The difference is essential
About Bunzl
n
w
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Bunzl plc Annual Report 2021
Focused on
sustainability
READ MORE
PAGE 18
We are the largest
value-added
distributor in
the world in our
market sectors…
A focused and successful
specialist international
distribution and services
Group with operations across
the Americas, Europe, Asia
Pacific and UK & Ireland.
Our purpose is to deliver
essential business solutions
around the world and create
long term sustainable value
for the benefit of all our
stakeholders.
Engaging
digital
solutions
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PAGE 22
Visit our new website at bunzl.com
Contents
Strategic report
A year in review
At a glance
Chairman’s statement
Investment case
Chief Executive Officer’s review
The difference is essential
Market trends
Our purpose-led strategy
Our business model
Our strategy
Key performance indicators
Operating review
Sustainability report
Section 172 statement
Principal risks and uncertainties
Viability
Financial review
Taskforce on Climate related
Financial Disclosures (TCFD)
SASB Reporting for Bunzl
Sustainability Metrics
ESG Appendix
Non-financial information statement
Directors’ report
Chairman’s introduction
Board of directors
Corporate governance report
Nomination Committee report
Audit Committee report
Directors’ remuneration report
Other statutory information
Financial statements
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated statement
of changes in equity
Consolidated cash flow statement
Notes
Company balance sheet
Company statement of
changes in equity
Notes to the Company
financial statements
Statement of directors’ responsibilities
Independent auditors’ report
to the members of Bunzl plc
Shareholder information
Five year review
4
6
8
10
12
18
24
28
30
32
36
38
46
58
64
73
74
82
83
85
91
94
96
98
110
116
125
150
156
157
158
159
160
162
205
206
207
213
214
222
231
1
Investing in
our people
READ MORE
PAGE 20
Bunzl plc Annual Report 2021
Supporting a more circular
economy: Transitioning our
customer Driscoll’s to
alternative products.
READ MORE
PAGE 57
2
Bunzl plc Annual Report 2021
Strategic
report
A year in review
At a glance
Chairman’s statement
Investment case
Chief Executive Officer’s review
The difference is essential
Market trends
Our purpose-led strategy
Our business model
Our strategy
Key performance indicators
Operating review
Sustainability report
Section 172 statement
Principal risks and uncertainties
Viability
Financial review
Taskforce on Climate related
Financial Disclosures (TCFD)
SASB Reporting for Bunzl Sustainability Metrics
ESG Appendix
Non-financial information statement
4
6
8
10
12
18
24
28
30
32
36
38
46
58
64
73
74
82
83
85
91
Bunzl plc Annual Report 2021
3
A YEAR IN REVIEW
Strong results with a
focus on sustainability
Backed by a proven financial track record, we are
committed to further accelerating our focus on
sustainability for tomorrow and beyond.
Financial performance: Highlights
Revenue
(2020: £10,111.1m)
£10,285.1m
+7.1%
Growth at constant exchange rates
Growth at actual exchange rates 1.7%
Adjusted operating profit*
(2020: £778.4m)
£752.8m
+2.8%
Growth at constant exchange rates
Growth at actual exchange rates (3.3)%
Operating profit
£623.3m
(2020: £618.5m)
Growth at actual exchange rates 0.8%
Adjusted earnings per share*
(2020: 164.9p)
162.5p
+4.9%
Growth at constant exchange rates
Growth at actual exchange rates (1.5)%
Basic earnings per share
132.7p
(2020: 128.8p)
Growth at actual exchange rates 3.0%
Dividend per share
(2020: 54.1p)
57.0p
+5.4%
Cash conversion*
102%
(2020: 103%)
Committed acquisition spend
£508m
Net debt : EBITDA **
1.6x
(2020: 1.5x)
* Alternative performance measure (see Note 3 to the consolidated financial statements on page 170)
** At average exchange rates and based on historical accounting standards, in accordance with Group’s external debt covenants
Reconciliation of alternative performance measures to statutory measures
for the year ended 31 December 2021
Adjusting items
Alternative
performance
measures
£m
Customer
relationships
and brands
amortisation
£m
Non-recurring
pension
scheme
charges
£m
Statutory
measures
£m
Acquisition
related items
£m
(106.5)
(23.0)
–
623.3 Operating profit
Year ended
31 December 2021
Adjusted operating
profit
Finance income
Finance expense
Adjusted profit before
income tax
Tax on adjusted profit
Adjusted profit
for the year
Adjusted earnings
per share
752.8
10.7
(65.3)
698.2
(155.7)
(106.5)
27.3
(23.0)
2.5
542.5
(79.2)
(20.5)
162.5p
(23.7)p
(6.1)p
10.7
Finance income
(65.3)
Finance expense
568.7
Profit before
income tax
(125.9)
Income tax
442.8
Profit for the year
132.7p
Basic earnings
per share
–
–
–
–
This review refers to alternative performance measures which exclude charges for customer relationships and brands
amortisation, acquisition related items, non-recurring pension scheme charges and the profit or loss on disposal of businesses
and any associated tax, where relevant. None of these items relate to the underlying operating performance of the business
and, as a result, they distort comparability between businesses and reporting periods. Accordingly, these items are not taken
into account by management when assessing the results of the business and they are removed in calculating the profitability
measures by which management assesses the performance of the Group. Further details of these alternative performance
measures can be found in Note 3 on page 170.
Growth at constant exchange rates is calculated by comparing the 2021 results to the results for 2020 retranslated at the
average exchange rates used for 2021.
4
Bunzl plc Annual Report 2021
Sustainability performance: Highlights
1.5°C
Joined the Race to Zero
and committed to the Business
Ambition for 1.5°C campaign
754
754 ethical audits
conducted in Asia
12%
12% improvement in carbon
efficiency during 2021 and
c.60% reduction in carbon
intensity since 2010
84%
84% of Group revenue attributable
to non-packaging products and
packaging products made from
alternative materials that are well
suited to a circular economy
22%
22% of UK & Ireland’s senior
leadership team are women
(13% in 2019)
2%
Only 2% of Group revenue
generated from consumables
that are facing regulation
FURTHER INFORMATION ABOUT
SUSTAINABILITY AT BUNZL CAN
BE FOUND ON PAGES 46 TO 57
Bunzl plc Annual Report 2021
5
STRATEGIC REPORT AT A GLANCE
Facilitating businesses
globally with essential
products and services
We provide a one-stop-shop, on-time and in-full
specialist distribution service across 31 countries,
supplying a broad range of internationally and
responsibly sourced non-food products to a variety
of market sectors.
Grocery
Goods-not-for-resale, including
food packaging, films, labels,
cleaning and hygiene supplies and
personal protection equipment to
grocery stores, supermarkets and
convenience stores.
Cleaning & Hygiene
Cleaning and hygiene materials,
including chemicals and hygiene paper,
to cleaning and facilities management
companies and industrial and public
sector customers.
Other
A variety of product ranges to other
end user markets.
Foodservice
Non-food consumables, including
food packaging, disposable tableware,
guest amenities, catering equipment,
agricultural supplies, cleaning and
hygiene products and safety items, to
hotels, restaurants, contract caterers,
food processors, commercial growers
and the leisure sector.
Retail
Goods-not-for-resale, including
packaging and other store supplies
and a full range of cleaning and hygiene
products, to retail chains, boutiques,
department stores, home improvement
chains, office supply companies and
related e-commerce sales channels.
Sector
revenue split
Safety
Personal protection and safety
equipment, including gloves, boots,
hard hats, ear and eye protection and
other workwear, as well as cleaning and
hygiene supplies and asset protection
products to industrial and construction
and ecommerce sectors.
Healthcare
Healthcare consumables, including
gloves, masks, swabs, gowns,
bandages and other healthcare related
equipment and cleaning and hygiene
products and healthcare devices to
hospitals, care homes and other
facilities serving the healthcare sector.
Foodservice
Grocery
Safety
Cleaning & Hygiene
Retail
Healthcare
Other
28%
26%
15%
10%
10%
8%
3%
6
Bunzl plc Annual Report 2021
North America
Adjusted operating profit (£m)*
£401.3m
2020: £395.7m
UK & Ireland
Adjusted operating profit (£m)*
Rest of the World
Adjusted operating profit (£m)*
£67.0m
2020 : £68.6m
£116.5m
2020: £104.2m
Continental Europe
Adjusted operating profit (£m)*
£191.8m
2020: £238.1m
* Alternative performance measure (see Note 3 on page 170).
Our business regions
We operate across the Americas,
Europe, Asia Pacific and UK &
Ireland with our global HQ in
London. We are continually
developing our global network to
ensure we deliver the best service
to our customers.
183
Acquisitions since 2004
31
Countries
Continental
Europe
25%
Rest of the
World
15%
29
Adjusted
operating
profit**
UK & Ireland
9%
North
America
51%
21,021
Years of dividend growth
Employees
** Alternative performance measure (see Note 3 on page 170). Percentages stated are the
business areas’ adjusted operating profit compared to the Group’s adjusted operating profit before corporate costs.
Bunzl plc Annual Report 2021
7
STRATEGIC REPORT CHAIRMAN’S STATEMENT
Our people and culture
continue to be key to
our success
‘The strength of our performance over the
last two years has provided me with even
greater confidence in the Group’s future.’
Peter Ventress
Chairman
The Group continued to perform strongly
during the pandemic, with good ongoing
growth in 2021 against a strong prior year
performance. At constant exchange rates,
the Group delivered strong revenue
growth of 7.1% (1.7% at actual exchange
rates), an increase of 2.8% in adjusted
operating profit and a rise of 4.9% in
adjusted earnings per share, with basic
earnings per share at actual exchange
rates increasing 3.0%. This has resulted,
at constant exchange rates, in 2021
revenues and adjusted operating profit
being 17.1% and 23.2% higher than 2019
respectively, reflecting the resilience of
the Group’s portfolio as the mix of
revenues between the traditional base
business and Covid-19 related products
has shifted through that period. The
ability for the business to adapt quickly
to changing demands and challenges,
including within disrupted supply chains,
has provided me with even stronger
confidence in the Group’s future.
Bunzl continues to demonstrate strong
cash conversion and despite completing
14 acquisitions, ended the year with a
strong balance sheet and net debt to
EBITDA of 1.6 times. The strength of
the Group’s financial position enables
a continued focus on acquisition
opportunities that support future growth.
Strategic priorities
We continue to pursue a consistent
and proven strategy of developing the
business through a combination of
organic growth, operational improvements
and acquisition growth. The 14 acquisitions
made in 2021 are complementary to our
existing businesses and demonstrate
the quality of acquisition opportunities
in the pipeline, as well as the breadth
of opportunity, with acquisitions made
across all of our business areas. Alongside
this, we officially launched the next phase
of our sustainability ambitions in October
at our Capital Markets Day and
8
Bunzl plc Annual Report 2021
‘Since 2004 Bunzl has returned £1.8 billion to shareholders through
dividends and has committed £4.4 billion in acquisitions to support
a growth strategy that has delivered an adjusted earnings per share
compound annual growth rate of 10% over the period.’
highlighted the strong progress we have
already made in supporting customers
with the transition to products made
from alternative materials that are better
suited to the circular economy.
People and culture
The power of a strong and motivated
workforce has been demonstrated over
the last two years. Our colleagues have
gone above and beyond to support our
customers despite the continually
changing environment and challenges
that they have faced. We are exceptionally
proud of their entrepreneurial spirit
which has driven the business forward
over the last two years. The Group’s focus
on engagement and leadership succession
has been integral to this performance.
Our most recent employee engagement
survey continues to demonstrate that our
colleagues feel positive about working at
Bunzl with approximately 89% feeling
personally driven to help Bunzl succeed
and 88% having a strong sense of
commitment to Bunzl.
Within our people strategy, diversity is
a key focus, and I am pleased that we
are expanding our diversity programmes.
We are encouraging more women into
leadership roles through focused and
targeted activities, with the UK & Ireland
demonstrating the power of these
initiatives as the number of women
in senior leadership roles has grown
from 13% to 22% over the last two years.
Furthermore, we are providing a voice for
under-represented colleagues across the
Group to ensure we better understand
the dynamics and barriers within our
organisation. This has included, for
the first time, some listening sessions
between the Chief Executive Officer
and groups of colleagues from under-
represented groups. Pleasingly, where we
have been able to collect engagement
data by ethnicity in our latest employee
survey, we have found broadly consistent
engagement scores across ethnic groups.
Identifying the next generation of leaders
from a more diverse pool of talent and
balancing the requirement for broader
capabilities with the need to retain our
entrepreneurial skills is a key objective
for the Group. I am also particularly
pleased with the progress we have
made to attract younger talent onto
new graduate programmes across our
decentralised organisation.
Shareholder returns
The Board is recommending a final
dividend of 40.8p, 6.5% higher than the
prior year, resulting in a full year dividend
of 57.0p. This represents a 5.4% increase
compared to the 2020 total dividend and
Bunzl’s 29th consecutive year of dividend
growth. The Group remains committed
to ensuring sustainable dividend growth.
Since 2004 Bunzl has returned £1.8 billion
to shareholders through dividends and
has committed £4.4 billion in acquisitions
to support a growth strategy that has
delivered an adjusted earnings per share
compound annual growth rate (CAGR)
of 10% over the period.
Peter Ventress
Chairman
28 February 2022
Share price range (p)
2,436 2,465 2,452
2,551 2,603
1,950
1,820
1,167
1,450
1,671 1,735
1,367
1,014
852
2,016 1,936 1,943
2021 share price
High
2,968p
2,968
2,150
1,277
Low
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
2,150p
Thank you to
our people
The power of a strong and motivated
workforce has been demonstrated
over the last two years. Our colleagues
have gone above and beyond to
support our customers despite the
continually changing environment
and challenges that they have faced.
We are exceptionally proud of their
entrepreneurial spirit which has driven
the business forward over the last
two years.
The Group’s focus on engagement
and leadership succession has been
integral to this performance. Our most
recent employee engagement survey
continues to demonstrate that our
colleagues feel positive about working
at Bunzl with approximately 89%
feeling personally driven to help Bunzl
succeed and 88% having a strong
sense of commitment to Bunzl.
READ MORE
PAGE 53
Bunzl plc Annual Report 2021
9
STRATEGIC REPORT INVESTMENT CASE
A strong track record
for delivering growth
Bunzl has a compounding growth strategy that
consistently delivers, with sustainability a vital
part of the equation.
A diversified,
balanced and
resilient
business
A consistent
and proven
compounding
strategy
Significant
opportunities
for future
growth
• Global presence in 31 countries
• Six customer focused market
sectors
• Fragmented markets
• Long term customer and supplier
relationships
• Profitable organic growth
• Operating model improvements
• Disciplined approach to self-
funded acquisitions
• Significant opportunities for
growth in existing countries
• Scope for further geographic
and new sector expansion
Revenue CAGR
since 2004
9%
Average underlying revenue
growth1 since 2004
2.5%
Adjusted operating profit1
CAGR since 2004
Self-funded committed
acquisition spend since 2004
9%
Resilience demonstrated by
adjusted operating profit1
growth 2019 – 2021 at
constant currency of
23.2%
£4.4bn
Acquisitions since 2004
183
Committed acquisition spend
in 2021
£508m
Net debt to EBITDA2 provides
substantial capacity for further
self-funded acquisitions
1.6x
10
Bunzl plc Annual Report 2021
Sustainable
and equitable
growth
Disciplined
financial
management
• Industry-leading ethical
supplier audits
• Carbon efficiency through
consolidation
• Proactive leader in the transition
to alternative material products
• Decentralised business model
supports people focus
• Consistently strong cash
conversion
• Efficient capital allocation
• Strong balance sheet
Return on invested
capital1
15.1%
Return on average
operating capital1
43.3%
Cash conversion1
102%
In-person supplier audits in
Asia over 2021
754
Scope 1 and 2 tonnes of CO2e
per £m revenue since 2010
c.60%
% of Group revenue
generated by consumables
facing regulation
2%
Proportion of female members
of Board and Executive
Committee during 2021
c.40%
A long term
track record
of returns for
shareholders
• Sustained increases in revenue,
adjusted operating profit and
adjusted earnings per share
• Long term dividend growth
and total shareholder return
• A focus on ensuring that future
growth remains sustainable
Annual consecutive
dividend growth
29 years
Adjusted earnings
per share1
31.7p in 2004
to
162.5p in 2021
1 Alternative performance measure (see Note 3 to
the consolidated financial statements on page 170)
2 Net debt to EBITDA – At average exchange rates
and based on historical accounting standards, in
accordance with Group’s external debt covenants
Bunzl plc Annual Report 2021
11
STRATEGIC REPORT CHIEF EXECUTIVE OFFICER’S REVIEW
Driving the
transition to
better solutions
‘Our proactive leadership and capabilities
supporting the transition to alternative materials
is a growth avenue that is deepening our
customer relationships.’
Frank van Zanten
Chief Executive Officer
Overview
Our performance since the start of the
pandemic has demonstrated the strength
of our business model and the consistent
delivery of our strategy. We have driven
growth over this challenging period
supported by the resilience of our model,
the entrepreneurial nature of our people
and our continued success in acquiring
high quality businesses. While our focus
on being a responsible business is well
established, I am pleased to have
launched the next phase of our
sustainability commitments during the
year. We continue to develop and
innovate products made from alternative
materials and solutions that are tailored
to our customers’ needs, and work to
respect communities and workers’ rights
Committing
to ambitious
climate action
Today
Tomorrow
Beyond
12
Bunzl plc Annual Report 2021
in our supply chain. Bunzl’s forward-
looking focus and customer-centric
business model has already driven
a strong compounding track record,
and I see our accelerated commitments
as integral to ensuring this continued
performance.
Operating performance
With over 90% of adjusted operating
profit generated outside the UK, and
due to the strength of sterling, the
Group’s revenue, profits and earnings
were adversely impacted between 5%
and 8% by currency translation over
2021. The commentary below is stated
at constant exchange rates unless
otherwise highlighted.
In 2021 revenue increased by 7.1%
(1.7% at actual exchange rates) to
£10,285.1 million. Within this, underlying
revenue growth, which is organic
growth of 3.2% adjusted for the impact
of one less trading day, was 3.6%.
In addition, acquisitions contributed
revenue growth of 4.0% in 2021. In
comparison to 2019, revenue in 2021
was 17.1% higher, with underlying
revenue 8.5% higher and acquisitions
driving the remainder of growth.
During 2021 underlying revenue growth
has reflected a reversal of prior year
trends, with the year-on-year decline
of Covid-19 related products more than
offset by the strong recovery in the base
business which had been materially
impacted by the challenges of the
pandemic in the prior year. Within
underlying revenue growth of 3.6%,
sales of the top 8 Covid-19 related
products, being masks, sanitisers,
disposable gloves, disinfectants, coveralls,
disposable wipes, face shields and eye
protection, and which are primarily own
brand, contributed an underlying revenue
decrease of 6.3%. This has been driven
primarily by the expected decline in
larger orders, which were a strong feature
of 2020 and generated predominately
by governments and healthcare
organisations. Smaller Covid-19 related
sales, generally made to existing
customers, including Covid-19 related
products that they may not have sourced
from Bunzl previously, also contributed
a slight decline over the year. Despite the
year-on-year decline in Covid-19 related
sales, revenue generated by these
products in the fourth quarter of 2021
remained substantially higher than
generated in the comparable quarter
in 2019. The impact on underlying growth
in 2021 of the decline in Covid-19 related
product sales was more than offset by
recovery in the base business. Recovery
in the base business benefited the
Group’s underlying revenue growth by
9.9%, with this growth driven by inflation
and volume.
Inflation was a key feature of
performance over the year, with
inflation strongly supportive to growth.
Continued inflation on certain Covid-19
related products was particularly
supportive to the first half of the year,
whilst inflation on plastics, paper and
chemicals was very supportive in the
second half of the year. We have
managed the strong inflation on plastics,
paper and chemicals well, with success
in passing through product price
increases to customers. Our largest
customers, particularly in North America,
often have product price movements
factored into agreements and elsewhere
regular price renegotiations are required.
While inflation trends remained strong
to the end of the year, we saw a moderate
tempering of plastic prices in some regions.
• Committing to SBTi1 approved targets with
Scope 3 emissions included
• 25% more efficient by 2025 and 50% by 20302
• 100% Group wide renewable energy
procurement by 2030
• Net zero by 2050 at the latest3
1 SBTi = Science Based Targets initiative.
2 Scope 1 and 2 emissions.
3 Scope 1, 2 and 3 emissions.
Bunzl plc Annual Report 2021
Our focus areas to 2025
• Transitioning our fleet
to low and zero carbon
solutions
• Trialling alternative fuels
in our larger vehicles
• Energy efficiency
measures in warehouses
• Renewable energy
procurement and
generation
13
STRATEGIC REPORT CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
Across the Group, recovery in the base
business has been supported by strong
growth in the foodservice and retail
sectors. As a result, the foodservice and
retail sectors, inclusive of Covid-19 related
sales, delivered underlying revenue
growth of 16% year-on-year. The cleaning
& hygiene, safety and healthcare sectors
were impacted by the decline in larger
Covid-19 related orders year-on-year,
as well as work from home trends in
cleaning & hygiene in most markets, and
soft safety end markets, which hampered
the base business recovery. Overall total
underlying revenue in the cleaning &
hygiene, safety and healthcare sectors
declined 12% year-on-year, although total
sales were 10% higher than in 2019. Total
underlying revenue in the grocery and
other sectors grew 9%, driven by product
cost inflation.
North America achieved underlying
revenue growth of 9.2%, despite a decline
in Covid-19 related sales, with the strong
recovery of the base business driven
largely by inflation but also fewer
Covid-19 related restrictions over the
year. Underlying revenue in Continental
Europe declined by 5.7%, but after
excluding larger Covid-19 related sales,
which strongly benefited the prior year,
saw moderate underlying revenue
growth. Underlying revenue in the UK
& Ireland declined by 6.2%, but after
similarly excluding larger Covid-19 related
sales saw good underlying growth. With
UK & Ireland having a higher weighting
to the foodservice and non-food retail
sectors, the extended lockdowns earlier
in 2021 impacted operating margin,
but following the improved trading
performance in the second half of the
year, including the non-repeat of
provisions established in the prior year,
the UK & Ireland delivered a meaningful
improvement in adjusted operating
margin over the second half. Underlying
revenue in the Rest of the World grew
by 4.7% year-on-year, driven by Latin
America which has seen strong growth
in its base business and benefited from
inflation, whilst Asia Pacific was impacted
by a decline in Covid-19 related sales and
Covid-19 related restrictions which limited
base business growth.
Overall, the Group’s base business over
2021 traded broadly in-line with 2019,
driven by strength in North America and
Latin America. The base business in
North America traded moderately ahead
of 2019 revenue levels, with sales strongly
ahead in the second half of the year,
whilst Latin America traded very strongly
ahead of 2019 over the year. Continental
Europe and Asia Pacific delivered base
business revenues broadly in-line with
2019 levels, with moderate growth
achieved in the second half of the year,
although Asia Pacific’s foodservice and
retail revenues were impacted by stricter
restrictions in the second half of the year.
The UK & Ireland saw a greater impact
from extended Covid-19 related
restrictions and its higher weighting to
the foodservice and non-food retail
sectors, but by the final quarter of the
year delivered base business sales that
were approaching 2019 levels.
Whilst we experienced greater operating
cost inflation in the second half of the
year, this has been more than offset by
revenue growth driven by product price
inflation and operational efficiencies.
Wage inflation has been particularly
strong in North America and the UK &
Ireland but more benign in Continental
Europe and Rest of the World. However,
towards the end of the year we started
to see some stabilisation in wages in
North America. Outbound freight costs
were also higher, although freight cost
movements can be factored into
pricing agreements, and we have also
experienced property cost inflation linked
to lease renewals. Driving operational
efficiencies is a core component of our
compounding strategy and is particularly
important at a time of higher inflation.
Over the year we have continued to focus
on optimising our warehouse space with
more than 15 consolidations and have
further implemented technologies to
automate processes in our business.
Overall, combined with the support of
product inflation on revenue, inflation
dynamics have been somewhat
supportive to margins to date.
Adjusted operating profit was £752.8
million, an increase of 2.8% (down 3.3%
at actual exchange rates) and operating
margin decreased to 7.3% from 7.6% in
2020 at constant exchange rates (7.3%
from 7.7% at actual exchange rates).
Whilst inflation has been somewhat
supportive to margins, the reduction
in operating margin reflects the
normalisation of revenue mix, with the
reduction in sales of Covid-19 related
Helping customers with
alternative packaging solutions
Our role in supporting
the circular economy
• Supporting smart material choices
• Designing for circularity not waste
• Promoting responsible packaging
usage and reusable options
• Partnering to support closed-loop
solutions
2021 highlights
• Limited exposure to consumables that are
facing regulation
• 2021 packaging mix is broadly consistent
with 2019, supported by inflation
• We saw growth in packaging made from
alternative products due to customers
transitioning, regulatory changes and
shortages of plastic products
• Covid-19 caused a move back to single use
plastics for hygiene reasons which is
expected to be temporary
2%
Only 2% of our Group revenue is
generated by consumables that
are facing regulation
84%
of Group revenue attributable
to non-packaging products
or packaging products made
from alternative materials
that are well suited to a
circular economy
Note that ‘packaging’ refers to packaging and other products within the foodservice, grocery and retail sectors which are facing legislation or
consumer pressure. Refer to page 47 for further details.
14
14
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
products, which are largely own brand
and had driven strong volume leverage
on operating costs in the prior year, and
the stronger recovery in typically lower
margin businesses within our base
business. Furthermore, price deflation
in certain Covid-19 related products
impacted margins over the second half of
the year, although margins benefited over
the period from a reduction in the net
charge relating to inventory and credit
loss provisions compared to the prior
year. The Group saw a further increase
in the level of slow moving inventory
with customer demand continuing
to be impacted by pandemic-related
restrictions and supply chain disruption
resulting in higher levels of inventory.
This has resulted in a net charge of
approximately £25 million in the year
to increase slow moving inventory
provisions whilst additional provisions
were also required as a result of market
price deflation on certain Covid-19
products. This was partially offset by a
net release of approximately £5 million
from expected credit losses on trade
receivables. Reported operating profit
was £623.3 million, an increase of 7.7%
(0.8% at actual exchange rates), reflecting
the 2.8% increase in adjusted operating
profit and a reduction in acquisition
related items, as well as the non-recurring
pension scheme charge in the prior year.
Adjusted profit before income tax was
£698.2 million, an increase of 3.9% (down
2.4% at actual exchange rates) due to
the growth in adjusted operating profit
and a reduction in net finance expense.
The lower net finance expense was due
mainly to a change in the mix of debt
towards currencies with lower interest
rates and higher interest income on cash
deposits held in the subsidiaries through
the year. Reported profit before income
tax was £568.7 million, an increase of
9.6% (2.3% at actual exchange rates).
The effective tax rate of 22.3% was lower
than the 23.1% in 2020 due to a reduction
in the expected tax liabilities for prior
periods. Over the period the Group was
informed that it was not within the scope
of the European Union State aid decision
against part of the UK’s tax regime.
The risk of having to pay any additional
tax plus interest of up to £37 million in
connection with the matter is now remote,
whatever the EU General Court’s eventual
ruling. In 2022 the Group’s effective tax
rate is expected to be approximately 24%,
reflecting the absence of benefits seen
in recent years from the favourable
settlement of prior year exposures.
Looking beyond 2022, we expect our
effective tax rate to increase to between
24% and 25% due to the rise in the UK tax
rate from 19% to 25% from April 2023
and enforcement of a minimum tax rate
for corporate profits globally. Based on
current proposals we do not expect
proposed federal tax changes in the US
to have a significant impact to the Group
if implemented. Adjusted earnings per
share were 162.5p, an increase of 4.9%
(down 1.5% at actual exchange rates) and
basic earnings per share were 132.7p,
an increase of 10.5% (up 3.0% at actual
exchange rates).
Cash conversion (operating cash flow as
a percentage of lease adjusted operating
profit) remained strong over the year
at 102%. The Group’s cash generation
continues to be impressive, with £525.4
million of free cash flow generated in
2021, representing 15.0% growth at actual
exchange rates compared to 2019, and
continuing to enable strong investment in
the business and acquisitions. Compared
to 2020, free cash flow declined 9.6% at
actual exchange rates, due to a decrease
in operating cash flow driven by a
significant reduction in advance payments
from customers net of upfront payments
to suppliers for large orders of Covid-19
related products and higher tax payments.
Net capital expenditure of £30.0 million
compares to £31.9 million in 2020 and
reflects continued investment in IT and
digital technologies, as well as warehouse
consolidations. Despite the amount
invested into acquisitions, the Group
ended the period with net debt, excluding
lease liabilities, of £1,337.4 million
compared to £1,255.0 million in 2020.
Net debt to EBITDA, calculated at average
exchange rates and in accordance with
the Group’s external debt covenants
which are based on historical accounting
standards, was 1.6 times compared to
1.4 times at the end of June 2021 and
1.5 times at the end of 2020. This is
meaningfully below our 2.0 times to 2.5
times target range, providing substantial
headroom for further acquisitions.
Return on average operating capital
decreased to 43.3% compared to 45.4%
in 2020, driven by the lower operating
margin, and reflective of a more normal
revenue mix for the Group as Covid-19
related sales have decreased. Return on
invested capital was 15.1% compared to
16.2% in 2020, with operating margin
having a similar impact, in addition to
continued acquisitions made over the
year which temporarily dilute the metric.
Return on average operating capital and
return on invested capital both remain
significantly higher than in 2019, with
36.9% and 13.6% achieved in 2019,
respectively.
Underlying growth and operational
efficiency
Delivering 17.1% constant currency
revenue growth between 2019 and
2021, with broadly similar contributions
from underlying growth and acquisition
growth, highlights the strength of Bunzl’s
consistent compounding strategy.
During 2021 Bunzl held a Capital Markets
Day to update on elements of this
strategy, including our focus on, and
commitments to, sustainable solutions
which are integral to the continued
success of the strategy.
Our continuous investment in digital
capabilities has supported performance
over the last two years, with 67% of
orders placed in 2021 made digitally,
compared to 62% in 2019 and 59%
in 2018. Acceleration of our digital
capabilities continues to be a key strategic
priority for the business, given the value
it provides to our customers, how it
differentiates Bunzl’s proposition and
the efficiencies it delivers to our own
operations. In addition, we continued to
focus on operational efficiencies, with
more than 15 warehouses consolidated
over the year. Furthermore, in the UK &
Ireland we continued to roll out shared
service capabilities in both Finance and
HR with a range of new technologies
implemented to support the transition.
Acquisitions
Over the year, Bunzl announced the
completion of 14 acquisitions with
committed spend of £508 million,
adding estimated annualised revenue
of £322 million. Over 2020 and 2021
Bunzl’s combined committed spend on
acquisitions was approximately £950
million, with the strength of the Group’s
cash conversion and balance sheet
enabling the Group to fund one of the
most successful periods for acquisitions
in our history, largely through cash
generated by the Group in the year.
These 14 acquisitions include some
fast growing businesses, in particular
McCue Corporation, Disposable
Discounter and Intergro.
Bunzl ended the year with net debt to
EBITDA of 1.6 times, providing the Group
with substantial capacity to fund further
acquisitions. Our pipeline is active, and
we see significant opportunities for
continued acquisition growth in our
existing markets, both where we have
limited or no sector presence, as well as
potential to expand into new markets.
Bunzl plc Annual Report 2021
15
STRATEGIC REPORT CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
Acquisition
Completion
Description
Deliver Net
January 2021
Healthcare distributor to care homes in the UK, with annualised
revenue of £20 million
Pinnacle
February 2021 Distributor of cleaning & hygiene products in Saskatchewan, Canada,
with annualised revenue of £11 million
February 2021 Online distributor of foodservice disposable products, with annualised
Disposable
Discounter
Comax
May 2021
Harvey
Distributors
Obex Medical
Holdings
May 2021
June 2021
Proin Pinilla
July 2021
Arprosa
July 2021
revenue of £24 million. The business operates mostly in the
Netherlands but has started to expand across Europe
Distributor to the leisure, cleaning & hygiene, care home and foodservice
sectors in the UK, with annualised revenue of £16 million in 2020
Cleaning & hygiene distributor in Australia, with annualised revenue
of £4 million
Leading medical distribution business that supplies a broad range of
healthcare equipment and devices in New Zealand, with annualised
revenue of £29 million
Largest independent safety distributor to end-users in Spain, with
annualised revenue of £14 million
Distributor of personal protection equipment (PPE) to end-users in
Spain, with annualised revenue of £7 million
Medshop
September 2021 Online distributor of medical supplies and devices predominantly in
Australia, with annualised revenue of £14 million
Intergro
September 2021 Distributor of agricultural supplies to commercial growers in the US,
McCue
Corporation
October 2021
with annualised revenue of £22 million
Leading and fast growing US business in the distribution of safety
and asset protection solutions for sectors spanning e-commerce and
grocery with a growing international footprint, and with annualised
revenue of £73 million
Workwear
Express
October 2021
UK business in personalised workwear and promotional clothing with a
strong e-commerce focus, and with annualised revenue of £33 million
Hydropac
November 2021 Distributor of insulated packaging solutions based in the UK, with
annualised revenue of £8 million
Tingley
Rubber
December 2021 Distributor of own brand PPE based in the US, with annualised revenue
of £47 million
Sustainable solutions
We understand our role as a proactive
leader in the transition to a more
sustainable and equitable future. As
laid out at our 2021 Capital Markets Day,
sustainability is a key component of
our strategic priorities, and we are
focused on four key areas: alternative
packaging solutions; responsible supply
chains; investing in our people; and
climate change.
We are already proactively leading the
transition of packaging to products
which are better suited to the circular
economy and momentum has remained
strong with customers looking to shift
to products made from alternative
materials. Our strength in sourcing
innovative products, including our own
brand portfolio, as well as our expert
advice, data tools and supply chain
investments is an increasing competitive
advantage to Bunzl. The Group continues
to have very limited exposure to single-
use plastic consumables where some
volume reduction is expected. Only 2%
of our Group revenue is generated by
consumables that are facing regulation,
with 84% of Group revenue attributable
to non-packaging products and
packaging products made from
alternative materials that are well
suited to the circular economy.
The Group also completed 754 ethical
and quality audits through our Shanghai
based Global Supply Chain Solutions,
which is responsible for auditing our
Asian suppliers, the most material high
risk sourcing market for Bunzl, by spend.
Furthermore, we have started to expand
our programme to ensure that 90% of
our spend on products from all high-risk
regions are sourced from assessed and
compliant suppliers by 2025. Our people
strategy also continues to drive strong
engagement, as indicated by our latest
employee engagement scores, with
encouraging retention levels across the
Group in a climate of much tighter labour
markets in many parts of the world.
In 2021 Bunzl joined the largest global
alliance on climate change, the UN’s Race
to Zero campaign, and has committed to
achieving a net zero position across the
Group inclusive of Scope 3 emissions by
2050 at the latest. Over 2021 our carbon
intensity (carbon per revenue) declined by
12% year on year, further contributing to
our overall reduction of c.60% since 2010.
Our commitment to sustainability has
enabled Bunzl to sign environmental,
social and governance (ESG) loans in 2021
which are linked to the progress we make,
with ESG financing likely to become a
greater mix of our overall borrowing
profile over time.
Ensuring a
responsible
supply chain
Our auditing process is key to
preventing defective products being
shipped and to ensure products
comply with our ethical standards.
Products supplied directly from Asia
are through suppliers that are verified
by our Shanghai office. We work with
suppliers to improve their operations
but will walk away if issues cannot
be resolved.
c.98%
of spend in Asia
audited every 2 years
754
ethical audits conducted
in Asia in 2021
We’re expanding our ethical
auditing programme to
ensure 90% of our spend on
products from all high-risk
regions are sourced from
assessed and compliant
suppliers by 2025.
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ABOUT OUR SHANGHAI
OPERATIONS
16
Bunzl plc Annual Report 2021
Prospects
We upgrade our 2022 guidance compared
to that published in our pre-close
statement. While we see continued
uncertainty relating to the extent of
product cost and operating cost inflation
and the effect of new Covid-19 variants,
at constant exchange rates the Group
expects moderate revenue growth in
2022, driven by the impact of acquisitions
completed in the last 12 months and
supported by a slight increase in organic
revenue. Continued recovery of the base
business is expected to be offset by the
further normalisation of sales of Covid-19
related products, albeit these are
expected to remain ahead of 2019 levels,
with inflation support in plastics, paper
and chemical products and the year-on-
year impact of deflation on certain
Covid-19 related products expected to
remain dynamics within our performance.
We also expect Group operating margin
in 2022 to be slightly higher than historical
levels, as the mix of sector and product
sales continues to transition to more
typical levels for the Group.
Looking ahead, the Group’s longer
term prospects remain attractive,
with the last two years reinforcing the
resilience and quality of the Bunzl model
by demonstrating the agility that comes
with our decentralised business model,
the critical role we play in supply chains
and for our customers, and our highly
cash generative nature. We expect to see
further normalisation in the near-term
as we continue to see base business
recovery at varying speed across sectors
and attractive longer-term growth
opportunities in the sectors that we
serve, particularly in safety, cleaning &
hygiene and healthcare. Further, we
believe the merits of joining the Bunzl
family have only been strengthened
as a result of the pandemic and this is
reflected in our recent acquisition success
and the conversations we are having
with a number of acquisition targets.
The Group remains committed to
creating value through its proven
and consistent strategy of driving
organic growth, delivering operational
improvements and further consolidating
our markets through strategic acquisitions.
Frank van Zanten
Chief Executive Officer
28 February 2022
Our leadership team
Leaders from across the Group meet regularly to
review performance, discuss trends affecting our
businesses and seek further opportunities for
growth and competitive advantage.
READ MORE
PAGE 96
Frank van Zanten*
Chief Executive
Officer
Diana Breeze*
Director of Group
Human Resources
Richard Howes*
Chief Financial
Officer
Andrew Mooney*
Director of Corporate
Development
Suzanne Jefferies*
General Counsel
and Company
Secretary
* Members of the Executive Committee
Jim McCool
Chief Executive Officer,
North America
Andrew Tedbury
Managing Director,
UK & Ireland
Alberto Grau
Managing Director,
Continental Europe
Jonathan Taylor
Managing Director,
Latin America
Kim Hetherington
Managing Director,
Asia Pacific
Mark Jordan
Group Chief
Information Officer
Bunzl plc Annual Report 2021
17
STRATEGIC REPORT THE DIFFERENCE IS ESSENTIAL
Supporting our
customers with
sustainable solutions
James Pitcher
Group Head of
Sustainability
‘Bunzl’s business model is
perfectly positioned to support
our customers’ sustainability
objectives. The risk-based
approach we take to ethical
auditing across our supply chain,
our carbon-efficient consolidation
model and unrivalled range of
alternative packaging products
means we can engage the
whole value chain to help
build a better world.’
WATCH THE FILM:
TAILORED SOLUTIONS
FOR A BETTER WORLD
18
Ensuring products are made
from alternative materials
A very important part of what we do is innovating products to
provide better solutions for our customers. One of our grocery
customers sold hot rotisserie chicken in plastic domes with
a black plastic underside which was very difficult to recycle.
Bunzl worked with the customer to design an alternative bag
which removed the difficult to recycle black plastic, reduced the
weight of the packaging, improved the logistical efficiency as
more units fit into a carton (1,000 vs. 136) and is recyclable via
in-store collection. We are now working to introduce a solution
which includes recycled content to further support the circular
economy and help our customer meet the requirements of the
UK plastics tax.
Bunzl plc Annual Report 2021
Sustainability as a
competitive advantage
Supporting a more
circular economy
Our ability to provide Andron, a UK facilities management chain
who service over 900 locations, with a much more reliable,
responsive and sustainable service supported us in winning
a new contract with them. We have a carbon optimisation
process that helps us to identify savings that can be made.
We agreed a plan with Andron that optimises the company’s
ordering patterns to reduce their carbon footprint with the
remaining emissions offset through reputable schemes.
We also developed a new closed loop solution with five-litre
cleaning solutions collected by our drivers and sent back to
our supplier to be washed and refilled.
Our customers explained that while they don’t expect Bunzl
to establish new closed loop recycling systems ourselves,
they would like us to provide the support required to make
their circular initiatives a success. We partnered with a large
grocery customer in Hungary, the Czech Republic and
Slovakia. They have developed a film-based recycling
programme where waste plastic is collected by our logistics
network, transported to a speciality recycler before being
transformed into their new reusable bags-for-life, supplied
by Bunzl. The scheme is expected to collect enough
material to produce 30 million bags in the next few years
and 5.4 million reusable bags have moved through this
new closed loop system so far.
Bunzl plc Annual Report 2021
19
STRATEGIC REPORT THE DIFFERENCE IS ESSENTIAL
Continued focus
and investment in
our people
Diana Breeze
Group HR Director
‘Bunzl has so much to offer as an employer,
including learning and development
support and almost limitless career
development opportunities. However,
what really sets us apart is our inclusive
and customer-focused culture’
Bunzl’s ‘We Believe’
employment brand
articulates our culture
The “We Believe” employer brand has now been in place for
almost 12 months. New content is communicated via key
social media channels such as LinkedIn every month around
a different “Belief Statement”, and key Group-level messaging
is supported by local “stories” coordinated at regional or
national level. The number of views per month attracted by
each post can be tracked, and there have been some very
positive results. For example, the International Women’s Day
campaign, which featured profiles of several of our senior
female leaders from across the Group, attracted more than
30,000 views. Of particular interest are the personal profiles of
leaders, and Frank van Zanten’s post supporting the statement
“At Bunzl we believe that when you join our team, your
potential is unlimited” also attracted a high number of views.
20
Bunzl plc Annual Report 2021
“In Bunzl North
America, ensuring
that our culture is
truly inclusive has
been a huge area of
focus during 2021,
and this has started
with making sure
that we take the
time to listen to
our colleagues and
understand their
perspectives”
The creation of a Diversity, Equity and
Inclusion plan for Bunzl North America
began with a series of listening initiatives
across the Group. All female colleagues in
the Business were surveyed to assess the
interest in an establishment of a Women’s
Network similar to the “Inspiring Women
in Bunzl” network in the UK. The response
was overwhelmingly positive and the
network is now thriving. “Voices” listening
sessions were held for small groups of
colleagues from non-white ethnic
backgrounds with Jim McCool, the
Chief Executive Officer, so that any real
or perceived barriers to engagement
and progression could be understood
in a safe environment. One of the key
learnings was the opportunity to
celebrate diversity through effective
communications, and throughout 2021
regular updates have focused on a whole
range of events such as Black History
Month, Pride, Juneteenth and Hispanic
Heritage month.
82%of employees believe that
leaders support diversity
& inclusion here.
Bunzl plc Annual Report 2021
21
STRATEGIC REPORT THE DIFFERENCE IS ESSENTIAL
Improving efficiency
with engaging
digital solutions
Mark Jordan
Chief Information Officer
‘Complex customer journeys
necessitate smart digital
solutions that simplify ordering
but also provide customer
enhancing insights.’
At the heart of Bunzl’s proposition is the
ability to tailor processes to individual
customer needs. Digital tools are a crucial
component of this proposition; from
being able to customise order lists and
budgets to individual users; to integrating
our ordering platforms into our customers’
own intranets; and providing app-based
ordering solutions. Furthermore, we
provide digital solutions that enable
our customers to make better solutions,
such as our proprietary sustainability
dashboards. These tools enhance the
value we provide our customers and
build our competitive advantage.
Customised dynamic
dashboards
Dynamic dashboards that are customised to provide real-time
full visibility around key management information, for example,
spend per site and efficiency opportunities. Many of our
customers are businesses with multiple users ordering
products across different sites and the insight our tools
provide is invaluable to enable us to improve efficiency,
ensure compliance and support the transition to products
which are well suited to a circular economy.
67%Group orders placed
digitally in 2021
22
Bunzl plc Annual Report 2021
Using our footprint tools
to support customers in
making the right choices
Across many of our businesses we are now providing
our customers with the data they need to understand
the mix of packaging that they source and how this
packaging is ranked against alternatives. Our data insights
allow customers to accurately measure their progress in
transitioning products to those that are better suited to
a circular economy against their commitments, and to
assess the impact of legislation and track actions to mitigate
this risk. Our solutions incorporate supplier portals to
ensure accurate real-time reporting even when products
supplied change.
Example customer output
Products at risk of legislation
Product recyclability
High
Medium high
Medium low
Low
4%
8%
26%
62%
Widely recyclable
Recyclable through
specialist provision*
Not recyclable
74%
21%
5%
* The recyclability of the packaging needs to be checked before disposal, returned to larger
recycling points or supermarkets as is not collected by all local authority kerbside collections.
Bunzl plc Annual Report 2021
23
STRATEGIC REPORT MARKET TRENDS
Agile response to evolving
market dynamics
Bunzl’s organisation structure and strength of
management teams continues to be a driving
force in Bunzl’s response to challenges faced
and opportunities.
Summary of performance
over the pandemic
2020
Strength of Covid-19 related sales more than offset
material declines in our base business, with impact across
all our core sectors and particularly foodservice and retail.
2021
Reversing trends with year-on-year decline in Covid-19
related sales offset by base business recovery, inclusive of
inflation support. Due to varied levels of restrictions and
sector mix, recovery in the base business has been mixed
across countries, but by the final quarter of 2021 all
business areas achieved base business revenues ahead
of 2019, except for UK & Ireland which was slightly below.
Inflation has been strongly supportive to this recovery.
Resilience through mix
Absolute top 8 Covid-19 related
revenue1 (£m)
Absolute base business2
revenue (£m)
1,200
1,000
800
600
400
200
0
5,000
4,000
3,000
2,000
1,000
0
H1-19 H2-19 H1-20
H2-20 H1-21 H2-21
H1-19
H2-19 H1-20
H2-20 H1-21
H2-21
Smaller orders
Larger orders
1 Covid-19 related revenue refers to the revenue generated from the top 8 Covid-19 related products,
being masks, sanitisers, gloves, disinfectants, coveralls, disposable wipes, face shields and eye protection.
2 Base business defined as underlying revenue excluding the top 8 Covid-19 related products.
3 Alternative performance measure (see Note 3 to the consolidated financial statements on page 170).
Underlying revenue growth3 of
4.8%
in 2020 comprised of +14.6% from
Covid-19 related revenue1 and
(9.8)% from base business revenue2
Underlying revenue growth3 of
3.6%
in 2021 comprised of (6.3)% from
Covid-19 related revenue1 and +9.9%
from base business revenue2
17%
constant currency revenue growth
2019-2021, with broadly equal
contribution from acquisitions
and underlying revenue growth
23%
adjusted operating profit3 growth
2019–2021
24
Bunzl plc Annual Report 2021
Transition to
normalisation
• We expect the sales of Covid-19 related products to
remain higher than 2019 levels from 2022 onwards,
although we expect the annualisation of price deflation
on certain Covid-19 related products to be a headwind
in 2022.
• We expect continued recovery of our base
businesses, with inflation trends supportive.
In the near term we expect varying speeds of recovery by sector
Safety
• Wide array of end markets –
slower short term recovery
impacted by inflation in raw
materials and labour shortages
Cleaning & Hygiene
• Facilities management – cautious
on speed of recovery given
footfall in offices
• Ongoing benefit from deep
cleaning
Healthcare
• Healthcare institutions –
expect strong recovery in
elective surgeries given backlog
Grocery
• Grocery chains – momentum
maintained with support from
inflation
Foodservice
• Restaurants – recovering well as
markets open and as home
delivery remains elevated
• Convenience stores – recovery
• Catering – cautious on recovery
will follow improved travel
trends
speed given return to work
exposure
• Hotels – full recovery dependent
on international travel
• North America food processor –
strong growth
Retail
• Big box and mall based
retail – improved footfall will
support but expected lasting
shift to e-commerce
• E-commerce retail – strong
growth providing some offset
Bunzl plc Annual Report 2021
25
STRATEGIC REPORT
MARKET TRENDS CONTINUED
Beyond the
pandemic
Our underlying growth is supported by
activity in our markets and we are well
placed in attractive end markets
Trends
Revenue opportunity
in the medium term
Safety
• Growth supported by increasing safety
standards, regulation and awareness
• Infrastructure spend
Cleaning & Hygiene
• Enhanced cleaning habits
• Technology to improve cleaning
efficiency
Healthcare
Grocery
Foodservice
Retail
• Growth of care at home
• Increased focus on preventative
healthcare
• Willingness to outsource non food essentials
• Sustainable packaging growth with transition
to alternative products
• Omnichannel strategy supports broadening
of product range
• Eating away from home
• Home delivery
• Sustainable packaging growth with transition
to alternative products
• Omnichannel strategy
• Sustainable packaging growth with transition
to alternative products
•
•
•
•
•
•
26
Bunzl plc Annual Report 2021
Supporting our customers
with the omnichannel shift
Grocery
• Shift from in-store orders to
e-commerce orders is broadly
neutral to Bunzl
• Stores remain important in an
omnichannel world but product
mix supplied by Bunzl can change
• While online orders are largely picked
in-store, store footfall is reduced given
a single picker can pick multiple orders
for customers. This impacts some
areas, such as cafes, hygiene and
cleaning areas
• The reduced demand for in-store
products is offset by increased
demand for products to support
online delivery to customers’
homes, such as multi pick
trolleys, packaging for delivery
segmentation, delivery crates,
labels, driver uniforms and
vehicle cleaning and sanitation
Foodservice
Retail
• Packaging choices are important for
delivery platforms and the
restaurants utilising them, with
considerations ranging from
branding to technical specification
• We expect channel to grow
independently of restaurant visits
and this is therefore a new growth
channel for Bunzl
• E-commerce packaging is vital to
protect products during transit,
ensure it delivers the customer brand
experience and is simple to reuse
for returns
• Bunzl works with customers to develop
sustainable packaging alternatives and
conducts audits to optimise packaging
• The range and sales of packaging used
for online orders is typically higher
than those for in-store packaging
Listen to what one of our
e-commerce retail customers,
bol.com, has to say about the
support we provide to them
• 14 years of partnership
• Wide range of e-commerce
packaging products
• Tailored deliveries, daily interaction,
quarterly innovation meetings
• Help with achieving carbon neutral
packaging by the end of 2024
SCAN THE QR
CODE TO GO TO
THE BOL.COM
VIDEO
Bunzl plc Annual Report 2021
27
STRATEGIC REPORT
OUR PURPOSE-LED STRATEGY
Delivering long term
sustainable value
Our purpose
We believe that our
purpose is to deliver
essential business
solutions around
the world and create
long term sustainable
value for the benefit
of all stakeholders.
Through
our core
values
• Humility
• Responsiveness
• Reliability
• Transparency
What
Essential
business
solutions...
One-stop-shop
We source
We consolidate
We deliver
We ensure:
• Customer-centric service model
• Simplification and efficiency
• Local agility and knowledge
• Value-add services and expertise
• Sustainable and responsible solutions
• Reliability
28
Bunzl plc Annual Report 2021
How
Create
long term
sustainable
value...
A compounding strategy
that consistently delivers…
• Profitable organic growth
• Operating model improvements
• Acquisition growth
READ MORE
PAGE 32
We deliver:
• Growth opportunities
• Strong track record
• Resilience
• Good return on invested capital
• Strong cash generation
…with sustainability
a vital part of the equation
• Responsible supply chains
• Investing in a diverse workforce
• Taking action on climate change
• Providing tailored alternative solutions
READ MORE
PAGE 46
We provide:
• Industry-leading supplier audits and control
• Decentralised business model that is supportive of a focus on our colleagues
• Carbon efficiency through consolidation
• Supplier flexibility to source alternative and more sustainable products
Why
For the
benefit of all
stakeholders
Customers
Colleagues
Environment
Shareholders
Suppliers
Communities
READ MORE
PAGE 58
Bunzl plc Annual Report 2021
29
STRATEGIC REPORT OUR BUSINESS MODEL
Essential business solutions
Our tailored
service model
Bunzl offers tailored solutions
that utilise varied resources
and capabilities.
We source
• Sourcing experts and category specialists
• Global supplier relationships
• Own brand portfolio
• Innovative product sourcing, including
those well suited to the circular economy
• Customer-specific products
• Competitive prices
We consolidate
• One-stop-shop for all products in a
single delivery
• Customised digital solutions
• Integrated ordering systems
• Analytical support to improve efficiencies
• Carbon savings through consolidated
deliveries
Our service and value
proposition for our customers
By providing our customers with a broad range of essential
items, readily available from stock, alongside specialist
knowledge and expertise, we provide the reassurance
our customers need for important items, which allows
them to focus on their core businesses. The value of our
service to our customers goes far beyond the cost of the
products sourced.
Product
cost
Cost to process
Cost of failure
Working capital investment
Sustainability risks
Logistal infrastructure
Established product expertise and supplier network
Innovation costs
We deliver
• On-time, in-full delivery; received just-in-time
• Multiple delivery options that include direct
to site, cross dock or warehouse
replenishment
• Extensive distribution network with regional
and national coverage
Saving our
customers
more than just
the cost of
products
30
Bunzl plc Annual Report 2021
Our sources of
competitive advantage
Tailored solutions and value-added services
Our tailored solutions enable us to add value to our
customers’ operations, ensuring products sourced meet
our customers’ needs and they receive their orders
on-time and in full.
Global and ethical sourcing
We source and procure branded, own brand and
unbranded products, working with suppliers to give our
customers access to the best and most suitable products
and solutions to meet their needs, with the reassurance
that they have been ethically sourced.
Sustainable solutions
Our depth of expert advice, own brand ranges and priority
data help our customers navigate the complex transition
to new products and solutions.
Carbon efficient model
Our consolidation model drives a reduced carbon footprint
in comparison to competitors who process smaller,
unconsolidated orders.
Digital capabilities
Our e-commerce platforms enhance the experience
for our customers while increasing the efficiency of
our operations.
Our people
Our c.6,000 sales experts and locally based customer
service specialists use their detailed knowledge to work
with customers to ensure they receive the best possible
advice on all product and service related matters.
Decentralised model
Comprising c.150 operating companies, with a
decentralised operational structure, Bunzl’s management
teams focus on their customers’ needs in their local
markets and create an energised entrepreneurial
environment.
International scale
With operations in 31 countries, our extensive distribution
networks mean we can deliver to customers on a local,
regional, national and international basis, giving them
complete flexibility and management reporting.
Acquisition track record
We have a strong track record of making and successfully
integrating acquisitions, helping us to extend our
geographic footprint while at the same time enabling
our acquired businesses to continue to feel ‘local’.
Our capital
allocation
priorities
Cash flow
Our businesses are highly cash
generative and this, together
with our disciplined approach
to capital allocation, allows us
to reinvest to deliver organic
growth, pay a growing
dividend and grow our
business by acquisition.
Reinvestment
We continue to reinvest in our
operations, including in our IT
systems and e-commerce
applications, vehicle routing
and warehouse management
systems and by consolidating
and upgrading our warehouses.
Acquisitions
Applying our disciplined
and controlled approach,
we have been able to commit
£4.4 billion of cash generated
to 183 acquisitions since 2004
while maintaining a prudent
approach to leverage which
continues to support our
excellent future acquisition
opportunities.
Dividends
Our dividend has grown every
year for 29 years at a CAGR
of 10% per annum. We are
committed to ensuring
sustainable dividend growth in
line with our progressive policy.
Delivering
value for
all of our
stakeholders
Bunzl plc Annual Report 2021
31
STRATEGIC REPORT
OUR STRATEGY
A consistent
compounding strategy
Our strategy is founded
on organic growth,
operating model
improvements and growth
through acquisition,
with a commitment that
growth is sustainable and
equitable. Within these
core pillars, our strategic
priorities enable Bunzl to
maintain and strengthen
its competitive advantages.
Consistent compounding strategy
Profitable
organic
growth
Operating
model
improvements
Acquisition
growth
Use our competitive
advantage to support
the growth of our
customers and to
increase our market
share
Daily focus on making
our business more
efficient
Use strong balance sheet
and excellent cash flow
to consolidate our
markets further
MORE INFORMATION
ON PAGE 33
MORE INFORMATION
ON PAGE 34
MORE INFORMATION
ON PAGE 35
Proven track record
Revenue (£bn)
10.3
C A G R 9 %
2.4
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Adjusted EPS1 (p)
162.5
C A G R 1 0 %
31.7
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
1 Alternative performance measure (see Note 3 to the consolidated financial statements on page 170).
32
Bunzl plc Annual Report 2021
Profitable
organic growth
We are constantly
looking to grow
Bunzl organically,
both by expanding
and developing
our business with
existing customers
and by gaining
new business
with additional
customers.
Our organic growth drivers
Volume
Price
Mix
Sell more to existing
customers
Inflation
Own brand/imports
Expand product ranges
Market dynamics
Manufactured brands
Win new customers
FX impact
Geographies and sectors
Market leading customers
Sustainability
Growing sectors
Trend to outsourcing
STRATEGY IN ACTION
How our model drove
success during the
pandemic
• c.£3.5 billion of Covid-19 related orders made over the
last two years, including c.£550 million of larger Covid-19
related orders in 2020
• Supported customers with products that suited new
needs, such as screens and social distance signage
• Growth supported by inflation on certain items
• Fulfilled demand, despite supply issues, through
own brand product ranges
• Provided reassurance around ethical sourcing, at a time
of great disruption
Underlying revenue growth1
2021 vs 2019
+8.5%
Bunzl plc Annual Report 2021
33
STRATEGIC REPORT
OUR STRATEGY CONTINUED
Operating model
improvements
We continually
strive to improve
the quality of our
operations and to
make our businesses
more efficient
and sustainable.
Operating cost efficiencies
continually assessed
• Consolidating warehouses –
75 warehouses consolidated
in the last five years
• Implementing IT systems and solutions
• Delivery and routing efficiencies
• Staff productivity improvements
• Energy savings
Digital a key enabler
to driving efficiencies
Supply chain efficiencies
• Stock management
• Demand planning
• Rapid product sourcing
• Data driven decision making
Optimising our operations
• Analytics based operating model
• Optimising fleet & delivery processes
• Leading warehouse management systems
STRATEGY IN ACTION
UK grocery and non-food retail
efficiencies over the last five years
Warehouse consolidations: six small
warehouses into one efficient warehouse
Investment in workforce management
systems to increase labour productivity,
efficient pick runs and safe systems of work
Use of energy efficient lighting reducing
energy usage by 70%
Investment in transport management software
supporting fuel economy, reducing accidents
and optimising vehicle route planning
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Bunzl plc Annual Report 2021
Acquisition
growth
We seek out
businesses that
satisfy key criteria,
including having
good financial
returns, while
at the same
time providing
opportunities to
extract further
value as part of
the Bunzl Group.
Success of acquisition strategy
• 183 acquisitions since 2004
• £4.4 billion committed acquisition
spend since 2004, self-funded
• Two thirds of revenue growth driven
by acquisitions over recent years
• A stronger, more diversified business
• Group average return on invested
capital over last three years of 15%
compared to WACC of 6–8%
Average components of revenue
growth over last 10 years
4.6%
2.5%
Organic growth
Acquisitions
Average growth over last 10 years
STRATEGY IN ACTION
50 safety acquisitions
since 2000
• Attractive sector, with focus on own brand and innovation
• In some markets we sell to redistributors and in others
we sell to end customers
• Diverse end markets (e.g. construction, manufacturing,
energy and mining)
• c.£1.6 billion of committed spend in the sector since 2005,
accounting for c.40% of Bunzl’s acquisition investment
Acquisition of McCue Corporation
(October 2021)
Safety and asset protection solutions, such
as safety barriers, floor railings and bumpers,
for use in warehouses and high footfall
environments
• >20% historical sales CAGR (2018-2021)
• Strong margins; above typical group safety margins
• Exciting growth opportunity:
– growth of e-commerce based distribution activities;
– importance of health and safety measures in
operating environments;
– increasing prevalence of higher value
warehouse equipment; and
– international growth
Bunzl plc Annual Report 2021
35
STRATEGIC REPORT
KEY PERFORMANCE INDICATORS
Measuring our
strategic progress
We use the following key performance indicators
(‘KPIs’) to measure our progress in delivering the
successful implementation of our strategy and
to monitor and drive performance.
Profitable organic growth
Acquisition growth
Operating model
improvements
Organic revenue growth (%)
Acquisition spend £m
Operating margin %∆
5.3
616
508
445
183
124
7.7
7.3
6.9
6.8
6.8
7.0
4.3
4.3
3.2
(0.2)
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
2017
2018
2019
2019
2020
2021
Increase/(decrease) in revenue for the year excluding the
impact of currency translation, acquisitions during the
first 12 months of ownership and disposals.
Consideration paid and payable, together with net debt/
cash assumed, in respect of acquisitions agreed during
the year.
Organic revenue increase of 3.2% was driven by the
strong recovery in the base business.
Committed acquisition spend of £508 million with 14
announced acquisitions.
Reconciliation of revenue growth
between 2020 and 2021 £m
10,111
345
379
10,285
(512)
(38)
Annualised revenue from
acquisitions £m
621
602
IAS 17
IFRS 16
Ratio of adjusted operating profit∆ to revenue.
Operating margin of 7.3% compared to 7.7% in 2020.
Excluding the impact of acquisitions during the first 12
months of ownership, the 2021 operating margin∆ was 7.1%,
down from 7.6% in 2020 (restated at constant exchange rates).
Return on average
operating capital %∆
53.1
50.7
45.4
43.3
48.4
36.9
322
148
97
2017
2018
2019
2020
2021
2017
2018
2019
2019
2020
2021
2020
Currency
translation
Impact of
one less
trading
day
Under-
lying
revenue
growth
Acquisitions 2021
Revenue up 2% (7% at constant exchange rates) driven by
underlying revenue growth, acquisitions made in 2020
and 2021, partly offset by a small adverse impact from
one less trading day compared to 2020.
Estimated revenue which would have been contributed
by acquisitions agreed during the year if such
acquisitions had been completed at the beginning of the
relevant year (see Note 28 on page 201).
IAS 17
IFRS 16
Ratio of adjusted operating profit∆ to the average of the
month end operating capital employed (being property,
plant and equipment, software, right-of-use assets,
inventories and trade and other receivables less trade and
other payables).
RAOC down to 43.3% from 45.4% in 2020 driven by a lower
operating margin and reflective of a more normal revenue
mix for the Group as Covid-19 related sales have decreased.
Financial
Adjusted earnings
per share p∆
129.6
132.4
132.2
119.4
164.9
162.5
Return on invested
capital %∆
16.0
15.0
16.2
15.1
14.6
13.6
Cash conversion %∆
97
94
100
101
103
102
2017
2018
2019
2019
2020
2021
2017
2018
2019
2019
2020
2021
IAS 17
IFRS 16
IAS 17
IFRS 16
2017
2018
2019
2019
2020
2021
IAS 17
IFRS 16
Adjusted profit for the year∆ divided by the weighted
average number of ordinary shares in issue (see Note 8
on page 177).
At constant exchange rates, adjusted eps up 4.9% from a
2.8% increase in adjusted operating profit∆, a reduction in
net interest expense and a decrease in the effective tax rate.
Ratio of adjusted operating profit∆ to the average of the
month end invested capital (being equity after adding
back net debt, net defined benefit pension scheme
liabilities, cumulative customer relationships and brands
amortisation, acquisition related items and amounts
written off goodwill, net of the associated tax).
ROIC down to 15.1% driven by a lower operating margin
and reflective of a more normal revenue mix for the
Group as Covid-19 related sales have decreased.
Operating cash flow∆ as a percentage of lease adjusted
operating profit∆ (see Consolidated cash flow statement
on page 160).
Another strong year of cash generation with cash
conversion of 102% in 2021 and an average of 98%
since 2004.
36
Bunzl plc Annual Report 2021
These KPIs reflect our strategic
priorities of developing the business
through organic and acquisition led
growth and improving the efficiency
of our operations as well as other
financial and environmental metrics.
Existing non-financial
key performance indicators
Scope 1 carbon emissions
Tonnes of CO2e per £m revenue
11.3
11.4
10.7
9.5
8.5◊
∆ Alternative performance measure (see Note 3 on page 170).
◊ Included in the external auditors’ limited assurance scope. See the data assurance
statement on the Company’s website, www.bunzl.com. The data for previous years
was also assured as detailed in the respective Annual Reports.
As we launched the next phase of our sustainability commitments in 2021 we
will be updating the non-financial Key Performance Indicators (KPIs) we track to
assess our performance. A summary of the targets for these is shown below
and a more detailed description of our current performance against these key
themes can be found in the Sustainability section of this report (page 46), the
ESG Appendix (page 85) and Sustainability Accounting Standards Board (SASB)
disclosure on page 83. The current non-financial KPIs shown on this page will
move to the ESG Appendix in the 2022 Annual Report.
2018
2019
2017
2020
Measured in accordance with the Greenhouse Gas
Protocol applying BEIS conversion factors.
2021
Scope 1 carbon emissions down 14% at constant
exchange rates (down 11% at actual exchange rates)
primarily due to unusual business circumstances, with
activity in some businesses impacted by pandemic-
related restrictions.
12 months to 30 September.
Scope 2 carbon emissions
Tonnes of CO2e per £m revenue
3.7
3.6
3.2
2.9
2.4◊
2017
2018
2019
2020
2021
Measured in accordance with the Greenhouse Gas
Protocol applying BEIS UK conversion factors and IEA
factors for overseas electricity.
Scope 2 carbon emissions down 18% at constant
exchange rates (down 15% at actual exchange rates)
driven by the continued implementation of energy
efficiency improvements such as low energy lighting.
12 months to 30 September.
Fuel usage
Litres per £000 revenue
3.7
3.6
3.4
3.1
2.7◊
2017
2018
2019
2020
2021
Diesel, petrol and LPG used in the Group’s own vehicles.
Fuel usage down 14% at constant exchange rates (down
11% at actual exchange rates) primarily due to unusual
business circumstances with activity in some businesses
impacted by pandemic-related restrictions.
12 months to 30 September.
Responsible
supply chains
Target
90%
Investing in our people
and a diverse workforce
Target
The percentage of women on our
main Board and Executive
Committee will be at least
of our spend on products from all
high-risk regions will be sourced
from assessed and compliant
suppliers by 2025
40%
Taking further action
on climate change
Providing tailored
alternative solutions
Target
25%
reduction in CO2 emissions (scope 1
and 2) by 2025 (baseline of 2019)
Target for 2030
50%
reduction in CO2 emissions (scope 1
and 2) by 2030 (baseline of 2019)
Target
We will significantly
increase the amount
of recyclable,
compostable or
reusable packaging
supplied to our
customers to help
them meet their
targets
Bunzl plc Annual Report 2021
37
STRATEGIC REPORT OPERATING REVIEW
North America
Percentage of
Group adjusted
operating profit*◊
51%
208
Locations
7,936
Employees
‘Our strong
network has
been resilient
against supply
challenges’
Jim McCool
Chief Executive Officer
North America
In North America, revenue increased
12.4% to £6,144.7 million, with underlying
growth of 9.2%. The positive impact of
the acquisitions of MCR Safety, Snelling,
Pinnacle, Intergro, McCue and to a lesser
extent Tingley Rubber, was supported by
significant inflation, particularly in grocery
and foodservice, as well as the strong
recovery across foodservice and retail
businesses due to reduced Covid-19
related restrictions and economic
stimulus. By the second half of the year
the base business was trading strongly
ahead of 2019 levels, driven by inflation.
Adjusted operating profit was £401.3
million with an operating margin of 6.5%,
down from 6.8% in 2020, driven by the
recovery of the lower margin sectors
within the base business, as well as the
impact of deflation on certain Covid-19
related products in the second half of
the year. Over the period, underlying
operating cost inflation in wages,
property and delivery costs accelerated
significantly but was more than offset by
revenue growth attributable to product
inflation. Bunzl’s resilient network, scale
and global sourcing allowed it to mitigate
many of the service level issues brought
on by inbound supply chain disruption
and labour capacity challenges.
Our largest business, in the US grocery
sector, saw revenue increase very
strongly from continued consumer
demand and product cost inflation,
though certain categories, such as
salad and hot food bars remained
below pre-pandemic levels. Although
consumers increasingly utilised online
ordering, the associated orders have
been largely fulfilled at the store level,
creating the need for packaging and
labels. Our convenience store sector
business also saw improvement
throughout the year as travel gradually
returned, but overall saw a slight decline
as many convenience store retailers
have not yet fully reopened their
foodservice offerings.
Our foodservice redistribution business
delivered very strong growth, driven by
the reopening of in-restaurant dining
and subsequent strong demand, with
significant net inflation in packaging
categories more than offsetting a decline
in Covid-19 related sales. Takeaway
packaging also continued to drive sales
despite the return of in-person dining.
Our businesses serving the food
processor and agricultural sectors also
grew strongly, due to continued strong
consumer demand and increased sales
of packaging in support of certain
pandemic-related government food
programmes. A strong focus on own
brand and supply chain management
ensured continuity of supply as demand
increased, despite the increasing
challenges across supply chains.
38
Bunzl plc Annual Report 2021
Revenue
Adjusted operating profit*
Operating margin*
£6,144.7m
(2020: £5,843.8m)
Growth at constant exchange rates
Underlying growth*
12.4%
9.2%
£401.3m
(2020: £395.7m)
Growth at constant exchange rates
8.5%
* Alternative performance measure
(see Note 3)
◊ Based on adjusted operating profit and
before corporate costs (see Note 4)
6.5%
(2020: 6.8%)
A decline in Covid-19 related sales, as
well as continued high levels of remote
working, negatively impacted our
cleaning & hygiene redistribution
business, which declined significantly.
Our retail supplies business delivered
moderate growth over the year, with
recovery benefiting from the reopening
of shopping malls and retailers in the first
half. Store level fulfilment of online orders
by many retailers provided growth in
packaging to support online orders.
Our safety business grew very strongly
due to the favourable impact of the
MCR Safety and McCue acquisitions,
which have performed well and are
positioned for continued growth.
Excluding acquisitions, growth was
more modest with soft demand in certain
end markets, such as oil and gas and
industrial sectors, as well as end market
supply chain and labour shortage issues.
Finally, our business in Canada grew
strongly, driven by the Snelling and
Pinnacle acquisitions, with strong
demand and product cost inflation in
the grocery and the industrial supplies
segments offsetting softness in the
cleaning & hygiene and foodservice
sectors related to Canada’s extended
lockdowns and remote working.
SUSTAINABILITY IN ACTION
Supporting customers to meet
industry-leading targets
The wide range of solutions and expert advice offered by Bunzl
allows our customers to have confidence when signing up to industry
leading programmes.
We started to transition a key customer to packaging made from
between 70 - 100% recycled content at the start of our contract nine
years ago. This transition and availability of the right solution for their
fragile products gave them the support they needed to become the first
US-based fresh produce company to sign up to the Ellen MacArthur New
Plastics Economy Global Commitment.
More recently, we have developed a dedicated in-house printing
department for the 300 million clamshells we supply every year to this
customer where we add proprietary washable labels, certified recyclable
by the Association of Plastics Recycling, to the packaging before they are
shipped to the customer.
Number of clamshells supplied made
from recycled content
300m
Bunzl plc Annual Report 2021
39
STRATEGIC REPORT OPERATING REVIEW CONTINUED
Continental
Europe
Percentage of
Group adjusted
operating profit*◊
25%
175
Locations
5,221
Employees
‘Our profit
growth since
2019 shows the
strength of
our model’
Alberto Grau
Managing Director,
Continental Europe
Revenue in Continental Europe declined
by 2.7% to £1,972.9 million due to the
significantly lower level of larger Covid-19
orders to government bodies compared
to 2020, although the acquisitions of ICM,
Disposable Discounter, Proin Pinilla,
Arprosa and Hydropac were supportive.
Excluding these acquisitions and larger
one-off Covid-19 related orders,
underlying sales grew moderately as the
decline in smaller Covid-19 orders was
more than offset by growth in the base
business, particularly in the foodservice
and non-food retail sectors, supported
by inflation. Adjusted operating profit
declined by 14.0% to £191.8 million.
Operating margin decreased from
11.2% to 9.7% at actual exchange rates,
reflective of a more typical margin for the
business area, with the impact of reduced
larger Covid-19 related orders on a largely
fixed cost base as well as deflation in
certain Covid-19 products in the second
half of the year. This more than offset
the benefit of a reduction in the charges
relating to inventory and credit loss
provisions compared to those taken
in 2020.
In France, our cleaning & hygiene
businesses saw a decline in sales due
to lower levels of Covid-19 related orders
as well as continued weakness in the
contract cleaning and office canteen
sectors due to employees working
from home, although revenues overall
remained above 2019 levels. Our safety
business was also impacted by a
reduction in Covid- 19 related orders
with only a partial offset from the
improvement within the base business.
Our specialist foodservice businesses saw
a very strong recovery although revenue
remains below that of 2019. As part of
our ongoing strategy of improving our
operating platform we relocated two
French businesses to new warehouses
in Rennes.
In the Netherlands, the retail and industry
sectors saw a very strong recovery,
fuelled by the increased demand in
packaging for e-commerce fulfilment and
cool packaging, while the healthcare and
contract cleaning sectors continued to
be adversely impacted by the pandemic.
Our recently acquired e-commerce food
packaging business also saw very strong
growth. Total revenue in the Netherlands,
excluding the larger Covid-19 related
orders, overall saw strong growth.
In Belgium, sales were stable in our
grocery business, with gains particularly
with food processors being mostly offset
by lower sales of industrial packaging,
although our cleaning & hygiene
businesses suffered from lower sales
to facilities management companies as
well as the decline in larger Covid-19
related orders.
In Germany, higher sales in our
foodservice business were offset by lower
Covid-19 related sales in the healthcare
sector. In Switzerland, sales were
marginally lower as good growth in the
industrial and foodservice sectors was
similarly offset by lower Covid-19 related
sales. In Austria, we saw improved sales
in both food and industrial packaging.
40
Bunzl plc Annual Report 2021
Revenue
Adjusted operating profit*
Operating margin*
£1,972.9m
(2020: £2,127.3m)
Growth at constant exchange rates
Underlying growth*
(2.7)%
(5.7)%
£191.8m
(2020: £238.1m)
Growth at constant exchange rates
(14.0)%
* Alternative performance measure
(see Note 3)
◊ Based on adjusted operating profit and
before corporate costs (see Note 4)
9.7%
(2020: 11.2%)
In Denmark, lower sales to the fitness,
safety, cleaning and public sectors more
than offset improvement in recovery
in parts of the foodservice sector. In
Norway, our catering equipment business
saw significantly improved sales following
removal of restrictions, but sales still
remained below 2019 levels.
In Spain, sales improved in all businesses,
with PPE sales ahead of the prior year
despite lower Covid-19 items as recovery
was seen in our more traditional
products. In Italy, our safety business
also recorded good growth as the base
business benefited from economic
recovery and more than offset lower
Covid-19 related sales.
Turkey delivered moderate sales growth,
supported by demand for PPE, hardware
and grocery sector products, as well as
currency-driven inflation, which more
than offset lower sales to hospitals. In
Israel, we benefited from the removal
of restrictions in the foodservice sector
and sales grew very strongly.
In Central Europe, sales growth in
Hungary and Romania and growth in PPE
in the Czech Republic, more than offset
a decline in sales to the grocery sector
in the Czech Republic and Poland.
SUSTAINABILITY IN ACTION
Independent advice when
transitioning from one material
to another
Containment, preservation, protection, material availability, effective
marketing, convenience of use, sustainability and budget are all key
considerations for our customers when choosing the right type
of packaging.
Our businesses have already made excellent progress transitioning
customers to alternative materials and 73% of the food containers
we sell across the Group are made from recyclable, compostable,
renewable or reusable materials.
In Continental Europe, we have recently transitioned 39 million
expanded polystyrene meat trays to a fully recyclable solution made
from recycled plastic with a long-standing customer in Belgium.
Material availability for the quantities required, food contact safety
and manufacturing speed were all key considerations for our customer
as well as improving the recyclability of the packaging.
Number of trays transitioned to fully
recyclable solution with recycled content
39m
Bunzl plc Annual Report 2021
41
STRATEGIC REPORT OPERATING REVIEW CONTINUED
UK & Ireland
Percentage of
Group adjusted
operating profit*◊
9%
94
Locations
3,812
Employees
‘We have
seen a strong
recovery since
the lifting of
restrictions’
Andrew Tedbury
Managing Director
UK & Ireland
In UK & Ireland, revenue declined by
2.4% to £1,254.2 million, driven by the
reduction in larger Covid-19 related
orders and restrictions at the beginning
of the year, despite the support from the
acquisitions of Bodyguard, Abco Kovex,
Deliver Net, Comax and Workwear
Express. Excluding these acquisitions
and larger Covid-19 orders, underlying
sales saw good growth driven by the
acceleration of recovery in the second
half of the year as restrictions eased,
although the base business in the
second half remained below 2019 levels.
Adjusted operating profit reduced to
£67.0 million, down 2.2%, with operating
margin stable at 5.3%. The operating
margin in the second half of the year
improved materially on the first half,
with a reduction in the charges relating
to inventory and credit loss provisions
compared to those taken in 2020 mainly
in the retail and foodservice sectors,
as well as the good recovery in the
base business.
Our safety businesses were very strongly
impacted over the year as raw material
and labour shortages continued to
impact our customer base which has
struggled to return to 2019 activity levels.
Despite this trend our businesses have
continued to invest in new digital
platforms and have also secured some
new customer wins in the second half
of the year.
In our cleaning & hygiene supplies
business, revenue growth improved
through 2021 as restrictions eased.
We have also secured new customers
driven by their desire for a strong and
established supplier of sustainable
solutions, the availability of quality
data to help them achieve their own
environmental aspirations and increasing
demand for closed loop partnerships.
Our non-food retail packaging businesses
saw strong growth over the year,
supported by Covid-19 related growth,
and with the base business trading
well in the second half of the year and
a partial bounce back for in-store
packaging requirements, such as bags
and boxes and continued growth in
online packaging. In grocery we achieved
moderate growth as we rolled out two
new customers and supermarkets
started to open in-store counters
following the end of lockdowns which
helped to balance the reduction in
sales of Covid-19 related orders.
Our foodservice business benefited from
the reopening of restaurants and hotels,
as well as the prevalence of domestic
holidays, although the industry has been
impacted by supply shortages. With
many employees continuing to work from
home, office-based contract catering
continues to be impacted. Overall, we
saw a material improvement over the
year with several new customer wins
in the second half of the year.
42
Bunzl plc Annual Report 2021
Revenue
Adjusted operating profit*
Operating margin*
£1,254.2m
(2020: £1,287.7m)
Growth at constant exchange rates
Underlying growth*
(2.4)%
(6.2)%
£67.0m
(2020: £68.6m)
Growth at constant exchange rates
(2.2)%
* Alternative performance measure
(see Note 3)
◊ Based on adjusted operating profit and
before corporate costs (see Note 4)
5.3%
(2020: 5.3%)
In healthcare, we have seen a significant
decline in sales of Covid-19 related
products although we experienced
moderate growth in the base business.
We saw an improvement in elective
surgeries and strong sales and
new business wins in the private
healthcare sector.
Our businesses in Ireland have also
had better performances in the second
half of 2021. The opening up of the
hospitality industry has resulted in an
increase in sales to restaurants, hotels
and coffee shops.
During the year we continued to
implement further operational efficiency
plans and exited five warehouses,
including two small warehouses in
Scotland in the second half, and
implemented a range of new technologies
within our shared finance centre.
SUSTAINABILITY IN ACTION
Driving carbon efficiencies
through optimised and
consolidated deliveries
To support customers to reduce the carbon emissions associated with
our deliveries, Bunzl Cleaning & Hygiene Supplies (BCHS) has launched a
new Carbon Forecast tool. The tool demonstrates to our customers how
increasing their average order value can reduce carbon emissions in
their supply chain by reducing the number of deliveries they receive
from BCHS.
In April 2021, BCHS finalised an agreement with EMCOR UK to double
their minimum order value. Using our proprietary Carbon Forecast tool
BCHS were able to identify significant carbon savings to the EMCOR UK
estate based on a 60% increase in average order value. This led to the
decision to go even further and commit to a 100% increase in average
order value.
The savings include c.360 fewer individual orders a year and a reduction
in administration costs without changing EMCOR overall spend with
BCHS. The significant reduction in CO2e will be equivalent to nine acres
of forest absorbing carbon, over a million smartphone charges or
c.22,000 passenger vehicle miles.
Increase in average order value
to reduce carbon emissions
100%
Bunzl plc Annual Report 2021
43
STRATEGIC REPORT OPERATING REVIEW CONTINUED
Rest of the
World
Percentage of
Group adjusted
operating profit*◊
15%
112
Locations
3,368
Employees
The Rest of the World delivered a very
strong performance, with revenue
increasing 11.0% to £913.3 million, with
underlying revenue growth of 4.7%,
and adjusted operating profit growth of
18.3% to £116.5 million. Operating margin
increased to 12.8% from 12.2% at actual
exchange rates. Latin America delivered
very strong revenue growth over the year,
driven by strength in the base business,
which traded very strongly above 2019
levels, and the acquisitions of SP
Equipamentos and Medcorp. Covid-19
related sales remained robust, although
deflation in Covid-19 related products
impacted operating profit margin,
particularly in the second half of the year.
Revenues in Asia Pacific were resilient,
with the impact of the acquisitions
of Obex Medical Holdings, Harvey
Distributors and Medshop, offset by a
decline in Covid-19 related orders over
the year. The base business in Asia Pacific
traded in line with 2019 levels over the
year, but with a better performance in the
second half of the year which delivered
good growth against 2019. Operating
margin improved in Asia Pacific driven
by the revenue mix, with strong growth
within healthcare, and with the
consolidation of two large warehouses
in Australia.
In Brazil, our safety businesses grew very
well as reduced demand for Covid-19
related products and the adverse impact
of disposable gloves deflation were
more than offset by strong demand
and product cost inflation in the base
business. In the foodservice sector,
trading was more difficult, particularly
due to deflation in gloves in the second
half of the year. Our healthcare
businesses had a very strong year
as the base business recovered well
and additional sales of vaccine related
products led to strong growth in sales
and operating profits.
In Chile, our safety businesses had an
exceptional year as the base business
recovered strongly and economic growth
ensured copper prices remained high,
in addition to the launch of new products
in our specialist safety footwear business.
In the foodservice sector, our catering
supplies business also benefited from a
good recovery in end markets and higher
demand for sustainable products.
In Mexico and Colombia, our safety
businesses were impacted by the
reduction in demand for Covid-19 related
products, with Mexico also impacted
by weak underlying industrial demand.
Our largest business in Asia Pacific
which is positioned well in the healthcare,
foodservice and cleaning & hygiene
sectors, has delivered a resilient
performance excluding the reduction
in larger Covid-19 related orders. The
business has a traditional customer base
in aged, primary and community care
which remained strong and benefited
from continued demand for smaller
Covid-19 related orders. This helped
offset the downturn in our traditional
hospitality customer base which
continues to operate at reduced
capacity due to ongoing restrictions.
‘Our acquisition
strategy has
continued to
support growth’
Jonathan Taylor
Managing Director
Latin America
‘Our resilient
portfolio has
been key to our
success during
the pandemic’
Kim Hetherington
Managing Director
Asia Pacific
44
Bunzl plc Annual Report 2021
Revenue
Adjusted operating profit*
Operating margin*
£913.3m
(2020: £852.3m)
Growth at constant exchange rates
Underlying growth*
11.0%
4.7%
£116.5m
(2020: £104.2m)
Growth at constant exchange rates
18.3%
* Alternative performance measure
(see Note 3)
◊ Based on adjusted operating profit and
before corporate costs (see Note 4)
12.8%
(2020: 12.2%)
Our speciality Australian healthcare
business had another very good year
despite the challenges with ongoing
supply chain issues from its major
suppliers. The business benefited from
increased demand for Covid-19 testing
swabs from state health departments
in the second half of 2021.
Our Australian safety businesses
achieved moderate growth, benefiting
again from ongoing improvements and
initiatives implemented over the past
few years. The business continues to
invest in the development of its PPE
and safety footwear range which will
complement our current market offering.
FRSA, our emergency services speciality
business, was also impacted by supply
chain and shipping delays but was
nevertheless ahead of last year. We also
successfully expanded our service
offering following several large contract
wins in Australia and we will also expand
our service capabilities for customers in
New Zealand.
Our safety business in Singapore
continued with another very good
performance, offsetting the slowdown
in its traditional customer base with an
increase in the sales of PPE and cleaning
& hygiene products.
SUSTAINABILITY IN ACTION
Enabling faster transition with
Bunzl own-brand solutions
We capture a good part of any transition to alternatives through our
own brands and this is usually accompanied by a positive margin impact
in addition to increased sales. Our Sustain and Revive packaging ranges
in Australia are a good example of this success.
Aligned to the Compass Group Planet Promise commitment (Planet
Promise | Compass Group (compass-group.com) and the introduction of
Australian single-use plastic legislation, our strategic customer Compass
Group Australia and their specialist procurement and supply chain
organisation Foodbuy transitioned their entire range beyond plastic
cutlery, straws and stirrers to include plates, hot cups and more.
The transition is across multiple jurisdictions of varying requirements;
a significant project where our partnership has provided expert advice,
guidance, and new product innovations in support of these changes and
to ensure legal requirements are met. Close to 20 million products are
being transitioned to alternative materials.
Number of consumable products
transitioned to alternative materials
20m
Bunzl plc Annual Report 2021
45
STRATEGIC REPORT SUSTAINABILITY REPORT
Tailored solutions for
a better world: Today,
tomorrow and beyond
Bunzl has always provided its customers with solutions and
the value we add is even more important when it comes to
supporting their progress on sustainability.
Our global scale, vast experience,
flexibility and unwavering passion means
we are perfectly placed to help build a
better world. We are working proactively
to help solve the problems society faces,
both now and in the future, whether that
is helping our customers innovate,
improving the ways we do things to
be more efficient, or partnering with
communities and other stakeholders
to make a difference.
We understand our role as an influential
leader in the transition to a more
sustainable and equitable future.
Our materiality assessment completed
in 2020 identified the four areas where
we can have the greatest impact.
Key themes
Our contribution
Benefits to our business, our stakeholders,
the environment and society
Responsible
supply chains
Respecting human rights with our
industry-leading sourcing and
auditing function in Shanghai
• Supplier education
• Supporting worker conditions
• Supply chain resilience and
assurance for customers
Investing in our
people and a diverse
workforce
Our large family of local businesses
are focused on developing talent,
increasing diversity and enhancing
inclusivity practices
• Acquiring & retaining talent
• Fostering a positive workplace
culture
• Increasing diversity and inclusion
Taking further
action on climate
change
Consolidating orders from a range
of sources into one delivery to
reduce transport emissions and
taking further action to tackle
climate change
• Carbon efficient offer for customers
• Business resilience
• Helping customers meet their
targets
Providing tailored
alternative
solutions
Using our scale and unique
position at the centre of the supply
chain working with customers and
suppliers to lead the industry
towards a more sustainable
approach to packaging
• Attracting new and retaining
existing customers
• Supporting a more circular economy
• Competitive advantage
46
Bunzl plc Annual Report 2021
Strong track record of transitioning customers
The majority of our packaging is recyclable, compostable, renewable or reusable
£6.8bn (66%)
Non-packaging products
Group revenue 2021
£10.3bn
£0.2bn (2%)◊
Consumables facing regulation
£0.8bn (8%)◊
Consumables likely to transition
£0.7bn (6%)◊
Packaging with an important purpose
£1.8bn (18%)◊
Packaging and products made
from alternative materials
◊ Included in the external auditors’ limited assurance
scope. See the data assurance statement on the
Company’s website, www.bunzl.com. More
information on our packaging categories can be
found on page 85.
Category
Recyclability
Consumable
products facing
regulation
Consumable
products likely
to transition to
alternative
materials
Packaging with
an important
purpose
Plastic products most commonly being
addressed by legislation in our markets
Plastic products that have measures in place
(driven by legislation or voluntarily applied by
some brands) to control their usage, for example
a charge for using plastic bags
Carrier and fresh
produce bags, coffee
cups, cold drink cups
Plastic products where alternatives do not
currently exist at scale or where careless
substitution of plastic could lead to significant
negative, unintended consequences such as
increased food waste
Packaging and
products made
from alternative
materials
Products that are recyclable or compostable
(in line with national guidance), made from a
renewable resource, for example palm leaf or
sugar cane, or reusable products like ‘bags for life’
or refillable coffee cups.
Examples
Straws, stirrers,
plates, bowls,
cutlery
Fresh meat, fruit,
vegetable trays,
films, takeaway
boxes
All of the above
84%
84% of Group revenue is
attributable to non-packaging
products or packaging products
made from alternative
materials that are well suited
to a circular economy
Packaging refers to packaging and other
products within the foodservice, grocery and
retail sectors which are facing legislation or
consumer pressure. We have exercised our
judgement to allocate the sales in 2021 to
non-packaging products and the four
packaging categories shown.
Bunzl plc Annual Report 2021
47
STRATEGIC REPORT SUSTAINABILITY REPORT CONTINUED
Responsible
supply chains
Highlights
Investing in our people
and a diverse workforce
• We have updated our supply chain risk assessment
in partnership with a leading NGO
• Our people are highly engaged
• We have increased our investment in the attraction
• New member of the Responsible Labor Initiative
• An independent review to benchmark our standards
and development of talent
• We are accelerating our Diversity, Equity and
against external best practice
Inclusion activity
Our progress
• 754 suppliers audited
• 77 identified as needing to improve practices
• 56 suppliers completed remediation work
• 11 in progress
• 10 suppliers terminated for not meeting our strict
standards
Supporting the UN Sustainable Development Goals (SDGs)
Bunzl has sourced an unprecedented amount of Covid-19
related products and provided innovative solutions
needed for new social distance measures and enhanced
hygiene. At a time of great disruption our Global Supply
Chain Solutions team not only provided the assurance
that these essential items were of the right quality but
that the products had been produced ethically and the
people in the supply chain treated fairly with in-person
manufacturing facility audits continuing throughout the
pandemic. To date our team have conducted over 200
quality inspections for Covid-19 related product lines with
orders totalling 440 million face masks checked as part of
this work.
• 86% engagement index score (global % of strongly agree
or agree responses to nine key questions from our
employee survey in 2021)
• 40% female leaders on the Board during 2021 and on
the Executive Committee
• Representation of women in senior leadership roles
in UK & Ireland has grown from 13% to 22%
Bunzl is committed to playing its role in creating a fairer,
more equitable society. Several new initiatives have
launched to support this commitment, including the
‘Diversity, Equality & Inclusion’ program in North America
and the ‘Inspiring Ethnicity in Bunzl’ group in the UK &
Ireland. Both have the ambition to drive meaningful
transformation across Bunzl and support the Group’s
ability to attract and retain the best talent, build
awareness around this critical issue while inspiring people
of all backgrounds to bring their most authentic selves
to the Company and help drive the business forwards.
‘It is great to see Bunzl taking a risk based approach
to responsible sourcing on such a large scale, as work
like this is vital to the prevention of modern slavery
and labour exploitation worldwide. We look forward
to building upon our effective NGO – business
partnership with Bunzl and helping them achieve
their social impact goals.’
‘My manager asked if I would like to be part of the
Inspiring Ethnicity in Bunzl (IEIB) Group. To be honest,
I was a little reluctant, fearing it could be a tick box
exercise. My fears were unfounded as IEIB has turned
out to be one of the most important activities that
I have been involved with in my six years working
for Bunzl.’
Jack Nunn,
Business Development –
Project Manager at
Stop the Traffik
Shezmin Madhani,
Senior National
Account Manager,
Bunzl UK & Ireland
48
Bunzl plc Annual Report 2021
Taking action on
climate change
Highlights
Providing tailored
alternative solutions
• New long-term carbon reduction targets for our
operations that are aligned to climate science
• Committed to the Business Ambition for 1.5° campaign
• Proactively developing products made from alternative
materials to help customers meet their targets
• Transitioning customers to materials that support
and joined the UN’s Race to Zero initiative
a more circular economy
• A new renewable energy target and net zero ambition
• Assessing full lifecycle impact to ensure transitioning
for the business
Our progress
does not cause unintended environmental
consequences
• 12% annual reduction in carbon emissions relative
• 73% of all food containers sold across the group made
to revenue
• 14% renewable energy procurement
• Conducted further energy efficiency projects that
reduced our Group electricity usage by 4%
from recyclable, compostable, renewable or
reusable materials
• 41% of the consumable products facing regulation have
been transitioned to alternative materials
• 42% of all bags sold across the Bunzl Group were paper,
compostable or reusable
Supporting the UN SDGs
King Belgium has been a distribution partner of Essity
in Belgium for over 25 years. Both companies have
invested in a 100% electric Renault truck that is now
supplying hygiene products like paper towels, facial
tissues, napkins and dispensing systems to customers
such as schools, hospitals, restaurants and contract
caterers across Belgium and Luxembourg. King Belgium
is continuing to contribute to a greener future in the field
of logistics with work underway to replace their existing
fleet with electric vehicles.
As well as working with our customers to find alternative
solutions for the products they use, we are also supporting
the creation of new waste management infrastructure
where it is needed most. For the last two years Bunzl
has been working with Plastics for Change to fund the
development of new waste management infrastructure
and provide improved social services for marginalised
waste picker communities in India. This project has
helped fortify plastics recycling businesses, pay waste-
pickers decent incomes, train them in techniques that
boost their livelihoods, and make investments that benefit
entire communities.
‘As a market leader in Europe, we take our social
responsibility very seriously and are contributing
further to sustainable developments. Thanks to the
collaboration with King Belgium, the entire process,
from factory to customer and end consumer,
is now much more environmentally friendly.’
Wilco Nederkoorn,
Commercial Director
Professional Hygiene Benelux
at Essity
‘We’re so thrilled to partner with Bunzl on a project
in South India that supports both the planet and
the people behind recycling. Over the last 2 years
we’ve seen meaningful impact in some of the most
vulnerable communities in the world. Plastics for
Change through the partnership support from Bunzl
has been able to support and lift over 100 waste-
collectors and their families from extreme poverty
through income opportunities related to new
waste management infrastructure.’
Shifrah Jacobs,
Chief Impact Officer
at Plastics for Change
Bunzl plc Annual Report 2021
49
STRATEGIC REPORT SUSTAINABILITY REPORT CONTINUED
Responsible
supply chains
Our global supply chain has expanded
customer choice and lowered costs
but we recognise this comes with a
responsibility to ensure communities
and workers’ rights are respected in
the process.
The impacts of our business go far
beyond our people, premises and
vehicles and our obligations do too.
We believe that everyone is entitled to
safe and decent work and our Global
Supply Chain Solutions team in Shanghai
is uniquely positioned to give us a
thorough level of oversight over our
supply chain to support this objective.
This is a competitive advantage in our
industry, with our 50-strong team
supporting the regular auditing of direct
suppliers to ensure that the products
they manufacture are of the highest
quality and they are treating their
employees fairly.
Respecting Human Rights
We build solid and lasting relationships
with our suppliers, providing them
with support and guidance as well
as monitoring their social and ethical
performance. Our auditing process
is our first line of defence to prevent
defective products being shipped and to
ensure products comply with our ethical
standards. All products supplied directly
from Asia are through suppliers that
are verified by our office and our
audits typically cover c.98% of Bunzl
spend across 13 Asian countries every
two years.
Bunzl have also joined the Responsible
Labor Initiative (RLI). Established in 2017,
the RLI is a multi-industry, multi-
stakeholder initiative that focuses on
ethical recruitment and employment
practices. Based on leading Responsible
Business Alliance standards and
programs, RLI members, suppliers,
recruitment partners and stakeholders
use their collective influence and
application of due diligence to drive the
transformation of recruitment markets
and reduce the risk of forced labour in
global supply chains.
Our new
commitments
We are committed to taking what
we have learned across Asia and
expanding our ethical sourcing
principles across other sourcing
areas in the Group. We will now
expand our programme to ensure
products from all high-risk regions
are sourced from assessed and
compliant suppliers by 2025 in line
with the commitment below.
Today
Our supply chain in Asia (and all
other very high risk regions) is
currently covered by our direct
auditing and assurance practices
with 754 audits completed in 2021.
Tomorrow
We will expand our programme
to ensure 90% of our spend on
products from all high-risk regions
are sourced from assessed and
compliant suppliers by 2025.
Beyond
We will continue to take a proactive,
risk-based approach to responsible
sourcing, identifying common issues
in our supply chain and working
closely with suppliers to reduce
the future incidences of these.
During 2021 our team audited 754
suppliers and 677 had no critical issues.
If our audits identify non-conformities
against our standard (for example,
instances of forced labour or overtime or
wage violations) we work to resolve these
quickly through in-depth engagement
with the supplier. In 2021 77 suppliers
underwent remediation efforts to bring
them up to the required standard, 56
have completed their action plans to date
with 11 still in progress.
If resolution is not possible within
a reasonable time frame (usually six
months) then we terminate the
relationship. In 2021, we terminated
relationships with 10 suppliers who
failed to make enough progress.
Our progress in 2021
Our Global Supply Chain Solutions team
have continued to work closely with our
operating companies and suppliers
despite facing travel restrictions related
to the pandemic. As operating company
buyers were unable to visit suppliers in
person, the team arranged four different
online events across three regions where
preferred suppliers were able to meet
a number of our operating companies at
the same time to promote their solutions.
Where our ethical auditing teams
have been unable to physically visit
manufacturing sites, they have used
a number of remote auditing tools to
ensure engagement on this important
subject is maintained. These include
self-assessment questionnaires,
telephone interviews and day-long video
meetings where management teams
are interviewed and records checked.
To ensure the auditing standards we
apply are consistent with external
best practice, we commissioned an
independent external review with Elevate,
an industry leader in sustainability and
supply chain services. It is Elevate’s
opinion that the Bunzl Auditing Checklist
has the same content and is equivalent to
the SMETA Checklist, one of the leading
external auditing standards available.
To guide our responsible sourcing work
effectively, we partnered with the
Non-Governmental Organisation (NGO)
Stop the Traffik who have applied their
methodology to rank the inherent
modern slavery and human rights risks
in our supply chain. This work was based
on a combination of the sourcing country
and market sector applicable to the
products and services being procured.
This work has been used to refine and
establish our new responsible sourcing
commitments (see below).
50
Bunzl plc Annual Report 2021
Our supply chain auditing and assessment programme
• In our supplier risk assessment work we place primary focus on the inherent modern slavery risks in the countries that we
source our products from (see Category A below for examples). However, we are aware that lower risk countries can contain
industry sectors with an increased risk of modern slavery issues (see Category B below for examples and our approach
to mitigation). The table below provides an overview of how we categorise the modern slavery risks associated with our
suppliers and the risk mitigations we apply.
Category
Description
Countries and product sectors
Risk Mitigation
Category A
(low overall
spend)
Category B
(low overall
spend)
Category C
(high overall
spend)
Suppliers
operating in
very high or high
risk countries
regardless of
product risk
sector.
Our responsible
sourcing target
to 2025 covers
this category.
Suppliers
operating in lower
risk countries but
operating in a
very high or high
product risk
sector.
Suppliers
operating in lower
risk countries and
operating in lower
risk product
sectors.
Most Asian countries.
Key countries outside of Asia are:
Brazil, Turkey, Mexico, Poland and Israel.
• Standard or enhanced Bunzl
audit process in Asia.
• Risk-based assessment and
audit process outside Asia
(self-assessment will be used
to determine the most
appropriate approach).
• Type of audit (standard or
enhanced) to be determined
by product risk sector and
other leverage factors such
as spend and number of
employees at supplier
location.
Very high and high risk product sectors:
• Manufacturing of
wearing apparel
• Manufacturing of textiles
• Manufacture of leather products
In various countries such as USA, UK
and France.
• Similar assessment and
auditing techniques to
Category A but targeting
specific sectors in these
countries. These will be
conducted at a lower
frequency or by using
proactive spot checks.
Lower risk product sectors:
• Manufacture of rubber and plastic products
• Manufacture of paper and paper products
• Manufacture of chemicals and chemical
products
In various countries such as USA, UK, France
and the Netherlands.
• These suppliers are provided
with Bunzl’s Supplier Code
of Conduct.
Bunzl plc Annual Report 2021
51
STRATEGIC REPORT SUSTAINABILITY REPORT CONTINUED
Investing in
our people
and a diverse
workforce
We believe everyone has a right to
prosperity. We are accelerating our
diversity, equity and inclusion agenda
to ensure that we have a working
environment which supports individual
well-being, growth and career
progression. For Bunzl, the business case
for focusing on this agenda is clear:
• it is fundamental to our employer
brand and our current and prospective
employees expect us to have a strong
strategy in place;
• it is a key strand of our talent strategy
– in order to build the capabilities we
require for the future, we need to
ensure that we are accessible as a
workplace to all, irrespective of gender,
ethnicity, age or any other individual
characteristic; and
• it is increasingly becoming a ‘condition
of doing business’ with our key
stakeholders including customers,
suppliers, investors and partners.
Stepping up to this challenge will
continue to be central to the growth
of our business.
Following on from the Covid-19 Pulse
survey we ran in November 2020, we ran
a Global Employee Engagement Survey
in 2021 to help gain insight into the levels
of engagement of Bunzl employees on a
global and local level. The survey had a
very high response rate with 80% of our
employees completing the survey to tell
us their views.
It is clear from the results that on the
whole our employees feel positive about
working at Bunzl:
• 91% believe their work is meaningful;
• 89% enjoy the work they do;
• 89% feel personally driven to help
Bunzl succeed; and
• 88% have a strong sense of
commitment to Bunzl.
The survey reinforced the need to
focus on development for our people
at all levels and also told us that our
employees have an appetite for more
communication, particularly while times
remain uncertain during the pandemic.
The power of the survey comes from the
local action taken as a result of the
feedback. Local leadership teams will now
spend time reviewing the survey results
to identify appropriate actions and
establish plans to implement changes
and monitor improvement.
Our progress in 2021
The development of leadership talent
for the future has been a key focus of
our Group HR strategy and we have
also made a significant investment in
leadership development activities. We
now have our Global Senior Leadership
Development Programme, tailored
specifically for Bunzl’s needs by the
Centre for Strategy and Leadership. To
meet regional requirements there are
development initiatives including the
‘Overdrive’ programme in Bunzl North
America partnering with Washington
University and the Leading Edge
programme in the UK, shortly to be
replicated in Continental Europe,
run by the Franklin Covey organisation.
Critically, although they are very tailored
to our decentralised Bunzl model, these
programmes fit together into a coherent
development framework and we can
start to measure the impact of the
investment through the retention and
future career development of our most
talented leaders.
In 2020 we launched our new
Employment Brand ‘We Believe’ which we
are now using internally and externally
across the Group. This has enabled us to
bring to life the benefits of working for a
local business that is part of a powerful
network under the Global Bunzl umbrella.
The ‘We Believe’ campaign has gained
traction through popular social media
posts and increased awareness of our
organisation’s values and beliefs.
Our talent objectives for the next few
years are:
• encouraging more women into
leadership roles through focused and
targeted activities including giving all
high potential females an internal or
external mentor, ensuring that we
consider female candidates where
we can for senior leadership roles,
and continuing with the rollout of
our successful women’s networks.
• continuing to focus on building a truly
inclusive culture by:
– achieving parity of engagement
scores across ethnic groups in our
North American business, and other
parts of the Group where data
collection is possible; and
– providing a voice for under-
represented colleagues and acting on
their feedback to address any real or
perceived barriers to engagement;
• identifying the next generation of
leaders from a more diverse pool of
talent, balancing broader capabilities
while retaining entrepreneurial skills;
• providing a safe workplace for all
employees and creating a culture
where health and safety is clearly
embedded into local business
processes and leadership behaviours;
• capitalising on our compelling
employment brand; and
• building on a technology enabled
hybrid working environment to create
a networked, collaborative organisation
that attracts more diverse talent.
52
Bunzl plc Annual Report 2021
Excellent engagement scores
In November 2021 we surveyed all our employees and we are incredibly proud
of the results we received:
91%
92%
88%
89%
82%
“My work is
meaningful to me.”
“I know what to do if I have
a concern about my health
and safety at work.”
“I feel a strong sense of
commitment to the
Company.”
“I enjoy
the work I do.”
“Leaders support
diversity and
inclusion here.”
The results from the employee survey have been shared with employees
at team level. The teams are now creating action plans to address
identified areas of opportunity.
Question: What do you value
most about working here?
The word cloud below shows by size of text the volume of comments received in response to the question posed.
customer focus
team
leadership
skills
support
recognition
immediate manager
service
help
benefits
relations between departments
management
stability
safety
enjoy
learning
communication
my team
flexibility
pay
empowerment
work
environment
day
respect and ethics
work life balance
opportunity
working
relationships
working hours
atmosphere
motivation
Bunzl plc Annual Report 2021
53
STRATEGIC REPORT SUSTAINABILITY REPORT CONTINUED
Taking action
on climate
change
Our carbon efficient business model
Our solutions significantly reduce road
miles and minimise both our and
our customers’ carbon footprint by
consolidating multiple items into single
mixed pallet deliveries.
However, we recognise climate change
as one of the biggest environmental
threats the world faces and one which
could detrimentally impact our direct
operations, distribution network and
supply chain. We applaud the ambition
being shown by our customers in setting
science-based carbon reduction targets.
We are committed to playing our part
by cutting emissions across our own
business supported by our new
commitments.
We are committed to providing
transparency to our stakeholders
regarding climate-related risks and
opportunities that may impact our
business and how we manage those
risks and opportunities. We are
supporting the recommendations
made by the Task Force on Climate-
related Financial Disclosures (TCFD)
and publishing our second statement
aligned to the TCFD’s recommended
disclosures www.bunzl.com/
sustainability/sustainability-reporting/.
Over the last 11 years the total carbon
emissions from Bunzl’s operations has
remained stable despite the business
growing substantially and our carbon
efficiency has improved by c.60%.
Our progress in 2021
To build on our long-established focus
on carbon we have joined the United
Nations’ Race to Zero campaign – the
largest ever global alliance committed to
achieving net zero carbon emissions by
2050, backed by science-based targets.
We have done this by formally
committing to the Business Ambition
for 1.5°C, a campaign led by the Science
Based Targets initiative in partnership
with the UN Global Compact and the
We Mean Business coalition.
To meet our new climate commitments,
we are starting to transition applicable
vehicles to low and zero carbon solutions
and trialling alternative fuels in our larger
fleet. We will also continue our successful
programme of installing energy efficiency
measures in our warehouses (a major
driver of our good performance to date),
procure more renewable energy and
introduce efficient routing systems for
our vehicles. In 2021 we completed
another 19 Light Emitting Diode (LED)
retrofit projects in North America which
will result in savings of 3.1 million kWh
every year (4% of our Group electricity
usage) and our dynamic routing system
has reduced the total miles driven by
an estimated 20% (5.5 million miles)
while retaining our high customer
service levels.
Assessing climate change scenarios and
their impact on our business
In 2020, we undertook the Group’s first
risk assessment using climate-related
scenarios to better understand the long
term impacts that climate change may
have on Bunzl in the future. We focused
our assessment on three alternative
scenarios up to 2050. Two of our
scenarios align with a global warming
trajectory of 2°C by 2100 but differ in the
speed and extent of decarbonisation over
the next 30 years (orderly and disorderly
scenarios). Our final scenario assessed
the potential impacts of a world in which
global warming exceeds 3°C by 2100
(hot-house world scenario). In each
scenario, climate change could present
a risk to Bunzl’s future financial
performance (when assessed against
Bunzl’s projected future profits).
However, our assessment suggests that
in no scenario do the climate-related risks
assessed present a significant financial
risk to the business (as defined by our risk
management processes) and therefore
we currently believe our business to be
fundamentally resilient to the potential
impacts of climate change. Moreover,
the transition to a net zero economy will
present good opportunities to the Group,
specifically through the provision of
environmentally friendly products and
sustainability expertise to customers.
Our new
commitments
Today
• We are working to have our new
targets approved by the Science
Based Targets initiative (SBTi) and
we will be assessing and including
our scope 3 emissions as part of
this process.
Tomorrow
• 25% improvement in carbon
efficiency by 2025 and 50% by
2030 (against a 2019 baseline).
• 100% Group-wide renewable
energy procurement by 2030.
Beyond
• Net zero by 2050 at the latest,
including scope 3.
Comparing Bunzl to other companies with large logistics networks
Tonnes CO2 per £m revenue (scope 1 and 2)
54
Bunzl plc Annual Report 2021
Bunzl
Retailer
with stores
Distributor
Retailer
with stores
Online-only
retailer
Business
services
Last-mile
delivery
Our carbon roadmap to 2030
Carbon emissions intensity projection
120%
100%
80%
60%
40%
20%
0%
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Commercial vehicles
Company cars
Electricity
Heating
Scope 1 and 2
emission source
Commercial
vehicles
Short term actions (2021 to 2025)
Longer term actions (2025 to 2030)
Increasing our use of biofuels in UK&I and Continental
Europe, with an aim to cover approximately 25% of
commercial fuel usage in these areas if feasible.
c.250 small commercial vehicles will be transitioned to
electric models (EVs). The transition of medium and
large vehicles will also start but additional advances
in lightweight, energy-dense battery technology are
required to allow implementation on a larger scale.
Ongoing fuel efficiency improvements and the
continued usage of routing and loading optimisation
software will continue to decrease the distance driven
by our commercial vehicles.
Biofuels will continue to represent a transition fuel in this
period across the Bunzl Group.
On the basis of projected technological advancement,
relatively large scale implementation of EV technology
will be feasible for medium and large vehicles. We
estimate that 50% of these vehicles would be equipped
with EV technology by 2030.
We expect the energy density and range limitations of
batteries to limit widescale EV penetration in Heavy
Goods Vehicles (HGVs) until after 2030.
Company cars
We aim to implement new lease car programmes to
increase the number of hybrid and fully electric cars
by 25%.
The use of EVs will accelerate in this period. We expect
the number of EVs to increase to at least 70% in 2030
across the markets where we operate.
Electricity
A significant reduction in electricity usage will be
achieved by continuing to implement energy efficient
lighting systems in our warehouses with c.80% of our
North American facilities converted to LED lighting.
We are planning onsite solar photovoltaic projects and
will increase the amount of renewable energy we buy
reaching 100% of our requirements in UK&I and
Continental Europe.
We aim to buy 100% of our electricity from renewable
sources by 2030.
Solar photovoltaic panels, particularly at new sites
and extensions, will be implemented where possible.
Heating
Use of natural gas for heating our buildings largely
follows the weather conditions. Alternative heating
systems and improved building insulation will be
implemented as assets reach the end of their life.
We will continue to invest in energy efficiency measures
and new technologies such as electric-based heating
solutions such as ground source heat pumps to drive
these emissions down as far as possible to meet our
long term targets.
Bunzl plc Annual Report 2021
55
STRATEGIC REPORT • Only 2% of revenue generated by
consumables facing regulation
• 2021 picture is broadly consistent
with 2019, supported by inflation
• Covid-19 caused a move back to single
use plastics for hygiene reasons
which is expected to be temporary
• We saw growth in packaging made
from alternative products due to
customers transitioning, regulatory
changes and shortages of plastic
products
Our new
commitments
Today
• We will support our customers to
remove, replace and reduce single
use plastics.
Tomorrow
• We will significantly increase the
amount of recyclable, compostable
or reusable packaging supplied to
our customers to help them meet
their targets.
Beyond
• Every single packaging product
and disposable in our range will
be offered with an alternative
that is recyclable, reusable,
compostable or renewable.
SUSTAINABILITY REPORT CONTINUED
Providing
tailored
solutions
The majority of Bunzl’s revenue comes
from non-packaging products like gloves,
sanitiser, PPE equipment and cleaning
chemicals. The daily running of our
customers’ operations depends on these
products, where in many cases, no viable
alternative to plastic exists today –
especially when it comes to healthcare
consumables like gloves and gowns and
PPE equipment for the safety sector.
We work with thousands of suppliers
globally to find the packaging and products
our customers need and where they
don’t yet exist, innovate to find them
new solutions. These are a mix of branded
products from large global suppliers,
own-brand solutions offered exclusively
by Bunzl and many familiar products
branded with our customers’ logos.
Our progress in 2021
Our material agnostic position means
we are well placed to help customers
transition to a more circular economy
and lead the industry towards a more
sustainable approach to packaging and
plastics. Bunzl’s scale means we can drive
change quickly and we are well placed
to provide customers with trusted and
objective advice on these complex issues.
We have continued to support our
customers and lead the transition to
packaging and products made from
alternative materials.
1
Smart material choices
Helping customers to select materials
with the lowest total environmental
impact and make well informed
packaging decisions that include
consideration for cold chain, shelf life,
food waste, product safety and hygiene.
We offer our customers expert advice
on sustainability as part of our service,
becoming a consultant or adviser on
some of the issues they face. Providing
our customers with the data they need to
understand their position against their
packaging commitments and participate
in industry-leading external programmes
and schemes is key.
IN ACTION
PlanetScore:
Gathering
information on
sustainability
In France, our business Comatec has
developed ‘PlanetScore’, a tool that
provides information on the total
environmental impact of the products
they distribute. The tool incorporates a
score on a 5-letter scale (A to E) based
on ten specific criteria and over 1,000
products have been assessed to date.
The score is a simple reference point for
our customers in the catering industry
who want to make informed choices
about the sustainability characteristics
of a product. In addition, the scoring
system is used by Comatec’s research
and development department to refine
the products they have in their range
and engage suppliers to improve the
sustainability characteristics of the
solutions they offer.
56
Bunzl plc Annual Report 2021
2
Designing for
circularity not waste
3
Promoting responsible
usage and reusable
options
4
Partnering to support
closed loop solutions
Proactively transitioning customers
to single-use products made from
recyclable or compostable materials.
We have been innovating the way the
packaging products we supply are
designed as well as bringing an extensive
range of own-brand alternative products
to market. These new ranges not only
provide solutions which comply with the
latest legislation in our markets but often
offer leading sustainability advice and
training via new digital web platforms.
Working with customers to rationalise
their usage of certain products and
introducing dedicated reusable product
ranges and promoting reuse systems. A
large proportion of packaging materials
serve an important purpose but despite
this necessity, our businesses regularly
work closely with their customers to
rationalise the products they use as part
of our value-added service. For example,
plastic pallet wrap serves an important
purpose by protecting goods in transit
and preventing waste, but by providing
advice and technology on how to use the
wrap efficiently we have driven some
significant savings in the amount of
material used each year.
Supporting customers’ closed loop
systems directly with our logistics
networks or by partnering with suppliers
to reuse, refill or recycle products
returned to them. Our customers
explained that while they don’t expect
Bunzl to establish new closed loop
recycling systems ourselves, they would
like us to provide the support required to
make their circular initiatives a success.
IN ACTION
IN ACTION
IN ACTION
Transitioning a
North American
business to recycled
materials
In North America we have worked
with our customer Good Food Holdings
and their brand New Seasons Market,
a grocery chain that inspires
environmental stewardship and
champions the local food economy, to
transition to plastic packaging made
from 100% post-consumer recycled
content, with feedstock from the
west coast of the United States and
manufactured locally in Portland,
Oregon. Over 500,000 of the new
recyclable fresh food containers,
have been distributed representing
a 9.7 tonne reduction in the amount
of virgin plastic used previously.
Reducing
plastic use with
soluble cleaning
sachets
Recycling
thermoforms
to create fresh
berry packaging
Bunzl Cleaning & Hygiene Supplies in
the UK has helped an expert facilities
management customer Churchill Group
to trial and embed PVA Hygiene’s water
soluble sachets in their business. PVA
Hygiene offer a range of specific cleaning
powders encapsulated in water soluble
sachets which when added to the
required volume of water in a reusable
trigger spray bottle, create a ready-to-
use cleaning solution.
As the sachets are dry, compact and light
they reduce storage space, transportation
costs and the carbon emissions associated
with delivering cleaning supplies. In the
12 months since September 2020,
Churchill Group have saved 38.6 metric
tonnes of plastic (avoiding the waste of
39,400 trigger spray bottles and 5,499
five litre containers).
In North America, we have supported
our customer Driscoll’s to close the loop
on fresh berry packaging with a project
that won a Sustainable Packaging
Coalition award for Innovation in
Responsible Sourcing. Our teams have
supported the collection and recycling
of PET thermoforms that are then
recycled back into the fresh berry retail
packaging Driscoll’s use to sell their
short-life, fragile produce. Driscoll’s have
become the first berry producer to use
closed-loop packaging and the project
has prevented 3.6 tonnes of virgin
plastic from being used in the
manufacturing process.
Bunzl plc Annual Report 2021
57
STRATEGIC REPORT SECTION 172 STATEMENT
A strategy that benefits
all our stakeholders
The following information
describes how the
directors have had regard
to the matters set out in
section 172(1) (a) to (f) of
the Companies Act 2006
when performing their
duty to promote the
success of the Company.
Bunzl has a global and diverse
community of stakeholders and the
Board has identified those that it
considers key as being customers,
colleagues, shareholders, the
environment, suppliers as well as the
communities in which we operate.
We believe that to maximise value and
secure our long term success, we must
engage proactively and constructively
with our key stakeholders, in a two way
relationship, in order to establish a
mutual understanding of both the
Group’s and stakeholders’ views and
objectives. By understanding our
stakeholders, we can factor into
Boardroom discussions and the
Company’s strategic decision making the
potential impact of our decisions on each
stakeholder group and consider their
needs and concerns in accordance with
section 172 of the Companies Act 2006.
Like any business, there are occasions
when we must take decisions that
adversely affect one or more of these
groups and, in such cases, we always
seek to ensure that those impacted are
treated fairly. The views of stakeholders
are raised in Board conversations,
informing and improving Board decision
making and outcomes.
Through a range of engagement
mechanisms, examples of which are
referred to on the pages that follow,
Bunzl is able to maintain meaningful
dialogue with our key stakeholders.
These engagement mechanisms are
reviewed periodically and the Board
will continue to monitor and adapt the
methods used in order to ensure that
they remain appropriate and effective.
Customers
Colleagues
Environment
Shareholders
Suppliers
Communities
Why do we
engage?
How do we
engage?
Our business and livelihood
depend upon our customers.
Building strong relationships
with them, using the expertise
of our commercial teams,
ensures that we gain a deep
understanding of their varying
and complex needs, allowing us
to provide a customised service
and bespoke solutions to
different customers.
• Our businesses use ‘hotlines’
and seminars and host launch
days to engage with
customers and increase their
awareness of our product
and service solutions.
• We work with our customers
in the development of new,
redesigned, or substantially
improved products.
• Our 6,000 customer service
specialists and sales experts
use their deep and detailed
knowledge to work with
customers to provide the best
possible advice on all product
and service related matters.
• We work with our customers
to ensure strong, ethical
supply chains.
Our people underpin everything
we do and are the focus of our
business. Nurturing the talent
that we need to drive future
growth is a business priority
and we create an inclusive
and supportive environment
in which each individual can
contribute to our success.
We implement action plans
to address points raised by
colleagues to create a
collaborative workplace in
which we attract and retain
the best talent.
• We use a range of methods to
engage with our employees,
including listening groups,
regular team briefings, site
visits, digital apps,
engagement surveys, video
messaging and meetings with
workforce representatives.
• The Board ensures that it
understands the views of
Bunzl’s workforce through
director attendance at, and
participation in, employee
consultation forums, senior
leadership programmes and
other employee-focused
events.
• Board meetings are
periodically held at or near
Group locations where the
directors meet with local
management and employees.
• We have accelerated our
diversity, equity and inclusion
employer practices and
established working groups
and targeted events
throughout the business.
• Social media updates are
provided on employee
initiatives.
• ‘The Source’ magazine is
published frequently,
updating colleagues on
company initiatives,
acquisitions, career moves,
new customers, community
efforts, and sustainability
progress.
Our goal is for Bunzl to be a
Engagement with shareholders
Bunzl regards suppliers as
We believe that, in order to
responsible and resilient
helps us to understand their
partners and collaboration
maintain their social licence to
organisation that inspires and
views and priorities. The
between Bunzl and its suppliers
operate, companies must invest
proactively implements solutions
feedback that we receive informs
ensures strategic alignment
in and benefit the places and
that protect the environment,
our decision making and
which enables us to meet our
communities in which they work.
while being commercially
influences the long term strategy
customers’ individual needs,
It is clear to us that we can
successful for our stakeholders.
of the Company.
promote innovation and drive
only deliver for our customers
ambitious business solutions
and grow our business when
for new and existing customers.
our employees, suppliers
and communities succeed
alongside us.
Engagement is essential for
our proactive approach to
sustainability so we can
accelerate our focus on
sustainability for tomorrow
and beyond.
• We seek to reduce our, our
• Bunzl updates shareholders
• We work with our suppliers to
• We encourage and provide
suppliers’ and our customers’
six times per year on trading
build long term relationships,
resources and opportunities
impacts on the environment
performance.
capability and trust, increase
for Bunzl people to get
by reducing carbon emissions,
• Presentations of the half
sustainability within our supply
involved in local community
promoting the reduction of
year and annual results
waste and providing innovative
with question and answer
chain and provide products
and solutions to customers
projects and to contribute
to social impact causes.
products and services to meet
sessions are also given.
that are sourced and delivered
• We align the focus of our
our customers’ sustainability
• Executive directors meet
efficiently, safely and
needs.
regularly with major
sustainably.
• We work in partnership
shareholders and report
• Supplier conferences are held
charitable support with key
environmental activities
relevant to our business.
with customers and suppliers
their views to the Board.
to showcase examples of good
• We have supported our local
to source and promote
alternatives to single use
plastics and to support the
development of innovative
products to increase
• The Chairman, Senior
practice and build awareness
communities with tailored
Independent Director and
of social compliance issues.
support during the Covid-19
other non-executive directors
• Our quality assurance/quality
pandemic, including donating
are available to meet with
major shareholders on
control team in Shanghai
PPE to hospitals and providing
monitors and works with our
face masks to schools.
key suppliers in Asia and
• We support the communities
compostability, circularity
request.
and recyclability.
• The Board reviews and
elsewhere to ensure that they
where our employees live
• We aim to reduce our impact
discusses analysts’ and
meet international standards.
and work and encourage
on the environment, including
brokers’ reports and surveys
• Bunzl’s supplier code of
fundraising activities
factors contributing to climate
of shareholder opinions
conduct is in operation across
championed by our businesses
change, through a
conducted by the Company’s
our supplier base.
and their employees locally.
commitment to continual
brokers and investor relations
improvement.
consultants.
• Bunzl commits to ambitious
• Shareholders are encouraged
climate change action targets
to participate in the AGM, are
and joins global alliances on
invited to ask questions at the
climate change.
meeting or via a dedicated
email address, if they are
unable to attend, and are
given the opportunity to meet
all of the directors informally.
• The Board engages with
shareholders before and after
the AGM to understand voting
intentions and votes cast.
58
Bunzl plc Annual Report 2021
FURTHER INFORMATION ABOUT HOW THE
COMPANY ENGAGES WITH ITS STAKEHOLDERS
CAN ALSO BE FOUND IN THE SUSTAINABILITY
REPORT ON PAGES 46 TO 57 AND IN
THE CORPORATE GOVERNANCE REPORT
ON PAGE 103
Customers
Colleagues
Environment
Shareholders
Suppliers
Communities
Our goal is for Bunzl to be a
responsible and resilient
organisation that inspires and
proactively implements solutions
that protect the environment,
while being commercially
successful for our stakeholders.
Engagement is essential for
our proactive approach to
sustainability so we can
accelerate our focus on
sustainability for tomorrow
and beyond.
Engagement with shareholders
helps us to understand their
views and priorities. The
feedback that we receive informs
our decision making and
influences the long term strategy
of the Company.
Bunzl regards suppliers as
partners and collaboration
between Bunzl and its suppliers
ensures strategic alignment
which enables us to meet our
customers’ individual needs,
promote innovation and drive
ambitious business solutions
for new and existing customers.
We believe that, in order to
maintain their social licence to
operate, companies must invest
in and benefit the places and
communities in which they work.
It is clear to us that we can
only deliver for our customers
and grow our business when
our employees, suppliers
and communities succeed
alongside us.
• Our businesses use ‘hotlines’
• We use a range of methods to
• We seek to reduce our, our
suppliers’ and our customers’
impacts on the environment
by reducing carbon emissions,
promoting the reduction of
waste and providing innovative
products and services to meet
our customers’ sustainability
needs.
• We work in partnership
with customers and suppliers
to source and promote
alternatives to single use
plastics and to support the
development of innovative
products to increase
compostability, circularity
and recyclability.
• We aim to reduce our impact
on the environment, including
factors contributing to climate
change, through a
commitment to continual
improvement.
• Bunzl commits to ambitious
climate change action targets
and joins global alliances on
climate change.
• We work with our suppliers to
build long term relationships,
capability and trust, increase
sustainability within our supply
chain and provide products
and solutions to customers
that are sourced and delivered
efficiently, safely and
sustainably.
• Supplier conferences are held
to showcase examples of good
practice and build awareness
of social compliance issues.
• Our quality assurance/quality
control team in Shanghai
monitors and works with our
key suppliers in Asia and
elsewhere to ensure that they
meet international standards.
• Bunzl’s supplier code of
conduct is in operation across
our supplier base.
• We encourage and provide
resources and opportunities
for Bunzl people to get
involved in local community
projects and to contribute
to social impact causes.
• We align the focus of our
charitable support with key
environmental activities
relevant to our business.
• We have supported our local
communities with tailored
support during the Covid-19
pandemic, including donating
PPE to hospitals and providing
face masks to schools.
• We support the communities
where our employees live
and work and encourage
fundraising activities
championed by our businesses
and their employees locally.
• Bunzl updates shareholders
six times per year on trading
performance.
• Presentations of the half
year and annual results
with question and answer
sessions are also given.
• Executive directors meet
regularly with major
shareholders and report
their views to the Board.
• The Chairman, Senior
Independent Director and
other non-executive directors
are available to meet with
major shareholders on
request.
• The Board reviews and
discusses analysts’ and
brokers’ reports and surveys
of shareholder opinions
conducted by the Company’s
brokers and investor relations
consultants.
• Shareholders are encouraged
to participate in the AGM, are
invited to ask questions at the
meeting or via a dedicated
email address, if they are
unable to attend, and are
given the opportunity to meet
all of the directors informally.
• The Board engages with
shareholders before and after
the AGM to understand voting
intentions and votes cast.
Why do we
engage?
How do we
engage?
Our business and livelihood
Our people underpin everything
depend upon our customers.
we do and are the focus of our
Building strong relationships
business. Nurturing the talent
with them, using the expertise
that we need to drive future
of our commercial teams,
growth is a business priority
ensures that we gain a deep
and we create an inclusive
understanding of their varying
and supportive environment
and complex needs, allowing us
in which each individual can
to provide a customised service
contribute to our success.
and bespoke solutions to
different customers.
We implement action plans
to address points raised by
colleagues to create a
collaborative workplace in
which we attract and retain
the best talent.
and seminars and host launch
engage with our employees,
days to engage with
including listening groups,
customers and increase their
regular team briefings, site
awareness of our product
visits, digital apps,
and service solutions.
engagement surveys, video
• We work with our customers
messaging and meetings with
in the development of new,
workforce representatives.
redesigned, or substantially
• The Board ensures that it
improved products.
understands the views of
• Our 6,000 customer service
Bunzl’s workforce through
specialists and sales experts
director attendance at, and
use their deep and detailed
participation in, employee
knowledge to work with
consultation forums, senior
customers to provide the best
leadership programmes and
possible advice on all product
other employee-focused
and service related matters.
events.
• We work with our customers
• Board meetings are
to ensure strong, ethical
supply chains.
periodically held at or near
Group locations where the
directors meet with local
management and employees.
• We have accelerated our
diversity, equity and inclusion
employer practices and
established working groups
and targeted events
throughout the business.
• Social media updates are
provided on employee
initiatives.
• ‘The Source’ magazine is
published frequently,
updating colleagues on
company initiatives,
acquisitions, career moves,
new customers, community
efforts, and sustainability
progress.
Bunzl plc Annual Report 2021
59
STRATEGIC REPORT SECTION 172 STATEMENT CONTINUED
Customers
Colleagues
Environment
Shareholders
Suppliers
Communities
A fundamental element of Bunzl’s
consistent and proven strategy
involves growing the business
organically, by expanding and
developing our business with
existing customers and by gaining
new business with additional
customers. We seek to achieve
organic growth by continually
redefining and deepening our
commitment to our customers and
we apply our resources, knowledge
and expertise to offer an efficient
and cost-effective one-stop-shop
solution which is the very essence
of our business model.
The people in our business make
the difference. It is our people who
continue to deliver the Group’s
strategy for the individual businesses
and we will continue to invest in our
people to ensure that we attract and
retain the best talent so that Bunzl
can continue to grow and provide its
essential services. Two-way, effective
engagement is essential for parity,
talent development and broadening
the talent pool to ensure we have the
knowledge and skills to give the best
service to our customers.
Positive actions with respect to the
environment and an increased focus
on products made from alternative
materials are not only desirable
in their own right but are also of
potential economic and commercial
benefit to Bunzl.
Engagement is a key factor in building and
Our global sourcing capabilities, working
Bunzl’s operations are international but our
maintaining shareholder trust and in
with multinational and local suppliers,
strength lies in the local nature of our
ensuring that shareholder support continues
together with the unrivalled benefits of our
businesses and the communities in which
in the long term.
Shanghai sourcing office, allow us to provide
they are based. Our corporate responsibility
a range of competitively priced and ethically
strategy directly supports Bunzl’s strategic
sourced products. Such capabilities are
vision by seeking to gain sustainable
intrinsic to our business model and a key
business success through building
source of competitive advantage.
relationships with local stakeholders.
• Successful renewal of customer
• Ongoing monitoring of gender
• Dialogue with environmental
• Feedback gathered at investor roadshows.
• Results of audits performed by Bunzl’s
• Feedback from communities in which
contracts.
and diversity metrics.
agencies.
• Feedback from expert sales
• Monitoring the culture in the
people and customer service
specialists.
• Dialogue with customers.
• Expanding and developing our
business with existing customers.
• Gaining new business with
additional customers.
workplace.
• Feedback from employee forums,
including through non-executive
director listening groups and
diversity, equity and inclusion
working groups.
• Frequent Board reporting of
• Monitoring underlying sales
people matters.
• Dialogue with government and
non-governmental agencies.
• Dialogue with customers and
suppliers.
• Monitoring of results of CO2
reporting.
• Analysis and monitoring of
external auditors’ EHS assurance
report.
growth.
• Ongoing monitoring of whistle
blowing reports.
• Continuous monitoring of absence
rates, turnover rates and health &
safety scores.
• Dedicated innovation sessions
• Non-executive director listening
• Design and launch of a business
• 2021 AGM question and answer session.
• The Board received regular updates
• Partnerships with charities.
Relevance to
strategy
How do we
monitor the
impact of our
actions?
How we engaged
during 2021
with large customers.
groups.
• Involvement of a key customer in
accelerating the diversity agenda.
• Proactive engagement with
customers around UK plastics tax.
• Customer data analysed for risk
assessment against single-use
plastics regulation.
• Customer insights and feedback
were presented to the Board.
• 2021 employee engagement
survey.
wide stakeholder communications
and marketing programme.
• Defined the scope of any new
• CEO listening sessions relating
to gender and ethnic diversity.
• Non-executive director visits to UK
targets, including being 25% more
carbon efficient by 2025 and 50%
by 2030.
and US operations.
• Capital Markets Day.
• Virtual conference with senior
management, hosted by Frank van
Zanten and Richard Howes.
• Senior management inclusive
leadership training.
• Feedback received has been used
to update the diversity agenda,
including the provision of mentors
for high potential women in senior
management positions.
• Clear and transparent policies
implemented around working
from home during Covid-19
restrictions.
• Discussions concerning the Pulse
survey results and gaining an
understanding of the employee
engagement results.
• Made a business application for
Group wide UN Global Compact
membership and research.
• Engagement with regional Plastic
Pacts at business area level.
• Gave greater disclosures
on sustainability at Capital
Markets Day.
• Developed a roadmap to execute
new targets in the most relevant
parts of Bunzl’s business.
• Positive feedback from Capital
Markets Day.
• Publication of the SASB Index
following engagement with
a large investor.
• Committed to the Business
Ambition for 1.5⁰ campaign.
• Race to Zero membership.
• Improved scores with MSCI.
Outcomes
of engagement
• Bunzl was granted critical supplier
status, supplying healthcare
organisations and governments
with masks, sanitisers, gloves and
other products during the global
pandemic.
• Increased amount of recyclable,
compostable and reusable
packaging supplied to customers.
• Analysis of AGM voting results.
quality assurance/quality control team
Bunzl operates.
in Shanghai.
• Dialogue with other employees.
• Monitoring of compliance with Bunzl’s
• Feedback from local organisations
• Analysis of results of major shareholder
Supplier code of conduct.
and charities.
• Shareholder feedback.
• Analyst feedback.
consultations.
• Analysis of efficiency savings in
procurement activities.
• Successful renewal of procurement
contracts.
• Supplier feedback.
• Monitoring of results of payment practices
and performance reporting.
• Consultation with shareholders regarding
regarding supplier performance at Board
• Approval and implementation of the
possible overboarding of directors.
meetings.
Group’s 2021 charity programme, which
• Capital Markets Day.
• Investor roadshows.
• The Board was kept informed of how the
focused on: infrastructure projects that
pandemic and other external factors have
encourage reuse and recycling; litter
• 140 investor meetings during 2021.
impacted suppliers.
education, prevention and clean-up
• Extensive engagement between Vanda
• The Board received a presentation and
initiatives; and supporting the livelihoods
Murray, Chair of the Remuneration
updates on supplier governance and the
of waste picker communities in some of
Committee, and shareholders regarding
work of Bunzl’s quality assurance/quality
the world’s poorest places, particularly in
the remuneration policy approved at the
control team in Shanghai.
areas where plastic leakage to the natural
2021 AGM.
environment is highest.
• Clarity given around possible
• Expansion of our supply chain audit
• Approval of UK and overseas charity
overboarding issues and Board policy
programme to other countries.
initiatives for 2022.
concerning external appointments.
• Partnerships formed with NGOs to
• Re-allocation of a proportion of the charity
• Changed the structure of the Nomination
review high risk supplier countries.
budget to overseas initiatives, where
Committee following engagement with
• 10 suppliers were terminated for not
there are higher levels of team member
investors around best practice and
making sufficient progress during
fundraising.
good governance.
the year.
• Launch of new website following Board
drive to improve shareholder
communications.
• Positive feedback following Capital
Markets Day.
• Record share prices.
60
Bunzl plc Annual Report 2021
Customers
Colleagues
Environment
Shareholders
Suppliers
Communities
Relevance to
strategy
A fundamental element of Bunzl’s
The people in our business make
Positive actions with respect to the
consistent and proven strategy
the difference. It is our people who
environment and an increased focus
involves growing the business
organically, by expanding and
developing our business with
continue to deliver the Group’s
on products made from alternative
strategy for the individual businesses
materials are not only desirable
and we will continue to invest in our
in their own right but are also of
existing customers and by gaining
people to ensure that we attract and
potential economic and commercial
new business with additional
retain the best talent so that Bunzl
benefit to Bunzl.
Engagement is a key factor in building and
maintaining shareholder trust and in
ensuring that shareholder support continues
in the long term.
Our global sourcing capabilities, working
with multinational and local suppliers,
together with the unrivalled benefits of our
Shanghai sourcing office, allow us to provide
a range of competitively priced and ethically
sourced products. Such capabilities are
intrinsic to our business model and a key
source of competitive advantage.
Bunzl’s operations are international but our
strength lies in the local nature of our
businesses and the communities in which
they are based. Our corporate responsibility
strategy directly supports Bunzl’s strategic
vision by seeking to gain sustainable
business success through building
relationships with local stakeholders.
• Feedback gathered at investor roadshows.
• Analysis of AGM voting results.
• Shareholder feedback.
• Analyst feedback.
• Analysis of results of major shareholder
consultations.
• Results of audits performed by Bunzl’s
quality assurance/quality control team
in Shanghai.
• Monitoring of compliance with Bunzl’s
Supplier code of conduct.
• Analysis of efficiency savings in
procurement activities.
• Successful renewal of procurement
contracts.
• Supplier feedback.
• Monitoring of results of payment practices
and performance reporting.
• Feedback from communities in which
Bunzl operates.
• Dialogue with other employees.
• Feedback from local organisations
and charities.
• 2021 AGM question and answer session.
• Consultation with shareholders regarding
possible overboarding of directors.
• Capital Markets Day.
• Investor roadshows.
• 140 investor meetings during 2021.
• Extensive engagement between Vanda
Murray, Chair of the Remuneration
Committee, and shareholders regarding
the remuneration policy approved at the
2021 AGM.
• The Board received regular updates
regarding supplier performance at Board
meetings.
• The Board was kept informed of how the
pandemic and other external factors have
impacted suppliers.
• The Board received a presentation and
updates on supplier governance and the
work of Bunzl’s quality assurance/quality
control team in Shanghai.
• Partnerships with charities.
• Approval and implementation of the
Group’s 2021 charity programme, which
focused on: infrastructure projects that
encourage reuse and recycling; litter
education, prevention and clean-up
initiatives; and supporting the livelihoods
of waste picker communities in some of
the world’s poorest places, particularly in
areas where plastic leakage to the natural
environment is highest.
• Clarity given around possible
• Expansion of our supply chain audit
• Approval of UK and overseas charity
programme to other countries.
initiatives for 2022.
• Partnerships formed with NGOs to
review high risk supplier countries.
• 10 suppliers were terminated for not
making sufficient progress during
the year.
• Re-allocation of a proportion of the charity
budget to overseas initiatives, where
there are higher levels of team member
fundraising.
overboarding issues and Board policy
concerning external appointments.
• Changed the structure of the Nomination
Committee following engagement with
investors around best practice and
good governance.
• Launch of new website following Board
drive to improve shareholder
communications.
• Positive feedback following Capital
Markets Day.
• Record share prices.
Bunzl plc Annual Report 2021
61
customers. We seek to achieve
can continue to grow and provide its
organic growth by continually
redefining and deepening our
essential services. Two-way, effective
engagement is essential for parity,
commitment to our customers and
talent development and broadening
we apply our resources, knowledge
the talent pool to ensure we have the
and expertise to offer an efficient
knowledge and skills to give the best
and cost-effective one-stop-shop
service to our customers.
solution which is the very essence
of our business model.
How do we
monitor the
impact of our
actions?
• Successful renewal of customer
• Ongoing monitoring of gender
• Dialogue with environmental
contracts.
and diversity metrics.
agencies.
• Feedback from expert sales
• Monitoring the culture in the
• Dialogue with government and
people and customer service
workplace.
non-governmental agencies.
specialists.
• Feedback from employee forums,
• Dialogue with customers and
• Dialogue with customers.
including through non-executive
suppliers.
• Expanding and developing our
director listening groups and
• Monitoring of results of CO2
business with existing customers.
diversity, equity and inclusion
reporting.
• Gaining new business with
working groups.
• Analysis and monitoring of
additional customers.
• Frequent Board reporting of
external auditors’ EHS assurance
• Monitoring underlying sales
people matters.
report.
growth.
• Ongoing monitoring of whistle
blowing reports.
• Continuous monitoring of absence
rates, turnover rates and health &
safety scores.
How we engaged
during 2021
• Dedicated innovation sessions
• Non-executive director listening
• Design and launch of a business
with large customers.
groups.
wide stakeholder communications
• Involvement of a key customer in
• 2021 employee engagement
and marketing programme.
accelerating the diversity agenda.
survey.
• Defined the scope of any new
• Proactive engagement with
• CEO listening sessions relating
targets, including being 25% more
customers around UK plastics tax.
to gender and ethnic diversity.
carbon efficient by 2025 and 50%
• Customer data analysed for risk
• Non-executive director visits to UK
by 2030.
assessment against single-use
plastics regulation.
and US operations.
• Capital Markets Day.
• Made a business application for
Group wide UN Global Compact
• Customer insights and feedback
• Virtual conference with senior
membership and research.
were presented to the Board.
management, hosted by Frank van
• Engagement with regional Plastic
Zanten and Richard Howes.
Pacts at business area level.
• Senior management inclusive
• Gave greater disclosures
leadership training.
on sustainability at Capital
Markets Day.
Outcomes
of engagement
• Bunzl was granted critical supplier
• Feedback received has been used
• Developed a roadmap to execute
status, supplying healthcare
to update the diversity agenda,
new targets in the most relevant
organisations and governments
including the provision of mentors
parts of Bunzl’s business.
with masks, sanitisers, gloves and
for high potential women in senior
• Positive feedback from Capital
other products during the global
management positions.
Markets Day.
pandemic.
• Clear and transparent policies
• Publication of the SASB Index
• Increased amount of recyclable,
implemented around working
following engagement with
compostable and reusable
from home during Covid-19
a large investor.
packaging supplied to customers.
restrictions.
• Committed to the Business
• Discussions concerning the Pulse
Ambition for 1.5⁰ campaign.
survey results and gaining an
• Race to Zero membership.
understanding of the employee
• Improved scores with MSCI.
engagement results.
STRATEGIC REPORT SECTION 172 STATEMENT CONTINUED
The Board of directors of Bunzl plc promote the success of the Company
for the benefit of its members as a whole, having sufficient regard to:
The likely consequences of any decision in the long term
• Company purpose: page 28
• Acquisitions: page 104
• Our business model: page 30
• Our strategy: page 32
• Shareholder returns: page 9
The impact of the Company’s operations on the community
and the environment
• Sustainability: pages 46 to 57
• TCFD disclosures: page 82
• Carbon emissions: pages 86 to 88
• Community investment: pages 58 to 63
The interests of the Company’s employees
• Employment policies: page 152
• Employee engagement: page 103
• Diversity, equity and inclusion: page 48
• Our people: pages 20 and 21
The need to foster the Company’s business relationships with
suppliers, customers, and others
See our ‘Policy hub’ at www.bunzl.com to access:
• Business Code of Conduct Policy
• Bunzl Anti Bribery and Corruption Policy
• Bunzl Ethical Sourcing Policy
• Modern Slavery Statement
• Supplier Code of Conduct
The desirability of the Company maintaining a reputation for
high standards of business conduct
• Audit Committee report: pages 116 to 124
• Independent auditors’ report: pages 214 to 221
• Whistle blowing: page 86
• Culture and values: page 102
• Non-financial information statement: page 91
The need to act fairly as between members of the Company
• Shareholder engagement: pages 58 to 63
• The Company’s Annual General Meeting: page 63
SUSTAINABILITY IN ACTION
Tailored
solutions that
support the
circular economy
and climate
change agenda
Bunzl Cleaning & Hygiene Supplies
partnered with Dettol Pro Solutions to
distribute the 600 hand sanitisers used
at COP26 to businesses across Glasgow
and the surrounding areas.
Following COP26, Bunzl collected and
distributed the dispensers and remaining
stock to Glasgow City Council and local
businesses in Glasgow and the wider
region. The initiative not only supports a
more circular economy but is expected to
save six tonnes of waste and 2.7 tonnes of
carbon dioxide by keeping the dispensers
in use.
Any excess stock will be offered to local
government offices, universities, the
Hygiene Bank – which works to reduce
hygiene poverty – and to Emmaus, a
homeless charity supported by Bunzl.
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Bunzl plc Annual Report 2021
CASE STUDY
CASE STUDY
CASE STUDY
The Board’s
ethical supplier
policy
The Board sets clear messaging for the
Group that Bunzl wishes to partner with
ethical suppliers and is willing to take
action to cease dealing with suppliers
that fall below Bunzl’s ethical standards
and audit requirements. The Board
receives regular updates on the audits
undertaken or overseen throughout the
year by the quality assurance/quality
control department based in Shanghai.
Under Bunzl’s policy, suppliers who fall
foul of the audit requirements are
provided with the opportunity to comply
within a reasonable period of time, and
Bunzl engages and works closely with
the suppliers during this time to solve
the identified issues. The Board is clear
that the Company is willing to cease
trading with those suppliers who fail
to resolve the identified issues and
continue to fall below required standards.
To read more about our ethical
supply chain, see page 48 of the
Sustainability report.
Diversity
listening events
In December, the Company’s Chief
Executive Officer, Frank van Zanten,
supported by the Company’s Director of
Group Human Resources, Diana Breeze,
held two listening sessions inviting
female colleagues and colleagues from
ethnic minority backgrounds to join
informal, open, and honest
conversations about their personal
insights and experiences of diversity
at Bunzl and beyond.
The Board understands that diversity
at all levels of the business is essential
to uphold Bunzl’s open and inclusive
culture and ensure all colleagues feel
supported to reach their maximum
potential and perform to their best
ability. The Company believes that
each person plays a role in creating the
conditions for a diverse and inclusive
workplace, and the Board therefore
sought the views of female colleagues
and colleagues from ethnic minority
backgrounds in order to assist with
the development and review of the
Company’s diversity agenda. Attendees
gave key insights and frank suggestions
regarding what has helped them
develop their careers at Bunzl, whether
there are any barriers to progression
and what changes senior leadership
can make to support them further in
their careers.
This overwhelmingly positive meeting
provided the directors with a forum to
gain valuable first-hand feedback about
how colleagues in Bunzl feel about the
Company and the current initiatives in
place, as well as providing the Board
a unique opportunity to gain an
understanding of what more can be
done to make a difference to women
and colleagues from ethnic minority
backgrounds in Bunzl and drive forward
the diversity agenda. The leadership
team has recently undertaken voluntary
unconscious bias training in support of
the agenda.
Bunzl’s AGM:
engaging with
shareholders
During the 2021 AGM season, the
Company was unable to hold a physical
meeting for the second consecutive
year due to government restrictions.
The Board understands that the AGM
is an important opportunity for all
shareholders to express their views
by asking questions and voting, and
considered it vital to provide alternative
engagement opportunities.
The Company extensively consulted
with its corporate lawyers and Registrar
to benchmark engagement mechanisms
against other companies and align
with best practice, to ensure that the
shareholder voice would still be heard
by the Board in an appropriate and
inclusive way.
Following the consultation, the Company
arranged a live Q&A session during
which shareholders were given an
opportunity to pose questions directly
to the directors and receive answers in
real time. To accommodate those who
could not attend the session and for all
other queries, a dedicated email address
was made available for shareholders
to submit their questions ahead of
the AGM.
The Board also recognised that the
Articles of Association did not allow
for virtual AGMs and subsequently
amended the Articles of Association
to align with technological advances,
changes in investor sentiment and
evolving best practice.
Due consideration has been given
to the responses to the engagement
mechanisms previously employed and,
for maximum engagement, it is our
present intention to welcome
shareholders in person to the
forthcoming AGM.
Bunzl plc Annual Report 2021
63
STRATEGIC REPORT PRINCIPAL RISKS AND UNCERTAINTIES
A robust approach
to risk management
Bunzl operates in six core market sectors in 31 countries
which exposes it to many risks and uncertainties. The Group
sees the management of risk, both positive and negative, as
critical to achieving its strategic objectives.
Risk assessment
Risk identification
• Every business, business area, the Executive Committee and the
Board consider, identify and document risks in a consistent way
within the categories of strategic, operational and financial risks.
• This includes current risks as well as emerging risks which also
need to be assessed and carefully monitored
Inherent risk
assessment
• The inherent impact and probability of risks are evaluated before
considering the effect of any mitigating activities:
– impact is assessed based on a defined range of business
continuity, health & safety, environmental, regulatory,
reputational and financial criteria; and
– probability is assessed as remote, unlikely, possible or probable
Risk response
and residual
risk assessment
• The relevant mitigating activities and controls are evaluated for
each risk.
• The residual risk is assessed assuming that the mitigating actions
and internal controls operate as intended in an effective way.
• If necessary, to bring the residual risk within Bunzl’s risk appetite,
enhancements to risk mitigation activities and controls are
considered until the residual risk is reduced to an acceptable level
64
Bunzl plc Annual Report 2021
Risk management process
To deliver the Group’s strategic objectives successfully,
and provide value for shareholders and other stakeholders,
it is critical that Bunzl maintains an effective process for the
management of risk. The Company has a risk management
policy which ensures a consistent process is followed by every
business and business area as well as the Executive
Committee and ultimately the Board, firstly to assess and then
subsequently to manage both current and emerging risks.
These interrelated aspects of the Group’s risk management
policy are explained below*. Additional details are also provided
on the key risk management activities undertaken during 2021.
Risk management
Establishes the nature and extent
of risk the Group is willing to accept
(its ‘risk appetite’) in pursuit of
Bunzl’s strategic objectives
The Board
Performs a robust assessment
of the Group’s risks through a
biannual review of the Group’s risk
register, focusing on the evolving
risk landscape, emerging risks
and those risks considered to be
significant by management and
the Executive Committee
The Audit Committee
Continuously monitors and
oversees the Group’s risk
management and internal controls
processes and procedures
Reviews the process for the management of risk,
including the risk assessment and risk response,
and its effectiveness
Directs and oversees internal audit’s activities and
reviews the results of assurance over controls and risk
mitigation activities
Executive Committee
Holds regular meetings with business area management
to discuss strategic, operational and financial issues and
ensures policies and procedures are in place to identify
and manage the principal risks affecting each of the
Group’s businesses. Business area management present
risk assessments to the Executive Committee annually,
focusing on the key risks in their region, processes they
have in place to identify risk and any areas of heightened
concern or any emerging risks for the future
Considers the evolving risk landscape, including reviewing
the results of the risk assessment process and assessing
the sufficiency of risk mitigation activities for current
risks as well as the threats and opportunities from
emerging risks
Business area management
Business management
The Group’s decentralised management structure
allows for the establishment of clear ownership of risk
identification and management at the business area level
within the framework of Bunzl’s risk management policy
Businesses, with the support of business area management,
implement and monitor the effectiveness of controls,
policies and procedures designed to manage risk
* The ‘Risk management and internal control’ section of the Corporate governance report on pages 108 and 109 includes further information on the specific
procedures designed to identify, manage and mitigate risks which could have a material impact on the Group’s business, financial condition or results of operations
and for monitoring the Company’s risk management and internal control systems.
Bunzl plc Annual Report 2021
65
STRATEGIC REPORT PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Principal risks and uncertainties
The Group operates in six core market
sectors in 31 countries which exposes
it to many risks and uncertainties,
many of which are not fully within the
Group’s control. The risks summarised
below represent the principal risks
and uncertainties faced by the Group,
being those which are material to the
development, performance, position
or future prospects of the Group, and
the steps taken to mitigate such risks.
However, these risks do not comprise all
of the risks that the Group may face and
accordingly this summary is not intended
to be exhaustive.
In addition, the Group’s financial
performance is partially dependent on
general global economic conditions, the
deterioration of which could have an
adverse effect on the Group’s business
and results of operations. Although this
is not considered by the Board to be a
specific principal risk in its own right,
many of the risks referred to below could
themselves be impacted by the economic
environment prevailing in the Group’s
markets from time to time.
The risks are presented by category of
risk (Strategic, Operational and Financial)
and are not presented in order of
probability or impact. The relevant
component of the Group’s strategy
that each risk impacts is also noted:
Profitable organic growth
Acquisition growth
Operating model improvements
Sustainability
Overall, the nature and type of the
principal risks and uncertainties
affecting the Group are considered
to be unchanged compared to the
2020 Annual Report.
Monitoring risks
The Board reviews each risk and
assesses the gross impact, applying the
hypothetical assumption there are no
mitigating controls in place, net impact
and probability to set the Group’s
mitigation priorities. The register of
principal risks and uncertainties was
updated following review by the
Executive Committee and approval
by the Board.
Emerging risks
In addition to the principal risks faced by
the Group, there are risks which are more
uncertain in nature and difficult to assess
or that have the potential to develop and
increase in severity over time.
The Board monitors closely all emerging
risks as part of the ongoing risk
management processes that have the
potential to increase in significance and
affect the performance of the Group and
its ability to meet its strategic objectives.
Climate change continues to be an
emerging risk that may impact both
Bunzl’s direct operations and the value
chain in which the Group operates.
The Group is already facing increased
interaction with some customers who
expect Bunzl to contribute to their
climate change commitments, however,
there has been no impact on the financial
statements for 2021. In future, the Group
may face increased business continuity
risks from acute and chronic climatic
events. For more details on our climate
change work see www.bunzl.com/
sustainability and pages 54 and 55 of
the sustainability section of this report.
The directors confirm that they have
carried out a robust assessment of the
principal and emerging risks facing the
Group, including those that would
threaten its business model, future
performance, solvency or liquidity.
Covid-19 impact
The Covid-19 pandemic has created
extreme economic volatility which
has had a significant impact on
the markets in which the Group
operates and the Group’s business.
The medium to long term economic
impact of the Covid-19 pandemic
is still uncertain and the rate of
economic recovery could vary
significantly between, and even
within, markets. Although the full
impact of the Covid-19 pandemic
is difficult to predict, the Group’s
strength and resilience lies in the
diversity of its operations and
supply chain, as well as the critical
nature of the products it supplies
to its customers.
The extent to which the long term
impact of the Covid-19 pandemic
will impact the Group’s operations
and those of its customers will
depend on future developments,
which are highly uncertain and
cannot be predicted with
confidence, including, for example,
if vaccination roll outs are slower
than expected or if other
preventative measures become less
effective against any new variants
of Covid-19. Increased sales of
products related to Covid-19 have
offset the weakness in the base
businesses of all sectors, but
particularly in foodservice and retail
sectors which have been impacted
by pandemic-related restrictions.
Despite the significant disruption
from impacted supply chains, the
Group has been able to manage
these effects due to the Group’s
wide reaching supplier relationships
across multiple jurisdictions and
internal supplier auditing
capabilities in Asia, which have been
a source of strength. While Covid-19
related products continue to be
elevated compared to 2019 levels,
the Group is now seeing a reversal
in trends with the base business,
excluding the top 8 Covid-19 related
products, recovering and the sales
of Covid-19 related products
declining. The Group’s performance
as economies have moved into
the next phase of the pandemic
continues to demonstrate
its resilience.
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Bunzl plc Annual Report 2021
Principal risks
facing the Group
Description of risk and how it
might affect the Group’s prospects
How the risk is
managed or mitigated
Developments
in 2021
Strategic risks
1. Competitive
pressures
Revenue and profits
are reduced as the
Group loses a
customer or lowers
prices due to
competitive
pressures
Risk owner:
CEO and Business
Area Heads
Change to risk level:
Included in viability
statement: Yes
• The Group operates in highly
• The Group’s geographic and market
competitive markets and faces price
competition from international,
national, regional and local
companies in the countries and
markets in which it operates
• Unforeseen changes in the
competitive landscape could also
occur, such as an existing competitor
or new market entrant introducing
disruptive technologies or changes
in routes to market
• Customers, especially large or
growing customers, could exert
pressure on the Group’s selling
prices, thereby reducing its margins,
switch to a competitor or ultimately
choose to deal directly with suppliers
• Any of these competitive pressures
could lead to a loss of market share
and a reduction in the Group’s
revenue and profits
sector diversification allow it to
withstand shifts in demand, while
this global scale across many
markets also enables the Group to
provide the broadest possible range
of customer specific solutions to suit
their exacting needs
• The Group maintains high service
levels and close contact with its
customers to ensure that their needs
are being met satisfactorily. This
includes continuing to invest in
e-commerce and digital platforms to
enhance further its service offering
to customers
• The Group maintains strong
relationships with a variety of
different suppliers, thereby enabling
the Group to offer a broad range of
products to its customers, including
own brand products, in a
consolidated one-stop-shop offering
at competitive prices
• The Group’s large sales force
connected with customers to
help them understand the range
of products available to meet
their needs
• The Group continued to invest in
technology to streamline customers’
experience
• The Group continued to develop its
sustainable product assortment and
tools to assist customers in meeting
their sustainability goals
2. Financial collapse
of either a large
customer and/or a
significant number
of small customers
Revenue and profits
are reduced as the
Group loses
customers
Risk owner:
CEO and Business
Area Heads
Change to risk level:
Included in viability
statement: Yes
• An unexpected insolvency of either
a large customer or a significant
number of small customers,
particularly within the retail and
foodservice sectors, could lead
to a sudden reduction in revenue
and profits, including the cost of
impairing any irrecoverable
receivables balances, as well as
operating margin erosion due to
under-used capacity
• The Group’s revenue and profits may
be affected as well as receivables
and inventory (if customer specific
inventory is held)
• The Group monitors significant
• In 2021, the Group did not encounter
developments in relationships with
key customers, including credit
checks and limits set for each
customer
• Delegation of authority limits mean
that there is oversight of all material
customer contracts at business area
and local level
insolvencies of either a large
customer or a significant number
of smaller customers. However,
this remains a significant risk as the
world is still not out of the Covid-19
pandemic
• In 2021, provisions relating to the
Group’s credit exposure from
customers remained broadly
unchanged
Bunzl plc Annual Report 2021
67
STRATEGIC REPORT PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Principal risks
facing the Group
Description of risk and how it
might affect the Group’s prospects
How the risk is
managed or mitigated
Developments
in 2021
Strategic risks continued
3. Product cost
deflation
Revenue and profits
are reduced due to
the Group’s need to
pass on cost price
reductions
Risk owner:
CEO and Business
Area Heads
Change to risk level:
Included in viability
statement: Yes
• In the event of indexed or cost plus
contracts, a reduction in the cost
of products bought by the Group,
due to suppliers passing on lower
commodity prices (such as plastic
or paper) or other price reductions,
lower trade tariffs and/or foreign
currency fluctuations, coupled with
actions of competitors, may require
the Group to pass on such cost
reductions to customers, resulting in
a reduction in the Group’s revenue
and profits
• Operating profits may also be lower
due to the above factors if operating
costs are not reduced commensurate
with the reduction in revenue
• The Group uses its considerable
experience in sourcing and selling
products to manage prices during
periods of deflation in order to
minimise the impact on profits
• Focus on the Group’s own brand
products, together with the
reinforcement of the Group’s service
and product offering to customers,
helps to minimise the impact of
price deflation
• The Group continually looks at ways
to improve productivity and
implement other efficiency measures
to manage and, where possible,
reduce its operating costs
• In 2021, the Group experienced
a higher level of price volatility
compared to recent years. In
particular, there was deflation
on Covid-19 related products,
especially gloves
• In order to oversee the price
fluctuations in disposable gloves,
a working group was set up in 2021.
The group, consisting of purchasing
directors from around the world,
hold regular meetings to understand
the price variations in the market
and take the appropriate actions for
the Group
4. Cost inflation
Profits are reduced
from the Group’s
inability to pass on
product or operating
cost increases
Risk owner:
CEO and Business
Area Heads
Change to risk level:
Included in viability
statement: Yes
• Significant or unexpected cost
• The Group sources its products
increases by suppliers, due to the
pass through of higher commodity
prices (such as plastic or paper) or
other price increases, higher trade
tariffs and/or foreign currency
fluctuations, could adversely impact
profits if the Group is unable to pass
on such product cost increases to
customers
• Operating profits may also be lower
due to the above factors if selling
prices are not increased
commensurate with the increases in
operating costs
from a number of different suppliers
based in different countries so that it
is not dependent on any one source
of supply for any particular product,
or overly exposed to a particular
country changing trade tariffs, and
can purchase products at the most
competitive prices
• The majority of the Group’s
transactions are carried out in the
functional currencies of the Group’s
operations, but for foreign currency
transactions some forward
purchasing of foreign currencies is
used to reduce the impact of short
term currency volatility
• The Group will, where possible, pass
on price increases from its suppliers
to its customers
• The Group continually looks at ways
to improve productivity and
implement other efficiency measures
to manage and, where possible,
reduce its operating costs
• The Group experienced inflation of
both product cost and operating
costs in 2021 at a higher rate than
in the recent past. Selling prices
to customers were continually
evaluated and updated to ensure
that profitability levels were at least
maintained. In addition, cost plus
arrangements facilitate the
automatic increase in prices
• The Group continues to focus on own
brand product development as part
of the discussion with customers
about price increases
• To mitigate the operating costs
increases, the Group drives
efficiencies by consolidating facilities
and implementing IT systems and
solutions to improve productivity
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Bunzl plc Annual Report 2021
Principal risks
facing the Group
Description of risk and how it
might affect the Group’s prospects
How the risk is
managed or mitigated
Developments
in 2021
Strategic risks continued
5. Inability to make
further acquisitions
Profit growth is
reduced from the
Group’s inability to
acquire new
companies
Risk owner:
CEO and Business
Area Heads
Change to risk level:
• Acquisitions are a key component
of the Group’s growth strategy and
one of the key sources of the Group’s
competitive advantage, having
made 183 acquisitions since 2004
• Insufficient acquisition opportunities,
through a lack of availability of
suitable companies to acquire or an
unwillingness of business owners
to sell their companies to Bunzl,
could adversely impact future
profit growth
• The Group maintains a large
• The acquisition pipeline is closely
monitored with continued research
of any available opportunities for
investment
• 2021 has been the second most
acquisitive year for the Group, with
committed spend of £508 million
acquisition database which continues
to grow with targets identified by
managers of current Bunzl
businesses, research undertaken
by the Group’s dedicated and
experienced in-house corporate
development team and information
received from banking and corporate
finance contacts
• The Group has a strong track record
of successfully making acquisitions.
At the same time the Group
maintains a decentralised
management structure which
facilitates a strong entrepreneurial
culture and encourages former
owners to remain within the Group
after acquisition, which in turn
encourages other companies to
consider selling to Bunzl
• Inadequate pre-acquisition due
• The Group has established processes
• The Board reviews performance of
recent acquisitions annually. In 2021
the Board reviewed the principal
acquisitions made in 2019 and
noted that performance was in line
with expectations
diligence related to a target company
and its market, or an economic
decline shortly after an acquisition,
could lead to the Group paying more
for a company than its fair value
• Furthermore, the loss of key people
or customers, exaggerated by
inadequate post-acquisition
integration of the business, could in
turn result in underperformance of
the acquired company compared to
pre-acquisition expectations which
could lead to lower profits as well
as a need to record an impairment
charge against any associated
intangible assets
and procedures for detailed
pre-acquisition due diligence related
to acquisition targets and the
post-acquisition integration thereof
• The Group’s acquisition strategy is
to focus on those businesses which
operate in sectors where it has, or
can develop, competitive advantage
and which have good growth
opportunities
• The Group endeavours to maximise
the performance of its acquisitions
through the recruitment and
retention of high quality and
appropriately incentivised
management combined with
effective strategic planning,
investment in resources and
infrastructure and regular reviews
of performance by both business
area and Group management
Included in viability
statement: Yes
6. Unsuccessful
acquisition
Profits are reduced,
including by an
impairment charge,
due to an
unsuccessful
acquisition or
acquisition
integration
Risk owner:
CEO and Business
Area Heads
Change to risk level:
Included in viability
statement: Yes
Bunzl plc Annual Report 2021
69
STRATEGIC REPORT
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Principal risks
facing the Group
Description of risk and how it
might affect the Group’s prospects
How the risk is
managed or mitigated
Developments
in 2021
Strategic risks continued
7. Sustainability
driven market
changes
Revenue and
profits are reduced
from the Group’s
inability to offer
sustainable
products in
response to changes
in legislation,
consumer
preferences or the
competitive
environment
Risk owner:
CEO and Business
Area Heads
Change to risk level:
Included in viability
statement: Yes
• Over the last year we have seen
new legislation introduced across
Australia, New Zealand and Canada
that mirrors (and in some cases
goes further than) the legislation
previously introduced in Europe and
the UK. The scope of new legislation
tends to cover a wider range of
products than that previously
introduced and has largely been
welcomed by consumers and viewed
as governments doing the right thing
• Consumer awareness of the
environmental impact of certain
single-use plastic products continues
to grow and the concept of single-use
consumable items and societies’
reliance on them is starting to be
questioned more widely, regardless
of the material that these items are
made from. These changes are likely
to lead to a reduction in demand for
single-use plastic-based products
that the Group sells while, at the
same time, increase demand for
sustainably sourced, recyclable
or reusable alternatives
• The Group’s revenue and profits
could be reduced if it is unable to
offer more sustainably sourced,
recyclable, compostable,
biodegradable or reusable
alternatives that replace products
that cannot be sold due to legislation,
or products where demand is lower
due to changes in consumer
preferences
• Bunzl’s scale and unique position
as a distributor at the centre of
the supply chain, supported by
dedicated sustainability managers,
gives the Group an opportunity to
provide customers with advice about
alternative products which are
sustainably sourced, recyclable,
compostable, biodegradable or
reusable, or a combination of these
• The Group has access to an extensive
global supply chain of product and
packaging manufacturers who are
innovating the range of products
they produce to satisfy the increased
focus on sustainability. This means
the Group can offer the broadest
possible range of products whether
in response to legislative changes,
consumer preference driven changes
or a desire to offer market-leading
products to the Group’s customers
• The Group maintains high service
levels and close contact with its
customers. Data on customer
product usage, coupled with the
Group’s detailed product knowledge,
ensures that the Group is well-
positioned to be able to support its
customers in shaping and achieving
their sustainability strategies (such
as a reduction in single-use plastics
or an introduction of reusable
products systems)
• The majority of the Group’s
businesses in the retail, foodservice
and grocery sectors now employ
material footprint tools that explain
how legislation will impact the
products and packaging a customer
uses, while promoting the
alternatives we have in our range
• In response to a larger number of
customers setting increasingly
ambitious targets for their packaging,
the Group has developed proprietary
tools that support customers to
report effectively against their goals
and participation in industry-leading
external schemes, such as the New
Plastics Economy and B-Corp
certification
• The Group continued to expand and
introduced new ranges of own brand
products made from alternative
materials. In Europe, we launched
Verive and the new range not only
provides solutions which comply
with the EU Single Use Plastics
Directive but also offers leading
sustainability advice and training via
a new digital webshop platform
Operational risks
8. Cyber security
failure
Revenue and profits
are reduced as the
Group is unable to
operate and serve
its customers’ needs
due to being
impacted by a
cyber-attack
Risk owner:
CIO
Change to risk level:
Included in viability
statement: Yes
• The frequency, sophistication
and impact of cyber-attacks on
businesses are rising at the same
time as Bunzl is increasing its
connectivity with third parties and its
digital footprint through acquisition
and investment in e-commerce
platforms and efficiency enhancing
IT systems
• Weak cyber defences, both now and
in the future, through a failure to
keep up with increasing cyber risks
and insufficient IT disaster recovery
planning and testing, could increase
the likelihood and severity of a
cyber-attack leading to business
disruption, reputational damage and
loss of customers and/or a fine under
applicable data protection legislation
• Concurrent with the Group’s IT
investments, the Group is continuing
to improve information security
policies and controls to improve its
ability to monitor, prevent, detect
and respond to cyber threats
• Cyber security awareness campaigns
have been deployed across all
regions to enhance the knowledge of
Bunzl personnel and their resilience
to phishing attacks
• IT disaster recovery and incident
management plans, which would be
implemented in the event of any
such failure, are in place and
periodically tested. The Group Chief
Information Officer and Group Head
of Information Security coordinate
activity in this area
• The Group continued to improve
cyber security and data privacy
governance, architecture, and
controls, along with increasing
awareness of both cyber security
and data privacy across the Group
• Investments were made in modern
cyber security technologies that
address current and emerging
threats while improving operational
processes and procedures
• The Group focused on improving
cyber security and data privacy
due diligence processes during the
acquisition process, along with
improving security posture
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Bunzl plc Annual Report 2021
Principal risks
facing the Group
Description of risk and how it
might affect the Group’s prospects
How the risk is
managed or mitigated
Developments
in 2021
Financial risks
9. Availability of
funding
Insufficient
liquidity in financial
markets leading
to insolvency
Risk owner:
CFO
Change to risk level:
Included in viability
statement: Yes
10. Currency
translation
Significant change in
foreign exchange
rates leading to a
reduction in
reported results
and/or a breach of
banking covenants
Risk owner:
CFO
Change to risk level:
Included in viability
statement: No
• Insufficient liquidity in financial
• The Group arranges a mixture of
markets could lead to banks and
institutions being unwilling to lend
to the Group, resulting in the Group
being unable to obtain necessary
funds when required to repay
maturing borrowings, thereby
reducing the cash available to
meet its trading obligations, make
acquisitions and pay dividends
borrowings from different sources
and continually monitors net debt
and forecast cash flows to ensure
that it will be able to meet its financial
obligations as they fall due and that
sufficient facilities are in place to
meet the Group’s requirements in
the short, medium and long term
• No new debt was issued in 2021 but
the Group has significant liquidity
available and continues to monitor
forecast cash flows to ensure future
requirements can be met
• The majority of the Group’s revenue
and profits are earned in currencies
other than sterling, the Group’s
presentation currency
• As a result, a significant
strengthening of sterling against the
US dollar and the euro in particular
could have a material translation
impact on the Group’s reported
results and/or lead to a breach of net
debt to EBITDA banking covenants
• In 2021, currency translation had
an adverse impact on the Group’s
reported results, decreasing
revenue, profits and earnings
by between 5% and 8%
• The Group’s results are reviewed
at constant exchange rates to show
the underlying performance of the
Group excluding the currency
translation impact
• The Group does not hedge the
impact of exchange rate movements
arising on translation of earnings into
sterling at average exchange rates.
The Board believes that the benefits
of its geographical spread outweigh
the risks
• The Group’s borrowings are
denominated in US dollars, sterling
and euros in similar proportions to
the relative profit contribution of
each of these currencies to the
Group’s EBITDA. This reduces the
volatility of the ratio of net debt to
EBITDA from foreign exchange
movements. In addition, net debt
for the purposes of covenant
calculations in the Group’s financing
documents is calculated using
average rather than closing exchange
rates. Consequently, any significant
movement in exchange rates
towards the end of an accounting
period should not materially affect
the ratio of net debt to EBITDA. Both
these factors minimise the risk that
banking covenants will be breached
as a result of foreign currency
fluctuations
Bunzl plc Annual Report 2021
71
STRATEGIC REPORT
PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Principal risks
facing the Group
Description of risk and how it
might affect the Group’s prospects
How the risk is
managed or mitigated
Developments
in 2021
Financial risks continued
• The resolution of uncertain prior
year tax matters or the introduction
of legislative changes could cause a
higher tax expense and higher cash
tax payments, thereby adversely
affecting the Group’s profits and
cash flows
11. Increase in
taxation
Increases in Group
tax rate and/or
cash tax
Risk owner:
CFO
Change to risk level:
Included in viability
statement: Yes
• Oversight of the Group’s tax strategy
is within the remit of the Board and
tax risks are assessed by the Audit
Committee
• The Group seeks to plan and manage
its tax affairs efficiently but also
responsibly with a view to ensuring
that it complies fully with the relevant
legal obligations in the countries in
which the Group operates while
endeavouring to manage its tax
affairs to protect value for the
Company’s shareholders in line with
the Board’s broader fiduciary duties
• The Group manages and controls
these risks through an internal tax
department made up of experienced
tax professionals who exercise
judgement and seek appropriate
advice from specialist professional
firms
• At the same time the Group monitors
international developments in tax
law and practice, adapting its
approach where necessary to do so
• HMRC concluded that the Group
was not subject to State aid rules for
periods up to 2018, which removed
a significant uncertainty
• The Organisation for Economic
Co-operation and Development
(OECD) proposals for a global
minimum tax rate of 15% have been
widely agreed to take effect from
2023 and model provisions have
been published. The Group will
monitor the legislative changes
which many countries will take
to enact this during 2022 and will
take action where required
• Significant proposals for tax reform
have been presented by the US
government and are the subject
of debate in the US Congress.
The financial implications of such
changes have been modelled and
the Group will update its expected
tax expense in light of any
enacted changes
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Bunzl plc Annual Report 2021
In all scenarios it has been assumed,
based on past experience and all current
indicators, that the Company will be able
to refinance its banking facilities and US
private placement notes as and when
they mature. In the first two stress tests
it was found that the Group was resilient
and in particular it remained in
compliance with the relevant financial
covenants. The conditions required to
create the reverse stress test scenarios
were so severe that they were considered
to be implausible.
The directors consider that the stress
testing based assessment of the
Company’s prospects, building on the
results of the robust assessment of
the principal risks to the business and
the financial implications of them
materialising, confirms the resilience
of the Group to severe but plausible
scenarios and provides a reasonable
basis on which to conclude on its longer
term viability.
Confirmation of longer term viability
In accordance with the provisions of
the Corporate Governance Code, the
directors have taken account of the
Group’s current position and principal
risks and uncertainties referred to above
in assessing the prospects of the
Company and 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 31 December 2024.
Viability
Assessment of the prospects of the
Company and its viability statement
In accordance with provision 31 of
the Corporate Governance Code, the
directors set out below how they have
assessed the prospects of the Company,
over what period the prospects have
been assessed and the Company’s
formal viability statement.
The context for and period over which
the prospects of the Company have
been assessed
To consider the prospects of the
Company and determine an appropriate
time frame for the purpose of making a
statement on the Company’s longer term
viability, the directors have taken into
account various factors including the
nature of the Company’s business, its
business model and strategy and the
existing planning periods.
In particular:
• Bunzl has a geographically balanced
and diversified business portfolio
operating in 31 countries;
• the Company operates across six core,
fragmented market sectors, many of
which are growing and resilient to
challenging economic conditions; and
• the business model and strategy
minimise the volatility of the Company’s
results, enabling Bunzl to deliver
consistently good results with high
returns on capital and cash conversion.
With regard to the time frame specifically,
the directors considered the above
factors as well as the Group’s strategic
planning process. Comprehensive
budgets are prepared annually by the
business areas and approved by the
Board. Strategic plans focusing on two
years beyond the forecast for the
current year are also prepared annually
and reviewed by the Board. While the
directors have no reason to believe the
Company will not be viable over a longer
period, given the inherent uncertainty
involved, the period over which the
directors consider it possible to form a
reasonable expectation as to the Group’s
longer-term viability is the three year
period to 31 December 2024.
How the prospects of the Company
and its longer term viability have
been assessed
In making a viability statement, the
directors are required to consider the
Company’s ability to meet its liabilities
as they fall due, taking into account the
Company’s current position and principal
risks. The Company has significant
financial resources including committed
and uncommitted banking facilities,
US private placement notes and senior
bonds, further details of which are set out
in Note 16 to the consolidated financial
statements. As a result, the directors
believe that the Company is well placed
to manage its business risks successfully.
The resilience of the Group to a range
of possible scenarios, in particular the
impact on key financial ratios and its
ongoing compliance with financial
covenants, was factored into the
directors’ considerations through stress
testing against the Group’s current base
case financial projections. The base case
financial projections start with the
Group’s 2022 Budget and look ahead
over the three year assessment period
to include an expected level of organic
growth and acquisition activity. These
stress tests included the following:
• the impact of the crystallisation of
the principal strategic and operational
risks to the Group’s organic growth
resulting in a 20% reduction in adjusted
operating profit and a 20% increase in
working capital;and
• the impact of the crystallisation of the
principal strategic and operational risks
to the Group’s organic growth as above,
together with the impact of the
crystallisation of the principal risks to
the Group’s acquisition growth, and a
significant increase the effective tax
rate, without mitigating actions.
In addition, the Group has carried out
reverse stress tests against the base case
financial projections to determine the
conditions that would result in a breach of
financial covenants. In order for a breach
of covenants to occur during the three
year assessment period the Group would
need to experience a reduction in EBITDA
of over 45% compared to the base case or
an increase in net debt of over 210%.
Bunzl plc Annual Report 2021
73
STRATEGIC REPORT FINANCIAL REVIEW
Financial review
‘We largely funded the second most acquisitive
year in our history from cash generated in the
year and ended 2021 with leverage in a strong
position for continued acquisition investment.’
Richard Howes
Chief Financial Officer
Revenue
Up 1.7% at actual exchange rates
(2020: £10,111.1m)
£10,285.1m
+7.1%†
Operating profit
Up 0.8% at actual exchange rates
£623.3m
+7.7%†
(2020: £618.5m)
Adjusted operating profit*
Down 3.3% at actual exchange rates
(2020: £778.4m)
£752.8m
+2.8%†
Adjusted earnings per share*
Down 1.5% at actual exchange rates
(2020: 164.9p)
162.5p
+4.9%†
Cash conversion*
Continued strong cash conversion
102%
(2020: 103%)
Dividend per share
Long track record of dividend
growth continues
(2020: 54.1p)
57.0p
+5.4%
74
74
Bunzl plc Annual Report 2021
Financial results
Revenue
Adjusted operating profit*
Adjusted profit before income tax*
Adjusted earnings per share*
Dividend for the year
Statutory results
Operating profit
Profit before income tax
Basic earnings per share
Balance sheet and Cash flow
Return on average operating capital %*
Return on invested capital %*
Cash conversion %*
† At constant exchange rates.
* Alternative performance measure (see Note 3 on page 170).
Growth at
constant
exchange
7.1 %
2.8 %
3.9 %
4.9 %
7.7 %
9.6 %
10.5 %
2021
£m
2020
£m
Growth as
reported
1.7 %
(3.3)%
(2.4)%
(1.5)%
5.4 %
0.8 %
2.3 %
3.0 %
10,285.1
752.8
698.2
162.5p
57.0p
623.3
568.7
132.7p
43.3%
15.1%
102%
10,111.1
778.4
715.6
164.9p
54.1p
618.5
555.7
128.8p
45.4%
16.2%
103%
As in previous years this review refers to a number of alternative performance measures which management uses to assess the
performance of the Group. Details of the Group’s alternative performance measures are set out in Note 3 to the consolidated
financial statements on page 170.
Currency translation
Currency translation has had an adverse impact on the Group’s reported results, decreasing revenue, profits and earnings
by between 5% and 8%. The adverse exchange rate impact was principally due to the effect on average exchange rates of the
strengthening of sterling against certain currencies during the year, particularly the US dollar, Euro and Brazilian real, partly offset
by the weakening of sterling against the Australian dollar.
Average exchange rates
US$
Euro
Canadian$
Brazilian real
Australian$
Closing exchange rates
US$
Euro
Canadian$
Brazilian real
Australian$
2021
1.38
1.16
1.72
7.42
1.83
2021
1.35
1.19
1.71
7.54
1.86
2020
1.28
1.12
1.72
6.61
1.86
2020
1.37
1.12
1.74
7.08
1.77
Revenue
Revenue increased to £10,285.1 million (2020: £10,111.1 million), an increase of 7.1% at constant exchange rates and 1.7% at actual
exchange rates, due to the benefit of acquisitions adding 4.0% and underlying revenue growth of 3.6% partly offset by the impact
of one less trading day in 2021, 2020 being a leap year.
Movement in revenue (£m)
10,500
10,000
9,500
9,000
8,500
10,111.1
378.6
10,285.1
344.8
(511.7)
(37.7)
2020 revenue
Currency translation
Impact of one less
trading day
Underlying revenue
growth
Acquisitions
2021 revenue
Bunzl plc Annual Report 2021
75
STRATEGIC REPORT
FINANCIAL REVIEW CONTINUED
Operating profit
Adjusted operating profit was £752.8 million (2020: £778.4 million), an increase of 2.8% at constant exchange rates (down 3.3%
at actual exchange rates). At constant exchange rates operating margin decreased to 7.3% from 7.6% in 2020 (7.3% from 7.7% at
actual exchange rates). This decline in operating margin reflects a normalisation of revenue mix, with a reduction in sales of
Covid-19 related products in the higher than average margin sectors of safety, healthcare and cleaning & hygiene and a recovery
in demand in the lower than average margin sectors of foodservice and retail, and the impact of price deflation on certain Covid-19
related products.
During 2021, the Group saw a further increase in the level of slow moving inventory with customer demand continuing to be
impacted by the pandemic-related restrictions and supply chain disruption resulting in higher levels of inventory. This has resulted
in a net charge of approximately £25 million in the year to increase slow moving inventory provisions whilst additional provisions
were also required as a result of market price deflation on certain Covid-19 products. This was partially offset by a net release of
approximately £5 million relating to expected credit losses on trade receivables.
Movement in adjusted operating profit (£m)
778.4
(46.4)
20.8
752.8
800
750
700
650
600
2020 adjusted operating profit
Currency translation
2021 growth
2021 adjusted operating profit
Operating profit was £623.3 million, an increase of 7.7% at constant exchange rates and 0.8% at actual exchange rates.
Movement in operating profit (£m)
618.5
20.8
8.2
15.6
623.3
(39.8)
675
625
575
525
475
2020 operating profit
Currency translation
Growth in adjusted
operating profit
Decrease in customer
relationships and brands
amortisation and
acquisition related items
Non-repeat of
non-recurring pension
scheme charges
2021 operating profit
Customer relationships and brands amortisation, acquisition related items and non-recurring pension scheme charges are
excluded from the calculation of adjusted operating profit as they do not relate to the underlying operating performance and
distort comparability between businesses and reporting periods. Accordingly, these items are not taken into account by
management when assessing the results of the business and are removed in calculating adjusted operating profit and other
alternative performance measures by which management assess the performance of the Group.
Net finance expense
The net finance expense for the year was £54.6 million, a decrease of £5.2 million at constant exchange rates (down £8.2 million at
actual exchange rates), mainly due to a change in the mix of debt towards currencies with lower interest rates and higher interest
income on cash deposits held in the subsidiaries through the year.
Profit before income tax
Adjusted profit before income tax was £698.2 million (2020: £715.6 million), up 3.9% at constant exchange rates (down 2.4%
at actual exchange rates), due to the growth in adjusted operating profit and the reduction in net finance expense. Profit
before income tax was £568.7 million (2020: £555.7 million), an increase of 9.6% at constant exchange rates (up 2.3% at actual
exchange rates).
76
Bunzl plc Annual Report 2021
Taxation
The Group’s tax strategy is to comply with tax laws in all countries in which it operates and to balance its responsibilities for
controlling the tax costs with its responsibilities to pay the appropriate level of tax where it does business. No companies are
established in tax havens or other countries for tax purposes where the Group does not have an operational presence and the
Group’s de-centralised operational structure means that the level of intragroup trading transactions is very low. The Group does
not use intragroup transfer prices to shift profit into low tax jurisdictions. The Group’s tax strategy has been approved by the Board
and tax risks are reviewed by the Audit Committee. In accordance with UK legislation, the strategy is published on the Bunzl plc
website within the Corporate governance section.
The effective tax rate (being the tax rate on adjusted profit before income tax) for the year was 22.3% (2020: 23.1%) and the
reported tax rate on statutory profit was 22.1% (2020: 22.6%). Both the effective and reported tax rates for 2021 are lower than
for 2020 due to a reduction in the expected tax liabilities for prior periods. In 2022 the Group’s effective tax rate is expected to be
approximately 24%, reflecting the absence of benefits seen in recent years from the favourable settlement of prior year exposures.
Looking beyond 2022, we expect our effective tax rate to increase to between 24% and 25% due to the rise in the UK tax rate from
19% to 25% from April 2023 and enforcement of a minimum tax rate for corporate profits globally. Based on current proposals we
do not expect proposed federal tax changes in the US to have a significant impact to the Group if implemented.
As explained in the Principal risks and uncertainties section on pages 64 to 72, the Group identifies an increase in taxation as a
principal risk for the Group, and the tax rate could be affected by legislative changes or the resolution of prior year tax matters.
However this risk is now considered to be lower due to the reduction of the Group’s exposure to the particular risk which was
described in the 2020 Annual Report regarding the potential application of State aid rules to the UK tax regime. In March 2021 the
Group received communication from HM Revenue & Customs (‘HMRC’) regarding the potential application of State aid rules to the
UK tax regime, which was described in the 2020 Annual Report. HMRC’s conclusion, with which the European Commission agreed,
was that no Bunzl Group company was a beneficiary under the State aid decision of the European Commission. This means that the
risk of having to pay additional tax plus interest of up to £37 million in connection with the matter is now remote, whatever the EU
General Court’s eventual ruling.
Earnings per share
Profit after tax increased to £442.8 million (2020: £430.0 million), up 10.4% and an increase of £41.8 million at constant exchange
rates (up 3.0% at actual exchange rates), due to a £49.8 million increase in profit before income tax, partly offset by an £8.0 million
increase in the tax charge at constant exchange rates.
Adjusted profit after tax was £542.5 million (2020: £550.5 million), up 4.9% and an increase of £25.4 million at constant exchange
rates (down 1.5% at actual exchange rates), due to a £26.0 million increase in adjusted profit before income tax, partly offset by a
£0.6 million increase in the tax on adjusted profit before income tax at constant exchange rates.
The weighted average number of shares of 333.8 million is unchanged from 2020 with employee share option exercises offset by
share purchases into the employee benefit trust.
Basic earnings per share were 132.7p (2020: 128.8p), up 10.5% at constant exchange rates (up 3.0% at actual exchange rates).
Adjusted earnings per share were 162.5p (2020: 164.9p), an increase of 4.9% at constant exchange rates (down 1.5% at actual
exchange rates).
Movement in basic eps (p)
140
130
120
110
100
128.8
6.0
1.9
3.5
1.2
132.7
(8.7)
2020 basic EPS
Currency
translation
Increase in
adjusted profit
before income tax
Decrease in
customer
relationships and
brands amortisation
and acquisition
related items
Non repeat of
non-recurring
pension scheme
charges
Decrease in
reported tax rate
2021 basic EPS
Bunzl plc Annual Report 2021
77
STRATEGIC REPORT FINANCIAL REVIEW CONTINUED
Movement in adjusted eps (p)
164.9
6.0
1.6
162.5
(10.0)
170
160
150
140
130
120
2020 adjusted EPS
Currency translation
Increase in adjusted
profit before income tax
Decrease in effective
tax rate
2021 adjusted EPS
Dividends
An analysis of dividends per share for the years to which they relate is shown below:
Interim dividend (p)
Final dividend (p)
Total dividend (p)
Dividend cover (times)
2021
16.2
40.8
57.0
2.9
Growth
2.5%
6.5%
5.4%
2020
15.8
38.3
54.1
3.0
The Company’s practice in recent years has been to pay a progressive dividend, delivering year-on-year increases with the dividend
usually growing at a similar rate to the growth in adjusted earnings per share. The Board is proposing a 2021 final dividend of 40.8p,
an increase of 6.5% on the amount paid in relation to the 2020 final dividend. The 2021 total dividend of 57.0p is 5.4% higher than
the 2020 total dividend.
Before approving any dividends, the Board considers the level of borrowings of the Group by reference to the ratio of net debt to
EBITDA, the ability of the Group to continue to generate cash and the amount required to invest in the business, in particular into
future acquisitions. The Group’s long term track record of strong cash generation, coupled with the Group’s substantial borrowing
facilities, provides the Company with the financial flexibility to fund a growing dividend. After the further growth in 2021, Bunzl has
sustained a growing dividend to shareholders over the past 29 years.
The risks and constraints to maintaining a growing dividend are principally those linked to the Group’s trading performance and
liquidity, as described in the Principal risks and uncertainties on pages 64 to 72. The Group has substantial distributable reserves
within Bunzl plc and there is a robust process of distributing profits generated by subsidiary undertakings up through the Group
to Bunzl plc. At 31 December 2021 Bunzl plc had sufficient distributable reserves to cover more than five years of dividends at the
levels of those delivered in 2021, which is expected to be approximately £191 million.
Acquisitions
The Group completed 14 acquisitions during the year ended 31 December 2021 with a total committed spend of £507.6 million.
The estimated annualised revenue and adjusted operating profit of the acquisitions completed during the year were £322 million
and £46 million respectively.
The acquisitions completed during the year include the acquisition of McCue Corporation, which is considered to be individually
significant due to its impact on intangible assets, adding £107.1 million to customer relationships, £8.6 million to brands and
£132.5 million to goodwill. The committed spend on this acquisition was £246.5 million. For further details of this acquisition
see Note 28 on pages 201 to 203.
A summary of the effect of acquisitions is as follows:
Fair value of net assets acquired
Goodwill
Consideration
Satisfied by:
cash consideration
deferred consideration
Contingent payments relating to retention of former owners
Net cash acquired
Transaction costs and expenses
Total committed spend in respect of acquisitions agreed and completed in the current year
£m
238.9
240.8
479.7
442.8
36.9
479.7
30.9
(11.3)
8.3
507.6
78
Bunzl plc Annual Report 2021
The net cash outflow in the year in respect of acquisitions comprised:
Cash consideration
Net cash acquired
Deferred consideration payments
Net cash outflow in respect of acquisitions
Acquisition related items*
Total cash outflow in respect of acquisitions
* Acquisition related items comprise £9.1 million of transaction costs and expenses paid and £6.9 million of payments relating to the retention of former owners.
Cash flow
A summary of the cash flow for the year is shown below:
Cash generated from operations†
Payment of lease liabilities
Net capital expenditure
Operating cash flow†
Net interest excluding interest on lease liabilities
Income tax paid
Free cash flow
Dividends paid
Net receipts/(payments) relating to employee share schemes
Net cash inflow before acquisitions
Acquisitions◊
Net cash (outflow)/inflow
† Before acquisition related items.
◊ Including acquisition related items.
£m
442.8
(11.3)
5.2
436.7
16.0
452.7
2020
£m
968.3
(159.6)
(31.9)
776.8
(41.5)
(153.8)
581.5
(171.5)
(8.4)
401.6
(387.5)
14.1
2021
£m
930.5
(158.9)
(30.0)
741.6
(34.8)
(181.4)
525.4
(180.4)
19.5
364.5
(452.7)
(88.2)
The Group’s free cash flow of £525.4 million was £56.1 million lower than in 2020, primarily due to the decrease in operating cash
flow of £35.2 million and a higher cash outflow relating to tax. The Group’s free cash flow was used to finance dividend payments
of £180.4 million in respect of 2020 (2020: £171.5 million in respect of 2019) and partially fund an acquisition cash outflow of
£452.7 million (2020: £387.5 million). Cash conversion (being the ratio of operating cash flow as a percentage of lease adjusted
operating profit) was 102% (2020: 103%).
Operating cash flow
Adjusted operating profit
Add back depreciation of right-of-use assets
Deduct payment of lease liabilities
Lease adjusted operating profit
2021
£m
741.6
752.8
134.8
(158.9)
728.7
2020
£m
776.8
778.4
134.8
(159.6)
753.6
Cash conversion (operating cash flow as a percentage of lease adjusted operating profit)
102%
103%
Net debt
Net debt excluding lease liabilities increased by £82.4 million during the year to £1,337.4 million (2020: £1,255.0 million), due to a net
cash outflow of £88.2 million partly offset by a £5.8 million decrease due to currency translation. Net debt including lease liabilities
was £1,826.1 million (2020: £1,752.5 million).
Net debt to EBITDA calculated at average exchange rates and based on historical accounting standards, in accordance with the
Group’s external debt covenants, was 1.6 times (2020: 1.5 times). Net debt to EBITDA calculated at average exchange rates including
lease liabilities was 1.9 times (2020: 1.8 times).
Bunzl plc Annual Report 2021
79
STRATEGIC REPORT FINANCIAL REVIEW CONTINUED
Balance sheet
Summary balance sheet at 31 December:
Intangible assets
Right-of-use assets
Property, plant and equipment
Working capital
Other net liabilities
Net pension surplus/(deficit)
Net debt excluding lease liabilities
Lease liabilities
Equity
Return on average operating capital
Return on invested capital
2021
£m
2,766.8
448.3
120.9
1,027.6
(364.8)
3,998.8
31.2
(1,337.4)
(488.7)
2,203.9
2020
£m
2,441.9
453.4
122.7
1,021.4
(323.0)
3,716.4
(44.8)
(1,255.0)
(497.5)
1,919.1
43.3%
15.1%
45.4%
16.2%
Return on average operating capital decreased to 43.3% from 45.4% in 2020 and return on invested capital of 15.1% was down from
16.2% in 2020, both driven by a lower operating margin and reflective of a more normal revenue mix for the Group as Covid-19
related sales have decreased.
Intangible assets increased by £324.9 million to £2,766.8 million due to intangible assets arising on acquisitions in the year of
£487.9 million and software additions of £7.9 million, partly offset by an amortisation charge of £114.9 million, and a decrease from
currency translation of £56.0 million.
Right-of-use assets decreased by £5.1 million to £448.3 million due to a depreciation charge of £134.8 million and a decrease from
currency translation of £7.0 million, partly offset by additional right-of-use assets from new leases during the year of £112.6 million,
an increase from acquisitions of £12.6 million and an increase from remeasurement adjustments of £11.5 million.
Working capital increased from the prior year end by £6.2 million to £1,027.6 million due to increases from acquisitions, partly offset
by a decrease in the underlying business and a decrease from currency translation.
The Group’s net pension surplus of £31.2 million at 31 December 2021 compares with the net pension deficit of £44.8 million at
31 December 2020, principally due to an actuarial gain of £74.1 million and contributions of £8.4 million during the year, partly offset
by decreases from service cost and net interest expense. The actuarial gain principally arose from a decrease in pension liabilities
due to an increase in discount rates and higher than expected returns on pension scheme assets.
Shareholders’ equity increased by £284.8 million during the year to £2,203.9 million.
Movement in shareholders’ equity (£m)
442.8
(180.4)
(73.6)
55.6
18.3
22.1
2,203.9
2,300
2,200
2,100
2,000
1,900
1,800
1,700
1,600
1,919.1
2020
Shareholders’
equity
Profit for
the year
Dividends
Currency
(net of tax)
Actuarial gain on
pension schemes
(net of tax)
Share based
payments
(net of tax)
Employee share
options (net of
tax)
2021
Shareholders’
equity
Capital management
The Group’s policy is to maintain a strong capital base to maintain investor, creditor and market confidence and to sustain future
development of the business. The Group funds its operations through a mixture of shareholders’ equity and bank and capital
market borrowings. The Group’s funding strategy is to maintain an investment grade credit rating and the Company’s current credit
rating with Standard & Poor’s is BBB+. All borrowings are managed by a central treasury function and funds raised are lent onward
to operating subsidiaries as required. The overall objective is to manage the funding to ensure the borrowings have a range of
maturities, are competitively priced and meet the demands of the business over time. There were no changes to the Group’s
approach to capital management during the year and the Group is not subject to any externally imposed capital requirements.
80
Bunzl plc Annual Report 2021
Treasury policies and controls
The Group has a centralised treasury department to control external borrowings and manage liquidity, interest rate, foreign
currency and credit risks. Treasury policies have been approved by the Board and cover the nature of the exposure to be hedged,
the types of financial instruments that may be employed and the criteria for investing and borrowing cash. The Group uses
derivatives to manage its foreign currency and interest rate risks arising from underlying business activities. No transactions of
a speculative nature are undertaken. The treasury department is subject to periodic independent review by the internal audit
department. Underlying policy assumptions and activities are periodically reviewed by the Board. Controls over exposure changes
and transaction authenticity are in place.
During the year, all of the Group’s committed bank facilities, which previously referenced the discontinued GBP LIBOR, have been
renegotiated to reference SONIA, the new GBP benchmark. This has not had an impact on the financial results for the year ended
31 December 2021.
The Group continually monitors net debt and forecast cash flows to ensure that sufficient facilities are in place to meet the
Group’s requirements in the short, medium and long term and, in order to do so, arranges borrowings from a variety of sources.
Additionally, compliance with the Group’s biannual debt covenants is monitored on a monthly basis and formally tested at 30 June
and 31 December. The principal covenant limits are net debt, calculated at average exchange rates, to EBITDA of no more than
3.5 times and interest cover of no less than 3.0 times. Sensitivity analyses using various scenarios are applied to forecasts to assess
their impact on covenants and net debt. During the year ended 31 December 2021 all covenants were complied with and based on
current forecasts it is expected that such covenants will continue to be complied with for the foreseeable future. Debt covenants
are based on historical accounting standards.
The Group has substantial funding available comprising multi-currency credit facilities from the Group’s banks, US private
placement notes and senior bonds. At 31 December 2021 the nominal value of US private placement notes outstanding was
£834.7 million (2020: £916.3 million) with maturities ranging from 2022 to 2028. At 31 December 2021 the available committed
bank facilities totalled £996.2 million (2020: £978.0 million) of which £14.5 million (2020: £45.0 million) was drawn down, providing
headroom of £981.7 million (2020: £933.0 million). During the year, £188 million of bank facilities were extended to 2025 and we
expect to extend 2025 maturities further using the bank and/or capital markets in due course. The Group expects to make
repayments in 2022 of approximately £112 million relating to maturing US private placement notes.
Committed facilities maturity profile by year (£m)
1200
1000
800
600
400
200
0
300
583
167
2025
140
150
2023
204
122
2024
112
2022
116
2026
55
130
2027
37
2028
2029
2030
2031
400
Bank facilities – undrawn
Senior bonds
Bank facilities – drawn
US private placement notes
Further details of the Group’s capital management and treasury policies and controls are set out in Note 16 on pages 183 to 190.
Going concern
The directors, having reassessed the principal risks and uncertainties, consider it appropriate to adopt the going concern basis of
accounting in the preparation of the financial statements. In reaching this conclusion, the directors noted the Group’s strong cash
performance in the year, the substantial funding available to the Group as described above and the resilience of the Group to a
range of severe but plausible downside scenarios. Further details are set out in Note 1 on page 162.
Richard Howes
Chief Financial Officer
28 February 2022
Bunzl plc Annual Report 2021
81
STRATEGIC REPORT
TASKFORCE ON CLIMATE RELATED FINANCIAL DISCLOSURES (TCFD)
TCFD Index
The Taskforce on Climate related Financial Disclosures (TCFD) has developed a climate related financial risk disclosure framework
for companies to provide information to investors, lenders, insurers and other stakeholders.
Our climate related disclosures comply with the TCFD recommendations and disclosures. The index table below provides a
reference to where these disclosures can be found. A separate TCFD statement is available which provides more detail of the
recommended disclosures and provides easy access for external stakeholders. This TCFD statement can be found on our website
www.bunzl.com/sustainability/sustainability-reporting/.
Topic
Disclosure summary
Disclosure
Governance
Disclose the organisation’s
governance around climate related
risks and opportunities.
a) Describe the Board’s oversight of climate related
risks and opportunities.
b) Describe management’s role in assessing and
managing climate related risks and opportunities.
Bunzl response
Governance report:
pages 98-99, 108-109
Principal risks: pages 64-66
TCFD statement.
Governance report:
pages 98-99, 108-109
Principal risks: pages 64-66
TCFD statement.
Strategy
Disclose the actual and potential
impacts of climate related risks and
opportunities on the organisation’s
businesses, strategy and financial
planning.
a) Describe the climate related risks and
opportunities the organisation has identified over
the short, medium and long term.
Principal risks: page 66
Sustainability report: page 54
TCFD statement.
b) Describe the impact of climate related risks and
opportunities on the organisation’s businesses,
strategy, and financial planning.
Principal risks: page 66
Sustainability report: page 54
TCFD statement.
c) Describe the resilience of the organisation’s
strategy, taking into consideration different climate
related scenarios including a 2°C or lower
temperature scenario.
Principal risks: page 66
Sustainability report: page 54
TCFD statement.
Risk
management
Disclose how the organisation
identifies, assesses and manages
climate related risks.
a) Describe the organisation’s processes for
identifying and assessing climate related risks.
Principal risks: pages 64-66
Sustainability report: page 54
TCFD statement.
b) Describe the organisation’s processes for
managing climate related risks.
Principal risks: page 66
TCFD statement.
c) Describe how processes for identifying, assessing
and managing climate related risks are integrated
into the organisation’s overall risk management.
Principal risks: pages 64-66
TCFD statement.
Metrics and
targets
Disclose the metrics and targets
used to assess and manage
relevant climate related risks and
opportunities.
a) Disclose the metrics used by the organisation to
assess climate related risks and opportunities in
line with its strategy and risk management
process.
ESG appendix: pages 86-88
TCFD statement.
b) Disclose Scope 1, Scope 2, and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions and the
related risks.
ESG appendix: pages 86-88
TCFD statement.
c) Describe the targets used by the organisation to
manage climate related risks and opportunities
and performance against targets.
ESG appendix: pages 86-87
Sustainability report: page 54-55
TCFD statement.
82
Bunzl plc Annual Report 2021
SASB REPORTING FOR BUNZL SUSTAINABILITY METRICS
STRATEGIC REPORT
SASB Reporting for
Bunzl Sustainability Metrics
The Sustainability Accounting Standards Board (SASB) has industry-specific sustainability standards which identify material topics
and associated metrics. The table below summarises where relevant SASB disclosures can be found throughout Bunzl’s annual
reporting. This is based on several standards from the materiality map as Bunzl does not fall within one clear sector. We have based
our disclosure on the most relevant standards for the business that align to and cover the key sustainability themes arising from
our recent materiality assessment. All of the data provided below is from 2021 unless otherwise stated.
SASB Metric
Bunzl Disclosures
Product lifecycle management
Revenue from products
that are reusable,
recyclable, and/or
compostable
Discussion of
strategies to reduce
the environmental
impact of packaging
throughout its lifecycle
Greenhouse Gas Emissions
Gross global Scope 1
emissions
Discussion of long-term
and short-term strategy
or plan to manage Scope
1 emissions, emissions
reduction targets, and an
analysis of performance
against those targets
In 2021, £1.8bn revenue was generated from packaging and products made from materials that are recyclable,
compostable, reusable or made from renewable sources.
Page 47: Annual Report.
We have discussed how we work with our suppliers and customers to reduce the environmental impact of packaging
and products in both our annual report and Capital Markets Day material.
Pages 56 to 57: Annual Report.
Pages 23-37: Capital Markets Day 2021.
87,125 tonnes of CO2e
Our climate change/carbon strategy has been detailed in the sustainability section of our annual report on pages
54 to 55: Annual Report.
A comprehensive view into how we understand, assess and manage the risks and opportunities associated with
climate change can be found in our TCFD statement: TCFD Statement.
Our integrated process for identifying and assessing risks is detailed in the strategic report section of our annual
report on pages 64 to 72: Annual Report.
Our carbon reduction targets can be found on pages 13 and 54 of our annual report (Annual Report) with our
performance shown on pages 86 to 88.
The targets are (baseline year: 2019):
• 2025: Reduce emission intensity by 25% (scope 1 and 2)
• 2030: Reduce emission intensity by 50% (scope 1 and 2)
• 100% Group-wide renewable energy procurement by 2030
• Net zero by 2050 at the latest (scope 1, 2 and 3)
We have also committed to the Business Ambition for 1.5⁰C initiative & joined the Race to Zero campaign.
(1) Total fuel consumed,
(2) percentage natural
gas, (3) percentage
renewable
(1) Total fuel consumed: 1,402,986 GJ
(2) percentage natural gas: 23%
(3) percentage renewable fuel: 0.2%
(1) Operational energy
consumed, (2)
percentage grid
electricity, (3) percentage
renewable
(1) Operational energy consumed: 1,695,386 GJ
(2) percentage grid electricity: 17%
(3) percentage renewable: 2.5% (total energy), 14% (total electricity)
Bunzl plc Annual Report 2021
83
SASB REPORTING FOR BUNZL SUSTAINABILITY METRICS CONTINUED
SASB Metric
Bunzl Disclosures
Labour conditions in the supply chain
Percentage of (1) Tier 1
supplier facilities and (2)
supplier facilities beyond
Tier 1 that have been
audited to a labour
code of conduct, (3)
percentage of total audits
conducted by a third-
party auditor
Our auditing process is our first line of defence to prevent defective products being shipped and to ensure products
comply with our ethical standards.
(1) Tier 1 suppliers: All products supplied directly from Asia are through suppliers that are verified by our Global
Supply Chain Solutions team and our audits typically cover c.98% of Bunzl spend across 13 Asian countries
every 2 years.
We will take a proactive, risk-based approach to responsible sourcing, identifying common issues in our supply
chain and working closely with suppliers to reduce the future incidences of these. The spend coverage above
(representing c.15% of our global supply chain) relates to our suppliers based in regions identified as very high risk
in international rankings of human rights issues (e.g. Global Slavery Index).
(2) Tier 2 suppliers: None audited as we are taking a risk based approach to working through our supply chain with
our programme (and focusing on Tier 1 as a priority). Our audits and Supplier Code of Conduct demand that our
Tier 1 suppliers ensure that the Code is maintained and enforced within their own supply chains, including by any
sub-contractors used in executing any orders received from our Company.
(3) Percentage of total audits conducted by a third-party auditor: c.3%, although this increased to c.15% during the
pandemic due to travel restrictions impacting our Global Supply Chain Solutions team.
For more information see:
Pages 50 to 51: Annual Report.
Bunzl Supplier Code of Conduct
Bunzl Modern Slavery Statement
Priority non-
conformance rate and
associated corrective
action rate for suppliers’
labour code of conduct
audits
Description of the
greatest (1) labour and (2)
environmental, health,
and safety risks in the
supply chain
During 2021, our Global Supply Chain Solutions team audited 754 suppliers:
• 677 had no critical issues (89.8% suppliers audited).
• 77 underwent remediation efforts to bring them up to the required standard (10.2% suppliers audited).
• Following these remediation efforts, we terminated relationships with 10 suppliers who failed to make enough
progress (1.3% of suppliers audited, 13% of suppliers requiring remediation).
• Corrective action rate for suppliers requiring remediation: 87%.
Our Global Supply Chain Solutions team have identified the following risks:
(1) Labour:
• Child Labour.
• Forced Labour (Modern Slavery) – including the use of recruitment fees.
• Unfair discrimination.
• Wages not meeting local legal minimum requirements.
• Continuous work for more than 30 consecutive days without at least one day’s rest.
(2) Environmental, health and safety risks:
• Whether the supplier have an Environmental Policy and an appointed business owner.
• Are evacuation routes and safety exits kept clear and unblocked, and firefighting equipment easy to access.
• Whether the dormitory located in a building separate from the workshops and warehouses.
• Are the production/warehouse buildings structurally safe.
Workforce diversity and inclusion
Percentage of gender
and racial/ethnic group
representation for (1)
management and (2) all
other employees
Total amount of
monetary losses as a
result of legal
proceedings associated
with employment
discrimination
Voluntary and
involuntary turnover
rates for employees
We monitor the percentage of our workforce by gender and have total workforce of just over 21,000 employees, 63%
of them are male and 37% are female. In our senior management population (c.450 leaders) there are 19% females
and 81% males.
We cannot monitor ethnicity of our total workforce or senior management population due to restrictions on capturing
data in certain countries in which we operate.
In 2021 compensation costs of c.£3,000 were incurred for one legal case in Latin America associated with alleged
employment discrimination.
Voluntary turnover for 2021 was 17.3%.
84
Bunzl plc Annual Report 2021
ESG APPENDIX
STRATEGIC REPORT
ESG Appendix
Packaging categories
• Packaging refers to packaging and other products within the foodservice, grocery and retail sectors which are facing legislation or
consumer pressure.
• We have exercised our judgement to allocate sales to the packaging and non-packaging categories as explained below.
• In future years packaging and products may move between categories and / or may be added or removed (for example, as
legislation changes, recyclability improves or if a new line of products is launched).
Category detail and name
applied by Bunzl
#
Description
Example products
in category
Category detail:
Single-use plastic products
facing restriction
Bunzl name:
Consumable plastics facing
regulation
Category detail:
Single-use plastic products
facing regulation (not
outright restriction)
Bunzl name:
Consumable plastics likely to
transition
Category detail:
Single-use plastic products
where plastic is an
appropriate material for the
job, where alternatives are
not commercially available or
where substitution could
cause unintended
environmental consequences
Bunzl name:
Packaging and products with
an important purpose
Category detail:
Recyclable, reusable,
compostable products, and
those made from renewable
resources
Bunzl name:
Packaging and products
made from alternative
materials
1 The single-use plastic products most commonly facing restriction – i.e.
outright bans or complete restriction on placing into the market within
countries in which we operate – this is the category where we expect to
see some volume reduction.
Including but not limited to:
Plastic cutlery
Plastic plates, bowls, platters,
and lids
We have expanded these specific regulations to all Business Areas
where such products are sold. This is to provide consistency, as it can
be reasonably expected that legislation will follow to those areas where
it does not currently apply.
2 Single-use plastic products that have existing measures in place (either
legislative in countries we operate or voluntarily by some brands/
businesses we sell to) to control their usage.
As the use of these products is not completely restricted (i.e. there are
no large-scale outright bans as with category 1) and the products
themselves serve a functional purpose, we expect customers to
transition away from these products to alternatives including reusable
options.
We have expanded these specific regulations to all Business Areas
where such products are sold to provide consistency.
Including but not limited to:
Single-use plastic cups
Paper cups and soup containers
with plastic lining
Lightweight plastic carrier bags
3 Single-use plastic products where plastic is an appropriate material for
the job from a functional perspective, where alternatives do not
currently exist at scale or where unmitigated, careless substitution of
plastic could lead to significant negative, unintended consequences
such as higher carbon emissions, water use and food waste.
Including but not limited to:
Plastic food containers
Plastic pouches, packets,
and wrappers
4 These are products that are recyclable or compostable, made from a
renewable resource, for example palm leaf or sugar cane, plastic
products containing a proportion of recycled content (where these
products are also recyclable) and reusable products such as ‘bags for
life’ or refillable coffee cups that are products specifically designed to be
used more than once.
These represent the alternative solutions our customers typically
transition their single-use packaging and products to.
National guidance (where it exists) has been used to determine the
recyclability of a product.
Due to the huge variation in recycling provisions globally we have
expanded these criteria to all Business Areas where such products are
sold to provide consistency.
Including but not limited to:
PET and rPET food containers
Cardboard or paperboard
containers
Compostable plastic cups
Reusable cups
Alternative materials cutlery
Alternative materials plates,
bowls, platters, and lids
Paper pouches, packets,
and wrappers
Paper bags
Reusable carrier bags
Bunzl plc Annual Report 2021
85
ESG APPENDIX CONTINUED
Code of conduct
The Group’s business code of conduct is a guide for every employee explaining how they are expected to conduct themselves both
from a corporate and individual perspective.
2019
2020
2021
Comment
Material breaches of code of conduct
Speak up
0
8
0
43
0 No material breaches of our code of conduct were recorded in 2021.
33
In 2021 we received 33 reports through our confidential whistle blowing
process, ‘Speak Up’, none of which related to any issues of material concern. We
promoted the service in September 2021 due to a change in supplier and new
contact details and have received 13 cases since communicating these details.
All reports raised were effectively resolved at a local level.
Suppliers
Bunzl’s industry-leading sourcing and auditing function based in Shanghai works in partnership with our Asian suppliers to ensure
the highest standards of product quality and to respect human rights and driving broad-based growth through responsible supply
chains. Our Group Modern Slavery Statement gives further details on our approach which can be found on the Bunzl plc website.
Number of supplier audits and
assessments covering environmental
and social standards
707
680
754
The number of audits increased due to travel restrictions being relaxed in Asia.
We have ceased our relationship with 10 suppliers that did not make sufficient
progress to resolve non-acceptable non-conformities.
2019
2020
2021
Comment
Greenhouse gas emissions data (Group)
Data for the period 1 October to 30 September
Scope 1
Total emissions (tonnes of CO2e)
Emission intensity (tonnes of CO2e/£m revenue
Natural gas usage (m3)
Fuel usage (ltr)
Scope 2 – Location based
Emissions (tonnes of CO2e)
Emission intensity (tonnes of CO2e/£m revenue)
Electricity usage (MWh)
Scope 2 – Market based
Emissions (tonnes of CO2e)
Emission intensity (tonnes of CO2e/£m revenue)
Total gross emissions – location based
Emissions (tonnes of CO2e)
Emission intensity (tonnes of CO2e/£m revenue)
Total energy (MWh)
2019
(baseline year)
2020
2021
99,193
10.7
8,912,413
31,523,097
90,568
9.5
8,082,813
29,306,537
87,125◊
8.5◊
8,272,123
28,060,702
29,594
3.2
83,062
29,835
3.2
128,787
13.9
516,775
27,421
2.9
80,276
26,183
2.7
117,989
12.4
480,711
25,043◊
2.4◊
79,057
25,025
2.4
112,168◊
10.9◊
470,941
◊ Included in the external auditors limited assurance scope. See Data Assurance statement, which is available on our website, www.bunzl.com. The data for previous years was also assured as
detailed in the respective Annual Reports.
Scope 1:
Target for 2021: Reduce emission intensity by 6% against 2019 (target excludes any foreign exchange translation effect
on revenue).
The 2021 scope 1 carbon emissions intensity of 8.5 tonnes of CO2e/£m revenue represents a 20% decrease versus 2019, including
the effect of foreign exchange rate fluctuation. At constant exchange rates the emissions reduced by 23%.
Reduction of these emissions has been impacted by the continued unusual business circumstances due to the Covid-19 pandemic.
The fuel consumption associated with company cars decreased further due to travel restrictions and the requirement for
employees to work from home throughout the whole reporting year (October 2020 - September 2021). Fuel for transportation
remains our highest source of CO2e emissions, contributing 80% of Scope 1. Of those emissions relating to transportation, 83% are
generated by our fleet of commercial vehicles.
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Bunzl plc Annual Report 2021
Scope 2:
Target for 2021: Reduce emission intensity by 10% against 2019 (target excludes any foreign exchange translation effect
on revenue).
The 2021 scope 2 location based intensity figure of 2.4 tonnes of CO2e/£m revenue represents a 23% reduction in Scope 2
emissions versus 2019, including the effect of foreign exchange rate fluctuation. At constant exchange rates the reduction in
emissions is 26%. These Scope 2 emissions take into account changes to the average country specific emission factors, but do not
take into account low carbon electricity purchases (representing approximately 13% of electricity purchased). The remaining
improvement in the Scope 2 index has been driven by the continued implementation of energy efficiency improvements such as
low energy lighting. In 2021 we completed another 19 LED retrofit projects in North America which will result in savings of 3.1
thousand MWh every year. These savings represent 4% of our Group electricity usage.
Scope 1 and 2:
Target for 2021: Reduce emission intensity by 6% against 2019 (target excludes any foreign exchange translation effect on
revenue numbers).
The 2021 combined scope 1 and 2 intensity figure of 10.9 tonnes of CO2e/£m revenue represents a 21% reduction versus 2019,
including the effect of foreign exchange rate fluctuation. At constant exchange rates the reduction in emissions is 24%.
Scope 1 carbon emissions
Tonnes of CO2 per £m revenue
Measured in accordance with
the Greenhouse Gas Protocol
applying DEFRA conversion factors
Scope 2 carbon emissions
(location based)
Tonnes of CO2 per £m revenue
Measured in accordance with
the Greenhouse Gas Protocol
applying DEFRA conversion factors
11.3
11.4
10.7
9.5
8.5◊
3.7
3.6
3.2
2.9
2.4◊
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
◊ Included in external auditors’ limited assurance scope. See Data Assurance statement which is available on our website, www.bunzl.com. The data for previous years was also assured as
detailed in the respective Annual Reports.
Greenhouse gas emissions data (UK)*
Data for the period 1 October to 30 September
Scope 1
Total emissions (tonnes of CO2e)
Natural gas usage (m3)
Fuel usage (ltr)
Scope 2
Emissions (tonnes of CO2e)
Electricity usage (MWh)
Total gross emissions
Emissions (tonnes of CO2e)
Total energy consumption (MWh)
Emission intensity (tonnes of CO2e/£m revenue)
2019
2020
2021
17,211
469,573
6,271,182
15,261
486,661
5,606,760
14,845
419,138
5,572,556
2,660
10,405
19,871
82,084
17.0
2,847
11,140
18,108
75,812
14.9
2,511
9,823
17,356
73,815
14.6
* Energy usage and carbon emissions disclosed separately to adopt to the requirements of the UK Streamlined Energy and Carbon Reporting (‘SECR’) policy.
Bunzl plc Annual Report 2021
87
STRATEGIC REPORT ESG APPENDIX CONTINUED
Our reported environmental data includes all businesses that are subsidiaries of the Group for financial reporting purposes,
except for recent acquisitions where there has been insufficient opportunity for the businesses to adopt our reporting guidelines.
The revenue from these businesses is not included when calculating the indexed emissions. The reported data covers 99.3% of the
Group by revenue.
Bunzl has a Group-wide approach to recording, measuring and reporting energy and climate change data. Business Areas are
responsible for data input and monitoring progress against targets and providing commentary on significant variances and on the
implementation of projects aimed at improving EHS performance. All data is reported in the Group’s central EHS reporting and
consolidation system. More details can be found in the Group reporting guidelines on our website (https://www.bunzl.com/
sustainability/reports-and-progress.aspx).
Scope 3:
Our reporting comprises emissions from third party carriers, business flights, waste and electricity transmission losses. The bar
graph shows that third party carriers produce the largest proportion of our reported Scope 3 emissions. These emissions arise due
to some of our businesses not having their own fleet and, in addition, all our businesses, irrespective of whether they have their
own fleet, will distribute a proportion of goods by third party carriers where it is more efficient and cost-effective to do so. In 2022,
we will undertake a screening of our scope 3 emissions sources and estimate the quantity of emissions from other scope 3 sources.
Scope 3 carbon emissions
Tonnes of CO2e per £m revenue
0.1
0.3
1.1
5.7
0.1
0.2
1.0
5.7
0.1
0.2
1.1
5.4
0.1
0.2
0.5
5.6
0.5
0.1
0.2
5.6
2017
2018
2019
2020
2021
Third party carriers
Business travel
Electricity transmission
Waste
12 months to 30 September
The increase in the CO2 emissions associated with waste generation in 2021 due to the application of a new CO2 emission factor
Waste
The amount of waste generated in our facilities in 2021 is approximately 22,000 tonnes which is approximately 4% lower compared
to last year, mainly due to increased reporting accuracy. The recycling rates strongly depend on the locally available waste recycling
options. In 2021, the recycling rate remained stable at approximately 50% of the generated waste. This excludes any post-disposal
waste treatment and recycling carried out by waste handlers. The reported waste data covers approximately 95% of the Group
by revenue.
To improve consistency and accuracy of waste reporting and management, we have carried out projects to consolidate waste
contractors in UK and Australia. Accurate waste measurement remains challenging in geographies with less advanced waste
management infrastructures.
Water
Direct water usage is not a significant environmental impact for our business as it is principally confined to staff hygiene and
workplace cleaning. Our estimated water usage is 175,000 m3 of water per year. The usage is higher than last year due to increased
number of FTEs in the group and increased operational hours at some of our sites. As we do not manufacture any of the goods we
sell, water discharges, apart from internal sanitation, are limited to rainwater run-off from the yards of our locations.
Environmental management system certification
We have developed an internal EHS management system standard that is based on ISO 14001 and ISO 45001. Some parts of the
business, mainly in UK & Ireland, Asia Pacific and Continental Europe, have elected to become formally certified. These businesses
cover approximately 22% of the Group’s operations (measured by revenue).
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Bunzl plc Annual Report 2021
Health & safety
Health & safety indicators
Average number of incidents per month per 100,000 employees
Average number of days lost per month per 100,000 employees
Fatalities
2017
81
1,890
0
2018
95
2,370
1
2019
96
3,110
0
2020
85
3,040
0
2021
86◊
2,615◊
0
◊ Included in the external auditors’ limited assurance scope see Data Assurance statement which is available on our website, www.bunzl.com. The data for previous years was also assured as
detailed in the respective Annual Reports.
Targets for 2021:
Reduce the Group accident incidence rate by 5% from 2019. Reduce the Group accident severity rate by 5% from 2019.
The 2021 group accident incidence rate of 86 represents a 10% improvement versus 2019. The 2021 group accident severity rate of
2,615 represents a 16% improvement versus 2019.
Despite the continued challenging conditions due to the Covid-19 pandemic, we have continued the work to minimise our health
and safety risks, particularly relating to the operation of our warehouses and vehicles, such as manual handling, falling, slipping and
tripping and impact with equipment which remain the highest causes of accidents. We have taken several steps to embed a more
pro-active safety culture in Bunzl. Across the Group we are now internally reporting on leading indicators such as near misses,
safety meetings, safety observations and inspections. We are rolling out behavioural safety observation programmes, aimed at
facilitating discussions with employees about safe and unsafe work practices. In France, where we have the highest incidence
and severity rate in the Group, the roll out of the safety observation programme resulted in a 23% reduction of lost time accidents
in 2021.
Target for 2022:
Reduce the Group accident incidence rate by 5% from 2021
Reduce the Group accident severity rate by 5% from 2021
Incidence rate
Average number of incidents per
month per 100,000 employees
Severity rate
Average number of days lost per
month per 100,000 employees
95
96
81
85
86◊
3,110
3,040
2,615◊
2,370
1,890
2017
2018
2019
2020
2021
2017
2018
2019
2020
2021
12 months to 30 September
◊ Included in the external auditors’ limited assurance scope. See Data Assurance statement which is available on our website, www.bunzl.com.
The data for previous years was also assured as detailed in the respective Annual Reports.
Bunzl plc Annual Report 2021
89
STRATEGIC REPORT ESG APPENDIX CONTINUED
Employees
Engaging with our employees with clear communications and the provision of learning and development opportunities
Employee turnover:
Voluntary
Performance
2019
2020
2021
What we said we would do in 2021 What we did
What we plan to do in 2022
15.4% 12.2% 17.3% Review quarterly at the
Executive Committee to
ensure we understand and
where appropriate address
reasons for unintended
voluntary turnover.
Continued to listen to
employees who leave and
share this data at Executive
Committee level. Offered
greater flexibility in working
arrangements when possible.
Build on the strong
engagement results and focus
on the employee experience.
Ensure employees continue
to feel safe at work. Establish
models of hybrid working.
Gender diversity:
Women at senior
management level
14%
16%
19% Monitor progress of high
potential females in network
groups to track career
development.
Employee
engagement index
score
–
88%
86% Run a Global engagement
survey and where necessary
local surveys to better
understand trends and
drivers of engagement.
Increased focus on
high potential females
through regional and
global monitoring. High
potential females have been
offered mentors; targeted
development solutions.
Encourage more women
into leadership roles though
focussed and targeted
activities and a continuation
of leadership development
initiatives.
Conducted two regional
surveys in Latin America and
Continental Europe focussed
on understanding employees
opinions regarding Diversity &
Inclusion. Deployed a Global
survey for all employees with
an 80% response rate.
Ensure employees are
involved in conversations
to develop plans based on
their local survey results.
Run tailored local surveys to
focus on specific areas to be
improved or understood in
more depth.
Senior management (%) and employees
Males
81%
374
Males 63% 13,243
Total workforce (%) and employees Average number of employees (%)
Total workforce age profile (%)
Females 19%*
88
Females 37%
7,778
* 27.3% of the Executive Committee’s direct reports are female (6 employees)
Source:
HR from September 2021 (those employees eligible to receive
grants of executive share options)
Source:
HR from BRMS
Charitable contributions
Charity donations (£000s)
39%
North America
Continental Europe 26%
19%
UK & Ireland
16%
Rest of the World
Under 30
30–39
40–54
Over 55
15%
24%
39%
22%
Source:
Note 24 on page 199
Source:
HR from BRMS
2019
669
2020
2,271
2021
1,271
Bunzl’s operations are international but our strength lies in the local nature of our businesses. We support the communities where
our employees live and work and encourage fundraising activities championed by our businesses and their employees locally.
During the Covid-19 pandemic, many of our businesses supported initiatives in our local communities when it mattered most,
meaning our charitable donations were higher in 2020 when compared to other years.
In 2019, we realigned our corporate charity programme to focus on environmental projects related to recycling, litter prevention,
clean-up and waste management infrastructure. During 2021 we continued to support activities in these three areas:
• charitable projects that encourage packaging reuse and recycling, and work to educate consumers;
• litter clean-up and prevention initiatives operating in our markets, giving our employees the opportunity to get involved; and
• projects that build new waste management infrastructure and develop recycling skills in some of the world’s poorest places,
often in areas where plastic leakage to the natural environment is highest.
In addition to some of the projects referenced throughout this report (see page 49) we have funded a number of other
environmental initiatives:
• we have continued our partnership with the UK-based charity Sea-Changers and our ‘coastal fountain’ fund for the provision of
water bottle refill fountains at some of the UK’s busiest beaches continued during 2021. We now have 10 fountains installed
across the country.
• our overseas initiatives included developing a new plastics recycling unit in Douala, Cameroon employing 30 vulnerable people
from the community to collect, sort and process plastic waste into valuable products and continuing our successful project in
Mangalore, India where we have supported informal waste-collectors with the resources and skills to work with dignity and are
launching a new scholarship programme for local children.
Group wide, Bunzl donated a total of £1,271,000 to charitable causes during 2021. This does not include amounts donated by Bunzl
in matching funds raised by employees for local charities.
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Bunzl plc Annual Report 2021
NON-FINANCIAL INFORMATION STATEMENT
STRATEGIC REPORT
Non-financial
information statement
In accordance with sections 414CA and 414CB of the Companies Act 2006, we have set out where the relevant non-financial
information we need to report against can be found in this Annual Report:
Business model
Social matters
Employees
Anti-bribery and corruption matters
Human rights
Environmental matters
Read more on pages 30 and 31
Read more on pages 46 to 57
Read more on pages 58 to 63
Read more on page 62
Read more on pages 46 to 57
Read more on pages 46 to 57
Where principal risks have been identified in relation to any of the matters listed above, these can be found on pages 64 to 72.
Our non-financial key performance indicators are set out on page 37.
View the following codes, policies and standards, together with information concerning the due diligence and monitoring
procedures carried out in relation thereto, on our ‘Policy hub’ at www.bunzl.com:
• Business Code of Conduct Policy;
• Business Code of Conduct;
• Supplier Code of Conduct;
• Bunzl Ethical Sourcing Policy;
• Modern Slavery Statement;
• ‘Speak Up’ Policy;
• Bunzl Anti-Bribery and Corruption Policy;
• Diversity, Equity and Inclusion Policy;
• Health & Safety Policy; and
• Environment Policy.
FIND OUT MORE IN
OUR POLICY HUB
ON OUR WEBSITE
Bunzl plc Annual Report 2021
91
At the centre of Bunzl’s
corporate culture are the
championed values of
humility, responsiveness,
reliability and transparency.
READ MORE
PAGE 102
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Bunzl plc Annual Report 2021
Directors’
report
Chairman’s introduction
Board of directors
Corporate governance report
Nomination Committee report
Audit Committee report
Directors’ remuneration report
Other statutory information
94
96
98
110
116
125
150
Bunzl plc Annual Report 2021
93
CHAIRMAN’S INTRODUCTION
Introduction from
Peter Ventress,
Chairman of the Board
‘We are dedicated to leading by example
to demonstrate Bunzl’s strong corporate
values and culture.’
Peter Ventress
Chairman
On behalf of the Board, I am pleased to
present the Corporate governance report
for the year ended 31 December 2021.
Throughout the year the Board has
worked cohesively as a team to enable
the Company to successfully navigate a
turbulent and uncertain period. I would
like to thank the Board for their wise
counsel and continued efforts during this
time. The Board is composed of highly
skilled and experienced directors from
a diverse range of industries and
backgrounds, all of whom contribute
towards the long term success of the
Company and show commitment and
enthusiasm in the performance of their
roles and duties.
Last year we refreshed the Board with
the appointments of Vinodka (Vin) Murria
OBE and Maria Fernanda Mejía, and
this year the Board has continually
considered the composition of the
Board in relation to the strategy of the
Company, with succession planning being
high on the agenda.
As announced by the Company on
2 February 2022, Maria Fernanda has
stepped down from the Board and its
Committees to take up an external
executive role. I would like to thank
Maria Fernanda for her contribution
to the Board and wish her the best in
her future endeavours. An extensive
recruitment process is currently
underway, further details of which will
be included in our 2022 Annual Report.
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Bunzl plc Annual Report 2021
Annual listening
sessions
Representative colleagues across
all levels throughout Bunzl North
America, Bunzl Continental Europe,
Bunzl UK & Ireland, Bunzl Latin
America and Bunzl Asia Pacific
participated in annual listening
sessions with a dedicated non-
executive director per region.
The non-executive director
responsible for conducting the
session and the participating
colleagues are kept consistent each
year, where possible, to ensure
a degree of trust is built between the
parties and to encourage more open
and honest two-way engagement.
Colleagues are given the opportunity
to input their own ideas and raise
issues of concern and this information
is fed back to the Board, providing
the Board with an opportunity to
understand how colleagues feel about
working for Bunzl and gain insight
into the employee voice. From this,
key actions are extracted for the
leadership team and the directors are
provided with a more detailed insight
into the results of the employee
engagement survey.
on page 53. Diversity, equity and
inclusion have been areas of high
priority focus for the Board during
the year. Our diverse and talented
workforce is fundamental to our
success and we are proud of the
progress being made in these areas
throughout the business and with
the initiatives that have been
introduced throughout the Bunzl
Group (see pages 48 and 63 for more
information). In respect of the year
ended 31 December 2021, I am
pleased to report that the Company
has met the targets set by the
Hampton-Alexander Review and the
Parker Review; however, we recognise
that this is just part of our journey as
we continue to accelerate our diversity
and inclusion practices further.
At Bunzl, we take the views and
opinions of our shareholders and
other stakeholders seriously and
we recognise that the AGM is an
important opportunity for all
shareholders to express their views
by asking questions and voting.
While it was unfortunate that we
were unable to welcome shareholders
in person to the 2021 AGM due to
the Covid-19 restrictions, additional
opportunities for shareholder
engagement were put in place, details of
which can be found on page 63. Taking
into consideration the responses to the
engagement mechanisms employed to
date, the Board has taken the decision
to hold the 2022 AGM in person and
we look forward to welcoming our
shareholders to the meeting in April.
Details of the 2022 AGM can be found
on page 150.
Peter Ventress
Chairman
28 February 2022
The report that follows, in conjunction
with the Nomination, Audit and
Remuneration Committee reports, seeks
to demonstrate our robust governance
framework, prudent risk management,
open engagement with stakeholders and
compliance with the principles and
provisions of the UK Corporate
Governance Code (the ‘Code’).
The challenges faced over the past 18
months have brought into sharp focus
the importance of a healthy culture for
maintaining resilience, managing risk
and as a driver of success. As a Board
we are committed to ensuring that the
Company’s purpose, values and high
standards are set from the top and, with
the support of the executive directors
and the executive management team,
embedded throughout the Group. The
Board understands the importance of
monitoring the culture of the Company
and therefore assesses culture through
a variety of mechanisms to ensure
alignment with our purpose, values
and strategy.
Stakeholders are at the heart of Bunzl’s
decision making and understanding their
views is vital to Board conversations and
outcomes. During the year, we engaged
with our diverse range of stakeholders
and further details of the engagement
activities which took place can be found
on pages 58 to 63. As part of these
activities, in October, we were pleased
to be able to host a successful Capital
Markets Day with investors which
focused on sustainability, our tailored,
service-led customer proposition and
our compounding strategy which
has once again delivered strong
shareholder returns.
At Bunzl we want every employee to have
a sense of belonging and pride that they
are part of the Bunzl Group and during
the year we undertook our employee
engagement survey to ascertain the level
of employee engagement and enhance
our understanding of the employee voice.
The positive results received are set out
Bunzl plc Annual Report 2021
95
DIRECTORS’ REPORT BOARD OF DIRECTORS
The right balance of
skills and experience
Peter Ventress
Chairman
Appointment
Frank van Zanten
Chief Executive
Officer
Richard Howes
Chief Financial
Officer
Vanda Murray OBE
Senior Independent
Lloyd Pitchford
Non-executive
Director
director
Stephan Nanninga
Non-executive
director
Vin Murria OBE
Non-executive
director
Chairman of the Board since April 2020,
having been Chairman designate since
June 2019. Chair of the Nomination
Committee.
Chief Executive Officer since April 2016,
having been appointed as an executive
director in February 2016.
Chief Financial Officer and a member
of the Board since January 2020, having
been appointed Chief Financial Officer
designate in September 2019.
Non-executive director
Non-executive director since
Non-executive director since
Non-executive director since
since February 2015, Senior
March 2017 and Chair of the
May 2017.
June 2020.
Independent Director and
Audit Committee.
Chair of the Remuneration
Committee.
Experience
He was formerly a non-executive
director of Premier Farnell plc, Staples
Solutions NV and Softcat plc and was
Chief Executive Officer of Berendsen plc
from 2010 to 2016. Prior to this he held
several senior executive roles including
International President of Staples Inc
and Chief Executive Officer of Corporate
Express NV, a Dutch quoted company
which was subsequently acquired by
Staples. He is currently Chairman of
Galliford Try Holdings plc.
He joined Bunzl in 1994 when Bunzl
acquired his family owned business in
the Netherlands and he subsequently
assumed responsibility for a number
of businesses in other countries. In 2002
he became Chief Executive Officer of
PontMeyer NV, a listed company in the
Netherlands, before rejoining Bunzl in
2005 as the Managing Director of the
Continental Europe business area. He is
a member of the Supervisory Board of
Koninklijke Ahold Delhaize N.V.
He qualified as a Chartered Accountant
with Ernst & Young before moving to the
investment bank Dresdner Kleinwort
Benson. During his career he has held
a number of senior positions at Geest plc
and Bakkavor Group plc, including that
of Chief Financial Officer of Bakkavor
Group. He was Chief Financial Officer of
Coats Group plc between 2012 and 2016
and prior to joining Bunzl was Chief
Financial Officer of Inchcape plc.
Committee
–
–
96
Bunzl plc Annual Report 2021
Formerly Chief Executive
Having previously held a
After holding a number of
Formerly Chief Executive
Officer of Blick plc from 2001
number of senior finance
positions with Sonepar and Royal
Officer of Computer
to 2004, she subsequently
positions with BG Group plc,
Dutch Shell, he subsequently
Software Group plc from
became UK Managing
latterly as Group Financial
became Managing Director,
2002 until 2007, she
Director of Ultraframe PLC
Controller, he subsequently
Distribution Europe of CRH plc in
subsequently founded and
from 2004 to 2006 and was
joined Intertek Group plc,
1999. He then joined the Board of
was Chief Executive Officer
appointed OBE in 2002 for
where he was Chief Financial
SHV Holdings NV in 2007, where
of Advanced Computer
services to industry and
Officer from 2010 to 2014. He
he was initially responsible for
Software Group plc from
export. She is currently Chair
is presently Chief Financial
the Makro and Dyas businesses,
2008 until 2015. She was
of Marshalls plc.
Officer of Experian plc.
before becoming Chief Executive
appointed OBE in 2018 for
in 2014, a position he held until
services to the digital
2016. He is a member of the
Supervisory Board of CM.com,
economy. She is Chair of
AdvancedAdvT Limited,
a non-executive director of IMCD
Deputy Chair of M&C Saatchi
N.V. and an executive director of
plc and a non-executive
Dutch Star Companies TWO B.V.
director of Softcat plc and
Plum Acquisition Corp. I.
Stephan will step down as an
executive director of Dutch Star
Companies TWO B.V. on 1 March
2022 and he has been nominated
to be appointed as a member of
the Supervisory Board of Cabka
N.V. on this same date.
Committee membership
Member of the Audit Committee
Member of the Remuneration Committee
Member of the Nomination Committee
Independent director
Denotes Chairman
Frank van Zanten
Chief Executive
Officer
Richard Howes
Chief Financial
Officer
Vanda Murray OBE
Senior Independent
Director
Lloyd Pitchford
Non-executive
director
Stephan Nanninga
Non-executive
director
Vin Murria OBE
Non-executive
director
Chairman of the Board since April 2020,
Chief Executive Officer since April 2016,
Chief Financial Officer and a member
having been Chairman designate since
having been appointed as an executive
of the Board since January 2020, having
June 2019. Chair of the Nomination
director in February 2016.
been appointed Chief Financial Officer
designate in September 2019.
Non-executive director
since February 2015, Senior
Independent Director and
Chair of the Remuneration
Committee.
Non-executive director since
March 2017 and Chair of the
Audit Committee.
Non-executive director since
May 2017.
Non-executive director since
June 2020.
Peter Ventress
Chairman
Appointment
Committee.
Experience
He was formerly a non-executive
He joined Bunzl in 1994 when Bunzl
He qualified as a Chartered Accountant
director of Premier Farnell plc, Staples
acquired his family owned business in
with Ernst & Young before moving to the
Solutions NV and Softcat plc and was
the Netherlands and he subsequently
investment bank Dresdner Kleinwort
Chief Executive Officer of Berendsen plc
assumed responsibility for a number
Benson. During his career he has held
from 2010 to 2016. Prior to this he held
of businesses in other countries. In 2002
a number of senior positions at Geest plc
several senior executive roles including
he became Chief Executive Officer of
and Bakkavor Group plc, including that
International President of Staples Inc
PontMeyer NV, a listed company in the
of Chief Financial Officer of Bakkavor
and Chief Executive Officer of Corporate
Netherlands, before rejoining Bunzl in
Group. He was Chief Financial Officer of
Express NV, a Dutch quoted company
2005 as the Managing Director of the
Coats Group plc between 2012 and 2016
which was subsequently acquired by
Continental Europe business area. He is
and prior to joining Bunzl was Chief
Staples. He is currently Chairman of
a member of the Supervisory Board of
Financial Officer of Inchcape plc.
Galliford Try Holdings plc.
Koninklijke Ahold Delhaize N.V.
Formerly Chief Executive
Officer of Blick plc from 2001
to 2004, she subsequently
became UK Managing
Director of Ultraframe PLC
from 2004 to 2006 and was
appointed OBE in 2002 for
services to industry and
export. She is currently Chair
of Marshalls plc.
Having previously held a
number of senior finance
positions with BG Group plc,
latterly as Group Financial
Controller, he subsequently
joined Intertek Group plc,
where he was Chief Financial
Officer from 2010 to 2014. He
is presently Chief Financial
Officer of Experian plc.
Formerly Chief Executive
Officer of Computer
Software Group plc from
2002 until 2007, she
subsequently founded and
was Chief Executive Officer
of Advanced Computer
Software Group plc from
2008 until 2015. She was
appointed OBE in 2018 for
services to the digital
economy. She is Chair of
AdvancedAdvT Limited,
Deputy Chair of M&C Saatchi
plc and a non-executive
director of Softcat plc and
Plum Acquisition Corp. I.
After holding a number of
positions with Sonepar and Royal
Dutch Shell, he subsequently
became Managing Director,
Distribution Europe of CRH plc in
1999. He then joined the Board of
SHV Holdings NV in 2007, where
he was initially responsible for
the Makro and Dyas businesses,
before becoming Chief Executive
in 2014, a position he held until
2016. He is a member of the
Supervisory Board of CM.com,
a non-executive director of IMCD
N.V. and an executive director of
Dutch Star Companies TWO B.V.
Stephan will step down as an
executive director of Dutch Star
Companies TWO B.V. on 1 March
2022 and he has been nominated
to be appointed as a member of
the Supervisory Board of Cabka
N.V. on this same date.
Committee
–
–
Bunzl plc Annual Report 2021
97
DIRECTORS’ REPORT
CORPORATE GOVERNANCE REPORT
Governance overview
Board
Meetings
The table below sets out directors’ attendance at the scheduled Board and Board
Committee meetings held during 2021. Additional meetings of the Board were also
held as and when circumstances required it to meet at short notice.
Board
(7)
Audit
(4)
Nomination
(2)
Remuneration
(3)
Tenure (non-executive
directors, incl. Chairman)
(year ended 31 December 2021)
Chairman
Peter Ventress
Executive directors
Frank van Zanten
Richard Howes
Independent non-executive directors
Vanda Murray OBE
Lloyd Pitchford
Stephan Nanninga
Vin Murria OBE
Maria Fernanda Mejía
7
7
7
7
7
7
7
7
2
2
2
2
2
2
2
4
4
4
4
4
0 – 3 years
3 – 6 years
6+ years
3
2
1
Executive and
non-executive directors
(year ended 31 December 2021)
3
3
3
3
3
What we bring
Succession planning priorities
Core industry experience
Digital/technology
Senior executive experience
Diversity
Finance, audit and risk
Prior leadership in a
multinational business
Scale and complexity experience
Legal
IT/cyber security
Health & safety
Supply chain
Digital/technology
Retail
International
Other current plc experience
Media/communications
Sustainability
Executive
Non-executive
(inc. Chairman)
2
6
Board gender
(year ended 31 December 2021)
Male
Female
5
3
Independent directors
(excl. Chairman)
(year ended 31 December 2021)
Independent
Other
5
2
98
Bunzl plc Annual Report 2021
Matters reserved for the Board
The table below summarises some of the matters which are required to be brought to the Board for consideration:
Shareholders
• Matters requiring shareholder
approval.
• Circulars and significant shareholder
communications.
Capital allocation
and structure
• Significant capital expenditure/disposals.
• Significant business acquisitions/
disposals.
• Material changes to the Group’s capital
structure.
• Major property leases.
• Material increases in borrowing and loan
facilities.
Policies and
statements
• Material Group policies and
statements and major changes
thereto, for example:
– tax strategy;
– treasury policy;
– modern slavery statement;
– Diversity, Equity and Inclusion
policy; and
– risk appetite.
People and
leadership
• Appointment/removal of directors
and Company Secretary.
• Non-executive directors’
remuneration.
• Executive directors’ remuneration.
• Board Committee constitution and
terms of reference.
Strategy and
management
• The Group’s strategic aims and
objectives.
• Annual budget and strategic plan.
Financial reporting,
risk and controls
• Financial results and announcements
relating thereto.
• Final and interim dividends.
• Auditor appointment/removal.
• Risk management and internal
controls.
Key activities and decisions of the Board
Jan
Feb
Apr
Jun
• Presentation on talent,
succession, and deeper
diversity.
• Presentation on the global
employee ‘pulse’ survey
results.
• Presentation on feedback
from employee listening
groups.
• Presentation on potential
acquisitions.
• Results for the year ended
31 December 2020.
• Final dividend for the year
ended 31 December 2020.
• Updates to the Articles of
Association.
• Update on sustainability,
inclusion, and climate change.
• Presentation on the Inspiring
Women Network.
• Presentation on accident
statistics.
• Q1 trading update.
• Q&A with shareholders.
• 2021 AGM.
• Presentation on AGM
results.
• Pre-close trading statement.
• Update on corporate
responsibility and supplier
performance.
• Update on whistle blowing
reports.
• Presentation on investor
and analyst perceptions.
• Presentation on treasury
policies and funding
proposals.
• Review of acquisitions made
in 2019.
Aug
Oct
Nov
Dec
• Results for the half year
ended 30 June 2021.
• 2021 interim dividend.
• Site visits in the UK.
• Presentation on
competitive landscape and
types of competitors by
sector.
• Update on accident
statistics.
• Q3 trading update.
• Update on the EMTN
programme.
• Review of the Diversity,
Equity and Inclusion policy.
• Presentation on a significant
customer.
• Capital Markets Day.
• Follow up on the 2020
Board evaluation.
• Non-executive director
visit to US operations.
• Pre-close trading
statement.
• Board evaluation review.
• CEO and Director of Group
Human Resources listening
group on diversity, equity
and inclusion.
• Investor relations
presentation.
• Corporate governance
trends update.
Bunzl plc Annual Report 2021
99
DIRECTORS’ REPORT CORPORATE GOVERNANCE REPORT CONTINUED
UK Corporate Governance Code
compliance statement
It is the Board’s view that, for the year
ended 31 December 2021, with the
exception of provision 38 which states
that the pension contribution rates for
executive directors, or payments in lieu,
should be aligned with those available to
the workforce, the Company has been
fully compliant with all of the relevant
principles and provisions set out in the
Code. The Code came into force after the
Company had contractually agreed that
the Company’s Chief Executive Officer
was entitled to a cash allowance in lieu
of pension contributions equal to 25%
of his salary. However, in order to
align the Company’s position with the
requirements of the Code, a programme
of reductions has been agreed which
will bring the cash allowance in lieu of
pension contributions for the Company’s
Chief Executive Officer in line with the
wider workforce by the beginning of 2023
and the Company will therefore be fully
compliant with the Code during 2023.
Further information concerning the
Company’s approach to pension
contribution rates for executive
directors can be found on page 144
of the Directors’ remuneration
report. The Company’s auditors,
PricewaterhouseCoopers LLP, are
required to review whether this
statement reflects the Company’s
compliance with those provisions of the
Code specified for their review by the
Financial Conduct Authority’s Listing
Rules and to report if it does not reflect
such compliance. No such report has
been made.
Board leadership and company purpose
Relevant section of the Annual Report
Effective Board
Biographies of the Board of directors
Purpose, values and strategy
Our purpose, values and strategy
Culture
How the Board monitors culture
Prudent and effective controls
Risk management and internal control
Engagement with shareholders
Section 172 statement
S.172 statement and engagement with stakeholders
Section 172 statement
Engagement with employees
Employee engagement statement
Workforce policies and practices
Other statutory information
Division of responsibilities
Relevant section of the Annual Report
Division of responsibilities
Board roles and responsibilities
Board independence
Director independence chart
Board attendance and time commitments
Board attendance table
Composition, succession and evaluation
Relevant section of the Annual Report
Appointment procedure
Nomination Committee report
Succession plans
Nomination Committee report
Composition of the Board and its Committees
Biographies of the Board of directors
Page
96 and 97
28 and 29
102
108 and 109
58 to 63
58 to 63
103
152
Page
105
98
98
Page
110 to 115
110 to 115
96 and 97
98
Tenure of directors
Evaluation
Board tenure chart
Board evaluation and priorities identified
106 and 107
Audit, risk and internal control
Relevant section of the Annual Report
Audit Committee role
External Audit
Audit Committee report
Audit Committee report
Fair, balanced, understandable report
Fair, balanced and understandable statement
Internal control framework
Audit Committee report
Principal and emerging risks
Principal risks and uncertainties
Remuneration
Relevant section of the Annual Report
Remuneration policy and practices
Remuneration Committee report
Development of executive remuneration policy
Remuneration Committee report
Independent judgement and discretion
Remuneration Committee report
Page
116 to 124
116 to 124
108
116 to 124
64 to 72
Page
125 to 149
125 to 149
125 to 149
100
Bunzl plc Annual Report 2021
The Board is satisfied that each non-
executive director dedicates appropriate
time to their role, continues to contribute
effectively to Board decision making
and executes their responsibilities to
challenge, monitor, advise and guide
the Company to a high standard for
the benefit of Bunzl’s stakeholders as a
whole. Further details relating to the time
commitments of the directors can be
found on page 105.
In accordance with the terms of the Code,
each of the directors in office at the date
of this Annual Report will be subject to
re-election at the 2022 AGM and the
reasons for each director’s re-election
will be set out in the forthcoming Notice
of Meeting.
Governance structure
The Board has ultimate responsibility
for the overall leadership of the Group.
To ensure the directors maintain
overall control over strategic, financial,
operational and compliance issues, the
Board meets regularly throughout the
year and has formally adopted a schedule
of matters which are required to be
brought to it for consideration. Further
details of the matters reserved for the
Board can be found on page 99.
The Board has established three
Committees, all of which comply with
the provisions of the Code and play an
important governance role through the
detailed work they carry out to fulfil
the responsibilities delegated to them.
Briefing papers are prepared and
circulated to Committee members in
advance of each meeting. Further
information relating to the Board
Committees is set out below and in the
Committee reports which follow this
Corporate governance report.
Board composition
As at 31 December 2021, the Board was
made up of eight members comprising
a Chairman, a Chief Executive Officer,
a Chief Financial Officer and five non-
executive directors.
Brief biographical details of the
current directors are given on pages 96
and 97 and further information on the
Nomination Committee’s approach to
succession planning can be found in its
report on pages 110 to 115.
None of the Company’s non-executive
directors had any previous connection
with the Company or its executive
directors on appointment to the Board
and all of them are considered by both
the Board and the criteria set out in the
Code to be independent. Each of the
non-executive directors is considered to
have a breadth of strategic, management
and financial experience gained in
each of their own fields in a range of
multinational businesses, further details
of which can be found in the skills matrix
on page 98.
Board
Nomination Committee
Chair
Peter Ventress
Audit Committee
Chair
Lloyd Pitchford
Remuneration Committee
Chair
Vanda Murray
Members
Vanda Murray
Lloyd Pitchford
Stephan Nanninga
Vin Murria
Members
Vanda Murray
Stephan Nanninga
Vin Murria
Members
Lloyd Pitchford
Stephan Nanninga
Vin Murria
Key responsibilities
Reviews the structure, size and
composition of the Board with regard to
diversity and to ensuring a balance of
skills, knowledge and experience.
Key responsibilities
Reviews and monitors the integrity of
the Company’s financial reports, risk
processes and internal controls and the
effectiveness of the internal audit
function and external auditors.
Key responsibilities
Determines the policy for executive
director remuneration and sets all
elements of the remuneration and
benefits of the Chairman, executive
directors and senior management.
FOR MORE INFORMATION
SEE PAGES 110 TO 115
FOR MORE INFORMATION
SEE PAGES 116 TO 124
FOR MORE INFORMATION
SEE PAGES 125 TO 149
Bunzl plc Annual Report 2021
101
DIRECTORS’ REPORT CORPORATE GOVERNANCE REPORT CONTINUED
Purpose, values and how we
monitor culture
The Board is responsible for setting the
purpose, values and strategy of the
Company and ensuring that these align
with the desired culture. Bunzl’s purpose
is to deliver essential business solutions
around the world and create long term
sustainable value for the benefit of all
stakeholders. Everyone at Bunzl takes
ownership of and accountability for the
achievement of the Company’s purpose,
which is successfully realised and
adopted throughout the business.
In order to achieve the Company’s
purpose, the Board recognises the
importance of a healthy corporate
culture. At the centre of Bunzl’s corporate
culture are the championed values of
humility, responsiveness, reliability and
transparency. These values are reflected
in the Board’s decision making and
embedded throughout the Company,
underlying the way Bunzl conducts
its business.
Bunzl’s strong culture is a key source of
competitive advantage and helps Bunzl to
attract and retain the best talent.
Our values
Humility
Responsiveness
Reliability
Transparency
Humility in action
Responsiveness in action
Reliability in action
Transparency in action
Bunzl is committed to giving
back, doing better, and
sharing its success with the
communities in which the
Group operates while
promoting the drive towards
a more sustainable world. As
part of the International Day
of Awareness of Food Loss
and Waste, colleagues from
Bunzl Australasia teamed
up with OzHarvest to raise
awareness about food
waste, food security and
sustainability, becoming part
of a global effort to reduce
food wastage.
SCAN THE QR CODE
TO VIEW VIDEO
Bunzl is agile and offers
bespoke solutions, working
with its customers to provide
innovative products that
respond to their needs. Bunzl
continually partners with
customers and suppliers to
improve products and find
more sustainable solutions in
response to environmental
concerns for a better world.
See page 18 for an example
of our responsiveness to a
customer’s needs.
Bunzl is a reliable, expert
partner with an unrivalled
value-added offering of
on-time and in-full delivery.
As referenced on page 19,
during 2021 we secured a
new customer, Andron. A key
factor in this success was our
vast branch network, as Bunzl
Cleaning & Hygiene Supplies
has a large selection of
branches around the UK that
offer a vast, reliable, and
accurate delivery service to
over 1,000 customer sites.
Bunzl and its leaders believe
that a culture of openness,
honesty and transparency
is the only effective way to
conduct business and these
values engender confidence
in the Company. We
communicate openly with
stakeholders, and the Board
and senior management are
visible, embody the values
espoused by the Company
and are accessible to
stakeholders.
See our section 172 table on
pages 58 to 63 which shows
how we have engaged with
stakeholders throughout
the year.
To ensure alignment with the Company’s purpose, values and strategy, the culture of the Company is continuously
monitored through the below mechanisms. The output of these measures provides the Board with assurance that the
culture of the Company cultivates desirable behaviours that help to achieve the strategic objectives of the Company.
Diversity, equity and
inclusion activities
Attendance at
employee forums
Analysis of employee
survey results
Monitoring of
‘culture indicators’
Adherence to Bunzl’s
business code of conduct and
other working practices
Dialogue with executives
and senior management
Regular Board reporting
on people matters
Site visits
Health & safety data
Whistle blowing reports
Non-executive director
listening groups
102
Bunzl plc Annual Report 2021
Employee engagement statement
Employee involvement in the Company’s
performance is encouraged through a
variety of different means, including the
operation of all employee share plans,
bonus and commission schemes and
other incentive arrangements. The Board
regards employee engagement as a
matter of the utmost importance and,
during the year, the directors were
involved in a number of initiatives aimed
at further enhancing their understanding
of the views and interests of Bunzl’s
employees. More information about
these initiatives and the relevance of
such engagement in the context of the
Company’s strategy can be found on
pages 58 to 63 and in the Sustainability
report on page 52.
In accordance with Provision 5 of the
Code, the Board has decided to use
alternative arrangements to engage with
our colleagues. Bunzl is a global business
with operations in multiple locations and
our employees fulfil a broad range of
roles with many different perspectives.
It is therefore essential that our
engagement methods suit the nature
of our business and our workforce.
We strongly believe that this holistic
approach to engagement is the most
effective method and allows the Board
to understand, monitor and assess the
culture of the business.
Further information concerning the
arrangements in place to communicate
and consult with Bunzl’s employees can
also be found in the Sustainability report
and in the Other statutory information
section on page 152.
Engagement with customers, suppliers
and others
Understanding the views of the
Company’s stakeholders is a key priority
for the Board and Bunzl as a whole.
It helps to focus the Company’s
resources, engagement and reporting
activities by addressing those issues that
matter most to the Group’s businesses
and to the Company’s wider stakeholders.
Fostering strong business relationships is
an intrinsic part of the Company’s long
established, consistent, proven and
successful compounding strategy and
a key consideration in all decision
making. More information about Bunzl’s
engagement with its suppliers, customers
and wider stakeholder groups can be
found on pages 58 to 63 and in the
Sustainability report on pages 46 to 57.
Examples of how we engaged
with colleagues during 2021
2021 Employee
engagement survey
READ MORE
PAGE 53
Visits to UK and
North America sites
READ MORE
PAGE 107
Non-executive
director listening
groups
READ MORE
PAGE 95
Diversity, equity
and inclusion
sessions
READ MORE
PAGE 63
Further examples can be found in the Strategic report on pages 20 and 21 and
in the section 172 statement on pages 58 to 63.
Bunzl plc Annual Report 2021
103
DIRECTORS’ REPORT CORPORATE GOVERNANCE REPORT CONTINUED
Board activity in 2021
The Board meets formally at least seven
times a year and normally at least two of
these meetings are held at or near Group
locations around the world where the
directors have the opportunity to meet
and interact with employees from
different businesses within the Group’s
portfolio, as well as observe the
operations in situ.
number of the Group’s executives made
presentations to the Board about a
diverse range of topics and a variety
of the Company’s professional advisers
provided training and updates to the
Board on pertinent matters. Further,
following the outcome of the Board
evaluation, knowledge sharing sessions
for the Board were scheduled, focusing
on each business area.
At each meeting, Bunzl’s operational and
financial performance is discussed and
presentations are made by the Chief
Executive Officer, the Chief Financial
Officer and, by invitation, the heads of
the business areas. The Director of
Corporate Development frequently
presents to the Board on potential
acquisitions and the Board receives
regular updates on risk, health & safety,
environment, sustainability, governance
and people matters. During 2021, a
Board agendas are set by the Chairman
in consultation with the Chief Executive
Officer and with the assistance of the
Company Secretary, who maintains a
rolling programme of items for discussion
by the Board to ensure that all matters
reserved for the Board and other key
issues are considered at the appropriate
time. During 2021, the Board agendas
were also constructed to react to and
anticipate developments in relation to
the Covid-19 pandemic.
Each Board meeting is structured to
accommodate sufficient challenge and
contribution by all participants. The
Board is supplied with full and timely
information, including detailed financial
information, to enable the directors to
discharge their responsibilities. Briefing
papers are prepared and circulated to
directors approximately one week before
the scheduled Board meeting to enable
informed decision making. All directors
have access to the advice and services
of the Company Secretary who is tasked
with ensuring that Board procedures are
complied with, and the Board is fully
briefed on relevant legislative, regulatory
and corporate governance developments.
Directors may also take independent
professional advice at the Company’s
expense where they judge this to be
necessary in the furtherance of their
duties to discharge their responsibilities
as directors.
Governance in action – acquisition process
Expanding the Group through
acquisition is an important part of
Bunzl’s strategy to grow and develop.
Our markets are very fragmented
which results in numerous
opportunities to expand through
purchasing businesses in both existing
and new markets and countries.
The Board plays a critical role in
ensuring that a robust and rigorous
process is followed in respect of
material acquisitions and those
involving the entry into new countries
or market sectors to ensure that the
proposals are carefully considered and
challenged before being taken
forward. The process is summarised
on this page, and details of the
acquisitions made by the Group during
2021 can be found on page 202.
1Presentation made to the Board by management regarding the relevant
potential acquisition, due to its material size or because it represents the
Group’s first step into a new country or market sector.
2The Board considers the acquisition proposal, including the financial
performance of the target company, the projected synergies, the regulatory,
political and competitor landscapes, the Company’s existing operations and
market presence in the relevant country, the culture of the target company,
the alignment of the transaction with the Company’s purpose and strategy,
sustainability-related issues, the impact on customers, suppliers and
shareholders, employee matters and any potential risks and management’s
proposals for mitigating these.
3The Board sets any relevant parameters concerning the transaction, including
in relation to the purchase price and any specific due diligence requirements
and agrees whether to proceed with the proposed acquisition.
4 The Board undertakes a post-acquisition review approximately two years after
completion of the transaction to evaluate whether desired objectives and
benefits have been realised, measured against the relevant investment case
at the time the acquisition was approved.
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Bunzl plc Annual Report 2021
Board roles and responsibilities
The following table summarises the role and responsibilities of the different members of the Board:
Role
Responsibilities
Chairman
The primary job of the Chairman is to be responsible for the leadership of the Board and to ensure its
effectiveness in all aspects of its role. The Chairman:
• takes overall responsibility for the composition and capability of the Board and its Committees;
• consults regularly with the Chief Executive Officer and is available on a flexible basis to provide advice,
counsel and support to the Chief Executive Officer; and
• ensures corporate governance is conducted in accordance with current best practice, as appropriate
to the Group.
Chief Executive
Officer
The Chairman is also viewed by investors as the ultimate steward of the Group and the guardian of the
interests of all the shareholders.
The Chief Executive Officer is responsible for the leadership and the operational and performance
management of the Company within the strategy agreed by the Board. The Chief Executive Officer is also
the designated member of the Board responsible for environmental, social and governance matters and
reports to the Board in relation to such matters. The Chief Executive Officer:
• manages the executive director and the Group’s management and day-to-day activities;
• prepares and presents to the Board the strategy for growth in shareholder value;
• sets the operating plans and budgets required to deliver the agreed strategy;
• ensures that the Group has in place appropriate risk management and control mechanisms; and
• communicates with the Company’s shareholders on a day-to-day basis as necessary.
There is a clear
division of
responsibilities
between the
Chairman and
the Chief
Executive Officer,
which is set out
in writing and
has been agreed
by the Board.
Chief Financial
Officer
The Chief Financial Officer supports the Chief Executive Officer and is responsible for managing the Group’s funding strategy,
financial reporting, non-financial reporting, risk management and internal controls, investor relations programme and the
leadership of the finance function. The Chief Financial Officer communicates with the Company’s analysts on a day-to-day basis
as necessary.
Senior
Independent
Director
A key role of the Senior Independent Director is to be available to shareholders if they have concerns which contact through the
normal channels of Chairman, Chief Executive Officer or Chief Financial Officer has failed to resolve or for which such contact is
inappropriate. The Senior Independent Director is also available to the other directors should they have any concerns which are
not appropriate to raise with the Chairman or which have not been satisfactorily resolved by the Chairman.
Independent
non-executive
directors
The non-executive directors play an important role in corporate governance and accountability through both their attendance
at Board meetings and their membership of the various Board Committees. The non-executive directors bring a broad range
of business and financial expertise and experience to the Board which complements and supplements the experience of the
executive directors. This enables them to offer strategic guidance, evaluate information provided and constructively challenge
management’s viewpoints, assumptions and performance.
External appointments and time
commitment of directors
The Board takes the time commitment of
directors seriously and the time expected
of directors is set out in their letters of
appointment.
Each director must notify the Chairman
prior to accepting any new external
appointment and the Board will consider
whether, in its view, the appointment
could reasonably be described as one
which will negatively impact the
contribution of the director. In assessing
the proposed appointment, the
Board considers the other external
appointments currently undertaken by
the director, the type of company that the
director intends to join, the associated
time commitment required and whether
the appointment would cause the
number of directorships held to exceed
those set out in the Code or institutional
investor and proxy adviser guidance.
The Board is satisfied with the
commitment and contribution of all
directors. The results of the Board
evaluation confirmed that the Board is
working effectively and that the directors
are engaged and continue to contribute
to the success of the Company.
Engagement with shareholders following
significant votes against
During the year the Board engaged with
investors in relation to the significant
votes against the re-appointments of
Vin Murria and Stephan Nanninga at
the 2021 AGM. The Board takes investor
concerns seriously and sought engagement
with those significant shareholders
who expressed concern in order to
understand their views and reasons
for voting negatively.
As a result of the engagement, the Board
understood that the negative votes
concerned the external appointments of
Vin and Stephan and the perceived ability
of Vin and Stephan to commit sufficient
time to the Company due to overboarding
concerns. The Board clarified that some
of the external appointments held by
both Vin and Stephan are on boards of
special purpose acquisition vehicles,
which are not full-time roles and involve
considerably less time commitment than
would ordinarily be associated with
positions in other listed companies. The
Board reiterates that it is unanimously
satisfied with the commitment of both
Vin and Stephan, both of whom have
impeccable attendance records,
contribute effectively to the long term
success of the Company, offer wise
counsel, constructive challenge, diverse
views and provide appropriate oversight
of management.
The Chairman has agreed to engage
with the dissenting shareholders further
in advance of the 2022 AGM should
there be any developments or changes
in respect of the directors’ external
commitments which may benefit from
being explained further, in order to avoid
any misconceptions about the nature of
the external position and the associated
time commitment.
The results of the AGM and the ‘Update
statement regarding the Bunzl plc 2021
Annual General Meeting proxy voting’ can
be viewed on the Company’s website,
www.bunzl.com.
Bunzl plc Annual Report 2021
105
DIRECTORS’ REPORT CORPORATE GOVERNANCE REPORT CONTINUED
Engagement timeline
April 2021
June and July 2021
September 2021
March 2022
• AGM question and
answer session.
• 2021 AGM.
• Announcement of
results of AGM, including
significant votes against.
Meetings with the
institutional shareholders
who voted against the
re-appointments of Vin
and Stephan, led by the
Chairman of the Company.
Update released on
Bunzl’s website regarding
the Company’s engagement
following significant
votes against.
Publication of result of
engagement in the 2021
Annual Report.
Performance evaluation
A well-functioning Board of directors
needs diversity of experience and
perspectives and the Chairman is
responsible, with support from the
Nomination Committee, for ensuring that
the Company has an effective Board with
a suitable range of skills, knowledge,
experience and diversity and that
directors have sufficient time available
to discharge their duties effectively.
In furtherance of this, the Company has
a formal performance evaluation process
for the Board, its Committees and
individual directors overseen by the
Chairman. The Code requires that the
evaluation of the Board and its
Committees be externally facilitated
at least every three years and as
reported in last year’s Annual Report,
a comprehensive external evaluation,
including interviews with every Board
member and the Company Secretary,
was carried out for the year ended
31 December 2020 by Lintstock.
Lintstock has assisted with the Board’s
external evaluation for a number of years
to ensure that there is consistency and
continuity in the presentation of the
results from year to year. Lintstock does
not provide any other services to, or have
any other connection with, the Company.
Details of the priorities identified as part
of the evaluation that was carried out in
2020 can be found below.
This year, another external evaluation
was carried out by Lintstock which
included a detailed questionnaire.
The Chairman also held individual
discussions with each director. A number
of key priorities to improve the Board’s
performance further were subsequently
agreed and any progress in respect of
such priorities will be reported on
formally in next year’s Annual Report.
Details of the priorities identified as
part of this year’s evaluation can be
found below.
Key priorities identified
during 2020
1
Monitoring the
progress being
made in key strategic
pillars, most notably
sustainability,
digitalisation, people
and growth.
2
Focusing on longer
term strategy and
trends.
3
The post Covid-19
transition, including
returning to face-to-
face meetings and
site visits.
Examples of action taken
At each Board meeting the Board receives updates on the progress being made in digitalisation and
sustainability initiatives as part of the business review. The Board also receives regular updates on
talent management and succession planning in line with the current strategy and future opportunities
of the Company. Opportunities for acquisition growth for each business area was a key element of
the Company’s 2021 strategic planning process, and during 2021 the performance of acquisitions
made in 2019 was reviewed against the relevant acquisition case. Strategic planning sessions for the
Board and senior management team also included presentations on organic profit growth and
accelerating growth through use of technology.
During the year the Board undertook a comprehensive review of the Company’s strategic planning
tools and materials in order to encourage management to continue to take a long term view and to
take account of sectoral and geographic trends.
Outcome
The Board
is satisfied
that the
priorities
identified
following the
evaluation
carried out
in 2020
have been
adequately
addressed
during 2021.
Board meetings and strategic planning sessions have focused on Bunzl’s business post Covid-19,
including:
• Bunzl learnings from Covid-19;
• non Bunzl-specific post Covid-19 trends;
• how Bunzl may be impacted in the short term as the Company emerges from the pandemic; and
• the lasting trends Bunzl can expect and how the Company is reacting.
Further, the Board has met seven times during the year, with four of these meetings being held
virtually and three being held in person. The Board has adapted well to reinstating face-to-face
meetings and has met in London and Lisbon. The Board looks forward to meeting in more
Group locations during 2022 and being afforded the opportunity to meet and engage with Bunzl’s
diverse workforce.
4
Finalising non-
executive recruitment,
with a particular
focus on diversity,
experience in North
America and expertise
in the fields of
sustainability and
technology.
The following appointments were made to the Board during 2020:
• Vin Murria, who has extensive experience in the digital and technology sectors; and
• Maria Fernanda Mejía, who has experience in the Americas and a background in marketing and communications.
These appointments strengthened the breadth of the overall skills, knowledge and experience on the Board in line
with the 2020 evaluation findings. Both non-executive directors took part in an immersive induction programme
throughout 2021, details of which can be found on page 107.
The Board understands and champions the benefits that diversity of mind brings. The composition of the Board is
reviewed continually, with succession planning and developing a diverse pipeline of talent remaining high on the
agenda. The Board skills matrix on page 98 maps out the current range of skills of the directors and the succession
planning priorities for prospective Board candidates.
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Bunzl plc Annual Report 2021
Key priorities identified during 2021
1. Talent management and development, including succession planning for both executive and non-
executive members of the Board.
2. Focusing on digitalisation and IT security.
3. Continued challenge and support on the progress of the strategic pillars, with a focus on sustainability.
4. Driving and monitoring the success of acquisitions.
As a result of the performance
evaluation process carried out
in 2021, the Board concluded
that both it and its Committees
are operating effectively.
Led by the Senior Independent Director, the non-executive directors also meet without the Chairman present at least annually
to appraise the Chairman’s performance, including a review of his other commitments to ensure that he is able to allocate sufficient
time to the Company to discharge his responsibilities effectively. The Chairman also periodically holds meetings with the non-
executive directors without the executive directors present. All of these processes were carried out satisfactorily during the year.
Induction
Upon appointment, all new directors
undertake an induction programme
which is designed to facilitate their
understanding and awareness of the
Group’s businesses, people and
processes and of their roles and
responsibilities as directors of the
Company. The induction programme
is regularly reviewed and is tailored
to each director’s individual needs.
A typical induction programme normally
includes:
• a detailed information pack which
includes details of directors’ duties and
responsibilities, procedures for dealing
in Bunzl plc’s shares and a number of
other governance related issues;
• one-to-one meetings with the other
members of the Board and the
Company Secretary;
• meetings with Committee chairs, as
appropriate;
• meetings with senior management;
• visits to some of the Group’s locations;
• information on the main areas of the
Company’s business activity and risks;
and
• information on the Company’s
approach to sustainability and
stakeholder engagement.
Having both joined the Board in 2020, due
to the prevalence of Covid-19 Vin Murria
and Maria Fernanda Mejía were unable to
undertake key site visits and meet Bunzl’s
workforce in person. Fortunately, as
Example induction
restrictions have eased throughout
2021, Vin and Maria Fernanda have been
afforded the opportunity to engage with
Bunzl’s workforce and witness Bunzl’s
operations in situ through an immersive
and comprehensive induction programme.
This engagement has enabled both Vin
and Maria Fernanda to gain a valuable
and in-depth understanding of the
Group’s operations, the strategic priorities
of, and risks faced by, Bunzl’s different
businesses, Bunzl’s diverse talent
pipeline, the culture of the Company
and the progress being made by such
businesses in relation to environmental,
social and governance matters.
The Board believes good decision making
is enabled by a deep understanding of
the Group’s operations and people.
During the course of the year, directors
receive training and presentations to
keep their knowledge current and
enhance their experience. They are
updated continually on the Group’s
businesses, their markets and the
changes to the competitive and
regulatory environments in which they
operate. In addition, the Board is kept
informed of relevant legal, regulatory
and financial developments or changes
by the Company Secretary and the Chief
Financial Officer. The Company’s legal
advisers and auditors give presentations
and training to the Board on any specific
topics of interest.
Training and development needs
of the Board are kept under review and
directors attend external courses where
it is considered appropriate for them
to do so.
2021 training &
development activities
• Non-executive training and
knowledge sharing sessions.
• Non-executive site visits.
• Presentations from senior
management on the competitive
landscape.
• Strategic planning sessions
covering:
– long term vision and strategy;
– sector focus areas for
acquisitions;
– organic profit growth;
– accelerating growth through
use of technology;
– business post Covid-19,
including learnings, trends and
expected short and long term
impact;
– sustainability priorities and
progress; and
– talent and diversity.
• Presentation on a key customer.
• Corporate governance update.
• Investor relations update.
August 2021 UK tour
• Site visit to Bunzl’s Retail Division
• Site visit to Bunzl’s Cleaning & Safety Division
November 2021 North America tour
• Site visit to Bunzl Processor Division
• Site visit to Bunzl Kansas City
• Site visit to Bunzl North America
Activities:
• facility tours;
• presentations on strategy, acquisitions, technology,
sustainability and carbon targets, innovation, culture,
people engagement, talent, diversity, equity and inclusion;
• information on recent acquisitions and the strategic
challenges and opportunities faced by each division;
• meetings with key personnel; and
• meetings with talent.
Bunzl plc Annual Report 2021
107
DIRECTORS’ REPORT CORPORATE GOVERNANCE REPORT CONTINUED
Fair, balanced and
understandable –
Bunzl’s assurance
framework
The Board considered whether
the 2021 Annual Report, taken
as a whole, was fair, balanced and
understandable and provided
sufficient information to enable
the reader to assess the Group’s
position and performance, business
model and strategy.
In carrying out its review, the Board
considered:
• the information and assurance
provided by the ongoing work of
the internal audit department;
• the reviews conducted by the
external auditors in relation to
both the half year and full year
results;
• the Board’s understanding
of the Group’s business; and
• the information provided by the
senior executive management
team.
The Board also took account
of the preparation and verification
processes that had been undertaken,
including the review that had been
carried out by one of the Company’s
senior executives who had not been
involved in the Annual Report’s
preparation. As a result of its
deliberations the Board concluded
that, taken as a whole, the 2021
Annual Report is fair, balanced and
understandable.
Conflicts of interest
The directors are required to avoid
situations where they have, or could have,
a direct or indirect interest that conflicts,
or possibly may conflict, with the
Company’s interests. In accordance with
the Companies Act 2006, the Company’s
Articles of Association allow the Board to
authorise potential conflicts of interest
that may arise and to impose such limits
or conditions as it thinks fit.
Directors are required to give notice
of any potential situational and/or
transactional conflicts which are then
considered by the Board and, if deemed
appropriate, authorised accordingly.
A director is not however permitted to
participate in such considerations or
to vote in relation to their own conflicts.
The Board has considered and authorised
a number of potential situational conflicts
all of which relate to the holding of external
directorships and have been entered
on the Company’s conflicts register.
No actual conflicts have been identified
during the year. The Board considers that
these procedures operate effectively.
Financial and business reporting
The responsibilities of the directors in
respect of the preparation of the Group
and parent company financial statements
are set out on page 213 and the auditors’
report on pages 214 to 221 includes a
statement by the external auditors about
their reporting responsibilities. As set
out on page 162, the directors are of the
opinion that it is appropriate to continue
to adopt the going concern basis in
preparing the financial statements.
The process of preparing the Annual
Report has included the following:
• comprehensive reviews undertaken at
different levels of the Group in order to
ensure the accuracy, consistency and
overall balance of the Annual Report;
and
• procedures to verify the factual
accuracy of the Annual Report.
Risk management and internal control
The directors acknowledge that they
have overall responsibility for identifying,
evaluating, managing and mitigating the
emerging and principal risks faced by the
Group and for monitoring the Group’s
risk management and internal control
systems. However, such systems are
designed to manage rather than eliminate
the risk of failure to achieve business
objectives and can only provide
reasonable and not absolute assurance
against material misstatement or loss. In
accordance with the Code and the related
guidance, the Company has established
the procedures necessary to ensure
that there is an ongoing process for
identifying, evaluating, managing and
mitigating the principal risks faced by the
Group and for determining the nature
and extent of the principal risks it is
willing to take to achieve its strategic
objectives (its ‘risk appetite’). The
directors confirm that such procedures
have been in place for the year ended
31 December 2021 and up to the date of
approval of these financial statements
and that the Group’s risk management
and internal control systems have been
monitored during the year.
Further information about the Group’s
approach to risk management and the
principal risks and uncertainties facing
the Group can be found on pages 64 to
72. A summary of the principal control
processes and procedures in place to
manage such risks is set out below.
The Board has delegated to an Executive
Committee, consisting of the Chief
Executive Officer, Chief Financial Officer
and other functional managers, the initial
responsibility for identifying, evaluating,
managing and mitigating the risks facing
the Group and for deciding how these are
best managed, as well as responsibility
for establishing a system of internal
control appropriate to the business
environments in which the Group
operates. The principal features of this
system include:
• a procedure for monitoring the
effectiveness of the internal control
system through a tiered management
structure with clearly defined lines
of responsibility and delegation of
authority;
• clearly defined authorisation
procedures for capital investment
and acquisitions;
• strategic plans and comprehensive
budgets which are prepared annually
by the business areas and approved by
the Board;
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Bunzl plc Annual Report 2021
The directors confirm that they have
reviewed the effectiveness of the
Company’s risk management and internal
control systems in operation during 2021
and are satisfied that these systems are
operating effectively.
The external auditors are engaged to
express an opinion on the financial
statements. The audit includes a review
and evaluation of the system of internal
financial control and the data contained
in the financial statements to the extent
necessary for expressing an audit
opinion on the truth and fairness
of the financial statements.
Assessment of the prospects of the
Company and its viability statement
In accordance with provision 31 of the
Code, details of how the directors have
assessed the prospects of the Company,
over what period the prospects have
been assessed and the Company’s formal
viability statement are included in the
Strategic report on page 73.
By order of the Board
Suzanne Jefferies
Secretary
28 February 2022
• the internal audit department
periodically reviews individual
businesses and procedures, makes
recommendations to improve
controls and follows up to ensure
that management implements the
recommendations made. The internal
audit department’s work is determined
on a risk assessment basis and its
findings are reported to Group and
business area management as well
as to the Audit Committee and the
external auditors;
• an annual self-assessment of the status
of internal controls measured against
a prescribed list of minimum standards
is performed by every business and
action plans are agreed where remedial
action is required;
• the appointment of a Head of Internal
Controls during 2021;
• the Audit Committee, which comprises
all of the independent non-executive
directors of the Company, meets
regularly throughout the year. Further
details of the work of the Committee,
which includes a review of the
effectiveness of the Company’s internal
financial controls and the assurance
procedures relating to the Company’s
risk management system, are set out in
the Audit Committee report on pages
116 to 124;
• regular meetings are held with
insurance and risk advisers to assess
the risks throughout the Group;
• management committees, known as
the Group Sustainability Committee,
the Environment, Health & Safety
Committee and the Supply Chain
Committee which oversee issues
relating principally to environment,
health & safety and business continuity
planning matters, set relevant policies
and practices and monitor their
implementation;
• health & safety risk assessments, safety
audits and a regular review of progress
against objectives established by each
business area are periodically carried
out; and
• developments in tax, treasury and
accounting are continually monitored
by Group management in association
with external advisers.
• formal standards of business conduct
(including code of conduct, anti-bribery
and corruption and whistle blowing
policies) based on honesty, integrity,
fair dealing and compliance with the
local laws and regulations of the
countries in which the Group operates;
• continual investment in IT systems to
ensure the production of timely and
accurate management information
relating to the operation of the Group’s
businesses;
• a well-established consolidation and
reporting system for the statutory
accounts and monthly management
accounts; and
• detailed manuals covering Group
accounting policies and policies and
procedures for the Group’s treasury
operations supplemented by internal
control procedures at a business
area level.
Some of the procedures carried out in
order to monitor the effectiveness of the
internal control system and to identify,
manage and mitigate business risk are
listed below:
• central management holds regular
meetings with business area
management to discuss strategic,
operational and financial issues,
including a review of the principal risks
affecting each of the business areas
and the policies and procedures
by which these risks are managed;
• the Executive Committee reviews the
outcome of the discussions held at
business area meetings on internal
control and risk management issues;
• the Board in turn reviews the outcome
of the Executive Committee discussions
on internal control and risk
management issues, which ensures
a documented and auditable trail of
accountability;
• each business area, the Executive
Committee and the Board carry out
an annual fraud risk assessment;
• actual results are reviewed monthly
against budget, forecasts and the
previous year and explanations are
obtained for all significant variances;
• all treasury activities, including in
relation to the management of foreign
exchange exposures and Group
borrowings, are reported and reviewed
monthly;
• the Group’s bank balances around the
world are monitored on a weekly basis
and significant movements are
reviewed centrally;
Bunzl plc Annual Report 2021
109
DIRECTORS’ REPORT NOMINATION COMMITTEE REPORT
Nomination Committee report
‘An effective Board is one
which prizes constructive
challenge, openness and
diversity of background
and opinion, along with a
commitment to act fairly
and in the interests of all
stakeholders. ‘
Peter Ventress
Chairman and Chair of
the Nomination Committee
Introduction from Peter Ventress
As Chair of the Nomination Committee,
I am pleased to present the Committee’s
report for the financial year ended
31 December 2021, which provides an
overview of the Committee’s key activities
and focus areas during the year.
The year has seen significant challenges,
and it has been essential that our Board
and senior management team have been
robust in supporting the Group through
such an uncertain time. I am proud
of the resilience and strong leadership
demonstrated by the directors and
management team and the diligence and
unyielding commitment to excellence
shown by Bunzl’s workforce.
An effective Board is one which prizes
constructive challenge, openness and
diversity of background and opinion,
along with a commitment to act fairly and
in the interests of all stakeholders. The
Committee has a primary role to play in
achieving this and during 2021, the main
focus of the Committee has been Board
and Executive Committee composition,
succession planning and corporate
governance matters. There has also been
a continued focus on developing the
Board’s collective knowledge and
experience in areas of increasing strategic
importance to the Company and our
stakeholders, including environmental,
social and governance (‘ESG’) matters
and technology.
Frank van Zanten stepped down as a
member of the Committee with effect
from 8 December 2021 but remains
Chief Executive Officer and an executive
director of the Company. He will continue
to attend Committee meetings at the
invitation of the Committee, as and when
necessary, so that we may continue to
benefit from his in-depth knowledge
and understanding of employee-related
matters at Bunzl and his closer working
relationships with Bunzl’s executive
and senior management and potential
talent pools.
As announced on 2 February 2022,
Maria Fernanda Mejía stepped down
from the Board and its Committees with
effect from 2 February 2022 to take up a
new external executive position. A robust
recruitment process for a new non-
executive director is now underway and
an announcement will be released in due
course, once a suitable candidate has
been identified. Full details of the
recruitment process will also be included
in next year’s Annual Report.
As directors, we have a duty to ensure the
long term success of the Company. This
includes ensuring that we have a steady
supply of high quality talent for executive
positions and established succession
plans for Board changes to enable the
Group to fulfil its purpose and deliver its
current and future strategic objectives.
The need to refresh the Board but at the
same time maintain a knowledgeable
and experienced team of non-executive
directors is essential and is something
that we have continued to address in
our succession planning discussions this
year. As part of its remit, the Committee
has also continued to monitor the
development of Bunzl’s Executive
Committee, which sits below the Board,
to ensure that there is a diverse supply
of senior executives and potential future
Board members with appropriate skills
and experience.
I am pleased to report that, for the year
ended 31 December 2021 and as detailed
on page 98, our Board composition
meets the target for the proportion
of women on boards set out in the
Hampton-Alexander review, as well as
the recommendation on ethnic diversity
on boards in the Parker review.
As a business, we have put various
initiatives into practice to address gender
and ethnic diversity and I am pleased
with the considerable progress that we
have made in these areas at Board and
Executive Committee level. The Board
and the Committee are nevertheless
mindful that ethnic diversity remains a
challenge and that more work needs to
110
Bunzl plc Annual Report 2021
be attending Bunzl’s forthcoming Annual
General Meeting (‘AGM’) and would
welcome your questions. Questions
relating to the AGM can also be submitted
via our dedicated AGM email address,
BunzlAGM@bunzl.com.
By providing an overview of the
Committee’s role and a meaningful
insight into its activities during the
past year, this report demonstrates
how the Committee has discharged its
responsibilities effectively and I hope that
you will find it useful in understanding the
work that we have undertaken.
Peter Ventress
Chairman and Chair of the
Nomination Committee
28 February 2022
be done in this area. The benefits of
having a diverse Board and workforce
are considerable and we intend to
continue to support and develop our
talent pipeline in relation to gender,
cultural and ethnic diversity and other
under-represented groups to ensure
that Bunzl harnesses the benefits of a
diversified Board and workforce.
Following the 2021 performance
evaluation, the Committee determined
that the Company has a strong Board
that is able to manage the demands of
the Group sufficiently but that it would
nevertheless be useful to bolster the
Board further in certain areas, including
diversity. The Committee strongly
believes that diversity, in all aspects,
and the promotion of an inclusive culture
are key drivers of business success and
is committed to making a continuous
improvement in this area at both Board
and senior management level. For this
reason, increasing diversity on the
Board and in the senior management
population will be a key area of focus
for the Committee in 2022.
Additional information concerning the
initiatives and actions being taken to
promote diversity and inclusion at Bunzl
can be found on pages 114 and 115.
In order to ensure that the Committee
remains effective, an evaluation of the
performance of the Board and the
Committees is undertaken every year.
In accordance with the requirements of
the UK Corporate Governance Code (the
‘Code’) and the associated guidance, an
independent, externally facilitated review
is undertaken at least every three years.
An externally facilitated evaluation was
performed in 2021 and concluded that
the Board members considered the
Committee to be thorough and fully
effective in fulfilling its responsibilities.
A more comprehensive external
evaluation, including interviews with
every Board member and the Company
Secretary, was performed in 2020.
Further information concerning the
performance evaluation process and
the key priorities identified following the
reviews in 2020 and 2021 can be found
in the Corporate governance report on
pages 106 and 107.
The views of our stakeholders are very
important to us and we value greatly
the feedback and insights that our
stakeholders provide. During 2021,
through routine engagement with
our investors, we became aware of
certain investors’ views concerning
the composition of the Nomination
Committee, namely, that it should consist
solely of independent non-executive
directors. While the composition of the
Committee met all of the requirements
set out in the Code, which states that a
majority of members of the Committee
should be independent directors, Frank
van Zanten took the decision to step
down as a member of the Committee
with effect from 8 December 2021. This
decision was considered to be in the best
interests of our stakeholders and is
demonstrative of Bunzl’s high quality
governance practices. The decision also
reflects the importance placed on
investor sentiment and opinion by the
Board and each of the directors.
The Committee recognises the
importance of listening to the employee
voice and directors have attended a
number of the listening groups that have
been held across the business to ensure
that they stay informed of employee
sentiment and key employment matters.
Further information concerning the
listening groups held during 2021 can be
found on pages 63 and 95.
As detailed on page 95, I sought to engage
with a number of different stakeholder
groups during the year and will continue
to do so whenever necessary or
appropriate so that the stakeholder voice
continues to get the right audience and
attention. If you wish to discuss any
aspect of the Committee’s activities, I will
Bunzl plc Annual Report 2021
111
DIRECTORS’ REPORT NOMINATION COMMITTEE REPORT CONTINUED
Principal responsibilities
of the Committee
Board structure
• Reviewing the structure, size and
composition of the Board with
regard to maintaining a balance of
skills, experience, knowledge and
diversity.
Succession
• Considering succession planning,
taking into account the challenges
and opportunities facing the
Company and the skills and
expertise required by the Board
and senior management in the
future.
• Reviewing annually a succession
planning presentation in relation
to the Company’s senior
management.
Appointments
• Identifying and nominating
appropriate individuals to fill
Board vacancies as they arise.
• Approving the appointment of
any senior executive who is to
report directly to the Chief
Executive Officer.
• Making recommendations to the
Board as to the continuation in
office and/or re-appointment of
directors.
Evaluation
• Considering the commitment
required of non-executive
directors and reviewing their
performance.
Role and support
The Committee’s principal role is to
lead the process for appointments to the
Board, whether to fill any vacancies that
may arise or to change the number of
Board members, ensure plans are in
place for orderly succession to both the
Board and senior management positions
and oversee the development of a
diverse pipeline for succession. The
senior management succession plans
take into account the views of all Board
members to ensure the plans encompass
the benefit of all their skills and
experience.
It is the Committee’s role to ensure
that the Board and its Committees
maintain the appropriate balance of skills,
knowledge, experience and diversity
to ensure their continued effectiveness.
In the performance of its duties, the
Committee has been authorised to enlist
the services of external executive search
firms to assist with the recruitment
process, including the identification of
potential candidates, to fill Board
positions and vacancies.
The Committee meets as necessary
throughout the year to discharge its
responsibilities. The Committee’s terms
of reference, which were reviewed in 2021
but remain unchanged, are available on
the Company’s website, www.bunzl.com.
Performance evaluation
The Committee’s performance and
effectiveness are reviewed annually by
both the Committee and as part of the
Board performance evaluation. The Chair
of the Committee also meets with each
Committee member independently to
ensure that their individual views about
the operation of the Committee are taken
into account. Additional information
concerning the results of the 2021
performance evaluation is set out on
page 107.
Composition
During 2021, the Nomination Committee
comprised the Chairman of the Company,
who chairs the Committee (unless the
Committee is dealing with the matter
of succession of the Chairman of the
Company), the Chief Executive Officer
and all of the independent non-executive
directors. In accordance with the
provisions of the Code, the majority of
the members are independent non-
executive directors. The Secretary to the
Committee is the Company Secretary.
On 8 December 2021, the Chief Executive
Officer stepped down as a member of
the Committee.
Meetings
The Committee meets as necessary
throughout the year to discharge its
responsibilities.
The table below sets out directors’
attendance at the four scheduled
Committee meetings held during 2021.
Meetings attended
Peter Ventress
Frank van Zanten1
Vanda Murray
Lloyd Pitchford
Stephan Nanninga
Vin Murria
Maria Fernanda Mejía
4
4
4
4
4
4
4
1 Frank van Zanten stepped down as a member of the
Committee on 8 December 2021 having attended all of the
Committee meetings held between 1 January 2021 and
that date.
Key areas of focus in 2022
• Succession planning for both executive
and non-executive directors and
enhancing the Committee’s
understanding of the Group’s plans
on management succession.
• Continuing to support the journey
towards greater diversity, inclusion
and gender equality and developing
concrete plans in relation thereto.
• Talent development, including
continuing to support HR in attracting,
developing and retaining talent and
increasing the Committee’s
involvement in the Group’s Global
Senior Leadership Development
Programme.
• Board requirements and capabilities.
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Bunzl plc Annual Report 2021
Notwithstanding the considerable
progress that has been made across
the Group in respect of gender and
diversity in all its guises, the Committee
recognises that this is still work in
progress and that there is much more to
be done. Supporting the journey towards
greater diversity, inclusion and gender
equality, particularly at executive level,
remains a key priority for the Committee
and, with clear plans in place to address
the diversity challenge, the Committee is
confident that considerable progress will
continue to be made in this area. Further
information about the different roles
and functions that contribute towards
improving diversity and inclusion at Bunzl
can be found later in this report.
While taking the important
considerations of gender and diversity
into account, the Committee will continue
to recommend appointments to the
Board based on merit and the individual
skills and experience of each candidate.
It is nevertheless clear that gender,
ethnicity, race and other forms of
diversity and inclusion must form a
key part of our succession planning
discussions and are critical to the long
term sustainable success of the business.
The Board and the Committee’s
approach to inclusion and diversity in
the composition of the Board and senior
management is set out in the Board’s
diversity policy, which is reviewed
regularly and which can be found on
the following page.
Activities
Succession planning
The Committee recognises that
having the right directors and senior
management in place is fundamental to
the Group’s long term, sustainable
success. In furtherance of this, a key
responsibility of the Committee is to
satisfy itself that a robust and rigorous
succession planning process is in place,
over both the medium and long term, to
ensure that there is the right mix of skills
and experience on the Board as the
Company evolves. The Company’s
succession plans, together with the
Board skills matrix and tenure tracker
are considered regularly and allow the
Committee to identify potential gaps,
including in relation to director rotation
and in respect of the skills needed to
deliver the Group’s strategic priorities.
Effective and proactive succession
planning and assessment also enable the
Committee and the Board to ensure that
changes to the Board are proactively
planned and coordinated.
The Committee also continues to take
an active interest in the quality and
development of talent and capabilities
below Board level and during the year
the Chief Executive Officer presented his
annual management succession plan to
the Committee for its consideration.
This process helps to ensure that high
performing individuals within senior
management can be developed and
nurtured in order to strengthen the
succession pipeline further, while at the
same time increasing diversity in senior
roles across the Group. The Committee
also maintains regular interaction with
senior management across the Group
and within each business area. Such
interaction enables the Committee to
familiarise itself with the teams, thereby
facilitating the identification of high
performing talent and informing
succession planning.
Enhancing the Committee’s oversight
of executive succession planning and
strengthening executive succession
continues to be a key priority for the
Committee and one which will continue
to receive considerable attention in 2022.
The Committee also plans to deepen its
discussions concerning succession
timelines, the various options available
and planning.
A fundamental consideration in all of
the Committee’s discussions concerning
current and future Board composition
and the Groups’ executive and senior
talent succession planning is the Group’s
strategy. The Committee seeks to
anticipate future challenges to ensure
that Bunzl has the talent it needs to
deliver its strategy and deal with any
changes in the business environment.
We strive to embed inclusion in
everything that we do, and succession
planning and the appointment process
are key in promoting diversity in a
way that is consistent with Bunzl’s
long term strategy.
Inclusion and diversity
It is a well-established fact that
boards with an appropriate mix
of age, experience, backgrounds and
perspectives tend to foster better
debate and decision making and less
group-think. The Committee remains
focused on promoting broader diversity
and creating an inclusive culture in line
with the recommendations of the
Hampton-Alexander, Parker and
McGregor-Smith reviews.
The Committee embraces the importance
of diversity and inclusion in all Board and
senior management recruitment and
challenges external search consultants
where necessary to ensure that diversity
of gender, social and ethnic backgrounds
and cognitive and personal strengths is
always considered in the selection of
candidates. In addition, the Committee
seeks to engage firms that are signatories
to the Voluntary Code of Conduct for
executive search firms and encourages
them to look further afield and access
talent from wide and diverse pools.
Bunzl plc Annual Report 2021
113
DIRECTORS’ REPORT
NOMINATION COMMITTEE REPORT CONTINUED
Diversity policy
Within the Group’s businesses, the Board is committed to
greater diversity in its broadest sense, whether in terms of
ideas, skills, knowledge, experience, education, gender, social
and ethnic backgrounds, cognitive and personal strengths,
or any other relevant measure.
When considering director appointments, one of the
objectives is to maintain a diverse Board. While the Board will
continue to follow a policy of ensuring that the best people
are appointed for the relevant roles, based on merit by
assessing candidates against objective criteria, the directors
recognise the benefits of greater diversity and will take
account of this when considering any particular appointment.
However, the primary responsibility when making new
appointments is to ensure the strength of the Board’s
composition. The overriding aim is to select and recommend
the best candidate for the position, having regard to all of the
different stakeholders that Bunzl has as a global organisation,
while ensuring that the Board members are able to provide a
range of perspectives, insights and challenge required to
support effective decision making.
Looking beyond the Board to the Group’s wider workforce,
Bunzl is committed to treating people fairly and equally by
accepting and embracing their diversity and ensuring there
is an inclusive and positive working environment for all
employees. For a number of years in the annual succession
planning reviews, there has been a particular focus on
diversity within the business areas and one of the key
objectives is to ensure there are no barriers preventing
talented people from succeeding. There is also a range of
initiatives within the Group to help provide learning and
development opportunities for female executives and to
ensure unbiased career progression opportunities. The
Board has formally approved an equality and diversity policy,
which applies to the wider workforce of the Group. A copy
of the policy can be found on the Company’s website,
www.bunzl.com.
Monitoring and reporting
The Nomination Committee is responsible for regularly
reviewing the structure, size and composition of the Board,
including the skills, knowledge, experience and diversity
of the directors. It is also responsible for identifying and
nominating appropriate individuals to fill Board vacancies
as they arise. The Committee will report annually, in the
Company’s Annual Report, on the process followed in
relation to any Board appointments made during the relevant
period. The Board is responsible for keeping its diversity
policy under review and making changes thereto when
appropriate to do so.
‘Being a part of the DEI initiative
has been an honor. It’s not
often that an organisation is
willing to have candid
conversations to promote
change and equity in the
workplace, and Bunzl has done
just that. Bunzl has given every
employee permission to break
the common stigma that we all
have to fit in a box.’
Shelly Jones
Bunzl North America
‘The killing of George Floyd
and the worldwide movement
calling for greater racial and
ethnic justice was my
motivation to help drive change.
I felt Bunzl should be doing
something and so, a little
hesitantly because I didn’t want
to be seen as a trouble maker,
I approached senior staff. My
hesitation was unfounded as
the response was resoundingly
positive. So the IEIB Group in the
UK & Ireland was founded.’
Matt Hall
Woodway UK & Ireland
DIVERSITY IN ACTION
Bunzl is committed
to playing its role
in creating a fairer,
more equitable
society, and the well-
being and safety of
Bunzl’s people
is a top priority
Against this backdrop we’ve launched a
number of powerful new initiatives worldwide
including the ‘Inspiring Ethnicity in Bunzl’ (‘IEIB’)
Group in the UK & Ireland and the Diversity
Equity and Inclusion (‘DEI’) initiative in the USA,
which have potential to drive meaningful
transformation in Bunzl. Two members of
these initiatives have provided some detail on
how being part of the initiatives is having a
powerful impact on their lives.
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Bunzl plc Annual Report 2021
Driving diversity and inclusion at Bunzl
1
Board of
directors
5
Human
Resources
2
Nomination
Committee
Diversity
and inclusion
4
Executive
Committee
3
Chairman of
the Board
2
3
4
1
Board of directors
• Supports management to
ensure that diversity and
inclusion are embedded
into the Company’s
strategy.
• Embodies inclusive
leadership traits among
its own members.
• Holds management
accountable for
developing Bunzl’s talent
into inclusive leaders.
• Demonstrates inclusive
governance practices and
behaviours.
• Ensures that the
Nomination Committee is
itself diverse.
• Challenges management
to establish strong
diversity targets and clear
diversity policies.
• Embraces and champions
diversity.
• Participates in listening
groups and other
activities and initiatives
that support diversity and
inclusion.
• Considers both diversity
and inclusion implications
when making decisions.
• Prioritises stakeholder
engagement.
• Promotes collaboration
across the business.
Nomination
Committee
• Actively monitors and
manages the composition
of the Board and the
pipeline of diverse talent.
• Embraces a culture of
continuous improvement.
• Develops Boardroom
succession plans by
determining the needs
most relevant to Bunzl’s
forward-looking strategy
and risks.
• Reviews and updates the
short, medium, and long
term succession plans
regularly as the needs of
the Board and the
Company evolve.
• Engages firms that are
signatories to the
Voluntary Code of
Conduct for executive
search firms.
• Ensures that search firms
are provided with a clear
mandate.
• Challenges search firms to
look further afield and
access talent from wide
and diverse pools.
• Has regard to the Board
skills matrix when
recruiting directors.
• Considers diversity and
inclusion as key elements
when discharging its
duties.
Chairman of the Board
• Creates an inclusive
culture within the
Boardroom and
integrates inclusive
thinking and behaviours
into all of the Board’s
proceedings and
operations.
• Actively monitors the
pipeline of potential
directors.
• Ensures that diversity
plays a prominent role on
the Board’s agenda.
• Participates in listening
groups on diversity,
equity and inclusion.
• Supports and encourages
the directors and
Executive Committee
members to highlight any
high performing talent.
• Encourages all Board
members to be
open-minded and look at
challenges from many
perspectives.
• Ensures that all Board
members are heard and
respected.
Executive Committee
• Focuses on promoting
and embedding the
inclusive culture across
the business.
• Demonstrates integrity
and behaviours that
support and cultivate
diversity in its broadest
sense.
• Actively champions the
Group’s Diversity, Equity
and Inclusion Policy.
• Promotes and participates
in activities and initiatives
that drive the diversity
agenda forward.
• Ensures that appropriate
training is provided across
the business to raise
awareness of unconscious
bias.
• Participates in mentoring
programmes for
under-represented
groups.
• Actively monitors the
pipeline of talent within
the business.
5
Human Resources
• Sets thoughtful targets on
diversity and implements
robust monitoring
frameworks.
• Surveys Bunzl employees
globally to measure their
engagement levels and
gain invaluable insights
into how inclusive Bunzl’s
culture is.
• Encourages more women
into leadership roles
through focused and
targeted activities.
• Develops initiatives and
policies that support
Bunzl’s commitment to
creating a fairer society,
including the Group’s
Diversity, Equity and
Inclusion Policy, the
‘Inspiring Women in Bunzl’
networks, ‘employee
voice’ sessions with
employees from
under-represented
groups, ‘listening group’
sessions involving
employees and Board
directors and the global
employer brand campaign
‘We Believe’.
FURTHER INFORMATION ABOUT DIVERSITY AND INCLUSION
AT BUNZL CAN BE FOUND ON PAGES 46 TO 57.
Bunzl plc Annual Report 2021
115
DIRECTORS’ REPORT
AUDIT COMMITTEE REPORT
Audit Committee report
‘The Committee fulfils
a vital role in the
Company’s governance
framework, providing
valuable independent
challenge and oversight
across the Company’s
financial reporting and
internal control
procedures.’
Lloyd Pitchford
Chair of the Audit Committee
Introduction from Lloyd Pitchford
I am pleased to present the Audit
Committee’s report for the year ended
31 December 2021.
This report is intended to provide an
overview of the role of the Committee,
report on the work it has carried out
during the past year and demonstrate
how the Committee discharged its
responsibilities and provided assurance
on the integrity of the Company’s 2021
Annual Report and financial statements.
The Committee fulfils a vital role in
the Company’s governance framework,
providing valuable independent
challenge and oversight across the
Company’s financial reporting and
internal control procedures. During
the year, we continued to discharge
our duties effectively and to the
highest standards, providing appropriate
challenge and oversight of the decisions,
assumptions and key judgements
made by management to make
certain that stakeholder interests are
protected. Our meeting agendas were
designed to anticipate key risk areas,
including those significant matters
most impacted by Covid-19, which
provided ample opportunity for early
scrutiny and challenge.
Honesty and transparency are
fundamental to the integrity of the
Group’s financial reporting and to the
relationship between management
and the Committee and are reinforced
through the cultural framework within
which Bunzl operates (see pages 28 and
29 for more information on the Group’s
purpose and core values). I am pleased
to report that the Group’s risk focused
culture and established procedures and
systems to identify, mitigate and manage
risks enabled the financial reporting and
audit processes to continue to operate
effectively throughout the year. On behalf
of the Committee, I thank the executive
management team, the finance, external
and internal audit teams and Bunzl’s
employees for their sustained
commitment and resilience in securing
the Group’s control environment during
this time.
Audit and internal controls
The Committee believes that high quality
audit is vital to ensuring that users of
financial statements can confidently
rely on the information published by
companies in relation to their financial
health, their operational performance
and their prospects. We are committed
to working with our internal and external
auditors and other stakeholders to
maintain audit quality within Bunzl and,
as a result, ensure better outcomes for
our stakeholders who rely on the
accuracy and integrity of the Group’s
financial performance and prospects.
I believe that this, together with the
Board’s efforts in harnessing and
promoting a strong, risk focused culture,
play an essential role in assuring the
long term viability of the Company.
Information concerning Bunzl’s
assessment of the effectiveness of both
the external audit process for the 2020
financial statements and the Company’s
internal audit function can be found
on page 123 and detail concerning
external auditor independence and
reappointment is set out on page 124.
The prevalence of Covid-19 in 2021
created another challenging year for
everyone involved in the Group’s finance,
control and audit functions. Throughout
the year, the Committee continued to use
its collective expertise, with assurance
from our external auditors, to consider
the impact of Covid-19 on the Group’s
processes, control environment and
financial reporting, together with the
implications for, and the appropriateness
of, the internal and external audit plans
and procedures.
Reflecting the importance of continually
evolving and enhancing the control
environment across Bunzl, during the
year, the Company also recruited a Head
of Internal Controls, reporting to the Chief
Financial Officer (‘CFO’), to manage the
implementation of a new Group wide
Internal Controls Programme. Further
information concerning the Group’s
internal controls and risk management
system can be found later in this report.
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Bunzl plc Annual Report 2021
granted and will continue to monitor
stakeholder sentiment closely and
ensure that engagement is sought
whenever it is needed. I will also be
attending the Company’s forthcoming
Annual General Meeting (‘AGM’) to
answer any questions that shareholders
may have. Further information
concerning stakeholder engagement
can be found on pages 58 to 63.
This report has been prepared in
compliance with the relevant provisions
of the Financial Reporting Council’s
(‘FRC’) UK Corporate Governance Code
(the ‘Code’) which applied to the financial
year ended 31 December 2021. In
carrying out its duties, the Committee
also operated in accordance with the
recommendations set out in the FRC’s
Guidance on Audit Committees.
I hope that you find this report
informative and take assurance from
the work undertaken by the Committee
during the year.
Lloyd Pitchford
Chair of the Audit Committee
28 February 2022
Key accounting estimates and
judgements and alternative performance
measures (‘APMs’)
During 2021, the Committee challenged
management on the outcomes of the
modelling and scenario planning
undertaken and the appropriateness
of the key accounting estimates and
judgements and their effects on the
financial statements. We also considered
the impairment testing carried out by
management, together with the APMs
that are designed to assist with
understanding Bunzl’s underlying
performance. I am pleased to report
that, following rigorous debate and
challenge, the Committee concluded
that it is satisfied with the key accounting
estimates and judgements and APMs
adopted, further details of which can
be found on pages 168 to 171.
Cyber threat and information security
Acceleration of our digital capabilities
continues to be a key strategic priority
for Bunzl and during the year, the
Committee dedicated considerable time
and attention to the risks associated with
cyber and information security (‘IS’),
which have been heightened further due
to the number of people working from
home as a result of Covid-19. Regular
updates were received from the Group
Chief Information Officer (‘CIO’) and the
Head of Internal Audit and Risk on the
measures being taken by management
to mitigate the cyber and IS risks faced by
the business, including the actions taken
to ensure secure and reliable access to
employees working remotely. The
Committee continued to challenge the
cyber security operating model and to
ensure that the security risks across the
IT landscape are properly assessed and
managed. In light of our increasing
reliance on IT systems, the Committee
also considered whether any new or
enhanced internal controls, particularly
those relating to IT and cyber security, are
required. Details of the principal risks and
uncertainties facing the Group, and the
mitigating actions taken in response
thereto, can be found on pages 64 to 72
and further information relating to the
Committee’s oversight of internal controls
can be found on page 121. Commentary
from the Group CIO can also be found
on page 22.
Governance and regulatory
developments
During the year, the Committee was
briefed on UK legislative, regulatory and
governance developments, including the
UK government’s consultation paper on
restoring trust in audit and corporate
governance, so as to assess their likely
impact on the Group and the future work
of the Committee and to enable areas of
focus to be planned accordingly.
Performance evaluation
Addressing the priorities identified as
part of the externally facilitated
performance evaluation in 2020 was
another area of focus for the Committee
in 2021. I am pleased to report that
considerable progress has been made
against these priorities and that the 2021
performance evaluation concluded that
the Board members considered the
Committee to be thorough and effective
in fulfilling its responsibilities. Further
information concerning the performance
evaluation process can be found in the
Corporate governance report on pages
106 and 107 and examples of the
priorities identified as part of the 2021
Audit Committee review are set out on
page 119.
Additional information concerning the
Committee’s activities during 2021 and
the key areas of focus in 2022 can be
found later in this report. The Committee
will keep its activities under review to
ensure that they remain appropriate and
continue to meet the changing needs of
the business.
Stakeholder engagement
As Committee chair, I place great
emphasis on the views and sentiment
of our shareholders and other key
stakeholders. I avail myself of all
opportunities to engage with these
groups when appropriate in order to
obtain their feedback and discuss any
concerns that they may have concerning
the Committee’s operations and
oversight. While the results of the
Company’s proactive engagement with
stakeholders during the year did not
identify any concerns relating to the
Group’s risk profile and management
thereof, or the Committee’s discharge of
its responsibilities, I do not take this for
Bunzl plc Annual Report 2021
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DIRECTORS’ REPORT AUDIT COMMITTEE REPORT CONTINUED
Q&A
with Lloyd Pitchford,
Chair of the
Audit Committee
How has the Committee
navigated Covid-19?
Maintaining frequent and open dialogue
with Bunzl’s internal and external
auditors and the CFO throughout the
transition to remote working has been
key and has meant that the Committee
has received the information it needs in
a timely manner. It has enabled us to
understand fully the impact of Covid-19
on ways of working, how management
and the auditors are addressing
emerging issues, the complexity of
the audits and the associated time
requirements. This in turn has allowed
us to adapt the audit plans as necessary,
including in respect of audit scope and
timing and plans for addressing areas of
new or modified risk.
What do you think makes an
effective audit committee?
In my opinion, the key to a truly
effective audit committee is the
behaviour and culture emanating from
the board and reflected throughout
a company’s management, committees
and assurance activities. A culture
underpinned by honesty and
transparency fosters open debate
and mature questioning, which are
fundamental to the effectiveness of
audit committees. I think that having
a collegiate approach is also key in order
to promote an open and listening
culture and ensure that all members of
the committee can contribute fully to
the committee’s deliberations.
Diversity in terms of skills, experience
and perspectives among committee
members is also an essential
characteristic of an effective committee.
While financial expertise and literacy
are important, so is the ability of audit
committee members to understand a
company’s business, its strategy and its
risk profile and a fundamental part of
this is listening. It is the prerequisite to
balanced analysis, judgement and
challenge and without the right degree
of openness and debate, an audit
committee can quickly become
blinkered to the financial, operational
and strategic risks within a business.
What are the top concerns
faced by audit committees
today?
Change, controls, culture and the
importance of technology are some of
the areas of focus of audit committees.
The Committee understands that
change can bring new risks and
vulnerabilities, so it is essential that the
right controls and financial reporting
are being implemented around new
changes and that the Company’s culture
emphasises and embraces the need for
having effective internal controls.
Bunzl’s risk focused and resilient
culture, combined with its robust
system of internal controls have
ensured that the Group has been able
to navigate the prolonged period of
global and economic uncertainty
caused by Covid-19. The recruitment in
2021 of a Head of Internal Controls and
the implementation of a new Group
wide Internal Controls Programme also
demonstrate Bunzl’s commitment to
continuously improving and
strengthening its risk management and
internal controls framework.
Finally, using inefficient technology can
create higher risk of data issues for
companies so it is encouraging to see
that Bunzl is continually and proactively
investing in digital technology and
targeting internal improvements to
drive efficiencies, both within the
business and in respect of how we
engage with and support our
customers.
Composition and experience
The Committee comprises all of
the independent non-executive
directors, who were appointed to the
Committee by the Board following
recommendations by the Nomination
Committee. The Secretary to the
Committee is the Company Secretary.
All members contribute to the work
of the Committee and bring an
appropriate balance of financial, risk
management and commercial acumen
and experience in multinational
organisations, combined with a good
understanding of the Company’s
business and are therefore considered
by the Board to be collectively
competent in the sector in which the
Company operates.
As the serving Chief Financial Officer
of Experian plc, the Chair of the
Committee, Lloyd Pitchford, is
considered by the Board to have
recent and relevant financial
experience. The Committee members
are of an independent mindset and
bring a diversity of perspectives,
knowledge and experience to the
Committee’s deliberations, which in
turn ensures that the Committee is
able to provide an appropriate amount
of scrutiny, challenge and support to
management. Independent thinking is
an essential aspect of the Committee’s
role and is crucial in assessing the work
of management and the assurance
provided by the internal and external
audit functions. Further information
concerning the directors’ skills and
experience can be found in the
Corporate governance report on pages
92 to 109.
Meetings
The table below sets out the
Committee’s composition and its
members’ attendance at the four
scheduled Committee meetings held
during 2021.
Meetings attended*
Lloyd Pitchford
Vanda Murray
Stephan Nanninga
Vin Murria
Maria Fernanda Mejía
4
4
4
4
4
* While the Company Chairman and the executive
directors are not members of the Committee, they
normally attend Committee meetings by invitation,
together with the Head of Internal Audit and Risk,
representatives from the external auditors and
members of the Group finance team.
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Bunzl plc Annual Report 2021
Assurance framework
Bunzl’s assurance framework
comprises a number of
important elements, including:
• the Company’s risk
management and internal
control systems;
• the internal and external audit
functions; and
• the regular reporting of the
Company’s performance
against budgets, forecasts and
prior year results.
Key areas of focus in 2022
Alongside the regular cycle of matters
that the Committee schedules for
consideration each year, we are planning
over the next 12 months to focus on the
following areas:
• the outcome of the government’s
consultation paper on restoring trust in
audit and corporate governance and
the Company’s response thereto,
including the implementation of a new
Internal Controls Programme;
• finance function resiliency;
• further evolving the internal audit
function;
• the effective management of fraud risk;
• Enterprise Risk Management and
monitoring continued shifts in the
technology risk landscape, including in
respect of cyber risk; and
• evolving the control environment and
assurance over information security
risks.
Role and support
The role of the Audit Committee is to act
independently of management to ensure
that the interests of shareholders are
properly protected in relation to the
Company’s financial reporting and
internal control arrangements and to
provide appropriate oversight, review
and challenge of the decisions and
approach taken by management in
respect of the content and disclosures
within the Company’s financial reports.
There are a number of key aspects to
this, including the use of appropriate
accounting policies and practices and
the implementation of a robust assurance
framework.
The Committee ensures that the
Company has effective governance over
the Group’s financial reporting, including
the adequacy of related disclosures, the
performance of both the internal and
external audit functions and the
management of the Group’s systems of
internal control and business risk
management and related compliance
activities. It also considers whether the
disclosures made in the financial
statements are set properly in context.
In the performance of its duties, the
Committee has independent access to
the services of the Company’s internal
audit function and to the external
auditors and may obtain outside
professional advice as necessary.
The Committee’s terms of reference,
which were reviewed in 2021 but remain
unchanged, are available on the
Company’s website, www.bunzl.com.
Performance evaluation
The Committee’s performance and
effectiveness are reviewed annually by
both the Committee and as part of the
Board performance evaluation. The Chair
of the Committee also meets with each
Committee member independently to
ensure that their individual views about
the operation of the Committee are taken
into account. Additional information
concerning the results of the 2021
performance evaluation is set out on
pages 106 and 107.
Principal responsibilities
of the Committee
Financial reporting
• Monitoring and reviewing the
integrity of the Group’s financial
results and the significant
judgements contained therein.
Risk management and internal control
• Reviewing:
– the Group’s risk management
processes, procedures and
controls; and
– the effectiveness of the Company’s
internal financial controls.
Internal audit
• Overseeing the Company’s internal
audit activities.
• Monitoring and reviewing the
effectiveness of the internal audit
function.
External audit
• Making recommendations to the
Board in relation to the
appointment/re-appointment/
removal of the external auditors.
• Reviewing the Company’s
relationship with the external
auditors and monitoring their
independence and objectivity.
• Agreeing the scope, terms of
engagement and fees for the
statutory audit.
• Initiating and supervising a
competitive tender process for the
external audit as required from time
to time.
• Developing and implementing a
policy on the engagement of the
external auditors to supply non-
audit services.
Bunzl plc Annual Report 2021
119
DIRECTORS’ REPORT AUDIT COMMITTEE REPORT CONTINUED
Financial statements and significant
accounting matters
During the year and prior to the
publication of the Group’s results for
2021, the Committee reviewed the 2021
half yearly financial report and related
news release, the 2021 Annual Report
(including the financial statements), the
2021 annual results news release and the
reports from the external auditors on the
outcomes of their half year review and
their audit relating to 2021.
As part of its work, the Committee
considered a number of significant
accounting matters in relation to the
Company’s financial statements, together
with the adequacy of the associated
disclosures and challenged the
judgements being made in relation
thereto. These significant accounting
matters are summarised in the table
below and further information can be
found in the relevant Notes to the
consolidated financial statements.
The Committee believes that the
significant accounting matters have been
properly recorded in the Company’s
books and records and accounted for
appropriately, including relevant
disclosure in the Annual Report.
Significant matters considered in relation to the financial statements
Issue
Review and conclusion
Accounting for
business
combinations
For business combinations, the Group has a long-standing process for the identification of the fair values of the assets acquired and
liabilities assumed, including separate identification of intangible assets using external valuation specialists where required. The
Committee reviewed this process and discussed with management and the external auditors the methodology and assumptions
used to value the assets and liabilities of the acquisitions completed in 2021. The Committee concluded that it was satisfied with
management’s valuations of these assets and liabilities, including the degree to which such valuations are supported by professional
advice from external advisers. For business combinations where less than 100% of the issued share capital of a subsidiary is acquired
and the acquisition includes an option to purchase the remaining share capital of the subsidiary, for which there were five such
business combinations during the year, the Group has an established process to assess whether a non-controlling interest should be
recognised. The Committee reviewed the Group’s assessment of these five business combinations, noting that no non-controlling
interest had been recognised, and concluded that it was satisfied with management’s conclusion that the risks and rewards
associated with the options to purchase the remaining shares had transferred to the Group on each acquisition. Details of the
Company’s approach to accounting for acquisitions are set out in Note 28 to the consolidated financial statements.
The carrying
value of
goodwill,
customer
relationships
and brands
intangible
assets
Goodwill is allocated to cash generating units (‘CGUs’) and is tested annually for impairment. The Committee critically reviewed and
discussed management’s report on the impairment testing of the carrying value of goodwill of each of the Group’s CGUs. The
Committee also critically reviewed and discussed management’s consideration of the impairment risk on customer relationships
and brands intangible assets. In both regards, the Committee considered the sensitivity of the outcome of impairment testing to the
use of different assumptions and considered the external auditors’ testing thereof.
After due challenge and debate, the Committee concluded that it was satisfied with the assumptions and judgements applied
in relation to the impairment testing and agreed that there was no impairment to goodwill or on customer relationships and
brands intangible assets. Details of the key assumptions and judgements used are set out in Note 11 to the consolidated
financial statements.
Defined benefit
pension
schemes
The Committee considered reports from management and the external auditors in relation to the valuation of the defined benefit
pension schemes and reviewed the key actuarial assumptions used in calculating the defined benefit pension liabilities, especially in
relation to discount rates, inflation rates and mortality/life expectancy. The Committee discussed the reasons for the movement in
the net pension deficit to a net pension surplus and was satisfied that the assumptions used were appropriate and were supported
by independent actuarial experts.
Taxation
The Committee considered the Company’s withdrawal from three multi-employer pension plans (‘MEPPs’) relating to the Group’s US
entities, for which a provision for the withdrawal liability had been made in the prior year. The Committee noted that the Group had
exited one of the schemes and agreed to pay a lump sum to settle the liability at the amount equal to that provided for (£3.3 million).
It was further noted that the exit vote in respect of one of the other schemes had been passed and that negotiations for the
withdrawal liability were now underway. It was acknowledged that negotiations relating to the Group’s exit from the remaining
scheme were ongoing. The Committee noted that no provision was held in relation to three other MEPPs to which the Group’s US
entities continue to contribute. Having considered these matters thoroughly and following discussions with the external auditors,
the Committee concluded that it agreed with the accounting treatment and disclosures made in relation to these matters. Further
details on these matters and the key assumptions used are given in Note 23 to the consolidated financial statements.
The Committee reviewed a report and received a presentation from the Head of Tax highlighting the principal tax risks that the
Group faces and a detailed risk assessment relating to the tax risks identified, including the judgements underpinning the provisions
for potential tax liabilities. The Committee noted the reduction of the previously identified risk concerning the application of the
European Union State aid provisions to the UK tax regime, as a result of HMRC’s conclusion that the Group was not a beneficiary of
these provisions. The Committee also considered management’s review of other risks associated with inter-company finance
arrangements.
The Committee noted management’s activities in monitoring changes to tax rates around the world, including those arising from
the OECD’s recommendations for a global minimum tax rate of 15% and a change in taxing rights for high-margin multinational
businesses. The Committee also reviewed the results of the external auditors’ assessment of provisions for income taxes.
Following appropriate debate and challenge, the Committee was satisfied with the key judgements and proposed disclosures
related to tax made by management.
Inventory and
receivable
provisions
The Committee noted that during 2021 the Group has seen a further increase in the level of slow moving inventory with customer
demand continuing to be impacted by the pandemic-related restrictions and supply chain disruption resulting in higher levels of
inventory. This has resulted in a net charge of approximately £25 million in the year to increase slow moving inventory provisions
whilst additional provisions were required as a result of market price deflation on certain Covid-19 products. This has been partially
offset by a net release of approximately £5 million relating to expected credit losses on trade receivables.
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Bunzl plc Annual Report 2021
Standing agenda items/activities
The standard agenda items/activities
dealt with by the Committee include:
• Reports from the Head of Internal Audit
and Risk concerning the work
undertaken by the internal audit
function, including:
– fraud reporting;
– audit plan updates;
– internal audit KPIs;
– high priority audit findings;
– control self-assessment results;
– review of the second line of defence
activities; and
– progress against the points raised
during an external quality
assessment of the internal audit
function.
• Separate discussions are held
periodically during Committee
meetings between the Committee and
the Head of Internal Audit and Risk and
the external auditors without
management present.
• The forward agenda planner is
reviewed regularly. Its content is also
discussed with the executive directors,
management and the external auditors
and adapted, where necessary, to
ensure that it meets the changing
needs of the business.
• Following each Committee meeting,
any significant findings are reported to
the Board and copies of the minutes of
the Committee meetings are circulated
to all directors and to the external
auditors.
• The Committee Chair attends the AGM
to respond to any shareholder
questions that might be raised
concerning the Committee’s activities.
Internal controls and risk management
As mentioned earlier in this report, the
Committee is responsible for reviewing,
on behalf of the Board, the effectiveness
of the Company’s internal financial
controls and the assurance procedures
relating to the Company’s risk
management system. These controls and
procedures are designed to manage, but
not eliminate, the risk of failure of the
Company to meet its business objectives
and, as such, provide reasonable, but not
absolute, assurance against material
misstatement or loss. During the year, the
Committee reviewed the process by
which management assessed the control
environment, in accordance with the
requirements of the Guidance on Risk
Management, Internal Control and
related Financial and Business Reporting
published by the FRC.
The Committee monitored the
effectiveness of the internal financial
controls framework through reports from
the CFO, the Head of Internal Audit and
Risk and the external auditors. In
particular, the Committee considered the
scope and results of the work of the
internal audit function, the findings of the
external auditors in relation to the year
end audit, the assessment of fraud risk
carried out by management, the controls
over the Company’s financial
consolidation and reporting system, the
treasury controls, the tax risks and the
process for monitoring the ongoing
performance of the Company. It is the
responsibility of managers to provide
confirmation that the controls and
processes are being adhered to
throughout the business and this is
continually tested by the work of the
internal audit function as part of its
annual plan of work, which the
Committee approves each year.
Compliance with the internal control
system is monitored annually by the
completion of a controls self-assessment
questionnaire by senior managers in
consultation with their teams. The results
are then reviewed and audited on a
sample basis by the internal audit
function and reported to the Committee.
In relation to the risk management
system, the Committee reviewed the
process by which significant current and
emerging risks had been identified by
management and the Board, the key
controls and other processes designed
to manage and mitigate such risks and
the assurance provided by the internal
audit function, the external auditors and
other oversight from management and
the Board.
Further information on internal controls
and risk management can be found in
the Corporate governance report on
pages 108 and 109.
Meetings and activities
Committee meetings are generally
scheduled close to Board meetings in
order to facilitate an effective and timely
reporting process.
The Committee has a structured, rolling,
forward-looking planner which is
developed with the Company Secretary
and is designed to ensure that the
Committee’s responsibilities are
discharged in full during the year and to
facilitate more in-depth reviews of those
topics which are of particular importance
or pertinence. Items on the agenda are
set with consideration of regulatory
requirements, the Company’s reporting
timetable and after considering key
issues identified by the CFO,
management, the Head of Internal Audit
and Risk and the external auditors.
The Chair of the Committee holds
preparatory discussions with the
Company’s senior management, the
Head of Internal Audit and Risk and the
external auditors prior to Committee
meetings to discuss the items to be
considered at the meetings.
A summary of the Committee’s key
activities in 2021 and its priorities for
2022 can be found on page 118 and
page 119 respectively. The Committee
will continue to keep its activities under
review and adapt them wherever
necessary in anticipation of, and in
response to, developments within the
business and changes in the financial
reporting, regulatory and governance
landscape.
Bunzl plc Annual Report 2021
121
DIRECTORS’ REPORT AUDIT COMMITTEE REPORT CONTINUED
Audit Commitee meetings and activities
Financial reporting
• Receiving and, where
appropriate, challenging
reports from
management and the
external auditors in
relation to the half yearly
financial report and the
annual financial
statements.
• Reviewing the half yearly
financial report and the
annual financial
statements and the
formal announcements
relating thereto.
• Reviewing the
amendments made by
management to the
definitions of APMs and
considering the
appropriateness of
disclosures made in the
half yearly financial
report and annual
financial statements.
• Considering thematic
reviews and guidance
from the FRC concerning
annual report disclosures.
Audit
matters
Governance
and other
• Receiving training on
recent and impending
regulatory and
governance changes.
• Reviewing the
Committee’s
effectiveness following an
externally facilitated
performance evaluation.
• Reviewing the
Committee’s terms of
reference.
• Reviewing and approving
the Group’s Tax Strategy
for the 2022 financial
year.
• Considering a paper from
the CFO on the Group’s
finance function,
forthcoming reform of
the corporate
governance, reporting
and audit system in the
UK, the Company’s
actions and roadmap to
ensuring compliance with
the proposed reforms,
Bunzl’s internal controls,
the future of internal
audit and the results of a
regional deep dive into
governance, controls and
culture.
• Reviewing the effectiveness
of both the external auditors
and the internal audit
function following
completion of detailed
questionnaires by both the
Board and senior
management within the
Company.
• Making recommendations to
the Board concerning the
re-appointment of the
external auditors and
approving the remuneration
and terms of engagement of
the auditors, including the
audit strategy.
• Reviewing and approving
changes to the policy for the
provision of non-audit
services by the external
auditors.
• Reviewing and approving the
level and nature of non-audit
work which the external
auditors performed during
the year, including the fees
paid for such work, and
planning process for the
current financial year.
• Reviewing and approving the
internal audit work
programme for the coming
year.
• Receiving and considering a
report concerning the
progress being made in
addressing the points raised
during an external quality
assessment of the internal
audit function.
• Receiving and considering
reports from the Head of
Internal Audit and Risk
concerning the work
undertaken by the internal
audit function, including in
relation to the function’s
ongoing quality assurance
and improvement
programme.
• Reviewing and approving
changes to the Company’s
internal audit charter.
Risk management
and internal
controls
• Reviewing the effectiveness
of the Company’s internal
financial controls and the
assurance procedures
relating to risk management
systems, including receiving
and considering a Risk and
Assurance Map.
• Reviewing the Company’s
annual controls self-
assessment process and
related controls framework.
• Reviewing the effectiveness
of the risk management
process.
• Reviewing the principal tax
risks applicable to the
Company and the steps
taken to manage such risks.
• Considering an update from
the CFO and the Head of
Internal Controls on the
Group’s Internal Controls
Programme which is
supported by an external
professional services firm.
• Receiving updates from the
Group CIO concerning the
Group’s Information Security
Policy and activities in 2021,
covering matters such as the
results of reviews by
external professional
services firms of the Group’s
approach to Information
Security, the development of
a new Governance
Programme (including the
establishment of a Group
Information Security Risk
Committee).
• Considering a paper from
the Head of Internal Audit
and Risk on Information
Security assurance, including
the results of the 2021
Information Security audit
and approving the proposed
future Information Security
Assurance Audit Plan.
• Receiving updates from the
Head of Internal Audit and
Risk relating to the Group’s
Information Security
Assurance Audit Plan and
associated audit results,
including progress on GDPR
and data privacy, and the
Group’s risk-based security
framework.
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Bunzl plc Annual Report 2021
Internal audit
The Company has an internal audit
function which comprises 12 in-house
auditors, including the Head of Internal
Audit and Risk. As reported in last year’s
Annual Report, the Company has sought
to enhance its specialist IT audit resource
further and, during the year, successfully
recruited an Internal Audit IT Manager
into the internal audit function.
The scope of work of the internal audit
function covers all systems and activities of
the Group and work is prioritised according
to the Company’s risk profile. The internal
audit plan is approved by the Committee
annually and is reviewed regularly
thereafter to ensure that it continues to be
fit for purpose and to enable the
Committee to assess how internal audit is
delivering against the plan.
Internal audit reports are provided
regularly to the Committee and include
details of the audit findings, the relevant
management actions required in order to
address any issues arising, as well as
updates on management’s progress in
addressing any outstanding
recommendations from previously
reported findings. In addition, the internal
audit function reports on any significant
issues relating to the processes for
controlling the activities of the Group and
the adequacy and effectiveness of such
processes. Overall, the work of the
internal audit function provides the
Committee with a further means of
monitoring the processes and actions to
manage and mitigate those risks
identified as posing the greatest threat to
the Company.
The quality and effectiveness of the
internal audit function’s work is
monitored continually using a variety of
formal and informal inputs, including
discussions with management, reviews
and assessments of the quality of testing
results and reporting, questionnaires and
feedback from the external auditors.
Further information concerning the
formal process undertaken to assess the
effectiveness of both the internal audit
function and the external auditors can be
found below.
External auditors
Both the Board and the Committee place
great emphasis on the independence and
effectiveness of the Group’s external
auditors in reporting to stakeholders. The
Committee is responsible for ensuring
that the three-way relationship between
the Committee, the external auditors and
the Company’s management is
appropriate and that the external
auditors remain independent of the
Company. Every audit firm and team
must ensure that they have no conflicts of
interest or threats to independence that
cannot be properly mitigated and that
they only undertake audits for which they
have the skills, capabilities and capacity to
deliver to the required standards.
Therefore, as part of its decision making
process concerning whether to tender,
offer, or continue an audit engagement,
there are a number of key considerations
that the Committee takes into account,
the principal elements of which are
summarised on page 124.
Auditors’ effectiveness reviews
The assessment of the effectiveness of
the external and internal auditors is an
ongoing process at Bunzl and the
Committee uses a number of different
methods to ensure that it is fully aware
of how the auditors are performing.
During 2021, the Committee undertook
reviews of the effectiveness of both the
Company’s external audit process for
the 2020 financial statements and the
Company’s internal audit function. Each
of the reviews followed a broadly
similar process, as summarised in the
diagram below. In addition, the external
audit partner and the Head of Internal
Audit and Risk attend and table reports
at each scheduled Audit Committee
meeting, which ensures that the
Committee members have the
opportunity to provide real-time
feedback and, where appropriate,
challenge in relation to all audit related
matters, including the auditors’
assurance procedures, the level of
challenge and professional scepticism
applied by the auditors, the audit scope,
the execution of audit plans and any
future audit plans. Both the Head of
Internal Audit and Risk and the external
auditors have direct access to the Chair
of the Committee who held a number
of meetings with each of them during
the year outside formal Committee
meetings. The Chair of the Committee
also liaises with the CFO as necessary to
ensure robust oversight and challenge
in relation to financial control and risk
management and to ensure that the
Committee is kept informed of any
changes in response to new issues or
changing circumstances.
Detailed questionnaires
of different aspects of
external audit process/
internal audit function.
Questionnaires
completed by:
• directors; and
• senior managers at
Group and business
area levels.
Results of
questionnaires
considered and
discussed by the
Committee.
Action plan and
implementation
timeframes agreed.
External audit process
The questionnaire covered a total of 24 different aspects of the external audit
process, grouped under four separate headings: the robustness of the audit process;
the quality of delivery; the quality of people and service; and the quality of reporting.
Internal audit function
The questionnaire covered a total of 36 different aspects of the internal audit
function including: purpose, authority and responsibility; independence, objectivity
and proficiency; quality assurance processes; adequacy of resources; auditors’ skills
and capabilities; and the quality of reporting.
Following these assessments, the Committee
concluded that it was satisfied with the
effectiveness of the external audit process
relating to the 2020 financial statements and
that the internal audit function continued to be
effective, efficient and appropriately resourced.
The Committee will carry out similar
effectiveness reviews in 2022 in respect of the
audit of the 2021 financial statements and the
internal audit function.
Bunzl plc Annual Report 2021
123
DIRECTORS’ REPORT AUDIT COMMITTEE REPORT CONTINUED
Auditor appointment – key considerations
Conflicts of interest
In assessing the independence of the auditors from the
Company, the Committee takes into account the information and
assurances provided by the auditors confirming that all their
partners and staff involved with the audit are independent of
any links to the Company.
+ Non-audit services
Bunzl has a detailed policy relating to the provision of non-audit
services by the external auditors which is overseen by the
Committee. It is the Company’s policy to assess the non-audit
services to be performed by the Company’s auditors on a
case-by-case basis to ensure adherence to the prevailing ethical
standards and regulations.
+ Tenure and effectiveness
The Committee takes into account the tenure of the auditors in
addition to the results of its review of the effectiveness of the
external auditors and considers whether there should be a full
tender process, either as a result of that review or as may be
required by the relevant regulations. There are no contractual
obligations restricting the Committee’s choice of external
auditors.
In accordance with The Statutory Audit Services for Large
Companies Market Investigation (Mandatory Use of Competitive
Tender Processes and Audit Committee Responsibilities) Order
2014 (‘CMA Order’) the Company is required to put the external
audit contract out to tender every 10 years. In addition, in
accordance with the CMA Order, the external auditors are
required to rotate the audit partner responsible for the
Company’s audit every five years.
+ Internal assessment of audit quality
At least annually, the Committee undertakes a formal review of
the effectiveness of the external audit process in respect of the
Company’s prior year financial statements.
+ External assessment of audit quality
The Committee takes into account the results of any periodic
reviews undertaken by the FRC’s Audit Quality Review team of
the external auditors’ audit of the Company.
+ Recommendation
Provisional upon its satisfaction with the results of its review of
the external auditors’ activities and performance during the year,
the Committee makes a formal recommendation to the Board
that a resolution proposing the re-appointment of the external
auditors be put before shareholders in general meeting for
approval.
PwC confirmed during the year that all its partners and staff complied with
their ethics and independence policies and procedures which are consistent
with the FRC’s Revised Ethical Standard (2019) and other relevant regulatory
and professional requirements, including that none of its employees working
on Bunzl’s audit hold any shares in Bunzl plc. PwC are required to provide an
independence confirmation letter at the planning stage of the audit, including
any relationships that may reasonably be thought to have an impact on their
independence and the integrity and objectivity of the audit engagement
partner and the audit staff.
In the main, Bunzl uses other firms to provide non-audit services. However, if
the provision of a service by the Company’s auditors is permitted and
adequate safeguards are in place, it is sometimes appropriate for this
additional work to be carried out by the Company’s auditors.
Details of the fees paid to the external auditors in 2021 in respect of the audit
and for non-audit services are set out in Note 5 to the consolidated financial
statements. The fees relating to non-audit services work in 2021 equated to
6.0% of the fees relating to audit services.
PwC were first appointed as Bunzl’s external auditors in 2014. The Committee
anticipates that the next competitive tender will be conducted no later than
2023 in accordance with current regulation that requires a tender every 10
years. Given the continuing effectiveness of PwC in their role as external
auditors, the Committee believes it is in the best interests of shareholders for
PwC to remain in role for the next two years pending the outcome of the
tender process. The current audit partner, Neil Grimes, took over the position
as audit partner with effect from 1 January 2019. Accordingly, the Company
confirms that it has complied with the provisions of the CMA Order for the
2021 financial year.
Further information concerning the auditors’ effectiveness reviews can be
found on page 123.
As a consequence of its satisfaction with the results of its review of the
external auditors’ activities during the year, the Committee has again
recommended to the Board that a resolution proposing the re-appointment
of PwC as external auditors for the year ending 31 December 2022 be put to
shareholders at the forthcoming AGM.
124
Bunzl plc Annual Report 2021
Directors’ remuneration report
‘During a year of
continuing challenge
we have made great
progress against key
strategic objectives as
well as delivering
impressive financial
results.’
Vanda Murray OBE
Chair of the Remuneration
Committee
Introduction from
Vanda Murray
I am pleased to present the Directors’
remuneration report for the year ended
31 December 2021.
Context of remuneration
At the start of 2021, it was very unclear
how business performance during the
year would unfold – many parts of the
world were still in effective lockdowns
and some of Bunzl’s key market sectors,
including hospitality and non-food retail,
remained very distressed. However, the
leadership team continued to navigate
the challenge as effectively as it had done
in 2020, and whilst the large one-off
Covid-19 related orders were generally
not repeated in 2021, it became clear that
there was ongoing demand for essential
key products which continued
throughout the year. The recovery of the
hospitality industry in most markets has
been less than smooth, but the net result
was a significant outperformance versus
both budget and prior year, driven by a
particularly positive performance in
North America, Latin America and Asia
Pacific. The increases to both revenue
and profit were supported by continued
discipline around working capital and
cash, resulting in strong delivery against
all the financial targets in the annual
bonus plan. In addition, the completion
of 14 acquisitions over the course of the
year left the Group in very strong shape
at the end of 2021. This meant that we
were able to continue our policy of not
taking any government support and of
paying dividends to shareholders. In
addition, good progress was made
against the key strategic imperatives of
Sustainability, Digital and Talent; against
such a challenging business backdrop it
has been pleasing to see that clear and
ambitious targets have been set,
supported by detailed plans for delivery.
Performance and reward for 2021
Annual bonus
Annual bonus payments are based on
a combination of key financial measures
comprising adjusted earnings per share,
return on average operating capital and
operating cash flow, with a minority
(30% of the total opportunity) based
on personal strategic objectives and,
for the first time this year, specific
Environmental, Social and Governance
(‘ESG’) targets. In setting our incentive
targets, we have regard to the
performance potential of the different
parts of the business and of the whole
Group. The on-target performance level
for the bonus for 2021 was set at, or close
to, the budgeted level of performance.
For 2021, the Committee made slight
adjustments to the weighting of the
financial metrics to allow the introduction
of the ESG targets, and it set a range
around the target to incentivise the
delivery of a stretching performance.
As stated above, exceptional financial
performance resulted in the payment of
maximum annual bonus for the financial
measures. As well as navigating the
headwinds of product deflation, product
and operating cost inflation, lockdowns
and inconsistent rates of recovery of
the base business, both directors also
delivered exceptional performance
against the strategic and ESG objectives.
This resulted in a payment of 93.3% of
maximum for these elements for Frank
van Zanten and 90.0% of maximum for
these elements for Richard Howes.
No discretion was applied by the
Committee to adjust the bonus
outcomes, as overall performance
reflected payment, and, in line with the
remuneration policy, 50% of the annual
bonuses will be delivered in shares,
subject to a three year deferral period.
Long Term Incentive Plans (‘LTIP’)
The Committee assessed the
performance for the LTIP awards with
performance conditions linked to
performance periods that ended during,
or at the end of, the 2021 financial year.
The share options were subject to
adjusted earnings per share (‘eps’) growth
targets and the performance shares were
subject to both eps growth and relative
total shareholder return (‘TSR’) targets.
The strong eps growth of 25.49% over the
three year performance period (adjusted
to ensure that the relevant eps figures
were comparable) will result in 96.43% of
executive share options vesting for the
performance period ended 31 December
2021. In addition, eps growth of 40.9%
over the three years to 31 December 2020
(adjusted to exclude two disposals of
businesses during the period) and
stronger relative TSR performance
resulted in 87.9% and 74.3% of
performance shares vesting for
Bunzl plc Annual Report 2021
125
DIRECTORS’ REPORT performance periods that ended in April
and October 2021, respectively. The
Committee has not exercised discretion
to amend the vesting outcomes for any of
these share awards.
Director’s remuneration policy
The 2021 directors’ remuneration policy
was approved at last year’s AGM (by
95.7% of shareholders). The main change
to the policy was the replacement of our
share options (LTIP A) and performance
shares (LTIP B) schemes with a single
Restricted Share Award. Awards of shares
were therefore granted to approximately
25 of the most senior leaders, with
around a further 460 managers
continuing to receive share options under
the LTIP A in 2021. Another key change
was the formalisation of post-cessation
holding requirements. The Committee
continues to feel that the Restricted Share
Award plan is the most appropriate plan
for Bunzl for the following key reasons:
• It is aligned with our strategy of
balancing profitable organic growth,
operating model improvements and
growth through acquisition because it
encourages leaders to take the right
long-term decisions for the business
rather than focusing on three year eps
growth.
• It is significantly simpler than the
previous plans which included both
performance shares and share options.
• It creates closer alignment between
shareholders and management
because, while the shares are granted
at a much lower level of quantum than
previously, a significant proportion of
their ultimate value is tied to the accrual
of dividends and share price growth
over the performance period.
• It helps the business to manage the
impact of significant swings in
performance against more volatile
market conditions.
• It is common practice in North America
and other jurisdictions in which we
compete for senior talent.
As stated above, the first grants of
Restricted Share Awards were made in
April 2021 following the approval of the
new policy by shareholders at the AGM.
Frank van Zanten received shares
equivalent to 125% of his salary, and
Richard Howes to 100% of his salary,
which was a reduction of approximately
50% from the total grants of shares
received under the previous plans.
The vesting of the shares is subject to
a performance ‘underpin’ which will be
closely reviewed by the Committee
before these shares vest in April 2024.
The vested shares are then subject to
a further two-year holding period.
Chief Executive Officer pay ratio
As required by the Regulations we have
again disclosed in this year’s Directors’
remuneration report the ratio between
the Chief Executive Officer’s remuneration
and the median, lower quartile and upper
quartile of UK employees. The Committee
considers the executive remuneration in
the context of this and other internal and
external reference points.
Implementing the policy for the 2022
financial year
Base salary
The base salaries for the executive
directors, Frank van Zanten and Richard
Howes, have been increased by 2.9%
effective from 1 January 2022. This is
broadly in line with that of the leadership
populations across the business.
Annual Bonus
For the 2022 financial year, the maximum
annual bonus opportunity will remain
unchanged at 180% of base salary for the
Chief Executive Officer and 160% for the
Chief Financial Officer, with on-target
bonus at 50% of the maximum.
The annual bonus performance
measures continue to be a balanced
scorecard of eps; return on average
operating capital (‘RAOC’); operating cash
flow; and personal performance linked to
certain specified strategic non-financial
goals. The weighting of these metrics will
remain the same as in 2021, and again,
10% of the opportunity for both directors
will be dependent on the achievement
of specific Environmental, Social and
Governance (‘ESG’) objectives in addition
to the 20% for the achievement of
non-financial strategic objectives. This
reflects how central the Sustainability
agenda is to Bunzl’s strategy, around the
four key pillars of the transition to
Alternative Products, Climate Change,
Ethical Sourcing and Diversity. The
objectives agreed for 2022 are a clear
build on the strategy and targets agreed
in 2021.
50% of any bonus awarded will be
deferred into shares for a period of
three years.
When setting the target levels, the
Committee conducts an analysis of the
challenges and growth opportunities
across the Group and sets targets that
are stretching without encouraging
inappropriate levels of risk. The range
itself varies each year taking into account
the risks and opportunities facing the
business. The principles followed are
that target setting, year by year, results in
stretching ambition, while ensuring
that the scale of reward on offer is
proportionate and always linked
to performance.
LTIP
In March 2022, the Committee expects to
make further grants of restricted shares
under the 2021 approved policy to the
executive directors and other participants.
These will be at the same percentages of
salary as in 2021, and will vest in March
2025, subject to continued employment
and the assessment of the underpin. The
Committee may scale back the awards
(including to zero) if it is not satisfied that
the underpin has been met.
Priorities for 2022
After two consecutive years of policy
change the Committee now needs to
ensure that the policy, in particular the
new Restricted Share Award Plan,
continues to drive the leadership
behaviour required to support Bunzl’s
growth. While we are not anticipating any
major changes in the short term, the
Committee will continue to keep itself
abreast of market context and of
emerging trends in executive reward, as it
plans for the future. It will also carefully
monitor the reward context for the wider
Bunzl organisation to satisfy itself that
the structure for the executives continues
to be aligned. As ever, the ongoing input
and feedback from shareholders is very
much appreciated.
126
Bunzl plc Annual Report 2021
DIRECTORS’ REMUNERATION REPORT CONTINUED Conclusions
In many ways, 2021 was a continuation of
2020 as we saw ongoing demand for key
Covid-19 related products and further
periods of distress in key market sectors.
As described earlier, it is a testament to
the resilience of all our people and to the
performance of the leadership team that
another exceptional set of business
results was delivered. This is reflected in
the outturns of both the short and long
term incentive plans.
In the following pages you will find
details of:
• the ‘At a Glance’ guide to executive
directors’ remuneration for 2021;
• the annual report on remuneration for
2021; including our approach to the
application of the remuneration policy
in 2022; and
• The Directors’ remuneration policy
I hope that you will find this report to be
clear and helpful in understanding our
remuneration policy and practices.
Vanda Murray OBE
Chair of the Remuneration Committee
28 February 2022
Q&A
with Vanda Murray OBE
Chair of the
Remuneration
Committee
How has the role of the
Remuneration Committee
evolved over the last
few years?
I think the role of Remuneration
Committees is much broader, and more
strategic, than it used to be. In the past,
the Committee spent a great deal of
time involved in the mechanics of
designing short and long term incentive
schemes, and in calculating the
outturns. Over the last few years,
remcos have taken a much more central
role in ensuring that the remuneration
plans and, more particularly, the
outturns, truly reflect progress against
the strategic objectives of the business.
This includes a much broader focus on
environmental and employee-focused
targets, for example. I have also
observed that the Committee takes a
much broader interest in the pay and
reward arrangements for the wider
workforce than it did in the past.
What key recent developments
have you seen in the Executive
Pay landscape?
Quite rightly, there is now a demand
from shareholders for much more
transparency over the link between pay
and performance. Committees now
need to give real thought to the setting
of meaningful and stretching objectives,
whether these are financial or non-
financial. The broader focus on ESG
priorities is a key development, but this
needs to be underpinned by really clear
objectives linked to a broader strategy.
The requirement for a comparison
between executive reward and that of
the wider workforce is another way of
increasing transparency. Finally, the
increasing ability of Committees to
defer payment of awards, or even claw
them back in exceptional circumstances,
all helps to ensure that executives are
held to account for the longer term
performance of their businesses.
How has the Bunzl
Remuneration Committee
responded to these
developments?
The Bunzl Remuneration Committee
has always kept abreast of any new
or forthcoming developments to
ensure that our plans remain fit for
purpose. We do this as a matter of
course every three years when our
Policy is put to a shareholder vote,
and additionally between policy
updates where this is necessary.
This was the case last year where we
updated our Policy to include a new
long term incentive plan. We felt
strongly that the growing focus on
simplicity and transparency meant
that the time was right to move to
Restricted Shares. At the same time,
we made some other minor
adjustments to ensure that our Policy
remained in line with good practice.
Do you feel that the current
pay structure will be fit for
purpose for the future?
It is impossible to predict too far into
the future, but when we made the
change last year, it was with a view
that it would remain in place for
some time. The Committee has been
very clear that making changes too
often, or reverting to previous
arrangements, will not support our
objective of simplicity or transparency.
Of course, we will still keep abreast of
future developments and be
prepared to make adjustments
where we need to.
How does the Committee
stay abreast of wider
workforce pay issues?
When we are approving plans and
outturns for the executives, the
Committee members normally take
note of relevant internal benchmarks
as a guide to their decision making.
This can be quite complex in a
decentalised and global business such
as Bunzl. Another recent development
is that the non-executive directors on
the Committee now conduct regular
listening sessions with employee
representatives around the Group, so
we can hear any concerns about pay
first hand from our employees. We
can also take the opportunity to
explain to them how our executive
plans work.
Bunzl plc Annual Report 2021
127
DIRECTORS’ REPORT The key responsibilities of the
Committee include:
• ensuring that executive directors and
senior executives are properly
incentivised to attract, retain and fairly
reward them for their individual
contribution to the Company, having
due regard to the policies and practices
applied to the rest of the employees
within the Group;
• determining the framework and broad
policy for the remuneration of the
Chairman and the executive directors
of the Board;
• ensuring that remuneration is aligned
with and supports the Company’s
strategy and performance, having due
regard to the interests of the
shareholders and to the financial and
commercial health of the Company,
while at the same time not encouraging
undue risk taking;
• communicating and discussing any
remuneration issues with the
Company’s stakeholders as and when
appropriate;
• setting and reviewing the executive
directors’ remuneration and benefits
including, but not limited to, base
salary, bonus, long term incentive plans
and retirement benefits;
• ensuring that all remuneration paid to
the executive directors is in accordance
with the Company’s previously
approved remuneration policy;
• ensuring all contractual terms on
termination, and any payments made,
are fair to the individual and the
Company;
• monitoring the policies and practices
applied in respect of the remuneration
of senior executives directly below
Board level and making
recommendations as appropriate;
• overseeing the Company’s long term
incentive plans for all employees; and
• ensuring that provisions relating to
disclosure of remuneration as set out in
the relevant legislation, the Financial
Conduct Authority’s Listing Rules and
the UK Corporate Governance Code
(the ‘Code’) are fulfilled.
Committee membership
Date of appointment
to the Committee
1 February 2015
Vanda Murray
1 March 2017
Lloyd Pitchford
1 May 2017
Stephan Nanninga
Vin Murria
1 June 2020
Maria Fernanda Mejía 23 December 2020
Meetings
Vanda Murray
Lloyd Pitchford
Stephan Nanninga
Vin Murria
Maria Fernanda Mejía*
Meetings
eligible
to attend
3
3
3
3
3
Meetings
attended
3
3
3
3
3
* Maria Fernanda Mejía stepped down from the board
on 2 February 2022
Compliance statement
This report has been prepared on
behalf of, and has been approved by,
the Board. It complies with the
Schedule 8 of the Large and Medium-
sized Companies and Groups
(Accounts and Reports) Regulations
2008 (as amended) (the ‘Regulations’),
the Code and the Financial Conduct
Authority’s Listing Rules and takes into
account the accompanying Directors’
Remuneration Reporting Guidance and
the relevant policies of shareholder
representative bodies.
In accordance with the Regulations,
at the 2022 Annual General Meeting
(‘AGM’) the Company will be asking
shareholders to vote on an advisory
vote on the Directors’ remuneration
report, excluding the Directors’
remuneration policy, as set out on
pages 130 to 140 which provides
details of the remuneration earned by
directors for performance in the year
ended 31 December 2021. The
directors’ remuneration policy was
approved by shareholders in a binding
vote at the 2021 AGM.
The responsibilities and
operation of the Committee
Committee membership role
and remit
The Committee comprises all of the
independent non-executive directors
of the Company. While neither the
Chairman nor the Chief Executive
Officer are members of the
Committee, they normally attend
meetings by invitation. The Director
of Group Human Resources, who acts
as secretary to the Committee, also
attends meetings. The Committee’s
terms of reference, which were
reviewed by both the Committee and
the Board in 2021, but remain
unchanged, are available on the
Company’s website, www.bunzl.com.
No director plays any part in
determining his or her remuneration.
During the year ended 31 December
2021, both the Chief Executive Officer
and the Chairman were consulted and
invited to attend meetings of the
Committee but were not present
during any part of the meeting when
their own remuneration was under
consideration.
The independent non-executive
directors who were members of the
Committee during 2021 are listed
on page 97.
The primary role of the Committee is
to determine the framework and
broad policy for the remuneration
of the Chairman, the executive
directors of the Board and the senior
management group directly below
Board level. The Committee proposes
the directors’ remuneration policy
for shareholder approval at least
every three years. It also governs the
implementation of the policy, ensuring
that the remuneration of the executive
directors and senior management
supports the sustainable performance
of the business and that it is aligned
with the Company’s shareholders’
interests. The Committee considers
market practice, shareholders’
views and the Group’s broader
remuneration arrangements when
setting the Group’s performance-
related incentives and ensures
compliance with UK corporate
governance good practice.
128
Bunzl plc Annual Report 2021
DIRECTORS’ REMUNERATION REPORT CONTINUED 2021 remuneration at a glance
Remuneration principles
• Materially differentiate
reward according to
performance.
• Reward competitively to
attract and retain the
best talent.
• Breakdown of fixed and
variable pay to be
appropriate to each role.
• Framework to be
transparent with clear
line of sight from
performance to individual
outcomes.
Summary of executive directors’ remuneration for the year
Chief Executive Officer
Frank van Zanten (£000)
Chief Financial Officer
Richard Howes (£000)
CEO CFO
1,422.9
1,217.1
621.7
1,597.2
1,610.7
1,643.5
1,271.4
1,244.6
1,244.6
1,001.3
1,139.7
287.3
931.1
929.4
958.1
627.2
645.0
645.0
Upper quartile
Median
Lower quartile
Positioning of total direct
remuneration compared
to external benchmarks
2020
2021
Max
2020
2021
Max
Salary + benefits + pension
Bonus
LTIP
• External benchmark data for total
remuneration of comparable
FTSE 11-100 CEO & CFO roles
Alignment of incentive outcomes in 2021
To motivate and reward the achievement of the Company’s strategic and operational objectives.
Alignment of performance and remuneration 2021
Total opportunity
Result
Annual
bonus
To motivate
and reward the
achievement of
the Company’s
strategic and
operational
objectives
Eps
Linked financial KPI: eps
RAOC
Linked financial KPI: RAOC and operating profit
Operating cash flow
Linked financial KPI: cash conversion
Non-financial strategic goals
Payable to the executive directors in relation
to agreed non-financial strategic goals
Frank van Zanten
Richard Howes
ESG goals
Total bonus opportunity/result
Frank van Zanten
35%
10%
10%
25%
20%
20%
LTIP
To motivate
and reward
performance
linked to long
term success
Eps
Linked financial KPI: eps
TSR
Linked financial KPI: dividend per share
and share price
Total LTIP opportunity/result
Richard Howes
LTIP A
50%
50%
Wider workforce elements of remuneration
c 21,000 employees
c.12,500
employees
receive a bonus
or variable pay
for performance
c.14,000
employees receive
retirement benefits
462
leaders
receive an
annual share
grant
c.11,500
employees are
eligible for
share save
100%
100%
100%
100%
Bunzl plc Annual Report 2021
129
DIRECTORS’ REPORT
Annual report on directors’ remuneration for 2021
This report sets out the elements of remuneration paid to, or earned by, the directors in respect of the financial year 2021.
Single total figure of remuneration 2021 (audited information)
Executive directors
Salary
£000
Taxable
benefits
£000
Bonus
£000
2021
2020
2021
2020
2021
2020
2021
Frank van Zanten 913.1
Richard Howes
598.8
Total
887.3
582.0
1,511.9 1,469.3
148.9
16.3
165.2
1,597.2
173.4
16.1
1,610.7
929.4
1,217.1
931.1 1,001.3
189.5 2,540.1 2,528.3 2,218.4
Pension
£000
2021
2020
2021
Sub-
total
of fixed
pay
£000
Sub-
total of
variable
pay
£000
2021
2021
Total
£000
2020
182.6
29.9
212.5
210.7 4,072.4 3,490.3 1,244.6 2,827.8
645.0 1,930.7
239.8 6,648.1 5,335.9 1,889.6 4,758.5
29.1 2,575.7 1,845.6
LTIP
£000
2020
621.7
287.3
909.0
Notes
a) The figures above represent remuneration earned as directors during the relevant financial year including the bonus of which the cash element, 50% of the bonus, is paid in the year following
that in which it is earned. The other 50% of the bonus shown above is deferred and conditionally awarded as shares under the rules of the Deferred Annual Share Bonus Scheme (‘DASBS’).
Shares relating to the 2020 deferred bonus were awarded in 2021 as shown in the table on page 139 and the shares relating to the 2021 deferred bonus will be awarded in 2022.
b) The annual bonus for 2021 was determined according to a formulaic calculation in respect of eps, RAOC and operating cash flow measures, while the Committee used its judgement to assess
performance of individual objectives (20% of the bonus) and ESG objectives (10% of the bonus).
c) Benefits provided for all executive directors are a car or car allowance and medical insurance coverage for them and their families. Frank van Zanten’s benefits are lower in 2021 and include
school fees, tax advice and international health insurance.
d) The long term incentives are in the form of awards under the LTIP granted in April and October 2018 and February and September 2019. The performance metrics for LTIP A were eps growth
and for LTIP B were eps growth and TSR, further details of which are on page 134. The share price used to calculate the value of LTIP A is the three-month average share price for the period
ending 31 December 2021 (2,738p) and for LTIP B it is the closing mid market share price on dates of vesting, 2,409p and 2,399p on 9 April 2021 and 8 October 2021 respectively for Frank van
Zanten and 2,434p on 12 April 2021 for Richard Howes. There are no dividend equivalents included in the LTIP figures. The portion of total LTIP figures (2021: £2,218,400 2020: £909,000) that
are attributable to share price growth are £204,768 for Frank van Zanten and £0 for Richard Howes in 2020 and £454,065 for Frank van Zanten and £154,264 for Richard Howes in 2021.
e) The figures shown in relation to 2020 for the LTIP have been restated from those figures shown in the 2020 Annual Report to reflect the difference between the relevant grant price and the
estimated value (using a three month average to December 2020) and the actual value of the LTIP share option awards on the date of vesting on 1 March 2021 and 31 August 2021 at the
closing mid-market share price of 2,255p and 2,636p respectively.
Non-executive directors
Peter Ventress – Chairman
Vanda Murray
Lloyd Pitchford
Stephan Nanninga
Vin Murria
Maria Fernanda Mejía
Total
Board fees
£000
2020
277.9
71.8
71.8
71.8
41.9
1.9
537.1
2021
368.0
73.2
73.2
73.2
73.2
73.2
734.0
Committee
Chair/SID
fees
£000
2020
–
38.0
20.0
–
–
–
58.0
2021
-
39.0
20.0
-
-
-
59.0
Taxable
payments/
expenses
£000
2021
2020
0.2
1.2
-
-
–
-
1.4
–
–
–
3.7
–
-
3.7
Total
£000
2020
277.9
109.8
91.8
75.5
41.9
1.9
598.8
2021
368.2
113.4
93.2
73.2
73.2
73.2
794.4
Notes
a) Taxable payments/expenses for non-executive directors are costs incurred for travel and accommodation in order to attend Board meetings. These costs have been grossed up to include the
tax payable
b) Peter Ventress was appointed Chairman on 15 April 2020 and prior to this date received fees for a non-executive director.
c) Maria Fernanda Mejía stepped down from the Board on 2 February 2022.
Payments for loss of office (audited information)
No payments were or are to be made to directors in respect of loss of office.
Payments to past directors (audited information)
Eugenia Ulasewicz was reimbursed for two flights from the USA, for herself and her partner, to attend a Board event that had been
rearranged due to the Covid-19 pandemic from 2020 to 2021. The total value of this benefit which includes tax payable was £30,819.
Brian May was granted performance shares and share options in 2018 and 2019 respectively as an executive director of Bunzl plc.
During 2021 11,650 LTIP B performance shares vested at a value of £280,231 on the vesting dates. In 2022 22,009 LTIP A share
options will vest and the estimated value on vesting, based on a three-month average share price to 31 December 2021, is £79,893.
In addition, Brian May exercised 49,152 LTIP A share options in 2021, these had a value of £105,215 on the dates of vesting.
130
Bunzl plc Annual Report 2021
DIRECTORS’ REMUNERATION REPORT CONTINUED Executive directors’ annual salary
As disclosed last year, executive directors’ salaries were reviewed with effect from 1 January 2021 in accordance with normal policy
and were increased taking into account the average salary increases for employees across the Group.
Frank van Zanten
Richard Howes
Salary from
1 January
2021
£913,078
£598,827
Salary from
1 January
2020
£887,345
£581,950
Increase in
salary 2020
to 2021
2.9%
2.9%
Executive directors’ salaries were also reviewed with effect from 1 January 2022 and the increases awarded are shown on page 138.
Executive directors’ external appointments
During 2021 Frank van Zanten served as a non-executive director of Ahold Delhaize NV. During the year, he retained fees of
€116,875 from Ahold Delhaize NV.
Non-executive directors’ fees
The Chairman’s fee is reviewed every two years with the most recent review having taken place with effect from 1 January 2020.
The fees for the non-executive directors were reviewed with effect from 1 January 2021 in accordance with the normal fees policy.
Chairman’s fee
Non-executive director fee
Supplements:
Senior Independent Director
Audit Committee Chair
Remuneration Committee Chair
With
effect from
January 2021
£368,000
£73,240
£19,000
£20,000
£20,000
Fees paid
in 2020
£368,000
£71,800
£18,000
£20,000
£20,000
Increase in
fees 2020
to 2021
–
2.0%
5.6%
–
–
The Chairman and non-executive directors’ fees were reviewed again with effect from 1 January 2022 and the increases awarded
are shown on page 138.
Performance against annual bonus targets (audited information)
The annual bonus plan and DASBS currently operate as set out in the policy section on page 142. The bonus measures for 2021
were Group eps, RAOC, operating cash flow performance, personal performance on individual objectives and specific objectives
related to ‘ESG’ matters.
The maximum bonus achievable was 180% of salary for Frank van Zanten and 160% for Richard Howes. The results for 2021 against
the targets set were as follows and the Committee did not exercise any discretion over these formulaic outturns:
Scorecard performance metric
Threshold
Group performance
Weighting
35%
10%
25%
20%
10%
eps (p)
% of target
% payable – Frank van Zanten
% payable – Richard Howes
RAOC %
% of target
% payable – Frank van Zanten
% payable – Richard Howes
Operating cash flow (£m)
% of target
% payable – Frank van Zanten
% payable – Richard Howes
Individual objectives
ESG objectives
Actual outturn
calculated at constant
exchange rates
% of maximum
169.5
121.8%
43.4%
126.5%
778.5
132.7%
100%
100%
100%
Target
139.2
100%
31.5%
28%
34.3%
100%
9%
8%
586.7
100%
22.5%
20%
Stretch
148.9
107%
63%
56%
36.3%
106%
18%
16%
616.0
105%
45%
40%
129.5
93%
15.8%
14%
32.3%
94%
4.5%
4%
557.4
95%
11.3%
10%
see details below
see details below
Notes
a) The actual outturn calculated at constant exchange rates is the actual result of the relevant measures retranslated at the exchange rates used in setting the target for that measure.
b) % payable represents the percentage of base salary payable.
Bunzl plc Annual Report 2021
131
DIRECTORS’ REPORT Non-financial strategic goals
Following a review of performance against specific personal objectives for 2021, the Committee determined the bonus percentages
payable to the executive directors in relation to the non-financial strategic goals. Performance was considered in the context of the
market environment and leadership displayed by the executive directors in successfully navigating through the continuing impact
of the Covid-19 pandemic. The specific objectives, and the related evaluation of performance, are shown in the table below.
Frank van Zanten – Chief Executive Officer
Non-financial objectives
Evaluation
• Effective positioning of the business
• After the volatility of 2020, 2021 balanced the capture of ongoing Covid-19 opportunities with
post Covid-19, including capturing the
opportunities (for instance in the areas
of sanitisation and cleaning and hygiene
trends) and implementing operating
platform improvements, including
streamlining warehouse footprints and
implementing technology tools that
drive further efficiencies.
supporting the base business to return back to almost pre-pandemic levels. There was a
significant increase in collaboration across the Group to manage challenges such as product
deflation and sharing best practices on specific new opportunity areas such as vaccination
supplies. Against this challenging backdrop, ongoing operating platform improvements have been
implemented, including significant consolidation activity in Asia Pacific, the UK and North America.
• Further develop talent by supporting
• The development of High Potential Talent has been a top priority across the Group in 2021, with all
high potentials as part of their
development plans with leadership
training programmes and other
support. Ensuring that high calibre
external talent is recruited where
appropriate to build a stronger
succession pipeline across the group.
areas operating to a consistent model for identifying leadership potential.
• A fully integrated programme of Leadership Development Programmes is now in place, including
the Group Senior Leaders’ Development Programme.
• Regions have recruited into leadership roles from the external market to expand the talent
pipeline. The diversity objectives are being carefully monitored by measuring number of females
and persons of colour considered in recruitment processes.
• Implement recommendations from the
external board evaluation including
training and further induction of the
newer board members.
• An action plan was agreed with the Chairman and proposed to the Board. In the context of limited
opportunity to travel, Knowledge Sharing sessions were held by each region to prepare the Board
for the October 2021 Strategic Plan meeting.
• Visits were organised for newer board members in the UK and North America.
• Continued development of digital tools
and capabilities including increasing the
average percentage of digital
transactions with the key customers and
suppliers (digital sales orders and
purchasing invoices processed
automatically).
• Global focus on growing digital orders with 2021 showing good progress. Excluding acquisitions,
digital orders have increased to 67% in 2021.
• The automatic receipt of supplier invoices has increased to 54% by the end of October 2021. This is
expected to improve further in future with the roll out of digital tools.
% of base salary awarded
% of maximum
34%
95%
Frank van Zanten – Chief Executive Officer
ESG objectives
Evaluation
• Development of strong content and
• The Capital Markets Day in October 2021 provided an opportunity to re-set the positioning of
communications materials (using video
and other vehicles) to further and better
engage with investors and further
improve our ESG perception.
Bunzl with a key focus on the Sustainability strategy and the broader ESG agenda. As part of this, a
series of new, easy to re-use materials and videos have been developed to position Bunzl as a
pro-active leader and a business that benefits from the increasing focus on Sustainability. The
relaunch of the Corporate website has been another key vehicle for re-communicating the key
messages.
• Define clear longer term climate change
goals during 2021.
• In March 2021, Bunzl became one of the first FTSE 100 companies to voluntarily report on the Task
Force for Climate Related Financial Disclosure (TCFD) and published a detailed paper on relevant
climate risks and opportunities.
• In the first half of 2021, as part of work to agree new sustainability commitments, new long-term
carbon reduction targets were set for scope 1 and 2 emissions, aligned to climate science and
Science Based Targets initiative (SBTi) guidance. These are:
– 25% improvement in carbon efficiency by 2025
– 50% improvement in carbon efficiency by 2030
• Bunzl joined the UN’s “Race to Zero” campaign in September 2021. Longer-term targets include
100% renewable energy procurement across the group by 2030 and Net Zero (across scope 1, 2
and 3) by 2050 at the latest. All new targets have been agreed by the leadership team and detailed
carbon reduction roadmaps have been developed by regions.
132
Bunzl plc Annual Report 2021
DIRECTORS’ REMUNERATION REPORT CONTINUED Frank van Zanten – Chief Executive Officer continued
ESG objectives
Evaluation
• Define sustainability commitments
around the 4 key focus areas that can be
achieved in the Group. These
commitments will include diversity and
inclusion, and will reflect the different
legislative contexts around the world.
• Clear commitments were launched around all four key pillars of the Sustainability strategy, using
the “Today, Tomorrow and Beyond” framework, and these are outlined in detail in the Strategic
and Sustainability sections of the Annual Report. For example, on Tailored Solutions:
– Today: We will support our customers to remove, replace and reduce single use plastics.
– Tomorrow: We will significantly increase the amount of recyclable, compostable or reusable
packaging supplied to our customers to help them meet their targets.
– Beyond: Every single packaging product and disposable in our range will be offered with an
alternative that is recyclable, reusable, compostable or renewable.
• On Diversity, Equity and Inclusion, our stated commitments are as follows:
– Encouraging more women into leadership roles through focused and targeted activities.
– Focusing on building a truly inclusive culture.
• To support these, we have been explicit about the (measurable) initiatives required to make real
progress, and there has been significant momentum behind these in 2021.
% of base salary awarded
% of maximum
16%
90%
Richard Howes – Chief Financial Officer
Non-financial objectives
• Deliver a successful Capital Markets Day
during 2021 including a successful
messaging of our accelerated
Sustainability strategy.
• Achieve the GDPR / information security
milestones for 2021.
Evaluation
• The Capital Markets Day in October 2021 was deemed to be a very successful event which led to
clear Share Price outperformance and a very strong positioning of Bunzl in terms of the core
business model, the Sustainability strategy and future growth.
• Focus on Information Security has increased significantly across the Group. In 2021, a practical
operating plan was developed and a robust governance process established for the delivery of
specific security actions.
• Substantial progress has been made in the area of data privacy, and this has been established
as a key focus for both the UK and Continental Europe businesses. Specialist resource has been
recruited and a rigorous reporting mechanism has been established.
• Coordinate and undertake a review of
• Significant progress has been made in understanding the profitability of key customers as the
the profitability of our largest customers
and come up with recommendations to
improve where possible.
% of base salary awarded
% of maximum
Richard Howes – Chief Financial Officer
ESG objectives
• Set stretching and achievable TCFD
targets with a clear action plan.
• Establish a high quality data collection
process to support our Sustainability
agenda and commitments.
• Relaunch the corporate website,
including highlighting the significant
progress made in the ESG area.
basis for constructive dialogue and partnership with customers moving forward.
29%
90%
Evaluation
• A clear Carbon roadmap has been developed in partnership with the regional leadership teams,
and has been communicated externally. The roadmap includes concrete plans for 2022-2025
with clear emission reductions in commercial vehicles (company cars and vans), electricity
(renewable electricity, LED, facility consolidation, on-site solar) and natural gas.
• This was a very challenging undertaking given the decentralised structure of the Group and the
fragmented nature of the data. Multiple data capture systems were identified, data mapped
against 2019 packaging data using common templates to ensure consistency.
• A top-down review was carried out and reconciliation conducted as appropriate.
• The new Corporate website was launched on time in December 2021 and is a significant step up
in quality and functionality, mirroring the success of the Capital Markets Day. Usage statistics
have been monitored carefully and this will continue in 2022. Highlights include a significant
uptake in users per day and longer dwell time than with the previous website.
% of base salary awarded
% of maximum
14%
90%
When assessing performance and outcomes the Committee was mindful of the Company’s broader achievements and stakeholder
experience. The outcomes are considered appropriate in light of the Company’s exceptional financial and operational performance
delivered in the most challenging of conditions. Accordingly the total payments under the annual bonus plans were:
Frank van Zanten
Richard Howes
Total bonus payment (cash and deferred shares) as a % of salary
2021
%
176.4
155.2
2020
%
180.0
160.0
2019
%
107.1
–
2018
%
126.7
–
2017
%
109.2
–
The monetary values of the bonus payments for 2021 and 2020 are included in the table on page 130. The deferred shares portion
of the bonus is required to be held under the DASBS rules for a period of three years and is subject to continued employment.
Bunzl plc Annual Report 2021
133
DIRECTORS’ REPORT LTIP grants/awards with performance periods ending in 2021 (audited information)
Executive share options – LTIP Part A
In 2019 Executive share option awards were granted in two tranches, the first vested on 28 February 2022 and the second are due
to vest on 11 September 2022. The Committee assessed the performance of the Company against the relevant performance
condition and no discretion was exercised to override the formulaic outcomes including as a result of the share price movement
over the performance period:
LTIP Part A – 28 February 2019 and 11 September 2019 grants
Performance measure
Vesting schedule
Eps growth (over three year
period to 31 December 2021)
% payable at target
25% vesting for threshold performance
100% vesting for maximum performance
Threshold
target (5% p.a.
compounded)
Maximum
target (8% p.a.
compounded)
15.8%
25%
26.0%
100%
Frank van Zanten
Richard Howes
Date of grant
Exercise price
Number of
awards granted
28 February 2019
11 September 2019
28 February 2019
11 September 2019
2,375
2,107
36,273
40,887
–
–
Actual eps
growth
% vesting
(max 100%)
25.49%*
96.43%
Vesting
outcome
96.43%
96.43%
–
–
Estimated
value of
award vesting
£126,974
£248,793
–
–
Note
The estimated values of grants vesting are based on the difference between the exercise price and the average of the Company’s closing mid-market share price for the three month period
ended 31 December 2021 (2,738p) and are the same as the figures included in the single total figure of remuneration table on page 130.
* The eps growth for the three years to 31 December 2021 has been calculated by (i) restating the eps for the year ended 31 December 2021 on a proforma basis under IAS 17 in order to allow a
direct comparison with the eps for the year ended 31 December 2019; and (ii) adjusting the eps growth to exclude two businesses, one in France and one in the UK, that were disposed of
during the period of calculation. The Committee approved the adjustment relating to the disposals on the basis that the directors and the other share option recipients should not be
penalised for the decision to dispose of non-core businesses.
Performance shares – LTIP Part B
Awards of performance shares were made to Frank van Zanten on 9 April 2018 and 8 October 2018 under the 2014 LTIP and
vested during 2021. The Committee assessed the performance of the Company against the relevant performance conditions
and no discretion was exercised to override the formulaic outcomes including as a result of the share price movement over the
vesting period:
LTIP Part B – 9 April and 8 October 2018 awards
Performance measure
Threshold
target
(6% p.a.
compounded)
Maximum
target
(12% p.a.
compounded)
Vesting
schedule
Actual eps
growth
% vesting
(50% of award)
Eps growth (over three year period
to 31 December 2020)
25% vesting for threshold performance
100% vesting for maximum performance
19.1%
40.5%
40.91%*
100%
% payable
Performance measure
TSR relative to comparator
group of bespoke peer
companies
% payable
Frank van Zanten
Richard Howes
12.5%
50%
Performance
period
Vesting
schedule
Threshold
target
(median)
Maximum
target
(upper quartile)
Actual TSR
% vesting
(50% of award)
1 April 2018 to
31 March 2021
25% vesting for
threshold performance,
8.7%
15.5 out of 30
45.3%
8.0 out of 30
23.6%
10.43 out of 30
1 October 2018 to
30 September 2021
100% vesting for
maximum performance
4.6%
17.5 out of 34
53.9%
9 out of 34
19.0%
14.82 out of 34
75.71%
48.68%
12.5%
50%
Date of grant
9 April 2018
8 October 2018
11 September 2019
Number of
shares granted
Vesting
outcome – eps
Vesting
outcome – TSR
Value of
award vesting
22,510
20,464
46,824
100%
100%
100%
75.7%
48.7%
75.7%
£476,404
£364,936
£1,001,275
Note
a) Included in the single total figure of remuneration on page 130 is the value of these vested awards for Frank van Zanten at the closing mid-market share price on the dates of vesting, 9 April
2021 and 8 October 2021, which were 2,409p and 2,399p respectively and for Richard Howes at the closing mid-market share price on 12 April 2021 (being the first dealing day following the
vesting on 10 April 2021) which was 2,434p.
b) As detailed on page 109 of the 2019 Annual Report and Accounts, Richard Howes received an award on 11 September 2019 to compensate him for unvested awards under his previous
employer’s long term incentive scheme.
* The eps growth for the three years to 31 December 2020 has been calculated by (i) restating the eps for the year ended 31 December 2020 on a proforma basis under IAS 17 in order to allow a
direct comparison with the eps for the year ended 31 December 2017; and (ii) adjusting the eps growth to exclude two businesses, one in France and one in the UK, that were disposed of
during the period of calculation. The Committee approved the adjustment relating to the disposals on the basis that the directors and the other share option recipients should not be
penalised for the decision to dispose of non-core businesses.
134
Bunzl plc Annual Report 2021
DIRECTORS’ REMUNERATION REPORT CONTINUED Total pension entitlements (audited information)
Frank van Zanten
Richard Howes
Value of cash allowance
including any company
Defined Contribution in 2021
£182,616
£29,941
Total pension
2021
£182,616
£29,941
Note
Chief Executive Officer Frank van Zanten received a pension allowance of 20% of base salary in 2021. In 2022 this has been reduced to 14% and will continue to reduce as outlined in the policy
table. As Chief Financial Officer, Richard Howes receives a pension allowance of 5% of base salary.
LTIP grant policy
Conditional awards of executive share options and performance shares have historically been granted twice a year to executive
directors and other senior executives. Executive share option awards have normally been granted in February or March and August
or September dependent on the date of announcement of the Company’s results. For the first time in 2021 a single Restricted
Share Award was made on 21 April 2021 under the LTIP Part B in accordance with the policy as approved at the 2021 AGM.
LTIP interests awarded during the financial year (audited information)
Frank van Zanten
Richard Howes
Plan
Date of grant
Basis of award
RSA 21 April 2021
RSA 21 April 2021
125% of salary
100% of salary
Face value
£000
£1,141.3
£598.8
Number of
shares
Performance
period end date
45,859
24,060
21 April 2024
21 April 2024
Notes
a) The face value of the awards is calculated using the average of the closing mid-market share price on the five days prior to the grant of the award. The RSA options were awarded under the
LTIP Part B on 21 April 2021 at a value of 2,488.8p per share.
b) The RSA is subject to an underpin, as detailed in the policy table. On the vesting date if the underpin is met 100% of the award will vest. Alternatively, if significant elements of the underpin are
not met the award may be scaled back or lapse in exceptional circumstances.
Performance underpins
Restricted Share Award–LTIP 21 April 2021
The extent to which the Restricted Share Award awarded under the LTIP to the Company’s executive directors, Executive
Committee members and selected key employees in 2021 may vest is subject to a performance ‘underpin’ which will be closely
reviewed by the Committee before these awards vest in 2024. Further details of the performance ‘underpin’ are on page 143 in the
Remuneration policy. Vested awards are then subject to a further two-year holding period.
Shareholder dilution
In accordance with The Investment Association Principles of Remuneration, the Company can satisfy awards to employees under all
its share plans with new issue shares or shares issued from treasury up to a maximum of 10% of its issued share capital (adjusted
for share issuance and cancellation) in a rolling 10 year period. Within this 10% limit, the Company can only issue (as newly issued
shares or from treasury), 5% of its issued share capital (adjusted for share issuance and cancellation) to satisfy awards under
executive (discretionary) plans.
As well as the LTIP, the Company operates various all employee share schemes as described on page 144. Newly issued shares are
currently used to satisfy the exercise of options under the Sharesave Scheme and the International and Irish Sharesave Plans.
Awards under the LTIP of executive options and performance shares are principally satisfied by shares delivered from the
Employee Benefit Trust which buys shares on the market, unless security laws in relevant jurisdictions prevent this.
Limit on awards
10% in any rolling 10 year period
5% in any rolling 10 year period (executive (discretionary) plans)
Cumulative options and performance shares
granted as a percentage of issued share capital
as at 31 December 2021
1.1%
0.2%
Statement of directors’ shareholding and share interests (audited information)
As at 31 December 2021, each of the executive directors and their connected persons have a shareholding as follows:
Frank van Zanten
Richard Howes
Requirement for share ownership
as a percentage of salary (31 December 2021)
Actual share ownership as a percentage
of salary at 31 December 2021 at the closing
mid-market price (2,885p)
300%
200%
617%
224%
Note
The shareholding requirement for the Chief Executive Officer, Frank van Zanten increased to 300% of salary under the remuneration policy approved at the 2020 AGM. Shares contributing to the
share ownership % include deferred shares held under the DASBS (net of tax) but not any unvested or vested but unexercised LTIP awards.
Bunzl plc Annual Report 2021
135
DIRECTORS’ REPORT Interests in shares and share options (audited disclosure)
The interests of the directors, and their connected persons, in the Company’s ordinary shares and share options at 31 December
2021 were:
Shares (LTIP B and RSA)
Options (LTIP Part A and Sharesave)
Total interests held
Unvested and
subject to
performance
conditions
(LTIP Part B)
119,202
95,478
Unvested
(DASBS)
83,665
31,149
Unvested and
subject to
underpin
(RSA)
Unvested and
subject to
performance
conditions
Unvested
subject to
continued
employment
45,859
24,060
162,481
55,956
1,463
1,010
Vested
but not
exercised
155,374
721,160
237,770
2,608
3,000
4,000
Frank van Zanten
Richard Howes
Peter Ventress
Vin Murria
Vanda Murray
Lloyd Pitchford
Stephan Nanninga
Maria Fernanda Mejía
Owned
outright
153,116
30,117
2,608
–
3,000
4,000
–
–
Notes
a) No changes to the directors’ ordinary share interests shown in this remuneration report have taken place between 31 December 2021 and 28 February 2022.
b) LTIP A share options are structured as market value options and LTIP B performance shares are structured as nil-cost options.
Performance graph and table
Schedule 8 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 requires that the
Company must provide a graph comparing the TSR performance of a hypothetical holding of shares in the Company with a broad
equity market index over a 10 year period. The Company’s TSR performance against the FTSE 350 Support Services Sector,
considered to be the most appropriate comparator group, over a 10 year period commencing on 4 January 2011 is shown below.
)
d
e
s
a
b
e
r
(
)
£
(
e
u
a
V
l
450
400
350
300
250
200
150
100
50
0
Bunzl
FTSE 350 Support Services
Source: Datastream (a Refinitiv product)
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Chief Executive Officer’s single figure history
The table below summarises the Chief Executive Officer’s single total figure of remuneration, annual bonus and long term incentive
payout as a percentage of maximum opportunity for 2021 and the previous nine years.
Single total figure of
remuneration £000
Annual bonus payment
as a percentage of
maximum
Long term incentive
vesting as a percentage of
maximum
LTIP Part A
(options)
LTIP Part B
(performance
shares)
2012
2013
2014
2015
2016
MR
2016
FvZ
2017
2018
2019
2020
2021
3,502.9 4,387,6 4,766.8 3,937.9 2,353.3 1,492.0 2,812.0 2,828.8 2,769.4 3,490.3
4,072.4
67%
91%
85%
64%
0%
67%
73%
70%
60%
100%
98%
100%
100%
100%
100%
100%
0%
100%
100%
100%
100%
96.4%
45%
62%
89%
69%
82%
0%
69%
54%
63%
45%
81%
Notes
a) The data for 2016 includes the amounts relating to Michael Roney (‘MR’) from 1 January 2016 to 19 April 2016 and also includes the LTIP awards made to him that vested in the period from
20 April to 31 December 2016. There was no bonus award for Michael Roney in relation to 2016.
b) The data for 2016 also includes the amounts relating to Frank van Zanten (‘FvZ’) from 20 April to 31 December 2016 including the bonus award for that period and the international relocation
package with accommodation benefit support, but excludes the LTIP awards made to him in his previous role that vested during the period from 20 April to 31 December 2016.
c) All years prior to 2016 relate to Michael Roney.
d) The single total figure of remuneration in relation to 2020 has been restated from the figure shown in the 2020 Annual Report to reflect the difference between the grant price and the
estimated value of vesting using the three month average share price to 31 December 2020 and the value of the relevant LTIP awards on the actual date of vesting as detailed in Note e) to the
table of the single total figure of remuneration 2021 on page 130.
136
Bunzl plc Annual Report 2021
DIRECTORS’ REMUNERATION REPORT CONTINUED
Percentage change in each director’s remuneration
The table below sets out the change between 2020 and 2021 and 2019 and 2020 in the salary, benefits, and bonus of all directors
and employees of the legal entity which employs the Chief Executive Officer, Bunzl plc. Where it is not possible to compare
employees from Bunzl plc between years due to employees joining or leaving the Company or moving role, these employees have
been removed from the data to prevent distortion.
Chief Executive Officer – Frank van Zanten
Chief Financial Officer – Richard Howes
Chairman – Peter Ventress
Non-executive director – Vanda Murray
Non-executive director – Lloyd Pitchford
Non-executive director – Stephan Nanninga
Non-executive director – Vin Murria
Non-executive director – Maria Fernanda Mejía
Average of employees in Bunzl plc
Salary/Fees
Benefits
Bonus
2020
3.0%
3.0%
3.1%
0.9%
1.1%
n/a
n/a
n/a
3.2%
2021
2.9%
2.9%
0.0%
2.2%
1.6%
2.0%
2.0%
2.0%
3.1%
2020
(42%)
n/a
n/a
(100%)
(100%)
(64%)
n/a
n/a
(25%)
2021
(14.1%)
1.2%
100%
100%
0.0%
(100%)
0.0%
0.0%
33.2%
2020
73%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
162%
2021
0.8%
(0.2%)
n/a
n/a
n/a
n/a
n/a
n/a
(15.9%)
Notes
a) Benefits are annualised.
b) Bunzl plc employees exclude any increases due to a change of role that occurred during either year.
c) Benefits for the non-executive directors are costs incurred for travel and accommodation in order to attend Board meetings in London and therefore have increased in 2021 compared to
2020 due to less Covid-19 travel restrictions.
d) The increase for benefits in 2021 for the employees in Bunzl plc is due to a higher premium for health insurance and a greater number of employees having health insurance as a benefit.
Chief Executive Officer pay ratio
The table below sets out the comparisons between the 25th, median, and 75th percentile employees in the UK, with reference to
31 December 2021, and the Chief Executive Officer’s salary and total remuneration as detailed in the single figure table. To calculate
these ratios, the Company has used Option A and determined full time equivalent total remuneration as this is the most statistically
robust method. This includes scaling up salary for part time employees. Each employee’s pay and benefits are calculated using each
element of employee remuneration consistent with the Chief Executive Officer and no element of pay has been omitted.
Adjustments have been made to include the bonuses paid to employees in 2021, compared to the Chief Executive Officer’s bonus
due to be paid in 2022, in respect to performance in 2021. Ratios compared to salary remain consistent to the previous two years
reported. The total remuneration ratio has increased due to the strong performance of the Group impacting the Chief Executive
Officer’s variable pay as well as an increase in the share price reflected in the value of the Chief Executive Officer’s LTIPs.
Salary
Total remuneration
Salary
Total remuneration
Salary
Total remuneration
Chief Executive Officer
25th percentile employee
Median employee
75th percentile employee
CEO single
figure
£913,078
£4,072,387
£887,345
£3,490,306
£861,500
£2,769,400
Year
2021
2021
2020
2020
2019
2019
Method
Option A
Option A
Option A
Option A
Option A
Option A
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
43:1
181:1
44:1
161:1
44:1
133:1
37:1
153:1
38:1
137:1
38:1
111:1
27:1
103:1
27:1
90:1
27:1
75:1
Salary
Total remuneration
£913,078
£21,200
£24,442
£34,000
£4,072,387
£22,549
£26,627
£39,592
Note
The single total figure of remuneration in relation to 2020 has been restated from the figure shown in the 2020 Annual Report to reflect the difference between the grant price and the estimated
value of vesting of the relevant LTIP awards on the actual date of vesting as detailed in Note e) to the table of the single total figure of remuneration 2021 on page 130.
Relative importance of spend on pay
The table below shows a comparison between the overall expenditure on pay and dividends paid to shareholders as well as the
adjusted earnings per share for 2020 and 2021 (as stated in Note 24, Note 20 and Note 3 to the consolidated financial statements
on pages 199, 194 and 171 respectively).
£m
Overall expenditure on pay
Dividends paid in the year
Adjusted earnings per share (p)
2021
844.0
180.4
162.5
2020
844.3
171.5
164.9
Percentage
change
–
5.2%
(1.5)%
Notes
a) Overall expenditure on pay excludes employer’s social security costs.
b) The percentage change in overall expenditure on pay includes the impact of changes in exchange rates from 2020 to 2021, details of which are referred to in the Chief Executive Officer’s
review on page 13 and in the Financial review on page 75.
c) Adjusted earnings per share is used as a comparator as it is a key financial indicator.
Bunzl plc Annual Report 2021
137
DIRECTORS’ REPORT Remuneration arrangements for 2022
Salary
The salary increases for the executive directors for 2022, which are in line with increases that have been implemented for the
broader leadership team, are as follows:
Frank van Zanten
Richard Howes
Salary from
1 January 2022
£939,600
£616,193
Salary from
1 January 2021
£913,078
£598,827
Increase
in salary
2021 to 2022
2.9%
2.9%
2022 bonus measures
The structure for Frank van Zanten and Richard Howes’ annual bonus for 2022 is a balanced scorecard of performance measures,
based on eps, RAOC, operating cash flow and specified strategic goals. The weighting of these measures remains 70% financial
measures and 30% non-financial measures (20% strategic goals and 10% ESG goals). The relevant performance points are:
threshold; target; and maximum amount (the level at which the bonus for that measure is capped). These performance points are
determined at the start of the year. No elements of the bonus are guaranteed. As in previous years, financial performance
measures, including profit targets, are commercially sensitive and therefore are not disclosed until the following year.
Performance measures and pricing basis for long term incentives to be awarded in 2022
Grants of restricted share awards to be made to executive directors and senior executives will not be subject to performance
measures but vesting will be subject to the achievement of an underpin as set out in the policy table. The Committee conducts an
annual review of the underpin to ensure there is no reason why the shares should not vest in full at the end of three years. In 2022
Frank van Zanten will be granted a restricted share award to the value of 125% of his salary and Richard Howes will be granted a
restricted share award to the value of 100% of his salary. In respect of determining the number of awards to be granted in 2022, the
60-day average share price preceding the grant date will be used for such purposes.
The performance of the RSA is measured with reference to an underpin as stated in the policy table on page 143. In assessing the
underpin, in normal circumstances the Committee may consider the Group’s overall performance, including financial and non-
financial performance over the course of the vesting period and any material risk/regulatory failures identified. Financial
performance may include elements like revenue, profitability, cash generation, and return on capital. Non-financial performance
relates to strategic priority areas focused on delivering long term success of the Company and implementing the Group’s long term
strategy. These include, for instance, making operating model improvements, own brand development, acquisition growth, building
on our competitive advantage, digital and technology improvements, focus on ESG, including sustainability, employee satisfaction
and managing risk in the business.
Chairman’s and non-executive directors’ fees for 2022
The Chairman’s fee is reviewed every two years and the non-executive directors’ fees are reviewed annually with the most recent
reviews for both taking effect from 1 January 2022. The current fee structure for the Chairman and the non-executive directors is
shown below:
Chairman’s fee
Non-executive director fee
Supplements:
Senior Independent Director
Audit Committee Chair
Remuneration Committee Chair
With effect from
1 January 2022
£386,000
£75,000
Fees paid in 2021
£368,000
£73,240
£20,000
£21,000
£21,000
£19,000
£20,000
£20,000
Increase in fees
2021 to 2022
4.9%
2.4%
5.3%
5.0%
5.0%
138
Bunzl plc Annual Report 2021
DIRECTORS’ REMUNERATION REPORT CONTINUED Additional information on directors’ interests (audited information)
Details of the executive directors’ interests in outstanding share awards under the DASBS, LTIP and all employee share plans are set
out below.
Deferred share awards as at 31 December 2021
The awards granted to each director of the Company and any director with an interest in the Company under the DASBS are set out
in the table below. Further information relating to the deferred bonus is provided on page 142.
Awards
(shares)
held at
1 January
2021
22,789
22,328
24,670
–
9,774
–
Shares
awarded
during
2021
36,667
21,375
Shares
vested
during
2021
24,329
Total number
of awards
(shares) at
31 December
2021
–
22,328
24,670
36,667
9,774
21,375
Normal
vesting
date
01.03.21
01.03.22
02.03.23
08.03.24
02.03.23
08.03.24
Share
price
at grant
p
1,955
2,373
1,870
2,178
1,870
2,178
Market
price
at vesting
p
2,255
Monetary
value of
vested
awards
£000
549
Frank van Zanten
Richard Howes
Notes
a) The deferred element of the 2021 annual bonus plan as shown on page 133 is not included in the table above as the appropriate number of shares have not yet been awarded. No shares
lapsed during the year.
b) The deferred shares vested during 2021 include the dividend equivalents.
c) The deferred shares awarded during 2021 relate to 50% of the bonus for 2020 and are structured as nil-cost options, with the number of shares being determined by reference to the mid
market closing share price on the day preceding the grant date.
d) Frank van Zanten exercised 24,329 deferred shares granted in 2018 on 4 March 2021 with total gain of £541,642.
LTIP
The tables below show the number of executive share options and performance shares held by the executive directors under the
LTIP during 2021 with shaded details indicating options or shares that have vested.
Executive share options – LTIP Part A
Frank van Zanten
Total
Richard Howes
Total
Options held at
1 January
2021
42,636
34,946
42,782
35,010
36,273
40,887
48,225
37,096
317,855
31,627
24,329
55,956
Grant
date
02.09.16
02.03.17
01.03.18
31.08.18
28.02.19
11.09.19
10.03.20
09.09.20
10.03.20
09.09.20
Exercise
price
p
2,336
2,335
1,955
2,389
2,375
2,107
1,840
2,392
1,840
2,392
Options
exercisable
between
Options
held at
31 December
2021
02.09.19-01.09.26
02.03.20-01.03.27
01.03.21-29.02.28
31.08.21-30.08.28
28.02.22-27.02.29
11.09.22-10.09.29
10.03.23-09.03.30
09.09.23-08.09.30
10.03.23-09.03.30
09.09.23-08.09.30
42,636
34,946
42,782
35,010
36,273
40,887
48,225
37,096
317,855
31,627
24,329
55,956
Notes
a) The mid-market price of a share on 31 December 2021 was 2,885p and the range during 2021 was 2,150p to 2,968p.
b) Executive share options are structured as market value options.
Performance shares – LTIP Part B
Awards
(shares)
held at
1 January
2021
22,510
20,464
22,072
27,817
42,936
26,377
162,176
46,824
59,112
22,527
13,839
142,302
Conditional
shares
awarded
during
2021
0
0
Award
date
09.04.18
08.10.18
08.04.19
07.10.19
06.04.20
05.10.20
11.09.19
11.09.19
06.04.20
05.10.20
Frank van Zanten
Total
Richard Howes
Total
Note
Performance shares are structured as nil-cost options.
Bunzl plc Annual Report 2021
Market
price per
share
at award
p
Lapsed
awards
(shares)
during
2021
Exercised
awards
(shares)
during
2021
Market
price
per share
at exercise
p
Awards
(shares)
held at
31 December
2021
Value at
exercise
£000
2,090
2,299
2,537
2,013
1,550
2,523
2,059
2,059
1,550
2,523
2,734
5,252
–
–
–
–
7,986
5,687
–
–
–
5,687
19,776
15,212
–
–
–
–
34,988
41,137
–
–
–
41,137
2,384
2,398
–
–
–
–
2,456
–
–
–
471
365
–
–
–
–
1,010
–
–
–
–
–
22,072
27,817
42,936
26,377
119,202
–
59,112
22,527
13,839
95,478
139
DIRECTORS’ REPORT
Restricted Share Awards
Frank van Zanten
Total
Richard Howes
Total
Awards
(shares)
held at
1 January
2021
–
0
–
0
Conditional
shares
awarded
during
2021
45,859
45,859
24,060
24,060
Market
price per
share
at award
p
Lapsed
awards
(shares)
during
2021
Exercised
awards
(shares)
during
2021
Market
price
per share
at exercise
p
Awards
(shares)
held at
31 December
2021
Value at
exercise
£000
Award
date
21.04.21
2,488.8
21.04.21
2,488.8
–
0
–
0
–
0
–
0
–
–
–
–
45,859
45,859
24,060
24,060
Note
Retricted share awards are structured as nil-cost options.
All employees share scheme
The table below shows the number of share options granted to the executive directors under the Sharesave Schemes. Details of the
Sharesave Schemes are set out on page 144.
Sharesave Schemes
Frank van Zanten
Richard Howes
Options at
1 January
2021
964
959
–
–
Grant
date
29.03.16
27.03.18
31.03.21
31.03.21
Exercise
price
p
1,556
1,564
1,781
1,781
Options
exercisable
between
Options at
31 December
2021
01.05.21-31.10.21
01.05.23–31.10.23
01.05.24–31.10.24
01.05.24–31.10.24
0
959
504
1,010
Advisers to the Remuneration Committee
In carrying out their responsibilities, the Committee seeks external remuneration advice as necessary. During the year the
Committee received advice from Willis Towers Watson (‘WTW’) and FIT Remuneration Consultants LLP (‘FIT’). WTW provided
external survey data on directors’ remuneration and benefit levels.
The fees payable to each adviser, based on hourly rates, were: £17,520 (WTW), and £94,223 (FIT) respectively for such work
undertaken in 2021. Advisers are appointed by the Committee and reviewed periodically. A tender exercise was conducted in 2020
and FIT were selected to provide independent advice to the Remuneration Committee on senior executive pay matters. The
Committee conducts regular reviews of the effectiveness of the advisers and is satisfied that they remain objective and
independent.
Statement of voting at the 2021 AGM for the remuneration report and the remuneration policy
The remuneration report and remuneration policy received the following shareholder votes at the 2021 AGM, held on 20th April.
This being the year they were last voted on by shareholders:
Remuneration report
Remuneration policy
Votes cast
Votes for
273,780,764
273,777,510
262,042,684
258,507,726
% of shares
voted
Votes
against
% of shares
voted
95.71%
94.42%
11,738,080
15,269,784
4.29%
5.58%
Votes
withheld
3,879,257
3,880,511
Notes
a) The votes ‘For’ include votes given at the Company Chairman’s discretion.
b) A vote ‘Withheld’ is not a vote in law and is not counted in the calculation of the votes ‘For’ or ‘Against’ the resolution. Votes ‘For’ and ‘Against’ are expressed as a percentage of the votes cast.
140
Bunzl plc Annual Report 2021
DIRECTORS’ REMUNERATION REPORT CONTINUED Directors’ remuneration policy
Following its approval in 2021 the overall approach to remuneration remains consistent and is designed to ensure that the policy
continues to support the performance of the business and addresses the requirements of the UK Corporate Governance Code
(‘the Code’).
Objectives of the policy
The proposed directors’ remuneration policy, effective from the date of the 2021 AGM, continues to meet the following objectives:
• Clarity: maintain transparency, clear alignment with shareholder value and promotion of longer term, sustained performance.
For example, the restricted share plan encourages a focus on the longer term success of the business;
• Predictability: continue to ensure that targets are stretching (but realistic), the quantum of reward reflects both Company and
individual performance and there are appropriate award caps and Committee discretions in place. For example, the underpin is
broad and encourages the Committee to focus on ‘in the round’ performance;
• Support for the Company’s business strategy: for example, aligning the executive directors’ and management’s incentives with
the Company’s growth objectives;
• Simplicity: ensure that the remuneration structures avoid unnecessary complexity. For example, the restricted share plan has
only a single annual grant of shares;
• Risk is appropriately managed: variable pay should drive performance within the Company’s risk appetite and encourage a
prudent and balanced approach to the business;
• Alignment to culture: the remuneration principles encourage the behaviour from the executive directors that the Committee
expects to see throughout the business; and
• Proportionality: the link between individual awards, the delivery of strategy and long term performance of the Group is clear.
In setting the remuneration policy for the executive directors, the Committee also takes into consideration a number of different
factors:
• the Committee applies the principles set out in the Code and also takes into account best practice guidance issued by the major
UK institutional investor bodies, the Financial Conduct Authority (including the provisions of any applicable remuneration codes)
and other relevant organisations;
• the Committee has overall responsibility for the remuneration policies and structures for employees of the Group as a whole and
it reviews remuneration policy on a Group wide basis. When the Committee determines and reviews the remuneration policy for
the executive directors it considers and compares it against the pay, policy and employment conditions of the rest of the Group to
ensure that there is alignment between the two; and
• the Committee considers the external market in which the Group operates and uses comparator remuneration data from time to
time to inform its decisions. However, the Committee recognises that such data should be used as a guide only (data can be
volatile and may not be directly relevant) and that there is often a need to phase-in changes over a period of time.
The Committee’s overall policy, having had due regard to the factors above, continues to be for a proportion of total remuneration
to be based on variable pay. This is achieved by setting base pay and benefits by reference to mid-market levels, with annual bonus
linked to the achievement of demanding performance targets and long term incentives which are designed to align the interests of
the directors with those of shareholders and the long term sustainable success of the business.
Bunzl plc Annual Report 2021
141
DIRECTORS’ REPORT Remuneration policy for executive directors
The following table summarises each element of the remuneration policy for the executive directors, explaining how each element
operates and links to the corporate strategy. It remains unchanged from that published in last year’s report.
Base salary
Purpose
Operation
• Recognise knowledge, skills and experience as well as reflect the scope and size of the role.
• Reward individual performance without encouraging undue risk.
• Paid in 12 equal monthly instalments during the year.
• Normally reviewed annually in December (with any changes usually effective from January). An out-of-cycle review
may be conducted if the Committee determines that it is appropriate.
• Takes into consideration a number of factors including (but not limited to) individual and Group performance, the
size and scope of the individual’s responsibilities, salary increases across the Group, typical salary levels for
comparable roles using appropriate comparator groups, for example similarly sized companies with a large
international presence.
• Pensionable.
Maximum
potential value
• While there is no maximum salary level, salary increases are normally considered in relation to the salary increases
of other employees in the Group and performance of the individual. Higher salary increases may be made under
certain circumstances, such as when there has been a change in role or responsibility, a major market movement or
when a director has been appointed to the Board at a lower than typical salary initially. The annual salaries for the
executive directors for 2021 and 2022 are set out on pages 131 and 138 respectively.
Performance metrics
• While there are no performance conditions attached to the payment of base salary, individual performance in the
role, as well as the performance of the Group and achievements related to environmental, social and governance
issues, are all taken into consideration.
Annual bonus
Purpose
Operation
• Incentivise the attainment of annual corporate targets.
• Retain and reward high performing employees.
• Align with shareholders’ and wider stakeholders’ interests.
• Bonus awards are based on performance targets and objectives set by the Committee for the financial year.
• At the end of the performance period, the Committee assesses the extent to which the performance measures have
been achieved. The level of bonus for each measure is determined by reference to the actual performance against
the relevant performance targets.
• Up to half the bonus is paid in cash and the remainder in shares (with the shares normally deferred for three years
under the Deferred Annual Share Bonus Scheme (‘DASBS’)) in respect of which dividend equivalents may apply to
the extent that such deferred awards vest. If a director resigns during the period of deferral any outstanding DASBS
awards would normally lapse.
• Malus and clawback provisions apply to the cash element of the bonus and awards made under DASBS to allow the
recoupment of bonus for three years from the end of the relevant performance year. They would be enforced in the
event of material misstatement, significant failure of risk control, serious misconduct, corporate failure (entailing the
appointment of an administrator or liquidator) or serious reputational damage, when it is clear that the issue has
been caused by a management failure to which the relevant individual has made a direct and material contribution.
• Bonus awards are non-pensionable and are payable at the Committee’s discretion.
Maximum
potential value
• The annual bonus policy maximum is 180% of base salary.
• The annual target bonus opportunity is normally set at 50% of the maximum.
• The level of annual bonus for threshold performance is up to 25% of the maximum.
Performance metrics
Metrics will be set each year by the Committee taking into account the Company’s key strategic objectives for the year.
For example, bonus metrics may include:
• Financial measures chosen to align bonus outcomes with the underlying financial performance of the business, such
as profit, return on average operating capital (‘RAOC’) and cash flow;
• Non-financial measures are linked to the achievement of personal goals or certain specified strategic goals, including
environmental, social and governance matters;
• The performance metrics and targets are reviewed each year to ensure that they remain appropriate. The
Committee retains the discretion to set alternative metrics as appropriate; and
• The specific targets will be disclosed on a retrospective basis following the end of the financial year unless they are
deemed to be commercially sensitive.
The Committee sets targets that are appropriately stretching in the context of the business outlook and taking into
account internal and external factors. Targets are set to ensure that there is appropriate alignment between
stakeholder outcomes and to ensure that they do not drive inappropriate behaviours or unacceptable levels of risk
taking.
142
Bunzl plc Annual Report 2021
DIRECTORS’ REMUNERATION REPORT CONTINUED Long term incentives
Purpose
• Incentivise long term decision making as the basis for sustainable growth.
• Align with shareholders’ interests.
• Recruit and retain senior employees across the Group.
Operation
Executive directors receive restricted share awards as the long term variable element of remuneration:
• Restricted share awards are discretionary and will normally vest subject to continued employment after no less than
three years;
• A holding period will apply which means that restricted shares may not ordinarily be sold until at least five years
after the grant date (other than to pay relevant taxes due on vested awards);
• Malus and clawback provisions apply under which part or the full amount of a vested award may be recovered, by a
reduction in the amount of any future bonus, subsisting award, the vesting of any subsisting award or future share
awards and/or a requirement to make a cash payment for a period of three years from the relevant performance
period. They would be enforced in the event of material misstatement, significant failure of risk control, serious
misconduct, corporate failure (entailing the appointment of an administrator or liquidator) or serious reputational
damage, when it is clear that the issue has been caused by a management failure to which the relevant individual
has made a direct and material contribution;
• Dividend equivalents shall accrue in respect of restricted share awards to the extent that they vest, including in
relation to any holding periods; and
• All awards are subject to the discretions contained in the relevant plan rules.
Maximum
potential value
• The individual restricted share limit per financial year is 125% of base salary.
• The Chief Executive Officer may receive restricted shares per financial year with a face value of up to 125% of salary.
• The Chief Financial Officer may receive restricted shares per financial year with a face value of up to 100% of salary.
Performance metrics
• Restricted share awards are not subject to performance measures but vesting is subject to the achievement of an
underpin normally reviewed over the three financial years commencing with the financial year in which awards are
granted.
• In assessing the underpin, in normal circumstances the Committee may consider the Group’s overall performance,
including financial and non-financial performance over the course of the vesting period and any material risk/
regulatory failures identified. Financial performance may include elements like revenue, profitability, cash
generation, and return on capital. Non-financial performance relates to strategic priority areas focused on delivering
long term success of the Company and implementing the Group’s long term strategy. These include, for instance,
making operating model improvements, own brand development, acquisition growth, building on our competitive
advantage, digital and technology improvements, focus on ESG, including sustainability, employee satisfaction and
managing risk in the business.
• When considering these factors, the Committee will assess performance in the round, with the expectation of full
vesting unless there has been identified material underperformance over the period. The Committee may scale
back the awards (including to zero) if it is not satisfied the underpin has been met.
Long term incentives – previous policy applied for awards up to and including October 2020
Purpose
Operation
• Subject to the approval of the remuneration policy, awards issued under the previous policy with respect to long term
incentives will continue to vest until October 2023 and therefore the policy described below will continue to apply,
including the performance metrics described
• Discretionary biannual grants of executive share option awards and performance share awards which vest subject to
performance conditions measured over three years and subject to continuous service. Subject to the approval of the
new policy, no further grants will be awarded to the executive directors
• A malus and clawback facility is in operation under which part or the full amount of a vested award may be recovered,
by a reduction in the amount of any future bonus, subsisting award, the vesting of any subsisting award or future
share awards and/or a requirement to make a cash payment, for a period of three years from the relevant
performance year, to the extent that the value of a vested award is subsequently found to have been overstated as a
result of a material misstatement of performance or there has been a significant failure of risk control or serious
misconduct
• Two year post-vesting holding requirement for shares that vest, net of sales to settle tax or other withholding due on
vesting or exercise of awards
• If any executive resigns during the period before vesting, awards would normally lapse
• All awards are subject to the discretions contained in the relevant plan rules
Maximum
potential value
Executive share options
• Maximum annual award of 225% of base salary
• Annual grant levels for executive directors will not normally exceed 200% of base salary
• For 2020, grants did not exceed 200% of base salary for the incumbent executive directors
Performance shares
• Maximum annual award of 175% of base salary
• For 2020, awards did not exceed 150% of base salary for the Chief Executive Officer and 120% for the Chief Financial
Officer
Bunzl plc Annual Report 2021
143
DIRECTORS’ REPORT Long term incentives – previous policy applied for awards up to and including October 2020 continued
Performance metrics
• Performance and service conditions must be met over a three year performance period. Metrics and targets are set
each year by the Committee. The current metrics are as follows:
Executive share options
• The eps performance measure relates to the absolute growth in the Company’s eps against the targets set for the
performance period
• The vesting is scaled as follows:
– no vesting for performance below the threshold target
– 25% of an award will vest for achieving the threshold target
– 100% of an award will vest for achieving or exceeding the maximum target
– for performance between these targets, the level of vesting will vary on a straight line sliding scale
• The Committee annually reviews the performance conditions outlined above and, in line with the rules of the LTIP,
reserves the right to set different targets for forthcoming annual grants provided it is deemed that the relevant
performance conditions remain appropriately challenging in the prevailing economic environment
Performance shares
• The TSR performance measure (50% of the total award) compares a combination of both the Company’s share price
and dividend performance during the performance period against a comparator group of the constituents of the FTSE
11–100. It aligns the rewards received by executives with the returns received by shareholders
• The other 50% of the award is subject to an eps performance measure which relates to the absolute growth in the
Company’s eps against the targets set for the performance period
• The vesting for both performance measures is scaled as follows:
– no vesting for performance below median performance (TSR) or below the threshold target (eps)
– 25% of an award will vest for achieving median performance (TSR) or the threshold target (eps)
– 100% of an award will vest for achieving or exceeding upper quartile performance (TSR) or the maximum target
(eps)
– for performance between these targets, the level of vesting will vary on a straight line sliding scale
• The Committee annually reviews the performance conditions outlined above and, in line with the rules of the LTIP,
reserves the right to set different targets for forthcoming annual grants provided it is deemed that the relevant
performance conditions remain appropriately challenging in the prevailing economic environment
All employee share plans
Purpose
• Encourage employees, including the executive directors, to build a shareholding through the operation of all
employee share plans such as the HM Revenue & Customs (‘HMRC’) tax advantaged Sharesave Scheme and the
Internal Revenue Service (‘IRS’) approved Employee Stock Purchase Plan (US) (‘ESPP’) in the US.
Operation
• Executive directors may participate in all employee schemes on the same basis as other eligible employees.
• The Sharesave Scheme has standard terms under which participants can normally enter into a savings contract, over
a period of either three or five years, in return for which they are granted options to acquire shares at a discount of up
to 20% of the market price prevailing on the day immediately preceding the date of invitation to apply for the option.
Options are normally exercisable either three or five years after they have been granted.
• New plan rules were approved by shareholders at the 2021 AGM.
Maximum
potential value
• In the UK, the Sharesave Scheme is linked to a contract for monthly savings within the HMRC limits over a period of
either three or five years (currently £500 per month).
Performance metrics
• Service conditions apply.
Retirement benefits
Purpose
• Provision of retirement benefits.
• Retain executive directors.
Operation
• All defined benefit pension plans in the Group have been closed to new entrants since 2003 with any new recruits
being offered defined contribution retirement arrangements and/or a pension allowance.
• Legacy arrangements exist for the Chief Executive Officer as detailed below.
• Pension contributions and allowances are normally paid monthly.
Maximum
potential value
• Company pension contributions to defined contribution retirement arrangements or cash allowances are capped at
5% of base salary for new executive directors and the current Chief Financial Officer.
• The current Chief Executive Officer’s pension contribution has been reduced from 23.75% of base salary to 20% of
base salary with effect from 1 January 2021 and will reduce to 14% from 1 January 2022 and to 5% from 1 January
2023.
Performance metrics
• Not applicable.
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Bunzl plc Annual Report 2021
DIRECTORS’ REMUNERATION REPORT CONTINUED Other benefits
Purpose
Operation
• Provision of competitive benefits which helps to recruit and retain executive directors.
• Benefits may include a car allowance or a car which may be fully expensed, various insurances such as life, disability
and medical and, in some jurisdictions, club expenses and other benefits provided from time to time.
• Some benefits may only be provided in the case of relocation, such as removal expenses, and in the case of an
international relocation might also include fees for accommodation, children’s schooling, home leave, tax equalisation
and professional advice etc.
Maximum
potential value
• The value of benefits is based on the cost to the Company and varies according to individual circumstances. For
example, the cost of medical insurance varies according to family circumstances and the jurisdiction in which the
family is based.
Performance metrics
• Not applicable.
Shareholding requirement
Purpose
Operation
• Strengthen the alignment between the interests of the executive directors and those of shareholders.
• In employment guideline: executive directors will normally be expected to retain shares, net of sales to settle tax,
through the exercise of awards under the DASBS and the LTIP until they attain the required holding. Three years is the
typical expectation for executives who are promoted from within the Company to achieve the required shareholding.
It is recognised that a longer time period may be required for externally recruited executives to achieve the expected
shareholding. Unvested deferred shares held under the DASBS will count towards the guideline (net of the expected
sales for tax that would apply on vesting).
• Post-cessation guideline: from the approval of this policy, upon cessation of employment, executive directors should
maintain a shareholding for two years thereafter at a level equal to the lower of the in-employment guideline and the
number of shares vested as at cessation (net of tax) under restricted share awards granted after the approval of this
policy.
Maximum
potential value
• The Chief Executive Officer’s in-employment shareholding requirement is 300% of base salary. The in-employment
requirement for other executive directors is 200% of base salary.
Performance metrics
• Not applicable.
Fees policy for Chairman and non-executive directors (the ‘NEDs’)
The following table summarises the fees policy for the Chairman and the NEDs.
Fees
Purpose
• Provision of a competitive fee to attract NEDs who have a broad range of experience and skills to oversee the
implementation of the Company’s strategy.
Operation
• Determined in light of market practice and with reference to time commitment and responsibilities associated with
the roles.
• Annual fees are paid in 12 equal monthly instalments during the year.
• The Senior Independent Director and Chairman of the Audit and Remuneration Committees are paid an extra fee to
reflect their additional responsibilities.
• The NEDs and the Chairman are not eligible to receive benefits and do not participate in pension or incentive plans.
Expenses incurred in respect of their duties as directors of the Company are reimbursed.
• The NEDs’ fees are reviewed annually in January each year and the Chairman’s fee is reviewed biennially, the latest
review being with effect from January 2022.
• The Board as a whole considers the policy and structure for the NEDs’ fees on the recommendation of the Chairman
and the Chief Executive Officer. The NEDs do not participate in discussions on their specific levels of remuneration;
the Chairman’s fees are set by the Committee.
Maximum
potential value
• Determined within the overall aggregate annual limit of £1,500,000 authorised by shareholders with reference to the
Company’s Articles of Association approved at the 2021 AGM.
Performance metrics
• Not eligible to participate in any performance related elements of remuneration.
Taxable benefits
and expenses
• Taxable expenses incurred in the course of carrying out NED duties are reimbursed and grossed up to include tax
payable.
Bunzl plc Annual Report 2021
145
DIRECTORS’ REPORT Selection of performance measures and targets
The Committee determines the performance measures applying to the annual bonus based on the strategic priorities of the Group
at the time. The measures and their weightings may change from year to year. The bonus measures in place for the first financial
year under the policy include the use of eps, RAOC and operating cash flow measures. Each of these are aligned with the Group’s
key performance indicators (‘KPIs’). The management of capital employed together with profitability and cash flow ensures the
focus on cash generation, enabling the Group to pay dividends and to support the growth strategy by making acquisitions and
reinvesting in the underlying business. Strategic non-financial goals reward individual contribution to the success of the Group and
allow a focus each year on important operational goals and strategic milestones. This combination of performance measures
provides a balance relevant to the Group’s business and market conditions as well as providing a common goal for the executive
directors, senior managers and shareholders. They have been chosen as, although growing the profitability of the business is a key
objective, equally important is the focus on cash and effective investment in capital.
Statement of consideration of shareholder views
The Committee considers shareholder feedback received in relation to the AGM each year and guidance from shareholder
representatives more generally. In addition, the Committee consults proactively with its major shareholders prior to making
significant changes to its policy.
Discretions retained by the Committee in operating the incentive plans
The Committee operates the Group’s various incentive plans according to their respective rules and in accordance with HMRC and
IRS rules where relevant. To ensure the efficient administration of these plans, the Committee may apply certain operational
discretions. These include the following:
• selecting the participants in the plans;
• determining the timing of grants and/or payments;
• determining the quantum of grants and/or payments (within the limits set out in the policy table above);
• determining the extent of vesting based on the assessment of performance, including the vesting of restricted share awards;
• determining ‘good leaver’ status and the extent of vesting in the case of the share based plans;
• determining the extent of vesting of awards under share based plans in the event of a change of control;
• making the appropriate adjustments required in certain circumstances (e.g. rights issues, corporate restructuring events,
variation of capital and special dividends);
• determining the appropriate choice of measures, weightings and targets for the annual bonus plan from year to year, including
discretion to amend the bonus outcome, as appropriate; and
• varying the performance conditions applying to share based awards if an event occurs which causes the Committee to consider
that it would be appropriate to amend the performance conditions, provided the Committee considers the varied conditions are
fair and reasonable and not materially less challenging than the original conditions would have been but for the event in question.
Legacy arrangements
The directors’ remuneration policy approved by shareholders at the 2021 AGM gave authority to the Company to honour any
commitments entered into with current or former directors (that have been disclosed to shareholders in previous remuneration
reports) or internally promoted future directors (in each case, such as the payment of a pension or the unwind of legacy share
plans). Details of any payments to former directors will be set out in the relevant remuneration report as they arise.
Executive directors’ external appointments
With the specific approval of the Board in each case, executive directors may accept external appointments as non-executive
directors of other companies and retain any related fees paid to them.
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Bunzl plc Annual Report 2021
DIRECTORS’ REMUNERATION REPORT CONTINUED Recruitment of executive directors – approach to remuneration
Executive directors
For the ongoing stability and growth of the Group, it is important to secure, as necessary, the appointment of high calibre
executives to the Board by either external recruitment or internal promotion. The overarching principles applied by the Committee
in developing the remuneration package will be to set an appropriate base salary together with retirement and other benefits and
short and long term incentives taking into consideration the skills and experience of the individual, the complexity and breadth of
the role, the particular needs and situation of the Group, internal relativities, the marketplace in which the executive will operate
and an individual’s current remuneration package and location. In addition, the Committee recognises that it may need to meet
certain relocation expenses or expatriate benefits as appropriate.
Any fixed or variable pay awards for new executive directors will not exceed the maximum limits set out in the policy table above.
However, in addition, for external appointments the Committee may consider offering additional cash and/or share based
elements to replace deferred remuneration forfeited by the individual on leaving their existing employment when it considers
these to be in the best interests of the Company and its shareholders. Such elements, as appropriate, may be made under section
9.4.2 of the Listing Rules and would normally take account of the nature, time horizons and performance requirements attached to
the awards forfeited.
Depending on the timing of the appointment, the Committee may deem it appropriate to set different annual bonus performance
conditions for the first performance year of appointment. A long term incentive award can be made shortly following an
appointment (or as soon as is practical if the Company is in a close period).
Non-executive directors
On appointment of a new Chairman of the Board or non-executive director, the fees will be set taking into account the experience
and calibre of the individual and the prevailing rates of the other non-executive directors at the time.
Executive directors’ service contracts
The service contracts for Frank van Zanten and Richard Howes provide for an equal notice period from the Company and the
executive of a maximum 12 months’ notice and any contracts for newly appointed executive directors will provide for equal notice
in the future. The date of each service contract is noted in the table below:
Frank van Zanten
Richard Howes
Date of service contract
13 January 2016
10 May 2019
Non-executive directors’ terms of appointment
The non-executive directors do not have service contracts with the Company but instead have letters of appointment. The date
of appointment and the most recent re-appointment and the length of service for each non-executive director are shown in the
table below:
Peter Ventress
Eugenia Ulasewicz
Vanda Murray
Lloyd Pitchford
Stephan Nanninga
Vin Murria
Maria Fernanda Mejía
Date of
appointment
1 June 2019
1 April 2011
1 February 2015
1 March 2017
1 May 2017
1 June 2020
23 December 2020
Date of last
re-appointment
at AGM
21 April 2021
21 April 2021
21 April 2021
21 April 2021
21 April 2021
21 April 2021
Length of
service as at
2022 AGM
2 years 10 months
n/a
7 years 2 months
5 years 1 month
4 years 11 months
1 year 10 months
1 year 3 months
Notes
a) On termination, at any time, a non-executive director is entitled to any accrued but unpaid director’s fees but not to any other compensation.
b) Maria Fernanda Mejía stepped down from the Board on 2 February 2022.
Bunzl plc Annual Report 2021
147
DIRECTORS’ REPORT Policy on payment for departure from office
On termination of an executive director’s service contract, the Committee will take into account the departing director’s duty to
mitigate his loss when determining the amount of compensation. The Committee’s policy in respect of the treatment of executive
directors leaving the Group is described below and is designed to support a smooth transition from the Company taking into
account the interests of shareholders:
Component
of pay
Base salary,
pension and
benefits
Annual bonus
cash
Voluntary resignation
or termination
for cause
Paid for the proportion
of the notice period
worked and any untaken
holidays pro-rated to the
leaving date
Cessation of
employment during a
bonus year will normally
result in no cash bonus
being paid
Departure as a ‘good leaver’ or in other specific circumstances including on agreed terms
Paid up to the date of departure or death, including any untaken holidays pro-rated to such date. In
the case of ill health, a payment in lieu of notice may be made and, according to the circumstances,
may be subject to mitigation. In such circumstances some benefits, such as company car or medical
insurance may be retained until the end of the notice period.
Cessation of employment during a bonus year or after the year end but prior to the normal bonus
payment date will result in cash and deferred bonus being paid and pro-rated for the relevant
portion of the financial year worked and performance achieved.
Annual bonus
deferred
shares
Unvested deferred
shares will lapse
In the case of the death of an executive, all deferred shares will be transferred to the estate as soon
as possible after death. In all other cases, subject to the discretion of the Committee, unvested
deferred shares will be transferred to the individual on a date determined by the Committee.
Executive
share options
Unvested executive
share options will lapse
Tax advantaged options will vest in full on the cessation of employment and be exercisable for the
following 12 months after which any unexercised options will lapse.
Performance
shares
Unvested performance
shares will lapse
Restricted
shares
Unvested restricted
share awards will lapse
Subject to the discretion of the Committee, unvested non-tax advantaged share options will
normally be retained by the individual for the remainder of the vesting period and remain subject to
the relevant performance conditions. Holding period terms will ordinarily continue to run until (or
be set to expire no later than) the second anniversary of departure, commensurate with the
post-cessation shareholding requirement. However, in the case of the death of an executive, the
Committee will determine the extent to which the unvested options may be exercised within 12
months of the date of death.
Subject to the discretion of the Committee, unvested performance share awards will normally be
retained by the individual for the remainder of the vesting period, remain subject to the
performance conditions and will ordinarily be subject to time pro-ration. Holding period terms will
ordinarily continue to run until (or be set to expire on no later than) the second anniversary of
departure from employment, commensurate with the post-cessation shareholding requirement.
However, in the case of the death of an executive, the Committee will determine the extent to which
the unvested restricted shares may be exercised within 12 months of the date of death.
Subject to the discretion of the Committee, unvested restricted share awards will normally be
retained by the individual for the remainder of the vesting period, remain subject to the underpin
conditions and will ordinarily be subject to time pro-ration. Holding period terms will ordinarily
continue to run until (or be set to expire on or no later than) the second anniversary of departure
from employment, commensurate with the post-cessation shareholding requirement. However, in
the case of the death of an executive, the Committee will determine the extent to which the
unvested shares may be exercised within 12 months of the date of death.
Options under
Sharesave
As per HMRC regulations
As per HMRC regulations.
Other
None
Disbursements, such as legal costs and outplacement fees may be paid.
Note
The Committee will have the authority to settle any legal claims against the Company, e.g. for unfair dismissal etc, that might arise on termination.
Differences in remuneration policy for executive directors and employees in general
The main difference in remuneration policy between the executive directors and employees in general is the split of fixed and
performance related pay, such as bonus and long term incentives. Overall the percentage of performance related pay, in particular
longer term incentive pay, is greater for the executive directors. This reflects that executive directors have more freedom to act and
the consequences of their decisions are likely to have a broader and more far reaching time span of effect than those decisions
made by employees with more limited responsibility. As a consequence only executive directors, Executive Committee members
and other key employees (currently around 25 people) are granted restricted share awards. Approximately 460 senior managers
are granted executive share option awards on an annual basis, which helps to provide a common focus for management in the
Company’s decentralised organisation structure. In most cases, the annual bonuses are related to the performance of individual
operating units.
Bonus arrangements vary throughout the Group and are related to the specific role and the country in which the employee
operates. The majority of bonus plans have quantitative targets, but the performance measures and targets vary according to each
specific role. Sales representatives often have annual bonus payments which may be commission based.
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Bunzl plc Annual Report 2021
DIRECTORS’ REMUNERATION REPORT CONTINUED When there is a critical mass of employees within a country to make it cost-effective to do so, to encourage wider employee share
ownership, an all employee share plan may be offered. Currently plans are offered to all employees based in Australia, Canada,
Germany, Ireland, the Netherlands, the US and the UK. In France, employees take part in profit sharing arrangements in accordance
with local regulations.
Retirement and other benefits offered to employees across the Group differ according to the country in which the job is based and
the function and seniority of the relevant role.
Statement of consideration of employment conditions elsewhere in the Group
The Committee is provided annually with information on the salaries and proposed increases for the Executive Committee
members and other senior direct reports of the Chief Executive Officer, as well as data on the average salary increases for
leadership teams in each region within the Group. In addition, the Committee reviews and agrees all grants of executive share
options, performance share awards and restricted share awards.
The Committee considers the general basic salary increase within the geographical regions for the broader employee population
when determining the annual salary increases for the executive directors and is cognisant of the Group’s overall employment
arrangements when reviewing and implementing the executive directors’ remuneration policy. Members of the Committee held
feedback sessions with employees in all regions and part of the discussion sought the employee’s view on the executive
remuneration approach and application. In addition, the Company monitors employees’ views through regular employee surveys.
Remuneration scenarios
The remuneration package comprises both core fixed elements (base salary, pension and other benefits) and performance
based variable elements (cash bonus, the DASBS and the LTIP). The structure of the remuneration packages for on-target and
stretch performance for each of the two executive directors for 2022, in line with the remuneration policy, is illustrated in the bar
charts below.
46%
34%
27%
5%
4%
3%
23%
3%
49%
26%
36%
41%
36%
29%
38%
50%
2%
48%
35%
2%
28%
35%
28%
25%
1%
1%
44%
38%
27%
36%
Frank van Zanten
Below threshold performance
(Total £2,408,295)
Target performance
(Total £3,253,935)
Stretch performance
(Total £4,099,575)
Stretch + 50% share price
increase (Total £4,686,825)
Richard Howes
Below threshold performance
(Total £1,279,895)
Target performance
(Total £1,772,849)
Stretch performance
(Total £2,265,804)
Stretch + 50% share price
increase (Total £2,573,900)
Salary and benefits
Pension
Bonus (Cash/DASBS)
LTIP
Notes
a) Salary represents annual salary for 2022. Benefits such as a car or car allowance and private medical insurance have been included based on 2021 figures. In the case of Frank van Zanten
benefits also include school fees and international health insurance.
b) Stretch performance plus 50% share price increase shows the effect of a 50% growth in the Company share price on the value of the restricted share awards.
c) Pension represents the value of the annual pension allowance for 2022 for Frank van Zanten and Richard Howes.
d) Below threshold performance comprises salary, benefits, pension with no bonus award and for restricted share awards an assumption that 100% will vest.
e) Target performance comprises annual bonus awarded at target level (i.e. for 2022 at 90% of salary for Frank van Zanten and 80% of salary for Richard Howes comprised of half cash and half
deferred shares under the DASBS) and for restricted share awards an assumption that 100% will vest.
f) Stretch performance comprises annual bonus awarded at stretch level (i.e. for 2022 at 180% of salary for Frank van Zanten and 160% of salary for Richard Howes comprised of half cash and
half deferred shares under the DASBS) and for restricted share awards an assumption that 100% will vest.
Vanda Murray OBE
Chair of the Remuneration Committee
28 February 2022
Bunzl plc Annual Report 2021
149
DIRECTORS’ REPORT
OTHER STATUTORY INFORMATION
Other statutory information
Annual General Meeting
The Notice convening the Company’s
Annual General Meeting (‘AGM’), to be
held at The Great Hall, 60 Victoria
Embankment, London, United Kingdom,
EC4Y 0JP on Wednesday 20 April 2022 at
2.00 pm, is set out in a separate letter
from the Chairman to shareholders.
Dividends
An interim dividend of 16.2p was paid
on 5 January 2022 in respect of 2021 and
the directors are recommending a final
dividend of 40.8p, making a total for the
year of 57.0p per share (2020: 54.1p).
Dividend details are given in Note 20 to
the consolidated financial statements.
Subject to shareholder approval at the
2022 AGM, the final dividend will be paid
on 4 July 2022 to those shareholders on
the register at the close of business on
20 May 2022.
Share capital
The Company has a single class of share
capital which is divided into ordinary
shares of 32¹⁄ ⁷p each which rank pari
passu in respect of participation and
voting rights. The shares are in registered
form, are fully paid up and are quoted
on the London Stock Exchange. In
addition, the Company operates a Level 1
American Depositary Receipt programme
with Citibank N.A. under which the
Company’s shares are traded on the
over-the-counter market in the form of
American Depositary Receipts.
Details of changes to the issued share
capital during the year are set out in
Note 19 to the consolidated financial
statements.
Bunzl Group General Employee
Benefit Trust
The trustee of the Bunzl Group General
Employee Benefit Trust (the ‘EBT’) holds
shares in respect of employee share
options and awards that have not been
exercised or vested. The EBT abstains
from voting in respect of these shares.
The trustee has agreed to waive the right
to dividend payments on shares held
within the EBT. Details of the shares so
held are set out in Note 19 to the
consolidated financial statements.
Rights and obligations attaching
to shares
Subject to the provisions of the
Companies Act 2006 and without
prejudice to any rights attached to any
existing shares, the Company may resolve
by ordinary resolution to issue shares
with such rights and restrictions as set
out in such resolution or (if there is no
such resolution or so far as it does not
make specific provision) as the Board
may decide. Subject to the provisions
of the Companies Act 2006 and of any
resolution of the Company passed
pursuant thereto and without prejudice
to any rights attached to existing shares,
the Board is duly authorised to issue and
allot, grant options over or otherwise
dispose of the Company’s shares on such
terms and conditions and at such times
as it thinks fit. If at any time the share
capital of the Company is divided into
different classes of shares, the rights
attached to any class may be varied or
abrogated by special resolution passed
at a separate general meeting of such
holders. Subject to the rights attached to
any existing shares, rights attached to
shares will be deemed to be varied by the
reduction of capital paid up on the shares
and by the allotment of further shares
ranking in priority in respect of dividend
or capital or which confer on the holders
more favourable voting rights than the
first-mentioned shares, but will not
otherwise be deemed to be varied by
the creation or issue of further shares.
Power to issue and allot shares
The directors are generally and
unconditionally authorised under the
authorities granted at the 2021 AGM
to allot shares in the Company up to
approximately one third of the
Company’s issued share capital or
two thirds in respect of a rights issue.
The directors were also given the power
to allot ordinary shares for cash up to a
limit representing approximately 10% of
the Company’s issued share capital as at
12 March 2021, without regard to the
pre-emption provisions of the Companies
Act 2006 (however, more than 5% can
only be used in connection with an
acquisition or specified capital investment).
No such shares were issued or allotted
under these authorities in 2021, nor is
there any current intention to do so, other
than to satisfy share options under the
Company’s share option schemes and,
if necessary, to satisfy the consideration
payable for businesses to be acquired.
These authorities are valid until the
conclusion of the forthcoming AGM and
the directors again propose to seek
equivalent authorities at such AGM.
Restrictions on transfer of shares
Dealings in the Company’s ordinary
shares by its directors, persons
discharging managerial responsibilities,
certain employees of the Company
and, in each case, any persons closely
associated with them, are subject to the
Company’s Share Dealing Code.
Certain restrictions, which are customary
for a listed company, apply to transfers of
shares in the Company. The Board may
refuse to register an instrument of
transfer of any share which is not a fully
paid share and of a certificated share at
its discretion unless it is:
• lodged, duly stamped or duly certified,
at the offices of the Company’s registrar
or such other place as the Board may
specify and is accompanied by the
certificate for the shares to which it
relates and such other evidence as the
Board may reasonably require to show
the right of the transferor to make the
transfer;
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Bunzl plc Annual Report 2021
before the relevant meeting, 24 hours
before a poll is taken if such poll is taken
more than 48 hours after it was demanded
or during the meeting at which the poll was
demanded if the poll is not taken straight
away but is taken not more than 48 hours
after it was demanded.
Purchase of own shares
At the 2021 AGM, shareholders gave
the Company authority to purchase
up to a maximum amount equivalent
to approximately 10% of its issued
share capital. During the year ended
31 December 2021, the Company did not
purchase any of its own shares pursuant
to this authority or the authority granted
at the 2020 AGM and no shares have
been purchased between 31 December
2021 and 28 February 2022. As a result,
directors again propose to seek the
equivalent authority at the 2022 AGM.
Directors
Directors may be elected by ordinary
resolution at a duly convened general
meeting or appointed by the Board.
Under the Articles, the minimum number
of directors shall be two and the
maximum shall be 15. In accordance with
the Articles, each director is required to
retire at the AGM held in the third
calendar year after which he or she was
appointed or last appointed and any
director who has held office with the
Company, other than employment or
executive office, for a continuous period
of nine years or more at the date of the
AGM is subject to annual re-appointment.
The Board may also appoint a person
willing to act as a director during the year
either to fill a vacancy or as an additional
director but so that the total number of
directors shall not at any time exceed 15.
However, such appointee shall only hold
office until the next AGM of the Company.
• in respect of only one class of share;
and
• in favour of not more than four
transferees.
Registration of a transfer of an
uncertificated share may be refused
in the circumstances set out in the
uncertificated securities rules, and where,
in the case of a transfer to joint holders,
the number of joint holders to whom the
uncertificated share is to be transferred
exceeds four.
In addition, no instrument of transfer for
certificated shares shall be registered if
the transferor has been served with a
restriction notice as defined in the
Company’s Articles of Association (the
‘Articles’) after failure to provide the
Company with information concerning
certain interests in the Company’s shares
required to be provided under the
Companies Act 2006, unless the transfer
is shown to the Board to be pursuant to
an arm’s length sale. The Board has the
power to procure that uncertificated
shares are converted into certificated
shares and kept in certificated form for
as long as the Board requires.
The Company is not aware of any
agreements between shareholders
that may result in any restriction of the
transfer of shares or voting rights.
Restrictions on voting rights
A member shall not be entitled to vote,
unless the Board otherwise decides, at
any general meeting or class meeting in
respect of any shares held by them if any
call or other sums payable remain unpaid.
Currently, all issued shares are fully paid.
In addition, no member shall be entitled
to vote if he has been served with a
restriction notice after failing to provide
the Company with information concerning
certain interests in the Company’s
shares required to be provided under
the Companies Act 2006. Votes may be
exercised in person or by proxy. The
Articles currently provide a deadline for
submission of proxy forms of 48 hours
In addition to any power to remove
a director from office conferred by
company law, the Company may also by
special resolution remove a director from
office before the expiration of his or her
period of office under the Articles.
The office of a director shall also be vacated
pursuant to the Articles if the director:
• resigns by giving notice to the Company
or is asked to resign by all of the other
directors who are not less than three in
number; or
• is or has been suffering from mental or
physical ill health and the Board
resolves that his or her office be
vacated; or
• is absent without permission from
Board meetings for six consecutive
months and the Board resolves that his
or her office be vacated; or
• becomes bankrupt or compounds with
his or her creditors generally; or
• is prohibited by law from being a
director; or
• ceases to be a director by virtue of any
provisions of company law or is removed
from office pursuant to the Articles.
Biographical details of all of the current
directors are set out on pages 96 and 97.
Notwithstanding the retirement by
rotation provisions in the Articles, each
of the directors will retire and offer
themselves for re-election at the
forthcoming AGM in accordance with
the UK Corporate Governance Code.
Directors’ interests in the Company’s
ordinary shares are shown in Note 22 to
the consolidated financial statements.
None of the directors was materially
interested in any contract of significance
with the Company or any of its subsidiary
undertakings during or at the end of
2021. Information relating to the
directors’ service agreements and their
remuneration for the year and details of
the directors’ share options under the
Company’s share option schemes and
awards under the Long Term Incentive
Plan and Deferred Annual Share Bonus
Scheme are set out in the Directors’
remuneration report on pages 125 to 149.
Bunzl plc Annual Report 2021
151
DIRECTORS’ REPORT OTHER STATUTORY INFORMATION CONTINUED
Powers of the directors
Subject to the Articles, the Companies
Act 2006 and any directions given by the
Company by special resolution, the
business of the Company is managed by
the Board who may exercise all powers
of the Company. The Board may, by
power of attorney or otherwise, appoint
any person or persons to be the agent
or agents of the Company for such
purposes and on such conditions as
the Board determines.
Directors’ indemnities
Indemnities were in force throughout
2021 and remain in force as at the date of
this report under which the Company has
agreed to indemnify the directors and the
Company Secretary, in addition to other
senior executives who are directors of
subsidiaries of the Company, to the
extent permitted by law and the Articles
in respect of all losses arising out of, or in
connection with, the execution of their
powers, duties and responsibilities as a
director or officer of the Company or any
of its subsidiaries.
Amendment of articles
Any amendments to the Articles may be
made in accordance with the provisions
of the Companies Act 2006 by way of a
special resolution of the Company’s
shareholders at a general meeting.
Environmental and social responsibility
The directors recognise that the Company
is part of a wider community and that it
has a responsibility to act in a way that
respects the environment and social and
community issues. Further information
relating to the Company’s approach
to these matters is set out in the
Sustainability report on pages 46 to 57.
Greenhouse gas emissions
Information relating to greenhouse gas
emissions has been set out in the ESG
appendix on pages 85 to 90.
Employment policies
The employment policies of the Group
have been developed to meet the needs
of its different business areas and the
locations in which they operate
worldwide, embodying the principles of
equal opportunity. The Group has
standards of business conduct with which
it expects all its employees to comply.
Bunzl encourages the involvement of its
employees in the performance of the
business in which they are employed
and aims to achieve a sense of shared
commitment. In addition to a regular
magazine and the Company’s intranet,
which provide a variety of information on
activities and developments within the
Group and incorporate half year and
annual financial reports, announcements
are periodically circulated to give details
of corporate and employee matters,
together with a number of subsidiary or
business area publications dealing with
activities in specific parts of the Group.
It is the Group’s policy that applicants
with a disability should be considered for
employment and career development on
the basis of their aptitudes and abilities.
Employees who develop a disability
during their working life will be retained
in employment wherever possible and
given help with rehabilitation and training.
Further information relating to the
Group’s employees can be found in the
Sustainability report on pages 46 to 57.
Significant agreements
The Company’s wholly owned subsidiary,
Bunzl Finance plc, has a number of
bilateral loan facilities with a range of
different counterparties, all of which are
guaranteed by the Company, are in
substantially the same form and are
repayable at the option of the lender in
the event of a change of control of the
Company. Similar change of control
provisions in relation to the Company are
included in the US dollar, sterling and
euro US private placement notes and the
senior unsecured bonds (which are listed
on the Main Market and International
Securities Market of the London Stock
Exchange), all of which have been entered
into by Bunzl Finance plc and the Company
and are also guaranteed by the Company.
Political donations
During 2021, no contributions were made
for political purposes.
Use of financial instruments
Information on the use of financial
instruments can be found in the Financial
review on pages 74 to 81 and in the Notes
to the financial statements on pages 162
to 204.
Disclosures required under UK Listing
Rule 9.8.4
Apart from the dividend waiver which has
been issued in respect of shares held by
the EBT referred to in Note 19 to the
consolidated financial statements on
page 192, there are no disclosures
required to be made under UK Listing
Rule 9.8.4.
Substantial shareholdings
As at 31 December 2021, the Company had been notified of the following significant
interests in the issued share capital of the Company, in accordance with rule 5 of the
Financial Conduct Authority’s Disclosure Guidance and Transparency Rules.
Shareholder
BlackRock, Inc.
Mawer Investment Management Ltd.
Date of
notification
30.06.20
18.07.19
Number of
shares
% of issued
share capital
17,120,005
16,961,895
5.08
5.04
No other notifications have been received between 31 December 2021 and
28 February 2022.
152
Bunzl plc Annual Report 2021
The Company has chosen, in accordance
with section 414C(11) of the Companies
Act 2006, to include certain matters in its
Strategic report that would otherwise be
required to be disclosed in this Directors’
report. These matters are referred to
above and are explained in more detail in
the Strategic report on pages 2 to 91.
Under the Companies Act 2006, a safe
harbour limits the liability of directors in
respect of statements in and omissions
from a strategic report and a directors’
report. Under English law, the directors
would be liable to the Company, but not
to any third party, if the Strategic report
or the Directors’ report contain errors as
a result of recklessness or knowing
misstatement or dishonest concealment
of a material fact, but would not
otherwise be liable.
The Strategic report and the Directors’
report were approved by the Board on
28 February 2022.
By order of the Board
Suzanne Jefferies
Secretary
28 February 2022
External auditors
Each of the directors in office at the date
of approval of this report confirms that:
• so far as the director is aware, there is
no relevant audit information of which
the Group and the Company’s auditors
are unaware; and
• the director has taken all steps that he
or she ought to have taken as a director
in order to make the director aware of
any relevant audit information and to
establish that the Group and the
Company’s auditors are aware of that
information.
This confirmation is given and should
be interpreted in accordance with the
provisions of section 418 of the
Companies Act 2006.
Resolutions are to be proposed at the
forthcoming AGM for the re-appointment
of PricewaterhouseCoopers LLP as
auditors of the Company, at a rate of
remuneration to be determined by
the directors.
Future developments within the Group
An indication of likely future
developments in the Group’s business
can be found in the Strategic report on
pages 2 to 91.
Strategic report and Directors’ report
Pages 2 to 91 inclusive consist of the
Strategic report and pages 92 to 153
inclusive consist of the Directors’ report.
These reports have been drawn up and
presented in accordance with, and in
reliance upon, applicable English
company law and any liability of the
directors in connection with these
reports shall be subject to the limitations
and restrictions provided by such law.
Bunzl plc Annual Report 2021
153
DIRECTORS’ REPORT MCR Safety was one of 50
safety businesses acquired
since 2000. For details on
the 2021 acquisitions see
Note 28.
READ MORE
PAGE 201
154
Bunzl plc Annual Report 2021
Financial
Statements
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated cash flow statement
Notes
Company balance sheet
Company statement of changes in equity
Notes to the Company financial statements
Statement of directors’ responsibilities
Independent auditors’ report
to the members of Bunzl plc
Shareholder information
Five year review
156
157
158
159
160
162
205
206
207
213
214
222
231
Bunzl plc Annual Report 2021
155
Consolidated income statement
for the year ended 31 December 2021
Revenue
Operating profit
Finance income
Finance expense
Profit before income tax
Income tax
Profit for the year attributable to the Company’s equity holders
Earnings per share attributable to the Company’s equity holders
Basic
Diluted
Alternative performance measures†
Operating profit
Adjusted for:
Customer relationships and brands amortisation
Acquisition related items
Non-recurring pension scheme charges
Adjusted operating profit
Finance income
Finance expense
Adjusted profit before income tax
Tax on adjusted profit
Adjusted profit for the year
Adjusted earnings per share
Notes
4
4
6
6
7
8
8
4
4
4
4
6
6
7
8
2021
£m
2020
£m
10,285.1
10,111.1
623.3
10.7
(65.3)
568.7
(125.9)
442.8
618.5
10.4
(73.2)
555.7
(125.7)
430.0
132.7p
131.8p
128.8p
128.3p
623.3
618.5
106.5
23.0
–
752.8
10.7
(65.3)
698.2
(155.7)
542.5
100.4
42.7
16.8
778.4
10.4
(73.2)
715.6
(165.1)
550.5
162.5p
164.9p
† See Note 3 on page 170 for further details of the alternative performance measures.
The Accounting policies and other Notes on pages 162 to 204 form part of these consolidated financial statements.
156
156
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
FINANCIAL STATEMENTS
Consolidated income statement
for the year ended 31 December 2021
Consolidated statement of comprehensive income
for the year ended 31 December 2021
FINANCIAL STATEMENTS
Revenue
Operating profit
Finance income
Finance expense
Profit before income tax
Income tax
Basic
Diluted
Profit for the year attributable to the Company’s equity holders
Earnings per share attributable to the Company’s equity holders
Alternative performance measures†
Operating profit
Adjusted for:
Customer relationships and brands amortisation
Acquisition related items
Non-recurring pension scheme charges
Adjusted operating profit
Finance income
Finance expense
Adjusted profit before income tax
Tax on adjusted profit
Adjusted profit for the year
Adjusted earnings per share
Notes
10,285.1
10,111.1
Profit for the year
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) on defined benefit pension schemes
Gain/(loss) recognised in cash flow hedge reserve
Tax on items that will not be reclassified to profit or loss
Total items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences on foreign operations
Gain/(loss) taken to equity as a result of effective net investment hedges
Tax on items that may be reclassified to profit or loss
Total items that may be reclassified subsequently to profit or loss
623.3
618.5
Other comprehensive expense for the year
Total comprehensive income attributable to the Company’s equity holders
Notes
2021
£m
442.8
2020
£m
430.0
23
7
7
74.1
4.4
(19.3)
59.2
(89.8)
11.5
–
(78.3)
(19.1)
423.7
(16.2)
(8.5)
4.6
(20.1)
(63.5)
(15.9)
0.3
(79.1)
(99.2)
330.8
132.7p
131.8p
128.8p
128.3p
2021
£m
623.3
10.7
(65.3)
568.7
(125.9)
442.8
106.5
23.0
–
752.8
10.7
(65.3)
698.2
(155.7)
542.5
2020
£m
618.5
10.4
(73.2)
555.7
(125.7)
430.0
100.4
42.7
16.8
778.4
10.4
(73.2)
715.6
(165.1)
550.5
162.5p
164.9p
4
4
6
6
7
8
8
4
4
4
4
6
6
7
8
† See Note 3 on page 170 for further details of the alternative performance measures.
The Accounting policies and other Notes on pages 162 to 204 form part of these consolidated financial statements.
156
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
157
157
FINANCIAL STATEMENTS
Consolidated balance sheet
at 31 December 2021
Assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Defined benefit pension assets
Derivative financial assets
Deferred tax assets
Total non-current assets
Inventories
Trade and other receivables
Income tax receivable
Derivative financial assets
Cash at bank and in hand
Total current assets
Total assets
Equity
Share capital
Share premium
Translation reserve
Other reserves
Retained earnings
Total equity attributable to the Company’s equity holders
Liabilities
Interest bearing loans and borrowings
Defined benefit pension liabilities
Other payables
Income tax payable
Provisions
Lease liabilities
Derivative financial liabilities
Deferred tax liabilities
Total non-current liabilities
Bank overdrafts
Interest bearing loans and borrowings
Trade and other payables
Income tax payable
Provisions
Lease liabilities
Derivative financial liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
Notes
2021
£m
2020
£m
9
10
11
23
18
13
14
26
19
26
23
15
17
25
18
26
26
15
17
25
120.9
448.3
2,766.8
63.6
6.9
2.8
122.7
453.4
2,441.9
0.4
17.0
2.5
3,409.3
3,037.9
1,474.0
1,431.0
8.0
14.9
776.9
3,704.8
7,114.1
108.4
194.2
(269.2)
19.0
2,151.5
2,203.9
1,432.2
1,395.8
6.6
12.6
944.3
3,791.5
6,829.4
108.3
187.7
(190.9)
14.3
1,799.7
1,919.1
1,433.7
1,615.2
32.4
72.9
1.5
56.3
359.6
27.9
151.0
45.2
50.2
2.0
55.7
368.4
0.8
105.1
2,135.3
2,242.6
551.6
111.9
1,921.3
42.1
8.5
129.1
10.4
2,774.9
4,910.2
7,114.1
514.6
79.9
1,836.3
75.7
8.5
129.1
23.6
2,667.7
4,910.3
6,829.4
Approved by the Board of directors of Bunzl plc (Company registration number 358948) on 28 February 2022 and signed on its behalf by
Frank van Zanten, Chief Executive Officer and Richard Howes, Chief Financial Officer.
158
158
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
FINANCIAL STATEMENTS
Consolidated balance sheet
at 31 December 2021
Consolidated statement of changes in equity
for the year ended 31 December 2021
FINANCIAL STATEMENTS
Assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Defined benefit pension assets
Derivative financial assets
Deferred tax assets
Total non-current assets
Inventories
Trade and other receivables
Income tax receivable
Derivative financial assets
Cash at bank and in hand
Total current assets
Total assets
Equity
Share capital
Share premium
Translation reserve
Other reserves
Retained earnings
Liabilities
Interest bearing loans and borrowings
Defined benefit pension liabilities
Other payables
Income tax payable
Provisions
Lease liabilities
Derivative financial liabilities
Deferred tax liabilities
Total non-current liabilities
Bank overdrafts
Interest bearing loans and borrowings
Trade and other payables
Income tax payable
Provisions
Lease liabilities
Derivative financial liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
Total equity attributable to the Company’s equity holders
9
10
11
23
18
13
14
26
19
26
23
15
17
25
18
26
26
15
17
25
Notes
2021
£m
2020
£m
3,409.3
3,037.9
120.9
448.3
2,766.8
63.6
6.9
2.8
1,474.0
1,431.0
8.0
14.9
776.9
3,704.8
7,114.1
108.4
194.2
(269.2)
19.0
2,151.5
2,203.9
32.4
72.9
1.5
56.3
359.6
27.9
151.0
551.6
111.9
1,921.3
42.1
8.5
129.1
10.4
2,774.9
4,910.2
7,114.1
122.7
453.4
2,441.9
0.4
17.0
2.5
1,432.2
1,395.8
6.6
12.6
944.3
3,791.5
6,829.4
108.3
187.7
(190.9)
14.3
1,799.7
1,919.1
45.2
50.2
2.0
55.7
368.4
0.8
105.1
514.6
79.9
1,836.3
75.7
8.5
129.1
23.6
2,667.7
4,910.3
6,829.4
1,433.7
1,615.2
2,135.3
2,242.6
At 1 January 2021
Profit for the year
Actuarial gain on defined benefit
pension schemes
Foreign currency translation differences
on foreign operations
Gain taken to equity as a result of effective net
investment hedges
Gain recognised in cash flow hedge reserve
Income tax charge on other
comprehensive income
Total comprehensive income
2020 interim dividend
2020 final dividend
Movement from cash flow hedge reserve
to inventory
Issue of share capital
Employee trust shares
Movement on own share reserves
Share based payments
At 31 December 2021
At 1 January 2020
Profit for the year
Actuarial loss on defined benefit
pension schemes
Foreign currency translation differences
on foreign operations
Loss taken to equity as a result of effective net
investment hedges
Loss recognised in cash flow hedge reserve
Income tax credit on other
comprehensive expense
Total comprehensive income
2019 interim dividend
2019 additional interim dividend
Movement from cash flow hedge reserve
to inventory
Issue of share capital
Employee trust shares
Movement on own share reserves
Share based payments
At 31 December 2020
Share
capital
£m
108.3
Share
premium
£m
Translation
reserve
£m
Capital
redemption
£m
Other reserves
Cash flow
hedge
£m
Merger
£m
Retained earnings
Own
shares
£m
Earnings
£m
Total
equity
£m
187.7
(190.9)
2.5
16.1
(4.3)
(73.4)
1,873.1 1,919.1
(89.8)
11.5
–
(78.3)
0.1
6.5
442.8
442.8
74.1
74.1
(89.8)
11.5
4.4
(18.5)
(19.3)
498.4
423.7
(52.8)
(52.8)
(127.6)
(127.6)
15.5
5.0
(5.0)
18.3
1.1
6.6
15.5
–
18.3
4.4
(0.8)
3.6
1.1
108.4
194.2
(269.2)
2.5
16.1
0.4
(52.9)
2,204.4 2,203.9
Share
capital
£m
108.3
Share
premium
£m
Translation
reserve
£m
Capital
redemption
£m
Other reserves
Cash flow
hedge
£m
Merger
£m
Retained earnings
Own
shares
£m
Earnings
£m
Total
equity
£m
184.0
(111.8)
2.5
16.1
(2.4)
(69.9)
1,617.5 1,744.3
(63.5)
(15.9)
0.3
(79.1)
–
3.7
430.0
430.0
(16.2)
(16.2)
(63.5)
(15.9)
(8.5)
3.0
4.9
416.8
330.8
(51.7)
(51.7)
(119.8)
(119.8)
(9.4)
5.9
(5.9)
16.2
5.0
3.7
(9.4)
–
16.2
(8.5)
1.6
(6.9)
5.0
108.3
187.7
(190.9)
2.5
16.1
(4.3)
(73.4)
1,873.1 1,919.1
Approved by the Board of directors of Bunzl plc (Company registration number 358948) on 28 February 2022 and signed on its behalf by
Frank van Zanten, Chief Executive Officer and Richard Howes, Chief Financial Officer.
158
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Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
159
159
FINANCIAL STATEMENTS
Consolidated cash flow statement
for the year ended 31 December 2021
Cash flow from operating activities
Profit before income tax
Adjusted for:
net finance expense
customer relationships and brands amortisation
acquisition related items
non-recurring pension scheme charges
Adjusted operating profit
Adjustments:
depreciation and software amortisation
other non-cash items
working capital movement
Cash generated from operations before acquisition related items
Cash outflow from acquisition related items
Income tax paid
Cash inflow from operating activities
Cash flow from investing activities
Interest received
Purchase of property, plant and equipment and software
Sale of property, plant and equipment
Purchase of businesses
Cash outflow from investing activities
Cash flow from financing activities
Interest paid excluding interest on lease liabilities
Dividends paid
Increase in borrowings
Repayment of borrowings
Realised gains/(losses) on foreign exchange contracts
Payment of lease liabilities – principal
Payment of lease liabilities – interest
Proceeds from issue of ordinary shares to settle share options
Proceeds from exercise of market purchase share options
Purchase of employee trust shares
Cash outflow from financing activities
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at start of year
(Decrease)/increase in cash and cash equivalents
Currency translation
Cash and cash equivalents at end of year
Notes
2021
£m
2020
£m
568.7
555.7
6
11
4
4
29
29
29
28
9,11
28
20
25
25
26
54.6
106.5
23.0
–
752.8
171.2
4.4
2.1
930.5
(16.0)
(181.4)
733.1
8.7
(32.7)
2.7
(436.7)
(458.0)
(43.5)
(180.4)
14.5
(134.9)
25.0
(138.6)
(20.3)
6.6
47.1
(34.2)
(458.7)
62.8
100.4
42.7
16.8
778.4
171.7
13.2
5.0
968.3
(24.3)
(153.8)
790.2
15.1
(33.1)
1.2
(363.2)
(380.0)
(56.6)
(171.5)
444.5
(133.5)
(37.1)
(137.1)
(22.5)
3.7
37.0
(49.1)
(122.2)
(183.6)
288.0
429.7
(183.6)
(20.8)
225.3
140.8
288.0
0.9
429.7
160
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FINANCIAL STATEMENTS
Consolidated cash flow statement
for the year ended 31 December 2021
Consolidated cash flow statement continued
for the year ended 31 December 2021
FINANCIAL STATEMENTS
Notes
2021
£m
2020
£m
568.7
555.7
Alternative performance measures†
Cash generated from operations before acquisition related items
Purchase of property, plant and equipment and software
Sale of property, plant and equipment
Payment of lease liabilities
Operating cash flow
Adjusted operating profit
Add back depreciation of right-of-use assets
Deduct payment of lease liabilities
Lease adjusted operating profit
Notes
25
10
25
2021
£m
930.5
(32.7)
2.7
(158.9)
741.6
752.8
134.8
(158.9)
728.7
2020
£m
968.3
(33.1)
1.2
(159.6)
776.8
778.4
134.8
(159.6)
753.6
Cash conversion (operating cash flow as a percentage of lease adjusted operating profit)
102%
103%
Operating cash flow
Net interest excluding interest on lease liabilities
Income tax paid
Free cash flow
† See Note 3 on page 170 for further details of the alternative performance measures.
741.6
(34.8)
(181.4)
525.4
776.8
(41.5)
(153.8)
581.5
Cash flow from operating activities
Profit before income tax
Adjusted for:
net finance expense
customer relationships and brands amortisation
acquisition related items
non-recurring pension scheme charges
Adjusted operating profit
Adjustments:
depreciation and software amortisation
other non-cash items
working capital movement
Cash generated from operations before acquisition related items
Cash outflow from acquisition related items
Income tax paid
Cash inflow from operating activities
Cash flow from investing activities
Interest received
Purchase of property, plant and equipment and software
Sale of property, plant and equipment
Purchase of businesses
Cash outflow from investing activities
Cash flow from financing activities
Interest paid excluding interest on lease liabilities
Dividends paid
Increase in borrowings
Repayment of borrowings
Realised gains/(losses) on foreign exchange contracts
Payment of lease liabilities – principal
Payment of lease liabilities – interest
Proceeds from issue of ordinary shares to settle share options
Proceeds from exercise of market purchase share options
Purchase of employee trust shares
Cash outflow from financing activities
Cash and cash equivalents at start of year
(Decrease)/increase in cash and cash equivalents
Currency translation
Cash and cash equivalents at end of year
6
11
4
4
29
29
29
28
9,11
28
20
25
25
26
54.6
106.5
23.0
–
752.8
171.2
4.4
2.1
930.5
(16.0)
(181.4)
733.1
8.7
(32.7)
2.7
(436.7)
(458.0)
(43.5)
(180.4)
14.5
(134.9)
25.0
(138.6)
(20.3)
6.6
47.1
(34.2)
(458.7)
429.7
(183.6)
(20.8)
225.3
62.8
100.4
42.7
16.8
778.4
171.7
13.2
5.0
968.3
(24.3)
(153.8)
790.2
15.1
(33.1)
1.2
(363.2)
(380.0)
(56.6)
(171.5)
444.5
(133.5)
(37.1)
(137.1)
(22.5)
3.7
37.0
(49.1)
(122.2)
140.8
288.0
0.9
429.7
(Decrease)/increase in cash and cash equivalents
(183.6)
288.0
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161
161
FINANCIAL STATEMENTS
Notes
1 Basis of preparation
Bunzl plc (the ‘Company’) is a public company, which is limited by shares and is listed on the London Stock Exchange. The Company is
incorporated and domiciled in the United Kingdom and is registered in England and Wales.
a. Basis of accounting
On 31 December 2020, International Financial Reporting Standards (‘IFRSs’) as adopted by the European Union at that date were brought into
UK law and became UK-adopted International Accounting Standards (‘IASs’), with future changes being subject to endorsement by the UK
Endorsement Board. The Company transitioned to UK-adopted IASs in its consolidated financial statements on 1 January 2021. This change
constitutes a change in accounting framework. However, there is no impact on recognition, measurement or disclosure in the period
reported as a result of the change in framework.
The consolidated financial statements for the year ended 31 December 2021 have been approved by the Board of directors of Bunzl plc. They
are prepared in accordance with UK-adopted IASs in conformity with the requirements of the Companies Act 2006 and the applicable legal
requirements of the Companies Act 2006. The consolidated financial statements also comply fully with IFRSs as issued by the International
Accounting Standards Board (‘IASB’). They are prepared under the historical cost convention with the exception of certain items which are
measured at fair value as described in the accounting policies below.
(i) Going concern
The directors, having reassessed the principal risks and uncertainties, consider it appropriate to adopt the going concern basis of accounting
in the preparation of the financial statements.
In reaching this conclusion, the directors noted the Group’s strong operating cash flow performance in the year and the substantial funding
available to the Group as described in the Financial review. The directors also considered a range of different forecast scenarios for the
18 month period from the date of these financial statements to the end of June 2023 starting with a base case projection derived from
the Group’s 2022 Budget excluding any non-committed acquisition spend or changes in funding. The resilience of the Group to a range of
severe but plausible downside scenarios was factored into the directors’ considerations through two levels of stress testing against the base
case projection.
These severe but plausible downside scenarios included the following assumptions:
• A 10% reduction in adjusted operating profit from the potential for adverse impacts from the crystallisation of the principal strategic and
operational risks to the Group’s organic growth and a 10% increase in working capital
• A 20% reduction in adjusted operating profit from a more severe impact from the crystallisation of the principal strategic and operational
risks to the Group’s organic growth and a 20% increase in working capital
In addition, the Group has carried out reverse stress tests against the base case to determine the level of performance that would result in
a breach of financial covenants. In order for a breach of covenants to occur during the 18 month period to the end of June 2023 the Group
would need to experience a reduction in EBITDA of over 50% compared to the base case.
In the first two stress tests it was found that the Group was resilient and in particular it remained in compliance with the relevant financial
covenants. The conditions required to create the reverse stress test scenario were so severe that they were considered to be implausible.
The directors are therefore satisfied that the Group’s forecasts, which take into account reasonably possible changes in trading performance,
show that there are no material uncertainties over going concern, including no anticipated breach of covenants, and therefore the going
concern basis of preparation continues to be appropriate.
(ii) Impact of Covid-19 on the financial statements at 31 December 2021
During 2021, the Group has seen a further increase in the level of slow moving inventory with customer demand continuing to be impacted
by the pandemic-related restrictions and supply chain disruption resulting in higher levels of inventory. This has resulted in a net charge of
approximately £25m in the year to increase slow moving inventory provisions whilst additional provisions were required as a result of market
price deflation on certain Covid-19 products. This has been partially offset by a net release of approximately £5m relating to expected credit
losses on trade receivables.
Further details on the impact of the Covid-19 pandemic on the financial results for the Group for the year ended 31 December 2021 are
included elsewhere in this report, notably in the Chief Executive Officer’s review and the Financial review.
b. Newly adopted accounting policies
There are no new standards or amendments to existing standards that are effective that have had a material impact on the Group, nor does
the Group anticipate any new or revised standards and interpretations that are effective from 1 January 2022 and beyond to have a material
impact on its consolidated results or financial position.
162
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FINANCIAL STATEMENTS
Notes
1 Basis of preparation
a. Basis of accounting
Bunzl plc (the ‘Company’) is a public company, which is limited by shares and is listed on the London Stock Exchange. The Company is
incorporated and domiciled in the United Kingdom and is registered in England and Wales.
On 31 December 2020, International Financial Reporting Standards (‘IFRSs’) as adopted by the European Union at that date were brought into
UK law and became UK-adopted International Accounting Standards (‘IASs’), with future changes being subject to endorsement by the UK
Endorsement Board. The Company transitioned to UK-adopted IASs in its consolidated financial statements on 1 January 2021. This change
constitutes a change in accounting framework. However, there is no impact on recognition, measurement or disclosure in the period
reported as a result of the change in framework.
The consolidated financial statements for the year ended 31 December 2021 have been approved by the Board of directors of Bunzl plc. They
are prepared in accordance with UK-adopted IASs in conformity with the requirements of the Companies Act 2006 and the applicable legal
requirements of the Companies Act 2006. The consolidated financial statements also comply fully with IFRSs as issued by the International
Accounting Standards Board (‘IASB’). They are prepared under the historical cost convention with the exception of certain items which are
measured at fair value as described in the accounting policies below.
(i) Going concern
in the preparation of the financial statements.
The directors, having reassessed the principal risks and uncertainties, consider it appropriate to adopt the going concern basis of accounting
In reaching this conclusion, the directors noted the Group’s strong operating cash flow performance in the year and the substantial funding
available to the Group as described in the Financial review. The directors also considered a range of different forecast scenarios for the
18 month period from the date of these financial statements to the end of June 2023 starting with a base case projection derived from
the Group’s 2022 Budget excluding any non-committed acquisition spend or changes in funding. The resilience of the Group to a range of
severe but plausible downside scenarios was factored into the directors’ considerations through two levels of stress testing against the base
case projection.
These severe but plausible downside scenarios included the following assumptions:
• A 10% reduction in adjusted operating profit from the potential for adverse impacts from the crystallisation of the principal strategic and
operational risks to the Group’s organic growth and a 10% increase in working capital
• A 20% reduction in adjusted operating profit from a more severe impact from the crystallisation of the principal strategic and operational
risks to the Group’s organic growth and a 20% increase in working capital
In addition, the Group has carried out reverse stress tests against the base case to determine the level of performance that would result in
a breach of financial covenants. In order for a breach of covenants to occur during the 18 month period to the end of June 2023 the Group
would need to experience a reduction in EBITDA of over 50% compared to the base case.
In the first two stress tests it was found that the Group was resilient and in particular it remained in compliance with the relevant financial
covenants. The conditions required to create the reverse stress test scenario were so severe that they were considered to be implausible.
The directors are therefore satisfied that the Group’s forecasts, which take into account reasonably possible changes in trading performance,
show that there are no material uncertainties over going concern, including no anticipated breach of covenants, and therefore the going
concern basis of preparation continues to be appropriate.
(ii) Impact of Covid-19 on the financial statements at 31 December 2021
During 2021, the Group has seen a further increase in the level of slow moving inventory with customer demand continuing to be impacted
by the pandemic-related restrictions and supply chain disruption resulting in higher levels of inventory. This has resulted in a net charge of
approximately £25m in the year to increase slow moving inventory provisions whilst additional provisions were required as a result of market
price deflation on certain Covid-19 products. This has been partially offset by a net release of approximately £5m relating to expected credit
losses on trade receivables.
Further details on the impact of the Covid-19 pandemic on the financial results for the Group for the year ended 31 December 2021 are
included elsewhere in this report, notably in the Chief Executive Officer’s review and the Financial review.
b. Newly adopted accounting policies
FINANCIAL STATEMENTS
2 Accounting policies
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in the consolidated
financial statements.
a. Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group is either exposed or has rights to variable returns from
its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are included in the
consolidated financial statements from the date that control commences until the date that control ceases. A list of all of the Company’s
subsidiary undertakings is included in the Related undertakings note in the Shareholder information section on pages 222 to 230 and is
subject to audit. The results of all of the subsidiary undertakings are included in full in these consolidated financial statements.
(ii) Business combinations
The acquisition method of accounting is used to account for the acquisition of subsidiaries. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially at fair value at the acquisition date. The consideration paid
or payable in respect of acquisitions comprises amounts paid on completion and deferred consideration, excluding payments which are
contingent on the continued employment of former owners of businesses acquired. The excess of the consideration over the fair value of
the identifiable net assets acquired is recorded as goodwill. Payments that are contingent on future employment and transaction costs and
expenses such as professional fees are charged to the income statement.
When less than 100% of the issued share capital of a subsidiary is acquired and the acquisition includes an option to purchase the remaining
share capital of the subsidiary, the anticipated acquisition method is applied, where judged appropriate to do so based on the risks and
rewards associated with the option to purchase, meaning that no non-controlling interest is recognised. A liability is carried on the balance
sheet equal to the fair value of the option and this is revised to fair value at each reporting date with differences being recorded in acquisition
related items in the income statement.
(iii) Disposal of businesses
Where a subsidiary undertaking is sold, the profit or loss on disposal is calculated as the difference between the aggregate of the fair
value of the consideration received and the carrying amount of the assets and liabilities of the subsidiary on the date of disposal less any
transaction costs relating to the disposal. On the disposal of a subsidiary with assets and liabilities denominated in foreign currency, the
cumulative translation difference associated with that subsidiary in the translation reserve is credited or debited to the profit or loss on
disposal recognised in the income statement. Cash received on disposal of businesses is shown within investing activities in the Consolidated
cash flow statement, net of cash and cash equivalents disposed of and transaction costs.
(iv) Transactions eliminated on consolidation
Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup transactions are eliminated in
preparing the consolidated financial statements.
b. Foreign currency
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at the exchange rate prevailing at that date. Foreign exchange
differences arising on translation are recognised in the income statement, unless they qualify for cash flow or net investment hedge
accounting treatment, in which case the effective portion is recognised directly in other comprehensive income.
Assets and liabilities of foreign operations are translated at the exchange rate prevailing at the balance sheet date. Income and expenses of
foreign operations are translated at average exchange rates. All resulting exchange differences, including exchange differences arising from
the translation of borrowings and other financial instruments designated as hedges of such balances, are recognised directly in other
comprehensive income and accumulated in the translation reserve. Differences that have arisen since 1 January 2004, the date of transition
to IFRS, are presented in this separate component of equity.
c. Revenue
The Group is principally engaged in the delivery of goods to customers representing a single performance obligation which is satisfied upon
delivery of the relevant goods. Revenue related to the provision of services is recognised when the service is provided, which for the majority
of the Group’s service revenue represents a single performance obligation. Revenue is not recognised if there is significant uncertainty
regarding recovery of the consideration due.
There are no new standards or amendments to existing standards that are effective that have had a material impact on the Group, nor does
the Group anticipate any new or revised standards and interpretations that are effective from 1 January 2022 and beyond to have a material
impact on its consolidated results or financial position.
Revenue is valued at invoiced amounts, excluding sales taxes and including estimates for variable consideration where relevant, such as
returns and discounts, for which a liability is recognised as required. Returns and early settlement discount liabilities are based on experience
over an appropriate period whereas volume discount liabilities are based on agreements with customers and expected volumes.
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163
163
FINANCIAL STATEMENTS
Notes continued
2 Accounting policies continued
d. Cost of goods sold
Cost of goods sold consists of the cost of the inventories sold or disposed of in the period where the cost of inventories is net of supplier
rebate income related to those inventories.
e. Supplier rebates
The Group has various rebate arrangements with a number of suppliers. Some of these arrangements are based on the volume of products
purchased and others are based on the volume of products sold. Supplier rebate income is recognised in cost of goods sold concurrent with
the sale of the inventories to which it relates and is calculated by reference to the expected consideration receivable from each rebate
arrangement. Substantially all supplier rebate income is unconditional and non-judgemental. Supplier rebate income is not recognised if
there is significant uncertainty regarding recovery of the amount due. Supplier rebate income accrued but not yet received is included in
other receivables.
f. Share based payments
The Group operates a number of equity settled share based payment compensation plans. Details of these plans are outlined in Note 19 and
the Directors’ remuneration report. The total expected expense is based on the fair value of options and other share based incentives on the
grant date, calculated using a valuation model, and is spread over the expected vesting period with a corresponding credit to equity.
g. Leases
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured
at cost, comprising the initial amount of the lease liability plus any initial direct costs incurred and any lease payments made at or before the
lease commencement date, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight line
method from the commencement date to the earlier of the end of the useful life of the asset or the end of the lease term. The lease liability
is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest
rate implicit in the lease. If that rate cannot readily be determined, as is the case in the vast majority of the leasing activities of the Group, the
lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset
in a similar economic environment with similar terms and conditions. The lease liability is subsequently measured at amortised cost using the
effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index/rate or a
change in the Group’s assessment of whether it will exercise an extension or termination option. When the lease liability is remeasured,
a corresponding adjustment is made to the right-of-use asset.
Judgements are involved in determining the lease term, particularly because termination options are included in a number of property leases
across the Group to facilitate operational flexibility. The majority of termination options held are exercisable only by the Group and not by the
respective lessor. In determining the lease term, management considers all facts and circumstances that create an economic incentive to
exercise a termination option. Periods after the date of a termination option are only included in the lease term if it is reasonably certain that
the lease will not be terminated. The assessment of the lease term is reviewed if a significant event or a significant change in circumstances
occurs that is within the control of the Group.
Payments associated with short term leases and leases of low value assets are recognised on a straight line basis as an expense in profit or
loss. Short term leases are leases with a lease term of 12 months or less. Low value assets are assets with a value of less than £5,000 when
new, typically small items of IT equipment, office equipment and office furniture.
h. Income tax
Income tax in the income statement comprises current and deferred tax. Income tax is recognised in the income statement except to the
extent that it relates to items recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable or recoverable on the taxable income or loss for the year using tax rates enacted or substantively
enacted at the balance sheet date and any adjustments in respect of prior years. Current tax payable is recognised when it is probable that
the Group will be required to settle the obligation. The Group’s policy for accounting for current tax payable or receivable where it is uncertain
is described in more detail in Note 2y – Sources of estimation uncertainty – Taxation.
Deferred tax is provided using the balance sheet liability method providing for temporary differences arising between tax bases and carrying
amounts in the consolidated financial statements. Deferred tax is measured at the tax rates that are expected to be applied to temporary
differences when they reverse, based on the laws that have been enacted or substantively enacted at the balance sheet date.
Deferred tax is not recognised for the following temporary differences: goodwill not deductible for tax purposes, the initial recognition of
assets and liabilities that affect neither accounting nor taxable profits and differences relating to investments in subsidiaries to the extent
that they will probably not reverse in the foreseeable future and where the Company controls the timing of the reversal. A deferred tax
asset is recognised only to the extent that it is probable that future taxable profit will be available against which the temporary difference
can be utilised.
164
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FINANCIAL STATEMENTS
Notes continued
2 Accounting policies continued
d. Cost of goods sold
rebate income related to those inventories.
e. Supplier rebates
Cost of goods sold consists of the cost of the inventories sold or disposed of in the period where the cost of inventories is net of supplier
The Group has various rebate arrangements with a number of suppliers. Some of these arrangements are based on the volume of products
purchased and others are based on the volume of products sold. Supplier rebate income is recognised in cost of goods sold concurrent with
the sale of the inventories to which it relates and is calculated by reference to the expected consideration receivable from each rebate
arrangement. Substantially all supplier rebate income is unconditional and non-judgemental. Supplier rebate income is not recognised if
there is significant uncertainty regarding recovery of the amount due. Supplier rebate income accrued but not yet received is included in
other receivables.
f. Share based payments
g. Leases
The Group operates a number of equity settled share based payment compensation plans. Details of these plans are outlined in Note 19 and
the Directors’ remuneration report. The total expected expense is based on the fair value of options and other share based incentives on the
grant date, calculated using a valuation model, and is spread over the expected vesting period with a corresponding credit to equity.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured
at cost, comprising the initial amount of the lease liability plus any initial direct costs incurred and any lease payments made at or before the
lease commencement date, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight line
method from the commencement date to the earlier of the end of the useful life of the asset or the end of the lease term. The lease liability
is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest
rate implicit in the lease. If that rate cannot readily be determined, as is the case in the vast majority of the leasing activities of the Group, the
lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset
in a similar economic environment with similar terms and conditions. The lease liability is subsequently measured at amortised cost using the
effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index/rate or a
change in the Group’s assessment of whether it will exercise an extension or termination option. When the lease liability is remeasured,
a corresponding adjustment is made to the right-of-use asset.
Judgements are involved in determining the lease term, particularly because termination options are included in a number of property leases
across the Group to facilitate operational flexibility. The majority of termination options held are exercisable only by the Group and not by the
respective lessor. In determining the lease term, management considers all facts and circumstances that create an economic incentive to
exercise a termination option. Periods after the date of a termination option are only included in the lease term if it is reasonably certain that
the lease will not be terminated. The assessment of the lease term is reviewed if a significant event or a significant change in circumstances
occurs that is within the control of the Group.
Payments associated with short term leases and leases of low value assets are recognised on a straight line basis as an expense in profit or
loss. Short term leases are leases with a lease term of 12 months or less. Low value assets are assets with a value of less than £5,000 when
new, typically small items of IT equipment, office equipment and office furniture.
h. Income tax
Income tax in the income statement comprises current and deferred tax. Income tax is recognised in the income statement except to the
extent that it relates to items recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable or recoverable on the taxable income or loss for the year using tax rates enacted or substantively
enacted at the balance sheet date and any adjustments in respect of prior years. Current tax payable is recognised when it is probable that
the Group will be required to settle the obligation. The Group’s policy for accounting for current tax payable or receivable where it is uncertain
is described in more detail in Note 2y – Sources of estimation uncertainty – Taxation.
Deferred tax is provided using the balance sheet liability method providing for temporary differences arising between tax bases and carrying
amounts in the consolidated financial statements. Deferred tax is measured at the tax rates that are expected to be applied to temporary
differences when they reverse, based on the laws that have been enacted or substantively enacted at the balance sheet date.
Deferred tax is not recognised for the following temporary differences: goodwill not deductible for tax purposes, the initial recognition of
assets and liabilities that affect neither accounting nor taxable profits and differences relating to investments in subsidiaries to the extent
that they will probably not reverse in the foreseeable future and where the Company controls the timing of the reversal. A deferred tax
asset is recognised only to the extent that it is probable that future taxable profit will be available against which the temporary difference
can be utilised.
FINANCIAL STATEMENTS
2 Accounting policies continued
i. Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and any impairment losses. The carrying values of
property, plant and equipment are periodically reviewed for impairment when events or changes in circumstances indicate that the carrying
values may not be recoverable. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items.
j. Depreciation
Depreciation is charged to the income statement on a straight line basis to write off cost less estimated residual value over the assets’
estimated remaining useful lives. The estimated useful lives are as follows:
Buildings
Plant and machinery
Fixtures, fittings and equipment
Freehold land
50 years (or depreciated over life of lease if shorter than 50 years)
3 to 12 years
3 to 12 years
Not depreciated
Assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date.
k. Intangible assets
(i) Goodwill
Acquisitions are accounted for using the acquisition method. As permitted by IFRS 1 ‘First-time Adoption of International Financial Reporting
Standards’, the Group chose to apply IFRS 3 ‘Business Combinations’ from 1 January 2004 and elected not to restate previous business
combinations. For acquisitions made before 1 January 2004, goodwill represents the amount previously recorded under UK Generally
Accepted Accounting Practice (‘UK GAAP’). For acquisitions that occurred between 1 January 2004 and 31 December 2009, goodwill represents
the cost of the business combination in excess of the fair value of the identifiable assets, liabilities and contingent liabilities acquired. For
acquisitions that have occurred on or after 1 January 2010, goodwill represents the cost of the business combination (excluding payments
contingent on future employment and transaction costs and expenses) in excess of the fair value of the identifiable assets, liabilities and
contingent liabilities acquired. Goodwill is allocated to cash generating units (‘CGUs’) and is tested annually for impairment. Negative goodwill
arising on acquisition is recognised immediately in the income statement.
(ii) Customer relationships and brands
Customer relationships and brands intangible assets acquired in a business combination are recognised on acquisition and recorded
at fair value. Subsequent to initial recognition, customer relationships and brands intangible assets are stated at cost less accumulated
amortisation and any impairment losses. Amortisation is charged to the income statement on a straight line basis over the estimated useful
economic lives which range from 3 to 19 years.
(iii) Software
Software is stated at historical cost less accumulated amortisation and any impairment losses. The carrying values of software are periodically
reviewed for impairment when events or changes in circumstances indicate that the carrying values may not be recoverable. Amortisation is
charged to the income statement on a straight line basis over the estimated useful economic lives which range from 3 to 10 years.
l. Impairment
The carrying amounts of the Group’s assets are reviewed annually to determine if there is any indication of impairment. If any such indication
exists, the assets’ recoverable amounts are estimated. The recoverable amounts of assets carried at amortised cost are calculated as the
present value of estimated future cash flows, discounted at appropriate pre-tax discount rates. The recoverable amounts of other assets are
the greater of their fair value less the costs of disposal and the value in use. In assessing the value in use, the estimated future cash flows are
discounted to their present values using appropriate pre-tax discount rates. Impairment losses are recognised when the carrying amount of
an asset or CGU exceeds its recoverable amount, with impairment losses being recognised in the income statement.
m. Inventories
Inventories are valued at the lower of cost and net realisable value. The cost of inventories is based on the first-in first-out principle and
comprises the purchase price, net of any related supplier volume rebates, plus import duties and other taxes, inbound freight and haulage
costs and other related costs incurred to bring the product to its present location and condition. Net realisable value is the estimated selling
price in the ordinary course of business, less the estimated cost of completion and estimated cost necessary to make the sale. Provision is
made for obsolete, slow moving or defective items and market price movements where appropriate.
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Notes continued
2 Accounting policies continued
n. Trade and other receivables
Trade and other receivables are initially measured at fair value, which for trade receivables is equal to the consideration expected to be
received from the satisfaction of performance obligations, plus any directly attributable transaction costs. Subsequent to initial recognition
these assets are measured at amortised cost less any provision for impairment losses including expected credit losses. In accordance with
IFRS 9 ‘Financial Instruments’ the Group applies the simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit
risk characteristics such as the ageing of the debt and the credit risk of the customers. An historical credit loss rate is then calculated for each
group and adjusted to reflect expectations about future credit losses. Inputs and assumptions used for expected credit loss provisions are
based on local operating company historical experience and expectations about future credit losses. The Group does not have any significant
contract assets.
o. Trade and other payables
Trade and other payables are initially measured at fair value including any directly attributable transaction costs. Subsequent to initial
recognition these liabilities are measured at amortised cost. The Group has contract liabilities in the form of deferred income which arises
from consideration received in advance of the satisfaction of performance obligations.
p. Financial instruments
Classification and measurement
Under IFRS 9, financial instruments are initially measured at fair value with subsequent measurement depending upon the classification of
the instrument. IFRS 13 ‘Fair Value Measurement’ defines fair value as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date.
All non-derivative financial assets and liabilities are subsequently held at amortised cost unless they are in a fair value hedge relationship.
Financial assets and liabilities held in a fair value hedge relationship are held at amortised cost with a fair value adjustment with subsequent
changes in this fair value adjustment recorded in the income statement.
Derivatives and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their
fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is
designated as a hedging instrument and, if so, the nature of the item being hedged. The Group designates certain derivatives as either:
• a hedge of the fair value of recognised assets or liabilities or a firm commitment (‘fair value hedge’);
• a hedge of a particular risk associated with the cash flows of recognised assets and liabilities and highly probable forecast transactions
(‘cash flow hedge’); or
• a hedge of a net investment in a foreign operation (‘net investment hedge’).
The Group documents its risk management objectives and strategy for undertaking its hedge transactions. At inception of hedge relationships,
the Group documents the economic relationship between the hedging instruments and the hedged items.
The fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more
than 12 months and as a current asset or liability when the remaining maturity of the hedged item is 12 months or less.
(i) Fair value hedge
Where a derivative instrument is designated and qualifies as a hedge of a recognised asset or liability, all changes in the fair value of the
derivative are recognised immediately in the income statement within finance expense. The carrying value of the hedged item is adjusted by
the change in fair value that is attributable to the risk being hedged with changes recognised in the income statement, also within finance
expense. The gain or loss relating to any ineffective portion of the hedging arrangement is recognised immediately in the income statement.
If the hedge relationship is de-designated, then from the point of de-designation there is no further fair valuing of the hedged item.
Any previous adjustment to the carrying amount of the hedged item is amortised over the remaining maturity of the hedged item.
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Notes continued
2 Accounting policies continued
n. Trade and other receivables
contract assets.
o. Trade and other payables
p. Financial instruments
Classification and measurement
Trade and other receivables are initially measured at fair value, which for trade receivables is equal to the consideration expected to be
received from the satisfaction of performance obligations, plus any directly attributable transaction costs. Subsequent to initial recognition
these assets are measured at amortised cost less any provision for impairment losses including expected credit losses. In accordance with
IFRS 9 ‘Financial Instruments’ the Group applies the simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit
risk characteristics such as the ageing of the debt and the credit risk of the customers. An historical credit loss rate is then calculated for each
group and adjusted to reflect expectations about future credit losses. Inputs and assumptions used for expected credit loss provisions are
based on local operating company historical experience and expectations about future credit losses. The Group does not have any significant
Trade and other payables are initially measured at fair value including any directly attributable transaction costs. Subsequent to initial
recognition these liabilities are measured at amortised cost. The Group has contract liabilities in the form of deferred income which arises
from consideration received in advance of the satisfaction of performance obligations.
Under IFRS 9, financial instruments are initially measured at fair value with subsequent measurement depending upon the classification of
the instrument. IFRS 13 ‘Fair Value Measurement’ defines fair value as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date.
All non-derivative financial assets and liabilities are subsequently held at amortised cost unless they are in a fair value hedge relationship.
Financial assets and liabilities held in a fair value hedge relationship are held at amortised cost with a fair value adjustment with subsequent
changes in this fair value adjustment recorded in the income statement.
Derivatives and hedging activities
• a hedge of the fair value of recognised assets or liabilities or a firm commitment (‘fair value hedge’);
• a hedge of a particular risk associated with the cash flows of recognised assets and liabilities and highly probable forecast transactions
(‘cash flow hedge’); or
• a hedge of a net investment in a foreign operation (‘net investment hedge’).
The Group documents its risk management objectives and strategy for undertaking its hedge transactions. At inception of hedge relationships,
the Group documents the economic relationship between the hedging instruments and the hedged items.
The fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more
than 12 months and as a current asset or liability when the remaining maturity of the hedged item is 12 months or less.
(i) Fair value hedge
Where a derivative instrument is designated and qualifies as a hedge of a recognised asset or liability, all changes in the fair value of the
derivative are recognised immediately in the income statement within finance expense. The carrying value of the hedged item is adjusted by
the change in fair value that is attributable to the risk being hedged with changes recognised in the income statement, also within finance
expense. The gain or loss relating to any ineffective portion of the hedging arrangement is recognised immediately in the income statement.
If the hedge relationship is de-designated, then from the point of de-designation there is no further fair valuing of the hedged item.
Any previous adjustment to the carrying amount of the hedged item is amortised over the remaining maturity of the hedged item.
FINANCIAL STATEMENTS
2 Accounting policies continued
p. Financial instruments continued
(ii) Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in the cash
flow hedge reserve within equity. The gain or loss relating to any ineffective portion is recognised immediately in the income statement.
Where a derivative instrument is designated and qualifies as a hedge of a forecast transaction, only the change in fair value of the forward
contract related to the spot component is designated as the hedging instrument. Gains or losses relating to the effective portion of the
change in the spot component of the forward contract are initially recognised in the cash flow hedge reserve within equity. The change in the
forward element of the contract that relates to the hedged item is recognised in the income statement.
Gains or losses accumulated in equity are reclassified to the income statement when the hedged item affects profit or loss or to the non-
financial asset when the hedged item results in the recognition of a non-financial asset with the deferred gains or losses ultimately being
recognised in the income statement as the non-financial asset affects profit or loss.
When a hedging instrument expires, any cumulative deferred gain/loss in equity relating to that instrument remains in equity until the
forecast transaction occurs at which point it is reclassified to the income statement. When the forecast transaction is no longer expected to
occur, the cumulative deferred gain/loss recorded in equity is immediately reclassified to the income statement.
(iii) Net investment hedge
Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net investment in foreign operations
are recognised directly in equity to the extent the hedge is effective and are accumulated in a separate reserve within equity. To the extent
that the hedge is ineffective such differences are recognised in the income statement.
(iv) Other derivative instruments
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does not
qualify for hedge accounting are recognised immediately in the income statement.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their
fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is
designated as a hedging instrument and, if so, the nature of the item being hedged. The Group designates certain derivatives as either:
q. Cash and cash equivalents
Cash and cash equivalents, as reported in the cash flow statement, comprises cash at bank and in hand and bank overdrafts. Cash at bank
and in hand includes cash balances and short term deposits with maturities of three months or less from the date the deposit is made.
r. Net debt
Net debt is defined as interest bearing loans and borrowings adjusted for the fair value of interest rate swaps on fixed interest rate
borrowings and other derivatives managing the interest rate risk and currency profile less cash and cash equivalents.
s. Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event that
can be reliably measured and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is
material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects risks specific to the liability.
t. Investment in own shares
The cost of shares held either directly (treasury shares) or indirectly (employee benefit trust shares) is deducted from equity. Repurchased
shares are classified as treasury shares and are presented as a deduction from total equity. When treasury shares are subsequently sold or
reissued, the amount received is recognised as an increase in equity and the resulting surplus or deficit on the transaction is recognised in
retained earnings.
At each reporting date the Group remeasures the value of the shares held in the employee benefit trust to present them in the own shares
reserve at the market value of those shares at the reporting date. This is done through a reclassification from retained earnings to the own
shares reserve. This movement has no effect on the actual numbers of shares held by the employee benefit trust.
u. Retirement benefits
(i) Defined contribution pension schemes
A defined contribution pension scheme is a post-employment benefit scheme under which the Company pays fixed contributions into a
separate fund and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay
all employee benefits relating to employee service in the current and prior periods. Obligations for contributions to defined contribution
pension schemes are recognised as an expense in the income statement in the periods during which services are rendered by employees.
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FINANCIAL STATEMENTS
Notes continued
2 Accounting policies continued
u. Retirement benefits continued
(ii) Defined benefit pension schemes
A defined benefit pension scheme is a post-employment benefit plan other than a defined contribution pension scheme. Defined benefit
pension schemes are recognised on the balance sheet as a defined benefit pension asset or a defined benefit pension liability based on the
difference between the fair value of pension scheme assets and the present value of pension scheme liabilities.
The present value of pension scheme liabilities is calculated by a qualified actuary using the projected unit method by estimating the amount
of future benefit that employees have earned in return for their service in the current and prior periods, discounted using the rate applicable
to AA rated corporate bonds that have a similar maturity and currency to the pension scheme liabilities. The fair value of any pension scheme
assets (at bid price) is deducted from the present value of pension scheme liabilities to determine the net deficit or surplus of each scheme.
Remeasurements arising from defined benefit pension schemes comprise actuarial gains and losses on pension scheme liabilities and the
actual return on pension scheme assets excluding amounts already included in net interest. The net actuarial gain or loss for the year is
recorded in full in the statement of comprehensive income.
Current service cost, past service cost or gain and gains and losses on any settlements and curtailments are credited or charged to the income
statement. Past service cost is recognised immediately to the extent benefits are already vested. Net interest on the net defined benefit
pension liability or asset is calculated by applying the discount rate used to measure the defined benefit pension scheme deficit or surplus
at the beginning of the year to the net defined benefit pension liability or asset at the beginning of the year. Net interest is recorded within
finance expense or finance income in the income statement.
When the valuation of a defined benefit pension scheme results in a surplus, the recognised defined benefit pension asset is limited to the
present value of benefits available in the form of any future refunds from the pension scheme or reductions in future contributions and takes
into account the adverse effect of any minimum funding requirements.
v. Dividends
The interim dividend is recognised in the statement of changes in equity in the period in which it is paid and the final dividend in the period in
which it is approved by shareholders at the Annual General Meeting.
w. Hyperinflationary economies
Where the Group has operations in countries to which hyperinflation accounting applies, the financial statements of the business concerned
are accounted for under IAS 29 ‘Financial Reporting in Hyperinflationary Economies’.
x. Judgements made in applying the Group’s accounting policies
In the course of preparing the financial statements, other than judgements involved in determining lease terms under the application
of IFRS 16 ‘Leases’ and in determining estimates and assumptions (see Note 2y below), no other judgements have been made in the process
of applying the Group’s accounting policies that have had a significant effect on the amounts recognised in the financial statements.
In measuring its right-of-use assets and lease liabilities, management is required to make judgements, particularly in relation to lease
termination options. Periods after the date of a termination option are only included in the lease term if it is reasonably certain that the lease
will not be terminated. While management determine lease terms across the Group on a case-by-case basis, if different judgements were
applied relating to a number of leases, it could have a significant effect on the overall amounts recognised in the financial statements.
y. Sources of estimation uncertainty
In applying the Group’s accounting policies various transactions and balances are valued using estimates or assumptions. Should these
estimates or assumptions prove incorrect, there may be an impact on the following year’s financial statements. As at 31 December 2021,
sources of estimation uncertainty where there was a significant risk of material adjustment to the carrying amounts of assets and liabilities
within the next financial year was limited to the following item:
Defined benefit pension schemes
The measurement of the present value of defined benefit pension scheme liabilities involves the use of various actuarial assumptions. The
Group uses independent actuarial experts to assist with the estimation of the discount rates, inflation rates and longevity assumptions used
for the measurement of defined benefit pension scheme liabilities but the actual liabilities could be materially different. The main risks to
which the Group is exposed in relation to the valuation of the defined benefit pension schemes are described in Note 23. The Group’s net
pension asset balance as at 31 December 2021 was £31.2m (2020: £44.8m deficit).
The following estimates or assumptions were also used in applying the Group’s accounting policies:
Accounting for business combinations
Part of the Company’s strategy is to grow through acquisitions. Acquisitions are accounted for using the acquisition method as described
in the business combinations accounting policy, Note 2a(ii), and the goodwill accounting policy, Note 2k(i). This includes the determination
of fair values for assets and liabilities acquired, including the separate identification of intangible assets, which use assumptions and estimates
and are therefore subjective. The Group has developed a process to meet the requirements of IFRS 3 including the separate identification
of customer relationships and brands intangible assets based on estimated future performance and customer attrition rates. This formal
process is applied to each acquisition and involves an assessment of the assets acquired and liabilities assumed with assistance provided by
external valuation specialists where appropriate. Until this assessment is complete, the allocation period remains open up to a maximum of
12 months from the relevant acquisition date. The process applied is described in Note 28.
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FINANCIAL STATEMENTS
2 Accounting policies continued
y. Sources of estimation uncertainty continued
Recoverability of goodwill, customer relationships and brands intangible assets
As noted above, part of the Company’s strategy is to grow through acquisitions which has led to material goodwill, customer relationships and
brands intangible assets being recognised on the balance sheet. Goodwill, which is allocated across CGUs, is tested annually to determine if
there is any indication of impairment by comparing the carrying amount of the goodwill to the recoverable amount of the CGU to which it has
been allocated. Assumptions and estimates are used to determine the recoverable amount of each CGU, principally based on the present
value of estimated future cash flows. Actual performance may differ from management’s expectations. The estimates and assumptions used
in performing impairment testing are described in Note 11. Customer relationships and brands intangible assets are also reviewed annually
for indicators of impairment and if an indicator of impairment exists then similar recoverability testing, involving the use of estimates and
assumptions, is performed for the business to which the customer relationships and brands intangible assets relate. The useful economic
lives of customer relationships and brands intangible assets are also reviewed at least annually, with any revisions to the original estimated
useful economic lives accounted for prospectively. As at 31 December 2021 the goodwill balance was £1,698.5m (2020: £1,494.6m), the
amount of customer relationships intangible assets was £1,022.0m (2020: £912.7m) and the amount of brands intangible assets was £24.0m
(2020: £12.5m).
Trade receivables and inventory provisions
Due to the uncertainty created by the Covid-19 pandemic, trade receivables and inventory provisions are considered to be a source of
estimation uncertainty. In 2020, the Group saw a number of customers either entering insolvency processes or illustrating specific credit
stress indicators that impacted the recoverability of receivables and customer specific inventory in the foodservice and retail sectors. In 2020,
the Group also saw an increase in the level of slow moving inventory as the Covid-19 pandemic and the associated government imposed
control measures have continued to impact customer demand across a range of market sectors. During 2021, the Group has seen a further
increase in the level of slow moving inventory with customer demand continuing to be impacted by the pandemic-related restrictions and
supply chain disruption resulting in higher levels of inventory. This has resulted in a net charge of approximately £25m in the year to increase
slow moving inventory provisions whilst additional provisions were required as a result of market price deflation on certain Covid-19
products. This has been partially offset by a net release of approximately £5m related to expected credit losses on trade receivables. As at
31 December 2021, the Group carried trade receivables provisions of £27.4m (2020: £35.2m) and provisions for slow moving, obsolete or
defective inventories of £179.9m (2020: £132.5m).
Taxation
The Group operates in many countries and is therefore subject to tax laws in a number of different tax jurisdictions. The amount of tax
payable or receivable on profits or losses for any period is subject to the agreement of the tax authority in each respective jurisdiction and the
tax liability or asset position is open to review for several years after the relevant accounting period ends. In determining the provisions for
income taxes, management is required to make assumptions based on interpretations of tax statute and case law, which it does after taking
account of professional advice and prior experience.
The majority of the Group’s tax payable balance of £43.6m (2020: £77.7m) relates to provisions for uncertain tax matters. Uncertainties in
respect of enquiries and additional tax assessments raised by tax authorities are measured by management according to the guidance
provided by IFRIC 23 ‘Uncertainty over Income Tax Treatments’ but the amounts ultimately payable or receivable may differ from the
amounts of any provisions recognised in the consolidated financial statements as a result of the estimates and assumptions used.
Management does not consider there to be any significant risks of material adjustment within the next financial year because tax provisions
cover a range of matters across multiple tax jurisdictions with a variety of timescales before such matters are expected to be concluded.
Notes continued
2 Accounting policies continued
u. Retirement benefits continued
(ii) Defined benefit pension schemes
A defined benefit pension scheme is a post-employment benefit plan other than a defined contribution pension scheme. Defined benefit
pension schemes are recognised on the balance sheet as a defined benefit pension asset or a defined benefit pension liability based on the
difference between the fair value of pension scheme assets and the present value of pension scheme liabilities.
The present value of pension scheme liabilities is calculated by a qualified actuary using the projected unit method by estimating the amount
of future benefit that employees have earned in return for their service in the current and prior periods, discounted using the rate applicable
to AA rated corporate bonds that have a similar maturity and currency to the pension scheme liabilities. The fair value of any pension scheme
assets (at bid price) is deducted from the present value of pension scheme liabilities to determine the net deficit or surplus of each scheme.
Remeasurements arising from defined benefit pension schemes comprise actuarial gains and losses on pension scheme liabilities and the
actual return on pension scheme assets excluding amounts already included in net interest. The net actuarial gain or loss for the year is
recorded in full in the statement of comprehensive income.
Current service cost, past service cost or gain and gains and losses on any settlements and curtailments are credited or charged to the income
statement. Past service cost is recognised immediately to the extent benefits are already vested. Net interest on the net defined benefit
pension liability or asset is calculated by applying the discount rate used to measure the defined benefit pension scheme deficit or surplus
at the beginning of the year to the net defined benefit pension liability or asset at the beginning of the year. Net interest is recorded within
finance expense or finance income in the income statement.
When the valuation of a defined benefit pension scheme results in a surplus, the recognised defined benefit pension asset is limited to the
present value of benefits available in the form of any future refunds from the pension scheme or reductions in future contributions and takes
into account the adverse effect of any minimum funding requirements.
v. Dividends
The interim dividend is recognised in the statement of changes in equity in the period in which it is paid and the final dividend in the period in
which it is approved by shareholders at the Annual General Meeting.
w. Hyperinflationary economies
Where the Group has operations in countries to which hyperinflation accounting applies, the financial statements of the business concerned
are accounted for under IAS 29 ‘Financial Reporting in Hyperinflationary Economies’.
x. Judgements made in applying the Group’s accounting policies
In the course of preparing the financial statements, other than judgements involved in determining lease terms under the application
of IFRS 16 ‘Leases’ and in determining estimates and assumptions (see Note 2y below), no other judgements have been made in the process
of applying the Group’s accounting policies that have had a significant effect on the amounts recognised in the financial statements.
In measuring its right-of-use assets and lease liabilities, management is required to make judgements, particularly in relation to lease
termination options. Periods after the date of a termination option are only included in the lease term if it is reasonably certain that the lease
will not be terminated. While management determine lease terms across the Group on a case-by-case basis, if different judgements were
applied relating to a number of leases, it could have a significant effect on the overall amounts recognised in the financial statements.
y. Sources of estimation uncertainty
In applying the Group’s accounting policies various transactions and balances are valued using estimates or assumptions. Should these
estimates or assumptions prove incorrect, there may be an impact on the following year’s financial statements. As at 31 December 2021,
sources of estimation uncertainty where there was a significant risk of material adjustment to the carrying amounts of assets and liabilities
within the next financial year was limited to the following item:
Defined benefit pension schemes
The measurement of the present value of defined benefit pension scheme liabilities involves the use of various actuarial assumptions. The
Group uses independent actuarial experts to assist with the estimation of the discount rates, inflation rates and longevity assumptions used
for the measurement of defined benefit pension scheme liabilities but the actual liabilities could be materially different. The main risks to
which the Group is exposed in relation to the valuation of the defined benefit pension schemes are described in Note 23. The Group’s net
pension asset balance as at 31 December 2021 was £31.2m (2020: £44.8m deficit).
The following estimates or assumptions were also used in applying the Group’s accounting policies:
Accounting for business combinations
Part of the Company’s strategy is to grow through acquisitions. Acquisitions are accounted for using the acquisition method as described
in the business combinations accounting policy, Note 2a(ii), and the goodwill accounting policy, Note 2k(i). This includes the determination
of fair values for assets and liabilities acquired, including the separate identification of intangible assets, which use assumptions and estimates
and are therefore subjective. The Group has developed a process to meet the requirements of IFRS 3 including the separate identification
of customer relationships and brands intangible assets based on estimated future performance and customer attrition rates. This formal
process is applied to each acquisition and involves an assessment of the assets acquired and liabilities assumed with assistance provided by
external valuation specialists where appropriate. Until this assessment is complete, the allocation period remains open up to a maximum of
12 months from the relevant acquisition date. The process applied is described in Note 28.
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Notes continued
3 Alternative performance measures
In addition to the various performance measures defined under IFRS, the Group reports a number of other measures that are designed to
assist with the understanding of the underlying performance of the Group and its businesses. These measures are not defined under IFRS
and, as a result, do not comply with Generally Accepted Accounting Practice (‘GAAP’) and are therefore known as ‘alternative performance
measures’. Accordingly, these measures, which are not designed to be a substitute for any of the IFRS measures of performance, may not
be directly comparable with other companies’ alternative performance measures. The principal alternative performance measures used
within the consolidated financial statements and the location of the reconciliation to equivalent IFRS measures are shown and defined in the
table below:
Underlying
revenue growth
Adjusted
operating profit
Revenue excluding the incremental impact of acquisitions and disposals compared to revenue in prior years at constant exchange
and adjusted for differences in trading days between years (reconciled in the Financial review)
Operating profit before customer relationships and brands amortisation, acquisition related items, non-recurring pension scheme
charges and profit or loss on disposal of businesses (reconciled in the following tables and in the Consolidated income statement)
Operating margin
Adjusted operating profit as a percentage of revenue
Adjusted profit
before income tax
Profit before income tax, customer relationships and brands amortisation, acquisition related items, non-recurring pension
scheme charges and profit or loss on disposal of businesses (reconciled in the following tables)
Adjusted profit
for the year
Profit for the year before customer relationships and brands amortisation, acquisition related items, non-recurring pension
scheme charges, profit or loss on disposal of businesses and the associated tax (reconciled in the following tables)
Effective tax rate
Tax on adjusted profit before income tax as a percentage of adjusted profit before income tax (reconciled in Note 7)
Adjusted earnings
per share
Adjusted diluted
earnings per share
Operating
cash flow
Adjusted profit for the year divided by the weighted average number of ordinary shares in issue (reconciled in the following tables
and in Note 8)
Adjusted profit for the year divided by the diluted weighted average number of ordinary shares (reconciled in Note 8)
Cash generated from operations before acquisition related items after deducting purchases of property, plant and equipment and
software and adding back the proceeds from the sale of property, plant and equipment and software and deducting the payment
of lease liabilities (as shown in the Consolidated cash flow statement)
Free cash flow
Operating cash flow after deducting payments for tax and net interest excluding interest on lease liabilities (as shown in the
Consolidated cash flow statement)
Lease adjusted
operating profit
Adjusted operating profit after adding back the depreciation of right-of-use assets and deducting the payment of lease liabilities (as
shown in the Consolidated cash flow statement)
Cash conversion
Operating cash flow as a percentage of lease adjusted operating profit (as shown in the Consolidated cash flow statement)
Working capital
Inventories and trade and other receivables less trade and other payables, excluding non-operating related receivables, non-
operating related payables (including those relating to acquisition payments) and dividends payable (reconciled in Note 12)
Return on average
operating capital
The ratio of adjusted operating profit to the average of the month end operating capital employed (being property, plant and
equipment, right-of-use assets, software, inventories and trade and other receivables less trade and other payables)
Return on
invested capital
EBITDA
Net debt excluding
lease liabilities
Constant
exchange rates
The ratio of adjusted operating profit to the average of the month end invested capital (being equity after adding back net debt,
lease liabilities, net defined benefit pension scheme liabilities, cumulative customer relationships and brands amortisation,
acquisition related items and amounts written off goodwill, net of the associated tax)
Adjusted operating profit on a historical GAAP basis, before depreciation of property, plant and equipment and software
amortisation and after adjustments as permitted by the Group’s debt covenants, principally to exclude share option charges and
to annualise for the effect of acquisitions and disposal of businesses
Net debt excluding the carrying value of lease liabilities (reconciled in Note 26)
Growth rates at constant exchange rates are calculated by retranslating the results for prior years at the average rates for the year
ended 31 December 2021 so that they can be compared without the distorting impact of changes caused by foreign exchange
translation. The principal exchange rates used for 2021 and 2020 can be found in the Financial review on page 75
These alternative performance measures exclude the charge for customer relationships and brands amortisation, acquisition related items,
non-recurring pension scheme charges, profit or loss on disposal of businesses and any associated tax, where relevant.
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FINANCIAL STATEMENTS
Notes continued
per share
and in Note 8)
Adjusted diluted
earnings per share
Operating
cash flow
3 Alternative performance measures
In addition to the various performance measures defined under IFRS, the Group reports a number of other measures that are designed to
assist with the understanding of the underlying performance of the Group and its businesses. These measures are not defined under IFRS
and, as a result, do not comply with Generally Accepted Accounting Practice (‘GAAP’) and are therefore known as ‘alternative performance
measures’. Accordingly, these measures, which are not designed to be a substitute for any of the IFRS measures of performance, may not
be directly comparable with other companies’ alternative performance measures. The principal alternative performance measures used
within the consolidated financial statements and the location of the reconciliation to equivalent IFRS measures are shown and defined in the
table below:
Underlying
Revenue excluding the incremental impact of acquisitions and disposals compared to revenue in prior years at constant exchange
revenue growth
and adjusted for differences in trading days between years (reconciled in the Financial review)
Adjusted
Operating profit before customer relationships and brands amortisation, acquisition related items, non-recurring pension scheme
operating profit
charges and profit or loss on disposal of businesses (reconciled in the following tables and in the Consolidated income statement)
Operating margin
Adjusted operating profit as a percentage of revenue
Adjusted profit
Profit before income tax, customer relationships and brands amortisation, acquisition related items, non-recurring pension
before income tax
scheme charges and profit or loss on disposal of businesses (reconciled in the following tables)
Adjusted profit
for the year
Profit for the year before customer relationships and brands amortisation, acquisition related items, non-recurring pension
scheme charges, profit or loss on disposal of businesses and the associated tax (reconciled in the following tables)
Effective tax rate
Tax on adjusted profit before income tax as a percentage of adjusted profit before income tax (reconciled in Note 7)
Adjusted earnings
Adjusted profit for the year divided by the weighted average number of ordinary shares in issue (reconciled in the following tables
Adjusted profit for the year divided by the diluted weighted average number of ordinary shares (reconciled in Note 8)
Cash generated from operations before acquisition related items after deducting purchases of property, plant and equipment and
software and adding back the proceeds from the sale of property, plant and equipment and software and deducting the payment
of lease liabilities (as shown in the Consolidated cash flow statement)
Free cash flow
Operating cash flow after deducting payments for tax and net interest excluding interest on lease liabilities (as shown in the
Consolidated cash flow statement)
Lease adjusted
operating profit
shown in the Consolidated cash flow statement)
Adjusted operating profit after adding back the depreciation of right-of-use assets and deducting the payment of lease liabilities (as
Cash conversion
Operating cash flow as a percentage of lease adjusted operating profit (as shown in the Consolidated cash flow statement)
Working capital
Inventories and trade and other receivables less trade and other payables, excluding non-operating related receivables, non-
operating related payables (including those relating to acquisition payments) and dividends payable (reconciled in Note 12)
Return on average
The ratio of adjusted operating profit to the average of the month end operating capital employed (being property, plant and
operating capital
equipment, right-of-use assets, software, inventories and trade and other receivables less trade and other payables)
Return on
The ratio of adjusted operating profit to the average of the month end invested capital (being equity after adding back net debt,
invested capital
lease liabilities, net defined benefit pension scheme liabilities, cumulative customer relationships and brands amortisation,
acquisition related items and amounts written off goodwill, net of the associated tax)
EBITDA
Adjusted operating profit on a historical GAAP basis, before depreciation of property, plant and equipment and software
amortisation and after adjustments as permitted by the Group’s debt covenants, principally to exclude share option charges and
Net debt excluding
Net debt excluding the carrying value of lease liabilities (reconciled in Note 26)
to annualise for the effect of acquisitions and disposal of businesses
lease liabilities
Constant
exchange rates
ended 31 December 2021 so that they can be compared without the distorting impact of changes caused by foreign exchange
Growth rates at constant exchange rates are calculated by retranslating the results for prior years at the average rates for the year
translation. The principal exchange rates used for 2021 and 2020 can be found in the Financial review on page 75
These alternative performance measures exclude the charge for customer relationships and brands amortisation, acquisition related items,
non-recurring pension scheme charges, profit or loss on disposal of businesses and any associated tax, where relevant.
FINANCIAL STATEMENTS
3 Alternative performance measures continued
Acquisition related items comprise deferred consideration payments relating to the retention of former owners of businesses acquired,
transaction costs and expenses, adjustments to previously estimated earn outs, customer relationships asset impairment charges, goodwill
impairment charges and interest on acquisition related income tax. Customer relationships and brands amortisation, acquisition related items
and any associated tax are considered by management to form part of the total spend on acquisitions or are non-cash items resulting from
acquisitions. The non-recurring pension scheme charges relate to non-recurring charges arising from the Group’s participation in a number
of defined benefit pension schemes. In the year ended 31 December 2021 there have been no non-recurring pension scheme charges.
In the year ended 31 December 2020, these non-recurring pension scheme charges comprised the costs relating to the Group’s decision
to withdraw from three multi-employer pension plans in North America and a charge relating to the equalisation of guaranteed minimum
pensions between male and female members on historical transfer values out of the Group’s UK defined benefit pension scheme following
the outcome of the High Court judgment in November 2020 in the case of Lloyds Banking Group Pension Trustees Limited vs Lloyds Bank plc.
None of these items relate to the underlying operating performance of the business and, as a result, they distort comparability between
businesses and reporting periods. Accordingly, these items are not taken into account by management when assessing the results of the
business and are removed in calculating the profitability measures by which management assesses the performance of the Group. However
it should be noted that they do exclude charges that nevertheless do impact the Group’s cash flow and GAAP financial performance.
Other alternative performance measures, including the Group’s key performance indicators which are set out and defined on pages 36 and
37, are used to monitor the performance of the Group and a number of these are based on, or derived from, the alternative performance
measures noted above. All alternative performance measures have been calculated consistently with the methods applied in the
consolidated financial statements for the year ended 31 December 2020. The Group’s alternative performance measures remain consistent
with the prior year with the exception of two new alternative performance measures, being underlying revenue growth and working capital.
The addition of these alternative performance measures, alongside an assessment of the relevance of the existing alternative performance
measures, were agreed with the Audit Committee.
Reconciliation of alternative performance measures to IFRS measures
The principal profit related alternative performance measures, being adjusted operating profit, adjusted profit before income tax, adjusted
profit for the year and adjusted earnings per share, are reconciled to the most directly reconcilable statutory measures in the tables below.
Year ended 31 December 2021
Adjusting items
Alternative
performance
measures
£m
Customer
relationships
and brands
amortisation
£m
Acquisition
related
items
£m
Non-recurring
pension scheme
charges
£m
Statutory
measures
£m
Adjusted operating profit
Finance income
Finance expense
Adjusted profit before income tax
Tax on adjusted profit
Adjusted profit for the year
752.8
10.7
(65.3)
698.2
(155.7)
542.5
(106.5)
(23.0)
(106.5)
27.3
(79.2)
(23.0)
2.5
(20.5)
Adjusted earnings per share
162.5p
(23.7)p
(6.1)p
–
–
–
–
–
623.3 Operating profit
10.7 Finance income
(65.3) Finance expense
568.7 Profit before income tax
(125.9) Income tax
442.8 Profit for the year
132.7p Basic earnings per share
Year ended 31 December 2020
Alternative
performance
measures
£m
Customer
relationships
and brands
amortisation
£m
Acquisition
related
items
£m
Non-recurring
pension scheme
charges
£m
Statutory
measures
£m
Adjusting items
Adjusted operating profit
Finance income
Finance expense
Adjusted profit before income tax
Tax on adjusted profit
Adjusted profit for the year
778.4
10.4
(73.2)
715.6
(165.1)
550.5
(100.4)
(42.7)
(16.8)
618.5 Operating profit
10.4 Finance income
(73.2) Finance expense
(100.4)
24.5
(75.9)
(42.7)
10.7
(32.0)
(16.8)
4.2
(12.6)
555.7 Profit before income tax
(125.7) Income tax
430.0 Profit for the year
Adjusted earnings per share
164.9p
(22.7)p
(9.6)p
(3.8)p
128.8p Basic earnings per share
170
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Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
171
171
FINANCIAL STATEMENTS
Notes continued
4 Segment analysis
The Group results are reported as four business areas based on geographical regions which are reviewed regularly by the Company’s
chief operating decision maker, the Board of directors. The principal results reviewed for each business area are revenue and adjusted
operating profit.
Year ended 31 December 2021
Revenue
Adjusted operating profit/(loss)
Customer relationships and brands amortisation
Acquisition related items
Non-recurring pensions scheme charges
Operating profit/(loss)
Finance income
Finance expense
Profit before income tax
Adjusted profit before income tax
Income tax
Profit for the year
North
America
£m
6,144.7
Continental
Europe
£m
1,972.9
401.3
(44.5)
(7.6)
–
349.2
191.8
(36.4)
(8.2)
147.2
UK &
Ireland
£m
1,254.2
67.0
(9.1)
(3.1)
54.8
Rest of
the World
£m
Corporate
£m
913.3
116.5
(16.5)
(4.1)
95.9
(23.8)
–
(23.8)
Operating margin
Return on average operating capital
6.5%
42.9%
9.7%
47.3%
5.3%
38.4%
12.8%
48.9%
Purchase of property, plant and equipment
Depreciation of property, plant and equipment
Additions to right-of-use assets
Depreciation of right-of-use assets
Purchase of software
Software amortisation
Year ended 31 December 2020
Revenue
Adjusted operating profit/(loss)
Customer relationships and brands amortisation
Acquisition related items
Non-recurring pensions scheme charges
Operating profit/(loss)
Finance income
Finance expense
Profit before income tax
Adjusted profit before income tax
Income tax
Profit for the year
7.7
9.7
55.2
65.1
2.8
3.5
North
America
£m
5,843.8
395.7
(39.8)
(8.4)
(16.4)
331.1
8.1
8.8
32.0
31.8
2.9
2.4
Continental
Europe
£m
2,127.3
238.1
(35.6)
(8.1)
194.4
4.3
5.2
8.8
22.3
1.6
1.0
UK &
Ireland
£m
1,287.7
68.6
(8.8)
(7.2)
52.6
Operating margin
Return on average operating capital
6.8%
41.3%
11.2%
59.6%
5.3%
41.4%
12.2%
50.9%
Purchase of property, plant and equipment
Depreciation of property, plant and equipment
Additions to right-of-use assets
Depreciation of right-of-use assets
Purchase of software
Software amortisation
6.3
9.7
31.1
66.3
3.7
3.2
7.1
8.7
20.7
31.0
2.1
4.8
6.1
4.8
34.4
21.3
1.7
0.8
4.6
3.3
13.9
15.7
1.0
1.3
4.6
4.2
16.6
15.1
0.6
1.3
0.1
0.1
–
0.5
–
0.2
Rest of
the World
£m
Corporate
£m
852.3
104.2
(16.2)
(19.0)
69.0
(28.2)
(0.4)
(28.6)
0.3
0.1
–
0.5
0.2
0.2
Total
£m
10,285.1
752.8
(106.5)
(23.0)
–
623.3
10.7
(65.3)
568.7
698.2
(125.9)
442.8
7.3%
43.3%
24.8
28.0
112.6
134.8
7.9
8.4
Total
£m
10,111.1
778.4
(100.4)
(42.7)
(16.8)
618.5
10.4
(73.2)
555.7
715.6
(125.7)
430.0
7.7%
45.4%
24.4
26.6
100.1
134.8
8.7
10.3
172
172
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
FINANCIAL STATEMENTS
The Group results are reported as four business areas based on geographical regions which are reviewed regularly by the Company’s
chief operating decision maker, the Board of directors. The principal results reviewed for each business area are revenue and adjusted
North
America
£m
6,144.7
Continental
Europe
£m
1,972.9
401.3
(44.5)
(7.6)
–
349.2
191.8
(36.4)
(8.2)
147.2
UK &
Ireland
£m
1,254.2
67.0
(9.1)
(3.1)
54.8
Rest of
the World
£m
913.3
116.5
(16.5)
(4.1)
95.9
Corporate
£m
Total
£m
10,285.1
Notes continued
4 Segment analysis
operating profit.
Year ended 31 December 2021
Revenue
Adjusted operating profit/(loss)
Customer relationships and brands amortisation
Acquisition related items
Non-recurring pensions scheme charges
Operating profit/(loss)
Finance income
Finance expense
Profit before income tax
Adjusted profit before income tax
Income tax
Profit for the year
Purchase of property, plant and equipment
Depreciation of property, plant and equipment
Additions to right-of-use assets
Depreciation of right-of-use assets
Purchase of software
Software amortisation
Year ended 31 December 2020
Revenue
Adjusted operating profit/(loss)
Customer relationships and brands amortisation
Acquisition related items
Non-recurring pensions scheme charges
Operating profit/(loss)
Finance income
Finance expense
Profit before income tax
Adjusted profit before income tax
Income tax
Profit for the year
Operating margin
Return on average operating capital
6.5%
42.9%
9.7%
47.3%
5.3%
38.4%
12.8%
48.9%
7.7
9.7
55.2
65.1
2.8
3.5
North
America
£m
5,843.8
395.7
(39.8)
(8.4)
(16.4)
331.1
8.1
8.8
32.0
31.8
2.9
2.4
Continental
Europe
£m
2,127.3
238.1
(35.6)
(8.1)
194.4
4.3
5.2
8.8
22.3
1.6
1.0
UK &
Ireland
£m
1,287.7
68.6
(8.8)
(7.2)
52.6
4.6
4.2
16.6
15.1
0.6
1.3
Rest of
the World
£m
852.3
104.2
(16.2)
(19.0)
69.0
Operating margin
Return on average operating capital
6.8%
41.3%
11.2%
59.6%
5.3%
41.4%
12.2%
50.9%
Purchase of property, plant and equipment
Depreciation of property, plant and equipment
Additions to right-of-use assets
Depreciation of right-of-use assets
Purchase of software
Software amortisation
6.3
9.7
31.1
66.3
3.7
3.2
7.1
8.7
20.7
31.0
2.1
4.8
6.1
4.8
34.4
21.3
1.7
0.8
4.6
3.3
13.9
15.7
1.0
1.3
(23.8)
–
(23.8)
0.1
0.1
0.5
–
–
0.2
(28.2)
(0.4)
(28.6)
0.3
0.1
–
0.5
0.2
0.2
752.8
(106.5)
(23.0)
–
623.3
10.7
(65.3)
568.7
698.2
(125.9)
442.8
7.3%
43.3%
24.8
28.0
112.6
134.8
7.9
8.4
778.4
(100.4)
(42.7)
(16.8)
618.5
10.4
(73.2)
555.7
715.6
(125.7)
430.0
7.7%
45.4%
24.4
26.6
100.1
134.8
8.7
10.3
FINANCIAL STATEMENTS
4 Segment analysis continued
Acquisition related items
Deferred consideration payments relating to the retention of former owners of businesses acquired
Transaction costs and expenses
Adjustments to previously estimated earn outs
Goodwill impairment charges (Note 11)
Customer relationships impairment charges (Note 11)
2021
£m
15.0
8.3
(0.3)
23.0
–
–
23.0
2020
£m
13.2
7.3
1.0
21.5
12.1
9.1
42.7
Reportable segments are determined based on quantitative thresholds in accordance with IFRS 8 ‘Operating Segments’. The three business
areas of North America, Continental Europe and UK & Ireland are operating segments that meet the quantitative thresholds for reportable
segments and are therefore disclosed separately above. The Rest of the World business area contains businesses in Latin America and Asia
Pacific which individually do not meet the quantitative thresholds for separate disclosure as reportable segments. Rest of the World is therefore
an ‘other’ segment that is disclosed above as a reportable segment as this information is considered to be useful to users of the financial
statements and it also helps to reconcile the results of the reportable segments to the Group’s consolidated results.
The revenue presented relates to external customers. Sales between the business areas are not material. Each of the business areas supplies
a range of products to customers operating primarily in the grocery, foodservice, safety, cleaning & hygiene, retail and healthcare market
sectors but results are not monitored on this basis. The performance of the four business areas is assessed by reference to adjusted
operating profit and this measure also represents the segment results for the purposes of reporting in accordance with IFRS 8. Debt and
associated interest is managed at a Group level and therefore has not been allocated across the business areas.
In the year ended 31 December 2021 the Group had no customer that represented 10% or more of total Group revenue (2020:
no customers).
As noted above, the businesses within each operating segment operate in a number of different countries and sell products across a range
of market sectors, with the vast majority of revenue generated from the delivery of goods to customers. The following table provides a
breakdown of revenue by market sector. The other category covers a wide range of market sectors, none of which is sufficiently material to
warrant separate disclosure.
Corporate
£m
Total
£m
10,111.1
Revenue by market sector
Foodservice
Grocery
Safety
Cleaning & Hygiene
Retail
Healthcare
Other
2021
£m
2,879.8
2,623.5
1,564.9
1,048.3
1,011.2
809.9
347.5
2020
£m
2,500.2
2,590.3
1,426.1
1,320.3
1,021.1
1,008.7
244.4
10,285.1
10,111.1
Revenue attributable to the UK, the parent company’s country of domicile, for the year ended 31 December 2021 was £1,165.9m, representing
11% of the Group’s total (2020: £1,192.6m, representing 12% of the Group’s total). Revenue attributable to foreign countries in total was
£9,119.2m, representing 89% of the Group’s total (2020: £8,918.5m, representing 88% of the Group’s total). Six foreign countries account for
the majority of the revenue attributable to foreign countries, these being USA, Canada, France, the Netherlands, Australia and Brazil. These six
foreign countries account for 75% of the Group’s revenue (2020: 75%).
Non-current assets attributable to the UK, the parent company’s country of domicile, for the year ended 31 December 2021 were £569.8m,
representing 17% of the Group’s total (2020: £441.2m, representing 15% of the Group’s total). Non-current assets attributable to foreign
countries in total were £2,839.5m, representing 83% of the Group’s total (2020: £2,596.7m, representing 85% of the Group’s total). Six foreign
countries account for the majority of the non-current assets attributable to foreign countries, these being USA, Canada, France, the
Netherlands, Australia and Brazil. These six foreign countries account for 66% of the Group’s total non-current assets (2020: 66%).
172
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
173
173
FINANCIAL STATEMENTS
Notes continued
4 Segment analysis continued
The table below reconciles segment assets and liabilities to the Group’s total assets and total liabilities. Unallocated assets and liabilities
include corporate assets and liabilities, tax assets and liabilities, cash at bank and in hand, bank overdrafts, interest bearing loans and
borrowings, derivative financial assets and liabilities and defined benefit pension assets and liabilities.
At 31 December 2021
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
At 31 December 2020
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
North
America
£m
2,952.4
Continental
Europe
£m
1,614.9
UK &
Ireland
£m
968.3
Rest of
the World
£m
692.3
Unallocated
£m
2,952.4
1,614.9
968.3
692.3
1,138.0
607.9
508.9
220.8
1,138.0
607.9
508.9
220.8
North
America
£m
2,597.2
Continental
Europe
£m
1,669.9
UK &
Ireland
£m
930.1
Rest of
the World
£m
640.3
2,597.2
1,669.9
930.1
640.3
1,063.1
599.7
524.8
206.3
1,063.1
599.7
524.8
206.3
886.2
886.2
2,434.6
2,434.6
Unallocated
£m
991.9
991.9
2,516.4
2,516.4
Total
£m
6,227.9
886.2
7,114.1
2,475.6
2,434.6
4,910.2
Total
£m
5,837.5
991.9
6,829.4
2,393.9
2,516.4
4,910.3
5 Analysis of operating income and expenses
Cost of goods sold
Employee costs (Note 24)
Depreciation of property, plant and equipment (Note 9)
Depreciation of right-of-use assets (Note 10)
Amortisation of intangible assets (Note 11)
Acquisition related items (Note 4)
Non-recurring pension scheme charges (Note 23)
Net impairment (reversals)/losses on trade receivables (Note 14)
(Profit)/loss on disposal of property, plant and equipment
Expense relating to short term leases and low value assets
Lease and sublease income
Other operating expenses
Net operating expenses
2021
£m
2020
£m
7,762.5
7,526.3
934.8
28.0
134.8
114.9
23.0
–
(4.7)
(0.9)
6.2
(2.3)
935.1
26.6
134.8
110.7
42.7
16.8
15.9
0.8
8.0
(2.1)
665.5
9,661.8
677.0
9,492.6
Cost of goods sold consists of the cost of the inventories sold or disposed of in the period where the cost of inventories is net of supplier rebate
income related to those inventories.
174
174
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
FINANCIAL STATEMENTS
The table below reconciles segment assets and liabilities to the Group’s total assets and total liabilities. Unallocated assets and liabilities
include corporate assets and liabilities, tax assets and liabilities, cash at bank and in hand, bank overdrafts, interest bearing loans and
borrowings, derivative financial assets and liabilities and defined benefit pension assets and liabilities.
Notes continued
4 Segment analysis continued
At 31 December 2021
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
At 31 December 2020
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
5 Analysis of operating income and expenses
Cost of goods sold
Employee costs (Note 24)
Depreciation of property, plant and equipment (Note 9)
Depreciation of right-of-use assets (Note 10)
Amortisation of intangible assets (Note 11)
Acquisition related items (Note 4)
Non-recurring pension scheme charges (Note 23)
Net impairment (reversals)/losses on trade receivables (Note 14)
(Profit)/loss on disposal of property, plant and equipment
Expense relating to short term leases and low value assets
Lease and sublease income
Other operating expenses
Net operating expenses
North
America
£m
2,952.4
Continental
Europe
£m
1,614.9
UK &
Ireland
£m
968.3
Rest of
£m
692.3
the World
Unallocated
2,952.4
1,614.9
968.3
692.3
1,138.0
607.9
508.9
220.8
1,138.0
607.9
508.9
220.8
North
America
£m
2,597.2
Continental
Europe
£m
1,669.9
UK &
Ireland
£m
930.1
Rest of
the World
£m
640.3
2,597.2
1,669.9
930.1
640.3
1,063.1
599.7
524.8
206.3
1,063.1
599.7
524.8
206.3
£m
886.2
886.2
2,434.6
2,434.6
Unallocated
£m
991.9
991.9
2,516.4
2,516.4
934.8
28.0
134.8
114.9
23.0
–
(4.7)
(0.9)
6.2
(2.3)
Total
£m
6,227.9
886.2
7,114.1
2,475.6
2,434.6
4,910.2
Total
£m
5,837.5
991.9
6,829.4
2,393.9
2,516.4
4,910.3
935.1
26.6
134.8
110.7
42.7
16.8
15.9
0.8
8.0
(2.1)
2021
£m
2020
£m
7,762.5
7,526.3
FINANCIAL STATEMENTS
5 Analysis of operating income and expenses continued
Auditors’ remuneration
Audit of these financial statements
Amounts receivable by the Company’s auditors* in respect of:
audit of financial statements of subsidiaries of the Company
audit related assurance services
all other services
Total auditors’ remuneration
* Including their associates.
UK
£m
0.8
0.5
0.1
0.2
1.6
Overseas
£m
–
2.9
–
–
2.9
2021
Total
£m
0.8
3.4
0.1
0.2
4.5
UK
£m
0.5
0.4
0.1
0.1
1.1
Overseas
£m
–
3.0
–
–
3.0
2020
Total
£m
0.5
3.4
0.1
0.1
4.1
Audit related assurance services comprise the review of the half yearly financial report for the six months ended 30 June. All other services
comprise other non-audit work which was permissible in accordance with the Company’s policy and the prevailing regulations concerning the
provision of non-audit services by the Company’s external auditors. It is the Company’s policy to assess the non-audit services to be performed
by the Company’s auditors on a case-by-case basis to ensure adherence to the prevailing ethical standards and regulations. Other firms are
normally used by the Company to provide non-audit services. However, if the provision of a service by the Company’s auditors is permitted and
adequate safeguards are in place, it is sometimes appropriate for this additional work to be carried out by the Company’s auditors. In addition
to the amounts shown in the table above, an additional £0.3m was incurred in 2021 in relation to the finalisation of the 2020 audit.
The Audit Committee, which consists entirely of independent non-executive directors, reviews and approves the level and type of non-audit
work which the external auditors perform, including the fees paid for such work, to ensure that the auditors’ objectivity and independence are
not compromised. Further information is set out in the Audit Committee’s report on pages 98 to 109.
6 Finance income/(expense)
Interest on cash and cash equivalents
Interest income from foreign exchange contracts
Net interest income on defined benefit pension schemes in surplus
Interest related to income tax
Other finance income
Finance income
Interest on loans and overdrafts
Lease interest expense
Interest expense from foreign exchange contracts
Net interest expense on defined benefit pension schemes in deficit
Fair value gain/(loss) on US private placement notes and senior bond in a hedge relationship
Fair value (loss)/gain on interest rate swaps in a hedge relationship
Foreign exchange (loss)/gain on intercompany funding
Foreign exchange gain/(loss) on external debt and foreign exchange forward contracts
Cost of goods sold consists of the cost of the inventories sold or disposed of in the period where the cost of inventories is net of supplier rebate
income related to those inventories.
665.5
9,661.8
677.0
9,492.6
Interest related to income tax
Other finance expense
Finance expense
Net finance expense
2021
£m
3.5
5.0
0.1
0.7
1.4
2020
£m
2.6
5.3
0.3
0.1
2.1
10.7
10.4
(40.7)
(20.3)
(1.5)
(0.8)
33.3
(33.1)
(25.3)
25.2
(0.5)
(1.6)
(65.3)
(54.6)
(44.2)
(22.5)
(2.4)
(1.0)
(15.2)
15.4
3.5
(4.0)
(1.1)
(1.7)
(73.2)
(62.8)
The foreign exchange loss on intercompany funding arises as a result of the retranslation of foreign currency intercompany loans. This loss on
intercompany funding is substantially matched by the foreign exchange gain on external debt and foreign exchange forward contracts not in a
hedge relationship which minimises the foreign currency exposure in the income statement.
174
Bunzl plc Annual Report 2021
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175
175
FINANCIAL STATEMENTS
Notes continued
7 Income tax
Current tax on profit
current year
adjustments in respect of prior years
Deferred tax on profit
current year
adjustments in respect of prior years
Income tax on profit
2021
£m
152.9
(14.1)
138.8
(10.6)
(2.3)
(12.9)
125.9
2020
£m
161.1
(12.5)
148.6
(19.7)
(3.2)
(22.9)
125.7
In assessing the underlying performance of the Group, management uses adjusted profit before income tax. The tax effect of the adjusting
items (see Note 3) is excluded in monitoring the effective tax rate (being the tax rate on adjusted profit before income tax) which is shown in the
table below.
Income tax on profit
Tax associated with adjusting items
Tax on adjusted profit
Profit before income tax
Adjusting items
Adjusted profit before income tax
Reported tax rate
Effective tax rate
Tax on other comprehensive income/(expense)
and equity
Actuarial gain/(loss) on defined benefit pension schemes
Foreign currency translation differences on foreign operations
Gain/(loss) taken to equity as a result of effective net
investment hedges
Gain/(loss) recognised in cash flow hedge reserve
Other comprehensive expense
Dividends
Movement from cash flow hedge reserve to inventory
Issue of share capital
Employee trust shares
Share based payments
Other comprehensive expense and equity
Gross
£m
74.1
(89.8)
11.5
4.4
0.2
(180.4)
1.4
6.6
15.5
12.7
(144.0)
Tax (charge)/
credit
£m
(18.5)
–
–
(0.8)
(19.3)
–
(0.3)
–
–
5.6
(14.0)
2021
Net
£m
55.6
(89.8)
11.5
3.6
(19.1)
(180.4)
1.1
6.6
15.5
18.3
Gross
£m
(16.2)
(63.5)
(15.9)
(8.5)
(104.1)
(171.5)
6.1
3.7
(9.4)
14.9
(158.0)
(260.3)
2021
£m
125.9
29.8
155.7
568.7
129.5
698.2
22.1%
22.3%
Tax (charge)/
credit
£m
3.0
0.3
–
1.6
4.9
–
(1.1)
–
–
1.3
5.1
2020
£m
125.7
39.4
165.1
555.7
159.9
715.6
22.6%
23.1%
2020
Net
£m
(13.2)
(63.2)
(15.9)
(6.9)
(99.2)
(171.5)
5.0
3.7
(9.4)
16.2
(255.2)
176
176
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
FINANCIAL STATEMENTS
Notes continued
7 Income tax
Current tax on profit
current year
adjustments in respect of prior years
Deferred tax on profit
current year
adjustments in respect of prior years
Income tax on profit
table below.
Income tax on profit
Tax associated with adjusting items
Tax on adjusted profit
Profit before income tax
Adjusting items
Adjusted profit before income tax
Reported tax rate
Effective tax rate
In assessing the underlying performance of the Group, management uses adjusted profit before income tax. The tax effect of the adjusting
items (see Note 3) is excluded in monitoring the effective tax rate (being the tax rate on adjusted profit before income tax) which is shown in the
Tax (charge)/
Tax (charge)/
credit
Tax on other comprehensive income/(expense)
and equity
Actuarial gain/(loss) on defined benefit pension schemes
Foreign currency translation differences on foreign operations
Gain/(loss) taken to equity as a result of effective net
investment hedges
Gain/(loss) recognised in cash flow hedge reserve
Other comprehensive expense
Dividends
Movement from cash flow hedge reserve to inventory
Issue of share capital
Employee trust shares
Share based payments
Gross
£m
74.1
(89.8)
(180.4)
11.5
4.4
0.2
1.4
6.6
15.5
12.7
(144.0)
credit
£m
(18.5)
–
–
–
–
–
(0.8)
(19.3)
(0.3)
5.6
(14.0)
2021
Net
£m
55.6
(89.8)
11.5
3.6
(19.1)
(180.4)
1.1
6.6
15.5
18.3
Gross
£m
(16.2)
(63.5)
(15.9)
(8.5)
(104.1)
(171.5)
6.1
3.7
(9.4)
14.9
Other comprehensive expense and equity
(158.0)
(260.3)
2021
£m
152.9
(14.1)
138.8
(10.6)
(2.3)
(12.9)
125.9
2021
£m
125.9
29.8
155.7
568.7
129.5
698.2
22.1%
22.3%
£m
3.0
0.3
–
1.6
4.9
(1.1)
–
–
–
1.3
5.1
2020
£m
161.1
(12.5)
148.6
(19.7)
(3.2)
(22.9)
125.7
2020
£m
125.7
39.4
165.1
555.7
159.9
715.6
22.6%
23.1%
2020
Net
£m
(13.2)
(63.2)
(15.9)
(6.9)
(99.2)
(171.5)
5.0
3.7
(9.4)
16.2
(255.2)
FINANCIAL STATEMENTS
7 Income tax continued
Factors affecting the tax charge for the year
The Group operates in many countries and is subject to different rates of income tax in those countries. The expected tax rate is calculated as
a weighted average of the tax rates in the tax jurisdictions in which the Group operates, most of which are higher than the UK statutory rate
for the year of 19.0% (2020: 19.0%). The adjustments to the tax charge at the weighted average rate to determine the income tax on profit are
as follows:
Profit before income tax
Tax charge at weighted average rate (2021: 24.9%; 2020: 24.7%)
Effects of:
non-deductible expenditure
impact of intercompany finance
change in tax rates
prior year adjustments from acquisitions
other prior year adjustments
other current year items
Income tax on profit
2021
£m
568.7
2020
£m
555.7
141.7
137.4
2.4
(0.2)
(0.7)
–
(16.4)
(0.9)
125.9
5.8
(2.1)
(0.3)
(5.1)
(10.6)
0.6
125.7
During the year, legislation was passed to increase the UK Corporation tax rate to 25% from 1 April 2023. UK taxable profits earned before that
date will be subject to the current tax rate of 19% but UK temporary differences at 31 December 2021 have been calculated at the rate of 25%
because reversal is expected after April 2023. The impact of this change in tax rate on the income statement was not significant.
Deferred tax in the income statement
Property, plant and equipment
Defined benefit pension schemes
Goodwill and customer relationships
Provisions and accruals
Inventories
Leases
Other
Deferred tax on profit
2021
£m
(0.9)
1.7
(13.0)
4.3
(5.5)
0.2
0.3
(12.9)
2020
£m
(0.1)
(2.6)
(16.7)
(4.4)
1.7
0.2
(1.0)
(22.9)
In March 2021 the Group received communication from HM Revenue & Customs (‘HMRC’) regarding the potential application of State aid rules
to the UK tax regime, which was described in the 2020 Annual Report. HMRC’s conclusion, with which the European Commission agreed, was
that no Bunzl Group company was a beneficiary under the State aid decision of the European Commission. This means that the risk of having to
pay additional tax plus interest of up to £37m in connection with the matter is now remote, whatever the EU General Court’s eventual ruling.
8 Earnings per share
Profit for the year
Adjusted for:
customer relationships and brands amortisation
acquisition related items
non-recurring pension scheme charges
tax credit on adjusting items
Adjusted profit for the year
176
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
2021
£m
442.8
106.5
23.0
–
(29.8)
542.5
2020
£m
430.0
100.4
42.7
16.8
(39.4)
550.5
177
177
FINANCIAL STATEMENTS
Notes continued
8 Earnings per share continued
Basic weighted average number of ordinary shares in issue (million)
Dilutive effect of employee share plans (million)
Diluted weighted average number of ordinary shares (million)
Basic earnings per share
Adjustment
Adjusted earnings per share
Diluted basic earnings per share
Adjustment
Adjusted diluted earnings per share
9 Property, plant and equipment
2021
Cost
Beginning of year
Acquisitions (Note 28)
Additions
Disposals
Currency translation
End of year
Accumulated depreciation
Beginning of year
Charge in year
Disposals
Currency translation
End of year
Net book value at 31 December 2021
2020
Cost
Beginning of year
Acquisitions (Note 28)
Additions
Disposals
Currency translation
End of year
Accumulated depreciation
Beginning of year
Charge in year
Disposals
Currency translation
End of year
Net book value at 31 December 2020
2021
333.8
2.2
336.0
132.7p
29.8p
162.5p
131.8p
29.7p
161.5p
Land and
buildings
£m
Plant and
machinery
£m
Fixtures,
fittings and
equipment
£m
93.9
0.9
2.2
(3.7)
(1.8)
91.5
49.0
4.7
(2.4)
(0.7)
50.6
40.9
159.6
5.3
9.9
(6.5)
(0.7)
167.6
110.4
13.4
(6.0)
(1.0)
116.8
50.8
107.1
1.0
12.7
(3.7)
(6.6)
110.5
78.5
9.9
(3.7)
(3.4)
81.3
29.2
Land and
buildings
£m
Plant and
machinery
£m
Fixtures,
fittings and
equipment
£m
83.2
2.7
4.1
(0.8)
4.7
93.9
41.6
4.5
(0.7)
3.6
49.0
44.9
151.4
4.7
9.4
(4.6)
(1.3)
159.6
102.1
12.8
(4.0)
(0.5)
110.4
49.2
100.6
1.2
10.9
(6.1)
0.5
107.1
73.2
9.3
(5.6)
1.6
78.5
28.6
2020
333.8
1.3
335.1
128.8p
36.1p
164.9p
128.3p
36.0p
164.3p
Total
£m
360.6
7.2
24.8
(13.9)
(9.1)
369.6
237.9
28.0
(12.1)
(5.1)
248.7
120.9
Total
£m
335.2
8.6
24.4
(11.5)
3.9
360.6
216.9
26.6
(10.3)
4.7
237.9
122.7
178
178
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
FINANCIAL STATEMENTS
10 Right-of-use assets
2021
Net book value at beginning of year
Acquisitions (Note 28)
Additions
Depreciation charge in the year
Remeasurement adjustments
Currency translation
Net book value at 31 December 2021
2020
Net book value at beginning of year
Acquisitions (Note 28)
Additions
Depreciation charge in the year
Remeasurement adjustments
Currency translation
Net book value at 31 December 2020
11 Intangible assets
2021
Cost
Beginning of year
Acquisitions (Note 28)
Additions
Disposals
Currency translation
End of year
Accumulated amortisation and impairment
Beginning of year
Amortisation charge in year
Disposals
Currency translation
End of year
FINANCIAL STATEMENTS
Property
£m
Motor vehicles
£m
Equipment
£m
358.3
12.5
81.3
(96.4)
16.5
(5.8)
366.4
66.4
0.1
24.3
(28.6)
(3.5)
(0.9)
57.8
28.7
–
7.0
(9.8)
(1.5)
(0.3)
24.1
Property
£m
Motor vehicles
£m
Equipment
£m
341.5
30.8
62.4
(95.2)
22.7
(3.9)
358.3
66.4
3.9
24.7
(29.4)
0.5
0.3
66.4
25.0
0.5
13.0
(10.2)
1.0
(0.6)
28.7
Total
£m
453.4
12.6
112.6
(134.8)
11.5
(7.0)
448.3
Total
£m
432.9
35.2
100.1
(134.8)
24.2
(4.2)
453.4
Goodwill
£m
Customer
relationships
£m
Brands
£m
Software
£m
Total
£m
1,506.7
240.8
(36.6)
1,710.9
12.1
0.3
12.4
1,874.2
234.8
–
(53.8)
2,055.2
961.5
105.5
–
(33.8)
1,033.2
12.8
11.8
–
0.4
25.0
0.3
1.0
–
(0.3)
1.0
85.5
0.5
7.9
(1.9)
(1.8)
90.2
63.4
8.4
(1.9)
(2.0)
67.9
3,479.2
487.9
7.9
(1.9)
(91.8)
3,881.3
1,037.3
114.9
(1.9)
(35.8)
1,114.5
Net book value at 31 December 2021
1,698.5
1,022.0
24.0
22.3
2,766.8
Basic weighted average number of ordinary shares in issue (million)
Dilutive effect of employee share plans (million)
Diluted weighted average number of ordinary shares (million)
Notes continued
8 Earnings per share continued
Basic earnings per share
Adjustment
Adjusted earnings per share
Diluted basic earnings per share
Adjustment
Adjusted diluted earnings per share
9 Property, plant and equipment
Net book value at 31 December 2021
2021
Cost
Beginning of year
Acquisitions (Note 28)
Additions
Disposals
Currency translation
End of year
Accumulated depreciation
Beginning of year
Charge in year
Disposals
Currency translation
End of year
2020
Cost
Beginning of year
Acquisitions (Note 28)
Additions
Disposals
Currency translation
End of year
Accumulated depreciation
Beginning of year
Charge in year
Disposals
Currency translation
End of year
Net book value at 31 December 2020
2021
333.8
2.2
336.0
132.7p
29.8p
162.5p
131.8p
29.7p
161.5p
107.1
1.0
12.7
(3.7)
(6.6)
110.5
78.5
9.9
(3.7)
(3.4)
81.3
29.2
100.6
1.2
10.9
(6.1)
0.5
107.1
73.2
9.3
(5.6)
1.6
78.5
28.6
2020
333.8
1.3
335.1
128.8p
36.1p
164.9p
128.3p
36.0p
164.3p
Total
£m
360.6
7.2
24.8
(13.9)
(9.1)
369.6
237.9
28.0
(12.1)
(5.1)
248.7
120.9
Total
£m
335.2
8.6
24.4
(11.5)
3.9
360.6
216.9
26.6
(10.3)
4.7
237.9
122.7
Land and
buildings
£m
Plant and
machinery
£m
Fixtures,
fittings and
equipment
£m
Land and
buildings
£m
Plant and
machinery
£m
Fixtures,
fittings and
equipment
£m
93.9
0.9
2.2
(3.7)
(1.8)
91.5
49.0
4.7
(2.4)
(0.7)
50.6
40.9
83.2
2.7
4.1
(0.8)
4.7
93.9
41.6
4.5
(0.7)
3.6
49.0
44.9
159.6
5.3
9.9
(6.5)
(0.7)
167.6
110.4
13.4
(6.0)
(1.0)
116.8
50.8
151.4
4.7
9.4
(4.6)
(1.3)
159.6
102.1
12.8
(4.0)
(0.5)
110.4
49.2
178
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
179
179
FINANCIAL STATEMENTS
Notes continued
11 Intangible assets continued
2020
Cost
Beginning of year
Acquisitions (Note 28)
Additions
Disposals
Currency translation
End of year
Accumulated amortisation and impairment
Beginning of year
Amortisation charge in year
Impairment charge in year
Disposals
Currency translation
End of year
Goodwill
£m
1,403.6
108.8
(5.7)
1,506.7
–
12.1
–
12.1
Customer
relationships
£m
Brands
£m
Software
£m
1,710.9
172.2
–
(8.9)
1,874.2
846.0
100.1
9.1
–
6.3
961.5
–
13.7
–
(0.9)
12.8
–
0.3
–
–
–
0.3
74.7
2.0
8.7
(1.7)
1.8
85.5
52.3
10.3
–
(0.9)
1.7
63.4
Total
£m
3,189.2
296.7
8.7
(1.7)
(13.7)
3,479.2
898.3
110.7
21.2
(0.9)
8.0
1,037.3
Net book value at 31 December 2020
1,494.6
912.7
12.5
22.1
2,441.9
Goodwill, customer relationships and brands intangible assets have been acquired as part of business combinations. Further details of
acquisitions made in the year are set out in Note 28.
Customer relationships include three businesses with individually significant customer relationships assets, McCue Corporation acquired in
October 2021 and based in North America, MCR Safety acquired in September 2020 and based in North America and Hedis acquired in 2017
and based in France. The net book value of customer relationships in McCue Corporation as at 31 December 2021 was £107.9m with a
remaining useful economic life of 14.7 years. The net book value of customer relationships in MCR Safety as at 31 December 2021 was
£90.0m (2020: £95.5m) with a remaining useful economic life of 13.7 years (2020: 14.7 years). The net book value of customer relationships
in Hedis as at 31 December 2021 was £90.8m (2020: £105.4m) with a remaining useful economic life of 11.9 years (2020: 12.9 years).
Impairment testing
The carrying amount of goodwill is allocated across CGUs and is tested annually for impairment by comparing the recoverable amount of
each CGU with its carrying value.
A description of the Group’s principal activities is set out in the Chief Executive Officer’s review. There is no significant difference in the
nature of activities across different geographies. The identification of CGUs reflects the way the business is managed and monitored on a
geographical basis, taking into account the generation of cash flows and the sharing of synergies. Given the similar nature of the activities of
each CGU, a consistent methodology is applied across the Group in assessing CGU recoverable amounts. The recoverable amount is the
higher of the value in use and the fair value less the costs of disposal. The value in use is the present value of the cash flows expected to be
generated by the CGU over a projection period together with a terminal value. The projection period is the time period over which future cash
flows are predicted. The Group’s methodology is to use a projection period of five years consisting of detailed cash flow forecasts for the first
two years and CGU specific growth assumptions for years three, four and five. For periods after this five year period, the methodology applies
a long term growth rate specific to the CGU to derive a terminal value. Cash flow expectations exclude any future cash flows that may arise
from restructuring or other enhancements to the cash generating activities of the CGU and reflect management’s expectations of the range
of economic conditions that may exist over the projection period.
The value in use calculations are principally sensitive to revenue growth, including any significant changes to the customer base, achievability
of future profit margins and the discount rates used in the present value calculation. The information used for valuation purposes takes
into consideration past experience and the current economic environment with regard to customer attrition rates and additions to the
customer base, the ability to introduce price increases and new products and experience in controlling the underlying cost base. This
information is used to determine a long term growth rate which is consistent with the geographic segments in which the Group operates
and management’s assessment of future operating performance and market share movements. The discount rates used are determined
with assistance provided by external valuation specialists.
The Group allocates goodwill across seven CGUs (2020: seven). Based on our impairment testing, no impairments were identified to the
carrying value of goodwill within the Group.
180
180
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
FINANCIAL STATEMENTS
Notes continued
11 Intangible assets continued
2020
Cost
Beginning of year
Acquisitions (Note 28)
Additions
Disposals
Currency translation
End of year
Accumulated amortisation and impairment
Beginning of year
Amortisation charge in year
Impairment charge in year
Disposals
Currency translation
End of year
Customer
Goodwill
relationships
£m
£m
Brands
£m
Software
£m
1,403.6
108.8
(5.7)
1,506.7
–
12.1
–
12.1
1,710.9
172.2
–
(8.9)
1,874.2
846.0
100.1
9.1
–
6.3
961.5
–
13.7
–
(0.9)
12.8
0.3
–
–
–
–
0.3
Total
£m
3,189.2
296.7
8.7
(1.7)
(13.7)
3,479.2
898.3
110.7
21.2
(0.9)
8.0
1,037.3
74.7
2.0
8.7
(1.7)
1.8
85.5
52.3
10.3
–
(0.9)
1.7
63.4
Net book value at 31 December 2020
1,494.6
912.7
12.5
22.1
2,441.9
Goodwill, customer relationships and brands intangible assets have been acquired as part of business combinations. Further details of
acquisitions made in the year are set out in Note 28.
Customer relationships include three businesses with individually significant customer relationships assets, McCue Corporation acquired in
October 2021 and based in North America, MCR Safety acquired in September 2020 and based in North America and Hedis acquired in 2017
and based in France. The net book value of customer relationships in McCue Corporation as at 31 December 2021 was £107.9m with a
remaining useful economic life of 14.7 years. The net book value of customer relationships in MCR Safety as at 31 December 2021 was
£90.0m (2020: £95.5m) with a remaining useful economic life of 13.7 years (2020: 14.7 years). The net book value of customer relationships
in Hedis as at 31 December 2021 was £90.8m (2020: £105.4m) with a remaining useful economic life of 11.9 years (2020: 12.9 years).
Impairment testing
each CGU with its carrying value.
The carrying amount of goodwill is allocated across CGUs and is tested annually for impairment by comparing the recoverable amount of
A description of the Group’s principal activities is set out in the Chief Executive Officer’s review. There is no significant difference in the
nature of activities across different geographies. The identification of CGUs reflects the way the business is managed and monitored on a
geographical basis, taking into account the generation of cash flows and the sharing of synergies. Given the similar nature of the activities of
each CGU, a consistent methodology is applied across the Group in assessing CGU recoverable amounts. The recoverable amount is the
higher of the value in use and the fair value less the costs of disposal. The value in use is the present value of the cash flows expected to be
generated by the CGU over a projection period together with a terminal value. The projection period is the time period over which future cash
flows are predicted. The Group’s methodology is to use a projection period of five years consisting of detailed cash flow forecasts for the first
two years and CGU specific growth assumptions for years three, four and five. For periods after this five year period, the methodology applies
a long term growth rate specific to the CGU to derive a terminal value. Cash flow expectations exclude any future cash flows that may arise
from restructuring or other enhancements to the cash generating activities of the CGU and reflect management’s expectations of the range
of economic conditions that may exist over the projection period.
The value in use calculations are principally sensitive to revenue growth, including any significant changes to the customer base, achievability
of future profit margins and the discount rates used in the present value calculation. The information used for valuation purposes takes
into consideration past experience and the current economic environment with regard to customer attrition rates and additions to the
customer base, the ability to introduce price increases and new products and experience in controlling the underlying cost base. This
information is used to determine a long term growth rate which is consistent with the geographic segments in which the Group operates
and management’s assessment of future operating performance and market share movements. The discount rates used are determined
with assistance provided by external valuation specialists.
The Group allocates goodwill across seven CGUs (2020: seven). Based on our impairment testing, no impairments were identified to the
carrying value of goodwill within the Group.
FINANCIAL STATEMENTS
11 Intangible assets continued
As at 31 December 2021 North America, UK & Ireland, France and Rest of Continental Europe carried a significant amount of goodwill in
comparison with the total value of the Group’s goodwill. At 31 December 2021 the carrying value of goodwill in respect of North America was
£649.3m (2020: £490.9m), UK & Ireland was £325.3m (2020: £282.4m), France was £245.0m (2020: £260.3m) and Rest of Continental Europe
was £199.1m (2020: £195.6m). As at 31 December 2021 the aggregate amount of goodwill attributable to the Group’s CGUs, excluding
North America, UK & Ireland, France and Rest of Continental Europe, was £279.8m (2020: £265.4m), none of which is individually significant.
For North America, UK & Ireland, France and Rest of Continental Europe, the weighted average long term growth rate used in 2021 was in
the range of 2.5%–3.7% (2020: 2.5%–3.5%) reflecting anticipated revenue and profit growth. A pre-tax discount rate in the range of 8%–10%
(2020: 7%–10%) has been applied to the value in use calculations reflecting market assessments of the time value of money at the balance
sheet date. Similar assumptions have been applied to the other CGUs but where appropriate the directors have considered alternative
market risk assumptions to reflect the specific conditions arising in individual CGUs with long term growth rates ranging from 2.5%–5.9%
(2020: 2.5%–5.9%) and discount rates ranging from 7%–14% (2020: 7%–14%).
As part of the annual impairment testing for goodwill, the Group also considered whether there were any indicators that individual customer
relationships and brands intangible assets were impaired. As for the impairment testing for the Group’s CGUs noted above, value in use
calculations were prepared based on management’s latest expectations of the performance of the relevant business over a five year
projection period and appropriate long term growth and discount rates. Based on our impairment testing, no impairments were identified
to the carrying value of customer relationships and brands intangible assets within the Group.
The Group has also considered whether climate change would have a significant impact on the approach taken to the annual impairment
testing. As part of this the Group has assessed three alternative climate change scenarios up to 2050. Two of our scenarios align with the
global warming trajectory of 2⁰C by 2100 but differ in the speed and extent of decarbonisation over the next 30 years (orderly and disorderly).
Our final scenario assessed the potential impacts of a world in which global warming exceeds 3⁰C by 2100 (hot-house world scenario). Having
assessed these scenarios the Group has concluded that, while climate change is an emerging risk, it is not currently expected to have a
material financial impact and does not warrant any amendments to the assumptions used in the impairment testing.
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, expected long term growth rates and the discount rates selected. Key assumptions on which value in use calculations are dependent
relate to the discount rates used and revenue growth including the impact of changes to the underlying customer base from customer
attrition and the rate at which new customer relationships are introduced and established.
As part of the annual impairment testing, management performed sensitivity analysis by modelling the impact of higher discount rates, and
reviewing the combination of discount rates and long term growth rates which would bring the value in use to the net book value or below.
From this sensitivity testing management has concluded that no reasonably possible change in key assumptions would result in a material
change to the carrying amounts of any of the Group’s intangible assets in the next 12 months.
12 Working capital
Inventories (Note 13)
Trade and other receivables (Note 14)
Trade and other payables - current (Note 15)
Add back net non-trading related receivables and payables
2021
£m
1,474.0
1,431.0
(1,921.3)
43.9
1,027.6
2020
£m
1,432.2
1,395.8
(1,836.3)
29.7
1,021.4
See Note 29 for the cash flow impact of movements in working capital which exclude the impact from foreign exchange movements and
acquisitions.
13 Inventories
Goods for resale
2021
£m
2020
£m
1,474.0
1,432.2
During the year £8.5m (2020: £10.1m) was written off from inventories due to obsolescence or damage. Inventory provisions, including
provisions for slow moving, obsolete or defective inventories and market price movements, as at 31 December 2021 were £179.9m
(2020: £132.5m). During the year the Group saw an increase in the level of slow moving inventory with customer demand continuing to be
impacted by the pandemic-related restrictions and supply chain disruption resulting in higher levels of inventory. This has resulted in an
increase in the level of provisions required, including a net charge of approximately £25m (2020: approximately £15m) to increase provisions
for slow moving inventory, whilst additional provisions were required as a result of market price deflation on certain Covid-19 products.
180
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Bunzl plc Annual Report 2021
181
181
FINANCIAL STATEMENTS
Notes continued
14 Trade and other receivables
Trade receivables
Prepayments
Other receivables
The Group does not have any significant contract assets.
The ageing of trade receivables at 31 December was:
Current
0–30 days overdue
31–90 days overdue
Over 90 days overdue
2021
£m
1,173.3
86.8
170.9
1,431.0
Gross
£m
936.1
163.0
43.2
30.9
1,173.2
2020
£m
1,138.0
96.1
161.7
1,395.8
2020
Provision
£m
6.6
1.8
2.7
24.1
35.2
Gross
£m
983.8
147.6
43.5
25.8
1,200.7
2021
Provision
£m
4.8
2.1
2.4
18.1
27.4
The trade receivables provision includes provisions for expected credit losses and credit notes to be issued. The movement in the provision
during the year was as follows:
Beginning of year
Acquisitions
Charge
Released
Utilised
Currency translation
End of year
2021
£m
35.2
1.5
5.7
(10.4)
(3.7)
(0.9)
27.4
2020
£m
23.9
4.1
16.9
(4.3)
(4.4)
(1.0)
35.2
The movement in the year includes a net release of £4.7m (2020: net charge of £12.6m) reflecting a reduction in the level of recoverability risk
from customers as businesses begin to recover from the impacts of the Covid-19 pandemic. The total net impairment reversals on trade
receivables during the year were £4.7m (2020: net impairment losses of £15.9m) comprising the net reversal of £4.7m (2020: net charge of
£12.6m) relating to the trade receivables provision and a nil charge (2020: charge of £3.3m) relating to the write-off of gross trade receivable
balances not previously provided for.
15 Trade and other payables
Current
Trade payables
Other tax and social security contributions
Other payables
Accruals and contract liabilities
2021
£m
2020
£m
1,216.6
1,080.4
28.0
222.4
454.3
34.0
235.8
486.1
1,921.3
1,836.3
Other payables includes £46.5m (2020: £30.3m) related to deferred consideration on acquisitions.
The Group’s contract liabilities are limited to deferred income of £34.5m (2020: £82.9m). This arises from contracts with customers in the form
of consideration that has been received in advance of the satisfaction of performance obligations. The reduction in contract liabilities compared
to 2020 is a result of the majority of customer prepayments at the end of the prior year relating to large orders having been recognised as
revenue in 2021, offset by additional customer prepayments during the year relating to orders which are yet to be satisfied.
Non-current
Other payables greater than one year of £72.9m (2020: £50.2m) includes £61.3m (2020: £38.6m) related to deferred consideration on
acquisitions.
182
182
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Bunzl plc Annual Report 2021
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
16 Risk management and financial instruments
Capital management
The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future
development of the business. The Group monitors the return on average operating capital employed and the return on invested capital
(as defined on page 170) as well as the level of total shareholders’ equity and sets the amount of dividends paid to ordinary shareholders.
The principal covenant limits are net debt to EBITDA, calculated at average exchange rates and in accordance with the Group’s external debt
covenants, of no more than 3.5 times and interest cover of no less than 3.0 times. Sensitivity analyses using various scenarios are applied to
forecasts to assess their impact on covenants and net debt. Additionally, compliance with the Group’s biannual debt covenants is monitored
on a monthly basis and formally tested at 30 June and 31 December. During 2021 all covenants have been complied with and based on
current forecasts it is expected that such covenants will continue to be complied with for the foreseeable future. Debt covenants are based
on historical accounting standards.
The Group funds its operations through a mixture of shareholders’ equity and bank and capital market borrowings. All of the borrowings are
managed by a central treasury function and funds raised are lent onward to operating subsidiaries as required. The overall objective is to
manage the funding to ensure the borrowings have a range of maturities, are competitively priced and meet the demands of the business
over time and, in order to do so, the Group arranges a mixture of borrowings from different sources with a variety of maturity dates.
The Group’s businesses provide a high and consistent level of cash generation which helps fund future development and growth. The Group
seeks to maintain an appropriate balance between the higher returns that might be possible with higher levels of borrowings and the
advantages and security afforded by a sound capital position.
The trade receivables provision includes provisions for expected credit losses and credit notes to be issued. The movement in the provision
during the year was as follows:
There were no changes to the Group’s approach to capital management during the year and the Group is not subject to any externally
imposed capital requirements.
Treasury policies and controls
The Group has a centralised treasury department to control external borrowings and manage liquidity, interest rate, foreign currency and
credit risks. Treasury policies have been approved by the Board and cover the nature of the exposure to be hedged, the types of financial
instruments that may be employed and the criteria for investing and borrowing cash. The Group uses derivatives to manage its foreign
currency and interest rate risks arising from underlying business activities. No transactions of a speculative nature are undertaken. The
treasury department is subject to periodic independent review by the internal audit department. Underlying policy assumptions and activities
are periodically reviewed by the Board. Controls over exposure changes and transaction authenticity are in place.
Derivatives and hedge accounting
The Group designates derivatives which qualify as hedges for accounting purposes as either (a) a hedge of the fair value of a recognised
asset or liability; (b) a hedge of the cash flow risk resulting from changes in interest rates or foreign exchange rates; or (c) a hedge of a net
investment in a foreign operation. The accounting treatment for hedges and derivatives is set out in the financial instruments’ accounting
policy in Note 2p. The Group tests the effectiveness of hedges on a prospective basis to ensure compliance with IFRS 9. Information about the
methods and assumptions used in determining the fair value of derivatives is provided under the ‘Financial instruments’ section on page 189.
Hedge effectiveness
For hedges of foreign currency purchases and sales, the Group enters into cash flow hedge relationships where the critical terms of the
hedging instrument are similar to those of the hedged item, such as notional amount, expected maturity date and currency. Hedge
ineffectiveness may arise if the timing of the forecast transaction changes from what was originally estimated. The Group therefore performs
a quantitative hedge effectiveness assessment to calculate any ineffectiveness during the period.
Part of the Group’s fixed rate debt portfolio is swapped to floating rates using interest rate swaps where the hedged items are individual
tranches of fixed rate debt. These interest rate swaps are held in fair value hedges with critical terms exactly matching those of the underlying
hedged items, such as notional amounts, payment dates, reset dates, maturity dates and currencies. As all critical terms matched during the
year, the economic relationship was 100% effective. The Group therefore performs a qualitative assessment of effectiveness. If changes in
circumstances affect the terms of the hedged item such that the critical terms no longer match exactly with the critical terms of the hedging
instrument, the Group will perform a quantitative assessment of effectiveness. Hedge ineffectiveness may arise due to a change in credit risk
of the counterparty or if there is a change in timings or amounts of the hedged cash flows.
There was no material ineffectiveness during 2021 in relation to the interest rate swaps or the forward currency contracts.
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
183
183
Gross
£m
983.8
147.6
43.5
25.8
1,200.7
2021
Provision
£m
4.8
2.1
2.4
18.1
27.4
2021
£m
1,173.3
86.8
170.9
1,431.0
Gross
£m
936.1
163.0
43.2
30.9
1,173.2
2021
£m
35.2
1.5
5.7
(10.4)
(3.7)
(0.9)
27.4
2020
£m
1,138.0
96.1
161.7
1,395.8
2020
Provision
£m
6.6
1.8
2.7
24.1
35.2
2020
£m
23.9
4.1
16.9
(4.3)
(4.4)
(1.0)
35.2
1,216.6
1,080.4
2021
£m
28.0
222.4
454.3
2020
£m
34.0
235.8
486.1
1,921.3
1,836.3
The movement in the year includes a net release of £4.7m (2020: net charge of £12.6m) reflecting a reduction in the level of recoverability risk
from customers as businesses begin to recover from the impacts of the Covid-19 pandemic. The total net impairment reversals on trade
receivables during the year were £4.7m (2020: net impairment losses of £15.9m) comprising the net reversal of £4.7m (2020: net charge of
£12.6m) relating to the trade receivables provision and a nil charge (2020: charge of £3.3m) relating to the write-off of gross trade receivable
Other payables includes £46.5m (2020: £30.3m) related to deferred consideration on acquisitions.
The Group’s contract liabilities are limited to deferred income of £34.5m (2020: £82.9m). This arises from contracts with customers in the form
of consideration that has been received in advance of the satisfaction of performance obligations. The reduction in contract liabilities compared
to 2020 is a result of the majority of customer prepayments at the end of the prior year relating to large orders having been recognised as
revenue in 2021, offset by additional customer prepayments during the year relating to orders which are yet to be satisfied.
Other payables greater than one year of £72.9m (2020: £50.2m) includes £61.3m (2020: £38.6m) related to deferred consideration on
Notes continued
14 Trade and other receivables
Trade receivables
Prepayments
Other receivables
The Group does not have any significant contract assets.
The ageing of trade receivables at 31 December was:
Current
0–30 days overdue
31–90 days overdue
Over 90 days overdue
Beginning of year
Acquisitions
Charge
Released
Utilised
Currency translation
End of year
balances not previously provided for.
15 Trade and other payables
Current
Trade payables
Other tax and social security contributions
Other payables
Accruals and contract liabilities
Non-current
acquisitions.
182
FINANCIAL STATEMENTS
Notes continued
16 Risk management and financial instruments continued
Risk management
(a) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group continually monitors net
debt and forecast cash flows to ensure that sufficient facilities are in place to meet the Group’s requirements in the short, medium and long
term and, in order to do so, arranges borrowings from a variety of sources.
The Group has substantial funding available comprising multi-currency credit facilities from the Group’s banks, US private placement notes
and senior bonds. During 2020, the Group issued a £400m bond which matures in 2030 under the terms of its Euro Medium Term Note
(EMTN) Programme.
Loans, borrowings and net debt
Bank overdrafts
Bank loans
US private placement notes
Borrowings due within one year
Bank loans
US private placement notes
Senior bonds
Borrowings due after one year
Derivatives managing the interest rate risk and currency profile of the debt
Gross debt
Cash at bank and in hand
Net debt excluding lease liabilities
Lease liabilities
Net debt including lease liabilities
2021
£m
(551.6)
–
(111.9)
(663.5)
(14.6)
(750.5)
(668.6)
(1,433.7)
(17.1)
(2,114.3)
776.9
(1,337.4)
(488.7)
(1,826.1)
2020
£m
(514.6)
(0.5)
(79.4)
(594.5)
(45.1)
(874.8)
(695.3)
(1,615.2)
10.4
(2,199.3)
944.3
(1,255.0)
(497.5)
(1,752.5)
Further information on the movement in net debt and lease liabilities is shown in Note 27.
The total available committed funding at 31 December 2021 was £2,530.9m (2020: £2,594.3m). The committed funding maturity profile at
31 December 2021 is set out in the chart below.
Committed funding maturity profile by year (£m)
1200
1000
800
600
400
200
0
300
583
167
2025
140
150
2023
204
122
2024
112
2022
116
2026
55
130
2027
37
2028
2029
2030
2031
400
Bank facilities – undrawn
Senior bonds
Bank facilities – drawn
US private placement notes
The undrawn committed bank facilities available at 31 December were as follows:
Expiring within one year
Expiring after one year but within two years
Expiring after two years
2021
£m
–
139.8
841.9
981.7
2020
£m
105.0
160.0
668.0
933.0
During the year, all of the Group’s committed bank facilities, which previously referenced the discontinued GBP LIBOR, have been renegotiated
to reference SONIA, the new GBP benchmark. This has not had an impact on the financial results for the year ended 31 December 2021.
In addition, the Group maintains overdraft and uncommitted facilities to provide short term flexibility. As at 31 December 2021 there were no
loans secured by fixed charges on property (2020: none).
184
184
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
FINANCIAL STATEMENTS
Notes continued
16 Risk management and financial instruments continued
Risk management
(a) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group continually monitors net
debt and forecast cash flows to ensure that sufficient facilities are in place to meet the Group’s requirements in the short, medium and long
term and, in order to do so, arranges borrowings from a variety of sources.
The Group has substantial funding available comprising multi-currency credit facilities from the Group’s banks, US private placement notes
and senior bonds. During 2020, the Group issued a £400m bond which matures in 2030 under the terms of its Euro Medium Term Note
(EMTN) Programme.
Loans, borrowings and net debt
Bank overdrafts
Bank loans
US private placement notes
Borrowings due within one year
Bank loans
US private placement notes
Senior bonds
Borrowings due after one year
Gross debt
Cash at bank and in hand
Net debt excluding lease liabilities
Lease liabilities
Net debt including lease liabilities
Derivatives managing the interest rate risk and currency profile of the debt
2021
£m
(551.6)
–
(111.9)
(663.5)
(14.6)
(750.5)
(668.6)
(1,433.7)
(17.1)
(2,114.3)
776.9
(1,337.4)
(488.7)
(1,826.1)
2020
£m
(514.6)
(0.5)
(79.4)
(594.5)
(45.1)
(874.8)
(695.3)
(1,615.2)
10.4
(2,199.3)
944.3
(1,255.0)
(497.5)
(1,752.5)
Further information on the movement in net debt and lease liabilities is shown in Note 27.
The total available committed funding at 31 December 2021 was £2,530.9m (2020: £2,594.3m). The committed funding maturity profile at
31 December 2021 is set out in the chart below.
Committed funding maturity profile by year (£m)
The undrawn committed bank facilities available at 31 December were as follows:
Expiring within one year
Expiring after one year but within two years
Expiring after two years
2021
£m
–
139.8
841.9
981.7
2020
£m
105.0
160.0
668.0
933.0
During the year, all of the Group’s committed bank facilities, which previously referenced the discontinued GBP LIBOR, have been renegotiated
to reference SONIA, the new GBP benchmark. This has not had an impact on the financial results for the year ended 31 December 2021.
In addition, the Group maintains overdraft and uncommitted facilities to provide short term flexibility. As at 31 December 2021 there were no
loans secured by fixed charges on property (2020: none).
FINANCIAL STATEMENTS
16 Risk management and financial instruments continued
Contractual maturity profile
The contractual maturity profile of the Group’s financial liabilities at 31 December is set out in the tables below. The amounts disclosed are
the contractual undiscounted cash flows and therefore include interest cash flows (forecast using SONIA and USD LIBOR interest rates at
31 December in the case of floating rate financial assets and liabilities). Derivative assets and liabilities have been included within the tables
since they predominantly relate to derivatives which are used to manage the interest cash flows on the Group’s debt. Bank loans have been
drawn under committed facilities and can be refinanced on maturity from these same facilities. Accordingly, they have been aged based on
the maturity dates of the underlying facilities. Foreign currency cash flows have been translated using spot rates as at 31 December.
2021
Financial liabilities
Bank overdrafts
Bank loans
US private placement notes
Senior bonds
Lease payments
Trade and other payables
Derivative financial instruments
Net settled:
Interest rate swaps
Gross settled:
Foreign exchange inflows
Foreign exchange outflows
Total
2020
Financial liabilities
Bank overdrafts
Bank loans
US private placement notes
Senior bonds
Lease payments
Trade and other payables
Derivative financial instruments
Net settled:
Interest rate swaps
Gross settled:
Foreign exchange inflows
Foreign exchange outflows
Total
Total
contractual
cash flows
£m
Within one
year
£m
(551.6)
(14.9)
(939.8)
(781.1)
(562.2)
(1,966.2)
(4,815.8)
(551.6)
(0.1)
(140.0)
(12.8)
(143.9)
(1,893.3)
(2,741.7)
Contractual cash (outflows)/inflows
After
one year
but within
two years
£m
After
two years
but within
five years
£m
After
five years
£m
(0.2)
(174.5)
(12.8)
(108.2)
(72.9)
(368.6)
(14.6)
(450.6)
(331.5)
(186.9)
(174.7)
(424.0)
(123.2)
(983.6)
(721.9)
10.9
2.1
2.1
6.3
0.4
2,081.5
(2,075.6)
16.8
2,081.5
(2,075.6)
8.0
(4,799.0)
(2,733.7)
2.1
(366.5)
6.3
(977.3)
0.4
(721.5)
Contractual cash (outflows)/inflows
Total
contractual
cash flows
£m
Within one
year
£m
After
one year
but within
two years
£m
(514.6)
(46.6)
(1,050.7)
(793.9)
(583.9)
(1,852.5)
(4,842.2)
(514.6)
(0.6)
(109.8)
(12.8)
(146.3)
(1,802.3)
(2,586.4)
21.8
2.9
1,803.9
(1,809.6)
16.1
1,803.9
(1,809.6)
(2.8)
(4,826.1)
(2,589.2)
–
(0.3)
(142.6)
(12.8)
(122.4)
(50.2)
(328.3)
2.9
–
–
2.9
(325.4)
After
two years
but within
five years
£m
–
(45.7)
(501.6)
(338.3)
(184.6)
–
(1,070.2)
8.9
–
–
8.9
After
five years
£m
–
–
(296.7)
(430.0)
(130.6)
–
(857.3)
7.1
–
–
7.1
(1,061.3)
(850.2)
184
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185
185
FINANCIAL STATEMENTS
Notes continued
16 Risk management and financial instruments continued
(b) Interest rate risk
The Group is funded by a mixture of fixed and floating rate debt with the Group’s main interest rate risk arising on its floating rate debt.
Interest rate swaps and interest rate caps are used to manage the interest rate risk profile.
The table below shows the fixed/floating rate debt mix after interest rate swaps. Of the US private placement notes of £862.4m
(2020: £954.2m), there are US dollar denominated amounts totalling £95.8m (2020: £100.4m), with maturities ranging from 2026 to 2028,
which have been swapped to floating rates using interest rate swaps which reprice every three or six months. Of the senior bonds of £668.6m
(2020: £695.3m), an amount totalling £369.9m (2020: £396.9m), with a maturity of 2030, has been swapped to floating rates using interest
rate swaps which reprice daily.
The US private placement notes of £862.4m include a fair value adjustment of £20.8m (2020: £25.1m) related to interest rate swaps
terminated in previous years. The terminations resulted in discontinuation of a number of fair value hedge relationships. At the date of de-
designation, there was a fair value adjustment on the US private placement notes which will be amortised to the income statement across the
remaining life of the debt. The amortisation of the fair value adjustment in 2021 was £4.3m (2020: £2.1m). During 2020 the termination of
interest rate swaps resulted in a cash inflow of £15.1m within increase in borrowings on the consolidated cash flow statement. There were no
terminations in 2021.
The interest rate risk on the floating rate liability is managed using interest rate options. Hedge accounting is not applied to the interest rate
caps since the majority of their value is related to time value. The strike rates of these options are based on EURIBOR and are repriced every
three months.
Bank loans are drawn for periods up to one month at interest rates linked to SONIA.
Fixed vs floating interest rate table
Fixed rate debt
US private placement notes
Senior bonds
Total fixed rate debt
Interest rate swaps (fixed leg)
Fixed rate liability
Floating rate debt
Bank overdrafts
Bank loans
Total floating rate debt
Interest rate swaps (floating leg)
Floating rate liability
Derivatives managing the interest rate risk and currency profile of the debt
Gross debt
Effects of hedge accounting on the financial position and performance
The effects of the interest rate swaps on the Group’s financial position and performance are as follows:
Interest rate swaps
Net carrying amount (liability/(asset)) (£m)
Notional amount (£m)
Maturity date range
Hedge ratio
Fair value gain/(loss) on US private placement notes and senior bond in a hedge relationship (£m)
Fair value (loss)/gain on interest rate swaps in a hedge relationship (£m)
2021
£m
2020
£m
(862.4)
(668.6)
(1,531.0)
465.7
(1,065.3)
(551.6)
(14.6)
(566.2)
(465.7)
(954.2)
(695.3)
(1,649.5)
497.3
(1,152.2)
(514.6)
(45.6)
(560.2)
(497.3)
(1,031.9)
(1,057.5)
(17.1)
(2,114.3)
10.4
(2,199.3)
2021
2020
(21.3)
488.9
11.8
487.6
2026–2030
2026–2030
1:1
33.3
(33.1)
1:1
(15.2)
15.4
186
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FINANCIAL STATEMENTS
16 Risk management and financial instruments continued
(b) Interest rate risk
The Group is funded by a mixture of fixed and floating rate debt with the Group’s main interest rate risk arising on its floating rate debt.
Interest rate swaps and interest rate caps are used to manage the interest rate risk profile.
The table below shows the fixed/floating rate debt mix after interest rate swaps. Of the US private placement notes of £862.4m
(2020: £954.2m), there are US dollar denominated amounts totalling £95.8m (2020: £100.4m), with maturities ranging from 2026 to 2028,
which have been swapped to floating rates using interest rate swaps which reprice every three or six months. Of the senior bonds of £668.6m
(2020: £695.3m), an amount totalling £369.9m (2020: £396.9m), with a maturity of 2030, has been swapped to floating rates using interest
rate swaps which reprice daily.
The US private placement notes of £862.4m include a fair value adjustment of £20.8m (2020: £25.1m) related to interest rate swaps
terminated in previous years. The terminations resulted in discontinuation of a number of fair value hedge relationships. At the date of de-
designation, there was a fair value adjustment on the US private placement notes which will be amortised to the income statement across the
remaining life of the debt. The amortisation of the fair value adjustment in 2021 was £4.3m (2020: £2.1m). During 2020 the termination of
interest rate swaps resulted in a cash inflow of £15.1m within increase in borrowings on the consolidated cash flow statement. There were no
The interest rate risk on the floating rate liability is managed using interest rate options. Hedge accounting is not applied to the interest rate
caps since the majority of their value is related to time value. The strike rates of these options are based on EURIBOR and are repriced every
Bank loans are drawn for periods up to one month at interest rates linked to SONIA.
Fixed vs floating interest rate table
Notes continued
terminations in 2021.
three months.
Fixed rate debt
US private placement notes
Senior bonds
Total fixed rate debt
Interest rate swaps (fixed leg)
Fixed rate liability
Floating rate debt
Bank overdrafts
Bank loans
Total floating rate debt
Interest rate swaps (floating leg)
Floating rate liability
Derivatives managing the interest rate risk and currency profile of the debt
Gross debt
Effects of hedge accounting on the financial position and performance
The effects of the interest rate swaps on the Group’s financial position and performance are as follows:
Interest rate swaps
Net carrying amount (liability/(asset)) (£m)
Notional amount (£m)
Maturity date range
Hedge ratio
Fair value gain/(loss) on US private placement notes and senior bond in a hedge relationship (£m)
Fair value (loss)/gain on interest rate swaps in a hedge relationship (£m)
2021
£m
2020
£m
(862.4)
(668.6)
(1,531.0)
465.7
(1,065.3)
(551.6)
(14.6)
(566.2)
(465.7)
(954.2)
(695.3)
(1,649.5)
497.3
(1,152.2)
(514.6)
(45.6)
(560.2)
(497.3)
(1,031.9)
(1,057.5)
(17.1)
(2,114.3)
10.4
(2,199.3)
2021
2020
2026–2030
2026–2030
(21.3)
488.9
1:1
33.3
(33.1)
11.8
487.6
1:1
(15.2)
15.4
FINANCIAL STATEMENTS
16 Risk management and financial instruments continued
Sensitivity to movements in interest rates
After taking account of hedge relationships, a change of 1% in the interest rate forward curves on 31 December would have affected profit
before income tax for the year and equity as at the year end as a result of changes in the fair values of derivative assets and liabilities at that
date by the amounts shown below:
2021
2020
Impact on profit before tax
–1%
£m
+1%
£m
1.3
0.6
(0.3)
–
Impact on equity
–1%
£m
(0.3)
–
+1%
£m
1.3
0.6
(c) Foreign currency risk
The majority of the Group’s sales are made and income is earned in US dollars, euros and other foreign currencies. The Group does not
hedge the impact of exchange rate movements arising on translation of earnings into sterling at average exchange rates.
The following significant exchange rates applied during the year:
US dollar
Euro
Average rate
Closing rate
2021
1.38
1.16
2020
1.28
1.12
2021
1.35
1.19
2020
1.37
1.12
The majority of the Group’s transactions are carried out in the respective functional currencies of the Group’s operations and so transaction
exposures are usually relatively limited. Where they do occur the Group’s policy is to hedge exposures of highly probable forecast transactions
using forward foreign exchange contracts and these are designated as cash flow hedges. During the year the Group hedged highly probable
forecast transactions for periods of up to 12 months. However, the economic impact of foreign exchange on the value of uncommitted future
purchases and sales is not hedged. As a result, sudden and significant movements in foreign exchange rates can impact profit margins where
there is a delay in passing the resulting price increases on to customers.
For the year ended 31 December 2021, all foreign exchange cash flow hedges were effective with a cumulative pre-tax gain of £0.5m
(2020 cumulative pre-tax loss of £5.3m) recognised in equity at the end of the year and this will affect the income statement during 2022.
Effects of hedge accounting on the financial position and performance
Forward foreign currency hedges in relation to inventory purchases
Net carrying amount asset/(liability) (£m)
Notional amount at 31 December 2021 (£m)
Maturity date range
Hedge ratio
Change in value of hedged items since 1 January (£m)
Change in fair value of outstanding foreign currency forward contracts since 1 January (£m)
2021
2020
0.5
149.3
2022
1:1
(5.8)
5.8
(5.3)
143.9
2021
1:1
2.4
(2.4)
The majority of the Group’s borrowings are effectively denominated in US dollars, sterling and euros, aligning them to the respective functional
currencies of the component parts of the Group’s EBITDA. This currency profile is achieved using short term foreign exchange contracts and
foreign currency debt which are designated as hedging instruments to achieve net investment hedge accounting at a Group level. This currency
composition minimises the impact of movements in foreign exchange rates on the ratio of net debt to EBITDA. No ineffectiveness was recorded
from net investments in foreign entity hedges.
186
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187
187
FINANCIAL STATEMENTS
Notes continued
16 Risk management and financial instruments continued
The currency profile of the Group’s net debt excluding lease liabilities at 31 December is set out in the table below:
US dollar
Sterling
Euro
Other
2021
£m
572.1
135.1
502.4
127.8
2020
£m
458.0
308.5
398.4
90.1
1,337.4
1,255.0
The Group also enters into foreign currency derivatives to hedge intercompany loans economically although these do not qualify for hedge
accounting and therefore gains and losses are recorded in the income statement. These currency derivatives are subject to the same risk
management policies as all other derivative contracts.
Sensitivity to movements in foreign exchange rates
For the year ended 31 December 2021, a movement of one cent in the US dollar and euro average exchange rates would have changed profit
before income tax by £2.0m and £0.9m respectively (2020: £2.0m and £1.2m) and adjusted profit before income tax by £2.3m and £1.2m
respectively (2020: £2.5m and £1.5m).
If a 10% strengthening or weakening of sterling had taken place on 31 December it would have increased/(decreased) profit before income
tax and (decreased)/increased equity for the year by the amounts shown below. The impact of this translation is much greater on equity than
it is on profit before income tax since equity is translated using the closing exchange rates at the year end and profit before income tax is
translated using the average exchange rates for the year. As a result, the value of equity is more sensitive than the value of profit before
income tax to a movement in exchange rates on 31 December and the resulting movement in profit before income tax is due solely to the
translation effect on monetary items. This analysis assumes that all other variables, in particular interest rates, remain constant.
2021
2020
Impact on profit before tax
–10%
£m
+10%
£m
0.4
0.4
(0.5)
(0.5)
Impact on equity
–10%
£m
212.9
200.9
+10%
£m
(177.0)
(192.7)
(d) Credit risk
Credit risk is the risk of loss in relation to a financial asset due to non-payment by the relevant counterparty. The Group’s objective is
to reduce its exposure to counterparty default by restricting the type of counterparty it deals with and by employing an appropriate policy in
relation to the collection of financial assets.
The Group’s financial assets are cash at bank and in hand, derivative financial instruments and trade and other receivables which represent
the Group’s maximum exposure to credit risk in relation to financial assets. The maximum exposure to credit risk for cash at bank and in
hand, derivative financial assets (see page 190) and trade and other receivables (see Note 14) is their respective carrying amounts.
Dealings are restricted to those banks with the relevant combination of geographic presence and suitable credit rating. The Group continually
monitors the credit ratings of its counterparties and the credit exposure to each counterparty.
For trade and other receivables, the amounts represented in the balance sheet are net of any impairment losses measured using the
expected credit loss model. Note 14 sets out an analysis of trade and other receivables and the provision for doubtful debts in respect of
trade receivables.
At the balance sheet date there were no significant concentrations of credit risk (2020: none).
188
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FINANCIAL STATEMENTS
Notes continued
16 Risk management and financial instruments continued
The currency profile of the Group’s net debt excluding lease liabilities at 31 December is set out in the table below:
16 Risk management and financial instruments continued
(e) Financial instruments
Financial assets and liabilities
Financial assets held at amortised cost
Cash at bank and in hand
Trade and other receivables
Financial assets held at fair value
Interest rate derivatives in fair value hedges
Foreign exchange derivatives in cash flow hedges
Foreign exchange derivatives in net investment hedges
Other foreign exchange and interest rate derivatives
Total financial assets
Financial liabilities held at amortised cost
Bank overdrafts
Bank loans
US private placement notes
Senior bonds
Lease liability
Trade and other payables
Financial liabilities held at fair value
Interest rate derivatives in fair value hedges
Foreign exchange derivatives in cash flow hedges
Foreign exchange derivatives in net investment hedges
Other foreign exchange derivatives
Other payables
Total financial liabilities
FINANCIAL STATEMENTS
2021
£m
2020
£m
776.9
1,344.2
944.3
1,299.7
6.6
1.4
7.0
6.8
12.6
–
4.6
12.4
2,142.9
2,273.6
(551.6)
(14.6)
(862.4)
(668.6)
(488.7)
(514.6)
(45.6)
(954.2)
(695.3)
(497.5)
(1,866.6)
(1,793.6)
(27.9)
(0.9)
(3.9)
(5.6)
(99.6)
(0.8)
(5.3)
(16.3)
(2.0)
(58.9)
(4,590.4)
(4,584.1)
Financial assets and liabilities stated as being measured at fair value in the tables above (including all derivative financial instruments),
with the exception of other payables, have carrying amounts where the fair value is, and has been throughout the year, a level two fair value
measurement. Level two fair value measurements use inputs other than quoted prices that are observable for the relevant asset or liability,
either directly or indirectly. The fair values of financial assets and liabilities stated at level two fair value have been determined by discounting
expected future cash flows, translated at the appropriate balance sheet date exchange rates and adjusted for counterparty or own credit risk
as applicable. Other payables measured at fair value relate to earn outs on businesses acquired. This is a level three fair value which is initially
measured based on the expected future profitability of the businesses acquired at the acquisition date and subsequently reassessed at each
reporting date based on the most recent data available on the expected profitability of the businesses acquired. There were no transfers
between levels for recurring fair value measurements during the year.
As at 31 December 2021 the fair values, based on unadjusted market data, of the US private placement notes was £882.1m (2020: £991.9m)
and of the senior bonds was £694.0m (2020: £731.6m).
For other financial assets and financial liabilities not measured at fair value, including cash at bank and in hand, bank loans and overdrafts,
trade and other receivables and trade and other payables, their carrying amount is a reasonable approximation of fair value due to their short
term nature. Bank loans are priced based on floating interest rates and the credit spread has not changed since the inception of the loan.
2021
£m
572.1
135.1
502.4
127.8
2020
£m
458.0
308.5
398.4
90.1
1,337.4
1,255.0
US dollar
Sterling
Euro
Other
2021
2020
(d) Credit risk
The Group also enters into foreign currency derivatives to hedge intercompany loans economically although these do not qualify for hedge
accounting and therefore gains and losses are recorded in the income statement. These currency derivatives are subject to the same risk
management policies as all other derivative contracts.
Sensitivity to movements in foreign exchange rates
For the year ended 31 December 2021, a movement of one cent in the US dollar and euro average exchange rates would have changed profit
before income tax by £2.0m and £0.9m respectively (2020: £2.0m and £1.2m) and adjusted profit before income tax by £2.3m and £1.2m
respectively (2020: £2.5m and £1.5m).
If a 10% strengthening or weakening of sterling had taken place on 31 December it would have increased/(decreased) profit before income
tax and (decreased)/increased equity for the year by the amounts shown below. The impact of this translation is much greater on equity than
it is on profit before income tax since equity is translated using the closing exchange rates at the year end and profit before income tax is
translated using the average exchange rates for the year. As a result, the value of equity is more sensitive than the value of profit before
income tax to a movement in exchange rates on 31 December and the resulting movement in profit before income tax is due solely to the
translation effect on monetary items. This analysis assumes that all other variables, in particular interest rates, remain constant.
Impact on profit before tax
Impact on equity
+10%
£m
0.4
0.4
–10%
£m
(0.5)
(0.5)
+10%
£m
(177.0)
(192.7)
–10%
£m
212.9
200.9
Credit risk is the risk of loss in relation to a financial asset due to non-payment by the relevant counterparty. The Group’s objective is
to reduce its exposure to counterparty default by restricting the type of counterparty it deals with and by employing an appropriate policy in
relation to the collection of financial assets.
The Group’s financial assets are cash at bank and in hand, derivative financial instruments and trade and other receivables which represent
the Group’s maximum exposure to credit risk in relation to financial assets. The maximum exposure to credit risk for cash at bank and in
hand, derivative financial assets (see page 190) and trade and other receivables (see Note 14) is their respective carrying amounts.
Dealings are restricted to those banks with the relevant combination of geographic presence and suitable credit rating. The Group continually
monitors the credit ratings of its counterparties and the credit exposure to each counterparty.
For trade and other receivables, the amounts represented in the balance sheet are net of any impairment losses measured using the
expected credit loss model. Note 14 sets out an analysis of trade and other receivables and the provision for doubtful debts in respect of
trade receivables.
At the balance sheet date there were no significant concentrations of credit risk (2020: none).
188
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189
189
FINANCIAL STATEMENTS
Notes continued
16 Risk management and financial instruments continued
Offsetting of financial assets and liabilities
The following table sets out the Group’s derivative financial assets and liabilities that are subject to counterparty offsetting or master
netting agreements.
2021
Derivative financial assets
Derivative financial liabilities
2020
Derivative financial assets
Derivative financial liabilities
17 Provisions
Current
Non-current
Beginning of year
Charge
Acquisitions
Utilised or released
Currency translation
End of year
Gross
amounts
offset in the
balance sheet
£m
Net amounts
recognised
in the
balance sheet
£m
Amounts not
offset in the
balance sheet
£m
Gross
amounts
£m
21.8
(38.3)
29.6
(24.4)
–
–
–
–
21.8
(38.3)
29.6
(24.4)
Net
amounts
£m
9.7
(26.2)
10.2
(5.0)
2020
£m
8.5
55.7
64.2
2020
Total
£m
40.4
24.9
4.4
(4.2)
(1.3)
64.2
(12.1)
12.1
(19.4)
19.4
2021
£m
8.5
56.3
64.8
Other
£m
21.7
2.6
3.4
(2.5)
(0.6)
24.6
Properties
£m
MEPP
withdrawal
£m
24.3
1.6
2.1
(2.5)
(0.3)
25.2
15.3
–
–
(3.2)
0.2
12.3
Other
£m
24.6
4.4
2.6
(3.1)
(1.2)
27.3
2021
Total
£m
64.2
6.0
4.7
(8.8)
(1.3)
64.8
Properties
£m
MEPP
withdrawal
£m
18.7
5.9
1.0
(1.7)
0.4
24.3
–
16.4
–
–
(1.1)
15.3
The Properties provision includes provisions for repairs and dilapidations. These provisions cover the relevant periods of the lease agreements,
which typically extend from one to 10 years, up to the expected termination date.
The MEPP withdrawal provision relates to the withdrawal liability on multi-employer pension plans in North America. See Note 23 for
further details.
Group companies are, from time to time, subject to certain claims and litigation incidental to their operations and arising in the ordinary
course of business including, but not limited to, those relating to the products and services that they supply, contractual and commercial
disputes, environmental claims and employment related disputes. Other provisions include management’s best estimate of the liabilities for
such claims and litigation at the balance sheet date, determined by reference to known factors and past experience of similar items. Provision
is made if, on the basis of current information and professional advice, liabilities are considered likely to arise. Management expects these
matters to be settled within the next one to five years. While any dispute has an element of uncertainty, management does not expect that
the actual outcome of any such claims and litigation, either individually or in the aggregate, will be materially different to the amounts
provided. In the case of unfavourable outcomes, the Group may benefit from applicable insurance protection.
190
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Bunzl plc Annual Report 2021
FINANCIAL STATEMENTS
16 Risk management and financial instruments continued
Offsetting of financial assets and liabilities
netting agreements.
The following table sets out the Group’s derivative financial assets and liabilities that are subject to counterparty offsetting or master
Gross
Net amounts
amounts
offset in the
recognised
in the
amounts
balance sheet
balance sheet
Amounts not
offset in the
balance sheet
Gross
£m
21.8
(38.3)
29.6
(24.4)
£m
–
–
–
–
£m
21.8
(38.3)
29.6
(24.4)
amounts
Net
£m
9.7
(26.2)
10.2
(5.0)
2020
£m
8.5
55.7
64.2
2020
Total
£m
40.4
24.9
4.4
(4.2)
(1.3)
64.2
£m
(12.1)
12.1
(19.4)
19.4
2021
£m
8.5
56.3
64.8
Other
£m
21.7
2.6
3.4
(2.5)
(0.6)
24.6
Properties
MEPP
withdrawal
£m
24.3
1.6
2.1
(2.5)
(0.3)
25.2
£m
15.3
–
–
(3.2)
0.2
12.3
Other
£m
24.6
4.4
2.6
(3.1)
(1.2)
27.3
2021
Total
£m
64.2
6.0
4.7
(8.8)
(1.3)
64.8
Properties
MEPP
withdrawal
£m
£m
18.7
5.9
1.0
(1.7)
0.4
24.3
16.4
–
–
–
(1.1)
15.3
Notes continued
Derivative financial assets
Derivative financial liabilities
2021
2020
Derivative financial assets
Derivative financial liabilities
17 Provisions
Current
Non-current
Beginning of year
Charge
Acquisitions
Utilised or released
Currency translation
End of year
further details.
FINANCIAL STATEMENTS
18 Deferred tax
Property, plant and equipment
Defined benefit pension schemes
Goodwill and customer relationships
Share based payments
Leases
Provisions and accruals
Inventories
Other
Deferred tax asset/(liability)
Set-off of tax
Net deferred tax asset/(liability)
Asset
£m
1.4
7.8
4.1
12.8
6.9
33.7
10.9
8.2
85.8
(83.0)
2.8
Liability
£m
(9.4)
(15.7)
(195.6)
–
–
(2.2)
(7.1)
(4.0)
(234.0)
83.0
(151.0)
2021
Net
£m
(8.0)
(7.9)
(191.5)
12.8
6.9
31.5
3.8
4.2
(148.2)
–
(148.2)
Asset
£m
1.2
11.4
3.2
7.1
7.1
33.2
10.5
10.7
84.4
(81.9)
2.5
Liability
£m
(10.6)
(0.1)
(160.4)
–
(0.1)
(2.0)
(10.4)
(3.4)
(187.0)
81.9
(105.1)
2020
Net
£m
(9.4)
11.3
(157.2)
7.1
7.0
31.2
0.1
7.3
(102.6)
–
(102.6)
Except as noted below, deferred tax is calculated in full on temporary differences under the liability method using the tax rate of the country
of operation.
The Company is able to control the dividend policy of its subsidiaries and, therefore, the timing of the remittance of the undistributed
earnings of overseas subsidiaries. In general, the Company has determined either that such earnings will not be distributed in the foreseeable
future or, where there are plans to remit those earnings, no tax liability is expected to arise except for a liability of £1.4m (2020: £0.6m) which
has been provided for.
Deferred tax assets in respect of temporary differences have only been recognised in respect of tax losses and other temporary differences
where it is probable that these assets will be realised. No deferred tax asset has been recognised in respect of unutilised tax losses of £4.1m
(2020: £6.2m).
No deferred tax has been recognised in respect of unutilised capital losses of £94.6m (2020: £94.6m) as it is not considered probable that
there will be suitable future taxable profits against which they can be utilised.
The movement in the net deferred tax liability is shown below:
The Properties provision includes provisions for repairs and dilapidations. These provisions cover the relevant periods of the lease agreements,
which typically extend from one to 10 years, up to the expected termination date.
The MEPP withdrawal provision relates to the withdrawal liability on multi-employer pension plans in North America. See Note 23 for
Group companies are, from time to time, subject to certain claims and litigation incidental to their operations and arising in the ordinary
course of business including, but not limited to, those relating to the products and services that they supply, contractual and commercial
disputes, environmental claims and employment related disputes. Other provisions include management’s best estimate of the liabilities for
such claims and litigation at the balance sheet date, determined by reference to known factors and past experience of similar items. Provision
is made if, on the basis of current information and professional advice, liabilities are considered likely to arise. Management expects these
matters to be settled within the next one to five years. While any dispute has an element of uncertainty, management does not expect that
the actual outcome of any such claims and litigation, either individually or in the aggregate, will be materially different to the amounts
provided. In the case of unfavourable outcomes, the Group may benefit from applicable insurance protection.
Beginning of year
Acquisitions
Credit to income statement
Recognised in other comprehensive income and equity
Reclassified to current tax
Currency translation
End of year
2021
£m
102.6
51.7
(12.9)
16.1
(5.8)
(3.5)
148.2
2020
£m
123.8
6.6
(22.9)
(4.3)
0.9
(1.5)
102.6
190
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
191
191
FINANCIAL STATEMENTS
Notes continued
19 Share capital and share based payments
Issued and fully paid ordinary shares of 3217p each
Number of ordinary shares in issue and fully paid
Beginning of year
Issued – option exercises
End of year
2021
£m
108.4
2020
£m
108.3
2021
2020
336,998,961
336,792,607
399,835
206,354
337,398,796
336,998,961
The Company operates a number of share plans for the benefit of employees of the Company and its subsidiaries. Further details of the share
plans as they relate to the directors of the Company are set out in the Directors’ remuneration report.
Sharesave Scheme, International Sharesave Plan and Irish Sharesave Plan
For many years, the Company has operated all employee savings related share option schemes. The existing scheme in the UK, the Bunzl plc
Sharesave Scheme, was approved by shareholders at the 2011 Annual General Meeting (‘AGM’) and renewal amendments were approved
by shareholders at the 2021 AGM. It is an HMRC tax advantaged scheme and is open to all eligible UK employees, including UK based
executive directors.
The Bunzl Irish Sharesave Plan, which is approved by the Irish Revenue Commissioners, and the Bunzl plc International Sharesave Plan, were
first introduced in 2006 and have since been extended, most recently following the renewal of the Bunzl plc Sharesave Scheme in 2021.
The Bunzl plc Sharesave Scheme, Bunzl plc International Sharesave Plan and the Bunzl Irish Sharesave Plan operate on a similar basis with
options granted to participating employees who have completed at least three months of continuous service at a discount of up to 20% of the
market price prevailing shortly before the invitation to apply for the options. Depending on the scheme, options are normally exercisable
either three or five years after they have been granted with employees saving up to £500 (2020: £500) per month (or the equivalent value in
other currencies under the Bunzl plc International Sharesave Plan) or €500 (2020: €500) per month under the Bunzl Irish Sharesave Plan.
Long Term Incentive Plan 2004 (‘2004 LTIP’) and 2014 (‘2014 LTIP’)
The 2004 LTIP was approved by shareholders at the 2004 Annual General Meeting and expired in May 2014. No further share options or
performance share awards have been granted under the 2004 LTIP since that date. The 2014 LTIP was approved by shareholders at the 2014
Annual General Meeting and replaced the 2004 LTIP. The operation of both LTIPs is overseen by the Remuneration Committee of the Board
and each is divided into two parts.
Part A of the LTIP relates to the grant of market priced executive share options. In normal circumstances options granted under Part A are
only exercisable if the relevant performance condition has been satisfied. The performance condition is based on the Company’s adjusted
earnings per share growth exceeding UK RPI inflation over three financial years by a specified margin (for the 2004 LTIP) or meeting certain
specified targets (for the 2014 LTIP).
Part B of the LTIP relates to the grant of performance share awards and restricted share awards both of which are conditional rights to
receive shares in the Company for nil consideration. Performance share awards and restricted awards will usually vest (i.e. become
exercisable) on the third anniversary of their grant. The extent to which a performance share award will vest is usually subject to the extent
to which the applicable performance conditions have been satisfied, based partly on the Company’s total shareholder return performance,
relative to a comparator group of companies over a three year period, and partly subject to the Company’s adjusted earnings per share
growth exceeding UK RPI inflation over three years by a specified margin (for the 2004 LTIP) or meeting certain specified targets (for the 2014
LTIP). The extent to which a restricted share award will vest is usually subject to the extent to which the applicable underpin condition has
been satisfied. There are no set measures or targets in relation to the underpin condition. The basis of assessment is at the absolute
discretion of the Remuneration Committee.
Investment in own shares
The Company holds a number of its ordinary shares in an employee benefit trust. The principal purpose of this trust is to hold shares
in the Company for subsequent transfer to certain senior employees and executive directors in relation to options granted and awards
made under the LTIPs and the Deferred Annual Share Bonus Scheme (‘DASBS’) over market purchase shares. Details of these plans are
set out above and in the Directors’ remuneration report. The assets, liabilities and expenditure of the trust have been incorporated in the
consolidated financial statements. Finance expenses and administration charges are included in the income statement on an accruals basis.
As at 31 December 2021 the trust held 1,831,893 (2020: 3,006,186) shares, upon which dividends have been waived, with an aggregate
nominal value of £0.6m (2020: £1.0m) and market value of £52.9m (2020: £73.4m).
192
192
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
FINANCIAL STATEMENTS
Notes continued
19 Share capital and share based payments
Issued and fully paid ordinary shares of 3217p each
Number of ordinary shares in issue and fully paid
Beginning of year
Issued – option exercises
End of year
The Company operates a number of share plans for the benefit of employees of the Company and its subsidiaries. Further details of the share
plans as they relate to the directors of the Company are set out in the Directors’ remuneration report.
Sharesave Scheme, International Sharesave Plan and Irish Sharesave Plan
For many years, the Company has operated all employee savings related share option schemes. The existing scheme in the UK, the Bunzl plc
Sharesave Scheme, was approved by shareholders at the 2011 Annual General Meeting (‘AGM’) and renewal amendments were approved
by shareholders at the 2021 AGM. It is an HMRC tax advantaged scheme and is open to all eligible UK employees, including UK based
executive directors.
The Bunzl plc Sharesave Scheme, Bunzl plc International Sharesave Plan and the Bunzl Irish Sharesave Plan operate on a similar basis with
options granted to participating employees who have completed at least three months of continuous service at a discount of up to 20% of the
market price prevailing shortly before the invitation to apply for the options. Depending on the scheme, options are normally exercisable
either three or five years after they have been granted with employees saving up to £500 (2020: £500) per month (or the equivalent value in
other currencies under the Bunzl plc International Sharesave Plan) or €500 (2020: €500) per month under the Bunzl Irish Sharesave Plan.
Long Term Incentive Plan 2004 (‘2004 LTIP’) and 2014 (‘2014 LTIP’)
The 2004 LTIP was approved by shareholders at the 2004 Annual General Meeting and expired in May 2014. No further share options or
performance share awards have been granted under the 2004 LTIP since that date. The 2014 LTIP was approved by shareholders at the 2014
Annual General Meeting and replaced the 2004 LTIP. The operation of both LTIPs is overseen by the Remuneration Committee of the Board
and each is divided into two parts.
Part A of the LTIP relates to the grant of market priced executive share options. In normal circumstances options granted under Part A are
only exercisable if the relevant performance condition has been satisfied. The performance condition is based on the Company’s adjusted
earnings per share growth exceeding UK RPI inflation over three financial years by a specified margin (for the 2004 LTIP) or meeting certain
specified targets (for the 2014 LTIP).
Part B of the LTIP relates to the grant of performance share awards and restricted share awards both of which are conditional rights to
receive shares in the Company for nil consideration. Performance share awards and restricted awards will usually vest (i.e. become
exercisable) on the third anniversary of their grant. The extent to which a performance share award will vest is usually subject to the extent
to which the applicable performance conditions have been satisfied, based partly on the Company’s total shareholder return performance,
relative to a comparator group of companies over a three year period, and partly subject to the Company’s adjusted earnings per share
growth exceeding UK RPI inflation over three years by a specified margin (for the 2004 LTIP) or meeting certain specified targets (for the 2014
LTIP). The extent to which a restricted share award will vest is usually subject to the extent to which the applicable underpin condition has
been satisfied. There are no set measures or targets in relation to the underpin condition. The basis of assessment is at the absolute
discretion of the Remuneration Committee.
Investment in own shares
The Company holds a number of its ordinary shares in an employee benefit trust. The principal purpose of this trust is to hold shares
in the Company for subsequent transfer to certain senior employees and executive directors in relation to options granted and awards
made under the LTIPs and the Deferred Annual Share Bonus Scheme (‘DASBS’) over market purchase shares. Details of these plans are
set out above and in the Directors’ remuneration report. The assets, liabilities and expenditure of the trust have been incorporated in the
consolidated financial statements. Finance expenses and administration charges are included in the income statement on an accruals basis.
As at 31 December 2021 the trust held 1,831,893 (2020: 3,006,186) shares, upon which dividends have been waived, with an aggregate
nominal value of £0.6m (2020: £1.0m) and market value of £52.9m (2020: £73.4m).
FINANCIAL STATEMENTS
2021
£m
108.4
2020
£m
108.3
2021
2020
336,998,961
336,792,607
399,835
206,354
337,398,796
336,998,961
19 Share capital and share based payments continued
IFRS 2 disclosures
Options granted during the year have been valued using a Black-Scholes model. The fair value per option granted during the year and the
assumptions used in the calculations are as follows:
Grant date
Share price at grant date (£)
Exercise price (£)
Number of options granted during the year (shares)
Vesting period (years)
Expected volatility (%)
Option life (years)
Expected life (years)
Risk free rate of return (%)
Expected dividends expressed as a dividend yield (%)
Fair value per option (£)
2021
2020
31.03.21–15.09.21
10.03.20–30.10.20
23.23–25.28
nil–26.03
2,405,719
3–5
19–21
3.0–10
3.0–6.5
0.1–0.6
0.0–2.3
15.55–25.21
nil–23.92
3,418,392
3–5.2
18–24
3.0–10
3.0–6.7
0.0–0.2
2.1–3.3
2.87–18.54
1.34–22.34
The Bunzl Irish Sharesave Plan, which is approved by the Irish Revenue Commissioners, and the Bunzl plc International Sharesave Plan, were
first introduced in 2006 and have since been extended, most recently following the renewal of the Bunzl plc Sharesave Scheme in 2021.
The expected volatility is based on historical volatility over the last three to seven years. The expected life is the average expected period to
exercise. The risk free rate of return is the yield on zero coupon UK government bonds of a term consistent with the assumed option life.
The weighted average share price for options exercised by employees of the Company and its subsidiaries during the year was £26.37
(2020: £24.29). The total charge for the year relating to share based payments was £12.7m (2020: £14.9m). After tax the total charge was
£8.4m (2020: £11.2m).
Details of share options and awards which have been granted and exercised, those which have lapsed during 2021 and those outstanding
and available to exercise at 31 December 2021, whether over new issue or market purchase shares, under the Sharesave Scheme (2011),
International Sharesave Plan, Irish Sharesave Plan, the 2004 LTIP Part A and Part B and 2014 LTIP Part A and Part B, are set out in the
following table:
Options
outstanding
at 01.01.2021
Number
Number
Grants/
awards
2021
Price (£)
Exercises
2021
Price (£)
Lapses*
2021
Number
Number
Number
Options
outstanding
at 31.12.21
Price (£)
Options
available
to exercise
at 31.12.21
Number
Sharesave Scheme
(2011)
International Sharesave
Plan
Irish Sharesave Plan
2004 LTIP Part A
2014 LTIP Part A
2014 LTIP Part B
649,528
313,410
17.81
222,897 15.28-19.16
86,314
653,727
15.28-19.16
2,497
267,493
110,154
39,355
562,335
14,166
–
17.81
17.81
82,420 15.28-19.16
19,100 15.28-19.16
30,950
3,901
264,277
15.28-19.16
30,520
15.28-19.16
1,998
–
–
295,644
8.13-15.66
–
266,691
10.90-15.66
266,691
10,114,066
1,705,506
26.03
2,029,037 16.38-24.01
207,747
9,582,788
16.38-26.03
3,358,418
1,479,090
262,483
nil
295,238
nil
109,350
1,336,985
nil
56,895
13,111,867
2,405,719
2,944,336
438,262
12,134,988
3,686,499
* Share option lapses relate to those which have either been forfeited or have expired during the year.
For the options outstanding at 31 December 2021, the weighted average fair values and the weighted average remaining contractual lives
(being the time period from 31 December 2021 until the lapse date of each share option) are set out below:
Weighted average
fair value of options
outstanding (£)
Weighted average
remaining
contractual life
(years)
192
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Bunzl plc Annual Report 2021
Sharesave Scheme (2011)
International Sharesave Plan
Irish Sharesave Plan
2004 LTIP and 2014 LTIP Part A
2004 LTIP and 2014 LTIP Part B
4.31
4.29
4.57
2.82
16.12
The outstanding share options and performance share awards are exercisable at various dates up to September 2031.
2.29
2.00
1.98
7.27
4.22
193
193
FINANCIAL STATEMENTS
Notes continued
20 Dividends
Total dividends for the years in which they are recognised are:
2019 interim
2019 additional interim*
2020 interim
2020 final
Total
Total dividends per share for the year to which they relate are:
Interim
Final
Total
2021
£m
52.8
127.6
180.4
2021
16.2p
40.8p
57.0p
2020
£m
51.7
119.8
171.5
Per share
2020
15.8p
38.3p
54.1p
The 2021 interim dividend of 16.2p per share was paid on 5 January 2022 and comprised £54.3m of cash. The 2021 final dividend of 40.8p per
share will be paid on 4 July 2022 to shareholders on the register at the close of business on 20 May 2022. The 2021 final dividend will comprise
approximately £137m of cash.
* The 2019 final dividend of 35.8p per share recommended by the Board of directors of the Company in the 2019 Annual results announcement on 24 February 2020 was
subsequently not proposed at the Annual General Meeting on 15 April 2020 as a result of the heightened uncertainty created by the Covid-19 pandemic. As a result of the better
than expected trading performance during the first half of 2020, the Board of directors of the Company decided to reinstate the final dividend for the year ended 31 December
2019 at the same level as originally proposed (35.8p per share) as an additional interim dividend for the year ended 31 December 2019. This was paid on 16 November 2020 and
comprised £119.8m of cash.
21 Contingent liabilities
Bank guarantees
22 Directors’ ordinary share interests
The interests of the directors, and their connected persons, in the share capital of the Company at 31 December were:
Peter Ventress
Frank van Zanten
Richard Howes
Vanda Murray
Lloyd Pitchford
Stephan Nanninga
Vinodka Murria
Maria Fernanda Mejía
2021
£m
1.5
2020
£m
1.3
2021
2,608
153,116
30,117
3,000
4,000
–
–
–
2020
2,608
122,428
8,363
3,000
4,000
–
–
–
192,841
140,399
Details of the directors’ options and awards over ordinary shares made under the 2014 LTIP, Sharesave Scheme (2011) and DASBS are set out
in the Directors’ remuneration report. No changes to the directors’ ordinary share interests shown in this Note and the Directors’ remuneration
report have taken place between 31 December 2021 and 28 February 2022.
194
194
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
FINANCIAL STATEMENTS
Notes continued
20 Dividends
Total dividends for the years in which they are recognised are:
Total dividends per share for the year to which they relate are:
2019 interim
2019 additional interim*
2020 interim
2020 final
Total
Interim
Final
Total
comprised £119.8m of cash.
21 Contingent liabilities
Bank guarantees
Peter Ventress
Frank van Zanten
Richard Howes
Vanda Murray
Lloyd Pitchford
Stephan Nanninga
Vinodka Murria
Maria Fernanda Mejía
The 2021 interim dividend of 16.2p per share was paid on 5 January 2022 and comprised £54.3m of cash. The 2021 final dividend of 40.8p per
share will be paid on 4 July 2022 to shareholders on the register at the close of business on 20 May 2022. The 2021 final dividend will comprise
approximately £137m of cash.
* The 2019 final dividend of 35.8p per share recommended by the Board of directors of the Company in the 2019 Annual results announcement on 24 February 2020 was
subsequently not proposed at the Annual General Meeting on 15 April 2020 as a result of the heightened uncertainty created by the Covid-19 pandemic. As a result of the better
than expected trading performance during the first half of 2020, the Board of directors of the Company decided to reinstate the final dividend for the year ended 31 December
2019 at the same level as originally proposed (35.8p per share) as an additional interim dividend for the year ended 31 December 2019. This was paid on 16 November 2020 and
22 Directors’ ordinary share interests
The interests of the directors, and their connected persons, in the share capital of the Company at 31 December were:
2021
£m
52.8
127.6
180.4
2021
16.2p
40.8p
57.0p
2020
£m
51.7
119.8
171.5
Per share
2020
15.8p
38.3p
54.1p
2021
£m
1.5
2020
£m
1.3
2021
2,608
153,116
30,117
3,000
4,000
–
–
–
2020
2,608
122,428
8,363
3,000
4,000
–
–
–
192,841
140,399
Details of the directors’ options and awards over ordinary shares made under the 2014 LTIP, Sharesave Scheme (2011) and DASBS are set out
in the Directors’ remuneration report. No changes to the directors’ ordinary share interests shown in this Note and the Directors’ remuneration
report have taken place between 31 December 2021 and 28 February 2022.
FINANCIAL STATEMENTS
23 Retirement benefits
The Group operates a number of defined benefit and defined contribution retirement benefit schemes in the US, the UK and elsewhere in
Europe (including France, the Netherlands and the Republic of Ireland). The funds of the principal defined benefit schemes are administered
by trustees and are held independently from the Group. Pension costs of defined benefit schemes are assessed in accordance with the
advice of independent professionally qualified actuaries. Contributions to all schemes are determined in line with actuarial advice and local
conditions and practices. Scheme assets for the purpose of IAS 19 ‘Employee Benefits’ are stated at their bid value.
Characteristics of defined benefit pension schemes
UK
The UK defined benefit scheme is a contributory defined benefit pension scheme providing benefits based on final pensionable pay.
The scheme has been closed to new members since 2003. The valuation of the UK defined benefit pension scheme has been updated to
31 December 2021 by the Group’s actuaries.
The UK scheme is an HMRC registered pension scheme and is subject to standard UK pensions and tax law. This means that the payment of
contributions and benefits are subject to the appropriate tax treatments and restrictions and the scheme is subject to the scheme funding
requirements outlined in section 224 of the Pensions Act 2004.
In accordance with UK trust and pensions law, the pension scheme has a corporate trustee. Although the Company bears the financial cost of
the scheme, the responsibility for the management and governance of the scheme lies with the trustee, which has a duty to act in the best
interest of members at all times. The assets of the scheme are held in trust by the trustee who consults with the Company on investment
strategy decisions.
The trustee, in agreement with the Company, has hedging in place to reduce the impact of inflation and interest rate movements on the
funding of the plan.
The last full triennial valuation on the UK defined benefit pension scheme was carried out by a qualified actuary as at 5 April 2018 and showed
that there was a deficit on the agreed funding basis. To address the deficit, the Company has agreed to contribute an additional £5.5m per
year from March 2019 to 30 June 2022. The triennial valuation as at 5 April 2021 is ongoing.
US
The principal US defined benefit pension scheme is a non-contributory defined benefit pension scheme providing benefits based on final
pensionable pay. The scheme has been closed to new members since 2003. The valuation of the US defined benefit pension scheme has
been updated to 31 December 2021 by the Group’s actuaries.
The US scheme is a qualified pension scheme and is subject to standard regulations under the Employee Retirement Income Security Act of
1974, the Pension Protection Act of 2006 and the Department of Labor and Internal Revenue reporting requirements. The scheme pays
annual premiums to the Pension Benefit Guaranty Corporation to insure the benefits of the scheme.
The assets of the scheme are held in trust by an independent custodian. The Company has established a Retirement Scheme Investment
Committee. The members of the Committee are the scheme fiduciaries and, as such, are ultimately responsible for the management of the
scheme assets. The Committee performs the oversight function and delegates the day-to-day management process to appropriate staff.
A registered investment adviser advises the Committee regarding the investment of scheme assets.
A de-risking strategy has been agreed for the scheme to reduce the mismatch between the assets and liabilities, whereby investments are
switched from return seeking assets to liability matching assets as the funding improves, based on pre-agreed triggers.
Annual actuarial valuations are performed on the US defined benefit pension scheme. The last annual review was carried out by a qualified
actuary as at 1 January 2021 and showed that there was a required annual contribution of $3.4m. In 2022, the Group plans to contribute
$6.0m which also includes a contribution prior to the termination of one of the schemes. In 2021, Bunzl paid a contribution of $1.1m for the
2020 plan year. The annual review as at 1 January 2022 is ongoing.
Risks
The main risks to which the Group is exposed in relation to the defined benefit pension schemes are described below:
• Inflation risk – the majority of the UK scheme’s liabilities increase in line with inflation and, as a result, if inflation is greater than expected
the liabilities will increase. The impact of high inflation is capped each year for the UK scheme’s benefits. The US scheme’s liabilities are not
directly tied to inflationary increases.
• Interest rate risk – a fall in bond yields will increase the value of the schemes’ liabilities. A proportion of both the UK and US schemes’ assets
are invested in liability matching assets to mitigate the interest rate and also the inflation risk.
• Mortality risk – the assumptions adopted by the Group make allowance for future improvements in life expectancy. However, if life
expectancy improves at a faster rate than assumed, this would result in greater payments from the schemes and consequently increases
in the schemes’ liabilities. The mortality assumptions are reviewed on a regular basis to minimise the risk of using an inappropriate
assumption.
194
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
195
195
FINANCIAL STATEMENTS
Notes continued
23 Retirement benefits continued
Risks continued
• Investment risk – the schemes invest in a diversified range of asset classes to mitigate the risk of falls in any one area of the investments.
In the UK, the trustee implements partial currency hedging on the overseas assets to mitigate currency risk.
The risks mentioned above could lead to a material change to the deficit or surplus of the pension schemes. Given the long term time horizon
of the schemes’ cash flows, the assumptions used can lead to volatility in the scheme valuations from year to year. The Company and the
trustee of the UK scheme seek to mitigate actively the risks associated with the schemes.
A higher defined benefit obligation could lead to additional funding requirements in future years. Any deficit measured on a funding valuation
basis, which may differ from the actuarial valuation under IAS 19, will generally be financed over a period that ensures the contributions are
appropriate to the Group and in line with the relevant regulations.
Financial information
The amounts included in the consolidated financial statements at 31 December were:
Amounts included in the income statement
Defined contribution pension schemes
Defined benefit pension schemes
current service cost (net of contributions by employees)
past service cost
losses on curtailment and settlement
Total included in employee costs excluding non-recurring pensions scheme charges
Defined benefit pension schemes
past service cost recognised in non-recurring pension scheme charges
Total included in employee costs
Amounts included in finance (income)/expense
Net interest income on defined benefit pension schemes in surplus
Net interest expense on defined benefit pension schemes in deficit
Total charge to the income statement
Amounts recognised in the statement of comprehensive income
Actual return less expected return on pension scheme assets
Experience gain on pension scheme liabilities
Impact of changes in financial assumptions relating to the present value of pension scheme liabilities
Impact of changes in demographic assumptions relating to the present value of pension scheme liabilities
Actuarial gain/(loss) on defined benefit pension schemes
2021
£m
23.0
5.7
0.1
0.7
29.5
–
29.5
(0.1)
0.8
30.2
2021
£m
26.1
20.1
20.1
7.8
74.1
The cumulative amount of net actuarial losses arising since 1 January 2004 recognised in the statement of comprehensive income at
31 December 2021 was £41.9m (2020: £116.0m).
The principal assumptions used by the independent qualified actuaries for the purposes of IAS 19 were:
UK
Longevity at age 65 for current pensioners (years)
Longevity at age 65 for future pensioners (years)
US
Longevity at age 65 for current and future pensioners (years)
Rate of increase in salaries
Rate of increase in pensions
Discount rate
Inflation rate
2021
3.8%
2.8%
1.8%
2.8%
2020
3.4%
2.4%
1.4%
2.4%
UK
2019
3.4%
2.2%
2.1%
2.2%
2021
3.0%
–
2.6%
2.3%
2021
22.0
23.4
21.6
2020
3.0%
–
2.3%
2.3%
2020
£m
22.0
6.2
–
–
28.2
0.4
28.6
(0.3)
1.0
29.3
2020
£m
57.9
2.0
(77.4)
1.3
(16.2)
2020
22.0
23.4
21.4
US
2019
3.0%
–
3.1%
2.3%
The assumptions used by the actuaries are the best estimates chosen from a range of possible actuarial assumptions which, due to the
timescales covered, may not necessarily be borne out in practice.
196
196
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
23 Retirement benefits continued
Financial information continued
The increase/(decrease) that would arise on the overall net pension surplus as at 31 December 2021 as a result of reasonably possible
changes to key assumptions was:
A higher defined benefit obligation could lead to additional funding requirements in future years. Any deficit measured on a funding valuation
basis, which may differ from the actuarial valuation under IAS 19, will generally be financed over a period that ensures the contributions are
appropriate to the Group and in line with the relevant regulations.
UK
US
Impact of change
in longevity
–1 year
£m
15.6
3.8
+1 year
£m
(14.8)
(3.7)
Impact of change
in inflation rate
–0.25%
£m
9.1
–
+0.25%
£m
(9.5)
–
+0.25%
£m
17.2
3.0
The market value of pension scheme assets and the present value of retirement benefit obligations at 31 December were:
Impact of change
in discount rate
–0.25%
£m
2021
Equities
Bonds
Other
Total market value of pension scheme assets
Present value of funded obligations
Present value of unfunded obligations
Present value of funded and unfunded obligations
Defined benefit pension schemes in deficit
Defined benefit pension schemes in surplus
Total surplus/(deficit) before tax
Deferred tax
Total surplus/(deficit) after tax
2020
Equities
Bonds
Other
Total market value of pension scheme assets
Present value of funded obligations
Present value of unfunded obligations
Present value of funded and unfunded obligations
Defined benefit pension schemes in deficit
Defined benefit pension schemes in surplus
Total surplus/(deficit) before tax
Deferred tax
Total surplus/(deficit) after tax
UK
£m
149.9
308.8
0.3
459.0
(396.2)
–
(396.2)
–
62.8
62.8
(15.7)
47.1
UK
£m
143.3
293.9
1.1
438.3
(437.9)
–
(437.9)
–
0.4
0.4
(0.1)
0.3
US
£m
52.1
46.4
16.1
114.6
(122.4)
(11.2)
(133.6)
(19.0)
–
(19.0)
4.4
(14.6)
US
£m
58.0
54.0
13.7
125.7
(142.9)
(11.6)
(154.5)
(28.8)
–
(28.8)
6.8
(22.0)
Other
£m
3.0
9.9
13.9
26.8
(28.1)
(11.3)
(39.4)
(13.4)
0.8
(12.6)
3.4
(9.2)
Other
£m
4.1
8.6
15.6
28.3
(31.1)
(13.6)
(44.7)
(16.4)
–
(16.4)
4.6
(11.8)
(18.9)
(3.2)
Total
£m
205.0
365.1
30.3
600.4
(546.7)
(22.5)
(569.2)
(32.4)
63.6
31.2
(7.9)
23.3
Total
£m
205.4
356.5
30.4
592.3
(611.9)
(25.2)
(637.1)
(45.2)
0.4
(44.8)
11.3
(33.5)
There is a net surplus of £47.1m (£62.8m before deferred tax) (2020: £0.3m (£0.4m before deferred tax)) on the UK scheme, which is recorded
separately as a defined benefit pension asset on the balance sheet. In accordance with IFRIC 14, the surplus on the scheme is recognised as a
defined benefit asset because the Group considers that it has an unconditional right to a refund of any surplus from the UK scheme.
Of the pension scheme assets, £574.9m (2020: £566.6m) are valued based on a quoted market prices.
The assumptions used by the actuaries are the best estimates chosen from a range of possible actuarial assumptions which, due to the
Net benefit obligation attributable to settlement
Currency translation
End of year
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
Movement in net surplus/(deficit)
Beginning of year
Current service cost
Past service cost
Contributions
Net interest expense
Actuarial gain/(loss)
2021
£m
(44.8)
(5.7)
(0.1)
8.4
(0.7)
74.1
(0.7)
0.7
31.2
2020
£m
(36.0)
(6.2)
(0.4)
14.6
(0.7)
(16.2)
–
0.1
(44.8)
197
197
Notes continued
23 Retirement benefits continued
Risks continued
• Investment risk – the schemes invest in a diversified range of asset classes to mitigate the risk of falls in any one area of the investments.
In the UK, the trustee implements partial currency hedging on the overseas assets to mitigate currency risk.
The risks mentioned above could lead to a material change to the deficit or surplus of the pension schemes. Given the long term time horizon
of the schemes’ cash flows, the assumptions used can lead to volatility in the scheme valuations from year to year. The Company and the
trustee of the UK scheme seek to mitigate actively the risks associated with the schemes.
Financial information
The amounts included in the consolidated financial statements at 31 December were:
Amounts included in the income statement
Defined contribution pension schemes
Defined benefit pension schemes
current service cost (net of contributions by employees)
past service cost
losses on curtailment and settlement
Total included in employee costs excluding non-recurring pensions scheme charges
Defined benefit pension schemes
past service cost recognised in non-recurring pension scheme charges
Total included in employee costs
Amounts included in finance (income)/expense
Net interest income on defined benefit pension schemes in surplus
Net interest expense on defined benefit pension schemes in deficit
Total charge to the income statement
Amounts recognised in the statement of comprehensive income
Actual return less expected return on pension scheme assets
Experience gain on pension scheme liabilities
Impact of changes in financial assumptions relating to the present value of pension scheme liabilities
Impact of changes in demographic assumptions relating to the present value of pension scheme liabilities
Actuarial gain/(loss) on defined benefit pension schemes
The cumulative amount of net actuarial losses arising since 1 January 2004 recognised in the statement of comprehensive income at
31 December 2021 was £41.9m (2020: £116.0m).
The principal assumptions used by the independent qualified actuaries for the purposes of IAS 19 were:
Longevity at age 65 for current pensioners (years)
Longevity at age 65 for future pensioners (years)
Longevity at age 65 for current and future pensioners (years)
Rate of increase in salaries
Rate of increase in pensions
Discount rate
Inflation rate
2021
3.8%
2.8%
1.8%
2.8%
2020
3.4%
2.4%
1.4%
2.4%
UK
2019
3.4%
2.2%
2.1%
2.2%
2021
3.0%
–
2.6%
2.3%
timescales covered, may not necessarily be borne out in practice.
UK
US
196
2021
£m
23.0
5.7
0.1
0.7
29.5
–
29.5
(0.1)
0.8
30.2
2021
£m
26.1
20.1
20.1
7.8
74.1
2021
22.0
23.4
21.6
2020
3.0%
–
2.3%
2.3%
2020
£m
22.0
6.2
–
–
28.2
0.4
28.6
(0.3)
1.0
29.3
2020
£m
57.9
2.0
(77.4)
1.3
(16.2)
2020
22.0
23.4
21.4
US
2019
3.0%
–
3.1%
2.3%
FINANCIAL STATEMENTS
Notes continued
23 Retirement benefits continued
Financial information continued
Changes in the present value of defined benefit pension scheme liabilities
Beginning of year
Current service cost
Past service cost
Interest expense
Contributions by employees
Benefit obligation attributable to settlement
Actuarial (gain)/loss
Benefits paid
Currency translation
End of year
Changes in the fair value of defined benefit pension scheme assets
Beginning of year
Interest income
Actuarial gain
Contributions by employer
Contributions by employees
Benefits paid due to settlement
Benefits paid
Currency translation
End of year
2021
£m
637.1
5.7
0.1
9.8
0.5
(7.7)
(48.0)
(27.7)
(0.6)
569.2
2021
£m
592.3
9.1
26.1
8.4
0.5
(8.4)
(27.7)
0.1
600.4
2020
£m
572.6
6.2
0.4
12.9
0.6
–
74.1
(26.1)
(3.6)
637.1
2020
£m
536.6
12.2
57.9
14.6
0.6
–
(26.1)
(3.5)
592.3
The actual return on pension scheme assets was a gain of £35.2m (2020: gain of £70.1m).
The Group expects to pay approximately £12.0m in contributions to the defined benefit pension schemes in the year ending 31 December 2022
(expected as at 31 December 2020 for the year ending 31 December 2021: £15.3m) including £6.8m for the UK (expected as at 31 December 2020
for the year ending 31 December 2021: £7.0m).
The weighted average duration of the defined benefit pension scheme liabilities at 31 December 2021 was approximately 18.2 years
(2020: 19.4 years) for the UK and 10.4 years (2020: 11.7 years) for the US.
The total defined benefit pension scheme liabilities are divided between active members (£155.5m (2020: (£206.8m)), deferred members
(£186.0m (2020: £204.2m)) and pensioners (£227.7m (2020: £226.1m)).
Multi-employer pension plans
The Group participates in six multi-employer pensions plans (‘MEPPs’) in North America. Although these plans are defined benefit plans the
Group does not have sufficient information to account for them as defined benefit plans and, therefore, in accordance with IAS 19, accounts
for them as defined contribution plans.
For MEPPs, US law requires payment of a withdrawal liability when employers cease contributing to underfunded MEPPs. The liability
for withdrawal payments is shared by all members of the group of companies in any particular plan and solvent entities must cover the
unfunded liabilities of employers who are unable to pay due to insolvency or bankruptcy. On withdrawal from a plan, an employer’s
withdrawal liability amount is calculated by reference to the employer’s proportionate share of the MEPP’s unfunded vested benefits based
on the employer’s share of all contributions made to the plan over the previous 10 years.
During 2020 the Group reviewed its exposure to the six MEPPs in which it participated and determined that it was in its best interests to serve
notice to withdraw from three of the plans due to their critical funding status, recognising a provision for the estimated withdrawal liability for
these three plans of £15.3m as at 31 December 2020, as shown in Note 17. During the year, the Group has agreed to pay a lump sum to settle
the liability at the amount equal to that provided (£3.2m) for one of these plans. Negotiations on the Group’s exit from the other two plans
remain ongoing.
The Group continues to participate in the other three MEPPs and continues to account for these as defined contribution plans with the
combined ongoing annual contributions for the three plans in 2022 expected to be no more than £2m per annum.
198
198
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
FINANCIAL STATEMENTS
Changes in the present value of defined benefit pension scheme liabilities
Notes continued
23 Retirement benefits continued
Financial information continued
Contributions by employees
Benefit obligation attributable to settlement
Beginning of year
Current service cost
Past service cost
Interest expense
Actuarial (gain)/loss
Benefits paid
Currency translation
End of year
Beginning of year
Interest income
Actuarial gain
Contributions by employer
Contributions by employees
Benefits paid due to settlement
Benefits paid
Currency translation
End of year
Changes in the fair value of defined benefit pension scheme assets
2021
£m
637.1
5.7
0.1
9.8
0.5
(7.7)
(48.0)
(27.7)
(0.6)
569.2
2021
£m
592.3
9.1
26.1
8.4
0.5
(8.4)
(27.7)
0.1
600.4
2020
£m
572.6
6.2
0.4
12.9
0.6
–
74.1
(26.1)
(3.6)
637.1
2020
£m
536.6
12.2
57.9
14.6
0.6
–
(26.1)
(3.5)
592.3
The actual return on pension scheme assets was a gain of £35.2m (2020: gain of £70.1m).
The Group expects to pay approximately £12.0m in contributions to the defined benefit pension schemes in the year ending 31 December 2022
(expected as at 31 December 2020 for the year ending 31 December 2021: £15.3m) including £6.8m for the UK (expected as at 31 December 2020
for the year ending 31 December 2021: £7.0m).
The weighted average duration of the defined benefit pension scheme liabilities at 31 December 2021 was approximately 18.2 years
(2020: 19.4 years) for the UK and 10.4 years (2020: 11.7 years) for the US.
The total defined benefit pension scheme liabilities are divided between active members (£155.5m (2020: (£206.8m)), deferred members
(£186.0m (2020: £204.2m)) and pensioners (£227.7m (2020: £226.1m)).
Multi-employer pension plans
for them as defined contribution plans.
The Group participates in six multi-employer pensions plans (‘MEPPs’) in North America. Although these plans are defined benefit plans the
Group does not have sufficient information to account for them as defined benefit plans and, therefore, in accordance with IAS 19, accounts
For MEPPs, US law requires payment of a withdrawal liability when employers cease contributing to underfunded MEPPs. The liability
for withdrawal payments is shared by all members of the group of companies in any particular plan and solvent entities must cover the
unfunded liabilities of employers who are unable to pay due to insolvency or bankruptcy. On withdrawal from a plan, an employer’s
withdrawal liability amount is calculated by reference to the employer’s proportionate share of the MEPP’s unfunded vested benefits based
on the employer’s share of all contributions made to the plan over the previous 10 years.
During 2020 the Group reviewed its exposure to the six MEPPs in which it participated and determined that it was in its best interests to serve
notice to withdraw from three of the plans due to their critical funding status, recognising a provision for the estimated withdrawal liability for
these three plans of £15.3m as at 31 December 2020, as shown in Note 17. During the year, the Group has agreed to pay a lump sum to settle
the liability at the amount equal to that provided (£3.2m) for one of these plans. Negotiations on the Group’s exit from the other two plans
remain ongoing.
The Group continues to participate in the other three MEPPs and continues to account for these as defined contribution plans with the
combined ongoing annual contributions for the three plans in 2022 expected to be no more than £2m per annum.
24 Directors and employees
Number of employees
North America
Continental Europe
UK & Ireland
Rest of the World
Corporate
Employee costs
Wages and salaries
Social security costs
Pension costs
Share based payments
GMP equalisation charge
MEPP withdrawal liability charge
FINANCIAL STATEMENTS
2021
8,189
5,292
4,082
3,386
20,949
72
21,021
Closing
2020
7,618
5,151
3,671
3,348
19,788
65
19,853
2021
7,936
5,221
3,812
3,368
20,337
69
20,406
2021
£m
801.8
90.8
29.5
12.7
934.8
–
–
934.8
Average
2020
7,078
5,042
3,808
3,248
19,176
63
19,239
2020
£m
801.2
90.8
28.2
14.9
935.1
0.4
16.4
951.9
In addition to the above, acquisition related items for the year ended 31 December 2021 include deferred consideration payments of £15.0m
(2020: £13.2m) relating to the retention of former owners of businesses acquired.
Key management remuneration
Salaries and short term employee benefits
Share based payments
Retirement benefits
2021
£m
6.7
2.7
0.7
10.1
2020
£m
7.1
2.5
0.7
10.3
The Group considers key management personnel as defined in IAS 24 ‘Related Party Disclosures’ to be the directors of the Company and those
members of the Executive Committee and the Managing Directors of the major geographic regions who are not directors of the Company.
Directors’ emoluments
Non-executive directors
Executive directors:
remuneration excluding performance related elements
annual bonus
2021
£m
0.8
1.7
1.3
3.8
2020
£m
0.7
1.7
1.3
3.7
More detailed information concerning directors’ emoluments and long term incentives is set out in the Directors’ remuneration report. The
aggregate amount of gains made by directors on the exercise of share options during the year was nil (2020: £0.1m). The aggregate market
value of performance share awards exercised by directors under long term incentive schemes during the year was £1.8m (2020: £0.8m).
The aggregate market value of share awards exercised by directors under the DASBS was £0.5m (2020: £0.2m).
198
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
199
199
FINANCIAL STATEMENTS
Notes continued
25 Lease liabilities
The Group leases certain property, plant, equipment and vehicles under non-cancellable operating lease agreements. These leases have
varying terms and renewal rights.
Movement in lease liabilities
Beginning of year
Acquisitions (Note 28)
New leases
Interest charge in the year
Payment of lease liabilities
Remeasurement adjustments
Currency translation
End of year
Ageing of lease liabilities:
Current lease liabilities
Non-current lease liabilities
End of year
2021
£m
497.5
12.9
112.6
20.3
(158.9)
11.5
(7.2)
488.7
129.1
359.6
488.7
2020
£m
480.0
35.2
100.1
22.5
(159.6)
24.2
(4.9)
497.5
129.1
368.4
497.5
As at 31 December 2021, the Group had £21.2m (2020: £8.6m) of leases which had been committed to but which had not yet started. Such
leases are not included in the Group’s lease liabilities as at 31 December 2021. In relation to leases which are included in lease liabilities, there
are potential further future cash flows of £28.5m (2020: £26.5m) if termination options are not exercised and extension options are exercised.
The cash outflow for low value and short term leases was £6.2m for the year ended 31 December 2021 (2020: £8.0m).
26 Cash and cash equivalents and net debt
Cash at bank and in hand
Bank overdrafts
Cash and cash equivalents
Interest bearing loans and borrowings – current liabilities
Interest bearing loans and borrowings – non-current liabilities
Derivatives managing the interest rate risk and currency profile of the debt
Net debt excluding lease liabilities
Lease liabilities
Net debt including lease liabilities
2021
£m
776.9
(551.6)
225.3
(111.9)
(1,433.7)
(17.1)
(1,337.4)
(488.7)
(1,826.1)
2020
£m
944.3
(514.6)
429.7
(79.9)
(1,615.2)
10.4
(1,255.0)
(497.5)
(1,752.5)
The cash at bank and in hand and bank overdrafts amounts included in the table above include the amounts associated with the Group’s cash
pool. The cash pool enables the Group to access cash in its subsidiaries to pay down the Group’s borrowings. The Group has the legal right of
set-off of balances within the cash pool which is an enforceable right which the Group intends to use. The cash at bank and in hand and bank
overdrafts figures net of the amounts in the cash pool are disclosed below for reference:
Cash at bank and in hand net of amounts in the cash pool
Bank overdrafts net of amounts in the cash pool
Cash and cash equivalents
2021
£m
274.6
(49.3)
225.3
2020
£m
475.3
(45.6)
429.7
200
200
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
FINANCIAL STATEMENTS
Notes continued
25 Lease liabilities
varying terms and renewal rights.
Movement in lease liabilities
Beginning of year
Acquisitions (Note 28)
New leases
Interest charge in the year
Payment of lease liabilities
Remeasurement adjustments
Currency translation
End of year
Ageing of lease liabilities:
Current lease liabilities
Non-current lease liabilities
End of year
The Group leases certain property, plant, equipment and vehicles under non-cancellable operating lease agreements. These leases have
2021
£m
497.5
12.9
112.6
20.3
(158.9)
11.5
(7.2)
488.7
129.1
359.6
488.7
2020
£m
480.0
35.2
100.1
22.5
(159.6)
24.2
(4.9)
497.5
129.1
368.4
497.5
2021
£m
776.9
(551.6)
225.3
(111.9)
(1,433.7)
(17.1)
(1,337.4)
(488.7)
(1,826.1)
2020
£m
944.3
(514.6)
429.7
(79.9)
(1,615.2)
10.4
(1,255.0)
(497.5)
(1,752.5)
2021
£m
274.6
(49.3)
225.3
2020
£m
475.3
(45.6)
429.7
As at 31 December 2021, the Group had £21.2m (2020: £8.6m) of leases which had been committed to but which had not yet started. Such
leases are not included in the Group’s lease liabilities as at 31 December 2021. In relation to leases which are included in lease liabilities, there
are potential further future cash flows of £28.5m (2020: £26.5m) if termination options are not exercised and extension options are exercised.
The cash outflow for low value and short term leases was £6.2m for the year ended 31 December 2021 (2020: £8.0m).
26 Cash and cash equivalents and net debt
Cash at bank and in hand
Bank overdrafts
Cash and cash equivalents
Interest bearing loans and borrowings – current liabilities
Interest bearing loans and borrowings – non-current liabilities
Derivatives managing the interest rate risk and currency profile of the debt
Net debt excluding lease liabilities
Lease liabilities
Net debt including lease liabilities
Cash at bank and in hand net of amounts in the cash pool
Bank overdrafts net of amounts in the cash pool
Cash and cash equivalents
The cash at bank and in hand and bank overdrafts amounts included in the table above include the amounts associated with the Group’s cash
pool. The cash pool enables the Group to access cash in its subsidiaries to pay down the Group’s borrowings. The Group has the legal right of
set-off of balances within the cash pool which is an enforceable right which the Group intends to use. The cash at bank and in hand and bank
overdrafts figures net of the amounts in the cash pool are disclosed below for reference:
27 Movement in net debt
2021
Beginning of year excluding lease liabilities
Net cash outflow
Realised gain on foreign exchange contracts
Currency translation
End of year excluding lease liabilities
Lease liabilities
End of year including lease liabilities
2020
Beginning of year excluding lease liabilities
Net cash inflow
Realised losses on foreign exchange contracts
Currency translation
End of year excluding lease liabilities
Lease liabilities
End of year including lease liabilities
FINANCIAL STATEMENTS
Net debt
£m
(1,255.0)
(88.2)
25.0
(19.2)
(1,337.4)
(488.7)
(1,826.1)
Net debt
£m
(1,247.0)
14.1
(37.1)
15.0
(1,255.0)
(497.5)
(1,752.5)
Cash and cash
equivalents
£m
429.7
(183.6)
–
(20.8)
225.3
–
225.3
Other
components
£m
(1,684.7)
95.4
25.0
1.6
(1,562.7)
(488.7)
(2,051.4)
Cash and cash
equivalents
£m
Other
components
£m
140.8
288.0
–
0.9
429.7
–
429.7
(1,387.8)
(273.9)
(37.1)
14.1
(1,684.7)
(497.5)
(2,182.2)
The net cash inflow of £95.4m (2020: outflow of £273.9m) on other components of net debt comprises an increase in borrowings of £14.5m
(2020: £444.5m), a repayment of borrowings of £134.9m (2020: £133.5m) and the impact of a realised gain of £25.0m on foreign exchange
contracts (2020: loss of £37.1m).
28 Acquisitions
Acquisitions involving the purchase of the acquiree’s share capital or, as the case may be, the relevant assets of the businesses acquired, have
been accounted for under the acquisition method of accounting. A key part of the Group’s strategy is to grow through acquisition. The Group
has developed a process to assist with the identification of the fair values of the assets acquired and liabilities assumed, including the
separate identification of intangible assets in accordance with IFRS 3 ‘Business Combinations’ as revised. This formal process is applied to
each acquisition and involves an assessment of the assets acquired and liabilities assumed with assistance provided by external valuation
specialists where appropriate. Until this assessment is complete, the allocation period remains open up to a maximum of 12 months from the
relevant acquisition date. At 31 December 2021 the allocation period for all acquisitions completed since 1 January 2021 remained open and
accordingly the fair values presented are provisional.
Adjustments are made to the assets acquired and liabilities assumed during the allocation period to the extent that further information and
knowledge come to light that more accurately reflect conditions at the acquisition date. Adjustments are made to the value of assets acquired
to reflect more accurately the estimated realisable or settlement value. Similarly, adjustments are made to acquired liabilities to record
onerous commitments or other commitments existing at the acquisition date but not recognised by the acquiree. Adjustments are also made
to reflect the associated tax effects. During the year ended 31 December 2021 adjustments have been recognised to the fair value of assets
and liabilities acquired related to acquisitions made in the prior year, resulting in a net increase to goodwill of £3.4m. Given the immaterial
amounts involved the fair value of assets and liabilities acquired as reported in the prior year have not been restated.
The consideration paid or payable in respect of acquisitions comprises amounts paid on completion, deferred consideration and payments
which are contingent on the retention of former owners of businesses acquired. Any payments that are contingent on future employment,
including payments which are contingent on the retention of former owners of businesses acquired, are charged to the income statement.
All other consideration has been allocated against the identified net assets, with the balance recorded as goodwill. Transaction costs and
expenses such as professional fees are charged to the income statement. The acquisitions provide opportunities for further development of
the Group’s activities and to create enhanced returns. Such opportunities and the workforces inherent in each of the acquired businesses do
not translate to separately identifiable intangible assets but do represent much of the assessed value that supports the recognised goodwill.
For each of the businesses acquired and announced during the year, the name of the business, the market sector served, its location and
date of acquisition, as well as the estimated annualised revenue it would have contributed to the Group for the year if such acquisitions had
been made at the beginning of the year, are separately disclosed. The remaining disclosures required by IFRS 3 are provided separately for
those individual acquisitions that are considered to be material and in aggregate for individually immaterial acquisitions. An acquisition would
generally be considered individually material if the impact on the Group’s revenue or profit measures (on an annualised basis) or the relevant
amounts on the balance sheet is greater than 5%. Management also applies judgement in considering whether there are any material
qualitative differences from other acquisitions made.
200
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201
201
FINANCIAL STATEMENTS
Notes continued
28 Acquisitions continued
2021
Summary details of the businesses acquired during the year ended 31 December 2021 are shown in the table below:
Business
Deliver Net
Pinnacle
Disposable Discounter1
Comax
Harvey Distributors
Obex Medical Holdings2
Proin Pinilla
Arprosa
Medshop3
Intergro
McCue Corporation4
Workwear Express5
Hydropac6
Tingley Rubber
Sector
Healthcare
Country
UK
Cleaning & Hygiene
Canada
Foodservice
Netherlands
Cleaning & Hygiene
UK
Cleaning & Hygiene
Australia
Healthcare
New Zealand
Safety
Safety
Healthcare
Foodservice
Safety
Safety
Foodservice
Safety
Spain
Spain
Australia
US
US
UK
UK
US
Acquisitions agreed and completed in the current year
1 Acquisition of 75.1% of share capital.
2 Acquisition of 99.1% of share capital.
3 Acquisition of 75.1% of share capital.
4 Acquisition of 96.9% of share capital.
5 Acquisition of 96.3% of share capital.
6 Located in the UK, but reporting through Continental Europe.
Acquisition date
2021
31 January
1 February
2 February
31 May
31 May
1 June
22 July
31 July
8 September
30 September
15 October
26 October
4 November
21 December
Annualised
revenue
£m
19.5
11.3
23.6
16.4
4.4
28.7
14.3
6.6
14.4
22.3
72.6
33.2
8.4
46.7
322.4
The acquisition of McCue Corporation is considered to be individually significant due to its impact on intangible assets. The acquisition is
therefore separately disclosed in the table below. In 2020 the acquisition of MCR Safety was considered to be individually significant and is
shown separately in the table below. A summary of the effect of acquisitions in 2021 and 2020 is shown below:
Customer relationships
Brands
Property, plant and equipment and software
Right-of-use assets
Inventories
Trade and other receivables
Trade and other payables
Net cash
Provisions
Lease liabilities
Derivative liabilities
Income tax payable and deferred tax liabilities
Fair value of net assets acquired
Goodwill
Consideration
Satisfied by:
cash consideration
deferred consideration
Contingent payments relating to retention of former owners
Net cash acquired
Transaction costs and expenses
Total committed spend in respect of acquisitions agreed and
McCue
£m
107.1
8.6
1.2
3.4
10.1
25.1
(18.5)
5.0
(0.4)
(3.6)
–
(29.1)
108.9
132.5
241.4
234.3
7.1
241.4
8.4
(5.0)
1.7
Other
£m
127.7
3.2
6.5
9.2
22.7
38.7
(42.4)
6.3
(4.3)
(9.3)
(0.1)
(28.2)
130.0
108.3
238.3
208.5
29.8
238.3
22.5
(6.3)
6.6
2021
Total
£m
234.8
11.8
7.7
12.6
32.8
63.8
(60.9)
11.3
(4.7)
(12.9)
(0.1)
(57.3)
238.9
240.8
479.7
442.8
36.9
479.7
30.9
(11.3)
8.3
MCR Safety
£m
104.5
13.7
6.5
18.0
62.0
35.0
(20.2)
7.4
(0.2)
(18.0)
–
(0.1)
208.6
71.8
280.4
245.2
35.2
280.4
1.4
(7.4)
2.1
Other
£m
67.7
−
4.1
17.2
40.2
54.6
(44.0)
1.5
(4.2)
(17.2)
–
(9.8)
110.1
37.0
147.1
122.7
24.4
147.1
17.7
(1.5)
5.2
2020
Total
£m
172.2
13.7
10.6
35.2
102.2
89.6
(64.2)
8.9
(4.4)
(35.2)
–
(9.9)
318.7
108.8
427.5
367.9
59.6
427.5
19.1
(8.9)
7.3
completed in the current year
246.5
261.1
507.6
276.5
168.5
445.0
202
202
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Bunzl plc Annual Report 2021
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
28 Acquisitions continued
The net cash outflow in the year in respect of acquisitions comprised:
Cash consideration
Net cash acquired
Deferred consideration payments
Net cash outflow in respect of acquisitions
Transaction costs and expenses paid
Payments relating to retention of former owners
Total cash outflow in respect of acquisitions
McCue
£m
234.3
(5.0)
–
229.3
1.5
–
Other
£m
208.5
(6.3)
5.2
207.4
7.6
6.9
2021
Total
£m
442.8
(11.3)
5.2
436.7
9.1
6.9
MCR Safety
£m
245.2
(7.4)
−
237.8
1.3
−
230.8
221.9
452.7
239.1
Other
£m
122.7
(1.5)
4.2
125.4
5.8
17.2
148.4
2020
Total
£m
367.9
(8.9)
4.2
363.2
7.1
17.2
387.5
Acquisitions completed in the year ended 31 December 2021 contributed £123.2m (2020: £356.0m) to the Group’s revenue, £17.3m
(2020: £22.5m) to the Group’s adjusted operating profit and £10.6m (2020: £18.0m) to the Group’s operating profit for the year ended
31 December 2021.
The estimated contributions from acquisitions completed during the year to the results of the Group for the year ended 31 December if such
acquisitions had been made at the beginning of the year, are as follows:
Revenue
Adjusted operating profit
2021
£m
322.4
46.3
2020
£m
601.8
50.0
The total amount of goodwill expected to be deductible for tax purposes in relation to acquisitions completed during the year is £9.3m
(2020: £78.6m).
The acquisition of McCue Corporation is considered to be individually significant due to its impact on intangible assets. The acquisition is
therefore separately disclosed in the table below. In 2020 the acquisition of MCR Safety was considered to be individually significant and is
shown separately in the table below. A summary of the effect of acquisitions in 2021 and 2020 is shown below:
2020
Summary details of the businesses acquired or agreed to be acquired during the year ended 31 December 2020 are shown in the table
below:
Business
Joshen Paper & Packaging
Medcorp
Bodyguard Workwear
MCR Safety
Abco Kovex1
ICM2
SP Equipamentos
Snelling
Other
Acquisitions agreed and completed in 2020
1 Acquisition of 80% of share capital.
2 Acquisition of 78.9% of share capital.
Sector
Grocery
Healthcare
Safety
Safety
Other
Safety
Safety
Cleaning & Hygiene
Country
US
Brazil
UK
US
Ireland
Denmark
Brazil
Canada
Acquisition date
2020
6 January
31 January
28 February
1 September
30 September
30 October
30 November
7 December
Annualised
revenue
£m
254.9
9.4
7.6
206.7
20.3
49.5
23.9
27.2
2.3
601.8
202
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Bunzl plc Annual Report 2021
203
203
Notes continued
28 Acquisitions continued
2021
Disposable Discounter1
Harvey Distributors
Obex Medical Holdings2
Business
Deliver Net
Pinnacle
Comax
Proin Pinilla
Arprosa
Medshop3
Intergro
McCue Corporation4
Workwear Express5
Hydropac6
Tingley Rubber
Acquisitions agreed and completed in the current year
1 Acquisition of 75.1% of share capital.
2 Acquisition of 99.1% of share capital.
3 Acquisition of 75.1% of share capital.
4 Acquisition of 96.9% of share capital.
5 Acquisition of 96.3% of share capital.
6 Located in the UK, but reporting through Continental Europe.
Property, plant and equipment and software
Customer relationships
Brands
Right-of-use assets
Inventories
Trade and other receivables
Trade and other payables
Net cash
Provisions
Lease liabilities
Derivative liabilities
Goodwill
Consideration
Satisfied by:
cash consideration
deferred consideration
Income tax payable and deferred tax liabilities
Fair value of net assets acquired
Summary details of the businesses acquired during the year ended 31 December 2021 are shown in the table below:
Sector
Healthcare
Country
UK
Cleaning & Hygiene
Canada
Foodservice
Netherlands
Cleaning & Hygiene
UK
Cleaning & Hygiene
Australia
Healthcare
New Zealand
Safety
Safety
Healthcare
Foodservice
Safety
Safety
Foodservice
Safety
Spain
Spain
Australia
US
US
UK
UK
US
Acquisition date
2021
31 January
1 February
2 February
31 May
31 May
1 June
22 July
31 July
8 September
30 September
15 October
26 October
4 November
21 December
Annualised
revenue
£m
19.5
11.3
23.6
16.4
4.4
28.7
14.3
6.6
14.4
22.3
72.6
33.2
8.4
46.7
322.4
McCue
£m
107.1
8.6
1.2
3.4
10.1
25.1
(18.5)
5.0
(0.4)
(3.6)
–
(29.1)
108.9
132.5
241.4
234.3
7.1
241.4
8.4
(5.0)
1.7
Other
£m
127.7
3.2
6.5
9.2
22.7
38.7
(42.4)
6.3
(4.3)
(9.3)
(0.1)
(28.2)
130.0
108.3
238.3
208.5
29.8
238.3
22.5
(6.3)
6.6
2021
Total
£m
234.8
11.8
7.7
12.6
32.8
63.8
(60.9)
11.3
(4.7)
(12.9)
(0.1)
(57.3)
238.9
240.8
479.7
442.8
36.9
479.7
30.9
(11.3)
8.3
MCR Safety
£m
104.5
13.7
6.5
18.0
62.0
35.0
(20.2)
7.4
(0.2)
(18.0)
–
(0.1)
208.6
71.8
280.4
245.2
35.2
280.4
1.4
(7.4)
2.1
Other
£m
67.7
−
4.1
17.2
40.2
54.6
(44.0)
1.5
(4.2)
(17.2)
–
(9.8)
110.1
37.0
147.1
122.7
24.4
147.1
17.7
(1.5)
5.2
2020
Total
£m
172.2
13.7
10.6
35.2
102.2
89.6
(64.2)
8.9
(4.4)
(35.2)
–
(9.9)
318.7
108.8
427.5
367.9
59.6
427.5
19.1
(8.9)
7.3
Contingent payments relating to retention of former owners
Net cash acquired
Transaction costs and expenses
Total committed spend in respect of acquisitions agreed and
completed in the current year
246.5
261.1
507.6
276.5
168.5
445.0
FINANCIAL STATEMENTS
Notes continued
29 Cash flow from operating activities
The tables below give further details on the adjustments for depreciation and software amortisation, other non-cash items and the working
capital movement shown in the Consolidated cash flow statement.
Depreciation and software amortisation
Depreciation of right-of-use assets
Other depreciation and software amortisation
Other non-cash items
Share based payments
Provisions
Retirement benefit obligations
Other
Working capital movement
Increase in inventories
Increase in trade and other receivables
Increase in trade and other payables
2021
£m
134.8
36.4
171.2
2021
£m
12.7
(8.0)
(1.9)
1.6
4.4
2021
£m
(32.9)
(10.7)
45.7
2.1
2020
£m
134.8
36.9
171.7
2020
£m
14.9
4.7
(8.4)
2.0
13.2
2020
£m
(192.5)
(81.0)
278.5
5.0
30 Related party disclosures
The Group has identified the directors of the Company, their close family members, the Group’s defined benefit pension schemes and its key
management as related parties for the purpose of IAS 24. Details of the relevant relationships with these related parties are disclosed in the
Directors’ remuneration report, Note 23 and Note 24 respectively. All transactions with subsidiaries are eliminated on consolidation.
204
204
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FINANCIAL STATEMENTS
29 Cash flow from operating activities
The tables below give further details on the adjustments for depreciation and software amortisation, other non-cash items and the working
capital movement shown in the Consolidated cash flow statement.
Notes continued
Depreciation and software amortisation
Depreciation of right-of-use assets
Other depreciation and software amortisation
Other non-cash items
Share based payments
Provisions
Retirement benefit obligations
Other
Working capital movement
Increase in inventories
Increase in trade and other receivables
Increase in trade and other payables
30 Related party disclosures
The Group has identified the directors of the Company, their close family members, the Group’s defined benefit pension schemes and its key
management as related parties for the purpose of IAS 24. Details of the relevant relationships with these related parties are disclosed in the
Directors’ remuneration report, Note 23 and Note 24 respectively. All transactions with subsidiaries are eliminated on consolidation.
2021
£m
134.8
36.4
171.2
2021
£m
12.7
(8.0)
(1.9)
1.6
4.4
2021
£m
(32.9)
(10.7)
45.7
2.1
2020
£m
134.8
36.9
171.7
2020
£m
14.9
4.7
(8.4)
2.0
13.2
2020
£m
(192.5)
(81.0)
278.5
5.0
Company balance sheet
at 31 December 2021
Fixed assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Investments
Current assets
Deferred tax asset
Defined benefit pension asset
Debtors: amounts falling due after more than one year
Debtors: amounts falling due within one year
Cash at bank and in hand
Current liabilities
Creditors: amounts falling due within one year
Lease liabilities
Net current assets
Total assets less current liabilities
Non-current liabilities
Provisions
Lease liabilities
Deferred tax liability
Net assets
Capital and reserves
Share capital
Share premium
Other reserves
Capital redemption reserve
Profit and loss account†
Total shareholders’ funds
Notes
3
4
3
5
6
11
7
7
8
10
9
10
6
12
13
13
2021
£m
0.3
0.2
0.8
729.8
731.1
–
62.8
837.9
764.9
30.6
2020
£m
0.4
0.7
1.1
718.4
720.6
1.8
0.4
837.9
647.7
0.2
1,696.2
1,488.0
(98.8)
(0.2)
1,597.2
2,328.3
(1.0)
–
(12.0)
(98.1)
(0.7)
1,389.2
2,109.8
(1.6)
(0.2)
–
2,315.3
2,108.0
108.4
194.2
5.6
16.1
1,991.0
2,315.3
108.3
187.7
5.6
16.1
1,790.3
2,108.0
Approved by the Board of directors of Bunzl plc (Company registration number 358948) on 28 February 2022 and signed on its behalf by
Frank van Zanten, Chief Executive Officer and Richard Howes, Chief Financial Officer.
The Accounting policies and other Notes on pages 207 to 212 form part of these financial statements.
† Profit and loss account includes a net profit after tax for the year of £304.1m (2020: £268.1m). As permitted by section 408(3) of the Companies Act 2006, the profit and loss
account of the Company has not been separately presented in these financial statements.
204
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Bunzl plc Annual Report 2021
205
205
FINANCIAL STATEMENTS
Company statement of changes in equity
for the year ended 31 December 2021
At 1 January 2021
Profit for the year
Other comprehensive income
Contributions to pension scheme
by participating subsidiaries
Actuarial gain on defined benefit
pension scheme
Income tax charge on other
comprehensive income
Total comprehensive income
2020 interim dividend
2020 final dividend
Issue of share capital
Employee trust shares
Movement on own share reserves
Share based payments
At 31 December 2021
At 1 January 2020
Profit for the year
Other comprehensive income
Contributions to pension scheme
by participating subsidiaries
Actuarial loss on defined benefit
pension scheme
Income tax credit on other
comprehensive income
Total comprehensive income
2019 interim dividend
2019 final dividend
Issue of share capital
Employee trust shares
Movement on own share reserves
Share based payments
At 31 December 2020
Share
capital
£m
108.3
Share
premium
£m
187.7
Other
reserves
£m
5.6
Capital
redemption
reserve
£m
Profit and loss account
Retained
Own
earnings
shares
£m
£m
Total
shareholders’
funds
£m
16.1
(73.4)
1,863.7
304.1
2,108.0
304.1
0.1
6.5
4.6
58.0
(15.6)
351.1
(52.8)
(127.6)
(5.0)
14.5
4.6
58.0
(15.6)
351.1
(52.8)
(127.6)
6.6
15.5
–
14.5
15.5
5.0
108.4
194.2
5.6
16.1
(52.9)
2,043.9
2,315.3
Share
capital
£m
108.3
Share
premium
£m
184.0
Other
reserves
£m
5.6
Capital
redemption
reserve
£m
Profit and loss account
Retained
Own
earnings
shares
£m
£m
16.1
(69.9)
1,766.0
268.1
Total
shareholders’
funds
£m
2,010.1
268.1
–
3.7
4.5
4.5
(14.9)
(14.9)
2.0
259.7
(51.7)
(119.8)
(5.9)
15.4
2.0
259.7
(51.7)
(119.8)
3.7
(9.4)
–
15.4
(9.4)
5.9
108.3
187.7
5.6
16.1
(73.4)
1,863.7
2,108.0
206
206
Bunzl plc Annual Report 2021
Bunzl plc Annual Report 2021
FINANCIAL STATEMENTS
Company statement of changes in equity
for the year ended 31 December 2021
Share
capital
£m
108.3
Share
premium
£m
187.7
Other
reserves
£m
5.6
Capital
redemption
reserve
£m
16.1
Own
shares
£m
(73.4)
Profit and loss account
Retained
earnings
£m
1,863.7
304.1
shareholders’
Total
funds
£m
2,108.0
304.1
At 1 January 2021
Profit for the year
Other comprehensive income
Contributions to pension scheme
by participating subsidiaries
Actuarial gain on defined benefit
pension scheme
Income tax charge on other
comprehensive income
Total comprehensive income
2020 interim dividend
2020 final dividend
Issue of share capital
Employee trust shares
Movement on own share reserves
Share based payments
At 31 December 2021
At 1 January 2020
Profit for the year
Other comprehensive income
Contributions to pension scheme
by participating subsidiaries
Actuarial loss on defined benefit
pension scheme
Income tax credit on other
comprehensive income
Total comprehensive income
2019 interim dividend
2019 final dividend
Issue of share capital
Employee trust shares
Movement on own share reserves
Share based payments
At 31 December 2020
0.1
6.5
Share
capital
£m
108.3
Share
premium
£m
184.0
Other
reserves
£m
5.6
Capital
redemption
reserve
£m
16.1
Profit and loss account
Retained
earnings
£m
1,766.0
268.1
shareholders’
Total
funds
£m
2,010.1
268.1
4.6
58.0
(15.6)
351.1
(52.8)
(127.6)
(5.0)
14.5
4.6
58.0
(15.6)
351.1
(52.8)
(127.6)
6.6
15.5
–
14.5
4.5
4.5
(14.9)
(14.9)
2.0
259.7
(51.7)
(119.8)
(5.9)
15.4
2.0
259.7
(51.7)
(119.8)
3.7
(9.4)
–
15.4
15.5
5.0
Own
shares
£m
(69.9)
(9.4)
5.9
–
3.7
108.3
187.7
5.6
16.1
(73.4)
1,863.7
2,108.0
Notes to the Company financial statements
1 Basis of preparation
Bunzl plc (the ‘Company’) is a company incorporated and domiciled in the United Kingdom. These financial statements present information
about the Company as an individual undertaking and not about its Group. The financial statements of the Company have been prepared
on a going concern basis and under the historical cost convention with the exception of certain items which are measured at fair value as
described in the accounting policies below.
These financial statements have been prepared in accordance with Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (‘FRS
101’) and the Companies Act 2006 as applicable to companies using FRS 101. There are no new standards, amendments or interpretations
that are applicable to the Company for the year ended 31 December 2021. In preparing these financial statements the Company has applied
the exemptions available under FRS 101 in respect of:
• a cash flow statement and related notes;
• comparative period reconciliations for share capital and tangible fixed assets;
• disclosures relating to transactions with wholly owned subsidiaries and capital management;
• the effects of new but not yet effective IFRSs; and
• disclosures relating to the compensation of key management personnel.
As the consolidated financial statements of the Company include the equivalent disclosures, the Company has also applied the exemptions
available under FRS 101 in respect of:
108.4
194.2
5.6
16.1
(52.9)
2,043.9
2,315.3
• certain disclosures required by IFRS 2 ‘Share Based Payments’ in respect of Group settled share based payments; and
• certain disclosures required by IFRS 13 ‘Fair Value Measurement’ and disclosures required by IFRS 7 ‘Financial Instruments: Disclosures’.
2 Accounting policies
The accounting policies of the Company have, unless otherwise stated, been applied consistently to all periods presented in these financial
statements. In most cases the accounting policies for the Company are fully aligned with the equivalent accounting policies for the Group as
stated on pages 163 to 169 in Note 2 to the consolidated financial statements. The accounting policies of the Company which are aligned with
those of the Group are the policies for tangible assets, leases, intangible assets, income tax, trade and other payables, provisions, retirement
benefits, investment in own shares, dividends and leases. The accounting policies that are specific to the Company are set out below.
a. Investment in subsidiary undertakings
Investments in subsidiary undertakings are held at cost less any provision for impairment. The subsidiary undertakings which the Company
held at 31 December 2021 are disclosed in the Related undertakings Note in the Shareholder information section on pages 222 to 228.
b. Share based payments
The Company operates a number of equity settled share based payment compensation plans. Details of these plans are outlined in Note 19
to the consolidated financial statements and the Directors’ remuneration report. The total expected expense is based on the fair value of
options and other share based incentives on the grant date, calculated using a valuation model, and is spread over the expected vesting
period with a corresponding credit to equity.
Where the Company grants options over its own shares to the employees of its subsidiaries and it has not recharged the cost to the relevant
subsidiaries, it recognises, in its individual financial statements, an increase in the cost of investment in its subsidiaries equivalent to the equity
settled share based payment charge recognised in its consolidated financial statements, with the corresponding credit being recognised
directly in equity.
c. Financial guarantee contracts
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. In this respect the Company treats the
guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required to make a payment
under the guarantee.
206
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207
FINANCIAL STATEMENTS
Notes to the Company financial statements continued
2 Accounting policies continued
d. Intercompany and other receivables
Intercompany and other receivables are initially measured at fair value. Subsequent to initial recognition these assets are measured at
amortised cost less any provision for expected credit losses. The Group measures expected credit losses using the expected credit loss model
in accordance with IFRS 9. There were no impairment losses on intercompany or other receivables during the year (2020: none).
e. Defined benefit pension schemes
The Company is the sponsoring company of the UK defined benefit pension scheme. As there is no contractual agreement or stated Group
policy for charging the net defined benefit cost of the scheme to participating subsidiaries, the net defined benefit pension cost or benefit is
recognised fully by the Company. The contributions paid by the participating subsidiaries other than the Company are credited to profit or
loss of the Company where the amounts relate to service and are independent of the number of years of service or to other comprehensive
income if not linked to service.
f. Judgements made in applying the Company’s accounting policies
In the course of preparing the financial statements, other than judgements involved in determining estimates and assumptions (see Note 2g
below), no judgements have been made in the process of applying the Company’s accounting policies that have had a significant effect on the
amounts recognised in the financial statements.
g. Sources of estimation uncertainty
In applying the Company’s accounting policies various transactions and balances are valued using estimates or assumptions. Should these
estimates or assumptions prove incorrect, there may be an impact on the following year’s financial statements. As at 31 December 2021,
the only source of estimation uncertainty that has a significant risk of resulting in a material adjustment to the carrying amounts of assets and
liabilities within the next financial year is the measurement of the defined benefit pension scheme liability which is explained in Note 2u to the
consolidated financial statements.
3 Property, plant and equipment and intangible assets
Cost
Beginning and End of year
Accumulated depreciation and amortisation
Beginning of year
Charge in year
End of year
Net book value at 31 December 2021
Net book value at 31 December 2020
Short
leasehold
improvement
£m
Fixtures,
fittings and
equipment
£m
Total
tangible
assets
£m
Total
intangible
assets
£m
0.1
1.7
1.8
2.1
0.1
–
0.1
–
–
1.3
0.1
1.4
0.3
0.4
1.4
0.1
1.5
0.3
0.4
1.0
0.3
1.3
0.8
1.1
208
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FINANCIAL STATEMENTS
Notes to the Company financial statements continued
2 Accounting policies continued
d. Intercompany and other receivables
Intercompany and other receivables are initially measured at fair value. Subsequent to initial recognition these assets are measured at
amortised cost less any provision for expected credit losses. The Group measures expected credit losses using the expected credit loss model
in accordance with IFRS 9. There were no impairment losses on intercompany or other receivables during the year (2020: none).
e. Defined benefit pension schemes
The Company is the sponsoring company of the UK defined benefit pension scheme. As there is no contractual agreement or stated Group
policy for charging the net defined benefit cost of the scheme to participating subsidiaries, the net defined benefit pension cost or benefit is
recognised fully by the Company. The contributions paid by the participating subsidiaries other than the Company are credited to profit or
loss of the Company where the amounts relate to service and are independent of the number of years of service or to other comprehensive
income if not linked to service.
f. Judgements made in applying the Company’s accounting policies
In the course of preparing the financial statements, other than judgements involved in determining estimates and assumptions (see Note 2g
below), no judgements have been made in the process of applying the Company’s accounting policies that have had a significant effect on the
In applying the Company’s accounting policies various transactions and balances are valued using estimates or assumptions. Should these
estimates or assumptions prove incorrect, there may be an impact on the following year’s financial statements. As at 31 December 2021,
the only source of estimation uncertainty that has a significant risk of resulting in a material adjustment to the carrying amounts of assets and
liabilities within the next financial year is the measurement of the defined benefit pension scheme liability which is explained in Note 2u to the
amounts recognised in the financial statements.
g. Sources of estimation uncertainty
consolidated financial statements.
3 Property, plant and equipment and intangible assets
Cost
Beginning and End of year
Beginning of year
Charge in year
End of year
Accumulated depreciation and amortisation
Net book value at 31 December 2021
Net book value at 31 December 2020
Short
leasehold
improvement
Fixtures,
fittings and
equipment
Total
tangible
assets
£m
Total
intangible
assets
£m
£m
0.1
0.1
–
0.1
–
–
£m
1.7
1.3
0.1
1.4
0.3
0.4
1.4
0.1
1.5
0.3
0.4
1.0
0.3
1.3
0.8
1.1
FINANCIAL STATEMENTS
4 Right-of-use assets: Property
Net book value
Beginning of year
Depreciation charge in the year
End of year
5 Investments
Investments in subsidiary undertakings
Cost
Beginning of year
Additions
End of year
Impairment provisions
Beginning and end of year
Net book value at 31 December
6 Deferred tax asset/(liability)
Recognised deferred tax assets net of deferred tax liabilities are attributable to the following:
1.8
2.1
Recognised in other comprehensive income or directly in equity
1 January 2020
Recognised in profit or loss
31 December 2020/1 January 2021
Recognised in profit or loss
Recognised in other comprehensive income or directly in equity
31 December 2021
Defined benefit
pension scheme
£m
Share based
payments
£m
(1.9)
(0.2)
2.0
(0.1)
–
(15.6)
(15.7)
1.2
–
0.5
1.7
–
1.8
3.5
2021
£m
0.7
(0.5)
0.2
2021
£m
721.7
11.4
733.1
2020
£m
1.2
(0.5)
0.7
2020
£m
710.3
11.4
721.7
3.3
3.3
729.8
718.4
Net deferred
tax asset/
(liability)
£m
(0.5)
(0.2)
2.5
1.8
–
(13.8)
(12.0)
Other
£m
0.2
–
–
0.2
–
–
0.2
No deferred tax asset has been recognised in respect of unutilised capital losses of £68.5m (2020: £68.5m).
During the year, legislation was passed to increase the UK Corporation tax rate to 25% from 1 April 2023. UK taxable profits earned before that
date will be subject to the current tax rate of 19% but UK temporary differences at 31 December 2021 have been calculated at the rate of 25%
because reversal is expected after April 2023. The impact of this change in tax rate on the income statement was not significant.
7 Debtors
Debtors: amounts falling due within one year
Amounts owed by Group undertakings
Prepayments and other debtors
Debtors: amounts falling due after more than one year
Amounts owed by Group undertakings
2021
£m
760.3
4.6
764.9
2020
£m
644.5
3.2
647.7
837.9
837.9
The carrying value of the amounts owed by Group undertakings falling due after more than one year is a reasonable approximation of their fair
values. These amounts have a fixed repayment date and are interest bearing at an interest rate which is reset periodically based on the Bank of
England base rate.
208
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209
209
FINANCIAL STATEMENTS
Notes to the Company financial statements continued
8 Creditors: amounts falling due within one year
Trade creditors
Amounts owed to Group undertakings
Other tax and social security contributions
Income tax payable
Accruals
Amounts due to Group undertakings are repayable on demand and are not interest bearing.
9 Provisions
Beginning of year
Utilised or released
End of year
2021
£m
1.1
83.0
0.8
0.5
13.4
98.8
2021
£m
1.6
(0.6)
1.0
The provisions relate to properties, where amounts are held against liabilities for repairs and dilapidations, and other claims.
10 Lease liabilities
Beginning of year
Interest charge in the year
Payments of lease liabilities
End of year
Ageing of lease liabilities:
Current lease liabilities
Non-current lease liabilities
End of year
2021
£m
(0.9)
–
0.7
(0.2)
(0.2)
–
(0.2)
2020
£m
0.7
82.1
0.3
0.5
14.5
98.1
2020
£m
1.7
(0.1)
1.6
2020
£m
(1.6)
(0.1)
0.8
(0.9)
(0.7)
(0.2)
(0.9)
11 Retirement benefits
The Company operates a number of retirement benefit schemes in the UK, including both defined benefit and defined contribution schemes.
A description of the characteristics and risks to which the Company is exposed in relation to the UK defined benefit pension scheme together
with the principal assumptions used and sensitivity to changes in assumptions are detailed in Note 23 to the consolidated financial statements.
The amounts included in the Company financial statements relating to the defined benefit pension scheme at 31 December were:
Amounts included in profit for the year
Current service cost (net of contributions by employees)
Past service cost
Net interest income
Contributions paid by participating subsidiaries linked to service
Total charge to profit for the year
2021
£m
2.4
–
(0.1)
(1.0)
1.3
2020
£m
2.2
0.4
(0.3)
(1.2)
1.1
210
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FINANCIAL STATEMENTS
Notes to the Company financial statements continued
8 Creditors: amounts falling due within one year
Trade creditors
Amounts owed to Group undertakings
Other tax and social security contributions
Income tax payable
Accruals
Amounts due to Group undertakings are repayable on demand and are not interest bearing.
The provisions relate to properties, where amounts are held against liabilities for repairs and dilapidations, and other claims.
9 Provisions
Beginning of year
Utilised or released
End of year
10 Lease liabilities
Beginning of year
Interest charge in the year
Payments of lease liabilities
End of year
Ageing of lease liabilities:
Current lease liabilities
Non-current lease liabilities
End of year
11 Retirement benefits
The Company operates a number of retirement benefit schemes in the UK, including both defined benefit and defined contribution schemes.
A description of the characteristics and risks to which the Company is exposed in relation to the UK defined benefit pension scheme together
with the principal assumptions used and sensitivity to changes in assumptions are detailed in Note 23 to the consolidated financial statements.
The amounts included in the Company financial statements relating to the defined benefit pension scheme at 31 December were:
Amounts included in profit for the year
Current service cost (net of contributions by employees)
Past service cost
Net interest income
Contributions paid by participating subsidiaries linked to service
Total charge to profit for the year
2021
£m
1.1
83.0
0.8
0.5
13.4
98.8
2021
£m
1.6
(0.6)
1.0
2021
£m
(0.9)
–
0.7
(0.2)
(0.2)
–
(0.2)
2021
£m
2.4
–
(0.1)
(1.0)
1.3
2020
£m
0.7
82.1
0.3
0.5
14.5
98.1
2020
£m
1.7
(0.1)
1.6
2020
£m
(1.6)
(0.1)
0.8
(0.9)
(0.7)
(0.2)
(0.9)
2020
£m
2.2
0.4
(0.3)
(1.2)
1.1
11 Retirement benefits continued
Amounts recognised in other comprehensive income
Actual return less expected return on pension scheme assets
Experience gain on pension scheme liabilities
Impact of changes in assumptions relating to the present value of pension scheme liabilities
Actuarial gain/(loss) on defined benefit pension scheme
Contributions paid by participating subsidiaries not linked to service
Total credit/(charge) to other comprehensive income
Movement in defined benefit pension scheme surplus/(deficit)
Beginning of year
Current service cost
Past service cost
Contributions
Net interest income
Actuarial gain/(loss)
End of year
Changes in the present value of defined benefit pension scheme liabilities
Beginning of year
Current service cost
Past service cost
Interest expense
Contributions by employees
Actuarial (gain)/loss
Benefits paid
End of year
Changes in the fair value of defined benefit pension scheme assets
Beginning of year
Interest income
Actuarial gain
Contributions by the Company
Contributions by participating subsidiaries
Contributions by employees
Benefits paid
End of year
FINANCIAL STATEMENTS
2021
£m
18.5
20.7
18.8
58.0
4.6
62.6
2021
£m
0.4
(2.4)
–
6.7
0.1
58.0
62.8
2021
£m
437.9
2.4
–
6.1
0.5
(39.5)
(11.2)
396.2
2021
£m
438.3
6.2
18.5
1.1
5.6
0.5
(11.2)
459.0
2020
£m
44.6
–
(59.5)
(14.9)
4.5
(10.4)
2020
£m
10.8
(2.2)
(0.4)
6.8
0.3
(14.9)
0.4
2020
£m
379.2
2.2
0.4
7.9
0.5
59.5
(11.8)
437.9
2020
£m
390.0
8.2
44.6
1.1
5.7
0.5
(11.8)
438.3
The actual return on pension scheme assets was a gain of £24.7m (2020: gain of £52.8m). The market value of scheme assets and the present
value of retirement benefit obligations at 31 December are detailed in Note 23 to the consolidated financial statements. The total defined
benefit pension liability is divided between active members (£77.9m (2020: £102.9m)), deferred members (£156.5m (2020: £172.9m)) and
pensioners (£161.8m (2020: £162.1m)).
12 Share capital
Issued and fully paid ordinary shares of 3217p each
Number of ordinary shares in issue and fully paid
Beginning of year
Issued – option exercises
End of year
2021
£m
108.4
2020
£m
108.3
2021
2020
336,998,961
336,792,607
399,835
206,354
337,398,796
336,998,961
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Bunzl plc Annual Report 2021
211
211
FINANCIAL STATEMENTS
Notes to the Company financial statements continued
13 Reserves
The capital redemption reserve of £16.1m (2020: £16.1m) as presented in the statement of changes in equity records the aggregate nominal
value of treasury shares that have been cancelled.
The own shares reserve of £52.9m (2020: £73.4m) as presented in the statement of changes in equity comprises ordinary shares of the
Company held by the Company in an employee benefit trust. The assets, liabilities and expenditure of the trust are included in the Company
financial statements. Details of the trust and investment in own shares reserve are set out in Note 19 to the consolidated financial statements.
The dividends paid and declared in the current and prior year are detailed in Note 20 to the consolidated financial statements.
14 Contingent liabilities
Borrowings by subsidiary undertakings totalling £1,549.2m (2020: £1,661.3m) which are included in the Group’s borrowings have been
guaranteed by the Company.
15 Employees’ and directors’ remuneration
The average number of persons employed by the Company during the year (including directors) was 56 (2020: 53) and the aggregate
employee costs relating to these persons were:
Wages and salaries
Social security costs
Share based payments
Pension costs
2021
£m
11.1
1.7
(0.2)
0.8
13.4
2020
£m
11.0
1.8
2.3
0.8
15.9
Conditional awards of executive share options and performance shares are granted to executive directors and other senior employees of the
Company. Employees of the Company can also participate in the Company’s Sharesave Scheme. Further information on the Company’s share
plans is disclosed in Note 19 to the consolidated financial statements.
16 Related party disclosures
The Company has identified the directors of the Company, their close family members, its key management, the UK pension scheme and its
subsidiary undertakings as related parties for the purpose of IAS 24 ‘Related Party Disclosures’. Details of the relevant relationships with these
related parties are disclosed in the Directors’ remuneration report, Note 23 and Note 24 to the consolidated financial statements and the
Related undertakings Note in the Shareholder information section on pages 222 to 228.
212
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FINANCIAL STATEMENTS
Statement of directors’ responsibilities
The directors are responsible for preparing the Annual Report,
which includes the Directors’ remuneration report and the
financial statements, in accordance with applicable law
and regulation.
The directors consider that the Annual Report, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group’s
and the Company’s position and performance, business model
and strategy.
Each of the directors, whose names and functions are set out on
pages 96 and 97 of the Annual Report, confirm that, to the best
of their knowledge:
• the Group financial statements, which have been prepared
in accordance with UK-adopted IASs and IFRSs as issued by
the IASB, give a true and fair view of the assets, liabilities,
financial position and profit of the Group;
• the Company financial statements, which have been prepared
in accordance with United Kingdom Accounting Standards,
comprising FRS 101, give a true and fair view of the assets,
liabilities and financial position of the Company; and
• the Annual Report includes a fair review of the development
and performance of the business and the position of the
Group and the Company, together with a description of the
principal risks and uncertainties that they face.
By order of the Board
Frank van Zanten
Chief Executive Officer
28 February 2022
Richard Howes
Chief Financial Officer
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the Group financial statements in accordance
with UK-adopted International Accounting Standards (‘IASs’)
and the Company financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, comprising FRS 101 ‘Reduced
Disclosure Framework’, and applicable law). In preparing the
Group financial statements, the directors have also elected
to comply with International Financial Reporting Standards
(‘IFRSs’), issued by the International Accounting Standards
Board (‘IASB’) (‘IFRSs as issued by the IASB’).
Under company law, 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 the
Company and of the profit or loss of the Group for that period.
In preparing the financial statements, the directors are
required to:
• select suitable accounting policies and then apply them
consistently;
• state whether applicable UK-adopted IASs and IFRSs as
issued by the IASB have been followed for the Group financial
statements and United Kingdom Accounting Standards,
comprising FRS 101, have been followed for the Company
financial statements, subject to any material departures
disclosed and explained in the financial statements;
• make judgements and accounting estimates that are
reasonable and prudent; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the
Company will continue in business.
The directors are responsible for safeguarding the assets of
the Group and the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain the
Group’s and the Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the
Group and the Company and enable them to ensure that the
financial statements and the Directors’ remuneration report
comply with the Companies Act 2006.
The directors are responsible for the maintenance and integrity
of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Bunzl plc Annual Report 2021
213
FINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF BUNZL PLC
Independent auditors’ report to the members of Bunzl plc
Report on the audit of the financial statements
Opinion
In our opinion:
• Bunzl plc’s Group financial statements and Company financial statements (the “financial statements”) give a true and fair view
of the state of the Group’s and of the Company’s affairs as at 31 December 2021 and of the Group’s profit and the Group’s cash
flows for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;
• the Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable
law); and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006
We have audited the financial statements, included within the Annual Report, which comprise: the Consolidated and Company
balance sheets as at 31 December 2021; the Consolidated income statement, the Consolidated statement of comprehensive
income, the Consolidated cash flow statement, and the Consolidated and Company statements of changes in equity for the year
then ended; and the notes to the financial statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Separate opinion in relation to International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting
Standards Board (‘IASB’)
As explained in note 1 to the financial statements, the Group, in addition to applying UK-adopted international accounting
standards, has also applied international financial reporting standards (IFRSs) as issued by the International Accounting Standards
Board (IASB).
In our opinion, the Group financial statements have been properly prepared in accordance with IFRSs as issued by the IASB.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ 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 remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in note 5 to the Group financial statements, we have provided no non-audit services to the Company or
its controlled undertakings in the period under audit.
Our audit approach
Overview
Audit scope
• We performed full scope audits and other procedures of the financial information of 86 components spread
across 29 different countries across North America, Continental Europe, UK & Ireland and Rest of the World.
• Specific audit procedures in relation to various Group activities, including consolidation, taxation, pensions,
business combinations and the carrying value of goodwill and intangible assets, were performed by the
Group audit team centrally.
Key audit matters
• Carrying value of goodwill (Group)
• Accounting for business combinations (Group)
• Valuation of defined benefit pension schemes (Group and Company)
• Valuation of inventory provisions and expected credit loss provisions against trade receivables (Group)
Materiality
• Overall Group materiality: £34 million (2020: £30 million) based on 5% of adjusted profit before tax.
• Overall Company materiality: £23 million (2020: £20 million) based on 1% of net assets.
• Performance materiality: £25.5 million (2020: £22.5 million) (Group) and £17.2 million (2020: £15 million)
(Company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
214
Bunzl plc Annual Report 2021
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the 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) identified by the auditors, including 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, and any comments we make on the
results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Covid-19 and provisions for corporate tax exposure, which were key audit matters last year, are no longer included. We exclude the
Covid-19 key audit matter as the impact of the pandemic to the Group was primarily on the retail and foodservice sectors and we have
considered the implication of this in the valuation of inventory provisions and expected credit loss provisions against trade receivables
key audit matter. As for the provisions for corporate tax exposure, the key audit matter is excluded as the risk has reduced in 2021.
In addition, the key audit matter in relation to the carrying value of goodwill included other intangible assets in the prior year but the
risk around intangibles has been removed as the risk has reduced in 2021. Otherwise, the key audit matters below are consistent with
last year.
Key audit matter
How our audit addressed the key audit matter
Carrying value of goodwill (Group)
Refer to the Audit Committee report, Note 2
and Note 11 of the Group financial statements.
The Group has material goodwill balances of
£1,698.5m (2020: £1,494.6m) spread across
multiple geographies and relating to multiple
cash generating units (‘CGUs’). In assessing
whether the carrying amount of the goodwill
assets has been impaired, management
considers forecast cash flows of the 7 individual
CGUs which are identified on a geographical
basis. We focused our goodwill impairment
procedures on the CGUs with the lowest levels
of headroom between each respective value in
use model and carrying value. Management’s
impairment assessments involve significant
estimation, principally relating to short and
long-term revenue growth, future profitability
and discount rates. Management’s impairment
assessment also takes into account the impact
of climate change. Due to the acquisitive
nature of the Group and the magnitude of the
aggregated related goodwill, together with the
subjectivity of the principal assumptions, a
significant amount of audit effort was required.
Accounting for business combinations (Group)
Refer to the Audit Committee report, Note 2
and Note 28 of the Group financial statements.
Given that the Group continues to make
significant investment in acquisitions,
accounting for business combinations is an area
of focus due to the level of judgement involved.
Business combinations can involve judgements
in relation to the value of assets and liabilities
that are recognised on acquisition, particularly
the allocation of purchase consideration to
goodwill and separately identified
intangible assets.
In our testing of management’s annual goodwill impairment calculations,
we used valuation experts to assist our evaluation of the appropriateness
of the discount rates used by management.
We evaluated the reasonableness of the directors’ cash flow forecasts by
comparing the key assumptions made to board reviewed budgets, historical
performance and external economic data.
In particular:
• We determined that long-term growth rates are generally consistent when
compared to third party nominal GDP rates;
• We assessed the discount rate used to determine the present value by
assessing the cost of capital for the Company and comparable organisations
and considered them to be acceptable;
• We obtained evidence to assess historical accuracy in management’s
forecasting process;
• We challenged the extent to which the impact of climate change risk identified by
management in its TCFD scenario analysis and the Group’s net zero commitment
were consistent with the assumptions within the impairment assessment. We
also performed sensitivity analysis to ascertain whether downward adjustments
to the forecast assumptions would result in a material impairment.
Management concluded that there was no impairment. We concur with this
assessment. Based on managements’ own sensitivity calculations, no other
reasonably possible change in assumptions would lead to an impairment of
goodwill assets. Having ascertained the extent of changes in key assumptions
either individually or collectively that would be required for goodwill assets to
be materially impaired, we considered such a change in those key assumptions
to be unlikely.
Management relies on external valuation specialists for larger acquisitions
to value significant intangibles acquired in business combinations. Where
management has relied on such specialists, with the support of our own
valuation specialists, we assessed their objectivity and competence and tested
the results of their work.
We focused in particular on the following areas:
• We assessed the methodology and key assumptions used in determining the
value of the customer relationship assets for the more significant acquisitions;
• We determined whether the cash flows applied within the valuation models
and the key assumptions such as the discount rates, growth rates, customer
attrition and period for amortisation, were appropriate;
• We also evaluated the consideration paid or payable in respect of acquisitions
made.
Based on the procedures performed, we noted no material issues arising from
our work.
Bunzl plc Annual Report 2021
215
FINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF BUNZL PLC CONTINUED
Key audit matter
How our audit addressed the key audit matter
Valuation of defined benefit pension schemes (Group and Company)
Refer to the Audit Committee report, Note 2 and
Note 23 of the Group financial statements.
The Group has defined benefit pension
schemes (with material schemes in the US and
the UK) with a net surplus of £31.2m at the
current year end (2020: combined net deficit of
£44.8m). The gross assets and liabilities in each
scheme are significant in the context of the
Consolidated balance sheet.
Management estimation is required in relation
to the measurement of pension scheme
obligations, and management employs
independent actuarial experts to assist it in
determining appropriate assumptions such as
inflation levels, discount rates, salary increases
and mortality rates. Movements in these
assumptions can have a material impact on the
determination of the liability and, therefore,
the extent of any net surplus or deficit.
We used our own actuarial experts to satisfy ourselves that the assumptions
used in calculating the US and UK pension scheme liabilities are appropriate,
including confirming that salary increases were appropriate and that mortality
rate assumptions were consistent with relevant benchmarks.
We determined that the discount and inflation rates used in the valuation
of the pension scheme liabilities were consistent with our internally developed
benchmarks.
In each case we considered the assumptions made by management to be
reasonable in light of the available evidence. We also performed procedures
to satisfy ourselves over the completeness and accuracy of the employee data
used in the calculation.
We have confirmed the pension asset valuations with third parties and
independently assessed the valuation of a sample of these assets.
Based on the procedures performed, we noted no material issues arising from
our work.
Valuation of inventory provisions and expected credit loss provisions against trade receivables (Group)
Refer to the Audit Committee report, Note 1,
Note 2, Note 13 and Note 14 of the Group
financial statements.
The Covid-19 pandemic has significantly
increased the risk of loss on trade receivables
and inventory particularly in the food service
and retail businesses that have been impacted
more heavily by the pandemic.
The Group has also seen an increased risk of
net realisable value risk for certain Covid-19
related products due the price normalisation
following the disruption caused by the
pandemic. We focused on this area because
of the risk surrounding the level of estimation
and judgement that is necessary in
determining the provisions required.
We assessed the basis for the inventory provisions, the consistency of
provisioning in line with the Group’s policy and the reasonableness of the
overall provisioning in light of the impact of Covid-19. We did this through the
following procedures:
• We tested the completeness and the accuracy of the ageing of the reports
used to calculate the provisions.
• We tested that the calculation of provisions had been performed in
accordance with the Group policy.
• We understood management’s process for identifying specific inventory
requiring a provision and recalculated the provisions against this inventory
using latest market prices and volume data.
• We tested the net realisable value of a sample of inventory items to ensure
that the listing of inventory requiring a provision identified was complete.
We obtained an understanding of management’s process in estimating the
expected credit loss provision and the respective judgements. We considered
the appropriateness of management’s judgements in relation to these
calculations by performing the following procedures:
• Reviewing the ageing categorisation of trade receivables balances;
• Assessing historical credit loss experience;
• Understanding and assessing the impact of the insolvencies in the
period; and
• Consideration of forward-looking factors by assessing management’s risk
categorisation of customers in the food service and retail sectors.
We determined whether the calculations were in line with the accounting
standards and that the methodology and principles had been applied
consistently.
Based on the procedures performed, we determined that the provisions reflect
management’s current best estimate of the expected economic outflows.
We also considered the appropriateness of the related disclosures in the
financial statements.
Based on the procedures performed, we noted no material issues arising from
our work.
216
Bunzl plc Annual Report 2021
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the Group and the Company, the accounting processes and controls,
and the industry in which they operate.
We identified one financially significant component, being North America, where a full scope audit has been performed. In addition,
we have identified two material components being the Netherlands and Australia. To achieve the coverage desired, we identified
four components across the UK and France for which a full scope audit of their financial information has been performed. In order
to satisfy the request of the Audit Committee and management, we performed full scope audits and other procedures on a further
79 components. The components where we performed audit procedures covered over 94% of Group revenue, adjusted profit
before taxation and total assets.
Where work was performed by component auditors, detailed instructions were issued by us and the Group audit team conducted
conference calls with component teams. For our financially significant component and material components, oversight procedures
included regular communication with the component team, reviewing their working papers, and attending the clearance meeting.
Specific audit procedures over central functions and areas of significant judgement, including consolidation, taxation, pensions,
business combinations and the carrying value of goodwill and other intangible assets, were performed by the Group audit
team centrally.
As part of the audit, we inquired of management to understand and evaluate the Group’s risk assessment process in relation to
climate change. Management has sought advice from external sustainability experts to help them understand the environmental
challenges they face, and to source science-based inputs for their assessment of climate risk. We reviewed management’s paper
which sets out their assessment of climate change risk to the Group and the impact, if any, on the financial statements and
impairment testing. In evaluating the completeness of the risks identified, we assessed the objectivity and competence of
management’s experts, we engaged our internal climate change experts to review management’s assessment, we considered the
return submitted to the Carbon Disclosure Project by the Group and challenged management on how they considered the Group’s
net zero commitment in their assessment. In responding to the risk identified, we specifically considered how climate change risk
would impact the assumptions made in the forecasts prepared by management used in their assessment of the carrying value of
goodwill. Our procedures in relation to the assessment of the carrying value of goodwill are described in the key audit matters
section above. We read the disclosures in relation to climate change made in the other information within the Annual Report to
ascertain whether the disclosures are materially consistent with the financial statements and our knowledge from our audit.
Our responsibility over other information is further described in the Reporting on other information section of our report.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of
our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements,
both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – Group
Financial statements – Company
Overall materiality
£34 million (2020: £30 million).
£23 million (2020: £20 million).
How we determined it
5% of adjusted profit before tax
1% of net assets
Rationale for
benchmark applied
Given that the Group’s businesses are profit
oriented and the directors use adjusted profit
measures to assess the performance of the
business, we believe that adjusted profit before
tax is the best benchmark to use.
Considering the nature of the business and
activities in Bunzl plc (holding activities) we use
the Company net assets value as a basis for the
calculation of the overall materiality level.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality.
The range of materiality allocated across components was up to £21.7 million. Certain components were audited to a local
statutory audit materiality that was also less than our overall Group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope
of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in
determining sample sizes.
Our performance materiality was 75% (2020: 75%) of overall materiality, amounting to £25.5 million (2020: £22.5 million) for the
Group financial statements and £17.2 million (2020: £15 million) for the Company financial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range
was appropriate.
Bunzl plc Annual Report 2021
217
FINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF BUNZL PLC CONTINUED
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £1.5 million
(Group audit) (2020: £1.5 million) and £1.5 million (Company audit) (2020: £1.5 million) as well as misstatements below those
amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going concern basis
of accounting included:
• We assessed the appropriateness of the cash flow forecasts in the context of the Group’s 2021 financial position and evaluated
the directors’ downside sensitivities against these forecasts.
• We evaluated the key assumptions in the forecasts and considered whether these were supported by the evidence we obtained.
• We examined the headroom under the base case cash flow forecasts, as well as the directors’ and our own sensitised cases, and
evaluated whether the directors’ conclusion that headroom remained in all events was supported by the evidence we obtained.
• We considered the impact of Covid-19 and climate change risk including whether this was appropriately reflected in the going
concern model.
• We obtained the Group’s covenant calculations and reperformed the calculation including applying sensitivities to assess the
potential impact of downside sensitivities on covenant compliance.
• We also reviewed the disclosures provided relating to the going concern basis of preparation and found that these provided an
explanation of the directors’ assessment that was consistent with the evidence we obtained.
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’s and the Company’s ability to continue as a going concern for
a period of at least twelve months from when the financial statements are authorised for issue.
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.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s and the
Company’s ability to continue as a going concern.
In relation to the directors’ 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.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’
report thereon. The directors are responsible for the other information, which includes reporting based on the Task Force on
Climate-related Financial Disclosures (TCFD) recommendations. Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report,
any form of assurance thereon.
In connection with our audit of the financial statements, 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 audit, or
otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are
required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic report and Directors’ report, we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and
matters as described below.
Strategic Report and Directors’ report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors’
report for the year ended 31 December 2021 is consistent with the financial statements and has been prepared in accordance with
applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit,
we did not identify any material misstatements in the Strategic report and Directors’ report.
Directors’ Remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
218
Bunzl plc Annual Report 2021
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of
the corporate governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance
Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other
information are described in the Reporting on other information section of this report.
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 and our knowledge obtained during the audit, and we
have nothing material to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks
and an explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern
basis of accounting in preparing them, and their identification of any material uncertainties to the Group’s and Company’s ability
to continue to do so over a period of at least twelve months from the date of approval of the financial statements;
• The directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this assessment covers
and why the period is appropriate; and
• The directors’ statement as to whether 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 period of its assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the Group was substantially less in scope than an
audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that
the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the
statement is consistent with the financial statements and our knowledge and understanding of the Group and Company and their
environment obtained in the course of the audit.
In addition, 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 and our knowledge obtained during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and
provides the information necessary for the members to assess the Group’s and Company’s position, performance, business
model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems;
and
• The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the Company’s
compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the
Listing Rules for review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of directors’ responsibilities, the directors are responsible for the preparation of the
financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.
The directors are also responsible for such internal control as they 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’s and the 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 Company or to cease operations, or have no realistic alternative but
to do so.
Bunzl plc Annual Report 2021
219
FINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF BUNZL PLC CONTINUED
Auditors’ 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 auditors’ 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 the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and
regulations related to breaches of environmental regulations and unethical and prohibited business practices, and we considered
the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and
regulations that have a direct impact on the financial statements such as the Companies Act 2006. We evaluated management’s
incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls),
and determined that the principal risks were related to the posting of inappropriate journal entries to increase revenue or reduce
expenditure, and management bias in accounting estimates. The Group engagement team shared this risk assessment with the
component auditors so that they could include appropriate audit procedures in response to such risks in their work. Audit
procedures performed by the Group engagement team and/or component auditors included:
• Enquiry of management, those charged with governance and the entity’s in-house legal team around actual and potential
litigation and claims.
• Reviewing minutes of meetings of those charged with governance including the Board, Audit committee and Executive
committee.
• Reviewing internal audit reports.
• Assessment of matters reported on the Group’s whistleblowing helpline.
• Auditing the risk of management override of controls, including through testing journal entries and other adjustments for
appropriateness testing accounting estimates (because of the risk of management bias).
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements.
Also, 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.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations.
We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit
sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.
uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
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Bunzl plc Annual Report 2021
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from
branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the Company financial statements and the part of the Directors’ remuneration report to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the directors on 19 March 2014 to audit the financial
statements for the year ended 31 December 2014 and subsequent financial periods. The period of total uninterrupted engagement
is 8 years, covering the years ended 31 December 2014 to 31 December 2021.
Other matter
As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements form
part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in
accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether the
annual financial report has been prepared using the single electronic format specified in the ESEF RTS.
Neil Grimes (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
28 February 2022
Bunzl plc Annual Report 2021
221
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION
Shareholder information
Related undertakings as at 31 December 2021
In accordance with Section 409 of the Companies Act 2006 a full list of Bunzl plc’s subsidiary undertakings and other shares
held by the Company as at 31 December 2021 is disclosed below. The registered office address of each entity or, in the case of
unincorporated entities, the principal place of business, is disclosed on pages 226 to 228. Unless otherwise stated the subsidiary
undertakings listed are wholly owned and held indirectly by Bunzl plc with ordinary shares issued (or the equivalent of ordinary
shares in the relevant country of incorporation). In some of the jurisdictions in which the Group operates share classes are not
defined and in these instances, for the purposes of this disclosure, the shares issued have been classified as ordinary shares.
Bunzl plc does not have any joint venture companies or associated undertakings.
Subsidiary
undertakings
Argentina
Vicsa Steelpro S.A.
Australia
Atlas Health Care Pty Limited
Bunzl Australasia Limited
Bunzl Brands & Operations Pty Limited
Bunzl Catering Supplies Limited
Bunzl Food Processor Supplies Pty Limited
Bunzl Outsourcing Services Limited
Fire Rescue Safety Australia Pty Ltd (80%)
Inkell Pty. Limited
Interpath Services Pty. Ltd.
Multipoint Technologies Pty Ltd (75.1%)
Network Packaging Pty Limited
Obex Medical Holdings Pty Limited
Protect-A-Clean Pty Ltd
Robertsons Lifting & Rigging Pty Limited
Sanicare Australia Pty Limited
Star Wholesale Distribution Pty Limited
Worksense Workwear and Safety Pty Limited
Austria
Bunzl Holdings Austria GmbH
Meier Verpackungen GmbH
Belgium
Établissements Glorieux SA
King Belgium NV
Polaris Chemicals SRL
Total Safety Supply Belgium BVBA
Varia-Pack NV
Brazil
B2B Web Distribuicao De Produtos Ltda
Bunzl Equipamentos para Proteção Individual Ltda.
Dental Sorria Ltda.
DVT Comércio, Importação E Exportação Ltda.
Labor Import Comercial Importadora Exportadora Ltda
MCR Safety de Brasil Distribuiacao de Equipamentos
Medcorp Saúde tecnologia Ltda
SP Equipamentos de Proteção ao trabalho e MRO Ltda.
VCH – Importadora, Exportadora E Distribuição De
Produtos Ltda.
Canada
8948399 Canada Inc. d/b/a Sur-Seal Packaging(iii)
Bunzl Canada, Inc.
Dura Plus Inc.
Ghost Distribution Inc.
McCue Corporation Canada (96.9%)
Pinnacle Paper & Sanitation Inc.(ii)
222
Registered
office address
Subsidiary
undertakings
Snelling Paper & Sanitation Ltd.(iii)
Tingley Inc.
Chile
B2B Web Distribuicao de Produtos Chile SpA
Bunzl Chile Holdings SpA
DPS Chile Comercial Limitada
Enepack SpA
Tecno Boga Comercial Limitada
Vicsa Safety Comercial Limitada
China
Beijing HSESF Safety Technology Co., Ltd.
Bunzl Trading (Shanghai) Limited
Diversified Distribution Systems Trading (Shanghai) Ltd.
Keenpac (Shenzhen) Trading Company Limited
McCue Xiamen Trading Co., Ltd. (96.9%)
MCR Safety Foshan South Co., Ltd.
MCR Safety Hangzhou Co., Ltd.
Shanghai BeiZhi Industrial Technology Co., LTD
Shanghai Cosafety Technology Co., Ltd.
Shanghai HSESF Safety Technology Co., Ltd.
Shanghai Mai Xi Protection Technology Co., Ltd.
Shanghai Yinghao Protection Technology Co., Ltd.
Suzhou Sai Wo Trading Co., Ltd.
Vicsa Commerce and Trading (Shanghai) Co., Ltd
Colombia
B2B Web Distribuição De Produtos Colombia
Spa S.A.S
Importadores Y Exportadores Solmaq SAS
MCR Safety Colombia S.A.S.
Vicsa Steelpro Colombia S.A.S.
Czech Republic
Blyth s.r.o.
Bunzl CS s.r.o.
Denmark
Bunzl Distribution Danmark A/S
Bunzl Holding Danmark A/S
Clean Care A/S
ICM A/S (78.9%)
MultiLine A/S
France
Alpes Entretien Distribution SAS
Blanc SAS
Bourgogne Hygiene Entretien SAS
Bunzl Catering Développement SAS
Bunzl Holdings France SAS
Comatec SAS
Comptoir de Bretagne SAS
1
7
6
4
7
3
7
2
5
6
8
4
6
7
4
6
7
4
9
9
10
14
12
13
11
17
19
23
21
22
20
15
16
18
28
29
26
25
27
28
Registered
office address
28
24
30
30
32
32
31
30
38
35
40
41
44
45
46
37
34
33
43
36
47
42
48
48
49
50
52
51
53
53
54
55
56
70
84
83
60
72
71
60
Bunzl plc Annual Report 2021
Subsidiary
undertakings
Daugeron & Fils SAS
Fichot Hygiene SAS
France Sécurité SAS
Gama 29 SAS
Générale Collectivités SAS
GM Equipement S.A.S.
Groupe Pierre Le Goff - Ile de France-Adage SAS
Groupe Pierre Le Goff Bourgogne Franche-Comte SAS
Groupe Pierre Le Goff Méditerranée SAS
Groupe Pierre Le Goff Rhône-Alpes Centre SAS
Groupe Pierre Le Goff Sud-Ouest SAS
Hedis SAS
Hygiadis SAS
Industrie du Compactage Alimentaire Hygiene ICA
Hygiene L'image du Propre SAS
Keenpac France SAS
Ligne T SAS
Mat'hygiene SAS
Nicolas Entretien SAS
ORRU SAS
PLG Finances SAS
PLG Grand-Nord SAS
PLG SAS
Prorisk S.A.S.
SCI des Saules SCI
Société Civile Immobilière Sainte Claire Deville SC
Sodiscol SAS
Sopecal Hygiene SAS
Germany
Bäumer Betriebshygiene Vertriebsgesellschaft mbH(iii)
Bunzl Großhandel GmbH
Bunzl Healthcare GmbH
Bunzl Healthcare Holding GmbH(iii)
Bunzl Holding GmbH(iii)
Majestic GmbH
PKA Klöcker GmbH(iii)
Protemo GmbH
Hong Kong
Bunzl Asia Limited(iii)
DDS of Hong Kong Limited
Keenpac Asia Limited
MCR Safety Asia Company Limited
Hungary
Bunzl CEE Kft
Bunzl Magyarország Kft.
Ireland
Abco Kovex Limited (80%)
Bunzl Ireland Limited
Thomas McLaughlin (Ireland) Limited
Israel
M.S. Global Limited
Meichaley Zahav Packages Ltd
Silco (Utensils) A.S. Limited(iii)
Bunzl plc Annual Report 2021
Registered
office address
73
62
68
66
80
57
64
78
67
75
74
59
64
77
61
65
69
82
76
81
63
81
57
64
64
58
79
88
85
87
85
85
89
86
88
90
91
93
92
95
95
96
96
96
97
98
97
Subsidiary
undertakings
Italy
B2B Distribution Italy Holdings S.r.l.
Keenpac Italia S.r.l.
Neri S.p.A.
Secure Service S.r.l.
Malaysia
Medshop Malaysia Sdn. Bhd. (75.1%)
Mexico
Bunzl De Mexico S. De R. L. De C.V(iii)
Bunzl Retail Services of Mexico, S. de R.L. de C.V.(iii)
Bunzl Servicios, S. De R. L. De C.V(iii)
Cool Pak AG Packaging, S. de R. L. de C.V.(iii)
Cool Pak Exports S. de R.L. de C.V.(iii)
CRM de las Americas, S.A. de C.V.
Espomega S. de R.L. de C.V.(iii)
Proepta, S.A. DE C.V.(iii)
Shelby Manufacturing De Mexico, S.A. DE C.V.
Steel pro S.A de C.V.(iii)
TRC Protective Footwear, S.A. de C.V.(iii)
Web Distribucion Safety Mexico, S. de R.L. de C.V.(iii)
Morocco
Proin Maroc, S.à r.l.
Netherlands
Allshoes Benelux B.V.
Bunzl Outsourcing Services B.V.
Bunzl Verpakkingen Arnhem B.V.
De Ridder B.V.
King Nederland B.V.
Le Roux Verpakkingen & Disposables B.V. (75.1%)
Majestic Products B.V.
MCR Safety Europe B.V.
QS Nederland B.V. (85%)
Vespinae International B.V. (75.1%)
Worldpack Trading B.V.
New Zealand
Bunzl New Zealand Holdings Limited(iii) (99.1%)
Bunzl Outsourcing Services NZ Limited
Corded Strap (NZ) Limited
Downs Distributors Limited (99.1%)
Fire Rescue Safety New Zealand Limited (80%)
ICB Cleaning Supplies Limited
Isobex Medical Limited (99.1%)
Nelson Packaging Supplies Limited
Obex (NZ) Limited (99.1%)
Obex Medical Limited (99.1%)
OXC (NZ) Limited(ii) (99.1%)
Norway
Art Trading AS
Culina AS
Enor AS
Riise & G G Storkjøkken AS
Skien Storkjøkken AS (51%)
Peru
B2B WEB DISTRIBUICAO DE PRODUTOS PERU SPA S.A.C
Vicsa Safety Peru S.A.C.
Registered
office address
100
99
100
101
102
108
104
108
106
107
103
111
109
103
105
110
112
113
121
123
115
118
117
122
119
120
114
124
116
125
127
128
129
127
126
129
128
129
129
129
131
131
132
132
130
133
133
223
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION CONTINUED
Related undertakings continued
Subsidiary
undertakings
Puerto Rico
Melissa Sales Corp.
Romania
Bunzl Romania SRL
Singapore
LSH Industrial Solutions Pte. Ltd
Medshop Holdings Pte. Ltd. (75.1%)
Medshop Singapore Pte. Ltd. (75.1%)
Slovakia
Eurobal, spol. s.r.o.
Spain
Artículos de Protección, S.A.
Bunzl Distribution Spain, S.A.U.
Bunzl Mallorca 2018, S.L.U.
Faru, S.L.U.
Guantes Juba, S.A.U.
Juba Personal Protective Equipment, S.L.U.
Lovilia Spain, S.L.U.
Marca Proteccion Laboral, S.L.U.
PROIN-PINILLA, S.L.
PROTEC & MARTI, S.L.
Quirumed, S.L.U.
Safety Quickers Europe, S.L.U.
Tecnopacking, S.L.U.
Switzerland
Bunzl Holding Switzerland AG
Distrimondo AG
Keenpac (Switzerland) SA
MMH Holding AG
Weita AG
Weita Service AG
Turkey
Bursa Pazarı İnşaat Sanayi Ve Ticaret Anonim Şirketi
İstanbul Ticaret Hırdavat Sanayi A.Ş.
İstanbul Ticaret İş Güvenliği ve Endüstriyel Sanayi
Ürünler A.Ş
Kullanatmarket Elektronik Pazarlama Ticaret Anonim
Şirketi
United Kingdom
365 Healthcare Limited
Abco Kovex (N.I.) Limited (80%)
Abco Kovex (UK) Limited (80%)
Aggora (Technical) Limited(iii)
Aggora Group Ltd(iii)
Aggora Limited
Aggora Projects Ltd(iii)
Bodyguard Workwear Limited
Bunzl American Holdings (No.1) Limited
Bunzl American Holdings (No.2) Limited
Bunzl Finance Public Limited Company(i)
Bunzl Group Services Limited(i)
Bunzl Holding GTL Limited(i)
Bunzl Holding LCE Limited
Registered
office address
Subsidiary
undertakings
134
135
136
137
137
138
147
141
142
146
148
148
141
144
139
143
145
141
140
150
151
152
151
150
149
153
155
156
154
160
157
160
160
160
160
160
160
160
160
160
160
160
160
Bunzl Holding WWE Limited(iii) (96.3%)
Bunzl Mexico Holdings 1 Limited
Bunzl Mexico Holdings 2 Limited
Bunzl Overseas Holdings (No. 2) Limited(i) (ii)
Bunzl Overseas Holdings (No. 3) Limited
Bunzl Overseas Holdings (No.4) Limited
Bunzl Overseas Holdings Limited
Bunzl Pension Trustees Limited(i)
Bunzl Plastics Limited(i)
Bunzl Properties Limited(i)
Bunzl Retail & Healthcare Supplies Limited
Bunzl UK Limited
Catered 4 Limited
Classic Bag Company Holdings Limited
Comax (UK) Limited
Continental Chef Supplies Limited
Deliver Net Holdings Limited
Deliver Net Limited
Dialene Limited
Guardsman Limited
Henares Limited(i)
Howper 800 Limited(iii)
Hydropac Limited
Kingsbury Packaging (Limavady) Ltd
Lee Brothers Bilston Limited
Lightning Packaging Supplies Limited
London Bio Packaging Limited
McCue Corporation Limited (96.9%)
Packaging 2 Buy Limited
Parmelee Limited
Portabottle Limited
Portabrands Limited
Selectuser Limited(ii)
Spectrum Hygiene Limited(iii)
The Classic Printed Bag Company Limited
The Porta Group Limited
Tornado Gloves Limited
Tornado Holdings Limited
Tri-Star Packaging Supplies Limited
Woodway Packaging Limited
Woodway UK Limited
Woodway UK South Limited(iii)
Workwear Express Limited(iii) (96.3%)
Wycombe Marsh Paper Mills Limited(i)
Yorse No. 1 Limited
Yorse No. 3 Limited(i)
United States
Arch Logistics, LLC
Banner Stakes LLC (96.9%)
Bunzl Corporate Holdings, Inc.
Bunzl Distribution California, LLC
Bunzl Distribution Leasing, Inc.
Bunzl Distribution Midatlantic, LLC
Registered
office address
160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
160
157
160
160
160
159
160
158
160
160
160
160
160
160
158
158
160
160
160
160
160
160
160
160
177
179
177
162
166
168
224
Bunzl plc Annual Report 2021
Subsidiary
undertakings
Revco Industries, Inc.(iii)
Right Choice Distribution, LLC
SAS Safety Corporation
Shelby Group International, Inc.(iii)
Steiner Industries, Inc.
The Warehouse Rack, LLC
Tingley Rubber Corporation(iii)
TSN East, LLC
TSN West, LLC
U.S. Glove Co., Inc.
Uruguay
Steelpro Safety S.A.
Other shareholdings
Registered
office address
169
177
162
170
178
162
175
177
177
171
180
Registered
office address
Viner-Pack Gyarto Kereskedelmi Es Szolgaltato Korlatolt
Felelossegu Tarsasag(iii) (20%)
MCR Hanvo Safety Products (Nantong) Co., Ltd. (20%)
94
39
Classifications key
(i) Directly owned by Bunzl plc
(ii) Holding of ordinary and preference shares
(iii) Holding of more than one class of ordinary share
(iv) Holding of preference shares
Subsidiary
undertakings
Bunzl Distribution Midcentral, Inc.
Bunzl Distribution Northeast, LLC
Bunzl Distribution Oklahoma, Inc.
Bunzl Distribution Southeast, LLC
Bunzl Distribution Southwest, L.P.
Bunzl Distribution USA, LLC
Bunzl Holdings Inc.
Bunzl International Services, Inc.
Bunzl IP Holdings, LLC
Bunzl Mexican Holdings II, LLC
Bunzl Mexican Holdings III, LLC
Bunzl Mexican Holdings IV, LLC
Bunzl Mexican Holdings, LLC
Bunzl Midatlantic, LLC
Bunzl Minneapolis, LLC
Bunzl North American Holdings, Inc.
Bunzl Northeast, LLC
Bunzl Processor Distribution, LLC
Bunzl Retail Services, LLC
Bunzl Retail, LLC
Bunzl Southwest Holdings, LLC
Bunzl US Holdings LLC
Bunzl USA Holdings LLC
Bunzl USA LLC
Bunzl Utah, LLC
Bunzl Western Holdings, Inc.
Cool-Pak, LLC
Destiny Packaging, LLC
Earthwise Bag Company, Inc.
Eco Systems Holdings LLC
Foodhandler Inc.
Green Source, LLC
Hi-Valu, LLC
Intergro, LLC
International Sourcing Company Inc.(iii)
John Tillman Company
Joshen Paper & Packaging Co.(iii)
Keenpac, LLC
Liberty Glove & Safety, LLC
M.L. Kishigo Manufacturing Company, LLC
Masteragents LLC
McCue Business Trust (96.9%)
McCue Corporation (96.9%)
McCue International, Inc. (96.9%)
MCQ Holdings, Inc.(iii) (96.9%)
MCQ Protective Solutions Inc. (96.9%)
MCR Holdings, Inc.
Monte Package Company, LLC
Papercraft Southwest, LLC
Polygro, LLC
Prime Source, LLC
R3 Safety, LLC
R3, LLC
Registered
office address
177
177
163
177
165
162
162
162
162
177
177
177
177
177
166
162
177
177
162
177
167
162
162
162
164
177
162
162
169
177
173
177
177
161
170
162
176
177
162
167
177
174
174
174
167
167
170
162
162
161
177
177
172
Bunzl plc Annual Report 2021
225
FINANCIAL STATEMENTS SHAREHOLDER INFORMATION CONTINUED
List of registered office addresses
Registered office address
Key
Registered office address
Key
Maipú 1300, piso 13, Ciudad de Buenos Aires, Argentina
17 Millrose Drive, Malaga WA 6090, Australia
34-48 Cosgrove Road, Enfield NSW 2136, Australia
55 Sarah Andrews Close, Erskine Park NSW 2759, Australia
Bunzl Australia & New Zealand, Unit 1/52 Fox Drive, Dandenong
South VIC 3175, Australia
Level 2, 700 Springvale Road, Mulgrave VIC 3170, Australia
Unit 1, 52 Fox Drive, Dandenong South VIC 3175, Australia
Unit 3, 110 Chifley Drive, Preston VIC 3072, Australia
Diepoldsauer Straße 37, 6845, Hohenems, Austria
1 Rue du Bois des Hospices, 2iémé étage, 7522 Tournai, Belgium
Aarschotsesteenweg 114 3012 Leuven (Wilsele), Belgium
Avenue Sabin 23, 1300 Wavre, Belgium
Oudenaardsesteenweg 19 9000 Ghent, Belgium
Rue du Cerf 190 1332 Genval, Belgium
Av. Fagundes de Oliveira 538, Warehouse A5, Piraporinha,
Cidade de diadema, CEP, 09950-300, Brazil
Avenida do Cursino, 3.365 SL/06, Saúde, City of São Paulo, CEP,
04133-300, Brazil
Avenida Doutor Alberto Jackson Byington, 1435 Industrial
Anhanguera, City of Osasco, São Paulo, CEP 06276-000, Brazil
Avenida Doutor Alberto Jackson Byington, 1435 Jardim Santa Fe,
City of Osasco, São Paulo, CEP 06273-050, Brazil
Estrada Velha de Guarulhos - São Miguel, 5135, Box 301 - Jardim
Arapongas, city of Guarulhos, São Paulo, CEP 07210-250, Brazil
Rua Dr. Guilherme Bannitz, No. 126, 2nd floor, sets 21 and 22,
District of Itaim Bibi, City of São Paulo, State of São Paulo,
04532-060, Brazil
Rua João Thomaz Pinto, No. 1570, Shed A, Modules 6, 7 and 8
Condominium Byblos, district of Canhanduba, City of Itajaí,
State of Santa Catarina, 88.313-045, Brazil
Rua Padre Damaso 165, 173 e 187, Osasco, São Paulo, CEP 06016-
010, Brazil
Via Expressa de Contagem, 3115, galpão 1, Bairro Agua Branca,
City of Contagem, Minas Gerais, CEP 32370-485, Brazil
#310, 5700 Boul. Des Galeries, Québec G2K 0H5, Canada
1212 – 1175 Douglas St, Victoria, BC V8W 2E1, Canada
160 Elgin Street, Suite 2600 , Ottawa, CA, ON K1P 1C3, Canada
1801 Hollis St Ste 1800, Halifax NS B3J 3N4, Canada
Dentons Canada LLP, 2500 Stantec Tower, 10220 – 130 Avenue
NW, Edmonton AB T5J 0K4, Canada
Parlee McLaws LLP, 3300 TD Canada Trust Tower, 421-7th
Avenue, SW, Calgary AB T2P 4K9, Canada
Av. Presidente Eduardo Frei Montalva 5151, Conchalí, 8550678
Santiago, Chile
Avenida Boulevard, Aeropuerto Norte #9649, Pudahuel,
Santiago, Chile
Camino Coquimbo N’ 16.000, Colina, Sanitago, Chile
2F, Building 4, No. 115 Lane 1276, Nanle Road, Songjiang District,
Shanghai, China
3F, Building 4, No. 115 Lane 1276, Nanle Road, Songjiang District,
Shanghai, China
1
2
3
4
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Floor 9, Xinpeng Plaza, No. 200, Lane 91, E'shan Road, Pudong
New Area, Shanghai, 200127, China
No. 181 Zhongshe Road, Maogag Town, Songjiang District,
Shanghai, China
No. 301 Rongle East Road, Songjiang District, Shanghai, China
No. 9 Fuqian Road, Shandong Zhuang Town, Pinggu District,
Beijing, China
No.128 Jinshajiang Road, Rudong Economic Development Zone,
Jiangsu, China
Room 1509, Building 2, No. 1266 Nanjing West Road, Jingan
District, Shanghai, China
Room 1805, Central Business Tower, 88 Fuhua 1st Road, Futian,
Shenzhen Guangdong, China
Room 3123, Building 3, 112-118 Gaoyi Road, Baoshan District,
Shanghai, China
Room 368, Part 302, No. 211 Fute North Road, Free Trade Zone,
Shanghai, China
Room 901, No. 595 West Lianqian Road, Siming District, Xiamen,
Fujian Province, China
Room 908, Building 16, Zone 2, International Chuangzhi Park,
No.8 Gangkou Road, Guicheng Street, Nanhai District, Foshan,
Guangdong, China
Room A39, Floor 6, Building 2, Dongfang MAO Business Center,
Xiacheng District, Hangzhou, Zhejiang, China
Southwest of No.1 House, 3F, Building A, Tower 2, Xinhaiyi, No.
58 Heshun Road, Suzhou Industrial Park, Jiangsu, China
Carrera 30 No. 15-30, Bogota D.C., Colombia
CR 71 No 94 - 23 AP, 1134 TO 9, Colombia
Km 7 Vía Medellín, Parque Empresarial Celta, Módulo 1, Bodega
49, Funza (Cundinamarca), Colombia
Dolnokrčská 2029/54a, Krč, Praha 4, 140 00, Czech Republic
Přátelstvi 1011/17, Uhřiněves, Praha 10, 10 400, Czech Republic
Greve Main 30, 2670 Greve, Denmark
Indkildevej 2 c, DK-9210, Aalborg SØ, Denmark
Kærvej 25, DK-2970 Hørsholm, Denmark
Kirkebjergvej 17, 4180 Sorø, Denmark
11 C rue des Aulnes, 69410 Champagne-au-Mont-d'or, France
13 rue des Battants RN 20, 31140, Saint-Alban, France
130-136 rue Victor Hugo, 92300 Levallois-Perret, France
17 Boulevard du Trieux, Zone d’aménagement Concerté les
touches, 35740, Pacé, France
191-195 Avenue Charles de Gaulle, 92200 Neuilly-sur-Seine, Paris,
France
26/28 rue Jean Perrin, 28300, Mainvilliers, France
29 avenue des Morillons, ZA des Doucettes, 95140 Garges les
Gonesses, France
440 route de Rosporden, Le Grand Guelen, 29000 Quimper,
France
50 Avenue d'Allemagne, Rond Point de L'Europe ZA Albasud,
82000 Montauban, France
530 rue Jacqueline Auriol ZA de Saint Thudon, 29490, Guipavas,
France
556 Chemin du Mas de Cheylon, CAP Delta 30941, Nimes, France
35
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226
Bunzl plc Annual Report 2021
Registered office address
Key
Registered office address
585, Rue Alain Colas, 29200, Brest, France
7 route de Villiers, 77780, Bourron-Marlotte, France
725 Route des Vernes Pringy, 74370, Annecy, France
Boulevard Francois-Xavier Faffeur, Zone Industrielle Lannolier,
11000, Carcassonne, France
La Fregate, 19 avenue Jacques Cartier, 44800, Saint-Herblain,
France
Lieudit la Trentaine, 77690, La Genevraye, France
Parc d'activité Des Lacs, 22 rue Saint Exupéry, 33 290
Blanquefort, France
Quai Louis Aulagne, 69 190 Saint Fons, France
Route Nationale 97, ZA Les Plantades, 83130 La Garde, France
Route Nationale, 57420, Louvigny, France
Rue Charles Remi Arnoult, 21700 Nuits Saint Georges, France
Rue de Pau, 40500 Saint-Server, France
Rue Edouard Branly, ZAC des Chamonds 58640 Varennes-
Vauzelles, France
Rue Nungesser et Coli, D2a Nantes Atlantique, 44860, Saint-
Aignan de Grand Lieu, France
Rue Pierre Pascal Fauvelle, 66000 Perpignan, France
ZI Maison Dieu RN 74, 21220 Fixin, France
Zone Artisanale Maritime du Bassin de Thau, Route de Séte,
34540 Ballaruc Les Bains, France
Elbestraße 1-3, 45768 Marl, Germany
Friedrichstrasse 2, 40699 Erkrath, Germany
Kitzingstr. 15-19, 12277, Berlin, Germany
Maysweg 11, 47918 Tönisvorst, Germany
Stadtweide 17, 46446 Emmerich, Germany
11th Floor, One Pacific Place, 88 Queensway, Hong Kong
Room 2103, Futura Plaza, 111 How Ming Street, Kwun Tong, Hong
Kong
Unit 26, 22/F, Metro Centre II, Lam Hing St., Kowloon Bay,
Kowloon, Hong Kong
Unit 3-4 18F Tower 6, China Hong Kong City, Tsim Sha Tsui,
Kowloon, Hong Kong
2336 Dunavarsány, 071/33 hrsz, Hungary
Vendel Park, Erdőalja út 3, 2051 Biatorbágy, Hungary
10 Earlsfort Terrace, Dublin 2, D02 T380, Ireland
4 Kinneret Street, POB 1139, Airport City, Ben Gurion Airport,
7019802, Israel
Emek Ha'Ela 250, Modi'in, P.O.B 553, LOD 7110601, Israel
Corsa Italia n.6, 50123 Florence, Italy
68
69
70
71
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81
82
83
84
85
86
87
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94
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99
Avenida Cafetales No. 1702, Interior 201, between streets
Rancho Recoveco and Rancho Estopila, Hacienda de
Coyoacán, Coyoacán, 04970, Mexico
Calle Rio San Lorenzo No. 503, Col. Fuentes del Valle, CP 6620, CD
San Pedro Garza Garcia, Nuevo León, Mexico
Carretera al CUCBA No. 400 Interior 5, Colonia La Venta del
Astillero, C.P. 45221 Zapopan, Jalisco, Mexico
Carretera Corredor Tijuana Rosarito 2000 Exterior 15202.,
Interior Mt3 A, Colonia Zona Cerril General, Tijuana, Baja
California, Mexico
Carretera Miguel Alemán KM21 Edificio 4C Prologis Park,
Apodaca, N.L., México C.P, 66627, Mexico
Galileo # 11, Colonia Polanco V Secc., Delagación Miguel Hidalgo,
11560, Ciudad de México, Mexico
Nicaragua 205, Arbide, León, Guanajuato, 37360, Mexico
Pablo A. Gonzalez Garza Pte., 820, Chepevera, Monterrey, Nuevo
León, 64030, Mexico
Rio San Lorenzo No. 503 Local I, Col. Fuentes Del Valle, San Pedro
Garza Garcia, C.P. 66220, Mexico
C/O CAE, ILOT 43B Bureau 9/18, Zone Franche d’Exportation,
90000 Tanger, Morocco
Bijsterhuizen 3005C, 6604 LP Wijchen, Netherlands
Delta 57, 6825 ML Arnhem, Netherlands
Esp 125, 5633 AA Eindhoven, Netherlands
Grotewei 2, 4004 LW Tiel, Netherlands
Industrieweg 11B, 1566JN, Assendelft, Netherlands
Jan Campertlaan 6, 3201AX, Spijkenisse, Netherlands
Keizersgracht 241, 1016EA, Amsterdam, Netherlands
Koivistokade 80, 1013 BB, Amsterdam, Netherlands
Portugallaan 3, 9403DR, Assen, Netherlands
Rondebeltweg 82, 1329 BG Almere, Netherlands
Spanjelaan 1, 9403DN, Assen, Netherlands
109 Carlton Gore Road, Newmarket, Auckland 1023, New
Zealand
686 Rosebank Road, Avondale, Auckland, 1026, New Zealand
97 Sawyers Arm Road, Christchurch, 8052, New Zealand
KPMG Level 5, 79 Cashel Street, Christchurch, 8140, New Zealand 128
Level 3, 109 Carlton Gore Road, Newmarket, Auckland, 1023,
New Zealand
Bedriftsveien 24, 3735 Skien, Norway
c/o Enor AS, Holmaveien 20, 1339 Vøyenenga, Norway
Holmaveien 20, 1339 Vøyenenga, Norway
Av. Santa Rosa 350. Ate., Lima, Peru
Via 8 Marzo n. 6, 42025 Corte Tegge di Cavriago, Reggio Emilia,
Italy
Via Brigata Reggio no. 24, Reggio Emilia, Italy
8.03, 8th Floor Plaza First Nationwide 161, Jalan Tun H.S. Lee
50000 Kuala LUMPUR, Malaysia
Av. del sauce número 1600, Col. La angostura, City of San Luis
Potosí, S.L.P, 78117, Mexico
100
101
102
103
PO Box 6494, PR 00914-6494, San Juan, Puerto Rico
Sat Dragomiresti-Deal, Comuna Dragomiresti-Vale, DE 287/1,
Bucharest West Logistic Park, Cladirea C, Unitatea C01, Ilfov,
Romania
1 Penjuru Close, 608617, Singapore
190 Middle Road #16-01, Fortune Centre, 188979, Singapore
Na pántoch 18, 831 06 Bratislava, Slovakia
Bunzl plc Annual Report 2021
Key
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
129
130
131
132
133
134
135
136
137
138
227
FINANCIAL STATEMENTS Key
170
171
172
173
174
175
176
177
178
179
180
SHAREHOLDER INFORMATION CONTINUED
List of registered office addresses continued
Registered office address
Key
Registered office address
Corporation Service Company, 2908 Poston Avenue, Nashville
TN 37203-1312, United States
Corporation Service Company, 300 Deschutes Way SW, Suite
304, Turnwater WA 98501, United States
Corporation Service Company, 505 5th Street, Suite 729, Des
Moines IA 50309, United States
Corporation Service Company, 80 State Street, Albany NY 12207-
2543, United States
Corporation Service Company, 84 State Street, Boston MA 02109,
United States
Corporation Service Company, Princeton South Corporate
Center, Suite 160, 100 Charles Ewing Boulevard, Ewing NJ
08628, United States
Corporation Services Company, 50 West Broad Street, Suite
1330, Columbus OH 43215, United States
CSC-Lawyers Incorporating Service Company, 221 Bolivar Street,
Jefferson City MO 65101, United States
Illinois Corporation Service Company, 801 Adlai Stevenson Drive,
Springfield IL 62703-4261, United States
The Corporation Trust Company, Corporation Trust Center, 1209
Orange Street, Wilmington, New Castle County DE 19801,
United States
César Cortinas 2037, Montevideo, Uruguay
Calle Ana Abarca de Bolea 22, Nave A, polígono industrial El Pilar,
Zaragoza, Spain
Calle Castilla-León, Parcela 45 Onda, 12200, Castellón, Spain
Calle Filats, 8 Polg. Industrial Prologis Park, 08830 Sant Boi de
Llobregat, Barcelona, Spain
Calle las Palmeras 7, Polígono Industrial La Sendeilla, 28350
Ciempozuelos, Spain
Carretera de Madrid Km 314 – Nave 3ª, polígono industrial Jesús
Vicente, Zaragoza, Spain
Cartagena, Murcia, poligono industrial Cabezo Beaza, Avenida
Bruselas, 30353, esquina calle Amsterdam, parcela R 100,
Spain
Corretger No 115-117-119, Parque Empresarial Táctica, Paterna,
46980, Valencia, Spain
Edificio Plaza, Nave 5, Ali-4 Plataforma Logistica de Zaragoza,
50197, Zaragoza, Spain
Rosalia de Castro, 5, As Pontes de García Rodríguez, A Coruña,
Spain
Santo Domingo De La Calzada, La Rioja, 26250, Carretera De
Logrono, Spain
Güterstrasse, 4313 Möhlin, Switzerland
Nordring 2, 4147 Aesch, Switzerland
Oberebenestrasse 53, CH-5620 Bremgarten, Switzerland
Route des Jeunes 5D, c/o Télios SA, 1227 Les Acacias, Genève,
Switzerland
Akçaburgaz Mahallesi, 3137. Sokak, No.19, Esenyurt, Istanbul,
Turkey
Akçaburgaz Mahallesi, 3137. Sokak, No.19, K. 1, Esenyurt,
Istanbul, Turkey
Arapcami Mah, Tersane Cad, No. 115, Beyoğlu, Istanbul, Turkey
Barbaros Mah., Begonya Sk.,, Nidakule Kuzey Ataşehir Apt.,
No:3/157, Ataşehir, İstanbul, Turkey
Arthur Cox, Victoria House, 15-17 Gloucester Street, Belfast, BT1
4LS, United Kingdom
Middlemore Lane West, Aldridge, Walsall, WS9 8BG, United
Kingdom
Mount House Bond Avenue, Mount Farm, Milton Keynes,
Buckinghamshire, MK1 1SF, United Kingdom
York House, 45 Seymour Street, London, W1H 7JT, United
Kingdom
2915 SR 590, Suite 15, Clearwater FL 33759, United States
Corporation Service Company, 100 Shockoe Slip, 2nd Floor,
Richmond VA 23219, United States
Corporation Service Company, 10300 Greenbriar Place,
Oklahoma City OK 73159, United States
Corporation Service Company, 15 West South Temple, Suite 600,
Salt Lake City UT 84101, United States
Corporation Service Company, 211 E. 7th Street, Suite 620, Austin
TX 78701, United States
Corporation Service Company, 2345 Rice Street, Suite 230,
Roseville MN 55113, United States
Corporation Service Company, 251 Little Falls Drive, Wilmington
DE 19808, United States
Corporation Service Company, 2595 Interstate Drive, Suite 103,
Harrisburg PA 17710, United States
Corporation Service Company, 2710 Gateway Oaks Drive, Suite
150N, Sacramento CA 95833-3505, United States
139
140
141
142
143
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145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
228
Bunzl plc Annual Report 2021
Financial calendar
Annual General Meeting
Results for the half year to 30 June 2022
Results for the year to 31 December 2022
Annual Report circulated
2022
20 April
30 August
2023
February
March
Dividend payments are normally made on the second working
day of the following months:
Ordinary shares (final)
Ordinary shares (interim)
July
January
Analysis of ordinary shareholders
At 31 December 2021 the Company had 4,839 (2020: 4,923)
registered shareholders who held 337.4 million (2020: 337.0
million) ordinary shares between them, analysed as follows:
Size of holding
0 – 10,000
10,001 – 100,000
100,001 – 500,000
500,001 – 1,000,000
1,000,001 and over
Number of
shareholders
4,132
441
180
40
46
4,839
% of issued
share capital
2
4
13
8
73
100
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Telephone +44 (0) 370 889 3257
Fax +44 (0) 370 703 6101
Email webqueries@computershare.co.uk
Website www.computershare.com
Investor Centre
Shareholders can manage their shareholding online at
www.investorcentre.co.uk. The Investor Centre is our registrar’s
easy to use website, available 24 hours a day, seven days a
week, where the following services are available:
• elect for electronic communications;
• change of address;
• view share balance information;
• join the dividend reinvestment plan; and
• view dividend payment and tax information.
In order to register for the Investor Centre, shareholders will
need their shareholder reference number which can be found
on either their share certificate or dividend confirmations.
Dividend payment by BACS
Shareholders can have their dividends paid directly into their
bank or building society account using the Bankers’ Automated
Clearing Service (‘BACS’). This means that dividends will be
in the account on the same day the dividend payment is made.
To use this method of payment please contact our registrar on
+44 (0) 370 889 3257 or visit the Investor Centre website. Please
note that this option will not override any existing dividend
scheme mandate, which would need to be revoked in writing.
Shareholders who have elected to have their dividends paid by
BACS and who have registered a valid email address with the
registrar will be able to access their dividend confirmations
electronically at www.investorcentre.co.uk. If no such email
address has been registered, shareholders will receive their
dividend confirmations by post.
Dividend reinvestment plan
The Company operates a dividend reinvestment plan which
allows shareholders in eligible countries to use the whole of
their cash dividend to buy additional shares in the Company,
thereby increasing their shareholding.
Shareholders can check their eligibility in the terms and
conditions and apply to join the plan online in the Investor
Centre or can contact the Company’s registrar to request the
terms and conditions of the plan and a printed mandate form.
American Depositary Receipts
The Company has a sponsored Level 1 American Depositary
Receipt programme that trades on the over-the-counter
market in the US with ticker BZLFY. Citibank N.A. acts as the
Depositary Bank.
Telephone Citibank +1 781 575 4555
Email citibank@shareholders-online.com
Website www.citi.com/dr
Shareholders may if they wish have their dividend payments
paid directly into their bank account in certain foreign
currencies. Please contact the Company’s registrar on
+44 (0) 370 889 3257 to request further information about
the currencies for which this service is available.
Bunzl plc Annual Report 2021
229
FINANCIAL STATEMENTS
SHAREHOLDER INFORMATION CONTINUED
Share dealing
Bunzl plc shares can be traded through most banks and
stockbrokers. The Company’s registrar also offers an internet
and telephone dealing service. Further details can be found at
https://www-uk.computershare.com/Investor/#ShareDealingInfo
or by telephoning +44 (0) 370 889 3257.
ShareGift
Sometimes shareholders have only a small holding of shares
which may be uneconomical to sell. Shareholders who wish
to donate these shares to charity can do so through ShareGift,
an independent charity share donation scheme (registered
charity no. 1052686). Further information about ShareGift
may be obtained from ShareGift on +44 (0) 20 7930 3737 or at
www.sharegift.org.
Shareholder security
Shareholders are advised to be cautious about any unsolicited
financial advice, offers to buy shares at a discount or offers of
free company reports. More detailed information about this can
be found at www.fca.org.uk in the Consumers section and at
www.fca.org.uk/scamsmart. Details of any share dealing
facilities that the Company endorses will be included in
Company mailings.
Independent auditors
PricewaterhouseCoopers LLP
Corporate brokers
J.P. Morgan Cazenove
Citigroup
Company Secretary
Suzanne Jefferies
Registered office
York House
45 Seymour Street
London W1H 7JT
Telephone +44 (0) 20 7725 5000
Fax +44 (0) 20 7725 5001
Website www.bunzl.com
Registered in England no. 358948
Forward-looking statements
The Annual Report contains certain statements about the
future outlook for the Group. Although the Company believes
that the expectations are based on reasonable assumptions,
any statements about future outlook may be influenced by
factors that could cause actual outcomes and results to be
materially different.
230
Bunzl plc Annual Report 2021
Five year review
Revenue
Operating profit
Finance income
Finance expense
Profit on disposal of businesses
Profit before income tax
Income tax
Profit for the year attributable to the Company’s
2021
£m
10,285.1
623.3
10.7
(65.3)
–
568.7
(125.9)
IFRS
2020
£m
10,111.1
618.5
10.4
(73.2)
–
555.7
(125.7)
2019
£m
9,326.7
528.4
12.4
(87.5)
–
453.3
(104.1)
2019◊
£m
9,326.7
506.0
12.4
(64.2)
–
454.2
(104.3)
IAS 17
2018
£m
9,079.4
466.2
11.6
(66.6)
13.6
424.8
(98.3)
2017
£m
8,580.9
456.0
10.6
(57.3)
–
409.3
(98.8)
equity holders
442.8
430.0
349.2
349.9
326.5
310.5
Basic earnings per share
132.7p
128.8p
104.8p
105.0p
98.4p
94.2p
Alternative performance measures†
Adjusted operating profit
Adjusted profit before income tax
Adjusted profit for the year
Adjusted earnings per share
752.8
698.2
542.5
162.5p
778.4
715.6
550.5
164.9p
653.3
578.2
440.6
132.2p
630.9
579.1
441.3
132.4p
614.0
559.0
429.9
129.6p
589.3
542.6
393.4
119.4p
◊ Following the adoption of IFRS 16 ‘Leases’ with effect from 1 January 2019, because the Group adopted the accounting standard using the modified retrospective approach to transition and
accordingly did not restate prior periods, the results for the years ending 31 December 2019 and onwards are not directly comparable with those reported in the prior years under the
previous applicable accounting standard, IAS 17 ‘Leases’. To provide a meaningful comparative for the year ended 31 December 2019, the results for 2019 have been presented under both
IAS 17 and IFRS 16 accounting standards.
† See Note 3 on page 170 for further details of the alternative performance measures.
Bunzl plc Annual Report 2021
231
FINANCIAL STATEMENTS Printed by Empress Litho on Forest
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Bunzl plc Annual Report 2021
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Bunzl plc Annual Report 2021