in the businesses
covering issues such as business updates and ESG topics.

See the letter from Richard Reid on pages 84 and 85,
which includes details of some of the outcomes from workforce
engagement. See also the ‘Our people’ section on pages 50
and 51.

Suppliers
As a diversified international Group, we have many complex supply chains.

Key matters

How the businesses engage with this
stakeholder group

• Responsible sourcing
• Supply chain sustainability
• Payment practices
• Capital strength

• Human and labour rights

• Conversations

in our supply chains
• Transparency in supply

chains

(face-to-face or virtual)

• Training
• Communication sessions

• Correspondence
• Audits
• Engagement with trade

unions and NGOs

How the Board engages and/or is kept informed and takes matters into account

• Senior management of each business division (often with the
assistance of specialists from within that division) regularly
report to the Board on key relationships and projects with
suppliers either as part of their business updates to the Board
or through reports to the Chief Executive and Finance Director.

• The Board reviews each business segment every year,
including a review of ESG issues, with support from the
Director of Legal Services and Company Secretary and
the Group Corporate Responsibility Director.

Examples of key matters or projects on which the Board was
briefed include:

• the expansion of the Kilombero sugar plant in Tanzania;
• the responsible exit from Myanmar as a source of garments

for Primark; and

• human rights and environmental due diligence in respect

of our supply chains.

See further details on page 45 in respect of the implementation of a
responsible exit from Myanmar as a source of garments for Primark
and page 47 in respect of ESG governance.

Customers/Consumers
The buyers of our safe, nutritious and affordable food, and clothing that is great value for money.

Key matters

• Healthy and safe products
• Value for money
• Availability of products
• Customer relations

How the businesses engage with this
stakeholder group

• Social and environmental

impact

• In-store signage (Primark)
• Face-to-face interactions

• Store environment

with staff

• Customer surveys
• Websites

• Labelling
• Social media
• Customer/consumer

contact lines

• Market data analysis

How the Board engages and/or is kept informed and takes matters into account

• The Board is regularly updated by each business division on
its strategy, including in relation to key customers and key
activities impacting customers and consumers.

• The Group Director of Financial Control provides the Board

with an annual report on food and feed safety.

• The Chief Executive and Finance Director meet each division

quarterly to discuss key commercial matters.

Examples of key matters or projects on which the Board was
briefed include:

• changes to fitting rooms at Primark stores to seek to ensure

that our customers feel safer and more welcome;
• performance of the Click and Collect trial at Primark;
• self-checkout trials at Primark;
• Twinings marketing trials; and
• increased marketing investment in Patak’s, Blue Dragon,

Jordans Dorset Rvyita and Mazzetti.

See further details on page 15 about Twinings marketing trials and
on page 34 about Primark using self-checkouts to enhance
customers’ in-store experience.

Associated British Foods plc Annual Report 2023

SECTION 172 STATEMENT | OUR STAKEHOLDERS CONTINUED

Communities and the environment
Supporting society and respecting the environment are two of the key ways we live our values and
make a difference.

Governments
The Group is impacted by changes in laws and public policy.

Key matters

How the businesses engage with this
stakeholder group

Key matters

How the businesses engage with this
stakeholder group

• Climate change mitigation

• Social impact – including

• Coaching and training

and adaptation

employment opportunities

programmes

• Natural resources and

• Agriculture and farming

• Community programmes

circular economy

practices

and schemes

• Dealings with NGOs and
other expert programmes
and schemes

• Various environmental

programmes

How the Board engages and/or is kept informed and takes matters into account

• Corporate governance and

• Climate and environment-

audit reform

related matters

• Meetings, calls and
correspondence

• Energy support schemes
• Tax and business rates
• Agricultural and trade policy

• Public health
• Support of businesses

and workers

• Responding to consultations

and calls for evidence
• Providing data/insights

(e.g. supply challenges and
international conflict)

• Participation in government

schemes

• Parliamentary events
• Industry forums
• Site visits
• Attendance at conferences

• Senior management of the business divisions report to the

• The Board receives updates from the Chief People and

How the Board engages and/or is kept informed and takes matters into account

full Board on their key ESG matters.

• The Board reviews risk assessments undertaken by the

businesses each year which consider, among other things,
climate change impacts and risks.

• The Director of Legal Services and Company Secretary and
the Group Corporate Responsibility Director present to the
Board on broader corporate responsibility issues that sit beyond
our direct manufacturing operations e.g. in the supply chains.

Performance Officer and the Group Safety and Environment
Manager on operational safety and key environmental matters
in our direct manufacturing operations reflecting an additional
focus on climate and sustainability.

• The Board receives updates and provides views on key

sustainability matters. This included individual sessions with
non-executive directors on climate-related financial reporting.

See the Responsibility section on pages 46 to 67 of this Annual
Report. See also the sections of our Responsibility Report 2023
providing further details of our businesses’ work with people
in the supply chains and surrounding communities.

Shareholders and institutional investors
The Company has a mix of individual and institutional shareholders, including bondholders,
whose views are valued.

Key matters

• Business and financial

performance

• Return on investment

• ESG
• Remuneration

How the businesses engage with this
stakeholder group

• Press releases
• Annual general meeting
• Annual Report
• Responsibility Report

• Website
• Results announcements
• Meetings
• Registrar

How the Board engages and/or is kept informed and takes matters into account

• The annual general meeting provides an opportunity for retail

• At each Board meeting, the directors are briefed on meetings

shareholders to ask the Board questions.

• The Board also responds either directly or via its in-house
company secretarial team to queries raised throughout
the course of the year.

• Regulatory News Service (RNS) announcements keep

investors updated on business and financial performance
and other matters.

• Each year, the Chairman meets with the Company’s

largest institutional shareholders to discuss their views,
issues or concerns.

• The Chief Executive and/or Finance Director meet with

investors throughout the year.

that have taken place with institutional shareholders and
on feedback received.

• The Remuneration Committee Chair meets with investors
and analysts to answer queries and respond to feedback
around remuneration issues.

• The Responsibility Report is approved by the Board and
is produced to provide greater transparency in response
to increasing requests for information from investors.
• All shareholders are treated equally and a Relationship
Agreement is in place with the Company’s controlling
shareholders (see pages 116 and 117).

See further details on page 86, which includes details on this year’s
annual general meeting.

• The Company engages with governments to contribute to,

and anticipate, important changes in public policy.
• The Board takes into account the interplay between

commercial decisions and government policies and aims
in its investment decisions.

• The Board is briefed on engagement with governments,
which, using the UK as an example, might cover matters
specifically related to energy support schemes,
environmental policies including Extended Producer
Responsibility, decarbonisation and the Emissions Trading
Scheme, high streets and business rates and the impact
of international conflicts.

Our refurbished store on Mary Street,
Dublin

Associated British Foods plc Annual Report 2023

SECTION 172 STATEMENT | OUR STAKEHOLDERS CONTINUED

Principal decisions

In making decisions throughout the course
of the financial year, there is a need to
ensure that the consequences promote the
long-term success of the Company, as well as
maintain our reputation for high standards
of business conduct.

Investment in Primark’s existing store estate
alongside its ongoing international expansion.
Which stakeholders most affected?
• Customers/Consumers
• Employees
• Suppliers
• Communities and the environment

Provided in this section are some examples of principal
decisions that were taken (or implemented) during the year and
how stakeholder views were taken into account and impacted
on those decisions.

Launch of a £500m share buyback programme.
Which stakeholders most affected?
• Shareholders/Institutional investors

Consideration of stakeholder views/interests
and impact on decision-making
The Board took into account views of various investors
(including views expressed in meetings with the Chairman, the
Chief Executive and/or Finance Director) in reaching the decision
in November 2022 to launch a share buyback programme of up
to £500m. This included, for example, investor views that the
Company’s shares were undervalued, that a share buyback
would be an appropriate way to return capital to shareholders
and that return on investment from a potential buyback should
be considered in the same way as an M&A opportunity.
Following detailed consideration by the Board and engagement
with brokers and external advisers, the first tranche of the
programme was launched in November 2022 with Barclays
Capital Securities Limited (‘Barclays’) being irrevocably
instructed to buy back up to £250m of the Company’s ordinary
shares. Feedback received from institutional investors following
the launch of the first tranche of the buyback indicated that
they welcomed the buyback programme and that, in particular,
they were pleased with the quantum.

Following completion of the first tranche of the programme
by Barclays, in May 2023 we commenced the second £250m
tranche of the share buyback, having irrevocably appointed
Credit Suisse International to carry out that tranche. In deciding
to launch the second tranche, the Board considered whether
the share buyback continued to be value accretive, taking into
account external advice.

The share buyback programme announced in November 2022
has now completed and, in total, the Company purchased
26,478,215 of its ordinary shares for a total consideration
of £499,999,929. The purpose of the share buyback was
to reduce the capital of the Company and all shares repurchased
as part of the programme were cancelled.

Whilst some shareholders, particularly retail shareholders,
expressed a preference for return of capital by way of an
additional (or larger) dividend rather than by way of a share
buyback, the Company considered on this occasion that a
buyback was the more appropriate way to return capital,
taking into account the long-term consequences of the
different options.

Consideration of stakeholder views/interests
and impact on decision-making
In line with Primark’s commitment to create a great in-store
experience for consumers, the Board has approved the
investment of substantial sums in extensions and upgrades to
existing stores. This is in addition to investment in growing the
Primark store estate to 530 by the end of the 2026 financial year
as well as in automation of distribution depots.

The upgrades to stores have included the continued roll-out of
LED lighting across the UK store portfolio, which will also help
Primark progress its ambition to reduce its carbon footprint, and
self-service checkouts, which, as well as reducing labour costs,
should also reduce queues for customers (in response to
customer feedback). We are also upgrading CCTV monitoring
in a bid to reduce theft and anti-social behaviour in stores, both
of which impact our employees.

During the course of the financial year, Primark has opened
stores in two new markets, namely Slovakia and Romania,
bringing the total number of countries in which Primark operates
to 16 at year end. The decision to expand Primark’s footprint
in the southern states of the US was also taken. New store
openings continue to be met with an enthusiastic reception
from customers, as well as providing employment opportunities
in the local areas and increasing career options for employees.

Relationships with key landlords continue to be important, as is
the use of technology and demographic data to inform decisions
about new store locations.

Approval of various projects in our food
and ingredients businesses.
Which stakeholders most affected?
• Customers/Consumers
• Employees
• Shareholders/Institutional investors

Consideration of stakeholder views/interests
and impact on decision-making
Throughout the financial year, the Board approved significant
capital expenditure (or increases to existing approved capital
expenditure) by our food and ingredients businesses.
This included a new yeast plant for AB Mauri in northern India,
a new spray dryer and upgraded yeast production facility for
Ohly in Germany, a new sugar factory in Tanzania, a major
new water irrigation system in Malawi, an upgrade to a Tip
Top bakery and a new animal feed plant in Western Australia
(see picture on page 45), a steam reduction project for British
Sugar (as part of its pledge to reduce its carbon footprint) and
a new factory purchase with plans for localised production
for Ovaltine in Nigeria.

The decisions to approve such projects and initiatives took into
account customer demand for our products and the additional
quantity of products and/or improved quality that such investment
should bring about. The decisions also factored in our investors’
interest in us making the best use of the Company’s capital.

We continue to monitor the Group’s small number of
food-related sales and co-packing operations in Myanmar
(which primarily relate to the supply of food and grocery
products to the local population).

Acquisition of National Milk Records.
Which stakeholders most affected?
• Shareholders/Institutional investors
• Customers/Consumers
• Employees

Consideration of stakeholder views/interests
and impact on decision-making
In June 2023, following detailed consideration of both the
short-term and longer-term benefits of the transaction for AB
Agri customers and our investors, we announced the acquisition
by AB Agri Limited (an indirect wholly-owned subsidiary of the
Company) of the entire issued and to-be-issued ordinary share
capital of National Milk Records plc (NMR) for approximately
£48m. The NMR business was considered by the Board to be
well-aligned with AB Agri’s objective of supporting customers
across the dairy industry, helping to drive efficiency and
increase productivity.

NMR provides complementary services and technology
offerings to AB Agri’s existing operations across the dairy supply
chain. It was considered that the combination will enable a
better service to the dairy industry and will ultimately offer
products that deliver increased value, efficiency and ultimately
profitability for farmers. It was also considered that the
acquisition will allow NMR to accelerate and de-risk the delivery
of its strategy, as well as creating greater opportunities for
NMR’s customers, employees and wider stakeholders.

The work done leading to the decision to acquire NMR took
into account our customers’ desire for increased value and
efficiency, as well as the opportunities that this is likely
to create for our employees as we strengthen our position
in the dairy sector.

Implementation of a responsible exit from
Myanmar as a source of garments for Primark.
Which stakeholders most affected?
• Suppliers
• Communities and the environment

Consideration of stakeholder views/interests
and impact on decision-making
Primark places a high priority on the safety and wellbeing of the
people who make its clothes and products and of the Ethical
Trade team that carries out visits to the factories.

Following the military coup in Myanmar in February 2021 and
subsequent calls from global trade unions to disinvest from the
country, the situation became both concerning and complex,
given that many people in Myanmar are employed in suppliers’
factories making garments for major retailers such as Primark.

In September 2022, following its human rights impact
assessment, the Ethical Trading Initiative published a report
setting out the significant challenges faced by businesses
sourcing garments from Myanmar in relation to their ability
to conduct the level of due diligence required to meet
recognised standards governing human rights and labour rights.
The conclusions of this report were combined with information
from the Primark Ethical Trade team and the resulting document
was then reviewed by the Primark Myanmar Steering
Committee. As referred to in our 2022 Annual Report,
Primark decided to work towards a responsible exit from
Myanmar. Accordingly, Primark stopped placing orders in
October 2022 and expects its final orders from Myanmar
to ship before the end of the 2023 calendar year.

Following the announcement that it would stop sourcing
from Myanmar, Primark doubled the size of the Ethical Trade
team on the ground to enable more frequent visits to supplier
factories to give the business improved visibility of working and
employment conditions. While the exit plan from Myanmar is
being implemented, the Primark Ethical Trade team will continue
to work with supplier factory management and relevant
stakeholders to address any issues as and when they arise.

The decision to exit was not taken lightly. Primark has managed
its exit in consultation with partners and stakeholders both
in Myanmar and globally, following the UN Guiding Principles
on Business and Human Rights and ACT’s responsible exit
guidelines. It is also working with IndustriALL Global Union
and alongside other retail brands to create a framework for
responsible business disengagement.

Mauri ANZ’s new animal feed plant, Weston Animal Nutrition,
Hope Valley, Australia

Associated British Foods plc Annual Report 2023

RESPONSIBILITY

Investing for tomorrow
Delivering today

Our purpose is to provide safe, nutritious and affordable food, and good quality
clothing that is great value for money.

Materiality and stakeholders
This year, to better support our stakeholders’ understanding of
our business model and our approach to ESG, this Responsibility
section of the Annual Report focuses on the areas that have
been identified as material for the Group.

The materiality assessment helps us understand how ESG
factors might impact our businesses. This assessment helps
us prioritise our activities. We consider the guidance of globally
recognised sustainability standards and frameworks when
compiling potential material topics and issues. Our stakeholders
are a key part of the materiality assessment and we give them
the chance to provide input on our ESG agenda and put their
views to inform our decision-making.

The list of ABF material topics has been grouped into
six areas:

• Agriculture and farming practices;
• People in our supply chains and surrounding

communities;

• Our people;
• Carbon and climate;
• Efficient resource use; and
• Food and nutrition.

Looking ahead, we are working to further develop our
materiality approach in line with the reporting requirements
under the EU’s Corporate Sustainability Reporting
Directive (CSRD).

For more information please see our Responsibility Report 2023.

We live and breathe our values through the work we do every
day. They guide our behaviour and help us deliver long-term
benefits for our people, suppliers, communities, customers
and the environment.

These do not replace each business’s own values, but rather
consolidate and summarise the most common themes found
across the Group.

Non-financial and sustainability reporting
requirements
The Group data included in this Report on our environmental
and safety KPIs covers the period 1 August to 31 July.

The Companies Act 2006 requires the Company to disclose
certain non-financial and sustainability information within the
Annual Report and Accounts.

Accordingly, the disclosures required in the Company’s
non-financial and sustainability information statement can
be found on the following pages in the Strategic Report
or are incorporated into the Strategic Report by reference
for these purposes:

Information on our business model (pages 10 to 11)

Information on our people (pages 50 to 52)

Information on DEI (page 51)

Information on our Anti-Bribery and Corruption Policy (page 52)

Information on our Speak Up Policy (page 52)

Information on our approach to human rights (page 49)

Information on supporting communities (page 49)

Information on our environmental management (pages 52 to 55)

Information on our climate-related financial disclosures
(pages 56 to 67)

Information on our principal risks and uncertainties, including
how we manage and mitigate those risks (pages 68 to 75)

Further information on these can also be found in our 2023
Responsibility Report. Our Responsibility Report is published
online and provides additional information relating to the
commitments, approach, performance and impact of ABF
and our businesses.

We engaged Ernst & Young (EY) to provide independent limited
assurance over the 29 ESG KPIs. These are marked with the
symbol ∆ in these pages and on page 13.

There is also further information on our website at www.abf.
co.uk/responsibility, which includes our current and previous
responsibility reports, our Modern Slavery Statement and our
climate, water and forests reports submitted to CDP.

∆ EY has provided limited independent assurance over the 2023 metrics.

See the 2023 Responsibility Report page 114 for EY’s assurance statement.

Our values

We strive to protect the
dignity of everyone within and
beyond our operations, so that
the people who make our
products feel safe, respected
and included.

From the products we make, to
the way we preserve the resources
we rely on and support the people
we work with, we are always
learning and incorporating better
practices. Across our businesses,
we are partnering with industry
experts to help us work towards
the highest standards.

Respecti n
e ’ s
everyo n
dignit y

l
i
v

r
i
g

ring

c
ti

inte

r
i
t

g ressin
t h ro ugh
o lla b oratio

P r

We proudly promote and protect
a culture of trust, fairness and
accountability that puts ethics first.
From farms and factories right
through to our boardroom, we are
committed to embedding integrity
into every action.

We work with others to leverage
our global expertise for local good.
Through collaboration with our
stakeholders, we are working
to create safer, fairer working
environments and promoting
thriving, resilient communities.

Our Group ESG governance
The Board has overall responsibility for the general oversight
of ESG factors across ABF. It reviews each business segment
every year, including a review of ESG issues.

In carrying out its duties, the Board is also supported by:

• our Director of Legal Services and Company Secretary who

reports to the Chief Executive and has responsibility for ESG
issues. He acts as the focal point for communications to the
Board and shareholders on ESG matters;

• our Chief People and Performance Officer (CPPO) who

reports to the Chief Executive and has responsibility for all
employee matters, including safety, mental health, financial
wellbeing, employee development, workforce engagement
and diversity, equity and inclusion (DEI), as well as initiatives
within procurement in our supply chains, the coordination
of environmental reporting across our operations and how
we ensure security for our people and assets; and

• our Group Corporate Responsibility Director who leads the

Group’s Corporate Responsibility Hub team.

The Corporate Responsibility Hub is a central resource available
to all our businesses, which provides support to them as required
on environmental and human rights issues. It provides a network
that brings together professionals across the Group working
in these areas, the Corporate Responsibility (CR) Leads, so that
they can share knowledge and best practices with each other.

Within the remit of the CPPO, other teams have been assigned
dedicated focus areas, including DEI and health, safety and
environment (HSE) and procurement.

All our businesses operate within a clear governance framework
defined by the Group. However, our devolved business model
gives businesses autonomy to operate in ways that aim to create
enduring economic, environmental and social value. In addition
to individual business leaders, divisional CEOs also have
responsibility and are accountable for their ESG programmes.
This covers their ESG risks, opportunities and impacts. They can
draw on specialist support from the Corporate Responsibility
Hub and the Director of Legal Services and Company Secretary,
the CPPO as well as specialist legal advice from the team led
by the Associate General Counsel for ESG.

Governance structure

ABF Board

Annual business
reviews

Risk reviews of
material topics

Continuous
oversight and
support

Grocery

Ingredients

Agriculture

Sugar

Retail

Agriculture
and farming
practices

People in
our supply
chains

Material topics

Our people

Carbon and
climate

Efficient
resource
use

Food and
nutrition

Audit
Committee

Director of Legal Services
and Company Secretary

Chief People and
Performance Officer

Group Corporate
Responsibility Director

Associated British Foods plc Annual Report 2023

RESPONSIBILITY CONTINUED

Agriculture and farming practices

ABF is a diversified group, with a wide range of food and
ingredients businesses as well as our retail brand, Primark.
Our businesses depend upon agricultural systems for most of
the raw materials we use in our products, and we recognise the
need to support more sustainable farm management practices.

We have a strong association with the UK agricultural sector,
where our businesses collectively form the largest end-to-end
food producer. Globally, we are also a significant purchaser
of cotton, sugar beet, sugar cane, tea and cereals.

Global agricultural systems are under increasing pressure
to provide for a growing population while responding to the
challenges and effects of climate change. Extreme weather
events, increasing water stress, biodiversity loss and soil
degradation are all adding to pressures within the system.

We expect our businesses to go further than legal compliance
by continuously considering and implementing other appropriate
activities, voluntary commitments and internationally recognised
management systems to reduce their environmental and
social impacts and risks. This encompasses the responsible
stewardship of our environment in line with the
following requirements:

• Group Environment Policy;
• Group Animal Health and Welfare Policy; and
• Group Supplier Code of Conduct.

Our businesses support a wide range of social and
environmental interventions at farm level. These span
management models including certified organic production,
standards to promote wildlife biodiversity, engagement with
smallholder growers in developing markets, and the adoption
of integrated farm management systems built on the principles
of sustainable intensification.

For example, Primark launched its Sustainable Cotton Programme
in 2013, with farmers in the programme trained on techniques
to help improve efficiency, increase soil quality and reduce their
use of agrichemicals. It also aims to address a wide range
of social development issues related in income improvement.

While it is not possible for our businesses to intervene in every
farm supply chain, collectively we support many farm-focused
intervention programmes. The objective of these is to shape
management practices to promote systemic commercial, social
and environmental resilience for the long term. Science,
technology and data are essential to achieving this aim.

Many of the farm management standards our businesses
support align with the core principles of Integrated Farm
Management (IFM). They require the incorporation of a range
of management practices across a number of designated
criteria in the context of improving overall supply chain efficiency
and driving more sustainable farm productivity. Requirements
typically include, for example, the safe handling of agrochemicals
and improving soil structure, as well as the provision of land
management practices to sustain habitats for wildlife biodiversity.
IFM can make a significant impact on a range of measures.

A Jordan’s Farm Partnership grower tending the infield crop
alongside woodland habitat

The UN Sustainable Rice Platform (SRP) Standard, for example,
requires Alternate Wet and Dry farm management techniques
to reduce water use in the rice sector by around 30% and,
by association, GHG emissions by up to 50%. Westmill has
committed to source 20% of all the rice it purchases from
farms in Pakistan and Thailand to follow this Standard.

Our businesses also supply a range of products and services to
the agricultural sector that facilitate efficient farm management
and regenerative approaches such as cover-cropping to improve
soil structure and water retention.

We support the adoption of regenerative farm management
techniques alongside the responsible use of precision science
and technology to maximise efficiency, reduce greenhouse
emissions and limit biodiversity losses while maintaining
commercially productive agricultural outputs. For example,
Illovo – Africa’s largest sugar producer – manages cane lands
and farming activities in South Africa according to the
SUSFARMS® environmental management system. Allied Mills
and British Sugar require the farms they purchase from to
meet the Combinable Crops Standard specified under the Red
Tractor mark. In Jordans Dorset Ryvita, the Jordan’s Farm
Partnership programme is run across 15,000ha in conjunction
with both LEAF (Linking Environment And Farming) and
The Wildlife Trusts.

We believe in the importance of high animal health and welfare
standards. This is captured in our Group Animal Health and
Welfare Policy, which applies to all our businesses.

For more information please see our Responsibility Report 2023.

People in our supply chains and
surrounding communities

Respect for the working conditions and labour standards of the
workers in our businesses’ supply chains is important to us. We
also recognise the potential contribution we can make to
surrounding communities.

Human and labour rights in our supply chains
Our businesses use the United Nations Guiding Principles on
Business and Human Rights (UNGPs) as a reference point to
guide their activities in implementing human rights due diligence
processes. The OECD’s Guidelines for Multinational Enterprises,
Due Diligence Guidance for Responsible Business Conduct and
various sectoral guidance documents all provide valuable
models and reference material.

Our Group Supplier Code of Conduct is an essential
requirement of the responsible business conduct of our
businesses. This document is based on the core conventions
of the International Labour Organization (ILO) and on the Base
Code of the Ethical Trading Initiative, of which Primark is a
member. All businesses within the Group are responsible for
managing their relationships with suppliers and satisfying
themselves that suppliers operate in line with the principles
contained in the Supplier Code of Conduct.

In their application of the Supplier Code of Conduct, our
businesses continue to develop and improve human rights
due diligence processes in their supply chains as laid out in the
UNGPs. Knowledge of where potential negative human rights
impacts might exist, combined with supply chain mapping, helps
them to monitor and identify actual issues, to seek remedy or
even to anticipate and prevent them before they arise, prioritising
those that are most salient. Our devolved business model
enables our businesses to take the most appropriate approach
based on their specific supply chains and the nature of their
supplier relationships. In many cases we find that suppliers have
their own programmes that meet our expectations in this area,
but where this is not the case our businesses seek to use their
leverage or collaborate to drive change.

Our businesses use a number of data platforms to assess and
monitor potential human rights risks. Many businesses monitor
their risk through audits carried out by internal teams or third
parties. For example, Primark’s Ethical Trade auditing and
monitoring programme is one of Primark’s most important
resources for identifying risks. Some businesses also engage
workers and their representatives directly outside of the audit
process to understand what issues they face.

Our businesses seek to use the leverage they may have with
their suppliers to secure access to an effective remedy for
workers facing negative human rights impacts in their supply
chains. For example, in India, Primark’s Ethical Trade and
Environmental Sustainability team has developed a
comprehensive programme called the India Worker
Empowerment Programme to address the root causes and
manifestations of key human rights risks.

Our businesses have or are developing grievance mechanisms
to give workers a voice on the issues they face in the
workplace. Examples include ABF Sugar’s ‘We Listen, We Act,
We Remedy’ toolkit. Primark has multiple approaches to
achieve effective grievance mechanisms, these include the
Amader Kotha programme in Bangladesh, where a hotline is
available to workers in garment factories.

Different stakeholders including NGOs, trade unions,
governments, other businesses (subject to relevant competition
and anti-trust laws) and industry bodies inform our approach to
human rights due diligence. We work with these organisations
due to their expert knowledge and we acknowledge
their contribution.

Transparency about who and where our businesses source
from enhances our understanding of human rights risks and,
where necessary, encourages collaboration to resolve issues
both locally and across our sectors. Some of our businesses,
including Primark, Twinings and ABF Sugar, publish global
sourcing maps and provide information about their processes,
progress and challenges through corporate reports, websites,
stakeholder engagement activities and submissions
to ESG benchmarks.

In line with our Group Supplier Code of Conduct, our businesses
prohibit all forms of modern slavery, including forced labour and
human trafficking. For more information, see our Group Modern
Slavery Statement 2023. Alongside our Group statement, some
of our businesses publish separate modern slavery statements.

Supporting communities
ABF Sugar continues to invest in its relationships with
communities and key stakeholders. For instance, Illovo
recognises that its sugar estates are a key part of the
communities they are located in, and this is reflected by its
activities to support those communities, such as by providing
clinics, schools and local services to support its employees
and in some cases also to support their families and
neighbouring communities.

For more information please see our Responsibility Report 2023.

A cotton farmer in Primark’s Sustainable Cotton Programme, India

Associated British Foods plc Annual Report 2023

RESPONSIBILITY CONTINUED

Our people

We employ over 133,000 people and have operations in
55 countries across Europe, Africa, the Americas, Asia and
Australia. The people across our businesses are united by our
purpose, culture and passion for delivering for our customers.
We empower them to innovate and support them to grow
and develop.

Health, safety and wellbeing
Our businesses strive to safeguard the wellbeing, health and
safety of our people, contractors and visitors to our sites and
when they are travelling for business. Safety is non-negotiable.

Loss of life in our operations is unacceptable and we expect
all colleagues to return home after work as well as when they
arrived. As such, we are deeply saddened to report three
fatalities this year and recognise the irreplaceable loss this has
caused their families, friends and colleagues. One contractor
in Spain was fatally injured during an off-site traffic accident.
An employee was involved in a fatal incident with a forklift truck
in one of our bakeries in Australia. An employee in Malawi was
fatally injured while working on an overhead electricity line.

Following these tragic events, our priority was to support the
families and colleagues of those who died. We investigate all
fatalities and serious accidents thoroughly, share the learnings
with safety and operational colleagues across the group
and have reinvigorated our focus on working with moving
vehicles and electricity to minimise the risk of such events
from happening again.

All our businesses must comply with our Group Health,
Safety and Wellbeing Policy. Many of them supplement this
with additional policies of their own. Responsibility for ensuring
compliance with the Health, Safety and Wellbeing Policy is
devolved to the chief executives of the various businesses.
Each business also has a nominated director with specific
accountability for health, safety and wellbeing.

A growing number of our businesses are investigating the
potential of human behavioural and psychological techniques,
some of them based on neuroscience, to help employees and
contractors stay focused on health, safety and wellbeing.

Across the Group, we have identified the following key on-site
and off-site safety risks:

• harm from moving vehicles;
• falls from height;
• machinery safeguarding;
• the storage and handling of hazardous materials;
• manual handling of heavy and awkward loads;
• working in confined spaces; and
• the management of contractors.

Supporting our people’s mental health and their sense of
general wellbeing also remains a priority. We continue to invest
in our support across the Group, including programmes designed
to raise awareness and provide practical assistance. In response
to rising living costs this year, we have continued to focus
on ensuring financial wellbeing tools and resources are
available internationally.

We engage independent HSE specialists to provide us with
an objective opinion of our safety performance, through
a compliance and risk management audit programme.

Of our factories and retail stores, 69% have operated for one
or more years without an on-site employee injury.

This year, the Group’s on-site employee Lost Time Injury
(LTI) rate has reduced slightly from 0.36% in 2022 to 0.35%.
The number of onsite employee LTIs has also reduced by 2%
from 355 to 348. Primark has reduced its on-site employee
LTI rate again this year by 15% from 0.40% of employees
experiencing an LTI to 0.34%.

The on-site contractor LTI rate this year has increased from
0.14% to 0.33% and the number of on-site contractor LTIs has
increased significantly by 85% from 41 to 76. Of this year’s
on-site contractor LTIs 80% are attributed to our Retail and
Sugar segments. The two segments are working hard
to address the reasons for these incidents.

For more information please see our Responsibility Report 2023.

Lost time injuries and lost time injury rate
Number of employees having an LTI during the year

(%)
800

0.65%

0.42%

0.39%

0.36%

0.35%∆

6
8
2

‘19

4
0
6

‘20

3
4
6

‘21

3
5
5

‘22

3
4
8
∆

‘23

Engagement and development
Our employees can provide feedback to their business
through discussions with their line manager and leaders,
engagement surveys, and other mechanisms that support
two-way communication. The work and focus of Richard Reid,
our Non-Executive Director for engagement with our workforce,
enables the Board to ensure that our businesses have cultures
of openness so our people can share their views, that their
voice is heard and acted upon. Read more about workforce
engagement on pages 84 and 85.

Our businesses strive to attract and develop the most talented
people. We enable this by creating opportunities for professional
and personal development, and by fostering environments that
enable our people to showcase their diverse and unique skills.

We offer a variety of learning opportunities and development
programmes to help our people gain the skills our businesses
need, including apprenticeships and mentoring. Our people are
supported to build a rewarding career with us, we help them
explore their own aspirations by building awareness of what
their business and the wider group has to offer.

Diversity, equity and inclusion (DEI)
We celebrate diversity in all its forms. Our businesses are
focused on widening and deepening their talent pools,
attracting new recruits and connecting with the diverse
communities they serve. We believe engaging with a diverse
talent pool gives us a competitive edge and enhances our ability
to deliver long-term success.

Many of our businesses have their own diversity policies,
alongside the Board Diversity policy which applies across the
Group, DEI teams and dedicated programmes to support their
people, be they women, people from ethnic minorities, those
working with disabilities or people who identify as LGBTQIA+.

Our Group DEI Network brings together people from across
our businesses to share knowledge, best practices and ideas.
We have over 300 DEI advocates across the Group, who
benefit from access to masterclasses and self-study kits
across a range of topics, including allyship, handling difficult
conversations, neurodiversity inclusion, disability inclusion,
racial and ethnic diversity and anti-racism, female careers
and leadership, gender identity and LGBTQIA+ inclusion.

To create a more inclusive workplace, we ensure leaders and
line managers have the skills they need to set the tone, model
appropriate behaviour and put in place targeted campaigns
relevant to local circumstances. We provide unconscious bias
and cultural awareness training and tools to all our businesses.

Our ‘Women in ABF’ network was established over 10 years
ago and continues to grow and evolve. It provides support for
our women to develop skills, business awareness and networks
that will enhance their current performance and future careers
across the Group. Virtual events with external and internal
speakers and networking opportunities are available to women
across the Group.

To further address gender and ethnicity imbalances, we need
to prioritise attracting a broader range of talent using more
inclusive and effective processes. We are addressing the
barriers that have historically discouraged talent from being
attracted to or joining ABF or from reaching the top of our

organisation. We continue to support female talent with
bespoke development interventions to further strengthen our
succession pipeline for senior roles across the Group.

Overall, the gender balance of the Group is fairly equal,
with women making up 55%∆ of our total global workforce.
We voluntarily report on our overall gender pay gap for
employees in Great Britain (GB) on page 110 of this Annual
Report. Each of our GB-based businesses with over 250
employees also report on their own gender pay gap, with these
reports published on their websites. These reports share some
inspirational business-level insights about the actions being
taken to enable all employees to successfully grow their
careers with us.

Number of employees, highlighting percentage
of women in workforce

(%)
160,000

52%

53%

54%

55%∆

1
3
8
,
0
9
7

‘19

1
3
3
,
4
2
5

‘20

1
2
7
,
9
1
2

‘21

1
3
2
,
2
7
3

‘22

1
3
3
,
4
8
7
∆

‘23

Considering the most senior levels, those reporting to the
divisional chief executives and Group functional directors,
our gender balance as reported to the FTSE Women Leaders
has improved to 28.1% from last year. We also see an increase
in the number of women in senior management roles to 38%.
It is pleasing to see the outcome from the focus we have given
to addressing gender imbalances, we commit to a continued
focus on ensuring women are represented in our most
senior roles.

For more information please see our Responsibility Report 2023.

Gender metrics
Associated British Foods plc Board directors are not included in the table below. We currently have three women and six men on the
Company’s Board. The Board is pleased that our composition continues to meet the recommendations of the Parker Review and that,
by the time of the annual general meeting, we will also have met the recommendations of the FTSE Women Leaders Review and the
new targets on gender and ethnic diversity in the Listing Rules.

Grocery
Sugar
Agriculture
Ingredients
Retail
Central
Total

Total
employees*
15,788
30,975
3,052
6,257
76,857
558
133,487Δ

Men in
workforce
10,164
24,849
2,028
4,583
17,466
350
59,440

Women in
workforce
5,624
6,126
1,024
1,674
59,391
208
74,047

% women who
are in workforce
36%
20%
34%
27%
77%
37%
55%Δ

Number
of senior
management
roles**
795
246
454
562
253
71
2,381

Number of
men in senior
management
roles
470
171
263
387
131
55
1,477

Number of
women in senior
management
roles
325
75
191
175
122
16
904

Percentage
of senior
management
who are women
41%
30%
42%
31%
48%
23%
38%

* Full-time, part-time and seasonal/contractors.
** Includes directorships of subsidiary undertakings.

See our Responsibility Report 2023 for definitions.

Associated British Foods plc Annual Report 2023

RESPONSIBILITY CONTINUED

Anti-Bribery and Corruption Policy
Our approach to governance is to respect not simply the letter,
but also the spirit, of our policy and always act with integrity.
To ensure the effective implementation of our Policy and
procedures, each business has its own designated Anti-Bribery
and Corruption Officer and we have monitoring systems
in place at various levels within the Group including global
risk assessments.

In addition, all relevant employees are required to complete
an e-learning course on the subject when they join the Group
and at regular intervals thereafter and those who work in higher
risk roles are required to attend regular face-to-face training.

A copy of the ABF Anti-Bribery and Corruption Policy is available
on the ABF website.

Speak Up
Our Speak Up Policy provides a route for our employees to raise
concerns confidentially about inappropriate behaviour at work.

Speak Up empowers our people to tell us whenever they see
anything inappropriate, improper, dishonest, illegal or dangerous
and ensures that their concerns will be handled confidentially
and professionally. Speak Up includes both a telephone line
and a web reporting device managed by a leading independent
provider, People Intouch.

We encourage all individuals working for ABF in any of our
businesses in any country and in any capacity to Speak Up,
including employees at all levels, directors, officers, part-time
and fixed-term workers, casual and agency workers, seconded
workers and volunteers. Speak Up also enables issues to be
raised by third parties.

Any contact made is disseminated to the appropriate
management team responsible for investigating the issues
raised. A thorough investigation is then undertaken and any
remediation agreed.

In the year to 31 May 2023, 216 notifications were received,
of which:

• 24% were resolved, with outcomes ranging from reviews
of processes and support for individual employees to,
where necessary, disciplinary procedures being followed;

• 60% were investigated as appropriate and required no action;

and

• 16% remain under investigation.

A copy of the ABF Speak Up Policy is available on the
ABF website.

Carbon and climate

As a Group, we recognise that climate change represents a
material risk throughout our supply chains and poses challenges
to some of our businesses worldwide. However, we also
recognise that climate change and the transition to a lower-
carbon world presents opportunities.

We wholly support policies that are aligned with the goals of the
Paris Climate Agreement to limit the rise in global temperatures
to well below 2˚C above pre-industrial levels, and to pursue
efforts to limit the temperature increase even further to 1.5˚C.

As a Group, we have an ambition to achieve net zero by 2050
or sooner. Beyond that broad ambition we do not set groupwide
climate-related plans or targets. In line with our devolved
business model, our businesses set plans and targets

that are appropriate to their operations and supply chains.
Our businesses are all committed to cutting GHG emissions and
several of our businesses have set specific reduction targets.

ABF Sugar, Primark, Twinings Ovaltine and UK Grocery have
each set a specific emissions reduction target. Primark has set
a target in line with the Science Based Targets initiative (‘SBTi’),
while ABF Sugar is in the process of validating their reduction
target against the SBTi. We expect this to be completed by the
end of the calendar year.

Achieving net zero across ABF by 2050 will depend on a
number of factors that are beyond our control. However, based
on our track record and progress against our plans so far, we are
confident in our ability to deliver on this objective.

Reducing GHG emissions
Our businesses are targeting reductions in GHG emissions
through carbon reduction plans, energy efficiency and growing
their use of renewable energy. ABF Sugar and Primark have
transition plans in place.

Energy efficiency has long been a driver of better performance
for our Group, and we remain focused on finding ways to
produce more from less energy. Much of our electricity is
purchased from third-party power generation companies via
national grids, and our businesses understand the benefits of
transitioning to renewable energy tariffs for their purchased
electricity. Many are doing so as soon as it becomes operationally
and commercially feasible. In 2022/23, 29% of the electricity we
bought came from renewable sources, which is a 62% increase
in the amount of purchased renewable electricity compared
with last year.

Several of our businesses are also contributing to
decarbonisation by exporting renewable energy, contributing
909 gigawatt hours (GWh) this year to national grids.

This year our businesses consumed 21,183 GWh∆ of energy
which is a 1% increase compared with last year. Of this
total consumed, 58%∆ was derived from renewable sources.
These are predominantly biomass fuels from by-products
generated as part of the production process within our
agricultural based businesses. In the main, the renewable
energy we generate comes from bagasse, the renewable
plant-based fibrous residue that remains after the extraction
of juice from the crushed stalks of sugar cane. Some renewable
energy is derived from the anaerobic digestion of a range
of waste materials.

Our Scope 1 and 2 (location-based) emissions decreased by
6% this year from 3.11 million tonnes of CO2e to 2.91 million
tonnes of CO2e ∆. This decrease has been driven primarily
by a reduction in imported electricity and a change in the fuels
used on-site.

In compliance with UK reporting requirements, we have
provided in the table on the following page our UK energy and
GHG emissions data. The principal energy efficiency measures
undertaken this year to reduce our carbon emissions include
a large-scale project to replace fluorescent lighting with LED
lighting across stores in eight of Primark’s markets; embedding
the use of energy monitoring systems; and upgrades to
production machinery such as evaporators, pulp presses and
boilers to improve efficiencies across our UK businesses.

For more examples of energy efficiency actions, see our
Responsibility Report 2023.

Streamlined energy and carbon reporting

Scope 1: 000 tonnes of CO2e
Scope 2 Location method: 000 tonnes of CO2e
Scope 2 Market method: 000 tonnes of CO2e
Total scopes 1 and 2 location method: 000 tonnes of CO2e
Scope 3 – Indirect emissions from use of third-party transport:
000 tonnes of CO2e
Scope 3 – Primark’s scope 3 emissions: 000 tonnes of CO2e
Total Scope 3: 000 tonnes of CO2e

UK only
1,093
90
124
1,184

2022

Non-UK
1,315
609
596
1,923

Total
2,408
699
720
3,107

637
6,452
7,089

UK only
1,053
92
108
1,145

2023

Non-UK
1,219
551
527
1,770

Total
2,272Δ
643Δ
635Δ
2,915Δ

656Δ
7,019Δ
7,675Δ

Biogenic carbon emissions: 000 tonnes of CO2e

3,865

3,879

108

4,152

4,260Δ

Intensity ratio: Scopes 1 and 2 emissions per £1m revenue
Scopes 1 and 2 location method: tonnes CO2e/£1m

–

183

–

148

Energy consumed: GWh

4,777

16,269

21,046

4,625

16,558 21,183Δ

Biogenic emissions are those from the combustion or fermentation of biomass/biofuels on our sites.
We calculate and disclose our GHG emissions based on the WRI/WBCSD GHG Protocol Corporate Accounting and Reporting Standard Revised Edition, except
for alignment with the GHG Protocol’s approach for determining our organisational boundary and limitations with our Scope 3 disclosures. See our Responsibility
Report Appendix for detail on our current treatment of emissions from joint ventures and Scope 3 limitations. We use carbon conversion factors published by the
UK’s Department for Business, Energy and Industrial Strategy (BEIS) in June 2022, other internationally recognised sources, and bespoke factors based on laboratory
calculations at selected locations. Scope 2 market-based emissions have been calculated in accordance with the GHG Protocol Scope 2 Guidance on procured
renewable energy. Since 2021, we have excluded Primark’s third-party transport emissions from the Group figure as these are accounted for in the reported Primark
Scope 3 emissions. Aligned with the GHG Protocol, biogenic CO2 emissions are specifically excluded from Scope 1 emissions and are separately reported.

Many of our businesses are in the process of calculating their
wider Scope 3 emissions, focusing initially on their supply
chains. Primark completed this process in 2021 and is currently
implementing plans to support its suppliers and partners to
reduce their GHG emissions in line with its reduction target.
ABF Sugar completed this year a project to calculate its Scope 3
emissions and it is also in the process of validating its Scope 3
reduction target with the SBTi.

Primark reports 7.02 million tonnes of CO2e ∆ this year for
their full Scope 3 emissions. For the rest of the Group, we
currently report emissions from third-party transport for
which we are responsible. These equate to 655,545 tonnes
of CO2e ∆ which is a 3% increase compared with last year.
This increase has been driven primarily by third-party transport
emissions from our Retail and Sugar segments.

Our total Scope 3 emissions, which include Primark’s Scope 3
emissions and Group third-party transport emissions increased
by 8% from 7.09 million tonnes of CO2e to 7.67 million tonnes
of CO2e ∆. This is largely due to Primark’s continued increase in
trading activity during the year and expansion into new markets,
resulting in increased materials and products brought into
the business. Our businesses have started to collect their
third-party transport data to align with the internationally
recognised GHG Protocol.

For more information please see our Responsibility Report 2023.

Providing products that help others reduce their
GHG emissions
We provide products and services that have the potential to
assist others in reducing their carbon emissions, often referred
to as carbon enablement. This has always been integral to our
businesses, and a key focus for investment and innovation.
ABF businesses including ABF Sugar, AB Enzymes and AB
Agri play a role in facilitating the potential reduction of other

businesses’ emissions. For example they do this by creating
products which have environmental benefits for the end user.

For more information please see our Responsibility Report 2023.

Our performance in 2023

Scope 1 and 2 GHG emissions

(000 tonnes CO2e)
5,000

3
,
9
9
3

3
,
5
5
5

3
,
1
6
1

3
,
1
0
7

2
,
9
1
5
∆

‘19

‘20

‘21

‘22

‘23

Total energy consumed and proportion from
a renewable source (%)

(GWh)
30,000

52%

55%

54%

58%∆

2
3
,
5
6
6

‘19

2
2
,
8
7
7

‘20

2
1
,
9
9
0

‘21

2
1
,
0
4
6
∆

‘22

2
1
,
1
8
3
∆

‘23

Associated British Foods plc Annual Report 2023

RESPONSIBILITY CONTINUED

Efficient resource use

We are reliant on a range of natural resources to deliver our
products and new processes and technologies have enabled us
to become highly efficient at maximising the value that we can
derive from them.

Waste and circularity
As a first step, our businesses aim to avoid waste generation
as far as possible, and reuse and recycle waste where they can.
Some of our businesses also explore energy recovery solutions
for any remaining waste. Landfill and other final disposal
techniques are always the last resort.

We are focused on making finite resources go further, believing
that waste materials are often a resource that we can find a use
for. With that in mind, our businesses are implementing
practices to reuse, recycle or reduce food, plastic and/or textile
waste. For example, we do not just make sugar. Our sugar
facilities are highly efficient biorefineries that play a key role in
other sectors’ value chains. We turn sugar beet and sugar cane
co-products and by-products into animal feed and chemical
products, as well as using it to generate renewable energy.
We also use on-site anaerobic digesters to generate biogas
from our waste streams.

In Retail, Primark has made a commitment to giving its clothes
a longer life. Its ambition is to drive forward innovation and
collaboration within its industry to make its clothes last longer
and reduce clothing waste.

Our food businesses avoid products going to waste by donating
surpluses to food banks, community groups and charities.

Across the Group, we generated 520,608 tonnes of waste ∆
in 2023 which is an 11% decrease compared with the 584,845
tonnes generated in 2022. Of the total generated, 83% was
sent for recycling or other beneficial use. Our businesses
continue to focus on reusing waste materials where possible.

This year, 11% of all our production sites achieved zero waste
to landfill and 37% recycled or reused 95% or more of their total
generated waste.

For more information please see our 2023 Responsibility Report.

Plastic and packaging
As a leading provider of food, ingredients and clothing,
packaging contributes significantly to our environmental
footprint. Paper is the main packaging material used across the
Group, followed by plastic and glass. We also use wood, steel,
aluminium and a number of other materials.

Though we fully recognise the harmful effects of plastic waste
on ecosystems, plastic currently plays a vital role in both food
safety and reducing food waste, by extending the shelf life of
food. Our challenge is to use plastic materials responsibly and
find solutions which balance the needs of our customers and
our desire to minimise our impact.

Our businesses aim to achieve this by removing unnecessary
and problematic plastic packaging, switching to more easily
recyclable types of plastic and increasing the use of recycled
content in the plastics we use.

Our businesses demonstrate their commitment to tackling
plastic and packaging challenges by involvement with and
support for a number of pacts and programmes, including the
WRAP UK Plastics Pact, REDcycle in Australia and the Soft
Plastic Recycling Scheme in New Zealand.

In 2023, our businesses used 246,683 tonnes ∆ of packaging
compared with 267,638 tonnes used in 2022. This is an 8%
annual decrease even though tonnes of production from Group
operations increased by 3%. There has been a decrease in the
use of all the packaging materials, including plastic, steel, glass
and paper, which remains the main packaging material used.
Tonnes of plastic used as a packaging material has decreased
by 9% this year and demonstrates the commitment of our
businesses to reduce the use of plastic where appropriate.

Proportion of total waste sent for recycling or other
beneficial use

(% of total waste)
100

Quantity of packaging used

(000 tonnes)
300

8
0
%

8
4
%

7
9
%

8
4
%

8
3
%

2
5
9

2
4
5

2
5
8

2
6
8

2
4
7
∆

‘19

‘20

‘21

‘22

‘23

‘19

‘20

‘21

‘22

‘23

Total waste generated

(000 tonnes)
700

6
3
2

5
8
5

5
7
1

5
8
5

5
2
1
∆

‘19

‘20

‘21

‘22

‘23

Water use
Our businesses aim to reduce the amount of water they abstract,
to reuse process water as much as possible and to return treated
wastewater to nature, having ensured it meets or exceeds local
and national water standards, and protect aquatic ecosystems.

We have carried out annual water risk assessments for our
operations using internationally recognised methodologies to
identify the sites operating in water-stressed areas.

We use a range of technologies in our operations to manage our
water use in fields and factories, and constantly work to further
reduce our water footprint per tonne of product we produce.

This year, the Group collectively abstracted 860 million m3 ∆
of water for use in operations and irrigation, an 8% increase
compared with last year. This rise is driven by three of Illovo’s
estates which account for a significant proportion of the Group’s
total water abstraction. Their increase in water abstraction, which
is primarily used for cane irrigation, is aligned with their increase
in tonnes of production from their operations for this year.

ABF Sugar accounts for a significant proportion of the water
used in our own operations across the Group, at 97% of the
total water abstracted. Water is used carefully and extensively
throughout the sugar manufacturing operations compared with
our other businesses; from the processing stage to extract and
refine the sugar, to generating steam in the boilers, through to
cleaning the equipment. A significant amount of ABF Sugar’s
abstracted water is also used for crop irrigation within Illovo and
where possible the sites reuse abstracted water for this
irrigation, for dust control, landspreading and cleaning machinery.

This year, across the Group, 25% of the water abstracted was
reused before being returned to watercourses. This is a cost-
and resource-efficient way of managing water.

Notable improvements in water management this year were
made by ABF Sugar and include the approval of a large-scale
irrigation project and continued conversions from furrow to
more efficient drop irrigation systems.

AB Mauri continues to invest in effluent treatment plants
at many of its sites to deliver on its commitment to maintain
appropriate standards of water quality, this investment being
significant in recent years. More broadly, its water strategy
focuses on reducing its water-intensity ratio defined as the
quantity of water consumed per tonne of product produced,
excluding by-products. AB Mauri has reduced its overall water
intensity-ratio by 25% since 2017/18.

Total water abstracted

(million m3)
900

8
8
0

8
4
7

8
6
4

7
9
6

8
6
0
∆

‘19

‘20

‘21

‘22

‘23

Food and nutrition

Providing safe food and enabling customers to make healthier
choices have both been central to our approach for a long time.

Relevant businesses take nutritional factors into account across
their product portfolio. Many of our food products already
support healthier choices – from high-fibre breakfast cereals,
wholemeal bread and crispbreads to specialist sports nutrition
products. Product reformulation can also help to gradually shift
consumer tastes towards foods that support better long-term
nutrition, and our food businesses actively review their
portfolios with this in mind.

As part of ABF Sugar’s commitment to thriving and healthy
communities, the business has its Making Sense of Sugar
website which provides factual information based on robust
science to help inform and educate people about sugar and the
role it can play as part of a healthy balanced diet.

As part of UK Grocery’s commitment to responsibly produce
and market safe, nutritious and affordable food, our UK Grocery
businesses provide details of the revenue generated by their UK
branded portfolio in terms of the 2004/5 Nutrient Profiling Model
and the Food (Promotion and Placement) (England) Regulations
2021. The Nutrient Profiling Model uses a formula to assess the
nutritional content of foods, designating them as either HFSS
(high in fat, salt, or sugar), or non-HFSS.

Overall, more than 94% of the revenue generated from our
UK Grocery’s branded portfolio in 2022/23 was derived from
products that are designated as being non-HFSS, or that are
classified as HFSS but are not subject to restrictions under the
Food (Promotion and Placement) (England) Regulations 2021.
For context, foods designated HFSS within our UK Grocery’s
branded portfolio that are not within the scope of public
health-related sales restrictions include bagged sugars and
cooking oils, as well as some cooking sauces and condiments.

Examples of products becoming healthier include Jordans
Dorset Ryvita launching several new non-HFSS recipes and AB
World Foods reducing sugar, fat and salt from Patak’s sauces.

AB Mauri has successfully developed solutions for its sweet
bakery portfolio that enables up to 100% sugar reduction while
preserving the delightful taste experience. AB Mauri is also
improving the nutritional profile of its sweet bakery goods by
increasing the amount of fibre.

A number of ABF brands, including Ryvita and Kingsmill, are
among 24 signatories to the UK Food and Drink Federation’s
Action on Fibre pledge, to increase fibre consumption in the UK.
Our UK Grocery division is also a long-term sustaining member
of the British Nutrition Foundation.

For more information please see our Responsibility Report 2023.

Associated British Foods plc Annual Report 2023

CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)

Climate-related Financial Disclosures (TCFD)

Climate change continues to represent a
material risk throughout our supply chains
and presents ongoing risks and opportunities
to some of our businesses, some of which
we have been working on for many years.
We remain committed to taking action and
supporting policies aligned with the goals
of the 2015 Paris Climate Agreement to limit
the rise in global temperatures to well below
2° C above pre-industrial levels, and to pursue
efforts to limit the temperature increase
even further to 1.5° C.

We recognise our role in working towards a low-carbon
economy. We have developed last year’s disclosure to highlight
actions we have taken in the current year and describe transition
plans for two of our largest businesses.

In our diversified Group, climate-related targets are set by our
businesses based on their material risks and what is relevant
and achievable for them. ABF Sugar, Primark and Twinings
remain our most material businesses, comprising 76% of
Group adjusted operating profit (2022 – 81%) and 72% of
Scope 1 and 2 greenhouse gas (‘GHG’) emissions (2022 – 70%),
mainly from ABF Sugar and Twinings. Primark’s GHG emissions
arise predominantly in Scope 3, which accounts for 98% of
Primark’s total GHG emissions. See pages 52 and 53 for the
detailed disclosure.

Our most material businesses each have their own emission
reduction targets. These are:

• ABF Sugar – a 30% absolute reduction in Scope 1 and 2

emissions by 2030 (baseline: 2018)

• Primark – a 50% absolute reduction in emissions across

the value chain by 2030 (baseline: 2018)

Other Group businesses have identified their own emission
reduction targets or are in the process of doing so. Further
information can be found on our website.

We are committed to the aim of reaching net zero by 2050, but
this cannot be achieved by us in isolation. There is a need for
systemic change throughout the value chain, including a
redesign of national energy strategies and policies.

Twinings’ previously set target is under review to develop a
new, more specific carbon reduction target. For further details
please read page 33 of the Responsibility Report 2023.

Background

We published our approach to TCFD in the 2021 Annual Report
before our first TCFD report in the 2022 Annual Report.

Last year we met the requirements of Listing Rule 9.8.6R
with TCFD disclosures in line with the 2017 TCFD framework.
This year we have applied the same framework, now including
the 2021 implementation guidance which requires details of
transition plans. For the first time, we have included transition
plans for ABF Sugar and Primark as they contribute most
significantly to adjusted operating profit and total GHG emissions.
Twinings’ transition plan will be included next year. These
disclosures also meet the Companies Act 2006 requirement
to make UK Mandatory Climate Disclosures.

Last year we considered a variety of climate scenarios including
<2° C and 4° C scenarios to assess the resilience of the Group
to climate change. On the basis of that analysis, we determined
that in the period to 2030, the risks to the Group were not
material, but are material in the longer term. This year we have
identified no significant changes in our businesses or where
they operate that would require an update to last year’s
scenario analyses.

Governance
Our governance processes in relation to overseeing, assessing
and managing climate-related issues evolve every year. This year
we enhanced our processes to address the evolving requirements
of climate change and other ESG matters. The Board continues
to have oversight over, and responsibility for, climate-related
risks and opportunities.

Oversight by the Board and Audit Committee
The Board receives specific updates each year on climate and
other ESG matters from the Group Corporate Responsibility
Director, the Director of Legal Services and Company Secretary
and the Chief People and Performance Officer. This year,
this included:

• an update on TCFD requirements and the additional areas

we are required to report against

• our approach to transition plans and why the focus is on ABF

Sugar and Primark

• an update on UK Mandatory Climate Disclosures and which

entities are in scope

• update on strategic decisions taken by businesses
in addressing climate change and wider ESG issues

The Board receives relevant updates, such as updates
on transition plans throughout the year outside of this annual
presentation. All operating businesses present periodically
to the Board, including on significant climate matters.

The Board is proactive and has taken prior assessments of
climate risks and opportunities and information from the above
meetings and used these to influence strategic decisions.
In 2023 this has primarily crystallised through approval and drive
of transition plans.

Primark’s targets for GHG emission reductions have been
validated against the Science Based Targets Initiative (SBTi). By
the end of the calendar year, reduction targets for
Scope 1, 2 and 3 emissions at ABF Sugar should be validated
against the SBTi.

The Board possesses sufficient competencies to lead the
Group in responding to climate-related risks and opportunities.
Please refer to pages 80 and 81 for details of the Board.

The Audit Committee was briefed on updated TCFD
requirements, including transition plans for Primark and ABF
Sugar, as well as on UK Mandatory Climate Disclosures, which
apply to our largest UK subsidiaries for the first time this year.

Management’s role
Assessing and managing the impact of climate change on the
Group is the responsibility of the Chief Executive, reporting to
the Board. Divisional chief executives are responsible for
assessing, managing and mitigating the impact of climate
change on their businesses. Every business presents quarterly
updates to the Chief Executive and Finance Director, which
include discussion of significant climate-related matters.

The Chief Executive and the Board are supported in these
activities by the Director of Legal Services and Company
Secretary, the Chief People and Performance Officer and the
Group Corporate Responsibility Director.

Further details of their activities are set out in the ’Our Group
ESG Governance’ section on page 47.

15% of short-term incentive targets for the Chief Executive
and Finance Director, equivalent to 30% of base salary, is linked
to strategic, primarily ESG, measures. See pages 104, 105, 107
and 108 for further details.

Risk management
The Board is accountable for risk management including on
climate change issues. The process for identifying, assessing
and managing climate-related risks is the same as for other
business risks and sits with the business where the risk resides.
Risks are collated and reviewed at a business and divisional
level and are then reported to the Director of Financial Control,
who reviews the key risks with the Board.

More information on our risk management process is available
in the ‘Our approach to risk management’ section on page 68.

We have integrated climate-related considerations into
processes affecting our financial statements, including
considerations of capital expenditure within the ABF Sugar
business as well as for impairment assessments.

Identifying, assessing and managing climate-related
risks and opportunities
Last year, we described our groupwide materiality-based risk
assessment, focussed on financially material climate risks and
opportunities at a divisional level and our decentralised
structure. This assessment identified risks and opportunities in
the most material divisions contributing to Group adjusted
operating profit and GHG emissions – ABF Sugar, Primark
and Twinings.

Our cross-functional divisional teams worked with third-party
experts to understand climate-related physical and transition
risks and opportunities. These were included in our
scenario analysis.

Following this we worked with the third-party experts and
performed high-level assessments across the remainder of our
businesses to understand whether the risks and opportunities
in individual businesses, but also in aggregate, could be material
to the Group. The most significant risks were incorporated
into relevant risk registers, in line with our existing risk
management process. We have considered, in aggregate,
other risks and opportunities that might have a material impact.
None were identified.

This year, ABF Sugar and Primark formalised their transition
plans, which confirmed that the risks and opportunities
identified last year were still appropriate. No new risks
or opportunities were identified.

An Illovo sugar cane field in Malawi

Associated British Foods plc Annual Report 2023

CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) CONTINUED

Strategy and action, metrics and targets
We operate a decentralised business model because we believe in giving our leaders the scope and accountability to create and run
the best businesses they can.

Enabling decision-making by the people closest to these issues, with the relationships with affected stakeholders, provides resilience,
agility and flexibility in planning, allowing for quick action on impacts and opportunities.

Climate risks and opportunities

Output from the risks
and opportunities
assessment process

Climate impact
on the Group’s key
agricultural crops

Impact of flooding
on the Group’s
end-to-end supply
chain including
operations

Resilience of
workers to mitigate
or adapt to climate
change

Transition risks as
the world reduces its
reliance on carbon

Carbon enablement:
providing solutions
to reduce carbon

Efficiency

P
h
y
s
i
c
a

r
i
s
k
s

T
r
a
n
s
i
t
i
o
n

O
p
p
o
r
t
u
n
i
t
i
e
s

Primark

Sugar

Twinings

Cross-divisional

Sugar yields (UK,
Eswatini, Malawi,
Mozambique,
South Africa,
Tanzania, Zambia)

Mozambique and
Malawi

Tea yields (Argentina,
China, India,
Indonesia, Kenya,
Sri Lanka)

Wheat yields
(Australia, UK)

Corn yields (US)

Coastal and river flood
risks: Key Group
manufacturing sites

Cotton yields*

Coastal and river flood
risks: third-party
manufacturers
(Bangladesh, China)
and Primark stores
and warehouses

Heat impact on
farmers (Bangladesh,
India, Pakistan)

Carbon pricing
mechanisms

Biofuels, renewable
energy

Fuel substitution,
energy efficiency,
process optimisation
and increased
contribution from
by-products

Enzymes, animal
feeds, ingredients,
on-farm carbon
measurement

* The focus of the cotton yield analysis was on Primark's Sustainable Cotton Programme (PSCP) locations in India and Pakistan.

Scenario analysis
As described in last year's Annual Report, we engaged third-party
experts to help us perform scenario analysis to assess
the potential impact of these risks. This year, we considered
whether that analysis should be updated for any new material
factors. We concluded that the analysis remains appropriate,
except in respect of flooding risk in Bangladesh, where revised
information is given on page 62.

Knowledge in this area is growing and we expect models and
pathways to evolve with time. Models have limitations, and some
areas are challenging to model, for example the frequency and
severity of extreme weather events. However, our businesses can
still consider how they would mitigate or adapt to such events.
Additionally, in certain situations different models can project
contrasting results. In these situations, we have used our
experience of current risks that may be exacerbated by climate
change and then considered how different outcomes would impact
our businesses.

We have used the following scenarios:

Warming
trajectory by 2100

< 2˚ C

2-3˚ C

~4˚ C

Transition scenarios1

Net Zero Emissions by 2050
Scenario (‘NZE’) (1.5˚ C)

Sustainable Development
Scenario (‘SDS’)

Stated Policies Scenario
(‘STEPS’)

Physical
scenarios2

RCP2.6

RCP4.5

RCP8.5

1. The International Energy Agency’s scenarios have been used to assess

transition impacts with each scenario built on a set of assumptions on how
the energy system might evolve. Each scenario has a different temperature
outcome. We used scenarios covering 1.5˚ C, <2˚ C and <3˚ C.

2. We used the Intergovernmental Panel on Climate Change’s Representative
Concentration Pathways (RCP) to assess physical climate risk. RCPs are
commonly used by climate scientists to assess physical climate risk, with each
pathway representing a different greenhouse gas concentration trajectory
which can then be translated into global warming impacts. We used climate
data from the World Climate Research Programmes Coupled Model
Intercomparison Project – Phase 5 (CMIP 5 adjusted for spatial resolution and bias
corrected) to do this translation. RCPs feed into climate, crop and flood models.
There are four RCP pathways with RCP8.5 representing the worst case scenario.

The impact of compounding means that even small changes
in assumptions can lead to a significant range of outcomes
from climate models and scenarios. We have therefore placed more
emphasis on projections to 2030, using them for action planning,
and used projections to 2050, where there is more uncertainty, to
check our sense of direction and consider the resilience of our
businesses should certain hypothetical scenarios take place.

Risks and opportunities have been considered over the following
time horizons:

Years Rationale

Short-term

2025 Mid-decade

Medium-term 2030 Our most financially material businesses,

ABF Sugar, Primark and Twinings have
set 2030 emission targets, which are
supported by emission reduction plans

Long-term

2050 2050 is consistent with many national and

industry targets. Primark is aligned with
the UNFCCC Fashion Industry Charter
goal of net zero emissions across all three
Scopes by 2050

TCFD physical risk: concepts and frameworks
In all physical risk analysis, we have used the RCP8.5 scenario,
which is widely considered to represent one of the worst-case
climate scenarios with temperatures reaching some 4˚ C above
pre-industrial levels by 2100. This scenario projects an extreme
view of physical climate change impacts.

In addition to RCP8.5, the evaluation of physical risks has been
supplemented with analysis using either RCP2.6 or RCP4.5
scenarios, depending on which climate scenario is most
applicable to the risk. We have focused on the results of
RCP8.5 as it is the most challenging scenario from a physical
risk perspective.

In line with best practice, we used a multi-modal approach to
capture and assess the uncertainty of future climate change
projections. The numbers quoted represent the median
projected result. Where appropriate we have also disclosed
ranges in potential outcomes to reflect the uncertainties and
variables inherent when using models to assess future climate
outcomes. These outcome ranges represent the 25th and 75th
percentiles. Detailed data for the analysis was supplied by our
businesses, including individual locations of our own operations,
suppliers’ factories and the location of the farming communities
in Primark’s Sustainable Cotton Programme in India, Pakistan
and Bangladesh.

Our third-party experts advised us which crop models to use to
assess climate change impacts on crop yields. In some cases
(e.g. for cotton and tea), only one available crop model was
deemed sufficiently robust for evaluating future climate impacts
on yields, the analysis was based on the input of five climate
models providing sensitivity to the analysis. For other crops (e.g.
sugar cane, wheat and corn), multiple crop models were used.

Global average surface temperature change

°C
6

-2

2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

RCP8.5

RCP2.6

Climate model projections of average global temperature under the RCP2.6
and RCP8.5 scenarios (IPCC Fifth Assessment Report, 2013).
Use of scenario results to support strategy
and financial planning
Scenario analysis has helped our businesses confirm the actions
they need to take and strategies they need to adopt on an
ongoing basis to mitigate and adapt to risks and take advantage
of opportunities. Mitigating actions are managed by the relevant
businesses as the actions are specific to them. We consider
that the scenario analysis performed in conjunction with the
mitigating actions undertaken by our businesses demonstrate
that our business models and strategy are resilient to climate
change in each of the transition and physical scenarios
outlined above.

Associated British Foods plc Annual Report 2023

CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) CONTINUED

Impact assessment

Determining the potential impact of climate risks and the size of
climate opportunities is challenging. Climate models include
several fixed assumptions and there is significant uncertainty
around the impacts of climate change and how governments
will respond to its threats.

We have taken several factors into consideration when
assessing our confidence in mitigating actions:

1. Greater reliance is placed on actions already underway and
where we have seen evidence of the success of those
actions, for example the benefits seen by farmers in Primark’s
sustainable cotton programme and pest control in British
Sugar.

2. Physical risks from a changing climate are already present,
growing and being managed by our businesses. In many
cases, risks may worsen but there is time to find innovative
solutions to adapt to their impacts.

This year we experienced significant flooding, damaging the
sugar crop in our sugar business in Mozambique, which
required an asset write-off, but the financial impact on the group
was not material.

Impact
assessment

Description

Low

Medium

High

Projected impacts from scenario analysis
are positive or not significant

Impacts judged not to be significant once
mitigating actions are considered

Impacts judged to be significant even after
mitigating actions have been considered

Significance assessed by considering the impact of climate risks
and opportunities on the Group’s financial performance and position.

Results of the climate-related risks and opportunities assessment

Having evaluated, using scenario analysis, all physical and transition risks in the table on page 58, we disclose below the risks we
believe have the potential to be the most financially significant and/or of the most interest to stakeholders:

Climate impact on cotton yields

2022 assessment

Low

2030

Medium

2050

Scenarios assessed: RCP2.6 and RCP8.5
Assessment: based on RCP8.5
The outcomes to 2030 show that effects of climate risks such
as extreme temperatures, heavy rainfall and timing/duration of
monsoon season range from virtually no impact to a reduction
of approximately 4% under RCP8.5.

The outcomes to 2050 project a negative impact on yield
of 14% under RCP8.5 and 4% under RCP2.6 before
mitigating actions.

Mitigation
• By 2022, 40% of Primark’s cotton clothing sales (units)

contain cotton that is organic, recycled or is sourced from
Primark’s Sustainable Cotton Programme (‘PSCP’).
• Cotton sourced through PSCP is grown using farming
methods with a lower environmental impact, including
reducing water, chemical pesticide and fertiliser use and
training farmers in these methods. Our 2013-2019 study
concluded that switching to these farming methods led to
increased yields which help mitigate negative yield impacts
caused by climate change.

• By 2022, some 250,000 farmers have received training

in our PSCP.

2023 update

Metrics and targets
• Proportion of cotton clothing sales (units) that contain cotton that is organic, recycled or sourced from Primark’s Sustainable
Cotton Programme: 100% by 2027. 46% of cotton clothing units sold against this metric in 2023. This is up from 27% at the
launch of the programme and 40% from 2022.

• Number of farmers trained in Primark’s Sustainable Cotton Programme: 275,000 by end of 2023. As of July 2023, 299,388

(∆assured) farmers had received training through the programme.

Please refer to https://corporate.primark/en-gb/primark-cares/resources/reports for Primark’s basis of reporting for each metric.

Projects addressing physical risks

Primark Sustainable Cotton Programme
Cotton sourced through PSCP is grown using farming methods with lower environmental impact, including reducing
water, chemical pesticide and fertiliser use. This has led to increased yields, lower input costs and an overall increase
in income for the farmers trained in these methods.

Project impact
As at July 2023, 299,388 (∆assured) farmers had received training through the programme compared to a target
of 275,00 farmers. In 2023, the programme was expanded to Turkey.

Impact of climate on sugar yields in Africa (Malawi, Mozambique,
South Africa, Tanzania and Zambia)

2022 assessment

Low

2030

Medium

2050

Scenarios assessed: RCP2.6 and RCP8.5
Assessment: based on RCP8.5
Climate impact on sugar yields varies country by country.
The outcomes to 2030 under the USDA’s EPIC crop model
indicate a range from no change to a decline of 10%. The
outcomes to 2050 indicate a 5% gain to a 29% decline.

Mitigation
• Our African sugar businesses already experience and

manage significant climate variability, so their responses to
weather events are well developed.

• Improving irrigation efficiency to mitigate the risk of drought,
including investing in drip irrigation and river defences to
reduce storm damage.

2023 update

Metrics and targets
• Sugar production (tonnes): ABF Sugar has produced 2.8m tonnes of sugar
• Volume of water abstracted (million m3): ABF Sugar has abstracted 830 million m3 of water.
• ABF Sugar has a target to reduce its end-to-end supply chain water usage by 30% by 2030. ABF Sugar has reduced water usage

by 4% between 2017/18 and 2022/23.

Projects addressing physical risks

Irrigation and drainage investment
ABF Sugar is implementing a variety of irrigation and drainage projects across its African businesses to reduce the
impact climate has on sugar yields. These include drip irrigation conversion, a bulk water supply efficiency programme
and sub-surface drainage in Malawi.

Project impact
These are a few of the ongoing projects to improve irrigation and drainage and therefore reduce water usage.
This is measured primarily through solutions implemented and volume of water saved.

Mitigation
• Twinings’ sourcing capability coupled with its blending
capability enables the business to manage localised
yield issues.

Climate impact on tea yields

2022 assessment

Low

2030

Low

2050

Scenarios assessed: RCP8.5
Assessment: based on RCP8.5
The outcomes through 2030 and 2050 show a positive impact
on tea yields. However, the crop model has limited
representation of acute weather events such as extreme
temperatures, heavy rainfall and droughts. We have a
well-grounded experience in understanding volatility in regional
tea yields as a result of weather events and by extension the
world’s tea-growing regions. With this, we can respond to
extreme weather events by sourcing tea products to continue
to produce tea to our set standards. Where this is not an
option for single origin blends, the impact would not be
material to the business.

2023 update

Metrics and targets
• Since the impact of climate change on tea yields is assessed as low, no metrics are disclosed. We will continue to monitor

this risk and will develop a metric at such a time where the risk could be material.

Associated British Foods plc Annual Report 2023

CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) CONTINUED

Impact on flooding risk on Primark’s third-party manufacturers

Impact of carbon pricing mechanisms on ABF Sugar

2022 assessment

Low

2030

Medium

2050

Scenarios assessed: Bangladesh RCP4.5 and RCP8.5;
China RCP8.5
Assessment: Bangladesh (based on RCP4.5 and RCP8.5)
Bangladesh is exposed to both coastal and river flooding. The
flood risk outcomes through to 2030 are minimal, but by 2050
there is a distinct increase.

China (based on RCP8.5)
The flood risk in China only changes minimally through to 2030
and 2050. Coastal flooding is projected at 1% in 2030 and less
than 2% in 2050. River flooding is projected at less than 5%
for 2030 and 2050. Primark has a large geographical spread of
supplier factories which would require a large number of rivers
and coastlines to flood simultaneously for there to be a
material problem.

Mitigation
• The analysis shows that the majority of Primark’s suppliers
in Bangladesh are located in areas of Dhaka which are less
susceptible to flooding.

• The local Dhaka community regularly deals with flooding

and has adapted processes to mitigate its impacts.
• Ensuring a geographical spread of supplier factories

across China.

• Primark’s Sourcing Strategy has been in place for two years
with a focus on geographical diversification, creating a more
balanced global footprint and developing risk mitigation
strategies to increase flexibility and agility when unexpected
events occur.

2023 update

Metrics and targets
• Number of Primark supplier factories (China and Bangladesh) subject to high flood risk.

China
• 10.9% of factories face high ravine flood risk at baseline (2023)
• 2.9% of factories face high coastal flood risk at baseline (2023)

Bangladesh
• 10.2% of factories face high ravine flood risk at baseline (2023)
• 5.1% of factories face high coastal flood risk at baseline (2023)

Projects addressing physical risks

Structural Integrity Programme – Mott MacDonald flood pilot – Bangladesh
Primark has mobilised an engineering team under its Structural Integrity Programme to pilot an approach in Bangladesh
to support supplier factories to mitigate flood risk. Primark has appointed Mott MacDonald to investigate flood risk
associated with factories within Primark’s supply chain that are deemed high risk. The programme seeks to understand
the detailed risk to each site and how those supplier factories have taken appropriate measures to minimise the potential
impact of flooding such as damage to property, plant and equipment and finished goods as well as protecting the
wellbeing of factory workers.

Project impact
Primark will use the pilot to determine how to deploy wider activity within the existing Structural Integrity Programme.
Progress in this area will be provided in next year’s report. However, the overarching goal is to ensure factories have
the right flood mitigation measures in place.

2022 assessment

Medium

2030

Scenarios assessed: International Energy Agency’s Net
Zero Emissions by 2050 Scenario, Sustainable
Development Scenario and Stated Policies Scenario
Assessment
Incremental impact ranges from £0m to £48m in 2030. ABF
Sugar has developed a plan to reduce Scope 1 and 2
emissions by 30% by 2030 (from a 2018 baseline), achieved
through a series of fuel substitution and energy-efficiency
programmes that generally have a return on investment above
15%. Beyond 2030, while some technologies exist, they are
not yet commercially viable.

Mitigation
• ABF Sugar has a detailed plan to achieve its 30% absolute
GHG reduction by 2030. Some 12% reduction has already
been delivered versus its 2018 baseline.

2023 update

Metrics and targets
• A 30% absolute reduction in Scope 1 and 2 emissions by

2030 (from a 2018 baseline).

See also the transition plan on pages 64 and 65.

Projects addressing physical risks

Technology adoption
ABF Sugar is using SAI platform FSA to support assessing, improving and validating on-farm sustainability. This focuses
on soil health, pest management and climate change.

Project impact
ABF Sugar is in the process of defining metrics to monitor the progress of this programme. It will align these metrics to
the SAI regenerative agriculture framework.

Impact of carbon pricing mechanisms on Primark

2022 assessment

Medium

2030

Scenarios assessed: International Energy Agency’s Net
Zero Emissions by 2050 Scenario, Sustainable
Development Scenario and Stated Policies Scenario
Assessment
Incremental impact ranges from £55m to £155m in 2030,
driven by hypothetical carbon taxes on Scope 3 upstream
emissions. Scope 1 and 2 make up less than 2% of Primark’s
total emissions. Primark’s decarbonisation programme is
managed as an integral part of the Primark Cares strategy with
a road map to reduce absolute emissions by 50% by 2030
and mitigate potential exposure to increased carbon taxation.
The plan focuses on Primark’s top five sourcing markets and
support to suppliers with implementing energy-efficient
measures and making a switch to renewable sources.
The plan does not assume the purchase of offsets.

Mitigation
• Primark has a worked-up plan to achieve a significant

reduction in supplier emissions by the end of the decade
and is aligned with the UNFCCC Fashion Industry Charter
goal of net zero emissions across all three Scopes by 2050.

2023 update

Metrics and targets
• A 50% absolute reduction in Scope 1, 2 and 3 emissions by

2030 from a 2018 baseline.

See also the transition plan on pages 66 and 67.

Associated British Foods plc Annual Report 2023

Strategy, metrics and targets
ABF Sugar has categorised existing and new plans and projects
into three timeframes:

1. Short term (present to 2025): Focus on improving efficiency

and reducing operational GHG emissions; investing in energy
efficiency with the aim of reducing energy consumption and
eliminating coal.

2. Medium term (2026 to 2030): Targeting key sites and pairing

them with key technological resources.

3. Long term (beyond 2030): Focusing on employing low-

emission technologies, managing climate-related risks across
the value-chain, and partnering to innovate at factories across
the business.

There are assumptions on low-emission technologies for
hydrocarbons and government regulations surrounding biogas
that underpin these goals. The above short- and medium-term
goals have been identified to achieve ABF Sugar’s 2030
commitments.

These goals have been set in line with the Science Based
Targets Initiative (‘SBTi’). ABF Sugar’s emissions reduction
target will be validated by the SBTi throughout 2023, with the
aim of completion before the end of the calendar year.

In alignment with the best practice, ABF Sugar will need to
develop a strategy to neutralise residual emissions that will not
be abated through emissions reductions initiatives in the future.

The progress of each project is monitored by a defined
governance structure which aligns with the capital and
performance improvement programme quarterly review. This is
owned by the Head of Advocacy who monitors each project
with appropriate metrics. Progress against the transition plan
is also monitored as part of this process.

The selection and implementation process for these projects
are included in ABF Sugar’s financial planning process.
Each selected project undergoes a formal capital
expenditure process.

Some of the long-term projects are reliant on external factors.
For example, development of hydrogen solutions will require
significant government policy change and support. If this
does not eventuate, ABF Sugar will have to reassess its
long-term plans.

CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) CONTINUED

Transition plans

In line with the 2021 TCFD implementation
guidance, this year we are disclosing transition
plans for ABF Sugar and Primark. We have
applied a materiality-based methodology as set
out in the climate risk and opportunity section.
ABF Sugar and Primark are currently our largest
contributors to GHG emissions. Twinings will
be included next year.

Whilst each business prepares and executes
their own transition plans, the Board has
overall accountability for the transition plan.
Transition plans were reviewed by the Board
in June. The Board reviews these plans to
ensure they align and further the Group’s
transition to a low-carbon economy. The Board
will receive an update annually on the status
and execution of the transition plans with the
transition plans being revised every three
years, or sooner if a material event occurs.

ABF Sugar

ABF Sugar is committed to reducing absolute Scope 1 and 2
emissions by 30% from a 2018 baseline by 2030. ABF Sugar is
undergoing a project to measure Scope 3 emissions. Once this
is completed, they will be considered. This transition plan explains
the activities ABF Sugar has planned to ensure that it can meet
this commitment.

Governance
The ABF Sugar chief executive and local managing directors are
responsible for overseeing climate-related risks, opportunities,
overall strategy and transition plans. ABF Sugar holds regular
meetings with the corporate centre which act as a forum for
climate-related content, particularly updates on: climate
commitments, transition plans, GHG reduction roadmaps and
any additional risks or opportunities identified. The frequency
of these meetings has increased in this first year of reporting
on transition plans.

Climate related targets are included in the personal performance
incentive assessment of senior management.

Risk management
The ABF Sugar chief executive and local managing directors are
accountable for effective risk management. The process for
identifying, assessing and managing climate-related risks is
the same as for other risks and sits with the business where
the risk resides. These individuals are also accountable for
identifying, assessing and managing risks to delivering the
transition plan.

Each business develops action plans to respond to relevant
climate-related risks and opportunities. All plans and projects are
subject to a well-established governance process within ABF
Sugar that examines each performance improvement proposal
against internal rate of return criteria and ESG factors. These
plans are then approved by the local managing director and the
chief executive of ABF Sugar.

GHG improvement road map

Impact from today

Moving towards 2030

Beyond 2030

Plan and execute

Efficiency programmes

Co-generation in Africa

Tactical electrification

Feed drying

Green cane harvesting

Solar electricity

Develop projects and
commercial relationships

Hydrogen and carbon capture,
usage and storage (Vivergo)

EU biogas/biomass

Monitor the horizon

Hydrogen, carbon capture, usage
and storage and negative carbon

General electrification

New sugar process technology

Projects supporting carbon reduction to date
Since communicating its 2030 commitments, ABF Sugar has delivered a number of projects to support the transition to a low-carbon
economy. These are a sample of the projects ABF Sugar has delivered, there is a larger number and carbon impact.

Project

Impact

Bury St Edmunds hot gas
generator dryer (February 2019 –
September 2021)*

Newark decalcification (February
2018 – September 2022)*

Modifications made to dryers have allowed them to run on natural gas instead of coal,
leading to a 1% decrease in carbon emissions (9,833 tCO2e).

Calcium was removed from thin juice to prevent evaporator scaling. This enables
evaporators to operate more energy efficiently, leading to a 0.3% decrease in carbon
emissions (3,302 tCO2e).

Newark heater (October 2018 –
September 2022)*

Several new heaters have facilitated improved heat transfer and improved energy
performance, leading to a 0.2% decrease in carbon emissions (1,758 tCO2e).

Wissington gas turbine
performance recovery (July 2017
– September 2019)*

Cantley process safety – heavy fuel
oil elimination (September 2016 –
September 2019)*

Bury cossette quality improvement
(March 2017 – September 2018)*

Gas turbine performance has been improved, leading to a 1% decrease in carbon
emissions (10,407 tCO2e).

A switch from heavy fuel oil to natural gas at this site, leading to a 0.1% decrease in carbon
emissions (1,422 tCO2e).

Slicer machines were replaced with newer models allowing for higher quality cossette and
lower water usage leading in turn to less process water for sugar extraction and lower
evaporation demand. This has led to a 2% decrease in carbon emissions (20,242 tCO2e).

* All emission decreases are against the 2017/18 baseline.

All of the above projects were selected in alignment with ABF Sugar’s short-term focus on energy reduction, energy efficiency and
smaller fuel switching projects. These have included projects that enable the reduction of steam usage in the factory and fuel
reduction in our animal feed dryers. By minimising our factories’ energy demand in the near-term, this will enable ABF Sugar to deploy
technological and larger fuel-switching projects in the medium- to long-term.

There is a strong pipeline of accretive GHG reduction projects. Each ABF Sugar business has its own environmental plan which has
been categorised between short- and long-term.

Short term (present to 2025)
• UK: Projects focus on smaller factory energy efficiency/steam
reduction, coal elimination and reduction of energy use for
pulp drying.

Medium and long term (2026 to 2050)
• UK: Projects focus on technological advancements for factory
energy efficiency/steam reduction and alternate pulp drying
technologies.

• Africa: Projects focus on energy efficiency and coal
elimination/reduction in South Africa and green cane
harvesting.

• Spain: Projects focus on factory energy efficiency and
automation as well as a specific project in Guadalete.

• Africa: Projects are aligned to those in the short term, but the

technology is yet to be developed.

• Spain: Projects focus on alternative fuel projects, but current

regulations present a challenge at this point in time.

ABF Sugar has reported an overall 24% reduction in absolute
Scope 1 and 2 emissions for 2023 against 2018. Please refer to
page 92 of the 2023 Responsibility Report for further detail. ABF
Sugar is on track to achieve its carbon reduction goal of 30%
absolute reduction by 2030.

Associated British Foods plc Annual Report 2023

CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) CONTINUED

Primark
Governance
The overall responsibility for the Primark transition plan lies with
Primark’s Chief Financial Officer. The Director of Primark Cares
and Head of Environmental Sustainability work with the Chief
Financial Officer to implement the plan.

Primark has established dedicated forums for the governance of
its decarbonisation strategy (transition plan), which fall under the
broader Primark Cares governance structure. In particular, these
forums engage key stakeholders across the business, including
board members, and cover related climate commitments,
GHG emissions reduction roadmaps and any relevant risks
or opportunities identified. For additional information, please
refer to the Primark Sustainability and Ethics report,
‘Governance’ section.

Additional ad-hoc meetings with the corporate centre have been
held in this first year of reporting on transition plans to ensure
alignment across the Group.

Climate related targets are included in the personal performance
incentive assessment of senior management.

Risk management
The Primark Chief Executive and Chief Financial Officer are
accountable for effective management of physical and transition
climate-related risks.

Last year the impact of climate risks and opportunities on
Primark was assessed by the Group using scenario analysis.
Primark has incorporated this analysis on transition risks into its
own risk management process to ensure that no risks are
omitted. Risks are identified and assessed through various
means. Workshops with internal stakeholders are held focusing
on the identification, assessment and management of climate
and nature-related risks.

Primark’s baseline emissions (2018)

Strategy, metrics and targets
In 2021, Primark set an overarching objective to halve absolute
carbon emissions across its value chain by 2030, from a base
year of 2018. In defining a roadmap to realise this ambition,
Primark has focussed on key priority areas across all emission
scopes for the short term (up to 2025) and medium term
(up to 2030).

Short-term goals focus on maintaining current certifications,
developing strategies for heat decarbonisation and energy
efficiency. Medium-term goals focus on product-specific
initiatives. Long-term goals are yet to be defined. Development
of technology and innovations gaps in the market are constraints
in defining long-term goals. We will evolve these goals as these
needs are met and as the business evolves.

These goals have been set in line with the Science Based
Targets Initiative (‘SBTi’). Primark’s emissions reduction target
has been validated by the SBTi in 2023.

At present, Primark has not included residual emissions
neutralisation (“carbon offsetting”) in its transition planning.
However, in alignment with industry standards, for its long-term
ambition Primark will need to develop an approach to
neutralising the residual emissions that will not be abated
through its emissions reduction strategy.

Key priority areas for action were identified on the basis of the
influence and materiality of emissions categories, assessed
from the base year of 2018 (see the diagram below). These are
Scope 1 and 2 emissions, where the business has stronger
influence, and the most significant Scope 3 categories in terms
of absolute emissions.

End-of-life treatment of sold products

Use of sold products

Business travel

Waste generated in operations

Upstream transportation

Fuel and energy-related activities

Capital goods

Purchased goods and services

Scope 1 and 2: 3.5%

Scope 3: 96.5%

0.6%

12.1%

0.2%

0.1%

8.1%

0.6%

2.0%

76.3%

Scope 1 and 2 emissions
Short term (present – 2025)
• Maintain ISO50001 certification for all stores, offices, and

distribution centres.

• Develop appropriate regional pathways for heat

decarbonisation in Primark properties.

Medium term (2026 – 2030)
• Reduce absolute Scope 1 and 2 GHG emissions by 50% by

2030, from a 2018/2019 baseline year.

Scope 3 emissions
Short term (present – 2025)
• Launch an energy efficiency programme, engaging and
supporting suppliers’ manufacturing facilities on energy
demand reduction.

• Launch a renewable energy programme, engaging and

supporting suppliers’ manufacturing facilities on sourcing low
carbon and renewable energy.

• Optimise inbound transport modes to balance emissions,

cost, and time.

• Strengthen the durability of Primark’s clothes by 2025.

Medium term (2026 – 2030)
• Develop all clothes to be recyclable by design by 2027.
• Develop all clothes from recycled or sustainably sourced

materials by 2030.

• Further regenerative agricultural practices will be used in the

Primark Sustainable Cotton Programme.

• Eliminate single-use plastics and all non-clothing

waste by 2027.

The selection and implementation process for these projects are
included in Primark’s financial planning process. Each selected
project undergoes a formal capital expenditure process where
capital spend is involved.

Projects supporting carbon reduction to date
Since communicating its 2030 commitments in 2021, Primark has started several key projects focussed on the priority areas
identified in the road map and using a pilot-learning-scale approach. Once at scale, these projects are expected to drive the bulk
of Primark’s decarbonisation as they tackle the most material value chain emissions categories.

Project

Impact

Renewable energy
procurement
(Late 2022
to present)

Own operations: Primark has signed renewable power contracts in seven countries, covering the UK and continental
Europe. At the time of publishing this report, approximately 70% of stores were covered by a renewable or low-carbon
electricity contract. However, as these contracts have come into operation at different times over the course of the
year, their full benefit isn’t seen in the Scope 2 emissions reporting. Continuing its progress in the renewable power
market is a key priority for Primark in the next year, alongside addressing Scope 1 emissions from onsite heating.

Supply chain: Primark has partnered with Ren Energy to help suppliers source and switch to energy from
renewable sources.

Influencing customers on how to use Primark’s products is important to support the decarbonisation of its downstream
value chain. Key behavioural drivers to emissions reductions include reducing the number of washes, avoiding tumble
drying and keeping clothes in active use for longer. Primark’s plan is to collaborate with customers and industry
partners to advance our understanding and extend our sphere of influence. Over the last year, Primark has scaled
its repair workshops further in the UK and Ireland, and introduced them in the Netherlands, Germany and France.
To date, Primark has held 120 workshop sessions, offering more than 1,700 free places to customers and colleagues.
To further maximise the reach of the repair workshops, Primark has created an online customer hub featuring
easy-to-follow repair videos.

Own operations: Primark is scaling the roll-out of an energy bureau to enable remote management of energy and
greater visibility of energy use to manage demand more effectively. At year end, this covered more than 179 locations
across the UK at year end. It allows the business to maintain sustainable store condition in an energy efficient manner.

Primark also launched a significant initiative to fit all stores with energy-efficient light fittings. Approximately 70%
of Primark stores across eight markets are now powered by renewable or low-carbon electricity and 141 stores have
switched to energy-efficient LED lighting.

Supply chain: Building on the learning of small-scale energy and water efficiency pilot projects conducted over years
in China using the Apparel Impact Institutes (Aii) Clean by Design (CBD), Primark has now scaled its energy efficiency
programmes to engage 57 factories in Bangladesh, China and Cambodia. Suppliers involved learn about more energy
efficient practices and receive support on data collected and analyse to create their own emissions reduction action
plan, while improving manufacturing processes. These programmes create improvements in factory operations by
delivering training, guidance and workshops.

Primark has set a target to remove all single-use plastic by 2027 and estimates it has already removed and/or avoided
more than 1 billion units of single-use plastic from its business in 2019.

Customer
education
(Late 2021
to present)

Energy efficiency
improvements
(early 2021
to present)

Packaging Centre
of Excellence
(2019 to present)

This year, there has been an overall increase of 11% in carbon
emissions across the value chain against Primark’s baseline year
2018/19. This is the result of an increased volume of material
used to produce the products sold over that period. In the short
term, this trend is likely to continue, but there will be a decline

as Primark increases the use of more sustainably sourced
materials across its product range and once the energy
programmes being rolled out across the supply chain begin
to deliver at scale.

Associated British Foods plc Annual Report 2023

PRINCIPAL RISKS AND UNCERTAINTIES

Managing our risks

Our approach to risk management
The delivery of our strategic objectives and the sustainable
growth and long-term shareholder value of our business is
dependent on effective risk management. We regularly face
business uncertainties and it is through a structured approach to
risk management that we are able to mitigate and manage
these risks and embrace opportunities when they arise.
These disciplines remain effective as the global environment
continues to be uncertain in the face of increasingly complex
global economic, geopolitical and environmental challenges.
As a result of these, together with ongoing inflationary pressures,
cost-of-living remains a real issue for consumers across a
number of the markets in which we operate.

The diversified nature of our operations, geographical reach,
assets and currencies are important factors in mitigating the
risk of a material threat to the Group’s sustainable growth
and long-term shareholder value. However, as with any
business, risks and uncertainties are inherent in our business
activities. These risks may have a financial, operational and
reputational impact.

The Board is accountable for effective risk management,
for agreeing the principal, including emerging risks facing the
Group and ensuring these are successfully managed. The Board
undertakes a robust annual assessment of the principal risks
that would threaten the business model, future performance,
solvency or liquidity. The Board also monitors the Group’s
exposure to risks as part of the business performance
reviews at each Board meeting, providing the Board with
an opportunity to discuss risk mitigation actions with divisional
senior management.

Our decentralised business model empowers the management
of our businesses to identify, evaluate and manage the risks
they face, on a timely basis, to ensure each business’s
compliance with relevant legislation, our business principles
and Group policies.

Our businesses perform risk assessments which consider
materiality, risk controls and specific local risks that are relevant
to the markets in which they operate. The collated risks from
each business are shared with the respective divisional
chief executives who present their divisional risks to the
Group Executive.

Emerging risks are identified and considered at both a Group
and business unit level, with key management being close to
their markets and geographies. These risks are identified as
part of the overall risk management process through a variety
of horizon-scanning methods including: geopolitical insights;
ongoing assessments of competitor activity and market factors;
workshops and management meetings focused on risk
identification; analysis of existing risks using industry knowledge
and experience to understand how these risks may affect us
in the future; and representation and participation in key
industry associations.

The Group’s Director of Financial Control receives the risk
assessments on an annual basis and, with the Finance Director,
reviews and challenges them with the divisional chief
executives on an individual basis.

These discussions are wide-ranging and consider operational,
environmental and other external risks. These risks and their
impact on business performance are reported during the
year and are considered as part of the monthly management
review process.

Group functional heads including Legal, Treasury, Tax, IT,
Pensions, HR, Procurement and Insurance also provide input to
this process, sharing with the Director of Financial Control their
view of key risks and what activities are in place or planned to
mitigate them. A combination of these perspectives together
with the business risk assessments creates a consolidated view
of the Group’s risk profile. A summary of these risk assessments
is then shared and discussed with the Finance Director and
Chief Executive at least annually.

The Director of Financial Control holds meetings with each
of the non-executive directors seeking their feedback on the
reviews performed and discussing the key risks, which include
emerging risks, and mitigating activities identified through the
risk assessment exercise. Once all non-executive directors have
been consulted, a Board report is prepared summarising the
full process and providing an assessment of the status of risk
management across the Group. The key risks, mitigating
controls and relevant policies are summarised and the Board
confirms the Group’s principal risks.

These are the risks which could prevent ABF from delivering
our strategic objectives. This report also details when formal
updates relating to the key risks will be provided to the Board
throughout the year.

Key areas of focus this year
Effective risk management processes and
internal controls
We continued to seek improvements in our risk management
processes to ensure the quality and integrity of information
and the ability to respond swiftly to direct risks. During the year,
the Audit Committee on behalf of the Board conducted reviews
on the effectiveness of the Group’s risk management processes
and internal controls in accordance with the 2018 UK Corporate
Governance Code. Our approach to risk management and
systems of internal control is in line with the recommendations
in the Financial Reporting Council’s (FRC) revised guidance
‘Risk management, internal control and related financial and
business reporting’.

The Board is satisfied that internal controls were properly
maintained and that principal and emerging risks are being
appropriately identified and managed.

Geopolitical uncertainty, Russia’s ongoing war
in Ukraine and the potential for escalation of the conflict
in Gaza
The ongoing Russian war in Ukraine continues to drive economic
uncertainty in almost all of the markets in which we operate.

Whilst during the year, we have seen a reduction in energy
prices and sea freight costs, which are significant costs for ABF,
the ongoing situation remains volatile and could result in supply
chain disruption.

We remain cognisant of the significant impacts that would
result from an escalation in the war in Ukraine, particularly
if western governments’ support for Ukraine were to waver.

Russia’s suspension of the Ukraine grain export agreement
in July 2023 could result in tensions and further inflation in the
medium-term. Our management teams continue to work closely
with suppliers to secure raw materials, maintain production and
provide a reliable supply to our customers.

Escalation of recent events in Gaza could have further
inflationary pressures, particularly on energy. In addition, there
could potentially be wider implications for global logistics and
supply chains.

Cost of living
Recent global financial data shows that several European
economies in which we operate tipped into recession in
recent months and a prolonged period of stagnation is a real
possibility. This would increase consumer debt problems,
resulting in increasing costs of living and putting additional
strain on household budgets.

Whilst consumer spending has proven to be more resilient than
anticipated at the start of the financial year, household budgets
continue to face real pressures as a result of high inflation and
interest rates and general economic uncertainty. This means that
some consumers are having to make challenging and difficult
choices in respect of what they spend and where they spend it.

We continue to offer safe, nutritious and affordable food and
affordable, quality clothes to our customers. Primark’s cost
leadership position continues to be attractive to the customer.
In the food businesses, there is an increasing demand for
private label products.

All of our businesses have developed strategies considering
the potential changes in both end consumer and our customer
behaviours and demands, the implications for the business
and where investment or changes to business models may
be appropriate.

The medium-term impact on our businesses will depend on
the extent of government intervention and the duration of any
economic downturns.

Regulatory changes
Our businesses continue to face a large number of regulatory
changes with ever increasing complexity and variations in
requirements across the markets in which we operate.
For example, the EU’s Corporate Sustainability Reporting
Directive (CSRD) requiring EU-incorporated companies and
certain other companies with operations in the EU to publicly
disclose and report on environmental, social affairs
and governance issues, the new German Supply Chain Due
Diligence Act (LkSG), and changes to data privacy laws.

The extent of change will have an impact on the capacity of
management at a time when they are dealing with the ongoing
challenges resulting from economic uncertainty, alongside the
day-to-day growth of our businesses.

Environmental, Social and Governance
ABF has an ambition to continue to make food and clothes
available and affordable and to achieve net zero by 2050 or sooner.

Environmental factors, including the potential implications of
climate change within our businesses and their supply chains,
are considered as part of the risk management framework and
they also frame opportunities for our businesses. Our culture
and values, and particularly our devolved decision-making
model, empowers our teams to make the right judgements
in assessing and mitigating risks related to climate change.

Where relevant, third-party experts have been engaged to
perform scenario analyses and in-depth risk assessments which
form the basis of strategies to mitigate the material risks.

Our local management teams have demonstrated their ability
to respond quickly and make decisions that make sense to
their businesses when extreme climate-related events occur.
For example, in response to adverse weather conditions which
resulted in significantly lower beet yields from the 2022/23 crop,
British Sugar moved swiftly to secure alternative sources of
supply. Similarly, our Africa sugar business, Illovo, has been
significantly impacted by floods in Mozambique and Malawi,
and is investing in a variety of irrigation and drainage projects
to reduce the impact climate has on sugar yields.

Leaders across ABF are also empowered to implement
responsible business practices to further reduce our negative
impact on the environment, such as the sustainable use of
natural resources, sourcing responsible packaging and our use
of plastic, as well as reducing carbon emissions. Each of our
businesses has prioritised resources to those environmental
factors which are of greatest relevance and will make the
greatest long-term difference.

The Board has overall responsibility for overseeing ESG factors
across ABF. On a regular basis, the Board conducts a review of
each of our business segments, including a review of significant
ESG issues.

Divisional chief executives have responsibility and are
accountable for their ESG programmes, as well as for risks,
opportunities and impacts in their divisions. They can draw on
support from the Corporate Responsibility Hub and the Director
of Legal Services and Company Secretary, the CPPO as well as
specialist legal advice from the team led by the Associate
General Counsel for ESG. The leaders of our businesses are
also challenged by the centre through detailed reviews of the
Group’s environmental performance, health and safety
performance, and its diversity, equity and inclusion and
workforce engagement programmes.

Our principal risks and uncertainties
The directors have carried out an assessment of the principal
risks facing ABF, including emerging risks, that would threaten
our business model, future performance, solvency or liquidity.

Outlined below are the Group’s principal risks and uncertainties
and the key mitigating activities in place to address them. These
are the principal risks of the Group as a whole and are not in any
order of priority.

ABF is exposed to a variety of other risks related to a range of
issues such as human resources and the attraction, development
and retention of people, community relations, the regulatory
environment and competition. These are managed as part of the
risk process and a number of these are referred to in our 2023
Responsibility Report. Here, we report the principal risks which
we believe are likely to have the greatest current or near-term
impact on our strategic and operational plans and reputation.

They are grouped into external risks, which may occur in the
markets or environment in which we operate, and operational
risks, which are related to internal activity linked to our own
operations and internal controls.

The ‘Changes since 2022’ describe our experience and activity
over the last year.

Associated British Foods plc Annual Report 2023

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

External risks

Operating in global markets

Context and potential impact
Associated British Foods operates in 55 countries with sales
and supply chains in many more. For example, Primark has a
complex supply chain, which is dependent on supplies from
countries including China, Bangladesh, India and Turkey. We are
therefore exposed to global market forces; fluctuations in
national economies; societal unrest and geopolitical uncertainty;
a range of consumer trends; evolving legislation; and changes
made by our competitors.

The ongoing Russian war in Ukraine continues to drive
economic uncertainty in almost all of the markets in which
we operate.

Failure to recognise and respond to any of these factors could
directly impact the profitability of our operations.

Entering new markets is a risk to any business.

Mitigation
Our approach to risk management incorporates potential
short-term market volatility and evaluates longer-term socio-
economic and political scenarios. The Group’s financial control
framework and Board-adopted tax and treasury policies require
all businesses to comply fully with relevant local laws.

Provision is made for known issues based on management’s
interpretation of country-specific tax law, EU cases and
investigations on tax rulings and their likely outcomes.

By their nature socio-political events are largely unpredictable.
Nonetheless our businesses have detailed contingency plans
which include site-level emergency responses and improved
security for employees.

In the event of a major geo-political event that disrupts
Primark’s supply chain, in the short-term the risk would be
partially mitigated as we have several weeks of stock in
warehouses and relatively long lead times, whilst alternative
sourcing strategies are implemented.

We engage with governments, local regulators and community
organisations to contribute to, and anticipate, important changes

Fluctuations in commodity and energy prices

in public policy. We conduct rigorous checks when entering
or commencing business activities in new markets.

Our management teams continue to both monitor where
products and raw materials are sourced from and work closely
with suppliers to secure raw materials, maintain production and
provide a reliable supply to our customers.

Changes since 2022
Whilst during the second half of the year, we have seen
a reduction in energy prices and sea freight costs, which are
significant costs for ABF, the ongoing war in Ukraine means
that there is still a level of volatility in energy prices and a risk
of further supply chain disruption. Russia’s suspension of the
Ukraine grain export agreement in July 2023 could result in
further inflation in the medium term. An escalation of the recent
hostilities in Gaza and the potential wider implications for the
global economy are being closely monitored.

Recent global financial data shows that several European
economies in which we operate tipped into recession in recent
months and a prolonged period of stagnation is a real possibility.
This would increase consumers’ debt problems and put
additional strain on household budgets.

Geopolitical tensions continue to arise in a number of countries
in which we operate and this is having an impact on sourcing
and supplier management. For example, Primark are working
through a responsible exit plan in consultation with partners
and stakeholders in Myanmar and globally, in line with the
UN Guiding Principles on Business and Human Rights and the
ACT (Action, Collaboration and Transformation Responsible
Exit Guidelines). Since the announcement to stop sourcing from
Myanmar, Primark has doubled the size of its ethical team in
its remaining sourcing locations enabling an increased number
of supplier factory audits.

High inflation continues to be a challenge for our yeast and
bakery ingredients businesses based in Argentina and Turkey.

The impact of the COVID-19 pandemic on our businesses has
been negligible in the past year, now that restrictions have
largely been removed, particularly in China.

Context and potential impact
Changes in commodity and energy prices can have a material
impact on the Group’s operating results, asset values
and cash flows.

Changes since 2022
A number of our food and agriculture businesses have
experienced increased input costs driven by the appreciation
of energy and agricultural commodity prices in the financial year.

Mitigation
The Group purchases a wide range of commodities in the
ordinary course of business. We constantly monitor the markets
in which we operate and manage certain exposures with
exchange traded contracts and hedging instruments.

The commercial implications of commodity price movements
are continuously assessed and, where appropriate, are reflected
in the pricing of our products.

Energy prices, particularly in the first half of the year in UK and
Europe, increased materially as a result of significant market
uncertainty and supply concerns. Whilst wholesale energy
prices have reduced from the peak, the market continues
to experience levels of volatility. Businesses continue
to manage commodity price risk under their existing risk
management frameworks and, where appropriate, reflect
this in pricing of products.

Increased

Unchanged

Decreased

Movement in exchange rates

Context and potential impact
Associated British Foods is a multinational Group with
operations and transactions in many currencies.

Changes in exchange rates give rise to transactional exposures
within the businesses and to translation exposures when the
assets, liabilities and results of overseas entities are translated
into sterling upon consolidation.

Mitigation
Our businesses constantly review their currency exposures and
their hedging instruments and, where necessary, ensure
appropriate actions are taken to manage the impact of currency
movements.

Board-approved policies require businesses to hedge all
transactional currency exposures and committed long-term
supply or purchase contracts which are denominated in a
foreign currency, using foreign exchange forward contracts.
Cash balances and borrowings are largely maintained in the
functional currency of the local operations.

Health and nutrition

Context and potential impact
Failure to adapt to changing consumer health choices or to
address nutrition concerns in the formulation of our products,
related to consumer preferences or government public health
policies, could result in a loss of consumer base and impact
business performance. We have provided a detailed breakdown
of our UK Grocery product portfolio in the context of nutrition
within the ABF Responsibility Report.

Mitigation
All of our food businesses are individually responsible for
managing their product portfolio. Consumer preferences,
regulation and market trends are monitored continually.
Recipes are regularly reviewed and, where technically feasible,
are considered for reformulation to improve their overall
nutritional value.

All of our grocery products are labelled with nutritional
information, including in many cases front of pack nutrition
labelling on our branded grocery products.

We actively consider consumer health in the context of brand
development and merger and acquisition activity.

Changes since 2022
On average, sterling has weakened against most of our trading
currencies this year, resulting in an operating profit gain on
translation of £17m.

Primark covers its currency exposure on purchases of
merchandise denominated in foreign currencies at the time of
placing orders, with an average tenor of Primark’s hedging
activity of between three and four months. There was a
negative transactional effect from the appreciation of the US
dollar exchange rate against both sterling and euro on Primark’s
largely dollar-denominated purchases for the year.

There has been a high level of volatility in sterling exchange rates
against our major trading currencies during the financial year.
This has been driven by the impacts and varying global responses
to high inflation and increasing interest rates impacting
economic growth output.

We invest in research with experts to improve our
understanding of the science and societal trends. Both ABF UK
Grocery and British Sugar support the charitable work of the
British Nutrition Foundation to promote understanding of
nutrition science in the context of healthy and sustainable diets.

Changes since 2022
Our Sugar and Grocery businesses have continued to focus on
nutrition and health during the year to help consumers improve
their diet.

Notable examples include AB World Foods, who have continued
to roll out recipes with a reduction in fat, sugar and salt, and
Jordans Dorset Ryvita who reduced the salt level in the Ryvita
Thins range.

In addition to reformulating existing products, our businesses
have launched a range of products with nutritional benefits
including Dorset Cereals range of high in fibre, non-HFSS (high
in fat, salt or sugar) porridges, Jordan’s non-HFSS No Added
Sugar Granola and Westmill’s Elephant Rice Basmati Boost, the
UK’s first fortified basmati with thiamin and iron.

Associated British Foods plc Annual Report 2023

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

Operational risks

Workplace health and safety

Context and potential impact
Our operations have the potential for loss of life or workplace
injuries to employees and contractors, both on-site and off-site,
if the hazards and associated risks are not fully controlled.

Mitigation
Safety continues to be one of our main priorities. The chief
executives of each business, who lead by example, are
accountable for the safety performance of their business.

Our Health, Safety and Wellbeing Policy makes it very clear that
we require the businesses to make improvements to safety
year on year, and to make sure that we understand the hazards
and risks of our activities and have in place appropriate controls.

We have an external independent safety audit programme
to verify implementation of safety management and support
a culture of continuous improvement.

Best practice safety guidance is shared across the businesses,
coordinated from the corporate centre, to supplement the
delivery of their own programmes.

Product safety and quality

Context and potential impact
As a leading food manufacturer and retailer, it is vital that we
manage the safety and quality of our products throughout the
supply chain.

Mitigation
Product safety is put before economic considerations.

We operate strict food safety and traceability policies within an
organisational culture of hygiene and product safety to ensure
consistently high standards in our operations and in the sourcing
and handling of raw materials and garments.

Food quality and safety audits are conducted across all our
manufacturing sites, by independent third parties and
customers, and a due diligence programme is in place to ensure
the safety of our retail products.

Our sites comply with international food safety and quality
management standards and our businesses conduct regular
mock product incident exercises.

This guidance addresses our critical risks of moving vehicle
interactions, falls of people and materials from height,
machinery safety, confined spaces, electrical safety and
management of contractors, as well as addressing the more
common, but less severe, injuries from manual handling and
from slips and trips.

Changes since 2022
The safety performance of the Group is reported in the 2023
Responsibility Report at www.abf.co.uk/responsibility.

We are deeply saddened to report that in the year there were
three work-related fatalities: two to employees, both on-site,
and one to a contractor off-site. They occurred in Australia,
Spain and Africa. Our businesses have conducted thorough
root cause analyses, have implemented safety changes and
communicated the findings to the other businesses.

This year just under £42m was invested in reducing the safety
and health risks across a wide range of operational hazards.

All businesses set clear expectations of suppliers, with relevant
third-party certification or other assessment a condition of
doing business. Product testing and trials are undertaken as
required and where bespoke raw materials are purchased, the
businesses will work closely with the supplier to ensure quality
parameters are suitably specified and understood.

All Primark’s products are tested to, and must meet, stringent
product safety specifications in line with and, in some instances
above, legal requirements.

Primark continues to drive and improve product performance
for quality and compliance purposes through its product
approval processes, in-country inspection centres and
management of its supply base.

Changes since 2022
We had no major product recalls during the year.
There have been a very small number of product recalls that
have been managed and monitored as part of our normal
course of business.

Businesses have continued to define and refine KPIs
in this area.

Breaches of IT and information security

Context and potential impact
To meet employee, customer, consumer and supplier needs,
our IT infrastructure needs to be flexible, reliable and secure to
allow us to interact through technology.

Our delivery of efficient and effective operations is enhanced
using relevant technologies and the sharing of information.
We are therefore subject to potential cyber-threats such as
social engineering attacks, computer viruses and the loss
or theft of data.

There is the potential for disruption to operations from data
centre failures, IT malfunctions or external cyber-attacks.

Mitigation
There is an ongoing programme of investment in both
technology and people to enhance the longevity of our IT
environments for both on-site and remote working. This ongoing
investment includes the control and protection of the IT and
manufacturing environments being provided.

To support our employees in our campaign against phishing and
social engineering attacks we have invested in cyber security
solutions that prevent the majority of attacks from reaching our
employees. We continue to educate through user awareness
training programmes to help further reduce the likelihood of our
employees falling victim to such attacks. We measure and
report on these campaigns and training programmes regularly.

We have established Group IT security policies, technologies
and processes, all of which are subject to regular internal audit.

Our supply chain and ethical business practices

Access to sensitive data is restricted and closely monitored.

Robust disaster recovery plans are in place for business-critical
applications and are adequately tested.

Cyber incident response testing is done at all levels of the
business to ensure we have adequate and effective processes
to respond to a cyber incident.

Technical security controls are in place over key IT platforms
with the Chief Information Security Officer tasked with
identifying and responding to potential security risks.

Changes since 2022
As cybersecurity risks evolve, we continue to invest in our
security capabilities at a Group level and across the businesses
allowing us to more effectively detect, respond to and recover
from disruptive cyber-threats.

We have improved and developed the existing disciplines to
ensure that user devices and applications are regularly patched
and upgraded to reflect emerging IT security threats.

During the year we have reviewed, tested and refined our cyber
security ransomware response plan at the Group level.

We have developed an operational technology security strategy
and policy to further protect our manufacturing and supply
chain functions.

Due to the fast-paced growth of AI and its potential uses in our
organisation, we created an AI policy and guidelines to support
the adoption of this technology in a safe and secure manner.

Context and potential impact
We have a global diverse business with complex supply chains
most of which depend on agriculture and manufacturing.

Our UK Grocery businesses monitor their supply chains and
engage suppliers through the use of the Sedex (Supplier Ethical
Data Exchange) online database.

The most critical risks in our supply chain are:

• transparency of the source of raw materials and
manufacturing locations in our supply chains;

• the vulnerability of workers; and
• ensuring we have the leverage and consistency in our
approach to due diligence to prevent, avoid or mitigate
negative social and environmental impacts that may arise.

Mitigation
ABF’s Supplier Code of Conduct, which all businesses are
required to implement, is based on the International Labour
Organization’s (ILO) standards as well as the Ethical Trading
Initiative’s Base Code. We have developed online training
modules to facilitate both internal awareness across the Group
and to support knowledge of our approach and expectations
amongst our suppliers.

Primark is a member of the Ethical Trading Initiative and is also
recognised for its Ethical Trade and Environmental Sustainability
programme. Its approach to due diligence is explained in its
Supply Chain Human Rights Policy.

Many of our businesses monitor their risks through social audits
carried out by internal teams or third parties. For example,
Primark’s Ethical Trade auditing and monitoring programme
is one of the most important resources for identifying risks.

Our businesses work to understand the issues specific to the
workers within their respective supply chains and where
appropriate the communities in which they reside. For example,
Twinings uses a comprehensive Community Needs
Assessment Framework, developed in consultation with expert
external stakeholders. In addition to labour rights, this
framework covers housing, water and sanitation, health and
nutrition, land, gender and children’s rights, farming practices
and more.

Some of our businesses – including Primark, Twinings and ABF
Sugar – publish global sourcing maps and provide information
about their processes, progress and challenges through
corporate reports, websites, stakeholder engagement activities
and submissions to benchmarks. This helps our understanding
of human rights risks and, where necessary, supports
collaboration both locally and across our sectors.

Increased

Unchanged

Decreased

Associated British Foods plc Annual Report 2023

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

Our supply chain and ethical business practices continued

The impact of climate change and natural disasters on our operations

Context and potential impact
Our businesses and their supply chains rely on a secure supply
of finite natural resources, some of which are vulnerable to
external factors such as natural disasters and climate change.
Climate change continues to represent a material risk
throughout our supply chains and poses challenges to some of
our businesses. Many of our businesses rely on agricultural
crops with complex supply chains. Long-term climate change
will impact agricultural crops and workers while extreme
weather events have the potential to cause disruption to supply
chains and operations.

For example, extreme adverse weather conditions in the UK
resulted in significantly lower beet yields from the 2022/23 crop;
British Sugar therefore moved swiftly to secure alternative
sources of supply.

Also, our Mozambique operation was seriously impacted by
severe flooding which resulted in the destruction of over 98%
of the sugar cane crop.

In our assessment of climate-related business risks we
recognise that the cumulative impacts of changes in weather
and water availability could affect our operations at a Group
level. However, the diversified and devolved nature of the
Group means that mitigation or adaptation strategies are
considered and implemented by the individual businesses.

Some of our businesses have continued to work with third-party
experts to understand climate-related risks and opportunities.
The most significant and material risks are incorporated into
the business risk registers.

Mitigation
Determining the potential medium- to long-term impact
of climate risks and opportunities is challenging as the impacts
of climate change and governments’ responses to its threats
are uncertain.

Our climate-related scenario analysis has identified business-
specific actions which are being overseen by the relevant
businesses. Further information on our material climate-related
risk mitigation activities is provided in the TCFD report on pages
56 to 67.

Changes since 2022
Last year we met the requirements of Listing Rule 9.8.6R
with TCFD disclosures in line with the 2017 TCFD framework.
This year this has been expanded to include the 2021
implementation guidance by including the transition plans for
ABF Sugar and Primark as they contribute most significantly
to adjusted operating profit and total reported GHG emissions.

Over the past year, our businesses have continued to
implement specific projects which aim to reduce the impact of
climate change and natural disasters on our businesses including:

• Illovo Sugar is implementing a variety of irrigation and
drainage projects across its African businesses; and

• Primark is mobilising a specialist engineering team to support
the development of a pilot approach in Bangladesh to support
supplier factories to assess and mitigate flood risk.

For details on the scenario analysis, transition plans, and our risk
management and materiality assessment approach, refer to the
2023 TCFD report and 2023 Responsibility Report.

In line with our Group Code of Conduct, our businesses prohibit
all forms of modern slavery, including forced labour and human
trafficking. For more information, see our Group Modern Slavery
Statement 2023.

Changes since 2022
Our Modern Slavery Statement 2023, together with the
businesses’ due diligence activities across our supply chains,
are reported on our website and in the 2023 Responsibility
Report at www.abf.co.uk/responsibility.

In November 2022, the EU formally adopted the Corporate
Sustainability Reporting Directive (CSRD) requiring companies
operating in the EU to publicly disclose and report on
environmental, social affairs and governance issues. Through
the established ESG Steering Committee, the Group has a
number of activities to prepare for the inception of the CSRD
reporting requirements, including the European Sustainability
Reporting Standards (ESRSs) and the EU Taxonomy.

As result of the Directive certain EU companies within the
Group will be required to publish mandatory sustainability
information from 2025/26 onwards. From 2028/29 reporting
under the CSRD will also need to cover the rest of the Group.
The exact format and scope of reporting will depend upon
transposition of EU law into the national laws of EU member
states (which is due by July 2024) and on any equivalence
arrangements put in place with the UK

Our UK Grocery division has established a central capability
for monitoring and reporting upon supplier Self-Assessment
Questionnaire (SAQ) completion, as well as the status of
non-conformances identified within supplier audit reports.
In addition, we have appointed an India-based corporate
responsibility specialist to support Westmill Foods and AB
World Foods to engage and support third-party businesses
in their supply chains.

Our use of natural resources and managing our environmental impact

Context and potential impact
We are reliant on a range of natural resources to deliver our
products, and new processes and technologies have enabled us
to become highly efficient at maximising the value that we can
derive from them. Overall, our material environmental impacts
come from: fuel and energy use; agricultural operations giving
rise to GHG emissions; use of land related to agricultural
operations; the abstraction and management of water and
wastewater especially in water-stressed areas; and waste
which is not yet eliminated at source, reused or recycled,
including single-use plastics.

In addition to GHG emissions, our operations generate a range
of other environmental impacts related to wastewater and
waste which, if not controlled, could pose a risk to the
environment and local communities, potentially creating risk to
our licence to operate and resulting in additional costs.

Across countries where ABF businesses operate, there is
increased regulatory scrutiny and ESG reporting requirements
that we must meet. Remaining compliant with these
requirements and being able to report accurate and robust data
on our environmental impact, is a priority for the Group and to
our businesses.

Mitigation
We recognise our role in transitioning to a low-carbon economy.
We are targeting reductions in our GHG emissions through
carbon reduction plans, energy efficiency and growing our use
of renewable energy.

We continuously seek ways to improve the efficiency of our
operations, using technologies and techniques to reduce our
use of natural resources and minimise waste and the
subsequent impact on the environment. We are also increasing
our focus on capturing this data and being able to report in line
with regulatory requirements.

We support the adoption of integrated farm management
techniques and the responsible use of precision science and
technology to maximise efficiency, reduce GHG emissions and
limit biodiversity losses while maintaining commercially
productive agricultural outputs.

Water is an essential input for clothing and food production.
We remain aware that it is a valuable resource and our
businesses aim to reduce the amount of water they abstract, to
reuse process water as much as possible and to return treated
wastewater to nature, having ensured it meets or exceeds local
and national water standards, and protect aquatic ecosystems.

Changes since 2022
The environmental performance of the Group is reported
in the 2023 Responsibility Report and in our CDP
submissions which can be found on the ABF website at
www.abf.co.uk/responsibility.

Increased

Unchanged

Decreased

Associated British Foods plc Annual Report 2023

VIABILITY STATEMENT AND GOING CONCERN

Viability statement and going concern

The Group has a track record of delivering strong cash flows,
with in excess of £1bn of operating cash being generated in
each of the last ten years. This has been more than sufficient to
meet not only our ongoing financing obligations but also to fund
the Group’s expansionary capital investment.

Even in a worst-case scenario, with risks modelled to
materialise simultaneously and for a sustained period, the
possibility of the Group having insufficient resources to meet
its financial obligations is considered remote. Based on this
assessment, the directors confirm that they have a reasonable
expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the
three-year period to 12 September 2026.

Going concern
After making enquiries, the directors have a reasonable
expectation that the Group has adequate resources to continue
in operational existence for the foreseeable future. For this
reason, they continue to adopt the going concern basis in
preparing the consolidated financial statements.

The forecast for the going concern assessment period to
1 March 2025 has been updated for the business’s latest
trading in October and is the best estimate of cashflow in the
period. Having reviewed this forecast and having applied a
downside sensitivity analysis and performed a reverse stress
test, the directors consider it a remote possibility that the
financial headroom could be exhausted.

The Board’s treasury policies are in place to maintain a strong
capital base and manage the Group’s balance sheet and liquidity
to ensure long-term financial stability. These policies are the
basis for investor, creditor and market confidence and enable
the successful development of the business. The financial
leverage policy requires that, in the ordinary course of business,
the Board prefers to see the Group’s ratio of net debt including
lease liabilities to adjusted EBITDA to be well under 1.5x. At the
end of this financial year, the financial leverage ratio was 1.0x
and the Group had total cash of £1.5bn and an undrawn
committed Revolving Credit Facility of £1.5bn.

In March 2023, S&P Global Ratings reaffirmed their assignment
to the Group of an ‘A’ grade long-term issuer credit rating. The
Group’s funding basis is supported by the existing £400m public
bond due in 2034. Furthermore the Group’s committed
Revolving Credit Facility is free of performance covenants and
matures in 2028, with one 1-year extension option remaining
(after the first was utilised during the year). The $100m of
outstanding private placement notes are due in March 2024
after which point Group funding will not be subject to financial
performance covenants.

Viability statement
The directors have determined that the most appropriate period
over which to assess the Company’s viability, in accordance
with the 2018 UK Corporate Governance Code, is three years.
This is consistent with the Group’s business model which
devolves operational decision making to the businesses.
Each business sets a strategic planning time horizon appropriate
to its activities which are typically of a three to five year duration.
The directors also considered the diverse nature of the Group’s
activities and the degree to which the businesses change and
evolve in the relatively short term.

The directors considered the Group’s profitability, cash flows
and key financial ratios over this period and the potential impact
that the Principal Risks and Uncertainties set out on pages 68 to
75 could have on future performance, solvency or liquidity of the
Group and its resilience to threats to its viability posed by severe
but plausible scenarios. Building on the analysis performed as
part of the going concern review, sensitivity analysis was
applied to these metrics and the projected cash flows were
stress tested against a range of scenarios.

The directors considered the level of performance that would
cause the Group to exhaust its available liquidity, the financial
implications of making any strategic acquisitions and a variety of
additional potentially adverse factors including long-term
reputational damage, macroeconomic influences such as
fluctuations in commodity markets and climate-related business
risks. Specific consideration has been given to the potential
ongoing risks associated with the outlook for a potential global
recession, reducing demand for goods in both the food
businesses and Primark, and continuing inflationary cost
pressures. The impact of potential mitigating actions under the
Group’s control were also considered in this analysis.

The Board’s treasury policies are in place to maintain a strong
capital base and manage the Group’s balance sheet and liquidity
to ensure long-term financial stability. These policies are the
basis for investor, creditor and market confidence and enable
the successful development of the business. The financial
leverage policy requires that, in the ordinary course of business,
the Board prefers to see the Group’s ratio of net debt including
lease liabilities to adjusted EBITDA to be well under 1.5x.
At the end of this financial year, the financial leverage ratio was
1.0x and the Group had total cash of £1.5bn and an undrawn
committed Revolving Credit Facility of £1.5bn.

In March 2023, S&P Global Ratings reaffirmed their assignment
to the Group of an ‘A’ grade long-term issuer credit rating.
The Group’s funding basis is supported by the existing £400m
public bond due in 2034. Furthermore the Group’s committed
Revolving Credit Facility is free of performance covenants and
matures in 2028, with one 1-year extension option remaining
(after the first was utilised during the year).

The Group is highly diversified operating in 55 countries
in different markets, sectors, customer groups, geographies
and products. While the principal risks considered all have
the potential to affect future performance, none of them are
considered individually or collectively to threaten the viability
of the Company for the period of the assessment.

In reviewing the cash flow forecast for the period, the directors
reviewed the trading for both Primark and the food businesses
in light of the experience gained from events of the last three
years of trading and emerging trading patterns. The directors
have a thorough understanding of the risks, sensitivities and
judgements included in these elements of the cash flow forecast
and have a high degree of confidence in these cash flows.

As a downside scenario the directors considered the adverse
scenario in which inflationary costs are not fully recovered,
there are adverse foreign exchange impacts and there is a
global recession, reducing demand for goods further than the
base levels forecast. This downside scenario was modelled
without taking any mitigating actions within their control.
Under this downside scenario the Group forecasts liquidity
throughout the period.

In addition, the directors also considered the circumstances
which would be needed to exhaust the Group’s total liquidity
over the assessment period – a reverse stress test. This
indicates that, on top of the downside scenario outlined above,
cost inflation would need to exceed £1.9bn without any price
increases or other mitigating actions being taken before total
liquidity is exhausted. The likelihood of these circumstances
is considered remote for two reasons. Firstly, over such a
period, management could take substantial mitigating actions,
such as reviewing pricing, taking cost cutting measures and
reducing capital investment. Secondly, the Group has significant
business and asset diversification and would be able to, if it
were necessary, dispose of assets and/or businesses to raise
considerable levels of funds.

The Strategic Report was approved by the Board and signed
on its behalf

Michael McLintock
Chairman

George Weston
Chief Executive

Eoin Tonge
Finance Director

Associated British Foods plc Annual Report 2023

CORPORATE GOVERNANCE

Chairman’s introduction

the executive directors and through annual updates by senior
management of the businesses. This gives the Board the
opportunity to provide effective guidance and
constructive challenge.

On succession planning at Board level, earlier this year we
announced that Ruth Cairnie would be relinquishing her roles as
Senior Independent Director and as Chair of the Remuneration
Committee and would not be standing for re-election at the next
annual general meeting, having served on the Board since May
2014. Dame Heather Rabbatts became Senior Independent
Director and Graham Allan became Chair of the Remuneration
Committee, both with effect from 1 May 2023. Ruth stepped
down from the Board with effect from 31 August 2023. Ruth
made a terrific contribution to our Board deliberations and she
leaves with our grateful thanks.

In February 2023, the Board was also pleased to welcome
Eoin Tonge as a director, taking up the role of Finance Director
with effect from 29 April 2023 after John Bason retired from the
Board on 28 April 2023. In addition, Annie Murphy was appointed
as a Non-Executive Director and as a member of the Audit and
Remuneration Committees with effect from 6 September 2023.
As announced in August 2023, Kumsal Bayazit will be appointed
as a Non-Executive Director and as a member of the same
Committees with effect from 1 December 2023. All directors
will be standing for election or re-election at the annual general
meeting. We look forward to working with our newest Board
members and benefiting from the additional skills, insights and
experience that they will undoubtedly bring.

We published our Board Diversity Policy in November 2022. I am
pleased to report that, by the time of our annual general meeting,
we will have met the commitments and aspirations around
Board composition as set out in that policy, which reflect the
new targets on gender and ethnic diversity in the Listing Rules.
Further details are set out in the Nomination Committee Report.

Richard Reid continues in his role as our Non-Executive Director
designated for engagement with the workforce and an update
is provided in Richard’s letter on pages 84 and 85. Richard’s
activities are a key way that we continue to assess and monitor
culture, alongside directors’ visits to sites, business divisions’
updates to the Board on workforce engagement, input from our
Speak Up programme and the annual talent review and update
to the Board from the Chief People and Performance Officer.

Our four values, namely respecting everyone’s dignity, acting
with integrity, progressing through collaboration and delivering
with rigour, are illustrated through the various case studies
in this Annual Report, through our Section 172 Statement
on pages 40 to 45 and through the Responsibility section on
pages 46 to 55. Further examples can be found in our 2023
Responsibility Report, which is available on the Company’s
website at: www.abf.co.uk/responsibility.

We will again hold a physical AGM in December 2023. As was
the case last year, we will also stream the event online for those
shareholders who are not able to attend in person. Please note,
however, that you will not be able to vote or ask questions
on the day if you do not attend in person, so please vote in
advance by proxy and submit any questions in advance if you
cannot attend. Details on how to do so are provided in the
Notice of Annual General Meeting 2023. We look forward to
seeing as many of you as possible on the day.

Michael McLintock
Chairman

Our devolved decision-making model
is a distinctive characteristic of ABF.
This empowers management of our
businesses to take decisions at the level we
consider to be the most effective – in other
words, closest to the markets, customers
and stakeholders relevant to each business.

Dear fellow shareholders
I am pleased to present the Associated British Foods plc
Corporate Governance Report for the year ended
16 September 2023.

Your Company’s clear sense of purpose – to provide safe,
nutritious and affordable food, and clothing that is great value
for money – continues to stand us in good stead. Our conviction
that businesses do well when they act well is ingrained
throughout the Group and management continue to be
encouraged to take a long-term view and to invest in the future.
We give various examples throughout the Strategic Report
of how we have invested in our food businesses and in the
Primark retail estate.

We continue to operate a devolved decision-making model.
This is a distinctive characteristic of ABF, and one which we
believe empowers management of our businesses to take
decisions at the level we consider to be the most effective.
The senior management of the businesses are supported with
resources and expertise from throughout the Group.

The Board continues to be kept informed about, and engages
with, the individual businesses through regular updates by

Compliance with the
UK Corporate Governance Code

As a premium listed company on the London Stock
Exchange, the Company is reporting in accordance with
the 2018 UK Corporate Governance Code (‘2018 Code’).
The 2018 Code sets out standards of good practice in
relation to: (i) board leadership and company purpose;
(ii) division of responsibilities; (iii) board composition,
succession and evaluation; (iv) audit, risk and internal
control; and (v) remuneration. The 2018 Code is published
by the UK Financial Reporting Council (‘FRC’) and a copy
is available from the FRC website: www.frc.org.uk.

The Board takes its compliance with the 2018 Code
seriously. The Board considers that the Company has,
throughout the year ended 16 September 2023, applied
the principles and complied with the provisions set out in
the 2018 Code except provision 38 in relation to alignment
of executive director pension contributions with the
workforce. In this regard, please see the explanation on
page 106 of the Directors’ Remuneration Report, which
explains our plans to bring the Company into line with the
2018 Code by December 2023.

The Company’s disclosures on its application of the principles of the 2018 Code can be found on the following pages:

Board leadership and company purpose
See pages 82 to 86

Composition, succession and evaluation
See pages 87; 89 to 92

Chairman’s introduction
See page 78

Leadership, values, culture and purpose
See pages 9 to 13; 46 to 55; 82 to 86

Strategy
See pages 9 to 13; 82 to 83

Stakeholder and shareholder engagement
See pages 40 to 45; 46 to 55; 82; 84 to 86

Division of responsibilities
See pages 87 to 88

Commitment, development and information flow
See pages 84 to 85 and 87 to 88

Board evaluation
See page 89

Nomination Committee Report
See pages 90 to 92

Audit, risk and internal control
See pages 93 to 99

Risks, viability and going concern
See pages 68 to 77; 94 to 99

Audit Committee Report
See pages 93 to 99

Remuneration
Directors’ Remuneration Report
See pages 100 to 115

Associated British Foods plc Annual Report 2023

CORPORATE GOVERNANCE CONTINUED

Board of Directors

Michael McLintock
Chairman

N R

Michael was appointed a
director in November 2017
and Chairman in April 2018.
He was formerly Chief
Executive of M&G, retiring
in 2016, having joined the
company in 1992 and been
appointed Chief Executive

in 1997. In 1999 he oversaw the sale of M&G to Prudential plc
where he served as an Executive Director from 2000 until 2016.
Previously he held roles in investment management at Morgan
Grenfell and in corporate ﬁnance at Morgan Grenfell and Barings.

Other appointments:

• Trustee of the Grosvenor Estate
• Non-Executive Chairman of Grosvenor Group Limited
• Chairman of The Investor Forum CIC
• Member of the Advisory Board of Bestport Private Equity

Limited

• Member of the Takeover Appeal Board
• Member of the MCC Committee

George Weston
Chief Executive

George was appointed to
the Board in 1999 and took up
his current appointment as
Chief Executive in April 2005.
In his former roles at
Associated British Foods,
he was Managing Director
of Westmill Foods, Allied
Bakeries and George Weston
Foods Limited (Australia).

Other appointments:

• Non-Executive Director of Wittington Investments Limited
• Trustee of the Garfield Weston Foundation
• Trustee of the British Museum

Eoin Tonge
Finance Director

Eoin was appointed a director
in February 2023 and as
Finance Director in April 2023.
He previously held positions
as the Chief Financial Officer
and Chief Strategy Officer
at Marks and Spencer Group
Plc, Chief Financial Officer of
Greencore Group plc and
Managing Director of
Greencore’s grocery division and Chief Strategy Officer.

Other appointments:

• None

Dame Heather Rabbatts
Independent Non-Executive
Director

Dame Heather Rabbatts
was appointed a director
on 1 March 2021 and has
been Senior Independent
Director since 1 May 2023.
Heather has held a number
of executive and non-executive

roles including in local government, infrastructure, media and
sports. She has previously been a Non-Executive Director
of Grosvenor Britain & Ireland, a Non-Executive Director of
Kier Group plc and was the first woman on the Board of the
Football Association in over 150 years. She continues to work
in film and sports.

Other appointments:

• Chair of Soho Theatre

Graham Allan
Independent Non-Executive
Director

Graham was appointed a
director in September 2018
and became chair of the
Remuneration Committee
in May 2023. Graham was
formerly the Group Chief
Executive of Dairy Farm
International Holdings Limited, a pan-Asian retailer. Prior to
joining Dairy Farm, he was President and Chief Executive Officer
at Yum! Restaurants International. Graham has previously held
various senior positions in multinational food and beverage
companies with operations across the globe and has lived
and worked in Australia, Asia, the US and Europe.

Other appointments:

• Senior Independent Director of Intertek Group plc
• Senior Independent Director of InterContinental Hotels

Group PLC

• Non-Executive Director of Americana Restaurants

International PLC

• Non-Executive Chairman of Bata International
• Director of IKANO Pte Ltd
• Strategic Advisor to Nando’s Group Holdings Limited

Wolfhart Hauser
Independent Non-Executive
Director

Wolfhart was appointed
a director in January 2015.
Starting his career with
various research activities, he
went on to establish and lead
a broad range of successful
international service industry

Annie Murphy
Independent Non-Executive
Director

A R

Annie was appointed a
director in September 2023.
Annie has held senior roles at
fast moving consumer goods
and retail companies including
PepsiCo and Procter & Gamble
and, most recently, as SVP,

Global Chief Commercial Officer – Brands and International
at Walgreens Boots Alliance until January 2023.

Other appointments:

• Deputy Chair and Board Member of the British Beauty Council

Richard Reid
Independent Non-Executive
Director

Richard was appointed a
director in April 2016. He was
formerly a partner at KPMG
LLP (‘KPMG’), having joined
the firm in 1980. From 2008,
Richard served as London
Chairman at KPMG until he

retired from that role and KPMG in September 2015. Previously,
Richard was KPMG’s UK Chairman of the High Growth Markets
group and Chairman of the firm’s Consumer and Industrial
Markets group.

Other appointments:

• Chairman of National Heart and Lung Foundation
• Deputy Chairman of Berry Bros & Rudd
• Senior Advisor to Bank of China UK
• Warden and Member of the Court of the Goldsmiths’ Company

Emma Adamo
Non-Executive Director

Emma was appointed a
director in December 2011.
She was educated at Stanford
University and has an MBA
from INSEAD. She has served
as a director/trustee on a
number of non-profit and
Foundation boards in the
UK and Canada.

businesses. He was Chief Executive of Intertek Group plc for
10 years until he retired from that role and the board in May
2015. He was previously Chief Executive Officer and President
of TÜV Süddeutschland AG for four years and Chief Executive
Officer of TÜV Product Services for 10 years. He has also held
other directorship roles, including as a Non-Executive Director
of Logica plc from 2007 to 2012, as a Non-Executive Director
of RELX plc from 2013 to 2023 and Chair of FirstGroup plc for
four years from 2015 to July 2019.

Other appointments:

• Board member in the Trescal Group

At the date of this report, Kumsal Bayazit is not yet a director
but the Board approved her appointment as a Non-Executive
Director with effect from 1 December 2023.

Key to Board Committees
N Nomination Committee

R Remuneration Committee

A Audit Committee

Committee Chair

Other appointments:

• Director of Wittington Investments Limited

Associated British Foods plc Annual Report 2023

CORPORATE GOVERNANCE CONTINUED

Board leadership and company purpose

The work of the Board during the year

The Board
The Board is collectively responsible to the Company’s
shareholders for the direction and oversight of the Company
to ensure its long-term success. This includes setting the
Company’s purpose, which is described in the Strategic Report.
The Board met regularly throughout the year, sometimes with
individual members attending virtually, to approve the Group’s
strategic objectives, to lead the Group within a framework
of effective controls which enable risk to be assessed and
managed, and to ensure that sufficient resources are available
to meet the objectives set.

There are a number of matters which are specifically reserved
for the Board’s approval. These are set out in a clearly defined
schedule which is available to view on the corporate governance
section of the Company’s website: www.abf.co.uk.

Certain specific responsibilities are delegated to the Board
Committees, being the Nomination, Audit and Remuneration
Committees, which operate within clearly defined terms of
reference and report regularly to the Board. Membership of
these Committees is reviewed annually. Minutes of Committee
meetings are made available to all directors on a timely basis.
For further details, please see the Reports of each of these
Committees below.

Purpose, business model and strategy
The purpose of the Company is to provide safe, nutritious
and affordable food, and clothing that is great value for money.
A description of the Company’s business model for sustainable
growth in support of this purpose is set out in the Group business
model and strategy section on pages 9 to 13. This section
provides an explanation of the basis on which the Group
generates value and preserves it over the long term and its
strategy for delivering its objectives. Our ‘Managing our risks’
section starting on page 68 provides details on how opportunities
and risks to the future of the business have been considered.

Culture and values
At its simplest, our culture and our values (respecting
everyone’s dignity, acting with integrity, progressing through
collaboration, and delivering with rigour) centre around doing
the right thing. Our devolved decision-making model empowers
the people closest to the risks to make the right judgements
to mitigate those risks and to find opportunities, but importantly
with encouragement, engagement and support from the centre.
That support can take the form of resources and expertise or
it can be provided through challenge. We believe the route to
enduring value creation lies in our focus on building objectives
from the bottom up rather than from the top down.

Culture is monitored by the Board through a number of different
approaches. Richard Reid’s work on workforce engagement,
with the support of the Chief People and Performance Officer,
is a key approach (and Richard’s letter on pages 84 and 85 sets
out further detail on how Richard has engaged with the
businesses during this financial year and the overarching
themes of such engagement). This is supported by business
presentations from senior management of each business
division to the Board (which include information on safety
performance and health and wellbeing initiatives, as well as
the individual businesses’ workforce engagement initiatives,
including results and outcomes).

It is essential that the businesses not only engage with and
assess culture within their workforce, but that they also respond
and take action. Some of the initiatives that our businesses
have taken arising from people surveys and other listening and
engagement interactions, including examples of how we reward
and invest in our workforce, are set out in Richard Reid’s letter
on pages 84 and 85.

In addition, directors have carried out other site visits and other
engagement events, further details of which can be found
on page 88.

Whistleblowing
The Group’s Speak Up Policy contains arrangements for an
independent external service provider to receive, in confidence
(where legally permitted), reports of any inappropriate, improper,
dishonest, illegal or dangerous behaviour for reporting to the
Audit Committee as appropriate. The Audit Committee reviews
reports and the actions arising from internal audit and reports
on these to the Board.

The Audit Committee reports to the full Board on (or all Board
members attend the relevant parts of the Audit Committee
meeting to obtain details of) the analysis of reported allegations
which is compiled by the Director of Financial Control.
Arrangements are in place for proportionate and independent
investigations of allegations and for follow-up action.
Further details of the Speak Up Policy and processes in place,
as well as information on the status of notifications received
in the year to 31 May 2023 are provided on page 52.

Conflicts of interest procedure
The Company has procedures in place to deal with the situation
where a director has a conflict of interest. As part of this
process, the Board:

• considers each conflict situation separately on its

particular facts;

• considers the conflict situation in conjunction with the rest of
the conflicted director’s duties under the Companies Act 2006;
• keeps records and Board minutes as to authorisations granted

by directors and the scope of any approvals given; and

• regularly reviews conflict authorisation.

Engagement with stakeholders
Our scale, employing approximately 133,000 people and
with operations in 55 countries across the world, means that
our activities matter to, or have an impact on, many people.
As a result, the Company engages regularly with its stakeholders
at Group and/or business level, depending on the particular issue.

At a Group level we engage with a variety of stakeholder groups
including shareholders, governments, media and investors
through a range of methods. As part of daily business activities
and through structured processes, our businesses routinely
engage with customers, suppliers, regulators and industry bodies.

More detail about our approach to stakeholder engagement
and specific activities this year can be found on pages 40 to 45
(which contain our Section 172 Statement on engaging with
our stakeholders), pages 46 to 55 (on responsibility) and in the
letter on pages 84 and 85 from Richard Reid, our Non-Executive
Director for engagement with the workforce.

During the financial year, key activities of the Board included:

Strategy

Acquisitions/disposals/
projects

• conducting regular strategy update sessions with the divisions in Board meetings; and
• receiving a strategy update from the Director of Business Development.

• considering/approving various acquisitions including the acquisitions of: Vital Solutions,

active in polyphenol-based botanical ingredients for human dietary supplements,
Kite Consulting, active in dairy consulting and performance products, and National Milk
Records plc, which provides an integrated service provider working for both farmers
and milk buyers as well as an independent source of data from advisers such as vets,
farm consultants and breed societies;

• considering and approving capital investment including in relation to the opening of

new Primark stores and upgrades to existing stores, the expansion of yeast production
and introduction of spray drying capability for Ohly in Germany, the establishment
of a manufacturing facility for Ovaltine in Nigeria, expansion and upgrades in our African
sugar businesses and various ERP projects across the Group; and
• receiving regular updates on proposed acquisitions and disposals.

Financial and operational
performance

• receiving regular reports to the Board from the Chief Executive;
• receiving, on a rolling basis, senior management presentations from Group business

Governance and risk

Corporate responsibility

Investor relations and other
stakeholder engagement

People

segments;

• considering the Group budget for the 2023/24 financial year;
• approving the Company’s full year and interim results;
• deciding to recommend payment of a 2022 final dividend (paid in January 2023) and

deciding to pay an interim dividend (paid in July 2023); and

• approving banking mandate updates and various other treasury-related matters.

• reviewing the material financial and non-financial risks facing the Group’s businesses;
• receiving regular updates on corporate governance and regulatory matters;
• participation in, as well as review and discussion of recommendations from,

the internal Board evaluation;

• receiving reports from the Board Committee Chairs as appropriate;
• confirming directors’ independence and conflicts of interest;
• reviewing and approving gender pay reporting and the Modern Slavery and Human

Trafficking Statement; and

• undertaking appropriate preparations for the holding of the AGM including considering
and approving an ‘outlook’ statement and, subsequently, discussing any issues arising
from the AGM.

• continuing to support the enhanced activity on ESG matters;
• receiving regular management reports as well as annual presentations on health

and safety and on environmental issues; and

• receiving an update on ESG matters including priorities, commitments, risks and

opportunities, and the requirements in relation to climate-related financial disclosures.

• one or more of the Chairman, Chair of the Remuneration Committee, Chief Executive

and Finance Director attending meetings with institutional investors to hear their views;
and

• receiving reports on investor relations activities and regular feedback on directors’

meetings held with institutional investors.

• approving the appointment of Annie Murphy and Kumsal Bayazit as Non-Executive
Directors of the Company with effect from 6 September 2023 and 1 December
2023 respectively;

• Richard Reid, Non-Executive Director for engagement with the workforce, continuing
to work with the businesses to ensure that the voice of the workforce is heard and
acted upon – see further details on pages 84 and 85;

• receiving updates from senior management of the businesses on how they have

engaged with their workforces and the outcomes of such engagement; and
• receiving and considering presentations on succession planning and talent

management from the Chief People and Performance Officer.

Associated British Foods plc Annual Report 2023

CORPORATE GOVERNANCE CONTINUED

Board leadership and company purpose continued

Non-Executive Director for engagement with the workforce

• operations, commercial and management teams from

Twinings Ovaltine in Andover and New Jersey;

• employees from the Argo factory and the Chicago Head

Office in ACH;

• retail assistants, store supervisors, managers, and regional

HR business partners at Primark’s Chicago store and at two
different Primark stores in New Jersey;

• employees across a range of teams and departments at SPI

Pharma in Grand Haven, Michigan;

• participants of the Thrive development programme at George

Weston Foods businesses in Australia;

• employees from operations and product merchandising from

Tip Top in New South Wales, Australia;

• a wide variety of employees from our Don business

in regional Victoria, Australia; and

• the team in our Yumi’s business based in Port Melbourne,

Australia.

My visits also enable me to connect with our people through
unions or other local collective arrangements, for example with
the union representative for our Don business.

I am also grateful for the input from fellow Board members
who have visited our businesses including Acetum, Illovo and
Primark during the year.

I am struck by the openness and honesty I experience in all
these discussions and the willingness of our people to actively
participate in sharing views on what is going well and where
there could be improvement. This is a testament to the cultures
that our leaders have developed across the Group. Overarching
themes from these discussions include that:

• people enjoy their work, feel respected and deeply appreciate

the accountability and empowerment that they have,
consistent with the ABF devolved operating model;
• people care about the work they do and feel cared for

by our businesses;

• people appreciate the culture and values, which are seen
as being different from other organisations they have
worked with;

• people are appreciative of clear and consistent

communications and that there is no such thing as too
much communication;

• the leaders of our businesses have increased the breadth

and depth of communications in recent years, as our people
value being kept informed on business progress and the
opportunity for discussion; and

• people value career development and progression, and there

is real interest in understanding and pursuing career and
development opportunities across the broader Group.

Further areas are beginning to emerge in discussions, for
example, our people seeing the opportunity for greater use
of technology to increase efficiency and effectiveness in the
work environment.

In my visits and discussions, I specifically take the opportunity
to understand if our people are aware of Speak Up, our policy to
ensure there is a route beyond local management and leadership
to raise concerns and issues. Speak Up is an important
mechanism to ensure employees will always feel comfortable
to raise concerns even in the most sensitive of situations.
For more information on Speak Up, see page 52.

Richard Reid
Non-Executive Director

The success of our Group has people at its
heart. The culture and processes across all our
businesses ensure that employee voices, at all
levels of the organisation, are encouraged and
welcomed in their local teams through to Board
discussions, and that their views and opinions
are heard and acted upon.

The breadth and complexity of our Group, with our devolved
operating model, requires all our leaders to connect with their
people and teams, actively and attentively listening and
responding to views or suggestions considering the local
culture, workplace and style of operation. The Chief Executive
sets the tone and expectations for this ongoing engagement
with all our divisional chief executives and business leaders.
My role as Non-Executive Director for engagement with the
workforce is primarily to ensure processes are in place giving
employees the opportunity to raise views, opinions, and
concerns, and that the workforce understand how to access
these channels and they are listened to when they do. It is also
to interact with our leaders and businesses to test culture and
engagement and bring back perspectives to the boardroom.
While local cultures clearly vary across the world and we need
to be sensitive to those, divisional chief executive officers also
have responsibility to embed group-wide cultures across our
businesses and this is an area of focus for the Board.

Since my last report I have spent face-to-face time with our
people in their offices, factories, stores, and out in the field.
In these discussions I have been able to understand how
they view our Group and their specific business and location.
I have spoken with:

The visits are only one part of the ABF approach to workforce
engagement. In addition:

• workforce engagement across the Group is discussed in

depth at two of the Board meetings, with the Chief People
and Performance Officer presenting a groupwide view of
progress, including metrics, process enhancements, and
highlighting the ‘we asked, you said, we listened, we did’
feedback loop case studies from across the Group. During
these discussions we identify areas of ongoing enhancement
which are taken back to the businesses. This year for example,
we identified a further focus on colleagues who work in
factories and stores, including relationships with unions;
• every Board meeting also includes divisional chief executive

presentations covering workforce engagement within
their businesses; this ensures all areas of the Group are
reviewed in depth during the year. I continue to be in regular
discussion with our divisional chief executives and people and
performance/HR directors across all segments for the Group.
I speak with them after their formal presentations to discuss
areas of interest or concern and to share insights for my
discussions with their people;

• we have an annual Board session focused on talent,

succession and progress on inclusion;

• twice a year the Chief Executive and Chief People and
Performance Officer have in-depth discussions on
organisation and talent that include workforce engagement
with each divisional chief executive and people and
performance/HR director; and

• the divisional people and performance/HR directors, facilitated

by the Chief People and Performance Officer, also come
together regularly to learn and share with each other across
a variety of topics, including workforce engagement.

A vast number of our businesses use engagement surveys to
gather feedback from their people, through a variety of global
partners such as Willis Towers Watson, Workday Peakon and
Gallup. Close to 90% of our businesses use engagement
surveys regularly, often annually or more frequently. In the
businesses that have run their surveys this year, 85% of our
people were invited to participate with response rates at almost
70%. The insights and actions that flow from these surveys are
part of the data presented to the Board on a regular basis. I was
pleased to see that, of the businesses running their engagement
surveys this year, almost 90% showed favourable engagement
scores at or above 70%.

In line with our focus areas shared in last year’s report, we have
widened our understanding of workforce engagement, through
introducing engagement surveys to new parts of the Group
or through expanding the reach of existing surveys to more
employees. Local technological, legal and cultural norms do still
present challenges for a full rollout of engagement surveys in all
countries, but we expect our leaders to find appropriate ways to
understand workforce engagement and take action to enhance
it further for all our employees in the year ahead.

I am pleased to see the feedback loop in action, with
businesses acting on the voice of their employees through
their employee engagement surveys, listening groups or
through the insights I can share from my visits and discussions.
Examples include:

• the ABF Centre leadership held a ‘Strength through

Difference’ workshop to explore ways to ensure even greater
inclusion among the corporate centre teams;

• the Managing Director of our ABF Sugar business in Eswatini

invited colleagues from operations teams to day visits in
the head office to learn more about the wider business.
This followed on from discussions I had with them when
I visited them at the end of the last financial year;

• in response to employee feedback, that was shared in

discussion sessions with me, Twinings Ovaltine held global
town hall sessions, to provide its employees with greater
understanding and clarity of areas of the business beyond
their own;

• our grocery business Acetum has enhanced its benefits for
shift workers and provided a communal lunchroom and
subsidised meals for all their employees based on feedback
and requests from their employees and union discussions;
• to promote an open workplace, AB Mauri’s Global Baking

Ingredients business has introduced a number of
mechanisms to support communication and connections
across their teams, including suggestion boxes, town halls,
team-building games, appreciation workshops, family days,
newsletters and lunch with leaders;

• AB Agri has further developed its wellbeing offering including
using Nudge to support financial education and wellbeing,
creating spaces for social wellbeing, plus raising awareness
through recognising World WellBeing Week; and

• Primark has developed a new approach to ensure it is

responding promptly to employee feedback. Themes from
its regular engagement surveys are fed into the centres
of excellence or its global teams, where local managers and
people and culture business partners develop and implement
local action plans at a store or team level.

In summary, from my work over the last 12 months, I have seen
significant evidence that the necessary policies and practices
within the businesses are in place and that our people are of
aware how to raise views, ideas and concerns. This perspective
comes from my direct interactions with the Chief Executive,
Chief People and Performance Officer, division chief executives,
business leaders and managers, the observations and insights
shared with me by our people on my visits, information shared
in Board presentations and papers, and the results of the
engagement surveys across the Group.

Culture and tone are set from the top of an organisation,
echoed through leaders and managers to every level of a
business; across ABF I see an open culture that enables issues
and ideas to be raised and acted on constructively. It is clear
that our chief executives and business leaders take seriously
the voices of all our people.

I and the Board remain steadfast to holding divisional chief
executives and business leaders to account, and in turn
ensuring that all our employees have the opportunity for their
voice to be heard in every part of ABF, so they can be part
of creating a successful business where people thrive.

Richard Reid
Non-Executive Director

Associated British Foods plc Annual Report 2023

CORPORATE GOVERNANCE CONTINUED

Board leadership and company purpose continued

of the meeting on all resolutions put forward as shareholders
will not be able to vote on the day if they are not attending in
person. Shareholders will also have the opportunity to put their
questions to the Board either at the meeting (if attending in
person) or in advance of the meeting. Further details are included
in the Notice of AGM and documentation accompanying the
proxy form. All votes are taken by a poll. In 2022, voting levels
at the AGM were over 85% of the Company’s issued share
capital.

Annual Report
We publish a full Annual Report and Accounts each year which
contains a Strategic Report, responsibility section, corporate
governance section and financial statements. The Annual Report
is available in paper format for those who request it and on our
website: www.abf.co.uk.

Responsibility/ESG
We publish a Responsibility Report on the issues most
material to the businesses within our Group. The Director
of Legal Services and Company Secretary acts as a focal point
for communications on matters of corporate responsibility.
During the year, the Company responded to requests for
meetings, telephone meetings or written information from
both existing and potential shareholders and research bodies
on a broad range of environmental, social and governance risk
matters, including matters related to climate change, water and
greenhouse gas risk management, supply chain management,
sustainable agriculture, human rights, employee welfare, gender
balance and human capital development. The Director of Legal
Services and Company Secretary and the Group Corporate
Responsibility Director regularly meet with investors, potential
investors and other stakeholders to discuss corporate
responsibility matters.

Website (www.abf.co.uk)
Our website is regularly updated and contains a comprehensive
range of information on our Company. There is a section
dedicated to investors which includes our investor calendar,
financial results, presentations, press releases and contact
details. The area dedicated to individual shareholders is an
essential communication method. It includes information
on shareholder news, administrative services and
contact information.

Engagement with shareholders

We have a dedicated in-house team to manage communications
with our shareholders, making sure we respond directly,
as appropriate, to any matters regarding their shareholdings.
We also have a dedicated team at Equiniti Limited (our share
registrar) which looks after their needs. To improve security
and efficiency of communications and to reduce the amount
of paper we use, we seek to use e-communications to
communicate with shareholders wherever possible and
encourage shareholders to switch to e-communications in order
to reduce our paper usage further. We also encourage the direct
payment of dividends into bank or building society accounts.

We also engage with shareholders, both institutional investors
and individual shareholders, in a number of other ways:

Meetings
The Chairman meets with the Company’s largest institutional
shareholders to hear their views and discuss any issues or
concerns. During the year, the Chairman held meetings with a
number of institutional shareholders (either in person or virtually)
and discussed a range of topics including the Company’s
strategy and approach to corporate governance, ESG and
remuneration-related matters. The Remuneration Committee
Chair also meets with investors and analysts to answer queries
and respond to feedback around remuneration issues.

On the day of the announcement of the interim and final results,
the Company’s largest shareholders, together with financial
analysts, are invited to a presentation with a question and answer
session by the Chief Executive and Finance Director, with
webcast presentations of the results available for all shareholders
through the Company’s website. Following the results, the
Executive team holds one-to-one and group meetings (virtually
where necessary) with institutional shareholders and potential
investors. These views are then reported back to the Board
as a whole at the following Board meeting to ensure that it is
aware of any issues that the Company’s largest shareholders
are concerned with.

During the year, the Board has maintained an active programme
of engagement with institutional investors, including engagement
by the Chief Executive and/or Finance Director, the purpose
of which is both to develop shareholders’ understanding of
the Company’s strategy, operations and performance and to
provide the Board with an awareness of the views of significant
shareholders. At each Board meeting, the directors are briefed
on shareholder meetings that have taken place and on feedback
received, including any significant concerns raised.

AGM
All shareholders are invited to attend the AGM in person, have
access to our website and the choice to receive electronic
communications.

The AGM provides an opportunity for the directors to engage
with shareholders, answer their questions and to meet them
informally. The AGM will be held on Friday 8 December 2023
at 11.00 am at the Congress Centre, 28 Great Russell Street,
London WC1B 3LS. It is planned that shareholders will be able
to attend in person. There will also be the possibility for
registered shareholders to follow proceedings through a
livestream on the AGM website. We encourage all shareholders
not attending in person on the day to vote by proxy in advance

Division of responsibilities

Board composition
At the date of this Annual Report, the Board comprises
the following directors:

Chairman
Michael McLintock

Executive Directors
George Weston (Chief Executive)
Eoin Tonge (Finance Director) – appointed 6 February 2023

Non-Executive Directors
Dame Heather Rabbatts (Senior Independent Director)
Emma Adamo
Graham Allan
Wolfhart Hauser
Annie Murphy – appointed 6 September 2023
Richard Reid

The Board has approved the appointment of Kumsal Bayazit
as a Non-Executive Director with effect from 1 December 2023.
John Bason retired from the Board with effect from 28 April
2023 and Ruth Cairnie retired from the Board with effect from
31 August 2023.

Biographical and related information about the directors as at the
date of this Annual Report is set out on pages 80 and 81.

We consider the size of the Board to be large enough to ensure
diversity and an appropriate variety of skills whilst still being
small enough to ensure a good quality of debate. This view was
supported by the external Board evaluation in 2021, as well as
the internal Board evaluations carried out in 2022 and 2023,
further details of which are set out on page 89.

Chairman and Chief Executive
The roles of the Chairman and the Chief Executive are
separately held and the division of their responsibilities is clearly
established, set out in writing, and agreed by the Board to
ensure that no one has unfettered powers of decision. Copies
are available on request.

The Chairman is responsible for the operation and leadership
of the Board, ensuring its effectiveness and setting its agenda.
The Chairman works with the Company Secretary to set the
agenda for Board meetings. The Chairman promotes a culture
of openness and debate, which has been a key factor behind
seeking to keep the size of the Board relatively small, and
facilitates constructive Board relations and contributions from all
non-executive directors, as well as ensuring that directors
receive accurate, timely and clear information. The Chairman
was independent on appointment.

The Chief Executive is responsible for leading and managing the
Group’s business within a set of authorities delegated by the
Board and for the implementation of Board strategy and policy.
Authority for the operational management of the Group’s
business has been delegated to the Chief Executive for
execution or further delegation by him for the effective
day-to-day running and management of the Group. The chief
executive of each business within the Group has authority for
that business and reports directly to the Chief Executive.

Senior Independent Director
The purpose of this role is to act as a sounding board for the
Chairman and to serve as an intermediary for other directors
where necessary. The Senior Independent Director is also
available to shareholders should a need arise to convey
concerns to the Board which they have been unable to convey
through the Chairman or through the executive directors.
The role of the Senior Independent Director is set out in writing
and a copy is available on request.

In addition to meeting with non-executive directors without
the Chairman present to appraise the Chairman’s performance
(for which, see further details on page 89), the Senior
Independent Director meets with the non-executive directors
on other occasions as necessary.

The non-executive directors
The non-executive directors, in addition to their responsibilities
for strategy and business results, play a key role in providing a
solid foundation for good corporate governance and ensure that
no individual or group dominates the Board’s decision-making.
They each occupy, or have occupied, senior positions in industry
which, taken together, cover a broad range of jurisdictions,
bringing valuable external perspectives to the Board’s
deliberations through their experience and insight from different
sectors and geographies. This enables them to contribute
significantly to Board decision-making by providing constructive
challenge and holding to account both management and
individual executive directors against agreed performance
objectives. The Board is of a sufficiently small size to be
conducive to open and candid discussions. The formal letters
of appointment of non-executive directors are available for
inspection at the Company’s registered office.

Board Committees
The written terms of reference for the Nomination, Audit and
Remuneration Committees are available on the Company’s
website, www.abf.co.uk, and hard copies are available on
request. Further details on the work of each of the Committees
are included later in this Corporate Governance Report.

Board independence
Emma Adamo is not considered by the Board to be independent
in view of her relationship with Wittington Investments Limited,
the Company’s majority shareholder. Emma was appointed in
December 2011 to represent this shareholding on the Board.
The Board considers that the other non-executive directors are
independent in character and judgement and that they are each
free from any business or other relationships which would
materially interfere with the exercise of their independent
judgement. Further details of their independence are included
in the Notice of AGM. At least half the Board, excluding the
Chairman, are independent non-executive directors.

Commitment
The letters of appointment for the Chairman and the
non-executive directors set out the expected time commitment
required of them and are available for inspection by any person
during normal business hours at the Company’s registered
office and at the AGM. Other significant commitments of
the Chairman and non-executive directors are disclosed prior
to appointment and subsequent appointments require
prior approval.

Associated British Foods plc Annual Report 2023

CORPORATE GOVERNANCE CONTINUED

Division of responsibilities continued

Dame Heather Rabbatts stepped down from the board of Kier
Group plc with effect from 30 March 2023. Wolfhart Hauser
stepped down from the board of RELX plc in April 2023 and
subsequently took up a position as a board member in the
(non-listed) Trescal group. Graham Allan was already a director
on an Americana Restaurants entity which subsequently listed
its shares for trading on the Abu Dhabi Securities Exchange and
the Saudi Stock Exchange in December 2022 as Americana
Restaurants International PLC. The Board considered that these
appointments did not impact the relevant directors’ ability to
discharge their responsibilities to the Company.

Board meetings
The Board held eight meetings during the financial year.
Periodically, Board meetings are held away from the corporate
centre in London.

The attendance of the directors at Board and Committee
meetings during the year is shown in the table below. If a
director is unable to participate in a meeting either in person
or remotely, the Chairman will solicit their views on key items
of business in advance of the relevant meeting and share
these with the meeting so that they are able to contribute to
the debate.

All of the directors attended those meetings that they were
eligible to attend.

Senior executives below Board level are invited, when
appropriate, to attend Board meetings and to make
presentations on the results and strategies of their business
units. Papers for Board and Committee meetings are generally
provided to directors a week in advance of the meetings.

Information flow
The Company Secretary manages the provision of information
to the Board at appropriate times in consultation with the
Chairman and Chief Executive and ensures that the Board has
the policies, processes, time and resources it needs in order to
function effectively and efficiently. This includes the provision
of corporate governance updates to all Board members in the
Board pack for each meeting. In addition to formal meetings,
the Chairman and Chief Executive maintain regular contact with
all directors. The Chairman holds informal meetings or calls with
non-executive directors, without any of the executives being
present, to discuss issues affecting the Group, as appropriate.
All directors have access to the Company Secretary, who is
responsible for advising the Board on all governance matters.

Board induction
The Company provides all non-executive directors with a tailored
and thorough programme of induction, which is facilitated by
the Chairman and the Company Secretary and which takes
account of prior experience and business perspectives and the
Committees on which he or she serves. This typically includes
training, as well as site visits and meetings with management
to get to know the businesses better.

Eoin Tonge, the newest executive director appointed to the
Board, has visited many businesses since his appointment in
February 2023. These visits have included: Illovo in South Africa,
Zambia and Malawi; AB World Foods and Twinings Ovaltine in
Poland; Primark in Ireland, the USA and Germany; Azucarera and
AB Agri in Spain; George Weston Foods in Australia and New
Zealand; and various grocery businesses in the UK.

Annie Murphy joined the Board with effect from 6 September
2023. Since the end of the financial year to which this Annual
Report relates, in addition to meeting with executives at the
corporate centre in late September 2023, Annie has also visited
India with Dame Heather Rabbatts and the Group Corporate
Responsibility Director as part of Annie’s induction. This has
enabled them to understand more about Primark’s activities in
India following meetings with Primark’s Ethical Trade and
Environmental Sustainability team and visits to a community
centre, farmer village and a supplier factory.

Kumsal Bayazit will join the Board with effect from 1 December
2023 and an induction will be arranged, including visits to
businesses.

Training, development and engagement
The Chairman has overall responsibility for ensuring that the
directors receive suitable training to enable them to carry out
their duties and is supported in this by the Company Secretary.
Directors are also encouraged personally to identify any additional
training requirements that would assist them in carrying out
their role. Training is provided in briefing papers, such as the
regular update from the Company Secretary as part of the Board
pack ahead of each meeting covering developments in legal,
regulatory and governance matters, and by way of presentations
and meetings with senior executives or other external sources.

The Chief Executive encourages other Board members to visit
operations either with him, with other directors, or on their
own. The Board meeting in May 2023 was held at Primark’s
headquarters at Arthur Ryan House in Dublin and also included
a visit to the Mary Street store.

Dame Heather Rabbatts had also separately visited Primark’s
head office and its first store in Mary Street in Dublin in January
2023 and met with Paul Marchant, Primark CEO, together with
members of the Primark leadership team.

In addition to the visits by Eoin as part of his induction, as
mentioned above, the senior executives of several businesses
also met with Eoin to provide ‘deep dives’ into their businesses.

For details of visits by Richard Reid to a variety of businesses
across the Group, please see pages 84 and 85.

Attendance of directors at Board and Committee
meetings

Board

Audit
Committee

Nomination
Committee

Remuneration
Committee

Michael
McLintock
George Weston
Eoin Tonge
Dame Heather
Rabbatts
Emma Adamo
Graham Allan
Wolfhart Hauser
Annie Murphy
Richard Reid
John Bason
Ruth Cairnie

8/8
8/8
5/5

8/8
8/8
8/8
8/8
1/1
8/8
5/5
7/7

4/4

3/3

4/4
4/4

4/4

4/4
4/4
1/1
4/4

3/3

4/4

4/4
4/4

4/4

Composition, succession and evaluation

Board composition and succession
Details of the composition of the Board are on page 87. There is a formal and transparent procedure for the appointment of new
directors to the Board. Details are available in the Nomination Committee Report on pages 90 to 92 which also provides details of the
Committee’s activities, including the approval of the appointment of Annie Murphy and Kumsal Bayazit as Independent Non-Executive
Directors as well as details of Board and senior management succession plans and diversity.

Election and re-election of directors
In accordance with the provisions of the 2018 Code, at the 2023 AGM to be held in December, all directors currently in office
will be proposed for election/re-election. Kumsal Bayazit is to be appointed with effect from 1 December 2023 and will also be
proposed for election at the AGM.

Board evaluation
2022 internal Board evaluation
As reported in our last Annual Report, an internal Board evaluation was carried out in May to August 2022. A summary of the actions
arising from the 2022 Board evaluation and their outcomes are set out below.

Actions from 2022 internal evaluation

Outcome

Chief Executive to discuss with the Director of Business Performance
and the Chief People and Performance Officer and agree approach with
regard to increasing the provision of feedback to executives on their
presentations to the Board and to encourage business divisions to focus
on a few specific issues in their presentations such that the Board can
provide input of most value to the business divisions.

Businesses have improved in giving further specific
insight into their business during Board presentations.
Feedback provided to executives following their
presentations to the Board has increased.

Chairman, Chief Executive and Finance Director to consider the most
appropriate model to meet requirements, including looking beyond usual
corporate governance structures in order to consider the interface
between the Primark Strategic Advisory Board and the main Board.

The Chair of the Primark Strategic Advisory Board
(‘PSAB’) meets regularly with the Chairman and
Chief Executive to update them on the PSAB’s work.
This input then informs main Board discussions.

Chairman to consider in conjunction with the Chief People and
Performance Officer how the Nomination Committee/Board can most
effectively carry out their roles in respect of the diversity pipeline and
succession planning.

During the financial year, two new non-executive
directors were approved to join the Board, strengthening
the Board’s expertise, particularly in respect of retail/
brand and technology/analytics experience.

2023 internal Board evaluation
An internal Board evaluation was carried out in July and August
2023. The objective of the review was to assess all aspects of
the effectiveness of the Board, its Committees, the Chairman
and the individual directors, also measuring progress against
recommendations from the previous Board evaluation.

The Board evaluation was carried out at the request of the
Chairman by the Director of Corporate Governance.

How the Board evaluation was conducted
The main strands of work were as follows:

• each Board member, the Company Secretary and the Group
Statutory Auditor was requested to complete a questionnaire
and provide comments in response to a range of questions
and observations relating to the Board. Each respondent was
also given the opportunity to have a follow-up meeting with
the Chairman to discuss any particular issues; and

• a report was prepared including overall observations and
highlighting key recommendations for consideration.

The report was then included in the Board pack for the Board
meeting in September 2023 and discussed by the Board at
that meeting. The headline outcomes of the review were that
the Board felt that it had the right mix of skills and expertise
in the context of developing and delivering the strategy and
assessing the challenges and opportunities facing the Group
(particularly in light of the skillset that the newest directors will
bring) and that the Board and its Committees continue to be
well-functioning and effective in providing oversight of the
Company and its governance.

Key recommendations and actions from the 2023 internal Board
evaluation are to:

• increase the businesses’ discussion with the Board on the

competitive environment and growth areas so as to improve
the Board’s understanding of their strategies and ability to
continue to provide valued input;

• consider how to facilitate more business visits by non-

executive directors, in recognition of the importance of such
visits in monitoring culture;

• continue to consider how ESG risks and opportunities are

addressed most effectively; and

• consider aligning the Board’s ‘deep dives’ on businesses with

the Audit Committee’s ‘deep dives’ on the audit.

The outcome of the evaluation will not have any impact on
Board composition, taking into account that the composition of
the Board has only recently changed with the appointment of
Annie Murphy as a director in September 2023 and with Kumsal
Bayazit joining the Board in December 2023.

The Board (apart from the Chairman) also reviewed the
performance of the Chairman during the year. This concluded
that the Chairman is highly effective, ensuring that the Board
considers the individual strategies of the businesses within the
Group, whilst also maintaining a focus on priorities. It was
further noted that the Chairman successfully enables open and
purposeful discussions and is very inclusive, working well with
all the non-executive directors and ensuring that the Board
retains appropriate independence whilst forging strong
relationships with the key executives.

Associated British Foods plc Annual Report 2023

CORPORATE GOVERNANCE CONTINUED

Nomination Committee Report

• ensuring effective succession plans are in place for the Board
and senior management and overseeing the development
of a diverse pipeline for orderly succession based on merit
and objective criteria, with due regard to diversity of age,
gender, ethnicity, sexual orientation, disability, educational,
professional and socio-economic background, cognitive and
personal strengths; and

• making recommendations to the Board on the Board’s policy

on boardroom diversity and inclusion, its objectives and
linkage to strategy, how it has been implemented and
progress on achieving its objectives.

Governance
Members of the Nomination Committee are appointed by
the Board from amongst the directors of the Company, in
consultation with the Committee Chair. The Nomination
Committee comprises a minimum of three members at any
time, a majority of whom are independent non-executive
directors. A quorum consists of two members, being either
two independent non-executive directors or one independent
non-executive director and the Chairman.

Only members of the Nomination Committee have the right to
attend Nomination Committee meetings. Other individuals such
as the Chief Executive, Finance Director, members of senior
management, the Chief People and Performance Officer and
external advisers may be invited to attend meetings as and
when appropriate.

The Nomination Committee may take outside legal or other
professional advice on any matters covered by its terms of
reference at the Company’s expense but within any budgetary
constraints imposed by the Board.

The Nomination Committee Chair reports the outcome of
meetings to the Board to the extent that any Board members
are not in attendance at the relevant meeting.

The terms of reference of the Nomination Committee are
available on the Corporate Governance section of the
Company’s website: www.abf.co.uk.

Committee activities during the year
Succession planning
The Board continues to emphasise generalist skills in Board
recruitment as well as continuing to factor in all forms
of diversity, including gender and ethnic diversity.

A detailed review of succession planning in respect of senior
management was presented to the Board by the Chief People
and Performance Officer at the Board meeting in July 2023. This
included a focus on: overall principles for succession (including
an aim to have an increasingly diverse potential internal
successor pool for all our leadership roles); potential succession
candidates for the corporate centre roles; potential succession
candidates for divisional CEO and CFO roles; diverse succession
talent planning, including specifically identifying, developing and
sponsoring emerging talent; group-wide learning and
development initiatives to support diverse talent (e.g. the
Executive Leadership Programme; the Senior Executive
Induction Programme; the Finance Excellence Programme; and
the Business Acumen Programme); and inclusion and diversity
networks throughout the Group (e.g. Women in ABF; Early
Careers Network; and the DEI Network).

Board appointments process
The process for making new appointments is led by the
Chairman. Where appropriate, external, independent consultants
are engaged to conduct a search for potential candidates,
who are considered on the basis of their skills, experience and
fit with the existing members of the Board. The Nomination
Committee has procedures for appointing directors and these
are set out in its terms of reference.

During the year, the Chairman led the process for conducting
a search for new non-executive directors. Lygon Group, an
external executive search consulting firm, was engaged to help
identify potential candidates. In line with our Board Diversity
Policy, the firm is a signatory to the Voluntary Code of Conduct
for Executive Search Firms for best practice on gender and
ethnic diversity. The firm is also a signatory to the Change the
Race Ratio. Lygon has no other connection to the Company or
the directors.

Potential candidates were considered on the basis of their
skills and experience as well as their fit with the Group’s
strategy. Following a rigorous process including interviews with
members of the Nomination Committee and the Chief
Executive and following recommendations of the Nomination
Committee, in May 2023 the Board approved the appointment
of Annie Murphy as a Non-Executive Director with effect from
6 September 2023. Following a similar process, in August 2023
the Board approved the appointment of Kumsal Bayazit as a
Non-Executive Director with effect from 1 December 2023.

Re-election of directors
The Nomination Committee members considered the
composition of the Board and the time needed to fulfil the roles
of Chairman, Senior Independent Director and Non-Executive
Director. They also considered the election/re-election of
directors prior to their recommended approval by shareholders
at the AGM.

Performance evaluation
The performance of the Nomination Committee was considered
as part of the internal Board evaluation. The overall view was
that it appeared to be working well and it was noted that the
work of the Nomination Committee had led to securing good
new non-executive director appointments.

Diversity and inclusion
We operate under the principle that we should be a Group
where anyone with ambition and talent can have a great career,
regardless of their age, gender, ethnicity, sexual orientation,
disability, educational and socio-economic background, cognitive
and personal strengths or any of the other qualities that make
people unique. This applies as much to the Board and to its
Remuneration, Audit and Nomination Committees as it does
to the Group as a whole.

In furtherance of this principle, we aim to ensure that there
are no obstacles or barriers to people joining the Group and
progressing their careers with us. Across all of our operations,
our objective is that everyone should feel respected, valued
and included.

In November 2022, the Board approved a Board Diversity Policy
which is available online at: www.abf.co.uk. This was taken
into account in the appointments approved during the course
of the financial year.

The objectives under our Board Diversity Policy include:

• continuing to engage executive search firms who have signed
up to the Voluntary Code of Conduct for Executive Search
Firms for best practice on gender and ethnic diversity;
• committing to maintain at least 33% female directors on

the Board and at least one person from an ethnic minority
background on the Board;

• aspiring to have at least 40% female directors on the Board
by the end of 2025 and to maintain at least one woman
in the Chair, Chief Executive, Finance Director or Senior
Independent Director role;

• with a view to attracting non-executive directors from

more diverse socio-economic backgrounds, reducing the
shareholding expectation for non-executive directors to
‘a meaningful level of shareholding’; and

• overseeing the development of a diverse pipeline for orderly
succession of appointments to both the Board and to senior
management, so as to maintain an appropriate balance of
skills and experience, taking into account the challenges and
opportunities facing the Group. This includes continuing
to receive detailed annual updates on succession planning
and talent management from the Chief People and
Performance Officer in recognition of its importance in
supporting the Group’s strategy.

By way of update, with the appointment of Annie Murphy on
6 September 2023 and with the forthcoming appointment of
Kumsal Bayazit on 1 December 2023 (including the appointment
of both to the Audit and Remuneration Committees), the Board
will have met its aspiration as set out in the Board Diversity
Policy to increase female representation to at least 40%,
as recommended by the FTSE Women Leaders Review.
We continue to meet our commitment to have at least one
person from an ethnic minority background as a director, in line
with the recommendations of the Parker Review. The Board
has also maintained at least one woman in the Chair, Chief
Executive, Finance Director or Senior Independent Director role,
with Dame Heather Rabbatts taking up the position of Senior
Independent Director from Ruth Cairnie in May 2023.

The Board also reviews progress on diversity and inclusion
with the divisions as part of their business updates and with
the Chief People and Performance Officer as an element of the
talent and succession planning reviews. Details of other initiatives
across the Group to promote diversity are provided on page 51,
as is information on the gender balance of senior managers
and direct reports.

On the next page we also publish a director skill sets matrix
which seeks to provide a snapshot of the diversity of skills
of the Board, as well as gender and ethnicity representation
at Board and executive management levels.

Michael McLintock
Nomination Committee Chair

Members
At the date of this report, the following are members
of the Nomination Committee:

• Michael McLintock (Chair)
• Graham Allan
• Wolfhart Hauser
• Dame Heather Rabbatts
• Richard Reid

All members served on the Committee throughout the year,
with the exception of Dame Heather Rabbatts who was
appointed on 2 November 2022. Ruth Cairnie served on the
Committee until she stepped down from the Board on
31 August 2023.

Meetings
The Committee met four times during the year under review.

Primary responsibilities
In accordance with its terms of reference, the Nomination
Committee’s primary responsibilities included:

• leading the process for Board appointments (both executive

and non-executive) and making recommendations to
the Board;

• reviewing regularly the Board structure, size and composition
(including skills, knowledge, experience and diversity) and
recommending any necessary or desirable changes;

Associated British Foods plc Annual Report 2023

CORPORATE GOVERNANCE CONTINUED

Audit Committee Report

Food/
Retail

Financial/
Audit/
Risk

Legal/
Public
Policy

Senior
Executive

Cybersecurity/
IT

Comms/
Marketing/
Customer
Service

Environmental/
Social

International
Markets

Technical/
Engineering

Health
and
Safety

Manufacturing/
Supply Chain

Director skill sets

Director

Michael McLintock

George Weston

Eoin Tonge

Dame Heather Rabbatts

Emma Adamo

Graham Allan

Wolfhart Hauser

Annie Murphy

Richard Reid

Board and executive management gender and ethnicity metrics
New Listing Rules targets for gender and ethnic diversity apply to the Company for the first time this financial year. As at
16 September 2023, the Company had met the new Listing Rules targets for gender and ethnic Board diversity with the exception
of the target for 40% female representation on the Board. This remains the case as at the date of this Annual Report. However,
following the appointment of Kumsal Bayazit as a director with effect from 1 December 2023 (subject to Kumsal’s election by
shareholders at the upcoming AGM), the Company will then meet all of the Listing Rules Board diversity targets as it will increase
female representation on the Board to 40%.

The following metrics set out the range of gender and ethnicity as they relate to our Board and executive management as at
16 September 2023. In the absence of an Executive Committee, by ‘executive management’ we refer to the most senior level
of managers reporting to the Chief Executive, including the Company Secretary but excluding administrative and support staff,
in accordance with the definition in the Listing Rules. The process by which diversity data was collected was, where permitted
by relevant laws, to contact relevant individuals and ask them how they identified using the categorisations set out in the Listing
Rules. Where we already held gender or ethnicity data for executives, with consents in place to use it for reporting on an anonymous
basis, we used that data.

Gender representation at Board and executive management level

Men
Women
Not specified/prefer not to say

Number of

Board members % of the Board
66.7%
33.3%
–

6
3
–

Ethnicity representation at Board and executive management level

White British or other White (incl. minority white groups)
Mixed/Multiple Ethnic Groups
Asian/Asian British
Black/African/Caribbean/Black British
Other ethnic group, including Arab
Not specified/prefer not to say*

Number of

Board members % of the Board
88.9%
11.1%
–
–
–
–

8
1
–
–
–
–

Number of
senior Board
positions (CEO,
CFO, SID, Chair)
3
1
–

Number of
senior Board
positions (CEO,
CFO, SID, Chair)
3
1
–
–
–
–

Number in
executive
management
10
3
1

% of executive
management
71.4%
21.4%
7.2%

Number in
executive
management
10
–
–
–
1
3

% of executive
management
71.4%
–
–
–
7.2%
21.4%

* This includes, as permitted by Listing Rule 9.8.6G, those people in respect of whom data protection laws in the relevant jurisdiction (e.g. France) prevent the

collection or publication of some or all of the personal data required to be disclosed.

• reviewing and challenging, where necessary, the consistency
of, and changes to, accounting and treasury policies; whether
the Group has followed appropriate accounting policies and
made appropriate estimates and judgements; the clarity and
completeness of disclosure; significant adjustments resulting
from the audit; and compliance with accounting standards;

Narrative reporting
• at the Board’s request, reviewing the content of the Annual

Report and advising the Board on whether, taken as a whole,
it is fair, balanced and understandable and provides the
information necessary for shareholders to assess the
Company’s position and performance, business model
and strategy;

• where requested by the Board, assisting in relation to the
Board’s robust assessment of the principal and emerging
risks facing the Company and the prospects of the Company
for the purposes of disclosures required in the Annual Report;

• reviewing and approving statements to be included in the

Annual Report concerning the going concern statement and
viability statement;

Internal financial controls
• reviewing the effectiveness of the Group’s internal financial
controls and internal control and risk management systems
(including the systems to identify, manage and monitor
financial risks), including the policies and overall process
for assessing established systems and the timeliness and
effectiveness of corrective action taken by management;

Whistleblowing and fraud
• reviewing and reporting to the Board on the Group’s

arrangements for its employees and contractors to raise
concerns, in confidence, about possible improprieties in
financial reporting, financial and management accounting,
or any other matters. The objective is to ensure that
arrangements are in place for the proportionate and
independent investigation of such matters and appropriate
follow-up action;

• reviewing the Group’s policies, procedures and controls for

preventing and detecting fraud, preventing bribery, identifying
money laundering, and ensuring compliance with legal and
regulatory requirements;

Internal audit
• monitoring, reviewing and assessing the effectiveness and
independence of the Group’s internal audit function in the
context of the Group’s overall risk management system;
• considering and approving the remit of the internal audit

function, ensuring it has adequate resources and appropriate
access to information to enable it to perform its function
effectively; and

External audit
• overseeing the relationship with the Group’s external auditor,
including considering when the external audit contract should
be put out to tender (adhering to any legal requirements for
tendering or rotation), reviewing and monitoring the external
auditor’s independence and objectivity, agreeing the scope
of their work and fees paid to them for audit, assessing the
effectiveness of the audit process, and agreeing the policy
in relation to the provision of non-audit services.

Richard Reid
Audit Committee Chair

Members
At the date of this report, the members and Chair of the Audit
Committee are as follows:

Richard Reid (Chair)
Graham Allan
Wolfhart Hauser
Annie Murphy (appointed 6 September 2023)
Dame Heather Rabbatts

All members served on the Committee throughout the year
with the exception of Annie Murphy, who was appointed
on 6 September 2023. Ruth Cairnie served on the Committee
throughout the year until stepping down from the Board
on 31 August 2023.

Meetings
The Committee met four times in the year under review.
The Committee’s agenda is linked to events in the Group’s
financial calendar.

Primary responsibilities
In accordance with its terms of reference, the Audit
Committee’s primary responsibilities include:

Financial reporting
• monitoring the integrity of the Group’s financial statements
and any formal announcements relating to the Company’s
performance, reviewing significant financial reporting
judgements contained in them before their submission to
the Board;

• informing the Board of the outcome of the Group’s external

audit and explaining how it contributed to the integrity
of financial reporting;

Associated British Foods plc Annual Report 2023

CORPORATE GOVERNANCE CONTINUED

Governance
The Audit Committee comprises a minimum of three members,
all of whom are independent non-executive directors of the
Company. Two members constitute a quorum.

The Committee Chair fulfilled the requirement that there must
be at least one member with recent and relevant financial
experience and competence in accounting or auditing (or both)
during the year. In addition, the Committee as a whole has
competence in the sectors in which the Company operates.
All Committee members are expected to be financially literate
and to have an understanding of the following areas:

• the principles of, and developments in, financial reporting

including the applicable accounting standards and statements
of recommended practice;

• key aspects of the Company’s operations including corporate

policies and the Group’s internal control environment;

• matters which may influence the presentation of accounts

and key figures;

• the principles of, and developments in, company law and

other relevant corporate legislation;

• the role of internal and external auditing and risk

management; and

• the regulatory framework for the Group’s businesses.

The Committee invites the other non-executive directors, Chief
Executive, Finance Director, Group Financial Controller, Director
of Financial Control and senior representatives of the external
auditor to attend its meetings in full, although it reserves
the right to request any of these individuals to withdraw.
Other senior managers are invited to present such reports
as are required for the Committee to discharge its duties.

During the year, the Committee held four meetings with the
external auditor without any executive members of the Board
being present.

The Committee has unrestricted access to Company
documents and information, as well as to employees of the
Company and the external auditor.

The Committee may take independent professional advice
on any matters covered by its terms of reference at the
Company’s expense.

The Committee Chair reports the outcome of meetings to the
Board (to the extent that any Board members were not in
attendance at the relevant meeting).

The performance of the Audit Committee was considered
in the external Board evaluation in 2021, which found that the
Committee was universally well-regarded as being strong and
effective. It was noted that members came to the meetings
well prepared and offered robust challenge and that the agenda
of meetings was broad-ranging, well-structured and covered
all the matters in the Audit Committee’s remit. This view was
reiterated in both the 2022 and 2023 internal Board evaluation.

The terms of reference of the Audit Committee can be viewed
on the Investors section of the Company’s website:
www.abf.co.uk.

The Committee advises the Board to enable it to meet its
responsibilities under audit, risk and internal control.

Board responsibilities on audit, risk and
internal control
The Board recognises that its responsibility to present a fair,
balanced and understandable assessment extends to interim
and other price-sensitive public reports, reports to regulators,
and information required to be presented by statutory requests.

The directors confirm that they consider that the Annual Report
and financial statements, taken as a whole, are fair, balanced
and understandable and provide the information necessary for
shareholders to assess the Company’s position, performance,
business model and strategy. The Company produced a paper in
this respect, prepared by the Group Financial Controller,
containing an assessment of the Annual Report and financial
statements, including a summary by division of performance
issues in the year and one-off items which benefited
performance. This paper was presented to the Audit
Committee.

Risk management and internal control
The Board acknowledges its overall responsibility for monitoring
the Group’s risk management and internal control systems to
facilitate the identification, assessment and management of
risk and the protection of shareholders’ investments and the
Group’s assets. The directors recognise that they are responsible
for providing a return to shareholders, which is consistent with
the responsible assessment and mitigation of risks.

The directors confirm that there is a process for identifying,
evaluating and managing the risks faced by the Group and the
operational effectiveness of the related controls, which has
been in place for the year under review and is up to the date of
approval of the Annual Report. They also confirm that they have
regularly monitored the effectiveness of the risk management
and internal control systems (which cover all material controls
including financial, operational and compliance controls) utilising
the review process set out below.

Standards
There are guidelines on the minimum groupwide requirements
for health and safety and environmental standards. There are
also guidelines on the minimum level of internal control that
each of the divisions should exercise over specified processes.
Each business has developed and documented policies and
procedures to comply with the minimum control standards
established, including procedures for monitoring compliance and
taking corrective action. The board of each business is required
to confirm twice yearly that it has complied with these policies
and procedures.

High-level controls
All businesses prepare annual operating plans and budgets
which are updated regularly. Performance against budget is
monitored at business unit level and centrally, with variances
being reported promptly. The cash position at Group and
business level is monitored constantly and variances from
expected levels are investigated thoroughly. Clearly defined
guidelines have been established for capital expenditure and
investment decisions. These include the preparation of budgets,
appraisal and review procedures and delegated authority levels.

Financial reporting
Detailed management accounts are prepared every four
weeks, consolidated in a single system and reviewed by senior
management and the Board.

They include a comprehensive set of financial reports and
key performance indicators covering commercial, operational,
environmental and people issues. Performance against budgets
and forecasts is discussed regularly at Board meetings and
at meetings between operational and Group management.
The adequacy and suitability of key performance indicators are
reviewed regularly. All chief executives and finance directors of
the Group’s operations are asked to sign an annual confirmation
that their business has complied with the Group Accounting
Manual in the preparation of consolidated financial statements
and specifically to confirm the adequacy and accuracy of
accounting provisions.

Internal audit
The Group’s internal audit activities are co-ordinated centrally
by the Director of Financial Control, who is accountable to the
Audit Committee.

Our internal audit team adopts a risk-based approach to develop
and deliver a balanced internal audit plan that provides assurance
that our businesses are effectively managing their key control
risks and agreed action plans with business leaders where
controls require improvement.

All Group businesses are required to comply with the Group’s
Financial Control Framework which sets out minimum control
standards. Our internal audit plans are designed to include
coverage of financial controls to provide assurance over how
our businesses meet the requirements of the Financial
Control Framework.

Assessment of principal risks
The directors confirm that, during the year, the Board has
carried out a robust assessment of the principal and emerging
risks facing the Group, including those that could threaten its
business model, future performance, and solvency or liquidity.
A description of these principal and emerging risks and how
they are being managed and mitigated is set out on pages
68 to 75.

Annual review of the effectiveness of the systems of risk
management and internal control
During the year, the Board reviewed the effectiveness of the
Group’s systems of risk management and internal control
processes embracing all material systems, including financial,
operational and compliance controls, to ensure that they remain
robust. The review covered the financial year to 16 September
2023 and the period to the date of approval of this Annual
Report. The review included:

• the annual risk management review, a comprehensive

process identifying the key external and operational risks
facing the Group and the controls and activities in place to
mitigate them, the findings of which are discussed with
each member of the Board individually (refer to the risk
management section on pages 94 to 95 for details of the
process undertaken); and

• the annual assessment of internal control, which, following

consideration by the Audit Committee, provided assurance to
the Board around the control environment and processes in
place around the Group, specifically those relating to internal
financial control.

The Board evaluated the effectiveness of management’s
processes for monitoring and reviewing risk management and
internal control. No significant failings or weaknesses were
identified by the review and the Board is satisfied that, where
areas of improvement were identified, processes are in place to
ensure that remedial action is taken and progress monitored.

The Board confirmed that it was satisfied with the outcome of
the review of the effectiveness of the systems and processes
and that they complied with the requirements of the 2018 Code.

Going concern and viability
The 2018 Code requires the directors to assess and report on
the prospects of the Group over a longer period. This longer-
term viability statement and statement of going concern is set
out on pages 76 and 77.

Audit Committee activities during the year
In order to fulfil its terms of reference, the Audit Committee
receives and reviews presentations and reports from the
Group’s senior management, consulting as necessary with
the external auditor.

Monitoring the integrity of reported financial information
Ensuring the integrity of the financial statements and
associated announcements is a fundamental responsibility
of the Audit Committee.

During the year it formally reviewed the Group’s interim and
annual reports.

These reviews considered:

• the description of performance in the Annual Report to ensure

it was fair, balanced and understandable;

• the accounting principles, policies and practices adopted

in the Group’s financial statements, any proposed changes
to them, and the adequacy of their disclosure;

• important accounting issues or areas of complexity, the

actions, estimates and judgements of management in relation
to financial reporting and in particular the assumptions
underlying the going concern and viability statements;

• any significant adjustments to financial reporting arising from

the audit;

• tax contingencies, compliance with statutory tax obligations

and the Group’s tax policy;

• ongoing consideration of the potential implications of the
Government White Paper: Restoring Trust in Audit and
Corporate Governance, including the preparatory work for
additional control reviews, the Group’s Assessment
of Controls Effectiveness (ACE) programme;

• reporting in line with the recommendations and recommended

disclosures of the Task Force on Climate-related Financial
Disclosures (TCFD) and the new Companies Act 2006
climate-related disclosure requirements; and

• treasury policies.

Associated British Foods plc Annual Report 2023

CORPORATE GOVERNANCE CONTINUED

Significant accounting issues considered by the Audit
Committee in relation to the Group’s financial statements
A key responsibility of the Committee is to consider the
significant areas of complexity, management judgement and
estimation that have been applied in the preparation of the
financial statements. The Committee has, with support from
Ernst & Young LLP (‘EY’) as external auditor, reviewed the
suitability of the accounting policies which have been adopted
and whether management has made appropriate estimates
and judgements.

Set out below are the significant areas of accounting judgement
or management estimation and a description of how the
Committee concluded that such judgements and estimates
were appropriate. These are divided between those that could
have a material impact on the financial statements and those
that are less likely to have a material impact but nevertheless,
by their nature, required a degree of estimation.

Areas of significant accounting judgement and
estimation material to the Group financial
statements

Impairment of goodwill, intangibles, property,
plant and equipment and right-of-use assets
Assessment for impairment involves comparing the
book value of an asset with its recoverable amount,
being the higher of value-in-use and fair value less
costs to sell. Value-in-use is determined with
reference to projected future cash flows discounted
at an appropriate rate. Both the cash flows and the
discount rate involve a significant degree of
estimation uncertainty.

Impact of inflationary pressures on the viability
statement and going concern
The Group has continued to experience inflationary
pressures in raw material, supply chains and energy.
These inflationary pressures have been exacerbated
by the war in Ukraine.

The Board considered future performance and cash
flows in its going concern assessment, through to
February 2025, and its viability statement over the
next three years.

Management has undertaken a detailed financial
modelling exercise that has considered the impact on
profit, cash and working capital of a number of
potential scenarios.

Audit Committee assurance

The Committee considered the reasonableness of cash flow projections
which were based on the most recent budget approved by the Board and
reflected management’s expectations of sales growth, operating costs and
margins based on past experience and external sources of information.
The Committee focused on China Sugar, Don, Illovo Mozambique, Jordans
Dorset Ryvita and Vivergo.

Long-term growth rates for periods not covered by the annual budget were
challenged to ensure that they were appropriate for the products, industries
and countries in which the relevant cash-generating units operate.
The Committee reviewed and challenged the key assumptions made in
deriving these projections: discount rates, growth rates, and expected
changes in production and sales volumes, selling prices and direct costs.
The Committee also considered the adequacy of the disclosures in respect
of the key assumptions and sensitivities. Refer to notes 8, 9 and 10 to the
financial statements for more details of these assumptions.

The Committee was satisfied that the discount rate assumptions
appropriately reflected current market assessments of the time value of
money and the risks associated with the particular assets. The other key
assumptions were all considered to be reasonable.

On the basis of the key assumptions and associated sensitivities, it is
considered that the charge of £109m, comprising £41m in the Don
business, £15m in north China Sugar, £35m in Illovo Mozambique and £18m
in Primark was appropriately recognised and included within exceptional
items as detailed in notes 8, 9 and 10.

The external auditor undertook an independent audit of the estimates of
value-in-use and fair value less costs to sell, including a challenge of
management’s underlying cash flow projections, long-term growth
assumptions and discount rates. On the basis of its work, and its challenge
of the key assumptions and sensitivities, it considered that the impairment
charges as detailed in notes 8, 9 and 10 were appropriately recognised.

The Committee has reviewed and challenged the scenarios considered
by management and concluded that these, and the stress-testing scenarios
and assumptions, were appropriate and adequate.

The Committee has reviewed the detailed cash flow forecasts, which
incorporate the mitigating actions proposed by management.
The Committee also reviewed and challenged the reverse stress
assumptions to confirm the viability of the Group.

The Committee has been kept informed of the impacts of inflationary
pressures on the Group, including accounting matters, going concern and
viability considerations. The Committee has satisfied itself that management
has adequately identified and considered all potentially significant accounting
and disclosure matters.

Areas of significant accounting judgement and
estimation material to the Group financial
statements

Post-retirement benefits
Valuation of the Group’s pension schemes and
post-retirement medical benefit schemes require
various subjective judgements to be made including
mortality assumptions, discount rates, general and
salary inflation, and the rate of increase for pensions
in payment and those in deferment.

Audit Committee assurance

Actuarial valuations of the Group’s pension scheme obligations are
undertaken every three years in the UK by an independent qualified actuary
who also provides advice to management on the assumptions to be used
in preparing the accounting valuations each year. Actuarial valuations in
other jurisdictions are performed as required. Details of the assumptions
made in the current and previous year are disclosed in note 12 of the
financial statements together with the bases on which those assumptions
have been made.

The Committee reviewed the assumptions by comparison with externally
derived data and also considered the adequacy of disclosures in respect
of the sensitivity of the surplus to changes in these key assumptions.

Other accounting areas requiring management
judgement or estimation

Audit Committee assurance

Taxation
Current and deferred tax recognised in the financial
statements is dependent on subjective judgements
as to the outcome of decisions by tax authorities in
various jurisdictions around the world and the ability
of the Group to use tax losses within the time limits
imposed by various tax authorities.

The Committee reviews the Group’s tax policy and principles for managing
tax risks annually.

The Committee reviewed and challenged the provisions recorded and the
contingent liabilities disclosed at the balance sheet date and management
confirmed that they represent their best estimate of the financial exposure
faced by the Group.

The external auditor explained to the Committee the work that they had
conducted during the year, including how their audit procedures were
focused on those provisions requiring the highest degree of judgement.

The Committee discussed with both management and the external auditor
the key judgements which had been made. The Committee was satisfied
that the judgements were reasonable and that, accordingly, the provision
amounts recorded were appropriate.

Misstatements
Management reported to the Committee that they were not
aware of any material or immaterial misstatements made
intentionally to achieve a particular presentation. The external
auditor reported to the Committee the misstatements that they
had found in the course of their work. After due consideration
the Committee concurred with management that these
misstatements were not material and that no adjustments
were required.

Internal financial control and risk management
The Committee is required to assist the Board to fulfil its
responsibilities relating to the adequacy and effectiveness of
the control environment, controls over financial reporting and
the Group’s compliance with the 2018 Code. To fulfil these
duties, the Committee (or the Board as a whole) reviewed:

• the external auditors’ summary of management letters

and their Audit Committee reports;

• internal audit reports on key audit areas and any significant

deficiencies in the financial control environment;

• reports on the systems of internal financial control and risk
management, including the preparatory work for additional
control reviews under the Group’s ACE programme;

• an assessment of business continuity plans in place in the

Group’s businesses;

• reports on fraud perpetrated against the Group;

• the Group’s approach to anti-bribery and corruption, and

whistleblowing;

• the Group’s approach to IT and cybersecurity;
• reports on significant systems implementations; and
• inflationary pressure challenges and response assurance plan.

Internal audit
The Group’s businesses employ internal auditors (both
employees and resources provided by major accounting firms
other than the firm involved in the audit of the Group (except
where expressly permitted by the Audit Committee)) with skills
and experience relevant to the operation of each business.
All of the internal audit activities are co-ordinated centrally by
the Director of Financial Control, who is accountable to the
Audit Committee.

The Audit Committee is required to assist the Board in fulfilling
its responsibilities for ensuring the capability of the internal audit
function and the adequacy of its resourcing and plans.

The Audit Committee receives regular reports on the results
of internal audit’s work and monitors the status of
recommendations arising. The Committee reviews annually
the adequacy, qualifications and experience of the Group’s
internal audit resources and the nature and scope of internal
audit activity in the overall context of the Group’s risk
management system.

Associated British Foods plc Annual Report 2023

CORPORATE GOVERNANCE CONTINUED

To fulfil its duties, the Committee reviewed:

• internal audit’s reporting lines and access to the Committee

and all members of the Board;

• internal audit’s plans and its achievement of the planned

activity;

• the results of key audits and other significant findings,

the adequacy of management’s response and the timeliness
of their resolution; and

• changes in internal audit personnel to ensure appropriate

resourcing, skills and experience are put in place.

The Group’s Director of Financial Control meets with the Chair
of the Audit Committee as appropriate but at least quarterly,
without the presence of executive management, and has direct
access to the Chairman of the Board.

Whistleblowing and fraud
The Whistleblowing Policy ‘Speak Up’ is designed to protect
ABF’s culture of fairness, trust, accountability and respect,
encouraging effective and honest communication at all levels.
In addition, an independent external service provider receives,
in confidence, complaints on accounting, risk issues, internal
controls, auditing issues and related matters for reporting to the
Audit Committee as appropriate. Further details on the Policy
can be found on page 52. The Committee reviewed reports
from internal audit and the actions arising therefrom and reported
this to the Board (to the extent any Board member was not
in attendance at the relevant meeting).

The Group’s Anti-fraud Policy has been communicated to all
employees and states that all employees have a responsibility
for fraud prevention and detection. Any suspicion of fraud should
be reported immediately and will be investigated vigorously.
The Audit Committee reviewed all instances of fraud perpetrated
against the Group and the action taken by management both
to pursue the perpetrators and to prevent reoccurrences.

External audit
Auditor independence
The Audit Committee is responsible for the development,
implementation and monitoring of policies and procedures
on the use of the external auditor for non-audit services,
in accordance with professional and regulatory requirements.
These policies are kept under review to meet the objective
of ensuring that the Group benefits in a cost-effective manner
from the cumulative knowledge and experience of its auditor,
whilst also ensuring that the auditor maintains the necessary
degree of independence and objectivity. The Committee’s policy
on the use of the external auditor to provide non-audit services
is in accordance with applicable laws and takes into account the
relevant ethical guidance for auditors. Any non-audit work to be
undertaken by the auditor requires authorisation by the Finance
Director, and above a certain threshold, the Audit Committee,
prior to its commencement.

The Committee also ensures that fees incurred, or to be
incurred, for non-audit services, both individually and in
aggregate, do not exceed any limits in applicable law and take
into account the relevant ethical guidance for auditors.

The Committee is required to approve the use of the external
auditor to provide: accounting advice and training; corporate
responsibility and other assurance services; financial due
diligence in respect of acquisitions and disposals; and will
consider other services when it is in the best interests of the
Company to do so, provided they can be undertaken without
jeopardising auditor independence. Tax services including tax
compliance, tax planning and related implementation advice
may not be undertaken by the external auditor except in very
exceptional circumstances where specialist knowledge is
required. The aggregate expenditure with the Group auditor
is reviewed by the Audit Committee. No individually significant
non-audit assignments that would require disclosure were
undertaken in the financial year.

The Company has a policy that any partners, directors or senior
managers hired directly from the external auditor must be
pre-approved by the Chief People and Performance Officer,
and the Finance Director or Group Financial Controller, with the
Chair of the Audit Committee being consulted as appropriate.

The Audit Committee has formally reviewed the independence
of the external auditor. EY has reported to the Committee
confirming that it believes it remained independent throughout
the year, within the meaning of the regulations on this matter
and in accordance with its professional standards.

To fulfil its responsibility to ensure the independence of the
external auditor, the Audit Committee reviewed:

• a report from the external auditor describing arrangements
to identify, report and manage any conflicts of interest, and
policies and procedures for maintaining independence and
monitoring compliance with relevant requirements; and

• the extent of non-audit services provided by the

external auditor.

The total fees paid to EY for the 52 weeks ended 16 September
2023 were £11.2m, of which £1.0m related to non-audit work.
Further details are provided in note 2 to the financial statements.

Auditor effectiveness
To assess the effectiveness of the external auditor,
the Committee reviewed:

• the external auditor’s fulfilment of the agreed audit plan

and variations from it (including changes in perceived audit
risks and the work undertaken by the external auditors to
address those risks);

• reports highlighting the major issues that arose during

the course of the audit;

• feedback from the businesses via questionnaires evaluating
the conduct and performance of each assigned audit team
(including in respect of their planning, challenge and
interaction with the business); and

• a report on EY, as a firm, from the Audit Quality Review Team
(‘AQRT’) of the Financial Reporting Council (‘FRC’) and the
discussions with EY on the contents of such report.

Minimum Standard
The FRC’s ‘Audit Committees and the External Audit: Minimum
Standard’ (the ‘Minimum Standard’) was published in May 2023,
eight months into the financial year. Between its publication
and the end of the financial year on 16 September 2023,
one Audit Committee meeting has taken place, at which the
Minimum Standard was considered. The Audit Committee’s
initial assessment is that there is nothing of note in the
Minimum Standard that differs from how the ABF Audit
Committee currently operates. However, this is being reviewed
further, including to the extent that there may be useful points
to consider in relation to the assessment of the effectiveness
of the audit process and to the audit tender process.

Richard Reid
Audit Committee Chair

There is regular open communication between EY and the Audit
Committee as well as between EY and the businesses’ senior
management. The Audit Committee holds private meetings with
the external auditor after each Committee meeting to review
key issues within their sphere of interest and responsibility and
to satisfy itself that the audit is of a sufficiently high standard.

To fulfil its responsibility for oversight of the external audit
process, the Audit Committee reviewed:

• the terms, areas of responsibility, associated duties and
scope of the audit as set out in the external auditor’s
engagement letter;

• the overall work plan and fee proposal;
• the major issues that arose during the course of the audit

and their resolution;

• key accounting and audit judgements;
• the level of errors identified during the audit; and
• the content of, and any recommendations made by the
external auditor in, their management letters and the
adequacy of management’s response.

Auditor appointment
The Audit Committee reviews annually the appointment of
the auditor, taking into account the auditor’s effectiveness and
independence, and makes a recommendation to the Board
accordingly. Any decision to open the external audit to tender
is taken on the recommendation of the Audit Committee.

The Company’s current external auditor, EY, was first appointed
at the annual general meeting in December 2015, with effect
from 2016, following the conclusion of a competitive tender
process. The Audit Committee is satisfied with the auditor’s
effectiveness and independence and has recommended to the
Board that EY be reappointed as the Company’s external auditor
for 2023/24. The Board accepted such recommendation. In
accordance with applicable law and regulation, the Company is
required to conduct a competitive audit tender during 2025.

The Audit Committee has discussed the most appropriate time
to carry out the external audit tender process, taking into account
the independence, objectivity and quality of EY’s external audit
and has concluded that, based on current performance, it is
anticipated that a competitive tender process will commence in
2024. The Audit Committee considers that a competitive tender
is in the best interests of the Company’s shareholders as it will
allow the Company to appoint the audit firm that will provide
the highest quality, most effective and efficient audit.

Compliance with the Competition and Markets
Authority Order
The Company confirms that, during the period under review,
it has complied with the provisions of The Statutory Audit
Services for Large Companies Market Investigation (Mandatory
Use of Competitive Tender Processes and Audit Committee
Responsibilities) Order 2014.

Associated British Foods plc Annual Report 2023

DIRECTORS’ REMUNERATION REPORT

Annual statement by the Remuneration
Committee Chair

Incentive Plan Outcomes for 2022/23
At the beginning of the year, the Company was facing extreme
market volatility, as well as significant cost inflation at Primark
and in most of the food businesses. Given the challenging
trading environment, adjusted operating profit and adjusted
earnings per share were, at that time, expected to be lower
than in 2021/22. During the course of the year, however,
the Company successfully navigated these headwinds and
outperformed against both expectations and the prior year.
At Primark, well-received ranges, good results from new stores,
and selective price increases generated a solid sales and profit
outcome. Several other businesses had impressive sales
growth, particularly in Grocery and Ingredients, and international
brands performed well. In Sugar, performance was slightly
better than expected and adjusted operating profit was
moderately above last year. For the Group overall, this strong
all-round performance resulted in adjusted operating profit
finishing ahead of last year. The remuneration outcomes for
2022/23 reflect these results.

Short-Term Incentive Plan (STIP) 2022/23
Underpinned by year-on-year sales growth, operating profit
exceeded the maximum target established under the STIP.
However, working capital levels were impacted by supply chain
challenges and inflationary pressures and the threshold for the
working capital modifier was not met. Accordingly, the overall
outcome under the financial performance measures for this year
is 66.67% of maximum.

Last year, as part of our review, the personal element of
the STIP was replaced with strategic KPIs, with a weighting
of 15%. This year our strategic KPIs were all related to ESG.
The diversified nature of ABF means that ESG targets
are developed by division, with the centre having a key role
in governance, overseeing progress and ensuring accountability
for performance. Our scorecard of measures for the year
incorporated both the key ESG priorities within the divisions and
the evolution of our governance model. For the 2022/23 STIP,
against a broad scorecard of measures, the Committee
assessed the overall score at 21/30.

Combining these measures, the overall formulaic outcome
for the 2022/23 STIP was 67.17% of maximum.

Long-Term Incentive Plan 2020-23
Reflecting the Group’s strong post-COVID recovery, EPS
performance for the 2020-23 LTIP was broadly in line with the
target set back in 2020. The Group three-year average ROACE
without Sugar exceeded the maximum level. The four-year
average Sugar ROACE outcome was just below the maximum
level. Note that the Group ROACE without Sugar modifier
and the Sugar ROACE modifier act only as downward modifiers
to the calculated incentive outcomes.

Based on these results, the overall formulaic outcome for the
2020-23 LTIP was 58.46% of maximum.

The Committee believes that the STIP and LTIP outcomes
are appropriate, taking into account the performance of the
Company in the year and the strong recovery of the business
over the three-year LTIP performance period.

Appointment of Eoin Tonge
In the year, the Committee finalised the terms of buy-out
awards in place of awards forfeited by Eoin Tonge at his
previous employer, Marks and Spencer (‘M&S’), upon his
appointment as Finance Director of ABF. These awards,
along with their terms, were disclosed in last year’s Directors’
Remuneration Report. Three of these awards vested in July
2023. Details of these can be found on page 111.

Remuneration decisions for 2023/24
Salary and fees
In ABF’s decentralised model, each business is given flexibility
to determine its own salary increases and there is no single
budgeted increase rate for UK employees. We assess that our
average UK salary increases will be 9.2% including hourly-paid
Primark staff, and 4.7% if hourly-paid Primark staff are excluded.
In this context, the Committee has determined that for 2023/24,
the executive directors will receive salary increases of 4.5%,
below the average increase for the wider employee population.

STIP 2023/24
For 2023/24, the financial measures under the STIP remain
the same as those used in 2022/23, with a modest rebalancing
towards EBIT performance versus working capital. Strategic
measures, focused on ESG, will continue to represent 15%
of the total measures.

Restricted Share Plan (RSP) 2023-26
The shareholder-approved 2022 Remuneration Policy included a
move from LTIP awards to RSP awards for those in Group roles.
In line with shareholder expectations, the RSP awards represent
a 50% reduction in award opportunity compared to the previous
LTIP awards.

ABF has operated a conservative overall incentive quantum for
many years, with the maximum LTIP award level having been
set at 200% of salary since 2010. Recognising the modest level
of our incentive packages, the 2016 and 2019 remuneration
policies included headroom for LTIP awards to be increased up
to 300% of salary for new hires.

As disclosed last year, the recruitment of Eoin Tonge as Finance
Director afforded an opportunity to test the competitiveness
of senior level remuneration at ABF. As anticipated, use of the
policy headroom was required and an LTIP opportunity of 250%
of salary was needed to secure Eoin in the role. Under the
2022 Remuneration Policy, this translated to an RSP award
of 125% of salary.

Reliance on this policy headroom to successfully recruit a new
Finance Director caused the Committee last year to consider
an increase in the maximum opportunity for the Chief Executive
to an LTIP of 250% or an RSP award of 125% of salary. At that
time, the Chief Executive requested that this increase be
deferred. As a result, his RSP opportunity for 2022-25 was
100% of salary.

This year, the Committee again reviewed market data and
internal relativities, and concluded that it would be inappropriate
to continue awarding RSP awards to the Chief Executive at a
lower level than those awarded to the Finance Director. Recent
market data reveals that an RSP award of 100% of salary is not
competitive, with ABF having the joint lowest opportunity within
a comparator group of similar sized UK listed companies.

Graham Allan
Remuneration Committee Chair

In this section

Committee Chair letter

Remuneration at a glance

Remuneration Report

pages 100 to 101

pages 102 to 103

pages 100 to 115

Wider workforce remuneration

pages 107 to 108

Additional required disclosures

pages 111 to 115

The Annual Remuneration Report is subject to an advisory
vote at the 2023 AGM.

Dear shareholders
In this first letter as the new Remuneration Committee Chair,
I am pleased to present the Directors’ Remuneration Report for
the year to 16 September 2023. I would like to acknowledge
Ruth Cairnie’s extensive work as the previous Committee Chair
and to thank her for her support with the transition.

Work of the Committee in 2022/23
The role of the Committee includes incentivising strong
business performance and appropriately rewarding contributions
to the Company’s long-term success. We are pleased that the
2022 Remuneration Policy, which was based on these
principles, received support from more than 92% of
shareholders at the 2022 AGM.

The Committee has, as part of its regular work, reviewed the
policy based outcomes under the annual short-term incentive
plan (STIP) and the long-term incentive plan (LTIP), as well as
consulting with shareholders on the proposed restricted
share plan (RSP) award level for the Chief Executive for
2023-26 onwards.

The chart below shows the LTIP opportunities in the FTSE
15 – 45 (excluding Financial Services) with awards subject to
performance conditions discounted by 50% to allow for ready
comparison to the RSP, alongside the current and proposed
opportunities at ABF:

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(%)
250

200

150

100

From 2023/24 onwards, we plan to make RSP awards at 125%
of salary to both executive directors. This remains modest
compared to other companies of our scale.

As part of the normal consultation process we engaged with
22 of our largest shareholders on this proposal. No significant
concerns have been raised with the Committee in the course
of these consultations.

Consideration of wider workforce views and
remuneration approaches
The Group is geographically dispersed and subject to quite
different employment market conditions, both of which
complicate meaningful comparisons against wider workforce
compensation. However, the Committee is mindful of reward
practices across the Group when setting and implementing its
approach to executive remuneration. The Committee receives
data on the remuneration structure for two tiers of management
below the executive directors and uses this information to
ensure as much consistency of approach as is practicable.

Divisional HR directors provided input to the most recent
remuneration policy review and they also share, on an ongoing
basis, feedback they receive from employees on remuneration.
Richard Reid, a member of the Committee, engages with
employees through his work as the Non-Executive Director
for workforce engagement and specifically affords them an
opportunity to share their views on pay and conditions.
This feedback is shared fully with the Committee. We have also
created an email inbox (remcochair@abfoods.com) to enable
employees and other stakeholders to share directly their views
on the Company’s executive remuneration approach should
they so wish.

2023 AGM
This year the Committee has maintained its approach of aligning
compensation with business performance and the shareholder
experience. I hope that you will feel able to support our
Directors’ Remuneration Report at the 2023 AGM.

Graham Allan
Remuneration Committee Chair

100

Associated British Foods plc Annual Report 2023

101

DIRECTORS’ REMUNERATION REPORT CONTINUED

Remuneration summary/at a glance
Remuneration principles
Our remuneration approach needs to support efforts to attract and retain top executive talent and to promote the strategic and
financial performance of the business. Our principles, which are consistent with the requirements of Provision 40 of the UK Corporate
Governance Code, are considered in the Committee’s decision making. We believe that pay should be:

Fair
Total remuneration should fairly
reflect the performance delivered
by executives. Where appropriate,
this may include the application
of discretion to ensure remuneration
outcomes are aligned to performance
that creates value for shareholders
and other stakeholders

Aligned
The portfolio we operate is diverse and
complex. We aim to align remuneration
and business objectives and to use
performance measures which provide
clear line of sight for executives

Clear & simple
We believe that executive
remuneration should be clear and
simple for participants to understand.
The best way to achieve this is through
close alignment with business
performance

Remuneration approach
The Remuneration Policy for the executive directors, approved by shareholders last year, includes the following elements:

Base salary

Pension and
benefits

Short-Term
Incentive Plan (STIP)

Restricted Share
Plan (RSP)

Shareholding
requirement

Base salary set at an
appropriate level for ABF’s
size and scale

The Chief Executive will
opt out of his current
EFRBS and will not
receive a cash allowance
thereafter

The Finance Director
receives a cash allowance
of 10% of salary aligned
with other employees

Maximum of 200%
of salary

Normal annual RSP award
of 125% of salary

(Up to 150% of salary
cash, and 50% of salary
STIP shares)

Set at 250% of salary,
retained for 2 years after
leaving employment

The policy worked as intended this year and outcomes are in line with performance. The full Remuneration Policy wording is set out
in the 2022 Annual Report and Accounts which is available on the Company’s website https://www.abf.co.uk

Time horizons for STIP and RSP awards

2022/23

2023/24

2024/25

2025/26

2026/27

STIP cash

STIP shares

One year
performance

Deferral period
Vest at end of year three

RSP

Three year performance period – underpins apply
Vest at end of year three

Two year holding period

STIP and RSP payments are subject to malus and clawback provisions.

Performance alignment
Reward in Group and business roles – Group roles, including the executive directors, are granted RSP awards. This structure is
consistent with their responsibility for managing the portfolio to achieve sustainable growth in shareholder value. Performance-based
LTIPs are used at division and business level where tangible and directly relevant targets are set.

STIP performance measures – STIP performance is based on financial measures (adjusted operating profit and working capital)
and a portion based on strategic measures including ESG.

RSP underpins – The RSP underpins are intended to avoid rewards for failure. The underpins ensure a disciplined approach
to investment (ROACE), alignment with shareholders (dividends), strategic focus for future sustainable growth, good governance
and meaningful progress on the ESG agenda.

Discretion and judgement – In line with the principle of fairness, the Committee has a long history of applying discretion both to
increase and reduce incentive outcomes to ensure that they ‘feel fair’ given the circumstances and achievements across our portfolio,
consistent with our established remuneration principles.

Shareholder voting and engagement
We were pleased last year that 92.37% of those voting supported our new remuneration policy and that 99.11% supported the
Directors’ Remuneration Report, as shown below.

Resolution
Directors’ Remuneration Policy 2022
Directors’ Remuneration Report 2022

Dates of AGM
December 2022
December 2022

Votes for
92.37%
99.11%

Votes against

Votes withheld
7.63% 2,539,398
928,042
0.89%

During the year, the Committee engaged with its major shareholders on the proposed increase to the Chief Executive’s RSP award
level. See page 101 for more information on this consultation.

Annual remuneration report
Single total figure of remuneration for the executive directors (audited)

Fixed pay

Variable pay

Single total figure

Salary
Benefits
Pension
Total fixed remuneration
STIP cash
STIP deferred shares
LTIP
Other
Total variable remuneration

George Weston

Eoin Tonge

John Bason

2023
£000
1,118
18
0
1,136
1,167
469
1,328
–
2,964
4,100

2022
£000
1,084
17
101
1,202
1,084

0
–
1,084
2,286

2023
£000
446
17
45
508
449
253
-
2,372
3,074
3,582

2022
£000
–
–
–
–
–

–
–
–
–

2023
£000
478
11
81
570
484
194
756
–
1,434
2,004

2022
£000
748
17
187
952
745

0
–
745
1,697

Notes to single total figure of remuneration for the executive directors

Salary
For George Weston, the salary paid is reduced for pension-related salary sacrifices. The benefit of these salary sacrifices is captured
in the increase in pension entitlements for which a remuneration value is shown in the pensions row.

Benefits
The value of benefits for George Weston comprised £15,656 taken in cash and £2,114 taxed as benefits-in-kind; for Eoin Tonge
comprised £15,197 taken in cash and £1,363 taxed as benefits-in-kind; and for John Bason benefits comprised £9,725 taken in cash
and £1,001 taxed as benefits-in-kind.

Pension
In 2022/23 George Weston had an overall benefit promise of 1/45th of final pensionable pay for each year of pensionable service up
to 5 April 2016 and 1/50th of final pensionable pay for each year of pensionable service thereafter, subject to a maximum of 2/3rds of
final pensionable pay (basic salary during the last 12 months before retirement, plus if applicable, the average of the last three years’
fluctuating earnings). He opted out of the Associated British Foods Pension Scheme on 5 April 2006 and has a deferred benefit in that
scheme; the balance of the promise is provided under an EFRBS. His pension benefits are payable from age 65. No alternative defined
benefit arrangements are available to any member who chooses to take their benefits early. His accrued pension at 16 September
2023 was £754,991 per annum. George Weston will opt out of the EFRBS on 31 December 2023.

While the nature of George Weston’s pension benefits has not changed during the year, the pensions number for remuneration
purposes is £0 as inflation exceeded salary increases in the year.

Eoin Tonge received a cash allowance of 10% of salary in lieu of pension, which is reported under the pensions section in the single
figure table for clarity. Between 24 April 2019 and 31 December 2022, John Bason received a cash supplement of 25% of salary
in lieu of pension contributions. This reduced to 10% of salary from 1 January 2023.

George Weston total remuneration

Eoin Tonge total remuneration

(£000)
5,000

4,000

3,000

2,000

1,000

4
,
2
0
4

4
,
1
0
0

3
,
3
2
9

1
,
1
3
8

2
,
2
8
6

‘19

‘20

‘21

‘22

‘23

(£000)
5,000

4,000

3,000

2,000

1,000

3
,
5
8
2

‘19

‘20

‘21

‘22

‘23

102

Associated British Foods plc Annual Report 2023

103

DIRECTORS’ REMUNERATION REPORT CONTINUED

Annual Remuneration Report

STIP 2022/23
Achievement against financial targets
This table details the financial performance ranges for STIP 2022/23 and the calculated outcome for the cash element of the STIP.

Adjusted operating profit £m
STIP based on profit (as % of salary)

Working capital as % of 3rd party sales
% modifier to Profit element

Cash element

Cut In
1,130
15.94%

Target
1,255
63.75%

Maximum
1,380
106.25%

2022/23 STIP
outcome
1,513.19
106.25%

15.40%
80%

14.39%
100%

13.38%
120%

15.88%
80%

Total STIP cash financial element (as % of salary)

12.75%

63.75%

127.5%

85%

At the start of the year, the Company was facing extreme market volatility and significant cost inflation. Given the challenging
trading environment, adjusted operating profit was expected to be lower than in 2021/22. As explained on page 100, the Company
successfully navigated these headwinds. For the Group overall, this strong all-round performance resulted in adjusted operating profit
finishing ahead of last year and ahead of the maximum of the STIP performance range. However, working capital levels were impacted
by supply chain challenges and inflationary pressures and the threshold for the working capital modifier was not met. Accordingly,
the overall outcome under the financial performance measures for this year is 66.67% of maximum.

Achievement against ESG strategic KPIs
This year our STIP strategic KPIs were all related to ESG. In our diversified Group, ESG-related targets are set by the businesses based
on their material risks and what is relevant and achievable for them. As detailed in our TCFD report, our most material businesses
each have their own emissions reduction targets.

We are committed to a range of sustainability goals, including reaching net zero by 2050, and believe that the best way to incentivise
management to deliver this is by setting targets in their short-term incentive plans linked to the delivery of key projects. In our TCFD
report we have included transition plans for ABF Sugar and Primark as they contribute most significantly to adjusted operating profit
and total GHG emissions.

In line with our governance model, we have assessed the STIP outcome taking into account progress in four key areas, as set out
in the table below. The targets set were demanding and tightly-aligned with our approach to ESG. Against a scorecard of measures,
the overall score achieved was 21/30, 70% of the maximum for this element.

The Committee also considered our progress on ESG in the round, ensuring that our ESG governance approach is robust, that each
operating division has its own ESG framework and increasing understanding of future legislation and implications for reporting.
The Committee concluded that progress had been good and was therefore satisfied that 21/30 (70%) was a fair outcome.

Score

Commentary and performance outcome

Primark
sustainability

People and
community

5/6

6/9

• 55% of clothing made from recycled/more sustainably sourced material, up from 45% in 2022.
• 46% of cotton clothing units sold contained organic, recycled or Sustainable Cotton Programme

(PSCP) cotton, up from 40% in 2022.

• Over 299,000 farmers trained or currently in PSCP.
• Primark Phase 2 pilot completed using Fair Labour Association (FLA) tool to assess wage data

in 30 factories compared with the Global Living Wage Coalition benchmark.

• Social and supply chain risks documented to same level as environmental risks – significant

Carbon

6/8

Water

4/7

progress made.

• Further review of the human rights risks across 15 key commodities is underway.
• Board Diversity Policy introduced with principles applied across the Group.
• Health, Safety and Wellbeing Policy updated to reflect focus on mental health and wellbeing.
• Progress on key Sugar projects in the UK designed to reduce carbon emissions including:

• modifications to driers to enable them to run on natural gas rather than coal; and
• removing calcium from juice to enable evaporators to operate more efficiently.

• For further information please refer to page 65.
• Around half of Illovo abstraction sites have >95% instrumentation accuracy and capital plans are

in place to ensure remaining sites are at this level by the end of 2024.

• Carried out annual water risk assessments for our operations using internationally recognised

methodologies to identify sites in water-stressed areas.

• 25% of water abstracted was reused before being returned to watercourses.

Overall achievement
The overall outcome for the STIP cash element was 100.75% of salary (67.17% of maximum) as shown in the table below.

STIP financial element
STIP ESG/KPI element
STIP cash total

Cut In
12.75%
2.25%

Target
63.75%
15%

Maximum
127.5%
22.5%

Actual
85%
15.75%
100.75%

The 2022-25 STIP shares element was subject to the same performance conditions as the cash element. 67.17% of the shares that
were allocated at the beginning of the performance period will vest in 2025, subject to a service condition. The remaining allocated
shares have now lapsed. The number of shares vesting is shown on page 111.

STIP amounts included in the single total figure table
For 2022/23, the figures shown in the single total figure table comprise the annual cash bonus, which is paid in December in respect
of the preceding financial year, and the value of deferred share awards, earned for performance in the 2022/23 financial year, calculated
based on the average mid-market closing price over the last quarter of the financial year of 2,008.02p. These shares are subject to
a two-year deferral period. 20.6% of the value of the deferred awards is attributable to share price appreciation as the share price
has increased from 1,665.3p at allocation in December 2022. No value is included in respect of the STIP deferred shares based on
performance in 2020/21 and vesting in November 2023 as these values were required to be reported in the 2020/21 annual report.
The directors are also paid dividend equivalents in respect of vested shares. These are not included in the single total figure as the
amounts do not relate to the periods being reported on.

For 2021/22, this figure comprises the annual cash bonus, which was paid in December 2022 in respect of the preceding financial
year, and the value of deferred share awards, earned for performance in the 2021/22 financial year, calculated based on the average
mid-market closing price over the last quarter of the 2021/22 financial year of 1,580.52p. These shares are subject to a two-year
deferral period. These values are not updated to reflect vesting share price as the awards have not yet vested. None of this value is
attributable to share price appreciation as the share price decreased in the 2021/22 financial year. The directors are also paid dividend
equivalents in respect of vested shares. These are not included in the single total figure as the amounts do not relate to the periods
being reported on.

LTIP 2020–23
Boosted by a strong post-COVID recovery, the EPS performance for the 2020-23 LTIP was just ahead of target. The Group three-year
average ROACE without Sugar exceeded the maximum level. The four-year average Sugar ROACE outcome was just below the
maximum level. Note that the Group ROACE without Sugar modifier and the Sugar ROACE modifier act only as downward modifiers
to the calculated incentive outcomes. The overall formulaic outcome for the 2020-23 LTIP was 58.46% of maximum, as shown in the
table below.

100% of award

Group adjusted earnings per share
in the non-Sugar businesses
3-yr ROACE in the non-Sugar
businesses downward modifier
4-yr Sugar ROACE downward modifier
Vesting as % of maximum

Threshold

Target

Maximum

Performance

Calculated
outcome

125p

132p

142p

133.7p

58.5%

10%
5%

12%
8%

13.07%
7.99%

100%
99.93%
58.46%

LTIP amounts included in the single total figure table
The numbers in the single total figure table reflect the number of shares vesting. George Weston will receive 63,063 shares and John
Bason will receive 35,870 shares. As required by UK regulations, the vesting value for 2020–23 has been estimated using the
mid-market closing price over the last quarter of 2022/23 of 2,008.02p. Vesting will be on 20 November 2023 and a figure recalculated
for the share price on that date will be presented in the 2023/24 annual report. The values shown in the table also include an amount
in respect of cash dividend equivalent payments that will be made in respect of the shares vesting. The amount included for George
Weston is £62,054 and for John Bason is £35,296. None of the amount shown is in respect of an increase in share price as the price
used in the calculation is below the allocation price.

None of the shares under the LTIP for 2019–22 vested in November 2022.

Other
The values shown for other remuneration in the single total figure table for Eoin Tonge are:

• the buyout awards made to replace awards that he held in M&S of 96,210 shares, which vested on 3 July 2023 at a price of

2,006.7p; and

• £440,605 in cash made as a buyout award in respect of the M&S STIP he forfeited on joining ABF.

104

Associated British Foods plc Annual Report 2023

105

DIRECTORS’ REMUNERATION REPORT CONTINUED

Implementation of policy in 2023/24

Base salary

Salaries for the executive directors will increase as shown below in December 2023. Estimated average UK
salary increases are expected to be 9.23% including hourly-paid Primark staff, and 4.68% excluding them.

George Weston
Eoin Tonge

Salary from
Increase
1 December 2023
4.5% £1,210,000
£757,500
4.5%

Pension

The Group has a wide variety of pension arrangements in place and a history of honouring the
commitments we make to individuals at appointment. Our UK defined benefit pension scheme remains
open to future accrual for members who joined the Group before it closed to new members.

George Weston participates in an EFRBS designed to replicate benefits under the UK defined benefit
scheme. Whilst this is consistent with others who joined the Group at a similar time, it is different from the
wider workforce of more recent recruits who participate in a defined contribution scheme.

In 2021/22 George Weston agreed that his EFRBS participation would end on 31 December 2023. He will
then opt out of the EFRBS and become a deferred member of the Scheme. Thereafter he will receive no
further EFRBS accruals from the Group, nor will he receive a cash allowance in lieu of pension contributions.

Eoin Tonge will receive a cash supplement of 10% of salary in lieu of pension contributions, in line with the
approach for the wider ABF UK workforce.

STIP 2023/24
150% of salary
in cash
50% of salary
in shares

Maximum
On-target
Threshold
Below threshold

EBIT
(% of salary)
147.83%
85%
20%
0%

Modification
based on
average
working capital
x1.15
X1
x0.85
x0.85

Total financial
element
(% of salary)
170%
85%
17%
0%

ESG and
strategic
measures
(% of salary)
30%
20%
3%
0%

Total STIP
(% of salary)
200%
105%
20%
0%

The financial measures remain the same as in 2022/23, with a modest rebalancing in weighting towards
EBIT performance.

STIP share awards will be granted in November 2023 and will lapse at the end of the financial year to the
extent that performance conditions have not been met. The balance of the shares will remain conditional
and be deferred for a further two years.

Malus and clawback provisions apply to STIP awards for up to two years after being paid.

Restricted share awards will be granted in November 2023. At the Committee’s discretion, vesting may
be reduced if the following underpins are not met:

• ROACE above the weighted average cost of capital;
• dividend payments maintained;
• consideration of whether the right actions have been taken to strengthen ABF’s competitive position for
long-term sustainable growth. Performance will be assessed in the round. The underpin will be deemed
to not be met in the event that there is an identified and agreed specific management failure; and

• satisfactory governance performance including no ESG issues that result in material reputational damage

(as determined by the Board).

A two-year post-vesting holding period applies to net of tax shares. Malus and clawback provisions apply for
two years post-vesting.

George Weston’s shareholding very significantly exceeds the 250% of salary requirement.

Eoin Tonge’s shareholding does not yet meet the requirement and at least 50% of net shares vested under
the STIP and RSP awards as well as 50% of net shares vested under certain new joiner awards must be
held by him until it is met.

RSP 2023-26
125% of salary
in shares

Shareholding
requirement
250% of salary

NED Fees

Non-executive directors’ fees will increase from £78,250 to £81,750 in December 2023.

The fee for the Senior Independent Director will increase from £24,500 to £25,000 in December 2023.

The fee for responsibility for workforce engagement will increase from £23,500 to £25,000 in December 2023.

The Chairman’s fee will increase from £440,000 to £459,800 in December 2023.

Wider Workforce Remuneration
Fair pay
Associated British Foods is a diversified business that currently operates in 55 countries and employs 133,000 people working across
five business segments. Our people are central to our business and we pride ourselves on being a first-class employer.

As an international business, we have a duty to operate responsibly and are keen to ensure that the people who work in our
businesses are paid fairly. We support the work of governments to ensure that minimum wages are sufficient to allow employees
to have an acceptable standard of living. Our businesses, each of which is responsible for setting and managing its own remuneration
approach, operate in line with the principles set out below and in compliance with all local laws.

Pay should be…

Appropriate

For the employee’s role,
experience and skills

Fixed pay will meet/exceed
legal minimum and
appropriate industry
standards (e.g. collective
bargaining agreements)

Free from
discrimination

Pay should not be impacted
by an individual’s age,
gender, sexual orientation,
ethnicity or other
characteristics

Intuitive

Explainable

Market competitive

Employees should always
receive compensation
regularly, in full and on time

The business should be
able to explain how pay
has been calculated so that
it is easy to understand

Local market conditions
(industry/location/cost of
living) should be considered
when setting pay levels

Workforce engagement on remuneration
Please see the Remuneration Committee Chair’s letter on pages 100 and 101 for more information on how the Committee
communicates with the wider workforce.

Inflation and wider workforce remuneration
This year has seen exceptionally high inflation in the UK, with the lowest paid workers disproportionately impacted. In our
decentralised model, the salary management approach varies from business to business but all have targeted higher rates of salary
increase to our more junior employees. Many have also paid temporary allowances or made specific additional payments to lower paid
colleagues to assist them with the additional costs they are facing.

This year we have updated our Health, Safety and Wellbeing Policy to include a greater focus on mental health and wellbeing.
In addition, many of our businesses have reviewed their financial wellness activities to help protect employees from financial shocks.
96% of our people have access to an EAP to support their wellbeing. More information on the actions our businesses take to support
employees’ wellbeing can be found in our Responsibility Report.

106

Associated British Foods plc Annual Report 2023

107

DIRECTORS’ REMUNERATION REPORT CONTINUED

Directors’ Pay in the Context of the Group’s Wider Pay Practices
The Committee has regard to workforce remuneration and related policies across the Group and ensured alignment of incentives and
reward with the Company’s culture when determining the 2022 Policy for directors. The table below summarises the remuneration
structure for the wider workforce.

Salary

STIP

Below the Board

Salary increase budgets are determined by each of the businesses for each
country, taking into account country-specific conditions such as inflation.
Salary increases are then determined by line managers based on factors
such as development in role and local market practice. Salaries are
benchmarked to ensure that we are able to recruit and retain talented people.

We review the ratio of the Chief Executive’s pay to that of our UK employees
on page 109

In our decentralised model the approach to incentives varies by division.
This is consistent with our line of sight approach and ensures design is
appropriate for the strategy of each business and market. There is a common
governance framework, with central oversight, for signing off all changes to
incentive design to ensure that risks are mitigated and cultural considerations
are appropriately taken into account.

Key performance measures of adjusted operating profit, working capital, ESG
targets and personal performance are commonly used across the Group.

As employees progress and are promoted, their target and maximum bonus
opportunities increase.

LTIP

We make share-based LTIP or RSP awards to around 200 of our most senior
managers across the Group to support the remuneration philosophy of
incentivising superior long-term business results and shareholder value creation.

The performance measures for around a third of participants are aligned fully
or partially to those of the executive directors. For other participants, the
appropriate measures are agreed with the individual business to reflect the
strategy and role in the portfolio of the business. Measures include profit
growth, returns, working capital management and strategic objectives e.g.
related to business transformation or ESG priorities.

We also operate a cash LTIP to ensure long-term incentivisation for a wider
population of senior managers and to reward performance in businesses,
where relevant long-term targets can be set.

All of our LTIPs have a performance period of at least three years with some
being up to five years. Awards are made as a percentage of base salary.

Pension

A pension/provident fund is offered to our employees in line with local market
requirements and practices. Exceptions to this are countries where pension
provision is not prevalent in the local market and/or is provided by the state.

In the UK, newly appointed employees and executives of all ABF companies
are entitled to receive a Company pension contribution that matches their own
contribution to a maximum of 10% of salary. They are eligible to take some
or all of this as a cash alternative if subject to the lifetime or annual allowance.

In certain countries, including the UK and Ireland, longer-serving employees
continue to participate in and accrue benefits under defined benefit pension
schemes which are closed to new members.

In our decentralised model, we expect our businesses to ensure that core
benefits provided to employees in each country remain appropriate and local
market competitive. For example, in the African sugar businesses, outside
South Africa, we have on site clinics/hospitals (dependent on country)
available to employees and their families to ensure that they have access to
healthcare. In other locations such provision may be through the state or may
be covered by insurances that we offer as a benefit to employees.

Benefits

Executive directors

Salary increases as a percentage
of salary are normally aligned with,
or lower than, those of the
wider workforce.

Consistent with the wider workforce,
salaries are set competitively against
peers in support of the recruitment
and retention of executive directors.

The STIP for executive directors
is primarily based on the financial
performance of the Company.
15% of the STIP is based on
ESG performance.

STIP share awards are made for
25% of the total STIP payment and
are deferred for a further two years
after the performance condition
has been met.

Executive directors’ LTIP grants up
to 2021 were subject to achievement
of EPS and ROACE performance
conditions.

From 2022 the LTIP was replaced
with an RSP, granted by reference to
a percentage of salary that is half the
amount of an equivalent LTIP award
and which vest provided underpins
are met.

Vested shares are subject to
a two-year holding period.

Newly appointed executive directors
are eligible to receive a Company
pension contribution of up to 10%
of salary in line with the wider
workforce in the UK. They are
eligible to take some or all of this
as a cash alternative if subject to
the lifetime or annual allowance.

Executive directors receive benefits
which consist primarily of the
provision of a company car/allowance
and health cover.

In addition, executive directors are
eligible for benefits available to
the wider head office workforce.

CEO Pay Ratio

Year
2022/23
2021/22
2020/21
2019/20
2018/19

We have chosen to use Option B of the available methodologies
to calculate our CEO Pay Ratio. Given the complexity of our
Group, this approach enables us to use existing gender pay
data for Great Britain (GB) as a foundation for our calculations.
We determined the hourly rates at each quartile of our 5 April
2023 gender pay data then calculated the average annual salary
and total remuneration for each quartile as each point represents
multiple individuals. We pro-rated the data for part-time individuals
to reflect full-time equivalent remuneration and excluded
leavers from the calculation.

Those at the lower quartile data point are Primark and Allied
Bakeries employees, at median they are from Primark,
Speedibake and Vivergo and at upper quartile they are from
Speedibake, Primark, Allied Bakeries, Westmill and SilverSpoon.

Methodology used
Option B
Option B
Option B
Option B
Option B

Lower quartile
196:1
114:1
171:1
79:1
253:1

Median
166:1
104:1
155:1
70:1
238:1

Upper quartile
131:1
85:1
115:1
48:1
169:1

The increase in the pay ratio reflects the increase in incentive
outcomes this year for the Chief Executive. We are pleased
that the remuneration levels for our GB-based employees have
increased year-on-year by 11.7% at the median.

Whilst based on data for GB only, this year’s pay ratio reflects
the relationship between the Chief Executive’s pay and the
experience of UK employees as a whole. Many of our early
career employees are in Primark and this affects the data, with
those in the food businesses typically later in their careers and
with remuneration at higher levels in line with their skills
and experience.

Salary for GB-based employees
Single figure of total remuneration for GB-based employees

Lower quartile
£19,898
£20,957

Median
£23,031
£24,655

Upper quartile
£29,406
£31,390

Annual percentage change in remuneration of directors and employees

% change in salary/fees

% change in benefits5

% change in cash STIP6

George Weston1
Eoin Tonge
John Bason1
Michael
McLintock3
Ruth Cairnie2,4
Richard Reid²,4
Graham Allan2
Heather Rabbatts2
Emma Adamo2
Wolfhart Hauser2
Annie Murphy
Average ABF plc
UK employee7

2023

2020
3.14% 0.15% 33.09% (23.52)%

2021

2022

2023

2022
5.88% 5.45%

2021
0%

2020
0%

2023

2020
33.8% 0.04% 100% (100)%

2022

2021

–

(36.10)% 0.60% 34.30% (21.19)% (35.29)% 4.91%

–
0% (23.81)% (19.7)% 1.35% 100% (100)%

(11.67)%

3.56% 0.96% 15.19% (11.49)%
0% 17.65% (8.11)%
3.52% (2.07)% 42.16% (8.11)%
15.79% 1.33% 15.38% (12.16)%
–
14.47% 1.33%
2.63% 1.33% 15.38% (12.16)%
2.63% 1.33% 15.38% (12.16)%
–

–

n/a
n/a
n/a
n/a
n/a
n/a
n/a
–

n/a
n/a
n/a
n/a
–
n/a
n/a
–

n/a
n/a
n/a
n/a
n/a
n/a
n/a
–

n/a
n/a
n/a
n/a
–
n/a
n/a
–

2.1% 9.5% 4.70% (0.70)%

(1.5)% 15.1% 3.90% 2.90%

9.3% 13.5% 167% (63)%

1. George Weston and John Bason’s salary rates increased by 3.5%, a lower increase rate than for other head office employees, whose standard increase was 6%.

The lower increase shown in the table reflects an increase in the number of more junior roles in the head office.

2. The NED fee increased from £76,000 to £78,250 in December 2022.
3. Michael McLintock’s fee increased to £440,000 in December 2022.
4. The Committee Chair fee increased from £23,500 to £27,000 in December 2022 and the Senior Independent Director fee increased from £21,000 to £24,500 in
December 2022. There was no change to other additional responsibility fees in the period, but the change in base NED fee detailed in note 2 applies to these
roles.

5. Benefits data is calculated on the same basis as the benefits data in the single total figure table on page 103 and includes benefits in kind and benefits taken
in cash but excludes any pension allowances. The reduction in benefits for the average employee reflects a reduction of the number of employees eligible
for a company car.

6. Includes cash STIP payments only.
7. The numbers for 2022 have been restated to correct an error in the 2022 disclosure, which led to the salary and benefits increases being understated and

the STIP increase overstated for the average employee.

108

Associated British Foods plc Annual Report 2023

109

DIRECTORS’ REMUNERATION REPORT CONTINUED

2023 Gender pay gap reporting
Women comprise 55% of our total global workforce. We have chosen to report on the gender pay gap that relates to our employee
population in Great Britain (GB) as of 5 April 2023. However, more than half of our workforce is employed outside Great Britain and is
not included in this analysis. Consistent with last year we have presented data for the whole Group and for the Group without Primark.

ABF Group businesses in GB

ABF Group businesses in GB (excluding Primark)

Women’s mean hourly pay rate
is below that of men by
Women’s median hourly pay rate
is below that of men by
Women’s mean bonus pay rate
is below that of men by
Women’s median bonus pay rate
is above that of men by

Percentage of men who
received a bonus
Percentage of women who
received a bonus

2023

2022

28.2%

31.6%

18.9%

22.6%

27.0%

34.1%

21.8%

25.9%

26.6%

26.5%

7.9%

7.2%

Women’s mean hourly pay rate
is above that of men by
Women’s median hourly pay rate
is above that of men by
Women’s mean bonus pay rate
is below that of men by
Women’s median bonus pay rate
is above that of men by

Percentage of men who
received a bonus
Percentage of women who
received a bonus

2023

2022

3.6%

4.0%

10.2%

9.0%

24.1%

34.0%

29.8%

30.0%

50.8%

48.0%

66.5%

61.3%

Gender pay and bonus gaps are calculated by comparing the mean (average) and median (central value in the data list) measures for women to that of men and
identifying the percentage difference between the two. As required by the UK Equality Act 2010 (Gender Pay Gap Information) Regulations 2017, we submit data
for our relevant legal entities to the UK Government through their website.

Group
The Group pay gap has improved, though it remains in favour
of men. A significant number of female employees work as
retail assistants, with 77.2% of roles in the lower pay quartile
taken by women. Whilst men take up more of the highest
paid roles, we are pleased that the proportion of women in the
upper quartile is increasing, reducing the pay gap.

One of the Company’s strengths is that business leaders have
detailed knowledge of every aspect of their organisation. That
knowledge often comes from many years in role. Institutional
memory is critical in our decentralised operating model.

Whilst the gender balance at the top of the Group is changing,
it is slow due to long tenure. Balancing long tenure, fresh
external insights and the need for diverse thinking is a focus
across our businesses. We support new colleagues to build
strong internal networks so that they can more quickly
understand the organisation.

Proportion of men and women in each pay quartile

The greater presence of senior men in the bonus pool has a
distorting effect on the mean bonus gap. The median bonus
gap, which includes recognition awards, is in favour of women.
Recognition awards are smaller in quantum and often given to
men with long service in the manufacturing environment. They
are compared to bonuses for women in middle management.

Non-retail businesses
In the non-retail businesses the pay gap remains in favour of
women as we have a significant majority of male employees in
the food businesses who work in a manufacturing environment.
These employees are being compared to women who, on
average, work in middle management.

Primark
The Primark gender pay data can be found on their website.
At median we have only a 1.4% pay gap in Primark.

For more information on our approach to DEI, please refer to our
Responsibility Report.

Upper

Upper middle

Lower middle

Lower

(%)
100

7
6
.
5
%

7
9
.
0
%

2
3
.
5
%

2
1
.
0
%

Group
businesses
in GB

Group
businesses in
GB without
Primark

7
1
.
0
%

5
7
.
1
%

4
2
.
9
%

2
9
.
0
%

Group
businesses
in GB

Group
businesses in
GB without
Primark

6
4
.
5
%

6
8
.
0
%

3
5
.
5
%

3
2
.
0
%

Group
businesses
in GB

Group
businesses in
GB without
Primark

7
7
.
2
%

7
1
.
3
%

2
2
.
8
%

2
8
.
7
%

Group
businesses
in GB

Group
businesses in
GB without
Primark

(%)
100

Male
Female

Executive directors’ shareholding and scheme interests
Scheme interests (audited information)
The table below details the conditional share interests held by the executive directors as at 16 September 2023. The awards made
before December 2022 were made in line with the 2019 Remuneration Policy.

LTIP, RSP and Buyout Awards
Vesting of LTIP awards is subject to meeting performance conditions over the performance period. A further two-year post-vesting
holding period applies to net of tax shares. The RSP is expected to vest in full, subject to meeting performance underpins.

George
Weston

John
Bason

Eoin
Tonge

Scheme
LTIP

RSP
LTIP

RSP
RSP
Vested M&S
buyout awards2
STIP 22/23 buyout3
RSP buy out4
PSP 20-23 buy out5
Unvested M&S
buyout awards
DSBP buy out4
PSP 21-24 buy out6
PSP 22-25 buy out7

Maximum award

Shares vesting

Award
date

%
of salary

Face value
at grant
£000

Market
price at
grant1

End of
performance
period

Maximum

Target
(50% of
maximum)

Threshold
(10% of
maximum)

Release
date

20/11/20
19/11/21
09/12/22

20/11/20
19/11/21
09/12/22
03/03/23

03/07/23
03/03/23
03/03/23

03/03/23
03/03/23
03/03/23

200%
200%
100%

200%
200%
100%
125%

2,180 2,020.9p
2,180 1,974.7p
1,158 1,665.3p

16/09/23
14/09/24
13/09/25

107,873
110,397
69,537

1,440 2,020.9p
1,440 1,974.7p
152 1,665.3p
906 1,665.3p

16/09/23
14/09/24
13/09/25
13/09/25

71,255
74,381
9,113
54,420

53,937
55,199
N/A

35,628
37,191
N/A
N/A

10,787
11,040

20/11/23
19/11/24
N/A 17/11/25

7,126
7,438

20/11/23
19/11/24
N/A 17/11/25
N/A 17/11/25

–
–
–

441 1,604.6p
364 1,604.6p
1,450 1,604.6p

N/A
N/A
16/09/23

27,459
22,656
90,383

N/A
N/A
–

N/A 03/07/23
N/A 03/07/23
03/07/23

18,077

570 1,604.6p
1,358 1,604.6p
113 1,604.6p

N/A
14/09/24
13/09/25

35,511
84,611
7,068

N/A
42,306
N/A

8,461

N/A 01/07/25
01/11/24
N/A 01/11/25

1. The price used to determine the number of shares allocated under the LTIP and RSP is the average closing price on the five trading days immediately

preceding the main allocation in November/December each year. The details of the buyout awards for Eoin Tonge, including the price used to determine the
number of shares allocated was agreed as part of his joining arrangements as set out on page 146 of our 2022 Annual Report. None of the buyout awards
is pensionable.

2. These awards were allocated and vested this financial year. The beneficial ownership shown on page 112 is the amount of shares retained from those that

vested in July 2023 after selling sufficient to cover tax and National Insurance due.

3. All of these shares vested in July 2023 and are to be retained until 01/07/26.
4. All of these shares vested in July 2023 and are to be retained until 06/07/25.
5. 46,095 of these shares vested in July 2023 after applying the performance conditions that applied to the M&S 20-23 PSP award. Net vested shares to be

retained until 01/07/25.

6. Performance will be assessed 30% against ABF 21-24 EPS targets, 30% against ABF strategic KPIs and 40% against ABF average STIP as a percentage

of maximum for 2022/23 and 2023/24.

7. Net vested shares to be retained until 01/07/27, underpins apply in line with those on the 22-25 RSP award.

STIP – shares
The value of deferred STIP shares released is determined based on the achievement of the STIP performance conditions.

Scheme

George Weston Deferred

Eoin Tonge

John Bason

awards

Deferred
awards
Deferred
awards

Maximum award

Deferred awards

Award
date
20/11/20
19/11/21
09/12/22

03/03/23
20/11/20
19/11/21
09/12/22

%
of salary
50%
50%
50%

50%
50%
50%
50%

Face value
at grant
£000
545
545
579

Market
price at
grant1
2,020.9p
1,974.7p
1,665.3p

End of
performance
period
18/09/21
17/09/22
16/09/23

312
360
360
240

1,665.3p
2,020.9p
1,974.7p
1,665.3p

16/09/23
18/09/21
17/09/22
16/09/23

Shares
lapsed for
performance
13,484
14,233
11,415

Shares
subject to
service
condition
13,484
13,366
23,354

Release
date
20/11/23
19/11/24
17/11/25

6,154
8,907
9,589
4,734

12,591
8,907
9,006
9,687

17/11/25
20/11/23
19/11/24
17/11/25

Maximum
shares
26,968
27,599
34,769

18,745
17,814
18,595
14,421

1. The share price used for determining the number of shares in an allocation is the average closing price on the five trading days immediately preceding the main

annual award date. The awards to Eoin Tonge were made at the same share price as those for the main award.

110

Associated British Foods plc Annual Report 2023

111

DIRECTORS’ REMUNERATION REPORT CONTINUED

Executive Directors’ shareholding requirements (audited information)
The interests below as at 16 September 2023 remained the same at 7 November 2023. George Weston has met our shareholding
requirement. Since joining the business this year, Eoin Tonge has begun to build a holding of ABF shares.

Holding
requirement

Beneficial

Beneficial as
% of salary1

LTIP/RSP/buyout
awards subject
to performance
condition/
underpins

Unvested
deferred STIP/
buyout
awards

Total
16 September
2023

Total
17 September
20224

George Weston2
Wittington Investments Limited,
ordinary shares of 50p
Associated British Foods plc,
ordinary shares of 515/22p
Eoin Tonge
Associated British Foods plc,
ordinary shares of 515/22p
John Bason
Associated British Foods plc,
ordinary shares of 515/22p

n/a

15,060.5

n/a

15,060.5

6,328

250% of salary

3,795,585

6,821%

287,807

50,204

4,133,596

4,127,648

250% of salary

50,855

146%

146,099

48,102

245,056

–

250% of salary

229,3693

612%

154,749

27,600

411,718

446,758

1. Calculated using share price as at close of business on 15 September 2023 of 2,081p and rate of base salary as at 16 September 2023.
2. George Weston is a director of Wittington Investments Limited which, together with its subsidiary Howard Investments Limited, held 431,515,108 ordinary

shares in Associated British Foods plc as at 16 September 2023.

3. Beneficially owned shares are shown as at retirement date.
4. Prior year restated to reflect revised approach of including only the element of STIP shares that is subject to a holding condition. Adjustment for George Weston

is 4,177,101 shares minus 76,303 (the full amount of STIP shares shown on page 143 of the 2022 Annual Report) plus 26,850 (the number of STIP shares
subject to a service condition). Adjustment for John Bason is 479,612 shares minus 50,767 plus 17,913. This methodology is then consistent with the numbers
shown for unvested deferred awards and total shares for 2023.

Directors’ service contracts/letters of appointment

Executive Directors
George Weston
Eoin Tonge
Non-Executive Directors
Michael McLintock
Emma Adamo
Wolfhart Hauser
Richard Reid
Graham Allan
Heather Rabbatts
Annie Murphy

Date of
appointment

Date of current
contract/letter of
appointment

Notice from
Company

Notice from
individual

Unexpired period of service contract

19/04/99
06/02/23

01/06/05
20/07/22

12 months
12 months

Rolling contract
Rolling contract

01/11/17
09/12/11
14/01/15
14/04/16
05/09/18
01/03/21
06/09/23

11/04/18
09/12/11
14/01/15
13/04/16
05/09/18
16/02/21
31/05/23

6 months
6 months
6 months
6 months
6 months
6 months
6 months

Letter of appointment
Letter of appointment
Letter of appointment
Letter of appointment
Letter of appointment
Letter of appointment
Letter of appointment

Copies of service contracts are available for inspection at the Company’s head office.

Executive Director departures and appointments
Appointment of Eoin Tonge as Finance Director
Our approach to remuneration for Eoin Tonge was set out in detail on page 146 of the 2022 annual report. The details of RSP and
buyout awards made to him can be found in the share allocation tables on page 111.

Retirement of John Bason as Finance Director
John Bason retired on 28 April 2023 and was determined to be a good leaver. He remains subject to the following shareholding
requirements:

• any shares vesting under the LTIP need to be retained, net of tax, for a further two years from the vesting date; and
• a personal holding of ABF shares to the value of 250% of salary must be maintained until 28 April 2025. Shares that are subject

to a holding period post-vesting count towards this 250% shareholding requirement.

Details of the approach applied for incentive awards can be found on page 147 of our 2022 Annual Report.

Payments to past directors and payments for loss of office (audited information)
The only payments made to John Bason in relation to his role as Finance Director since his retirement are those noted above
in respect of his participation in incentive schemes up to his leaving date.

No payments for loss of office were made in the year.

Executive directors serving as non-executive directors
To encourage self-development and external insight, the Committee has determined that, with the consent of both the Chairman and
the Chief Executive, executive directors may serve as non-executive directors of other companies in an individual capacity, retaining
any fees earned. Neither individual currently holds such other roles.

Non-Executive Directors’ remuneration (audited information)

Michael McLintock
Ruth Cairnie1
Richard Reid
Emma Adamo
Wolfhart Hauser
Graham Allan2
Heather Rabbatts3
Annie Murphy4

Fees

Fixed pay

Variable pay

Single total figure
of remuneration

2023
£000
436
106
147
78
78
88
87
6

2022
£000
421
120
142
76
76
76
76
0

2023
£000
436
106
147
78
78
88
87
6

2022
£000
421
120
142
76
76
76
76
0

2023
£000
–
–
–
–
–
–
–
–

2022
£000
–
–
–
–
–
–
–
–

2023
£000
436
106
147
78
78
88
87
6

2022
£000
421
120
142
76
76
76
76
0

1. Ruth Cairnie stepped down as Senior Independent Director and Remuneration Committee Chair on 1 May 2023 and left the Board on 31 August 2023.
2. Graham Allan was appointed as Remuneration Committee Chair on 1 May 2023.
3. Heather Rabbatts was appointed as Senior Independent Director on 1 May 2023.
4. Annie Murphy joined the Board on 6 September 2023.

Non-executive directors’ remuneration
Non-executive directors’ fees were reviewed during 2023 and it was determined that increases should be made as shown below.

Chairman
Additional fee for Senior Independent Director responsibilities
Additional fee for Committee Chair (Audit/Remuneration only)
Additional fee for responsibility for workforce engagement
Additional fee for chairing Primark Finance and Risk Committee
Director

Fees effective
1 Dec 2023
£460,000
£25,000
£27,000
£25,000
£19,000
£81,750

Fees effective
1 Dec 2022
£440,000
£24,500
£27,000
£23,500
£19,000
£78,250

112

Associated British Foods plc Annual Report 2023

113

DIRECTORS’ REMUNERATION REPORT CONTINUED

NED shareholdings and share interests (audited information)
The following shareholdings are ordinary shares of Associated British Foods plc unless stated otherwise. The interests remained the
same at 7 November 2023.

Relative importance of spend on pay
A year-on-year comparison of the relative importance of pay with significant distributions to shareholders and taxes paid is shown
below. Taxes paid represents part of our societal contribution, alongside the activities detailed in our Responsibility Report.

Michael McLintock
Ruth Cairnie1
Richard Reid
Emma Adamo2

Wittington Investments Limited, ordinary shares of 50p
Associated British Foods plc, ordinary shares of 515/22p

Wolfhart Hauser
Graham Allan
Heather Rabbatts
Annie Murphy

Total
16 September
2023
24,000
5,223
3,347

Total
17 September
2022
24,000
5,223
3,347

2023 total
holding as % of
annual fee3
114%
84%
47%

1,011
511,234
7,161
10,000
–
–

1,322
511,234
7,161
10,000
–
–

–
13,596%
190%
198%
0%
0%

1. Shareholding at 31 August 2023 when Ruth Cairnie’s appointment ended
2. Emma Adamo is a director of Wittington Investments Limited which, together with its subsidiary, Howard Investments Limited, held 431,515,108 ordinary

shares in Associated British Foods plc as at 16 September 2023.

3. Calculated using share price as at close of business on 15 September 2023 of 2,081p and fee rate as at 16 September 2023.

Total shareholder return (TSR) performance and Chief Executive’s pay
The performance graph below illustrates the performance of the Company over the 10 years from September 2013 to September
2023 in terms of total shareholder return compared with that of the companies comprising the FTSE 100 index.

This index has been selected because it represents a cross-section of leading UK companies and Associated British Foods is a part
of the index.

In addition, the table below the graph provides a summary of the total remuneration of the Chief Executive over the last 10 years.

t
n
e
m
t
s
e
v
n

0
0
1
£

a
c
i
t
e
h
t
o
p
y
h

f
o
e
u
a
V

200

175

150

125

100

ABF
FTSE 100

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Source: DataStream Return Index

Single total figure
remuneration (£’000)
Annual variable element
– STIP (% of maximum
before share price
impacts)
Long-term variable
element – LTIP
(% of maximum)

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

7,470

3,056

3,133

4,849

3,843

4,204

1,138

3,329

2,286

4,100

59.49% 44.46% 86.75% 97.47% 50.34% 73.37%

0% 52.50% 51.09% 67.17%

100% 18.54%

0% 51.02%

100% 57.13%

0% 40.00%

0% 58.46%

Pay spend for Group
Dividends relating to period
Taxes paid

2023
£m
3,156
459
341

2022
£m
2,812
345
304

Members of the Remuneration Committee
In the financial year and as at the date of this report, members and Chair of the Committee have been as follows:

Ruth Cairnie
Wolfhart Hauser
Richard Reid
Michael McLintock
Graham Allan
Heather Rabbatts
Annie Murphy

Role on Committee
Chair (until May 2023) then member
Member
Member
Member
Member then Chair (from May 2023)

Independence
Senior (until May 2023) Independent Director
Independent Director
Independent Director
Chairman
Independent Director
Member Senior Independent Director (from May 2023)
Independent Director
Member

Year of
appointment
2014
2015
2016
2017
2018
2021
2023

Change
%
12%
33%
12%

Meetings
attended
3/3
4/4
4/4
4/4
4/4
4/4
1/1

The Chairman was considered independent on appointment and, as such, is a member of the Committee. George Weston
(Chief Executive), Sue Whalley (Chief People and Performance Officer), and Julie Withnall (Group Director of Reward) attend the
meetings of the Committee. No individual is present when their own remuneration is considered.

Role of the Committee
The Committee is responsible to the Board for determining:

• the remuneration policy for the executive directors and Chairman, considering internal and external trends on remuneration;
• the overall policy for remuneration of the Chief Executive’s direct reports;
• the design and monitoring of the operation of any Company share plans;
• stretching performance targets for executive directors to encourage enhanced performance;
• an approach that fairly and responsibly rewards contribution to the Company’s long-term success; and
• the specific terms and conditions of employment of each executive director, ensuring that contractual terms and payments made

on termination are fair to the individual and Company, that failure is not rewarded and loss is mitigated.

The Committee’s remit is set out in detail in its terms of reference, which are reviewed regularly to ensure that they are compliant
with the latest corporate governance requirements and were most recently updated in November 2022. They are available from the
corporate governance section of our website at www.abf.co.uk.

Remuneration Committee advisers and fees
Following a competitive tender the Committee appointed Deloitte LLP (Deloitte) in March 2020 to provide independent advice to the
Committee. Deloitte are members of the Remuneration Consultants Group and adhere to its Code of Conduct in relation to executive
remuneration consulting. The Committee is satisfied that the advice it received in the year was objective and independent. This advice
included independent meetings with the Committee Chair during the year. During the year, other services that Deloitte provided to
the Company were corporate and employment tax advice, advice related to transactions, and risk and controls-related advisory work.
The fees paid to Deloitte for Committee assistance over the past financial year totalled £76,500.

Herbert Smith Freehills LLP and Addleshaw Goddard LLP provide the Company with legal advice. Their advice is made available
to the Committee, where it relates to matters within its remit.

Compliance
Where information in this report has been audited by Ernst & Young LLP, it has been clearly indicated. The report has been prepared
in line with the requirements of The Large and Medium-sized Companies Regulations (as amended), the recommendations of the UK
Corporate Governance Code (July 2018) and the requirements of the UKLA Listing Rules.

The Directors’ Remuneration Report was approved by the Board and signed on its behalf by

Paul Lister
Company Secretary

7 November 2023

114

Associated British Foods plc Annual Report 2023

115

DIRECTORS’ REPORT

Directors’ Report

The directors of Associated British Foods plc present their
report for the 52 weeks ended 16 September 2023, in
accordance with section 415 of the Companies Act 2006.
The Financial Conduct Authority’s Disclosure Guidance and
Transparency Rules and Listing Rules also require the Company
to make certain disclosures, some of which have been included
in other appropriate sections of the Annual Report and Accounts.

The information set out on page 119 and the following cross-
referenced material, which would otherwise be required to be
disclosed in this Directors’ Report, is incorporated into this
Directors’ Report:

• likely future developments in the Group’s business

(pages 1 to 39);

• greenhouse gas emissions and energy consumption

(page 52 to 54);

• the Board of Directors (pages 80 and 81);
• information on our employees including disabled persons

(pages 50 and 51; 110);

• information on how the directors keep employees informed

on and involved with the Company’s performance (pages 40;
84 to 85);

• information on how the directors have engaged with

employees (including those in the UK), have had regard to
employee interests and the effect of that regard on the
Company’s principal decisions (pages 40 to 45; 50 and 51;
84 to 85);

• information on how the directors have had regard to the need

to foster the Company’s business relationships with
suppliers, customers and others and the effect of that regard,
including on the principal decisions taken by the Company
during the year (pages 40 to 55); and

• the Corporate Governance Statement (pages 78 to 115).

Results and dividends
The consolidated income statement is on page 128. Proﬁt for
the ﬁnancial year attributable to equity shareholders amounted
to £1,044m.

The directors recommend a final dividend of 33.1p per ordinary
share to be paid, subject to shareholder approval, on 12 January
2024. Together with the interim dividend of 14.2p per share paid
on 7 July 2023, this amounts to 47.3p for the year. See page
147 for the note on dividends. In addition, a special dividend
of 12.7p is proposed by the directors as an interim dividend
which will also be paid on 12 January 2024 to holders of
ordinary shares on the register at the close of business on
15 December 2023. Shareholder approval for this special
dividend is not required.

Directors
The names of the persons who were directors of the Company
during the ﬁnancial year and as at 7 November 2023 appear
on page 87.

Appointment of directors
The Articles give directors the power to appoint and replace
directors. Under the terms of reference of the Nomination
Committee, any appointment must be recommended
by the Nomination Committee for approval by the Board.
A person who is not recommended by the directors may only
be appointed as a director where details of that director have
been provided at least seven and not more than 35 days prior to
the relevant meeting by at least two members of the Company.

The Articles require all directors to retire and seek re-election at
each AGM in line with the 2018 Code.

Details of unexpired terms of directors’ service contracts are set
out in the Directors’ Remuneration Report on page 149.

Power of directors
The directors are responsible for managing the business of the
Company and may exercise all the powers of the Company
subject to the provisions of relevant statutes, to any directions
given by special resolution and to the Articles. The Articles, for
example, contain speciﬁc provisions and restrictions concerning
the Company’s power to borrow money. Powers relating to the
issuing of shares are also included in the Articles and such
authorities are renewed by shareholders at the AGM each year.

Directors’ indemnities and insurance
The directors of a subsidiary company that acts as trustee of
a pension scheme benefited from a qualifying pension scheme
indemnity provision during the ﬁnancial year and at the date
of this report.

The Company has in place appropriate directors’ and ofﬁcers’
liability insurance cover in respect of legal action against its
executive and non-executive directors, amongst others.

Directors’ share interests
Details regarding the share interests of the directors (and their
persons closely associated) in the share capital of the Company,
including any interests under the Restricted Share Plan, LTIP
and any deferred awards, are set out in the Directors’
Remuneration Report on pages 112 to 114.

Disclosures required under Listing Rule 9.8.4R
The following table is included to meet the requirements of
Listing Rule 9.8.4R. The information required to be disclosed
by Listing Rule 9.8.4R, where applicable to the Company, can
be located in the Annual Report at the references set out below.

Information required
(4) Long term incentive
scheme
(12) Shareholder waiver
of dividends
(13) Shareholder waiver
of future dividends
(14) Board statement on
relationship agreement with
controlling shareholder

Location in Annual Report

See page 111

Note 24 on page 164

Directors’ Report on page 116
(below)

Paragraphs (1), (2), (5), (6), (7), (8), (9), (10) and (11) of Listing Rule 9.8.4R
are not applicable.

Relationship agreement with controlling
shareholders
Any person who exercises or controls, on their own or together
with any person with whom they are acting in concert, 30%
or more of the votes able to be cast at general meetings of
a company is known as a ‘controlling shareholder’ under
the Listing Rules. The Listing Rules require companies with
controlling shareholders to enter into an agreement which
is intended to ensure that the controlling shareholders comply
with certain independence provisions in the Listing Rules and
which must contain undertakings that:

• transactions and arrangements with the controlling

shareholder (and/or any of its associates) will be conducted
at arm’s length and on normal commercial terms;

• neither the controlling shareholder nor any of its associates
will take any action that would have the effect of preventing
the listed company from complying with its obligations under
the Listing Rules; and

• neither the controlling shareholder nor any of its associates

will propose or procure the proposal of a shareholder
resolution which is intended or appears to be intended to
circumvent the proper application of the Listing Rules.

Wittington Investments Limited (‘Wittington’) and, through
their control of Wittington, the trustees of the Garﬁeld Weston
Foundation (the ’Foundation’) are controlling shareholders of the
Company. Certain other individuals, including certain members
of the Weston family who hold shares in the Company (and
including two of the Company’s directors, George Weston and
Emma Adamo) are, under the Listing Rules, treated as acting in
concert with Wittington and the trustees of the Foundation and
are therefore also treated as controlling shareholders of the
Company. Wittington, the trustees of the Foundation and these
individuals together comprise the controlling shareholders of
the Company and, as at 16 September 2023, had a combined
interest in approximately 59.8% of the Company’s voting rights.

The Board conﬁrms that, in accordance with the Listing Rules,
on 14 November 2014 the Company entered into a relationship
agreement with Wittington and the trustees of the Foundation
containing the required undertakings (the ‘Relationship
Agreement’ as most recently amended and restated on
3 November 2022).

Under the terms of the Relationship Agreement, Wittington
has agreed to procure compliance with the undertakings by the
other individuals who are treated as controlling shareholders
(the ‘Non-signing Controlling Shareholders’). The Board conﬁrms
that, during the period under review:

• the Company has complied with the independence provisions

included in the Relationship Agreement;

• so far as the Company is aware, the independence provisions
included in the Relationship Agreement have been complied
with by the controlling shareholders and their associates; and
• so far as the Company is aware, the procurement obligation

included in the Relationship Agreement as regards
compliance with the independence provisions by the
Non-signing Controlling Shareholders and their associates,
has been complied with by Wittington.

The Company is a premium listed company on the London
Stock Exchange and, under the Listing Rules, is required to
carry on an independent business as its main activity.

Major interests in shares
During the period under review, and up until 3 November 2023,
the Company received the following formal notifications under
the Disclosure Guidance and Transparency Rules of material
interests in its shares:

Shareholder
Wittington
Investments
Limited

Number of
ordinary shares

% of issued
share capital

Date of notification
of interest

431,515,108

56.1

4 September 2023

Further details of the Company’s controlling shareholders for
the purpose of the Listing Rules who, as at 16 September 2023,
had a combined interest in approximately 59.8% of the voting
rights are set out above.

Share capital
Details of the Company’s share capital and the rights attached
to the Company’s shares are set out in note 22 on page 162.
The Company has one class of share capital: ordinary shares
of 515/22p. The rights and obligations attaching to these shares
are governed by English law and the Articles.

No shareholder holds securities carrying special rights with
regard to the control of the Company. There are no restrictions
on voting rights.

There are no restrictions on the holding or transfer of the ordinary
shares other than the standard restrictions for an English
incorporated company.

Authority to issue shares
At the last AGM, held on 9 December 2022, authority was given
to the directors to allot shares in the Company up to an aggregate
nominal amount equivalent to two thirds of the shares in issue
(of which one third must be offered by way of rights issue).
This authority expires on the date of this year’s AGM to be
held on 8 December 2023. No such shares have been issued.
The directors propose to renew this authority at the 2023 AGM
for the forthcoming year.

A further special resolution passed at the 2022 AGM granted
authority to the directors to allot equity securities in the Company
for cash, without regard to the pre-emption provisions of the
Companies Act 2006 in certain circumstances. This authority
also expires on the date of the 2023 AGM and the directors will
seek to renew this authority for the forthcoming year.

Authority to purchase own shares
The Companies Act 2006 empowers the Company to purchase
its own shares subject to the necessary shareholder approval.
At the last AGM, authority was given to the directors to allow
the Company to purchase its own shares. This authority expires
on the date of this year’s AGM. The directors propose to renew
this authority at the 2023 AGM for the forthcoming year.

On 9 November 2022, the Company commenced a share
buyback programme in order to reduce the capital of the
Company. That buyback programme completed on 27 October
2023, the Company having purchased 26,478,215 of its ordinary
shares of 515/22p (being 3.3% of called-up share capital) for a
total consideration of £499,999,929. All such shares were
subsequently cancelled. Further details of the Company’s share
capital are set out on page 162.

Amendment to Articles
Any amendments to the Articles may be made in accordance
with the provisions of the Companies Act 2006 by way of
special resolution of the shareholders.

116

Associated British Foods plc Annual Report 2023

117

DIRECTORS’ REPORT CONTINUED

Signiﬁcant agreements – change of control
The Group has contractual arrangements with many parties
including directors, employees, customers, suppliers and
banking groups. The following arrangements are considered to
be signiﬁcant in terms of their potential impact on the business
of the Group as a whole and could alter or terminate on a
change of control of the Company:

• the Group has a number of borrowing facilities provided by
various banking groups. These facility agreements generally
include change of control provisions which, in the event
of a change of control of the Company, could result in their
renegotiation or withdrawal. The most signiﬁcant of these is
a £1.5bn syndicated loan facility dated 9 June 2022, maturing
in June 2028, which was undrawn at the year end. In the
event of a change in control of the Company, the lenders
may request cancellation of the commitment and repayment
of any outstanding amounts;

• on 16 February 2022, the Company issued £400m 2.5 per

cent Notes due 16 June 2034 (‘the Notes’). In the event of a
change of control of the Company, in certain circumstances
set out in the Terms and Conditions of the Notes as set out in
the Prospectus dated 14 February 2022 (which is available on
the Company’s website at www.abf.co.uk), noteholders shall
have the option to require the Company to redeem or repay
the notes at their principal amount together with interest
accrued to (but excluding) the date of redemption or purchase;

• £81m (approximate sterling equivalent) of private placement
notes are in issue to institutional investors. In the event of
a change of control of the Company, the Company is obliged
to make an offer of immediate repayment to the remaining
note holders; and

• cross-currency swaps totalling $100m are in place to swap
all of the private placement debt denominated in US dollars
to euros. In the event of a change of control of the Company,
the agreement contains a typical ‘Credit Event Upon Merger’
termination event which permits the counterparty
to terminate the agreement and all transactions under it.

There are no agreements between the Company and its
directors or employees providing for compensation for loss of
ofﬁce or employment that occurs as a result of a takeover bid.

Political donations
During the year, the Group did not make any political donations
or incur any political expenditure (within the ordinary meaning
of those words) in the UK. However, under the wider definition
of those terms in Part 14 of the Companies Act 2006, the
Company and a subsidiary of the Company paid costs totalling
approximately £3,150 during the year for attendance of
employees at the Conservative and Labour Party Conferences
which could potentially fall within that wider definition. The
Group did not make any contributions to non-UK political parties
during the year.

Financial risk management
Details of the Group’s use of ﬁnancial instruments, together
with information on our risk management objectives and
policies, including the policy for hedging each major type of
forecasted transaction for which hedge accounting is used, and
our exposure to price, credit, liquidity, cash ﬂow and interest
rate risks, can be found in note 26 starting on page 166.

Research and development
Innovative use of existing and emerging technologies will
continue to be crucial to the successful development of new
products and processes for the Group.

The Company has a technical centre in the UK at the Allied
Technical Centre. R&D facilities also exist across the Group,
including at: ACH Food Companies in the USA; AB Mauri in
Australia and the Netherlands (including the Global Technology
Centre); AB Enzymes in Germany; and our Roal joint venture
pilot plant in Rajamäki, Finland. These centres support the
technical resources of the trading divisions in the search for new
technology and in monitoring and maintaining high standards
of quality and food safety. The Company also acquired National
Milk Records plc (see further details on page 25) which
invests in an innovative range of milk quality, herd health and
genomic testing services, generating data and building robust
insights that empower farmers to make informed decisions
on cow productivity.

Branches
The Company, through various subsidiaries, has established
branches in a number of different countries in which the
Group operates.

Disclosure of information to auditor
Each of the directors who held ofﬁce at the date of approval
of this Directors’ Report conﬁrms that:

• so far as each director is aware, there is no relevant audit

information of which the Company’s auditor is unaware; and
• each director has taken all the steps that they ought to have
taken as a director to make themself aware of any relevant
audit information and to establish that the Company’s auditor
is aware of that information.

For these purposes, relevant audit information means
information needed by the Company’s auditor in connection
with the preparation of its report on pages 120 to 127.

Auditor
Resolutions for the reappointment of Ernst & Young LLP as
auditor of the Company and to authorise the Audit Committee
to determine its remuneration are to be proposed at the
forthcoming AGM.

Annual general meeting
The AGM will be held on 8 December 2023 at 11.00 am.
Details of the resolutions to be proposed are set out in a
separate Notice of AGM which accompanies this report for
shareholders receiving hard copy documents and which is
available at www.abf.co.uk for those who elected to receive
documents electronically. All resolutions for which notice has
been given will be decided on a poll.

The Directors’ Report was approved by the Board and signed
on its behalf by

Paul Lister
Company Secretary

7 November 2023

Associated British Foods plc
Registered ofﬁce:
Weston Centre
10 Grosvenor Street
London W1K 4QY

Company No. 293262

Statement of directors’ responsibilities

Responsibility statement of the directors
in respect of the Annual Report
We conﬁrm that to the best of our knowledge:

• the ﬁnancial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair
view of the assets, liabilities, ﬁnancial position and proﬁt
or loss of the Company and the undertakings included
in the consolidation taken as a whole; and

• the Strategic Report includes a fair review of the development

and performance of the business and the position of the
Company and the undertakings included in the consolidation
taken as whole, together with a description of the principal
risks and uncertainties that they face.

On behalf of the Board

Michael McLintock
Chairman

George Weston
Chief Executive

Eoin Tonge
Finance Director

7 November 2023

Statement of directors’ responsibilities in respect
of the Annual Report and the Financial Statements
The directors are responsible for preparing the Annual Report
and the Group and parent company financial statements
in accordance with applicable law and regulations.

Company law requires the directors to prepare Group and
parent company financial statements for each financial year.
Under that law they are required to prepare the Group ﬁnancial
statements in accordance with Adopted IFRS and have elected
to prepare the parent company ﬁnancial statements in
accordance with UK Accounting Standards, including FRS 101.

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 Group and parent company
and of their proﬁt or loss for that period.

In preparing each of the Group and parent company ﬁnancial
statements, the directors are required to:

• select suitable accounting policies and then apply them

consistently;

• make judgements and estimates that are reasonable

and prudent;

• for the Group ﬁnancial statements, state whether they have

been prepared in accordance with Adopted IFRS;

• for the parent company ﬁnancial statements, state whether
applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained
in the parent company ﬁnancial statements; and

• prepare the ﬁnancial statements on the going concern basis
unless it is inappropriate to presume that the Group and
the parent company will continue in business.

The directors are responsible for keeping adequate accounting
records that are sufﬁcient to show and explain the parent
company’s transactions and disclose with reasonable accuracy
at any time the ﬁnancial position of the parent company and
enable them to ensure that its ﬁnancial statements comply with
the Companies Act 2006. They have general responsibility for
taking such steps as are reasonably open to them to safeguard
the assets of the Group and to prevent and detect fraud and
other irregularities.

Under applicable law and regulations, the directors are also
responsible for preparing a Strategic Report, Directors’ Report,
Directors’ Remuneration Report and Corporate Governance
Statement that complies with that law and those regulations.
The directors are responsible for the maintenance and integrity
of the corporate and ﬁnancial information included on the
Company’s website. Legislation in the UK governing the
preparation and dissemination of ﬁnancial statements may
differ from legislation in other jurisdictions.

118

Associated British Foods plc Annual Report 2023

119

INDEPENDENT AUDITOR’S REPORT

Independent Auditor’s Report to the
members of Associated British Foods plc

Opinion
In our opinion:

• Associated British Foods plc’s consolidated 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 16 September 2023 and of the Group’s profit for the
52 weeks then ended;

• the consolidated financial statements have been properly
prepared in accordance with UK adopted international
accounting standards;

• the parent company financial statements have been properly

prepared in accordance with United Kingdom Generally
Accepted Accounting Practice; and

• the financial statements have been prepared in accordance

with the requirements of the Companies Act 2006.

We have audited the financial statements of Associated British
Foods plc (the ‘parent company’) and its subsidiaries (the ‘Group’)
for the 52 weeks ended 16 September 2023 which comprise:

Group

Parent company

Consolidated balance sheet as
at 16 September 2023

Balance sheet as at
16 September 2023

Statement of changes
in equity for the 52
weeks then ended

Related notes 1 to 11
to the financial
statements including a
summary of significant
accounting policies

Consolidated income statement
for the 52 weeks then ended

Consolidated statement
of comprehensive income
for the 52 weeks then ended

Consolidated statement
of changes in equity for the
52 weeks then ended

Consolidated statement of cash
flows for the 52 weeks then ended

Related notes 1 to 30 to the
financial statements, including
a summary of significant
accounting policies

The financial reporting framework that has been applied
in the preparation of the consolidated financial statements
is applicable law and UK adopted international accounting
standards. 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. We believe that the audit
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.

Independence
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.

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.

Conclusions relating to going concern
In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.

Our evaluation of the directors’ assessment of the Group and
parent company’s ability to continue to adopt the going concern
basis of accounting included:

• Understanding the process undertaken by management to
evaluate the economic impacts of rising costs on the Group
and to reflect these in the Group’s forecasts for the going
concern period until 1 March 2025;

• Analysing the historical accuracy of forecasting by comparing

management’s forecasts to actual results, both for 2023
and 2022 and through the subsequent events period, and
performing inquiries to the date of this report to determine
whether forecast cash flows are reliable based on
past experience;

• Considering whether the Group’s forecasts in the

going concern assessment were consistent with other
forecasts used by the Group in its accounting estimates,
including impairment;

• Confirming the opening cash and cash equivalents to

the financial statements and the Group’s facilities to the
agreements and third party confirmations, and agreeing
the terms of the facilities to the underlying contracts;

• Considering the downside scenario identified by management
in their assessment on page 77, assessing whether there are
any other scenarios, which should be considered through
reference to the Groups principal risks, and assessing
whether the quantum of the impact of the downside scenario
in the going concern period was sufficiently severe whilst
remaining plausible;

• Evaluating the Group’s ability to undertake mitigating actions
should it experience a severe downside scenario, considering
likely achievability of both timing and quantum;

• Testing the clerical accuracy of the model used to prepare

the Group’s going concern assessment;

• Reperforming the reverse stress test to establish the

increases in input costs and the related impact on the cash
flows that could lead to a loss of liquidity and considering
whether this scenario was plausible; and

• Assessing the appropriateness of the Group’s disclosure

concerning the going concern basis of preparation.

The audit procedures performed to address this risk were
performed by the Group audit team.

We observed that the Group achieved the forecasts that it
was targeting in 2023. We observed the significant liquidity that
the Group has at its disposal that can be utilised if the modelled
downside was to materialise. The Group has the facilities
disclosed in note 26 which includes details of the maturities
of those facilities.

Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group and parent company’s ability to continue as a going
concern until 1 March 2025.

In relation to the Group and parent company’s reporting on how
they have applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the
directors’ statement in the financial statements about whether
the directors considered it appropriate to adopt the going
concern basis of accounting.

Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections
of this report. However, because not all future events or
conditions can be predicted, this statement is not a guarantee
as to the Group’s ability to continue as a going concern.

Overview of our audit approach

Audit
scope

• We performed an audit of the complete
financial information of 101 components
and audit procedures on specific balances
for a further 19 components

• The components where we performed full
or specific audit procedures accounted for
88% of adjusted profit before taxation,
87% of revenue and 86% of total assets

Key audit
matters

• Assessment of the carrying value of goodwill,
other intangible assets, property, plant and
equipment and right-of-use assets

• Taxation provisions
• Revenue recognition, including the risk

of management override

Materiality

• We used a Group materiality of £66m

which represents 4.5% of adjusted profit
before taxation

An overview of the scope of the parent company
and group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and
our allocation of performance materiality determine our audit
scope for each company within the Group. Taken together,
this enables us to form an opinion on the consolidated financial
statements. We take into account the level of revenue and
adjusted profit before taxation, risk profile (including country
risk, controls and internal audit findings and the extent of
changes in management, systems and processes and the
business environment) and other known factors when
assessing the level of work to be performed at each entity.

In assessing the risk of material misstatement to the
consolidated financial statements, and to ensure we had
adequate quantitative coverage of significant accounts in the
financial statements, of the 517 reporting components of the
Group, we selected 120 components, which represent the
principal business units within the Group.

Of the 120 components selected, we performed an audit
of the complete financial information of 101 components
(‘full scope components’) which were selected based on their
size or risk characteristics. For the remaining 19 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 88% (2022 – 90%) of the Group’s
adjusted profit before taxation, 87% (2022 – 88%) of the
Group’s revenue and 86% (2022 – 87%) of the Group’s total
assets. For the current period, the full scope components
contributed 79% (2022 – 80%) of the Group’s adjusted profit
before taxation, 84% (2022 – 84%) of the Group’s revenue
and 83% (2022 – 83%) of the Group’s total assets. The specific
scope components contributed 9% (2022 – 10%) of the Group’s
adjusted profit before taxation, 3% (2022 – 4%) of the Group’s
revenue and 3% (2022 – 4%) 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.

Of the remaining 397 components that together represent
12% of the Group’s adjusted profit before taxation, none are
individually greater than 1% of the Group’s adjusted profit
before taxation. For these components, we performed other
procedures, including analytical review, 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.

120

Associated British Foods plc Annual Report 2023

121

INDEPENDENT AUDITOR’S REPORT CONTINUED

The charts below illustrate the coverage obtained from the work performed by our audit teams.

Adjusted profit before taxation

Revenue

Total assets

Full scope components

79%

Speciﬁc scope components

Other procedures

12%

Full scope components

84%

Speciﬁc scope components

Other procedures

13%

Full scope components

83%

Speciﬁc scope components

Other procedures

14%

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 Group audit engagement
team, or by component auditors from other EY global network
firms operating under our instruction. Of the 101 full scope
components, audit procedures were performed on 32 of these
directly by the Group audit team and 69 by component audit
teams. For the 19 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.

During the current audit cycle, we completed a combination
of physical visits to component teams and alternative oversight
procedures, including video meetings and live reviews of our
local audit teams’ working papers based on the risk and size
of our components. Our physical visits included the senior
statutory auditor visiting Ireland and Australia and other senior
members of the Group audit team visiting South Africa, India,
Italy and Poland. For the alternative oversight procedures, we
used video technology to meet with our component team to
discuss and direct their audit approach, reviewed key working
papers using our global audit software and understood the
significant audit findings in response to the risk areas including
asset impairment, tax provisions and revenue recognition.
We also held meetings with local management and obtained
updates on IT systems implementations and local matters
including tax, pensions and legal. The Group audit team
interacted regularly with the component teams where
appropriate during various stages of the audit, reviewed key
working papers and were responsible for the scope and
direction of the audit process. This, together with the additional
procedures performed at Group level, gave us appropriate
evidence for our opinion on the consolidated financial
statements.

Climate change
There has been increasing interest from stakeholders as to
how climate change will impact Associated British Foods plc.
The Group has determined that the most significant future
impacts from climate change on their operations will be from
the impact on key agricultural crops, the impact of flooding
on the end-to-end supply chain including operations, resilience
of workers to mitigate/adapt to climate change and transition
risks as the world reduces its reliance on carbon.

These are explained on pages 56 to 57 in the Task Force for
Climate related Financial Disclosures and on pages 74 to 75
in the principal risks and uncertainties, which form part
of the ‘Other information’, rather than the audited financial
statements. Our procedures on these disclosures therefore
consisted solely of considering whether they are materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit or otherwise appear to be
materially misstated.

As explained in these disclosures, governmental and societal
responses to climate change risks are still developing, and are
interdependent upon each other, and consequently financial
statements cannot capture all possible future outcomes as
these are not yet known. The degree of certainty of these
changes may also mean that they cannot be taken into account
when determining asset and liability valuations and the timing
of future cash flows under the requirements of UK adopted
international accounting standards. The scenarios assessed
by Associated British Foods plc do not lead to a need
for reasonably possible change disclosures related
to climate change.

Our audit effort in considering climate change was focused on
evaluating management’s assessment of the impact of climate
risk, physical and transition, and ensuring that the effects
of material climate risks disclosed on pages 74 to 75 have been
appropriately reflected in asset values and associated
disclosures where values are determined through or assessed
by modelling future cash flows, being goodwill, other intangible
assets, property, plant and equipment and right-of-use assets.
Details of our procedures and findings on the carrying value of
goodwill, other intangible assets, property, plant and equipment
and right-of-use assets are included in our key audit matters
below. We also challenged the Directors’ considerations of
climate change in their assessment of going concern and
viability and associated disclosures.

Whilst the Group has stated its commitment to the aspirations
of the Paris Agreement to achieve net zero emissions by
2050, the Group is currently unable to determine the full future
economic impact on its business model, operational plans
and customers to achieve this and therefore, the potential
impacts are not fully incorporated in these financial statements.

Key audit matters
Key audit matters are those matters that, in our professional judgement, 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

We concluded that it was
appropriate to record an
impairment for Don, that
the impairment recorded
was not materially
misstated and that the
impairment was
appropriately disclosed as
an exceptional item.

For JDR and AB
Mauri, we agreed with
management's conclusion
that no impairments
were required.

Assets relating to Don and
JDR remain sensitive to
reasonably possible
changes in key
assumptions. Management
discloses these
sensitivities appropriately
in the intangible assets and
property, plant and
equipment notes to the
consolidated financial
statements, in accordance
with the requirements
of IAS 36.

Risk

Our response to the risk

Assessment of the carrying value
of goodwill, other intangible assets,
property, plant and equipment,
right-of-use assets and assets held
for sale (2023 – £9,986m;
2022 – £9,968m)
The Group has significant carrying
amounts of goodwill, other intangible
assets, property, plant and equipment
and right-of-use assets. The impairment
tests covered the Don business
(carrying value £154m), Jordans Dorset
Ryvita (‘JDR’) (£137m) and AB Mauri
(£937m).

During the year, impairments have been
recognised against the Don business
(£41m).

Don and JDR continue to operate in
environments where there is significant
retailer pressure on price and competitor
activity, which is further exacerbated
by high inflationary costs and
operational challenges.

There is a risk that these cash generating
units (‘CGUs’) or groups of CGUs may
not achieve the anticipated business
performance to support their carrying
value, or that the estimated fair value
less cost to sell of a disposal group may
not support its carrying value. This could
lead to an impairment charge or loss
on disposal that has not been recognised
by management.

The significant improvement in
performance in AB Mauri in 2023 has
resulted in the risk of impairment of the
carrying value of that CGU reducing.

Significant estimation is required in
forecasting the future cash flows of each
CGU or, in the case of goodwill, group
of CGUs, together with the rate at which
they are discounted.

We understood the methodology applied by management
in performing its impairment test for each of the relevant
CGUs, groups of CGUs or disposal groups and walked
through the controls over the process, but did not test the
operating effectiveness of them.

For CGUs where there were indicators of impairment,
including the three CGUs or groups of CGUs described, we
performed detailed testing to critically assess and corroborate
the key inputs to the impairment tests, including:

• Analysing the historical accuracy of budgets to actual
results to determine whether forecast cash flows are
reliable;

• For Don, we challenged management’s key assumptions
within the impairment model for optimism, benchmarking
against historical trends and external market data. We
tested management’s methodology over the remaining
impairment allocation basis and concur that the allocation
is in line with IAS 36;

• For JDR, we critically challenged and evaluated, the

key assumptions adopted in management's forecasts.
Where assumptions in our opinion could not be supported
or appeared, in our view, optimistic, these were risk
adjusted and/or removed. We calculated the breakeven
level of operating profit required in the perpetuity cash
flows and assessed this in the context of the historical
performance of JDR;

• For AB Mauri, we challenged the assumptions in the

model, focusing on the cash flow forecasts for the largest
regions. Analysing the non-key and the negative business
units, along with reviewing the contingencies included
in the model. We have assessed the overall adjusted
operating profit growth in the key business units and
compared to third party market rates. We have assessed
the overall division growth against the global growth
rates;

• In conjunction with our valuation specialists, assessing
the discount rates used by determining independently
a range of acceptable rates for each CGU, considering
market data and comparable organisations, and comparing
these ranges to the rates used by management;
• Validating the long-term growth rates assumed by

comparing them to economic and industry forecasts that
we obtained independently; and

• Considering any contra evidence obtained during the

course of the audit.

122

Associated British Foods plc Annual Report 2023

123

INDEPENDENT AUDITOR’S REPORT CONTINUED

Risk

Our response to the risk

Key observations
communicated to the
Audit Committee

This risk existed in the prior year as well.
We focus our audit effort on those
businesses where we believe there
is greater risk of impairment.

Refer to the Audit Committee Report
(pages 93 to 99); accounting policies
(pages 133 to 138); accounting estimates
and judgements (page 139); and notes 8,
9 and 10 to the consolidated financial
statements (pages 148 to 153).

Tax provisions for uncertain tax
positions £55m (2022 – £102m)
included within the income tax
liability of £109m (2022 – £160m)
The global nature of the Group’s
operations results in complexities in
the payment of and accounting for tax.

Management applies judgement in
assessing tax exposures in each
jurisdiction, which require interpretation
of local tax laws.

Given this judgement, there is a risk that
tax provisions are misstated.

This risk existed in the prior year as well.
Refer to the Audit Committee Report
(pages 93 to 99); accounting policies
(pages 133 to 138); accounting estimates
and judgements (page 139); and note 5
to the consolidated financial statements
(pages 146 and 147).

For all CGUs we calculated the degree to which the key
inputs and assumptions would need to fluctuate before an
impairment is triggered and we considered the likelihood of
this occurring. We performed our own sensitivities on the
Group’s forecasts. We then determined whether adequate
headroom remained using these sensitivities and our
independent assessment.

We assessed the disclosures in notes 8, 9 and 10 against
the requirements of IAS 36, in particular in respect of the
requirement to disclose further sensitivities for CGUs where
a reasonably possible change in a key assumption would
cause an impairment.

For AB Mauri, the audit procedures performed to address
this risk were performed by the Group audit team. The JDR
and Don CGUs were subject to full scope audit procedures
by the respective component teams and reviewed by the
Group team.

We understood:

• The Group’s process for determining the completeness

and measurement of provisions for tax;

• The methodology for the calculation of the tax provision
and considered whether this is compliant with IFRIC 23
requirements; and

• Management’s controls over tax reporting, but did not

test the operating effectiveness of these controls.

The Group audit team, including tax specialists, evaluated
the tax positions taken by management in each significant
jurisdiction in the context of local tax law outcomes,
correspondence with tax authorities and the status of any
tax audits. Our work utilised additional support from country
tax specialists in five jurisdictions where the Group had
more significant tax exposures.

We assessed the Group’s transfer pricing judgements,
considering the way in which the Group’s businesses
operate and the correspondence and agreements reached
with tax authorities.

In evaluating management’s accounting, we developed our
own range of acceptable provisions for the Group’s tax
exposures, based on the evidence we obtained. We then
compared management’s provision to our independently
determined range.

We have evaluated the
Group’s tax provisions
and challenged the
judgements applied.

We consider provisions for
uncertain tax positions to
be within an acceptable
range in the context of the
Group’s overall tax
exposures.

Key observations
communicated to the
Audit Committee

Based on the procedures
performed, including those
in respect of trade
promotions and rebates
in the Grocery segment,
we did not identify any
evidence of management
override or material
misstatement in the
revenue recognised in
the period.

Risk

Our response to the risk

Revenue recognition, including
the risk of management override
(2023 – £19,750m; 2022 – £16,997m)
There continues to be pressure to meet
expectations and targets. Management
reward and incentive schemes, based
on achieving profit targets and working
capital as a percentage of revenue
targets, may also place pressure
on management to manipulate
revenue recognition.

The majority of the Group’s sales
arrangements are generally
straightforward, being on a point of sale
basis and requiring little judgement to
be exercised. However, in the Grocery
segment, management estimates the
level of trade promotions and rebates
to be applied to its sales to customers,
adding a level of judgement to revenue
recognition. Approximately 3% (2022
– 3%) of the Group’s gross revenue is
subject to such arrangements.

There is a risk that management may
override controls intentionally to misstate
revenue transactions, either through the
judgements made in estimating rebates
in the Grocery segment or by recording
fictitious revenue transactions across
the business.

This risk existed in the prior year as well.
Refer to the accounting policies (page
134) and note 1 to the consolidated
financial statements (pages 140 to 143).

We understood the revenue recognition policies and how
they are applied, including the relevant controls, but we did
not test the operating effectiveness of these controls.

We discussed key contractual arrangements with
management and obtained relevant documentation,
including in respect of rebate arrangements. Where rebate
arrangements existed, on a sample basis, we obtained
third-party confirmations or performed appropriate alternative
procedures, including reviewing contracts and recalculating
rebates. We also performed hindsight analysis over changes
to prior period rebate estimates to challenge the assumptions
made, including assessing the estimates for evidence
of management bias.

For several businesses, including Primark, as part of our
overall revenue recognition testing, we used data analysis
tools on revenue transactions in the period to test the
correlation of revenue to cash and sample tested to cash
receipts to verify the occurrence of revenue. This provided
us with assurance over £17.1bn (87%) (2022 – £14.8bn
(87%)) of revenue recognised by the Group. For those
in-scope businesses where we did not use data analysis
tools, we performed alternative procedures over revenue
recognition such as detailed transaction testing to invoices
and payments.

We performed other audit procedures specifically designed
to address the risk of management override of controls
in addition to the correlation testing including journal entry
testing, applying particular focus to manual journals.

We performed full and specific scope audit procedures over
this risk area in 82 locations, which covered 87% of the
Group’s revenue.

The audit procedures performed to address this risk were
performed by component teams and reviewed by the
Group team.

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 £66m
(2022 – £65m), which is 4.5% (2022 – 5%) of adjusted profit
before taxation. We believe that adjusted profit before taxation
provides us with the most relevant performance measure to
the stakeholders of the entity and therefore have determined
materiality based on this number.

We determined materiality for the parent company to be £49m
(2022 – £46m), which is 2% (2022 – 2%) of equity.

Performance materiality
The application of materiality is 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%
(2022 – 75%) of our planning materiality, namely £50m
(2022 – £49m).

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 £1m to £20m (2022 – £1m to £20m).

124

Associated British Foods plc Annual Report 2023

125

INDEPENDENT AUDITOR’S REPORT 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 £1m
(2022 – £1m) 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 set out on pages 1 to 119, other than
the financial statements and our auditor’s report thereon.
The directors are responsible for the other information contained
within the Annual Report.

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.

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 course of 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 this gives rise to a material misstatement in
the financial statements themselves. 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.

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:

• 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

• 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:

• 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

• 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

• certain disclosures of directors’ remuneration specified by law

are not made; or

• we have not received all the information and explanations

we require for our audit.

Corporate Governance Statement
We have reviewed the directors’ statement in relation to going
concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Group and parent
company’s compliance with the provisions of the UK Corporate
Governance Code specified for our review by the Listing Rules.

Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit:

• Directors’ statement with regards to the appropriateness

of adopting the going concern basis of accounting and any
material uncertainties identified set out on pages 76 and 77;

• Directors’ explanation as to their assessment of the

company’s prospects, the period this assessment covers and
why the period is appropriate set out on pages 76 and 77;
• Directors’ statement on whether they have a reasonable
expectation that the Group will be able to continue in
operation and meets its liabilities set out on pages 76 and 77;

• Directors’ statement on fair, balanced and understandable

set out on page 94;

• Board’s confirmation that it has carried out a robust

assessment of the emerging and principal risks set out
on page 95;

• The section of the Annual Report that describes the review
of effectiveness of risk management and internal control
systems set out on page 95; and

• The section describing the work of the Audit Committee set

out on pages 93 to 99.

Responsibilities of directors
As explained more fully in the Directors’ Responsibilities
Statement set out on pages 100 to 115, 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.

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 and were designed to
provide reasonable assurance that the financial statements
were free from material fraud or error.

• 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, 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 https://www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
auditor’s report.

Other matters we are required to address
Following the recommendation from the Audit Committee,
we were appointed by the shareholders on 4 December 2015
to audit the financial statements for the 52 weeks ending
17 September 2016 and subsequent financial periods.

The period of total uninterrupted engagement including previous
renewals and reappointments is eight years, covering the 52
weeks ending 17 September 2016 until the 52 weeks ending
16 September 2023. 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.

Simon O’Neill (Senior Statutory Auditor)
for and on behalf of Ernst & Young LLP,
Statutory Auditor

Birmingham

7 November 2023

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 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
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect irregularities,
including fraud. The risk of not detecting a material misstatement
due to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through
collusion. The extent to which our procedures are capable
of detecting irregularities, including fraud, is detailed below.
However, the primary responsibility for the prevention and
detection of fraud rests with both those charged with governance
of the company and management.

Our approach was as follows:

• We obtained an understanding of the legal and regulatory

frameworks that are applicable to the Group and determined
that the most significant frameworks which are directly
relevant to specific assertions in the financial statements are
those that relate to the reporting framework (UK adopted
International Accounting Standards, United Kingdom Generally
Accepted Accounting Practice, the Companies Act 2006 and
the UK Corporate Governance Code) and the relevant tax
laws and 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.

• We understood how Associated British Foods plc is

complying with those frameworks by observing the oversight
of those charged with governance, the culture of honesty
and ethical behaviour and whether a strong emphasis is
placed on fraud prevention, which may reduce opportunities
for fraud to take place, and fraud deterrence, which could
persuade individuals not to commit fraud because of the
likelihood of detection and punishment.

• 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 influence on efforts 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

126

Associated British Foods plc Annual Report 2023

127

FINANCIAL STATEMENTS

Consolidated income statement

Consolidated statement of comprehensive income

for the 52 weeks ended 16 September 2023

Continuing operations
Revenue
Operating costs before exceptional items
Exceptional items

Share of profit after tax from joint ventures and associates
Profits less losses on disposal of non-current assets
Operating profit

Adjusted operating profit
Profits less losses on disposal of non-current assets
Amortisation of non-operating intangibles
Acquired inventory fair value adjustments
Transaction costs
Exceptional items

Profits less losses on sale and closure of businesses
Profit before interest
Finance income
Finance expense
Other financial income
Profit before taxation

Adjusted profit before taxation
Profits less losses on disposal of non-current assets
Amortisation of non-operating intangibles
Acquired inventory fair value adjustments
Transaction costs
Exceptional items
Profits less losses on sale and closure of businesses
Taxation – UK (excluding tax on exceptional items)

– UK (on exceptional items)
– Overseas (excluding tax on exceptional items)
– Overseas (on exceptional items)

Profit for the period

Attributable to
Equity shareholders
Non-controlling interests
Profit for the period

Basic and diluted earnings per ordinary share (pence)
Dividends per share paid and proposed for the period (pence)
Special dividend per share proposed for the period (pence)

Note
1
2
2

8
2
2
2

4
4
4

8
2
2
2
23

7
6
6

2023
£m
19,750
(18,410)
(109)
1,231
124
28
1,383

2022
£m
16,997
(15,729)
(206)
1,062
109
7
1,178

1,513
28
(41)
(3)
(5)
(109)

(3)
1,380
48
(128)
40
1,340

1,473
28
(41)
(3)
(5)
(109)
(3)
(40)
–
(300)
68
(272)
1,068

1,044
24
1,068

134.2
47.3
12.7

1,435
7
(47)
(5)
(6)
(206)

(23)
1,155
19
(111)
13
1,076

1,356
7
(47)
(5)
(6)
(206)
(23)
(50)
3
(243)
(66)
(356)
720

700
20
720

88.6
43.7
nil

Profit for the period recognised in the income statement

Other comprehensive income

Remeasurements of defined benefit schemes
Deferred tax associated with defined benefit schemes
Items that will not be reclassified to profit or loss

Effect of movements in foreign exchange
Net gain/(loss) on hedge of net investment in foreign subsidiaries
Net gain on other investments held at fair value through other comprehensive income
Deferred tax associated with movements in foreign exchange
Current tax associated with movements in foreign exchange
Movement in cash flow hedging position
Deferred tax associated with movement in cash flow hedging position
Deferred tax associated with movement in other investments
Share of other comprehensive (loss)/income of joint ventures and associates
Effect of hyperinflationary economies
Items that are or may be subsequently reclassified to profit or loss

Other comprehensive (loss)/income for the period

Total comprehensive income for the period

Attributable to
Equity shareholders
Non-controlling interests
Total comprehensive income for the period

Note

2023
£m
1,068

(7)
4
(3)

(470)
1
–
(5)
6
(260)
40
–
(18)
40
(666)

2022
£m
720

821
(198)
623

440
(1)
4
–
–
419
(28)
(1)
28
46
907

(669)

1,530

399

2,250

397
2
399

2,219
31
2,250

128

Associated British Foods plc Annual Report 2023

129

FINANCIAL STATEMENTS

Consolidated balance sheet

at 16 September 2023

Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investments in joint ventures
Investments in associates
Employee benefits assets
Income tax
Deferred tax assets
Other receivables
Total non-current assets

Current assets
Assets classified as held for sale
Inventories
Biological assets
Trade and other receivables
Derivative assets
Current asset investments
Income tax
Cash and cash equivalents
Total current assets
Total assets

Current liabilities
Liabilities classified as held for sale
Lease liabilities
Loans and overdrafts
Trade and other payables
Derivative liabilities
Income tax
Provisions
Total current liabilities

Non-current liabilities
Lease liabilities
Loans
Provisions
Deferred tax liabilities
Employee benefits liabilities
Total non-current liabilities
Total liabilities
Net assets

Equity
Issued capital
Other reserves
Translation reserve
Hedging reserve
Retained earnings
Total equity attributable to equity shareholders
Non-controlling interests
Total equity

Consolidated cash flow statement

for the 52 weeks ended 16 September 2023

Note

2023
£m

2022
£m

Note

2023
£m

2022
£m

8
9
10
11
11
12
5
13
14

15
16
17
14
26
25

15
10
19
20
26

10
19
21
13
12

22
22
22
22

1,870
5,766
2,350
303
91
1,446
23
193
63
12,105

–
3,207
99
1,778
96
–
102
1,457
6,739
18,844

–
(335)
(168)
(2,953)
(69)
(109)
(55)
(3,689)

(2,825)
(394)
(48)
(626)
(69)
(3,962)
(7,651)
11,193

44
179
(42)
2
10,910
11,093
100
11,193

1,868
5,599
2,456
301
85
1,393
23
158
58
11,941

45
3,259
105
1,758
475
4
67
2,121
7,834
19,775

(14)
(316)
(157)
(3,114)
(205)
(160)
(87)
(4,053)

(2,936)
(480)
(26)
(647)
(79)
(4,168)
(8,221)
11,554

45
178
422
154
10,649
11,448
106
11,554

Cash flow from operating activities
Profit before taxation
Profits less losses on disposal of non-current assets
Profits less losses on sale and closure of businesses
Transaction costs
Finance income
Finance expense
Other financial income
Share of profit after tax from joint ventures and associates
Amortisation
Depreciation (including of right-of-use assets)
Exceptional items
Acquired inventory fair value adjustments
Effect of hyperinflationary economies
Net change in the fair value of current biological assets
Share-based payment expense
Pension costs less contributions
Increase in inventories
Increase in receivables
(Decrease)/increase in payables
Purchases less sales of current biological assets
(Decrease)/increase in provisions
Cash generated from operations
Income taxes paid
Net cash generated from operating activities

Cash flow from investing activities
Dividends received from joint ventures and associates
Purchase of property, plant and equipment
Purchase of intangibles
Lease incentives received
Sale of property, plant and equipment
Purchase of subsidiaries, joint ventures and associates
Sale of subsidiaries, joint ventures and associates
Purchase of other investments
Interest received
Net cash used in investing activities

Cash flow from financing activities
Dividends paid to non-controlling interests
Dividends paid to equity shareholders
Interest paid
Repayment of lease liabilities
Decrease in short-term loans
Increase in long-term loans
Decrease in current asset investments
Share buyback
Movement from changes in own shares held
Net cash used in financing activities

Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effect of movements in foreign exchange
Cash and cash equivalents at the end of the period

1,340
(28)
3
5
(48)
128
(40)
(124)
82
804
109
3
14
(11)
18
(8)
(94)
(107)
(15)
(9)
(27)
1,995
(341)
1,654

107
(997)
(76)
62
48
(94)
4
(4)
44
(906)

(7)
(345)
(118)
(308)
(13)
–
3
(448)
(46)
(1,282)

(534)
1,995
(73)
1,388

1,076
(7)
23
6
(19)
111
(13)
(109)
68
802
206
5
16
(8)
19
7
(953)
(288)
512
(4)
7
1,457
(304)
1,153

93
(680)
(89)
46
30
(154)
–
(7)
17
(744)

(8)
(380)
(114)
(321)
(12)
178
30
–
(50)
(677)

(268)
2,189
74
1,995

2
4
4
4
11

25
25
25
25

The financial statements on pages 128 to 193 were approved by the Board of Directors on 7 November 2023 and were signed
on its behalf by:

Michael McLintock
Chairman

Eoin Tonge
Finance Director

130

Associated British Foods plc Annual Report 2023

131

FINANCIAL STATEMENTS

Consolidated statement of changes in equity

Significant accounting policies

for the 52 weeks ended 16 September 2023

Attributable to equity shareholders

Issued
capital
£m
45

Other
reserves
£m
175

Translation
reserve
£m
(34)

Hedging
reserve
£m
43

Retained
earnings
£m
9,692

Total
£m
9,921

Non-
controlling
Total
interests
equity
£m
£m
83 10,004

Note

Balance as at 18 September 2021
Total comprehensive income
Profit for the period recognised in the income statement
Remeasurements of defined benefit schemes
Deferred tax associated with defined benefit schemes
Items that will not be reclassified to profit or loss
Effect of movements in foreign exchange
Net loss on hedge of net investment in foreign subsidiaries
Net gain on other investments held at fair value through

other comprehensive income

Movement in cash flow hedging position
Deferred tax associated with movement in cash flow

hedging position

Deferred tax associated with movement in other

investments

Share of other comprehensive income of joint ventures

and associates

Effect of hyperinflationary economies
Items that are or may be subsequently reclassified to

profit or loss

Other comprehensive income
Total comprehensive income
Inventory cash flow hedge movements
Amounts transferred to cost of inventory
Total inventory cash flow hedge movements
Transactions with owners
Dividends paid to equity shareholders
Net movement in own shares held
Deferred tax associated with share-based payments
Dividends paid to non-controlling interests
Total transactions with owners
Balance as at 17 September 2022
Total comprehensive income
Profit for the period recognised in the income statement
Remeasurements of defined benefit schemes
Deferred tax associated with defined benefit schemes
Items that will not be reclassified to profit or loss
Effect of movements in foreign exchange
Net gain on hedge of net investment in foreign subsidiaries
Deferred tax associated with movements in foreign

exchange

Current tax associated with movements in foreign

exchange

Movement in cash flow hedging position
Deferred tax associated with movement in cash flow

hedging position

Share of other comprehensive income of joint ventures

and associates

Effect of hyperinflationary economies
Items that are or may be subsequently reclassified to

profit or loss

–
–
–
–
–
–

–
–

–

–
–

–
–
–

–
–

–
–
–
–
–
–

4
–

–

(1)

–
–

3
3
3

–
–

–
–
–
–
429
(1)

–
–

–

28
–

456
456
456

–
–
–
–
–
–

–
419

(28)

–

–
–

700
821
(198)
623
–
–

–
–

–

–
46

700
821
(198)
623
429
(1)

4
419

(28)

(1)

28
46

391
391
391

46
669
1,369

896
1,519
2,219

–
–

(280)
(280)

–
–

(280)
(280)

–
–
–
–
–

(380)
(31)
(1)
–
(412)
154 10,649

(380)
(31)
(1)
–
(412)
11,448

1,044
(7)
4
(3)
–
–

1,044
(7)
4
(3)
(448)
1

–

–
–

–

–
40

(5)

6
(260)

(18)
40

(644)
(647)
397

68
68

(220)
(220)
(220)

40
37
1,081

68
68

–
–

–
–
–
–
–
–

–

–
(260)

–
–

–
–
–
–
–
45

–
–
–
–
–
178

–
–
–
–
–
–

–

–
–

–

–
–

–
–
–

–
–

–
–
–
–
–
–

–

–
–

–

–
–

–
–
–

–
–

–
–
(1)
–
–
(1)
44

–
–
1
–
–
1
179

–
–
–
–
–
422

–
–
–
–
(448)
1

(5)

6
–

–

(18)
–

(464)
(464)
(464)

–
–

–
–
–
–
–
–
(42)

20
–
–
–
11
–

–
–

–

–
–

11
11
31

–
–

720
821
(198)
623
440
(1)

4
419

(28)

(1)

28
46

907
1,530
2,250

(280)
(280)

–
–
–
(8)
(8)

(380)
(31)
(1)
(8)
(420)
106 11,554

24
–
–
–
(22)
–

1,068
(7)
4
(3)
(470)
1

–

–
–

–

–
–

(22)
(22)
2

–
–

(5)

6
(260)

(18)
40

(666)
(669)
399

68
68

(345)
–
(28)
–
(448)
–
1
–
–
–
–
(820)
2 10,910

(345)
(28)
(448)
1
–
(820)
11,093

–
–
–
–
(8)
(8)

(345)
(28)
(448)
1
(8)
(828)
100 11,193

Associated British Foods plc is domiciled in the United Kingdom.
The Company’s consolidated financial statements for the
52 weeks ended 16 September 2023 comprise those of the
Company, its subsidiaries and its interest in joint ventures
and associates.

The directors authorised the consolidated financial statements
for issue on 7 November 2023. The directors prepared and
approved the consolidated financial statements in accordance
with UK-adopted IAS (‘Adopted IFRS’).

The Company has elected to prepare the parent company
financial statements under FRS 101. These are presented
on pages 194 to 200.

Basis of preparation
The Company presents its consolidated financial statements
in sterling, rounded to the nearest million, prepared on the
historical cost basis except that current biological assets and
certain financial instruments are stated at fair value, and assets
classified as held for sale are stated at the lower of carrying
amount and fair value less costs to sell.

The preparation of financial statements under Adopted IFRS
requires management to make judgements, estimates and
assumptions about the reported amounts of assets and liabilities,
income and expenses and the disclosure of contingent assets
and liabilities. The estimates and associated assumptions
are based on experience. Actual results may differ from
these estimates.

Judgements made by management in the application of
Adopted IFRS that have a significant effect on the financial
statements, and estimates with a significant risk of material
adjustment next year, are discussed in Accounting estimates
and judgements detailed on page 139.

The estimates and underlying assumptions are reviewed
regularly. Revisions to accounting estimates are recognised
prospectively from when the estimates are revised.

The accounting policies set out below apply to all periods
presented, except where stated otherwise.

Details of accounting standards which came into force in the
year are set out at the end of this note.

The Group’s consolidated financial statements are prepared to
the Saturday nearest to 15 September. Accordingly, they have
been prepared for the 52 weeks ended 16 September 2023
(2022 – 52 weeks ended 17 September 2022).

To avoid delay in the preparation of the consolidated financial
statements, the results of certain subsidiaries, joint ventures
and associates are included to 31 August each year.

Adjustments have been made where appropriate for significant
transactions or events occurring between 31 August and
16 September.

The Group’s business activities, together with factors likely
to affect its future development, performance and position are
set out in the Strategic Report on pages 1 to 77. The financial
position of the Group, its cash flows, liquidity position and
borrowing facilities are described in the Financial review
on pages 36 to 39.

In addition, the Principal risks and uncertainties on pages 68 to
77 and note 26 on pages 166 to 177 provide details of the
Group’s policy on managing its financial and commodity risks.

Climate change
In preparing the consolidated financial statements, management
has considered the impact of climate change, particularly in
the context of the TCFD disclosures set out on pages 56 to 67
and our sustainability targets. These considerations did not have
a material impact on the financial reporting judgements and
estimates, consistent with the assessment that climate change
is not expected to have a significant impact on the Group’s
going concern assessment to 1 March 2025 nor the viability
of the Group over the next three years.

Management has considered the impact of climate change
on a number of key estimates within the financial statements,
including the estimates of future cash flows used in impairment
assessments of the carrying value of goodwill and other
non-current assets. The assessment with respect to the impact
of climate change will be kept under review by management,
as the future impacts depend on factors outside of the Group’s
control, which are not all currently known.

Going concern
After making enquiries, the directors have a reasonable
expectation that the Group has adequate resources to continue
in operational existence for the foreseeable future. For this
reason, they continue to adopt the going concern basis
in preparing the consolidated financial statements.

In March 2023, S&P Global Ratings reaffirmed their assignment
to the Group of an ‘A’ grade long-term issuer credit rating. The
Group’s funding basis is supported by the existing £400m public
bond due in 2034 furthermore the Group’s committed Revolving
Credit Facility is free of performance covenants and matures in
2028, with one 1-year extension option remaining (after the first
was utilised during the year). The $100m of outstanding private
placement notes are due in March 2024 after which point Group
funding will not be subject to financial performance covenants.

132 Associated British Foods plc Annual Report 2023

Associated British Foods plc Annual Report 2023

133

FINANCIAL STATEMENTS

Significant accounting policies

for the 52 weeks ended 16 September 2023

As a downside scenario the directors considered the adverse
scenario in which inflationary costs are not fully recovered, there
are adverse foreign exchange impacts and there is a global
recession, reducing demand for goods further than the base levels
forecast. This downside scenario was modelled without taking
any mitigating actions within their control. Under this downside
scenario the Group forecasts liquidity throughout the period.

In addition, the directors also considered the circumstances
which would be needed to exhaust the Group’s total liquidity
over the assessment period – a reverse stress test. This indicates
that, on top of the downside scenario outlined above, cost
inflation would need to exceed £1.9bn without any price
increases or other mitigating actions being taken before total
liquidity is exhausted. The likelihood of these circumstances
is considered remote for two reasons. Firstly, over such a long
period, management could take substantial mitigating actions,
such as reviewing pricing, cost cutting measures and reducing
capital investment. Secondly, the Group has significant business
and asset diversification and would be able to, if it were
necessary, dispose of assets and/or businesses to raise
considerable levels of funds.

Basis of consolidation
These consolidated financial statements include the results
of the Company and its subsidiaries from the date that control
commences to the date that control ceases.

They also include the Group’s share of the after-tax results,
other comprehensive income and net assets of its joint ventures
and associates on an equity-accounted basis from the point at
which joint control or significant influence respectively
commences, to the date that it ceases.

Subsidiaries are entities controlled by the Company. Control
exists when the Company has the power, directly or indirectly,
to direct the activities of an entity so as to affect significantly
the returns of that entity.

Changes in the Group’s ownership interest in a subsidiary that
do not result in a loss of control are accounted for within equity.

All the Group’s joint arrangements are joint ventures, which
are entities over whose activities the Group has joint control,
typically established by contractual agreement and requiring
the venturers’ unanimous consent for strategic, financial and
operating decisions.

Associates are those entities in which the Group has significant
influence, being the power to participate in the financial and
operating policy decisions of the entity, but which does not
amount to control or joint control.

Where the Group’s share of losses exceeds its interest in
a joint venture or associate, the carrying amount is reduced
to zero and recognition of further losses is discontinued except
to the extent that the Group has incurred legal or constructive
obligations or made payments on behalf of an investee.

Control, joint control and significant influence are generally
assessed by reference to equity shareholdings and voting rights.

Business acquisitions
On acquisition of a business, the Group attributes fair values to
the identifiable assets, liabilities and contingent liabilities acquired,
reflecting conditions at the date of acquisition. These include
aligning accounting policies with those of the Group.

The Group finalises provisional fair values within 12 months
of the date of acquisition and, where significant, reflects them
by restatement of the comparative period in which the
acquisition occurred.

The Group measures non-controlling interests at the
proportionate share of the net identifiable assets acquired.

The Group remeasures existing equity interests in the acquiree
to fair value at the date of acquisition, with any resulting gain
or loss taken to the income statement.

Goodwill arising on acquisition of a business is the excess of
the remeasured carrying amount of any existing equity interest
plus the fair value of consideration payable for the additional
stake over the fair value of the share of net identifiable assets
and liabilities acquired (including separately identified intangible
assets), net of non-controlling interests. Total consideration
does not include transaction costs, which the Group
expenses as incurred.

The Group measures contingent consideration at fair value
at the date of acquisition, classified as a liability or equity
(usually as a liability).

Other than for the finalisation of provisional fair values, the
Group accounts for changes in contingent consideration
classified as a liability in the income statement.

Revenue
Revenue represents the value of sales made to customers after
deduction of discounts, sales taxes and a provision for returns.
Discounts include sales rebates, price discounts, customer
incentives, some promotional activities and similar items.
Revenue does not include sales between Group companies.

The Group recognises revenue when performance obligations
are satisfied, goods are delivered to customers and control
of goods is transferred to the buyer.

In the food businesses, the Group generally recognises revenue
from the sale of goods on dispatch or delivery to customers,
dependent on shipping terms, and provides for discounts and
returns as a reduction to revenue when sales are recorded,
based on management’s best estimate of the amount required
to meet claims by customers, taking into account contractual
and legal obligations, historical trends and past experience.

In the Retail business, the Group generally recognises revenue
from the sale of goods when a customer purchases goods, and
provides for returns as a reduction to revenue when sales are
recorded, based on management’s best estimate of the amount
required to meet claims by customers, taking into account
historical trends and past experience.

Borrowing costs
The Group accounts for borrowing costs using the effective
interest method. The Group capitalises borrowing costs directly
attributable to the acquisition, construction or production
of qualifying items of property, plant and equipment as part
of their cost.

Foreign currencies
Individual group companies record transactions in foreign
currencies at the exchange rate at the date of the transaction, and
translate monetary assets and liabilities in foreign currencies at
the exchange rate at the balance sheet date, with any resulting
differences taken to the income statement, unless designated
in a hedging relationship, in which case hedge accounting applies.

On consolidation, the Group translates the assets and liabilities
of operations denominated in foreign currencies into sterling
at the exchange rate at the balance sheet date and the income
statements of those operations into sterling at average
exchange rates.

The Group records differences arising from the retranslation
of opening net assets of group companies, together with
differences arising from the restatement of the net results of
group companies from average exchange rates to those at the
balance sheet date, in the translation reserve in equity.

Pensions and other post-employment benefits
The Group’s pension and other post-employment benefit
arrangements comprise defined benefit plans, defined
contribution plans and other unfunded post-employment plans.

For defined benefit plans, the income statement charge
comprises the cost of benefits earned by members and benefit
improvements granted to members during the year, as well as
net interest income/(expense) calculated by applying the liability
discount rate to the opening net pension asset or liability.

The Group records the difference between the market value
of scheme assets and the present value of scheme liabilities
on a scheme-by-scheme basis as net pension assets (to the
extent recoverable) or liabilities.

The Group recognises remeasurements and movements
in irrecoverable surpluses in other comprehensive income.

The Group charges contributions payable in respect of defined
contribution plans to operating profit as incurred.

The Group accounts for other unfunded post-employment plans
in the same way as defined benefit plans.

Share-based payments
The Group recognises the fair value of share awards at grant
date as an employee expense with a corresponding increase in
equity, spread over the period during which employees become
unconditionally entitled to the shares.

The Group adjusts the amount recognised to reflect expected
and actual levels of vesting except where the failure to vest
is as a result of not meeting a market condition.

Income tax
Income tax on profit or loss for the period comprises current
and deferred tax. The Group recognises income tax in the
income statement except to the extent that it relates to items
taken directly to equity.

Current tax is the tax expected to be payable on taxable income
for the year, using tax rates enacted or substantively enacted
during the period, together with any adjustment to tax payable
in respect of prior periods.

The Group provides for deferred tax using the balance sheet
liability method, providing for temporary differences between
the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for tax purposes.

The Group does not provide for the following temporary
differences: initial recognition of goodwill; initial recognition
of assets or liabilities affecting neither accounting nor taxable
profit other than those acquired in a business combination; and
differences relating to investments in subsidiaries to the extent
that they will probably not reverse in the foreseeable future.

The Group bases the amount of deferred tax provided on the
expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or
substantively enacted at the balance sheet date.

The Group recognises deferred tax assets only to the extent
that it is probable that future taxable profits will be available
against which the asset can be utilised.

The Group offsets deferred tax assets and liabilities if, and only
if, it has a legally enforceable right to set off current tax assets
and liabilities and the deferred tax assets and liabilities relate
to income taxes levied by the same taxation authority on either
the same taxable entity or different taxable entities which intend
either to settle current tax liabilities and assets on a net basis,
or to realise the assets and settle the liabilities simultaneously,
in each future period in which significant amounts of deferred
tax liabilities or assets are expected to be settled or recovered.

As required by IAS 12, we have applied the exception to
recognising and disclosing information about deferred tax assets
and liabilities related to Pillar Two income taxes.

The Group recognises income tax arising from dividend
distributions at the same time as the liability to pay the
related dividend.

Financial assets and liabilities
The Group recognises financial assets and liabilities when
it becomes a party to the contractual provision of the relevant
financial instrument.

Trade and other receivables
The Group records trade and other receivables initially at fair
value and subsequently at amortised cost. This generally results
in recognition at nominal value less an expected credit loss
provision, which is recognised based on management’s
expectation of losses without regard to whether or not a specific
impairment trigger has occurred.

Other non-current receivables
Other non-current receivables comprise finance lease
receivables due from a joint venture and minority shareholdings
in private companies. The Group accounts for finance lease
receivables in the same way as for trade and other receivables.

The Group records minority shareholdings in private companies
initially at fair value, including directly attributable transaction
costs, and subsequently at fair value through other
comprehensive income.

On disposal of a minority shareholding, the cumulative gain
or loss previously recognised in other comprehensive income
is included directly in retained earnings, without recycling it to
the income statement.

Bank and other borrowings
The Group records bank and other borrowings initially at fair value,
which equals the proceeds received, net of direct issue costs, and
subsequently at amortised cost. The Group accounts for finance
charges, including premiums payable on settlement or redemption
and direct issue costs, using the effective interest rate method.

Trade payables
The Group records trade payables initially at fair value and
subsequently at amortised cost. This generally results in
recognition at nominal value.

134

Associated British Foods plc Annual Report 2023

135

FINANCIAL STATEMENTS

Significant accounting policies

for the 52 weeks ended 16 September 2023

Cash and cash equivalents
Cash and cash equivalents comprise bank and cash balances,
deposits and short-term investments with original maturities
of three months or less.

For the purposes of the cash flow statement, the Group includes
bank overdrafts that are repayable on demand and form an
integral part of the Group’s cash management as a component
of cash and cash equivalents.

Derivative financial instruments and hedging
The Group primarily uses derivatives to manage economic
exposure to financial and commodity risks. The principal
instruments used are foreign exchange and commodity
contracts, futures, swaps and options. The Group does not
use derivatives for speculative purposes.

The Group recognises derivatives at fair value based on market
prices or rates, or calculated using discounted cash flow or
option pricing models.

The Group recognises changes in the fair value of derivatives
in the income statement unless the derivative is designated
in a hedging relationship, when recognition of the change in
fair value depends on the nature of the item being hedged.

The purpose of hedge accounting is to mitigate the impact on
the Group of changes in foreign exchange or interest rates and
commodity prices.

At the inception of each hedging relationship, the Group
documents the hedging instrument, the hedged item, the risk
management objectives and strategy for undertaking the hedge,
and assesses hedge effectiveness.

During the life of each hedging relationship, the Group performs
testing to demonstrate that the hedge remains effective.

For derivatives hedging of future cash flows, the Group
recognises the change in fair value through other comprehensive
income in either the cost of hedging reserve (for the element
of the change in fair value relating to the currency spread) or
in the hedging reserve (for the remaining change in fair value).
Any ineffective portion is recognised immediately in the
income statement.

When the future cash flow results in the recognition of a
non-financial asset or liability, then at the time that asset or
liability is recognised, the Group includes the associated gains
and losses previously recognised in the hedging reserve in the
initial measurement of that asset or liability.

When the future cash flow does not result in the recognition of
a non-financial asset or liability, the Group includes the associated
gains and losses previously recognised in the hedging reserve
in the income statement in the same period in which the
hedged item affects profit or loss.

Hedges of the Group’s net investment in foreign operations
principally comprise borrowings in the currency of the
investment’s net assets.

For derivative or non-derivative financial instruments used as
hedges of the Group’s net investment in foreign operations,
the Group recognises the change in fair value through other
comprehensive income in the net investment hedging reserve.
Any ineffective portion is recognised immediately in the
income statement.

The Group discontinues hedge accounting when a hedging
instrument expires or is sold, terminated, exercised, or no longer
qualifies for hedge accounting. At that time, the Group retains
the cumulative associated gain or loss recognised in the hedging
reserve until the forecast transaction occurs. Gains or losses
on hedging instruments relating to an underlying exposure that
no longer exists are taken to the income statement.

The Group economically hedges foreign currency exposure on
recognised monetary assets and liabilities but does not normally
seek hedge accounting. The Group records any derivatives held
to hedge this exposure at fair value through profit and loss.

Intangible assets other than goodwill
Non-operating intangible assets are generally intangible assets
that arise on business combinations and typically include
technology, brands, customer relationships and grower
agreements. The Group acquires operating intangible assets in
the ordinary course of business, typically including computer
software, land use rights and emissions trading licences.

The Group records intangible assets other than goodwill at cost
less accumulated amortisation and impairment charges.

Amortisation is charged to the income statement on a straight-
line basis over the estimated useful lives of intangible assets
from the date they are available for use. Estimated useful lives
are generally deemed to be no longer than:

Technology and brands – up to 15 years

Customer relationships – up to 10 years

Grower agreements – up to 10 years

Operating intangibles – up to 10 years

Goodwill
Goodwill is defined under ‘Business acquisitions’ on page 134.
Certain commercial assets associated with the acquisition of a
business are not capable of being recognised in the acquisition
balance sheet. In such circumstances, goodwill is recognised,
which may include, but is not necessarily limited to, workforce
assets and the benefits of expected future synergies.

Goodwill is subject to an annual impairment review.

Research and development
The Group expenses research and development expenditure
as incurred, unless development expenditure relates to products
or processes which are technically and commercially feasible,
in which case it is capitalised. The Group records capitalised
development expenditure at cost less accumulated amortisation
and impairment charges.

Impairment
The Group reviews the carrying amounts of intangible assets
and property, plant and equipment at each balance sheet date to
determine whether there is any indication of impairment. If any
such indication exists, the Group estimates the indicated asset’s
recoverable amount. For goodwill and intangibles without a
finite life, the Group does this at least annually.

The Group recognises an impairment charge in the income
statement whenever the carrying amount of an asset or its CGU
exceeds its recoverable amount.

The Group allocates impairment charges recognised in respect
of CGUs first to reduce the carrying amount of any goodwill
relating to that CGU and then to reduce the carrying amount
of the other assets in the CGU on a pro rata basis.

Calculation of recoverable amount
The recoverable amount of assets is the greater of their fair
value less costs to sell and their value in use. In assessing value
in use, the Group discounts estimated future cash flows to
present value using a pre-tax discount rate reflective of current
market assessments of the time value of money and the risks
specific to the asset.

For an asset that does not generate largely independent cash
inflows, the Group determines recoverable amount for the CGU
to which the asset belongs.

Reversals of impairment
The Group does not subsequently reverse impairments of
goodwill. For other assets, the Group may reverse an
impairment charge if there has been a change in the estimates
used to determine the recoverable amount, but only to the
extent that the new carrying amount does not exceed the
carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment charge had
previously been recognised.

Property, plant and equipment
The Group records property, plant and equipment at cost less
accumulated depreciation and impairment charges.

The Group charges depreciation to the income statement on a
straight-line basis over the estimated useful economic lives of
each item sufficient to reduce it to its estimated residual value.
Land is not depreciated. Estimated useful economic lives are
generally deemed to be no longer than:

Freehold buildings
Plant and equipment, fixtures and fittings
• sugar factories, yeast plants, mills and

bakeries

• other operations
Vehicles
Sugar cane roots

up to 66 years

up to 20 years
up to 12 years
up to 10 years
up to 10 years

Leases
A lease is an agreement whereby the lessor conveys to the
lessee, in return for a payment or a series of payments, the right
to use a specific asset for an agreed period.

Where the Group is a lessee, the following accounting policy
is applied.

Right-of-use assets
The Group records right-of-use assets at cost at the
commencement date of the lease, which is the date the
underlying asset is available for use, less any accumulated
depreciation and impairment losses, and adjusted for
subsequent remeasurement of lease liabilities.

Cost includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made at or before
the commencement date, less any lease incentives received.

The Group charges depreciation to the income statement on
a straight-line basis over the shorter of the estimated useful life
and the lease term.

Lease liabilities
The Group records lease liabilities at the commencement date
of the lease at the present value of lease payments to be made
over the lease term, discounted using the incremental
borrowing rate at the commencement date of the lease if the
interest rate implicit in the lease is not readily determinable.

Lease payments include fixed payments, including in-substance
fixed payments, and variable lease payments that depend on
an index or a rate, less any lease incentives receivable.

Variable lease payments that do not depend on an index or a
rate are recognised as an expense in the period in which the
event or condition that triggers the payment occurs.

The Group subsequently measures lease liabilities at amortised
cost using the effective interest rate method. The Group records
the accretion and settlement of interest through accruals and
reduces the carrying amount of lease liabilities for the capital
element of lease payments made.

The carrying amount of lease liabilities is remeasured when
there is a change in future lease payments due to a change
in the lease term, a change in the in-substance fixed lease
payments or a change in the assessment of whether to
purchase the underlying asset.

Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption
to leases that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option.
It also applies the low-value asset recognition exemption to
groups of underlying leases considered uniformly low-value.

The Group expenses lease payments on short-term leases and
leases of low-value assets in the income statement as incurred.

Lessor accounting
When subleasing assets, the Group assesses the sublease
classification with reference to the head lease right-of-use asset,
which considers, among other factors, whether the sublease
represents a majority of the remaining life of the head lease.

The ratio of rental income to head lease rental payments is used
to determine how much of the right-of-use asset should be
derecognised, taking into account whether the sublease/head
lease are above or below market rate.

The Group records amounts due from lessees under finance
leases as a receivable at an amount equal to the net investment
in the lease, calculated using the incremental borrowing rate
at the date of recognition. The Group recognises any difference
between the derecognised right-of-use asset and the newly
recognised amounts due from lessees under finance leases
in the income statement.

The Group recognises finance income over the lease term,
reflecting a constant periodic rate of return on the net
investment in the lease.

The Group recognises operating lease income as earned
on a straight-line basis over the lease term.

136

Associated British Foods plc Annual Report 2023

137

FINANCIAL STATEMENTS

Significant accounting policies

Accounting estimates and judgements

for the 52 weeks ended 16 September 2023

Current biological assets
The Group records current biological assets at fair value less
costs to sell.

The basis of valuation for growing cane is estimated sucrose
content valued at estimated sucrose price for the following
season, less estimated costs for harvesting and transport.

When harvested, the Group transfers growing cane to inventory
at fair value less costs to sell.

Inventories
The Group records food inventories at the lower of cost and net
realisable value. Cost includes raw materials, direct labour and
expenses and an appropriate proportion of production and other
overheads, calculated on a first-in first-out basis.

The Group records retail inventories at the lower of cost and net
realisable value using the retail method, calculated on the basis
of selling price less appropriate trading margin. All retail
inventories are finished goods.

On acquisition of a business, the Group records inventories at
fair value. Subsequently, the Group charges the book value of
the inventories to adjusted operating profit as they are sold or
used. Any significant fair value uplift is charged below adjusted
operating profit as the inventories are sold or used.

Grants
The Group recognises grants only when there is reasonable
assurance that the Group will comply with the conditions
attached and that the grants will be received. Grants receivable
as compensation for expenses already incurred are recognised
in profit or loss in the period in which they become receivable.

Hyperinflation
The Argentinian economy was designated hyperinflationary
from 1 July 2018. The Turkish economy was designated
hyperinflationary from 1 July 2022.

The Group has applied IAS 29 Financial Reporting in
Hyperinflationary Economies to its Argentinian operations from
the beginning of the 2019 financial year and for its Turkish
operations from the beginning of the 2022 financial year. IAS 29
requires that hyperinflationary adjustments are reflected from
the start of the reporting period in which it is applied. For the
Group’s Argentinian operations this was 1 September 2018, and
for the Group’s Turkish operations this was 1 September 2021.

The adjustments required by IAS 29 are set out below:

• adjustment of historical cost non-monetary assets and

liabilities from their date of initial recognition to the balance
sheet date to reflect the changes in purchasing power of the
currency caused by inflation, according to the official indices
for Argentina published by the Federación Argentina de
Consejos Profesionales de Ciencias Económicas (‘FACPCE’)
and for Turkey published by Turkish Statistical Institute (‘TUIK’);

• adjustment of the components of the income statement
and cash flow statement for the inflation index since their
generation, with a balancing entry in the income statement
and a reconciling item in the cash flow statement, respectively;

• adjustment of the income statement to reflect the impact

of inflation on holding monetary assets and liabilities
in local currency;

• the financial statements of the Group’s Argentinian and

Turkish operations have been translated into sterling at the
closing exchange rate at 16 September 2023 (ARS 433.88:£1;
TRL 33.45:£1); and

• the cumulative impact corresponding to previous years has
been reflected in other comprehensive income in the year.

In Argentina, the FACPCE index was 911.1316 at 31 August
2022 and 2044.2832 at 31 August 2023. The inflation index for
the year is therefore 2.244.

In Turkey, the TUIK index was 80.21 at 31 August 2022 and
58.94 at 31 August 2023. The inflation index for the year is
therefore 0.735.

The Venezuelan economy has been designated hyperinflationary
for a number of years, but the impact on the Group’s results
remains immaterial.

New accounting standards
The Group adopted the following accounting standards and
amendments during the year with no significant impact:

• Reference to the Conceptual Framework (Amendments

to IFRS 3)

• Property, Plant and Equipment: Proceeds before Intended

Use (Amendments to IAS 16)

• Onerous Contracts – Cost of Fulfilling a Contract

(Amendments to IAS 37)

• Annual Improvements to IFRS 2018–2020

The Group is assessing the impact of the following standards,
interpretations and amendments that are not yet effective.
Where already endorsed by the UKEB, these changes will be
adopted on the effective dates noted. Where not yet endorsed
by the UKEB, the adoption date is less certain:

• IFRS 17 Insurance Contracts, Amendments to IFRS 17, Initial
Application of IFRS 17 and IFRS 9 – Comparative Information,
effective 2024 financial year

• Disclosure of Accounting policies (Amendments to IAS 1 and

IFRS Practice Statement 2), effective 2024 financial year
• Definition of Accounting Estimates (Amendments to IAS 8),

effective 2024 financial year

• Deferred Tax related to Assets and Liabilities arising from

a Single Transaction (Amendments to IAS 12), effective 2024
financial year

• Lease Liability in a Sale and Leaseback (Amendments to IFRS

16), effective 2024 financial year

• International Tax Reform – Pillar Two Model Rules

(Amendments to IAS 12), effective 2024 financial year

• Amendments to IAS 1 Presentation of Financial Statements,

effective 2024 financial year

• Supplier Finance Arrangements (Amendments to IAS 7 and
IFRS 7), effective 2025 financial year (not yet endorsed by
the UKEB)

• Amendments to IAS 21 The Effects of Changes in Foreign
Exchange Rates: Lack of Exchangeability, effective 2026
financial year (not yet endorsed by the UKEB)

Significant accounting estimates
The preparation of the Group’s consolidated financial
statements includes the use of estimates and assumptions.
Although the estimates used are based on management’s best
information about current circumstances and future events and
actions, actual results may differ from those estimates.

The accounting estimates with a significant risk of a material
change to the carrying value of assets and liabilities within the
next year are set out below.

Forecasts and discount rates
The carrying values of a number of items on the balance sheet
are dependent on estimates of future cash flows arising from
the Group’s operations which, in some circumstances, are
discounted to arrive at a net present value.

Assessment for impairment involves comparing the book value
of an asset with its recoverable amount (the higher of value in
use and fair value less costs to sell). Value in use is determined
with reference to projected future cash flows discounted at an
appropriate rate. Both the cash flows and the discount rate
involve a significant degree of estimation uncertainty.

The recovery of deferred tax assets is dependent on the
generation of sufficient future taxable profits. The Group
recognises deferred tax assets to the extent that it is
considered probable that sufficient taxable profits will be
available in the future. This involves a significant degree
of estimation uncertainty.

When considering sources of future taxable profit, the Group
firstly considers existing deferred tax liabilities. However, the
majority of deferred tax assets are recognised based on future
profit forecasts, including the deferred tax assets in the Group’s
most material jurisdictions of the United Kingdom, the United
States, Australia, Germany and Spain.

When relying on profit forecasts, the assessment of whether to
recognise deferred tax assets is based on the following year’s
budget and expectations of the future performance of individual
businesses (or groups of businesses in the case of national tax
groups). Where possible, this is consistent with forecasts used
for impairment assessments. Forecasts for impairment
assessments are discounted, but this is not permitted for
recognition of deferred tax assets.

Deferred tax assets are reduced when it is no longer considered
probable that the related tax benefit will be realised.

The widespread nature of the Group’s activities across multiple
jurisdictions means that it is not practical to provide detailed
sensitivities in respect of individual deferred tax assets.

Further details of deferred tax assets are included in note 13.

Post-retirement benefits
The Group’s defined benefit pension schemes and similar
arrangements are assessed annually in accordance with IAS 19
Employee Benefits. The accounting valuations, assessed using
assumptions determined with independent actuarial advice,
resulted in a significant net surplus as at 16 September 2023,
principally relating to the UK defined benefit scheme, which
is separately disclosed.

The net surplus is highly sensitive to the market value of scheme
assets, to discount rates used in assessing liabilities, to actuarial
assumptions (including price inflation, rates of pension and
salary increases, mortality and other demographic assumptions)
and to the level of contributions.

Further details are included in note 12, including associated
sensitivities.

Other areas of judgement and
accounting estimates
The consolidated financial statements include other areas of
judgement and accounting estimates. While these areas do not
meet the definition of significant accounting estimates or critical
accounting judgements, the recognition and measurement of
certain material assets and liabilities are based on assumptions
and/or are subject to longer term uncertainties. The other areas
of judgement and accounting estimates are set out below.

Biological assets
In valuing growing cane, estimating sucrose content requires
management to assess expected cane and sucrose yields
for the following season considering weather conditions and
harvesting programmes. Estimating sucrose price requires
management to assess into which markets the forthcoming
crop will be sold and to assess domestic and export prices as
well as related foreign currency exchange rates. The carrying
value of growing cane and associated sensitivities is disclosed
in note 17.

Income tax
The Group is exposed to a range of uncertain tax positions.
It provides for open tax matters, where it believes it is probable
that payments will be required, including those for routine tax
audits, which are by nature complex and may take a number
of years to resolve. Uncertainty is driven by the resolution of the
issue and estimation process in arriving at the amount. The Group
has recognised potential current corporate tax liabilities for a
number of uncertain tax positions, none of which are individually
material. The provision for these uncertain tax positions was
2023 – £55m (2022 – £102m). The reduction in the provision
is due to the conclusion of UK tax audits covering several
businesses and years. The majority of the remaining provisions
relate to transfer pricing risks across a number of jurisdictions
in which the Group has operations. Transfer pricing is a complex
area with resolution of matters taking many years. Given the
underlying nature of these risks, the timing of when they will
resolve is uncertain.

The Group applies IFRIC 23 Uncertainty over Income Tax
Treatments to measure uncertain tax positions. The Group
calculates each provision using management’s best estimate of
the liability based on interpretation of tax law in each jurisdiction
and ongoing monitoring of tax cases and rulings. The Group
believes it has adequate provision for these matters. Final
conclusion of each matter may result in an outcome different
to any amounts provided, but the Group has concluded that this
is unlikely to have a material impact.

138

Associated British Foods plc Annual Report 2023

139

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

1. Operating segments
The Group has five operating segments, as described below. These are the Group’s operating divisions, based on the management
and internal reporting structure, which combine businesses with common characteristics, primarily in respect of the type of products
offered by each business, but also the production processes involved and the manner of the distribution and sale of goods. The Board
is the chief operating decision-maker.

Inter-segment pricing is determined on an arm’s length basis. Segment result is adjusted operating profit, as shown on the face of the
consolidated income statement. Segment assets comprise all non-current assets except employee benefits assets, income tax
assets, deferred tax assets and all current assets except cash and cash equivalents, current asset investments and income tax assets.
Segment liabilities comprise trade and other payables, derivative liabilities, provisions and lease liabilities.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a
reasonable basis. Unallocated items comprise mainly corporate assets and expenses, cash, borrowings, employee benefits balances
and current and deferred tax balances.

Segment non-current asset additions are the total cost incurred during the period to acquire segment assets that are expected to be
used for more than one year, comprising property, plant and equipment, right-of-use assets, operating intangibles and biological assets.

Businesses disposed are shown separately and comparatives are re-presented for businesses sold or closed during the year.

The Group comprises the following operating segments:

Grocery
The manufacture of grocery products, including hot beverages, sugar and sweeteners, vegetable oils, balsamic vinegars, bread
and baked goods, cereals, ethnic foods and meat products, which are sold to retail, wholesale and foodservice businesses.

Ingredients
The manufacture of bakers’ yeast, bakery ingredients, enzymes, lipids, yeast extracts and cereal specialities.

Agriculture
The manufacture of animal feeds and the provision of other products and services for the agriculture sector.

Sugar
The growing and processing of sugar beet and sugar cane for sale to industrial users and to Silver Spoon, which is included
in the Grocery segment.

Retail
Buying and merchandising value clothing and accessories through the Primark and Penneys retail chains.

Geographical information
In addition to the required disclosure for operating segments, disclosure is also given of certain geographical information about
the Group’s operations, based on the geographical groupings: United Kingdom; Europe & Africa; The Americas; and Asia Pacific.

Revenues are shown by reference to the geographical location of customers. Profits are shown by reference to the geographical
location of the businesses. Segment assets are based on the geographical location of the assets.

Operating segments
Grocery
Ingredients
Agriculture
Sugar
Retail
Central

Geographical information
United Kingdom
Europe & Africa
The Americas
Asia Pacific

Revenue

2023
£m

4,198
2,157
1,840
2,547
9,008
–
19,750

7,271
7,552
2,420
2,507
19,750

2022
£m

3,735
1,827
1,722
2,016
7,697
–
16,997

6,378
6,291
2,028
2,300
16,997

Adjusted operating profit

2023
£m

448
214
41
169
735
(94)
1,513

488
559
353
113
1,513

2022
£m

399
159
47
162
756
(88)
1,435

533
482
279
141
1,435

2023

Revenue from continuing businesses
Internal revenue
Revenue from external customers

Operating profit

Adjusted operating profit before joint ventures and associates
Share of adjusted profit after tax from joint ventures
and associates
Adjusted operating profit
Finance income
Finance expense
Other financial income
Adjusted profit before taxation
Profits less losses on disposal of non-current assets
Amortisation of non-operating intangibles
Acquired inventory fair value adjustments
Transaction costs
Exceptional items
Profits less losses on sale and closure of businesses
Profit before taxation
Taxation
Profit for the period

Segment assets (excluding joint ventures and associates)
Investments in joint ventures and associates
Segment assets
Cash and cash equivalents
Income tax
Deferred tax assets
Employee benefits assets
Segment liabilities
Loans and overdrafts
Income tax
Deferred tax liabilities
Employee benefits liabilities
Net assets

Grocery
£m
4,222
(24)
4,198

Ingredients
£m
2,366
(209)
2,157

Agriculture
£m
1,849
(9)
1,840

Sugar
£m
2,680
(133)
2,547

Retail
£m
9,008
–
9,008

Central
£m

Total
£m
(375) 19,750
–
375
– 19,750

402

368

80
448

(1)

447
19
(23)
(1)
–
(41)
–
401

401

201

190

24
214

(1)

213
–
(13)
–
–
–
3
203

203

16
41

–

41
–
(5)
(2)
(2)
–
–
32

119

717

(88)

1,383

162

735

(94)

1,386

7
169

–
735

(3)

(86)

166
–
–
–
–
(50)
(6)
110

649
–
–
–
–
(18)
–
631

–
(94)
48
(37)
40
(43)
9
–
–
(3)
–
–
(37)
(272)
(309)

127
1,513
48
(128)
40
1,473
28
(41)
(3)
(5)
(109)
(3)
1,340
(272)
1,068

110

631

2,759
58
2,817

2,011
133
2,144

640
155
795

2,179
48
2,227

7,530
–
7,530

(689)

(407)

(196)

(501)

(4,326)

2,128

1,737

599

1,726

3,204

–

110 15,229
394
110 15,623
1,457
125
193
1,446
(6,285)
(562)
(109)
(626)
(69)
1,799 11,193

1,457
125
193
1,446
(166)
(562)
(109)
(626)
(69)

Non-current asset additions
Depreciation (including of right-of-use assets)
Amortisation

154
(114)
(26)

174
(62)
(15)

20
(19)
(7)

289
(75)
(3)

711
(526)
(31)

4
(8)
–

1,352
(804)
(82)

140

Associated British Foods plc Annual Report 2023

141

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

1. Operating segments continued
2022

Revenue from continuing businesses
Internal revenue
Revenue from external customers

Operating profit

Segment assets (excluding joint ventures and associates)
Investments in joint ventures and associates
Segment assets
Cash and cash equivalents
Current asset investments
Income tax
Deferred tax assets
Employee benefits assets
Segment liabilities
Loans and overdrafts
Income tax
Deferred tax liabilities
Employee benefits liabilities
Net assets

Grocery
£m
3,736
(1)
3,735

Ingredients
£m
1,996
(169)
1,827

Agriculture
£m
1,728
(6)
1,722

Sugar
£m
2,097
(81)
2,016

Retail
£m
7,697
–
7,697

Central
£m

Total
£m
(257) 16,997
–
257
– 16,997

369

328

71
399

(1)

398
4
(32)
(1)
(1)
–
–
368

368

141

142

17
159

(1)

158
–
(13)
(2)
(3)
–
(7)
133

133

16
47

–

47
–
(2)
(2)
(2)
–
–
41

164

550

(87)

1,178

154

756

(88)

1,323

8
162

–
756

(2)

(76)

160
2
–
–
–
–
(16)
146

680
–
–
–
–
(206)
–
474

–
(88)
19
(31)
13
(87)
1
–
–
–
–
–
(86)
(356)
(442)

112
1,435
19
(111)
13
1,356
7
(47)
(5)
(6)
(206)
(23)
1,076
(356)
720

146

474

2,876
62
2,938

2,017
136
2,153

597
143
740

2,422
45
2,467

7,570
–
7,570

(703)

(450)

(196)

(616)

(4,545)

2,235

1,703

544

1,851

3,025

–

136 15,618
386
136 16,004
2,121
4
90
163
1,393
(6,698)
(637)
(160)
(647)
(79)
2,196 11,554

2,121
4
90
163
1,393
(188)
(637)
(160)
(647)
(79)

2023

Revenue from external customers
Segment assets
Non-current asset additions
Depreciation (including of right-of-use assets)
Amortisation
Acquired inventory fair value adjustments
Transaction costs
Exceptional items

2022

Revenue from external customers
Segment assets
Non-current asset additions
Depreciation (including of right-of-use assets)
Amortisation
Impairment of property, plant and equipment on sale

and closure of businesses

Acquired inventory fair value adjustments
Transaction costs
Exceptional items

United Kingdom
£m
7,271
5,690
305
(279)
(17)
(2)
(4)
–

Europe & Africa
£m
7,552
6,651
732
(374)
(56)
(1)
(1)
(53)

The Americas
£m
2,420
1,792
217
(84)
(4)
–
–
–

United Kingdom
£m
6,378
5,972
285
(277)
(25)

Europe & Africa
£m
6,291
6,519
487
(392)
(32)

The Americas
£m
2,028
1,840
177
(69)
(5)

–
(2)
(2)
–

–
(3)
(3)
(206)

–
–
–
–

Asia Pacific
£m
2,507
1,490
98
(67)
(5)
–
–
(56)

Asia Pacific
£m
2,300
1,673
103
(64)
(6)

(30)
–
(1)
–

Total
£m
19,750
15,623
1,352
(804)
(82)
(3)
(5)
(109)

Total
£m
16,997
16,004
1,052
(802)
(68)

(30)
(5)
(6)
(206)

The Group’s operations in the following countries met the criteria for separate disclosure:

Australia
Spain
United States

Revenue

Non-current assets

2023
£m
1,407
1,836
1,580

2022
£m
1,232
1,545
1,315

2023
£m
541
651
887

2022
£m
623
650
866

All segment disclosures are stated before reclassification of assets and liabilities classified as held for sale (see note 15).

Non-current asset additions
Depreciation (including of right-of-use assets)
Amortisation
Impairment of property, plant and equipment on sale and

closure of business

128
(109)
(37)

–

183
(57)
(14)

(11)

26
(17)
(3)

223
(75)
(3)

489
(532)
(11)

3
(12)
–

1,052
(802)
(68)

–

(19)

–

(30)

142

Associated British Foods plc Annual Report 2023

143

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

2. Operating costs

Operating costs
Cost of sales (including amortisation of intangibles)
Distribution costs
Administration expenses
Exceptional items

Operating costs are stated after charging/(crediting):
Employee benefits expense
Amortisation of non-operating intangibles
Amortisation of operating intangibles
Acquired inventory fair value adjustments
Depreciation of property, plant and equipment
Depreciation of right-of-use assets and non-cash lease adjustments
Transaction costs
Effect of hyperinflationary economies
Other operating income
Research and development expenditure
Fair value gains on financial assets and liabilities held for trading
Fair value losses on financial assets and liabilities held for trading
Foreign exchange gains on operating activities
Foreign exchange losses on operating activities

Note

2023
£m

2022
£m

15,587
1,603
1,220
109
18,519

13,219
1,465
1,045
206
15,935

3
8
8

9
10

3,158
38
44
3
531
273
5
14
(35)
42
(19)
22
(48)
62

2,812
44
24
5
521
281
6
16
(25)
37
(23)
17
(36)
37

Amortisation of non-operating intangibles of £41m (2022 – £47m) shown as adjusting item in the income statement, include £3m
(2022 – £3m) incurred by joint ventures, in addition to the amounts shown above.

Exceptional items
2023
The income statement this year included a non-cash exceptional impairment charge of £109m. In Grocery, the Don business has
been adversely affected by inflationary pressures, a surplus supply of fresh pork in the market, labour constraints and equipment
reliability causing production shortfalls and additional transportation costs following the unforeseen liquidation of its distribution
partner. As a result, the Group has recognised impairment write-downs of £39m against property, plant and equipment, £1m against
right-of-use assets and £1m against intangible assets.

In the Sugar segment, north China recognised a £15m impairment write down against property, plant and equipment. This business
was classified as held for sale in the previous year, but the potential buyer withdrew their offer in the second half of the year. Due to
the severe flooding in Mozambique, the related damage to the sugar crop fields and the inability to plant for the foreseeable future,
Illovo Mozambique recognised a £25m impairment write-down against property, plant and equipment, £7m against current biological
assets, provided £2m for personnel costs and wrote down inventory by £1m.

In the Retail segment, the Group recognised £13m of exceptional impairment charges relating to the German store portfolio.
This primarily related to stores impaired in the previous year after additional right-of-use assets were recognised due to rent indexation
adjustments. The Group also recognised a £4m charge including a £3m exceptional impairment for the write-down of property, plant
and equipment for the right-sizing of four further German stores and £1m to write down a freehold store.

2022
The income statement included an exceptional impairment charge of £206m comprising non-cash writedowns of £72m against
property, plant and equipment and a write-down of £134m of right-of-use assets relating to the capitalisation of store leases
for Primark. Also £49m of the £63m exceptional charge included in the Group's total tax charge for this financial year was the
de-recognition of the deferred tax assets relating to Germany.

Auditor’s remuneration
Fees payable to the Company’s auditor and its associates in respect of the audit
Group audit of these financial statements
Audit of the Company’s subsidiaries’ financial statements
Total audit remuneration

Fees payable to the Company’s auditor and its associates in respect of non-audit services
Audit-related assurance services
All other services
Total non-audit remuneration

3. Employees

Average number of employees
United Kingdom
Europe & Africa
The Americas
Asia Pacific

Employee benefits expense
Wages and salaries
Social security contributions
Contributions to defined contribution schemes
Charge for defined benefit schemes
Equity-settled share-based payment schemes

2023
£m

1.7
8.5
10.2

0.4
0.6
1.0

2022
£m

1.6
7.6
9.2

0.4
0.5
0.9

2023

2022

42,071
73,411
6,769
11,236
133,487

41,526
73,155
6,102
11,490
132,273

Note

12
12
24

2023
£m

2,657
355
95
33
18
3,158

Details of directors’ remuneration, share incentives and pension entitlements are shown in the Remuneration Report on pages
100 to 115.

4. Interest and other financial income and expense

Finance income
Cash and cash equivalents and current asset investments

Finance expense
Bank loans and overdrafts
All other borrowings
Lease liabilities
Other payables

Other financial income
Interest income on employee benefit scheme assets
Interest charge on employee benefit scheme liabilities
Interest charge on irrecoverable surplus
Net financial income from employee benefit schemes
Net foreign exchange (losses)/gains on financing activities
Total other financial income

Note

12
12
12

2023
£m

48
48

(23)
(11)
(91)
(3)
(128)

185
(123)
(2)
60
(20)
40

2022
£m

2,350
311
87
45
19
2,812

2022
£m

19
19

(20)
(8)
(81)
(2)
(111)

84
(74)
(1)
9
4
13

144

Associated British Foods plc Annual Report 2023

145

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

5. Income tax expense

Current tax expense
UK – corporation tax at 21.8% (2022 – 19%)
Overseas – corporation tax
UK – over provided in prior periods
Overseas – under provided in prior periods

Deferred tax expense
UK deferred tax
Overseas deferred tax
UK – over provided in prior periods
Overseas – over provided in prior periods

Total income tax expense in the income statement

2023
£m

26
249
(14)
18
279

54
28
(26)
(63)
(7)
272

2022
£m

44
244
(12)
1
277

18
72
(3)
(8)
79
356

Reconciliation of effective tax rate
Profit before taxation
Less share of profit after tax from joint ventures and associates
Profit before taxation excluding share of profit after tax from joint ventures and associates

1,340
(124)
1,216

1,076
(109)
967

Nominal tax charge at UK corporation tax rate of 21.8% (2022 – 19%)
Effect of higher and lower tax rates on overseas earnings
Effect of changes in tax rates on the income statement
Expenses not deductible for tax purposes
Disposal of assets covered by tax exemptions or unrecognised capital losses
Deferred tax not recognised
Adjustments in respect of prior periods

Income tax recognised in equity
Deferred tax associated with defined benefit schemes
Deferred tax associated with share-based payments
Deferred tax associated with movement in cash flow hedging position
Deferred tax associated with movements in foreign exchange
Current tax associated with movements in foreign exchange
Deferred tax associated with movement in other investments

265
(16)
5
66
(2)
39
(85)
272

(4)
(1)
(40)
5
(6)
–
(46)

184
4
2
63
6
120
(23)
356

198
1
28
–
–
1
228

In the second half of last year a deferred tax asset arose mainly in relation to the charge taken for the impairment of property, plant
and equipment and store leases in Primark Germany. A significant proportion of this asset was deemed not to be recoverable and was
written off as an exceptional tax charge. Since then, further work has been undertaken to assess the amount of the deferred tax asset
that is expected to be recoverable. This work determined that the deferred tax asset at last year end was understated in error.

The directors believe that this understatement of the deferred tax asset was not material to the prior period financial statements.
Accordingly, an exceptional tax credit of £58m has been recognised in this year.

We recognise the importance of complying fully with all applicable tax laws as well as paying and collecting the right amount of tax
in every country in which the Group operates. Our tax strategy, approved by the Board, is based on seven tax principles that are
embedded in the financial and non financial processes and controls of the Group. This tax strategy is available in the Policies section
of the Group’s website.

Deferred taxation balances are analysed in note 13.

6. Dividends

2021 final and special
2022 interim
2022 final
2023 interim

2023
pence per share
–
–
29.9
14.2
44.1

2022
pence per share
34.3
13.8
–
–
48.1

2023
£m
–
–
235
110
345

2022
£m
271
109
–
–
380

The 2023 interim dividend was declared on 25 April 2023 and paid on 7 July 2023. Given the outlook for the Group, the strength of the
balance sheet and the underlying cash generation of the business, we have declared the payment of a special dividend, to be paid as
a second interim dividend at 12.7p per share at an estimated cost of £97m.

The Board has proposed a final dividend of 33.1p per share at an estimated cost of £252m. The combined 2023 final and special
dividend of 45.8p, with an estimated value of £349m, will be paid on 12 January 2024 to shareholders on the register on
15 December 2023.

Dividends relating to the period including the special dividend were 60.0p per share totalling £459m (2022 – 43.7p per share
totalling £345m).

7. Earnings per share
The calculation of basic earnings per share at 16 September 2023 was based on the net profit attributable to equity shareholders
of £1,044m (2022 – £700m), and a weighted average number of shares outstanding during the year of 778 million (2022 – 789 million).
The calculation of the weighted average number of shares excludes the shares held by the Employee Share Ownership Plan Trust
on which the dividends are being waived. The weighted average number of shares has reduced as a result of our first share buyback
programme. In the year, we repurchased 23.7 million shares which were cancelled.

Adjusted earnings per ordinary share, which exclude the impact of profits less losses on disposal of non-current assets and the sale
and closure of businesses, amortisation of acquired inventory fair value adjustments, transaction costs, amortisation of non-operating
intangibles, exceptional items and any associated tax credits, is shown to provide clarity on the underlying performance of the Group.

Amortisation of non-operating intangibles of £41m (2022 – £47m) shown as adjusting item below include £3m (2022 – £3m) incurred
by joint ventures.

The UK corporation tax rate of 19% increased to 25% from 1 April 2023. The legislation to effect these changes was enacted before
the balance sheet date and UK deferred tax has been calculated accordingly.

The diluted earnings per share calculation takes into account the dilutive effect of share incentives. The diluted, weighted average
number of shares is 778 million (2022 – 789 million). There is no difference between basic and diluted earnings.

In April 2019 the European Commission published its decision on the Group Financing Exemption in the UK’s controlled foreign
company legislation. The Commission found that the UK law did not comply with EU State Aid rules in certain circumstances.
The Group has arrangements that may be impacted by this decision as might other UK-based multinational groups that had financing
arrangements in line with the UK’s legislation in force at the time. The UK Government, the Group and a number of other UK
companies appealed against this decision to the General Court of the European Union (‘GCEU’). On 8 June 2022, the GCEU found
in favour of the Commission's original decision. As a result of this, in August 2022, the UK Government, the Group and various other
UK companies appealed GCEU’s decision to the Court of Justice of the European Union. We have calculated our maximum potential
liability to be £26m (2022 – £26m), however we do not consider that any provision is required in respect of this amount based on our
current assessment of the issue. Following receipt of charging notices from HM Revenue & Customs (‘HMRC’), we made payments
to HMRC in 2021. Our assessment remains that no provision is required in respect of this amount. We will continue to consider the
impact of the Commission’s decision on the Group and the potential requirement to record a provision.

Adjusted profit for the period
Disposal of non-current assets
Sale and closure of businesses
Acquired inventory fair value adjustments
Transaction costs
Exceptional items
Tax effect on above adjustments
Amortisation of non-operating intangibles
Tax credit on non-operating intangibles amortisation and goodwill
Profit for the period attributable to equity shareholders

2023
£m
1,103
28
(3)
(3)
(5)
(109)
64
(41)
10
1,044

2022
£m
1,034
7
(23)
(5)
(6)
(206)
(63)
(47)
9
700

146

Associated British Foods plc Annual Report 2023

147

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

7. Earnings per share continued

Adjusted earnings per share
Disposal of non-current assets
Sale and closure of businesses
Acquired inventory fair value adjustments
Transaction costs
Exceptional items
Tax effect on above adjustments
Amortisation of non-operating intangibles
Tax credit on non-operating intangibles amortisation and goodwill
Earnings per ordinary share

8. Intangible assets

2023
pence
141.8
3.6
(0.4)
(0.4)
(0.6)
(14.0)
8.2
(5.3)
1.3
134.2

2022
pence
131.1
0.9
(2.9)
(0.6)
(0.8)
(26.1)
(8.0)
(6.0)
1.0
88.6

Goodwill
£m

Technology
£m

Brands
£m

Non-operating

Customer
relationships
£m

Grower
agreements
£m

Operating

Other
£m

Total
£m

Cost
At 18 September 2021
Acquisitions – externally purchased
Acquired through business combinations
Other disposals
Transfer to assets classified as held for sale
Effect of hyperinflationary economies
Effect of movements in foreign exchange
At 17 September 2022
Acquisitions – externally purchased
Acquired through business combinations
Other disposals
Transfer from assets classified as held for sale
Effect of hyperinflationary economies
Effect of movements in foreign exchange
At 16 September 2023

Amortisation and impairment
At 18 September 2021
Amortisation for the year
Other disposals
Transfer to assets classified as held for sale
Effect of movements in foreign exchange
At 17 September 2022
Amortisation for the year
Other disposals
Transfer from assets classified as held for sale
Impairment
Effect of movements in foreign exchange
At 16 September 2023
Net book value
At 18 September 2021
At 17 September 2022
At 16 September 2023

1,236
–
85
–
–
9
84
1,414
–
39
–
–
2
(79)
1,376

112
–
–
–
10
122
–
–
–
–
(12)
110

1,124
1,292
1,266

214
–
49
–
–
–
22
285
–
2
–
–
–
(15)
272

195
7
–
–
19
221
9
–
–
–
(13)
217

19
64
55

429
–
33
–
–
–
26
488
4
9
–
–
–
(15)
486

372
22
–
–
21
415
15
–
–
–
(11)
419

57
73
67

271
–
6
–
–
–
13
290
–
21
(15)
–
–
(11)
285

200
15
–
–
11
226
14
(15)
–
–
(8)
217

71
64
68

109
–
–
–
–
–
1
110
–
–
–
–
–
(16)
94

109
–
–
–
1
110
–
–
–
–
(16)
94

–
–
–

5
–
–
–
–
–
–
5
–
–
(5)
–
–
–
–

5
–
–
–
–
5
–
(5)
–
–
–
–

–
–
–

591
138
–
(49)
(16)
–
33
697
143
3
(69)
15
–
(25)
764

281
24
(1)
(4)
22
322
44
–
4
1
(21)
350

310
375
414

2,855
138
173
(49)
(16)
9
179
3,289
147
74
(89)
15
2
(161)
3,277

1,274
68
(1)
(4)
84
1,421
82
(20)
4
1
(81)
1,407

1,581
1,868
1,870

In addition to the amounts disclosed above, there are £nil (2022 – £12m) intangible assets classified as assets held for sale (see note 15).

Amortisation of non-operating intangibles of £41m (2022 – £47m) shown as an adjusting item in the income statement includes
£3m (2022 – £3m) incurred by joint ventures in addition to the amounts shown above.

Impairment
As at 16 September 2023, the consolidated balance sheet included goodwill of £1,266m (2022 – £1,292m). Goodwill is allocated
to the Group’s cash-generating units (CGUs), or groups of CGUs, that are expected to benefit from the synergies of the business
combination that gave rise to the goodwill, as follows:

CGU or group of CGUs
Acetum
ACH
AB Mauri
Twinings Ovaltine
Illovo
AB World Foods
Other (not individually significant)

Primary reporting
segment
Grocery
Grocery
Ingredients
Grocery
Sugar
Grocery
Various

Discount
rate
13.5%
13.4%
12.8%
13.6%
23.7%
12.5%
Various

2023
£m
91
193
267
119
89
78
429
1,266

2022
£m
93
208
289
119
105
79
399
1,292

A CGU, or group of CGUs, to which goodwill has been allocated must be assessed for impairment annually, or more frequently
if events or circumstances indicate that the carrying amount may not be recoverable. There has been no change in CGUs or group
of CGUs from the prior year.

The carrying value of goodwill is assessed by reference to its value in use reflecting the projected cash flows of each of the CGUs
or group of CGUs. These projections are based on the most recent budget, which has been approved by the Board and reflects
management’s expectations of sales growth, operating costs and margin, taking into consideration past experience and external
sources of information. Long-term growth rates for periods not covered by the annual budget reflect the products, industries and
countries in which the relevant CGU, or group of CGUs, operate.

Management expects to achieve growth over the next three to five years in excess of the long-term growth rates for the applicable
country or region. In these circumstances, budgeted cash flows are extended, generally to between three and five years, using
specific growth assumptions and taking into account the specific business risks.

The key assumptions in the most recent annual budget on which the cash flow projections are based relate to discount rates, growth
rates and expected changes in volumes, selling prices and direct costs.

The cash flow projections have been discounted using a pre-tax weighted average cost of capital for each business, adjusted for
country, industry and market risk. Inflation assumptions used to calculate discount rates are aligned with those used in the cash flow
projections. The rates used were between 10.2% and 23.7% (2022 – between 9.8% and 23.4%).

The long-term growth rates beyond the initial budgeted cash flows, applied in the value in use calculations for goodwill allocated
to each of the CGUs or groups of CGUs that are significant to the total carrying amount of goodwill, were in a range between 0%
and 6.0%, consistent with the inflation factors included in the discount rates applied (2022 – between 0% and 6.7%).

Changes in volumes, selling prices and direct costs are based on past results and expectations of future changes in the market.

Sensitivity to changes in key assumptions
Impairment testing is dependent on management’s estimates and judgements, particularly as they relate to the forecasting of future
cash flows, the discount rates selected and expected long-term growth rates. Each of the Group’s CGUs had headroom under the
annual impairment review.

In light of the supply side inflationary pressures combined with the cost of living pressures faced by our UK Grocery business,
management performed a detailed impairment review of Jordans Dorset Ryvita, and concluded that no impairment was required.
Key drivers of the forecast improvement in performance include annualisation of price increases, completion of a number of margin
improvement initiatives, implementation of planned strategic initiatives and the completion of ongoing new product development.
Headroom was £59m on a CGU carrying value of £137m (2022 – headroom of £26m on a CGU carrying value at £147m).
The discount rate used was 12.2% and would have to increase to more than 15.7% before value in use fell below the CGU carrying
value. The long-term growth rate applied into perpetuity was 2.8%, based on forecast industry growth of 2.5% for breakfast cereals
and 3.3% for biscuits.

148

Associated British Foods plc Annual Report 2023

149

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

9. Property, plant and equipment

Cost
At 18 September 2021
Acquisitions – externally purchased
Acquired through business combinations
Other disposals
Transfers from assets under construction
Transfer to assets classified as held for sale
Effect of movements in foreign exchange
At 17 September 2022
Acquisitions – externally purchased
Acquired through business combinations
Other disposals
Transfers from assets under construction
Transfer from assets classified as held for sale
Effect of movements in hyperinflation
Effect of movements in foreign exchange
At 16 September 2023

Depreciation and impairment

At 18 September 2021
Depreciation for the year
Impairment
Impairment on sale and closure of business
Other disposals
Transfer to assets classified as held for sale
Effect of movements in foreign exchange
At 17 September 2022
Depreciation for the year
Impairment
Other disposals
Transfer from assets classified as held for sale
Effect of movements in hyperinflation
Effect of movements in foreign exchange
At 16 September 2023
Net book value
At 18 September 2021
At 17 September 2022
At 16 September 2023

Land and
buildings
£m

Plant and
machinery
£m

Fixtures and
fittings
£m

Assets under
construction
£m

Sugar cane
roots
£m

2,707
32
1
(14)
33
(32)
98
2,825
20
–
(34)
35
37
–
(99)
2,784

759
47
–
11
(1)
(17)
35
834
52
22
(22)
20
–
(37)
869

1,948
1,991
1,915

4,008
76
4
(3)
164
(53)
223
4,419
86
4
(57)
191
75
78
(257)
4,539

2,827
174
–
19
–
(60)
160
3,120
183
56
(46)
75
64
(158)
3,294

1,181
1,299
1,245

4,019
203
1
(17)
96
(2)
119
4,419
431
–
(3)
87
2
19
(84)
4,871

2,343
290
72
–
(17)
(2)
74
2,760
287
3
(3)
2
17
(50)
3,016

1,676
1,659
1,855

440
421
–
–
(293)
–
37
605
452
–
–
(313)
–
–
(34)
710

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

440
605
710

Impairment
The methodology used to assess property, plant and equipment for impairment is the same as that described for impairment
assessments of goodwill. See note 8 for further details. In addition where the fair value less costs of disposal is higher than value
in use, this methodology has been used to determine the recoverable amount. This method uses inputs that are unobservable,
using the best information available in the circumstances for valuing the CGU, and therefore falls into the Level 3 category of fair
value measurement.

In Grocery, the Australian Don business has been adversely affected by inflationary pressures, a surplus supply of fresh pork in
the market, labour constraints and equipment reliability causing production shortfalls and additional transportation costs following
the unforeseen liquidation of its distribution partner. Management therefore performed a detailed impairment review and concluded
that an impairment of A$72m (£39m) should be recognised, A$62m (£34m) against plant and equipment and A$10m (£5m) against
buildings. The impairment model assumed long-term growth rates beyond the forecast period of 2.0% (2022 – 2.0%) and a discount
rate of 12.6% (2022 – 11.9%).

The sugar business in north China recognised a £15m write down against property, plant and equipment. This business was classified
as held for sale in the previous year, but the potential buyer withdrew their offer in the second half of the year.

Due to severe flooding in Mozambique, the related damage to the sugar crop fields and the inability to plant for the foreseeable future,
Illovo Mozambique recognised a £25m write-down against property, plant and equipment. Primark recognised a £3m write down
against fixtures and fittings for the right-sizing of four German stores and £1m to write down a freehold store.

10. Leases
Most of the Group’s right-of-use assets are associated with our leased property portfolio in the Retail segment.

Right-of-use assets

Cost
At 18 September 2021
Additions
Lease incentives
Acquired through business combinations
Other disposals
Other movements
Effect of movements in foreign exchange
At 17 September 2022
Additions
Lease incentives
Acquired through business combinations
Other disposals
Other movements
Effect of movements in foreign exchange
At 16 September 2023

Land and buildings
£m

Plant and machinery
£m

Fixtures and fittings
£m

Total
£m

3,261
161
(46)
8
(1)
12
107
3,502
183
(53)
1
(2)
80
(72)
3,639

63
10
–
–
(1)
2
2
76
17
–
–
(4)
5
(6)
88

2
–
–
–
(1)
–
–
1
–
–
–
–
–
–
1

3,326
171
(46)
8
(3)
14
109
3,579
200
(53)
1
(6)
85
(78)
3,728

Total
£m

11,266
743
6
(38)
–
(87)
483
12,373
1,005
4
(95)
–
114
97
(493)
13,005

5,980
521
72
30
(22)
(79)
272
6,774
531
83
(72)
97
81
(255)
7,239

5,286
5,599
5,766

2022
£m
364

92
11
–
(4)
–
–
6
105
16
–
(1)
–
–
–
(19)
101

51
10
–
–
(4)
–
3
60
9
2
(1)
–
–
(10)
60

41
45
41

2023
£m
493

Capital expenditure commitments – contracted but not provided for

In addition to the amounts disclosed above, there are £nil (2022 – £18m) of property, plant and equipment classified as assets held for
sale (see note 15). Of this, £nil (2022 – £18m) is freehold land and buildings.

150

Associated British Foods plc Annual Report 2023

151

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

10. Leases continued

Depreciation and impairment
At 18 September 2021
Depreciation for the year
Impairment
Other disposals
Effect of movements in foreign exchange
At 17 September 2022
Depreciation for the year
Impairment
Other disposals
Effect of movements in foreign exchange
At 16 September 2023
Net book value
At 18 September 2021
At 17 September 2022
At 16 September 2023

Land and buildings
£m

Plant and machinery
£m

Fixtures and fittings
£m

Total
£m

Current
Non-current

644
263
134
(1)
33
1,073
257
13
(1)
(23)
1,319

2,617
2,429
2,320

32
18
–
(1)
1
50
16
1
(4)
(4)
59

31
26
29

1
–
–
(1)
–
–
–
–
–
–
–

1
1
1

677
281
134
(3)
34
1,123
273
14
(5)
(27)
1,378

2,649
2,456
2,350

Impairment
The methodology used to assess right-of-use assets for impairment is the same as that described for impairment assessments
of goodwill. See note 8 for further details.

In the year there was a £14m (2022 – £134m) impairment of right-of-use assets related to Primark and the Don business
(included within exceptional items).

Lease liabilities

Cost
At 18 September 2021
Additions
Interest expense relating to lease liabilities
Repayment of lease liabilities
Acquisition of businesses
Other movements
Effect of movements in foreign exchange
At 17 September 2022
Additions
Interest expense relating to lease liabilities
Repayment of lease liabilities
Other movements
Other disposals
Effect of movements in foreign exchange
At 16 September 2023

Land and buildings
£m

Plant and machinery
£m

Fixtures and fittings
£m

Total
£m

3,262
161
80
(385)
8
14
97
3,237
180
89
(373)
80
(5)
(60)
3,148

34
9
1
(18)
–
2
1
29
18
2
(18)
5
–
(3)
33

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

3,296
170
81
(403)
8
16
98
3,266
198
91
(391)
85
(5)
(63)
3,181

2023
£m
356
2,825
3,181

2022
£m
330
2,936
3,266

Lease liabilities comprise £3,160m (2022 – £3,252m) capital payable and £21m (2022 – £14m) interest payable. The interest payable
is all current and disclosed within trade and other payables. Repayments comprise £308m (2022 – £321m) capital and £83m
(2022 – £82m) interest.

Other information relating to leases
The Group had the following expense relating to short-term leases and low-value leases:

Land and buildings
Plant and machinery
Fixtures and fittings

2023
£m
2
1
–
3

2022
£m
–
2
1
3

The Group expensed £1m (2022 – £1m) of variable lease payments that do not form part of the lease liability. Cash outflows of £2m
(2022 – £4m) that do not form part of the lease liability are expected to be made in the next 12 months.

Rental receipts of £3m (2022 – £4m) were recognised relating to operating leases. The total of future minimum rental receipts expected
to be received is £43m (2022 – £36m). £10m (2022 – £11m) is due to be received in respect of sub-leasing right-of-use assets.

11. Investments in joint ventures and associates

At 18 September 2021
Acquisitions
Profit for the period
Dividends received
Effect of movements in foreign exchange
At 17 September 2022
Acquisitions
Profit for the period
Dividends received
Effect of movements in foreign exchange
At 16 September 2023

Joint ventures
£m
278
4
90
(88)
17
301
9
106
(102)
(11)
303

Associates
£m
60
–
19
(5)
11
85
–
18
(5)
(7)
91

Details of joint ventures and associates are listed in note 29.

Included in the consolidated financial statements are the following items that represent the Group’s share of the assets, liabilities
and profit of joint ventures and associates:

Non-current assets
Current assets
Current liabilities
Non-current liabilities
Goodwill
Non-controlling interest
Net assets

Revenue

Profit for the period

Joint ventures

Associates

2023
£m
222
541
(414)
(67)
25
(4)
303

2022
£m
202
641
(475)
(87)
20
–
301

2023
£m
47
500
(454)
(3)
1
–
91

2022
£m
46
427
(386)
(3)
1
–
85

2,539

2,165

1,605

1,313

106

152

Associated British Foods plc Annual Report 2023

153

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

12. Employee entitlements
The Group operates a number of defined benefit and defined contribution retirement benefit schemes in the UK and overseas.

The defined benefit schemes expose the Group to a variety of actuarial risks including demographic assumptions such as mortality
and financial assumptions such as discount rate, inflation risk and market (investment) risk. The Group is not exposed to any unusual,
entity-specific or scheme-specific risks. All schemes comply with local legislative requirements.

UK defined benefit scheme
The Group’s principal UK defined benefit scheme is the Associated British Foods Pension Scheme (the ‘Scheme’), which is a funded
final salary scheme that is closed to new members. Defined contribution arrangements are in place for other employees. The UK
defined benefit scheme represents 90% (2022 – 90%) of the Group’s defined benefit scheme assets and 85% (2022 – 86%)
of defined benefit scheme liabilities. The Scheme is governed by a trustee board which is independent of the Group and which
agrees a schedule of contributions with the Company each time a formal funding valuation is performed.

The most recent triennial funding valuation of the Scheme was carried out as at 5 April 2023, using the current unit method, and
revealed a surplus of £1,013m. The market value of the Scheme assets was £3,648m, representing 138% of members’ accrued
benefits after allowing for expected future salary increases.

The Scheme’s assets are managed using a risk-controlled investment strategy, which includes a liability-driven investment policy
that seeks to match, where appropriate, the profile of the liabilities. This includes the use of derivative instruments to hedge inflation,
interest and foreign exchange risks. The Scheme utilises both market and solvency triggers to develop the level of hedges in place.
To date, the Scheme is fully hedged for 75% of inflation sensitivity and 76% of interest rate risk. It is intended to hedge 80% of total
exposure.

The Scheme is forbidden by the trust deed from holding direct investments in the equity of the Company, although it is possible that
the Scheme may hold indirect interests through investments in some equity funds.

Overseas defined benefit schemes
The Group also operates defined benefit retirement schemes in a number of overseas businesses, which are primarily funded final
salary schemes, as well as a small number of unfunded post-retirement medical benefit schemes, which are accounted for in the
same way as defined benefit retirement schemes.

Defined contribution schemes
The Group operates a number of defined contribution schemes for which the charge was £47m in the UK and £48m overseas,
totalling £95m (2022 – UK £42m, overseas £45m, totalling £87m).

Actuarial assumptions
The principal actuarial assumptions for the Group’s defined benefit schemes at the year end were:

Discount rate
Inflation
Rate of increase in salaries
Rate of increase for pensions in payment
Rate of increase for pensions in deferment (where provided)

2023
UK
%
5.5
2.7-3.4
3.7-4.3
1.9-3.1
2.5-2.8

2023
Overseas
%
1-15.8
0-17.4
0-150.0
0-49.0
0-3.9

2022
UK
%
4.6
2.6-3.4
3.7-4.3
1.9-3.2
2.5-2.8

2022
Overseas
%
0.9-13.5
0-55.0
0-40.0
0-40.0
0-2.3

Discount rates are determined by reference to market yields at the balance sheet date on high-quality corporate bonds consistent with
the estimated term of the obligations. This has been done in conjunction with independent actuaries in each jurisdiction.

The UK inflation assumption includes assumptions on both the Retail Price Index and Consumer Price Index measures of inflation
on the basis that the gap between the two measures is expected to remain stable in the long term.

The mortality assumptions used to value the UK defined benefit schemes in 2023 are derived from the S3 mortality tables with
improvements in line with the 2022 projection model prepared by the Continuous Mortality Investigation of the UK actuarial profession
(2022 – S3 mortality tables with improvements in line with the 2020 projection model), with a 0-year rating movement for males and
females (2022 – 0-year rating movement for males and females), both with a long-term trend of 1.75% (2022 – 1.5%). These mortality
assumptions take account of experience to date, and assumptions for further improvements in life expectancy of scheme members.
Examples of the resulting life expectancies in the UK defined benefit schemes are as follows:

Life expectancy from age 65 (in years)
Member aged 65 in 2023 (2022)
Member aged 65 in 2043 (2042)

2023

Male
21.8
23.7

Female
24.2
26.2

2022

Male
22.1
23.7

Female
24.3
26.1

An allowance has been made for cash commutation in line with emerging scheme experience. Other demographic assumptions
for the UK defined benefit schemes are set having regard to the latest trends in scheme experience and other relevant data.

The assumptions are reviewed and updated as necessary as part of the periodic funding valuation of the schemes.

For the overseas schemes, regionally appropriate assumptions for mortality, financial and demographic factors have been used.

A sensitivity analysis on the principal assumptions used to measure UK defined benefit scheme liabilities at 16 September 2023 is:

Discount rate
Inflation
Rate of real increase in salaries

Rate of mortality

Change in assumption
decrease/increase by 0.1%
increase/decrease by 0.1%
increase/decrease by 0.1%
members assumed to be one
year younger/older

Impact on scheme liabilities
increase/decrease by 1.2%
increase by 0.6%/decrease by 0.9%
increase/decrease by 0.9%

increase/decrease by 2.9%

A sensitivity to the rate of increase in pensions in payment and pensions in deferment is represented by the inflation sensitivity,
as all pensions increases and deferred revaluations are linked to inflation.

The sensitivity analysis above has been determined based on reasonably possible changes in the respective assumptions occurring
at the end of the period and may not be representative of the actual change. It is based on a change in the specific assumption while
holding all other assumptions constant. When calculating the sensitivities, the same method used to calculate scheme liabilities
recognised in the balance sheet has been applied. The method and assumptions used in preparing the sensitivity analysis have not
changed since the prior year.

Balance sheet

Equities
Government bonds
Corporate and other bonds
Property
Cash and other assets
Scheme assets
Scheme liabilities
Aggregate net surplus
Irrecoverable surplus*
Net pension asset/(liability)

Analysed as
Schemes in surplus
Schemes in deficit

UK
£m
1,020
455
619
314
1,145
3,553
(2,176)
1,377
–
1,377

1,397
(20)
1,377

2023

Overseas
£m
172
89
55
36
57
409
(373)
36
(36)
–

Total
£m
1,192
544
674
350
1,202
3,962
(2,549)
1,413
(36)
1,377

49
(49)
–

1,446
(69)
1,377

UK
£m
1,135
308
767
398
1,126
3,734
(2,390)
1,344
–
1,344

1,366
(22)
1,344

2022

Overseas
£m
188
92
47
37
53
417
(405)
12
(42)
(30)

Total
£m
1,323
400
814
435
1,179
4,151
(2,795)
1,356
(42)
1,314

27
(57)
(30)

1,393
(79)
1,314

Unfunded liability included in the present value of scheme
liabilities above

(20)

(32)

(52)

(22)

(52)

(74)

* The surpluses in the plans are only recoverable to the extent that the Group can benefit from either refunds formally agreed or from future contribution reductions.

154

Associated British Foods plc Annual Report 2023

155

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

12. Employee entitlements continued

UK Scheme
Scheme assets include £64m (2022 – £50m) of derivative instruments, £409m (2022 – £441m) of corporate debt instruments and
£1,119m (2022 – £861m) of government debt.

Corporate and other bonds assets of £619m (2022 – £767m) include £235m (2022 – £248m) of assets whose valuation is not derived
from quoted market prices. The valuation for all other equity assets, government bonds, and corporate and other bonds is derived
from quoted market prices. The carrying value of UK property assets is based on a 30 June market valuation, adjusted for purchases,
disposals and price indexation between the valuation and the balance sheet date. Cash and other assets includes £888m (2022 – £820m)
of assets whose valuation is not derived from quoted market prices.

For financial reporting in the Group’s financial statements, liabilities are assessed by actuaries using the projected unit method.

The accounting value is different from the result obtained using the funding basis, mainly due to different assumptions used to project
scheme liabilities.

The defined benefit scheme liabilities comprise 18% (2022 – 24%) in respect of active participants, 21% (2022 – 20%) for deferred
participants and 61% (2022 – 56%) for pensioners.

The weighted average duration of the defined benefit scheme liabilities at the end of the year is 12 years for both UK and overseas
schemes (2022 – 15 years for both UK and overseas schemes).

The Group recognises the accounting surplus as it has the ability to use the surplus to meet employer contributions to the UK
Scheme, covering both the defined benefit and defined contribution sections. This has been agreed with the independent Trustee
Board for the new financial year. See the Cash flow section below for further details.

Income statement
The charge to the income statement for employee benefit schemes comprises:

Charged to operating profit:
Defined benefit schemes
Current service cost
Past service cost

Defined contribution schemes
Total operating cost
Reported in other financial income:
Net interest income on the net pension asset
Interest charge on irrecoverable surplus
Net impact on profit before tax

Note

2023
£m

2022
£m

3
3
3

(31)
(2)
(95)
(128)

62
(2)
(68)

(45)
–
(87)
(132)

10
(1)
(123)

Cash flow
Group cash flow in respect of employee benefits schemes comprises contributions paid to funded schemes of £36m (2022 – £36m)
and benefits paid in respect of unfunded schemes of £5m (2022 – £2m). Contributions to funded defined benefit schemes are subject
to periodic review. Contributions to defined contribution schemes amounted to £95m (2022 – £87m).

Total contributions to funded schemes and benefit payments by the Group in respect of unfunded schemes in 2024 are currently
expected to be approximately £3m in the UK and £10m overseas, totalling £13m (2022 – UK £29m, overseas £10m, totalling £39m).

As part of the triennial funding valuation of the UK Scheme as at 5 April 2023, which was finalised with the independent trustee board
in September 2023, the Company has agreed an abatement of all UK employer contributions to the UK Scheme, covering both the
defined benefit and defined contribution sections from the start of the new financial year. The employer contributions will instead be
met from the surplus in the UK Scheme. This is subject to a solvency check, assessed annually by the Scheme Actuary. This is
expected to result in approximately £70m cash flow benefit for the Group in the new financial year.

Other comprehensive income
Remeasurements of the net pension asset recognised in other comprehensive income are as follows:

Return on scheme assets excluding amounts included in net interest in the income statement
Actuarial gains arising from changes in financial assumptions
Actuarial gains arising from changes in demographic assumptions
Experience losses on scheme liabilities
Change in unrecognised surplus
Remeasurements of the net pension (liability)/asset

2023
£m
(238)
264
18
(57)
6
(7)

2022
£m
(582)
1,440
11
(38)
(10)
821

Reconciliation of change in assets and liabilities

At beginning of year
Current service cost
Employee contributions
Employer contributions
Benefit payments
Past service cost
Interest income/(expense)
Loss on scheme assets less interest income
Actuarial gains arising from changes in financial assumptions
Actuarial gains arising from changes
in demographic assumptions
Experience losses on scheme liabilities
Effect of movements in foreign exchange
At end of year

Reconciliation of change in irrecoverable surplus

At beginning of year
Change recognised in other comprehensive income
Interest charge on irrecoverable surplus
Effect of movements in foreign exchange
At end of year

13. Deferred tax assets and liabilities

2023
assets
£m
4,151
–
7
36
(161)
–
185
(238)
–

–
–
(18)
3,962

2022
assets
£m
4,728
–
8
36
(154)
–
84
(582)
–

–
–
31
4,151

2023
liabilities
£m
(2,795)
(31)
(7)
–
166
(2)
(123)
–
264

18
(57)
18
(2,549)

2022
liabilities
£m
(4,209)
(45)
(8)
–
156
–
(74)
–
1,440

11
(38)
(28)
(2,795)

Note

2023
net
£m
1,356
(31)
–
36
5
(2)
62
(238)
264

18
(57)
–
1,413

2023
£m
(42)
6
(2)
2
(36)

At 18 September 2021
Amount credited to the income statement
Amount credited to equity
Acquired through business combinations
Effect of changes in tax rates on the
income statement
Effect of changes in tax rates on equity
Effect of hyperinflationary economies taken
to operating profit
Transfer to assets/liabilities held for sale
Effect of movements in foreign exchange
At 17 September 2022
Amount credited to the income statement
Amount credited to equity
Acquired through business combinations
Effect of changes in tax rates on the
income statement
Effect of hyperinflationary economies taken
to operating profit
Transfer from assets/liabilities held for sale
Effect of movements in foreign exchange
At 16 September 2023

Property,
plant and
equipment
£m
137
34
–
–

Intangible
assets
£m
90
(5)
–
22

Leases
£m
(101)
27
–
–

Employee
benefits
£m
125
1
154
–

Financial
assets and
liabilities
£m
12
–
28
–

Provisions
and other
temporary
differences
£m
(84)
13
2
2

Tax value of
carry-forward
losses
£m
(34)
8
–
–

2
–

3
5
6
187
73
–
–

4
(5)
(19)
243

–
–

–
–
10
117
(3)
–
7

–

–
–
(3)
118

–
–

–
–
(4)
(78)
(30)
–
–

–

–
–
3
(105)

–
44

–
–
–
324
12
(5)
1

–
–
–
334

–
–

–
–
–
40
–
(40)
–

–

–
–
–
–

–
–

–
–
(8)
(75)
(11)
5
(1)

–

–
–
3
(79)

–
–

–
–
–
(26)
(53)
–
(1)

–

–
–
2
(78)

2022
net
£m
519
(45)
–
36
2
–
10
(582)
1,440

11
(38)
3
1,356

2022
£m
(26)
(10)
(1)
(5)
(42)

Total
£m
145
78
184
24

2
44

3
5
4
489
(12)
(40)
6

4
(5)
(14)
433

156

Associated British Foods plc Annual Report 2023

157

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

13. Deferred tax assets and liabilities continued
Provisions and other temporary differences include provisions of £(103)m (2022 – £(93)m), biological assets of £33m (2022 – £32m),
tax credits of £(9)m (2022 – £(16)m) and other temporary differences of £nil (2022 – £2m).

Certain deferred tax assets and liabilities have been offset in the table above. The following is the analysis of the deferred tax balances
(after offset) for financial reporting purposes:

Deferred tax assets
Deferred tax liabilities

2023
£m
(193)
626
433

2022
£m
(158)
647
489

In addition to the amounts disclosed above, there are £nil (2022 – £5m) deferred tax assets classified as assets held for sale (see note 15).

Deferred tax assets have not been recognised in respect of tax losses of £358m (2022 – £348m). Of these tax losses, £186m
(2022 – £188m) will expire at various dates between 2023 and 2028 (2022: 2022 and 2027). Deferred tax assets have also not been
recognised in respect of other temporary differences of £353m (2022 – £516m). This includes £160m (2022 – £378m) relating to
property, plant and equipment and leases in Germany which were derecognised following the impairment in 2022 (see notes 9 and 10
for further details). These deferred tax assets have not been recognised on the basis that their future economic benefit is uncertain.

In addition, the Group’s overseas subsidiaries have net unremitted earnings of £2,527m (2022 – £2,029m), resulting in temporary
differences of £1,426m (2022 – £1,495m). No deferred tax has been provided in respect of these differences since the timing of the
reversals can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

14. Trade and other receivables

Non-current – other receivables
Loans and receivables
Other non-current investments

Current – trade and other receivables
Trade receivables
Other receivables
Accrued income

Prepayments and other non-financial receivables

2023
£m

31
32
63

1,319
223
26
1,568
210
1,778

2022
£m

29
29
58

1,311
218
35
1,564
194
1,758

In addition to the amounts disclosed above, there are £nil (2022 – £3m) trade and other receivables classified as assets held for sale
(see note 15).

The directors consider that the carrying amount of receivables approximates fair value.

For details of credit risk exposure on trade and other receivables, see note 26.

Trade and other receivables include £32m (2022 – £29m) in respect of finance lease receivables, with £28m in non-current loans
and receivables and £4m in current other receivables (2022 – £25m in non-current loans and receivables and £4m in current other
receivables). Minimum lease payments receivable are £4m within one year, £11m between one and five years and £17m in more than
five years (2022 – £4m within one year, £16m between one and five years and £9m in more than five years).

The finance lease receivables relate to property, plant and equipment leased to a joint venture of the Group (see note 28).

15. Assets and liabilities classified as held for sale
The Group has no assets and liabilities classified as held for sale at year end. In the prior year, the Group’s north China sugar business
was classified as held for sale. The proposed buyer withdrew their offer in the second half of this year and the Group has since
recognised a £15m non-cash exceptional impairment charge to write down the property, plant and equipment in that business.

16. Inventories

Raw materials and consumables
Work in progress
Finished goods and goods held for resale

Write-down of inventories

2023
£m
599
78
2,530
3,207
(123)

2022
£m
607
70
2,582
3,259
(115)

In addition to the amounts disclosed above, there are £nil (2022 – £7m) of inventories classified as assets held for sale (see note 15).

17. Biological assets

At 18 September 2021
Transferred to inventory
Purchases
Other disposals
Changes in fair value
Effects of movements in foreign exchange
At 17 September 2022
Transferred to inventory
Purchases
Impairment
Changes in fair value
Effect of movements in foreign exchange
At 16 September 2023

Growing
cane
£m
79
(113)
–
–
124
7
97
(121)
3
(7)
135
(19)
88

Other
£m
6
(13)
5
(1)
10
1
8
(14)
6
–
11
–
11

Total
£m
85
(126)
5
(1)
134
8
105
(135)
9
(7)
146
(19)
99

Impairment
The methodology used to assess current biological assets for impairment is the same as that described for impairment assessments
of goodwill. See note 8 for further details.

In the year there was a £7m (2022 – £nil) impairment of current biological assets in Illovo Mozambique due to the severe flooding
and damage to the sugar crop fields (included within exceptional items).

Growing cane
The fair value of growing cane is determined using inputs that are unobservable, using the best information available in the
circumstances for valuing the growing cane and therefore falls into the Level 3 category of fair value measurement. The following
assumptions were used in the determination of the estimated sucrose tonnage at 16 September 2023:

Expected area to harvest (hectares)
Estimated yield (tonnes cane/hectare)
Average maturity of growing cane

South Africa
5,729
67.9
46.4%

Malawi
18,819
100.1
67.4%

Zambia
15,700
114.0
65.7%

Eswatini
10,580
92.0
67.7%

Tanzania
9,578
80.2
46.2%

Mozambique
–
–
–

158

Associated British Foods plc Annual Report 2023

159

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

17. Biological assets continued
The following assumptions were used in the determination of the estimated sucrose tonnage at 17 September 2022:

Expected area to harvest (hectares)
Estimated yield (tonnes cane/hectare)
Average maturity of growing cane

South Africa
6,028
67.9
47.6%

Malawi
19,207
103.7
67.4%

Zambia
16,163
115.9
65.7%

Eswatini
8,419
99.5
67.7%

Tanzania
9,612
72.6
46.2%

Mozambique
5,802
71.0
72.4%

A 1% change in the unobservable inputs could increase or decrease the fair value of growing cane as follows:

Estimated sucrose content
Estimated sucrose price

18. Cash and cash equivalents

Cash
Cash at bank and in hand
Cash equivalents
Cash and cash equivalents

Reconciliation to the cash flow statement
Bank overdrafts
Cash and cash equivalents in the cash flow statement

Cash and cash equivalents on the face of the balance sheet

2023

+1%
£m
1.6
1.9

-1%
£m
(1.6)
(1.9)

Note

2022

+1%
£m
1.2
1.4

2023
£m

481
976
1,457

(69)
1,388

1,457
1,457

-1%
£m
(1.2)
(1.4)

2022
£m

674
1,447
2,121

(126)
1,995

2,121
2,121

Cash at bank and in hand generally earns interest at rates based on the applicable daily bank deposit rate.

Cash equivalents generally comprise deposits placed on money markets for periods of up to three months and money market funds
which earn interest at a short-term deposit rate.

The carrying amount of cash and cash equivalents approximates fair value.

19. Loans and overdrafts

Current loans and overdrafts
Secured loans
Unsecured loans and overdrafts

Non-current loans
Unsecured loans

Note

2023
£m

–
168
168

394
394
562

2022
£m

1
156
157

480
480
637

Secured loans
• Other floating rate
Unsecured loans and overdrafts
• Bank overdrafts
• GBP fixed rate
• USD floating rate
• USD fixed rate
• EUR floating rate
• Other floating rate
• Other fixed rate

Note

2023
£m

–

69
392
8
81
1
9
2
562

2022
£m

126
390
8
87
2
13
10
637

Secured loans comprise amounts borrowed from commercial banks and are secured by floating charges over the assets of subsidiaries.
Bank overdrafts generally bear interest at floating rates.

20. Trade and other payables

Trade payables
Accruals

Deferred income and other non-financial payables

2023
£m
1,177
1,271
2,448
505
2,953

2022
£m
1,362
1,275
2,637
477
3,114

In addition to the amounts disclosed above, there are no trade and other payables (2022 – £14m) classified as liabilities held for sale
(see note 15).

For payables with a remaining life of less than one year, carrying amount is deemed to reflect fair value.

In a small number of businesses, the Group utilises supplier financing arrangements to enable participating suppliers, at each
supplier’s sole discretion, to sell any or all amounts due from the Group to a third party bank earlier than the invoice due date, at better
financing rates than the supplier alone could achieve. Payment terms for suppliers are identical, irrespective of whether they choose
to participate. The Group receives no benefit from these arrangements. Contractual terms and invoice due dates are unchanged
and the Group considers amounts owed to the third party bank as akin to amounts owed to the supplier. Such amounts are therefore
included within trade payables and associated cash flows are included within operating cash flows, as they continue to be part
of the Group’s normal operating cycle.

At year end, the value of invoices sold by suppliers under supply chain financing arrangements was £75m (2022 – £45m).

21. Provisions

At 17 September 2022
Created
Utilised
Released
Effect of movements in foreign exchange
At 16 September 2023

Current
Non-current

Restructuring
£m
55
21
(39)
(18)
(1)
18

Deferred
consideration
£m
20
2
(16)
–
–
6

18
–
18

3
3
6

Other
£m
38
67
(9)
(13)
(4)
79

34
45
79

Total
£m
113
90
(64)
(31)
(5)
103

55
48
103

Financial liabilities within provisions comprised deferred consideration in both years (see note 26).

160

Associated British Foods plc Annual Report 2023

161

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

21. Provisions continued
Restructuring
Restructuring provisions include business restructure costs, including redundancy, associated with the Group’s announced
reorganisation plans. These restructuring provisions are largely expected to be utilised in the next financial year.

Deferred consideration
Deferred consideration comprises estimates of amounts due to the previous owners of businesses acquired by the Group which are
often linked to performance or other conditions.

Other
Other provisions mainly comprise litigation claims and warranty claims arising from the sale and closure of businesses. The extent
and timing of the utilisation of these provisions is more uncertain given the nature of the claims and the period of the warranties.

22. Share capital and reserves
Share capital
At 16 September 2023, the Company’s issued and fully paid share capital comprised 767,953,088 ordinary shares of 515⁄22p, each
carrying one vote per share (2022 – 791,674,183). Total nominal value was £44m (2022 – £45m).

Other reserves
£173m of other reserves arose from the cancellation of share premium account by the Company in 1993. £2m arose in 2010 as a
transfer to capital redemption reserve following redemption of two million £1 deferred shares at par. £1m arose in 2023 as a transfer
to capital redemption reserve following the purchase and subsequent cancellation of shares (2022 – nil).

The remaining £3m comprises a £4m unrealised gain on investments held at fair value through other comprehensive income,
net of £1m deferred tax (2022 – £3m, £4m and £1m, respectively).

Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign
operations, as well as from the translation of liabilities that hedge the Group’s net investment in foreign subsidiaries.

Hedging reserve
The hedging reserve comprises all changes in the value of derivatives to the extent that they are effective cash flow hedges, net
of amounts recycled from the hedging reserve on occurrence of the hedged transaction or when the hedged transaction is no longer
expected to occur.

23. Acquisitions and disposals
Acquisitions
2023
In the first half, the Agriculture division acquired Kite Consulting, Advance Sourcing and Progres. Kite Consulting is a specialist dairy
consultant and Advance Sourcing provides specialist products to create value by improving herd performance and supports dairy
farmers to improve herd efficiency and build resilience across the agri-food supply chain. Progres in Finland uses a patented additive
to support good health, reduce inflammation and stimulate recovery, which improves gut integrity and the performance of animals.

In April, the Ingredients division acquired Vital Solutions, a German company specialising in natural science-based ingredients for
application in dietary supplements and functional foods.

The Agriculture division acquired IFCN AG, a dairy research and consulting company in June and in August acquired National Milk
Records plc (NMR) for £48m. NMR is the leading agri-tech supplier of management information and testing services to the UK dairy
supply chain, developing technology used to inform farming efficiency and animal welfare, and quantify food provenance.

Net assets
Intangible assets
Property, plant and equipment and right-of-use assets
Investment in joint ventures
Cash and overdrafts
Working capital
Loans
Taxation
Net identifiable assets and liabilities
Goodwill
Total consideration

Satisfied by
Cash consideration
Deferred consideration

Net cash
Cash consideration
Cash and cash equivalents acquired

Recognised values on acquisition

Pre-acquisition
carrying values
£m

National Milk
Records
£m

Other
£m

Total
£m

3
5
3
1
(1)
(2)
1
10

23
4
9
–
–
(2)
(4)
30
18
48

12
1
–
1
(1)
–
(2)
11
21
32

35
5
9
1
(1)
(2)
(6)
41
39
80

Recognised
values on
acquisition
£m

78
2
80

78
(1)
77

Pre-acquisition carrying amounts were the same as recognised values on acquisition apart from £32m of non-operating intangibles in
respect of brands, technology and customer relationships, a £7m related deferred tax liability, a £6m uplift to the investment in joint
ventures and goodwill of £39m. Cash flow on acquisition of subsidiaries, joint ventures and associates of £94m comprised £78m cash
consideration less £1m cash and overdrafts acquired, £16m of deferred consideration relating to previous acquisitions and a £1m
contribution to an existing joint venture in China.

2022
In January, the Group acquired 100% of Fytexia, a B2B specialty ingredients business in France and Italy producing and formulating
polyphenols-based active ingredients for the dietary supplements industry. In July, the Group acquired Greencoat, a UK-based animal
supplement and care business. During the year, the Group also acquired a small grocery company in New Zealand, a small agriculture
business in Finland and a small ingredients business in Australia.

Pre-acquisition carrying amounts were the same as recognised values on acquisition apart from £88m of non-operating intangibles in
respect of brands, technology and customer relationships, an £8m uplift to inventory, a £16m related deferred tax liability and goodwill
of £85m. Cash flow on acquisition of subsidiaries, joint ventures and associates of £154m comprised £153m cash consideration less
£10m cash and overdrafts acquired, £7m of deferred consideration relating to previous acquisitions and a £4m contribution to an
existing joint venture in China.

Disposals
2023
The Group agreed to sell property, plant and equipment to its Chinese joint venture partner. Profit on sale was £3m. In March
Gledhow, the Group’s 30% equity-accounted associate in Illovo South Africa, formally went into business rescue. A non-cash
provision of £6m was booked on the financial guarantee held on this business' liabilities.

2022
The proposed sale of a yeast company to the joint venture with Wilmar International in China (classified as held for sale at the 2021
year end) is not going ahead. The £10m non-cash impairment reversed in 2021 through profit/(loss) on sale and closure of business
has been reinstated at a cost of £11m.

The Group’s investment in north China Sugar is classified as held-for-sale at year end and an associated £19m non-cash write-down
has been charged to loss on sale and closure of business.

The Group also released £3m of closure provisions in Vivergo in the UK and £4m of warranty provisions no longer required for a disposed
Ingredients business in the United States.

162

Associated British Foods plc Annual Report 2023

163

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

24. Share-based payments
The annual charge in the income statement for equity-settled share-based payments schemes was £18m (2022 – £19m).
The Group had the following principal equity-settled share-based payment plans in operation during the period:

Associated British Foods 2016 Long-term Incentive Plan (‘the 2016 LTIP’)
The 2016 LTIP was approved and adopted by the Company at the AGM held on 9 December 2016. It takes the form of conditional
allocations of shares which are released if, and to the extent that, performance targets are satisfied, typically over a three-year vesting
period.

Associated British Foods 2016 Short-term Incentive Plan (‘the 2016 STIP’)
The 2016 STIP was approved and adopted by the Board on 2 November 2016. It takes the form of conditional allocations of shares
which are released at the end of a three-year vesting period if, and to the extent that, performance targets are satisfied, over a one-
year performance period.

Further information regarding the operation of the above plans can be found in the Remuneration Report on pages 100 to 115.

Total conditional allocations under the Group’s equity-settled share-based payment plans are as follows:

2023
2022

Balance
outstanding at
the beginning
of the period
6,090,005
5,419,237

Granted/
awarded
3,113,056
2,445,814

Vested
(607,140)
(718,185)

Expired/lapsed
(1,618,739)
(1,056,861)

Balance
outstanding
at the end
of the period
6,977,182
6,090,005

Employee Share Ownership Plan Trust
Shares subject to allocation under the Group’s equity-settled share-based payment plans are held in a separate Employee Share
Ownership Plan Trust funded by the Company. Voting rights attached to shares held by the Trust are exercisable by the trustee, who
is entitled to consider any recommendation made by a committee of the Company. At 16 September 2023 the Trust held 4,734,992
(2022 – 3,042,132) ordinary shares of the Company. The market value of these shares at the year end was £99m (2022 – £40m).
The Trust has waived its right to dividends. Movements in the year were a release of 607,140 shares and the purchase of 2,300,000
shares (2022 – release of 718,185 shares and the purchase of 2,413,228 shares).

Fair values
The weighted average fair value of conditional grants made was determined by taking the market price of the shares at the time
of grant and discounting for the fact that dividends are not paid during the vesting period. The weighted average fair value of the
conditional shares allocated during the year was 1,544p (2022 – 1,660p) and the weighted average share price was 1,925p (2022
– 1,975p). The dividend yield used was 2.5% (2022 – 2.5%).

25. Analysis of net debt

Short-term loans
Long-term loans
Lease liabilities
Total liabilities from financing activities
Cash at bank and in hand, cash equivalents
and overdrafts
Current asset investments
Net debt including lease liabilities

At
17 September
2022
£m
(31)
(480)
(3,252)
(3,763)

1,995
4
(1,764)

At
18 September
2021
£m
(244)
(76)
(3,281)
(3,601)

2,189
32
(1,380)

Acquisitions
and disposals
£m
(1)
(1)
–
(2)

–
–
(2)

Acquisitions
and disposals
£m
(23)
–
(8)
(31)

New leases,
non-cash
items and
transfers
£m
(87)
87
(279)
(279)

–
–
(279)

New leases,
non-cash
items and
transfers
£m
224
(224)
(186)
(186)

Exchange
adjustments
£m
7
–
63
70

At
16 September
2023
£m
(99)
(394)
(3,160)
(3,653)

(73)
(1)
(4)

1,388
–
(2,265)

Exchange
adjustments
£m
–
(2)
(98)
(100)

At
17 September
2022
£m
(31)
(480)
(3,252)
(3,763)

–
–
(31)

–
–
(186)

74
2
(24)

1,995
4
(1,764)

Cash flow
£m
13
–
308
321

(534)
(3)
(216)

Cash flow
£m
12
(178)
321
155

(268)
(30)
(143)

Cash and cash equivalents comprise bank and cash balances, deposits and short-term investments with original maturities
of three months or less. £69m (2022 – £126m) of bank overdrafts that are repayable on demand form part of the Group’s cash
management and are included as a component of cash and cash equivalents for the purpose of the cash flow statement
(see note 18 for a reconciliation).

Net cash before lease liabilities is £895m, comprising cash at bank and in hand, cash equivalents and overdrafts of £1,388m,
short-term loans of £99m, long-term loans of £394m and current asset investments of £nil (2022 – £1,488m, £1,995m, £31m,
£480m and £4m,respectively).

£69m (2022 – £126m) of bank overdrafts plus the £99m (2022 – £31m) of short-term loans shown above comprise the £168m
(2022 – £157m) of current loans and overdrafts shown on the face of the balance sheet.

Current and non-current lease liabilities shown on the face of the balance sheet of £335m and £2,825m respectively (2022 – £316m
and £2,936m respectively) comprise the £3,160m (2022 – £3,252m) of lease liabilities shown above.

Current asset investments comprise term deposits and short-term investments with original maturities of greater than three months.

Interest paid is included within financing activities. The roll-forward of the liabilities associated with interest paid is an opening balance
of £(18)m, expense of £(128)m, payments of £118m, effect of hyperinflationary economies of £3m and a closing balance of £(25)m
(2022 – opening balance of £(20)m, expense of £(111)m, payments of £114m, fx of £(1)m and a closing balance of £(18)m).

164

Associated British Foods plc Annual Report 2023

165

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

26. Financial instruments
Financial instruments include £nil (2022 – £3m) of trade and other receivables and £nil (2022 – £14m) of trade and other
payables which are classified as held for sale (see note 15). All disclosures in this note are given gross, before the held-for-sale
reclassification is made.

a) Carrying amount and fair values of financial assets and liabilities

Financial assets
Financial assets at amortised cost
Cash and cash equivalents
Current asset investments
Trade and other receivables
Other non-current receivables
At fair value through other comprehensive income
Investments
At fair value through profit or loss
Derivative assets not designated in a cash flow hedging relationship:
• currency derivatives (excluding cross-currency swaps)
• commodity derivatives
Designated cash flow hedging relationships
Derivative assets designated and effective as cash flow hedging instruments:
• currency derivatives (excluding cross-currency swaps)
• cross-currency swaps
• interest rate derivatives
• commodity derivatives
Total financial assets

Financial liabilities
Financial liabilities at amortised cost
Trade and other payables
Secured loans
Unsecured loans and overdrafts (fair value 2023 – £470m; 2022 – £571m)
Lease liabilities (fair value 2023 – £3,178m; 2022 – £3,471m)
Deferred consideration
At fair value through profit or loss
Derivative liabilities not designated in a cash flow hedging relationship:
• currency derivatives (excluding cross-currency swaps)
• commodity derivatives
Designated net investment hedging relationships
Derivative liabilities designated as net investment hedging instruments:
• cross-currency swaps
Designated cash flow hedging relationships
Derivative liabilities designated and effective as cash flow hedging instruments:
• currency derivatives (excluding cross-currency swaps)
• interest rate derivatives
• commodity derivatives
Total financial liabilities
Net financial liabilities

Except where stated, carrying amount is equal to fair value.

2023
£m

2022
£m

1,457
–
1,568
31

11
–

40
24
4
17
3,184

2,121
4
1,567
29

50
3

70
29
–
323
4,225

(2,448)
–
(562)
(3,160)
(6)

(2,651)
(1)
(636)
(3,252)
(20)

(6)
–

(7)

(5)
(3)

(7)

(4)
–
(52)
(6,245)
(3,061)

(17)
(3)
(170)
(6,765)
(2,540)

Valuation of financial instruments carried at fair value
Financial instruments carried at fair value on the balance sheet comprise derivatives and investments. The Group classifies these
financial instruments using a fair value hierarchy that reflects the relative significance of both objective evidence and subjective
judgements on the inputs used in making the fair value measurements:

• Level 1: financial instruments are valued using observable inputs that reflect unadjusted quoted market prices in an active market for
identical instruments. An example of an item in this category is a widely traded equity instrument with a normal quoted market price.
• Level 2: financial instruments are valued using techniques based on observable inputs, either directly (i.e. market prices and rates)

or indirectly (i.e. derived from market prices and rates). An example of an item in this category is a currency derivative, where
forward exchange rates and yield curve data, which are observable in the market, are used to derive fair value.

• Level 3: financial instruments are valued using techniques involving significant unobservable inputs.

b) Derivatives
All derivatives are classified as current on the face of the balance sheet. The table below analyses the carrying amount of derivatives
and their contractual/notional amounts, together with an analysis of derivatives by the level in the fair value hierarchy into which their
fair value measurement method is categorised.

Financial assets
Currency derivatives
(excluding cross-currency swaps)
Cross-currency swaps
Interest rate derivatives
Commodity derivatives

Financial liabilities
Currency derivatives
(excluding cross-currency swaps)
Cross-currency swaps
Interest rate derivatives
Commodity derivatives

2023

2022

Contractual/
notional
amounts
£m

Level 1
£m

Level 2
£m

Total
£m

Contractual/
notional
amounts
£m

Level 1
£m

Level 2
£m

Total
£m

2,402
84
400
163
3,049

626
65
–
275
966

–
–
–
5
5

–
–
–
(2)
(2)

51
24
4
12
91

(10)
(7)
–
(50)
(67)

51
24
4
17
96

(10)
(7)
–
(52)
(69)

2,193
94

439
2,726

921
68
400
366
1,755

–
–

3
3

–
–
–
–
–

120
29

323
472

(22)
(7)
(3)
(173)
(205)

120
29

326
475

(22)
(7)
(3)
(173)
(205)

166

Associated British Foods plc Annual Report 2023

167

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

26. Financial instruments continued
c) Cash flow hedging reserve
The following table identifies the movements in the cash flow hedging reserve during the year, and the periods in which the cash
flows are expected to occur. The periods in which the cash flows are expected to impact profit or loss are materially the same.

Opening balance
Losses/(gains) recognised
in the hedging reserve
Amount removed from
the hedging reserve and
included in the income
statement:
• revenue
• cost of sales
• other financial

(income)/expense
Amount removed from
the hedging reserve and
included in a non-financial
asset:
• inventory
Deferred tax
Closing balance
Cash flows are expected
to occur:
• within six months
• between six months

and one year

• between one and two

years

Currency
derivatives
(excluding
cross-
currency)
£m
(41)

(6)
–

–

(52)
(2)
(28)

(15)

(13)

–
(28)

2023

2022

Cross-
currency
swaps
£m
–

Interest rate
derivatives
£m
2

Commodity
derivatives
£m
(115)

Total
£m
(154)

Currency
derivatives
(excluding
cross-
currency)
£m
(14)

Cross-
currency
swaps
£m
(1)

Interest rate
derivatives
£m
–

Commodity
derivatives
£m
(28)

Total
£m
(43)

–
–

(7)

–
–
(2)

–

(2)

–
(2)

(5)

339

412

(295)

(20)

(234)

(546)

–
–

–

–
1
(2)

–

(2)

–
(2)

(7)
(132)

(13)
(132)

–

(7)

(16)
(39)
30

(68)
(40)
(2)

(13)

1
30

1
(2)

5
–

–

258
5
(41)

(36)

(6)

1
(41)

–
–

–
–
–

–

–
–

–

–
(1)
2

–

–
2

(4)
105

1
105

–

22
24
(115)

280
28
(154)

(105)

(139)

(10)

(16)

–
(115)

1
(154)

Of the closing balance of £(2)m, £(2)m is attributable to equity shareholders and £nil to non-controlling interests (2022 – £(154)m,
£(154)m attributable to equity shareholders and £nil to non-controlling interests). Of the net movement in the year of £(152)m, £(152m
is attributable to equity shareholders and £nil to non-controlling interests (2022 – £(111)m, £(111)m attributable to equity shareholders
and £nil to non-controlling interests).

The balance remaining in the commodity cash flow hedge reserve from hedging relationships for which hedge accounting is no longer
applied is £3m (2022 – £1m).

The balance in the cost of hedging reserve was not significant at 17 September 2022 or 16 September 2023.

d) Financial risk identification and management
The Group is exposed to the following financial risks from the use of financial instruments:

• market risk; and
• credit risk.

The Group’s financial risk management process seeks to enable the early identification, evaluation and effective management of key
risks facing the business. Risk management policies and governance committees have been established and are reviewed regularly
to reflect changes in market conditions and the Group’s activities. The Group, through its policies and procedures, aims to develop
a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Group sources and sells products and manufactures goods in many locations around the world. These operations expose the
Group to potentially significant price volatility in the financial and commodity markets. Risk management teams have been established
to manage this exposure by entering into a range of products, including physical and financial forward contracts, futures, swaps, and,
where appropriate, options. These teams work closely with Group Treasury and report regularly to executive management.

Treasury activities and commodity hedging are conducted within a clearly defined framework of Board-approved policies and
guidelines to manage the Group’s financial and commodity risks. Group Treasury works closely with the Group’s commercial and
procurement teams to manage commodity risks. Group Treasury policy seeks to ensure that adequate financial resources are available
at all times for the management and development of the Group’s businesses, whilst effectively managing its market risk and credit
risk. The Group’s risk management policy explicitly forbids the use of financial or commodity derivatives for speculative purposes.

e) Foreign currency translation
The Group presents its financial statements in sterling. As a result of its worldwide operations, the Group is exposed to foreign
currency translation risk where overseas operations have a functional currency other than sterling. Changes in foreign currency
exchange rates impact the translation into sterling of both the income statement and net assets of these foreign operations.

The Group typically finances its operations using own funds generated in the functional currency of its operations and where
appropriate, by borrowing locally in the same functional currency. This reduces net asset values reported in functional currencies other
than sterling, thereby reducing the economic exposure to fluctuations in foreign currency exchange rates on translation.

The Group also finances its operations by obtaining funding at Group level through external borrowings and, where they are not in
sterling, these borrowings may be designated as net investment hedges. This enables gains and losses arising on retranslation of
these foreign currency borrowings to be charged to other comprehensive income, providing a partial offset in equity against the gains
and losses arising on translation of the net assets of foreign operations.

The Group also holds cross-currency interest rate swaps to hedge its fixed rate non-sterling debt. These are reported as cash flow
hedges and net investment hedges. The change in fair value of the hedging instrument, to the degree effective, is retained in other
comprehensive income. Under IFRS 9, the currency basis on the cross-currency swaps is excluded from the hedge designation
and recognised in other comprehensive income – cost of hedging. The value of the currency basis is not significant. Effectiveness
is measured using the hypothetical derivative approach. The hypothetical derivative is based on the critical terms of the debt and
therefore the only ineffectiveness that might arise is in relation to credit risk. Credit risk is monitored regularly and is not a significant
factor in the hedge relationship.

The Group does not actively hedge the translation impact of foreign exchange rate movements on the income statement (other than
via the partial economic hedge arising from the servicing costs on non-sterling borrowings).

The Group designates certain of its intercompany loan arrangements as quasi-equity for the purposes of IAS 21. The effect of the
designation is that any foreign exchange volatility arising within the borrowing entity and/or the lending entity is accounted for directly
within other comprehensive income.

A net foreign exchange loss of £2m (2022 – £nil) on retranslation of these loans has been taken to the translation reserve on
consolidation, all of which was attributable to equity shareholders. The Group also held cross-currency swaps that have been
designated as hedges of its net investments in euros, whose change in fair value of £nil to the translation reserve, all of which was
attributable to equity shareholders (2022 – £1m has been debited to the translation reserve).

f) Market risk
Market risk is the risk of movements in the fair value of future cash flows of a financial instrument or forecast transaction as
underlying market prices change. The Group is exposed to changes in the market price of commodities, interest rates and foreign
exchange rates. These risks are known as ‘transaction’ (or recognised) exposures and ‘economic’ (or forecast) exposures.

(i) Commodity price risk
Commodity price risk arises from the procurement of raw materials and sale of finished goods linked to market indices, the
consequent exposure to changes in market prices.

The Group purchases a wide range of commodities in the ordinary course of business and has some sales contracts which are linked
to financial market indices. Exposure to changes in the market price of certain of these commodities including sugar raws, energy,
wheat, edible oils, soya beans, tea, lean hog, cocoa and rice is managed through the use of forward physical contracts and hedging
instruments, including futures, swaps and options primarily to convert floating prices to fixed prices. The use of such contracts to
hedge commodity exposures is governed by the Group’s risk management policies and is continually monitored by Group Treasury.
Commodity derivatives also provide a way to meet customers’ pricing requirements whilst achieving a price structure consistent
with the Group’s overall pricing strategy.

168

Associated British Foods plc Annual Report 2023

169

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

26. Financial instruments continued
Some of the Group’s commodity forward contracts are classified as ‘own use’ contracts, since they are entered into, and continue
to be held, for the purposes of the Group’s ordinary operations. In this instance the Group takes physical delivery of the commodity
concerned. Own use contracts do not require accounting entries until the commodity purchase actually crystallises. Where possible,
other commodity derivatives are accounted for as cash flow hedges (typically with a one-to-one hedge ratio), but there are some
commodity derivatives for which the strict requirements of hedge accounting cannot be satisfied. Such commodity derivatives are
used only where the business believes they provide an economic hedge of an underlying exposure. These instruments are classified
as held for trading and are marked to market through the income statement.

The majority of the Group’s forward physical contracts and commodity derivatives have maturities of less than one year.

The Group’s sensitivities in respect of commodity derivatives for a +/- 20% movement in underlying commodity prices are £16m
(2022 – £62m) and £(13)m (2022 – £(57)m), respectively.

(ii) Interest rate risk
Interest rate risk comprises two primary elements:

• interest price risk results from financial instruments bearing fixed interest rates. Changes in floating interest rates therefore affect

the fair value of these financial instruments; and

• interest cash flow risk results from financial instruments bearing floating rates. Changes in floating interest rates affect cash flows

on interest receivable or payable.

The Group’s policy is to manage its mix of fixed and floating rate debt, cash and investments so that a significant change in interest
rates does not have a material negative impact on the Group’s cash flows.

At 16 September 2023, £475m (85%) (2022 – £487m and 76%) of total debt was subject to fixed rates of interest, the majority
of which is the 2034 public bond. Floating rate debt comprises other bank borrowings bearing interest rates for various time periods
up to 12 months, by reference to the relevant market rate for the currency and location of the borrowing.

The Group’s cash and cash equivalents and current asset investments are subject to floating rates of interest, typically fixed for
periods up to 3 months by reference to the relevant market rate for the currency of the cash placing or investment.

£400m of sterling interest rate swaps have been entered into so that the floating interest rate received on an equivalent balance
of the Group’s cash and cash equivalents is fixed for the 13-month period to September 2024.

(iii) Foreign currency risk
The Group conducts business worldwide and consequently in many foreign currencies. As a result, it is exposed to movements
in foreign currency exchange rates which affect the Group’s transaction costs. The Group also publishes its financial statements
in sterling and is therefore exposed to movements in foreign exchange rates on the translation of the results and underlying net
assets of its foreign operations into sterling.

Translation risk is discussed in section e) on page 169.

Transaction risk
Currency transaction exposure occurs where a business makes sales and purchases in a currency other than its functional currency.
It also arises where monetary assets and liabilities of a business are not denominated in its functional currency, and where dividends
or surplus funds are remitted from overseas. The Group’s policy is to match transaction exposures wherever possible, and to hedge
actual exposures and firm commitments as soon as they occur by using forward foreign currency contracts.

The Group uses derivatives (principally forward foreign currency contracts) to hedge its exposure to movements in exchange rates on
its foreign currency trade receivables and payables. The Group does not seek formal fair value hedge accounting for such transaction
hedges. Instead, such derivatives are classified as held for trading and marked to market through the income statement. This offsets
the income statement impact of the retranslation of the foreign currency trade receivables and payables.

Economic (forecast) risk
The Group principally uses forward foreign currency contracts to hedge its exposure to movements in exchange rates on its highly
probable forecast foreign currency sales and purchases typically on a rolling 12-month basis. The Group does not formally define the
proportion of highly probable forecast sales and purchases to hedge, but agrees an appropriate percentage on an individual basis with
each business by reference to the Group’s risk management policies and prevailing market conditions. The Group designates currency
derivatives used to hedge its highly probable forecast transactions as cash flow hedges. Under IFRS 9, the spot component is
designated in the hedging relationship and forward points and currency basis are excluded and recognised in other comprehensive
income – cost of hedging. The cost of hedging value during the period and at the balance sheet date was not material. The economic
relationship is based on critical terms and a one-to-one hedge ratio. To the extent that cash flow hedges are effective, gains and
losses are deferred in equity until the forecast transaction occurs, at which point the gains and losses are recycled either to the
income statement or to the non-financial asset acquired.

The majority of the Group’s currency derivatives have original maturities of less than one year.

The Group’s most significant currency transaction exposures are:

• sourcing for Primark – costs are denominated in a number of currencies, predominantly US dollars, euros and sterling.
• sugar sales in British Sugar to movements in the sterling/euro exchange rate.

Elsewhere, a number of businesses make sales and purchase a variety of raw materials in foreign currencies (primarily US dollars and
euros), giving rise to transaction exposures. In all other material respects, businesses tend to operate in their functional currencies.

The table below illustrates the effects of hedge accounting on the consolidated balance sheet and consolidated income statement
by disclosing separately by risk category, and each type of hedge, the details of the associated hedging instrument and hedged item.

2023

Carrying
amount
assets/
(liabilities)
£m

Contract
notional
£m

Furthest
maturity
date
£m

Hedge
ratio
%

Change in fair
value of hedging
instrument used to
determine hedge
ineffectiveness
£m

Change in fair value
of hedged item used
to determine hedge
effectiveness
£m

Current
Designated cash flow hedging relationships:
• currency derivatives (excluding cross-currency

swaps)

• cross-currency swaps
• commodity derivatives
• interest rate derivatives

2,024
84
427
400

36
Sep 24
24 Mar 24
(35) Sep 24
Sep 24

100%
100%
100%
100%

Designated net investment hedging relationships:
• currency derivatives (cross-currency swaps)

(7) Mar 24

100%

Non-current
Designated cash flow hedging relationships:
• currency derivatives (excluding cross-currency

swaps)

• commodity derivatives

21
11

–
–

Apr 25
Feb 25

100%
100%

2022

36
6
(35)
4

–

–
–

(36)
(6)
35
(4)

–

–
–

Carrying
amount
assets/
(liabilities)
£m

Furthest
maturity
date
£m

Change in fair
value of hedging instrument
used to determine hedge
ineffectiveness
£m

Change in fair value of
hedged item used to
determine hedge
effectiveness
£m

Hedge
ratio
%

Contract
notional £m

Current
Designated cash flow hedging relationships:
• currency derivatives (excluding cross-currency

swaps)

• commodity derivatives
• interest rate derivatives

Non-current
Designated cash flow hedging relationships:
• currency derivatives (excluding cross-currency

swaps)

• cross-currency swaps
• commodity derivatives

Designated net investment hedging relationships:
• currency derivatives (cross-currency swaps)

2,102
739
400

54
152

Sep 23
Aug 23
(3) Aug 23

100%
100%
100%

32
94
20

(1)
Sep 24
29 Mar 24
Jan 24

100%
100%
100%

(7) Mar 24

100%

54
152
(3)

(1)
14
1

(3)

(54)
(152)
3

1
(14)
(1)

170

Associated British Foods plc Annual Report 2023

171

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

26. Financial instruments continued
Hedging relationships are typically based on a one-to-one hedge ratio. The economic relationship between the hedged item and the
hedging instrument is analysed on an ongoing basis. Sources of possible ineffectiveness include changes in forecast transactions as a
result of timing or value or, in certain cases, different indices linked to the hedged item and the hedging instrument. As at 16 September
2023, £2,045m of forward foreign currency contracts designated as cash flow hedges were outstanding (2022 – £2,134m), largely
in relation to purchases of USD (£1,702m) and sales of EUR (£203m) with varying maturities up to April 2025. Weighted average
hedge rates for these contracts are GBPUSD: 1.264, EURUSD: 1.098 and GBPEUR: 1.145. Weighted average hedge rates for the
cross-currency swaps are GBPUSD: 1.70 and GBPEUR: 1.26. Commodity derivatives designated as cash flow hedges related to
a range of underlying hedged items, with varying maturities up to February 2025.

The analysis of the Group’s foreign currency exposure to financial assets and liabilities by currency of denomination is as follows:

Sensitivity analysis – translation impact of non-functional assets and liabilities

The following sensitivity analysis illustrates the impact that a 10% strengthening of the Group’s transactional currencies against
local functional currencies would have had on profit and equity. The analysis covers currency translation exposures at year end on
businesses’ financial assets and liabilities that are not denominated in the functional currencies of those businesses. A similar but
opposite impact would be felt on both profit and equity if the Group’s main operating currencies weakened against local functional
currencies by a similar amount.

The exposure to foreign exchange gains and losses on translating the financial statements of subsidiaries into sterling is not included
in this sensitivity analysis, as there is no impact on the income statement, and the gains and losses are recorded directly in the
translation reserve in equity (see below for a separate sensitivity). This sensitivity is presented before taxation and non-controlling
interests.

Financial assets
Cash and cash equivalents
Trade and other receivables

Financial liabilities
Trade and other payables
Unsecured loans and overdrafts

Currency derivatives
Gross amounts receivable
Gross amounts payable

Financial assets
Cash and cash equivalents
Trade and other receivables

Financial liabilities
Trade and other payables
Unsecured loans and overdrafts

Currency derivatives
Gross amounts receivable
Gross amounts payable

The following major exchange rates applied during the year:

US dollar
Euro

Sterling
£m

US dollar
£m

2023

Euro
£m

17
56
73

(41)
–
(41)

112
(299)
(187)

Other
£m

32
19
51

(6)
1
(5)

466
(179)
287

Total
£m

313
125
438

(445)
(80)
(525)

2,535
(642)
1,893

264
50
314

(381)
(81)
(462)

1,890
(161)
1,729

–
–
–

(17)
–
(17)

67
(3)
64

1,581

(155)

333

1,806

2022

Sterling
£m

US dollar
£m

1
–
1

(29)
–
(29)

93
(2)
91

78
55
133

(512)
(90)
(602)

2,143
(202)
1,941

1,472

Euro
£m

10
54
64

(38)
–
(38)

98
(428)
(330)

(304)

Other
£m

38
24
62

(17)
–
(17)

256
(57)
199

Total
£m

127
133
260

(596)
(90)
(686)

2,590
(689)
1,901

244

1,475

Average rate

Closing rate

2023
1.22
1.15

2022
1.29
1.18

2023
1.24
1.16

2022
1.14
1.14

10% strengthening against other currencies of
Sterling
US dollar
Euro
Other

2023
impact on
profit for
the period
£m
1
21
(2)
29

2023
impact on
total
equity
£m
6
164
(19)
32

2022
impact on
profit for
the period
£m
–
19
(19)
16

2022
impact on
total
equity
£m
6
172
(41)
22

Sensitivity analysis – translation of foreign operations profit before tax

A second sensitivity analysis calculates the impact on the Group’s profit before tax if the average rates used to translate the results
of the Group’s foreign operations into sterling were adjusted to show a 10% strengthening of sterling. A similar but opposite impact
would be felt on profit before tax if sterling weakened against the other currencies by a similar amount.

10% strengthening of sterling against
US dollar
Euro
Other

2023
impact on
profit for
the period
£m
(24)
(22)
(27)

2022
impact on
profit for
the period
£m
(18)
(3)
(30)

g) Credit risk
Credit risk is the risk that counterparties to financial transactions can not perform according to the terms of the contract. The Group’s
businesses are principally exposed to counterparty credit risk when dealing with their customers, suppliers, and from financial
institutions.

The immediate credit exposure of financial derivatives is represented by those financial derivatives that have a net positive fair value
by counterparty at 16 September 2023. The Group considers its maximum exposure to credit risk to be:

Cash and cash equivalents
Current asset investments
Trade and other receivables
Other non-current receivables
Investments
Derivative assets at fair value through profit and loss
Derivative assets in designated cash flow hedging relationships

2023
£m
1,457
–
1,568
31
32
11
78
3,177

2022
£m
2,121
4
1,567
29
29
53
415
4,218

The Group uses changes in credit ratings and other metrics to identify significant changes to the financial profile of its counterparties.

172

Associated British Foods plc Annual Report 2023

173

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

26. Financial instruments continued
Counterparty risk profile and management
The table below analyses the Group’s current asset investments, cash equivalents and derivative assets by credit exposure:

2023

Long-term issuer rating
AA
A
Not rated
Total

2022

Long-term issuer rating
AA
A
BBB
BB
B
Not rated
Total

Derivatives

Current asset
investments
£m
–
–
–
–

Cash
equivalents
£m
50
874
52
976

Currency
derivatives
£m
2
39
–
41

Cross-currency
swaps
£m
–
17
–
17

Interest rate
swaps
–
4
–
4

Commodities
£m
–
1
7
8

Derivatives

Current asset
investments
£m
–
4
–
–
–
–
4

Cash
equivalents
£m
299
955
157
9
16
11
1,447

Currency
derivatives
£m
2
103
–
–
–
–
105

Cross-currency
swaps
£m
–
22
–
–
–
–
22

Interest rate
swaps
–
–
–
–
–
–
–

Commodities
£m
10
–
–
–
–
315
325

Total
£m
52
935
59
1,046

Total
£m
311
1,084
157
9
16
326
1,903

In the current year, we have included cash equivalents in the above disclosure and have re-presented the prior year comparatives
on a consistent basis.

Cash of £481m (2022 – £674m) has been excluded from this analysis as the balances are available on demand. The significant majority
of cash balances and short-term deposits are held with strong investment-grade banks or financial institutions.

Trade and other receivables
Significant concentrations of credit risk are very limited as a result of the Group’s large and diverse customer base. The Group has
an established credit policy applied by each business under which the credit status of each new customer is reviewed before credit
is advanced. This includes external credit evaluations where possible and in some cases bank references. Credit limits are established
for all significant or high-risk customers, which represent the maximum amount permitted to be outstanding without requiring
additional approval from the appropriate level of management. Outstanding debts are continually monitored by each business. Credit
limits are reviewed on a regular basis, and at least annually. Customers that fail to meet the Group’s benchmark creditworthiness may
only transact on a prepayment basis. Aggregate exposures are monitored at Group level.

Many customers have been transacting with the Group for many years and the incidence of bad debts has been low. Where
appropriate, goods are sold subject to retention of title so that, in the event of non-payment, the Group may have a secured claim.
The Group does not typically require collateral in respect of trade and other receivables.

The Group provides for impairment of financial assets including trade and other receivables based on known events, and makes a
collective provision for losses yet to be identified, based on historical data. The majority of the provision comprises specific amounts.

To measure expected credit losses, gross trade receivables are assessed regularly by each business locally with reference to
considerations such as the current status of the relationship with the customer, the geographical location of each customer, and days
past due (where applicable).

Expected losses are determined based on the historical experience of write-offs compared to the level of trade receivables. These
historical loss expectations are adjusted for current and forward-looking information where it is identified to be significant. The Group
considers factors such as national economic outlooks and bankruptcy rates of the countries in which its goods are sold to be the most
relevant factors. Where the impact of these is assessed as significant, the historical loss expectations are amended accordingly.

The Group considers credit risk to have significantly increased for debts aged 180 days or over and expects these debts to be
provided for in full. Where the Group holds insurance or has a legal right of offset with debtors who are also creditors, the loss
expectation is applied only to the extent of the uninsured or net exposure.

Trade receivables are written off when there is no reasonable expectation of recovery, indicators of which may include the failure
of the debtor to engage in a payment plan, and failure to make contractual payments within 180 days past due.

The maximum exposure to credit risk for trade and other receivables at the reporting date by geographic region of origin was:

UK
Europe & Africa
The Americas
Asia Pacific

Trade receivables can be analysed as follows:

Not overdue
Up to one month past due
Between one and two months past due
Between two and three months past due
More than three months past due
Expected loss provision

Trade receivables are stated net of the following expected loss provision:

Opening balance
Increase charged to the income statement
Amounts released
Amounts written off
Effect of movements in foreign exchange
Closing balance

2023
£m
584
398
216
370
1,568

2023
£m
1,157
121
29
10
30
(28)
1,319

2023
£m
27
7
(2)
(2)
(2)
28

2022
£m
579
385
230
373
1,567

2022
£m
1,129
137
31
10
31
(27)
1,311

2022
£m
24
6
(4)
(1)
2
27

No trade receivables were written off directly to the income statement in either year.

The geographical and business line complexity of the Group, combined with the fact that expected credit loss assessments are all
performed locally, means that it is not practicable to present further analysis of expected credit losses.

In relation to other receivables not forming part of trade receivables, a similar approach has been taken to assess expected credit
losses. No significant expected credit loss has been identified.

The directors consider that the carrying amount of trade and other receivables approximates fair value.

Cash and cash equivalents
Policies including choice of bank, opening of bank accounts and repatriation of funds must be agreed with Group Treasury. The Group
has not recorded impairments against cash or cash equivalents, nor have any recoverability issues been identified with such balances.

h) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting its obligations associated with its financial liabilities as they
fall due. Group Treasury is responsible for monitoring and managing liquidity and ensures that the Group has sufficient headroom
in its committed facilities to meet unforeseen or abnormal requirements. The Group also has access to uncommitted facilities to
assist with short-term funding requirements.

Available headroom is monitored via the use of detailed cash flow forecasts prepared by each business, which are reviewed at least
quarterly, or more often, as required. Actual results are compared to budget and forecast each period, and variances investigated and
explained. Particular focus is given to management of working capital.

The Board’s treasury policies are in place to maintain a strong capital base and manage the Group’s balance sheet to ensure long-term
financial stability. This includes maintaining access to significant total liquidity comprised of both cash and undrawn committed credit
facilities. These policies are the basis for investor, creditor and market confidence and enable the successful development of the
business.

Details of the Group’s borrowing facilities are given in section i) on page 176.

174

Associated British Foods plc Annual Report 2023

175

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

26. Financial instruments continued
The following table analyses the contractual undiscounted cash flows relating to financial liabilities at the balance sheet date and
compares them to carrying amounts:

Non-derivative financial liabilities
Trade and other payables
Unsecured loans and overdrafts
Lease liabilities
Deferred consideration
Derivative financial liabilities
• Currency derivatives (excluding cross-

currency swaps) (net payments)

• Commodity derivatives (net payments)
Total financial liabilities

Non-derivative financial liabilities
Trade and other payables
Secured loans
Unsecured loans and overdrafts
Lease liabilities
Deferred consideration
Derivative financial liabilities
• Currency derivatives (excluding cross-

currency swaps) (net payments)

• Commodity derivatives (net payments)
• Interest rate derivatives (net payments)
Total financial liabilities

Note

20
19
10
21

Note

20
19
19
10
21

Due within
6 months
£m

Due
between
6 months
and 1 year
£m

Due
between
1 and 2
years
£m

(2,380)
(80)
(197)
(2)

(4)
(46)
(2,709)

(68)
(101)
(210)
(1)

–
(5)
(385)

–
(13)
(406)
(3)

–
(1)
(423)

Due within
6 months
£m

Due
between
6 months
and 1 year
£m

Due
between
1 and 2
years
£m

(2,623)
–
(153)
(197)
(4)

(15)
(170)
(3)
(3,165)

(28)
(1)
(17)
(214)
(12)

(2)
(1)
–
(275)

–
–
(103)
(409)
(1)

(1)
(2)
–
(516)

2023

Due
between
2 and 5
years
£m

–
(30)
(1,057)
–

(3)
–
(1,090)

2022

Due
between
2 and 5
years
£m

–
–
(31)
(1,115)
(3)

–
–
–
(1,149)

Due after
5 years
£m

Contracted
amount
£m

Carrying
amount
£m

–
(460)
(2,074)
–

(2,448)
(684)
(3,944)
(6)

(2,448)
(562)
(3,160)
(6)

–
–
(2,534)

(7)
(52)
(7,141)

(10)
(52)
(6,238)

Due after
5 years
£m

Contracted
amount
£m

Carrying
amount
£m

–
–
(470)
(2,400)
–

–
–
–
(2,870)

(2,651)
(1)
(774)
(4,335)
(20)

(18)
(173)
(3)
(7,975)

(2,651)
(1)
(636)
(3,252)
(20)

(22)
(173)
(3)
(6,758)

The above tables do not include forecast data for liabilities which may be incurred in the future but which were not contracted
at 16 September 2023.

The principal reasons for differences between carrying values and contractual undiscounted cash flows are coupon payments on
the fixed rate debt to which the Group is already committed, future interest payments on the Group’s lease liabilities, and cash flows
on derivative financial instruments which are not aligned with their fair value.

i) Borrowing facilities
The Group has substantial borrowing facilities available to it. The undrawn committed facilities at 16 September 2023 amounted to
£1,516m (2022 – £1,567m):

Committed Revolving Credit Facility
Public Bond due in 2034
US private placement
Illovo
Other

2023

2022

Facility
£m
1,500
390
81
29
2
2,002

Drawn
£m
–
390
81
15
–
486

Undrawn
£m
1,500
–
–
14
2
1,516

Facility
£m
1,500
390
87
77
9
2,063

Drawn
£m
–
390
87
12
7
496

Undrawn
£m
1,500
–
–
65
2
1,567

Uncommitted facilities available at 16 September 2023 were:

Illovo
Azucarera
China
Moneymarket lines
Other

2023

2022

Facility
£m
115
33
35
–
180
363

Drawn
£m
50
1
–
–
25
76

Undrawn
£m
65
32
35
–
155
287

Facility
£m
188
36
39
100
162
525

Drawn
£m
99
2
–
–
40
141

Undrawn
£m
89
34
39
100
122
384

In addition to the above facilities there are also £149m (2022 – £114m) of undrawn and available credit lines for the purposes of issuing
letters of credit and guarantees in the normal course of business.

The Group has issued a public bond of £400m due in 2034. Included are deferred financing costs totalling £10m which have been
capitalised against the bond and are to be amortised over its term.

Uncommitted bank borrowing facilities are normally reaffirmed by the banks annually, although they can be withdrawn at any time.

Refer to note 9 for details of the Group’s capital commitments and to note 27 for a summary of the Group’s guarantees.

An assessment of the Group’s current liquidity position is given in the Financial Review on pages 36 to 39.

j) Capital management
The capital structure of the Group is presented in the consolidated balance sheet. For the purpose of the Group’s capital management,
capital includes issued capital and all other reserves attributable to equity shareholders, totalling £11,093m (2022 – £11,448m).
The consolidated statement of changes in equity provides details on equity and note 19 provides details of loans and overdrafts.
Short- and medium-term funding requirements are provided by a variety of loan and overdraft facilities, both committed and
uncommitted, with a range of counterparties and maturities. Longer-term debt funding is sourced from the 2034 Public Bond and
committed revolving credit facilities.

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to enable
successful future development of the business. The financial leverage policy is that, in the ordinary course of business, the Board prefers
to see the Group’s ratio of net debt including lease liabilities to Adjusted EBITDA to be well under 1.5 times at each half year and year
end reporting date. The Board monitors return on capital by division and determines the overall level of dividends payable to shareholders.

From time to time the trustee of the Employee Share Ownership Plan Trust purchases the Company’s shares in the market to satisfy
awards under the Group’s incentive plans. Once purchased, shares are not sold back into the market. The Group does not have
a defined share buy-back plan.

There were no changes to the Group’s approach to capital management during the year. Neither the Company nor any of its
subsidiaries is subject to externally-imposed capital requirements.

27. Contingencies
Litigation and other proceedings against the Group are not considered material in the context of these financial statements.

Where Group companies enter into financial guarantee contracts to guarantee the indebtedness of other Group companies, the Group
considers these to be insurance arrangements and has elected to account for them as such in accordance with IFRS 4. In this respect,
the guarantee contract is treated as a contingent liability until such time as it becomes probable that the relevant Group company
issuing the guarantee will be required to make a payment under the guarantee.

As at 16 September 2023, Group companies have provided guarantees in the ordinary course of business amounting to £1,724m
(2022 – £1,754m).

In 2021, a Thai court ruled in favour of the Group’s Ovaltine business in Thailand in a legal action it brought against one of its suppliers
in respect of a contractual dispute. The court concluded that between 2009 and 2019 the supplier had overcharged Ovaltine Thailand
and should pay compensation of 2.2 billion Thai baht (£50m; 2022 – £52m). The relevant contractual relationship between the Group
and its supplier terminated at the end of 2019. The Group has not yet recorded an asset in respect of this matter as the defendant
is appealing the judgment. Since the balance sheet date, a proclamation from the appeal court in Thailand has been made regarding
the appeal by the defendant that reverses the previous judgement that was given in 2021. We are currently reviewing next steps
with legal counsel.

176

Associated British Foods plc Annual Report 2023

177

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

28. Related parties
The Group has a controlling shareholder relationship with its parent company, Wittington Investments Limited, with the trustees of
the Garfield Weston Foundation and with certain other individuals who hold shares in the Company. Further details of the controlling
shareholder relationship are included in note 29. The Group has a related party relationship with its associates and joint ventures
(see note 29) and with its directors. In the course of normal operations, related party transactions entered into by the Group have been
contracted on an arm’s length basis.

Material transactions and year end balances with related parties were as follows:

Charges to Wittington Investments Limited in respect of services provided by the Company
and its subsidiary undertakings
Dividends paid by Associated British Foods plc and received in a beneficial capacity by:

(i) trustees of the Garfield Weston Foundation and their close family
(ii) directors of Wittington Investments Limited who are not trustees of the Foundation and
their close family
(iii) directors of the Company who are not trustees of the Foundation and are not directors
of Wittington Investments Limited

Sales to fellow subsidiary undertakings on normal trading terms
Sales to companies with common key management personnel on normal trading terms
Amounts due from companies with common key management personnel
Sales to joint ventures on normal trading terms
Sales to associates on normal trading terms
Purchases from joint ventures on normal trading terms
Purchases from associates on normal trading terms
Amounts due from joint ventures
Amounts due from associates
Amounts due to joint ventures
Amounts due to associates

Sub
note

2
3
4
4

2023
£000

985

2022
£000

930

11,219

12,361

2,159

2,322

89
18
9,912
1,028
40,645
88,753
482,267
97,844
36,986
8,745
17,609
7,161

128
48
16,891
2,898
54,111
73,360
436,467
13,879
37,865
9,151
30,214
594

1. The Garfield Weston Foundation (‘the Foundation’) is an English charitable trust, established in 1958 by the late W. Garfield Weston. The Foundation has no
direct interest in the Company, but as at 16 September 2023 was the beneficial owner of 683,073 shares (2022 – 683,073 shares) in Wittington Investments
Limited representing 79.2% (2022 – 79.2%) of that company’s issued share capital and is, therefore, the Company’s ultimate controlling party. At 16 September
2023, the trustees of the Foundation comprised nine grandchildren of the late W. Garfield Weston of whom five are children of the late Garry H. Weston.

2. Details of the directors are given on pages 80 and 81. Their interests, including family interests, in the Company and its subsidiary undertakings are

given on page 112 and 114. Key management personnel are considered to be the directors, and their remuneration is disclosed within the Remuneration Report
on pages 100 to 115.

3. The fellow subsidiary undertaking is Fortnum and Mason plc.
4. The company with common key management personnel is the George Weston Limited group, in Canada.

Amounts due from joint ventures include £32m (2022 – £29m) of finance lease receivables (see note 14). The remainder of the balance
is trading balances. All but £4m (2022 – £4m) of the finance lease receivables are non-current.

29. Group entities
Control of the Group
The largest group in which the results of the Company are consolidated is that headed by Wittington Investments Limited
(‘Wittington’), the accounts of which are available at Companies House, Crown Way, Cardiff CF14 3UZ. It is the ultimate holding
company, is incorporated in Great Britain and is registered in England.

At 16 September 2023 Wittington, together with its subsidiary, Howard Investments Limited, held 431,515,108 ordinary shares (2022
– 431,515,108) representing in aggregate 56.2% (2022 – 54.5%) of the total issued ordinary share capital of Associated British Foods plc.

Wittington, and through their control of Wittington, the trustees of the Garfield Weston Foundation (‘the Foundation’), are controlling
shareholders of the Company. Certain other individuals, including certain members of the Weston family who hold shares in the
Company (and including two of the Company’s directors, George Weston and Emma Adamo) are, under the Listing Rules, treated
as acting in concert with Wittington and the trustees of the Foundation and are therefore also treated as controlling shareholders
of the Company. Wittington, the trustees of the Foundation and these individuals together comprise the controlling shareholders
of the Company and, at 16 September 2023, have a combined interest in approximately 59.8% (2022 – 58.4%) of the Company’s
voting rights. Information on the relationship agreement between the Company and its controlling shareholders is set out on pages
116 and 117 of the Directors’ Report.

Subsidiary undertakings
A list of the Group’s subsidiaries as at 16 September 2023 is given below. The entire share capital of subsidiaries is held within the
Group except where ownership percentages are shown. These percentages give the Group’s ultimate interest and therefore allow
for situations where subsidiaries are owned by partly owned intermediate subsidiaries. Where subsidiaries have different classes of
shares, this is largely for historical reasons and the effective percentage holdings given represent both the Group’s voting rights and
equity holding. Shares in ABF Investments plc and ABF Investments (No. 2) Limited are held directly by Associated British Foods plc.
All other holdings in subsidiaries are owned by members of the Associated British Foods plc group. All subsidiaries are consolidated
in the Group’s financial statements.

Subsidiary undertakings

United Kingdom
England & Wales
Weston Centre, 10 Grosvenor Street, London,
W1K 4QY, United Kingdom
A.B. Exploration Limited
A.B.F. Holdings Limited
A.B.F. Nominees Limited
A.B.F. Properties Limited
AB Agri Limited
AB Foods Australia Limited
AB Ingredients Limited
AB Mauri (UK) Limited
AB Mauri China Limited
AB Mauri Europe Limited
AB Sugar China Holdings Limited
AB Sugar China Limited
AB Sugar China North Limited
AB Sugar Limited
AB Technology Limited
AB World Foods (Holdings) Limited
AB World Foods Limited
ABF (No.1) Limited
ABF (No.2) Limited
ABF (No.3) Limited
ABF BRL Finance Ltd
ABF Energy Limited
ABF Europe Finance Limited
ABF European Holdings Limited
ABF Finance Limited
ABF Food Tech Investments Limited
ABF Funding
ABF Grain Products Limited
ABF Green Park Limited
ABF Grocery Limited
ABF HK Finance Limited
ABF Ingredients Limited

% effective holding
if not 100%

Subsidiary undertakings

% effective holding
if not 100%

ABF Investments plc
ABF Investments (No.2) Limited
ABF Japan Limited
ABF MXN Finance Limited
ABF Overseas Limited
ABF PM Limited
ABF UK Finance Limited
ABF US Holdings Limited
ABF ZMW Finance Limited
ABN (Overseas) Limited
ABNA Feed Company Limited
ABNA Limited
Acetum (UK) Limited (previously Allied Technical
Centre Limited)
Agrilines Limited
Allied Bakeries Limited
Allied Grain (Scotland) Limited
Allied Grain (South) Limited
Allied Grain (Southern) Limited
Allied Grain Limited
Allied Mills (No.1) Limited
Allied Mills Limited
Allinson Limited
Associated British Foods Pension Trustees Limited
Atrium 100 Properties Limited
Atrium 100 Stores Holdings Limited
Atrium 100 Stores Limited
B.E. International Foods Limited
Banbury Agriculture Limited
British Sugar (Overseas) Limited
British Sugar plc
BSO (China) Limited
Cereal Industries Limited
Cereform Limited
Dairy Consulting Limited
Davjon Food Limited

178 Associated British Foods plc Annual Report 2023

Associated British Foods plc Annual Report 2023

179

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

29. Group entities continued

Subsidiary undertakings

Dorset Cereals Limited
Eastbow Securities Limited
Elsenham Quality Foods Limited
Fishers Feeds Limited
Fishers Seeds & Grain Limited
Food Investments Limited
G. Costa (Holdings) Limited
G. Costa and Company Limited
Germain’s (U.K.) Limited
Greencoat Limited
Greencoat Farm Limited
H 5 Limited
Illovo Sugar Africa Holdings Limited
John K. King & Sons Limited
Kingsgate Food Ingredients Limited
KO2 Limited
LeafTC Limited
Mauri Products Limited
Mountsfield Park Finance Limited
Natural Vetcare Limited
Nutrition Trading (International) Limited
Nutrition Trading Limited
Patak (Spices) Limited
Patak Food Limited
Patak’s Breads Limited
Patak’s Foods 2008 Limited
Premier Nutrition Products Limited
Pride Oils Public Limited Company
Primark (U.K.) Limited
Primark Austria Limited
Primark Mode Limited
Primark Pension Administration Services Limited
(dissolved 24 October 2023)
Primark Stores Limited
Primary Diets Limited
Primary Nutrition Limited
Pro-Active Nutrition Limited
R. Twining and Company Limited
Reflex Nutrition Limited
Roses Nutrition Ltd
Seedcote Systems Limited
Serpentine Securities Limited (dissolved
26 September 2023)
Shep-Fair Products Limited
Spectrum Aviation Limited
Speedibake Limited
Sunblest Bakeries Limited
The Bakery School Limited (dissolved
3 October 2023)
The Billington Food Group Limited
The Home Grown Sugar Company Limited
The Jordans & Ryvita Company Limited
The Natural Sweetness Company Limited
The Roadmap Company Limited
The Silver Spoon Company Limited
Tip Top Bakeries Limited
Trident Feeds Limited

% effective holding
if not 100%

Subsidiary undertakings

% effective holding
if not 100%

Twining Crosfield & Co Limited
Vivergo Fuels Limited
W. Jordan & Son (Silo) Limited
W. Jordan (Cereals) Limited
Wereham Gravel Company Limited (The)
Westmill Foods Limited
Weston Biscuit Company Limited (The)
Weston Foods Limited
Weston Research Laboratories Limited
Worldwing Investments Limited
Vernon House, 40 New North Road, Huddersfield,
West Yorkshire HD1 5LS, United Kingdom
Proper Nutty Limited
Fox Talbot House, Unit 4 Greenways Business Park,
Bellinger Close, Chippenham, Wiltshire, SN15 1BN
United Kingdom
National Milk Records Limited
National Livestock Records Limited
National Milk Records Trustee Company Limited
Nordic Star Ltd
Northern Ireland
1 College Place North, Belfast, BT1 6BG,
United Kingdom
James Neill, Limited
Unit 4, 211 Castle Road, Randalstown, Co. Antrim,
BT41 2EB, United Kingdom
Jordan Bros. (N.I.) Limited
Nutrition Services (International) Limited
Vistavet Limited
Scotland
32 Kelvin Avenue, Hillington Park, Glasgow,
G52 4LT, United Kingdom
National Milk Laboratories Limited
180 Glentanar Road, Glasgow, G22 7UP,
United Kingdom
ABN (Scotland) Limited
Miller Samuel LLP, RWF House,
5 Renfield Street, Glasgow, G2 5EZ,
United Kingdom
Korway Foods Limited
Korway Holdings Limited
Patak’s Chilled Foods Limited
Patak’s Frozen Foods Limited
Argentina
Mariscal Antonio José de Sucre 632 – 2nd Floor,
Buenos Aires 1428, Argentina
AB Mauri Hispanoamerica S.A.
Surgras S.A. (in liquidation)
Compañía Argentina De Levaduras S.A.I.C.
Australia
Building A, Level 2, 11 Talavera Road,
North Ryde, NSW 2113, Australia
AB Mauri Overseas Holdings Limited
AB Mauri Pakistan Pty Limited
AB Mauri ROW Holdings Pty Limited
AB Mauri South America Pty Limited
AB Mauri South West Asia Pty Limited
AB Mauri Technology & Development Pty Limited
AB Mauri Technology Pty Limited
AB World Foods Pty Ltd
Anzchem Pty Limited
AusPac Ingredients Pty Ltd
CCD Animal Health Pty Ltd
Dagan Trading Pty. Ltd

Subsidiary undertakings

Food Investments Pty. Limited
George Weston Foods (Victoria) Pty Ltd
George Weston Foods Limited
Indonesian Yeast Company Pty Limited
Mauri Fermentation Brazil Pty Limited
Mauri Fermentation Chile Pty Limited
Mauri Fermentation China Pty Limited
Mauri Fermentation India Pty Limited
Mauri Fermentation Indonesia Pty Limited
Mauri Fermentation Malaysia Pty Limited
Mauri Fermentation Philippines Pty Limited
Mauri Fermentation Vietnam Pty Limited
Mauri Yeast Australia Pty Limited
N&C Enterprises Pty Ltd
Serrol Ingredients Pty Limited
The Jordans and Ryvita Company Australia Pty Ltd
Yumi’s Quality Foods Pty Ltd
35-37 South Corporate Avenue, Rowville,
VIC 3178, Australia
AB Food & Beverages Australia Pty. Limited
170 South Gippsland Highway, Dandenong,
VIC 3175, Australia
ABF Wynyard Park Limited Partnership
Austria
Wollzeile 11/2. OG, 1010 Vienna, Austria
Primark Austria Ltd & Co KG
Krottenbachstrasse, 82-88/Stg 1/Top 5, 1190 Vienna,
Austria
Nutrilabs GmbH
Bangladesh
Level 13 Shanta Western Tower,
Bir Uttam Mir Shawkat Road, 186 Tejgaon I/A, Dhaka
1208, Bangladesh
Twinings Ovaltine Bangladesh Limited
Belgium
Industriepark 2d, 9820 Merelbeke, Belgium
AB Mauri Belgium NV
Chaussée de la Hulpe 177/20, 1170 Bruxelles, Belgium
Primark SA
Brazil
Avenida Tietê, L-233 Barranca do Rio Tietê,
City of Pederneiras, State of Sao Paulo,
CEP 17.280-000, Brazil
AB Brasil Indústria e Comércio de Alimentos Ltda
Alameda Madeira 328, 20th Floor, Room 2005,
Alphaville – Barueri, Sao Paulo 06454-010, Brazil
AB Enzimas Brasil Comercial Ltda
Avenida Dra. Ruth Cardoso, n.º 7.221, 11º Floor, Room
1.101 (parte), Condomínio Edifício Birmann 21,
Pinheiros, CEP 05425-902, City of São Paulo, State of
São Paulo, Brazil
AB Vista Brasil Comércio De Alimentação
Animal Ltda
Canada
Blake, Cassels & Graydon LLP, 199 Bay Street,

Suite 4000, Toronto, Ontario M5L 1A9, Canada
AB Mauri (Canada) Limited
Chile
Miraflores Street No.222, 28 Floor, Santiago, Chile
Calsa Chile Inversiones Limitada

% effective holding
if not 100%

Subsidiary undertakings

% effective holding
if not 100%

China
No.1 Tongcheng Street, A Cheng District, Harbin,
Heilongjiang Province, China
AB (Harbin) Food Ingredients Co., Ltd. (in liquidation)
North Huang He Road, Rudong
New Economic Development Zone,
Nantong City, Jiangsu Province, China
AB Agri Animal Nutrition (Nantong) Co., Ltd.
AB Agri Animal Nutrition (Rudong) Co., Ltd.
No 28. South Shunjin Road, Yintai District, Tongchuan,
Shaanxi Province, China
AB Agri Animal Nutrition (Shaanxi) Co., Ltd.
Room 7-1068, No. 68 Shijiu Hubei Road, Chunxi Street,
Gaochun District, Nanjing City, Jiangsu Province, China
AB Agri Pumeixin Tech (Jiangsu) Co., Ltd.
Chuangxin Road, Tonggu Industry Zone,
Sandu Town, Tonggu County,
Jiangxi Province, China
AB Agri Pumeixin Tech (Jiangxi) Co., Ltd.
Room 2802, Raffles City Changning,
No.1189 Changning Road, Changning District,
Shanghai, 200051, China
AB Enzymes Trading (Shanghai) Co., Ltd.
Room 2803, Raffles City Changning,
No.1189 Changning Road, Changning District,
Shanghai, 200051, China
ABNA Management (Shanghai) Co., Ltd.
ABNA Trading (Shanghai) Co., Ltd.
Room 2906 Raffles City Changning,
No.1189 Changning Road, Changning District,
Shanghai, 200051, China
Associated British Foods Holdings (China) Co., Ltd.
Unit 006, Room 401, Floor 4, Building 1, No.15
Guanghua Road, Chaoyang District, Beijing, China
AB Mauri (Beijing) Food Sales and
Marketing Company Limited
Building 1, 35 Chi Feng Road, Yangpu District,
Shanghai 200092, China
AB Mauri Foods (Shanghai) Company Limited
868 Yongpu Road, Pujiang Town,
Minhang District, Shanghai 201112, China
ABNA (Shanghai) Feed Co., Ltd.
14 Juhai Road, Jinghai Development Zone,
Tianjin, China
ABNA (Tianjin) Feed Co., Ltd.
Shu Shan Modern Industrial Zone of Shou County,
Huainan City, Anhui Province, China
ABNA Feed (Anhui) Co., Ltd.
145 Xincheng Road, Tengao Economic Development
Zone, Anshan, Liaoning 114225, China
ABNA Feed (Liaoning) Co., Ltd.
17 Xiangyang Street, Tu Township, Chayou Qianqi,
Inner Mongolia, China
Botian Sugar Industry (Chayou Qianqi) Co., Ltd.
No.1 Botian Road, Economic Development Zone,
Zhangbei County, Zhangjiakou City,
Hebei Province, China
Botian Sugar Industry (Zhangbei) Co., Ltd.
Room 1110, No.368, Changjiang Road, Nangang
Concentrated District, Economic Development Zone,
Harbin, China
Botian Sugar Industry Co., Ltd.
1 Industrial North Street, Zhangjiakou, Zhangbei County,
Hebei Province, China
Hebei Mauri Food Co., Ltd.

90%

180

Associated British Foods plc Annual Report 2023

181

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

29. Group entities continued

Subsidiary undertakings

8 Lancun Road, Economic and Technical Development
Zone, Minhang, Shanghai 200245, China
Shanghai AB Food & Beverages Co., Ltd.
No.68-1, Shuanglong Road, Fushan District,
Yantai City, Shandong Province, China
Yantai Mauri Yeast Co., Ltd.
Colombia
Cra 35# 34A-64, Palmira, Valle, Colombia
Fleischmann Foods S.A.
Czech Republic

Nádražní 523, 349 01 Stříbro, Czech Republic
Bodit Tachov s.r.o.
Palladium, Na Porici 1079/3a, Prague 1, 110 00, Czech
Republic
Primark Prodejny s.r.o.
Denmark
Skjernvej 42, Troestup, 6920 Videbæk, Denmark
AB Neo A/S
Middelfartvej 77, Baaring, 5466 Asperup, Denmark
Cowconnect ApS
Ecuador
Medardo Ángel Silva 13 y Panamá, Manzana 12,
El Recreo, Eloy Alfaro, Durán, Guayas, Ecuador
ABCALSA S.A.
Eswatini
Ubombo Sugar Limited, Old Main Road,
Big Bend, Eswatini
Bar Circle Ranch Limited
Illovo Swaziland Limited
Moyeni Ranch Limited
Ubombo Sugar Limited
Finland
Tykkimäentie 15b (PO Box 26), Rajamäki,
FI-05200, Finland
AB Enzymes Oy
Tykkimäentie 15b (PO Box 57), Rajamäki,
FI-05201, Finland
Enzymes Leasing Finland Oy
Koskelontie 19 B, Espoo, FI-02920, Finland
Alimetrics Research Oy
AB Vista Finland Oy
France
40/42, avenue Georges Pompidou, 69003,
à Lyon, France
AB Mauri France
25 Rue Anatole France, 92300 Levallois-Perret, France
Twinings & Co SAS
11 Rue de Milan, 75009, Paris, France
ABFI France SAS
Centre Commercial Régional Créteil Soleil, Niveau 3,
101 Avenue du Général de Gaulle, 94000, Créteil,,
France
Primark France SAS
845 Chemin du Vallon du maire, 13240,
Septemes les Vallons, France
SPI Pharma SAS
ZAE Via Europa, 3 rue d’Athènes, 34350 Vendres,
France
Fytexia Group
Fytexia

% effective holding
if not 100%

Subsidiary undertakings

% effective holding
if not 100%

92%

60%
60%
60%
60%

Germany
Feldbergstrasse 78, 64293, Darmstadt, Germany

AB Enzymes GmbH

Schauenburgerstrasse 116, 24118, Kiel, Germany

ICFN AG
Wandsbeker Zollstrasse 59, 22041,
Hamburg, Germany
ABF Deutschland Holdings GmbH
Ohly GmbH
Ohly Grundbesitz GmbH
Rheinische Presshefe- und Spritwerke GmbH
Kennedyplatz 2, 45127, Essen, Germany
Primark Mode Ltd. & Co. KG
Primark Property GmbH
Hausinger Strasse 4-8, 40764, Langenfeld, Germany
Vital Solutions GmbH
Westendstrasse 28, 60325, Frankfurt am Main, Germany
Wander GmbH
Marie-Kahle-Allee 2, D-53113, Bonn, Germany
Westmill Foods Europe GmbH
Greece
28, Dimitriou Soutsou Str, Athens, GR 115 21, Greece
PSH Teal Single Member S.A.
Guernsey
Dorey Court, Admiral Park, St. Peter Port, GY1 4AT,
Guernsey
Talisman Guernsey Limited
Hong Kong
5/F, Manulife Place, 348 Kwun Tong Road, Kowloon,
Hong Kong
Associated British Foods Asia Pacific
Holdings Limited
Hungary
Károlyi utca 12. 3. em., Budapest, 1053, Hungary
Primark Üzletek Korlátolt Felelösségu" Társaság
(Primark Üzletek Kft.)
India
#218 & #219, Bommasandra – Jigani Link Road, Anekal
Taluk, Bangalore, 560105, India
AB Mauri India Private Limited
First Floor, Regent Sunny Side, 80 Ft Road, 8th Block,
Koramangala Bengaluru, Karnataka, 560030, India
SPI Specialties Pharma Private Limited
G3/41, New Budge Budge Trunk Road, Old Dakghar,
Kolkata, West Bengal, 700141, India
Twinings Private Limited
Indonesia
Wisma GKBI Lt.39, Suite 3901, No.28 Jl. Jend,
Sudirman, Jakarta, Indonesia
PT AB Food & Beverages Indonesia (in liquidation)
Ireland
47 Mary Street, Dublin 1, Ireland
Abdale Finance Limited
Primark Holdings Unlimited Company
Primark Pension Trustees Limited
1 Stokes Place, St. Stephen’s Green,
Dublin 2, Ireland
Allied Mills Ireland Limited
Unit 5, Hebron House, Macdonagh Junction, Kilkenny,
R95 T91Y, Ireland

% effective holding
if not 100%

Subsidiary undertakings

% effective holding
if not 100%

Netherlands
Mijlweg 77, 3316 BE, Dordrecht, Netherlands
AB Mauri Netherlands B.V.
AB Mauri Netherlands European Holdings B.V.
Foods International Holding B.V.
Van Oldenbarneveltplaats 36, 3012 AH, Rotterdam,
Netherlands
Primark Fashion B.V.
Primark Netherlands B.V.
Primark Stil B.V.
Weena 505, 3013AL Rotterdam, Netherlands
AB Vista Europe B.V.
7122 JS Aalten, Dinxperlosestraatweg 122, Netherlands
Germains Seed Technology B.V.
Oude Kerkstraat 55 4878 AK, Etten-Leur, Netherlands
Mauri Technology B.V.
Laarderhoogtweg 25, 1101 EB Amsterdam,
Netherlands
Westmill Foods Europe B.V.
New Zealand
Building 3, Level 2, Central Business Park, 666 Great
South Road, Ellerslie, Auckland 1051, New Zealand
Allied Foods (NZ) Ltd
AusPac Ingredients NZ Limited
George Weston Foods (NZ) Limited
57 Forge Road, Silverdale 0932 New Zealand
Dad’s Pies Limited
Nigeria
23 Oba Akinjobi Street, GRA, Ikeja, Lagos, Nigeria
Twinings Ovaltine Nigeria Limited
Pakistan
21KM Ferozepur Road, 2 KM Hadyara Drain, Lahore,
Pakistan
AB Mauri Pakistan (Private) Limited
Peru
Av. Republica de Argentina No.1227, Z.I. La Chalaca,
Callao, Peru
Calsa Perú S.A.C.
Philippines
86 E Rodriguez Jr. Ave., Ugong Norte, QC,1604, Pasig
City, Metro Manila, Philippines
AB Food & Beverages Philippines, Inc.
1201-1202 Prime Land Building, Market Street,
Madrigal Business Park, Ayala Alabang,
Muntinlupa,1770, Philippines
AB Mauri Philippines, Inc.
Poland
Przemysłowa 2, 67-100 Nowa Sól, Lubuskie, Poland
AB Foods Polska Spólka z ograniczona
odpowiedzialnoscia (AB Foods Polska Sp. z.o.o.)
Towarowa 28,00-839 Warsaw, Poland
Primark Sklepy spolka z ograniczona
odpowiedzialnoscia (Primark Sklepy Sp. z.o.o)

76%
76%

52%

70%

60%

99%

Subsidiary undertakings

Intellync Technology Limited
Arthur Ryan House, 22-24 Parnell Street,
Dublin 1, Ireland
Primark Limited
Primark Austria Limited
Primark Mode Limited
13 Classon House, Dundrum Business Park, Dundrum,
Dublin 14, D14 W9Y3, Ireland
Nutritional Advanced Formulas (Ireland) Limited
Italy
Viale Monte Nero, 84, 20135, Milan, Italy
AB Agri Italy S.r.l
Via Milano 42, 27045, Casteggio, (Pavia), Italy
AB Mauri Italy S.p.A.
ABF Italy Holdings S.r.l.
Largo Francesco Richini 2/A, 20122, Milan, Italy
Primark Italy S.r.l.
Via Rizzotto 46, 41126, Modena (MO), Italy
Acetaia Fini Modena S.r.l.
Via Sandro Pertini 440, 401314, Cavezzo (MO), Italy
Acetum S.p.A. Società Benefit
Via Garibaldi 84, Magenta, 20013, Milan, Italy
ALP Immobiliare S.r.l.
Via Gran Sasso, 33, Corbetta, 20011, Milan, Italy
B Natural S.r.l.
Malawi
Illovo House, Churchill Road, Limbe, Malawi
Dwangwa Sugar Corporation Limited
Illovo Sugar (Malawi) plc
Malawi Sugar Limited
Malaysia
Unit 30-01, Level 30, Tower A, Vertical Business Suite,
Avenue 3, Bangsar South, No.8, 59200 Jalan Kerinchi,
Kuala Lumpur, Malaysia
AB Mauri Malaysia Sdn. Bhd.
Malta
171 Old Bakery Street, Valletta, VLT 1455, Malta
Relax Limited
Mauritius
10th Floor, Standard Chartered Tower,
19 Cybercity, Ebene, Mauritius
Illovo Group Financing Services
Illovo Group Holdings Limited
Illovo Group Marketing Services Limited
Kilombero Holdings Limited
Sucoma Holdings Limited
Mexico
Paseo de la Reforma 1015, Piso 6, Suite/Oficina
06W123, Colonia Lomas de Santa Fe, Delegación
Cuajimalpa de Morelos, Mexico City, 05348, Mexico
AB CALSA S.A. de C.V.
Avenida Javier Barros Sierra 495, piso 7 oficina 07-102,
Col. Santa Fe, Alvaro Obregón, Ciudad de México,
01219, México
ACH Foods Mexico, S. de R.L. de C.V.
Mozambique
KM75 EN1, Maçiana, Distrito de Manhiça,
Provincia de Maputo, Mozambique
Maragra Açucar, S.A.

182

Associated British Foods plc Annual Report 2023

183

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

29. Group entities continued

Subsidiary undertakings

ul. Rabowicka 29/31, 62-020, Swarzędz – Jasin, Poland
R. Twining and Company Spółka z ograniczona
odpowiedzialnoscia (R. Twining and Company
Sp. z.o.o.)

ul. Główna 3A, Bruszczewo, 64-030, Śmigiel, Poland
AB Neo Polska spolka z ograniczona
odpowiedzialnoscia (AB Neo Polska Sp. z.o.o)
(previously AB Agri Polska Sp. z.o.o.)
Portugal
Avenida Salvador Allende, n.º 99, Oeiras, Julião da
Barra, Paço de Arcos e Caxias, 2770-157,
Paco de Arcos, Portugal
AB Mauri Portugal, S.A.
Rua Castilho 50, 1250-071, Lisbon, Portugal
Lojas Primark Portugal – Exploracao, Gestao e
Administracao de Espacos Comerciais S.A.
Romania
District 1, 165 Calea Floreasca, One Tower, 12th Floor,
Bucharest, Romania
Primark Magazine S.R.L. (previously P.S.R. Indigo)
Rwanda
Nyarugenge District, Nyarugenge Sector,
Kigali City, Rwanda
Illovo Sugar (Kigali) Limited
Singapore
80 Robinson Road, #02-00, 068898 Singapore
AB Mauri Investments (Asia) Pte Ltd
112 Robinson Road #05-01, 068902 Singapore
AB Vista Asia Pte. Limited
Slovakia
Staromestska 3, 811 03 Bratislava – Stare Mesto,
Slovakia
Primark Slovakia s.r.o.
Slovenia
Bleiweisova cesta 30, Ljubljana, 1000, Slovenia
Primark Trgovine, trgovsko podjetje, d.o.o.
South Africa
1 Nokwe Avenue, Ridgeside, Umhlanga Rocks,
Kwazulu Natal, 4320, South Africa
CGS Investments (Pty) Limited
East African Supply (Pty) Limited
Glendale Sugar (Pty) Ltd
Illovo Distributors (Pty) Limited
Illovo Sugar (South Africa) Proprietary Limited
Illovo Sugar Africa Proprietary Limited
Illprop (Pty) Limited
Lacsa (Pty) Limited
Noodsberg Sugar Company (Pty) Ltd
Reynolds Brothers (Pty) Ltd
S.A. Sugar Distributors (Pty) Limited
Spain
Calle Cardenal Marcelo Spínola, 42, 28016,
Madrid, Spain
AB Azucarera Iberia, S.L. Sociedad Unipersonal
AB Vista Iberia, S.L.
Calle Levadura, 5 14710, Villarrubia, Córdoba, Spain
AB Mauri Food, S.A
AB Mauri Spain, S.L.U.
ABF Iberia Holding S.L.

% effective holding
if not 100%

Subsidiary undertakings

96%

70%

C/Escultor Coomonte nº. 2, Entreplanta, Benavente,
Zamora, Spain
Agroteo S.A.
Calle Comunidad de Murcia, Parcela LIE-1-03,
Plataforma Logistica de Fraga, 22520, Huesca, Spain
Alternative Swine Nutrition, S.L.
Calle Escoles Pies 49, Planta Baja, 08017 Barcelona,
Spain
DR Healthcare España, S.L.U.
Avienda Virgen de Montserrat, 44 Castelloli, 08719,
Barcelona, Spain
Germains Seed Technology, S.A.
Plaza Pablo Ruiz Picasso S/N, Torre Picasso,
Planta 37, Madrid, Spain
Illovo Sugar Espana, S.L.
Gran Via, 32 5o 28013, Madrid, Spain
Primark Tiendas, S.L.U.
8, 2 Calle Via Servicio I, 2 CP, 19190 Torija,
Guadalajara, Spain
Primark Logistica, S.L. Sociedad Unipersonal
Sri Lanka
124 Templers Road, Mount Lavinia, Sri Lanka
AB Mauri Lanka (Private) Limited
Sweden
Retzius väg 8, 171 65, Solna, Sweden
Larodan AB
Switzerland
Fabrikstrasse 10, CH-3176, Neuenegg, Switzerland
Wander AG
Taiwan
3F-1, No. 161, Sec 4, Nanking E Rd, Taipei City 104,
Taiwan (Province of China)
AB Food and Beverages Taiwan, Inc.
Tanzania
Msolwa Mill Office, Kidatau, Kilombero District,
Tanzania
Illovo Distillers (Tanzania) Limited
Illovo Tanzania Limited
Kilombero Sugar Company Limited
Thailand
11th Floor, 2535 Sukhumvit Road, Kwaeng Bangchak,
Khet Prakhanong, Bangkok, 10260, Thailand
AB Food & Beverages (Thailand) Ltd.
ABF Holdings (Thailand) Ltd.
1 Empire Tower, 24th Floor, Unit 2412-2413,
South Sathorn Road, Yannawa, Sathorn, Bangkok,
10120, Thailand
AB World Foods Asia Ltd
229/110 Moo 1, Teparak Road, T. Bangsaothong,
A. Bangsaothong, Samutprakarn, 10540, Thailand
Jasol Asia Pacific Limited (in liquidation)
Turkey
Aksakal Mahallesi, Kavakpinari, Kume Evleri
No.5, Bandirma- Balikesir, 10245, Turkey
Mauri Maya Sanayi A.S.
United Arab Emirates
Office 604ª, Jafza LOB 15, Jebel Ali Freezone, Dubai,
PO BOX 17620, United Arab Emirates
AB Mauri Middle East FZE

% effective holding
if not 100%

53%

75%

Subsidiary undertakings

United States
CT Corporation System, 818 West Seventh Street,
Suite 930, Los Angeles CA 90017, United States
AB Mauri Food Inc.
The Corporation Trust Company, Corporation Trust
Center, 1209 Orange Street, Wilmington DE 19801,
United States
AB Agri US, Inc.
AB Enzymes, Inc.
AB Vista, Inc.
AB World Foods US, Inc.
ABF North America Corp.
ABF North America Holdings, Inc.
Abitec Corporation
ACH Capital Ventures, Inc.
ACH Food Companies, Inc.
ACH Jupiter LLC
BakeGood, LLC
Germains Seed Technology, Inc.
PGP International, Inc.
Primark US Corp.
Prosecco Source, LLC
SPI Pharma, Inc.
SPI Polyols, LLC
Twinings North America, Inc.
C T Corporation System, 155 Federal Street Suite 700,
Boston, MA 02110, United States
Primark GCM LLC
C T Corporation System, 330 N.Brand Blvd., Glendale,
California 91203, United States
PennyPacker, LLC
158 River Road, Unit B, Clifton, NJ 07014,
United States
Balsamic Express LLC

% effective holding
if not 100%

Subsidiary undertakings

% effective holding
if not 100%

158 River Road, Unit A, Clifton, NJ 07014,
United States
Modena Fine Foods, Inc.
251 Little Falls Drive, Wilmington, DE 19808, United
States
Fytexia Corp.
Uruguay
CNo.Carlos Antonio Lopez 7547,
Montevideo, Uruguay
Levadura Uruguaya S.A.
Venezuela
Oficinas Once 3 (N° 11-3) y Once 4 (N° 11-4), Torre
Mayupan, Centro Comercial San Luis, Av.Principal
Urbanización San Luis, cruce con Calle Comercio,
Caracas, Bolivarian Republic of Venezuela
Alimentos Fleischmann, C.A.,
Compañía de Alimentos Latinoamericana
de Venezuela (CALSA) S.A.
Vietnam
Unit 2, 100 Nguyen Thi Minh Khai Street,
Ward 6, District 3, Ho Chi Minh City, Vietnam
AB Agri Vietnam Company Limited
La Nga Commune, Dinh Quan District, Dong Nai
Province, Vietnam
AB Mauri Vietnam Limited
Zambia
Nakambala Estates, Plot No.118a Lubombo Road,
Off Great North Road, Zambia
Illovo Sugar (Zambia) Limited
Nanga Farms PLC
Tukunka Agricultural Limited

Zambia Sugar plc

66%

75%
75%
75%

184

Associated British Foods plc Annual Report 2023

185

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

29. Group entities continued
Joint ventures
A list of the Group’s joint ventures as at 16 September 2023 is given below. All joint ventures are included in the Group’s financial
statements using the equity method of accounting.

Joint ventures

% holding

Joint ventures

% holding

United Kingdom
England
Weston Centre, 10 Grosvenor Street, London,
W1K 4QY, United Kingdom
Frontier Agriculture Limited

Boothmans (Agriculture) Limited
Forward Agronomy Limited
G F P (Agriculture) Limited
GH Grain Limited
GH Grain (No.2) Limited
Grain Harvesters Limited
Intracrop Limited
Nomix Limited
North Wold Agronomy Limited
Phoenix Agronomy Limited
SOYL Limited
The Agronomy Partnership Limited

Berth 36, Test Road, Eastern Docks, Southampton,
Hampshire, SO14 3GG, United Kingdom
Southampton Grain Terminal Limited

Riverside, Wissington Road, Nayland, Colchester,
Essex, CO6 4LT, United Kingdom
Anglia Grain Holdings Limited
Anglia Grain Services Limited
Northants Apc, Rushton Road, Kettering, NN14 1FL
England, United Kingdom
Navara Oat Milling Limited
Unit 8, Burnside Business Park, Burnside Road, Market
Brayton, TF9 3UX, United Kingdom
B.C.W (Agriculture) Limited

Witham St Hughs, Lincoln, LN6 9TN, United Kingdom
Nomix Enviro Limited
Eagle Labs Incubator, 28 Chesterton Road, Cambridge,
CB4 3AZ, United Kingdom
Yagro Ltd
Scotland
Kingseat, Newmacher, Aberdeenshire, AB21 0UE,
United Kingdom

Euroagkem Limited
Lothian Crop Specialists Limited

Australia
Building A, Level 2, 11 Talavera Road, North Ryde
NSW 2113, Australia
Fortnum & Masons Pty Limited
Chile
Ave. Balmaceda 3500, Valdivia, Chile
Levaduras Collico S.A.
China
1828 Tiejueshan Road, Huangdao District, Qingdao,
Shandong Province, China
Qingdao Xinghua Cereal Oil and Foodstuff Co., Ltd
1 East Ren Min Road, Regiment 66, Cocodala, Xinjiang,
China
AB Mauri Yihai Kerry (Cocodala) Food Co., Ltd.
(previously Xinjiang Mauri Food., Ltd)
Room 607, 6th Floor, 1379, Bocheng Road, Pudong New
District, Shanghai, China
AB Mauri Yihai Kerry Investment Company Limited

Room 608, 6th Floor, 1379, Bocheng Road, Pudong New
District, Shanghai, China
AB Mauri Yihai Kerry Food Marketing (Shanghai)
Co., Ltd
Ta Ha Comprehensive Industrial Park, Fuyu County
Economic Development Area, Qiqihar, Heilongjiang
Province, China
AB Mauri Yihai Kerry (Fu Yu) Yeast Technology Co.,
Ltd
9 Tonggang Road, Shage Village, Nanpu Town,
Quangang Area, Quanzhou, Fujian Province, China
AB Mauri Yihai Kerry (Quanzhou) Yeast Technology
Co., Ltd.
Intersection of Jiaotong Avenue and Zhoushan Road,
Gang District, Zhoukou, Henan Province, China
AB Mauri Yihai Kerry (Zhoukou) Yeast Technology
Co., Ltd.
Xinsha Industrial Zone, Machong Town, Dongguan,
Guangdong Province, China
AB Mauri Yihai Kerry (Dongguan) Food Co., Ltd
Finland
Tykkimäentie 15b (PO Box 57), Rajamäki,
FI-05201, Finland
Roal Oy
France
59, Chemin du Moulin, 695701, Carron, Dardilly, France
Synchronis
Germany
Brede 4, 59368, Werne, Germany
UNIFERM GmbH & Co. KG
INA Nahrmittel GmbH

UNIFERM Verwaltungs GmbH
Brede 8, 59368, Werne, Germany
UNILOG GmbH
Ireland
Rathcore Golf & Country Club, Rathcore, Co. Meath,
A83KP98, Ireland
Independent Milk Laboratories Ltd
Japan
36F Atago Green Hills Mori Tower, 2-5-1 Atago,
Minato-ku, Tokyo 105-6236, Japan
Twinings Japan Co Ltd
Poland
ul. Wybieg, nr 5, lok 9, Miesjsc, KOD 61-315,
Poznan, Poland
Uniferm Polska Sp z.o.o
South Africa
1 Nokwe Avenue, Ridgeside, Umhlanga Rocks, Kwazulu
Natal 4320, South Africa
Glendale Distilling Company
Spain
C/Raimundo Fernández, Villaverde 28, Madrid, Spain
Compañía de Melazas, S.A. (in liquidation)
United States
The Corporation Trust Company, Corporation Trust
Center, 1209 Orange Street, Wilmington DE 19801,
United States
Stratas Foods LLC
Stratas Receivables I LLC

50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%

50%

50%
50%

38%

50%

50%
50%

33%

50%

25%

50%

50%
50%
50%

50%

50%
50%

Associates
A list of the Group’s associates as at 16 September 2023 is given below. All associates are included in the Group’s financial
statements using the equity method of accounting.

Associates

% holding

United Kingdom
Pacioli House, Duncan Close, Moulton Park Industrial
Estate, Northampton, NN3 6WL, United Kingdom
Bakers Basco Limited
Paternoster House, 65 St. Paul’s Churchyard,
London, EC4M 8AB, United Kingdom

C. Czarnikow Limited
Czarnikow Group Limited
C. Czarnikow Sugar Futures Limited
C. Czarnikow Sugar Limited

Sugarworld Limited
Australia
283 Flagstaff Road, Murray Bridge SA 5253, Australia
Big River Pork Pty Ltd
Murray Bridge Bacon Pty Ltd
32 Davis Road, Wetherill Park, Sydney NSW 2164,
Australia
New Food Coatings Pty Ltd
Bahrain
Suite No.1959 Diplomatic Commercial Office, Tower B,
Building No.1565, Road 1722, Diplomatic Area/Manama
317, Bahrain
Czarnikow Supply Chain Sales for Food & Beverage
Ingredients Bahrain W.L.L.
Brazil
Av Dos Vinhedos, 71, floor 11, room 1101, Uberlandia,
Minas Gerais, Brazil
2C Energia S.A.
Avenida Presidente Juscelino Kubitschek, n.º 2.041, 11º
andar- Vila Olímpia, CEP 04.543-011, São Paulo, Brazil
Czarnikow Brasil Ltda
Av Pres Juscelino Kubitschek, 2041, floor 11, São
Paulo, Brazil
Cz Energy Comercializado Ra De Etanol S.A
China
Room 17A01, 232 Zhong Shan 6th Road, Guangzhou
City, Guangdong Province, 510180, China
C. Czarnikow Sugar (Guangzhou) Company Ltd
Colombia
Cl. 16 Sur #43a-49, El Poblado, Medellín, El Poblado,
Medellín, Antioquia, Colombia
Czarnikow Colombia S.A.S.
India
Plot No N46, House No 4-9-10, Hmt Nagar, Hyderabad
TG, 500076, India
Huoban Energy 9 Private Limited
House No.1-8-373/A, Chiran Fort Lane, Begumpet,
Hyderabad, 500003, India
C. Czarnikow Sugar (India) Private Limited
Indonesia
Komplex Puri Mutiara Blok A21-22, JL. Griya Utama,
Sunter Agung, Jakarta, 14350, Indonesia
PT Indo Fermex
P.T. Jaya Fermex
PT Sama Indah
Israel
26, Harokmim st., Holon Azireli Center Building B, Israel
Sucarim (C.I.S.T.) Ltd

20%

43%
43%
43%
43%
43%

20%
20%

50%

43%

22%

43%

21%

43%

34%

43%

49%
49%
49%

43%

Associates
Italy
Via Borgogna, 2-20122, Milan, Italy
Czarnikow Italia Srl
Kenya
I & M Bank House, Second Ngong Avenue,
P.O. Box 10517, Nairobi 00100, Kenya
Czarnikow East Africa Limited
Mauritius
No 5 President John Kennedy Street,
Port Louis, Mauritius
Sukpak Limited
Mexico
Jaime Balmes #8 Loc. 3-A, Los Morales Polanco,
México City, 11510, Mexico
C. Czarnikow Sugar (Mexico), S.A. de C.V.
New Zealand
c/o KPMG, 18 Viaduct Harbour Avenue, Maritime
Square, Auckland, New Zealand
New Food Coatings (New Zealand) Limited
Philippines
Unit A, 103 Excellence Avenue, Carmelray
Industrial Park 1, Canlubang, Calamba,
Laguna, Philippines
New Food Coatings (Philippines) Inc.
5F Don Jacinto Building, Dela Rosa cor. Salcedo
Streets, Legaspi Village, 1229 Makati City, Philippines
CZ Philippines, Inc.
Singapore
3 Phillip Street, #14-01 Royal Group Building,
Singapore 048693
C. Czarnikow Sugar Pte. Limited
South Africa
1 Gledhow Mill Road, Gledhow, Kwadukuza, 4450,
South Africa
Gledhow Sugar Company (Pty) Limited
Tanzania
7th Floor Amani Place, Ohio Street, PO Box 38568,
Dar-es-Salaam, Tanzania
Czarnikow Tanzania Limited
Msolwa Mill Office, Kidatu, Tanzania
Kilombero Sugar Distributors Limited
Thailand
909 Moo 15, Teparak Road, Tambol Bangsaothong,
King Amphur Bangsaothong, Samutprakarn, Thailand
Newly Weds Foods (Thailand) Ltd
1203, 12th Floor, Metropolis Building,
725 Sukhumvit Road, North Klongton, Wattana,
Bangkok, 10110, Thailand
Czarnikow (Thailand) Limited
United States
333 SE 2nd Avenue, Suite 2860, Miami,
FL 33131, USA
C. Czarnikow Sugar Inc.
Vietnam
5th Floor, IMC Tower, 62 Tan Quang Khai, Tan Dinh
Ward, District 1, Ho Chi Minh City, Vietnam
Czarnikow (Vietnam) Limited

% holding

43%

30%

43%

50%

43%

30%

43%

20%

50%

43%

186

Associated British Foods plc Annual Report 2023

187

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

29. Group entities continued
In accordance with section 479A of the Companies Act 2006 (the ‘Act’), and subject to compliance with the requirements of
that section including the provision of a statutory guarantee from Associated British Foods plc, the following subsidiaries are exempt
from the requirements of the Act relating to the audit of individual accounts in respect of the financial year ended 16 September 2023:

Company name

A.B. Exploration Limited

AB Mauri China Limited

AB Mauri Europe Limited

AB Sugar China Holdings Limited

AB Sugar China Limited

ABF (No.1) Limited

ABF (No.2) Limited

ABF (No.3) Limited

ABF BRL Finance Ltd

ABF Finance Limited

ABF Food Tech Investments Limited

ABF Funding

ABF HK Finance Limited

ABF Japan Limited

ABF PM Limited

Company number

Company name

00487323
12109070
02883738
09468366
09469163
04668120
03369799
00155305
11001902
04659735
00172141
05380813
07761084
00492278
00486887

A.B.F. Properties Limited

ABF UK Finance Limited

ABF US Holdings Limited

ABF ZMW Finance Limited

ABN (Overseas) Limited

Atrium 100 Properties Limited

Atrium 100 Stores Holdings Limited

Atrium 100 Stores Limited

British Sugar (Overseas) Limited

BSO (China) Limited

G. Costa (Holdings) Limited

Mountsfield Park Finance Limited

Twining Crosfield & Co Limited

Worldwing Investments Limited

Company number
00683361
07267422
05659249
13485724
00145374
04502487
04660969
05007953
02400085
03799608
03679738
07882348
00144900
02778854

30. Alternative performance measures
In reporting financial information, the Board uses various APMs which it believes provide useful additional information for understanding
the financial performance and financial health of the Group. These APMs should be considered in addition to IFRS measures and are
not intended to be a substitute for them. Since IFRS does not define APMs, they may not be directly comparable to similar measures
used by other companies.

The Board also uses APMs to improve the comparability of information between reporting periods and geographical units (such as
like-for-like sales) by adjusting for non-recurring or uncontrollable factors which affect IFRS measures, to aid users in understanding
the Group’s performance.

Consequently, the Board and management use APMs for performance analysis, planning, reporting and incentive-setting.

APM

Closest equivalent
IFRS measure

Definition/purpose

Reconciliation/calculation

Like-for-like
sales

No direct
equivalent

The like-for-like sales metric enables measurement of the
performance of our retail stores on a comparable year-on-year basis.

Consistent with the
definition given

This measure represents the change in sales at constant currency in
our retail stores adjusted for new stores, closures and relocations.
Refits, extensions and downsizes are also adjusted for if a store’s
retail square footage changes by 10% or more. For each change
described above, a store’s sales are excluded from like-for-like sales
for one year.

No adjustments are made for disruption during refits, extensions or
downsizes if a store’s retail square footage changes by less than
10%, for cannibalisation by new stores, or for the timing of national or
bank holidays.

It is measured against comparable trading days in each year.

Adjusted operating profit is stated before amortisation of non-
operating intangibles, transaction costs, amortisation of fair value
adjustments made to acquired inventory, profits less losses on
disposal of non-current assets and exceptional items.

Items defined above which arise in the Group’s joint ventures and
associates are also treated as adjusting items for the purposes of
Adjusted operating profit.

A reconciliation of this
measure is provided on
the face of the
consolidated income
statement and by
operating segment in note
1 of the financial
statements

Adjusted
operating
profit

Operating
profit

Adjusted
operating
(profit) margin

No direct
equivalent

Adjusted operating (profit) margin is Adjusted operating profit as a
percentage of revenue.

See note A

Adjusted profit
before tax

Profit before
tax

Earnings and
earnings per
share

Adjusted
earnings and
Adjusted
earnings per
share

Adjusted profit before tax is stated before amortisation of non-
operating intangibles, transaction costs, amortisation of fair value
adjustments made to acquired inventory, profits less losses on
disposal of non-current assets, exceptional items and profits less
losses on sale and closure of businesses.

Items defined above which arise in the Group’s joint ventures and
associates are also treated as adjusting items for the purposes of
Adjusted profit before tax.

Adjusted earnings and Adjusted earnings per share are stated before
amortisation of non-operating intangibles, transaction costs,
amortisation of fair value adjustments made to acquired inventory,
profits less losses on disposal of non-current assets, exceptional
items and profits less losses on sale and closure of businesses,
together with the related tax effect.

Items defined above which arise in the Group’s joint ventures and
associates are also treated as adjusting items for the purposes of
Adjusted earnings and Adjusted earnings per share.

A reconciliation of this
measure is provided on
the face of the
consolidated income
statement and by
operating segment in note
1 of the financial
statements

Reconciliations of these
measures are provided in
note 7 of the financial
statements

188

Associated British Foods plc Annual Report 2023

189

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

30. Alternative performance measures continued

APM

Closest equivalent
IFRS measure

Definition/purpose

Exceptional
items

No direct
equivalent

Exceptional items are items of income and expenditure which are
material and unusual in nature and are considered of such significance
that they require separate disclosure on the face of the income
statement.

Constant
currency

Revenue and
Adjusted
operating
profit (non-
IFRS) measure

Constant currency measures are derived by translating the relevant
prior year figures at current year average exchange rates, except for
countries where CPI has escalated to extreme levels, in which case
actual exchange rates are used. There are currently three countries
where the Group has operations in this position – Argentina, Venezuela
and Turkey.

Effective tax
rate

Income tax
expense

This measure is the tax charge for the year expressed as a percentage
of profit before tax.

Adjusted
effective tax
rate

No direct
equivalent

This measure is the tax charge for the year excluding tax on adjusting
items expressed as a percentage of adjusted profit before tax.

Reconciliation/calculation

Exceptional items are
included on the face of
the consolidated income
statement with further
detail provided in note 2 of
the financial statements

See note B

Whilst the Effective tax
rate is not disclosed, a
reconciliation of the tax
charge on profit before tax
at the UK corporation tax
rate to the actual tax
charge is provided in note
5 of the financial
statements

The tax impact of
reconciling items between
profit before tax and
Adjusted profit before tax
is shown in note 7 of the
financial statements

Dividend cover No direct
equivalent

Dividend cover is the ratio of Adjusted earnings per share to dividends
per share relating to the year.

See note C

Capital
expenditure

No direct
equivalent

Gross
investment

No direct
equivalent

Capital expenditure is a measure of investment in non-current assets
in existing businesses. It comprises cash outflows from the purchase
of property, plant and equipment and intangibles.

See note D

Gross investment is a measure of investment in non-current assets in
existing businesses and acquisition of new businesses. It comprises
capital expenditure, cash outflows from the purchase of subsidiaries,
joint ventures and associates, additional shares in subsidiary
undertakings purchased from non-controlling interests and other
investments, and net debt assumed in acquisitions.

See note E

Net cash/debt
before lease
liabilities

Net cash/debt
including
lease liabilities

Adjusted
EBITDA

No direct
equivalent

This measure comprises cash, cash equivalents and overdrafts,
current asset investments and loans.

No direct
equivalent

This measure comprises cash, cash equivalents and overdrafts,
current asset investments, loans and lease liabilities.

A reconciliation of this
measure is shown in note
25 of the financial
statements

Adjusted EBITDA is stated before depreciation, amortisation and
impairments charged to adjusted operating profit.

See note F

Adjusted
operating
profit
(non-IFRS)
measure

Financial
leverage ratio

No direct
equivalent

Financial leverage is the ratio of net cash/debt including lease
liabilities to Adjusted EBITDA.

See note F

APM

Free cash
flow

Closest equivalent
IFRS measure

Definition/purpose

No direct
equivalent

This measure represents the cash that the Group generates from
its operations after maintaining and investing in its capital assets.

Reconciliation/calculation

See note G

All the items below Adjusted EBITDA can be found on the face of the
cash flow statement or derived directly from it.

Working capital comprises the movements in inventories, receivables and
payables within net cash generated from operating activities.

Net interest paid is the sum of interest received within net cash used
in investing activities and interest paid within net cash used in
financing activities.

Share of adjusted profit after tax from joint ventures and associates
is the amount on the face of the cash flow statement, plus the £3m
(2022 – £3m) non-operating intangible amortisation which is not included
in Adjusted EBITDA.

Other includes all other items from net cash generated from operating
activities and net cash used in investing activities except for the purchase
and sale of subsidiaries, joint ventures and associates, plus dividends paid
to non-controlling interests and the movement from changes in own
shares held.

Total liquidity

No direct
equivalent

Total liquidity comprises cash at bank and in hand and cash equivalents
less current loans and overdrafts, and an estimate of inaccessible cash,
plus the undrawn RCF.

See note H

Cash at bank and in hand and cash equivalents are set out in note 18.
Current loans and overdrafts are set out in note 19.

Inaccessible cash is generally located in jurisdictions where there is
limited access to foreign currency or where there are exchange controls.
It is estimated at 5% of cash at bank and in hand and cash equivalents.

The RCF is long-term, legally committed and contains no
performance covenants.

(Average)
capital
employed

No direct
equivalent

Capital employed is derived from the management balance sheet and
does not reconcile directly to the statutory balance sheet. All elements are
calculated in accordance with Adopted IFRS.

Consistent with the
definition given

Average capital employed for each segment and for the Group is
calculated by averaging capital employed for each period of the year
based on the reporting calendar of each business.

No direct
equivalent

This measure expresses Adjusted operating profit as a percentage of
Average capital employed.

Consistent with the
definition given

No direct
equivalent

Working capital is derived from the management balance sheet and does
not reconcile directly to the statutory balance sheet. All elements are
calculated in accordance with Adopted IFRS.

Consistent with the
definition given

Average working capital for each segment and for the Group is calculated
by averaging working capital for each period of the year based on the
reporting calendar of each business.

No direct
equivalent

This measure expresses (Average) working capital as a percentage of
revenue.

Consistent with the
definition given

Return on
(average)
capital
employed

(Average)
working
capital

(Average)
working
capital as a
percentage
of revenue

190

Associated British Foods plc Annual Report 2023

191

FINANCIAL STATEMENTS

Notes forming part of the financial statements

for the 52 weeks ended 16 September 2023

30. Alternative performance measures continued
Note A

2023
External revenue from continuing businesses
Adjusted operating profit
Adjusted operating margin %
2022
External revenue from continuing businesses
Adjusted operating profit
Adjusted operating margin %

Note B

2023
External revenue from continuing businesses
at actual rates
2022
External revenue from continuing businesses
at actual rates
Impact of foreign exchange
External revenue from continuing businesses
at constant currency

Grocery
£m

Ingredients
£m

Agriculture
£m

Sugar
£m

Retail
£m

4,198
448
10.7%

3,735
399
10.7%

2,157
214
9.9%

1,827
159
8.7%

1,840
41
2.2%

1,722
47
2.7%

2,547
169
6.6%

2,016
162
8.0%

9,008
735
8.2%

7,697
756
9.8%

Grocery
£m

Ingredients
£m

Agriculture
£m

Sugar
£m

Retail
£m

4,198

2,157

1,840

2,547

9,008

3,735
51

1,827
46

1,722
3

2,016
(40)

7,697
137

3,786

1,873

1,725

1,976

7,834

% change at constant currency

+11%

+15%

+7%

+29%

+15%

2023
Adjusted operating profit at actual rates
2022
Adjusted operating profit at actual rates
Impact of foreign exchange
Adjusted operating profit at constant currency

Grocery
£m

Ingredients
£m

Agriculture
£m

448

399
16
415

214

159
8
167

47
1
48

Sugar
£m

169

162
(5)
157

Retail
£m

735

756
4
760

% change at constant currency

+8%

+28%

-15%

+8%

-3%

Note C

Adjusted earnings per share (pence)
Dividends relating to the year (pence) – excluding special dividend proposed
Dividend cover

Central and
disposed
businesses
£m

–
(94)

–
(88)

Central and
disposed
businesses
£m

–

–
–

–

Central and
disposed
businesses
£m

Total
£m

19,750
1,513
7.7%

16,997
1,435
8.4%

Total
£m

19,750

16,997
197

17,194

+15%

Total
£m

(94)

1,513

(88)
–
(88)

2023
141.8
47.3
3

1,435
24
1,459

+4%

2022
131.1
43.7
3

Note D

From the cash flow statement
Purchase of property, plant and equipment
Purchase of intangibles
Capital expenditure

Note E

From the cash flow statement
Purchase of property, plant and equipment
Purchase of intangibles
Purchase of subsidiaries, joint ventures and associates
Purchase of other investments
Gross investment

Note F

Adjusted operating profit
Charged to adjusted operating profit:

Depreciation of property, plant and equipment
Amortisation of operating intangibles
Depreciation of right-of-use assets and non-cash lease adjustments

Adjusted EBITDA
Net debt including lease liabilities
Financial leverage ratio

Note G

Adjusted EBITDA (see note F)
Repayment of lease liabilities net of incentives received
Working capital
Capital expenditure (see note D)
Purchase of subsidiaries, joint ventures and associates
Sale of subsidiaries, joint ventures and associates
Net interest paid
Income taxes paid
Share of adjusted profit after tax from joint ventures and associates
Dividends received from joint ventures and associates
Other
Free cash flow

Note H

Cash at bank and in hand and cash equivalents
Current loans and overdrafts
Estimated inaccessible cash
RCF
Total liquidity

2023
£m
997
76
1,073

2023
£m
997
76
94
4
1,171

2023
£m
1,513

531
44
273
2,361
(2,265)
1.0

2023
£m
2,361
(246)
(216)
(1,073)
(94)
4
(74)
(341)
(127)
107
(32)
269

2023
£m
1,457
(168)
(73)
1,500
2,716

2022
£m
680
89
769

2022
£m
680
89
154
7
930

2022
£m
1,435

521
24
281
2,261
(1,764)
0.8

2022
£m
2,261
(275)
(729)
(769)
(154)
–
(97)
(304)
(112)
93
2
(84)

2022
£m
2,121
(157)
(106)
1,500
3,358

192

Associated British Foods plc Annual Report 2023

193

FINANCIAL STATEMENTS

Company balance sheet

at 16 September 2023

Fixed assets
Intangible assets
Right-of-use assets
Investments in subsidiaries

Current assets
Debtors:
• due within one year
• due after one year
Employee benefits assets – due after one year
Derivative assets
Cash and cash equivalents

Creditors: amounts falling due within one year
Bank loans and overdrafts – unsecured
Lease liabilities
Other creditors
Derivative liabilities

Net current assets
Total assets less current liabilities
Creditors: amounts falling due after one year
Bank loans – unsecured
Lease liabilities
Amounts owed to subsidiaries
Employee benefits liabilities
Deferred tax liabilities

Net assets

Capital and reserves
Issued capital
Capital redemption reserve
Hedging reserve
Profit and loss reserve
Equity shareholders’ funds

Note

1
2
3

4
4
5

2
7

5
6

8
8
8
8

2023
£m

–
6
1,296
1,302

4,165
129
1,397
31
924
6,646

(81)
(3)
(4,411)
–
(4,495)
2,151
3,453

(394)
(3)
(200)
(20)
(325)
(942)
2,511

44
3
2
2,462
2,511

2022
£m

–
9
1,287
1,296

3,163
98
1,366
30
1,408
6,065

(2)
(3)
(4,013)
(3)
(4,021)
2,044
3,340

(481)
(7)
(196)
(22)
(324)
(1,030)
2,310

45
2
–
2,263
2,310

The Company’s profit for the 52 weeks ended 16 September 2023 was £1,043m (52 weeks ended 17 September 2022 – £426m).

The financial statements on pages 194 to 200 were approved by the Board of Directors on 7 November 2023 and were signed on its
behalf by:

Michael McLintock
Chairman

Eoin Tonge
Finance Director

Company statement of changes in equity

for the 52 weeks ended 16 September 2023

Balance as at 18 September 2021

Total comprehensive income
Profit for the period recognised in the income statement

Remeasurement of defined benefit schemes
Deferred tax associated with defined benefit schemes
Items that will not be reclassified to profit or loss

Movements in cash flow hedging position
Deferred tax associated with movements in cash flow hedging position
Items that are or may be subsequently reclassified to profit or loss

Other comprehensive income
Total comprehensive income

Transactions with owners
Dividends paid to equity shareholders
Net movement in own shares held
Total transactions with owners
Balance as at 17 September 2022

Total comprehensive income
Profit for the period recognised in the income statement

Remeasurement of defined benefit schemes
Deferred tax associated with defined benefit schemes
Items that will not be reclassified to profit or loss

Movements in cash flow hedging position
Deferred tax associated with movements in cash flow hedging position
Items that are or may be subsequently reclassified to profit or loss

Other comprehensive income
Total comprehensive income

Transactions with owners
Dividends paid to equity shareholders
Net movement in own shares held
Share buyback
Total transactions with owners
Balance as at 16 September 2023

Share
capital
£m
45

Capital
redemption
reserve
£m
2

Hedging
reserve
£m
4

Profit
and loss
reserve
£m
1,692

Total
£m
1,743

–

–
–
–

–
–

–
–
–
45

–

–
–
–

–
–

–
–
(1)
(1)
44

–

–
–
–

–
–

–
–
–
2

–

–
–
–

–
–

–
–
1
1
3

–

–
–
–

(5)
1
(4)

(4)
(4)

–
–
–
–

–

–
–
–

4
(2)
2

2
2

–
–
–
–
2

426

742
(186)
556

–
–
–

556
982

742
(186)
556

(5)
1
(4)

552
978

(380)
(31)
(411)
2,263

(380)
(31)
(411)
2,310

1,043

(33)
10
(23)

–
–
–

(33)
10
(23)

4
(2)
2

(23)
1,020

(21)
1,022

(345)
(28)
(448)
(821)
2,462

(345)
(28)
(448)
(821)
2,511

194

Associated British Foods plc Annual Report 2023

195

Accounting estimates and judgements

for the 52 weeks ended 16 September 2023

Significant accounting estimates
The preparation of the Company’s financial statements includes
the use of estimates and assumptions. Although the estimates
used are based on management’s best information about
current circumstances and future events and actions, actual
results may differ from those estimates. The accounting
estimates with a significant risk of a material change to the
carrying value of assets and liabilities within the next year are
forecasts and discount rates, and pensions.

These are set out in Accounting estimates and judgements
in the consolidated financial statements on page 139.

Other areas of judgement and accounting estimates
The Company’s financial statements include other areas of
judgement and accounting estimates. While these areas do not
meet the definition of significant accounting estimates or critical
accounting judgements, the recognition and measurement of
certain material assets and liabilities are based on assumptions
and/or are subject to longer term uncertainties.

FINANCIAL STATEMENTS

Accounting policies

for the 52 weeks ended 16 September 2023

Basis of preparation
The Company presents its financial statements in sterling,
rounded to the nearest million, prepared on the historical cost
basis, except that derivative financial instruments are stated at
fair value, and in accordance with FRS 101 and the Companies
Act 2006.

As permitted by FRS 101, the Company takes advantage of
the disclosure exemptions available in relation to share-based
payments, financial instruments, capital management,
presentation of comparative information in respect of certain
assets, presentation of a cash flow statement, standards not
yet effective, impairment of assets and certain related party
transactions. Where required, equivalent disclosures are given
in the consolidated financial statements.

As permitted by section 408(4) of the Companies Act 2006,
a separate income statement and statement of comprehensive
income for the Company are not included in these financial
statements. The principal accounting policies adopted are
described below. They have all been applied consistently to all
years presented.

Intangible assets
Intangible assets comprise goodwill arising on business
combinations and operating intangibles. Goodwill is defined
under ‘Business acquisitions’ on page 134 of the consolidated
financial statements. The Companies Act 2006 requires goodwill
to be amortised on a systematic basis over its useful economic
life. Under FRS 101, goodwill is not amortised but is instead
reviewed for impairment annually or whenever there are
indicators of impairment. The Company previously invoked a
‘true and fair view override’ to overcome the requirement to
amortise goodwill in the Companies Act 2006.

Operating intangibles are stated at cost less accumulated
amortisation and impairment charges. Amortisation is charged
to the income statement on a straight-line basis over the
estimated useful economic lives of intangible assets from the
date they are available for use. The estimated useful lives are
generally deemed to be no longer than five years.

Investments in subsidiaries
Investments in subsidiaries are stated at cost less any provision
for impairment.

Impairment
The Company reviews the carrying amount of investments
in subsidiaries and other assets at each balance sheet date
to determine whether there is any indication of impairment.
If any such indication exists, the Company estimates the asset’s
recoverable amount. The Company recognises an impairment
charge in the income statement whenever the carrying amount
of an asset exceeds its recoverable amount.

The recoverable amount of assets is the greater of their fair
value less costs to sell and their value in use. In assessing value
in use, the Company discounts estimated future cash flows to
present value using a pre-tax discount rate reflective of current
market assessments of the time value of money and the risks
specific to the asset.

The Company may reverse an impairment charge if there
has been a change in the estimates used to determine the
recoverable amount, but only to the extent that the new carrying
amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no
impairment charge had previously been recognised.

Financial assets and liabilities
The Company recognises financial assets and financial liabilities,
except for derivatives, initially at fair value and subsequently
at amortised cost.

Derivatives
The Company uses derivatives to manage its economic
exposure to financial risks. The principal instruments used are
foreign exchange contracts and swaps and interest rate swaps.
The Company recognises derivatives at fair value based on
market prices or rates, or calculated using discounted cash flow
or option pricing models. The Company recognises changes in
the value of derivatives in the income statement unless the
derivative is designated in a hedging relationship, when
recognition of any change in fair value depends on the nature
of the item being hedged.

Pensions
The Company operates one defined contribution and two
defined benefit pension schemes. The Company is the principal
employer of the Associated British Foods Pension Scheme,
which is a funded final salary scheme that is closed to new
members, as well as a small unfunded final salary scheme.
The accounting policy for pensions is the same as for the Group,
which is set out on page 135.

Income tax
The accounting policy for income tax is the same as for the
Group, which is set out on page 135.

Share-based payments
The Company recognises the fair value of share awards at grant
date as an employee expense with a corresponding increase in
equity, spread over the period during which employees become
unconditionally entitled to the shares.

The Company adjusts the amount recognised to reflect
expected and actual levels of vesting except where the failure
to vest is as a result of not meeting a market condition.

Where the Company grants allocations of shares to employees
of its subsidiaries, these are accounted for on the same basis as
allocations to employees of the Company, except that the fair
value is recognised as an increase to investment in subsidiaries
with a corresponding increase in equity.

Cash and cash equivalents
Cash and cash equivalents comprise bank and cash balances,
deposits and short-term investments with original maturities
of three months or less.

Leases
The accounting policy for leases is the same as for the Group,
which is set out on page 137.

196

Associated British Foods plc Annual Report 2023

197

FINANCIAL STATEMENTS

Notes to the Company financial statements

for the 52 weeks ended 16 September 2023

1. Intangible assets

Cost
At beginning and end of year

Amortisation
At beginning and end of year

Net book value
At beginning and end of year

2. Leases
Right-of-use assets

Cost
At beginning and end of year

Depreciation
At beginning of year
Depreciation for the year
At end of year

Net book value
At beginning of year
At end of year

Lease liabilities

Cost
At beginning of year
Repayment of lease liabilities
At end of year

Current
Non-current

Leases relate to land and buildings.

3. Investments in subsidiaries

At beginning of year
Additions
At end of year

Operating
intangibles
£m

–

2022
£m

6
3
9

12
9

2022
£m

14
(4)
10

3
7
10

2023
£m

9
3
12

9
6

2023
£m

10
(4)
6

3
3
6

2023
£m
1,287
9
1,296

2022
£m
720
567
1,287

Additions in the year comprise £9m relating to the allocation of shares under equity-settled share-based payment plans to employees
of the Company’s subsidiaries (2022 – £556m in the existing investment in ABF Investments plc, a wholly owned subsidiary, and
£11m relating to the allocation of shares under equity-settled share-based payment plans to employees of the Company’s subsidiaries).

4. Debtors

Amounts falling due within one year
Amounts owed by subsidiaries
Other debtors
Corporation tax recoverable

Amounts falling due after one year
Amounts owed by subsidiaries

5. Employee entitlements

2023
£m

2022
£m

4,079
16
70
4,165

3,104
18
41
3,163

129

Reconciliation of changes in assets and liabilities
At beginning of year
Current service cost
Employee contributions
Employer contributions
Benefit payments
Interest income/(expense)
Return on scheme assets less interest income
Actuarial gains arising from changes in financial assumptions
Actuarial gains arising from changes in demographic assumptions
Experience losses on scheme liabilities
At end of year

2023
assets
£m

2022
assets
£m

2023
liabilities
£m

2022
liabilities
£m

2023
net
£m

2022
net
£m

3,735
–
5
28
(140)
169
(244)
–
–
–
3,553

4,315
–
6
27
(136)
75
(552)
–
–
–
3,735

(2,391)
(23)
(5)
–
139
(107)
–
252
19
(60)
(2,176)

(3,719)
(34)
(6)
–
138
(64)
–
1,325
11
(42)
(2,391)

1,344
(23)
–
28
(1)
62
(244)
252
19
(60)
1,377

596
(34)
–
27
2
11
(552)
1,325
11
(42)
1,344

The net pension asset of £1,377m comprises a funded scheme with a surplus of £1,397m and an unfunded scheme with
a deficit of £20m.

Further details of the Associated British Foods Pension Scheme are contained in note 12 of the consolidated financial statements.

6. Deferred tax assets and liabilities

At 18 September 2021
Amount charged to the income statement
Amount charged to equity
Disposals
At 17 September 2022
Amount charged to the income statement
Amount charged to equity
Effect of changes in tax rates on the income statement
At 16 September 2023

7. Other creditors

Amounts falling due within one year
Accruals and deferred income
Amounts owed to subsidiaries

Employee
benefits
£m
(149)
(1)
(186)
–
(336)
(16)
10
(2)
(344)

Share-based
payments
£m
3
–
–
–
3
3
–
–
6

Other
£m
9
1
1
(2)
9
6
(2)
–
13

Total
£m
(137)
–
(185)
(2)
(324)
(7)
8
(2)
(325)

2023
£m

2022
£m

69
4,342
4,411

67
3,946
4,013

198

Associated British Foods plc Annual Report 2023

199

Progress report

Saturday nearest to 15 September

Revenue
Adjusted operating profit
Exceptional items
Transaction costs
Amortisation of non-operating intangibles
Acquired inventory fair value adjustments
Profits less losses on disposal of non-current assets
Profits less losses on sale and closure of businesses
Finance income
Finance expense
Other financial income/(expense)
Profit before taxation
Taxation
Profit for the period

Basic and diluted earnings per ordinary share (pence)
Adjusted earnings per share (pence)
Dividends per share (pence)

2019
£m
15,824
1,421
(79)
(2)
(47)
(15)
4
(94)
15
(42)
12
1,173
(277)
896

111.1
137.5
46.35

2020
£m
13,937
1,024
(156)
(2)
(59)
(15)
18
(14)
11
(124)
3
686
(221)
465

57.6
81.1
nil

2021
£m
13,884
1,011
(151)
(3)
(50)
(3)
4
20
9
(111)
(1)
725
(227)
498

60.5
80.1
26.7

2022
£m
16,997
1,435
(206)
(6)
(47)
(5)
7
(23)
19
(111)
13
1,076
(356)
720

88.6
131.1
43.7

2023
£m
19,750
1,513
(109)
(5)
(41)
(3)
28
(3)
48
(128)
40
1,340
(272)
1,068

134.2
141.8
47.3

FINANCIAL STATEMENTS

8. Capital and reserves
Share capital
At 16 September 2023, the Company’s issued and fully paid share capital comprised 767,953,088 ordinary shares of 515⁄22p, each
carrying one vote per share (2022 – 791,674,183). Total nominal value was £44m (2022 – £45m).

Capital redemption reserve
£2m arose in 2010 following redemption of two million £1 deferred shares at par. £1m arose in 2023 following the purchase
and subsequent cancellation of shares (2022 – nil). The capital redemption reserve is regarded as non-distributable.

Dividends
Details of dividends paid and proposed are provided in note 6 to the consolidated financial statements.

Share-based payments
Details of the Company’s equity-settled share-based payment plans are provided in note 24 to the consolidated financial statements.

9. Contingent liabilities
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its group,
the Company considers these to be insurance arrangements and accounts for them as such. The guarantee contract is treated as a
contingent liability until such time as it becomes probable that the Company will be required to make a payment under the guarantee.

At year end, the Company had provided £480m of guarantees in the ordinary course of business (2022 – £484m).

10. Related parties
The Company has a controlling shareholder relationship with its parent company, Wittington Investments Limited, with the trustees
of the Garfield Weston Foundation and with certain other individuals who hold shares in the Company. Further details of the
controlling shareholder relationship are included in note 28 to the consolidated financial statements. The Company has a related
party relationship with its subsidiaries, associates and joint ventures and directors. In the course of normal operations, related party
transactions entered into by the Company have been contracted on an arm’s length basis.

Material transactions and year end balances with related parties (excluding wholly owned subsidiaries) were as follows:

Charges to Wittington Investments Limited for services provided by the Company
Dividends paid by the Company and received in a beneficial capacity by:
i. trustees of the Garfield Weston Foundation and their close family
ii. directors of Wittington Investments Limited who are not trustees of the Foundation

and their close family

iii. directors of the Company who are not trustees of the Foundation and are not

directors of Wittington Investments Limited

Interest income earned from non-wholly owned subsidiaries
Amounts due from non-wholly owned subsidiaries

Sub note

2023
£000
985

2022
£000
930

1
2
2

11,219

12,361

2,159

2,322

89
1,647
14,780

128
743
10,008

1. Details of the nature of the relationships with these bodies are set out in note 28 of the consolidated financial statements.
2. Details of the Company’s subsidiaries, joint ventures and associates are set out in note 29 of the consolidated financial statements.

11. Other information
Emoluments of directors
The remuneration of the directors of the Company is shown in the Remuneration Report for the Group on pages 100 to 115.

Employees
The Company had an average of 229 employees (2022 – 208). Remuneration was £35m (2022 – £34m).

Audit fees
Note 2 to the consolidated financial statements of the Group provides details of the remuneration of the Company’s auditors.

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201

FINANCIAL STATEMENTS

Glossary

AGM
APM
the Board
CDP
CGU
the Company
CPI
ESG
ESOP
EY

FCA
FRC
FRS 101
GHG
GMP
the Group

HSE
IFRIC
IFRS
LTIP
Net finance expense

RCF
ROI
RSP
SBTi
STIP
TCFD
UKEB
UK MCD

Annual General Meeting
Alternative Performance Measure
the board of Associated British Foods plc
Carbon Disclosure Project
Cash-generating unit
Associated British Foods plc
Consumer Price Index (UK)
Environmental, Social and Governance
Employee Share Ownership Plan
Ernst & Young LLP, the Company’s statutory auditor (also refers
to associated firms of Ernst & Young LLP worldwide who work
on the audit of the consolidated financial statements)
Financial Conduct Authority
Financial Reporting Council
Financial Reporting Standard 101 Reduced Disclosure Framework
Greenhouse gas emissions
Guaranteed Minimum Pension
Associated British Foods plc, its subsidiaries and its
interests in joint ventures and associates
Health, Safety and Environment
International Financial Reporting Interpretations Committee
International Financial Reporting Standard(s)
Long-term incentive plan
the sum of finance income, finance expense and other financial
income on the face of the consolidated income statement
Revolving Credit Facility
Return on investment (see ESG glossary for further information)
Restricted Share Plan
the Science Based Targets initiative
Short-term incentive plan
The Task Force for Climate-related Financial Disclosures
UK Endorsement Board
UK Mandatory Climate Disclosures

Company directory

Associated British Foods plc
Registered office
Weston Centre
10 Grosvenor Street
London W1K 4QY

Company registered in
England and Wales,
number 293262

Company Secretary
Paul Lister

Registrar
Equiniti
Aspect House
Spencer Road
Lancing BN99 6DA

Auditor
Ernst & Young LLP
Chartered Accountants

Brokers
UBS AG London Branch
5 Broadgate
London EC2M 2QS

Barclays Bank PLC
5 The North Colonnade
Canary Wharf

Timetable
Annual general meeting
8 December 2023

Interim results to be announced
25 April 2024

Website
www.abf.co.uk

Warning about share fraud
From time to time, companies, their subsidiary companies, and shareholders can be the subject of investment scams. The perpetrators
obtain lists of shareholders or subsidiaries and make unsolicited phone calls or correspondence concerning investment matters.
They may offer to sell worthless or high-risk shares and may offer to buy your current shareholdings at an unrealistic price. They will
often also inform you of untrue scenarios to make you think that you need to sell your shares or to justify an offer that seems too
good to be true. These operations are commonly known as ‘boiler rooms’.

Shareholders are advised to be very wary of any offers of unsolicited advice, discounted shares, premium prices for shares they own
or unsolicited investment opportunities. If you receive any such unsolicited calls, correspondence or investment advice:

• ensure you get the correct name of the person and firm;
• check that the firm is on the Financial Conduct Authority (FCA) Register to ensure they are authorised at https://register.fca.org.uk/;
• use the details on the FCA Register to contact the firm;
• call the FCA Consumer Helpline (0800 111 6768) if there are no contact details in the Register or you are told they are out of date; and
• if you feel uncomfortable with the call or the calls persist, simply hang up.

Forward-looking statements
This report contains forward-looking statements. These have been made by the directors in good faith based on the information
available to them up to the time of their approval of this report. The directors can give no assurance that these expectations will
prove to have been correct. Due to the inherent uncertainties, including both economic and business risk factors underlying such
forward-looking information, actual results may differ materially from those expressed or implied by these forward-looking statements.
The directors undertake no obligation to update any forward-looking statements whether as a result of new information, future
events or otherwise.

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Associated British Foods plc Annual Report 2023

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This report is printed on paper certified in accordance
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Designed and produced by Black Sun Global.

Associated British Foods plc
Weston Centre
10 Grosvenor Street
London W1K 4QY

Tel + 44 (0) 20 7399 6500

For an accessible version of the
Annual Report and Accounts please
visit our website www.abf.co.uk