The difference
is essential
Trusted, reliable
delivery
Bunzl plc Annual Report 2022
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.
Our customers trust us to deliver
the innovative products, solutions
and insights that help them run
their businesses more efficiently
and sustainably. Our investors trust
our track record of dividend growth.
Our employees value our customer-
focused and inclusive culture. That’s
why the Bunzl difference is essential.
Trusted…
…to deliver
Visit our website
www.bunzl.com
…partnerships
Page
Page
24 Our strong and ethical
supply chain network
ensures our customers
can always rely on us
to deliver
28 Our customer-centric
focus and differentiated
value-added offering drive
new business wins
Inside…
Strategic report
4
A year in review
6
Bunzl at a glance
8
Chairman’s statement
10
Investment case
12
Chief Executive Officer’s review
20
Operating review
24
Trusted to deliver
26
Market dynamics
28
Trusted partnerships
30
Our purpose-led strategy
32
Our business model
34
Our strategy
40
Our people
44
Trusted expertise
46
Key performance indicators
Sustainability
48
Taskforce on Climate related Financial Disclosures (TCFD) 69
70
Section 172 statement
74
Principal risks and uncertainties
83
Viability
84
Trusted to perform
86
Financial review
94
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
SASB Reporting for Bunzl Sustainability Metrics
ESG Appendix
Five year review
98
100
102
114
119
132
156
162
163
164
165
166
168
214
215
216
222
223
230
238
240
248
…expertise
…to perform
Page
Page
44 Our entrepreneurial
mindset ensures we
always evolve; today our
sustainability expertise
differentiates our offering
84 The consistency of our
performance has allowed
Bunzl to deliver 30 years
of consecutive annual
dividend growth
Bunzl plc Annual Report 2022
1
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT Strategic
report
Our business model is strong and flexible.
We respond with agility to our customers’
needs, delivering essential business
solutions around the world and creating
long term sustainable value for the benefit
of all our stakeholders.
A year in review
Bunzl at a glance
Chairman’s statement
Investment case
Chief Executive Officer’s review
Operating review
Trusted to deliver
Market dynamics
Trusted partnerships
Our purpose-led strategy
Our business model
Our strategy
40
Our people
44
Trusted expertise
46
Key performance indicators
Sustainability
48
Taskforce on Climate related Financial Disclosures (TCFD) 69
70
Section 172 statement
74
Principal risks and uncertainties
83
Viability
84
Trusted to perform
86
Financial review
94
Non-financial information statement
4
6
8
10
12
20
24
26
28
30
32
34
2
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
3
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT 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
Basic earnings per share
(2021: £10,285.1m)
£12,039.5m
+9.8%†
Growth at actual exchange rates 17.1%
Adjusted operating profit*
(2021: £752.8m)
£885.9m
+11.1%†
Growth at actual exchange rates 17.7%
Operating profit
£701.6m
(2021: £623.3m)
Growth at actual exchange rates 12.6%
Adjusted earnings per share*
(2021: 162.5p)
184.3p
+7.0%†
Growth at actual exchange rates 13.4%
141.7p
(2021: 132.7p)
Growth at actual exchange rates 6.8%
Dividend per share
(2021: 57.0p)
62.7p
+10.0%
Cash conversion*
107%
(2021: 102%)
Committed acquisition spend
£322m
Net debt : EBITDA**
1.2x
(2021: 1.6x)
* Alternative performance measure (see Note 3 to the consolidated financial statements on page 178).
** At average exchange rates and based on historical accounting standards, in accordance with the Group’s external
debt covenants.
† At constant exchange rates.
Reconciliation of alternative performance measures to statutory measures
for the year ended 31 December 2022
Adjusting items
Customer
relationships,
brands and
technology
amortisation
£m
Acquisition
related
items
£m
Alternative
performance
measures
£m
Disposal of
business
£m
Statutory
measures
£m
885.9
22.3
(90.2)
–
818.0
(201.2)
(128.4)
(55.9)
701.6 Operating profit
22.3
Finance income
(90.2)
Finance expense
0.9
0.9 Disposal of business
0.9
634.6
Profit before
income tax
–
(160.2)
Income tax
(128.4)
34.7
(55.9)
6.3
616.8
(93.7)
(49.6)
0.9
474.4
Profit for the year
184.3p
(28.0)p
(14.8)p
0.2p
141.7p
Basic earnings
per share
Year ended
31 December 2022
Adjusted
operating profit
Finance income
Finance expense
Disposal of business
Adjusted profit
before income tax
Tax on adjusted profit
Adjusted profit
for the year
Adjusted earnings
per share
30th year
of consecutive annual dividend increase
This review refers to alternative performance measures which exclude charges for customer relationships, brands and
technology 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, page 178.
Growth at constant exchange rates is calculated by comparing the 2022 results to the results for 2021 retranslated at the
average exchange rates used for 2022.
4
Bunzl plc Annual Report 2022
Sustainability performance: highlights
READ MORE
PAGE 48
Responsible
supply chains
Investing in a
diverse workforce
78%
of our spend in high risk
regions from assessed
and compliant suppliers
930
ethical audits completed
c.96%
of our purchasing spend today is either
in low-risk regions, with assessed or
compliant suppliers in high-risk regions,
or on other non-product related costs
21%
women in senior
leadership roles
+2%
increase compared to 2021
Senior leadership defined as the 470
employees who receive share options
as part of their remuneration
Taking action on
climate change
Providing sustainable
solutions
SBTi*
approval of our Scope 1, 2 and
3 emissions reduction targets
* Science Based Targets initiative
24%
more carbon efficient since
2019 with a 15% reduction in
absolute emissions.
2%
of Group revenue generated
from consumables that are
facing regulation
83%
of Group revenue attributable to
non-packaging products and packaging
products made from alternative materials
that are well suited to a circular economy
Bunzl plc Annual Report 2022
5
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT BUNZL AT A GLANCE
Helping 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
Foodservice
30%
Safety
15%
Grocery
26%
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
e-commerce sectors.
Healthcare
Healthcare consumables,
including gloves, masks, swabs,
gowns, bandages, cleaning and
hygiene products, and healthcare
devices to hospitals, care homes
and other facilities serving the
healthcare sector.
Retail
10%
9
%
7
%
H
e
a
l
t
h
c
a
r
e
O
t
h
e
r
3
%
l
i
C
e
a
n
n
g
&
H
y
g
i
e
n
e
6
Bunzl plc Annual Report 2022
195
acquisitions
since 2004
31
countries we
operate in
30
years of dividend
growth
22,451
employees
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.
Continental Europe
£195.1m
2021: £191.8m
21%
Adjusted
operating profit*
12%
Rest of the World
£111.7m
2021: £116.5m
11%
UK & Ireland
£95.3m
2021: £67.0m
* Alternative performance measure (see note 3, page 178).
Percentages stated are the business areas’ adjusted
operating profit compared to the Group’s adjusted
operating profit before corporate costs.
56%
North America
£511.5m
2021: £401.3m
Bunzl plc Annual Report 2022
7
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT CHAIRMAN’S STATEMENT
Our people are
the engine of
our success
Bunzl has had another successful year,
delivering very strong financial results,
making further strategic progress across
the business, and announcing a 30th
consecutive year of annual dividend
growth. At constant exchange rates,
Bunzl delivered strong revenue growth
in 2022 of 9.8% (17.1% at actual exchange
rates), an increase of 11.1% in adjusted
operating profit and growth of 7.0% in
adjusted earnings per share, with basic
earnings per share at actual exchange
rates increasing 6.8%. This has resulted,
at constant exchange rates, in adjusted
operating profit being 37% higher than
the comparable period in 2019 and is
equivalent to 11% Compound Annual
Growth Rate (‘CAGR’) over that period,
which is ahead of the 10% CAGR achieved
between 2004 and 2022. The resilience
of the Group’s performance, despite
significant inflation, pandemic-related
business mix shifts and supply chain
disruptions demonstrates the strength of
the Bunzl model. This performance over
the last three years gives me even greater
confidence in the Group’s ability to adapt
to changing circumstances, the benefits
of the Group’s diversification, the
dedication of our people, and the depth
of our partnerships with customers, all
of which continue to support the longer
term growth of the business. I am
confident these elements will continue
to support future performance.
Peter Ventress
Chairman
8
Bunzl plc Annual Report 2022
Governance
In July we announced the appointment
of Pam Kirby as a non-executive director
with effect from 1 August 2022. Pam
has significant knowledge and experience
in global businesses, having worked
in several international roles for over
30 years. She brings a wealth of
international distribution, strategic
and UK listed company experience to
the Board. In February 2023 Bunzl also
announced the appointment of Jacky
Simmonds as a non-executive director
with effect from 1 March 2023. Jacky has
significant knowledge and experience
working in international and listed
companies, and across all aspects of HR,
with particular expertise in employee
engagement and talent and succession
planning. Following this appointment,
the proportion of female directors on the
Board will be 44%, whilst representation
on our executive committee remains
at 40%.
Peter Ventress
Chairman
27 February 2023
Strategic priorities
We continue to pursue a strategy of
developing the business through a
combination of organic growth,
operational improvements and
acquisition growth. 2022 was another
year of successful strategic progress,
with the Group signing agreements
to acquire 12 businesses which span
multiple sectors, including specialist
healthcare distributors and warehouse
solutions providers, from across nine
different countries. In July 2022, the
Group announced a key acquisition in
Germany to provide a platform for
expansion into this high-potential market,
which we have already built upon with
the German acquisition we have
announced today. Bunzl’s depth of
opportunity is significant and further
consolidation of its fragmented end
markets is a key driver of growth for
the Group. Demonstrating Bunzl’s focus
on portfolio optimisation and returns
focused capital allocation, we disposed
of our UK healthcare business in 2022.
The Group also continued to undertake
projects to drive operational efficiencies,
including further warehouse relocations
and consolidations and investments
into automation.
Furthermore, Bunzl’s operating
companies have continued to enhance
their value-added offering by partnering
with customers to help them achieve
their sustainability goals, including a
focus on transitioning to alternative
packaging products and materials
that are better suited to the circular
economy and reducing carbon emissions
associated with our deliveries. Packaging
made from alternative materials now
accounts for 53% of the Group’s total
packaging revenue. Similarly, a focus
on driving digital sales, which improve
user experience, customer retention
and Bunzl’s operational efficiency, has
been steadily increasing over the last few
years, now accounting for 69% of orders.
Bunzl ended the year with a net debt
to EBITDA of 1.2 times, affording us
the balance sheet strength to invest
in our longer term strategic growth
priorities despite some near term
macroeconomic uncertainties.
People and culture
Our people are a key asset and it is their
commitment to providing customers with
a reliable service that has helped Bunzl
to navigate the supply chain challenges
faced over the year and the impact of
inflation. Our decentralised structure
also utilised a network of colleagues to
drive strategic progress, with a number of
acquisitions made over 2022 introduced
by our local teams. People at Bunzl
continue to find it a fulfilling place to
work, and it is pleasing to see the Group’s
sustainable engagement score increase
a further 5% to 85% in 2022. Over the last
year we accelerated our diversity, equity
and inclusion agenda to ensure that we
have a working environment which
supports individual well-being, growth
and career progression. In 2022 the
percentage of women within our senior
leadership group (comprising 470
individuals) increased for the sixth year
running to 21%, compared to 19% in the
prior year, and more than double the level
in 2016.
Shareholder returns
The Board is recommending a final
dividend of 45.4p, 11.3% higher than the
prior year, resulting in a full year dividend
of 62.7p. This represents a 10.0% increase
compared to the 2021 total dividend
and is Bunzl’s 30th consecutive year of
dividend growth. The Group remains
committed to ensuring sustainable
dividend growth. Since 2004, Bunzl has
returned £2.0 billion to shareholders
through dividends and has committed
£4.7 billion in acquisitions to support a
growth strategy that has delivered an
adjusted earnings per share CAGR of
10% over the period.
Positive feeling
amongst our
colleagues
85%sustainable engagement score
+5%increase year-on-year
READ MORE:
PEOPLE SECTION
PAGE 40
Bunzl plc Annual Report 2022
9
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC 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
Sustainable
and equitable
growth
Disciplined financial
management
A long term
track record
of returns for
shareholders
• Industry-leading ethical
supplier audits
• Carbon efficiency
through consolidation
• Proactive leader in the transition
to alternative material products
• Decentralised business model
supports people and customer focus
• Consistently strong
cash conversion
• Efficient capital allocation
• Strong balance sheet
• 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
• Global presence in 31 countries
• Six customer focused
market sectors
• Fragmented markets
• Long term customer and
supplier relationships
Revenue CAGR
since 2004
9%
Adjusted operating profit1
CAGR since 2004
10%
Resilience demonstrated by
adjusted operating profit1
growth 2019 – 2022 at constant
currency of
37%
• 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
Average underlying revenue
growth1 since 2004
3%
Self-funded committed
acquisition spend 2004 to
2022
£4.7bn
Acquisitions since 2004
195
Committed acquisition
spend in 2022
£322m
Net debt to EBITDA2 provides
substantial capacity for further
self-funded acquisitions
1.2x
10
Bunzl plc Annual Report 2022
A diversified,
balanced and
resilient business
A consistent
and proven
compounding
strategy
Significant
opportunities
for future growth
Sustainable
and equitable
growth
Disciplined financial
management
A long term
track record
of returns for
shareholders
• Global presence in 31 countries
• 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
• Six customer focused
market sectors
• Fragmented markets
• Long term customer and
supplier relationships
• Consistently strong
cash conversion
• Efficient capital allocation
• Strong balance sheet
Return on invested
capital1
15%
Return on average
operating capital1
43%
Cash conversion1
107%
• Industry-leading ethical
supplier audits
• Carbon efficiency
through consolidation
• Proactive leader in the transition
to alternative material products
• Decentralised business model
supports people and customer focus
Supplier audits
over 2022
930
Scope 1 and 2 tonnes of CO2e
since 2019
15%
% of Group revenue
generated by consumables
facing regulation
2%
Proportion of female members
of Board and Executive
Committee
>40%
Inclusive of the appointment of Jacky Simmonds
as a non-executive director with effect from
1 March 2023.
• 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
30 years
Adjusted earnings
per share1
31.7p in 2004
to
184.3p in 2022
1 Alternative performance measure (see Note 3 to
the consolidated financial statements on page 178).
2 On a covenant basis – at average exchange rates
and based on historical accounting standards, in
accordance with Group’s external debt covenants.
Bunzl plc Annual Report 2022
11
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT CHIEF EXECUTIVE OFFICER’S REVIEW
A strong performance,
reaching a significant
dividend milestone
Frank van Zanten
Chief Executive Officer
Overview
The very strong results we have
achieved once again demonstrate Bunzl’s
operational and financial resilience. Our
people have been instrumental to our
success, with our teams working hard to
pass through price increases, while also
successfully managing supply chain
disruption so that our customers can
continue to rely on us to deliver the
essential products and solutions they
need. Our capabilities in the face of
disruption continue to be recognised by
customers, and have supported some
new business wins over the year. I am
very pleased that our acquisition strategy
continues to complement the organic
growth of the business, with the range
and breadth of acquisitions made this
year highlighting our opportunities to
consolidate across the diversified end
markets and regions in which we
operate. Over the year we also concluded
negotiations with our largest customer
by revenue, securing improved structural
terms and extending this long-standing
partnership. Furthermore, the strength
and success of the Group’s long term
strategy has enabled Bunzl to reach a
milestone of 30 years of consecutive
annual dividend increases.
Operating performance
With approximately 90% of adjusted
operating profit generated outside the
UK, profits and earnings were positively
impacted between 6% and 7% by
currency translation over the period.
The commentary below is stated at
constant exchange rates unless
otherwise highlighted.
In 2022 revenue increased by 9.8%
(17.1% at actual exchange rates)
to £12,039.5 million. Within this,
underlying revenue growth was 6.6%,
while acquisitions contributed revenue
growth of 3.1%. Our disposal of the UK
healthcare business in December 2022
impacted revenue by 0.1%, while excess
growth in hyperinflationary economies,
largely in Turkey, contributed a small
increase of 0.2%.
Underlying revenue growth of 6.6%
during the year was driven by very strong
growth of the base business, which
benefited the Group’s underlying revenue
growth by 11.6% and was driven by very
strong inflation in addition to the benefit
of volume recovery in Continental Europe
and UK & Ireland earlier in the year. This
was partially offset by the expected
reduction in sales of the top Covid-19
related products, which contributed an
underlying revenue decrease of 5.0%.
12
Bunzl plc Annual Report 2022
Robust
performance
11.1%1
adjusted operating profit2 growth
year-on-year
12
acquisitions in 2022
10.0%
dividend per share growth, celebrating
our 30th consecutive year of annual
dividend growth
69%
of orders placed digitally
83%
of Group revenue attributable to
non-packaging products or packaging3
made from alternative materials
1 At constant exchange rates.
2 Alternative performance measure – see Note 3,
page 178.
3 Packaging refers to packaging and other products
within the foodservice, grocery and retail sectors
which are facing legislation or consumer pressure.
See page 240 for further detail.
Our people have been instrumental to
our success, with our teams working
hard to pass through price increases,
while also successfully managing supply
chain disruption so that our customers
can continue to rely on us.”
Covid-19 related sales have returned to
a more typical level, being c.£200 million
greater than in 2019 on an underlying
basis, and significantly lower than the
peak of Covid-19 related sales in 2020.
With both product cost inflation, as well
as continued post-pandemic recovery of
the base business in Continental Europe
and UK & Ireland earlier in the year, the
foodservice and retail sectors combined
delivered underlying revenue growth of
13% compared to the prior year, despite
the decline in Covid-19 related sales.
Similarly, total underlying revenue in the
grocery and other sectors grew by 9%,
driven by product cost inflation. Overall,
total underlying revenue in the cleaning
& hygiene, safety and healthcare sectors
declined by 3% year-on-year due to lower
Covid-19 related sales, but remained
6% higher than in 2019, benefiting from
Covid-19 related sales remaining higher
than in 2019 and good growth delivered
in the healthcare sector. Our healthcare
base businesses are performing well, with
the growing backlog of elective surgeries
expected to remain a tailwind. The base
business in safety started to see some
improvement as supply chain and labour
shortages have started to ease for
customers; we expect the safety business
to benefit from increased infrastructure
spend in the medium term. The cleaning
& hygiene sector, whilst continuing to be
impacted by work from home trends
which have hampered the base business
recovery, benefited from inflation and
saw some improvement in office-based
activity towards the end of the year.
The Group has managed inflation on
plastics, paper and chemicals well and
successfully implemented selling price
increases. While inflation trends
remained strong to the end of the year,
product cost inflation had started to
annualise in North America in the second
half of the year and inflation in other
regions, which had lagged North America,
also started to see some annualisation
Inflation
• Successful management of
product cost inflation through
implementing price increases was
strongly supportive to our growth
in 2022
• Operating cost inflation more
than offset by revenue growth
driven by product cost inflation,
and operational efficiencies
• Inflation dynamics somewhat
supportive to operating margin
towards the end of the year. Over
2022, tender activity remained below
pre-pandemic levels, with this expected
to pick up going forward.
Although we experienced operating
cost inflation over the year, this has
been more than offset by revenue
growth driven by implementation of
price increases related to product
cost inflation, and achieving further
operational efficiencies. Operating
cost inflation in North America has
been high, driven by fuel and freight
costs, despite some support from fuel
surcharges, as well as wage inflation
and property inflation linked to lease
renewals. However, wage rates, which
rose particularly strongly in 2021, saw
their year-on-year impact moderate over
the course of the year, and exited the year
closer to more typical historical levels of
inflation. While wage inflation remained
more benign in Continental Europe over
2022, this is starting to increase, although
it is expected to be significantly less than
the inflation we had experienced in
North America. Driving operational
efficiencies is a core component of our
compounding strategy and is particularly
Bunzl plc Annual Report 2022
13
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
Only 2% of revenue generated
from consumables facing regulation
£7.7bn (64%)
Non-packaging products
Group revenue 2022
£12.0bn
£0.2bn (2%)
Consumables facing
regulation
£1.2bn (10%)
Consumables likely
to transition
£0.6bn (5%)
Packaging with an
important purpose
£2.3bn (19%)
Packaging and products made
from alternative materials
• 83% of Group revenue attributable to
non-packaging products or packaging products
better suited to a circular economy
• 53% of packaging made from alternative
materials in 2022
• New legislation continues to drive sustainability
growth opportunities
• Packaging refers to packaging and other products
within the foodservice, grocery and retail sectors
which are facing legislation or consumer pressure.
We continue to exercise judgement to allocate the
sales in 2022 to non-packaging products and the
four packaging categories shown, which are taken
at a point in time in the context of rapidly changing
legislation and changes in product composition
across a vast range of products. As a consequence,
category adjustments are likely, and we have
recognised two category adjustments this year
that increase “products likely to transition” by
£0.2bn, with corresponding reductions of £0.1bn
in “packaging with an important purpose” and
“products made from alternative materials”,
which would also have applied last year. More
information on our packaging categories, and
limitations with respect to the product data and
related disclosures, are set out in the ESG
Appendix on page 240
FOR MORE
INFORMATION
SEE PAGES 240
AND 241
14
Bunzl plc Annual Report 2022
Digital
investments
support our
consistent
strategy
We aim to ensure it is easy and
efficient for our customers to
work with us
Customer experience
Enhancing customer
retention
• Remove pain points
• Self-service solutions
• Fast and easy interaction
with Bunzl (B2C feel)
Operational efficiency
Delivering excellent
service levels
• Process automation
• Flexible systems
• Scalable tools
Data and analytics
Creating value through
the right insights
• Dynamic dashboards for
fact-driven decisions
• Predict and prescribe
• New business solutions
important during periods of higher
operating cost inflation. Overall,
combined with the positive contribution
that product cost inflation has made to
revenue, inflation dynamics have been
somewhat supportive to margins.
Adjusted operating profit was
£885.9 million, an increase of 11.1%
(17.7% at actual exchange rates), and
operating margin increased to 7.4%
compared to 7.3% in the prior year,
remaining well ahead of historical levels.
Within this margin movement, inflation
trends and acquisitions more than offset
the dilutive impact: of (i) reduced Covid-19
related sales, which are largely own
brand or unbranded; (ii) a recovery in
typically lower margin sectors within
our base business; and (iii) the impact
of hyperinflation accounting in Turkey.
Reported operating profit was
£701.6 million, an increase of 6.0%
(12.6% at actual exchange rates),
reflecting the 11.1% increase in adjusted
operating profit and an increase in
customer relationships, brands and
technology amortisation and acquisition
related items due to acquisition activity
over the last 12 months.
Adjusted profit before income tax was
£818.0 million, an increase of 10.5%
(17.2% at actual exchange rates) due to
the growth in adjusted operating profit.
The £10.3 million increase in net finance
expense, at constant exchange rates,
to £67.9 million largely reflected a
non-cash charge of £10.7 million from
hyperinflation accounting primarily
related to operations in Turkey. In total,
hyperinflation accounting has impacted
adjusted profit before income tax
by £18.7 million pounds. The Group
expects a net finance expense in 2023 of
£90 million to £95 million, predominantly
reflecting the non-repeat of financial
derivative benefit and higher interest
rates on the floating portion of Bunzl’s
Group debt. Reported profit before
income tax was £634.6 million, an
increase of 5.0% (11.6% at actual
exchange rates).
The effective tax rate of 24.6% was higher
than the 22.3% in the prior year, reflecting
the absence of benefits seen in recent
years from the favourable settlement of
prior year exposures. The effective tax
rate is expected to be between 25.0%
and 25.5% in 2023, reflective of the UK
corporate tax increase. Adjusted earnings
per share were 184.3p, an increase of
7.0% (13.4% at actual exchange rates),
and basic earnings per share were 141.7p,
an increase of 0.5% (6.8% at actual
exchange rates).
The Group’s cash generation continues
to be strong, with £705.7 million of free
cash flow generated, representing
34% growth at actual exchange rates
compared to the comparable period in
2021. The level of cash generation reflects
strong underlying cash generation, but
also an improvement in working capital
in the second half of the year, enabled
by easing supply chain constraints. The
strength of our underlying free cash
flow generation continues to enable
our investment in the business and
acquisitions. Cash conversion (operating
cash flow as a percentage of lease
adjusted operating profit) over the
period was 107%. The Group ended the
period with net debt, excluding lease
liabilities, of £1,160.1 million compared to
£1,337.4 million in December 2021. 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 1.2 times compared to
1.6 times at the end of 2021. This provides
substantial headroom for further
acquisitions. Net debt in 2022 also
benefited from disposal proceeds
received through the sale of our UK
healthcare business; excluding this
benefit, net debt to EBITDA would have
been 1.3 times. Due to the structure of
recent acquisitions, with increasing
earn-outs and options to be exercised
to buy out minorities in future years,
we hold deferred consideration payable
on our balance sheet based on the
expected earnings to be achieved by
these businesses over the respective
earn-out and option terms. At the end
of the period, a liability of £139.9 million
was held compared to £107.8 million at
the end of 2021. This liability is not
included within the Group’s external debt
covenant definition. In March the Group
successfully completed a US private
placement issue of US dollar 400 million
which refinances near-term US private
placement maturities, extending the
Group debt maturity profile.
Return on average operating capital
decreased slightly to 43.0% compared
to 43.3% at 31 December 2021, driven
by an adverse impact from currency.
Return on invested capital was 15.0%
compared to 15.1% at 31 December 2021,
with an adverse impact from currency
translation and acquisitions partly offset
by higher returns in the underlying
business. Return on average operating
capital and return on invested capital
both remain significantly higher than in
December 2019, with 36.9% and 13.6%
respectively achieved at the end of 2019.
Bunzl plc Annual Report 2022
15
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
Organic growth and operational
efficiency
We remain committed to delivering
growth through our consistent
compounding strategy which focuses
on organic growth, operational efficiency
and acquisitions. Our colleagues have
continued to provide our customers with
innovative products and services, with
a growing sustainability offering being
a particular focus. Furthermore, digital
sales accounted for 69% of orders over
2022 compared to 67% in 2021 and 62%
in 2019, with penetration above this
level in the latter part of the year
following the acquisition of hygi.de,
a digital business. Our continued focus
on operational efficiencies included the
consolidation of 10 warehouses and
the relocation of five warehouses,
as well as the further implementation
of technologies and automation that
drive more efficient processes.
Acquisitions
In 2022 Bunzl signed 12 acquisitions with
total committed spend of £322 million,
adding estimated annualised revenue
of £299 million. The strength of the
Group’s cash conversion and balance
sheet continues to enable the Group to
fund further acquisitions, largely through
cash generated in the year.
The high quality acquisitions we made
in 2022, spanning 9 countries and 5
sectors, further expand our customer
reach and strategic capabilities, as well
as geographic and sector diversification.
Within this Bunzl acquired hygi.de,
a fast growing online distributor in
Germany, which materially increased
Bunzl’s presence in this high potential
market, establishing a platform which
we are already building upon with the
acquisition of Arbeitsschutz-Express,
announced today. Furthermore, we have
continued to acquire businesses in the
specialist healthcare sector in Australia
and New Zealand, an attractive end
market which we have been expanding
into over the last few years and where
we see continued opportunity. Acquisitions
made during the year have also enhanced
the Group’s digital capabilities and
expanded our own brand and sustainability
related product ranges and expertise.
During 2022, Bunzl sold its UK healthcare
division, which in 2021 generated
£216 million of revenue. This decision
reflected Bunzl’s commitment to
ensuring optimal capital allocation
across the Group.
Bunzl ended 2022 with net debt to
EBITDA of 1.2 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 where we have
opportunity to increase our presence,
as well as potential to expand into
new markets.
In January 2023, Bunzl completed
the acquisition of Capital Paper, a
distributor of foodservice packaging
and consumables, cleaning & hygiene
supplies, and industrial packaging
products in Canada. The acquisition of
Capital Paper strongly complements our
existing business in Canada and in 2022
generated revenue of CAD 26 million
(c.£16 million).
Acquisition
Description
USL
Completed: May 2022
hygi.de
Completed: July 2022
AFL Groep
Completed: July 2022
New Zealand distributor of medical consumables to the
healthcare sector, including hospitals, aged care, and
community health services, with revenue of NZD114 million
(c.£59 million) in 2021
Leading and fast-growing online distributor of cleaning and
hygiene products in Germany to a fragmented customer
base, with revenue of EUR107 million (c.£92 million) in 2021
Distributor of logistics and warehouse related supplies
to customers in the Benelux region, with revenue of
EUR19 million (c.£16 million) in 2021
London Catering &
Hygiene Solutions
Completed: July 2022
Distributor of catering supplies and cleaning and hygiene
products in the UK with revenue of £5 million in the 12 months
to May 2022
Containit
Completed: August 2022
Fast-growing distributor of warehouse storage solutions
to the resource and defence sectors in Australia, with revenue
of AUD17 million (c.£9 million) in 2021
Corsul Group
Completed:
September 2022
Enviropack
Completed:
October 2022
VM Footwear
Completed:
October 2022
PM Pack
Completed:
November 2022
Leading distributor of personal protective equipment (‘PPE’)
in the south of Brazil, with revenue of BRL260 million
(c.£35 million) in 2021
Online distributor of reusable, recyclable and compostable
packaging products to foodservice customers in the UK, with
revenue of c.£7 million in the 12 months to August 2022.
Distributor of PPE based in the Czech Republic, specialising in
own brand footwear throughout Central and Eastern Europe,
with revenue of CZK366 million (c.£13 million) in the 12 months
to June 2022
Distributor of packaging products in Denmark to food
processor customers, with revenue of DKK142 million
(c.£16 million) in the 12 months to September 2022
Toomac Ophthalmic
& Solutions
Completed:
December 2022
Distributor of ophthalmology products in New Zealand with
revenue of NZD11 million (c.£6 million) in the 12 months to
March 2022
Grupo R. Queralto
Completed:
December 2022
Online distributor of healthcare products based in Spain, with
a strong own brand portfolio and revenue of EUR27 million
(c.£23 million) in 2022
GRC
Completed:
January 2023
Distributor of innovative medical technology devices in
Australia, with revenue of AUD4 million (c.£3 million) in the
12 months to June 2022
16
Bunzl plc Annual Report 2022
In February 2023, Bunzl also entered into
an agreement to acquire Arbeitsschutz-
Express, a fast-growing online distributor
of workwear and PPE in Germany, which
generated EUR 41 million (c.£35 million)
of revenue in 2022. This acquisition,
combined with hygi.de, will more than
double our presence in the market, with
significant further opportunity remaining.
Our capital allocation priorities are to:
reinvest our cash into the business to
support organic growth and operational
efficiencies; pay a progressive dividend;
and self-fund value accretive acquisitions.
Whilst our framework favours these
three methods of investment, with
£2.0 billion of cash distributed to
shareholders through dividends and
£4.7 billion committed acquisition spend
since 2004, and a return on invested
capital of 15.0%, if leverage continues
to consistently fall, the Board would
consider other mechanisms for distributing
excess cash to shareholders.
Equitable and sustainable growth
We understand our role as a proactive
leader in the transition to a more
sustainable and equitable future. As we
have previously laid out, sustainability
is a key strategic priority, and we have
directed our efforts into four key areas
where we believe we can make the
greatest positive contribution: providing
alternative packaging solutions; ensuring
responsible supply chains; investing
in our people; and taking action on
climate change.
The Group continues to focus on
transitioning customers to packaging
that is better suited to a circular economy,
with revenue from packaging made from
alternative materials accounting for 53%
of the Group’s total packaging sales.
The proportion of total Group revenue
attributable to non-packaging products
or packaging made from alternative
materials remained high at 83%, with
the Group continuing to have very
limited exposure to single-use plastic
consumables where some volume
reduction is possible. Our strength in
sourcing innovative products, including
from within our own brand portfolio,
as well as our expert advice, data tools
and supply chain investments, are
increasingly competitive advantages
for Bunzl.
Our climate change commitments
Today
• SBTi1 approved targets with
Scope 3 emissions included
Tomorrow
• Scope 1 and 2: 50% more
carbon efficient by 20302
equivalent to a 27.5% absolute
reduction
• Scope 3: 79% of suppliers to
have science based targets
by 2027
Beyond
• Net zero3 by 2050 at the latest,
inclusive of Scope 3 emissions
1 SBTi = Science Based Targets initiative.
2 Scope 1 and 2 emissions, against a 2019 base line.
3 Scope 1, 2 and 3 emissions.
READ MORE:
SUSTAINABILITY
PAGE 56
Bunzl plc Annual Report 2022
17
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
than historical levels. Adjusted earnings
per share is expected to be moderately
lower year-on-year due to higher interest
rates and an increased effective tax rate.
The Group’s longer term prospects
remain attractive, with the Group
committed to its proven and consistent
strategy which supports Bunzl’s
continued track record of value creation.
Organic growth, which is driven by
activity in our markets, is further
supported by new business
opportunities, continual product
innovation, and the Group’s daily focus on
becoming more efficient. Our acquisition
growth is driven by our position as the
leading operator of scale in highly
fragmented markets, with a strong
balance sheet and demonstrable track
record of our ability to consolidate. We
have an active pipeline of acquisition
opportunities in our existing markets,
supplemented by potential acquisitions in
new geographies and adjacent sectors.
Our capital allocation and portfolio
optimisation discipline ensures we are
investing to drive a good return. We
believe the merits of businesses joining
Bunzl have only been further evidenced
as a result of the pandemic and supply
chain disruptions, and this is reflected in
our recent acquisition success and the
conversations we are having with a
number of acquisition targets.
Frank van Zanten
Chief Executive Officer
27 February 2023
Proven track record
Revenue (£bn)
12.0
C A G R 9 . 4 %
2.4
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Adjusted EPS1 (p)
184.3
C A G R 1 0 . 3 %
31.7
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
1 Alternative performance measure (see Note 3 to the consolidated financial statements on page 178).
Over the year we completed an exercise
to calculate our Scope 3 emissions in
detail for the first time, allowing Bunzl to
set a new target for carbon reduction in
its supply chain. This, along with our
Scope 1 and 2 emissions reduction
targets, were approved by the Science
Based Targets initiative (‘SBTi’). We
continue to aim to be net zero by 2050 at
the latest, inclusive of Scope 3 emissions.
Since 2019 we have reduced our absolute
carbon emissions (Scope 1 and 2) by 15%
and are on track to reach our target of a
27.5% reduction by 2030.
The Group completed 930 ethical and
quality audits through our Shanghai
based Global Supply Chain Solutions
team, which is responsible for auditing
our suppliers. These audits largely
occurred in Asia, the most significant high
risk sourcing market for Bunzl by spend,
but have expanded to include other
high-risk regions. In total, c.96% of our
purchasing spend today is either in low
risk regions, with assessed or compliant
suppliers in high risk regions, or on other
non-product related costs.
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. Furthermore, we have made
pleasing progress on our diversity plans.
With our support of communities
inherent to our locally driven business
model, across our Group, businesses
have been donating essential products to
help with the relief efforts in Ukraine and
its neighbouring countries, and are
coordinating product donations after the
recent earthquakes in Turkey and Syria. In
total the Group has donated £250,000 to
Disasters Emergency Committee Appeals,
through the British Red Cross, to support
the aid needed across both catastrophes.
Prospects
While we see continued uncertainty
relating to the macroeconomic
environment, our 2023 guidance remains
unchanged from that published in our
pre-close statement on 21 December
2022. At constant exchange rates the
Group expects revenue in 2023 to be
slightly higher than in 2022, driven by
both organic growth and announced
acquisitions, and partially offset by a
small impact from the UK healthcare
disposal. We expect Group adjusted
operating profit in 2023 to be resilient,
with operating margin slightly higher
18
Bunzl plc Annual Report 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.
BOARD OF
DIRECTORS
PAGE 100
The leadership team
Members of the Executive Committee
Frank van Zanten
Chief Executive
Officer
Diana Breeze
Director of Group
Human Resources
Richard Howes
Chief Financial
Officer
Suzanne Jefferies
General Counsel
and Company
Secretary
Andrew Mooney
Director of
Corporate
Development
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 2022
19
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT Our cleaning & hygiene redistribution
business benefited from strong net
product cost inflation, partially offsetting
declines in Covid-19 related categories
as well as the ongoing impact of
remote working.
Our retail supplies business was
impacted by actions taken to focus on
more profitable business, but this was
offset by certain new business wins and
the benefit of product cost inflation.
Online ordering growth moderated, but
we continue to benefit from packaging
related to store level fulfilment of
online orders.
Our safety business grew strongly, with
the favourable impact of acquisitions
more than offsetting the decline in
Covid-19 related sales. Base business
growth was modest as certain end
markets remain slow to return to
pre-pandemic levels, in part driven
by supply chain and labour capacity
issues, although these are easing.
Lastly, our business in Canada saw very
good growth, benefiting from significant
product cost inflation in the grocery and
industrial segments, which more than
offset the impact of the decline in
Covid-19 related sales in safety. Our
cleaning & hygiene business recovered
modestly, despite the ongoing impact
of remote working.
OPERATING REVIEW
North
America
Jim McCool
Chief Executive Officer,
North America
Revenue
£7,366.0m
(2021: £6,144.7m)
Growth at constant exchange rates
Underlying growth*
8.1%
6.1%
Adjusted operating profit*
£511.5m
(2021: £401.3m)
Growth at constant exchange rates
15.0%
Operating margin*
6.9%
(2021: 6.5%)
Percentage of Group adjusted
operating profit*◊
56%
(2021: 51%)
In North America, revenue increased
8.1% to £7,366.0 million, with underlying
growth contributing 6.1%. Substantial
product cost inflation in the base
business, particularly in grocery,
foodservice and retail, was further
supported by the positive impact of
acquisitions, although a decline in
Covid-19 related sales was a headwind.
Adjusted operating profit was £511.5
million with an operating margin of 6.9%,
up from 6.5% in 2021, driven by improved
margins in our grocery and foodservice
segments, supported by inflation, as well
as the impact of acquisitions. While cost
inflation was high over the period, driven
by fuel and freight costs, the year-on-year
impact on wages moderated over the
year, with year-on-year wage inflation
exiting closer to more typical historical
levels of inflation. Overall, the impact
of operating cost inflation in 2022 was
more than offset by revenue and margin
growth attributable to product cost
inflation. Despite supply chain disruption
over the period, the resilience of Bunzl’s
teams and network, as well as its global
sourcing expertise, provided customers
strong service levels across a broad
product assortment, enhanced by several
new own brand product categories.
Our largest business, in the US grocery
sector, saw continued strong revenue
growth from significant product cost
inflation and steady demand. Sales
relating to salad and hot food bars that
largely shut down during the pandemic
and have since gradually reopened,
remain below pre-pandemic levels.
Our convenience store sector business
enjoyed strong growth, as travel and
related store traffic improved.
Despite the impact of Covid-19
related sales decline our foodservice
redistribution business also delivered
strong growth, driven by significant
inflation in foodservice packaging
categories as well as a more consistently
open in-person dining environment and
continued demand for takeaway
packaging. Our food processor and
agricultural sectors also experienced
continued strong growth, driven by
consistent consumer demand, product
cost inflation and acquisition benefit.
Our processor business was awarded
a contract for significant new volume
with a national food processing customer,
Tyson Foods, which will onboard in the
first half of 2023.
* Alternative performance measure (see Note 3)
◊ Based on adjusted operating profit and before
corporate costs (see Note 4)
The commentary within this operating review is stated at
constant exchange rates unless otherwise highlighted.
20
Bunzl plc Annual Report 2022
In Denmark, our foodservice business
has grown strongly in the absence of
Covid-19 lockdown restrictions. Revenues
in our safety business have delivered
good growth while our grocery business
was broadly stable given the impact of
lower Covid-19 related sales.
Sales grew strongly in Spain, driven
by foodservice recovery as well as
strong growth in the industrial and
disposable packaging business. Our
safety redistribution businesses were
impacted by the reduction of Covid-19
related sales, in addition to reduced
inventory availability given extended lead
times on imported products, although
this issue eased a little in the second half.
In Turkey, high inflation is driving
increased revenue across most channels
and our businesses have taken actions
in the second half of the year to limit
the impact of the hyperinflationary
environment as we move into 2023.
In all other countries we have seen
growth driven by the recovery in
foodservice and inflation be partially
offset by lower Covid-19 related sales.
Over the period we also significantly
increased the number of digital orders
from customers, supporting improved
customer retention and enhancing the
efficiency of our business.
Revenue in Continental Europe grew
by 13.2% to £2,173.4 million, due to the
benefit of strong product cost inflation,
a recovery in the foodservice and retail
sectors, and the benefit of acquisitions.
Within underlying growth, base business
growth was partially offset by the
expected reduction in Covid-19 related
sales. Hyperinflation in Turkey was
a further support to overall revenue
growth, although underlying revenue
growth of 7.9% is adjusted to exclude
growth delivered in excess of 26% per
annum in Turkey. Adjusted operating
profit increased by 5.6% to £195.1m with
operating margin decreasing from 9.7%
to 9.0% driven by the introduction of
hyperinflation accounting in 2022 to our
Turkish businesses, as well as the decline
in Covid-19 related sales.
In France, revenue grew moderately in
our cleaning & hygiene businesses as the
recovery by foodservice customers within
this sector and inflation offset a reduction
in Covid-19 related sales. We also saw
some improvement in office-based
activity later in the year. Our safety
business saw a significant reduction in
sales of Covid-19 related products and
was impacted by supply chain disruptions
in the first half of 2022. However, our
foodservice businesses have seen
significantly higher sales following the
reduction in Covid-19 related restrictions
compared to 2021, and were supported
by inflation.
In the Netherlands, there was very strong
growth in our foodservice and non-food
retail businesses, driven by inflation and
a number of new business wins, despite
the decline in Covid-19 related sales, with
the non-food retail business successfully
relocating to a larger facility in the first
half that will enable further growth. Good
growth continued in the grocery and
e-commerce fulfilment sectors and our
healthcare business grew with inflation
which was partially offset by reduced
volumes of Covid-19 related products.
In our safety business, sales of Covid-19
related items were significantly lower and
supply chain disruptions also impacted
sales in the first half of the year. In
Belgium, our cleaning & hygiene
businesses have grown strongly with
catering and contract cleaning customers
benefiting from fewer Covid-19 related
restrictions throughout the year and
some improvement in office-based
activity toward the end of the year.
Continental
Europe
Alberto Grau
Managing Director,
Continental Europe
Revenue
£2,173.4m
(2021: £1,972.9m)
Growth at constant exchange rates
Underlying growth*
13.2%
7.9%
Adjusted operating profit*
£195.1m
(2021: £191.8m)
Growth at constant exchange rates
5.6%
Operating margin*
9.0%
(2021: 9.7%)
Percentage of Group adjusted
operating profit*◊
21%
(2021: 25%)
* Alternative performance measure (see Note 3)
◊ Based on adjusted operating profit and before
corporate costs (see Note 4)
Bunzl plc Annual Report 2022
21
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT Our foodservice businesses saw very
strong growth, driven by both volume
recovery as well as inflation. Office
catering remains well below pre-
pandemic levels given work from home
trends, although the return of leisure
and sporting activity and consumer
desire to return to dining out helped
bolster sales, which, supported by
inflation, finished close to 2019 levels.
We secured new customers, launched
a new webshop, and continued to roll out
both sustainable products and services
throughout the year.
Our businesses in Ireland performed
well during 2022. Further improvements
have been made during the year to both
our digital and sustainability offerings.
We continue to improve our operating
model with the introduction of new
stock management software and new
transport management software in
some businesses.
In UK & Ireland, revenue increased by
15.0% to £1,442.5 million, with underlying
growth of 12.2% driven by strong product
cost inflation, alongside continued
recovery in certain markets, most notably
foodservice, as well as the benefit of
acquisitions. Across our office related
businesses, we saw an improvement in
footfall towards the end of the year,
although this continues to remain below
2019 levels. Due to the strength of base
business recovery, despite the decline in
higher margin Covid-19 related sales over
the period, operating margin increased
from 5.3% to 6.6%. Adjusted operating
profit increased to £95.3 million, up 42.0%
year-on-year. The UK healthcare business,
which generated £216 million of revenue
in 2021, was disposed of in December
2022, resulting in minimal impact on
2022 reported results due to the timing
of the sale.
In our cleaning & hygiene businesses,
which include businesses servicing care
homes, we saw strong revenue growth
throughout the year. Our product range
continued to develop, offering more
sustainable solutions to our customers
including the launch of a new award-
winning Eco Cleaning range of chemicals.
Our safety businesses were impacted by
a lack of major infrastructure investment
during 2022, with construction and
manufacturing industry customers also
impacted by a shortage of raw materials
and labour availability particularly earlier
in the year. Despite this challenging
backdrop, our businesses continued to
secure new customers and develop more
sustainable product ranges throughout
the year.
Our retail businesses witnessed good
growth over the year, supported by high
levels of product cost inflation. Online
packaging sales weakened throughout
2022 as more shoppers returned to
‘bricks and mortar’ traditional shopping
methods which aided our luxury
packaging supplies businesses. Our
grocery business saw good growth,
benefiting from inflation and expanded
product ranges supplied to some of our
larger grocery customers.
OPERATING REVIEW CONTINUED
UK &
Ireland
Andrew Tedbury
Managing Director,
UK & Ireland
Revenue
£1,442.5m
(2021: £1,254.2m)
Growth at constant exchange rates
Underlying growth*
15.0%
12.2%
Adjusted operating profit*
£95.3m
(2021: £67.0m)
Growth at constant exchange rates
42.0%
Operating margin*
6.6%
(2021: 5.3%)
Percentage of Group adjusted
operating profit*◊
11%
(2021: 9%)
* Alternative performance measure (see Note 3)
◊ Based on adjusted operating profit and before
corporate costs (see Note 4)
22
Bunzl plc Annual Report 2022
In Chile, our safety businesses, which sold
limited Covid-19 related products in the
prior year, saw good sales growth as a
result of new product launches, product
cost inflation and a weakening currency.
Our catering supplies business also saw
very strong, inflation-driven sales growth.
Our largest business in Asia Pacific
continued to perform well, benefiting
from its position in the more resilient
healthcare and cleaning & hygiene
sectors. The business did, however,
see a downturn in the aged care sector
due to a release of surplus Covid-19
related inventory to our customers by
the government.
Our Australian specialty healthcare
business continued with another strong
year, benefiting from improved supply
chain performance from its major
suppliers and the return to more
traditional trading as pathology patients
resumed normal testing protocols.
Our Australian safety business continued
to see good momentum in its underlying
business and was supported by Covid-19
Rapid Antigen Testing opportunities into
government and industry customers in
the first half. The underlying business
benefited as its supply chain improved,
and from continued strong performance
of some of its traditional customers in
the resource industry. Our emergency
services business, FRSA, finished the year
strongly and saw the business returning
to a more traditional sales mix with the
government redirecting spend into fire
and emergency services budgets.
In New Zealand, our MedTech healthcare
business experienced an extended
slowdown, with hospitals initially delaying
elective surgeries to allow beds for
potential Covid-19 outbreaks and then
subsequently impacted by a shortage of
clinical staff. This was compounded by
delays from its traditional labour pool
due to immigration restrictions, impacting
waiting lists within the healthcare system.
Rest of
the World
Jonathan Taylor
Managing Director,
Latin America
Kim Hetherington
Managing Director,
Asia Pacific
Revenue
£1,057.6m
(2021: £913.3m)
Growth at constant exchange rates
Underlying growth*
8.5%
0.6%
Adjusted operating profit*
£111.7m
(2021: £116.5m)
Growth at constant exchange rates
(10.6)%
Operating margin*
10.6%
(2021:12.8%)
Percentage of Group adjusted
operating profit*◊
12%
(2021: 15%)
* Alternative performance measure (see Note 3)
◊ Based on adjusted operating profit and before
corporate costs (see Note 4)
In Rest of the World, revenue increased
8.5% to £1,057.6 million, driven by
acquisitions, with underlying revenue
growth of 0.6% as a result of strong
revenue growth in Asia Pacific being
offset by a decline in Latin America
caused by a strong reduction in Covid-19
related sales. Asia Pacific continued to
benefit from Covid-19 related sales
growth, driven by some larger orders.
Adjusted operating profit declined by
10.6% to £111.7 million with operating
margin decreasing from 12.8% to 10.6%,
due to the strong reduction in higher
margin Covid-19 related sales in Latin
America, despite very strong adjusted
operating profit growth in Asia Pacific
which was supported by acquisitions.
However, operating margin remains
well ahead of 2019 levels, with adjusted
operating profit in 2022 double that
achieved in 2019 at constant exchange
rates, with this growth supported
equally by growth in Asia Pacific and
Latin America.
In Brazil, our safety and foodservice
businesses were significantly impacted
by a decline in Covid-19 related sales
although we saw strong growth across
other categories. Our healthcare
businesses, which were impacted by
lower sales of vaccine related products,
saw a strong performance across the
remaining portfolio as supply chains
improved and demand for medical
procedures increased.
Bunzl plc Annual Report 2022
23
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT TRUSTED, RELIABLE DELIVERY
Trusted
to deliver
The essential link,
reliably supporting
customers at all times
A strong supply chain
enabled Bunzl to navigate
2022’s supply chain
challenges
We have a strong global supply chain, consisting of
flexible sourcing relationships, with limited supplier
concentration, enabling Bunzl to support customers
even during challenging times
>10,000 c.75%
suppliers
of our purchases are
products sourced
domestically
Working together
to support the
environment
• Bunzl is committed to being a net zero
business by 2050, including supply
chain emissions.
• In order to achieve this, Bunzl has set
a target to ensure 79% of suppliers by
emissions have a science-based carbon
target by 2027, in addition to carbon
reduction targets for its own operations.
READ MORE:
TAKING ACTION ON CLIMATE CHANGE
PAGE 56
24
Bunzl plc Annual Report 2022
Ensuring an ethical
supply chain
Bunzl has well-established auditing
practices, as part of our overarching
sustainability strategy:
• All products supplied directly from Asia
are through suppliers that are regularly
audited by our Global Supply Chain
Solutions team in Shanghai.
• Ethical and quality audits expanding to
include other high risk regions.
• Strong competitive advantage
compared to Bunzl’s peers who
typically lack this capability.
Bunzl is committed to expanding its
auditing and assurance practices to cover
90% of Bunzl’s spend on products from
high-risk regions, compared to 78% today.
This will ensure that c.99% of Bunzl’s total
purchasing spend is either in low-risk
regions, with assessed or compliant
suppliers in high-risk regions, or on other
non-product related costs, compared
to c.96% today.
READ MORE:
RESPONSIBLE SUPPLY CHAINS
PAGE 52
c.35%
of Bunzl’s total purchases are
made through its top 40
suppliers highlighting the limited
concentration of suppliers
To provide customer assurance over delivery of essential
products at crucial moments, Bunzl takes the following steps to
maintain its high level of customer service. These steps enabled
Bunzl to successfully navigate supply chain challenges in 2022:
Strategic focus
on the critical
product lines for
our customers
Use of multiple
regional sources
of supply and
global sourcing
collaborations
Ability to temporarily
increase stock held
and forward orders
placed to ensure
product availability,
supported by the
strength of Bunzl’s
balance sheet
Alternative
product plans in
place as a
contingency
Transport
disruption is
planned for
Bunzl plc Annual Report 2022
25
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT MARKET DYNAMICS
Continued resilience
Key to Bunzl’s resilience is its diversification and ability to navigate
external challenges. Over the last three years adjusted operating
profit has grown 37% despite significant shifts between sectors
and products across this period driven by the pandemic. 2022
saw the Group return to a more typical mix.
Resilient performance through the pandemic
The resilience of
the Group’s delivery
over 2019–2022, despite
significant inflation,
pandemic-related
business mix shifts
and supply chain
disruptions demonstrates
the strength of the
Bunzl model.
Pandemic-related mix shifts
Between 2019 and 2022 Bunzl saw some strong shifts between Covid-19 related
sales and base business sales, with Covid-19 related sales peaking in 2020
alongside a contraction in our base business. Overall, however, the Group’s
adjusted operating profit has grown by 37% over this period.
Bunzl enters 2023 with a more normalised mix
Overall base business revenues are well ahead of 2019 levels, driven by inflation,
with volumes broadly returned to 2019 levels. Similarly, Covid-19 related sales are
approximately £200 million higher than in 2019 on an underlying basis, with
revenues having largely normalised since 2020’s highs. Overall, while there is
some variation in sector recovery and Covid-19 related sales remain slightly higher
than pre-pandemic, our business has largely recovered to a more typical mix. Our
diversification has enabled the business to deliver strong underlying growth over
the last three years, despite meaningful shifts between products and sectors.
Underlying revenue1
£m
12,000
10,000
8,000
6,000
4,000
2,000
0
2019
2020
2021
2022
Base business2
Covid-19 related products
+16%Group underlying revenue
growth*: 2019–20223
+37%Group adjusted operating
profit* growth: 2019–20223
1 Underlying revenue is defined as revenue excluding the incremental impact of acquisitions and disposals made
since the start of 2019, adjusted for trading days, excluding the impact of growth in excess of 26% per annum in
hyperinflationary economies, and at constant exchange rates.
2 Base business defined as underlying revenue excluding the top Covid-19 related products (including, masks,
sanitisers, disposable gloves, disinfectants, coveralls, disposable wipes, face shields and eye protection)
3 At constant exchange rates.
* Alternative performance measure – see page 178.
26
Bunzl plc Annual Report 2022
2022 sector developments
Bunzl’s diversification across sectors and geographies is key to its
resilience, with Bunzl also benefiting from structural end market drivers.
Sector
2022 sector commentary
2022 revenue
as % of Group
total
Underlying
revenue1
2022 vs 2019
Underlying
revenue1
2022 vs 2021
Healthcare
Safety
Cleaning
& Hygiene
• Healthcare base business performing
well, supported by an increasing
backlog of elective surgeries.
• Started to see improvement in safety
markets, with supply chain and labour
shortages easing. Infrastructure spend
is a potential medium term support.
• Cleaning & hygiene base business
impacted by work from home trends
compared to 2019, although this was
easing towards the end of the year.
31%
vs 33% in 2021
6%
(3)%
Driven by
the expected
decline in Covid-19
related sales
Grocery2
• Significant support from inflation.
29%
vs 29% in 2021
20%
9%
Foodservice
Retail
• In foodservice and retail we have seen
significant support from inflation.
• Benefit from volume recovery earlier
in the year, particularly in Continental
Europe and UK & Ireland.
40%
vs 38% in 2021
22%
13%
1 Underlying revenue growth, which is an alternative performance measure – see page 178.
2 Also includes the ‘Other’ sector.
Bunzl plc Annual Report 2022
27
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
TRUSTED, RELIABLE DELIVERY
Trusted
partnerships
Driving organic growth
with our strong
customer proposition
Sustainability focused
new business win
Case study: Sprouts
Sprouts is a sustainability focused grocery chain
with stores across the USA. Bunzl recently won the
contract to become the single distributor for all
goods-not-for-resale across its stores.
What this business win was driven by:
• Our ability to support a fast-growing grocer.
• The strength of our national infrastructure.
• Our capabilities to support Sprouts with its
sustainability ambitions.
• Our data and analytical insights.
28
Bunzl plc Annual Report 2022
c.370
stores across the USA
Why we won
Sprouts’ business
Support for c.370 stores
• Our national infrastructure replaces the
use of four independently owned
distributors.
Coordination to improve buying
• We have become the single distributor
for all goods-not-for-resale.
• The number of SKUs sourced is targeted
to reduce by 50%, partially offsetting
product cost inflation.
Improved reliability
• Our own driver infrastructure ensures
high reliability of successful fulfilment.
Greater visibility
• Implementation of analytical tools
enables Sprouts to assess inventory and
store usage, driving improved decision
making.
Meaningful store base expansion
• We can support Sprouts’ growth with our
scale and depth of capabilities.
Sustainability requirements
and ambitions
• Our product data mapping supports
sustainability analysis, reporting and
transition to alternatives.
• A tailored offering ensures each store
only orders products compliant with
regulation.
• Sprouts aims to be a leader in innovative
packaging solutions, and we are
committed to supporting it to achieve
its targets.
Bunzl plc Annual Report 2022
29
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC 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
We provide essential
business solutions:
A 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
30
Bunzl plc Annual Report 2022
We create long term
sustainable value:
For the benefit of
all stakeholders
A compounding strategy
that consistently delivers
Sustainability is a vital
part of the equation
Profitable
organic
growth
Use our competitive advantage
to support the growth of our
customers and to increase our
market share.
READ MORE
PAGE 36
Operating
model
improvements
Daily focus on making our business
more efficient.
READ MORE
PAGE 37
Responsible
supply chains
READ MORE
PAGE 52
Investing in a
diverse workforce
READ MORE
PAGE 54
Taking action on
climate change
READ MORE
PAGE 56
Providing tailored
alternative solutions
READ MORE
PAGE 64
Acquisition
growth
Digital capabilities
Use strong balance sheet and
excellent cash flow to consolidate
our markets further.
READ MORE
PAGE 38
Our tailored digital solutions
enhance the experience of our
customers, supporting customer
retention, while increasing the
efficiency of our own operations.
READ MORE
PAGE 15
Customers
Colleagues
Environment
Shareholders
Suppliers
Communities
READ MORE:
SECTION 172
PAGE 70
Bunzl plc Annual Report 2022
31
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT OUR BUSINESS MODEL
Essential business solutions
Our tailored
service model
We provide tailored
solutions using
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
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
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
Logistical infrastructure
Established product expertise and supplier network
Innovation costs
Saving our
customers
more than just
the cost of
products
32
Bunzl plc Annual Report 2022
Our sources of competitive advantage
Our people
Our c.6,000 sales experts and
local customer service specialists
provide detailed advice to
customers 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.
Acquisition
track record
We have a strong track record of
successfully integrating acquisitions,
helping us to grow our geographic
footprint while retaining the ‘local’
feel of our acquired businesses.
Tailored solutions
and value-added
services
Adding 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
Working with suppliers to give
our customers access to the best
products and solutions, 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
achieves a reduced carbon
footprint in comparison to
competitors who process
smaller, unconsolidated orders.
Digital capabilities
Our tailored digital solutions
enhance the experience for our
customers, supporting customer
retention, while increasing the
efficiency of our own operations.
Delivering value
for all of our
stakeholders
Customers
Colleagues
Environment
69%
of customer orders
processed digitally
81%
would recommend
Bunzl as a good
place to work
15%
reduction in
Scope 1 and 2
carbon emissions
since 2019
10.0%
dividend increase
to 62.7p
Shareholders
930
audits conducted
in 2022
Suppliers
Communities
£200k
and essential items
donated to support
relief efforts in Ukraine
and neighbouring
countries
Bunzl plc Annual Report 2022
33
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC 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.
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.
READ MORE
PAGE 36
READ MORE
PAGE 37
READ MORE
PAGE 38
Supported by investments in sustainability and digital
Sustainability
Our depth of expert advice, own brand ranges and
priority data help our customers navigate the complex
transition to new products and solutions.
Digital capabilities
Our tailored digital solutions enhance the experience
for our customers, supporting customer retention,
while increasing the efficiency of our own operations.
Both of these elements support our competitive advantage
34
Bunzl plc Annual Report 2022
Strategy in action: Continental Europe
Overview
Consistent track record of expansion
Expansion since 2005 has established
Bunzl’s leading position today
2005
Continental Europe
business area
created with
presence in
eight countries
1994
Bunzl acquires its
first business in
Continental
Europe, Hopa
Disposables
in the Netherlands
Strong consistent growth
Bunzl Continental Europe revenue (£m)1
2,173
0 %
C A G R 1
2500
2000
1500
1000
c.388
500
0
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
1 At 2022 exchange rates.
2 Average contribution to revenue growth over the last 10 years.
3 Alternative performance measure (see Note 3 to the consolidated financial statements
on page 178).
2010
Presence in
12 countries
Revenue increase
since 2004
6x
Organic growth
contribution2
c.40%
Acquisition growth
contribution2
c.60%
Adjusted operating profit3
CAGR (04–22)1
c.12%
Today
16 countries
54 operating
companies
6 core customer
markets
5,850 colleagues
c.2,100 expert
sales and customer
service colleagues
Operating from
>100 locations
69 acquisitions
since 1994
Strong revenue growth
• Organic growth
supported by the building
of strong customer
relationships
• Consolidation of
fragmented markets with
the acquisition of good
businesses
Steady margin
improvement
• Good business
performance and
operational excellence
• Portfolio development
Bunzl plc Annual Report 2022
35
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT OUR STRATEGY CONTINUED
Strategy in action: Continental Europe
Profitable organic growth and
operating model improvements
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.
How we drive organic growth.
Case study:
CEVA
Logistics
“For CEVA, Bunzl is not
just a supplier, but we are
working in partnership…
We depend on Bunzl’s
knowledge and flexibility
to get the right solution
delivered.”
Jan de Breet
Head of Procurement,
CEVA Logistics, Benelux
SCAN THE QR CODE TO
VIEW THE CEVA
TESTIMONIAL VIDEO
CEVA Logistics is a logistics and supply chain company we have
supported for the last 12 years. Our relationship expanded significantly
in 2017 when we won the contract to become the sole distributor to its
100+ warehouse network in Benelux. Today we supply this fast-growing
company with 1,000+ essential products, and have delivered strong
savings and efficiencies to them. This example demonstrates how
helping our customers to grow fuels our own organic growth.
Prior
solution
Bunzl
solution
Each warehouse
sourced
independently
On time and
in full < 90%
High packaging
costs
• Sole distributor of
goods-not-for-resale
• On time and in full 99%+
• Improved logistics, more
reliable supply chain
• Reduced costs
• Warehouse and packaging
innovation, including new
machinery
No value-added
services through
partnership
• Joint revenue venture to
provide CEVA’s larger
customers with packaging
– upside opportunity
Improvements
achieved by Bunzl
30%
reduction
of air in shipped
packaging
15%
cost saving
10%
improved
availability
of products
36
Bunzl plc Annual Report 2022
Operating model improvements:
We continually strive to improve the quality of our operations
and to make our businesses more efficient and sustainable.
c.50
warehouse relocations and
consolidations since 2010 in
Continental Europe
Bunzl plc Annual Report 2022
37
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT OUR STRATEGY CONTINUED
Strategy in action: Continental Europe
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.
Significant
expansion
opportunities
Driving Bunzl’s growth.
Case study:
hygi.de
In June 2022, Bunzl acquired hygi.de
in Germany. The acquisition of this
fast-growing, online business effectively
doubled our revenue in the high-potential
German market, which has been a key
expansion target for Bunzl. Despite the
success of this acquisition, we still have
the opportunity to further increase our
penetration by at least 8x in this key
market, based on a comparison to our
revenue/GDP penetration in the
UK&I market.
hygi.de
Market-leading online distributor
of cleaning and hygiene products
in Germany
• Established in 2004
• Fast growing business
• 2021 revenue of c.£92 million
• Annual meetings with local
Bunzl leadership since 2012 –
acquisition has been 10 years
in the making
Supporting our
acquisitions to grow.
Case study:
MultiLine
We acquired Danish foodservice distributor, MultiLine, in 2003 to
significantly strengthen Bunzl’s position in Denmark and become the
number one foodservice distributor. Since then, we have leveraged
Group scale to invest in sustainability and digital technologies and also
leveraged our global sourcing office in Shanghai to expand Multiline’s
own brand range. It has provided a platform for the development of
our business in Denmark with five subsequent bolt-on acquisitions.
11%Adjusted operating profit* CAGR
since 2003 achieved by MultiLine,
a Bunzl operating company
* Alternative performance measure (see Note 3)
38
Bunzl plc Annual Report 2022
Similar opportunities for us to expand
our presence significantly through
acquisitions exist for us across Europe,
and we can more than double our
revenue/GDP penetration in key markets
such as Italy (15x) and Spain (2x).
We also continue to use acquisitions to
expand our footprint by entering new
countries (e.g. Poland, Sweden, Finland
and Portugal) and expanding the number
of core verticals we operate within our
current countries.
We are looking for opportunities
to expand our market share in our
existing countries and markets with
smaller bolt-on acquisitions, while we
look to expand the number of core
sectors we operate within or enter
into new countries with larger anchor
acquisitions, that we can build our
footprint around.
Revenue/GDP penetration comparison to the UK & Ireland –
illustrative opportunity across our markets
P
D
G
/
e
u
n
e
v
e
R
Examples
UK & Ireland
Continental
Europe average
Spain
Germany
Italy
New markets
Continental Europe Country and sector presence –
sizeable growth opportunities within existing markets
Foodservice
Grocery
C&H
Safety
Retail
Healthcare
Country
Germany
France
Italy
Spain
Netherlands
Belgium
Denmark
Norway
Switzerland
Austria
Czech Republic
Hungary
Romania
Slovakia
Israel
Turkey
Bunzl has an existing presence
Bunzl plc Annual Report 2022
39
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT OUR PEOPLE
Employee voice
Bunzl recognises
the importance of
listening to the views and
feedback from our people
in these rapidly changing
times. During 2022
we have continued on our
journey towards more
regular “pulse” check-ins
using both formal and
informal mechanisms.
This helps us to ensure
that we are in touch with
the concerns and ideas of
our employees, and we
believe that it helps
us be more responsive
in making Bunzl a place
people choose to work.”
Diana Breeze
Director of Group
Human Resources
Targeted our employee survey
to focus on communication
In the autumn of 2022 we conducted
a pulse survey inviting all our employees
to share their feedback and suggestions
on what it is like to work for Bunzl, with
a focus on communications. At a global
level the results were very positive with
every group of questions improving since
the last survey in 2021. Our sustainable
engagement score improved by 5% to
85% in 2022.
“ In UK & Ireland we saw
the greatest increase in
survey results with a 10%
increase in the sustainable
engagement score.”
We introduced a new section in the
survey called employee voice and the
two questions in this section help us to
understand our employees’ views about
how easy it is to share opinions and
communicate upwards openly and
honestly. We were very pleased to learn
that over 80% of our people responded
positively to both these questions, and
that an effective employee voice is a key
driver of sustainable engagement. We also
introduced some new questions about the
ability of managers and leaders to explain
the reasons behind decisions and the value
of Company communications.
Alongside the open questions these
new questions have given us lots of rich
information to help us better understand
how we can improve the information we
share with our people.
Reverse mentoring
Andrew Tedbury, Managing Director,
UK&I has benefited from reverse
mentoring offered in the region. Andrew
has two mentors, Nadia Summers and
Shez Madhani, and they meet regularly to
discuss ideas and share views. Both
mentors have different ethnic
backgrounds, and this, coupled with their
viewpoints based on the roles they hold,
means they can offer a fresh perspective
on a whole plethora of issues. These
In addition to participating in the
Bunzl pulse survey, 836 employees,
in seven countries in our Continental
Europe region took part in the ‘Great
Place to Work’ process, an externally
recognised approach to gathering
employee feedback on their organisations.
This enabled us to benchmark the results
from the businesses who took part
against 10,000 other organisations
around the world. Ten businesses that
took part in the pilot using this approach
were certified as a ‘great place to work’.
The employees and leaders in these
businesses have, rightly, a sense of pride
in achieving this standard and it has
generated energy and enthusiasm
for ensuring that the accreditation is
maintained. Following the success of this
pilot in seven countries, the region plans
to get more businesses and countries
involved in 2023, and we will consider
extending the pilot to other regions.
87%
of employees have a clear
understanding of the goals and
objectives of our Company
range from communication to
organisational design and the experience
has provided Andrew with a rich
awareness and understanding of ways to
improve many elements of the business
going forward. Shez Madhani, Senior
National Account Manager, Bunzl Catering
Supplies, commented ‘I have enjoyed the
reverse mentoring experience and it has
been a great opportunity to see my views
and experiences taken on board.’
40
Bunzl plc Annual Report 2022
STRATEGIC REPORT
DIRECTORS’ REPORT
FINANCIAL STATEMENTS
The conference celebrated successes
through the launch of the Bunzl
Sustainability Awards where leaders
received awards on behalf of their teams
for the following five award categories:
1. Sustainable solutions
2. Taking action on climate change
3. Investing in people and communities
4. Responsible sourcing
5. We Believe award
As a result of the conference we have:
• developed and launched an e-learning
solution for the effective onboarding
of new acquisitions
• increased the use and application of
our We Believe employer brand and
clarified how it can complement
local external and internal brands
• increased awareness and use of our
internal capability of sourcing in Asia.
SCAN TO WATCH THE WE
BELIEVE CANADA VIDEO
Leadership
conference 2022
In May 2022 we were able to get together
just under 200 of our senior leaders
for the first time since the Covid-19
pandemic. The time we spent together
in Lisbon was used to share best practice
and to collaborate across regional
boundaries on our shared business
priorities. Several of our leaders took
to the stage to present to their colleagues
fantastic developments in their businesses
– this included innovations in products
and processes that others could benefit
from. The conference began with a
thought-provoking external speaker,
Peter Hinssen, stimulating ideas and
discussion around the theme of ‘The
New Normal’. Over the course of the four
days together delegates learnt about
successes achieved through increased
focus on the customer proposition and
the customer-centric approach of a recent
acquisition. Leaders shared the progress
with our digital transformation agenda
and numerous examples of digital best
practice to gain insight into how it has
been applied. A section of the conference
was devoted to our people and focused
on improving our performance through
people with practical tools and ideas
shared through real examples.
Sustainability is a key element of our
Group strategy and several sessions
focused on this topic sharing details
of sustainable own brands and how
our internal sourcing capability
supports the growth of our sustainable
product ranges.
Bunzl plc Annual Report 2022
41
OUR PEOPLE
Developing people across the world
Bunzl continues to be
committed to developing
employees with the skills
and experiences they need
to thrive at work. The details
below show some of the
tailored development
programmes on offer to
employees in all our regions.
Providing development opportunities to all levels of Bunzl Leadership
Direct entrant development programmes
First line
managers
‘Spark’ provides first
time supervisors
in North America
with foundational
leadership skills
driving the ‘Blue
and Green’ culture.
Employees
‘Warehouse to
wheels’ in UK& I
provides warehouse
employees with
skills to be a
commercial driver.
Managers
Accelerate in APAC
develops leaders
through a
combination of in
person, virtual and
peer supported
learning with
practical real
business projects
over a 12 month
period.
Senior
leaders
Our global
‘Senior Leadership
Development
Programme’ brings
together high
potential leaders
from around the
world to develop
through a tailored
series of events;
coaching; project
based learning and
self reflection.
Leaders
Continental
Europe introduced
a leadership
development
programme in 2022
to grow its high
potential leaders
of the future.
Attendees represent
all 15 countries in
Bunzl Continental
Europe.
Digital and e-learning e.g. acquisition success training
Technical and functional skills training e.g. Finance for non financial leaders
42
Bunzl plc Annual Report 2022
STRATEGIC REPORT
DIRECTORS’ REPORT
FINANCIAL STATEMENTS
Bunzl programme success stories
Developing
sales leaders
Courtney Smith joined the R3
Metro South Branch as a Sales
Professional in 2013 and since
then has successfully driven her
career and used the development
opportunities offered by Bunzl to
go from strength to strength.
After taking part in leadership
development programs Courtney
was successfully appointed
to a sales director role, then
later to market vice president.
In 2020, Courtney attended
the OverDRIVE development
programme and participated
twice as a mentee in the mentoring
program. In 2022 Courtney was
one of 50 female leaders to
benefit from the Inspiring
Women In Bunzl conference.
Graduate
career success
Katie Bradbury joined Bunzl
UK&I in 2009 as a ‘graduate
management trainee’ and has
progressed throughout the
organisation working in two
UK&I divisions, in both
Procurement and Sustainability
roles. Katie was a founding
member of the UK&I’s Inspiring
Women in Bunzl programme
and has benefitted from
participation in Bunzl’s
mentoring programme during
2022. Katie is now the Head of
Sustainability for Bunzl Retail
Division and has been
instrumental in the
development of Material
Footprint reporting.
Accelerated
career growth
Glenn Harris first joined Bunzl
Australia & New Zealand (BANZ)
in 1991 in Customer Service and
has progressed his career
through the business holding
various roles from Account
Manager to leading the Perth
site. In 2022 Glenn took part in
the Accelerate programme and
with the skills gained through
this and his impressive career
has now been promoted to
General Manager to lead the
Processor & Industry sector for
Australia and New Zealand.
Bunzl plc Annual Report 2022
43
TRUSTED, RELIABLE DELIVERY
Trusted
expertise
Case study: Bunzl Australia
and New Zealand
We are uniquely positioned to help our customers transition to
a more circular economy. Our customers rely on our advice and
expertise, particularly in cases where they are operating across
multiple jurisdictions and face having to comply with a complex
patchwork of constantly changing single-use plastic legislation,
such as is the case in Australia and New Zealand.
Customers in Australia face the added complication of needing to
comply with three different tiers of legislation (federal, state and
local), as well as the rules established by the Australian Packaging
Covenant Organisation (APCO). Joining APCO is part of a compulsory,
co-regulatory product stewardship framework established by the
Federal Government. Our largest local operating company, Bunzl
Australia and New Zealand, as well as many of its customers, are
required to join and therefore work towards the targets.
Helping customers
navigate complex
plastic legislation
44
Bunzl plc Annual Report 2022
Case study: supporting
our customers and the
environment
Bunzl Australia and New Zealand worked with
Compass Foodbuy Australia through the various
single-use plastics phases in Australia during 2022.
The program included supporting 120 Australian
sites to meet bans impacting food service such as
cutlery, straws, cups and other food service items.
Through this process the Bunzl team were able
to remove 54 product SKUs resulting in more than
9.5 million individual units converted into sustainable
options over the 12 month period. This process
continues to drive both Compass and Bunzl to seek
out, trial and implement innovative sustainable
options throughout all categories to ensure that
we are creating a sustainable future.
“Being a leader in our market
requires us to partner with similar
market leaders who have shared
values, support us with experienced-
based research and insight and
work with us through the complex
change management. Bunzl
is such a valued partner.”
Andrew Brightmore, Executive Director,
Foodbuy Australia, Compass Group
c.9.5mproduct units replaced by alternative
products over 12 months for
Foodbuy Australia
c.30
tonnes of plastic removed for
Foodbuy Australia
Sustainability focused
value-added services
Bunzl Australia and New Zealand’s solution is
a multi-pronged approach, incorporating:
Government insight
• Engaging with government to ensure the business
and its customers have the most up-to-date
information and in-depth understanding of the
changing regulatory environment.
Developing own brand sustainable
alternatives: Sustain and Revive
• Working with the supply chain to phase out banned
products and identify more sustainable alternatives
that meet both new legislative requirements and
customer needs.
Customer-facing analytics tools
• Bunzl has designed various calculators to quantify
the environmental benefit of transitioning from one
product to another.
Marketing and customer engagement
• Bunzl’s marketing incorporates business sustainability
goals and government laws and regulations into its
strategy and communications, actively working to
inform and educate customers to support transitioning
towards more sustainable behaviours.
Bunzl Australia and New Zealand1 – total revenue
from food containers and cups
Products made
from alternative
materials
Single use
plastic
2019
2022
1 Our largest operating company in the region
Bunzl plc Annual Report 2022
45
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC 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.
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 non-financial metrics.
∆ Alternative performance measure (see Note 3, page 178).
Profitable
organic growth
Acquisition
growth
Operating model
improvements
Organic revenue growth %
Acquisition spend £m
Operating margin %∆
5.3
4.3
6.8
3.2
(0.2)
2018
2019
2020
2021
2022
508
445
322
7.7
7.4
7.3
6.8
6.8
7.0
183
124
2018
2019
2020
2021
2022
2018
2019
2019
2020
2021
2022
Increase/(decrease) in revenue for the year excluding
the impact of currency translation, acquisitions during
the first 12 months of ownership and disposals.
Organic revenue increase of 6.8% was driven by
successful pass through of product cost inflation and
recovery volume growth in the first half of the year.
Consideration paid and payable, together with net
debt/cash assumed, in respect of acquisitions agreed
during the year.
Committed acquisition spend of £322 million across
12 acquisitions.
Reconciliation of revenue growth
between 2021 and 2022 £m
10,285
676
724
339
16
12,040
Annualised revenue from
acquisitions £m
602
322
299
148
97
IAS 17
IFRS 16
Ratio of adjusted operating profit∆ to revenue.
Operating margin of 7.4% compared to 7.3% in 2021.
Excluding the impact of acquisitions during the
first 12 months of ownership and hyperinflation
accounting adjustments, the 2022 operating margin∆
was 7.3%, unchanged from 7.3% in 2021 (restated at
constant exchange rates).
Return on average
operating capital %∆
50.7
45.4
48.4
36.9
43.3
43.0
2021
Currency
translation
Under-
lying
revenue
growth
Acquisitions Hyperinflation
2022
& disposal
Revenue up 17.1%, with 9.8% growth at constant
exchange rates driven by underlying revenue growth
and acquisitions made in 2021 and 2022. This was
partly offset by a small impact from the disposal of
our UK healthcare business in December 2022, while
excess growth in hyperinflationary economies, largely
in Turkey, contributed a small increase.
2018
2019
2020
2021
2022
2018
2019
2019
2020
2021
2022
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 9 on page 186).
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 43.0% from 43.3% in 2021 driven by
an adverse impact from currency translation.
46
Bunzl plc Annual Report 2022
STRATEGIC REPORT
DIRECTORS’ REPORT
FINANCIAL STATEMENTS
Financial
Adjusted earnings
per share p∆
184.3
164.9
162.5
129.6
132.4
132.2
184.300000
153.583333
122.866667
92.150000
61.433333
30.716667
0.000000
16.2
13.5
13.5
10.8
10.8
8.1
8.1
5.4
5.4
2.7
2.7
0.0
0.0
Return on invested
capital %∆
15.0
14.6
13.6
16.2
15.1
15.0
Cash conversion %∆
100
101
103
102
107
94
2018
2019
2019
2020
2021
2022
2018
2019
2019
2020
2021
2022
2018
2019
2019
2020
2021
2022
IAS 17
IFRS 16
IAS 17
IFRS 16
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 185).
At constant exchange rates, adjusted eps up 7.0% driven
by an 11.1% increase in adjusted operating profit∆, partially
offset by an increase in net interest expense and a higher
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, brands and
technology amortisation, acquisition related items and
amounts written off goodwill, net of the associated tax).
ROIC slightly down to 15.0% from 15.1% in 2021, driven
by an adverse impact from currency translation and
acquisitions partly offset by higher returns in the
underlying business.
Operating cash flow∆ as a percentage of lease adjusted
operating profit∆ (see Consolidated cash flow statement
on page 167).
Very strong year of cash generation with cash
conversion of 107% in 2022, from focus on working
capital improvement, enabled by easing supply
chain constraints.
Non-financial
Our key
themes
Our
commitments
Responsible
supply chains
90% of our spend on products
from all high-risk regions will
be sourced from assessed and
compliant suppliers by 2025
Investing
in a diverse
workforce
Encouraging more women
into leadership roles through
focused and targeted activities
and continuing to build a truly
inclusive culture across Bunzl
Taking action on
climate change
Scope 1 and 2:
50% more carbon efficient
(equivalent to a 27.5%
absolute reduction) by 2030
(against a 2019 baseline)
Scope 3:
79% of suppliers by
emissions will have science-
based targets by 2027
Net zero by 2050 at the latest
Performance
What’s next
78% of our spend in high-risk regions was sourced from
assessed and compliant suppliers.
c.96% of our purchasing spend today is either in low-risk regions,
with assessed or compliant suppliers in high-risk regions, or on
other non-product related costs1
Continuing to take a proactive, risk
based approach to responsible sourcing
by assessing suppliers of high risk
commodities who are based in lower
risk sourcing countries
1 Includes freight, duties and FX related costs
21% women in our senior leadership population
21
19
2021
2022
Promote female role models through a
focused programme of communications
and extended networking events such as
female leadership conferences in North
America and Latin America
Senior leadership group defined as the 470 individuals that receive
share options as part of their remuneration. Since 2016 the number
of women in our senior leadership group has more than doubled.
15% reduction in absolute
emissions since 2019.
Absolute carbon emissions
(tonnes CO2e)
24% improvement in
carbon efficiency since 2019.
Emission intensity
(tonnes CO2e per £m revenue)
141,3201
120,742◊
13.81
10.5◊
Working with our key suppliers to
deliver our new science-based scope 3
emissions target (engaging them on the
requirement to set science-based targets
by 2027) and publishing our net zero
transition plan
2019
2022
2019
2022
1 Emissions in our baseline year have been recalculated to
reflect the impact of acquisitions. Emissions intensity has been
recalculated using revenue at constant currency. This process
has been agreed with the SBTi.
◊ Included in the external auditors’ limited assurance scope.
See the data assurance statement on the Company’s website,
www.bunzl.com.
Providing
sustainable
solutions
Significantly increasing the
amount of recyclable,
compostable or reusable
packaging supplied to
our customers to help them
meet their targets
53% of packaging made from alternative materials in 2022.
83% of Group revenue attributable to non-packaging products
or packaging products better suited to a circular economy.
2% of revenue generated from consumables facing regulation.
Engaging our key customers in the
retail, grocery and foodservice sectors
using our material footprint tools and
developing a new solution to effectively
advise customers on the carbon impact
of the products they source
Bunzl plc Annual Report 2022
47
SUSTAINABILITY
Trusted, reliable solutions
for a better world
Sustainability is firmly embedded in the way we do business at
Bunzl. We take a leading approach to ethical auditing across our
supply chain, possess a carbon-efficient consolidation model and
supply an extensive range of alternative packaging products to drive
the transition towards a more sustainable and circular economy.
Bunzl’s operating companies have
continued to partner with our customers
to help achieve their sustainability goals.
We have introduced additional material
footprint tools to help more customers
understand the impact that legislation
will have on the packaging and products
they buy and some of our businesses
have developed a new solution to
minimise the carbon emissions
associated with their deliveries.
We continue to lead the transition to
a more circular economy, by offering
tailored solutions and working with our
customers to supply packaging and
products made from alternative materials
as they respond to new legislation and
work to meet their packaging targets.
Our Global Supply Chain Solutions team
in Asia has continued to work closely with
our operating companies and suppliers
and has increased the total number of
ethical audits by 23%.
In 2022, 96 suppliers underwent
remediation efforts to bring them up
to the required standard and we have
expanded the scope of our programme to
include suppliers based in other high risk
sourcing regions outside of Asia and high
risk product commodities manufactured
in low risk countries.
Bunzl’s unique advantage
We have exclusive access to the
data our customers need to
understand the impact of
legislation, make informed
sourcing decisions and report
on progress against their targets
Our expert sales and
sustainability teams use this
data to provide advice,
customer-specific strategies and
reports through intelligent tools
that link to our product
management systems
We then use our strengths in
sourcing innovative products,
including from within our own
brand portfolio, to supply the
alternative solutions they need
48
Bunzl plc Annual Report 2022
“We are
increasingly
turning our
attention to our
supply chain and
continuing our
commitment to
tackling climate
change.”
Our large family of businesses has a track
record of creating an inclusive working
environment where people can bring
their best wherever they come from.
Our most recent materiality assessment
identified that we could build on this
diversity of talent to create opportunities
for under-represented groups to progress
into leadership roles. Over the last year
we have accelerated our diversity, equity
and inclusion agenda to support
individual well-being, growth and career
progression among all of our employees,
irrespective of their background. In 2022
the percentage of women within our
leadership group increased for a second
year running to 21%, compared to 19% in
the prior year.
Our key themes
We have reached a key milestone of
our commitment to the ‘taking action on
climate change’ pillar of our sustainability
strategy. Our emissions reduction targets
(for scope 1, 2 and 3 emissions) have been
approved by the Science Based Targets
initiative ‘SBTi’ as being consistent with
levels required to meet the goals of the
Paris Agreement. In 2022, our businesses
have continued to make good progress in
delivering their operational carbon
roadmaps and we are on track to meet
our targets.
To continue our commitment to tackling
climate change we have assessed our
scope 3 carbon emissions in detail for
the first time (see page 60). We have also
set a new science-based scope 3 target
that we will deliver with our key supply
chain partners over the next five years.
In 2023 we will build further on the
risk-based approach we have taken to
supply chain ethics over the last 14 years
and start to focus on the broader
Environmental, Social and Governance
‘ESG’ risks present across our supply
chain before working with our key
suppliers to mitigate these effectively.
Responsible
supply
chains
Investing
in a diverse
workforce
Taking action
on climate
change
Providing
tailored
solutions
READ MORE
PAGE 52
READ MORE
PAGE 54
READ MORE
PAGE 56
READ MORE
PAGE 64
Bunzl plc Annual Report 2022
49
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
SUSTAINABILITY CONTINUED
Materiality matrix
l
s
r
e
d
o
h
e
k
a
t
s
r
u
o
o
t
e
c
n
a
t
r
o
p
m
I
i
i
e
c
n
a
t
r
o
p
m
h
g
h
y
r
e
v
r
o
h
g
h
s
a
e
u
s
s
i
i
n
a
g
n
i
r
o
c
s
s
r
e
d
o
h
e
k
a
t
s
f
o
%
l
High
Very high
Sustainable
sourcing
Responsible
marketing
Circular
economy
Corporate
governance
Health &
wellness
Dialogue and
partnerships
Charity and
community
Sustainable
products
Climate
change
Human
rights
Diversity &
inclusion
Talent
development
Importance to Bunzl (0–5 years)
Key themes
Responsible supply chains
Investing in our people
Taking action on climate change
Providing tailored solutions
Our material issues and strategy
Our success as a specialist distribution
and services Group is influenced by
a constantly changing sustainability
landscape that presents both risks and
opportunities for a business like Bunzl.
In 2020 we conducted our first materiality
assessment to ensure that our activities
took account of the significant social and
environmental issues that were of most
interest to our stakeholders.
It is critical that we keep abreast of the
requirements of our stakeholders as new
legislation is introduced, consumer habits
and perceptions change and markets
evolve. We also acknowledge that ESG
risks and opportunities can be material
from both a financial and non-financial
perspective and recognise that companies
must manage and take responsibility for
the actual and potential adverse impacts
of their decisions on people, society and
the environment. To ensure we do this
effectively we will repeat our materiality
assessment, following the principles of
double materiality during 2023.
Our strategy is based on these material issues
Material ESG issues
Key themes
Our contribution to the theme
Supporting the SDGs
Our commitments
Sustainable
Development
Goals ‘SDGs’
• Supply chain management and
stewardship
• Human rights and fair and safe labour
Responsible
supply chains
Respecting human rights with our
industry-leading Global Supply Chain
Solutions team in Shanghai
• Equal opportunities
• Gender, ethnic, LGBTQIA and disability
diversity
Investing in
our people
and a diverse
workforce
Our local businesses are focused
on developing talent, increasing
diversity and enhancing inclusivity
practices
We have partnered with a Non-Governmental Organisation
‘NGO’, Stop the Traffik, who send an adverse media report to all
of our business areas every month. The solution is trained to
recognise terms and incidents related to human trafficking within
unstructured content, reviews Bunzl’s top suppliers by spend and
then ranks any issues found in terms of importance to Bunzl.
• 90% of our spend on products from all high-risk
regions will be sourced from assessed and compliant
suppliers by 2025
In Continental Europe we have established diversity and inclusion
committees in all of our operating countries and our Managing
Directors have incentivised objectives to support these
programmes. In 2022, the number of women in leadership roles
increased to 30%.
• Encouraging more women into leadership roles
• Continuing to focus on building a truly
inclusive culture
• Identifying the next generation of leaders
from a more diverse pool of talent
• Renewable energy and energy efficiency
• Low and zero carbon logistics
• Supply chain emissions
Taking further
action on climate
change
Consolidating orders from a range
of sources into one delivery to
reduce transport emissions and
taking direct action to tackle
climate change
We have assessed our Group wide scope 3 carbon footprint in
detail for the first time (see pages 60). This has allowed us to
effectively identify the material emission hotspots, prioritise
engagement within our supply chain and will support the
development of our net zero transition plan.
• Scope 1 and 2: 50% more carbon efficient by 2030
(27.5% absolute reduction) against 2019 baseline
• Scope 3: 79% of suppliers by emissions will have
science-based targets by 2027
• Net zero by 2050 at the latest
• Availability of products and services with
sustainable attributes
• Supporting a more circular economy
Providing tailored
alternative
solutions
Using our unique position at the
centre of the supply chain, working
with customers and suppliers to lead
the transition towards a sustainable
approach to packaging
Bunzl plc partnered with WasteAid in South Africa to fund a
twelve-week training programme to support waste collectors to
improve their income potential. The training combined both
personal and practical skills to help the waste collectors grow
their earning potential and reduce the amount of waste in the
local environment. The participants attended a pitch event in
October where they were each allocated seed funding to help
grow their businesses.
• Support customers to remove, replace and
reduce single-use plastics.
• Significantly increase the recyclable, compostable or
reusable packaging supplied to customers
50
Bunzl plc Annual Report 2022
Responding to the feedback from our stakeholders
Stakeholder group
What we heard in 2020
Examples of what we have done since
Investors and
customers
Investors
‘We’d expect to see more quantifiable
long term targets and milestones in
key areas’
‘Would like more transparency and data
specifically in relation to supply chain
ethics, climate change and packaging’
Set new commitments and targets for our key themes, including long
term science-based carbon reduction targets approved by the SBTi
We have made new transparent disclosures in our Annual Report
(TCFD statement, SASB reporting) to show how we have been making
progress against our key themes, including but not limited to,
packaging data and percentage of high risk spend covered by our
ethical audit and assessment work
Investors
Customers
‘Would like to hear more about the
approach to sustainability as a whole
rather than supplementary initiatives’
Sustainability formed a key part of our Capital Markets Day where
we shared how our strategy is embedded in how we do business,
highlighted the strong progress we have already made and officially
launched the next phase of our commitments
‘We welcomed the new footprint tool,
this is a highly positive example of
Bunzl taking a proactive approach to
sustainability – more solutions like this
would be really useful’
Our businesses have continued to develop new, digitally led solutions.
For example, our carbon forecast tools are now present in seven
countries and in 2022 we launched a new material footprint reporting
tool for key grocery customers in North America
Internal teams
‘We’d like to see more examples of best
practice from across the Group so we
can learn from and replicate what other
businesses are doing’
We held a Sustainability Awards event at our leadership conference
in 2022 with 63 award entries shortlisted across five categories.
The award-winning entries were then developed into best practice
case studies and shared across the Group
Material ESG issues
Key themes
Our contribution to the theme
• Supply chain management and
stewardship
• Human rights and fair and safe labour
Responsible
supply chains
Respecting human rights with our
industry-leading Global Supply Chain
Solutions team in Shanghai
• Equal opportunities
• Gender, ethnic, LGBTQIA and disability
diversity
Investing in
our people
and a diverse
workforce
Our local businesses are focused
on developing talent, increasing
diversity and enhancing inclusivity
practices
Sustainable
Development
Goals ‘SDGs’
Supporting the SDGs
Our commitments
We have partnered with a Non-Governmental Organisation
‘NGO’, Stop the Traffik, who send an adverse media report to all
of our business areas every month. The solution is trained to
recognise terms and incidents related to human trafficking within
unstructured content, reviews Bunzl’s top suppliers by spend and
then ranks any issues found in terms of importance to Bunzl.
• 90% of our spend on products from all high-risk
regions will be sourced from assessed and compliant
suppliers by 2025
In Continental Europe we have established diversity and inclusion
committees in all of our operating countries and our Managing
Directors have incentivised objectives to support these
programmes. In 2022, the number of women in leadership roles
increased to 30%.
• Encouraging more women into leadership roles
• Continuing to focus on building a truly
inclusive culture
• Identifying the next generation of leaders
from a more diverse pool of talent
• Renewable energy and energy efficiency
• Low and zero carbon logistics
• Supply chain emissions
Taking further
action on climate
change
Consolidating orders from a range
of sources into one delivery to
reduce transport emissions and
taking direct action to tackle
climate change
We have assessed our Group wide scope 3 carbon footprint in
detail for the first time (see pages 60). This has allowed us to
effectively identify the material emission hotspots, prioritise
engagement within our supply chain and will support the
development of our net zero transition plan.
• Scope 1 and 2: 50% more carbon efficient by 2030
(27.5% absolute reduction) against 2019 baseline
• Scope 3: 79% of suppliers by emissions will have
science-based targets by 2027
• Net zero by 2050 at the latest
• Availability of products and services with
sustainable attributes
• Supporting a more circular economy
Providing tailored
alternative
solutions
Using our unique position at the
centre of the supply chain, working
with customers and suppliers to lead
the transition towards a sustainable
approach to packaging
Bunzl plc partnered with WasteAid in South Africa to fund a
twelve-week training programme to support waste collectors to
improve their income potential. The training combined both
personal and practical skills to help the waste collectors grow
their earning potential and reduce the amount of waste in the
local environment. The participants attended a pitch event in
October where they were each allocated seed funding to help
grow their businesses.
• Support customers to remove, replace and
reduce single-use plastics.
• Significantly increase the recyclable, compostable or
reusable packaging supplied to customers
Bunzl plc Annual Report 2022
51
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT SUSTAINABILITY CONTINUED
Responsible
supply chains
More than 50 million people worldwide
are estimated to be living in slavery, with
nearly 28 million of those in forced
labour1. With global trade so extensive
and supply chains stretching across every
corner of the planet, businesses are
increasingly responsible for ensuring
sourcing is ethical and lawful.
As a company operating across more
than 30 countries and with a global
supply chain, Bunzl has zero tolerance for
unethical practices. We are committed to
eliminating modern slavery practices and
respecting human rights across both our
own operations and supply chain. To
achieve this, we take a direct approach to
ensuring that businesses and individuals
operating within the supply chain are
complying with communities’ and
workers’ rights.
While the majority of Bunzl’s direct
suppliers are based in countries with low
or medium levels of social risk, a low
proportion of the Company’s procurement
spend takes place with suppliers in
higher-risk countries, such as China, India,
Malaysia, Brazil and Turkey. We take a risk
based approach to responsible sourcing
by identifying the highest risk sourcing
regions before making them a priority for
our assessment and auditing controls,
policies and procedures. Once our
compliance programme reduces those
highest risks to acceptable levels, it will
move on to lower risks.
During 2023 we will be expanding our
programme to start assessing suppliers
of high risk commodities who are based
in lower risk sourcing countries.
1 https://www.ilo.org/global/about-the-ilo/newsroom/
news/WCMS_855019/lang--en/index.htm.
Q&A
with Bunzl’s Global Sourcing
Director Paul Stoker
What makes Bunzl’s approach to
responsible sourcing in Asia
unique?
Our auditing standard is equivalent
to a SMETA 2-pillar audit but we
choose to manage our own
programme, believing that building
strong relationships with our supply
chain offers the greatest benefit to
our business, our customers, and
those suppliers who we partner
with. We are unique in that we
apply our assessment and auditing
process to all suppliers based in
high risk sourcing regions, covering
more than c.98% of our Asian Bunzl
spend in over 13 Asian countries
every two years.
How does Bunzl audit its
suppliers?
As shown in this report (see page
53) our audits include factory
walk-throughs in all areas, including
production, packing, canteens and
dormitories and we also conduct
employee interviews, using our
own translators where required.
Audits cover various aspects of
social, environmental, and quality
control issues, including child,
forced or bonded labour,
disciplinary practices, management
of homeworkers and foreign
migrant workers, freedom of
association, wages, working hours
and health & safety.
What do you do if you uncover any
instances of modern slavery?
In the event of an allegation or
discovery of a zero tolerance issue,
our preferred practice is to work
with suppliers to remediate the
issue found and achieve meaningful
future improvement. If any
manufacturer fails to undertake
corrective action and is not seeking
to achieve improved outcomes, then
we would terminate the
relationship.
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Bunzl plc Annual Report 2022
Our unique approach to auditing
We use two types of audits for Category A risk suppliers; standard
or enhanced, and take a risk based approach to determining which
should apply. Category A suppliers are those operating in very
high or high risk countries (see ESG Appendix page 246 for more
information about our supply chain risk assessment work).
Our standard audits are conducted over one day (usually with one
auditor, but occasionally two if the supplier is over a given size) and
enhanced audits take place over two working days. The type of audit
(standard or enhanced) is determined by leverage factors such as
spend and number of employees at the supplier’s location. We cover
social accountability and quality assurance topics in both audits.
Social accountability
Quality assurance
Example audit sections:
Recruitment and termination;
forced labour; discrimination;
harassment and abuse;
working hours and wages; and
health & safety
Example audit sections:
Facilities and maintenance;
Incoming materials control;
finished goods control;
management systems;
and hygiene
Bunzl auditing standard
Over 150 issues assessed
Zero tolerance
issue
Proportion of
total zero
tolerance issues
(in 2022)
Forced labour
issues
c.46%
Example of issue
found
Example
locations Our response
Payment of recruitment
fees to agents by foreign
migrant workers
Malaysia
Taiwan
We explain why this issue is recognised as forced labour. The charging of recruitment
fees is not against local law but is not accepted by Bunzl or the International Labour
Organization (ILO). We demand the supplier change their policy, provide training to
other members of their team and return all fees paid. The supplier will remain
un-approved until all rectification evidence has been reviewed and approved.
c.20%
Defective
materials and
/ or products
are not
segregated
China
The supplier does not
have a separate, easily
identifiable, area to
store rejected
production material
There is a risk the rejected material could be used to produce a faulty finished product.
Our auditing team will provide best practice examples and training to provide the
factory with a new process. We also request that the supplier strengthens their quality
management training or introduces a new quality management system before
verifying this as evidence.
Our progress in 2022
Our Global Supply Chain Solutions team
assessed 930 suppliers and 834 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. Of the
suppliers undertaking remediation
efforts to bring them up to the required
standard, 73 have completed their action
plans to date with 7 still in progress.
If resolution is not possible within a
reasonable time frame (usually six
months) then we terminate the
relationship. In 2022, we terminated
relationships with 16 suppliers who
failed to make enough progress.
In 2022, 78% of our spend on products
from high-risk regions was sourced
from assessed and compliant suppliers,
meaning c.96% of our purchasing spend
today is either in low-risk regions, with
assessed or compliant suppliers in
high-risk regions, or on other non-product
related costs.
Bunzl plc Annual Report 2022
53
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT SUSTAINABILITY CONTINUED
Investing in a
diverse workforce
Businesses and societies continue
to struggle with persistent gender
discrimination, systemic racism and local
inequalities. Companies that do not
respect or prioritise the individual and
unique needs, potential and perspectives
of their people will fall behind their
competitors and fail to grow sustainably
as they are unable to attract and retain
talent from significant subsectors of the
total available pool.
We know diverse and inclusive
workplaces earn more commitment
and deeper trust from their people
and that’s one of the reasons why
Bunzl has increased its focus on this
area over the last few years. Bunzl
remains committed to improving the
representation of women and those
from different ethnic backgrounds,
particularly in the leadership population,
and is taking steps to ensure that we
have a truly inclusive culture.
We have an ambition to make everyone,
irrespective of who they are or what role
they do, feel equally engaged with and
supported by our business, across all
areas of Bunzl.
Our progress in 2022
Our businesses have been focused on
accelerating their diversity, equity and
inclusivity programmes to meet the new
commitments we established during
2021. The first of these was to take action
to address a common issue that faces
many large organisations, the under-
representation of women at a senior
level. We committed to encourage 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.
The companies in our Group have a track
record locally of creating an inclusive
working environment where people can
bring their best wherever they come
from. However, we know there is more
Q&A
with Bunzl’s HR Director
in Latin America, Rocio Trejo
How important is diversity and
inclusion in your region?
We believe it represents a major
competitive advantage for our
companies because it provides for a
broader range of mindsets, thought
processes and perspectives across
our teams that enable us to build
better solutions for customers. It is
a priority for our region and our
leadership.
companies across Latin America
have completed the programme to
date with another 53 about to start.
What have the results of this
been?
We have increased the number of
female Managing Directors within
Latin America by three (a 13%
increase) and have a 48% female
representation at leadership level -1.
Could you tell us a little about the
new Women in Leadership
programme in Latin America?
As part of our wider diversity
programme and with the aim of
promoting female leadership across
Bunzl, we designed a new
programme in partnership with the
Catholic University of Chile, to
develop leadership skills in women
we have identified as high potential
and part of the succession plans for
our senior management roles. 22
women from different operating
What are your ambitions for the
future?
My ambition is not to have to
promote these programmes in
the future because they are
increasingly forming a bigger part of
our culture. I would like to continue
preparing and supporting female
professionals to assume leadership
positions within our business area,
while broadening the scope of our
programme by creating cultural,
ethnic and racial affinity groups and
for individuals with disabilities.
we can do to build on this diversity of
talent to create opportunities for under-
represented groups. Our commitments
were to continue to focus on building a
truly inclusive culture by achieving parity
of engagement scores across ethnic
groups in the largest part of our business,
North America and other parts of the
Bunzl Group (e.g. UK & Ireland) where
data collection is possible and providing
a voice for all under-represented
colleagues and acting on their feedback
to address any real or perceived barriers
to engagement.
54
Bunzl plc Annual Report 2022
In focus: Accelerating diversity and inclusion across Bunzl
The programmes that have been implemented by our business areas since the introduction of our new commitments in this
area have resulted in good progress being made.
Encouraging
more women
into leadership
roles
Building
a truly
inclusive
culture
Identifying the
next generation
of our leaders from
a more diverse
pool of talent
Bunzl Women
in Leadership
engagement
programmes
now present in
all business areas
In Asia Pacific
there are 45%
women in
senior positions
(leadership -1)
with an increase
of 10% during
2022
28% of senior
leadership roles
in our UK &
Ireland operating
companies are
held by women
Over 4,000
employees
have completed
diversity
appreciation
training in North
America
Bunzl UK &
Ireland have
partnered with
Green Park
(www.green-
park.co.uk) to
provide subject
matter expertise
as they continue
to refine and
broaden their
approach to
Diversity &
Inclusion
33% internal
promotions in
North American
leadership team
were female in
2022 (up from
14% in 2021)
26% of external
hires in North
America were
female in 2022,
an increase of 7%
A new
warehouse
employment
programme in
partnership with
the Australian
government with
a focus on areas
such as family-
friendly shift
patterns
Bunzl plc Annual Report 2022
55
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT SUSTAINABILITY CONTINUED
Taking action on
climate change
The impacts of climate change are
already with us, as recent periods of
extreme weather and biodiversity loss
have shown, affecting communities
least able to withstand them. Without
concerted and ambitious action from
companies and governments, climate
change will have a devastating effect
on our businesses and our daily lives.
Bunzl’s one-stop-shop service means
we are able to aggregate orders from
thousands of suppliers into single
deliveries which reduces transport miles
and carbon emissions. Our role as a
distributor means we also do not operate
any energy intensive or highly polluting
manufacturing facilities. But we recognise
that our direct operations, distribution
network and supply chains are all part of
the challenge and in addition to assessing
the long term risks climate change
presents to the business (see page 82),
we have worked with the SBTi to have
our long term carbon reduction targets
approved during 2022.
Our position in the supply chain gives us
the ability to manage both upstream and
downstream carbon emissions with our
suppliers and customers. During 2022,
we have reviewed how we can take action
throughout the value chain by calculating
our scope 3 emissions in detail for the
first time, setting a new SBTi-approved
scope 3 target and supporting our
customers to reduce the carbon impact
of our deliveries to them.
Our progress in 2022
As shown on page 17, our long term
carbon targets were recently approved
by the SBTi which achieves a commitment
we made in 2021 when Bunzl joined the
Business Ambition for 1.5°C and the
United Nations ‘UN’ Race to Zero
initiative. Our existing scope 1 and 2
emissions reduction targets and a newly
developed target to reduce scope 3
emissions have been approved.
Progress against our targets
Our scope 1 and 2 carbon emissions in 2022 and baseline year (2019) are shown
in the table below:
Carbon emissions (market based)
2019
Reduction since
baseline year
2022
CO2e emissions (tonnes)
141,3201
120,742◊
Emission intensity (tonnes
CO2e/£m revenue)
13.81
10.5◊
15%
24%
1 Emissions in our baseline year have been recalculated to reflect the impact of acquisitions. Emissions intensity has
been recalculated using revenue at constant currency. This process has been agreed with the SBTi.
◊ Included in the external auditors’ limited assurance scope. See the data assurance statement on the Company’s
website, www.bunzl.com.
More information
• Detailed energy consumption and
climate change data can be found
in the ESG Appendix (see pages 243
and 244). Our climate change reporting
procedures can be found in the EHS
and Sustainability Reporting guidelines
in the sustainability section of our
website (https://www.bunzl.com/
sustainability/sustainability-reporting/).
• The independent assurance for our
scope 1 and scope 2 carbon emissions
and emission intensity (tonnes of CO2e
per £m revenue) calculations can be
found in the ESG Appendix of this
report (see pages 243 and 244) and in
the EHS data assurance statement in
the sustainability section of our
corporate website.
We have a vast supply chain comprised
of over 10,000 suppliers accounting
for around 87% of our total scope 3
emissions. Reducing these emissions is
imperative to achieving our net zero goal
and gaining approval for our scope 3
emissions reduction target is our first
step towards this. As the majority of
our scope 3 emissions are associated
with our product and services suppliers,
we have decided that the most effective
way to reduce these emissions would
be to ensure our suppliers set science-
based reduction targets to reduce their
impact. We will be developing our
net zero transition plan during 2023
(for publication in 2024).
Compared to the 2019 baseline year
for our targets, our efficiency has now
improved by 24%. We have also reduced
our absolute emissions by 15% since
2019, which means we are on track to
meet our science-based reduction goals
in 2030.
Our baseline year emissions have been
recalculated to take into account the
cumulative impact of the emissions
associated with acquisitions since 2019.
The recalculation of baseline year
emissions takes place if the cumulative
impact of the emissions associated with
acquisitions exceed 5% of base year
emissions (as agreed with the SBTi).
56
Bunzl plc Annual Report 2022
Assessing climate change
scenarios and their
impact on our business
The Board, Executive Committee and
every business area and business in
Bunzl identify and document risks in a
consistent way within the categories of
strategic, operational, and financial risks.
Our process for identifying and assessing
risks on an ongoing basis is detailed on
pages 74 and 75. These include current
and emerging climate-related risks and
opportunities and by doing so, we are
ensuring that climate change is integrated
into the Group’s overall risk management.
Using climate scenarios to assess
climate change risks
We follow a four-step process and use
climate change scenarios to assess the
impacts that climate change may have on
Bunzl, as described in more detail below.
1. Evaluating risks and opportunities
Bunzl’s climate-related risks and
opportunities were determined by an
internal consultation process that
involved a wide range of internal
stakeholders across all regions and
markets, previous assessments and
desk-based research. Our Company
operates internationally and the impact
on our business varies significantly
depending on the market sector and the
geographic location of our businesses,
supply chains and our customers. These
impacts could be direct (e.g. expenditure,
revenue, assets) and/or indirect (e.g. delay
in delivery, drop in demand, disruption of
supply chains).
It was determined that climate change
could impact Bunzl in the following four
thematic areas:
• shifting customer expectations
(transitional risk);
• environmental impacts of technology
(transitional risk);
• adaptation to extreme weather
(physical risk), and;
• changing market dynamics
(transitional risk).
In the identification of risks and
opportunities and the evaluation of
the impact on our business, we have
considered the following time horizons:
• short term (to 2025);
• medium term (to 2030), and;
• long term (to 2050).
2. Selecting climate change scenarios
The next step was to assess the impact
of various climate change scenarios.
We focused our assessment on three
alternative climate scenarios up to 2050.
The ‘orderly’ and ‘disorderly’ scenarios
align with global warming trajectories of
1.5oC and 2oC by 2100 respectively but
differ in the speed and extent of
decarbonisation over the next 30 years.
Our final scenario (‘hothouse world’)
assessed the potential impacts of a world
in which global warming exceeds 3oC by
2100. Our scenarios broadly align with the
environmental and economic conditions
represented in the Network for Greening
the Financial System ‘NGFS’ scenario
framework (https://www.ngfs.net/
ngfs-scenarios-portal/explore) and more
information can be found on page 241
of our ESG Appendix.
3. Evaluating the impact on our
business
We have applied the three climate
change scenarios to our four key risk
areas (shifting customer expectations,
environmental impacts of technology,
adaptation to extreme weather and
changing market dynamics) to
understand the impact each scenario
could have on Bunzl’s business. We have
then worked to calculate the financial
impacts associated with the various
scenarios. More information can be
found on page 242 of our ESG Appendix.
4. Effectiveness of response measures
We will continue to evaluate (and when
necessary accelerate) our existing
response measures to ensure that our
business continues to be resilient to the
assessed risks and is able to capitalise on
business opportunities that our response
to climate change may offer.
Bunzl plc Annual Report 2022
57
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT SUSTAINABILITY CONTINUED
Thematic area
Risk & opportunities
Response measures
Shifting customer expectations
Bunzl’s customers are setting more
stringent environmental targets.
Risks
Failing to align with our customers’ ambitions could lead
to reputational damage and loss of sales.
Bunzl is increasingly expected to help
customers achieve their ambitions
and goals.
Opportunities
Aligning with customers’ ambitions could strengthen
customer relationships, build resilience to new
environmental legislation and policy, and create brand
differentiation.
The risks and opportunities are applicable for all time
horizons and are most significant in the short and
medium term.
Environmental impacts of technology
Technological advances will drive
decarbonisation of Bunzl’s commercial
fleet and shipping suppliers.
The extent to which technological
change presents a risk or opportunity
for Bunzl will be determined by factors
such as the development of low carbon
technology for large commercial goods
vehicles and deployment of charging
infrastructure.
Increased regulatory pressure on
the use of fossil fuels for mobility
is expected.
Adaptation to extreme weather
Bunzl’s suppliers and operations have
already experienced the impacts of
extreme weather.
For example, hurricanes in North
America have disrupted Bunzl’s
distribution activities and wildfires
have threatened Bunzl’s Australian
operations.
In both cases, we have been able to
mitigate the risks to ensure supply.
Risks
Bunzl may need to upgrade to less carbon intensive
technologies such as electric vehicle technology in our
commercial goods vehicles. Regulations could limit Bunzl’s
access to major urban areas for last mile deliveries.
Opportunities
New technologies such as energy efficient measures in
warehouses. Proactive implementation of electric vehicle
technology presents opportunities for strengthened
customer relationships and brand differentiation, in
addition to emissions reductions.
The risks and opportunities are applicable for all time
horizons and are most significant in the medium term.
Risks
The severity and frequency of extreme weather events
could increase in the future. While the flexibility of Bunzl’s
supply chain has provided good operational resilience to
the physical impacts of climate change, there could be an
impact if several key customers in a high risk region were
impacted simultaneously. More chronic impacts of climate
change, such as drought or increased rainfall may, in
certain circumstances, also lead to resource shortages
and price volatility of raw materials and packaging.
Opportunities
Our supply chain flexibility and lack of fixed manufacturing
assets provide an opportunity to quickly respond to
changing operating conditions such as flooding and
erosion caused by changed weather patterns.
The risks and opportunities are applicable for all time
horizons and are most significant in the medium and
long term.
Proactive scanning of customer
trends and expectations to ensure
our activities meet or exceed
customer expectations.
Building sustainability expertise
within the Group to provide
customers with:
• a broad range of product options;
• including less carbon intensive
products;
• advice on the carbon impact of
products sourced;
• options to reduce the impact of
our deliveries (see page 62).
Setting emissions reduction targets
to decarbonise our operations and
supply chain in line with climate
science (see page 17).
Continuing and accelerating the
introduction of technology in our
warehouse operations with a focus
on implementation of energy
efficient lighting and solar
photovoltaic panels (see page 59).
Piloting new low carbon transport
technologies (such as electric vehicle
technology and biofuels) for use in
our commercial fleet, ahead of full
adoption once large vehicle
technologies become technically
and economically viable.
Proven business continuity plans
have ensured continued service to
customers.
Resilience through supply chain
flexibility and lack of fixed
manufacturing assets.
Changing market dynamics
The direct (physical) and indirect
(transitional) risk may change the
dynamics of the markets in which Bunzl
operates. A key potential impact could
come from carbon pricing, leading to
some increase in costs of carbon
intensive products.
Climate change may create a demand
for low carbon products or the supply
of products which help mitigate the
physical impacts of climate change.
Certain markets may also be increasingly
affected by extreme weather.
Risks:
Bunzl may face the risk of some increases in indirect costs
from carbon intensive products. Certain markets may be
increasingly affected by extreme weather (i.e. disruption to
the hospitality industry in areas impacted by wildfires and
flooding) which could impact our commercial strategy.
Opportunities:
Our material agnostic business model and flexible supply
chain allows us to benefit from opportunities to source and
supply specialist low-carbon products, or to acquire
business and/or supply products which help mitigate the
physical impacts of climate change.
Bunzl is agnostic to the type of
products it sources and supplies.
This allows us to follow broader
environmental, social and economic
trends, entering new markets and
seeking new customers where there
is a business case for doing so.
The ability to effectively pass through
any increased costs of products in
our supply chain (for example due
to carbon pricing mechanisms) to
our customers.
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Bunzl plc Annual Report 2022
Our short term carbon roadmap activities
Our short term scope 1 and 2 roadmaps primarily focus on technology that is currently available, but we also actively trial new
technologies across the Group to support our longer term carbon reduction targets. As suitable new technologies develop,
we will revisit our roadmaps accordingly to ensure our activities remain ambitious. The roadmap below relates to the short term
activities (2021 to 2025) our business areas are working on to ensure we stay on track to achieve our scope 1 and 2 science-based
reduction goals in 2030.
Scope 1 and 2
emission source
Commercial
vehicles
KPIs to 2025
25% biofuel usage
in UK & Ireland and
Continental Europe
2022 update
Biofuel conversion where we have
a fuel tank on site is progressing
as planned
Rating
On track
250 vehicles
changed to
electric
2022 update
The trialling of zero emission
vehicles (where applicable
technology exists) has started,
with some implementation of new
vehicles to date, but further trials
and implementation are planned
to help meet our ambition
Rating
Behind plan but
will recover to
meet target
Scope 1 and 2
emission source
Company
cars
KPI to 2025
Hybrid and electric
company cars to
increase by 25%
2022 update
Good progress made with
increasing electric vehicle adoption
in UK & Ireland and Continental
Europe. Hybrid vehicles have been
ordered in North America and
Asia Pacific
Rating
On track
Scope 1 and 2
emission source
Electricity
KPIs to 2025
80% facilities in
North America will
have LED lighting
100% renewable
energy procurement
in UK & Ireland and
Continental Europe
2022 update
95 installations completed
to date (65%)
Rating
On track
Rating
On track
2022 update
Renewable energy procurement
is c.80% in UK & Ireland. In
Continental Europe procurement
has reached c.30% and our
sites continue to install solar
photovoltaic panels, most recently
at two locations in the Netherlands
Bunzl plc Annual Report 2022
59
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT SUSTAINABILITY CONTINUED
In focus: Mapping our supply chain emissions
During 2022 we performed a full scope 3 assessment of our
carbon impact, covering both 2019 (as our baseline year) and
2021. This work identified the carbon hotspots within our
scope 3 boundary, what is driving those emissions and
potential reduction opportunities.
Bunzl’s Scope 3 carbon footprint for 2021 was c.7.1 million
tonnes of CO2e. The top three most material emission
categories of our scope 3 footprint are:
• purchased goods & services (c.87%);
• end of life (c.7%); and
• upstream transportation and distribution (c.4%).
Scope 3
footprint
Our scope 3 carbon footprint
Material emission sources
tCO2e
Purchased goods and services
c.6.2m
c.87%
End of life
Upstream transportation
and distribution
c.0.5m
c.0.3m
c.7%
c.4%
Other business operations
c.0.1m
c.2%
Other Business
Operations
Emissions
Other business operations emissions
Downstream transportation
and distribution
c.0.05m
0.7%
Fuel and energy related
activities
Employee commuting
Capital goods
Use of products sold
Business travel
Waste
c.0.03m
0.4%
c.0.02m
c.0.02m
c.0.01m
c.0.01m
c.0.005m
0.3%
0.3%
0.2%
0.1%
0.1%
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Bunzl plc Annual Report 2022
The most material part of our scope 3 footprint for both
baseline year 2019 and 2021, is associated with the purchased
goods and services category, predominantly our suppliers’
spend on raw materials. The second most significant category
of Bunzl’s footprint is the emissions associated with the
disposal of the products and packaging at the end of the
product’s useful life. The upstream transportation and
distribution of products is also a contributor to the overall
scope 3 footprint. This includes inbound transportation
of goods that are imported or transported domestically
around our business regions; North America, UK & Ireland,
Continental Europe, Latin America and Asia Pacific.
Our material scope 3 emission sources
Overall, c.98% of Bunzl’s scope 3 emissions are associated
with the production, transportation and disposal of products.
This is to be expected given Bunzl’s business function and is
consistent with other companies in the industry. The emissions
associated with the remainder of our business operations
within the footprint boundary (downstream transportation,
employee commuting, waste etc.) account for just c.2% of
scope 3 emissions.
Hotspot
Purchased goods and services
End of life
Upstream transportation and distribution
Source of
emissions
Emissions associated with the
cost of the raw materials our
suppliers require to manufacture
their products. The emission
intensity varies depending
on the product type and the
location of the suppliers, which
in turn is influenced by factors
such as the intensity of the local
electricity grid.
Emissions are driven by the
material type and the disposal
route when the products come
to the end of their useful life.
Depending on whether products
are sent to landfill, incinerated
with energy recovery or recycled
will impact the emission
intensity of each category. The
emissions by business areas will
also be influenced by regional
recycling rates.
Inbound transportation of goods is
differentiated between ‘imports’, which is
typically sea freight (with some air freight into
North America) from Asia and ‘domestic’,
which is road freight within business regions
(between port of arrival and Bunzl’s locations,
and movement of products between
operating companies).
Emissions
examples
• c.35% emissions from spend
• c.69% disposal of pulp
on plastic resins
products
• c.17% pulp based products
• c.9% chemicals
• c.12% disposal of textile
products
• c.6% disposal of packaging
products
• c.55% road transportation
• c.40% sea freight
• c.4% air freight
Example
reduction
activities
• Working with suppliers to
• Continuing to transition
increase the recycled content
of their products (plastic
and paper)
customers to products made
from recyclable materials or
reusable options
• Prioritising lower emission transportation
options such as sea and rail over air freight
• Working with our largest suppliers to set science-based carbon reduction targets of their own
Bunzl plc Annual Report 2022
61
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT SUSTAINABILITY CONTINUED
Supporting
customers
to reduce
the emissions
associated with
our deliveries
To promote efficiency and align with our
customers’ targets, our UK business
Bunzl Cleaning & Hygiene Supplies ‘BCHS’
created a carbon forecast tool to drive
engagement on the emissions associated
with our deliveries and the impact
ordering patterns can have on these.
The tool calculates the emission
reductions that could be achieved by
customers eliminating smaller orders
and increasing their average order value.
It supports customers with their scope 3
emissions reporting, drives efficiency
savings (time, cost and carbon) and has
been shown to be pivotal in securing
new and renewing existing contracts.
Customers also have the option to offset
the remaining emissions (from the
reduced number of deliveries) through
certified schemes if this approach aligns
with their carbon reduction strategy.
Where they choose to do this, the
deliveries Bunzl makes to their locations
are carbon neutral. The success of the
tool has led to its introduction in a
number of other operating companies.
Bunzl Cleaning & Hygiene Supplies
• Calculation of average carbon
emissions associated with the
processing and delivery of all orders
from our branches to a large facilities
management provider’s sites.
• Service implemented with a key
customer with c.5,900 sites across
the UK.
• Before forecast work completed,
c.38,500 deliveries a year with 30%
orders less than £75.
• BCHS agreed with the customer to
implement a new minimum order
value of £75.
• This achieved a 100% reduction in small
orders below £75, which has delivered
a 7% reduction in total deliveries.
• Over the following 12 month period,
the carbon intensity of the contract
reduced by 44% (CO2e per £1,000
spend).
• In addition to the CO2e reduction, BCHS
has committed to offset the remaining
CO2e (185.5 tonnes) through certified
programmes.
Carbon forecast tool:
how it works
Ordering patterns
and customer spend
reviewed, deliveries
and routing mapped
Forecast tool
identifies ordering
adjustments and
carbon savings
Adjustments
made, average
order value
increases and
deliveries
reduce
62
Bunzl plc Annual Report 2022
Bunzl Distribution Spain
• Detailed mapping of all delivery routes
across the country to calculate and
simulate carbon footprint of product
deliveries.
• Service implemented with Grupo
Saona, a foodservice customer, with
50 restaurants across Spain assessed.
• 2,000 deliveries a year with c.75%
orders between €100 to €1,000 and
16% orders below €60.
• Results include a 60% reduction in
small orders below €60 which has
delivered a 10% reduction in total
carbon emissions.
• Total sales with the customer increased
73% with an associated increase in
total deliveries of just 10% due to the
effectiveness of the tool.
• Tool certified by AENOR, to GHG
Protocol Standards.
Q&A
with Grupo Saona
What are your sustainability
objectives ?
This great project with Bunzl is an
example of the various initiatives that
we have been working on for a long
time to achieve a positive impact
within our company. From the
construction of our restaurants to
our daily activities, our strategy
focuses on environmental
improvement. We work to improve
our energy efficiency by promoting
natural light and using appliances
with a high energy rating, we
purchase products well suited to a
circular economy (construction and
decoration materials, furniture,
takeaway food packaging) and we
have started the process to achieve
carbon neutrality, looking at the
food we source and engaging with
initiatives like Bunzl’s CO2 calculator.
What role do you expect your
suppliers to play to help you
achieve your sustainability
objectives?
Our commitment to sustainability
is real. We are motivated by our
innovative, demanding and restless
character and we demand the same
characteristics from our suppliers.
For us the essence of sustainability
and of this project in particular is
that the most effective way to
achieve our collective sustainability
goals is through cooperation and
Bunzl is the best companion for
this. Our alliance with Bunzl is
a partnership where we work
proactively to create a global
strategy for the decarbonisation
of the restaurant sector.
How has the carbon forecast tool
supported you?
The CO2 calculator is a tool that
has helped us reduce the carbon
footprint of the distribution
activities to the 50 Grupo Saona
restaurants in Spain. Transparent,
verified and objective measurement
has been key to the project.
This tool has allowed us to raise
awareness and promote a cultural
change to improve the procurement
activities in our restaurants.
We think the achievements have
been magnificent.
Bespoke carbon
reporting to
customers
Remaining
emissions can be
offset through
certified schemes
Bunzl plc Annual Report 2022
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT SUSTAINABILITY CONTINUED
Providing tailored
solutions
Our customers are acutely aware of,
and responding to, consumer driven
sustainability trends such as the call for
fossil-free materials and the reduction
of certain single-use plastics and are
increasingly requesting products which
are more recyclable, reusable and
climate friendly.
We have an important role in providing
the tailored solutions that respond to
these trends and continue to enable
customers to transition to products
and solutions that support a low carbon
and more circular economy. This unique
ability represents both a competitive
advantage and growth opportunity
for Bunzl.
A key strength of Bunzl is our position in
the supply chain. Our global scale, local
expertise and supply flexibility means
we are perfectly placed to solve the
problems our customers face. Whether
that is helping them transition away
from certain materials, improving the
packaging we supply to be more efficient,
or partnering with innovative new
suppliers to make a difference, we can
access the data and information our
customers need, provide them with
tailored advice and then supply the
solutions they require to respond to
legislation and meet their own targets.
Our progress in 2022
Our businesses have continued to
help transition customers to packaging
products made from alternative materials
and these solutions account for 53%
of total packaging sales across the
Group. The introduction of new single-
use plastics legislation and customers’
efforts to meet their packaging targets
are examples of drivers that have
contributed to the proportion of
alternative packaging sales.
The Group has very limited exposure (2%)
to single-use plastic consumables facing
regulation where some volume reduction
is expected and the proportion of total
Group revenue attributable to non-
packaging products or packaging made
from alternative materials is high at 83%.
Only 2% of revenue generated
from consumables facing regulation
£0.2bn (2%)
Consumables facing
regulation
£1.2bn (10%)
Consumables likely
to transition
£0.6bn (5%)
Packaging with an
important purpose
£2.3bn (19%)
Packaging and products
made from alternative
materials
FOR MORE
INFORMATION
SEE PAGES
240 AND 241
£7.7bn (64%)
Non-packaging products
Group revenue 2022
Group revenue 2022
£12.0bn
£12.0bn
• 83% of Group revenue attributable to non-packaging products or packaging products better suited to a circular economy
• 53% of packaging made from alternative materials in 2022
• New legislation continues to drive sustainability growth opportunities
• Packaging refers to packaging and other products within the foodservice, grocery and retail sectors which are
facing legislation or consumer pressure. We continue to exercise judgement to allocate the sales in 2022 to
non-packaging products and the four packaging categories shown, which are taken at a point in time in the context
of rapidly changing legislation and changes in product composition across a vast range of products. As a consequence,
category adjustments are likely, and we have recognised two category adjustments this year that increase “products
likely to transition” by £0.2bn, with corresponding reductions of £0.1bn in “packaging with an important purpose” and
“products made from alternative materials”, which would also have applied last year. More information on our
packaging categories, and limitations with respect to the product data and related disclosures, are set out in the ESG
Appendix on page 240
One example of how we help customers
transition to alternative packaging
solutions is the work Bunzl Catering
Supplies has been doing in the UK with
one of our longstanding customers,
Wagamama. We helped design and
implement a solution to replace their
current takeaway bowls, which were
made from 0% recycled polypropylene,
with ones made from up to 70% recycled
crystallised polyethylene terephthalate
(CPET) that can be widely recycled by
UK households.
In addition to the improvements made
to the products themselves, we are
supporting Wagamama with their
industry leading Bowl Bank scheme,
which is now in place at all of their
restaurants across the UK. Bowls are
collected by Bunzl Catering Supplies
drivers and returned to branch to be
recycled, which is helping to close the
loop for these products.
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Bunzl plc Annual Report 2022
Q&A
with Bunzl Catering Supplies Managing Director,
Helen Cockerham
What key sustainability challenges
have you seen your customers
in the hospitality sector face over
the last year?
With coronavirus restrictions lifted in
2022, we were delighted to see the
hospitality sector continue its
recovery in the UK. As part of this
recovery we saw an increasing
number of customers re-engage with
the challenges of tackling climate
change and navigating an increasingly
fractured legislative programme
focused on single use plastics and
reforms to waste management.
Throughout 2022, we have been
working closely with our supply
partners to help our customers
navigate the implementation of the
Government’s plastics packaging tax,
hosting regular customer forums,
providing critical mapping tools to
provide line-level analysis of the
impact of the tax and helping our
teams find sustainable solutions for
our customers.
What role do your customers expect
you to take when it comes to
supporting them with their
sustainability objectives?
Our customers expect us to source
and deliver products in an ethical and
responsible way and to support them
in building a sustainable future in a
way that is commercially viable. They
recognise that because we are not
tied to any type of material we will
offer transparent and impartial
advice, helping them to make
informed decisions that support
their ambitions and achieve their
sustainability goals and targets.
Could you explain more about
how you work with your customers
like Wagamama and the value you
are able to add from a sustainability
perspective?
Our customers recognise that we
are ready to work proactively to help
them adopt sustainable product
solutions. Because we have sight of
the complete product journey and
offer transparent advice on products
and materials we supply, we enable
our customers to make well informed
decisions. Supporting Wagamama
with the design of their new home
delivery offer was a great opportunity
for us to demonstrate the value we
can bring to a project, helping to
coordinate key stakeholders across
the supply chain, bringing suppliers
and customers together to
understand the benefits of the
materials used and delivering a
solution that took the whole life cycle
of the product into account. Our work
with Wagamama, and trusted supplier
Faerch, has led to us using our
transport network to deliver the
products and collect them for
recycling. Using existing capacity and
road miles highlights our ability to
efficiently bring innovative solutions
to our industry and support initiatives
like Wagamama’s industry leading
Bowl Bank scheme.
Bunzl plc Annual Report 2022
65
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT SUSTAINABILITY CONTINUED
In focus:
Our sustainability
value proposition
and progress
Data
A deep understanding of our products,
customer sectors, operations and their
regional challenges
Our unique
position
The Bunzl
difference
Access to detailed packaging
data (material type, weight,
composition, certifications,
carbon footprint)
Knowledge of complex
regional and national
legislation and details of
our customer targets
Collecting c.100,000 data
points from c.400 suppliers to
provide packaging information
to our top 10 grocery
customers in North America
Tracking over 900 separate
pieces of enacted plastics
and packaging legislation
across cities, counties, and
states in North America
28,000 delivery locations and
routes mapped in Spain to
populate carbon forecast tool
How it
all comes
together
Our customer in Australia (Ramsay Health
Care) targeted plastic reduction in its
sustainability strategy
66
Bunzl plc Annual Report 2022
Proprietary in-house tools
to present packaging data
reports to customers and
close working relationships
with our suppliers
Expert teams provide
customer-specific advice
and regular updates on
legislation and trends
Own brand packaging
Using our unique position
ranges promoting faster,
in the supply chain to source
more affordable transition
alternative products for our
to alternative materials
customers that comply with
new legislation
16 material footprint tools are
Our expert team in
Bunzl Australia &
New Zealand won an
Australian Packaging
Covenant Organisation
‘Our Packaging Future’
Award for its extensive
sustainable packaging
industry awareness-
raising programme
now in use with customers
across the Group with one UK
retailer paying for packaging
data services from Bunzl
Co-developed a new
paperboard tray with a
grocery customer in North
America made from
sustainably sourced plant-
based fibre with a liner that
can be easily separated for
recycling, leading to a 91%
reduction in plastic across one
of its fresh produce ranges
Over 650 Bunzl own
brand product and
Bunzl Retail Supplies (‘BRS’)
in the UK helped two leading
packaging SKUs made from
retailers to minimise their
alternative materials across
exposure to the UK plastic
four brand names and four
packaging tax by introducing
business areas
new recycled content film roll
with savings of c.£145,000 for
R3 Redistribution Canada,
the customer and c.£1 million
a local Bunzl operating
additional turnover for BRS
company, worked with the
largest convenience store
Bunzl North America has
operator in the country to
supported a large retailer
replace all of their single-use
to meet the requirements
plastic carrier bags with a
of a new ban on expanded
Bunzl own brand paper bag
polystyrene products in New
solution in two sizes to meet
Jersey. Transitioning produce
their needs
trays to alternative materials
increased revenue by over
$0.5 million and this will increase
further in 2024 when meat trays
are added to the ban
Our unique
position
The Bunzl
difference
Access to detailed packaging
data (material type, weight,
composition, certifications,
carbon footprint)
Knowledge of complex
regional and national
legislation and details of
our customer targets
Collecting c.100,000 data
Tracking over 900 separate
points from c.400 suppliers to
pieces of enacted plastics
provide packaging information
and packaging legislation
to our top 10 grocery
across cities, counties, and
customers in North America
states in North America
28,000 delivery locations and
routes mapped in Spain to
populate carbon forecast tool
Knowledge
Our expert teams provide customer-specific
advice and regular updates on new
legislation and trends
Solutions
We are uniquely positioned to supply the
solutions our customers need to meet their
targets, comply with legislation and improve
their sustainability credentials
Proprietary in-house tools
to present packaging data
reports to customers and
close working relationships
with our suppliers
16 material footprint tools are
now in use with customers
across the Group with one UK
retailer paying for packaging
data services from Bunzl
Co-developed a new
paperboard tray with a
grocery customer in North
America made from
sustainably sourced plant-
based fibre with a liner that
can be easily separated for
recycling, leading to a 91%
reduction in plastic across one
of its fresh produce ranges
Expert teams provide
customer-specific advice
and regular updates on
legislation and trends
Own brand packaging
ranges promoting faster,
more affordable transition
to alternative materials
Our expert team in
Bunzl Australia &
New Zealand won an
Australian Packaging
Covenant Organisation
‘Our Packaging Future’
Award for its extensive
sustainable packaging
industry awareness-
raising programme
Over 650 Bunzl own
brand product and
packaging SKUs made from
alternative materials across
four brand names and four
business areas
R3 Redistribution Canada,
a local Bunzl operating
company, worked with the
largest convenience store
operator in the country to
replace all of their single-use
plastic carrier bags with a
Bunzl own brand paper bag
solution in two sizes to meet
their needs
Using our unique position
in the supply chain to source
alternative products for our
customers that comply with
new legislation
Bunzl Retail Supplies (‘BRS’)
in the UK helped two leading
retailers to minimise their
exposure to the UK plastic
packaging tax by introducing
new recycled content film roll
with savings of c.£145,000 for
the customer and c.£1 million
additional turnover for BRS
Bunzl North America has
supported a large retailer
to meet the requirements
of a new ban on expanded
polystyrene products in New
Jersey. Transitioning produce
trays to alternative materials
increased revenue by over
$0.5 million and this will increase
further in 2024 when meat trays
are added to the ban
The Bunzl Australia & New Zealand team
reviewed the customer’s usage data and
mapped appropriate sustainable alternatives
(compliant with future legislation) to create a
transition plan for the customer.
Converted A$800,000 branded products to
own-brand and captured an additional
A$600,000 sales from two competitors.
Sustainability offer contributed to the
award of new 5-year contract.
Bunzl plc Annual Report 2022
67
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT SUSTAINABILITY CONTINUED
Sustainability
governance
We have established a governance
structure to implement our sustainability
strategy and manage the delivery of the
programme across the Bunzl Group.
While principal responsibility for
determining the sustainability strategy,
its implementation and how Bunzl’s
business areas should integrate
sustainability considerations remain
decisions for the Board, we have
established a new Board Sustainability
Committee ‘BSC’ to allow for more
detailed strategic consideration of the
opportunities and risks presented by
sustainability and to supplement the
work of the Board in this area.
To recognise the repositioning of climate
change as a principal risk to the Company
and effectively govern the progress
of our regional carbon roadmaps,
a new Environment & Climate Change
Committee will be established in 2023
and our EHS Committee will become a
Health & Safety Committee as a result.
Like our other governance meetings held
at senior management level (e.g. the
Supply Chain Committee), the groups
will meet four times a year and be
represented by all business areas.
The Environment & Climate Change
Committee will periodically review
performance against our environmental
objectives and track the progress of
emission reduction initiatives across the
Group such as site energy efficiency
improvements, fuel efficiency projects
and renewable energy procurement.
The BSC and Group Sustainability
Committee conduct regular reviews
of climate-related risks and Bunzl’s
performance against the Group’s carbon
reduction and other sustainability targets.
Board Sustainability Committee ‘BSC’
The BSC was established in 2022 and
provides an oversight function to the
Group Sustainability Committee and
comprises all of the independent non-
executive directors and the Chairman
of the Board, who also chairs the
Committee. The CEO, Chief Financial
Officer, Director of Group HR and Head
of Sustainability are also usually invited
to attend Committee meetings. The
Committee will meet at least three
times a year.
Group Sustainability Committee
Our Group Sustainability Committee is
a cross-functional leadership committee
that engages the management teams and
operating companies across our business
areas and provides oversight and
strategic guidance for our programme.
Chaired by our CEO and attended by
members of our executive team, the
Committee meets quarterly to ensure
Bunzl has an ambitious sustainability
strategy, which is subject to effective
governance. It sets targets and monitors
progress while providing support for our
business area sustainability teams.
Sustainability governance structure
Board
Nomination
Committee
Audit
Committee
Board
Sustainability
Committee
Remuneration
Committee
Group Sustainability Committee
Supply Chain
Committee
Environment, Health &
Safety Committee
Business Area Product
Sustainability Committees
Business area and operating company responsibilities
68
Bunzl plc Annual Report 2022
Taskforce on climate related financial disclosures ‘TCFD’
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 are
reported consistent with the TCFD recommendations and disclosures. The index table below provides a reference to where these
disclosures can be found throughout our annual report.
Topic
Disclosure summary
Disclosure
Bunzl response
Governance
Disclose the organisation’s
governance around
climate-related risks
and opportunities.
Describe the Board’s oversight of
climate-related risks and opportunities.
Describe management’s role in assessing
and managing climate-related risks and opportunities.
Governance report: pages 102 and 103,
105 to 108, 111
Principal risks: pages 74 to 76, 82
Sustainability report: page 68
Governance report: pages 102 and 103,
105 to 108, 111
Principal risks: pages 74 to 76, 82
Sustainability report: pages 57 and 58
Strategy
Disclose the actual and
potential impacts of
climate-related risks and
opportunities on the
organisation’s businesses,
strategy and financial
planning.
Risk
management
Disclose how the
organisation identifies,
assesses and manages
climate-related risks.
Metrics and
targets
Disclose the metrics and
targets used to assess
and manage relevant
climate-related risks
and opportunities.
Describe the climate-related risks and opportunities
the organisation has identified over the short, medium
and long term.
Principal risks: page 82
Sustainability report: page 58
Describe the impact of climate-related risks and
opportunities on the organisation’s businesses,
strategy, and financial planning.
Principal risks: page 82
Sustainability report: pages 57 and 58
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 82
Sustainability report: pages 57 and 58
Describe the organisation’s processes for identifying
and assessing climate-related risks.
Principal risks: pages 74 to 76, 82
Sustainability report: pages 57 and 58
Describe the organisation’s processes for managing
climate-related risks.
Principal risks: pages 74 to 76, 82
Sustainability report: pages 57 and 58
Describe how processes for identifying, assessing and
managing climate-related risks are integrated into the
organisation’s overall risk management.
Principal risks: pages 74 to 76, 82
Sustainability report: pages 57 and 58
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 243-244
Non-financial KPIs: page 47
Sustainability report: pages 56, 59 to 61
Disclose Scope 1, Scope 2, and, if appropriate, Scope 3
greenhouse gas (GHG) emissions and the related risks.
ESG Appendix: pages 243 and 244
Non-financial KPIs: page 47
Sustainability report: pages 56, 59 to 61
Describe the targets used by the organisation to
manage climate-related risks and opportunities and
performance against targets.
ESG Appendix: pages 243
Non-financial KPIs: page 47
Sustainability report: pages 56, 59 to 61
Bunzl plc Annual Report 2022
69
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT SECTION 172 STATEMENT
A strategy that benefits all
our stakeholders
Our purpose is to deliver essential business solutions
around the world and create long term sustainable value
for the benefit of all stakeholders.
Bunzl has a global and diverse
community of stakeholders and engaging
proactively is essential to the long term
success of the Company. Feedback
informs the strategic agenda of Bunzl
and ultimately helps the Company grow
sustainably, making better business
decisions for the benefit of all stakeholders.
Bunzl has identified its key stakeholders
on the following pages.
Engagement with stakeholders is
primarily carried out at operational level,
with direct engagement by the Board
taking place where possible and on
pertinent matters. Members of senior
management are accountable to the
Board for their engagement mechanisms
and frequently present on the issues and
concerns of relevant stakeholder groups.
The Board ensures that stakeholders are
considered in its deliberations, and
understands that competing interests will
sometimes need to be weighed against
each other. In these circumstances, it is a
priority of the Board to ensure the fair
treatment of any group that has been
adversely affected.
Bunzl’s open culture and values pave
the way for effective engagement and
underly business decisions, ensuring the
Company fosters meaningful business
relationships with its stakeholders,
maintains high standards of business
conduct and reports transparently on
its activities.
Section 172
The Board of directors of Bunzl plc promotes 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 30
• Acquisitions: page 16
• Our business model: page 32
• Our strategy: page 34
• Shareholder returns: page 9
The interests of the Company’s employees
• Employment policies: page 158
• Employee engagement statement: page 109
• Diversity, equity and inclusion: page 54
• Succession planning: page 116
• Our people: pages 40 and 41
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 impact of the Company’s operations on the community
and the environment
• Sustainability: pages 48 to 68
• TCFD disclosures: page 69
• Carbon emissions: pages 243 and 244
• Community investment: pages 70 to 73
• Non-financial information statement: pages 94 and 95
The desirability of the Company maintaining a reputation for high standards of
business conduct
• Audit Committee report: pages 119 to 131
• Independent auditors’ report: pages 223 to 229
• Whistle blowing: page 246
• Culture and values: page 108
• Non-financial information statement: pages 94 and 95
The need to act fairly as between members of the Company
• Shareholder engagement: page 72
• The Company’s Annual General Meeting: page 156
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Bunzl plc Annual Report 2022
Engaging with our stakeholders
Customers
Colleagues
Relevance to strategy
Customers are central to Bunzl’s purpose of providing essential
business solutions around the world, and Bunzl’s strategy is
formed to achieve this purpose while creating long term value
for the benefit of stakeholders as a whole. A key tenet of our
strategy is organic growth; expanding by developing our
business with current customers and gaining new business
with additional customers.
Relevance to strategy
Bunzl has 22,451 colleagues worldwide. Bunzl’s colleagues
represent our biggest opportunity and are the focus of the
business. The Board carefully considers the interests of
employees in key decisions by engaging with them to ascertain
their thoughts and concerns, and implementing action plans to
address points raised. Recruiting, retaining and developing the
best talent is key to Bunzl’s strategy as it ensures that every
person pulls in the same direction to achieve Bunzl’s purpose.
Concerns and interests
• Customised digital solutions
• Alternative sustainable product expertise, support and
sourcing
• Innovative product solutions
• Competitive prices
• On-time and in-full delivery
• Access to customer service and sales
How we engage
Bunzl maintains frequent dialogue with customers to ensure
ethical and robust supply chains. Customers are supported
with the use of our material footprint tools, which help them
understand their own carbon impact to inform better decision
making and aid the development of new or substantially
improved products. In 2022, we introduced additional material
footprint tools to help customers understand the impact that
legislation will have on packaging and products. This enables
us to help customers prepare for legislative changes by
recommending and sourcing alternatives. See pages 44 and
45 for an example of how we engaged with customers in
Australia and New Zealand to help them navigate complex
plastic legislation.
Outcomes of engagement
Two-way engagement enables Bunzl to respond to customers’
needs and become a true strategic partner to customers,
providing them with a tailored, value-added service and driving
organic growth. In 2022, frequent engagement allowed us to
materially expand our relationship with Tyson Foods in North
America from providing hardware components to supplying a
greater range of products and specialist consumables.
69%
of customer orders
processed digitally
c.30%
of colleagues have
customer-facing roles
Concerns and interests
• Fair remuneration
• Talent development
• A safe working environment
• Good communications
• Career prospects
• Sharing in the Company’s success
• Fair policies and practices
• An inclusive environment
How we engage
In 2022, Bunzl continued with its diversity, equity and inclusion
(‘DEI’) initiatives to enhance inclusivity at Bunzl and rolled
forward the CEO and non-executive director listening sessions
to hear from colleagues around the globe (page 109). During
these sessions, the Board engaged with colleagues on a range of
matters, including pay, new ways of working post-Covid-19 and
local topical issues. The Board also undertook site visits to speak
with employees on the ground (page 111) and reviewed the
responses to the 2022 pulse survey (page 40).
Outcomes of engagement
See the employee engagement statement on page 109 for the
Company’s responses to engagement with employees during
the year.
22,451
employees
85%
sustainable engagement score
Bunzl plc Annual Report 2022
71
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT SECTION 172 STATEMENT CONTINUED
Shareholders
Suppliers
Relevance to strategy
Maintaining shareholder support through building meaningful
relationships is key to Bunzl’s strategy, as our shareholders
influence the long term direction and governance framework of
the Company. Frequent dialogue keeps the Company informed
as to the concerns and interests of our investors and allows the
Company to respond, grow and perform better.
Relevance to strategy
Building strong and trusted partnerships with suppliers is
fundamental to our business model. Our suppliers are our
partners, and collaboration enables Bunzl to innovate, drive
ambitious business solutions and meet customers’ individual
needs. Engagement primarily takes place at operational level,
with executives providing frequent updates on outcomes of
engagement to the Board.
Concerns and interests
• Financial performance
• Resilience
• Ethical supply chains
• Executive remuneration
• Shareholder returns
• Carbon emissions reductions
• Succession planning
• Long term performance
• Strong leadership
• Good governance
• Fair pay for employees
How we engage
Bunzl updates shareholders six times per year on trading
performance and encourages shareholder attendance at the
Annual General Meeting (‘AGM’). Engagement with shareholders
takes place before, during and after the AGM to understand
voting intentions and votes cast. Feedback from investors is
gathered at investor roadshows and is presented back to the
Board for discussion and action. Furthermore, during 2022
Bunzl hosted its first ever Insight Day in the Netherlands for
investors and analysts, showcasing Bunzl Continental Europe’s
growth and customer proposition (see page 21).
Concerns and interests
• Ethical supply chains
• Reliable partnerships
• On-time payment
• Mutual trust
• Improving environmental impacts
How we engage
Bunzl’s Supplier Code of Conduct is in operation across all
suppliers and the Company monitors compliance with this
code with the help of our quality assurance control team in
Shanghai, which works with key suppliers in Asia and beyond to
ensure international standards are met (see page 25). Supplier
conferences are held to showcase best practice and ethical
compliance issues, such as our Vietnamese Supplier Training Day
in October 2022 which was attended by 24 Vietnamese suppliers
and helped them understand Bunzl’s requirements in both social
accountability and quality management systems. Furthermore,
during 2022 Bunzl teams worked with key suppliers to deliver
our new science-based Scope 3 emissions target and the
Director of Group HR presented to the Board on the details of
supplier audits carried out and progress made with previously
audited suppliers.
Outcomes of engagement
For outcomes of engagement with investors on matters relating
to sustainability, see page 51.
Outcomes of engagement
For outcomes of engagement with Bunzl’s suppliers and the
results of supplier audits undertaken during the year, see
page 53.
c.140
meetings with investors
c.1,400
unique downloads of Insight
Day series
930
supplier audits
>10,000
suppliers
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Bunzl plc Annual Report 2022
Environment and community
Relevance to strategy
Sustainability is core to Bunzl’s strategy and long term success
and Bunzl’s culture of continuous improvement drives the
determination to set and meet ambitious climate-related
targets. Bunzl’s decentralised business relies on local suppliers,
recruiting local talent and championing local businesses.
Giving back to the community is core to Bunzl’s values and the
Company participated in a range of community initiatives
throughout the year.
Concerns and interests
• Ambitious climate targets
• Science-backed commitments
• Clear roadmap to net zero
• Ethical supply chains
• Local support
• Community investment
• Cost of living crisis
• Inclusive working practices
• Employing local talent
• Sourcing local products
How we engage
The Board defines the sustainability strategy and oversees
its implementation by Company executives. The Company
maintains dialogue with environmental agencies and informs
customers, employees and suppliers on sustainable practices
in line with best practice and local laws. The Company has also
committed to ambitious targets, with clear roadmaps to
achieving these targets (see page 59). To benefit the wider
community, Bunzl forms partnerships with charities to fund
social, ethical and environmental causes that are championed
by our local businesses (see page 247).
Outcomes of engagement
In 2022, our Scope 1, 2 and 3 emissions targets were approved
by the Science Based Targets initiative and following engagement
with stakeholders, we formed the Board Sustainability
Committee to further enhance governance of the Company’s
strategy (page 68).
15%
reduction in Scope 1 and 2
carbon emissions since 2019
£200k
and essential items donated
to support relief efforts in
Ukraine and neighbouring
countries
Key decisions
throughout the year
Warehouse consolidation
Decision
In 2022, the Board considered the consolidation of two
warehouses in the US and the installation of new technology that
would sort outbound orders to customers more efficiently, ease
the Company’s reliance on external labour to supplement
warehouse staff shortages in the US, and reduce labour costs.
See page 16 for more information.
Considerations
• Long term strategy: the strategic aims of the business,
including the reductions of redundant costs in warehouse
space, investment in automation to maximise warehouse
utilisation and achievement of cost efficiencies;
• Environment: the positive impact on the environment of
footprint consolidation;
• Colleagues: the impacts of the consolidation on the staff
at the Nevada and California warehouses and the impacts of
automation on physically demanding labour practices;
• Customers: the impact of automation on the accuracy of the
sorting process, the delivery experience of customers and the
ability of Bunzl to increase its operational capacity; and
• Shareholders: the proposed cost and benefits of the project,
bringing operations in line with market expectations and the
positive impact on the Company’s operating profit.
Outcome
The Board decided that the consolidation and investment in new
technology would benefit the Company and its stakeholders as a
whole in the long term by increasing operating efficiency and
quality, bringing market-appropriate service level in line with
customer and segment expectations, and enabling the Company
to price services more competitively.
Acquisitions
Decision
During 2022, the Board considered acquisition proposals in line
with the Company’s acquisition growth strategy. For information
on acquisitions during the year, see page 16.
Considerations
• Long term strategy: the risks and opportunities associated with
each acquisition;
• Environment and community: the environmental, social and
governance initiatives of target companies and the values of
the companies in relation to sustainability;
• Shareholders: the impact of acquisitions on shareholder value;
• Colleagues: the impact of the acquisitions on Bunzl’s
employees and the employees of target companies, including
the alignment of company cultures; and
• Suppliers: the impact of acquisitions on Bunzl’s suppliers.
Outcome
The Board approved the acquisition proposals that it believed
would be beneficial to the long term interests of the Company
and Bunzl’s stakeholders as a whole, taking into account the
considerations above.
Bunzl plc Annual Report 2022
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC 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
Inherent risk
assessment
• 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
• 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.
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Bunzl plc Annual Report 2022
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 2022.
Risk management
The Board
Establishes the nature
and extent of risk the
Group is willing to accept
(its ‘risk appetite’) in
pursuit of Bunzl’s
strategic objectives.
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.
Continuously monitors
and oversees the
Group’s risk management
and internal controls
processes and
procedures.
The Audit Committee
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 biannually,
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 111 and 112 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 2022
75
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC 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:
Organic growth
Acquisition growth
Operating model improvements
Sustainability
The nature and type of the principal risks
and uncertainties affecting the Group
have changed slightly since the 2021
Annual Report. The risk presented by
climate change is now considered a
principal risk. As with most companies,
climate change could present some
challenges to our business over the
medium and long term. Although we
have mitigating actions in place, Bunzl
may face increasing physical risks from
climate change, including potential
damage to our assets from extreme
weather and indirect physical risks in
our supply chains or for customers. In
addition to the physical risks associated
with climate change, the transition to a
low carbon or net zero economy may, to
some extent, impact Bunzl’s operating
and commercial environments through
policy, legal, technology and market
changes (transition risk).
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.
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.
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Bunzl plc Annual Report 2022
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 2022
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
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
• The Group operates in highly
• The Group’s geographic and
• 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
market 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 monitors significant
• In 2022 the Group did not
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
encounter material insolvencies of
either a large customer or a
significant number of smaller
customers. However, this remains
a significant risk given the potential
for global economic downturn
• In 2022, provisions relating to the
Group’s credit exposure from
customers remained broadly
unchanged
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
• 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)
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC 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 2022
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 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 or customers,
indexed or cost plus contracts 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
4. Cost inflation
Profits are reduced
due to 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
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
• 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
• The Group sources its products
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
• In 2022 the Group experienced
a higher level of price volatility
compared to recent years. In
particular, significant product cost
inflation was seen in paper and
plastic products due to a range of
factors including energy price
increases. The outlook for product
costs, however, remains uncertain
• The Group experienced inflation of
both product cost and operating
costs in 2022 at a significantly
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. Overall, the Group was very
successful in passing on product
cost inflation
• 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 2022
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 2022
• The acquisition pipeline is closely
monitored with continued
research of any available
opportunities for investment
• During 2022, the Group’s
committed acquisition spend was
£322 million and the pipeline
remains active
• The Board reviews performance of
recent acquisitions annually. In
2022 the Board reviewed the
principal acquisitions made in 2020
and noted that performance was
in line with expectations
Strategic risks continued
5. Inability to make
further acquisitions
Profit growth is
reduced from the
Group’s inability to
acquire new
companies
• 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 195 acquisitions since
2004
• Insufficient acquisition
Risk owner:
CEO and Business
Area Heads
Change to risk level:
Included in viability
statement: Yes
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
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
• Inadequate pre-acquisition due
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
• The Group maintains a large
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
• The Group has established
processes 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
Bunzl plc Annual Report 2022
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC 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 2022
Strategic risks continued
• 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 ranges
• In response to a larger number of
customers setting increasingly
ambitious targets for their
packaging, the Group has
continued to strengthen its expert
sustainability teams who train
customers on incoming legislation,
hold customer forums where they
showcase the latest products, and
support customers to report
effectively against their goals and
participate 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
7. Sustainability
driven market
changes
Revenue and profits
are reduced due to
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
• New legislation introduced outside
Europe and the UK in countries
where Bunzl operates mirrors (and
in some cases is more impactful
than) 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.
Legislation related to packaging
still remains extremely fragmented
across different regions
• Consumer awareness of the
environmental impact of certain
single-use plastic products
continues to grow and the concept
of single-use consumable items
and society’s reliance on them is
regularly questioned. The issue is
now widespread in all of Bunzl’s
regions and is growing in
importance from a customer
perspective. 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 renewable,
recyclable or reusable alternatives
• The Group’s revenue and profits
could be reduced if it is unable to
offer packaging and products
made from alternative materials
that will replace products that
cannot be sold due to legislation,
or products where demand is
lower due to changes in consumer
preferences, for example a move
to more reusable packaging
• Bunzl is well positioned to support
its customers with the legislative
complexity thanks to its material
agnostic position and network
strength, allowing it to deliver the
right products across large
multi-site customer operations
• Bunzl’s scale and unique position
at the centre of the supply chain,
supported by expert sustainability
managers, gives the Group an
opportunity to provide customers
with advice about alternative
products which are recyclable,
compostable, biodegradable or
reusable
• The Group has access to an
extensive supply chain of product
and packaging manufacturers that
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 has access to the
proprietary data on the packaging
and products our customers need.
That, coupled with the Group’s
detailed product knowledge and
data on customer product usage,
ensures that the Group is well
positioned to be able to support its
customers in shaping and
achieving their sustainability
strategies
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
• Concurrent with the Group’s IT
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
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 Chief
Information Security Officer
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 for
acquired companies
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Bunzl plc Annual Report 2022
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 2022
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
• The availability of funding to the
Group remains strong
• The Group issued a $400 million
US private placement during 2022
with three tranches maturing in
2029, 2031 and 2032. This debt
issuance contained an MFN clause
whereby the financial covenants
in this bond will fall away when
the existing last US private
placement matures in 2028.
There is £161 million of debt
maturing in the next 12 months
which can be repaid from free
cash flow. The Group maintains
a BBB+ rating from S&P and
therefore access to the Eurobond
public market
• In 2022 currency translation had a
positive impact on the Group’s
reported results, increasing
revenue, profits and earnings by
between 6% and 7%
• The Group’s results are reviewed
at constant exchange rates to
show the underlying performance
of the Group excluding the
currency translation impact
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
• The majority of the Group’s
• The Group does not hedge the
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
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 2022
81
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC 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 2022
Financial risks continued
11. Climate change
Change in
temperature and
climate conditions
that causes business
disruption and
economic loss for the
Group
Risk owner:
CEO and Business
Area Heads
Change to risk level:
New risk
Included in viability
statement: No
• Certain markets and regions are
increasingly affected by extreme
weather (e.g. suppliers and
customers in areas impacted by
wildfires and flooding) which
could, in some areas, impact the
Group’s commercial strategy
• Failure to align with customers’
ambitions could lead to
reputational damage and loss of
sales
• The Group may face indirect costs
from carbon intensive products
where carbon prices increase and
no suitable substitute materials
exist
• Bunzl’s supply chain flexibility and
lack of fixed manufacturing assets
provide operational resilience to
the physical impacts of climate
change. Our established business
continuity planning has helped to
ensure continued service to
customers in cases of weather-
related disruptions, such as
Hurricane Katrina in North
America and the Australian
wildfires.
• Setting emissions reduction
targets to decarbonise our
operations and those of the supply
chain helps to ensure our activities
meet or exceed customer
expectations
• The ability to pass through any
increased costs of products in our
supply chain (for example due to
carbon pricing mechanisms) to
customers
• The group has reclassified the
impact of climate change as a
principal risk, based on our
modelling of its impacts on Group
profit under various scenarios
• The Group’s modelling of the
impact of climate change has been
updated to include the latest data
available from the Network for
Greening the Financial System
(NGFS) and now assesses the
impact of climate change on GDP
at the regional level, the impact of
carbon pricing on total supply
chain carbon dioxide emissions
rather than emissions relating only
to the purchase of plastic and
rubber products, and the
trajectory of the reduction of
carbon dioxide emissions over
time based upon NGFS data rather
than a standalone forecast of
emissions from the plastics and
rubber industries
• The Group has re-evaluated the
different transition scenarios in
light of COP26 and other
commitments by leading nations
and now considers the likelihood
of the Orderly scenario, reflecting
Net Zero 2050, to be ‘probable’
(previously considered ‘possible’)
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Bunzl plc Annual Report 2022
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 2025.
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 three
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 2025.
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 18 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 base case
financial projections. The base case
financial projections start with the
Group’s 2023 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 25% 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, 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 50% compared to the base case or
an increase in net debt of over 240%.
Bunzl plc Annual Report 2022
83
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT TRUSTED, RELIABLE DELIVERY
Trusted
to perform
Bunzl’s resilience is
demonstrated by our
performance track record
Operational resilience
Resilience is embedded at every level of Bunzl’s
operations. Our decentralised nature empowers
individual businesses within the Group with the
agency and agility to quickly respond to challenges.
We have a strong culture of operational efficiency,
which is a central pillar of our strategy, maximising
the returns we generate. The strength and depth of
our global supply chain is also a key asset, with
customers relying on our sourcing capabilities.
READ MORE:
TRUSTED TO DELIVER
PAGE 24
Compounding
growth resilience
Bunzl’s demonstrable operational and financial
resilience supports our compounding growth
strategy. We generate more new business
opportunities as customers feel reassured by the
reliability of our sourcing capabilities. Our financial
strength also allows us to make investments to
support our customers through challenging times,
as well as in the latest sustainability and digital
innovations. The benefits of joining the Bunzl Group
are also highlighted to acquisition prospects during
periods of difficulty.
READ MORE:
STRATEGY
PAGE 34
84
Bunzl plc Annual Report 2022
Portfolio resilience
Bunzl supplies a diverse range of essential products
and solutions to our customers globally and across
different sectors. The essential nature of these
products and our customers’ reliance on them
supports the resilience of the Group. Furthermore,
approximately 75% of our revenue is generated in
the more resilient cleaning & hygiene, grocery,
foodservice and healthcare sectors.
READ MORE:
AT A GLANCE
PAGE 6
c.75%of our revenue is generated in
the more resilient cleaning &
hygiene, grocery, foodservice
and healthcare sectors.
Financial resilience
Bunzl has a long track record of growing revenue and adjusted operating
profit1, delivering 9% to 10% CAGR in both measures since 2004. Our cash
generation is consistently robust, and our balance sheet is healthy. This
positions us to self-fund acquisitions to fuel our growth, and allows us to
support the businesses in our portfolio when they face short term challenges.
1 Alternative performance measure (see Note 3 on page 178).
Dividend per
share CAGR
9.6%
62.7
30years of consecutive annual
dividend increases
4.0
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
Bunzl plc Annual Report 2022
85
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
FINANCIAL REVIEW
Strongly positioned for
continued acquisition
investment
Richard Howes
Chief Financial Officer
After achieving further growth in
2022, Bunzl has sustained 30 years
of consecutive annual dividend
growth.”
Revenue
Up 17.1% at actual exchange rates
(2021: £10.3bn)
£12.0bn
+9.8%†
Operating profit
Up 12.6% at actual exchange rates
(2021: £623.3m)
£701.6m
+6.0%†
Adjusted operating profit*
Up 17.7% at actual exchange rates
(2021: £752.8m)
£885.9m
+11.1%†
Adjusted earnings per share*
Up 13.4% at actual exchange rates
(2021: 162.5p)
184.3p
+7.0%†
Cash conversion*
Continued strong cash conversion
107%
(2021: 102%)
Dividend per share
Long track record of dividend
growth continues
(2021: 57.0p)
62.7p
+10.0%
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Bunzl plc Annual Report 2022
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 178).
2022
£m
2021
£m
Growth as
reported
Growth at
constant
exchange
17.1%
17.7%
17.2%
13.4%
10.0%
12.6%
11.6%
6.8%
9.8%
11.1%
10.5%
7.0%
6.0%
5.0%
0.5%
12,039.5
885.9
818.0
184.3p
62.7p
701.6
634.6
141.7p
43.0%
15.0%
107%
10,285.1
752.8
698.2
162.5p
57.0p
623.3
568.7
132.7p
43.3%
15.1%
102%
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 178.
Currency translation
Currency translation has had a positive impact on the Group’s reported results, increasing revenue, profits and earnings
by between 6% and 7%. The positive exchange rate impact was principally due to the effect on average exchange rates of the
weakening of sterling against certain currencies during the year, particularly the US dollar, Australian dollar, Canadian dollar and
Brazilian real, partly offset by the strengthening of sterling against the Euro.
Average exchange rates
US$
Euro
Canadian$
Brazilian real
Australian$
Closing exchange rates
US$
Euro
Canadian$
Brazilian real
Australian$
2022
1.24
1.17
1.61
6.38
1.78
2022
1.20
1.13
1.63
6.35
1.77
2021
1.38
1.16
1.72
7.42
1.83
2021
1.35
1.19
1.71
7.54
1.86
Revenue
Revenue increased to £12,039.5 million (2021: £10,285.1 million), an increase of 9.8% at constant exchange rates and 17.1% at actual
exchange rates, due to underlying growth of 6.6%, from very strong growth in the base business driven by product cost inflation,
which was partly offset by the expected reduction in sales of the top Covid-19 related products. Acquisitions net of disposals added
3.0% and excess growth in hyperinflationary economies added 0.2%.
Movement in revenue (£m)
12,500
12,000
11,500
11,000
10,500
10,000
9,500
9,000
8,500
676.0
20.9
10,285.1
723.6
333.9
12,039.5
2021 revenue
Currency translation
Excess growth in
hyperinflationary
economies
Underlying revenue
growth
Acquisitions
net of disposals
2022 revenue
Bunzl plc Annual Report 2022
87
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
FINANCIAL REVIEW CONTINUED
Operating profit
Adjusted operating profit was £885.9 million (2021: £752.8 million), an increase of 11.1% at constant exchange rates and 17.7% at
actual exchange rates, including an £8.0 million adverse impact from hyperinflation accounting adjustments. At both constant and
actual exchange rates operating margin increased to 7.4% from 7.3% in 2021. This improvement in operating margin reflects
a positive impact from inflation and acquisitions partially offset by the reduction in profits relating to Covid-19 related products,
a recovery in typically lower margin sectors within our base business and the impact of hyperinflation accounting.
During 2022, the Group has seen a net utilisation of approximately £5 million in trade receivables and slow moving inventory
provisions, with usage of these provisions exceeding net charges to increase the provisions. In addition, the Group has seen some
utilisation of the additional provisions set up in the prior year as a result of market price movements on certain Covid-19 products.
Movement in adjusted operating profit (£m)
950
900
850
800
750
700
650
600
752.8
(8.0)
44.8
96.3
885.9
2021 adjusted
operating profit
Currency translation
Hyperinflation accounting
adjustments
2022 growth◊
2022 adjusted
operating profit
◊ Excluding hyperinflation accounting adjustments
Operating profit was £701.6 million (2021: £623.3 million), an increase of 6.0% at constant exchange rates and 12.6% at actual
exchange rates. Operating profit in the year is after a £22.8 million adverse impact from hyperinflation accounting adjustments and
impairment. This comprises a £9.8 million adverse impact from hyperinflation accounting adjustments, including an £8.0 million
charge to adjusted operating profit and a £1.8 million charge to customer relationships amortisation, and also a £13.0 million
impairment charge relating to the customer relationships assets of the Group’s businesses in Turkey.
Movement in operating profit (£m)
623.3
38.6
(22.8)
96.3
(33.8)
701.6
775
725
675
625
575
525
475
2021 operating profit
Currency translation
Hyperinflation
accounting adjustments
and impairment
Growth in adjusted
operating profit◊
Increase in customer
relationships, brands and
technology amortisation and
acquisition related items*
2022 operating profit
* Excluding hyperinflation accounting adjustments and impairment charges
Customer relationships, brands and technology amortisation and acquisition related items 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 £67.9 million, an increase of £10.3 million at constant exchange rates (up £13.3 million at
actual exchange rates), mainly due to a net monetary loss from hyperinflation accounting of £10.7 million, with the impact of higher
interest rates and higher average debt offset by fair value gains on interest rate derivatives.
Profit before income tax
Adjusted profit before income tax was £818.0 million (2021: £698.2 million), up 10.5% at constant exchange rates (up 17.2%
at actual exchange rates), due to the growth in adjusted operating profit partly offset by the increase in net finance expense.
Profit before income tax was £634.6 million (2021: £568.7 million), an increase of 5.0% at constant exchange rates (up 11.6% at
actual exchange rates).
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Bunzl plc Annual Report 2022
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 24.6% (2021: 22.3%) and the
reported tax rate on statutory profit was 25.2% (2021: 22.1%). The effective and reported tax rates for 2022 are higher than for 2021
as expected due to a lower benefit from removing prior year exposures. The Group’s effective tax rate is expected to increase to be
between 25.0% and 25.5% in 2023 due to the rise in the UK corporation tax rate from 19% to 25% from April 2023.
The Group no longer identifies an increase in taxation as a principal risk for the Group, although the future tax rate could still be
affected by legislative changes or the resolution of prior year tax matters.
The Group is monitoring the progress of draft legislation for a global minimum tax rate, as proposed by the OECD, to be set at 15%
and expected to take effect from 2024. Profits generated in countries with a tax rate below this level are likely to be an insignificant
proportion of the Group’s profit as a whole, and the Group does not benefit to any significant extent from any tax incentives.
Further analysis of the potential impact on the Group’s effective tax rate will be carried out during 2023, when the rules are
expected to be finalised and enacted.
Earnings per share
Profit after tax increased to £474.4 million (2021: £442.8 million), up 0.8% and an increase of £3.8 million at constant exchange
rates (up 7.1% at actual exchange rates), due to a £30.3 million increase in profit before income tax, partly offset by a £26.5 million
increase in the tax charge at constant exchange rates. Profit after tax for the year bears a £21.2 million adverse impact from
hyperinflation accounting adjustments, and also a hyperinflation accounting related impairment charge of £13.0 million to the
customer relationships assets in the Group’s businesses in Turkey partly offset by a tax credit of £2.5 million related to the
impairment charge.
Adjusted profit after tax was £616.8 million (2021: £542.5 million), up 7.3% and an increase of £41.8 million at constant exchange
rates (up 13.7% at actual exchange rates), due to a £78.0 million increase in adjusted profit before income tax, partly offset by a
£36.2 million increase in the tax on adjusted profit before income tax at constant exchange rates. Adjusted profit before tax for the
year bears a £19.4 million adverse impact from hyperinflation accounting adjustments, comprising an £18.7 million adverse impact
to adjusted profit before income tax and a £0.7 million increase in the tax charge.
The weighted average number of shares in issue increased to 334.7 million from 333.8 million in 2021 due to employee share option
exercises partly offset by share purchases into the employee benefit trust.
Basic earnings per share were 141.7p (2021: 132.7p), up 0.5% at constant exchange rates (up 6.8% at actual exchange rates).
Adjusted earnings per share were 184.3p (2021: 162.5p), an increase of 7.0% at constant exchange rates (up 13.4% at actual
exchange rates).
Movement in basic eps (p)
22.5
(7.5)
8.3
132.7
(9.5)
(4.4)
(0.4)
141.7
170
160
150
140
130
120
110
100
2021 basic EPS
Currency
translation
Increase in adjusted
profit before income
tax excluding
hyperinflation
accounting
adjustments
Increase in
adjusting items*
Hyperinflation
accounting
adjustments and
impairment
Increase in
reported tax rate
Increase in
weighted average
number of shares
2022 basic EPS
* Excluding hyperinflation accounting adjustments and impairment charges
Bunzl plc Annual Report 2022
89
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT FINANCIAL REVIEW CONTINUED
Movement in adjusted eps (p)
162.5
9.8
22.5
(5.9)
(4.1)
(0.5)
184.3
200
190
180
170
160
150
140
130
120
2021 adjusted EPS
Currency translation Increase in adjusted
profit before income
tax excluding
hyperinflation
accounting
adjustments
Hyperinflation
accounting
adjustments
Increase in effective
tax rate
Increase in weighted
average number
of shares
2022 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)
2022
17.3
45.4
62.7
2.9
Growth
6.8%
11.3%
10.0%
2021
16.2
40.8
57.0
2.9
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 2022 final dividend of 45.4p,
an increase of 11.3% on the amount paid in relation to the 2021 final dividend. The 2022 total dividend of 62.7p is 10.0% higher than
the 2021 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 2022, Bunzl has
sustained 30 years of consecutive annual dividend growth to shareholders.
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 74 to 82. 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 2022 Bunzl plc had sufficient distributable reserves to cover more than seven years of dividends at the
levels of those delivered in 2022, which is expected to be approximately £210 million.
Acquisitions
The Group completed 11 acquisitions during the year ended 31 December 2022 with a total committed spend of £319.3 million.
Including the acquisition of GRC, which was agreed in 2022 but completed on 1 January 2023, total committed spend on acquisitions
agreed and completed during the year was £322.2 million. The estimated annualised revenue and adjusted operating profit of the
acquisitions completed and agreed during the year were £299 million and £29 million respectively.
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 overdrafts acquired
Transaction costs and expenses
Total committed spend in respect of acquisitions completed in the current year
Spend on acquisition committed but not completed at year end
Total committed spend in respect of acquisitions agreed in the current year
£m
128.6
106.6
235.2
180.6
54.6
235.2
66.4
6.8
10.9
319.3
2.9
322.2
90
Bunzl plc Annual Report 2022
The net cash outflow in the year in respect of acquisitions comprised:
Cash consideration
Net overdrafts acquired
Deferred consideration payments
Net cash outflow in respect of acquisitions
Acquisition related items*
Total cash outflow in respect of acquisitions
£m
180.6
6.8
56.2
243.6
20.6
264.2
* Acquisition related items comprise £11.0 million of transaction costs and expenses paid and £9.6 million of payments relating to the retention of former owners.
Disposal
The Group completed the disposal of its UK Healthcare division on 19 December 2022. As a result, the net assets of the Group
increased by £0.9 million, representing the profit on disposal of £0.9 million, with a net cash inflow of £49.9 million.
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 (payments)/receipts relating to employee share schemes
Net cash inflow before acquisitions and disposals
Acquisitions◊
Disposals
Net cash inflow/(outflow)
† Before acquisition related items.
◊ Including acquisition related items.
2022
£m
1,145.8
(175.1)
(45.7)
925.0
(45.7)
(173.6)
705.7
(190.5)
(31.9)
483.3
(264.2)
49.9
269.0
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 £705.7 million was £180.3 million higher than in 2021, primarily due to the increase in operating cash
flow of £183.4 million and a lower cash outflow relating to tax, partly offset by an increase in net interest paid excluding interest on
lease liabilities. The Group’s free cash flow was used to finance an acquisition cash outflow of £264.2 million (2021: £452.7 million),
dividend payments of £190.5 million in respect of 2021 (2021: £180.4 million in respect of 2020) and net payments of £31.9 million
(2021: net receipts of £19.5 million) relating to employee share schemes. Cash conversion (being the ratio of operating cash flow as
a percentage of lease adjusted operating profit) was 107% (2021: 102%).
Operating cash flow
Adjusted operating profit
Add back depreciation of right-of-use assets
Deduct payment of lease liabilities
Lease adjusted operating profit
2022
£m
925.0
885.9
151.1
(175.1)
861.9
2021
£m
741.6
752.8
134.8
(158.9)
728.7
Cash conversion (operating cash flow as a percentage of lease adjusted operating profit)
107%
102%
Net debt
Net debt excluding lease liabilities decreased by £177.3 million during the year to £1,160.1 million (2021: £1,337.4 million), due
to a net cash inflow of £269.0 million and a non-cash decrease in debt of £8.2 million partly offset by a £99.9 million increase due
to currency translation. Net debt including lease liabilities was £1,730.0 million (2021: £1,826.1 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 1.2 times (2021: 1.6 times) and would have been 1.3 times excluding the benefit from the
disposal of the UK healthcare division. Net debt to EBITDA calculated at average exchange rates including lease liabilities was
1.5 times (2021: 1.9 times).
Bunzl plc Annual Report 2022
91
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT FINANCIAL REVIEW CONTINUED
Balance sheet
Summary balance sheet at 31 December:
Intangible assets
Right-of-use assets
Property, plant and equipment
Working capital
Deferred consideration
Other net liabilities
Net pension surplus
Net debt excluding lease liabilities
Lease liabilities
Equity
Return on average operating capital
Return on invested capital
2022
£m
3,093.9
529.6
137.2
1,096.6
(139.9)
(306.4)
4,411.0
39.9
(1,160.1)
(569.9)
2,720.9
2021
£m
2,766.8
448.3
120.9
1,027.6
(107.8)
(257.0)
3,998.8
31.2
(1,337.4)
(488.7)
2,203.9
43.0%
15.0%
43.3%
15.1%
Return on average operating capital decreased slightly to 43.0% from 43.3% in 2021, driven by an adverse impact from currency
translation. Return on invested capital of 15.0% was slightly down from 15.1% in 2021 with an adverse impact from currency
translation and acquisitions partly offset by higher returns in the underlying business.
Intangible assets increased by £327.1 million to £3,093.9 million due to intangible assets arising on acquisitions in the year of
£235.7 million, an increase from currency translation of £220.3 million, a net increase from hyperinflation adjustments of
£28.7 million and software additions of £12.0 million, partly offset by an amortisation charge of £137.2 million, a decrease from
disposal of businesses of £19.4 million, and an impairment charge of £13.0 million relating to the customer relationships assets
in the Group’s Turkish businesses.
Right-of-use assets increased by £81.3 million to £529.6 million due to additional right-of-use assets from new leases during the
year of £123.3 million, an increase from remeasurement adjustments of £56.6 million, an increase from currency translation of
£32.7 million and an increase from acquisitions of £21.5 million, partly offset by a depreciation charge of £151.1 million and a
decrease from disposal of businesses of £1.7 million.
Working capital increased from the prior year end by £69.0 million to £1,096.6 million mainly due to an increase from currency
translation of £100.8 million, £41.0 million from acquisitions, and £2.6 million from hyperinflation adjustments in Turkey and
Argentina, partly offset by an underlying decrease of £54.5 million as shown in the cash flow statement and a decrease from
disposal of business of £27.5 million.
Deferred consideration increased by £32.1 million to £139.9 million due to charges relating to the retention of former owners and
adjustments to previously estimated earn outs of £30.2 million, £54.6 million of deferred consideration recognised on current year
acquisitions and an increase from currency translation of £8.2 million, partly offset by deferred consideration and retention
payments of £60.9 million.
The Group’s net pension surplus of £39.9 million at 31 December 2022 has increased by £8.7 million from the net pension surplus of
£31.2 million at 31 December 2021, principally due to cash contributions of £9.2 million and an actuarial gain of £6.9 million partly
offset by £4.8 million of current service costs. The actuarial gain principally arose from a decrease in pension liabilities due to an
increase in discount rates partly offset by lower than expected returns on pension scheme assets.
Shareholders’ equity increased by £517.0 million during the year to £2,720.9 million.
Movement in shareholders’ equity (£m)
474.4
2,800
2,700
2,600
2,500
2,400
2,300
2,200
2,100
92
2,203.9
2021
shareholders’
equity
47.5
5.5
15.3
2,720.9
(28.9)
(190.5)
193.7
Currency
(net of tax)
Profit for
the year
Dividends
Hyperinflation
accounting
adjustments
Actuarial gain on
pension schemes
(net of tax)
Share based
payments
(net of tax)
Employee
share options
(net of tax)
2022
shareholders’
equity
Bunzl plc Annual Report 2022
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.
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.
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 2022 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 USPPs issued in March 2022 contain a clause whereby upon maturity of the
previously issued USPPs, the latest maturity being in 2028, the principal financial covenants referred to above will no longer apply.
In addition, during August 2022, these principal financial covenants were removed from the Group’s committed bank facilities.
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 2022 the nominal value of US private placement notes outstanding was
£1,126.4 million (2021: £834.7 million) with maturities ranging from 2023 to 2032. At 31 December 2022 the available committed
bank facilities totalled £963.6 million (2021: £996.2 million) of which none (2021: £14.5 million) was drawn down, providing
headroom of £963.6 million (2021: £981.7 million). During 2022, the Group issued $400m of US private placement notes which
mature in three tranches in 2029, 2031 and 2032. During the year, £100 million of bank facilities were extended from 2025 to 2026
and the Group expects to extend additional bank maturities further during 2023. The Group expects to make repayments in 2023
of approximately £161 million relating to maturing US private placement notes.
Committed facilities maturity profile by year (£m)
1000
800
600
400
200
0
411
300
176
2025
84
161
2023
205
138
2024
209
131
2026
55
146
2027
42
2028
108
2029
400
2030
112
2031
112
2032
US private placement notes
Senior bonds
Bank facilities – drawn
Bank facilities – undrawn
Further details of the Group’s capital management and treasury policies and controls are set out in Note 18 on pages 194 to 201.
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 168.
Richard Howes
Chief Financial Officer
27 February 2023
Bunzl plc Annual Report 2022
93
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT NON-FINANCIAL INFORMATION STATEMENT
Non-financial
information statement
In accordance with sections 414CA and 414CB of the
Companies Act 2006, the information below sets out
how we comply with each reporting requirement
and where further information can be found.
Reporting requirement
Key matters
Relevant policies and standards
Further information
Social matters
Developing responsible supply chains
Promoting a healthy corporate culture
Business standards of behaviour
Employees
Encouraging employees to raise matters of concern
Where employees have concerns relating to failures to adhere to standards, they can report such concerns on a
confidential and anonymous basis using our ‘Speak Up’ Policy.
Investing in our people and a diverse workforce
Providing our employees with a safe working environment
Human rights,
anti-corruption
and anti-bribery
Prevention of bribery, corruption and fraud
Promoting ethical supply chains
Approach to human rights and modern slavery
Revised by the Board this year, our Modern Slavery Statement sets out the steps that we take to ensure, as far as
possible, that slavery and human trafficking do not exist in our supply chain or any part of our business.
READ MORE ON
PAGES 239 AND 246
Environmental
matters
Taking action on climate change
Reducing our impact on the environment
Providing sustainable solutions
Our Supplier Code of Conduct, Global Supply Chain Solutions team and partnership with leading NGO, Stop the
Traffik, are some of the measures we take to ensure that products are sourced responsibly and that adequate
READ MORE ON
PAGES 51 TO 53
standards are maintained throughout our supply chains.
Our values underly the way we conduct our business and ensure that all of our colleagues are working towards
the common goal of creating long term sustainable value for the benefit of all stakeholders.
Our Business Code of Conduct and Code of Conduct Policy ensure that all business is conducted according to
rigorous ethical, professional and legal standards.
READ MORE ON
PAGE 108
READ MORE ON
PAGE 246
READ MORE ON
PAGE 246
Our Diversity, Equity and Inclusion Policy was reviewed this year and ensures that employees are treated fairly
and equally and that diversity is embraced. We also offer extensive learning and development opportunities to
READ MORE ON
PAGES 54 AND 55
equip employees with the skills and experience they need to succeed and grow in their roles.
The Bunzl Health & Safety Policy ensures that high standards of health & safety are maintained throughout the
business. Incidents are monitored and reported to the Board periodically, which enables the Board to take action
READ MORE ON
PAGES 244 AND 245
when necessary.
Our Anti-Bribery and Corruption Policy outlines the behaviour and principles required of employees to prevent
any form of bribery or corruption. Additionally, we have a Fraud Policy in place, we conduct a rigorous Fraud Risk
READ MORE ON
PAGES 119 TO 131
Assessment annually and the Board regularly receives and considers whistle blowing updates.
Our Supplier Code of Conduct defines the principles and standards that we expect suppliers to understand and
adhere to. This is supported by our industry-leading sourcing and auditing operation in Shanghai, which works in
partnership with suppliers in high risk regions to ensure the highest standards of product quality and respect for
READ MORE ON
PAGES 52 AND 53
human rights in our supply chain.
We are supporting the recommendations made by the Task Force on Climate related Financial Disclosures and
have joined the UN Race to Zero campaign by formally committing to the Business Ambition for 1.5°C.
Our Environment Policy promotes the efficient use of resources and energy in our supply chain and ensures
a Group wide commitment to continual improvement and compliance with environmental legislation
and regulations.
READ MORE ON
PAGE 69
READ MORE ON
PAGES 48 TO 68
Our material footprint tools help customers understand the carbon impact of the products they source, helping
us to work with them to find sustainable solutions that are better suited to a more circular economy.
READ MORE ON
PAGE 51
94
Bunzl plc Annual Report 2022
Reporting requirement
Key matters
Relevant policies and standards
Further information
Social matters
Developing responsible supply chains
Our Supplier Code of Conduct, Global Supply Chain Solutions team and partnership with leading NGO, Stop the
Traffik, are some of the measures we take to ensure that products are sourced responsibly and that adequate
standards are maintained throughout our supply chains.
READ MORE ON
PAGES 51 TO 53
Promoting a healthy corporate culture
Business standards of behaviour
Our values underly the way we conduct our business and ensure that all of our colleagues are working towards
the common goal of creating long term sustainable value for the benefit of all stakeholders.
Our Business Code of Conduct and Code of Conduct Policy ensure that all business is conducted according to
rigorous ethical, professional and legal standards.
Employees
Encouraging employees to raise matters of concern
Where employees have concerns relating to failures to adhere to standards, they can report such concerns on a
confidential and anonymous basis using our ‘Speak Up’ Policy.
READ MORE ON
PAGE 108
READ MORE ON
PAGE 246
READ MORE ON
PAGE 246
Investing in our people and a diverse workforce
Providing our employees with a safe working environment
Human rights,
anti-corruption
and anti-bribery
Prevention of bribery, corruption and fraud
Promoting ethical supply chains
Our Diversity, Equity and Inclusion Policy was reviewed this year and ensures that employees are treated fairly
and equally and that diversity is embraced. We also offer extensive learning and development opportunities to
equip employees with the skills and experience they need to succeed and grow in their roles.
READ MORE ON
PAGES 54 AND 55
The Bunzl Health & Safety Policy ensures that high standards of health & safety are maintained throughout the
business. Incidents are monitored and reported to the Board periodically, which enables the Board to take action
when necessary.
READ MORE ON
PAGES 244 AND 245
Our Anti-Bribery and Corruption Policy outlines the behaviour and principles required of employees to prevent
any form of bribery or corruption. Additionally, we have a Fraud Policy in place, we conduct a rigorous Fraud Risk
Assessment annually and the Board regularly receives and considers whistle blowing updates.
READ MORE ON
PAGES 119 TO 131
Our Supplier Code of Conduct defines the principles and standards that we expect suppliers to understand and
adhere to. This is supported by our industry-leading sourcing and auditing operation in Shanghai, which works in
partnership with suppliers in high risk regions to ensure the highest standards of product quality and respect for
human rights in our supply chain.
READ MORE ON
PAGES 52 AND 53
Approach to human rights and modern slavery
Revised by the Board this year, our Modern Slavery Statement sets out the steps that we take to ensure, as far as
possible, that slavery and human trafficking do not exist in our supply chain or any part of our business.
READ MORE ON
PAGES 239 AND 246
Environmental
matters
Taking action on climate change
Reducing our impact on the environment
Providing sustainable solutions
We are supporting the recommendations made by the Task Force on Climate related Financial Disclosures and
have joined the UN Race to Zero campaign by formally committing to the Business Ambition for 1.5°C.
Our Environment Policy promotes the efficient use of resources and energy in our supply chain and ensures
a Group wide commitment to continual improvement and compliance with environmental legislation
and regulations.
READ MORE ON
PAGE 69
READ MORE ON
PAGES 48 TO 68
Our material footprint tools help customers understand the carbon impact of the products they source, helping
us to work with them to find sustainable solutions that are better suited to a more circular economy.
READ MORE ON
PAGE 51
A DESCRIPTION OF OUR
BUSINESS MODEL CAN BE
FOUND ON PAGES 32 AND 33
WHERE PRINCIPAL RISKS
HAVE BEEN IDENTIFIED IN
RELATION TO ANY OF THE
MATTERS LISTED ABOVE,
THESE CAN BE FOUND ON
PAGES 74 TO 82
OUR NON-FINANCIAL KEY
PERFORMANCE INDICATORS
ARE SET OUT ON PAGE 47
FIND OUT MORE IN OUR
POLICY HUB ON OUR WEBSITE
Bunzl plc Annual Report 2022
95
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT Directors’
report
Proactive leadership deepens our customer
relationships and our employees are at the
heart of our business.
Chairman’s introduction
Board of directors
Corporate governance report
Nomination Committee report
Audit Committee report
Directors’ remuneration report
Other statutory information
98
100
102
114
119
132
156
96
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
97
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT CHAIRMAN’S INTRODUCTION
Introduction from
Peter Ventress,
Chairman of the Board
Peter Ventress
Chairman
We believe that in order to
effectively monitor, guide and
advise, we must be open to director
training, upskilling and evolving
our governance structure.”
On behalf of the Board, I am pleased to
present the Corporate governance report
for the year ended 31 December 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’).
In July, following an extensive recruitment
process, we announced the appointment
of Pam Kirby, who joined the Board as a
non-executive director with effect from
1 August 2022. Having considered
the succession planning priorities for
future appointments, the Nomination
Committee recommended Pam’s
appointment to the Board due to her
prior leadership in complex multinational
businesses, international distribution,
strategic and listed company experience.
Her skill set has proved valuable to Board
discussions and to her roles on the
Nomination, Audit, Remuneration and
Board Sustainability Committees.
On 7 February 2023 we announced
that Jacky Simmonds will be appointed
to the Board and its Committees effective
1 March 2023, further details of which
will be provided in our 2023 report.
I look forward to welcoming Jacky to
the Company.
Having an inclusive and diverse culture
starts from the top and the Board is
pleased to report that following Jacky’s
appointment, the proportion of female
directors on the Board will exceed the
Financial Conduct Authority’s new
diversity target (which applies to financial
years starting on or after 1 April 2022),
that at least 40% of a company’s board
should be women. We recognise that
in order to achieve greater diversity
at senior management level, greater
representation needs to be achieved
across all levels of the organisation and
nurturing a diverse pipeline of talent has
been an area of focus throughout the
business. Further information can be
found on page 42.
The Board met seven times during the
year and the June and October meetings
were held near group locations in
North America and the Netherlands,
respectively. We were pleased to be able
to connect with employees around the
world and be afforded the opportunity
98
Bunzl plc Annual Report 2022
On the Board’s mind in 2022
Talent management and
development, including succession
planning for both executive
and non-executive members
of the Board
The Board is committed to ensuring that it
is balanced, diverse and representative of
the markets in which it operates and during
the year, Pam Kirby was appointed to the
Board and brings with her valuable
knowledge and experience. Further, in
2022 the Board started the recruitment
process for a new director in line with its
succession planning priorities, which
concluded in 2023 with the appointment
of Jacky Simmonds.
Continued challenge and support on
the progress of the strategic pillars,
with a focus on sustainability
The Board has continued to develop the
Company’s sustainability strategy and
oversee its implementation throughout the
year. In 2022, the Company:
• supported customers with innovative
products better suited to a circular
economy; and
• received approval of Bunzl’s ambitious
carbon emissions reduction targets by
the Science Based Targets initiative
(‘SBTi’).
See the Sustainability report for further
information on Bunzl’s strategy.
Succession planning for executives is still
high on the agenda and was noted as a
recommendation to be carried forward
into the next financial year. Information on
succession planning can be found in the
Nomination Committee report.
Page 116
Focusing on digitalisation
and IT security
2022 has been a year of improving and
evolving Bunzl’s digitalisation strategy and
cyber security. Digital tools are crucial to
Bunzl’s proposition to tailor products to
individual customer needs and enable
Bunzl’s customers to find better solutions,
while knowledge of the risks and
opportunities associated with cyber is
essential for our workforce. The Board is
acutely aware of the risks posed by cyber
crime and both the Board and the wider
workforce have been upskilled in managing
digital risks. The Audit Committee
report contains further information
on digital security.
Page 124
Page 48
Driving and monitoring the success
of acquisitions
In line with the Company’s acquisition
growth strategy, the Board approved the
acquisition of 12 businesses in 2022. The
Board drives and monitors the success of
acquisitions through:
• Bunzl’s decentralised model which
allows previous company owners to
retain an entrepreneurial culture and
drive further success;
• providing management with training;
• providing acquired companies with
support, resources and operational
excellence; and
• frequently reviewing the performance of
acquired companies against projections.
Further information regarding Bunzl’s
acquisition strategy can be found in the
Strategic report.
Page 16
Defining strategic success over the short/medium term for Bunzl:
Growth
ESG success
Technology
Financial performance
People and talent
See page 16
See page 48
See page 15
See page 86
See page 40
to visit sites in person once again.
The Board also used these visits as an
opportunity to engage with staff at all
levels of the organisation and assess the
culture of the Company.
We believe that in order to effectively
monitor, guide and advise, we must be
open to director training, upskilling and
evolving our governance structure in line
with Bunzl’s strategy and changes to the
regulatory and risk landscape. During
the year, the Board received training on
internal controls and cyber security.
In addition, to further cultivate Bunzl’s
risk-aware culture, employees across
the business continued to receive training
on cyber security and digital risks.
In recognition of the importance of
sustainability to Bunzl’s strategy and in
order to improve Board-level oversight
of environmental, social and governance
(‘ESG’) matters, the Board approved the
formation of the Board Sustainability
Committee, which I am pleased to Chair.
The Board approved the Committee’s
terms of reference in June, which include
providing strategic advice to the Board on
the principal objectives, targets and
priorities of the Company’s sustainability
strategy. Further information on the
Board Sustainability Committee can be
found on page 68.
The Board is mindful of the difficulties
faced by employees worldwide due to the
economic and political climate. Inflation
and a cost of living crisis have changed
the landscape within which we work and
the Company has engaged with the
workforce and implemented measures
to assist colleagues in navigating this
climate. For more information, please
see page 109.
The Board is pleased to report
compliance with the principles and
provisions of the Code for the year
ended 31 December 2022, with the
exception of provision 38 which has been
complied with effective 1 January 2023.
For more information regarding Bunzl’s
compliance, see page 104.
The 2022 Annual General Meeting (‘AGM’)
was held in person and, on behalf of the
Board, I would like to thank those who
attended. The 2023 meeting will be held
at 60 Victoria Embankment, London, EC4Y
0JP on 26 April 2023 and we look forward
to welcoming shareholders once again.
Peter Ventress
Chairman
27 February 2023
Bunzl plc Annual Report 2022
99
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
BOARD OF DIRECTORS
The right balance of
skills and experience
Peter Ventress
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
Vin Murria OBE
Non-executive
director
director
Pam Kirby
Non-executive
director
Appointment
Chairman of the
Board since April 2020,
having been appointed
Chairman designate in
June 2019. Chair of the
Nomination Committee
and Board Sustainability
Committee.
Experience
He was formerly
Chairman of Galliford
Try Holdings plc and a
non-executive director
of Premier Farnell plc,
Staples Solutions NV and
Softcat plc. He was Chief
Executive Officer of
Berendsen plc from 2010
to 2016, prior to which
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. Peter
is currently Chairman of
Howden Joinery Group Plc.
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
since February 2015,
Senior Independent
Director and Chair
of the Remuneration
Committee.
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.
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.
He is currently a non-
executive director of
Smiths Group plc.
–
–
100
Bunzl plc Annual Report 2022
Non-executive director
since March 2017 and
Chair of the Audit
Committee.
Non-executive director
Non-executive director
Non-executive director
since May 2017.
since June 2020.
since August 2022.
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.
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
and Dyas businesses,
before becoming Chief
Executive in 2014, a
position he held until
2016. He is a member of
the Supervisory Boards
of CM.com and Cabka N.V
and a non-executive
director of IMCD N.V.
Formerly Chief Executive
Formerly Chief Executive
Officer of Computer
Officer of Quintiles
Software Group plc from
Transnational
2002 until 2007, she
subsequently founded
and was Chief Executive
Officer of Advanced
Computer Software
Group plc from 2008
until 2015. She was
for services to the digital
economy. She is Chair of
AdvancedAdvT Limited
and a non-executive
director of Softcat plc.
Corporation, having
previously held senior
executive positions at
AstraZeneca PLC and
F. Hoffmann-La Roche
Ltd. She was also
previously a non-
executive director
of DCC plc, Hikma
Pharmaceuticals PLC
and Senior Independent
Director of Victrex plc.
She is presently a
non-executive director of
Reckitt Benckiser Group
PLC and a member of the
Supervisory Board of
AkzoNobel N.V.
responsible for the Makro
appointed OBE in 2018
Committee membership
Member of the Audit Committee
Member of the Remuneration Committee
Member of the Nomination Committee
Member of the Board Sustainability Committee
Independent director
Denotes Chairman
Peter Ventress
Chairman
Frank van Zanten
Chief Executive
Richard Howes
Chief Financial
Officer
Officer
Vanda Murray OBE
Senior Independent
Director
Lloyd Pitchford
Non-executive
director
Stephan Nanninga
Non-executive
director
Vin Murria OBE
Non-executive
director
Pam Kirby
Non-executive
director
Appointment
Chairman of the
Board since April 2020,
having been appointed
Chairman designate in
June 2019. Chair of the
Nomination Committee
and Board Sustainability
Committee.
Experience
He was formerly
Chairman of Galliford
Try Holdings plc and a
non-executive director
of Premier Farnell plc,
Staples Solutions NV and
Softcat plc. He was Chief
Executive Officer of
Berendsen plc from 2010
to 2016, prior to which
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
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
since February 2015,
Senior Independent
Director and Chair
of the Remuneration
Committee.
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.
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
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.
He is currently a non-
executive director of
Smiths Group plc.
–
–
acquired by Staples. Peter
Supervisory Board of
is currently Chairman of
Howden Joinery Group Plc.
Koninklijke Ahold
Delhaize N.V.
Non-executive director
since March 2017 and
Chair of the Audit
Committee.
Non-executive director
since May 2017.
Non-executive director
since June 2020.
Non-executive director
since August 2022.
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.
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 Boards
of CM.com and Cabka N.V
and a non-executive
director of IMCD N.V.
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
and a non-executive
director of Softcat plc.
Formerly Chief Executive
Officer of Quintiles
Transnational
Corporation, having
previously held senior
executive positions at
AstraZeneca PLC and
F. Hoffmann-La Roche
Ltd. She was also
previously a non-
executive director
of DCC plc, Hikma
Pharmaceuticals PLC
and Senior Independent
Director of Victrex plc.
She is presently a
non-executive director of
Reckitt Benckiser Group
PLC and a member of the
Supervisory Board of
AkzoNobel N.V.
Bunzl plc Annual Report 2022
101
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT
Governance overview
Tenure (non-executive
directors, incl. Chairman)
(year ended 31 December 2022)
Board
Meetings
The table below sets out directors’ attendance at the scheduled Board and Committee meetings held during
2022. Additional meetings of the Board were also held as and when circumstances required it to meet at
short notice.
Board
(7)
Audit
(4)
Nomination
(4)
Remuneration
(3)
Board
Sustainability
(2)
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*
Pam Kirby*
7
7
7
7
7
7
7
–
3
4
4
4
4
–
2
4
4
4
4
4
–
0
3
3
3
3
–
2
2
2
2
2
2
–
2
* Maria Fernanda Mejía resigned from the Board effective 2 February 2022. Due to a potential conflict of interest, she did not attend the Board
nor the Nomination Committee meetings held between 1 January 2022 and 2 February 2022.
* Pam Kirby joined the Board effective 1 August 2022 and attended all Board and Committee meetings held between that date and the end of
Frank
van
Zanten
Richard
Howes
Peter
Ventress
Vanda
Murray
OBE
Lloyd
Pitchford
Stephan
Nanninga
Vin
Murria
OBE
Pam
Kirby
the year.
Skills held by
each director
Core industry experience
(logistics and distribution)
Digital/cyber security
International
Sustainability
M&A
Strategy
Remuneration/people
Finance
Legal: The Board has access to the services of the General Counsel and Company Secretary, who is a qualified solicitor.
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, 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
0 – 3 years
3 – 6 years
6+ years
2
3
1
Executive and
non-executive directors
(year ended 31 December 2022)
Executive
Non-executive
(incl. Chairman)
2
6
Board gender
(year ended 31 December 2022)
Male
Female
5
3
Independent directors
(excl. Chairman)
(year ended 31 December 2022)
Independent
Other
5
2
Ethnic diversity
(year ended 31 December 2022)
Director from minority
ethnic group
Other
1
7
102
Bunzl plc Annual Report 2022
Knowledge sharing, upskilling and continual development
The Board understands the importance of knowledge sharing, upskilling and continual development. Therefore,
senior management, members of different corporate functions and external parties are frequently invited to
attend meetings to present to the Board on their respective areas of expertise, aiding better decision making.
HR Function
Employee engagement,
health & safety,
corporate
responsibility, human
rights, diversity, equity
and inclusion and
remuneration
Legal function and
Company Secretariat
Legal, regulatory and
governance
Corporate
Development team
M&A, strategy and due
diligence
External advisers
Legal, compliance,
remuneration,
shareholder
engagement, investor
relations, internal
controls and IT security
Tax, Treasury and
Finance functions
Tax, treasury and
finance
The
Board
Investor Relations
and Communications
team
Investor relations,
stakeholder
engagement and
external/internal
communications
IT and Information
Security function
Information/cyber
security, internal
controls and digital
strategy
Internal and External
Audit functions and
Internal Controls
team
Audit, assurance, risk
management and
controls
Local management
Regional and
commercial sector,
market knowledge,
supply chains and
stakeholder
engagement
Sustainability
department
Environmental, social
and governance,
regulatory knowledge,
supply chains, product
sourcing and corporate
responsibility
Key activities and decisions of the Board
January
• Results of the employee engagement survey
• Presentation on feedback from employee
listening groups
• Group risk assessment
• Strategic plan proposal
• Update on climate change, the Group’s
carbon road map, the Group’s new targets
and net zero ambitions
February
• Results for the year ended 31 December 2021
• Update on cyber security
• Risk management, internal controls and
disclosure of information to auditors
• Re-appointment of auditor
• Approval of 2022 Fraud Policy
• Presentations on acquisition pipeline
• Final dividend for the year ended
31 December 2021
• Fraud risk assessment
• Update on accident statistics
• Presentation on feedback from employee
listening groups
April
• Q1 trading update
• Revision of the Modern Slavery Statement
• Approval of updates to the Board
Diversity Policy
• Formation of the Board Sustainability
Committee
October
• Q3 trading update
• Update on the Euro Medium Term Note
programme
• Digital update
• Presentation on the results of the 2022
investor perception audit
June
• Pre-close trading statement
• Presentation on treasury policies and
funding proposals
• Approval of the policy for the prevention
of the facilitation of tax evasion
• Review of acquisitions made in 2020
• Presentation on the updated Group
Information Security Policy
• Update on corporate responsibility and
supplier performance
• Update on whistle blowing reports
• Site visits in the US
August
• Results for the half year ended 30 June 2022
• 2022 interim dividend
• Update on contract with a key customer
• Race to Zero update
• Update on accident statistics
• Presentations on acquisition pipeline
• Update on the Continental Europe Insight Day
• Site visits in the Netherlands
December
• Pre-close trading statement
• Board evaluation review
• 2023 budget
• Presentation on acquisition pipeline
• Accident statistics
• Tax strategy statement
• Supplier audit statistics
• Update on whistle blowing reports
• Investor relations presentation
• Review of Committee terms of reference
Bunzl plc Annual Report 2022
103
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT CORPORATE GOVERNANCE REPORT CONTINUED
UK Corporate Governance Code
(the ‘Code’) compliance statement
It is the Board’s view that, for the year
ended 31 December 2022, the Company
has been fully compliant with the relevant
principles and provisions set out in the
Code 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.
As previously reported, a programme
of reductions was agreed which has
brought the cash allowance in lieu
of pension contributions for Frank
van Zanten in line with the wider
workforce, effective January 2023.
Further information concerning the
Company’s approach to pension
contribution rates for executive directors
can be found on page 150 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
Tenure of directors
Evaluation
Board tenure chart
Board evaluation and priorities identified
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
100 and 101
30 to 39
108
111 and 112
70 to 73
70 to 73
109
156
Page
107
102
102
Page
114 to 118
114 to 118
100 and 101
102
110
Page
119 to 131
119 to 131
113
119 to 131
74 to 82
Page
132 to 155
132 to 155
132 to 155
104
Bunzl plc Annual Report 2022
Governance structure
Board
Nomination
Committee
Audit
Committee
Remuneration
Committee
Board
Sustainability
Committee
Chief Executive
Officer
Executive
Committee
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 102.
The Board has established four
Committees to which it delegates certain
matters, 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. The
Board recognises the importance of
evolving the governance structures of the
Company in line with the development of
the Company’s strategy and, in 2022, the
Board Sustainability Committee was
formed with a mandate to provide
strategic advice to the Board on the
principal objectives, targets and priorities
of Bunzl’s sustainability strategy. All
Committees meet at least three times
a year, with the exception of the Audit
Committee which meets at least four
times a year, and 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.
The terms of reference for each
Committee can be found on the
Company’s website, www.bunzl.com.
Bunzl plc Annual Report 2022
105
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT CORPORATE GOVERNANCE REPORT CONTINUED
Board composition
As at 31 December 2022, 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 directors
in office at the date of this report are
given on pages 100 and 101 and further
information on the Nomination
Committee’s approach to succession
planning can be found in its report on
pages 114 to 118.
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 102.
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 110.
In accordance with the terms of the
Code and Bunzl’s Articles of Association,
each of the directors in office at the date
of this Annual Report will be subject to
re-election at the 2023 AGM and the
reasons for each director’s re-election
will be set out in the forthcoming Notice
of Meeting.
Board
Nomination
Committee
Audit
Committee
Remuneration
Committee
Board
Sustainability
Committee
Chair
Peter Ventress
Members
Vanda Murray
Lloyd Pitchford
Stephan Nanninga
Vin Murria
Pam Kirby
Chair
Peter Ventress
Members
Vanda Murray
Lloyd Pitchford
Stephan Nanninga
Vin Murria
Pam Kirby
Key responsibilities
Reviews the structure,
size and composition of
the Board with regard to
ensuring a balance of
skills, knowledge and
experience and diversity.
Chair
Lloyd Pitchford
Members
Vanda Murray
Stephan Nanninga
Vin Murria
Pam Kirby
Chair
Vanda Murray
Members
Lloyd Pitchford
Stephan Nanninga
Vin Murria
Pam Kirby
Key responsibilities
Reviews and monitors
the integrity of the
Company’s financial and
narrative reporting, 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.
Key responsibilities
Provides an oversight
function to the Group
Sustainability
Committee and strategic
advice to the Board on
the principal objectives,
targets and priorities of
Bunzl’s sustainability
strategy.
FOR MORE INFORMATION
SEE PAGES 114 TO 118
FOR MORE INFORMATION
SEE PAGES 119 TO 131
FOR MORE INFORMATION
SEE PAGES 132 TO 155
FOR MORE INFORMATION
SEE PAGE 68
106
Bunzl plc Annual Report 2022
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;
• organises the annual evaluation of the Board, its Committees and each individual director;
• 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.
The Chairman is also viewed by investors as the ultimate steward of the Group and the guardian
of the interests of all the shareholders.
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 Executive
Officer
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:
• 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.
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, Tax and Treasury functions. The Chief Financial Officer communicates
with the Company’s analysts on a day-to-day basis as necessary.
Senior
Independent
Director
Independent
non-executive
directors
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.
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.
Board activity in 2022
The Board meets formally at least seven
times a year with two Board meetings
held at or near Group locations around
the world. During 2022, the Board held
meetings in North America and in the
Netherlands which gave the directors the
opportunity to meet with colleagues and
assess the culture of the Company.
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 Business
Area Heads. The importance of bringing
management into meetings to present on
their respective area of expertise, share
knowledge and provide updates on the
performance of the business is well
recognised by the Board. The Director
of Corporate Development frequently
presents to the Board on potential
acquisitions and the Board receives
regular updates from management
on risk, health & safety, digital strategy,
information security, environment,
sustainability, governance and
people matters.
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. This ensures that all
matters reserved for the Board and
other key issues are considered at the
appropriate time.
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 ensures 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.
Bunzl plc Annual Report 2022
107
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
CORPORATE GOVERNANCE REPORT CONTINUED
Purpose, values and how
we monitor 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. It is the
responsibility of the Board to set the
purpose, values and strategy of the
Company and ensure that these align
with the desired culture. In order to
achieve the Company’s purpose, the
Board recognises the importance of a
healthy corporate culture where
colleagues can reach their potential and
everyone is working towards a common
goal. Bunzl has a unique and valued
entrepreneurial culture which is critical to
delivering the Company’s strategy and is
enabled by its decentralised structure
and a focus on developing local talent.
As the Group continues to grow, the
Board ensures that the culture of Bunzl
is sustained and protected.
At the centre of Bunzl’s corporate
culture are our championed values
which underly the way Bunzl conducts
its business. Bunzl’s strong culture is a
key source of competitive advantage and
helps the Group to attract and retain the
best talent.
Our culture is evidenced by what our
people most value about life at Bunzl:
• Our working relationships
• Work/life balance for colleagues
• Respect and ethics
• The atmosphere on the ground
• Teamwork and support
• The skills of employees
• Development opportunities
• Our customer-focused attitude
• Empowerment of colleagues
• Representation of leaders
The Company’s values are at the centre of our culture and are
reflected in the way we work and interact with stakeholders:
Reliability in action
Bunzl’s knowledge, flexibility and expertise in product
innovation means it becomes more than just a supplier,
but a reliable business partner to its customers. It is this
ability to form long-lasting relationships that enables
Bunzl to reliably provide a tailored, value-added service.
READ ABOUT OUR
RELATIONSHIP WITH
CEVA LOGISTICS AND
WATCH THE CEVA
TESTIMONIAL VIDEO
ON PAGE 36
Humility in action
Bunzl’s social and environmental work is diverse and
spans the globe. In 2022, two employees from Bunzl went
to South Africa to join Bunzl’s charity partner, WasteAid, in
supporting workers in the informal waste collection
industry to enhance and build their business skills.
SCAN TO SEE THE
WASTEAID INTERVIEW
WITH BUNZL’S
MELANIE HARRIS
Transparency in action
Bunzl’s honest culture engenders confidence in the
Company and Bunzl aims to be as transparent as possible
in its reporting. The Sustainability report includes extensive
reporting on Bunzl’s scientifically approved targets and
progress, while the Remuneration report details the values
and rationale underlying the remuneration policy.
Responsiveness in action
Bunzl provides tailored and innovative solutions to
customer needs. Bunzl’s digital offering is a key component
of its success and during the year, Bunzl assisted customers
by creating customised digital solutions.
READ THE
SUSTAINABILITY
REPORT ON PAGE 48
READ THE
REMUNERATION
REPORT ON PAGE 132
READ MORE ABOUT
THIS ON PAGE 15
Our values guide our culture and impact Company decision making:
Nomination
Committee
Actively manages the
composition of the Board
and the pipeline of
diverse talent, embracing
a representative Board
and inclusive culture for
all employees to thrive.
See page 114
Audit Committee
Ensures the honesty
and transparency of the
Group’s financial and
narrative reporting and
promotes the healthy
risk-focused culture
within which the
Company operates.
See page 119
Board
Sustainability
Committee
Provides
recommendations
to the Board on the
Group’s sustainability
strategy, endorsing a
culture of continuous
improvement.
See page 68
Remuneration
Committee
Human
Resources team
Aligns executive
remuneration with
Bunzl’s culture to
encourage desired
behaviours, and ties
remuneration targets for
executives to building the
desired inclusive culture
at Bunzl. In addition, the
Committee monitors
gender pay gaps and CEO
pay ratio to ensure that
remuneration aligns with
Bunzl’s values.
See page 132
Creates a work
environment within
which individuals can
thrive. The team
implements programmes
to enhance inclusivity
at Bunzl and monitors
employee sentiment
through engagement
surveys. The team
introduces compulsory
training modules to
upskill colleagues and
reviews employee
policies to protect the
culture of Bunzl.
See page 40
108
Bunzl plc Annual Report 2022
Our culture is measured through our
culture metrics:
• Employee voluntary turnover
rate: 17.4%
• Employee engagement index
score: 85%
• Non-executive director engagement
meetings held: 4
• Number of material breaches
of Code of Conduct: 0
• Accident/incident rate: 7%
improvement versus 2021
Our culture is monitored through:
• Diversity, equity and inclusion
(‘DEI’) activities
• Health & safety data
• Employee forums
• Dialogue with executives and
senior management
• Employee survey results
• Regular Board reporting on people
matters
• Non-executive director listening groups
• Site visits
Employee engagement statement
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,
decentralised 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, the
culture of the Company and our
workforce. This holistic approach to
engagement is the most effective method
and allows the Board to understand,
monitor and assess employee sentiment.
Some of the mechanisms used to
engage with employees during the
year are described in the following
section. Employees are also encouraged
to get involved with the Company’s
performance through a variety of
different means, including the operation
of all employee share plans, bonus
and commission schemes and other
incentive arrangements.
CEO listening sessions
The Chief Executive Officer alongside the Director of Group HR held listening
sessions with female colleagues and colleagues from ethnically diverse
backgrounds across the Bunzl Group in order to review progress against the
Company’s diversity objectives, inform future actions of the Board and gain
further insights into the results of the employee pulse survey.
What was said in 2021:
What we did in 2022:
The creation of strong
role models is critical for
diversity, local leaders need
to be accessible and local
management behaviour
is critical.
Following up with real
action is important.
The Company has increased its communications
throughout 2022 to publicise success stories of
colleagues across the Group. Further, DEI initiatives
were previously organised at regional level; however,
during 2022 it was agreed that these initiatives should
be localised and managed at divisional/operating
company level in order to improve accessibility and
deliver on the Inspiring Women in Bunzl and Inspiring
Ethnicity in Bunzl purpose, mission and vision.
• Statements and action from executive directors
• Executives calling out bias in external providers
• Commitment by the Board to seek at least one female
candidate for all senior leadership roles
• High-potential female employees given access to a
business coach or mentor
The acceptance of different
cultural approaches to work
is critical, and national
cultures matter.
• National Inclusion Week celebrated by Bunzl
UK & Ireland
• Unconscious bias training extended to further levels
of the organisation
The meetings in 2022 involved open and honest conversations on the following
topics, which will inform the diversity and employee agendas for 2023:
• What are the actual/perceived barriers to females progressing in our
organisation?
• What should our number one priority be for 2023?
• What can we best do as a leadership team to support colleagues?
Non-executive director listening groups
During 2022, four non-executive director listening groups were held by Vanda
Murray, Vin Murria, Stephan Nanninga and Lloyd Pitchford who spoke directly
with colleagues from the UK & Ireland, Continental Europe, North America and
Asia Pacific. The comments raised by colleagues from each geographical location
were then presented to the Board by each participating director and the Board
used this feedback to inform its actions.
What was said:
What we did:
Colleagues in the UK &
Ireland were concerned
about the cost of living crisis.
The Board approved one-off support payments to
employees below senior leader level throughout the
UK & Ireland to assist with the rising cost of living.
Colleagues across the
business suggested a
more targeted approach
to communications,
including increased usage
of social media.
The Board used this feedback to drive an initiative to
increase its inclusive communications. In particular,
social media channels were used to showcase ESG
initiatives across the Group, talent, success stories,
strategic decisions, acquisitions joining the Bunzl
Group and the Company’s financial results.
MONITORING EMPLOYEE SENTIMENT:
SEE THE RESULTS OF THE EMPLOYEE
PULSE SURVEY ON PAGE 40
VISITS TO THE NETHERLANDS AND
NORTH AMERICA SITES: READ MORE
ABOUT THE DIRECTORS’ VISITS TO
GROUP LOCATIONS ON PAGE 111
Bunzl plc Annual Report 2022
109
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT CORPORATE GOVERNANCE REPORT CONTINUED
Performance evaluation
The Board is aware of the need to continually review its performance and each
year the Board, its Committees and each individual director undergo a formal
evaluation process which is overseen by the Chairman. This year, an external
evaluation was carried out by Lintstock which included a detailed questionnaire
and 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, and progress in respect of the key priorities identified in 2021,
are set out below.
Key priorities identified during 2021
Progress made
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.
The Board is satisfied
that the priorities
identified following the
evaluation carried out
in 2021 have been
adequately addressed
during 2022.
See page 99 for how
these priorities were
addressed in 2022.
Key priorities identified during 2022
Outcome of evaluation
1. Focusing on management succession planning and
enhancing the Group’s organisational structure, talent
management, and diversity and inclusion processes.
2. Continuing Bunzl’s focus on sustainability and building
this into customer relationships.
3. Supporting management in acquisition and organic
growth strategies.
As a result of the
performance
evaluation process
carried out in 2022, the
Board concluded that
both it and its
Committees are
operating effectively.
4. Continued Board oversight of strategic priorities and
the execution of Bunzl’s strategic plans.
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 and will be carried out for the year ending
31 December 2023. 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 and Lintstock does not provide any
other services to, or have any other connection with, the Company.
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.
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 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 70 to 73 and in the
Sustainability report on pages 48 to 68.
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 a new
appointment, and the Chairman must
notify the Board. During the year, the
Board considered the following external
appointments:
• Richard Howes as a non-executive
director of Smiths Group plc
• Peter Ventress as non-executive
chairman of Howden Joinery Group plc
• Stephan Nanninga as a member of the
Supervisory Board of Cabka N.V.
The Board recognises the benefits in
terms of director knowledge and
experience that external appointments
can bring to Board deliberations. When
considering the new appointments, the
Board considered whether the relevant
appointment would impact the time
required for each director to prepare for
and attend meetings of the Company,
engage with stakeholders, undertake any
training or personal development and
execute their duties to the Company
effectively. In addition, the Board
considered the current portfolio of each
director, the type of company that the
director intended to join, whether there
were any conflicts or potential conflicts,
the time commitment required with the
new appointment 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 that each director
devotes sufficient time to their role at
Bunzl and continues to discharge their
duties effectively.
110
Bunzl plc Annual Report 2022
Induction
Upon appointment, all new directors
undertake a formal 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.
During the year, the Board welcomed
Pam Kirby, whose induction programme
covered the aforementioned areas and
included a trip to the Netherlands. While
there, Pam received presentations on
Bunzl’s operations in the Netherlands and
central Europe and undertook site visits
to King Nederland and Bunzl Retail &
Industry, where she had the opportunity
to speak with managers and non-
managerial members of the workforce.
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 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.
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.
Pam Kirby’s induction
October 2022 Netherlands tour
• Presentation on Bunzl’s
operations in central Europe
• Presentation on Bunzl’s
operations in the Netherlands
• Site visit to King Nederland
• Site visit to Bunzl Retail & Industry
2022 training and development
activities
• Internal Control Essentials programme
updates at every Audit Committee
meeting
• Updates on the proposed UK Corporate
Governance and Audit reforms
• External adviser training on
information security, including:
– the current state of cyber risk and the
threat landscape;
– the growing threat of ransom attacks;
and
– how to protect Bunzl.
• Internal sustainability updates,
including on:
– focus areas for 2023;
– ESG governance;
– UK sustainability reporting standards
and preparations for the proposed
EU mandatory sustainability
reporting;
– results of Bunzl’s sustainability audit;
and
– focus on TCFD reporting.
• Presentation on the findings of an
investor perception study conducted by
an external party
Conflicts of interest
The directors are required to avoid
situations in which they have, or could
have, a direct or indirect interest that
conflicts, or possibly may conflict, with
the Company’s interests. In accordance
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 and the
Board considers that these procedures
operate effectively.
Risk management and internal control
In accordance with the Code, the Board
acknowledges that it has overall
responsibility for identifying, evaluating,
managing and mitigating the principal
and emerging risks, including in respect
of cyber and climate 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 2022 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 74
to 82.
Bunzl plc Annual Report 2022
111
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT CORPORATE GOVERNANCE REPORT CONTINUED
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;
• a new second line internal control team was established in
2022 to further develop the Group’s framework and
approach to internal controls over financial reporting;
• formal standards of business conduct (including code of
conduct, anti-bribery and corruption, fraud investigations
and reporting, 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;
• strategic plans and comprehensive budgets which are
prepared annually by the business areas and approved by
the Board;
• clearly defined authorisation procedures for capital
investment and acquisitions;
• a well-established consolidation and reporting system
for the statutory accounts and monthly management
accounts;
• 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; and
• periodic IT risk assessment aligned with the Group’s IT
security standard, as well as continual investment in IT
systems and security to ensure the security of information
systems and data, business continuity and the production
of timely and accurate management information.
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:
• 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.
Reporting protocols are in place to identify, analyse and
respond to actual or potential fraud incidents;
• 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 minimum
standard and the self-assessment process were further
enhanced during 2022;
• 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;
• developments in tax, treasury and accounting are
continually monitored by Group management in
association with external advisers;
• regular meetings are held with insurance and risk advisers
to assess the risks throughout the Group;
• systems are in place to monitor IT security incidents,
analyse and remediate any identified weaknesses.
Findings are used to continually improve defences across
all Group companies;
• the internal audit department periodically performs
business and risk-themed audit work, makes
recommendations to improve processes and 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;
• 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 119 to 131;
• 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; and
• health & safety risk assessments, safety audits and a
regular review of progress against objectives established
by each business area are periodically carried out.
112
Bunzl plc Annual Report 2022
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 222 and the auditors’
report on pages 223 to 229 includes a
statement by the external auditors about
their reporting responsibilities. In
accordance with provision 30 of the Code
and as set out on page 168, 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.
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 83.
By order of the Board
Suzanne Jefferies
Secretary
27 February 2023
Fair, balanced and understandable – Bunzl’s assurance framework
In accordance with provision 27 of the Code, the Board confirms that taken
as a whole, the 2022 Annual Report is fair, balanced and understandable, and
provides the information necessary for shareholders to assess the Company’s
position, performance, business model and strategy. Considerations of the Board
when reviewing whether the 2022 Annual Report, taken as a whole, is fair,
balanced and understandable and provides sufficient information to enable the
reader to assess the Group’s position and performance, business model and
strategy, are shown below:
Independent review process
A review was carried out by a senior executive who was not involved in the
preparation of the Annual Report.
Senior executive management team
Members of the senior executive management team reviewed and
challenged the content and messaging of the Annual Report.
Internal audit
The Board considered the information and assurances provided by the
ongoing work of the internal audit function.
External audit
The Board considered reports from external auditors and any significant
issues identified in relation to the Annual Report and financial statements.
Audit Committee
The Board considered the work and recommendations of the Audit
Committee in relation to its formal processes concerning the Annual Report
and financial statements.
Bunzl plc Annual Report 2022
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT NOMINATION COMMITTEE REPORT
Nomination Committee report
To support the creation of long term
value for our stakeholders, it is vital
that we continue to build and promote
a culture of openness and integrity.”
Peter Ventress
Chairman and Chair of the Nomination Committee
Introduction from
Peter Ventress
On behalf of the Board, I am pleased to
present the Nomination Committee’s
report for the financial year ended
31 December 2022, which outlines the
Committee’s role and responsibilities, as
well as our activities and areas of focus
during the year.
The development and execution of our
long term strategic objectives, embedding
of our culture and values and promotion
of the interests of our stakeholders are all
dependent upon effective leadership at
both Board and executive level. This
report highlights the significant role that
the Committee plays in ensuring the
Board is sufficiently diverse and has the
appropriate balance of skills, knowledge,
experience, and background to provide
the breadth, depth, diversity of thinking
and perspective needed to support our
consistent and proven strategy and
deliver our purpose.
To support the creation of long term
value for our stakeholders, it is vital that
we continue to build and promote a
culture of openness and integrity. The
Committee’s activities during the year
were conducted within the context of our
unwavering commitment to improving
inclusion and diversity across the Group
and we are committed to the diversity of
the Board, just as Bunzl is committed to
equal opportunities for all employees at
all levels of the Group.
As demonstrated in the following report,
we have made significant progress
against the priorities identified following
the Committee’s 2021 performance
evaluation. Our work in 2022 has focused
on reviewing the composition of the
Board and the Executive Committee
and the recruitment of an additional
non-executive director following the
departure of Maria Fernanda Mejía, who
stepped down from the Board and its
Committees on 2 February 2022.
I am pleased to report that the
recruitment process was a success
and culminated in the appointment of
Pam Kirby as a non-executive director
on 1 August 2022. Pam Kirby brings with
her a wealth of experience that has
further enhanced the knowledge and
skills of the Board as a whole. In addition,
as announced on 7 February 2023, we
will also be welcoming Jacky Simmonds
to the Board and its Committees with
effect from 1 March 2023. Further
detail regarding Jacky Simmonds’
appointment will be included in next
year’s Annual Report.
Additional information concerning the
search and selection process for Pam
Kirby is included in the report that follows
and information concerning her skills
and experience is set out on page 101.
An overview of Pam Kirby’s induction
process can be found on page 111.
As described later in this report, other
areas of Committee focus during 2022
included succession planning, Board
tenure and talent development. The
Committee seeks to balance the
composition and tenure of the Board
and that of its Committees, and to
refresh them over time. This enables the
Board to benefit from the experience of
longer serving directors and the fresh
perspectives and insights from newer
appointees. Given the Board changes
during 2022, it is felt that there is a good
balance of newer appointees and longer
serving directors who provide
consistency of Bunzl knowledge
and experience.
We are fully compliant with the
requirements of the Parker Review on
ethnic diversity and the diversity targets
outlined in the Hampton-Alexander
Review. The Committee and the Board
are also aware of, and fully support,
the new diversity targets set by the
Financial Conduct Authority (which
apply to financial years starting on or
after 1 April 2022), including the target
that at least 40% of the board should
be women (including individuals self-
identifying as women). I am pleased to
confirm that, following Jacky Simmonds’
appointment on 1 March 2023, we will
exceed this target.
We end the year satisfied that we
have a Board with the right skills and
experience to continue providing the
highest standards of leadership and
oversight in the years ahead.
If you wish to discuss any aspect of the
Committee’s activities or our priorities
for the coming year, I will 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.
Peter Ventress
Chairman and Chair of the Nomination
Committee
27 February 2023
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Bunzl plc Annual Report 2022
Composition
During 2022, 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) and all of the
independent non-executive directors. In accordance with
the provisions of the UK Corporate Governance Code, all
of the members are independent non-executive directors.
The Secretary to the Committee is the Company Secretary.
Nomination 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 2022.
Meetings attended
Peter Ventress
Vanda Murray
Lloyd Pitchford
Stephan Nanninga
Vin Murria
Maria Fernanda Mejía1
Pam Kirby2
4
4
4
4
4
–
–
1 Maria Fernanda Mejía resigned as a director on 2 February 2022. Due to a potential
conflict of interest, she did not attend the Committee meeting held in January 2022.
2 Pam Kirby was appointed as a director on 1 August 2022. No Committee meetings
were held between that date and the end of the year.
Key areas of focus in 2023
• Succession planning, with a particular focus on executive
succession and further enhancing the Committee’s insight
into the development plans related thereto
• Gaining greater exposure to management below
Board level
• Talent management and development, including leadership
development
• Continuing to support the journey towards greater
diversity
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. 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.
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. Information concerning the training and
development activities undertaken by the directors during
the year can be found on page 111.
The Committee meets as necessary throughout the year
to discharge its responsibilities. The Committee’s terms of
reference, which were reviewed in 2022, 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 2022 performance evaluation
is set out on page 110.
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
Bunzl plc Annual Report 2022
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT NOMINATION COMMITTEE REPORT CONTINUED
Activities
Recruitment
During 2022, the Committee undertook
an extensive search and selection
process to recruit a new non-executive
director, which resulted in the
successful appointment of Pam Kirby
on 1 August 2022.
The Committee held a debrief following
the conclusion of the interviews and
referee meetings, taking account of
each candidate’s individual attributes,
skill sets, knowledge and experience and
concurred that a recommendation to
appoint Pam Kirby as a non-executive
director be put to the Board for approval.
The Committee seeks to follow best
practice in all the appointments it
recommends, agreeing the criteria for
each role and the most appropriate
interview panel, before considering
a comprehensive and diverse list of
candidates. Shortlisted candidates are
interviewed and assessed against the
chosen criteria and due diligence is then
undertaken before the Committee makes
its final recommendation. Executive
search firms are appointed based on their
expertise relative to each role and the
Committee seeks to engage only those
search firms that are signatories to the
Voluntary Code of Conduct of Executive
Search Firms on gender diversity and
best practice.
Succession planning
The need to refresh the Board but at the
same time maintain a knowledgeable and
experienced team of non-executive
directors is something that we continued
to address in our succession planning
discussions during 2022.
As part of the planning process, the
Committee reviewed the Board skills
matrix and capability gaps identified and
agreed on the areas of experience which
would be beneficial to and complement
the composition of the Board (the role
specification). The Committee also agreed
that the behaviours and values of any
prospective director should align with the
values and culture of the Group.
The Committee subsequently engaged
Russell Reynolds Associates to undertake
an extensive external search based on
the aforesaid role specification, following
which a longlist of candidates was
compiled. Having reviewed the list, the
Committee agreed on a shortlist of
candidates to take through to the next
stage of the recruitment process, which
involved informal meetings between each
of the shortlisted candidates and the
Committee members to gauge the
appetite for the role, likely cultural fit,
experience and location/availability
considerations. Following feedback from
the meetings, it was recommended that
those candidates that best met the role
specifications be taken forward to meet
other members of the Board and
members of the Executive Committee.
A thorough due diligence and referencing
process was then undertaken.
The Committee recognises that having
the right directors and senior
management, with the right capabilities,
experience and Company and industry
knowledge, 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 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. This allows 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.
Enhancing the Committee’s oversight
of executive succession planning and
strengthening executive succession
continued to be a key priority for the
Committee in 2022 and one which
will continue to receive considerable
attention in 2023. The Committee
also plans to deepen its discussions
concerning succession timelines, the
various options available and planning.
Recruitment process of Pam Kirby
Role specification
The Committee developed a role specification and list of characteristics deemed essential for the new non-executive director.
Election of external
search firm
Following a final review of the role specification, Russell Reynolds Associates was engaged as the external search firm.
Collation of candidate list
Following consultation with the Chairman and the CEO, Russell Reynolds Associates prepared a longlist of potential candidates,
which was subsequently reviewed by the Committee and a shortlist agreed.
Candidate interviews
Preliminary interviews with each of the shortlisted candidates were held by the Committee, following which the Committee agreed
on the candidates that best met the role specification.
Final stage interviews
The preferred candidates attended additional meetings with the executive directors and members of the Executive Committee.
Candidate references
The Committee sought references for the preferred candidates and held virtual meetings with the associated referees.
Committee
recommendation
The Committee held a debrief following the conclusion of all of the interviews and referee meetings and made a recommendation
to the Board that Pam Kirby be appointed to the Board and its Committees with effect from 1 August 2022.
Board decision
and announcement
The Board accepted the recommendation of the Committee and approved Pam Kirby’s appointment, following which an
announcement was made via the London Stock Exchange.
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Bunzl plc Annual Report 2022
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 strives to embed
inclusion in everything that it does, and
succession planning and the appointment
process are key in promoting diversity in
a way that is consistent with Bunzl’s long
term strategy.
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 of
Executive Search Firms and encourages
them to look further afield and access
talent from wide and diverse pools.
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 remain
key parts 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
Diversity Policy, which is reviewed
regularly and can be found on page 118.
Additional information concerning
diversity and inclusion in Bunzl can be
found in the Sustainability report on
pages 48 to 69 and in the Corporate
governance report on pages 98 to 113.
Evaluation and independence
During the year, the Committee reviewed
and took account of the balance of skills,
knowledge, experience and diversity
of the Board, the time commitment
expected of the non-executive directors
and the conclusions of the formal
performance evaluation process, which
was undertaken when considering and
recommending the nomination of
directors for re-election at the 2022 AGM.
The Committee also conducted
a review of individual director conflict
authorisations as recorded in the
Conflicts of Interest register. The register
is maintained by the General Counsel
and Company Secretary and sets out any
actual or potential conflict of interest
situations which a director has disclosed
to the Board in line with their statutory
duties. In order to form a view of a
director’s independence, consideration
was also given to other external
appointments held by each director.
Non-executive directors’ independence
of thought and judgement is vital to
facilitating constructive and challenging
debate in the boardroom and is essential
to the operational effectiveness of
the Board and its Committees. The
Committee determines a non-executive
director’s independence in line with the
relevant provisions of the Code and is
satisfied that all of the non-executive
directors meet the criteria for
independence and that the Chairman
of the Board met the criteria on
appointment to that role.
Further details concerning the Board
evaluation process that was carried out
during 2022, together with information
on the key priorities identified as part of
the review, can be found in the Corporate
governance report on pages 98 to 113.
Talent
As part of its remit, the Committee
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.
During the year, the Chief Executive
Officer provided regular updates to the
Committee on any changes to the
composition of the Executive Committee
and presented his annual management
succession plan to the Committee for its
consideration. This included information
on people review processes, functional
talent development, specific emerging
talent pipelines, diversity, equity and
inclusion, and learning and development
initiatives. This process ensures 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 maintained 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. It is the Committee’s
intention to gain even greater insight into
the Group’s internal talent pipeline by
increasing its exposure to management
below Board level in 2023.
Committee composition
Another area of Committee focus during
the year related to the composition of a
new Board Sustainability Committee
(‘BSC’). As part of this process, the
Committee took account of matters such
as the Group’s sustainability strategy and
objectives in the near and long term, the
skills and experience of the executive and
non-executive directors, prevailing and
future legislation and governance
requirements, and market best practice.
The Committee also had regard to the
directors’ skills matrix and Conflicts of
Interest register, as well as the directors’
training and development priorities
identified as part of the 2021
performance evaluation. The
Committee’s recommendation, that each
of the non-executive directors be
appointed as members of the BSC and
that the Chairman of the Board be
appointed as its Chair, was subsequently
presented to, and approved by, the Board
at its meeting in June 2022.
Bunzl plc Annual Report 2022
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT NOMINATION COMMITTEE REPORT CONTINUED
Board 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 a Diversity, Equity and Inclusion
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.
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Bunzl plc Annual Report 2022
Audit Committee report
Successful management of risks and
uncertainties enables us to deliver
on our purpose and be more resilient
across our corporate, financial and
operational structures.”
Lloyd Pitchford
Chair of the Audit Committee
Introduction from
Lloyd Pitchford
I am pleased to present our Audit
Committee report for the year ended
31 December 2022 and welcome Pam
Kirby, who was appointed on 1 August
2022, as a Committee member. The
report provides an overview of the
Committee’s role and demonstrates how
our work contributes to the achievement
of the Group’s purpose. Further
information on our purpose-led strategy
can be found on pages 30 and 31.
Acting ethically, lawfully and with integrity
is critical to our long term success and
operating responsibly is fundamental
to the protection of stakeholder value
and the delivery of our purpose. The
Committee has a significant role to play in
this, with one of its primary responsibilities
being to assist the Board in fulfilling its
responsibilities by monitoring areas such
as the integrity of financial reporting
and non-financial reporting measures,
the effectiveness of the risk management
framework and system of internal
controls, as well as the consideration
of ethics and compliance matters.
During the year, we continued to
discharge our duties effectively and
to the highest standards, providing
appropriate challenge to and oversight
of the decisions, assumptions and key
judgements made by management to
ensure that stakeholder interests are
protected. 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.
The Committee has made good
progress on the 2022 priorities that were
identified in last year’s Annual Report,
with particular attention being paid to
the matters set out below. A summary
of the Committee’s priorities for the
forthcoming year can be found on
page 121.
Audit and corporate governance
reforms
In its May 2022 response to the BEIS
consultation on ‘Restoring Trust in
Audit and Corporate Governance’,
the government set out wide-ranging
reforms to the UK’s audit and corporate
governance framework. While the timing
of many of the reforms and the precise
detail surrounding them is still unclear,
preparatory work has already commenced
ahead of any changes coming into effect.
The Committee has been reassured
by the work undertaken to date by
management in response. An overview of
some of the proposed reforms, and how
we anticipate responding, can be found
later in this report.
The Committee welcomes those
developments which aim to improve
transparency in governance and trust
in our disclosures and we will continue
to monitor the enactment of the
government’s reforms closely and the
Group’s proposed response thereto.
Risk management, internal controls,
and fraud risk
Successful management of risks and
uncertainties enables us to deliver on
our purpose and be more resilient across
our corporate, financial and operational
structures. During 2022, the Committee
increased its focus on the Group’s
Enterprise Risk Management (‘ERM’)
framework and engaged a professional
services firm to assess Bunzl’s risk
management procedures and identify
opportunities for improvement. The
output from the external review has been
used to develop the ERM framework
further and set goals for the future.
The Group has continued to strengthen
its framework and approach to controls
governance and assurance with the
establishment of the Internal Control
Essentials programme, investment
made in the internal control team, and
the build out of a network of control
professionals embedded in each
of the business areas. The work of
the programme, which was initially
supported by an external consultancy
firm, is overseen by the Committee.
In addition, greater Committee scrutiny
and challenge of the Group’s processes
and controls relating to fraud risk has
been facilitated by more extensive and
frequent reporting of fraud risk under the
Internal Control Essentials programme.
We have also focussed on strengthening
the Group’s anti-bribery and corruption
procedures during the year.
Bunzl plc Annual Report 2022
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT AUDIT COMMITTEE REPORT CONTINUED
More information on the Group’s ERM
framework and internal controls can be
found in the Corporate governance
report on pages 98 to 113. Readers will
also find a Q&A with the Head of Internal
Controls on page 126.
Information security
Given their criticality to the successful
execution of the Group’s strategy and
operations, the oversight and scrutiny of
information security and cyber security
programmes remained key areas of focus
for the Committee during the year. The
Committee’s scrutiny and intervention
supported the recruitment of a new
Group Chief Information Security Officer
(‘Group CISO’) and additional investment
in Bunzl’s global IT security resource and
capabilities in 2022. I am encouraged by
management’s plans to reinforce Bunzl’s
IT security framework further.
Information concerning the Group’s
approach to information security, and the
Committee’s responsibilities and activities
in relation thereto, can be found later in
this report and in an interview with the
Group CISO on page 125.
Internal auditors
During 2022, we increased headcount
in the Group’s internal audit function,
including the addition of one IT internal
auditor, with further recruitment activity
underway. This is a welcome development,
which I believe will bolster the function’s
audit and assurance capacity and
support its continued development
and effectiveness. Details of Bunzl’s
assessment of the effectiveness of the
Company’s internal audit function can
be found on page 129.
Financial and non-financial reporting
Another area of focus in 2022 concerned
the resilience of the Group finance
function, which I am pleased to report
was enhanced further during the year.
This is a result of the additional resource
that has been recruited and the
continued development of a systems-
based approach to the analysis and
reporting of data from across the Group. I
would like to acknowledge the quality of
PwC’s audit of our 2022 financial
statements but also the quality of Bunzl’s
finance resource, processes, approach
and transparency in its communication
with the external auditors, which are all
critical to high quality financial reporting
and the delivery of an effective audit.
Information concerning external auditor
independence and Bunzl’s assessment of
the effectiveness of the external audit
process for the 2021 financial statements
can be found later in this report.
During the year, a letter was received
from the Conduct Committee of the
Financial Reporting Council (‘FRC’)
relating to its limited scope review of the
Company’s Taskforce on Climate-related
Financial Disclosures in the 2021 Annual
Report and I am pleased to report that
no questions or queries were raised. The
letter included suggestions concerning
areas where the FRC believes users
of the accounts would benefit from
improvements to the Company’s existing
disclosures. These suggestions have been
considered in preparing this Annual
Report. The Company recognises that the
FRC’s review was based on a review of its
Annual Report for the year ended 31
December 2021 and did not benefit from
detailed knowledge of the Company’s
business or an understanding of the
underlying transactions entered into.
The FRC’s review provides no assurance
that the Company’s Annual Report is
correct in all material respects; the
FRC’s role is not to verify the information
provided but to consider compliance
with reporting requirements.
The Committee has increased its scrutiny
of non-financial reporting and updated its
terms of reference to include the review
and challenge of non-financial reporting
measures, and the review of the Group’s
assurance activities relating thereto
within its remit. The Group’s internal
audit team and an external professional
services firm reviewed the Group’s
strategy to assess whether its existing
governance, processes, controls and
management activities support the
consistent production of accurate
Environmental, Social and Governance
(‘ESG’) data and reporting. The
recommendations will be used to
enhance the Group’s governance,
processes, controls and management
activities to ensure accurate reporting
of ESG data and to prepare for the
introduction of further mandatory
sustainability reporting.
Performance evaluation
I am pleased to report that, based on the
results of the 2022 evaluation, the Board
members continue to consider the
Committee to be thorough and effective
in fulfilling its responsibilities. Further
information concerning the evaluation
process can be found in the Corporate
governance report on pages 98 to 113
and examples of the priorities identified
as part of the 2022 Audit Committee
review are set out on page 121.
Additional information concerning the
Committee’s activities during 2022 and
the key areas of focus in 2023 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.
Lloyd Pitchford
Chair of the Audit Committee
27 February 2023
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Bunzl plc Annual Report 2022
Key areas of focus in 2023
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:
• response to pending legislation and pronouncements from
the FRC/ARGA following the BEIS consultation;
• monitoring new workstreams on internal controls projects;
• tracking the Group’s information security programme;
• overseeing the external audit tender;
• overseeing the external review of the internal audit
function; and
• a review of non- financial reporting and assurance.
Role and support
The role of the Audit Committee is to act independently of
management to safeguard the interests of stakeholders in
relation to the Company’s financial reporting and internal
control arrangements. A fundamental part of this role is
ensuring 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.
The Committee provides 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, including considering
whether such disclosures 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 by
both Committee and the Board in 2022, are available on the
Company’s website, www.bunzl.com.
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,
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 98 to 113 .
Audit Committee meetings
The table below sets out the Committee’s composition and
its members’ attendance at the four scheduled Committee
meetings held during 2022.
Meetings attended*
Lloyd Pitchford
Vanda Murray
Stephan Nanninga
Vin Murria
Maria Fernanda Mejía**
Pam Kirby***
4
4
4
4
–
2
*
**
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, Head of Internal Controls, representatives from
the external auditors and members of the Group finance team.
Maria Fernanda Mejía resigned as a director on 2 February 2022. No Committee
meetings were held between 1 January 2022 and 2 February 2022.
*** Pam Kirby was appointed as a director on 1 August 2022 and attended all of the
Committee meetings held between that date and the end of the year.
Bunzl plc Annual Report 2022
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT AUDIT COMMITTEE REPORT CONTINUED
Training and briefings
Throughout 2022, the Committee considered market updates
and developments in order to ensure that it was fully
cognisant of matters which may affect the Group and its
operations. This included:
• training from external specialists on information and cyber
security;
• technical accounting updates on developments in financial
reporting and accounting policy;
• updates on regulatory and governance changes, including
the government’s response to the BEIS consultation on
audit and corporate governance; and
• briefings on specific topics, including tax risk and
information security.
Stakeholder engagement
Our relationship with our stakeholders is a fundamental
driver of value creation and we place considerable
importance on ensuring that we are aware of and
understand their views and sentiments. The Committee
Chair avails himself of all opportunities to engage with Bunzl’s
stakeholders 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,
this is not taken for granted and the Committee will continue
to monitor stakeholder sentiment closely and ensure that
engagement is sought whenever it is needed. The Chair of the
Committee will also be attending the Company’s forthcoming
AGM to answer any questions that shareholders may have.
Further information concerning stakeholder engagement can
be found on pages 70 to 73.
Principal responsibilities of the Committee
Financial and narrative reporting
• Monitoring and reviewing the integrity of the Group’s
financial and narrative reporting and the significant
judgements contained therein
• Reviewing non-financial reporting measures, including
non-financial KPIs, for inclusion in the Annual Report
Risk management and internal control
• Reviewing:
– the Group’s risk management processes, procedures
and controls;
– the effectiveness of the Company’s internal control
systems including operational, compliance and
financial controls; and
– the assurance activities relating to financial and
non-financial reporting matters.
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
Financial statements and significant
accounting matters
During the year and prior to the
publication of the Group’s results for
2022, the Committee spent considerable
time reviewing and scrutinising the 2022
half yearly financial report and related
news release, the 2022 Annual Report
(including the financial statements), the
2022 annual results news release and the
reports from the external auditors on the
outcomes of their half year review and
their audit relating to 2022. Management
was challenged, where appropriate, on
matters such as the appropriateness of
accounting policies, critical accounting
judgements and key accounting
estimates. The appropriateness of the
Group’s external reporting framework
and use of alternative performance
measures (‘APMs’) were also assessed,
with the Committee concluding that it is
satisfied that the APMs reviewed are
consistent with market practice, and that
disclosure and reconciliation to statutory
measures is appropriate. In conjunction
with the Board, the Committee reviewed
the financial modelling and stress testing
conducted for the going concern
assessment, as well as the viability
assessment process undertaken in
support of the long term viability
statement. The Committee also
challenged the assumptions and
scenarios, noting the effect they would
have during the viability period, further
details of which can be found on page 83.
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. 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.
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Bunzl plc Annual Report 2022
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 2022, noting that,
following the acquisition of Hygi.de, the Group has also recognised a separate technology intangible asset. 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, the Group has an established process to assess whether a non-controlling
interest should be recognised. There were eight such business combinations during the year. The Committee reviewed the
Group’s assessment of these eight business combinations, noting that no non-controlling interest had been recognised.
The Committee concurred 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 9 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 relating to 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.
Defined benefit
pension schemes
The Committee noted that an impairment charge of £13.0 million had been recognised in the year in relation to the
customer relationships intangible assets of two businesses based in Turkey within the Rest of Continental Europe CGU.
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 other impairment of goodwill or customer
relationships and brands intangible assets. Details of the key assumptions and judgements used are set out in Note 13
to the consolidated financial statements.
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 surplus and was satisfied that the assumptions used were
appropriate and were supported by independent actuarial experts.
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 2020. The Committee noted
that, in 2021, the Group had paid a lump sum of £3.2 million to settle the liability in respect of one of the plans. It was
acknowledged that negotiations concerning the withdrawal liability for the remaining two plans were ongoing and that the
Group carried a provision of £13.8 million for the estimated withdrawal liability on these two plans. 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 thereto. Further information on these matters
and the key assumptions used are given in Note 25 to the consolidated financial statements.
Taxation
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 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 2022 the Group has seen a net utilisation of approximately £5 million in trade
receivables and slow moving inventory provisions, with usage of these provisions exceeding net charges to increase
the provisions.
Hyperinflation
accounting
The Committee also noted that the Group has seen some utilisation of the additional provisions set up in the prior year
as a result of market price movements on certain Covid-19 products.
The Committee noted that, during 2022, IAS 29 ‘Financial Reporting in Hyperinflationary Economies’ became
applicable for entities with a functional currency of the Turkish Lira. As a result of this, the Group’s financial statements
include the results and financial position of its Turkish operations restated to the measuring unit current at the end
of the year, with hyperinflationary gains and losses in respect of monetary items being reported in finance expense.
The Committee noted that the total impact on the Consolidated income statement was a charge of £31.7 million.
Having considered the aforesaid matters fully, and following discussions with the external auditors, the Committee
concluded that it agreed with the accounting treatment and disclosures made. Further details concerning these
matters and the key assumptions used are given in Note 1 to the consolidated financial statements.
Bunzl plc Annual Report 2022
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT AUDIT COMMITTEE REPORT CONTINUED
Risk management
The Board approves the Group’s risk
management framework and sets
the risk appetite, which in turn guides
management to proactively identify,
monitor, and manage the material and
emerging risks that could impact Bunzl.
During 2022, the Committee continued its
regular review of risk reporting to ensure
the balance between risk and opportunity
remained in line with the Group’s risk
appetite and tolerance.
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. The Group has
a culture of effective risk management
and risk aware decision making is
embedded in our key processes.
During the year, 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, including
the assurance provided by the internal
audit function, the external auditors and
other oversight from management and
the Board. The Committee uses a number
of tools to review the Group’s risk
management processes, including the
Group’s Risk and Assurance Map. These
tools are reviewed regularly to ensure that
they remain fit for purpose and continue
to meet the needs of the business. In
addition, during 2022, the Committee
engaged a professional services firm to
undertake an external assurance review
of the maturity of the Group’s risk
management procedures. The output
from the review has been used to develop
the Group’s ERM framework further and
set goals for the future.
Cyber risk
Cyber threat and information security
remained a major focus for the
Committee in 2022 given the importance
of technology for the Group’s strategy and
operations and the evolving risks in this
area. Our cyber security controls and
governance have been strengthened
considerably in recent years in response
to the increasing threat this poses to our
businesses, including further developing
our security policies, practices and
training. We have remained focused on
increasing the maturity of our cyber
security capabilities and have invested
heavily in the resources and initiatives
necessary to maintain and improve our
information security framework, including
preventative technologies such as end
point detection systems, user training
and carrying out regular health checks
and testing.
Cyber security at Bunzl
Identify
Know what we have, what we do, and what’s important
Protect
Stop the things we should and do the basics well
Detect
Quickly, simply, and efficiently find what needs to be stopped
Respond
Implement processes to deal with events in real time
Recover
Return to known good state and focus on continuous improvement
Asset Management
Business Environment
Governance
Risk Assessment
Risk Management
Identity Management
Awareness and Training
Data Security
Information Protection
Anomalies and Events
Detection Processes
Security Continuous
Monitoring
Analysis
Mitigation
Improvements
Communications
Response Planning
Disaster Recovery
Continuous Improvement
Communications
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Bunzl plc Annual Report 2022
Q&A
Interview with
Moses Bulus, Group
Chief Information
Security Officer
Q. What is Bunzl’s strategy on
digital security and how is the
strategy communicated throughout
the organisation?
We have a multi-stage information
security strategy that scales to both
the larger and smaller operating
companies across the Group. This
strategy was developed through
collaboration with industry experts,
Group technology resources and the
executive team, with support from
the Board of directors. Proactive
communications between the business
areas, technology directors, and
corporate development teams is key
to our strategy. We have further
embedded this strategy throughout
the organisation by deploying cyber
security awareness campaigns across
all regions to enhance the knowledge
of Bunzl personnel and their resilience
to cyber threats.
Q. What has the Board done to foster
a culture of digital security?
The Board has been actively
engaged with the information
security programme from the start.
During 2022, the Board supported
investments in technology, process
support, and the development and
acquisition of talent into the
organisation. Its support and regular
review of information security KPIs
also ensures that we continue to
foster a culture of measurement
and continuous improvement.
We believe that having an overlapping
strategy based on security tools, people,
and processes yields the most effective
defences. Our layered approach to cyber
security provides multiple opportunities
for threats to be identified and addressed
before they can cause significant harm.
Fundamental to the success of our digital
security and strategy is our digital security
culture, which is fostered and embedded
through several channels. We recognise
that a culture of security has to start at the
top and the Board and Committees lead
by example by dedicating considerable
time and attention to the risks associated
with cyber and information security. The
Group Chief Information Officer (‘Group
CIO’), Group CISO and the Head of Internal
Audit and Risk are regularly invited to
Committee meetings to give an
assessment of cyber risk and provide
updates on the measures being taken by
management to mitigate the cyber and
information security risks and other
evolving threats faced by the business.
Making security a part of everyone’s
responsibilities is a key part of instilling
Bunzl’s security culture and seeing senior
management embody the security culture
through their words and actions has been
an important part of this. Regular
communications and presentations from
the Group CIO and Group CISO also
increase employees’ awareness and
understanding of cyber risks and
reinforce the significance security has for
the entire Group. A Q&A with the Group
CISO can be found in the adjacent section
of this page.
The Group experienced a number
of cyber-attacks during 2022, none of
which were considered material and
all of which were effectively managed
through our Group Information Security
teams. The Company regularly monitors
its information security KPIs to ensure
a process of continual improvement
and development, and during the year
an external professional services
firm was engaged to assess how the
Group’s cyber security controls could
be enhanced further.
Additional information concerning the
principal risks and uncertainties facing the
Group can be found on pages 74 to 82.
Q. What training is provided
to the directors in relation to
digital security?
The Board is provided with annual
training on digital security, which is
delivered by the Group CIO and me.
The training is adapted based on the
ever changing threat environment
and external expertise is leveraged
whenever necessary to ensure the
Board has sufficient knowledge to
effectively monitor the Group’s digital
security strategy and risks. This year,
training covered topics including global
trends, threat intelligence and risk
mitigation strategies.
Q. What role does the Audit
Committee play in relation to digital
security, digital transformation and
strategy risks?
The Committee is proactive in
addressing the principal and emerging
risks facing the Group, including
information security risks. We are
continually making improvements to
the information security programme
thanks to the Committee’s regular
engagement, auditing and
management of mitigation strategies
(as necessary). The Committee also
plays a key role in evaluating and
selecting external advisers to assist
with programme management,
implementing best practice, and
benchmarking in line with industry
standards, which are critical to the
successful delivery of a programme
such as this.
Bunzl plc Annual Report 2022
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT AUDIT COMMITTEE REPORT CONTINUED
Internal controls
The Group has an internal control
environment designed to protect the
business from the material risks which
have been identified. Management is
responsible for establishing and
maintaining adequate internal controls
and the Committee has responsibility for
ensuring the effectiveness of those
controls. 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.
The Committee monitored the
effectiveness of the internal financial
controls framework through reports from
the Chief Financial Officer (‘CFO’), the
Head of Internal Controls, the Head of
Internal Audit and Risk and the external
auditors. In particular, the Committee
considered the scope and results of the
work of internal audit, the findings of the
external auditors in relation to the year
end audit, management’s assessment of
fraud risk, the controls over the Company’s
financial consolidation and reporting
process, treasury controls, tax risks and
the process for monitoring the ongoing
performance of the Company. It is the
responsibility of management 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. Compliance with
the internal control system is monitored
via an annual internal controls self-
assessment with sign off and review of
key financial and non-financial controls for
all businesses. Self-assessed responses
are challenged locally by business area
internal control teams, reviewed centrally
and audited on a sample basis by the
internal audit function, and reported to
the Committee.
As previously mentioned, the Committee
also oversaw the Group’s Internal Control
Essentials programme which is influenced
by the audit and governance reforms and
aims to further develop the Group’s
internal control framework for financial
reporting. As part of this programme, a
Group Steering Committee has been
established to further the strategy and
monitor progress against key programme
deliverables. The Committee received the
results of a deep dive on control
enhancement work within our largest
Bunzl North America business and
challenged management on the initial test
Q&A
with Ian Burrows,
Head of Internal Controls
Q. How has the internal controls
framework evolved over the past few
years at Bunzl?
I joined Bunzl in 2021 to help
implement a Group wide internal
control programme. With the help of
an external consultancy, we launched
the Bunzl Internal Control Essentials
programme early in 2022, designed to
continuously improve and strengthen
risk management and the internal
control framework at Bunzl.
Our work has accelerated throughout
the past year with the expansion of our
global team of internal control
specialists, the majority of whom are
embedded in each of our business
areas so that we remain close business
partners and we mirror the
organisational structure of Bunzl. Our
team now consists of a range of
colleagues with broad experience in
internal controls, IT general controls,
assurance, and risk management.
Allied to our investment in the team is
our investment in technology. We are
progressively rolling out a technology
platform to automate and manage our
internal control and risk management
processes and continue to upgrade
underlying financial and operational
systems to improve efficiency.
Q. How have internal controls been
further integrated into Company
strategy?
The programme is aligned with strategy
and seeks to build on existing strengths
such as our decentralised structure and
the strong culture of ownership and
accountability amongst Bunzl’s business
leaders. One of our key objectives is to
ensure the programme adds value to
the business, builds on existing
processes and controls and provides a
firm foundation for further growth. To
achieve this, we are conscious of
ensuring our work does not become a
compliance or box-ticking exercise; the
Group is composed of a range of
diversified businesses so our internal
control framework is designed to be
risk-based and flexible such that it can
be tailored for each business.
Notwithstanding, we also place great
importance on aligning our work with
Bunzl’s broader risk management,
information security and internal audit
programme so that we work in an
integrated and holistic manner.
Q. What level of engagement does
your team have with the Audit
Committee?
Monitoring the Group’s internal control
systems has always been a core part of
the Audit Committee’s remit and the
Internal Control Essentials programme
was established under its direction.
The initiation of the programme was a
key focus for the Audit Committee
throughout 2022 and the Committee
dedicated time at each meeting to
monitor both progress and the ongoing
control monitoring activities carried
out by the Group. Having strong
leadership and ‘tone at the top’ is
critical for programmes like ours, so the
continued strong commitment shown
by the Audit Committee and wider
executive team is critical for success.
Q. Looking ahead, what are some of
the key areas that your team will be
focusing on?
The Internal Control Essentials
programme is designed to address the
relevant requirements of the UK
government’s proposed reforms to the
audit and corporate governance
regime. While we await final details on
the requirements, our work to date has
focused on ‘no regret’ actions. The
pace of activity will increase further in
2023 and 2024 as we work with
management across our businesses to
embed risk and control enhancements
into our business and IT processes. We
also intend to progress work to
develop the scope and content of the
Group’s Audit and Assurance Policy
and will continue to monitor
developments from the FRC and the
government.
126
Bunzl plc Annual Report 2022
work performed, the remedial actions and
the completion timeframes proposed.
Having 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
confirms that the system of internal
control operated effectively for the 2022
financial year. Where specific areas for
improvement were identified, mitigating
alternative controls and processes were in
place. This allows us to provide positive
assurance to the Board to help fulfil its
obligations under the FRC’s UK Corporate
Governance Code.
Further information on internal controls
and risk management is included in the
Corporate governance report on pages
111 and 112 and in the Q&A with the Head
of Internal Controls which is included on
page 126. Additional information
concerning the Group’s approach to risk
management and the principal risks and
uncertainties that it faces can also be
found on pages 74 to 82.
Audit and governance reforms
The table below provides an overview of
some of the audit and corporate
governance reforms announced by the
government and how we anticipate
addressing these within Bunzl. The
Committee’s terms of reference will be
updated as appropriate to reflect the new
responsibilities placed on audit
committees by the reforms.
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 both 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 forward agenda
planner is reviewed regularly and
adapted, where necessary, to ensure
that it meets the changing needs of
the business.
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. The Committee Chair also
meets individually throughout the year
with Committee members to obtain their
feedback on the areas of Committee
focus. 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.
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.
A summary of the Committee’s key
activities in 2022 and its priorities for 2023
can be found on page 128 and page 121
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.
Audit and governance reforms – proposed actions
Internal controls systems
and fraud statement
As part of the Internal Control Essentials programme, a project plan has been developed to assist the
Company to comply with the new reforms, as they are currently understood.
Audit and assurance policy
In preparation for the introduction of an Audit and Assurance Policy, management has completed
an exercise to map important risks and disclosures to the different types of assurance in place
currently across the Group.
Resilience statement
A ‘resilience statement’ will be included in future annual reports, in compliance with prevailing
regulation/legislation and governance requirements. In the meantime, we will continue to further
our understanding of the government’s resilience reporting requirements and how best to meet
them.
Dividends and capital
maintenance
It is our present intention to widen our disclosures in respect of distributable reserves in our
future financial reporting.
New sanctions for director
wrongdoing
The Remuneration Committee will consider the inclusion of additional conditions to its malus and
clawback provisions ahead of the Company’s 2024 AGM, at which the directors’ remuneration
policy will be put to a shareholder vote.
Bunzl plc Annual Report 2022
127
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT AUDIT COMMITTEE REPORT CONTINUED
Audit Committee meetings and activities
Financial reporting
Risk management and
internal controls
Audit
matters
Governance
and other
• 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 on the
reforms identified by the
government in its response
to the BEIS consultation
‘Restoring trust in audit and
corporate governance’
• Considering a letter from
the FRC’s Conduct
Committee relating to its
limited scope review of the
Company’s Annual Report
2021
• Receiving and, where
• Reviewing the effectiveness of
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
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 and fraud
processes and related controls
framework
• Reviewing the
• Reviewing the effectiveness of
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
the Company’s risk
management processes,
including considering a paper
from a professional services
firm on the results of its
assessment of Bunzl’s risk
management processes and
procedures and debating
management’s proposed
actions in response thereto
• Reviewing the Company’s
principal tax risks and the
steps taken to manage such
risks
• Considering updates from the
Head of Internal Controls on
the Internal Control Essentials
programme
• Receiving updates on the
Group’s Information Security
Policy and activities in 2022,
including incidents
encountered, the results of
reviews by external
professional services firms of
the Group’s approach to
information security, the work
undertaken as part of the
Information Security
Governance and Operational
Plans Review, and the
opportunities identified as
part of an in-house
‘continuous improvement’
session
• Undergoing training from a
third party provider on the
current state of cyber risk
• Receiving updates from the
Head of Internal Audit and
Risk on the Information
Security Assurance Audit Plan
and associated audit results,
including progress on GDPR
and data privacy, and the
Group’s risk-based security
framework
• 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
• Approving the engagement of
a professional services firm to
undertake an external review
of the Group’s risk
management
• 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 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
• Considering a paper on the
proposed strategy for the
tender of the external audit
contract
• Reviewing and approving the
internal audit work
programme for the coming
year
• Considering a paper
concerning the initiatives
undertaken by the internal
audit function to further
develop the team and increase
collaboration across the
Group’s businesses
• 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 the
Company’s internal audit
charter
• Receiving and considering the
results of the 2022 anti-
bribery and corruption audit
128
Bunzl plc Annual Report 2022
Internal audit
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 scope of work 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.
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. Periodically,
the quality and effectiveness of the
internal audit function is also assessed
externally, with the most recent review
being undertaken in 2019.
The Head of Internal Audit and Risk has
direct access to the Committee Chair, with
whom a number of meetings were held
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.
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.
The internal audit reports 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. The reports also
highlight any significant issues relating to
the processes for controlling the activities
of the Group and the adequacy and
effectiveness of such processes.
A detailed questionnaire is circulated
annually to gather feedback from a broad
range of internal stakeholders, including
directors and senior management at
Group and business area levels who have
regular contact with the internal audit
function. In 2022, 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. Taking all
of these elements into account, the
Committee concluded that the internal
audit function continued to be effective,
efficient and appropriately resourced.
The Committee will carry out a similar
effectiveness review in 2023.
External auditors
An important part of the Committee’s
work consists of overseeing the Group’s
relationship with the external auditors.
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 independence,
quality, rigour, and challenge of the
external audit process is maintained.
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 set out
below and on page 130.
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 its
partners and staff involved with the
audit are independent of any links to
the Company.
PwC confirmed during the year that
all its partners and staff complied with
its 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 is 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 its independence and the integrity and
objectivity of the audit engagement
partner and the audit staff.
Bunzl plc Annual Report 2022
129
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT Given the continuing effectiveness
of PwC in its role as external auditors,
the Committee believes it is in the best
interests of shareholders for PwC to
remain in the role for the next year
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 2022 financial year.
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
2023 be put to shareholders at the
forthcoming AGM.
AUDIT COMMITTEE REPORT CONTINUED
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.
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 2022 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 2022 equated to 8.0%
of the fees relating to audit services.
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.
As reported last year, PwC has been
Bunzl’s external auditors since its
appointment in 2014 following a
competitive tender process. In accordance
with The Statutory Audit Services for
Large Companies Market Investigation
(Mandatory Use of Competitive Tender
Processes and Audit Committee
Responsibilities) Order 2014 (the ‘CMA
Order’), the Company is required to put
the external audit contract out to tender
every 10 years and it is the Committee’s
intention to conduct a formal competitive
tender process in 2023. Should the
Company decide to change auditors, this
will allow sufficient time for the chosen
auditors to meet the requirements for
independence and develop their audit
plan in advance of the 2024 financial year.
Extensive preparatory work has already
been undertaken by the CFO and
management, with the Committee being
briefed fully on the proposed timetable
and process for the tender. As part of this
work, particular attention has been paid
to The Statutory Auditors and Third
Country Auditors Regulations 2016
legislation, which contains specific
requirements for audit committees of
Public Interest Entities (‘PIEs’) in respect of
tender processes. Full details of Bunzl’s
tender process and the Group’s ultimate
decision will be provided in next year’s
Annual Report.
130
Bunzl plc Annual Report 2022
Effectiveness of the statutory audit process
PwC presented the Committee
with its detailed audit plan for the
forthcoming financial year, which
outlined its audit scope, planning
materiality and its assessment of
key audit risks. The identification
of key audit risks is critical in the
overall effectiveness of the
external audit process.
In assessing the adequacy of the
audit plan, the Committee
considers and, where necessary,
challenges the auditors on how far
the scope of the audit addresses
the Board’s assessment of risks.
Prior to the Board’s approval of
the annual financial statements,
the Committee provided the
Board with its views on the
outcome of the statutory audit.
Such feedback generally covers:
the outcome of the auditors’
assessment of key audit matters;
management’s key accounting
issues and judgements; other
areas of audit focus; and how the
statutory audit has contributed to
the integrity of the financial
reporting process.
The Committee also discusses the
outcome of any quality monitoring
processes that may have been
undertaken by the auditors’ own
firm, including any lessons learnt
and the actions taken to address
those areas identified for
improvement.
The Committee was provided with
updates on PwC’s progress against
the audit scope at subsequent
Committee meetings, providing
Committee members with the
opportunity to challenge
management and PwC and raise
questions where necessary.
Regular dialogue between the
Committee and the auditors
ensures that any significant issues
are identified, and the appropriate
audit responses are discussed,
at the earliest opportunity.
The external auditors also have
direct access to the Chair of the
Committee who held a number
of meetings with PwC during
the year outside formal
Committee meetings.
Following the completion of the
audit, those involved in the
process were invited to provide
feedback on PwC’s performance.
This involved the completion of a
questionnaire by the Committee
members, key members of senior
management and those who
regularly provide input into the
Committee or have regular
contact with the auditors.
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. The
responses were collated and
presented to the Committee for
consideration.
As part of the ongoing monitoring
process, the Committee considers
the results of any periodic reviews
by the FRC’s Audit Quality Review
Team of PwC’s audit of the
Company, as well as the results
of the FRC’s reviews of PwC’s
audits more broadly, and
challenges PwC to ensure
continuous improvement.
During the year, private meetings
were held between the Committee
and PwC without management
present to encourage open and
honest feedback by both parties
on any matters they wished to
raise. This afforded the Committee
the opportunity to obtain greater
insight concerning the extent to
which management’s analysis and
presentation of information had
been challenged by the auditors.
Based on the feedback received and the results of the Committee’s ongoing audit
monitoring throughout the year, the Committee concluded that PwC had
demonstrated appropriate focus and challenge on the primary areas of the audit and
had applied robust challenge and scepticism throughout the process, with additional
measures for further enhancement encouraged.
Bunzl plc Annual Report 2022
131
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT DIRECTORS’ REMUNERATION REPORT
Directors’ remuneration
report
Despite facing a number of headwinds
and a degree of uncertainty, Bunzl has
delivered another exceptional all-round
performance in both financial and
strategic terms.”
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 2022. It has been another
busy year for the Remuneration
Committee and I was delighted to
welcome Pam Kirby as a member in
August 2022.
Context of remuneration
2022 was a very difficult year to plan for.
At the beginning of the year we were still
managing the impact of the Omicron
variant, facing significant supply chain
issues, a tightening labour market and
managing the deflation of some key
Covid-19 related products.
Amidst all these challenges Bunzl’s
business performance was outstanding.
At constant exchange we achieved
9.8% revenue growth, both organic
and through acquisition (we announced
12 new acquisitions over the course of
the year), and 11.1% growth in adjusted
operating profit. We continued to
manage cash in a disciplined way and
our diversified and essential product
portfolio helped us to remain resilient
in a high-inflation environment.
Despite all the operational challenges,
2022 was also a year when we were able
to make significant progress with our
Environmental Social and Governance
(‘ESG’) agenda. Our climate change
targets were approved by the SBTi in
October, and we expanded the reach of
our supplier audit programme beyond
Asia. Our ability to supply sustainable
alternative products, including newly
launched own brands, to our key
customers has become a source of real
competitive advantage. We were also
able to demonstrate our focus on our
people by improving the diversity of our
workforce at a leadership level and
providing much-needed cost of living
support to employees in some parts
of the business.
In summary, the Group has delivered
another excellent all-round business
performance, and this has been
rewarded with strong outturns from both
the annual bonus scheme and those long
term incentive plans which included 2022
as a performance year.
Performance and reward for 2022
Annual bonus
Annual bonus payments were 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
second year running, specific 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 financial
elements of the bonus for 2022 was set
at, or close to, the budgeted level of
performance. The personal and ESG
objectives selected are closely aligned to
the strategic priorities for the business
and are clearly measurable.
As outlined above, this was an
exceptionally strong all-round
performance from the business and
the leadership team, and therefore
the variable pay awarded has been
deservedly high. The Committee’s
evaluation of the annual bonus targets
resulted in a payment of 98% of
maximum for Frank van Zanten and 98%
of maximum for Richard Howes. On the
financial elements, no discretion was
applied by the Committee to adjust the
bonus outcomes, as overall payments
reflected business performance.
The Committee conducted a detailed
review of the evidence to support the
evaluation of the personal and ESG
objectives. 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 (‘LTIPs’)
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 2022 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.
It is worth noting that the share option
grants were made in the spring and
autumn of 2020, in the midst of the Covid
pandemic. Although the performance
conditions for the autumn grants were
set in the context of the outlook at the
time, the spring grants were made under
the previously set eps growth targets
over a three year period, which were
exceptionally stretching. The Committee
also considered the potential for windfall
gains as a result of granting awards at
share prices impacted by Covid-19.
132
Bunzl plc Annual Report 2022
Despite a decline in our share price
directly after the outbreak of the
pandemic, the share price recovered
strongly in the second half of 2020. As a
result of granting LTIP awards biannually
the average grant prices during 2020
were less than 10% below 2019 prices.
Therefore, the Committee is satisfied that
there is no windfall gain and that no
adjustment is required. In addition, the
Committee has not exercised discretion
to amend the vesting outcomes for any of
these share awards, although it did adjust
the eps performance to reflect the impact
of the accounting change during 2022 in
respect of hyperinflation in Turkey. The
2019 performance share awards vested in
April and October 2022 at 45.4% and
73.6% of the maximum respectively, and
the 2020 share option awards at 100%
and 100% respectively.
Restricted Share Awards have been in
place for the senior team since 2021
when the Directors’ Remuneration Policy
was approved by shareholders. These
replaced the previous performance share
plan (LTIP B) and share option awards
(LTIP A) referred to above. In 2022, awards
of shares were therefore granted to
approximately 25 of the most senior
leaders, with around a further 470
managers continuing to receive share
options under the LTIP A in 2022.
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 2023
financial year
Base salary
The base salaries for the executive
directors, Frank van Zanten and Richard
Howes, have been increased by 5.9% and
5% respectively, effective from 1 January
2023. Both these increases are broadly in
line with those of the leadership
populations across the business, which
were between 4-6%. In the UK, the
average pay awards for the leadership
team were slightly higher. The Committee
took the decision to award Frank van
Zanten a slightly higher percentage
increase because of his excellent
performance over his almost seven
year tenure as Chief Executive Officer,
during which time Bunzl has achieved
exceptional growth against all key
financial and non-financial metrics. Since
2015, revenue has increased by around
80% and adjusted operating profit has
almost doubled at actual exchange rates.
72 new businesses have been acquired,
making Bunzl a much larger and more
global business than it was when Frank
van Zanten was appointed as Chief
Executive Officer.
LTIP
In March 2023, 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 2022, and will vest in March
2026, subject to continued employment
and the assessment of the underpin.
Vested awards will be subject to a
two-year holding period. The Committee
may scale back the awards (including to
zero) if it is not satisfied that the underpin
has been met.
Annual bonus
For the 2023 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 key financial metrics – eps,
return on average operating capital
(‘RAOC’) and operating cash flow. 20% of
the bonus opportunity will be dependent
on personal performance linked to
certain specified strategic non-financial
goals and again, 10% of the opportunity
for both directors will be dependent on
the achievement of specific ESG
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 2023 are a clear
build on the 2022 targets and reflect the
long-term nature of the roadmap.
50% of any bonus awarded will be
deferred into shares for a period of
three years.
When setting the target levels, the
Committee considers carefully the
growth ambitions for the Group and the
market challenges which may impact
performance. The overall aim is to set
targets that are stretching without
encouraging inappropriate levels of risk.
The range itself varies each year, taking
into account the specific opportunities
and challenges facing the business. 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.
Priorities for 2023
Over the course of 2023, the Committee
will be considering possible revisions to
the Directors’ Remuneration Policy to be
presented to shareholders early in 2024.
As always, we will take into account the
future strategy and growth agenda of
Bunzl, as well as considering external
market trends and developments in
executive pay. I will be very grateful for
the feedback of shareholders on our
proposals later in the year.
Conclusions
Despite the challenges facing Bunzl at
the beginning of the year, the Group has
yet again proven the strength of its
diversified model, strong local focus on
customers and resilient supply chain.
Adjusted eps in 2022 at constant
exchange rates was 41% higher than in
2019. This is a testament to the quality of
the leadership team, who have been able
to combine forensic operational focus
with strategic vision and a strong appetite
for growth. The variable pay outturns are
deservedly high.
In the following pages you will find
details of:
• the ‘at a glance’ guide to executive
directors’ remuneration for 2022;
• the annual report on remuneration for
2022, including our approach to the
application of the remuneration policy
in 2023; and
• the 2021 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
27 February 2023
Bunzl plc Annual Report 2022
133
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC 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 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
1 August 2022
Pam Kirby
Meetings
Vanda Murray
Lloyd Pitchford
Stephan Nanninga
Vin Murria
Maria Fernanda Mejía*
Pam Kirby**
Meetings
eligible
to attend
3
3
3
3
–
2
Meetings
attended
3
3
3
3
–
2
* Maria Fernanda Mejía stepped down from the
Board on 2 February 2022.
** Pam Kirby was appointed to the Board on
1 August 2022.
Compliance statement
This report has been prepared on
behalf of, and has been approved by,
the Board. It complies with 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 2023 AGM the Company will be
asking shareholders to put forward an
advisory vote on the Directors’
remuneration report, excluding the
directors’ remuneration policy, as set
out on pages 147 to 155. This provides
details of the remuneration earned by
directors for performance in the year
ended 31 December 2022. 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 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 2022, 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
2022, 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 2022 are listed
on pages 100 and 101.
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.
134
Bunzl plc Annual Report 2022
DIRECTORS’ REMUNERATION REPORT CONTINUED 2022 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)
2,123.2
1,370.1
1,552.2
1,610.7
1,657.5
1,691.3
1,277.2
2,266.3
1,244.6
1,305.2
1,305.2
2021
2022
Max
Salary + benefits + pension
Bonus
LTIP
1001.3
929.4
645.0
2021
966.2
985.9
663.7
2022
663.7
Max
Alignment of incentive outcomes in 2022
To motivate and reward the achievement of the Company’s strategic and operational objectives.
Alignment of performance and remuneration 2022
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
35%
10%
25%
20%
20%
Frank van
Zanten
Richard Howes
10%
10%
Frank van
Zanten
Richard Howes
LTIP A
LTIP B
ESG goals
Total bonus opportunity/result
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
Total opportunity
Result
50%
50%
100%
100%
100%
100%
Highlights of wider workforce remuneration in 2022
471 leaders across the Group receive share options as part of their remuneration
* One-off cost of living support payments made to all UK based employees below senior leader level.
c.11,600 people benefit from the opportunity to take part in employee share save plans
c.12,300 people have an element of performance related pay in their remuneration.
Bunzl plc Annual Report 2022
135
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT Annual report on directors’ remuneration for 2022
This report sets out the elements of remuneration paid to, or earned by, the directors in respect of the financial year 2022.
Single total figure of remuneration 2022 (audited information)
Executive directors
Salary
£000
Taxable
benefits
£000
Bonus
£000
2022
2021
2022
2021
2022
2021
2022
LTIP
£000
2021
Pension
£000
2022
2021
2022
Sub-
total
of fixed
pay
£000
Sub-
total of
variable
pay
£000
2022
2022
Total
£000
2021
Frank van
Zanten
Richard Howes
Total
913.1
939.6
616.2 598.8
1,555.8 1,511.9
234.1
16.7
250.8
148.9
16.3
165.2
1,657.5 1,610.7 1,552.2 1,370.1
929.4 1,277.2 1,001.3
2,623.7 2,540.1 2,829.4 2,371.4
966.2
131.5
30.8
162.3
182.6
29.9
212.5
4,514.9 4,225.4 1,305.2
2,907.1 2,575.7
663.7
7,422.0 6,801.1 1,968.9
3,209.7
2,243.4
5,453.1
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 2021 deferred bonus were awarded in 2022 as shown in the table on page 145 and the shares relating to the 2022 deferred bonus will be awarded in 2023.
b) The annual bonus for 2022 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). No discretion was applied.
c) Benefits provided for all executive directors include a car or car allowance and medical insurance coverage for them and their families. Frank van Zanten’s benefits are higher in 2022 as he
undertook more travel between his home in the Netherlands and the London office. In addition, the Committee introduced a hybrid working allowance to support the more flexible working
patterns demanded of a global CEO post-pandemic.
d) The long term incentives are in the form of awards under the LTIP granted in April, September and October 2019 and March and September 2020. 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 140. The share price used to calculate the value of LTIP A is the three month average share price for
the period ending 31 December 2022 (2,888p) and for LTIP B it is the closing mid-market share price on dates of vesting, 3,111p and 2,686p on 8 April 2022 and 7 October 2022 respectively for
Frank van Zanten and 3,069p on 11 April 2022 for Richard Howes. There are no dividend equivalents included in the LTIP figures. The portion of total LTIP figures (2022: £2,829,400 2021:
£2,371,400) that are attributable to share price growth are £607,003 for Frank van Zanten and £154,264 for Richard Howes in 2021 and £884,951 for Frank van Zanten and £723,641 for
Richard Howes in 2022.
e) The figures shown in relation to 2021 for the LTIP have been restated from those figures shown in the 2021 Annual Report to reflect the difference between the relevant grant price and the
estimated value (£375,755, using a three month average to December 2021) and the actual value of the LTIP share option awards on the date of vesting on 28 February 2022 and 12 September
2022 (£528,705) the first working day after the date of vesting, at the closing mid-market share price of 2,969p and 2,921p respectively.
Non-executive directors
Peter Ventress – Chairman
Vanda Murray
Lloyd Pitchford
Stephan Nanninga
Vin Murria
Maria Fernanda Mejía
Pam Kirby
Total
Board fees
£000
2021
368.0
73.2
73.2
73.2
73.2
73.2
–
734.0
2022
386.0
75.0
75.0
75.0
75.0
6.1
31.3
723.4
Committee
Chair/SID
fees
£000
2021
–
39.0
20.0
–
–
–
–
59.0
2022
41.0
21.0
62.0
Taxable
payments/
expenses
£000
2021
0.2
1.2
–
–
–
–
–
1.4
2022
–
2.4
–
7.9
0.6
–
–
10.9
Total
£000
2021
368.2
113.4
93.2
73.2
73.2
73.2
–
794.4
2022
386.0
118.4
96.0
82.9
75.6
6.1
31.3
796.3
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
relevant income tax payable where applicable (e.g. to travel expenses).
b) Maria Fernanda Mejía stepped down from the Board on 2 February 2022.
c) Pam Kirby was appointed to the Board on 1 August 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)
Brian May was granted share options in 2019 as an executive director of Bunzl plc. During 2022 Brian May exercised 44,039 LTIP A
share options at a value of £185,148 on the vesting dates. In addition, in 2022 Brian May exercised 1,490 LTIP B performance shares
at a value of £46,354 on the date of vesting.
Executive directors’ annual salary
As disclosed last year, executive directors’ salaries were reviewed with effect from 1 January 2022 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
2022
£939,600
£616,193
Salary from
1 January
2021
£913,078
£598,827
Increase in
salary 2021
to 2022
2.9%
2.9%
Executive directors’ salaries were also reviewed with effect from 1 January 2023 and the increases awarded are shown on page 144.
136
Bunzl plc Annual Report 2022
DIRECTORS’ REMUNERATION REPORT CONTINUED Executive directors’ external appointments
During 2022 Frank van Zanten served as a non-executive director of Ahold Delhaize N.V. and Richard Howes served as a non-
executive director of Smiths Group plc. During the year, Frank van Zanten retained fees of €152,500 from Ahold Delhaize N.V. and
Richard Howes retained fees of £24,800 from Smiths Group plc.
Non-executive directors’ fees
The Chairman’s fee and non-executive directors’ fees were reviewed with effect from 1 January 2022 in accordance with the normal
fees policy, which is once every two years for the Chairman’s fee and annually for the non-executive directors’ fees.
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
£20,000
£21,000
£21,000
Fees paid
in 2021
£368,000
£73,240
£19,000
£20,000
£20,000
Increase in
fees 2021
to 2022
4.9%
2.4%
5.3%
5.0%
5.0%
The Chairman and non-executive directors’ fees were reviewed again with effect from 1 January 2023 and the increases awarded
are shown on page 144.
Performance against annual bonus targets (audited information)
The annual bonus plan and DASBS currently operate as set out in the policy section on page 148. The bonus measures for 2022 were
Group eps, RAOC, operating cash flow, 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 2022
reflect another year of excellent performance and were as follows. The Committee did not exercise any discretion over these
formulaic outturns.
Group performance
The Committee set the 2022 annual bonus targets early in the year, and the target ranges for all three financial metrics were ahead
of the bonus ranges set for 2021. At the time, the Committee was conscious that 2021 was a record year for Bunzl with exceptional
performance, in particular from our Healthcare, Safety and Cleaning & Hygiene businesses which were boosted by significant sales
of Covid-19 related products. In addition, the Committee recognised the risks of product cost deflation at a time of increasing
operating cost inflation.
In this context, the Committee set challenging ranges for 2022 relative to budget and market consensus. To demonstrate this, the
2022 eps consensus (constant currency) when targets were set was 151.5p compared to an eps bonus range of 143.9p to 165.5p.
2022 was another exceptional year with financial performance significantly exceeding expectations. This is further demonstrated
by very strong cashflow and returns on capital.
Weighting
35%
10%
25%
20%
10%
Scorecard performance metric
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
Threshold
143.9
93.0%
15.8%
14.0%
37.2%
95.0%
4.5%
4.0%
617.7
95.0%
11.3%
10.0%
Target
154.7
100.0%
31.5%
28.0%
39.2%
100.0%
9.0%
8.0%
650.2
100.0%
22.5%
20.0%
see details below
see details below
Stretch
165.5
107.0%
63.0%
56.0%
41.2%
105.0%
18.0%
16.0%
682.7
105.0%
45.0%
40.0%
Actual outturn
calculated at constant
exchange rates
169.2
109.4%
43.0%
109.7%
852.4
131.1%
% of maximum
100%
100%
100%
Notes
a) The eps outturn for 2021 (169.5p) calculated at the exchange rates used in setting the 2022 target is 161.2p
b) 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.
c) % payable represents the percentage of base salary payable.
d) The eps outturn has not been adjusted for the impact of hyperinflation accounting. The adjusted eps outturn was 180.0p
Bunzl plc Annual Report 2022
137
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT Non-financial strategic goals
Following a review of performance against specific personal objectives for 2022, 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
uncertain economic environment. The specific objectives, and the related evaluation of performance, are shown in the table below:
Frank van Zanten – Chief Executive Officer
Non-financial objectives
• Conduct a review of the leadership model for the
business in Asia Pacific, recognising the volume
of new acquisitions and the multi-sector,
multi-geographical focus of the strategy.
Specifically, this will include managing a robust
process for the replacement of the Managing
Director, ensuring a smooth transition to the
successor, and determining the most
appropriate organisational positioning of the
sourcing operation in Shanghai.
• Deliver evidence of progress made in the digital
and technology space (tools, investments,
people) by providing more insights into the
development of our distribution businesses
during 2022. Progress will be supported by data
on growth in key areas such as digital orders and
supplier invoices handled automatically.
Evaluation
• The leadership model for the Asia Pacific Region was considered in response to the planned
retirement of the current Managing Director, Kim Hetherington. It was determined that the
initial focus of the Managing Director role should be on maximising the performance of the
Australia and New Zealand businesses. After a very thorough selection process (including
interviews, a leadership assessment and projects), Scott Mayne, previously the Managing
Director of the Australian Safety Business, was appointed into this role in January 2023, and a
smooth transition was achieved. A separate part time role was created to oversee business
development and the integration of acquisitions across the region, and also to support the
Shanghai sourcing and QA/QC team and the LSH business in Singapore.
• Significant progress made in the digital and technology space. Digital sales orders (as at
December 2022) increased from 67% to 69% in 2022, and the increase since 2019 is
significantly higher (+10%) if recent acquisitions are excluded. The percentage of digital
supplier invoices also increased by a similar margin.
• New digital tools, such as the materials footprinting tool launched in Bunzl North America,
have been developed and the implementation accelerated through greater sharing of
learnings and best practice across the Group. For example, the Digital Forum established in
Continental Europe has significantly expanded to include other regions.
• Undertake an independent external investor
• A highly regarded business advisory firm, h2glenfern, undertook an extensive Investor
review during 2022 that will provide the Board
with external feedback on how Bunzl is seen,
including the evaluation of progress in specific
areas of strategic focus, such as sustainability.
Ensure that the learnings from the review are
fed into a clear action plan to further enhance
our investor engagement.
Perception Audit and this was presented to the Board in October 2022. The conclusions were
positive with a long-term commitment, and a high degree of confidence in the leadership
team from key investors. The specific recommendations, including the continuation of the
work to articulate Bunzl’s business proposition as clearly and simply as possible, and the
creation of more investor insight into individual business areas, have been taken on board
and integrated into the Investor Relations plans for the future.
% of base salary awarded
% of maximum
34.2%
95%
Richard Howes – Chief Financial Officer
Non-financial objectives
• Undertake a review of existing adviser
relationships ensuring that the ongoing strategic
focus of the Group is properly supported.
Undertake a robust process to identify and
appoint advisers who can demonstrate a real
focus on sustainability and wider ESG themes as
well as an active approach to enhancing our
relationships with existing and prospective
investors. Deliver a comprehensive induction
programme for new advisers to ensure they can
fully support the Group through the 2022 year
end process.
Evaluation
• An extensive process in H1 2022 assessed potential advisors on the quality of the brokering
team and salesforce, the targeting of new investors, an understanding of the Group’s equity
story and innovative ideas to drive a best in class Investor Relations programme. As a result,
a new advisor was selected and supported through a thorough induction programme, to
enable them to add value to the half-year results process.
• Carry out a strategic review of the future
• The triennial valuation of the UK defined benefit scheme was completed in 2022 with the
provision of pension benefits in the UK. As part
of negotiating and finalising the triennial
valuation, establish an action plan with trustees
including liability management initiatives,
investment strategy and future contributions to
ensure the ongoing health of the defined benefit
scheme. As part of the review, assess the
financial and HR considerations in defining a
future roadmap for the scheme.
scheme in an improved position. A broad roadmap for the scheme has been agreed with the
Trustees with the ongoing continuation of company contributions.
• Ongoing dialogue with the Pension Trustees remains constructive and there is clear
alignment in the wish to manage the financial liability to Bunzl whilst protecting the interests
of scheme members and ensuring that any change programme is effectively resourced.
• Deliver the agreed 2022 milestones for the
• The Internal Controls strategy was agreed with the Audit Committee in February 2022. The
Internal Control Essentials programme by the
end of December 2022.
broader business has been engaged on the approach which is appropriate for Bunzl’s
decentralised structure and prioritises the areas of greatest risk. Within the agreed
approach, controls matrices and implementation plans have been developed to a consistent
format, and a team of dedicated resources, mostly embedded within the business areas, has
been recruited to manage the programme. An appropriate technology platform has also
been selected to facilitate the implementation and the ongoing monitoring of controls.
138
Bunzl plc Annual Report 2022
DIRECTORS’ REMUNERATION REPORT CONTINUED • Deliver and complete the agreed 2022
milestones for the information security
programme by the end of December 2022.
• Stage 1 controls and governance and operational plans have been created with the
appropriate Business Area input. The governance over Information Security has been
improved with the creation of a new Group Information Security Risk Committee and the
appointment of a new Information Security Officer. A rigorous process has been put into
place to track leading and lagging indicators of overall programme health, and continuous
improvement workshops have been held to learn from audits and share best practice across
the Group.
% of base salary awarded
% of maximum
30.4%
95%
ESG objectives
• Climate change – ensure that our climate
change ambitions are accredited by the
Science-Based Target Initiative, commencing in
July 2022.
Evaluation
• Our Climate Change Targets were approved by the SBTi in October 2022:
• Scope 1 and 2 – 50% more carbon efficient (equating to 27.5% absolute reduction) by 2030;
• Scope 3 – 79% of suppliers by emissions will have science-based targets by 2027;
• Our long-term target of net-zero emissions by 2050 will be reviewed by SBTi in 2024.
• Products – ensure that the senior leadership
• Significant progress made in every business area – notably Bunzl North America launched
team in every business area has delivered clear
progress in the roll out of material footprint
reporting in the retail, foodservice and grocery
businesses, as the basis for measurable
competitive advantage in our markets.
• Ethical sourcing – expand the responsible
sourcing programme, with a focus on the
high-risk countries outside of Asia, as the first
year of the plan to ensure that 90% of our spend
on products from all high-risk regions is sourced
from assessed and compliant suppliers by 2025.
Ensure that there is a robust process in place for
the collection and validation of supplier data as
the basis for tracking progress against the
objective.
their first materials footprinting tool with the top 10 grocery customers.
• 15 operating companies in UK/Ireland and Continental Europe are using similar tools to
engage foodservice, retail and grocery customers. Asia Pacific is also well developed in terms
of tools, own brand ranges and capabilities.
• Systems improvements have been made to improve the visibility of new product ranges
• Own brand ranges of sustainable products have been extended and a new own brand range
(Ecosystems) launched in North America.
• As of December 2022, 78% of “high risk” spend (using 2022 spend data) has been assessed.
This is strong progress towards the 2025 target of 90% of spend, acknowledging that
progress may be slower moving forward as we will work with a larger number of small
suppliers.
• The audit programme is being monitored by the recently-created Supplier Data Management
System and is being further developed to include “B Risk” suppliers – those based in lower
risk countries but in higher risk product groups (e.g. textiles and leather).
• Diversity – accelerate the representation of
• All regional Managing Directors had the improvement of the % of leadership roles occupied
females in leadership roles (currently 19%) by
ensuring that, unless there is an obvious and
clearly identified successor, female candidate(s)
are considered for every leadership role and that
high-potential females are offered internal or
external mentors.
by females as a bonusable objective for 2022.
• The % of leadership roles occupied by females now stands at 21% across the Group (19 last
year) and there has been further significant improvement in the UK business.
• The “Inspiring Women in Bunzl” model has been expanded to North America and Asia Pacific
and female leadership events have been held in both regions.
• Female candidates have been considered for the majority of leadership roles and all high
potential females in leadership positions have been offered an internal or external mentor.
% of base salary awarded
% of maximum
Frank van Zanten -16.2%
90%
Richard Howes – 14.4%
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 challenging conditions, and the Committee also recognised the significant growth in the revenue and profitability of the
business since 2019. 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
2022
%
176.4
156.8
2021
%
176.4
155.2
2020
%
180.0
160.0
2019
%
107.1
–
2018
%
126.7
–
The monetary values of the bonus payments for 2022 and 2021 are included in the table on page 136. 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.
LTIP grants/awards with performance periods ending in 2022 (audited information)
Executive share options – LTIP Part A
In 2020 Executive share option awards were granted in two tranches and they are due to vest on 10 March 2023 and 9 September
2023. Between the two grants in 2020, and recognising the significant uncertainty created by the pandemic, the Committee revised
the three year performance targets for the September grants. Pleasingly, the Group performed exceptionally well and would have
achieved maximum vesting even if the much more stretching targets applied to the March grant had been retained. 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. It did, however, agree to
adjust the eps performance to reflect the impact of the accounting change in respect of hyperinflation in Turkey.
Bunzl plc Annual Report 2022
139
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT LTIP Part A – 10 March 2020 and 9 September 2020 grants
LTIP Part A – 10 March 2020
Performance measure
Eps growth (over three year
period to 31 December 2022)
% payable at target
Vesting schedule
25% vesting for threshold performance
100% vesting for maximum performance
Threshold
target (5% p.a.
compounded)
Maximum
target (8% p.a.
compounded)
Actual eps
growth
% vesting
(max 100%)
15.76%
25%
25.97%
100%
43.72%
100.00%
LTIP Part A – 9 September 2020
Performance measure
Eps growth (over three year
period to 31 December 2022)
% payable at target
Vesting schedule
25% vesting for threshold performance
100% vesting for maximum performance
Threshold target
(0.5% p.a.
compounded)
Maximum target
(3.5% p.a.
compounded)
Actual eps
growth
% vesting
(max 100%)
1.51%
25%
10.87%
100%
43.72%
100.00%
Frank van Zanten
Richard Howes
Date of grant
10 March 2020
9 September 2020
10 March 2020
9 September 2020
Exercise price
1,840
2,392
1,840
2,392
Number of
awards granted
48,225
37,096
31,627
24,329
Vesting
outcome
100%
100%
100%
100%
Estimated
value of
award vesting
£505,398
£183,996
£331,451
£120,672
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 2022 (2,888p) and are included in the single total figure of remuneration table on page 136.
Performance shares – LTIP Part B
Awards of performance shares were made to Frank van Zanten on 8 April 2019 and 7 October 2019 under the 2014 LTIP and vested
during 2022. 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 – 8 April and 7 October 2019 awards
Performance measure
Eps growth (over three year period
to 31 December 2021)
Vesting
schedule
25% vesting for threshold performance
100% vesting for maximum performance
% payable
Threshold target
(6% p.a.
compounded)
Maximum target
(12% p.a.
compounded)
Actual eps
growth
% vesting
(50% of award)
19.10%
12.5%
40.49%
50.0%
25.49%*
47.38%
Performance measure
TSR relative to comparator
group of bespoke peer
companies
% payable
Performance
period
Vesting
schedule
Threshold target
(median)
Maximum target
(upper quartile)
Actual TSR
% vesting
(50% of award)
1 April 2019 to
31 March 2022
25% vesting for
threshold performance
17.8%
17 out of 40
47.5%
8.75 out of 40
22.5%
14.96 out of 40
1 October 2019 to
30 September 2022
100% vesting for
maximum performance
4.6%
18 out of 45
12.5%
23.3%
9.24 out of 45
50.0%
49.2%
2.21 out of 45
43.58%
100.00%
Frank van Zanten
Richard Howes
Date of grant
8 April 2019
7 October 2019
11 September 2019
Number of
shares granted
22,072
27,817
59,112
Vesting
outcome – eps
47.38%
47.38%
47.38%
Vesting
outcome – TSR
43.58%
100.00%
43.58%
Value of
award vesting
£312,251
£550,549
£825,039
Notes
a) Included in the single total figure of remuneration on page 136 is the value of these vested awards for Frank van Zanten at the closing mid-market share price on the dates of vesting,
8 April 2022 and 7 October 2022, which were 3,111p and 2,686p respectively and for Richard Howes at the closing mid-market share price on 11 April 2022 which was 3,069p.
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 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 2018; 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.
Total pension entitlements (audited information)
Frank van Zanten
Richard Howes
Value of cash allowance in 2022
£131,544
£30,810
Total pension
2022
£131,544
£30,810
Note
The Chief Executive Officer Frank van Zanten received a pension allowance of 14% of base salary in 2022. In 2023 this has been reduced to 5%. As Chief Financial Officer, Richard Howes receives
a pension allowance of 5% of base salary.
140
Bunzl plc Annual Report 2022
DIRECTORS’ REMUNERATION REPORT CONTINUED LTIP grants in 2022
In 2022 a single Restricted Share Award was made on 1 March 2022 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
RSA 1 March 2022
RSA 1 March 2022
Basis of award
125% of salary
100% of salary
Face value
£000
£1,174.5
£616.2
Number of
Performance
shares
period end date
42,693 31 December 2024
22,398 31 December 2024
Notes
a) The face value of the awards is calculated using the average of the closing mid-market share price on the 60 calendar days prior to the grant of the award. The RSA options were awarded
under the LTIP Part B on 1 March 2022 at a value of 2,751p 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 1 March 2022
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 2022 may vest is subject to a performance underpin which will be closely
reviewed by the Committee before these awards vest in 2025. Further details of the performance underpin are on page 148 in the
remuneration policy. Vested awards are then subject to a further two year holding period.
Shareholder dilution
In accordance with The Investment Association’s Principles of Remuneration, the Company can satisfy awards to employees under
all of 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 149. 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 2022
1.0%
0.2%
Statement of directors’ shareholding and share interests (audited information)
As at 31 December 2022, 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 2022)
300%
200%
Actual share ownership as a percentage of salary at
30 December 2022 at the closing mid-market price (2759p)
663%
308%
Note
Shares contributing to the share ownership percentage include deferred shares held under the DASBS (net of tax) but not any unvested or vested but unexercised LTIP awards.
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
2022 were:
Shares (LTIP B and RSA)
Options (LTIP Part A and Sharesave)
Total interests held
Unvested and
subject to
performance
conditions
(LTIP Part B)
69,313
36,366
Unvested
(DASBS)
88,461
46,800
Unvested and
subject to
underpin
(RSA)
88,552
46,458
Unvested and
subject to
performance
conditions
85,321
55,956
Unvested
subject to
continued
employment
1,463
1,010
Vested
but not
exercised
229,779
Frank van Zanten
Richard Howes
Peter Ventress
Vin Murria
Vanda Murray
Lloyd Pitchford
Stephan Nanninga
Pam Kirby
Owned
outright
180,751
43,996
2,608
–
3,000
4,000
–
1,800
Notes
a) No changes to the directors’ ordinary share interests shown in this remuneration report have taken place between 31 December 2022 and 27 February 2023.
b) LTIP A share options are structured as market value options and LTIP B performance shares are structured as nil-cost options.
Bunzl plc Annual Report 2022
743,640
230,586
2,608
–
3,000
4,000
–
1,800
141
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT 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 2012 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)
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
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 2022 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)
2013
2014
2015
2016
MR
2016
FvZ
2017
2018
2019
2020
2021
2022
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
4,225.4
4,514.9
91%
85%
64%
0%
67%
73%
70%
60%
100%
98%
98%
100%
100%
100%
100%
0%
100%
100%
100%
100%
96.4%
100%
62%
89%
69%
82%
0%
69%
54%
63%
45%
81%
60%
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 2021 has been restated from the figure shown in the 2021 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 2021 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 2022 on page 136.
Percentage change in each director’s remuneration
The table below sets out the change between 2021 and 2022, 2020 and 2021, and 2019 and 2020 in the salary, benefits, and bonus
values 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
Non-executive director – Pam Kirby
Average of employees in Bunzl plc
Salary/Fees
2020
3.0%
3.0%
3.1%
0.9%
1.1%
n/a
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%
n/a
3.1%
2022
2.9%
2.9%
Benefits
2020
2021
(42.0%)
n/a
(14.1%)
1.2%
2022
57.2%
2.5%
n/a
4.9%
3.4% (100.0%)
3.0% (100.0%)
(64.0%)
2.5%
n/a
2.5%
n/a
n/a
n/a
n/a
(25.0%)
4.7%
0.0%
(100.0%)
100.0% (100.0%)
100.0% 104.0%
0.0%
100.0%
0.0% 100.0%
0.0%
n/a
n/a
n/a
33.2%
21.3%
2020
73.0%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
162.0%
Bonus
2021
0.8%
(0.2%)
n/a
n/a
n/a
n/a
n/a
n/a
n/a
(15.9%)
2022
2.9%
4.0%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
(2.2%)
Notes
a) Benefits are annualised. See footnote (c) under the table on page 136 for explanation of increase to Frank van Zanten’s benefits.
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.
d) Benefits for plc are health insurance cover and the increases or decreases are primarily driven by the premium costs.
142
Bunzl plc Annual Report 2022
DIRECTORS’ REMUNERATION REPORT CONTINUED
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 2022, 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 the year reported, compared to the Chief Executive
Officer’s bonus due to be paid early in the year following the performance year. The process for calculating the employee pay and
benefits has been modified after identifying an issue in the way the ratios were calculated in previous years. Therefore the 2021
ratios have been restated to reflect this change. In addition, the total remuneration ratio has been restated to reflect the difference
between the grant price and estimated value of vesting of the relevant LTIP awards. The total remuneration ratio has remained
broadly consistent to the previous year and is due to the strong performance of the Group impacting the Chief Executive Officer’s
variable pay as well as increase in the share price reflected in the value of the Chief Executive Officer’s LTIPs.
Salary
Total remuneration
Salary
Total remuneration
Chief Executive Officer
25th percentile employee
Median employee
75th percentile employee
CEO single
figure
£939,600
£4,514,868
£913,078
£4,225,361
Year
2022
2022
2021
2021
Method
Option A
Option A
Option A
Option A
25th percentile
pay ratio
41:1
193:1
Median
pay ratio
35:1
163:1
75th percentile
pay ratio
25:1
108:1
43:1
196:1
37:1
164:1
26:1
106:1
Salary
£939,600
£23,000
£26,800
£37,000
Total remuneration
£4,514,868
£23,375
£27,779
£41,822
Note
The single total figure of remuneration in relation to 2021 has been restated from the figure shown in the 2021 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 2022 on page 136.
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 2021 and 2022 (as stated in Note 26, Note 22 and Note 3 to the consolidated financial statements
on pages 210, 205 and 179 respectively).
£m
Overall expenditure on pay
Dividends paid in the year
Adjusted earnings per share (p)
2022
984.5
190.5
184.3
2021
844.0
180.4
162.5
Percentage
change
16.6%
5.6%
13.4%
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 2021 to 2022, details of which are referred to in the Chief Executive Officer’s
review on page 12 and in the Financial review on page 87.
c) Adjusted earnings per share is used as a comparator as it is a key financial indicator.
Bunzl plc Annual Report 2022
143
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT Remuneration arrangements for 2023
Salary
The salary increases for the executive directors for 2023, which are broadly in line with increases that have been implemented for
the wider leadership team, are as follows:
Frank van Zanten
Richard Howes
Salary from
1 January 2023
£995,050
£647,000
Salary from
1 January 2022
£939,600
£616,193
Increase
in salary
2022 to 2023
5.9%
5.0%
2023 bonus measures
The structure for Frank van Zanten’s and Richard Howes’ annual bonus for 2023 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 (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, the performance measures,
including the financial 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 2023
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 2023
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 2023, the
60 day average share price preceding the grant date will be used for such purposes.
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 such as revenue, profitability, cash generation, and return on capital. Non-financial
performance relates to strategic priority areas focused on delivering the 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 2023
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 and 1 January 2023 respectively. 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 2023
£386,000
£78,500
£21,000
£22,000
£22,000
Fees paid
in 2022
£386,000
£75,000
£20,000
£21,000
£21,000
Increase in fees
2022 to 2023
0.0%
4.7%
5.0%
4.8%
4.8%
144
Bunzl plc Annual Report 2022
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 2022
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 148.
Frank van Zanten
Richard Howes
Awards
(shares)
held at
1 January
2022
22,328
24,670
36,667
–
9,774
21,375
–
Shares
awarded
during
2022
27,124
15,651
Shares
vested
during
2022
23,881
Total number
of awards
(shares) at
31 December
2022
–
24,670
36,667
27,124
9,774
21,375
15,651
Normal
vesting
date
01.03.22
01.03.23
01.03.24
01.03.25
01.03.23
01.03.24
01.03.25
Share
price
at grant
p
2,373
1,870
2,178
2,969
1,870
2,178
2,969
Market
price
at vesting
p
2,902
Monetary
value of
vested
awards
£000
693
Notes
a) The deferred element of the 2022 annual bonus plan as shown on page 137 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 2022 include the dividend equivalents.
c) The deferred shares awarded during 2022 relate to 50% of the bonus for 2021 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 23,881 deferred shares granted in 2019 on 1 March 2022 with a total gain of £693,589.
LTIP
The tables below show the number of executive share options and performance shares held by the executive directors under the
LTIP during 2022 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
2022
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
Options
exercisable
between
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
1,840
2,392
10.03.23 – 09.03.30
09.09.23 – 08.09.30
Options
held at
31 December
2022
42,636
34,946
42,782
35,010
34,978
39,427
48,225
37,096
315,100
31,627
24,329
55,956
Notes
a) The mid-market price of a share on 30 December 2022 (last working day of 2022) was 2,759p and the range during 2022 was 2,575p to 3,163p.
b) Executive share options are structured as market value options.
Performance shares – LTIP Part B
Frank van Zanten
Total
Richard Howes
Total
Awards
(shares)
held at
1 January
2022
22,072
27,817
42,936
26,377
119,202
59,112
22,527
13,839
95,478
Conditional
shares
awarded
during
2022
0
0
Award
date
08.04.19
07.10.19
06.04.20
05.10.20
11.09.19
06.04.20
05.10.20
Market
price per
share
at award
p
2,537
2,013
1,550
2,523
2,059
1,550
2,523
Lapsed
awards
(shares)
during
2022
12,035
7,320
–
–
19,355
32,229
–
–
32,229
Exercised
awards
(shares)
during
2022
10,037
20,497
–
–
30,534
26,883
–
–
26,883
Market
price
per share
at exercise
p
3,110
2,709
–
–
Value at
exercise
£000
312
555
–
–
3,049
–
–
820
–
–
Awards
(shares)
held at
31 December
2022
–
–
42,936
26,377
69,313
–
22,527
13,839
36,366
Note
Performance shares are structured as nil-cost options.
Bunzl plc Annual Report 2022
145
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
Restricted Share Awards
Frank van Zanten
Total
Richard Howes
Total
Awards
(shares)
held at
1 January
2022
45,859
–
45,859
24,060
–
24,060
Conditional
shares
awarded
during
2022
42,693
42,693
22,398
22,398
Market
price per
share
at award
p
2,488.8
2,751.0
Award
date
21.04.21
01.03.22
21.04.21
01.03.22
2,488.8
2,751.0
Lapsed
awards
(shares)
during
2022
–
–
0
–
–
0
Exercised
awards
(shares)
during
2022
–
–
0
–
–
0
Market
price
per share
at exercise
p
–
–
Value at
exercise
£000
–
–
–
–
–
–
Awards
(shares)
held at
31 December
2022
45,859
42,693
88,552
24,060
22,398
46,458
Note
Restricted Share Awards are structured as nil-cost options.
All employee 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 149.
Sharesave Schemes
Frank van Zanten
Richard Howes
Options at
1 January
2022
959
504
1,010
Grant
date
27.03.18
31.03.21
31.03.21
Exercise
price
p
1,564
1,781
1,781
Options
exercisable
between
01.05.23–31.10.23
01.05.24–31.10.24
01.05.24–31.10.24
Options at
31 December
2022
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: £15,768 (WTW), and £76,096 (FIT) respectively for such work undertaken
in 2022. 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 2022 AGM for the remuneration report
The remuneration report and remuneration policy respectively received the following shareholder votes at the 2022 AGM held on
21 April 2022 and the 2021 AGM held on 20th April 2021 these being the years they were last voted on by shareholders:
Remuneration report (2022)
Remuneration policy (2021)
Votes cast
279,543,838
273,777,510
Votes for
261,072,563
258,507,726
% of shares
voted for
93.39%
94.42%
Votes
against
18,471,275
15,269,784
% of shares
voted against
6.61%
5.58%
Votes
withheld
3,176,520
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.
146
Bunzl plc Annual Report 2022
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 Code.
Objectives of the policy
The directors’ remuneration policy, which became 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.
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
• Recognise knowledge, skills and experience as well as reflect the scope and size of the role
• Reward individual performance without encouraging undue risk
Operation
• 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 2022 and 2023
are set out on pages 136 and 144 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
Bunzl plc Annual Report 2022
147
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT Annual bonus
Purpose
Operation
Maximum
potential
value
Performance
metrics
• 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
• 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
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.
Long term incentives
Purpose
Operation
Maximum
potential
value
Performance
metrics
• Incentivise long term decision making as the basis for sustainable growth
• Align with shareholders’ interests
• Recruit and retain senior employees across the Group
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.
• 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
• 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 such as 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
148
Bunzl plc Annual Report 2022
DIRECTORS’ REMUNERATION REPORT CONTINUED Long term incentives – previous policy applied for awards up to and including October 2020
Purpose
• 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
Operation
• 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
Performance
metrics
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
• 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; and
– 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); and
– 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
Performance
metrics
• 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)
• Service conditions apply
Bunzl plc Annual Report 2022
149
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT 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 20% of base salary to 14% of base salary with
effect from 1 January 2022 and has reduced to 5% from 1 January 2023
Performance
metrics
• Not applicable
Other benefits
Purpose
• Provision of competitive benefits which helps to recruit and retain executive directors
Operation
• 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.
• 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
• Not applicable
Maximum
potential value
Performance
metrics
Shareholding requirement
Purpose
• Strengthen the alignment between the interests of the executive directors and those of shareholders
Operation
• 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: 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.
• 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
• Not applicable
Maximum
potential value
Performance
metrics
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 Chairs 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 2023 for NED fees and January 2022 for the Chairman’s fees
• 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
• 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
• Not eligible to participate in any performance related elements of remuneration
• Taxable expenses incurred in the course of carrying out NED duties are reimbursed and grossed up to include tax payable
Bunzl plc Annual Report 2022
Maximum
potential value
Performance
metrics
Taxable
benefits and
expenses
150
DIRECTORS’ REMUNERATION REPORT CONTINUED 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 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.
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).
Bunzl plc Annual Report 2022
151
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT 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
Vanda Murray
Lloyd Pitchford
Stephan Nanninga
Vin Murria
Pam Kirby
Date of
appointment
1 June 2019
1 February 2015
1 March 2017
1 May 2017
1 June 2020
1 August 2022
Date of last
re-appointment
at AGM
20 April 2022
20 April 2022
20 April 2022
20 April 2022
20 April 2022
–
Length of
service as at
2023 AGM
3 years 10 months
8 years 2 months
6 years 1 month
5 years 11 months
2 years 10 months
8 months
Note
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.
152
Bunzl plc Annual Report 2022
DIRECTORS’ REMUNERATION REPORT CONTINUED 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
Voluntary resignation
or termination for cause
Departure as a ‘good leaver’ or in other specific circumstances including
on agreed terms
Base salary,
pension and
benefits
Paid for the proportion of the
notice period worked and any
untaken holidays pro-rated to
the leaving date
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.
Annual bonus
cash
Cessation of employment during
a bonus year will normally result
in no cash bonus being paid
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.
Bunzl plc Annual Report 2022
153
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT 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 27 people) are granted restricted share awards. Approximately 470 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.
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, New
Zealand, 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.
154
Bunzl plc Annual Report 2022
DIRECTORS’ REMUNERATION REPORT CONTINUED 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 2023, in line with the remuneration policy, is illustrated in the
bar charts below.
49%
37%
29%
2%
1%
1%
49%
26%
36%
41%
29%
25%
1%
36%
38%
49%
3%
48%
35%
2%
28%
35%
28%
25%
1%
1%
44%
38%
27%
36%
Frank van Zanten
Below threshold performance
(Total £2,553,541)
Target performance
(Total £3,449,086)
Stretch performance
(Total £4,344,631)
Stretch + 50% share price
increase (Total £4,966,537)
Richard Howes
Below threshold performance
(Total £1,342,906)
Target performance
(Total £1,860,506)
Stretch performance
(Total £2,378,106)
Stretch + 50% share price
increase (Total £2,701,606)
Salary and benefits
Pension
Bonus (Cash/DASBS)
LTIP
Notes
a) Salary represents annual salary for 2023. Benefits such as a car or car allowance and private medical insurance have been included based on 2022 figures. In the case of Frank van Zanten
benefits also include a hybrid working allowance and an education allowance.
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 2023 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 2023 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 2023 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
27 February 2023
Bunzl plc Annual Report 2022
155
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
OTHER STATUTORY INFORMATION
Other statutory
information
Annual General Meeting
The Notice convening the Company’s
Annual General Meeting (‘AGM’), to be
held at 60 Victoria Embankment, London,
EC4Y 0JP on Wednesday 26 April 2023 at
11.00 am, is set out in a separate letter
from the Chairman to shareholders.
Dividends
An interim dividend of 17.3p was paid on
4 January 2023 in respect of 2022 and the
directors are recommending a final
dividend of 45.4p, making a total for the
year of 62.7p per share (2021: 57.0p).
Dividend details are given in Note 22 to
the consolidated financial statements.
Subject to shareholder approval at the
2023 AGM, the final dividend will be paid
on 4 July 2023 to those shareholders on
the register at the close of business on
19 May 2023.
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 21 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 21 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 2022 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
10 March 2022, 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
2022, 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;
156
Bunzl plc Annual Report 2022
• 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 they have 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 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 2022 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 2022, the Company did not
purchase any of its own shares pursuant
to this authority or the authority granted
at the 2021 AGM and no shares have
been purchased between 31 December
2022 and 27 February 2023. As a result,
directors again propose to seek the
equivalent authority at the 2023 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, at every annual general
meeting all the directors at the date of
the notice convening the annual general
meeting shall retire from office and may
offer themselves for re-appointment
by the members. 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 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 in writing sent
to or received at the office or at an
address specified by the Company for
the purposes of communication by
electronic means or tendered at a
meeting of the Board and that
resignation becomes effective, 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 100 and
101. Each of the directors will retire and
offer themselves for re-appointment at
the forthcoming AGM.
Directors’ interests in the Company’s
ordinary shares are shown in Note 24
to the consolidated financial statements.
None of the directors were materially
interested in any contract of significance
with the Company or any of its subsidiary
undertakings during or at the end
of 2022. 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 132 to 155.
Bunzl plc Annual Report 2022
157
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC 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
2022 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 48 to 68.
Greenhouse gas emissions
Information relating to greenhouse gas
emissions has been set out in the ESG
appendix on pages 240 to 247.
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
Our people section on pages 40 to 43.
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 2022, 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 86 to 93 and in the
Notes to the financial statements on
pages 168 to 213.
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 21 to the
consolidated financial statements on
page 203, there are no disclosures
required to be made under UK Listing
Rule 9.8.4.
Substantial shareholdings
As at 31 December 2022, 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
17,120,005
16,961,895
% of issued
share capital
5.08
5.04
No other notifications have been received between 31 December 2022 and
27 February 2023.
158
Bunzl plc Annual Report 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.
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 95.
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
27 February 2023.
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 95.
Suzanne Jefferies
Secretary
27 February 2023
By order of the Board
Strategic report and Directors’ report
Pages 2 to 95 inclusive consist of the
Strategic report and pages 96 to 159
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 2022
159
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT Financial
statements
Our daily focus on making our business
more efficient and our diversified portfolio
of essential solutions gives us strong cash
generation and a balance sheet with
significant financial headroom.
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
SASB Reporting for Bunzl Sustainability Metrics
ESG Appendix
Five year review
162
163
164
165
166
168
214
215
216
222
223
230
238
240
248
160
Bunzl plc Annual Report 2022
STRATEGIC REPORT
DIRECTORS’ REPORT
FINANCIAL STATEMENTS
Bunzl plc Annual Report 2022
161
FINANCIAL STATEMENTS
Consolidated income statement
for the year ended 31 December 2022
Revenue
Operating profit
Finance income
Finance expense
Disposal of business
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, brands and technology amortisation
Acquisition related items
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
10
7
8
8
4
4
4
6
6
7
8
2022
£m
2021
£m
12,039.5
10,285.1
701.6
22.3
(90.2)
0.9
634.6
(160.2)
474.4
623.3
10.7
(65.3)
–
568.7
(125.9)
442.8
141.7p
140.7p
132.7p
131.8p
701.6
623.3
128.4
55.9
885.9
22.3
(90.2)
818.0
(201.2)
616.8
106.5
23.0
752.8
10.7
(65.3)
698.2
(155.7)
542.5
184.3p
162.5p
† See Note 3 on page 178 for further details of the alternative performance measures.
The Accounting policies and other Notes on pages 168 to 213 form part of these consolidated financial statements.
162
162
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
FINANCIAL STATEMENTS
Consolidated income statement
for the year ended 31 December 2022
Profit for the year attributable to the Company’s equity holders
Earnings per share attributable to the Company’s equity holders
Customer relationships, brands and technology amortisation
Revenue
Operating profit
Finance income
Finance expense
Disposal of business
Profit before income tax
Income tax
Basic
Diluted
Alternative performance measures†
Operating profit
Adjusted for:
Acquisition related items
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
Consolidated statement
of comprehensive income
for the year ended 31 December 2022
Profit for the year
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss:
Actuarial gain on defined benefit pension schemes
Gain 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
(Loss)/gain 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
Other comprehensive income/(expense) for the year
701.6
623.3
Total comprehensive income attributable to the Company’s equity holders
Notes
4
4
6
6
7
10
8
8
4
4
4
6
6
7
8
2022
£m
2021
£m
12,039.5
10,285.1
701.6
22.3
(90.2)
0.9
634.6
(160.2)
474.4
623.3
10.7
(65.3)
–
568.7
(125.9)
442.8
141.7p
140.7p
132.7p
131.8p
128.4
55.9
885.9
22.3
(90.2)
818.0
(201.2)
616.8
106.5
23.0
752.8
10.7
(65.3)
698.2
(155.7)
542.5
184.3p
162.5p
Notes
2022
£m
474.4
2021
£m
442.8
25
7
7
6.9
10.3
(4.0)
13.2
232.9
(38.2)
0.3
195.0
208.2
682.6
74.1
4.4
(19.3)
59.2
(89.8)
11.5
–
(78.3)
(19.1)
423.7
† See Note 3 on page 178 for further details of the alternative performance measures.
The Accounting policies and other Notes on pages 168 to 213 form part of these consolidated financial statements.
162
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
163
163
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
FINANCIAL STATEMENTS CONTINUED
Consolidated balance sheet
at 31 December 2022
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
11
12
13
25
20
15
16
28
21
28
25
17
19
27
20
28
28
17
19
27
2022
£m
137.2
529.6
2021
£m
120.9
448.3
3,093.9
2,766.8
60.5
–
4.0
63.6
6.9
2.8
3,825.2
3,409.3
1,748.6
1,557.4
12.6
19.0
1,504.0
4,841.6
8,666.8
108.5
199.4
(74.2)
17.7
2,469.5
2,720.9
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
1,574.0
1,433.7
20.6
117.2
1.1
50.5
424.0
100.5
192.7
32.4
72.9
1.5
56.3
359.6
27.9
151.0
2,480.6
2,135.3
825.9
161.0
551.6
111.9
2,249.4
1,921.3
40.6
24.2
145.9
18.3
3,465.3
5,945.9
8,666.8
42.1
8.5
129.1
10.4
2,774.9
4,910.2
7,114.1
Approved by the Board of directors of Bunzl plc (Company registration number 358948) on 27 February 2023 and signed on its behalf
by Frank van Zanten, Chief Executive Officer and Richard Howes, Chief Financial Officer.
164
164
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Bunzl plc Annual Report 2022
FINANCIAL STATEMENTS CONTINUED
Consolidated balance sheet
at 31 December 2022
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
Notes
11
12
13
25
20
15
16
28
21
28
25
17
19
27
20
28
28
17
19
27
3,093.9
2,766.8
3,825.2
3,409.3
2022
£m
137.2
529.6
60.5
–
4.0
1,748.6
1,557.4
12.6
19.0
1,504.0
4,841.6
8,666.8
108.5
199.4
(74.2)
17.7
2,469.5
2,720.9
20.6
117.2
1.1
50.5
424.0
100.5
192.7
825.9
161.0
40.6
24.2
145.9
18.3
2021
£m
120.9
448.3
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
42.1
8.5
129.1
10.4
2,480.6
2,135.3
2,249.4
1,921.3
3,465.3
5,945.9
8,666.8
2,774.9
4,910.2
7,114.1
Consolidated statement
of changes in equity
for the year ended 31 December 2022
At 31 December 2021
Adjustment to 2021 closing equity in
respect of hyperinflation in Turkey1
Share
capital
£m
108.4
Share
premium
£m
Translation
reserve
£m
Merger
£m
Other reserves
Cash flow
hedge
£m
Capital
redemption
£m
Retained earnings
Own
shares
£m
Earnings
£m
Total
equity
£m
194.2
(269.2)
2.5
16.1
0.4
(52.9)
2,204.4
2,203.9
12.6
12.6
Restated equity at 1 January 2022
108.4
194.2
(269.2)
2.5
16.1
0.4
(52.9)
2,217.0
2,216.5
Profit for the year
Actuarial gain on defined benefit
pension schemes
Foreign currency translation differences
on foreign operations
Loss 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
2021 interim dividend
2021 final dividend
Movement from cash flow hedge reserve
to inventory
Hyperinflation accounting adjustments1
Issue of share capital
Employee trust shares
Movement on own share reserves
Share based payments
At 31 December 2022
232.9
(38.2)
0.3
195.0
0.1
5.2
474.4
474.4
6.9
6.9
232.9
(38.2)
10.3
(3.7)
682.6
(54.3)
(1.4)
479.9
(54.3)
(136.2)
(136.2)
34.9
(23.7)
15.3
(9.0)
34.9
5.3
(34.2)
–
15.3
(34.2)
23.7
10.3
(2.6)
7.7
(9.0)
108.5
199.4
(74.2)
2.5
16.1
(0.9)
(63.4)
2,532.9
2,720.9
1,574.0
1,433.7
1 During the year to 31 December 2022, IAS 29 ‘Financial Reporting in Hyperinflationary Economies’ became applicable for entities with a functional currency of the Turkish
Lira. Following this, the results of the Group’s businesses in Turkey, along with its business in Argentina which has been subject to hyperinflation accounting since 2018,
have been adjusted for the effects of inflation in accordance with IAS 29. See Note 1 for further details.
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
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
Share
capital
£m
108.3
Share
premium
£m
Translation
reserve
£m
Merger
£m
Capital
redemption
£m
Other reserves
Cash flow
hedge
£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
(19.3)
423.7
(52.8)
(18.5)
498.4
(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
165
165
Approved by the Board of directors of Bunzl plc (Company registration number 358948) on 27 February 2023 and signed on its behalf
by Frank van Zanten, Chief Executive Officer and Richard Howes, Chief Financial Officer.
164
Bunzl plc Annual Report 2022
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
FINANCIAL STATEMENTS CONTINUED
Consolidated cash flow statement
for the year ended 31 December 2022
Cash flow from operating activities
Profit before income tax
Adjusted for:
net finance expense
customer relationships, brands and technology amortisation
acquisition related items
disposal of business
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
Disposal of business
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 (losses)/gains 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
Increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at start of year
Increase/(decrease) in cash and cash equivalents
Currency translation
Cash and cash equivalents at end of year
Notes
2022
£m
2021
£m
634.6
568.7
6
13
4
10
30
30
30
9
11,13
9
10
22
27
27
28
67.9
128.4
55.9
(0.9)
885.9
189.5
15.9
54.5
1,145.8
(20.6)
(173.6)
951.6
16.2
(46.7)
1.0
(243.6)
49.9
(223.2)
(61.9)
(190.5)
346.4
(131.8)
(86.2)
(153.1)
(22.0)
5.3
36.8
(74.0)
(331.0)
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)
397.4
(183.6)
225.3
397.4
55.4
678.1
429.7
(183.6)
(20.8)
225.3
166
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Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
FINANCIAL STATEMENTS CONTINUED
Consolidated cash flow statement
for the year ended 31 December 2022
Consolidated cash flow statement continued
for the year ended 31 December 2022
Notes
2022
£m
2021
£m
634.6
568.7
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
27
12
27
2022
£m
1,145.8
(46.7)
1.0
(175.1)
925.0
885.9
151.1
(175.1)
861.9
2021
£m
930.5
(32.7)
2.7
(158.9)
741.6
752.8
134.8
(158.9)
728.7
Cash conversion (operating cash flow as a percentage of lease adjusted operating profit)
107%
102%
Operating cash flow
Net interest excluding interest on lease liabilities
Income tax paid
Free cash flow
† See Note 3 on page 178 for further details of the alternative performance measures.
925.0
(45.7)
(173.6)
705.7
741.6
(34.8)
(181.4)
525.4
customer relationships, brands and technology amortisation
Cash flow from operating activities
Profit before income tax
Adjusted for:
net finance expense
acquisition related items
disposal of business
Adjusted operating profit
Adjustments:
depreciation and software amortisation
other non-cash items
working capital movement
Cash outflow from acquisition related items
Income tax paid
Cash inflow from operating activities
Cash generated from operations before acquisition related items
Cash flow from investing activities
Interest received
Purchase of property, plant and equipment and software
Sale of property, plant and equipment
Purchase of businesses
Disposal of business
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 (losses)/gains 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
Increase/(decrease) in cash and cash equivalents
Currency translation
Cash and cash equivalents at end of year
11,13
9
10
6
13
4
10
30
30
30
9
22
27
27
28
67.9
128.4
55.9
(0.9)
885.9
189.5
15.9
54.5
1,145.8
(20.6)
(173.6)
951.6
16.2
(46.7)
1.0
(243.6)
49.9
(223.2)
(61.9)
(190.5)
346.4
(131.8)
(86.2)
(153.1)
(22.0)
5.3
36.8
(74.0)
(331.0)
225.3
397.4
55.4
678.1
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
Increase/(decrease) in cash and cash equivalents
397.4
(183.6)
166
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
167
167
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
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
The consolidated financial statements for the year ended 31 December 2022 have been approved by the Board of directors of
Bunzl plc. They are prepared in accordance with UK-adopted International Accounting Standards (‘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 International Financial Reporting Standards (‘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 2024 starting with a base case
projection derived from the Group’s 2023 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 15% 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 25% 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
2024 the Group would need to experience a reduction in EBITDA of over 55% 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.
168
168
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
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.
The consolidated financial statements for the year ended 31 December 2022 have been approved by the Board of directors of
Bunzl plc. They are prepared in accordance with UK-adopted International Accounting Standards (‘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 International Financial Reporting Standards (‘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 2024 starting with a base case
projection derived from the Group’s 2023 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 15% 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 25% 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
1 Basis of preparation continued
(ii) Impact of Hyperinflation on the financial statements at 31 December 2022
During the year to 31 December 2022 the three-year cumulative inflation in Turkey exceeded 100% and as a result, IAS 29
‘Financial Reporting in Hyperinflationary Economies’ became applicable for entities with a functional currency of the Turkish Lira.
The Group’s financial statements include the results and financial position of its Turkish operations restated to the measuring unit
current at the end of the year with hyperinflationary gains and losses in respect of monetary items being reported in finance
expense. Comparative amounts presented in the financial statements have not been restated. In accordance with IAS 29,
hyperinflationary accounting has been applied as if Turkey has always been a hyperinflationary economy, and as an accounting policy
choice allowed under IAS 29, the differences between equity at 31 December 2021 as reported and the equity after the restatement
of the non-monetary items to the measuring unit current at 31 December 2021 have been recognised directly in retained earnings,
rather than in other comprehensive income. The inflation rate used by the Group is the official rate published by the Turkish
Statistical Institute, TurkStat. The movement in the publicly available official price index for the year to 31 December 2022 was an
increase of 64% (12 months to 31 December 2021: increase of 36%).
The impact of the continuing application of hyperinflationary accounting to the Group’s business in Argentina was immaterial both in
the current and comparative years.
IAS 29 requires that the income statement is adjusted for inflation in the year and translated at the year-end foreign exchange rates
and that non-monetary assets and liabilities on the balance sheet are inflated to reflect the change in purchasing power caused by
inflation from the date of initial recognition. For the year ended 31 December 2022, this resulted in an increase in goodwill of £16.4m
and a net increase in other intangibles of £12.3m before impairment charges. The impacts on other non-monetary assets and
liabilities were immaterial. The total impact to retained earnings during the year was a gain of £47.5m, comprising the adjustment to
opening balances for our businesses in Turkey of £12.6m and the impact of inflation in the current year for our businesses in Turkey
and Argentina of £34.9m. The total impact to the Consolidated income statement during the year was a charge of £21.2m to profit
after tax from hyperinflation accounting adjustments, comprising an £18.7m adverse impact on adjusted profit before tax, increased
customer relationships amortisation of £1.8m and an increased tax charge of £0.7m, and also a hyperinflation accounting related
impairment charge of £13.0m to the customer relationships assets in the Group’s businesses in Turkey partly offset by a tax credit of
£2.5m related to the impairment charge.
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
2024 the Group would need to experience a reduction in EBITDA of over 55% compared to the base case.
When applying IAS 29 on an ongoing basis, comparatives in a stable currency are not restated with the translation effect presented
within other comprehensive income during the year, and the effect of inflating opening balances to the measuring unit current at the
end of the reporting period presented as a change in equity.
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.
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 2023 and beyond
to have a material impact on its consolidated results or financial position.
168
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
169
169
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
NOTES CONTINUED
2 Accounting policies
The accounting policies set out below have, unless otherwise stated, been applied consistently to all years 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 230 to 235 and is subject to audit. The results of all of the subsidiary undertakings are included in full in these consolidated
financial statements.
The following UK subsidiaries are exempt from the requirements under the Companies Act 2006 relating to the audit of individual
financial statements by virtue of section 479A of the Act.
Company Name
Registered number
Bunzl American Holdings (No. 1) Limited
Bunzl American Holdings (No. 2) Limited
Bunzl Holding GTL Limited
Bunzl Holding LCE Limited
Bunzl Mexico Holdings 1 Limited
Bunzl Mexico Holdings 2 Limited
Bunzl Overseas Holdings Limited
Bunzl Overseas Holdings (No. 2) Limited
Bunzl Overseas Holdings (No. 3) Limited
Henares Limited
Yorse No. 1 Limited
Yorse No. 3 Limited
Selectuser Limited
02865710
05286676
0685352
0970892
13558260
13558193
02865701
02090880
08224950
06387342
04373660
02317609
03829908
(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 paid.
(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.
170
170
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
NOTES CONTINUED
2 Accounting policies
consolidated financial statements.
a. Basis of consolidation
(i) Subsidiaries
The accounting policies set out below have, unless otherwise stated, been applied consistently to all years presented in the
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 230 to 235 and is subject to audit. The results of all of the subsidiary undertakings are included in full in these consolidated
financial statements.
The following UK subsidiaries are exempt from the requirements under the Companies Act 2006 relating to the audit of individual
financial statements by virtue of section 479A of the Act.
Company Name
Registered number
Bunzl American Holdings (No. 1) Limited
Bunzl American Holdings (No. 2) Limited
Bunzl Holding GTL Limited
Bunzl Holding LCE Limited
Bunzl Mexico Holdings 1 Limited
Bunzl Mexico Holdings 2 Limited
Bunzl Overseas Holdings Limited
Bunzl Overseas Holdings (No. 2) Limited
Bunzl Overseas Holdings (No. 3) Limited
Henares Limited
Yorse No. 1 Limited
Yorse No. 3 Limited
Selectuser Limited
(ii) Business combinations
02865710
05286676
0685352
0970892
13558260
13558193
02865701
02090880
08224950
06387342
04373660
02317609
03829908
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 paid.
(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.
2 Accounting policies continued
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.
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.
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 21 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.
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NOTES CONTINUED
2 Accounting policies continued
g. Leases continued
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.
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, brands and technology
Customer relationships, brands and technology intangible assets acquired in a business combination are recognised on acquisition
and recorded at fair value. Subsequent to initial recognition, customer relationships, brands and technology 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.
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NOTES CONTINUED
2 Accounting policies continued
g. Leases continued
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
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,
which the temporary difference can be utilised.
i. Property, plant and equipment
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
3 to 12 years
3 to 12 years
Not depreciated
50 years (or depreciated over life of lease if shorter than 50 years)
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, brands and technology
Customer relationships, brands and technology intangible assets acquired in a business combination are recognised on acquisition
and recorded at fair value. Subsequent to initial recognition, customer relationships, brands and technology 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.
2 Accounting policies continued
k. Intangible assets continued
(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.
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’).
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
NOTES CONTINUED
2 Accounting policies continued
p. Financial instruments continued
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.
(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. When the
hedged item results in the recognition of a non-financial asset, the gains or losses accumulated in equity are transferred from equity
and included in the carrying amount of the 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. This transfer is not a reclassification adjustment.
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.
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.
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NOTES CONTINUED
2 Accounting policies continued
p. Financial instruments continued
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.
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
(i) Fair value hedge
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.
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
(ii) Cash flow hedge
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. When the
hedged item results in the recognition of a non-financial asset, the gains or losses accumulated in equity are transferred from equity
and included in the carrying amount of the 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. This transfer is not a reclassification adjustment.
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
2 Accounting policies continued
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.
(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.
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.
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.
(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.
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.
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
s. Provisions
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.
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.
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’. See Note 1a(ii) for details on the
impact of hyperinflation accounting in the current year.
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.
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NOTES CONTINUED
2 Accounting policies continued
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 2022, 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 25. The Group’s net pension asset balance as at 31 December 2022 was £39.9m (2021: £31.2m).
While not expected to result in a material change in the carrying value of assets or liabilities in the next 12 months 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, brands and technology 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 9.
Recoverability of goodwill, customer relationships, brands and technology intangible assets
As noted above, part of the Company’s strategy is to grow through acquisitions which has led to material goodwill, customer
relationships, brands and technology 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 13. Customer relationships, brands and technology 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, brands and technology intangible assets relate. The useful economic
lives of customer relationships, brands and technology 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 2022 the goodwill balance was £1,931.6m
(2021: £1,698.5m), the amount of customer relationships intangible assets was £1,090.9m (2021: £1,022.0m), the amount of brands
intangible assets was £34.9m (2021: £24.0m) and the amount of technology intangible assets was £9.1m (2021: £nil).
176
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NOTES CONTINUED
2 Accounting policies continued
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 2022, 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 25. The Group’s net pension asset balance as at 31 December 2022 was £39.9m (2021: £31.2m).
While not expected to result in a material change in the carrying value of assets or liabilities in the next 12 months 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, brands and technology 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 9.
Recoverability of goodwill, customer relationships, brands and technology intangible assets
As noted above, part of the Company’s strategy is to grow through acquisitions which has led to material goodwill, customer
relationships, brands and technology 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 13. Customer relationships, brands and technology 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, brands and technology intangible assets relate. The useful economic
lives of customer relationships, brands and technology 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 2022 the goodwill balance was £1,931.6m
(2021: £1,698.5m), the amount of customer relationships intangible assets was £1,090.9m (2021: £1,022.0m), the amount of brands
intangible assets was £34.9m (2021: £24.0m) and the amount of technology intangible assets was £9.1m (2021: £nil).
2 Accounting policies continued
y. Sources of estimation uncertainty continued
Trade receivables and inventory provisions
Due to the uncertainty created by the Covid-19 pandemic and the continuing challenging economic conditions, trade receivables
and inventory provisions are considered to be a source of estimation uncertainty. In 2020 and 2021, the Group saw increases in
provisions for expected credit losses on trade receivables and slow moving inventory provisions, and additional provisions were
made as a result of market price deflation on certain Covid-19 products. During 2022, the Group has seen a net utilisation of
approximately £5m in trade receivables and slow moving inventory provisions, and also some utilisation of the provisions set up
in the prior year for market price movements on Covid-19 products. As at 31 December 2022, the Group carried trade receivables
provisions of £29.1m (2021: £27.4m) and provisions for slow moving, obsolete or defective inventories and market price movements
of £179.9m (2021: £179.9m).
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 £41.7m (2021: £43.6m) 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.
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
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, adjusted for differences in trading days between years and adjusted to exclude growth in excess of 26% per
annum in hyperinflationary economies (reconciled in the Financial Review)
Operating profit before customer relationships, brands and technology 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, brands and technology 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, brands and technology 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 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 diluted
earnings per share
Operating
cash flow
Free cash flow
Lease adjusted
operating profit
Cash conversion
Working capital
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)
Operating cash flow after deducting payments for tax and net interest excluding interest on lease liabilities (as 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 shown in the Consolidated cash flow statement)
Operating cash flow as a percentage of lease adjusted operating profit (as shown in the Consolidated cash flow
statement)
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 14)
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, brands and
technology 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 28)
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 2022 so that they can be compared without the distorting impact of changes caused by
foreign exchange translation. The principal exchange rates used for 2022 and 2021 can be found in the Financial review
on page 87
Cumulative inflation over 100% (26% per annum compounded) over three years is one of the key indicators within IAS 29 to assess
whether an economy is deemed to be hyperinflationary. As a result, the definition of ‘Underlying revenue growth’ has been updated
to exclude growth in hyperinflationary economies above 26% per annum at constant exchange rates. In addition, the list of adjusting
items excluded from the profitability alternative performance measures has been amended to include amortisation of technology
intangibles recognised on acquisition.
Except for the amendments noted above, there have been no new alternative performance measures during the year and all other
alternative performance measures have been calculated consistently with the methods applied in the consolidated financial
statements for the year ended 31 December 2021. The amendments to the alternative performance measures, alongside an
assessment of the relevance of the existing alternative performance measures, were agreed with the Audit Committee.
178
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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 excluding the incremental impact of acquisitions and disposals compared to revenue in prior years at constant
revenue growth
exchange, adjusted for differences in trading days between years and adjusted to exclude growth in excess of 26% per
annum in hyperinflationary economies (reconciled in the Financial Review)
Adjusted
Operating profit before customer relationships, brands and technology amortisation, acquisition related items, non-
operating profit
recurring pension scheme charges and profit or loss on disposal of businesses (reconciled in the following tables and in
Operating margin
Adjusted operating profit as a percentage of revenue
the Consolidated income statement)
Adjusted profit
Profit before income tax, customer relationships, brands and technology amortisation, acquisition related items, non-
before income tax
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, brands and technology 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
per share
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)
Adjusted diluted
earnings per share
Operating
cash flow
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
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
statement)
Note 14)
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
invested capital
debt, lease liabilities, net defined benefit pension scheme liabilities, cumulative customer relationships, brands and
technology 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
Net debt excluding
Net debt excluding the carrying value of lease liabilities (reconciled in Note 28)
charges and to annualise for the effect of acquisitions and disposal of businesses
lease liabilities
Constant
on page 87
Growth rates at constant exchange rates are calculated by retranslating the results for prior years at the average rates for
exchange rates
the year ended 31 December 2022 so that they can be compared without the distorting impact of changes caused by
foreign exchange translation. The principal exchange rates used for 2022 and 2021 can be found in the Financial review
Cumulative inflation over 100% (26% per annum compounded) over three years is one of the key indicators within IAS 29 to assess
whether an economy is deemed to be hyperinflationary. As a result, the definition of ‘Underlying revenue growth’ has been updated
to exclude growth in hyperinflationary economies above 26% per annum at constant exchange rates. In addition, the list of adjusting
items excluded from the profitability alternative performance measures has been amended to include amortisation of technology
intangibles recognised on acquisition.
Except for the amendments noted above, there have been no new alternative performance measures during the year and all other
alternative performance measures have been calculated consistently with the methods applied in the consolidated financial
statements for the year ended 31 December 2021. The amendments to the alternative performance measures, alongside an
assessment of the relevance of the existing alternative performance measures, were agreed with the Audit Committee.
3 Alternative performance measures continued
The alternative performance measures listed above exclude the charge for customer relationships, brands and technology
amortisation, acquisition related items, non-recurring pension scheme charges, profit or loss on disposal of businesses and any
associated tax, where relevant.
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, brands and technology
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 2022
and the year ended 31 December 2021 there were no non-recurring pension scheme charges. Disposal of business relates to the
profit on disposal of the Group’s UK Healthcare division in the year ended 31 December 2022. 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
46 and 47, 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.
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 2022
Adjusting items
Alternative
performance
measures
£m
Customer
relationships,
brands and
technology
amortisation
£m
Acquisition
related
items
£m
Disposal of
business
£m
Statutory
measures
£m
Adjusted operating profit
Finance income
Finance expense
Disposal of business
Adjusted profit before income tax
Tax on adjusted profit
Adjusted profit for the year
885.9
22.3
(90.2)
–
818.0
(201.2)
616.8
(128.4)
(55.9)
(128.4)
34.7
(93.7)
(55.9)
6.3
(49.6)
701.6 Operating profit
22.3 Finance income
(90.2) Finance expense
0.9
0.9
–
0.9
0.9 Disposal of business
634.6 Profit before income tax
(160.2) Income tax
474.4 Profit for the year
Adjusted earnings per share
184.3p
(28.0)p
(14.8)p
0.2p
141.7p Basic earnings per share
Year ended 31 December 2021
Adjusting items
Alternative
performance
measures
£m
Customer
relationships,
brands and
technology
amortisation
£m
Acquisition
related
items
£m
Disposal of
business
£m
Statutory
measures
£m
Adjusted operating profit
Finance income
Finance expense
Disposal of business
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
– Disposal of business
568.7 Profit before income tax
(125.9) Income tax
442.8 Profit for the year
132.7p Basic earnings per share
–
–
–
–
–
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
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.
North
America
£m
7,366.0
511.5
Continental
Europe
£m
2,173.4
195.1
(57.3)
(15.8)
438.4
(40.6)
(27.5)
127.0
UK &
Ireland
£m
1,442.5
95.3
(11.0)
(7.4)
76.9
Rest of
the World
£m
1,057.6
111.7
(19.5)
(5.2)
87.0
Year ended 31 December 2022
Revenue
Adjusted operating profit/(loss)
Customer relationships, brands and
technology amortisation
Acquisition related items
Operating profit/(loss)
Finance income
Finance expense
Disposal of business
Profit before income tax
Adjusted profit before income tax
Income tax
Profit for the year
Operating margin
Return on average operating capital
6.9%
45.4%
9.0%
43.7%
6.6%
52.2%
10.6%
35.3%
Corporate
£m
(27.7)
Total
£m
12,039.5
885.9
(27.7)
13.0
11.3
65.8
74.7
3.1
3.7
9.7
9.1
15.3
33.6
5.2
2.2
North
America
£m
6,144.7
401.3
(44.5)
(7.6)
349.2
Continental
Europe
£m
1,972.9
191.8
(36.4)
(8.2)
147.2
5.9
4.8
18.9
23.8
2.6
1.6
UK &
Ireland
£m
1,254.2
67.0
(9.1)
(3.1)
54.8
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 2021
Revenue
Adjusted operating profit/(loss)
Customer relationships, brands and
technology amortisation
Acquisition related items
Operating profit/(loss)
Finance income
Finance expense
Profit before income tax
Adjusted profit before income tax
Income tax
Profit for the year
5.8
4.3
23.3
18.4
0.9
1.1
0.3
0.1
–
0.6
0.2
0.2
Rest of
the World
£m
Corporate
£m
913.3
116.5
(16.5)
(4.1)
95.9
(23.8)
752.8
(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
7.7
9.7
55.2
65.1
2.8
3.5
8.1
8.8
32.0
31.8
2.9
2.4
4.3
5.2
8.8
22.3
1.6
1.0
4.6
4.2
16.6
15.1
0.6
1.3
0.1
0.1
–
0.5
–
0.2
180
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Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
(128.4)
(55.9)
701.6
22.3
(90.2)
0.9
634.6
818.0
(160.2)
474.4
7.4%
43.0%
34.7
29.6
123.3
151.1
12.0
8.8
Total
£m
10,285.1
(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
Operating margin
Return on average operating capital
6.9%
45.4%
9.0%
43.7%
6.6%
52.2%
10.6%
35.3%
NOTES CONTINUED
4 Segment analysis
adjusted operating profit.
Year ended 31 December 2022
Revenue
Adjusted operating profit/(loss)
Customer relationships, brands and
technology amortisation
Acquisition related items
Operating profit/(loss)
Finance income
Finance expense
Disposal of business
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 2021
Revenue
Adjusted operating profit/(loss)
Customer relationships, brands and
technology amortisation
Acquisition related items
Operating profit/(loss)
Finance income
Finance expense
Profit before income tax
Adjusted profit before income tax
Income tax
Profit for the year
North
Continental
America
£m
7,366.0
511.5
(57.3)
(15.8)
438.4
Europe
£m
2,173.4
195.1
(40.6)
(27.5)
127.0
UK &
Ireland
£m
1,442.5
95.3
(11.0)
(7.4)
76.9
Rest of
£m
1,057.6
111.7
(19.5)
(5.2)
87.0
13.0
11.3
65.8
74.7
3.1
3.7
9.7
9.1
15.3
33.6
5.2
2.2
North
America
£m
6,144.7
401.3
(44.5)
(7.6)
349.2
Continental
Europe
£m
1,972.9
191.8
(36.4)
(8.2)
147.2
5.9
4.8
18.9
23.8
2.6
1.6
UK &
Ireland
£m
1,254.2
67.0
(9.1)
(3.1)
54.8
5.8
4.3
23.3
18.4
0.9
1.1
Rest of
the World
£m
913.3
116.5
(16.5)
(4.1)
95.9
£m
(27.7)
(27.7)
0.3
0.1
–
0.6
0.2
0.2
(23.8)
Total
£m
12,039.5
885.9
(128.4)
(55.9)
701.6
22.3
(90.2)
0.9
634.6
818.0
(160.2)
474.4
7.4%
43.0%
34.7
29.6
123.3
151.1
12.0
8.8
(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
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
7.7
9.7
55.2
65.1
2.8
3.5
8.1
8.8
32.0
31.8
2.9
2.4
4.3
5.2
8.8
22.3
1.6
1.0
4.6
4.2
16.6
15.1
0.6
1.3
0.1
0.1
0.5
–
–
0.2
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
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
the World
Corporate
Customer relationships impairment charges (Note 13)
2022
£m
24.9
10.9
7.1
42.9
13.0
55.9
2021
£m
15.0
8.3
(0.3)
23.0
–
23.0
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 2022 the Group had no customer that represented 10% or more of total Group revenue
(2021: 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
10,285.1
(23.8)
752.8
Revenue by market sector
Foodservice
Grocery
Safety
Retail
Cleaning & Hygiene
Healthcare
Other
2022
£m
3,592.9
3,139.3
1,786.8
1,153.7
1,124.5
839.0
403.3
2021
£m
2,879.8
2,623.5
1,564.9
1,011.2
1,048.3
809.9
347.5
12,039.5
10,285.1
Revenue attributable to the UK, the parent company’s country of domicile, for the year ended 31 December 2022 was £1,354.5m,
representing 11% of the Group’s total (2021: £1,165.9m, representing 11% of the Group’s total). Revenue attributable to foreign
countries in total was £10,685.0m, representing 89% of the Group’s total (2021: £9,119.2m, representing 89% 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 74% of the Group’s revenue (2021: 75%).
Non-current assets attributable to the UK, the parent company’s country of domicile, for the year ended 31 December 2022 were
£545.9m, representing 14% of the Group’s total (2021: £569.8m, representing 17% of the Group’s total). Non-current assets
attributable to foreign countries in total were £3,279.3m, representing 86% of the Group’s total (2021: £2,839.5m, representing 83%
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 64% of the Group’s total
non-current assets (2021: 66%).
180
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181
181
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
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 2022
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
At 31 December 2021
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
North
America
£m
3,268.8
Continental
Europe
£m
1,956.5
UK &
Ireland
£m
939.2
Rest of
the World
£m
878.8
Unallocated
£m
3,268.8
1,956.5
939.2
878.8
1,363.1
768.9
516.8
279.5
1,363.1
768.9
516.8
279.5
1,623.5
1,623.5
3,017.6
3,017.6
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
5 Analysis of operating income and expenses
Cost of goods sold
Employee costs (Note 26)
Depreciation of property, plant and equipment (Note 11)
Depreciation of right-of-use assets (Note 12)
Customer relationships, brands and technology amortisation (Note 13)
Amortisation of software (Note 13)
Acquisition related items (Note 4)
Net impairment losses/(reversals) on trade receivables (Note 16)
Profit 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
Cost of goods sold consists of the cost of the inventories sold or disposed of in the year where the cost of inventories is net of supplier
rebate income related to those inventories.
182
182
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
Total
£m
7,043.3
1,623.5
8,666.8
2,928.3
3,017.6
5,945.9
Total
£m
6,227.9
886.2
7,114.1
2,475.6
2,434.6
4,910.2
2021
£m
7,762.5
934.8
28.0
134.8
106.5
8.4
23.0
(4.7)
(0.9)
6.2
(2.3)
886.2
886.2
2,434.6
2,434.6
2022
£m
9,015.0
1,085.1
29.6
151.1
128.4
8.8
55.9
3.7
(0.4)
5.2
(3.2)
858.7
11,337.9
665.5
9,661.8
NOTES CONTINUED
At 31 December 2022
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
At 31 December 2021
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
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.
North
Continental
America
£m
3,268.8
Europe
£m
1,956.5
UK &
Ireland
£m
939.2
Rest of
£m
878.8
the World
Unallocated
3,268.8
1,956.5
939.2
878.8
1,363.1
768.9
516.8
279.5
1,363.1
768.9
516.8
279.5
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
£m
1,623.5
1,623.5
3,017.6
3,017.6
£m
886.2
886.2
2,434.6
2,434.6
2022
£m
9,015.0
1,085.1
29.6
151.1
128.4
8.8
55.9
3.7
(0.4)
5.2
(3.2)
Total
£m
7,043.3
1,623.5
8,666.8
2,928.3
3,017.6
5,945.9
Total
£m
6,227.9
886.2
7,114.1
2,475.6
2,434.6
4,910.2
2021
£m
7,762.5
934.8
28.0
134.8
106.5
8.4
23.0
(4.7)
(0.9)
6.2
(2.3)
5 Analysis of operating income and expenses
Cost of goods sold
Employee costs (Note 26)
Depreciation of property, plant and equipment (Note 11)
Depreciation of right-of-use assets (Note 12)
Customer relationships, brands and technology amortisation (Note 13)
Amortisation of software (Note 13)
Acquisition related items (Note 4)
Net impairment losses/(reversals) on trade receivables (Note 16)
Profit 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
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
0.3
1.7
Overseas
£m
–
3.6
–
–
3.6
2022
Total
£m
0.8
4.1
0.1
0.3
5.3
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
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.
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 119 to 131.
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 on US private placement notes and senior bond in a hedge relationship
Fair value loss on interest rate swaps in a hedge relationship
Foreign exchange gain/(loss) on intercompany funding
Foreign exchange (loss)/gain 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 year where the cost of inventories is net of supplier
rebate income related to those inventories.
858.7
11,337.9
665.5
9,661.8
Interest related to income tax
Monetary loss from hyperinflation accounting1
Other finance expense
Finance expense
Net finance expense
1 See Note 1 for further details.
2022
£m
10.5
9.2
1.2
–
1.4
22.3
(58.5)
(22.0)
(0.8)
(0.8)
83.2
(79.2)
126.7
(126.7)
(0.5)
(10.7)
(0.9)
(90.2)
(67.9)
2021
£m
3.5
5.0
0.1
0.7
1.4
10.7
(40.7)
(20.3)
(1.5)
(0.8)
33.3
(33.1)
(25.3)
25.2
(0.5)
(0.2)
(1.4)
(65.3)
(54.6)
The foreign exchange gain on intercompany funding arises as a result of the retranslation of foreign currency intercompany loans.
This gain on intercompany funding is substantially matched by the foreign exchange loss on external debt and foreign exchange
forward contracts not in a hedge relationship which minimises the foreign currency exposure in the income statement.
182
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Bunzl plc Annual Report 2022
183
183
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
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
2022
£m
172.7
(9.2)
163.5
(4.8)
1.5
(3.3)
160.2
2021
£m
152.9
(14.1)
138.8
(10.6)
(2.3)
(12.9)
125.9
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
2022
£m
160.2
41.0
201.2
634.6
183.4
818.0
25.2%
24.6%
Tax on other comprehensive income/(expense)
and equity
Actuarial gain on defined benefit pension schemes
Foreign currency translation differences on foreign operations
(Loss)/gain taken to equity as a result of effective net
investment hedges
Gain recognised in cash flow hedge reserve
Other comprehensive income/(expense)
Dividends
Movement from cash flow hedge reserve to inventory
Hyperinflation accounting adjustments
Issue of share capital
Employee trust shares
Share based payments
Other comprehensive income/(expense) and equity
Gross
£m
6.9
232.9
(38.2)
10.3
211.9
(190.5)
(12.0)
36.7
5.3
(34.2)
14.1
31.3
Tax (charge)/
credit
£m
(1.4)
0.3
–
(2.6)
(3.7)
–
3.0
(1.8)
–
–
1.2
(1.3)
2022
Net
£m
5.5
233.2
(38.2)
7.7
208.2
Gross
£m
74.1
(89.8)
11.5
4.4
0.2
(190.5)
(180.4)
(9.0)
34.9
5.3
(34.2)
15.3
30.0
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
£m
125.9
29.8
155.7
568.7
129.5
698.2
22.1%
22.3%
2021
Net
£m
55.6
(89.8)
11.5
3.6
(19.1)
(180.4)
1.1
–
6.6
15.5
18.3
(158.0)
184
184
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
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
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 table below.
Tax (charge)/
credit
Tax (charge)/
Tax on other comprehensive income/(expense)
and equity
Actuarial gain on defined benefit pension schemes
Foreign currency translation differences on foreign operations
(Loss)/gain taken to equity as a result of effective net
investment hedges
Gain recognised in cash flow hedge reserve
Other comprehensive income/(expense)
Dividends
Movement from cash flow hedge reserve to inventory
Hyperinflation accounting adjustments
Issue of share capital
Employee trust shares
Share based payments
Other comprehensive income/(expense) and equity
Gross
£m
6.9
232.9
(38.2)
10.3
211.9
(190.5)
(12.0)
36.7
5.3
(34.2)
14.1
31.3
2022
Net
£m
5.5
233.2
(38.2)
7.7
208.2
(9.0)
34.9
5.3
(34.2)
15.3
30.0
Gross
£m
74.1
(89.8)
11.5
4.4
0.2
1.4
–
6.6
15.5
12.7
(144.0)
(190.5)
(180.4)
£m
(1.4)
0.3
–
(2.6)
(3.7)
–
3.0
(1.8)
–
–
1.2
(1.3)
2022
£m
172.7
(9.2)
163.5
(4.8)
1.5
(3.3)
160.2
2022
£m
160.2
41.0
201.2
634.6
183.4
818.0
25.2%
24.6%
credit
£m
(18.5)
(0.8)
(19.3)
(0.3)
–
–
–
–
–
–
5.6
(14.0)
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%
2021
Net
£m
55.6
(89.8)
11.5
3.6
(19.1)
(180.4)
1.1
–
6.6
15.5
18.3
(158.0)
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% (2021: 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 (2022: 24.6%; 2021: 24.9%)
Effects of:
non-deductible expenditure
impact of intercompany finance
change in tax rates
hyperinflation accounting adjustments
prior year adjustments
other current year items
Income tax on profit
Deferred tax in the income statement
Property, plant and equipment
Defined benefit pension schemes
Goodwill, customer relationships, brands and technology
Provisions and accruals
Inventories
Leases
Other
Deferred tax on profit
8 Earnings per share
Profit for the year
Adjusted for:
customer relationships, brands and technology amortisation
acquisition related items
profit on disposal of business
tax credit on adjusting items
Adjusted profit for the year
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
184
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
2022
£m
634.6
2021
£m
568.7
156.1
141.7
8.9
(2.0)
0.4
4.7
(7.7)
(0.2)
160.2
2022
£m
1.2
(0.1)
(17.4)
–
10.5
0.7
1.8
(3.3)
2022
£m
474.4
128.4
55.9
(0.9)
(41.0)
616.8
2022
334.7
2.5
337.2
141.7p
42.6p
184.3p
140.7p
42.2p
182.9p
2.4
(0.2)
(0.7)
–
(16.4)
(0.9)
125.9
2021
£m
(0.9)
1.7
(13.0)
4.3
(5.5)
0.2
0.3
(12.9)
2021
£m
442.8
106.5
23.0
–
(29.8)
542.5
2021
333.8
2.2
336.0
132.7p
29.8p
162.5p
131.8p
29.7p
161.5p
185
185
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
NOTES CONTINUED
9 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 2022 the allocation period for
all acquisitions completed since 1 January 2022 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 2022 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 decrease to goodwill of £3.4m (2021: 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.
2022
Summary details of the businesses acquired during the year ended 31 December 2022 are shown in the table below:
Acquisition date
2022
Percentage of
share capital
acquired
Annualised
revenue
£m
Business
USL
Hygi.de
AFL Groep
Sector
Healthcare
Country
New Zealand
Cleaning & Hygiene Germany
Other
Netherlands
London Catering & Hygiene Solutions
Cleaning & Hygiene United Kingdom
Containit
Corsul Group
Enviropack
VM Footwear
PM Pack
Toomac Ophthalmic & Solutions
Grupo R. Queralto
Safety
Safety
Foodservice
Safety
Foodservice
Healthcare
Healthcare
Australia
Brazil
United Kingdom
Czech Republic
Denmark
New Zealand
Spain
31 May
11 July
20 July
29 July
1 August
2 September
13 October
31 October
30 November
2 December
21 December
Acquisitions completed in the current year
GRC
Healthcare
Australia
1 January 2023
Acquisitions agreed in the current year
90%
75%
90%
100%
80%
100%
85%
70%
70%
100%
85%
100%
56.0
94.3
18.1
5.4
12.9
42.3
6.9
14.2
16.3
6.6
23.3
296.3
2.7
299.0
186
186
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
NOTES CONTINUED
9 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 2022 the allocation period for
all acquisitions completed since 1 January 2022 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 2022 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 decrease to goodwill of £3.4m (2021: 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.
Summary details of the businesses acquired during the year ended 31 December 2022 are shown in the table below:
London Catering & Hygiene Solutions
Cleaning & Hygiene United Kingdom
Sector
Healthcare
Country
New Zealand
Cleaning & Hygiene Germany
Other
Safety
Safety
Foodservice
Safety
Foodservice
Healthcare
Healthcare
Netherlands
Australia
Brazil
United Kingdom
Czech Republic
Denmark
New Zealand
Spain
Acquisition date
2022
31 May
11 July
20 July
29 July
1 August
2 September
13 October
31 October
30 November
2 December
21 December
Percentage of
share capital
acquired
Annualised
revenue
90%
75%
90%
100%
80%
100%
85%
70%
70%
100%
85%
100%
£m
56.0
94.3
18.1
5.4
12.9
42.3
6.9
14.2
16.3
6.6
23.3
296.3
2.7
299.0
Toomac Ophthalmic & Solutions
Grupo R. Queralto
Acquisitions completed in the current year
Acquisitions agreed in the current year
GRC
Healthcare
Australia
1 January 2023
2022
Business
USL
Hygi.de
AFL Groep
Containit
Corsul Group
Enviropack
VM Footwear
PM Pack
9 Acquisitions continued
There were no individually significant acquisitions in 2022. In 2021 the acquisition of McCue Corporation was considered to be
significant and is shown separately in the table below. A summary of the effect of acquisitions in 2022 and 2021 is shown below:
Customer relationships
Brands
Technology
Property, plant and equipment and software
Right-of-use assets
Inventories
Trade and other receivables
Trade and other payables
Net (overdrafts)/cash
Provisions
Lease liabilities
Derivative assets/(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 overdrafts/(cash) acquired
Transaction costs and expenses
Total committed spend in respect of acquisitions completed in the year
Spend on acquisitions committed but not completed at the year end
Total committed spend in respect of acquisitions agreed in the year
The net cash outflow in the year in respect of acquisitions comprised:
Cash consideration
Net overdrafts/(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
2022
Total
£m
107.7
11.6
9.1
4.8
21.5
44.9
27.0
(30.9)
(6.8)
(7.9)
(21.5)
0.4
(31.3)
128.6
106.6
235.2
180.6
54.6
235.2
66.4
6.8
10.9
319.3
2.9
322.2
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
507.6
–
2021
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
246.5
261.1
–
–
507.6
246.5
261.1
2022
Total
£m
180.6
6.8
56.2
243.6
11.0
9.6
264.2
Total
£m
442.8
(11.3)
5.2
436.7
9.1
6.9
2021
McCue
£m
234.3
(5.0)
–
Other
£m
208.5
(6.3)
5.2
229.3
207.4
1.5
–
7.6
6.9
452.7
230.8
221.9
Acquisitions completed in the year ended 31 December 2022 contributed £115.8m (2021: £123.2m) to the Group’s revenue, £9.5m
(2021: £17.3m) to the Group’s adjusted operating profit and £5.9m (2021: £10.6m) to the Group’s operating profit for the year ended
31 December 2022.
186
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Bunzl plc Annual Report 2022
187
187
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
NOTES CONTINUED
9 Acquisitions continued
The estimated contributions from acquisitions completed and agreed 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
2022
£m
299.0
29.3
2021
£m
322.4
46.3
The total amount of goodwill expected to be deductible for tax purposes in relation to acquisitions completed during the year is £6.8m
(2021: £9.3m).
Deferred consideration
The table below gives further details of the Group’s deferred consideration liabilities.
Minority options
Earn outs
Deferred consideration held at fair value
Other
Total deferred consideration
Current
Non-current
Total deferred consideration
2022
£m
92.4
39.3
131.7
8.2
139.9
42.0
97.9
139.9
2021
£m
41.9
57.7
99.6
8.2
107.8
46.5
61.3
107.8
Including expected future payments which are contingent on the continued retention of former owners of businesses acquired of
£76.3m, total deferred and contingent consideration as at 31 December 2022 is £216.2m.
2021
Summary details of the businesses acquired or agreed to be acquired during the year ended 31 December 2021 are shown in the
table below:
Business
Deliver Net
Pinnacle
Sector
Healthcare
Country
UK
Cleaning & Hygiene
Canada
Disposable Discounter
Foodservice
Netherlands
Comax
Harvey Distributors
Obex Medical Holdings
Proin Pinilla
Arprosa
Medshop
Intergro
McCue Corporation
Workwear Express
Hydropac1
Tingley Rubber
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 2021
1 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
Percentage of
share capital
acquired
Annualised
revenue
£m
100%
100%
75.1%
100%
100%
99.1%
100%
100%
75.1%
100%
96.9%
96.3%
100%
100%
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
188
188
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
9 Acquisitions continued
The estimated contributions from acquisitions completed and agreed 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:
10 Disposal of business
The Group completed the disposal of its UK Healthcare division on 19 December 2022. As a result, the net assets of the Group
increased by £0.9m representing the profit on disposal of £0.9m. The profit on disposal reflects the cash consideration received of
£63.7m, offset by the net book value of the assets disposed of £53.0m, including the associated customer relationships intangible
assets of £2.2m and the carrying value of allocated goodwill of £17.0m, less the associated transaction costs.
The net cash inflow in the year in respect of disposal of business comprised:
NOTES CONTINUED
Revenue
Adjusted operating profit
(2021: £9.3m).
Deferred consideration
Minority options
Earn outs
Deferred consideration held at fair value
Other
Total deferred consideration
Current
Non-current
Total deferred consideration
2021
table below:
Business
Deliver Net
Pinnacle
Comax
Proin Pinilla
Arprosa
Medshop
Intergro
McCue Corporation
Workwear Express
Hydropac1
Tingley Rubber
Harvey Distributors
Obex Medical Holdings
Acquisitions agreed and completed in 2021
1 Located in the UK, but reporting through Continental Europe.
The total amount of goodwill expected to be deductible for tax purposes in relation to acquisitions completed during the year is £6.8m
The table below gives further details of the Group’s deferred consideration liabilities.
Including expected future payments which are contingent on the continued retention of former owners of businesses acquired of
£76.3m, total deferred and contingent consideration as at 31 December 2022 is £216.2m.
Summary details of the businesses acquired or agreed to be acquired during the year ended 31 December 2021 are shown in the
Sector
Healthcare
Country
UK
Cleaning & Hygiene
Canada
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
2022
£m
299.0
29.3
2021
£m
322.4
46.3
2022
£m
92.4
39.3
131.7
8.2
139.9
42.0
97.9
139.9
100%
100%
75.1%
100%
100%
99.1%
100%
100%
75.1%
100%
96.9%
96.3%
100%
100%
2021
£m
41.9
57.7
99.6
8.2
107.8
46.5
61.3
107.8
£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
Percentage of
share capital
acquired
Annualised
revenue
Cash flow from disposal of business
Cash consideration received
Cash and cash equivalents disposed
Net cash proceeds
Transaction costs paid
Net cash inflow
11 Property, plant and equipment
2022
Cost
Beginning of year
Acquisitions (Note 9)
Disposal of business (Note 10)
Additions
Disposals
Currency translation
End of year
Accumulated depreciation
Beginning of year
Charge in year
Disposal of business (Note 10)
Disposals
Currency translation
End of year
Disposable Discounter
Foodservice
Netherlands
Net book value at 31 December 2022
2021
Cost
Beginning of year
Acquisitions (Note 9)
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
2022
£m
63.7
(10.2)
53.5
(3.6)
49.9
Total
£m
369.6
4.1
(7.9)
34.7
(11.0)
28.2
417.7
248.7
29.6
(6.0)
(10.4)
18.6
280.5
Total
£m
360.6
7.2
24.8
(13.9)
(9.1)
369.6
237.9
28.0
(12.1)
(5.1)
248.7
Land and
buildings
£m
Plant and
machinery
£m
Fixtures,
fittings and
equipment
£m
167.6
110.5
3.2
(1.7)
19.0
(2.7)
16.2
0.9
(3.6)
10.4
(6.5)
5.5
201.6
117.2
116.8
15.1
(1.7)
(2.3)
10.6
138.5
81.3
9.3
(3.0)
(6.3)
4.1
85.4
159.6
107.1
5.3
9.9
(6.5)
(0.7)
1.0
12.7
(3.7)
(6.6)
167.6
110.5
110.4
13.4
(6.0)
(1.0)
116.8
78.5
9.9
(3.7)
(3.4)
81.3
91.5
–
(2.6)
5.3
(1.8)
6.5
98.9
50.6
5.2
(1.3)
(1.8)
3.9
56.6
42.3
93.9
0.9
2.2
(3.7)
(1.8)
91.5
49.0
4.7
(2.4)
(0.7)
50.6
40.9
63.1
31.8
137.2
Land and
buildings
£m
Plant and
machinery
£m
Fixtures,
fittings and
equipment
£m
50.8
29.2
120.9
188
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
189
189
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
NOTES CONTINUED
12 Right-of-use assets
2022
Net book value at beginning of year
Acquisitions (Note 9)
Disposal of business (Note 10)
Additions
Depreciation charge in the year
Remeasurement adjustments
Currency translation
Net book value at 31 December 2022
2021
Net book value at beginning of year
Acquisitions (Note 9)
Additions
Depreciation charge in the year
Remeasurement adjustments
Currency translation
Net book value at 31 December 2021
13 Intangible assets
2022
Cost
At 31 December 2021
Adjustment to opening balances in respect of
hyperinflation in Turkey1
Restated as at 1 January 2022
Acquisitions (Note 9)
Disposal of business (Note 10)
Adjustment for hyperinflation accounting1
Additions
Disposals
Currency translation
End of year
Accumulated amortisation and impairment
At 31 December 2021
Adjustment to opening balances in respect of
hyperinflation in Turkey1
Restated as at 1 January 2022
Amortisation charge in the year
Impairment charge in the year
Disposal of business (Note 10)
Adjustment for hyperinflation accounting1
Disposals
Currency translation
End of year
Goodwill
£m
Customer
relationships
£m
1,710.9
2,055.2
6.7
1,717.6
106.6
(17.0)
9.7
10.0
2,065.2
107.7
(5.1)
13.5
127.5
1,944.4
167.7
2,349.0
12.4
1,033.2
–
12.4
–
–
–
0.4
12.8
4.4
1,037.6
124.8
13.0
(2.9)
6.8
78.8
1,258.1
Property
£m
Motor vehicles
£m
Equipment
£m
366.4
20.9
(1.5)
84.2
(111.7)
54.7
26.6
439.6
57.8
0.3
(0.2)
28.1
(28.6)
1.9
4.0
63.3
24.1
0.3
–
11.0
(10.8)
–
2.1
26.7
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
Total
£m
448.3
21.5
(1.7)
123.3
(151.1)
56.6
32.7
529.6
Total
£m
453.4
12.6
112.6
(134.8)
11.5
(7.0)
448.3
Brands
£m
Technology
£m
Software
£m
Total
£m
25.0
–
25.0
11.6
–
–
3.1
39.7
1.0
–
1.0
3.2
–
–
–
0.6
4.8
–
–
–
9.1
–
–
0.4
9.5
–
–
–
0.4
–
–
–
–
0.4
9.1
90.2
3,881.3
–
90.2
0.7
(0.8)
–
12.0
(3.4)
8.7
107.4
16.7
3,898.0
235.7
(22.9)
23.2
12.0
(3.4)
307.4
4,450.0
67.9
1,114.5
–
67.9
8.8
–
(0.6)
–
(3.4)
7.3
80.0
4.4
1,118.9
137.2
13.0
(3.5)
6.8
(3.4)
87.1
1,356.1
27.4
3,093.9
Net book value at 31 December 2022
1,931.6
1,090.9
34.9
1 See Note 1 for further details.
190
190
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
Goodwill
£m
Customer
relationships
£m
Brands
£m
Technology
£m
Software
£m
Total
£m
–
–
–
–
–
–
–
–
–
–
–
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
22.3
2,766.8
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
Property
Motor vehicles
Equipment
13 Intangible assets continued
2021
Cost
Beginning of year
Acquisitions (Note 9)
Additions
Disposals
Currency translation
End of year
Accumulated amortisation and impairment
Beginning of year
Amortisation charge in year
Disposals
Currency translation
End of year
NOTES CONTINUED
12 Right-of-use assets
2022
Net book value at beginning of year
Acquisitions (Note 9)
Disposal of business (Note 10)
Additions
Depreciation charge in the year
Remeasurement adjustments
Currency translation
Net book value at 31 December 2022
2021
Net book value at beginning of year
Acquisitions (Note 9)
Additions
Depreciation charge in the year
Remeasurement adjustments
Currency translation
Net book value at 31 December 2021
13 Intangible assets
2022
Cost
Adjustment to opening balances in respect of
hyperinflation in Turkey1
Restated as at 1 January 2022
Acquisitions (Note 9)
Disposal of business (Note 10)
Adjustment for hyperinflation accounting1
Additions
Disposals
Currency translation
End of year
Accumulated amortisation and impairment
Adjustment to opening balances in respect of
hyperinflation in Turkey1
Restated as at 1 January 2022
Amortisation charge in the year
Impairment charge in the year
Disposal of business (Note 10)
Adjustment for hyperinflation accounting1
Disposals
Currency translation
End of year
1 See Note 1 for further details.
Property
Motor vehicles
Equipment
£m
366.4
20.9
(1.5)
84.2
(111.7)
54.7
26.6
439.6
£m
358.3
12.5
81.3
(96.4)
16.5
(5.8)
366.4
25.0
11.6
–
–
–
3.1
39.7
1.0
–
1.0
3.2
–
–
–
0.6
4.8
£m
57.8
0.3
(0.2)
28.1
(28.6)
1.9
4.0
63.3
£m
66.4
0.1
24.3
(28.6)
(3.5)
(0.9)
57.8
9.1
0.4
9.5
–
–
–
–
–
–
–
–
–
–
–
–
0.4
0.4
9.1
£m
24.1
0.3
–
11.0
(10.8)
–
2.1
26.7
£m
28.7
–
7.0
(9.8)
(1.5)
(0.3)
24.1
–
90.2
0.7
(0.8)
–
12.0
(3.4)
8.7
107.4
67.9
8.8
(0.6)
–
–
–
(3.4)
7.3
80.0
Total
£m
448.3
21.5
(1.7)
123.3
(151.1)
56.6
32.7
529.6
Total
£m
453.4
12.6
112.6
(134.8)
11.5
(7.0)
448.3
16.7
3,898.0
235.7
(22.9)
23.2
12.0
(3.4)
307.4
4,450.0
4.4
1,118.9
137.2
13.0
(3.5)
6.8
(3.4)
87.1
1,356.1
6.7
1,717.6
106.6
(17.0)
9.7
10.0
2,065.2
107.7
(5.1)
13.5
127.5
1,944.4
167.7
2,349.0
12.4
–
–
–
–
0.4
12.8
4.4
1,037.6
124.8
13.0
(2.9)
6.8
78.8
1,258.1
At 31 December 2021
1,710.9
2,055.2
25.0
90.2
3,881.3
Customer
Goodwill
relationships
Brands
Technology
Software
£m
£m
£m
£m
£m
Total
£m
At 31 December 2021
12.4
1,033.2
67.9
1,114.5
Net book value at 31 December 2022
1,931.6
1,090.9
34.9
27.4
3,093.9
Goodwill, customer relationships, brands and technology intangible assets have been acquired as part of business combinations.
Further details of acquisitions made in the year are set out in Note 9.
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 2022
was £113.1m (2021: £107.9m) with a remaining useful economic life of 13.7 years (2021: 14.7 years). The net book value of customer
relationships in MCR Safety as at 31 December 2022 was £94.2m (2021: £90.0m) with a remaining useful economic life of 12.7 years
(2021: 13.7 years). The net book value of customer relationships in Hedis as at 31 December 2022 was £86.9m (2021: £90.8m) with a
remaining useful economic life of 10.9 years (2021: 11.9 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 (2021: seven). Based on our impairment testing, no impairments were identified to
the carrying value of goodwill within the Group.
190
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Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
191
191
Net book value at 31 December 2021
1,698.5
1,022.0
24.0
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
NOTES CONTINUED
13 Intangible assets continued
As at 31 December 2022 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 2022 the carrying value of goodwill in respect of North
America was £722.7m (2021: £649.3m), UK & Ireland was £314.7m (2021: £325.3m), France was £258.0m (2021: £245.0m) and Rest
of Continental Europe was £276.8m (2021: £199.1m). As at 31 December 2022 the aggregate amount of goodwill attributable to the
Group’s CGUs, excluding North America, UK & Ireland, France and Rest of Continental Europe, was £359.4m (2021: £279.8m), 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 2022
was in the range of 2.5 %–4.0 % (2021: 2.5%–3.7%) reflecting anticipated revenue and profit growth. A pre-tax discount rate in the
range of 8%–11% (2021: 8%–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%–5.4% (2021: 2.5%–5.9%) and discount rates ranging from 7%–15% (2021: 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. Following the application of hyperinflation
accounting to Turkey in the year, the Group completed an impairment assessment in relation to the carrying value of customer
relationship assets held in the Group’s businesses in Turkey. As a result of this impairment assessment an impairment of £13.0m was
recognised in relation to these assets.
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.
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 between 1⁰C to 2⁰C by 2100 but differ in the speed and extent of global
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,
although climate change is a principal risk, it does not warrant any amendment to the assumptions used in the Group’s impairment
testing, and would not have a material impact on the results of the impairment testing.
14 Working capital
Inventories (Note 15)
Trade and other receivables (Note 16)
Trade and other payables – current (Note 17)
Add back net non-trading related receivables and payables
2022
£m
1,748.6
1,557.4
(2,249.4)
40.0
1,096.6
2021
£m
1,474.0
1,431.0
(1,921.3)
43.9
1,027.6
See Note 30 for the cash flow impact of movements in working capital which exclude the impact from foreign exchange movements,
acquisitions and the disposal of business.
15 Inventories
Goods for resale
2022
£m
2021
£m
1,748.6
1,474.0
During the year £10.8m (2021: £8.5m) was written off directly 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 2022 were
£179.9m (2021: £179.9m). During the year, the Group saw a net utilisation of approximately £4m on provisions for slow moving
inventory, as well as some utilisation of provisions related to market price movements on Covid-19 related products.
192
192
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
NOTES CONTINUED
13 Intangible assets continued
As at 31 December 2022 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 2022 the carrying value of goodwill in respect of North
America was £722.7m (2021: £649.3m), UK & Ireland was £314.7m (2021: £325.3m), France was £258.0m (2021: £245.0m) and Rest
of Continental Europe was £276.8m (2021: £199.1m). As at 31 December 2022 the aggregate amount of goodwill attributable to the
Group’s CGUs, excluding North America, UK & Ireland, France and Rest of Continental Europe, was £359.4m (2021: £279.8m), 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 2022
was in the range of 2.5 %–4.0 % (2021: 2.5%–3.7%) reflecting anticipated revenue and profit growth. A pre-tax discount rate in the
range of 8%–11% (2021: 8%–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%–5.4% (2021: 2.5%–5.9%) and discount rates ranging from 7%–15% (2021: 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. Following the application of hyperinflation
accounting to Turkey in the year, the Group completed an impairment assessment in relation to the carrying value of customer
relationship assets held in the Group’s businesses in Turkey. As a result of this impairment assessment an impairment of £13.0m was
recognised in relation to these assets.
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.
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 between 1⁰C to 2⁰C by 2100 but differ in the speed and extent of global
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,
although climate change is a principal risk, it does not warrant any amendment to the assumptions used in the Group’s impairment
testing, and would not have a material impact on the results of the impairment testing.
14 Working capital
Inventories (Note 15)
Trade and other receivables (Note 16)
Trade and other payables – current (Note 17)
Add back net non-trading related receivables and payables
15 Inventories
Goods for resale
See Note 30 for the cash flow impact of movements in working capital which exclude the impact from foreign exchange movements,
acquisitions and the disposal of business.
During the year £10.8m (2021: £8.5m) was written off directly 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 2022 were
£179.9m (2021: £179.9m). During the year, the Group saw a net utilisation of approximately £4m on provisions for slow moving
inventory, as well as some utilisation of provisions related to market price movements on Covid-19 related products.
2022
£m
1,748.6
1,557.4
(2,249.4)
40.0
1,096.6
2021
£m
1,474.0
1,431.0
(1,921.3)
43.9
1,027.6
2022
£m
2021
£m
1,748.6
1,474.0
Gross
£m
1,037.5
174.1
48.3
35.2
1,295.1
2022
Provision
£m
6.0
2.3
2.7
18.1
29.1
Gross
£m
983.8
147.6
43.5
25.8
1,200.7
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:
16 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
Disposal of business
Charge
Released
Utilised
Currency translation
End of year
17 Trade and other payables
Current
Trade payables
Other tax and social security contributions
Other payables
Accruals and contract liabilities
2022
£m
2021
£m
1,266.0
1,173.3
87.9
203.5
86.8
170.9
1,557.4
1,431.0
2021
Provision
£m
4.8
2.1
2.4
18.1
27.4
2021
£m
35.2
1.5
–
5.7
(10.4)
(3.7)
(0.9)
27.4
2022
£m
27.4
0.8
(0.6)
8.5
(4.8)
(4.3)
2.1
29.1
2022
£m
2021
£m
1,440.9
1,216.6
31.2
245.3
532.0
28.0
222.4
454.3
2,249.4
1,921.3
Other payables includes £42.0m (2021: £46.5m) related to deferred consideration on acquisitions.
The Group’s contract liabilities are limited to deferred income of £10.4m (2021: £34.5m). This arises from contracts with customers in
the form of consideration that has been received in advance of the satisfaction of performance obligations.
Non-current
Other payables greater than one year of £117.2m (2021: £72.9m) includes £97.9m (2021: £61.3m) related to deferred consideration
on acquisitions.
192
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Bunzl plc Annual Report 2022
193
193
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
NOTES CONTINUED
18 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 178) 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 2022 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 USPPs issued in March 2022 contain a clause
whereby upon maturity of the previously issued USPPs, the latest maturity being in 2028, the principal financial covenants referred to
above will no longer apply. In addition, during August 2022, these principal financial covenants were removed from the Group’s
committed bank facilities.
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.
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 200.
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 2022 in relation to the interest rate swaps or the forward currency contracts.
194
194
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
NOTES CONTINUED
18 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 178) 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 2022 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 USPPs issued in March 2022 contain a clause
whereby upon maturity of the previously issued USPPs, the latest maturity being in 2028, the principal financial covenants referred to
above will no longer apply. In addition, during August 2022, these principal financial covenants were removed from the Group’s
committed bank facilities.
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.
There were no changes to the Group’s approach to capital management during the year and the Group is not subject to any
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
externally imposed capital requirements.
Treasury policies and controls
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 200.
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 2022 in relation to the interest rate swaps or the forward currency contracts.
18 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 2022, the Group issued $400m of US private placement notes which mature in three tranches in
2029, 2031 and 2032. During the year, £100 million of bank facilities were extended from 2025 to 2026 and the Group expects to
extend additional bank maturities further during 2023.
Loans, borrowings and net debt
Bank overdrafts
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
2022
£m
(825.9)
(161.0)
(986.9)
–
(975.7)
(598.3)
(1,574.0)
(103.2)
(2,664.1)
1,504.0
(1,160.1)
(569.9)
(1,730.0)
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)
Further information on the movement in net debt and lease liabilities is shown in Note 29.
The total available committed funding at 31 December 2022 was £2,790.0m (2021: £2,530.9m). The committed funding maturity
profile at 31 December 2022 is set out in the chart below:
Committed funding maturity profile by year (£m)
1000
800
600
400
200
0
411
300
176
2025
84
161
2023
205
138
2024
209
131
2026
55
146
2027
42
2028
108
2029
400
2030
112
2031
112
2032
US private placement notes
Senior bonds
Bank facilities – drawn
Bank facilities – undrawn
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
2022
£m
84.1
205.4
674.1
963.6
2021
£m
–
139.8
841.9
981.7
In addition, the Group maintains overdraft and uncommitted facilities to provide short term flexibility. As at 31 December 2022 there
were no loans secured by fixed charges on property (2021: none).
194
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195
195
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
NOTES CONTINUED
18 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.
2022
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
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
196
196
Total
contractual
cash flows
£m
Within one
year
£m
(825.9)
(825.9)
–
(1,325.9)
(768.4)
(706.6)
(2,325.0)
(5,951.8)
–
(200.8)
(12.8)
(167.6)
(2,207.8)
(3,414.9)
Contractual cash (outflows)/inflows
After
two years
but within
five years
£m
After
five years
£m
After
one year
but within
two years
£m
(172.7)
(12.8)
(136.0)
(117.2)
(438.7)
(527.1)
(324.8)
(263.3)
(425.3)
(418.0)
(139.7)
(1,115.2)
(983.0)
(115.7)
(15.2)
(15.2)
(44.7)
(40.6)
1,831.6
(1,830.0)
(114.1)
(6,065.9)
1,829.8
(1,828.2)
(13.6)
(3,428.5)
1.8
(1.8)
(15.2)
(453.9)
(44.7)
(40.6)
(1,159.9)
(1,023.6)
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)
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
NOTES CONTINUED
2022
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
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
196
18 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.
18 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 £1,136.7m
(2021: £862.4m), there are US dollar denominated amounts totalling £94.6m (2021: £95.8m), 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 £598.3m (2021: £668.6m), an amount totalling £299.2m (2021: £369.9m), with a maturity of 2030, has been swapped to
floating rates using interest rate swaps which reprice daily.
The US private placement notes of £1,136.7m include a fair value adjustment of £16.6m (2021: £20.8m) 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 2022 was a credit to the income
statement of £4.2m (2021: £4.3m).
The interest rate risk on the floating rate liability is managed using interest rate options. 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 (£m)
Notional amount (£m)
Maturity date range
Hedge ratio
Fair value gain on US private placement notes and senior bond in a hedge relationship (£m)
Fair value loss on interest rate swaps in a hedge relationship (£m)
2022
£m
2021
£m
(1,136.7)
(598.3)
(1,735.0)
393.8
(1,341.2)
(825.9)
–
(825.9)
(393.8)
(862.4)
(668.6)
(1,531.0)
465.7
(1,065.3)
(551.6)
(14.6)
(566.2)
(465.7)
(1,219.7)
(1,031.9)
(103.2)
(2,664.1)
(17.1)
(2,114.3)
2022
2021
(100.5)
500.0
(21.3)
488.9
2026-2030
2026–2030
1:1
83.2
(79.2)
1:1
33.3
(33.1)
Contractual cash (outflows)/inflows
contractual
Within one
Total
cash flows
£m
After
one year
but within
two years
£m
After
two years
but within
five years
£m
year
£m
After
five years
£m
(115.7)
(15.2)
(15.2)
(44.7)
(40.6)
(825.9)
(825.9)
–
(1,325.9)
(768.4)
(706.6)
(2,325.0)
(5,951.8)
–
(200.8)
(12.8)
(167.6)
(2,207.8)
(3,414.9)
1,831.6
(1,830.0)
(114.1)
(6,065.9)
1,829.8
(1,828.2)
(13.6)
(3,428.5)
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)
(527.1)
(324.8)
(263.3)
(425.3)
(418.0)
(139.7)
(1,115.2)
(983.0)
(172.7)
(12.8)
(136.0)
(117.2)
(438.7)
1.8
(1.8)
(15.2)
(453.9)
(44.7)
(40.6)
(1,159.9)
(1,023.6)
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)
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Bunzl plc Annual Report 2022
197
197
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
NOTES CONTINUED
18 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:
2022
2021
Impact on profit before tax
–1%
£m
+1%
£m
1.5
1.3
(1.4)
(0.3)
Impact on equity
–1%
£m
+1%
£m
1.5
1.3
(1.4)
(0.3)
(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
2022
1.24
1.17
2021
1.38
1.16
2022
1.20
1.13
2021
1.35
1.19
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 21 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 2022, all foreign exchange cash flow hedges were effective with a cumulative pre-tax loss of £1.2m
(2021: cumulative pre-tax gain of £0.5m) recognised in equity at the end of the year and this will affect the income statement during
2023 and 2024.
Effects of hedge accounting on the financial position and performance
Forward foreign currency hedges in relation to inventory purchases
Net carrying amount (liability)/asset (£m)
Notional amount at 31 December (£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)
2022
2021
(1.2)
169.0
2023-2024
1:1
1.7
(1.7)
0.5
149.3
2022
1:1
(5.8)
5.8
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.
198
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NOTES CONTINUED
2022
2021
(c) Foreign currency risk
US dollar
Euro
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:
Average rate
Closing rate
2022
1.24
1.17
2021
1.38
1.16
2022
1.20
1.13
2021
1.35
1.19
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 21 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.
Effects of hedge accounting on the financial position and performance
Forward foreign currency hedges in relation to inventory purchases
Net carrying amount (liability)/asset (£m)
Notional amount at 31 December (£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)
2022
2021
(1.2)
169.0
2023-2024
1:1
1.7
(1.7)
0.5
149.3
2022
1:1
(5.8)
5.8
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.
18 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:
18 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:
Impact on profit before tax
Impact on equity
+1%
£m
1.5
1.3
–1%
£m
(1.4)
(0.3)
+1%
£m
1.5
1.3
–1%
£m
(1.4)
(0.3)
US dollar
Sterling
Euro
Other
2022
£m
475.9
48.9
551.6
83.7
2021
£m
572.1
135.1
502.4
127.8
1,160.1
1,337.4
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 2022, a movement of one cent in the US dollar and euro average exchange rates would have
changed profit before income tax by £2.7m and £0.9m respectively (2021: £2.0m and £0.9m) and adjusted profit before income tax
by £3.2m and £1.2m respectively (2021: £2.3m and £1.2m).
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.
For the year ended 31 December 2022, all foreign exchange cash flow hedges were effective with a cumulative pre-tax loss of £1.2m
(2021: cumulative pre-tax gain of £0.5m) recognised in equity at the end of the year and this will affect the income statement during
2023 and 2024.
2022
2021
Impact on profit before tax
–10%
£m
+10%
£m
Impact on equity
–10%
£m
+10%
£m
0.2
0.4
(0.2)
(0.5)
(211.1)
(177.0)
277.9
212.9
(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 201) and trade and other receivables (see Note 16) 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 16 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 (2021: none).
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Bunzl plc Annual Report 2022
199
199
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
NOTES CONTINUED
18 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 liabilities
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
2022
£m
2021
£m
1,504.0
1,469.5
776.9
1,344.2
–
1.5
8.3
9.2
6.6
1.4
7.0
6.8
2,992.5
2,142.9
(825.9)
–
(1,136.7)
(598.3)
(569.9)
(551.6)
(14.6)
(862.4)
(668.6)
(488.7)
(2,193.3)
(1,866.6)
(100.5)
(2.7)
(5.7)
(9.9)
(131.7)
(5,574.6)
(27.9)
(0.9)
(3.9)
(5.6)
(99.6)
(4,590.4)
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 and options 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. These balances are sensitive to a change in the expected profitability of the businesses
acquired. A 1% increase in the expected profitability of the relevant businesses acquired would result in an increase to other payables
of £2.5m and 1% decrease in the expected profitability would result in a decrease of £3.0m.
There were no transfers between levels for recurring fair value measurements during the year.
As at 31 December 2022 the fair values, based on unadjusted market data, of the US private placement notes was £1,063.4m
(2021: £882.1m) and of the senior bonds was £572.7m (2021: £694.0m).
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.
200
200
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
NOTES CONTINUED
18 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
Senior bonds
Lease liabilities
US private placement notes
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
2022
£m
2021
£m
1,504.0
1,469.5
776.9
1,344.2
–
1.5
8.3
9.2
6.6
1.4
7.0
6.8
2,992.5
2,142.9
(2,193.3)
(1,866.6)
(825.9)
–
(1,136.7)
(598.3)
(569.9)
(100.5)
(2.7)
(5.7)
(9.9)
(131.7)
(5,574.6)
(551.6)
(14.6)
(862.4)
(668.6)
(488.7)
(27.9)
(0.9)
(3.9)
(5.6)
(99.6)
(4,590.4)
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 and options 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. These balances are sensitive to a change in the expected profitability of the businesses
acquired. A 1% increase in the expected profitability of the relevant businesses acquired would result in an increase to other payables
of £2.5m and 1% decrease in the expected profitability would result in a decrease of £3.0m.
There were no transfers between levels for recurring fair value measurements during the year.
As at 31 December 2022 the fair values, based on unadjusted market data, of the US private placement notes was £1,063.4m
(2021: £882.1m) and of the senior bonds was £572.7m (2021: £694.0m).
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.
18 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.
2022
Derivative financial assets
Derivative financial liabilities
2021
Derivative financial assets
Derivative financial liabilities
19 Provisions
Current
Non-current
Gross
amounts
£m
19.0
(118.8)
21.8
(38.3)
Gross
amounts
offset in the
balance sheet
£m
Net amounts
recognised
in the
balance sheet
£m
Amounts not
offset in the
balance sheet
£m
–
–
–
–
19.0
(118.8)
21.8
(38.3)
Beginning of year
Charge
Acquisitions
Disposal of business
Utilised or released
Currency translation
End of year
Properties
£m
25.2
2.0
1.4
(1.3)
(2.2)
0.2
25.3
MEPP
withdrawal
£m
12.3
–
–
–
–
1.5
13.8
Other
£m
27.3
12.5
6.5
–
(13.7)
3.0
35.6
2022
Total
£m
64.8
14.5
7.9
(1.3)
(15.9)
4.7
74.7
Properties
£m
24.3
1.6
2.1
–
(2.5)
(0.3)
25.2
MEPP
withdrawal
£m
15.3
–
–
–
(3.2)
0.2
12.3
Net
amounts
£m
8.1
(107.9)
9.7
(26.2)
2021
£m
8.5
56.3
64.8
2021
Total
£m
64.2
6.0
4.7
–
(8.8)
(1.3)
64.8
(10.9)
10.9
(12.1)
12.1
2022
£m
24.2
50.5
74.7
Other
£m
24.6
4.4
2.6
–
(3.1)
(1.2)
27.3
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 25 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.
200
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
201
201
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
NOTES CONTINUED
20 Deferred tax
Property, plant and equipment
Defined benefit pension schemes
Goodwill, customer relationships, brands and
technology
Share based payments
Leases
Provisions and accruals
Inventories
Other
Deferred tax asset/(liability)
Set-off of tax
Net deferred tax asset/(liability)
Asset
£m
1.0
5.2
5.9
11.7
6.7
42.6
12.2
8.6
93.9
(89.9)
4.0
Liability
£m
(11.6)
(14.8)
(226.2)
–
(0.1)
(3.4)
(21.6)
(4.9)
(282.6)
89.9
(192.7)
2022
Net
£m
(10.6)
(9.6)
(220.3)
11.7
6.6
39.2
(9.4)
3.7
(188.7)
–
(188.7)
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)
2021
Net
£m
(8.0)
(7.9)
(195.6)
(191.5)
–
–
(2.2)
(7.1)
(4.0)
(234.0)
83.0
(151.0)
12.8
6.9
31.5
3.8
4.2
(148.2)
–
(148.2)
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
(2021: £1.4m) 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 £8.6m (2021: £4.1m).
No deferred tax has been recognised in respect of unutilised capital losses of £87.2m (2021: £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:
Beginning of year
Acquisitions
Credit to income statement
Recognised in other comprehensive income and equity
Reclassified from/(to) current tax
Currency translation
End of year
2022
£m
148.2
26.9
(3.3)
3.0
0.3
13.6
188.7
2021
£m
102.6
51.7
(12.9)
16.1
(5.8)
(3.5)
148.2
202
202
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
NOTES CONTINUED
20 Deferred tax
Property, plant and equipment
Defined benefit pension schemes
Goodwill, customer relationships, brands and
technology
Share based payments
Leases
Provisions and accruals
Inventories
Other
Deferred tax asset/(liability)
Set-off of tax
Net deferred tax asset/(liability)
country of operation.
Asset
Liability
Asset
Liability
(226.2)
(220.3)
(195.6)
(191.5)
£m
1.0
5.2
5.9
11.7
6.7
42.6
12.2
8.6
93.9
(89.9)
4.0
£m
(11.6)
(14.8)
–
(0.1)
(3.4)
(21.6)
(4.9)
(282.6)
89.9
(192.7)
2022
Net
£m
(10.6)
(9.6)
11.7
6.6
39.2
(9.4)
3.7
(188.7)
–
(188.7)
£m
1.4
7.8
4.1
12.8
6.9
33.7
10.9
8.2
85.8
(83.0)
2.8
£m
(9.4)
(15.7)
–
–
(2.2)
(7.1)
(4.0)
(234.0)
83.0
(151.0)
2021
Net
£m
(8.0)
(7.9)
12.8
6.9
31.5
3.8
4.2
(148.2)
–
(148.2)
Except as noted below, deferred tax is calculated in full on temporary differences under the liability method using the tax rate of the
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
(2021: £1.4m) 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 £8.6m (2021: £4.1m).
No deferred tax has been recognised in respect of unutilised capital losses of £87.2m (2021: £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:
Recognised in other comprehensive income and equity
Beginning of year
Acquisitions
Credit to income statement
Reclassified from/(to) current tax
Currency translation
End of year
2022
£m
148.2
26.9
(3.3)
3.0
0.3
13.6
188.7
2021
£m
102.6
51.7
(12.9)
16.1
(5.8)
(3.5)
148.2
21 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
2022
£m
108.5
2021
£m
108.4
2022
2021
337,398,796
336,998,961
269,050
399,835
337,667,846
337,398,796
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 (2021: £500) per
month (or the equivalent value in other currencies under the Bunzl plc International Sharesave Plan) or €500 (2021: €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 share 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 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 2022 the trust held 2,298,301 (2021: 1,831,893) shares, upon which dividends
have been waived, with an aggregate nominal value of £0.7m (2021: £0.6m) and market value of £63.4m (2021: £52.9m).
202
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
203
203
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
NOTES CONTINUED
21 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 (£)
2022
2021
01.03.22–14.09.22
31.03.21–15.09.21
28.10–31.03
23.23–25.28
nil–28.97
2,226,096
3–5
19–21
3.0–10
3.0–5.9
0.8–1.7
0.0–1.9
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
4.77–26.38
2.87–18.54
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
£29.53 (2021: £26.37). The total charge for the year relating to share based payments was £14.1m (2021: £12.7m). After tax the total
charge was £12.4m (2021: £8.4m).
Details of share options and awards which have been granted and exercised, those which have lapsed during 2022 and those
outstanding and available to exercise at 31 December 2022, whether over new issue or market purchase shares, under the Sharesave
Scheme, International Sharesave Plan, Irish Sharesave Plan, the 2004 LTIP Part A and 2014 LTIP Part A and Part B, are set out in the
following table:
Options
outstanding
at 01.01.2022
Number
653,727
264,277
30,520
266,691
Grants/
awards
2022
Price (£)
22.56
22.56
Exercises
2022
Price (£)
Number
126,200 15.28–19.16
49,831 15.28–19.16
Lapses*
2022
Number
68,600
29,800
Number
164,553
62,088
Options
outstanding
at 31.12.22
Price (£)
Number
623,480 15.28–22.56
246,734 15.28–22.56
Options
available
to exercise
at 31.12.22
Number
5,320
1,152
–
–
–
–
8,550
19.16
167,091 10.90–15.66
2,821
7,000
19,149 15.28–17.81
–
92,600 13.56–13.75
92,600
9,582,788
1,744,061
28.97
1,668,772 16.38–28.97
300,088
9,357,989 16.38–28.97
4,036,924
1,336,985
255,394
nil
190,296
nil
188,659
1,213,424
nil
105,774
12,134,988
2,226,096
2,210,740
596,968 11,553,376
4,241,770
Sharesave Scheme
International
Sharesave Plan
Irish Sharesave Plan
2004 LTIP Part A
2014 LTIP Part A
2014 LTIP Part B
* Share option lapses relate to those which have either been forfeited or have expired during the year.
For the options outstanding at 31 December 2022, the weighted average fair values and the weighted average remaining contractual
lives (being the time period from 31 December 2022 until the lapse date of each share option) are set out below:
Sharesave Scheme
International Sharesave Plan
Irish Sharesave Plan
2004 LTIP and 2014 LTIP Part A
2014 LTIP Part B
Weighted average
fair value of options
outstanding (£)
Weighted average
remaining
contractual life
(years)
4.90
4.73
3.94
3.25
18.56
1.95
1.74
1.46
7.13
3.96
The outstanding share options and performance share awards are exercisable at various dates up to September 2032.
204
204
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
NOTES CONTINUED
Number of options granted during the year (shares)
Grant date
Share price at grant date (£)
Exercise price (£)
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 (£)
21 Share capital and share based payments continued
IFRS 2 disclosures
the assumptions used in the calculations are as follows:
Options granted during the year have been valued using a Black-Scholes model. The fair value per option granted during the year and
22 Dividends
Total dividends for the years in which they are recognised are:
2022
2021
01.03.22–14.09.22
31.03.21–15.09.21
28.10–31.03
23.23–25.28
nil–28.97
2,226,096
3–5
19–21
3.0–10
3.0–5.9
0.8–1.7
0.0–1.9
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
4.77–26.38
2.87–18.54
2020 interim
2020 final
2021 interim
2021 final
Total
Total dividends per share for the year to which they relate are:
Interim
Final
Total
2022
£m
54.3
136.2
190.5
2022
17.3p
45.4p
62.7p
2021
£m
52.8
127.6
180.4
Per share
2021
16.2p
40.8p
57.0p
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
£29.53 (2021: £26.37). The total charge for the year relating to share based payments was £14.1m (2021: £12.7m). After tax the total
charge was £12.4m (2021: £8.4m).
Details of share options and awards which have been granted and exercised, those which have lapsed during 2022 and those
outstanding and available to exercise at 31 December 2022, whether over new issue or market purchase shares, under the Sharesave
Scheme, International Sharesave Plan, Irish Sharesave Plan, the 2004 LTIP Part A and 2014 LTIP Part A and Part B, are set out in the
following table:
Sharesave Scheme
International
Sharesave Plan
Irish Sharesave Plan
2004 LTIP Part A
2014 LTIP Part A
2014 LTIP Part B
Options
outstanding
at 01.01.2022
Grants/
awards
2022
Exercises
2022
Lapses*
2022
Options
outstanding
at 31.12.22
Options
available
to exercise
at 31.12.22
Number
Number
Price (£)
Number
Price (£)
Number
Number
Price (£)
Number
653,727
264,277
164,553
62,088
22.56
22.56
126,200 15.28–19.16
49,831 15.28–19.16
68,600
29,800
623,480 15.28–22.56
246,734 15.28–22.56
5,320
1,152
30,520
266,691
–
–
–
–
8,550
19.16
167,091 10.90–15.66
2,821
7,000
19,149 15.28–17.81
–
92,600 13.56–13.75
92,600
9,582,788
1,744,061
28.97
1,668,772 16.38–28.97
300,088
9,357,989 16.38–28.97
4,036,924
1,336,985
255,394
nil
190,296
nil
188,659
1,213,424
nil
105,774
12,134,988
2,226,096
2,210,740
596,968 11,553,376
4,241,770
* Share option lapses relate to those which have either been forfeited or have expired during the year.
For the options outstanding at 31 December 2022, the weighted average fair values and the weighted average remaining contractual
lives (being the time period from 31 December 2022 until the lapse date of each share option) are set out below:
Sharesave Scheme
International Sharesave Plan
Irish Sharesave Plan
2004 LTIP and 2014 LTIP Part A
2014 LTIP Part B
The outstanding share options and performance share awards are exercisable at various dates up to September 2032.
Weighted average
Weighted average
remaining
fair value of options
contractual life
outstanding (£)
(years)
4.90
4.73
3.94
3.25
18.56
1.95
1.74
1.46
7.13
3.96
The 2022 interim dividend of 17.3p per share was paid on 4 January 2023 and comprised £57.9m of cash. The 2022 final dividend of
45.4p per share will be paid on 4 July 2023 to shareholders on the register at the close of business on 19 May 2023. The 2022 final
dividend will comprise approximately £152m of cash.
23 Contingent liabilities
Bank guarantees
2022
£m
1.8
2021
£m
1.5
24 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
Pam Kirby
Stephan Nanninga
Vinodka Murria
2022
2,608
180,751
43,996
3,000
4,000
1,800
–
–
2021
2,608
153,116
30,117
3,000
4,000
–
–
–
236,155
192,841
Details of the directors’ options and awards over ordinary shares made under the 2014 LTIP, Sharesave Scheme 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 2022 and 27 February 2023.
204
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Bunzl plc Annual Report 2022
205
205
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
NOTES CONTINUED
25 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 2022 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 2021
and showed that there was a surplus on the agreed funding basis. To address the deficit from the 2018 valuation, the Company had
agreed to contribute an additional £5.5m per year from March 2019 to 30 June 2022. To help bring the funding of the Plan to a level
to be able to secure the benefits with an external provider the Company has agreed to pay up to £5.0m a year until 31 March 2025.
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 2022 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 2022 and showed that there was a required annual contribution of $2.9m. Bunzl plans to cover this
required contribution using prefunding balance. In 2022, Bunzl paid a contribution of $4.8m for the 2021 plan year, which included a
contribution as part of the plan termination. The annual review as at 1 January 2023 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.
206
206
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
NOTES CONTINUED
25 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 2022 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 2021
and showed that there was a surplus on the agreed funding basis. To address the deficit from the 2018 valuation, the Company had
agreed to contribute an additional £5.5m per year from March 2019 to 30 June 2022. To help bring the funding of the Plan to a level
to be able to secure the benefits with an external provider the Company has agreed to pay up to £5.0m a year until 31 March 2025.
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 2022 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 2022 and showed that there was a required annual contribution of $2.9m. Bunzl plans to cover this
required contribution using prefunding balance. In 2022, Bunzl paid a contribution of $4.8m for the 2021 plan year, which included a
contribution as part of the plan termination. The annual review as at 1 January 2023 is ongoing.
25 Retirement benefits continued
Risks continued
• 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.
• 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
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 (loss)/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 on defined benefit pension schemes
2022
£m
26.2
4.8
–
0.5
31.5
(1.2)
0.8
31.1
2022
£m
(179.6)
(16.3)
205.6
(2.8)
6.9
2021
£m
23.0
5.7
0.1
0.7
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 2022 was £35.0m (2021: £41.9m).
The principal assumptions used by the independent qualified actuaries for the purposes of IAS 19 were:
Risks
206
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.
Rate of increase in salaries
Rate of increase in pensions
Discount rate
Inflation rate
2022
3.6%
2.7%
5.0%
2.7%
2021
3.8%
2.8%
1.8%
2.8%
UK
2020
3.4%
2.4%
1.4%
2.4%
2022
3.0%
–
5.0%
2.3%
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
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)
2022
22.1
23.4
21.6
2021
3.0%
–
2.6%
2.3%
2021
22.0
23.4
21.6
US
2020
3.0%
–
2.3%
2.3%
207
207
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
NOTES CONTINUED
25 Retirement benefits continued
Financial information continued
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.
The increase/(decrease) that would arise on the overall net pension surplus as at 31 December 2022 as a result of reasonably
possible changes to key assumptions was:
UK
US
Impact of change
in longevity
–1 year
£m
+1 year
£m
Impact of change
in inflation rate
–0.25%
£m
+0.25%
£m
(7.0)
(2.3)
7.0
2.5
(4.9)
–
5.2
–
Impact of change
in discount rate
–0.25%
£m
+0.25%
£m
8.2
2.0
(8.6)
(2.1)
The market value of pension scheme assets and the present value of retirement benefit obligations at 31 December were:
2022
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
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
UK
£m
75.6
230.4
0.3
306.3
(247.0)
–
(247.0)
–
59.3
59.3
(14.8)
44.5
UK
£m
149.9
308.8
0.3
459.0
(396.2)
–
(396.2)
–
62.8
62.8
(15.7)
47.1
US
£m
38.0
38.4
18.4
94.8
(95.1)
(10.0)
(105.1)
(10.3)
–
(10.3)
2.6
(7.7)
US
£m
52.1
46.4
16.1
114.6
(122.4)
(11.2)
(133.6)
(19.0)
–
(19.0)
4.4
(14.6)
Other
£m
1.2
9.9
9.3
20.4
(20.6)
(8.9)
(29.5)
(10.3)
1.2
(9.1)
2.6
(6.5)
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)
Total
£m
114.8
278.7
28.0
421.5
(362.7)
(18.9)
(381.6)
(20.6)
60.5
39.9
(9.6)
30.3
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
There is a net surplus of £44.5m (£59.3m before deferred tax) (2021: £47.1m (£62.8m 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, £397.4m (2021: £574.9m) are valued based on quoted market prices.
208
208
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
NOTES CONTINUED
25 Retirement benefits continued
Financial information continued
UK
US
2022
Equities
Bonds
Other
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
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
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.
The increase/(decrease) that would arise on the overall net pension surplus as at 31 December 2022 as a result of reasonably
possible changes to key assumptions was:
Impact of change
in longevity
Impact of change
in inflation rate
Impact of change
in discount rate
+1 year
–1 year
+0.25%
–0.25%
+0.25%
–0.25%
£m
(7.0)
(2.3)
£m
7.0
2.5
£m
(4.9)
–
£m
5.2
–
The market value of pension scheme assets and the present value of retirement benefit obligations at 31 December were:
£m
8.2
2.0
Other
£m
1.2
9.9
9.3
20.4
(20.6)
(8.9)
(29.5)
(10.3)
1.2
(9.1)
2.6
(6.5)
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)
£m
(8.6)
(2.1)
Total
£m
114.8
278.7
28.0
421.5
(362.7)
(18.9)
(381.6)
(20.6)
60.5
39.9
(9.6)
30.3
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
UK
£m
75.6
230.4
0.3
306.3
(247.0)
(247.0)
–
–
59.3
59.3
(14.8)
44.5
UK
£m
149.9
308.8
0.3
459.0
(396.2)
(396.2)
–
–
62.8
62.8
(15.7)
47.1
US
£m
38.0
38.4
18.4
94.8
(95.1)
(10.0)
(105.1)
(10.3)
–
(10.3)
2.6
(7.7)
US
£m
52.1
46.4
16.1
114.6
(122.4)
(11.2)
(133.6)
(19.0)
–
(19.0)
4.4
(14.6)
25 Retirement benefits continued
Financial information continued
Movement in net surplus/(deficit)
Beginning of year
Current service cost
Past service cost
Contributions
Net interest income/(expense)
Actuarial gain
Net impact of benefit obligation settlement
Currency translation
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
Benefit obligation attributable to settlement
Actuarial gain
Benefits paid
Currency translation
End of year
Changes in the fair value of defined benefit pension scheme assets
Beginning of year
Interest income
Actuarial (loss)/gain
Contributions by employer
Contributions by employees
Benefits paid due to settlement
Benefits paid
Currency translation
End of year
2022
£m
31.2
(4.8)
–
9.2
0.4
6.9
(0.5)
(2.5)
39.9
2022
£m
569.2
4.8
–
10.9
0.4
(8.8)
(186.5)
(25.2)
16.8
381.6
2022
£m
600.4
11.3
(179.6)
9.2
0.4
(9.3)
(25.2)
14.3
421.5
2021
£m
(44.8)
(5.7)
(0.1)
8.4
(0.7)
74.1
(0.7)
0.7
31.2
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
There is a net surplus of £44.5m (£59.3m before deferred tax) (2021: £47.1m (£62.8m 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, £397.4m (2021: £574.9m) are valued based on quoted market prices.
Benefits paid due to settlement of £9.3m (2021: £8.4m) relate to payments to participants to the Bunzl USA, LLC Pension Plan which
was spun off from the principal US pension scheme in 2017 and terminated on 31 December 2020.
The actual return on pension scheme assets was a loss of £168.3m (2021: gain of £35.2m).
The Group expects to pay approximately £6.1m in contributions to the defined benefit pension schemes in the year ending
31 December 2023 (expected as at 31 December 2021 for the year ending 31 December 2022: £12.0m) including £4.7m for the UK
(expected as at 31 December 2021 for the year ending 31 December 2022: £6.8m).
The weighted average duration of the defined benefit pension scheme liabilities at 31 December 2022 was approximately 14.5 years
(2021: 18.2 years) for the UK and 9.0 years (2021: 10.4 years) for the US.
The total defined benefit pension scheme liabilities are divided between active members (£102.6m (2021: £155.5m)), deferred
members (£137.3m (2021: £186.0m)) and pensioners (£141.6m (2021: £227.7m)).
208
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
209
209
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
NOTES CONTINUED
25 Retirement benefits continued
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.
In 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. In 2021, the Group paid 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 carries a provision of £13.8m at 31 December 2022 for the estimated withdrawal liability on these two plans.
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 2023 expected to be no more than £2m per annum.
26 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
2022
8,697
5,841
3,935
3,901
22,374
77
22,451
Closing
2021
8,189
5,292
4,082
3,386
20,949
72
21,021
2022
8,482
5,517
4,182
3,628
21,809
74
21,883
2022
£m
938.9
100.6
31.5
14.1
1,085.1
Average
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
In addition to the above, acquisition related items for the year ended 31 December 2022 include deferred consideration payments of
£24.9m (2021: £15.0m) relating to the retention of former owners of businesses acquired.
Key management remuneration
Salaries and short term employee benefits
Share based payments
Retirement benefits
2022
£m
7.3
3.1
0.6
11.0
2021
£m
6.7
2.7
0.7
10.1
210
210
Bunzl plc Annual Report 2022
Bunzl plc Annual Report 2022
NOTES CONTINUED
25 Retirement benefits continued
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.
In 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. In 2021, the Group paid 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 carries a provision of £13.8m at 31 December 2022 for the estimated withdrawal liability on these two plans.
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 2023 expected to be no more than £2m per annum.
26 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
Key management remuneration
Salaries and short term employee benefits
Share based payments
Retirement benefits
2022
8,697
5,841
3,935
3,901
22,374
77
22,451
Closing
2021
8,189
5,292
4,082
3,386
20,949
72
21,021
2022
8,482
5,517
4,182
3,628
21,809
74
21,883
2022
£m
938.9
100.6
31.5
14.1
1,085.1
2022
£m
7.3
3.1
0.6
11.0
Average
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
2021
£m
6.7
2.7
0.7
10.1
26 Directors and employees continued
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
2022
£m
0.8
1.8
1.3
3.9
2021
£m
0.8
1.7
1.3
3.8
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 (2021: £nil). The
aggregate market value of performance share awards exercised by directors under long term incentive schemes during the year was
£1.7m (2021: £1.8m). The aggregate market value of share awards exercised by directors under the DASBS was £0.7m (2021: £0.5m).
27 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. Details of the Group’s right-of-use assets recognised under these lease agreements are shown
in note 12.
Movement in lease liabilities
Beginning of year
Acquisitions (Note 9)
Disposal of business (Note 10)
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
2022
£m
488.7
21.5
(2.1)
123.3
22.0
(175.1)
56.6
35.0
569.9
145.9
424.0
569.9
2021
£m
497.5
12.9
–
112.6
20.3
(158.9)
11.5
(7.2)
488.7
129.1
359.6
488.7
In addition to the above, acquisition related items for the year ended 31 December 2022 include deferred consideration payments of
£24.9m (2021: £15.0m) relating to the retention of former owners of businesses acquired.
As at 31 December 2022, the Group had £44.5m (2021: £21.2m) 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 2022. In relation to leases which are included in lease
liabilities, there are potential further future cash flows of £46.3m (2021: £28.5m) if termination options are not exercised and extension
options are exercised.
The cash outflow for low value and short term leases was £5.2m for the year ended 31 December 2022 (2021: £6.2m).
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211
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
NOTES CONTINUED
28 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
2022
£m
1,504.0
(825.9)
678.1
(161.0)
(1,574.0)
(103.2)
(1,160.1)
(569.9)
(1,730.0)
2021
£m
776.9
(551.6)
225.3
(111.9)
(1,433.7)
(17.1)
(1,337.4)
(488.7)
(1,826.1)
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
29 Movement in net debt
2022
Beginning of year excluding lease liabilities
Net cash inflow
Non-cash movement in debt
Realised losses on foreign exchange contracts
Currency translation
End of year excluding lease liabilities
Lease liabilities
End of year including lease liabilities
2021
Beginning of year excluding lease liabilities
Net cash outflow
Realised gains on foreign exchange contracts
Currency translation
End of year excluding lease liabilities
Lease liabilities
End of year including lease liabilities
2022
£m
700.5
(22.4)
678.1
2021
£m
274.6
(49.3)
225.3
Net debt
£m
(1,337.4)
269.0
8.2
(86.2)
(13.7)
(1,160.1)
(569.9)
(1,730.0)
Net debt
£m
(1,255.0)
(88.2)
25.0
(19.2)
(1,337.4)
(488.7)
(1,826.1)
Cash and cash
equivalents
£m
Other
components
£m
225.3
397.4
–
–
55.4
678.1
–
678.1
(1,562.7)
(128.4)
8.2
(86.2)
(69.1)
(1,838.2)
(569.9)
(2,408.1)
Cash and cash
equivalents
£m
Other
components
£m
429.7
(183.6)
–
(20.8)
225.3
–
225.3
(1,684.7)
95.4
25.0
1.6
(1,562.7)
(488.7)
(2,051.4)
The net cash outflow of £128.4m (2021: inflow of £95.4m) on other components of net debt comprises an increase in borrowings of
£346.4m (2021: £14.5m), a repayment of borrowings of £131.8m (2021: £134.9m) and the impact of a realised loss of £86.2m on
foreign exchange contracts (2021: gain of £25.0m).
212
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30 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
Hyperinflation accounting adjustments
Other
Working capital movement
Increase in inventories
Increase in trade and other receivables
Increase in trade and other payables
2022
£m
151.1
38.4
189.5
2022
£m
14.1
(3.9)
(3.9)
8.0
1.6
15.9
2022
£m
(118.7)
(13.0)
186.2
54.5
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
Cash and cash
Other
Net debt
equivalents
components
31 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 25 and Note 26 respectively. All transactions with subsidiaries are
eliminated on consolidation.
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:
NOTES CONTINUED
28 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
29 Movement in net debt
2022
Beginning of year excluding lease liabilities
Net cash inflow
Non-cash movement in debt
Realised losses on foreign exchange contracts
Currency translation
End of year excluding lease liabilities
Lease liabilities
End of year including lease liabilities
2021
Beginning of year excluding lease liabilities
Net cash outflow
Realised gains on foreign exchange contracts
Currency translation
End of year excluding lease liabilities
Lease liabilities
End of year including lease liabilities
2022
£m
1,504.0
(825.9)
678.1
(161.0)
(1,574.0)
(103.2)
(1,160.1)
(569.9)
(1,730.0)
2022
£m
700.5
(22.4)
678.1
£m
225.3
397.4
–
–
–
55.4
678.1
678.1
£m
429.7
(183.6)
(20.8)
225.3
–
–
225.3
2021
£m
776.9
(551.6)
225.3
(111.9)
(1,433.7)
(17.1)
(1,337.4)
(488.7)
(1,826.1)
2021
£m
274.6
(49.3)
225.3
£m
(1,562.7)
(128.4)
8.2
(86.2)
(69.1)
(1,838.2)
(569.9)
(2,408.1)
Other
£m
(1,684.7)
95.4
25.0
1.6
(1,562.7)
(488.7)
(2,051.4)
£m
(1,337.4)
269.0
8.2
(86.2)
(13.7)
(1,160.1)
(569.9)
(1,730.0)
£m
(1,255.0)
(88.2)
25.0
(19.2)
(1,337.4)
(488.7)
(1,826.1)
Cash and cash
Net debt
equivalents
components
The net cash outflow of £128.4m (2021: inflow of £95.4m) on other components of net debt comprises an increase in borrowings of
£346.4m (2021: £14.5m), a repayment of borrowings of £131.8m (2021: £134.9m) and the impact of a realised loss of £86.2m on
foreign exchange contracts (2021: gain of £25.0m).
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Bunzl plc Annual Report 2022
213
213
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
Company balance sheet
at 31 December 2022
Fixed assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Investments
Current assets
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
11
7
7
8
10
9
10
6
12
13
13
2022
£m
0.6
3.6
0.8
741.0
746.0
59.3
–
1,449.9
15.1
1,524.3
(108.0)
(0.7)
1,415.6
2,161.6
(0.9)
(3.1)
(11.2)
2021
£m
0.3
0.2
0.8
729.8
731.1
62.8
837.9
764.9
30.6
1,696.2
(98.8)
(0.2)
1,597.2
2,328.3
(1.0)
–
(12.0)
2,146.4
2,315.3
108.5
199.4
5.6
16.1
1,816.8
2,146.4
108.4
194.2
5.6
16.1
1,991.0
2,315.3
Approved by the Board of directors of Bunzl plc (Company registration number 358948) on 27 February 2023 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 216 to 221 form part of these financial statements.
† Profit and loss account includes a net profit after tax for the year of £39.1m (2021: £304.1m). 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.
214
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Bunzl plc Annual Report 2022
Company balance sheet
at 31 December 2022
Fixed assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Investments
Current assets
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
Creditors: amounts falling due within one year
Current liabilities
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
11
7
7
8
10
9
10
6
12
13
13
2022
£m
0.6
3.6
0.8
741.0
746.0
59.3
–
1,449.9
15.1
1,524.3
(108.0)
(0.7)
1,415.6
2,161.6
(0.9)
(3.1)
(11.2)
108.5
199.4
5.6
16.1
1,816.8
2,146.4
2021
£m
0.3
0.2
0.8
729.8
731.1
62.8
837.9
764.9
30.6
1,696.2
(98.8)
(0.2)
1,597.2
2,328.3
(1.0)
–
(12.0)
108.4
194.2
5.6
16.1
1,991.0
2,315.3
2,146.4
2,315.3
Company statement
of changes in equity
for the year ended 31 December 2022
At 1 January 2022
Profit for the year
Other comprehensive expense
Contributions to pension scheme
by participating subsidiaries
Actuarial loss on defined benefit
pension scheme
Income tax credit on other
comprehensive expense
Total comprehensive income
2021 interim dividend
2021 final dividend
Issue of share capital
Employee trust shares
Movement on own share reserves
Share based payments
At 31 December 2022
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
Share
capital
£m
108.4
Share
premium
£m
194.2
Other
reserves
£m
5.6
Capital
redemption
reserve
£m
Profit and loss account
Retained
earnings
£m
Own
shares
£m
Total
shareholders’
funds
£m
16.1
(52.9)
2,043.9
39.1
2,315.3
39.1
0.1
5.2
3.0
(6.5)
0.9
36.5
(54.3)
(136.2)
(23.7)
14.0
3.0
(6.5)
0.9
36.5
(54.3)
(136.2)
5.3
(34.2)
–
14.0
(34.2)
23.7
108.5
199.4
5.6
16.1
(63.4)
1,880.2
2,146.4
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
Approved by the Board of directors of Bunzl plc (Company registration number 358948) on 27 February 2023 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 216 to 221 form part of these financial statements.
† Profit and loss account includes a net profit after tax for the year of £39.1m (2021: £304.1m). 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.
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Bunzl plc Annual Report 2022
215
215
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
Notes to the Company financial statements
1 Basis of preparation
Bunzl plc (the ‘Company’) is a company incorporated and domiciled in the United Kingdom and is registered in England and Wales.
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 2022. 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:
• 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 170 to 177 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 2022 are disclosed in the Related undertakings Note in the Shareholder information section on pages
230 to 235.
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 21 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.
216
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Notes to the Company financial statements
1 Basis of preparation
Bunzl plc (the ‘Company’) is a company incorporated and domiciled in the United Kingdom and is registered in England and Wales.
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 2022. 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:
• 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
specific to the Company are set out below.
a. Investment in subsidiary undertakings
230 to 235.
b. Share based payments
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 170 to 177 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
Investments in subsidiary undertakings are held at cost less any provision for impairment. The subsidiary undertakings which the
Company held at 31 December 2022 are disclosed in the Related undertakings Note in the Shareholder information section on pages
The Company operates a number of equity settled share based payment compensation plans. Details of these plans are outlined in
Note 21 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.
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
(2021: 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 2022, 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
Short
leasehold
improvement
£m
Fixtures,
fittings and
equipment
£m
Total
tangible
assets
£m
Total
intangible
assets
£m
Cost
Beginning of year
Additions
End of year
Accumulated depreciation and amortisation
Beginning of year
Charge in year
End of year
Net book value at 31 December 2022
Net book value at 31 December 2021
0.1
0.3
0.4
0.1
–
0.1
0.3
–
1.7
0.1
1.8
1.4
0.1
1.5
0.3
0.3
1.8
0.4
2.2
1.5
0.1
1.6
0.6
0.3
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Bunzl plc Annual Report 2022
2.1
0.2
2.3
1.3
0.2
1.5
0.8
0.8
217
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
4 Right-of-use assets: Property
Net book value
Beginning of year
Remeasurement adjustments
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:
At 1 January 2021
Recognised in profit or loss
Recognised in other comprehensive income or directly in equity
At 31 December 2021/1 January 2022
Recognised in profit or loss
Recognised in other comprehensive income or directly in equity
At 31 December 2022
Defined benefit
pension
scheme
£m
Share based
payments
£m
(0.1)
–
(15.6)
(15.7)
–
0.9
(14.8)
1.7
–
1.8
3.5
–
(0.1)
3.4
No deferred tax asset has been recognised in respect of unutilised capital losses of £68.5m (2021: £68.5m).
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
2022
£m
0.2
4.0
(0.6)
3.6
2022
£m
733.1
11.2
744.3
2021
£m
0.7
–
(0.5)
0.2
2021
£m
721.7
11.4
733.1
3.3
3.3
741.0
729.8
Net deferred
tax asset/
(liability)
£m
1.8
–
(13.8)
(12.0)
–
0.8
(11.2)
2021
£m
760.3
4.6
764.9
Other
£m
0.2
–
–
0.2
–
–
0.2
2022
£m
1,440.1
9.8
1,449.9
–
837.9
Amounts owed by Group undertakings falling due within one year are unsecured and repayable on demand with no fixed date of
repayment. Interest rates are linked to the Bank of England Base Rate.
218
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NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
4 Right-of-use assets: Property
Net book value
Beginning of year
Remeasurement adjustments
Depreciation charge in the year
End of year
Investments in subsidiary undertakings
5 Investments
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:
Defined benefit
pension
scheme
Share based
payments
Net deferred
tax asset/
(liability)
At 1 January 2021
Recognised in profit or loss
Recognised in other comprehensive income or directly in equity
At 31 December 2021/1 January 2022
Recognised in profit or loss
Recognised in other comprehensive income or directly in equity
At 31 December 2022
£m
(0.1)
–
(15.6)
(15.7)
–
0.9
(14.8)
£m
1.7
–
1.8
3.5
–
(0.1)
3.4
No deferred tax asset has been recognised in respect of unutilised capital losses of £68.5m (2021: £68.5m).
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
–
837.9
Amounts owed by Group undertakings falling due within one year are unsecured and repayable on demand with no fixed date of
repayment. Interest rates are linked to the Bank of England Base Rate.
3.3
3.3
741.0
729.8
2022
£m
0.2
4.0
(0.6)
3.6
2022
£m
733.1
11.2
744.3
Other
£m
0.2
0.2
–
–
–
–
0.2
2022
£m
1,440.1
9.8
1,449.9
2021
£m
0.7
–
(0.5)
0.2
2021
£m
721.7
11.4
733.1
£m
1.8
–
(13.8)
(12.0)
–
0.8
(11.2)
2021
£m
760.3
4.6
764.9
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
2022
£m
4.7
82.1
0.5
3.0
17.7
108.0
2022
£m
1.0
(0.1)
0.9
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
Remeasurement adjustments
Payments of lease liabilities
End of year
Ageing of lease liabilities:
Current lease liabilities
Non-current lease liabilities
End of year
2022
£m
(0.2)
(0.1)
(4.3)
0.8
(3.8)
(0.7)
(3.1)
(3.8)
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)
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 25 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)
Net interest income
Contributions paid by participating subsidiaries linked to service
Total charge to profit for the year
2022
£m
2.1
(1.2)
(0.3)
0.6
2021
£m
2.4
(0.1)
(1.0)
1.3
218
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
11 Retirement benefits continued
Amounts recognised in other comprehensive income
Actual return less expected return on pension scheme assets
Experience (loss)/gain on pension scheme liabilities
Impact of changes in assumptions relating to the present value of pension scheme liabilities
Actuarial (loss)/gain on defined benefit pension scheme
Contributions paid by participating subsidiaries not linked to service
Total (charge)/credit to other comprehensive income
Movement in defined benefit pension scheme surplus/(deficit)
Beginning of year
Current service cost
Contributions
Net interest income
Actuarial (loss)/gain
End of year
Changes in the present value of defined benefit pension scheme liabilities
Beginning of year
Current service cost
Interest expense
Contributions by employees
Actuarial gain
Benefits paid
End of year
Changes in the fair value of defined benefit pension scheme assets
Beginning of year
Interest income
Actuarial (loss)/gain
Contributions by the Company
Contributions by participating subsidiaries
Contributions by employees
Benefits paid
End of year
2022
£m
(150.9)
(15.1)
159.5
(6.5)
3.0
(3.5)
2022
£m
62.8
(2.1)
3.9
1.2
(6.5)
59.3
2022
£m
396.2
2.1
7.0
0.4
(144.4)
(14.3)
247.0
2022
£m
459.0
8.2
(150.9)
0.6
3.3
0.4
(14.3)
306.3
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
The actual return on pension scheme assets was a loss of £142.7m (2021: gain of £24.7m). The market value of scheme assets and
the present value of retirement benefit obligations at 31 December are detailed in Note 25 to the consolidated financial statements.
The total defined benefit pension liability is divided between active members (£43.2m (2021: £77.9m)), deferred members (£92.4m
(2021: £156.5m)) and pensioners (£111.4m (2021: £161.8m)).
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
2022
£m
108.5
2021
£m
108.4
2022
2021
337,398,796
336,998,961
269,050
399,835
337,667,846
337,398,796
220
220
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Bunzl plc Annual Report 2022
13 Reserves
The capital redemption reserve of £16.1m (2021: £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 £63.4m (2021: £52.9m) 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 21 to the
consolidated financial statements.
The dividends paid and declared in the current and prior year are detailed in Note 22 to the consolidated financial statements.
14 Contingent liabilities
Borrowings by subsidiary undertakings totalling £1,822.6m (2021: £1,549.2m) 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 61 (2021: 56) and the aggregate
employee costs relating to these persons were:
Changes in the present value of defined benefit pension scheme liabilities
Wages and salaries
Social security costs
Share based payments
Pension costs
2022
£m
12.4
1.7
0.9
0.8
15.8
2021
£m
11.1
1.7
(0.2)
0.8
13.4
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 21 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 25 and Note 26 to the consolidated
financial statements and the Related undertakings note in the Shareholder information section on pages 230 to 235.
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
11 Retirement benefits continued
Amounts recognised in other comprehensive income
Actual return less expected return on pension scheme assets
Experience (loss)/gain on pension scheme liabilities
Impact of changes in assumptions relating to the present value of pension scheme liabilities
Actuarial (loss)/gain on defined benefit pension scheme
Contributions paid by participating subsidiaries not linked to service
Total (charge)/credit to other comprehensive income
Movement in defined benefit pension scheme surplus/(deficit)
Beginning of year
Current service cost
Contributions
Net interest income
Actuarial (loss)/gain
End of year
Beginning of year
Current service cost
Interest expense
Contributions by employees
Actuarial gain
Benefits paid
End of year
Changes in the fair value of defined benefit pension scheme assets
Beginning of year
Interest income
Actuarial (loss)/gain
Contributions by the Company
Contributions by participating subsidiaries
Contributions by employees
Benefits paid
End of year
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
2022
£m
(150.9)
(15.1)
159.5
(6.5)
3.0
(3.5)
2022
£m
62.8
(2.1)
3.9
1.2
(6.5)
59.3
2022
£m
396.2
2.1
7.0
0.4
(144.4)
(14.3)
247.0
2022
£m
459.0
8.2
(150.9)
0.6
3.3
0.4
(14.3)
306.3
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
2022
£m
108.5
2021
£m
108.4
2022
2021
337,398,796
336,998,961
269,050
399,835
337,667,846
337,398,796
The actual return on pension scheme assets was a loss of £142.7m (2021: gain of £24.7m). The market value of scheme assets and
the present value of retirement benefit obligations at 31 December are detailed in Note 25 to the consolidated financial statements.
The total defined benefit pension liability is divided between active members (£43.2m (2021: £77.9m)), deferred members (£92.4m
(2021: £156.5m)) and pensioners (£111.4m (2021: £161.8m)).
220
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221
221
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
Statement of directors’ responsibilities
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 100 and 101 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
27 February 2023
Richard Howes
Chief Financial Officer
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.
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.
222
Bunzl plc Annual Report 2022
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 2022 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
as applied in accordance with the provisions of the Companies Act 2006;
• the Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards, including 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 balance sheet and
the Company balance sheet as at 31 December 2022; the Consolidated income statement, the Consolidated statement of
comprehensive income, the Consolidated cash flow statement, the Consolidated statement of changes in equity and the Company
statement 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 IFRSs as issued by the 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 87 components spread
across 28 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 • Accounting for business combinations (Group)
Materiality
• Valuation of defined benefit pension schemes’ obligations (Group and Company)
• Valuation of inventory provisions (Group)
• Overall Group materiality: £40 million (2021: £34 million) based on 5% of adjusted profit before tax.
• Overall Company materiality: £21 million (2021: £23 million) based on 1% of net assets.
• Performance materiality: £30 million (2021: £25.5 million) (Group) and £15.7 million (2021: £17.2 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.
Bunzl plc Annual Report 2022
223
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF BUNZL PLC CONTINUED
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.
Carrying value of goodwill (Group) and Valuation of expected credit loss provisions against trade receivables (Group), which were
key audit matters last year, are no longer included because of the reduction of risk of both items in 2022. Otherwise, the key audit
matters below are consistent with last year.
Key audit matter
Accounting for business combinations (Group)
Refer to the Audit Committee report, Note 2 and
Note 9 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.
How our audit addressed the key audit matter
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 evaluated the consideration paid or payable in respect of certain
acquisitions made; and
• We considered the disclosures in Note 9 of the Group financial statements
and we are satisfied that these disclosures are appropriate.
Based on the procedures performed, we noted no material issues arising
from our work.
Valuation of defined benefit pension schemes’ obligations (Group and Company)
Refer to the Audit Committee report, Note 2 and
Note 25 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 £39.9m at the current year
end (2021: net surplus of £31.2m). 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.
Based on the procedures performed, we noted no material issues arising
from our work.
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Bunzl plc Annual Report 2022
Key audit matter
How our audit addressed the key audit matter
Valuation of inventory provisions (Group)
Refer to the Audit Committee report, Note 2,
Note 14 and Note 15 of the Group financial
statements.
The Group has seen an increased risk of net
realisable value for certain Covid-19 related
inventories due to 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 price normalisation following the disruption
caused by the pandemic. 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;
and
• 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.
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
five 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 either full scope audits or other specified
procedures on a further 79 components. The components where we performed audit procedures covered over 94% of Group
revenue and adjusted profit before taxation.
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 and material components, oversight procedures included
regular communication with the component team, reviewing their working papers, and attending the clearance meeting either
virtually or in person. 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.
The impact of climate risk on our audit
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. 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.
Bunzl plc Annual Report 2022
225
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF BUNZL PLC CONTINUED
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:
Overall materiality
How we determined it
Rationale for
benchmark applied
Financial statements - Group
Financial statements - Company
£40 million (2021: £34 million).
5% of adjusted profit before tax
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.
£21 million (2021: £23 million).
1% of net assets
Considering the nature of the business and
activities in Bunzl plc (holding activities) we use the
Company net asset 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 £34 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% (2021: 75%) of overall materiality, amounting to £30 million
(2021: £25.5 million) for the Group financial statements and £15.7 million (2021: £17.2 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.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £1.9 million
(Group audit) (2021: £1.5 million) and £1.9 million (Company audit) (2021: £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 2022 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’ sensitised cases, and evaluated
whether the directors’ conclusion that headroom remained in all events was supported by the evidence we obtained.
• 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.
226
Bunzl plc Annual Report 2022
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 2022 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.
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 and Company 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.
Bunzl plc Annual Report 2022
227
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF BUNZL PLC CONTINUED
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.
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 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.
228
Bunzl plc Annual Report 2022
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 May 2014 to audit the financial
statements for the year ended 31 December 2014 and subsequent financial periods. The period of total uninterrupted engagement
is 9 years, covering the years ended 31 December 2014 to 31 December 2022.
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
27 February 2023
Bunzl plc Annual Report 2022
229
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT SHAREHOLDER INFORMATION
Shareholder information
Related undertakings as at 31 December 2022
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 2022 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 233 to 235. 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
Containit Pty Ltd(iii) (80%)
Fire Rescue Safety Australia Pty Ltd (80%)
GRC Medical Pty Ltd
Inkell Pty. Limited
Interpath Services Pty. Ltd.
Multipoint Technologies Pty Ltd (75.1%)
Network Packaging Pty Limited
Obex Australia Holdings Pty Ltd
Robertsons Lifting & Rigging Pty Limited
Sanicare Australia Pty Limited
Worksense Workwear and Safety Pty Limited
Austria
Bunzl Holdings Austria GmbH
Meier Verpackungen GmbH
Belgium
AFL Belgium BV (90%)
Établissements Glorieux SA
King Belgium NV
Total Safety Supply Belgium BVBA
Varia-Pack NV
Brazil
Bunzl Equipamentos para Proteção Individual Ltda.
Corsul Comercio e Representações do Sul Ltda.
Corsul Representações Comerciais 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)
Snelling Paper & Sanitation Ltd.(iii)
Tingley Inc.
Chile
B2B Web Distribuicao de Produtos Chile SpA
Bunzl Chile Holdings SpA
Registered
office address
1
6
5
3
6
6
6
3
2
5
4
5
7
3
5
3
5
3
8
8
12
9
13
11
10
18
15
15
22
17
20
19
14
16
21
27
28
25
24
26
27
27
23
30
30
Subsidiary
undertakings
DPS Chile Comercial Limitada
Enepack SpA
MCR Chile 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) Security Technology Co., Ltd. (96.9%)
MCR Safety Foshan South Co., Ltd.
MCR Safety Products Foshan 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 Distribução 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.
VM Footwear s.r.o. (70%)
VM Obuv s.r.o. (70%)
Denmark
Bunzl Distribution Danmark A/S
Bunzl Holding Danmark A/S
Clean Care A/S
ICM A/S (78.9%)
MultiLine A/S
PACK-LINK ApS (70%)
PM Pack A/S (70%)
France
Adage SAS
Alpes Entretien Distribution SAS
Blanc SAS
Bourgogne Hygiene Entretien SAS
Bunzl Holdings France SAS
Comatec SAS
Daugeron & Fils SAS
Fichot Hygiene SAS
France Sécurité SAS
Gama 29 SAS
GM Equipement S.A.S.
Groupe Comptoir SAS
Hedis SAS
Industrie du Compactage Alimentaire Hygiene ICA
Hygiene L'image du Propre SAS
Registered
office address
32
32
29
31
30
34
47
37
38
43
44
45
36
33
42
41
40
46
39
48
48
49
50
52
51
53
53
54
54
55
56
57
58
58
66
71
80
62
73
72
74
65
69
68
59
63
61
76
230
Bunzl plc Annual Report 2022
Subsidiary
undertakings
Keenpac France SAS
Ligne T SAS
Mat'hygiene SAS
Nicolas Entretien SAS
ORRU SAS
PLG Finances 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)
Bunzl Holding No. 2 GmbH (75%)
hygi GmbH & Co. KG (75%)
hygi.de Holding GmbH(iii) (75%)
hygi.de Import GmbH (75%)
hygi.de Management GmbH (75%)
Majestic GmbH
PKA Klöcker GmbH(iii)
Protemo GmbH
Hong Kong
Bunzl Asia Limited(iii)
Bunzl Retail Services 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)
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)
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)
Bunzl plc Annual Report 2022
Registered
office address
64
67
70
79
75
78
78
59
66
66
60
77
84
81
83
81
81
81
85
85
85
85
86
82
84
87
88
90
89
92
92
93
93
93
94
95
94
97
96
97
98
99
105
101
105
103
104
108
106
100
102
107
109
Subsidiary
undertakings
Morocco
Proin Maroc, S.à r.l.
Netherlands
AFL Groep B.V. (90%)
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 (No. 2) Limited(iii)
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%)
Toomac Holdings Limited
Universal Specialities Limited (90%)
Norway
Art Trading AS
Culina AS
Enor AS
Riise & G G Storkjøkken AS
Skien Storkjøkken AS
Peru
B2B WEB DISTRIBUICAO DE PRODUTOS PERU SPA S.A.C
Vicsa Safety Peru S.A.C.
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.
Grupo R Queraltó, S.A. (85%)
Juba Personal Protective Equipment, 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.
Registered
office address
110
119
118
121
112
115
114
120
116
117
111
122
113
123
123
127
128
129
127
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148
141
142
147
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149
145
139
144
146
141
140
231
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT SHAREHOLDER INFORMATION CONTINUED
Related undertakings continued
Subsidiary
undertakings
Switzerland
Bunzl Holding Switzerland AG
Distrimondo AG
Keenpac (Switzerland) SA
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
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)
B3S Healthcare Limited
B3S No.2 Limited
Bodyguard Workwear Limited
Bunzl American Holdings (No.1) Limited
Bunzl American Holdings (No.2) Limited(i)
Bunzl Finance Public Limited Company(i)
Bunzl Group Services Limited(i)
Bunzl Holding GTL Limited(i)
Bunzl Holding LCE Limited
Bunzl Holding WWE Limited(iii) (96.3%)
Bunzl Mexico Holdings 1 Limited
Bunzl Mexico Holdings 2 Limited
Bunzl Overseas Holdings (No. 2) Limited
Bunzl Overseas Holdings (No. 3) Limited(ii)
Bunzl Overseas Holdings (No.4) Limited
Bunzl Overseas Holdings Limited
Bunzl Pension Trustees Limited(i)
Bunzl Plastics Limited(i)
Bunzl Properties Limited(i)
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
Enviropack Ltd(iii) (85%)
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
London Catering and Hygiene Solutions Limited
McCue Corporation Limited (96.9%)
Packaging 2 Buy Limited
Parmelee Limited
Portabottle Limited
Registered
office address
151
152
153
151
150
154
156
157
155
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161
161
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161
161
161
161
161
161
161
161
161
158
161
161
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161
160
161
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161
Subsidiary
undertakings
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
ANB Distribution Holdings Inc.
Arch Logistics, LLC
Banner Stakes LLC (96.9%)
Bunzl Corporate Holdings, Inc.
Bunzl Distribution California, LLC
Bunzl Distribution Leasing, Inc.
Bunzl Distribution Midatlantic, LLC
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)
Registered
office address
161
161
161
161
161
159
159
161
161
161
161
161
161
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178
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232
Bunzl plc Annual Report 2022
Subsidiary
undertakings
Keenpac, LLC
Liberty Glove & Safety, LLC
M.L. Kishigo Manufacturing Company, LLC
Masteragents LLC
McCue Corporation (96.9%)
McCue International, Inc. (96.9%)
MCQ Holdings, Inc.(iii) (96.9%)
MCR Holdings, Inc.
Monte Package Company, LLC
Papercraft Southwest, LLC
Premier Essential LLC
Prime Source, LLC
R3 Safety, LLC
R3, LLC
Revco Industries, Inc.(iii)
Right Choice Distribution, LLC
SAS Safety Corporation
SH Glove LLC
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.
List of registered office addresses
Registered office address
Key
Registered
office address
178
163
168
178
175
175
168
171
163
163
178
178
178
173
170
178
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172
Maipú 1300, piso 13, Ciudad de Buenos Aires, Argentina
17 Millrose Drive, Malaga WA 6090, 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
Oudenaardsesteenweg 19 9000 Ghent, Belgium
Port Atlantic House, Noorderlaan 147, bus 9, 2030 Antwerp,
Belgium
Rue du Cerf 190 1332 Genval, Belgium
Av. Fagundes de Oliveira 538, Warehouse A5, Piraporinha,
Cidade de Diadema, CEP, 09950-300, Brazil
Avenida Centenário, No. 900, Bairro Pinheirinho, Criciuma,
Santa Catarina, 88.804-000
Avenida Robert Kennedy 675, Jardim Felix, City of São Bernardo
do Campo, São Paulo, 09895-030, Brazil
Estado de Santa Catarina, na Rua Fermino Vieira Cordeiro,
380 – Shed 2 module B, district of Espinheiros, City of Itajaí,
State of Santa, 88.317-200, Brazil
181
Estrada Velha de Guarulhos – São Miguel, 5135, Box 301 – Jardim
Arapongas, city of Guarulhos, São Paulo, CEP 07210-250, Brazil
Other shareholdings
MCR Hanvo Safety Products (Nantong) Co., Ltd. (20%)
Viner-Pack Gyártó Kereskedelmi és Szolgáltató Korlátolt
Felelősségű Társaság(iii) (20%)
Registered
office address
35
91
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
Bunzl plc Annual Report 2022
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 Padre Damaso 165, 173 e 187, Osasco, São Paulo, CEP 06016-
010, Brazil
Rua Salem Bechara, 140, 10th floor, Centro, City of Osasco,
Sao Paulo, CEP 06018-180, 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. del Valle Nte. 765, Huechuraba, Región Metropolitana,
8580000
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
M05-02 Floor 11, Building 11, No. 1569, Yushu 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 108, Floor 1, Building 6, No. 777, Songfu Road, Qingpu
District, Shanghai, China
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT SHAREHOLDER INFORMATION CONTINUED
List of registered office addresses
Registered office address
Key
Registered office address
Key
Room 1509, Building 2, No. 1266 Nanjing West Road, Jingan
Lieudit la Trentaine, 77690, La Genevraye, France
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 315 Lane 777 , Guangfulin Road, Songjiang District,
Shanghai, China
Room 368, Part 302, No. 211 Fute North Road, Free Trade Zone,
Shanghai, China
Room 568, Floor 5, Building 1, No. 1318, Xiangda East Road,
Qingpu District, 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
Units 501A, 501B, 501C, 5th Floor, No. 4, Lane 255, Dongyu Road,
Pudong New Area, Shanghai, 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 1966/54, Praha 4, 140 00, Czech Republic
Přátelstvi 1011/17, Uhřiněves, Praha 10, 10 400, Czech Republic
Veselská 1935, Strážnice, 696 62
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
Satellitvej 7, 8700, Horsens, 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
14 rue Lavoisier, 21 700 Nuits Saint Georges, 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
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
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
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Route Nationale 97, ZA Les Plantades, 83130 La Garde, France
Route Nationale, 57420, Louvigny, France
Rue de Pau, 40500 Saint-Server, France
Rue Nungesser et Coli d2A Nantes Atlantique, 44860 Saint-
Aignan de Grand Lieu, France
Rue Pierre Pascal Fauvelle, 66000 Perpignan, 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
Otto-Diehls-Straße 13-17, 48291 Telgte, 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
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
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
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Bunzl plc Annual Report 2022
Registered office address
Key
Registered office address
Bijsterhuizen 3005C, 6604 LP Wijchen, Netherlands
Delta 57, 6825 ML Arnhem, Netherlands
Ekkersrijt 3102A, 5692CC, Son en Breugel, 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
Kraaiendonk 46, 5428 NZ Venhorst, 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
32D Poland Road, Wairau Valley, Auckland, 0627, New Zealand
494 Rosebank Road, Avondale, Auckland, 1026, 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
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
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
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
Calle Pino Albar, number 24, P.I. El Pino, Seville, C.P. 41016
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
Bunzl plc Annual Report 2022
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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
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
Key
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FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT SHAREHOLDER INFORMATION CONTINUED
Financial calendar
Annual General Meeting
Results for the half year to 30 June 2023
Results for the year to 31 December 2023
Annual Report circulated
2023
26 April
29 August
2024
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 2022 the Company had 4,559 (2021: 4,839)
registered shareholders who held 337.7 million (2021: 337.4
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
3,824
450
195
40
50
4,559
% of issued
share capital
1
5
13
8
73
100
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Telephone +44 (0) 370 889 3257
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.
Share dealing
Bunzl plc shares can be traded through most banks and
stockbrokers. The Company’s registrar also offers an internet
and postal dealing service. Further details can be found at
https://www-uk.computershare.com/Investor/#ShareDealingInfo
or by telephoning +44 (0) 370 889 3257.
236
Bunzl plc Annual Report 2022
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
Credit Suisse
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.
Bunzl plc Annual Report 2022
237
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT SASB REPORTING
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 2022 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 2022, £2.3bn revenue was generated from packaging and products made from materials that are recyclable,
compostable, reusable or made from renewable sources
Page 64
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 64 and 65
Pages 23 to 37: Capital Markets Day
93,405◊ tonnes of CO2e
Our climate change/carbon strategy has been detailed in the sustainability section of our Annual Report on pages
56 to 63
A comprehensive view into how we understand, assess and manage the risks and opportunities associated with
climate change can be found in our TCFD Index and associated reporting. Pages 69, 56 to 63, 242 and 243
Our integrated process for identifying and assessing risks is detailed in the strategic report section of our Annual
Report on pages 74 to 76
Our carbon reduction targets can be found on pages 17 and 51 of our Annual Report with our performance shown on
pages 56 and 243
The targets are (baseline year: 2019):
• Scope 1 & 2 – 50% more carbon efficient (equivalent to a 27.5% absolute reduction by 2030)*
• Scope 3 – 79% of suppliers by emissions will have science-based targets by 2027*
• Net zero emissions by 2050 at the latest
We have also committed to the Business Ambition for 1.5⁰C initiative and joined the UN Race to Zero campaign
* These targets have been approved by the Science-Based Targets initiative (SBTi).
◊ Included in the external auditors limited assurance scope. See Data Assurance statement, which is available on our website, www.bunzl.com.
(1) Total fuel consumed,
(2) percentage natural gas,
(3) percentage renewable
(1) Total fuel consumed: 1,495,373 GJ
(2) percentage natural gas: 26%
(3) percentage renewable fuel: 0.3%
(1) Operational energy
consumed, (2) percentage
grid electricity, (3)
percentage renewable
(1) Operational energy consumed: 1,837,885 GJ
(2) percentage grid electricity: 18%
(3) percentage renewable: 3.3% (total energy), 17% (total electricity)
238
Bunzl plc Annual Report 2022
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
two years. We 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 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: 20% due to Covid-19 related travel restrictions
impacting our Global Supply Chain Solutions team.
For more information see:
Pages 52 and 53
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 2022, our Global Supply Chain Solutions team audited 930 suppliers:
• 834 had no critical issues (89.7% of suppliers audited).
• 96 underwent remediation efforts to bring them up to the required standard (10.3% of suppliers audited).
• Following these remediation efforts, we terminated relationships with 16 suppliers who failed to make enough
progress (1.7% of suppliers audited, 16.7% of suppliers requiring remediation).
• Corrective action rate for suppliers requiring remediation: 83.3%.
Our Global Supply Chain Solutions team have identified the following risks:
(1) Labour:
• Forced Labour (Modern Slavery) – including the use of recruitment fees.
• Continuous work for more than 30 consecutive days without at least one day’s rest.
• Unfair discrimination.
• Wages not meeting local legal minimum requirements.
• Child Labour.
(2) Environmental, health and safety risks:
• Whether the supplier has 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 is 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 a total workforce of over 22,000 employees, 63%
of them male and 37% are female. In our senior management population (c. 470 leaders) there are 21% females and
79% 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.
No compensation costs were paid in 2022.
Voluntary turnover was 17.1%.
Bunzl plc Annual Report 2022
239
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT ESG APPENDIX
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.
• Packaging sales only includes those sales of products that will be ultimately bought or used by consumers. Sales of packaging
related products bought by business customers for non retail purposes are captured as non packaging revenue.
• 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).
• We have exercised our judgement to allocate sales to the packaging and non-packaging categories as explained below. There are
certain limitations with respect to the accuracy and completeness of the packaging categories as it is not always possible to
evidence the exact composition of our products across the vast range that we sell. Judgements with respect to allocating
products to categories are taken at a point in time, and both evolving legislation and changes in product composition mean that it
is likely we will recognise adjustments, both current and retrospective, akin to those we have disclosed below this year as we
continue to enhance the quality of our data. We will continue to disclose such adjustments where they are of significance to year
on year trends in our packaging-related data.
We review the categorisation of our products and packaging on a quarterly basis as part of our internal controls process and have
made two changes this year.
• Food containers made from Expanded Polystyrene ‘EPS’ have been moved from category 3 to category 2. Several of the countries
where we operate have announced legislation restricting the use of this material in the takeaway foodservice sector and we are
actively transitioning customers to alternative materials with no reductions in volume. As these restrictions have not been
applied consistently across our Group (for example, c.94% of our sales in this product category are in United States of America
where EPS is not widely restricted) and they do not impact the fresh produce sector in some of our markets, we have positioned
these sales in ‘Consumable plastics likely to transition’.
• Baking paper and parchment products have moved from category 4 to category 3. Despite c.99% of the material in the product
being renewable and recyclable, the presence of a silicone coating means these products cannot be widely recycled. As papers of
this nature serve a functional purpose and alternatives are not commercially available, we have positioned these sales in
‘Packaging and products with an important purpose’.
Category detail and
name applied by Bunzl
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
# Description
1
2
The single-use plastic products most commonly facing restriction
– i.e. outright bans or complete restriction on placing into the
market within the majority of the countries in which we operate
– this is the category where we expect to see some volume
reduction and transition may not happen on a like-for-like basis.
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 in those
areas where it does not currently apply.
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 across our Group is not completely
restricted (i.e. there are no consistent bans as with category 1) and
the products themselves serve a functional purpose, customers
typically transition away from these products to alternatives on a
like-for-like basis (including reusable options).
We have expanded these specific regulations to all business areas
where such products are sold to provide consistency.
Example products
in category
Including but not limited to:
Plastic cutlery
Plastic plates, bowls, platters,
and lids
Including but not limited to:
Single-use plastic cups
Paper cups and soup containers
with plastic lining
Lightweight plastic carrier bags
EPS food containers
240
Bunzl plc Annual Report 2022
Category detail and
name applied by Bunzl
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
3
4
# Description
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.
Example products
in category
Including but not limited to:
Plastic food containers
Plastic pouches, packets,
and wrappers
Baking paper and parchment
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, to
provide consistency we have expanded these criteria to all
business areas where such products are sold.
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 bags
Decorative retail boxes (paper
and corrugate)
Reusable carrier bags
Climate change scenarios
The climate change scenarios align with the environmental and economic conditions represented in the Network for Greening the
Financial System ‘NGFS’ scenario framework. This framework was used as the basis for the Bank of England’s 2021 Biennial
Exploratory Scenario on climate risks and is based on the following assumptions:
Scenario 1 – ‘Orderly’
This reflects Net Zero 2050 commitments from COP26 which limit global warming to 1.5°C through stringent climate policies and
innovation and assumes those jurisdictions which have committed to Net Zero (including US, EU, UK, Canada, Australia and Japan) will
achieve those goals. This scenario assumes climate policies are introduced early and become gradually more stringent and that physical
and transition risks increase gradually. Carbon prices increase steadily in key Bunzl countries and the use of internal combustion engine
‘ICE’ vehicles will be limited by regulations and market pressures. Physical and transition risks are both relatively low, however carbon
prices are initially higher than the Disorderly scenario in order to encourage an earlier curbing of emissions. Customers may also
increasingly express their preferences relating to the type of transportation used by Bunzl to deliver their products.
Scenario 2 – ‘Disorderly’
This scenario assumes a lack of coordinated response to climate change and therefore emissions reductions are limited until 2030.
Climate policies are delayed or divergent across countries and since actions are taken relatively late and are limited by available
technologies, emissions reductions need to be greater than in the Orderly scenario to limit warming to below 2°C. The result is
higher transition risks and higher carbon prices.
Scenario 3 – ‘Hothouse world’
The final scenario assumes that Governments fail to introduce the policies needed to address climate change beyond those that are
already in place. Climate policies are implemented in some jurisdictions, but global efforts are insufficient to halt significant global
warming. Global average carbon prices remain low and emissions grow until 2080 leading to +3°C of warming with severe physical
risks and irreversible global impacts.
Bunzl plc Annual Report 2022
241
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT ESG APPENDIX CONTINUED
Evaluating potential impacts of climate change on our business
The Group has considered three possible outcomes (best, medium, worst) across our key potential climate-related business impacts,
under the three climate scenarios. We have assessed the impacts on a short term (to 2025) mid term (to 2030) and long term (to
2050) basis.
Shifting customer expectations
The timing of the emissions reductions required varies significantly between the Orderly, Disorderly and Hothouse scenarios. Many
customers have committed to dramatically reduce carbon emissions by 2050 (with some committing to net zero) and they expect suppliers
such as Bunzl to contribute to achieving these targets. Bunzl has already established a science-based reduction target in line with an Orderly
scenario and will assess on an ongoing basis whether this emissions trajectory continues to meet customers’ ambitions.
Environmental impacts of technology
Whilst the transition to electric and plug-in hybrid vehicles has begun, the pace and breadth of change will depend upon the
climate scenarios above. Bunzl is aware of relevant current trends including the deployment of electric ‘EV’ and plug-in hybrid
electric vehicles ‘PHEV’, the energy density and range limitations of batteries for long haul trucks, and the likely future cost of biofuels,
which represent an important transition fuel. We considered whether a rapid increase in carbon pricing after 2030 in the Disorderly
scenario could leave Bunzl with stranded assets, if trucks were to become uneconomical to run. Consideration of the environment in
which we may operate under each of the climate scenarios above has led us to conclude that Bunzl will implement a fleet strategy
that ensures a timely transition to alternative fuels at a cost that is comparable to the current cost, or that any increase in costs is
marketwide and can be incorporated into sales prices. We also conclude that the risk of stranded assets is minimal, as the average
life remaining on our truck and car leases is limited (estimated to 3 to 4 years).
Adaptation to extreme weather
The business impact of extreme weather is already included in our climate model, as it could be a driver of lower GDP growth.
Bunzl monitors the current impact of extreme weather on our operations to ensure we remain well prepared for worsening
conditions in the future. In recent years we have seen disruptions due to extreme weather in North America (hurricanes and
wildfires) and Australasia (wildfires and flooding). These events were predominantly regional and in most cases we were able to
serve customers from a different location. If this was not possible, then it is expected revenue would recover in a short time after
conditions normalise. We have concluded that extreme weather conditions currently do not represent a material financial risk to
Bunzl in excess of the impacts already modelled by considering the impact climate change will have on GDP.
Changing market dynamics
We have modelled the business impact of changing market conditions, by considering the potential for climate change to lead to
lower GDP growth and higher carbon taxes:
Global GDP: Bunzl’s revenue is to some extent correlated with the health and progress of the global economy. Economic damage
from climate change could be caused by a number of outcomes, including shocks from extreme weather events, losses in
agricultural productivity, temperature effects on labour productivity and human health, energy demands, and flows of tourism.
All impacts are considered within our scenarios.
Carbon pricing is a cost levied by governments to encourage polluters to reduce the amount of greenhouse gases they emit. The
Orderly scenario assumes increased carbon pricing in key Bunzl countries as a result of Government intervention and sustained
consumer pressure. The Disorderly scenario reflects moderate pressure from consumers for climate action, resulting in a much
lower carbon price than the Orderly scenario until 2030, when the substantial financial impacts of extreme weather events leads
to a rapid policy response from Governments. A high carbon price is required from this point to drive large emissions reductions to
limit global warming. Within the Hot House scenario, increases in carbon pricing remain negligible up to and beyond 2050.
242
Bunzl plc Annual Report 2022
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)
Fuel intensity (ltr/£m revenue)
Scope 2
Emissions location-based (tonnes of CO2e)
Emission intensity location-based (tonnes of CO2e/£m revenue)
Emissions market-based (tonnes of CO2e)
Emission intensity market-based (tonnes of CO2e/£m revenue)
Electricity usage (MWh)
% renewable electricity
Total Scope 1 and 2 emissions
Emissions location-based (tonnes of CO2e)
Emission intensity location-based (tonnes of CO2e/£m revenue)
Emissions market-based (tonnes of CO2e)
Emission intensity market-based (tonnes of CO2e/£m revenue)
Total energy (MWh)
2019
2020
2021
2022
99,193
10.7
8,912,413
31,523,097
3.4
90,568
9.5
8,082,813
29,306,537
3.1
87,125
8.5
8,272,123
28,060,702
2.7
93,405◊
8.1◊
9,650,228
29,099,858
2.5◊
29,594
3.2
29,835
3.2
83,062
NA
128,787
13.9
129,028
13.7
516,775
27,421
2.9
26,183
2.7
80,276
15
117,989
12.4
116,751
12.2
480,711
25,043
2.4
25,025
2.4
79,057
14
112,168
10.9
112,150
10.9
470,941
27,895◊
2.4◊
27,337
2.4
93,224
17
121,300◊
10.5◊
120,742◊
10.5◊
510,524
◊ Included in the external auditors limited assurance scope. See Data Assurance statement, which is available on our website, www.bunzl.com. The location-based emissions and intensity data
for previous years was also assured as detailed in the respective Annual Reports.
Our absolute carbon emissions increased by 8% during the year primarily caused by acquisitions. Carbon emissions in the
remaining business were stable as our growth was offset by reductions from an increased uptake of electric vehicles, energy
efficiency improvements and increased procurement of renewable energy. Fuel used for transportation remains our highest source
of operational emissions, contributing c.79% of our scope 1 emissions. Of those emissions relating to transportation, c.82% are
generated by our fleet of commercial vehicles.
Performance against carbon reduction targets
Data for the period 1 October to 30 September
Total scope 1 and scope 2 Emissions market-based (tonnes of CO2e)
Emission intensity market-based (tonnes of CO2e/£m revenue)
2019
141,3201
13.81
2022
120,742◊
10.5◊
2022 %
reduction
(vs 2019)
15
24
2030 target
(vs 2019)
27.5%
50%
1 Emissions in our baseline year have been recalculated to reflect the impact of acquisitions. Emissions intensity has been recalculated using revenue at constant currency. This process has
been agreed with the SBTi.
◊ Included in the external auditors’ limited assurance scope. See the data assurance statement on the Company’s website, www.bunzl.com.
Greenhouse gas emissions data (UK)*
Data for the period 1 October to 30 September
Scope 1 emissions (tonnes of CO2e)
Scope 2 Emissions (tonnes of CO2e) (location-based)
Total scope 1 and 2 Emissions (tonnes of CO2e)
Emission intensity (tonnes of CO2e/£m revenue)
Natural gas usage (m3)
Fuel usage (ltr)
Electricity usage (MWh)
Total energy consumption (MWh)
2019
17,211
2,660
19,871
17.0
469,573
6,271,182
10,405
82,084
2020
15,261
2,847
18,108
14.9
486,661
5,606,760
11,140
75,812
2021
14,845
2,511
17,356
14.6
419,138
5,572,556
9,823
73,815
2022
15,479
2,215
17,694
13.4
425,053
5,716,256
11,292
76,744
* Energy usage and carbon emissions disclosed separately to adopt to the requirements of the UK Streamlined Energy and Carbon Reporting (‘SECR’) policy.
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/sustainability-reporting.
Bunzl plc Annual Report 2022
243
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT ESG APPENDIX CONTINUED
Scope 3:
During 2022 we performed a full assessment of our scope 3 carbon emissions, covering both 2019 (as our baseline year) and 2021.
This work has been covered in more detail on page 60. The carbon emissions are summarised in the table below.
Greenhouse gas emissions scope 3 data (Group)
Scope 3 category
Purchased goods and services
Capital goods
Fuel and energy-related activities not included in scope 1 or scope 2
Upstream transportation and distribution
Waste generation in operations
Business travel
Employee commuting
Downstream transportation and distribution
Use of sold products
End-of-life treatment of sold products
Total scope 3 emissions
2019
(kt CO2e)
2021
(kt CO2e)
5,212
18
29
247
5
20
21
53
20
468
6,093
6,200
18
30
282
5
11
20
47
13
483
7,109
Waste
The amount of waste generated in our facilities in 2022 is 22,200 tonnes which is a decrease of 1% compared to last year, mainly
due to increased completeness and accuracy of reporting. The recycling rates strongly depend on the locally available waste
recycling options. In 2022, 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 more than 99%
of the Group by revenue although accurate waste measurement remains challenging in geographies with less advanced waste
management infrastructures. We continue to work on improvement of the completeness and accuracy of waste reporting across
the Group.
Water
Direct water usage is not a significant environmental impact for our business as it is principally confined to staff hygiene and
workplace cleaning, with the exception of a very small number of sites where we process gel or ice packs which contain water.
Water discharges, apart from internal sanitation, are limited to rainwater run-off from the yards of our locations. Our estimated
water usage is 230,000 m3 of water per year. The usage is significantly higher than last year (175,000 m3) due to an increased
number of FTEs in the group, increased completeness of reporting and increased water consumption due to a higher sales of ice
packs, which are produced at a very small number of sites.
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 25% of the Group’s operations (measured by revenue).
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
2018
95
2,370
1
2019
96
3,110
0
2020
85
3,040
0
2021
86
2,615
0
2022
80◊
2,441◊
0
◊ 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.
Targets for 2022:
Reduce the Group accident incidence rate by 5% from 2021. Reduce the Group accident severity rate by 5% from 2021.
The 2022 group accident incidence rate of 80 represents a 7% improvement versus 2021. The 2022 group accident severity rate of
2,441 represents a 7% improvement versus 2021. The continued improvement of our safety performance has been the result of
our ongoing focus on minimising health and safety risks and creating a safe work environment for our employees. We have
continued to refine our programmes to reduce injuries 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 also
made further improvement in our programmes to report on leading indicators such as near misses, safety meetings and
inspections. A key project in 2022 which will continue into 2023, has been the replacement of our current EHS reporting system by
on global integrated EHS data management system.
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Bunzl plc Annual Report 2022
Targets for 2023:
Reduce the Group accident incidence rate by 3% from 2022
Reduce the Group accident severity rate by 3% from 2022
Incidence rate
Average number of incidents
per month per 100,000
employees
95
96
Severity rate
Average number of days lost
per month per 100,000
employees
85
86
80◊
3,110
3,040
2,370
2,615
2,441◊
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
12 months to 30 September.
12 months to 30 September.
◊ Included in the external auditors’ 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 at https://www.bunzl.com/sustainability/sustainability-reporting/external-assurance-opinion-statement
External assurance
We engaged PricewaterhouseCoopers LLP ‘PwC’ to undertake a limited assurance engagement, reporting to Bunzl plc only, using
International Standard on Assurance Engagements ‘ISAE’ 3000 (Revised): ‘Assurance Engagements Other Than Audits or Reviews
of Historical Financial Information’ and ISAE 3410: ‘Assurance Engagements on Greenhouse Gas Statements’ over the two
non-financial KPIs highlighted on page 47 and the selected data on page 56 of the Sustainability Report and in the ESG Appendix.
In each case that has been highlighted with the symbol ‘◊’.
PwC has provided an unqualified opinion in relation to the relevant KPIs and data and their full assurance opinion is available in
the Sustainability section of our Group website, www.bunzl.com. Non-financial performance information, including greenhouse
gas quantification in particular, is subject to more inherent limitations than financial information. It is important to read the
selected information contained in this Annual Report in the context of PwC’s full limited assurance opinion and the Company’s
EHS Reporting Guidelines which are also available in the Sustainability section of our website.
Bunzl plc Annual Report 2022
245
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT ESG APPENDIX CONTINUED
Supply chain risk assessment
To guide our responsible sourcing work effectively, we partnered with the Non-Governmental Organisation (NGO) Stop the Traffik
which has applied its 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.
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
Category A
(low 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.
Countries and
product sectors
Most Asian countries.
Key countries outside
of Asia are Brazil,
Turkey, Mexico,
Poland and Israel.
Category B
(low overall
spend)
Category C
(high overall
spend)
Suppliers operating in lower risk countries but
operating in a very high or high product risk
sector. Very high and high risk product sectors:
• Manufacturing of wearing apparel
• Manufacturing of textiles
• Manufacture of leather products
Suppliers operating in lower risk countries and
operating in lower risk product sectors.
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 and
France.
In various countries
such as USA, UK,
France and the
Netherlands.
Risk mitigation
• 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.
• 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.
These suppliers are provided with Bunzl’s Supplier
Code of Conduct.
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.
Material breaches of code of conduct
Speak up
0
43
0
33
0 No material breaches of our code of conduct were recorded in 2022.
83 In 2022 we received 83 reports through our confidential whistle blowing
2020
2021
2022 Comment
process, ‘Speak Up’, none of which related to any issues of material concern.
Over half of the cases were from the LATAM region. A number of the reports
raised were from the same site or related to the same issue and were treated as
separate reports.
246
Bunzl plc Annual Report 2022
Employees
Engaging with our employees with clear communications and the provision of learning and development opportunities
2020
2021
2022
What we said we would
do in 2022
12.2% 17.3% 17.1% Build on the strong
Employee
turnover:
Voluntary
16%
19%
Gender diversity:
Women at senior
management
level
engagement results and focus
on the employee experience.
Ensure employees continue
to feel safe at work. Establish
models of hybrid working.
21% Encourage more women
into leadership roles though
focused and targeted
activities and a continuation
of leadership development
initiatives.
Employee
engagement
index score
88%
86% 85%* 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.
What we did
Focus on understanding
key drivers for teams with
higher turnover of employees
including use of employee
survey data.
Continued to monitor
engagement survey results
by gender. Provided high-
potential women with access
to mentors.
Identified a common
improvement area of
communications. Ran a
communications pulse survey
for all employees to gain a
greater understanding of
communication needs and
improvement opportunities.
What we plan to do in 2023
Ensure that we have a competitive
employment proposition which
reflects the local labour market.
Continue our strategy of listening
to understand employee
engagement in more detail.
Promote female role models
through a focused programme of
communications and extended
networking events such as female
leadership conferences in North
America and Latin America.
Extend the pilot of GPTW in
our Continental Europe region.
Undertake pulse surveys with
specific teams to monitor
progress on action plan and
impact on results.
* The measure of engagement has changed to sustainable engagement and this is a 5% improvement from the survey completed in 2021
Senior management (%) and employees
Total workforce (%) and employees
Average number of employees (%)
Total workforce age profile (%)
Males
79%
374
Males
63%
13,577
Females
21%*
97
Females
37%
7,969
North America
Continental Europe
UK & Ireland
Rest of the World
39%
25%
19%
17%
Under 30
30–39
40–54
Over 55
16%
23%
38%
23%
* 27.3% of the Executive Committee’s direct reports are female (6 employees)
Source:
HR from September 2022 (those employees eligible
to receive grants of executive share options)
Source:
HR from BRMS
Source:
Note 26 on page 210
Source:
HR from BRMS
Charitable contributions
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.
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 2022 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.
Example initiatives
Charity name
Hubbub
Sea Changers
Project(s)
Reusable packaging systems research and guide for businesses
Coastal fountain fund (provision of water bottle refill fountains at some of the UK’s busiest beaches)
Marine Conservation Society ‘MCS’
Sponsorship of MCS Ocean Schools programme
Plastics for Change
WasteAid
Supported informal waste collectors in India with the resources and skills to work with dignity and the
launch a new scholarship and education programme for local children
Informal waste collectors in Johannesburg provided with training and capex funding to help them grow
their waste collection businesses.
Group wide, Bunzl donated a total of c.£2.3 million to charitable causes during 2022. This does not include amounts donated by
Bunzl in matching funds raised by employees for local charities.
Bunzl plc Annual Report 2022
247
FINANCIAL STATEMENTSDIRECTORS’ REPORTSTRATEGIC REPORT FIVE YEAR REVIEW
Five year review
Revenue
Operating profit
Finance income
Finance expense
Disposal of businesses
Profit before income tax
Income tax
Profit for the year attributable to the
Company’s equity holders
2022
£m
IFRS
2021
£m
2020
£m
12,039.5
10,285.1
10,111.1
701.6
22.3
(90.2)
0.9
634.6
(160.2)
623.3
10.7
(65.3)
–
568.7
(125.9)
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)
IAS 17
2019◊
£m
9,326.7
506.0
12.4
(64.2)
–
454.2
(104.3)
2018
£m
9,079.4
466.2
11.6
(66.6)
13.6
424.8
(98.3)
474.4
442.8
430.0
349.2
349.9
326.5
Basic earnings per share
141.7p
132.7p
128.8p
104.8p
105.0p
98.4p
Alternative performance measures†
Adjusted operating profit
Adjusted profit before income tax
Adjusted profit for the year
Adjusted earnings per share
885.9
818.0
616.8
752.8
698.2
542.5
778.4
715.6
550.5
184.3p
162.5p
164.9p
653.3
578.2
440.6
132.2p
630.9
579.1
441.3
614.0
559.0
429.9
132.4p
129.6p
◊ 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 178 for further details of the alternative performance measures.
248
Bunzl plc Annual Report 2022
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