Government
Employees
Government
Employees
Community
Customers
and
Consumers
Community
Customers and
Consumers
Creating a World of
Sustainable Nutrition
Suppliers
Kerry Group Annual Report 2021
Shareholders
Suppliers
Shareholders
Kerry Group Annual Report 2021 Kerry is the world’s leading
taste and nutrition partner
for the food, beverage and
pharmaceutical markets,
with our broad range
of ingredient solutions
currently reaching over
1 billion consumers.
CONTENTS
Strategic Report
3 Our Performance in 2021
4 Our Purpose and Vision
Kerry Group at a Glance
6
8
Chairman’s Statement
10 Chief Executive Officer’s Review
15 Our People
22 Our Business Model
24 Our Technologies
26 Our Markets
28 Our Strategy
31 Strategy & Targets
32 Why Kerry?
34 Key Performance Indicators
36 Financial Review
44 Business Review: Taste & Nutrition
48 Business Review: Consumer Foods
50 Sustainability Review
75 Risk Management Report
Directors’ Report
87 Board of Directors
90 Report of the Directors
Governance Report
96 Corporate Governance Report
109 Audit Committee Report
115 Governance, Nomination
and Sustainability
Committee Report
121 Remuneration Committee Report
Financial Statements
152 Independent Auditors’ Report
160 Financial Statements
168 Notes to the Financial Statements
Supplementary Information
234 Financial Definitions
Strategic
Report
Kerry Group Annual Report 2021 Group Revenue
Group Revenue
Business Volumes¹
Business Volumes¹
2021
Group Revenue
2020
2021
Group Revenue
2020
2021
2021
Group Revenue
2020
Group Revenue
2020
Group Revenue
Net Cash from Operating Activities
Net Cash from Operating Activities
Trading Profit
Trading Profit
2021
2021
Group Revenue
Group Revenue
Our Performance
in 2021
€7.4 billion
€7.4 billion
€7.0 billion
€7.0 billion
€865 million
2020
Group Revenue
2021
€876 million
€7.4 billion
2021
Financial Performance Measures
2020
€7.0 billion
2020
2021
€7.4 billion
Group Revenue
Group Revenue
2021
€876 million
€876 million
€7.4 billion
€7.0 billion
2020
€7.0 billion
2020
Group Revenue
2021
2021
Trading Profit
Trading Profit
2020
2020
2021
Group Revenue
2021
2020
Trading Profit
2020
2021
Trading Profit
€797 million
€797 million
€797 million
€797 million
€7.0 billion
2020
2021
€7.4 billion
€7.4 billion
€7.4 billion
€7.4 billion
2020
2021
Trading Profit
Trading Profit
2020
2021
€7.0 billion
€876 million
€876 million
€7.0 billion
2021
€797 million
2020
2021
€1049 million
€654 million
Trading Profit
Net Cash from Operating Activities
2021
2020
2020
2021
Trading Profit
Net Cash from Operating Activities
Trading Profit
2020
2021
2020
€876 million
€7.0 billion
€872 million
€797 million
€876 million
€7.4 billion
€876 million
€672 million
2020
2021
2021
2020
2021
2021
Trading Profit
Net Cash from Operating Activities
Trading Profit
Net Cash from Operating Activities
€797 million
€654 million
€797 million
€876 million
€654 million
€876 million
€797 million
€797 million
€672 million
€672 million
2020
2020
2020
2020
2020
2020
€876 million
€876 million
€654 million
€797 million
2021
2021
2021
Basic EPS
Basic EPS
2021
€654 million
Net Cash from Operating Activities
Net Cash from Operating Activities
Net Cash from Operating Activities
2020
2020
€797 million
€654 million
2021
Net Cash from Operating Activities
2021
2021
Basic EPS
2020
2020
2020
2021
€672 million
Net Cash from Operating Activities
(2.3%)
€672 million
€672 million
€654 million
Net Cash from Operating Activities
2021
2021
Basic EPS
2020
2020
2021
Net Cash from Operating Activities
313.0 cent
€654 million
€654 million
€654 million
€672 million
€876 million
€797 million
313.0 cent
(2.3%)
Trading Profit
430.6 cent +37.6%
391.3 cent +25%
€7.2 billion
€7.4 billion
€6.9 billion
€7.0 billion
€7.4 billion
€7.4 billion
€7.0 billion
€7.0 billion
2021
Business Volumes¹
2020
Business Volumes¹
2020
(2.9%)
(2.9%)
2021
6.8%
8.0%
Strategic Report Our Performance in 2021
3
2021
2021
8.0%
8.0%
Business Volumes¹
2020
Business Volumes¹
(2.9%)
(2.9%)
2020
In a year where we made significant strategic progress
on a number of different fronts, we also achieved strong
Group Trading Margin¹
Group Trading Margin¹
2021
2021
Business Volumes¹
Business Volumes¹
growth and good business performance recovery.
(2.9%)
2020
Business Volumes¹
2021
Group Trading Margin¹
Business Volumes¹
2021
Group Trading Margin¹
11.9%
8.0%
12.0%
8.0%
(2.9%)
8.0%
8.0%
2020
2021
2021
+50bps
+40bps
2021
(2.9%)
2020
2020
2021
Business Volumes¹
2020
2020
(2.9%)
Volume Growth1
Business Volumes¹
2021
8.0%
(2.9%)
2021
2020
Group Trading Margin¹
2021
(2.9%)
Group Trading Margin¹
2020
2020
2020
2021
(100bps)
(100bps)
11.5%
11.5%
8.0%
11.9%
8.0%
11.9%
+40bps
+40bps
Business Volumes¹
2020
2021
8.0%
Free Cash Flow¹ (cash conversion percentage)
2020
2021
11.9%
Group Trading Margin¹
Free Cash Flow¹ (cash conversion percentage)
(2.9%)
Group Trading Margin¹
11.9%
(2.9%)
+40bps
+40bps
11.5%
11.5%
8.0%
(100bps)
(100bps)
2020
2021
2020
2021
8.0%
Group Trading Margin¹
Free Cash Flow¹ (cash conversion percentage)
(2.9%)
2020
2021
81%
Group Trading Margin¹
Group Trading Margin¹
Free Cash Flow¹ (cash conversion percentage)
2021
11.9%
11.9%
2020
11.5%
€566 million
11.9%
€545 million
€412 million
€412 million
2021
2020
11.5%
(100bps)
(100bps)
84%
+40bps
+40bps
67%
67%
2020
2021
2021
2021
2020
2021
Group Trading Margin¹
2020
2020
Group Trading Margin¹
Free Cash Flow¹ (cash conversion percentage)
Free Cash Flow¹ (cash conversion percentage)
11.5%
11.9%
€566 million
€566 million
11.9%
11.5%
11.5%
€412 million
€412 million
2020
2020
67%
67%
11.5%
(100bps)
(100bps)
+40bps
+40bps
84%
84%
(100bps)
(100bps)
Group Trading Margin¹
2021
2021
11.9%
11.9%
+40bps
+40bps
2021
2020
Constant Currency Adjusted EPS¹
84%
84%
Free Cash Flow¹ (cash conversion percentage)
(100bps)
(100bps)
Constant Currency Adjusted EPS¹
2021
Free Cash Flow¹ (cash conversion percentage)
Free Cash Flow¹ (cash conversion percentage)
2020
€566 million
€566 million
11.5%
Free Cash Flow¹ (cash conversion percentage)
+11.6%
+12.1%
84%
84%
Free Cash Flow¹ (cash conversion percentage)
Constant Currency Adjusted EPS¹
11.5%
Constant Currency Adjusted EPS¹
67%
67%
+40bps
377.6 cent
380.8 cent
€566 million
€566 million
(100bps)
€566 million
€412 million
€412 million
2021
2021
2021
2021
11.5%
11.9%
2020
2020
2021
2020
2020
2020
2021
2020
2020
2021
€412 million
€412 million
Free Cash Flow¹ (cash conversion percentage)
84%
Free Cash Flow¹ (cash conversion percentage)
+12.1%
+12.1%
(9.4%)
(9.4%)
84%
345.4 cent
345.4 cent
67%
67%
€566 million
€566 million
380.8 cent
380.8 cent
67%
67%
345.4 cent
345.4 cent
€566 million
€566 million
(9.4%)
84%
(9.4%)
84%
2021
2020
Basic EPS
Basic EPS
2020
2021
430.6 cent
Net Cash from Operating Activities
2021
2020
Basic EPS
2020
2021
€672 million
(2.3%)
(2.3%)
€654 million
€654 million
313.0 cent
313.0 cent
430.6 cent +37.6%
€672 million
430.6 cent +37.6%
2021
2020
€412 million
Constant Currency Adjusted EPS¹
Constant Currency Adjusted EPS¹
2020
380.8 cent
2021
Free Cash Flow¹ (cash conversion percentage)
€412 million
Constant Currency Adjusted EPS¹
2020
2021
2021
2020
2020
2021
Basic EPS
Total Dividend Per Share
2021
2020
2021
Basic EPS
Total Dividend Per Share
€654 million
€672 million
€672 million
430.6 cent +37.6%
430.6 cent +37.6%
313.0 cent
313.0 cent
€672 million
2020
Basic EPS
2020
2021
2021
2020
Basic EPS
2021
2021
Total Dividend Per Share
Total Dividend Per Share
2020
2021
2020
95.2 cent
Basic EPS
Total Dividend Per Share
2020
2020
2021
Basic EPS
(2.3%)
(2.3%)
430.6 cent +37.6%
95.2 cent
430.6 cent +37.6%
95.2 cent
+10.1%
+10.1%
313.0 cent
313.0 cent
(2.3%)
(2.3%)
430.6 cent +37.6%
86.5 cent
+10.1%
86.5 cent
+10.1%
430.6 cent +37.6%
380.8 cent
+12.1%
+12.1%
2021
2020
2020
2021
2020
2020
2020
2021
€412 million
67%
67%
380.8 cent
Constant Currency Adjusted EPS¹
Constant Currency Adjusted EPS¹
Return on Average Capital Employed¹
Return on Average Capital Employed¹
84%
345.4 cent
345.4 cent
€412 million
€566 million
Constant Currency Adjusted EPS¹
Constant Currency Adjusted EPS¹
€412 million
Return on Average Capital Employed¹
345.4 cent
2021
2021
Return on Average Capital Employed¹
Return on Average Capital Employed¹
2020
345.4 cent
2020
9.9%
2021
Constant Currency Adjusted EPS¹
Constant Currency Adjusted EPS¹
380.8 cent
380.8 cent
2020
2021
2020
2021
2021
67%
380.8 cent
9.9%
+12.1%
+12.1%
9.9%
(9.4%)
9.8%
380.8 cent
9.8%
(9.4%)
+12.1%
+12.1%
(9.4%)
(9.4%)
2020
2021
2020
2021
313.0 cent
313.0 cent
(2.3%)
(2.3%)
95.2 cent
95.2 cent
+10.1%
+10.1%
2020
2021
2020
2021
345.4 cent
345.4 cent
(9.4%)
9.9%
(9.4%)
9.9%
Basic EPS
Total Dividend Per Share
Total Dividend Per Share
2021
2020
2021
2020
430.6 cent +37.6%
+10.1%
430.6 cent +37.6%
+10.1%
86.5 cent
86.5 cent
Constant Currency Adjusted EPS¹
2021
2020
Return on Average Capital Employed¹
Return on Average Capital Employed¹
380.8 cent
2021
2020
380.8 cent
9.8%
9.8%
+12.1%
+12.1%
2020
2020
313.0 cent
313.0 cent
(2.3%)
430.6 cent +37.6%
(2.3%)
2020
2021
2020
2021
95.2 cent
95.2 cent
Total Dividend Per Share
2021
Total Dividend Per Share
2021
Non-Financial Performance Measures
(2.3%)
313.0 cent
2020
+10.1%
Total Dividend Per Share
Consumers Reached with
Total Dividend Per Share
Consumers Reached with
Consumers Reached with
Positive and Balanced Nutrition Solutions²
2021
Positive and Balanced Nutrition²
Positive and Balanced Nutrition²
1.1 billion
Total Dividend Per Share
Consumers Reached with
Positive and Balanced Nutrition²
Total Dividend Per Share
Consumers Reached with
Positive and Balanced Nutrition²
2020
2021
2021
95.2 cent
95.2 cent
86.5 cent
86.5 cent
86.5 cent
2021
2020
+10.1%
+10.1%
2020
2021
+10.1%
+10.1%
+10.1%
+10.1%
+10.1%
+10.1%
+10.1%
+10.1%
2021
+10.1%
2020
2020
2020
345.4 cent
+12.1%
Return on Average Capital Employed¹
Return on Average Capital Employed¹
345.4 cent
380.8 cent
2021
2021
(9.4%)
(9.4%)
Return on Average Capital Employed¹
Absolute Carbon Reduction²
Return on Average Capital Employed¹
Absolute Carbon Reduction²
Absolute Carbon Reduction²
345.4 cent
(9.4%)
2020
2020
2021
2021
39%
2020
2021
2020
2021
2021
2021
2020
2020
2020
2021
2021
2020
2021
2020
86.5 cent
95.2 cent
95.2 cent
1.1 bn
1.1 bn
86.5 cent
86.5 cent
1.0 bn
1.0 bn
95.2 cent
1.1 bn
86.5 cent
95.2 cent
1.1 bn
86.5 cent
1.0 bn
1.0 bn
+10.1%
Return on Average Capital Employed¹
Absolute Carbon Reduction²
Return on Average Capital Employed¹
Absolute Carbon Reduction²
2020
Return on Average Capital Employed¹
2021
17%
17%
+10.1%
+10.1%
+10.1%
+10.1%
Absolute Carbon Reduction²
Absolute Carbon Reduction²
2021
Total Shareholder Return
-3.7% (2020: +7.4%)
2020
2020
2020
17%
17%
9.9%
9.8%
Absolute Carbon Reduction²
Absolute Carbon Reduction²
2021
2021
1.1 bn
1.1 bn
Total Dividend Per Share
2020
2020
2021
2020
2021
2021
2020
2021
2020
Consumers Reached with
Positive and Balanced Nutrition²
Consumers Reached with
2021
95.2 cent
Positive and Balanced Nutrition²
2020
2020
2020
86.5 cent
+10.1%
2021
2021
Consumers Reached with
Positive and Balanced Nutrition²
Consumers Reached with
Positive and Balanced Nutrition²
Consumers Reached with
Positive and Balanced Nutrition²
Consumers Reached with
Positive and Balanced Nutrition²
1
2020
2
2021
2020
2021
See Key Performance Indicators section pages 34-35 and the Supplementary Information section page 234 for definitions, calculations and
reconciliations of Alternative Performance Measures
See Sustainability Review pages 50-74 for further information on non-financial metrics
1.1 bn
Absolute Carbon Reduction²
Absolute Carbon Reduction²
1.1 bn
1.0 bn
1.0 bn
39%
39%
17%
17%
2020
2021
2021
2020
2020
2021
2020
2021
Consumers Reached with
Positive and Balanced Nutrition²
Consumers Reached with
Positive and Balanced Nutrition²
1.0 bn
1.0 bn
1.1 bn
1.1 bn
Absolute Carbon Reduction²
Absolute Carbon Reduction²
2020
2021
2020
2021
17%
17%
Consumers Reached with
2020
2020
Positive and Balanced Nutrition²
2021
2021
1.1 bn
1.1 bn
1.0 bn
Absolute Carbon Reduction²
17%
17%
2020
2020
1.0 bn
1.0 bn
1.1 bn
2020
2020
17%
17%
39%
2021
2020
1.0 bn
2020
2020
2021
2021
17%
2021
2020
1.0 bn
9.9%
9.9%
9.8%
9.8%
9.9%
9.9%
9.8%
9.9%
39%
9.8%
9.8%
9.9%
39%
9.8%
9.9%
9.9%
39%
9.8%
39%
9.8%
39%
39%
39%
39%
39%
39%
Kerry Group Annual Report 2021 4
Strategic Report Our Purpose and Vision
Our Purpose and Vision
+
Our People
Pages 15-21
Sustainability
Review
Pages 50-74
The Impact of Purpose
Our employees give clear expression
to our purpose and are empowered
to strive to achieve positive social
impact. One example is the
establishment of the PRYSM
and SEEN employee groups,
reflecting the momentum behind
our Diversity, Inclusion and
Belonging strategy. Responding
to the challenges presented by
COVID-19 in our business and our
local communities, has galvanised
our people in ways never anticipated.
Inspiring Food,
Across the globe, our
Purpose, Inspiring Food,
Nourishing Life is central
to everything we do.
The impact of our purpose is
in evidence through our people,
our products and our commitments
to protecting the planet and
improving lives.
It is embedded across our business
in the decisions we make, in how we
innovate and grow and in how we
partner with our customers to create
lasting value. Our purpose guides
us in our Vision to be our customers’
most valued partner, creating
a world of sustainable nutrition.
Purpose in Action
This year our purpose brought us
together with our customers to
deliver a clear pathway to achieving
our goal of reaching 2 billion people
with sustainable nutrition solutions
by 2030. We created a framework
which enables Kerry to support our
customers as they move along the
sustainable nutrition spectrum,
enhancing their products and
improving the environmental and
social impact of those products.
We are committed to targets that
align with the Paris Agreement
goal of limiting global temperature
increases by 1.5 degrees Celsius.
With the help of our senior
leadership team, we embed our
purpose right across the business,
enabling all employees to feel a part
of the journey, committed to playing
their part and being accountable
for progress towards achieving
these targets.
Kerry Group Annual Report 2021 2 bn
Our goal is to reach
2 billion people with
sustainable nutrition
solutions by 2030.
Nourishing Life
Our Purpose and Vision
5
Kerry Group Annual Report 2021
6
Strategic Report Kerry Group at a Glance
Kerry Group at a Glance
Kerry Group at a Glance
Kerry is the world’s leading taste and nutrition partner for
the food, beverage and pharmaceutical markets, with our
broad range of ingredient solutions currently reaching
over 1 billion consumers.
22,000+
Employees
152
Manufacturing locations
across 36 countries
18,000+
Products, with >80% providing
positive and balanced nutrition
1,100+
R&D Scientists
Where We Operate
Our Business
Taste & Nutrition
Consumer Foods
84%
€7.4bn
Revenue
16%
92%
€876m
Trading Profit
8%
Kerry Group Annual Report 2021
Global HeadquartersGlobal and RegionalTechnology &Innovation CentresManufacturing PlantsSales OfficesNote Ireland & UK: 25 manufacturing plants, 3 sales offices Taste & Nutrition Business Dimensions
Food 69%
Beverage 26%
Pharma 5%
Americas 52%
Europe 25%
APMEA 23%
Kerry Group at a Glance
7
22 Core Technologies
25 Process Technology
Platforms
Taste & Nutrition
Kerry is the world's leading taste and nutrition partner for the food, beverage and pharmaceutical
markets. We use our broad range of ingredient solutions to innovate with our customers and create great
tasting products, with improved nutrition and functionality, while ensuring a better impact for the planet.
Our leading consumer insights, global R&D team of over 1,100 food scientists and extensive global
footprint enable us to solve our customers’ most complex challenges with differentiated solutions. At
Kerry, we are driven to be our customers’ most valued partner, creating a world of sustainable nutrition.
Consumer Foods
Kerry’s Consumer Foods division is a leader in its
categories in the chilled cabinet, primarily in Irish
and UK markets. We have many strong, well-loved
dairy and dairy alternative brands which can be
found across our retail partners in supermarkets,
convenience stores and other retail outlets the
length and breadth of Ireland and the UK. Kerry’s
Consumer Foods division also manufactures
customer branded products which can be found in
leading supermarket chains.
Kerry Group Annual Report 2021
8
Strategic Report Chairman's Statement
Chairman's Statement
At the beginning of a
new strategic cycle, Kerry
is better positioned than
ever and committed to
creating long-term value
for all stakeholders.
Philip Toomey
Chairman
Overview
Kerry has been at the forefront
of our industry through the last
decade, continually evolving its
portfolio and strategy to remain best
placed to meet the latest consumer
and customer demands. Delivering
consumer-preferred taste, while
also improving the nutritional profile
of food and beverage products, is
where Kerry excels.
The past couple of years has seen
the importance of health and
sustainability increase amongst
consumers, customers and indeed
all stakeholders. The collective
corporate willingness to work
together to do better for people
and planet has never been as
strong. Kerry is exceptionally well
positioned to play a key role in the
drive towards a more sustainable
food and beverage ecosystem.
The impact Kerry is delivering in
conjunction with its customers
in enhancing the taste, nutrition
and sustainability profile of food
and beverage products that
are consumed every day across
the globe is remarkable. This is
testament to how Kerry’s purpose
and vision have been embedded
throughout the organisation in
recent years.
Significant Strategic
Progress
Kerry’s evolution and industry-
leading capabilities were presented
at a virtual Capital Markets Day
during the year. The Executive Team
outlined Kerry’s unique strategic
positioning, strong leadership
positions and future growth
strategies. The Group also presented
its updated financial targets for the
period 2022 to 2026.
The Group completed a number of
important strategic developments
during the year as Kerry continues
to evolve its portfolio to strengthen
its position as a market leading
Taste & Nutrition company. The
acquisition of Niacet enhances
Kerry’s leadership position in food
protection and preservation. The
Group also completed the sale of
its Consumer Foods Meats and
Meals business, and I would like to
take this opportunity on behalf of
the Board to thank all of the 4,500
employees who worked in those
businesses for their contribution to
Kerry over many years.
The Group will continue to pursue
organic and acquisitive growth
opportunities aligned with the
Group’s strategic priorities and key
growth platforms of Authentic Taste,
Plant-based, Food Waste and Health
& Bio-Pharma.
Sustainability
In 2020, the Group announced
its 2030 sustainability strategy
Beyond the Horizon, which underpins
Kerry’s future growth as it continues
to partner with its customers across
the globe to create a world of
sustainable nutrition. At the
Capital Markets Day in October,
the Group announced a higher
carbon reduction target, while also
enhancing its diversity, inclusion and
belonging commitments.
The Board, through the Governance,
Nomination and Sustainability
Committee, contributed to, reviewed
and approved the significant
sustainability developments
actioned in 2021. This year for
the first time, climate related
disclosures, in line with the
recommendations of the Task
Force on Climate Related Financial
Disclosures (TCFD), are outlined on
pages 68-74.
The Group will also publish in 2022
its first GRI Sustainability Report
alongside the Annual Report which
will detail the Group’s progress
against its sustainability strategy
and targets in line with Global
Reporting Initiative (GRI) standards.
Kerry Group Annual Report 2021 Details regarding the Group’s
sustainability strategy, targets,
performance, policies and
programmes are outlined in the
Sustainability Review on pages 50-74
and in the GRI Sustainability Report
which is available on the Group’s
website.
As part of the ongoing Board
refreshment process, the
Governance, Nomination &
Sustainability Committee will
continue its search for suitable
candidates to join the Board in the
context of the Group's diversity
commitments.
Corporate Governance
The Board is firmly committed to
maintaining the highest standards
of corporate governance in line
with best practice. During 2021,
the Board reviewed the Company’s
corporate governance policies and
procedures to monitor compliance
with the UK Corporate Governance
Code and with latest best practice
developments. We also engaged
with our stakeholders during the
year as we believe listening to their
views and needs is fundamental
to building a sustainable business.
Further details of our stakeholder
engagement activities are outlined
on pages 99-104.
Each year the Board undertakes a
formal evaluation of its effectiveness
and that of its committees. In 2021
this was an internal self-assessment
which concluded that the Board
and its Committees are performing
effectively.
Board Changes
Jinlong Wang joined the Board
as a non-Executive Director on
5 January 2021 and Joan Garahy
retired from the Board following
the Company’s Annual General
Meeting on 29 April 2021. On
behalf of the Board, I would like to
thank Joan for her contribution and
service to the organisation. I am
delighted to welcome Michael Kerr
and Fiona Dawson who joined the
Board as non-Executive Directors
on 3 May 2021 and 4 January 2022
respectively. I look forward to
both of them making significant
contributions to the Board in the
years ahead.
Gerard Culligan and Con Murphy
will retire from the Board at the
conclusion of the 2022 AGM and will
not seek re-election. On behalf of the
Board, I would like to thank Gerard
and Con for their strong contribution
over the last five years.
Purpose and Values
Our Purpose, Inspiring Food,
Nourishing Life, and our Values
of Courage, Enterprising Spirit,
Inclusiveness, Open-mindedness
and Ownership guide our actions
and behaviours, keeping us on the
right path toward achieving a world
of sustainable nutrition. During
2021, the Board has continued to
ensure that management promote
our purpose and values to unite the
organisation across diverse cultures
and geographies. Staying true to
our purpose as the organisation
has continued to respond to the
COVID-19 pandemic, has shown the
extraordinary agility, compassion and
resilience of our people, operating
in difficult circumstances, to do the
right thing for our customers, our
shareholders, our communities and
the environment, and this will enable
us to continue the Group’s evolution
in the years ahead.
People and Engagement
Central to Kerry’s continued success
is the hard work and commitment
of all our employees. The Board
is proud of the response of our
employees to the challenges
we faced during the COVID-19
pandemic.
The Board also recognises
the importance of employee
engagement and continues to
enhance its employee engagement
activities. During 2021, Tom
Moran, the designated Workforce
Engagement Director, engaged in
a detailed programme of activities
where he had the opportunity to
gauge the engagement levels of our
people supporting our business,
both in-person within our offices
or sites and remotely. Tom has also
participated in various employee
events across the business, gaining
a more in-depth understanding of
how Kerry continues to respond
to the COVID-19 pandemic and is
adapting to new ways of working.
Chairman's Statement
9
As a result of ongoing restrictions
during the year, all events were
held virtually and details of these
activities are outlined in the
Corporate Governance Report on
pages 96-108.
Dividend
The Board recommends a final
dividend of 66.7 cent per share (an
increase of 10.1% on the 2020 final
dividend) payable on 6 May 2022
to shareholders registered on the
record date of 8 April 2022. Together
with the interim dividend of 28.5
cent per share, this brings the total
dividend for the year to 95.2 cent, an
increase of 10.1% on 2020.
Prospects
The Board remains confident
that the Group’s business model,
strategic priorities and key growth
platforms will continue to deliver
shareholder value and benefit our
other stakeholders in the years
to come. Kerry will continue to
pursue organic and acquisitive
growth opportunities and the
Group’s balance sheet is well placed
to support our objectives. The
view of management regarding
the business outlook for 2022 is
presented in the Chief Executive
Officer’s Review.
On behalf of the Board, I would like
to sincerely thank Edmond and the
Executive Management team for
their exceptional leadership and
thank everyone throughout the
organisation for their contribution to
the ongoing success of the Group.
Conclusion
Having served ten years on the
Board, I will retire as Chairman
and as a Director of the Company
at the upcoming AGM. I would like
to take this opportunity to thank
the members of the Board, our
employees and all our shareholders
for their support during my years on
the Board and as Chairman. Finally,
I wish my successor Tom Moran
the very best as he assumes the
Chairmanship of the Board.
Philip Toomey
Chairman
15 February 2022
Kerry Group Annual Report 2021 10
Strategic Report Chief Executive Review
Chief Executive Officer’s Review
2021 was a significant year
for Kerry, during which we
delivered strong growth,
completed a number of
important strategic portfolio
developments and refreshed
our strategy.
Edmond Scanlon
Chief Executive Officer
In 2021, we delivered strong growth across
all regions, with Group revenue of €7.4 billion
driven by volume growth of 8.0%.
Growth was strong through the year across
both the retail and foodservice channels,
which was pleasing given the impact COVID-19
has had on our industry over the past couple
of years.
While the pandemic continues to impact the
everyday lives of consumers around the world,
our industry has adapted very well and is now
in a much stronger position to manage through
any future disruption. I would like to recognise
the agility of our people through this period.
They have found creative new ways to innovate
and collaborate with our customers, while
continuing to support each other and the local
communities in which we operate. We have a
unique culture within Kerry, which has always
been the key ingredient to our success.
+
Our People
Pages 15-21
Financial
Review
Pages 36-43
Kerry Group Annual Report 2021 What We Depend On
(Inputs)
What We Do
Kerry is the world’s leading taste and nutrition partner
for the food, beverage and pharmaceutical markets, with
our broad range of ingredient solutions currently reaching
over 1 billion consumers.
Financial
Funding available
to the Group
Why We Do It
Chief Executive Review
11
Strategic Developments
Acquisition of Niacet
Manufacturing
[148] manufacturing
locations/global supply
chain infrastructure
A Year of
Significant
Strategic
Developments
Intellectual
Consumer insights, technology,
know-how and R&D capabilities
Human
22,000+ talented employees
across 30+ countries
Our Purpose
Inspiring Food, Nourishing Life
We continued to develop our portfolio in the
year with a number of strategic acquisitions
aligned to our key growth platforms and
supporting our focus as a leading taste &
nutrition company.
Our Vision
To be our customers’ most valued partner,
creating a world of sustainable nutrition.
In the area of Food Waste – specifically in food
protection and preservation, we completed
the acquisition of Niacet, which is a strong
complement to our clean-label preservation
capability.
How We Do It
Our Unique Business Model
Under Health & Bio-Pharma – we acquired
Biosearch Life which added strong capability
to our proactive health portfolio.
We enhanced our biotechnology capabilities with
the acquisition of Enmex, which is a leading enzyme
manufacturer in its food and beverage markets.
Unique
Proposition
We also completed the disposal of our Consumer
Foods Meats and Meals Business to Pilgrim’s Pride,
and we would like to reiterate our best wishes to
our former colleagues.
Nutrition
Taste
We opened our new manufacturing facility in
Durban, South Africa, which will be the leading
taste facility on the continent of Africa. We also
commenced production at our state-of-the-art
manufacturing facility in Rome, Georgia and
within our taste facility in Irapuato, Mexico.
New Facility in Durban, South Africa
Our Technology Portfolio
Our Integrated Value Creation Engine
Refreshed strategy presented
at Capital Markets Day
Delivering Taste &
Nutrition Solutions
During the year, we completed a comprehensive
strategic planning refresh, which resulted in the
presentation of our refreshed strategic priorities,
key growth platforms, mid-term financial targets
and sustainability commitments at our Capital
Markets Day.
Social and Relationships
Global brand and relationships
with local communities,
regulators and industry bodies
Refreshed
Strategy
Reflecting the
Evolution of
our Business
The consistency of Kerry’s strategy has been an important contributor to the Group’s success
over many years. The strategic priorities of Taste, Nutrition and Emerging Markets comprise
Kerry’s overarching strategic framework. Within this structure, we highlighted the four key
growth platforms that will be important contributors to meeting our 4-6% revenue volume
growth target over the next strategic cycle, namely Authentic Taste, Plant-based, Food Waste,
and Health & Bio-Pharma.
What We Focus On
Taste & Nutrition Strategic Framework
Social and Relationships
Working with Concern
Worldwide, Partnership for
Global LGBTI Equality (PGLE) and
the UN World Food Programme
Natural
A global network of >10,000 raw
materials suppliers
Taste and
Nutrition Strategic
Framework
The Value We Create
(Outputs)
Financial
Growth in revenue,
profit and free cash flow
Manufacturing
>18,000 products with
80%+ delivering positive
and balanced nutrition
Intellectual
Customer-specific innovation
combined with differentiated
new technologies and solutions
Human
An inclusive workplace that
enables people to excel both
personally and professionally
Natural Capital
Responsible consumption and
production with sustainable
sourcing, emissions reduction
and waste recovery
Kerry Group Annual Report 2021 12
Strategic Report Chief Executive Review
Our Markets –
More Dynamic
Than Ever
Market conditions have been highly dynamic across the year, with a strong
overall demand environment combined with high degrees of variability across
geographies and channels. At home consumption remained strong, with
foodservice improving as consumers embraced the opportunities for more
out-of-home social engagement and food consumption.
The extent of consumer demands continues to increase in areas such as
plant-based, functional food for specific health requirements, taste without
compromise, and products with an improved sustainability impact. These
heightened and complex consumer demands are presenting greater
challenges for our customers, as they continue to balance these with current
industry labour and supply chain dynamics. This is leading to the need for a
greater level of support from value-add partners and increasing the level of
collaborative innovation in our industry.
Creating
A World of
Sustainable
Nutrition
We realise the important role we play in the global food and beverage
ecosystem, and we have an ambition to enhance our reach to over two
billion people with sustainable nutrition solutions by 2030. This will be
achieved by partnering with our customers to create products that are
better for people, society and the planet. This is how we support our
customers to move along the sustainable nutrition spectrum.
As part of our Beyond the Horizon sustainability strategy, we announced
enhanced sustainability commitments at our Capital Markets Day. We
increased our emissions reduction target to align with a 1.5ºC temperature
pathway, which has increased our target for Scope 1 and 2 emissions
reduction from 33% to 55% by 2030.
Kerry Group Annual Report 2021
Climate PositiveCustomerSustainable NutritionEnvironmental & SocialNutritionFood Safety & SecurityClean LabelSocial ImpactRegenerativeAgricultureCircularSolutionsPositive & Balanced NutritionProactiveNutritionPersonalised NutritionCREATING A WORLD OF SUSTAINABLE NUTRITIONClimate PositiveCustomerSustainable NutritionEnvironmental & SocialNutritionFood Safety & SecurityClean LabelSocial ImpactRegenerativeAgricultureCircularSolutionsPositive & Balanced NutritionProactiveNutritionPersonalised NutritionOR - Without Globe Overall
Financial
Performance
Group reported revenue increased to €7.4 billion, with
volume growth of 8.0% and positive pricing, partially
offset by the impact of foreign currency translation and
business disposals net of acquisitions. Group EBITDA
increased to €1.1 billion with an EBITDA margin of 14.7%.
Free cash flow was €566m, which represented cash
conversion of 84%.
All Regions
Delivered
Strong Growth
Looking
Forward
Taste & Nutrition delivered overall volume growth of
8.3% with excellent growth across all regions.
We achieved continued strong volume growth of 5.4% in
the retail channel, with excellent growth of 18.0% in the
foodservice channel as it recovered from the impact of
COVID-19 in the prior year.
The Americas had volume growth of 6.7% in the year,
with growth of 9.9% in Europe and 11.3% in APMEA,
while volume growth from emerging markets amounted
to 14.4%.
Consumer Foods delivered strong volume growth of
6.0% in the year, with growth right across the business.
Our markets remain highly dynamic with a continued good
demand environment, despite the backdrop of COVID-19
and supply chain challenges right across our industry. While
market conditions remain uncertain, the Group is strongly
positioned for growth. Kerry’s key growth platforms of
Authentic Taste, Food Waste, Plant-based and Health & Bio-
Pharma underpin a strong innovation pipeline.
As the industry is currently experiencing a period of
heightened inflation, the Group remains confident in its
ability to manage through this current cycle with its well-
established pricing model and cost initiatives.
Kerry will continue to strategically evolve its portfolio and
invest capital aligned to its strategic priorities and key
growth platforms.
Edmond Scanlon
Chief Executive Officer
15 February 2022
Chief Executive Review
13
€7.4 bn
Record Group Revenue
14%
Beverage Volume Growth
supported by launches
incorporating our leading
taste solutions for nutritionally
optimised products and our
proactive nutrition portfolio.
On behalf of the
Board and the
Senior Management
team, I would like
to acknowledge the
contribution of our
outgoing Chairman
Philip Toomey, who
will be retiring in 2022.
Throughout his tenure
as Chairman, Philip
provided strong Board
leadership. We thank
him sincerely for his
valued contribution to
Kerry and wish him well
in the future.
Kerry Group Annual Report 2021 14
Passion
for Growth
22,000+
People
200+
Locations
112
Nationalities
50+
Countries
Strategic Report Our PeopleKerry Group Annual Report 2021 15
Our People
Our Culture
At Kerry our Purpose, Inspiring Food,
Nourishing Life and our values form the
bedrock of, and inspire our culture.
They guide the actions and behaviours of
our people, of which we have over 22,000
across the world, every day, as we pursue
our Vision, to be our customers' most
valued partner, creating a world of
sustainable nutrition.
Our people represent 112 nationalities, working across
200+ locations globally, with a presence in more than 50
countries. Through 2021, guided by our purpose and our
values, our people continued to demonstrate great levels
of resilience and agility, through constantly evolving
and challenging circumstances, doing the right thing
by each other, our customers, our shareholders, our
communities, and our planet.
We are of the firm conviction that we differentiate
ourselves as an organisation through the quality,
commitment and integrity of our people. We think
and act with a Safety First, Quality Always mindset,
and an insatiable appetite for delivering value for our
customers. We hold ourselves to the highest standards
of business and ethical behaviour in everything we do
and continue to reinforce this through our standards,
policies, and practices.
We lead with a purpose mindset, and empowering
our teams is fundamental to our group-wide approach
to people leadership. In support of our objective of
building a truly inclusive workplace, during 2021,
we gave particular focus to strengthening inclusive
leadership behaviours. Our leaders are committed to
their role in building a great place to work – a place
where our people are engaged in meaningful work that
is connected to our purpose and can contribute fully to
our shared success. Ensuring that our senior leadership
and management teams reflect both our workforce
and the communities in which we live and work is a key
imperative for us. We continue to enhance the cultural
diversity of our leadership through strengthening
our talent pipeline and positively encouraging the
progression of local talent into our regional leadership
and management teams.
Our people practices reflect our purpose and vision
– from who and how we attract talent, to how we
develop skills and behaviours, reward individual and
team performance, build future talent, and play a
role in society, supporting local communities through
volunteering and other charitable initiatives.
In 2021 we also took steps to further simplify and
standardise our ways of working and put in place
stronger foundations for the future. We have evolved
our Global Business Services (GBS) organisation as a
key pillar of our Business Operating model, delivering
scalable and quality services across all regions and
global functions.
Our significantly enhanced GBS portfolio and scope
of services makes it easier for our people to access
the support they need, when they need it and to do so
in a more efficient and effective way. Providing more
consistent support to our people globally is critical as
we continue to develop and grow our business.
Our people have continued to
demonstrate great resilience
and agility, through constantly
evolving and challenging
circumstances.
+
Our Purpose and Vision
Pages 4-5
Our PeopleKerry Group Annual Report 2021 16
Our Values
Our values are inspired by our
purpose. They underpin the
culture we continue to cultivate
and develop to sustain our success.
They represent strengths from
our heritage that we want to
build on into the future, as well
as harnessing new capabilities
and ways of working that we will
collectively embed across our
expanding global footprint.
Following a refresh of our values in
2019, our Executive Team continue
to take a visible leadership role
in ensuring that they are firmly
embedded across the Group, and
fully demonstrated in our leader
actions and behaviours. Our
values unite us across cultures and
geographies, providing a guiding
framework for building trust
and mutual respect through the
engagement of our people, our
customers, and our communities.
Reflecting on the essence of our
values, we empower our people to
have the courage to challenge the
status quo when it may get in the
way of progress, and to speak their
mind. We have the courage of our
convictions, and integrity is non-
negotiable.
We listen, remaining open to
new ideas and ways to grow
our business.
Every voice counts in Kerry. We see
our diversity as a key strength to
be leveraged, and we value and
respect different perspectives,
opinions, and backgrounds.
We welcome feedback, enabling
us to improve and fulfil our
future potential.
We see opportunities where others
see problems, we learn from each
other, remain resilient, and work
together to make it easier and
more valuable for our customers
to do business with Kerry.
We act as owners, we take
accountability, and we never
compromise on doing what
we say we will do and doing
the right thing for our business
and customers.
Aligning our organisation behind
our purpose and values is one
of our key levers in attracting
and retaining the best talent
for Kerry. We want to foster an
environment where our people
are highly engaged, investing their
time, commitment and passion,
achieving fulfilment through their
contributions every day.
Courage
Enterprising Spirit
Inclusiveness
Open-mindedness
Ownership
We’re brave, we speak
up and we inspire
each other to get
the best results.
We’re bold, we think
big picture, we add
value and we grow.
We’re welcoming,
we are authentic
and we see strength
in diversity.
We’re curious,
we innovate and we
believe in possibility.
We’re accountable
and we care about
the business as if it
were our own.
Enhancing our Employee Experience
We are passionate about creating a positive
and engaging environment that inspires
all our people to give their best; we believe
that the engagement of our people is a key
lead indicator of future sustainable business
growth and performance.
To ensure we continuously improve and adapt our
workplace to enhance our employee experience, we
track employee engagement on a regular basis, so we
can identify and build on strengths, and address areas
for improvement. We have a stated ambition of being
a top quartile employer through continually listening
to our people, frequently monitoring, and building on
the progress that we are making through our shared
engagement planning.
One of the key measures of engagement is participation,
and in 2021 88% of our people took the opportunity to
share their voice, up 2 percentage points from 2020.
We are delighted that so many of our people took the
time and want to have their voice heard and to be part
of making Kerry a better and more successful business
for the future.
Since we initiated our global survey in 2019, our key
areas of strength have been consistent – our approach
to customers, as well as our focus on safety and quality
is highly valued. More recently, we have seen how our
vision and purpose are resonating with our teams and
the work that they do every day: 85% of those who
responded understand how their work relates to
our organisational goals, scoring above global top
quartile benchmarks.
The global pandemic has continued to have an
impact on the lives of our people, both within and
outside of the workplace. Across many industries,
well-documented labour shortages as well as a shift to
remote working are presenting new challenges – and
Kerry is no exception. From the feedback given through
our survey, collaboration, coming to work, interaction,
and engagement with other colleagues in person is an
important factor in our people’s ability to perform and
be at their best at Kerry. As a result, we have taken the
opportunity to support new and more flexible ways of
working as we move forward in the future.
Strategic Report Our PeopleKerry Group Annual Report 2021 17
Highlights based on feedback in 2021 include:
Leadership
& Talent
Management
Simplification
We continue to support our leaders to shape our workplace of the future, listen
to their teams, and implement robust action plans for continuous improvement
based on two-way dialogue and evolving environmental factors. Over the
last few years, we have been deploying our Kerry Management Effectiveness
programme and the impact is now being reflected in our 2021 results with our
people’s experience of management effectiveness increasing across all survey
dimensions. This year our Virtual Leadership Academy has contributed to this
enhanced feedback, through providing coaching to our leaders, combined with
access to thought leadership content and world class business school programmes
to enhance their leadership impact, and support them in creating more positive
team environments that value, encourage and support inclusivity. In addition,
during 2021 we increased our investment in our learning academies and have
elevated our focus on building functional capabilities in our sales, foundational
technologies, integrated operations, marketing and finance areas to deliver on our
strategic priorities.
Our relentless drive to make it easier for our people is reflected in the introduction
of a core communication platform – Workplace. We now have more than 10,000
colleagues actively using this tool to better communicate, connect, collaborate, and
build community throughout Kerry. In our commercial teams we have introduced
Agile ways of working to improve sales effectiveness and to launch a new customer
self-serve portal. Our drive for operational excellence continues through our Plant
Transformation programme, helping us to build and sustain consistent excellence
across all manufacturing sites.
Recognition
Further to feedback from our 2020 employee engagement survey, we launched
our Kerry global employee recognition programme in 2021 – Inspiring People. This
reinforces recognition in line with our values, underpinning our Kerry culture and
supporting all the actions we have taken in relation to evolving our leadership and
people management capabilities. We are confident this will continue to improve
overall employee engagement in Kerry during 2022.
We are delighted to see strengths coming through in
many of these dimensions this first year, for example
Trust, which references our approach to fostering
open and honest communications and how respected
our people feel. This is core to building inclusivity
in organisations.
During 2021 we have continued to support Mr. Tom
Moran, our designated Workforce Engagement
Director, who has participated in numerous employee
engagement activities, enabling him to have a first-
hand and broad view of our progress in this area as he
carries out his responsibilities for the Board (for details
on activities supported during 2021, please see our
Corporate Governance section on page 96).
Throughout 2021 we have continued our engagement
focus on Leadership, Talent Management and
Simplification and we will continue to build on these
priorities globally in 2022, incorporating specific
feedback from 2021. Our functional, regional and plant
teams will continue to ensure that our engagement
action plans are relevant and impactful at a local level.
In 2021 we established our Inclusion Index, as an
integral component of our employee engagement
survey – this is a measure of our ability to foster a truly
inclusive workplace. Through this Index we will begin
to monitor progress against our goal to become a top
quartile employer in terms of inclusion, and target
improvement efforts year-on-year to achieve this. Our
Inclusion Index covers five externally researched and
validated dimensions of inclusion – Fair Treatment,
Trust, Psychological Safety, Integrating Differences and
Belonging – which are embedded within our employee
engagement survey. Collectively, these dimensions
provide additional insights into how we are leveraging
diversity in Kerry to increase our people’s overall
sense of belonging, which is proven to lead to higher
engagement, retention, and productivity.
Our PeopleKerry Group Annual Report 2021 18
Fostering Diversity,
Inclusion and Belonging
Our social sustainability ambitions and
commitments include our commitment
to building a highly inclusive workplace
at Kerry.
Our Inclusive Workplace Plan includes key workstreams
to increase the diversity of our leadership profile, build
inclusive leadership behaviours, improve connection and
collaboration across our organisation, update workplace
policies to ensure they promote inclusion and enhance
overall external collaboration through partnerships and
contributions to our local communities.
Across the year, over 800 of our people leaders,
including our most senior Executives have participated
in Inclusive Leadership masterclasses, webinars and
insights sessions. The purpose of these is to raise
awareness, build confidence through peer discussions,
and equip leaders with the skills and behaviours to lead
inclusive conversations with their teams, to uncover and
action areas of immediate focus, and to drive greater
inclusion and belonging within Kerry.
Gender diversity is an underlying indicator of a
healthy and inclusive culture. In 2020, we committed
to increasing representation of women in senior
leadership roles to 35% by 2025 and remain on track
to achieve this, being positioned at 29% at year end. In
2021, we reinforced our gender diversity commitment
and expanded our focus, setting an additional target
to achieve equal gender representation in all senior
management roles by 2030. We are currently at 36%.
Our Diversity, Inclusion and Belonging Councils, teams
and global employee networks play a core role in
championing our commitments across the Group and
enabling our people to actively involve themselves in
building a truly inclusive workplace where diversity
is celebrated and nurtured. This year we launched
two additional global employee networks, PRYSM –
supporting LGBTQI colleagues and allies and SEEN –
a network raising awareness and providing support
on issues relating to race and social equity. These
networks – together with our Global and Regional
Diversity, Inclusion and Belonging Councils – worked
throughout the year to raise awareness, educate,
and implement initiatives focused on building a more
inclusive workplace.
Strategic Report Our PeopleKerry Group Annual Report 2021 19
We continue to mark annual events such as
International Women’s Day, Black History Month,
Pride, and International Pronouns Day as
opportunities to celebrate diversity and reinforce
our inclusion commitments.
We collaborate with industry peers and relevant
external partners, leveraging our market-leading
position as a champion for change, to build a more
inclusive workplace and society.
We proudly signed the United Nations Pledge and
Code of Conduct for Business for LGBTI in June.
The UN Pledge is a working standard, endorsed and
created through a partnership between the World
Economic Forum, the UN and PGLE, and aimed at
shining a spotlight on the specific needs and
challenges of LGBTI individuals.
We joined the Partnership for Global LGBTI Equality (PGLE),
a coalition of organisations dedicated to accelerating
LGBTI equality and inclusion globally. Founded by
leading multinational companies across the world, this
partnership is supported by the Office of the United
Nations High Commissioner for Human Rights and is
operated in collaboration with the World Economic Forum.
Membership will enable us to access and implement best
practices and benchmarks in meeting our commitments to
achieving global LGBTI equality.
In North America we signed the CEO in Action pledge, a
public commitment to advancing diversity and inclusion
in our workplace by cultivating an environment where all
ideas are welcome, and our people feel comfortable
and empowered to have discussions about diversity
and inclusion.
Our PeopleKerry Group Annual Report 2021 20
Building Leadership and Talent
to Fuel our Growth
The quality of our leadership and talent has
always been, and will continue to be a key
enabler of our growth ambitions. At Kerry,
we partner with our people, helping them to
fulfil their career aspirations while ensuring
we have a ready supply of qualified expert
and leadership talent to meet the current
and future needs of the business.
In 2021 we evolved our Career Review process, an
employee-led initiative where our people update
and refresh their online career profile in readiness
for a career conversation with their people manager.
Career profiles provide the basis for building robust
development plans which will support our people to
grow and achieve their ambitions. This also helps to
align internal opportunities with the career aspirations
of our people.
Our learning and development function supports
our Career Review process by providing challenging,
business-oriented, leadership and employee career
development programmes aligned to organisational
priorities. These programmes include a blend of
classroom, virtual and interactive content focused
on developing technical, functional and leadership
skills, stimulating peer discussions and encouraging
collaboration across different functions and regions. We
also leverage our leading subject matter experts within
our business to provide coaching or more specialist and
technical developmental support as part of our overall
curriculum. This includes developing unique offerings
for critical talent segments, for example our Flavourist
Academy, designed to grow and sustain our in-house
expertise for the future.
This year, we focused further resource on strengthening
the quality of our leadership pipelines by conducting
more in-depth strategic talent reviews across our
regional businesses and global functions. We have
maintained a focus on building the quality of our
leadership team, making key strategic appointments
as well as continuing to invest in building future
leaders. Activities to accelerate succession readiness of
identified leadership talent have included participation
in externally benchmarked assessments, internally
led 360-feedback tools to better target leadership
development plans, individual coaching, mentoring
and collective participation in certified business
school programmes.
Kerry’s early careers programme is a core component
of our strategy to strengthen our current and future
talent pipeline, providing opportunities for interns and
graduates to develop skills and experience across a
wide range of core disciplines, enabling longer-term
sustainable leadership for the organisation.
2021 saw the launch of our refreshed global graduate
programme, enhancing our focus on building leadership
behaviours and embedding a sustainability mindset,
with graduates applying to Kerry from across the globe
and competing for places on our 2022 programme.
Rewarding and Recognising our People
At Kerry, we believe Total Reward is about
more than just pay and financial rewards.
It encompasses career development,
personal growth, and access to worldwide
opportunities in an inclusive culture where
all our people can flourish.
It supports us in being the first choice for the best
talent by providing fair, competitive offerings which our
people value and which drive an ownership mindset to
achieve Kerry’s success. Our programmes are designed
to recognise and reward high performance while
nurturing a healthy, diverse workforce by offering choice
and flexibility, supporting our people and their families
through different life and career stages.
During 2021, we implemented the next phase of our
Rewards Roadmap – a multi-year change journey
developed following the Total Reward Review completed
during 2019. Our aim is to ensure that our reward
programmes are positioned as one of the key levers of
business performance, are appropriately aligned with
the external market, and are delivered in a way which
makes them more easily understood and appreciated by
our people.
Strategic Report Our PeopleKerry Group Annual Report 2021 21
In addition to changes to our global programmes we
made enhancements to local in-country benefit plans,
in accordance with our regional and country specific
reward roadmaps. The implementation of the Rewards
Roadmap will continue during 2022.
We are committed to gender pay equality and continue
to proactively monitor the pay of male and female
colleagues engaging in similar roles to ensure it is
comparable. We appoint and promote based on merit
and will continue to encourage the career development
of all our people, paying attention to our promotion
and recruitment practices with regards to gender, and
supporting greater representation of women at all senior
management levels in line with our commitments.
Our Wellbeing framework – focused on the pillars of
Nutritional, Physical, Emotional and Financial health
– provides access to tools and resources, such as our
global Employee Assistance Programme (available
to every employee in Kerry, as well as their family
members). This Wellbeing approach played a critical role
in our response to the emerging needs of our people
over the course of the COVID-19 pandemic and we have
continued to build out the programme and applicability
of the framework over the course of 2021 based on
feedback and evaluation of emerging trends.
Some of the signature enhancements we made to our
Total Rewards portfolio during 2021 are as follows:
In April, we launched our new global recognition
programme – Inspiring People. Recognition,
when done right, is a powerful driver of employee
engagement and our Inspiring People programme
is a key tool which our people leaders now use to
enhance the employee experience and reinforce
our purpose and values.
We introduced a new Long Term Incentive Plan
during 2021. The new plan enhances our market
competitiveness and provides greater flexibility to
allow us to compete globally for talent.
We also increased the maximum bonus payable
under our Management Incentive Plan from 150%
to 200% of target bonus where performance has
exceeded maximum levels on each KPI.
In Q3, we launched Kerry’s new agile working
framework for all Kerry employees. This new
framework addresses the paradigm shift in ways
of working brought about by the pandemic and
facilitates the implementation of a coherent and
consistent global approach to agile working, whilst
also ensuring sufficient flexibility at a local level to
shape specific policies and programmes to meet local
business, market or cultural needs. The framework
will be implemented in line with return to the
workplace government guidance and timelines. The
framework also facilitates the adoption of flex-time,
part-time and job share options in line with our
commitment to building an inclusive workplace.
Our PeopleKerry Group Annual Report 2021
22
Strategic Report Our Business Model
Our Business Model
How Our Integrated Business Model
Creates Sustainable Value
What We Depend On
(Inputs)
Financial
Funding available
to the Group
What We Do
Kerry is the world’s leading taste and nutrition partner
for the food, beverage and pharmaceutical markets, with
our broad range of ingredient solutions currently reaching
over 1 billion consumers.
Why We Do It
Our Purpose
Inspiring Food, Nourishing Life
Manufacturing
152 manufacturing
locations and global supply
chain infrastructure
Our Vision
To be our customers’ most valued partner,
creating a world of sustainable nutrition.
How We Do It
Our Unique Business Model
Unique
Proposition
Taste
Nutrition
Our Technology Portfolio
Our Integrated Value Creation Engine
Intellectual
Consumer insights, technology,
know-how and R&D capabilities
Human
22,000+ talented employees
across 50+ countries
Delivering Taste &
Nutrition Solutions
Social and Relationships
Global brand and relationships
with local communities,
regulators and industry bodies
What We Focus On
Taste & Nutrition Strategic Framework
Natural
A global network of >10,000 raw
materials suppliers
The Value We Create
(Outputs)
Financial
Growth in revenue,
profit and cash flow
Manufacturing
>18,000 products with
80%+ delivering positive
and balanced nutrition
Intellectual
Customer-specific innovation
combined with differentiated
new technologies and solutions
Human
An inclusive workplace that
enables people to excel both
personally and professionally
Social and Relationships
Concern Worldwide,
Global LGBTI Equality and
the UN World Food Programme
Natural Capital
Responsible consumption and
production with sustainable
sourcing, emissions reduction
and waste recovery
Kerry Group Annual Report 2021 Our Business Model
23
What We Do
Kerry is the world’s leading taste and nutrition partner
for the food, beverage and pharmaceutical markets, with
our broad range of ingredient solutions currently reaching
over 1 billion consumers.
Why We Do It
Our Purpose
Inspiring Food, Nourishing Life
Our Vision
To be our customers’ most valued partner,
creating a world of sustainable nutrition.
How We Do It
Our Unique Business Model
Unique
Proposition
Taste
Nutrition
Our Technology Portfolio
Our Integrated Value Creation Engine
What We Depend On
(Inputs)
Financial
Funding available
to the Group
Manufacturing
[148] manufacturing
locations/global supply
chain infrastructure
Intellectual
Consumer insights, technology,
know-how and R&D capabilities
Human
22,000+ talented employees
across 30+ countries
Natural
A global network of >10,000 raw
materials suppliers
Delivering Taste &
Nutrition Solutions
Social and Relationships
Global brand and relationships
with local communities,
regulators and industry bodies
What We Focus On
Taste & Nutrition Strategic Framework
The Value We Create
(Outputs)
Financial
Growth in revenue,
profit and free cash flow
Manufacturing
>18,000 products with
80%+ delivering positive
and balanced nutrition
Intellectual
Customer-specific innovation
combined with differentiated
new technologies and solutions
Human
An inclusive workplace that
enables people to excel both
personally and professionally
Social and Relationships
Working with Concern
Worldwide, Partnership for
Global LGBTI Equality (PGLE) and
the UN World Food Programme
Natural Capital
Responsible consumption and
production with sustainable
sourcing, emissions reduction
and waste recovery
The Impact We Deliver
Supporting our customers in creating great
tasting products, with improved nutrition
and functionality, while ensuring a better
impact for the planet.
Who We Benefit
Customers and
Consumers
How We Contribute
Core SDGs
Linked SDGs
Kerry Group Annual Report 2021 24
Strategic Report Our Technologies
Our Technologies
Our Technology Strategy –
Breadth | Depth | Integration
Our technology strategy is built
on three foundations: breadth
of technology capability, depth
and expertise within each of
these technologies, and the
integration of these technology
capabilities to deliver unique
and value-added solutions
for customers.
22
Core
technologies
33
End use market Development
and Application Centres
across the globe
25
Process
technology
platforms
1,100+
Scientists
Technology and Innovation – Underpinning Growth Through our Leading Capabilities
We have four key consumer-inspired growth platforms,
which are driven by the knowledge and capability within
Kerry. We have invested in our globally connected
infrastructure, with over 1,100 scientists across multiple
disciplines. We form part of a broad ecosystem including
50 university collaborations.
These support our science and technology foundation,
where we are constantly looking for and discovering new
technologies. We have the industry-leading integrated
technology portfolio, capability and strategy, which we
leverage to innovate for our customers, while continuing
to deliver next-generation innovation.
Next-generation
Innovation
This platform allows
us to deliver next-
generation innovation
5
Customer
Innovation
Consumer-focused
differentiated
customer products
6
1
Underpinned by our
commitment to
advance innovation for
a world of sustainable
nutrition
2
4
3
Integrated Technology
Strategy
Broad range of technologies
across taste and nutrition
Enabled through our process technologies
Embedded in our integrated technologies
Consumer-inspired
Growth Platforms
Authentic Taste
Plant-based
Food Waste
Health & Bio-Pharma
Knowledge
& Capability
Globally connected
infrastructure
Over 1,100 scientists
50 university collaborations
Science & Technology
Discovery and Screening: Cell Culture
Assays, Predictive Model Systems, In-Vitro
and In-Vivo Assays, Strain Sequencing,
Bioinformatics, Metabolomics, Single
Strain Fermentation, Pre- Pro and
Postbiotics, Functional Enzymes, Stability
Kinetics, Untargeted and Targeted Omics
(Proteomics)
Kerry Group Annual Report 2021 Our Technologies
25
Creating Value Through
Integrated Solutions
3
Beverage
Taste
Food Nutrition
& Functionality
Meat
Taste
Embedded in our
Integrated
Technologies
Meat Nutrition
& Functionality
Food
Taste
Beverage Nutrition
& Functionality
4
Integrated
Solutions
1
Texturants
Proteins
Modulation
Probiotics &
Bioactives
Natural
Extracts
Dairy
Flavours
Broad Range of
Core Technologies
Across
Taste and Nutrition
Lipids
Enzymes
Bio-
preservation
Sweet
Flavours
Emulsifiers
Savoury
Flavours
Pharma
2
Thermal
Processing
Agglomeration
Encapsulation
I N T E GRATED PR
O
Extrusion
Reaction &
Cooking
Methods
E
T
S
A
T
Distillation
C
E
S
S
T
E
C
Spray
Drying
Enabled through our
Process
Technologies
H
N
O
L
O
G
Y
Forming,
Robing &
Enrobing
Baking
Pyrolysis
BIOS C I E N C
E
Ultrafiltration
Fermentation
Enzymolysis
& Hydrolysis
Our integrated solutions capability is deployed in four steps:
2.
We combine this core
technology expertise
with our extensive
process technology
expertise including
extrusion, distillation
and fermentation.
3.
This enables us to create
integrated technologies
specific to the end use
markets we serve.
4.
All of these capabilities
are leveraged by our
application teams and
chefs to create unique
integrated solutions
– designed to solve
our customers’ specific
requirements.
1.
We start with our
broad range of core
technologies spanning
both taste and nutrition.
In Taste – we have
extensive capabilities
across our range of
flavours, modulation
and natural extracts.
In Nutrition – our
technologies include
our broad protein range,
probiotics, enzymes,
and range of functional
ingredients.
Kerry Group Annual Report 2021
26
Strategic Report Our Markets
Our Markets
Kerry is strategically
positioned within a dynamic
and evolving industry.
Where We Operate
Value-Add
Ingredients &
Solutions
Raw Material
Producers
Foodservice
Channel
F&B
Manufacturers
Digital
Channel
F&B
Retailers
Consumer
Business to Business
Business to Consumer
Consumer
Kerry operates in the value-add
ingredients and solutions market
– which plays a critical role in the
overall end-to-end supply chain.
The breadth of differentiated
solutions Kerry provides for
its customers helps improve
the taste and functionality of
products, efficiency of processes,
and supports a more sustainable
impact for the planet.
At Kerry, we work with a broad
range of customers across multiple
channels, supplying the food,
beverage and pharmaceutical
end use markets. We have strong
relationships and partnerships
with our customers, supporting
them to innovate and win in today’s
marketplace.
As a consumer-led
organisation, Kerry’s
business model, structures
and strategies are centred
around a deep understanding
of diverse local consumer
preferences across the globe.
Kerry Group Annual Report 2021 Our Markets
27
Value-Add Ingredients
& Solutions Market
d u s t r y Opportunity
I n
Snacks
Beverage
Dairy & Dairy
Alternatives
Kerry’s
€75bn
Market
Meals
Meat & Meat
Alternatives
Bakery,
Cereal &
Confectionery
Pharma
Our Markets
The size of Kerry's market is over €75 billion
with significant opportunity to expand –
e.g. with industry players evolving into the
Health & Wellness space who are looking
for partners, or new industry ownership
looking for outsourced innovation partners,
across a number of different food and
beverage categories.
As a result of this industry opportunity, we
see the potential for this market to expand
to between €90-€100 billion, as customers
continue to strive to meet the ever-evolving
needs of today’s consumer.
Kerry Group Annual Report 2021
28
Strategic Report Our Strategy
Our Strategy
The markets we focus on
are Food, Beverage, and
Pharma. Our strategic
priorities of Taste, Nutrition,
and Emerging Markets help
ensure capital allocation
decisions are aligned
to strategy.
Within this framework we have
four key growth platforms which
will be key drivers of growth –
Authentic Taste, Plant-based,
Food Waste and Health
& Bio-Pharma.
F
o
o
d
Taste
B
e
v
e
r
a
g
e
P
harm
a
Nutrition
Emerging
Markets
Taste for Kerry is built on our from-food-
for-food heritage and philosophy, with a
broad range of foundational technology
capabilities including Sweet, Savoury
and Dairy Flavours, Texturants, Taste
Modulation and Natural Extracts.
Our Nutrition, Wellness & Functionality
delivers benefits such as immunity
support, digestive health, cleaner
labels, and preservation. These benefits
are achieved by leveraging our broad
foundational technology platform
which includes Proteins, Probiotics
and Bioactives, Lipids, Enzymes,
Bio-preservation and Pharma.
Our local knowledge and focus, combined
with our global expertise and capabilities
have been key to our excellent track
record of growth in emerging markets.
Our target is to achieve average annual
volume growth in emerging markets
of 10%+.
Consumer Foods
Kerry’s Consumer Foods division is a leader in its categories in the chilled
cabinet. Our portfolio of leading brands are enjoyed every day across Irish
and UK markets.
We will continue to drive growth by responding to key consumer trends
and leveraging our expertise to expand into adjacent categories.
Kerry Group Annual Report 2021
Our Strategy
29
Strategy in Action
Key Achievements in 2021
Strong growth in Beverage end use market
(EUM) of 14% enabled by performance of
Kerry’s Taste technologies.
Taste
Manufacturing commenced at Rome,
Georgia plant.
Launched Kerry Botanicals Collection ZERO
2.0 next-generation range and new organic
Tastesense™ Sweet range.
Significant enhancement of savoury
taste capabilities with breakthroughs in
Tastesense™ Salt and Barbecue range.
The acquisition of Niacet helped further
develop Kerry’s world-leading food
protection and preservation platform.
Enhanced proactive nutrition portfolio
with clinically-backed ingredients including
probiotics, natural extracts, and nutritional
lipids addressing a number of need states.
Established Global Fermentation Science
Centre of Excellence.
Published over 30 science-based articles.
Strong volume growth of 14.4% in emerging
markets, led by performance in China,
Middle East & Russia.
Commenced production at facilities in
Durban, South Africa and Irapuato, Mexico.
Completed acquisitions of Enmex
and Afribon in Mexico and East Africa
respectively, enhancing our local nutrition
and taste capabilities in these markets.
Nutrition
Emerging
Markets
Strong volume growth of 6.0% with an
excellent finish to the year and growth
across the business.
Strong growth achieved across core
and adjacent categories.
Significant change in portfolio with sale of
Meats and Meals business to Pilgrim’s Pride.
Kerry Group Annual Report 2021
30
Strategic Report Strategy & Targets
Kerry Group Annual Report 2021 Strategy & Targets
31
+
Financial
Review
Pages 36-43
Strategy & Targets
Kerry’s targets are aligned to our value creation framework, which is
a combination of growth, return and sustainability. We believe that by
achieving our growth targets, meeting our returns criteria and delivering on
our sustainability commitments, we will deliver strong shareholder returns.
Our Value Creation Framework –
Growth, Return and Sustainability
Volume Growth
4-6% Average Target
EBITDA Margin
18%+ by 2026
Strategic Priorities
Pillars of Margin Expansion
Growth
Taste Nutrition Emerging Markets
Portfolio
Mix
Operating
Leverage
Key Growth Priorities
Authentic Taste
Plant-based
Food Waste
Health & Bio-Pharma
Operational
Efficiencies
Reinvestment
for Growth
Return
Cash
80%+ Cash Conversion
Return
10-12% ROACE
Focused Capital Expenditure Aligned to Strategic Priorities
Strict Working Capital Management to Deliver Days Improvement
Nutritional Reach
Carbon
Food Waste
Sustainability
Reach 2 billion people
with sustainable
nutrition solutions
55% reduction
in Scope 1 & 2
carbon emissions
50% reduction in
Food Waste
Note 1: Financial Targets are for the period 2022-2026
Note 2: Volume growth target assumes 2% above market growth rates
Note 3: Adjusted earnings and ROACE are calculated before brand related intangible asset amortisation and non-trading items (net of related tax)
Note 4: Cash conversion is free cash flow expressed as a percentage of adjusted earnings after tax
Note 5: Sustainability targets to be achieved by 2030. Carbon reduction targets include 30% intensity reduction in Scope 3 by 2030.
For more detail on Kerry’s science-based targets, see Sustainability Review on pages 50-74.
Full definitions can be found on pages 234-238.
Kerry Group Annual Report 2021
32
Strategic Report Why Kerry?
Why Kerry?
We deliver the key
value-add component
and driver of
repeat purchase
behaviour.
1.
Strategically Positioned in
a Highly Attractive Industry
While the range of ingredient solutions we
offer amount to only a small percentage of
the final product, in most cases they deliver
the key value-add component and driver of
repeat purchase behaviour.
The market we serve is currently estimated
at €75bn and is growing rapidly, as
customers are looking for innovation
partners to support them right across
all food and beverage categories from
ideation to launch, to impact.
2.
Kerry is a Truly Unique Business
We have an extensive global network of
over 22,000 talented colleagues, who are
driven to innovate and collaborate with
our customers to deliver food and
beverage products that are better for
consumers, customers, and the planet.
We have a strong science and technology
background, with over 1,100 scientists and
we are part of a broad ecosystem that
includes accelerators and universities.
The combination of our people, science,
technology and integrated solutions
capability enables us to solve the industry’s
most complex challenges with truly
differentiated solutions.
Kerry Group Annual Report 2021
Why Kerry?
33
3.
Strong Leadership
Positions1
4.
Track Record of Value Creation
3.3% CAGR2 for revenue
5.8% CAGR for trading profit
6.0% CAGR for adjusted EPS
14.9% CAGR on share price
11.4% CAGR on dividend per share
39% Absolute carbon reduction3
5.
Winning Growth Strategies
Authentic Taste
Plant-based
Food Waste
Health & Bio-Pharma
1
2
3
Leadership positions above are within the
value-add ingredients and solutions market we serve.
CAGR = Compound Average Growth Rate
(2011 - 2021)
Scope 1 + 2 reduction versus our 2017 base year.
Kerry Group Annual Report 2021
Market Leader in Meatand Meat Alternatives#1 Solutions Partner for BeverageKerry Pharma Solutions used in6 of top 10 Blockbuster DrugsLeading Solutions Partner for CPGs and Own-Brands #1 Globally in the Foodservice ChannelLeadership Positions with Global, Regional and Local Customers#1 Taste & Nutrition in North AmericaMarket Leading Growthin Emerging Markets#1 Globally in Authentic Savoury Taste Solutionsfor Meat and Snacks#1 in Food Protection& Preservation#1 in Probiotics inambient food andbeverage applicationss
34
Strategic Report Key Performance Indicators
Key
Performance
Indicators
We use a number of financial and
non-financial key performance indicators
(KPIs) to measure performance across
our business. These KPIs help inform
decision making, assist effective goal
setting and track progress in achieving
our strategic objectives.
We believe that long-term sustainable
success will be achieved by generating
value for all stakeholders, while
developing and monitoring strategy,
managing the risks that face the
organisation and embedding the
Company’s purpose and values.
FINANCIAL PERFORMANCE INDICATORS
GROWTH
Metric
Volume Growth
Trading Margin Expansion
+8.0%
+40bps
Constant Currency
Adjusted EPS Growth
+12.1%
Performance
2021
2021
2021
8.0%
8.0%
8.0%
2020
2020
2020
(2.9%)
(2.9%)
(2.9%)
2019
2019
2019
2.8%
2.8%
2.8%
2021
2021
2021
2020
2020
2020
2019
2019
2019
11.9%
11.9%
+40bps
11.9%
+40bps
+40bps
11.5%
11.5%
(100bps)
11.5%
(100bps)
(100bps)
12.5%
12.5%
+30bps
12.5%
+30bps
+30bps
2021
2021
2021
2020
2020
2020
2019
2019
2019
380.8 12.1%
380.8 12.1%
380.8 12.1%
(9.4%)
(9.4%)
(9.4%)
8.3%
8.3%
8.3%
Commentary
Group volumes increased by 8.0% in
the year, with strong performances
across all regions following the
impact of COVID-19 in the prior year.
Group trading margin increased
by +40bps in the year, primarily
due to operating leverage recovery
after the impact of COVID-19 in the
prior year.
Constant currency adjusted EPS
increased by +12.1% in the year.
Strategic
Importance/
Link to
Remuneration
Volume growth is an important metric
as it is seen as the key driver of organic
top-line business improvement. It is
a metric in the short-term incentive
plan and is a key driver of adjusted
EPS growth, which is a metric for the
long-term incentive plan.
Trading margin expansion is a key
measure of profitability. It is a metric
in the short-term incentive plan and
is a key driver of adjusted EPS growth,
which is a metric for the long-term
incentive plan.
Constant currency EPS growth is
a key performance metric as it
encompasses the components
of growth that are important to
the Group’s stakeholders. It is a
performance metric for the long-
term incentive plan.
Comparable
IFRS measure
Reported revenue was +5.7%
in the year (2020: (4.0%)) - see
Financial Definition point 1 within
Supplementary Information section
on page 234.
Operating profit was +25.2%
in the year (2020: (2.7%)) - see
Financial Definition point 4 within
Supplementary Information section
on page 235.
Basic earnings per share was
+37.6% in the year (2020:
(2.3%)) - see Financial Definition
point 7 within Supplementary
Information section on page 235.
NON-FINANCIAL PERFORMANCE INDICATORS
2021
2021
2021
2020
2020
2020
2019
2019
2019
9.9%
9.9%
9.9%
9.8%
9.8%
9.8%
11.8%
11.8%
11.8%
2021
2021
2021
2020
2020
2020
2019
2019
2019
566
566
84%
566
84%
84%
34%
34%
(4%)
34%
(4%)
(4%)
2021
2021
2021
2020
2020
2020
412
412
67%
412
67%
67%
29%
29%
7%
29%
7%
7%
515
515
74%
515
74%
74%
2019
2019
2019
20%
20%
29%
20%
29%
29%
ROACE for the year was 9.9%, which
Cash conversion for the year was 84%,
TSR for the year was (3.7%), as share
reflected the impact from portfolio
which represented a good recovery from
performances varied across the food &
developments in the year.
the impact of COVID-19 in the prior year.
beverage sector. Compound TSR over the
past three years amounted to 34%.
ROACE is a key measure of the return
Cash conversion is an important metric
TSR is an important indicator of how
the Group achieves on its investment in
as it measures how much of the Group’s
successful the Group has been in terms of
capital expenditure projects, acquisitions
adjusted earnings is converted into cash.
shareholder value creation. Relative TSR
and other strategic investments. It is a
It is a performance metric for the short-
is a performance metric for the long-term
performance metric for the long-term
term incentive plan.
incentive plan.
incentive plan.
There is no IFRS measure comparable
Net cash from operating activities was
There is no IFRS measure comparable to
to ROACE.
€654.0 (2020: €672.2m) - see Financial
Total Shareholder Return.
Definition point 8 within Supplementary
Information section on page 236.
Metric
Performance
Commentary
Consumers Reached with Positive and Balanced Nutrition Solutions
1.1 Billion
2030
2021
2020
Target of Reaching 2 billion consumers by 2030
1.1
1.0
2030
2021
2020
39%
17%
2030
2021
2020
19%
10%
Target of 55% reduction in carbon by 2030
Target of achieving 50% reduction in overall food waste by 2030
Understanding that nutrition plays a critical part in the broader sustainable development agenda, Kerry has
an ambitious target of reaching two billion people with sustainable nutrition solutions by 2030. This target
encompasses both financial and non-financial metrics, as key to increasing Kerry's reach will be achieving business
growth objectives, while creating a positive impact through the achievement of our sustainability commitments.
Kerry will deliver on this target by further enhancing and expanding our solutions portfolio across the nutrition
spectrum, as we respond to evolving market demands. In 2021, we increased our reach to over 1.1 billion
consumers as we continued to grow our business and enhance our portfolio of sustainable nutrition solutions.
Strategic
Importance/
Link to
Remuneration
As the leader in Taste and Nutrition, we can play a pivotal role in supporting the transition to healthier more
sustainable diets. As awareness continues to grow of the link between diet and health, consumers are increasingly
looking for products that are good for them and the world around them. As customers seek to respond, Kerry
is ideally placed to support them in the development of products that deliver more sustainable nutrition. The
achievement of this target is fully integrated with our broader strategic objectives and central to our Vision to be
our customers' most valued partner, creating a world of sustainable nutrition. It is one of the performance metrics
that measures the Group’s performance compared to its 2030 sustainability strategy targets. This was incorporated
in the sustainability metrics within the 2021 long-term incentive plan.
Kerry Group Annual Report 2021
Further definitions, calculations and detail for these are set out above and within the Sustainability Review on pages 50-74.
The Group has set a Science-based Target for Scope 1 and 2
In line with target 12.3 of the UN Sustainable Development Goals,
emissions reduction that reflects global efforts to limit global
we aim to halve food waste across our operations by 2030. In
warming to 1.5 degrees Celsius. In 2021, we achieved a 39%
2021, we made further progress towards this goal achieving a 19%
reduction in absolute Scope 1 & 2 emissions versus our base
reduction across our sites versus our base year. Our approach
year, driven primarily by an ongoing focus on carbon efficiency
focuses on a number of different interventions at site level
and increasing the share of electricity we procure from
including the recovery and redistribution of products through
renewable sources.
charitable partners, further optimising our production processes
and a programme of employee engagement and training.
The impact of climate change is increasingly clear with growing
A crucial intervention for sustainable food production is reducing
awareness of the implications for people, the environment
the current level of food waste, estimated to be up to a third of
and the economy. At Kerry, we understand the need to act
all calories produced. This significant environmental, social and
now in support of a global shift towards decarbonisation,
economic impact provides an opportunity for organisations to
helping to mitigate the worst effects of climate change and
capture additional value while acting to reduce environmental
building resilience across our value chain. We are committed
impacts. At Kerry, we are committed to halving food waste across
to addressing our total carbon footprint and achieving net
our operations and supporting our customers in reducing their
zero emissions before 2050. It is one of the performance
food waste through the use of sustainable solutions, particularly
metrics that measures the Group’s performance against the
our preservation technologies. It is one of the performance
2030 sustainability strategy targets. This is incorporated in the
metrics that measures the Group’s performance compared to its
sustainability metrics within the 2021 long-term incentive plan.
2030 sustainability strategy targets. This is incorporated in the
sustainability metrics within the 2021 long-term incentive plan.
Key Performance Indicators
35
Our model is a combination of growth, return and
sustainability metrics, which have helped Kerry
deliver a strong track record of shareholder return.
Growth
Return
Share
Price
Sustainability
Dividend
Total
Shareholder
Return
The Kerry Model
RETURN
Cash Conversion
Total Shareholder Return (TSR)
412
515
566
515
412
29%
34%
67%
29%
7%
29%
20%
84%
20%
29%
34%
74%
84%
74%
29%
67%
412
67%
515
74%
566
84%
(4%)
(4%)
2019
2021
2020
2019
2021
2020
2019
2021
2021
2021
2019
2021
2020
2020
2020
2019
2019
2020
2019
2020
2021
2019
2021
2021
2019
2020
2020
34%
(4%)
8.3%
8.3%
8.3%
9.9%
9.8%
9.8%
9.9%
9.9%
9.8%
20%
29%
7%
7%
11.8%
11.8%
11.8%
(9.4%)
(9.4%)
(9.4%)
380.8 12.1%
380.8 12.1%
380.8 12.1%
(3.7%)
Return on Average Capital
Employed (ROACE)
9.9%
84%
566
2021
2021
2021
2020
2020
2020
(2.9%)
(2.9%)
(2.9%)
2019
2019
2019
2.8%
2.8%
2.8%
8.0%
8.0%
8.0%
11.9%
11.9%
11.9%
+40bps
+40bps
+40bps
2021
2021
2021
2020
2020
2020
2019
2019
2019
11.5%
11.5%
11.5%
(100bps)
(100bps)
(100bps)
12.5%
12.5%
12.5%
+30bps
+30bps
+30bps
2021
2021
2021
2020
2020
2020
2019
2019
2019
Commentary
Group volumes increased by 8.0% in
Group trading margin increased
the year, with strong performances
by +40bps in the year, primarily
Constant currency adjusted EPS
increased by +12.1% in the year.
across all regions following the
due to operating leverage recovery
impact of COVID-19 in the prior year.
after the impact of COVID-19 in the
prior year.
Strategic
Importance/
Link to
Remuneration
Volume growth is an important metric
Trading margin expansion is a key
Constant currency EPS growth is
as it is seen as the key driver of organic
measure of profitability. It is a metric
a key performance metric as it
top-line business improvement. It is
in the short-term incentive plan and
encompasses the components
a metric in the short-term incentive
is a key driver of adjusted EPS growth,
of growth that are important to
plan and is a key driver of adjusted
which is a metric for the long-term
the Group’s stakeholders. It is a
EPS growth, which is a metric for the
incentive plan.
long-term incentive plan.
performance metric for the long-
term incentive plan.
Comparable
IFRS measure
Reported revenue was +5.7%
in the year (2020: (4.0%)) - see
Operating profit was +25.2%
in the year (2020: (2.7%)) - see
Basic earnings per share was
+37.6% in the year (2020:
Financial Definition point 1 within
Financial Definition point 4 within
(2.3%)) - see Financial Definition
Supplementary Information section
Supplementary Information section
point 7 within Supplementary
on page 234.
on page 235.
Information section on page 235.
Metric
Performance
Metric
Performance
ROACE for the year was 9.9%, which
reflected the impact from portfolio
developments in the year.
Cash conversion for the year was 84%,
which represented a good recovery from
the impact of COVID-19 in the prior year.
TSR for the year was (3.7%), as share
performances varied across the food &
beverage sector. Compound TSR over the
past three years amounted to 34%.
ROACE is a key measure of the return
the Group achieves on its investment in
capital expenditure projects, acquisitions
and other strategic investments. It is a
performance metric for the long-term
incentive plan.
There is no IFRS measure comparable
to ROACE.
Cash conversion is an important metric
as it measures how much of the Group’s
adjusted earnings is converted into cash.
It is a performance metric for the short-
term incentive plan.
TSR is an important indicator of how
successful the Group has been in terms of
shareholder value creation. Relative TSR
is a performance metric for the long-term
incentive plan.
Net cash from operating activities was
€654.0 (2020: €672.2m) - see Financial
Definition point 8 within Supplementary
Information section on page 236.
There is no IFRS measure comparable to
Total Shareholder Return.
Absolute Carbon Reduction
39%
Reduction in Food Waste
19%
2030
2021
2020
2030
2021
2020
Target of Reaching 2 billion consumers by 2030
Target of Reaching 2 billion consumers by 2030
1.1
1.1
1.0
1.0
2030
2021
2020
2030
Target of 55% reduction in carbon by 2030
Target of 55% reduction in carbon by 2030
2021
2020
17%
17%
39%
39%
2030
2021
2020
Target of achieving 50% reduction in overall food waste by 2030
Target of achieving 50% reduction in overall food waste by 2030
2030
2021
19%
19%
2020
10%
10%
Commentary
Understanding that nutrition plays a critical part in the broader sustainable development agenda, Kerry has
an ambitious target of reaching two billion people with sustainable nutrition solutions by 2030. This target
encompasses both financial and non-financial metrics, as key to increasing Kerry's reach will be achieving business
growth objectives, while creating a positive impact through the achievement of our sustainability commitments.
Kerry will deliver on this target by further enhancing and expanding our solutions portfolio across the nutrition
spectrum, as we respond to evolving market demands. In 2021, we increased our reach to over 1.1 billion
consumers as we continued to grow our business and enhance our portfolio of sustainable nutrition solutions.
Strategic
Importance/
Link to
Remuneration
As the leader in Taste and Nutrition, we can play a pivotal role in supporting the transition to healthier more
sustainable diets. As awareness continues to grow of the link between diet and health, consumers are increasingly
looking for products that are good for them and the world around them. As customers seek to respond, Kerry
is ideally placed to support them in the development of products that deliver more sustainable nutrition. The
achievement of this target is fully integrated with our broader strategic objectives and central to our Vision to be
our customers' most valued partner, creating a world of sustainable nutrition. It is one of the performance metrics
that measures the Group’s performance compared to its 2030 sustainability strategy targets. This was incorporated
in the sustainability metrics within the 2021 long-term incentive plan.
The Group has set a Science-based Target for Scope 1 and 2
emissions reduction that reflects global efforts to limit global
warming to 1.5 degrees Celsius. In 2021, we achieved a 39%
reduction in absolute Scope 1 & 2 emissions versus our base
year, driven primarily by an ongoing focus on carbon efficiency
and increasing the share of electricity we procure from
renewable sources.
The impact of climate change is increasingly clear with growing
awareness of the implications for people, the environment
and the economy. At Kerry, we understand the need to act
now in support of a global shift towards decarbonisation,
helping to mitigate the worst effects of climate change and
building resilience across our value chain. We are committed
to addressing our total carbon footprint and achieving net
zero emissions before 2050. It is one of the performance
metrics that measures the Group’s performance against the
2030 sustainability strategy targets. This is incorporated in the
sustainability metrics within the 2021 long-term incentive plan.
In line with target 12.3 of the UN Sustainable Development Goals,
we aim to halve food waste across our operations by 2030. In
2021, we made further progress towards this goal achieving a 19%
reduction across our sites versus our base year. Our approach
focuses on a number of different interventions at site level
including the recovery and redistribution of products through
charitable partners, further optimising our production processes
and a programme of employee engagement and training.
A crucial intervention for sustainable food production is reducing
the current level of food waste, estimated to be up to a third of
all calories produced. This significant environmental, social and
economic impact provides an opportunity for organisations to
capture additional value while acting to reduce environmental
impacts. At Kerry, we are committed to halving food waste across
our operations and supporting our customers in reducing their
food waste through the use of sustainable solutions, particularly
our preservation technologies. It is one of the performance
metrics that measures the Group’s performance compared to its
2030 sustainability strategy targets. This is incorporated in the
sustainability metrics within the 2021 long-term incentive plan.
Kerry Group Annual Report 2021 36
Strategic Report Financial Review
Financial Review
We are pleased with the
Group's overall financial
performance and
progression in the year,
against the backdrop of a
highly variable marketplace.
Marguerite Larkin
Chief Financial Officer
The Financial Review provides an overview of the Group’s
financial performance for the year ended 31 December
2021 and the Group’s financial position at that date. The
key financial performance indicators outlined below are
used to track business and operational performance and
help the Group drive value creation.
The Group has a strong track record and a disciplined
financial approach of targeting continued growth
while meeting return on investment objectives. This
combination of growth and return are important
measures for the Group as it aims to deliver consistent
shareholder returns.
KEY FINANCIAL METRICS
GROWTH
Group Revenue
Volume Growth
Group
Trading Margin
Adjusted EPS Growth in
Constant Currency
2021
2021
8.0%
8.0%
2020
2020
(2.9%)
(2.9%)
2019
2019
2.8%
2.8%
2021
2021
2020
2020
2019
2019
11.9%
11.9%
+40bps
+40bps
11.5%
11.5%
(100bps)
(100bps)
2021
2021
2021
2020
2020
2020
(9.4%)
12.5%
12.5%
+30bps
+30bps
2019
2019
12.1%
12.1%
12.1%
(9.4%)
(9.4%)
8.3%
8.3%
2021
2021
2020
2020
2019
2019
9.9%
9.9%
9.8%
9.8%
11.8%
11.8%
2021
2021
2020
2020
2019
2019
412
412
67%
67%
515
515
74%
74%
2021
2021
2020
2020
2019
2019
566
566
84%
84%
95.2 cent +10.1%
95.2 cent +10.1%
86.5 cent
86.5 cent
+10.1%
+10.1%
2021
2021
2021
8.0%
8.0%
8.0%
2021
2021
2021
11.9%
11.9%
+40bps
11.9%
+40bps
+40bps
2020
2020
2020
(2.9%)
(2.9%)
(2.9%)
2019
2019
2019
2.8%
2.8%
2.8%
2020
2020
2020
2019
2019
2019
11.5%
11.5%
11.5%
(100bps)
(100bps)
(100bps)
12.5%
12.5%
12.5%
+30bps
+30bps
+30bps
2021
2021
2021
2020
2020
2020
2019
2019
2019
12.1%
12.1%
12.1%
(9.4%)
(9.4%)
(9.4%)
8.3%
8.3%
8.3%
2021
2021
2021
2020
2020
2020
2019
2019
2019
9.9%
9.9%
9.9%
9.8%
9.8%
9.8%
11.8%
11.8%
11.8%
2021
2021
2021
2020
2020
2020
2019
2019
2019
566
566
84%
566
84%
84%
412
412
67%
412
67%
67%
515
515
74%
515
74%
74%
2021
2021
2021
2020
2020
2020
2019
2019
2019
95.2 cent +10.1%
95.2 cent +10.1%
95.2 cent +10.1%
86.5 cent
86.5 cent
+10.1%
86.5 cent
+10.1%
+10.1%
RETURN
ROACE
Free Cash Flow
Conversion
Dividend
Further detail is set out within the Key Performance Indicators section on pages 34-35 and within the Supplementary Information section –
Financial Definitions on pages 234-238.
Kerry Group Annual Report 2021
Analysis of Results
Revenue
Trading profit
Trading margin
Computer software amortisation
Finance costs (net)
Adjusted earnings before taxation
Income taxes (excluding non-trading items)
%
change
+5.7%
+9.8%
Adjusted earnings after taxation
+10.4%
Brand related intangible asset amortisation
Non-trading items (net of related tax)
Profit after taxation
Basic EPS
Brand related intangible asset amortisation
Non-trading items (net of related tax)
Adjusted EPS
Impact of exchange rate translation
Adjusted EPS growth in constant currency
Revenue
+37.6%
+10.2%
+1.9%
+12.1%
Financial Review
37
2021
€’m
2020
€’m
7,350.6
6,953.4
875.5
11.9%
(34.6)
(69.9)
771.0
(96.2)
674.8
(46.2)
134.4
763.0
EPS
cent
430.6
26.0
(75.8)
380.8
797.2
11.5%
(28.4)
(72.4)
696.4
(85.1)
611.3
(41.7)
(15.5)
554.1
EPS
cent
313.0
23.6
8.8
345.4
(9.4%)
Group revenue was €7.4 billion (2020: €7.0 billion) reflecting a reported increase of 5.7%. This comprised a volume
increase of 8.0%, increased pricing of 1.2%, an adverse translation currency impact of 1.8% and an adverse impact
from business disposals net of acquisitions of 1.7%.
2020: Group reported revenue (4.0%), volume decrease (2.9%), pricing increase +0.3%, transaction currency (0.1%),
translation currency (2.3%), contribution from business acquisitions of +1.0%.
Taste & Nutrition revenue was €6.3 billion (2020: €5.8 billion) reflecting a reported revenue increase of 9.0%. This
comprised a volume increase of 8.3%, increased pricing of 1.3%, an adverse translation currency impact of 2.7% and
contribution from business acquisitions net of disposals of 2.1%.
2020: Taste & Nutrition reported revenue (4.4%), volume decrease (3.0%), pricing increase +0.1%, transaction currency
(0.1%), translation currency (2.6%), contribution from business acquisitions of +1.2%.
Consumer Foods revenue was €1.1 billion (2020: €1.28 billion) reflecting a reported revenue decrease of 10.5%.
This comprised a volume increase of 6.0%, increased pricing of 0.5%, a favourable transaction currency impact of
0.1%, a favourable translation currency impact of 1.7% and an adverse impact from the disposal of the Meats and
Meals business of 18.8%.
2020: Consumer Foods reported revenue (2.1%), volume reduction (2.6%), pricing +1.2%, translation currency (0.7%).
Excluding the impact of the ready meals contract exit, volume would have increased by 2.2%.
Kerry Group Annual Report 2021
Financial Review
39
38
Strategic Report Financial Review
Trading Profit & Margin
Group reported trading profit was €875.5m (2020: €797.2m) and trading margin was 11.9%, representing an increase
of 40bps, driven by the recovery of operating leverage and net contribution of acquisitions and disposals, partially
offset by pricing, supply chain oncosts and KerryExcel investments.
Taste & Nutrition reported trading profit of €913.4m (2020: €814.2m) and trading margin of 14.6%, an increase of
40bps, driven principally by operating leverage.
Consumer Foods reported trading profit of €82.1m (2020: €99.2m) and trading margin of 7.2%, a decrease of 60bps,
principally reflecting the sale of the Meats and Meals business.
The trading profit reflects Group EBITDA of €1.1 billion (2020: €1.0 billion) and an EBITDA margin of 14.7%.
A comprehensive analysis of the revenue and trading performance of the Taste & Nutrition and Consumer Foods
divisions is included in the Business Reviews on pages 44-49.
Computer Software Amortisation
Computer software amortisation increased by €6.2m to €34.6m (2020: €28.4m) reflecting the ongoing progression
of the KerryConnect Programme including costs associated with the rollout across our sites in North America. The
capitalised element of the cost of this project is being amortised over a seven-year period.
Brand Related Intangible Asset Amortisation
Brand related intangible asset amortisation increased to €46.2m (2020: €41.7m) which is reflective of recent
acquisition activity.
Finance Costs (net)
Finance costs (net) for the year decreased by €2.5m to €69.9m (2020: €72.4m) primarily due to lower interest rates.
The Group’s average interest rate for the year was 2.7% (2020: 3.0%).
Taxation
The tax charge for the year before non-trading items was €96.2m (2020: €85.1m) representing an effective tax rate of
13.3% (2020: 13.0%) and reflective of the geographical mix of earnings.
Acquisitions
During the year, the Group completed five acquisitions for a total consideration of €1,106.5m. These acquisitions
were aligned to the Group’s strategic priorities: enhancing the Group’s taste and nutrition capabilities, while also
expanding its presence in emerging markets.
Non-Trading Items
During the year, the Group incurred a non-trading credit of €134.4m (2020: €15.5m charge) net of tax. The credit in
the year primarily related to the gain on the disposal of the Consumer Foods Meats and Meals business, partially
offset by costs related to acquisition integration.
Adjusted EPS in Constant Currency
Adjusted EPS in constant currency increased by 12.1% to 380.8 cent (2020: 9.4% decrease) reflecting the strong
overall business performance in the year.
Basic EPS
Basic EPS increased by 37.6% to 430.6 cent (2020: 313.0 cent). Basic EPS is calculated after accounting for brand
related intangible asset amortisation of 26.0 cent (2020: 23.6 cent) and a non-trading item credit of 75.8 cent net of
related tax (2020: 8.8 cent charge).
Return on Average Capital Employed
ROACE increased to 9.9% (2020: 9.8%) reflecting business performance and the impact of portfolio developments in
the year.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
38
Strategic Report Financial Review
Financial Review
39
Exchange Rates
Group results are impacted by year-on-year fluctuations in exchange rates versus the euro. The average rates below
are the principal rates used for the translation of results. The closing rates below are used to translate assets and
liabilities at year end.
Australian Dollar
Brazilian Real
British Pound Sterling
Chinese Yuan Renminbi
Malaysian Ringgit
Mexican Peso
Russian Ruble
South African Rand
US Dollar
Balance Sheet
A summary balance sheet as at 31 December is provided below:
Property, plant & equipment
Intangible assets
Other non-current assets
Current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Property, Plant & Equipment
Average Rates
Closing Rates
2021
2020
2021
2020
1.57
6.34
0.86
7.63
4.92
24.06
87.24
17.40
1.19
1.66
5.75
0.89
7.86
4.77
24.34
81.16
18.62
1.13
1.56
6.32
0.84
7.22
4.73
23.30
84.07
18.06
1.13
1.59
6.38
0.90
8.03
4.92
24.46
90.68
18.02
1.23
2021
€’m
2020
€’m
2,091.3
1,990.6
5,580.7
4,687.1
264.5
170.6
3,458.9
2,594.8
11,395.4
9,443.1
1,995.4
1,696.3
3,798.8
3,091.3
5,794.2
4,787.6
5,601.2
4,655.5
5,601.2
4,655.5
Property, plant and equipment increased by €100.7m to €2,091.3m (2020: €1,990.6m) primarily due to additions and
the impact of foreign exchange translation, partially offset by the depreciation charge. Net capital expenditure in the
year (including computer software) amounted to €315.2m (2020: €310.7m). The level of capital investment supports
the Group’s growth initiatives and included the strategic development of its Rome, Georgia, US facility, creating a
world‐leading manufacturing facility to meet increasing demand for integrated solutions across a variety of protein
applications.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
40
Strategic Report Financial Review
Financial Review
41
Intangible Assets & Acquisitions
Intangible assets increased by €893.6m to €5,580.7m (2020: €4,687.1m) due to a number of acquisitions made in the
year including the acquisition of Niacet and the impact of foreign exchange translation, partially offset by the impact
of business disposals and the amortisation charge.
Current Assets
Current assets increased by €864.1m to €3,458.9m (2020: €2,594.8m) due to increased cash at bank and in hand,
increased inventory and increased trade and other receivables.
Retirement Benefits
At the balance sheet date, the net surplus for all defined benefit schemes (after deferred tax) was €56.3m (2020:
deficit of €43.6m). The improvement in the net position was driven primarily by strong returns on schemes' assets
which was partially offset by an increase in schemes' liabilities. The net surplus expressed as a percentage of market
capitalisation at 31 December 2021 was 0.3% (2020: 0.2%).
Shareholders’ Equity
Shareholders’ equity increased by €945.7m to €5,601.2m (2020: €4,655.5m), resulting from profits generated during
the year, offset in part by dividends.
A full reconciliation of shareholders’ equity is disclosed in the Consolidated Statement of Changes in Equity on
page 164.
Capital Structure
The Group finances its operations through a combination of equity and borrowing facilities, including bank
borrowings and senior notes from capital markets.
The financing structure of the Group is managed in order to optimise shareholder value while allowing the Group to
take advantage of opportunities that might arise to grow the business. The Group targets acquisition and investment
opportunities that are value enhancing and the Group’s policy is to fund these transactions from cash flow or
borrowings while maintaining its investment grade debt status.
This is managed by setting Net debt to EBITDA targets while allowing flexibility to accommodate significant
acquisition opportunities. Any expected variation from these targets should be reversible between 18 and 24
months; otherwise consideration would be given to issuing additional equity in the Group.
Free Cash Flow
In 2021, the Group achieved free cash flow of €566.1m (2020: €412.0m) reflecting 84% cash conversion in the year.
Free Cash Flow
Trading profit
Depreciation (net)
Movement in average working capital
Pension contributions paid less pension expense
Finance costs paid (net)
Income taxes paid
Purchase of non-current assets
Free cash flow
Cash conversion¹
1 Cash conversion is free cash flow expressed as a percentage of adjusted earnings after taxation.
2021
€’m
875.5
201.5
(37.7)
(14.7)
(71.3)
(72.0)
2020
€’m
797.2
200.7
(102.5)
(23.4)
(74.6)
(74.7)
(315.2)
(310.7)
566.1
84%
412.0
67%
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
40
Strategic Report Financial Review
Financial Review
41
Total Net Debt
Total net debt at the end of the year was €2,124.1m (2020: €1,945.1m). The increase during the year is analysed in the
table below:
Movement in Total Net Debt
Free cash flow
2021
€’m
566.1
2020
€’m
412.0
Acquisitions (net of disposals) including payments relating to previous acquisitions
(344.0)
(258.6)
(Purchase)/disposal of financial asset investments
Difference between average working capital and year end working capital
Share of profit from joint ventures
Non-trading items
Dividends paid
Shares issued during the financial year
Exchange translation adjustment
Increase in net debt resulting from cash flows
Fair value movement on interest rate swaps
Exchange translation adjustment on net debt
Increase in net debt in the year
Net debt at beginning of year
Net debt at the end of year – pre-lease liabilities
Lease liabilities
Total net debt at the end of year
(4.4)
(146.6)
(3.9)
(76.1)
5.3
(4.6)
(1.6)
(39.7)
(157.5)
(143.1)
-
(0.7)
(167.1)
(0.1)
(19.1)
(186.3)
-
(4.6)
(34.9)
7.6
26.5
(0.8)
(1,863.6)
(1,862.8)
(2,049.9)
(1,863.6)
(74.2)
(81.5)
(2,124.1)
(1,945.1)
The exchange translation adjustment of €19.1m results primarily from borrowings denominated in US dollar
translated at a year end rate of $1.13 versus a rate of $1.23 in 2020.
Maturity Profile of Total Net Debt
Within 1 year
Between 1 and 2 years
Between 2 and 5 years
Over 5 years
Total net debt at end of year
Weighted average maturity (years)
Financing
2021
€’m
1,005.5
2020
€’m
533.3
(661.1)
(104.9)
(977.4)
(1,626.3)
(1,491.1)
(747.2)
(2,124.1)
(1,945.1)
5.7
5.2
Undrawn committed facilities at the end of the year were €1,100m (2020: €1,100m) while undrawn standby facilities
were €337.0m (2020: €320.0m).
Full details of the Group’s financial liabilities, cash at bank and in hand and credit facilities are disclosed in notes 23
and 24 to the Consolidated Financial Statements. Of the cash at bank and in hand at year end, €100.0m was on short
term deposit under a Sustainable Deposits programme.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
42
Strategic Report Financial Review
Financial Review
43
Sustainability-Linked Bond Progress Report
In 2021, Kerry issued a €750 million, ten year Sustainability-Linked Bond (SLB) aligned with the Sustainability-Linked
Bond Principles (SLBPs) administered by the International Capital Markets Association. The bond has a sustainability-
linked feature that could result in an interest coupon step-up if certain KPI targets are not met, as outlined below, by
December 2030.
The KPIs that have been included in the SLB have been selected as they reflect material environmental sustainability
challenges for our industry and key focus areas under our Beyond the Horizon strategy. These KPIs and targets are
as follows:
KPI 1: 55% Absolute reduction in Scope 1 & 2 greenhouse gas emissions
KPI 2: 50% Food waste reduction across our operations
2021 Performance
In 2021, we made strong progress against both targets, delivering a 39% reduction in our absolute 1 & 2 emissions
and a 19% reduction in our food waste volumes, versus a 2017 baseline for both KPIs.
Emissions (CO2e)
2021
2017
Food Waste
2021
2017
Scope 1 & 2 (Tonnes)
536,370
878,363
% change
39%
-
Tonnes
% change
10,290
12,780
19%
-
For more details of our efforts to reduce emissions and food waste, see our Sustainability Review on page 50 and also
our 2021 GRI Sustainability Report at kerrygroup.com.
Key Financial Ratios
The Group’s balance sheet is in a strong position. With a Net debt to EBITDA ratio of 2.0 times, the Group has
sufficient headroom to support future growth plans. During the year, the Group repaid US$200m of outstanding
private placement notes. Following this repayment, the Group now has no financial arrangements that carry financial
covenants.
Net debt: EBITDA
EBITDA: Net interest
Share Price and Market Capitalisation
2021
2.0
14.9
2020
1.9
13.8
The Company’s shares traded in the range €99.95 to €130.00 during the year. The share price at 31 December 2021
was €113.25 (2020: €118.50) giving a market capitalisation of €20.0 billion (2020: €20.9 billion). Total shareholder
return for 2021 was (3.7%) (2020: +7.4%).
Financial Risk Management
Within the Group risk management framework as described in the Risk Management Report on page 76, the Group
has a Financial Risk Management Programme, which is approved by the Board of Directors and is subject to regular
monitoring by the Finance Committee and Group Internal Audit. The Group does not engage in speculative trading.
Further details relating to the Group’s financial and compliance risks and their associated mitigation processes are
discussed in the Risk Management Report on pages 75-85 and in note 24 to the Consolidated Financial Statements.
Dividend and Annual General Meeting
During the year, the Group paid an interim dividend of 28.5 cent per A ordinary share, which was an increase
of 10.0%. The Board has proposed a final dividend of 66.7 cent per A ordinary share, payable on 6 May 2022 to
shareholders registered on the record date of 8 April 2022. When combined with the interim dividend, the total
dividend for the year amounts to 95.2 cent per share (2020: 86.5 cent per share), which is an increase of 10.1% over
last year’s dividend. The Group’s aim is to have double digit dividend growth each year. Over 35 years as a listed
company, the Group has grown its dividend at a compound rate of 16.3%.
Kerry’s Annual General Meeting is scheduled to take place on 28 April 2022.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
42
Strategic Report Financial Review
Financial Review
43
10 Year Earnings History
A strong history of positive results
Revenue
Trading profit
20121
€’m
2013
€’m
2014
€’m
2015
€’m
2016
€’m
2017
€’m
2018
€’m
2019
€’m
2020
€’m
2021
€’m
5,848.3 5,836.7 5,756.6 6,104.9 6,130.6 6,407.9 6,607.6 7,241.3 6,953.4 7,350.6
559.0
611.4
636.4
700.1
749.6
781.3
805.6
902.7
797.2
875.5
Computer software amortisation
(8.7)
(11.5)
(13.6)
(18.7)
(23.4)
(24.3)
(25.0)
(26.5)
(28.4)
(34.6)
Finance costs (net)
(62.1)
(67.6)
(52.9)
(69.3)
(70.4)
(65.6)
(67.0)
(81.6)
(72.4)
(69.9)
Adjusted earnings before taxation2
488.2
532.3
569.9
612.1
655.8
691.4
713.6
794.6
696.4
771.0
Income taxes
(excluding non-trading items)
(77.3)
(79.1)
(79.6)
(81.1)
(86.7)
(89.5)
(89.2)
(98.6)
(85.1)
(96.2)
Adjusted earnings after taxation2
410.9
453.2
490.3
531.0
569.1
601.9
624.4
696.0
611.3
674.8
Brand related intangible asset
amortisation
(14.7)
(16.6)
(14.4)
(18.7)
(23.0)
(23.6)
(28.8)
(37.8)
(41.7)
(46.2)
Non-trading items (net of related tax)
(135.5)
(352.2)
4.0
13.1
(13.0)
10.2
(55.1)
(91.7)
(15.5)
134.4
Profit after taxation attributable to
owners of the parent
260.7
84.4
479.9
525.4
533.1
588.5
540.5
566.5
554.1
763.0
Adjusted EPS (cent)*
234.0
257.9
278.9
301.9
323.4
341.2
353.4
393.7
345.4
380.8
1
2
2012 was restated in line with IAS 19 (2011) ‘Employee Benefits’ which was adopted as required by IFRS in 2013. All other years are
presented as reported.
Adjusted EPS, adjusted earnings before taxation and adjusted earnings after taxation are calculated before brand related intangible
asset amortisation and non-trading items (net of related tax) and are considered more reflective of the Group’s underlying trading
performance. Adjusted EPS performance on a constant currency basis is disclosed on page 235.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
44
Strategic Report Business Review
Business Review
Taste &
Nutrition
Kerry Group Annual Report 2021 Taste & Nutrition
reported revenue
increased by 9.0%
to €6.3 billion in
the year.
Revenue
€6,273m
Volume Growth
+8.3%
EBITDA Margin
17.5%
Trading Margin
14.6%
Business Review
45
Volume growth driven by Beverage and
Food EUMs – led by Meat and Bakery
Retail channel volume growth of 5.4% with
foodservice growth of 18.0% against lower
comparatives
Pricing of 1.3% reflected increases in input costs
through the period
Trading margin improvement of 40bps primarily
driven by operating leverage
Taste & Nutrition reported revenue increased by
9.0% to €6.3 billion in the year. This reflected strong
volume growth of 8.3% increased pricing of 1.3% and
contribution from acquisitions of 2.1%, partially offset
by the impact of adverse translation currency of 2.7%.
Kerry’s key growth platforms performed well in the
year, with particularly strong growth achieved in Food
Waste applications supported by the acquisition of
Niacet, and also in Plant-based with new launches
incorporating our Radicle™ plant-based range. We
achieved excellent growth across a number of our
end use markets, supported by innovations with our
leading taste solutions for nutritionally optimised
products and our proactive nutrition portfolio. Kerry’s
overall growth was supported by an increased number
of customer launches through the year, where we
played an important role in improving the sustainability
impact of our customers’ products. In emerging
markets, we achieved strong growth across all regions,
with overall volume growth of 14.4%.
Kerry Group Annual Report 2021 46
Strategic Report Business Review
Americas Region
Volume growth of 6.7%
Retail channel delivered strong growth
led by Beverage, Bakery and Meat
Foodservice channel delivered very good growth
with a strong finish to the year
Revenue in the region increased by 4.9% to €3.2 billion in the
year. This reflected strong volume growth of 6.7%, increased
pricing of 1.2% and contribution from acquisitions of 1.8%,
partially offset by the impact of adverse translation currency of
4.8%. The strong growth within the region was achieved despite
supply chain and labour challenges across the industry.
Within the North American retail channel, the Beverage EUM
achieved excellent growth driven by Kerry’s portfolio of proactive
nutrition, botanicals and taste modulation technologies. Within
the Food EUM, Bakery delivered very strong growth through
taste, preservation and clean label solutions. Performance
in Meals and Cereal & Sweet were impacted by product
repositioning within these categories, while Snacks had good
growth supported by new launches in healthier snacking. Meat
achieved good overall growth through food protection and
preservation, with strong business development and growth in
plant-based alternatives.
The foodservice channel in North America continued to deliver
very good growth, with a strong finish to the year across quick
service restaurants and coffee chains in particular, supported
by Kerry’s brands and solutions to reduce complexity in back-of-
house operations.
In LATAM we had strong growth across the region. Volume
growth in Brazil was driven by performance in Beverage and
ice-cream, while growth in Mexico was led by Snacks. Within the
global Pharma EUM, cell nutrition delivered good growth, which
was offset by weaker volumes in excipients as a result of supply
chain delays in the year.
During the year, we commenced production at our new state-of-
the-art facility in Rome, Georgia, and within our taste facility in
Irapuato, Mexico. These facilities will be important contributors
to future growth within the region.
Kerry Group Annual Report 2021 Business Review
47
Europe Region
APMEA Region
Volume growth of 9.9%
Volume growth of 11.3%
Retail channel delivered strong growth led
Retail channel delivered excellent growth
by Meat, Bakery and Dairy
led by Meat, Beverage and Bakery
Foodservice channel performance improved
significantly with increased out-of-home
consumption through the year
Foodservice channel delivered strong overall
growth – with variations across the region
Revenue in the region increased by 14.6% to €1.6
billion in the year. This reflected very strong
volume growth of 9.9%, increased pricing of 1.8%,
contribution from acquisitions of 2.3% and the impact
of favourable transaction and translation currency
of 0.1% and 0.5% respectively. The level of growth
achieved in the region reflected strong progress
across the year, while recognising softer prior year
comparatives.
Growth in the retail channel was driven by
performance within the Food EUM. Meat achieved
excellent growth through a number of plant-based
meat alternative innovations, launches with natural
preservation and increased demand for healthier
coating systems. Bakery & Confectionary delivered
a very strong performance through texture systems
and indulgent innovations. Dairy achieved strong
growth in premium and dairy-free ice cream ranges,
while international dairy markets reflected increased
demand versus supply dynamics. Within the
Beverage EUM, there was good growth with low/non-
alcoholic beverages incorporating Kerry’s botanicals,
natural extracts and sugar reduction technologies.
The foodservice channel achieved excellent growth
particularly in the UK and Southern Europe. This
growth was broad-based across our end use
markets, as customers extended their menu ranges
and reintroduced limited time offers as the year
progressed. Russia and Eastern Europe continued
to deliver very strong growth across both retail and
foodservice channels, led by Meat and Snacks.
Revenue in the region increased by 14.8% to €1.4
billion in the year. This reflected very strong volume
growth of 11.3%, increased pricing of 1.1% and
contribution from acquisitions of 3.3%, partially offset
by the impact of adverse transaction currency of 0.1%
and adverse translation currency of 0.8% respectively.
The overall growth across the region was led by
strong performances in China and the Middle East.
Growth in the retail channel was well spread
across Kerry’s markets. Within the Food EUM, Meat
had strong growth through local authentic taste
innovations and a number of plant-based launches.
Growth in the Bakery EUM was led by savoury taste
innovations with a number of local leaders across the
region. Within the Beverage EUM, growth was driven
by innovations across tea, coffee and refreshing
beverage through solutions incorporating Kerry’s
natural extracts, Tastesense™ sugar reduction
technology and proactive nutrition portfolio.
The foodservice channel delivered strong overall
growth and a good finish to the year. This was
achieved despite COVID-related restrictions
impacting performance across the region at
various stages, most notably in South East Asia.
During the year, we continued to make good
progress in expanding our capacity and deploying
our technology capabilities in the region. We opened
our new taste facility in Durban, South Africa in the
final quarter, which represents an important strategic
step in our expansion within the continent. We made
good progress in the development of our new taste
facility at our Jeddah, Saudi Arabia operation and
we also announced the development of a new taste
facility in Karawang, Indonesia.
Kerry Group Annual Report 2021 48
Strategic Report Business Review
Business Review
Consumer
Foods
Revenue
€1,144m
Volume Growth
+6.0%
EBITDA Margin
8.7%
Trading Margin
7.2%
Volume – strong growth across
the business with an excellent
finish to the year
Pricing of 0.5% reflecting
increases in input costs and
market pricing
Trading margin decrease
of 60bps as underlying
improvement more than
offset by the impact of
portfolio divestment
Meats and Meals business sale
completed on 27th September
Consumer Foods reported revenue
decreased in the year by 10.5% to €1.1
billion. This reflected strong volume
growth of 6.0%, increased pricing
of 0.5%, a favourable transaction
currency impact of 0.1% and favourable
translation currency impact of 1.7%,
which were more than offset by the
impact of business disposal of 18.8%
due to the sale of the Meats and
Meals business.
Growth in the division reflected
a strong performance while
recognising the lower prior
year comparatives.
The sale of the Meats and Meals
business completed on 27th
September, resulting in the
separation and realignment of the
remaining dairy-related activities
within the Consumer Foods
business.
Meats¹ delivered good overall
growth in the year, driven by the
continued strong performance of
Richmond’s meat-free range and
the performance of Fridge Raiders.
Meals¹ achieved strong growth
supported by chilled meals
health & wellness ranges and
performance of the Oakhouse
Foods home delivery business.
Dairy delivered strong overall
growth with an excellent final
quarter. This was led by volume
growth in the Strings & Things
snacking range, with spreadable
butter ranges also delivering a
strong performance.
1
Comments on Meats and Meals business performance represent the nine month period prior to disposal on 27 September.
Kerry Group Annual Report 2021 Business Review
49
Thank You
As a result of the sale of our Consumer Foods' Meats
and Meals business, 4,500 colleagues began a new chapter
with Pilgrim's Pride in September. We wish to thank each
and every one of you and many more of our former colleagues,
who through talent, dedication and loyalty have helped
make Kerry Group what it is today.
As featured in The Irish Times, 27 September 2021.
Kerry Group Annual Report 2021
50
Sustainability Review
Beyond
the Horizon
As the world's population approaches eight billion people, what
we eat and drink every day and how that food is produced is under
increasing scrutiny. The contribution of the current food system to
environmental and social impacts such as climate change, resource
use, access to fresh water, obesity and hunger, means that as an
industry, we must take urgent action to address the impacts of the
products we produce and the way in which we produce them.
Across the globe, our Purpose,
Inspiring Food, Nourishing Life
is central to everything we do.
We collaborate with others to fulfil this purpose and
our Vision is to be our customers’ most valued partner,
creating a world of sustainable nutrition. With the
sustainability commitments under our Beyond the
Horizon strategy and our four strategic platforms of
Authentic Taste, Plant-based, Food Waste and Health &
Bio-Pharma, we have set out a clear pathway to bring
this vision to life.
Our ambition is to reach over two billion people with
sustainable nutrition solutions by 2030. Our Beyond
the Horizon strategy outlines how we will play a crucial
role with our industry-leading portfolio, innovation
expertise and sustainability commitments, leading to
better outcomes for people, society and the planet.
We are proud of our achievements to date and
particularly our ability to reach over one billion
people with positive and balanced nutrition solutions.
We also recognise the very significant environmental
and social challenges facing our industry and the need
to accelerate our actions. Given our scale, reach and
ability to impact on consumer health and wellbeing,
we are committed to creating a future of sustainable
nutrition, helping to maintain good health, while
protecting people and the planet.
READ MORE
For more information on our sustainability strategy
and performance, see our 2021 Kerry Group GRI
Sustainability Report at www.kerrygroup.com.
Kerry Group Annual Report 2021Strategic Report Sustainability Review 51
The food system has a critical role to play in the
achievement of the Sustainable Development Goals.
According to the World Health Organisation, good
nutrition is central to the achievement of twelve of the
seventeen SDGs. However, today more than three billion
people are malnourished and many consume diets which
are low in quality1. Food production is also responsible
for a significant share of greenhouse gas emissions and
global resource use and yet it is estimated that a third of
all food produced is lost or wasted2.
Stepping Up Our Actions
The United Nations Sustainable Development Goals
(SDGs) provide a clear roadmap for addressing poverty,
protecting the planet and improving the lives and
prospects for all by 2030.
In 2020, Kerry was proud to reinforce its commitments
towards the achievement of these goals with the launch
of our Beyond the Horizon strategy, which is focused on
actions that are better for people, better for society and
better for the planet.
At our Capital Markets Day in October 2021, we
announced a step up in our emissions reduction goal
to align with the most ambitious 1.5-degree pathway
under the Paris Climate Agreement, as well as a
strengthening of our gender diversity targets.
While all seventeen goals are critically important,
Kerry’s integrated solutions capabilities, innovation
expertise and sustainability commitments mean
that we are best placed to make the most significant
contribution to goals 2, 3, and 12.
Zero Hunger
Helping people access sufficient
amounts of the right nutrition in a
cost-effective way while working with
producers to sustainably intensify
production and improve livelihoods.
Responsible
Consumption
and Production
Using natural
resources responsibly
and enabling our
customers to consume
and produce more
sustainably through
our innovation
expertise and
technology portfolio.
Good Health
& Well-being
Supporting good
health and well-
being and helping
reduce mortality
through the co-
creation of products
that help improve
consumer diets.
1
2
https://www.hsph.harvard.edu/nutrition source/sustainability/
UN FAO https://www.fao.org/food-loss-and-food-waste/flw-data)
Kerry Group Annual Report 2021Sustainability Review 52
Strategic Report Sustainability Review
Listening to our Stakeholders
The nature of the challenges facing our industry and
the required pace of change means that we must build
a shared understanding of our issues and consensus
on the path forward. At Kerry, we believe that the
best way to achieve this is through ongoing and
inclusive stakeholder engagement. We are involved
in continuous dialogue with key groups, as we share
our vision for a world of sustainable nutrition and
seek to incorporate a diverse set of views to help
inform our approach. Among our key stakeholders are
employees, customers and consumers, shareholders,
suppliers, communities and government. For more
on our approach to stakeholder engagement see our
Corporate Governance Report on pages 99-104 and
our GRI Sustainability Report.
Stakeholder
Groups
Shareholders
Defining What is Most Important
Our material topics are defined through a dedicated
process of stakeholder engagement which considers
a broad universe of issues. We assess the relative
importance of each issue in influencing the decision
making of these stakeholders, their importance to
Kerry’s business performance and our wider social,
environmental and economic impacts. We conducted
a comprehensive review of our materiality assessment
in 2021, which enabled us to integrate the principles of
dynamic and double materiality within the assessment
process and reflect the evolution of many sustainability
topics across our industry.
The outputs of this assessment, including our relative
impact in each area, are reflected in the matrix on the
opposite page and while many of these topic areas are
not new, we have seen disaggregation in some areas
as certain elements within broader topics become
increasingly salient. We also see changes in relative
importance of some topics, most notably the continued
acceleration of climate related issues, the increasing
importance being attributed to biodiversity and the
demand for more sustainable innovation as stakeholders
look for solutions in response to these challenges.
These material topics are reviewed as part of the
broader risk assessment process and further details
on the Group’s principal risks are outlined in the Risk
Management Report on pages 78-84. For more on
materiality see our GRI Sustainability Report.
Kerry Group Annual Report 2021
Materiality Matrix 2021
Better for People
Better for Society
Better for Planet
Other
Sustainability Review
53
Higher
l
s
r
e
d
o
h
e
k
a
t
S
n
o
t
c
a
p
m
I
g
n
i
s
a
e
r
c
n
I
Human Rights
Product Safety
& Quality
Climate Action &
Net Zero Strategy
Responsible
Sourcing &
Regenerative
Agriculture
Business Ethics
& Integrity
Biodiversity
Protection
Transparency
& Reporting
Sustainable
Packaging
Animal
Welfare
Diversity,
Inclusion
& Belonging
Sustainable
Advocacy &
Partnerships
Socio-Economic
Prosperity
ESG Regulatory &
Policy Landscape
Nourishing
Communities
Responsible
Marketing &
Communications
Digital &
Technology
Innovation
Food Loss
& Waste
Nutrition & Health
Sustainable Innovation
Water Stewardship
Clean & Efficient Energy Use
Sustainable Business Model
Affordable & Accessible Nutrition
Responsible Investment
Waste &
Circular
Economy
Global Events &
Geopolitical
Context
Employee Health,
& Wellbeing
Consumer Behaviour &
Brand Activism
Employee Retention
& Development
Increasing Impact on Kerry Group
Higher
External Recognition
At Kerry, we are proud to have our sustainability efforts
acknowledged by credible independent assessment.
FTSE4GOOD: Kerry is a constituent of the FTSE4GOOD, which
measures the performance of companies demonstrating strong
Environmental, Social and Governance (ESG) practices.
MSCI: Kerry achieved an improved MSCI ESG Rating of AAA for
its performance on Environmental, Social and Governance (ESG)
issues in 2021.
ECOVADIS: A Gold rating through the EcoVadis sustainability
assessment places Kerry in the top 3% of companies assessed by
EcoVadis in our sector.
World Benchmarking Alliance (WBA): In their inaugural
assessment of the food sector, WBA ranked Kerry in the top 5% of
companies that are leading the way on food system transformation.
Assurance:
The Greenhouse Gas (GHG), waste, water, health and safety
and renewable electricity data, alongside progress towards
our Sustainable Nutrition Goal outlined in this report, is
independently assured by Jacobs UK Ltd to AA1000 Assurance
Standard. The full assurance statement can be found on
kerrygroup.com.
Kerry Group Annual Report 2021
54
Strategic Report Sustainability Review
Better
for
People
Kerry Group Annual Report 2021
As the leader in Sustainable Nutrition, our goal is to
provide sustainable nutrition solutions for over two
billion people by 2030.
For many people, getting the right nutritional balance is a challenge.
According to the UN Food and Agriculture Organisation (FAO), in 2021
healthy diets were out of reach for three billion people*. Malnutrition, in all
its forms including hunger and obesity, occurs when safe, healthy foods are
not accessible or affordable for people. Poor quality diets, high in salt, sugar
and saturated fat can lead to diet-related diseases such as heart disease and
type 2 diabetes which account for one quarter of all adult deaths each year.
In 2021, the UN Food Systems Summit emphasised the responsibility of the
food system in addressing the issue of malnutrition, providing accessible
nutritious foods to ensure a healthy future for both people and planet.
Consumers are also increasingly mindful of the link between diet, health
and the environment. Kerry’s Sustainability in Motion research highlighted
that consumers are seeking out products and brands that have a positive
impact on their health and the world around them. As food and beverage
manufacturers seek to respond to these changing consumer preferences,
demand for partners who can support them in creating products that deliver
more sustainable nutrition is growing.
*
https://www.fao.org/state-of-food-security-nutrition#
Sustainability Review
55
Creating a World of Sustainable Nutrition
We define sustainable nutrition as the ability to provide
positive and balanced nutrition solutions that help
maintain good health, while protecting people and
the planet.
At Kerry, we create integrated taste and nutrition
solutions that help our customers to respond
to evolving consumer demands as they become
increasingly conscious of the link between diet, health
and the environment. Nutritional concerns for our
customers and their consumers range from food
safety and security, clean label, positive and balanced
nutrition, proactive nutrition and an increasing focus
on personalised nutrition. There is also growing
awareness around the environmental and social impact
of food and so the way in which food is produced
must also be considered in the context of sustainable
nutrition. For more on our approach see our white
paper at kerrygroup.com.
Understanding Consumer Expectations
Amid rapidly changing consumer expectations, Kerry has
developed leading insights into how environmental and
social concerns impact on everyday food and beverage
choices. In 2021, we published the findings from our
Sustainability in Motion research, following engagement
with over 14,000 consumers across 18 countries and
three continents. This comprehensive study shows how
the definition of sustainability is evolving, with more and
more emphasis on health, nutrition and sustainability, as
it relates to an individual, as well as the more traditional
associations of sustainability and its impact on the
environment.
When it comes to the food and beverage industry in
particular, an individual’s considerations regarding
sustainable food and drinks can encompass
environmental concerns, social needs, industry
expectations (e.g. responsible sourcing) and personal
goals around health and nutrition.
These findings have major implications for the food and
drinks industry. Our growing and increasingly urbanised
global population has high expectations regarding the
broader impacts of food. However, it also demands high
standards in terms of taste, convenience and value.
As the leading global expert in taste and nutrition,
Kerry provides a crucial link between manufacturer
capabilities and consumer expectations and is firmly at
the forefront of technological innovation within food
and beverages – a critical foundation for building a
more sustainable future food system. For more on these
consumer insights see kerrygroup.com.
Global consumers follow a consistent
Sustainability Adoption Curve:
KERRY PROPRIETARY
INSIGHTS
EMERGING
Reducing food,
packaging and
production waste
Zero plastic movement
SUSTAINABILITY
ADOPTION CURVE
TABLESTAKES
Environment and
atmosphere
preservation
Sustainable packaging
Community aid and
human rights advocacy
Extrinsic
Extrinsic associations are the
first point of contact
consumers have with
sustainability.
EMERGING
Personal health
and nutrition
Food waste
Clean label claims
such as locally
sourced, no artificial
ingredients, organic
and non-GMO
Intrinsic
Intrinsic associations are
made by consumers who
have matured in their
sustainability journey.
Kerry Group Annual Report 2021
56
Strategic Report Sustainability Review
Enhancing Nutrition and
Supporting Wellbeing
At Kerry, we are ideally placed to enable our customers
to move along the sustainable nutrition spectrum.
Through our unique capabilities and solutions
portfolio, we co-create products that deliver better
nutrition for consumers with no compromise on taste.
Our application expertise and delivery systems allow
us to bring tasty, convenient and familiar food to the
consumer, increasing the availability of nutritious
options with positive health benefits. Our ambitious
environmental and social commitments allow for these
better-for-you products to be produced in a more
sustainable way.
Creating Impact at Scale
To highlight the role of Kerry as a sustainable nutrition
partner, our industry-leading nutrition profiling
methodology assesses the nutritional contribution
of our ingredients portfolio to a final consumer
product. Our assessment shows that more than 80%
of our Taste & Nutrition portfolio delivers positive
or balanced nutrition solutions for over one billion
consumers today. Over the next decade, we will
increase the impact from our portfolio, through
innovation and partnerships, creating sustainable
solutions that will reach more than two billion people.
Given the strength of our portfolio and its potential for
positive impact, we aim to bring these solutions to as
many consumers as possible, helping us to fulfil our
Purpose of Inspiring Food, Nourishing Life.
In 2021 we continued to expand our impact and
increased our reach* with positive and balanced
nutrition solutions by 10% to 1.1 billion people. This
growth was driven by the increase in positive nutrition
solutions within our portfolio and our geographical
expansion in developing regions.
Kerry Group Annual Report 2021
Kerry Health and
Nutrition Institute™
Kerry Health and Nutrition Institute: Science
for Healthier Food
The Kerry Health and Nutrition Institute (KHNI) was
established to share Kerry’s scientific expertise and
to advance awareness of the science of healthier
food. Supported by an independent Scientific
Advisory Council made up of recognised leaders
in nutrition science and research, KHNI is enabling
those within the sector to learn from our scientists,
academics and other experts, as they explore
challenges in the food and beverage industry.
This digital hub of scientific know-how provides
in-depth articles, webinars and white papers,
written for those working in the food industry, by
experts within the food industry. To date, KHNI
has welcomed more than half a million visitors to
engage with this industry-leading content, with
contributions from over 125 global experts in
nutrition, health, taste, sensory, and life sciences.
In 2021, the focus was increasingly aligned with
efforts under our Beyond the Horizon strategy,
with content, including dedicated webinars, on
overcoming challenges and capturing opportunities
associated with sustainable nutrition.
For information see khni.kerry.com.
*
Our approach to calculating consumer reach was developed in
partnership with independent third parties and combines the
outputs from our industry-leading nutritional assessment with
external market data and Kerry's business insight. We use a
bottom-up model taking information by country and end use
market and eliminating potential double counting through the
application of accepted statistical methods.
Sustainability Review
57
Kerry Icons
Kerry Icons
Courage
Enterprising Spirit
Inclusiveness
Open-mindedness
Ownership
Gen Z
Kerry Icons
Courage
Enterprising Spirit
Inclusiveness
In 2021, we supported
customers with market
leading sustainable
solutions across a range
of end use markets.
Open-mindedness
Ownership
Gen Z
Developing Markets
Taste
Culinary & insights
Nutrition
Taste
Foodservice
Courage
Enterprising Spirit
Open-mindedness
Ownership
Gen Z
Inclusiveness
Development &
Application
Product Process
Technologies
Millennials
Leading with Innovation
Innovation is critical to the transformation of our food
system. At Kerry, we are helping our customers to keep pace
Development &
with consumer expectations, solving their most complex
Application
sustainability challenges and providing solutions that are
Ingredient
healthier and more sustainable by design.
Product Process
Technologies
Customer/Supplier
Culinary & insights
Boomers
Millennials
Nutrition
Bakery
Taste
Nutrition
Culinary & insights
Development &
Application
Product Process
Technologies
Millennials
Developing Markets
Developing Markets
Foodservice
Ingredient
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Settings
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€297m
Customer/Supplier
Bakery
Boomers
View Research
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Invested in research development
and application to ensure we
remain at the forefront of
sustainable nutrition, as well as
continuing to further our leading
capabilities in proactive health,
food protection and preservation
through portfolio development.
Aroma
Chicken
Seniors
Cereal
Dairy
Meat
Search
Profile
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Sound
Aroma
Bakery
Watch
Boomers
Ingredient
Foodservice
View Research
Customer/Supplier
Already home to the industry’s leading portfolio of integrated
taste and nutrition technologies, our innovation programme
brings together Kerry’s unrivalled global capabilities to
create solutions that meet consumer needs and preferences.
Cereal
In 2021, we invested a further €297 million in research,
development and application to ensure we remain at the
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forefront of sustainable nutrition, as well as continuing to
further our leading capabilities in proactive health, food
protection and preservation through portfolio development.
Meat
Settings
For more see Our Markets on pages 26-27.
Meat
Chicken
Download
Seniors
Settings
Chicken
Seniors
Dairy
Profile
Cereal
Watch
Dairy
Confectionery 1
Appetizers
Our approach is validated by the growing demand among
customers for new concepts that deliver on consumer
appetite for healthier products with lower environmental
impacts. In 2021, we supported customers with market
Confectionery 2
leading sustainable solutions across a range of end use
markets. Some examples of these are outlined below and
for more information on how we support our customers see
www.kerry.com.
Confectionery 2
Male/Female
Confectionery 1
Male/Female
Appetizers
Sound
Aroma
Sound
Confectionery 1
Appetizers
Male/Female
Sensory Main
Confectionery 2
Touch
Sensory Main
Meals
Touch
Plant Protein Main
Meals
Pork
Plant Protein Main
Beverage
Pork
Beverage
Sensory Main
Touch
Meals
Plant Protein Main
Pork
Beverage
Mouthfeel
Mouthfeel
Taste
Pet/Animal Nutrition
Taste
Pet/Animal Nutrition
Plant Protein Alt
Mouthfeel
Taste
Pet/Animal Nutrition
VEGAN SLICE
For the foodservice channel
we have developed a vegan
alternative to cheese with
Plant Protein Alt
unrivalled taste and functionality,
Natural/Clean Label
supporting an iconic plant-based
product launch in 2021.
Snacks
Beef
WASTE TO TASTE
In a circular approach to
resource use, we have taken a
traditional by-product from fruit
processing and upcycled this to
create a flavour for a leading
beverage producer.
Nutritional Beverage
Natural/Clean Label
Alcohol
Alcohol
Nutritional Beverage
Coffee & Tea
Snacks
Plant Protein Alt
Beef
Beef
Snacks
PLANT PROTEIN
Our Radicle™ plant protein
portfolio was key in enabling a
challenger brand to bring their low
Coffee & Tea
carbon meat alternative to market
Refreshing Beverage
and support their on-pack claims
around nutrition and CO2.
Refreshing Beverage
Seafood
Seafood
Natural/Clean Label
Alcohol
Nutritional Beverage
Coffee & Tea
Seafood
Refreshing Beverage
Pharma
Functional
Safety/Quality
Service/Supply Chain
Collaboration/
Government
Shareholder
Pharma
Functional
Safety/Quality
Service/Supply Chain
Collaboration/
Government
Shareholder
Kerry Group Annual Report 2021
Pharma
Functional
Safety/Quality
Service/Supply Chain
Shareholder
Consumer
Omni-Channel
Cost/Financial/Margin
Risk is unchanged
Risk has increased
Risk has decreased
Collaboration/
Government
Consumer
Omni-Channel
Cost/Financial/Margin
Risk is unchanged
Risk has increased
Risk has decreased
Global
Location
Locations
Achieved
Taste & Nutrition
Strategic Growth
Priorities
Consumer Foods
Strategic Growth
Priorities
Consumer
Omni-Channel
Cost/Financial/Margin
Risk is unchanged
Risk has increased
Risk has decreased
Taste & Nutrition
Strategic Growth
Priorities
Consumer Foods
Strategic Growth
Priorities
Global
Location
Locations
Achieved
Low/Reduced
Sugar Beverages
Healthy/Nutritious
Proactive Nutrition
Climate Positive
Social Impact
Circular Solutions
Taste & Nutrition
Strategic Growth
Priorities
Consumer Foods
Strategic Growth
Priorities
Global
Location
Locations
Achieved
Low/Reduced
Sugar Beverages
Healthy/Nutritious
Proactive Nutrition
Climate Positive
Social Impact
Circular Solutions
Sustainability
Deforestation
Child Labour
Farmer Livelihood
Biodiversity
Regenerative
Agriculture
Low/Reduced
Sugar Beverages
Healthy/Nutritious
Proactive Nutrition
Climate Positive
Social Impact
Circular Solutions
Regenerative
Agriculture
Sustainability
Deforestation
Child Labour
Farmer Livelihood
Regenerative
Agriculture
Biodiversity
Sustainability
Animal Welfare
Deforestation
Greenhouse Emission
Child Labour
Water
Farmer Livelihood
Home
Biodiversity
Site
Site Overview
Animal Welfare
Greenhouse Emission
Water
Home
Site
Site Overview
Animal Welfare
Greenhouse Emission
Water
Home
Site
Site Overview
58
Strategic Report Sustainability Review
Better
for
Society
Improving nutrition and health supports a broad social
agenda, helping to deliver on many of the UN SDGs.
We aim to contribute to a society that is fair and just and where
everyone has an equal opportunity to participate, knowing that our
industry can play a key role in promoting human rights, supporting
education and training and creating more resilient and inclusive
communities.
At Kerry, we demonstrate this first and foremost through how we
operate. Doing business with integrity is a fundamental priority and
the foundation of our long-term success. We are committed to living
our values and enhancing the lives of all those with whom we engage,
including our employees, workers across our broader value chain and
those within the communities around us.
Kerry Group Annual Report 2021 59
Prioritising Workplace Health and Safety
The health and wellbeing of our people underpins our
culture and is a key enabler of our business success.
We are committed to the ongoing improvement of
our safety performance as we continue our journey
towards a best-in-class safety culture. To achieve this,
we continually reinforce our Safety First, Quality Always
mindset at the core of our business and through
our operational excellence programmes, we ensure
that safety is at the centre of everything we do.
We have been deeply saddened by the loss of a
colleague to a workplace fatality at a manufacturing
facility in 2021 and extend our sincere sympathy to
the family. The circumstances of this tragedy were
thoroughly investigated, including engagement with
the appropriate regulatory authorities and a complete
root cause analysis. Following the investigation’s
conclusion, key learnings were shared as appropriate
across the Group.
While we recognise that there is no acceptable level
of accident or injury, we can report a further 8%
improvement in our safety performance for 2021 versus
2020. In addition, we have also seen an increase in the
number of manufacturing facilities with no recordable
injuries in this same 12-month period, reinforcing
the progress that has been made to date. These
improvements were due, in part, to the deployment
of targeted training and awareness programmes for
employees with a particular emphasis on serious
incidents, as well as increased management focus
and investment in this area.
Doing the Right Thing
Business results must always be achieved ethically and
legally. We conduct our business guided by our purpose
and underpinned by our values, and the Group’s
comprehensive Code of Conduct clearly defines the
standards and expectations for all Kerry colleagues.
In 2021, we refreshed our Code of Conduct, revising
several underlying policies to better reflect the evolving
expectations of our business and making it more
accessible for all employees. As part of this process,
the Code of Conduct has been made available in 26
languages and led by the CEO and the Executive Team,
we have engaged broadly across the organisation to
communicate these changes. As part of the Group's
Code of Conduct, Kerry’s Anti-Bribery Policy describes
our zero-tolerance approach and provides guidance to
all employees regarding potential situations involving
bribery and corruption.
Regardless of role, seniority or location, all colleagues
have a responsibility to apply these standards and
expectations in their work every day. We continue to
monitor understanding of this Code through dedicated
training requirements and in 2021, over 90% of required
colleagues achieved Code of Conduct certification. For
more on our approach to business ethics and reporting
of potential issues, see our GRI Sustainability Report.
Upholding Labour Standards
and Human Rights
Kerry is fully committed to upholding internationally
recognised human rights. Our Code of Conduct and
Human Rights Policy apply to all employees and sets
out our expectations for business and supply chain
partners to conduct their business in a way that
upholds our values.
In 2021, Kerry’s work on human rights was led through
the Social Sustainability Council, chaired by the Group’s
Chief Human Resources Officer. Across our operations,
our manufacturing facilities complete a self-assessment,
ensuring our visibility of potential human rights
within our business. Across our supply chain, we have
expanded the scope of our human rights due diligence,
bringing more direct suppliers within the scope of this
programme. In 2021, 86% of these higher risk suppliers
had been enrolled in the programme and we will
continue to engage the remaining suppliers along with
any qualifying new vendors to our business.
Given the inter-connected and complex nature of human
rights, we continue to engage with expert third parties
and multi-stakeholder groups to advance our approach
and ensure we align with evolving best practice. In
2022, our focus will be on further building out our
due diligence programme, including undertaking an
independent assessment of our approach.
Kerry Group Annual Report 2021Sustainability Review 60
Strategic Report Sustainability Review
Promoting Diversity, Inclusion
& Belonging (DI&B)
We are committed to building an inclusive workplace
where everyone feels they belong and can fully
contribute to our shared success. We believe that
embracing different perspectives, ideas and ways
of working is good for business performance. We
champion inclusion at all levels of our workforce,
reflecting the diversity of the communities in which
we operate, and we offer opportunities for colleagues
without discrimination.
To measure the impact of our inclusive workplace
initiatives and to ensure we are delivering on our
commitments, we established an Inclusion Index during
2021 as a key metric to monitor our performance. This
index is derived from our annual employee engagement
survey and directly related to our employee experience,
and will enable us to provide an informed view on our
progress in future reports.
Gender diversity is an underlying indicator of a healthy
and inclusive culture and a core component within
our broader diversity agenda. We are committed to
increasing representation of women in senior leadership
roles to 35% by 2025 and remain on track to achieve this,
having improved to 29% this year. At our Capital Markets
Day in October 2021, we reinforced our gender diversity
commitment and expanded our ambition, to include the
achievement of equal gender representation in all senior
management roles by 2030. We are currently tracking at
36%. For more detail see Our People on pages 18-19.
Nourishing Communities
Kerry continued to grow a sustainable
presence in local communities through
the year.
The further embedding of MyCommunity as the platform
for locally-led donations and employee volunteering was
aided by innovative use of digital tools which allowed
many activities to continue, even against the backdrop
of the pandemic. In addition, we continued to support
the ongoing evolution of Group-led projects with our
valued NGO partners in countries where Kerry is not
on the ground.
Kerry Group Annual Report 2021
PARTNERSHIP FOR GLOBAL
LGBTI EQUALITY (PGLE)
Going beyond gender diversity,
we are committed to creating
an environment where everyone
can bring their true selves
to work and in June 2021,
we were proud to join the
Partnership for Global LGBTI
Equality (PGLE) while signing
the UN Standards of Conduct for
Business to accelerate equality,
inclusion and LGBTI rights.
CREATING A MORE
INCLUSIVE ENVIRONMENT
Through our partnership with
Special Olympics, Kerry welcomed
athlete Fiona Brady to celebrate
International Women’s Day on
8 March and our employees were
given insights on inclusivity for
businesses with Special Olympics
Ireland to celebrate International
Day for People with Disabilities.
MyCommunity
Following its successful launch in 2020, this
year saw Kerry employees continue to build
and enhance the MyCommunity programme.
These initiatives primarily looked to support
health and nutrition efforts, as COVID-19
continues to impact on lives around the world.
As families and health services remain under
pressure, colleagues were restricted in their
ability to volunteer in person. In response,
Kerry and its employees focused on donations
where they saw opportunities to contribute
positively, reflecting a desire to make an
impact and demonstrate Kerry’s values in a
tangible way.
Examples of these engagements include;
the ongoing support for a COVID-19
quarantine and treatment centre dedicated to
providing much needed accommodation, food
and toiletries for women, pregnant mothers
and young children in Tampoi, Malaysia;
the donation of nutritional products to four
hospitals in the Manaus region of Brazil;
the provision of PPE and the donation of
food and sanitisers for care and educational
organisations in Moscow, Russia; and the
work of colleagues with care facilities and
food distribution charities across Ireland.
Sustainability Review
61
Our Global Partnerships
Kerry continued to support UN World Food
Programme (WFP), Concern Worldwide
and Special Olympics throughout the
challenging global environment of 2021.
As we seek to grow our social impact, we are learning
from these partnerships and are continually exploring
ways to increase our measurable impact on the areas
of exclusion, poverty and malnutrition in communities
across the world.
supported by
supported by
supported by
World Food Programme (WFP)
Our partnership with WFP began in 2017 with Project
Leche in Honduras. In 2021, our focus moved to Gitega
province in Burundi, where we are leveraging Kerry’s
dairy and nutritional expertise to improve farming
methods, increase dairy yields and impact the nutritional
value of school meals in the participating communities.
Addressing hunger is a key driver for this project, titled
Project Amata (amata is the word for milk in Kirundi,
the national language of Burundi), and participating
farmers are aiming to greatly enhance their impact on
their communities and increase incomes as they do so.
COVID-related restrictions have meant some activities
have moved online, yet progress to date includes the
completion of the baseline dairy farming assessment
and knowledge gathering on local farming and milk
production practices. We have partnered locally with
Vétérinaires Sans Frontières (VSF) and together with
Kerry expertise, delivered a virtual training programme
on dairy best practices which can be rolled out across
the project region.
RAIN Programme
In partnership with Concern Worldwide, Kerry is
supporting the delivery of the RAIN (Realigning
Agriculture to Improve Nutrition) programme in the
Tahoua region of Niger. Under the programme, 1,000
vulnerable households in seven villages in Tahoua
benefit from sustainable improvements in health and
nutrition, diversified livelihoods, greater access to quality
education and improved social capital. The focus on food
security, health protection, income for vulnerable women
and improved food production is complemented with
community engagement and empowerment to make a
lasting impact. With the conclusion of the programme in
2021, Kerry is working with Concern to assess the overall
programme results and understand how these can best
be used to inform future partnerships.
Special Olympics
The COVID-19 pandemic continues to impact the work
of Special Olympics across the world, with athletes
and volunteers unable to participate as they were
accustomed to. Despite this, the support of partners
such as Kerry allowed programmes in Ireland to provide
innovative online platforms for athletes to continue
to engage with their training, participate in virtual
wellbeing courses and host 14 face-to-face competitions
during 2021. Running alongside these competitions
were a number of virtual events which encouraged over
3,300 Special Olympics athletes to stay fit and healthy
during the pandemic.
Photo: WFP / Irenee Nduwayezu
Caption
Photo: Ollivier Girard of Concern Worldwide
Kerry Group Annual Report 2021
62
Better
for the
Planet
Through our Beyond the Horizon strategy, we are
building on our achievements to date to address the
key environmental impact areas across our business
and value chains.
The current model of food production results in substantial
environmental impacts, contributing more than a quarter of global
emissions, using over 70% of freshwater withdrawals and driving
further deforestation and biodiversity loss. We know too that food and
packaging waste is having an impact on the environment around us
as plastic finds its way into waterways and oceans, impacting on water
quality and marine life.
As the industry’s innovation partner of choice, we continue working
with suppliers and customers, amplifying our impact across our
operations and supply chains, allowing our customers to reduce their
footprint and in turn create products that provide more sustainable
nutrition to consumers.
Kerry Group Annual Report 2021Strategic Report Sustainability Review 100
150
200
250
300
100
200
300
400
500
600
700
800
900
100
150
200
250
300
100
150
200
250
300
KgCO2e tonne
Baseline
2021
2020
Taking Action on Climate Change
2019
In 2021, the Intergovernmental Panel on Climate Change
warned that scientists are observing changes in the
500
900
200
300
earth’s climate in every region and across the whole
climate system.
KgCO2e tonne
Baseline
700
250
300
150
100
100
800
600
200
400
At Kerry, we understand the urgent need
2021
for action and are committed to playing
our part. In October 2021, we updated our
2020
science-based target to align with a 1.5
degree temperature pathway, increasing our
2019
2030 emissions reduction target from 33% to
500
55%, versus our 2017 base year.
900
100
300
700
Scope 1
Scope 2
Baseline
We continue to develop and deploy our decarbonisation
approach for our operational emissions. We are bringing
forward our target date for the achievement of 100%
renewable electricity across our sites from 2025 to 2022.
We have made important progress on renewable electricity
in 2021, with 65% of our electricity needs now classified as
renewable. This was reflected in the strong progress on
emissions reduction in the year, with the achievement of a
39% absolute reduction versus our base year.
100
150
200
250
300
2021 Carbon Performance
Carbon Intensity
2021
2020
2019
63
300
700
Scope 1
900
500
100
Kerry is a proud member of the RE100 initiative.
Baseline
Led by the Climate Group and in partnership with
CDP (formerly the Carbon Disclosure Project),
this global initiative brings together the world's
most influential businesses committed to
100% renewable electricity.
Scope 2
In 2021, Kerry achieved a CDP score of 'A-', placing
us at leadership level for our action and reporting
on climate change.
Adopting a Circular Approach to Resources
To help lower our environmental impact, we are focused
on a more circular approach that recovers resources for
re-use within our business, or as an input to another
system. In this way, we can keep materials in productive
use for longer and capture potential opportunities to
500
valorise these waste streams. Fundamental to achieving
this is avoiding material loss and in 2021, we were
successful in diverting 94% of our total waste volumes
towards other productive uses.
300
700
800
100
900
400
200
600
2021
2021
2020
2019
100
150
200
250
100
150
200
250
300
100
200
kgCO2e/tonne
300
400
500
600
Tonnes of CO2e (000's)
2021
2020
2019
2017 Baseline
700
800
2020
2021 Waste Recovery
2019
100
6%
300
Scope 1
300
900
500
700
900
Scope 2
2017 Baseline
Diverted Waste
Landfill
6% 2%
Recycling/Recovery
Landfill
Incineration
(energy recovery)
94%
92%
2021
2020
2019
2021
2020
2019
100
150
200
250
300
100
300
500
700
900
2021 Waste by Destination
kgCO2e/tonne
2017 Baseline
Scope 1
6%
Scope 2
2017 Baseline
6% 2%
Notes:
We measure and report our performance in accordance with the GHG
Protocol.
Our Scope 2 emissions are calculated using the market-based method.
For more information, including boundary and scope, see our GRI
Sustainability Report.
Diverted Waste
Landfill
Recycling/Recovery
Landfill
Incineration
(energy recovery)
94%
In 2021, we also carried out a comprehensive review
of our Scope 3 emissions to improve the accuracy of
our footprint and support a more targeted approach
to supplier engagement. This engagement programme
will expand to encompass suppliers across our most
material categories, as we seek to deliver on our 30%
reduction goal by 2030.
For additional climate-related disclosures see our TCFD
report on page 73.
92%
Notes:
Our waste data reflects waste produced across our manufacturing facilities.
Landfill volumes include waste sent for incineration without energy recovery.
For more information, see our GRI Sustainability Report.
Kerry Group Annual Report 2021Sustainability Review
64
Halving Food Loss and Waste
Food loss and waste is a key lever in
tackling both environmental and social
challenges confronting our industry and
given the economic opportunity associated
with addressing this issue, there is a
compelling case for action.
To tackle food waste within our own organisation,
we have committed to 50% reduction across our
operations by 2030, aligning with target 12.3 under
SDG 12: Responsible Consumption and Production.
Given the diverse nature of our portfolio, the
achievement of this goal involves working across sites
to understand the key drivers of food waste locally
and implementing the most appropriate actions to
deliver on our target. In 2021, we have continued
to make good progress against this goal with a 19%
reduction versus our 2017 baseline.
Supporting Our Customers
While tackling food waste across our operations is
vitally important, there are substantial opportunities
for Kerry to impact on food waste elsewhere in the
value chain, particularly downstream. In developed
markets, the proportion of total food lost or wasted
at the consumer level can be more than 60%. As
consumers increasingly demand natural, clean label
products that do not contain artificial preservatives,
manufacturers are challenged to meet these evolving
consumer demands, while maintaining or improving
shelf life. With the industry’s largest portfolio of clean
label preservation technologies, Kerry and its new
acquisition, Niacet, are ideally placed to support our
customers in meeting these requirements.
Food Waste Solutions
Combatting food waste represents an attractive,
high growth market and at Kerry we have the
capabilities and solutions to help customers with
this challenge. Bakery represents the highest
volume category of food waste globally and in
2021, Kerry and its new acquisition Niacet extended
the shelf life of 34.5 billion loaves of bread by an
average of 50%.
Tackling Plastic Waste
We fully support efforts to promote a more circular
approach to plastics and have committed to making
all our plastic packaging reusable, recyclable or
compostable by 2025. We use sustainable packaging
where possible, favouring reusable, returnable, or
certified paper-based material. In 2021, 57% of the
plastic packaging used across our business was in
line with the criteria for our 2025 target. We continue
to look at ways to address the remaining volumes,
with plans already in place for how we can tackle
some of the more challenging plastic materials
and packaging formats.
Protecting Water Resources
Across our operations we are targeting a
15% reduction in water intensity by 2025.
As our business volumes recovered through 2021, with
the easing of restriction in the foodservice channel, our
performance on water was challenged. At year end, we
recorded a 4% reduction in water efficiency versus our
2017 base year. We have identified a pipeline of water
reduction opportunities which are supported by our
capital investment programme. In particular, planned
investment in 2022 will result in improvements in
future years to deliver our 2025 ambition.
We also understand that water discharges from
our sites can have an impact on local water quality
and make every effort to ensure we protect local
water sources. We track and monitor compliance
with relevant water standards on an ongoing basis.
For more details on our water use, see our GRI
Sustainability Report.
Water Risk
Using the World Resources Institute’s Aqueduct Tool,
we have identified priority locations that may be more
vulnerable to water risk. Water efficiency across these
sites exceeds that for the Group and was 15% lower in
2021 versus our 2017 base year. We have plans to keep
a critical focus on water at these locations and with
the support of an expert third party we are conducting
a programme of metering, monitoring and targeting
to help drive ongoing improvements.
Kerry Group Annual Report 2021Strategic Report Sustainability Review 2021
2020
2019
2.5
3
3.5
4
m3/tonne
2017 Baseline
65
2021 Water Withdrawal by Source (Megalitres)
20%
39%
20,885
Total Water
Withdrawals
41%
Surface Water
Ground Water
Municipal Water
Water Intensity at Higher Risk Sites
2021
2020
2019
2.5
3
3.5
4
m3/tonne
2017 Baseline
Sourcing Responsibly
Notes:
Our water data reflects water use across our manufacturing facilities and
is a like for like performance versus our base year.
Water intensity at higher risk sites, is a relative measure using total water
withdrawal from areas with water stress divided by tonnes of finished
product from areas with water stress.
For more information on our performance and measurement see our
GRI Sustainability Report.
39%
41%
20%
Surface Water
Ground Water
Municipal Water
20,885
Total Water
Withdrawals
Protecting Biodiversity
Amid the alarming rate of species and habitat loss,
we have seen the emergence of biodiversity as an
increasingly material topic for our business (see our
materiality matrix on page 53). Kerry has potential to
impact on biodiversity directly through its operations
and indirectly through the raw materials we source. Our
most significant impacts are those that are linked to our
supply chain and are incorporated within our approach
to the priority categories outlined below. One critical
action we are working towards is the preservation of the
tropical forests and the rich biodiversity they contain.
We are committed to eliminating deforestation across
targeted supply chains that are the leading drivers of
forest loss including, Cocoa, Coffee, Soybean, Palm
Oil and Paper. In support of this commitment, we are
members of several multi-stakeholder initiatives focused
on this area including RSPO, SAI Platform (including
their deforestation workstream within the Sustainable
Dairy Partnership), Tropical Forest Alliance (TFA) 2020
and others. For more on our evolving approach to
biodiversity, see our GRI Sustainability Report.
At Kerry, we know the production of some
raw materials can present social and
environmental challenges.
Addressing these challenges can prove difficult within a
complex global supply chain and as part of our vision to
create a world of sustainable nutrition, we are engaging
with our suppliers to drive more sustainable practices
right back to farm level, ensuring that 100% of our
priority raw materials are responsibly sourced by 2030.
In partnership with our suppliers, we work to ensure
decent livelihoods for farmers, promote practices that
protect and regenerate vital ecosystems, and protect
the rights of workers and communities throughout our
value chain. We use a combination of certification and
verification and where these mechanisms do not support
the best path forward, we work more directly with supply
partners and expert third parties, including through
direct engagement and programmes at farm level.
We risk assess our supply chains and prioritise
category engagement with our suppliers and other
key stakeholders, both individually and as part of
broader multi-stakeholder platforms, to better
understand common challenges associated with specific
commodities and/or geographies and how we can work
together to effectively address these. For more on our
progress see the table on page 66.
Kerry Group Annual Report 2021Sustainability Review 66
Priority Raw Materials
Category
Our Interim Targets
Our Progress
Coffee Ingredients
100% of our direct volumes will be deforestation
and conversion free by year end 2025, as evidenced
through verified sourcing and/or using an approved
third-party certification scheme.
Cocoa Ingredients
Dairy Ingredients
Maintain 100% certification of our liquid milk volumes
in Ireland. Across dairy ingredient purchases,
80% of our volume will be with processors at SDP
(Sustainable Dairy Partnership) Stage 3 or higher by
the end of 2025.
Across these categories certification will play an
important role and is likely to be complemented by
independent and/or remote verification programmes.
Already today, we are proud to be the exclusive extraction
partner of Café Femenino, an advocacy program and
ethical sourcing model committed to ending the cycle of
poverty affecting women coffee farmers across the world.
All volumes sourced directly from farmers in South
West Ireland are certified under the Sustainable Dairy
Assurance Scheme as part of Origin Green.
With the launch of the SDP we are engaging with industry
partners on the rollout of requirements for our dairy
ingredient suppliers.
Egg
By 2025, 100% of our volumes will be cage-free and/
or free range in Europe and Australia with increasing
volumes in other regions.
We continue to make progress across our targeted
regions and in 2021, 57% of our volumes in Europe met
with the requirements outlined for this category.
Herbs & Spices
25% of our leading category volumes will be third
party verified and/or certified by 2025.
Aligned with our commitments under the Sustainable
Spices Initiative (SSI) 100% of our targeted volumes
for Parsley and 50% of our targeted volumes for black
pepper, met our responsible sourcing criteria in 2021.
Palm Oil
100% of our direct volumes will be deforestation
and conversion free by 2025, as evidenced through
verified sourcing and/or using an approved third-
party certification scheme.
In 2021, 43% of our palm oil volumes were certified
under a physical RSPO certification system and we
provided ongoing support for smallholder programmes
in Malaysia.
Paper Packaging
100% of pulp-based volumes will be deforestation and
conversion free by 2025, as evidenced through third
party verification and/or certification.
More than 90% of our paper-based packaging was subject
to FSC, PEFC, SFI certification and/or was from recycled
material in 2021.
Soy Ingredients
Vanilla
Meat
100% of our direct volumes are deforestation and
conversion free by 2025, as evidenced through
verified sourcing and/or using an approved third-
party certification scheme.
100% of our volumes to have third party verification /
certification in place by 2030.
We are increasing the traceability of our sourcing
locations and expect to publish guidance for suppliers via
a dedicated Soy Policy early in 2022.
We source our vanilla beans through the Tsara Kalitao
programme in Madagascar, helping to support more
sustainable development in the participating regions.
For more on this work see kerry.com.
This category has been removed following the sale of our Consumer Foods’ Meats and Meals business,
which represented approximately 90% of our meat purchases.
Non-Financial Reporting Statement
We comply with regulations on non-financial reporting and provide information on required topics across this report
and within our GRI Sustainability Report. Relevant information on each topic can be found below. In addition, non-
financial risks are evaluated as part of the broader enterprise risk management framework and more detail can be
found in our Risk Management Report on pages 75-85.
Reporting Requirements
Our Policies
Environmental Matters
Environmental Policy
Social and Employee Matters
Health & Safety Policy; Group Code of Conduct; Diversity,
Inclusion & Belonging Policy; Employee Concerns
Disclosure Policy
Respect for Human Rights
Human Rights Policy
Anti-Bribery and Corruption
Anti-Bribery Policy; Group Code of Conduct
Business Model
Non-financial KPIs
Page Reference
Page 62
Pages 15-21, 59-60 and 80
Page 59
Page 59
Pages 22-23
Pages 34-35 and 63-67
Kerry Group Annual Report 2021Strategic Report Sustainability Review
67
Capital expenditure
Our assessment was carried out with our engineering
function and is based on investment in eligible economic
activities listed within the regulation. This included
projects involving construction of new buildings
to enhance our manufacturing footprint, building
renovations to improve existing manufacturing facilities
and the installation, maintenance and repair of energy
efficiency equipment. Projects were allocated to distinct
categories to avoid double counting and going forward,
capital projects and associated purchases will include
more detailed assessment of taxonomy alignment. The
amount of capital expenditure additions deemed eligible
in 2021 was 24%.
Key Performance Indicators
In the 2021 reporting period Kerry Group had no
turnover or operating expenditure associated with
eligible activities. The proportion of eligible capital
expenditure was deemed to be 24%.
Turnover
With no eligible turnover (numerator) and using a base
of our total turnover (denominator) as reported in our
Consolidated Income Statement, we established the
proportion of eligible turnover to be zero.
Operational Expenditure
Having identified no material eligible expenditure
within this category (numerator) and using the
maintenance and repairs cost base (denominator),
we established the proportion of eligible operational
expenditure to be zero.
Capital expenditure
Comparing these eligible capital additions (numerator)
to our additions of property plant and equipment, right
of use assets and intangible assets as reported in notes
11 and 12 in our financial statements (denominator),
the level of eligible additions is approximately 24%. This
does not include business combinations in the year.
Category
Turnover
Operational Expenditure
Capital Expenditure
Eligible
Non-Eligible
0%
0%
24%
100%
100%
76%
EU Taxonomy
Background
In line with its action plan for financing sustainable
growth, the European Union is defining a taxonomy
of sustainable activities, which aims to increase
environmental transparency and support more
sustainable investment. As part of these efforts,
Regulation (EU) 2020/852 (the ‘Taxonomy Regulation’)
creates a classification system for sustainable economic
activities. In the following section, the Group has
outlined information on the extent to which the Group’s
activities are eligible under this taxonomy.
We have undertaken a review of the Group’s activities
and as our systems do not categorise data in a manner
consistent with the taxonomy, we have been prudent in
our disclosure of eligible activities.
Economic Activity
In assessing eligibility, we looked at the activities of
the Group and whether these fall within the scope of
the economic activities outlined under the taxonomy
regulation. Kerry’s core business involves the
manufacture of food and beverage products, which
are not currently listed as eligible activities.
To support our business, we carry out some ancillary
activities and we have also looked at our investment in
these areas to understand if these qualify as eligible.
Accounting Policies
Turnover
While the manufacture of food and beverage products
were deemed non-eligible, we undertook a deeper
review of our turnover with cross functional support and
input from the Group’s Chief Technology Officer.
As part of our assessment, we reviewed the Group’s
portfolio against those economic activities currently
within the scope of the taxonomy regulation and
through this assessment we determined that Kerry had
no eligible turnover in 2021.
Operational Expenditure
Having reviewed our overall operating costs versus the
taxonomy requirements, we determined that as the
majority of our operating costs relate to our turnover,
they too were determined to be non-eligible with the
exception of maintenance and repairs. These costs
are included in other general overheads reported in
note 3 in our financial statements. The assessment of
maintenance and repairs determined that there are no
material eligible costs within this category.
Kerry Group Annual Report 2021Sustainability Review 68
Task Force on Climate
Related Financial Disclosures
(TCFD)
Climate change will bring about
unprecedented changes for our industry and
we recognise the risks and opportunities
this presents for our business. Kerry has a
strong record of action on climate change
and has been targeting emission reductions
for more than a decade, reporting publicly
on our progress and working with suppliers
and customers to extend this impact along
our value chain. As a leader in sustainable
nutrition, our technology and innovation
expertise will play an important role in
the transition to healthier, lower impact
diets that meet with changing consumer
expectations.
To achieve this, we must acknowledge the significant
environmental and social risks posed by the changing
climate and be prepared for the challenges presented
by the transition to a low carbon economy. We
understand the need for enhanced disclosures in
this area and the TCFD recommendations provide a
consistent framework with which to align our climate
reporting. In this section we have brought together
information from across our Annual and Sustainability
reports, in accordance with these guidelines. We
continue to develop our approach to climate change
and in addition to this TCFD disclosure, we provide
information in our Risk Management (page 77) and
Governance (page 118) Reports and within our GRI
Sustainability Report at www.kerrygroup.com. We also
consider the potential financial impacts from climate
change in our financial accounting policies, in particular
our property, plant and equipment policy and our
intangible assets policy.
Kerry Group Annual Report 2021Strategic Report Sustainability Review Governance
The Board has overall responsibility for management of
risks and opportunities and this includes climate change
risks. The Board approved the Group’s Beyond the Horizon
strategy prior to its launch in 2020, encompassing its
commitments on climate action.
The Chairman of the Board also chairs the dedicated
Board Committee with responsibility for Governance,
Nomination and Sustainability. As such, he and the other
members of the committee take a lead role in Board
guidance and oversight of the implementation and
performance versus the Group’s sustainability strategy,
including its actions on climate change. To facilitate
this, scheduled meetings take place between business
leaders and the Committee throughout the year.
In 2021, the Committee and the wider Board received
three dedicated updates from the Group Head of
Sustainability and other leaders across the business on
matters which included the Group's performance versus
its climate goals, climate related risks and opportunities
and TCFD aligned disclosures. The potential impact of
climate change is increasingly integrated into strategic
matters which are considered by the Board. During
the year, the Board approved an acceleration of the
Group’s greenhouse gas (GHG) emissions reduction
target to support Kerry’s alignment with the 1.5⁰ Celsius
temperature pathway.
The Board is supported in their role by the Global
Sustainability Council, which is chaired by the CEO and
comprises executive and functional leadership from
across the Group. This Council is responsible for the
assessment and management of climate related risks
and opportunities as part of its broader sustainability
remit.
Additional thematic governance councils are in place
across the organisation to support the climate agenda.
Each Council is led by a member of the Executive Team
and has cross functional membership from across
the business and regions, incorporating our experts
focused on climate action from engineering, operations,
procurement and RD&A. These Councils also engage
externally on specific climate related issues as required.
69
Meeting at least quarterly, they have been established
to ensure that action to address issues like climate
change is embedded at all levels across the organisation
and to provide a channel for reporting to the Global
Sustainability Council. They include:
an Environmental Council chaired by the Group’s
Chief Operating Officer, which is focused on
reducing operational emissions across our
manufacturing facilities and addressing impacts
related to waste and water. This council plays a
crucial role in setting and implementing plans for
the achievement of our targets, identifying process
changes and capital investment to deliver the
improvements required.
a Responsible Sourcing Council led by the Chief
Procurement Officer dedicated to assessing the
sustainability of the raw materials we purchase,
ensuring no deforestation across our supply chains
by 2025 and reducing our Scope 3 emissions by
2030, in line with our Science Based Target.
a Product Portfolio Council led by the Group’s
Chief Technology Officer tasked with monitoring
and improving the sustainability of the products
we produce, driving sustainable innovation and
expanding our portfolio of sustainable solutions that
enable carbon reduction for our customers.
a Commercial Council led by the Chief Commercial
Officer which assesses the opportunities presented
by sustainability and how Kerry can best serve its
customers through the lens of sustainable nutrition,
supporting them to achieve their own climate
related objectives.
In 2021, we enhanced the Long-Term Incentive Plan
(LTIP) for Executive Directors and Senior management
which included the addition of sustainability and climate
related metrics in line with our Beyond the Horizon
strategy launch in 2020. As part of the overall reward
framework, our long-term incentive plan considers
core sustainability metrics, specifically Scope 1 and 2
carbon reduction and the progress towards our science-
based target. More details on this can be found in the
Remuneration Committee Report on pages 129-130. For
further details on overall Group Governance, see our
Corporate Governance Report on pages 96-108.
Kerry Group Annual Report 2021Sustainability Review
70
Strategic Report Sustainability Review
Strategy
Kerry has acknowledged the significance of climate
change for its business for more than a decade and
has made important progress in addressing key
parts of its footprint. As the impact of climate change
continues to unfold, efforts to address our emissions
have accelerated and as part of our Beyond the Horizon
strategy, we have placed an even greater emphasis on
carbon reduction. Crucially, our climate ambitions are
also reflected in our broader business strategy and
particularly within our key strategic platforms. They
increasingly inform all areas of our business, including
our M&A activity and financing strategy. In 2021, we
announced the acquisition of Niacet and Biosearch
Life, both of which support our goal of creating more
sustainable nutrition solutions and Kerry also issued
a Sustainability-Linked Bond in the final quarter,
which links our financing to the Group’s sustainability
performance, including its science-based emissions
reduction target.
To ensure we realise our goals, we are increasingly
focused on understanding material climate related
issues that may impact our strategy and how we can
mitigate and/or adapt to these risks and opportunities.
Physical Risk
Transition Risk
Acute: Acute physical
risks refer to those risks
that are event-driven,
including increased
severity of extreme
weather events.
Chronic: Chronic physical
risks refer to longer-term
shifts in climate patterns
that may cause sea level
rise or chronic heat
waves.
Transitioning to a lower-
carbon economy may
entail extensive policy,
legal, technology,
and market changes.
Depending on the nature,
speed, and focus of these
changes, transition risks
may pose varying levels
of financial and
reputational risk to
organisations.
Timeframe: While some physical risks are already
evident today, the most significant impacts are likely
to be felt over the medium to long-term. Transition
risks are likely to manifest more quickly as society
makes the shift towards a low carbon economy.
In 2021, we established a working group to evolve our
existing climate risk assessment and lead our alignment
with the TCFD guidance. In conjunction with an expert
external party and with the support of an Executive
led steering committee, we commenced a detailed
qualitative and quantitative assessment of climate
related issues. With broad cross-functional engagement,
we defined an extensive set of risks and opportunities
through stakeholder engagement, dedicated workshops
and expert input. This longlist was subsequently refined
based on appraisal of risk severity and likelihood, a
method aligned with our overall risk management
framework, and which provided us with a focused set of
risks for more detailed analysis.
Key Risks and Opportunities Identified
Category
Risk / Opportunity
Potential Impact
Physical Risk
(Acute)
Extreme weather events
Increase in the frequency and severity of extreme weather events
could result in damage and/or interruption to our manufacturing
facilities and distribution network.
Physical Risk
(Chronic)
Access to water
The limited availability of water as a result of climate related impacts
has the potential to disrupt production at facilities in vulnerable
locations.
Physical Risk
(Chronic)
Raw material availability
Extreme weather events, water variability, changes to precipitation
patterns and rising global temperatures could impact on the
availability and cost of raw material supplies.
Transition Risk
Policy
Existing and emerging regulations including carbon pricing could
lead to increased operational costs across different jurisdictions.
Transition Risk
Technology
Opportunities
Market dynamics
Widespread adoption of new lower-carbon technology may require
investment in our operations to maintain competitiveness and/or to
meet new regulatory requirements.
Shifts in consumer demand for low carbon products presents
potential opportunities for Kerry given our RD&A and technology
capabilities, product portfolio and leading consumer insights.
Kerry Group Annual Report 2021 71
Assessing the Potential Impact
Modelling the potential impacts of these climate related
risks to our business is complex. As the climate crisis
unfolds, climate related impacts and policy responses
will manifest in different ways and over different
time-horizons. Typically, we consider business risk over
a relatively shorter term (<5 years), however, climate risk
requires a longer-term view as some impacts may be
felt more slowly. To account for this, we have chosen to
examine the potential impact of these risks over 10 years
and 30 years respectively, using 2030 and 2050 as our
reference timeframes.
Adopting this longer-term view presents certain
challenges given uncertainty surrounding the timing
and severity of both physical and transition risks. For
example, sea-level rise is expected to be a more gradual
impact area whereas more frequent and intense weather
events are already visible today. To help overcome this,
we have modelled the potential impacts under different
scenarios in accordance with TCFD guidance. In doing
so, we looked at the potential directional impacts under
the following future conditions:
Scenario One
Scenario Two
Under this scenario, there is inadequate action to limit
greenhouse gas emissions and modelling reflects a
world where increasing concentrations of CO2 puts
global average temperature increases on a trajectory
towards four degrees Celsius by 2100.
Under this scenario, there is sustained and coordinated
collective action to address the climate crises, with
emissions reductions meeting the required levels to
keep global average temperature increases to below two
degrees Celsius by 2100.
Using the above reference scenarios, we undertook an assessment for the following risks and opportunities to better
understand how our business might be impacted by different temperature increases and by policy and market
responses to the climate crises. Outlined below is a summary of the approach which we adopted and the findings
from our analysis.
Risk
Impact
Approach
Outcome
Next Steps
Extreme
Weather
Events
Disruption to
manufacturing
facilities and
distribution
network.
Heat Waves,
Water Stress
and Extreme
Weather
Conditions
Availability
of key raw
materials.
Specific climate
related hazards
representing key
physical risks
(flooding, wind,
forest fire, etc.)
were assessed for
all manufacturing
facilities and key
transport routes,
helping us to identify
those with potentially
higher exposure
and understand the
most relevant climate
hazards for each
location.
The analysis across our
manufacturing footprint and deep
dive assessment highlighted that
three sites had a more elevated
level of risk, relative to our other
locations. It also identified a
potentially higher financial impact
on the distribution network in our
North America region1. The severity
of potential impacts increased over
time and were more pronounced
under Scenario One, with risks
heightened by a higher global
average temperature. However,
modelling to date indicates no
significant financial impact for our
business under either scenario.
We will expand our
assessment with
the refinement of
current risks and
the expansion of the
scope. We plan to
further enhance the
assessment process
with the integration
of additional data
points, for example
on storm patterns, as
our scenario analysis
evolves.
To better understand
the key risks to our
future sourcing
we looked at five
important raw
material categories
and their sourcing
locations to assess
potential physical
climate related
impacts. We reviewed
both raw material
volumes and the
contribution to
revenue to provide
a top down and
bottom-up analysis.
Our assessment shows that
current sourcing locations could
be impacted by climate change
and although yields for some raw
materials (e.g. wheat) may fall in
certain regions, they are projected
to increase in others. We assume
the ability to substitute sourcing
locations to mitigate any scarcity,
albeit with a potential price impact.
While the impacts are mirrored
under both scenarios, they are
greater under Scenario One, with
physical climate risks amplified by
the increased temperature.
Work is ongoing to
further integrate
category specific
insight within
our modelling,
particularly for
categories such as
dairy, where regional
variations and
differing agricultural
systems make it
more complex to
infer broader climate
related impacts
across sourcing
regions.
1
This reflects the important contribution of the region to total Group revenue
Kerry Group Annual Report 2021Sustainability Review
72
72
Strategic Report Sustainability Review
Risk
Impact
Approach
Outcome
Next Steps
Carbon
Pricing
Increased
operational
costs.
Market
Dynamics
Product
portfolio
changes.
Policy responses to
climate change are
expected to result
in additional carbon
pricing mechanisms
as well as an increase
in the unit cost of
carbon. Under our
assessment we
focus on potential
changes to carbon
prices under Scenario
Two, assuming that
in Scenario One,
regulation and policy
remain as usual and
carbon prices would
not rise beyond
current expectations.
Innovation will be
core to achieving
climate objectives
and as part of our
assessment we
examined how
demand for certain
products may change
over time and under
different climate
conditions.
Climate policy
and carbon price
modelling is
constantly evolving,
and this analysis
will be kept under
review to ensure
it reflects ongoing
developments.
To limit average temperature
increase to 1.5⁰C, global action on
decarbonisation would need to
increase significantly and carbon
prices would likely rise alongside
this. Our analysis shows that with
this type of intervention, carbon
pricing could add to the Group’s
operating costs in regions where
we are subject to existing pricing
mechanisms. In this scenario, the
impact could be more pronounced
with rapid and ambitious policy
action over the short to medium
term.
While we understand the
significant opportunity that lower
carbon product development will
present, the potential for increased
innovation has not been modelled
at this time. Still, our assessment
around future product demand
indicates potential opportunity
for growth across a number
of important categories under
Scenario Two, with transition
effects as the dominant driver.
Potential changes to
consumer demand
for lower carbon
products and the
impact for our
business, will be
further explored
in 2022.
Ensuring Future Resilience
Climate change is already a key consideration for
Kerry, given the importance of sustainability to our
broader business strategy. Significant temperature
increases aligned with Scenario One, or the pace
and scale of change required to deliver Scenario
Two, will undoubtedly create risks and opportunities
for our industry.
Through the work we have undertaken in 2021, we have
identified where these climate-related issues have the
potential to impact on our business and the strategic
priorities we have set out. We have specific mitigation
measures in place across key risk areas including
investments in process improvements and capital to
reduce GHG emissions across our value chain, water risk
assessment across priority locations, business continuity
plans in the event of business or supply chain disruption
and alternative sourcing strategies for critical raw
materials.
Our analysis to date highlights the resilience of the
Group’s strategy to a range of climate hazards and
transition risks across both temperature scenarios and
over the timeframes outlined.
The outputs of the analysis were also considered in the
scenarios considered for the Group’s ongoing viability
and impairment testing. For more see page 84. We will
continue to enhance our climate assessments to ensure
visibility of any potential changes to these risks or to
their velocity.
We also see the opportunity to further integrate specific
climate considerations within our broader risk
assessment and operational planning processes in
the short to medium term. This will provide a more
comprehensive approach to near term risk management
and improve the effectiveness of our climate related
actions in the coming years.
Our scenario analysis will continue to evolve and
alongside the ongoing mitigation of anticipated risks,
we are encouraged that our assessment reinforces
the opportunities for businesses that can support the
transition to a low carbon economy. At Kerry, we have
an important role to play within our industry, partnering
with our customers and supporting them through
innovation, as they seek to meet the growing consumer
demand for lower carbon products that contribute to
good health and wellbeing. For more information see
page 57 of this Sustainability Review.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
73
Risk Management
The Audit Committee is responsible for providing
structured and systematic oversight of the Group’s risk
management and internal control systems. The Group’s
risk assessment process is a coordinated bottom-up
and top-down group-wide approach that facilitates the
identification and evaluation of risks, as well as assessing
how the risks are monitored, managed and mitigated.
This process is facilitated by Internal Audit and overseen
by the Risk Oversight Committee.
Metrics and Targets
Our Beyond the Horizon strategy was introduced in
2020 and sets out our ambition to become Net Zero
before 2050. As part of this commitment, we outlined
an original target for a 33% reduction in Scope 1 and
2 emissions by 2030 and a 30% reduction in carbon
intensity for Scope 3 emissions over the same period.
These targets were approved by the Science Based
Target initiative (SBTi) as aligned to a well below two
degree temperature pathway.
Within our risk management framework, we adopt an
integrated approach to assessing and managing climate
risks across our business and wider value chain. The
impact of climate change has typically been integrated
within broader risk classifications, as a contributor to
other principal risks (e.g. extreme weather impacts
on raw material prices). While a climate risk lens is
applied as part of the broader risk assessment, we have
examined key risks in greater depth and identified areas
where the integration of these climate related issues can
be strengthened.
Managing these risks is a cross functional responsibility
and with the support of the Council structure outlined
under Governance above, management track and
review the Group’s performance, prioritise actions and
investments for mitigation and report on progress to the
Global Sustainability Council and the Board.
In 2021, we have also introduced ‘Climate and
Environmental Risk’ as a standalone principal risk,
reflecting the increasing importance of policy
interventions, market changes and physical impacts
such as water stress for our business. For more details
on our principal risks and the risk assessment process
see our Risk Management Report on pages 75-85.
Climate Change Integration
Across Our Principal Risks
Climate-related issues are considered as part of the
Group’s risk management process and are reflected
within many of our principal risks. For the purpose
of climate scenario analysis, we focused on a limited
number of specific climate risks and while the impacts of
these risks are cross-cutting, they may not relate to all of
the risks outlined below.
Portfolio
Management
Treasury
Taxation
Geopolitical /
Emerging Markets
In 2021, we enhanced our targets in line with calls
to limit global average temperature increase to 1.5
degrees Celsius, the most ambitious pathway under
the Paris Agreement. This change has taken our Scope
1 and 2 reduction target to 55% by 2030, versus our
2017 base year and this revised target has been
approved by the SBTi.
We have made good progress against this target with a
39% reduction versus our base year. The measurement
and target performance of Scope 1 and 2 emissions
is for all sites under our operational control and is
undertaken in accordance with the GHG Protocol. We
report annually to CDP and in 2021, achieved a CDP
score of 'A-', placing us at leadership level for our action
and reporting on climate change.
In support of our climate objectives, we also have a
number of associated targets which contribute to our
overall goals, including:
ensuring all our purchased electricity comes from
renewable sources, as part of our membership of
RE100. In 2021, we have accelerated against this
commitment and expect to reach this goal before
the end of 2022.
eliminating deforestation from our relevant supply
chains by 2025, helping to halt biodiversity loss and the
climate impacts associated with this land use change.
halving food waste across our business by 2030 and
supporting our customers and their consumers to
reduce food loss downstream in our value chain.
increasing our water use efficiency and recognising
the interconnected nature of water and climate risk.
Our water targets are increasingly context based
and designed to take account of water risk across
our regions.
Business
Acquisition
and Divestiture
Climate
Change and
Environment
Business Ethics
and Social
Responsibility
Intellectual Property
Operational
and Supply
Chain Continuity
Principal
Risks
Information
Systems and
Cybersecurity
Margin Management
People
Health
& Safety
Food Safety, Quality
and Regulatory
Denotes where climate related issues have
been considered within the risk assessment.
Target Area
Climate Related Targets Performance
Target
Date
-55%
2030
Base
2017
Scope 1 & 2
Emissions
Water Intensity
-15%
2025
2017
Food Waste
-50%
2030
2017
Renewable
Electricity
100%
2022
N/A
2021
-39%
-4%
-19%
65%
Targets are absolute with the exception of water, which is an intensity
measure. The scope of these targets is for sites under our operational
control. For emissions and renewable electricity, this includes all sites.
For water and waste, the target relates to our manufacturing facilities.
Kerry Group Annual Report 2021Sustainability Review
74
To provide a comprehensive view of our approach
and the progress we have made against our climate
and associated targets, we have made more
information available in our GRI Sustainability Report
at www.kerrygroup.com. This report also includes
further details of our performance on energy, water
and waste. For more on our responsible sourcing
targets, see page 66 of this review.
Next Steps
In 2021, we continued to make progress on our
climate transition, supported by our existing
governance structures, our integrated strategy and our
science-based targets. We further embedded climate
considerations within the Group’s risk assessment
framework and this was aided through the process of
scenario analysis and dynamic risk assessment. Our
disclosures are consistent with TCFD recommendations
other than where we continue to enhance the climate
related impact on strategy and financial planning,
resilience and scenario analysis and the alignment of
metrics and targets to specific climate related risks.
In 2022, planned activities will include:
continuing to embed and enhance our group-wide
governance structure, leveraging this to lead and
engage our people on further climate action.
expanding our analysis to account for additional
areas including potential risks associated with water
and technology, while continuing to refine existing
assessments and exploring the use of updated
climate scenarios aligned with Kerry’s 1.5⁰C
commitment.
exploring the potential for further mitigation
measures, particularly for any risks identified with
the potential to impact on our business strategy.
enhancing our risk process with further assessment
and integration of explicit climate related issues
within our enterprise risk management framework.
reviewing our Scope 3 carbon target and Net Zero
commitment in line with evolving SBTi guidance and
the release of their Net Zero standard.
building awareness and knowledge across our
organisation with dedicated training through the
Kerry learning academy.
Finally, we also plan to progress our carbon footprinting
at product level to support our customers in better
understanding their own value chain emissions and
providing us further insight into the contribution of our
portfolio to lower impact consumer products.
Kerry Group Annual Report 2021Strategic Report Sustainability Review
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75
Risk Management Report
Managing risk and uncertainty is
integral to the successful delivery
of our strategy and supports our
desire to grow a sustainable and
resilient business.
Risk Management
Approach and Governance
Effective risk management supports
the delivery of our strategic
objectives and the sustainable
growth of our business.
We regularly face business
uncertainties and it is through
a structured approach to risk
management that we are able to
proactively respond to, mitigate and
manage these risks and embrace
opportunities as they arise. Despite
ongoing challenges, such as the
COVID-19 pandemic and global
supply chain disruption, our
performance continues to highlight
the resilience of our people, our
business model and our proven
track record of delivery through
uncertainty.
The diversified nature of our
operations and geographical
footprint, together with our broad
portfolio of products, customers
and suppliers are important factors
in mitigating the risk of a material
threat to the Group’s sustainable
growth and long-term shareholder
value. However, as with any
business, risks and uncertainties are
inherent in our business activities
and may have a significant financial,
operational or reputational impact.
The Board is ultimately responsible
for the management of risk and for
setting the Group's risk appetite. On
an annual basis, the Board agrees
the principal and emerging risks
facing the Group and a robust risk
management governance framework
is in place which enables the Group
to effectively prioritise and manage
risk to within our risk appetite levels.
The Board carries out a review of
the effectiveness of the Group’s risk
management and internal control
systems at least annually.
The Group’s risk management
governance framework has been
designed using a three lines of
defence (3LOD) model which has
been implemented to ensure there
is clear ownership and delegation of
responsibility for the management
and oversight of risk to support the
appropriate flow of information
throughout the Group.
An overview of the Group’s risk
management governance structure
along with the key responsibilities
within it is outlined in the diagram
on page 76.
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76
Strategic Report Risk Management Report
Our Risk Management Governance Framework
Board of Directors
The Board has overall responsibility to ensure that appropriate risk management and internal control systems, designed to identify, manage and mitigate
risks which may impact the achievement of the Group’s objectives are in place. The Board also ensure an appropriate risk appetite has been set and
consider how the Group’s longer-term viability may be impacted by the crystallisation of one or more of these risks.
Responsibility has been delegated by the Board to provide structured and systematic oversight of the Group’s risk management and internal control
systems. They review and monitor the effectiveness of the Group’s risk management and internal control systems throughout the year. The Chairman
reports to the Board on its activities regarding audit matters and risk management. See pages 109-114 for description of the risk management activities
conducted by the Audit Committee in 2021.
Audit Committee
Risk Oversight Committee (ROC)
The ROC supports the Audit Committee in the risk management process through ongoing monitoring and evaluation of the risk environment and
the controls in place to manage those risks, in addition to the consideration of emerging risks which may impact the Group in the future. The ROC is
comprised of senior leadership, and is chaired by the CFO. The ROC maintains the Group risk register and provides regular updates on changes in the
principal or emerging risks to the Audit Committee and the Board.
Executive management are responsible for the effective operation of internal controls designed to manage and mitigate the principal risks and
uncertainties. The 3LOD model ensures accountability for risk management is embedded into processes and procedures. Key management committees
support risk management including the Group Finance Committee, the ICT Security Steering Committee, the Sustainability Council, and the Quality, Safety,
Health & Environment Leadership Team.
Executive Management
1st LINE OF DEFENCE:
Operational Management is responsible
for risk identification, managing the
internal control environment and
monitoring changes in the risk profile
of the Group.
2nd LINE OF DEFENCE:
Group functional teams ensure the first line
is operating as designed, manage
performance reviews, internal control
verifications and facilitate risk assessments.
This includes Quality, Health & Safety,
Information & Cyber Security, Legal and
Financial Control functions.
3rd LINE OF DEFENCE:
Group Internal Audit function with other
external assurance providers perform
reviews which give independent assurance
over the operation of the internal control
framework, risk management systems and
governance processes.
Identify
& Assess
Risk
Appetite
Monitor
& Report
Manage /
Mitigate
Enterprise Risk Management Process
Our enterprise risk management process is embedded
across the Group to support the delivery of our strategic
objectives and our annual risk assessment is an integral part
of this process. This risk assessment incorporates a group-
wide top down and bottom up evaluation to determine the
likelihood of occurrence and potential impact of risks on
the Group at a residual level. Input is obtained from senior
business and functional management through a series of
workshops, one-to-one interviews and surveys, which are
consolidated to produce the Group Risk Register. Our risk
universe forms the basis of conversations and additional
new and emerging risks are added as they are identified
and assessed. A standard risk scoring methodology has
been devised to provide context and ensure consistency in
reporting and evaluation of risks.
The output from this process is consolidated to determine
the principal risks and uncertainties for the Group. Executive
Management and the ROC review and validate these risks,
providing further input where necessary before submission
to the Audit Committee and Board for final consideration
and approval.
Kerry Group Annual Report 2021
During the year the ROC and the Board considered
the Group’s principal risks in the context of our risk
appetite and our approach is to minimise exposure
to reputational, financial and operational risk, while
accepting and recognising a risk and reward trade-off
in pursuit of our strategic and commercial objectives.
As the world’s leading taste and nutrition company, the
integrity of our business is critical and cannot be put at
risk. Consequently, we have a zero tolerance for risks
such as food safety and employee health and safety.
We operate in a challenging and highly competitive
market place and as a result, recognise that strategic,
commercial and investment risks will be required to
seize opportunities and deliver business results. We
are therefore prepared to make certain financial and
operational investments in pursuit of growth objectives,
accepting the risk that the anticipated benefits from
these investments may not always be fully realised. Our
acceptance of risk is subject to ensuring that potential
benefits and risks are fully understood and appropriate
measures to mitigate those risks are established.
Each of the Group’s principal risks is assigned an
executive owner who is responsible for ensuring
mitigating actions are sufficient to bring risks to within
the agreed appetite and the 3LOD model ensures that
these mitigations and internal controls are embedded
and operate effectively throughout the organisation.
The annual Board and the Audit Committee agendas
include a series of updates from executive risk owners
in relation to the Group’s principal risks. These updates
include the history of the risk to date, key mitigating
actions and controls, an outline of the residual risk
and any future actions planned to address control
weaknesses.
The Audit Committee also receive regular updates on
risk management and internal control effectiveness
from the Head of Internal Audit (HIA) along with agreed
mitigating actions to resolve any weaknesses identified.
The Audit Committee and Board formally approved the
principal risks and risk appetite and have confirmed
in the Corporate Governance Report on page 108
that a robust assessment of the Group’s principal and
emerging risks was completed, including those risks that
could threaten the business model, future performance,
solvency or liquidity of the Group.
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77
Principal and Emerging Risks
The table on pages 78-84 describes the principal risks
and uncertainties, which the Board has determined
could impact the achievement of strategic objectives
and have been identified through the risk assessment
process, as well as the mitigating actions in place and
an update on any change in the profile of each risk
during the year. Additionally, each risk has been linked
to the Group Strategy and Margin Expansion targets as
outlined in the Strategic Report on pages 28-31. These
risks form the basis of Board and Audit Committee
communications and discussions.
This table presents the Board’s view of the Group’s
principal risks and uncertainties and is not an exhaustive
list of all the risks which may impact the Group. There
are additional risks which are not yet considered
material, or which are not yet known to the Board,
which could become significant in the future. Likewise,
some of the current risks may reduce in importance as
management actions are implemented or changes in the
operating environment occur. The Board will continue
to monitor risk in the context of relevant factors such
as the ongoing impact of the COVID-19 pandemic,
growth through geographic expansion and ongoing
acquisitions, as well as other changes in the external
environment, which may create future risks.
Climate Risk
The Board recognise the significant risks posed by
climate change and consideration of these risks forms
part of our existing risk management processes. It
is acknowledged that there is opportunity to further
integrate the ongoing climate related risk processes
within our risk management processes and this will be
a key area of focus in the coming year. The increasing
importance of climate change risk was reflected in
the Board’s decision to include Climate Change and
Environmental as a standalone principal risk during
2021, having been included as a sub-risk within
Sustainability/Environmental risk previously. In addition,
climate change impacts a number of our other principal
risks such as Portfolio Management and Operational and
Supply Chain Continuity.
During the year, a global cross-functional team was
created to further align our assessment and disclosure
practices with the requirements of the Taskforce on
Climate-related Financial Disclosures (TCFD). This
included conducting a detailed climate change risk
assessment and scenario analysis with the support of an
expert external party. The TCFD section on pages 68-74
summarises the work undertaken to date to understand
the potential impact of climate change on the Group and
outlines future areas of management focus.
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Strategic Report Risk Management Report
Changes to Our Principal Risks
While there has been no significant change in the
principal risks in the last year, the Group operates in a
dynamic environment where risks continue to evolve and
the Group continues to develop mitigation measures to
address them.
The COVID-19 pandemic has continued to create
uncertainty; however, as vaccination rollouts progress
and our understanding and agility in managing it
through preventative measures has grown, the outlook
is more optimistic. Similar to the previous year we have
not considered COVID-19 as an individual risk but rather
considered the amplifying effect it has had on a number
of other principal risks such as Health & Safety risk,
People risk, Operational and Supply Chain Continuity risk
and Margin Management risk.
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Sustainability/Environmental risk was introduced as a
principal risk in 2020 having previously been considered
as an emerging risk. As consideration of climate change
risk has been further embedded in our enterprise risk
management process, this principal risk has been split
out to include Climate Change and Environmental
and Business Ethics and Social Responsibility as two
standalone risks for this year.
Emerging Risks
Emerging risks are considered as part of the risk
assessment process and are identified through horizon
scanning, continual dialogue with the business and
keeping abreast of market and industry changes. A
summary of emerging risks which are identified through
this process is presented to the Audit Committee and
Board for assessment and these risks continue to be
monitored as part of our ongoing risk management
processes. Emerging risks we are monitoring include
endemic COVID-19, ESG regulatory changes, labour
model disruption and technology innovation and
disruption.
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Risk is unchanged
Risk is unchanged
Risk has increased
Link to Group Strategy as per the Strategic Report
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Consumer Foods
Nutrition
Taste
Risk has decreased
Risk has decreased
Risk has increased
Risk is unchanged
Risk has increased
Risk is unchanged
Risk has decreased
Risk has increased
Risk has decreased
Taste
Taste
Nutrition
Nutrition
Emerging
Markets
Emerging
Margin
Markets
Expansion
Margin
Expansion
Taste
Nutrition
Taste
Emerging
Markets
Nutrition
Margin
Expansion
Shareholder
Consumer Foods
Risk trend
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Emerging Markets
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Margin
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Expansion Drivers
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Emerging
Markets
Margin
Expansion
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Risk is unchanged
Risk has increased
Risk has decreased
Risk is unchanged
Risk has increased
Risk has decreased
Risk is unchanged
Risk has increased
Risk has decreased
Risk is unchanged
Risk has increased
Risk has decreased
Principal Risks and Uncertainties - Strategic
Risk is unchanged
Risk is unchanged
Risk is unchanged
Risk is unchanged
Risk has increased
Risk has increased
Risk has increased
Risk has increased
Risk has decreased
Risk has decreased
Risk has decreased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Portfolio Management
Description
Consumer preferences, tastes,
behaviours and demand for more
sustainable products are changing at
an unprecedented rate.
Impact
If the Group does not make
optimal strategic investment
decisions, then opportunities
for growth and improved
margin could be missed.
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The Group’s overall growth and
profitability is determined by
the effective management of its
portfolio across technologies, end
use markets, geographies, channels
and customers to respond to these
consumer-led dynamics.
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Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Kerry Group Annual Report 2021
Taste
Taste
Taste
Taste
Shareholder
Nutrition
Nutrition
Consumer Foods
Nutrition
Nutrition
Emerging
Emerging
Markets
Markets
Emerging
Markets
Emerging
Markets
Margin
Margin
Expansion
Expansion
Margin
Expansion
Margin
Expansion
How We Manage the Risk
– The Group’s strategic planning process
is designed to ensure that investment
decisions balance both our financial
ambitions and our Beyond the Horizon
sustainability commitments. A robust
portfolio management toolkit is in place to
support this process which uses multiple
perspectives and data.
– Post completion reviews are undertaken
for all major investment projects to
measure returns and inform future
investment decisions.
– Our integrated business model is
differentiated in the marketplace
through its ability to provide integrated
solutions underpinned by its portfolio of
foundational technologies.
– The Group’s refreshed mid-term plan
published during 2021 outlined key growth
pillars and financial targets for the period
2022-2026 and is aligned to the Group’s
Beyond the Horizon sustainability targets.
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79
Principal Risks and Uncertainties - Strategic (continued)
Risk is unchanged
Risk is unchanged
Risk is unchanged
Risk is unchanged
Risk has increased
Risk has increased
Risk has increased
Risk has increased
Risk has decreased
Risk has decreased
Risk has decreased
Risk has decreased
Geopolitical / Emerging Markets
Taste
Taste
Taste
Taste
Shareholder
Nutrition
Nutrition
Consumer Foods
Nutrition
Nutrition
Emerging
Emerging
Markets
Markets
Emerging
Markets
Emerging
Markets
Margin
Margin
Expansion
Expansion
Margin
Expansion
Margin
Expansion
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Risk Icons
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Description
Through our substantial global
footprint and acquisitive
growth strategy the Group
is exposed to global market
forces, fluctuations in national
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economies, societal unrest,
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geopolitical uncertainty and
an increasingly complex legal
and regulatory environment.
Impact
Failure to monitor and
respond to change
and volatility across
the Group’s markets
may have an impact
on the future growth
and profitability of the
Group.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Business Acquisition and Divestiture
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Description
Acquisitions and divestitures
continue to be a core element
of the Group’s growth and
portfolio management
strategy which presents
risks around due diligence,
execution and integration or
separation of businesses.
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Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Impact
A failure to successfully
execute divestments
or identify, execute
and efficiently
integrate acquisitions
and capitalise on
potential synergies in
a timely and effective
manner could impact
profitability and
impede the strategic
development of the
Group.
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Climate Change and Environmental
Description
The Group recognises the
significant environmental
challenges the world faces
due to a changing climate
and the implications that
this can have for our
business and supply chains.
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Physical climate impacts and
related policy and/or market
changes may disrupt our
operations or impact demand
for our products.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Impact
Physical and transition
climate risks including
extreme weather
events, water stress and
increased regulation,
or an inability to
deliver on our climate
and environmental
objectives, may have
a negative impact on
the Group’s revenue
and profitability, may
negatively impact our
ability to raise finance
and may damage
the reputation of the
Group.
How We Manage the Risk
- Rigorous due diligence is undertaken when entering or
commencing business activities in new markets.
- Central and local legal, regulatory and compliance
teams ensure adherence to applicable laws and
regulations.
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- The breadth of the Group’s portfolio and our geographic
reach help to mitigate exposure to localised risk.
Risk is unchanged
Risk is unchanged
Risk is unchanged
Risk is unchanged
Risk has increased
Risk has increased
Risk has increased
Risk has increased
Risk has decreased
Risk has decreased
Risk has decreased
Risk has decreased
Taste
Taste
Taste
Taste
Shareholder
Nutrition
Nutrition
Consumer Foods
Nutrition
Nutrition
Emerging
Emerging
Markets
Markets
Emerging
Markets
Emerging
Markets
Margin
Margin
Expansion
Expansion
Margin
Expansion
Margin
Expansion
How We Manage the Risk
- An experienced, dedicated Mergers and Acquisitions
team are in place who follow a strong governance
process throughout all stages of a transaction.
- All potential transactions are rigorously assessed and
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evaluated to ensure the Group’s strategic and financial
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criteria are met. All transactions are fully reviewed and
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approved by the Board.
- A robust integration process is in place and post-
acquisition performance is closely monitored by both
divisional and Group management.
- Significant focus is placed on the retention of key
acquired talent and support is provided to facilitate an
efficient integration process.
Risk has decreased
Risk has decreased
Risk has decreased
Risk has decreased
Risk has increased
Risk has increased
Risk is unchanged
Risk is unchanged
Risk has increased
Risk has increased
Risk is unchanged
Risk is unchanged
Taste
Taste
Taste
Taste
Shareholder
Nutrition
Nutrition
Consumer Foods
Nutrition
Nutrition
Emerging
Emerging
Markets
Markets
Emerging
Markets
Emerging
Markets
Margin
Margin
Expansion
Expansion
Margin
Expansion
Margin
Expansion
How We Manage the Risk
- An appropriate governance structure is in place with the
Global Sustainability Council charged with the assessment
and management of climate related risk and opportunities
as part of its broader sustainability remit. Regular
updates are provided to the Governance, Nomination and
Sustainability Committee and to the Board. For further
detail in relation to climate risk governance please see
page 69-74 of our TCFD Report.
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- Ambitious targets are in place with regard to reducing
the carbon footprint of our operations, our water
intensity, reducing food waste and ensuring that our
priority raw materials are responsibly sourced.
- Significant work is being undertaken to improve the
measurement of our Scope 3 footprint and prioritise
action areas with our suppliers.
- A cross functional team has been established to lead our
alignment with the TCFD guidance. An expert external
party has also been engaged to support this process.
- We continue to embed climate considerations into
our overall strategic planning and investment appraisal
processes.
- Sustainability and climate-related metrics were included as
part of the Long-Term Incentive Plan (LTIP) for Executive
Directors and senior management in 2021.
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Principal Risks and Uncertainties - Operational
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Risk is unchanged
Risk is unchanged
Risk is unchanged
Risk is unchanged
Risk has increased
Risk has increased
Risk has increased
Risk has increased
Risk has decreased
Risk has decreased
Risk has decreased
Risk has decreased
Taste
Taste
Taste
Taste
Shareholder
Nutrition
Nutrition
Consumer Foods
Nutrition
Nutrition
Emerging
Emerging
Markets
Markets
Emerging
Markets
Emerging
Markets
Margin
Margin
Expansion
Expansion
Margin
Expansion
Margin
Expansion
People
Description
The ability to attract,
develop, engage and retain
a diverse, talented and
capable workforce is critical
if the Group is to continue to
compete and grow effectively.
A number of external factors,
2021 Annual Report
including the COVID-19
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pandemic, have increased the
competition for talent and
labour across all sectors.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Impact
A failure to effectively
manage talent, plan for
leadership succession
and adapt to an
evolving workplace
environment driven
by external factors
such as COVID-19 may
2019 Annual Report
impede the realisation
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of the Group’s strategic
objectives.
How We Manage the Risk
- The Group’s employment policies and procedures
underpin its people strategy and ensure robust and
objective processes are in place for talent attraction,
selection, development and progression, supported by
global HR systems.
- The Group’s reward programmes continue to be
enhanced and in 2021 this included the launch of a new
Global Recognition Programme and enhancements to
both long and short-term global incentive plans.
- The Group’s approach to talent management and
executive succession planning is regularly reviewed by
the Group Executive and is overseen by the Governance,
Nomination and Sustainability Committee and the Board.
- A key focus of the Group’s social sustainability agenda
is to build a purpose-led, culturally diverse, engaged
and inclusive workforce, where our people can be at
their best, contribute to the Group’s success and realise
their career ambitions. Progress is monitored through
KPIs and an annual group-wide employee engagement
survey, which includes a newly established Inclusion
Index, the results of which are reviewed by Executive
Management and the Board to agree ongoing priorities.
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- The Group has continued to prioritise the safety
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and wellbeing of employees as it has navigated the
challenges of the COVID-19 pandemic.
Risk has increased
Risk has increased
Risk has increased
Risk is unchanged
Risk is unchanged
Risk is unchanged
Risk has decreased
Risk has decreased
Risk has decreased
Business Ethics and Social Responsibility
Taste
Taste
Taste
Shareholder
Nutrition
Consumer Foods
Nutrition
Nutrition
Emerging
Markets
Emerging
Markets
Emerging
Markets
Margin
Expansion
Margin
Expansion
Margin
Expansion
How We Manage the Risk
- A Social Sustainability Council is in place, chaired by
the Group’s Chief Human Resources Officer, which has
overseen a significant programme of activity during
2021 to advance the Group’s ongoing work in this area.
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- The Group’s Code of Conduct and supporting polices,
which were refreshed in 2021, clearly define the
standards and expectations for all employees and third
parties. The Code is available in 26 languages.
- Our Human Rights policy sets expectations for business
and supply chain partners and these expectations are
also embedded in our Supplier Code of Conduct. A self-
assessment process is in place for both Kerry sites and
high risk direct suppliers.
- A mandatory employee compliance certification
programme is in place to embed employee
understanding of key compliance risks.
- The Group’s Speak Up whistleblowing service is available
to all employees and third parties to raise concerns
with regard to suspected wrongdoings or unethical
behaviours.
- Robust due diligence is performed on all new acquisitions.
Description
Acting in an ethical and
socially responsible
manner, consistent with the
expectations of customers,
2021 Annual Report
consumers, and other
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stakeholders, is essential
for the protection of the
reputation of the Group.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Impact
A material failure to
comply with relevant
legal and ethical
standards or best
practices could harm
the reputation of the
Group, its relationship
with key stakeholders
and/or result in
financial penalties and
costs.
Taste
Nutrition
Emerging
Markets
Margin
Expansion
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Principal Risks and Uncertainties - Operational (continued)
Risk is unchanged
Risk is unchanged
Risk is unchanged
Risk is unchanged
Risk has increased
Risk has increased
Risk has increased
Risk has increased
Risk has decreased
Risk has decreased
Risk has decreased
Risk has decreased
Food Safety, Quality and Regulatory
Taste
Taste
Taste
Taste
Shareholder
Nutrition
Nutrition
Consumer Foods
Nutrition
Nutrition
Emerging
Emerging
Markets
Markets
Emerging
Markets
Emerging
Markets
Margin
Margin
Expansion
Expansion
Margin
Expansion
Margin
Expansion
Description
Adherence to stringent food
safety and product controls
is critical to ensure the safety
and integrity of raw materials
and products throughout
the Group’s supply chain.
The Group must also ensure
compliance with continuously
2021 Annual Report
evolving legal and regulatory
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obligations in the areas of
food safety, quality, labelling
and the environment.
Impact
A significant food
safety or regulatory
compliance issue
could result in a
product recall, financial
penalties and costs,
impact business
performance and/or
damage the reputation
of the Group.
How We Manage the Risk
– Industry-leading food safety and traceability systems
are in place and all manufacturing sites comply with
international food safety and quality management
standards. This is supported by a strong quality culture
through the Group’s Safety First, Quality Always
approach.
– Regular audits of manufacturing sites against
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recognised global food safety standards are conducted
by Corporate Quality, Internal Audit, customers and
other independent agencies.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Health & Safety
Description
The nature of the Group’s
operations can expose
employees, sub-contractors,
customers and other
individuals to potential
health & safety risks.
The Group is also subject
2021 Annual Report
to local safety regulations
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in multiple jurisdictions,
compliance with which
is paramount.
Impact
A significant safety
incident could expose
the Group to legal
liability, and/or
significant costs and
damage the Group’s
reputation.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
– Stringent controls operate across our supply chain
including audits and approval of suppliers supported by
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rigorous quality checking of all high-risk ingredients.
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– A dedicated regulatory function closely monitors
the external environment and engages industry
organisations to identify and understand emerging
issues and address increasing compliance requirements.
– In 2021, 66% of our sites were certified to ISO14001
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Environmental Management System with a further 10%
currently in the process of obtaining certification.
Risk has decreased
Risk has increased
Risk has increased
Risk has increased
Risk is unchanged
Risk is unchanged
Risk is unchanged
Risk has decreased
Risk has decreased
Taste
Taste
Taste
Shareholder
Nutrition
Consumer Foods
Nutrition
Nutrition
Emerging
Markets
Emerging
Markets
Emerging
Markets
Margin
Expansion
Margin
Expansion
Margin
Expansion
How We Manage the Risk
– A strong health and safety culture has been driven by
management and employees at all levels supported by
our Safety First, Quality Always mindset.
– A robust health & safety management system is in place
across all sites requiring employees to complete formal
health & safety training (relevant to their role) at regular
intervals. All sites are also subject to regular health &
safety audits by Corporate Health & Safety, Internal
Audit and external assurance providers.
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– Stringent COVID-19 protocols remain in place at all
sites. These include ongoing remote working in some
locations, employee and visitor screening protocols,
segregation and zoning and use of appropriate personal
protective equipment.
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Strategic Report Risk Management Report
Principal Risks and Uncertainties - Operational (continued)
Risk is unchanged
Risk has increased
Risk has decreased
Impact
Failure to pass on cost
increases to customers
may have a material
impact on the Group’s
margins and ability to
deliver target returns.
Taste
Nutrition
Emerging
Markets
Margin
Expansion
How We Manage the Risk
- A strong commercial focus on procurement, pricing and
cost improvement initiatives is maintained along with
ongoing monitoring of the commercial implications of
commodity price and other input cost movements.
– Risk management processes such as taking purchasing
cover on a back-to-back basis and exchange rate
hedging have been implemented where necessary.
– Contractual mechanisms to pass through fluctuations in
2021 Annual Report
commodity prices are in place with many customers.
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Information Systems and Cybersecurity
Margin Management
Description
The Group’s cost base and
margin may be impacted by
fluctuations in commodities,
freight, energy, labour and
other input costs.
There has been significant
global cost inflation during
2021 caused by factors such
as climate change related
weather events, the impact
2021 Annual Report
of COVID-19 on global
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supply chain and labour
dynamics and general
market uncertainty.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Description
The Group relies on a robust
ICT infrastructure for its daily
business operations, internal
communications, controls,
reporting and communications
with customers and suppliers.
There is a constant threat of
significant and sophisticated
cyber-attacks including
phishing, ransomware,
malware and social
engineering.
2021 Annual Report
Risk Icons
The macro risk level continues
to rise with the number of
attacks against high profile
peers becoming more
frequent.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Kerry Group Annual Report 2021
Impact
A successful cyber-
attack, internal breach
or other systems failure
could result in theft,
misappropriation of
critical assets and/
or personal data
and disruption
to core business
operations including
manufacturing and
supply chain. This could
result in a significant
customer, financial,
reputational and/or
regulatory impact for
the Group.
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Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
How We Manage the Risk
– An appropriate governance structure is in place including
an Executive Information Security Management
Committee and the ROC. Cybersecurity is a major focus
area for the Board who this year received two formal
updates from the Chief Information Security Officer.
– A specialist ICT Security team is in place who use
industry leading tools, technology and processes
aligned to global best practice cybersecurity
frameworks. These include a 24/7 security monitoring
service, a vulnerability management programme, a
software review process, supply chain partner audits,
a data loss prevention programme and identity
governance controls amongst other initiatives.
– During 2021 we continued our ongoing programme
of investment in cybersecurity controls which included
Endpoint Detect and Respond (EDR), Cloud Access
Security Broker (CASB), Domain-based Message
Authentication, Reporting and Conformance (DMARC)
email authentication and enhanced data loss prevention
controls.
– Business continuity, disaster recovery and crisis
management plans are in place and are tested on a
regular basis.
– Employees receive regular online cybersecurity
training and ongoing awareness is promoted through
monthly phishing training and other initiatives to keep
employees abreast of new and emerging threats.
– Cybersecurity reviews are conducted by a team of
internal ICT auditors in addition to the engagement of
external experts on a biennial basis to conduct a cyber
resilience assessment against the National Institute of
Standards and Technology (NIST) framework.
– The Group maintains a cyber insurance policy.
– There were no material information or cybersecurity
breaches noted over the last three years.
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83
Principal Risks and Uncertainties - Operational (continued)
Risk is unchanged
Risk is unchanged
Risk is unchanged
Risk is unchanged
Risk has increased
Risk has increased
Risk has increased
Risk has increased
Risk has decreased
Risk has decreased
Risk has decreased
Risk has decreased
Operational and Supply Chain Continuity
Taste
Taste
Taste
Taste
Shareholder
Nutrition
Nutrition
Consumer Foods
Nutrition
Nutrition
Emerging
Emerging
Markets
Markets
Emerging
Markets
Emerging
Markets
Margin
Margin
Expansion
Expansion
Margin
Expansion
Margin
Expansion
Impact
Failure to effectively
respond to a significant
operational or supply
chain disruption could
adversely affect the
Group’s operations and
financial performance.
How We Manage the Risk
– Crisis management and business continuity plans
are in place to enable effective recovery from a major
disruption.
– Robust inventory management processes are in place
including the maintenance of appropriate safety stock
levels.
– Sourcing model includes dual supply for critical raw
materials.
– Ongoing programme of work to enhance our end-
to-end planning processes through improved cross-
functional collaboration and decision making.
– Ongoing investment in manufacturing facilities to
increase capacity and enhance reliability and continuity
of supply.
– All facilities have insurance cover to mitigate the impact
of significant disruption.
– Operational, Supply Chain and Procurement leaders
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have participated in cross-functional workshops to
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explore and gain a better understanding of the climate
risks associated with our supply chain. For further
information refer to the TCFD Report on pages 68-74.
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– Experienced customer service teams enable a
responsive and agile operation.
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Description
The Group’s manufacturing
operations and global supply
chain network is potentially
exposed to adverse events
such as physical disruptions,
environmental and industrial
accidents, cybersecurity
incidents, trade restrictions or
disruptions at a key supplier,
which could impact on our
ability to service customers.
2021 has seen unprecedented
global supply chain disruption.
The COVID-19 pandemic
combined with an increased
number of other disruptive
events (e.g. Suez Canal
crisis and extreme weather
events) have highlighted the
need to focus on building a
resilient supply chain which
is responsive to changing
internal and external
pressures.
2021 Annual Report
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Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Intellectual Property
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Description
The Group’s unique mix of
Intellectual Property (IP) is
created by combining carefully
managed material sourcing,
recipe formulation and
process technology expertise.
The protection of IP is critical
given it is a key component
2021 Annual Report
of the Group’s value creation
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model and supports its unique
and differentiated position in
the marketplace.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Risk is unchanged
Risk is unchanged
Risk is unchanged
Risk is unchanged
Risk has increased
Risk has increased
Risk has increased
Risk has increased
Risk has decreased
Risk has decreased
Risk has decreased
Risk has decreased
Taste
Taste
Taste
Taste
Shareholder
Nutrition
Nutrition
Consumer Foods
Nutrition
Nutrition
Emerging
Emerging
Markets
Markets
Emerging
Markets
Emerging
Markets
Margin
Margin
Expansion
Expansion
Margin
Expansion
Margin
Expansion
How We Manage the Risk
– A global centre of expertise exists to provide legal and
technical support in the area of IP protection.
– Policies, procedures and training programmes are in
place to provide guidance in relation to the capture,
exploitation and protection of IP.
– Strong physical and system access controls are in place
to prevent unauthorised access or download of sensitive
data.
2019 Annual Report
Risk Icons
– The external environment is monitored for potential
Impact
If IP owned by
the Group is not
adequately protected
it may result in the
loss of commercially
sensitive and/or
Kerry proprietary
information which
may have an adverse
impact on revenue and
profitability.
IP infringement and appropriate action is taken when
issues are identified.
Kerry Group Annual Report 2021
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Strategic Report Risk Management Report
Principal Risks and Uncertainties - Financial and Compliance
Risk is unchanged
Risk has increased
Risk has decreased
2019 Annual Report
Risk Icons
Impact
The Group’s tax
liability or reporting
requirements may be
negatively impacted by
local or international
legislative changes,
evolving legal
interpretations, tax
audits or transfer
pricing judgements.
Impact
Failure to manage these
risks could negatively
impact on the financial
performance of the
Group.
Taxation
Description
Given the Group’s global
2021 Annual Report
network, it is exposed to an
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increasingly complex and
evolving international tax
environment.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
Treasury
Description
The international nature
of the Group’s operations
means that it has transactions
and activities across many
2021 Annual Report
jurisdictions which expose
Risk Icons
it to liquidity, foreign
exchange, interest rate and
counterparty risks.
Risk Trend
Risk is unchanged
Risk has increased
Risk has decreased
Taste
Nutrition
Emerging
Markets
Margin
Expansion
How We Manage the Risk
- A team of dedicated tax experts responsible for
Taste
Nutrition
Emerging
Markets
Margin
Expansion
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Risk Icons
ensuring compliance with all taxation matters globally
2021 Annual Report
are employed. A programme of continuous professional
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development ensures that the team is up to date on
evolving tax law changes e.g. carbon tax.
– In house expertise is supplemented by external taxation
advisors where required.
Risk is unchanged
Risk has increased
Risk has decreased
How We Manage the Risk
– The Group Finance Committee monitors treasury risk on
Taste
Nutrition
Emerging
Markets
Margin
Expansion
an ongoing basis.
– Significant cash and debt resources with relatively
2019 Annual Report
Risk Icons
long-term maturities are in place to ensure the Group’s
liquidity requirements are met and maintained. During
2021, the Group further strengthened its liquidity
position by exercising the final one year extension on
it’s Revolving Credit Facility which now matures in 2026
and issuing €750m of Sustainability-Linked Bond notes,
due in 2031.
– The Treasury function actively manages all treasury risks
through cashflow forecasts, foreign currency exposure,
netting and hedging as well as monitoring and meeting
funding requirements across its jurisdictions and
management of interest rate and counterparty risk.
GOING CONCERN AND VIABILITY ASSESSMENT
The Board, taking into consideration the Group’s principal risks and uncertainties, including emerging risks, assessed
the going concern and longer-term viability of the Group in line with the requirements of the 2018 UK Corporate
Governance Code and the Irish Annex. Its conclusions on these assessments are outlined below.
As a result of this review, the Directors report that they
have satisfied themselves and consider it appropriate
that the Group and the Company is a going concern,
having adequate resources to continue in operational
existence for the foreseeable future and have not
identified any material uncertainties that cast a
significant doubt on the Group’s and the Company’s
ability to continue as a going concern over a period of
at least 12 months.
Going Concern
The Consolidated Financial Statements have been
prepared on the going concern basis of accounting.
The Directors considered the Group’s business activities
and how it generates value, together with the main
trends and factors likely to affect future development,
business performance and position of the Group,
including the continuing impact of the COVID-19
pandemic and the potential impact of climate related
risks on profitability and liquidity, as described in the
Business Reviews on pages 44-49.
The Group’s 2022 budget was reviewed and approved at
the December Board meeting. The Directors have also
examined the financial position of the Group, including
cash flows, liquidity position, borrowing facilities,
financial instruments and financial risk management, as
described on pages 36-43 and additionally as described
in note 24 to the financial statements.
Kerry Group Annual Report 2021
Risk Management Report
85
Viability Assessment
Assessment of Prospects
In line with Provision 31 of the 2018 UK Corporate
Governance Code, the Directors have carried out a
rigorous review of the prospects of the Group over the
medium term. In assessing the prospects of the Group
and its ability to meet its liabilities as they fall due, the
Board has taken account of the Group’s medium term
strategic planning cycle, capital investment plans, the
business model, its diverse portfolio and the innovation
pipeline. The Directors have also considered the Group’s
strong cash generation and debt maturity profile in
addition to the principal risks and uncertainties detailed
on pages 78-84. This included a consideration of the
impact of the ongoing COVID-19 pandemic in addition to
the potential impact of climate related risks on profitability
and liquidity. The financial position of the Group, its
cash flows, liquidity position and borrowing facilities are
outlined in the Financial Review on pages 36-43.
Period of Viability Assessment
The Board has considered the length of time to be
reviewed in the context of the viability assessment.
Although the Group’s strategic planning cycle covers
a period of five years, the Board consider that three
years is the most appropriate period to assess the
longer-term viability of the Group as current capital
expenditure plans, commercial arrangements and
financial projections are considered to be more reliable
and robust over this period.
Scenario Modelled
Relevant Principal Risks
Scenario 1: External and
Macroeconomic Risks
Depressed economic performance,
further deterioration in COVID-19
situation, prolonged global supply
chain disruption, political unrest
– Climate Change and Environmental
– Business Acquisition and Divestiture
– Geopolitical/Emerging Markets
– Operational and Supply Chain Continuity
- Business Ethics and Social Responsibility
– Margin Management
– Portfolio Management
– People
– Intellectual Property
– Treasury
Scenario 2: Climate Change and
Environmental Risk*
Impacts of extreme weather events,
water stress and climate change
– Climate Change and Environmental
– Portfolio Management
– Operational and Supply Chain Continuity
– Margin Management
Scenario 3: One-off Expense
Impact of a potential large event,
fine and/or penalty
– Climate Change and Environmental
– Information Systems and Cybersecurity
– Food Safety, Quality and Regulatory
- Business Ethics and Social Responsibility
– Portfolio Management
– Intellectual Property
– Taxation
– Treasury
Assessment of Viability
The viability of the Group has been assessed,
considering the Group’s current financial position,
including external funding in place over the assessment
period, and after modelling the impact of certain
scenarios arising from the Group’s principal risks and
uncertainties as outlined on pages 78-84.
While each of the principal risks and uncertainties could
have an impact on the Group’s performance, three
severe but plausible scenarios were modelled that
the Board assessed would have the most direct and
material impact on the Group. The three scenarios as
outlined above were stress tested both individually and
in combination to assess their potential impact on the
Group’s solvency, liquidity and cash flow.
This analysis indicated that significant liquidity
headroom existed in all scenarios tested. In addition, the
Board consider that the diverse nature of the Group’s
geographies, markets, customer base, and product
portfolio provide significant mitigation against the
impact of a serious business interruption.
Viability Statement
Based on their assessment of prospects and viability,
the Directors have concluded that they have a
reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall
due over the three year period of the assessment.
* This scenario was modelled based on a three year time horizon.
For a longer term assessment of climate risk please see the
TCFD section of this report on pages 68-74.
Kerry Group Annual Report 2021
Directors‘
Report
Board of Directors
Chairman & Executive Directors
Board of Directors
87
Mr. Philip Toomey (68)
Mr. Edmond Scanlon (48)
Ms. Marguerite Larkin (50)
Mr. Gerry Behan (57)
Chairman of the Board
Executive Director
Chief Executive Officer
Executive Director
Chief Financial Officer
Executive Director
President and CEO
Kerry Taste & Nutrition
Edmond is a highly
experienced leader in the
global food and beverage
industry having spent almost
20 years in senior roles
across the Group. Edmond
brings a strategic mindset
to drive Group performance
and growth as well as
significant financial and
operational expertise.
Edmond joined Kerry’s
graduate programme
in Ireland in 1996. Over
his career he has held
leadership roles in the
Group’s Flavours and
Applied Health and Nutrition
businesses as well as
heading up the Group’s
activities in China and the
Asia Pacific region.
Edmond was appointed
Executive Director and Group
Chief Executive Officer in
October 2017.
Appointed: 1 October 2017
Marguerite brings extensive
financial knowledge and risk
management expertise as well
as being a highly experienced
business leader.
Gerry has over 30 years'
experience in the Group and
has extensive knowledge
of the global food and
beverage industry.
Marguerite has over 25 years
international experience
having served as lead client
partner at Deloitte Ireland for
a number of multinationals
operating in a broad range
of industries including food
and beverage, pharma and
technology.
During her career with
Deloitte, Marguerite served
as a senior partner and held
a number of leadership roles
within Deloitte Ireland.
Marguerite is a Fellow of
Chartered Accountants
Ireland and holds a Bachelor
of Commerce degree and
Masters in Accountancy.
Marguerite was appointed
Executive Director and Group
Chief Financial Officer in
September 2018.
Appointed: 30 September 2018
He has a wealth of business
leadership experience,
financial and operational
expertise and brings a
strategic mindset to the
advancement of Kerry’s
leading taste and nutrition
capabilities and unique
positioning.
Gerry joined Kerry’s
graduate programme in
1986 and has held a number
of senior financial and
business management roles,
primarily in the Americas
region, including regional
Chief Operating Officer and
regional Chief Executive
Officer.
He was appointed President
and Chief Executive Officer
of Kerry’s Global Taste &
Nutrition business in 2011.
Gerry has served as an
Executive Director on the
Board for 14 years.
Appointed: 13 May 2008
Philip has extensive business
leadership and international
experience following an
executive career in the
financial services industry
practice at Accenture.
Philip brings financial and
operational expertise as well
as significant board level
experience.
Philip was formerly Global
Chief Operating Officer for
the financial services industry
practice at Accenture and also
a member of the Accenture
Global Leadership Council.
He is a Fellow of Chartered
Accountants Ireland.
Philip was appointed
Chairman of the Board in
May 2018 and has served as
a Director for ten years. He is
Chairman of the Governance,
Nomination and Sustainability
Committee having previously
served as Senior Independent
Director and Chairman of the
Audit Committee.
Appointed: 20 February 2012 and as
Chairman 3 May 2018
Committee Membership
G
Committee Membership Key
A Audit Committee
G
Governance, Nomination and
Sustainability Committee
R Remuneration Committee
Indicates Committee Chair
Kerry Group Annual Report 2021
88
Directors’ Report Board of Directors
Board of
Directors
Non-Executive
Directors
Committee Membership Key
A Audit Committee
G
Governance, Nomination and
Sustainability Committee
R Remuneration Committee
Indicates Committee Chair
Kerry Group Annual Report 2021
Dr. Hugh Brady (62)
Senior Independent Non-Executive Director
Mr. Gerard Culligan (47)
Independent Non-Executive Director
Gerard has considerable knowledge of the
food industry, in particular the dairy and
agribusiness sectors, as well as many years
business management experience. He brings
insights to the Board that are reflective of the
Group’s heritage and the dairy community that
he represents.
Gerard operates his own business in the
agribusiness sector and is a director and
co-owner of two private companies in the
marine industry.
Appointed: 1 June 2017
Hugh’s biomedical research and academic
background brings an invaluable perspective
to the Board particularly in the areas of health
and wellbeing. He also brings a broad range of
international and leadership experience.
Hugh is currently President and Vice Chancellor
of the University of Bristol in the UK, a position
he has held since 2015. He is also President-
designate of Imperial College London, a role he
will take up on 1 August 2022.
Hugh had a successful career as a physician and
biomedical research scientist in the US where
he served on the faculty of Harvard Medical
School for almost a decade prior to returning
to his alma mater as Professor of Medicine and
Therapeutics in University College Dublin (UCD).
He was previously President of UCD from 2004
to 2013.
He is a non-Executive Director on the Board
of ICON plc where he also serves on the Audit
Committee.
Hugh joined both the Audit and Governance,
Nomination and Sustainability Committees in
2015. He was appointed Senior Independent
Director on 29 April 2021.
Appointed: 24 February 2014
Committee Membership A G
Ms. Fiona Dawson (55)
Independent Non-Executive Director
Dr. Karin Dorrepaal (60)
Independent Non-Executive Director
Fiona has over 30 years of experience in the
consumer food and beverage sector having
retired after a long and successful career with
Mars Inc during which she held a variety of
senior management roles.
She brings to the Board a deep knowledge of
the consumer food and beverage sector, an
understanding of global markets and general
management experience on a global scale.
Fiona also has a strong track record in
sustainability, health and wellbeing,
particularly in the areas of women’s
entrepreneurship and human rights. In May
2021, Fiona was awarded a CBE for services to
women and the UK economy.
Fiona is currently a non-executive director
of Marks and Spencer Group plc and Lego
Group. She is on a number of advisory Boards
including Trinity Business School in Dublin, and
The Social Mobility Foundation.
Fiona was appointed to the Remuneration
Committee on 14 February 2022.
Appointed: 4 January 2022
Committee Membership R
Karin is an experienced business leader who
also brings extensive pharmaceutical market
knowledge. She has wide ranging experience
as a non-Executive Director on an international
basis.
During her career she was an Executive
Director on the Board of Schering AG in Berlin
with responsibility for the Diagnostic Imaging
business as well as worldwide manufacturing
and procurement and was a partner at the New
York and Amsterdam office of an international
consultancy firm (formerly known as Booz
Allen & Hamilton) where she specialised in the
pharmaceutical industry.
Karin holds a Ph.D. and an MBA.
She is currently a non-Executive Director on
the Boards of Gerresheimer AG, Paion AG (vice
Chairperson) and Almirall S.A. Karin is also a
director of a number of private companies.
Karin joined the Remuneration Committee
in January 2015 and the Governance,
Nomination and Sustainability Committee
in December 2015.
Appointed: 1 January 2015
Committee Membership R G
Board of Directors
89
Ms. Emer Gilvarry (64)
Independent Non-Executive Director
Mr. Michael Kerr (62)
Independent Non-Executive Director
Mr. Tom Moran (66)
Independent Non-Executive Director
Emer is a highly experienced professional who
brings legal, business and corporate governance
expertise to the Board.
Emer is a former senior partner of law firm
Mason Hayes and Curran where she served as
Head of the Litigation group from 2001 to 2008,
Managing Partner from 2008 to 2014 and Chair
from 2014 to 2017.
Emer is currently the Senior Independent
Director at Greencoat Renewables plc and
is Chair of their Remuneration Committee.
She is also a director of a number of private
companies.
She previously served as a non-Executive
Director of Aer Lingus plc from 2014 to 2015 and
as a Council Member of The Economic and Social
Research Institute from 2014 to 2020.
Emer joined the Audit Committee in November
2020 and the Remuneration Committee on
16 June 2021.
Appointed: 1 November 2020
Committee Membership A R
Michael has over 36 years of investment
management experience having retired after a
long and successful career with Capital Group,
one of the world’s oldest and largest investment
management organisations.
He brings to the Board a detailed knowledge
of global equity capital markets, finance
knowledge, extensive business leadership skills
and insights into the North American market.
Michael is currently a non-executive director with
EOG Resources Inc, which is listed on the New
York Stock Exchange.
Michael joined the Audit Committee on
1 November 2021.
Appointed: 3 May 2021
Committee Membership A
Tom is an experienced leader who brings
extensive knowledge of the food and agriculture
industries combined with a broad range of
international diplomacy skills. He has been a
member of numerous Irish Government food
strategy committees including the most recent
AgriFood 2030 Strategy Group.
Tom had a long and distinguished career within
the Irish Public Sector where he served as
Secretary General of the Irish Department of
Agriculture, Food and the Marine and also held a
number of international policy and international
trade negotiation leadership roles.
Tom is currently a Board member of An Bord
Bia, the Irish Food Board, and chairs its Dairy
Subsidiary Board. He is Vice Chair of the Origin
Green Global Sustainability Council and is
also Chairman of the Irish Government Public
Appointments Service. Tom is a registered
Chartered Director.
Tom joined the Remuneration Committee in
February 2016 and was appointed Chair of
the Committee on 29 April 2021. He joined the
Governance, Nomination and Sustainability
Committee in November 2020. He also served as a
member of the Audit Committee from December
2015 to November 2020. Tom is currently the
designated workforce engagement Director.
Appointed: 29 September 2015
Committee Membership R G
Mr. Con Murphy (57)
Independent Non-Executive Director
Mr. Christopher Rogers (61)
Independent Non-Executive Director
Mr. Jinlong Wang (64)
Independent Non-Executive Director
Con has a deep knowledge of the food
industry, in particular the dairy and
agribusiness sectors. He brings insights to
the Board that are reflective of the Group’s
heritage and the dairy community that
he represents.
Con operates his own business in the
agribusiness sector and is a member of
the Board of a small private company. He
was previously the Chairman of the Irish
Montbeliarde Cattle Society.
Appointed: 1 June 2017
Christopher is an experienced non-Executive
Director with a broad business leadership
background who also brings extensive
knowledge of the foodservice industry together
with financial and risk management expertise.
He was formerly an Executive Director of
Whitbread plc for 11 years, serving as Finance
Director for 7 years and then as Global
Managing Director of Costa Coffee.
Christopher is currently Chairman of Wickes
plc and non-Executive Director at Sanderson
Design Group plc. He also continues to be a
non-Executive Director of Vivo Energy plc until
the completion of the sale of the business after
regulatory clearance later this year.
Christopher is a Fellow of Chartered
Accountants England and Wales. He is also a
visiting Fellow at Durham University (UK).
He was appointed Chairman of the Audit
Committee in May 2018 and joined the
Remuneration Committee in April 2020.
Appointed: 8 May 2018
Committee Membership A R
Jinlong is an experienced leader with more
than 30 years’ experience in global business
development, consumer branding and general
management. His in-depth understanding
of Asian markets, coupled with his extensive
knowledge of the Food & Beverage industry,
brings a key set of skills to the Board.
Jinlong holds a Bachelor’s degree in international
economics and trade from the University of
International Economics and Trade in Beijing and
a Juris Doctor degree from Columbia University
School of Law.
He was formerly President of Starbucks Coffee
Asia Pacific having served as Chairman and
President of Starbucks China. He also served as
Operating Partner of Hony Capital Limited and as
Group Chairman and Chief Executive Officer of
PizzaExpress.
He is currently a non-Executive Director on
the Boards of Sonova Holdings AG and Swire
Properties Limited.
Jinlong joined the Audit Committee on 3 May
2021.
Appointed: 5 January 2021
Committee Membership A
Kerry Group Annual Report 2021
90
Directors’ Report Report of the Directors
Report of the Directors
Directors and
Other Information
Directors
Philip Toomey, Chairman
Edmond Scanlon, Chief Executive Officer*
Marguerite Larkin, Chief Financial Officer*
Gerry Behan, President & CEO Kerry Taste & Nutrition*
Hugh Brady
Gerard Culligan
Fiona Dawson
Karin Dorrepaal
Emer Gilvarry
Michael Kerr
Tom Moran
Con Murphy
Christopher Rogers
Jinlong Wang
* Executive Director
Secretary and Registered Office
Ronan Deasy
Kerry Group plc
Prince’s Street
Tralee
Co. Kerry
V92 EH11
Ireland
Registrar and Share Transfer Office
Ronan Deasy
Registrar’s Department
Kerry Group plc
Prince’s Street
Tralee
Co. Kerry
V92 EH11
Ireland
Website
www.kerrygroup.com
Kerry Group Annual Report 2021
The Directors submit their Annual Report together with
the audited Consolidated Financial Statements for the
year ended 31 December 2021.
Principal Activities
Kerry is the world’s leading taste and nutrition
partner for the food, beverage and pharmaceutical
markets. Kerry innovates with its customers to create
great tasting products, with improved nutrition and
functionality, whilst ensuring better impact for the
planet.
Listed on the Euronext Dublin and London Stock
Exchanges, Kerry has an international presence with
152 manufacturing facilities across the world.
Results and Review of the Business
The Directors are pleased to report strong growth and
a good financial performance for 2021 with revenue of
€7.4bn (2020: €7.0bn), trading profit of €876m (2020:
€797m), profit before tax and non-trading items of €725m
(2020: €655m) and shareholders’ funds of €5.6bn (2020:
€4.7bn). Constant currency adjusted earnings per share
(EPS), which is before brand related intangible asset
amortisation and non-trading items (net of related tax),
increased by 12.1% to 380.8 cent (2020: 9.4% decrease).
Basic EPS of 430.6 cent increased by 37.6%. Trading
margin for the year increased by 40bps to 11.9% (2020:
11.5%). The Group achieved a free cash flow of €566m
(2020: €412m). Further details of the results for the year
are set out in the Consolidated Income Statement and
in the related notes forming part of the Consolidated
Financial Statements. The Group’s financial key
performance indicators are discussed on pages 34-35.
The Chairman’s Statement, the Chief Executive Officer’s
Review, the Business Reviews and the Financial Review,
which are included in the Strategic Report on pages
8-49, report on the performance of the Group’s business,
including M&A activity during the year and on future
developments.
Dividends
On 15 February 2022, the Directors recommended a
final dividend totaling 66.7 cent per share in respect of
the year ended 31 December 2021 (see note 10 to the
financial statements). This final dividend per share is an
increase of 10.1% over the final 2020 dividend per share
paid on 14 May 2021. This dividend is in addition to the
interim dividend paid to shareholders on 12 November
2021, which amounted to 28.5 cent per share.
The payment date for the final dividend is 6 May 2022 to
shareholders registered on the record date 8 April 2022.
Report of the Directors
91
Principal Risks and Uncertainties
In accordance with Section 327(1)(b) of the Companies
Act 2014 and the Central Bank (Investment Market
Conduct) Rules, a description of the principal risks and
uncertainties facing the Group are outlined in the Risk
Management Report on pages 77-84.
Research and Development
The Group is fully committed to ongoing technological
innovation in all sectors of its business, providing
integrated customer focused product development and
support by leveraging our global technology capabilities
and expertise. To facilitate this, the Group has invested
in highly focused research, development and application
centres of excellence with a strategically located
Global Technology & Innovation Centre, based in Naas,
Ireland which is supported by Regional Development
& Application Centres and a global knowledge
management infrastructure. Expenditure on research
and development applications and technical support
amounted to €297.2m in 2021 (2020: €281.9m).
Sustainability
In October 2020, the Group announced its 2030
sustainability strategy Beyond the Horizon, which
underpins Kerry’s future growth as it continues to
partner with its customers across the globe to create a
world of sustainable nutrition. Beyond the Horizon will
see Kerry work with customers to promote healthier and
more sustainable diets aiming to reach over two billion
people by 2030. The strategy also includes ambitions to
deliver for people, society and the planet with targets
across material topics including climate change, circular
economy and responsible sourcing.
Details regarding the Group’s sustainability strategy,
targets, performance, policies and programmes are
outlined in the Sustainability Review on pages 50-74.
Details of our disclosures relating to the Task Force on
Climate-related Financial Disclosures (TCFD) are outlined
on pages 68-74.
The Group will also publish its first separate 2021 Kerry
Group GRI Sustainability Report alongside the Annual
Report in 2022 which will detail the Group’s progress
against its sustainability strategy and targets in line with
Global Reporting Initiative (GRI) standards.
Share Capital
Details of the share capital are shown in note 27 of the
financial statements. The authorised share capital of
the Company is €35,000,000 divided into 280,000,000 A
ordinary shares of 12.5 cent each, of which 176,848,451
shares were in issue at 31 December 2021.
The A ordinary shares rank equally in all respects. There
are no limitations on the holding of securities in the
Company.
Kerry Group Annual Report 2021
92
Directors’ Report Report of the Directors
There are no restrictions on the transfer of fully paid
shares in the Company, but the Directors have the
power to refuse the transfer of shares that are not
fully paid. There are no deadlines for exercising voting
rights other than proxy votes, which must be received
by the Company at least 48 hours before the time of the
meeting at which a vote will take place. There are no
restrictions on voting rights except:
– where the holder or holders of shares have failed to
pay any call or instalment in the manner and at the
time appointed for payment; or
– the failure of any shareholder to comply with the
terms of Article 14 of the Company’s Articles of
Association (disclosure of beneficial interest).
The Company is not aware of any agreements between
shareholders which may result in restrictions on the
transfer of securities or on voting rights.
The Directors have the authority to issue new shares
in the Company up to a maximum of 20 million new A
ordinary shares. This authority will expire on the earlier
of the conclusion of the 2022 Annual General Meeting
(AGM) and close of business on 28 July 2022 and it is
intended to seek shareholder approval to renew the
authority at the AGM to be held on 28 April 2022.
Shareholders approved the authority for the Directors
to allot shares for cash on a non-pro rata basis up to a
maximum of 8,835,899 shares at the AGM held on 29
April 2021, representing 5% of the A Ordinary Shares
in issue on 15 March 2021. Shareholders also approved
an authority to allot a further 8,835,899 A Ordinary
Shares (5%) for cash on a non pro rata basis provided the
additional authority will only be used for the purpose of
an acquisition or specified capital investment announced
contemporaneously with the issue or which has taken
place in the preceding six month period and is disclosed
with the announcement of the issue. Neither authorities
have been exercised and will expire on the earlier of the
conclusion of the 2022 AGM and close of business on
28 July 2022. It is intended to seek shareholder approval
for their renewal at the 2022 AGM. During 2021, 148,415
shares were allotted pursuant to the Company’s Short
and Long-Term Incentive Plans as a result of shares
which vested and options which were exercised. Further
details are shown in note 28 to the financial statements.
The Company may purchase its own shares in
accordance with the Companies Act 2014 and the
Company’s Articles of Association. At the 2021 AGM,
shareholders passed a resolution authorising the
Company to purchase up to 5% of its own issued
share capital, but the authority was not exercised. This
authority is due to expire on the earlier of the conclusion
of the 2022 AGM and close of business on 28 July 2022
and it is intended to seek shareholder approval for its
renewal at the 2022 AGM.
Kerry Group Annual Report 2021
Substantial Interests
The Directors have been notified of the following
shareholdings of 3% or more in the issued share capital
of the Company:
Shareholder
Number Held
%
Kerry Co-operative
Creameries Limited (KCC)
Blackrock Investment
Management
20,528,000
11.6%
8,878,177
5.0%
Apart from the aforementioned, the Company has not
been notified of any interest of 3% or more in the issued
share capital of the Company.
Directors
The Board, at the date of this report, consists of a
Chairman, three Executive and ten independent Non-
Executive Directors. The names and biographical details
of the Directors are set out on pages 87-89. Following
the individual performance evaluation of all Directors, as
outlined in the Corporate Governance Report on page
107, the Board recommends the election and re-election
of all Directors seeking election and re-election.
The Directors’ and Company Secretary’s interests in
shares and debentures are included in the Remuneration
Report on pages 146-147.
Board and Committee Changes
Mr. Jinlong Wang was appointed to the Board on
5 January 2021 and joined the Audit Committee on
3 May 2021.
Ms. Joan Garahy retired from the Board following
the conclusion of the AGM on 29 April 2021 and was
succeeded as Senior Independent Director by Dr. Hugh
Brady and as Chair of the Remuneration Committee by
Mr. Tom Moran on the same date.
Mr. Michael Kerr was appointed to the Board on
3 May 2021 and joined the Audit Committee on
1 November 2021.
Ms. Emer Gilvarry was appointed to the Remuneration
Committee on 16 June 2021.
Ms. Fiona Dawson was appointed to the Board on
4 January 2022 and joined the Remuneration Committee
on 14 February 2022.
Mr. Philip Toomey will retire as Chairman and from
the Board at the conclusion of the AGM to be held
on 28 April 2022 and having served ten years will not
seek re-election.
Mr. Gerard Culligan and Mr. Con Murphy will also retire
from the Board at the conclusion of the AGM and will not
seek re-election.
The Articles of Association empower the Board to
appoint Directors, but also require such Directors
to retire and submit themselves for re-election at
the next AGM following their appointment. For the
purposes of the European Communities (Takeover Bids
(Directive 2004/25/EC)) Regulations 2006 specific rules
regarding the appointment and re-election of Directors
are referred to in the Governance, Nomination and
Sustainability Committee Report.
Corporate Governance
The Corporate Governance Report on pages 96-108 sets
out the Company’s application of the principles, and
compliance with the Provisions of the 2018 UK Corporate
Governance Code and Irish Annex (the Code).
Non-Financial Information
Pursuant to the European Union (Disclosure of Non-
Financial and Diversity Information by certain large
undertakings and groups) Regulations 2017, the Group
is required to report on certain non-financial information
to provide an understanding of its development,
performance, position and the impact of its activities,
relating to, at least, environmental matters, social
matters, employee matters, respect for human rights
and anti-bribery and anti-corruption. Information on
these matters can be found in the following sections of
the Annual Report, which are deemed to form part of
this Report: Sustainability Review on pages 50-74, Our
Business Model on pages 22-23, the Risk Management
Report on pages 75-85. Information on diversity can be
found in the Governance, Nomination and Sustainability
Committee Report on pages 115-120, Our People on
pages 18-19 and the Sustainability Review on page 60.
Going Concern and Long-Term Viability
Statements
The going concern and longer-term viability statements
in the Risk Management Report on pages 84-85 set
out the Company’s basis for the adoption of the
going concern basis of accounting in preparing the
Consolidated Financial Statements and the basis for
the Directors’ conclusion that they have a reasonable
expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the
next three years.
Directors’ Responsibility Statement
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable laws and regulations.
Report of the Directors
93
Irish company law requires the Directors to prepare
financial statements for each financial year, which give
a true and fair view of the assets, liabilities and financial
position of the Company and the Group, and of the
profit or loss of the Group for that period. Under that
law the Directors have elected to prepare group financial
statements in accordance with International Financial
Reporting Standards (‘IFRSs’) and IFRSs as adopted by
the European Union and Article 4 of the IAS Regulation
and have also chosen to prepare the parent company
financial statements under IFRSs and IFRSs as adopted
by the European Union. In preparing the financial
statements, the Directors are required to:
– select suitable accounting policies and then apply
them consistently;
– make judgements and estimates that are reasonable
and prudent;
– state that the financial statements comply with IFRS
and IFRSs as adopted by the European Union; and
– prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Group will continue in business.
The Directors are responsible for ensuring that the
Company keeps adequate accounting records which
correctly explain and record the transactions of the
Company, enabling at any time the assets, liabilities,
financial position and profit or loss of the Company to
be determined with reasonable accuracy and ensuring
that the financial statements are prepared in accordance
with IFRSs and IFRSs as adopted by the European Union,
comply with the Companies Act 2014 and as regards
to the Group financial statements, Article 4 of the IAS
Regulation and enable the financial statements to be
audited.
The Directors are also responsible for safeguarding the
assets of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and
other irregularities. The Directors are responsible for
the maintenance and integrity of the corporate and
financial information included on the Group’s website
www.kerrygroup.com. Irish legislation governing the
preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
In accordance with the Central Bank (Investment
Market Conduct) Rules, the Directors are required to
include a management report containing a fair review
of the business and a description of the principal risks
and uncertainties facing the Group. The Directors are
also required by applicable law and the Listing Rules
issued by Euronext Dublin and the UK Listing Authority
to prepare a Directors’ Report and reports relating to
Directors’ remuneration and corporate governance.
Kerry Group Annual Report 2021
94
Directors’ Report Report of the Directors
Each of the Directors, whose names and functions are
listed on page 90, confirms that, to the best of their
knowledge and belief:
– the Consolidated Financial Statements for the year
ended 31 December 2021 have been prepared in
accordance with IFRSs and IFRSs as adopted by the
European Union and as applied in accordance with
the Companies Act 2014. They give a true and fair
view of the assets, liabilities, and financial position
of the Group and the undertakings included in the
consolidation, taken as a whole, as at that date and its
profit for the year then ended;
– the Company financial statements, prepared in
accordance with IFRSs and IFRSs as adopted by the
European Union and as applied in accordance with the
Companies Act 2014, give a true and fair view of the
assets, liabilities and financial position of the Company
as at 31 December 2021;
– the Financial and Business Reviews on pages 36-
49 include a fair review of the development and
performance of the business for the year ended 31
December 2021 and the position of the Company and
the Group at the year end;
– the Risk Management Report provides a description of
the principal risks and uncertainties which may impact
the future performance of the Company and the
Group at the year end; and
– the Annual Report and Consolidated Financial
Statements, taken as a whole, provides the
information necessary for shareholders to assess the
Company’s and Group’s position and performance,
business model and strategy and is fair, balanced and
understandable.
Directors’ Compliance Policy Statement
It is the policy of the Company to comply with its
relevant obligations (as defined in the Companies
Act 2014). The Directors have drawn up a compliance
policy statement (as defined in section 225(3)(a) of the
Companies Act 2014) and arrangements and structures
are in place that are, in the Directors’ opinion, designed
to secure material compliance with the Company’s
relevant obligations. The Directors confirm that these
arrangements and structures were reviewed during
the financial year. As required by Section 225(2) of the
Companies Act 2014, the Directors acknowledge that
they are responsible for the Company’s compliance
with the relevant obligations. In discharging their
responsibilities under Section 225, the Directors relied
on the advice both of persons employed by the Company
and of third parties who the Directors believe have
the requisite knowledge and experience to advise the
Company on compliance with its relevant obligations.
Kerry Group Annual Report 2021
Accounting Records
To ensure that proper accounting records are kept
for the Company in accordance with section 281 to
285 of the Companies Act 2014, the Directors employ
appropriately qualified accounting personnel and
maintain appropriate accounting policies and systems.
The accounting records of the Company are maintained
at the Company’s registered office.
Accountability and External Audit
A statement relating to the Directors’ responsibilities in
respect of the preparation of the financial statements is
set out on pages 93-94 with the responsibilities of the
Company’s external Auditors outlined on page 158.
The Consolidated Financial Statements on pages 160-233
have been audited by PricewaterhouseCoopers (PwC),
Chartered Accountants.
The external Auditors, PwC who were appointed in
March 2016, will continue in office in accordance
with Section 383(2) of the Companies Act 2014.
A resolution authorising the Directors to determine
their remuneration will be proposed at the Annual
General Meeting.
Disclosure of Information to the
External Auditors
Each of the Directors, who were members of the Board
at the date of approval of this Report of the Directors,
confirms that:
– so far as they are aware there is no relevant audit
information of which the Company’s external auditors
are unaware; and
– they have taken all the steps that they ought to have
taken as a Director in order to make themselves aware
of any relevant audit information and to establish that
the Company’s external auditors are aware of that
information.
Memorandum and Articles of Association
The Company’s Memorandum and Articles of Association
set out the objects and powers of the Company. The
Articles of Association of the Company may only be
amended by way of special resolution approved by
shareholders in a general meeting.
A copy of the Articles of Association can be obtained
from the Company’s website www.kerrygroup.com.
Change of Control Provisions
The Group’s revolving credit facility includes a ‘Change
of Control’ provision which requires the Group to notify
the lending institutions of a change of control event
occurring. Each lender has the option to withdraw their
facilities in the event of a change of control occurring
unless they agree otherwise in writing.
Certain public senior notes issued by the Group contain
a provision that requires the Group to make an offer
to repurchase the notes in the event that a change of
control occurs which leads to a downgrading of the
rating assigned to the notes below investment grade.
Other than the ‘Change of Control’ provisions in those
arrangements, the Group is not a party to any other
significant agreements which contain such a provision.
Events After the Balance Sheet Date
Since the financial year end, the Group has proposed a
final dividend of 66.70 cent per A ordinary share.
The Group has entered into an agreement to acquire
100% of the shares of Almer Malaysia Sdn Bhd, based in
Malaysia and 92% of the shares of c-LEcta GmbH, based in
Germany.
The Group also expects to complete the previously
announced acquisition of 100% of the shares in Natreon.
Inc., in the first quarter of 2022.
Political Donations
During the year, the Company made no political
contributions which require disclosure under the
Electoral Act, 1997.
Group Entities
The principal subsidiaries and associated undertakings
are listed in note 36 to the financial statements.
Financial Instruments
The financial risk management objectives and policies,
along with a description of the use of financial
instruments are set out in note 24 to the financial
statements.
Information Required to be Disclosed by
Listing Rule 6.1.77, Republic of Ireland
Listing Authority
For the purposes of Listing Rule 6.1.77, the information
required to be disclosed can be found in the following
locations:
Section Topic
Location
(1)
(2)
(3)
(4)
Interest capitalised
Statement of
accounting policies
Publication of unaudited
financial information
Supplementary
information
Details of small related
party transactions
Note 33 to the
financial statements
Details of long-term
incentive schemes
Remuneration
Committee Report
(5) – (14) Section 5 - 14 of Listing
Not applicable
Rule 6.1.77
Report of the Directors
95
Cross References
All information cross referenced in this report forms part
of the Report of the Directors.
Signed on behalf of the Board:
Philip Toomey
Chairman
15 February 2022
Edmond Scanlon
Chief Executive Officer
15 February 2022
Kerry Group Annual Report 2021
96
Directors’ Report Corporate Governance Report
GOVERNANCE REPORT
Corporate Governance Report
Board continued to assess and monitor
the Group’s culture to ensure that it is
aligned with the Group’s strategy and
values and is adequately embedded
across the Group.
and considered the enhanced
environmental, social and governance
reporting disclosures included in the
2021 Annual Report and the separate
GRI Sustainability Report.
As a Board, we recognise the benefits
of understanding the views of all our
stakeholders and we ensure that their
interests are considered in Board
discussions and in our decision making.
Details of stakeholder engagement
activities during the year, including
the work of the designated Workforce
Engagement Director, are outlined on
pages 99-104.
The Board, in conjunction with
the Governance, Nomination and
Sustainability Committee, ensures
that there are robust plans in place to
facilitate Board, executive and senior
management succession. During 2021,
the Board undertook a formal process
to recruit two new non-Executive
Directors, both of whom bring skills
and experience that will strengthen
the Board. Details of the non-Executive
Director and Committee changes that
occurred during the year, are set out
in the Governance, Nomination and
Sustainability Committee Report on
page 119.
I have served ten years as a Director,
including nearly four years as
Chairman, and as previously announced
I will retire from the Board, and as
Chairman, at the next AGM and will be
succeeded by Chairman Designate, Tom
Moran. His appointment as Chairman
Designate followed a formal succession
process by a sub-committee of the
Board, led by the Senior Independent
Director Dr. Hugh Brady.
The Board recognises its role in
providing guidance and strategic
oversight in relation to the
implementation of the Group’s 2030
sustainability strategy, Beyond the
Horizon. Following its official launch in
October 2020, the Board expanded the
role of the Nomination Committee and
renamed it the Governance, Nomination
and Sustainability Committee.
During the year this Committee
monitored how the implementation
of the 2030 sustainability strategy was
progressing, reviewed performance
achieved versus agreed sustainability
related commitments and targets,
Diversity at Board level has been a
focus for the Governance, Nomination
and Sustainability Committee for a
number of years and also continues
to be a key factor when considering
Board refreshment. During 2021, the
Committee also monitored the progress
made against the diversity targets at
senior management level to ensure
the appropriate level of skills and
diversity exists to support the delivery
of the Group’s strategy and financial
targets. Diversity at Board level in
terms of gender, nationality and ethnic
background have all been improved.
In addition, the Board is committed to
achieving the recommended gender
diversity target in 2022.
The Group announced, at the
Capital Markets Day held in October,
its commitment to achieve equal
gender representation across all
senior management roles by 2030.
Improving and monitoring diversity
beyond gender and below Board
level will continue to be a key area of
focus for the Board and the Executive
Management in 2022.
Each year the Board undertakes a
formal evaluation of its effectiveness
and that of its Committees. In 2021, this
was an internal self-assessment which
was conducted by the Chairman and
the Senior Independent Director. The
evaluation concluded that the Board
and its Committees are performing
effectively. Details of the process and
the resulting actions from this review
are outlined on page 107.
Details of the Group’s activities and the
operations of the Board, contained in
the following report, outline the manner
in which the Group has achieved
compliance with the Code through the
activities and operations of the Board
and its Committees during the year.
Philip Toomey
Chairman of the Board
Philip Toomey
Chairman of the Board
Dear Shareholder,
I am pleased to present
the Kerry Group Corporate
Governance Report for the
year ended 31 December
2021.
The Corporate Governance Report
describes how we apply the main
Principles of good governance as set out
in the 2018 UK Corporate Governance
Code and the Irish Annex (the Code). On
behalf of the Board, I can confirm that
for the year under review the Group has
complied with all relevant Provisions of
the Code other than one remuneration
related Provision which will be complied
with from 1 January 2023 when
Executive Director pension entitlements
are aligned with those available to the
general workforce in Ireland.
Since the declaration of the COVID-19
pandemic in 2020, the Board has
focused on managing the impact of
the pandemic on all stakeholders and
has overseen the Group’s response by
providing critical guidance and support
to Executive Management. Physical
Board meetings were not possible
during the height of COVID-19 related
restrictions but resumed in the latter
part of 2021 as these restrictions were
eased.
The Board sets the tone and shared
values for the way in which the
Group operates and recognises the
importance of culture to the success of
the business model. During 2021, the
Kerry Group Annual Report 2021
Corporate Governance Report
97
Board Leadership and Company Purpose
Kerry Group Governance Framework
Kerry Group has a clear Governance Framework with defined responsibilities and accountabilities as outlined
in the diagram below. This Governance Framework is designed to safeguard long term shareholder value and
ensure that the Group contributes to wider society.
Shareholders
Board of Directors
Executive Management
Audit
Committee
(page 109)
Governance, Nomination
and Sustainability
Committee
(page 115)
Remuneration
Committee
(page 121)
Finance
Committee
(page 42)
Risk Oversight
Committee
(page 76)
Sustainability
Council
(page 69)
Board Role and Operations
The Board currently comprises 14 members; a non-
Executive Chairman, Chief Executive Officer, Chief
Financial Officer, one other Executive Director, and ten
non-Executive Directors.
The Directors are of the opinion that the composition
of the Board provides the extensive relevant business
experience needed to oversee the effective operation
of the Group’s activities and that the individual
Directors bring a diverse range of skills, knowledge and
experience, including financial as well as industry and
international experience, necessary to provide effective
governance and oversight of the Group.
The Board’s role is to promote the long-term sustainable
success of the Company generating value for all its
stakeholders, including shareholders, employees,
customers, suppliers and the communities in which it
operates, while developing and monitoring strategy,
and managing the risks that face the organisation. It is
also responsible for embedding the Company’s purpose,
instilling the appropriate values and behaviours,
together with monitoring and assessing culture
throughout the organisation.
The Board continued to oversee the Group’s response
to COVID-19 providing critical guidance and support to
Executive Management. The Board was provided with
regular updates on progress, in relation to the health
and safety of employees, support for customers and
communities, continuity of supply both from suppliers
and to customers, and the Group’s financial and
operational performance.
Schedule of Matters Reserved for the Board
– Appointments to the Board;
– Ensuring compliance with corporate governance,
legal, statutory and regulatory requirements;
– Approval of the overall Group strategic and operating
plans;
– Monitoring and reviewing risk management and
internal control systems;
– Monitoring and assessing culture;
– Reviewing and assessing the adequacy of the Group’s
whistleblowing arrangements;
– Approval of acquisitions and divestitures;
– Approval of significant capital expenditure;
– Approval of Treasury policy including changes to the
Group’s capital structure;
– Approval of dividend policy and dividends;
– Approval of annual budgets;
– Approval of preliminary results, interim management
statements and interim financial statements;
– Assessment of the long-term viability of the Group
and the going concern assumption; and
– The preparation of, and confirmation that, the
annual report and financial statements present a
fair, balanced and understandable assessment of the
Company’s position, performance and prospects.
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Information Flow
The Chairman ensures that all Directors have full and
timely access to such information as they require to
discharge their responsibilities fully and effectively.
Board papers are issued to each Director at least one
week in advance of Board meetings and include the
meeting agenda, minutes of the previous Board meeting
and all papers relevant to the agenda. The Chairman, in
conjunction with the Company Secretary, has primary
responsibility for setting the agenda for each meeting.
All Directors continually receive comprehensive reports
and documentation on all matters for which they have
responsibility to allow them to fully complete their duties
as a Director. All Directors participate in discussing
strategy, trading updates, financial performance,
significant risks and operational activities in addition to
the Group’s purpose, vision, values and culture. Board
meetings are of sufficient duration to ensure that all
agenda items and any other material non-agenda items
that may arise are adequately addressed. In addition
to formal meetings, the Chairman and Chief Executive
Officer maintain regular contact with all Directors. The
Chairman holds informal meetings or calls with non-
Executive Directors without the Executive Directors to
discuss issues affecting the Group.
All directors have access to the advice and services of
the Company Secretary, who is responsible for advising
the Board on all governance matters. In accordance with
an agreed procedure, in the furtherance of their duties,
each Director has the authority to engage independent
professional advice at the Company’s expense.
Strategy
The Board collaborated with Executive management in
the development of the Group’s updated strategy and
associated mid-term financial targets to help ensure
that the direction of the plan was appropriate and a
good fit for the Group in the long term. During the
year the Board provided input and strategic guidance
to Executive management in relation to the strategic
priorities, key growth platforms, capital investment
requirements, the key risks facing the plan and how they
should be addressed and managed. The Board approved
the updated strategic plan at the October Board meeting
prior to its release at the Capital Markets Day held
virtually later that month. The Chairman Philip Toomey,
along with a number of Directors, attended the Capital
Markets Day on behalf of the Board.
The Board also oversaw and approved the strategic M&A
transactions during the year including the disposal of
the Consumer Foods Meats and Meals business and the
acquisition of Niacet, which significantly enhanced the
Group’s capability in food preservation.
Presentations were also received from the Company’s
advisors throughout the year on matters such as the
specialty ingredients sector, food trends and their
implications for the Group, the future of work and its
implications for mergers and acquisitions, as well as
corporate defence and shareholder activism. Through
these reviews and ongoing discussions on strategy, the
Board is confident that Kerry’s strategic priorities and
Kerry Group Annual Report 2021
key growth platforms will continue to be the key
drivers of organic growth and acquisition investment
in the future.
The Board ensures that the decisions it makes are
aligned with the achievement of the Group’s strategy
and are made in the long-term interest of the Group
and its stakeholders. This is particularly the case when
deciding how to prioritise the allocation of resources
(human and financial capital) across competing research
and development activities, acquisition opportunities
and major capital expenditure projects.
During the year, the Board also reviewed the business
model and how it is executed. The Board is satisfied
that the business model is both sustainable in the
long-term and optimally structured to enable delivery
of the Group’s strategy. Details of the Group’s strategy
are outlined in Strategy and Financial Targets on pages
28-31.
Purpose, Values and Culture
Our Purpose, Inspiring Food, Nourishing Life underpins
our culture and is reflected in our values.
The Group’s purpose is guided by the Group’s Vision
to be our customers’ most valued partner, creating a
world of sustainable nutrition. The Board is satisfied
that the updated strategy is aligned to the Group’s
purpose which is also guided by our Values of Courage,
Enterprising Spirit, Inclusiveness, Open-mindedness
and Ownership. The Board is led by the Group’s purpose
during its discussions and when making decisions on the
matters that are reserved for its consideration. Further
details of the Group’s purpose and values are outlined
on pages 4 and 16.
The Group’s culture is based on a common
understanding of our values, underpinned by our
practices of Safety First, Quality Always and a robust
risk management framework consisting of policies and
procedures, including a Code of Conduct which defines
business conduct standards for anyone working for, or
on behalf of the Group.
The Board recognises the importance of its role in
setting the tone of Kerry’s culture and embedding it
throughout the Group. In addition to the Board, the
Executive Team have responsibility to ensure that the
policies and behaviours set at Board level are effectively
communicated and implemented throughout the Group.
The Group’s refreshed Code of Conduct, which was
approved by the Board during the year, aligns with the
Group’s purpose and values and the MyKerry internal
website provides a platform for employees to access the
Group’s policies.
The Board monitors and assesses the culture of the
Group through a number of mechanisms including
compliance with Group policies, internal audit,
formal and informal channels for employees to
raise concerns, including the Leader Pulse Check,
employee engagement survey and the Group’s Speak
Up arrangements and feedback from the designated
Workforce Engagement Director.
Board Activities
The Board’s activities during the year included the items
set out below:
Strategy
– helped shape the refreshed strategy which will evolve
the Group as the world’s leading taste and nutrition
partner for the food, beverage and pharmaceutical
markets;
– approved the Group’s refreshed strategic plan, the
new mid-term financial targets and the enhanced
sustainability targets ahead of the Capital Markets
Day;
– reviewed and approved the Group’s strategy relating
to mergers, acquisitions and divestitures; and
– monitored the implementation of the Group’s 2030
sustainability strategy Beyond the Horizon and progress
against targets therein.
Operational/Commercial
– received regular updates from Executive Directors on
how COVID-19 was impacting the Group’s operations
with a particular focus on employee health & safety;
– approved M&A transactions (including the disposal of
the Consumer Foods Meats and Meals business and
the acquisition of Niacet) and considered the learnings
from completed acquisitions; and
– approved significant capital expenditure projects.
Financial
– received reports from the Chief Financial Officer
at each meeting in respect of the Group’s financial
performance, including how it was impacted by
COVID-19;
– received regular reports from the Chief Financial
Officer on Investor Relations activities;
– approved the Group’s Preliminary Results, Annual
Report and Accounts, Interim Financial Statements
and Interim Management Statements;
– approved the payment of an interim dividend and
recommended the payment of a final dividend;
– approved the going concern basis of accounting and
the long-term viability statement;
– considered and agreed the treasury policy and
approved significant treasury activities during the year
including the issuance of €750m Sustainability-Linked
Notes; and
– approved the Group Budget for the 2022 financial
year.
Internal Controls and Risk Management
– Confirmed that a robust assessment of the Group’s
principal risks and uncertainties, including emerging
risks, was completed and approved the risk appetite
for each of the principal risks.
– received regular reports from the Chairman of the
Audit Committee on its oversight of internal controls,
risks and risk management;
– received regular reports from business and functional
leaders on the Group’s key risks; and
– confirmed the effectiveness of the internal control and
risk management framework.
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99
Governance and Stakeholders
– received regular reports from the Chairman of the
Governance, Nomination and Sustainability Committee
on its activities;
– approved the appointment of Mr. Michael Kerr, and
Ms. Fiona Dawson as non-Executive Directors and
changes to the composition of Board Committees;
– conducted an internally facilitated Board evaluation
and considered its outcome;
– considered compliance with the 2018 UK Corporate
Governance Code;
– reviewed and approved the Corporate Governance
Policy and the Board Diversity Policy;
– confirmed that appropriate arrangements and
structures are in place to ensure material compliance
with the relevant obligations under Section 225 of the
Companies Act 2014;
– confirmed that appropriate structures are in place
for the proportionate and independent investigation
and follow-up of matters raised through the Group’s
whistleblowing arrangements; and
– received updates on a range of corporate governance
and regulatory matters from external advisors.
People and Culture
– received regular reports from the Chairperson of the
Remuneration Committee on its activities;
– reviewed the results of the employee engagement
survey and the Leader Pulse Check conducted in 2021;
– received and considered reports from the designated
Workforce Engagement Director on his activities
during the year. Details are outlined in Governance in
Action on page 104;
– received and considered presentations from the Chief
Executive Officer and the Chief Human Resources
Officer on talent and succession planning;
– reviewed and approved the Group’s refreshed Code of
Conduct; and
– monitored and assessed the culture of the Group to
ensure it promotes integrity and openness, values
diversity and is responsive to the views of shareholders
and wider stakeholders.
Stakeholder Engagement
While the Board’s primary duty is to act in a way that
promotes the long-term success of the Company for
the benefit of the shareholders, the Directors also
acknowledge the need to have regard for the interests of
all other stakeholders in their discussions and decision
making. Engagement with stakeholders enables better
informed decision making, thereby increasing the
likelihood of long-term successful outcomes. Similarly,
the Board also recognises the need to maintain a
reputation for high standards of business conduct in
its actions and decisions. Details of our stakeholder
engagement are set out below:
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Shareholders Why we Engage
Active engagement with shareholders ensures they are aware of the Group’s business environment,
strategy, performance and sustainability commitments. The views of our shareholders help to inform
the strategic decision making of the Board.
How we Engage
The Board ensures it has an effective channel of communication with existing and potential shareholders.
The Investor Relations team and Executive Management maintain ongoing engagement with the
investment community, through a variety of different mediums including investor meetings and
conferences, investor events, ongoing investor calls and correspondence.
During 2021, meetings were held with approximately 1,000 investors and Kerry’s Investor Relations team
and Executives participated at 21 investor conferences.
A virtual Capital Markets Day was held in October 2021, where Kerry’s refreshed strategy, mid-term financial
targets and enhanced sustainability commitments were announced. This event was broadcast on Kerry’s
website and the format involved a number of business presentations, followed by a live questions and
answers session with the investment community. A large number of investors accessed the live event, with
a significant level of views on the playback facility post the event.
In addition, a significant amount of published material including results releases, presentations,
share price information and news releases are accessible to all shareholders on the Group’s website
www.kerrygroup.com.
Shareholder presentations are made at the time of release of the Group’s full year and half year results
and interim management statements, following which the Chief Executive Officer and Chief Financial
Officer provide the Board with an update on feedback received.
The Company’s Annual General Meeting (AGM) provides an opportunity for the Directors to deliver
presentations and to answer questions of shareholders, both institutional and private.
Key Topics
Key topics for shareholders included Group performance and outlook, Kerry’s refreshed strategic plan
and mid-term targets, portfolio developments, marketplace dynamics, the potential effect from supply
chain challenges including the external inflationary pressures, in addition to sustainability strategy,
climate change transition and ESG disclosures.
Our Response
Regular updates are provided by the Chief Financial Officer to the Board on matters raised by the
investment community during the year, as well as updates on the composition of the Group’s share
register.
When necessary, the Board Chairman and Committee Chairs engage with shareholders on specific topics
and where relevant provide feedback to the Directors. During the year, the Remuneration Committee
Chairperson consulted with a number of large institutional shareholders in relation to Executive Director
Remuneration.
Whilst the 2021 AGM was held in constrained circumstances due to COVID-19 related restrictions, all
shareholders were able to exercise their right to vote through the appointment of a proxy. Shareholders
were also invited to join, listen to the business of the meeting and to ask questions via a webcast which
was accessed through the Company’s website. The Company also provided a facility for shareholders to
submit questions by email or by post in advance of the AGM.
All the Committee Chairs attended the AGM, and all Committee Chairs were available throughout the year
to engage with shareholders.
The Board participated in the development of and approved the refreshed strategy and the new mid-term
financial targets as well as the enhanced sustainability targets before their release at the Capital Markets
Day held in October.
The Board contributed, reviewed and approved the significant sustainability developments and related
reporting enhancements actioned in 2021.
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Employees
Why we Engage
Regular and ongoing engagement with employees is key to attracting, developing and retaining a talented,
dedicated and motivated workforce which ensures the successful delivery of our strategy and achieving
our purpose.
How we Engage
The Group undertakes regular two-way listening activities with our 22,000+ employees throughout the year
including one-to-one engagement, employee briefings and Town Halls led by business leadership teams.
Each year the Group runs an employee engagement survey and during October 2021, 88% of our
employees participated in the survey, which is followed by leader-led feedback sessions to discuss
strengths, opportunities for continued improvement and to agree action plans for the following year.
In addition, an interim Leader Pulse Check was also completed mid-year, targeting our senior leaders
across the Group.
The Group’s learning and leadership academies over the past 12 months have contributed to enhanced
leader engagement, through provided coaching to leaders and access to thought leadership content to
enhance their leadership impact, helping to create more positive team environments that value, encourage
and support inclusivity.
The Group maintains a wellbeing framework, focused on the pillars of Nutritional, Physical, Emotional
and Financial health and provides access to several tools and resources, such as the Employee Assistance
Programme.
In 2021, the Group improved communication channels with employees including the introduction of a new
dedicated digital employee communication platform.
In addition, the designated Workforce Engagement Director Mr. Tom Moran engaged directly with business
leadership teams and employees. Details of these activities are outlined on page 104.
The Group has a Speak Up facility to allow employees and other stakeholders to confidentially report
matters of concern so that timely investigation and appropriate action can be taken.
Key Topics
The employee engagement survey reinforced Kerry’s core strengths in the areas of health & safety and
customer focus. It also demonstrated that employees have a clear understanding of their roles and how
their roles align with the Group’s purpose and vision.
Areas identified for focus in 2022 include continuing to put our people first, by promoting a healthy,
diverse and positive working environment, ensuring senior leaders communicate clearly how employee’s
roles contribute to our continued success and empowering our employees to take ownership and make
decisions to improve our ways of working and embrace agile working principles so that everyone can
perform at their best for Kerry.
A further key topic that arose during 2021 was the impact of the sale of the Consumer Foods Meats and
Meals business for employees working in the business and in the wider Group.
Our Response
The Workforce Engagement Director provided regular feedback to the Board on employee engagement
activities during the year.
The Board provided feedback on the global priorities and plans to address the matters raised by employees
as part of the employee engagement survey and the Leader Pulse Check.
The Board also received regular updates from the Chief Executive Officer and Chief Human Resources
Officer on the health, safety and wellbeing of employees as the impact of the COVID-19 pandemic
continued through 2021. The Board ensured that the Group prioritised protecting the safety, health and
wellbeing of employees at all times, enabling all 152 manufacturing and R&D facilities to continue to
operate through the pandemic.
In approving the disposal of the Consumer Foods Meats and Meals business, the Board considered
the impact of the decision on the 4,500 employees who worked in those businesses and ensured that
appropriate actions were taken to mitigate the impact on the employees involved.
As part of the Group’s ambition to achieve the highest standards of inclusion, diversity, engagement
and belonging, the Board approved an enhanced target of equal gender representation within all senior
management roles by 2030. In addition, the Board approved the Group signing the United Nations Pledge
and Code of Conduct for Business for LGBTI.
The Board approved the new Code of Conduct together with associated enhanced processes and systems
to make it easier for employees to Speak Up when they have matters of concern.
The Board approved the Kerry Global Employee Recognition Programme, Inspiring People, which was
launched in 2021 and reinforces employee recognition in line with the Group’s values.
Details of employee engagement activities are outlined in Our People on pages 14-21, the Sustainability
Review on pages 50-74 and the separate GRI Sustainability Report which can be found on the
Group’s website.
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Customers and
Consumers
Why we Engage
Strong engagement with customers and consumers enables Kerry to operate a customer-centric
business model and helps Kerry achieve its Vision of being “our customers’ most valued partner,
creating a world of sustainable nutrition”.
How we Engage
Kerry operates a proven customer-centric business model that enables us to work side by side with
customers as their co-creation partner of choice.
The Group interacts with customers on a daily basis at multiple levels from dedicated relationship and
account managers, customer and industry conferences as well as tailored innovation forums.
Through collaboration and innovation, the Group helped customers to make healthier and more
sustainable products in response to changing consumer needs. This includes assisting customers to
enhance the nutritional profile of their products and to reduce food waste. The Group also partnered
with customers to reduce complexity and preparation times in the face of labour shortages and social
distancing requirements.
The Kerry Health and Nutrition Institute (KHNI) shares Kerry’s scientific expertise and advances
awareness of the science of healthier food. Supported by an independent Scientific Advisory Council,
KHNI is enabling those within the sector to acquire new knowledge from the Group’s scientists,
academics and other experts, as they explore challenges in the food and beverage industry.
Key Topics
Our customers are responding to the acceleration of key trends in the food and beverage industry,
with increased demand for sustainable nutrition solutions, including enhancing health and immunity,
plant protein options, and products addressing a diverse range of environmental and social
sustainability criteria.
Key topics included the ongoing impact of global end-to-end supply chain challenges, changing
consumer needs and preferences and the customers’ ability to operate in an environment impacted
by COVID-19.
Our customers also want to reduce food waste and the impact that their production activities have on
the planet and in particular on climate change.
Our Response
Feedback from customer engagement activities was discussed at each Board meeting as part of the
business updates provided by the Executive Directors.
The Board approves the Group’s significant investment in Research & Development activities and
together with management, ensures that this resource is focused on those projects that can best meet
customers’ needs and thereby enable the Group to achieve its purpose and strategic objectives in
relation to revenue growth, margin expansion, return on investment and enabling food production in a
more environmentally sustainable manner.
During 2021, the Board approved a number of acquisitions, the most significant being the acquisition
of Niacet, a global leader in food preservation technologies. This acquisition significantly enhances the
Group’s capabilities in food protection and preservation solutions thereby enabling a reduction in food
waste. The acquisition of Biosearch Life enhances the Group’s capabilities in proactive nutrition and
brings leading clinical research capabilities and functional food technologies across multiple life stages
and need states.
As Kerry continues to evolve, the acquisitions and investments completed in 2021 help to underpin
the Group’s growth strategy as Kerry continues to partner with customers to create a world of
sustainable nutrition.
The Board also considers customer engagement matters as part of the overall Group sustainability
strategy and together with the Governance, Nomination and Sustainability Committee, receives
updates on these matters from the Group Head of Sustainability. With the increasing importance
of environmental and social issues for our customers, the Board also considers the integration of
sustainability within our value proposition and received updates on this from the Chief Commercial
Officer and the Group Head of Sustainability throughout the year.
Further details are outlined in Our Business Model on pages 22-23, Strategy and Financial Targets on
pages 28-31, the Sustainability Review on pages 54-57 and the separate GRI Sustainability Report on
the Group’s website.
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Suppliers
Why we Engage
By engaging with suppliers, we can ensure they continue to meet Kerry’s high standards in product
safety, quality, and business ethics, whilst respecting human rights and the environment.
How we Engage
Kerry engages with suppliers on a daily basis to manage commercial and operational activities
through a dedicated procurement and supply chain function, two way communication, supplier
meetings, multi-stakeholder forums and participation at industry conferences.
The Group takes a risk-based approach to supplier assessments to ensure ongoing safety, quality
and responsible sourcing.
The Group’s suppliers are integral to supporting the delivery of innovative solutions for customers
and consumers.
Key Topics
Key topics for suppliers include quality and food safety, service levels, business continuity, capacity,
cost, innovation and responsible sourcing requirements such as Kerry’s Scope 3 carbon target.
During 2021, the ability to supply and the cost of various inputs increased for many suppliers due to
a number of factors including COVID-19, extreme weather events, global shipping challenges, labour
availability and supply and demand volatility challenges.
Our Response
Through the Group’s sustainability strategy, Beyond the Horizon, the Board ensures that the organisation
works with suppliers who provide raw materials to the required safety and quality standards, produced
on a sustainable basis and with the proper regard for the fair treatment of workers across the supply
chain.
Further details on our responsible sourcing strategy are outlined in the Sustainability Review on pages
65-66 and the separate GRI Sustainability Report on the Group’s website.
Community
Why we Engage
By fostering strong relationships with the communities in which we operate, we can help support
livelihoods and create a better society whilst protecting the environment.
How we Engage
Kerry engages with community representative bodies, charities and leading non-governmental
organisations in all the regions in which it operates.
The Group directly supports a range of community projects through its MyCommunity programme
and encourages employees to participate in local initiatives through paid volunteer hours.
Key Topics
Key topics include employment and local economic development, social inclusion, access to nutrition,
food security, and sustainable food production as well as the opportunity for organisations like Kerry
to play a lead role in environmental protection and community support.
Our Response
The Board considers local community engagements as part of the overall Group sustainability strategy.
In 2021, the Board approved the funding required to enable the Group to embark on a new phase of its
partnership with the UN World Food Programme in Burundi while continuing to support the work
of Concern Worldwide in Niger and Special Olympics in Europe.
As a leader in the food and beverage industry, the Board ensured that the Group is in a position to
play a vital role in the global supply chain providing sustainable nutrition solutions for over a billion
consumers.
Further details of these engagements and the Group’s MyCommunity programme are outlined in the
Sustainability Review on pages 60-61 and the separate GRI Sustainability Report on the Group’s website.
Consideration of Stakeholder Views in the Decision-Making Process
By understanding the matters of importance to our stakeholders, the Board can consider their needs and concerns in
its decision making. The Board ensures that material decisions, which could impact on stakeholder groups, are taken
with due regard to their interests.
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GOVERNANCE IN ACTION:
Designated Workforce Engagement Director – Activities in 2021
Throughout 2021, the designated Workforce Engagement Director, Mr. Tom Moran, participated in engagements to
assess employee sentiment at all employee levels, across all group-wide locations and in different workplace contexts.
As a result of the global pandemic, the 2021 plan was built on the 2020 activities, enabling him to review the continued
progress and further evolution of the Group’s employee engagement strategies. In addition, the 2021 plan had a
particular focus on the Americas and APMEA regions given the limited opportunities for Mr. Tom Moran to interact with
employees in these regions during 2020. Whilst participation in employee engagement activities continued to be virtual
in 2021, it is expected to return to some level of in person activities during 2022. Details of the employee engagement
activities undertaken by Mr. Tom Moran during 2021 are outlined below:
– attendance at regional executive team meetings and employee townhalls;
– attendance at team meetings held by the Group Information and Communications Technology function;
– participation in briefings on the Group’s Integrated Operations Transformation programme, including attendance at
monthly plant leader engagement calls in the Americas;
– attendance at regional and global events on the topic of Diversity, Inclusion and Belonging, including Black History
Month, International Women’s Day and Pride;
– participation in a thought leadership session with our employee engagement survey provider on global trends in
employee engagement and impacts on engagement arising from the COVID-19 pandemic;
– participation in briefings on employee engagement strategies from various global business and functional leaders and
their teams across all regions;
– participation in briefings on employee career development initiatives across a number of functions, for example our
global Research, Development and Applications function.
Global Priorities for Employee Engagement in 2021 were
– Leadership – inclusive leadership through building effective teams, setting clear goals, and engaging with employees to
help them collaborate and be at their best. Ensuring that all employees clearly understand how their role plays a part in
achieving Kerry’s purpose and vision for the future;
– Talent Development – attracting, developing and retaining talent, recognising people for their contributions, building
a positive and inclusive workplace that reflects the broad mix of capabilities and cultural diversity within Kerry, where
employees feel they belong; and
– Simplification – employees feeling involved, empowered and enabled to make decisions and take ownership to achieve
objectives. Providing opportunities for employees to make suggestions and changes to drive greater simplification
across the business.
Mr. Tom Moran held regular meetings with the Chief Human Resources Officer and the Group Human Resources Team
to provide his feedback from the engagement activities. He also presented regular reports to the Board on the activities
undertaken and shared his feedback and findings where applicable.
He is satisfied that the employee engagement process is being successfully operated within the Group and, despite the
pandemic constraints, has been very productive. He, and the officers leading the process, have kept the Board informed
on its progress and on the views of the workforce.
Annual General Meeting
All Directors attend the AGM and are available to meet
with shareholders and answer questions as required.
Notice of the AGM, proxy statement and the Annual
Report and financial statements are sent to shareholders
at least 20 working days before the meeting. A separate
resolution is proposed at the AGM on each substantially
separate issue including a particular resolution relating
to the adoption of the Directors’ and Auditors’ reports
and the financial statements. Details of the proxy votes
for and against each resolution, together with details
of votes withheld are announced after the result of
the votes by hand. These details are published on the
Group’s website following the conclusion of the AGM. At
the AGM held on 29 April 2021, there were no material
votes cast against any resolutions.
Whistleblowing Arrangement
The Group’s whistleblowing arrangement includes an
externally facilitated multi-lingual hotline ‘Speak Up’
through which all employees and third parties can raise
concerns in confidence about possible wrong doings in
financial reporting and other matters, 24 hours a day by
phone or online.
All whistleblowing incidents are reviewed by the Legal
and Ethical Compliance team and formally investigated
by the relevant functional heads depending on the
nature of the concern raised.
In 2021, the Audit Committee reviewed the
whistleblowing incidents and outcomes and provided
updates to the Board which enabled the Board to assess
the adequacy of the whistleblowing arrangements
and to review the reports arising from its operation.
The Board is satisfied that the Group’s whistleblowing
arrangements are operating effectively.
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Division of Responsibilities
Chairman and Chief Executive Officer
The roles of the Chairman and Chief Executive Officer
are separate and the division of duties between them is
formally established, set out in writing and agreed by the
Board. The Chairman is responsible for leadership of the
Board and ensuring its effectiveness in all respects. The
Executive Directors, led by the Chief Executive Officer,
are responsible for the management of the Group’s
business and the implementation of Group strategy
and policy.
Senior Independent Director
The principal role of the Senior Independent Director
(SID) is to provide a sounding board for the Chairman
and to act as an intermediary for other Directors as
required. The SID is responsible for the appraisal of the
Chairman’s performance throughout the year. The SID is
also responsible for leading a formal succession process
for the role of Chairman. The SID is available to meet
shareholders upon request, in particular if they have
concerns that cannot be resolved through the Chairman
or the Chief Executive Officer.
Non-Executive Directors
The non-Executive Directors’ main responsibilities are to
review the performance of management and the Group’s
financial information, assist in strategy development,
and ensure that appropriate and effective systems of
internal control and risk management are in place. The
non-Executive Directors review the relationship with
external auditors through the Audit Committee and
monitor the remuneration structures and policy through
the Remuneration Committee.
The non-Executive Directors provide a valuable breadth
of experience and independent judgement to Board
discussions.
Company Secretary
Each Director has access to the advice and services of
the Company Secretary, whose responsibilities include
ensuring that Board procedures are followed, assisting
the Chairman in relation to corporate governance
matters, ensuring the Company complies with its legal
and regulatory obligations and facilitating appropriate
quality information flows between the business and
the Board.
Commitments
Under the terms of their appointment all Directors
agreed to the time commitment schedule which requires
them to allocate sufficient time to discharge their
responsibilities effectively. This matter is considered
by the Governance, Nomination and Sustainability
Committee on an ongoing basis in accordance with its
Terms of Reference.
All Directors must seek prior approval of the Board
in advance of undertaking any additional external
appointments. Before approving any additional external
appointment, the Board considers the time commitment
required for the role. Each proposed external
appointment is reviewed independently.
Independence
The Board, as a whole, has assessed the non-Executive
Directors’ independence and confirmed that, in its
opinion, all non-Executive Directors are independent in
accordance with the Code.
Conflicts of Interest
Under the terms of their appointment all Directors have
continuing obligations to update the Chairman as soon
as they become aware of a situation that could give rise
to a conflict or a potential conflict of interest.
Board Committees
The Board has three Committees, the Audit Committee,
the Governance, Nomination and Sustainability
Committee and the Remuneration Committee, which
support the operation of the Board through their focus
on specific areas of governance.
Each Committee is governed by its Terms of Reference,
available from the Group’s website www.kerrygroup.com
or upon request, which sets out how it should operate
including its role, membership, authority and duties.
Reports on the activities of the individual Committees
are presented to the Board by the respective Committee
Chairs.
Further details on the duties, operation and activities of
all Board Committees can be found in their respective
reports on pages 109-151 and these reports form part of
the Governance Report.
Meetings and Attendance
The Board meets regularly to ensure that all its duties
are discharged effectively. All Directors are expected
to prepare for and attend meetings of the Board, the
Committees of which they are members and the AGM.
In the event that a Board member cannot attend or
participate in the meeting, the Director may discuss and
share opinions on agenda items with the Chairman,
Chief Executive Officer, Senior Independent Director or
Company Secretary in advance of the meeting.
A total of 11 meetings were held in 2021, with meetings
held virtually up until the latter part of the year due to
COVID-19 related restrictions to ensure that the health
and safety of our Board and colleagues was protected.
Individual attendance at the Board and Committee
meetings is set out in the table below.
Kerry Group Annual Report 2021
106
Directors’ Report Corporate Governance Report
Directors
Board
Audit
Committee
Governance, Nomination and
Sustainability Committee
Remuneration
Committee
Philip Toomey
Edmond Scanlon 1
Marguerite Larkin 1
Gerry Behan 1
Hugh Brady 2
Gerard Culligan
Karin Dorrepaal
Joan Garahy 3
Emer Gilvarry 4
Michael Kerr 5
Tom Moran 6
Con Murphy
Christopher Rogers
Jinlong Wang 7
11/11
11/11
11/11
11/11
11/11
11/11
11/11
4/4
11/11
7/7
11/11
11/11
11/11
11/11
–
–
–
–
5/6
–
–
3/3
6/6
1/1
–
–
6/6
3/3
5/5
–
–
–
5/5
–
5/5
–
–
–
5/5
–
–
–
–
–
–
–
–
–
6/6
2/2
4/4
–
6/6
–
6/6
–
1 Executive Directors.
2 Dr. Hugh Brady was unable to attend one committee meeting due to a diary conflict.
3 Ms. Joan Garahy retired from the Board following the conclusion of the AGM on 29 April 2021.
4 Ms. Emer Gilvarry was appointed to the Remuneration Committee on 16 June 2021.
5
6 Mr. Tom Moran was appointed Chair of the Remuneration Committee on 29 April 2021.
7 Mr. Jinlong Wang was appointed to the Board on 5 January 2021 and the Audit Committee on 3 May 2021.
Mr. Michael Kerr was appointed to the Board on 3 May 2021 and was appointed to the Audit Committee on 1 November 2021.
Attendance statistics represent: Total number of meetings attended by the Director / Total number of meetings held
during the year which they were eligible to attend.
Composition, Succession and Evaluation
Board Induction and Development
On appointment to the Board, each new non-Executive Director undergoes a full formal induction programme
organised by the Chairman and supported by the Company Secretary. The purpose of the induction programme is to
enable new Directors to gain a full understanding of the Group, governance related matters and Directors’ duties and
responsibilities. The induction programme includes presentations on the Group’s operations and results, meetings
with Executive Management and an outline of the principal risks and uncertainties facing the Group. Details of the
induction programme undertaken by Mr. Michael Kerr are outlined in the Governance in Action below.
GOVERNANCE IN ACTION (example):
New Director Induction
Mr. Michael Kerr was appointed to the Board on 3 May 2021. Following his appointment, Mr. Kerr underwent a formal
induction programme which was tailored to his individual requirements and included the following induction activities.
Induction Activities
– provision of a detailed information pack including key corporate governance policies, board papers, financial and
strategic documents and information on Directors’ duties and responsibilities;
– meetings with the Executive Directors;
– meetings with the Chairman, the Senior Independent Director and Remuneration Committee Chairperson, and the Audit
Committee Chairman;
– meetings with functional leaders on matters such as board and corporate governance, internal audit, strategy, investor
relations, human resources and sustainability;
– meetings with business leaders of the Taste & Nutrition and the Consumer Foods businesses to obtain an overview of
each business;
– meetings with external auditors and other advisors; and
– site visits to see first-hand the Group’s operations while engaging with employees and senior management.
Kerry Group Annual Report 2021
Corporate Governance Report
107
Ms. Fiona Dawson who was appointed to the Board with
effect from 4 January 2022, will complete a full formal
induction programme tailored to her requirements over
the coming months.
Company Secretary and senior management, ability to
communicate issues of importance and concern, their
knowledge and effectiveness at meetings and the overall
time and commitment to their role on the Board.
Throughout the year, the Board as a whole engages
in development through a series of consultations with
subject matter experts on a range of topics including
corporate governance and strategy. Presentations
are also made by Executive Directors and senior
management on various topics throughout the year in
relation to their areas of responsibility.
On an annual basis, an ‘off-site‘ Board meeting is
scheduled at a Group location and is combined with a
comprehensive schedule of activities over a week-long
period, to allow non-Executive Directors further develop
their understanding of the Group’s activities and meet
with local senior management and emerging talent. Due
to the COVID-19 pandemic, the ‘off site’ Board meeting
did not take place in 2021.
As part of their personal development plans,
individual non-Executive Directors were also afforded
the opportunity to visit a number of the Group’s
international facilities and operations. In 2021,
Mr. Michael Kerr visited the Savoury Taste Centre
of Excellence and manufacturing facility in Clark,
New Jersey, USA and the Global Technology and
Innovation Centre in Beloit, Wisconsin, USA. Due to the
COVID-19 pandemic, all other non-Executive Directors’
international site visits did not occur. Individual Board
members training requirements are reviewed with
the Chairman and Company Secretary and training is
provided to address these needs.
Board Performance Evaluation
In accordance with provisions of the Code, a
performance evaluation of the Board is carried out
annually and facilitated externally every third year.
In 2021, the Board conducted an internal self-evaluation
of the performance of the Board, Board Committees,
the Chairman and individual Directors against a set
of pre-defined key criteria. The review was led by the
Chairman of the Board and the Senior Independent
Director and was facilitated by the Company Secretary.
The review was undertaken using Thinking Board,
Independent Audit Limited’s governance self-assessment
process. Independent Audit Limited, based in the UK, is
recognised as a leading firm of board reviewers, and has
no other connections to the Group.
Topics covered during the Board Performance Evaluation
included Board composition and succession planning,
board meetings and papers, strategy and financial
oversight, mergers and acquisitions, people and culture,
stakeholder engagement and risk management.
The Chairman appraised the performance of each
of the non-Executive Directors by meeting each
Director individually. The key areas reviewed were
independence, contribution and attendance at Board
meetings, interaction with Executive Directors, the
In addition, the Senior Independent Director formally
appraised the performance of the Chairman. This
appraisal was similar to the non-Executive Director
evaluation process which included feedback from
all Directors on the Chairman’s performance during
the year.
In December 2021, the non-Executive Directors met
without the presence of the Executive Directors and,
led by the Chairman, undertook a formal review of the
performance of the individual Executive Directors.
To conclude on the appraisal of the non-Executive
Directors, the Chairman and the Executive Directors,
results are collated, summarised and presented to
the Board. The appraisal process concluded that each
Director is performing well and is committed to their
role in terms of dedication of time and attendance
at meetings.
At the December Board meeting, the Board considered
the outcomes of the Board evaluation report (including
the Board Committees). Overall, the Board concluded
that no area of significant weakness had been identified
and that it and its committees operated effectively
throughout the period under review. A number of
points for improvement were identified and action
plans established to address them. The areas for further
improvement identified from the 2021 performance
evaluation included recommendations relating to
Board composition and succession planning, executive
succession planning, structure and content of Board
papers, director training, stakeholder engagement
and the appropriate time allocation between strategic
priorities and other matters at Board meetings.
Progress against recommendations from the previous
evaluation were also considered and the Board is
satisfied that improvements have been made which have
enhanced the operation and effectiveness of both the
Board and its Committees.
The Chairman, along with the Company Secretary, will
ensure that areas for improvement identified from the
2021 evaluation report and areas for consideration
arising from the Directors’ appraisal, where identified,
will be considered during 2022.
In line with the requirements of the Code, the
performance evaluation of the Board in 2022 will be
externally facilitated, three years since the last externally
facilitated evaluation in 2019.
Kerry Group Annual Report 2021
108
Directors’ Report Corporate Governance Report
Audit, Risk and Internal Control
Risk Management and Internal Controls
The internal control framework in Kerry Group
encompasses the policies, processes, tasks and
behaviours, which together facilitate the Group’s
effective and efficient operation by enabling it
to respond appropriately to significant business,
operational, financial, compliance and other risks to
achieve its business objectives.
The systems which operate in Kerry Group provide
reasonable, but not absolute, assurance on:
– the safeguarding of assets against unauthorised use
or disposition; and
– the maintenance of proper accounting records and the
reliability of the financial information produced.
The Board has delegated certain duties to the Audit
Committee in relation to the ongoing monitoring
and review of risk management and internal control
systems. The work performed by the Audit Committee is
described in its report on pages 109-114.
Full details of the risk management systems are
described in the Risk Management Report on pages
75-78.
The principal risks and uncertainties facing the Group,
including those that could threaten the business model,
future performance, solvency or liquidity are described
on pages 78-84. Emerging risks are also identified,
analysed and managed as part of the same process as
the Group’s other principal risks as described on page
78. The Directors confirm that they have carried out a
robust assessment of these risks and the actions that are
in place to mitigate them.
The Directors confirm that they have also reviewed
the effectiveness of the systems of risk management
and internal control which operated during the
period covered by these financial statements and
up to the date of this report. Based on the review
performed, the Directors concluded that for the year
ended 31 December 2021, the Group’s systems of risk
management and internal control were effective. The
procedures adopted comply with the guidance contained
in Guidance on Risk Management, Internal Control and
Related Financial and Business Reporting as published
by the Financial Reporting Council in the UK.
Kerry Group Annual Report 2021
Features of Internal Control in Relation to
the Financial Reporting Process
The main features of the internal control and risk
management systems of the Group in relation to the
financial reporting process include:
– the Board review and approve a detailed annual
budget and monitor performance against the budget
through periodic Board reporting;
– prior to submission to the Board with a
recommendation to approve, the Audit Committee
review the Interim Management Statements, the
Interim and Annual Consolidated Financial Statements
and all formal announcements relating to these
statements;
– adherence to the Group Code of Conduct and Group
policies published on the Group’s intranet ensures
the key controls in the internal control system are
complied with;
– monthly reporting and financial review meetings are
held to review performance at business level ensuring
that significant variances between the budget and
detailed management accounts are investigated and
that remedial action is taken as necessary;
– the Group has a Financial Compliance function to
establish compliance policies and monitor compliance
across the countries in which the Group operates;
– the Group operates an internal control self-assessment
process covering material finance, operational and
compliance controls across the Group;
– a well-resourced and appropriately skilled Finance
function is in place throughout the Group;
– completion of key account reconciliations at reporting
unit and Group level;
– centralised Taxation and Treasury functions and
regional Shared Service Centres established to
facilitate appropriate segregation of duties;
– the Group Finance Committee has responsibility
for raising finance, reviewing foreign currency risk,
making decisions on foreign currency and interest rate
hedging and managing the Group’s relationship with
its finance providers;
– the Board, through the Audit Committee, completes an
annual assessment of risks and controls;
– appropriate ICT security environment; and
– the Internal Audit function continually reviews
the internal controls and systems and makes
recommendations for improvement which are
reported to the Audit Committee.
Fair, Balanced and Understandable
The Directors have concluded that the Annual Report
and Consolidated Financial Statements, taken as
a whole, provide the information necessary for
shareholders to assess the Group’s and Company’s
position and performance, business model and
strategy and is fair, balanced and understandable. This
assessment was completed by the Audit Committee and
the activities undertaken in reaching this conclusion are
outlined on page 111.
GOVERNANCE REPORT
Audit Committee Report
The Committee continued its work
to strengthen non-financial controls
and governance arrangements
which included oversight of a project
to refresh the Group’s Code of
Conduct which is a practical guide to
upholding the Group’s commitment
to the highest standards of integrity
and ethical behaviour. Each regular
meeting included reviews of risk and
compliance related activities and
further details with regard to these
matters are set out on page 112.
The Committee focused on
monitoring the integrity of the
Group’s Financial Statements and
announcements relating to the
Group’s financial performance. It
reviewed the work completed by
management in respect of the Going
Concern and Viability Statements,
including a consideration of the
continuing impact of COVID-19
and the potential impact of climate
related risks and concluded that
there was no threat to the Group’s
prospects or viability. Further details
are set out on pages 84-85. The
Committee also assisted the Board
in determining that the Annual
Report and Consolidated Financial
Statements, when 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, performance,
business model and strategy. The
significant issues that the Committee
considered in relation to the financial
statements and how these issues
were addressed are set out on
page 111.
The Committee oversaw the
relationship with the external
auditor, including monitoring
all matters associated with their
appointment, remuneration,
performance and independence.
Christopher Rogers
Chairman of the
Audit Committee
“ During the year the
Committee continued to
focus on monitoring the
effectiveness and integrity
of the Group’s financial
reporting, internal control
and risk management
processes.”
Dear Shareholder,
On behalf of the Audit Committee,
I am pleased to present my report
for the year ended 31 December
2021. The report outlines how
the Committee discharged its
responsibilities during the year
in relation to financial and other
reporting, risk management and
internal control, the Internal Audit
function and our relationship and
interaction with the external auditor.
The Committee supported the
Board in assessing the principal and
emerging risks facing the Group,
particularly in the context of the
ongoing COVID-19 pandemic.
This included reviewing the Group’s
risk management and internal
control systems and overseeing
the operation of the Internal
Audit function.
Audit Committee Report
109
Following a detailed planning
process, PwC again conducted a
largely remote audit across the
Group and the Committee reviewed
the scope and results of the audit
and the effectiveness of the process.
The work completed in this regard is
outlined on page 113.
As outlined on page 114, the
Committee considered the
requirements of the Companies Act
2014 in relation to the Directors’
Compliance Statement and is
satisfied that appropriate steps have
been undertaken by the Company to
ensure that it is materially compliant
with its relevant obligations.
Ms. Joan Garahy retired as a Director
and member of the Committee at
the company’s AGM on 29 April 2021
and I would like to extend my sincere
thanks to her for her service to the
Committee during her tenure.
Looking ahead to 2022, the
Committee’s key priorities will
include maintaining oversight of
the Group’s risk management and
internal control processes, sustaining
a strong culture of risk management
across the Group, continuing to
monitor the impact of climate
change on assumptions and taking
a proactive approach in anticipating
and preparing for any legislative or
regulatory changes which may be
required to internal controls and
reporting.
I trust you will find this report useful
in understanding the operation
and activities of the Committee
during the year and I welcome any
comments from shareholders on
the report.
Christopher Rogers
Chairman of the Audit Committee
Kerry Group Annual Report 2021
110
Directors’ Report Audit Committee Report
Roles and Responsibilities
The main roles and responsibilities of the Committee,
which reflect the UK Corporate Governance Code and
the Irish Annex and the Guidance on Audit Committees,
are set out in its written Terms of Reference which are
available from the Group’s website www.kerrygroup.com
or upon request.
The Board is also satisfied that together, the members
of the Committee, as set out in their biographical
details on pages 87-89, bring a broad range of relevant
skills, experience and expertise, from a wide variety
of industries and backgrounds, and as a whole have
competence relevant to the sectors in which the Group
operates. The Company Secretary is the Secretary of the
Committee.
The primary responsibilities outlined in the terms of
reference are included in the table below:
Primary Responsibilities of the Audit Committee
– monitoring the integrity of the Group’s financial
statements, including reviewing significant financial
reporting judgements contained in them;
– reviewing the Interim Management Statements, the
Interim and Annual Consolidated Financial Statements
and considering the appropriateness of accounting
policies and practices;
– advising the Board on whether it believes there are any
material uncertainties which may impact the Group’s
ability to continue as a going concern or the Group’s
long-term viability;
– advising the Board on whether the Annual Report and
Consolidated Financial Statements, when taken as a
whole is fair, balanced and understandable;
– assisting the Board in its responsibilities in regard to
the assessment of the principal and emerging risks
facing the company, the monitoring of risk management
and internal control systems, including a review of
effectiveness;
– reviewing the operation and effectiveness of the Group
Internal Audit function;
– making recommendations to the Board in relation to
the appointment, re-appointment and removal of the
Group’s external auditor as well as monitoring their
effectiveness and independence;
– reviewing, on behalf of the Board, the Group’s
whistleblowing arrangements for its employees and third
parties to raise concerns in confidence about possible
wrongdoings in financial reporting or other matters; and
– advising the Board in relation to compliance with stock
exchange and other legal or regulatory requirements.
Committee Membership
The Audit Committee currently comprises five
independent non-Executive Directors; Dr. Hugh Brady,
Ms. Emer Gilvarry, Mr. Jinlong Wang, Mr. Michael Kerr and
is chaired by Mr. Christopher Rogers.
Mr. Jinlong Wang was appointed to the Committee on
3 May 2021 and Mr. Michael Kerr was appointed on
1 November 2021.
Ms. Joan Garahy retired from the Board and the Audit
Committee following the conclusion of the AGM on
29 April 2021.
The Board is satisfied that both Mr. Christopher Rogers
and Mr. Michael Kerr meet the specific requirements for
recent and relevant financial experience as set out in
the Code.
Kerry Group Annual Report 2021
Committee Meetings
The Committee met six times during the year and
attendance at these meetings is outlined on page 106.
Typically, the Chief Executive Officer, the Chief Financial
Officer, the Group Financial Controller, the Company
Secretary and the Head of Internal Audit, as well as
representatives of the external auditor are invited to
attend meetings of the Committee. In addition, the
Chairman of the Board attends meetings at the invitation
of the Committee. When required, other key executives
and senior management are invited to attend to present
and provide deeper insight on various topics as are
required by the Committee to discharge its duties.
The external auditor and the Head of Internal Audit have
direct access to the Committee Chairman at all times
and meet with the Committee, without other Executive
Management being present, on a formal basis at least
annually in order to provide additional opportunity for
open dialogue and feedback.
After each Committee meeting, the Chairman of the
Committee reports to the Board on the key issues which
have been discussed.
Committee Evaluation
As outlined in detail on page 107, an internal evaluation
of Board effectiveness included a review by the
Committee of its own effectiveness. The output was
discussed by the Committee and it was concluded
that the Committee continued to operate effectively
throughout the year as well as identifying ongoing areas
of focus for the 2022 financial year.
Financial Reporting and
Significant Financial Judgements
The Audit Committee reviewed the Interim Management
Statements, the Interim and Annual Consolidated Financial
Statements and all formal announcements relating to
these statements before submitting them to the Board
of Directors with a recommendation to approve. These
reviews focused on, but were not limited to:
– the appropriateness and consistency of accounting
policies and practices;
– the going concern assumption;
– compliance with applicable financial reporting
standards and corporate governance requirements as
well as the clarity and completeness of disclosures; and
– considering the significant areas of complexity,
management judgement and estimation that had been
applied in the preparation of the Consolidated Financial
Statements in accordance with the accounting policies.
Audit Committee Report
111
The Committee has been regularly briefed by Group
management on interaction with the Irish Auditing and
Accounting Supervisory Authority (‘IAASA’) in respect of
their review of the 2020 Annual Report and Consolidated
Financial Statements in line with their statutory functions
and normal practice. All matters arising from this review
have been concluded satisfactorily.
The Committee considered the impact of climate change
on the Group’s Consolidated Financial Statements and
agreed that the disclosures outlined on pages 68-74
made in response to the recommendations of the
Task Force on Climate-related Financial Disclosures
are appropriate and that the assumptions used in the
financial statements as outlined in note 1 are consistent
with these disclosures.
The Committee has, with the support of PwC as external
auditor, reviewed the suitability of the accounting policies
which have been adopted and whether management
have made appropriate judgements and disclosures. The
table below sets out the significant matters considered by
the Committee in relation to the Consolidated Financial
Statements for the year ended 31 December 2021.
Significant Financial Reporting Judgements
Impairment
of Goodwill
and Indefinite
Life Intangible
Assets
Goodwill and indefinite life intangible assets, as disclosed in note 12 to the Consolidated Financial
Statements, represents the largest number on the Group balance sheet at €4.7 billion. The Committee
considered the process to complete the annual impairment review of the Group’s goodwill and indefinite
life intangible assets and specifically the assumptions used for the future cash flows, discount rates,
terminal values and growth rates. This included consideration of the impact of the pace and extent
of economic recovery in some markets as a result of COVID-19 in addition to the potential impact of
climate change on such assessments and a consideration of the sensitivity analysis run by management.
Following discussions with senior management and the external auditor, the Committee found that
the methodology used for the above valuation and annual impairment review are appropriate and no
impairment was identified.
Going Concern
and Viability
Statement
The Committee assessed the effectiveness of the process undertaken by management to evaluate
going concern which included reviewing and challenging management’s assumptions and modelling
of projected cashflows and, in particular those related to the continuing impact of COVID-19 and the
potential impact of climate related risks on profitability and liquidity on future trading performance. The
Committee also considered the Group’s financing facilities and future funding plans. Based on this, the
Committee confirmed there were no material uncertainties that cast a significant doubt on the Group or
the Company’s ability to continue as a going concern and therefore the application of the going concern
basis for the preparation of the financial statements continued to be appropriate and recommended the
approval of the viability statement.
Business
Combinations
The Group acquired five businesses during the financial year which were accounted for as business
combinations. The Committee reviewed the methodology and assumptions applied in determining
these provisionally estimated fair values and found the methodology and assumptions to be appropriate
following discussion with senior management and the external auditor.
Taxation
Significant judgement and a high degree of estimation is required when arriving at the Group’s tax
charge and liability. The Committee, in conjunction with tax professionals, reviewed and discussed the
basis for the judgments in relation to uncertain tax positions and challenged management on their
assertions and also considered the outcome of the external auditors’ review of the tax charge and
liability. As a result, the Committee believes the impact of uncertain tax positions has been appropriately
reflected in the tax charge and liability.
Fair, Balanced and Understandable
At the request of the Board, the Audit Committee reviewed
the content of the Annual Report and Consolidated
Financial Statements to ensure that it is fair, balanced and
understandable, and provides the information necessary
for shareholders to assess the Group’s and the Company’s
position, performance, business model and strategy.
– the systematic approach to review and sign-off carried
out by senior management with a focus on consistency
and balance; and
– a detailed report from senior finance management
outlining the process through which they assessed
the narrative and financial sections of the 2021 Annual
Report to ensure that the criteria of fair, balanced and
understandable has been achieved.
In fulfilling this responsibility, the Committee considered
the following:
– the timetable for the co-ordination and preparation
of the Annual Report and Consolidated Financial
Statements, including key milestones as presented at
the December Audit Committee meeting;
Management ensured that the draft Annual Report
and Consolidated Financial Statements were available
to the Audit Committee in sufficient time for review in
advance of the Committee meeting to facilitate adequate
discussion at the meeting.
Kerry Group Annual Report 2021
112
Directors’ Report Audit Committee Report
Having considered the above, in conjunction with the
consistency of the various elements of the reports,
the narrative reporting and the language used, the
Committee confirmed to the Board that the Annual
Report and Consolidated Financial Statements, 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, performance,
business model and strategy.
Internal Control and Risk Management
The Audit Committee supports the Board in its duties
to review and monitor, on an ongoing basis, the
effectiveness of the Group’s risk management and
internal control systems. A detailed overview of the
Group’s risk management framework is set out in the
Risk Management Report on pages 75-78.
Throughout the year, the Committee:
– reviewed and approved the assessment of the principal
risks and uncertainties, including climate change and
emerging risks, that could impact the achievement of
the Group’s strategic objectives as described on pages
78-84;
– reviewed and approved the risk appetite for each of
the Group’s principal risks and recommended the risk
appetites as outlined for approval by the Board;
– received presentations on a selection of principal risks
and discussed with senior management the material
internal controls that exist to mitigate these to levels
within the Group’s risk appetite;
– reviewed quarterly reports from the Head of Internal
Audit based on internal audits completed outlining non-
compliances with Group controls and managements’
action plans to address them;
– considered reports from the Head of Internal Audit on
fraud investigations or other significant control matters
which occurred during the year and approved plans to
address and remediate the issues identified;
– received updates from the Group Financial Controller
on any control weaknesses identified through monthly
financial review meetings;
– considered the results of the Kerry Control Self
Assessment (the internal control self-assessment
review of material finance, operational and compliance
controls) and concluded that the controls are operating
effectively;
– received presentations from management on work
completed to refresh the Group’s Code of Conduct
which includes sections on protecting our people,
working with integrity, safeguarding our information
and assets and caring for our communities;
– assessed the Group’s risk management and internal
control framework in line with the FRC Guidance on Risk
Management, Internal Control and Related Financial
and Business Reporting; and
– reviewed the report from the external auditor in respect
of significant financial accounting and reporting issues,
together with significant internal control weakness
observations.
Kerry Group Annual Report 2021
In addition to the above, the Board received two updates
from ICT management with regard to the Group’s ICT
governance and information security programme and its
ability to address cybersecurity threats particularly in the
context of its criticality to the business and an increase
in the global risk level. Further detail with regard to the
Group’s information systems and cybersecurity controls
are outlined on page 82 of the Risk Report.
The Audit Committee, having assessed the above
information, is satisfied that the internal control and risk
management framework is operating effectively and has
reported this opinion to the Board.
Internal Audit
The Audit Committee is responsible for monitoring and
reviewing the operation and effectiveness of the Group
Internal Audit function including its focus, plans, activities
and resources. To fulfil these duties the Committee:
– reviewed and approved the Group Internal Audit
function’s charter, strategy and annual plan;
– considered and were satisfied that the competencies,
experience and level of resources within the Internal
Audit team were adequate to achieve the proposed
plan;
– considered the role and effectiveness of Internal Audit
in the overall context of the Group’s risk management
framework and was satisfied that the function has
appropriate standing within the Group;
– received quarterly updates from the Head of Internal
Audit on the delivery of the 2021 plan and on the
principal findings from the work of Internal Audit and
management’s actions to remediate issues identified;
– considered the impact of remote versus on-site auditing
in certain jurisdictions as a result of ongoing COVID-19
travel restrictions;
– received updates on the nature and extent of non-audit
activity performed by Internal Audit;
– ensured that the Head of Internal Audit had regular
meetings with the Chairman of the Audit Committee
and the Committee met with the Head of Internal Audit
without the presence of Executive Management;
– ensured that the Head of Internal Audit had access to
the Chairman of the Board if required; and
– ensured co-ordination between Group Internal Audit
and the external auditor to maximise the benefits from
clear communication and co-ordinated activities.
In order to comply with the Chartered Institute of
Internal Auditors (CIIA) requirements, an External Quality
Assessment (EQA) by an independent body is conducted
at least every five years to confirm conformance with the
International Professional Practice Framework (IPPF) of
the CIIA. The most recent EQA was completed in 2017 and
the next review will be completed in 2022. On an annual
basis, to ensure ongoing compliance with the IPPF, the
Group Internal Audit function has an internal Quality
Assurance and Improvement Program (QAIP) in place.
On the basis of the above, the Committee concluded
that for 2021 the Group Internal Audit function operated
effectively and is satisfied that the quality, experience and
expertise of the function is appropriate for the Group.
External Auditor
On behalf of the Board, the Audit Committee has
primary responsibility for overseeing the relationship
with, and performance of, the external auditor. This
includes making recommendations to the Board on
the appointment, re-appointment and removal of the
external auditor, assessing their independence and
effectiveness and approving the audit fee.
During the year, the Committee met with the external
auditor without management present to discuss any
issues that may have arisen during the audit of the
Group’s Consolidated Financial Statements.
Independence and Provision of Non-Audit Services
The Committee is responsible for ensuring that the
external auditor is independent and for implementing
appropriate safeguards where the external auditor also
provides non-audit services to the Group.
PwC confirmed to the Audit Committee that they are
independent from the Group under the requirements of
the Irish Auditing and Accounting Supervisory Authority’s
Ethical Standards for Auditors. PwC were appointed as
the Group’s external auditor in 2016 and the Committee
will ensure that in accordance with EU legislation in
relation to Audit Reform as adopted in Irish legislation,
the external auditor will be rotated at least once
every ten years. The audit lead engagement partner
for the financial year ended 31 December 2021 is Enda
McDonagh who was appointed in 2021 following the
rotation of the previous partner.
In accordance with the Group’s policy on the hiring of
former employees of the current external auditor, the
Committee reviews and approves any appointment of an
individual, within three years of having previously been
employed by the current external auditor, to a senior
managerial position in the Group.
A formal policy governing the provision of non-audit
services by the external auditor is in place and is reviewed
and approved by the Audit Committee annually. This
policy is in accordance with applicable laws and takes
into account the relevant ethical guidance for auditors.
This policy is designed to safeguard the objectivity and
independence of the external auditor and to prevent the
provision of services which could result in a potential
conflict of auditor independence. The policy outlines the
services which can be provided by the external auditor,
the relevant approval process for these services, and
those services which the external auditor is prohibited
from providing.
In 2021, all non-audit services and fees were approved by
the Audit Committee in line with policy. The Committee
is satisfied that the non-audit fees paid to PwC, which
were minimal, did not compromise their independence
or objectivity. Full details of the fees paid to the external
auditor during the year for non-audit services are
outlined in note 3 to the financial statements. Having
considered all of the above, the Committee concluded
that the Group’s external auditor is independent.
Audit Committee Report
113
Effectiveness
Post completion of the 2020 audit, in conjunction with
PwC, review meetings were held with senior finance
management across all regions and it was confirmed
by both parties that no issues had arisen during the
audit process. This review considered the process and
technology changes which were implemented to support
conducting the audit remotely and were satisfied that it
did not compromise the quality of the audit.
At the October Audit Committee meeting, PwC outlined
to the Committee in detail the 2021 external audit plan
which, similar to 2020, would be conducted remotely. The
Committee discussed the significant audit risks and key
audit matters, audit scope and materiality amongst other
matters. The Audit Committee agreed that the plan and
the materiality at which any misstatements should be
reported by PwC to the Committee was appropriate.
Prior to the finalisation of the 2021 Consolidated
Financial Statements, the Audit Committee received
a detailed presentation and final report from PwC.
The Committee also considered feedback from the
lead partner and senior executives in concluding that
PwC effectively delivered against the objectives of the
agreed audit plan.
In assessing the effectiveness of the external auditor, the
Audit Committee also considered the following:
– the quality of presentations to the Board and Audit
Committee;
– the technical insights provided relevant to the Group;
– key audit findings, including their robustness and
perceptiveness in handling of key accounting and audit
judgements; and
– their demonstration of a clear understanding of the
Group’s business and key risks.
On the basis of the above the Committee is satisfied with
the effectiveness of the external auditors.
Appointment
PwC were appointed as external auditor in March 2016
following a comprehensive tender process which was
overseen by the Audit Committee. On an annual basis,
the Committee reviews the appointment of the external
auditor, taking into account the auditor’s effectiveness
and independence. On that basis, the Committee
recommended to the Board that PwC should continue in
office as the auditor to the Group in respect of the year
ending 31 December 2022.
The Audit Committee approved the remuneration of the
external auditor, details of which are set out in note 3 to
the Consolidated Financial Statements.
Kerry Group Annual Report 2021
114
Directors’ Report Audit Committee Report
Directors’ Compliance Statement
During the year, the Audit Committee reviewed the
appropriateness of the Directors’ Compliance Policy
Statement and also received a report from senior
management on the review undertaken during
the financial year of the compliance structures and
arrangements in place to ensure the Company’s material
compliance with its relevant obligations. On the basis of
this review, the Committee confirmed to the Board that
in its opinion the Company is in material compliance
with its relevant obligations.
Whistleblowing and Fraud Arrangements
In accordance with the Provisions of the Code, the
responsibility for overseeing whistleblowing is within
the remit of the Board. During 2021, at the request
of the Board, the Committee considered the Group’s
whistleblowing arrangements and assisted the Board
in its assessment of the adequacy of these
arrangements. Details of the Group’s whistleblowing
arrangements are outlined in the Corporate Governance
Report on page 104.
The Committee also considered the Group’s procedures
for fraud prevention and detection to ensure that
these arrangements allow for the proportionate
and independent investigation of such matters and
appropriate follow up action. Following this review, the
Audit Committee confirmed to the Board that it was
satisfied that the Group’s fraud prevention procedures
were adequate.
Kerry Group Annual Report 2021
Governance, Nomination and Sustainability Committee Report
115
GOVERNANCE REPORT
Governance, Nomination and Sustainability Committee Report
Board and its Committees has the correct
balance of skills, knowledge, experience,
diversity and independence. To further
progress Board diversity, we engaged
with an executive recruitment consulting
firm to conduct a search for new
independent non-Executive Directors.
Potential non-Executive Directors
were considered by the Committee
and a shortlist were interviewed after
assessing their qualifications against
the above criteria and their other time
commitments. This culminated in the
appointment of Michael Kerr and Fiona
Dawson to the Board. Michael Kerr was
appointed to the Board on 3 May 2021
and joined the Audit Committee on 1
November 2021. He brings to the Board
a detailed knowledge of global equity
markets, financial knowledge, extensive
business leadership skills and insights
into the North American market. On the
recommendation of the Committee, the
Board also approved the appointment
of Fiona Dawson as a non-Executive
Director effective on 4 January 2022. She
brings to the Board a deep knowledge of
the consumer food and beverage sector,
an understanding of global markets and
general management experience on a
global scale.
The Committee also recommended
changes to the composition of the
Board Committees as outlined on
page 119. The Committee continues
to engage with executive recruitment
consulting firms to identify an
appropriate pipeline of candidates to
join the Board as independent non-
Executive Directors in the future.
Joan Garahy did not seek re-election
at the 2021 AGM and retired from the
Board as Senior Independent Director
and as Chair of the Remuneration
Committee having served nine years on
the Board. She was succeeded as Senior
Independent Director by Dr. Hugh
Brady and as Chair of the Remuneration
Committee by Tom Moran.
I have served ten years as a Director
including less than four years as
Chairman, and in line with the Provisions
of the Code will not seek re-election at
the 2022 AGM. A sub-committee of the
Board led by Dr. Hugh Brady as Senior
Independent Director and supported
by independent advisors undertook a
formal and extensive succession process
which considered internal and external
candidates. Following the conclusion of
this process, Tom Moran was appointed
as Chairman Designate and will assume
the role of Chairman on
28 April 2022.
Gerard Culligan and Con Murphy
will also retire from the Board at the
conclusion of the 2022 AGM and will not
seek re-election. On behalf of the Board,
I would like to thank Gerard and Con for
their strong contribution over the last
five years.
The Committee also reviewed senior
management development and
succession plans having regard to
business growth and geographic
expansion and taking account of
diversity goals below Board level.
During 2021, the Committee reviewed
the Company’s corporate governance
policy and processes and monitored
developments in corporate governance
best practice. The Committee also
provided guidance and oversight to the
Group on the implementation of the
2030 sustainability strategy Beyond the
Horizon, including monitoring progress
against agreed targets and considering
the enhanced environmental, social and
governance reporting requirements,
recognising the importance of
consistent and relevant information
on sustainability related matters.
Furthermore, the Committee also
contributed and reviewed the climate
related risks and opportunities as well as
the broader material topics refresh.
An internal review of the effectiveness
of the Board and its Committees was
conducted during 2021 and the outcome
of this review is that the Board and
its Committees consider that they are
operating effectively. Further details are
outlined on page 107.
The Committee’s priorities for 2022
will continue to focus on Board and
Committee refreshment, taking
account of all skill sets required,
diversity (beyond gender) and planned
retirements over the coming years.
The Committee will ensure that senior
management development and
succession planning can support the
delivery of Group strategy and will
also continue to focus on diversity and
inclusion in the wider workforce. In
addition, the Committee will continue
to oversee the implementation of the
Group’s sustainability strategy.
Philip Toomey
Chairman of the Governance,
Nomination and Sustainability
Committee
Kerry Group Annual Report 2021
Philip Toomey
Chairman of the
Governance, Nomination and
Sustainability Committee
Dear Shareholder,
On behalf of the Governance,
Nomination and Sustainability
Committee, I am pleased to
present our report for the
year ended 31 December
2021. This report sets out
the Committee’s key activities
in 2021 as well as the
Committee’s priorities
for 2022.
The Governance, Nomination and
Sustainability Committee is responsible
for evaluating the structure, size,
composition and successional needs of
the Board and its Committees and making
recommendations on same, with due
regard for Board diversity. The Committee
also reviews the results of the annual
Board evaluation process as it relates to
the Board and Committee performance
and composition. Additionally, the
Committee is responsible for monitoring
Corporate Governance developments
and for providing guidance and oversight
on the implementation of the Group’s
sustainability strategy.
Jinlong Wang joined the Board
on 5 January 2021. His in-depth
understanding of Asian markets has
been very insightful in Board discussions
relating to growth opportunities in that
geographic region. During the year
under review, the Committee continued
to lead the Board refreshment process
ensuring that the composition of the
116
Directors’ Report Governance, Nomination and Sustainability Committee Report
Roles and Responsibilities
The main roles and responsibilities of the Committee,
which were reviewed and updated during 2021, are set
out in written terms of reference which are available
from the Group’s website www.kerrygroup.com or
upon request.
The quorum for Committee meetings is two and
only Committee members are entitled to attend. The
Governance, Nomination and Sustainability Committee
may extend an invitation to other persons to attend
meetings or to be present for particular agenda items
as required. The Company Secretary acts as Secretary of
the Committee.
The key responsibilities outlined in the Terms of
Reference are included in the following table:
Primary Responsibilities of the
Governance, Nomination and
Sustainability Committee
– evaluating the balance of skills, experience,
independence, knowledge and diversity of the Board
to ensure optimum size and composition;
– ensuring an appropriate nomination process is in
place for Board appointments;
– reviewing a candidate’s other commitments to
ensure that on appointment, a candidate has
sufficient time to undertake the role;
– making recommendations to the Board on the
appointment and re-appointment of both Executive
and non-Executive Directors;
– ensuring a formal induction plan is in place for each
new Director on appointment;
– making recommendations to the Board concerning
membership of Board Committees in consultation
with the Chairs of the Committees;
– ensuring plans and processes are in place for
succession planning for Directors, including the
Chairman, Senior Independent Director, non-
Executive Directors and senior management
positions;
– reviewing the Board diversity policy;
– overseeing the conduct of the annual evaluation of
the Board and its Committees;
– monitoring and reviewing developments in law,
regulation and best practice relating to corporate
governance and making recommendations to the
Board and Committees on changes or additional
actions as appropriate; and
– providing guidance and oversight on the
implementation of the Group’s sustainability strategy.
Committee Membership
The Governance, Nomination and Sustainability
Committee currently comprises three independent non-
Executive Directors; Dr. Hugh Brady, Dr. Karin Dorrepaal,
Mr. Tom Moran and is chaired by Mr. Philip Toomey.
Biographical details for the members of the Committee
are outlined on pages 87-89.
During 2021, the Committee continued to work with
Korn Ferry, executive recruitment consulting firm, to
assist with Board refreshment. Korn Ferry acts as the
advisor to the Remuneration Committee and has also
provided leadership and talent consulting services to the
Group during the year through a separate part of the
business.
Committee Meetings
The Committee met five times during the year and
attendance at these meetings is outlined on page 106.
Board Refreshment Policy
On an ongoing basis, the Governance, Nomination
and Sustainability Committee reviews and assesses the
structure, size, composition, diversity and overall balance
of the Board and makes recommendations to the Board
with regard to refreshment.
Appointments to the Board are for a three-year period,
subject to shareholder approval and annual re-election,
after consideration of annual performance evaluation
and statutory provisions relating to the removal of a
Director. The Board may appoint such Directors for
a further term not exceeding three years and may
consider an additional term if deemed appropriate.
During the year, the Chairman conducted a rigorous
review of all other non-Executive Directors as part of the
Board evaluation process, taking into account the need
for progressive refreshment of the Board. The Board
explains to shareholders, in the papers accompanying
the resolutions to elect and re-elect the non-Executive
Directors, why it believes the individual should be re-
elected based on the results of the formal performance
evaluation. Details of Board refreshment activities during
the year are outlined on pages 119-120.
Nomination Process
There is a formal, rigorous and transparent procedure
in appointing new Directors to the Board. Details of this
process are outlined in the Governance in Action table.
The Committee also makes recommendations to the
Board concerning the re-appointment of any non-
Executive Director at the conclusion of their specified
term and the re-election of all Directors who are the
subject of annual rotation. The terms and conditions of
appointment of non-Executive Directors are set out in
formal letters of appointment, which are available for
inspection at the Company’s registered office during
normal office hours and at the AGM of the Company.
Kerry Group Annual Report 2021
Governance in Action (example)
Non-Executive Director Appointment
Ms. Fiona Dawson was appointed to the Board with
effect from 4 January 2022. The key stages of the
nomination process are outlined below.
1. Assessment
The Committee assessed the skill set,
experience and diversity on the Board, the
requirements to meet the Group’s future
growth plans, together with the planned
retirements from the Board over the
coming years.
2. Requirement
The Committee prepared a detailed role
profile; identifying the need for a new non-
Executive Director with international food &
beverage industry experience and the
capabilities to align with the Group’s
purpose, value and culture. The Committee
also considered the Board’s commitment to
enhance the gender profile of the Board.
3. Search
The Committee instructed Korn Ferry to
conduct a search for appropriate candidates
for appointment to the Board based on the
profile and skillset agreed by the Committee.
4. Screening
The Committee assessed a long list of
candidates identified by Korn Ferry as
having met the criteria.
5. Interview
A shortlist of potential candidates was
interviewed by the Chairman, the Committee
and the Chief Executive Officer.
6. Approval
A formal recommendation was made by
the Committee to the Board proposing
the appointment of Ms. Fiona Dawson as a
non-Executive Director. The Board approved
the appointment of Ms. Fiona Dawson noting
that she had a balance of skills, knowledge,
experience and diversity that matched the
requirements set. Appointment terms were
drafted and agreed with her.
Governance, Nomination and Sustainability Committee Report
117
Succession Planning
The Governance, Nomination and Sustainability
Committee reviews the succession plans for the Board
and its Committees on an ongoing basis to ensure an
orderly refreshment of membership, taking into account
Group strategy, the challenges and opportunities facing
the Group and the skills, knowledge and experience
required.
The Committee also reviews succession plans for senior
management, which form part of the Group’s overall
annual approach to succession planning and agrees
these with the Chief Executive Officer before being
presented to the Board. The succession planning process
includes defining success criteria for prioritised key
roles, identifying and evaluating candidate pools and
aligning successor development activities with individual
and business needs to ensure leadership continuity and
improve the depth of the leadership succession pipeline.
This process is fully documented and monitored
throughout the year in conjunction with the Committee.
Details of succession planning activities during the year
are outlined in Our People on page 20.
Diversity, Inclusion and Belonging Policy
Diversity, Inclusion and Belonging is fully embraced at
Kerry and the Group is committed to having a work
environment that is respectful of everyone. We recognise
the value that different perspectives and cultures bring
to the organisation. Valuing differences creates a work
environment which is positive and productive, where
people can and want to do their best and where each
individual can bring something unique to contribute to
the overall success of Kerry.
The Group’s Diversity, Inclusion and Belonging Policy
is an integral part of the Group’s Code of Conduct
ensuring that diversity and inclusion are embedded in
Kerry Group’s core values. Within this, the Group seeks
to recruit, hire and retain the best talent from a diverse
mix of gender, background, nationality, ethnicity and
other attributes with the skills and experiences to drive
innovative thinking to enable a sustained competitive
advantage.
Kerry Group Annual Report 2021
118
Directors’ Report Governance, Nomination and Sustainability Committee Report
The Board believes in the benefits of having a diverse
Board and the value that it can bring to its effective
operation. In accordance with the Board Diversity Policy,
differences in background, gender, skills, experiences,
nationality, ethnicity and other attributes are considered
in determining the optimum composition of the Board
with the aim to balance it appropriately. All Board
appointments are made on merit, with due regard
to diversity. The Board currently has a 29% female
representation and this will increase to 36% post the
planned retirements following the conclusion of the 2022
AGM. In line with its diversity policy, and recommended
best practice, the Board is committed to maintaining a
minimum of 33% female representation on the Board
and has an ambition to increase the representation
of members with diverse backgrounds such as
nationality, ethnicity and other attributes. During the
year, the ethnicity profile of the Board was broadened.
In reviewing Board composition and agreeing a
job specification for new non-Executive Director
80
appointments, the Committee considers the benefits of
all aspects of diversity including, but not limited to, those
described above, in order to complement the range
40
and balance of skills, knowledge and experience on the
20
Board. As part of the identification process executive
recruitment consultants are required to present a list of
0
potential candidates, who meet the stated specification
and requirements comprising candidates of diverse
backgrounds, for consideration by the Committee.
100
60
60
80
40
100
In 2021, diversity targets were agreed for senior
management succession pools with the Executive
Directors and approved by the Board to improve the
diversity profile of senior leadership teams and ensure
internal candidate pools better reflect the broader
cultural mix of people within the Group. The Group is
committed to achieving the highest levels of inclusion,
diversity, engagement and belonging and is targeting
equal gender representation at senior management
level by 2030. The Committee reviews progress against
these diversity goals each year, whilst taking account of
business growth and geographic expansion within the
organisation.
20
0
Executive
21%
Further details of the Group’s approach to Diversity,
Inclusion and Belonging, including our broader
organisational goals focused on building an inclusive
and diverse workplace are outlined in our GRI
Sustainability Report and in Our People on pages 18-19.
0
100%
Sustainability
During 2021, the role of the Committee was expanded to
provide guidance and oversight on the implementation
Female
29%
of the Group’s 2030 sustainability strategy Beyond
the Horizon following its launch in October 2020. The
Committee is supported in this work by the Global
Sustainability Council whose members are invited to
Committee meetings to share their expertise on key
sustainability topics and to update the Committee on the
implementation of the sustainability strategy.
Non-Executive
79%
Female
36%
Executive
21%
Board
2021
Male
71%
Male
64%
Board
Post 2022
AGM
40%
20%
60%
80%
0%
100
During 2021, the Committee approved the enhanced
climate and gender diversity targets communicated at
the Capital Markets Day held in October and monitored
progress against the broader commitments included
in the Beyond the Horizon strategy. In addition, the
80
Committee also considered and approved the risks and
opportunities and the new disclosures in line with the
Task Force on Climate-Related Financial Disclosures
(TCFD) included in the 2021 Annual Report as well as
the enhanced disclosures included in a separate GRI
Sustainability Report which follow the framework set out
by the Global Reporting Initiative (GRI) standards.
100
60
40
20
20
60
80
40
0
0
Details of the Group’s sustainability strategy, targets and
performance, policies and programmes are outlined in
the Sustainability Review on pages 50-74 and in the GRI
Sustainability Report that has been published alongside
the Annual Report.
0
20
10
30
20
40
0
10
30
40
0
10
20
30
40
50
60
A summary of the Group’s current position relating to
Board and senior management diversity is provided
below:
20
10
0
30
40
50
60
Executive / Non-Executive Directors
Non-Executive
79%
Non-Executive
79%
10-15
7%
0
10
6-10
20
10-15
7%
6-10
30
29%
3-6
29%
40
14%
21%
Executive
21%
Executive
21%
0
10
20
30
40
50
60
Gender Diversity
100%
Female
36%
Female
29%
Female
31%
Female
29%
Female
28%
Female
31%
Female
29%
Female
28%
61-68
Non-Executive
0
79%
Male
64%
10
Male
71%
20
Male
69%
30
10-15
40
7%
Male
71%
Male
69%
Male
71%
Male
72%
6-10
Male
72%
29%
Female
36%
Male
64%
100%
80%
60%
40%
20%
0%
80%
Female
29%
60%
40%
Male
71%
20%
0%
10
20
30
Board
50
40
Post 2022
AGM
Board
Post 2022
AGM
Board
2020
Board
60
2021
Board
2021
Board
2020
Senior
Leadership
2021*
Senior
Leadership
0-3
2020*
Senior
3-6
14%
Leadership
2021*
21%
Senior
Leadership
2020*
* Senior Leadership above aligns to Senior Management
29%
50%
61-68
56-60
40-55
29%
0%
50%
21%
29%
20%
40%
60%
56-60
21%
40-55
0%
20%
40%
60%
definition per Corporate Governance Code.
Executive
Directors
Non-Executive
Directors
Board Tenure (Years)
Board Age Profile
10-15
Female
31%
7%
Female
29%
6-10
Female
28%
29%
Male
69%
3-6
Male
14%
71%
Male
72%
21%
61-68
50%
56-60
21%
0-3
29%
40-55
29%
8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%
Board
2020
Senior
Leadership
2021*
Senior
Leadership
2020*
Executive
Directors
Non-Executive
Directors
0%
20%
40%
60%
8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%
3-6
14%
21%
0-3
29%
0-3
29%
Executive
Directors
Executive
Directors
Non-Executive
Directors
Non-Executive
Directors
8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%
8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%8%
100%
80%
60%
Female
36%
Female
29%
Female
31%
Female
29%
Female
28%
61-68
50%
Kerry Group Annual Report 2021
Male
71%
Male
64%
40%
20%
0%
Male
69%
Male
71%
Male
72%
56-60
21%
40-55
29%
Board
Post 2022
AGM
Board
2021
Board
2020
Senior
Senior
Leadership
Leadership
2021*
2020*
0%
20%
40%
60%
010203040010203040010203040010203040 Governance, Nomination and Sustainability Committee Report
119
Changes to the composition of the Board
and its Committees for the year ended
31 December 2021
Mr. Jinlong Wang
Appointed to the Board on 5 January 2021 and to the
Audit Committee on 3 May 2021.
Mr. Tom Moran
Appointed Chair of the Remuneration Committee
on 29 April 2021.
Mr. Michael Kerr
Appointed to the Board on 3 May 2021 and to the
Audit Committee on 1 November 2021
Ms. Joan Garahy
Retired from the Board, the Remuneration Committee,
the Audit Committee and as Senior Independent Director
on 29 April 2021.
Ms. Emer Gilvarry
Appointed to the Remuneration Committee on
16 June 2021.
Dr. Hugh Brady
Appointed Senior Independent Director on 29 April 2021.
Ms. Fiona Dawson
Appointed to the Board on 4 January 2022 and to
the Remuneration Committee with effect from
14 February 2022.
Key Activities
The key activities of the Committee throughout the year are detailed below:
Subject
Committee Activity
Board Size and
Composition
In 2021, as part of its remit, the Committee considered the size and composition of the
Board. At 31 December 2021, the Board comprised 13 members. The Board size reduced
to 12 following the retirement of Ms. Joan Garahy on 29 April 2021 and increased to 13
following the appointment of Mr. Michael Kerr on 3 May 2021.
The Board size will increase further to 14 on 4 January 2022 following the appointment of
Ms. Fiona Dawson.
The Board size will reduce to 11 post the planned retirements, following the conclusion
of the AGM. The Committee will continue to consider both Board size and composition
during 2022.
Chairman Succession
Mr. Philip Toomey, having served 4 years as Chairman and 10 years as a Director will not
seek re-election at the 2022 AGM.
A separate sub-committee of the Board chaired by Dr. Hugh Brady conducted a formal
process to identify and recommend a candidate to succeed Mr. Toomey. The Committee
engaged external consultants to assist in the process to identify a candidate. Following
the conclusion of this process, the sub-committee recommended the appointment of Mr.
Tom Moran as Chairman Designate and this was endorsed by the Board at its meeting in
February 2022. He will assume the role of Chairman at the conclusion of the AGM on
28 April 2022. On appointment, Mr. Tom Moran will step down as a member and Chair of
the Remuneration Committee and as the Designated Workforce Engagement Director.
Senior Independent
Director Succession
Ms. Joan Garahy retired as Senior Independent Director and from the Board at the
conclusion of the AGM held on 29 April 2021 having served nine years on the Board. The
Governance, Nomination and Sustainability Committee completed a formal process and
recommended to the Board the appointment of Dr. Hugh Brady as Senior Independent
Director at the conclusion of the 2021 AGM.
Board Refreshment
Ms. Joan Garahy retired from the Board on 29 April 2021.
New non-Executive Directors, Mr. Michael Kerr and Ms. Fiona Dawson were appointed to
the Board on 3 May 2021 and 4 January 2022 respectively, following searches conducted
by the Committee in conjunction with an executive recruitment consulting firm.
The Committee and the Board agreed that Mr. Kerr and Ms. Dawson had a balance of
skills, knowledge, experience and diversity that matched the requirements set.
Mr. Gerard Culligan and Mr. Con Murphy, having served five years on the Board will retire
as non-Executive Directors at the conclusion of the AGM to be held on 28 April 2022 and
will not seek re-election.
Kerry Group Annual Report 2021
Board Age Profile
120
Directors’ Report Governance, Nomination and Sustainability Committee Report
Key Activities (continued)
Subject
Committee Activity
Committee
Refreshment
Ms. Joan Garahy retired from the Remuneration Committee and the Audit Committee on
29 April 2021.
Mr. Tom Moran was appointed Chair of the Remuneration Committee on 29 April 2021,
Mr. Jinlong Wang was appointed to the Audit Committee on 3 May 2021, Ms. Emer
Gilvarry was appointed to the Remuneration Committee on 16 June 2021, Mr. Michael
Kerr was appointed to the Audit Committee on 1 November 2021 and Ms. Fiona Dawson
was appointed to the Remuneration Committee on 14 February 2022.
There were no other changes to the composition of the Board Committees during the
year. The Committee will continue to consider Committee refreshment in 2022.
Designated Workforce
Engagement Director
Mr. Tom Moran will retire as the Designated Workforce Engagement Director at the
conclusion of the AGM to be held on 28 April 2022.
The Governance, Nomination and Sustainability Committee has completed a formal
process and has recommended to the Board the appointment of Ms. Karin Dorrepaal as
the Designated Workforce Engagement Director at the conclusion of the 2022 AGM.
Remuneration
Committee
Chairperson
Mr. Tom Moran will retire as Chairperson of the Remuneration Committee on his
appointment as Chairman of the Board at the conclusion of the AGM, to be held on 28
April 2022.
Re-appointment
of non-Executive
Directors
The Governance, Nomination and Sustainability Committee has completed a formal
process and has recommended to the Board the appointment of Ms. Emer Gilvarry as
Chairperson of the Remuneration Committee, effective from the conclusion of the 2022
AGM. Ms. Emer Gilvarry has been a member of the Remuneration Committee since June
2021 and is also Chair of the Remuneration Committee of another listed plc.
During the year, Mr. Philip Toomey, Dr. Hugh Brady, Mr. Gerard Culligan, Dr. Karin
Dorrepaal, Mr. Tom Moran, Mr. Con Murphy and Mr. Christopher Rogers each completed
terms as non-Executive Directors. Following a rigorous review of their skills, knowledge,
experience and independence, the Board on the recommendation of the Committee,
agreed that they continue to be effective and independent and make a valuable
contribution to the Board, and re-appointed them to serve additional terms.
Board and Committees
Effectiveness
Evaluation
As outlined in detail on page 107, an internal evaluation of the Board and its Committees
took place in 2021 in line with the provisions of the 2018 UK Corporate Governance Code
and the Irish Annex.
The Committee considered the outcome of this evaluation and identified the
areas relevant to the Governance, Nomination and Sustainability Committee. Each
recommendation was assessed, and an action plan was developed to address areas for
potential improvement. These recommendations will be reviewed and considered by the
Committee in 2022.
Senior Management
Development and
Succession
During the year, the Committee reviewed senior management development and
succession plans having regard to agreed diversity goals to ensure the appropriate level
of skills and diversity will exist to support the delivery of the Group’s strategy.
Corporate Governance
Review
During 2021, the Committee reviewed the Company’s corporate governance policy in
the context of the 2018 UK Corporate Governance Code and monitored developments in
corporate governance best practice.
Sustainability Strategy
Following the launch of the Group’s sustainability strategy Beyond the Horizon in October
2020, the Committee provided guidance and oversight on the implementation of the
Group’s sustainability strategy during the year and monitored progress against targets.
The Committee also considered the additional climate related disclosures in line with
TCFD and the enhanced ESG disclosures the Group is reporting, in its separate GRI
Sustainability Report.
Terms of Reference
During the year, the Committee reviewed and updated its Terms of Reference. A copy of
these terms is available on the Group website www.kerrygroup.com.
Kerry Group Annual Report 2021
Remuneration Committee Report
121
GOVERNANCE REPORT
Remuneration Committee Report
Introduction
2021 was an important year for
Kerry Group. In parallel to delivering
strong growth and a good financial
performance against a challenging
COVID-19 backdrop, we have taken
significant strategic steps to further
solidify our position as the world’s
leading Taste & Nutrition company:
- a comprehensive strategy refresh,
with ambitious mid-term growth,
return and enhanced sustainability
targets communicated at our
Capital Markets Day in October;
and
- divestment of non-core consumer
foods assets, coupled with
strategic acquisitions in food
waste reduction and health &
bio-pharma.
We could not have achieved all of
this without the continued and
consistent excellent leadership of
our Executive Directors into and
throughout 2021, the drive and
agility of our leadership teams and
the tremendous commitment of our
people across the world.
Our 2020 Directors’ Remuneration
Report outlined the comprehensive
coordinated global response
taken by Kerry in response to
the pandemic, and these efforts
continued and were further
strengthened during 2021, ensuring
a positive experience for our
broader stakeholders, including
employees, shareholders and the
communities in which we operate.
From the outset of the pandemic, we
have consistently put the safety and
wellbeing of our people at the core
of our coordinated global response,
ensuring we could safely fulfil
our critical role in the global food
supply chain and enabling all 152
manufacturing and R&D facilities
to continue to operate to meet our
customers’ and consumers’ needs.
In recognition of the achievements
of our employees, and in order
to minimise the economic impact
of COVID-19 on our people, we
retained pay levels for all employees,
apart from the Executive Directors,
throughout 2020 and awarded
annual merit increases across all
geographies in both 2021 and 2022.
Kerry did not benefit from COVID-19
related government support in any
of our key geographies.
From a shareholder perspective,
in 2021 the Group has delivered
strong growth, a resilient share price
and sustained dividend payments.
Shareholder prospects for improved
long-term returns have been further
enhanced through the strategic
actions of our Executive Directors
and their teams over the past 12
months as detailed throughout this
year’s Annual Report.
Remuneration Policy
The Group’s Remuneration Policy is
outlined in Section C on pages 128-
133. This policy was approved by
shareholders in 2021 and provides
the framework for remuneration
decisions made by the Committee
until the next policy review.
The Committee is confident that
the Group’s Remuneration Policy is
aligned with shareholder interests,
promotes long term sustainable
success and is in line with applicable
best market practice. Furthermore,
it ensures that Executive Director
remuneration is aligned to the
Group’s purpose and values and can
be clearly linked to the successful
delivery of the Group’s strategy and
mid-term financial targets.
The Committee is satisfied that the
policy has operated as intended and
that no changes are required to the
operation of the policy for 2022.
Tom Moran
Chairperson of the
Remuneration Committee
Section A:
Chairperson’s
Annual Statement
Dear Shareholder,
On behalf of the
Remuneration Committee,
I am pleased to present the
Directors’ Remuneration
Report for the year ended
31 December 2021. This
is my first Remuneration
Committee Report having
been appointed chairperson
of the Committee following
Joan Garahy’s retirement on
29 April 2021. I would like to
acknowledge and thank Joan
for her valued leadership of
the Committee over the last
nine years.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
2022 Short-Term Incentive Plan
Following the review outlined above, the Committee
concluded that the only change required for 2022 was
to amend the Margin Expansion Metric from EBITA to
EBITDA. This change is reflective of the updated mid-
term targets and ensures better alignment with internal
performance measurement and with the metric more
commonly used by our industry peers. Annual bonus
maximum opportunity and metric weightings will remain
unchanged for 2022.
2022 Long-Term Incentive Plan
The LTIP performance metrics, weightings and target
calibrations were also reviewed in 2021. The Committee
concluded that the current metrics and weightings
continue to be appropriate and will therefore remain
unchanged for 2022.
The Remuneration Policy approved and implemented
in 2021, included an increase in the maximum LTIP
opportunity, to be implemented on a phased basis
over two years. The second phase of the increase will
be implemented in 2022 and in line with this, each
Executive Director will be awarded their maximum LTIP
opportunity in 2022 as follows; CEO 300% of basic salary
(from 250%), CFO and CEO Taste & Nutrition 250% of
basic salary (from 225%).
Pay for Performance
Kerry has a strong track record of demonstrating
appropriate rigour and discipline when setting
stretching targets as illustrated by the following chart.
Year
2017
2018
2019
2020
2021
Average
STIP
% of Max
Achieved
LTIP
% of Max
Achieved
75%
59%
73%
0%
72%
56%
62%
64%
63%
33%
22%
50%
The Committee is satisfied that the targets set for the
2022 STIP and LTIP awards are appropriately stretching
given the current inflationary environment, the ongoing
impact of COVID-19, overall market growth rates and the
level of capital expenditure required to support future
growth ambitions.
122
Directors’ Report Remuneration Committee Report
Kerry’s Remuneration Principles
Delivery of Group Purpose, Values and Strategy
The Group’s Executive Director short and long-term
remuneration philosophy is to ensure that executive
remuneration is aligned to the Group’s purpose and values,
supports strategy and promotes the long-term success of the
Company.
Creating Sustainable, Long-Term Performance
Remuneration includes performance related elements
designed to align Directors’ interests with those of
shareholders and to promote long-term sustainable growth
and performance at the highest levels in line with the Group’s
strategy.
Attract, Motivate and Retain Talent
Market-competitive total remuneration is structured to attract,
motivate and retain individuals of the highest quality on an
international basis.
Stakeholder Interests
By incorporating a high proportion of Executive Directors’
potential remuneration to short-term and long-term
performance metrics with robust share ownership
requirements, the Remuneration Committee believes that the
interest and risk appetite of the Executive Directors is properly
aligned with the interests of the shareholders and other
stakeholders.
Pay For Performance
The Committee ensures alignment with shareholders’ long-
term interests by aligning remuneration metrics with the
Group’s business model and strategic objectives.
Remuneration Policy Implementation 2022
Basic Salary
For 2022, no substantive increases are proposed, and
the basic salaries of the Executive Directors will be
increased as normal in line with increases available
to the general workforce (i.e. a range of 2.5%-3.3%) in
Ireland and the US respectively.
Pension Alignment
As detailed on page 129 Executive Directors’ pension
contribution rates will be aligned to those of Kerry’s
general workforce in Ireland with effect from 1 January
2023. Existing arrangements will apply for 2022.
Incentive Plans
A detailed review of our short and long-term incentive
plans was completed during 2020 following which a
number of changes were made to the metrics and
weightings in both plans and incorporated into the
Remuneration Policy approved by shareholders at the
2021 AGM.
We have consistently ensured that there is very strong
alignment between our short term and long term
incentive metrics and the Group’s business strategy
and financial targets. During 2021 the Remuneration
Committee reviewed the incentive plan metrics again
to ensure full alignment with the Group’s refreshed
strategy and updated mid-term targets as outlined
during the Capital Markets Day held in October 2021.
Kerry Group Annual Report 2021
24
20
16
12
8
4
0
100
90
80
70
60
50
40
30
20
10
0
Remuneration Committee Report
123
TSR Growth
100%
EV €’billion
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
€22.9bn
€22.2bn
€21.5bn
€17.8bn
€16.9bn
2017
2018
2019
2020
2021
TSR Growth (%)
Enterprise value (€’billion)
24
20
16
12
8
4
0
180
160
140
120
100
80
Non-Executive Director Fees for 2022
Non-Executive Director fees were reviewed in 2020 and
increases were made effective from 1 January 2021. For
2022, no substantive increases are proposed, and in line
with the Remuneration Policy approved by Shareholders
at the 2021 AGM, the basic fee paid to the Chairman and
the Non-Executive Directors will be increased in line with
the increase available to the general workforce (+ 2.5%)
in Ireland. No increases will be applied to Committee
membership or Chair fees.
Remuneration Policy Outturn 2021
In determining the Executive Director’s remuneration
outturns for the financial year, the Committee
maintained a clear and rigorous focus on aligning
pay with performance in the context of another
challenging year driven by COVID-19.
In 2021, the Group delivered strong growth and good
financial performance with constant currency adjusted
earnings per share growth of 12.1% driven by strong
volume growth of 8.0%, and a 40 bps expansion in
trading margin.
As can be seen in the Total Shareholder Return
graph - below Kerry has generated a 173% return for
shareholders (including reinvestment of dividends) over
the last 5 years.
Shareholder Consultation
On behalf of the Remuneration Committee, I had the
opportunity recently to consult with a number of our
major shareholders, along with the key proxy advisors,
regarding specific aspects of Kerry’s Executive Director
Remuneration in 2021.
Our shareholders recognised the strong leadership
shown by our Executive Directors in 2021; and
many specifically acknowledged the seamless and
simultaneous execution of significant strategic
divestments and acquisitions, coupled with the
completion of our comprehensive strategy refresh and
communication of our updated mid-term targets.
Thank you for your valuable perspectives and feedback,
they have been very helpful in informing the final
decisions made by the Committee.
2021 Short Term Incentive Plan Outturn
For 2021, STIP payouts to Executive Directors were on
average 72% of the maximum available opportunity.
The Committee exercised independent judgement when
awarding this outcome and considers it to be reflective
of the Group’s and the individual Executive Directors’
strong performance during the year, the broader
stakeholder experience, as well as the challenging and
stretching nature of the targets set.
In line with the Directors’ Remuneration Policy, one-third
of the STIP payout will be deferred into shares/options to
be held for two years.
5 Year Total Shareholder Return (Value of €100 Invested on 31/12/2016)
€180
€160
€140
€120
€100
€80
2016
2017
2018
2019
2020
2021
Kerry
MSCI Europe Food Producers
E300 Food & Beverage
Kerry Group Annual Report 2021
124
Directors’ Report Remuneration Committee Report
Long Term Incentive Plan 2019-2021 Outturn
The three year performance period in respect of the
2019-2021 LTIP award ended on 31 December 2021. The
2019 LTIP award was subject to Adjusted Earnings per
Share (EPS), Total Shareholder Return (TSR) and Return on
Average Capital Employed (ROACE) performance metrics.
Good performance was achieved against our TSR and
ROACE performance metrics over the three-year period.
However, the COVID-19 pandemic had a significant
impact on the EPS metric in 2020 (-9.4%), which
effectively negated the EPS growth achieved in 2021
(12.1% after recognising a dilution of 3.2% resulting from
the disposal of the Consumer Foods Meats and Meals
business) and 2019 (+8.3%). As a result, the threshold
level for this metric, weighted at 50% of the overall
award, was not achieved.
The final outcome of the 2019-2021 LTIP award was 22%
of maximum opportunity as outlined in further detail
on page 143. This is the second financial year in which
the impact of the pandemic during 2020 has had a very
significant impact on the remuneration outcomes for
our Executive Directors and in particular on their LTIP
vesting outcome (2019 LTIP award: 22%, 2018 LTIP
award: 33%).
This outcome is clearly disappointing, particularly in
consideration of the continued strong leadership of
our Executive Directors into and throughout 2021, as
well as the positive stakeholder experience over the
past 3 years. On behalf of the Committee, I wish to
wholeheartedly commend our Executive Team and
emphasise again our sincere appreciation of their
dedication and their excellent leadership over the three
year performance period. Their leadership has ensured
the resilience of the Kerry business and sustained
shareholder return against the very challenging
backdrop of the COVID-19 pandemic. We would
particularly commend their leadership of the significant
strategic steps taken in 2021 to enhance shareholder
prospects for improved long-term returns.
Whilst the Committee decided not to exercise discretion
to amend the formulaic vesting of the 2019 LTIP for
Executive Directors despite a strong supporting case,
consistent with our decision in 2020 we have decided to
exercise discretion for their extended leadership teams.
The formulaic vesting of the 2019 LTIP for approximately
400 leaders will be adjusted from 22% to 45%, in
recognition of their sustained commitment, agility and
performance against a very challenging backdrop.
Other Matters
Committee Refreshment
Ms Emer Gilvarry was appointed to the Committee on
16 June 2021. Emer is a highly experienced professional
who brings legal, business and corporate governance
expertise to the Committee and also has remuneration
committee experience with other listed companies.
Committee Performance
An internal review of the Remuneration Committee’s
performance was undertaken by the Committee
during 2021 and the outcome of this review is that the
Committee is operating effectively.
Conclusion
2021 has been a successful year for Kerry and the
Committee has faced difficult decisions in appropriately
recognising the contributions of our leadership teams in
very challenging circumstances. The 2019 LTIP outturn
for our Executive Directors is disappointing in the
context of their excellent leadership and the decision we
have taken regarding the LTIP vesting for their extended
leadership teams demonstrates our full appreciation of
their sustained contribution to Kerry.
The Committee continues to review the Group’s
Remuneration Policy to ensure that it remains aligned to
shareholders’ long term interests, is correctly reported
in accordance with relevant legislation and provides
the right framework to attract, retain and motivate the
Executive Directors in line with the pay for performance
principle.
As in previous years, the Remuneration Report is being
put to shareholders for an advisory vote. Last year,
99% of our shareholders who voted, voted in favour of
the Remuneration Report and I hope our shareholders
continue to provide their support at this year’s AGM.
Finally, I would like to take this opportunity to thank
the members of the Remuneration Committee for their
commitment and support during the year.
Tom Moran
Chairperson, of the Remuneration Committee
Kerry Group Annual Report 2021
Remuneration Committee Report
125
Section B:
Remuneration Committee
and Key Activities
Committee Membership
During 2021, the Remuneration Committee comprised
four independent non-Executive Directors; Dr. Karin
Dorrepaal, Mr. Tom Moran, Mr. Christopher Rogers and
was chaired initially by Ms. Joan Garahy. Following Joan
Garahy’s retirement from the Board and the Committee in
April, Tom Moran was appointed Chair of the Committee.
Ms. Emer Gilvarry joined the Committee in June 2021.
Details of the skills and experience of the Directors are
contained in the Directors’ biographies on pages 87-89.
Role and Responsibilities
On behalf of the Board, the Remuneration Committee
is responsible for determining the Remuneration
Policy for the CEO, other Executive Directors and senior
management on an annual basis. The CEO is invited to
attend Remuneration Committee meetings but does not
attend Committee meetings when his own remuneration
is discussed. The Committee also has access to internal
and external professional advice as required. The
Committee follows an annual and tri-annual calendar
with matters scheduled and planned well in advance.
Decisions are made within agreed reference terms, with
additional meetings held as required. In considering
the agenda, the Committee gives due regard to overall
business strategy, the interests of shareholders,
employees, other stakeholders and the performance of
the Group. The main responsibilities of the Committee,
which were reviewed during 2021, are set out in written
terms of reference which are available from the Group’s
website www.kerrygroup.com or upon request.
Primary Responsibilities of the
Remuneration Committee
– To determine the Remuneration Policy for, and set the
remuneration of the CEO, Executive Directors and senior
management;
– To review the remuneration of the Chairman;
– To receive the recommendations of the CEO and set the
salaries and overall remuneration of senior management;
– To review and approve incentive plan structures and targets;
– To agree the design of all share incentive plans for approval
by the shareholders;
– To ensure alignment of incentives and rewards with strategy,
values and culture;
– To ensure the contractual terms of Executive Directors and
senior management are deemed fair and reasonable;
– To place before shareholders at each AGM, a Directors’
Remuneration Report setting out the Group’s policy and
disclosures on remuneration;
– To arrange where appropriate, external benchmarking
of overall remuneration levels and the effectiveness of
incentive schemes;
– To review annually its own performance and terms of
reference to ensure it is operating effectively;
– To engage with the workforce to explain how executive
remuneration aligns with the wider company pay policy;
– To review workforce remuneration and related policies and
the alignment of incentives and rewards with the Group’s
culture, and take these into account when setting the policy
for executives; and
– To consider appropriate application and use of clawback and
malus provisions as well as discretion to adjust the formulaic
outturns for performance related pay.
Remuneration Committee Meetings and Activities 2021
The Committee held four scheduled meetings and two additional meetings during 2021. The additional meetings
were required to review the incentive plan metrics in the context of the updated mid-term targets, as outlined during
the Capital Markets Day, and to consider the Executive Director’s remuneration outturns for the financial year.
Attendance at these meetings is outlined on page 106.
The key activities undertaken by the Committee in discharging its duties during 2021 are set out below:
Subject
Remuneration Committee Activity
Remuneration
Report
A review of best practice remuneration reporting was completed during 2021 to ensure compliance with
relevant legislation and reporting requirements while also ensuring the delivery of a report which is transparent
and understandable for all shareholders. As part of this review, the Committee considered the recent updates
and guidance issued by the main shareholder representative bodies and proxy advisors, together with the 2014
Irish Companies Act, the EU Shareholders’ Rights Directive (as transposed into Irish law), the 2018 UK Corporate
Governance Code and the UK Companies (Miscellaneous Reporting) Regulations 2018.
Remuneration
Policy Review
The Committee reviewed the new policy and concluded that it has operated as intended, and that the second
phase of the LTIP changes will be applied from 2022.
Impact of
COVID-19 on pay
and conditions
for the general
workforce and
on Inflight STIP
and LTIP Awards
The Committee considered the impact of COVID-19 on the pay and conditions for the general workforce and
on inflight STIP and LTIP awards. In recognition of the achievements of employees and leadership teams, pay
levels were retained for all employees, with annual merit increases also being awarded to employees across all
geographies in 2021 and 2022.
The Committee exercised discretion to increase the formulaic vesting level for the 2018 LTIP award which vested
in March 2021, from 32.5% to 45.9%, for approximately 400 senior leaders (excluding Executive Directors).
Kerry Group Annual Report 2021
126
Directors’ Report Remuneration Committee Report
Subject
Remuneration Committee Activity
Basic salary
The Committee continued to monitor the level of basic salaries of the CEO and Executive Directors in line with
market practice following the detailed benchmark review of Executive Directors’ salaries completed in 2020.
STIP
LTIP
The STIP was reviewed during 2021 to ensure that the metrics are aligned with Group strategy and that the
associated targets are appropriately stretching.
The Committee concluded that there was no requirement to exercise discretion, as the 2021 STIP outcome
reflected the underlying performance of the business and the strong performance of the Executive Directors
against their strategic objectives.
The Committee considered the overall effectiveness of the LTIP in 2021 to ensure that it is structured
appropriately to incentivise Executive Directors and senior managers across the Group.
The Committee, having considered the current environment and following consultation with major
shareholders and proxy advisors determined not to amend the formulaic outcome for the 2019 LTIP award in
respect of the Executive Directors, despite the strong and sustained executive leadership during 2021 and over
the three-year performance period.
Chairman &
Non-Executive
Directors Fees
A detailed benchmark review of the Chairman and non-Executive Directors, fees was undertaken in 2020 with
the assistance of Korn Ferry. As provided in the Remuneration Policy put to Shareholders at the 2021 AGM, the
Chairman’s and non-Executive Director basic fees will be increased annually in line with the increase available to
the general workforce in Ireland.
Senior
Management
In accordance with the terms of the Code, the Committee set the remuneration arrangements for senior
management and the Company Secretary.
Workforce
Remuneration
and Related
Policies
During the year, the Committee was provided with information on pay policies and procedures for the wider
workforce to consider and review fairness and alignment with Group strategy and with the Executive Directors’
Remuneration Policy, as well as to inform its decision making in relation to Executive Director remuneration.
This included an update on the impact which COVID-19 had on the pay and conditions for the wider workforce,
an update on the Global Recognition Programme Inspiring People launched in 2021, an update on the
refresh of the Group’s Sales Incentive Plan (SIP) for the global sales team to be launched in Q1 2022, a review
of gender pay and an overview of the approach for the annual pay reviews in all the countries in which the
Group operates, as well as the structure and annual cost of the STIP and LTIP awards below Board level. The
Committee continues to review the proposal to introduce an all employee share plan and the timelines within
which this will be put to shareholders for approval and subsequent implementation across the Group.
Shareholder
Consultation
The Committee reviewed the results of the shareholder vote on the Remuneration Policy and Report at the 2021
AGM, noting that 97% of shareholders supported the implementation of the new policy and 99% supported the
Report. The Committee also reviewed the additional feedback received from the proxy advisors.
In early 2022, the Chairperson of the Committee consulted with a number of the Company’s major institutional
shareholders and with proxy advisors regarding the impact of COVID-19 on inflight LTIP awards in the context
of the strong performance by the Executive Directors in 2021 and the wider positive stakeholder experience
over the 3-year performance period. The Committee welcomed the engagement and the shareholders
consulted provided input and commentary which was considered by the Committee. These inputs, together
with inputs from the major proxy advisors informed the Committee’s decision in relation to inflight LTIP awards.
Committee
Evaluation
As outlined on page 107 an internal review of the Board and its Committees took place in 2021. The outcome of
the review is that the Remuneration Committee is operating effectively.
Terms of
Reference
During the year, the Committee reviewed and updated its Terms of Reference. A copy of these terms is available
on the Group website www.kerrygroup.com.
Work of the Committee in Determining
Executive Director Remuneration
The Committee considers the appropriateness of the
Executive Directors’ remuneration not only in the context
of overall business performance and environmental,
social and governance (ESG) matters but also in the
context of wider workforce pay conditions (taking into
account workforce policies and practices) and external
market data to ensure that it is fair and appropriate for
the role, experience of the individual, responsibilities and
performance delivered.
Remuneration Committee Advisors
The Remuneration Committee is authorised by the
Board to appoint external advisors and Korn Ferry is
the advisor to the Remuneration Committee. Korn
Ferry also supported the Governance, Nomination and
Sustainability Committee and provided other leadership
and talent consulting services to the Group during
the year through separate parts of the business. The
Committee is comfortable that the controls in place at
Korn Ferry do not result in the potential for any conflicts
of interest to arise.
The fees incurred with Korn Ferry for advising the
Committee in 2021 were €84,990 (2020: €217,584)
Kerry Group Annual Report 2021
Remuneration Committee Report
127
Our remuneration philosophy also supports our
long-term approach by deferring a significant part
of annual and long term variable remuneration into
share awards, which provides clear alignment with
the long-term interests of shareholders, together with
requiring Executives to acquire and maintain significant
shareholdings in the Group.
In line with best market practice, malus and clawback
provisions apply to the Executive Director’s STIP and LTIP
awards.
Volume
Growth
Margin
Expansion
Growth
EPS
Return
ROACE
Cash
Conversion
Share
Price
Dividend
Total
Shareholder
Return
Underpinned by Sustainability Measures
Remuneration Policy
Kerry’s current Remuneration Policy was submitted to a
non-binding advisory vote at the 2021 Annual General
Meeting, one year earlier than required under the
Shareholders Rights Directive as enacted in Ireland.
As an Irish incorporated company, Kerry Group plc is not
obliged to comply with the UK legislation which requires
UK companies to submit their remuneration policies to
a binding shareholder vote every three years or earlier if
changes are required prior to this.
Similarly, Kerry Group plc is not required to comply with
the remuneration reporting regulation contained in the
UK Companies (Miscellaneous Reporting) Regulations
2018 but follows the requirements as a matter of best
practice unless they conflict with Irish or other legal
requirements or there are other reasons where it is
considered not practicable to do so.
In setting remuneration levels, the Committee has
regard to comparable UK, USA and European companies
which are comparable to the Group in terms of size,
geographical spread and complexity of business, and
operate in the food and beverage and other sectors. It also
considers workforce remuneration and related policies
and employment conditions elsewhere in the Group.
Section C: Remuneration Policy
Remuneration Principles
The Group’s Executive Director remuneration philosophy
is to ensure that executive remuneration is aligned to
the Group’s purpose and values, supports strategy,
promotes the long-term success of the company,
properly reflects the duties and responsibilities of
the Executives, and is structured to attract, retain
and motivate individuals of the highest quality on an
international basis. Remuneration includes performance
related elements designed to align Directors’ interests
with those of shareholders and to promote long-term
sustainable growth and performance at the highest
levels in line with the Group’s strategy.
A high proportion of Executive Directors’ potential
remuneration is based on short-term and long-
term performance related incentive programmes.
By incorporating these elements, the Remuneration
Committee believes that the interest and risk appetite
of the Executive Directors is properly aligned with the
interests of the shareholders and other stakeholders.
When authorising remuneration outcomes, the
Committee exercises independent judgement and
discretion, taking account of Group and individual
performance as well as the investor experience,
environmental, governance and social matters and wider
workforce pay conditions to ensure that it is fair and
appropriate for the role, experience of the individual,
responsibilities and performance delivered.
Drivers of Shareholder Return
As outlined in the Strategic Report on page 31, Volume
Growth and Margin Expansion are the main drivers
of Adjusted Earnings Per Share (EPS) which is the key
performance metric for measuring growth. Return on
Average Capital Employed (ROACE) is a key measure of
how efficiently the Group employs its available capital.
Cash Conversion is an important indicator of the cash
the Group generates for reinvestment or for return to
shareholders.
These are the main Group metrics which drive the
Executive Director’s Short Term Incentive Plan (STIP)
and Long Term Incentive Plan (LTIP) underpinned by
the Group’s sustainability measures. Together these
metrics deliver Total Shareholder Return which aligns
the interest of the Executive Directors with that of the
shareholders.
Kerry Group Annual Report 2021
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Directors’ Report Remuneration Committee Report
In designing the Remuneration Policy, the Committee considered the best practice features detailed in the 2018 UK
Corporate Governance Code as follows:
Matters
Clarity
Examples
The policy is clear, uncomplicated and well understood by the Executive Directors. It has been clearly
communicated to shareholders and proxy advisors. Our Chief Human Resources Officer’s (CHRO) role has
direct responsibility for engaging with our employees and collaborates closely with Mr. Tom Moran, our
designated workforce engagement Director. The Committee monitors the effectiveness of engagement with
the wider workforce through updates provided by the CHRO and the designated workforce engagement
Director. The Board is comfortable that our Remuneration Policy is clearly understandable by employees.
Simplicity
The Committee considers that the Remuneration Policy is simple and easy to understand.
The Remuneration Policy is aligned with the strategy and business model of the Group. The Committee has
purposefully avoided any complex structures which have the potential to be misunderstood and deliver
unintended outcomes.
Risk
The Remuneration Policy is designed to discourage inappropriate risk taking and to ensure that it is not
rewarded. This is achieved by (i) the balanced use of both short-term and long-term incentive plans which
employ a blend of financial, non-financial and shareholder return targets (ii) the significant role played by
equity in our incentive plans together with shareholding requirements and (iii) malus and clawback provisions
and (iv) the ability of the Committee to utilise discretion to adjust formulaic outcomes to ensure outcomes are
aligned to, and are reflective of, the underlying business performance of the Group.
Predictability
Executive Directors’ remuneration is subject to individual participation caps, with our share-based plans
also subject to market standard dilution limits. The scenario charts on page 133 illustrate how the rewards
potentially receivable by our Executive Directors vary based on performance delivered and share price growth.
Proportionality
There is a clear link between individual rewards, delivery of strategy and long-term performance. In addition,
the significant role played by STIP and LTIP/‘at risk‘ pay, together with the structure of the Executive Directors
service contracts, ensures that poor performance is not rewarded.
Alignment to
Culture
Kerry has a relentless focus on delivering for our shareholders and other stakeholders and this is fully aligned
with our Remuneration Policy in that employee personal success is directly linked to the success of the Group
through the short-term and long-term incentive plans and targets we operate.
The Committee is satisfied the Remuneration Policy is fully aligned with the Group’s diverse, entrepreneurial
and results focused culture which is underpinned by our Values of Courage, Ownership, Inclusiveness, Open-
mindedness and Enterprising Spirit.
The company is operating its remuneration arrangements in line with the approved Remuneration Policy which
came into effect in 2021 and will apply for up to three years. The Committee is comfortable that the policy remains
appropriate supporting the Group’s strategy and that no changes are required prior to the triennial vote at the 2024
AGM. The current policy is reproduced below for ease of reference.
Remuneration Policy Table
The following table details the Remuneration Policy for the Executive Directors for the period 2021 to 2023:
Operation
Opportunity
– Remuneration Committee sets the basic salary
and benefits of each Executive Director
– Determined after taking into account a
number of elements including the Executive
Directors’ performance, experience and level of
responsibility
– Paid monthly in Ireland and bi-weekly in the US
– Salary is referenced to job responsibility and
internal/external market data
– Set at a level to attract,
retain and motivate
Executive Directors
– Reviewed annually
– Full review undertaken
every three years
Performance
Metrics
– Not
applicable
– These benefits primarily relate to the use of a
– Not applicable
company car or a car allowance
– Not
applicable
Purpose and Link
to Strategy
Basic Salary
Reflects the value of the
individual, their skills and
experience
Competitive salaries are set to
promote the long-term success
of the Company and attract,
retain and motivate Executive
Directors to deliver strong
performance for the Group in
line with the Group’s strategic
objectives
Benefits
To provide a competitive benefit
package aligned with the role
and responsibilities of Executive
Directors
Kerry Group Annual Report 2021
Purpose and Link
to Strategy
Pension
To provide competitive
retirement benefits to attract
and retain Executive Directors
Remuneration Committee Report
129
Operation
Opportunity
Performance
Metrics
– Pension arrangements may vary based on the
– Pension values
– Not applicable
Executive Director’s location
– Irish resident Executive Directors participate in the
general employee defined contribution pension
scheme or receive a contribution to an after-tax
savings scheme (where the lifetime earnings
cap has been reached) or receive a taxable cash
alternative based on a percentage of basic salary
– The existing Executive Director in the US
participates in the Group’s defined benefit and
defined contribution pension schemes. The normal
retirement age under the defined benefit scheme
is 65 years of age. Early retirement is possible from
age 55 onwards
currently vary based
on local practice
– The pension
contribution rates for
incumbent Executive
Directors will be
reduced to 10% of
basic salary, in line
with Kerry’s Irish
general workforce
rate, with effect from 1
January 2023
– The maximum
company pension
contribution rate for
new Executive Director
appointments is
aligned to that of the
general workforce rate
Short Term Incentive Plan (STIP)
To incentivise the achievement,
on an annual basis, of key
performance metrics and
short-term goals beneficial to
the Group and the delivery of
the Group’s strategy
One third of the award is
deferred in shares/options
providing a two year retention
element and aligns Executive
Directors’ interests with
shareholders’ interests
– Achievement of predetermined performance
targets set by the Remuneration Committee
– Performance targets aligned to the Group’s
published strategic targets with the targets and
weightings for financial metrics subject to annual
review
– Two thirds of the award is payable in cash
– One third of the award is awarded by way of
shares/options to be issued two years after
vesting following a deferral period
– Malus and clawback provisions are in place for
awards under the STIP (see page 131)
– Maximum
opportunity is 175%-
200% of basic salary
– Target opportunity
is 50% of maximum
opportunity for on-
target performance
– Threshold
performance results
in a bonus payable
at 0% of maximum
For FY 2022
– Volume
Growth
– Margin
Expansion
– Cash
Conversion
– Strategic
Objectives
Long Term Incentive Plan (LTIP)
Retention of key personnel
and incentivisation of
sustained performance
against key Group strategic
metrics over a longer period
of time
Share-based to provide
alignment with shareholder
interests
A two-year post vesting
deferral requirement aligns
Executive Directors’ interests
with shareholders’ interests
– The awards vest depending on a number of
– Maximum
performance metrics being met over a three-year
performance period
– Conditional awards over shares or share options
– Following vesting, 100% of the earned award is
deferred for a period of two years (i.e. giving a
combined performance period and deferral period
of five years)
– Malus and clawback provisions are in place for
awards under LTIP (see page 131)
opportunity is 250%
- 300% of basic
salary
For FY 2022
– Adjusted
Earnings Per
Share “EPS”
– Total
Shareholder
Return “TSR”
– Return on
Average
Capital
Employed
“ROACE”
– Sustainability
metrics
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Directors’ Report Remuneration Committee Report
Purpose and Link
to Strategy
Operation
Opportunity
Performance
Metrics
Shareholding Requirement
Maintain alignment of the
interests of the shareholders
and the Executive Directors
and commitment over the
long-term
– Executive Directors are required to build and to hold
shares in the Company to a minimum level of 250%-
300% of their basic salary
– Shareholding requirement to be satisfied through
retention of a minimum of 50% of vested annual
bonus and LTIP shares (excluding the sale of shares
to cover tax on vesting), until the shareholding
requirement is met
– A post-employment shareholding requirement obliges
Executive Directors to hold the lower of (i) their actual
shareholding and (ii) their in-service shareholding
requirement for two years post-employment. Applies
to shares acquired from new awards and does not
apply to own purchased shares
– 250%-300% of
basic salary
– Not
applicable
Selection of performance targets
STIP
Financial performance targets under the STIP are set by the Remuneration Committee with reference to the prior year, current
year budget and medium-term financial targets. They align with the Group’s strategic objectives while also ensuring the long-
term operational and financial stability of the Group. Targets are set at appropriately stretching levels to achieve threshold, target
and maximum payout levels. Performance targets are based predominately on the financial metrics of Volume Growth, Margin
Expansion and Cash Conversion (amounting to 80% of maximum opportunity).
Volume Growth and Margin Expansion are key performance metrics as they are the main drivers of Adjusted EPS Growth. Cash
Conversion is key to ensuring there are sufficient funds available for reinvestment or for return to shareholders.
Strategic objectives (amounting to 20% of maximum opportunity) are relevant to each Executive Director’s specific area of
responsibility and are key in ensuring focus on the strategic and functional priorities of the business.
Due to their commercial sensitivity, the Committee is of the view that it would be detrimental to the Company to disclose the
targets in advance of or during the relevant performance period. The Committee will disclose the targets and performance
against them in next year’s Remuneration Report.
LTIP
The performance targets under the LTIP are set to reflect the Group’s longer-term growth objectives and at a level where
maximum opportunity genuinely represents outperformance. The performance metrics are currently based on Adjusted EPS
Growth, TSR, ROACE and Sustainability metrics.
Adjusted EPS Growth is a key performance metric encompassing all the components of growth important to the Group’s
stakeholders. EPS Growth is driven by the STIP metrics, Volume Growth and Margin Expansion. TSR is an important indicator of
how successful the Group has been in terms of shareholder value creation. ROACE represents a good perspective on the Group’s
internal rate of return and financial added value for shareholders. ROACE supports the strategic focus on growth and margins
through ensuring cash is reinvested to generate appropriate returns. Sustainability metrics are core to maintaining our strategy
and long-term sustainable performance and are reviewed at the time of each award.
How Remuneration Links with Strategy
Performance Metrics
Strategic Priority
Incentive Scheme
Volume growth
Key driver of revenue growth
Margin expansion
Key driver of profit growth
Cash conversion
Cash generation for reinvestment or return to shareholders
Strategic objectives
Development and execution of business strategies
Adjusted EPS growth
Delivery of the Group’s long-term growth strategy
TSR
ROACE
Delivery of shareholder value
Balance growth and return
Sustainability
Core to our strategy and long-term sustainable performance
STIP
STIP
STIP
STIP
LTIP
LTIP
LTIP
LTIP
Kerry Group Annual Report 2021
Remuneration Committee Report
131
Malus/Clawback
The Committee has the discretion to reduce or impose
further conditions on the STIP and LTIP awards prior
to vesting (malus). The Committee further has the
discretion to recover incentives paid within a period of
two years from vesting (clawback).
The key trigger events for the use of malus and
clawback provisions include material misstatement
of the Company’s audited financial results, serious
wrongdoing, payment made on the basis of erroneous
data, gross misconduct, serious reputational damage
and corporate failure.
Any recalculation of the award shall be effected in such
manner and subject to such procedures as the Group
determines to be measured and appropriate, including
repayment of any excess incentive or offset against any
amounts due or potentially due to the participant under
any vested or unvested incentive awards.
The Company retains the right to apply the malus and
clawback provisions to former directors STIP and LTIP
awards. Other elements of remuneration are not subject
to malus or clawback provisions.
Committee Discretion
The Committee has discretion to adjust the formulaic
outcomes under STIP and LTIP to ensure outcomes are
aligned to and are reflective of the underlying business
performance of the Group.
In line with plan rules, the Committee may, at its
discretion, amend or vary the performance metrics of
the STIP and LTIP related incentives, the calculation
methodology for those performance metrics and the
composition of the TSR peer group when appropriate, in
the interest of alignment and fairness.
Service Contracts
The CEO and Executive Directors have service
contracts in place which can be terminated by either
party giving 12 months notice. In addition, all service
contracts include pay in lieu of notice, non-compete
and non-solicitation provisions of up to 12 months post
departure, in order to protect the Group’s customer
base, employees and intellectual property.
No ex-gratia severance payments are provided for in
respect of the CEO or Executive Directors.
Remuneration Policy for Recruitment of
New Executive Directors
The Remuneration Committee will determine the
contractual terms for new Executive Directors, subject
to appropriate professional advice to ensure that
these reflect best practice and are subject to the limits
specified in the Group’s approved policy as set out in this
report.
Salary levels for new Executive Directors will take into
account the experience and calibre of the individual
and his/her remuneration expectations. Where it is
appropriate to offer a lower salary initially, a series
of increases to the desired salary positioning may be
made over subsequent years, subject to individual
performance and development in the role.
Pension and benefits will be provided in line with
the approved policy, with relocation, travel or other
expenses provided if necessary.
The structure of the variable pay element will be in
accordance with and subject to the limits set out in
the Group’s approved policy detailed above. Different
performance measures may be set initially for STIP in
the year an Executive Director joins the Group taking
into account the responsibilities of the individual and the
point in the financial year that he/she joins the Board.
Subject to the rules of the scheme, an LTIP award may
be granted after joining the Group.
If it is necessary to buy-out incentive pay or benefit
arrangements (which would be forfeited on leaving
the previous employer) in the case of an external
appointment, this would be provided for taking
into account the form (cash or shares), timing and
expected value (i.e. likelihood of meeting any existing
performance criteria) of the remuneration being
forfeited. The general policy is that payment should be
no more than the Committee considers is required to
provide reasonable compensation for remuneration
being forfeited. The Group’s policy is that the period of
notice for new Executive Directors should not exceed 12
months and should include pay in lieu of notice, non-
compete and non-solicitation provisions to protect the
Group.
The Committee will ensure that any arrangements
agreed will be in the best interests of the Group and
shareholders.
Kerry Group Annual Report 2021
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Directors’ Report Remuneration Committee Report
Payments for Loss of Office
In the event of a Director’s departure, the Group’s policy
on termination is as follows:
– the Group will pay any amounts it is required to make
in accordance with or in settlement of a Director’s
statutory employment rights and in line with their
employment agreement;
– the Group will seek to ensure that no more is paid than
is warranted in each individual case;
– STIP and LTIP awards will be paid out in line with plan
rules on exit (i.e. for good leavers as defined in the
LTIP rules), with awards prorated to normal vesting
date, subject to performance and a two-year holding
requirement and prorated to reflect the proportion of
the performance period that has elapsed on the date
of cessation; and
– other payments, such as legal or other professional
fees, repatriation or relocation costs and/or
outplacement fees, may be paid if it is considered
appropriate and at the discretion of the Committee.
A Director’s service contract may be terminated
without notice and without any further payment or
compensation, except for sums accrued up to the date of
termination, on the occurrence of certain events such as
gross misconduct.
Change of Control
Outstanding STIP and LTIP awards/options would
normally vest and become exercisable on a change of
control, subject to plan rules, including the satisfaction
of any performance conditions and pro-rating. The
Committee may exercise its discretion to vary the level of
vesting having regard to the circumstances and reasons
for the events giving rise to the change of control.
Alignment with Workforce Pay and Policies
The Remuneration Policy provides an overview of
the structure that operates for the Group’s Executive
Directors and senior management. Differences
in quantum will depend on size of the role and
responsibility, the location of the role and local market
practice.
When setting the Remuneration Policy for Executive
Directors, the Committee considers the pay policies and
procedures for the wider workforce. The key difference
is that, overall, Remuneration Policy for the Executive
Directors is more heavily weighted towards variable pay
compared to other employees.
Basic salaries are operated under the same policy
as detailed in the Remuneration Policy table with
comparator groups used as a reference point. The
Committee considers the basic salary increase for the
broader workforce when determining the annual salary
review for the Executive Directors.
Senior management are invited to participate in both the
STIP and LTIP to incentivise performance through the
achievement of short-term and long-term objectives and
through the holding of shares in the Group.
The Committee will seek shareholder approval at a later
date for an All-Employee Share Plan which will allow for
the grant of various share-based awards to employees
across the Group once implemented (subject to local tax
and securities laws).
Consultation with Employees
When setting remuneration for Executive Directors
the Committee takes into account the remuneration
structures, policies and practices in the Group as a
whole, the feedback from employee engagement
activities and the information provided by our external
advisors. In addition, matters relating to remuneration
which come to the attention of the Committee
Chairperson, in his capacity as the designated workforce
engagement Director, are reported to the Committee.
The Group has a number of different channels for
engagement and the Committee continually reviews
and enhances these channels to enable the Committee
to engage more effectively with the wider workforce
to explain broader pay policies and practices and the
alignment to the Executive Directors’ Remuneration
Policy.
Consultation with Shareholders
The Committee considers the guidelines issued by
the major institutional shareholders and the bodies
representing them and the feedback provided by such
proxy advisors and shareholders, when completing its
annual and triennial review of the Group’s Executive
Remuneration policies and practices.
The Committee is committed to continued consultation
with shareholders regarding its Remuneration Policy.
Kerry Group Annual Report 2021
Non-Executive Directors’
Remuneration Policy
Non-Executive Directors’ fees, which are determined by
the Executive Directors, fairly reflect the responsibilities
and time spent by the non-Executive Directors on
the Group’s affairs. In determining the fees, which
are set within the limits approved by shareholders,
consideration is given to both the complexity of the
Group and the level of fees paid to non-Executive
Directors in comparable companies. Fees are reviewed
on an annual basis and the basic fee is increased in
line with the inflation increase available to the general
force in Ireland. A detailed benchmark review is carried
out on a three-year basis and any recommendations
are presented to the Executive Directors for approval.
Non-Executive Directors do not participate in the
Group’s incentive plans, pension arrangements or other
elements of remuneration provided to the Executive
Directors. Non-Executive Directors are reimbursed for
travel and accommodation expenses (and any personal
tax that may be due on those expenses). Non-Executive
Directors are encouraged to build up a shareholding in
the Company.
Illustration of Remuneration Policy
The following diagrams show the minimum, target,
maximum and maximum +50% share appreciation
composition balance between the fixed and variable
remuneration components for each Executive Director
effective for 2022. For illustration purposes, target
performance for LTIP is reflected as 50% of maximum
opportunity. The inner most circle represents the
minimum potential scenario for remuneration, with
the 2nd circle representing target, the 3rd circle
representing maximum potential and the outer circle
representing maximum potential plus 50% increase in
the LTIP share value.
Remuneration Committee Report
133
Basic Salary
Pension & Benefits
STIP
LTIP
Edmond Scanlon
58%
13%
48%
16%
40%
27%
19%
81%
3%
4%
6%
27%
32%
26%
Basic Salary
Pension & Benefits
STIP
LTIP
Basic Salary
Pension & Benefits
STIP
LTIP
3%
4%
4%
5%
Marguerite Larkin
56%
15%
46%
18%
37%
30%
18%
82%
7%
26%
32%
26%
Gerry Behan
55%
15%
45%
18%
37%
29%
21%
79%
26%
32%
8%
26%
The charts above exclude the effect of any Company
share price appreciation except in the ‘maximum +50%’
scenario.
Kerry Group Annual Report 2021
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Directors’ Report Remuneration Committee Report
Section D: Remuneration Policy Implementation
Part I: Remuneration Policy Implementation 2022
This part of the report sets out how the proposed Remuneration Policy as described on pages 127-128 will operate
in 2022.
Basic Salary and Benefits
The salaries of the Executive Directors effective for the year commencing on 1 March 2022, together with the
comparative figures, are as follows:
Directors
Edmond Scanlon
Marguerite Larkin
Gerry Behan
2022
€’000
1,249
773
$’000
1,019
2021
€’000
1,219
754
$’000
987
% Increase
2.5%
2.5%
% Increase
3.3%
The increases in salaries for the Executive Directors are in line with increases for the general workforce in Ireland
2.5% and the US 3.3%.
Benefits relate primarily to the use of a company car/car allowance. Any travel arrangements or travel costs required
for business purposes will also be met by the Group, on a net of tax basis.
Pensions
The Group CEO participates in the general employee Irish defined contribution scheme and the CFO receives
a taxable cash allowance based on a percentage of basic salary, in lieu of pension. The CEO Taste & Nutrition
participates in a US-defined contribution scheme and a US-defined benefit pension scheme.
Following the Remuneration Policy review carried out in 2020 pension contribution rates will continue as is for 2022.
The pension contribution rate for Executive Directors will be aligned to that of Kerry’s general workforce in Ireland
(currently a rate of 10%) with effect from 1 January 2023.
Short-Term Incentive Plan (STIP)
A review of the STIP metrics was completed in 2021 to ensure that they remain appropriate, are linked to strategy,
consistent with best practice and that the targets are appropriately calibrated. The Committee concluded that the
only change required for 2022 was to amend the Margin Expansion metric from EBITA to EBITDA to reflect the
updated mid-term targets and to ensure better alignment with internal performance measurement and with the
metric more commonly used by our industry peers. There is no change to the weightings attributed to the metrics. All
other metrics continue to support the Group’s long-term sustainable growth and forward-looking strategy as well as
attracting, motivating and retaining Executives of the highest quality internationally.
The maximum STIP opportunity remains the same as 2021: 200% of salary for the CEO and 175% of salary for the
CFO and CEO Taste & Nutrition.
2022 STIP – Performance Metrics and Weightings
Group Metrics
Volume growth*
Margin expansion*
Cash conversion
Strategic objectives
Total
CEO and CFO
% of award
CEO T&N
% of award
Target
17.5%
13.5%
9%
10%
50%
Max
35%
27%
18%
20%
100%
Target
17.5%
13.5%
9%
10%
50%
Max
35%
27%
18%
20%
100%
*
The above metrics are measured at a Group level for the CEO and CFO and at a Taste & Nutrition level for the CEO of Taste & Nutrition.
Kerry Group Annual Report 2021
Remuneration Committee Report
135
The Committee is of the view that a 50% of maximum award payout for on target performance is appropriate taking
into account the level of stretch in the targets set. Due to the commercial sensitivity of the financial metrics and
strategic objectives, the Committee is of the view that it would be detrimental to the Company to disclose the targets
in advance of, or during, the relevant performance period. The Committee will disclose the targets and performance
against them in next year’s Remuneration Report.
Long-Term Incentive Plan (LTIP)
A review of the LTIP metrics was completed in 2021 to ensure that they remain appropriate, linked to strategy and
that targets are appropriately stretching. The Committee concluded that no changes were required in relation to
the financial metrics other than to amend the target range applicable for the ROACE metric to better align with the
new mid-term targets communicated at the Capital Markets Day held in October 2021. The target range for the
sustainability metrics has been increased as the Group progresses on its journey towards the targets included in the
sustainability strategy Beyond the Horizon.
LTIP Award Year
Performance Metrics
EPS (40% weighting)1
Kerry’s EPS growth per annum
% of award which vests
ROACE (15% weighting)
ROACE return achieved
% of award which vests
Relative TSR (25% weighting)
Position of Kerry in peer group2
% of award which vests
Sustainability (20% weighting)3
Nutrition Reach Goal
Carbon Reduction
Food Waste Reduction
% of award which vests
2022
Threshold
Maximum
6%
25%
9%
25%
12%
100%
13%
100%
Median
Greater than 75th%
25%
100%
1.20bn
40%
20%
25%
1.40bn
48%
25%
100%
Note 1: Adjusted EPS growth is measured on a constant currency basis.
Note 2:
The TSR Peer Group companies are listed on page 143. For LTIP awards granted in 2021 and subsequent years Aryzta is being
replaced with Ingredion.
Note 3: Please see pages 34-35 for further details in relation to sustainability metrics.
Kerry Group Annual Report 2021
136
Directors’ Report Remuneration Committee Report
The Committee is satisfied that the target ranges above are appropriately stretching particularly given the current
challenging trading environment, overall market growth rates, the level of capital expenditure required to support
future growth ambitions and performance achieved against the previous targets set (see pages 34-35).
The Policy implemented in 2021 included an increase in the maximum LTIP opportunity to be implemented on a
phased basis over two years. The second phase of the increase will be implemented in 2022 and in line with this each
Executive Director will be awarded their maximum LTIP opportunity in 2022 as follows: CEO 300% of basic salary, CFO
250% of basic salary and CEO Taste & Nutrition 250% of basic salary.
See Group Key Performance Indicators (KPIs) on pages 34 and 35 for more information on the link between the
performance metrics used for incentive purposes and the Group’s Strategic Plan.
Non-Executive Director Remuneration Review
Non-Executive Director fees were last reviewed in 2020 and increases were made effective from 1 January 2021.
As proposed in the Remuneration Policy put to Shareholders at the 2021 AGM, the Chairman’s and non-Executive
Director basic fees will be increased annually in line with the increase available to the general workforce in Ireland,
which for 2022 is 2.5%. The following increases will be applied effective 1 March 2022.
Fee Type*
Chairman’s fee
Non-Executive Director basic fee
2022 Fees
€
394,625
86,100
2021 Fees
€
385,000
84,000
*
There are no changes to the Committee membership, Committee chair fees or any other fees.
Kerry Group Annual Report 2021
Remuneration Committee Report
137
Part II: Remuneration Policy Outturn 2021
Disclosures regarding Directors’ remuneration have been drawn up on an individual Director basis in accordance
with the requirements of the 2014 Irish Companies Act, the EU Shareholders’ Rights Directive, the UK Corporate
Governance Code, the Irish Annex, the Euronext Dublin Stock Exchange and the UK Listing Authority.
The information in the tables 1, 4, 5, 6 and 7 below including relevant footnotes (identified as audited) forms an
integral part of the audited consolidated financial statements as described in the basis of preparation on page 168.
All other information in the Remuneration Report is additional disclosure and does not form an integral part of the
audited consolidated financial statements.
Executive Directors’ Remuneration
Table 1: Individual Remuneration for the year ended 31 December 2021 (Audited)
Irish Based Directors
Euros
Edmond Scanlon
CEO
Marguerite Larkin
CFO
US Based Director
US Dollars
Gerry Behan6
CEO T&N
Basic Salary1
Benefits2
Pensions3
Total Fixed Remuneration
% Fixed v Total
STIP4
LTIP5
Total Variable Remuneration
% Variable v Total
Total Remuneration
2021
€’000
1,217
62
219
1,498
39%
1,752
605
2,357
61%
3,855
2020
€’000
1,113
45
214
1,372
59%
–
951
951
41%
2,323
2021
€’000
752
34
135
921
42%
948
337
1,285
58%
2,206
2020
€’000
688
34
132
854
77%
–
261
261
23%
1,115
2021
$’000
984
72
207
1,263
42%
1,240
513
1,753
58%
3,016
€’000
2,534
2020
$’000
895
72
273
1,240
62%
–
751
751
38%
1,991
€’000
1,762
Note 1:
During 2020 as a solidarity gesture in light of COVID-19 and those impacted, the Executive Directors volunteered a 25% reduction in
their basic salary for a three month period, hence the reason it appears there is a larger than the inflationary increase year on year.
Note 2: These benefits primarily relate to the use of a company car or a car allowance
Note 3:
The pension figure for Edmond Scanlon relates to Irish defined contribution pension benefits. Marguerite Larkin received a taxable
cash payment in lieu of pension benefits. The employer pension contribution in 2020 for both Edmond and Marguerite remained at
18% of their basic salaries before the 25% temporary voluntary reduction in salary referred to above. The pension figure for Gerry
Behan includes both defined benefit and defined contribution retirement benefits and similarly his employer pension contribution
for 2020 was not impacted by the voluntary basic salary reduction applied during the year
The 2021 STIP amount represents 67% delivered in cash with 33% delivered by way of shares/share options which are deferred for
two years.
The share price used to calculate the value of the LTIP is the average share price for the three months up to the end of the year
being reported. A positive share price movement versus that applicable at the date the conditional awards were granted has
increased the valuation of the awards (that will vest in 2022) over the three years by €98,947 for Edmond Scanlon, €55,071 for
Marguerite Larkin and by €70,586 for Gerry Behan. The LTIP included in this table was awarded in 2019.
The table shows the Executive Director’s pay in the currency of payment to ensure clarity in reflecting the year-on-year payment
comparisons.
The total remuneration for Executive Directors was €8,595k (2020: €5,200k) using a US dollar exchange rate of 1.19 (2020: 1.13).
Note 4:
Note 5:
Note 6:
Note 7:
Kerry Group Annual Report 2021
138
Directors’ Report Remuneration Committee Report
Basic Salary Increases
Edmond Scanlon’s basic salary as Group CEO was increased by 2.5% and the basic salaries of Marguerite Larkin and
Gerry Behan were increased by 2.5% and 3% respectively effective from 1 February 2021 in line with increases for
the general workforce in Ireland and the US respectively. However as noted above, the Executive Directors took a
voluntary 25% basic salary reduction for a three month period in 2020 as a solidarity gesture in light of COVID-19 and
those impacted.
Annual Incentive Outcomes (STIP)
Table 2: Annual Bonus Achievement Against Targets
Financial Metrics (CEO, CFO, and CEO T&N – 80% weighting)
Metric
1. Volume Growth*
(35% weighting)
2. Margin Expansion*
(27% weighting)
3. Cash Conversion
(18% weighting)
s Threshold
t
e
g
r
a
T
Target
Max
Actual performance
Bonus outcome
Link to strategy
Group
Taste &
Nutrition
Group
Taste &
Nutrition
2%
4.5%
5%
8%
35%
2%
5.5%
6%
8.3%
35%
+30 bps
+30 bps
+50 bps
+50 bps
+80 bps
+80 bps
40 bps
40 bps
7%
7%
Group
70%
80%
90%
84%
12%
Volume Growth is a key
performance metric as it
is one of the main drivers
of Adjusted EPS Growth
Margin Expansion is a key
performance metrics as it
is another main driver of
Adjusted EPS Growth
Cash Conversion is key
to ensuring there are
sufficient funds available
for reinvestment or for
return to shareholders
*
The above metrics are measured at Group level for the CEO and CFO and at Taste & Nutrition level for the CEO of Taste & Nutrition.
When setting the targets above the Committee considered them to be appropriate as they are aligned with the
Group’s strategic plan, were reflective of overall market conditions including the impact of COVID-19 on 2020
performance and the likely impact of COVID-19 on performance in 2021.The targets also take account of planned
investments (both capital and operational) that the Group is making to enable revenue growth and margin
expansion, as well as necessary working capital investments to mitigate global supply chain challenges and
KerryConnect risks.
Strategic Objectives – 20% weighting
The table below sets out the performance outcome for the strategic element of the STIP.
Metric
Threshold
Target
s
t
e
g
r
a
T
Max
Actual performance
Bonus outcome
Link to strategy
4. Strategic Objectives (All – 20% weighting)
CEO
0
10
20
18
18%
CFO
0
10
20
18
18%
CEO T&N
0
10
20
18
18%
Specific to the Executive Directors responsibility linked to strategic plan
implementation and talent management.
Kerry Group Annual Report 2021
Remuneration Committee Report
139
Details of Strategic Objectives
The Executive Directors are also measured against Strategic objectives. Performance against these objectives is
determined by the Committee by reference to key targets agreed with the Executives at the start of the year.
Strategic
Objective
CEO
Portfolio &
Strategy
Achievement
18%
10%
Weighting
Performance Assessment
20%
10%
Strong progress in further solidifying Kerry’s capability as a world
leading Taste & Nutrition partner for the food, beverage and
pharmaceutical markets:
– Seamless and simultaneous execution of significant strategic
divestments and acquisitions during the year:
– Sale of Consumer Foods Meats and Meals business completed.
– Acquisition of Niacet and other strategic businesses with
strong growth and profitability profiles, further building Kerry’s
capability in Food Waste reduction and Bio-Pharma.
– Comprehensive strategy refresh and updated mid-term targets
communicated at the Capital Markets Day held in October 2021:
– Ambitious growth and profitability targets.
– Concentration on key growth platforms of Authentic Taste,
Plant-based, Food Waste, and Health & Bio-Pharma.
– Enhanced sustainability targets with an increased target
for Scope 1 and 2 emissions reduction from 33% to 55% by
2030, and an extension of our commitment to equal gender
representation across all senior management roles by 2030.
Operating
Model & Digital
Enablement
5%
Leadership Team
and Succession
Planning
5%
Significant Operating Model enhancements to further strengthen
execution capability across the Group:
4%
– Digital enablement vision and roadmap established with a focus
on enhanced customer and employee experience.
– Evolved the Global Business Services organisation as a key pillar
of Kerry’s global operating model; two global centres established
to deliver scalable repeatable services to all geographies.
– Operational excellence programme established to deliver end-
to-end supply chain capability for delivery of the Group’s mid-
term growth, margin and sustainability ambitions. Significant
manufacturing footprint enhancements in key locations,
Hammersdale - South Africa, Rome Georgia - USA, Nantong -
China, Irapuato - Mexico, Olesnica - Poland and Jeddah - Saudi
Arabia.
Strong progress in building strength, depth and diversity of
leadership team and talent pipeline:
4%
– Strength and diversity of global leadership team further enhanced
through key internal promotions and external appointments
to achieve the target of equal gender representation at senior
management level by 2030.
– Championed Diversity, Inclusion and Belonging as a key business
priority; ensured leadership accountability and robust plans in
place to build enhanced inclusiveness and diversity.
– Continued to ensure rigour in executive succession planning and
development.
Kerry Group Annual Report 2021
140
Directors’ Report Remuneration Committee Report
Strategic
Objective
CFO
Portfolio &
Strategy
Achievement
18%
10%
Weighting Performance Assessment
20%
10%
Strong progress in further solidifying Kerry’s capability as a world
leading Taste & Nutrition partner for the food, beverage and
pharmaceutical markets:
– Seamless and simultaneous execution of significant strategic
divestments and acquisitions:
– Sale of Consumer Foods Meats and Meals business completed.
– Acquisition of Niacet and other strategic businesses with
strong growth and profitability profiles, further building Kerry’s
capability in Food Waste reduction and Bio-Pharma.
– Comprehensive strategy refresh and updated mid-term targets
communicated at the Capital Markets Day held in October 2021:
– Ambitious growth and profitability targets.
– Concentration on key growth platforms of Authentic Taste,
Plant-based, Food Waste, and Health & Bio-Pharma.
– Enhanced sustainability targets with an increased target
for Scope 1 and 2 emissions reduction from 33% to 55% by
2030, and an extension of our commitment to equal gender
representation across all senior management roles by 2030.
5%
Global Business
Services, Analytics
& Finance
Transformation
Significant Operating Model enhancements to further strengthen
execution capability across the Group.
4%
– Evolved the Global Business Services (“GBS”) organisation as a key
pillar of Kerry’s global operating model:
– Two global centres established to deliver scalable repeatable
services to all geographies.
– GBS leadership teams established to manage the transition of
Finance, HR and Regulatory services to these centres.
– Infrastructure and capability put in place to further expand
services to these centres in 2022.
– GBS effectively leveraged to enhance and streamline the Finance
Operating Model around three key pillars: Business partnering,
Centres of Expertise and Centres of Scale, supported and enabled
by finance digital solutions and analytics
– Enhanced group-wide analytics capability to drive agility,
empowerment and decision-making.
Leadership and
Succession
5%
Strong progress in building strength, depth and diversity of the
Finance leadership team and talent pipeline:
4%
– Strength and diversity of global Finance leadership team
further enhanced through key internal promotions and
external appointments to achieve the target of equal gender
representation at senior management level by 2030.
– Championed Diversity, Inclusion and Belonging as a key business
priority; ensured leadership accountability and robust plans in
place to build enhanced inclusiveness and diversity.
– Continued to ensure rigour in executive succession planning and
development.
Kerry Group Annual Report 2021
Remuneration Committee Report
141
Weighting Performance Assessment
Achievement
Strategic
Objective
CEO T&N
Portfolio &
Strategy
20%
10%
T&N Operating
Model
Enhancements
5%
18%
10%
Strong progress in further solidifying Kerry’s capability as a world
leading Taste & Nutrition partner for the food, beverage and
pharmaceutical markets:
– Acquisition of Niacet and other strategic businesses with strong
growth and profitability profiles, further building Kerry’s capability
in Food Waste reduction and Bio-Pharma.
– Comprehensive strategy refresh and updated mid-term targets
communicated at the Kerry Capital Markets Day in October 2021:
– Ambitious growth and profitability targets.
– Concentration on key growth platforms of Authentic Taste,
Plant-based, Food Waste, and Health & Bio-Pharma.
– Enhanced sustainability targets with an increased target
for Scope 1 and 2 emissions reduction from 33% to 55% by
2030, and an extension of our commitment to equal gender
representation across all senior management roles by 2030.
Enhanced commercial Operating model embedded consistently
across all regions fully aligned to strategic growth priorities:
4%
– Global Taste Organisation reinforced, with taste leadership
embedded in all regions.
– Global Plant-based, Food Waste, and Health & Bio-Pharma
Portfolio teams strengthened, coupled with strengthened
capability in all regions.
– Chief Commercial Officer function in place and, in partnership
with regions, driving commercial excellence, digital enablement
and enhanced customer experience.
– Operational excellence programme established to deliver end-to-
end supply chain capability across T&N for delivery of the Group’s
mid-term revenue growth, margin expansion and sustainability
ambitions.
– Significant manufacturing footprint enhancements in key
locations, including Hammersdale - South Africa, Rome, Georgia,
USA, Nantong - China, Irapuato - Mexico, Olesnica - Poland and
Jeddah - Saudi Arabia.
Leadership and
Succession
5%
Further strengthened T&N leadership through internal promotions,
strategic external hires and ongoing coaching and development:
4%
– Chief Commercial Officer driving commercial excellence and
enhanced customer experience group-wide.
– Appointment and ongoing mentoring of new CEOs in Europe and
North America.
– Enhanced diversity and leadership capability across all strategic
growth priorities through a combination of internal promotions,
external hires and ongoing coaching and development to achieve
the target of equal gender representation at senior management
level by 2030.
The Committee reviewed progress against these objectives and concluded that strong progress was made by the
Executive Directors against the objectives outlined above, which resulted in an award that was close to maximum
achievement.
Kerry Group Annual Report 2021
142
Directors’ Report Remuneration Committee Report
Discretion
The Committee concluded that there was no requirement to exercise discretion as the 2021 STIP outcomes reflected
the underlying performance of the business, the broader stakeholder experience and the strong performance of the
Executive Directors against strategic objectives.
Final Outturn for 2021
The targets for the Executive Directors, which were set by the Remuneration Committee, were challenging and stretching
in the context of the uncertain and volatile economic environment due to inflationary pressures and the evolving and
fast-changing COVID-19 situation. For 2021, a pay-out of 72% of max opportunity was achieved by each Director.
Under the policy, one third of the bonus is awarded by way of shares or options which are issued following the end of
the two-year deferral period.
Long-Term Incentive Plan (LTIP)
2021 LTIP
A new LTIP plan was approved by shareholders at the 2021 AGM. The first conditional awards under this plan were
made to Executive Directors in 2021. Subject to performance metrics being met over a three-year performance
period, the first awards under this plan will potentially vest in March 2024, 100% of which will be subject to a two-year
deferral period.
2013 LTIP
The terms and conditions of the plan were approved by shareholders at the 2013 AGM. The Remuneration Committee
approves the terms, conditions and allocation of conditional awards under the Group’s LTIP to Executive Directors
and senior management. Under this plan, Executive Directors and senior management are invited to participate in
conditional awards over shares or share options in the Company.
Subject to performance metrics being met over a three-year performance period, the LTIP award will vest on the
third anniversary of the date of grant. 50% of the award is delivered at the vesting date with the remaining 50% of the
award being delivered following a two-year deferral period. This provides for a combined performance period and
deferral period of five years for half of the award that vests.
The first conditional awards under this scheme were made to Executive Directors in 2013. The maximum award that
can be made to an individual Executive Director under the LTIP over a 12-month period is equivalent to 180%-200% of
basic salary for that period.
An award may lapse if a participant ceases to be employed within the Group before the vesting date. The market
price of the shares on the date of each award outlined above is disclosed in note 28 to the financial statements.
The proportion of each conditional award which vests will depend on the Adjusted EPS Growth, TSR and ROACE
performance of the Group during the relevant three year performance period.
2019 LTIP Awards
Set out below is the performance against targets for the 2019 LTIP award where the three-year performance period
ended on 31 December 2021 and the award vests in 2022.
EPS Performance Test
50% of the award vests according to the Group’s average adjusted EPS growth (‘EPS metric‘) over the performance
period. This measurement is determined by reference to the growth in the Group’s adjusted EPS calculated on a
constant currency basis in each of the three financial years in the performance period in accordance with the vesting
schedule outlined in the following table:
Average Adjusted EPS Growth
Percentage of the Award Which Vests
Threshold
Target
Maximum
6%
10%
12%
25%
50%
100%
Below 6% none of the award vests. Vesting between target points is on a straight line basis.
The COVID-19 pandemic had a particular impact on the EPS metric in 2020 (-9.4%), which negated the strong EPS
growth achieved in 2019 (+8.3%) and 2021 (+12.1% after recognising a dilution of 3.2% resulting from the disposal
of the Consumer Foods Meats and Meals business). As a result, the threshold level for this metric was not achieved,
resulting in an award outcome calculated on a formulaic basis of 0% out of a possible maximum of 50%.
Kerry Group Annual Report 2021
140
120
100
80
60
40
20
0
-20
-40
-60
-80
-100
Median
Remuneration Committee Report
143
TSR Performance Test
30% of the award vests according to the Group’s TSR performance over the period measured against the TSR
performance of a peer group of listed companies over the same three-year performance period. The peer group
consists of Kerry and the following companies:
Chr. Hansen
Barry Callebaut
Corbion
Givaudan
Glanbia
Greencore
Aryzta/Ingredion*
Danone
General Mills
IFF
Kellogg’s
Sensient Technologies
McCormick & Co.
Symrise
Nestlé
Novozymes
Premier Foods
Tate & Lyle
Unilever
* Aryzta was replaced by Ingredion for awards granted in 2021 and subsequent years.
When assessing whether the performance hurdle has been met, this measurement is determined by reference to
the ranking of Kerry’s TSR over the three-year performance period, in comparison with the TSR performance of the
companies in the peer group. The awards vest in line with the following table:
Position of Kerry in the Peer Group
Below median
Between median and 75th percentile
Greater than 75th percentile
Percentage of the Award Which Vests
0%
30%
Straight line between 30% and 100%
100%
The performance graph below shows Kerry’s TSR compared to the peer companies over the three-year performance
period from 1 January 2019 to 31 December 2021 for the LTIP awards which issued in 2019. These awards have a
vesting date on or before 30 April 2022.
3 Year TSR: Kerry and Comparator 1 January 2019 - 31 December 2021
See chart on page 148, which illustrates the Group’s TSR performance from 2011 to 2021
140%
120%
100%
80%
60%
40%
20%
0%
-20%
-40%
Top Quartile
2nd Quartile
3rd Quartile
4th Quartile
1
r
e
e
P
2
r
e
e
P
3
r
e
e
P
4
r
e
e
P
5
r
e
e
P
6
r
e
e
P
7
r
e
e
P
8
r
e
e
P
Y
R
R
E
K
0
1
r
e
e
P
1
1
r
e
e
P
2
1
r
e
e
P
3
1
r
e
e
P
4
1
r
e
e
P
5
1
r
e
e
P
6
1
r
e
e
P
7
1
r
e
e
P
8
1
r
e
e
P
9
1
r
e
e
P
0
2
r
e
e
P
Vesting Level for TSR Metric
The outcome of the measurement of the TSR condition in relation to the 2019 awards is in the 2nd quartile, resulting
in an award outcome of 16% out of a possible maximum of 30%.
Kerry Group Annual Report 2021
144
Directors’ Report Remuneration Committee Report
ROACE Performance Test
20% of the award vests according to the Group’s ROACE over the performance period. ROACE represents a good
perspective on the Group’s internal rate of return and financial added value for shareholders. ROACE supports
the strategic focus on growth and margins through ensuring cash is reinvested to generate appropriate returns.
This measurement is determined by reference to the ROACE in each of the three financial years included in the
performance period:
Return on Average Capital Employed
Percentage of the Award Which Vests
Threshold
Target
Maximum
10%
12%
14%
25%
50%
100%
Below 10% none of the award vests. Vesting between target points is on a straight line basis.
Vesting Level for ROACE Metric
The outcome of the measurement of the ROACE condition in relation to the 2019 award is a ROACE of 10.5% resulting
in a reward outcome of 6% out of a maximum of 20%.
Table 3: Overall Outcome of the 2019 LTIP Award Vesting in 2022
LTIP Metric*
Weighting %
Actual Vesting %
EPS
TSR
ROACE
50%
30%
20%
0%
16%
6%
22%
*
See TSR, EPS and ROACE tables above for details of performance metrics.
Summary of outstanding LTIP awards
The following table shows the Executive Directors’ and Company Secretary’s interests under the LTIP. Conditional
awards at 1 January 2021 relate to awards made in 2018, 2019 and 2020 which have a three-year performance period.
The 2018 awards vested in 2021. The 2019 and 2020 awards will potentially vest in 2022 and 2023 respectively. The
market price of the shares on the date of each award is disclosed in note 28 to the financial statements.
Executive Directors’ and Company Secretary’s Interests in Long-Term Incentive Plan
Table 4: Individual Interest in LTIP (Audited)
LTIP Vesting and Conditional Awards
Conditional
Awards at
1 January
2021
LTIP
Scheme
Share
Awards
Vested
During
the Year
Share
Option
Awards
Vested During
the Year
Share/Option
Awards
Lapsed
During the
Year
Conditional
Awards
Made
During
the Year
Conditional
Awards
at 31
December
2021
Share Price
at Date of
Conditional
Award Made
During the Year
Directors
Edmond Scanlon
Marguerite Larkin
Gerry Behan
Company Secretary
2013
2013
2013
80,916
32,714
_
_
(8,328)
(17,297)
28,270
83,561
(2,285)
(4,746)
15,734
41,417
50,615
(5,820)
_
(12,089)
17,090
49,796
€107.80
€107.80
€107.80
Ronan Deasy
2013
12,119
_
(1,512)
(1,783)
2,948
11,772
€107.80
Kerry Group Annual Report 2021
Remuneration Committee Report
145
Conditional LTIP awards made on 04 May 2021, under the new 2021 LTIP Plan, have a three-year performance period
and will potentially vest in March 2024. Under the new plan, 100% of the shares/share options which potentially vest
under the LTIP are issued to participants following a two-year deferral period in March 2026.
For awards made prior to 2021, 50% of the shares/share options which potentially vest under the LTIP, are issued
immediately upon vesting with the remaining 50% of the award issued to participants following a two-year deferral
period.
The following table shows the share options which are held by the Executive Directors and the Company Secretary
under the STIP and LTIP:
Table 5: Share Options Held Under the STIP and LTIP (Audited)
Share Options
Outstanding at
1 January 2021
Share Options
Exercised During
the Year
Share Options
Vested During
the Year1
Share Options
Outstanding at 31
December 2021
Exercise Price
Per Share
Directors
Edmond Scanlon1
Marguerite Larkin1
Company Secretary
30,355
2,256
–
–
8,328
2,285
38,683
4,541
€0.125
€0.125
Ronan Deasy
3,547
(2,104)
1,512
2,955
€0.125
Note 1:
Share Options which vested in March 2021 related to 2018 LTIP awards. 50% of share options vested under the LTIP are subject
to a two-year deferral period and 25% of the STIP payments which are delivered in share options are subject to a two-year
deferral period.
Once vested, share options under the LTIP can be exercised for up to seven years before they lapse. For share options
subject to the two-year deferral period, they can be exercised for up to five years following the end of the two-year
deferral period, before they lapse i.e. seven years following the vest date.
Executive Directors’ Pensions
The pension benefits under defined benefit pension plans for Gerry Behan during the year are outlined in the
following table.
Table 6: Defined Benefit – Pensions Individual Summary (Audited)
Accrued Benefits on Leaving Service at End of Year
Increase During the Year
(Excluding Inflation)
$’000
Accumulated Total
at End of Year
$’000
Transfer Value of Increase in
Accumulated Accrued Benefits
$’000
Gerry Behan
2021
2020
Note:
Note:
17
31
599
583
229
451
The table shows the Executive Director’s pension in the currency of payment to ensure clarity in reflecting the year on year
payment comparisons.
Contributions were made to an Irish defined contribution plan in respect of Edmond Scanlon. Marguerite Larkin receives a taxable
cash payment in lieu of pension benefits. These contributions are reflected in the single figure table (table 1) on page 137.
Kerry Group Annual Report 2021
146
Directors’ Report Remuneration Committee Report
Payments to Former Directors
No payments were made to former Directors during 2021 (2020: €nil) in respect of their duties as Directors.
Vested 2016 LTIP awards and vested 2018 STIP awards, which were subject to a two-year deferral period and
delivered in 2021 in respect of former Executive Directors, were disclosed in previous annual reports when earned
and therefore are not disclosed separately.
Payment for Loss of Office
There were no payments for loss of office in 2021 (2020: €nil).
Non-Executive Director Remuneration
Table 7: Remuneration paid to non-Executive Directors in 2021 (Audited)
Hugh Brady
Gerard Culligan
Karin Dorrepaal
Joan Garahy 2
Emer Gilvarry 3
James C. Kenny
Michael Kerr 4
Tom Moran
Con Murphy
Christopher Rogers
Philip Toomey
Jinlong Wang 5
Fees 2021
€
Fees 20201
€
114,000
84,000
104,000
44,667
99,833
-
77,667
126,000
84,000
119,000
385,000
119,790
91,875
73,125
91,875
120,000
14,666
39,000
-
103,125
73,125
102,037
335,156
-
1,357,957
1,043,984
Note 1:
During 2020, as a solidarity gesture in light of COVID-19 and those impacted, the Chairman and the non-Executive Directors
volunteered a 25% reduction in their fees for a three-month period.
Note 2:
Joan Garahy retired from the Board on 29 April 2021
Note 3: Emer Gilvarry was appointed to the Board on 1 November 2020.
Note 4: Michael Kerr was appointed to the Board on 3 May 2021.
Note 5:
Jinlong Wang was appointed to the Board on 5 January 2021.
Non-Executive Directors are reimbursed for travel and accommodation expenses and any personal tax that may be
due on those expenses. The gross amount of these expenses that were deemed to be taxable is €15,515.
Directors’ and Company Secretary’s Interests
There have been no contracts or arrangements with the Company or any subsidiary during the year, in which a
Director of the Company was materially interested and which were significant in relation to the Group’s business.
The interests of the Directors and the Company Secretary of the Company and their spouses and minor children in
the share capital of the Company, all of which were beneficial unless otherwise indicated, are shown overleaf:
Kerry Group Annual Report 2021
Remuneration Committee Report
147
Table 8: Directors and Company Secretary Shareholdings
31 December
2021
Ordinary
Shares
Number
31 December
2021
Share
Options
Number
31 December
2021
Total
Number
31 December
2020
Ordinary
Shares
Number
31 December
2020
Share
Options
Number
31 December
2020
Total
Number
Directors
Gerry Behan
- Deferred1
Hugh Brady
Gerard Culligan
Karin Dorrepaal
Joan Garahy2
Emer Gilvarry
Michael Kerr3
Marguerite Larkin
- Deferred1
Tom Moran
Con Murphy
Christopher Rogers
Edmond Scanlon
- Deferred1
Philip Toomey
Jinlong Wang4
Company Secretary
Ronan Deasy
- Deferred1
61,346
11,405
1,700
–
–
1,050
850
10,000
1,500
–
539
7,728
640
19,611
–
9,000
–
3,230
–
–
–
–
–
–
–
–
–
1,838
2,703
–
–
–
25,749
12,934
–
–
1,093
1,862
61,346
11,405
1,700
–
–
1,050
850
10,000
3,338
2,703
539
7,728
640
45,360
12,934
9,000
–
4,323
1,862
55,581
16,071
–
–
–
1,050
–
–
1,500
–
539
7,721
640
9,611
–
6,000
–
3,230
–
–
–
–
–
–
–
–
–
–
2,256
–
–
–
17,199
13,156
–
–
1,106
2,441
55,581
16,071
–
–
–
1,050
–
–
1,500
2,256
539
7,721
640
26,810
13,156
6,000
–
4,336
2,441
Note 1:
The deferred shares and share options above, relate to 25% of the awarded amount of the Executive Directors 2019 STIP award and
50% of the 2017 and 2018 LTIP award (vested in March 2020 and 2021 respectively). These awards are subject to a two-year deferral
period and will be delivered in shares/share options in March 2022 and March 2023 respectively.
Note 2: Shareholding for Joan Garahy when she left the group in April 2021.
Note 3: Michael Kerr joined the board 3 May 2021
Note 4:
Jinlong Wang joined the Board on 5 January 2021
Shareholding Guidelines
The table below sets out the Executive Directors’ shareholding at 31 December 2021 shown as a multiple of
basic salary. Refer to the Remuneration Policy Table on page 130 in Section C for details of the Executive Director
shareholding requirements.
Table 9: Individual Shareholding as a Multiple of Basic Salary
Executive Director
Edmond Scanlon
Marguerite Larkin2
Gerry Behan
As a Multiple of Basic Salary1
5.4x
0.9x
9.9x
Note 1:
Note 2:
The share price used to calculate the above is the share price as at 31 December 2021 and the shareholding is based on all shares
held and vested option awards (including deferred) reflected in table 8 above.
Marguerite Larkin, in line with the proposed new policy, has to increase her shareholding to at least the minimum 2.5x basic salary
through the retention of 50% of vested annual bonus and LTIP shares/options (after sales to meet taxes).
Kerry Group Annual Report 2021
600
500
148
400
300
200
Directors’ Report Remuneration Committee Report
100
TSR Performance and Chief Executive Officer Remuneration
The graph below illustrates the TSR performance of the Group over the past ten years showing the increase in value
of €100 invested in Group’s shares from 31 December 2011 to 31 December 2021. Also outlined in the table on
page 149, the remuneration of the Chief Executive Officer is calculated in line with the methodology captured under
legislation which was enacted for UK incorporated companies.
0
10 Year Total Shareholder Return (Value of €100 Invested on 31/12/2011)
€600
€500
€400
€300
€200
€100
€0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Kerry
MSCI Europe Food Producers
E300 Food & Beverage
Table 10: Remuneration Paid to the CEO 2012 – 2021
The Committee believes that the Policy and the supporting reward structure provide a clear alignment with the
strategic objectives and performance of the Group. To maintain this relationship, the Committee regularly reviews
the business priorities and the environment in which the Group operates. The table below shows the Group CEO’s
total remuneration over the last 10 years and the achieved annual variable and long-term incentive pay awards as a
percentage of the plan maximum.
Total remuneration
€’000
Annual incentive achieved
as a % of maximum
LTIP achieved as a % of
maximum
CEO – Stan McCarthy
2012
2013
2014
2015
2016
2017
CEO – Edmond Scanlon
20171
2018
2019
2020
2021
3,538
3,592
3,283
4,161
3,625
5,285
808
2,577
3,991
2,323
3,855
74%
70%
57%
58%
62%
75%
75%
60%
76%
0%
72%
100%
100%
91.9%
61.8%
29.4%
62.3%
62.3%
63.7%
62.8%
32.5%
21.8%
Note 1:
Edmond Scanlon was appointed CEO and to the Board on 1 October 2017 and his remuneration reflected in the table above relates
to remuneration from that date.
Kerry Group Annual Report 2021
Remuneration Committee Report
149
Table 11: Annual change in pay for Directors and all Employees
In line with the implementation of Articles 9a and 9b of European Directive 2017/828/EC1 (commonly known as
the Revised Shareholder Rights Directive or SRDII) into the Irish Companies Act 2014, the table below shows the
percentage change in each Director’s total remuneration and the global average total remuneration of an employee
from the year ended 31 December 2020 to the year ended 31 December 2021.
Year-on-year change in pay for Directors compared to the global average employee
Executive Directors1
Edmond Scanlon
Marguerite Larkin
Gerry Behan
Non-Executive Directors2
Hugh Brady
Gerard Culligan
Karin Dorrepaal
Joan Garahy*
Emer Gilvarry*
Michael Kerr*
Tom Moran
Con Murphy
Christopher Rogers
Philip Toomey
Jinlong Wang*
All Group Employees3
TSR Performance4
2021
€
3,855,000
2,206,000
2,534,000
114,000
84,000
104,000
44,667
99,833
77,667
126,000
84,000
119,000
385,000
119,790
47,434
2020
€
2,323,000
1,115,000
1,762,000
91,875
73,125
91,875
120,000
14,666
-
103,125
73,125
102,037
335,156
-
46,389
YoY
Change %
66%
98%
44%
24%
15%
13%
(63%)
581%
22%
15%
17%
15%
2.3%
-3.7%
2019
€
3,991,000
1,558,000
3,329,000
98,000
78,000
98,000
128,000
-
100%
105,000
78,000
103,000
357,500
100%
45,824
Note 1:
Note 2:
Note 3:
In 2020 the Executive Directors volunteered a 25% reduction in their basic fees for a three-month period, received no STIP payment
and a low LTIP award due to the impact of COVID-19. These are the main reasons for the year on year % change reflected above.
From 1 January 2021, the non-Executive Directors fees were increased for the first time in 3 years in line with the Remuneration
Policy approved at the 2021 AGM. This, together with the 25% voluntary reduction in their basic fees for a three-month period
in 2020, are the main reasons for the year on year % change reflected above. In addition a number of new non-Executive
Directors joined the Board and one non-Executive Director retired (marked with an asterix above). Their fees are reflective of
their period of office.
Calculated by dividing the aggregate payroll costs of employees in 2021 (excluding social welfare costs and costs related to
Executive Directors) by the average number of employees in 2021, as disclosed in note 4 to the consolidated financial statements.
Note 4: TSR performance for the period from 31 December 2020 to 31 December 2021.
Performance of the Company: 5 Year Total Shareholder Return
180
160
140
120
100
80
€180
€160
€140
€120
€100
€80
2016
2017
2018
2019
2020
2021
Kerry
MSCI Europe Food Producers
E300 Food & Beverage
Kerry Group Annual Report 2021
150
Directors’ Report Remuneration Committee Report
Relative Importance of Spend on Pay
The total amount spent on Executive Director remuneration (including Long-Term Incentive Plan) and overall
employee pay is outlined below in relation to retained profit, dividends paid and taxation paid.
2021
2020
Director Remuneration (0.5%)
Director Remuneration (0.2%)
Profit after tax
before NTIs (28.3%)
Dividends Paid (7.1%)
Taxation Paid (9.8%)
Employee Costs (54.3%)
Profit after tax
before NTIs (26.5%)
Dividends Paid (6.7%)
Taxation Paid (10.3%)
Employee Costs (56.3%)
Dilution
The Group offers Executive Directors and senior management the opportunity to participate in share-based schemes
as part of the Group’s Remuneration Policy. In line with best practice guidelines, the Company ensures that the level
of share awards granted under all share schemes does not exceed 10% of the Group’s share capital over a rolling ten
year period, with a further limitation of 5% in any ten-year period in respect of discretionary schemes. The dilution
resulting from all vested share awards/share options for the ten-year period to 31 December 2021 is 1%. This level of
dilution is well below the maximum dilution level recommended for executive share-based incentive plans.
The potential future dilution level from unvested share awards/share options as a result of these schemes is a
further 0.7%.
Table 12: CEO Ratio
The UK Companies (Miscellaneous Reporting) Regulations 2018 require certain UK incorporated companies to
publish the ratio of CEO remuneration to UK staff pay. Although not a requirement for Irish incorporated companies,
the ratio of the CEO’s total remuneration to that of the median Irish employee is disclosed in the table below, in line
with the Group’s commitment to ensure that its remuneration policies, practices and reporting reflect best corporate
governance practices.
In providing the CEO ratio we have used Method C as set out in the regulations but have applied the principles of
Method A.
Chief Executive Officer’s: Total remuneration
Median Irish employee: Total remuneration
Median Irish employee: Salary only
Median pay ratio – Total remuneration
Median pay ratio – excluding all variable short and long-term incentive
2021
2020
€3,855,000
€2,323,000
€43,260
€40,645
89x
37x
€42,137
€39,654
55x
33x
The Committee believes that our senior executives should have a significant proportion of their pay directly linked
to Group performance in order to drive alignment with shareholders. A significant portion of the Chief Executive
Officer’s remuneration is therefore delivered through the Group’s short-term and long-term incentive plans where
awards are linked to Group performance and share price movements over time. This means that ratios will depend
significantly on short-term and long-term incentive outturns and may fluctuate from year to year as a result.
The CEO pay ratio based on total remuneration has increased year on year. Performance outturns under both the
short-term and long-term incentive plans in 2020 were low with no STIP payout and only a 32.5% outturn for LTIP. In
addition, the CEO took a 25% voluntary reduction in basic salary for three months in 2020, in light of the COVID-19
pandemic. In 2021, as reported in previous sections, there was a good performance against STIP targets resulting
in a 72% payout of maximum opportunity. The LTIP award for the three-year period ended 31 December 2021 had a
vesting outturn of 22% of maximum which is lower than last year’s level of 32.5%. As a result, the total remuneration
for the Chief Executive Officer has increased in 2021 as compared to 2020.
Kerry Group Annual Report 2021
Remuneration Committee Report
151
The remuneration earned by the median Irish employee has also increased year on year due to annual pay increases.
As the median Irish employee does not participate in the Group’s short-term or long-term performance related
incentive plans, the Committee has provided the median pay ratio excluding these variable pay elements again in
2021 and this ratio has also increased year on year.
Statement on Shareholder Voting
Below is an overview of the voting which took place at the most recent AGM to approve the Directors’ Remuneration
Policy and the Directors Remuneration Report.
Table 13: Votes on Remuneration
Total Votes Cast
Votes For
Votes Against Votes Withheld/Abstained
Directors’ Remuneration Policy (2021 AGM)
108,924,838
Directors’ Remuneration Report (2021 AGM)
109,313,536
105,041,472
96.4%
108,385,726
99.2%
3,883,366
3.6%
927,810
0.8%
1,242,809
854,111
The Committee appreciates the level of support shown by the shareholders for the Remuneration Policy and Report
and is committed to continued consultation with shareholders with regard to the remuneration policy.
Kerry Group Annual Report 2021
152
Financial Statements Independent Auditors’ Report
INDEPENDENT AUDITORS’ REPORT
Independent auditors’ report
to the members of Kerry Group plc
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 IFRSs as adopted by the
European Union, has also applied IFRSs as issued by the
International Accounting Standards Board (IASB).
In our opinion, the consolidated financial statements
comply with IFRSs as issued by the IASB.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (Ireland) (‘ISAs (Ireland)’) and
applicable law. Our responsibilities under ISAs (Ireland)
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 Ireland, which
includes IAASA’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 IAASA’s Ethical Standard
were not provided to the Group or the Company.
Other than those disclosed in note 3 to the financial
statements, we have provided no non-audit services to
the Group or the Company in the period from 1 January
2021 to 31 December 2021.
Report on the audit of
the financial statements
Opinion
In our opinion, Kerry Group plc’s Consolidated financial
statements and Company financial statements (the
‘financial statements’):
– give a true and fair view of the Group’s and the
Company’s assets, liabilities and financial position as
at 31 December 2021 and of the Group’s profit and
the Group’s and the Company’s cash flows for the year
then ended;
– have been properly prepared in accordance with
International Financial Reporting Standards (‘IFRSs’)
as adopted by the European Union and, as regards
the Company’s financial statements, as applied in
accordance with the provisions of the Companies Act
2014; and
– have been properly prepared in accordance with the
requirements of the Companies Act 2014 and, as
regards the Group financial statements, Article 4 of the
IAS Regulation.
We have audited the financial statements, included
within the Annual Report, which comprise:
– the Consolidated and Company balance sheets as at
31 December 2021;
– the Consolidated income statement and Consolidated
statement of comprehensive income for the year then
ended;
– the Consolidated and Company statements of cash
flows for the year then ended;
– the Consolidated and Company statements of changes
in equity for the year then ended; and
– the notes to the financial statements, which include a
description of the significant accounting policies.
Certain required disclosures have been presented
elsewhere in the Annual Report, rather than in the
notes to the financial statements and are described as
being an integral part of the financial statements as set
out in the basis of preparation on page 168. These are
cross-referenced from the financial statements and are
identified as audited.
Our opinion is consistent with our reporting to the Audit
Committee.
Kerry Group Annual Report 2021
Our audit approach
Overview
Independent Auditors’ Report
153
Materiality
– €35 million (2020: €34.5 million) - Consolidated financial statements.
– Based on approximately 5% of profit before taxation and non-trading items.
In the prior year, materiality was based on approximately 5% of the three-year
average profit before taxation and non-trading items.
– €10.5 million (2020: €8 million) - Company financial statements.
– Based on approximately 1% of net assets.
Audit scope
– We conducted audit work in 39 reporting components. We selected these
components due to their size or characteristics and to ensure appropriate audit
coverage. An audit of the complete financial information of 26 components was
performed. Specific audit procedures on certain balances and transactions were also
performed at a further 13 components. We also performed audit work at each of the
principal shared service centres.
– The reporting components where an audit of the complete financial information was
performed accounted for in excess of 85% of Consolidated revenues and in excess of
85% of Consolidated profit before taxation and non-trading items.
Key audit matters
– Goodwill and indefinite life intangible assets impairment assessment.
– Business combinations - valuation of acquired intangible assets.
– Income taxes.
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. In particular, we looked at where the directors made subjective judgements, for example in
respect of significant accounting estimates that involved making assumptions and considering future events that
are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal
controls, including evaluating whether there was evidence of bias by the directors that represented a risk of material
misstatement due to fraud.
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.
Kerry Group Annual Report 2021
154
Financial Statements Independent Auditors’ Report
Key audit matter
How our audit addressed the key audit matter
Goodwill and indefinite life intangible assets
impairment assessment
Refer to note 1 ‘Statement of accounting policies’ - ‘Intangible
assets’ & ‘Critical accounting estimates and judgements’ and
note 12 ‘Intangible assets’.
The Group has goodwill and indefinite life intangible
assets of €4,743 million at 31 December 2021 representing
approximately 42% of the Group’s total assets at year end.
Goodwill and indefinite life intangible assets are subject to
impairment testing on an annual basis or more frequently if
there are indicators of impairment.
We determined this to be a key audit matter given the scale
of the assets and because the determination of whether an
impairment charge for goodwill or indefinite life intangible
assets was necessary involves significant judgement in
estimating the future results of the business and determining
the appropriate discount rate to use.
Our audit team, assisted by our in-house valuation experts,
considered the Group’s impairment models and evaluated the
methodology followed and key assumptions used. We tested
the mathematical accuracy of the underlying calculations in the
models.
We assessed management’s future cash flow forecasts, and
the process by which they were drawn up, including comparing
them to the latest board approved budgets. In evaluating these
forecasts we considered the Group’s historic performance
and its past record of achieving strategic objectives, and
management’s assessment of the likely impact which COVID-19
may have on financial performance.
We assessed the appropriateness of the Group’s forecast
growth rate assumptions used to calculate terminal values
at year five, by comparing them to independent sources (for
example, OECD statistics) of projected growth rates for each
region.
We used our in-house valuation experts in assessing
management’s calculation of the discount rate. Our experts
developed a range of discount rates (adjusted to reflect risks
associated with each group of CGUs) using observable inputs
from independent external sources.
We also considered management’s sensitivity analysis and
performed our own sensitivity analysis on the impact of
changes in key assumptions on the impairment assessment, for
example the cash flows, discount rates and the rates of growth
assumed by management.
Based on our procedures we determined that management’s
conclusion that there was no goodwill or indefinite life
intangible assets impairment was reasonable.
We assessed the appropriateness of the related disclosures
within the financial statements and consider the disclosures,
including the assessed impact of climate change on the
impairment assessment to be reasonable.
Business combinations valuation of acquired
intangible assets
We obtained and evaluated the valuation reports prepared by
management to value brand related intangibles.
Refer to note 1 ‘Statement of accounting policies’ - ‘Business
combinations’ and ‘Critical accounting estimates and
judgements’ and note 30 ‘Business combinations’.
We were assisted by our in-house valuation experts in assessing
the reasonableness of the valuation methodologies and
assumptions used by the Group.
The Group completed 5 acquisitions during 2021, the most
significant of which was Hare Topco, Inc. (trading as Niacet
Corp.) which is based in the Americas and EMEA regions of the
Taste & Nutrition segment.
The Group was required to determine the fair values of all
acquired assets and liabilities including the identification and
valuation of intangible assets. The most significant acquired
asset in all cases was brand related intangibles.
In accordance with IFRS 3, ‘Business Combinations’, the
valuations referred to above have been prepared on a
provisional basis. The Group will finalise its valuations within
the 12-month measurement period.
We considered the assumptions used to derive the cash
flows underlying the valuation model (including the revenue
growth rates and the excess earnings rates) by agreeing
them to the board approved business case and external data
where available. In evaluating these forecasts, we considered
any likely impact which COVID-19 may have on financial
performance and how this was reflected in the valuation
models.
We also considered the discount rate and contributory asset
charge in light of the acquiree’s industry and geography.
We were satisfied that the methodology and assumptions used
were reasonable.
We determined this to be a key audit matter as significant
judgement is exercised in selecting an appropriate valuation
methodology.
We assessed the appropriateness of the related disclosures
within the financial statements and consider the disclosures to
be reasonable.
Judgement is also exercised in determining assumptions such
as revenue growth rates and the excess earnings rate which
underlie the cash flows in the valuation models.
Other significant assumptions include the discount rate and
contributory asset charge.
Kerry Group Annual Report 2021
Independent Auditors’ Report
155
Key audit matter
Income taxes
Refer to note 1 ‘Statement of accounting policies’ - ‘Income
taxes’ and ‘Critical accounting estimates and judgements’, note
7 ‘Income taxes’ and note 17 ‘Deferred tax assets and liabilities’.
The global nature of the Group means that it operates across
a large number of jurisdictions and is subject to periodic
challenges by local tax authorities on a range of tax matters
during the normal course of business. Tax legislation is open to
different interpretations and the tax treatments of many items
are uncertain. Tax audits can require several years to conclude,
and transfer pricing judgements may impact the Group’s tax
liabilities. Management judgement and estimation is required
in the measurement of uncertain tax positions in the context of
the recognition of current and deferred tax assets/liabilities.
We determined this to be a key audit matter due to its inherent
complexity and the estimation and judgement involved in the
measurement of uncertain tax positions in the context of the
recognition of current and deferred tax assets/liabilities.
How our audit addressed the key audit matter
We obtained an understanding of the Group tax strategy
through discussions with management and the Group’s in-
house tax specialists.
The team, assisted by PwC International and Irish taxation
specialists, challenged judgements used and estimates made
by management to measure uncertain tax positions in the
context of the recognition of current and deferred tax assets/
liabilities. This included obtaining explanations regarding the
tax treatment applied to material transactions and evidence to
corroborate management’s explanations. Such evidence, where
appropriate, included management’s communications with
local tax authorities and copies of the tax advice obtained by
management from its external tax advisors including transfer
pricing studies.
Based on the evidence obtained, while noting the inherent
uncertainty with such tax matters, we determined the
measurement of uncertain tax positions in the context of the
recognition of current and deferred tax assets/liabilities as at 31
December 2021 to be within an acceptable range of reasonable
estimates.
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, the accounting processes
and controls, including those performed at the Group’s
shared service centres and the industry in which the
Group operates.
The Group is structured along two operating segments:
Taste & Nutrition and Consumer Foods. The majority
of the Group’s components are supported by one of
the Group’s principal shared service centres in Ireland,
Malaysia, and the United States.
We determined that an audit of the complete financial
information should be performed at 26 components
due to their size or risk characteristics and to ensure
appropriate coverage. These 26 components included
components that control central Group functions such
as Treasury and Employee Benefits. Specific audit
procedures on certain balances and transactions were
also performed at a further 13 components primarily
to ensure appropriate audit coverage. The reporting
components where an audit of the complete financial
information was performed accounted for in excess of
85% of Consolidated revenues and in excess of 85% of
Consolidated profit before taxation and non-trading
items.
The Group team performed the audit of the central
function components and component auditors within
PwC ROI and from other PwC network firms, operating
under our instruction, performed the audit on all other
in scope components and the required supporting audit
work at each of the Group’s principal shared service
centres.
The Group team was responsible for the scope and
direction of the audit. Where the work was performed
by component auditors, we determined the level of
involvement the Group team needed to have to be
able to conclude whether sufficient appropriate audit
evidence had been obtained as a basis for our opinion
on the consolidated financial statements as a whole.
Due to the current restrictions on travel and social
distancing measures, enacted as a response to the
global pandemic, the Group engagement leader and
senior members of the Group engagement team used
video conferencing to facilitate our oversight of the
component auditor work and had video meetings and
discussions with management and component audit
teams in Ireland, the USA, Brazil, Mexico and the Asia
Pacific region.
The meetings with our component teams confirmed
their audit approach. The meetings also involved
discussing and understanding the significant audit
risk areas and obtaining updates on local laws and
regulations and other relevant matters. In addition to
the meetings noted above, the Group team interacted
regularly with the component teams during all stages
of the audit. We received a detailed memorandum of
examination on work performed and relevant findings
in addition to an audit report which supplemented our
understanding of the individual components. In addition
to this, the Group engagement team reviewed certain
audit working papers in component audit files. Post
audit conference calls were held with all in scope audit
teams to discuss their audit findings.
Kerry Group Annual Report 2021
156
Financial Statements Independent Auditors’ Report
This, together with audit procedures performed by the
Group team gave us the evidence we needed for our
opinion on the consolidated financial statements as a
whole. These procedures included, amongst others,
procedures over IT systems, treasury, post-retirement
benefits, the consolidation process and key audit
matters including uncertain tax positions, impairment
testing of goodwill and indefinite lived intangible assets,
and business combinations.
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:
Consolidated
financial
statements
Company
financial
statements
Overall
materiality
€35 million
(2020: €34.5 million).
€10.5 million
(2020: €8 million).
Approximately 1%
of net assets.
The entity is a
holding Company
whose main activity
is the management
of investments in
subsidiaries.
How we
determined
it
Rationale for
benchmark
applied
Approximately 5% of
profit before taxation
and non-trading
items. In the prior
year, materiality was
calculated using 5% of
the three-year average
profit before taxation
and non-trading items.
We applied this
benchmark because in
our view this is a metric
against which the
recurring performance
of the Group is
commonly measured
by its stakeholders
and it results in using
a materiality level that
excludes the impact of
volatility in earnings.
In the prior year, the
benchmark applied
was reflective of the
effect that the COVID-19
pandemic had on the
results of the business.
We agreed with the Audit Committee that we would
report to them misstatements identified during our
audit above €1.7 million (Group audit) (2020: €1.7 million)
and €525,000 (Company audit) (2020: €400,000) as well
as misstatements below that amount that, in our view,
warranted reporting for qualitative reasons.
Kerry Group Annual Report 2021
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Group
and Company’s ability to continue to adopt the going
concern basis of accounting included:
– evaluating management’s going concern assessment
(being the period of 12 months from the date on
which the financial statements are authorised for
issue) and challenging the key assumptions. In
evaluating these forecasts, we considered the Group’s
historic performance and its past record of achieving
strategic objectives. Additionally, we have considered
management’s assessment of the likely impact
which COVID-19 and climate related risks may have
on financial performance and liquidity for a period
of 12 months from the date on which the financial
statements are authorised for issue;
– testing the mathematical integrity of the forecasts and
the models and reconciling these to board approved
budgets;
– considering whether the assumptions underlying the
base case were consistent with related assumptions
used in other areas of the entity’s business activities, for
example in testing for non-financial asset impairment;
– performing our own independent sensitivity analysis
to assess further appropriate downside scenarios; and
– considering the Group’s available liquidity, financing
and maturity profile to assess liquidity through the
going concern assessment period.
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 or the Company’s ability
to continue as a going concern for a period of at least
twelve months from the date on which 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 or the Company’s ability to continue as a going
concern.
In relation to the Company’s reporting on how they have
applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation
to the directors’ statement in the financial statements
about whether the directors considered it appropriate to
adopt the going concern basis of accounting.
We are required to report if the directors’ statement
relating to going concern in accordance with Rule 6.1.82
(3) (a) of the Listing Rules for Euronext Dublin and
Rule 9.8.6 R (3) of the Listing Rules of the UK Financial
Conduct Authority is materially inconsistent with our
knowledge obtained in the audit. We have nothing to
report in respect of this responsibility.
Our responsibilities and the responsibilities of the
directors with respect to going concern are described in
the relevant sections of this report.
Reporting on other information
The other information comprises all of the information
in the Annual Report other than the financial statements
and our auditors’ report thereon. The directors are
responsible for the other information. 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 Directors’ Report, we also considered
whether the disclosures required by the Companies Act
2014 (excluding the information included in the ‘Non
Financial Statement’ as defined by that Act on which we
are not required to report) have been included.
Based on the responsibilities described above and
our work undertaken in the course of the audit, ISAs
(Ireland), the Companies Act 2014 (CA14) and the
Listing Rules applicable to the Company (Listing Rules)
require us to also report certain opinions and matters
as described below (required by ISAs (Ireland) unless
otherwise stated).
Directors’ Report
– In our opinion, based on the work undertaken in the
course of the audit, the information given in the Directors’
Report (excluding the information included in the ‘Non
Financial Statement’ on which we are not required to
report) for the year ended 31 December 2021 is consistent
with the financial statements and has been prepared in
accordance with the applicable legal requirements. (CA14)
– Based on our 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 Directors’ Report (excluding the
information included in the ‘Non Financial Statement’ on
which we are not required to report). (CA14)
Independent Auditors’ Report
157
Corporate governance statement
– In our opinion, based on the work undertaken in the
course of the audit of the financial statements,
– the description of the main features of the internal
control and risk management systems in relation to the
financial reporting process included in the Corporate
Governance Report; and
– the information required by Section 1373(2)(d) of the
Companies Act 2014 included in the Report of the
Directors;
is consistent with the financial statements and has been
prepared in accordance with section 1373(2) of the
Companies Act 2014. (CA14)
– Based on our knowledge and understanding of the
Company and its environment obtained in the course
of the audit of the financial statements, we have not
identified material misstatements in the description of the
main features of the internal control and risk management
systems in relation to the financial reporting process
and the information required by section 1373(2)(d) of the
Companies Act 2014 included in the Corporate Governance
Report and the Report of the Directors. (CA14)
– In our opinion, based on the work undertaken during
the course of the audit of the financial statements, the
information required by section 1373(2)(a),(b),(e) and
(f) of the Companies Act 2014 and regulation 6 of the
European Union (Disclosure of Non-Financial and Diversity
Information by certain large undertakings and groups)
Regulations 2017 is contained in the Corporate Governance
Statement. (CA14)
The directors’ assessment of the prospects of the Group
and of the principal risks that would threaten the solvency
or liquidity of the Group
– We have nothing material to add or to draw attention to
regarding:
– The directors’ confirmation on page 108 of the Annual
Report that they have carried out a robust assessment of
the principal risks facing the Group, including those that
would threaten its business model, future performance,
solvency or liquidity.
– The disclosures in the Annual Report that describe
those risks and explain how they are being managed or
mitigated.
– The directors’ explanation on pages 84-85 of the Annual
Report as to how they have assessed the prospects of
the Group, over what period they have done so and
why they consider that period to be appropriate, and
their statement as to whether they have a reasonable
expectation that the Group will be able to continue
in operation and meet its liabilities as they fall due
over the period of their assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
– We have nothing to report having performed a review
of the directors’ statement that they have carried out a
robust assessment of the principal risks facing the Group
and the directors’ statement in relation to the longer-term
viability of the Group. Our review was substantially less in
scope than an audit and only consisted of making inquiries
and considering the directors’ process supporting their
statements; checking that the statements are in alignment
with the relevant provisions of the UK Corporate Governance
Code (the ‘Code’); and considering whether the statements
are consistent with the knowledge and understanding of the
Group and the Company and their environment obtained in
the course of the audit. (Listing Rules)
Kerry Group Annual Report 2021
158
Financial Statements Independent Auditors’ Report
Other Code provisions
We have nothing to report in respect of our responsibility to
report when:
– The statement given by the directors on page 94 that
they consider the Annual Report taken as a whole to
be fair, balanced and understandable and provides
the information necessary for the members to assess
the Group’s and Company’s position and performance,
business model and strategy is materially inconsistent with
our knowledge of the Group and Company obtained in the
course of performing our audit.
– The section of the Annual Report on page 110 describing
the work of the Audit Committee does not appropriately
address matters communicated by us to the Audit
Committee.
– The directors’ statement relating to the Company’s
compliance with the Code and the Irish Corporate
Governance Annex does not properly disclose a departure
from a relevant provision of the Code or the Annex
specified, under the Listing Rules, for review by the
auditors.
Responsibilities for the financial statements
and the audit
Responsibilities of the directors for the
financial statements
As explained more fully in the Directors’ Responsibility
Statement set out on pages 93-94, 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 (Ireland) 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.
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 IAASA website at:
https://www.iaasa.ie/getmedia/b2389013-1cf6-
458b-9b8f-a98202dc9c3a/Description_of_auditors_
responsibilities_for_audit.pdf
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 section 391 of the Companies Act 2014
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.
Kerry Group Annual Report 2021
Other required reporting
Companies Act 2014 opinions on other matters
– We have obtained all the information and explanations
which we consider necessary for the purposes of our
audit.
– In our opinion the accounting records of the Company
were sufficient to permit the company financial
statements to be readily and properly audited.
– The Company balance sheet is in agreement with the
accounting records.
Other exception reporting
Directors’ remuneration and transactions
Under the Companies Act 2014 we are required to report
to you if, in our opinion, the disclosures of directors’
remuneration and transactions specified by sections
305 to 312 of that Act have not been made. We have no
exceptions to report arising from this responsibility.
We are required by the Listing Rules to review the
six specified elements of disclosures in the report to
shareholders by the Board on directors’ remuneration.
We have no exceptions to report arising from this
responsibility.
Prior financial year Non Financial Statement
We are required to report if the Company has not
provided the information required by Regulation 5(2) to
5(7) of the European Union (Disclosure of Non-Financial
and Diversity Information by certain large undertakings
and groups) Regulations 2017 in respect of the prior
financial year. We have nothing to report arising from
this responsibility.
Prior financial year Remuneration Report
We are required to report if the company has not
provided the information required by Section 1110N of
the Companies Act 2014 in respect of the prior financial
year. We have nothing to report arising from this
responsibility.
Appointment
We were appointed by the members on 28 April 2016
to audit the financial statements for the year ended 31
December 2016 and subsequent financial periods. The
period of total uninterrupted engagement is 6 years,
covering the years ended 31 December 2016 to 31
December 2021.
Enda McDonagh
for and on behalf of PricewaterhouseCoopers
Chartered Accountants and Statutory Audit Firm
Dublin
15 February 2022
Independent Auditors’ Report
159
Kerry Group Annual Report 2021
160
Financial Statements
Consolidated Income Statement
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
Before
Non-
Trading
Items
2021
€’m
Non-
Trading
Items
2021
€’m
Before
Non-
Trading
Items
2020
€’m
Non-
Trading
Items
2020
€’m
Total
2021
€’m
Notes
Continuing operations
Revenue
Trading profit
2
7,350.6
2/3
875.5
Intangible asset amortisation
12
(80.8)
Non-trading items
Operating profit
Finance income
Finance costs
Profit before taxation
5
3
6
6
-
794.7
0.3
(70.2)
724.8
Total
2020
€’m
6,953.4
797.2
(70.1)
-
-
-
91.5
91.5
7,350.6
6,953.4
875.5
797.2
(80.8)
(70.1)
-
-
-
91.5
-
(19.4)
(19.4)
886.2
727.1
(19.4)
707.7
-
-
0.3
0.2
(70.2)
(72.6)
-
-
0.2
(72.6)
91.5
816.3
654.7
(19.4)
635.3
Income taxes
7
(96.2)
42.9
(53.3)
(85.1)
3.9
(81.2)
Profit after taxation attributable to owners of the parent
628.6
134.4
763.0
569.6
(15.5)
554.1
Earnings per A ordinary share
- basic
- diluted
9
9
Cent
430.6
429.9
Cent
313.0
312.5
Kerry Group Annual Report 2021
Consolidated Statement of Comprehensive Income
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
Financial Statements
161
Profit after taxation attributable to owners of the parent
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss:
Fair value movements on cash flow hedges
Cash flow hedges - reclassified to profit or loss from equity
Net change in cost of hedging
Deferred tax effect of fair value movements on cash flow hedges
Exchange difference on translation of foreign operations
Cumulative exchange difference on translation recycled on disposal
Fair value movement on revaluation of financial assets held at fair value through
other comprehensive income
Disposal of financial assets fair value movement reclassified to profit or loss
Items that will not be reclassified subsequently to profit or loss:
Re-measurement on retirement benefits obligation
Deferred tax effect of re-measurement on retirement benefits obligation
Net income/(expense) recognised directly in total other comprehensive income
Total comprehensive income
Notes
2021
€’m
2020
€’m
763.0
554.1
24
24
17
5
13
(0.3)
(0.9)
-
0.1
7.9
2.9
(0.9)
(2.0)
217.7
(282.3)
16.2
-
-
-
(1.3)
0.7
26
17
110.2
(20.0)
(67.0)
11.8
323.0
(330.2)
1,086.0
223.9
Kerry Group Annual Report 2021
162
Financial Statements
Consolidated Balance Sheet
AS AT 31 DECEMBER 2021
Non-current assets
Property, plant and equipment
Intangible assets
Financial asset investments
Investment in joint ventures
Other non-current financial instruments
Retirement benefits asset
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Cash at bank and in hand
Other current financial instruments
Assets classified as held for sale
Total assets
Current liabilities
Trade and other payables
Borrowings and overdrafts
Other current financial instruments
Tax liabilities
Provisions
Deferred income
Non-current liabilities
Borrowings
Other non-current financial instruments
Retirement benefits obligation
Other non-current liabilities
Deferred tax liabilities
Provisions
Deferred income
Total liabilities
Net assets
Issued capital and reserves attributable to owners of the parent
Share capital
Share premium
Other reserves
Retained earnings
Shareholders’ equity
31 December
2021
€’m
31 December
2020
€’m
Notes
11
12
13
14
23
26
17
16
19
23
23
18
20
23
23
25
21
23
23
26
22
17
25
21
27
2,091.3
5,580.7
1,990.6
4,687.1
49.9
21.7
34.8
90.3
67.8
37.0
17.8
82.0
-
33.8
7,936.5
6,848.3
1,204.2
1,181.7
1,039.1
15.2
18.7
3,458.9
11,395.4
975.6
1,042.0
563.1
14.1
-
2,594.8
9,443.1
1,791.5
1,543.3
5.6
40.1
141.6
13.6
3.0
2.8
10.0
132.6
5.2
2.4
1,995.4
1,696.3
3,118.0
2,505.8
0.5
24.1
153.9
447.3
37.1
17.9
3,798.8
5,794.2
5,601.2
22.1
398.7
(129.6)
5,310.0
5,601.2
0.5
54.4
144.9
330.2
36.1
19.4
3,091.3
4,787.6
4,655.5
22.1
398.7
(379.5)
4,614.2
4,655.5
The financial statements were approved by the Board of Directors on 15 February 2022 and signed on its behalf by:
Philip Toomey, Chairman
Edmond Scanlon, Chief Executive Officer
Kerry Group Annual Report 2021
Company Balance Sheet
AS AT 31 DECEMBER 2021
Non-current assets
Property, plant and equipment
Investments in subsidiaries
Current assets
Cash at bank and in hand
Trade and other receivables
Total assets
Current liabilities
Trade and other payables
Non-current liabilities
Deferred income
Total liabilities
Net assets
Issued capital and reserves
Share capital
Share premium
Other reserves
Retained earnings
Shareholders’ equity
Financial Statements
163
31 December
2021
€’m
31 December
2020
€’m
Notes
11
15
23
19
20
21
27
0.2
843.5
843.7
0.1
218.9
219.0
1,062.7
10.0
10.0
0.1
0.1
10.1
1,052.6
22.1
398.7
109.4
522.4
1,052.6
0.3
714.4
714.7
-
168.9
168.9
883.6
10.4
10.4
0.1
0.1
10.5
873.1
22.1
398.7
92.2
360.1
873.1
The Company earned a profit after taxation of €319.8m for the financial year ended 31 December 2021 (2020: €174.8m).
The financial statements were approved by the Board of Directors on 15 February 2022 and signed on its behalf by:
Philip Toomey, Chairman
Edmond Scanlon, Chief Executive Officer
Kerry Group Annual Report 2021
164
Financial Statements
Consolidated Statement of Changes in Equity
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
Share
Capital
€’m
Share
Premium
€’m
Other
Reserves
€’m
Retained
Earnings
€’m
Total
€’m
Notes
Group:
At 1 January 2020
Profit after taxation attributable to owners of the parent
Other comprehensive expense
Total comprehensive (expense)/income
Shares issued during the financial year
Dividends paid
Share-based payment expense
At 31 December 2020
Profit after taxation attributable to owners of the parent
Other comprehensive income
Total comprehensive income
Shares issued during the financial year
Dividends paid
Share-based payment expense
At 31 December 2021
Other Reserves comprise the following:
27
10
28
27
10
28
22.1
398.7
(119.0)
4,260.4
4,562.2
-
-
-
-
-
-
-
-
-
-
-
-
-
554.1
554.1
(273.0)
(57.2)
(330.2)
(273.0)
496.9
223.9
-
-
-
-
(143.1)
(143.1)
12.5
-
12.5
22.1
398.7
(379.5)
4,614.2
4,655.5
-
-
-
-
-
-
-
-
-
-
-
-
-
763.0
90.3
763.0
323.0
853.3
1,086.0
232.7
232.7
-
-
-
-
(157.5)
(157.5)
17.2
-
17.2
22.1
398.7
(129.6)
5,310.0
5,601.2
FVOCI
Reserve
€’m
Note
Capital
Redemption
Reserve
€’m
Other
Undenominated
Capital
€’m
Share-Based
Payment
Reserve
€’m
Translation
Reserve
€’m
Hedging
Reserve
€’m
Cost of
Hedging
Reserve
€’m
Total
€’m
At 1 January 2020
Other comprehensive
(expense)/income
Share-based payment
expense
28
At 31 December 2020
Other comprehensive
income/(expense)
Share-based payment
expense
28
At 31 December 2021
0.6
(0.6)
-
-
-
-
-
1.7
-
-
1.7
-
-
1.7
0.3
-
-
77.7
-
12.5
(189.7)
(282.3)
(8.2)
10.8
(1.4)
(119.0)
(0.9)
(273.0)
-
-
-
12.5
0.3
90.2
(472.0)
-
233.9
2.6
(1.2)
17.2
-
-
-
-
(2.3)
(379.5)
-
-
232.7
17.2
0.3
107.4
(238.1)
1.4
(2.3)
(129.6)
The nature and purpose of each reserve within shareholders’ equity are described in note 35.
Kerry Group Annual Report 2021
Company Statement of Changes in Equity
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
Share
Capital
€’m
Share
Premium
€’m
Other
Reserves
€’m
Retained
Earnings
€’m
Notes
22.1
398.7
79.7
-
-
-
-
-
-
-
-
-
-
-
-
22.1
398.7
-
-
-
-
-
-
-
-
-
-
-
-
22.1
398.7
-
-
-
-
-
12.5
92.2
-
-
-
-
-
17.2
109.4
Company:
At 1 January 2020
Profit after taxation
Other comprehensive income
Total comprehensive income
Shares issued during the financial year
Dividends paid
Share-based payment expense
At 31 December 2020
Profit after taxation
Other comprehensive income
Total comprehensive income
Shares issued during the financial year
Dividends paid
Share-based payment expense
At 31 December 2021
Other Reserves comprise the following:
At 1 January 2020
Share-based payment expense
At 31 December 2020
Share-based payment expense
At 31 December 2021
8
27
10
28
8
27
10
28
Note
28
28
Capital
Redemption
Reserve
€’m
Other
Undenominated
Capital
€’m
Share-Based
Payment
Reserve
€’m
1.7
-
1.7
-
1.7
0.3
-
0.3
-
0.3
77.7
12.5
90.2
17.2
Total
€’m
79.7
12.5
92.2
17.2
The nature and purpose of each reserve within shareholders’ equity are described in note 35.
Financial Statements
165
Total
€’m
828.9
174.8
-
328.4
174.8
-
174.8
174.8
-
-
(143.1)
(143.1)
-
360.1
12.5
873.1
319.8
319.8
-
-
319.8
319.8
-
-
(157.5)
(157.5)
-
17.2
522.4
1,052.6
107.4
109.4
Kerry Group Annual Report 2021
166
Financial Statements
Consolidated Statement of Cash Flows
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
Notes
2021
€’m
2020
€’m
Cash flows from operating activities
Profit before taxation
Adjustments for:
Depreciation (net)
Intangible asset amortisation
Share of profit from joint ventures
Non-trading items income statement (income)/charge
Finance costs (net)
Change in working capital
Pension contributions paid less pension expense
Payments on non-trading items
Exchange translation adjustment
Cash generated from operations
Income taxes paid
Finance income received
Finance costs paid
Net cash from operating activities
Investing activities
Purchase of assets (net)
Proceeds from the sale of assets (net of disposal expenses)
Capital grants received
Purchase of businesses (net of cash acquired)
Payments relating to previous acquisitions
Purchase of investments
Disposal of businesses (net of disposal expenses)
Net cash used in investing activities
Financing activities
Dividends paid
Payment of lease liabilities
Issue of share capital
Repayment of borrowings (net of swaps)
Increase in borrowings
Net cash movement due to financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the financial year
Exchange translation adjustment on cash and cash equivalents
14
5
6
29
29
5/13
30
13
5
10
29
27
Reconciliation of Net Cash Flow to Movement in Net Debt
Net increase in cash and cash equivalents
Cash flow from debt financing
Changes in net debt resulting from cash flows
Fair value movement on interest rate swaps (net of adjustment to borrowings)
Exchange translation adjustment on net debt
Movement in net debt in the financial year
Net debt at beginning of the financial year
Net debt at end of the financial year - pre lease liabilities
Lease liabilities
Total net debt at end of the financial year
Kerry Group Annual Report 2021
29
29
23
11/29
23/29
816.3
635.3
201.5
80.8
(3.9)
(91.5)
69.9
200.7
70.1
(1.6)
19.4
72.4
(184.3)
(107.1)
(14.7)
(76.1)
(0.7)
797.3
(72.0)
0.4
(71.7)
654.0
(23.4)
(39.7)
(4.6)
821.5
(74.7)
0.2
(74.8)
672.2
(300.4)
(276.2)
4.0
0.7
(1,084.9)
(18.9)
(4.4)
775.2
7.7
0.1
(251.1)
(7.5)
-
-
(628.7)
(527.0)
(157.5)
(34.9)
-
(1,093.3)
1,705.0
419.3
444.6
560.3
28.9
444.6
(611.7)
(167.1)
(0.1)
(19.1)
(186.3)
(1,863.6)
(2,049.9)
(74.2)
(143.1)
(37.0)
-
(391.1)
462.9
(108.3)
36.9
549.7
(26.3)
560.3
36.9
(71.8)
(34.9)
7.6
26.5
(0.8)
(1,862.8)
(1,863.6)
(81.5)
(2,124.1)
(1,945.1)
Cash and cash equivalents at end of the financial year
29
1,033.8
Company Statement of Cash Flows
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
Cash flows from operating activities
Profit before taxation
Adjustments for:
Depreciation (net)
Non-trading items income statement income
Finance income
Change in working capital
Cash generated from operations
Finance income received
Net cash from operating activities
Investing activities
Investments in subsidiary undertakings
Payments relating to previous acquisitions
Net cash from investing activities
Financing activities
Dividends paid
Issue of share capital
Net cash movement due to financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the financial year
Cash and cash equivalents at end of the financial year
Financial Statements
167
Notes
2021
€’m
2020
€’m
317.5
172.8
29
0.1
-
(0.5)
(29.2)
287.9
0.5
288.4
15
(129.1)
(1.7)
(130.8)
-
(3.5)
(0.5)
(26.2)
142.6
0.5
143.1
-
-
-
10
27
29
(157.5)
(143.1)
-
-
(157.5)
(143.1)
0.1
-
0.1
-
-
-
Kerry Group Annual Report 2021
168
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021
Certain income statement headings and other financial
measures included in the consolidated financial statements
are not defined by IFRS. The Group make this distinction to
give a better understanding of the financial performance of
the business.
The consolidated and company financial statements have
been prepared on the going concern basis of accounting.
The Directors have considered the Group’s business
activities and how it generates value, together with the
main trends and factors likely to affect future development,
business performance including liquidity and access
to financing as outlined in note 24. The position of the
Group including the impact of the ongoing COVID-19
pandemic and the potential impact of climate related risks
on profitability and liquidity was also considered. The
foodservice business in our Taste & Nutrition segment
has shown good recovery in 2021 to record third party
revenues of €1,616.1m (2020: €1,390.5m). There are no
material uncertainties that cast significant doubt on the
Group’s ability to continue as a going concern over a period
of at least 12 months from the date of approval of these
financial statements.
The Directors report that they have satisfied themselves
that the Group is a going concern, having adequate
resources to continue in operational existence for the
foreseeable future. In forming this view, the Directors have
reviewed the Group’s forecast for a period not less than
12 months, the five year medium term plan, and have
taken into account the cash flow implications of the plans,
including proposed capital expenditure, and compared
these with the Group’s committed borrowing facilities and
projected gearing ratios.
Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the
financial statements of the Company and the entities
controlled by the Company (its subsidiaries), all of
which prepare financial statements up to 31 December.
Accounting policies of subsidiaries are consistent with
the policies adopted by the Group. Control is achieved
where the Company has the power over the investee,
has exposure or has rights to variable returns from its
involvement with the investee and has the ability to use its
power to affect its returns.
The results of subsidiaries acquired or disposed of during
the financial year are included in the Consolidated Income
Statement from the date the Company gains control until
the date the Company ceases to control the subsidiary. All
inter-group transactions and balances are eliminated on
consolidation.
1. Statement of accounting policies
General information
Kerry Group plc is a public limited company incorporated
in the Republic of Ireland. The registered number is 111471
and registered office address is Prince’s Street, Tralee, Co.
Kerry, V92 EH11, Ireland. The principal activities of the
Company and its subsidiaries are described in the Business
Reviews and note 36 ‘Group entities’.
Basis of preparation
The consolidated financial statements of Kerry Group
plc have been prepared in accordance with International
Financial Reporting Standards (‘IFRS’), International
Financial Reporting Interpretations Committee (‘IFRIC’)
interpretations and those parts of the Companies Act, 2014
applicable to companies reporting under IFRS. The financial
statements comprise the Consolidated Income Statement,
the Consolidated Statement of Comprehensive Income, the
Consolidated Balance Sheet, the Company Balance Sheet,
the Consolidated Statement of Changes in Equity, the
Company Statement of Changes in Equity, the Consolidated
Statement of Cash Flows, the Company Statement of
Cash Flows and the notes to the financial statements.
The financial statements include the information in the
remuneration report that is described as being an integral
part of the financial statements. Both the Parent Company
and Group financial statements have also been prepared in
accordance with IFRS adopted by the European Union (‘EU’)
which comprise standards and interpretations approved by
the International Accounting Standards Board (‘IASB’). The
Group financial statements comply with Article 4 of the EU
IAS Regulation. IFRS adopted by the EU differs in certain
respects from IFRS issued by the IASB. References to IFRS
hereafter refer to IFRS adopted by the EU.
The Parent Company’s financial statements are prepared
using accounting policies consistent with the accounting
policies applied to the consolidated financial statements by
the Group.
The consolidated financial statements have been prepared
under the historical cost convention, as modified by
the revaluation of certain financial assets and liabilities
(including derivative financial instruments) and financial
asset investments which are held at fair value. Assets
classified as held for sale are stated at the lower of carrying
value and fair value less costs to sell. The investments
in joint ventures are accounted for using the equity
method.
The consolidated financial statements contained herein
are presented in euro, which is the functional currency
of the Parent Company, Kerry Group plc. The functional
currencies of the Group’s main subsidiaries are euro, US
dollar and sterling.
In the 2021 consolidated financial statements, the Group
has re-presented corresponding 2020 balances to align
with current year presentation in the Consolidated
Statement of Cash Flows, the Company Statement
of Cash Flows, note 5 ‘Non-trading items’, note 26
‘Retirement benefit obligations’ and note 29 ‘Cash flow
components’.
Kerry Group Annual Report 2021
1. Statement of accounting policies (continued)
Basis of consolidation (continued)
Joint ventures
Joint ventures are all entities over which the Group has joint
control, whereby the Group has rights to the net assets
of the arrangement, rather than rights to its assets and
obligations for its liabilities. Investments in joint ventures
are accounted for using the equity method of accounting
and are initially recognised at cost. On acquisition of the
investment in joint venture, any excess of the cost of the
investment over the Group’s share of the net fair value
of the identifiable assets and liabilities of the investee
is recognised as goodwill, which is included within the
carrying value of the investment.
The Group’s share of its joint ventures post-acquisition
profits or losses is recognised in ‘Share of joint ventures
profit after taxation during the financial year’ within
Trading Profit in the Consolidated Income Statement, and
its share of post-acquisition movements in reserves is
recognised in reserves until the date on which joint control
ceases. The cumulative post-acquisition movements are
adjusted against the carrying amount of the investment,
less any impairment in value. Where indicators of
impairment arise, the carrying amount of the joint venture
is tested for impairment by comparing its recoverable
amount with its carrying amount.
Unrealised gains arising from transactions with joint
ventures are eliminated to the extent of the Group’s
interest in the entity. Unrealised losses are eliminated to
the extent that they do not provide evidence of impairment.
The accounting policies of joint ventures are amended
where necessary to ensure consistency of accounting
treatment at Group level.
Revenue
Revenue represents the value of the consideration received
or receivable, for taste and nutrition applications and
consumer foods chilled food products, from third party
customers. Revenue is recorded at invoice value, net of
discounts, allowances, volume and promotional rebates
and excludes VAT. Revenue is recognised when control
of the products has transferred, which is usually upon
shipment, or in line with terms agreed with individual
customers. Revenue is recorded when there is no
unfulfilled obligation on the part of the Group. An estimate
is made on the basis of historical sales returns and is
recorded to allocate these returns to the same period as
the original revenue is recorded. Rebates and discounts
are provided for based on agreements or contracts
with customers, agreed promotional arrangements and
accumulated experience using the expected value method.
Any unutilised accrual is released after assessment that the
likelihood of such a claim being made is highly improbable.
The Group disaggregates revenue by End Use Market
(EUM) and primary geographic market. An EUM is defined
as the market in which the end consumer or customer
of Kerry’s product operates. The economic factors within
the EUMs of Food, Beverage and Pharma which affect the
nature, amount, timing and uncertainty of revenue and
cash flows are similar.
Trading profit
Trading profit refers to the operating profit generated by the
businesses before intangible asset amortisation and gains
or losses generated from non-trading items. Trading profit
represents operating profit before specific items that are not
reflective of underlying trading performance and therefore
hinder comparison of the trading performance of the Group’s
businesses, either year-on-year or with other businesses.
Notes to the Financial Statements
169
Segmental analysis
Operating segments are reported in a manner consistent
with the internal management structure of the Group
and the internal financial information provided to the
Group’s Chief Operating Decision Maker (the Executive
Directors) who is responsible for making strategic
decisions, allocating resources, monitoring and assessing
the performance of each segment. Trading profit as
reported internally by segment is the key measure utilised
in assessing the performance of operating segments
within the Group. Other Corporate activities, such as
the cost of corporate stewardship and the cost of the
KerryConnect programme, are reported along with the
elimination of inter-group activities under the heading
‘Group Eliminations and Unallocated’. Intangible asset
amortisation, non-trading items, net finance costs and
income taxes are managed on a centralised basis and
therefore, these items are not allocated between operating
segments and are not reported per segment in note 2.
The Group has determined it has two reportable segments:
Taste & Nutrition and Consumer Foods. The Taste & Nutrition
segment is the world’s leading taste and nutrition partner
for the food, beverage and pharmaceutical markets. Kerry
innovates with its customers to create great tasting products,
with improved nutrition and functionality, whilst ensuring
better impact for the planet. The Taste & Nutrition segment
supplies industries across Ireland, Europe, Americas and
APMEA (Asia Pacific, Middle East and Africa). The Consumer
Foods segment is a leader in our consumer foods categories
in the chilled cabinet primarily in Ireland and in the UK.
Property, plant and equipment
Property, plant and equipment, other than freehold land,
are stated at cost less accumulated depreciation and any
accumulated impairment losses. Cost comprises purchase
price and other directly attributable costs. Freehold land
is stated at cost and is not depreciated. Depreciation on
the remaining property, plant and equipment is calculated
by charging equal annual instalments to the Consolidated
Income Statement at the following annual rates:
-
-
- Motor vehicles
Buildings
Plant, machinery and equipment
2% - 5%
7% - 25%
20%
The charge in respect of periodic depreciation is calculated
after establishing an estimate of the asset’s useful life and
the expected residual value at the end of its life. Increasing/
(decreasing) an asset’s expected life or its residual value
would result in a (decreased)/increased depreciation
charge to the Consolidated Income Statement as well as an
increase/(decrease) in the carrying value of the asset.
The useful lives of Group assets are determined by
management at the time the assets are acquired and
reviewed annually for appropriateness. These lives are
based on historical experience with similar assets as well
as anticipation of future events, which may impact their
life, such as changes in technology or the location of the
asset and its climate related risk. Historically, changes in
useful lives or residual values have not resulted in material
changes to the Group’s depreciation charge.
Assets in the course of construction for production or
administrative purposes are carried at cost less any
recognised impairment loss. Cost includes professional
fees and other directly attributable costs. Depreciation of
these assets commences when the assets are ready for their
intended use, on the same basis as other property assets.
Kerry Group Annual Report 2021
170
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
171
1. Statement of accounting policies (continued)
Leasing
At the commencement date of the lease, the Group
recognises a right-of-use asset and a lease liability on the
balance sheet. The right-of-use asset is measured at cost,
which consists of the initial measurement of the lease
liability, any initial direct costs incurred by the Group in
setting up/entering into the lease, an estimate of any
costs to dismantle and remove the asset at the end of the
lease and any payments made in advance of the lease
commencement date (net of any incentive received).
The Group depreciates right-of-use assets on a straight-line
basis from the lease commencement date to the earlier of
the end of the useful life or the end of the lease term. The
carrying amounts of right-of-use assets are reviewed at
each balance sheet date to determine whether there is any
indication of impairment. An impairment loss is recognised
when the carrying value of an asset exceeds its recoverable
amount.
The Group measures the lease liability at the present value
of the lease payments unpaid at that date, discounted
using the applicable incremental borrowing rate. Lease
payments included in the measurement of the lease liability
comprises of fixed or variable payments (based on an index
or rate), amounts expected to be payable under a residual
value guarantee and payments arising from options
reasonably certain to be exercised.
Subsequent to the initial measurement, the liability will be
reduced for payments made and increased for the interest
applied and it is remeasured to reflect any reassessment
or contract modifications. When the lease liability is
remeasured, the corresponding adjustment is reflected
in the right-of-use asset or in the Consolidated Income
Statement if the right-of-use asset is already reduced to
zero.
The Group has elected to record short-term leases of less
than 12 months and leases of low-value assets as defined
in IFRS 16 as an operating expense in the Consolidated
Income Statement on a straight-line basis over the lease
term.
The Group has also elected not to separate non-lease
components from lease components, and instead account
for each lease component and any associated non-
lease components as a single lease component further
increasing the lease liability.
Assets classified as held for sale
Assets are classified as held for sale if their carrying value
will be recovered through a sale transaction rather than
through continuing use. This condition is regarded as met
if, at the financial year end, the sale is highly probable,
the asset is available for immediate sale in its present
condition, management is committed to the sale and the
sale is expected to be completed within one year from the
date of classification.
Assets classified as held for sale are measured at the lower
of carrying value and fair value less costs to sell.
Intangible assets
Goodwill
Goodwill arises on business combinations and represents
the excess of the cost of acquisition over the Group’s
interest in the fair value of the identifiable assets and
liabilities acquired.
Goodwill arising on acquisitions before the date of
transition to IFRS has been retained at the previous Irish/
UK GAAP amounts subject to impairment testing. Goodwill
written off to reserves under Irish/UK GAAP prior to 1998
has not been reinstated and is not included in determining
any subsequent profit or loss on disposal.
At the date control is achieved, goodwill is allocated for
the purpose of impairment testing to groups of cash
generating units (CGUs) provided they represent the
lowest level at which management monitor goodwill for
impairment purposes. Goodwill is not amortised but is
reviewed for indications of impairment at least annually
and is carried at cost less accumulated impairment losses,
where identified. Impairment is recognised immediately
in the Consolidated Income Statement and is not
subsequently reversed. On disposal of a subsidiary, the
attributable amount of goodwill (not previously written off
to reserves) is included in the determination of the profit or
loss on disposal.
Brand related intangibles
Brand related intangibles acquired as part of a business
combination are valued at their fair value at the date
control is achieved. Intangible assets determined to have
an indefinite useful life are not amortised and are tested
for impairment at least annually. Indefinite life intangible
assets are those for which there is no foreseeable limit
to their expected useful life. In arriving at the conclusion
that these brand related intangibles have an indefinite
life, management considers the nature and type of the
intangible asset, the absence of any legal or other limits on
the assets’ use, the fact the business and products have a
track record of stability, the high barriers to market entry
and the Group’s commitment to continue to invest for the
long-term to extend the period over which the intangible
asset is expected to continue to provide economic benefits.
The classification of intangible assets as indefinite is
reviewed annually. The future expectation of potential
market disruption due to changing consumer preferences
or changes in supply chain of raw materials linked to
sustainability and climate change were assessed as part of
this review and were deemed to have no material impact.
Finite life brand related intangible assets are amortised
over the period of their expected useful lives, which
predominantly range from 2 to 20 years, by charging
equal annual instalments to the Consolidated Income
Statement. The useful life used to amortise finite intangible
assets relates to the future performance of the assets
acquired and management’s estimate of the period over
which economic benefit will be derived from the asset.
Historically, changes in useful lives have not resulted in
material changes to the Group’s amortisation charge.
Computer software
Computer software separately acquired, including
computer software which is not an integral part of
an item of computer hardware, is stated at cost less
any accumulated amortisation and any accumulated
impairment losses. Cost comprises purchase price and
other directly attributable costs.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
170
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
171
1. Statement of accounting policies (continued)
Intangible assets (continued)
Computer software (continued)
Costs relating to the development of computer software
for internal use are capitalised once the recognition criteria
outlined as follows are met:
-
-
an asset can be separately identified;
it is probable that the asset created will generate
future economic benefits;
the development cost of the asset can be measured
reliably;
it is probable that the expected future economic
benefits that are attributable to the asset will flow to
the entity; and
the cost of the asset can be measured reliably.
-
-
-
Computer software is amortised over its expected useful
life, which ranges from 3 to 7 years, by charging equal
annual instalments to the Consolidated Income Statement.
Amortisation commences when the assets are ready for
use.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite
useful life are not subject to amortisation. They are tested
annually for impairment or when indications exist that
the asset may be impaired. For the purpose of assessing
impairment, these assets are allocated to groups of cash
generating units (CGUs) using a reasonable and consistent
basis. An impairment loss is recognised immediately in
the Consolidated Income Statement for the amount by
which the asset’s carrying value exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s
fair value less costs to sell or its value in use. Value in use
is determined as the discounted future cash flows of the
CGU. The key assumptions during the financial year for the
value in use calculations are discount rates, cash flows and
growth rates.
When an impairment loss (other than on goodwill)
subsequently reverses, the carrying amount of the asset
is increased to the revised estimate of its recoverable
amount, not exceeding its carrying amount that would
have been determined had no impairment loss been
recognised for the asset in prior years. Assets that are
subject to amortisation are reviewed for impairment
whenever events or changes in circumstances indicate
the carrying amount may not be recoverable. Impairment
is reviewed by assessing the asset’s value in use when
compared to its carrying value.
The carrying amounts of property, plant and equipment are
reviewed at each balance sheet date to determine whether
there is any indication of impairment. An impairment loss is
recognised when the carrying value of an asset exceeds its
recoverable amount.
-
Inventories
Inventories are valued at the lower of cost and net
realisable value. Cost includes raw materials, direct labour
and all other expenditure incurred in the normal course
of business in bringing the products to their present
location and condition. Cost is calculated at the weighted
average cost incurred in acquiring inventories. Net
realisable value is the estimated selling price of inventory
on hand less all further costs to completion and all costs
expected to be incurred in distribution and selling. Write-
downs of inventories are primarily recognised under ‘Raw
materials and consumables’ in the Consolidated Income
Statement.
Income taxes
Income taxes include both current and deferred taxes.
Income taxes are charged or credited to the Consolidated
Income Statement except when they relate to items
charged or credited directly in other comprehensive
income or shareholders’ equity. In this instance the income
taxes are also charged or credited to other comprehensive
income or shareholders’ equity.
The current tax charge is calculated as the amount payable
based on taxable profit and the tax rates applying to those
profits in the financial year together with adjustments
relating to prior years. Deferred taxes are calculated using
the tax rates that are expected to apply in the period when
the liability is settled or the asset is realised, based on tax
rates that have been enacted or substantively enacted at
the balance sheet date.
The Group is subject to uncertainties, including tax audits,
in any of the jurisdictions in which it operates. The Group
accounts for uncertain tax positions in line with IFRIC
23 ‘Uncertainty over Income Tax Treatments’. The Group
considers each uncertain tax treatment separately or
together with one or more uncertain tax treatments based
on which approach better predicts the resolution of the
uncertainty. If the Group concludes that it is not probable
that a taxation authority will accept an uncertain tax
treatment the Group reflects the effect of the uncertainty
in determining the related taxable profit, tax bases, unused
tax losses, unused tax credits or tax rate. The Group
reflects the effect of uncertainty for each uncertain tax
treatment using an expected value approach or a most
likely approach depending on which method the Group
expects to better predict the resolution of the uncertainty.
The unit of account for recognition purposes is the income
tax/deferred tax assets or liabilities and the Group does not
provide separately for uncertain tax positions. When the
final tax outcome for these items is different from amounts
recorded, such differences will impact the income tax and
deferred tax in the period in which such a determination is
made, as well as the Group’s cash position.
Deferred taxes are calculated based on the temporary
differences arising between the tax base of the asset or
liability and its carrying value in the Consolidated Balance
Sheet. Deferred taxes are recognised on all temporary
differences in existence at the balance sheet date except
for:
-
temporary differences which arise from the initial
recognition of an asset or liability in a transaction
other than a business combination that at the time of
the transaction does not affect accounting or taxable
profit or loss, or on the initial recognition of goodwill
for which a tax deduction is not available; and
temporary differences which arise on investments
in subsidiaries where the timing of the reversal
is controlled by the Group and it is probable that
the temporary difference will not reverse in the
foreseeable future.
The recognition of a deferred tax asset is based upon
whether it is probable that sufficient and suitable taxable
profits will be available in the future, against which the
reversal of temporary differences can be deducted.
Deferred tax assets are reviewed at each reporting
date.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
172
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
173
1. Statement of accounting policies (continued)
Income taxes (continued)
Current income tax assets and current income tax liabilities
are offset where there is a legally enforceable right to
offset the recognised amounts and the Group intends
to settle on a net basis. Deferred income tax assets and
deferred income tax liabilities are offset where there is a
legally enforceable right to offset the recognised amounts,
the deferred tax assets and deferred tax liabilities relate to
taxes levied by the same taxation authority and the Group
intends to settle on a net basis.
Retirement benefits obligation
Payments to defined contribution schemes are recognised
in the Consolidated Income Statement as they fall due and
any contributions outstanding at the financial year end are
included as an accrual in the Consolidated Balance Sheet.
Actuarial valuations for accounting purposes are carried
out at each balance sheet date in relation to defined
benefit schemes, using the projected unit credit method,
to determine the schemes’ liabilities and the related cost of
providing benefits. Scheme assets are accounted for at fair
value using bid prices.
Current service cost is recognised as it arises within staff
costs in the Consolidated Income Statement. Net interest
which is calculated by applying the discount rate to the net
balance of the defined benefit obligation and the fair value of
plan assets is recognised in interest costs in the Consolidated
Income Statement. Gains or losses on the curtailment or
settlement of a scheme are recognised in the Consolidated
Income Statement when the curtailment or settlement
occurs. Re-measurement of retirement benefits obligation,
comprising actuarial gains and losses and the return on
scheme assets (excluding amounts included in net interest
cost) are recognised in full in the period in which they occur
in the Consolidated Statement of Comprehensive Income.
The defined benefit liability recognised in the Consolidated
Balance Sheet represents the present value of the defined
benefit obligation less the fair value of any scheme
assets. Defined benefit assets are also recognised in the
Consolidated Balance Sheet but are limited to the present
value of available refunds from, and reductions in future
contributions to, the scheme.
Provisions
Provisions can be distinguished from other types of liability
by considering the events that give rise to the obligation
and the degree of uncertainty as to the amount or timing
of the liability. These are recognised in the Consolidated
Balance Sheet when:
-
the Group has a present obligation (legal or
constructive) as a result of a past event;
it is probable that the Group will be required to settle
the obligation; and
a reliable estimate can be made of the amount of the
obligation.
-
-
The amount recognised as a provision is the best estimate
of the amount required to settle the present obligation at
the balance sheet date, after taking account of the risks
and uncertainties surrounding the obligation.
The outcome depends on future events which are by
their nature uncertain. In assessing the likely outcome,
management bases its assessment on historical experience
and other factors that are believed to be reasonable in the
circumstances. Provisions are disclosed in note 25 to the
consolidated financial statements.
Non-trading items
Certain items, by virtue of their nature and amount, are
disclosed separately in order for the user to obtain a
proper understanding of the financial information. These
items relate to events or circumstances that are not related
to normal trading activities and are labelled collectively as
‘non-trading items’.
Non-trading items include gains or losses on the disposal
of businesses, disposal of assets (non-current assets and
assets classified as held for sale), costs in preparation of
disposal of assets, material restructuring costs and material
transaction, integration and restructuring costs associated
with acquisitions. Non-trading items are disclosed in note 5
to the consolidated financial statements.
Research and development expenditure
Expenditure on research activities is recognised as an
expense in the financial year it is incurred.
Development expenditure is assessed and capitalised as an
internally generated intangible asset only if it meets all of
the following criteria:
-
it is technically feasible to complete the asset for use
or sale;
it is intended to complete the asset for use or sale;
the Group has the ability to use or sell the intangible
asset;
it is probable that the asset created will generate
future economic benefits;
adequate resources are available to complete the
asset for sale or use; and
the development cost of the asset can be measured
reliably.
-
-
-
-
-
Capitalised development costs are amortised over their
expected economic lives. Where no internally generated
intangible asset can be recognised, product development
expenditure is recognised as an expense in the financial
year it is incurred. Accordingly, the Group has not
capitalised product development expenditure to date.
Grants
Grants of a capital nature are accounted for as deferred
income in the Consolidated Balance Sheet and are released
to the Consolidated Income Statement at the same rates
as the related assets are depreciated. Grants of a revenue
nature are credited to the Consolidated Income Statement
to offset the matching expenditure.
Dividends
Dividends are accounted for when they are approved,
through the retained earnings reserve. Dividends proposed
do not meet the definition of a liability until such time as
they have been approved. Dividends are disclosed in note
10 to the consolidated financial statements.
Share-based payments
The Group has granted share-based payments to Executive
Directors and senior executives under a long-term
incentive plan and to Executive Directors under a short-
term incentive plan.
The equity-settled share-based awards granted under
these plans are measured at the fair value of the equity
instrument at the date of grant. The cost of the award
is charged to the Consolidated Income Statement over
the vesting period of the awards based on the probable
number of awards that will eventually vest, with a
corresponding credit to shareholders’ equity.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
172
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
173
1. Statement of accounting policies (continued)
Share-based payments (continued)
For the purposes of the long-term incentive plan, the fair
value of the award is measured using the Monte Carlo
Pricing Model. For the short-term incentive plan, the fair
value of the expense equates directly to the cash value of
the portion of the short-term incentive plan that will be
settled by way of shares/share options.
At the balance sheet date, the estimate of the level of
vesting is reviewed and any adjustment necessary is
recognised in the Consolidated Income Statement and in
the Statement of Changes in Equity. Share-based payments
are disclosed in note 28 to the consolidated financial
statements.
Foreign currency
Foreign currency transactions are translated into functional
currency at the rate of exchange ruling at the date of the
transaction. Exchange differences arising from either the
retranslation of the resulting monetary assets or liabilities
at the exchange rate at the balance sheet date or from the
settlement of the balance at a different rate are recognised
in the Consolidated Income Statement when they occur.
On consolidation, the income statements of foreign
currency subsidiaries are translated into euro at the
average exchange rate. If this average is not a reasonable
approximation of the cumulative effect of the rates
prevailing on the transaction dates, a weighted average
rate is used. The balance sheets of such subsidiaries are
translated at the rate of exchange at the balance sheet
date. Resulting exchange differences arising on the
translation of foreign currency subsidiaries are taken
directly to a separate component of shareholders’ equity.
Goodwill and fair value adjustments arising on the
acquisition of foreign subsidiaries are treated as assets and
liabilities of the foreign subsidiaries and are translated at
the closing rate.
On disposal of a foreign currency subsidiary, the
cumulative translation difference for that foreign subsidiary
is recycled to the Consolidated Income Statement as part of
the profit or loss on disposal.
Borrowing costs
Borrowing costs incurred for qualifying assets, which take
a substantial period of time to construct, are added to
the cost of the asset during the period of time required to
complete and prepare the asset for its intended use. Other
borrowing costs are expensed to the Consolidated Income
Statement in the period in which they are incurred.
Business combinations
The acquisition method of accounting is used for the
acquisition of businesses. The cost of the acquisition is
measured at the aggregate fair value of the consideration
given. The acquiree’s identifiable assets, liabilities
and contingent liabilities that meet the conditions for
recognition under IFRS 3 ‘Business Combinations’ are
recognised at their fair value at the date the Group
assumes control of the acquiree. Acquisition related costs
are recognised in the Consolidated Income Statement as
incurred. If the business combination is achieved in stages,
the acquisition date fair value of the Group’s previously
held investment in the acquiree is remeasured to fair value
at the acquisition date through profit or loss.
Certain assets and liabilities are not recognised at their
fair value at the date control was achieved as they are
accounted for using other applicable IFRSs. These include
deferred tax assets/liabilities and also any assets related to
employee benefit arrangements.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which
the combination occurs, the Group reports provisional
amounts for the items for which the valuation of the fair
value of assets and liabilities acquired is still in progress.
Those provisional amounts are adjusted during the
measurement period of one year from the date control is
achieved when additional information is obtained about
facts and circumstances which would have affected the
amounts recognised as of that date.
Where applicable, the consideration for the acquisition
includes any asset or liability resulting from a contingent
consideration arrangement measured at fair value at the
date control is achieved. Subsequent changes in such fair
values are adjusted against the cost of acquisition where
they qualify as measurement period adjustments. All
other subsequent changes in the fair value of contingent
consideration classified as an asset or liability are
accounted for in accordance with relevant IFRSs.
Any fair value adjustments in relation to acquisitions
completed prior to 1 January 2010 have been accounted for
under IFRS 3 ‘Business Combinations (2004)’.
Investments in subsidiaries
Investments in subsidiaries held by the Parent Company
are carried at cost less accumulated impairment losses.
Investments in joint ventures
Investments in joint ventures held by the Group are
accounted for using the equity method, after initially being
recognised at cost in the Consolidated Balance Sheet.
Financial instruments
Financial assets and financial liabilities are recognised on
the Consolidated Balance Sheet when the Group becomes
party to the contractual provisions of the instrument.
Financial assets and liabilities are initially measured at fair
value plus transaction costs, except for those classified
as fair value through profit or loss, which are initially
measured at fair value.
All financial assets are recognised and derecognised on a
trade date basis, where the purchase or sale of a financial
asset is under a contract whose terms require delivery
of the financial asset within the timeframe of the market
concerned.
Financial assets and liabilities are offset and presented on
a net basis in the Consolidated Balance Sheet, only if the
Group holds an enforceable legal right of set off for such
amounts and there is an intention to settle on a net basis
or to realise an asset and settle the liability simultaneously.
In all other instances they are presented gross in the
Consolidated Balance Sheet.
The Group classifies its financial assets in the following
measurement categories:
-
those to be measured subsequently at fair value
(either through OCI or through profit or loss); and
those to be measured at amortised cost.
-
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
174
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
175
1. Statement of accounting policies (continued)
Financial instruments (continued)
The classification depends on the Group’s business model
for managing the financial assets and the contractual terms
of the cash flows. For assets measured at fair value, gains
and losses will either be recorded in profit or loss or OCI.
For investments in equity instruments that are not held for
trading, this will depend on whether the Group has made
an irrevocable election at the time of initial recognition to
account for the equity investment at fair value through
other comprehensive income (FVOCI).
Debt instruments:
Subsequent measurement of debt instruments depend on
the Group’s business model for managing the asset and
the cash flow characteristics of the asset. There are three
measurement categories into which the Group classifies its
debt instruments:
-
Amortised cost: Assets that are held for collection
of contractual cash flows, where those cash flows
represent solely payments of principal and interest,
are measured at amortised cost. Any gain or loss
arising on derecognition is recognised directly in the
Consolidated Income Statement. Impairment losses
are presented in the Consolidated Income Statement.
FVOCI: Assets that are held for collection of
contractual cash flows and for selling the financial
assets, where the assets’ cash flows represent solely
payments of principal and interest, are measured
at FVOCI. The Group have no debt instruments
measured at FVOCI.
FVPL: Assets that do not meet the criteria for
amortised cost or FVOCI are measured at fair value
through profit or loss (FVPL). In addition, assets that
are irrevocably designated as FVPL at origination
to eliminate or significantly reduce an accounting
mismatch are also measured at FVPL. A gain or loss
on a debt investment that is subsequently measured
at FVPL is recognised in the Consolidated Income
Statement.
-
-
Equity instruments:
The Group subsequently measures all equity investments
at fair value. Where the Group’s management has
elected to present fair value gains and losses on equity
investments in OCI, there is no subsequent reclassification
of fair value gains and losses to the Consolidated Income
Statement following the derecognition of the investment.
Dividends from such investments continue to be
recognised in the Consolidated Income Statement when
the Group’s right to receive payments is established.
Changes in the fair value of financial assets measured
at FVPL (Rabbi Trust assets) are recognised in the
Consolidated Income Statement. Impairment losses (and
reversal of impairment losses) on equity investments
measured at FVOCI are not reported separately from other
changes in fair value.
Trade and other receivables:
Trade receivables are amounts due from customers for
goods sold or services performed in the ordinary course
of business. Trade receivables are recognised initially at
the amount of consideration that is unconditional unless
they contain significant financing components, when they
are recognised at fair value. The Group holds the trade
receivables with the objective to collect the contractual
cash flows and therefore measures them subsequently at
amortised cost using the effective interest method.
Cash and cash equivalents:
Cash and cash equivalents carried at amortised cost consists
of cash at bank and in hand, bank overdrafts held by the
Group and short-term bank deposits with a maturity of three
months or less from the date of placement. Cash at bank
and in hand and short-term bank deposits are shown under
current assets on the Consolidated Balance Sheet under
the heading ‘Cash at bank and in hand’. Bank overdrafts are
shown within ‘Borrowings and overdrafts’ in current liabilities
on the Consolidated Balance Sheet but are included as a
component of cash and cash equivalents for the purpose of
the Statement of Cash Flows. The carrying amount of these
assets and liabilities approximates to their fair value.
Financial liabilities measured at amortised cost
Other non-derivative financial liabilities consist primarily of
trade and other payables and borrowings. Trade and other
payables are stated at amortised cost, which approximates to
their fair value given the short-term nature of these liabilities.
Trade and other payables are non-interest bearing.
Debt instruments are initially recorded at fair value, net
of transaction costs. Subsequently they are reported at
amortised cost, except for hedged debt. To the extent
that debt instruments are hedged under qualifying fair
value hedges, the carrying value of the debt instrument
is adjusted for changes in the fair value of the hedged
risk, with changes arising recognised in the Consolidated
Income Statement. The fair value of the hedged item is
primarily determined using the discounted cash flow basis
Financial liabilities at fair value through profit or loss
Financial liabilities at FVPL arise when the financial liabilities
are either derivative liabilities held for trading or they are
designated upon initial recognition as FVPL.
The Group classifies as held for trading certain derivatives
that are not designated and effective as a hedging
instrument. The Group does not have any other financial
liabilities classified as held for trading.
Impairment of financial assets
The Group assesses on a forward looking basis the
expected credit losses associated with its debt instruments
carried at amortised cost and FVOCI. The impairment
methodology applied depends on whether there has been
a significant increase in credit risk.
For trade receivables, the Group applies the simplified
approach permitted by IFRS 9 ‘Financial Instruments’,
which requires expected lifetime losses to be recognised
from initial recognition of the receivables. Further detail is
provided in note 19.
Derecognition of financial liabilities
The Group derecognises financial liabilities only when the
Group’s obligations are discharged, cancelled or expired.
Derivative financial instruments and hedge accounting
Derivatives are carried at fair value. The Group’s activities
expose it to risks of changes in foreign currency exchange
rates and interest rates in relation to international trading
and long-term debt. The Group uses foreign exchange
forward contracts, interest rate swaps and forward rate
agreements to hedge these exposures. The Group does
not use derivative financial instruments for speculative
purposes. When cross currency interest rate swaps
are used to hedge interest rates and foreign exchange
rates, the change in the foreign currency basis spreads
element of the contract that relates to the hedged item is
recognised within other reserves under the cost of hedging
reserve.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
174
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
175
1. Statement of accounting policies (continued)
Financial instruments (continued)
Derivative financial instruments and hedge accounting
(continued)
At inception of the hedge relationship, the Group
documents the economic relationship between hedging
instruments and hedged items including whether changes
in the cash flows of the hedging instruments are expected
to offset changes in the cash flows of hedged items. The
Group documents its risk management objective and
strategy for undertaking its hedge transactions.
Fair value of financial instrument derivatives
The fair value of derivative instruments is calculated
using quoted prices. Where such prices are not available
a discounted cash flow analysis is used based on the
applicable yield curve adjusted for counterparty risk for
the duration and currency of the instrument, which are
observable:
-
foreign exchange forward contracts are measured
using quoted forward exchange rates to match the
maturities of these contracts; and
interest rate swaps are measured at the present
value of future cash flows estimated and discounted
based on the applicable yield curves adjusted for
counterparty credit risk.
-
Cash flow hedges
Where derivatives, including forward foreign exchange
contracts and floating to fixed interest rate swaps or cross
currency swaps are used, they are primarily treated as
cash flow hedges. The gain or loss relating to the effective
portion of the interest rate swaps and cross currency
interest rate swaps is recognised in OCI and is reclassified
to profit or loss in the period when the hedged item is
recognised through profit or loss. All effective amounts
are directly offset against movements in the underlying
hedged item. Any ineffective portion of the hedge is
recognised in the Consolidated Income Statement. The
gain or loss relating to the effective portion of forward
foreign exchange contracts is recognised in OCI and is
reclassified to profit or loss in the period the hedged
item is recognised through profit or loss. Any ineffective
portion of the hedge is recognised in the Consolidated
Income Statement. When the hedged firm commitment or
forecasted transaction occurs and results in the recognition
of an asset or liability, the amounts previously recognised
in the hedge reserve, within OCI are reclassified through
profit or loss in the periods when the hedged item is
impacting the Consolidated Income Statement.
When a hedging instrument expires, or is sold or
terminated, or when a hedge no longer meets the criteria
for hedge accounting, any cumulative deferred gain or loss
and deferred cost of hedging in equity at that time remains
in equity until the forecast transaction occurs, resulting in
the recognition of a non-financial asset, such as inventory.
When the forecast transaction is no longer expected to
occur, the cumulative gain or loss and deferred cost of
hedging that were reported in equity are immediately
reclassified to profit or loss.
Cash flow hedge accounting is applied to foreign exchange
forward contracts which are expected to offset the changes
in fair value of expected future cash flows. In order to
achieve and maintain cash flow hedge accounting, it is
necessary for management to determine, at inception and
on an ongoing basis, whether a forecast transaction is
highly probable.
Kerry Group Annual Report 2021
Fair value hedges
Where fixed to floating interest rate swaps are used,
they are treated as fair value hedges when the qualifying
conditions are met. Changes in the fair value of derivatives
that are designated as fair value hedges are recognised
directly in the Consolidated Income Statement, together
with any changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk.
Hedge accounting is derecognised when the hedging
relationship ceases to exist. The fair value adjustment to
the carrying amount of the hedged item arising from the
hedged risk is amortised over the remaining maturity
of the hedged item through the Consolidated Income
Statement from that date.
Trading derivatives
Certain derivatives which comply with the Group’s financial
risk management policies are not accounted for using
hedge accounting. This arises where the derivatives; (a)
provide a hedge against foreign currency borrowings
without having to apply hedge accounting; or (b) where
management have decided not to apply hedge accounting.
In these cases the instrument is reported independently at
fair value with any changes recognised in the Consolidated
Income Statement. In all other instances, cash flow or fair
value hedge accounting is applied.
Critical accounting estimates and judgements
The Preparation of the Group consolidated financial
statements requires management to make certain
estimations, assumptions and judgements that affect the
reported profits, assets and liabilities.
Estimates and underlying assumptions are reviewed on an
ongoing basis. Changes in accounting estimates may be
necessary if there are changes in the circumstances on which
the estimate was based or as a result of new information or
more experience. Such changes are recognised in the period
in which the estimate is revised.
In particular, information about significant areas of
estimation and judgement that have the most significant
effect on the amounts recognised in the consolidated
financial statements are described below and in the
respective notes to the consolidated financial statements.
The impact of COVID-19 on the critical accounting
estimates and judgements as outlined below has been
assessed and is not considered material in the context of
the consolidated financial statements.
Impairment of goodwill and intangible assets (Estimation)
Determining whether goodwill and intangible assets
are impaired or whether a reversal of an impairment
of intangible assets (other than on goodwill) should be
recorded requires comparison of the value in use for the
relevant groups of cash generating units (CGUs) to the
net assets attributable to those CGUs. The value in use
calculation is based on an estimate of future cash flows
expected to arise from the CGUs and these are discounted
to net present value using an appropriate discount rate.
The tests are dependent on management’s estimates, in
particular in relation to the forecasting of future cash flows,
the discount rates applied to those cash flows, the expected
long-term growth rate of the applicable businesses and
terminal values. Such estimates are subject to change as
a result of changing economic conditions. As forecasting
future cash flows is dependent upon the Group successfully
leveraging its base of intangible assets over the long-term,
estimates are required in relation to future cash flows
which will support the asset value.
Kerry Group Annual Report 2021
176
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
177
1. Statement of accounting policies (continued)
Critical accounting estimates and judgements
(continued)
Impairment of goodwill and intangible assets (Estimation)
(continued)
These estimates may depend upon the outcome of future
events and may need to be revised as circumstances
change. The impact of COVID-19 on the Group was
considered and has been reflected in the cash flow
forecasts employed in the value in use calculations.
The potential impact of climate related events was also
considered under two different temperature scenarios
and had no impact on our conclusions. Details of the
assumptions used and key sources of estimation involved
are outlined in note 12 to these consolidated financial
statements.
The Group continues to monitor its assessment of the
economic environment particularly due to the pace and
extent of recovery in some markets as a result of COVID-19.
The long-term outlook for our businesses currently
remains positive, supports our CGU valuations and no
impairment was identified as a result of the impairment
testing review carried out. There is significant headroom in
the recoverable amount of the related CGUs as compared
to their carrying value and the likelihood of impairment is
considered remote.
Business combinations (Estimation)
When acquiring a business, the Group is required to bring
acquired assets and liabilities on to the Consolidated
Balance Sheet at their fair value, the determination of
which requires a significant degree of estimation.
Acquisitions may also result in intangible benefits being
brought into the Group, some of which qualify for
recognition as intangible assets while other such benefits
do not meet the recognition requirements of IFRS and
therefore form part of goodwill. Estimation is required in
the assessment and valuation of these intangible assets.
For intangible assets acquired, the Group bases valuations
on expected future cash flows taking into consideration
the impact of COVID-19 where applicable. This method
employs a discounted cash flow analysis using the present
value of the estimated after-tax cash flows expected to be
generated from the purchased intangible asset using risk
adjusted discount rates, revenue forecasts and estimated
customer attrition as appropriate. The period of expected
cash flows is based on the expected useful life of the
intangible asset acquired.
Depending on the nature of the assets and liabilities
acquired, determined provisional fair values may possibly
be adjusted within the measurement period as allowed by
IFRS 3 ‘Business Combinations’.
Business combinations are disclosed in note 30 to the
consolidated financial statements.
Non-trading items (Judgement)
The Group considers certain items, by virtue of their
nature and amount, are disclosed separately in order for
the user to obtain a proper understanding of the financial
information. These items relate to events or circumstances
that are not related to normal trading activities and are
labelled collectively as ‘non-trading items’. Determining
which transactions are to be disclosed separately is often
a subjective matter. Circumstances that the Group believes
would give rise to non-trading items for separate disclosure
are outlined in the accounting policy on non-trading items.
For clarity, separate disclosure is made of all items in one
column on the face of the Group Consolidated Income
Statement.
Income tax charge and income/deferred tax assets and
liabilities (Estimation and Judgement)
Significant judgement and a high degree of estimation
is required in determining the income tax charge as the
Group operates in many jurisdictions and the tax treatment
of many items is uncertain with tax legislation being
open to different interpretation. Furthermore, the Group
can also be subject to uncertainties, including tax audits
in any of the jurisdictions in which it operates, which by
their nature, are often complex and can require several
years to conclude. The Group considers these uncertain
tax positions in the recognition of its income tax/deferred
tax assets or liabilities. In line with its accounting policy,
the Group bases its assessment on the probability of
a tax authority accepting its general treatment having
regard to all information available on the tax matter and
when it is not probable reflects the uncertainty in income
tax/deferred tax assets or liabilities. When applying its
accounting policy at the year end the Group generally
considered each uncertain tax treatment separately and
reflected the effect of the uncertainty in the income tax/
deferred tax assets or liabilities using an expected value
approach as this better predicts the resolution of the
uncertainty. Such estimates are determined based on
management judgement, interpretation of the relevant
tax laws, correspondence with the relevant tax authorities
and external tax advisors and past practices of the tax
authorities. Where the final outcome of these tax matters
is different from the amounts that were recorded, such
differences will impact the income tax and deferred tax
charge in the period in which such determination is made.
Income taxes and deferred tax assets and liabilities are
disclosed in notes 7 and 17 to the consolidated financial
statements, respectively.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
176
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
177
1. Statement of accounting policies (continued)
New standards and interpretations
Certain new and revised accounting standards and new International Financial Reporting Interpretations Committee (‘IFRIC’)
interpretations have been issued. The Group intends to adopt the relevant new and revised standards when they become
effective and the Group’s assessment of the impact of these standards and interpretations is set out below.
The following Standards and Interpretations are effective for the Group in 2021 but do not have
a material effect on the results or financial position of the Group:
- IFRS 16 (Amendments)
Leases
- IFRS 7, IFRS 4 &
IFRS 16 (Amendments)
Interest Rate Benchmark Reform - Phase 2
The following Standards and Interpretations are not yet effective for the Group and are not expected
to have a material effect on the results or financial position of the Group:
- IAS 16 (Amendments)
Property, Plant and Equipment
- IAS 37 (Amendments)
Provisions, Contingent Liabilities and Contingent Assets
- IFRS 9 (Amendments)
Financial Instruments
- IFRS 3 (Amendments)
Business Combinations
- IAS 41 (Amendments)
Agriculture
- IAS 1 (Amendments)
Presentation of Financial Statements
- IFRS 17
Insurance Contracts
Effective Date
1 April 2021
1 January 2021
Effective Date
1 January 2022
1 January 2022
1 January 2022
1 January 2022
1 January 2022
1 January 2023
1 January 2023
- IAS 8 (Amendments)
Accounting Policies, Changes in Accounting Estimates and Errors
1 January 2023
- IAS 12 (Amendments)
Income Taxes
1 January 2023
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
178
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
179
2. Analysis of results
The Group has determined it has two reportable segments: Taste & Nutrition and Consumer Foods. The Taste & Nutrition
segment is the world’s leading taste and nutrition partner for the food, beverage and pharmaceutical markets. Kerry innovates
with its customers to create great tasting products, with improved nutrition and functionality, whilst ensuring better impact for
the planet. The Taste & Nutrition segment supplies industries across Ireland, Europe, Americas and APMEA (Asia Pacific, Middle
East and Africa). The Consumer Foods segment is a leader in our consumer foods categories in the chilled cabinet primarily in
Ireland and in the UK.
Taste &
Nutrition
2021
€’m
Consumer
Foods
2021
€’m
Group
Eliminations
and
Unallocated
2021
€’m
Taste &
Nutrition
2020
€’m
Consumer
Foods
2020
€’m
Total
2021
€’m
Group
Eliminations
and
Unallocated
2020
€’m
Total
2020
€’m
External revenue
6,209.0
1,141.6
-
7,350.6
5,678.4
1,275.0
-
6,953.4
Inter-segment revenue
64.3
2.3
(66.6)
-
74.8
3.6
(78.4)
-
Revenue
6,273.3
1,143.9
(66.6)
7,350.6
5,753.2
1,278.6
(78.4)
6,953.4
Trading profit
913.4
82.1
(120.0)
875.5
814.2
99.2
(116.2)
797.2
Intangible asset amortisation
Non-trading items
Operating profit
Finance income
Finance costs
Profit before taxation
Income taxes
Profit after taxation attributable to owners of the parent
Segment assets and liabilities
(80.8)
91.5
886.2
0.3
(70.2)
816.3
(53.3)
763.0
(70.1)
(19.4)
707.7
0.2
(72.6)
635.3
(81.2)
554.1
Segment assets
8,101.9
361.9
2,931.6 11,395.4
6,370.1
877.2
2,195.8
9,443.1
Segment liabilities
(1,605.4)
(235.2)
(3,953.6) (5,794.2)
(1,295.0)
(332.9)
(3,159.7)
(4,787.6)
Net assets
6,496.5
126.7
(1,022.0)
5,601.2
5,075.1
544.3
(963.9)
4,655.5
Other segmental information
Property, plant and equipment
additions
272.2
20.4
0.2
292.8
225.0
20.7
-
245.7
Depreciation (net)
183.3
17.7
0.5
201.5
178.5
Intangible asset additions
Intangible asset amortisation
1.3
28.9
0.2
3.9
32.6
48.0
34.1
80.8
0.9
23.7
21.7
1.0
6.4
0.5
200.7
50.2
40.0
52.1
70.1
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
178
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
179
2. Analysis of results (continued)
Revenue analysis
Disaggregation of revenue from external customers is analysed by End Use Market (EUM), which is the primary market in which
Kerry’s products are consumed and primary geographic market. An EUM is defined as the market in which the end consumer
or customer of Kerry’s product operates. The economic factors within the EUMs of Food, Beverage and Pharma and within the
primary geographic markets which affect the nature, amount, timing and uncertainty of revenue and cash flows are similar.
Analysis by EUM
Food
Beverage
Pharma
Taste &
Nutrition
2021
€’m
4,283.3
1,589.1
336.6
Consumer
Foods
2021
€’m
1,141.6
-
-
Total
2021
€’m
5,424.9
1,589.1
336.6
Taste &
Nutrition
2020
€’m
3,974.6
1,407.1
296.7
Consumer
Foods
2020
€’m
1,275.0
-
-
Total
2020
€’m
5,249.6
1,407.1
296.7
External revenue
6,209.0
1,141.6
7,350.6
5,678.4
1,275.0
6,953.4
Analysis by primary geographic market
Disaggregation of revenue from external customers is analysed by geographical split:
Taste &
Nutrition
2021
€’m
Consumer
Foods
2021
€’m
201.2
1,374.2
3,235.2
1,398.4
6,209.0
257.5
884.1
-
-
1,141.6
Total
2021
€’m
458.7
2,258.3
3,235.2
1,398.4
7,350.6
Taste &
Nutrition
2020
€’m
171.1
1,204.0
3,085.4
1,217.9
5,678.4
Consumer
Foods
2020
€’m
262.2
1,012.8
-
-
1,275.0
Total
2020
€’m
433.3
2,216.8
3,085.4
1,217.9
6,953.4
Republic of Ireland
Rest of Europe
Americas
APMEA
External revenue
Information about geographical areas
Europe
2021
€’m
Americas
2021
€’m
APMEA
2021
€’m
Total
2021
€’m
Europe
2020
€’m
Americas
2020
€’m
APMEA
2020
€’m
Total
2020
€’m
Segment assets by location
5,205.1
4,959.2
1,231.1 11,395.4
4,986.5
3,362.6
1,094.0
9,443.1
Property, plant and equipment additions
Intangible asset additions
83.7
33.1
152.5
56.6
292.8
1.0
-
34.1
61.1
51.6
130.2
54.4
245.7
0.5
-
52.1
The revenue and non-current assets (as defined in IFRS 8 ‘Operating Segments’) attributable to the country of domicile and all
foreign countries of operation, for which revenue exceeds 10% of total external Group revenue, are set out below.
Kerry Group plc is domiciled in the Republic of Ireland and the revenues from external customers in the Republic of Ireland
were €458.7m (2020: €433.3m). The non-current assets located in the Republic of Ireland are €1,598.4m (2020: €903.1m).
Revenues from external customers include €1,379.5m (2020: €1,420.6m) in the UK and €2,610.7m (2020: €2,509.8m) in the USA.
The non-current assets in the UK are €391.9m (2020: €692.4m) and in the USA are €3,166.1m (2020: €2,035.6m).
There are no material dependencies or concentrations on individual customers which would warrant disclosure under IFRS 8
‘Operating Segments’. The accounting policies of the reportable segments are the same as the Group’s accounting policies as
outlined in the Statement of Accounting Policies. Under IFRS 15 ‘Revenue from Contracts with Customers’ revenue is primarily
recognised at a point in time. Revenue recorded over time during the year was not material to the Group.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
180
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
181
Continuing
Operations
2021
€’m
Continuing
Operations
2020
€’m
7,350.6
6,953.4
Notes
4
11(i)
11(ii)
21
19
14
12
5
4,023.2
1,000.8
1,349.3
3,699.8
895.6
1,356.9
172.0
169.4
31.4
(1.9)
9.8
(8.6)
(97.0)
(3.9)
875.5
80.8
(91.5)
886.2
33.8
(2.5)
9.6
(2.2)
(2.6)
(1.6)
797.2
70.1
19.4
707.7
297.2
281.9
3. Operating profit
(i) Analysis of costs by nature
Revenue
Less operating costs:
Raw materials and consumables
Other general overheads
Staff costs
Depreciation:
- property, plant and equipment
- right-of-use assets
Capital grants amortisation
Loss allowances on trade receivables
Foreign exchange gains
Change in inventories of finished goods
Share of joint ventures profit after taxation during the financial year
Trading profit
Intangible asset amortisation
Non-trading items
Operating profit
And is stated after charging:
Research and development costs
(ii) Auditors’ remuneration
Statutory disclosure:
Group audit
Other assurance services
Total assurance services
Tax advisory services
Other non-audit services
Total non-audit services
Total auditors’ remuneration
1.5
Assurance services
Non-audit services
Total
PwC
Ireland
2021
€’m
PwC
Other
2021
€’m
PwC
Worldwide
2021
€’m
PwC
Ireland
2020
€’m
PwC
Other
2020
€’m
PwC
Worldwide
2020
€’m
1.4
0.1
1.5
-
-
-
1.8
-
1.8
-
0.1
0.1
1.9
3.2
0.1
3.3
-
0.1
0.1
3.4
97%
3%
100%
1.5
0.1
1.6
-
-
-
1.7
-
1.7
-
-
-
3.2
0.1
3.3
-
-
-
1.6
1.7
3.3
100%
-
100%
Group audit consists of fees payable for the consolidated and statutory audits of the Group and its subsidiaries. Included in
Group audit are total fees of €4,720 (2020: €4,720) which are due to the Group’s auditor in respect of the Parent Company.
Reimbursement of auditors’ expenses amounted to €0.2m (2020: €0.1m).
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
180
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
181
4. Total staff numbers and costs
The average number of people employed by the Group was:
Europe
Americas
APMEA
Taste &
Nutrition
2021
Number
5,137
10,034
5,221
20,392
Consumer
Foods
2021
Number
4,803
-
-
4,803
Total
2021
Number
9,940
10,034
5,221
25,195
Taste &
Nutrition
2020
Number
Consumer
Foods
2020
Number
Total
2020
Number
5,291
9,961
4,879
5,888
11,179
-
-
9,961
4,879
20,131
5,888
26,019
The aggregate payroll costs of employees (including Executive Directors) was:
Europe
Americas
APMEA
Taste &
Nutrition
2021
€’m
326.3
615.0
188.4
Consumer
Foods
2021
€’m
219.6
-
-
Total
2021
€’m
545.9
615.0
188.4
Taste &
Nutrition
2020
€’m
347.1
621.0
162.7
Consumer
Foods
2020
€’m
226.1
-
-
Total
2020
€’m
573.2
621.0
162.7
1,129.7
219.6
1,349.3
1,130.8
226.1
1,356.9
Social welfare costs of €145.6m (2020: €144.7m) and share-based payment expense of €17.2m (2020: €12.5m) are included in
payroll costs. Pension costs included in the payroll costs are disclosed in note 26.
5. Non-trading items
Profit/(loss) on disposal of businesses and assets
Acquisition integration costs
Global Business Services expansion
Tax on above
Tax on inter-group transfer
Non-trading items (net of tax)
Notes
(i)
(ii)
(iii)
7
(iv)/7
2021
€’m
179.7
(54.9)
(33.3)
91.5
26.3
16.6
134.4
2020
€’m
(1.9)
(13.1)
(4.4)
(19.4)
3.9
-
(15.5)
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
182
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
183
5. Non-trading items (continued)
(i) Profit/(loss) on disposal of businesses and assets
Property, plant and equipment - disposed
Property, plant and equipment - impaired
Goodwill
Brand related intangible assets
Computer software
Inventories
Deferred tax liabilities
Assets classified as held for sale - disposed
Trade and other receivables
Trade and other payables
Deferred income
Other non-current liabilities
Consideration
Cash received
Disposal related costs
Cumulative exchange difference on translation recycled on disposal
Profit/(loss) on disposal of businesses and assets
Net cash inflow on disposal:
Cash
Less: disposal related costs paid
Businesses
2021
€’m
Notes
11
11
12
12
12
21
(132.5)
-
(286.0)
(40.7)
(2.7)
(47.2)
12.8
-
(38.1)
6.8
2.3
12.2
*Assets
2021
€’m
(13.5)
(17.1)
-
-
(0.5)
-
-
(4.5)
-
-
-
-
Total
2021
€’m
(146.0)
(17.1)
(286.0)
(40.7)
(3.2)
(47.2)
12.8
(4.5)
(38.1)
6.8
2.3
12.2
(513.1)
(35.6)
(548.7)
813.6
(53.4)
760.2
(16.2)
230.9
Businesses
2021
€’m
813.6
(38.4)
775.2
19.4
(35.0)
(15.6)
-
(51.2)
*Assets
2021
€’m
19.4
(15.4)
4.0
833.0
(88.4)
744.6
(16.2)
179.7
Total
2021
€’m
833.0
(53.8)
779.2
*
Assets represent non-current assets and assets classified as held for sale
On 27 September 2021 the Group disposed of its Meats and Meals business operating in Ireland and the UK from the
Consumer Foods division and during the year also disposed of a small operation in Taste & Nutrition Europe for a consideration
of €813.6m resulting in a gain of €230.9m. The consideration of €813.6m comprises of the €819.0m as previously announced
for the sale of the Meats and Meals business net of working capital and debt adjustments and €2.9m for a small operation
disposed of in Taste & Nutrition Europe. A tax credit of €0.5m (2020: €nil) arose on the disposal of these businesses. These
businesses were not deemed to be discontinued operations and goodwill was allocated to these disposed businesses using an
appropriate allocation methodology aligned with IAS 36 ‘Impairment of Assets’.
During the year, the Group disposed of property, plant and equipment and computer software in North America, Europe and
APMEA for a combined consideration of €19.4m resulting in a loss of €2.6m for the year ended 31 December 2021. In 2020, the
Group disposed of property, plant and equipment primarily in North America, Europe and APMEA for a consideration of €2.4m
resulting in a loss of €1.9m. A tax credit of €nil (2020: a tax credit of €0.4m) arose on the disposal of assets.
In 2021, assets classified as held for sale of property, plant and equipment based in the USA and Europe were impaired to their
fair value less costs to sell by €48.6m (2020: €nil), consisting of €17.1m of property, plant and equipment impairment and €31.5m
of estimated costs to sell including marketing, legal, site rectification, environmental and other related expenses necessary to
complete the disposal. These assets held for sale are expected to sell in 2022. The related tax credit was €12.2m (2020: €nil).
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
182
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
183
5. Non-trading items (continued)
(ii) Acquisition integration costs
Acquisition integration costs of €54.9m (2020: €13.1m) primarily related to costs of integrating recent acquisitions into the
Group’s operations. These costs reflect the relocation of resources, the restructuring of operations in order to integrate the
acquired businesses into the existing Kerry operating model and external costs associated with deal preparation, integration
planning and due diligence. A tax credit of €12.4m (2020: €3.0m) arose due to tax deductions available on acquisition related
costs.
(iii) Global Business Services expansion
In 2020, the Group commenced a programme to evolve, migrate and expand its Global Business Services model to better
enable the business and support further growth. For the year ended 31 December 2021, the Group incurred costs of €33.3m
(2020: €4.4m) reflecting initial set up costs, relocation of resources, advisory fees, redundancies and the streamlining of
operations. The associated tax credit was €1.2m (2020: €0.5m).
(iv) Tax on inter-group transfer
During 2021, a net tax credit of €16.6m (2020: €nil) arose as a result of the transfer of intangible assets between two wholly
owned subsidiaries based in two different tax jurisdictions.
6. Finance income and costs
Finance income:
Interest income on deposits
Finance costs:
Interest payable
Interest on lease liabilities
Interest rate derivative
Net interest cost on retirement benefits obligation
Finance costs
Notes
2021
€’m
2020
€’m
0.3
0.2
(66.7)
(4.4)
1.6
(69.5)
(0.7)
(70.2)
(67.6)
(5.9)
0.9
(72.6)
-
(72.6)
11(iii.i)
26
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
184
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
185
7. Income taxes
Recognition in the Consolidated Income Statement (before credit on non-trading items)
Current tax expense in the financial year
Adjustments in respect of prior years
Deferred tax in the financial year
Income tax expense (before credit on non-trading items)
On non-trading items:
Current tax
Deferred tax
Recognition in the Consolidated Income Statement (after credit on non-trading items)
Current tax expense in the financial year
Adjustments in respect of prior years
Deferred tax in the financial year
Income tax expense (after credit on non-trading items)
Notes
5
17
2021
€’m
79.5
(2.9)
76.6
19.6
96.2
(1.3)
(41.6)
(42.9)
78.2
(2.9)
75.3
(22.0)
53.3
2020
€’m
78.4
1.6
80.0
5.1
85.1
(1.8)
(2.1)
(3.9)
76.6
1.6
78.2
3.0
81.2
The tax on the Group’s profit before taxation differs from the amount that would arise applying the standard corporation tax
rate in Ireland as follows:
Profit before taxation
Taxed at Irish Standard Rate of Tax (12.5%)
Adjustments to current tax and deferred tax in respect of prior years
Net effect of differing tax rates
Changes in standard rates of taxes
Income not subject to tax
Net credit arising on inter-group intangible assets transfer
Other adjusting items
Income tax expense
2021
€’m
816.3
102.0
(0.9)
4.2
5.2
(42.7)
(16.6)
2.1
53.3
2020
€’m
635.3
79.4
(0.1)
2.0
3.9
(1.6)
-
(2.4)
81.2
An increase in the Group’s applicable tax rate of 1% would reduce profit after taxation by €8.2m (2020: €6.3m). Factors that may
affect the Group’s future tax charge include the effects of restructuring, acquisitions and disposals, changes in tax legislation
and rates and the use of brought forward losses. In 2021, political agreement was reached by the OECD Inclusive Framework
on a two-pillar approach to international tax reform, which aims to address the tax challenges arising from digitalisation and
globalisation of the economy. In the absence of any finalised or substantively enacted legislation, the Group continues to
monitor developments as they may apply to the Group.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
184
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
185
8. Profit attributable to Kerry Group plc
In accordance with section 304(2) of the Companies Act, 2014, the Company is availing of the exemption from presenting its
individual income statement to the Annual General Meeting and from filing it with the Registrar of Companies. The Company’s
profit after taxation for the financial year is €319.8m (2020: €174.8m).
9. Earnings per A ordinary share
Basic earnings per share
Profit after taxation attributable to owners of the parent
430.6
763.0
313.0
554.1
EPS
cent
2021
€’m
EPS
cent
2020
€’m
Diluted earnings per share
Profit after taxation attributable to owners of the parent
429.9
763.0
312.5
554.1
Number of Shares
Note
Basic weighted average number of shares
Impact of share options outstanding
Diluted weighted average number of shares
Actual number of shares in issue as at 31 December
27
2021
m’s
177.2
0.3
177.5
176.8
2020
m’s
177.0
0.3
177.3
176.7
10. Dividends
Group and Company:
Amounts recognised as distributions to equity shareholders in the financial year
Final 2020 dividend of 60.60 cent per A ordinary share paid 14 May 2021
(Final 2019 dividend of 55.10 cent per A ordinary share paid 15 May 2020)
Interim 2021 dividend of 28.50 cent per A ordinary share paid 12 November 2021
(Interim 2020 dividend of 25.90 cent per A ordinary share paid 13 November 2020)
2021
€’m
2020
€’m
107.1
97.3
50.4
45.8
157.5
143.1
Since the financial year end the Board has proposed a final 2021 dividend of 66.70 cent per A ordinary share which amounts to
€118.0m. The payment date for the final dividend will be 6 May 2022 to shareholders registered on the record date as at 8 April
2022. The consolidated financial statements do not reflect this dividend.
11. Property, plant and equipment
Group:
Property, plant and equipment
Right-of-use assets
Notes
(i)
(ii)
2021
€’m
2020
€’m
2,026.1
1,916.2
65.2
74.4
2,091.3
1,990.6
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
186
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
187
11. Property, plant and equipment (continued)
(i) Property, plant and equipment analysis
Land and
Buildings
€’m
Notes
Plant,
Machinery
and
Equipment
€’m
Construction
in Progress
€’m
Motor
Vehicles
€’m
Total
€’m
Group:
Cost
At 1 January 2020
Businesses acquired
Additions
Purchase adjustments
Transfer from construction in
progress
Disposals
Exchange translation adjustment
At 31 December 2020
Businesses acquired
30
Additions
Purchase adjustments
Transfer from construction in
progress
Businesses disposed
Disposals
Transfer to held for sale
Exchange translation adjustment
5
5
1,309.1
2,170.7
16.8
10.1
(2.7)
42.4
(3.8)
(73.2)
1,298.7
47.7
20.4
(0.9)
36.1
3.9
35.2
(3.8)
228.1
0.4
181.3
-
110.1
(152.5)
(16.7)
(122.1)
2,177.3
23.9
80.2
(0.6)
-
(18.9)
238.4
17.6
158.4
-
138.5
(174.6)
(143.6)
(243.4)
(15.0)
-
(33.2)
83.1
(45.9)
(18.7)
101.5
At 31 December 2021
1,308.3
2,212.8
Accumulated depreciation and impairment
At 1 January 2020
446.8
1,301.1
Charge during the financial year
Disposals
Exchange translation adjustment
At 31 December 2020
Charge during the financial year
Businesses disposed
Disposals
Transfer to held for sale
Impairments
Exchange translation adjustment
3
3
5
5
5
38.5
(2.9)
(23.8)
458.6
36.3
(90.6)
-
(13.6)
2.5
27.1
129.8
(13.4)
(75.2)
1,342.3
134.7
(193.0)
(32.4)
(15.0)
14.6
66.6
At 31 December 2021
420.3
1,317.8
-
-
15.8
240.6
-
-
-
-
-
-
-
-
-
-
-
-
14.8
0.1
1.0
-
-
(0.9)
(1.2)
13.8
-
1.0
-
-
(0.8)
(0.9)
-
0.7
13.8
11.4
1.1
(0.8)
(0.6)
11.1
1.0
(0.4)
(0.9)
(0.1)
-
0.6
11.3
3,722.7
21.2
227.6
(6.5)
-
(21.4)
(215.4)
3,728.2
89.2
260.0
(1.5)
-
(402.8)
(46.8)
(51.9)
201.1
3,775.5
1,759.3
169.4
(17.1)
(99.6)
1,812.0
172.0
(284.0)
(33.3)
(28.7)
17.1
94.3
1,749.4
Carrying value
At 31 December 2020
At 31 December 2021
Kerry Group Annual Report 2021
840.1
888.0
835.0
895.0
238.4
240.6
2.7
2.5
1,916.2
2,026.1
Kerry Group Annual Report 2021
186
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
187
11. Property, plant and equipment (continued)
(i) Property, plant and equipment analysis (continued)
Company:
Cost
At 1 January 2020
At 31 December 2020 and 2021
Accumulated depreciation
At 1 January 2020
Charge during the financial year
At 31 December 2020
Charge during the financial year
At 31 December 2021
Carrying value
At 31 December 2020
At 31 December 2021
Land and
Buildings
Total
€’m
4.7
4.7
4.4
-
4.4
0.1
4.5
0.3
0.2
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
188
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
189
11. Property, plant and equipment (continued)
(ii) Right-of-use assets analysis
Group:
Cost
At 1 January 2020
Businesses acquired
Additions
Terminations
Exchange translation adjustment
At 31 December 2020
Businesses acquired
Additions
Businesses disposed
Terminations
Exchange translation adjustment
At 31 December 2021
Accumulated depreciation
At 1 January 2020
Charge during the financial year
Terminations
Exchange translation adjustment
At 31 December 2020
Charge during the financial year
Businesses disposed
Terminations
Exchange translation adjustment
At 31 December 2021
Carrying value
At 31 December 2020
At 31 December 2021
Land and
Buildings
€’m
Notes
Plant,
Machinery
and
Equipment
€’m
Motor
Vehicles
€’m
30
5
3
3
5
94.5
-
11.8
(8.9)
(6.8)
90.6
0.8
23.7
(16.4)
(12.0)
5.5
92.2
21.2
22.5
(5.8)
(2.5)
35.4
21.6
(5.4)
(10.4)
2.6
43.8
55.2
48.4
19.7
-
5.0
(3.6)
(1.4)
19.7
0.5
6.5
(3.4)
(1.3)
1.1
23.1
4.8
5.9
(2.8)
(0.6)
7.3
5.8
(1.2)
(0.9)
0.7
11.7
12.4
11.4
16.9
-
1.3
(2.3)
(0.9)
15.0
1.1
2.6
(0.9)
(1.5)
0.5
16.8
5.6
5.4
(2.3)
(0.5)
8.2
4.0
(0.4)
(0.8)
0.4
11.4
6.8
5.4
Total
€’m
131.1
-
18.1
(14.8)
(9.1)
125.3
2.4
32.8
(20.7)
(14.8)
7.1
132.1
31.6
33.8
(10.9)
(3.6)
50.9
31.4
(7.0)
(12.1)
3.7
66.9
74.4
65.2
The right-of-use assets consist of:
-
land and buildings for warehouse space, offices and manufacturing facilities. The lease terms vary and range from 1 to 93
years for buildings and range from 1 to 90 years for land;
machinery, equipment, tools, furniture and other equipment when combined are insignificant to the total leased assets
portfolio and have an average remaining lease term of 2 years; and
motor vehicles for management and sales functions and trucks for distribution in specific businesses. The lease terms for
motor vehicles range from 1 to 6 years with an average remaining term of 2 years.
-
-
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
188
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
189
11. Property, plant and equipment (continued)
(iii) Lease disclosures
(iii.i) Amounts recognised in the Consolidated Income Statement:
Depreciation charged during the financial year
Expenses relating to short-term leases
Expenses relating to leases of low-value assets, excluding short-term
leases of low-value assets
Note
Interest on lease liabilities charged during the financial year
6
(iii.ii) Amounts recognised in the Consolidated Statement of Cash Flows:
Total cash outflow for leases during the year*
2021
€’m
31.4
2.1
0.1
4.4
2021
€’m
41.5
*
includes interest expense and principal repayments of lease liabilities and short-term and low-value lease expenses
(iii.iii) Lease liabilities
At beginning of the financial year
Additions
Terminations
Remeasurements
Payments
Businesses disposed
Exchange translation adjustment
At end of the financial year
Analysed as:
Current liabilities
Non-current liabilities
At end of the financial year
2021
€’m
81.5
39.7
(2.4)
1.8
(34.9)
(16.3)
4.8
74.2
2021
€’m
28.0
46.2
74.2
2020
€’m
33.8
2.1
0.2
5.9
2020
€’m
45.2
2020
€’m
109.4
16.2
(3.8)
1.9
(37.0)
-
(5.2)
81.5
2020
€’m
27.0
54.5
81.5
(iii.iv) At the balance sheet date the Group had commitments
under non-cancellable leases which fall due as follows:
Discounted
2021
€’m
Undiscounted
2021
€’m
Discounted
2020
€’m
Undiscounted
2020
€’m
Within 1 year
Between 1 and 2 years
Between 2 and 5 years
After 5 years
28.0
19.7
20.9
5.6
74.2
31.0
22.2
22.3
6.9
82.4
27.0
20.6
26.6
7.3
81.5
31.4
22.6
29.0
9.1
92.1
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
190
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
191
12. Intangible assets
Cost
At 1 January 2020
Businesses acquired
Additions
Purchase adjustment
Exchange translation adjustment
At 31 December 2020
Businesses acquired
Additions
Purchase adjustment
Businesses disposed
Disposals
Exchange translation adjustment
At 31 December 2021
Accumulated amortisation and impairment
At 1 January 2020
Charge during the financial year
Exchange translation adjustment
At 31 December 2020
Charge during the financial year
Businesses disposed
Disposals
Exchange translation adjustment
At 31 December 2021
Carrying value
At 31 December 2020
At 31 December 2021
Notes
Goodwill
€’m
Brand
Related
Intangibles
€’m
Computer
Software
€’m
Total
€’m
2,624.2
2,143.7
317.0
5,084.9
149.2
-
20.2
(127.0)
2,666.6
124.1
-
(0.4)
(78.8)
2,188.6
30
657.1
440.0
-
8.2
-
2.8
(292.6)
(91.7)
-
96.2
-
93.5
-
52.1
-
(0.7)
368.4
0.5
34.1
-
(5.8)
(1.0)
2.0
273.3
52.1
19.8
(206.5)
5,223.6
1,097.6
34.1
11.0
(390.1)
(1.0)
191.7
3,135.5
2,633.2
398.2
6,166.9
20.6
-
(4.0)
16.6
-
(6.6)
-
4.2
14.2
279.2
41.7
(24.4)
296.5
46.2
(51.0)
-
22.7
314.4
195.4
28.4
(0.4)
223.4
34.6
(3.1)
(0.5)
3.2
257.6
495.2
70.1
(28.8)
536.5
80.8
(60.7)
(0.5)
30.1
586.2
2,650.0
3,121.3
1,892.1
2,318.8
145.0
140.6
4,687.1
5,580.7
5
5
3
3
5
5
Allocation of the purchase price in a business combination affects the results of the Group as finite life intangible assets
are amortised, whereas indefinite life intangible assets, including goodwill, are not amortised. This could result in differing
amortisation charges based on the allocation to finite life and indefinite life intangible assets.
Included in the cost of brand related intangibles are intangibles of €1,621.9m (2020: €1,262.4m) which have indefinite lives.
Approximately €11.4m (2020: €17.5m) of computer software additions during the year were internally generated, included
in this are payroll costs of €10.0m (2020: €13.1m). The Group has not capitalised product development expenditure in 2021
(2020: €nil).
The Group has no separate individual intangible asset that is material, as all intangibles acquired are integrated and developed
within the existing business.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
190
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
191
12. Intangible assets (continued)
Impairment testing
Goodwill and indefinite life intangibles are subject to impairment testing on an annual basis, or more frequently if there are
indicators of impairment. These assets are allocated to groups of cash generating units (CGUs). The recoverable amount of
each of the four CGUs is determined on value in use calculations. Intangible assets acquired in a business combination are
allocated to CGUs that are expected to benefit from the business acquisition, rather than where the assets are owned.
Cash flow forecasts employed for the value in use calculations are for a five year period approved by management and a
terminal value which is applied to the year five cash flows. The terminal value reflects the discounted value of the cash flows
beyond year five which is based on the weighted average long-term growth rates for each CGU.
No impairment was recognised in 2021 or 2020 as a result of the impairment testing which identified significant headroom in
the recoverable amount of the related CGUs as compared to their carrying value. In 2021, there was no specific impairment
charge (2020: €nil) in relation to goodwill recorded in non-trading items in the Consolidated Income Statement due to the
classification of a business as held for sale.
A summary of the allocation of the carrying value of goodwill and indefinite life intangible assets by CGU, is as follows:
Taste & Nutrition
Europe
Americas
APMEA
Consumer Foods
Europe
Goodwill
2021
€’m
Goodwill
2020
€’m
Indefinite Life
Intangibles
2021
€’m
Indefinite Life
Intangibles
2020
€’m
564.5
496.5
196.6
77.0
2,150.1
1,507.3
1,356.4
1,088.1
263.5
243.5
47.9
51.4
143.2
402.7
21.0
45.9
3,121.3
2,650.0
1,621.9
1,262.4
Key assumptions
Forecasts are generally derived from a combination of internal and external factors based on historical experience and take
account of expected growth in the relevant region. The key assumptions for calculating value in use calculations are those
relating to the discount rate, growth rate and cash flows. The table below outlines the weighted average discount rates and
weighted average long-term growth rates used in the terminal value for each CGU:
Taste & Nutrition
Europe
Americas
APMEA
Consumer Foods
Europe
Discount
Rates
2021
Discount
Rates
2020
Growth
Rates
2021
Growth
Rates
2020
6.3%
7.1%
8.9%
6.7%
7.1%
9.5%
1.4%
1.1%
3.6%
1.4%
1.1%
3.5%
6.1%
6.6%
1.7%
1.5%
Management estimate discount rates using pre-tax rates consistent with the Group’s weighted average cost of capital and the
risks specific to the CGUs. A higher discount rate is applied to higher risk markets, while a lower rate is applied to more stable
markets.
Long-term growth rates are based on external market data, are broadly in line with long-term industry growth rates and
are conservative in nature. Generally, lower growth rates are used in mature markets while higher growth rates are used in
emerging markets.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
192
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
193
12. Intangible assets (continued)
Impairment testing (continued)
The assumptions used by management in estimating cash flows for each CGU include future profitability and capital
expenditure requirements. The cash flows included in the value in use calculations are generally determined based on historical
performance, management’s past experience, management’s expectation of future trends affecting the industry and other
developments and initiatives in the business. Management also considered the impact of COVID-19 on the Group which
has been reflected in the cash flow forecasts employed in the value in use calculations. Capital expenditure requirements to
maintain the CGUs performance and profitability are based on the Group’s strategic plans, excluding future development
activity, and broadly assume that historic investment patterns will be maintained.
Sensitivity analysis
Sensitivity analysis has been performed across the four CGUs. If the discount rate was 1% higher than management’s
estimates, there would have been no requirement for the Group to recognise any impairment charge in 2021 or 2020. Further,
a 5% increase would not have resulted in an impairment charge in 2021 or 2020 as there is headroom in the discounted cash
flows. If the estimated growth rate was 1% lower than management’s estimates, there would have been no requirement for
the Group to recognise any impairment charge in 2021 or 2020. If the estimated cash flows were 5% lower than management’s
estimates, again there would have been no requirement for the Group to recognise any impairment charge in 2021 or 2020.
Management believes that no reasonable change, in normal circumstances, in any of the above key assumptions would cause
the carrying value of any CGU to exceed its recoverable amount. The potential impact of climate related events was also
considered as part of the sensitivity analysis and had no impact on our conclusions.
13. Financial asset investments
At 1 January 2020
Additions
Disposals
Fair value movements
Exchange translation adjustment
At 31 December 2020
Additions
Disposals
Fair value movements
Exchange translation adjustment
At 31 December 2021
FVOCI
Investments
€’m
Other
Investments
€’m
4.3
37.4
-
(3.0)
(1.3)
-
-
4.4
-
-
-
4.4
2.0
(2.8)
3.6
(3.2)
37.0
4.5
(2.1)
3.1
3.0
45.5
Total
€’m
41.7
2.0
(5.8)
2.3
(3.2)
37.0
8.9
(2.1)
3.1
3.0
49.9
Investments held at fair value through other comprehensive income
During 2021, the Group made an investment of €4.4m in new equity securities. These investments have no fixed maturity or
coupon rate. A fair value assessment was performed at 31 December 2021 which did not result in a change to the carrying
value of these assets. In October 2020, the Group disposed of its investments in equity securities for a total consideration of
€5.3m following a fair value assessment in June 2020, resulting in a decrease to the carrying value of these assets of €1.3m
through other comprehensive income.
Other investments
The Group maintains a Rabbi Trust in respect of a non-qualified deferred compensation plan in the USA. The assets of the trust
primarily consist of equities, bonds and cash which are restricted for use. These assets are fair valued through profit or loss at
each financial year end using quoted market prices. The corresponding liability is recognised within other non-current liabilities
(note 22).
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
192
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
193
14. Investments in joint ventures
At 1 January
Share of profit after taxation during the financial year
At 31 December
Note
3
2021
€’m
17.8
3.9
21.7
2020
€’m
16.2
1.6
17.8
The Group has a call option to acquire the remaining 45% interest in Proparent B.V. under an agreed valuation methodology in
2022. The Group is satisfied that the fair value attached to this call option is nominal.
15. Investments in subsidiaries
Company:
At 1 January
Additions
At 31 December
2021
€’m
714.4
129.1
843.5
In 2021, the Company increased its investment in Kerry Holding Co. in the US in order to fund acquisitions.
16. Inventories
Raw materials and consumables
Finished goods and goods for resale
Expense inventories
At 31 December
2021
€’m
527.2
614.8
62.2
1,204.2
2020
€’m
714.4
-
714.4
2020
€’m
409.3
517.8
48.5
975.6
Write-downs of inventories recognised as an expense approximates to 1.4% (2020: 1.4%) of raw materials and consumables in
the Consolidated Income Statement.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
194
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
195
17. Deferred tax assets and liabilities
The following is an analysis of the movement in the major categories of deferred tax liabilities/(assets) recognised by the Group:
Property,
Plant and
Equipment
€’m
Note
Intangible
Assets
€’m
Tax Credits
and NOLs
€’m
Retirement
Benefits
Obligation
€’m
Short-Term
Temporary
Differences
and Other
Differences
€’m
Total
€’m
At 1 January 2020
80.6
281.6
(20.0)
(3.3)
(38.9) 300.0
Consolidated Income Statement movement
7
(2.5)
Recognised in OCI during the financial year
Related to businesses acquired/(disposed)
Exchange translation adjustment
At 31 December 2020
-
-
(5.7)
72.4
3.8
-
23.0
(19.7)
288.7
2.0
-
-
1.6
3.6
(11.8)
-
0.1
(3.9)
3.0
2.0
(9.8)
-
23.0
3.9 (19.8)
(16.4)
(11.4)
(36.9) 296.4
Consolidated Income Statement movement
7
18.4
(36.2)
Recognised in OCI during the financial year
Related to businesses (disposed)/acquired
Exchange translation adjustment
At 31 December 2021
-
(1.8)
4.6
93.6
0.6
-
(11.1)
(0.5)
-
96.3
13.4
362.2
(27.4)
0.9
20.0
(0.4)
(0.7)
8.4
(5.7) (22.0)
(0.1)
19.9
(10.4)
72.6
(4.2)
12.6
(57.3) 379.5
The short-term temporary differences and other temporary differences recognised in other comprehensive income comprise
fair value movements on cash flow hedges of (€0.1m) (2020: €2.0m). In the above table, NOLs refers to Net Operating Losses.
The following is an analysis of the deferred tax balances (after offset) for balance sheet purposes:
Deferred tax assets
Deferred tax liabilities
2021
€’m
(67.8)
447.3
379.5
2020
€’m
(33.8)
330.2
296.4
The total deductible temporary differences for which deferred tax assets have not been recognised is €26.9m (2020: €21.8m).
The Group does not have any unrecognised losses which have an expiry date.
Deferred tax has not been recognised in respect of withholding taxes and other taxes that would be payable on the unremitted
earnings of foreign subsidiaries, as the Group is in a position to control the timing of reversal of the temporary differences and
it is probable that the temporary differences will not reverse in the foreseeable future. The deferred tax liabilities which have
not been recognised in respect of these temporary differences are not material as the Group can rely on the availability of
participation exemptions and tax credits in the context of the Group’s investments in subsidiaries.
An increase of 1% in the tax rates at which deferred tax is calculated would increase the net deferred tax balance of the Group
by €16.7m (2020: €15.0m).
18. Assets classified as held for sale
Property, plant and equipment
2021
€’m
18.7
18.7
2020
€’m
-
-
In 2021, the Group held certain property, plant and equipment classified as held for sale in the Taste & Nutrition segment in
Europe and North America.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
194
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
195
19. Trade and other receivables
Trade receivables
Loss allowances
Trade receivables due within 1 year
Other receivables and prepayments
Amounts due from subsidiaries
VAT receivable
Receivables due after 1 year
Group
2021
€’m
1,131.1
(42.1)
1,089.0
55.7
-
31.2
5.8
Group
2020
€’m
993.2
(37.1)
956.1
45.8
-
39.4
0.7
Company
2021
€’m
Company
2020
€’m
-
-
-
-
218.9
-
-
-
-
-
3.9
165.0
-
-
1,181.7
1,042.0
218.9
168.9
All receivable balances are due within 1 year except for €5.8m (2020: €0.7m) outlined above. All receivable balances are within
terms with the exception of certain trade receivables which are past due and are detailed below.
The following table shows an analysis of trade receivables split between past due and within terms accounts, where past due is
deemed to be when an account exceeds the agreed terms of trade:
Within terms
Past due not more than 1 month
Past due more than 1 month but less than 2 months
Past due more than 2 months but less than 3 months
Past due more than 3 months
Trade receivables (net)
The following table summarises the movement in loss allowances:
At beginning of financial year
Increase in loss allowance charged to the Consolidated Income Statement
Note
3
Utilised during the financial year
Exchange translation adjustment
At end of the financial year
2021
€’m
940.1
107.2
28.3
10.5
2.9
2020
€’m
829.4
92.8
22.5
9.6
1.8
1,089.0
956.1
2021
€’m
37.1
9.8
(6.6)
1.8
42.1
2020
€’m
35.7
9.6
(5.5)
(2.7)
37.1
Trade and other receivables are stated at amortised cost less loss allowances. The fair value of these receivables approximates
their carrying value as these are short-term in nature; hence, the maximum exposure to credit risk at the reporting date is the
carrying value of each class of receivable.
The Group applies the IFRS 9 ‘Financial Instruments’ 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 and the days past due. The expected loss rates are based on the payment
profiles of sales and the corresponding historical credit loss experience. The historical loss rates are adjusted to reflect current
and forward looking information on macroeconomic factors, including the GDP of the countries in which the Group sells its
goods and services, that affect the ability of customers to settle receivables.
Before accepting any new customer, the Group uses a credit scoring system to assess the potential customer’s credit quality
and defines credit limits by customer. These credit limits are reviewed regularly throughout the financial year. The Group does
not typically require collateral in respect of trade receivables.
There is no significant concentration of credit risk or transaction currency risk with respect to trade receivables, as the Group
has a large number of internationally dispersed customers. Further disclosures on currency risk are provided in note 24 to the
financial statements.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
196
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
197
20. Trade and other payables
Trade payables
Other payables and accruals
Lease liabilities
Deferred payments on acquisition of businesses
PAYE
Social security costs
Group
2021
€’m
Group
2020
€’m
Company
2021
€’m
Company
2020
€’m
1,577.9
1,293.9
161.9
186.5
28.0
4.0
13.1
6.6
27.0
17.1
11.7
7.1
7.7
-
-
2.3
-
-
6.4
-
-
4.0
-
-
1,791.5
1,543.3
10.0
10.4
Trade and other payables are stated at amortised cost, which approximates to fair value given the short-term nature of these
liabilities. The above balances are all due within 1 year.
21. Deferred income
Grants
At beginning of the financial year
Grants received during the financial year
Amortised during the financial year
Businesses disposed
Exchange translation adjustment
At end of the financial year
Analysed as:
Current liabilities
Non-current liabilities
Group
2021
€’m
Group
2020
€’m
Company
2021
€’m
Company
2020
€’m
Notes
3
5
21.8
3.1
(1.9)
(2.3)
0.2
20.9
3.0
17.9
20.9
23.1
0.3
(2.5)
-
0.9
21.8
2.4
19.4
21.8
0.1
0.1
-
-
-
-
-
-
-
-
0.1
0.1
-
0.1
0.1
-
0.1
0.1
There are no material unfulfilled conditions or other contingencies attaching to any government grants received.
22. Other non-current liabilities
Other payables and accruals
Lease liabilities
Deferred payments on acquisition of businesses
Group
2021
€’m
96.7
46.2
11.0
Group
2020
€’m
85.3
54.5
5.1
153.9
144.9
Company
2021
€’m
Company
2020
€’m
-
-
-
-
-
-
-
-
All of the above balances are due within 2 to 5 years except for €5.6m (2020: €7.3m) which is not due until after 5 years.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
196
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
197
23. Analysis of financial instruments by category
The following table outlines the financial assets and liabilities held by the Group at the balance sheet date:
Financial
Assets/
(Liabilities)
at Amortised
Cost
2021
€’m
Assets/
(Liabilities)
at Fair Value
through
Profit
or Loss
2021
€’m
Derivatives
Designated
as Hedging
Instruments
2021
€’m
Assets/
(Liabilities) at
FVOCI
2021
€’m
Notes
13
24 (i.i)
24 (ii.ii)
19
24 (iii.i)
Group:
Financial asset investments
Forward foreign exchange contracts
Interest rate swaps
Trade and other receivables
Cash at bank and in hand
Total financial assets
Current assets
Non-current assets
-
-
-
1,181.7
1,039.1
2,220.8
2,220.8
-
2,220.8
45.5
-
-
-
-
-
15.4
34.6
-
-
45.5
50.0
Borrowings and overdrafts
24 (iii.i)
(3,112.7)
(10.9)
Forward foreign exchange contracts
Interest rate swaps
24 (i.i)
24 (ii.ii)
-
-
Trade and other payables
20/22
(1,945.4)
-
-
-
Total financial liabilities
(5,058.1)
(10.9)
(40.6)
Current liabilities
Non-current liabilities
Total net financial (liabilities)/assets
(1,797.1)
(3,261.0)
(5,058.1)
(2,837.3)
Included in the above table are the following components of total net debt:
Analysis of total net debt by category
Bank overdrafts
Bank loans
Senior notes
Borrowings and overdrafts
Interest rate swaps
Cash at bank and in hand
Net debt - pre lease liabilities
Lease liabilities
Total net debt
(5.3)
(2.9)
(3,104.5)
(3,112.7)
-
1,039.1
(2,073.6)
(10.9)
(74.2)
-
(2,147.8)
(10.9)
-
45.5
45.5
-
(10.9)
(10.9)
34.6
-
-
(10.9)
(10.9)
-
-
15.2
34.8
50.0
-
(40.6)
-
-
(40.1)
(0.5)
(40.6)
9.4
-
-
-
-
34.6
-
34.6
-
34.6
Total
2021
€’m
49.9
15.4
34.6
1,181.7
1,039.1
2,320.7
2,236.0
84.7
2,320.7
(3,123.6)
(40.6)
-
(1,945.4)
(5,109.6)
(1,837.2)
(3,272.4)
(5,109.6)
4.4
-
-
-
-
4.4
-
4.4
4.4
-
-
-
-
-
-
-
-
4.4
(2,788.9)
-
-
-
-
-
-
-
-
-
(5.3)
(2.9)
(3,115.4)
(3,123.6)
34.6
1,039.1
(2,049.9)
(74.2)
(2,124.1)
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
198
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
199
23. Analysis of financial instruments by category (continued)
All Group borrowings and overdrafts and interest rate swaps are guaranteed by Kerry Group plc. No assets of the Group have
been pledged to secure these items.
As at 31 December 2021 and at 31 December 2020, the Group’s debt portfolio included:
-
US$750m of senior notes issued in 2013 maturing in 2023 (the 2023 senior notes), of which US$250m were swapped,
using cross currency swaps, to euro;
€750m of senior notes issued in 2015 and €200m issued in April 2020 as a tap onto the original issuance (the 2025 senior
notes). €175m of the issuance in 2015 were swapped, using cross currency swaps, to US dollar; and
€750m of senior notes issued in 2019 (the 2029 senior notes). No interest rate derivatives were entered into for this
issuance.
-
-
In addition as at 31 December 2021, the Group’s debt portfolio includes the December 2021 €750m of euro sustainability-linked
bond notes (2031 SLB senior notes) and no interest rate derivatives were entered into for this issuance.
As at 31 December 2020, the Group’s debt portfolio included US$200m of senior notes issued in 2010 (private placement notes)
which were swapped using cross currency swaps to euro. These notes were repaid in full in June 2021 ahead of their scheduled
maturity date. The related cross currency swaps also matured during the same period.
The adjustment to senior notes classified under liabilities at fair value through profit or loss of €10.9m (2020: €33.7m)
represents the part adjustment to the carrying value of debt from applying fair value hedge accounting for interest rate risk.
This amount is primarily offset by the fair value adjustment on the corresponding hedge items being the underlying cross
currency interest rate swaps.
Financial
Assets/
(Liabilities)
at Amortised
Cost
2020
€’m
Assets/
(Liabilities)
at Fair Value
through Profit
or Loss
2020
€’m
Derivatives
Designated
as Hedging
Instruments
2020
€’m
Assets/
(Liabilities) at
FVOCI
2020
€’m
Group:
Financial asset investments
Forward foreign exchange contracts
Interest rate swaps
Notes
13
24 (i.i)
24 (ii.ii)
Trade and other receivables
19
1,042.0
Cash at bank and in hand
24 (iii.i)
Total financial assets
Current assets
Non-current assets
563.1
1,605.1
1,605.1
-
1,605.1
-
37.0
37.0
-
-
-
37.0
-
-
-
-
-
14.2
81.9
-
-
37.0
96.1
Borrowings and overdrafts
24 (iii.i)
(2,474.9)
(33.7)
Forward foreign exchange contracts
Interest rate swaps
24 (i.i)
24 (ii.ii)
-
-
Trade and other payables
20/22
(1,688.2)
-
-
-
Total financial liabilities
(4,163.1)
(33.7)
(10.5)
Current liabilities
Non-current liabilities
Total net financial (liabilities)/assets
(1,546.1)
(2,617.0)
(4,163.1)
(2,558.0)
-
(33.7)
(33.7)
3.3
(10.0)
(0.5)
(10.5)
85.6
14.1
82.0
96.1
-
(10.5)
-
-
Total
2020
€’m
37.0
14.2
81.9
1,042.0
563.1
1,738.2
1,619.2
119.0
1,738.2
(2,508.6)
(10.5)
-
(1,688.2)
(4,207.3)
(1,556.1)
(2,651.2)
(4,207.3)
(2,469.1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
198
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
199
23. Analysis of financial instruments by category (continued)
Included in the above table are the following components of total net debt:
Financial
Assets/
(Liabilities)
at Amortised
Cost
2020
€’m
Assets/
(Liabilities)
at Fair Value
through Profit
or Loss
2020
€’m
Derivatives
Designated as
Hedging
Instruments
2020
€’m
Assets/
(Liabilities) at
FVOCI
2020
€’m
(2.8)
-
(2,472.1)
(2,474.9)
-
563.1
-
-
(33.7)
(33.7)
-
-
(1,911.8)
(33.7)
(81.5)
-
(1,993.3)
(33.7)
-
-
-
-
81.9
-
81.9
-
81.9
-
-
-
-
-
-
-
-
-
Total
2020
€’m
(2.8)
-
(2,505.8)
(2,508.6)
81.9
563.1
(1,863.6)
(81.5)
(1,945.1)
Analysis of total net debt by category
Bank overdrafts
Bank loans
Senior notes
Borrowings and overdrafts
Interest rate swaps
Cash at bank and in hand
Net debt - pre lease liabilities
Lease liabilities
Total net debt
The following table outlines the financial assets and liabilities held by the Company at the balance sheet date:
Company:
Financial assets at amortised cost
Cash at bank and in hand
Trade and other receivables
Total financial assets - all current
Financial liabilities at amortised cost
Borrowings and overdrafts
Trade and other payables
Total financial liabilities - all current
Notes
2021
€’m
2020
€’m
19
20
0.1
218.9
219.0
-
(10.0)
(10.0)
-
168.9
168.9
-
(10.4)
(10.4)
Total net financial assets
209.0
158.5
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
200
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
201
24. Financial instruments
Capital management
The financing structure of the Group is managed in order to optimise shareholder value while allowing the Group to take
advantage of opportunities that might arise to grow the business. The Group targets acquisition and investment opportunities
that are value enhancing and the Group’s policy is to fund these transactions from cash flow or borrowings while maintaining
its strong investment grade credit rating.
The capital structure of the Group consists of debt related financial liabilities, cash and cash equivalents, deferred payments
on acquisitions of businesses and equity attributable to owners of the parent, comprising issued capital, reserves and retained
earnings are disclosed in the Consolidated Statement of Changes in Equity, as represented in the table below:
Issued capital and reserves attributable to owners of the parent
Net debt - pre lease liabilities
Lease liabilities
Deferred payments on acquisition of businesses
Notes
23
20/22
20/22
2021
€’m
5,601.2
2,049.9
74.2
15.0
2020
€’m
4,655.5
1,863.6
81.5
22.2
7,740.3
6,622.8
During the financial year the Group undertook four notable debt financing events, the first three of which were completed
in June.
The Group entered into a dedicated bridge facility for US$1,000m for the acquisition of Niacet. This facility was drawn on the
closure of the acquisition in late Q3 2021 and was repaid and cancelled in early Q4 2021, with repayment funded predominantly
out of the proceeds from the sale of the Consumer Foods Meats and Meals business.
The Group exercised the second of the two ‘plus one’ extension options on its €1,100m revolving credit facility to extend the
maturity date of this facility for the full €1,100m to June 2026. As part of this process the Group amended and restated the
facility agreement to allow for IBOR replacement language. This amendment to immediately adopt SONIA for GBP loans and to
allow for switch language for US Dollars at a future date has no commercial impact on the Group. In keeping with the Group’s
commitment to Sustainability, the facility incorporates a price adjustment mechanism which is linked to the Group meeting or
exceeding its carbon, water and food waste reduction targets.
The Group repaid US$200m of outstanding private placement notes ahead of the scheduled maturity date (Tranche C US$125m
and Tranche D US$75m of the 2010 senior notes). At the time of issuance the US$200m of private placement notes were
swapped from US dollar fixed rate to euro floating rate using cross currency interest rate swaps which were closed out at the
time of the repayment. The net cash outflow was funded from existing cash resources of the Group. Following repayment of the
US$200m of private placement notes, the Group has no borrowings that carry financial covenants.
In December 2021 the Group issued €750m 10-year euro sustainability-linked bond notes (2031 SLB senior notes). The issuance
is listed on the Euronext Dublin - Global Exchange Market. The proceeds of the issuance will be used for general corporate
purposes including the repayment of indebtedness and the funding of acquisitions in the ordinary course of business. The SLB
senior notes embed key ‘Beyond the Horizon’ sustainability commitments into our financing.
All senior notes issued by the Group are rated by S&P (BBB+) and Moody’s (Baa2).
Net debt is subject to seasonal fluctuations that can be up to 25% above year end debt levels, before allowance for acquisition
activity undertaken during the financial year.
Capital is managed by setting net debt to earnings before finance income and costs, income taxes, depreciation (net),
intangible asset amortisation and non-trading items (EBITDA) targets while allowing flexibility to accommodate significant
acquisition opportunities. Any expected variation from these targets should be reversible in a period of time that retains our
strong investment grade credit rating, otherwise consideration would be given to issuing additional equity in the Group.
Net debt: EBITDA
EBITDA: Net interest
2021
Times
2.0
14.9
2020
Times
1.9
13.8
The Net debt: EBITDA and EBITDA: Net interest ratios disclosed are calculated using an adjusted EBITDA, adjusted finance
costs (net of finance income) and an adjusted net debt value to adjust for the impact of non-trading items, acquisitions net of
disposals and deferred payments in relation to acquisitions.
For the financial year end 31 December 2020, the private placement notes issued in 2010 had $200m outstanding and this
series of notes carry financial covenants calculated in accordance with the Note Purchase Agreement. The principal financial
covenants were that the ratio of Net debt to EBITDA of a maximum of 3.5 times and EBITDA to Net interest charge of a
minimum of 4.0 times. The actual outturn for 2020 were 1.9 times and 13.8 times respectively.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
200
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
201
24. Financial instruments (continued)
Financial risk management objectives
The Group has a clearly defined Financial Risk Management Programme, which is approved by the Board of Directors and is
subject to regular monitoring by the Finance Committee and Group Internal Audit. The Group operates a centralised treasury
function, which manages the principal financial risks of the Group and Company.
The principal objectives of the Group’s Financial Risk Management Programme are:
-
-
-
-
to manage the Group’s exposure to foreign exchange rate risk;
to manage the Group’s exposure to interest rate risk;
to ensure that the Group has sufficient credit facilities available to fund the Group and manage liquidity risk; and
to ensure that counterparty credit risk is monitored and managed.
Residual exposures not managed commercially are hedged using approved financial instruments. The use of financial
derivatives is governed by the Group’s policies and procedures. The Group does not engage in speculative trading.
The principal objectives of the Group’s Financial Risk Management Programme are further discussed across the following
categories:
(i)
Foreign exchange rate risk management - key foreign exchange exposure of the Group and the disclosures on forward
foreign exchange contracts.
(ii) Interest rate risk management - key interest rate exposures of the Group and the disclosures on interest rate derivatives.
(iii) Liquidity risk management - key banking facilities available to the Group and the maturity profile of the Group’s debt.
(iv) Credit risk management - details in relation to the management of credit risk within the Group.
(v) Price risk management - key price risk exposures of the Group.
(vi) Fair value of financial instruments - disclosures in relation to the fair value of financial instruments.
(vii) Offsetting financial instruments - disclosures in relation to the potential offsetting values in financial instruments.
(i) Foreign exchange rate risk management
The Group is exposed to transactional foreign currency risk on trading activities conducted by subsidiaries in currencies other
than their functional currency. Group policy is to manage foreign currency exposures commercially and through netting of
exposures wherever possible. Any residual exposures arising on foreign exchange transactions are hedged in accordance
with Group policy using approved financial instruments, which consist primarily of spot and forward exchange contracts and
currency swaps.
As at 31 December, the Group had an exposure to a US dollar liability of €13.1m (2020: €29.4m asset) and a sterling asset of
€36.5m (2020: €8.4m). Based on these net positions, as at 31 December 2021, a weakening of 5% of the US dollar and sterling
against all other key operational currencies, and holding all other items constant, would have impacted the profit after taxation
of the Group for the financial year by a decrease of €1.0m (2020: €1.6m).
The Group’s gain or loss on the retranslation of the net assets of foreign currency subsidiaries is taken directly to the translation
reserve. As at 31 December 2021 a 5% strengthening of the euro against the US dollar and sterling, holding all other items
constant, would have resulted in an additional translation reserve loss of €25.9m (2020: €21.6m) and €23.2m (2020: €22.9m),
respectively.
(i.i) Forward foreign exchange contracts
The Group’s activities expose it to risks of changes in foreign currency exchange rates in relation to international trading,
primarily sales in US dollar and sterling out of the Eurozone and sales and purchases in US dollar in APMEA. The Group uses
forward foreign exchange contracts to hedge these exposures. All such exposures are highly probable. Derivative financial
instruments are held in the Consolidated Balance Sheet at their fair value.
The following table details the portfolio of forward foreign exchange contracts* at the balance sheet date:
Designated in a hedging relationship:
- current 1
- non-current 2
Forward foreign exchange contracts
Location of line item in the Consolidated Balance Sheet
*
1 Other current financial instruments
2 Other non-current financial instruments
2021
€’m
Asset
2021
€’m
Liability
2021
€’m
Total
2020
€’m
Asset
2020
€’m
Liability
15.2
0.2
15.4
(40.1)
(24.9)
(0.5)
(0.3)
(40.6)
(25.2)
14.1
0.1
14.2
(10.0)
(0.5)
(10.5)
2020
€’m
Total
4.1
(0.4)
3.7
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
202
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
203
24. Financial instruments (continued)
Financial risk management objectives (continued)
(i) Foreign exchange rate risk management (continued)
(i.i) Forward foreign exchange contracts (continued)
The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged
item is more than twelve months and as a current asset or liability if the maturity of the hedged item is less than twelve months.
The Group adopted the hedge accounting requirements of IFRS 9 ‘Financial Instruments’. The Group enters into hedge
relationships when there is an economic relationship between the underlying highly probable forecasted transactions (hedged
item) and the forward foreign exchange contracts (hedged instruments). As the critical terms match for the prospective
assessment of effectiveness, a qualitative assessment is performed. The Group has established a 1:1 hedge ratio as the underlying
risks in the forward foreign currency exchange contract are identical to the hedged risk components. Hedge effectiveness is
determined at the origination of the hedging relationship. In instances where changes occur to the hedged item which result in
the critical terms no longer matching, the Group uses the hypothetical derivative method to assess effectiveness.
The Group does not hold any forward foreign exchange contracts classified as fair value hedges.
The following table details the foreign exchange contracts classified as cash flow hedges at 31 December:
Forward foreign exchange contracts
less than 1 year
1 - 2 years
Forward foreign exchange contracts - cash flow hedges
Fair Value Asset/(Liability)
Notional Principal
2021
€’m
(24.9)
(0.3)
(25.2)
2020
€’m
4.1
(0.4)
3.7
2021
€’m
2020
€’m
2,798.0
1,105.0
50.2
31.4
2,848.2
1,136.4
The following table details the impact of forward foreign exchange contracts - cash flow hedges on the Consolidated Balance
Sheet as at 31 December:
Forward foreign exchange contracts - cash flow hedges
Retained earnings and other reserves:
Cash flow hedging reserve
Amount reclassified from OCI to profit or loss
2021
€’m
(25.2)
(3.2)
28.4
25.2
2020
€’m
3.7
(2.9)
(0.8)
(3.7)
The fair value included in the hedging reserve will primarily be released to the Consolidated Income Statement within 9 months
(2020: 7 months) of the balance sheet date. All forward contracts relate to sales revenue and purchases made in their respective
currencies and forward foreign exchange contracts that provide a hedge against foreign currency receivables from ‘within Group’
lending.
The following table details the impact of forward foreign exchange contracts* - cash flow hedges on the Consolidated Income
Statement and Consolidated Statement of Comprehensive Income during the financial year:
Movements recognised in the Consolidated Statement of Comprehensive Income
Total hedging gain recognised in OCI in the financial year
Amount reclassified from OCI to profit or loss
Movements recognised in the Consolidated Income Statement
Income reclassified from OCI to profit or loss 1
Ineffectiveness recognised in profit or loss 1
Location of line item in the Consolidated Income Statement
*
1 Other general overheads
2021
€’m
0.8
(0.5)
0.3
0.5
-
0.5
2020
€’m
(2.1)
3.4
1.3
(3.4)
-
(3.4)
There were no transactions during 2021 or 2020 which were designated as hedges that did not occur, nor are there hedges on
forecast transactions that are no longer expected to occur.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
202
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
203
24. Financial instruments (continued)
Financial risk management objectives (continued)
(ii) Interest rate risk management
The Group is exposed to interest rate risk as the Group holds borrowings on both a fixed and floating basis. This exposure to
interest rate risk is managed by optimising the mix of fixed and floating rate borrowings and by using interest rate swaps, cross
currency swaps and forward rate agreements to hedge these exposures, in accordance with Group policy as approved by the
Board of Directors. The Group reviews the mix of fixed and floating rate borrowings on an ongoing basis and adjusts where
necessary to comply with Group policy. Derivative financial instruments are held in the Consolidated Balance Sheet at their fair
value.
(ii.i) Interest rate profile of financial liabilities excluding related derivatives fair value
The Group’s exposure to interest rates on financial assets and liabilities are detailed in the table below including the impact of
cross currency swaps (CCS) on the currency profile of net debt (including lease liabilities):
Euro
Sterling
US Dollar
Others
At 31 December 2021
Euro
Sterling
US Dollar
Others
At 31 December 2020
Total
Pre CCS
€’m
Impact
of CCS
€’m
Total
after CCS
€’m
Floating
Rate Debt
€’m
Fixed
Rate Debt
€’m
(1,831.1)
(45.9)
(1,877.0)
618.9
(2,495.9)
74.5
(513.5)
122.3
(2,147.8)
-
45.9
-
-
74.5
(467.6)
122.3
(2,147.8)
74.5
-
(246.7)
(220.9)
122.3
569.0
-
(2,716.8)
(1,562.0)
(191.7)
(1,753.7)
(25.0)
(1,728.7)
78.2
(591.5)
82.0
(1,993.3)
-
78.2
78.2
-
191.7
(399.8)
(196.1)
(203.7)
-
-
82.0
82.0
-
(1,993.3)
(60.9)
(1,932.4)
The currency profile of debt highlights the impact of the US$250m (2020: US$450m) of cross currency swaps entered into at
the time of issuance of senior notes. For the 2013 senior notes, US$250m were swapped from US dollar fixed to euro fixed
and accounted for as cash flow hedges. As at 31 December 2020, the US$200m private placement notes were swapped from
US dollar fixed to euro floating and are accounted for as fair value hedges. All cross currency swaps relating to the private
placements notes matured in June 2021. The retranslation of the foreign currency debt of US$250m (2020: US$450m) to the
balance sheet rate resulted in a foreign currency loss of €25.5m (2020: €36.8m) which is directly offset by a gain of €25.5m
(2020: €36.8m) on the application of hedge accounting on the cross currency swaps.
In addition, the Group holds €950m of 2025 senior notes of which €750m were issued in 2015 and €200m were issued in 2020.
€175m of the 2025 senior notes from 2015 were swapped, using cross currency swaps, from euro fixed to US dollar floating and
are accounted for as fair value hedges of the related debt. The fair value of the related derivative includes an asset of €2.9m
(2020: €16.2m) for movement in exchange rates since the date of execution which is directly offset by a loss of €2.9m (2020:
€16.2m) on the application of hedge accounting on the cross currency swaps.
The floating rate financial liabilities are at rates which fluctuate mainly based upon LIBOR or EURIBOR and comprise of bank
borrowings and other financial liabilities bearing interest rates fixed in advance for periods ranging from 1 to 6 months. At the
financial year end 15% (2020: 24%) of gross debt was held at floating rates.
If the interest rates applicable to floating rate net debt were to rise by 1% holding all other items constant, the profit of the
Group before taxation and non-trading items in the Consolidated Income Statement could decrease by 1% (2020: 1%).
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
204
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
205
24. Financial instruments (continued)
Financial risk management objectives (continued)
(ii) Interest rate risk management (continued)
(ii.ii) Interest rate swap contracts
The Group’s activities expose it to risks of changes in interest rates in relation to long-term debt. The Group uses interest rate
swaps, cross currency swaps and forward rate agreements to hedge these exposures. Derivative financial instruments are held
in the Consolidated Balance Sheet at their fair values.
The Group adopts an ‘exit price’ approach to valuing interest rate derivatives to allow for credit risk.
The following table details the portfolio of interest rate derivative contracts* at the balance sheet date:
2021
€’m
Asset
2021
€’m
Liability
2021
€’m
Total
2020
€’m
Asset
2020
€’m
Liability
Notes
Designated in a hedging relationship:
Interest rate swap contracts - cash flow hedges
(a)
- non-current 2
Interest rate swap contracts - fair value hedges
(b)
- non-current 2
Interest rate swap contracts
Location of line item in the Consolidated Balance Sheet
*
1 Other current financial instruments
2 Other non-current financial instruments
23.8
23.8
10.8
10.8
34.6
-
-
-
-
-
23.8
23.8
10.8
10.8
34.6
8.4
8.4
73.5
73.5
81.9
-
-
-
-
-
2020
€’m
Total
8.4
8.4
73.5
73.5
81.9
The Group adopted the hedge accounting requirements of IFRS 9 ‘Financial Instruments’. The Group enters into hedge
relationships when there is an economic relationship between the identified notional amount of the underlying debt
instrument (hedged item) and the interest rate swap contract (hedged instrument).
Interest rate swap
As the critical terms match for the prospective assessment of effectiveness, a qualitative assessment is performed. The Group
has established a 1:1 hedge ratio as the underlying risks in the interest rate swap contracts are identical to the hedged risk
components. Hedge effectiveness is determined at the origination of the hedging relationship. In instances where changes
occur to the hedged item which result in the critical terms no longer matching, the Group uses the hypothetical derivative
method to assess effectiveness. Hedge ineffectiveness may occur due to the credit/debit value adjustment on the interest rate
swaps which is not matched by the loan.
Cross currency interest rate swap
The Group uses the hypothetical derivative method to assess effectiveness for such swaps as while the critical terms match,
both qualitative and quantitative assessments are required to be performed as there remains characteristics in cross currency
interest rate swap contracts that are not present in the hedged item, being basis risks. The Group has established a 1:1 hedge
ratio as the underlying risks in the cross currency interest rate swap contracts are identical to the hedged risk components.
Hedge effectiveness is determined at the origination of the hedging relationship and at each reporting date.
The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged
item is more than twelve months and as a current asset or liability if the maturity of the hedged item is less than twelve
months. The classification of the maturity profile of the interest rate derivative contracts are set out in the following tables (a)
and (b).
The tables as set out reflect the hedging relationships affected by interest rate benchmark reform (IBOR reform) as financial
instruments transition to risk free rates. Group Treasury are managing the IBOR transition process. The principal change
is expected to be for the contractual terms of IBOR-referenced interest rate swaps and debt instruments and the related
impact on hedge designation, systems and processes. While general communication with swap and debt counterparties has
commenced, no specific changes have been agreed to date. In assessing the potential impact the Group has assumed that the
uncertainty in relation to the IBOR reform will remain until the Group has completed specific changes with the swap and debt
counterparties and the Group will continue to apply the amendments to IFRS 9 ‘Financial Instruments’ until this date.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
204
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
205
24. Financial instruments (continued)
Financial risk management objectives (continued)
(ii) Interest rate risk management (continued)
(ii.ii) Interest rate swap contracts (continued)
Cross currency interest rate swap (continued)
(a) Interest rate swap contracts - cash flow hedges
Under interest rate swap contracts, including cross currency interest rate swaps, the Group agrees to exchange the difference
between the fixed and floating rate interest amounts calculated on the agreed notional principal amounts.
The following table details the notional principal amounts and remaining terms of the cash flow hedges, where the Group
receives a floating or a fixed interest rate and pays fixed interest rate on swaps as at 31 December:
Interest rate swap contracts
2 - 5 years
Interest rate swap contracts - cash flow hedges
Average Contracted
Fixed Interest Rate
2021
%
2020
%
2.58
2.58
Fair Value Asset
Notional Principal
2021
€’m
23.8
23.8
2020
€’m
2021
€’m
2020
€’m
8.4
8.4
220.9
220.9
203.7
203.7
The following table details the impact of interest rate swap contracts* - cash flow hedges on the Consolidated Balance Sheet as
at 31 December:
Interest rate swap contracts - cash flow hedges
Fixed rate borrowings:
2021
€’m
23.8
2020
€’m
8.4
Amount reclassified from hedge reserve to profit or loss re: foreign exchange rate fluctuations1
(25.5)
(8.3)
Retained earnings and other reserves:
Cash flow hedging reserve
Cost of hedging reserve
Accumulated hedge ineffectiveness
1.8
(0.3)
0.2
(23.8)
0.3
(0.6)
0.2
(8.4)
Location of line item in the Consolidated Balance Sheet
*
1 Borrowings and overdrafts
The following table details the impact of interest rate swap contracts - cash flow hedges on the Consolidated Statement of
Comprehensive Income during the financial year:
Total hedging loss recognised in cash flow hedging reserve
Total hedging gain recognised in cost of hedging reserve
Amount reclassified from hedge reserve to profit or loss re: foreign exchange rate fluctuations
Amount reclassified from OCI to profit or loss re: interest rate fluctuations
Ineffectiveness recognised in profit or loss
Net impact
2021
€’m
19.1
0.3
(17.2)
(0.4)
-
1.8
2020
€’m
(27.7)
0.7
18.9
(0.5)
(0.2)
(8.8)
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
206
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
207
24. Financial instruments (continued)
Financial risk management objectives (continued)
(ii) Interest rate risk management (continued)
(ii.ii) Interest rate swap contracts (continued)
(a) Interest rate swap contracts - cash flow hedges (continued)
The following table details the income/(expense) impact of interest rate swap contracts* - cash flow hedges and the hedged
item on the Consolidated Income Statement during the financial year:
Interest rate swap contracts - cash flow hedges:
Foreign exchange rate fluctuations 1
Amount reclassified from OCI to profit or loss re: interest rate fluctuations 2
Ineffectiveness recognised in profit or loss 2
Fixed rate borrowings:
Foreign exchange rate fluctuations 1
Net impact
2021
€’m
17.2
0.4
-
(17.2)
0.4
2020
€’m
(18.9)
0.5
0.2
18.9
0.7
Location of line item in the Consolidated Income Statement
*
1 Other general overheads
2
Finance costs
The interest rate swaps settle on a 6 monthly basis, the difference between the floating rate or fixed rate due to be received
and the fixed rate to be paid are settled on a net basis.
(b) Interest rate swap contracts - fair value hedges
Under interest rate swap contracts including cross currency interest rate swaps, the Group agrees to exchange the difference
between the floating and fixed interest amounts calculated on the agreed notional principal amounts.
The following table details the notional principal amounts and remaining terms of the fair value hedges, where the Group
receives a fixed interest rate and pays a floating interest rate on swaps as at 31 December:
Interest rate swap contracts
less than 1 year
1 - 2 years
2 - 5 years
> 5 years
Average Contracted
Fixed Interest Rate
Fair Value Asset
Notional Principal
2021
%
2020
%
2021
€’m
2020
€’m
-
3.2
2.4
-
-
4.9
3.1
-
-
3.8
7.0
-
-
21.9
51.6
-
2021
€’m
-
220.9
175.0
-
2020
€’m
-
101.9
439.8
-
Interest rate swap contracts - fair value hedges
10.8
73.5
395.9
541.7
The interest rate swaps settle on a 6 monthly or annual basis. The floating interest rate paid by the Group is based on 6 month
EURIBOR or LIBOR. All hedges are highly effective on a prospective and retrospective basis.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
206
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
207
24. Financial instruments (continued)
Financial risk management objectives (continued)
(ii) Interest rate risk management (continued)
(ii.ii) Interest rate swap contracts (continued)
(b) Interest rate swap contracts - fair value hedges (continued)
The following table details the impact of interest rate swap contracts* - fair value hedges and the hedged items on the
Consolidated Balance Sheet as at 31 December:
Interest rate swap contracts - fair value hedges
Fixed rate borrowings:
Foreign exchange rate fluctuations 1
Interest rate movements 1
Receivables:
Foreign exchange rate fluctuations 2
Retained earnings and other reserves:
Hedge ineffectiveness
Cost of hedging reserve
2021
€’m
10.8
-
(10.9)
2020
€’m
73.5
(28.5)
(33.7)
(2.9)
(16.2)
0.4
2.6
2.0
2.9
(10.8)
(73.5)
Location of line item in the Consolidated Balance Sheet
*
1 Borrowings and overdrafts
2
Receivables: €175m of the 2015 senior notes issuance were swapped from Euro to US dollars and subsequently on-lent
from a Euro entity to a US dollar entity
The following table details the impact of interest rate swap contracts - fair value hedges on the Consolidated Statement of
Comprehensive Income during the financial year:
Amounts recognised in the cost of hedging reserve
2021
€’m
(0.3)
2020
€’m
0.1
The following table details the income/(expense) impact of interest rate swap contracts*/** - fair value hedges and the hedged
items on the Consolidated Income Statement during the financial year:
Interest rate swap contracts - fair value hedges:
Foreign exchange rate fluctuations 1
Interest rate movements 2
Ineffectiveness recognised in profit or loss 2
Fixed rate borrowings:
Foreign exchange rate fluctuations 1
Interest rate movements 2
Receivables:
Foreign exchange rate fluctuations 3
Net impact
2021
€’m
(12.1)
(12.3)
1.1
(1.3)
12.3
13.4
1.1
2020
€’m
(0.4)
8.7
0.7
15.2
(8.7)
(14.8)
0.7
Location of line item in the Consolidated Income Statement
*
** Location of line item in the Consolidated Balance Sheet
1 Other general overheads
2
3
Finance costs
Receivables: €175m of the 2015 senior notes issuance were swapped from Euro to US dollars and subsequently on-lent
from a Euro entity to a US dollar entity within the Group
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
208
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
209
24. Financial instruments (continued)
Financial risk management objectives (continued)
(iii) Liquidity risk management
Liquidity risk considers the risk that the Group could encounter difficulties in meeting obligations associated with financial
liabilities that are settled by delivering cash or another financial asset. There is no significant concentration of liquidity risk.
The Group entered 2021 with significant available liquidity and no significant loan maturities arising until April 2023. During
2021, this position was further strengthened by (a) completing a €750m sustainability-linked bond issuance (2031 SLB Senior
Notes) and (b) the exercise of the second of the two ‘plus one year’ extension options on our June 2019 revolving credit facility.
Group funding and liquidity is managed by ensuring that sufficient facilities are available from diverse funding sources with an
appropriate spread of debt maturities. The Group uses cash flow forecasts to constantly monitor the funding requirements of
the Group.
Group businesses are funded from cash generated from operations, borrowings from banks and senior notes from capital
markets. It is Group policy to ensure that:
-
-
sufficient facilities are available to cover its gross forecast debt by at least 1.25 times; and
at least 75% of total facilities available are committed.
Both targets were met at 31 December 2021 and 2020.
All Group credit facilities are arranged and managed by Group Treasury and approved by the Board of Directors. Where
possible, facilities have common security and terms and conditions. Other than the pre existing contractual exercise of the ‘plus
one year’ extension option on the revolving credit facility agreement, the Group did not undertake any liability modifications to
contracts for existing debt during 2021.
At 31 December 2021, the Group had undrawn committed bank facilities of €1,100m (2020: €1,100m), and a portfolio of
undrawn standby facilities amounting to €337m (2020: €320m). The undrawn committed facilities comprise primarily of a
revolving credit facility maturing between 4 - 5 years (2020: between 4 - 5 years). As set out above during the year the Group
exercised the second of its two ‘plus one year’ extension options on the revolving credit facility. As a result of the extension
option the Group now holds a committed facility until June 2026 for €1,100m.
(iii.i) Contractual maturity profile of non-derivative financial instruments
The following table details the Group’s remaining contractual maturity of its non-derivative financial instruments, including
lease liabilities and deferred payments on acquisitions of businesses, excluding the remaining trade and other payables (note
20) and other non-current liabilities (note 22), of which €1,759.5 (2020: €1,499.2m) is payable within 1 year, €96.7m (2020:
€85.3m) between 2 and 5 years. This information has been drawn up based on the undiscounted cash flows of financial
liabilities to the earliest date on which the Group can be required to repay. The analysis includes both interest commitments
and principal cash flows. To the extent that interest rates are floating, the rate used is derived from interest rate yield curves at
the end of the reporting date and as such, are subject to change based on market movements.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
208
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
209
24. Financial instruments (continued)
Financial risk management objectives (continued)
(iii) Liquidity risk management (continued)
(iii.i) Contractual maturity profile of non-derivative financial instruments (continued)
On demand &
up to 1 year
€’m
Note
Bank overdrafts
Bank loans
Senior notes
Borrowings and overdrafts
Lease liabilities (undiscounted)
11 (iii.iv)
Deferred payments on acquisition of
businesses
Interest commitments on borrowings and
overdrafts
(5.3)
(0.3)
-
(5.6)
(31.0)
(4.0)
(40.6)
(55.0)
Up to
2 years
€’m
-
(2.6)
(662.6)
(665.2)
(22.2)
(4.6)
(692.0)
(39.6)
2 - 5
years
€’m
-
-
(956.4)
(956.4)
(22.3)
(6.4)
> 5 years
€’m
-
-
Total
€’m
(5.3)
(2.9)
(1,485.5)
(3,104.5)
(1,485.5)
(3,112.7)
(6.9)
-
(82.4)
(15.0)
(985.1)
(1,492.4)
(3,210.1)
(72.0)
(45.0)
(211.6)
At 31 December 2021
(95.6)
(731.6)
(1,057.1)
(1,537.4)
(3,421.7)
Reconciliation to net debt position:
Borrowings and overdrafts
Senior notes - fair value adjustment
Borrowings and overdrafts
Interest rate swaps
Cash at bank and in hand
Net debt - pre lease liabilities
Lease liabilities (discounted)
11 (iii.iv)
Total net debt as at 31 December 2021
(5.6)
-
(5.6)
-
1,039.1
1,033.5
(28.0)
1,005.5
On demand &
up to 1 year
€’m
Note
Bank overdrafts
Bank loans
Senior notes
Borrowings and overdrafts
Lease liabilities (undiscounted)
11 (iii.iv)
Deferred payments on acquisition of
businesses
Interest commitments on borrowings and
overdrafts
(2.8)
-
-
(2.8)
(31.4)
(17.1)
(51.3)
(54.9)
(665.2)
(3.8)
(669.0)
27.6
-
(641.4)
(19.7)
(661.1)
Up to
2 years
€’m
-
-
(101.9)
(101.9)
(22.6)
(1.6)
(126.1)
(50.2)
(956.4)
(1,485.5)
(3,112.7)
(7.1)
-
(10.9)
(963.5)
(1,485.5)
(3,123.6)
7.0
-
-
-
34.6
1,039.1
(956.5)
(1,485.5)
(2,049.9)
(20.9)
(5.6)
(74.2)
(977.4)
(1,491.1)
(2,124.1)
2 - 5
years
€’m
-
-
(1,630.3)
(1,630.3)
(29.0)
(3.5)
(1,662.8)
(86.4)
> 5 years
€’m
-
-
(739.9)
(739.9)
(9.1)
-
(749.0)
(17.4)
Total
€’m
(2.8)
-
(2,472.1)
(2,474.9)
(92.1)
(22.2)
(2,589.2)
(208.9)
At 31 December 2020
(106.2)
(176.3)
(1,749.2)
(766.4)
(2,798.1)
Reconciliation to net debt position:
Borrowings and overdrafts
Senior notes - fair value adjustment
Borrowings and overdrafts
Interest rate swaps
Cash at bank and in hand
Net debt - pre lease liabilities
Lease liabilities (discounted)
11 (iii.iv)
Total net debt as at 31 December 2020
(2.8)
-
(2.8)
-
563.1
560.3
(27.0)
533.3
(101.9)
(1,630.3)
(739.9)
(2,474.9)
(4.3)
(29.4)
-
(33.7)
(106.2)
(1,659.7)
(739.9)
(2,508.6)
21.9
-
(84.3)
(20.6)
60.0
-
-
-
81.9
563.1
(1,599.7)
(739.9)
(1,863.6)
(26.6)
(7.3)
(81.5)
(104.9)
(1,626.3)
(747.2)
(1,945.1)
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
210
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
211
24. Financial instruments (continued)
Financial risk management objectives (continued)
(iii) Liquidity risk management (continued)
(iii.ii) Contractual maturity profile of derivative financial instruments
The following table details the Group’s remaining contractual maturity of its derivative financial instruments. The table has
been drawn up based on the undiscounted net cash inflows and outflows on derivative instruments that settle on a net basis.
To the extent that the amounts payable or receivable are not fixed, the rate used is derived from interest rate yield curves at
the end of the reporting date and as such are subject to change based on market movements.
Interest rate swaps inflow
Interest rate swaps outflow
Net interest rate swaps inflow
Forward foreign exchange contracts outflow
At 31 December 2021
Interest rate swaps inflow
Interest rate swaps outflow
Net interest rate swaps inflow
Forward foreign exchange contracts inflow/
(outflow)
On demand &
up to 1 year
€’m
Up to
2 years
€’m
18.3
(12.4)
5.9
(24.9)
(19.0)
On demand &
up to 1 year
€’m
25.3
(12.5)
12.8
4.1
33.5
(7.6)
25.9
(0.3)
25.6
Up to
2 years
€’m
38.4
(11.7)
26.7
(0.4)
At 31 December 2020
16.9
26.3
2 - 5
years
€’m
9.9
(9.3)
0.6
-
0.6
2 - 5
years
€’m
52.2
(9.0)
43.2
-
43.2
> 5 years
€’m
-
-
-
-
-
> 5 years
€’m
-
-
-
-
-
Total
€’m
61.7
(29.3)
32.4
(25.2)
7.2
Total
€’m
115.9
(33.2)
82.7
3.7
86.4
Included in the interest rate swaps inflow and outflow is the foreign currency differential on final maturity of the cross currency
interest rate swaps as follows:
Swaps inflow
- Up to 1 year - swaps inflow of €nil (2020: €nil)
1 - 2 years - swaps inflow of €25.5m (2020: €17.8m)
-
-
2 - 5 years - swaps inflow of €2.9m (2020: €35.2m)
- Greater than 5 years - swaps inflow of €nil (2020: €nil)
(iii.iii) Summary of borrowing arrangements
(a) Bank loans
Bank loans comprise committed term loan facilities, committed revolving credit facilities, bilateral term loans and other
uncommitted facilities:
- Demand facilities;
-
- Bilateral term loans with maturities ranging up to 1 year; and
-
Committed Syndicate revolving credit facilities of €1,100m to June 2026;
The Group also held a dedicated bridge facility of US$1,000m during the financial year under review. This facility was
drawn on the closure of the acquisition of Niacet in late Q3 2021 and was repaid and cancelled in early Q4 2021, funded
predominantly out of the proceeds from the sale of the Consumer Foods Meats and Meals business.
(b) 2031 Euro Senior Notes - public
In 2021 the Group issued €750m of euro sustainability-linked bond notes (2031 SLB Senior Notes) at an interest rate of 0.875%
with a maturity date on 1 December 2031. The Notes include targets to 1) Reduce absolute Scope 1 & 2 carbon emissions by
55% by 2030 against the 2017 baseline; 2) Reduce Food Waste by 50% by 2030 against the 2017 baseline. Should either of
these targets not be met by 2030 there is a +0.5% increase in the final interest coupon. If both targets are not met there is a
1% increase in the final interest coupon. The step up in the interest coupon (if any) is payable to investors on the last interest
payment date in December 2031.
(c) 2029 Euro Senior Notes - public (2029 Senior Notes)
In 2019 the Group issued a 10 year euro note of €750m at an interest rate of 0.625% with a maturity date on 20 September 2029.
(d) 2025 Euro Senior Notes - public (2025 Senior Notes)
In 2015 the Group issued a debut 10 year euro note of €750m at an interest rate of 2.375% with a maturity date on 10
September 2025. During 2020 the Group completed a €200m tap issuance of the onto our 2025 Euro Senior Notes.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
210
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
211
24. Financial instruments (continued)
Financial risk management objectives (continued)
(iii) Liquidity risk management (continued)
(iii.iii) Summary of borrowing arrangements (continued)
(e) 2023 US dollar Senior Notes - public (2023 Senior Notes)
In 2013 the Group issued a debut 10 year USA public note of US$750m at an interest rate of 3.2% with a maturity date on
9 April 2023.
(f) 2010 Senior Notes - private placement notes
The Group placed US$600m of senior notes with USA institutional investors in four tranches with maturity as follows:
-
-
-
-
Tranche A of US$192m - matured and repaid on 20 January 2017
Tranche B of US$208m - matured and repaid on 20 January 2020
Tranche C of US$125m - repaid in June 2021 ahead of its scheduled maturity of 20 January 2022
Tranche D of US$75m - repaid in June 2021 ahead of its scheduled maturity of 20 January 2025
The interest rates listed above are before the effects of related interest rate swaps.
(g) Lease liabilities
The Group’s lease liabilities are set out in note 11 (iii).(iii).
(iv) Credit risk management
Cash deposits and other financial assets give rise to credit risk on the amounts due from counterparties.
The Group controls and monitors the distribution of this exposure by ensuring that all financial instruments are held with
reputable and financially secure institutions and that exposure to credit risk is distributed across a number of institutions. At 31
December 2021 and 2020 all cash, short-term deposits and other liquid investments had a maturity of less than 3 months. Cash
at bank and in hand of €1,039.1m (2020: €554.9m) includes an amount of €545.0m (2020: €210.2m) held on short-term deposit
of which €100.0m (2020: €75m) was held under a Sustainable Deposits programme.
Credit risk exposure to financial institutions is actively managed across the portfolio of institutions by setting appropriate
credit exposure limits based on a value at risk calculation that takes EBITDA of the Group and calculates approved tolerance
levels based on credit default swap rates for the financial institutions. These levels are applied in controlling the level of
material surplus funds that are placed with counterparties and for controlling the institutions with which the Group enters into
derivative contracts. Credit default swaps are updated and reviewed on an ongoing basis.
The Group’s exposure to its counterparties is continuously monitored and the aggregate value of transactions entered into is
spread amongst approved counterparties.
Trade receivables consist of a large number of customers, spread across diverse geographical areas. Ongoing credit evaluation
is performed on the financial condition of accounts receivable at operating unit level at least on a monthly basis.
The Group’s maximum exposure to credit risk consists of gross trade receivables (note 19), cash deposits (note 23) and other
financial assets (note 23), which are primarily interest rate swaps and foreign exchange contracts.
(v) Price risk management
The Group’s exposure to equity securities price risk, due to financial asset investments held, is considered to be low as the level
of securities held versus the Group’s net assets is not material.
(vi) Fair value of financial instruments
(a) Fair value of financial instruments carried at fair value
Financial instruments recognised at fair value are analysed between those based on:
-
-
quoted prices in active markets for identical assets or liabilities (Level 1);
those involving inputs other than quoted prices included in Level 1 that are observable for the assets or liabilities, either
directly (as prices) or indirectly (derived from prices) (Level 2); and
those involving inputs for the assets or liabilities that are not based on observable market data (unobservable inputs)
(Level 3).
-
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
212
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
213
24. Financial instruments (continued)
Financial risk management objectives (continued)
(vi) Fair value of financial instruments (continued)
(a) Fair value of financial instruments carried at fair value (continued)
Financial assets
Interest rate swaps:
Non-current
Current
Forward foreign exchange contracts:
Non-current
Current
Financial asset investments:
Fair value through profit or loss
Fair value through other comprehensive income
Financial liabilities
Forward foreign exchange contracts:
Non-current
Current
Fair Value
Hierarchy
2021
€’m
2020
€’m
Level 2
Level 2
Level 2
Level 2
Level 1
Level 3
34.6
81.9
-
0.2
15.2
45.5
4.4
-
0.1
14.1
37.0
-
Level 2
(0.5)
(0.5)
Level 2
(40.1)
(10.0)
The reconciliation of Level 3 assets is provided in note 13. There have been no transfers between levels during the current or
prior financial year.
(b) Fair value of financial instruments carried at amortised cost
Except as detailed in the following table, it is considered that the carrying amounts of financial assets and financial liabilities
recognised at amortised cost in the financial statements approximate their fair values.
Financial liabilities
Senior notes - Public
Senior notes - Private
Fair Value
Hierarchy
Carrying
Amount
2021
€’m
Fair
Value
2021
€’m
Carrying
Amount
2020
€’m
Fair
Value
2020
€’m
Level 2
(3,104.5)
(3,174.7)
(2,309.2)
(2,466.9)
Level 2
-
-
(163.0)
(177.3)
(3,104.5)
(3,174.7)
(2,472.2)
(2,644.2)
(c) Valuation principles
The fair value of financial assets and liabilities are determined as follows:
-
-
-
-
assets and liabilities with standard terms and conditions which are traded on active liquid markets are determined with
reference to quoted market prices. This includes equity investments;
other financial assets and liabilities (excluding derivatives) are determined in accordance with generally accepted pricing
models based on discounted cash flow analysis using prices from observable current market transactions and dealer
quotes for similar instruments. This includes interest rate swaps and forward foreign exchange contracts which are
determined by discounting the estimated future cash flows;
the fair values of financial instruments that are not based on observable market data (unobservable inputs) requires entity
specific valuation techniques; and
derivative financial instruments are calculated using quoted prices. Where such prices are not available, a discounted cash
flow analysis is performed using the applicable yield curve for the duration of the instruments. Forward foreign exchange
contracts are measured using quoted forward exchange rates and yield curves derived from quoted interest rates adjusted
for counterparty credit risk, which is calculated based on credit default swaps of the respective counterparties. Interest
rate swaps are measured at the present value of future cash flows estimated and discounted based on the applicable yield
curves derived from quoted interest rates adjusted for counterparty credit risk, which is calculated based on credit default
swaps of the respective counterparties.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
212
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
213
24. Financial instruments (continued)
Financial risk management objectives (continued)
(vii) Offsetting financial instruments
The Group enters into derivative transactions under International Swaps and Derivatives Association (ISDA) master netting
agreements. The ISDA agreements do not meet the criteria for offsetting in the Consolidated Balance Sheet. This is because
the Group does not have any current legally enforceable right to offset recognised amounts, because the right to offset is
enforceable only on the occurrence of future events such as a default on the bank loans or other credit events. No collateral is
paid or received.
The following table sets out the carrying amounts of recognised financial instruments that are subject to the above
agreements.
The table also sets out where the Group has offset bank overdrafts against cash at bank and in hand based on a legal right of
offset as set out in the banking agreements.
Gross amounts
of financial
assets in the
Consolidated
Balance Sheet
€’m
Gross amounts
of financial
liabilities in the
Consolidated
Balance Sheet
€’m
Amounts
of financial
instruments
presented in the
Consolidated
Balance Sheet
€’m
Related
financial
instruments
that are not
offset
€’m
Net amount
€’m
At 31 December 2021
Financial assets
Cash at bank and in hand
Forward foreign exchange contracts
Interest rate swaps
Financial liabilities
Bank overdrafts
Forward foreign exchange contracts
Interest rate swaps
At 31 December 2020
Financial assets
Cash at bank and in hand
Forward foreign exchange contracts
Interest rate swaps
Financial liabilities
Bank overdrafts
Forward foreign exchange contracts
Interest rate swaps
1,039.1
15.4
34.6
1,089.1
-
-
-
-
563.1
14.2
81.9
659.2
-
-
-
-
-
-
-
-
(5.3)
(40.6)
-
(45.9)
-
-
-
-
(2.8)
(10.5)
-
(13.3)
1,039.1
15.4
34.6
1,089.1
(5.3)
(40.6)
-
(45.9)
563.1
14.2
81.9
659.2
(2.8)
(10.5)
-
(13.3)
-
(10.1)
-
(10.1)
-
10.1
-
10.1
-
(6.0)
-
(6.0)
-
6.0
-
6.0
1,039.1
5.3
34.6
1,079.0
(5.3)
(30.5)
-
(35.8)
563.1
8.2
81.9
653.2
(2.8)
(4.5)
-
(7.3)
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
214
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
215
25. Provisions
Group:
At 1 January 2020
Provided during the financial year
Utilised during the financial year
Released during the financial year
Transferred to payables and accruals
Exchange translation adjustment
At 31 December 2020
Provided during the financial year
Utilised during the financial year
Released during the financial year
Transferred to payables and accruals
Exchange translation adjustment
At 31 December 2021
Analysed as:
Current liabilities
Non-current liabilities
Insurance
€’m
Non-Trading Items
€’m
Total
€’m
46.6
5.2
(5.6)
(6.2)
-
(1.0)
39.0
15.8
(8.4)
(5.7)
-
2.6
43.3
11.8
-
(0.1)
(0.6)
(8.8)
-
2.3
5.1
-
-
-
-
7.4
2021
€’m
13.6
37.1
50.7
58.4
5.2
(5.7)
(6.8)
(8.8)
(1.0)
41.3
20.9
(8.4)
(5.7)
-
2.6
50.7
2020
€’m
5.2
36.1
41.3
Insurance
The Group operates a level of self-insurance. Under these arrangements, the Group retains certain exposures up to pre-
determined self-insurance levels. The amount of self-insurance is reviewed on a regular basis to ensure it remains appropriate.
The provision for these exposures represents amounts provided based on advice from insurance consultants, industry
information, actuarial valuation and historical data in respect of claims that are classified as incurred but not reported and
outstanding loss reserves. The methodology of estimating the provision is periodically reviewed to ensure that the assumptions
made continue to be appropriate. The utilisation of the provision is dependent on the timing of settlement of the outstanding
claims. Historically, the average time for settlement of outstanding claims ranges from 2 to 3 years from claim date.
Non-trading items
Non-trading items relate to restructuring and acquisition integration provisions incurred in 2021 and 2020; these costs are
expected to be paid within 22 months.
26. Retirement benefits obligation
The Group operates post-retirement benefit schemes in a number of its businesses throughout the world. These schemes
are structured to accord with local conditions and practices in each country they operate in and can include both defined
contribution and defined benefit schemes. The assets of the schemes are held, where relevant, in separate trustee
administered funds.
Defined benefit post-retirement schemes exist primarily in Ireland and the Netherlands (Eurozone), the UK and the USA
(included in Rest of World). These defined benefit schemes comprise final salary pension schemes, career average salary
pension schemes and post-retirement medical plans. All material defined benefit pension schemes are closed to future accrual.
The post-retirement medical plans operated by the Group relate primarily to a number of USA employees and are closed to
new entrants. Defined benefit schemes in Ireland, the UK, and the USA are administered by Boards of Trustees. The Boards of
Trustees generally comprise of representatives of the employees, the employer and independent trustees. These Boards are
responsible for the management and governance of the schemes including compliance with all relevant laws and regulations.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
214
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
215
26. Retirement benefits obligation (continued)
The values used in the Group’s consolidated financial statements are based on the most recent actuarial valuations and have
been updated by the individual schemes’ independent and professionally qualified actuaries to incorporate the requirements of
IAS 19 ‘Employee Benefits’ in order to assess the liabilities of the various schemes as at 31 December 2021 using the projected
unit credit method. All assets in the schemes have been measured at their fair value at the balance sheet date. Full actuarial
valuations for funding purposes are carried out for the Group’s pension schemes in line with local requirements. The actuarial
reports are not available for public inspection.
The Group continues to harmonise, standardise and integrate the benefit offering to employees across the countries in which
it operates. As a result, a number of deferred members transferred their past service benefits out of the Irish defined benefit
scheme during 2020 and 2021.
The defined benefit schemes expose the Group to risks such as interest rate risk, investment risk, inflation risk and mortality risk.
Interest rate risk
The present value of the defined benefit obligation is sensitive to the discount rate which is derived from the interest yield on
high quality corporate bonds at the balance sheet date. Market conditions in recent years have resulted in volatility in discount
rates which has significantly impacted the present value of the defined benefit obligation. Such changes lead to volatility in the
Group’s Consolidated Balance Sheet, Consolidated Income Statement and Consolidated Statement of Comprehensive Income.
Interest rates also impact on the funding requirements for the schemes.
Investment risk
The net surplus/(deficit) recognised in the Consolidated Balance Sheet represents the present value of the defined benefit
obligation less the fair value of the schemes’ assets. When assets generate a rate of return less than the discount rate this
results in an increase/(decrease) in the net (deficit)/surplus. The schemes have a diversified portfolio of investments which
include equities, bonds and other asset classes. The investment allocation for each scheme is reviewed periodically by the
scheme’s external investment consultants who advise on the most appropriate asset allocation taking account of asset
valuations, funding requirements, liability duration and the achievement of an appropriate return on assets.
Inflation risk
A significant proportion of the defined benefit obligation is linked to inflation, therefore an increase in inflation rates will
increase the defined benefit obligation. However, a portion of the schemes’ assets are inflation-linked debt securities which
mitigates some of the effects of inflation movements.
Mortality risk
The present value of the defined benefit obligation is calculated by reference to the best estimate of the mortality of schemes’
participants both during and after their employment. An increase in the life expectancy of the schemes’ participants will
increase the defined benefit obligation.
(i) Recognition in the Consolidated Income Statement and Consolidated Statement of Comprehensive Income
The following amounts have been recognised in the Consolidated Income Statement and the Consolidated Statement of
Comprehensive Income in relation to defined contribution and defined benefit post-retirement schemes:
Service cost:
- Costs relating to defined contribution schemes
- Current service cost relating to defined benefit schemes
- Past service and settlements
Net interest cost
Recognised in the Consolidated Income Statement
Re-measurements of the net defined benefit liability:
- Return on scheme assets (excluding amounts included in net interest cost)
- Experience losses/(gains) on schemes’ liabilities
- Actuarial losses/(gains) arising from changes in demographic assumptions
- Actuarial (gains)/losses arising from changes in financial assumptions
Recognised in the Consolidated Statement of Comprehensive Income
Total
2021
€’m
64.9
5.5
(4.7)
0.7
66.4
(129.8)
24.9
41.9
(47.2)
(110.2)
(43.8)
2020
€’m
63.9
3.2
(12.8)
-
54.3
(95.0)
(5.5)
(3.0)
170.5
67.0
121.3
The total service cost is included in total staff numbers and costs (note 4) and the net interest cost is included in finance income
and costs (note 6).
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
216
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
217
26. Retirement benefits obligation (continued)
(ii) Recognition in the Consolidated Balance Sheet
The net defined benefit post-retirement schemes’ surplus/(deficit) at 31 December, which has been recognised in the
Consolidated Balance Sheet, was as follows:
Schemes
in Surplus
2021
€’m
Schemes
in Deficit
2021
€’m
Total
2021
€’m
Total
2020
€’m
Present value of defined benefit obligation
(1,448.6)
(111.5)
(1,560.1)
(1,505.5)
Fair value of scheme assets
1,538.9
87.4
1,626.3
1,451.1
Net recognised surplus/(deficit) before deferred tax
Net related deferred tax (liability)/asset
Net recognised surplus/(deficit) after deferred tax
Net recognised surplus/(deficit) by region:
90.3
(24.1)
(14.8)
4.9
75.5
(19.2)
Eurozone
2021
€’m
UK
2021
€’m
Rest of
World
2021
€’m
Total
2021
€’m
Eurozone
2020
€’m
UK
2020
€’m
66.2
(9.9)
56.3
Rest of
World
2020
€’m
(54.4)
10.8
(43.6)
Total
2020
€’m
Present value of defined
benefit obligation
(427.4)
(1,025.0)
(107.7)
(1,560.1)
(451.8)
(946.8)
(106.9)
(1,505.5)
Fair value of scheme assets
487.0
1,051.9
87.4
1,626.3
59.6
26.9
(20.3)
66.2
443.4
(8.4)
931.8
(15.0)
75.9
1,451.1
(31.0)
(54.4)
(7.9)
(6.9)
4.9
(9.9)
0.6
2.6
7.6
10.8
51.7
20.0
(15.4)
56.3
(7.8)
(12.4)
(23.4)
(43.6)
Net recognised surplus/
(deficit) before deferred tax
Net related deferred tax
(liability)/asset
Net recognised surplus/
(deficit) after deferred tax
The surplus at 31 December 2021 relates to the Irish and UK schemes and has been recognised in accordance with IFRIC 14
‘The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction’ as it has been determined that the
Group has an unconditional right to a refund of the surplus.
(iii) Financial and demographic assumptions
The principal financial assumptions used by the Group’s actuaries in order to calculate the defined benefit obligation at
31 December, some of which have been shown in range format to reflect the differing assumptions in each scheme, were
as follows:
2021
2020
Eurozone
%
UK
%
Rest of
World
%
Eurozone
%
UK
%
Rest of
World
%
Rate used to discount schemes’ liabilities
Inflation assumption
Rate of increase in salaries
1.50
1.90
N/A*
3.25
N/A*
Rate of increase for pensions in payment
and deferred pensions
1.90
2.50 - 3.15
1.95
2.25 - 2.75
1.50
1.75 - 2.25
2.50
3.00
-
1.20
1.50
N/A*
2.80
N/A*
1.50
2.00 - 2.70
2.50
3.00
-
* Not applicable due to closure of the Irish, Netherlands and UK defined benefit schemes to future accrual.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
216
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
217
26. Retirement benefits obligation (continued)
(iii) Financial and demographic assumptions (continued)
The most significant demographic assumption is mortality. The mortality assumptions used are based on advice from the
pension schemes’ actuaries and reflect each scheme’s population. The life expectancy of a member retiring at 31 December at
age 65, now and in 20 years’ time, some of which have been shown in range format to reflect the differing assumptions in each
scheme, is as follows:
Male - retiring now
Female - retiring now
Male - retiring in 20 years’ time
Female - retiring in 20 years’ time
2021
2020
Eurozone
Years
UK
Years
22
24
24
26
21
24
23
26
Rest of
World
Years
21 - 22
23
22 - 23
24 - 25
Eurozone
Years
UK
Years
22
24
24
25 - 26
20
23
22
24
Rest of
World
Years
21 - 22
22 - 23
22 - 23
24
There are inherent uncertainties surrounding the financial and demographic assumptions adopted by the Group. The
assumptions may differ from the actual data as a result of changes in economic and market conditions as well as the actual
experience within each scheme. The present value of post-retirement benefit schemes’ liabilities is heavily dependent on the
discount rate. As the discount rate is based on a market driven measure, which is the interest yield on high quality corporate
bonds at the balance sheet date, the present value of post-retirement benefit schemes’ liabilities can fluctuate significantly
from valuation to valuation. The expected rate of inflation impacts the schemes’ liabilities in that inflation is the basis for the
calculation of the assumed future salary and revaluation increases in each scheme where applicable. In relation to demographic
assumptions, differing expectations regarding current and future changes in mortality rates can have a significant impact on
the schemes’ liabilities.
The table below gives an approximate indication of the impact of a change in the principal financial actuarial assumptions
(discount rate, inflation rate and pension increases and salary increases) and the principal demographic actuarial assumption
(mortality) on the schemes’ liabilities. The present value of the defined benefit obligation has been calculated using the
projected unit credit method. The impact on the defined benefit obligation at 31 December 2021 is calculated on the basis that
only one assumption is changed with all other assumptions remaining unchanged. The assessment of the sensitivity analysis
below could therefore be limited as a change in one assumption may not occur in isolation as assumptions may be correlated.
There have been no changes from the previous year in the methods and assumptions used in preparing the sensitivity analysis.
Impact on schemes’ liabilities of changes in assumptions
2021
2020
Change in Assumption
Discount rate
Decrease of 0.50%
Increase of 0.50%
Inflation Rate and Pension Increases
Increase of 0.50%
Decrease of 0.50%
Salary Increase
Increase of 0.50%
Decrease of 0.50%
Mortality
Eurozone
%
UK
%
10.4%
(9.0%)
7.9%
(7.1%)
-
-
11.0%
(9.5%)
4.3%
(5.2%)
-
-
Increase in life expectancy of 1 Year
Decrease in life expectancy of 1 Year
3.9%
(3.9%)
3.0%
(3.0%)
Rest of
World
%
5.2%
(4.7%)
-
-
0.2%
(0.2%)
2.5%
(2.5%)
Eurozone
%
UK
%
Rest of
World
%
10.5%
(9.1%)
8.2%
(7.0%)
-
-
12.8%
(11.0%)
5.6%
(5.1%)
8.9%
(7.8%)
-
-
-
-
0.4%
(0.3%)
2.5%
(2.5%)
3.8%
(3.8%)
4.0%
(4.0%)
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
218
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
219
26. Retirement benefits obligation (continued)
(iv) Reconciliations for defined benefit schemes
The movements in the defined benefit schemes’ obligation during the financial year were:
Present value of the defined benefit obligation at beginning of the financial year
(1,505.5)
(1,441.6)
2021
€’m
2020
€’m
Current service cost
Past service and settlements
Interest expense
Contributions by employees
Benefits paid
Re-measurements:
- experience (losses)/gains on schemes’ liabilities
- actuarial (losses)/gains arising from changes in demographic assumptions
- actuarial gains/(losses) arising from changes in financial assumptions
Decrease arising on settlement
Exchange translation adjustment
(5.5)
4.7
(21.9)
-
46.7
(24.9)
(41.9)
47.2
17.7
(76.7)
(3.2)
12.8
(26.8)
-
56.8
5.5
3.0
(170.5)
-
58.5
Present value of the defined benefit obligation at end of the financial year
(1,560.1)
(1,505.5)
Present value of the defined benefit obligation at end of the financial year that relates to:
Wholly unfunded schemes
Wholly or partly funded schemes
(16.1)
(17.2)
(1,544.0)
(1,488.3)
(1,560.1)
(1,505.5)
The weighted average duration of the defined benefit obligation at 31 December 2021 is approximately 20 years (2020:
approximately 22 years).
The movements in the schemes’ assets during the financial year were:
Fair value of scheme assets at beginning of the financial year
Interest income
Contributions by employer
Contributions by employees
Benefits paid
Re-measurements:
- return on scheme assets (excluding amounts included in net interest cost)
Decrease arising on settlement
Exchange translation adjustment
Fair value of scheme assets at end of the financial year
2021
€’m
2020
€’m
1,451.1
1,429.7
21.2
15.4
-
26.8
13.8
-
(46.7)
(56.8)
129.8
(17.7)
73.2
95.0
-
(57.4)
1,626.3
1,451.1
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
218
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
219
26. Retirement benefits obligation (continued)
(iv) Reconciliations for defined benefit schemes (continued)
The fair values of each of the categories of the pension schemes’ assets at 31 December were as follows:
Liability Driven Investment
Other Fixed Income
Equities
- Global Equities
- Emerging Market Equities
Diversified Growth Funds
Cash and other
2021
€’m
537.7
380.0
308.4
24.4
185.9
189.9
2020
€’m
355.8
274.6
566.5
70.7
164.4
19.1
Total fair value of pension schemes’ assets
1,626.3
1,451.1
The majority of equity securities and bonds have quoted prices in active markets. The schemes’ assets are invested with
professional investment managers. Investments in the Group’s own financial instruments, if any, are solely at the discretion of
the investment managers concerned. The actual amount of the Group’s own financial instruments held by the pension schemes
during 2021 and 2020 were not material. No property held by the pension schemes was occupied by the Group nor were any
other pension schemes’ assets used by the Group during 2021 or 2020.
Both the UK and Irish Schemes have invested in pooled Liability Driven Investment (LDI) strategies. The primary goal of this
asset class is to mitigate the impact of interest rate and inflation volatility and enable better matching of investment returns
with the cash outflows required to pay benefits. The pooled LDI solutions invest in various levered and unlevered bonds and the
value of the LDI assets at 31 December 2021 across the UK and Irish schemes was €537.7m (2020: €355.8m) which is based on
the latest market bid price for the underlying investments, which are traded daily on liquid markets.
(v) Funding for defined benefit schemes
The Group operates a number of defined benefit schemes in a number of countries and each scheme is required to be
operated in line with local legislation, conditions, practices and the regulatory framework in place for the specific country. As a
result, there are a number of different funding arrangements in place that accord with the specific local legislative, regulatory
and actuarial requirements.
Funding for each scheme is carried out by cash contributions from the Group’s subsidiaries. These funding arrangements have
been advised by the pension schemes’ actuaries and agreed between the Group and the relevant Trustees. Actuarial valuations,
which are not available for public inspection, are carried out every three years in Ireland and the UK; and every year in the USA.
During the financial year ending 31 December 2022, the Group expects to make contributions of approximately €18.9m to its
defined benefit schemes.
27. Share capital
Group and Company:
Authorised
280,000,000 A ordinary shares of 12.50 cent each
Allotted, called-up and fully paid (A ordinary shares of 12.50 cent each)
At beginning of the financial year
Shares issued during the financial year
At end of the financial year
The Company has one class of ordinary share which carries no right to fixed income.
2021
€’m
2020
€’m
35.0
35.0
22.1
-
22.1
22.1
-
22.1
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
220
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
221
27. Share capital (continued)
Shares issued
During 2021 a total of 148,415 (2020: 185,094) A ordinary shares, each with a nominal value of 12.50 cent, were issued at
nominal value per share under the Long-Term and Short-Term Incentive Plans.
The total number of shares in issue at 31 December 2021 was 176,848,451 (2020: 176,700,036).
Share buy back programme
At the 2021 Annual General Meeting, shareholders passed a resolution authorising the Company to purchase up to 5% of its
own issued share capital. In 2021 and 2020, no shares were purchased under this programme.
28. Share-based payments
The Group operates two equity-settled share-based payment plans. The first plan is the Group’s Long-Term Incentive Plan and
the second is the element of the Group’s Short-Term Incentive Plan that is settled in shares/share options after a 2 year deferral
period. Details on each of these plans are outlined below.
The Group recognised an expense of €17.2m (2020: €12.5m) related to equity-settled share-based payment transactions in
the Consolidated Income Statement during the financial year. The expectation of meeting performance criteria was taken into
account when calculating this expense.
(i) Long-Term Incentive Plan
The Group operates an equity-settled Long-Term Incentive Plan (LTIP) under which an invitation to participate was made
to Executive Directors and senior executives. The proportion of each invitation which vests will depend on the Adjusted
Earnings Per Share (EPS) performance, Total Shareholder Return (TSR) and Return on Average Capital Employed (ROACE) of
the Group during a three year period (‘the performance period’). The invitations made in 2019, 2020 and 2021 will potentially
vest in 2022, 2023 and 2024 respectively. 50% of the award will be issued at the date of vesting, with 50% being issued after a
2 year deferral period.
For the 2019 and 2020 awards, up to 50% of the shares/share options subject to an invitation will vest according to the Group’s
Adjusted EPS growth calculated on a constant currency basis compared with target during the performance period. Up to 30%
of the shares/share options subject to an invitation will vest according to the Group’s TSR performance during the performance
period measured against the TSR performance of a peer group of listed companies. The remaining 20% of the shares/share
options will vest according to the Group’s ROACE versus predetermined targets. For the 2021 awards, the performance
conditions are weighted 40% for Adjusted EPS growth calculated on a constant currency basis, 25% for TSR, 15% for ROACE and
the remaining 20% of the shares/share options will vest according to the Group’s Sustainability metrics versus predetermined
targets. An invitation may lapse if a participant ceases to be employed within the Group before the vesting date.
Under the LTIP, the Group introduced career shares awards, under which an invitation to participate was made to a limited
number of senior executives. The proportion of each invitation which vests will depend on personal objectives during a three
year period (‘the performance period’) and the senior executives remaining within the Group for a four year period (‘the
retention period’). The invitations made in 2016, 2017, 2018, 2019 and 2020 will potentially vest in 2022, 2023, 2024, 2025 and
2026 respectively. An invitation may lapse if a participant ceases to be employed within the Group before the vesting date.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
220
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
221
28. Share-based payments (continued)
(i) Long-Term Incentive Plan (continued)
A summary of the status of the LTIP as at 31 December and the changes during the financial year are presented below:
Outstanding at beginning of the financial year
Forfeited
Shares vested
Share options vested
Relinquished
New conditional awards
Number of
Conditional
Awards
2021
Number of
Conditional
Awards
2020
1,256,255
1,297,017
(62,724)
(50,382)
(129,018)
(229,909)
502,120
(76,535)
(77,717)
(140,034)
(138,147)
391,671
Outstanding at end of the financial year
1,286,342
1,256,255
Share options arising under the LTIP
Outstanding at beginning of the financial year
Options released at vesting date
Options released from deferral
Exercised
Outstanding and exercisable at end of the financial year
Number of
Share Options
2021
Number of
Share Options
2020
160,483
126,274
66,586
48,046
(88,088)
187,027
74,131
49,552
(89,474)
160,483
Share options under the LTIP scheme have an exercise price of 12.50 cent. The remaining weighted average life for share
options outstanding is 4.4 years (2020: 4.8 years). The weighted average share price at the date of exercise was €113.07 (2020:
€109.57). 62,432 share options (2020: 65,903 share options) which vested in the financial year are deferred and therefore are
not exercisable at year end.
At the invitation grant date, the fair value per conditional award and the assumptions used in the calculations are as follows:
LTIP Scheme
2021
Conditional
Award at
Grant Date
2020
Conditional
Award at
Grant Date
2019
Conditional
Award at
Grant Date
2018
Conditional
Award at
Grant Date
Conditional Award Invitation date
March 2021
March 2020
March 2019
March 2018
Year of potential vesting
Share price at grant date
Exercise price per share/share options
Expected volatility
Expected life
Risk free rate
Expected dividend yield
Expected forfeiture rate
2024
2023/2026
2022/2025
2021/2024
€107.80
€109.00
€0.125
25.5%
3 years
(0.7%)
0.8%
5.0%
€0.125
20.8%
€95.40
€0.125
19.3%
€81.95
€0.125
19.8%
3/7 years
3/7 years
3/7 years
(1.0%)
0.7%
5.0%
(0.5%)
0.7%
5.0%
(0.5%)
0.7%
5.0%
Weighted average fair value at grant date
€89.78
€92.06/€103.97
€78.00/€95.92
€66.52/€77.96
Valuation model
Monte Carlo
Pricing
Monte Carlo
Pricing
Monte Carlo
Pricing
Monte Carlo
Pricing
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
222
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
223
28. Share-based payments (continued)
(i) Long-Term Incentive Plan (continued)
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous three
years. Market based vesting conditions, such as the TSR condition, have been taken into account in establishing the fair value
of equity instruments granted. The TSR performance over the period is measured against the TSR performance of a peer group
of listed companies. Non‐market based performance conditions, such as the EPS, ROACE and Sustainability conditions, were
not taken into account in establishing the fair value of equity instruments granted, however the number of equity instruments
included in the measurement of the transaction is adjusted so that the amount recognised is based on the number of equity
instruments that eventually vest.
(ii) Short-Term Incentive Plan
In 2013 the Group’s Short-Term Incentive Plan (STIP) for Executive Directors was amended to incorporate a share-based
payment element with 25% of the total bonus to be settled in shares/share options. The shares/share options awarded as
part of this scheme will be issued 2 years after the vesting date once a deferral period has elapsed. There are no further
performance conditions relating to the shares/share options during the deferral period.
There are 4,632 share options (2020: 1,114 share options) outstanding and exercisable in relation to the STIP.
A share-based payment expense is recognised in the Consolidated Income Statement for the scheme to reflect the cash value
of the bonus to be paid by way of shares/share options. The issuance of shares/share options under the STIP which related to
the 2020 and 2021 financial years will be released from deferral in 2022 and 2023 respectively.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
222
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
223
29. Cash flow components
(i) Cash flow analysis
Change in working capital
Increase in inventories
Increase in trade and other receivables
Increase/(decrease) in trade and other payables
(Decrease)/increase in non-current liabilities
Share-based payment expense
Purchase of assets
Purchase of property, plant and equipment
Purchase of intangible assets
(Purchase)/sale of financial assets
Cash and cash equivalents
Cash at bank and in hand
Bank overdrafts
(ii) Net debt reconciliation
Notes
28
12
13
23
23
Group
2020
€’m
Company
2021
€’m
Company
2020
€’m
Group
2021
€’m
(192.6)
(98.1)
102.6
(13.4)
17.2
(39.7)
(48.1)
(40.6)
8.8
12.5
(184.3)
(107.1)
(263.9)
(34.1)
(2.4)
(227.9)
(52.1)
3.8
(300.4)
(276.2)
1,039.1
(5.3)
1,033.8
563.1
(2.8)
560.3
-
(50.0)
3.6
-
17.2
29.2
-
-
-
-
0.1
-
0.1
-
(33.2)
(5.5)
-
12.5
(26.2)
-
-
-
-
-
-
-
Cash at
bank and
in hand
€’m
Interest
Rate
Swaps
€’m
Overdrafts
due within
1 year*
€’m
Borrowings
due within
1 year*
€’m
Borrowings
due after
1 year*
€’m
Net Debt
- pre lease
liabilities
€’m
Note
Lease
liabilities*
€’m
Total Net
Debt
€’m
At 1 January 2020
554.9
128.4
(5.2)
(185.6)
(2,355.3)
(1,862.8)
(109.4)
(1,972.2)
Cash flows
Foreign exchange
adjustments
34.8
(45.5)
(26.6)
(20.1)
Other non-cash movements
-
At 31 December 2020
23
563.1
19.1
81.9
Cash flows
Foreign exchange
adjustments
447.0
(39.3)
29.0
7.8
Other non-cash movements
-
(15.8)
At 31 December 2021
23
1,039.1
34.6
*
Liabilities from financing activities.
2.1
0.3
-
(2.8)
(2.4)
(0.1)
-
(5.3)
185.3
(211.6)
(34.9)
-
72.9
26.5
37.0
7.8
2.1
34.3
0.3
(11.8)
7.6
(16.9)
(9.3)
-
(2,505.8)
(1,863.6)
(81.5)
(1,945.1)
(0.3)
(572.1)
(167.1)
34.9
(132.2)
-
-
(55.8)
(19.1)
(5.1)
(24.2)
15.7
(0.1)
(22.5)
(22.6)
(0.3)
(3,118.0)
(2,049.9)
(74.2)
(2,124.1)
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
224
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
225
30. Business combinations
During 2021, the Group completed a total of 5 acquisitions, all of which are 100% owned by the Group.
Recognised amounts of identifiable assets acquired and liabilities assumed:
Non-current assets
Property, plant and equipment
Brand related intangibles
Computer software
Current assets
Cash at bank and in hand
Inventories
Trade and other receivables
Current liabilities
Trade and other payables
Non-current liabilities
Deferred tax liabilities
Other non-current liabilities
Total identifiable assets
Goodwill
Total consideration
Satisfied by:
Cash
Deferred payment
Net cash outflow on acquisition:
Cash
Less: cash and cash equivalents acquired
Plus: debt acquired (included in other non-current liabilities above)
* Hare Topco, Inc. (trading as Niacet Corp.)
Notes
11
12
12
Niacet*
2021
€’m
Other
Acquisitions
2021
€’m
65.3
360.4
0.1
7.8
15.5
25.9
26.3
79.6
0.4
9.3
10.8
13.7
Total
2021
€’m
91.6
440.0
0.5
17.1
26.3
39.6
(32.8)
(27.6)
(60.4)
(68.9)
(17.7)
355.6
524.9
880.5
(15.3)
(3.4)
93.8
132.2
226.0
12
(84.2)
(21.1)
449.4
657.1
1,106.5
1,099.2
7.3
1,106.5
Total
2021
€’m
1,099.2
(17.1)
2.8
1,084.9
The acquisition method has been used to account for businesses acquired in the Group’s financial statements. Given that the
valuation of the fair value of assets and liabilities recently acquired is still in progress, some of the above values are determined
provisionally. The valuation of the fair value of assets and liabilities will be completed within the measurement period. For
the acquisitions completed in 2020, there have been no material revisions of the provisional fair value adjustments since the
initial values were established. The Group performs quantitative and qualitative assessments of each acquisition in order to
determine whether it is material for the purposes of separate disclosure under IFRS 3 ‘Business Combinations’ and as a result
separate disclosure was made for the Niacet acquisition.
The goodwill is attributable to the expected profitability, revenue growth, future market development and assembled workforce
of the acquired businesses and the synergies expected to arise within the Group after the acquisition. €11.7m of goodwill
recognised is expected to be deductible for income tax purposes.
Transaction expenses related to these acquisitions of €11.0m were charged in the Group’s Consolidated Income Statement
during the financial year. The fair value of the financial assets includes trade and other receivables with a fair value of €39.6m
and a gross contractual value of €40.4m.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
224
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
225
30. Business combinations (continued)
From the date of acquisition, the acquired businesses have contributed €73.7m of revenue and €9.2m of profit after taxation
attributable to owners of the parent to the Group. If the acquisition dates had been on the first day of the financial year, the
acquired businesses would have contributed €241.9m of revenue and €31.2m of profit after taxation attributable to owners of
the parent to the Group.
From the date of acquisition, Niacet has contributed €55.9m of revenue and €8.0m of profit after taxation attributable to
owners of the parent to the Group. If the acquisition date had been on the first day of the financial year, Niacet would have
contributed €186.4m of revenue and €26.8m of profit after taxation attributable to owners of the parent to the Group.
As previously announced, Kerry has entered into an agreement to acquire the share capital of Natreon, Inc., which has leading
capability in Ayurvedic and botanical extracts with facilities in the USA and India. The closing process for this acquisition is in
progress and the Group expects to complete the transaction in Q1 2022.
The following acquisitions were completed by the Group during 2021:
Acquisition Type
Completion
date
Principal activity
Strategic rationale
Biosearch,
S.A. (now
known as
Biosearch
S.A.U.)
Hare Topco,
Inc.
(trading as
Niacet Corp.)
National
Vinegar Co.
Asset May 2021
A producer of specialty ingredients based in
the USA.
Equity
July 2021
A leading biotechnology company based in
Spain with an extensive range of probiotics,
botanical extracts and omega-3 oils.
Supports the Group’s growth initiatives
in food protection and natural
preservation.
Brings leading clinical research
capabilities and functional
food technologies across the
pharmaceutical, nutraceutical and
functional food sectors.
Equity
September
2021
A global market leader in technologies
for preservation. It has clear leadership
positions in Bakery, Pharma, and cost-
effective low-sodium preservation systems
for Meat and plant based food, across both
conventional and clean label solutions.
Niacet is differentiated by its proprietary
drying and granulation process technologies,
with key manufacturing sites in the USA
and the Netherlands, with customers in
over 75 countries.
Brings a complementary product
portfolio and enhances the Group’s
leadership position in this fast growing
market of food protection and
preservatives, led by the industry drive
to reduce food waste.
Afribon
Limited
Equity December
2021
A producer of flavours for a range of food
and beverage applications in East Africa.
Supports the Group’s growth initiatives
in emerging markets.
Enmex S.A.
de C.V.
Equity December
2021
A leading producer of enzymes across
the food and beverage markets based
in Mexico.
Brings leading enzyme production
capabilities across a number of
markets.
31. Contingent liabilities
Company:
2021
€’m
2020
€’m
(i) Guarantees in respect of borrowings of subsidiaries
3,112.7
2,474.9
(ii) For the purposes of Section 357 of the Companies Act, 2014, the Company has undertaken by Board resolution to indemnify
the creditors of its subsidiaries incorporated in the Republic of Ireland, as set out in note 36, in respect of all amounts shown
as liabilities or commitments in the statutory financial statements as referred to in Section 357 (1) (b) of the Companies Act,
2014 for the financial year ending on 31 December 2021 or any amended financial period incorporating the said financial
year. All other provisions of Section 357 have been complied with in this regard. The Company has given similar indemnities
in relation to its subsidiaries in Germany (section 264-289 and 325-329 of the Commercial Code), Luxembourg (Article 70
of the Luxembourg law of 19 December 2002 as amended) and Netherlands (Article 2:403 of the Dutch Civil Code), as set
out in note 36. In addition, the Company has also availed of the exemption from filing subsidiary financial statements in
Luxembourg, Germany, Netherlands and Ireland.
The Company does not expect any material loss to arise from these guarantees and considers their fair value to be negligible.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
226
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
227
32. Other financial commitments
Commitments for the acquisition of property, plant, equipment and computer software at 31 December for which no provision
has been made in the accounts are as follows:
Group:
Commitments in respect of contracts placed
Expenditure authorised by the Directors but not contracted for at the financial year end
2021
€’m
60.1
111.0
171.1
2020
€’m
67.0
152.2
219.2
33. Related party transactions
(i) Trading with Directors
In their ordinary course of business as farmers, certain Directors have traded on standard commercial terms with the Group’s
Agribusiness division. Aggregate purchases from, and sales to, these Directors amounted to €0.3m (2020: €0.2m) and €0.1m
(2020: €0.1m) respectively. The trading balance outstanding to the Group at the financial year end was €nil (2020: €nil).
All transactions with Directors were on standard commercial terms. No expense has been recognised in the financial year for
bad or doubtful debts in respect of amounts owed by Directors.
(ii) Trading between Parent Company and subsidiaries
Transactions in the financial year between the Parent Company and its subsidiaries included dividends received of €331.4m
(2020: €179.0m), cost recharges of €17.6m (2020: €14.7m), and trade and other receivables of €216.8m (2020: €165.0m). The
Parent Company has also provided a guarantee in respect of borrowings of subsidiaries which is disclosed in note 31.
(iii) Trading with joint ventures
Details of transactions and balances outstanding with joint ventures are as follows:
Joint ventures
Rendering of services
Sale of goods
Amounts receivable/
(payable) at 31 December
2021
€’m
0.1
2020
€’m
0.1
2021
€’m
1.1
2020
€’m
1.8
2021
€’m
(0.1)
2020
€’m
(0.2)
These trading transactions are undertaken and settled at normal trading terms.
(iv) Trading with other related parties
As detailed in the Directors’ Report, Kerry Co-operative Creameries Limited is considered to be a related party of the Group as
a result of its significant shareholding in the Parent Company. During 2021, dividends of €18.8m (2020: €18.0m) were paid to
Kerry Co-operative Creameries Limited based on its shareholding. A subsidiary of Kerry Group plc traded product to the value
of €0.1m (2020: €0.1m) on behalf of Kerry Co-operative Creameries Limited.
(v) Transactions with key management personnel
The Board of Directors are deemed to be key management personnel of Kerry Group plc as they are responsible for planning,
directing and controlling the activities of the Group.
In addition to their salaries and short-term benefits, the Group also contributes to post-retirement defined benefit, defined
contribution and saving plans on behalf of the Executive Directors (note 26). The Directors also participate in the Group’s Long-
Term Incentive Plan (LTIP) (note 28).
Remuneration cost of key management personnel is as follows:
Short-term benefits (salaries, fees and other short-term benefits)
Post-retirement benefits
LTIP accounting charge
Other long-term benefits
Termination benefits
Total
2021
€’m
8.1
0.5
1.9
-
-
10.5
2020
€’m
3.9
0.6
1.0
-
-
5.5
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
226
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
227
33. Related party transactions (continued)
(v) Transactions with key management personnel (continued)
Retirement benefit charges of €0.2m (2020: €0.2m) arise under a defined benefit scheme relating to 1 Director (2020:
1 Director) and charges of €0.3m (2020: €0.3m) arise under a defined contribution scheme relating to 2 directors (2020:
2 Directors). The LTIP accounting charge above is determined in accordance with the Group’s accounting policy for share-based
payments.
Post-retirement benefits in the above table and the statutory and listing rules disclosure in respect of pension contributions in
the Executive Directors’ remuneration table in the remuneration report are determined on a current service cost basis.
The aggregate amount of gains accruing to Executive Directors on the exercise of share options is €nil (2020: €nil). Dividends
totalling €0.1m (2020: €0.1m) were also received by key management personnel during the financial year, based on their
personal interests in the shares of the company.
34. Events after the balance sheet date
Since the financial year end, the Group has:
-
entered into an agreement to acquire 100% of the shares of Almer Malaysia Sdn Bhd, based in Malaysia and 92% of the
shares of c-LEcta GmbH, based in Germany. The Group also expects to complete the previously announced acquisition
of 100% of the shares of Natreon, Inc., in Q1 2022. The combined consideration for these acquisitions is expected to be
€244.5m; and
proposed a final dividend of 66.70 cent per A ordinary share (note 10).
-
There have been no other significant events, outside the ordinary course of business, affecting the Group since 31 December 2021.
35. Reserves
Fair value through other comprehensive income reserve (FVOCI)
The fair value through other comprehensive income reserve represents the unrealised gains and losses on the financial assets
held at fair value through other comprehensive income by the Group.
Capital redemption reserve
Capital redemption reserve represents the nominal cost of the cancelled shares in 2007.
Other undenominated capital
Other undenominated capital represents the amount transferred to reserves as a result of renominalising the share capital of
the Parent Company due to the euro conversion in 2002.
Share-based payment reserve
The share-based payment reserve relates to invitations made to employees to participate in the Group’s Long-Term Incentive
Plan and the element of the Group’s Short-Term Incentive Plan that is settled in shares/share options. Further information in
relation to this share-based payment is set out in note 28.
Translation reserve
Exchange differences relating to the translation of the balance sheets of the Group’s foreign currency operations from their
functional currencies to the Group’s presentation currency (euro) are recognised directly in other comprehensive income and
accumulated in the translation reserve.
Hedging reserve
The hedging reserve represents the effective portion of gains and losses on hedging instruments from the application of cash flow
hedge accounting for which the underlying hedged transaction is not impacting profit or loss. The cumulative deferred gain or loss
on the hedging instrument is reclassified to profit or loss only when the hedged transaction affects the profit or loss.
Cost of hedging reserve
The cost of hedging reserve arises from where the Group has entered into cross currency interest rate swaps. Such cross
currency interest rate swaps have basis risk as there are characteristics in the cross currency interest rate swap contracts that
are not present in the hedged item, being currency basis spreads.
Retained earnings
Retained earnings refers to the portion of net income, which is retained by the Group rather than distributed to shareholders as
dividends.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
228
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
229
36. Group entities
Principal subsidiaries and joint venture undertakings
Country
Company Name
Nature of Business
Registered Office
Ireland
Accommodation Tralee Limited
Ballyfree Farms Limited
Breeo Brands Limited
Breeo Foods Limited
Carteret Investments Unlimited Company
Cuarto Limited
Dairy Consumer Foods (Ireland) Limited
Dawn Dairies Limited
Investment
Consumer Foods
Consumer Foods
Consumer Foods
Investment
Taste & Nutrition
Consumer Foods
Consumer Foods
Kerry Holdings International (Ireland) Limited
Investment
Fambee Limited
Glenealy Farms (Turkeys) Limited
Golden Vale Clare Limited
Golden Vale Dairies Limited
Golden Vale Food Products Unlimited Company
Golden Vale Holdings Limited
Golden Vale Investments Limited
Golden Vale Limited
Grove Farm Limited
Helios Limited
Henry Denny & Sons (Ireland) Limited
Ichor Management Limited
Ivernia Pig Developments Limited
Kerry Agri Business Holdings Limited
Kerry Agri Business Trading Limited
Kerry Creameries Limited
Kerry Food Ingredients (Cork) Limited
Kerry Foods Limited
Kerry Group Business Services Limited
Kerry Group Financial Services Unlimited Company
Kerry Group Finance International Limited
Kerry Group Services International Limited
Kerry Group Services Limited
Kerry Health and Nutrition Institute Limited
Kerry Holdings (Ireland) Limited
Kerry Ingredients & Flavours Limited
Kerry Ingredients (Ireland) Limited
Kerry Ingredients Holdings (Ireland) Limited
Kerry Taste & Nutrition (Ireland) Limited
Kerry Treasury Services Limited
Kerrykreem Limited
Lifesource Foods Research Limited
Linovale Limited
Consumer Foods
Consumer Foods
Investment
Agribusiness
Investment
Investment
Investment
Investment
Investment
Investment
Consumer Foods
Investment
Consumer Foods
Investment
Agribusiness
Agribusiness
Taste & Nutrition
Consumer Foods
Services
Services
Services
Services
Services
Taste & Nutrition
Investment
Taste & Nutrition
Taste & Nutrition
Investment
Taste & Nutrition
Services
Consumer Foods
Investment
Investment
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
228
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
229
36. Group entities (continued)
Principal subsidiaries and joint venture undertakings (continued)
Country
Company Name
Ireland
Maddens Milk Limited
National Food Ingredients Limited
Newmarket Co-operative Creameries Limited
Plassey Holdings Limited
Princemark Holdings Designated Activity Company
Putaxy Limited
Rye Developments Limited
Rye Investments Limited
Selamor Limited
Tacna Investments Limited
Zenbury International Limited
UK
Henry Denny & Sons (N.I.) Limited
Dairy Produce Packers Limited
Golden Cow Dairies Limited
Golden Vale (NI) Limited
Leckpatrick Dairies Limited
Leckpatrick Holdings Limited
RVF (UK) Limited
Kerry Foods Limited
Kerry Holdings (U.K.) Limited
Kerry Savoury Foods Limited
Noon Group Limited
Rollover Holdings Limited
Rollover Group Limited
Dairy Consumer Foods (UK) Limited
E B I Foods Limited
Gordon Jopling (Foods) Limited
Kerry Ingredients (UK) Limited
Kerry Ingredients Holdings (U.K.) Limited
Titusfield Limited
Kerry Flavours UK Limited
Belgium
Kerry Holdings Belgium NV
Netherlands
Kerry (NL) B.V.
Kerry Group B.V.
Proparent B.V. (55% shareholding)
Niacet Cooperatief U.A.
Niacet B.V.
Czech
Republic
Kerry Ingredients & Flavours S.R.O.
Nature of Business
Registered Office
Investment
Taste & Nutrition
Taste & Nutrition
Investment
Services
Investment
Services
Consumer Foods
Consumer Foods
Investment
Services
Consumer Foods
Consumer Foods
Consumer Foods
Investment
Consumer Foods
Investment
Consumer Foods
Consumer Foods
Investment
Consumer Foods
Consumer Foods
Consumer Foods
Consumer Foods
Investment
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Investment
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Investment
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
1
1
1
1
1
1
1
1
1
1
1
2
2
2
2
2
2
2
3
3
3
3
3
3
4
4
4
4
4
4
4
5
6
6
7
8
8
9
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
230
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
231
36. Group entities (continued)
Principal subsidiaries and joint venture undertakings (continued)
Country
Company Name
Nature of Business
Registered Office
France
Kerry Ingredients France SAS
Kerry Ingredients Holdings France SAS
Kerry Savoury Ingredients France SAS
Kerry Flavours France SAS
Germany
Kerry Food GmbH
Kerry Ingredients GmbH
SuCrest GmbH
Vicos Nahrungsmittel GmbH
Red Arrow Handels GmbH
Belarus
Unitary Manufacturing Enterprise “Vitella”
Denmark
Cremo Ingredients A/S
Italy
Kerry Ingredients & Flavours Italia S.p.A.
Poland
Kerry Polska Sp. z.o.o.
Hungary
Kerry Hungaria Kft
Luxembourg
Kerry Luxembourg S.a.r.l.
Zenbury International Limited S.a.r.l.
Romania
Kerry Romania s.r.l.
Russia
Spain
Kerry Limited Liability Company
Kerry Iberia Taste & Nutrition S.L.U.
Harinas y Sémolas del Noroeste S.A.U.
Pevesa Biotech S.A.U.
Biosearch S.A.U.
Malta
Kerry Malta Limited
Slovakia
Dera SK S.R.O.
Sweden
Ukraine
USA
Tarber AB
Kerry Ukraine LLC
Kerry Holding Co.
Kerry Inc.
Ganeden Biotech, Inc.
Insight Beverages, Inc.
Fleischmann’s Vinegar Company, Inc.
Kerry Stock & Broth Company Inc.
Bio-K Plus USA Inc.
Hare Topco, Inc. (trading as Niacet Corp.)
Canada
Kerry (Canada) Inc.
Bio-K Plus International Inc.
Mexico
Kerry Ingredients (de Mexico) S.A. de C.V.
Enmex S.A. de C.V.
Brazil
Kerry do Brasil Ltda.
Kerry da Amazonia Ingredientes e Aromas Ltda.
Costa Rica
Baltimore Spice Central America S.A.
Global Spice S.A.
Taste & Nutrition
Investment
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Services
Services
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Services
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Investment
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
10
10
10
11
12
12
13
13
14
15
16
17
18
19
20
20
21
22
23
24
25
26
27
28
29
30
31
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
230
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
231
36. Group entities (continued)
Principal subsidiaries and joint venture undertakings (continued)
Country
Company Name
Nature of Business
Registered Office
Chile
Kerry Chile Ingredientes, Sabores Y Aromas Ltda.
Colombia
Kerry Ingredients & Flavours Colombia S.A.S.
Real S.A.S.
Panama
Kerry Panamá S.A.
Kerry Holdings Panama, S.A.
Guatemala
Baltimore Spice Guatemala S.A.
Aromaticos de Centroamerica S.A.
Kerry Guatemala S.A.
El Salvador
Baltimore Spice de El Salvador S.A. de C.V.
Aromaticos de Centro America S.A. de C.V.
Thailand
Kerry Ingredients (Thailand) Limited
Philippines
Kerry Food Ingredients (Philippines), Inc.
Kerry Manufacturing (Philippines), Inc.
Singapore
Kerry Ingredients (S) PTE Limited
Malaysia
Kerry Ingredients (M) Sdn. Bhd.
Japan
China
Kerry Group Business Services (ASPAC) Sdn. Bhd.
Kerry Japan Kabushiki Kaisha
Kerry Food Ingredients (Hangzhou) Co. Ltd
Kerry Ingredients Trading (Shanghai) Co. Ltd
Kerry Foods (Nantong) Co Limited
TianNing Flavor & Fragrance (JiangSu) Co. Ltd
Zhejiang Hangmai Food Technologies Co. Ltd
SIAS Food Co. Ltd
Shandong Tianbo Food Ingredients Co. Ltd
Egypt
Kerry Egypt LLC
Indonesia
PT Kerry Ingredients Indonesia
PT Kerry Trading Indonesia
India
Kerry Ingredients India Private Limited
Australia
Kerry Ingredients Australia Pty Limited
New Zealand
Kerry Ingredients (NZ) Limited
Kenya
Kerry Kenya Limited
Afribon (K) Limited
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
South Africa
Kerry Ingredients South Africa (Proprietary) Limited
Taste & Nutrition
South Korea
Kerry Ingredients Korea LLC
Jungjin Food Co. Limited
Saudi Arabia
AATCO Food Industries LLC
Oman
AATCO Food Industries SPC
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Taste & Nutrition
Vietnam
Kerry Taste & Nutrition (Vietnam) Company Limited
Taste & Nutrition
UAE
Kerry MENAT DMCC
Taste & Nutrition
Notes
(a) All group entities are wholly owned subsidiaries unless otherwise stated.
(b) Country represents country of incorporation and operation. Ireland refers to the Republic of Ireland.
(c)
With the exception of the USA, Canadian and Mexican subsidiaries, where the holding is in the form of common stock,
all holdings are in the form of ordinary shares.
46
47
48
49
50
51
52
53
54
54
55
56
57
58
59
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
232
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
233
36. Group entities (continued)
Registered Office
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
Prince’s Street, Tralee, Co Kerry, V92 EH11, Ireland.
Millburn Road, Coleraine, Northern Ireland BT52 1QZ, United Kingdom.
Thorpe Lea Manor, Thorpe Lea Road, Egham, Surrey TW20 8HY, United Kingdom.
Kerry, Bradley Road, Royal Portbury Dock, Bristol BS20 7NZ, United Kingdom.
Havenlaan 86C, Bus 204, 1000 Brussels, Belgium.
Maarssenbroeksedijk 2a, 3542 DN Utrecht, Netherlands.
Cuneraweg 9c, 4051 CE, Ochten, Netherlands.
Papesteeg 91, 4006 WC Tiel, Netherlands.
Pujmanové 1753/10a, Nusle, 140 00, Praha 4, Czech Republic.
43 Rue Louis Pasteur, 62575 Blendecques, France.
Zone Industrielle du Plan, BP 82067, 06131 Grasse, CEDEX, France.
Hauptstrasse 22-26, D-63924 Kleinheubach, Germany.
Neckarstraße 9, 65239 Hochheim/Main, Germany.
Hanna-Kunath-Strasse 25, 28199, Bremen, Germany.
P. Brovki Str., 44 210039 Vitebsk, Belarus.
Toftegardsvej 3, DK-5620, Glamsbjerg, Denmark.
Via Capitani di Mozzo 12/16, 24030 Mozzo, Bergamo, Italy.
Ul. Energetyczna 13, 56-400 Olesnica, Poland
Dévai utca 26-28, Budapest, H-1134, Hungary.
17 Rue Antoine Jans, Luxembourg L-1820, Luxembourg.
Biroul Nr.5, Etaj 5, Nr. 4D, Corp C, Strada Gara Herastrau, Bucureşti Sectorul 2, Romania.
RigaLand Business Centre, 26 km Baltiya Highway, Krasnogorskiy District, 143421, Moscow, Russia.
Calle Coto de Doñana, 15, 28320 Pinto, Madrid, Spain.
Polígono Industrial de las Gándaras de Budino, O Porrino, Pontevedra, Spain.
Avda de la Industria s/n, Visos del Alcor, Seville, Spain.
Camino del Purchill, 66, 18004, Granada, Spain.
4, V. Dimech Street, Floriana, FRN 1504, Malta.
Hodžovo námestie 1A, Bratislava, 811 06, Slovakia.
Box 1420 - Frejgatan 13, 114 79 Stockholm, Sweden.
Avenue Peremoghy, 53, Kiev, 03067, Ukraine.
3400 Millington Road, Beloit WI 53511, United States.
5800 Landerbrook Drive, Suite 300, Mayfield Heights OH 44124, United States.
635 Oakwood Road, Lake Zurich IL 60047, United States.
12604 Hiddencreek Way # Suite A, Cerritos, CA 90703, United States.
1711 North Liberty Street, Harrisonburg VA 22802, United States.
8135 Remmet Ave, Canoga Park CA 91304, United States.
275 Northpointe Parkway, Suite 105, Amherst NY 14228, United States.
615 Jack Ross Avenue Woodstock ON N4S 8A4, Canada.
1000 De La Gauchetière Street West, Suite 2100, Montréal Québec H3B 4W5, Canada.
Carretara Panamericana, Irapuato-Salamanca Km 11.2, Apartado Postal 789, Guanajuato, 36660, Mexico.
Rio Lerma 228, Ffraccionamiento Industrial San Nicolas, Tlalnepantla, Estado de Mexico, CP 54030, Mexico.
Avenida Mercedes Benz 460, Distrito Industrial, Campinas, Sao Paolo, 13054-750, Brazil.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
232
Financial Statements Notes to the Financial Statements
Notes to the Financial Statements
233
36. Group entities (continued)
Registered Office (continued)
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
Rua Hidra 188, Santo Agostinho, Manaus, 69036-520, Brazil.
Liceo de Pavas 200 mts West, 100 Norte Zip Code 10909, San José, Costa Rica.
De la esquina noreste fabrica BTICINO, 50 mts al este, edificio a mano izquierda, San Jose, Costa Rica.
C.M. El Trovador No. 4280, Of 1205, Las Condes, Suc. Cerro Portezuelo 9901, Quilicura, Santiago, Chile.
Carrera 7 No 71-52, Torre A Piso 5, Bogota, Colombia.
Real SAS: carrera 3 # 6a – 100 oficina 703. Ed. Torre Protección, Cartagena, Colombia.
Parque Industrial Costa del Este, Calle Avenida Principal y 3ra Lote 88. Corregimiento, Parque Lefevre 0819-01869,
Panama.
Distrito Panama, Provincia Panama, Panama.
Avenida Petapa 52-20, Zona 12, Guatemala, Guatemala.
23 Avenida 34-61, Zona 12, Colonia Santa Elisa, Guatemala, Guatemala.
Kilómetro 26.5 carretera al pacifico, paso a desnivel, entrada a Amatitlán, Guatemala.
2 Calle Oriente Avenida Melvin Jones, Local 14, Centro Comercial Argoz, Santa Tecla, La Libertad, El Salvador.
No 618, Moo 4, Bangpoo Industrial Estate, Praksa Sub District, Muang District, Samutprakarn Province, Thailand.
Room 406, Cebu Business & Investments Consultants, 4th Floor, Tulips Centre, AS Fortuna Street, Mandaune City, Cebu,
6014, Philippines.
8/F The W Fifth Avenue Building, Fifth Avenue , Bonifacio Global City, Taguig, Philippines.
8A Biomedical Grove, #02-05/12, Immunos, 138648, Singapore.
Suite 1301, 13th Floor, City Plaza, Jalan Tebrau, 80300 Johor Bahru, Johor, Malaysia.
Kamiyacho Sankei Building. 2F, 1-7-2, Azabudai 1-chome, Minato-ku, Tokyo 106-0041, Japan.
Renhne Industry Zone, Jiulong Village, Hangzhou, China.
Room 311, Floor 3, Building 1, No 239 Gang-Ao Road, Pilot Free Trade Zone, Shanghai, China.
North side of Xiangjiang Road, Rudong County, Nantong City, China.
Dujiashan, Huayang County, Jurong, Jiangsu Province, 212425, China.
26 Tai Ping Qiao Industry Park, Xin’an, Deqing County, Zheijiang Province, China.
North side of XinYe Road, West side of LiDaXian, DaChang Industrial District, LangFang City, HeBei Province, China.
No.6 Haichuan Road, Jiezhuang Street, Hi-tech Zone, Jining, Shandong Province, China.
Olympic Building, Ramsis Extension St., ext 6th District, Nasr City, Cairo, Egypt.
JL Industri Utama Blok SS No. 6, Jababeka II Mekarmukti, Cikarang Utara, Bekasi 17520, Indonesia.
Jalan Industri Utama Blok SS-6 Kawasan Industri Jababeka 2, Kel. Mekarmukti, Kec. Cikarang Utara, Kab, Bekasi Prov.
Jawa Barat, Indonesia.
8th Floor, Pritech Park Annex, Marathalli-Sarjapur Outer Ring Road, Bellandur, Bangalore, Karnataka, 560103, India.
Suite 202, 7-9 Irvine Place Bella Vista, NSW 2153, Australia.
11-13 Bell Avenue, Otahuhu, Auckland, New Zealand.
Avocado Towers, L.R. No 209/1907, Muthithi Road, Nairobi, 00100, Kenya.
Kalamu House, Grevillea Grove, Brookside Westlands, P.O. Box 61120, 00200, Nairobi, Kenya.
Block 3 Nguni Park, 4-6 Lucas Drive, Hillcrest, Durban, Kwazulu-Natal, 3610, South Africa.
9th Fl., Sheenbang Bldg, 1366-18, Seocho-dong, Seocho-Gu, Seoul, 137-863, Republic of Korea.
#82 Yuolgum-5gil, Sunghwan-eup, Cheonan-si, Choongchungnam-do, Republic of Korea.
PO Box Number: 42511, PC 21551, Jeddah, Al Mehjar, 2nd Industrial City-Jeddah-Kin, Saudi Arabia.
PO Box 793, P.C-112, Muscat, Sultanate of Oman, Oman.
Me Linh Point Tower, 2 Ngo Duc De Street, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam.
Unit No: AG - GF - 01, AG Tower, Plot No: JLT-PH1-I1A, Jumeirah Lakes Towers, Dubai, United Arab Emirates.
Kerry Group Annual Report 2021
Kerry Group Annual Report 2021
Supplementary Information Financial Definitions
234
Supplementary Information Financial Definitions
SUPPLEMENTARY INFORMATION
Financial Definitions
(NOT COVERED BY INDEPENDENT AUDITORS’ REPORT)
1. Revenue
Volume performance
This represents the sales performance year-on-year, excluding pass-through pricing on raw material costs, currency impacts,
acquisitions (net of disposals) and rationalisation volumes.
Volume performance is an important metric as it is seen as the key driver of top-line business improvement. This is used as
the key revenue metric, as Kerry operates a pass-through pricing model with its customers to cater for raw material price
fluctuations. Pricing therefore impacts like-for-like revenue performance positively or negatively depending on whether raw
material prices move up or down. A full reconciliation to reported revenue performance is detailed in the revenue reconciliation
below.
Revenue Reconciliation
2021
Taste & Nutrition
Consumer Foods
Group
2020
Taste & Nutrition
Consumer Foods
Group
2. EBITDA
Volume
performance
8.3%
6.0%
8.0%
(3.0%)
(2.6%)
(2.9%)
Price
1.3%
0.5%
1.2%
0.1%
1.2%
0.3%
Transaction
currency
Acquisitions/
Disposals
Translation
currency
Reported
revenue
performance
-
2.1%
0.1%
(18.8%)
-
(1.7%)
(0.1%)
-
(0.1%)
1.2%
-
1.0%
(2.7%)
1.7%
(1.8%)
(2.6%)
(0.7%)
(2.3%)
9.0%
(10.5%)
5.7%
(4.4%)
(2.1%)
(4.0%)
EBITDA represents profit before finance income and costs, income taxes, depreciation (net of capital grant amortisation),
intangible asset amortisation and non-trading items.
Profit after taxation attributable to owners of the parent
Finance income
Finance costs
Income taxes
Non-trading items
Intangible asset amortisation
Depreciation (net of capital grant amortisation)
EBITDA
3. EBITDA Margin
EBITDA margin represents EBITDA, expressed as a percentage of revenue.
EBITDA
Revenue
EBITDA margin
Kerry Group Annual Report 2021
2021
€’m
763.0
(0.3)
70.2
53.3
(91.5)
80.8
201.5
1,077.0
2020
€’m
554.1
(0.2)
72.6
81.2
19.4
70.1
200.7
997.9
2021
€’m
2020
€’m
1,077.0
997.9
7,350.6
6,953.4
14.7%
14.4%
Financial Definitions
235
4. Trading Profit
Trading profit refers to the operating profit generated by the businesses before intangible asset amortisation and gains or
losses generated from non-trading items. Trading profit represents operating profit before specific items that are not reflective
of underlying trading performance and therefore hinder comparison of the trading performance of the Group’s businesses,
either year-on-year or with other businesses.
Operating profit
Intangible asset amortisation
Non-trading items
Trading profit
5. Trading Margin
Trading margin represents trading profit, expressed as a percentage of revenue.
Trading profit
Revenue
Trading margin
6. Operating Profit
Operating profit is profit before income taxes, finance income and finance costs.
Profit before taxation
Finance income
Finance costs
Operating profit
2021
€’m
886.2
80.8
(91.5)
875.5
2020
€’m
707.7
70.1
19.4
797.2
2021
€’m
875.5
2020
€’m
797.2
7,350.6
6,953.4
11.9%
11.5%
2021
€’m
2020
€’m
816.3
635.3
(0.3)
70.2
(0.2)
72.6
886.2
707.7
7. Adjusted Earnings Per Share and Performance in Adjusted Earnings Per Share
on a Constant Currency Basis
The performance in adjusted earnings per share on a constant currency basis is provided as it is considered more reflective
of the Group’s underlying trading performance. Adjusted earnings is profit after taxation attributable to owners of the parent
before brand related intangible asset amortisation and non-trading items (net of related tax). These items are excluded in order
to assist in the understanding of underlying earnings. A full reconciliation of adjusted earnings per share to basic earnings is
provided below. Constant currency eliminates the translational effect that arises from changes in foreign currency year-on-year.
The performance in adjusted earnings per share on a constant currency basis is calculated by comparing current year adjusted
earnings per share to the prior year adjusted earnings per share retranslated at current year average exchange rates.
Basic earnings per share
Brand related intangible asset amortisation
Non-trading items (net of related tax)
Adjusted earnings per share
Impact of retranslating prior year adjusted earnings per share at
current year average rates*
Growth in adjusted earnings per share on a constant currency basis
*
Impact of 2021 translation was 6.4/345.4 cent = 1.9% (2020: 2.9%).
2021
EPS
cent
430.6
26.0
(75.8)
380.8
Growth
%
37.6%
-
-
10.2%
1.9%
12.1%
2020
EPS
cent
313.0
23.6
8.8
Growth
%
(2.3%)
-
-
345.4
(12.3%)
2.9%
(9.4%)
Kerry Group Annual Report 2021
236
Supplementary Information Financial Definitions
8. Free Cash Flow
Free cash flow is trading profit plus depreciation, movement in average working capital, capital expenditure, payment of lease
liabilities, pensions costs less pension expense, finance costs paid (net) and income taxes paid.
Free cash flow is seen as an important indicator of the strength and quality of the business and of the availability to the Group
of funds for reinvestment or for return to shareholders. Movement in average working capital is used when calculating free
cash flow as management believes this provides a more accurate measure of the increase or decrease in working capital
needed to support the business over the course of the year rather than at two distinct points in time and more accurately
reflects fluctuations caused by seasonality and other timing factors. Average working capital is the sum of each month’s
working capital over 12 months. Below is a reconciliation of free cash flow to the nearest IFRS measure, which is ‘Net cash from
operating activities’.
Net cash from operating activities
Difference between movement in monthly average working capital and movement in the
financial year end working capital
Share of profit from joint ventures
Payments on acquisition integration and restructuring costs
Purchase of assets (net)
Payment of lease liabilities
Proceeds from the sale of property, plant and equipment
Capital grants received
Exchange translation adjustment
Free cash flow
9. Cash Conversion
2021
€’m
654.0
146.6
3.9
76.1
(300.4)
(34.9)
19.4
0.7
0.7
2020
€’m
672.2
4.6
1.6
39.7
(276.2)
(37.0)
2.4
0.1
4.6
566.1
412.0
Cash conversion is defined as free cash flow, expressed as a percentage of adjusted earnings after taxation.
Free cash flow
Profit after taxation attributable to owners of the parent
Brand related intangible asset amortisation
Non-trading items (net of related tax)
Adjusted earnings after taxation
Cash Conversion
2021
€’m
566.1
763.0
46.2
(134.4)
674.8
84%
2020
€’m
412.0
554.1
41.7
15.5
611.3
67%
Kerry Group Annual Report 2021
Financial Definitions
237
10. Liquidity Analysis
The Net debt: EBITDA and EBITDA: Net interest ratios disclosed are calculated using an adjusted EBITDA, adjusted finance
costs (net of finance income) and an adjusted net debt value to adjust for the impact of non-trading items, acquisitions net of
disposals and deferred payments in relation to acquisitions.
Net debt: EBITDA
EBITDA: Net interest
2021
Times
2.0
14.9
2020
Times
1.9
13.8
11. Average Capital Employed
Average capital employed is calculated by taking an average of the shareholders’ equity and net debt - pre lease liabilities
over the last three reported balance sheets plus an additional €486.8m relating to goodwill written off to reserves pre
conversion to IFRS.
2021
€’m
H1 2021
€’m
2020
€’m
H1 2020
€’m
2019
€’m
Shareholders’ equity
5,601.2
4,963.1
4,655.5
4,508.5
4,562.2
Goodwill amortised (pre conversion to IFRS)
486.8
527.8
527.8
527.8
527.8
Adjusted equity
6,088.0
5,490.9
5,183.3
5,036.3
5,090.0
Net debt - pre lease liabilities
2,049.9
1,913.0
1,863.6
1,996.4
1,862.8
Total
8,137.9
7,403.9
7,046.9
7,032.7
6,952.8
Average capital employed
7,529.6
7,010.8
12. Return on Average Capital Employed (ROACE)
This measure is defined as profit after taxation attributable to owners of the parent before non-trading items (net of related
tax), brand related intangible asset amortisation and finance income and costs expressed as a percentage of average capital
employed.
Profit after taxation attributable to owners of the parent
Non-trading items (net of related tax)
Brand related intangible asset amortisation
Net finance costs
Adjusted profit
Average capital employed
Return on average capital employed
2021
€’m
763.0
(134.4)
46.2
69.9
2020
€’m
554.1
15.5
41.7
72.4
744.7
683.7
7,529.6
7,010.8
9.9%
9.8%
Kerry Group Annual Report 2021
238
Supplementary Information Financial Definitions
13. Total Shareholder Return
Total shareholder return represents the change in the capital value of Kerry Group plc shares plus dividends in the financial year.
Share price (1 January)
Interim dividend (cent)
Dividend paid (cent)
Share price (31 December)
Total shareholder return
14. Market Capitalisation
Market capitalisation is calculated as the share price times the number of shares issued.
Share price (31 December)
Shares in issue (‘000)
Market capitalisation (€’m)
15.Enterprise Value
2021
2020
€118.50
€111.10
28.5
60.6
25.9
55.1
€113.25
€118.50
(3.7%)
7.4%
2021
2020
€113.25
€118.50
176,848.5
176,700.0
20,028.1
20,939.0
Enterprise value is calculated as per external market sources. It is market capitalisation plus reported borrowings less total cash
and cash equivalents.
16. Total Net Debt
Total net debt comprises borrowings and overdrafts, interest rate derivative financial instruments, lease liabilities and cash at
bank and in hand. See full reconciliation of total net debt in note 23 to the financial statements on pages 197 to 199.
Kerry Group Annual Report 2021
239
NOTES
Kerry Group Annual Report 2021
240
NOTES
Kerry Group Annual Report 2021
Notes to the Financial Statements
241
Kerry Group Annual Report 2021
Kerry Group
Prince’s Street, Tralee,
Co. Kerry, V92 EH11, Ireland.
T: +353 66 718 2000
www.kerrygroup.com
CBP006226